§ Considered in Committee. [Progress, 17th April.]
§ [Captain FITZROY in the Chair.]
§
Question again proposed.
That it is expedient to amend the law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance.
§ Mr. SNOWDENPractically every speech which has been delivered in the course of this Debate has been prefaced by the offer of congratulations to the Chancellor of the Exchequer upon the lucidity and conciseness of his Budget speech, and I should like to associate myself with these congratulations upon the remarkable features of that speech which called forth these congratulations, and I assure the right hon. Gentleman that my congratulations are not less sincere because they are somewhat belated. I regret that I am not able to extend my commendation to the actual proposals which he submitted to the consideration of the Committee. I had hoped, from speeches which he has been delivering in the country during the last, few weeks, showing that he was a sound economist and financier, that when he disclosed his Budget statement I should find that he had resisted the temptation, to which every Chancellor of the Exchequer is exposed, of sacrificing sound finance to political expediency. I was not disappointed in the earlier portions of the statement and I was feeling that if I were called upon to speak when he sat down I should have no criticism to offer, but only the pleasant duty of expressing my cordial agreement. But alas as the speech went on, I discovered that my financial idol had feet of day, and that the right hon. Gentleman had not been able to resist the temptation of which I have spoken.
So far the Debate upon this Budget has been confined almost wholly, and quite properly, to a discussion of the relative merits of an immediate policy of debt reduction or tax reduction. A very great change, as far as the expression of opinion is concerned, has come over commercial 2102 and some financial opinion in the country upon these two questions during the last two or three years. Two or three years ago even the Federation of British Industries was urging the absolute necessity of concentrating upon debt reduction. Although I was not a Member of the House at the time, I believe hardly any voice was then raised in support of the policy of tax reduction as an alternative to debt reduction, which now appears to be much more popular.
The ex-Chancellor of the Exchequer (Sir R. Horne) is now an out-and-out tax reductionist, and yet he himself, less than two years ago, was responsible for the issue of a Treasury circular in which the opinion is expressed that the expenditure of the country in future must be debited by at least £100,000,000 a year towards the reduction of debt. The right hon. Gentleman's predecessor, the right hon. Member for West Birmingham (Mr. A. Chamberlain) also said about that time that he regarded the provision of £100,000,000 as a sum about which no one could complain, and he was Chancellor of the Exchequer at a time when a proposal was submitted, at the urgent request of the advisers and experts of the Treasury, who were appalled at the magnitude of the National Debt, for the consideration of a Committee of the House for the special taxation of wartime made fortunes as a means of effecting an immediate and very considerable reduction of the National Debt. That proposal was not approved by the House of Commons. It was said at the time that it could not be approved by a House of Commons "full of hard-faced men who had done well out of the War." That observation is no reflection upon this House, because this is a newly elected House.
The Liberal party in the last Parliament were as strong as the Federation of British Industries; and the right hon. Member for Hillhead (Sir R. Horne) and the right hon. Member for West Birmingham (Mr. A. Chamberlain) were quite as strong in realising the urgency of this question of a considerable reduction in the Natonal Debt. In those days Liberals were in favour of a capital levy. The Liberal party in the last Parliament actually brought forward a Motion urging the adoption of a capital levy, and that was supported by their leader. [HON. MEMBERS: "Name! "] It was supported 2103 by speech and by vote by the then acting Leader of the Liberal party, Sir Donald Maclean.
§ Mr. STURROCKNo.
§ Mr. SNOWDENIt was.
§ Mr. STURROCKOn a point of Order—
§ Mr. SNOWDENI am not going to give way to the hon. Member. The records of the House will prove the accuracy of my statement.
§ Mr. STURROCKOn a point of Order—
§ Mr. STURROCKMay I claim that we ought to be allowed to have the name? May I ask the hon. Member for the name of the Liberal leader who supported the capital levy?
§ Mr. SNOWDENI have given the name. There was an almost unanimous feeling as to the importance of a considerable reduction of the National Debt. That opinion was held by members of the Government responsible for the finances of the country, by leaders and members of all parties, and by representatives of the great industrial organisations. May I add in this connection that one of the greatest and ablest of our captains of industry advocated the capital levy at that time as a drastic surgical operation to deal with a serious evil. How is it that in two or three years' time the expressed opinions appear to have changed so much in regard to the urgency and value of debt reduction and tax reduction? I have heard or read all the speeches that have been delivered, and I have not heard one word of explanation for the, reason of this change of opinion.
In the absence of explanation on the part of those who have changed their opinion it is not for me to suggest au explanation, but if I were called upon to do so, I would say that the explanation possibly is to be found in a change of opinion in regard to the effect of deflation. If that be the case, it does not reflect very much credit upon those who 2104 were advocating so strongly the policy of deflation two or three years ago, because they must have known what the consequences of deflation would be. Everybody knows that you cannot have a high state of inflation and begin to deflate without incurring certain consequences of a rather disagreeable character during the process of recovery. I do not think that those who are now opposing debt reduction, or a great many of them, have any reason to be really dissatisfied with the effect of deflation. Holders of securities have not. It has added hundreds of millions to the capital value of their investments. The same thing has happened in regard to the investments of industrial corporations, industrial concerns and municipal corporations. The appreciated value of investments during the last two or three years must run into four figures in millions. Therefore, the consequences of continuing this policy has meant a capital appreciation of investments by £1,000,000,000, and it may he £2,000,000,000. I offer this as a possible explanation of the change of opinion, in face of the complete silence as regards explanation from those who have changed their views.
The matter at issue in this Debate is between those who still believe that debt redemption is a sound policy and those who do not. The right hon. Member for Norwich (Mr. Hilton Young) and the right hon. Member for West Swansea (Sir A. Mond) belong to what I might call the school of charwoman economists. The right hon. Member for Norwich wrote a book on national finance, which was issued during the War, the whole point of which was to emphasise the danger of the maintenance of a huge National Debt. He said the accumulation of national debt is a certain road to bankruptcy. Now, the right hon. Gentleman, like the right hon. Member for West Swansea, does not care about debt at all—it does not matter. They appear to see some national advantage in the existence of a huge National Debt. I suppose they argue something like this: "It does not cost the country anything: it is true that we tax the people to pay interest upon it, but that interest is paid over to other people, so there is really no loss at all." I suppose these two right hon. Gentlemen think that the country may be made prosperous or kept 2105 prosperous by taxing one set of citizens and handing over the proceeds to another or, to some extent, to the same class of citizen. That is what I meant by describing these right hon. Gentlemen as belonging to the school of charwomen economists. They apparently believe that the nation can be made rich by our taking in each other's washing. I should be sorry to think that the right hon. Member for Norwich and the right hon. Baronet the Member for West Swansea have many supporters in holding these views of indifference in regard to the huge National Debt which we have upon our shoulders.
As between others who differ as to the relative advantage of immediate debt reduction and of immediate tax reduction, there is really very little difference of opinion when you get down to the root of the matter. It seems to me that the fallacy of those who are advocating tax reduction lies in this fact, which was apparent in the speeches of the right hon. Member for Norwich and the right hon. Member for West Swansea, that they do not appear to realise that you cannot have tax reduction on sound economic lines so long as this huge National Debt exists. That is the point at issue in this controversy, and, before giving the Labour point of view in regard to it, I should like to say, and I think everybody will agree with the point I am going to make, that there ought not to be either debt reduction or tax reduction except out of a real surplus. Especially there ought to be no tax reduction out of a mere temporary or adventitious surplus. I am sure the Chancellor of the Exchequer agrees with me upon that. What I mean is, that there ought not to be tax reduction by accident such as has happened this year, because the Chancellor of the Exchequer might find himself in the position that he would not have the remotest possibility of any repetition of that in the next financial year. It would be criminal financial policy to carry out tax reductions upon such a flimsy basis as that. I am sure that the right hon. Gentleman agrees with that. Therefore I want to consider, for the moment, the Budget from that point of view. The right hon. Gentleman has justified his tax reduction upon an estimated surplus of £36,000,000, but all he expects during the current year is not 2106 recurring revenue. Therefore the position of the Chancellor of the Exchequer is, that the tax remissions during the present year are from revenue which will not be available in the succeeding years, and these remissions of tax do not fully mature during the coming 12 months. His position, in reference to next year, should he occupy his present position then, will be that he will have an increased expenditure of £50,000,000 without any revenue that can be seen at the moment to meet that expenditure.
I am not indulging in prophecy. We had a dissertation yesterday afternoon on prophecy and prophets by the right hon. Member for Paisley, who did not emerge very well during the earlier part of the week in regard to the prophecy in which, I understand, he indulged 12 months ago. I am a somewhat younger man than the right hon. Gentleman, but if he were present I would venture, with the greatest respect, to say to him that he might very well act upon the practice of this somewhat younger man. I have always adopted the practice, with regard to prophecy, of never prophesying unless I am certain, and that is the safest way of establishing a reputation as a prophet. Therefore, I am not going to prophesy except in regard to admitted and ascertained facts. It may he that the Chancellor of the Exchequer is to some extent doing what the Chancellor of the Exchequer did last year, and gambling on prosperity. I am going to say nothing about that, but he himself dropped a hint that he expected next year a reduction in the yield of Income Tax, and the reason given was that the good trading year 1919–20 would be replaced, in the average, by the poor year, 1922–23.
On that point may I venture an opinion. This is no prophecy and it is not always wise to generalise from particular cases, but I follow with interest the financial pages of our newspapers and I wonder if the impression given to hon. Members is the same as has been given to me when reading the companies reports for 1922 published during the last few months. My impression is that 1922 was a much better year than 1921, and that is supported by an analysis of the dividends declared during 1922, which show that the average amount of dividend was about 1 per cent. higher than in the 2107 corresponding period for 1921. However, be that as it may, I think that the Chancellor of the Exchequer does not expect that he will be able to pay his way in the year after this unless he is able to get some additional source of revenue. His reference to the Betting Tax proves this.
Little has been said in the course of this Debate about the Betting Tax. I confess that I have heard with dismay, amounting almost to horror, the expressions of sympathy by the right hon. Gentleman in favour of a tax on betting. Has this great country come to this: have our resources in moral and legitimate forms of taxation become so exhausted that a Chancellor of the Exchequer must have recourse to patronising, legalising, making respectable what is perhaps the second greatest curse of this country, a curse which is every week ruining homes and blighting promising careers? I am sure that the right hon. Gentleman knows little of the outbreak of moral indignation which would occur in this country if Government or Parliamentary sanction should be given to, or even if the proposals should be put forward by a Cabinet for a tax on betting. But if his foreboding is realised, then next year he will not be in a position to finance the tax reductions he has given without additional taxation. Seeing that that is so, I agree with the statement of the right hon. Member for Paisley that in view of this it would have been much better had the right hon. Gentleman not given these remissions of taxation during the present year.
The burden of the speech of the right hon. Baronet the Member for Swansea was that the possibilities of reduced expenditure are not exhausted. The right hon. Baronet paid a very great and well-deserved tribute to the financial knowledge of the Chancellor of the Exchequer. The Chancellor of the Exchequer certainly knows more than the right hon. Baronet about the possibilities of further reduction of expenditure in this country. The right hon. Gentleman in his Budget speech told us:
I can see many directions in which it may be necessary to incur increased expenditure. I cannot see so many in which I can be certain of reduction. Yet how can I make reductions in taxation—the full effects of which would naturally only 2108 be felt next year—unless I can assure my position for the future?5.0 P.MAnd the right hon. Gentleman said, and I think said accurately and with wisdom, that the reduction of interest on War Debt, that is the amount that we have to pay as interest on the National Debt, was the only real way in which we could ultimately get any considerable reduction of expenditure. The right hon. Member for West Swansea talked at large about the possibilities of huge reductions of expenditure, but he never once condescended to indicate where a single £1 of savings could be effected. But the right hon. Gentleman has upon the Motion Paper of this House at this moment a Motion which asks the House to declare in favour of prosecuting with vigour far reaching schemes of social reform. How is the right hon. Baronet going to finance these far reaching schemes of social reform? I suppose that he thinks that they would be financed in the same way as his reductions of taxation can be effected, that is without providing the money to do it. That is the only explanation that can be afforded for the extraordinary statement made by the right hon. Baronet in regard to the possibilities of further reductions. He has said that the foundation of finance must be the spending of less money. In reply to that, may I refer him to the greater wisdom of a remote but still well remembered ancestor of the right hon. Gentleman, who said:
There is that scattereth and yet increaseth; and there is that withholdeth more than is meet, but it tendeth to poverty.All depends upon the purpose to which the expenditure is devoted. We are all opposed to useless wasteful and extravagant expenditure, but there is no kind of expenditure which can be incurred which brings such a good return to the community, and therefore to the individuals who constitute that community, as wise State and municipal expenditure. Where is this huge reduction of taxation, and the still further reduction of taxation which the right hon. Gentleman is pressed to give, to come from? I see on the benches opposite the hon. Member for Stockport (Mr. W. Greenwood). The hon. Member introduced to a Government Department, a week or two ago, a deputation representing the spinning trade of Lancashire. The object of the deputation was to press on the Board of Trade the need for a great reduction of taxa- 2109 tion as a means of improving the great industry with which these gentlemen are connected, and they made the great demand upon the Government for a reduction of 3s. 6d. in the pound in the Income Tax. £180,000,000 of reduced taxation was the figure which was mentioned.£180,000,000 represents a reduction of 3s. 6d. in the Income Tax. This utter nonsense is being talked by people who, without any knowledge at all, are making demands for a further reduction of taxation. There is only one real way in which you can bring about any great improvement in the way of reduced taxation, and that is by dealing with the main cause of high taxation, which is the £300,000,000 a year or more which have to be raised to pay the interest on the National Debt. One might think from the criticisms that have been made against the Labour party during these Debates that we are not in favour of lower taxation. We are in favour of lower taxation. What is the object of the proposal we put forward for a levy on capital, except to reduce the amount of Debt and thus to reduce the amount of taxation necessary to pay the interest on that debt? The only difference, if we would only understand each other, between those who are demanding a reduction of taxation without regard to the Debt, is that we realise that you cannot reduce taxation till you have reduced the Debt, and therefore the first thing is to tackle the Debt in a thorough manner.We agree with what has been said by the right hon. Member for Paisley (Mr. Asquith) about the way in which a very high Income Tax, especially when used for unremunerative purposes, operates on industry, and we would like to see it reduced. We would like to see, in his words, a. considerable amount of the capital which is at present diverted used to fertilise the fields of industry. It is claimed, I know, by those who advocate a reduction of taxation that by that means you will be doing something to improve trade, that the amount which is paid in Income Tax will be put into investments. Is there anything in that? I do not think there is. There is certainly nothing in it if you reduce the Income Tax by 6d. in the £. There might be something in it—I think there would be much in it—if you could reduce the In- 2110 come Tax by 2s. 6d., 3s. or 3s. 6d. in the £. We heard a great deal—the right hon. Baronet the Member for Ecclesall (Sir S. Roberts) was, I believe, the first to raise it—of the psychological effect of a reduction of taxation, but there is no psychological effect in a paltry reduction of Income Tax. I was much interested in a paragraph on that point which appeared in one of the evening newspapers last night. It was to the effect that the Budget had aroused no enthusiasm at all, because the amount of the reduction was so small. To no great extent, or hardly to any appreciable extent, is the reduction of Income Tax going to increase savings.
But may I go further? Is industry needing capital to-day? What is wanted to-day is not more capital hut an increase of effective demand, so that the capital now invested in industry can be more fully and more remuneratively unemployed. Let me give you proof of that. Take new issues. The amount of new issues during the past three months of the present year was only £46,000,000. Irk the first quarter of 1922 it was 93,000,000. Whenever there has been a new issue by a firm at all reputable, what happened? In the first hour after the announcement the new issue has been subscribed five times, ten times and fifteen times over, so that there is plenty of capital available if it were needed. What we need now, as I say, is to stimulate demand. The right hon. Gentleman the 'Member for Norwich gave expression to the most ridiculous fallacy in the course of an article which he published recently. He said it is more important to save for capital investment than to spend on consumption. What is the use of saving for capital investment unless you can increase consumption? Why do business men invest capital? It is in the hope of being able to sell. It is selling, it is consumption which is the object, and the reason why trade is so bad at present is because of the great fall in effective demand in the purchasing power of the vast part of our population. We have had, during the last 12 months, a fall in wages representing a fall in purchasing power of the earning classes of £200,000,000. How is a reduction of 6d. in the £ on Income Tax going to improve that? As a matter of fact, it is going to do nothing at all. The national debt is capital diverted from industry, 2111 and, therefore, hon. Members who talk about the need for saving for more capital should turn their attention and their efforts to a far more profitable field.
Just a further point about the stimulus to saving to be given by a reduction of 6d. in the £ off Income Tax. It is opposed to the teaching of all the old orthodox economists. They advocated high taxation as a means of compelling people to work harder and to save more. I certainly think there is a great more truth in that line of argument than in that of those who say that by reducing taxation you are stimulating saving. How is this reduction in Income Tax going to result in saving? I am going to submit figures to the Committee. I hope they will pardon me if they are somewhat intricate; their importance must be my excuse. The ex-Chancellor of the Exchequer said, and indeed the present Chancellor of the Exchequer said in his Budget speech that these remissions of taxation, particularly referring to the Income Tax, spread the benefit over the largest possible area, That is not the fact, and I am going to, prove it by facts which cannot be disputed. How is this remission of 6d. in the pound on Income Tax going to be distributed'? In reply to a question asked of him last week, the Chancellor of the Exchequer stated that there are now 2,250,000 Income Tax payers in this country. Unfortunately, we have had no official statistics to show the number of Income Tax payers in the various grades of income since 1920. The Treasury, in reply to a question I put a little time ago, said these figures could not be compiled. However, we know by the reply of the Chancellor last week that the total number is 2,250,000. It has not been difficult and I think it has been done with approximate accuracy—it has not been difficult for us on the Return of 1919–1920 to calculate how this remission of taxation on Income Tax is to he distributed between people with different grades of income. From the figures of 1919–1920, after making the necessary proportion of adjustment, we arrive at this conclusion, that of the 2,250,000 Income Tax payers 500,000 get over £475 a year income arid 1,750,000 below £475 a year. That means that three-quarters of the Income Tax payers have incomes below £475, and a. quarter of them incomes above £475.
2112 Last year the remission of 1s. on the Income Tax cost £52,000,000 in a full year. Therefore 6d. will cost £26,000,000. I believe the Chancellor of the Exchequer agrees with that. Suppose we call it £24,000,000. We find, then, continuing our calculation, that three-quarters of the Income Tax payers, those with less than £475 a year, would only get about £3,000,000 altogether out of the £24,000,000. It follows, therefore, that these 1,750,000 persons will, out of a remission of 6d. in their Income Tax, get only £2 a piece. Where is the incentive to saving there? How many new industrial enterprises will be started out of these £2 savings? These people do not get a remission of 6d. in the £1. In their case it is only 3d., or half, a point which is not sufficiently emphasised, and was not sufficiently understood when the reduction of 1s. was made last year. They get in all £3,000,000, and of the total of £24,000,000 no less than £21,000,000 will go for the remaining quarter of the Income Tax payers. They are, in round numbers, 500,000 persons. That is to say, those who have the most ability to pay will get the most relief.
Let us consider how it works out in regard to the Super-tax payers. Let me assume—it is a very moderate estimate, based on official figures—that there are about 75,000 Super-tax figures. The last figure which the Commissioners of Inland Revenue gave was nearly 90,000, but they added a footnote to the effect that the calculation was somewhat approximate. These 75,000 Super-tax payers are to get, on an average, from this remission £150 apiece. "To him that bath shall be given," apparently. Let us take the Super-tax figures for the super-rich, those with £5,000 a year or more. The number is about 25,000 These 25,000 people are to get £8,000,000 out of the £24,000.000, or an average reduction of £300 a year. They got £600 last year, and they get £300 this year. There are included amongst them, of course, people with incomes of £100,000 a year, and more. The right hon. Member for Hillhead (Sir R. Horne) greatly interested the Committee yesterday by the peroration of his clever debating speech. I would be the last man in the world to criticise a man's peroration. Perorations were invented so that a man might say those things which he cannot prove either by fact or 2113 argument. However, the right hon. Gentleman's peroration was not quite the ordinary sort. It was a justification and an argument. He justified these reductions of taxation on the ground that they were due to the people after the great anxieties they had endured, especially since the Armistice.
It is a curious distribution of the rewards for anxiety. What does the ex-service man get out of this distribution? What does the ordinary worker get out of it? He has had to endure reductions of wages, amounting to something like £700,000,000 during the last three years. What does he get? He is not left altogether out of consideration. You are to give him a penny off a pint of beer. You are giving to the 25,000 Super-tax payers a reduction of £300 a year, in addition to the £600 which they got last year. That is the reward for the anxiety which they have endured during the last three years. I have shown what the remission of taxation will mean. Is there much likelihood of it leading to saving? Reduction of taxation has been advocated on the ground that the taxes were too heavy, and that unless they were reduced, certain fortunate people would reduce the number of their servants, and motor-cars and country houses. What is likely to happen when the Super-tax payer gets this remission of £300 a year? Will he write to his stockbroker and tell him to invest the money? No such thing? The man's wife has been there before him. The money will go in increased expenditure, in the ostentatious display of the rich which we see everywhere in the streets of the West End to-day.
Reference has been made several times to a historic Debate that took place in the House of Commons nearly 70 years ago, when Mr. Gladstone used a phrase which has become classical in economic textbooks, in reference to not paying off the National Debt but leaving the money to fructify in the pockets of the people. Is the money more likely to fructify in the pockets of the people than elsewhere? The best answer to that is provided by Mill. This is what he said:
The desirableness, per se, of maintaining a surplus for the: purpose of reducing the National Debt does not, I think, admit of a doubt. We sometimes hear it said that the amount should be left to fructify in the pockets of the people. This is a good 2114 argument, as far as it goes, against levying taxes unnecessarily for purposes of unproductive expenditure, but not against paying off a National Debt. For what is meant by the word fructify '? If it means anything it means productive employment, and as an argument against taxation we must understand it to assert, that if the amount were left with the people they would save it, and convert it into capital. It is probable, indeed, that they would save a part, but extremely improbable they would save the whole, while, if taken by taxation and unemployed in paying off debt, the whole is saved and made productive. To the fund-holder who receives the payment it is already capital, not revenue, and he will make it fructify, that it may continue to afford him an income. The objection, therefore, is not only groundless, but the real argument is on the other side. The amount is much more certain of fructifying if it is not left in the pockets of the people."'When reading that quotation I saw on the face of the right hon. Member for Norwich (Mr. Hilton Young) an expression which seemed to be one of contempt.
Mr. HILTON YOUNGIt may have seemed an expression of contempt. It was one not of contempt, but of amusement, and the amusement was totally unrelated to Mill.
§ Mr. SNOWDENThe right hon. Gentleman will see that a writer in the financial columns of the "Times" to-day gives expression to precisely the same opinion as I have just quoted from Mill, and it is an opinion with which the right hon. Member for Norwich agreed when he was writing articles for the daily Press not very long ago—that it is much more likely that trade will benefit by the prosecution of a policy of debt reduction than by a policy of reduction of taxation. The right hon. Member for West Swansea spoke very disrespectfully of the Chancellor's proposals the other night, more especially in regard to their effect on trade. The right hon. Gentleman said that the proposals would have no effect at all, or no serious results. I note, however, in the newspapers this morning that the proposals have had a very remarkable, and, from the right lion. Baronet's point of view, a very gratifying result on the financial position of one of the great firms with which he is associated. I notice that the ordinary shares of Brunner, Mond and Company increased in capital value yesterday by £1,000,000.
§ Mr. A. M. SAMUELThey were the same price a fortnight ago.
§ Mr. SNOWDENThey have increased in value since Monday by an amount equal to £1,000,000. The hon. Member who interrupted referred to the price a fortnight ago. Let me go back to the price a year ago. The capital value of the shares in Brunner, Mond and Company, estimated in Stock Exchange quotations, has increased by £11,000,000 during the past 12 months. That is since the Budget of 12 months ago.
§ Lieut.-Colonel CROFTJolly good management!
§ Mr. SNOWDENI can quite understand that these facts are unpalatable to hon. Members opposite. [HON. MEMBERS: "No, the reverse! "] The fact that these facts should be made public is disagreeable to them. [HON. MEMBERS: "No "]
§ Lieut.-Colonel CROFTDoes it not mean that the saving is going into investment, and does not that destroy the hon. Member's argument?
§ Mr. SNOWDENNo; it is rather an anticipation of events. Reduction of interest on debt represents a far greater advantage to the country than a reduction of 6d. in the Income Tax. The policy of the Labour party is debt reduction in preference to taxation reduction—but debt reduction because it is a preliminary and essential condition to sound reduction of taxation. I therefore emphasise what I have said already, that this is our purpose. A word or two on the Corporation Profits Tax. The right hon. Gentleman, in referring to this matter, seemed to think that the Labour party would he opposed to the abolition or reduction of the Corporation Profits Tax. No such thing. We think it is a very bad tax, and I agree with what the ex-Chancellor of the Exchequer said yesterday in regard to it. I will only add this. If a saving in taxation were likely to improve the commercial position at all, the abolition of the Corporation Profits Tax would be much more likely to do so than a reduction of Income Tax, for this reason, that the saving would go into the reserve fund of the country, and would be available for capital or semi-capital expenditure.
As to the capital levy, I assure the Chancellor of the Exchequer he is going to hear a great deal about it before the Finance Bill passes. We are going to 2116 put it forward as an alternative to the Income Tax proposals, because we think it would fulfil what the right hon. Gentleman stated to be his purpose, namely, to spread the burden as much as possible. I am not going to argue upon it now, because there will be other opportunities of doing so.
With regard to beer, that matter cannot be considered purely from an economic point of view, because there are social and moral considerations which enter into the matter. The point which I wish to enforce is that the increased taxation upon beer and the high price of beer has proved the greatest agency of temperance reform' that has ever been seen in this country. The reduction in the number of convictions for drunkenness has been very marked—they have fallen by nearly one-half—and those diseases which are attributable to intemperance have also fallen to a very considerable extent. One thing this country cannot afford to do is to encourage an increase in the consumption of liquor, and I am amazed that commercial men should tolerate with such complacency as they do the existence of this terrific drain upon the economic resources of the country. It is time that they developed an intelligence in the matter, equal to the intelligence of the captains of industry in the United States of America. There is no trade in the country deserving of less consideration than the brewing trade. There is no trade which has fleeced the community so scandalously, so unblushingly, so mercilessly as the brewing trade has done during the last few years. In a question answered on Monday by the Financial Secretary to the Treasury the right hon. Gentleman told us that in 1922 the aggregate profits of the brewers of the United Kingdom came to nearly double the figure of 1913. Every hon. Member of the House who follows financial matters knows the profits which the brewing industry has been making during the last few years. The profits have doubled in nearly every case, and in the aggregate they were almost double what they were in 1913. Therefore, if a reduction in the price of beer had to be decided upon, my position is that the entire cost of meeting that reduction should have been put upon the trade.
It is sometimes said that the increase in the taxation of beer is higher than that 2117 on any other commodity. That is not the case. After this reduction the cheapest beer which I suppose will be sold at 4d. will be taxed seven times higher than was the case in 1913. Sugar is taxed 14 times more, and my position is that the people who have the first claim upon any real surplus at the disposal of the Chancellor of the Exchequer are the wives and children, and that first consideration should be paid to a, tax which presses, as the Sugar Duty does, upon bare necessaries of life. I have indicated briefly our attitude on the financial proposals of the year. I say no more except this, that when these proposals are embodied in the Finance Bill I can assure the right hon. Gentleman he may rely upon the strenuous opposition of the Labour party to most of his proposals. I have said little about the capital levy.[HON. MEMBERS: "Why? "] Why? Because we are asking the Government to give us a special day for the consideration of that matter. It is not a subject which can properly be discussed in a perfunctory manner during a general Debate, and if we cannot get a special day for its consideration then we shall move it as a reasoned Amendment on the Second Reading of the Finance Bill.
§ Mr. W. GREENWOODI listened very attentively to the speech of the hon. Member for Colne Valley (Mr. Snowden), and I noted that he charged successive Chancellors of the Exchequer with inconsistency. I never expected that the humble Member for Stockport would come under the lash of the hon. Member, but when he did come under that lash, at any rate it was not for inconsistency. The burden of the hon. Member's arguments regarding the inconsistency of previous Chancellors was that whereas two or three years ago they were in favour of the repayment of debt as against the remission of taxation, they had changed their views and were now more in favour of a remission of taxation than of a. reduction of debt. I have always maintained since the War that it was a grave mistake for this country to pay so much attention to the reduction of debt and to go in for excessive taxation, because, in my opinion, that has been one of the causes of the excessive deflation which has taken place and which has brought in its wake an unparalleled amount of unemployment. It is not the first time that I have 2118 had the pleasure of listening to the hon. Member for Colne Valley, but on previous occasions the circumstances have been rather different. I listened to him with very great interest many years ago under a large lamp-post near the Oldham Park, and I used to think then how idealistic were his arguments and theories. After a longer experience, it appears to me that his arguments are just as idealistic and just as unpractical as they were in those days. Hon. Members opposite sometimes show a great knowledge of financial affairs, but sometimes they show themselves lacking in that respect. I was glad to see the Leader of the Opposition in the House a little while ago, but I am sorry he has now left, because he made a statement during the Debate on Monday to the effect that limited companies did not pay Income Tax unless they were making profits, and, therefore, that it was no great hardship for them with regard to their cost of production.
I would point out to the Committee that this is not true, and I should like to tell the Committee exactly what goes on in the Lancashire cotton trade which proves that a very considerable amount of money is paid in Income Tax whether the firms concerned make a profit or not. At least £112,000,000 of capital is engaged in the cotton spinning trade of Lancashire. It is invested in those mills as a loan and interest is paid on the loan and Income Tax is paid by the companies. This system—whether hon. Members think it a good one or not has been going on in Oldham and district for the past 70 years and it is the system on which, to a very great extent, the cotton spinning industry of Lancashire has been built up. That industry plays no unimportant part in normal times in the trade and industry of this country, and when that industry is paying Income Tax to such a large amount before any profits are made, it shows that hon. Members opposite do not understand in that regard exactly what they are talking about, because the Income Tax on the sum I have mentioned will come to no less than £1,800,000 per annum. I agree with the hon. Member who spoke last that in the main the contention is between those who are in favour of tax remission as against those who are in favour of debt reduction, and I think sometimes too little importance is 2119 attached to that problem. I agree very often with arguments put, forward from the benches opposite with regard to taxation, especially when it is said that the burden of all taxes falls in the main and in the long run on the poorer class of the community. I believe that is true, but I ask the Committee which tax presses the people of the country most and especially the poor people of the country? [HON. MEMBERS: "Sugar."] I think the greatest tax that presses the working people of this country is the tax of unemployment, and it is because in my view the remission of taxation rather than the reduction of debt affects the question of unemployment that I heartily agree with that policy. I ask hon. Members to listen to a point of view with regard to the manner in which taxation presses upon the people. I am going to read something that was said a long time ago by Mr. John Bright.
What do taxes mean? They mean bareness of furniture, of clothing, and of the table in many a cottage in Lancashire, in Suffolk, and in Dorsetshire. They mean an absence of medical attendance for a sick wife, an absence of the school pence of three or four little children —hopeless toil to the father of a family, penury through his life, a cheerless old age, and, if T may quote the language of a poet of humble life, At last a little bell tolled hastily for the pauper funeral.' That is what taxes mean. The labourers of Dorset-shire as well as the weavers and spinners of Lancashire are toiling and must toil harder, longer, and with smaller remuneration for every single £100 that you extract in taxes front the people in excess of what is necessary for the just requirements of the Exchequer of the country.I am in entire agreement with John Bright with regard to that, that we have no right to extract from the taxpayers money that is unnecessary to meet our requirements. Our opponents on the other side say that a reduction in the Income Tax will not bring about an improvement in employment, but the best way to test that is to see what has taken place. It was stated on the last Budget by the right hon. Member for Paisley (Mr. Asquith) that the Chancellor of the Exchequer at that time was making a gamble. At any rate, that Budget, whether a gamble or not, was a very sound one, because it attached greater importance to the question of reviving trade and finding employment for the 2120 people than to the question of the credit of the nation. Nobody believes more than I do that we ought to try to uphold the credit of this nation, but I think hon. Members will agree that we should not do it as we did during the past three years, to such an extent that it caused unemployment to be so great that there were over 2,000,000 people at one time out of work, especially when they realise that when the first stop in that policy of deflation was made in the last Budget, it brought about a reduction in the unemployment figures from 1,700,000 to 1,200,000. There are a great many business men who, like those who were Chancellors of the Exchequer, but are now business men, are beginning to take rather a different view of this question.Although we had a very bold Chancellor in 1920 with regard to the deflation policy and to the great increase in taxation, I was hoping that during this Budget we should have had another Chancellor, just as hold, but hold in another way, and one who would at any rate, have reduced taxation more than he has done. I hope the right hon. Gentleman will see his way during these Debates to accept an Amendment, if it is put forward by hon. Members opposite, reducing the Income Tax, not by 6d., but by is., because we have already hail proof that the reduction of that tax has made a decided improvement with regard to the number of unemployed. There is no fear that the Chancellor of the Exchequer need expect that any deficit will take place, even if he does that. Hon. Members forget that there is surely a possibility of expansion in the taxpaying capacity, both of those who pay direct taxation and those who pay indirect taxation, and I venture to say that the policy pursued last year ought to be pursued in a greater degree this year, because it would save money in the amount to be paid for unemployment benefit by the State, and it would also mean that there would be an increase in the revenue on account of the greater spending power of those people who would be unemployed and thus obtaining greater wages than they would have been doing from unemployment benefit.
All that we ask for in business is that we should he treated fairly, and when hon. Members say that business men are selfish in asking for these big reductions in Income Tax, I think they do us a great 2121 injustice. I would like to point out one instance that shows the great unfairness of the taxation as it affects this country and as it affects the United States of America. Our Debt services in this Budget are put down as £350,000,000. In America, instead of having to pay £350,000,000, they have to receive £50,000,000. That means to say that, roughly speaking, the 10,000,000 workers in this country—which is about a fair estimate of the number—have to pay in Debt services alone, as compared with the United States of America, £400,000,000 a year. That means 15s. 6d. a week for every working man and woman in the country, and I think that is a great hardship and one that no industry ought to he called upon to suffer. Personally, I do not agree with the hon. Member for the Colne Valley in what he said against the possibilities of a betting tax. I do not see why a tax on what is certainly a luxury ought not to be imposed. We are often told, especially from the other side, that if there is one thing more than another that ought to he taxed, it is the luxuries which people buy, and I may say, in regard to that, that I missed something from the Chancellor of the Exchequer's statement, but, first of all, I should be very glad if the Financial Secretary to the Treasury, when he is at liberty, will listen to this point.
I listened very carefully to the speech of the Chancellor to see whether he had done anything with regard to removing an injustice from which traders who are making motor car tyres in this country feel that they are suffering, and that is that in the Finance Act a motor car tyre is not considered to be an integral part of a motor car. They were excluded during the War, and there has never been a logical reason given for that exclusion being continued. The Chancellor of the Exchequer promised two or three weeks ago that this matter should have his attention. In motor car tyres coming into this country there is contained over 5,000,000 pounds of cotton yarn which could be spun, if need be, in the mills of this country, and the cotton trade of Lancashire is at present on short time and is working only 50 per cent. of its opportunity. Here we are paying debts to America, having to pay such considerable sums, which I think every hon. Member in the House will agree is a great. hard- 2122 ship, and yet we allow them to send to us these tyres without any duty being put upon them, and we lose the possibility of producing the yarn that is required for hem. I hope that during the course of these Debates the Chancellor of the Exchequer will see his way to put right this particular injustice. The hon. Member for Colne Valley mentioned a deputation to one of the Ministers with regard to the emission of taxation. The cotton trade at the present time feels that it is time that the voice of Lancashire was heard more. We have heard a great deal of the hardships from Scotland, but those hardships are no greater than are the hardships of the working people of Lancashire to-day. I myself, and many hon. Members with me, think that one of the greatest reasons for the depression is heavy taxation, and one of the best ways in which we could remove it would be to reduce what everyone must recognise is this grinding weight of taxation.
I cannot understand why hon. Members always say that, we in this country should be so fully prepared to pay our debts right up to the mark when they never say anything much about other countries paying their debts to us. Surely it is only fair that We should have, at any rate, somewhere near a quid pro quo, and I would ask for the sympathy of hon. Members opposite with regard to the point of view of diminution of taxes as against diminution of debt. Three years ago hon. Members talked glibly of paying off the National Debt in 25 years, but, to-day, even those who think so much about purr economy have at any rate, changed their minds from about 25 years to about 100 years. One of the purest of economists said, "What is two years in the life of a nation?" He. talked as if two years were nothing. A man who can sit in his office and who never worries about being unemployed does not need to early about two years at all, but what are two years to those in business who cannot carry on because of the excessive load of taxation? What happens about the unemployed? Is a year nothing to them? Hon. Members need only look at the statistics with regard to those who cannot meet their demands for rates and taxes, at the number of businesses which are going bankrupt, to see that in this country we are pursuing a policy which is suicidal. It is all right for those who 2123 keep out of it to say it does not matter, but let us take a lead in this case from the other countries in Europe, like France and Germany, and let us put, first of all, not the credit of the nation with regard to the exchanges, serious and important, though it may he, but that which is of the greatest importance to every working loan and woman in this country, namely, the regularity of employment.
§ 6.0 P.M
§ Mr. NEWBOLDI want, first of all, to approach the Budget from the standpoint of one who has been listening with interest to the various arguments put forward in its support, whether from the point of view of the Government or that of the semi-Government; then to the criticisms that have been levelled against it from the Liberal and Labour Benches, and then to go forward and put before the Committee the ideas which I would prefer to see incorporated in any Budget, that might be produced in this country. The first thing that I want to say is that I have found a very considerable degree of encouragement in reading the peroration of the Chancellor of the Exchequer. All through his speech there was a very great deal to encourage me, because it is quite evident that he is feeling that in his own time, in the time of a problematical successor, whom, he has not, however, named yet, and in the time of other Chancellors of the Exchequer who will come after, there is no likelihood of anything like a serious reduction of that burden of Debt which is weighing upon the Government and the governing class at the present time. He made it quite clear, also, that he is very skeptical about the improvement in trade, of which we have heard considerably during the last few weeks or months. He made it quite clear that in his mind—and evidently, if it is in his mind, it is in the minds of the expert advisers of the Exchequer and in the minds of the Board of Trade as well—that this improvement in trade at the present time, and during the last month or two, is nothing more than a temporary revival, and he goes on to talk of the danger that he may require a larger sum of money than he has Budgeted for to meet eventualities on the Continent, eventualities that May arise abroad and at home. There was throughout his speech a note of that chronic pessimism that 2124 haunts the Budget speeches of every capitalist statesman in this country, and of every capitalist statesman in France and in Europe generally.
I would like to draw attention to this particular characteristic of the Budget. I think that, from the standpoint of the party and of the class interests which he represents, the Chancellor of the Exchequer has produced what his own supporters may describe as an excellent Budget. He has produced a Budget wherein he allots all the money which he has at his disposal to the purpose of reducing debt, the aim being, quite obviously throughout the whole of his proceedings, to appreciate the value of the £ sterling, to do everything possible to make this country once again a place to which the peoples of the world shall come for credit. His aim in that direction is quite conspicuous on this occasion, but I notice that it does not meet with what one might call approval whole and entire from the late Chancellor of the Exchequer, the right hon. Member for the Hillhead Division of Glasgow (Sir R. Horne). The right hon. Member for Hillhead regrets that so much of the surplus—I will not enter into the argument as to whether it is a boná fide surplus or a fictitious surplus; we will take it it is a surplus—the right hon. Member for Hillhead criticises the disposition of this surplus entirely for the purpose of reducing debt. He would like to see it devoted to the reduction of taxation. That is only natural, coming from the particular quarter that it does. As Chancellors of the Exchequer generally reflect, alike in their personality and in their policy, whatever happens to be the dominant interest in the State at any particular time, the Chancellor of the Exchequer on this occasion reflects pre-dominantly the interests of the credit-mongering class, and the criticism comes from one who represents, perhaps in the highest degree of any representative in this House, the interests of large-scale industry, and one who stands for high capitalism upon the industrial field. His particular branch of the capitalist class desires above everything else at the present time that there shall prevail in the hands of those capitalists a sufficient amount of ready money to enable them to extract themselves from the clutches of the banking, the insurance and other credit houses. The Chancellor of the 2125 Exchequer and his section rather propose that it shall be difficult for the industrial interests to extract themselves from the clutches of mortgage into which they have got. I listened during the course of the remarks of the right hon. Member for Hillhead with very considerable interest to those things that he had to say concerning the sacrifices that have. been made by the people of this country, and I think I can scarcely do better than call again to the minds of hon. Members some of the statements that he made. He said:
The attitude of this country since the Armistice has presented as great a spectacle of heroic performance as was exhibited even in the course of the War.I must say I think that comes remarkably well from one whom I might very appositely describe as the Hindenburg of I he class-struggle, because if there be one man more than another who was in charge of the attack which was made upon the workers' organisations, the attack which was made upon the miners, the attack which was made upon the railwaymen, the attack which was made upon all sections of the working classes from 1919 to the time of the great miners' lock-out, it was the right hon. Member for Hillhead. To-day he has gone from public enterprise to private enterprise. He is a man who is particularly associated with the endeavour to drive the working-class further and further into the abyss of destitution. One must say that that particular man represents the concentrated and combined attack of capitalism on the standard of life of the working-class, and for him to talk of the sacrifices made by the people of this country is nothing more or less than rank humbug and hypocrisy.I want to deal with arguments presented from other sides of the House. The right hon. Member for Norwich (Mr. Hilton Young) has a third alternative. One person desires to devote money to paying off Debt. Another one desires that the surplus money shall rather be used for the reduction of taxation. This third Gentleman comes forward with the proposition that it shall be devoted—well, it is difficult to say exactly to what—but, at any rate, he says, do not let us be over anxious about the reduction of debt. He, apparently, belongs to that good, old bond-holding school, which considers that the best interests of this country are generally served by imposing 2126 upon the masses of the people the beneficent task of working in order to keep the rentier class contented and happy. That is the third proposition put before this Committee. There are three propositions—that of the Chancellor of the Exchequer, that of the right hon. Member for Hillhead, and, thirdly, the proposition of the right hon. Member for Norwich. Then, hon. Members who sit around me on the Labour Benches wish to extricate the Chancellor of the Exchequer from his difficulty, if they cannot extract him from his position on the Treasury Bench and do the job themselves. They want to extract the Chancellor of the Exchequer from his difficulty by persuading him to listen to the arguments for the Capital Levy. That is their alternative solution, and I have been particularly interested this afternoon in hearing the comments of the hon. Member for Colne Valley (Mr. Snowden) upon the Capital Levy, because I wanted to know just how far the Labour party proposes to use the Capital Levy. I had thought for a while that it was seriously intended to use the Capital Levy for the purpose of transferring the means of production to the State, but I find that I have been mistaken. The Labour party is not concerned at the present time with going towards Socialism at all. It is concerned rather with the task of paying off the Debt by means of the-Capital Levy. That has come out quite clearly this afternoon in the speech of the hon. Member for Colne Valley, and I am sure that that speech will he read with very great interest by the whole of the working-class, particularly the remarks which he made afterwards, in which he said that the first object of the Labour party was debt reduction, that the second object was tax reduction, and then he stopped short.
In my opinion it is a most remarkable attitude for the Labour party to take up—first, the reduction of Debt; second, the reduction of taxation; third—and "also ran," apparently—housing, education, social reform, and the general improvement of the lot of the people. In examining the Budget, which is, after all, the central feature in the year's Parliamentary programme, the spokesman who particularly represents the Labour party in the Debate does not make any reference to the provision which the Chancellor of the Exchequer should make for the improvement of the 2127 standard of life of the people. I am not concerned with the reduction of taxation, though I say it quite frankly that I believe there should be, and I shall do everything in my power when the time comes to see that there shall be, no levying of Income Tax on any income under £500 a year. I think £500 is quite small enough a sum upon which any man and woman can bring up a family. I think, however, that when the income gets over £2,000 a year, it is time to put on the full screw, and make the tax 20s. in the pound. That, certainly, is the position of the Communist party, and I do not want you to think that we are going to let you off with more than £2,000. If you have got more than that, in these days at any rate, the best thing you can do is to show your love for the people by handing it over. If you will not show your love by handing it over, it will have to be taken from you. When it comes to a question of indirect taxes, I suggest that the Government should take off entirely the taxes upon sugar, tobacco, and tea, and take off the taxes generally upon those things which are the essentials, like the food of the common people.
I come to the proposal to tax betting. I notice that the Labour party views with considerable dismay this proposal, and also I notice another hon. Member views with dismay the suggestion that the Churches might interfere, that the moral influences in the country might interfere. I do not think that there is any particular danger of that if this is not going to be extended to prize draws, raffles, and that sort of thing. Yet, in connection with this proposed tax upon betting, the preliminary inquiry will probably be a great advantage to the capitalist class in enabling them to discover what proportion of surplus income remains in the hands of the workers so that they can be deprived of it without any lowering of their efficiency. I think there is probably a great deal more in that proposition than anything else. It is, however, a curious commentary upon the Christian civilisation of this country that the churches, chapels, and Sunday schools, and all the moralising influences of society, aided by the Judicature and the Police, have not been able up to this time to exterminate a vice such as that 2128 of betting; rather that it has got the hold it has and which apparently reflects at the present time the system under which in this country we are living.
It is notorious at the present time that whilst there is not more money possibly in circulation in the betting industry—because it is an industry, an industry that employs a great number of people without any corresponding benefit to the community—it is certainly far more active than it was previously. The circulation of what is passing between one and another is very much more rapid to-day, for every one in the working-classes is trying to make ends meet by putting so much on a horse with a view to getting something for nothing. It is characteristic of the corruption that is to-day throughout the whole of public life, throughout the whole of our social system in this country, in a country famous for Puritanism, famous for its adherence to Christian standards, and nothing probably shows up the corruption of British public life and the disintegration of society more than the fact that the House of Commons are seriously considering the legalisation of betting at the present time. It is only perhaps the perpetuation of the achievement of the late Government and continued by the present Government, of actually extending a bounty on prostitution. The Ministry of Labour refuses to pay to the unemployed man or woman a proper amount of benefit. They will not allow the parish councils of Scotland or the board of guardians in England to pay an amount of money adequate to keep the people at the trade union rate of wages or even at—
§ The CHAIRMANThe Ministry of Labour cannot be discussed on the question before the Committee.
§ Mr. NEWBOLDThe Ministry of Labour will, I think, come to a sudden end if the Budget does not pass. If the, Budget does not provide an extra amount of money for the Ministry of Labour it will be necessary for the Ministry of Labour to perpetuate this system of bounties on prostitution. The bounty on prostitution to which I refer is the inadequate provision of the Ministry of Labour—
§ The CHAIRMANThe hon. Member might put forward the same argument in respect to any Department, that it ought 2129 to have more money, and so raise a question that does not arise on the general financial position which is the question before the House.
§ Mr. NEWBOLDWell, I have succeeded in raising the question of the unemployed, prior to the time you called me to order, but I shall have to go back. I have given a very great deal of thought to the necessity of providing in the Budget for far-reaching social reconstruction. I confess that probably in that also I shall be ruled out of order. I was going to say that, so far as I was concerned, the Budget is unsatisfactory. The criticism levelled against it, by its various critics is equally unsatisfactory, because they all talk about a reduction of debt, a reduction of taxation, sinking funds, and all the various things which the capitalists can throw from one to the other, and will have at their disposal, instead of using the Budget as a means of social amelioration, and as a means of putting at the disposal of the Government the requisite sum of money to rebuild the houses of the country, to rebuild the towns and villages, so that this country may be a place fit for heroes or even human beings to live in. In the past we have had Budgets introduced for the purpose of giving old age pensions. We have had Budgets brought forward for giving this social reform and that social reform. This Budget will be known as the Budget brought forward without any single proposal for social reform, and the Debate upon it will be known still more as the Debate in which the spokesmen of the Labour party uttered no protest upon that fact.
The Budget that would satisfy me, and the only one that would go towards satisfying me, would be one which would provide a sum -of not less than £200,000,000 per year for social reconstruction. The first and foremost charge would be for housing. The second charge would be for the building of schools, so that there should not he in the length and breadth of this country a single school wherein there need be a class of more than 40 scholars. I demand for the children of the workers of this country that they should have educational facilities extending from the lowest rung of the ladder to the highest rung of the University, and -equal to those at the disposal of the- children of hon. Members opposite. 2130 Any Budget that fails to provide for these things is a Budget that I myself reject with contumely and contempt. The third demand I put forward is that the Budget shall provide for every boy and girl and for every young man and woman between the ages of 15 and 25 facilities for athletics, entertainments, cultural training, and all that kind of thing; and the fourth demand is one which has been in my mind for a time, particularly when I pass the London Hospital and note for the fifth year the national begging campaign. The Budget should provide for hospitals, nursing homes, sanatoria, and every kind of provision for the health of the people, from the pre-natal stage to the time they die. All these things should be provided by the State. They should be a first charge on the Budget and before there is any charge allowed for interest on War Loan. I demand that there shall be a cessation of the payment of interest on War Loan, a suspension of the payments of any interest on War Loan over a total of £2,500 until such time as the people of this country are properly housed, until such time as the people of this country have adequate education for their children, and until such time as the people of this country have for their children and young people the aesthetic things I mentioned above equal to those provided at Oxford and Cambridge, at Eton and Harrow. I demand that there should be no expenditure upon such things as War Loan until the national health is provided for in a way shall outline.
If there he not enough money to meet these things, then other sources of wealth will have to be tapped. I would suggest that the functionaries of the Crown, or the occupant of the Imperial Chair himself downwards to the functionaries of the House of Commons, many of whom are over-paid, should none of them receive an income of over £2,000 a year. If the King could not get on with less, then let the Stock Exchange have a-voluntary subscription to keep him. [HON. MEMBERS: "Order! "] I thought that would get home; that is because, Mr. Chairman, they will have to pay for their royalty instead of the workers having to pay for the support of the King. [HON. MEMBERS: "Order! "] The Chairman has not called me to, order. I would propose until such time as the people have a minimum, and a very high minimum at that, 2131 that we should cease to do this, and that the governing class should forego its interest, rents, and profits on the one side, and that we should not pay anything out from the other side. We would put prohibitive taxation on all incomes over £2,500, and in that way we might perhaps be able to get social reform. If we cannot get it that way—and from the quietude of hon. Members opposite it is extremely unlikely that they would be prepared to get off the people's back even for five years—then they will have to be thrust off. The only alternative to getting off voluntarily is being thrust off. If they will not provide these things themselves, well, then, I suppose the Labour party will be here to do it. If the Labour party comes in, we know what will happen from the assurance of the hon. Member for Harrow (Mr. Mosley). We have been assured that if the Labour party were to do anything rashly there would be a panic in the city. We have been told that if the Labour party comes in at the end of one year and does this sort of thing it will go out—a city man told me so—at the beginning of the next. We are told if they do anything drastic they will affect the interests in the city. Despite the fact that we would all like to get a new social order quietly, this Budget and past Budgets, end present and past Budget speeches, show quite clearly that there is only one way of getting these matters through, and that is by clearing out the lot of you, and so allowing the workers to run the country.
§ Sir PHILIP PILDITCHThe speech which has filled most space this evening has been that of the hon. Member for Colne Valley (Mr. Snowden), and it would have been tempting to have answered it. Part of that speech has been answered by the hon. Member who has last spoken, and as to the question of the taxation of capital, his suggestions would have been much more effective in the mind of the House if they had not been preceded last evening by the speech of the right hon. Gentleman the Member for Norwich (Mr. Hilton Young) which demolished them in advance. But there is one point upon which I should like to comment, and that was the effort the hon. Gentleman made to show that no savings of capital of any particular advantage to the community were likely 2132 to be derived from a reduction of the Income Tax. What he said latterly seemed to me to refute his earlier statement. His observation was, as I understood it, that a part of the reduction—to the extent of £2 per head only—would go to a million and a quarter people, and that would not do much good, whilst the largest part would go to people who would reap a much greater benefit per head from it. In the first place, it seemed to me that part which went to the smaller people would be beneficial to the State, because it would tend to increase consumption, which the hon. Member's leader favoured, and the suggestion that the Super-tax and large Income Tax payers would reap large benefits, disproved his primary argument that there would be no savings likely to result, and therefore, no benefit to the community, for that class is the saving class. I feel that it would be useless now to pursue the many topics which have been raised during the last three days. Amongst all the Budget Debates I have heard, I. think this has been by far the most beneficial from the point of view of those who desire to understand the matter, and from the point of view that there has been less partisan feeling than I ever remember before. Consequently, there is a much greater chance that the House may come together and finally help the Government to solve some of the problems which face the country.
There is one point which has not been referred to in the Debate. The Chancellor of the Exchequer has stated that he means to keep his eye on expenditure during the current year and for the years to come. I think he was right to make that statement. What is the situation? The Chancellor of the Exchequer has pointed out that next year he would be in a very much worse position in many respects than he is this year. In the first place, he tells us that he expects to lose £50,000,000 in regard to the sums he will have from the disposal of war stocks. He says he will have three bad years of Income Tax by which he expects to lose £50,000,000, and if he sticks to his determination to have a, 'sinking fund of £45,000,000 next year he will lose another £5,000,000 in that way.
The remissions this year only amount to £34,000,000 and next year he estimates that they will amount to £57,000,000, and 2133 in that way he will lose another £23,000,000. In addition to this there is no allowance this year for Supplementary Estimates, which in last year's Budget stood at £25,000,000. Therefore, on the whole, it is probable that the right hon. Gentleman will find himself £100,000,000 worse off next year than he is at the present time. On the other hand, war pensions may fall a little and special expenditure may fall, and we all hope that interest on the National Debt may fall. But these are all very uncertain things, and I cannot help thinking that the Chancellor of the Exchequer was very wise, although he did not give it prominence in his speech, when he said that he meant to keep his eye on the expenditure.
I should like to remind the House that this is the first year since the peace in which expenditure has been estimated to fall less than £100,000,000 in the year. From the high-water mark of the peace year the expenditure fell by £1,100,000,000 and in the following year it was reduced by £700,000,000. In the year 1921–22, that of the boom, it fell by £100,000,000. The following year, when the slump attracted people's minds to this question again, it rose to £300,000,000. The Estimates for the current year indicate that the Chancellor expects the expenditure to fall by something less than £100,000,000 less the £25,000,000 for Supplementary Estimates, which sum was included in last year's Budget but not in this year's Budget. So that we are face to face with the fact that expenditure is beginning to fall at a very much lower rate. So far as the first year or two after the War are concerned, the heavy savings were understandable, but it is more difficult to make savings now. On this point I should like to offer one suggestion. Anybody who looks at the figures which are indicated in the financial statement of the year will see that there is only one source out of which there can be much reduction of expenditure, and that is in the £436,000,000 which are estimated to be spent on the Supply Services.
§ Colonel WEDGWOODWhat about the Army?
§ Sir P. PILDITCHYes, that is a Supply Service. There are the fighting Services, the Post Office, and the Customs, and there remains for the Civil Services £250,000,000. That sum is comparable to 2134 an amount of £55,000,000 before the War, that is to say, that whereas the Civil. Services proper were costing £55,000,000 before the War they now cost £250,000,000 a year. But that amount includes war pensions and old age pensions, which should not be included in this calculation. That roughly means a reduction of £100,000,000 which nobody suggests should be interfered with. There is in this large sum the only method by which we can economise unless you make considerable reductions in the Sinking Fund charges by a reduction of interest, but outside that this is the only fund out of which the right hon. Gentleman can save money during the year which follows the current year, which he is thinking a good deal about in his calculations this year.
I will make one suggestion. I am quite satisfied that the Chancellor of the Exchequer will have to pursue the course of going into the question of this £436,000,000 as being the only way by which fresh savings can be made. I would like to indicate a source by which the right hon. Gentleman can obtain facts that will help him to make a selection of those services and directions in which he can hope to make savings. The Estimates Committee of this House, of which the right hon. Baronet the Member for the City of London (Sir F. Banbury) is Chairman, and of which I have been a member for several years—it is the Cinderella Committee of the House, doing unostentatious work quietly—has published a number of Reports accompanied' by the evidence on which they are based, and if the Chancellor of the Exchequer will peruse those Reports he will find indications of the way in which some of the money has been spent, and on which some of the heavy obligations which still have to he complied with were incurred, and these Reports will give him some assistance in the policy of reducing expenditure to which he has committed himself.
If the Chancellor of the Exchequer would not mind referring to page 7 of his admirable financial statement he will find that there is a summary in small print at the bottom which indicates how this £250,000,000 I have referred to is made up. What I am suggesting is that it would be very useful to the House if he could indicate how much of that £250,000,000 goes in the actual emoluments paid to the personnel of the various: 2135 services in the State. If he went into that question I think he would find that those emoluments have more than doubled since the War. He would also find that they have risen from something between £90,000,000 and £100,000,000 to very nearly £200,000,000 since the War.
I think he would also find, if he pursues these studies, that some of the methods by which these commitments were entered into during the last years of the War and the post-War years are exceedingly questionable from the point of view of economy. With all respect I offer to the right hon. Gentleman that suggestion, because I feel satisfied that both in regard to current economies which he relies upon to balance this Budget, and with regard to the economies which must come in the future, there is only one way in which this can be done, and that is by reductions of expenditure which can only come out of the area which I have described and by the means which I have suggested.
Mr. TREVELYAN THOMSONThe discussion before the Committee has, I think, so far shown a general consensus of opinion that if relief is to be given it should be given in the direction of stimulating trade and thereby reviving industry. It is true that there has been a difference of opinion as to the particular form which should be taken in order to stimulate trade and help to revive industry. We have been told that there is to he a grant of £2,750,000 in relief of agricultural rates. The question I wish to put to the Prime Minister and to the Chancellor of Exchequer is, why should we be asked to differentiate between agricultural rates and the rates in other parts of the country in this way.
At the present time agriculture is receiving under the Act of 1896 a relief of £1,300,000. Further relief is now to be given, and with the grant given from the Road Fund there is to be granted from the Exchequer £5,500,000 in relief of agricultural rates. I want to put it to the Chancellor of the Exchequer and the Prime Minister as to whether a case has been made out for differentiating in this way in favour of agricultural rates and agriculture as against industrial districts and the rest of the urban population. It is somewhat significant that, when the 1896 grant was made, it was then stated that it 2136 was merely being done pending a revision of the incidence of local taxation. We were told in the King's Speech that there was to be a revision of the whole system of State Exchequer grants from the Treasury towards the remission of local taxation.
I do want to put It to the Minister concerned that, although the state of agriculture may be bad, the state of industry in other parts of the country is as bad, if not worse. If one turns to the labour returns one finds that the amount of unemployment is infinitely greater, say, in Sheffield, on the North-East coast, in the Midlands, and in South Wales, than it is in agricultural districts. I have turned up the latest reports dealing with the matter, and. while it is true that it is stated that in agricultural districts there is an abundance of labour, in regard to industrial areas it is shown that there is a rate of unemployment of 39 per cent. in shipbuilding on the North-East coast, and 22 per cent. in engineering on the North-East coast, with an average for the whole country of over 13 per cent. I do submit that, in these circumstances, there is no special need to relieve agriculture from the national funds when industry generally is not being relieved. To take another test, if one turns to the question of bankruptcies, I cannot find, so far as the latest returns go, that the bankruptcies among landlords or farmers are any greater than in ordinary industry; in fact, the figures, so far as they are available, show that they are considerably greater in other industries than among landlords or farmers. Take what test you will, the necessity is infinitely greater in industrial areas and in urban districts than in the agricultural districts.
If one takes the burden of local rating, according to the return issued by the Ministry of Health, it will be found that, while in rural districts 55 per cent. of the rates are under 12s. 6d. in the £, in the urban districts only 18 per cent.. are under 12s. 6d. That is for the year 1922. At the other end of the scale, in rural districts only 22 per cent. are over 15s. in the £, but in the urban districts 47 per cent. are over 15s. in the £. Therefore, if the necessity is great in the agricultural districts, it is ever so much greater in the industrial and in the urban areas. I do not complain that a grant is made by the 2137 Exchequer to agricultural districts, but I think that grant should be made all round, because the incidence of taxation and of rating affects very inequitably the whole question of the cost that is borne by the public. I regret that the Government have not yet had time to bring in a comprehensive Measure for dealing with a question which has been urgently demanding a solution for the last 30 years. To add force to the point I am trying to make, I would mention that, whereas the highest rates in the rural districts are not more than 15s. in the £, last year, according to the Ministry of Health return, in Merthyr Tydfil the rates were 30s. 51d., in West Ham 26s. ld., in Norwich 27s. 7d., in my own district 20s., and the same in Sheffield and elsewhere; and yet, while these abnormal rates exist, relief is going to be given from the Exchequer to those districts where the rate is much below the average.
I appeal, therefore, to the Chancellor of the Exchequer and the Prime Minister that, as they are going to vary the custom and practice which has held good up to the present of making grants from the National Exchequer, that variation should be a fair variation all round, and should not be given simply to one section of the community and denied to another. I submit, also, that, if you are anxious to revive industry, you will revive industry ever so much more by giving the relief to the rates rather than to the Income Tax payer, because the cost of production is very heavy so far as rates are concerned. We have heard from the Chairmen of big industrial companies, speaking at their annual meetings, that they are handicapped in the struggle for foreign trade because of the excessive rates which they have to bear, and which are a first charge on production. The Chairman of Messrs. Bolckow, Vaughan and Co. showed how, as compared with 1914, the local rates had increased from 5d. per ton of steel produced to something like 3s. 2d., and in the Sheffield district similar figures were given, showing that the industries of Sheffield were crippled because of the excessive burden of rates, which is a direct charge on industry. If you wish to relieve industry, you will give it much greater relief by making a grant towards the reduction of local rating than by taking 6d., or even 1s., off the Income Tax. If relief is to be given on the widest scale to help to stimulate trade it will be 2138 infinitely better done by seeking to give the same number of millions to industrial areas which are being given to agricultural areas. Therefore, I hope that, before this matter is finally settled, the Prime Minister and the Chancellor of the Exchequer, who know the need better than I can tell them, will realise the necessity of giving this grant to the industrial areas pending that larger settlement which we all desire and which has been postponed too long. If we have not time to settle the whole question, at any rate let us treat fairly and equally the industrial areas along with the agricultural areas.
§ The CHANCELLOR of the EXCHEQUER (Mr. Baldwin)I will immediately say a word on the subject that the hon. Member for West Middlesbrough (Mr. T. Thomson) has broached, and in answer to a question asked yesterday by my right hon. Friend the Member for Chelmsford (Mr. Pretyman). It is quite true that the assessment of agricultural land will be reduced From one-half to one-fourth, and it is the intention of the Government that this provision shall take effect as from the beginning of the financial year. The precise methods of carrying it out will vary in different parts of the country, but such adjustments will he made as to ensure that, although farmers will have to meet current demand notes, they will subsequently receive the benefit for the whole year. Corresponding arrangements will be made to meet the case of Scotland. The whole subject will be raised and can be discussed, I hope, in the Agricultural Debate, and, at any rate, it will have to be when the Estimate is presented, for this purpose; but as it will be a Supplementary Estimate, I rely on its being met, as I rely on other Supplementary Estimates being met this year, out of savings.
Mr. THOMSONWould the right hon. Gentleman say why he is differentiating by giving to agriculture what he is denying to industry?
§ Mr. BALDWINI would ask the ion. Member to put that question to the Minister in charge, namely, the Minister of Agriculture.
§ Mr. BALDWINIt will arise on the Estimate it has nothing to do with the.Budget.
During the last two days and a half we have had, I think, a very interesting discussion, and my part has been.a not wholly unpleasant one, because,.although there has, naturally, been a good deal of criticism, it has come from three distinct parts of the Committee, and from the moment when I sat down until the moment when I rise, some one of those -three parts has been devoting its time to demolishing the arguments of one of the others. That makes my task very much the more easy, and reminds me, or at any rate I do see a resemblance, which hon. Members who recollect it will also see, between the proceedings of the last two days and a half and the famous three-cornered duel in "Mr. Midshipman Easy." I only hope that no hon. Member has suffered during the fight as the boatswain did on that occasion.
I should like to begin by alluding to one or two of the criticisms or perhaps inquiries would be a better term, which were made from the Front Opposition Bench by the right hon. Gentleman the Member for Paisley (Mr. Asquith). I think the first point upon which he addressed a question to me was as to the arrears of Income Tax and Super-tax. The figure he rightly gave for last year as £122,500,000, and, for the information of the Committee, I may say that at the beginning of the current financial year the figure was nearly £30,000,000 less, namely, about £94, 000,000. I think, however, that the most interesting point raised by the right hon. Gentleman was one that comes very closely home to the Exchequer, namely, the provision of interest in the Budget for charges on short money. The right hon. Gentleman expressed a fear that the current year might see rates rise. He thought they might be raised to very nearly twice the figure at which they stand to-day.
§ Mr. ASQUITHI did not say I thought that. I said there was a possibility of it.
§ Mr. BALDWINThere is always a possibility, but I would say, in answer to the right hon. Gentleman, that the provision I have made to meet that charge, which of course is a large one, is one which I hope will be sufficient for the; current year unless something. abnormal occur. I have made a more 2140 substantial provision than would be required if the present low rates lasted throughout, the 12 months, but I think we must bear this in mind, that, if there is going to be what I may call an abnormal increase in such rates, it can arise only from one of two causes, or possibly from a combination of those two causes. The first is that we might have such a rise of prices in America as would pull prices in this country along with them. But if that happen we shall have the dollar and 'the pound once again on an equality, and in that case we shall save in two ways—in the amount of interest we pay on the American debt, and the community as a whole will save on the lower cost, of buying dollars for the purchase of commodities to he consumed in this country. We may say that probably, looking over the country as a whole, it is very nearly as broad as it is long. But if we have the other cause operating, either by itself or in conjunction with America, namely, a revival of trade which will lead to such a demand for money as would send rates up, then, of course, we gain more directly in that we should almost at once get the benefit in the consumption of goods subject to Customs and Excise, and we should also get, although, of course, lagging behind, an improvement in Income Tax which would be very welcome at a later date.
7.0 P.M.
There was one other point. My right hon. Friend thought my provision of Sinking Fund rather meagre, and spoke of the days before the War, when, as he truly said, the average amount devoted to that purpose ran from 1 per cent. to 1; per cent. of the total debt. Of course, that, is a different criticism from that which I received from other quarters of the Committee, and I will say something about that later. The circumstances have changed since my right hon. Friend was Chancellor of the Exchequer, and we have to deal to-day with a debt ten times as large. We have also to deal with a country suffering from burdens of taxation which were unknown in those happy days when he administered our finances. We are also suffering from—though, I believe, passing through—one of the greatest trade depressions that has ever oppressed this country. All those circumstance have to be taken into account, and I can only conclude, from the fact that two sections of my critics—that is, two-thirds of the 2141 triangular duel—think I am providing too little, and that the other third think I am providing too much, that I am probably not far from the happy mean. I would only add this, that it will be perfectly competent, I think I may say, for my successor, when he receives large sums of money on account of German reparation, to pay them towards the redemption of debt.
There was one point rather allied to this which was raised by my right hon. Friend the Member for West Swansea (Sir A. Mond). He wanted some information about debts from the Dominions. I may tell the Committee, in a few words, how these debts stand. The Canadian debt, as I said in my Budget. statement, is practically settled.. The Australian and New Zealand debts are funded, and interest is bsing regularly received, to the amount of at out £6,000,000 a year. The South African debt, as regards a substantial portion, has been paid off. The rest has been funded, and we are receiving in respect of it rather more than £500,000 a year in interest. I am sure the Committee will feel that, as far as those debts are concerned, we are receiving from the Dominions the treatment which we should expect from men of our own race and kindred.
Perhaps here I may allude to one or two points raised by the hon. Member for Coins Valley (Mr. Snowden). As he truly said we shall have opportunities later on of discussing his great remedium, and there would be hardly time to-night to go into the particulars of a capital levy. There are two or three things which he said, however, that deserve a passing word of comment. Here again the triangular duel comes in. The hon. Member says that I have sacrificed sound finance to political expediency. Some friends of mine wish I had done so more, and thus it is impossible to satisfy everybody. The hon. Member said that I was taking a risk in giving as many reductions as I have done. There I follow the example of my predecessor and I have followed it with open eyes. I am taking a certain amount of risk, but at times like this, when correct estimating is almost an impossibility, when I see trade turning and when I believe that the sound policy I am pursuing in my Budget is going to help the trade of this country, -it is a risk that I may reasonably take, 2142 and I am not afraid to face the results next year, should I be here. Nor do I feel apprehensive, should someone else be in this place, that he will have to deal with a situation which will he too much for him.
Where I do rather take exception to what the hon. Member for Colne Valley said was when he spoke about the concession we are making to the Income Tax payer. I bear this in mind. that during the stress of war-time, in one of those difficult financial years, the direct taxpayer was called upon for 80 per cent. of the revenue raised in the 12 months. In my opinion, and in that of the majority of the Committee—I know, not in my hon. Friend's opinion--it is only just that those who have contributed so heavily should, when it is possible, get some respite from their burdens. Among the Income Tax payers are large numbers of the middle class, the class which has been more hit by taxes and high prices than almost any class in this country. I think that this sum of 6d., although people who are so familiar with large figures now, look down on 6d. and say it is nothing, will be a real relief; and I hope the Committee will think so too. But when the hon. Member for Colne Valley points out, as though I were doing a grievous thing, that the rich man who pays Income Tax gets more by a remission of taxation than the poor man, I must remind him that, unfortunately, you cannot help, if you reduce any tax, the person who has been paying the larger amount of the tax getting the greater relief. It is exactly the same with every tax. I mean, for example, that the gentleman who drinks a gallon of beer a. day would save eightpence, but the gentleman who drinks a. pint would save only one penny. In that also it is a question of taxable capacity.
There was one other thing which the hon. Member for Colne Valley said. He said, and of course there is an element of truth in it, that high taxation makes people work harder at their business to make an income. The hon. Member brought forward the sacrosanct name of John Stuart Mill, so I will copy his example. I remember that Mill wrote a chapter devoted to the Law of Diminishing Returns, and my impression now is--hon. Members must forgive me if my memory is rusty, for it is 30 years since I looked at it—that he said," You might go on, 2143 on a piece of land, increasing the doses of manure, and getting more and more crops, until a certain time came when the manure failed to act; you spent too much money; and your crops went back." He called that the Law of Diminishing Returns. The same thing is exactly true about taxing a. man. If you give him too many doses of manure, he will stop work. I am quite sure we have got to that point when the Law of Diminishing Returns is beginning to act, and I shall get increased returns by reducing the burden which has been put on him.
The hon. Member for Colne Valley felt that I was doing a wrong thing in offering any remission on beer. He took the view that these high duties on liquor have been the greatest ally, or some word to that effect, of the temperance reformer. In other words, he looked on penal taxation as effecting a moral improvement in the State. There is something to be said for that, but if the hon. Member really believes that, why is he going to oppose a tax on betting? He laid the greatest stress on that—a matter which is still sub judice. He said he would he bitterly opposed, and so would all the respectable people in this country, to a tax of that nature, because it was, in effect, pandering to the evil thing. I cannot quite see how he differentiates, in that very subtle and acute mind of his, the position as between beer and betting.
I had hoped, because Hope springs eternal in the human breast.," for a little expressed pleasure when I announced something off the price of beer. One does not go to work in the dark, and I hoped f was meeting the wishes of the Labour party. It is true that in this new House I have not had the pleasure of hearing many of them sneak on this subject, but I carefully examined the remarks of two old friends of mine, if I may so call them, who I think the Labour party would own are efficient members of their party. One was the hon. Member for Silvertown (Mr. J. Jones) and the other was the hon. Member for Plaistow (Mr. W. Thorne). They have both spoken within the last few months, with that native vigour which they both enjoy in so marked a degree, expressing almost an ardent desire for such a reduction, not, I freely admit, for themselves, but for 2144 their constituents. In the same way the hon. Member for Kingswinford (Mr. Sitch)—I hope he will not think I am saying anything unkind when I say I believe that he represents rather the intellectuals of the party—I say that with no malice, for I never represented intellectuals of any party—he said the other day, in his constituency, that he voted last year for a reduction, and he promised that if, in regard to the next Budget, the Chancellor saw a ghost of a chance of reducing the duties, he should support such a reduction whole-heartedly. I did think I should have had some support, and I must confess that I am disappointed.
What has been said on that subject?" If you are going to make reductions to help people—the poorer people—do not give it on beer, but give it on sugar." I am afraid I shall have to ask the careful attention of the Committee for a few minutes while I give them the reasons which made me, after very grave consideration, refuse to give a concession on sugar in the current financial year. When I say that, let me add that when I first began to examine the Budget position, there was no article that I was more anxious to relieve. I am quite convinced—not that what I am going to say will move a single vote—of this, that most hon. Members of the Committee will realise, at any rate, that I have some reason for the attitude have taken up. They are not obliged to support it, but the responsibility is mine.
I think it is a useful thing to remember, in the first place, what the consumption of sugar is in this country. In 1913 it amounted to a consumption of 83 lbs. per head. During the period of control following upon the War, of course, it fell considerably. That is no guide to the position to-day, but it, may interest hon. Members to know that it fell between 50 and 60 lbs. In 1922, after control had been taken off, even at the high prices then ruling, and even with the present duty, the consumption per head was no less than 75 lbs.—much nearer the pre-War figure than I could have imagined until saw the figures.
The next figure I would ask the Committee to seize on is the figure of the world production, and this is a figure which it is possible to estimate closely. I am giving no figures except those which 2145 can be estimated closely. The world production in the two or three years before the War was about 18,500,000 tons, and out of that Europe, with its beet sugar, produced over 8,000,000 tons. For the current year the sugar production is estimated at about 18,000,000 tons, and such stocks as are carried over from year to year are already being eaten into by the demand. Now the position is a very different one, for in the intervening years the centre of gravity has shifted to America. The European beet sugar production, which was just over 8,000,000 tons in 1913, is now down to just under 5,000,000 tons, whereas Cuba, which formerly produced 1,500,000 tons, and just before the War 2,500,000 tons, on account of the preference she has had in the United States, has increased her' production to 4,000,000 tons. One more factor, and I have nearly done. While our consumption, although below that of pre-War days, is yet approximating to it, American consumption has gone up by leaps and bounds, partly due to the increase of population and the increase of wealth in that country, and partly due to the increased amount of sugar which the human system seems to require when deprived of alcoholic liquor. In passing, may I advise the Committee to wait for complete prohibition in this country until there is once more a surplus of sugar, or they may find that by giving up acohol and taking to sugar they are indeed casting a real burden on the masses of the people.
Having given those figures, I wish to call attention to the price of sugar. Fifteen months ago the price of raw Cuban sugar was 10s. 6d. a cwt. One effect of that cheap price was to prevent any increase in the already enormously reduced sowings in the European beet countries, and those low prices held for some little time. But gradually, all through 1922, the price crept up as the dealers saw a possibility of world consumption catching up if not overtaking the world production, and in January, 1923, the price was 17s. 6d. per cwt. It remained there or thereabouts for about three weeks, when it became obvious that the Cuban sugar crop was going to be far below the estimate, arid prices then began to move up strongly. They moved up almost week by week until yesterday the price was 30s. 3d. per cwt., or three times more than the price in January, 1922.
2146 This rise has been caused entirely by the fact that so far as can he seen there is actually going to be a shortage of sugar this year and the slightest increase in the demand may easily cause a panic and send up prices rocketing far beyond the present price. This position is well known in commercial circles, and I should like to read a short paragraph from the commercial supplement of the "Manchester Guardian" of last week:—
The initial investigation which is going on in the United States into the recent rapid rise in prices is not expected to produce much by way of remedy, at any rate so far as this side is concerned, for the New York bankers have too tight a grip on Cuban supplies to he loosened very quickly. A lowering of the duty is therefore unlikely to benefit anybody but the Cubans for some time to come. The high prices now ruling, however, have induced larger sowings of the beetroot crop on the Continent and in the United States, so that by the end of the year there will be a different complexion on things should the weather be favourable.I have information confirming this, that the increase of sowings in the Continental countries of Europe, stimulated by the high prices, is as much as from 25 per cent. to 40 per cent., so that, as far as we can see, by the turn of next year the world price of sugar should be lower, and when this happens, that will be the time to reduce the duty. If I were to reduce the duty in this Budget, the whole of that reduction would go straight to New York, and I am not going to do it. It would be a very easy thing for me to have proposed this reduction, and to have said in public that. sugar was cheap-'r by the reduction of the duty. Let those hon. Members who might have believed that to he true say it, but I do not believe it to be true, and, therefore, I am not going to say it.A point was raised by the right hon. Baronet the Member for West Swansea on which I must just touch. He poured contempt on the idea of any of the money obtained by debt redemption finding its way to trade, but I think the fallacy that underlay his objection arises from this: He was thinking of gilt-edged securities as they used to exist before the War. The gilt-edged securities which are being redeemed to-day, and which must be redeemed in the next few years, are the short-term maturing War Bonds, and those are held largely by people who saved to do it during the War, who made sacrifices in 2147 many cases to do it, who will be only too glad to get the money back, and who will look round for the most advantageous way of employing it to give them a better return; moreover, these bonds are held very largely by industrial corporations of all kinds, who bought them for reserve funds and similar purposes. In the case of redemption, the money will go straight back to trade.
I have spoken several times about the way in which criticisms of my speech made in various parts of the House have been most providentially answered by other parts, but I must all the same say a few words for myself. I want to say something about criticisms which were levelled against my scheme for the Sinking Fund by my old friends and colleagues in the late Government. I was not a bit surprised at the criticisms brought against, me by my right hon. Friend the Member for Hillhead (Sir R. Horne), nor the right hon. Gentleman the Member for Colchester (Sir L. Worthington-Evans), nor the right hon. Baronet the Member for Swansea, but I was broken-hearted at the criticisms of the right hon. Member for Norwich (Mr. Hilton Young). I could not help remembering passages from a book which has been my Bible—a book in which he lays down the sound finance of debt redemption in words that I could never emulate, and where in a moment of emotion and enthusiasm he leaves plain prose for allegory. The words of his allegory I must give to the Committee:
What is the good,' Chancellor By-ends says to Prime Minister Halt-by-the-Way, of keeping up this year such an absurdly large provision for the redemption of debt. So much was never meant to be spent in the service of high and dry financial morality except in an ordinary year, and this is no ordinary year.'Just as "Charley's aunt" was no ordinary woman.There is our Better Circumvallation of Cuckoos (England) Act for which money has to be found, or what of the By-Election of Gotham? 'Very true,' says the other. This year the Cuckoos and next year it will be time enough to get to work on the debt again.' So the Sinking Fund is raided and when next year comes yet higher walls have to be built round the elusive birds and the renewal of provision for redemption is postponed to another year.If I spoke from now till the moment when I lose my seat I could not improve on that. After all, when my right hon. 2148 Friend the Member for Hillhead quotes authorities like Parnell and Disraeli I really do not think it is worth while pointing out to him the differences in the circumstances. I would merely give him a quotation, which I think is quite as good as the ones he gave—a quotation I find in a recently published book from a letter from Sir Michael Hicks-Beach to Sir William Harcourt, Sir Michael Hicks-Beach and Sir William Harcourt were well known to this House for generations and were highly respected and revered, not only by their parties, but by the whole House. Sir Michael Hicks-Beach wrote to Sir William Harcourt, perhaps in words that he would not have unemployed in this Committee.The surplus you have provided bids fair to be really alarming, and all mouths are opening wide. There will, as you say, be plenty of squeaking next Spring.It is a most remarkable thing how history repeats itself. The problem of Parnell and Disraeli was a simple one. They had a small debt to deal with; they had no maturities to speak of, and a consolidated debt with no fixed term. I have to redeem by contract. As I said in my opening remarks, I believe that I have struck the happy mean, because I have failed to satisfy any of my critics.Let me say in a few sentences why I make the modest proposal as to the Sinking Fund which I do, a proposal to which I intend to adhere. Let me remind the Committee, first of all, that. Treasury Bills now in London can be had on three months at a shade under 21 per cent. Let me remind the Committee that for short date borrowing in Paris they are paying 3 per cent. for a month, 4 per cent. for three months, and 5 per cent. for 32 months. In New York the rediscount rate is 41 per cent., and 90 days commercial paper, 5 per cent. to 51 per cent. Our bank rate is 3 per cent. for private borrowing, bank bills, 21 per cent., and trade bills, 2 per cent. In Paris the bank rate is 5 per cent., while bills on 90 days acceptances in New York are 41 per cent. No figures could testify more than these to the financial stability of London.
§ Sir R. HORNEThat was all done in a year in which the Sinking Funds were suspended.
§ Mr. BALDWINIt is true that my right hon. Friend suspended the Sinking Fund for a year, but he made it well 2149 known last year that it was for a year and a year only, and these Sinking Funds have, in point of fact, been paid out of revenue. After all, as I said before, this is really an insurance.
The hon. Member for Aberavon (Mr. Ramsay Macdonald) complained about the Treasury Circular which was circulated two years ago over the signature of my right hon. Friend the Member for Norwich, in which the right hon. Member for West Birmingham (Mr. A. Chamberlain) said that £100,000,000 a year would be necessary for debt redemption. Circumstances have changed since then owing to the rise in the prices of securities. We have not to provide the sums now that were needed then. In 1920–21 we had to provide £32,000,000 for the Depreciation Fund on the 4 per cent. and 5 per cent. War Loan, and £84,000,000 on account of securities proffered for Death Duties and Excess Profits Duty. In 1923–24 the Depreciation Fund is not required, and all that has to be provided is £7,500,000 on account of the surrender of Victory Bonds. If it were still the fact that the prices of securities had remained where they were when that circular was written, we should have had to provide £64,000,000 this year for the latter object, and £32,000,000 for the first. In all, in addition to what I have provided, we should have had to find very nearly £90,000,000. That has been saved by the appreciation of stocks, which has been produced principally from the fact that the finance of our country is so sound, and that we have steadily pursued the redemption of debt both by the old and the new Sinking Funds.
My right hon. Friend the Member for Colchester complained at the size of the surplus of last year and that it had been applied to the redemption of Debt. He forgot that he was a member of the Government which in 1920 made the alteration which rendered the surrender immediately possible in 1920, and in that financial year the surplus of £230,000,000 which had accrued went directly to the redemption of Debt, a transaction to which, as far as I know, he raised no objection at the time. Let us never forget what I said in my Budget statement, that we have £1,300,000,000 of Bonds maturing during the next six or seven years, and £2,100,000,000 of debt which may be converted if circumstances are favourable in 2150 1929. My modest Sinking Fund is a contribution to aid in these conversions when they arise and to help my successor to undertake them successfully. I believe that only by maintaining this position during the next few years can we play our part in helping to secure cheap money and keeping up the price of these securities, producing thereby the considerable saving which we are enjoying and which we have enjoyed in the past year. It is quite true that if there should come a great demand for money for trade we might have rates going up and we might have the gilt-edged securities falling; therefore, the cheaper we can keep money now and the higher the price of gilt-edged securities before that happens, the more chance we shall have when the trade revival does come of finding that our securities will maintain themselves in such a position that we shall not be called upon to provide a depreciation fund. In the meantime, and let us be happy in this, the higher the price of securities the more money I shall get in Death Duties. That is a consideration not to be forgotten. I must apologise for having kept the Committee much longer than I had intended. I am afraid that I have had to treat the latter part of my subject with much greater brevity than I had intended, but there are other hon. Members who wish to speak, and I will now leave the course open for them.
§ Mr. RHYS DAVIESI feel sure the Committee has listened with great interest to the second statement of the Chancellor of the Exchequer. I cannot help thinking that it was a curious anomaly that here was a Conservative Chancellor of the Exchequer quoting an independent Liberal newspaper in support of his Budget. I am becoming rather suspicious after his two quotations from the "Manchester Guardian" that we shall have not only unity between the two wings of the Liberal party, but possibly unity between the Conservative party and the two Liberal parties. We have the strange case of a Chancellor of the Exchequer bringing forward a Conservative Budget based on "Morning Post" principles, supported by quotations from the "Manchester Guardian." I should like to know how the Chancellor can square his principles with the quotations he has given to the Committee. I want to make a comment or two on his reply to the Debate, He 2151 has made one concession, strangely enough on a point that was hardly mentioned in the whole of the Budget Debate. The Debate turned round two or three main principles. The first was that hon. Members opposite claimed that the reduction in the rate of Income Tax would help industry. We had the hon. Member for Stockport (Mr. W. Greenwood) bringing to bear upon the discussion the classical example of the Lancashire cotton industry. He said that the, Lancashire cotton industry was in a bad state because taxation was heavy upon the taxpayer. I wish he were in his place. Every hon. Member for Lancashire will agree that it matters very little to Lancashire whether the Income. Tax be 5s. or 2s. so long as people from Lancashire take out machinery to India and manufacture there goods of the same type and quality that were manufactured in Lancashire many years ago. The 'problem of Lancashire is not the problem of Income Tax at all. I bow to the greater knowledge of some hon. Members opposite of the cotton industry; but from my superficial knowledge, what is wrong with the industry is this: that those countries to which we used to export cotton manufactured goods prior to the War learned, during the War, how to manufacture for themselves. For every three yards of English cotton manufactured goods exported to India prior to the War we are only sending to that great continent now one yard of the same quality. Therefore the question of income Tax has very little to do with the industrial prosperity of Lancashire.
The Chancellor of the Exchequer has made one concession, and that concession is in relation to the revision of the assessment of agricultural land. I wonder how he came to give a concession of that kind, if he is influenced in the least by Debates in this House. The strongest arguments that have been used have been in favour of the reduction of the Sugar Duty and those of us on these benches who represent the working classes feel this, that the men who will be delighted because there is a penny a pint off beer would, for the sake of their families, prefer a reduction in the Sugar Duty. The Chancellor of the Exchequer read quotations, but he did not in this case give us the name of the newspaper from which he was 2152 quoting figures in regard to sugar prices. If his arguments in relation to the price of sugar are good and substantial, why does he not give a reduction in the duty on tea where the same conditions do not apply? I can understand the Chancellor of the Exchequer stating that because of certain conditions prevailing in connection with sugar he is afraid that a reduction in the duty might increase the price all over the country, but if that be correct what is the case in regard to tea? Those conditions do not apply to tea, and we did expect that he would have given us some concession on that score.
I want to make some observations on his endeavour to reply to the proposal for a capital levy. He rather escaped giving any reply at all. I hope that we shall have a statement from him on some future date giving his own point of view on this subject. Every Member on this side was returned to Parliament in the main because of his advocacy of the capital levy. When I was asked what was the effect on my constituents because of my advocacy, I could reply that there were few, if any, persons in the whole of my division worth £6,000 to start with. But I pointed out this fact, that during the War the Government said to the young men: "We deem you to be soldiers. We deem you to he in the Army, irrespective of whether you like it or not." I think that it was Sir William Harcourt, who instituted the Death Duties, who stated that "as you rich people will have no political influence whatever when you ate dead, I will tax the estates that you leave behind you." I think it fair to state that all the capital levy means is, that we shall deem all persons who have an estate worth over £5,000 to be dead in order to claim the capital levy from their estates while living: and if that principle was good enough in relation to human life during the War, then it is good enough in relation to property and income.
I was astonished at another argument put forward in debate, that if we relieve taxation we should immediately secure better employment for our people. I want to combat that idea, because I have had brought to my notice this case, that on the very day on which a private capitalist firm in this country issued its balance sheet showing that there was an increase in profit from 10 per cent. to 12½ per cent., the wages of the work-people were reduced by 10 per cent: I 2153 have yet to learn that there is any -real connection between profits and wages, and between Income Tax and providing employment. I have never yet found that connection. I am glad to see the right hon. Member for Norwich (Mr. Hilton Young) in his place, be-cause he said that a Capital Levy is, as it were, turning a flood into a garden in order to water your roses. I think that the right hon. Gentleman ought to try his hand at poetry for a while, for I feel sure that he would succeed. But when we speak of a Capital Levy, we are not tabbing of a. garden of roses. The world to-day is more like a rubbish heap. It is like a sunburnt desert. The flood of capital of which the right hon. Gentleman spoke ought to come into that, desert, or on to that heap of rubbish. I do not think that the right hon. Gentleman did justice to himself on this occasion, because I have also been reading his book through, and I have always looked upon it as a standard of how to deal with our national finances. He lays down very good principles which I do not think he helped to carry out when he himself was in office. He says:
A wise man who wishes to control an institution such as a hospital or board of guardians makes it his business to become chairman of the finance committee. Who pleases then linty he patron or president.That is a good piece of philosophy, and I take it that that was the reason why the right hon. Gentleman was so satisfied when he acted as Financial Secretary to the Treasury in the last Government. The idea has prevailed in the whole Debate that you can measure a nation's comfort and prosperity by the amount of share capital which some of its inhabitants possess. I think that is wrong. What I fail to understand is why no Chancellor of the Exchequer up to now seems to have taken any notice of this very important fact, which annoys rue at any rate. If I remember rightly the number of persons in this country prior to the War in receipt of over £5,000 per annum was 14,000 odd. The War came, and millions of young men went to the War and were injured, bruised or maimed, and thousands of them were killed; but in spite of the fact that the mass of the population descended into destitution and poverty the 14,000 persons increased in number to about 25,000. It seems to me that it is the bounden duty of a Chancellor of the Ex- 2154 chequer to search for and pursue those persons who in the time when the nation was in agony made a profit our of the blood and misery of the people. I am very disappointed that no Chancellor of the Exchequer has yet devised means to deal with that class of person.Then I think that we ought to revise our opinion in reference to people who own money and have assured incomes. There is now a little island of people—they may be half a million or a million—who are receiving permanent incomes from investments in War Loan, by which they can be comfortable for the whole of their lives and their children after them. We talk of the luxurious splendour of the West End. If we come down to the City any afternoon we find people queueing up between 4 and 5 o'clock waiting for theatres to open. They live on that little island of population with sufficient of the world's goods, made out of the War, and if the Chancellor of the Exchequer had done his duty he would make those people pay, because they ought to pay, more than they have done for the cost of the last War.
There is a very old fallacy, and I am surprised that intelligent Members of Parliament should repeat it, that if a rich man owns four or five motor cars he does his duty to the community, because he finds work for the man who makes the motor-cars. That is a strange view! The view on this side of the house is that the man who makes those four or five motor-cars would be better unemployed in manufacturing boots and clothes and building houses for the people, and we hope that that principle will some day become the law of the land. If the Chancellor has not been influenced in the least by what I have said up to now, perhaps he may be influenced by this point with regard to the Beer Tax. He is giving to the brewers in effect 20s. out of every 24s. I have been wondering whether he can give a smaller percentage to the brewers and devote a little of the amount which he will gain by that means to reducing the Sugar or the Tea Tax, or both. This suggestion ought to receive his attention before the Debates on the Budget close.
I was rather surprised that the Chancellor made no reply to the criticisms from this side of the House that land, or some land, land owned by some people, 2155 at any rate, ought to come under his review. I may give a simple illustration of how it works out. About seven miles from this House there is an ordinary cottage, three up and two down, [...]anding on about 450 square yards of land. Before it was built on, that land was not even good enough to be used for agricultural purposes. To-day, the young man who lives in that house pays £12 per annum ground rent, and that £12 is payable for eternity so far as I san see; and the man who gets the £12 lives in affluence because he has land upon which about 120 such cottages have been built. I have never made land taxation a fetish as some people have done, but I am convinced that if a Chancellor of the Exchequer wants to balance his Budget in future, and wants to provide the money for our social services, as they ought to be carried on, he has got to go to the source of all things that maintain life, and that is land, and there I think he he will find sufficient money with which to carry on the work of the State.
Reverting for a moment to the speech of the hon. Member for Motherwell (Mr. Newbold), I was surprised at his modesty. He told the Committee that the Labour party was not revolutionary enough, and he demanded a sum of £200,000,000 in one year for reconstruction work. I have no desire to enter into a contest with him as to the policy of the Labour party and his own, but the Labour party would not be satisfied with £200,000,000. They would not be satisfied with £500,000,000 for reconstruction work, and in that connection I think that the Communist party is very much more tame than the Labour party in connection with social services and work of reconstruction. I trust that before we conclude the Debates on the Budget the Chancellor's heart may yet be touched in connection with reduction of the tax on sugar and tea, and that, if he cannot see his way to do one, he will at any rate do the other, because the women folk in the working-class homes will not think the taking of 1d. a point off beer a compensation for not reducing the tax on sugar and tea.
§ Lieut.-Colonel STEPHENSONThere are one or two points which, though they may have been touched upon in this Debate, I would like, even at this late stage, to emphasise. On the occasion of 2156 last year's Budget I ventured to congratulate the right hon. Gentleman the Member for Hillhead (Sir R. Horne) on the fact that his was the first Budget after the War which did anything to remove those feelings of gloom and depression which its forerunners had done so much to create and maintain. That Budget did something to relieve the necessities of all classes, and to restore that feeling of confidence which is no necessary in the business world, and especially to employers of labour. I would like now to join my congratulations to those which have been showered on the present Chancellor of the Exchequer on what he has done both by word and deed to maintain that position. At the same time, frankly, I am wofully disappointed, as other speakers have expressed themselves, as regards both the range and the extent of the remissions in taxation which he has felt himself justified in offering. I consider that with the example of the last year before him, especially in regard to the reductions in expenditure, which were found possible during the past year, and in view of his declared intentions to make further economies, I do certainly think he might have taken his courage in both hands instead of taking what appears to me to be the timid course be has adopted.
8.0 P.M.
During the Debate on last year's Budget I joined with Mr. Stanley Holmes, the then representative for North-east Derbyshire, in criticising the Chancellor of the Exchequer for under-estimating his income and over-estimating his expenditure, and in both respects I think we were right, more especially in the latter. I am not concerned to discuss the rival methods of debt redemption or reduction of taxation, for the simple reason that, in my judgment, both are necessary, and we must have both in full measure. I am not inclined to shed many tears over the fact that last year was a bumper year for debt redemption. I did not approve of the suspension of the Sinking Fund last year. I thought it both wrong and unnecessary, and I said so. Therefore, I am not at all sorry that the Chancellor of the Exchequer has on this occasion set aside a definite sum for debt redemption. In contradistinction to some of my friends, I congratulate him on having resisted the temptation to do otherwise. But, after congratulating him so far, I am 2157 afraid I must part company with him to some extent. I cannot reconcile his estimated results or his remissions of taxation with his known aspirations and his known good intentions. It appears to me that no one can dispassionately compare the cost of Government to-day with the cost of Government the year before the War, without realising that the increase is not only very great but unreasonably great. Those of us who have to run businesses, know we have to pay more for running them than we did before the War, but the question is one of degree. We know the cost of living is now something like 76 per cent. above the cost in 1913–14. I think the cost of commodities is something like 50 per cent greater than pre-War, and the cost of labour has been rapidly falling in the last two years, but, in spite of this, the cost of Government remains abnormally high, and it bears no proportion to the increase in cost of other things.
No one who makes a comparison between the cost of Government now and the cost of Government in the year before the War—even if he be a Chancellor of the Exchequer—can fail to realise the necessity for still further great reductions. Whether we look at the Civil Service Estimates or those for our defensive forces, the comparison tells its own tale, and I do not think we derive much comfort when we examine the Estimates in detail and find out what more we are getting for the increased expenditure we have to vote. Nobody desires to see our fighting services underpaid. Certainly I do not, but having regard to the falling market and the general trend of things and the great reduction of remuneration which our workers have had to accept in civilian life, in conjunction with having to face the whole of the increase of the cost of living, it does appear to me that the increase of remuneration of 150 per cent. which rules in the Navy over the year 1914 is an unreasonably great increase. I admit the pay of the Navy in 1914 was too low and that a reasonable increase is necessary, but I do think 150 per cent. is as much too high as the rate before the War was too low. And what is the result? We not only get these swollen Estimates of which I complain, but we also get a Navy which is reduced, in the opinion of some of the soundest critics, below the margin of safety. Instances could be multiplied, and I give 2158 this only as a sample. Then there is the vast expenditure of the Ministry of Health and the Ministry of Labour as compared with the Departments which discharged their functions, or many of their functions, before the War, and I think there is room there for great economy. I wonder if the Chancellor of the Exchequer has given sufficient consideration to the point that if he could only give a real fillip to trade and set trade on its legs by a reduction of taxation, he would do a great deal to reduce unemployment to a minimum if not to a vanishing point and save a great deal of the cost; of the Ministry of Labour? I should like to quote what Mr. Gladstone said on one occasion. Mr. Gladstone in 1859 complained of the extravagance of the Government of that day, and he dated it from the Russian war. I think we may date the extravagance of which I am now complaining from the Great War from which we recently emerged. In 1863, four years later, Mr. Gladstone, addressing this House, said:
Together with the so-called increase in expenditure there grows up what may be termed a spirit of expenditure which insensibly and unconsciously perhaps but really affects the spirit of the people, the spirit of Parliament, the spirit of the public departments, and perhaps even the spirit of those whose duty it is to submit Estimates to Parliament.I do not think that if Mr. Gladstone had lived to see the Estimates which have recently been placed before this House he would have found it necessary to qualify the suggestion that this spirit of expenditure affects those whose duty it is to submit Estimates to Parliament.As I understood the Chancellor of the Exchequer's statement, he admits that his Estimates are too high and he proposes to effect reductions in them. Where there is a will there is a way, and if the Chancellor of the Exchequer is as good as his word, I venture to say that a return to something like the spirit and atmosphere of Gladstonian finance would point the way to these reductions. I should like to ask the Chancellor of the Exchequer how much he is expecting to save by his proposed economies and what he is proposing to do with the money. I do not think he has taken any credit for those economies he proposes to make. It seems to me that if economies are to be effected as I believe they can be, at anything like the same rate this year as last year, there 2159 will be again a large surplus. Looking at the income side of the account the Chancellor of the Exchequer said that the Revenue last year was largely increased by payments of arrears in Income Tax, but he has not told us what arrears are now outstanding both as regards Income Tax and Super-tax, and what proportion he expects to get this year. I think the Chancellor has under-estimated what he can get from Income Tax and Super-tax.
The only other point I wish to mention is the question of the debts due to us by our Allies and by our Dominions apart from German reparations. I have on two occasions put questions to him in regard to the debts of our Allies, France and Italy, and I cannot say that I received very satisfactory answers, because I have been referred in each case to an answer given to questions I did not ask, and I considered the answers quite irrelevant. We have been called upon to pay our debt to the United States, and we have entered into a funding operation. Whatever disputes there may be on points of detail. I think that directly or indirectly that debt to the United States would not be in existence to-day if we had not lent sums exceeding that amount to France and Italy. It seems to me that the natural corollary to the funding of the American Debt by ourselves would have, been to ask the French and Italian Governments to undertake similar operations as regards the money owing to us, and I think the time has come when the Chancellor of the Exchequer must put his cards on the table, and when he should separate, the question of these debts from the question of reparations—with which, I submit, they have nothing whatever to do—and when he should press for repayment. If these debts are bad debts he ought to tell us what applications have been made for payment. We ought to know that. In all the circumstances I cannot divest myself of the impression that the Chancellor of the Exchequer has over-estimated expenditure and under-estimated his income. Although playing for safety may be laudable when dealing with the country's finances, it appears to me that to over-estimate expenditure is to put a premium on extravagance, because it removes the spur from Government Departments in the way of economy. I venture to say that if the Chancellor of the Exchequer had remitted 2160 1s. off the Income Tax, abolished the Coporation Profits Tax, and given a reduction of the duty on sugar, he would have given great satisfaction. Although we are grateful for the small mercies vouchsafed to us, we would have welcomed the bolder course which I have ventured to indicate, and which I believe would have done an inestimable amount to increase the trade and prosperity of the country.
§ Mr. BALDWINrose in his place, and claimed to wave, "That the Question be now put."
§
Question,
That it is expedient to amend the law relating to tire National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance,
§ put accordingly, and agreed to.
§ Resolution to he reported To-morrow; Committee to sit To-morrow.