SAVINGS BANKS' MILLIONS.

HC Deb 22 July 1927 vol 209 cc744-816

"Scotland boasts the thriftiest city in the kingdom. The deposits of the trustee savings banks in the country increased by nearly £3,000,000 during the year. According to the report of the Committee of Inspection, issued to-day, Glasgow is the thriftiest city with 292,678 depositors."

I am sorry the hon. Member for Dumbarton Burghs is not here, but I am sure the right hon. Member for Central Edinburgh will agree that, as long as your savings are kept up, your country is not on the decline. The hon. Member for West Leicester, in a speech a fortnight or so ago, referred to National Savings Certificates. I am rather sorry he did not refer to the subject this morning. The National Savings Certificates are in a peculiar position. The Budget in some ways is rather in their hands if there is a heavy encashment. Last year there was a heavy encashment, and it meant £5,000,000 on to the Budget expenditure. They are in a peculiar position, and I cannot help thinking that the National Savings Certificates, good as they have been in the past, much as we want to encourage them in the future, are a very heavy load on the country at the present time. What is the position When they are issued, the purchase price is added to the National Debt, while the National Savings Certificates are outstanding there is no provision for interest, and when they are encashed, the purchase price is regarded as redemption of debt and the balance as interest. I do not think that is business. I feel that if there is no redemption, there is no arrangement for interest payment, and the interest gradually accumulates. At the present time, there is about £370,000,000 in National Savings Certificates, and there is accrued interest of about £121,000,000. Possibly the Financial Secretary to the Treasury might think it worth while in the next few months to look into the position and see what a very heavy load that is on the country.

May I again refer to the hon. Member for West Leicester with regard to the Sinking Fund? The Sinking Fund, I may say, is a friend of mine. At the same time, it has been rather in an artificial position in the last two years. The population can increase, but unless the wealth of the population increases at the same time, it becomes a very heavy burden on the taxpayer to increase the Sinking Fund beyond what a country can afford, and I cannot help thinking that in this year, when the Sinking Fund is raised to £65,000,000, it is a little more than the country can afford at the present time, especially after the troubles of 1926. The real Sinking Fund is a surplus of revenue over expenditure. Now, how is that dealt with There is the individual and the Government. The individual is paid off by the Government and that is reinvested. But what is the position with regard to the Government? The Government, in paying off that amount, have reduced their liability, have reduced the interest charge and increased the credit of the country. In the last few years, since 1921, this country has put £641,000,000 into the Sinking Fund. That must have affected out trade, because all these expenditures which are taken by the Chancellor of the Exchequer come out of trade. There are two Sinking Funds. There is the Old Sinking Fund of 1875, which, as the hon. Member for West Leicester must know, takes the surplus revenue, and there is what is called the New Sinking Fund, which, in 1924, had to be £40,000,000, in 1925 £45,000,000 and in 1926 rising to £50,000,000. What is the position with regard to that? That is the present basis of our Sinking Fund. In 1924 £88,000,000 was put to the Sinking Fund, in 1925 £49,000,000, in 1926 £36,000,000 and in 1927 £23,000,000, making a total of £196,000,000 in the four years.

If you take that on the basis of the New Sinking Fund, you will find that the Chancellor of the Exchequer is about £11,000,000 beyond that basis, and I contend that, as he was £11,000,000 beyond that basis, there was hardly any necessity for him to have raised the amount to £65,000,000 this year, and taken that extra £15,000,000 out of trade. I fully realise what the Colwyn Report says. I fully realise the necessity for increasing the Sinking Fund when you can afford it. I remember what the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) said in regard to the Road Fund a few days ago. He asked, why not take some of the £60,000,000 Sinking Fund of 1926 for the Road Fund? We never put £60,000,000 to the Sinking Fund in 1926. The actual amount we put was £23,000,000, and that is not allowing for interest on the National Savings Certificates. It is most important, I think, that we should have a real Sinking Fund. I was reading the other day a speech of Sir Stafford Northcote, who was Chancellor of the Exchequer in 1875, and he said: If you are in a state of circumstances in which taxation bears very heavily indeed upon the interests of the country, no doubt it would be a great deal better to devote your energies to reducing taxation instead of devoting them to reducing debt. That is an important statement, and, although it was made some time ago, I hope that the Chancellor of the Exchequer will work on those lines, and remember that if trade is bad we cannot take an increased amount out of the National revenue to enlarge the Sinking Fund.

I have dealt with four subjects, but there is one other to which I am anxious to refer, and that is the question of retrenchment. The hon. Member for Finsbury was quite amused about the Economy Committee. Let me assure him and the Financial Secretary to the Treasury that the setting up of that Committee was an endeavour to help our party, there was no other motive, and I feel that if he and the Chancellor of the Exchequer will take it in that light that possibly the back benchers may be able to help him and do a little more good than they do by walking through the Division Lobby in support of our party. I have spoken on this subject almost ever since I have been in the House, and I well remember a conversation I had with the late Mr. Bonar Law in regard to the national expenditure. At that time it was only £788,000,000; to-day it is £834,000,000. Even then the question was how it could be reduced. The present Chancellor of the Exchequer is a wonderful debater and a great writer, and I admire him as much as anybody in the House, but some of his financial operations almost make me cry. A short time ago a Noble Marquess, in another place, put the blame for expenditure on the back benchers. I can assure the Financial Secretary to the Treasury that we are not the villains of the piece. These Economy Committees are designed to help the Government, and not to do anything else but to help, and if he had a little confidence in us he would find that we are not so bad as we are painted. There is a Cabinet Committee on Economy. I still maintain that a Cabinet Committee cannot possibly deal with economy, because they do not know the details of the expenditure. In his Budget speech the Chancellor of the Exchequer made this statement; it is very hard to understand exactly what it means: We have a programme of economies upon which we are working, and if that programme produces £8,500,000 of effective economies in 1928 it will reduce our expenditure in that year to the lowest level of any year since the War, that is, leaving out of account the Post Office and the Road Fund. Perhaps the Financial Secretary to the Treasury will tell us what that really means. I quite understand that it may mean the price level, but the man in the street will not understand that, and if my right hon. Friend can give some sort of reply to that statement, I feel it would help us on this side very considerably.

I remember that two years ago the Chancellor of the Exchequer interrupted my right hon. Friend the Member for Norwich (Sir Hilton Young) to ask him how he would suggest economies could be effected. The right hon. Member for Norwich said it was the Chancellor of the Exchequer's duty to find out how economy could be exercised. If the Chancellor of the Exchequer will refer to the Public Accounts Committee, and will refer to the Estimates Committee, who have just issued their report, he will find that it is full of valuable information, and full of suggestions which may be worth consideration, and if he will study that report he will find some methods of bringing about a reduction in Government expenditure. I also have in my hand a White Paper issued by the Home Office in reference to the Industrial Museum. We spent several thousands on this Industrial Museum, which is to be opened this month. I wonder if the Chancellor of the Exchequer knows about these details. I feel confident that he has not the time to go into these details, and if he would leave it to the Economy Committee to look into the facts and present to him some methods whereby expenditure can be reduced, it would be for the benefit of the country at large. I receive innumerable letters in regard to this important subject. It affects the millionaire as well as the unemployed person, and I sincerely hope that the Chancellor will take it into consideration in the coming twelve months.

Let me tell the Financial Secretary to the Treasury that there is a veiled insurrection amongst back benchers on this side. We feel that we are not being properly treated in relation to economy about which we could really advise him. In his Budget speech the Chancellor of the Exchequer said three Departments were going to be closed—the Ministry of Transport, the Department of Mines and the Overseas Trade Department. Nothing has been done, and nothing can be done till the Autumn. If they were to be closed down, why were they not closed clown almost at once? Why should they have been allowed to continue for all these months since the Budget was introduced? The Prime Minister stated in his election address, issued in October, 1924: The burden of taxation weighs heavily upon industry and trade, diminishes real wages, and, in a variety of ways, adds to the cost of living. To assist in relieving the community of this burden the most rigid economy in administration is essential. Those are very important words from the Prime Minister, and I hope they will be acted upon. In conclusion, let me say that I am sure everyone on this side is ready to help the Chancellor of the Exchequer and the Financial Secretary to the Treasury. Governments seldom realise till too late what an important position finance holds in regard to the nation. The stability of this nation, perhaps more than of any other nation, is bound up with finance. Sound finance leads to human happiness, and unless a reduction of Government expenditure is brought about in the next few months, it will he the Alpha and Omega of this country.

Mr. STEWART SANDEMAN

I am sure all my hon. Friends on the benches opposite and below the Gangway on this side are very much relieved to know that the Chancellor of the Exchequer is giving us what amounts to a year in which to evolve some better plan of dealing with those who evade the payment of their taxes. If the Chancellor of the Exchequer will add to his courage, ability and zeal a little discretion, and during the next year will take advice not only from those inside his own Department but from those outside, he will find we are only too ready and willing to help in every possible way to get at those people who are evading their responsibilities. It is their idea to get somebody else to pay, if they can legally "get away with it." To try to get something for nothing shows a Tack of independence of which they ought to be ashamed. I am perfectly certain that all my friends will join in the hunting of this big game, and when the Chancellor of the Exchequer really embarks upon it we will wish him, "Good hunting, little frog."

I want to raise one or two small questions. The other day I put a question to the Financial Secretary to the Treasury about free lunches. This opens up a very big question. In reply to my question the Financial Secretary very kindly said that he would inquire into any cases which I might bring to his notice. Of course a great many of these people do not want their names bandied about, and it is not an easy thing to bring forward special cases. Consequently I stated that I would raise this question on the first possible occasion. Since that time I have had many cases brought to my notice through correspondence from all parts of the country, and I propose to read a few extracts from letters which I have received.

In the first case, it is a question of whether a firm or big corporation has the right to give free lunches to the directors and employés of the company. So far as I can find out legally the employé is allowed to have a certain amount of refreshment at the expense of the firm. I think that is quite right, but I know of instances where this expense has had to be added back to the profits of the company concerned. In the case of a Minister I know that a cup of tea does him good in the afternoon, and he comes back here like a gaint refreshed. Nobody begrudges him that cup of tea and any of us would be prepared to pay for it. I believe they drink more tea in Government offices than in any other offices in the country. I am all for them having their teas but there should not be one rule in one particular office, and a totally different rule in another office. Who pays for these teas? The taxpayer?

Take a big firm in the City which gives lunches to its directors. I am perfectly certain that at those lunches business is discussed, and probably the earning power and the profits of the firm go up by the very valuable consideration which is given to the business by these men while at lunch. The Treasury cannot have it both ways. They cannot have the profits and at the same time take payment for the lunches. Of coarse, these companies are very wisely left alone by the inspectors. I know a small firm of dentists in which this practice is very different. The proprietors happen to live some distance away from the surgery, and they have a small light lunch so that they can get on with their work at once. That has to be charged against profits in their case. Why?

I have two cases of men who have been told that they must not deduct even a few shillings from the allowances they are allowed to give their wives for lunches. I have another case of the proprietress of a public-house, and she has been asked by the Treasury officials how much is given away per day in free drinks. She has allowed a bar attendant a couple of drinks per day, and she allows herself a couple of drinks per day. But she has charged £15 a year for the two drinks she takes and the Treasury get £3 out of it. Supposing those restrictions had not been put on and she had taken four drinks a day. In that case the Excise would have been £3 better off if the Treasury had left this good lady alone to exercise her discretion. We should like to know where we are.

Mr. R. McNEILL

That is exactly what we do want to know. I want to know where we are.

Mr. SANDEMAN

I am perfectly certain that my right hon. Friend will be able to inform us where we are when he comes to make his reply. Supposing the Chancellor of the Exchequer, in a fit of zeal decided that he would like to have a couple of rabbits for breakfast, and goes out to shoot them. Has the right hon. Gentleman got to charge those rabbits against the Estate Account? I do not know. Of course he has got a free breakfast table. What happens in the case of a market gardener who takes a bag of vegetables home? It would be impossible to assess their value. In these cases would there be a charge against the firm in the Income Tax returns? I know the 12th August is aproaching, and if any hon. Member of this House wishes to send me a brace of grouse, I should be very pleased to receive them. I would like to ask in such a case if the grouse would be recharged against me or against the owner of the estate. That is the sort of thing that puzzles one. We are actually coming to a position when we shall need a great many more inspectors to go round, and in future, instead of having 27 pages of four columns in the London Directory each giving the names of those holding prominent public positions we shall need another 25 pages giving the names of new officials required to look after all those new inspectors who will be required to watch possible tax evaders. So far as I can make out, the time that must be wasted on these very small points is quite out of proportion to any revenue which they can collect.

There is another point which causes a great deal of complaint, and that is the sort of questions which are asked. I am perfectly certain that Somerset House does not know what is going on in the case of these small inspectors who are naturally very zealous men. I know from questions which I have asked that these men are not paid by commission, but, naturally, if they make good returns, they will be pushed on. In a great many cases, they exceed the speed limit very considerably. Here is a letter from a firm of chartered accountants in the North country:— There is no question that, many of the Inland Revenue offices seem to be so staffed that the assistants have time to raise questions similar to the following, which are taken from cases in our office here, and can be produced to you if you desire confirmation. This is, perhaps, one of the cases where my right hon. Friend may get some assistance.

Mr. McNEILL

I cannot get any assistance unless my hon. Friend will give me the addresses. I invited him to do that some time ago, and he has not done it. I must say I think he ought not to indulge in general statements with regard to the inspectors of taxes unless he is prepared to give me details.

Mr. SANDEMAN

This is one case in which I can give the details. The letter goes on to quote this question from the inspector:— The approximate amount spent in household expenses, that is, Food, light, heat, rent, clothes, pocket money, amusements, betting, furniture and any similar expenditure for each of the years from October, 1901 to 1924, inclusive. I do not know whether that was answered. There was another letter also asking the same thing, and the reply sent back was as follows:— This is a conundrum extending over a period of 22 years. I shall have to say what the nigger said: 'Give it up and leave it to you to find the answer' I think that that was a very proper answer. The letter from which I have been quoting goes on: We can produce you totally unnecessary questions which have been raised by the Inland Revenue from time to time on such minor points. It is naturally distressing to those engaged in business to know that the Revenue have on their staffs such numbers as to have time at their disposal to investigate such minor trifles, with the result that not only are taxpayers put to serious trouble and inconvenience, but it involves great waste of public money. Our experience is that the majority of taxpayers are so frightened by the official communications sent in O.H.M.S. envelopes that they fear to neglect to reply to some outrageous inquiry going back over many, many years. The Inland Revenue know this harassing effect which tax trouble brings to taxpayers in trouble, and are always prepared to act on this effect. With that last sentence I am not in agreement at all, but there is no question, to my mind, that a great many questions of this sort are asked. I have another letter on the same subject from a man who pays Income Tax in a small way. He writes:— When a man is honest and absolutely straightforward, it is very galling to be insulted and threatened by young clerks who have had nothing more than a board school education, asking the most absurd personal questions. After all the tax inspectors are the servants of the taxpayers, and they have really no right to ask these questions. I think that Somerset House ought to draw up the sort of questions that they are allowed to ask, and these ought always to be sent in writing to the taxpayer, so that if there is a case it can be brought here. There is only one other question to which I should like to refer, and that is the time that rebates take to pay. Unquestionably that is a very serious grievance with a great many people. I cannot see why, in 98 per cent of these cases, there should be this delay. Take the case of an annuitant who has gone on drawing an annuity of £20 or £30 for the last 10 or 15 years. The Income Tax people know perfectly well that that rebate is due to the annuitant, and very often the annuitant cannot afford to lie out of the money. I think some steps should be taken to accelerate in some way the repayment of these rebates to poorer people. I cart give an example of that. I have a letter here from a most enraged lady. She writes:— I wish to endorse what you say about the Inland Revenue officials"— I have not said anything, really—— who are collecting Income Tax and Death Duties and treating the public as if they were criminals. I had the greatest difficulty in getting back the money deducted by the bank from my income, and each time I have had to fight to get back what I am entitled to. She gives her address, which I will show to my right hon. Friend afterwards. The letter proceeds: They have been so slow that after three months I told them they were thoroughly dishonest, as they had only paid me back, on the 27th May, £8 15s. 1d. I asked for £12 back in April, and I told them it was just as much stealing my money as if they had stolen my purse. I threatened to have the matter brought up in Parliament"— the next words are in brackets— (bluff on my part), and they paid me on June 27th £4 19s. 6d. as what they called a supplementary payment. That sort of thing is intolerable, and I think that if Somerset House took it up they could put it right. It is simply a question of internal management. The tax collector has made himself into an Ishmael; every man's hand is now against him; and I cannot say I wonder at it, because a great many people are very much afraid of him. People are honest at heart, and I am certain that the poorer people, especially, do not want to evade any taxation at all, if they were trusted more thoroughly. Somerset House should take the matter up with their inspectors and give some of them a good dressing down, which is what they want, and then, I think, there would not perhaps be quite so much difficulty in collecting the taxes.

Mr. O'NEILL

I am sure we all hope that the hon. Member for Middleton and Prestwich (Mr. Sandeman) will have success, not only in his appeals to those who are going to Scotland on the 12th of August to send him some grouse, but also in his appeals to the Government Front Bench with regard to the rather extreme cases which he has quoted about the action of various surveyors and local tax collectors. My hon. Friend the Member for Finsbury (Mr. Gillett), who initiated this discussion, made An interesting speech on the whole financial policy, not only of this Government, but, as he put it, of the Tory party, and he questioned the whole policy of deflation. My hon. Friend is himself a member of a very well known and highly respected, and, I believe, conservatively managed, discount house in the City of London, and when he says that the modified deflation which has taken place in this country is benefiting the rentier class, the people with fixed incomes, to such an extent that the Income Tax ought not to be reduced any more, I can hardly believe that he is representing, or anywhere near representing, the views of any considerable number of banking people in the City.

This Finance Bill has, it seems to me, on the whole, had a remarkably smooth passage. Apart from hardy annuals such as the Tea Duties, the Safeguarding of Industries Duties, and the McKenna Duties, which we look upon as very natural subjects for criticism by the Opposition on every Finance Bill—apart from these duties, the only substantial point which has been raised against the Government has come from these benches, in reference to the new Super-tax Clauses. Those Clauses, as we know, have been very considerably modified during the course of the discussions in this House, and I think that at any rate those who were opposed to them can take comfort to this extent, that things of this kind, once they are put into operation never really turn out to be half as bad as those who fear them expect that they will be. I always think that that is one of the most comforting facts in politics. We look back, and see the tremendous opposition which has been put up to various Bills; then, when they have come into operation, the results are not so terrible as we anticipated. Therefore, I believe that the Super-tax Clauses, which have been so opposed, will not in fact prove to have any very deleterious effect upon the business of the country. Nobody objects, as has been stated by speakers here this afternoon, to catching the real tax-dodger. What has raised alarm throughout the whole business community in regard to these Clauses has been the fear that the Inland Revenue authorities would, in some form, try to dictate to the directors and owners of businesses how they were to dispose of their profits, and whether they were to distribute them or put them to reserve. I believe that now the fear of any such action on the part of the Government, if it ever had any weight, is recognised to be groundless to a great extent. Therefore, in my view, the Clauses as they now stand in this Bill are very unlikely to create any great hardship on the private companies of the country. It is necessary that the business community should realise that, and that a great deal of the fears that were entertained should, by ventilation here and elsewhere, be dissipated.

There is one other point on the question of the Bill to which I should like to refer. The hon. Member for Ilford (Sir F. Wise) dealt with the Sinking Fund. He seemed to suggest that the Sinking Fund was too great and was more than the revenue of the country could bear. In my view, the Chancellor of the Exchequer was right to increase the Sinking Fund this year to the unprecedented level of £65,000,000 a year. After all, the whole structure of the finance of this country depends upon credit. Nothing can be better for credit than repayment of debt as soon as you can possibly repay it. The fact that this country is able, as I believe it will be this year, to put aside £65,000,000 towards redemption of debt, is a thing which should be blazened forth throughout the whole world as one of the greatest feats in the history of finance. It is a colossal and a staggering thing, after all the financial losses and burdens of the War, in addition to providing, as we do provide, the highest social services of any country in the world, that we should be, in this Budget, providing for a Sinking Fund of £65,000,000. The credit of a nation, and of this nation in particular, is a matter of such importance; and the debt which has got to be repaid in the near future—the various war loans—depend, as my hon. Friend knows better than anyone else, above all else upon the maintenance of a high state of credit in this country. It was, I think, to many hon. Members a surprise—we never contemplated that it would be possible, after the coal stoppage—that it should be possible to put aside this enormous sum of £65,000,000 towards the redemption of debt. When you think of the financial crises through which most other European countries have passed during the last few years since the War; when you look upon the mad and rapid inflation in Germany, which completely wiped out the whole of the fixed-income class and caused misery untold among large masses of the population there; when you look at France, and the financial difficulties through which she has had to pass; when you look at the other countries of Europe; it always seems to me that the finance of this country stands out as a kind of impregnable rock amidst the sea of financial chaos elsewhere. That it should be so is one of the greatest credits to the British name.

1.0. p.m.

The hon. Member for Ilford referred, in the concluding passages of his speech, to the question of retrenchment and economy. That is, of course, a matter of tremendous importance in the future finance of this country. The hon. Member asked whether the War Ministries were to be abolished, or not. That question made me—and, I am sure, other hon. Members—think how fearfully difficult it really is to bring about these economies. No sooner is the announcement made that these Ministries are to be brought to an end and wound up, than we read of deputations, in favour of this Ministry and of that Ministry being continued, waiting upon Members of the Government, until now we really do not know whether those. Ministries are going to be abolished or to be retained. Whatever economies are suggested, there is always somebody who comes forward, and says: "Excellent in theory, but for Heaven's sake, do not apply it to me!" I wonder sometimes whether it is really ever going to be possible to bring about economies on a large scale. The Chancellor of the Exchequer, when he introduced his Budget last April, rather seemed to indicate, I think, that it was impossible. Earlier, he had promised economies of £10,000,000 a year, but admittedly that was not possible. Now he promises no definite figure, but there is a Cabinet Economy Committee still in existence, and we are at any rate led to believe that that question is keeping a foremost place in the financial discussions and consideration of the Cabinet. But I would suggest this to the Government. Why, in the figures of the annual finances of the country, do they still persist in making the case worse than it really is? The expenditure on the Budget this year is £834,000,000, but, as the Chancellor of the Exchequer pointed out, that is not the measure of the expenditure which has taken place, because, owing to the way in which our national accounts are presented, the Post Office and the Road Fund—which are in a sense outside businesses, producing revenue, I am glad to say, at present—have their expenditure put upon one side, quite ignoring the fact that there is a far greater increase of revenue on the other side. Why should it not be possible, in the future presentation of the annual accounts to treat these revenue-producing services as outside and carry to the main balance sheet or Budget merely the balances, on whichever side they happen to be? Then you would get a better means of comparing the expenditure of to-day and the expenditure of three years ago. We know that the expenditure is higher. At any rate there seems to me to be no reason, as far as I can see, why the Government should not in future treat the accounts in this way, and thereby to a great extent simplify them and take away from the Opposition this unauthorised stick with which they are at present able successfully to beat the Government. I said just now that the finance of this country stood out like an impregnable rock in the middle of the sea. I feel that, if this country gets a stable Government and a moderate form of Government during the next two years, a tremendous amount will be done in that time towards the straightening out of the financial difficulties from which we are at present suffering. But, above all, I commend the Government for the boldness with which they have pursued the policy of the Sinking Fund and of debt redemption. If they continue on these lines, and if trade improves and revenue, as we all hope it will, increases, then it may be sooner than many of us think that at last the long-suffering taxpayers of this country may be able to enjoy some long-deferred and well-merited reduction of their burdens.

Sir JOHN MARRIOTT

I entirely agree with my hon. Friend who has just spoken in his commendation of the policy of the Government in maintaining at the highest possible point the national credit. I agree, also, that it would be to the great simplification of the national accounts if we took out of the balance-sheet for the year the aggregate expenditure upon and receipts from revenue producing services such as the Post Office, bringing into account only the balance credit or debit as may be. I agree that that is desirable, but I am afraid that I cannot agree than any such readjustment of the accounts would really sufficiently and adequately account for the enormous increase in expenditure since the present Government assumed office. I think they must bear the responsibility for that addition of £40,000,000 which no mere readjustment of national accounts would really remedy. I am perfectly familiar with the arguments repeatedly advanced by the Chancellor of the Exchequer on this matter, and I shall not neglect them. The course which the discussion has taken on this Finance Bill recalls to my mind an old adage, "Call no man happy until he is dead." Under the existing system of taxation I do not know that we can call any man happy even when he is dead; but no Chancellor of the Exchequer, I think, should congratulate himself on his Budget until the Finance Bill has been read a third time. That is particularly true of the Bill of this year, for a reason which I will venture to commend to the House.

The proposals which the Chancellor of the Exchequer unfolded in Committee of Ways and Means were received, if not with a chorus of congratulation, at any rate, I think, with a sensible sigh of relief. Here, it was said, is ingenuity in excelsis. Here is a Heaven-sent Chancellor of the Exchequer who can balance a terribly inflated Budget without the imposition of any new burdens calculated to deter industrial enterprise or retard trade recovery. That seemed to many people at the time to be an extraordinarily skilful and ingenious achievement. How did the Chancellor of the Exchequer achieve that remarkable feat? If I may say so with great respect, he seems to me to have achieved it by a characteristic mixture of audaci'y and optimism. A man of less ebullient temperament than the Chancellor of the Exchequer might very well, I think, have been crushed by the series of misfortunes which have dogged his steps ever since he assumed his present office. But, despite the coal subsidy of 1925, and the disastrous stoppage of 1926, my right hon. Friend comes up smiling, even if his smile be sometimes a little forced, with his third Budget and his third Finance Bill. It seems to me that in times of emergency this spirit of optimism and audacity is a national asset not to be despised. That was the impression that most of us derived when the Chancellor of the Exchequer unfolded his Budget some months ago.

But I think I am giving expression to a very general feeling when I say that the more closely his proposals have been scrutinised the less they have been liked. I think he has proved himself to be rather less ingenuous than ingenious. This Bill which we are going to read a Third time to-day is a mixture of ingenuity and something which to my mind amounts almost to disingenuousness. Take, for example, the Clause originally numbered 18, which dealt with proposals in regard to the collection of Income Tax assessed under Schedule A. The right hon Gentleman argued, in reply to a speech of mine in Committee, that after all this is a mere alteration in the date of payment. That is all very well, but as regards the Schedule A Income Taxpayer during this current year the proposals amount in fact to an increase in the rate of tax of 50 per cent., and no dialectical skill on his part—and no dialectical skill on his part is ever wanting—can disguise from the taxpayer under Schedule A the ugly reality which next January they will have to face. Then again I argued on Report stage that the Clause now 42 relating to simplification and economy in the collection of taxes in reality represents the thin end of the wedge which Somerset House failed to insert in the ill-fated Revenue Bill of 1921.

But my main burden of complaint against the finance of this year is that, whatever ingenuity may have been displayed by my right hon. Friend in his devices for exacting money from the taxpayer, the aggregate he gets is far too large. I remember that in the first Speech from the Throne at the opening of this present Parliament, this sentence occurred: The present heavy burdens on the taxpayers are a hindrance to the revival of enterprise and employment. Economy in every sphere is imperative if we are to regain our industrial and commercial prosperity. That was the promise made by my right hon. Friend on taking office, and I hope the Chancellor of the Exchequer will have that promise constantly before him, but up till now we have had hardly so much as a gesture in the direction of public economy. My right hon. Friend the Member for Antrim (Mr. O'Neill) referred to the gesture in regard to the abolition of certain offices. With what he said in reference to that matter, I would entirely associate myself, but the fact remains that the right hon. Gentleman the Member for Colne Valley (Mr. Snowden), in his Budget, estimated for an expenditure of £794,000,000, though the actual expenditure was £4,000,000 more. To-day the estimate is for an expenditure of £835,000,000. I know all the explanations. They are very familiar. They have been made over and over again, and I think I appreciate them at their true value. But the fact remains that, however they are to be explained, when the right hon. Gentleman opposite left office, the expenditure was as a fact £45,000,000 less than it is to-day.

If we are to attempt to estimate the progress we have been making in the last few years towards normality of expenditure, perhaps it would be fair if I were to refer to the estimate the Foreign Secretary put before the House in the celebrated Treasury Paper in 1920. In that Paper, he stated that the normal Budget for a normal year might be expected to reach the sum of £880,000,000. The present Chancellor is at any rate to be congratulated on the fact that he is below that normal figure. [Interruption.] I do not underestimate the importance of the Sinking Fund, and I do not know why the right hon. Gentleman should interrupt me. I was going to make him a present of one or two figures if he will be good enough to accept them. I was going to say that to estimate our progress towards that normality which was presupposed by the Chancellor of the Exchequer in 1920 one might perhaps be permitted to take one or two items. In a normal Budget he expected to have to provide £135,000,000 for defence. The Chancellor of the Exchequer of this year is providing £115,000,000 for defence. But both the War Office and the Admiralty continue to exhibit a very curious anomaly of inverse ratio between expenditure on personnel and expenditure on administrative staffs. I notice that in 1914 the personnel of the Army was 174,500 men, and in 1927 the corresponding figure is 151,000. But while in 1914 the administrative staff was only 2,800, it had increased by 1927 to 4,137. Similarly the personnel of the Navy has diminished from 145,600 in 1914 to 100,700 in the present year, but the administrative staff had in the same period increased from 5,800 to 8,414. There are in the Report published only two or three days ago by the Estimates Committee some very instructive figures in regard to the. staff of the War Office. I will quote a sentence from the Report: The number of subordinates employed by the four competent branches of the War Office is 505, as compared with 303 in 1914. Allowing for the fact that some of the staff now included as subordinates were included under the military operations and fortifications and works sections in 1914, the numbers now employed are excessive and your Committee consider they should be reduced as soon as possible. But there has been, up till now, no substantial reduction on that or any other account except fighting men. I would very respectfully commend to the attention of the Chancellor of the Exchequer this very careful report of this Committee. I would like to pay a tribute to the very great skill displayed by my hon. Friend, the Chairman of that Committee, and to the Members of that Committee in drafting a report which ought to be of considerable service to all who desire to see a reduction in national expenditure. In speaking of national expenditure, I cannot get away from the fact that, apart from Debt charges, on which I do not propose to say anything further, the bulk of the expenditure is to be found on what are known as public social services. The table which is annually presented to this House shows an expenditure on those services for the year 1926 of not less than £338,500,000, towards which the taxes and the rates contributed about £255,000,000. The balance is made up from the contributions and fees and so forth of potential beneficiaries. I do not suppose there is a single Member in this House who would not say that the expenditure on these services is in itself entirely estimable, but it is an expenditure which throws a burden on industry under which industry is literally reeling to-day.

Take one item, the smallest of all. I refer to a scheme in which I was myself, and am, very greatly interested. I mean the Widows' and Orphans' Non-Contributory Pensions Scheme. I must say, in passing, that the scheme as adopted by His Majesty's Government was not the scheme which over and over again I had personally put forward, but I was grateful to them for dealing with the matter at all. But I find myself very uneasy as to the ultimate financial implications of that scheme as brought forward by the present Chancellor of the Exchequer. I find, from his original statement, that 10 years' hence contributory pensions are to cost £15,000,000 a year, and that 20 years' hence they are to be increased to £25,000,000. I hoped, when that scheme was produced, that it would have got rid of the non-contributory pensions altogether, and would have been able to hold out some prospect of reducing poor law relief and pauperism to a negligible quantity. I observe that, despite all the social legislation of the last 20 years, despite the tremendous growth of old age pensions, despite the sum spent on health and unemployment insurance, despite the amount paid by employers for compensation under the Employers Liability Act, poor law relief has gone up from £14,000,000 in the year 1910 to £40,000,000 last year. During the same period, the old age pensions have gone up from zero to £33,000,000. We may regard these matters as inevitable, but the Chancellor of the Exchequer, in his very careful review of two years ago, did look ahead, and he told us that non-contributory pensions might be expected to increase at an appalling pace in the not very distant future. The Government actuaries view with great alarm the prospective increase of national expenditure under the heads I have mentioned, and the failure, in the meantime, to effect any real reduction in national expenditure.

I have one other point on which I want to say a very short word. It is in reference to Part III of the Bill which we are asked to read the Third time today. It would be an impertinence on my part to speculate what view Mr. Speaker may deem it his duty to take in reference to this Finance Bill, but I do not want to leave the subject altogether without pointing out that the Finance Bill of this year does seem, in my opinion, to contain Clauses which are not strictly pertinent to a Money Bill, as defined under the Parliament Act, 1911. May I remind the House that under Section 1 (2) of that Act a Money Bill means A Public Bill which in the opinion of the Speaker of the House of Commons contains only provisions dealing with all or any of the following subjects, namely, the imposition, repeal, remission, alteration, or regulation of taxation; the imposition for the payment of debt or other financial purposes of charges on the Consolidated Fund, or on money provided by Parliament, or the variation or repeal of any such charges; supply; the appropriation, receipt, custody, issue or audit of accounts of public money; the raising or guarantee of any loan or the repayment thereof; or subordinate matters incidental to those subjects or any of them. I have said that it would be an impertinence for any Member of the House to speculate as to what view Mr. Speaker might take of his duty in regard to the endorsement of this Bill, but what I would respectfully suggest is that Part III of this Bill does not come within the wide definition which I have quoted from the Act of 1911.

In conclusion, in reference to some remarks which fell from the hon. Member for Leicester West (Mr. Pethick-Lawrence), I am prepared to say this, that if I am induced to go into the Lobby in favour of the Third Reading of this Bill, it is less because I like the proposals of this Bill than because I dislike even more strongly the proposals which would be likely to come from the opponents of my right hon. Friend.

Mr. H. WILLIAMS

I have listened with great interest to the speech that has been made by my hon. Friend the Member for York (Sir J. Marriott). Quite frankly, I do not take the same view as he does. I think we are all rather dishonest on this economy question.

Sir J. MARRIOTT

Not all.

Mr. H. WILLIAMS

Most of us. We lead the public to believe that things are possible which, in fact, are impossible. I am of the opinion that the moment you come down to any specific issue economy is not a popular issue, but an unpopular issue, and, up to a point, in some respects, unpopular because we are not prepared, any of us, to sacrifice certain of the enterprises to which this country has committed itself. No one would suggest for example, the abolition of old age pensions, and no one would suggest the wiping out of our Defence Forces, and, that being the case, it is absurd, either for Members of Parliament or for newspapers, to represent the situation in the way in which they do represent it. On the other hand, I am equally satisfied there is public expenditure which is wasteful. I am satisfied that some of that waste can be eliminated, but I am very much afraid that Ministers in their departments are so overburdened with work that, whether Ministers of this present Government or any other Government, they cannot have the opportunities of going into their departments and overhauling the administration and eliminating waste where waste might be eliminated.

The life of a modern Minister is a life of ceaseless burden. He has not only his administrative duties, but he is a member of the Cabinet, which entails attendance at meetings of the Cabinet and Committees of the Cabinet, in addition to attendance on this House and the work preparatory to attendance on this House. One hon. Member suggested that more utilisation might be made of back bench Members. I think that if some of us were given an opportunity of chasing round the departments we might eliminate a certain amount of waste. I never enter a Government department without seeing signs of waste, in unnecessary staff. I never correspond with a Government department without being convinced of waste, because of the slowness in receiving replies. Prompt replies mean economy in administration, dilatory replies always mean waste, because it means the stuff hanging round all the time. What strikes me when I enter the room of a civil servant is to find his desk piled up with documents which would never be tolerated in a private business.

The CHANCELLOR of the EXCHEQUER (Mr. Churchill)

To which you make a contribution.

Mr. WILLIAMS

To which I make a contribution. If letters come into my office I am miserable if I leave my office without leaving my table clear, whereas no Civil servant ever leaves his office without leaving a great mass of correspondence there from day to day. The hon. Member for York was unfair to the Chancellor of the Exchequer. Whilst he was speaking I looked out the figures, and I compared the total expenditure for 1924–25 with the estimated total expenditure for this year, and from that I have deducted expenditure on the Post Office, on the Road Fund and on the Sinking Fund. The net amount which remains the ordinary Government expenditure including interest on debt, amounted in 1924–25 to £688,000,000— I am leaving out the odd hundred thousands—whereas the amount for this year is £691,000,000. The exact difference is not the £3,000,000 which his figures would indicate but £3,500,000. That may be more than explained by the pensions scheme or, alternatively, it may be more than explained by the sugar beet subsidy or by the growth in old age pension expenditure. If we take the normal Government expenditure, the increase is £3,500,000. If we look at it from the point of view of revenue derived from taxes imposed upon the citizens we find that actually the tax revenue expected during the present year is almost exactly £1,000,000 more than the tax revenue of 1924–25. That increase in the total revenue has been provided by the increased revenue of the Post Office, the increased revenue from the Road Fund and by the increased yield of certain miscellaneous sources of revenue, including reparation. Altogether, the situation is not suite as bad as it has been painted, and I think it is a pity to paint it in unduly dark colours because it lowers our national credit. When we bear in mind that the aggregate income of the people this year, if all goes well, will probably be £150,000,000 more than in 1924, we find that our tax burden is a diminishing burden in relation to the resources of the people.

Mr. MacLAREN

Oh!

Mr. WILLIAMS

I do not think the public of this country realise that, if we compare one year with another, the income of the people is increasing to the extent of £40,000,000 to £50,000,000 a year, and that number of people employed in this country is somewhere between 700,000, and 800,000 more than it was two and a half years ago, when the present Government took office. If we go back about four years we find that there has been an increase in employment of well over 1,000,000. Through the increase in our activities in a great many directions the income of the nation to-day may well be £300,000,000 or £400,000,000 a year higher than it was five or six years ago. These are very large figures, and we have to judge our national expenditure in relation to that fact and in relation to our population. It is no good taking some particular year and regarding that year as an arbitrary standard by which we can judge the future for all time.

The passage of this Bill through Committee has been a curious passage. The amount of attention devoted to big items has been comparatively small. The big items are for raising additional money, such as the £5,000,000 from the brewers, the £15,000,000 by ante-dating the Income Tax under Schedule. A, and the raiding of the Road Fund to the extent of £12,000,000. These things have not occupied a great deal of attention except, possibly, the Road Fund, and they have excited outside the House even far less interest than they have excited inside the House. There is, broadly speaking, nothing but general approval of the Chancellor of the Exchequer's success in finding some emergency device of a satisfactory character to meet an emergency situation. I am full of admiration for the Chancellor of the Exchequer that he has succeeded in solving this problem without the necessity of imposing taxation of a kind which would have hampered trade.

The only other things which have caused some debate have been certain extensions of safeguarding, and what are now Clauses 31 and 33. I took an active part on both of them, vigorous in defence of the Government when they were extending safeguarding, and equally vigorous in criticism of the Government with regard to their original proposals in Clauses 31 and 33. As I stated on the Report stage, I think that in the final form of those Clauses the ordinary business man can feel that his legitimate alarm has been allayed, and that the honest trader can go on trading without fear of interference with his legitimate liberty. Those of us who took a strong attitude and an attitude of active criticism were justified in our attitude by the very large modifications that were made in the scheme as it passed through Committee and Report stage.

I should like to say a few words on a subject on which it was my intention to speak during the Second Reading, but I happened to get up at eleven o'clock at night, when hon. Members opposite were very anxious that we should vote then, although for other reasons it was desired that the vote should not take place until 11.30. During my speech, which lasted half an hour, I am afraid that not much was heard, and I desire now to develop a certain argument which I was not able to develop then. The hon. Member for Ilford (Sir F. Wise) referred to National Savings Certificates, and rather condemned the whole idea of them. I differ from him on that point. The National Savings Certificate is a valuable social instrument as well as an instrument of great financial advantage to the State. It is a convenient method of enabling people of moderate means to save under conditions of very great security, and it may be an instrument for gradually converting a very large part of our debt from the fairly high rate of interest at which it now stands to a lower rate of interest.

Unfortunately, the present Chancellor of the Exchequer inherited from a whole series of Chancellors of the Exchequer certain ill features in connection with the scheme of savings certificates. The interest goes on accruing month after month, but that interest is only payable when the certificate is cashed, and as the holders of the certificates have the right of cashing at any time they please, subject to certain disadvantages if they cash in the first 12 months, the Chancellor of the Exchequer is never aware of the demands that will be made on him for interest on that part of the National Debt which consists of National Savings Certificates. There are, roughly speaking, £500,000,000 worth of savings certificates. including accrued and unpaid interest, outstanding at the present moment. All that can be demanded at any time. The chances of a very large proportion being demanded are, of course, small, but the demands year by year may vary enormously. Last year was a bad year from that point of view, because, owing to the long coal dispute, a great many people were hard up and had to use some of their capital reserves.

There were large encashments of National Savings Certificates during last year and the National Debt Commissioners had to provide out of funds placed at their disposal through the Sinking Fund that part of the encashments which represented the capital value, and the Chancellor of the Exchequer through the current account, had to provide the whole of the interest. The Chancellor of the Exchequer last year found himself compelled to provide £6,000,000 more in interest than he had anticipated and, to that extent, were his accounts disturbed. What will be the position this year? It is estimated, according to the answer to a Question which I asked, that the amount of interest which will accrue on outstanding certificates this year will be £24,000,000. In the estimate for interest on the National Debt presented in the financial statement on the opening of the Budget £9,000,000 is provided for interest on National Savings Certificates. The amount expected to accrue is £24,000,000, so that we shall pile up a future liability of £15,000,000 of unpaid interest on National Savings Certificates during this year. We are deferring that liability and it is inaccurate to say that we are providing £65,000,000 for Sinking Fund when, as a matter of fact, we are piling up that future burden of £15,000,000 which will have to be met somehow or other. In other words the Sinking Fund for the current year instead of being £65,000,000 will only be £50,000,000. That is one bad feature.

The other bad feature is that in a time of national difficulty when people are hard up they will demand payment of their certificates. That will involve great disturbance in the year's accounts and, possibly, that disturbance will fall upon the Chancellor just when his accounts are difficult for the same reason as the accounts of individual citizens are difficult. There ought to be a reserve to meet those charges. Quite honestly I think the Chancellor ought to allow each year in his estimate for interest on the National Debt, a sum equal to the full amount which is accruing on Savings Certificates, and, if certificates should not be encashed to that extent, that sum should be placed in reserve under the control of the National Debt Commissioners so that they can meet the interest when it falls due. We ought not to go on living in a fool's paradise as we are doing at present in this respect. It seems to me that this is a matter of considerable importance. We ought not to go on working on the bad system which the present Chancellor of the Exchequer inherited. I do not blame him for it, but he ought to devote his mind to seeing if he cannot alter it. I know that the Colwyn Committee looked into the matter and in view of the evidence given, I think, by Sir Otto Niemeyer decided to recommend no change. But I think that evidence was given before we had the coal dispute and before we realised what a disturbing effect the present system might have on the finances of the year.

I should like to make some reference to the speech of the hon. Member for Finsbury (Mr. Gillett) who opened the Debate. He suggested that the reductions of Income Tax which took place—the first, in 1922 from six shillings to five shillings, and the further reduction of five shillings to four shillings and sixpence in the first Budget of the present Chancellor—had not had a good effect. I have always taken the view that a high level of direct taxation hinders the rate of saving of a large section of the people, renders new capital scarcer than it ought to be, and hampers the development of employment and, in particular, the growth of employment in those industries which are engaged in producing what we may call capital goods as distinct from goods for ordinary consumption. I know that since the first reduction of Income Tax took place the volume of employment has expanded by possibly 1,250,000 persons. That is a definite advantage and I hope future Chancellors will pursue that path, always bearing in mind that they must do justice as between all classes of the taxpayers. The hon. Member went on to criticise the policy of deflation pursued by the present Government and by previous Conservative and Coalition Chancellors. Quite evidently a policy of deflation, particularly if the rate of deflation is very rapid, can produce very distressing effects but I well remember that when the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) was Chancellor of the Exchequer precisely the same policy was pursued. There was no change whatever in the general financial policy of the country so far as the National Debt and the enhancement of the exchange value of sterling were concerned. I remember speeches by Members and supporters of that Government in which they pointed with profound satisfaction to the fact that the rate of exchange of the pound sterling with the dollar had improved so far as the pound sterling was concerned. They emphasised what a satisfactory thing it was; in other words they rejoiced at the continuation of deflation which had taken place.

It is no good for them to come along now when the process has been completed and to denounce it. The restoration of the gold standard in May, 1925, was not in itself a dramatic act. When we see an eclipse the precise moment at which the sun is obscured seems rather startling, but it is only part of a continuous process. The process was going on all the time and the effect became suddenly revealed in the actual eclipse. The gradual process of raising sterling until it reached gold value had been persisted in since 1920 and when we suddenly "pegged" sterling to the gold value people thought it was dramatic. It was merely a part of a process in which every Chancellor of the Exchequer played a part since 1920. The Chancellor of the Exchequer in the Socialist Government equally played a part in it and rejoiced in the part which he played. Since the gold standard was restored there has been a marked expansion in the employment of people. There has also been a substantial reduction in the wholesale prices of commodities and in the cost of living. Whatever fears we may have had as to the restoration of the gold standard we can say with truth that those fears have been largely dissipated.

I think it was the hon. Member for West Leicester (Mr. Pethick-Lawrence) who said that the troubles in the coal dispute were aggravated by the restoration of the gold standard. I thought it was perfectly clear to all who studied the problem at all, that the acts which happened in June and July of 1924, namely, the signing of the Pact of London and the re-adjustment of wages in the coal industry, coming at the same time—the former leading to the evacuation of the Ruhr Valley—brought the coal industry for the first time since the end of the War against the full blast of increased foreign competition. That is an adequate explanation of the subsequent events, quite apart from any change brought about by the restoration of the gold standard. It has always seemed to me an extraordinary narrow view to fix upon the restoration of the gold standard when there were other obvious explanations staring one in the face. The hon. Member for Finsbury attributed all our troubles to deflation. If he thinks that, I presume he is, quite frankly, an inflationist. He regretted that the financial policy of this country was largely under the control of the Bank of England which is a private institution and he practically urged that we should have State control of finance. I see an hon. Member opposite who also held that view and who, to my personal regret, involved himself in some financial obligation through seeking to give effect to it, because it turned out that his Bill was a Hybrid Bill and he had to pay for the privilege. I always regretted that, because I had an admirable speech prepared for the occasion, the delivery of which was prevented by the ruling of Mr. Speaker on the matter.

Mr. MAXTON

I never paid.

Mr. WILLIAMS

I propose to deliver a brief part of that speech now. Earlier in the Debate some reference was made to the position of the Bank of Germany and it was suggested that part of Germany's troubles were due to the fact that the Reichsbank was not under the control of the German Government. When the Dawes experts produced their Report they recommended that the Reichsbank should be a private corporation. That was the first step. Then the right hon. Gentleman the present Leader of the Opposition achieved his great diplomatic success, on which we have always congratulated him, namely, the Pact of London to give effect to the Dawes Report. The Pact of London might be said to have denationalised the Bank of Germany and also the railways of Germany. The question was raised as to whether the late Chancellor of the Exchequer signed that Treaty. I find, as a matter of fact, he did not, and the signature on behalf of the British Government was that of Sir Eyre Crowe but it was given during the period when the right hon. Gentleman the Leader of the Opposition and the late Chancellor of the Exchequer held office and with their authority. They were responsible for taking State control off the Bank of Germany and handing that control over to private enterprise, because it has been found in practice that, unfortunately, you cannot trust democratically-elected people to operate the financial lever honestly. In France the same kind of thing happens.

Mr. MAXTON

Does the hon. Member suggest that because they could not find people to work a national bank honestly in Germany, it is equally impossible to find honest people in Great Britain?

Mr. WILLIAMS

I am grateful for that interruption. The word "honestly" was unfortunately chosen. I did not mean dishonesty in the sense of personal peculation but in another sense. It is quite clear that by operating the credit-creating machine you can produce all sorts of desirable results for the time being. It is much like getting drunk. It is very delightful, I am told, while you are getting drunk, but very horrible when you are getting sober. Inflation is getting drunk and deflation is getting sober. The trouble is that when the financial controller is the State it gets financially drunk and rejoices in it, because of the pressure of public opinion. Thus you require to have someone who will remain sober even though the bottle of inflation is to his hand. You cannot trust the State in that respect, but you can trust the directors of the Bank of England.

Mr. MAXTON

Does the hon. Member suggest that the right hon. Gentleman is untrustworthy?

Mr. WILLIAMS

I do not, but I do not want him to be tempted with the brandy of inflation.

Mr. MAXTON

I would trust him with a public house.

Mr. WILLIAMS

The hon. Member for Finsbury who raised this issue attributed all our troubles to deflation, but that is not true. I remember how the collapse came. In January, 1920, there was a bank panic in Japan; in March the trouble spread to the United States, and in May the first signs were visible in this country and showed themselves in many ways. Wholesale prices showed signs of dropping and, on one Friday, the Treasury failed to sell its quota of Treasury Bills and that led to the Bank Rate being raised to 7 per cent. Just after that time the present Foreign Secretary introduced a Budget in which he—as I always thought very foolishly—raised the rate of Excess Profit Duty from 40 per cent. to 60 per cent. If that was a deflationary act, it certainly did produce dramatic and drastic effects upon industry because the number of enterprises suddenly checked by that unwise step was well known to many people. Then there was the consumers' strike which was world-wide and the agitation against so-called profiteering. In America, I understand, the propaganda was far more effective than it was here and the public were urged that the only way to stop the rise in prices was to stop buying. In the end those who wanted a drop in prices succeeded in persuading the public from buying and prices did not merely drop—they crashed and ruined hundreds of thousands for the time being in the process. What is the use of ascribing all those amazing changes which took place between January, 1920 and the middle of 1921 to the decision of the Directors of the Bank of England raising the bank rate to 7 per cent. and to certain restrictions applied to the issue of currency notes somewhere about the same time. I think that is a narrow view. The financial acts of this country were very largely, not the cause, but the consequence, of world-wide events over which neither this Government nor any other Government had any effective control. I think we have to look at this from a wider point of view.

There is just one last point of detail which I wish to mention. The hon. Member who opened the Debate asked what assistance was a reduction in Income Tax to industries which were suffering under a heavy burden of bad trade and in many cases making no profit. He hinted that the rates were the real burden, and that no assistance had been given in that direction. I agree that rates are a direct element in the cost of production, but it is grossly unfair to suggest to this Government or preceding Governments that the ratepayers have not had very generous treatment at the expense of the taxpayers so far as we can regard those persons as separate groups or, at least, as groups whose interests are not quite the same. To-day the ratepayers are receiving, through the Government, grants which are roughly four times as great as they were receiving in 1913. The rates themselves have roughly doubled, and if it had not been for the enormous increase in Government grants, instead of being roughly double they would be nearly three times what they were. The plain truth of the matter is that there is very great local extravagance up and down the country. I meet people who deplore the expenditure of the central Government, and who are, themselves, members of local authorities engaged in extravagant expenditure. It is as well that people should realise that there has been gross waste in municipal expenditure in this country, and there is as much need for checking that waste as for checking waste in central expenditure. I am sorry to have occupied so much time but certain references made in other speeches have led me to speak at greater length than I had intended.

Mr. MAXTON

I do not normally enter into Debates on finance questions, and I do so on this occasion with great perturbation, following, as I do, such an expert as the hon. Member for Reading (Mr. H. Williams). He has raised some matters which are of particular interest to me and, during his speech, I made an intervention which I should now like to expand. I gather that he believes that because foreign States imposed upon Germany the denationalisation of her banks and railways, it proves that the nationalisation of banks and railways is impossible. Foreign Governments believed they were not good for Germany.

Mr. WILLIAMS

A foreign Socialist Government.

Mr. MAXTON

Would that be a strictly accurate description of the position? My right hon. Friend the late Foreign Secretary certainly did conclude those negotiations which had been proceeding since 1918, and which had been taken part in by Coalition and Conservative Governments. The States of the world were involved and both the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) and the right hon. Gentleman who is now Prime Minister failed to get anything like a reasonable working plan to bring the nations out of the financial chaos of the War. It was left to my right hon. Friend to get out of all these conflicting international interests a means of enabling something like harmonious functioning of the international financial machine to take place. He had to make certain concessions to meet the American, the Italian, and the French financiers, and if nationalisation of banks and railways in Germany had to be thrown to the Capitalist wolves of the world to secure something like stability, then that may be a very high testimony to my right hon. Friend's capacity as an international diplomat rather than an argument against the nationalisation of banks or railways. I want to cross swords with the hon. Gentleman also in the suggestion that there is a rash expenditure of public money on social services, either locally or nationally.

Mr. H. WILLIAMS

I did not say there was.

Mr. MAXTON

I hope I am not misunderstanding the hon. Member when he talks about careless municipal expenditure. A big proportion of municipal expenditure is on social services of one kind or another. He may have something else in mind, but I know that there is careless expenditure, from my point of view, of local authorities' money. I know that they spend a huge proportion of their money in giving interest to bankers and financiers, in which I would not spend a halfpenny. But I am quite satisfied of this. After listening all day yesterday to the various reports of the Secretary of State for Scotland on the various departments of education, public health, prisons, and other matters, I am certain that the one thing in which the community is getting value for its money is in the expenditure on social services. The policy of the Government since the War has been directed, in my view, to saving the financiers of this country at the expense of everybody else. It is a shocking thing that the great banking combines of this country, through all the years, bad or less bad, since the War, have had their dividends always remaining high. The 25 per cent. and the 30 per cent. dividend can always be declared by the great banking corporations.

Anybody who is running financial things, anybody who is merely manipulating money, can live comfortably and still increase his profits and his capital holding, but the man who owns industrial capital, the man who owns a shipyard on the Clyde, or a cotton factory in Lancashire, or a woollen factory in Yorkshire, is struggling to keep his head above water and on the verge of bankruptcy. I am certain of this, that the financial policy of the Chancellor of the Exchequer for the last year has been such as to maintain Britain's power as a moneylender, the moneylender of the world, and to maintain London as the great financial centre of the world. The Shy-locks are all right, but the industrial workers, whether masters or men, have been sacrificed to this Golden Calf, which to a large extent is not a British institution at all. To a large extent it is in the hands of people of other nationalities. Anybody who works in industry—right throughout Scotland our mining industry is depressed, our agricultural industry is depressed, our fishing industry is depressed—anybody who is willing and anxious to earn an honest living, is hard up against it, but the man in the bank parlour, the financier, is doing all right. It does not matter who is starving, he is making his profits.

2.0. p.m.

The policy of the right hon. Gentleman should not have been one of getting drunk on a super-inflation, or of having "the morning after" feeling by not getting the necessary hair of the dog that bit him. His policy has not been either the one thing or the other. As a matter of fact, the financial policy of the Government is not that of the wild drunk, whom one can appreciate and applaud and laugh at, the man who is feeling repentant about it afterwards. The state we are getting into is the state of chronic alcoholism, the state of the secret, solitary toper who is drinking from morning till night, day in and day out, and reducing his nerves to a dreadful state. That is the condition we are in—neither that of deflation nor of inflation. The banking policy, the financial policy, of this country, should have been directed to supplying the necessary, useful activities of this country with that amount of financial capital that they require for their success. Our financial policy should have been directed to helping industry instead of to killing industry. I hope the right hon. Gentleman is going, if he has the opportunity of bringing in another Finance Bill, to do something in the way of wiping out that big half of our national expenditure that is required to meet the claims of people who have merely lent money. I think more than half of the £800,000,000 odd of our national revenue is required to be poured into the rapacious maw of the moneylender. More than 10 times as much as that which goes to the men who were broken and maimed in the War goes to the moneylender. I wish we had a Chancellor of the Exchequer sufficiently courageous to wipe out the whole of that £400,000,000 and to say to the people who have lent the money, "You will get your interest out of the general welfare of Great Britain. The War was fought and protected your property and your life, and you do not need anything more out of the State's purse. You have got the right to live freely in Great Britain." Wipe out that debt completely, and let the nation start financially on a clean sheet.

Mr. EDWARD GRENFELL

The last speaker has introduced the dramatic touch which was here in April when the Chancellor of the Exchequer introduced his Budget. If we carry our minds back to April, we remember that we then found this House crowded, very differently from to-day. We found everybody agitated as to what was going to happen, and the House was crowded as if it were a theatre on the night of a revival of "Hamlet," when all the critics had come to see someone play a new part of Hamlet. When they had been here for half an hour or so, the gloom began to be lifted, and although they had a programme in their hands—the White or the Blue Paper—they could not read it on account of the gloom in the House, and so they were contented with listening to the Chancellor of the Exchequer. When he had unfolded his tale, and the audience had gone out into the Lobby, somewhat surprised but entirely happy, they looked at the programme which they had been unable to read, and they found that, so far from it having been "Hamlet" to which they had been listening, they had been listening to a revival of the Old play by Massinger, entitled "A New Way to Pay Old Debts," presented up to date by the Co-optimists. I regretted to read in the paper the other day that the Co-optimists, who were considered to be a very successful troupe, had gone into liquidation.

However, the fact is that the Chancellor of the Exchequer, in introducing his Budget, had relieved everyone's mind, I think, on all sides, to such an extent that the right hon. Member for Colne Valley (Mr. Snowden), I would not say on that occasion with an acid smile, but with a placid smile, had felt compelled to praise the right hon. Gentleman. After the first effects of the Chancellor's speech had worn off, he went through rather a bad time, because on reconsidering the Budget there were certain features of it which, at first sight, did not appeal to all sides of the House—I specially refer to the original Clauses 29 and 31—which were couched in language which it was very difficult for anyone, even a lawyer, to understand. I think it was unfortunate that they were not more lucidly explained, because the Press and public generally, to a large extent, got a wrong and an exaggerated idea of the danger of those Clauses. The modifications which have been introduced have, to a large extent, I believe, removed the danger that was felt, but not entirely so. I think it is the desire on all sides of the House—because, in spite of the dissent occasionally from the other side, none of us is anxious to protect the tax-dodger; and we are all dependent on Industry—to remove as far as possible all hindrances to the proper development of industry.

The Chancellor of the Exchequer has said that he will welcome, during the course of the next year, any committee that can be formed to advise him how to make the procedure more simple, how to capture the real evader and to remove any doubt in the minds of real industrialists that any blow is aimed at them. I think it will be very difficult to appoint such a committee which can be of real help, because the Chancellor and the Treasury have had the benefit of the greatest lawyers in the land in framing these Clauses. My impression is that if the Chancellor has had the benefit of the advice of the first-class lawyers of this country, the tax-evader will get the benefit of the second-class lawyers to advise him, and I believe the second-class lawyers will beat the first class. I do not believe that the Clause, as framed, will catch the man who, though legally correct, is a delinquent. I can only hope that if the right hon. Gentleman is asked to do so, he will lend the services of an expert of the Treasury to advise any committee that may be formed inside or outside this House.

To turn to another subject. The Sinking Fund has been referred to by the hon. Member for Reading (Mr. H. Williams). I applaud the Chancellor's decision to keep that fund intact, and to increase it, and it is necessary to increase it, because the old Sinking Fund, by which I mean the 50,000,000, is already definitely pledged to certain purposes. It is necessary to increase it from £50,000,000, so that he should have a free fund with which to reduce existing short and long debts, and to provide him with some credit, or extra credit, and an inducement to people who are ready to convert on a lower basis than that which is being paid by the Treasury to day. I think we must all feel that the increase in the Sinking Fund, although a burden to the country, is absolutely necessary to our financial salvation. In the items which are furnished to the House in the White or Blue Papers I think there are certain points which are deceptive, and, amongst the liabilities which are shown, are items amounting to some £135,000,000 which we owe to foreign countries. Those appear as liabilities, but, on the next page, there appear, as contingent assets, loans of £1,500,000,000 or so, owed to us by the same people to whom we owe the £135,000,000.

I think it is misleading to the country if we are to think that we owe, and are going to pay, that £135,000,000 of liabilities. If there is any idea that we are going to pay those, let us be very careful how we implement the agreements which were concluded with the foreign countries I have indicated. An agreement was tentatively arranged with France, under which they were to be let off certain debts, or their debts were to be so arranged that they were let off large amounts. Last year, I believe on the Third Reading of the Finance Bill, France was referred to, its finance was criticised and, at the same time, compassion was asked for for the country which was then in some difficulty. To-day, a year later, we find France in an entirely different position, and, as a result of the improvement in its finances, we in this country have found a new policy pursued by France, which has caused, and is causing, our Government greatly increased expenditure. A very short time ago the Bank of England Rate was reduced, and the general public believed that it could be further reduced. Unfortunately, owing to various circumstances abroad, not the least of which is the recovery in the position of France, it has been impossible to get money rates down, and I do sincerely hope that, as the Government of France were unable to implement that agreement last year, the Chancellor will see his way to consider the question as being an absolutely open one to-day, and if France was not prepared to sign that agreement last year, when it suited us to do so, we should now be very careful not to feel bound by that agreement, and be free to discuss the various points which I raised over a year ago with regard to the gold question. It is, I think, bad financial business for us to give another country an option on an agreement to sign it when it is favourable to her, but to ask for an alteration when she does not think it suits her to do so. There is, undoubtedly, always a risk that we may find the gold strain very severe upon us. I think the hon. Member for Reading has treated the matter in a very masterful fashion to-day, but if, in the course of years, there should arise difficulties—far be it from me to think them probable—I think we should be very careful to keep our house in order, and not make any agreement that might make things more difficult for us in the future.

One other thing raised by the Budget was the reduction in the new Ministries. I do not know whether that is eventually to be carried out. I am quite sure the elimination of three Ministries would in itself make very little impression in the income or expenses of the Government, but if we are considering the elimination of three new Ministries, surely it is much more useful to examine what are the uses of many of the old Ministries. I think in 1880 it was considered that 12 Members of the Cabinet were too many. I have seen nothing in the last few years to indicate that a Cabinet is a more workable proposition when it consists of 22 members than it was when it numbered 12, as in 1880. If new circumstances have arisen which make it advisable to have new Ministers, if it is necessary now to have a President of the Council, a Chancellor of the Duchy of Lancaster and other Ministers, we ought to consider whether such Ministers are entitled to Cabinet rank. I think it would cause less confusion to the general policy of the Government if, in the future, the Cabinet were confined to, say, five members, as was the case with the War Cabinet, or six or seven members, because with the best will in the world a Cabinet of 22 cannot preserve that sacred secrecy which is more easy to obtain when there are only five members sitting round a table.

Supposing these three Ministers whom I have mentioned, and perhaps many more, are redundant. Is it not better for the country to see a reduction in expenses, or a gesture of reduction, coming from the top rather than from the bottom? It is better to eliminate five or six Cabinet Ministers than 30 charwomen. And when we are speaking of Ministers, it appears to me that there are many Under-Secretaries who might be considered to be redundant. The hon. Member for Reading professed himself unable to think, if he became a Minister, that he would be able to make many reductions in the personnel of some of the Ministries. I think so too, and I think any Minister or Under-Secretary "nosing about in his office"—to use a vulgar expression—would not achieve much reduction. If the word were passed round that he was coming everyone would put away any little knitting or whatever else they might be doing in their spare time. The duty of Ministers is to deal with the general policy of their Departments, and to answer questions in this House; they can do little internal work in their offices. It would be a good gesture if several of these Under-Secretaries could be abolished, unless it is considered necessary to keep them as a kindergarten for future Cabinet Ministers.

I am not implying any criticism of any particular Minister, but, if we take the Under-Secretary for the Post Office, I think he has failed lamentably for 20 years to deal with the only question which he ever really treats of in this House, namely, the ability of the Government to run the telephone system in one-half as practical or economical a way as is done by a great private corporation in America. He hs had 20 years in which to rehearse or to learn his brief, or to get a brief made for him, and he has lamentably failed. On the last occasion on which he explained his difficulties, he said it would cost some £94,000,000 to buy out the telephone system here. I think five or six times that amount of money forms the capital of the great enterprise in America which runs the telephone system there, which is the most efficient system in the world, which is a model to everyone, which is a model employer, and which returns a good income to the investors in that company. I should welcome the handing back of our telephone system to private enterprise if that were possible, and I cannot believe that the results would be half so unfortunate as they are.

With reference to other proposals in the Budget, I think that on this exceptional occasion the raiding of the Road Fund was wise. It was to a large extent a book-keeping transaction, because it did not seem probable that the money would be spent year by year. I sincerely hope, however, that this is the last occasion on which the Chancellor of the Exchequer will have to go through his pockets to find fortuitous sources of income. We are all aware of the difficulty with which he is faced now, and with which he was faced three months ago, in regard to the expenditure in China, and I hope we may soon see our way to reduce that expenditure by bringing back the troops. I do feel, however, as I think everyone who knows the circumstances feels, that our action was wise. It came at the right moment, it was effectual, and the criticism that it could have been accomplished with fewer men is unjustified. If we were to do it at all, it had to be done in a big way, and I sincerely hope the Chancellor of the Exchequer and the Treasury will shortly be relieved of that burden. The apathy shown by the House on the last day of the Finance Bill indicates that, on the whole, the malcontents have been to a certain extent appeased, but it remains for ire, for Members on all sides of the House, and for those outside, to get together and, if possible, to devise a method of helping the Treasury out of their tax evasion difficulty.

Mr. HARDIE

I should not have taken part in this discussion but for certain statements made recently. The hon. Member for the City of London (Mr. E. Grenfell) and the hon. Member on the same side who preceded him cast what I regard as very nasty slurs upon Government Departments and their employeés. One of them said that if only he were employed he would show all the Government Departments how to run their business and how to leave their desks clean and cleared up at night. Anyone with any knowledge of running a business of that magnitude knows that that cannot be done unless there is very little business doing. Then there was the reference to "nosing about the office." I know what that means, and I am sorry that anyone with the standing of the hon. Member for the City of London should make such a slurring remark in reference to Government Departments. When you speak of "nosing about" it means that you distrust those whom you are nosing about amongst. No one can handle employeés efficiently by nosing about.

Mr. E. GRENFELL

That was exactly the point I made, or meant to make. The Civil Service is so efficient that it is trusted, and any such sort of suspicious gesture as is indicated by the word "nosing"—an unfortunate expression—would be ill-advised, unfortunate, and one of which I should entirely disapprove.

Mr. HARDIE

I am glad to have that explanation from the hon. Member, because his statement made a wrong impression. But I want to ask him how he aligns that statement with another one, in which he said that if certain things were done he was quite sure the Departments could do with fewer employeés. What was running in his mind was that there was something inefficient about the Departments, or he would not have made the statement that if things were done in another way men now employed might be dismissed without affecting the efficiency of the Departments. It is my experience during the five years I have been a Member of Parliament that whenever I have gone into any of the Departments in connection with any business I have never found the offices in a litter, as was described here to-day. I have found a business office with the necessary accumulation of documents on the desk. If those documents had been dust-laden, one might have taken it that it was a repetition of the old story of the lawyer awaiting clients and keeping bundles of papers on his desk in order to give the impression to callers that he was busy. Government offices do not require to resort to those practices. I have never seen anything but consistent application on the part of those engaged in work. When we attack people, I always like those who are attacked to have a chance of replying; otherwise, I call it cowardice.

I rise to protest, not only against what has been said against our public departments, but against the manner in which it has been said. I want to back up those men who have no right of reply in this House. If we had a system here where some direct representative of the department was allowed to reply, I am sure a good many statements which under our present system are made would not be made in this House. The previous speaker made a reference to the telephone system in America. From that statement, I take it that the hon. Gentleman has been in America and has had some experience of the telephone system in that country. I presume that he has been in America, but I wish that, in making his comparisons with the American telephone system, he had told the truth about the telephones in this country. He did not tell us what happened when the nation took over the telephones. Why did the hon. Member not tell the full story as to how the nation was made to pay for something which did not exist, and how we were taken in by private enterprise in that take over. It is no use making a statement like that when we have efficient Government departments where you can get all the facts in relation to the telephone and the difficulties we have had to encounter since the telephones were taken over by the nation. Surely hon. Members have not forgotten what took place at that time.

As for the comparison which has been made with America, I assert that, taking everything into consideration, the British telephone system is as efficient to-day as anything in the world. Hon. Members must take into consideration the difficulties which the Government have had to overtake since taking over the telephone system. In this country, we did not have the clear, clean ground to start with as the Americans had, and we must not forget these difficulties, many of which have not yet been wiped out. We had o take over an inefficient telephone system at a cost four times greater than it ought to have been. Not only had we to contend against that difficulty, but we had to reorganise the whole system. Had we taken over an up-to-date telephone system as was the case in America, all these difficulties would not have occurred. In view of these facts, statements like those which have been made by the last speaker do not contribute to the argument. Under these circumstances, I hope hon. Members will think twice before venturing to cast aspersions of this kind upon public Departments.

Sir ROBERT HORNE

The last speaker has dwelt upon a topic in which I have always taken great interest. He seemed to think that my hon. Friend the Member for the City of London (Mr. E. Grenfell) had cast some aspersions upon the Civil Service, but I am sure my hon. Friend knows the work of the Civil Service too well to indulge in the kind of attack which has been attributed to him by the hon. Member for Springburn (Mr. Hardie). I am only expressing the opinion of the hon. Member for the City of London as well as my own opinion, when I say that this country possesses the best Civil Service in the world, and one from which it gets the most loyal assistance which could be given by any staff. No doubt people will be able to discover things upon which they are able to make reflections, but, taking it as a whole, I think we get from our present Civil Service organisation help and assistance for which the country ought to be grateful.

I pass from that topic to what I hope my hon. Friend the Member for Spring-burn will forgive me for saying is a more interesting subject. The hon. Member for Bridgeton (Mr. Maxton), is always listened to with great delight by every Member of the House, and upon the present occasion he indulged in a series of comments upon the financial policy of the Chancellor of the Exchequer. The hon. Member used many metaphors, including one about intoxication, in connection with which I cannot follow him, because I cannot speak with any particular knowledge on the subject. I think the hon. Member allowed his eloquence to run away with him at certain points. He made an attack upon the banking system of this country in connection with the policy pursued by the Chancellor of the Exchequer, and he attributed the many ills from which we are suffering to the failure of the banks to support the industries of this country.

In that connection, I say without fear of contradiction that in no case have the banks failed to support the legitimate trade interests of this country. Anyone who knows what has been going on in regard to our industries will realise what a very great burden the banks are carrying because of the assistance they have given to industries. It is not possible for any industry to say that they have failed in getting the support of our banks for legitimate projects. I should also like to say that the whole welfare of the country depends upon the stability of our banks. It is no good asking the banks to go in for speculative enterprises, because, if you once find your financial system embarking on that kind of career, you may say farewell to the prosperity which this country has enjoyed in the past very largely through the stability of our financial system.

Reference has been made to the amount of dividends distributed by the Bank, but it should be remembered that a very large proportion of those dividends depend upon the careful conservation of resources which has taken place in the past, and these are the basis and the fruitful source of the business enterprise of this country. The hon. Member for Bridgeton complains that the banking system of this country finances the affairs of other countries, but I should have thought that by this time it was trite knowledge that the investment of funds abroad to the extent to which we are enabled to lend our surplus finances is one of the main sources by which British industries are supplied with orders. One has to remember that every loan which goes out from this country to any other country can only go out, in the end, in the shape of goods, and that those goods mean employment for vast numbers of British citizens. Accordingly, so far from attacking the system under which our banks are enabled to lend to other countries, we ought to support it with all the influence in our power in this House, and to congratulate ourselves that we have been able in the past to accumulate such moneys as have enabled us to gain, by the lending of those moneys, employment for our people.

One of the reasons why we are to some extent pressed to-day is that our foreign investments have been largely depleted as a result of the War, and we are no longer able to give that amount of financial assistance in other countries which brings those orders upon which our industry fructifies. Accordingly, I would venture to hole that that kind of argument will cease to be adduced in this House as a criticism of our banking system, because the attack which is made is directed against principles which are the real foundation of British industrial prosperity. The only way in which large population within the confines of a small island can exist is by being enabled, through the financial system which we enjoy, to manufacture so largely for other countries in the world.

I pass from that to the very careful and illuminating speech of my hon. Friend the Member for the City of London. He has directed attention to principles in the carrying out of our country's business his remarks upon which I think it would have been useful for a very much larger audience in this House to hear. He has laid down lines of thought which we ought all to take, into account in considering what our future is to be. In particular, he said something with regard to economy. I am sure that, however hard the Treasury may find it to devise further economies, the only final solution and security for the position of this country lies in the discovery of some means by which we can reduce the enormous expenditure with which we are saddled to-day. My hon. Friend also referred to a matter in which he and I took some part in criticism of some of the Clauses of the Finance Bill. He used a word which I personally would not be inclined to apply to myself. He used the word "malcontent" as a description of those wile have been critics of certain Clauses of the. Finance Bill.

I desire to say that I am no malcontent, but that, on the contrary, I very thoroughly understand and appreciate the difficulties which the Chancellor of the Exchequer has had in designing his Budget for this year and in finding means for avoiding further taxation at a time when our original burdens are hard enough to bear, and also in adopting measures by which all that the citizen ought to pay may be legitimately collected. All of us, whatever description may be applied to us, are very anxious, even from a selfish point of view, about catching the tax evader, because, to the extent to which he succeeds in evading his obligations, they are imposed upon the rest of us. Accordingly, I cannot imagine that anyone has any right to point at us the finger of scorn on the ground that we in any way approve of the devices which are adopted to escape the legitimate burdens which citizenship of this country imposes.

I would like to congratulate the Chancellor of the Exchequer on having met to so considerable an extent the objections which were taken to these Clauses—the Clauses, in particular, which were numbered 29 and 31 in the first draft of the Bill. He has obviously met a great many of the difficulties which were raised in people's minds, but, like my hon. Friend the Member for the City of London, I do not think he has met them all. There are still embedded in these clauses difficulties which give Vise to the greatest possible apprehension in the minds of a large variety of business people who are not anxious to take up any critical attitude towards this Government, but why are disturbed by the problems with which they are faced. would like to say this to the Financial Secretary to the Treasury. We are grateful, more than for the Amendments which have been moved, for the assurance that the Chancellor of the Exchequer is going to take into consideration during the course of the current year emendations which he may be able still to make in the principles on which his present legislation is based. If one thinks of the matter for a moment from the point of view of principle, it is perfectly obvious that, if you are trying to kill trickery, it is ridiculous to say that what is trickery on the part of five people shall not be trickery on the part of six. It would seem obvious that there is something wrong in principle with the preventives which are being adopted, because that is a proposition which is obvious to all of us. Following that proposition a little further, I would venture to say, repeating what I stated in Committee, that we have really based ourselves upon a wrong idea. We are trying to say that the thing which is meritorious is the point at which you should attack this system, instead of starting at the point at which the nefarious act is committed.

Mr. RADFORD

May I ask the rigħt hon. Gentleman a question? How is it that in his own Finance Bill of 1922 we had the same provision as to a company being under the control of not more than five persons?

Sir R. HORNE

I quite agree that I am open to that criticism, and I always think that a man is not only a fool but a knave if he does not admit when he has started on a wrong principle. I own quite frankly that the basis on which I started this legislation was not the one that I should now adopt upon more mature reflection, and, indeed, at the time when I was engaged in dealing with this particular matter, seeing its consequences, I confined it rigorously to those companies which were formed after the year 1914, when it began to be worth while to evade Super-tax. Any criticism that my hon. Friend chooses to make upon that I shall willingly endure, but I want to state my honest and sincere position to the House when I am faced with this problem; and perhaps the House will forgive my saying—I say it only because of certain comments that I have heard made upon my action—that there is no company or institution of any sort with which I am connected which can be even remotely touched by the proposals which the Chancellor of the Exchequer is now making. I am dealing with this matter upon grounds which do not affect me in the very slightest, but which, I am assured, affect the business of the country in general. I would venture to say that it is not wrong—on the contrary, it is right—that people should put as large sums to reserve as possible in connection with their business, and that they should not dissipate the funds which they have for increasing their enterprise in the future. That is a right thing to do, and you should not start your inquisition at that point at all; you should start the inquisition at the point where what is accumulated is wrongly used for the purpose of evading the ordinary taxation of the country. I know how difficult these things are, and I am perfectly persuaded in my own mind that the officials of the Treasury have been working upon this matter with the utmost sincerity, and with all the assiduity and skill of which they are capable—and, indeed, there is no more capable body of men in this, country at the present time.

I would, however, venture to suggest to my right hon. Friend the Financial Secretary that we should start the inquiry which is to take place during this next year by getting out a tabulated list of the ways in which taxation is evaded by the individual—ways in which, under the cloak of a private limited company, he succeeds in putting money to supposed capital which he really uses as income. Let me take one example. The Chancellor of the Exchequer gave us an instance of a common device which was practised by which a person who was largely interested in a private limited company, instead of taking the earnings of the company out in dividends, upon which he would have to pay Super-tax, takes them out as a loan upon which he pays no Super-tax at all. I have read this morning the draft of the new Companies Act which provides that notice of loans to directors of A company must be given in the annual accounts of the Company. That goes a certain length. It is perhaps possible to deal with this matter under the Companies Act, either by providing some restriction regarding the granting of these loans or by providing that such loans, when granted, shall involve the recipient in the obligation to pay Super-tax upon what he gets. I am only suggesting a line of inquiry, but that is one way of meeting the difficulty without upsetting people in the ordinary -conduct of their business.

I regret to have taken so long, but I do beg my right hon. Friend not to imagine that when he has got this Bill passed all the fears and the apprehensions of the business community of this country are allayed. They are not, and I should be a false friend of the Government if I were to suggest that I thought that they had completely conciliated the business community. That is not so, and I would beg the Government to give this matter consideration—as I am sure they will after the assurances they have given—in the course of the next year, and, if they do so, I am certain that they will find very anxious coadjutors to help them in this very difficult task.

Mr. WILLIAM GRAHAM

The temptation to follow the right hon. Gentleman who has just spoken is very great, especially as we devoted so much time during the Committee and the Report stages of the Bill to the problems which he has discussed. But the time at my disposal is limited, and I must immediately turn to one or two considerations on this Budget and Finance Bill which we desire to emphasise from this side of the House. In particular, I would like to pay a tribute to the two admirable speeches of my colleagues behind me who moved and seconded the rejection of this Bill, and to associate myself with the criticism which they offered, that to a very large extent in this Budget we are merely perpetrating a series of makeshifts or devices to get us out of a temporary and passing difficulty without touching the real heart of our financial problems. Every hon. Member must concede that when we have to have recourse to a diversion of the Road Fund, the removal of another month of credit from the brewers, to the devices such as are offered under Schedule A of the Income Tax, and to kindred steps we are undoubtedly in the realm of makeshift which the Chancellor of the Exchequer justifies apparently by the circumstances of 1925, and more particularly by the industrial dislocation of 1926. Be that as it may, the House must agree that in all probability, unless there is some very great improvement in our industrial and financial position during the present financial year, we have laid up for ourselves a very difficult situation in regard to the Finance Bill of 1928–29. Therefore, it seems rather important to-day to try to direct our minds, before this Measure passes from us, to one or two of what seem to us to be the leading considerations.

We on this side of the House do not deny for a single moment that the aggregate burden imposed upon the taxpayers is great if you compare it with the prewar aggregate, or with the sum which we thought might be possible very soon after the European war concluded. When we were in office in 1924 we were faced with an aggregate outlay of about £780,000,000 or £770,000,000. Last year it was £842,000,000, and, although we budget for rather more than £830,000,000 on this occasion, I think there is not the least doubt that we shall probably spend between £840,000,000 and £850,000,000 before the year is out, because the House is perfectly well aware that the Estimates which have been laid are not only on a very close basis, leaving a very narrow margin at the end of the financial year, but they include nothing, or practically nothing, for the exceptional expenditure in China and elsewhere which has already been incurred, and the diminution of which is not on the horizon this afternoon.

That aggregate outlay is before us, and the question which it seems to me confronts all hon. Members of this House, however much we may differ in policy, is what we are going to do in regard to that remarkable problem. Many hon. Members concentrate on particular Departments here and there. We have had a great deal of controversy about the suggested abolition of the Department of Overseas Trade, the Ministry of Transport, and the Mines Department, but, of course, we must concede at once that that is all relatively unimportant. The three great fields of our national expenditure at the present time for Budget purposes are the £120,000,000 on armaments, the £350,000,000 or thereby under the Debt Services, and between £200,000,000 and £250,000,000, taking very round figures, which come under the Civil, or what we call the Social Services. The argument which I would offer to the House this afternoon is an argument which seeks to draw certain lessons from the three spheres of expenditure on these lines. What is the kind of experience that comes to us in the Public Accounts Committee or in the Estimates Committee, or in any other study of public finance? If we take what we pay out on armaments at the present time as a test of that expenditure as it is analysed by these Committees, it, is perfectly plain that we have reached a limit to what the Departments themselves may do. The House will not misunderstand that phrase. I am merely seeking to point out that, when you analyse all the effort which lies within the range of departmental activity, you will find that they have gone very close to most of the things that can be done within their power and within Government policy as regards actual outlay.

When we take armaments or any other branch of the expenditure, we find the Government in the market as a large purchaser of goods and services, and, in the main analysis of the whole problem, we find, in turn, that they are bound, like every class of enterprise in this country, to an appreciable extent by the level of prices. While prices remain at their present level, and of course while policy remains as it is—I will say a word on that later—we have not much chance of getting further reductions in these particular classes of expenditure, viewed, from the standpoint of the departments. Hon. Members might ask, having regard to the enormous load which the State is carrying, what are the prospects of reduction, because this is a matter of vital, importance to us in Great Britian? Far be it from me to pose as an authority or an expert or anything half so dangerous on a, problem of that kind. We can only weigh up the evidence which is offered to us by more competent people, and I am bound to say, everything considered, that I see very little prospect of any appreciable fall of prices in this country or elsewhere, mainly for two reasons. First of all, I think we are at the point when our deflationary tendencies have been arrested. They can hardly go beyond the stage they have now reached, regarded by some as dangerous. Be that as it may, if we are at the end of that tendency, or in a condition in which it is arrested, then prices would not fall for that leading and dominating reason. In the second place, prices in this country and over a large part of Europe are influenced by the restrictive tendencies of much of the fiscal and commercial practice of the time. We in this House differ, as Protectionists, or Safeguarding of Industry supporters, or Free Traders, but the plain message of the Economic Conference at Geneva, which was a very representative body, is that Europe and this country are suffering from a variety of forms of restriction, and, in so far as that restriction is effective, it has an adverse effect on price level apart from the dislocation of business.

Applying these messages or lesson which come to us, I do not think that we have anything particular to expect from reduction in price level. So, until policy is changed, departments may be said to be almost at the end of their tether, because policy is the great commanding force, as we know, in the reduction of expenditure in this or any land. We, therefore, plead, from this side of the House, for a world peace policy, for the drastic reduction of that outlay, because we believe that to be necessary in the public interest. But, of course, it would be improper on the Finance Bill to develop an argument which would fall far more appropriately in foreign affairs. That is the consideration which comes home to me in this form of analysis, and I am reminded also—and it is borne out by figures supplied by the Public Accounts Committee—that you will get little or nothing in financial relief from what may be called the surrenderable surpluses of these departments in the near future, which, of course, goes under the financial system of this country, ultimately to the reduction of debt. We are very nearly back—in some cases we are making an improvement—to the remarkably close estimating of the prewar period, and anything which is surrendered, making a large assumption for the moment that there will ever be a surplus in the near future—I think this Budget will not balance, but making the large assumption it will be, on that basis and for these reasons, a very narrow surplus indeed. Therefore, from the strictly departmental analysis, we land hack with a dull thud in the wider sphere of policy, and there they cannot operate to an appreciable extent.

3 p.m.

In the second place, I want to say a word or two about the problem of the Debt, because hon. Members will agree that in armaments and in Debt, and also to some extent in the Social Services, we have the so-called static elements in the Budget to-day. Hold whatever view we like, they are not altering to any real degree. They are fixed and solid and impregnable, and they leave us with a very narrow field on which to operate for the purposes of economy or change in this country. The field of expenditure outside these three great propositions is comparatively small, so we come, in the second place, to the question of Debt. Our policy has always been perfectly plain and clear. None of us has ever disputed its technical difficulties. Some of us have got into trouble for emphasising those difficulties in what is, perhaps, a too honest discharge of our duty to constituents and the public. The fact is that this Debt to-day, for all practical purposes, is static in character. If hon. Members turn to the six or more years in which we repaid from fixed provision and from Budget surplus more than £600,000,000, they will find at the end of the day that we still owed £150,000,000 to £180,000,000 more. I do not care what their policy may be or their economic principles or anything else. All I am here to argue is that that state of affairs in the management of the Debt cannot continue. There must be some other policy, and, plainly, if the Debt is beating us to that extent—and I am not forgetting the influence of the American settlement and certain re-arrangements in our domestic obligations—but, if Debt is beating us to that extent, we require some stronger policy than so far we have been able to introduce.

There is the widest difference of opinion. Several schools of thought suggest that the Debt does not matter at all. They say that if we deal with it even to a moderate or limited extent, that will meet the situation. They say we should look rather to immediate taxation, to the burdens upon industry, and think less of our debt obligations. We on this side of the House, who are not supposed to have any particular ability in this matter, according to our opponents, have never taken so easy and convenient a view. We believe there is a real burden in the National Debt, and that it involves a burden for the masses of the people on whose shoulders it ultimately rests. Accordingly, by various proposals within recent Years, we have sought to try to deal with this enormous question. I should like to hear from the Government what view they have of the future, in the light of the Report of the Colwyn Committee. When we review what happened during the War and the enormous fortunes which were built up then—I do not dispute that some of them have been subsequently lost—and the gain which enured to certain sections of the community, I think the criticism remains that, even when we have made allowances for Excess Profits Duty, Corporation Tax and other devices, a limited section of the people in this country profited in material things to a remarkable degree at the time of the wide sacrifice of millions of their fellow men. Speaking for myself, and I think for all my colleagues on this side of the House, I will never give up the idea that we have still to find some method of making a call upon that wealth and that power in the interests of this Debt reduction; and I should do it, of course, on the lines of the minority recommendations of the Colwyn Committee. We recognise the argument which is offered, not, perhaps, by the Government, but, at all events, by many of the Government's supporters. They say that, if you make a call of this description, you will make an inroad on those sums which are placed to reserve, and upon which our industrial and commercial development depends. But many of us feel that that argument is exaggerated to a very large extent.

The most recent analysis of our national income pointed to an aggregate income of rather more than £4,000,000,000. We have to write that down, of course, to some extent, because of the change in values, and it was part of the contention of the authors that, broadly and generally, taking prices pre-war and prices post-war and the conditions and circumstances of the people, the bulk of the population have safeguarded themselves, having regard to the rise in prices, by a rise in nominal remuneration.

But I did not make the deduction from that report, or from the report of the Colwyn Committee, that our ability in the sphere of overseas investment to provide capital had been very drastically impaired. The truth is that, according to the most recent returns, the sums of money that are necessary for legitimate and productive business are usually forthcoming. It is also true that, in the midst of our remarkably difficult financial and social conditions, considerable sums are to-day devoted to luxury or quasi-luxury enterprises which should find no place in a country confronted with the social and industrial difficulties to which we are now exposed. While hon. Members opposite say they would never do anything to interfere with the direction of capital, I find that even in their ranks, and even in the ranks of orthodox bankers, who will not be accused of Socialistic tendencies, there is agreement that that is an undesirable and unhealthy tendency in the State in existing conditions. Do not let us make too much of the argument that savings will be penalised. By far the better course is to look to our undeniable power and our great resources, and, having that in mind, I would press to-day for a far stronger policy in the treatment of this Debt Which would aim at its progressive and indeed drastic reduction, not only by our existing Sinking Fund provisions, but by calling upon that section of the community which possesses undeniable wealth, as all the reports of the Board of Inland Revenue show, and which might well respond to a call of this kind.

In the third place, I want to say a word or two about the social services, to which we on this side, and I think also certain Members elsewhere, attach very great importance. It is a curious fact that many critics who have nothing to say about armaments, and nothing at all to say about debt, fasten upon this sphere of the Civil Service Estimates, or the social services, and suggest that there we should find the economies which they believe to be urgently required. What are the circumstances of this class of expenditure? It amounts to-day, in very round figures, to £200,000,000 or £250,000,000. We are making in our minds the necessary deductions for the Post Office and other items that should be excluded. Here you touch immediately the problem of the relationship of the State to local authorities, and you also raise the problem of the programme the Government have followed in relation to the local authorities. What is the position? Our aggregate burden is from £840,000,000 to £850,000,000, more than four times the pre-war burden. That of the local authorities is, £160,000,000 a year, or double the amount they raised before the War. That burden of local rates is not related to a strict ability to pay, to which you go rather nearer in the sphere of national taxation, but based in the main upon an annual valuation of property which in many cases has no relation, or next to none, to the business and turnover and profit which are taking place.

The hon. Member for Reading (Mr. H Williams) said that very great concessions had been made in State grants to the local authorities. I entirely agree that these have, of course, increased, but I think he altogether underrated this fact, that a considerable number of our citizens, especially in the heavy industries, are unemployed, as my hon. Friends on these benches have ample reason to appreciate. In these heavy industries the burden imposed by local rates is much greater than that of the national taxes in present-day circumstances. If this Budget has any tendency it has the tendency of increasing the burden upon localities. I want to ask the right hon. Gentleman what is the position of his inquiry into the relationship of national contributions to local rates, and, on that point, I want to try to make what I venture to regard as a constructive suggestion. Hon. Members know that down the years we have the reports of all kinds of Royal Commissions and Committees on this question, and very little legislation has followed, at all events, legislation on a large scale.

There are two documents to which I invite the attention of the House. There is the Report of the Kemp Committee which just preceded the War, and there is the Report of the Meston Committee on percentage grants which has not been published, but whose main features are probably well known. Before the War broke out, a scheme had been outlined for the improvement of the relationship of the State to the local authority, which the War, of course, entirely interrupted. The recommendations which have emerged from subsequent investigations are these, and I will put them in the briefest possible form. It is proposed that the State, in what is a very large field of expenditure year by year, should, first of all, know the limit of its liability. We on this side of the House do not for a moment disagree with a proposition of that kind. Every Chancellor of the Exchequer should know the sum to which, as near as he can know it, he is committed, but I would suggest to hon. Members who criticise these percentage grants, that, as a matter of fact, you have that material very largely and very accurately at your disposal in the mass of centralised control to which you expose these local authorities in their social services to-day.

In the second place, it was urged that we should aim at a certain minimum of national efficiency. Here again my colleagues and I will entirely agree. It is not part of our purpose to defend any class of expenditure for which you are not getting the maximum return, and, if it can be shown to us that in these social services you are spending money for which you are not getting the most productive return, then we would be the very first to co-operate, because that is a matter of vital importance to local ratepayers and national taxpayers, and it is of vital importance to the people who depend upon those services. Every pound which goes unnecessarily in administration or otherwise is taken from tuberculous people or from maternity schemes or from some of the branches of the services which undoubtedly urgently need assistance. Therefore, an those two points there will not be any particular quarrel between us.

The next point is a suggestion that, in this most important sphere of national finance, the Government of the day should look to a regrading of areas in this country at the present time for the purposes of this expenditure. That does not, I think, involve legislation. We have all kinds of anomalies, and we have a good deal of overlapping. Moreover, the area of great Britain is being altered under our very eyes by legislation like the Railways Act, 1921, the Electricity Supply Act, 1926, and other legislation. In other words, we have to think in terms of larger areas for the purpose of national and local finance. We are capable of very great improvements if we can bend our minds in a constructive way to a problem of that kind.

The fourth recommendation is this, and it applies not only to local expenditure but also to a considerable extent to our national or public outgoings, that the Public Accounts Committee and the trading departments of the State, and also some other departments, have given attention to the question of costing. The House is familiar with ordinary commercial costing, and I am not going to dispute that there are costing schemes and costing schemes. I exclude those costing schemes which are mere paper declarations, and convey nothing to anybody. We are thinking rather of those schemes which can be effective and of value to the State. They have considered those schemes, and while they are limited in the sphere of public expenditure, because we are very largely bound by overhead control, there can be no doubt that by the use of proper statistical material and the comparison of area with area and the working out of the unit of cost we can arrive at a far better appreciation of what is going on as between the State and local government in a sphere where probably £200,000,000 of our expenditure, or one-quarter of our Budget is involved to-day. These things are dull and technical, but they are of vital importance. The House, as a plain business proposition, recognises that until we get down to these dull things we are only scratching the surface of the problem of national expenditure. I am far more interested in getting maximum return for the motley which we are pouring out. If we do that, the Chancellor of the Exchequer, and not less the Financial Secretary to the Treasury, the holder of an office of undeniable difficulty in any Government, will be the first to appreciate the improvement.

I have reviewed, briefly and hurriedly, these three spheres, and I want to offer only a few words to the House on the Bill in conclusion. We are making these recommendations because we believe that, cumulatively, they would be of very great benefit to industry and commerce arid, above all, to social conditions. We are eight years from the conclusion of the War, and we have £7,700,000,000 of debt; we have over 1,000,000 people still unemployed; we have lost between £600,000,000 and £700,000,000 a year, if not more, in remuneration to about 10,000,000 of our people since the industrial depression set in, and there is a school of thought in this country which is telling us that it is going to be enormously difficult—that is not an exaggerated phrase—to regain our overseas markets, to raise the standard of life for our people and to provide that basis upon which our national finance must rest. Upon that point I will mention only two considerations in trying to illustrate the problems I have in mind. I do not take that gloomy view. I do not believe for a moment that the industrial or economic sun of this country or this Empire has set. We do not subscribe to any doctrine of that kind, but there are two forces which may descend upon us very soon which will have a profound bearing upon national finance and upon what we can do for the masses of our people.

A great deal is made, first of all, of American prosperity. Certainly that country's material gain has been undeniably great, but there are high authorities who fell us that they are approaching saturation paint in the markets of the united States, and that very soon they will be driven to try to export to this country and other countries larger quantities of manufactured goods. That is the first consideration.

The other consideration is this. When the ascending scales of annuities under the Dawes scheme begin many authorities on the continent and in this country are pointing out—it is pointed out in the monthly review of the Midland Bank, which will not be accused of revolutionary tendencies—that unless the Dawes scheme is modified—I make no comment upon that—a large part will reach this country in the form of manufactured goods from the Continent, and from a recovering Germany, and we shall have a pressure upon our industries here, upon our general resources, which I think we must do as much as we can to meet in advance by a wise handling of local funds. There are ways and means of meeting a problem of that description. The important thing for us is to take a broad and generous line through it all, not to regard this Budget as something standing apart but as something natural which we must fit in not only to a national economic difficulty but to a great world problem in which, to a large extent, we are in the position of stewards and trustees.

Mr. McNEILL

A Third Reading Debate on the Finance Bill is, I am afraid, almost invariably to a large extent a feast of stale cakes and flat ale. The right hon. Gentleman has done much to save us from that unappetising meal and has delivered a speech marked on these matters of world-wide economics by a lucidity and sagacity which the House has learned to expect from him. At the same time, he has interested and instructed the House in the speech he has just delivered rather by keeping at a distance from the actual proposals of the Bill we are now asking the House to read a Third time. I should like for a moment or two to take a look back over the long series of Debates we have had on these proposals. When I look back to the Budget statement, from which all our Debates have flowed, I think we who are responsible for the proposals now before the House have every reason for satisfaction. I believe that hon. Members in all parts of the House, even if they may disapprove of this Clause or that, even if they disapprove of the proposals as a whole, will not withhold personal congratulations to my right hon. Friend the Chancellor of the Exchequer on the Parliamentary achievement which this Bill will represent when it takes its place on the Statute Book. This Measure is one of very considerable bulk. It is one of exceptional difficulty and complexity. It contains a very large amount of highly controversial matter, as our Debates have shown, and it has been piloted through all its stages in this House by the Chancellor of the Exchequer, as the House will acknowledge, with patience and unruffled good humour, with unfailing mastery of its very complicated details, in a conciliatory spirit to critics on both sides of the House, and, I would like to add, because it is one of his qualities which always attracts the House, with occasional flashes of wit and humour which the House is not slow to appreciate.

I said that we have every reason for satisfaction, and that satisfaction is because in all the essential principles, notwithstanding the modifications which have been made, the schemes propounded by my right hon. Friend in his Budget statement have successfully stood the test of searching and critical debate. Wherever challenged—and they have been frequently challenged—they have been accepted by substantial majorities of this House. Hon. Members will recollect that in the early part of this year the Budget was anticipated with more than the usual curiosity and with no little apprehension, especially in business quarters. I hope hon. and right hon. Gentlemen opposite will not think me guilty of indelicacy if I once more make a reference, which will be a very passing reference, to what I may euphemistically call the events of last year. I will not more particularly describe them. The Chancellor of the Exchequer more than 12 months ago warned the country that if those events to which I have referred should take a turn which in point of fact they afterwards did take, there would be no escape this year from increases of both direct and indirect taxation.

Bearing that warning in mind, I do not think there can be any question that the financial proposals, actually embodied in the Budget statement and in the Finance Bill, were received by the country not only with surprise but with a considerable measure of relief. It was found, as this Bill shows, that any permanent increases in taxation were much lighter than the taxpayers were prepared for. The right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) and others have commented upon what they term the makeshift character of this Budget. But there was a gap in the revenue mainly owing to those events of last year and it is true that in the spanning of that gap we have had evidence of my right hon. Friend's keen eye for a windfall. It is quite true, and I do not think there is anything to be ashamed of in it. My right hon. Friend has preferred not to follow the example of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) in pilfering from hen roosts but has rather, for the moment, cast himself for the rôle of Autolycus and has not disdained to pick up a few unconsidered trifles. Why should the right hon. Gentleman opposite criticise this resort to expedients? After all, the gap in the revenue which has to be made up is—as he has explained more than once and as we hope and believe—due to temporary causes. We earnestly hope at the end of another year we shall have largely got away from the consequences of our misfortunes in 1926. If we can provide for temporary exigencies by resort to temporary measures, I should think that it, was a matter of mere common sense to do so and nothing of which to be ashamed.

The hon. Gentleman who opened the Debate said he was unable to detect any principle in the finance of my right hon. Friend. I think there is one very sound principle in which is to meet the requirements of the year by sound finance and, at the same time, to impose as little burden as possible upon the already overburdened taxpayer. The hon. Member answered his own criticism. Haring said he could find no principle in the finance of my right hon. Friend, he went on to accuse him of a too timid observance of orthodox principles, and suggested that he would do much better if he showed a little less regard for the hierarchy in the temple of finance, in which he seemed to think my right hon. Friend is kept too close a prisoner. I think from the Mover of the rejection of the Bill we have had a very high testimony to the sound principles underlying the proposals of the Chancellor of the Exchequer.

In these Debates it is always a privilege of the Opposition and of hon. Members in all quarters of the House to oppose every suggestion for raising revenue without making any suggestion as to how that revenue should be raised otherwise. That, of course, is in accordance with our traditions and principles if an hon. Member were to make a proposal in Committee to drop a Clause which would mean a loss of so many millions to the revenue, he would naturally and properly turn upon us if we asked him how he proposed to make good the revenue, and he would say, "That is not my business; that is the business of the Government." That is quite true, but I wonder how the House as a whole, if they took their own actions seriously in Committee and on Report, would really have proposed to make good the revenue which, from different parts of the House, has been attacked. I should like to recall to the House the sort of sources which would have been taken a way from us if objectors and critics had had their way and could have got a majority.

We should have lost the Tea Duty; we should have lost the Sugar Duty; we should have lost the increase in the Tobacco Duty. We should not have been allowed to put even the smallest increase upon matches; we should have had to alter and reduce the scale of the Entertainments Duty. I am not quite certain whether or not we should have lost the whole of the Betting Duty, but, at any rate, we should have had to have it modified; and lastly, and even coming from hon. Members opposite, we should actually have lost some of our revenue from the Income Tax, because they put forward proposals, and went into the Division Lobby in support of them, for increasing the allowances, which would mean a reduction of the Income Tax. Hon. Members below the Gangway, as usual, would have deprived us of all Safeguarding Duties and of all the McKenna Duties, and then my hon. and learned Friend the Member for Argyll (Mr. Macquisten) would have deprived us of nearly half the Whisky Duty and have put us in the position of facing the possibility, as the only means of recovering from it, of an increase as great as 130 per cent. in the consumption of that admirable liquid which his constituency so largely both produces and consumes.

What the right hon. Member for Central Edinburgh, in the very interesting speech to which I have already alluded, really says is, so far as it has a bearing upon this particular Bill—the text of his sermon is—"You cannot improve the financial position in which you find yourselves except by a change of policy." He lays great stress upon policy. Of course, I do not for one moment deny that—it is quite true that policy underlies it all—but what does the right hon. Gentleman mean by policy? As is invariably the case when these criticisms are made, it comes down to this. The right hon. Gentleman says that you must devote less money year by year to the defence of the country. The fighting services are the only sources of economy by which that change of policy which the right hon. Gentleman demands is to take place. I want to say this upon that subject. Hon and right hon. Members opposite sometimes speak as if we on this side of the House, the Conservative party, take a delight in spending money on armaments. We do not. No one on this side of the House wants to spend a sixpence more on armaments than is necessary. The only difference between us is this, that it is a matter of forecasting possible dangers to which this country may be subjected, and on our part, a disinclination to take risks which our friends on the opposite side appear to us sometimes willing to face recklessly and light-heartedly.

I would suggest to the right hon. Gentleman, who understands so well the world-wide economics underlying so much of modern politics—I would suggest to him, apart altogether from questions of declarations of war— we all hope and pray there may be no war—surely he realises that, in a state of international unrest, with a country like ours, absolutely dependent from week to week upon sea-borne commerce, even for its food, even a rumour of war might create such a panic, that, in the absence of proper protection of our trade routes, it might be almost as fatal to this country as defeat in war itself. It is merely because we realise the danger and menace to this country of risks of that sort, that we cannot bring ourselves to cut down, beyond what we think the lowest point of safety, the expenditure upon those services upon which the defence of the country depends. I do wish to repeat—and I hope it will be accepted as sincere—that we would gladly co-operate with the party opposite, or any other party, in cutting down armaments to the lowest possible point, if we could feel that we were not thereby incurring risk and responsibility which no Government of this country ought to undertake.

I want to pass to a totally different matter. Some hon. Members who have spoken referred again to a matter which has constantly cropped up in these Debates, and that is the matter of indirect taxation. We, of course, know the views of hon. Members opposite upon that point, but they sometimes use language which is liable to give a false impression when repeated outside. It is the greatest fallacy in the world to suppose that indirect taxation in this country at the present day, whatever may have been the case in the past, can be set against direct taxation in the form of an antonym, the one being the taxation of the rich and the other of the poor. That is not so. The whole character of indirect taxation has been very largely altered in recent years, owing, I know, to a financial policy which is disapproved of by many hon. Members opposite, but which, nevertheless, is a fact.

Let me give the increase in the percentage of indirect taxes since the right hon. Gentleman the Member for Central Edinburgh and his friends were in office. Since 1924 the percentage of indirect taxes to total taxes has risen by—how much does the House think? We are often told that this is some enormous figure. It has risen by 3.49 per cent.— less than 3½ per cent. Let us analyse that figure to see what form even that small increase has taken. I will take first of all the new sumptuary taxes—silk, the McKenna Duties and the Betting Duty. They account for 2.25 out of the total increase of 3.49. Then we have the old sumptuary taxes—beer, spirits, wine, tobacco and entertainments—which account for 1.21 of the increase. Then we come to the other indirect taxes, which alone are the taxes to which hon. and right hon. Gentlemen opposite really ought to refer when they speak about the taxes which bear upon the masses of the people, and especially on the poor. Those taxes, sugar, tea, coffee and matches, etc., account only for 03 per cent., less than ¼ of 1 per cent. That is really the position with regard to the increase of the percentage of indirect taxation since the right hon. Gentleman the Member for Central Edinburgh and the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) were responsible for our finances, and I submit that it is a very different story from that which is so very often put forward—I do not say, of course, with any intention to deceive, but which is in point of fact put forward and is very often misunderstood out of doors.

There is another matter to which some of my hon. Friends have referred—I think the hon. Member for heading (Mr. H. Williams) was one—and that is Savings Certificates. He laid great stress on the fact that in our annual financial proposals no arrangement is made for the accruing interest which, in point of fact, is not paid in that year. I really have not the time to go at length into that matter, but I can only say that his proposal that there should be a special reserve against the possibility of a larger encashment than the average it any one year is regarded, so far as I have been able to ascertain their views, by all the best financial experts, and those most acquainted with our financial system, as being extremely wasteful and as in no way increasing either the security of the holder of the certificates or the stability of the State. After all, our financial system is always on a cash basis. The law of averages applies here as well as everywhere else, and it is possible to estimate fairly closely year by year how much of the outstanding certificates will in point of fact be cashed. Now and again, there may be a disturbance which in other directions may interfere with accurate estimating, but, taking one year with another, it is quite possible to make a reasonable forecast. As my hon. Friend knows, the Colwyn Committee carefully examined this matter and reported that they saw no reason for departing from the present system.

A speech was made by my hon. Friend the Member for Middleton (Mr. Sande-man) to which I should like to make a reference. I am sure those hon. Members who were in the House at the time he made his speech were amused, and perhaps a little confused, in regard to his question as to whether some of them would have to pay Income Tax upon the grouse which he expected to receive from them within the next few weeks. It is all very well for my hon. Friend to make an amusing speech on this subject, but I want to protest against the action which he has taken. The hon. Member made some rather wild accusations against the administration of the Income Tax about which he put a question to me, and I stated, in reply to his question, that I could not trace what his complaint really was. I said then that I thought he was under a misapprehension, but if he would send me any individual cases which would enable me to investigate the facts, then I would be very glad to take any action that might be called for. My hon. Friend did not do that. What did he do instead? He did not communicate with me or send me any means of investigating his charges, but, apparently, he communicated with an evening newspaper, and it was only through that newspaper that I got notice that he was going to raise this question in the Debate to-day. My hon. Friend has repeated some of those charges to-day. I challenged the hon. Member on the last occasion when he made those charges, and I challenge him again today to give me definite names of people. I am quite certain my hon. Friend is sincere in the remarks he has made, but, to use a vulgar expression, I think his leg has been pulled, or else he has utterly misunderstood the whole bearing of the inquiries which have been made.

Mr. SANDEMAN

I am sorry if I should have done anything to put myself in a wrong position. I certainly asked this question, and I did not think the answer I received was satisfactory. All I wanted to raise was the question of the uniformity of the incidence of this tax. I thought some people were getting off and others were not getting off. Certainly, my right hon. Friend offered to discuss the matter with me, but since that time I have received a great many letters on the subject, and a good many people wrote letters which I could not publish, although I shall be quite willing to show them to the right hon. Gentleman.

Mr. McNEILL

The hon. Member does not quite realise what he has done. However, I accept the apology from my hon. Friend. But really the apology should not be made to me, because he has not said anything derogatory to myself. Surely he must see that the letters which he read out made grave charges against the local inspectors of taxes who were unnamed, and he made those charges apply to the inspectors all over the country. The hon. Member's speech will be reported, and it will give currency to the idea that the inspectors of taxes everywhere are preying upon the small taxpayers and putting to them absurd and oppressive questionnaires which I do not believe are true, and this will give the impression that the whole administration of the Income Tax Department ought to be drastically reformed. I repudiate that.

Let me give an example of the cases which the hon. Member has brought before the House. I rather understood from my hon. Friend that the information to be gathered from this correspondence was that, if an employer of labour gives lunch to his employés, the Inland Revenue Department can come down upon him for taking away something from his profits which ought to have been added. That was as far as I could follow my hon. Friend. That, however, is not so; no such charge is possible, and no such charge is ever made. But what I believe my hon. Friend had in his mind, although I do not think he quite understood it, was this: He gave the instance of a commercial traveler. In the case of a commercial traveler, it is a question of his claiming a deduction. The commercial traveller is liable for Income Tax, but, as a deduction from the income on which he pays tax, he may charge the costs incidental to his employment which are additional to the normal costs of living at home. What happened, no doubt, in the case that my hon. Friend had in mind, was that some commercial traveller, travelling about the country, sent in his Income Tax return with probably a very extravagant deduction for the amount that he had to expend in meals away from his own home, and then the inspector of taxes, very properly and rightly, thinking that this was an inflated claim for reduction, queried it, and wrote and asked for some proof of it.

Probably exactly the same sort of thing happened in a number of the other cases quoted by my hon. Friend. He made an amusing case, and made the whole thing look very absurd; but I am certainly not going to endorse his case, and I am not going to say anything that could be construed as a reprimand in any way to those inspectors of taxes, who, I am perfectly certain, are acting well within the law by which they are bound to act in carrying out their difficult duty of collecting taxes from small taxpayers—which is even more difficult than in the case of large taxpayers—and are making these inquiries here and there where they think there is probably tax evasion, as I think they are perfectly right in doing.

Before I sit down, I must say one word—I had intended to say more than one word—about the Clauses dealing with the evasion of Super-tax. The really distinguishing features of this Budget are not proposals for changes of taxation or maintaining existing taxation. There are two main distinguishing features of this limance Bill, which will make it an historic Finance Bill. The Clauses by which we are carrying out a system of simplification are the first of these features. Last year, as the House will remember, we enacted that, from the present year, Schedule D, the great Schedule of Income Tax, would be based on the previous year instead of on an average of three years. This year we are carrying that further by doing the same with regard to Schedule E. These are two great measures of simplification, and having done that, having swept them all on to a common basis, we are now taking measures to have "one man one return," so that there will be a cessation of the vexatious bombardment of taxpayers, which often occurs, with demands for returns from a number of different parts of the country, as to which there have-been frequent and bitter complaints. We hope to put an end to that.

The second distinguishing feature is the Clauses to which many of my hon. Friends have referred—the Clauses about which there was so much debate—as to the evasion of Super-tax. Some of my hon. Friends—the hon. Member for West Leicester (Mr. Pethick-Lawrence) and the right hon. Member for Antrim (Mr. O'Neill)—said, and I agree with them, that these Clauses will be found to work perfectly smoothly. I do not think that they will be found to hamper either legitimate trade or private companies, or that they will carry out any of the evils which were so freely prophesied during the course of the Debate. It is quite true, as the right hon. Member for Hill-head (Sir R. Horne) reminded the House, that the Chancellor of the Exchequer has said that he is still keeping an open mind as to the method of carrying out the object which we have in view, and that, if a better method, more free from objection and more acceptable to the commercial world, can be found before next year, he will be ready to consider it. I do not believe that any better method is likely to be found. I know the very great care, the trouble, the investigation, and the amount of ability and knowledge that lie behind the Clauses as they stand. It is very unlikely that say committee that can be formed, or any commercial gentlemen in the City who can be brought together, will be able to advise a, real improvement. However that may be, I think the House and the Government may congratulate themselves on a real reform which has been embodied in this Bill, now soon to become an Act, which I hope will remove the stigma which has rested hitherto upon the administration of the great direct taxes of the country, that the law is enabling a considerable number of wealthy people to evade their obligations. Therefore, I think in that respect alone, apart from the more detailed proposals of the Bill, it is one which the House may well read the Third time with the confidence that it will be a beneficial Measure when it takes its place upon the Statute Book.

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

The House divided: Ayes, 338; Noes, 86.

Division No. 282.]	AYES.	[3.58 p.m.
Acland-Troyte, Lieut.-Colonel	Craig, Capt. Rt. Hon. C. C. (Antrim)	Holt, Captain H. P.
Agg-Gardner, Rt. Hon. Sir James T.	Craig, Sir Ernest (Chester, Crewe)	Hope, Capt. A. O. J. (Warw'k, Nun.)
Ainsworth, Major Charles	Croft, Brigadier-General Sir. H.	Hopkins, J. W. W.
Albery, Irving James	Crookshank, Col. C. de W. (Berwick)	Hopkinson, Sir A. (Eng. Universities)
Alexander, E. E. (Leyton)	Crookshank, Cpt.H.(Lindsey, Gainsbro)	Horlick, Lieut.-Colonel J. N.
Alexander, Sir Wm. (Glasgow, Cent'l)	Cunliffe, Sir Herbert	Howard-Bury, Lieut.-Colonel C. K.
Allen, J. Sandeman (L'pool, W. Derby)	Curzon, Captain Viscount	Hudson, Capt. A. U. M. (Hackney, N.)
Allen, Lieut.-Col. Sir William James	Dalkeith, Earl of	Hudson, R. S. (Cumberl'nd, Whiteh'n)
Applin, Colonel R. V. K.	Davidson, J. (Hertf'd, Hemel Hempst'd)	Hume, Sir G. H.
Apsley, Lord	Davidson, Major-General Sir John H.	Hunter-Weston, Lt.-Gen. Sir Aylmer
Ashley, Lt.-Col. Rt. Hon. Wilfrid W.	Davies, Maj. Geo. F. (Somerset, Yeovil)	Huntingfield, Lord
Astbury, Lieut.-Commander F. W.	Davies, Sir Thomas (Cirencester)	Hurd, Percy A.
Astor, Maj. Hn. John J. (Kent, Dover)	Davies, Dr. Vernon	Hurst, Gerald B.
Baldwin, Rt. Hon. Stanley	Davison, Sir W. H. (Kensington, S.)	Iliffe, Sir Edward M.
Balfour, George (Hampstead)	Dawson, Sir Philip	Inskip, Sir Thomas Walker H.
Balniel, Lord	Dean, Arthur Wellesley	Jackson, Sir H. (Wandsworth, Cen'l)
Barclay-Harvey, C. M.	Dixey, A. C.	James, Lieut.-Colonel Hon. Cuthbert
Barnett, Major Sir Richard	Dixon, Captain Rt. Hon. Herbert	Jones, G. W. H. (Stoke Newington)
Beamish, Rear-Admiral T. P. H.	Drewe, C.	Joynson-Hicks, Rt. Hon. Sir William
Beckett, Sir Gervase (Leeds, N.)	Eden, Captain Anthony	Kennedy, A. R. (Preston)
Benn, Sir A. S. (Plymouth, Drake)	Edmondson, Major A. J.	Kindersley, Major Guy M.
Bennett, A. J	Elliot, Major Walter E.	King, Commodore Henry Douglas
Bentinck, Lord Henry Cavendish-	Ellis, R. G.	Kinloch-Cooke, Sir Clement
Berry, Sir George	Elveden, Viscount	Knox, Sir Alfred
Bethel, A.	Erskine, Lord (Somerset, Weston-s-M.)	Lamb, J. Q.
Betterton, Henry B.	Evans, Captain A. (Cardiff, South)	Lane Fox, Col. Rt. Hon. George R.
Birchall, Major J. Dearman	Everard, W. Lindsay	Lister, Cunliffe, Rt. Hon. Sir Philip
Bird, E. R. (Yorks, W. R., Skipton)	Fairfax, Captain J. G.	Little, Dr. E. Graham
Bird, Sir R. B. (Wolverhampton, W.)	Falle, Sir Bertram G.	Lloyd, Cyril E. (Dudley)
Blades, Sir George Rowland	Fanshawe, Captain G. D.	Locker-Lampson, G. (Wood Green)
Blundell, F. N.	Fielden, E. B.	Locker-Lampson, Com. O. (Handsw'th)
Boothby, R. J. G.	Finburgh, S.	Loder, J. de V.
Bourne, Captain Robert Croft	Ford, Sir P. J.	Long, Major Eric
Bowyer, Capt. G. E. W.	Forestier-Walker, Sir L.	Looker, Herbert William
Brassey, Sir Leonard	Foster, Sir Harry S.	Lougher, Lewis
Bridgeman, Rt. Hon. William Clive	Foxcroft, Captain C. T.	Lowe, Sir Francis William
Briscoe, Richard George	Fraser, Captain Ian	Lucas-Tooth, Sir Hugh Vere
Brittain, Sir Harry	Fremantle, Lieut.-Colonel Francis E.	Luce, Maj.-Gen. Sir Richard Harman
Brocklebank, C. E. R.	Gadle, Lieut.-Col. Anthony	Lumley, L. R.
Brooke, Brigadier-General C. R. I.	Galbraith, J. F. W.	MacAndrew, Major Charles Glen
Broun-Lindsay, Major H.	Ganzonl, Sir John	Macdonald, Capt. P. D. (I. of W.)
Brown, Col. D. C. (N'th'l'd., Hexham)	Gates, Percy	Macdonald, R. (Glasgow, Cathcart)
Brown, Brig.-Gen. H. C.(Berks, Newb'y)	Gault, Lieut.-Col. Andrew Hamilton	McDonnell, Colonel Hon. Angus
Buchan, John	Glimour, Lt.-Col. Rt. Hon. Sir John	Macintyre, Ian
Buckingham, Sir H.	Glyn, Major R. G. C.	McLean, Major A.
Bull, Rt. Hon. Sir William James	Goff, Sir Park	Macmillan, Captain H.
Bullock, Captain M.	Gower, Sir Robert	McNeill, Rt. Hon. Ronald John
Burman, J. B.	Grace, John	Macquisten, F. A.
Burney, Lieut.-Com. Charles D.	Graham, Fergus (Cumberland, N.)	Makins, Brigadier-General E.
Burton, Colonel H. W.	Grant, Sir J. A.	Malone, Major P. B.
Butler, Sir Geoffrey	Grattan-Doyle, Sir N.	Manningham-Buller, Sir Mervyn
Butt, Sir Alfred	Greaves-Lord, Sir Walter	Margesson, Captain D.
Cadogan, Major Hon. Edward	Greene, W. P. Crawford	Marriott, Sir J. A. R.
Caine, Gordon Hall	Greenwood, Rt. Hn.Sir H. (W'th's'w. E)	Mason, Lieut-Col. Glyn K.
Campbell, E. T.	Grenfell, Edward C. (City of London)	Meller, R. J.
Carver, Major W. H.	Grotrian, H. Brent	Merriman, F. B.
Cassels, J. D.	Guest, Capt. Rt. Hon. F. E. (Bristol, N.)	Meyer, Sir Frank
Cautley, Sir Henry S.	Guinness, Rt. Hon. Walter E.	Milne. J. S. Wardlaw-
Cayzer, Sir C. (Chester, City)	Gunston, Captain D. W.	Mitchell, S (Lanark, Lanark)
Cazalet, Captain Victor A	Hacking, Captain Douglas H.	Mitchell, W. Foot (Saffron Walden)
Cecil, Rt. Hon. Sir Evelyn (Aston)	Hall, Lieut.-Col. Sir F. (Dulwich)	Mond, Rt. Hon. Sir Alfred
Cecil, Rt. Hon. Lord H. (Ox. Univ.)	Hall, Capt. W. D'A. (Brecon & Rad.)	Moore, Lieut. Colonel T. C. R. (Ayr)
Chadwick, Sir Robert Burten	Hammersley, S. S.	Moore, Sir Newton J.
Chamberlain, Rt. Hn. Sir J.A(Blrm., W.)	Hanbury, C.	Moore-Brabazon, Lieut. -Col. J. T. C.
Chamberlain, Rt. Hon. N. (Ladywood)	Hannon Patrick Joseph Henry	Morden, Colonel Walter Grant
Chapman, Sir S.	Harland, A.	Moreing, Captain A. H.
Charteris, Brigadier-General J.	Harmsworth, Hon. E. C. (Kent)	Morrison, H. (Wilts, Salisbury)
Chilcott, Sir Warden	Harrison, G. J. C.	Murchison, Sir Kenneth
Christie, J A.	Hartington, Marquess of	Neville, Sir Reginald J.
Churchill, Rt. Hon. Winston Spencer	Harvey, G. (Lambeth, Kennington)	Newman, Sir R. H. S. D. L. (Exeter)
Churchman, Sir Arthur C.	Harvey, Major S. E. (Devon, Totnes)	Newton, Sir D. G. C. (Cambridge)
Clarry, Reginald George	Haslam, Henry C.	Nicholson, O. (Westminster)
Clayton, G. C.	Hawke, John Anthony	Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.)
Cobb, Sir Cyril	Henderson, Capt. R. R. (Oxf'd, Henley)	Nield, Rt. Hon. Sir Herbert
Cochrane, Commander Hon. A. D.	Henderson, Lt.-Col. Sir V. L. (Bootle)	Nuttall, Ellis
Cohen, Major J. Brunel	Henn, Sir Sydney H.	O'Connor, T. J. (Bedford, Luton)
Colfox, Major Wm. Phillips	Herbert, Dennis (Hertford, Watford)	O'Neill, Major Rt. Hon. Hugh
Colman, N. C. D.	Hills, Major John Walter	Oman, Sir Charles William C-
Conway, Sir W. Martin	Hilton, Cecil	Ormsby-Gore, Rt. Hon. William
Cooper, A. Duff	Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.	Pennefather, Sir John
Couper, J. B.	Hohler, Sir Gerald Fitzroy	Penny, Frederick George
Courthope, Colonel Sir G. L.	Holbrook, Sir Arthur Richard	Percy, Lord Eustace (Hastings)
Cowan, Sir Wm. Henry (Islington, N)	Holland, Sir Arthur	Perkins, Colonel E. K.

Perring, Sir William George	Shaw, R. G. (Yorks, W. R., Sowerby)	Ward, Col. J. (Stoke-upon-Trent)
Peto, Sir Basil E. (Devon, Barnstaple)	Sheffield, Sir Berkeley	Ward, Lt.-Col. A. L. (Kingston-on-Hull)
Peto, G. (Somerset, Frome)	Shepperson, E. W.	Warner, Brigadier-General W. W.
Pilditch, Sir Philip	Simms, Dr. John M. (Co. Down)	Warrender, Sir Victor
Pownall, Sir Assheton	Sinclair, Col. T. (Queen's Univ., Belfst)	Waterhouse, Captain Charles
Preston, William	Skelton, A. N.	Watson, Sir F. (Pudsey and Otley)
Price, Major C. W. M.	Slaney, Major P. Kenyon	Watson, Rt. Hon. W. (Carlisle)
Radford, E. A.	Smith, R. W. (Aberd'n & Kinc'dine, C.)	Watts, Dr. T.
Raine, Sir Walter	Smith-Carington, Neville W.	Wells, S. R.
Ramsden, E.	Smithers, Waldron	White, Lieut.-Col. Sir G. Dalrymple
Rawson, Sir Cooper	Spender-Clay, Colonel H.	Williams, A. M. (Cornwall, Northern)
Reid, D. D. (County Down)	Sprot, Sir Alexander	Williams, Herbert G. (Reading)
Remer, J. R.	Stanley, Lieut.-Colonel Rt. Hon. G. F.	Wilson, R. R. (Stafford, Lichfield)
Remnant, Sir James	Stanley, Lord (Fylde)	Winby, Colonel. L. P.
Rhys, Hon. C. A. U.	Stanley, Hon. O. F. G. (Westm'eland)	Windsor-Clive, Lieut.-Colonel George
Rice, Sir Frederick	Steel, Major Samuel Strang	Winterton, Rt. Hon. Earl
Richardson, Sir P. W. (Sur'y, Ch'ts'y)	Streatfeild, Captain S. R.	Wise, Sir Fredric
Roberts, E. H. G. (Flint)	Stuart, Crichton-, Lord C.	Withers, John James
Roberts, Sir Samuel (Hereford)	Stuart, Hon. J. (Moray and Nairn)	Wolmer, Viscount
Ropner, Major L.	Styles, Captain H. W.	Womersley, W. J.
Russell, Alexander West (Tynemouth)	Sueter, Rear-Admiral Murray Fraser	Wood, E. (Chest'r, Stalyb'ge & Hyde)
Rye, F. G.	Sykes, Major-Gen. Sir Frederick H.	Wood, Sir Kingsley (Woolwich W.)
Salmon, Major I.	Tasker, R. Inigo.	Wood, Sir S. Hill-(High Peak)
Samuel, A. M. (Surrey, Farnham)	Templeton, W. P.	Woodcock, Colonel H. C.
Sandeman, N. Stewart	Thompson, Luke (Sunderland)	Wragg, Herbert
Sanders, Sir Robert A.	Thomson, Rt. Hon. Sir W. Mitchell-	Yerburgh, Major Robert D. T.
Sanderson, Sir Frank	Titchfield, Major the Marquess of	Young, Rt. Hon. Sir Hilton (Norwich)
Sandon, Lord	Tryon, Rt. Hon. George Clement
Sassoon, Sir Philip Albert Gostave D.	Vaughan-Morgan, Col. K. P.	TELLERS FOR THE AYES.—
Savery, S. S.	Waddington, R.	Commander B. Eyres Monsell and
Scott, Rt. Hon. Sir Leslie	Wallace, Captain D. E.	Mr. F. C. Thomson.

NOES.
Adamson, W. M. (Staff., Cannock)	Grundy, T. W.	Scrymgeour, E.
Alexander, A. V, (Sheffield, Hillsbro')	Hall, F. (York, W. R., Normanton)	Scurr, John
Ammon, Charles George	Hardle, George D.	Shaw, Rt. Hon. Thomas (Preston)
Attlee, Clement Richard	Hayes, John Henry	Shepherd, Arthur Lewis
Baker, Walter	Hirst, W. (Bradford, South)	Sitch, Charles H.
Barnes, A.	Hudson, J. H. (Huddersfield)	Smith, Ben (Bermondsey, Rotherhithe)
Bondfield, Margaret	Kennedy, T.	Smith, Rennie (Penistone)
Bowerman, Rt. Hon. Charles W.	Kenworthy, Lt.-Com. Hon. Joseph M.	Snell, Harry
Broad, F. A.	Lansbury, George	Stamford, T. W.
Bromfield, William	Lawrence, Susan	Stephen, Campbell
Bromley, J.	Lee, F.	Taylor, R. A.
Buchanan, G.	Lindley, F. W.	Thomas, Sir Robert John (Anglesey)
Buxton, Rt. Hon. Noel	Lowth, T.	Thorne, G. R. (Wolverhampton, E.)
Charleton, H. C.	Lunn, William	Thorne, W. (West Ham, Plaistow)
Cove, W. G.	MacLaren, Andrew	Thurtle, Ernest
Cowan, D. M. (Scottish Universities)	Maclean, Neil (Glasgow, Govan)	Tinker, John Joseph
Crawfurd, H. E.	March, S.	Viant, S. P.
Davies, Evan (Ebbw Vale)	Maxton, James	Wallhead, Richard C.
Day, Colonel Harry	Montague, Frederick	Walsh, Rt. Hon. Stephen
Dennison, R.	Morrison, R. C. (Tottenham, N.)	Wedgwood, Rt. Hon. Josiah
Duncan, C	Naylor, T. E.	Wellock, Wilfred
Dunnico, H.	Oliver, George Harold	Welsh, J. C.
Gardner, J. P.	Palin, John Henry	Wilkinson, Ellen C.
Gibbins, Joseph	Paling, W.	Wilson, C. H. (Sheffield, Attercliffe)
Gillett, George M.	Parkinson, John Allen (Wigan)	Windsor, Walter
Graham, D. M. (Lanark, Hamilton)	Pethick-Lawrence, F. W.	Young, Robert (Lancaster, Newton)
Graham, Rt. Hon. Wm. (Edin., Cent.)	Ponsonby, Arthur
Greenwood, A. (Nelson and Colne)	Potts, John S.	TELLERS FOR THE NOES.—
Griffiths, T. (Monmouth, Pontypool)	Riley, Ben	Mr. T. Henderson and Mr. Charles
Groves, T.	Salter, Dr. Alfred	Edwards

Bill read the Third time, and passed.

The remaining Orders were read, and postponed.

Whereupon Mr. Speaker adjourned the House without Question put, pursuant to Standing Order No. 3.

Adjourned at Nine Minutes after Four o'Clock until Monday next (25th July).