FINANCE BILL.

HC Deb 29 May 1922 vol 154 cc1745-859

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a Second time."

Colonel WEDGWOOD

I beg to move, to leave out the word "now" and, at the end of the Question, to add the words "upon this day six months."

This is the first time, certainly in my recollection, that the Labour party have moved the rejection of the Finance Bill. It is therefore necessary for us to make a particularly strong case to justify us in the step which is being taken. It seems to me that in this case our grounds are sufficiently strong to justify that course. In every previous Budget, I think the Chancellor of the Exchequer and the Lord Privy Seal will agree, the Labour party have always agreed with the recommendations that have been made and have put up with the additional taxation that has been imposed. They have agreed to shouldering the burden of the war and letting that burden lie in no small degree upon the shoulders of those people least able to bear it. But the Budget before us to-day is a change from the old Budgets. For the first. time there is to be a substantial remission of taxation, and our objection to this Budget is simply this, that in that remission of taxation the vested interests have been thought of first and the common people only second. Our objection to this Budget is that it is a rich man's Budget, and that where taxation has been reduced, it is the vested interests that have secured that boon.

But I have a further objection to this Budget. It is not merely that that remission of taxation has taken place in quarters where it is least required, but that there is no proper case for any reduction in taxation at all. What should have happened was a reduction in expenditure, and that that reduction in expenditure should have translated itself into reduction of debt. All the canons of sound finance are upset by this Budget. I will deal first with the changes suggested in this Budget. There is 1s. off Income Tax, which reduces taxation by £32,000,000 this year and by £52,000,000 in all subsequent years. The whole surplus was only £45,000,000 odd, even after all repayment of debt had been brought to an end. It is remarkable about the reductions of taxation proposed in this Budget that the smaller portion falls in this year and that a larger reduction in revenue will take place next year. The Chancellor of the Exchequer, following the example of certain Chancellors in the past, has left his successor to carry the baby. The next Chancellor of the Exchequer will have to find the revenue to make up for the omissions of the present Chancellor of the Exchequer.

This year the Income Tax payer is to pay £32,000,000 less, and the right hon. Gentleman just manages by this to balance his Budget. Next year £52,000,000 will have to be found, and the Income Tax is reduced because above all things the Chancellor of the Exchequer was going to save the trade of the country. In a very eloquent passage in his speech he referred to unemployment. He began his plea in favour of the reduction of Income Tax by referring to unemployment at the present day. Is it likely that is. off the Income Tax will benefit trade and solve the unemployed problem, or do any of those things Which were held out by the right hon. Gentleman so well as a reduction in the National Debt? What we save in Income Tax is very likely to be squandered, but what money he had used and has used for the repayment of debt is not squandered. That money goes into trade. It is reinvested when it is paid off. The man who has a loan paid back re-invests his money and develops trade. I maintain that if the right hon. Gentleman had been seeking solely to improve the trade of the country, he would have retained the Sinking Funds and would have continued to do as all Chancellors of the Exchequer have done in the past ?he would have continued to pay off debt and would have realised that in the repayment of debt you have the soundest cure for the bad trade of the country and the best prospects of its revival. The reduction of debt means cheap money it means reducing the interest on the National Debt; it means facilities in conversion: it means less charges year by year.

Sir G. YOUNGER

What about America?

Colonel WEDGWOOD

In any case, if we have to repay America some time, it is better that the repayment should take place and that we should reduce our capital liabilities rather than that well-to-do people should be able to spend more money on going abroad or in any other way. Squandering is not good for trade. That is the first principle we have to realise. It is not good, whether it be squandering on the part of the rich or on the part of the workers. [HON. MEMBERS: "Agreed! "] I am glad that that is agreed. Then the best thing is not to reduce the charge upon big incomes in order that the rich may spend more, but to use the revenues, so far as we can spare the money, for the repayment of Debt and the cheapening of charges upon our Debt. What was remarkable last year? We paid off £80,000,000 net of Debt. The remarkable result of that was that the Chancellor of the Exchequer was able month by month and week by week to borrow more cheaply. Treasury Bills, as they fell in week by week, were renewed at cheaper and cheaper rates, so that the charges upon the Floating Debt became enormously less as the year went on. The Chancellor of the Exchequer could not have done that if he had not saved money and if he had not been in a position to pay off Debt. Next year, when, according to the Budget, we are exactly to balance without paying off any Debt, we may find, as the weeks go on, that, instead of being able to borrow more and more cheaply, we shall have to find heavier and heavier rates of interest upon the Floating Debt. Nor is that all. If you have to find heavier charges for a Floating Debt, you have also to borrow money at a higher rate.

We are anxious, above all, to reduce the interest on the National Debt by the perfectly honest way of converting the debt as money becomes cheaper. But the proposals made by the Government absolutely forbid any conversion of that sort. Money will get more expensive; the price which the man who has money will be able to charge for lending that money will go up under this Budget, and instead of the State being in the happy position that it was in last year, it will find it difficult to make both ends meet without being forced by the owners of money to pay a very high rate of interest. This is a Budget to "save the trade of the country by reducing the Income Tax. That is not half as useful as saving the trade of the country by the reduction of debt. The Lord Privy Seal, who has just entered the House, knows that quite well. If this new policy of the new Chancellor of the Exchequer be right, if it be right to cease repaying Debt in order to cut down taxation, why did the Lord Privy Seal, the previous Chancellor of the Exchequer, carry out an exactly opposite policy for three years? Why did we have the Prime Minister coming forward and pledging his party to repay the whole of the National Debt in 50 years, and to carry out a scheme of repayment of a heroic character in order to re-establish the trade of the country? All that sound finance has gone. We have the new finance of the Coalition in difficulties; the Coalition in difficulties because for the first time the Press was against them. The Press is their master. Their principles are sound enough, but the "Daily Mail" can break any principle, with the result that we have the Income Tax reduced by s. and debt not reduced at all.

It has been said that is off the Income Tax is a benefit to everybody and is a benefit to trade. I want to show that reduction of Income Tax is not nearly as good as the reduction by the same amount of the duty on sugar or tea. Not only do more people benefit by the reduction of the tea or sugar duty than by the reduction of Income Tax, but the trade of the country benefits also far more. If the Income Tax be reduced it is the well-to-do people who benefit. They do not spend all their money in this country. They do not all spend their money on the necessary support of themselves and their families. More of it is squandered and the larger proportion is spent in ways that are not essential to the welfare of the community. But in so far as money is saved on sugar, the whole community, particularly those who have not any surplus income with which to play, will benefit. They all spend more money at the end of the week; they are all able to buy more; and the more goods they want the more people are employed in making those goods. So that the trade of the country will benefit far more by the reduction of a tax which falls upon the poor than by the reduction of a tax which falls upon the rich.

Let us look at this Budget item by item and see whether it is not indeed a Budget, the whole idea of which is to reduce the taxation upon the rich. Last year the expenditure of the country was increased by a gift of £50,000,000 to the railway interests. It was nominally for arrears of maintenance, but was actually distributed in large measure in dividends within the last six months. There you had an admirable illustration of how expenditure increases and how certain vested interests benefit by that expenditure. £50,000,000 was a generous recognition of any possible services that the railways could have rendered during the War, and anyone reading the Colwyn Report will see that it certainly did not show, as it would have done this year no doubt, the vigilant eye of the Treasury with a view to cutting it down. If the right hon. Gentleman doubts whether that £50,000,000 was a legitimate payment, let him look at the way in which the ordinary stocks of railways have risen during the last six months. Since that gift was made and the Railway Bill was passed the ordinary stocks of nearly every railway have risen about 50 per cent. The Government succeeded in making a present. Is there any denial? I am sorry to have drawn a hornet's nest, but I ask hon. Members who are in the fortunate position of owning railway shares to observe the results of their legislation last year?very pleasant results for the shareholder, but a charge on the whole of the community.

This year, at any rate, we may hope that there will be no more £50,000,000 for the railway interests. They hardly need it any longer. Last year also there was the £17,000,000 for the agricultural interests. That charge is fortunately not to be repeated this year, and it means a very satisfactory reduction of expenditure in prospect for next year. Even this year we see the same process going on. I would draw attention, first, to the railway interests, in order to show how they are to get something even out of this Budget which is to "save trade." They are the friends of the Government, and they stand to get their slice of the cake. When the Corporation Profits Tax was introduced three years ago it was shown to the House that the tax fell most unfairly upon statutary companies. It was proved that if the tax of is. in the £ on profits were levied upon statutary companies, the unfortunate companies would not be able to pass the tax on to the consumer. When that was made clear the Government, showing a ready appreciation of their friends, exempted the statutary companies from Corporation Profits Tax. No sooner had the statutary companies got their exemption than the railway companies got up too and protested that they were in the same position as the statutary companies, and that they would not be able to pass the tax on, and that the shareholders would have to pay it. The Chancellor of the Exchequer exempted the railway companies from the tax. That left the tax only on those businesses that could pass it on to the consumer.

The exemption of the railway companies was to extend to only three years. The companies were then controlled by the State. Now they are no longer controlled by the State. Their shares have risen by leaps and bounds. We are told that the grounds which induced the Government three years ago to exempt the railway companies from the tax are still there. They are. The companies cannot pass on the tax. Therefore, the grounds being the same, the railway companies are still exempted from the tax. That exemption amounts to about £3,000,000 a year for the railway companies and the statutory companies. So that the first persons to have a slice of this cake are the railway interests, which have strangled the trade of the country by heavy freight rates and fares and are preventing the revival both of trade and of agriculture. They are getting £2,500,000 by the extension of this exemption. Would it not have been possible for the Chancellor of the Exchequer, when making this present to the railway interests, to have got some sort ofquid pro quo from the railway interests, some reduction in freight rates for a save4he-trade Budget?

Then I turn to the next friend of the Government to get a slice of the cake, and that is the agricultural interest. The agricultural interest got £17,000,000 last year as a settlement for the withdrawal of the advantages which they enjoyed the year before. The amount that the agricultural interest will get this year is not great, but next year the farmers and the landlords, by having Income Tax levied upon their annual rental instead of their annual revenue, are to benefit, and the taxpayer is to lose £2,150,000, and as long as the Income Tax continues to be based on the annual rental, the State will continue to be £2,150,000 to the bad. The real disaster of a change such as this is that it is not easily altered again. If a man buys or sells land, he does so subject to certain charges upon the land. If I know that Income Tax is charged on the full assessable value I naturally pay less for that land, if I am buying it, than I otherwise should. But once the State comes along and says, "We will divide your Income Tax by two," I immediately put up the price of the land, if I am going to sell to somebody else if the Income Tax is less than it used to be, the buyer is prepared to pay a bigger price for the land, so, in the long run, it does not cheapen production or assist the man who produces food from the land; it merely adds to the capital value of the land throughout the country. The production of food is no more cheap than it was before. If you took away the Safeguarding of Industries Act and removed the tax on imports into this country, then not only the importer would benefit, but also the consumer. By this reduction on the Income Tax levied upon farmers, you are merely putting something straight into the landlords' pockets. Indeed, you are not giving the landlords £2,150,000 but 20 times that—20 years' purchase of the amount of the reduction. The right hon. Baronet the Member for the City of London (Sir F. Banbury) knows quite well that by this act of the Chancellor's we are giving away, not £2,000,000, but £43,000,000, and adding that amount of money to the land value of the country. Let me say, in passing, that the reduction of Income Tax upon farmers is not a real benefit to the man who farms and who, even at the present time, calculates his Income Tax really upon his profits. Any man who considers himself to be paying on more than his real income can supply his hooks to show his real profits and get his Income Tax levied upon the real profits. We think that should be done all through, and that every farmer should pay upon the real profits, and we object to a. change in the system which makes it more and more impossible to get at the real profits of the farmer.

The right hon. Gentleman the Chancellor of the Exchequer has done an even more extraordinary stroke of business for the improvement of trade. Being pressed by the vested interests, and no doubt approached by the Land Union, he has seen to it that amenity land should be treated even better than the land of farmers who try to make some use of it. Amenity land, I take it, includes parks that produce nothing but deer. It is, of course, regarded as monstrous that they should be charged upon what they might be worth if they were used productively. That would be most unfair, and therefore amenity land, which is not used for farming, because it looks so much more beautiful out of cultivation?at least, that is the meaning of the phrase, and, as far as I can read, the Bill, that is the sort of land referred to?is not even to be assessed for Income Tax at its full annual value, based upon rent. It is to be assessed upon one-third of its annual value, and, naturally, the tendency will be, and the temptation will be present to every landlord, to convert his land more and more into amenity land, and to use it less and less for productive purposes. It will be to his advantage that his land should not be cultivated because the less he uses the land, the lower will be the charge on it for Income Tax and the lower the charge for local rates. He will benefit all round, but the country will lose. There will be less production of food, fewer people employed, and more bad trade because, mark you, unemployment in the primary trades means unemployment throughout the whole country. If the agricultural labourer is thrown out of work, if the farmer is not given land to cultivate, and if he has to go to Australia in order to produce food, it is not only the farmer and the agricultural labourer who suffer, but the makers of agricultural machinery, the builders of houses, the railways, the distributing trades and all the people who otherwise would be satisfying the wants of these cultivators. They also are thrown out of work because the primary trade is deprived of the opportunity of starting work. These two presents to the landlords amount, as I have shown, to nearly £2,500,000 next year, but in fact being a relief of taxation upon land they amount to a present to the landed interest of this country of about £45,000,000 to £50,000,000. I congratulate the Land Union on the success of their pressure, but again I regret that the trade of the country will suffer by this donation to this deserving vested interest.

Then I come to the Excess Profits Duty. The Excess Profits Duty is going to be reduced this year by £2,000,000 and next year by £3,000,000 by adjustments. I am not prepared to argue the merits or demerits of that alteration. It is too complicated for the ordinary layman to understand, but I would point out that, there too, you have out of this Budget, out of this lucky bag, something drawn by another vested interest. The Federation of British industries is all right. The only benefit we get out of this Budget for the common people is a reduction of the tax upon tea. Th., workers of the country will receive in a full year by the reduction of the Tea Duty a benefit of £[...]00,000. The rest of the community in a full year will receive £61,000,000. That seems to me to be hardly a fair division of the benefits arising from the reduction of taxation. I think we may add that nearly every item in this Budget, except that relating to the Tea Duty, will not help the trade of the country half so much as if that particular reduction in taxation had been applied to the reduction of and towards the abolition of our liabilities. Our charge against the Chancellor of the Exchequer in connection with this Budget is that he has reduced taxation without. reducing expenditure, that he has made his reduction in taxation depend upon the thoroughly unsound financial expedient of putting an end to the repayment of debt, that, further, the reductions which he has been able to make by putting an end to the repayment of debt, have nearly all?five-sixths of them at any rate?been for the benefit of the vested interests of the country and not for the benefit of the consumer. Had the Chancellor wished to make his reductions really beneficial to trade, he would have dealt with some of those charges which fall upon the mass of the people, like the Sugar Duty and the Beer Duty and other charges which are at present adding enormously to the cost of living of the working man. A reduction there would have been far better for the trade of the community than the reductions the right hon. Gentleman has made.

5.0 P.M.

Let it be clearly understood the Labour party's views on finance, in spite of the aberration—temporary, I hope—of the Chancellor, are still perfectly sound. We have not been convinced, and I do not think we shall be convinced, by the speeches here to-day. We still believe, as the right hon. Gentleman's leader the Lord Privy Seal believes, that the best thing to do to restore the trade of the country is to start paying off debt and getting rid of the millstone which is round the neck of trade. We believe, further, that it is not only right to pay off debt, but it is right, in readjusting taxation, to do so in such a way that it cannot be transferred to the consumer. The Corporation Profits Tax, as at present levied, is a new form of indirect taxation. It is contrary to all books on economics as a direct tax, and is, in fact, the most insidious of indirect taxes. Those who cannot pass it on are exempted, while the public pay through the firm which nominally signs the cheque. Every benefit given to the landed interest merely increases the value of land and thereby makes higher the barrier between the man who wants to get land to start work?the man to whom land is the raw material, which he must get in order to start work. We suggest that taxation should be so altered as to fall upon vested interests and monopolies, that they should not pass it on to the consumer and that a solid, definite effort should be made to pay off the capital indebtedness of this country by a general levy upon capital. A great deal of nonsense is talked about this levy upon capital by people who do not want to pay it. I think it is just and proper, that in asking the House to reject this Budget, we should indicate what we mean by a capital levy. Suppose the wealth of the country, as a whole, to be £20,000,000,000, which is more or less what it is, we find that roughly.£20,000,000,000 of wealth is at present subject to £8,000,000,000 of National Debt. The true wealth of the country is not altered if you reduce nominally the wealth of the individual and, at the same time, reduce the internal indebtedness of the country as a whole. Any transference of capital from assets to liabilities, which is accompanied by a reduction in the National Debt, really does not alter the national balance sheet in the very least. It is not going to make trade any more difficult to carry on, so long as the proceeds of your capital levy are ear-marked and reserved for the reduction of the National Debt. So long as that is so, the position of the country as a whole remains exactly as it was before.

Mr. A. M. SAMUEL

As this capital is in existence but is mostly immobile, and not in any form of coin, how is the State going to get it, to earmark it and use it, unless it cuts the trade off?

Colonel WEDGWOOD

It need not necessarily be used immediately for the repayment of debt at all. All the difficulties are met in the case that the hon. Member mentions if the company or the business concern waters its capital with a certain number of State property shares. The position is exactly met, and, indeed, any business company in this country today which finds itself with depreciated assets acts wisely at the present. day if it reconstructs itself, writes down its capital, and starts paying dividends again, rather than goes on, as we are going on. attempting to carry on a business, dividend-paying concern while our assets have depreciated, without meeting those debts.

Mr. SAMUEL

That is the very opposite of what you just proposed.

Colonel WEDGWOOD

Really a, capital levy is a reconstruction of the finances of the country, wiping out. the National Debt.

Mr. G. BALFOUR

Will the hon. and gallant Gentleman say what is wealth?

Colonel WEDGWOOD

Wealth is that which is produced by labour out of land. [Laughter.] Can anybody give a better definition? That is the definition taken by all economists, and apparently it is laughed at by people who know nothing whatever about it.

Mr. SAMUEL

What about the fishing industry!

Colonel WEDGWOOD

Not only is a capital levy sound from the point of view of the nation as a whole, but a capital levy is already in operation in this country. The Death Duties at the present time are exactly similar to the capital levy that we propose, but the Death Duties fall upon occasion?generally on the worst possible occasion —and a capital levy would fall at regular intervals. The Death Duties, unfortunately I think, although they are a charge on capital, are not used for the repayment of debt, but for the ordinary expenditure of the country. To my mind, any change from those Death Duties, levied on the inconvenient occasion, used for normal revenue and spent in normal expenditure, which should substitute for that a capital levy paid at regular intervals, graduated exactly. as the Death Duties are graduated, and earmarked for the payment of debt?any change of that sort, giving greater security, greater stability, and greater certainty to trade, would be for the advantage of the whole community and would lead to exactly what all financiers in this House know is the right thing, namely, the steady repayment of debt and the steady grounding upon a firm foundation of the finances of this country.

I have dealt, perhaps at undue length, with the question of the alternative method of paying off debt, and I do not propose at this hour to spend any time on the changes in taxation that we desire, beyond saying this, that we would certainly, in levying our taxation?the taxation that would be necessary even after the debt was paid off?levy it in such a way that it could not be transferred to the consumer, instead of selecting, as does this Government, those taxes from all taxes which can best and most certainly be transferred to the community as a whole. Day after day I see rich men getting up at company meetings and at after-dinner performances and saying that they are paying out of their income two-thirds or three-quarters of their income in taxation. They are doing nothing of the sort. They are signing a cheque, it is true, but they are collecting it from all of us. These taxes which are nominally levied upon the rich are so levied upon them now by this Government that they can be passed on to the consumer as a whole, and here, as always, the beggar pays for all.

Mr. MYERS

I beg to second the Amendment. I follow the hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) in asking for the rejection of this Bill because I feel that the Finance Bill, and the Budget upon which it is based, differentiate unfairly between the various sections of the community. Like many other Budgets which have preceded it, it hits the poorest of the country hardest of any. It is to one or two of the smaller matters which are included in the Finance Bill that I desire to draw attention this afternoon. There are several taxes which are creating considerable interest among large sections of the community in this country. I hold no special brief for that section of the community to whom I am going to refer in the first instance, namely, the members of the various clubs in the country, but I make no excuse for referring to what I believe to be the totally indefensible tax upon the clubs of the country. They had a tax levied upon them a year or two ago of 6d. in the £ upon their receipts. Those receipts have been increased considerably, not because of the additional volume of the articles they are disposing of, but the increase in their receipts, which has seen stupendous, has been due to the fact that heavy taxes have been put on the articles they sell, and the 6d. in the £ continues, with the result that where these clubs paid somewhere in the region of from 30,000 to £60,000 during the past year or two, the prospective call on the clubs of the country is somewhere in the region of £350,000. It is a tax upon a tax, and from that point of view it 17 difficult to defend its operation.

Then we come to the Entertainments Duty. Considerable pressure is being exerted by amusements caterers throughout the country upon the Members in the various constituencies, and here again it is upon the poorest of the people and upon the cheapest amusement that the burden very largely falls. A 5d. admission ticket into an ordinary cinema display pays 2d. in taxation. A 12s. seat at a London theatre?those theatres where these seats are very seldom vacant —pays something in the region of 2s., and the rich people pay 2s. in 12s., while the poor people pay double that amount upon their charge for admission. The Entertainments Duty is inequitable in its operation as between these sections of the community. The hon. and gallant Member for Newcastle-under-Lyme has referred to the inequity which comes from Income Tax as against the indirect taxes on consumers of commodities which the people require. I have never been a convert to the belief?or at least not to the extent that we have been asked to accept it?that this 1s. off the Income Tax was going to stimulate trade development. I believe that there is plenty of money for trade in this country, and the Chancellor of the Exchequer himself, during the last Budget discussion, said something to the effect that he was very much surprised at the large sums of money which were available where any attractive project presented itself. I think the same holds good to-day, and I should like to give one or two extracts from various newspapers during the last week or two which prove the fact that even now, if an attractive issue is presented to the public, the money is there for development in any direction: Those may count themselves lucky who were quick enough to secure some of the £1,500,000 7 per cent, first mortgage debentures issued by the Powell Duftryn Steam Coal Company; a sound and attractive offer. Rapid over-subscription was also the state of the Kellmer Partington paper pulp 7½ per cent. debentures, while the Poole Corporation issue of £359,000 5½ per cent. stock is sad to have been subscribed more than ten times over. £250,000 of the Calcutta Tramways second debentures were offered for subscription last. 2ek, and for the allotment small applicants fared badly. Those who applied for less than £400 received nothing, and on applications for £400 to £1,000 only £100 to £200 has been allotted. The tremendous rush for high-class issues is sustained. Lanarkshire's loan of £2,500,000 was over-subscribed in a few hours, Bristol's £1,000,000 was applied for fifteen times over, and the Union Castle debentures were snapped up as soon as the doors wore open. The outstanding feature of the past week has been the avalanche of subscriptions to the £5,000,000 P.L.M. Railway loan. Officially, the list was open for less than a quarter of an hour, yet it is estimated that applications amounted to something like £50,000,000. The Belfast Corporation received a cordial reception in the case of its offer of 1,000,000 5i per cent. at 96; and the Peter Robinson issue of 750,000 7 per cent. £1 shares was likewise heavily over-subscribed; and the comparatively small issue of 558,360 in £5 shares of the Yorkshire Electric Power Company was covered fifteen or sixteen times over. The Anglo-Persian Oil Company call for new capital, suggesting a likelihood of 30 per cent. interest, resulted in £75,000.000 being subscribed in a few hours. There is plenty of money for trade when those people who are looking for reasonable investments are sufficiently attracted by the prospectuses which are presented, and I think the effect of the 1s. off the Income Tax, which is going to relieve the trading interests of this country to the extent of £50,000,000 a year, from the point of view of the revival of trade, has been altogether over-estimated by those who have advocated that point of view. I said my objection to this Bill was due to the unfair differentiation between one section of the community and another. The Income Tax reduction represents a sum of £50,000,000, which is about equal to the whole of the taxes on tea and sugar. I find that the Sugar Duty for the coming year is estimated to bring in £35,000,000 and the Tea Duty, after the reduction has been made, nearly £12,000,000, so that if the 1s. Income Tax had not been removed and we had been desirous of applying that reduction to the taxation on the foodstuffs of the people, we could have removed the entire taxation on tea and sugar by leaving the Income Tax alone at the present time.

There used to be a school of politicians who advocated, frequently and tenaciously and with some spirit, the demand for a free breakfast table, but somehow they seem to be hiding their light under a bushel in these days, although I am thinking that there is just as much virtue in that cry to-day as there ever has been in our time. It is often asserted, and it is often hurled at us on this side of the House, that we promote what are said to be revolutionary doctrines. I am no revolutionary, but I know a short cut to a revolution in this country, and that short cut is to be found in the direction of telling the people of the country how much they are taxed and what they are taxed for, and if that belief could be implanted in the minds of the people, there would soon be a situation arising which would require some response to be made to the demand of the people under that head. I wonder if it be generally understood or realised by the people of the country that on 1 lb. of tea, 4 lbs. of sugar, two pints of beer and two ounces of tobacco, 3s. 7d. is yielded in taxation, It is a stupendous sum comparatively, and if we can get that into the minds of the people, they will soon demand some alteration. Because of the inequality in the treatment of the wealthy people and very poor section of the population, I think this Finance Bill, and the Budget on which it is based, are deserving of our criticism and condemnation.

We hear a great deal about reducing taxation. We are entitled to ask those who demand that expenditure shall be reduced, where and at what point will they make a reduction? There is plenty of loose talk upon political platforms about reduction in expenditure, but where and at what point? We are under no misgiving upon that matter, and the first thing we would urge, on the lines of the hon. and gallant Gentleman who submitted this Amendment, is that there shall be a reduction in the Debt. When we have reached a point that interest on Debt and Naval and Military expenditure at the present time take roughly 12s. 6d. out of every pound of national taxation, there is very little left in other directions where expenditure can be cut down, at least to any extent, which will make any great impression upon the burden of taxation. The Government are not reducing the Debt. Not only have they reduced the Sinking Fund for the coming year, but, in response to a question, the Financial Secretary to the Treasury, I believe, a couple of days ago, announced that in 1919 the National Debt increased by £708,000,000.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hilton Young)

If my hon. Friend is going to quote me, he might quote what I said.

Mr. MYERS

I am only mentioning the bare fact that the National Debt in 1919 increased by £708,000,000, and the hon. Gentleman gave figures which illustrated that point. He qualified it by saying that £140,000,000 of that was due to the conversion of one form of National War Loan into another, and this financial manœuvring which is going on?and I use the word with all the implication it conveys?of paying one person off and borrowing from another—[An HON. MEMBER: "Less interest"! An hon. Member says "less interest," but we are converting National War Bonds, which fall due in October, into another form of War stock. We converted it at 95, and all the large financial corporations in the country who hold substantial volumes of this War Stock axe making £5 out of every £100 in the process of conversion. While we are converting at a lower rate of interest we are adding to the capital Debt, and, so far as I can see, to the general burden of interest in the years to come. If we are going to have a Budget which will be clear of these inequalities, if we are going to have a reduction in taxation, there is one line of attack which needs to be made, and that is an attack on this great burden of Debt. While hon. Members ridicule those who present the Labour point of view of a capital levy, is there any alternative they have to present? Can this country carry for an indefinite period £400,000,000 a year interest on War Debt.? Can we have a revival of trade, can social reconstruction have a decent opportunity while that burden is round the country's neck? If not, and if hon. Members believe that, then it does not break any ice to ridicule the hon. and gallant Member for Newcastle-under-Lyme. If they consider a capital levy to be unsound, we are entitled to ask for an alternative; they must tell us what is desirable to be done in order to remove this great burden from the necks of the people of this country. On these grounds I second the Amendment.

Mr. ASQUITH

I am not going to occupy the time of the House for more than a few moments, because, in regard to the general policy of the Budget, I have nothing to add, after mature reflection, to the impression it made upon me when it was first introduced, which I then endeavoured to convey to the House. I think the surplus?the supposed surplus —upon the realisation of which rests the remission of taxation, urgently needed, I agree, both as regards the Income Tax and as regards indirect taxation, appears still to be in the realm of speculative conjecture. After such conclusions as I can draw from all the available evidence, I doubt whether the forecasts both of revenue and of expenditure are likely to be realised. Let me say at once, I shall be delighted if they are. If my right hon. Friend's gamble comes off, no one will be more pleased than I shall, but, after some considerable experience in these matters, I do not think he has provided to the House of Commons adequate evidence to justify one or the other. But, as I say, I hope my anticipations may be falsified by the result.

That is not the point to which I wish to direct the attention of the House. It is admitted by the Chancellor of the Exchequer that he can only obtain a surplus, whatever his Estimates may turn out to be, by suspending the Sinking Fund, and by re-borrowing money for the purpose of meeting obligations which mature within the next 12 months. I observe, although I was not, in the House at the time, that, in the course of the last Debate, he used these words: I admit that my right hon. Friend the Member for Paisley knows much more about tinkering with Sinking Funds than I do."ߞ [OFFICIAL REPORT, 3rd May, 1922; eel. 1423, Vol. 153.] Let us see what I know about tinkering with Sinking Funds. I was Chancellor of the Exchequer for three years, and during those three years, 1906 to 1909, I reduced the National Debt of the country by over £41,000,000. I raised the annual provision for Debt redemption to a height, £29,500,000, it had never reached before, and, taking the average for the three years in which I was Chancellor of-the Exchequer, we paid off something like £14,000,000 to £15,000,000 of Debt every year. That cannot be disputed. That is a very good way of tinkering with the Sinking Fund. I know I am coming, to a very delicate matter, but the charge made of tinkering with the Sinking Fund, as I think the right hon. Gentleman will agree, was not really addressed to me. I was succeeded by another Chancellor of the Exchequer. I admit to the full I have never repudiated in any way my responsibility as head of the Government for the action, administrative, legislative, or whatever it might be, of any one of my colleagues, particularly in the domain of finance. But I was succeeded by another Chancellor of the Exchequer, and in the Budget speech, which I made in 1908?my last Budget speech?I was, in fact, First Lord of the Treasury?I pointed out that, after the unexampled efforts which our Government had made during the three years for the reduction of Debt, it would be perfectly legitimate for my successor not to give up the repayment of Debt, but to slacken the pace, and I. shall always say so under similar conditions, in order that, out of the full and flowing revenue of the country, a portion of it should be applied, either to the remission of taxes, or, to that which was in those days of importance?and I think is of importance now?the financing of social reform. Let us see what happened. The Prime Minister is not here. He was Chancellor of the Exchequer during the whole of that time, and the attack made by my right hon. Friend opposite was an attack upon him. But I maintain that his finance was perfectly sound. During the whole of those years in which he was Chancellor of the Exchequer?that is to say, from 1909 until the outbreak of the War?with one exception, we never paid off in any year less than £10,000,000 of Debt. There was one exception, I agree. That was the year when the House of Lords threw out the Budget and dislocated the whole finances of the country?the year 1909-10. In that year, we had to borrow, temporarily, £21,000,000, but, as the official paper, issued on the 4th August last year by the Treasury, says: This item represents temporary borrowings and Ways and Means advances rendered -necessary up till the passing of the Finance Act, 1909–10. The whale sum was repaid on 13th September, 1910. These temporary borrowings were necessitated by the action of the House of Lords.

Sir F. BANBURY

But did not the House of Commons and the country afterwards confirm that action?

Mr. ASQUITH

Does the right hon. Baronet consider that observation relecant?

Sir F. BANBURY

Yes.

Mr. ASQUITH

I am talking about Debt, about the Budget of 1909, about the provision being made for the repayment -of Debt. I was pointing out that, with the exception of those temporary borrowings, "repaid in the course of the year, there was no year during which when the -present. Prime Minister was Chancellor of Exchequer we did not repay Debt at the rate of more than £10,000,000 a year. What becomes of this charge of tinkering -with the Sinking Fund? It is claimed by the right hon. Gentleman that he and not the Prime Minister is the true successor to the financial purists of the past. He can settle it with the Prime Minister. After all, however, that is a matter of the past. I want to deal with recent.years which are strictly relevant to the same subject-matter—I mean that of debt ?and as to which, I think, the House of Commons is entitled to a little further information than it has at present.

The Chancellor of the Exchequer claims he has paid off £320,000,000 of debt in two years. As a matter of fact, however, the total debt of the country as it was on 31st March, 1919, four months after the War had finished, and the total debt on 31st March of the present year show substantially very little difference. Why? My right hon. Friend has explained the reason, Let us come down to the 31st December, 1919. The Government had borrowed substantially £320,000,000.

The CHANCELLOR of the EXCHEQUER (Sir Robert Horne)

Not on 31st December, but in the financial year following the Armistice.

Mr. ASQUITH

The right hon. Gentleman took the date of 31st December?

Sir R. HORNE

I do not wish confusion to arise as to the date. In the year 1919–20, £320,000,000 were borrowed by the Government, and to that extent the debt was increased.

Mr. ASQUITH

I do not want to dispute about dates. The increase in the indebtedness of the country, says the right hon. Gentleman, between 31st March, 1919, and 31st March. 1920, was 320,000,000.

Sir R. HORNEindicated assent.

Mr. ASQUITH

It is that £320,000,000 only that has since been wiped out?or claimed to be wiped out, as I shall endeavour to show in a moment. I am very glad there is agreement about the actual facts. The right hon. Gentleman advanced various reasons why this admitted addition had been made to the debt in the financial year after the conclusion of the War. There were the necessary expenses incurred by demobilisation of the Army, removal of bodies of troops from place to place., etc. But that does not account for it, except I agree, in part. It was largely due, and substantially due, to adventures undertaken by the Government, costly adventures, futile adventures, adventures which have since been abandoned, in Russia, Iraq, Persia and elsewhere. It was really a renewal of borrowing for War purposes. The whole claim now made is that this addition to the enormous debt in the 12 months following 31st March, 1919, has now, at last, been wiped out. That is all.

There is another question on which our information is still defective. How much of that alleged reduction is due solely to the realisation of capital assets? I hope the Chancellor of the Exchequer will give us a report or return, something intelligible; figures which will show what were the capital assets, I mean war assets, in hand on 31st March, 1919, and how much have been realised year by year in the three years following; how much of what has been realised has gone in the form of Appropriations-in-Aid, and what at this moment is the balance left? I have here the statements made by the Chancellor of the Exchequer during those three years. I take the Budget statement of 1919. This, I think, was a Budget of the Lord Privy Seal. A very remarkable statement it is. The then Chancellor said: As regards the £200,000,000 which I have taken as the probable receipts from Vote of Credit assets this year, this figure, of course, does not represent the total amount of these assets nor even the total amount expected to he realised in the present year. It is the amount of cash which we hope will be paid into the Exchequer. Then the right hon. Gentleman goes on: I will give the figures of the Appropriations-in-Aid. In aid of the Ministry of Munitions, £140,000,000; in aid of the Ministry of Shipping, £50,000,000; of the War Office, £50,000,000; of the Admiralty. £14.000,000; a total of £254,000,000, making, with the £200,000,000 which I expect to receive into the Exchequer, a total for the year of £454,000,000.' ߞ[OFFICIAL REPORT, 30th April, 1919; col. 182, Vol. 115.] That was in the first year. Let me go on to read further from my right hon. Friend's statement: Even that does not exhaust the amount of the credit which we expect to realise. I put the total value of these assets outstanding on 31st March last at approximately £800,066,000. Yes. But he is going to realize £454,000,000 in the following financial year. There will, therefore, be a further sum to come in in future years. The £200,000,000 estimated for this year is necessarily a provisional figure."ߞ[OFFICIAL REPORT, 30th April, 1919; col. 183, Vol. 115.] That was the statement in 1919. The House will see that the amount of £454,000,000 was out of the estimated total of £800,000,000. We next come to 1920. The right hon. Gentleman was still Chancellor of the Exchequer. He then said, in his Budget statement: Vote of Credit realisations show an increase of £51.,300,000 on the original Estimate, mainly owing to unexpectedly large receipts from the Ministry of Shipping and the Ministry of Munitions."ߞ[OFFICIAL REPORT, 19th April, 1920; col. 72, Vol. 128.] If you add the £454,000,000, that is over £500,000,000 received. Now we come to the next year, 1921: Of other items I need mention only the special miscellaneous receipts. They were about £14,000,000 below the Estimate of £302,000,000, and again that decrease may be accounted for by the depression and the lower prices at which realisation could be effected."ߞ[OFFICIAL REPORT, 25th April, 1921; col. 69, Vol. 141.] That gives us £288,000,000. I add these three figures together, £454,000,000 £51,000,000 and £288,000,000, and they come to £793,000,000. I really do not know, and I cannot yet gather from the statement of the present Chancellor of the Exchequer what amount he anticipates to receive by realisations in the current financial year.

Sir R. HORNE

Altogether, about £90,000,000 of Miscellaneous Receipts.

Mr. ASQUITH

That is a totally different thing. I am really asking for an explanation. Let me tell the right hon. Gentleman the predicament I am in. You have £90,750,000 Miscellaneous Receipts. A great many of these are not in any sense derived from realisations of War assets. Let me come to the items given by my right hon. Friend. He says that the interest on Treasury Notes, and Disposal Commission receipts will be £42,000,000.

Sir R. HORNE

Just about.

Mr. ASQUITH

And the items include: Ministry of Shipping receipts, £29,000,000, and Ministry of Food (Sugar and Wheat Commission), £19,000,000.

Sir R. HORNE

Is the right hon. Gentleman referring to the figures realised for last year and the figures which were last given? The figure for this year is a different one.

Mr. ASQUITH

They are last year's figures. I agree that they are not all in the same category, and we should like to know what is anticipated for this year. Before we enter the Committee stage, I suggest it is very desirable that we should have these figures in a special Paper, because the House is very much in the dark with regard to them. I may be wrong by £100,000,000, and I do not know, but as far as I can make out from admitted items, there is something approaching a total value of these stores amounting to £800,000,000, which have been realised.

Mr. CHAMBERLAIN (Leader of the House)

And I was told that I was foolish for expecting that amount.

Mr. ASQUITH

It was a very good Estimate. But I want to know how much is still outstanding. At any rate, £800,000,000 is a large figure?I do not care whether it is taken in comparison with the 31st March or the 31st December, 1919. I cannot see how you can say that you have reduced Debt when the facts disclose that you have really been selling capital assets. You have really been treating as revenue what should he treated as the sale of capital assets. I want the Chancellor of the Exchequer to tell us what claim he actually makes in the way of reduction in view of those figures. Will the right hon. Gentleman consent to give us a return showing for each of the three financial years, 1919. 1920, 1921, in detail the amount which has been realised in each of those years, and the amount which he hopes to realise in the future from the sale of capital assets. My hon. Friend the Member for Greenock (Sir G. Collins), who is an authority on these matters, says it really means something like 6d. on the Income Tax, if you include the interest on these realisations and work it out in terms of Income Tax. In reply to those who jeer and gibe at myself and the Prime Minister for tinkering with the Sinking Fund, I say that that is not a very effective retort. When did we borrow money for social reforms? I hope the Chancellor of the Exchequer will let us know what he has to say on these points.

Sir R. HORNE

I have no complaint at all to make in regard to the tone of my right hon. Friend's speech, nor of the question which he has put to me with regard to certain figures which appear in the Budget statement. I would like to say at once that I am prepared to give the right hon. Gentleman the type of return which he desires, but he must bear certain things in mind. It is perfectly true that in the first year after the Armistice there was a considerable increase in the debt of this country by a figure amounting to about £320,000,000 sterling That was due, in the main, to War charges. I do not think that my right hon. Friend would suggest, and I am certain that he could not reasonably suggest, that the War could have been brought to an end on Armistice day, and that the charges for the succeeding years should be peace-time charges. For some time after the Armistice we had an army running to millions of men. What were we to do with them? Were we to pay them off and bring them home, or leave them where they were? I am sure my right hon. Friend would not suggest anything of the kind.

An enormous expense was incurred first of all in disbanding the Army, which had to be done slowly in order to allow the men time to be absorbed on their return to civil life. Those with long memories will recollect the immense difficulties with which we were faced at that time. There were great difficulties with regard to transport. The initial difficulty was not being able to bring them home rapidly enough in order to save the great expense we were incurring. That accounts for the borrowing which was forced upon the Government during that year. My right hon. Friend says there were other items which he regards as unnecessary. He says that we were engaged in adventures in many parts of the world and he especially mentioned Russia.

Let me recall the state of things in Russia. We had a force at Murmansk, and we could not bring it away at once. Does my right hon. Friend suggest that we should have left that force there without sending out any force to save these men? If he does not suggest that then his argument is not well justified. No doubt there were other instances in Russia, and I have no difficulty whatever about them. We had Allies in Russia. The forces of Russia had been used as allies for Britain, France and Italy in the struggle in which we were all mutually engaged. A large body of people in Russia had supported us against the German invasion and were we to leave these forces at the mercy of the Bolshevist Government? If not, then the expense which we incurred during that period was undoubtedly justified. You may say that a point of time arose at which a different policy should have been pursued, but I say that no party in the State would have supported us at that time if we had precipitately withdrawn every man we had in Russia and left those who had fought with us so gallantly at the mercy of their enemies.

My right hon. Friend the Member for Fife has criticised the use we have made of the money realised from War assets. I think we can all appreciate the argument for treating these as capital account rather than for revenue account. My right hon. Friend knows very well that the accounts of the nation are not kept as you would keep the accounts of an ordinary trading firm. [HON. MEMBERS: "Hear, hear!"] Believe me, it is impossible to treat the Budget of the nation as you would treat the budget of an ordinary trading firm. What I say is that if you are going to treat the money realised from these capital assets as capital, then equally you should put into a special account all the expenditure incurred in connection with the winding up of the War, and the enormous burdens we are now bearing as purely war charges.

A great many claims for compensation had to be satisfied owing to the cancellation of contracts, many of them being made whilst my right hon. Friend was Prime Minister, and all these claims had to be met. There were innumerable cases of that kind, and all these accounts are not yet cleared up. We have had to pay considerable sums, even during the present year, to the railway companies under contracts made by the President of the Board of Trade who, at the beginning of the War, was serving under the right hon. Gentleman opposite. These had still to be satisfied, and when the account comes to be dealt with it is perfectly plain that you must set one side of the account against the other, and it is quite reasonable to say that in considering the expenditure caused by the War, you are entitled to take into account the amount realised by the sale of the assets which have come down to us from the War.

6.0 p.m.

I turn now to another point which my right hon. Friend made in common with the hon. and gallant Gentleman the Mem- ber for Newcastle-under-Lyme (Colonel Wedgwood) who spoke for the Labour party. They profess to deprecate the suspension of the sinking fund and indicated that they saw evidence that we were really borrowing in order to meet our current expenditure. I am not sure whether the right hon. Gentleman opposite still maintains that point, but I think it is perfectly plain that what we are doing does not partake of that character, because although we are not paying off any debt, we are not increasing our debt. After the speech of the right hon. Gentleman I call him as a witness in favour of that course. He does not profess to say that you must always pay off debt. He does not say that you must always pay off the same amount of debt. He has recited his own personal experience in a time of prolific revenue and good trade and peace, when he was able to devote large sums in each year to paying off debt. By Statute he fixed the amount at a higher figure than it had ever previously attained. Having fixed it at that figure he does not profess that he maintained it. You have to deal with your debts, he said, according to your capacity at the appointed time in the circumstances as you find them. He found he required certain sums of money for social reform. He also wanted some of the money for buying shares in the Anglo-Persian Oil Company, so he suspended this statutory obligation in order to meet those charges.

Mr. ASQUITH

I raised the fund for the reduction of debt to £29,500,000, and I said before I left the office of Chancellor of the Exchequer that in the condition of the country it was no longer necessary to continue repaying debt on that scale, and the amount repaid was reduced to £10,000,000 a year.

Sir R. HORNE

Yes, my right hon. Friend was lucky enough and happy enough to have a large sum of money at his command, but he did not go on paying at the rate he had previously been paying. He did not provide for his social reforms out of current revenue, but he suspended his Sinking Fund, or rather he lessened it, in order to meet the obligations he was incurring in connection with his new social reforms. Is it not perfectly plain to the House that the right hon. Gentleman did on that occasion just what we are doing to-day? We are deal- ing with circumstances as we find them. We are paying off as much Debt as we can pay. It is true that in the existing circumstances we are not in a position to pay off any at the present time except by increasing the burdens on the country to an extent which the country could not bear. If my right hon. Friend had taken the purist attitude during the existence of his own Government which he professes to take to-day, he would have said: "We must raise the payment of Debt to a higher figure; let us maintain it at that figure, and take out of the taxation of the country sufficient sums of money to pay for our social reforms." But he did not choose to take that course. He said, on the contrary: "You must deal with circumstances as you find them, and you must not impose greater burdens on the country by way of taxation than it can bear." We find ourselves to-day in a condition unparalleled with anything that obtained during the right hon. Gentleman's experience. He never had a year, either as Chancellor of the Exchequer or as Prime Minister, in which he had to meet such obligations as those with which we are faced to-day. It is easy to take these otiose views of finance when you are in a particularly happy position. It is easy to come here and criticise us in this way when he was under no obligation to find money to meet the national burdens such as we had to meet.

Mr. ASQUITH

I was gratuitously and wantonly charged with tinkering with the Sinking Fund, and that is all I was replying to.

Sir R. HORNE

And my riposte was to the attack the right hon. Gentleman made on me, for suspending the Sinking Fund. I think at present we may cry quits on that.

Mr. ASQUITH

Not at all.

Sir R. HORNE

I think I have dealt with all the points raised by the right hon. Gentleman. I turn now to the arguments of the hon. and gallant Member for Newcastle-under-Lyme who spoke for the Labour party and who also took his stand upon the purist doctrine of continuing the plan of paying off debt without regard to the conditions of the country's finance. I do not know at what figure the hon. and gallant Member would put the amount which ought to be paid off from year to year. Is it to vary according to the, country's circumstances, or is it to be some stereotyped figure which the hon. Gentleman would fix% It seems to me his doctrine is hopelessly impracticable. My hon. and gallant Friend argued first of all on a basis of theory, but then unfortunately for himself he drew a picture of what he thought would be the result of the suggested course of action. He said we would find ourselves in the position of having to pay a larger interest for our Treasury Bills and that we would find it very much more difficult to raise the money we required for public debt. It was very unfortunate for the hon. and gallant Gentleman that he had to argue on facts instead of theories. My Budget Speech was made on the 1st May. What has been our experience since then with regard to the prices of Treasury Bills which have been issued? They have become cheaper, therefore there is no foundation for the theory which the hon. and gallant Gentleman has advanced. Some people who took a very apprehensive view told us also that the exchange value of the £ sterling would be depreciated by this proposal. Again the facts absolutely refute the theory because the value of the £ sterling has in the same period increased.

Colonel WEDGWOOD

Then why not borrow more money? Why not increase your national debt?

Sir R. HORNE

The question is not to be solved in that way. The fact is that the market takes into account the circumstances in which the country is, and it bases its view of our credit upon the general soundness of our financial position. I venture to think that the position in which we are to-day has in no way been impaired by the proposals which I made in the Budget speech on the 1st May. My hon. and gallant Friend says we have clone nothing for anybody but well-to-do men in this country. He suggested that the reduction of the Income Tax was entirely a modification of the burdens of the rich, and that we ought, indeed, to have applied whatever money we could save by this method of suspending the Sinking Fund to the remission of duties on tea and sugar. We have done something for tea, coffee, cocoa and chicory, all of which affect most of the households in this land. It is entirely a fallacy to suppose that all Income Tax payers are rich men. A single man with an income exceeding £135 pays Income Tax. A married couple with no children, whose income exceeds £225, pay Income Tax. Would you call these wealthy people? A very large number of the Income Tax payers of the country to-day are, in fact, poor men, who find the struggle for existence almost. more than they can stand. It is absurd to say that even in the class of people directly affected one is dealing only with the wealthy or well-to-do in this matter. The proposition is very much bigger than that.

Who were the people who mainly ask me to reduce the Income Tax if I wanted to benefit the greatest number of people in this country? They were the employers of labour in this country. They were the men who to-day find themselves unable to offer employment to the masses of people they used to employ. They said that if I wanted to do anything for industry or trade it could best be done by taking something off the Income Tax and giving them more financial facilities by means of which they could offer more employment to the people. I do not imagine there are many parts of the House in which that argument is contested. I have already referred to a speech, which I read many years ago, made by the right. hon. Member for Paisley on the untoward and ill-effect of a high Income Tax on trade and industry, and I therefore may cite the right hon. Gentleman as a. witness in favour of the proposition I have advanced. I could cite speeches from other hon. and right hon. Members beside and behind the right hon. Gentleman on the same lines and to the same effect. The real truth is that, although we cannot say that taking Is. off the Income Tax will have a very great effect—it is too much to say that I admit—on the trade of this country, at least it makes a start in the right direction, and I am perfectly certain it has given hope to many people, who now trust that we have, perhaps, turned the corner of the worst trade depression the world has ever known.

The hon. and gallant Gentleman went on to attack individual items of the aid which he said was given to particular interests in this country. He spoke of the case of the railway companies, which he described as receiving gifts from the present Government. He said that grants in aid were given to them without cause or reason, except that this nefarious Government wanted to help what he described as its own friends. I do not. believe I have a friend among the railway companies to-day. I have only to recall the recollection of the right hon. Baronet the Member for the City of London (Sir F. Banbury) to a meeting at which the railway directors came to settle accounts with me. I do not believe I had a single friend in that room at the end of the meeting, because, in point of fact, it was my duty to resist the claim that was made, and in the end it was settled for something like about one-half of what the railway companies said they could actually exhibit accounts for. That was not a gift or a grant-in-aid. It. was an absolute obligation under which the country lay as the result of a contract made by the President of the Board of Trade in the Government of the right hon. Gentleman opposite. Were we to disavow these contracts? I think my hon. and gallant Friend should revise his language.

Colonel WEDGWOOD

I think the right hon. Gentleman really ought to read the Colwyn Report.

Sir R. HORNE

I am sure there is nothing in that Report antagonistic to what I am putting before the House. I do not think any member of the Colwyn Committee would disagree with the compromise which I succeeded in making with the railway companies. I see a member of that Committee here this afternoon, and I venture to suggest that the settlement which was made by the Government was regarded by him and most of his colleagues as a very fair one.

Sir FREDERICK BANBURY

May I point out that the Colwyn Report said that, if the railway companies went to law, they might get something like £160,000,000, whereas the Government allowed, I think. L60,000,000—I do not remember the exact figures.

Sir R. HORNE

Yes, that is so. I will only say, before I leave the question of the railway companies, that some people may have been fortunate enough to gain by the advance in the value of railway companies' stocks, but they had an opportunity which was abnormal, be- cause, undoubtedly, stocks were unduly depressed by the apprehensions which railway stockholders felt as to what was going to take place—depressed, not upon their merits, but upon these apprehensions. The hon. and gallant Gentleman should remember one of the provisions of the new railway legislation, which is, that, in so far as the railway companies make any revenue in excess of their revenue of 1913, four-fifths of it has to be given back in reduction of the freight rates, and only one-fifth of it can go to the shareholders. I do not think the hon. and gallant Gentleman will say, after that, that the Government has been any particular friend to the railway stockholder. The hon. and gallant Gentleman had, of course, his criticism of the proposals with regard to agricultural land and also to amenity land. I have seldom listened to any speech of the hon. and gallant Gentleman since I entered this House in which he did not. at some stage of his argument produce an illustration from the inequalities of the land system of this country, and the definition which to-day he gave us in regard to wealth reminded one of some of the old controversies in which he took such a prominent part. I will only say in defence of the proposals which the Government are making that, if the hon. and gallant Gentleman would take the trouble, as I have done, to investigate the accounts of landed estates and the miserable pittance which is derived from them in these days, he would come very readily to the conclusion that we have been none too generous in the provisions which are made in the present Finance Bill to meet the emergency in which they find themselves.

Then the hon. and gallant Gentleman referred to the one remedy which the Labour party proposed for all our financial ills—he suggested that we ought to indulge in the luxury of a capital levy. I have always found the difficulty about a capital levy to be that nobody can explain to me how it is going to produce any money. Immediately you begin to impose such a levy, all the capital on which you would impose it begins to disappear. I do not mean that it disappears bodily out of this country, but the value disappears. The capital is so depreciated that, instead of getting something by the levy, you really decrease the wealth of the country, as well as decreasing the confidence on which all wealth depends. The best illustration I can find of what will happen under a capital levy is that which one finds in the classics with regard to the case of Tantalus, who was surrounded by water which he wanted to drink, but which he never could reach.

Mr. A. M. SAMUEL

You had it in the Excess Profits Duty even more closely than that.

Sir R. HORNE

The case of Tantalus would be absolutely reproduced in the case of any Chancellor of the Exchequer who sought to impose a capital levy. The capital he sought to reach would always disappear as he attempted to snatch it. The hon. and gallant Gentleman has a plan of his own, but he was met by a query from the hon. Member for Farnham (Mr. A. M. Samuel) as to how he was going to work it out, since most of the capital of this country is entirely immobile—is not represented by cash, but by factories, buildings of every sort and description, equipment and plant. How was the hon. and gallant Gentleman going to work his capital levy? His reply was that the stock of those companies must be watered, and the Government should take a share in each of them. I do not think that anything harsher about a capital levy has ever been said than that. It requires, as a result of its operation, that the Government should become a universal shareholder in companies with watered stock; and there, I think, I can leave the criticism of the hon. and gallant Gentleman. I think I have given all the information for which the right hon. Gentleman asked me as fully as I can, and I do not think that, upon any of the grounds which have been suggested by the speakers who have preceded me, the House will feel inclined to refuse the Bill a Second Reading.

Mr. LAMBERT

So far as I am concerned, the real crux of the situation in connection with this Budget is that it provides for far too much expenditure. The expenditure of the country has got to come down, and then taxation will come down. I should have liked the Chancellor of the Exchequer to give us some idea of how he proposes to effect the economies he promised in his Budget speech. That is the real crux of the situation. The country to-day is taxed far more heavily than it can bear. I do not care what party is in power; the country cannot go on bearing this enormous load of taxation. I do not, however, blame the Chancellor of the Exchequer to the extent that some of his critics do. I really believe that he is a frugal Scotsman in questions of finance. He appointed the Geddes Committee, and that was a very admirable piece of work, although it was not good for the reputation of the Government. He has given us information—I gratefully acknowledge it—on all the subjects about which we have asked. He finds, however, that the road of the economist is a very stony one, and he gets bleeding feet sometimes; but in reality we are suffering to-day from the orgy of extravagance of 1918 and 1919. The Government then went into every kind of mad experiment. Anything that would cost money, any fad that anyone got hold of, they translated into legislation, and consequent expenditure.

Mr. A. M. SAMUEL

That means the Labour party.

Mr. LAMBERT

That is your quarrel with your own Government. The Budget of the right hon. Gentleman the Lord Privy Seal, when he put on £200,000,000 of new taxation after the War, was a perfectly unjustifiable proceeding, and now we are up against the fact that it is very difficult to enforce economy because there are such an enormous number of the population who are receiving State aid. There are so many State-paid workers. The dockyard Members used to be the people who came here to bribe their constituents at the taxpayer's expense. Now the number is doubled and trebled, or even more. I hold that those of us who have some economical notions should endeavour to convince the workers of the country that it is to their interest to curtail Government expenditure. I am certain that we shall never get on until we we convince the hon. and gallant Gentleman who moved this Amendment, and until we convince others of his party that a reduction of Government expenditure is in the best interests of the workers of the country. I must say that I do not agree with my hon. and gallant Friend when he suggests that a reduction of the Income Tax will not help employment. I believe it will.

Colonel WEDGWOOD

I said that it would not help employment so much as a reduction of debt.

Mr. LAMBERT

At any rate we must remember, and I hope my hon. and gallant Friend will remember, that no employer of labour can increase his enterprise, can increase employment, if the tax collector comes along and takes the capital which is necessary for that purpose. To-day any small man in business, if he desires to make his business a success, puts back part of his profits and those profits give employment to labour, besides producing some useful commodity. But if the tax collector comes along, then, undoubtedly, that employment cannot be given, and I say that the whole industry of the country to-day is depressed by the enormous taxation of from 5s. to 10s. in the X. If a man succeeds, he gets 15s.; if he fails, he loses £1. That is a great check upon enterprise, and we have to kill that school of thought in this country which believes that high taxes are an advantage to industry or to the country. It is very like those economists—I do not like to call them muddle-headed—who believe that it would be a ruin for us to receive reparations. We have had the most dangerous Government of all—a Government of good intentions. The Prime Minister is sincere; he has good intentions; but he lands us into this morass of State-aided philanthropy. The State to-day is paying for what individuals ought to do. We have got to get back to the idea that individuals have to do more and the State less, because whatever the State does is badly done. The nation consists of individuals. The individual, if he be prudent, forecasts his income and adapts his expenditure to it. The State, on the contrary, forecasts its expenditure and then taxes us poor people who have no voice in the matter except a vote occasionally. My hon. and gallant Friend advocated a capital levy. is he quite certain what the result of a capital levy will be? After all, if a man pays from 5s. to 10s. in the in Income Tax, that is a pretty heavy capital levy.

Colonel WEDGWOOD

Reduce it.

Mr. LAMBERT

That is a matter of economics and finance, but I would point out to my hon. and gallant Friend that compelling the taxpayer to pay from 5s. to 10s. in the £ has a very considerable effect upon capital. I agree with my hon. and gallant Friend absolutely about the reduction of debt, but, unfortunately, to-day we have changed over from reducing debt, and now, as my right hon. Friend the Member for Paisley (Mr. Asquith) said, we are re-borrowing to pay off debt. I do, however, differ from my hon. and gallant Friend when he talks about a gift to the landed interest. Let me tell him that there is land to-day which is not being cultivated because of high rates and taxes, and the higher the rates and taxes, the less land will he cultivated. I must say that I always regarded the Genoa Conference as more or less of a will-of-the-wisp, but one of the results it did produce was a very admirable Memorandum, issued by the Economic Section, and that Section was presided over by a gentleman called Sir Robert Horne. Unfortunately, we do not seem to know him in this country. One of the principles which it laid down was, that the most important reform of all must be the balancing of the annual expenditure of the State without the creation of fresh credits not represented by new assets. He then says: The balancing of the Budget requires adequate taxation. If Government expenditure is so high as to drive taxation to a point beyond what can he paid out of the income of the country, that taxation itself may lead to inflation. Reduction of Government expenditure is the true remedy. That is Sir Robert Horne at Genoa. We do not quite recognise the Chancellor of the Exchequer here, because he to-day is budgetting for a deficit. He will have to provide for a reduction in revenue of £1,000,000 less next year for the Post Office, £20,000,000 less receipts from Income Tax, and £500,000 less receipts on tea. That means that next year the revenue derived from Income Tax, Post Office, and tea will be £21,500,000 a year less than this year. This year he has War stores, £90,000,000, and War expenditure, £60,000,000. That is a balance in his favour of £30,000,000. 230,000,000 plus £21,000,000 is £51,000,000, which he will not have next year. Then he will have to pay another £25,000,000 to America, which he has not got in his Estimates of this year. That is £76,000,000 that the Budget will have to bear more next year than it does this. Does anyone believe the Income Tax and the other Estimates the right hon. Gentleman has made will come up to our expectation, when you have one very bad year to come in instead of one good year? Therefore, I say, the right hon. Gentleman is budgetting for a deficit.

Sir R. HORNE

Next year.

Mr. LAMBERT

There is no political leaflet, but the view of the London City and Midland Bank. It is said here that by the policy of the Chancellor of the Exchequer, the policy of deflation, has been definitely abandoned. It is too early yet to form an opinion but it may be that a period of inflation is ahead of us. That is what I think the right hon. Gentleman is doing. He is not going to balance his Budget next year unless he imposes fresh taxation. Therefore you are going to have an increase in the cost of living, which will mean an increase in the cost of production. How will that aid trade recovery? I think the Chancellor should have looked ahead to next year as a sound financier and should have carried out the principles laid down by Sir Robert Horne at Genoa. He talked about the railways and said how strict he had been. I do not quite agree with him. He is going to pay the railways this year £33,000,000. Does he understand how much trade and agriculture to-day are harassed and prevented from recovering by high railway rates? The Railways Act of last year was one of the wickedest Acts ever passed in this House.

Colonel WEDGWOOD

There is a further gift this year.

Mr. LAMBERT

I am not talking about gifts. I say the Act. I have figures which show that great iron companies are complaining of high railway rates which prevent them from meeting foreign competition. Until railway rates come down, we cannot recover as we should. Then, in justification of what I have been saying about high taxes, let us remember the rates, too. According to a Return issued by the Government, the rates were £71,000,000 in 1914, and they are now £173,000,000. All this is hampering industry. We have to get it into the heads of the people that low rates and low taxation mean, as Gladstone once said, that the money will fructify in the pockets of the people.

Let me turn to the expenditure of the country this year, apart from all War charges, as compared with what it was before the War. The expenditure before the War was £207,006,000, but there was a. compulsory Sinking Fund then of, I, think, £7,000,000. That is £200,000,000. The right hon. Gentleman this year has to budget for £335,000,000. He has 290,000,000 of War pensions and £60,000,000 of War charges. That is £485,000,000. His total Budget is £910,000,000, so he is spending this year, apart from debt incurred by the War, £425,000,000. With this enormous load of debt., we cannot afford it. The taxable, capacity of the country was estimated by the general manager of Lloyd's Bank at 2600,000,000. You are asking it to bear just 50 per cent. more. I still say that we are taxed too high. Let us take what the right hon. Gentleman has done with regard to the Geddes Committee. At Sheffield on 10th May, Sir Eric Geddes stated that: The Chancellor of the Exchequer asked us for £100,000,000 of savings. We recommended £100,000,000. The Chancellor of the Exchequer has given effect to £52,000,000.

Sir R. HORNE

There will be more next year upon the same savings.

Mr. LAMBERT

I hope so, but hope deferred maketh the heart sick, and hope has been deferred so many times with regard to economy. The House of Commons has to realise that you cannot have economies unless you are prepared to face unpopularity. We all have to face unpopularity. We are told we have no Army, the Navy is starved and the Air Force is good for nothing, and yet for all that we are spending, according to a return which the right hon. Gentleman has issued—and I am grateful to him for issuing these returns—on the fighting forces £167,000,000 a year as against £86,000,000 before the War. There is something wrong somewhere. Let me deal with one or two of the Departments and how they have mounted up since the War. This is extracted from a Civil Service return. Before the War the Board of Trade cost £465,000. Now it has had put on to it various excrescences like the Department of Overseas Trade, the Mines Department and some other things which were the outcome of that orgy of expenditure and faddism which we had two or three years ago. The Board of Trade is now spending 22,840,000. I am certain we are not getting value for it. The Forestry Commission is another thing which was started. I see we spent no less than £200,000 last year. Now it is reduced to £20,000. I suggest that it should be cut nut altogether. Get rid of it. it is really no good. The Ministry of Agriculture spent £254,000 before the War. To-day it spends £1,834,000. I know as an agriculturalist that we are not getting value for that money. Let us cut down these swollen Departments. The trouble is that when you have these clerks they must lee doing something, and when they are doing something they are spending the nation's money. I want to get rid of a good many of them. Take the Office of the Secretary for Scotland.

Mr. SPEAKER

It is not in Order on the Finance Bill to go into any Departmental details of expenditure. That is the function of the Committee of Supply. It is quite in Order to deal with the balance-sheet on general principles.

Mr. LAMBERT

I am talking really from the point of view of general principles. The office of the Secretary for Scotland has gone from £16,000 to 2119,000 a year. I will not pursue that line of argument any further, but it is one which, I think, we must consider. In the case of the Ministry of Health the figures are even more striking. I ask the right hon. Gentleman to get the House of Commons with him, to appeal to the House of Commons to bring down this new bureaucracy. I believe any Minister to-day who made a stand against officialism and bureaucracy would be supported by the country. There will be no surrender in Whitehall or in any of the Government Departments. They are entrenched there in barbed wire entanglements and dug-outs. But we have got to bring clown this enormous amount of public expenditure if the country is to live. There were statesmen of the past—Mr. Gladstone, Lord Goschen, Sir Michael Hicks-Beach—who, after all, were not fools. They were frugal in Government expenditure, and I ask that, we should go back to those old principles which I am not ashamed to advocate—the Liberal principle of fostering for the individual liberty and economy in the public service.

Sir R. ADKINS

In common, I should think, with all hon. Members I cordially agree with much that has fallen from my right hon. Friend, and one welcomes any opportunity of hearing or repeating the protest which requires to be made as often as possible against the undue development of Governmental activities in the last few years. Certain kinds of expenditure can never be seriously diminished. Certain national developments must be financed if the country is to remain healthy and alive. But the habit of setting people to watch other people, the habit of multiplying inspectors, the habit of multiplying returns, the habit of inquiring into everything to see whether it is growing or not —all that leads to far greater expenditure of money than the results which are obtained from it. There is another side to the present very grave financial position. The limits of taxation are practically reached and whether we are supporting the Motion to reject the Bill or whether we are voting for the Budget because we believe it to be necessary, we know that taxes are pressing with undue hardship on every kind of person, some people finding one more intolerable to bear, the others finding another, and one realises at the same time that with the demands made upon the country, with the enormous debt, which this year will remain at its existing amount, the Chancellor of the Exchequer or anyone who took his place would be bound to levy taxation not substantially different in amount from that under which the country is groaning at present. Therefore one asks what taxes are there which can be modified, and what taxes are there, particularly taxes bringing in but small returns, as to which a natural and inevitable limitation exists now, but which may easily become a public danger, which can be alleviated and allayed. Let me give a few illustrations. If you take 1s. off the Income Tax, and if you make the reduction in the Tea Duty proposed in this Budget, you cannot without disturbing the whole balance of the finance of the year diminish by any considerable amount such things as Beer Duty and Tobacco Duty. That these are arousing widespread irritation, annoyance and discontent is a fact which all of us know, a fact which no one can afford to disregard, and a fact which I hope will lead the Chancellor of the Exchequer to give, if he possibly can, in connection with the debates on this Budget, some idea of the way in which he is looking and some adumbration of, if not immediate, at any rate, not long delayed relief.

There is another tax of which we have heard so much, owing to the admirable machine of protest which has been organised. I refer to the cinema tax. It is perfectly right that taxation should be levied on amusements. If you merely put taxation on necessaries and you do not have taxation on amusements, the obvious harm to the country requires no exposition. At the same time, it is a fact that the incidence of the cinema tax is not a fair incidence as between those who go to the less expensive amusements, and those who go to the higher. When you are dealing with taxes on amusements, it is, surely, of the greatest consequence so to apply them that those who can best afford to pay them should pay most, and it cannot be fairly said that the higher proportion should fall on those amusements which are sought by those with less resources, rather than on those who are in more easy circumstances. The cinema tax ought to be susceptible of such modifications as, without making any serious inroad on the receipts anticipated in the Budget, would relieve that perfectly genuine grievance.

The one tax on which I desire to speak with a little more detail is what is called the Club Tax. Taxes are so subtle in their incidence, and changes which are not foreseen by their authors so alter what comes about through them that no one can be surprised that the War and the enormous change in prices has brought about in regard to the Club Tax results that were never anticipated when it was levied originally 12 years ago, and results which are not in accord with the principle on which the tax was levied. I agreed with the principle of the tax when it was levied. It is a fact that clubs are in a certain sense in competition with licensed houses, and that there are sales of excisable liquors in clubs which it may well he argued should in some form or another pay a proper quota to the Exchequer in comparison with licensed duty paid by those licensees who sell excisable liquors. When the tax was first levied the returns were only about one-fifth of the returns from licence duty. You have the tax based on the amount of excisable liquors bought in the year, not on the amount sold, not on the membership of the club, not on the value at the time the tax was first levied, and the effect of its being in that way is to work an injustice more sharply articulated, more obvious than any injustice which arises out of any tax to which we can refer.

The position has come to this, that the less value a person has for his purchase the more tax he has to pay on it. It is a perfectly ridiculous result, because the costs of excisable liquors bought by clubs are higher in consequence of the rise in price, even when the quantity is less, and the tax rises in proportion. Therefore, the less value a man has for his money the greater is the tax which the State extorts from him, or rather from his club. I appeal to the Financial Secretary to the Treasury and to the Chancellor of the Exchequer, seeing that the amount of revenue brought in by this tax is only £350,000, and that it has been brought in to a very large extent because of the unforeseen circumstances, and the unexpected conditions of the tax in that form and levied in that way, to consider whether it is worth the irritation and the sense of injustice which is felt amongst the members of the 10,000 clubs in this country. By all manner of means let there be a club tax, fairly proportioned as was this in the beginning for the object it is desired to achieve; but the fairness has gone out of its incidence, and the results are quite different from what was expected. It is causing practically universal irritation and dissatisfaction, and what it brings in, although far more than was intended at the beginning, is surely not worth the irritating circumstances attached.

I appeal to the Government that, in a time like this, when taxation is of necessity so high, the. inevitable irritation which this causes is not without elements of danger to the State, and while I appeal for consideration on the other matters to which I have referred, I appeal particularly in regard to this, and ask whether they cannot, having regard to the comparatively small financial resources involved, get rid of this very considerable and legitimate cause of irritation and sense of injustice, in the real interest or making the payment of taxation as little burdensome and as full of the sense of necessity and of justice as can be done at a period of such extreme difficulty as that in which the House and the country finds itself.

Sir PHILIP SASSOON

This is not. a time when anybody by preference would make a suggestion which is likely to add to the burdens upon the Treasury, and if I do so I would ask the House to believe that it is in connection with a matter of very real and pressing urgency. I refer to the dispersal of our national art treasures, and their sale to foreign countries, and to the problem which confronts us of how to check the process before the nation suffers further irreparable loss. This subject was mentioned on a previous occasion by an hon. Member opposite, and I now invite the House to give it most sympathetic consideration and attention, because I do not think it is sufficiently realised how largely our national galleries and museums in London and in the provinces that are now open to the public exist for the benefit of the poorer sections of the population, or how largely they are frequented by people who have no other means of gratifying their love for rare and beautiful things.

To people who are rich enough to travel it may perhaps not matter so much whether a certain picture or statue is housed in London, Paris or New York, but to the poor man, who is yet riot so poor in spirit and intelligence or in the appreciation of beautiful things, it is a very real loss if a work of art is removed from a gallery where he may one day see it to a country which he may never hope to visit. Our national galleries and museums exist for those who have no chance of studying art elsewhere and who have no opportunities of widening their knowledge or experience by personal travel, study or research. They exist primarily for the poor, and I respectfully submit that it is part of the duty of this House to see that our national galleries and museums are as representative and as complete as possible. It is also part of the duty of this House to safeguard and preserve the nation's works of art which are still in this country and, although they may be in private hands, may still on fitting occasions be on view to the general public, and give immense pleasure to everybody who sees them.

The plea I am putting forward to the Treasury is not based on any particular regard for the private individuals who may have to sell their pictures to-day. They may have their grievances and opinions against the system of taxation that enforces such sale, but those are not the opinions or the arguments I wish to urge upon the House at the present time. The people who sell their pictures get good prices for them. It is not from the individual point of view, but from the national point of view that I would like to urge this question upon the attention of the House. The whole community suffers, both rich and poor, when any work of art or genius is carried away from our midst to become an example and an inspiration to another people. The loss to our national culture is a most important point. The second argument is the purely financial one, namely, the loss which the nation suffers when national capital is realised and dispersed, for these works of art represent national capital. Both these points of view affect primarily, not the individual who is forced to sell, but the nation as a whole. The community as a whole is impoverished in a sense both morally and materially. It is a part of our civilisation that leaves us whenever one of these outstanding triumphs of human art and man's creative genius is carried away to another country.

I need only quote two facts in proof of what I say. So high a value has been put by the common consent of the statesmen and nations of Europe upon the national possession of these great art treasures, that by the Treaty of Versailles these works of art were given a position of international importance. My second fact is in itself an acknowledgment of the correctness of the view expressed in the Treaty of Versailles; I mean the enormous increase in the number of pepole who visit our great art galleries and museums, especially the poorer sections of the population. That is clearly shown by the increasing numbers of people—they are numbered in millions yearly—who visit our national and private galleries. It shows that art is now looked upon, not by the few but by the many, as a high educational force, as a moral inspiration, and as a wholesome source of recreation. A Noble Lord in another place, Lord Sudeley, recently called attention to the popularity of guide lectures in museums and galleries, and to the growing number of people who find in them an absorbing interest, and who go to listen to them even after a hard day's work.

7.0 p.m.

My appeal is that even in the present year of financial stress the Government should take immediate steps to safeguard and preserve for the nation what is left of the unique art possessions in private hands. This plea is not dictated by any tenderness for the individual who is forced to sell his pictures, and who may very often be a comparatively rich man. It is put forward entirely because I am impressed with a profound sense of the irreparable loss which the nation has already sustained by the departure of so many works of art. That. is a loss which will be increased month by month, unless some action is taken to acquire for the nation those works of art which are now in private hands, and which are in danger of leaving the country. There is no time to be lost. Some hon. Members may remember that so far back as 1915 the committee of the trustees of the National Gallery, presided over by Lord Curzon, made a report on the same subject. They said that the exodus of old masters from this country was proceeding at a very terrible rate. A list was prepared which, though necessarily incomplete, showed that 500 pictures of outstanding merit, and all worthy to be retained as national possession, had in recent years left this country. The committee then predicted that in the course of the next quarter of a century, unless steps were taken to prevent it, this list would be doubled. Under pressure of events since 1915 the worst fears of the committee of that date have been more than realised. The exodus of old masters from private collections has been going on at an appalling rate, and masterpieces unique in the history of human art have left this country. This fact is known to everyone present, and it is equally clear that week by week this will go on unless some steps of a remedial character are taken by the nation.

I do not think the remedy would be a drastic one, when measured by the figures with which this House has become accustomed to deal when treating of the national finances. The Report of the Committee to which I have referred was conclusive on one point, and that was that whatever ameliorative measure might be adopted, there was only one cure for the state of affairs that existed then and which prevails to a far worse degree today. That cure was that the Treasury should be empowered to make from time to time special grants for extraordinary emergencies to the National Gallery, so that the National Gallery might be able to acquire for the nation by purchase some few at least of the finer works still left in this country. The proposal involves no innovation or departure from precedent, for in past years, when the grant to the National Gallery was double what it is to-day, as much as £75,000 and £85,000 were given as extrordinary special grants. Larger sums will no doubt be required to-day, but these extraordinary emergencies, when works of art of outstanding merit are in danger of leaving our shores for ever, must necessarily be few. I do not suppose there are more than half a dozen or a dozen pictures in our private collections in England to-day which can, from every point of view, be considered national treasures, and which as such ought not to be allowed to leave the country. Such grants would not be entirely unprofitable expenditure, even from the purely financial point of view. There are few private owners of valuable art treasures to-day who would not be willing to sell to the nation, at a price substantially less than that they could easily get in the open market, so that the nation would get immediately more than the present full value of its money for the pictures, which are bound to increase in monetary worth from year to year. In this way national capital will be preserved o the nation; but far more important than that, objects which form an integral part of the culture and civilisation of our race, which bring pleasure to millions of people in these islands and inspire and uplift all who behold them, would be preserved for all time for the enjoyment and the benefit of our own people.

Captain MOREING

Unlike the hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood), who moved the rejection of this Bill, I desire to thank the Chancellor of the Exchequer for the relief he is giving agriculture in the Budget. The House does not need to be reminded that most of the tenant farmers of this country are suffering to-day from an almost overwhelming burden of imperial taxation and local rates. I am very much afraid that many of them, especially those who have purchased their farms, are in for very bad times during the next few years, and the relief granted in the Budget will come to them as a message of encouragement and hope. It will show them that the Chancellor of the Exchequer, in spite of his difficulty and of the many claims upon his consideration, has been able to think of them and to afford them some assistance. I know that this does not meet with the approval of hon. Members of the Labour party, and I expect some of the financial purists, if I may call them so—I hardly know how to describe that section of the Liberal party which is in opposition to the Prime Minister—will maintain that farmers should be assessed, like everyone else, under Schedule D. I would like to remind the House that most farmers are unacquainted with systems of bookkeeping, and that of all the forms of accounts agricultural accounts are probably the most complicated.

I wish to pass from a point of praise to one a consideration. I should have liked to see in this Finance Bill some further reform of Income Tax procedure. It is rather striking that, although the importance of the Income Tax has enormously increased, and though it is now the mainstay and principal support of our financial system, there has been no alteration in the method of assessment and collection of the tax, at least on paper, since 1842, and I am not at all sure that it has been materially changed since 1798, when it was first introduced. That may be a great tribute to the essential conservatism of the British character, but I assert that the tax could not now be speedily and economically collected unless, in effect, there had been a very considerable departure from the law. I am not going very far wide of the actual state of affairs when I say that at least two-thirds, possibly four-fifths, of the tax are collected under procedure which, if not actually illegal, is at any rate a very great, departure from the methods laid down in the Act. We all know what the legal procedure is, and how it is supposed to be put into effect. I assert, however, that the hulk of the tax is agreed direct between the taxpayer and the Assessor of Taxes, and the nominal assessment by the Commissioners of Taxes is really only adding delay and expense. I agree that we should not do anything which would hamper the right of the public to appeal to the Commissioners, but I would urge the Financial Secretary to the Treasury to take these points into consideration and to see whether it will not be possible to render the assessment and collection of the tax more in consonance with the actual facts as they are to-day. The result would be more speedy working, greater satisfaction to the taxpayer, and a greater addition to the revenue.

Mr. HOLMES

I wish to address the House on a topic which has not been referred to during the Budget Debate nor to-day, that of the Corporation Profits Tax. I wish to ask the Chancellor of the Exchequer whether he thinks it worth while to continue that tax? The House will remember that it was introduced two years ago, in the Budget of 1920. The Lord Privy Seal, who was then Chancellor of the Exchequer, said he believed it would be a substitute for the Excess Profits Duty. There can be no comparison between the two taxes, and the Corporation Profits Tax can never be a substitute for the Excess Profits Duty. In the first place, the Corporation Profits Tax is only a limited tax, whereas the Excess Profits Duty falls on all trades and businesses, and the yield of these two taxes, so far as one is a substitute for the other, is so different. The Excess Profits Duty brought in £200,000,000 or £300,000,000 a year, and the Corporation Profits Tax not more than £20,000,000. In justifying the Corporation Profits Tax in 1920 the Chancellor of the Exchequer said: Partners in a private partnership pay Super-tax not merely on the profits which they divide, but also on the undivided profits which they place to reserve. No such charge falls on the undivided profits of limited liability companies. The Corporation Tax is justified by the distinction of the existing law in favour of such corporations, and it may be regarded as a composition in lieu of the liability to Super-tax. At another period of the Budget Debates of 1920 it was said that there were a certain number of people who had been turning their businesses and their investments into limited companies, paying the dividends into the limited companies and so avoiding the payment of Super-tax, and that the Corporation Profits Tax would get round the evading of these payments. That, apparently, has proved to be ineffective, because in the present Fin- ance Bill we have a Clause under which it is proposed to enable the Inland Revenue Authorities to assess for Supertax the amount put to reserve in private companies. Therefore one of the reasons given us two years ago, in favour of the establishment of the Corporation Profits Tax, has disappeared. In the first place, it is not, and never will be, a substitute for the Excess Profits Tax, and, in the second place, it has in no way caught the people who by forming private companies escaped the payment of Super-tax.

I would next call the attention of the House to the yield. In his Budget speech in 1920 the Lord Privy Seal said that he estimated that the receipts for the current year would be £3,000,000. They turned out to be £650,000. Last year the Chancellor of the Exchequer stated that in 1920-21 the yield would be £30,000,000. The actual receipts proved to be R17,816,000. The Lord Privy Seal's prediction that eventually he would get. £50,000,000 a year from Corporation Profits Tax, was the wildest estimate ever made during the period when he was Chancellor. I would remind the House of what the general method of taxation in this country is. We have indirect taxes and direct taxes. Indirect tax s are generally supposed to enable those who would not pay direct taxes to contribute in some way, by the purchase of sugar, tea, beer, and tobacco, towards the expenses of the nation. It is an easy way of getting people to pay taxes without their realising that they are doing so. It is also a way of collecting something from foreigners who visit this country and who, otherwise, would not contribute anything towards our revenue.

As regards direct taxation we have gradually in the course of time endeavoured to make a man pay according to his means. There has been graduation, and more skilful graduation as time has gone on, according to a man's total income from all sources, so is he taxed. The Corporation Profits Tax does not follow that principle at all. The amount of profit made by a limited company is taxed. It actually comes out of the pockets of the ordinary shareholders, and in proportion to their holdings, but not according to their private income from all sources. So you may have a man who is a shareholder in a limited company with a very low income on which he should only pay 2s. 6d. in the £. He receives the dividend from a limited company, but prior to that a portion of his dividend is taken from him in the shape of Corporation Profits Tax, so that he may be actually paying 4s. 6d. on his yield from that company. The Corporation Profits Tax is to the advantage of the rich man who holds shares in a company and to the disadvantage of the poor man, because if you have no Corporation Profits Tax on a business, the amount of total profits would be increased. You could increase the dividends paid to the shareholders. The shareholder, if a rich man, would pay at his own rate of Super-tax on the dividend, but the poor man would receive the increased dividend and have no Super-tax to pay on it, and he would be the gainer. Since there is a Corporation Profits Tax, he is taxed more heavily than the wealthy man.

The last point which I wish to make is this. Before the Royal Commission on Income Tax it was pointed out that there was continually a large amount of evasion of Income Tax or that, at any rate, the Inland Revenue did not collect the total amount of income tax that was actually payable. The hon. Member for Central Edinburgh (Mr. W. Graham) has spoken several times in the House on this particular point. The more Inland Revenue officials have to do the less are they able to look after those who are trying to evade payment of Income Tax. The Treasury claim, I think perfectly fairly, that the Income Tax and all other taxes are collected in this country at a minimum of expense, and that they have a minimum of staff employed on the work. If you take the Corporation Profits Tax away from every inspector of taxes in the country, a tax which is not yielding 220,000,000, you will so reduce the work which they will have to do that they will have time to go after the people who are trying to evade Income Tax, and the extra Income Tax which they will get in this way may be worth far more than the yield of the Corporation Profits Tax. I hope that this will be considered by the Chancellor of the Exchequer. He has had this tax for two years. We were told that he would get £50,000,000 out of it, but the receipts are more than £30,000,000 under the estimate, and now he has only estimated for £19,000,000. The tax is unfair in its incidence, and inadequate in its yield, and handicaps the officials of the Inland Revenue in doing what we may call their regular work in an efficient way, and I believe that, because it is mainly placed upon certain classes of traders in this country, it is likely to prove detrimental to the recovery of trade.

Sir A. WILLIAMSON

I would like to say to the Chancellor of the Exchequer what an advantage I think he has conferred on the country by the reduction he has made in the rate of income Tax. I do so, not upon the ground of selfish interest, but upon the ground that by reducing the tax he has given, and will give, an encouragement to enterprise and a confidence which will tend to restore that trade which we so much require. There is no doubt that the effect of reducing the Income Tax has already been beneficial. It. has encouraged enterprise, and will do so still more when people see that trade is gradually reviving, and, with the increase of trade, there will follow increased employment which is so much needed.

There is one point in connection with Income Tax on which I would like to express my views—that is the question of double Income Tax. I do not know whether the House is fully aware of how much we suffer as a nation by the imposition of double Income Tax. It is practically impossible—shall I put it that it is impracticable—to-day for British citizens to start an enterprise and invest their money in any country such as the United States, because our Government charges full Income Tax upon the profits made there, and the same profit has to pay the American Income Tax, rendering the operations impossible in competition with similar enterprises undertaken and domiciled within the United States itself. If an American citizen comes to England and establishes an enterprise, let it be tube railway or anything else, he pays, it is true, in this country the British Income Tax, but when he is assessed in the United States for Income Tax, the whole amount that he has paid here is deducted, not from the assessable income but from the actual amount of tax that he has to pay in the United States. Take the case of an American whose Income Tax liability to the United States amounts in dollars to £20,000, and who, has already paid in Great Britain £10,000. The result is that he only pays to his Government £20,000 less £10,000, that is, £10,000 in all. He is only paying once. Look at the advantage which he has in going abroad to establish a business, and look at the disadvantage from which we suffer. It is impossible for us now to go to America, where there is high taxation, and establish industries, in view of the double tax incurred.

I would put another case. I know a cement company which is quoted on the Stock Exchange, which was established by British enterprise and money in the United States. It pays the United States Income Tax and it has to pay British Income Tax not only on the dividends paid to shareholders in this country, but on the dividends paid to those who live in America. That company has alongside of it an American Company, competing in the same market with the same machinery, and the same raw material, but subject only to the one tax. Consequently it is able to put aside money to reserves, depreciation, building up and extending its business, which it is impossible for the British Company to do in view of the double taxation. This is a matter of such urgent importance to the trade of this country that I wish to call the attention of the Government to it. This matter of double Income Tax is not confined to the case of the United States and this country. Almost every country in the world is now thinking of the imposition of Income Tax, and we shall repeatedly be faced with double Income Tax where-ever we like to make our investments. Think of the impossibility of going on conducting foreign enterprises from this country. If such a condition comes about the result will be that these enterprises which would be radicated here will be radicated abroad. We shall not have that encouragement we have had in the past to extend our enterprise abroad and build up those orders for English goods, etc., which followed from the connection with this country. When concerns are domiciled abroad the orders for goods will go abroad, and you will lose the advantage which you have by radicating the enterprises in this country.

I wish also to say a word about this tax which is directed against the one-man company. I have sympathy with the Government and the Chancellor of the Exchequer in the object which they have in view, but I do not know if the House has considered the Clause as it stands in the Bill and exactly where it reaches. As I read it, it reaches every private company which has fewer than 50 shareholders, and which has not made an offer of its shares to the public. I imagine that that applies to most private businesses worked under the Companies Acts and to all the small shopkeepers who have their businesses in private limited companies—and there are many thousands of them—and it would also apply to many companies radicated here in London, which are working enterprises abroad. I know a company with fewer than 50 shareholders which works a large business on the West Coast of Africa. I know another with fewer than 50 shareholders which has made no public issue of its shares, which works a business in South America, and there are many others. All these companies will come under the scope of Clause 14, as I read it. Even the fishermen in my constituency who have boats in common will come within this Clause.

I do not think that the House realises how far-reaching is this Clause. Also a shareholder in a private company is going to be handicapped as compared with a shareholder in a public company, because in the private company it is now proposed to deal with money put away for such things as reserve or writing off the cost of the issue of debentures or writing off preliminary expenses, or for the repair, for example, of business premises, or providing new business premises, all of which are done by prudent companies out of revenue. If a public company makes profits out of which a certain amount is paid in dividends on which Income Tax is paid, the rest is often and wisely used for the purposes enumerated, but in the private company it is placed within the power of a Government Department to say at their sole discretion, "This money you have put aside, the profits you have used for writing off your preliminary expenses, repairs and alterations to premises, and payments to reserve for coming bad trade —all these we consider to be unnecessary and unreasonable, and consequently we are going to assess at our sweet dis- cretion your shares in this private company, and you must pay." That will discourage common prudence and good business methods. It is a very far-reaching Clause which should be scrutinised closely by the House before it is passed into law.

That being the case, I suggest that the Government, if it has in mind only the one-man companies, should consider what the law is about companies. The public company has a minimum of seven shareholders, and the private company has a minimum of two shareholders. Let the Chancellor of the Exchequer consider this step as one which would be more reasonable than the Bill: let him limit the operations of this Clause to those private companies which have not more than seven shareholders. Perhaps seven is a liberal number, for, if it be only a one-man company which is aimed at, five would suffice for the purposes of the Chancellor.

Clause 15 of the Bill gives too wide a power to the Commissioners of Super-tax. It gives them power, which they have not at present, in the way of asking for details and information which, if abused, might be used in a penal way against any individual with whom they were at variance, I do not know whether hon. Members have studied the Clause. The powers might be open to abuse. While I would never suggest that in the ordinary course a Government Department would abuse its powers, we all know that if powers are inserted in an Act they are liable, on occasion, to be used to the utmost extent permitted.

Mr. PRETYMAN

May I say how much I agree with nearly everything said by the last speaker? In the matter of double Income Tax there is a precedent. The subject was brought before the Income Tax Commission, of which I was a member, and a Sub-committee which was appointed went into the whole question of double Income Tax within the Empire. After very great difficulty what, it is hoped, will prove to be quite a satisfactory arrangement was made for the avoidance of double Income Tax within the Empire. That scheme is now in operation, and I do not think it has caused any trouble. It is obvious that the reaching of a satisfactory arrangement governing double Income Tax outside the Empire will be possible only by conference with other Governments and by reciprocity on both sides. The precedent of the arrangement within the Empire might be followed, and it would he a great advantage to the trade and industry of the country if the Chancellor of the Exchequer would examine the question further and see whether something can be done. We have reached a point in taxation when the Chancellor of the Exchequer has not so much to consider individual hardship when remitting or altering taxes as the burden on the trade and industry of the country. The object of the Chancellor of the Exchequer is to maintain revenue, and to maintain the stability of trade and industry upon which all revenue depends. He realises that, quite apart from the hardship which taxation inflicts, the effect of the present burden of Income Tax is such that in mnay cases it has to he paid out of capital. There you have a capital levy already.

In the case of the Income Tax and Super-tax at their present high level, the money cannot possibly be paid out of income and is distinctly paid out of capital. I do not want to debate that again, for I believe the Financial Secretary to the Treasury is convinced that the tax must be paid out of capital and that, in that sense, it is a capital levy. It is a direct cause of extravagance. Suppose a man has £1,000, which he has realised from selling something, which sum he would normally treat as capital. If he invests it—which he would do as a prudent man—and is liable to the full rate of income Tax and Super-tax, with prospective Death Duties and other burdens, ha might have to pay 15s. in the £. What would he get by so investing this £1,000? About £20 a year. What is the good of that to him? When he dies the State will take about half of it. Such a man knows that if he spends the £1,000 on something amusing and entertaining he gets the whole of it. It is putting too great a strain on human nature to expect a man to do otherwise. That is why the scheme is a direct cause of extravagance. To stop individual extravagance it is necessary to reduce taxation.

I regret very much that the Debates on the financial position of the country are falling back into the old groove and into an argument between direct and indirect taxation as a matter of hardship to the individual taxpayer. We had the old argument used by the hon. and gallant Gentleman (Colonel Wedgwood), who moved the rejection of the Bill. He spoke of the great advantage to the working classes of a reduction in the Tea Duty and the Sugar Duty, and said the reduced Income Tax was merely taking something off the burden of the rich. I suggest that the Income Tax at its present level is causing far more hardship to the working classes than the Tea Duty or the Sugar Duty. It is directly causing unemployment. Let me deal with the side of the question which I know best. That is the question of the burden of taxation upon agriculture and the rural population. I can say, from practical experience, that, with the present level of taxation upon rural areas, it is impossible to employ the proper amount of labour and to keep land in a state of cultivation. The principle of the Chancellor of the Exchequer is not to take Income Tax off farmers in order to benefit the individual farmer, but in order to keep the land in cultivation and to enable the farmer to employ labour, and so produce food in this country instead of having to buy much of it from abroad.

When dealing with the burden of taxation on agriculture, it is not so easy to reduce expenditure on the cultivation of land as to reduce expenditure on the production of some manufactured article. You can produce a percentage less of the manufactured article, although it is very injurious to do so. In agriculture, however, the difficulty goes farther. Not only is there the direct result that by reducing expenditure you reduce the actual output, but the whole cultivation of the land suffers, and when you reduce labour on a farm you not merely reduce the actual output of a farm by a certain percentage, but you reduce the whole cultivation value of that farm, and when a farm goes short of labour it is on the descending scale. Therefore, if the Chancellor of the Exchequer desired to continue receiving revenue from agriculture, he was bound to reduce the burden of taxation upon agriculture. When my hon. and gallant Friend dealt with Income Tax, I do not think he realised that, after all, Income Tax is a tax upon profits. There is a large proportion of Income Tax which is not paid on actual profits but is paid on statutory income. The changes which the Chancellor of the Exchequer has made deal largely with that particular form of taxation levy. Surely it is quite beside the mark to suggest that this man or that man pays too much or too little tax unless you can prove that the levy upon him is a tax upon his actual profits or actual income or as near it as you can get?

In the case of agricultural land, the reason why we pressed that Schedule B should be reduced from two years' rent to one year's rent was that, clearly, under present circumstances, no farmer can expect to make more profit than would be represented by one year's rent. It used to be one-third. It was then raised to one year, and afterwards to two years during the War, when prices were high. It is only fair and reasonable that where a. man cannot usually make more, and may often make a great deal less than a profit equal to one year's rent, the statutory figure at which the compounding rate is fixed should not be more than one year's rent. So far as amenity land is concerned that direct point arises. Amenity land is the land, in the shape of gardens or pleasure grounds, exceeding one acre, attached to a residence. It is clear that no profit is made out of the ownership or occupation of that kind of property. I do not know whether hon. Members realise that where a man has amenity land he has now to pay under Schedule B as well as under Schedule A. It means that he pays the tax twice over. Suppose a garden and pleasure grounds are assessed at £20 a year under Schedule A. Although he makes no profit out of it, the occupier has to pay on double that assessment, that is to say, on £40. It is only fair that his Income Tax should be on some figure which might reasonably represent the sort of profit which he is able to make, and it is surely reasonable that he should not have to pay more than one-and-a-third times the assessment. On a house the owner only pays once, and there is just as much amenity in the house as in the garden in which he grows his vegetables. But when this Finance Bill is passed and the Clause in question becomes law, he will pay one-and-one-third times on his garden where he pays once on his house.

I must again thank the Chancellor of the Exchequer for the concession which he has given, but it is very regrettable, in my opinion, that the repairs and main- tenance relief which is to be given under Clauses 17 and 18 should be deferred until the year 1923–24. I do not understand the reason for that. Clauses 13 and 14 are designed to tighten up and increase revenue, while Clauses 17 and 18 are designed to give relief. I notice that Clause 13, affecting trusts, comes into operation as from 5th April of this year, while Clause 14, respecting Super-tax on companies, operates as from the 5th April, 1921, or over a year ago. But the two relief Clauses only come into operation at the beginning of next financial year in April, 1923. That seems particularly unfortunate. The relief extends the principle of Section 69 of the Finance Act of 1909–10, to all property, and we should consider what will be he effect of deferring it. One of the main advantages which that relief gives to the country is that of increased employment. At present people who might have repairs to do and maintenance work to carry out on buildings and property, get no rebate in Income Tax in respect of such expenditure and are, consequently, unable to proceed with the work. At the same time the Government is paying large sums in relief of unemployment in the shape of doles. Surely, it would be far better for the State to give this relief and get property put into repair rather than to go on paying doles to unemployed who might be doing useful work in this way. I take it that is one of the main objects of this proposal.

Unemployment is very rife to-day, we hope next year it will not be so rife, but if anything be urgent in the matter of finance, it seems to me nothing could be more urgent than to get, people started as early as possible, on this kind of work, and to keep them off the unemployment dole. It is quite clear that people who have this sort of work to do will defer it until they can get the rebate on Income Tax. It certainly will not he done this year, and thus, so far from accelerating the provision of work, this will prove to be a delay, People who would be doing work this year if it were not for the prospective relief, will postpone that work. That is merely ordinary business. Everybody who has a house which he proposes to paint or repair will not do it this year, but will put it off until next year. I hope the Chancellor of the Exchequer will make the small alteration necessary to bring in this relief at once. I should also like to ask the Financial Secretary to the Treasury, when this maintenance and repairs Clause comes up in Committee, to tell us how the five years' average is to be worked. There are several ways of doing so, as he understands, and I do not wish to go into details in a Second Reading Debate, but I hope in Committee he will tell us how it is to be worked.

As to Clause 15, I think the powers which it is proposed to confer on the Special Commissioners require serious consideration. The Special Commissioners are Government officials, and what applies to Income Tax also applies to Super-tax, which is merely additional Income Tax. Clause 15 seems to be going very near the line of the proposals in the Revenue Bill of 1920, which were rejected by this House. It is a proposal to give Government officials, in the first instance, without any appeal to any independent authority, the right to demand documents and make the inquisitorial investigation which is in this Clause, very indefinitely laid down, and appears to me to be very extensive indeed. I think it is right that those who intend to raise points in Committee should at, this stage outline their position, so that the Treasury may be prepared to explain and deal with those points. That is one matter on which I am sure there will be considerable debate. There are other points which some of us will have to raise in Committee. A new Clause will be put down dealing with Death Duties on agricultural land. I do not wish to ask the Chancellor of the Exchequer to give us any more relief in this Budget than he has already given.

We recognise that the right hon. Gentleman has done the best for us that he could in the circumstances, but the harden of the Death Duties, as now levied on agricultural land—owing to the method of levying and not merely to the weight of the duties—is a matter which calls for consideration. The method of levying may be suitable for industrial property and for land which is being developed for building, but for purely agricultural land it is most unsuitable and is causing great difficulty and distress in the country. Some of us on the Agricultural Committee propose to develop these points in detail on the Committee stage, so that the House may see what our suggestions are, and I hope next year we may get something done. There is a small point in which a large number of agricultural labourers are interested. Under the present Excise law a labourer living in a house under £8 valuation is allowed to brew during the year, free of licence, two bushels of malt in the summer season. That privilege is greatly valued. We have had deputations to the Inland Revenue Board on the subject, and I hope we may get that privilege extended to four bushels of malt, and the time limit of the summer season abolished. The present price of beer is extraordinarily difficult for the agricultural labourer to meet out of the wages he receives.

Mr. RICHARDSON

And the miners.

Mr. PRETYMAN

Yes, I agree, but then the miner will have the same privilege. This privilege extends to anybody who lives in a house under £8 value, whether he be a miner or an agricultural labourer. May I also remind my hon. Friend that the miner at any rate gets free coal and the agricultural labourer does not.

Mr. RICHARDSON

Only some of them do—not all of them.

Mr. PRETYMAN

Well a great many of them do, but the agricultural labourer does not get free bread, although he grows the wheat. The miner in most cases has the advantage. This is not the privilege of the agricultural labourer alone, but it is his custom, particularly in the Eastern Counties, to home brew more than other workers in the country, and I believe there are a good many workers in Lancashire, both miners and others, who do the same thing, and this would apply equally to them all. We are not asking for a special privilege for the agricultural labourer. The effect on the revenue would be trifling, but the advantage would be greatly valued by the working classes who are in a position to brew at home. Another matter which will have to be raised is that of a very wasteful procedure which is continued in connection with the transfer of land. On every transfer of land to-day or on every grant of a lease of over twenty-one years, particulars have to be furnished for increment value duty. That involves the expense of a guinea and a half—the ordinary charge of the solicitor who is executing the conveyance for furnishing these particulars and getting the stamp affixed which has to be done in every single case. Now that there is no increment value duty it is a pure waste of money, and the revenue gets nothing out of it. It is merely an additional burden on the subject. I have been sitting to-day on a Committee dealing with the Law of Property Bill—a measure which is designed to cheapen and simplify the transfer of land. By merely striking off this unnecessary item you could cheapen every land transfer by a guinea and a half, and I hope the Chancellor will give favourable attention to this suggestion. I hope when this Bill is in Committee we shall get a statement as to who are to be the assessors appointed for the reassessment under Schedules A and B. Are they to be officials or not? My hon. Friend the Financial Secretary to the Treasury will see that a great deal rests on that.

8.0 p.m.

At present when land is liable to Death Duties, eight years are allowed during which the Duty may be paid off by instalments, but that privilege does not extend to other property. I do not know why that should be, and I hope if an Amendment is put down in regard to this, it will be favourably considered. Now that the Death Duties are at such a high level, it is a serious detriment to any business in which a very large block of shares is held by one individual when that individual dies. In that case the whole block of shares has to be realised in order to pay the Death Duties. It would be a great convenience in many businesses and of great assistance, and preventing injury to a business through the death of a large shareholder, if the privilege of spreading payment for Estate Duty over eight years were not confined to land, but extended to other forms of property as well. I hope my list of questions has not frightened my hon. Friend the Financial Secretary to the Treasury, but this Finance Bill is our only opportunity of raising these matters. The angle from which I have, approached this Bill throughout has been to see how we can, without any considerable sacrifice of revenue, do most to benefit trade and business, and to prevent the injury which heavy taxation causes, for it is quite clear that there may be directions in which, by a comparatively small sacrifice of revenue, we may give a very big advantage and help to trade and industry by a little thought and tact, and my hon. Friend may rely upon me that any criticisms or suggestions that I have to make will be made from that point of view. I understand that the revenue must be obtained, and I know very well that it cannot be obtained without hardship. I am not here to complain of hardship on the part of anybody, and all I ask and suggest is that any Amendments which are put forward from the point of view of giving relief to trade and industry, and so increasing employment, by a comparatively small sacrifice of revenue, should receive sympathetic consideration from the Government.

Major-General Sir J. DAVIDSON

I wish merely to add one word to what has been said already in regard to that portion of the Bill which deals with the evasion of taxation. The Chancellor of the Exchequer said in his Budget speech that avoidance had recently become prevalent, and he referred to the setting up of one-man companies in order to avoid taxation. No one could wish to permit the avoidance of taxation; everybody indeed is anxious to catch the evader, but it seems that Clause 14, which deals with evasion, will not only not catch the evader, but will go beyond that and impose excessive burdens on private limited liability companies. I am not going to deal in detail with this subject just now, which is one more properly to be dealt with in Committee, but I should like to draw the Chancellor's attention to one or two matters of principle involved. The Government proposal, roughly, is to subject a portion of the undistributed profits of these limited liability companies to Super-tax, and a Board of Referees is set up to decide the portion of the undistributed profits to be so subjected. In other words, the Board of Referees will decide what amount may be placed to reserve and what may be distributed, and it seems to me that this is entirely wrong. The bulk, or anyhow a very large number, of the companies affected are merchant companies, whose business is essentially speculative and whose profits and losses are accentuated, and it is their business to build up very large reserves in good times to meet the very heavy losses in bad times. Everybody knows that there are great fluctuations in trade, and statistics show that after a period of 12 or 15 years there is a succession of two, three, or four bad years which have to be provided for.

Even the genuine companies, established long before there was any question of evasion, will no longer he able to control their own affairs, and they surely must be the best judges, and the only judges, of what they should put to reserve and what they should distribute. Notwithstanding the periodical and heavy losses which these private limited liability companies sustain, and the speculative nature of their businesses, they are now to be subjected to four different classes. of taxation. There is, first of all, the Income Tax, secondly the Corporation Profits Tax, thirdly the Super-tax on distributed profits, and now, fourthly, there is to be Super-tax on a portion of the undistributed profits. I venture to think that if such a Clause as this be allowed to go through, it will have the effect either of driving a number of these private limited liability companies out of the country or making them seek some means of evasion.

I understood that the Corporation Profits Tax was originally instituted in substitution for some form of tax on undistributed profits, but now it appears that this tax is to be, not in substitution, but an additional burden, and this just at the time when trade is showing some signs of revival and when we want to do everything possible to encourage it. In my opinion, the effect will be in reality to hamper trade. To merchant companies, whose duty it is to accumulate large reserves, this interference will be most detrimental. It must be remembered that these private limited liability companies are the successors of private firms. They did not assume limited liability to shelter themselves from their creditors: on the contrary, they assumed limited liability for their own safety but with the intention at the same time of building up such adequate reserves as would give ample protection to their creditors, and facilitate their own operations. They have been bound to build up large reserves, and these large reserves have not been used in the past, and are not now created, to evade taxation. The Chancellor of the Exchequer says that evasion is increasing. Is it not possible to discriminate between the genuine companies and the one-man companies or similar companies which have been created in order to avoid taxation? This is a subject which requires careful scrutiny during the Committee stage, when I hope to bring the matter forward again.

Major BARNES

I did not have the opportunity of hearing the whole of the speech made by the right hon. Member for Chelmsford (Mr. Pretyman), but when I listened to that part dealing with the question of the particulars that will have to be furnished to the Inland Revenue on the occasion of the sale or lease of land, I thought that I have always failed to understand why, in the early years of this Parliament, when the right hon. Gentleman secured the first signal triumph of the Conservative section of the Coalition over the Liberal section and compelled the Prime Minister to swallow his Land Taxes, he allowed this remnant of that iniquitous taxation to remain. Ono of my earliest recollections in this House was the withstanding of him by the then Chancellor of the Exchequer, when he was pleading that this last remaining burden should be abolished, and I shall watch with a good deal of interest his efforts during the Committee stage of the Finance Bill, if they are to be directed to getting rid of this, to see how they succeed and whether he will find the present Chancellor of the Exchequer more complacent than he did his predecessor. As I say, I had not the opportunity of hearing the first portion of the right hon. Gentleman's speech, so I do not know whether he referred to this development of the work of the Land Valuation Branch of the Inland Revenue which is going to take place under powers which the Chancellor wants to get under this Bill.

There is a whole paragraph in the Chancellor's Budget speech dealing with the re-assessment of land and house property, and I have been looking through the Finance Bill, and see that there is quite a formidable Schedule—the second Schedule, I think—which lays down the procedure in connection with the determination of annual values for the purposes of Income Tax under Schedule A and Inhabited House Duty for 1923–24. I do not find any reference in the Chancellor's speech, or in the Schedule, to the fact that the persons who are going to be employed to do this are persons at present engaged in the Valuation Branch of the Inland Revenue, but I rather gather that that is what is going to take place, and I am certain that the right hon. Member for Chelmsford knows even better than I do what procedure is going lo be adopted. I do not know whether he proposes to resist this investigation or to do anything to modify it, and I do not know whether the Chancellor will cling to the particulars of which he has spoken as a means of the Valuation Branch carrying on its work. I would not commit myself to saying its very necessary work, although I see that the Chancellor of the Exchequer pointed out in his speech that great changes have taken place in the value of land and houses, and that a re-assessment is necessary, which will involve an immense amount of work. It must have sounded to the right hon. Gentleman the Member for Chelmsford very much like the old Form IV days, and I should have thought a kind of vista opened up before him of the procedure on the part of the Inland Revenue which would really call back to all its former determination and energy the work of the Land Union. Whether that be so or not, time will show, but it is rather significant that in the very Budget in which the Chancellor of the Exchequer is making concessions to the landed interests of this country, about which I shall have another word or two to say later, he is stressing the fact that they have since 1910 escaped contribution of their fair share to the revenue of the country.

On the Finance Bill generally, I suppose that with the present Government, the present House, and the present Chancellor it is the kind of Budget that might have been expected. The right hon. Member for Paisley (Mr. Asquith) made some charges of extravagance in the past but the Chancellor of the Exchequer will not admit that there has been any extravagance. For the last two or three years the ears of the country have been filled with the volume of complaints and charges of extravagance, but the Chancellor will have none of them. He refers to the commitments that existed at the end of the War, the obligations, financial and military and honourable, all of which involved expenditure, and his submission is, as I understand it, that all has been for the best possible good in the best of all possible Treasuries, that nothing could have been saved, and that nothing has been wasted. I should like to test that view, not from any outside opinions, but from what has actually taken place in the Treasury itself and what has been done by the Government.

We have had something like three and a half years since the Armistice. I do not propose to say anything at all about the first year and a half. Those were exceptional years, undoubtedly, but reasonably-minded people did expect that, at the end of 18 months, the Government would settle down to something like normal expenditure. They have got to a point of reduction this year, and it is upon what they have done this year that I propose to test what they might have done during the past three years. I think it is a test not too severe and stringent, because you have to bear in mind that, even in the present year, they have not come up to the expectations of the Geddes Committee. According to Sir Eric himself, they have a very considerable margin this year over and above what they ought to have, but, allowing for all that, and taking the present year and comparing the last two, what is the position? On the fighting services during he years 1920 to 1922, well after the military situation had settled down, they had spent over £600,000,000. This year they are proposing to spend something under £170,000,000, so that the expenditure for the two years, instead of being £660.000,000, might have been rather less than 2340,000,000, so that there is £270,000,00 over and above what would have been the sum for the three years on the present year's expenditure.

Coming to Civil expenditure, in those last two years they have spent £1,077,000,000. Taking the present year as the basis—a year in which they are spending £346,000,000—if they had pursued the path of economy they are pursuing to-day they might have saved in those two years £385,000,000. So that for the two years on the Fighting and Civil Services combined they have overspent, taking the rate at which they are spending in the present year, a sum of £655,000,000; that is by getting away from all the military obligations of the year, and getting into what might have been normal times, if the policy of the Government had been otherwise than it has been. I want to be as fair to the Chancellor of the Exchequer as an opponent of the Government can be, and I think that from that £655,000,000 it is right and proper to write off exceptional charges during those years. There are Loans to Dominions and Allies which do not appear in these accounts, payments to the railway companies under the Agreement, the bread subsidy, the expenses of the Ministry of Munitions and Ministry of Shipping, besides some expendture for food control and expenditure under the Mines Agreement. Wiping all these things out as being things which do not fall under the present year's expenditure they can be put at about £225,000,000. If you deduct that from the expenditure, you are left with the normal expenses. So that, making every allowance it is possible to make there is a sum of over £400,000,000 which during the last two years might have been saved and which the Chancellor of the Exchequer might have had in hand to-day. Curiously enough, that sum approximates fairly closely to the amount which we consider has been thrown away in Russia, Iraq, Egypt and other parts of the world. These sums have been generally estimated, I think, at something like £300,000,000. The Chancellor of the Exchequer has now got a surplus, not very creditable, as some people think, but he has got it. I do not suppose Chancellors of the Exchequer care very much how they come by things, so long as they do come by them. The Chancellor of the Exchequer when he came to consider his Budget found himself with a balance of £46,000,000, of which he might dispose; that is, after he has taken to his credit £90,000,000 still remaining in the disposal of stores, etc. Rut taking that £90,000,000 into revenue, and disregarding his Sinking Fund, he has left himself with £46,000,000 to give away.

How has he given it, away? He has given the largest amount away in Income Tax. The hon. and gallant Member who moved the rejection of the Bill said that this was a rich man's Budget, and I do not think that is an unfair description. £46,000,000 of relief has been given to those people who least needed it. To test it, we have had furnished to us what is a very helpful document—a table illustrating the effective rates of Income Tax, which justify the charges that have been made that this is a rich man's Budget. On page 4 there is a scale which sets out the different amounts paid on income. The Chancellor of the Exchequer says that it is absurd to say that if you relieve Income Tax you are relieving the rich. He said it was not only the rich who pay Income Tax, but that when you relieve Income Tax you relieve a great many people. I see they are set out here in their categories, and I propose to take two extremes. Here is a poor fellow with £150,000 a year. When he has paid his Income Tax, all he is left with to carry on a miserable existence is £62,476 a year. What can a man do with a sum like that? Obviously it was a man like that who needed relief. What the right hon. Gentleman has done to this burdened sufferer is that he has given him relief to the extent of £7,468 12s. 6d. a year. That is not, much, of course, but it is something. He will be able to get his Rolls-Royce out of pawn, and perhaps get an extra week-end or something of that sort. But it is quite true, as the Chancellor of the Exchequer points out, that that is not the only class of people who get relief under this Budget. The man with £500 a year gets his relief too. A man with £500 a year, as a rule, is drawing a salary or income more or less fixed: for instance, a country parson or civil servant, or somebody who is in more or less of a position of trust, the kind of person, say, upon whom the War has fallen with particular force, who is endeavouring to give his children a good education, and probably has not taken advantage of the provisions of the new Education Act. He may be keeping a son at college. He has£500 a year on which to do all that, and to keep up appearances. He has got to deny himself in all sorts of ways, and to spend very little except on the simplest pleasures. He is a fitting subject for relief. The Chancellor of the Exchequer recognizes that, and consequently gives that relief according to the scale. Having relieved the other poor fellow to the tune of £7,468, he feels that something must be done for this case. I find on looking over the list that this person is not forgotten. He gets relief, it is true, but not to the tune of £7,468. He gets the really substantial amount of £2 7s. 6d. There are similar cases attempted to be justified on a good many grounds. But you can mainly justify the Budget on Biblical grounds, for so far as I can see it has been framed upon sound Biblical principles, which is to those who have shall be given. That is the foundation of the Budget.

Other forms of relief are given. The Chancellor of the Exchequer, I think, rather objects to the description of the Budget as being a rich man's Budget, but it is hard to get away from that idea when you look at some of the other forms of relief. Take the relief in respect of amenity lands. These are, as I understand, lands that surround a dwelling house which are laid out in parklands, gardens, and so on, that make for beauty and convenience, and make the place a desirable place in which to reside. Prior to the War these were assessed on a basis of one-third. During the War they were assessed on the full annual—

Mr. PRETYMAN

One and one-third.

Major BARNES

How is that?

Mr. PRETYMAN

They come once under Schedule A and one-third under Schedule B.

Major BARNES

The point I want to make clear is the effect of this particular reduction which is relief given for a period of the year, £150,000, while for the full year it will amount to £300,000.

Mr. PRETYMAN

This has nothing whatever to do with land increment, but only the actual value of the grounds surrounding the house. That would not be £300,000, or anything like it.

Major BARNES

I am afraid the right hon. Gentleman has not given that attention to the Chancellor of the Exchequer that his speech really deserves.

Sir R. HORNE

The right hon. Gentleman (Mr. Pretyman) is quite right.

Major BARNES

Well, I will just take the opportunity of quoting the right hon. Gentleman's own speech: These proposals will, I estimate, in the case of what are called amenity lands, mean a loss to the Exchequer of £150,000 in the present year and £300,000 in a full year."—[OFFICIAL REPORT, let May, 1922; col. 1035, Vol. 153.]

Sir R. HORNE

Quite right.

Major BARNES

These are the figures.

Mr. PRETYMAN

Yes.

Major BARNES

A little earlier the Chancellor of the Exchequer said: In the case of land which is not being agriculturally dealt with, where there is no profit, and very often only expenditure, ill those cases I propose we should go back to the pre-War rate of assessment, that is one-third of the annual value."—[OFFICIAL, REPORT, 1st May, 1922; col. 1035, Vol. 153.] In regard to the agricultural land, that was increased in the War, and I have, for precaution, read the words of the Chancellor of the Exchequer. He said: During the War, in the case of farmers tilling their farms, the basis of assessment was raised, at first to the annual value and then to twice the annual value."—[OFFICIAL REPORT, 1st May, 1922; col. 1034, Vol. 153.] Farmers indirectly, I suppose with the owners, say that their taxes went up 30 times. First of all, the basis of assessment went up from one-third to twice, which was a sixfold increase, and then, with the going up from 1s. 3d. to 6s., it was about five-fold, so that really in the case of these lands they were, during the War, increased some thirty-fold! That does seem as if, just before the War, they had been escaping, in some quarter or another, anything like a fair assessment. At all events there is that very considerable amount of relief being given. I understand that that was given in response to some requests of some deputation or other which appeared before the Chancellor of the Exchequer. I shall be very much interested to know whether these representations came purely from farmers, or whether they were backed up by the landowner, as distinct from the land-using; interest, because this must have an indirect effect upon the lands. It must be a very difficult thing to maintain the rent if your tenant can say to you: "Well, now, look here! As things are, for every £1 of rent my basis for Income Tax is fixed at £2." This must be a very difficult position. I can quite believe, apart from the farmers themselves who rent the land, this concession must be viewed with a great deal of confusion which cannot be said at all for the relief given to the poorer classes of the community. The only thing they get is the Tea Duty, and the only point I make on that is one which the Chancellor of the Exchequer I hope will meet in Committee, and that is the 4d. in the lb. is not a fair and candid reduction. It appears to be 4d. and is not. The right hon. Gentleman looks up with surprise, but he is not really surprised.

Sir R. HORNE

To put it the way the hon. and gallant Gentleman wishes would give a preference to which he would object!

Major BARNES

It would, I agree, but the Chancellor of the Exchequer knows perfectly well that this has the effect of reducing the preference by only one-third; to that extent it is good. The Chancellor of the Exchequer knows perfectly well that this is only off 10 per cent. of the tea which is drunk in the country. Ninety per cent. of the tea drunk is not taking the 4d., but only 3d. and two-thirds of a penny, and it is impossible to divide that 3d. and two-thirds to enable reductions to be made on the smaller quantities of tea. I hope that in Committee the Chancellor of the Exchequer will, at least, make the reduction 4d. all round.

This is supposed to a Save-the-Trade Budget. I do not believe anybody really believes it is, for the amount of relief in Income Tax that is given will have no substantial effect upon trade. Some of the strongest supporters of the Government, like the right hon. Gentleman the Member for Norwich (Mr. G. Roberts). and Mossley (Mr. A. Hopkinson), have pointed that out in the course of the Budget Resolutions. One knows perfectly well that this remission of something like £20,000,000 a year is going into, the pockets of those who will employ it in other investments. Nobody will believe that the addition of £20,000,000 added to the fund at present available for investment is going to make a substantial difference in the trade conditions of the country. What we really want to. do is to get good trade going, and what the Government can do very much more effectively than through the agency of the Budget is to retrace their steps in regard to the restrictions they have imposed upon trade.

Let them give real effect to and practice in this country the doctrines they have been preaching at Genoa. When the Chancellor of the Exchequer goes to Genoa, he is quite a different person to what he is here, and gives excellent advice to the members of the Committee, bringing them to sound conclusions, such conclusions as are necessary to get back prosperity in Europe. And what is good for Europe is good for this country—to get back to the gold standard, to a free market in gold, to have the fewest possible restrictions on trade, to get the best and cheapest transport facilities. That was the foundation upon which the Committee over which he presided proposed to build up a new Europe. I say to the Chancellor it is only upon that foundation that a new England can be built up. It is not by Budgets such as this, which is, after all, nothing more than a form of relief to the wrong person. It is not by a Budget of this kind, but by bringing into real practical effect the conclusions of the Committee over which the right hon. Gentleman presided at Genoa, that he is going to do what I believe he wants to do bring about some substantial improvement in the trade of the country.

Mr. KIDD

The right hon. Gentleman has in his present financial proposals shown a fine native gift of making a very little go a long way. It is hoped that these present proposals will lead to yet better things next year. But we do not expect miracles in the domain of national finance, and if the hope referred to is to be realised it is quite clear that the burden must not be left entirely with the Chancellor of the Exchequer. We in this House must do something more substantial than we did last year to assist the right hon. Gentleman to guard both sides of the balance sheet. We must seek, not only to discover more real economies, but we must also seek in every possible way to encourage the increase of national wealth. I do not think after the bitter experience we have had in the past that many hon. Members.-or the public outside, will approve of the economies indicated in the speech of the last speaker, who seems to take exception' to any expenditure in any form having for its object the security of this country. Expenditure necessary to secure our island home and to secure our trade abroad in order to stimulate employment here is peculiarly objectionable to him.

I would almost wish that he had directed his very persuasive arguments to those countries who still maintain barriers against our trade, and who, by means of those barriers, are making the conditions of unemployment, bad as they are bound to be after a great War, still worse. Without danger to the State, and without endangering the employment of our people, I wish to suggest certain economies which I think might really be considered by the Govern- ment. I allude to the expenditure occasioned to us by our scheme of local government. It does seem somewhat ridiculous that in the smallest county you have parish councils, town councils, county councils, and education authorities representing four spending bodies, and three of them independent rating authorities.

Now why cannot we consolidate and concentrate our local government more than we do? Even in the matter of the collection of rates, which is spread over three bodies, concentration in that item alone would effect a very large local economy. However much Members of this House on the platform may pretend that rates and taxes are two separate and distinct things, I hope that no Member of this House is prepared to forfeit his reputation for common sense by trying to maintain that position here. My view is that the best way we can give relief to the Imperial Exchequer is to discover some method by which we can effect a large diminution in local expenditure, and I suggest that by concentrating on the lines I have just indicated we could effect a good deal in that direction. I know I shall be met with certain sentimental objections, and I hope that I am as amenable to sentiment as any hon. Gentleman opposite. Take the parish area. It had its origin in the Church which, at one time, wits responsible for the maintenance of the poor and for education. When these burdens got beyond the power of the Church to maintain, then the people undertook them and the parish unit was still maintained. Again take the smaller boroughs. Sometimes they had their origin in the action of the feudal lord seeking to add to his own dignity and to the benefit of his vassals by the privileges of a Burgh of Barony. Later they arose to secure the powers of public health not then enjoyed as enjoyed now by the county council. The feudal power disappeared, but the Burgh unit remained while the powers of the county council in public health would now render the other class of Burgh unnecessary.

The position is ripe for a complete survey of our system of local government and when I have pointed out how accidentally were the parish area and the borough area; when I point out how the original reason for those areas has now disappeared, I hope I have gone a long way towards establishing the case that the time has come when we might consolidate in the hands of the county council all the powers at present possessed by the parish councils, and by the overwhelming majority of our smaller boroughs. I have already referred to the education authorities. The fact of their creation as against the old Parish School Board is a proof that the mind of our people is already travelling in the direction which I have indicated. The old parish area scrapped and in its place you have the county education authority. You get a larger area and a larger conception of things, which I am sure in the end will be better for everybody interested in education. I believe I am right in saying that the original intention was that the education authority should not be anad hoe body but that education should be administered by the County Council. Unfortunately for Scotland that original intention was departed from.

Mr. DEPUTY-SPEAKER (Sir E. Cornwall)

I think the hon. Member would have some difficulty in associating this topic with the Bill now under discussion.

Mr. KIDD

I only wanted to point out how greatly our education administration costs have risen since 1918, and that, if it were in the hands of the county council, the result would be great economy. It is of the greatest national importance that we should reduce the burden of local rating, because, indirectly, the result would be to supplement our national revenue in two ways: First, by increasing national revunue, and, secondly, by diminishing the cost of administration. With the present burden of rates no man will build a house when he realises that the rates may mean a double rent. That naturally also prevents anyone investing his money in house building. If we can reduce the rates and bring back house investment to the position it occupied before the introduction of land values, we would supply a primary need of this country, we would have a constantly increasing stream of new houses, the rateable area would thereby be extended, and the national revenue would be proportionately increased. It seems rather monstrous to continue to encourage a condition of things which makes for overcrowding and for the creation of slums and necessitates the maintenance of a costly Ministry of Health. Let us largely diminish the rates and have a proper supply of housing on sound economic lines. We shall thereby largely increase our national revenue and by-improving the health of our people diminish the cost occasioned by the maintenance of the Ministry of Health. If we would assist the Chancellor of the Exchequer I said that we ought to encourage the increase of our national wealth. I am speaking in the presence of many members of the Labour patty who, I feel sure, will agree with me that, looking to the condition of our national finance at the moment, and looking to the difficulty of obtaining a living wage for the worker, the time has come when our trade unions should direct their efforts to purely economic purposes and should seek by investment to grow for the worker a share in management instead of being used as a mere pawn in the political game. By directing our attention to both sides of the national account along the lines indicated, I believe our financial position would be very much improved in a very short time.

Mr. WISE

I regret that the Vice-Chairman of the Labour party (Colonel Wedgwood) is not in his place. The Chancellor of the Exchequer has replied to the speech he has made, but I should like to give a further reply in view of a question which the hon. Member had down on the Order Paper for to-day. I will read it to the House: Colonel Wedgwood,—To ask the Chancellor of the Exchequer, whether the debt owed by Great Britain to America is additional to the sum of about £8,000,000,000 at which the National Debt, approximately stands, or whether it is included in that figure. The hon. and gallant Member delivered a speech of about 40 minutes' duration and gave various figures with regard to the Railway, Sugar and Wheat Commission and many other figures. I must say I cannot understand any hon. Member who has really studied his subject asking a question like that. The hon. and gallant Member also asked what was wealth. Perhaps I may tell him what I consider it is. I divide it under three heads: first., physical wealth, that is to say, our harvests: secondly, the wealth of labour; and, thirdly, the wealth of credit. If the hon. and gallant Member understood the wealth of credit he would be the last person to advocate a capital levy. If there is one thing we have not got in this country sufficiently at the present time it is capital. The hon. Member for the Spen Valley (Mr. Myers), who followed the hon. and gallant Member, referred to various issues of capital recently made. They, however, do not represent wealth. These issues were made because the bank rate is low, and investors can get more interest by investing in such securities as the Anglo-Persian Oil Company, and the other investments mentioned. This Budget has been called a gamble. The right hon. Member for South Molton (Mr. Lambert) further stated that the Chancellor of the Exchequer had budgeted for a deficit. I do not think that anyone who looks at the figures and studies them and realises what is meant by cheap money, could think that we are budgeting for a deficit unless something unreasonable occurs.

Take one item, the Consolidated Fund Services, which are made up of the National Debt Services. I should like, with the permission of the House, to give a few figures to show how very conservative the. Chancellor of the Exchequer is. In fact, he might be called ultra-Conservative seeing that in these days we want courage to help our traders. These are the figures to which I wish to refer. The estimate for the National Debt Services for 1921–22 amounted to £345,000,000. The actual amount for 1921–22 was £332,000,000, or a saving on the year of £13,000,000. This year's Estimate—for 1922–23—is £335,000,000, and in that is included the debt due to the United States of America, £25,000,000, which, if deducted from the £335,000,000. gives a total of £310,000,000. The difference between that and the actual amount for 1921–22 is £22,000,000. One item in the National Debt Service is that of Treasury Bills. Let me again, if I may humbly do so, congratulate the Chancellor of the Exchequer on acting on the tender system. He has saved this country millions by issuing these Treasury Bills by tender. Roughly, our Treasury Bills are down £300,000,000 in the twelve months. The interest on that £300,000,000 alone represents over £10,000,000 a year, and, if you take the difference between what the Chancellor of the Exchequer is paying in interest, you find that he is now paying £2 5s. 2d. per cent., whereas 12 months ago he was paying £5 13s. 1d. That is a difference of £3 7s. 11d., and, if you look at the average over the whole year, you can take it, on the most conservative basis, that the interest paid on Treasury Bills is at least 14 per cent. less than it was 12 months ago. That alone comes to £14,000,000, and with the £10,000,000 which I have just mentioned, makes a reduction of £24,000,000 due to cheap money. Another point to which I should like to refer is with regard to the depreciation fund. When the War Loan and the Funding Loan were issued, a depreciation fund was arranged, so that, when the stock went below the issue price, one-eighth of 1 per cent. was to be purchased monthly as long as the stock was below the issue price. I have here the White Paper dealing with the National Debt. It was issued in 1922, and is dated 31st March. 1921. That. is for last year, and to show the large amount that is involved I should like to quote from it. It says: Twelve monthly payments of £2.660.022 6s. were made to the National Debt Commissioners on account of the Depreciation Fund in connection with the 5 per cent. War Loan, 1929–47, and the 4 per cent War Loan, 1929–42, established in compliance with Section 32 of the Finance Act, 1917, making, with the balance of £8,589,390 8s. 8d. in hand on the 31st March, 1920, and £386,053 18s. 10d. received for interest, a total available of £40.895,711 19s. 6d. Of this sum £31,771,001 11s. 3d. was applied in the purchase and cancellation of £37,495,000 5 per cent. stock, leaving £9,124,710 8.s. 3d. in hand at 31st March, 1921. This Depreciation Fund must be a very great saving to the Government, because the War Loan and the Funding Loan are above their issue price, and, if you estimate on a conservative basis, there should be a saving in 1922–23 of about £25,000,000. There are also the Death Duties. Owing to the rise in these Government stocks, the Chancellor of the Exchequer will not have so much stock handed to him for Death Duties, and will not have to pay the difference between the par value, at which some are handed to him, and the market price. A very conservative estimate should show under this head a saving to the country of at least £8,000,000 in 1922–23. Adding all these three figures together, we get £57,000,000, of which the Chancellor of the Exchequer has allowed for £22,000,000. That leaves a balance of 135,000,000, which is £10,000,000 more than the interest payable on the United States debt. Besides that, there is the Excess Profits Duty, of which, at the end of March, there was £296,000,000 outstanding. The Chancellor of the Exchequer, in his Budget for 1922–23, is allowing for £27,000,000 of this to be paid over a period of five years, with interest at 5 per cent. without deduction of tax. That is really equal to 6¼ per cent. Taking it on a 5 per cent. basis, the interest on that would be £13,000,000 alone. There are several other matters, such as Income Tax and Supertax, the amount carried forward on 31st March being £146,000,000. The Chancellor of the Exchequer is estimating for £320,000,000 this year. Supposing that lie got in the amount due at the end of March, as We sincerely hope he will, it will mean that he will only have to collect 1183,000,000 during 1922–23. He also has—which I think shows the conservatism of his Budget—the pension capitalisation to consider, and, further, he has possible reparations and possible Allied debts. I put down a question quite recently as to whether Czecho-Slovakia was going to pay her debt, after issuing a loan in this country, and I understood that she was going to pay £2,000,000. That will all assist in strengthening the Budget. Moreover, the Civil Service war bonuses may come down, and that also will help. I am all for a conservative Budget, especially in the difficult times which may be ahead of us, but I do think that, with the continued blessing of peace and a system of preserving economy, the public credit of the country was never better and should continue to hold that splendid position.

9.0 P.M.

Mr. W. GRAHAM

On this occasion we have only one day for the discussion of the Finance Bill, and I think that, in justice to other Members of the House, we must as far as possible try to put our points as shortly as we can. With that in view, I propose simply to raise one or two of the leading questions in connection with the Bill as we see it from the Labour benches. During recent weeks there has been a great deal of criticism of the Budget on the ground that it was unduly generous to the wealthy or well-to-do classes, and I think it is our duty in the House of Commons to ask frankly whether there is any ground for that assertion. The people of this country are broadly familiar with one or two outstanding facts since 1914. They remember that our national indebtedness before the War broke out was in round figures £650,000,000, and they know that the national indebtedness to-day is about £7,000,000,000. They also know that in pre-war times we used to raise from the whole of our taxes about £200,000,000 per annum, and that we are now raising £900,000,000 or £1,000,000,000, that is to say, five times the pre-War figure. They are also told by economists and others that the taxation per head in Great Britain has arisen from about £:l before the War to about £21 or £22 at the present day. All these statements burn themselves into the minds of the masses in public debate, and they are beginning to appreciate the real burden, if I may so describe it, which that very great change involves. Then, having got these facts tolerably well together, they immediately ask themselves what call has been made upon big business—if I may be forgiven for using that phrase—or upon those who made large sums of money during the War. Have we called upon these people for any large contribution in proportion to the undeniable opportunities of wealth-making which they have had during that time? Let us coldly and impartially, and without any desire to make party capital, examine that side of the picture. The truth is that we in this country have not embarked upon a capital levy of any kind. I make that statement for the moment subject to qualifications which I will introduce later. We certainly have not had the capital levy which has been introduced by other countries whose financial position is after all not so good as our own, and whose needs were certainly very great. That is the first thing that well-to-do people in this country and the wealthy classes have escaped.

Then there was introduced the Excess Profits Duty, which, it was held by many of its defenders, did go a long way to meet the kind of exceptional gains which certain sections of business were; making during the War. Many of us on this side of the House never defended the Excess Profits Duty as a fiscal device. Speaking quite for myself, but I think also for many others, I question if a more mischievous tax, from a fiscal point of view, was ever introduced. It was thoroughly unfair in its incidence. It was capable of wide- spread evasion, which, in fact, took place. It. was from every point of view an undesirable impost. But a very large sum of money was collected under the Excess Profits Duty, and then there came an arrangement in recent times by which it was possible to claim repayment in respect of losses or deficiencies. The truth is that at present a very large part of the Excess Profits Duty has been repaid, and one of the most lamentable points about that repayment, of which I think the House of Commons is bound to take note, is that because of inadequate staff in the Inland Revenue Department it is not possible to examine so closely the claims for repayment as should have been done in the interests of the State, and probably large sums, I am afraid, have been repaid—the Inland Revenue have had no other choice—which on a strict reading, would have been in the coffers of the Treasury at this moment. There is high authority for that statement. That is the second point which I think the masses of the people have in mind.

There has been, in the third place, no special levy or charge upon war gains as such. I mean on the lines which were suggested by the inquiry conducted by a Select Committee of this House. That Committee reported that there were at least £4,000,000,000 of unmistakable war gains, and the evidence tendered by the Inland Revenue authorities was that a scheme of taxation, or appropriation of part of it, was possible if the State so desired. That Report was put in the waste-paper basket, no action was taken, the Excess Profits Duty began to be repaid, and I think a very unfortunate impression was left upon the minds of millions of the electors. They took the view, while they themselves admitted that they had participated in some of the gains, that a certain section of the community—I do not blame them specially for it because much of the wealth was automatically made—had profited unduly by the terrible experience through which this country passed, and that it was our duty to appropriate at least some portion of that gain in order to render unnecessary and impossible the terrible kind of Finance Bill with which the House is confronted to-night. These facts are very clearly in the minds of the people when they consider the present taxation.

But is it unjust to press a little further the kind of social conditions in which this Finance Bill is introduced, and ask whether the relief given in it is quite fair to all sections of the British people? I have often been told as a young Member that there is no assembly so just and fair as the House of Commons if you state your case frankly, whether it agrees with you or not. Let us view this situation among the masses and expose it to the test of the distribution of relief under this Bill. I agree that for a year and more after the War concluded economic conditions were on the whole prosperous, artificially prosperous no doubt, but still prosperous, and that led large numbers to believe that we were going to pass through our post-War experience without any great dislocation of industry or trade. The slump has come, and during the past 18 months, or less, a sum equal to at least £500,000,000 per annum has been deducted from the wages of from 7,000,000 to 10,000,000 of British workers. I admit, of course, that profits and returns and everything else have fallen in the same period, but there you have a block of seven to ten millions of people who have suffered undeniably during that period to the tune of £500,000,000 at least per annum. That would seem to indicate that that class of people should receive special consideration in the Finance Bill if strict justice is to be done to all the people as far as British finance is concerned.

We find, on the other hand, that a very large part of the relief afforded under this Bill goes to farmers and to other sections of the community, but is not directly and immediately traceable to the seven to ten millions of people I have described. No doubt they will get the indirect benefit of any improvement in trade that the reduction of Income Tax and the rest brings. But as to any immediate relief they are undeniably at a serious disadvantage under the present proposals of the Chancellor of the Exchequer. What do we do in this Bill to meet that situation? My hon. and gallant Friend the Member for East Newcastle (Major Barnes) drew attention to the comparatively small amount of relief that is afforded to the humbler Income Tax payers, and showed that on an income of about £500 the relief under this scheme would be little more than a few pounds at the best. But the seven to ten million people I have mentioned are very far below the £500 limit, and quite apart from that, we know that under the existing system of Income Tax a man may have a wife and three children and some small insurances and have anything between £350 and,E400 per annum before he is liable for a copper of Income Tax at all. These conditions of even small Income Tax payment do not obtain amongst these millions of people to-day, and the result is that, apart from the indirect benefit of the reduction in general taxation, they must depend upon such relief as is given in indirect taxation. That relief is confined to the £5,000,000 or so represented in the concession on the Tea Duty. My conclusion therefore is that it is altogether insufficient, and that goes a long way to justify the criticism that the allocation of relief under this Finance Bill is unfair, and is out of keeping with the very hard social conditions in which millions of people, through no fault of their own, find themselves to-day.

The other point to which I want to refer is the proposal under this Bill to place on a basis of one year's rental the assessment to Income Tax of farmers and others using land. I refer to it here because of the definite recommendations on that point which we made in the Report of the Royal Commission on the Income Tax. This basis of assessment for farmers has continued, as far as I remember, practically from the earliest time of Income Tax in this country, and in other days it was defended on certain grounds which I think no Member of the House of Commons would plead with any great force or conviction to-night. It was argued that there was considerable uncertainty about farming, that farmers did not or could not keep accounts, and that the whole occupation was one from many points of view of such a precarious character that it would probably be fair to take the annual rental as a kind of basis for Income Tax purposes. The original proposal was one-third. Passing through intermediate stages, it was raised to, I think, once, and then twice the annual rental, and now the Chancellor of the Exchequer proposes to go back to once the annual rental, because of the difficult times which have recently over taken British agriculture. I make no criticism whatever of that proposal from the point of view of existing conditions, but I say that the whole basis of assessment to Income Tax as represented by this proposal applying to farmers is thoroughly unsound.

The Royal Commission examined this at very great length. That Commission included one or two men eminent in agriculture in this country, and they recommended unanimously that after due notice had been given the farming classes of this country should be put on the ordinary assessment under Schedule D, that is, on their profits from time to time, and that that was not only desirable in the public interests but fair to other trading and producing classes in the community. What happens at the present time? They have, of course, the choice of assessment either of double or of once their annual rental, or an assessment on their actual profits under Schedule D. As times are prosperous or bad, they oscillate between the double rental or the single rental, and the assessment on ordinary profits. While there may be a certain cheek on the rental basis which their Inland Revenue authorities have, and which they can apply, it is practically impossible to say in this country at the present time that we have fairly taxed the farming community. I am not suggesting that farmers as a whole want to avoid their taxes. I am only suggesting that this is a bad basis, and that it was condemned unanimously by the Royal Commission on Income Tax.

There is another element in the situation. It has been pointed out that many farmers to-day are occupied in different kinds of enterprise. They are not confined to the cultivation of the soil. There may be poultry, fruit and other enterprises connected with their farms or concerns, and it is very difficult to arrive at a true income and true profits in cases of that kind whenever you have this basis of assessment. My contention is that we should not, any longer than we can possibly help, perpetuate this method of assessing farmers, but that we should at the earliest possible date place them in the same position as other traders and producers, and ask them to take their place under Schedule D on profits, with the usual assessment and abatements to which other producers and traders are subject. That was the unanimous recommendation of the Royal Commission. The only proviso they added was that due notice should be given, and I suggest that the Chancellor of the Exchequer should, before the Finance Bill leaves the House of Commons, give that notice if he agrees with the recommendation of the Royal Commission.

Some hon. Members have described this Budget as a gamble. They mean by that that we are taking our chance by reducing the Income Tax and sacrificing £50,000,000 or £60,000,000, and temporarily we are suspending our provision for the repayment of debt. What is our view of that proposal on these Benches? Over and over again I have heard my right hon. Friend's predecessor in office say that it was one of those undeniable canons of war finance that we should seek to pay off as early as we possibly could the debt that we incurred during the War, and that as far as possible we should seek to repay in the terms of depreciation, so to speak, in which we accumulated a very large portion of it. I do not think the House can contend that we have been faithful to that principle in the present Finance till. I want to be perfectly fair, because if there is one thing that demands a cool head, it is British, or, indeed, any finance. What is the question which the Chancellor of the Exchequer puts to the House? I assume that he agrees to that principle. He says, in effect: "I are confronted with very great depression in industry and commerce, and I am going to take my chance of reducing the taxation immediately in the hope that it will contribute to some extent to that trade revival which will make it possible for me to do more in succeeding years in the way of debt redemption than I could do if I strangled industry and commerce by high taxation now, and made it impossible for it to recover."

On that point I should like to say that there are many who believe that it is a very risky experiment. Suppose trade and commerce do not revive, and suppose we have sacrified this taxation. That would seem to point in the coming year to more borrowing, and with that to more inflation and to higher taxation and all the other diseases with which we have been painfully familiar during recent years. I prefer to build on the alternative. There is over practically the whole world at the present time, in nearly every country, the first faint sign of some coming trade revival. It is pronounced in some parts of American enterprise. It is found in many parts of Continental and other development, and I think, even in this country, our tendency is in the right direction. Accordingly, I appeal, as far as I possess any small influence in these matters, to all sections of people not to decry the effect of this small reduction in taxation, but, rather, to emphasise the psychological gain, if I may so describe it, which will come from it, and to do everything in their power so to build up industry and commerce that this experiment, risky as it is, will be justified, that our financial position will gain in years to come, and that by and by we shall be able to address our minds to those great social and other causes which arc, unfortunately, because of our condition, postponed to-day.

Mr. DENNIS HERBERT

I will confine my remarks to a few points of criticism of a Budget of which, on the whole, I approve, and I will ask the Financial Secretary to consider them before the Committee stage of the Finance Bill. I wish to deal with the Sections relating to the question of the avoidance of tax, and with regard to Section 14, and to add to what was said by the right hon. Baronet the Member for Moray and Nairn (Sir A. Williamson). I have every sympathy with the Chancellor of the Exchequer in wishing to hit what one might describe as the least conscientious of those men who are getting out of payment of Super-tax by means of the formation of these particular companies. The right hon. Baronet has already drawn attention to the way in which, in an endeavour to catch that particular individual, the Chancellor of the Exchequer is going to lay under a serious hardship a very large number of the comparatively small shopkeepers in this country who carry on their businesses as limited companies. May I point out to him, however, that the man who he is particularly trying to hit, if I are not mistaken, can and will keep out of this in the very simplest way possible? There are places in the world where joint stock companies can be registered, where there is not a big taxation on the income or profits made by these companies. The first thing that such a man will do will be to reconstruct and register his company as a foreign company instead of in this country. Not only will he by that means get oat of this attempt to saddle him with the Super-tax, but it will also remind him of what he did before the Act of 1914, when there was a regular system of what was known as savings banks accounts in Canada; the money which he hands over to this trust company he will probably invest in foreign securities, and he will thus take that money away from this country and those investments will not pay British Income Tax. I confess that, with every wish to see that got over, I do not see how it can be done, but so hardly may this Clause work that I feel perfectly certain it will be avoided, even by other means if necessary than that of registering the company abroad.

There are many ways in which men, wishing to build up a fortune for their children or something of that kind, can get out of this particular Clause by subscribing to such a company as will be formed directly this becomes law. They will form a public investment trust company, which will confine itself to investing all its capital in high-clase trustee security, and will provide that it pays only comparatively trifling, if any dividends at all. That being a public company with a very large number of shareholders, it will be entirely outside this Clause. There is one hardship under this Clause which I want to point out if the Chancellor were to persist in it, which I. sincerely hope he will not do. What is meant by reasonable proportion, regard being had to the normal requirements of the business"? There you find an example of the evil of a particular Clause of this kind, where you have to have an inquisitorial system, with all the power vested in some individuals who will say whether one particular member shall be taxed on certain grounds and if another particular member shall get out of being taxed on certain particular grounds. You are, in effect, leaving it to a body of referees to decide, according to their own sweet will, to what particular extent a particular man should be taxed. But the only thing, apparently, to which regard is to he had is the "normal requirements of the business." I would ask the Chancellor of the Exchequer to say whether the "normal requirements of the business" is intended to cover and include the building up of the sinking fund to replace wasting capital? I can tell the Financial Secretary to the Treasury that I believe I formed for a. client the first company which was formed in this country for the purpose of avoiding Super-tax. It was formed the moment Super-tax was first brought in, and as a result of what I have always thought to be the one unfair and inequitable position with regard to Super-tax, namely, that is that it allows no deductions whatever, however reasonable. This was the case of a man who had an income of £40,000 from a wasting security, which had cost something between 2250,000 and £500,000, and the life of which was estimated to be only seven or eight years. It was nothing short of sheer robbery to calculate the tax as if the whole of that were income. As a reasonable man, all he could do was to treat about £5,000 out of the £40,000 as income and to put the rest aside to meet the wasting capital assets.

I wish to say a word or two on Clause 13, with regard to settlements which are not to relieve the settlor from liability to Income Tax. If it is not too early to do so—I do not want to go into Committee points—while thanking the Chancellor of the Exchequer for the alterations which have been made since the Budget Resolution, I would call his attention to one or two further points which might reasonably be met with regard to Sub-section (3). That is the case of income which is settled upon a child in his infancy, and it is provided that in order that it should be free from tax in the hands of the settlor it must be settled for some period not less than the life of the child. I suggest now, as I suggested in the Debate on the Resolution, that a provision for determination of the interest of the child on bankruptcy or alienation should not. be construed to be determination within that period; and it might be allowed to be determined, not merely on the death of the child, but on the death of the settlor of the money, because many a man is trying to make provision for his children, not out of capital which he already owns, but out of money which he is making, because he has no other means of providing for them. I know of several cases in which, before any question of avoiding Income Tax arose, men entered into commitments to pay certain sums out of their income for the benefit of infant children so long as they lived, and so long as the man himself lived, but it would be quite impracticable for him to saddle his estate and executors with the burden of making those payments after his death.

There are only two other points to which I wish to refer. One is the Corporation Profits Tax. I do not wish to add to what has been said on that subject more than to put in my plea, in addition to those of other hon. Members, that this most industry-hampering tax should be got rid of as quickly as possible. If the Chancellor of the Exchequer really wants, as I am perfectly certain he does, to revive industry in this country, I honestly believe he would have done quite as well if he had taken off the Corporation Profits Tax as by taking 1s. off the Income Tax. It would cost him less and he might have applied further relief in some other direction. So far as the mere question of the revival of trade and industry is concerned, he would have done quite as much to help in that way as by merely reducing the rate of Income Tax. My last point, upon which I have to make a criticism, is one which I have not heard referred to to-night. It is the question of the tax on beer. I make this suggestion very seriously indeed. To my mind, the Beer Tax is not in the nature of a luxury tax. Brewed as it is now, with the heavy taxes on it, it takes a larger amount of beer than most working men can buy to make them drunk. It is looked on by the ordinary working man, who is not a the to taller, as quite as much a necessity of life as tea. In fact, more so, and the addition which the price of beer makes to the working man's bill is much bigger than the addition made by the tax on tea. Taking his view that it is a necessity of life, it is the one necessity of life on which the tax has been increased far more highly than the Tea Tax or any other of the taxes, and it is the one tax on which there has been no reduction whatever.

But the serious part of it from the point of view of the rest of the country is this, that the working man who drinks beer in the ordinary way looks upon this as a thoroughly unjust tax, and it is an injustice which tends to cause unrest among the working people of this country, more than any other alleged injustice in the whole realm of taxation. It may be too late to do anything this year, but I do earnestly urge upon the Chancellor, and all the others who may be concerned when the time comes, that the greatest possible effort should be made to reduce that tax next year. If the tax be reduced by £1 per barrel, the price of beer to the consumer will be reduced by ld. a pint, and that reduction will not be borne entirely by the State, but will be borne to a considerable extent by the brewer. It is not the brewer's fault at present that he is making big profits because of the big taxation. While there is an enormous production sold in very small quantities, the brewer naturally says, "I am not going to sell at a loss," and with a difference of ld. or a halfpenny on the small quantities sold, in the present state of affairs he gets a higher profit—I was going to say higher than he wants. At any rate, he is prepared, I believe, to provide something like 50 per cent. of the cost of a reduction of ld. a pint if the State will provide the other half by the reduction of £1 per barrel on the duty.

Mr. G. LOCKER-LAMPSON

Reading through this Bill I am very glad to see that at last the Chancellor of the Exchequer is dealing with the very important question of evasion. The hon. Member for Watford (Mr. D. Herbert) said that in one or two cases the Clause in regard to evasion would probably have to be amended. I think that that is very likely to be the case, but I am glad to see that the question of recoverable trusts is going to be dealt with, that under Clause 13 what are called single-man companies are going to be dealt with, and also that under Clause 15 the law is going to be very much strengthened in regard to sending in particulars of deductions for Super-tax, because, clearly, under the present system, people who do not wish to make proper returns return all sorts of reductions in respect of repairs, very often repairs that are anticipated, and that have never yet been effected at all. Therefore I hope that in the interest of the taxpayer who makes proper returns the Government will continue every single year in every Finance Bill to deal with this question of evasion as it comes up.

I wish to deal with two points which' have not been touched upon. The Chancellor of the Exchequer proposes certain Clauses which, I think, inflict a great deal of injustice upon various sections of the taxpayer. He put down Clause 11 in order to deal with the ruling of the House of Lords in respect of income assessed under Schedule D, a tax on such things as War Loan, for instance, on which the tax is not deducted at the source. Recently the House of Lords gave a ruling that, in respect of the man who had sold out and was no longer earning an income, he need not give the previous year's assessment. That, of course, meant great loss to the Exchequer, because it meant that in the last year in which he was getting income practically he paid no tax at all. To meet that case the Chancellor of the Exchequer has put down a Clause providing that in the first year such a person is to pay on the actual income, and thereafter he is to pay on the previous year's assessment, but this is going to entail a great deal of hardship upon the taxpayer. Take, for instance, a man who has bought £1,000 worth of War Loan, say at 5 per cent. In the first year of the purchase say he gets £25 interest, and in the second, third, and fourth years he gets his full £50, and in the fifth year he sells out, so that he only gets £20 interest. Taking that time, we find that his interest amounts to £235, but under the Bill as it stands he will actually pay £265. This can easily be remedied by the Chancellor of the Exchequer modifying his Bill a little bit by saying that such a man will pay on the actual income, and in the last year when he sells out he shall pay on the actual income of that last year, whatever that income may be.

Mr. YOUNG

I think that that will be unnecessary.

Mr. LOCKER-LAMPSON

I think that I understand my hon. Friend's interruption. He will say that there is already a concession, though it is not in the Bill. I believe that there is a concession given by the Inland Revenue, but the whole lot of these concessions are merely memoranda sent out to the inspectors, instructions from the Board of Inland Revenue. It takes experts under the Income Tax law very often months to find out what these concessions really amount to. For the ordinary taxpayer who has not all these papers at his disposal it is impossible to find out what these concessions are. I would suggest that these concessions should be made in the Act. They should be put into the Bill, and at the same time, I think that they ought to be made applicable to interest from foreign possessions and securities outside the United Kingdom. That is one of the suggestions which I hope the House will have to consider. Under Clause 12 of the Bill all employments are to be placed under Schedule E instead of under Schedule D as at the present moment. This, again, I believe is going to act very unfairly to a very large section of our population.

Take many people such as commercial travellers and bank clerks. They have a fluctuating income. They get commission and bonuses. Every time until now they have been taxed under Schedule D on the three years' basis, and a very wide latitude has been given to these people in respect to the assessment. The practice has varied in almost every part of the country. Sometimes they have an average of salary plus the commission or an average of commission only where they do not get any salary. Or you find that it is the salary of the actual year plus the commission of the previous year or sometimes perhaps it is the salary of the actual year plus an average of the commission over the three preceding years. The very fact that this practice is varied throughout the country under different managements, shows the impossibility, when you have a fluctuating income, of being able to say at the beginning of the financial year what your income is to be for the rest of the year. Under the Clause of the Bill as it stands, they are obliged to guess what is to be their actual income of the year. Either the taxpayer guesses too little, and then the Exchequer loses, or he guesses too much, and then he loses, and has to make a reclaim at the end of the year. Under the Bill you say that he is to give his income for the actual year under Schedule E, but in any event, if his income is fluctuating, he cannot do otherwise than give his income of the preceding year. It seems fairer and simpler to enable all these people to calculate their incomes on the income of the previous year. The other day the Chancellor of Exchequer turned down several suggestions for reform on the plea that he had an insufficient staff. I have no doubt that that was a very good reply to give. But if this Clause goes through it will mean more work, more staff, and more cost in the long run to the Inland Revenue.

I want to support what was said by my hon. Friend the Member for Central Edinburgh (Mr. W. Graham) as to Clause 16 and farmers' profits. I think he made a very good case. Farmers' profit is now to be taken on the single annual value. I maintain that it is not fair to the rest of the community. I am not in the least hostile to the farming industry. I happen to be a landlord with tenant farmers, and I have the farmers' interest at heart. It is not fair to the rest of the community to treat farmers upon an entiraly different basis from the rest of the taxpayers. Farmers already are preferentially treated. If in any year their actual profit is below their assessment, they have that amount deducted from their assessment, and they are assessed on the lower figure. They have their assessment reduced to their actual profit, and it is a privilege which is enjoyed by no other class. Moreover, if their profs is in excess of their assessment, they have not to pay on that excess profit. The business man, who is assessed on a three years' average, has to stick to that average, although no profit has been made at all in the actual year. I cannot see any reason for this whatever. Take two men. One is a farmer and the other a business man. The farmer's assessment is £1,000 and the business man is assessed at £1,000 as his three-years' average Suppose they drop £500 of the profit, and each in any one year has only £500. The business man has still to pay on £1,000, but the farmer has his assessment reduced to £500, and he pays only on that sum. If neither makes any profit, the farmer's assessment is wiped out altogether, and he pays nothing, but the business man has still to pay on an assessment of £1,000. There is no justice in it.

I am not arguing that you should take this privilege away from the farmer, but you ought to grant it to the business man also. It has been argued that the farmer does not keep books. But a lot of small traders have not kept books in the past, and now they are being forced to keep books, with the result that their assessment is raised almost every year and they do not know where they are. It has never been suggested that farmers are more illiterate than traders. The real reason, I believe, is that the farmers are a very well organised body. They went to the Chancellor of the Exchequer and put their case, probably very fairly, and he accepted that case. The small trader has no organisation. He went, too, to the Chancellor of the Exchequer, but was not able to get the same terms. During the War the farmer entirely escaped the Excess Profits Duty. That was preferential treatment again. It is not as though the farmers have been doing really badly. I know of a case of a farmer in the North of England who, during the last three or four years, has made four times his annual value in profit, and he has been taxed only on the double annual value. I have not spoken in any hostile spirit to the Bill, but I thought it right to make these points, and when the Committee stage comes, I hope the Chancellor of the Exchequer will consider them.

Lieut.-Colonel WHELER

I would like to take up a sentence or two to which the hon. Member for Central Edinburgh (Mr. W. Graham) gave utterance in his interesting and important speech. He was speaking with reference to the benefits which he held that certain sections of the community had secured in comparison with others. He illustrated the fact that this country had had no capital levy, so he said, and therefore, as compared with other countries, the richer classes had done well. The hon. Member was using what I call legal facts. I would ask him to consider the real facts. We had have a capital levy in this country far heavier than any other country. Our taxation per head has been such, as he knows, that there is not a single landed estate in the country where, if the owner wished to keep the estate in anything like a reasonable state of repair, he has not been obliged for the last three years to use capital to a very large extent. As one who has had to do that, I can give him that fact as a real fact. Such facts are worth a good deal more than legal facts, which may be merely true as utterances concerning the laws of the land, hut do not sometimes show the true state of the country as a whole and are not realised by a large number of people.

While I thank the Chancellor of the Exchequer, in common with all other agricultural Members, for what he has done for agriculture and the landed interests generally, I will point out that this year is a year of most serious and desperate difficulty for a vast number of those who have bought farming land. What is so often forgotten is that you may have good rich land for fruit farming or special hop ground which may bring you in a large income, but if you take the vast majority of the farms in England to-day, the case is different. I could name farm after farm where there is a dead loss of over £1,000 to the farmer last year. Think of the present situation, with this beautiful fine weather. It is causing very serious anxiety in many parts of Eastern England to-day. No grass is coming on, and there will therefore be little hay. The turnip crop, already sown twice, is being eaten off by what is locally called the flea, and, therefore, unless something happens soon, there will be poor root crops and poor hay crops. The situation was bad this time last year, and the reserves of capital then in the hands of those men have now been eaten up. If you have a second year of that sort, however grateful we are for the concessions made to us as agriculturists by the Chancellor of the Exchequer, those concessions are not likely to save a very large number of the farmers of England from practically complete ruin, unless we get a bountiful year with crops of all sorts growing in abundance, so that there may be a good valuation for the farms and a lot, of stuff to be sold.

The situation, as far as land is concerned, is still in a very precarious state, and those who talk about this Budget as giving such a great measure of relief to farmers and putting the farmers on their legs again, are very wide of the mark. If they study the question carefully, and especially the position in regard to the different qualities of land, they will realise that agriculture is still in a very serious state. The hon. Member for Wood Green (Mr. G. Locker-Lampson) talked about Schedule D and the question of profits. I wish there were going to be profits, but I frankly confess I do not see any prospect of the profits of an ordinary farmer coming under Schedule D. The hon. Member seems to infer that farmers should be dealt with on the same lines as small business men who, he says, have no trouble in fulfilling the requirements under these Schedules. Therefore, he thinks the small farmer should be in the same position. The two things are entirely different. The forms dealing with relief of Income Tax on land are quite different and are very complicated, and in that connection I would ask the Financial Secretary or the Chancellor of the Exchequer to once more look into the matter of the form which is now in use, because it is full of very intricate details, and even to land agents and others who have to deal with it, it causes an infinite amount of trouble. From the statistical point of view, I think it would be a benefit if it were simplified, because the returns and the necessary facts and figures would be compiled in a much more simple manner than is likely to be the case at the present time.

May I refer to the beer tax as it affects agriculture? I would join with the right hon. Gentleman the Member for Chelmsford (Mr. Pretyman) in making a plea to the Chancellor in this respect. The 'agricultural labourer has been passing through a very difficult time and has had great deductions in wages, through no fault of the farmer, who has not been able to pay. In many cases to-day they are hard put to it. At the same time, the agricultural labourer, working in the sun, has a right to a drink of beer, and yet he has to pay the enormous price which is now being charged. That is causing real irritation among agricultural labourers, who do not. understand the situation. It is difficult to make them understand that money is so badly needed for taxation and for the upkeep of the country. All he looks at is the fact that his wages have been reduced, and yet he is called upon to pay this high price. I do not know if it will be possible to do anything this year, but I hope the. Chancellor will bear it in mind, because this is a section of the community which deserves some consideration. The agricultural labourers do not take their beer in excess; to the vast majority of them it is a relief and a pick-me-up after heavy work.

10.0 P.M.

With reference to the Club Tax, the Chancellor last year said he would look into it and see what could be done. Club men generally have been looking forward with hope for some concession, and when one bears in mind the increase in the tax as compared with 1914, and the tax on the club as compared with the tax on the licence holder, one must realise that this is a grievance. I am not here to urge the Chancellor of the Exchequer to take any steps to-night in this matter, but I would ask him to say something on the subject to the people who, last year, were led to expect that some relief would be possible. It is felt that there is a grievance, and if people have been led to expect a redress of that grievance, the matter should be considered and those peoples should be the first to receive some relief when this is possible. I should like to emphasise what the right hon. Gentleman the Member for Chelmsford said in reference to Clause 18 of the Bill, which deals with the extension of claims in respect of repairs and maintenance. I was also disappointed to see that, relief was going to be postponed for a year. I would point) out that there are a great number of houses just over the limit, and owing to the expense of repairs and the general difficulty of getting that sort of work done, and the way in which owners have been taxed, the work of doing repairs has been put off as long as possible. They thought they were going to get some relief for repairs honestly done in order to keep up the rental value of the house, and if they are not going to get this relief, then the work will be postponed. If the Chancellor of the Exchequer could see his way to alter this Clause so as to extend the relief, it. would have the effect of encouraging work of this character on a large number of houses. I am certain the effect of that would be good, because the work will be carried out and local men will be employed who at the present time are unemployed, but that cannot be done if no relief is given. I hope the Chancellor will hear in mind this point, which is, perhaps, of more importance than might at first be imagined.

Mr. NAYLOR

The comments of the hon. Member who has just spoken are somewhat discounted by the fact that the farmer has yet to be born who is prepared to admit that he is prospering in the agricultural industry. For generations farmers have been living on their losses, and the greater their losses the more prosperous they seem to become. My object in rising is to draw attention to what I regard as two important points in connection with the Bill now before the House. The first is the remission of the Income Tax, and the second is the suspension of the Sinking Fund. I want the Chancellor, if he will, to consider for a moment what has been called during this Debate the psychological effect of this great National Debt of £7,000,000,000 and the psychological effect upon people who have to pay taxes of the £360,000,000 a year which has to be paid in interest on that Debt. I am opposed to the remission of the shilling Income Tax, because I think the burden is being taken from the wrong class of people. I believe taxation should have been taken off to a greater extent in regard to tea, which is merely a remission to working-class families of 2d. or 3d. per week. I would like to have seen it taken off sugar, coffee, cocoa, and even beer and tobacco before this 1s. was remitted to men who, in my opinion, are well able to afford to pay it. I have been taught, that to ignore the Sinking Fund is fundamentally wrong, and it is very few Chancellors of the Exchequer who have gone to the extent of remitting a portion of the Income Tax while at the same time making no provision for the redemption of the National Debt.

Not being learned in finance. I have taken the opportunity this afternoon of consulting some of the financial text books in the Library of this House, and I came across a very interesting, a very well written, and an extremely able book. I hesitate to mention the name of the author of that book, as it happens to be the name of a gentleman well known to Members of this House—Mr. Hilton Young. If the Financial Secretary to the Treasury has read that book—and I have no doubt he has—he will forgive me if I read these two extracts as bearing upon my criticism of the failure of the Chancellor to do what I consider he ought to have done, and that is to apply some of his surplus of 32,000,000 to part redemption of the National Debt. This is what our author says: National debt is like a toothache. It is best of all not to have one, but if you have got to have one, it is next best to get rid of it as soon as you can. I suggest to the Chancellor of the Exchequer that he should consult the Financial Secretary to the Treasury as to the best means of getting rid of his particular toothache. I quote our author again, on the question of the remission of Income Tax. He says: Interest is paid by taking money out of the pocket of the taxpayer and putting it back into the pocket of the holder of Consols.

Sir T. POLSON

When was that book published?

Mr. NAYLOR

I think it was in 1917, which is sufficiently recent to make it a work that a Member of the House of Commons might be allowed to quote without fear of the author being contradicted, especially when the quotations are made in the presence of the author himself. What I want to put to the House is this, that the £6,000,000 or £7,000,000 that is paid in interest on the £32,000,000 by which the National Debt might have been reduced had the policy of the Chancellor of the Exchequer been different was surely worth saving, and the fact that Income Tax has been reduced this year makes it practically impossible for the Chancellor next year, whoever he may be, if the national finances demand a further increase in Income Tax, to be able to re-impose that shilling upon income. I am wondering whether the fact that the Chancellor of the Exchequer does not anticipate being in office this time next year had any influence upon him in coming to that decision. I acquit him of any suggestion of that kind. But the Chancellor of the Exchequer at least might have followed the example of previous Chancellors and adopted what I consider to be a sound financial course, and that. would have been to have liquidated in part the National Debt, even though he had to disappoint his friends the payers of Income Tax.

Sir GODFREY COLLINS

Earlier in the afternoon the right hon. Member for Moray and Nairn (Sir A. Williamson) argued with force that the present Income Tax laws tax capital not only in this country, but capital trading on the Continent, of America, and that this was unfair. The right hon. Gentleman gave one or two very striking instances of tie hardships that the present law entails, and if I may call the attention of the Chancellor of the Exchequer to the present amount of Income Tax in America.as well as in this country he may see fit, perhaps, during the Committee stage of the Budget to rectify that hardship. As the House knows, the present Federal Income Tax in America amounts to 1s. 8d. in the £, and an individual to-day in America pays £20 by way of Income Tax in comparison with an individual in this country who is paying to-day from £118 to £143. An individual whose income in America is £2,000 pays £104 by way of Federal Income Tax. In this country he is mulcted from his income of the sum of £343. I have but to mention these figures to show the extraordinarily heavy taxation imposed in this country in comparison with America. I do not suggest for a moment that the two countries are directly comparable, but traders to-day in America and here are competing against each other in the neutral markets of the world, and any taxation, whether by direct or indirect methods, which hampers our traders in South America, China, Japan or South Africa tends to handicap them against the individual in America who is only paying these small amounts by way of Income Tax.

I know the Chancellor of the. Exchequer himself, before he came to this House, was a strong supporter of a tariff method of raising revenue. It is rather striking that the revenue raised by way of Customs Duty in America during the last 15 years has not increased. The amount to-day raised in America by way of Customs Duty is very much the same as it was 10, 12 or 15 years ago. The experience of the War has clearly shown that Customs Duties do not stand the test of war, and our fiscal system, built as it has been on the policy of free imports, and our direct taxation, based upon ability to pay, have stood the test of war and come through that extreme period. Hon. Members from one or two quarters of the House this afternoon have argued that the taxes on landed property are too great to-day. It is quite true that all taxes are too heavy, but while one or two hon. Members were pointing out that the landed proprietors are only able to maintain their estates in a certain degree of efficiency by the expenditure of capital, I recollected that to-night there are a million and a half people out of work, and if indirect taxation had been lower it would have been a direct benefit to a large number of people. I think there has been in this Budget undue relief granted to the direct taxpayer, in comparison with the relief granted to the indirect taxpayer. For every £1 by way of relief given to the indirect taxpayer, £6 has been granted to the direct taxpayer. It is true that the proportion between the direct and indirect amounts levied by way of taxation to-day is, roughly speaking, 61 per cent. direct and 39 indirect. These percentages correspond very accurately to the basis before the War. [HON. MEMBERS: "No!"] I think an investigation of the amount paid by way of direct taxation and indirect taxation before the War will show that 60 per cent. of our revenue was raised by direct taxation and 40 per cent. by indirect taxation before the War.

Mr. MACQUISTEN

It is the other way about.

Sir G. COLLINS

The reason why direct taxpayers think they are unduly burdened to-day is because of the large amounts taken out of their pockets. They believe, quite rightly, that direct taxation is too heavy, and they think that the burden is unfair in proportion to the burden placed upon indirect taxpayers. But the percentage of burden is the same. The result is due to the excessive burden placed upon all classes of taxpayers by the policy of His Majesty's Government. During the Budget Debate on the Committee stage and the Report stage there was a very general impression created, not only in the House of Commons, but throughout the country, that the Debt had been largely reduced. I think, after the Debate of this afternoon, that myth has been completely exploded. It is quite clear now that the National Debt in the last three financial years has only been decreased by £21,000,000. On the other hand, as my right hon. Friend the Member for Paisley (Mr. Asquith) pointed out, with the assent, I think, of the Leader of the House, £800,000,000 of capital assets have been sold and realised during that period. What is the result of that policy? There is to-day, and will be in perpetuity, an Income Tax at the rate of 9d. in the £ as a result of the financial policy of the last three years. Five per cent. of £800,000,000 is £40,000,000. A shilling in the Income Tax, as the Chancellor of the Exchequer pointed out, represents £22,000,000 per year. £40,000,000 being 5 per cent. of £800,000,000, the nation to-day is poorer to that extent. If these assets had not been sold, or if these assets, having been sold, had been placed against the National Debt, the Income Tax for all time could have been reduced by 9d. in the R. This is the striking fact that the Debate this afternoon has brought out. The Budget itself is a problem of debt. The question of debt, whether the international outlook or the financial outlook at home, all revolves round the question of debt Our debt—the question of reparations—clogs our policy abroad and creates feelings between nation and nation. So in our home policy the burden of debt is the main problem which the Chancellor of the Exchequer has to face. At this time, with the extraordinary burden facing the nation to-day and in the future, the Chancellor has not faced the problem. We join issue with him on this Budget, and say that he has not shown that proof of foresight which the people, after the extraordinary financial sacrifices which one and all have made, expected. He should have adopted the course of cutting down expenditure to enable the reduction of debt to be achieved.

Mr. HILTON YOUNG

The House will have observed that the course of the Debate has been that of somewhat anticipating the Committee stage of the Bill. So far from complaining of that, I very much welcome it. In the first place nothing could be more useful than an early realisation of what the principle issues in Committee are likely to be or of providing the Government with an opportunity of envisaging what are likely to be the principal objections to this or that Clause. At the same time I fail to observe any main issue or vital principles of this Finance Bill that the Debate has revealed since the speech of the right hon. Gentleman. As to the observations of the last speaker I should like to ask the House what is the use of considering the period of finance since the termination of the War, as if during that time there had been no exceptional war expenditure to meet? Surely that is not the way to maintain our debates in the region of practical commonsense? Everybody knows that war assets have been realised and they have gone towards meeting our annual expenditure. Everybody knows that if the annual expenditure had been less these war assets could have been used for the reduction of debt. Everybody, I hope, knows that our annual expenditure could not have been less in view of the immense remnants of liquidation left by the War. It was to meet these that these realised assets have been used. Then, again, as to this region of controversy between direct and indirect taxation, I cannot believe but that there is a great deal of artificiality about it! The more one examines the incidence of taxation and the more one considers how it falls, the more firmly one becomes persuaded that the simple idea that indirect taxation falls upon the masses and that direct taxation falls upon the classes has absolutely no foundation whatever in fact, and that to attempt to maintain theoretical equality between direct and indirect taxation as one of the commandments for the maintenance of financial integrity is absolutely absurd. The situation is this. As the proportion of direct taxation during the War was enormously increased, now it has been slightly decreased, and I fail to see anything startling or revolutionary in that phenomenon.

Let me pass from these considerations to my particular task, which is to furnish such information as I can upon the various and more definite questions which have been addressed to the Government in the course of this Debate. To and fro during the Debate has cropped up the vexed question of the Entertainments Duty. It is not strictly or roughly accurate to say that the incidence of the Entertainments Duy is heaviest upon the cheapest seats, because it is heaviest on the seats which come somewhere between the cheapest and the dearest. As to that, let me say that no more in this case, than in any other is it true to say that the arrangement adopted is ideal or perfect. I think I may say that my right hon. Friend has always been willing to consider any suggestions whatever for the amelioration of the distribution of the tax in order to render it more easy to those who have to bear it. I think that undoubtedly I may say that is still the attitude of the Chancellor of the Exchequer, subject to this underlying condition that in such a year as this any alteration must be such as will not reduce the revenue yielded by this tax.

A strong appeal has been made for some intervention in favour of the art treasures of the country. It has been argued in the first place that there should be some legislation in order to prevent the vanishing of great art treasures from this country. Towards that appeal it is almost impossible not to feel sympathetic, because art treasures are a great national asset, the diminution of which it is ire-possible to witness without the deepest regret. This, however, cannot be raised as a revenue question. There can be no question of raising any revenue at all worth considering in regard to the export of our treasures. The real purpose would be to prevent their export and not to raise revenue. It is therefore really not a perfectly relevant matter to consider on such a Bill as the Finance Bill, the purpose of which is to raise the revenue for the year. In the next place the question has been raised of grants for the purchase of works of art. Here again there is no purpose which, had we room to turn round, we would rather assist in the highest interests of the welfare of the nation, but I fear there can be no other answer in a year in which the evils of depressed trade and unemployment are so great, except that there can be no question of providing further money even for such a desirable object.

The question has been raised by several speakers and particularly by the Member for Buckrose (Captain Moreing) and the Member for North-east Derbyshire (Mr. Holmes) on the long-agitated question of the widespread evasion of the Income Tax. That is a matter which, of course, must always occupy the serious attention of any Government. I would call attention to the circumstances that this year, for the first time, we propose to make a long step in the direction of dealing with what is obviously the most dangerous form of evasion in these Clauses we are introducing into the Finance Bill to deal with the subdivision of income for the purpose of avoiding Income Tax, and the diversion of income to private companies for the purpose of avoiding Super-tax. We look forward to the opportunity to be provided by more time in order to deal with the more controversial recommendations of the Commission.

Let me pass on to another question raised by the hon. Member for North-East Derbyshire when he launched his now familiar but nevertheless always weighty attack on the Corporation Profits Tax. I do not suppose that even the most ardent admirers of the tax maintain that it is a perfect tax. Its imperfections have never been ignored; its features as somewhat of an excrescence on the more orderly growth of our ordinary taxation system have never been denied. Let the House recall the origin of the tax In regard to the theoretical justification for it, the hon. Member gave due weight to its justification as a supplement to the Super-tax and its justification as a return for the privilege of incorporation. But what I think the House occasionally allows to fall into obscurity are the historical circumstances of its birth. It sprang up like a phoenix from the ashes of the Excess Profits Duty. Historically, it would have been too much to expect in the fiscal economic history of any nation that it should have been able to pass straight by one single step from a fiscal system, including the Excess Profits Duty, to a fiscal system which included no direct taxation on the pool of industry itself. It is not surprising to find, therefore, that the Corporation Profits Duty was the necessary birth in succession to that larger direct tax on industry—the Excess Profits Duty. The hon. Member for North-East Derbyshire raised a very interesting point when he referred to the circumstances that if the Budget Provisions are carried out, the Super-tax will henceforth fall on the profits of the one-man company, which will fall under the sweep of the provisions against the invasion of the Income Tax. There is there, apparently, a question for inquiry. Corporation Profits Tax was introduced as an alternative to Super-tax, and at first sight it may seem as though in this case there would be both Corporation Profits Tax and Super-tax, but I think the House will not expect me to say more at the moment than that that is obviously a subject which will need further consideration when it comes to be discussed in detail in Committee.

Let me pass to the interesting and somewhat difficult question raised by the right hon. Gentleman the Member for Moray and Nairn (Sir A. Williamson) and the hon. Member for Greenock (Sir G. Collins). They pointed out the discrepancies which result from our own provisions and the provisions of the United States as regards double Income Tax. It is not my intention to deny, and indeed it would be idle to deny, the difficulties and the hardship from the point of view of taxation which result to international or semi-international business from the clashing of Income Taxes which results in double taxation. We have dealt with that within the British Empire by provisions which were passed in 1919 or 1920, and with which the House will be familiar. This is the greatest difficulty in connection with these hardships and discre- pancies, and the one which most urgently requires attention. At that time the Income Tax was specifically a British institution, and was most applied and highest in rate in this country and our Dominions, but the area of the difficulty has been somewhat widened by the provisions adopted in the United States, which are very much more attractive than ours. I would go so far as to say that, were we living in an ideal world, we might find it extremely convenient to adopt similar provisions ourselves, but what is the great difference? The great difference between the United States and ourselves in this matter of remitting double Income Tax is simply that in the fiscal system of the United States they can afford it, and in ours we cannot. In the United States the Income Tax is at a lower rate than ours, and therefore it is of less financial moment to them than it is to us. Moreover, in the United States the Income Tax is a new invention, and perhaps they are not quite so keenly alive to all the bearings of that tax as we are here. I think that possibly they are not so keenly alive to the loss of revenue which this provision of theirs is going to cost them, and, if I may venture to do a most gratuitously unwise thing, namely, to prophesy, I should say that it would seem to me to be far more likely, in the course of the coming year, that the United States will come to meet our provisions in this respect than that we shall go to meet theirs.

The right hon. Gentleman the Member for Moray and Nairn raised, also, some extremely interesting and important questions on the subject of the proposed provisions as to private companies. The right hon. Gentleman was afraid that the net of the Clause was swept too wide, and, as he argued the matter, it did seem to sweep too wide, but I believe that his fears are really groundless. While giving due emphasis to the provision that only those companies are to be caught in the net which have less than 50 members, or make no public issue, he did not pay due attention to the further provision, which is the most important of all, that only those private companies are to be troubled by this Clause which do not make a reasonable distribution to their shareholders in the year. That is the bedrock condition in the case of those companies to which the right hon. Gentle- men was referring. Companies candidly aridbona fide formed for carrying on businesses, and which make a reasonable distribution of their profits, will not be troubled by the provisions of this Clause, but only those companies which do not make such a reasonable distribution. I am confident that the intention and effect of this Clause is that only those companies will he troubled which indeed are grossly and obviously formed with the intention of evading the provisions of the Revenue Laws. Such is the intention. Such, I believe, will be the effect. It will be a matter for discussion in Committee as to whether that intention is secured, and will result from the provisions of this Clause. On the arguments of the hon. Member for Watford, I failed to follow why he found it necessary to advance such uncompromising opposition to the Clause. His argument, I thought, would have warranted rather a less vigorous opposition to the spirit of the Clause in any case, and I cannot doubt that when he comes to examine its exact provisions he will find himself in better agreement with its spirit. Let me take the point as to foreign registration, and assure him that his fears, I believe, are entirely groundless. Evasion of this provision by foreign or Colonial registration is practically impossible in practical working. The Clause could only be evaded by foreign or colonial registration if the practical administrative control of the affairs of the company were transferred to the foreign country or Colony. You could not transfer the administrative control of your company to Queensland by sending out instructions to register your company in Queensland.

Mr. D. HERBERT

It can be controlled by a solicitor in Queensland.

Mr. YOUNG

Control by a solicitor will not be accepted by any tribunal as practical administrative control. The truth is that that form of evasion would only be available to those who were prepared to make their headquarters in these foreign countries or Colonies and settle there in order to administer their companies. That leaves the question remaining as to what is a reasonable distribution of profits under this provision, and the hon. Member gave a single instance. Of course, upon the actual circumstances of a single case it is impossible to make a statement of general interest. One can only say that is a practical question for decision in each case by the tribunal—in the first place by the special commissioners, and in the second place by a court of appeal consisting of referees.

Questions of the widest interest were raised in the course of the observations of the right hon. Gentleman the Member for Chelmsford (Mr. Pretyman). Into the old and pleasant controversy between himself and myself as to whether taxes are paid out of capital or not I would not again upon this occasion enter. I fear I remain unconverted. I admit that at times the single taxpayer pays out of capital but that cannot be said to be the ease if you take the whole Income Tax of the country. Let me pass to the questions of practical detail my right hon. Friend put to me. I refer in the first place to his complaint that relief in respect of repairs and maintenance can be deferred until 1923. There are two things to make quite clear there. In the first place, the reason for the deferring of this relief is because the reassessment under Schedule A is not to come into force until 1923. At present those who pay on Schedule A are paying on an antiquated assessment which, in 99 cases out of 100 are very much undervalued. They are getting off lighter than they should under their assessment, and as long as they are getting off lighter than they should, there seems to be no obvious reason why additional relief should be given. As soon as the reassessment comes into force, under which they will be paying a fair assessment on their profits, then will be the time when it will be right and proper to give them, for the first time, this relief.

Lieut.-Colonel WHELER

Supposing it is found that the original assessments are just and fair, what happens then?

Mr. YOUNG

I think we can very well leave that for consideration when the case occurs. I am afraid my hon. and gallant Friend will not find that that becomes a very practical question in very many cases. Let me pass to the fear, expressed by my right hon. Friend in this connection. He said the result of this will be to induce people at a time of great unemployment to postpone work which would give useful employment. That is an argument which appears to have great force, but it is really quite unfounded and is based on a misapprehension. Those who undertake the repairs and maintenance works in this year will get the benefit of the allowance in respect of the five years' average, which will come in for assessment in 1923. So there can be no reason why they should not put the work in hand at once, from the point of view of getting the benefit of the allowance. By postponing the work, they will postpone the day on which they will begin to get the benefit. On the whole, the Clause will work rather in the direction of promoting work than of preventing work.

With regard to assessors' re-assessment, the assessments in this re-assessment in 1923 will be subject to the ordinary law as at present. No change is contemplated in the law. As the right hon. Gentleman is aware, the assessment is done in the years in which there is no re-assessment by the inspectors of taxes, and in the years in which there is a re-assessment by the assessors appointed locally by the general Commissioners. That will be the case in the coming reassessment. It will be made in the way provided by the general law, by local assessors appointed by the general Commissioners.

The hon. Member for Central Edinburgh (Mr. W. Graham) took wider ground in the greater part of his argument. Much of his argument proceeded on general lines, to which it is impossible not to agree; but I must object and protest against one statement made by him. He was arguing, if I do not misrepresent him, that the big business has not made its proper contribution in respect of War profits, and in order to support that argument he threw it out as if it were a fact—indeed, as if it were an admitted fact—that in the repayment of Excess Profits Duty there had been made by the Inland Revenue big overpayments by way of repayments; in fact, that the payers of Excess Profits Duty had got back more than that to which they were entitled. He referred to high authority for his assertion. I am totally unable to imagine to what high authority he referred. I believe there has been no authority of any sort or kind for that allegation. That the Excess Profits Duty taxpayer has not in all cases paid as much as he should, I admit, but that the Inland Revenue has let out of its hands more money than it ought I emphatically deny.

By way of support for this contention of his of big business being under-taxed, he referred to an old and now long extinct friend, the War Profits Levy. A most vivid recollection of the discussion that took place on that occasion tempts me to remind the House why it was that the War Profits Levy was, in fact, abandoned. The proposal was put forward and we sat and listened. It is most vividly within my memory that what so deeply impressed the House at that time, and was the means of leading it to reject the idea of the War Profits Levy, was the announcement by the expert advisers of the Government that the levy, in the form in which it was put forward, would have brought in less per annum than the increase of the Excess Profits Duty then proposed. I remember how, after that announcement, the War Profits Levy fell dead. We ought to be reminded of that when it is brought up against the Government that they did not adopt the best means of exacting a greater contribution from so-called big business in respect of war profits.

I pass to points of rather smaller detail, but nevertheless of great interest, raised by the hon. Member for Wood Green (Mr. G. Locker-Lampson). As I have already stated, I think in the course of a discussion in Committee last year, and on a minor Debate this year, there is no difference of opinion that the ideal manner of assessing farmers' profits is in the same manner as that of other businesses, under Schedule D, and that the direction of all reform and progress, it is truly recognised, must be by universalising Schedule D for farmers' profits. It is recognised, on the other hand, that great practical difficulties stand in the way of doing so on account of the keeping of accounts by small farmers. At the earliest possible moment all business profits should be put on the same uniform basis of Schedule D, only we have to recognise that in the case of farmers, and particularly in the case of small farmers, the earliest possible moment will be that moment at which they can be prevailed upon to keep reliable accounts.

The hon. Member referred to matters raised by Clause II of the Bill, which are very important for many investors, large and small. He argued against the provision by which, under that Clause, we are to assess the income derived from the War stocks and so on, both for the first and the last year, and not for the year following the last. He argued in particular against assessing for the last year, for the reason that that last year might be only a partial one. The apprehensions he expressed on this subject are really unnecessary, and the Amendment which he proposes is unnecessary. Under the existing law as it stands at present, if the holding is parted with in the course of the last year, the holder gets automatically a reduction in proportion to the time he does not hold his stock. That covers his apprehension.

As to Schedule E, the hon. Member's apprehension was even more unfounded with regard to this very important little reform which is proposed in the law. I am sure the House will agree, after listening to his description of the variation of practice which prevails in assessing the income of salaried persons, wage-earners, and so on, that nothing could be more undesirable than the extraordinary variety and the uncertainty of practice to which he refers. So far from being anything in the nature of a privilege to the taxpayer, it is very much to his disadvantage that there should be this lack of uniformity between the practice of various localities.

Nothing can be more in the interests of the taxpayer than to get reasonable uniformity in this respect. We are all convinced that one of the worst drawbacks of the Income Tax is the difficulty of understanding it, and anything that can be done to make it more intelligible to any large part of the Income Tax payers is most desirable. This will lead to making the Income Tax more intelligible to that great class of taxpayers who will come under Schedule E. His apprehension as to the difficulty of assessment of men with variable incomes, such as commission, can be dealt with easily. It has been the practice hitherto of all local commissioners who are closely concerned with such taxpayers to make this arrangement that the variable portion of the income, or of the whole income if it is variable, should be assessed upon the preceding year. There is no intention of interfering with that administrative arrangement, so that it will still be possible for the commissioners to assess any variable part of the income, such as commission, etc., upon the preceding year instead of on the actual year. So far from that being an increase of work for the overtaxed officials of the Inland Revenue, the result will be to make for very great economy of work.

In conclusion, let me refer to the more general criticism of the Government advanced by the right hon. Gentleman the Member for South Molton (Mr. Lambert), because he summed up, in so far as I have been able to detect any general line of criticism of this year's Finance Bill, what that general line has been. It is, I believe, necessary to suggest to the House, in connection with his proposed Resolution, that all such estimates of taxable capacity as that on which he based his observations are the merest guess-work, and that to base any figures of the year's Budget upon an estimate of what the annual income is in figures would be to base it on a foundation which is absolutely unreliable. On the other hand, that it is essential to regard taxable capacity in considering the limits of taxation is, of course, obvious, and, that being so, that to increase the credit of the country you must increase the country's taxable capacity. To do that there is one obvious means. That is to reduce the taxation which is imposed on that capacity. That is the design of the principal provision of this year's Budget—by reducing the taxation to increase the foundation of credit in the country, which is taxable capacity.

11.0 P.M.

There is another means. An hon. Gentleman challenged anybody replying from this bench to suggest any means by which it was possible to reduce the country's weight of Debt. I will specify one—by increasing production. By doing that you can also increase taxable capacity and return to the stage at which you will once more be able to begin to reduce Debt. If we are to do this thing, and increase credit and taxable capacity on which credit is based, we must reduce taxation. What must we do? We must reduce expenditure. Full justice was not done by the right hon. Member for South Molton to what has been done by the Government. It is not fair, in considering the efforts in this year, to state the Geddes cuts at £52,000,000. The full Geddes cuts are £64,000,000 in a full year. This is no small proportion of the total amount represented by the Geddes Committee. The total amount of expenditure specified by the Geddes Committee was £86,000,000. A further reduction was suggested by the Committee up to £100,000,000, but how it was to be got was not suggested by the Committee. No more has it ever been suggested by anyone else in this House. £86,000,000 is the total amount of specified economy which has been laid before the House and the Government. £64,000,000 of that has been attained. What is the remainder? £12,000,000 for education and £11,000,000 for the Royal Navy. Which is it to be? At this point one feels tempted to retire from the fray and leave it to the advocates of economy in education on the one hand and to the advocates of economy on the Navy on the other hand to decide which portion of these further cuts is to be added.

Let me refer to a further observation of the right hon. Member for South Molton. He spoke in terms of derision of the "huge bureaucracy" under which this country is now saddled. I wish to offer one or two figures upon that matter. Compared with 1914, the total increase in the personnel of Government offices is 65,000. Of these, 25,000 are now employed in Ireland, leaving 40,000 to be accounted for. Of this number 22,000 are attributable to the Ministry of Pensions and 16,000 to the Ministry of Labour. I ask the House, who are so often impressed with the idea that there is a vast overstaff of unnecessary civil servants, to consider those figures not now only, but once again. They will see that the bulk of the unexplained excess of civil servants at present over the figure before the War is due to two things only—to the fact that we have to administer £91,000,000 of pensions to the War pensioners and that we have to administer unemployment benefits in relief of unemployment. Those are both War effects. Pensions to the pensioners are the unanimously-applauded remanet of the War. Unemployment benefit is the regretted but inevitable and necessary result of the great slump that follows a war. These staffs are engaged in those necessary works.

Let me say a word in earnest deprecation of the derisive tone used by the right hon. Member for South Molton in referring to the whole Civil Service. I cannot believe that such an attitude towards the faithful servants of the country is justified in this House. These men are engaged by the State, and set to do work on behalf of this House. They are discharging the duties entrusted to them on behalf of the country. It is not theirs to question their necessity; it is not theirs to question the worth of their work. That is for the Government to consider. As long as they discharge those duties as faithfully and as strenuously as they do, surely, they should be free from such derisive references as those which have been made. It is on this Bench those references should fall; there are shoulders broad enough to bear them, but while these men are employed on behalf of the country, it should be recognised that their duties are performed by them faithfully and they are not responsible as to whether those duties should be performed or not. Let me say that the spirit which prevails in the Civil Service is, and has been, and I trust always will be, that same spirit of earnest devotion to duty which is known so well to many Members of this House, and which we find in the fighting services. It is the same devotion to their country and to duty, and I am confident it is freely recognised by hon. Members of this House. Other important considerations have arisen in the course of the Debate to which I have not time to refer. Let me close upon this note, that for the maintenance of the taxable capacity on which credit is based those things are necessary to which I have referred and they are essential in the common interest. Economy, as I ventured to argue to the House before, cannot be an act; it must be a process. We cannot disregard that fact and make a pretence of believing that such economies as we desire can be obtained by a single stroke of the pen. As has been stated on a higher field: Eternal vigilance must be the price of liberty. I might paraphrase that on this lower plane, and say: Eternal parsimony must be the price of solvency.

Mr. L. MALONE

The hon. and gallant Gentleman who represents the Treasury ought to explain to the House how it was that direct taxation and indirect taxation did not adversely affect the working class. However he only said in a few words that it was not so and proceeded with the rest of his peregrinations. I should like to take up the point where he left it. I find that out of the 5,500,000 people who are assessable for Income Tax only 445,000 benefit by this reduction of 1s. I feel that there is a danger when the next General Election comes of people not realising, owing to the complicated nature of the Income Tax that they are not benefiting, and there will be widespread misunderstanding on that point. I find from the Finance Bill statement that indirect taxation amounts to £5,457,000 whilst direct taxation amounts to £53,700,000, in addition to £3,000,000 which will become due in the course of the succeeding year. That shows, I think, quite clearly that the £5,457,000 is all the benefit which the working-class will get out of this Budget whereas £53,700,000 will be the benefit gained by the 445,000 people. Take the miner as a fair average working class man. He works hard in the pit for 8s. 6d. a day and the labourer on the surface finds it difficult to earn 26s. a week. To a man who only earns £50 or £60 a year, is it not futile to say the working classes are benefiting by the Budget? While speaking of Income Tax, I want to condemn the Government for its treatment of the manual workers and the wage earners in the matter of Income Tax. Up to this year a deduction has been allowed to wage earners for travelling expenses, but under this Bill that privilege has been withdrawn. The only comment which I think I need make on that is to read an extract from that respectable paper, the "Financial Times," which says: The withdrawal of this privilege for the working man is, to say the least, untactful, especially as this branch of Income Tax levy is generally believed not to produce sufficient to pay for the cost of collection.

There is another point, and there again I cannot do better than quote what the "Financial Times" says about the form in which the wage-earners' tax is taken. Referring to this tax, it says: The obnoxious quarterly wage-earners' tax,.… is unjust and inquisitorial in its application, and, moreover, costs more to collect than the net revenue from it is worth. I hope that, when the Bill comes up in Committee, the Chancellor of the Exchequer will see his way to modify that. There is one other point that I want to raise. I want to know why we are bolstering up two Government sugar factories. Why are we giving preferential treatment to the factories at Cantley in Norfolk, and Kelham in Nottinghamshire? The former was started in 1912, closed in 1915, and reopened in 1920. It is receiving an advantage of 6s. 2⅔d. per cwt. The other factory at Kelham was set up largely with the assistance of the Government. It exhausted its capital last year, and the directors have applied to the Government for permission to borrow another £200,000. Of this second mortgage the Government have already advanced, I understand, £125,000, in addition to which the State is guaranteeing the interest of 5 per cent. for 10 years on the 250,000 shares subscribed by the public. I want to know why we are bolstering up these two companies, and at whose suggestion it was that this preferential treatment was given to them. Surely, if we have got to have State sugar factories in this country, they ought to be run with the profits curtailed and not so that certain people can make profits out of the taxpayer. I could raise many other points, but I shall defer them in detail until the Committee stage. I merely conclude by saying that this Bill is drafted simply and entirely for the landlords and the rich classes in this country.

Question put, "That the word 'now' stand part of the Question."

The House divided: Ayes, 163; Noes, 21.

Division No. 126]	AYES.	[11 15 p m.
Adkins, Sir W. Ryland D.	Barnston, Major Harry	Bruton, sir James
Amery, Leopold C. M. S.	Barrand, A. R.	Buckley, Lieut.-Colonel A.
Armstrong, Henry Bruce	Bellairs, Commander Carlyon W.	Butcher, Sir John George
Atkey, A. R.	Benn, Sir A. S. (Plymouth, Drake)	Casey, T. w.
Baird, Sir John Lawrence	Birchall, J. Dearman	Cecil, Rt. Hon. Evelyn (Birm., Aston)
Baldwin, Rt. Hon. Stanley	Boscawen, Rt. Hon. Sir A. Griffith-	Chamberlain, Rt. Hn. J. A. (Birm., W)
Balfour, George (Hampstead)	Bowyer, Captain G. W. E.	Chamberlain, N. (Birm., Ladywood)
Banbury, Rt. Hon. Sir Frederick G.	Brassey, H. L. C.	Chilcot, Lieut.-Com. Harry W.
Barlow, Sir Montague	Bridgeman, Rt. Hon. William Clive	Clay, Lieut.-Colonel H. H. Spender
Barnett, Major Richard W.	Broad, Thomas Tucker	Clough, Sir Robert
Coote, Colin Reith (Isle of Ely)	Hope, Lt.-Cot. Sir J. A. (Midlothian)	Richardson, Sir Alex. (Gravesend)
Cope, Major William	Hopkins, John W. W.	Richardson, Lt.-Col. Sir P. (Chertsey)
Courthope, Lieut.-Col. George L.	Hopkinson, A. (Lancaster, Mossley)	Roberts, Rt. Hon. G. H. (Norwich)
Curzon, Captain Viscount	Horne, Sir R. S. (Glasgow, Hillhead)	Roberts, Samuel (Hereford, Hereford)
Davidson, J. C. C.(Hemel Hempstead)	Howard, Major S. G.	Rodger, A. K.
Davidson, Major-General Sir J. H.	Hurd, Percy A.	Roundell, Colonel R. F.
Davies, Thomas (Cirencester)	Inskip, Thomas Walker H.	Royds, Lieut.-Colonel Edmund
Dawson, Sir Philip	James, Lieut.-Colonel Hon. Cuthbert	Samuel, A. M. (Surrey, Farnham)
Doyle, N. Grattan	Jephcott, A. R.	Samuel, Samuel (W'dsworth, Putney)
Du Pre, Colonel William Baring	Jodrell, Neville Paul	Sanders, Colonel Sir Robert Arthur
Edgar, Clifford B.	Kellaway, Rt. Hon. Fredk. George	Sassoon, Sir Philip Albert Gustave D.
Edge, Captain Sir William	Kidd, James	Scott, Sir Loslie (Liverp'l, Exchange)
Edwards, Major J. (Aberavon)	King, Captain Henry Douglas	Seddon, J. A.
Elliot, Capt. Walter E. (Lanark)	Lane-Fox, G. R.	Seely, Major-General Rt. Hon. John
Evans, Ernest	Lewis, Rt. Hon. J. H. (Univ., Wales)	Shortt, Rt. Hon. E. (N'castle-on-T.)
Eyres-Monsell, Com. Bolton M.	Lindsay, William Arthur	Simm, M. T.
Falcon, Captain Michael	Lloyd Greame, Sir P.	Smith, Sir Allan M. (Croydon, South)
Falle, Major Sir Bertram Godfray	Locker-Lampson, G. (Wood Green)	Stanley, Major Hon. G. (Preston)
Fell, Sir Arthur	Locker-Lampson, Com. O. (H'tingd'n)	Stephenson, Lieut.-Colonel H. K.
Fisher, Rt. Hon. Herbert A. L.	Loseby, Captain C. E.	Sugden, W. H.
FitzRoy, Captain Hon. Edward A.	Lowther, Maj.-Gen. Sir C. (Penrith)	Sykes, Sir Charles (Huddersfield)
Ford, Patrick Johnston	Macdonald, Sir Murdoch (Inverness)	Thomas, Brig.-Gen. Sir O. (Anglesey)
Forrest, Walter	Mackinder, Sir H. J. (Camlachie)	Thomson, F. C. (Aberdeen, South)
Fraser, Major Sir Keith	Marriott, John Arthur Ransome	Thomson, Sir W. Mitchell- (Maryhill)
Gange, E. Stanley	Mason, Robert	Townley, Maximilian G.
Gee, Captain Robert	Mond, Rt. Hon. Sir Alfred Moritz	Wallace, J.
Gibbs, Colonel George Abraham	Morden, Col. W. Grant	Walters, Rt. Hon. Sir John Tudor
Gilbert, James Daniel	Moreing, Captain Algernon H.	Ward, William Dudley (Southampton)
Gilmour, Lieut.-Colonel Sir John	Murray, C. D. (Edinburgh)	Watson, Captain John Bertrand
Goff, Sir R. Park	Neal, Arthur	Weston, Colonel John Wakefield
Gray, Major Ernest (Accrington)	Newman, Sir R. H. S. D. L. (Exeter)	Wheler, Col. Granville C. H.
Green, Albert (Derby)	Nicholson, Brig.-Gen. J. (Westminster)	Willey, Lieut.-Colonel F. V.
Green, Joseph F. (Leicester, W.)	Norris, Colonel Sir Henry G.	Williams, C. (Tavistock)
Greenwood, William (Stockport)	Parker, James	Windsor, Viscount
Gregory, Holman	Parkinson, Albert L. (Blackpool)	Winterton, Earl
Grenfell, Edward Charles	Parry, Lieut.-Colonel Thomas Henry	Wise, Frederick
Gritten, W. G. Howard	Pease, Rt. Hon. Herbert Pike	Wood, Hon. Edward F. L. (Ripon)
Hamilton, Major C. G. C.	Percy, Lord Eustace (Hastings)	Wood, Sir H. K. (Woolwich, West)
Harmon, Patrick Joseph Henry	Perkins, Walter Frank	Worsfold, T. Cato
Harmsworth, C. B. (Bedford, Luton)	Pellock, Rt Hon. Sir Ernest Murray	Young, E. H. (Norwich)
Haslam, Lewis	Pretyman, Rt. Hon. Ernest G.	Young, Sir Frederick W. (Swindon)
Henderson, Major V. L. (Tradeston	Purchase, H. G.
Herbert, Dennis (Hertford, Watford)	Rankin, Captain James Stuart	TELLERS FOR THE AYES.—
Hohler, Gerald Fitzroy	Raw, Lieutenant-Colonel Dr. N.	Colonel Leslie Wilson and Mr. McCurdy.
Holbrook, Sir Arthur Richard	Rawlinson, John Frederick Peel
Hood, Sir Joseph	Remer, J. R.
NOES.
Ammon, Charles George	Kenyon, Barnet	Richardson, R. (Houghton-le-Spring)
Barnes, Major H. (Newcastle, E.)	Lawson, John James	Sitch, Charles H.
Cairns, John	Lunn, William	Sutton, John Edward
Davies, Evan (Ebbw Vale)	Maclean, Nell (Glasgow, Govan)	Swan, J. E.
Gillis, William	Malone, C. L. (Leyton, E.)	Young, Robert (Lancaster, Newton)
Hayday, Arthur	Myers, Thomas
Hirst, G. H.	Naylor, Thomas Ellis	TELLERS FOR THE NOES.—
Jones, J. J. (West Ham, Slivertown)	Ramsden, G. T.	Mr. G. Barker and Mr. Halls.

Bill read a Second time, and committed to a Committee of the whole House for To-morrow.