HC Deb 28 April 1926 vol 194 cc2053-129

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.


Everyone who has given attention to the facts of our financial situation will, be agreed that the task which has been set the Chancellor of the Exchequer this year is an extremely difficult one. He has been faced with a declining revenue in some of his most important sources of income, and with dwindling receipts from some of the duties now about to die. He is faced with an expenditure which is not only undiminished but seems to be undiminishable. In all the circumstances of the case I think the proposals which he has put before us show both courage and resource, and he has made the best of a very troublesome business. But I confess that my sympathy for him is not quite so active in my breast as it might have been in more normal circumstances, and I cannot help thinking that the Chancellor of the Exchequer has brought some of his troubles upon himself, while others have been imposed upon him by some of his colleagues.

The remarkable feature of the present financial situation, as I see it, is that, in spite of a promise, which I shall not exaggerate, of a vehement determination to cut down expenditure, the annual liabilities in our accounts seem to mount steadily from year to year. I would remind the Committee as we were informed by the late Chancellor of the Exchequer, that whereas for the year 1924–25 the actual expenditure was £795,000,000, it rose last year—leaving out of account the Coal 'Subsidy—to a figure of £805,000,000, representing a rise during that period of between £9,000,000. and £10,000,000. For the current year the Estimates show—again exclusive of the Coal Subsidy and of anything put to the Sinking Fund—a figure of £808,500,000, or an increase of £3,500,000 upon the expenditure of last year. Even this unhappy figure has only been reached after a series of what I may call makeshifts by which the contribution of the Exchequer to the social services of this country has been whittled away while the depressed industries of the country have been left to bear the burden of their disproportionate share. That is a record which even the most ardent supporters of the Government, of whom I am one—[HON MEMBERS: "Oh, Oh!"] —at any rate, the Government are the only people who have saved us from hon. Gentlemen opposite—can scarcely regard as satisfactory. I detected a tendency in the right hon. Gentleman's speech to excuse or explain that these increases in expenditure were clue to policy, that they were in some respect the outcome of Measures which the House of Commons had passed. Yesterday the Financial Secretary to the Treasury seemed to take the same line when he begged the House, in the interests of economy, not to ask the Government to pledge itself to commitments which would necessarily be expensive.

The question I wish to ask is, upon whom depends the policy which is accepted by the majority of this House, and whence emerge the Measures which we pass? I do not think that there is anything of any importance that originates in this House which does not come from the Government, and I know of no Measures which have been passed which have not been pressed upon us by Ministers. The Prime Minister not only has a more exuberant majority than is given to most people, but he has also got a majority in which there is not the slightest sign of sectionalism of any kind, and I hope there never will be. We are the most docile body of back benchers who ever sat on these seats. Accordingly I say that I do not think it is appropriate, if I may use an American expression, to "pass the buck" to us. The policy and expenditure of this House are the responsibility of the Government and the Government alone—[HON. MEMBERS: "Oh!"]—the Government after using its necessary influence with the body of followers which it possesses in this House.

I do not wish to be harsh in any criticism I have to offer; I entirely sympathise with the difficulties in which my right hon. Friend finds himself. I know from very sad experience the great difficulty that any Chancellor has in cutting down expenditure, and I sympathise with the view he has often expressed that, while the word "economy" evokes great cheers, any attempt to exercise it excites opposition such as he could scarcely have contemplated. But there is a difference between cutting down expenditure and adding to it. I recognise the difficulty of cutting it down, but I would venture to say to the Government, that this is no time, in the present condition of our industries, for adding to expenditure or for adopting new policies which put fresh burdens upon the backs of people who can ill endure the burdens which to-day they have to bear.

I pass from that general observation upon the accounts of the year to some of the more particular details which are to be found in them, and I take, first of all, one of the factors which seems to me to be most significant. Members of the Committee will have observed that the Income Tax last year produced £2,500,000 less than the officials of the Inland Revenue estimated. That, I think, is a matter of concern. It is the first time that this has happened for, I think, something like 13 or 14 years, and it indicates what we all know, the depression from which our trade suffers at the present time. You get no consolation from the fact that the Super-tax has increased by £4,000,000, for this reason, that, as the Committee will remember, the Super-tax is based, not upon the figures of last year, but upon the figures of the year before. The estimate of Income Tax for the current year, I see from the accounts which have been submitted to us, is put at £4,000,000 less even than we received last year.

The CHANCELLOR of the EXCHEQUER (Mr. Churchill)



I think it is £4,000,000 less than last year, and for Super-tax a similar figure.


The full reductions made in the tax last year are maturing this year.


I quite understand that; the full reduction comes into force this year. I perfectly realise that, but, at the same time, I think it is obvious that my right hon. Friend in estimating for his income it the current year has taken a rather gloomier view—he may correct me, but I estimate that he has taken rather a gloomier view of the position of trade than h did the previous year. For myself I think that that is the right course to pursue. [HON. MEMBERS: "Why?"] I shall say at once why. While there is an obvious betterment in the case of some, of the lighter trades of this country, no one can look without anxiety at the position of the heavy industries of Great Britain at the present time. The figures for overseas trade for the first quarter of this year are, indeed, very disquieting, because they reveal an even worse situation than any we had to confront last year. If you take the revenues which have come from various industries in this country, as exhibited in the reports of the chief companies, you discover, so far as the iron and steel trade is concerned, that they are down this year by 30 per cent. If you look at the figures, again, of shipping, their revenues are down in the first quarter of this year by 11 per cent. as compared with what they were last year; and in the textile industry there is a deficit of 6 per cent. as compared with the revenues of last year.

All of these symptoms, I venture to say, create great anxiety, and certainly do not justify any budgeting for a very much higher level of revenue in the current year than we had in the last. But. in the midst of all this rather gloomy scene which I have been depicting with regard to some of the main industries of the country, there are some hopeful and happy features. Some trades have undoubtedly done well. The electrical industry has greatly improved its position in the course of the year, and the manufacture of silks and of motor cars undoubtedly has been forging steadily ahead. I have great sympathy with my right hon. Friend the late Chancellor of the Exchequer in this matter. I have been finding these happy features in the record of the year's business, but to him they can afford nothing but gloom, and, indeed, his speech yesterday displayed the apprehension he felt from the fact that the silk trade and the motor car industry had been saddled anew with duties which he could only see setting towards a disaster. But I am sure we may congratulate ourselves upon the revenues that we have obtained from the Silk Duties, and also from the duty upon motor cars. What has been exhibited as the result of the working of these trades is that we have not only drawn a revenue front the duties upon these imports, we have not only increased the manufacture of these goods, but we have also been able to sell them at a price in this country which is rather lower than the price at which the same goods were sold last year.

I agree with the Chancellor of the Exchequer that it would be a mistake to draw too strong a deduction from these figures. I should not presume for a moment to found, on the particular experience of this year in connection with these industries, any great argument, for example, for a general system of tariffs; but I should like to say this, that the results are entirely in conformity with what is a very well known experience in the carrying on of any industry which involves the production of goods. It is that, the more of the goods you can produce, the cheaper you can sell them, and there is nothing that so much induces cheapness in the price of an article as the certainty of your market. There can be no question at all, whatever other argument there may be upon the fiscal aspect of this matter, that the motor trade in this country was enormously encouraged by the duties which were imposed, and which gave these people an opportunity of developing their industry, trusting to a particular market which enabled them to sell a large output. The same experience has been visible throughout the world, and no man who knew the facts would say that the extent to which mass production has gone, for example, in America, has not been enormously helped and assisted by the fact that the American manufacturer could depend upon his home market as an assured place in which he could sell his goods. I hope, accordingly, that this policy which has been adopted in recent times is not going to become the subject of political vicissitude, and be varied from time to time according as one party or another is in office.

4.0 P.M

I am glad to think the Chancellor of the Exchequer has seen fit at the present time, not only to keep these duties in being, but also to impose upon commercial motor cars which are being imported into this country a similar duty to that which at present applies to what are called luxury cars. I know from my own experience at the Exchequer how difficult it is to discriminate between one motor vehicle and another, and I am perfectly certain that what is being done will not only bring us added revenue but will greatly facilitate all the operations in dealing with this particular duty. While I am on this topic I should like to put one point to the Financial Secretary to the Treasury. In dealing with the motor-car taxation in this country, I hope attention may be paid to the result of our present methods. The reason I raised the point is that quite recently I had a conversation with a very important manufacturer of motor cars in America. He told me that although it helped them in their competition with us it was a point which he could not help disclosing, that our particular system of taxing our motor cars was a great impediment to the sale of our motor cars overseas, and gave American manufacturers an enormous advantage in the export markets as compared with any which we enjoy.

His explanation was this: "You put your licence duty upon the power of the ear. The more power it has the more the car has to pay. The result is that all your manufacturers try by every means in their power to manufacture a car which will have to endure the least taxation. That is all very well for your own country, but immediately you try to export that car to Australia it does not suit the Australian market. The American car is immensely more suitable. It has higher power, and it gives the results which they want. The effect is that in markets like Australia, where you have an enormous advantage because there is a preference given to you against us, you do not succeed against us, and your export is miserable compared with ours." I heard the same story the other day from Ceylon, and I would venture to suggest that the right hon. Gentleman should take into consideration in the course of the next year whether some new method of taxing our motor cars could not he adopted, which would not put us under these disadvantages in the export markets which we very much require. It is perfectly obvious that as people lay down their business a long time in advance you would require to give early notice of any change which you proposed to make. Therefore, I venture to hope that the Chancellor of the Exchequer will be able to give early consideration to what I regard as a very important point in regard to our export trade.

I leave these matters to turn to some which probably are somewhat more debatable. It is perfectly plain, in so far as the Budget is concerned, that the Chancellor of the Exchequer is going co meet with opposition on two particular parts of his policy, one the use he is going to make of the Road Fund and the returns from the Motor Licence Duties, and the other the Betting Duty. I shall accordingly take them in that order. With regard to the Road Fund, I should like to say at once that I give the Chancellor of the Exchequer my most hearty support. Let us consider for a moment the principle which is involved. It is perfectly true that in 1921 the Government, made an arrangement by which there was to be applied to the roads all the revenue which was obtained from the Motor Licence Duties. But is it to be said by anybody that that is a sacrosanct arrangement, and can never be altered? Let me suppose that the number of motor cars in this country increased as rapidly as they have done in America and that the revenues became ebullient as compared with their present level. Has Parliament tied its hands so that it is never going to be able to deal with them?

If I am right in saying that there is no principle involved except the right of Parliament to do as it chooses in the long run, then the only question becomes one of degree. Have the roads available an amount which is more than is necessary. That is a question of practical knowledge. I should say, looking at the Fund which has been piled up, that it is perfectly obvious that there is more being provided from these duties than is actually required for consumption upon the roads. [HON. MEMBERS: "No"!] I have been in many countries in very recent times, and I venture to say that there is no country whose roads are as good as ours at the present time. It is perfectly evident that there is no lack of expenditure upon the roads at present, and I think the Chancellor of the Exchequer is not erring upon the side of acquisitiveness in taking the modest which he proposes to take from the Road Fund and these Motor-car Duties, and applying it to the general revenues of the State. That argument might be accepted, and it might still he said that it is petty larceny to raid the accumulation of the Road Fund. I have no sympathy with that argument either. When I look Lack upon my own experience at the Exchequer, and what I had to do in the matter of roads, I am perfectly clear that the roads have benefited far more from the Exchequer than the Exchequer is going to take back at the present time.

Let me remind the Committee of one or two facts. In the year 1920, the Exchequer made a capital grant of £8,000,000 to the roads. That is more than the Chancellor of the Exchequer now proposes to take back. In the year 1921, at the time when this new arrangement with regard to the application of the Motorcar Duties was made, the Exchequer was still supplying to the roads a fund which amounted roughly from 11,250,000 to £1,500,000. That was in the days when the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was at the Treasury. I am sorry to see he is not here at the moment. In his day he had already talked of rearranging that matter so as to take back that particular grant and merge it into some other arrangement. Would it have been unconscionable at the time when the motor revenues were devoted to the roads, in 1921, if the Exchequer had said, "Our grants will now cease." It would in my opinion have beer the proper thing to do. But since that period £7,000,000 more has been contributed by the Exchequer for the upkeep of the roads. £1,000,000 was given not long ago for the arterial road from London to the South Coast, and to my knowledge £2,000,000 has been given by the Exchequer to the roads during the last year or so under Unemployment Schemes. In all, £18,000,000 has been provided by the Exchequer for the roads when already there was plenty of money in the Fund to spend upon them. I refuse to have my withers wrung by any sad tale about robbing the Road Fund when I find what is actually being done by the Treasury in the upkeep of the roads, which are better than any others in the world.

I pass from that question to the Betting Duty, and recognise at once that there are special considerations when you deal with a. matter of public morals. I confess that I have become somewhat confused in the differing logics of the moralists who deal with this topic, and, for example, with the drink traffic. I find that the same people who tell you that if you reduce the duty on beer you will enormously increase its consumption also, tell you that if you put a tax on betting you will enormously increase the amount of betting that goes on. The same tax which damps the enthusiasm of the tippler would appear to excite the ardour of the gambler. Sometimes the argument goes further. You find people who would shut up brewery because people abuse the beer that comes from it, whereas they have no such feelings with regard to the shutting up of racecourses, although peon le use racecourses for betting. For my part, I believe—and I think I shall be supported by all social workers who have experience in these matters—that there is or, the whole more distress and misery caused in this country at the present time by excessive betting than there is by the abuse of drink.

If that be true, what are we to do about it? I appreciate the view of people who say, "let us put it down altogether," but they do not try to do so. My right hon. and learned Friend the Member for Spen Valley (Sir J. Simon) yesterday said—and I agree with him—that A would be impossible at the present time to eradicate betting in this country. If that be so, what is our practical duty 7 I see no reason why we should not do everything we can to check it, and, if taxation is supposed to check the consumption of drink, I should imagine it would equally check the amount of betting. [Interruption.] Of course, you get a quite different angle of vision according to whether you own a brewery or a racing stud. For my part, I am of the supreme conviction that the taxation of betting will lead to its reduction. It is perfectly obvious, if you are going to shorten the odds, which would be a necessary result of this taxation on betting, the bet is going to be less attractive to the man backing any particular horse, and therefore I expect to see, I do not say any tremendous, but a considerable reduction.

I am much more in sympathy with those who point out the difficulty which is created by leaving street betting untouched. I think that is a practical point, and it remains either for the Legislature, if further legislation be necessary, to deal with that evil, or for the police, under the directions of the Administration, to see that this illegal betting which goes on is restricted in every way possible. In the meantime, we have to recognise, if we are not hypocrites, that betting is rife in this country. We have to recognise that our newspapers, whatever be their particular attitude to life or to politics, take advantage of the horse racing that goes on to the extent of printing largely for the consumption of their readers all the odds and all the results of all the races. We have also to admit that we have compromised ourselves in this matter by accepting for years Income Tax upon what we say now is so evil that we ought, not to touch it. Being in that position, I, for one, have, no difficulty at all in coming to the practical conclusion that since this exists and since no one appears to be willing at present to come forward and say we ought to clear it out of the way, it is our duty as legislators, dealing with what is a most obvious luxury, to tax it to the full and get as much as we can out of it.

I come now to a matter which is a little more disappointing in my attitude towards the course of financial operations in the course of last year, and the programme for the succeeding years. The Government in its King's Speech of 1924 said, in language which I think I can recite from memory, "Economy is imperative if we are to regain our industrial and commercial prosperity." I ask the Government what have they done to implement what was at least the implication of that paragraph. I am not now going back to the question of economies. The point I wish rather to insist upon is their dealing with industry. Economy, according to the paragraph, was necessary for a purpose. That was for the regaining of our industrial and commercial prosperity. I am sure every member of the Committee will agree that there is no object which is of more importance at present than that. Accordingly I hoped that industry in some way was to receive due notice and consideration, and that, having in view that the revenues of the country are mainly derived from industry, something would be done to encourage it by lightening their burdens. There appeared to be some controversy in the Committee yesterday as to the precise effect the weight of Income Tax had upon industry, and it would appear, to my surprise, that the last Chancellor of the Exchequer admitted that he thought it did not matter whether the Income Tax was high or low. I could scarcely believe that was a proposition he was prepared to maintain. If it were, I am certain that view would be denied by every Finance Minister in every country in which the Income Tax operates to-day. You have only to look at the experience of the United States of America, the richest country in the world and the most able to bear high imposts, where their deliberate policy has been to reduce their Income Tax in order to throw more money back into industry for the fructifying of trade. That, I should have thought, in our country more than any other, was an aim which we should keep in view.

But there are more important burdens upon industry to-day than Imperial taxation, bad as that is. The Income Tax, after all, only operates upon people who are making profits. But there are many imposts to-day which are acting upon people who are making losses, and these are much more grievous burdens on the whole than the general rim of taxation. If you take what are known as social services, the five important ones that affect industry, the Poor Rate, Workmen's Compensation, Old Age Pensions, Health Insurance and Unemployment Insurance, you will find that, whereas the aggregate of these burdens in 1911 was £30,000,000 in the year, by the year 1924 it had risen to the amazing figure of £169,000,000. I ask the Committee to consider for a moment how that burden is distributed. £37,000,000 of it comes from local rates Industry is the chief ratepayer for the local rates. £48,000,000 of it comes from the Exchequer—to that also industry is a very important contributor—and for the rest there is directly imposed upon industry contributions for social services for each man employed thus creating a penalty upon employment. The employer bears £46,000,000, and the workman bears £30,000,000—£76,000,000 from the employer and the workman directly imposed and directly paid in respect of every man employed, whether you are making profits or losses.

I ask the Committee to consider, in a time like this, where is the severest pinch for industry, and where is the point at which you can most easily relieve it? I hoped the Chancellor of the Exchequer was going to take the opportunity of doing something for industry in respect of relieving at least some of these last charges, but unfortunately when the opportunity came, industry was absolutely ignored. Last year I suggested that the Health Insurance Fund had reached such an amount and had created so many surpluses that it was no longer necessary to exact the full contribution required from the employer and the workman, and I can remember now the frigid gaze the Minister of Health turned on my suggestion, and the icy tones in which he exposed the moral turpitude of anyone who would venture to suggest an interference with the sacred system of Health Insurance. The opportunity recently came for relieving industry of part of this burden. The Chancellor of the Exchequer never thought of industry in the matter. He entirely ignored the claims of the industrialists, the employer and his workmen, and he took the opportunity of abbreviating the Government's contribution, doing nothing at all to relieve the burdens of the other contributors.

That really was not the more serious aspect of the situation. He also dealt with Unemployment Insurance. There there was an absolute statutory obligation that, as soon as the opportunity occurred, the employer's contribution was to be made the sane as that of the workman.




I do not wish to bandy words as to whether "may" is a word of obligation. At any rate, there was at least what I might represent as an under-standing—


Hear, hear.


—that the employer's contribution was to be reduced from 8d. to 7d., and made the same as that of the workman. But that understanding was entirely disregarded, and, instead of helping industry in the way I think I have shown industry can be most directly helped at present, it was the Exchequer that was relieved in respect of its particular burden. I do not deny that relief to the Exchequer percolates to industry, as to every other taxpayer, but it only affects industry in a minor degree compared with the effect you would produce either by relieving local rates or taking off some of these direct burdens which the social services of the country impose upon our industry. I hope the Chancellor of the Exchequer will have some bowels of compassion for industry in the future. The experience of the last year has certainly not been comforting to the industrial people, and while I dislike very much to seem to use any words of warning—I am probably telling the Government what they know already—what is borne in upon me every day as I move about., is that a very large body of people in the country engaged in industry, and struggling against great odds and difficulties and vicissitudes to keep industry going, by which alone the Chancellor of the Exchequer can get his revenue, are beginning to look with dismay at their prospects, and are wondering when something is going to be done that will ease then burdens. I hope I have not put this matter too strongly, but it is obviously one that is vital to the very existence of the country.

I cannot long remain in conflict with my right hon. Friend—I have never been able to—and now I should like to finish by tendering my gratitude in respect of one matter in his proposals which I think of paramount importance. He has indicated that not merely does he intend to keep in being all the Preferences we at present give to oar Dominions and Dependencies, but he intends to create confidence in their minds with regard to the future by putting forward a tract of time in which they will be assured of them:: markets in our country. Confidence over a period of time is one of the greatest factors of success. It creates enterprise and encourages confidence.

I am glad lie makes these proposals for many reasons. There are some people who think that to stalk of the Empire in any shape or form, either in connection with Preference or otherwise, is to use the language of the Jingo. To-day I am willing to leave aside, although one will never cease to remember, that without the assistance of the soldiers who came to us from the Dominions and Dependencies, we should have lost the War before America ever began to be interested. I am willing also to leave out of account, although I do not think any of us will ever forget, that proportionately as many men lost their lives from our Dominions and Dependencies as from within our own shores, men to whom in camp and forest, far away, and on lonely sheep tracks, the sound of the trumpet of war might have passed as too remote for observance, but who yet came thousands of miles across the seas to stand by us and to fight with us in the greatest conflict in human history. But to-day I am not on that note.

I wish to put before the Committee the purely sordid aspect of our Imperial relations. What is the record of our trade during the last 50 years? To anybody who takes the trouble to read it, it is that, whereas we had an immense export to foreign countries during the last half of the last century, it teas being steadily depleted, and while the proportion of our exports to foreign countries was going down, we were saved by the proportion of our exports to our Dominions and Colonies increasing. Today 42 per cent. of our exports go to our Dominions. If we reckon it in what matters most to us, manufactured goods, the percentage is even greater. A country like Australia, with 6,500,000 people, is our second biggest customer in the world; I do not mean per head of the population, but absolutely. Australia, with 6,500,000 people, takes more of our exports to-day than the 110,000,000 people in America, the 65,000,000 people in Germany or the 45,000,000 people in France. Our export trade to-day with Australia is between £50,000,000 and £60,000,000.

How do we keep that trade? It would be a great mistake to suggest that we keep it absolutely on our own merits. We only keep it—and everyone who knows Australian trade is aware of the fact—by reason of our Prefer- ences. Without those Preferences, this country would be in far more dire straits than it is. What are we doing to keep that trade? The sentiment has held very well, but it is being subjected to constant pressure. Anyone who has recently been in touch with citizens from our Dominions or from different parts of the world knows that very insistent efforts are being made by other countries to bring some of our biggest Dominions into their commercial ambit, and, having regard to the terms which are being offered, it sometimes amazes me that they reject them. We cannot afford to sit by and do nothing to encourage our trade with the Dominions. Our future lies with these young communities in the great spaces of our Dominions, living in conditions of promise and of hope. Our destiny lies with the Empire, and happy is he who, like my right hon. Friend the Chancellor of the Exchequer, has the opportunity, the vision, the desire and the determination to interweave the threads of our fortunes so closely together that never can they be severed.


The right hon. and learned Gentleman has spoken out of the plenitude of his industrial and departmental experience. It has been obvious throughout his speech that he has viewed the present Budget not only from the point of view of a member of the Conservative party, but also from that of a trader who is conscious of the trials and difficulties of industry at the present time. Having taken a complete survey of the Budget, the right hon. Gentleman has practically only two things to praise—the Preference Duties and the Betting Tax. [HON. MEMBERS: "The Road Fund proposals!"] Yes, and the proposals respecting the Road Fund.


Those are the only topics with which I had time to deal. I did not propose to deal with every topic in the Budget.


I do not wish to emphasise the right hon. Gentleman's approval of the Budget. What I want to do is to point out how critical he is of its main characteristics. One of the points raised by my right hon. and learned Friend had reference to the burdens borne by industry for Unemployment and National Health Insurance, and he made a complaint, in which I feel sure he had the sympathy of a large part of the House, that whereas he was not allowed to make a suggestion last year, except under the charge of moral turpitude, a right hon. Gentleman on the Front Government Bench may do it amid the plaudits of his supporters. Is it not a pity that the right hon. and learned Gentleman was not here 10 days ago? One man may steal a horse, while another may not look over the hedge. I regret to find the right hon. and learned Gentleman under such a severe disability. I do not say that he was right last year, but I say that if the Government are wrong this year so was he last year. He complains of the burdens which industry has to bear in rates and there, to a large extent, I have sympathy with him. It is possible for industrial concerns to reduce the amount of Income Tax they have to pay by a mere diminution of their prosperity, but the burden of rates falls on them no matter what may happen.

Last year, when we were discussing one of the proposals for social service which was devised on a national scale, some of us declared that the burden ought to be borne by the nation as a whole, and not by the industries in proportion to the number of persons they employed. Instance after instance was given to the House in Committee of the burden thrown upon industry by these new proposals. I do not remember the right hon. Gentleman voting against the method which the Government adopted for raising funds f Dr widows' pensions. It was quite right that the pensions should have been provided, but I still hold the view that it would have been far better for the industries concerned and for the general prosperity of the country if they had been provided on a national basis and not on a purely trade basis.

In one point made by the right hon. Gentleman he looks at only one aspect of the burden thrown upon industry. I think he was approximately correct in saying that nowadays for social services our trades have to bear a load of about £169,000,000 per annum. That is certainly a large amount to be carried by waning industry or by those whose prosperity is subject to very narrow margins. Is he quite sure that the £169,000,000 was lost to the trade of the country? That £169,000,000 has been distributed amongst the great mass of the people, and the great mass of the people are the customers in our home trade. When we turn to the survey made by the Chancellor of the Exchequer last year, and again this year, we find that the only section of our trade which is prospering at the present time is our home trade. I have no doubt that the £169,000,000 distributed amongst the poorest people in the country, and spent upon the main necessities of life, has had something to do with contributing towards the prosperity of our home trade.

The right hon. Gentleman expressed approval of taxes which have been imposed by the Chancellor of the Exchequer last year and are to be either re-enacted this year or to be left where they were. He hoped that they would net be subject to the vicissitudes of different administrations. The constitutional doctrine on this point is quite clear. No Parliament can bind its successor, and no Government can bind its successor. Whenever we are dealing with matters of such high controversy as Import Duties or Preference Duties, it is quite clear that from time to time Parliament will express different views. Anyone who relies on the permanence of Duties which depend on the swaying to or fro of the fiscal views of great majorities, is depending upon a broken reed. If the Labour Government came into power to-morrow, it is quite certain from the pledges given from the Opposition Front Bench, not only this week but on previous occasions, that they would decline to pledge themselves to a 10 years' period for Imperial Preference. I am not sure that the Government to-day are justified in adhering to the 10 years' period. The head of the Government gave assurances which could not be more definitely stated than they were in Debate in this House. Although one statement was quoted by my right hon. Friend the Member for Spen Valley (Sir J. Simon) yesterday, I should like to supplement it with an even more definite statement made by the Prime Minister when he introduced the Safeguarding of Industries Bill in 1921. He said then that he thought three years was too short a period for the duties, and he admitted that five years was an arbitrary term. He went on to say: I think myself, for the purpose in hand to regard to these key industries, 10 years would be much too long…. I think in specifying five years we have gone to the limit of what the industries may reasonably expect."—[OFFICIAL REPORT, 31st May, 1921; col. 877, Vol. 142.] In suggesting that the Government should go to 10 years the right hon. Gentleman not for the first time in his history, I fear, finds himself in disagreement with the Prime Minister, and the Chancellor of the Exchequer ignores the undertaking given by the Prime Minister in 1021. He asked for a, 10 years certainty. There can be no certainty in taxation. No one is better aware of that fact than those two right hon. Gentlemen, one of whom has been at the Exchequer and the other who is now there. It is just as well that in, future years there should be no charges of breach of faith on this matter, seeing that men in responsible positions have made it quite clear, as the right hon. Member for Colne Valley (Mr. Snowden) did yesterday, that in no circumstances will he pledge himself to a 10 years period.

The right hon. and learned Gentleman made a point with regard to the increased protection given to commercial cars. Of all the protective duties suggested by the present Chancellor of the Exchequer this is the one least justified by the state of the trade. The import of commercial cars has been far smaller in proportion than the import of pleasure cars, while the export of commercial cars from this country has been on a larger scale than the export of commercial ears from any other country in the world. There has been no case made out for treating commercial cars in the way proposed in the Budget. When the right hon. and learned Member is talking of the burden thrown upon industry, let him remember that there are far more industries users of commercial cars than makers of commercial cars. If there is to be an artificial rise in the price of commercial cars, not only the textile trades, but the metal trades, the distributive trades and almost every industry in this country will have to pay more for a portion of their raw material.

I will now turn to one subject which the right hon. Gentleman has discussed, which is certainly novel in our discussions—I mean the Betting Duty. It is easy to understand the feeling of a great many hon. and right hon. Gentlemen in regard to this tax if they take a rapid and purely superficial view of the problem into which they are now plunging. It sounds very convincing and, indeed, almost morally correct to support a duty upon betting if, as the right hon. Gentleman suggests, it is likely to result in a diminution in betting in this country. Has the right hon. Gentleman thought out the method by which it is to be done? The Chancellor of the Exchequer has his own way of dealing with this subject. He is going to deal with the credit bookmaker. He is going to ask that the bookmaker on the racecourse and elsewhere shall be certificated; and he will have to pay £10 for his licence. There is also to be a register of licensed premises. But all street betting, all the house-to-house betting, all the betting which is organised and carried on in works and other illegal places, is to go scot-free. Club betting is to be entirely untouched. This is not a question of the man who bets in large stakes and the man who bets in small stakes; it is not a question of the rich man and the poor man; this is a matter which concerns the whole community. There is not a single class of society which does not suffer in some degree from the gambling spirit; it is inherent in almost everyone. But that is no reason why we should adopt means which will undoubtedly lead not to a diminution of betting but to an increase of betting in its least legalised form in a Measure for the raising of revenue.

It is not for nothing that the State took the view that it should do everything in its power to diminish the amount of gambling in this country. I am sure there is no section in this House, certainly no member of the present Government, who would like to sweep away the Gaming Laws with one stroke of the pen, and yet, from the speeches which have been made in favour of the Betting Duty it would appear that betting is so prevalent that we all of us have our little flutter. If all this be true, why have the Gaming Laws on the Statute Book at all? The method adopted by the Chancellor of the Exchequer in this matter will for the first time license the bookmaking industry. It will for the first time license the premises from which it is to be conducted. It will create an interest. We have enough trouble already in dealing with interests without wishing to add another. And the Chancellor of the Exchequer is doing all this with the object of raising £6,000,000 in a full year. Is he likely—


It is not a proposition to license an office; it is a, proposal to license the man.


Well let us see about that. I must refer the hon. and learned Member to Resolution No. 3, and to paragraph (3) of that Resolution, which says: On a certificate to he taken out annually in respect of the entry or premises to be used or kept by a bookmaker for the purposes of his business a duty of ten pounds. How on earth is he going to collect this tax unless there is a register of these licensed premises? Is the hon. and learned Member in favour of that? I have read carefully through the Report of the Committee, and I do not gather that he was in favour of that system. No, the hon. and learned Member was not in favour of the proposal of the Chancellor of the Exchequer. He was in favour of the taxing of all betting—street betting, works betting, club betting—the whole thing. The Chancellor of the Exchequer says, "No, I am not going to do that." He has a higher moral code than the hon. and learned Member. He says, "I will not touch this illegal betting." The hon. and learned Member would have done so; he led the way two or three years ago in the Committee—


But we expressly prohibited any vested interest in the office.


Once a bookmaker is registered, you cannot get away from the registration of the office, and long after a bookmaker has ceased to have mental agility sufficient to carry on his business he is able to employ agents and conduct his business in a far wider area than a mere office. But how is the Chancellor of the Exchequer going to collect this £6,000,000? Is he going to collect it easily? He is dealing with about the slipperiest customers one can find. I know that a very large number of turf agents conduct their business just as honestly as any banker, but anybody who has any experience of racecourses and sees what goes on, anybody who watches the sort of organised betting that is to be found, not only in the industrial districts, is well aware of the fact that bookmakers are not so simple-minded, and so willing to pay taxes as all that. He will find them just as elusive as the Super-taxpayers, or the millionaire who transfers his domicile to Jersey. I am not at all sure that the Chancellor of the Exchequer will not have to take complete control of the detailed management of the General Post Office if he is to collect I is duty, for a large amount of this book-Flaking business may perchance be conducted in future from Jersey.

If he is to get his revenue, he will have to watch, not only the highly respectable commission agents, those who are well known to the public and to the Press, but he will have to deal with thousands of others who are to be found on and around the racecourses who conduct their business just on the verge of illegality. He will not find it easy to keep track of every transaction that is conducted. Does he imagine that in the few minutes before a race a busy bookmaker is going to lick innumerable stamps and fill in the forms that are to be required by the Customs and Excise. The Chancellor of the Exchequer, no doubt, has a much wider experience of racecourses than I have. There is nothing I enjoy more than to see the beautiful animals galloping past, and I have never found it necessary to add to my pleasure by betting heavily on the result of a race. When I go to these places, I go with my eyes open, and I take care to keep my pockets closed, but does any observer believe for a moment that the right hon. Gentleman is going to find it easy to collect his revenue without having almost as many policemen on the ground as there will be bookies? I do not know who the right hon. Gentleman has been conferring with in getting ready for this Betting Duty. A large number of people seem to have known a good deal about it before the Chancellor of the Exchequer said anything at all in the House of Commons. He is a very sanguine man if he thinks he is going to get £6,000,000 a year by an easy collection of this tax. If he does get it, if he does tax the most legalised form of betting, if he does place an impost on it, he leaves all the rest, all the illegal betting, alone. What is going to be the effect of that? I know it is easy to exaggerate the trans- fer of betting from these legalised places and legalised persons into the street, but the tendency will be undoubtedly all that way, and those who do betting on the street will be able to give backers better terms.


Will the right hon. Gentleman say how he can give better terms?


He will not have to pay a license or duty.


Is the right hon. Gentleman aware that they all pay on starting prices?


We are not quite so simple as that. The hon. and learned Gentleman has apparently forgotten the ante-past betting. If he knew anything about the way in which betting is organised in large parts of the industrial districts of this country he would know that it is not restricted to one type. He will find that any impost which is placed on legalised "bookies" and is not placed on illegal bookmaking will undoubtedly go to the advantage of those who are scot-free of the tax. According to the Chancellor of the Exchequer, this £6,000,000 is going to be paid by the bookmaking fraternity without their knowing they have paid it. They will pass on the impost to those who are backers. If as the Chancellor of the Exchequer anticipates it is going to be passed on, it only means that backers who have dealings with legalised bookmakers will be placed at a great disadvantage compared with those who deal with unlicensed bookies. The right hon. Gentleman, in dealing with this matter, and other hon. Gentlemen too, are quite entitled to say that they will examine this question, not only from the fiscal but from the moral point of view. I do not see why one should not bring moral considerations into a discussion of this matter in the House of Commons. Whether betting is moral or immoral, every man must judge for himself; but there is not a single individual who does not know that betting, conducted as it is on its present scale, has a demoralising effect in every grade of society. I need not argue the ethical side of it at all. We know the facts. The hon. and learned Member who was Chairman of the Committee which sat upstairs refers to it in his own Report, and there are pages in which that Committee describes the evil as it exists on its present scale amongst men, women and children. Why should we ignore that? Anything that will establish more firmly the business of betting in this country, this demoralising influence, ought not to be supported by any Government which devotes itself as does the present Government, to social causes. On the other hand it should do everything to diminish the volume of betting and not establish the evil more firmly by registration and licence.




If the right hon. Gentleman can tell us how he is going, by taxation, to put a stop to street betting and works betting, I hope he will do so at once. The Resolution on the Paper will do nothing to stop any one of these evils. I turn now to the larger aspect of the financial proposals of the Chancellor of the Exchequer. The first comment I would make in regard to his new taxes and the results we have seen during the past year is that his anticipations of a year ago have not been reached. His new import duties on films, clocks and watches, motor-cars, musical instruments, by which he thought he was going to get £1,500,000 have realised just over £1,000,000—£1,081,000. On silk and artificial silk he expected to collect £3,500,000. He has only got £3,190,000. Indeed, all his new taxes last year failed to reach his estimate.




Because they were badly devised. The right hon. Gentleman did not realise that when he puts on a tax it must diminish the volume of trade. He did not make enough allowance for that.


The right hon. Gentleman knows perfectly well the gigantic outbreak of dumping which took place between the announcement of the duties and the passage of the Finance Bill.

5.0 P.M


That excuse will really not hold water. It did not take long to get the Finance Bill through this House, and the right hon. Gentleman knew from day to day how much dumping was going on. He gave us a revised figure of £3,470,000 after he knew about all this dumping. The right hon. Gentleman had the official information—


The final figure was not known till after the result of the dumping. The revised figure referred to really embodied only the result, of concessions made during the Debate in this House on the Silk Duty.


Even if that be so, I cannot understand the use of the revised figure, or why it was placed before the right hon. Gentleman by his officials. The Chancellor of the Exchequer cannot at all make the Estimates conform strictly to the facts.


After the revised figure was given to the House, I stated, in answer to a question, that we had sustained a loss, at first estimated at between £1,000,000 and £1,500,000, as a result of the heavy dumping which had taken place. It is quite true in the upshot the additional loss has not been realised, because the duties have been more productive than I hoped at the time.


My right hon. Friend appears to have been wrung in the original Estimate and in the revised Estimate. However, I do not wish to press the right hon. Gentleman on a matter of £3,000 or £300,000 when we are dealing with millions. Let us turn to those other sources from which he will draw his revenue, and we shall see that a great deal of the revenue is fading away. The right hon. Gentleman opposite has drawn attention to that. Special receipts are likely to become smaller and smaller. The Excess Profits Duty is quite certain to bring in less and less, and I am not surprised that the Chancellar of the Exchequer is now bringing it to an end, because there have been so many claims made for refund in connection with the Excess Profits Duty that in the next two or three years it might quite possibly be found that the sums that are paid out were greater than that which had been collected. Of course, the Corporation Profits Tax disappears at the same time. How, then, is the right hon. Gentleman going to square his accounts? He has given us figures as to what he expects to get in various directions. As it stands at present, £7,000,000 appears to be the total amount that he may expect to get from the Road Fund. Then there is £4,000,000 from France. Whether this will be repeated next year or not remains to be seen. There is £5,500,000 through shortening the brewers' credit. He may get this or something like it again next year, but he will not get it in the following year, because the poor fellows are surely entitled to one month's credit. Motor vehicles are going to bring £1,500,000; extra Customs £750,000, and the Betting Duty £1,500,000. Then there is his dealings with the old Sinking Fund. The new Sinking Fund which is actually £46,000,000 is going to he made up to £50,000,000 by the addition of the £4,000,000 from the old to the new Sinking Fund.


I am endeavouring to maintain a uniform payment for debt redemption of £50,000,000 a year. Last year we paid £36,000,000, and, in addition, there was paid off £4,000,000 by means of the old Sinking Fund.


I quite recognise that. These various operations will have very considerable effect upon our national credit. I have heard of the New Sinking Fund being raided many a time, but I never heard of a Chancellor of the Exchequer in our generation who considered the old Sinking Fund to be fair game. Had the right hon. Gentleman left the old Sinking Fund as it was, it is quite certain that we should have had redeemed just as much debt as under the arrangement he has proposed.

As to the accounts which have been given to the House by the Chancellor of the Exchequer, the matter depends upon almost one thing. The main fact that really dominates the financial situation is the outcome of the crisis in the coal trade. I am not going into how the right hon. Gentleman is going to deal with the general situation in the coming years. I do not propose to discuss the Gold Standard nor do I wish to go into the Death Duties. Nor will I discuss the coal situation, but, in making a survey of our financial obligations, I think we must keep in view the effect of three possible ways in which it may affect the finances in the coming year.

In the first place, there is the possibility of nothing having to be paid by way of subsidy. All that will happen in that respect will be to wind up the subsidy on 30th May without increasing the charge in the year 1926–7. There is the second possibility—I only mention it as a possibility and as purely hypothetical —of a subsidy having to be made in order to ease the bump. The next alternative is the possibility of making loans, owing to certain conditions of the coal trade, over a period of 10 years, and that to some extent would be an absorption of the national credit. The fourth possibility, from which we all desire to be saved, is a stoppage in the coal trade. That would upset the accounts of the year perhaps more than any of the other matters I have mentioned. I think we are justified in saying that the financial situation is dominated by what may happen in the next few days in negotiations over coal.

Let me turn to a matter which is much less delicate. Last night we heard from the right hon. Gentleman the Member for Norwich (Mr. Hilton Young) a statement as to our national credit, which was of very great interest, although, I think, limited in its accuracy by the claims which he put forward on behalf of the bourgeoisie, and in which he suggested that the middle classes were bearing so much of the financial burdens of the country. What, however, he had to say on the subject of national credit was of great value, for the right hon. Gentleman takes a very wide and very detached view of our national affairs. It is quite clear from his speech as to what he thought of the credit of the United Kingdom. The right hon. Gentleman the Member for Colne Valley (Mr. Snowden) declared yesterday that the credit of the United Kingdom at the present time was rather worse than the City of Glasgow. It is a very remarkable fact that Glasgow succeeded in floating its loan yesterday, the whole of it has been over subscribed, and I doubt whether the Chancellor of the Exchequer could float any of his Trade Facilities loans, which are guaranteed by the State on a similar basis.

There is one slight deduction that must be made in the case of Glasgow Corporation; it paid the expenses of issue. The, right hon. Gentleman drew attention to the fact that since the War we had redeemed in this country £700,000,000 of floating debt. How has that been done? It has been done entirely out of the sale of surplus War Stock. The whole of that money derived from the sale of surplus War Stock ought not to have been used for the redemption of the debt. What has been spent out of the loans which we floated on the credit of the United Kingdom obviously ought to have been returned from sales to the category from which it was originally drawn.


But the right hon. Gentleman will possibly agree that many of the purposes to which the proceeds of war stores were devoted were in meeting capital obligations which arose out of the War, and ought to have been dealt with in the special manner described?


Oh, yes; But I mention that in passing. It is not now material. The problem which now faces the Chancellor of the Exchequer is not only to deal with the situation of this year, but, during the next 2½ years, to deal with the redemption or the funding of no less than £884,000,000 of short-dated debt. That is a very grave and difficult problem. How he is going to deal with it he is not going to discuss at the present time, but it must be a matter of continual concern to him. The only success he will get out of refunding will obviously come from the raising of the national credit. After all, the funding operations, whenever they begin, will depend very largely upon the simple law of supply and demand. If there is to be a larger supply of Government debt available for marketing than there is demand from the market for investment, it is quite obvious that the funding operations will not be successful.

There is only one way, so far as I know, in which it will be possible to keep down the supply of Government debt which will he sold in the markets below the level of the capital available for the purpose, and that is by the continual operation of the Sinking Fund, and by keeping expenditure far below the revenue point. The holders of this short-dated stock are not all going to ask for its redemption. And there are very good reasons why there should be a good deal of short-dated stock in the market. It is absolutely essential until there is a far greater volume of commercial bills that short-dated stock should be available. There is a continuous demand for this short-dated stock by British and foreign institutions, who need it for commercial or financial operations. The right hon. Gentleman will find it far easier to deal with the balance which he funds if he has created the impression in the rest of the world that we are paying off our debt rapidly, that we are not relaxing our efforts, that we are not adopting any makeshift expedients—I think "makeshift" was the word used by the right hon. Member for Hillhead—for making both ends meet. If he can create that impression, he will certainly do something to raise the chedit of the United Kingdom.

Unfortunately, under the right hon. Gentleman our expenditure has gone up steadily. In the figures which he quoted the right hon. Member for Hillhead pointed out how continuous this rise was That is certainly true. Our estimated expenditure, leaving coal out of account altogether, is higher now than it was last year or the year before. Our total tax revenue is higher this year than last, and it was higher last year than the year before. That tendency is all against the raising of the national credit. The Chancellor of the Exchequer asks, How could he have done otherwise? He could have dispensed with some of the subsidies that he has distributed. He might have postponed or cancelled or refused the grants made to Northern Ireland, as they were refused by his predecessor. He might have cut down the fighting Services to what they were when the last Conservative Administration was in power. He would have gained £11,000,000 out of that. If he had put his foot down firmly enough and refused any of these grants, sporadic or temporary, however hardly they were pressed on him by his colleagues or from Ireland, he would not have been in the difficulties in which he now finds himself at the close of the financial year. He would have had £14,000,000 at least in hand under those headings alone.

What he might have done in other directions is a matter merely for speculation, but one thing we may certainly say, and that is that the only means the right hon. Gentleman has for restoring our national credit is by a further reduction in expenditure, putting a stop to auto- matic increases, "stemming the tide," as he sometimes calls it, refusing the requests made to him by his colleagues and from outside, and in doing, as he was accused of doing this afternoon, "passing the buck" to his followers behind. They will always support him, whatever he proposes. The right hon. Member for Hillhead would back him whatever financial sins he committed. The Chancellor of the Exchequer is far mere afraid of the parties opposite than of the heterodox financiers on his own side of the House. The right hon. Gentleman will have to resist all the wiles of his followers as well as of his colleagues. It is high or low expenditure which makes or mars national credit. It is of far more importance to this country that we should now be able to disclose our financial strength than that we should disclose our military strength. The Chancellor of the Exchequer has it in his power. If he would carry through to the end the principles with which he started and in which he has an inherited interest—the result of long training in a better school—he would be able to restore our national credit, but only by adhering strictly to those simple rules of national as well as of personal finance.


The right hon. Member for Hillhead (Sir R. Horne) delivered a speech which we on the Labour Benches listened to with considerable surprise and considerable interest, and. as far as a large part of it was concerned, with complete approval. The right hon. Gentleman repeated the arguments which had been used from these Benches for days and nights during the Debates on the Economy Bill. We accept his arguments, hut we draw from them different conclusions, and conclusions which, as I shall try to show, are a far more logical development of his own arguments than those with which he seemed to be content. In dealing with this Budget, we of the Labour party cannot regard it as an isolated fact. We see that it is part of a general financial policy. The Chancellor of the Exchequer indicated in his Budget speech that he was looking forward not only to this year but to next year, and even the year after. The general financial scheme of which this Budget is part, began with the last Budget, and has been followed up in this House by a series of Bills which have occupied us for months, and which we of the Labour party have fought at every stage. I wish, then, to say a few words as to what is behind all these details of taxation, and what is the essential difference in principle between the financial results at which the Chancellor of the Exchequer is aiming and the financial doctrines which we hold.

Broadly and briefly, we believe that the result of the Chancellor of the Exchequer's finance, the result of the last Budget, the result of the Budget which he is evidently projecting, from the remarks which he made on Monday with regard to a prospective increase of resources of £23,000,000—we believe that the result is to be a vast decrease in direct taxation paid by the wealthier section of the State at the expense of the homes and the health and the standard of life which our people have, up to the present, secured. This policy began in the last Budget. In that Budget the Chancellor of the Exchequer had a surplus of about £40,000,000. He used all his manipulations of Income Tax and Super-tax and Death Duties, he spent £32,000,000 in relief of the direct taxation paid by the most fortunate classes in the country. I noticed that the right hon. Member for Hillhead seemed to think that that was not enough, and that still we have left a too heavy burden upon industry. But the fact is that if the Chancellor had not spent this £32,000,000 in that way, there would have been no need for the increase in the local rates of which the right hon. Member for Hillhead complained. Further, there would have been no need for those extra burdens placed on the employers and the employed by the Insurance Acts, of which also the right hon. Member for Hillhead complained. There would have been no need for any new taxes; there would have been no need for these Budget taxes; there would have been no need for the Unemployment Insurance Act of last year, no need for the Economy Bill, and no need for any of the attacks upon the health and homes and education of the great masses of the people.

In the Debates on the Economy Bill we pointed out the harshness and the cruelty and the injustice of this financial plan which the Chancellor of the Exchequer is gradually unfolding. We cannot go over that ground again, but in these Budget Debates we have an opportunity of pointing out that this plan is injurious and disastrous from a strictly financial and commercial and industrial point of view. The Chancellor diminishes direct taxation. It is quite clear that he proposes to continue the process. He diminishes direct taxation, but the money has to be made up from somewhere. From where is it coming? We see now that the first direction from which it is coming is the local rates. To that reference has been made. Let me give the actual results of what has been done from the White Papers which have been issued by the Government within the last two or three weeks. I have here the White Paper issued by the Ministry of Labour as to the effects of the Unemployment Insurance Act of last year. As a result of that. Act about 100,000 persons have been struck off unemployment benefit, and if we take into account their dependants, that means that at least 150,000 persons must have been directly impoverished as a result of that Act.

Then we have the White Paper from the Ministry of Health. What does that show? It shows that last June, before the Unemployment. Insurance Act came into operation, there were 350,000 insured persons receiving out-door relief. At the close of the last quarter after the Unemployment Insurance Act had been in operation for all these months, those 350,000 persons had increased to 500,000, which means that just about the number you would expect, about 150,000 persons, are directly impoverished by the Unemployment Insurance Act, that by the reduction of benefits 150,000 extra persons are thrown on to out-door relief, with all the indignity which that carries its train. What does it, mean? It means that the Income Tax is being reduced at the expense of a corresponding increase in the local rates. Exactly the same result is occurring as a consequence of the unemployment Clauses of the Economy Bill. Those Clauses diminish the amount which the Chancellor of the Exchequer pays to the Unemployment Fund. That increases to a higher level than would otherwise be the case the amount which has to be paid in contributions for unemployment insurance by the employers and the workers. Again, a mere transfer of burden, with results which are more injurious than if the position had been left as the late Chancellor of the Exchequer left it.

Broadly, then, our criticism of this financial scheme is this: To lower continually the direct taxation paid by the well-paid section of the country, and—in order to do so—to increase local rates and insurance contributions, is not a real reduction of taxation. It is a fraudulent reduction of taxation and merely means that you are transferring the burden of direct taxation elsewhere in a way that is more injurious to the recovery of our industrial position than direct taxation itself. At this particular juncture, the peculiar nature of the industrial situation ought to dominate every Budget which the Chancellor of the Exchequer introduces. The situation is peculiar for this reason. There is a great deal of unemployment and trade stagnation, and yet, taking the average, one penny in the Income Tax gives a good return. The Chancellor of the Exchequer himself states that the consuming power of the country is satisfactory. What does it mean? The main fact of the situation is that the greater part of our unemployment and industrial depression is concentrated in a comparatively few essential industries, particularly industries which depend on the export markets—the heavy industries such as iron, steel, engineering and coal. That being the case, the duty of the Chancellor of the Exchequer is so to frame his Budget as to give special assistance and nourishment to this group of industries which is struggling against the greatest difficulties.

If the Chancellor of the Exchequer wishes to do that, what policy ought he to pursue? Ask anyone who can speak for those trades, and they will all say that the one thing which they require and which will help them, is the possibility of reducing their standing charges so that they may compete on more even terms with their rivals It foreign markets. The Chancellor of the Exchequer reduces the Income Tax. That does not help these industries. They are not paying any Income Tax. It helps those huge sections who are living on debentures, and inherited wealth. It helps the whole bond-holding and interest-receiving class, but not the industries which want a reduction in their standing charges, for the simple reason that Income Tax does not enter into standing charges, but is paid out of the profits which are left after the standing charges have been met. It is, therefore, of no assistance to the industries who at present have this special problem to face. On the other hand, the increase in rates and insurance contributions is a direct increase in standing charges. These increases have to be paid whether any profits are made or not. They have to be paid by the export trades even when those trades are making losses. They have to be paid out of the costs of production which exporters have to take into account when determining the price they can charge. Our objection, therefore, to the Chancellor's whole financial outlook—because this clearly dominates not only what he has done, but what he aims at doing—is that at this stage of our industrial problem he ought to give special assistance to those export trades which are struggling against special difficulties. He has not done so. All he has done is to increase their standing charges and increase their difficulties—and he has done this in order that he may give greater assistance to those sections of the State who are already enjoying the greatest share of the national wealth.

There is only one further point of a more technical character on which I would like to make some remarks. The Chancellor of the Exchequer has increased the Sinking Fund to £60,000,000, and he has stated that he intends to reduce it again next year to £50,000,000. We have always maintained that a Sinking Fund of £50,000,0000 is totally inadequate. It means that the National Debt will not be paid off for 150 years. It means, in practice, that the Government have abandoned in despair the problem. of dealing with the Debt at all. The answer given to that criticism for some years past has been that the Government ale going to deal with the National Debt by a process of conversion, by a process of lowering the rate of interest, so that tens of millions will be saved, and the present Prime Minister, when he was Chancellor of the Exchequer, gave figures which indicated that he looked forward to saving about £80,000,000 a year by reducing the rate of interest on the National Debt. We have now reached a position in which I think this subject of conversion should be examined in order to see what are the possibilities, and I have here some figures which indicate the limits of the proposal.

The National Debt is, broadly, £7,500,000,000. Of that sum over £1,000,000,000 is debt to the United States, which cannot be converted and on which in any case we are only paying 3½per cent. Another £1,500,000,000 consists of Funding Loans, Victory Bonds, Conversion Loans, and long-dated securities which do not accrue until after 1960. Another £750,000,000 consists of Treasury Bills and other short-term securities to which the proposals of conversion do not apply. Taking these together, we get, out of the total of £7,500,000,000, a sum of about £3,500,000,000 to which conversion cannot be applied, and £4,000,000,000 represents the area within which all these proposals have, to operate. In present circumstances, considering that interest is going up and not down—considering that when the Prime Minister made these prophesies the Bank Rate was 3 per cent. and is now 5 per cent.—I think I make an optimistic assumption, when I assume that you might reduce the rate of interest on this £4,000,000,000 by one-half per cent. If you do that, you save £20,000,000 a year nominally, but you will not make an actual saving to that amount, because you will lose the Income Tax and Super-tax which the present recipients of that£20,000,000 are paying. That means a loss of at least £5,000,000, and the final result of all these conversion proposals, on the most optimistic assumption, is a saving of £15,000,000. The Prime Minister's £80,000,000 on examination becomes £15,000,000 —and this is in connection with the National Debt, the interest on which is £300,000,000 a year.


When did the Prime Minister make this proposal, or offer the suggestion that there was likely to be a Sinking Fund of £80,000,000?


In the Budget speech of 1923 the right hon. Gentleman spoke of a reduction of 1 per cent., and, as I have pointed out, instead of a reduction of 1 per cent. there has been an increase of 2 per cent.


A reduction of interest—not Sinking Fund.


I was speaking of conversion, not of Sinking Fund. I was speaking of conversion and reduction of interest. Conversion is the alternative to our proposal for an enlarged Sinking Fund.


I understood the hon. Member to say "Sinking Fund."


I may have said so, but I was dealing with reduction of interest, and the fact is that when you examine the situation you find our highest hopes of a saving in this way come to £15,000,000. That justifies me in saying that conversion is a myth and a fallacy—exploded, exposed and obsolete. The Sinking Fund will take 150 years, and the Government have no other alternative. They have, in fact, abandoned in despair the problem of the National Debt.


It is very difficult to reply to the arguments of the hon. Member for Keighley (Mr. Lees-Smith). He seems to despise a saving of £15,000,000, even if the conversion could take place. If it is possible to get cheap money, you might be able to save more than £15,000,000 on your conversion. It is still more difficult to argue with the hon. Member when he refers to the Income Tax as he did. I understood him to say that any reduction in the Income Tax was almost fraudulent. If he considers a reduction of Income Tax in this way, surely he does not realise the importance of such reduction, not only to trade, but to people in this country generally. I remember his argument last year upon this point, and I remember asking him what happened to a reduction in the Income Tax. The answer is that it all goes back into trade and helps trade in one way or another. The people do not put the money into a stocking. I desire, however, to refer to what the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) said yesterday. I agree with a great deal of the right hon. Gentleman's speech, but when he hinted that there should be some measure of control on public credit, to my mind, his speech lost all its force. The right hon. Gentleman himself used, in reply to the Chancellor of the Exchequer, the word "bunkum," and I think I may respectfully use the same word in reference to his suggested control of public credit.

I am sorry he is not in his place at present, because I should like to ask him if he remembers what occurred in connection with the Dawes Report? The Leader of the Opposition certainly signed that Report, and I have an idea that the right hon. Gentleman the Member for Colne Valley was also a signatory. In that case he did just the reverse of what he is now advocating. The Reichsbank was a part of the German Republic, and the effect of the Dawes Report was that it should be taken away from the control of the German Republic, and practically given to private enterprise. Surely he rather contradicts himself in hinting that public credit should be controlled. Now let me deal with the Budget. It has often been remarked that one of the most striking things of to-day compared with previous days is the complexity of the situation, and I feel that if there is any thing complex in this world it is the financial situation and problems. Last year's Budget brought in the return—and I think it a as an historic event—to the gold standard. I congratulate the Chancellor on the result up-to-date of the gold standard, and if I am in order, I should really like to congratulate the Governor and the Court of Directors of the Bank of England on the way they have managed the Bank's finance, which in many ways affects and regulates the national finance, during the course of the 12 months. They have shown financial statesmanship and great wisdom, and the country owes much gratitude to those Directors. In pre-War days very few people took any interest in gold except the cambists The exchange was almost unintelligible except to the arbitrage men, and the Bank Rate had more control than it has to-day.

The hon. Member for Finsbury (Mr. Gillett) referred last night, in an interesting speech, to the Bank Rate, but I am sure he will agree with me that the Bank Rate is not the weapon to-day that it was in pre-War days. If you take gold and exchange and the Bank Rate you will find they are all intertwined in the tangle of international debts. The tangle of international debts interferes with a great deal of the stability of Europe at the present time. As far as the gold standard in this country is concerned, you may say it is divided into two periods. There is in No. 1 period the gold exchange standard, which started at the end of April, 1925, and went on to the end of December, and in that period you had a big influx of gold, chiefly from Holland and Russia. In the second period, from the 1st January this year, you had what I might call a gold sheltered standard, not the full gold standard, but a gold sheltered standard, in which there was a large efflux of gold between January and the present day. The chief import of gold that came into this country was from Russia to the extent of £2,400,000, but the efflux was greater than the amount which came in. Great statesmanship must be shown when the fusion of the Treasury and Bank of England notes takes place, and also the settlement of the fiduciary issue.

The right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) two clays ago criticised the gold standard, but one point we have to consider and remember is that practically the dollar bill is ceasing to exist, and the London bill is again taking its place. Britain has a great many claims on its gold. The two great claims in 1925 were one from India, which, if you take the exchange at 1s. 6d., bought £43,000,000 worth of gold, which was half the world's production, and the other point that one has to consider, is the external debt which we have, which can be paid in gold, as it is so difficult to get the goods into America to pay that debt owing to the Fordney Tariff.

May I appeal to the Financial Secretary to the Treasury as to the cost of running this country? The cost of running this country—and I must include the coal subvention—last year was £826,000,000, and this year it is to be £824,000,000. In pre-War clays it was about £200,000,000, and then it was big; we are a poorer nation to-day—at least, I consider that we are poorer, although I welcome the remarks made not only by the Chancellor of the Exchequer the day before yesterday but also by the right hon. Member for Colne Valley (Mr. Snowden) yesterday, to the effect that there was more wealth in the country now than in the previous year. I welcome that, but this great big amount of £824,000,000 for this year compares badly, let me say, with other countries. It costs only £700,000,000 to run the United States of America, a country nearly as big as Europe. It costs Germany, our opponent in trade, £455,000,000, Russia £377,000,000, and Canada £60,000,000. Is there no method by which we can get sonic greater reduction, so as to compare more equally with our opponents in trade in this way?

The Chancellor has included in his Budget £4,000,000 from France. I welcome any money we can get in reduction of taxation, but what does that mean? It means that if you take the franc at 125—I believe it is 146 to-day— France, has to buy the equivalent at a pre-War rate of exchange of £20,000,000 for this £4,000,000, and if France has to pay the United States a similar amount, it will mean a further sum which she will have to buy at the appreciated rate of exchange. French imports in the last three months have been greater than her exports, and that does not help her to pay an external debt. Except by gold it will be difficult for France to make these payments in her present condition. May I refer now to the revenue of the country? Partly, the revenue of the country for this last year is misleading. The increase, although I welcome it, came chiefly from non-taxable sources, and I feel that that may not happen again, and we should not anyhow rely on the buoyancy of revenue which we had in 1925–26.

The Income Tax—and I am sure this will interest the hon. Member for Keighley—is extraordinarily heavy, whether just or unjust—I contend that it is just —but if you take the figures between 1920 and 1026 and add the Super-tax to them, because Super-tax is really an extended Income Tax, between 1920 and 1926 the Income Tax payers and the Super-tax payers paid 22,797,000,000 to the Exchequer. That is a mountain of revenue. It is extraordinary amongst a few people that we should be alive to tell a tale of that sort, that this gigantic amount has been paid, and if you compare our Income Tax with that of other countries—the Committee will forgive me in making this comparison again—you will see that we are higher taxed than the countries I am going to name. In Canada, on £600 a year income, the Income Tax is £8; in the United States it is nil; and in our country it is £32 10s. Take the rich man, the £10,000 a year man. In Canada, he pays Income Tax and Super-tax amounting to £1,930; in the United States he pays £1,071;and in Britain he pays £3,015. I am sure if we could get down to the basis of the United States or of Canada, it would be of benefit and would stimulate our trade. I welcome doing away with the three years' Income Tax calculation, because I feel that the Chancellor of the Exchequer will be able to amalgamate the Income Tax with the Super-tax, and in that way there should be a reduction of expenditure. I should also like to congratulate the Chancellor on having come to an arrangement with the Irish Free State in regard to double taxation. It is a great asset and a great bit of statesmanship to have settled this knotty and difficult problem.

Now I come to the expenditure, and, as the Chancellor of the Exchequer stated in his speech, expenditure governs the position. It is quite true, but it is a sad tale to tell of the increase of expenditure since my party came into power—two years of increase. We are pledged to economy. It is an alarming growth, and I wish to impress on the Financial Secretary to the Treasury the necessity, the vital necessity, for some reduction in this expenditure. It is no good saying it cannot be done. I am absolutely confident that it can be done, and I only hope that this country does not get into such a terrible financial state that it is forced on my party to have to reduce expenditure in some other way. Does the Financial Secretary realise that every penny that the Government takes has to be earned by trade and commerce? It does not matter whether it is a betting duty or what it is; it all has to come out of trade and commerce, and the more money that can be left in the pockets of the people, the better it is for the country at large.

With regard to the National Debt, I am very disappointed that the Colwyn Committee on the National Debt has not made its Report up to the present time. It will be a most important Report that will be issued, and we are most anxious to have it, and I cannot help thinking that the two or three years which have been going on since the Committee began its investigations is almost too long. There is one big problem which was referred to by the hon. Member for Keighley, and that is the national interest problem. He referred to the con- version of debt and interest. I understand, from what the Chancellor of the Exchequer said, that the rate of interest per annum on the National Debt has been reduced by £75,000,000 since the War. Our interest, I quite agree with him, is too large. It is three-eighths of the total of expenditure, and the question is: How can it be reduced It can only be reduced in one way, and that is by improving our credit. Has our credit improved? No. Our credit, since the Conservative Government has been in power, has gone down, not 1 per cent, as mentioned by the right hon. Member for Colne Valley, but by about ½ per cent.

Supposing you take the 3½ per cent. Conversion Loan, yon will find that when we came into power that conversion stock was standing at 80. It is now about 75. This shows a. reduction of 10s. per cent. You have to allow also for a reduction of 6d. in the Income Tax, which makes the problem worse from a percentage basis and nearer the one per cent. mentioned by the right hon. Member for Colne Valley. There are two questions which must be considered. Why has credit fallen, and how ran credit be improved? It has fallen because everybody who has got into a difficulty has looked to the Government for assistance, either in subsidies or in guarantees of various sorts. This practice must, stop. I welcome what the Chancellor the Exchequer said in regard to the Trade Facilities Act, but may I ask the Financial Secretary whether that includes the Trade Facilities (No. 2) Act? Does it include the export credit, because that was in the Trade Facilities Act, as far as I remember?

Lieut. Commander KENWORTHY

It was a separate Act.

6.0 P.M.


Well, it was called the Trade Facilities Act anyhow. What about all these other subsidies and guarantees which the Chancellor of the Exchequer is either proposing or going to give? They should be clone away with. Credit insurance we were promised yesterday. Then there is agricultural credit. There is going to be, I believe, a central Land Bank, and then there are various propositions, such as the Electricity Supply Bill, with £33,500,000 guaranteed. It is not business. You cannot get your credit better if you are gong to give millions away under your State guarantee. So far as the Electricity Bill is concerned, I feel that when that. Financial Resolution is considered, it should be fought tooth and nail by financial Members in this House, and I am confident the money can be raised without this State guarantee. I saw a question down recently when the subsidy was actually refused, I am glad to say. The amount was for £50 for killing cormorants. Just fancy asking for £50 to kill cormorants which are eating about two tons of fish a year! It is laughable to think that a question of that sort should come before this House.

I come to my second question, as to how it can be improved. The only way it can he improved is by the Chancellor of the Exchequer putting down his foot and stopping all these credits, guarantees, subsidies, and so on. It is not business for the State to guarantee with taxpayers' money, and the taxpayer to hand out his credit for such things as I have mentioned. But how else can it be improved? Could not something be done so that the Estimates are looked at and examined before they come to this House? I feel certain the Financial Secretary to the Treasury has seen the recent Report of the Estimates Committee. At present Estimates might just as well not be presented to this House at all. We all know what happens the two days in July, the millions that go through without being looked at at all, and not ever even examined. I feel confident that if we started some new organisation, with an Estimates Committee, it would be to the benefit of the taxpayer and, eventually, would reduce expenditure.

There is one other matter, which I mentioned last time I spoke in this House, and that was that the Trustee Act should be suspended for three years for future Dominion loans. I know it is a knotty question, but it would help the Exchequer in the conversion of our loans, and reduce our expenditure in that way. I do not want to go into all the details of the Trustee Act. It is only in future loans that I would suggest a thing of this sort, in an extremity—because we are in an extremity—to endeavour to get these large maturities floated on a more reasonable and lower interest basis than at the present time. Conditions have altered since the Trustee Act first came into force. We have now Canada borrowing money from the United States. That country borrowed last month £8,000,000 at 4.13 per cent. We could not lend money to Canada at that rate.

Conditions have altered, and I wish the Chancellor of the Exchequer would look into that, and see if it is possible to arrange something in the nature of the Trustee Act being suspended, say, for three years for future loans. I do not think it would do us any harm. We had tested the position last year of the embargo on loans when Australia was told to go to New York for her money, and I am confident that if the matter was explained to the Dominions, they would realise the extremity we are in on account of our conversion loans. I welcome, if we can afford it, the Sinking Fund being increased to £60,000,000. The question is, Can we afford it? I sincerely hope we can. Every addition to the Sinking Fund will reduce our Debt and eventually get us back on to a firmer and sounder basis, and a reduction in the expenditure will take place which is so much desired. When the Chancellor deals with these maturities next year, I sincerely hope he will find a new security instead of a 3½per cent. conversion loan, if it is at the large discount at which it is standing at the present time. Economy has been preached almost by everybody. We all know the necessity of it, and I believe the Chancellor of the, Exchequer realises the necessity of it. Last year, I remember, he used a military metaphor, and said it was fixed bayonets all round; he meant to the various Departments. I wish he would drive those bayonets home, and get the economy which is so needful for this country.

In conclusion, I only want to say that I hope the Chancellor of the Exchequer and the Financial Secretary to the Treasury will realise the gravity of this increased expenditure. I know the Financial Secretary is a well-read man. If wonder if lately he has read the Creevy Papers. The Creevy Papers go back 100 years. In those days you had to fight for every of expenditure. Let us fight for every 1s. at the present time. Let us fight for every penny, because I feel it is the taxpayer who wants to see that the Government are really reducing expenditure, instead of increasing it. I sincerely hope that, although the Chancellor of the Exchequer is not present, the Financial Secretary will convey to him the gravity of the situation, the necessity for the reduction of expenditure, and the possibility, as I contend, of reducing that expenditure.


The Budget we are discussing has been described in various terms, according to the side of the House from which it has been discussed. On the Chancellor's own side of the House it has been called bold more times than anything else. I am afraid that is not the adjective I shall apply to it myself. In my opinion, the Budget is a cowardly shrinking from patent facts, and I think, of all those who have taken part in the Debate, no one has more vividly shown up that particular aspect than the hon. Member who has just addressed the Committee. He speaks with authority, and there can be very cold comfort to supporters of the Government in the remarks he has just addressed to the Committee in a most powerful and eloquent speech. The Chancellor of the Exchequer, face to face with certain facts, has raked the entire realm to pick up every stray copper possible, in order to prevent himself imposing the taxation that the situation demands, and to prevent reimposing the taxation that he rather foolishly remitted last year, with regard to the Super-tax in particular. It would appear that a great deal of the present difficulty has arisen from his remission of the Super-tax last year, a remission that was, I think, quite unexpected even by those who received it, and by persons who really did not deserve it. In his attempt to escape reimposing taxation, he has raided every fund upon which he can lay his hands, and it is curious to note that in the taxes he has imposed, he has again come down most heavily upon that type of person whose funds have been raided most. He has raided the funds of the poor, and in his imposition of taxation he has again imposed taxes upon the poor. In so far as he is imposing taxation upon motor vehicles, he is raiding the luxuries, or the pleasures, of the poorer section of the community, and is further imposing a tax upon the commodities to be carried in heavier vehicles.

That does not seem to me to be a very reasonable way, or an intelligent way, of getting out of the difficulties with which the country is faced at the present moment. Further, the right hon. Gentleman has made desperate efforts to obtain some contribution from our debtors abroad to assist him in his Budget. The Financial Secretary did his level best yesterday to meet the charge which the right hon. and learned Member for Spen Valley (Sir J. Simon) brought, when he quoted the official French communique with regard to the plea which the Treasury had made for a contribution from the French Government to meet the present Budget demands. The Chancellor of the Exchequer has not been very fortunate, as far as this question of collecting debt from foreign debtors is concerned. He made a disastrous settlement with the Italian Government, a settlement that has aroused a great deal of feeling. I think, at any rate, those who have pleaded most earnestly that we need at the present moment some assistance as far as taxation is concerned, can have little but denunciation to offer of the settlement of the Italian Debt on the terms which the Chancellor concluded with the Italian Government. Political reasons, I agree, there may be in it, but the financial fact is that we are £26,000,000 per year down on the Italian Debt settlement. That does not seem to me, again, a very intelligent way of settling a question of that description. It may be that there are political considerations entering into the bargain. The House has not yet been made conversant with them, but, in my opinion, they may appear in the very near future. An effort has also been made to collect the French Debt.

I am going, at the risk of being charged with iteration, to mention another debt which the Government have failed to make any attempt to collect, and that is the debt which the Russian Government owes to this country. I want to point out in that connection that the Russian Government is the only Government which has expressed an earnest desire to come to a settlement. All the other Governments have avoided settlement as far as they can. Indeed, every Government has distinctly said it wanted to avoid it as far as possible, and it was the earnest plea of the Chancellor himself that has got £4,000,000 out of a reluctant France. Certainly Italy never asked to settle her debt, and I do not know that France desired to settle hers, but from the speeches by Russian statesmen, by the Russian Foreign Secretary, and recently by the Under-Secretary for Foreign Affairs in Russia, the Russian Government is desirous of discovering from our own Government whether it can get a settlement of the outstanding questions, including the debt, and it is, I think, a fair assumption that the settlement which the Government could get with Russia would be upon quite as liberal, generous and just terms as we have obtained from any of our other debtors.

For the life of me I cannot understand why hon. Members opposite welcome the settlement of the Italian debt, welcome a settlement with France, appeal for remission of taxation, tell us in doleful terms about the burdens the country has to bear, and yet. support the Chancellor of the Exchequer and the Cabinet in their, to my mind, obstinately stupid refusal to meet the Russian Government face to face and obtain from them whatever they are willing to pay in settlement of their outstanding debt. I do not know upon what basis a settlement could he made, but the Government would have a better case if they could tell us they were willing to consider terms, were willing to discuss a settlement instead of standing out obstinately in the way they do.


Will the hon. Member allow me to interrupt him to point out the difference? The difference is that the Russian Government deny the existence of a debt and repudiate it, whereas no other Government has done that. As soon as the Russian Government admit the existence of the debt, Hit Majesty's Government will be perfectly ready, as in other cases, to discuss how it should be paid.


Really, Sir, I am loth to believe that the right hon. Gentleman is quite as ignorant of the situation as his interjection would seem to imply. How are the Russian Government, to declare their intention? At least they did not repudiate the debt in 1924. They said then, that whatever the law might be, and whatever might have been the conditions obtaining in 1917, they had come to the conclusion that it was not possible for them to be admitted into association with the western nations unless they repudiated to a. certain extent the law of 1917, under which expropriation had taken place; though they might maintain the law in Russia, they were prepared to forego the law outside, so far as our debt was concerned. It is well known that M. Rakovsky is at present engaged in discussing this very question of debts with the French Government, which is hoping to come to a settlement. If this debt question were swept away, confidence would be restored, so far as trade is concerned, and the deplorable state of unemployment would be relieved as a result of the orders which the Russian Government and their Trade Departments are prepared to give if only they can get confidence established so far as they are concerned. It is about time our Government dropped the assumption that the Russian Government have made no overtures whatever. They have made them upon numberless occasions, and I submit that our Government ought to approach them to let them know where they were wrong in 1924. Let them tell the Russian Government in what manner they disagreed with the proposed settlement of 1924. We know that they disagreed with the suggested loan, but with what else did they disagree? If they found that out it might be possible to come to closer grips with this question.

Another question I wish to deal with is that of the Gold Standard. The Chancellor of the Exchequer took very great credit to himself for the reestablishment of the Gold Standard. I opposed it, and I do not take the view of it that most Members of the House hold. I am quite prepared to be held up to ridicule in the position I take up, but I am sure I shall make myself no more ridiculous with my proposals than scores of hon. Members have been with their proposals in the years that are past. I oppose the Gold Standard entirely. I do not oppose its re-establishment now, or at some other time, but I believe the Gold Standard is altogether unnecessary. I believe we can manage our affairs without, the Gold Standard. As I have before pointed out in Debate, it was gold that bolted first in 1914, and we had to come to unstable paper to take its place; and I am certain in my own mind that gold plays the game of those whose interests are not synonymous with those of the great mass of the people. Whether that be so or not, deflation accompanied the restoration of the Gold Standard, and whom does deflation hit most? It hits the working classes worst of all. There is no question whatever about that. The coal trade was badly hit, and so was the steel trade, and it prevented a return to healthy conditions in those vital industries upon which the prosperity of so many of our people depends.

The policy of deflation is an exceedingly good one for those who draw interest, but not for those who have to gain their livelihood by working for wages. An appeal has been made to the Chancellor of the Exchequer to give the country some hope of a remission of taxation, or of some change in taxation, in order to give us encouragement for the future. Upon what grounds is that argument based? It was stated in the "Economist" a short time ago that the profits in industry during 1925 were 50 per cent. higher than in 1922; and the "Economist." of a recent date has declared that 1925 brought back the conditions of the boom year of 1920. So far as I can make out from the returns, this is a very good country for everybody except those who have to work at productive industry. It is an excellent country for those whose incomes are derived from other sources than manual labour. Great Britain still remains what a witty Frenchman described it: "The Paradise of the rich, the Purgatory of the wise, and the Hell of the poor." That it is a hell for the poor, facts, crowding upon one another, amply demonstrate.

Take the increase in the value of Stock Exchange shares. The "Bankers' Magazine" for 10th January, 1925, stated that in the year 1924 the market value of 365 representative securities showed a total appreciation of £262,000,000. That was not so very bad. It looked as though things were not so dreadfully dull as some assumed them to be. The power of a relatively small section of the community to provide new capital appeared to be almost unlimited. For the four years from 1921 to 1924, inclusive, there was invested at home and abroad no less than £1,443,438,000. In the United Kingdom there was invested in those years £938,281,000; in British Possessions £330,499,000; and in foreign countries £174,658,000; a total of £1,443,438,000. That is a large sum of money to be added to the enormous total of foreign investments existing even at the end of the War. This enormous amount was added to the wealth already possessed by those who were the holders of the wealth before and after the War. A Committee that sat to consider the question of pre-War wealth told us that the wealth of the country before the War was, roughly. £11,000,000,000. They were told that by Sir Josiah Stamp, and they accepted his statement. They themselves estimated that the War added £4,180,000,000 to the wealth of a small section of the community. Thus at the end of the War the country was worth in capital values about £15,000,000,000.

The gentlemen who own this wealth are also, to a large extent, the owners of the National Debt. The hon. Member for Word (Sir F. Wise) told us of the enormous amount which that rich section who pay Income Tax on the higher scale have paid during the last six years. It is very true that an enormous sum has been contributed in Income Tax on the higher scale in those six years, but in the eight years since the War—I will take the six years if that is convenient—but in the eight years since the War I estimate that in interest alone £2,800,000,000 has been paid. We have been told by Committees who sneak with authority that fifteen-sixteenths of that sum has gone into the pockets of one small section, a very tiny section, of the community. It comes to this, that though the Income Tax payer may be hit he has to provide a very large sum of money, yet on the War Debt alone he will receive back, roughly, about £300,000,000. He pays it out in taxation to the Chancellor of the Exchequer with one hand, and draws it back with his War Loans with the other hand. It is simply taking money out, of one pocket and putting it into the other, and that is not taxation. As a matter of fact, the real people who are being taxed by this system are those without investments, and who are taxed on their small earnings in a way that presses very heavily upon them.

I have got out some figures showing the average industrial profits of large representative concerns for the year 1920. I find that in 1920 the average industrial profit was 15.2 per cent.; in 1921 the average was 10.3, in 1922 7.1, in 1923 9.8, and in 1924 10.3 per cent. The average 'or the five years is just over 10 per cent. While this average of 10 per cent. profit has been taken over those live years, the wages of the workers were reduced by £700,000,000 per year. Therefore, I would suggest that before hon. Members ask for assistance to be given to industry by reducing wages and increasing the hours of labour, they should turn their attention to lowering the rate of interest which they are prepared to accept, and they should be content to take less profits. Those figures show that the position is quite as black as I have described, and the blackness of the question reflects itself in the lives of the working people.

I always have before me the conditions under which the people in my constituency are compelled to live. A week ago in my constituency two men told me that during Easter week they had been working short time. They had worked only two or three days, and after deductions for health insurance and unemployed insurance, and the various payments which a miner has to make out of his wages, one or them went home with ld. in his pocket, and the other with 3d. That is where the blackness lies. In spite of these facts the average profit of 10 per cent. is continually being made. There is an enormous increase of wealthy people. Those who toil and create that wealth feel the burden most, and it is shameful that this should be so. The Chancellor of the Exchequer instead of raiding the funds of these poor people should be doing some thing to decrease their burdens. Let me suggest that the Government should pursue a foreign policy that will permit vast reductions in our expenditure upon the Army and the Navy, and upon our military expenditure in all directions. If the Government will curtail expenditure in that direction, they can at least do something to reduce the enormous burdens which at present fall upon the community. I think it is a great shame to reduce the wages of the poor people when you do not at the same time reduce interest and profits all round.

It is said that it would be difficult to do this, but I believe in getting those you can catch. The law does not refuse to imprison burglars because it cannot get all of them. The law punishes those burglars who are caught, and much of the wealth upon which I would like to see the interest reduced is the wealth extorted during the time of our direst need in the blackest years through which the country has passed. Something might be done on those lines. The rate of interest to-day might be cut down. Money is being taken out of the pockets of those who toil and it is passing into the pockets of those whose pockets are bulging with money already. I think the Chancellor of the Exchequer ought to do something to remove the burdens that press upon the homes of the people, something that would assure them of a brighter future.


I want to say a few words about one or two of the proposals which have been made by the Chancellor of the Exchequer. I am sorry the right hon. Gentleman is not in his place, because I wish to make a few remarks about the Betting Duty. I was chairman of the Committee which considered this question, and we had before us evidence of the working of the Betting Duty in Ontario, New South Wales, South Australia, Victoria, Queensland, Western Australia, New Zealand, the Cape of Good Hope, the. Transvaal, Natal, and Bengal. I think the Committee will agree with me when I say that every independent Dominion has a betting tax in operation, and has had years of experience of it. We had further evidence placed before us as to the betting taxation in force in France, Belgium, Italy, Germany and Austria. Practically every country except America taxes betting. I wish to impress upon the Committee the fact that not one single country that has ever introduced it has gone back upon it. In every country where it has been adopted it has produced a steadily increasing revenue, and nearly every country has expressed satisfaction because they have control of an amusement or institution which you cannot prohibit or stop, although it is considered to be most important that you should be able to control it.

Viscountess ASTOR

I would like to ask the lion. Member if any other country has got anything such as we are now proposing, or are their laws quite different and not comparable with ours?


On the contrary, most of them are very similar. Many of them have the totalisator and the pari-mutuel. Nearly all of them have found that the pari-mutuel and the totalisator do not do away with the bookmaker, and even at the present moment the French Government is passing legislation to license and control bookmakers. Almost every community of Britishers has taxed this luxury, and not one has gone against it. Under these circumstances, is it nut perfectly idle for bishops and betting men to come forward and say to the Chancellor of the Exchequer, "You cannot enforce this tax, and therefore you will get no revenue from it,' when the whole of our experience is directly contrary to that assertion. Let us look as to how it is to be enforced. Take the credit bookmaker. He has to be registered and licensed, and it is only necessary that his books should be open for inspection. It is to the interest of every bookmaker that everything in his books should be straightforward, because if he loses his registration he loses his livelihood. We have been told by the right hon. Gentleman the Member for West Swansea (Mr. Runciman) that bookmakers are fishy people, but I think, if the right hon. Gentleman had had any experience of betting, he would have known that that is not so, because bookmakers are the straightest people.

What is the plan adopted in regard to the racecourse? The bookmaker is obliged to issue a ticket for every bet he makes. He has to be licensed, and, if he is found on more than one casual occasion not issuing tickets with his bets, he runs the risk of losing his licence, and consequently losing his livelihood. The betting man says that what is now proposed would be an irksome business. It works out in this way. One man may have a bet of £1, another 10s. or 5s., and the Committee which considered this question agreed that there was no difficulty of any sort or kind in carrying this ticket system into effect. What does the right hon. Gentleman the Member for Spen Valley (Sir J. Simon) say on this point? He has told us that there will be such a leakage and an encouragement of unlicensed and illegal street betting that the tax will be unproductive. Who are the people who are going to be driven to street betting?


Was not that the evidence placed before the Committee over which the hon. Member presided by the Chairman of the Board of Customs?


That is quite true, but I have satisfied myself that the leakage would not be so great as the Chairman of the Inland Revenue thought it would be, and for this reason. First of all, I agree with the principle that, if you tax an article and leave a similar article untaxed there may be a leakage, and people will escape the tax. I would point out, however, that the people who bet on the racecourse are the people who are betting legally; and I would like to ask how many of those people are going to be driven to illegal betting and the risk of appearing in a Police Court? I do not think there would be very many such cases.

I ask the right hon. Gentleman the Member for West Swansea how is this increase in illegal betting going to take place? May I point out to him that the street bookmaker only bets at starting prices, and the only way in which he can bet is to do it surreptitiously. Street betting is generally done by people putting a name—it is not always their own name—on a slip of paper and the name of the horse, and then the money is handed surreptitiously to the bookmaker. No price is fixed, no odds are fixed by the street bookmaker; those odds are fixed by the starting price on the racecourse, and a starting price will still be fixed on the racecourse, which will be published in the newspapers.

It seems to me, therefore, perfectly impossible to suggest that, a street bookmaker can give better odds, because the only guarantee of fair odds that is given by the street bookmaker is what comes out in the evening editions of the newspapers, which is settled in the regular way on the racecourse and which all the bookmakers pay, and must pay, because, otherwise, their great clientèle, which runs into hundreds of thousands, will think, and rightly think, they are being swindled. Therefore, in my view—and I am steeped in this matter from having heard all the evidence given before the Betting Committee—it is, in the first place, not likely that people will go from a legal to an illegal act to any great extent, and, secondly, those who seek to bet with the street bookmaker, that is to say, to indulge in illegal betting, do not gain any advantage so far as they themselves are concerned.

In my opinion, the right hon. Gentleman opposite (Mr. Runciman) put it on a wrong basis. I myself regret that the Chancellor of the Exchequer has not seen his way to bringing in the street bookmaker and dealing with street betting. I was very much more interested in the reformative aspect of the control of betting by taxation than in its use as an engine for financial purposes, and I think the Chancellor of the Exchequer may ultimately have to bring in the street bookmaker, because he is by this means increasing, and must increase, the profits a the street bookmaker. There is not the least doubt that betting can stand a sax. It is a pure luxury, which ought to be taxed, and can stand a tax. That tax will be paid by the backer by shortening the odds, which are far too short as they are now, because of the power of the ring. They will be still shorter. The street bookmaker, however, as I have shown, will still pay the same odds which are fixed on the racecourse.

That means that the starting price bookmaker, who gets by far the largest. percentage of profit of any bookmaker, and will still get a larger percentage of profit, will be able to have more money to pay the fines of his touts and runners, and to bribe other people who ought to be engaged in putting him down. He will make his business still more lucrative, and bring still more people into it, and we shall still have our artisan houses, and even more women and children, canvassed to a great extent by bookmakers, and, as I see it, some future Chancellor of the Exchequer will be bound to bring in this part of the business. In conclusion, I congratulate the Chancellor of the Exchequer on having gene as far as he has gone, and, from the experience of other countries, knowing the extent to which betting is carried on in this country, and knowing that it is absolutely innate in our race, I have not the least doubt that he will get the money for which he is budgeting, and I personally think he will get more.


I have listened with great interest to the speech of my hon. and learned Friend the Member for East Grinstead (Sir H. Cautley), especially because he was Chairman of one of the Committees that inquired into the question of betting taxation. He has as given us a detailed account, but I hope he will allow me to say that I thought the last part of his speech contradicted the first. He started by telling us that it was possible to tax legal betting—credit betting and racecourse betting—and to leave untaxed street betting, and that there would not be a drain from the one to the other; but he concluded by saying he thought the Chancellor of the Exchequer would be driven to tax street betting. I believe his second mind is better than his first; I believe the Chancellor of the Exchequer will be driven to include the illegal betting, for I think there will be a drain from the taxed article to the cheaper and better untaxed article. Moreover, even a tax has to have some justice about it, and it is hardly fair to tax the man who is observing the law, and leave untaxed the man who is breaking the law. Therefore, I think my hon. and learned Friend is quite right, and that the Chancellor of the, Exchequer will be driven to tax street betting and ready-money betting away from the racecourse.

That means that you legalise ready-money betting. Let the Committee just realise what that means. It means that anybody who can obtain an excise licence may start a betting shop in a street, and we shall have our streets amply provided with places where any passer-by can go in and bet. I do not want to argue on the moral ground on one side or the other, but I am perfectly certain that the country would never allow that. It would never stand the exposure to temptation of-everybody who passes along a street—young men and young women, people of all sorts and kinds—who could go in and quite legally and comfortably stake their money on a horse. We had some experience of that kind a long time ago, when the Act that made betting illegal, or tried to make betting illegal, was passed—


The Act for suppressing betting houses.


I accept the correction. I am quite certain that in these days the country would never permit our towns to go back to that condition, and I regard that as the only logical result of a betting tax. I do hope the Chancellor of the Exchequer will at any rate leave this question to the House. It is a constitutional right of the House to reject a tax that it does not like. As far as expenditure is concerned, the Government can pass their expenditure, and they have a bigger claim over the allegiance of the House than they have in the case of a tax, but it, is perfectly well recognised that a tax is more open to criticism.

Except as regards the Betting Duty, upon which the views of the Committee have been very various, I do not think I have ever listened to a Debate in which opinion was more unanimous; and opinion was unanimous, not only upon the evil that we have to face, but upon the means of facing it. All, or nearly all, of the speakers in the Debate have called attention to the largely increased expenditure. All have said that it must he cut down, and very nearly all have said that it can only be reduced in two ways—either by some reduction of the rate of interest on our Debt, or by some co-ordination between the different Fighting Services, and, therefore, a reduction upon our Fighting Estimates. The Chancellor of the Exchequer, in the interesting speech that he made on the Second Reading of the Economy Bill, told the House that we must look for Budgets round about £800,000,000. I confess that when I heard those words I shivered, but I ought to have fortified myself, for the reality has proved considerably worse than the expectation. £800,000,000 was quite bad enough, but now we see that expenditure is increasing, and looks like increasing still more in the future. At this time of the evening it is impossible to produce any new arguments, and I certainly do not want to cite figures which have been quoted over and over again. But it is worth while, perhaps, to point out that our estimated expenditure has increased very largely over that of last year, in spite of the fact that we had a fall of £2,500,000 in war pensions last year, and that we also have the economies of the Economy Bill, of which the lowest estimate was £8,000,000. These economies and the fall in war pensions have all been swamped, and, in spite of them, our expenditure has risen immensely.

The next factor to which I want to call attention is that the Chancellor of the Exchequer told us that our tax revenue was not classic, that our Miscellaneous Receipts are dying out, and that we are getting, on the other side of the account, a substantial sum in reparations and debts from our Allies. I am very glad we are getting that money. I agree with hon. Gentlemen opposite that, if we could get seine money from Russia, I should be very pleased indeed. I was not in the House at the time when the Russian negotiations took place, but was under the impression that the Russians came after our money rather than with any intention of paying money to us. Still, if the Chancellor of the Exchequer can find any way of getting the Soviet Government to agree to pay a share of their War Debt to us, I am sure no one will he so pleased as he will be.

The Chancellor of the Exchequer has to balance his Budge, and he can do it in the two traditional ways, either by reducing expenditure or by finding more revenue. He chooses the course of finding more revenue, and of tapping new sources of revenue. It is sometimes thought that, if you have tapped a new source of taxation for 'bringing in national revenue, if you have found something quite new, something that has not been explored before, you are increasing the assets of your country, just as the private individual who manages a property well may increase the revenue of that property. But wherever the money comes from, it all comes from the same pool. Supposing that you tax the bookmaker; he, I expect, is a man who invests his savings just as wisely as the politician does—if the politician ever makes any savings—and, if you tax him, you do deplete the fund that is available for business or investment. If you deplete that fund, if you make it smaller, the people who want to borrow from that fund have to pay more for their loans, and the biggest borrower of all is the Government, for, as has been already said, we shall be compelled to re-borrow £945,000,000 in three years.

I am ashamed to travel over ground which has been covered so often but I do want to reinforce, if I can, what has been said about the rate of interest. We all of us know that the one great economy we can effect is ill the amount of interest that we shall pay on our loans. He would be a very bold man who, if he had to re-borrow that £900,000,000 now would expect to re-borrow it at less than 5 per cent.

7.0 P.M.

Now the national accounts can be looked at either from the point of view of expenditure or from the point of view of revenue, and I am not sure that the Government are not looking at them from the point of view of revenue. The Chancellor of the Exchequer told us that expenditure governs the situation. It does expenditure of the State determines its revenue, and, when he talks about fresh sources of taxation and fresh revenue, I venture to think that he is approaching the question from a rather dangerous angle. No doubt you can tax the country heavily, and people will pay heavy taxes. That his been known for a very long tin past. There is nothing new in that, but when you do tax the country you are not entitled to regard the: as something new that has fallen into your hands, and so we have to come back to expenditure.

I have listened to all this Debate for three days, and I have taken a note of the various suggestions of economics. One hon. Member opposite suggested that the Civil Service is very much overpaid A speaker on the Labour Benches said that we ought to drop the Singapore Base. Another speaker said that we ought to ration all the Departments and that only by that means could we get economy. I do not think that the Civil Service is overpaid. I do not think that you can ration Departments, because, after all, you have got to govern the country, and it is very difficult to combine efficiency with any sort of rationing. So we come back to the suggestions made to make possible the economics that I have mentioned, either in lowering interest on our Debt or some reduction in the cost of the Fighting Services. I quite agree that if we can get our Debt on a lower interest it will be a very real economy. I am not sure that we could, and, as was pointed out in an interesting speech yesterday by my right hon. Friend the Member for Norwich (Mr. Hilton Young), we do not always realise, though we put aside the sinking funds and though we congratulate ourselves upon the large amount of debt that has been repaid, that we are borrowing at the same time and piling up new debt while we are paying our old debt.

Here I want to call attention to and to emphasise the rein-ark made by my right lion. Friend the Member- for West Swansea (Mr. Runciman). He made a very interesting speech. I would dearly like to follow him in some of his Free Trade arguments, but he will realise that time does riot permit that. I found myself in disagreement with a good deal of his speech, but I found myself in entire agreement with one sentence, and that was when he urged the Chancellor of the Exchequer to beware of the wiles of his followers. He told him, and it is quite true, that he would be urged to new extravagances. The point that I want to make is that it is we, this Committee, who have been talking three days about economy, who do press extravagance on the Government. The only two economies that have really received support, the saving in interest on the National Debt, and the amlagamation or the co-ordination of the Fighting Services, are economies which either hit nobody, or are so remote that nobody regards them as possible. As soon as you pull out an economy from the abstract into the concrete, from the possible into the actual, you at once get the same opposition to the individual economy as you get support for the theory of economy in general. There, I believe, lies the root of the difficulty under which the country is suffering. It. is within the knowledge of everybody that the Government are being pressed now on all hands to spend money. Some Members want money spent on this or that social service; some want it spent on subsidies; some want Government credit used on guarantees. It is the combined effect of all these claims and demands on the Government which brings us the Budget we see before us.

The right hon. Member for West Swansea also said quite truly—and here again I agree with him—that the only way to restore our credit and pay off debt lies in the fact that you pay off debt by spending rather less than your revenue. I agree that the only proper sinking fund is to have a surplus revenue over expenditure. Unfortunately, as soon as you show a surplus at all, it is not only the Sinking Fund and the taxpayer that claim it, but it is claimed by all parties in the House, all of whom are equally to blame, and all of whom want money spent. We do not realise nowadays that this House of Commons is the body that ought to economise and to check the Government from spending money. We have quite given up that work altogether. The criticism of the Estimates has become a formality or a farce, and it is we who urge expenditure on the Government. So, though I do not like the large expenditure which this Budget shows, though I had hoped that my right hon. Friend would have shown us more reduction in the course of the Budget, still I am bound to admit that he is not a free agent in the matter, that he has to resist all sorts of extravagant claims made, not only by hon. Gentlemen opposite, but also by Members who sit on the same side of the House.

I believe we all agree that we cannot go on spending money at this rate. Expenditure grows up so fast, and, once it is on the upgrade, it shows a tendency to increase faster still. It is no good telling me we are bringing in new sources of untapped revenue. The thing I look at is the expenditure. Though I confess that the methods of reducing expenditure that emerge from this Debate are not of a very encouraging kind, and though I feel that if one only read the speeches of Members of the Committee, one would not see many places in which one could save money, still I am perfectly certain that, unless we do spend less, we are going into a dangerous position. Our tax revenue shows no elasticity. We have spent all our war stores and miscellaneous services, and unless we economise I find that our outlook is a gloomy one.


I shall not attempt to conceal from the Committee the general sense of satisfaction which has stolen steadily over me during the course of this three days' Debate. I have seen a great many Budgets in this house under very different conditions, and I do not remember one which, at the outset, seemed to encounter such a weak, dis- united, discursive or contradictory opposition. No doubt there will be many aspects of controversy to occupy us during the prolonged and elaborate stages of our financial procedure, and there have been a number of interesting questions raised in the Debate. But, speaking generally, I think I am entitled to say that this Budget is more nearly a virtually agreed Budget than any other it has been my fortune to take part in during the period of almost a quarter of a century that I have sat in this House. A number of important questions have been discussed by temperate or violent critics in every quarter of the House, and I propose to deal seriatim with the most prominent of these questions. I discern five aspects which stand out in the discussion, and call for special reference from me—Credit, Economy, the Road Fund, the Betting Duty, and the stabilisation of Imperial Preference. I think that is a fair selection of the principal points on which our discussions have turned.

I take Credit fist. The right hon. Member for Colne Valley (Mr. Snowden), who showed his deep disapproval of the Budget by referring to it for about 10 minutes in the course of a speech which exceeded an hour, commented on the difference between the deposit rate of the Joint Stock banks and the rate we have to pay for Treasury Bills, which moves up and down, below but in intimate association with the Bank rate. The difference between the deposit rate of the Joint Stock banks and the Bank rate is at present 2 per cent., and it has been so ever since the War. The Joint Stock banks have always had a deposit rate well below the discount rate of the Bank of England. It is natural that they should do so. The money they receive on deposit is scattered about in innumerable small earns throughout the length and breadth of the country, and the bulk of it is claimable at seven days' notice, whereas Treasury Bills are on a three months' basis. The Joint Stock banks only hold very small fraction of the Treasury Bills. It is a delusion to suppose that their prosperity is built up on the excessively favourable terms they obtain under the present financial system from the Exchequer. Their dealings in Treasury Bills are only an infinitesimal part of their vast transactions.

The margin of difference to which attention has been drawn by the right hon. Gentleman is no greater than it was in the days when he was Chancellor of the Exchequer. The position has not altered in any essential, and I ask myself why has he raised this issue at this moment. What prompted him to comment upon it? The right hon. Gentleman made no secret of his inspiration. It was, he told us, an article by the City Editor of the "Daily News." I have no doubt it was a very able and well written article, but what an exiguous and precarious foundation, this stray article in a newspaper, on which an ex-Chancellor of the Exchequer, speaking with the authority of the official Opposition should base a demand for the nationalisation of our banking system. The right hon. Gentleman spoke in terms of sorrow of the state of our Credit. He spoke in words which have been echoed by the right hon. Gentleman the Member for West Swansea (Mr. Runciman) this afternoon. He spoke of its delicate equipoise. Whether the delicate equipoise of our credit is likely to be ameliorated and fortified by proposals coming from a responsible Member of His Majesty's Official Opposition, to nationalise the banking system is a question on which I am sure the Committee will be able to judge for itself. The right hon. Gentleman referred to an interjected remark of mine last year in which I said I certainly hoped for a saving of about £5,000,000 in the service of the debt each year. That was only an interjection on my part and one of a general character without reference to any particular year, but it was not so far wrong. In 1924 the debt interest cost us £312,000,000. In 1925 it cost us £308,200,000, and if the Estimate for 1926 is realised it will cost us £304,000,000. Thus all the complaint the right hon. Gentleman had to make on this score was that in an interjectory remark I had suggested £5,000,000 as the rate at which we hoped to reduce our debt, whereas in fact we are realising a steady annual reduction of approximately £4,000,000.

The right hon. Gentleman the Member for West Swansea addressed us on the immense importance of the conversion possibilities and the opportunities which will be presented to us in the next few years. I can assure him and the Com- mittee that that is, I will not say the main, but a prime preoccupation of the Treasury. We are endeavouring by every means in our power to create favourable conditions for these operations which may be substantially advantageous to the taxpayer and indeed to the whole country. The right hon. Gentleman suggested that we should secure a revenue substantially in excess of our expenditure, and that we should devote with the utmost rigour the largest available sums to the amortisation of the debt. I agree with him. In this matter of conversion we shall need the help of all parties and of all classes in the country if we are to reap a benefit in which everyone will share. We are doing our best in this Budget, first of all, by closing down the Trade Facilities Scheme at the end of this year, and, secondly, by the payment of an extra 10,000,000 into the new Sinking Fund so as to raise that total to £60,000,000 instead of £50,000,000.

The right hon. Gentleman accused me of raiding the old Sinking Fund, and used language which would have led anyone unacquainted with the actual facts to suppose that I have been guilty this year of some laxity or impropriety in the achievement of debt redemption. If this time last week the right hon. Gentleman, with all his knowledge of the financial situation, had been told we proposed and were able in our financial plans to pay off £10,000,000 of the increased debt incurred last year through the coal subsidy he would not have believed it. He would have scouted the suggestion and would have said it was quite impossible with the resources at our disposal that we should be able to achieve such a result, and he would have added that it was quite impossible that so imprudent, thriftless and improvident person as myself would ever be found taking such orthodox and correct steps. Now when we are confronted with the actual fact, instead of according me, as he should have done, and as the right hon. Gentleman the Member for Colne Valley should have done—because he declared beforehand that this was really the correct policy—that meed of praise and encouragement they merely make this act of correctitude and propriety on my part a ground for a vague, ill-founded denunciation.

I come to the question of economy. Here I should like to say a few words of a general character about false arguments. It seems to me—and I have a lengthening experience in the House—that false arguments very rarely pay in debate. [An HON. MEMBER: "You are using them now!"] I always try to economise the use of false arguments as much as possible, because a false argument is so often detected, and it always repels any listener who is not already a convinced and enthusiastic partisan. The right hon. Gentleman the Member for Colne Valley deliberately, and I must say wilfully, used a false argument in comparing the estimated expenditure of this year with the estimated expenditure of last year. He compared the Estimate this year of £820,000,000 with the Estimate of £799,000,000 which I presented the year before. But, as I have said again and again such a comparison is absolutely false and misleading unless you compare like with like. As the right hon. Gentleman knows quite well, in order to make a fair and reasonable comparison it is necessary to deduct from the present Estimate of £820,000,000, first of all, £4,000,000 which is provided for the winding-up of the coal subsidy and the £10,000,000 which is provided for the repayment of a portion of what we borrowed last year for the coal subsidy. We also have to deduct the purely book-keeping transactions, the £2,750,000 for teachers' pensions and the £1,000,000 for Excise Duty on the increased beet sugar and he himself admitted publicly in debate in the last few weeks that it is perfectly reasonable and sensible to allow for the increase of expenditure on remunerative services like the Road Fund and the Post Office—an increase of £2,250,000 net.

All these reductions, amounting approximately to £20,000,000, ought in common fairness, and I may say if you are proceeding to argue by any rational process, to be deducted before any attempt is made to found an accusation on a comparison of the total Estimate this year with the total Estimate last year, and, if it is deducted, it is seen that the total Estimate this year hardly exceeds at all the total Estimate for last year. That may indeed be a cause for complaint. "We expected you to make a net reduction." That is a perfectly fair argument. But to pour out all this acorn and all these diatribes on the false basis of their having been an increase of £20,000,000 in the estimated expenditure, and not to make the allowances which the right hon. Gentleman knows, and everyone else in the House knows quite well by this time, are proper and appropriate, is a procedure which, I am sure, has only to be exposed to be discredited.

But what right, I should like to know, has the right hon. Gentleman to pose as a champion of economy at all, or as a judge of the effort at economy of other people? Last week, in winding up the Debate on the Economy Bill, I observed that the party opposite were by their natural inclination, conscious and unconscious, prone to profusion in expenditure in every direction, except of course in Imperial defence. I noticed at the time that this very serious accusation was taken very calmly by hon. Members opposite. They did not rally to it with any indignation, and yesterday the right hon. Gentleman dropped the mask—dropped all this pretence of economy. "Bunkum," I think was the word he used, but, whatever it was, he dropped it all and told us in so many words that for his part he declared general war upon economy. He boasted that in a former Parliament, when the expenditure of the country was only £200,000,000, he was urging that it should be raised to £300,000,000, and implied that that really was the spirit in which he was approaching the problem now. So far as I can make out, the position which the right hon. Gentleman disclosed is that the more there is spent on social services, irrespective of the wealth of the country, the better; the less that is spent on defence, irrespective of the needs of the country, the better, and so long as the money is spent on social services, the greater the burden on the direct taxpayer, the better. That seems to me to be a perfectly fair epitome of the arguments which are used with a good deal of sincerity from the benches opposite, and which are also used, I will not say with less honesty but in utter violation of all Liberal principles by the party on the benches below the Gangway opposite. The right hon. Member for Colne Valley is not, I am sorry to say, in his place. He told me that he had a public engagement to take part in one of the impending by-elections. We may imagine him, in our thoughts, in a few moments time, addressing a far less critical assembly than this, and repeating to them the same stream of Parliamentary Billingsgate with which he favoured us last night. I had more to say about the right hon. Gentleman, but in view of his absence and his occupation I will leave him at this point.

My right hon. Friend the Member for Hillhead (Sir R. Horne), in a speech which gave the greatest pleasure to these who have worked with him on intimate terms in public life, made one criticism to which I will venture, in all meekness, to reply. My right hon. Friend said that I had brought some of my troubles on myself, and he proceeded in this connection to point out that the responsibility for expenditure rested upon the Government. He said that the Government would be very wrong to try to east any portion of that responsibility upon those whom he termed their docile followers. In this respect his argument, apparently, was diametrically countered by the hon. and gallant Member for Ripon (Major Hills). I should like to make it quite clear that the Government have no intention of shirking their responsibilities in the matter. When one talks of Parliament and of the House as well as the Government being responsible, it is because the ultimate responsibility lies with Parliament and with the House, and because they are associated, and must continually feel themselves associated, with every act of the administration which they approve.

In the case which my right hon. Friend had in mind, the responsibility of the House was no mere formal responsibility. When he said that I am to blame for some of my troubles, he was no doubt referring —the whole context of his speech showed it—to the introduction of the Widows' and Old Age Pensions Bill, for which my right hon. Friend the Minister of Health (Mr. Chamberlain) and I were primarily responsible last year. This was not a matter in which the Government took the initiative. It was a, matter, as he will remember, on which the Conservative party and the House of Commons took the initiative before ever the Budget was introduced. We had a full Debate on a Private Members' night, when a universal request was made from all quarters that we should implement the pledges given by every party at every election on this subject.


I do not like to interrupt my right hon. Friend, but the objection I took to that was the time at which it was brought in and the condition of industry which was asked to bear the burden.


I know; I am only on the point of responsibility. I say that we have not sought to shirk our responsibility. We accept it to the full. If there was any matter on which in more than a formal sense the House as a whole and the party which supports the Government as a. whole had a direct responsibility, an initiatory responsibility, it was this very question of widows' pensions, which my right hon. Friend had in mind.

From all sides I get earnest appeals to refuse expenditure other than that which is advocated by the appellants at any given moment. The Chancellor of the Exchequer is not a dictator. It would be grossly unconstitutional to suggest that any Chancellor of the Exchequer had the power to veto proposals for expenditure. He has not that power, and he has never had that power. Any Minister, whether in the Cabinet or without the Cabinet, who does not agree with a decision of the Chancellor of the Exchequer on a matter of expenditure, brings the matter to the Cabinet, and it is there, in the Cabinet, that it has to be fought out, and it is there alone that it can be fought out. We have had many suggestions about establishing a dictatorship in this matter. I saw a suggestion by a Noble Lord the other day that three dictators should no appointed, a sort of triple Mussolini, in order to check expenditure, to say what we were to spend and what we were not to spend. It is a very interesting suggestion, but what would happen if the dictators dictated and the Ministers refused to obey, and if Parliament agreed with the Ministers and the country supported Parliament? If you are to have a financial dictatorship, you must have a dictatorship in every sphere of your national life. Even then, I am very doubtful whether much economy would result. I have noticed this about dictators, in modern times at any rate, that they are usually most successful when they dictate what the people want. It would be perfectly easy, if I were a dictator, to propose a reduction of £50,000,000 on the present Estimates, but I am sure that when I showed the proposals to the House of Commons, they would at once say, "Well, you had better dictate something different from that, or we will find someone else."

My right hon. Friend the Member for West Swansea could not help falling into the usual inconsistency of advocates of economy. He told us that in order to favour our conversion operations it was essential that we should economise and have a surplus of revenue over expenditure. In the same speech, almost in the same breath, he condemned the system of Widows' Pensions, although he desired to see them brought into force, because the whole expense of that system, on a noncontributory basis, was not thrown upon the national exchequer. Last Autumn, I invited the Press, and particularly the "Daily Mail"—which takes a great interest, in the question of economy, as some hon. Members may have noticed—to make positive proposals to reduce the expenditure by £50,000,000 or £100,000,000, which was the sort of figure they were apparently considering possible. No answer to that invitation was ever forthcoming from that newspaper or from its proprietor. The fact is that they, like a great many other people, like to gain popularity by crying out for economy and abusing the Government for expenditure, but they do not like incurring the unpopularity which is entailed when any particular proposal is advocated.

Although no answer to that invitation was received, I do not know whether the attractive and sincere speech of the hon. Member for Thanet (Mr. Harmsworth) last night was a belated response to it. My hon. Friend has a perfect right to plead consistency in the cause of economy, because I well remember his standing up in the early clays of the Coalition Government, when money was flowing out like water, and speaking with his utmost energy against the rate at which the money was being spent. My hon. Friend has a perfect right to take the course he has, and he may well point to his consistency over a considerable period. He had more claims than that. He put forward posi- tive proposals. They were two. They had both evidently been well thought over by him. The first, was the abolition of the Department of Overseas Trade, and the second was the placing of press telegrams upon an economic basis. Those are both thoroughly proper subjects for discussion and consideration.

It is the duty of the Postmaster-General always to endeavour to put every branch of his service on to an economic basis, and the Prime Minister is constantly considering whether any Department of State can be considered redundant or not. The effect of the second economy which my hon. Friend suggested would be to increase the revenue by £250,000. I understand, in regard to the other proposal, that the Chambers of Commerce passed a resolution against it the last time that it was mooted. If we abolish the Department of Overseas Trade and dismiss all the staff, without pension or compensation, and make no provision for carrying on the duties in any other Department or in any other form, we might save about £350,000, so that under these two heads the relief would be about £600,000. I do not underestimate or undervalue any suggestion for economy, and even the smallest trifle is welcome to the Exchequer, but what I ask is this: if this £600,000 represents the whole constructive contribution which we are to receive from this quarter in the reduction of expenditure, is that all there is to justify the droning campaign of mechanical abuse and misrepresentation to which the Government in general and the unfortunate individual who has the duty of taking charge of the public finances have been continually exposed clay after day?

The question of allocating a portion of the Road Fund revenue to the National Exchequer was bruited about last summer, and eve since then it has been much canvassed and discussed. I think I may feel justly contented with the response which our actual proposals have met. There is practically no challenge to them of any serious kind. My right hon. Friend, in a masterly and conclusive argument, showed both the equity and the propriety of the transaction we are proposing, and also approved the general policy. The right hon. Member for the Spen Valley (Sir J. Simon) also told us that he considered that no charge of breach of faith or anything like that could be urged against the Government for the course they had taken in regard to the Road Fund. We are getting on. When you consider the powerful interests that are affected by any movement in this field, whether from independent supporters of the Government or from keen and critical opponents, it is most remarkable that the main, the first, and the primary charge against us in this respect has already been withdrawn. The right hon. Gentleman the Member for Spen Valley, like the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), argued that it is a good thing to spend money on the roads, that motor transport would play a far greater part in the development of our transport system, that the roads must continually be improved, and so on. I entirely agree with all these sentiments, and I endeavoured in my own language to express the same when I introduced the Budget.

But the question we have to settle is what is the sum of money which is a wise and proportionate provision for the upkeep of our roads in the present year. We are proposing to spend this year a sum of not less than £21,000,000 for the upkeep, improvement and maintenance of our roads; that is to say, £3,500,000 more than the Road Fund was able to spend last year. Is not that ample and adequate provision? If I say that we are spending more than one-third as much on our roads as we are on the maintenance of the Royal Navy it will probably leave the right hon. Gentleman the Member for Spen Valley and the right hon. Gentleman the Member for Carnarvon Boroughs quite cold, so I will use another standard which may more directly appeal to them. I will say that this £21,000,000 represents half the whole contribution of the Exchequer to the cause of national education during the present year. I think I may claim that in all quarters of the House the broad outlines of the scheme we have proposed lot associating the national exchequer in a beneficent sense with the revenue of the Road Fund—providing for the services of the roads next year, increasing the taxation on heavy motor vehicles and giving special relief to the rural authorities for the maintenance of unclassified roads—has definitely, in spite of all the rumours of controversy which were raised in the past, come into a position where it will not encounter any serious or organised Parliamentary resistance.

Now I come to the proposal to tax betting. It was referred to by various speakers, by the hon. and gallant Member for Ripon (Major Hills) and by the right hon. Gentleman the Member for West Swansea, who told us with engaging candour that when he visited a racecourse he delighted to see the beautiful horses racing together, but was quite indifferent as to the order in which they are arranged. The proposal to tax betting has always hitherto been argued on the basis that all forms of betting, legal, illegal, racecourse, credit, and street alike, must equally be recognised, legalised and taxed. On that assumption it would, of course, be necessary to make legal what is now illegal, to set up, and allow to be set up, under the ægis of the State in all parts of the country, new licensed betting houses invested with the full sanction of the law. That has been the obstacle which has hitherto deterred everyone who has studied this tax from imposing it. I considered that it had been too readily assumed that it was impossible to confine the tax to legal betting and I directed the Customs to inquire again and afresh into the question as to whether it was practicable, without injury to the revenue, to limit the duty in its operation to the preponderant bulk of betting in money values, namely, that which is legal at the present time.

This was the first time the Customs had been asked to report directly on this particular aspect. They reported that there would be no mechanical difficulty in collecting the tax, that it would be easy and inexpensive to collect the great bulk of it, which would be derived from the credit bookmaker, and as soon as this opinion was expressed, it was clear that we had entered into a new field. They reported, further, that the amount of legal betting was estimated to be at least £170,000,000 a year, and this was the view also taken by the House of Commons Committee. Five per cent. on £170,000,000 amounts to £8,500,000. We thought it. prudent, however, in making our estimate to allow for a reduction in betting due to the imposition of the tax and also for evasion, and laid-off bets, up to £50,000,000, and we reduced the estimate of the taxable amount from; £170,000,000 to £120,000,000. This is is the sum on which we expect to obtain a yield of £6,000,000 in a full year. I want the Committee to realise that the decision to limit the tax to legal betting is a new decision, and that the belief that the tax in this form is administratively and mechanically possible is a new belief.

The moment that decision has been taken the moral controversy about betting cannot be raised in any reasonable form. No one has raised it here with any substance or purpose, and the right hon. Gentleman the Member for Spen Valley explicitly rejected the moral issue. Does anyone wonder that he should do so considering that the leading organ of his party, the "Daily News," has strongly argued for the imposition of this tax, and from the number of newspapers of the greatest eminence and solidity in all parts of the country which support it, one can realise that any attempt to import the moral issue into this particular proposal will be repulsed by the good sense of an overwhelming public opinion. From the moment that you do not seek to alter the law in regard to betting and gambling, from the moment you do not lend sanction and respectability to what is now illegal and set up all over the country licensed betting houses, from that moment the argument falls from the moral plane to the level of expediency, convenience, practicability and public policy, all extremely important aspects, on which no doubt there is a good deal to be said and upon which we shall be quite ready to meet our critics during the course of these debates.

I can only try to deal this evening with two of the arguments which have been used in the course of this discussion. I have weighed very carefully the argument that the illegal bookmaker will be favoured at the expense of the legal bookmaker. Whenever an import duty is imposed it penalises the legitimate importer at the expense of the successful smuggler, but that possibility never deterred any Government from the imposition of any import duty. We rely on the law to repress as far as possible illegal traffic and on the Customs authorities to collect the proper duties on the traffic that is legal. That is exactly what we are doing in this case. It is true that, in betting the evasions and breaches of the law are much more general than in the case of smuggled goods in modern times, but it does not raise any new principle. Certainly no one can say that favour is shown to the illegal bookmaker. Although the intention of the tax is to tax legal betting, the illegal bookmaker when detected by the police, will be liable to a revenue penalty in addition to any other penalty which may be inflicted by the magistrates.

It is suggested that the legal and credit bookmaker will be ready on the imposition of this tax of 5 per cent. to become an illegal bookmaker. Let us contrast the position of the legal and the illegal bookmaker. The credit bookmaker takes a fine office in some fashion able or business quarter and summons the Postmaster-General to lay on a dozen lines of private telephones. He fills the newspapers and covers the hoardings with his advertisements, he receives every day by telegraph and telephone thousands of commissions from clients in all parts of the country. He conducts a business which, apart from the subject matter, is practically undistinguishable from that of any great city office. Compare the position of this credit bookmaker with the hunted, harassed and hounded existence of the street bookmaker. He has to pay a large number of touts and scouts and agents to carry on his business, protect him from the approach of the police and otherwise secure against their excessive activities. He lives a fleeting, furtive and insecure existence. I am not defending the inequality in the treatment afforded to these men; I am only stating the position. Can it be said that by the imposition of a 5 per cent. tax, you are going to make the credit bookmaker quit the comfortable aid respectable shelter of his commodious office for the risks of the hunted life of the unfortunate street bookmaker!

8.0 P.M

Take the case of the backer—and I must say the right bon. Gentleman the Member for West Swansea has shown himself a very apt pupil in these matters, he seems to have familiarised himself to a large extent with the details. Does anyone suppose that a man or woman who now bets with a credit bookmaker, who has only to go to the telephone and make his wager by word of mouth under the full sanction of the law, who has every facility of the public service at his disposal, who can make his wager with a firm in which he has the utmost confidence, who have a conspicuous place of business, costly and substantial premises —can you suppose that this backer is going, for the sake of avoiding a shortening of the odds equal to 1s. in the £or to avoid a deduction from his winnings of 1s. in the £, to wander around a particular district in some manufacturing town looking for a mysterious individual into whose hand he may surreptitiously place half-a-dollar. The idea is obviously absurd. There is absolutely no possibility of anything being done or created which will transfer legal into illegal street betting, or which will cause bets now made with a turf commission agent to be made with an illegal bookmaker for the purpose of avoiding the tax.

Amongst the many letters I have received during the last few months sonic of the most pathetic have been those received from street bookmakers asking to be included in the scope of the tax, and saying to me how gladly they would pay such a tax to the Exchequer, and how much cheaper it would be for them than what they have now to pay for the organisation they have to maintain in order to carry on their business. The anomalies and injustices of the existing betting law are not created by this tax, nor are they increased by it. They are diminished by the tax. Why should the working man be hustled and treated as a malefactor and positively pushed to adopt every form of subterfuge of which he can think, while the wealthy man whose betting is a regular amusement does not even pay the smallest contribution to the State, but continues under the full protection of society, and enjoys the mail, the telegraph, the telephone, the newspapers, and every convenience just because he can get a banker's reference or establish his credit in some other way? At the present time the working man and the street bookmaker are pursued by the police, while the wealthy hacker and the credit bookmaker are aided by every public resource. We do not propose to relieve the working man or the street bookmaker from the present repression of the law, but surely there is no reason why some attempt at redressing the balance should not be made. And so, while the police are active in one direction, the Customs officer will be active in the other.

I am less sure about the argument that the tax will produce seriously less than I anticipate. I have admitted, and I think it a prudent thing, that we have based our estimate on a turnover of £50,000,000 less than the normal amount. It may not be so. Continental gambling resorts take a high percentage and I have noticed that this is done without in the slightest degree deterring an ever-increasing number of persons from pursuing their illusions, and paying for them! But suppose there is a reduction in the volume of betting over and above the £50,000,000 I have allowed for? Suppose I am wrong in that? What would be the result? There would be a loss to the Exchequer. Hon. Members will be able to twit me about that. Are we quite sure that there will be a serious loss to the country?

After all, if people are deterred from credit betting on the present scale, more money will be available for other forms of ntertainment, recreation or amusement, and some of it may be devoted to more solid purposes altogether. Bookmakers are, of course, fully entitled to pass on the tax to their clients. The betting public is, for this purpose, the consumer. I do not know what method the bookmakers will adopt, but now that the matter has been publicly announced, I shall welcome the opportunity of discussing methods and machinery with the representatives of the interests concerned. I shall be quite ready to deal with these interests with every desire to make the tax work as smoothly as possible for all parties. I will do this in the interval between the Report of the Resolutions and the Second Reading of the Finance Bill. I shall not attempt to go further into details of machinery at the present time. But may I be allowed, Before leaving the subject of the Betting Duty, to say this: I do not think it will be as difficult to collect or to administer as has been suggested. We have the example of the Silk Duties. They were denounced. We were given hard cases. We were told of deadlocks. This is all fresh in the memory of the Committee. I have very little doubt that when next year I am dealing with the Budget it will be seen that we possess a satisfactory new source of revenue without the slightest injury to the health, wealth, or happiness of the community.

I have one word to say about the stabilisation of Imperial Preference. By the arrangement I made with the right hon. Gentleman the Member for Hillhead in 1921, the first step was enabled to be taken on this subject. The importance of continuity in these arrangements is so obvious that it does not require to be emphasised. How are the traders and producers in the Dominions and the Colonies to invest their capital and to keep their trade running on normal lines unless they are to be free from doubt in this matter over a certain period? Nothing, however, interferes with the discretion of the House of Commons. It is perfectly open for another Parliament to repudiate the guarantee that has been given. It is perfectly open, but surely when it is found that a positive step will have to be taken, it will act as a practical deterrent, and surely we may also hope that as time goes on affairs of Imperial consequence will more and more cease to be matters of party politics, and that the parties, who may singly or in company some day feel able to replace the party now in power, will have other and much better things to do than to uproot and to tear down this process upon which the growth of our inter-Imperial trade will depend.

I am told repeatedly that fancy and optional taxes are absurd. The right hon. Gentleman opposite glorifies compulsory direct taxation. From below the Gangway Mr. Gladstone has been quoted as sweeping away all minor imposts. But the days in which Mr. Gladstone lived were very different. Direct taxation was then a mere bagatelle. Social services were practically non-existent. Now that our compulsory direct taxation has run to such an unprecedentedly high figure, when also all the primary comforts and indulgences of the masses are already taxed to the utmost limits, it would not be right to overlook either minor or novel sources, nor to shirk the labour of proposing and devising taxation which no one who is hard pressed in any walk of life need pay. If the present proposals are assented to we shall have added last year and this year £15,000,000 of permanent revenue to the country by means of taxes which no one need pay unless he buys a foreign motor-car, or a musical instrument; unless he makes a bet, or unless she adorns herself with silks and satins. There is £15,000,000 of permanent revenue, that is to say, a greater sum than was required to set in motion the whole system of widows' pensions, and in addition, to give a relief last year on the earned income of the smaller classes of Income Tax payer. Can anyone doubt where wisdom lies in this matter? For my own part, I shall persevere in the direction of relieving the great basic sources of taxation by every reasonable optional medium, expedient or experiment which I can discover.

I see it has been printed in some of the newspapers that we have failed in our finance this year. Let the Committee consider for a, moment the problem I had to face. Last year's remissions of taxation imposed a loss on the revenue of this year of £12,500,000 additional. The loss on the remissions of previous years was £4,500,000. The shrinkage in the Miscellaneous Special Receipts was £11,000,000. The total prospective loss to the Revenue which I had to face, before any other loss was taken into account, was thus £28,000,000. The increased items of expenditure which received the sanction of Parliament, and which were canvassed in the strictest manner and were the subject of deliberate decisions, amounted to £19,000,000. I have provided the whole of that in the present Budget, and in addition sums amounting to £17,000,000 for the payment of the coal subsidy or the repayment of that part of it which was borrowed last year. So here is a total of £64,000,000 which I have had to find from one source or another between the autumn of last year and the spring of this year, either from economies, from the normal growth of existing taxes, or by additional resources in any direction in which they presented themselves. That task has been accomplished. It has been accomplished while the social services are maintained at an unprecedented level. It has been accomplished while we are providing for expenditure on education and roads on a larger scale than has been previously known. It has been accomplished without impairing the enormous provision for Debt redemption, on which this country relies, or imposing any tax of the slightest consequence to the comfort, vigour, or health of the national life.

Question put, and agreed to.

Resolution to be reported To-morrow.

Committee to sit again To-morrow.