Question again proposed,
That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance.
§ Mr. SNOWDEN
The general Debate on the Budget provides almost the only opportunity which we have for a general survey of the financial position of the country. We shall have many opportunities of debating the specific proposals which were put forward yesterday by the Chancellor of the Exchequer. On this occasion, I propose to confine my observations, in the main, to a consideration of the early part of the right hon. Gentleman's statement dealing with the financial position. The Chancellor of the Exchequer related a pitiful story of the difficulties and dangers which he had encountered and overcome during the stormy passage of the last 12 months, and he claimed that this had been accomplished by hard work and ceaseless scraping. The right hon. Gentleman claimed that the favourable balance of last year's accounts was due to these reasons rather than to good luck. I am afraid that if good luck had not come to the right hon. Gentleman's aid he would have stood yesterday in the same unenviable position which he occupied on two previous occasions.
An analysis of the Estimates and receipts under the various items of income and expenditure last year discloses some curious and in some respects rather disconcerting features. The right hon. Gentleman was saved by the abnormal death-rate among millionaires, and he appears to have been encouraged by that to hope that that abnormal death-rate may be repeated in the present year. It is quite true that last year it was extremely difficult to accurately estimate 924 the yield of the Income Tax, and therefore the Chancellor of the Exchequer was, I think, particularly fortunate in being able to report an increase of £3,500,000 over the estimate of 12 months ago. It is very difficult' for an outsider to know whether that represents the normal yield of the year, or how far it has been swollen by the receipts during the year of the arrears of previous years.
I think it is common knowledge that when matters were looking rather serious a month or six weeks ago before the end of the financial year very considerable pressure was placed on the taxpayers to come to the assistance of the right hon. Gentleman. The Chancellor of the Exchequer will remember that I have ventured the opinion on many occasions during the last few years that I was afraid that, until there was a great revival of trade, we could not look forward to a progressive expansion of the yield of the Income Tax such as we experienced in the days before the depression. The Chancellor of the Exchequer evidently shares that view, because he has been so conservative in his estimate of the yield of the Income Tax during the present year.
The right hon. Gentleman was particularly fortunate last year, because, owing to the boom in industrial shares on the Stock Exchange, his receipts from Stamp Duties exceeded the estimate by £1,500,000. He is evidently anticipating that something of the same sort will continue during the current year, because he is estimating for an increase of £1,000,000 in the Stamp Duties. If that should happen, it will carry with it certain disadvantages to the right hon. Gentleman. If there is going to be a great demand for money for speculative purposes, we shall have the experience which America is now having of a rise in the money rate; therefore, what the right hon. Gentleman will gain upon the swings he is likely to lose on the Treasury roundabouts, and the renewal of Treasury Bills is likely to cost him more. We had that very painful experience last year when the Debt interest exceeded his estimate by something like £10,000,000.
§ Mr. SNOWDEN
To some extent, it was accounted for by the demand for repayment of National Savings Certificates, but the right hon. Gentleman also admitted yesterday that the cost of Treasury Bills exceeded his expectations. Having said that about the revenue side of the Budget, I turn to the, in some respects, much more interesting expenditure side. The right hon. Gentleman last year succeeded, by some means or other, in reducing the expenditure on the Civil Services by £9,000,000 below the Estimates. He told us yesterday that that was due to "scrapping and scraping." I hope that that is so, and that that saving is not to be set down to what I am afraid is far too common in many Government Departments, namely, over-estimating. It was announced some years ago that, as prices had become more stable, the era of unreliable Budget estimates had, passed; but, if the right hon. Gentleman was able last year, by "scrapping and scraping," to reduce the Civil Service Estimates by £9,000,000, I see no reason why that reduction should not have been made at the time when the Estimates were presented to the Treasury twelve months before. I hope, however, that it is a real economy, and I believe that the Chancellor of the Exchequer is looking forward, judging by a statement that he made some time ago, to considerable relief in the same way during the current financial year.
I mentioned just now the increased cost of the National Debt Services during the last 12 months, which was an increase of £9,000,000 over the amount estimated. As the right hon. Gentleman admitted just now, some part of this was accounted for by the increased cost of the renewal of Treasury Bills. The Bank Rate was reduced during the currency of the last financial year, about a fortnight, if I remember rightly, or a few days at any rate, after the introduction of the Budget. No doubt the Chancellor of the Exchequer anticipated that that was likely to take place, and no doubt he made his estimate of the cost of Treasury Bills with that knowledge in his mind. He is this year making a much smaller estimate for Debt services—very considerably smaller than the cost which he had to meet last year. I hope that he is not repeating the mistake of last year, and 926 anticipating cheaper money rates, because I think that all the tendencies point to an increase in money rates during the next 12 months.
America is now, of course, an important factor in influencing money rates in this country and throughout Europe. There is at the moment only the very unusual difference of ½ per cent. between the rediscount rates, and a very significant thing happened only three or four days ago. It will be remembered that a few months ago the Federal Reserve Board raised their Bank Rate, if I may so call it, by ½ per cent. That had been preceded by an increase in the discount rates of two or three other Federal banks, including that of Chicago. Exactly the same thing happened three or four days ago, and, therefore, I think it is very reasonable to suppose, though I do not wish it, that we must expect an increase in the Bank Rate of this country in the very near future. We may possibly be able to tide over until the stringent season comes in the early part of next autumn, but, at any rate, the bearing of these observations is upon the cost of renewal of Treasury Bills during the next 12 months, and I do not imagine that they will cost less this year than they cost 12 months ago.
I now want to respond to a challenge that has been repeatedly made by the right hon. Gentleman in regard to the present rate of national expenditure by contrast with the year 1924–25, the year of classic financial probity, as the right hon. Gentleman described it. The right hon. Gentleman has claimed that he has reduced expenditure by £12,000,000 in comparison with the expenditure in 1924–25. He has repeatedly made that claim. He made it to a deputation of the Federation of British Industries, and he repeated it in almost identical words in a speech at the Oxford Union a few weeks ago. This was what he said:The Government was not spending anything more than was spent in Labour's year of office, apparently the perfect year of financial administration"—a remark to which I take no exception.He strongly recommended them to disbelieve all statements to the contrary.He went on to talk about the Post Office, and then he said:If these items were left out, the figures, upon which he challenged dispute, showed that there had been no increase in three years over the expenditure which the Gov- 927 ernment had in operation when it resumed office. All this talk about increased expenditure was not even correctly directed moonshine.The description "moonshine" applies accurately to the statement of the right hon. Gentleman which I have just read. I think I can prove in a minute that the statements that expenditure has been reduced are wholly unfounded.
The right hon. Gentleman is evidently very touchy upon this matter, and he presented, as a supplement to the papers which are usually received with a Budget statement, a special White Paper setting out what claims to be a comparison of the expenditure of 1924 with that of last year. I can very well imagine, and I am sure my imagination is not far astray, how this Paper came to be compiled. The right hon. Gentleman said to his officials, "These Labour folks are always criticising me for having increased national expenditure. Now I want you to prepare a Paper to show that I have reduced national expenditure"; and the officials said, "Sir, it would be very difficult indeed to do that, because, as a matter of fact, you know you have not." "But, surely," the right hon. Gentleman replies, "the resources of the Treasury are not beyond producing a Paper of that sort?" And this is what was presented to the House of Commons yesterday. I wonder that the right hon. Gentleman had the temerity to insult the intelligence of the House of Commons by presenting such a Paper. Just look at it. Take page 3. He takes 1924, and gives the audited expenditure of that year. This is a table of comparison, and it ought to compare like with like. But does it compare the expenditure of last year with the audited expenditure of 1924? No. For 1928 he gives, not, even the actual expenditure of the year, but the original Estimates of the year, a figure just about £9,000,000 below the actual expenditure.
What are the facts? I meet the right hon. Gentleman on the ground he himself has selected. I admit, and I have often admitted, that it is not fair to include the Post Office. I also exclude the Road Fund, although that is a much more debatable point, but I am quite ready to exclude it though the Road Fund really is taxation. What are the facts? Take the expenditure on the 928 Civil Services, including the Revenue Vote, and the Fighting Services. In 1924–5, the expenditure was £352,000,000. Last year, it was £359,000,000, and the average of the last three years has been £367,000,000, which is £15,000,000 more than the figures of 1924–5. I have taken these figures from the various financial statements that have been presented. Take the total expenditure, again excluding the Post Office and the Road Fund. In 1924, it was £730,000,000, and last year it was £761,500,000.
§ Mr. SNOWDEN
That, does not include the Sinking Fund. I am glad of the interruption. The right hon. Gentleman had better wait, and I am quite sure he will not smile so benignly when I have finished. Take the Fighting Services. He made a most extraordinary statement yesterday. He said the Fighting Services expenditure was £5,000,000 less last year than in the year—
§ Mr. SNOWDEN
Another piece of camouflage. Take the expenditure upon the Defence Forces. In 1924–25, a year of perfect financial administration, it was £114,700,000. What was it last year? This, mark you, is one of the items upon which a reduction might be and ought to be made. Last year, it was more than £2,000,000 more. There is another fact to take into consideration, and I thank the right hon. Gentleman for the hint he gave yesterday. He stated that in the last three years there has been a reduction of 10 per cent. in prices. Therefore, there ought to have been, if no economy had been effected, on the standard of 1924–5 a reduction of 10 per cent.
§ Mr. CHURCHILL
It is no use misquoting facts. I never said a reduction of 10 per cent. in price, but a reduction of ten points in the cost of living. It is not 10 per cent. or anything like it.
§ Mr. SNOWDEN
There are a good many estimates of the cost of living at different comparative periods. The "Statist" estimate, the "Economist" estimate and the Board of Trade estimate are all based on somewhat different foundations, but the "Economist" estimate gave it at 8 per cent. That does not in the least affect my argument. The right hon. Gentleman does not deny that there has been a fall in prices and whether we put it at 8 per cent.—and the Board of Trade would not quarrel with that—or at 10 per cent., there ought to have been a corresponding reflection in the reduction of expenditure. As a matter of tact, it should have been something like £9,000,000 less. The right hon. Gentleman has this year made a change in the presentation of the accounts. Last year, the national revenue was about £800,000,000, and the expenditure was something similar. I ask hon. Members to see whether this dues not come true. I feel quite sure the right hon. Gentleman will be claiming on public platforms —he may be doing it on the wireless this evening, although I understand he is under a pledge to introduce no controversial matter—and he will base his statement upon the total presented in the White Paper, that he has reduced the national expenditure from £830,000,000 to £676,000,000. The totals are much higher, deducting the Road Fund and the Post Office, than they were in 1924–5. I do not want once more to remind him of the aim that he stated three years ago. If that aim had been realised, the expenditure to-day would have been on the same basis about £45,000,000 to £50,000,000 a year less—£15,000,000.
§ Mr. SNOWDEN
How many times have I got to remind the right hon. Gentleman of the exact terms of that aim. It was £10,000,000 upon the Supply Services. It was not an aim in regard to the reduction of the National Debt Services. "We certainly," he said, "will reduce these by £5,000,000 a year." That is £15,000,000 a year. Contrast the aim and the realised fact.
I come now to satisfy the right hon. Gentleman's desire to hear about the Sinking Fund. He claims that if there has been an increase in the total of expenditure it is due to the increased provision for the Sinking Fund. The right 930 hon. Gentleman has not during the last three years paid the statutory sum of £50,000,000 a year to the Sinking Fund. Every year he has raided the Sinking Fund, and he has repeated the operation this year by taking the £4,000,000 surplus which, according to every honest precedent—[Interruption.] I leave the two right hon. Gentleman to settle that. I am at any rate out of it. The right hon. Gentleman has not paid, during the last three years, the statutory £50,000,000 a year. He paid only £36,000,000 in the first of the three years, £24,000,000 in the next, and £65,000,000 in the last year, a total of £125,000,000. He ought to have paid £150,000,000, and, therefore, he is £25,000,000 to the bad there. A sinking fund ceases to be effective when it is not provided from an excess of revenue over expenditure. A considerable part of that which he has actually paid into the Sinking Fund he took by raiding what were in effect capital reserves. He got £20,000,000 from the Road Fund and about £10,000,000 from the sale of stocks. He is always claiming credit for having raised the Sinking Fund nominally from £50,000,000 to £60,000,000. That year, if he had maintained the Sinking Fund, instead of raising it to £60,000,000, he would have raised it to £64,000,000. Last year he did what he thought was a very courageous thing. He raised it from £50,000,000 to £65,000,000, but, if he had raised it. to the amount to which he ought to have raised, it, he would have provided £86,000,000 last year. He agrees.
§ Mr. SNOWDEN
What is the effect of all this? We sec the effect of it. The right hon. Gentleman's sins are coming home to roost. What happened to him in the autumn of last year? Then the credit of the country was put to the test in the conversion scheme which the right hon. Gentleman had to carry out. With what result? Take two national stocks, two which are a real test of national credit. There is the 3½ per cent. Conversion Loan. In the year of perfect financial administration the 3½ per cent. Conversion Loan reached 80⅜. To-day it stands at 77½4. Take Consols. In that year, they stood at 59. They stand to-day at 56½. There you have perhaps the truest reflection of the state of national credit, and, as the right hon. Gentleman the 931 Member for West Swansea (Mr. Runciman) pointed out in a very interesting company chairman's speech which he delivered a few weeks ago, while our credit has been going down, the credit of many other countries has been going up. The United States of America is borrowing to-day, I believe, at, a little under 3½ per cent.
Take the conversion issues last autumn —and I give the right hon. Gentleman my sympathy; he had to deal with the unfortunate 3½ per cent. conversion of 1914. If anybody else had been in the right hon. Gentleman's position, they would have had to convert it in the present state of national finance, at, a higher rate of interest. But my criticism of the right hon. Gentleman is that he was far too generous and far too prodigal. What did he do? He offered a new issue of 3½ per cent. Conversion Loan, and for each £100 of stock already held he gave them the nation's I.O.U. for £132 15s. At that time, the market quotation of the 3½ per cents. was about 75, and the right hon. Gentleman actually offered them more than the corresponding stock could be purchased in the open market at that time. That means that the yield upon that converted 3½ per cent. stock has been raised by 1 per cent. to about £4 13s., and it is what is called, although not very correctly, an irredeemable stock. That is not all the criticism. At the same time he sought to convert 5 per cent. National War Bonds into 3½ pee cent. Conversion Loan, and he gave the holders £142 for each £100 nominal stock. That means a yield of £4 19s. 5d. per cent. That is almost exactly the yield they were getting before. Then he converted 4½ per cent. National War Bonds, and he gave the owners £134, a yield of £4 13s. 9d., which he guaranteed till 1961. But even that is not all. Tie had an issue of 4£ per cent. Treasury Bonds with the option of redemption in February of next year. The latest date is 1934. The yield on the earliest redemption is £5 is. 3d. Why, the market was simply amazed when the Treasury prospectus came out giving particulars of these various conversions. That. is very largely the consequence of the financial policy which the right hon. Gentleman has followed during the last three Years.
932 I will say a word or two about these issues at a discount. The right hon. Gentleman is flying in the face of the very strong and unanimous recommendation of the Colwyn Committee. I have never been able to conceive any reason at all from the State's point of view for the issue of stock at a discount. I can see the advantage from the point of view of those who get, say, £140 for a cash subscription of £100. What does it mean? The right hon. Gentleman said: "Ah, well, we might he handing on the burden to posterity, but, at any rate, we are easing the present." As a matter of fact, you are not easing the present, because you will see from the figures that I have just given that we are effecting practically no reduction in the amount of interest which we have to pay. The right hon. Gentleman said: "Pay attention to interest. Do not bother about nominal figures." Alt, but these are not nominal figures. What the right lion. Gentleman is doing by issuing at a heavy discount is exactly what a moneylender does when an impecunious person goes to borrow and signs a promissory note for £100 and gets £50 cash. What is going to happen? Are we to maintain this debt for ever?
surely it is to be paid off some time. The redemption of certain of these bonds is 1961, and at that time the right hon. Gentleman will have to pay an appreciation of capital of 25 per cent. Now, if money rates fall—and I do think they will fall in the long run — to 3½ per cent., then the holders of 3½ per cent. Conversion Loan get a capital appreciation of 25 per cent., and, in the meantime, as money rates fall, they get a capital appreciation. And all that is exempt from Income Tax! It is an entire loss to the State. I repeat, that I never could understand why the State should adopt a policy of that sort. The right lion. Gentleman said yesterday, when dealing with the new fixed debt arrangement— and I should like, when either he or the Financial Secretary replies, to have a little enlightenment upon this point— that. the Income Tax-payers will in future get the benefit of a reduction in the rate of interest. I should like to have an answer to this question. If there is to be, by the operation of the new fixed 933 debt charge, a reduction in the rate of interest, does that mean there will be a reduction in the rate of Income Tax? I do not ask for an answer now, but I should like to have an answer later to that point.
I will give an illustration. Take the case of a person with an income of £10,000 a year from 5 per cent. National War Bonds. In 1920, that man was getting—I leave out Super-tax, because that does not really affect the point, as there has not been much change in that tax—£10,000 a year income, and he paid £3,000 income Tax, leaving a net income of £7,000 a year. What is his position today? He is still getting £10,000 under the new conversion, but he is only paying £2,000 a year in Income Tax. Therefore, his income is £8,000. But there has been—and this will not be disputed, at any rate—an appreciation in the purchasing power of money of 60 per cent. during those years, and, therefore, his £7,000 net in 1920 is worth over £11,000 this year.
§ Mr. SNOWDEN
Well, the Colwyn Committee put it at 61. I can quite understand that the right hon. Gentleman gets irritable—
§ Mr. SNOWDEN
—by the recital of these cold, hard facts. This fixed debt charge may be an admirable thing in itself, but it is a very dangerous thing to place in the hands of a Chancellor of the Exchequer like the one who holds office at the present time, but he may have successors. I confess I do not really understand the figures we had placed before us yesterday. We may be able to get some enlightenment later. I prefer a much simpler way of arriving at the real facts. What, is the right hon Gentleman going to provide, not this year but next year, when this new fixed debt charge method comes into operation?—£355,000,000. Does he expect that the interest charges next year are going to be materially less than they are at the present time? If we take them at £305,000,000, that only leaves £50,000,000 for the Sinking Fund—the statutory figure at the present time. What is really going to happen is this. 934 The right hon. Gentleman is actually in the next few years reducing the contribution to the Sinking Fund, and he is hoping that posterity will shoulder the burdens. But does the right hon. Gentleman really think that this new scheme will operate, say, for 40 years, when the proportion between debt and interest will be something like this—interest, £55,000,000; Debt reduction, £300,000,000? Does he really think that a scheme like that would be continued by those who are in our places 40 years hence? I do not believe that for a minute. Last year he provided £375,000,000 for interest and Sinking Fund. Next year he is proposing to provide only £355,000,000.
Passing from the consideration of the financial position, I want to say a few words about some of the new taxes. I will not say much about the tax on buttons. I suppose the presence of the President of the Board of Trade on the bench this afternoon is because of his interest in this important fiscal reform. Coming to the tax on petrol, I hope the Chancellor of the Exchequer is pleased with the reception which this proposal has received.
§ Mr. SNOWDEN
It does not take much, then, to satisfy the right hon. Gentleman. At any rate, we have proof already that it is the consumer who is going to pay, and the consumer is going to pay more than will go into the pocket of the Chancellor of the Exchequer. The rise in the price of petrol is already, I understand, 41d. It is a matter of some importance that the rating proposals of the right hon. Gentleman will not become, if ever they become, financially operative at all until October of next year. Surely it is a violation of all sound financial principles that a Chancellor of the Exchequer should levy this year taxation which is not to be spent during the current financial year. It has always been a principle that taxation had to be levied for expenditure that was going to be incurred during the year, and on the grounds of financial probity the right hon. Gentleman has no right to take £20,000,000 from the pockets of he taxpayers this year, when he does not even know that it will be needed for 935 the purpose he has adumbrated. He has no scheme before Parliament. Parliament has not approved it. Parliament may not approve it, and, indeed, I should be very much surprised if Parliament does approve such a fantastic, ill-considered and inequitable plan as that which the Chancellor of the Exchequer adumbrated yesterday.
The right hon. Gentleman attempted to justify this additional impost upon motorists by saying that petrol was cheap. But what guarantee has he that petrol will remain cheap? The right hon. Gentleman knows that for some time past there has been an oil war going on. There has been a competition or Soviet petrol, which is an effective competitor, in spite of "Daily Mail" placards. I have always been opposed to a tax on petrol, and for the reason that I know the Revenue do not approve of such a tax. We had to abandon the old 6d. tax on petrol imposed during the War, because of the loopholes for evasion. Those loopholes are not, closed now, and it would not require much ingenuity to run a whole army corps through the precautions which the right hon. Gentleman thinks he has erected. The reduction in the licence duty on hackney vehicles is not compensation for the increased petrol charge. The right hon. Gentleman said yesterday that petrol was taking the place of coal, that it was going to be the great motive spirit for industry in the future. What would be thought about putting a tax on coal, the raw material of every manufacturing industry? The right hon. Gentleman tells us that motor spirit is going to take its place, and, therefore, by this tax he is putting a tax upon what is the raw material essential—and increasingly so—for a vast number of industries in this country. Merely from the political point of view, I would welcome this proposal.
A word about sugar. I see that some of the newspapers this morning say, "Reduction in the Sugar Duty—cheaper sugar." There will be no cheaper sugar. The Chancellor of the Exchequer is far too good a Free Trader to believe in that nonsense; he understands the Free Trade case too well. The manipulation of the rates of duty on British sugar is being carried out simply for the purpose of giving protection to the British re- 936 finers. If they have to lower their price on account of the duty, what advantage will they get? Foreign competition kill be just as keen as it, is to-day, and their position will be just the same. The most nonsensical part of the right hon. Gentleman's statement on this question was that this farthing a pound—I do not believe it will be that—will go to the consumer. That is one of those statements that are really so ridiculous that it does not need a waste of words to refute them. Advantage has already been prospectively taken. There are one or two Members on the other side who, I am quite sure, follow Stock Exchange movements, and if they have been following the movements of sugar-refining companies during the last few weeks they will know that the shares of Messrs. Tate and Lyle have increased by over 50 per cent. since it became known that this protection was going to be given to the industry. A few weeks ago their shares stood on the Stock Exchange at 28s., and they were marked yesterday at 42s. 6d. What does that mean? The ordinary capital of Messrs. Tate and Lyle in £1 shares is £3,312,000. and the anticipation of this Budget proposal has raised the Stock Exchange value of those £3,000,000 of ordinary shares by £2,400,000. This company, which has been appealing to the Chancellor of the Exchequer in. forma panperis has during the last 12 years, I believe, paid an average dividend of between 15 and 16 per cent I am not going to say much about the rating scheme, except of a very general character. No part of the right hon. Gentleman's speech has, I think, been received with greater disappointment than his proposals in regard to rating. Disappointment was felt throughout the House yesterday when he announced that no relief was to he given, if it is ever to be given, until October of next year. The industries which it is supposed to be its purpose to help are languishing. "No help," says the right hon. Gentleman, "for at least 18 months." We must wait until the Paper which was promised by the Minister of Health this afternoon has been published to see how the Government are going to define "productive industries." They will be ingenious, indeed, if they can make a division between productive industry and distribu- 937 tive industry. I will give one very simple illustration, on a very small scale. Take a tailor who works in his shop. Is his shop a, distributive trade or it is a workshop t I do not know. The advisers of the Government will, no doubt, settle that point. The method which is proposed by the Government will give relief whether relief be required or not. It is going to give equal relief from rates, percentage relief, at any rate, to motor car firms here in the South of England which are prosperous, and to gramophone companies. I suppose that gramophone making is productive work, and so is artificial silk manufacture. The scheme is based upon no scientific plan whatever.
The loudest cheer that greeted the speech of the Chancellor of the Exchequer yesterday came from the benches opposite when he announced that the landlords were to be put still further on doles. We get exactly the same anomaly in operation there as in connection, with the manufacturing industries. The more valuable the land, the more profitable the purpose to which it is put, the greater will be the relief that the landlord—perhaps in the first instance the farmer—will get. The right hon. Gentleman cannot quite drive out of his mind his old belief in the iniquity of the increase in land values going into the pockets of the landlord. That came out, I believe unconsciously, yesterday. He raid that these great firms are, in the main, the owners of the freehold upon which their works stand, and, therefore, the increase of land values would go to their benefit. The owners of agricultural land are also the owners of the freehold, and, if the increment value is going to the owners of commercial enterprises, it is equally certain that the increment value will go into the pockets of the agricultural landowners; as a matter of fact, nobody disputes that. It is a perfectly outrageous thing that hundreds of thousands of acres of land outside our towns which is ripening in value every day and which is being used at the present time for agricultural purposes is going to be relieved of rates altogether. This rating scheme of the Government is based entirely upon wrong principles. It will give least relief where most relief is needed, and it will give the greatest relief where no relief is required.
938 There will be many other opportunities of dealing more in detail with the specific proposals of the Government. In conclusion, I would like to summarise—I know this is a point to which the Chancellor of the Exchequer attaches great importance—the right hon. Gentleman's financial record. He never makes a speech in the country without trying to defend himself, or praising his own achievements.
§ Mr. SNOWDEN
I would ask him to jot down, as I relate them, a few of his achievements during the last few years, and he can make them the topic of his next platform speech. He said, a little while ago, that the whole course of this Government had been to rid the local authorities of their heavy burdens and to economise national expenditure in order to relieve local authorities. What. has he done in that respect? The Road Fund was specifically for the purpose of relieving local authorities from the upkeep of the roads. He has taken £20,000,000 of capital reserves from that Fund, and he is taking £4,500,000 for ordinary revenue purposes every year. If the roads are to be maintained in that state of efficiency which gives so much delight and admiration to the right hon. Gentleman, it will have to he done by the local authorities making a larger contribution. He raided the funds of the National Health Insurance societies, with the result that a great many of those societies are unable to give the benefits to the sick which they formerly were able to provide, and that has thrown an additional burden upon the Poor Law.
The right hon. Gentleman stopped the unemployment grants to local authorities, although, when they were in operation, they were a means by which the local authorities could keep men off the Poor Law. The increase in the number of recipients of Poor Law since this policy was adopted proves that an additional burden thereby has been placed upon the local authorities. The right hon. Gentleman might also make a note of his successful efforts in economy. He might also note that. he bas burdened this country for the next 60 years with £50,000,000 of interest upon debt which ought to he paid by our Continental Allies in the late War; sufficient to reduce the 939 Income Tax by one shilling in the pound. Having done these things, he is now trying to re-establish, shall I say, his lost popularity. [An HON. MEMBER: "He never had any."] An hon. Member says that he never had any. At any rate, he is seeking to establish, shall I say, a reputation for constructive statesmanship by introducing such a fantastic, half-baked monstrosity as this rating scheme.
What relief will this Finance Bill give to the great toiling masses of this country? In our year of perfect financial administration, we reduced the burden of taxation upon the working people of the country by £50,000,000 a year, and so sound and so generally approved was that step that not even the right hon. Gentleman himself has had the courage to repeal it.
§ Mr. SNOWDEN
The right hon. Gentleman has, of course, taken credit for the £2,500,000 reduction in the Income Tax of certain taxpayers, and that will be welcomed; but it does not touch the millions of working-class population. The duties on tea and sugar, and the other indirect taxes are still crushing the bent backs of the working-classes. Until after the next. General Election I see no hope of any relief of that taxation. I am quite sure that the electors—we have had proof of it an hour ago—are not blind to the achievements and work of this Government, and I am confident that when the result of that. General Election is known there will he a change in the personnel of the. Minister responsible for the financial administration of this country.
§ Sir ALFRED MOND
The right hon. Gentleman, who for one short period was Chancellor of the Exchequer, and who lectures us on finance with pontifical authority which sometimes borders on the comic, has delivered a very characteristic oration. Aristides, the Just, was nothing compared with the right hon. Gentleman; he was a criminal compared to the wickedness of the present Chancellor of the Exchequer or the virtues of the right hon. Member for Colne Valley (Mr. Snowden) when he was Chancellor of the Exchequer. We have had the usual rather dreary kind of discussion between 940 ex-Chancellors of the Exchequer, in which the pot calls the kettle black, and in which they compare notes as to why they did or why they did not succeed in reducing expenditure. I have never been in the unfortunate position of being Chancellor of the Exchequer.
§ Sir A. MOND
The finances would be very much better ordered if that were the ease. From my experience of administration, I am quite certain that all Chancellors of the Exchequer can still effect very large and very useful reduction in public expenditure. In fact, there is no end to the amount of public money which can be saved by close, continuous and steady pressure.
I was rather interested listening to the right hon. Gentleman opposite discoursing on the evils of the conversions which have been carried out by the Department over which he presided with such ability. He seems to have overlooked one fact about conversion which a little more knowledge of finance would have shown him was a very important fact, and that is that unless you offer terms on which people are ready to convert it is no use introducing conversion schemes. I have no doubt that the Chancellor of the Exchequer was advised by exactly the same gentlemen as advised the right hon. Gentleman when he was Chancellor of the Exchequer, and therefore what is the use of all this camouflage between Chancellors of the Exchequer as to the terms on which conversion would he successful? The right hon. Gentleman, if he had been Chancellor of the Exchequer, would have accepted that advice at once. He would not have dared to alter it one bit, any more than the present Chancellor of the Exchequer, because he would not have dared to oppose the expert view of the Governor of the Bank of England and other financial authorities. [Interruption.] Hon. Members opposite have still got illusions if they imagine that a Labour Chancellor of the Exchequer can make conversion any more successful than any other person, or is less ready or less sensible or less prepared to take the advice of those on whom we all have to rely in financial matters. Therefore, all this talk of what ought to have been done, what might have been done, or 941 what some people thought should have been done, is entirely beside the mark and leaves us and the City entirely cold.
The right hon. Gentleman opposite made two observations to which I take exception. I do not agree with him that money is likely to be dearer during the next year. The best informed view is that it is likely to be cheaper: The right hon. Gentleman ought not to mistake a temporary rise in the money rate in New York, introduced by some federal banks, with a rate which rises because of a shortage of funds for loan able purposes. In America, there is more money for investment than can be usefully employed at; the present time, and, when he compares the rate of the Liberty Loan in America with the rate of our funds here, he is either not speaking candidly, or he is displaying such an extreme and lamentable want of knowledge, on financial questions as to make me wonder why he addresses the House on financial questions at all. What has happened to the Funding Loan in New York shows that if you can provide British funds in America free of Income Tax our credit is quite as good as that of any other country. What an extraordinary confusion the right hon. Gentleman introduced in his quotation, when he said that the fact that Consols were down showed that our national credit. has diminished What an absurdity! British national credit is good for thousands of millions as the War showed. It was really not worthy of one who has held the office of Chancellor of the Exchequer.
The Chancellor of the Exchequer can take comfort from the very vehemence of the attacks of the right hon. Gentleman and his friends. They are so overcome by the fact that the Chancellor has produced a constructive programme covering the whole field of industry in it large and comprehensive manner, with a real idea at the bottom of it and a real vision in front of it, that they have to fall back on gibes about the Petrol Duty and talks about buttons, in an attempt to diminish, either by vituperation or some other way, the impression which the Chancellor of the Exchequer has produced in this House and in the country. I was astonished to see that even the "Daily Mail," which is not always friendly to the Government or my right hon. Friend, has been compelled in a leading article to sup- 942 port the broad and statesmanlike proposals of the Chancellor of the Exchequer. Let me say a word about two subjects before I deal with the broader aspect of the financial statement. The right hon. Gentleman yesterday, in his opening remarks, touched, in passing, on a very vital and important question, and that was the fusion of the Note issues of the Bank of England and Treasury Notes, which we all know must shortly take place. He said that, of course, legislation would be required and indicated that elasticity would be found in that legislation which would satisfy some of us who have been drawing attention to the very important and vital part which this question will play in the future development of industrial prosperity in this country.
I do not wish to weary the Committee with any disquisition on the highly technical and difficult question of gold reserves and the gold standard, which are by no means synonymous terms, but I wish emphatically to state that it is absolutely essential that we should not so tic our hands in releasing what has been a potent weapon in the hands of the Government as to nullity all the efforts many of us are making to improve the industrial prosperity of this country. You cannot watertight the gnus-Lion of your financial policy from that of your industrial policy. You cannot crucify Great Britain on the cross of the gold standard and expect trade and commerce to develop as freely as if they were unfettered. You cannot restrict credit and then wonder that you have no development in trade and why you have unemployment. You cannot restrict currency and wonder why your people cannot purchase. These things must march hand in hand, and the important resolution which was passed at the Genoa conference in 1922 by all the leading financial authorities of the country ought to be taken up and carried out. I will leave it at that, with the hope that when we see the Bill we shall give ourselves as much freedom as the Federal Reserves Banks.
Passing from that to the question of the larger policy of the right hon. Gentleman, let us try to see whether this scheme, fantastic and absurd, ridiculous, unthought-out—and other adjectives?—[HON. MEMBERS: "Monstrous! Half-baked!"]—deserves all these harsh 943 epithets, or whether it does not really deserve the very serious consideration of this House. Some of the problems involved in this question were very present to my mind during my short tenure at the Ministry of Health, at a time of even greater economical stress than the present. I was faced then on more than one occasion with the difficulties of local authorities where unemployment had become so rife, where the rates had become so uncollectable, that they were practically on the verge of bankruptcy, and it was only by a series of grants or loans from the Treasury that some of the large industries, both in the North of England, in South Wales and elsewhere, were kept going and the population kept from starvation. What was borne in on one's mind then was the obvious reflection, first, that a system of rating and Poor Law which was suitable to the time of the Tudors was quite unsuitable to the present day; and, in the second place, that the area in which the distress operated was limited, and that, the very limitation of those areas made that distress more acute. In fact, we were continually working in a vicious circle; unemployment causing higher rates and higher costs to the big industries which were struggling on. The higher costs made their competitive position more and more impossible, and one by one they began to close down. Automatically, unemployment rose. This vicious circle was causing a state of chaos and misery which we could not contemplate with any equanimity; only with a kind of horror.
Since that time nothing has been done. We have often talked about the necessitous areas, and the necessity for reforming our Poor Law. We have often discussed what steps should be taken, but no scheme which has been brought forward, and there have been several, has met with entire support. Now for the first time the Government of the day brings forward a scheme—I am not arguing, whether it is perfect or imperfect—which is based on two big principles, one of which I have always put forward, and that is the Berating of machinery, the de-rating of improvements. [Interruption.] If you take the principle of paying three-quarters of the local rates on productive plant and machinery from some other 944 source, you are, to that extent, derating machinery. The source of the supply is another question altogether.
§ Sir A. MOND
I am not on that point at the moment. Really, this is a very complicated subject, and you must take it in steps. I am the owner of a factory and three-quarters of my rates are paid by Mr. X. Therefore, from that point of view my factory is derated. If I put in more machinery and again three-quarters of that machinery is not rated, I am not rated on that improvement. That is what some of us have been wanting for a long time, and it is not a benefit merely to one or two manufacturers, it is a benefit to the entire industrial life of this country. Hon. Members opposite who laugh at any scheme which is going to improve the industrial prosperity of this country and think it is going to be unwelcome to those they represent are making the greatest mistake of their lives.
§ Mr. MACKINDER
Does the right hon. Gentleman not know that machinery is not rated at, the present time?
§ Sir A. MOND
I know too much about rating to take that statement. Certain kinds of machinery are not rated and other kinds are. If the hon. Gentleman had had as much to do with rating appeals for chemical works as I have had, he would be a little more accurate in his statements. I shall not go into that very long question of what is rated and what is not. There is quite a large amount of building and industrial plant which is rated, and one company, of which I happen to be chairman, pays £200,000 in rates, and so apparently we are still rated.
§ Mr. MACKINDER
The right hon. Gentleman said "machinery." He was basing all his arguments on machinery. Now he refers to buildings.
§ Sir A. MOND
I am talking about buildings and fixed plant which cannot be moved. I was using the term as it is understood in industry. Let me say a word about the coal industry. Is it doubted that the burden of rates on the coal industry is one of the heaviest burdens which the industry has to bear to-day? Is it not a fact—[Interruption.]
§ The DEPUTY-CHAIRMAN (Captain FitzRoy)
This is a very serious subject, and the right hon. Gentleman cannot develop his argument when he is constantly interrupted.
§ Mr. MacLAREN
If I may say so, the right hon. Gentleman has been rather truculent and challenging in his statements.
§ Sir A. MOND
If I am truculent, I am afraid that I caught the tone of the right hon. Gentleman who opened the Debate. In South Wales, the coal rate has been increased since 1913 by 60 per cent. in the in some areas, and in other areas by as much as 300 per cent. In 1925, the amount paid in local rates was nearly £1,250,000 on an output of 44,500,000 tons. The average burden of rates per ton has been over 6d. per ton. It surely cannot be contended that if you succeed in reducing this great burden of 6d. per ton you are not going to benefit the coal industry? As far as that burden is concerned, the industry will certainly be benefited. There is no doubt that the levying of this continuous burden, which is a charge not on profits but on the cost of production in an industry which is losing money, is economically unsound, financially disastrous, and that in time it will lead to more and more reductions both in the production of coal and in employment in the industry. The more you rationalise your industry, the more you concentrate, the heavier that burden will become. Surely that cannot be a sound or reasonable fiscal policy? An hon. Gentleman opposite said he was afraid that that improvement might be given away. That leads me to this point.
While there can be no doubt in my mind that the distribution of this heavy weight on the on-cost charge of industries to-day, many of which are losing money and cannot compete in the markets of the world, would be an advantage to those industries, I would equally emphatically say that that in itself will not be sufficient to reanimate and re-establish the industries of the country. It is an assistance, it is a gesture, something that the Government are doing to show their good will, but unless these industries adopt the best possible economic methods of production, unless they come together and rationalise their output, unless they see 946 to it that they are as well equipped in the struggle for existence as their Continental and other rivals, this effort will not succeed in achieving what it sets out to do. But it will be something of very great importance. Surely the one thing we have to remember in this world is the psychological effect. No one has stretched out a helping hand to the depressed industries of the country for years. At present they lie almost derelict, and the bankers are clamouring to be repaid overdrafts. It has become almost a byword. They can obtain neither credit to reorganise themselves, nor that animation and hope for the future that drives people to improve their position.
This scheme of the Government will, from all I know—I may speak with a little authority on the question of industry—encourage that spirit of hope for the future and that animation, and if the Government will have the courage to use their best influence and power in order to promote not merely a reduction of the burden, but also an improvement in the getting together of these industries, then I do believe, quite apart from all party ideas, that we shall see a better and brighter state of industry. This is not really a party question. It is very much too serious a problem. It is a matter of indifference to me as to who occupies the Government Front Bench. It is, however, a matter of great importance to me that the people of this country should flourish. Therefore I sincerely hope that these ideas and this large and fruitful programme will be explored with no narrow and bitter idea of scoring a point here or there. Take the very important question of making England independent in its oil fuel supply—a question which lies at the root almost of our national safety, a question which may entirely change the aspect of the coal industry, which is rapidly losing its export markets. Surely that in itself is a problem of vital importance, and one which will undoubtedly be stimulated, strengthened and, I believe I might say, solved by the duty on petrol which the Government is introducing.
A solution of that kind is not a technical but a commercial question. If you alter the balance of trade in this country, you make your coalfields, which were once the great potential wealth of this country, once more the source of our power, once more the source of our 947 wealth. You will bunker your steamers with oil made from British coal, instead of bringing it from all the corners of the world. It may involve some sacrifice by some portion of the tax-payers but it will be a sacrifice of no great amount and it will be no great burden. The right hon. Gentleman who opened the Debate indicated his view that this tax was a tax on what he called the prime movers in industry. I have yet to hear of any manufacture in which the prime movers in industry are moved by petrol or motor spirit.
§ Sir A. MOND
There is no One more than the representatives of mining constituencies who should show the deepest and most profound interest in the development of our coal into fuel, and I imagine they will be the last people in the world to oppose any project which will enable some steps forward to be made in that direction. This problem, placed by the Chancellor of the Exchequer before the House in a speech of singular lucidity and felicity, did deserve a rather more statesmanlike reply than it has received from the right hon. Gentleman on the Front Opposition Bench. I have no doubt that as time goes on many points will have to be elucidated. There is the very important. question of railway rates, a question of vital importance, for at present you are jeopardising our export. trade by making our harbours as expensive to reach from a distance of a few miles as the harbours of Holland and Germany are from central Europe. That cannot continue if the export trade is to flourish. You have this whole wide field, and you must regard it as a whole. In the opinion of many to whom I have spoken, who are not interested in Our political controversies, this is the most fruitful, the most far-reaching, the most statesmanlike and the biggest-visioned Budget that we have had introduced into the House for a great number of years.
§ Mr. LLOYD GEORGE
I am not surprised that the right hon. Gentleman the Member for Carmarthen (Sir A. Mond) who has just spoken approves of the projects of the Budget. He would indeed be a very ungrateful man if he did not 948 feel like that. But may I just point out to him that in a very general speech he has missed the point altogether. He has not once condescended to go into details. The whole of this Budget must be tested by the actual projects put before us by the Chancellor of the Exchequer. The right hon. Gentleman brushed aside in a very scornful manner my right hon. Friend the Member for Colne Valley (Mr. Snowden) who opened the Debate, but he never condescended to point out a single detail or a single figure in which my right hon. Friend was wrong. He has done exactly the same thing in regard to the rating proposals. There is no dispute between any sections in this House as to the extreme desirability of lowering the rates upon industry. An hon. Member on this side of the House moved an Amendment to the Address about 18 months ago, urging the Government to do something. I am not at all sure into which Lobby the right hon. Gentleman who has just spoken went on that occasion, but those who are now associated with hint voted against that Amendment, and right. hon. and hon. Gentlemen on this side of the House voted for that Amendment. There is no doubt that it is essential to reduce the rates on industry. That is the common ground of all parties. The question is: how is it to be done? Is this the way to do it? The right hon. Gentleman has not given us a single sentence to illuminate us on that one vital matter upon which the House wants to he informed. He has said that it is a very serious question. Of course, it is a serious question. It is a question that ought to be considered in a purely nonparty spirit.
It is idle for us to make any appeal to the Chancellor of the Exchequer or to the Minister of Health with regard to this particular scheme. Those are appeals that the right hon. Gentleman ought to make to his own loaders on the Front Bench, and it is for them to respond to that appeal. I was convinced as I listened to the right hon. Gentleman yesterday, and I am still more convinced after considering his project, that this is a thoroughly vicious method of dealing with this particular matter. I am going to give my reasons. I am not going to make a vague statement like that 949 made by the right hon. Gentleman the Member for Carmarthen. I am going to give chapter and verse for my reasons. One thing I should like to put to the Chancellor of the Exchequer is this. He is not the first person to start considering this proposal. Even the right hon. Gentleman who has just sat down has been considering it and he has been urging upon us until quite recently that the one method of dealing with it was that of taxing land values.
§ Mr. LLOYD GEORGE
That is quite wrong. It was the right hon. Gentleman's colleagues who scrapped the machinery, and may I point out that what I am referring to is much more recent than that. I have been much too busy to follow the political history of a gentleman who has emulated the Chancellor of the Exchequer's political vacillations. I think, however, it will be found that the right hon. Gentleman was just as zealous two or three years ago upon that subject. as he was even in the days when the Chancellor of the Exchequer, too, was zealous upon it.
§ Sir A. MOND
May I remind the right hon. Gentleman that one of the greatest disappointments of my life was when he informed rue when I was a member of his Administration, that he had abandoned his taxes.
§ Mr. LLOYD GEORGE
As a matter of fact, that is not approximately accurate. I was not even in this country at that time, and so I could not have informed the right hon. Gentleman. The right hon. Gentleman is drawing, I will not say upon his memory but upon his imagination.
§ Sir A. MOND
My memory is quite accurate. The right hon. Gentleman told me himself of the withdrawal of these taxes at number 10, Downing Street, in the Cabinet Room.
§ Mr. LLOYD GEORGE
When the Budget was brought forward I was not even in this country, but the right hon. Gentleman was. I have no doubt he is stating his recollection. The point which want to put to the Chancellor of the Exchequer, however, is this. Although several have been examining the ques- 950 tion of relieving rates on industry, he has no Committee, he has no Commission, he has no body of experts that has ever recommended this particular course —not one. There are many who in examining this project have begun—[An HON. MEMBER: "The Yellow Book!"] If the hon. Gentleman will do me the honour of receiving a copy, he will then know more about rating. I was about to say that everybody who examines this problem starts in the same way. They all start with the idea of giving relief to industry in this way. That was done by the Agricultural Rates Act. The right hon. Gentleman condemned that in his speech of yesterday and said there, was to be no extension of it, but the whole of this project is an extension of that particular proposal.
What are the evils from which we are suffering? Let, us examine them. There are three particular evils. One was dwelt upon with great eloquence by the right hon. Gentleman himself—that owing to the depression in certain industries the burden of the rates became higher in certain districts, and fell upon the industries there, and crippled them and retarded their recovery. The same point was put by the right hon. Gentleman who has just sat down. That is common ground. What is the second? It has not been referred to at all by the right hon. Gentleman and is not touched. It is that you have an aggregation of people who are engaged in industrial pursuits in certain areas where social needs are very great, because houses are crowded into the acre. The needs are high, the rateable valuation is low. The result is that the rates in those districts are very much higher because there are no rich in those districts, there are no great houses there, there are even very few factories in some of them, the factories very often being outside. East Ham is a very good illustration. That is the second problem. How are you going to relieve that problem? It has not been touched by the right hon. Gentleman.
The third problem is one which the right hon. Gentleman did dwell upon and that is the problem arising out of motor traffic which has made a new demand upon the roads of the country—demanding not merely their repair but their reconditioning. Even after they have been reconditioned, the cost of repair is very much higher than it was 951 before, and so the rates go up. Let us see how the right hon. Gentleman proposes to deal with these matters. If I am wrong in stating his proposals, perhaps he will do me the honour of correcting me as I proceed, because I do not want to criticise on the basis of an imperfect knowledge of the scheme. I quite admit that there are one or two points in the right hon. Gentleman's speech which I did not quite realise until I read it this morning, and I want to be sure that I am correct in the interpretation which I am placing upon his project. He is going to take certain industries which he calls productive industries. I will come later on to the point as to how he distinguishes them. He is going to pay three-quarters of the rates upon those industries. He is going to send a cheque to the local authority to cover the loss, but it will be a fixed amount. If the rate goes up, there will be no increase in the contribution from the Treasury. On the other hand, if the rate goes down, the contribution will be the same.
This is a point, which I did not fully understand yesterday but I have an idea that the right. hon. Gentleman is going even beyond that. The right hon. Gentleman proposes to widen and enlarge the rating unit. He is going, in future, to convert the Poor Law guardians units, the urban units, and the rural units, into a county unit and spread the rates over the whole of that area. That is a very important and very vital consideration, because it means increasing the rates in some areas very considerably. If you are going to give relief to highly rated areas, you will be giving it at the expense of other areas in the same county. If I understand the right hon. Gentleman's speech, after reading it carefully, that is his project. I give as an illustration the case of the county of Durham. The county boroughs will remain the same. I take it that Gateshead, Sunderland, South Shields and three or four county boroughs of that kind will not be changed at all. They will remain as units, and there will be no spreading of the rates there. Then take Chester-le-Street. It will be pooled with the rest of Durham. The whole of the county, with the exception of these county boroughs, will be converted into one unit. The Poor Law will be pooled 952 over the whole of that unit. The highway rate will be pooled and all the other rates will also be pooed. If that be the case, I want to point out seriously to the Committee what it means. I wish the Minister of Health had been here, because probably he would have been more familiar with this subject, but I am not complaining of the right hon. Gentleman.
§ The PRESIDENT of the BOARD of TRADE (Sir Philip Cunliffe-Lister)
The right hon. Gentleman had to go to a very important engagement.
§ Mr. LLOYD GEORGE
I can only regret that it is impossible for him to be here, but the Parliamentary Secretary might be here to explain this matter. [HON. MEMBERS: "He is here."] The point with which I am dealing is a very vital one. What does the Chancellor of the Exchequer propose to do? I must say at once that I did not quite comprehend his proposal until I read the speech, and, if I am wrong, I should like to be corrected. Let us see what it means. The Chancellor of the Exchequer or those who advise him, say, "Yes, it is possible that you will increase the rates on many urban and rural areas because you spread the burden. The burden in a district like Chester-le-Street will be very high, and in another district, a rural district, it will be very low, and, therefore, in the rural areas you raise the rate and you lower it in Chester-le-Street." So the Chancellor of the Exchequer says. "In order to ease that. transaction I am going to give £3,000,000." That is grossly inadequate. As I understand it, the railway companies of this country at the present moment are going through a process of negotiation for the reduction of their assessments throughout the country. The right hon. Gentleman referred to it yesterday.
§ Mr. LLOYD GEORGE
I take it from the right hon. Gentleman's speech that this will mean a reduction. I think the companies are right. I think, upon the principles of the 16th century, which the right hon. Gentleman scoffed at, they are right. That will reduce the rates of the railway companies, as I understand it, from £7,000,000 to £4,000,000. The right hon. Gentleman's contribu- 953 tion to the railway companies will be on the basis of £4,000,000. Of course, he can only make an estimate at this stage, but his estimate is that it will be reduced to £4,000,000.
§ Mr. CHURCHILL
It would be reduced to a point at which three-quarters of it would be represented by £4,000,000.
§ Mr. LLOYD GEORGE
Very well, but that does represent a very considerable reduction from £7,000,000, and it means that the rating authorities throughout the Kingdom will lose perhaps about £2,000,000 a year through this process of reduction in the assessment of the rates. The total sum which the right hon. Gentleman provides for the whole Kingdom is only £3,000,000, while £2,000,000 of that will be absorbed in the change of assessment in the case of the railway corn-panics alone.
§ Mr. CHURCHILL.
No. The process of assessment is not limited to the railway companies. There is a general assessment also going on at the present time, and the result of that assessment will certainly not leave the problem more difficult. to handle than it is.
§ Mr. LLOYD GEORGE
I think, if the right hon. Gentleman had made a study of the rating problem, he would not have made that interruption as I am going to point out to him later on. What is going on at the present moment under an Act of Parliament passed in 1925 by a Government of which he is a Member and which he seems completely to have overlooked? I am going to tell him something about what is going on there, and how the proposal which he makes now completely shatters a process and a machine which is in operation at this moment for reassessment. Let us, therefore, see how the Chancellor of the Exchequer proposes to deal with this problem. It is no use saying that you are going to relieve certain industries. You must really see how it affects the rest of the community. You cannot put 4d. a gallon on petrol upon a large number of industries, you cannot put rates upon others, you cannot by means of a block grant increase the rates—because that is what it means—and get the whole of the community to contribute toward certain favoured industries, which are not by any means all of them unprosperous. What the Chancellor of the Exchequer is doing 954 is to put under contribution the vast majority of the people of this country to relieve a certain number of specific industries. Talk about robbing Peter in order to endow Paul; he is robbing the whole of the Twelve Apostles in order to endow Paul!
Let us see how his scheme works. Take, first of all, the depressed areas. In those areas, these industries will get three-fourths of their rates paid, and the rest of the community will get nothing. If it is a county borough, they will get nothing. If they are not in a county borough, they will get their neighbours in the rest of the county to contribute. There will be, first of all, that distinction against the poor people who are residing in a county borough. That is the first thing; they will get nothing. What is the next step? As long as industry is depressed, the shop people will get nothing, the traders will get nothing, the workmen will get nothing. When trade improves, the rates go down, and then everybody will benefit in rates. As long as they stand in need of it, they get nothing—three-fourths of the ratepayers. They will only begin to get something, those three-quarters, when trade improves and the poor rate comes down.
You are going to relieve these industries whether they are prosperous or whether they are not prosperous. That would be all right if the whole of the ratepayers in the country got the same benefit out of the scheme. I am not in favour of saying you must not relieve anybody except the unprosperous. If you have a general universal scheme over the whole country that takes off the burden of the rates, which is the proposal put by hon. Members here and by hon. Members behind me, you reduce the rates all round, and the prosperous will get their share, but the needy will get their share as well. There are, even in these depressed areas, prosperous works. Take Lancashire. There are in Lancashire cotton mills, those which are engaged in the fine spinning trade, that are doing very well, and there are engineering works there that I know are doing very well. They will get exactly the same measure of relief as the others.
Now let us take the second class of areas, namely, the prosperous areas. They are going to get the same relief exactly—neither more nor less—as the un-prosperous areas. The necessitous areas 955 will get no larger contribution than the areas that do not need help. I heard the Prime Minister at the beginning of this Session delivering a speech on unemployment in which he said that unemployment is practically confined to the Northern area of the country. When you come down South, and when you come down to the Midlands, there is no unemployment, and, not only so, but you have to draw labour from other districts. In these districts which he says are prosperous, where mills and factories are doing well, where there is no unemployment, these industries are going to get exactly the same relief as in the cases referred to by the right hon. Member for Carmarthen. Let me put another point there. When you come to these new areas which are prosperous—I hope the right hon. Gentleman the Chancellor of the Exchequer will listen to this point, because he invited, us to express our opinions, and I am sure—
§ Mr. LLOYD GEORGE
Thank you. Now I know what concentrated attention means. May the right hon. Gentleman never receive it from others. Let me put this: When you get these prosperous areas, where the rates are not high, there are certain rates that are bound to go up. What do I mean by that? You increase the factories. That was the proposition put by the Prime Minister—new factories springing up. That means new working-class houses, that means schools, that means an increase in the social services, that means sanitation, lighting, streets. The rates are bound to go up. What does the project of the right hon. Gentleman mean? Very prosperous concerns like those which have been mentioned here to-day—Courtaulds, the gramophones, the motor industry, which, being under the protection and patronage of persons like the hon. and gallant Member for Bournemouth (Sir H. Croft), are naturally prosperous—will get three-fourths of their rates paid. They will cast three-fourths of the increase upon the rest of the ratepayers in those districts. It is no use saying there will be more work there. According to the Prime Minister, there is no unemployment there, they are drawing people from other areas, 956 they are already working full time; but the increase in the rates will have to be borne by other ratepayers in the proportion of three-fourths of the increase.
Here is another question, which I would like to put to the right hon. Gentleman, if I may get. his attention. Take a perfectly new factory which is set up. I take it that the same three-fourths will apply to a new factory as to an old factory. Very well. In that area the new factory will only contribute one-fourth of what it would have contributed before to the rates of the community. That means that the remaining three-fourths will be spread over the rest. [An HON. MEMBER: "The Exchequer will pay!"] Not at all. I want to know that. Does that mean that the Exchequer is going to send a cheque in respect of three-fourths of the rates upon every new factory that is set up in this Kingdom? Is that part of the project of the right hon. Gentleman the Chancellor of the Exchequer? Is the right hon. Gentleman going to have an unlimited liability in those cases? I understood him to say he is going to give a certain fixed sum, which will be ascertained by October, 1929. That will be the contribution of the Treasury. That means that whenever a new factory is set up, or a new mine opened, they will only pay one-fourth, but there will be no three-fourths cheque from the Exchequer.
It is no use talking about this as if it were a great relief of rates. It is going to be a great relief of rates, not merely in the unprosperous districts and for unprosperous concerns in those districts; it is going to be a great relief for prosperous concerns in prosperous districts, and those who are now bearing heavy burdens will have those burdens increased as a result. That is really the present position. If the right hon. Gentleman had adopted one of two methods which have been urged, I do not mean by hon. Members here, but generally urged—
§ Mr. LLOYD GEORGE
I am not sure I did not hear it urged by the Minister of Health. I remember his heading a deputation. That is the first method. There are two methods of dealing with 957 it which would have avoided the injustice to the other ratepayers. One is that you should deal, temporarily, at any rate, with the necessitous areas. There are several methods of doing that, either by temporary grants or by taking over certain burdens. Deal temporarily with the necessitous areas, and take your time to recast the whole of the rating system of this country and put it upon a proper basis. I will show what that means in a few minutes. That is one method. You could have dealt temporarily with the urgent cases, the mining cases, iron and steel, and shipbuilding. You would have given them a chance, and you need not have waited until October, 1929, for that purpose, because—and nobody knows this better than the right hon. Member for Carmarthen—the next is months in industry in this country are going to be vital. He could have proceeded by that means, and done it instantly with the money at, his command. He could have given adequate relief to these particular areas.
The second method is a project to which the right hon. Gentleman referred, a project to which undoubtedly some of us have committed ourselves, and that is that he should take upon the shoulders of the taxpayers the burden of one great social service, which is really only part of the unemployment problem, namely, the able-bodied poor, and in addition to that he should make a larger contribution towards the cost of the roads—not a block grant. A block grant means that all the increase in the future fails upon the ratepayers, and that is not sufficiently understood by those who were supporting the right hon. Gentleman yesterday. If you did one or other of those things, what would happen? The areas which are hard pressed by the distress would be immediately relieved, but it is not merely particular industries that would be relieved; the whole of the ratepayers in that community would be relieved. Take, if you like, what is happening in South Wales, in Durham, and in other places. The traders there have been very hard hit. They were very hard hit by that long stoppage, and the right hon. Gentleman says the revenue has not got over it yet. Can he imagine what the effect would be upon those who live in those areas, where very often they have had to give credit because they could 958 not see their customers starving, and have found it very difficult to get it liquidated because of the depression in those areas? They are struggling hard; they would have received their measure of relief as well as the rest. Then, he could have had his time to examine the problem, because the right hon. Gentleman forgets that there was a Bill carried by his Government in 1925, which tackled the problem with a view to ascertaining the basis.
There is no doubt that these depressed industries are paying on too high an assessment at, the present moment. The right hon. Gentleman scoffed at the old sixteenth-century principle, but it was not a bad one. It was the theory of the hypothetical rent which a man would pay for a house, or a building, whether it was a shop or any other tenement, or a farm, a colliery, a mill, a factory, or a shipyard, in its present condition, on the assumption that the rates were borne by the tenant. What does that mean? If a colliery is not paying, the hypothetical rent for that colliery is bound to be small. If it is paying, the hypothetical rent will be higher. The policy of the right hon. Gentleman the Minister of Health practically restored that principle from all the entanglements of case law which had almost smothered it. What is going on now? The right hon. Gentleman does not seem to know. The whole of the assessment committees of this country have been recast. There has been a new machine for the purpose of settling the assessments. A new assessment and a new valuation have been proceeding. It was to be completed by April of this year, but it was obviously impossible to achieve that—I am not criticising anybody—and it was postponed until April, 1929. Meanwhile, all these new assessment committees are getting a complete re-assessment.
Some of the cases have already been considered. Take a case like Dorman Long, the well-known firm which suffered, like all those engaged in iron and steel, from the depression in that particular industry. They come to the Court upon the basis of the resurrected principle of Queen Elizabeth's legislation of the hypothetical rent, and they say; "You cannot pay the same hypothetical rent for works in times of depression as in 959 times of prosperity." They got a reduction of 40 per cent. in their assessment. In the Oldham district, 300 mills had their assessment reduced, and rightly so. In South Wales, at the present moment, there is a process of reduction of the whole of the assessments of the collieries going on, and rightly so. The right hon. Gentleman referred to the case of the railways. The railways are not doing as well as they were before, and they are appealing on the basis of what they are making. Take what happened in Poplar. There, the Port of London Authority appealed against an assessment of £113,000, which, they said, was not a fair assessment. It was reduced to £30,000. What did that mean? It meant that in Poplar, as a result of this reduction of the assessment on the Port of London Authority's premises there, there was an increase of 10 per cent. upon the rates of all the other ratepayers in the parish. While this process was going on, while the machine was working, while we were getting at a real and fair basis of assessment, the right hon. Gentleman has thrown a bomb into the machine. He has practically scrapped it.
He may say that that Act of Parliament is still there, and that it will operate. It will not. You go before an assessment committee and say, "I want to have my assessment reduced." Does anyone imagine that the Quarter Sessions, or the assessment committee, will not have in their minds the fact that three-quarters of the rates will come in from the Treasury, and will go into the local exchequer, and that, if they reduced the assessment, the contribution of the Treasury would be less to that district than it otherwise would be? I am not criticising the assessment committees, or saying that they are not perfectly honourable and straight-forward, but it would be more than human nature could possibly resist not to take that into account. As a matter of fact, it is bribing the assessment committees not to do their duty fairly, either by the State or by the other ratepayers. What ought to be done? In my judgment, the Chancellor of the Exchequer ought to have applied his cash immediately; he ought to have applied it as a temporary bridge of relief for the hard pressed areas, and 960 then he could have allowed this machinery to be completed in order to get a real bona-fide assessment of the premises, whether they are premises for the purposes of production, or for the purposes of distribution. Then, upon an ascertained assessment, he could consider, first of all, what reduction he ought to make; and he could consider to whom the reduction ought to be made, because that is more important.
It is important to distinguish between the producer and the distributor. The right hon. Gentleman who preceded me made one specific point. Is a baker, for instance, a distributor, or is he a producer? In most cases in the country, the production takes place on the same premises as the distribution. If the baker is not a producer, what does it mean? It means that, if you use corn for the production of beer or of spirits, it is production; if you use it for making bread, there is to be no relief. If you say the baker is a producer, and not a distributor, what about the butcher? He gets his raw material, he cuts and carves and trims it, and very often in the country the whole process takes place on the same premises. Is he a producer or a distributor? If you give the baker relief, there will be the greengrocer next door, and he will get no relief. Take the case of the drapers. Many of them have a millinery establishment and a dressmaking establishment on the same premises. They are employing manual labour for the purposes of production. What are you going to do there? Are you to treat that as production or as distribution, or are you to have some rough and ready method of dividing it? It is not going to be so easy as the right hon. Gentleman imagines.
In the case of agricultural land and mines, I should like to enforce what was said by the right hon. Gentleman the Member for Colne Valley. Just see what happens there. If the rates on agricultural land had not been subsidised since 1896, the rates would have been £12,000,000 to-day; £9,000,000 is borne by others, £4,500,000 by the State and £4,500,000 by other ratepayers in the Does agricultural districts anyone imagine that this is not part of the rent? To say that it is not relieving the rent is to say that the farmer is not a business man. A sum of £36,000,000 961 represents the rent of the land in the country. If you had the rates untouched there would have been £12,000,000. Does anyone imagine that £48,000,000 would have been paid in rates and rent, or that the farmer, when he is taking a farm, does not look at all the overhead charges? Where the tithe is high, he takes that into account before he determines the rent 11.3 will pay; where the rates are high, he takes that into account before he pays the rent. It is a direct contribution to the landowning classes of this country. In Scotland, I think, half the rates are borne by the landowners. I should like to ask the Chancellor of the Exchequer if that means that the whole of the rates borne by the Scottish landowners are to be taken over by the State? Evidently, the right hon. Gentleman has not considered it.
§ Mr. CHURCHILL
Not only has it been considered, but considered most elaborately, and I said yesterday that the Secretary of State for Scotland will have an opportunity of explaining the details of the proposal.
§ Mr. LLOYD GEORGE
This is really not a question of machinery, but of finance, and we are entitled to ask the Chancellor of the Exchequer, when we are discussing the finance of this problem, whether the whole of the burden of the rates, which is now borne by the landowners in respect of land in Scotland, is to be taken over by the Exchequer, or is to be left where it is? We are really entitled to ask that question. The relief in England will be on a different basis, and will be more considerable than that in Scotland, but there is really no difference. In Scotland, the money goes direct to the landlords. Here, it is hound to go indirectly. The same thing applies to the mines. The right hon. Gentleman, who preceded me, said that the rates amounted to something like 6d. per ton. The royalties are exactly the same figure. When you come to consider the hypothetical rent, surely you must take that into account. The 6d. is paid, whether a colliery loses money or whether it makes money. At any rate, the royalty owner ought to make a contribution towards this distress. You have a process in Scotland, as you have in Ireland, by which the landlord in 962 all tenements of £50 and under has an assessment of what it is fair for him to receive as rent. Why should not there be the same process in regard to royalties? The right hon. Gentleman yesterday, when he talked about the contribution which is to he made out of the Road Fund, said that it was fair that the Treasury should bear half. Does lie not think that the royalty owner ought to bear his share of the burden here? This is really a one-sided scheme. The right hon. Gentleman said yesterday that he is now going from the wilderness of preparation into the fertile and agreeable lands of rate reduction. Who is he taking to the promised land? He is going to lead the Federation of British Industries there, he is going to take the Mine-owners' Association there, and, in addition to them, he is going to take the landowners; but the vast majority of the people of this country he is going to leave on the arid side of Jordan.
It is a very big scheme. The right hon. Gentleman said so. It is, I think, a revolutionary scheme. He is going to abolish the guardians. He is going to upset assessments in this country. He is going to pick and choose those who will be -relieved, not merely in distressed areas but in prosperous areas. In fact, if you want a real revolution, put a Tory Government in power. You will always get it, either by provocation or promotion. Still, two revolutions in a single year are very considerable, and the Home Secretary and the Chancellor of the Exchequer are both engaged in them. But I ask the right hon. Gentleman whether he really thinks it fair, when he is going to spend 229,000,000 which he is going to raise out of the general taxpayers, to distribute it in a way which will hear very harshly on very large sections of the community? I wonder whether he has had figures given him showing what the working population of this country pay in rates? The compounding system has concealed that not merely from the whole of the community but has concealed it, unfortunately, from the working classes themselves. They do not realise the extent to which they are paying rates. I have some figures here from Lancashire. There is a family there paying 8s. a week for, I think-, about three rooms. The rates are £4 14s. 6d. in a year. The 963 wages are 55s. a week. There is another case which is still higher, but the wages are higher, it is true. In that case 12s. a week is paid in respect of rent, and that is not unusual. To pay 12s. a week tin respect of rent is very usual in some of our cities, and some people pay very much more. The rates in this case are £12 a year. The rates upon working-class households, which represent so many of these cases, are nearly 10 per cent. of the income. Take the cases in which people are working only two days a week, as in Lancashire, in South Wales, in Durham and in other places. The rates will be just the same, and, if anything, higher; they will be 20 per cent. No relief in those cases—none. Relief of great prosperous concerns in the South—great relief. No relief for the oppressed people of the North, would remind the right hon. Gentleman when he says he is trying to do justice in these cases of the great saying of Mr. Gladstone, that justice means justice to all.
§ Sir P. CUNLIFFE-LISTER
I think the Committee will have heard with some surprise both the speech of the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) and the speech of the right hon. Gentleman the leader of the Liberal party. The latter did condescend to some details; he did condescend to a detailed attack upon this great Measure. The right hon. Gentleman the Member for Colne Valley devoted but few moments of his speech to the whole scheme, and those few moments were only a very general attack; and if the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) had any ground for attacking, as I really do not think he had, my right hon. Friend the Member for Carmarthen (Sir A. Mond) for not condescending to details, the condemnation would fall with a great deal more force on the right hon. Gentleman the Member for Colne Valley. We are accustomed to very acute and probing interventions in debate by the right hon. Gentleman the Member for Colne Valley. If he thinks he has got anything to attack he is not slow in coming forward to attack it, and the fact that to-day—I do not know whether after a party meeting or not—all that he could say in answer to the great speech delivered by the Chan- 964 cellor of the Exchequer yesterday and to the great scheme which was advanced was about three minutes of vituperation is, I think, the best testimony that this scheme has yet received.
The right hon. Gentleman the Member for Carnarvon Boroughs made a more detailed attack upon the scheme. I am rather surprised at that, because I have listened with great interest, as most Members of this House have, to many speeches delivered by him during the last few years, and if one theme has run through all his speeches it is the importance of giving a stimulus to productive industry in order that we may restore trade prosperity. He has said, "are you going to do? It is no good puttering along. Act; act drastically; and, when you act, deal with the basic industries, with the depressed industries." Here is a scheme which is drastic and dealing with all productive industry, concentrating relief, not frittering it away, as he would, amongst those who need it and those who do not, but concentrating it. [Interruption.] I hope the Committee will bear with mc, because I want to descend to details, and to give chapter and verse for one broad section of this scheme. Here we have a scheme which concentrates on productive industry, as the right hon. Gentleman has advised us to do, and concentrates particularly on those hard-pressed and depressed industries where the burden of rates is heaviest and where the need for relief and encouragement is greatest. It concentrates on them by the direct relief of rates and by giving indirect relief through railway freights. I should have thought that if there was one Member of this House who would come and congratulate us for taking his advice it would be the right hon. Gentleman, but instead he says, "Why do you not deal with this subject in a wholly different way; why do you not give relief in entirely different directions 7 "This matter will occupy the House for a very considerable time, and it will occupy the attention of the country now and at a later stage; and through all the Debates in this House, through all the legislation which will necessarily come before this House and through all the discussions which will take place in the country we shall be perfectly prepared to join issue with the right hon. Gentleman the Member for Colne Valley 965 and the right hon. Gentleman the Member for Carnarvon Boroughs on the principle involved, the policy which we have set forward and the methods by which we propose to attain it.
The right hon. Gentleman has put a number of questions, some quite elementary and some questions of detail. I propose to deal with one section in my speech to-day, and that is the effect upon productive industries, and the right hon. Gentleman the Minister of Health, who has asked me to apologise for his unavoidable absence to-day, will deal to-morrow in general terms with those aspects particularly of local government which have been raised. The Committee will appreciate that, not only will there be the Finance Bill, but that when we come to the Autumn Session there will be the whole of the great Measure dealing with the reform of local administration.
§ Sir P. CUNLIFFE-LISTER
And the Valuation (Ascertainment) Bill. All the considerations which the right hon. Gentleman has raised have been thought out, and at the appropriate time the Measures we propose will be deployed for the consideration of the House, and the criticisms which are advanced will be met. It is not reasonable to complain that my right hon. Friend the Chancellor of the Exchequer, who in a magnificent speech of three hours did manage to say a great deal, did not tell the whole of the truth, did not get into a speech the work of a whole Session—
§ Mr. LLOYD GEORGE
I really should not like the right hon. Gentleman to go away with the idea that I made any complaint. I just asked one or two questions to elucidate something that he had said, not to complain in the least. of the fact that the right hon. Gentleman did not give more particulars. I am waiting for the answers to those questions.
§ Sir P. CUNLIFFE-LISTER
The right hon. Gentleman says he put a few questions. He put some questions with some of which I propose to deal, but which range over the whole of these problems. As the Committee will appreciate, there are really two great issues here. First of all, whether the particular policy of relieving productive industry and agri- 966 culture of their rates, or of a large proportion of their rates, is worth while. The second problem is: Are the means which are to be adopted to attain that end reasonable? That, again, involves two great issues; first of all the immediate issue of the taxation which we are proposing to impose in the present Budget, the oil tax, which will raise the money, and, secondly, the whole question of the reform of local government, which will form the subject of another Measure which will be introduced in the Autumn. I can only say that I do not want to anticipate what, will be said to-morrow by my right hon. Friend the Minister of Health, but, of course, there has been most careful consideration as to how this reform should be made, and nothing was less true than to say that all that is proposed is merely a continuation of the kind of relief which is given under the Agricultural Rates Act. Nothing is further from the truth. When that Bill is presented, when the negotiations with the local authority have taken place, even when my right hon. Friend speaks to-morrow, I am sure he will indicate to the Committee that the scheme of reform goes much further than is indicated by the term, "A simple Bill," as I think the right hon. Gentleman called it. It involves the system of block grants, it involves the enlargement of areas so that one area comes in to compensate another, and it involves, which is most important of all, in the matter of grants, relief on the basis of necessity. But I do not propose to anticipate my right hon. Friend's speech. All that is involved in that scheme has been engaging our attention. I do not propose to say more upon that.
I shall come now to the details of the relief, and say a word in passing, because the right hon. Gentleman the Member for Colne Valley has challenged us, on the method of raising the money. When a, scheme involves £26,000,000 a year in direct relief to industry and agriculture and to the railway rates, and involves further sums in the adjustment of the grants to local authorities, plainly that calls for a tremendous effort. The money can he raised only by some form of new taxation. I did read in one criticism, though no one has had the hardihood to repeat it to-day, that the money could have been raised by a reduction of the armed forces of the Crown. When a wrangle took place, which occupied a 967 considerable part of a Debate, over the question of whether the right hon. Gentleman the Member for Colne Valley had spent a million more or a million less than the present Government on the armed forces of the Crown, it will be seen that even if he were now in control of our finances we should not get very much contribution to this problem from that source. Supposing anyone had put to the House and to the country a year ago, when petrol prices were what they were a year ago, that you could keep petrol prices as they then stood and could completely derate agriculture as an industry, could relieve all other productive industry of three-quarters of its rates, that you could reduce the railway rates by three-quarters and apply that relief in reduction of freights on those industries which are most hard-pressed, is there a single man or woman who would not have closed immediately with your offer? That is a fair way of putting it. No one can give a guarantee in regard to prices, but it has been suggested that petrol prices may rise again. At least we know what is the general trend, and we can take into account what appears to be the world position. I am sure, if hon. Members consulted anybody engaged in the oil industry to-day, they would find that their anxiety would not be as to whether there would be such a shortage of oil that prices would go up, but that oil would be put on the market in such quantities that prices would fall still further. We know that there was a fall in prices last year, and while it would be impossible to predict what may happen in the future, we know that at present the general production of oil shows that we are taking a wise moment at which to propose this tax.
The right hon. Gentleman the Member for Colne Valley attacked us because we were putting on this tax in advance; he said it was unsound finance. That is the most amazing criticism I have ever heard; it apparently means that it is not sound to collect the money required for the scheme, and that you should run into debt from the start. I have always been taught that you should "cut your coat according to your cloth," and not launch out on a great scheme until you know that the money will be forthcoming to pay for it. Why should we not start 968 immediately raising the funds for this great scheme? Take any industry which is wisely conducted. Does it not create its reserves year by year in order that they may be ready for new developments? Who is going to say that an industry is improvident and unwise when it creates reserves of that kind? On the contrary, I think the cry has been that Governments should be more business-like; and the principle which is acknowledged as sound in any great business concern is certainly sound in regard to this scheme.
The right hon. Gentleman the Member for Carnarvon Boroughs could not help referring to taxes on land and site values. In answer to that argument, I wish to say that our past experience shows that the efforts made in that direction have been singularly unsuccessful in raising revenue, and so far from encouraging development they have stopped development and enterprise; again, whether in industry or for social purposes, what is required in building is a restoration to absolutely normal conditions as soon as possible. I am not going to arbitrate in a dispute between the two right lion. Gentlemen opposite as to whether one told the other what he proposed to do. [Interruption.] I am prepared to take it from the right hon. Gentleman the Member for Carnarvon Boroughs that he did not tell his colleague what he was going to do. At any rate, what is known to the world on this point, and will not be contradicted, is that when the right hon. Gentleman the Member for Carnarvon Boroughs was Prime Minister he himself removed those taxes, which shows that he had not any great confidence in them.
With regard to relief of the rates, the right hon. Gentleman the Member for Carnarvon Boroughs suggested that it might be better to proceed by some system which created a new central authority. May I point out that local knowledge and local responsibility are absolutely necessary in the administration of Poor Law relief, or any other form of relief. If you make relief a national service you take away at once the local responsibility, and set up another authority. By doing that moreover you fail to concentrate relief where it is most necessary, and where it will be most productive. The right hon. Gentleman the Member for Carnarvon Boroughs said 969 that what we are now proposing was simply going to be a dole for the landlords.
May I point out that agricultural rating relief has gone on under successive Governments year after year. It was carried on by a Liberal Government, by the Coalition Government and afterwards by the Socialist Government, and no attempt was made to remove that relief. At that time the Labour party and the Liberals were in a majority, and they could have combined to do away with the system of relieving agricultural rates. Throughout that time no one has suggested it was a mere dole for the landlord. If that be true of agriculture, where tenure is often from year to year, how fantastic it is to suggest that the proposed relief to industry is going to be a relief to the landowners. In industry a large part of the premises is freehold, and according to this argument the relief is going to the owner of the premises who is the manufacturer. As a rule factories which are not freehold are held on very long leases. Who would think of engaging in a great industrial enterprise and erecting a factory on a short lease? Nobody would ever dream of doing that. Therefore the relief under our scheme will go where it ought to go, that is to the producer. [An HON. MEMBER: "Who is the producer?"] The producer is the combination of the capitalist anti the workman who produces the goods.
§ Sir P. CUNLIFFE-LISTER
If there is one subject on which industrialists and politicians are agreed—they do not agree on all subjects—it is that the rates on productive industries are excessive and ought to be relieved. [Interruption.] Perhaps the hon. Member for Silvertown will have a chance of speaking later on.
§ The CHAIRMAN (Mr. James Hope)
I must say, if the hon. Member for Silvertown wishes to speak on his legs, he must not speak when he is otherwise placed.
§ Sir P. CUNLIFFE-LISTER
I was saying that if there is one thing upon which we are all agreed it is as to the importance of relieving productive industries of the burden of the rates, and if that principle is right then the relief should be given not only to a selection of depressed industries, but to all industries alike. Where production is low, the rates become progressively heavier on each unit produced. So you get a heavier charge on production, and less production and the result is more unemployment. In those circumstances, the best thing you can do is to relieve those industries of some of these involuntary charges. Not long ago I received a deputation of Welsh miners and mineowners, and they had quite a different story to tell from the right hon. Gentleman the Member for Carnarvon Boroughs. What was it that they asked for? They told me that the two things that were bearing most heavily upon the mining industry in which they were both engaged was, in the first place the burden of the local rates; and, secondly, the burden of railway freights. The spokesman of that deputation said, "If you want to help the mining industry, the best way to do it is to give us relief in regard to our local rates."
§ Sir P. CUNLIFFE-LISTER
We propose to do it as soon as possible, but it is a question which involves great progressive legislation and financial preparation as well. We are now proposing our scheme to the House and we are met with the question, "Why did you not do it before?" Hon. Members cannot have it both ways. The right hon. Gentleman the Member for Colne Valley attacked our scheme and said that it ought not to be carried out at all. [HON. MEMBERS: "No!"] Certainly, the right hon. Gentleman said that. At any rate, we have introduced our scheme now, and I ask hon. Members opposite to join with us and help us by constructive criticism to carry out our proposals.
This general sentiment as to the burden of rates is not in the least indefinite; it is founded on solid fact. Let 971 me take one or two examples, which I think ought to be placed on record. In the coal industry, £3,500,000 is paid in local rates. That means an average rate of about 3½d. a ton. On the North-East coast, the incidence of local rates is equal to 8¼d. on each ton of coal. In South Wales the rates have risen in some districts by as much as 200 to 300 per cent., and the closing of the pits makes the burden heavier on the pits that are left, while the reduced output again increases the burden until the assessment is adjusted.
I will take one or two examples picked at random. The first is that of a colliery with an output of 480,000 tons a year, on which the rates amount to 10½d. per ton. Another colliery, which is very conservative in its finance, its capital and debentures amounting to only £2,500,000, pays on its undertaking £98,000 a year in rates. Yet another, with an output of 3,500,000 tons, pays rates equivalent to 8d. per ton. Surely, if we can relieve that burden, it will be of the greatest possible assistance. We have been told that we ought to do more to encourage the processes by which liquid fuel may be produced from coal. As I showed in a recent Debate, we have done a good deal in that direction, and the preference which it is now proposed to give by freeing home producers from the duty on liquid fuel will surely be a great stimulus to the production of liquid fuel by any process from coal. In the case of steel, the cumulative effects of rates on steel and iron works, mines and quarries, amount to 4s. 1d. per ton of finished steel. Seventy-five per cent. of that, apart from the further relief which it is proposed to give in railway rates, would mean 3s. a ton, and in the heavily rated areas even more; and, after all, a few shillings a ton means the difference between getting and losing a contract. There are very often big contracts where the margin by which they are gained or lost is only a few shillings a ton.
§ Sir BASIL PETO
Could my right hon. Friend, in addition to telling us that the relief in rates will mean 3s. per ton of finished steel, say what will be the cumulative effect of the remission of railway rates when it is likewise translated into a tonnage figure?
§ Sir P. CUNLIFFE-LISTER
I am dealing first of all with the direct relief, and shall come to the indirect relief afterwards. As I was saying, a few shillings a ton may mean the difference between getting a big contract or not getting it, and this relief will affect every ton of steel produced—it will be universal. After all, a part of the steel produced is sold comparatively easily, and, therefore, the manufacturer can use this relief to concentrate on subsidising himself, so to speak, in order to get a contract where the competition is keen, which certainly will be well worth doing. The amount paid in rates on steel works is almost as heavy as it is in the case of coal. I will take again three companies as examples. One is a company with a capital of £3,500,000 and £2,500,000 of debentures. The rates on that undertaking are £118,000 a year. Another company was paying in 1914, in respect of exactly the same premises, £52,000 in rates, while in 1927 it was paying £173,000. In the third case, which I can mention by name, because the chairman of the company quoted the figures in his speech at the general meeting, the chairman of Vickers, Sir Herbert Lawrence, in his recent speech, said that on their Sheffield works alone the rates amounted to £56,600, and that, if the rates increased, it might well be that they would have to move their works to some other place where the rates were lower.
Do not let it be supposed that the value of this relief in rates is confined merely to the heavy industries. We were debating the subject of cotton in the House just before the Recess, and the relief in the case of the cotton trade is very considerable. I remember that in that Debate several quotations were given from a book called "Lancashire Under the Hammer." The author writes in that book on the subject of rates as follows:Rates are a much more considerable burden, but, until a Government takes office with sense and courage enough to transfer a good deal of that burden from local to national shoulders, to ask for relief is like asking for manna.The Manchester Chamber of Commerce, which certainly knows as much about cotton as anyone, sent a deputation to the Lord Mayor in December, 1926, and they pointed out that in the spinning trade the rates had increased by 184 per 973 cent., and in the weaving trade by 173 per cent. They went on to say in their memorandum:It must be realised that, when the margin between securing an order and losing it is a small one, the effect of one item of cost which cannot be cut down may be much greater than its proportion to the final price would suggest,and then they begged for a reduction in rates. Those views are confirmed by detailed figures. I asked to have figures supplied to me from Lancashire, in order that I might see exactly what the measure of the burden of rates was, and figures have been given to me showing the cumulative incidence of rates on the basis of the finished cloth—the cumulative effect in spinning, weaving and finishing. In the case of 100 yards of grey cloth, the total cost was 39s. 11d., and the rates were 1s. 2¼d., or 3 per cent. of the cost. In the case of 100 yards of white shirting, the cost was 47s. 5d., and the rates were 3½d., or 2.72 per cent. of the cost. In the case of 100 yards of print, the cost was 50s. 9d., and the rates were 1s. 3¼d., or 2.5 per cent. of the cost.
Looking at these figures from another angle, great efforts have been made in the industry to obtain economies much smaller than the amount of these rates. The gentleman who supplied me with these figures said that they had recast their whole system of casing and bagging in order to obtain an economy that worked out at about 1½d. per 100 yards. If it is worth while making a drastic change in a process in order to secure such an economy as that, how much more is meant by rates amounting to 1s. 2d. or 1s. 4d. per 100 yards? To take another example, the arrangements made by the bleachers with the rest of the trade a few months ago, and which I know will be of the highest possible value to the weaving trade in Lancashire, give, I understand, in the most favourable circumstances, an advantage of something like 5d. per 100 yards. Compare that with these rates of 1s. 2d. or 1s. 3d. per 100 yards. That is in every mill and on every yard of cloth. In the heavy engineering trades, the cost of rates is considerable. In the heavy electrical engineering trade the rates, I understand come out at 1½ per cent. or more—
§ Sir P. CUNLIFFE-LISTER
No; I think that if the hon. Member will study the electrical industry, as I do every month—I get reports from it every month—he will see—as is notorious—that in the heavy electrical industry, where the competition is tremendously keen, there is hardly any profit at all on the big orders that have been taken; any profit that is being made is in the huckstering part of the business.
§ Sir P. CUNLIFFE-LISTER
There is hardly a firm that is making money on its heavy contracts, though I know they make money on the huckstering trade. I am not accustomed to making statements of that kind in this House without authority, and I say with abolute knowledge that on the heavy side of electrical engineering profits are cut absolutely to the bone, and very often large contracts have been taken without any profits at all. The right hon. Gentleman has said that no benefit is coming yet—that it is postponed until 1929. I have already said that the reason for that is the great amount of work by the House of Commons that will be required in order to set the scheme in motion, but let no one suppose that the fact that the actual relief in the matter of rates is deferred until 1929 means that industry is not going to get any benefit before that. People do not look at the conduct of their industry merely from day to day. The knowledge that this relief is coming in 1929, and that it will come year after year after 1929, is going to have an immediate effect on industry and on the prospects of industry. Let me put it in this way. Suppose that an industry knew that it was going for certain, over a period of years, year after year, to get contracts yielding a profit of £20,000,000 a year. Is it to be supposed that that is not going to make an enormous difference to the industry? Is it to be supposed when amalgamations are needed, when new finance is needed, when reorganisation in an industry is needed, that, if that industry can go into the market for capital with the knowledge that next year it is going to get relief on this basis, and 975 will get it year after year, that it will not give immediate encouragement to that industry?
Now I want to say one word as to railway rates, about which my hon. Friend the Member for Barnstaple (Sir B. Peto) asked, The relief that the railways wilt receive, and will pass on by way of reduction of freights, is in the neighbourhood of £4,000,000, or rather more, and I submit that we are justified in proposing to the House of Commons that that should be passed on to selected traffics. The substantial relief will be given where it is most needed. We have a precedent in, I think, almost every country in the world. Over and over again examples have been quoted of foreign countries 'where special railway rates are given on foal or steel, and we have also a precedent in this country. After the period of control came to an end, the rates were first reduced on iron ore, coal and agricultural manures, showing that in this country the principle of relating relief to needs was regarded as a fair one; and, surely, in the present case, the relief is justified by the need. No one will deny that coal and steel are particularly depressed industries; no one will deny that in those industries railway rates are a far heavier item than in other industries—and they have; to rely on the railways and have not the alternative of road transport. No one, moreover, will deny that the numbers employed, and still more the numbers unemployed, in those industries, justify this particular action, and it is justified again by what I may call the universality of those industries. Coal goes to all industries; steel goes directly or indirectly to all industries. They are the true basic industries, and, moreover, by selecting them we can ensure that the relief is concentrated on home industries, and that not a penny of that relief in railway rates will go to any foreign article which has an effective domestic competitor. Many of these arguments apply in agricultural work, and agriculture, of course, has a special claim in that it is not receiving the same measure of relief.
I was asked what would be the measure of this relief. It is very considerable. The railway rate reduction on coal, coke, mining timber, iron-stone, iron ore, manganese ore and limestone, should mean 976 a reduction of about 8 per cent. in freights on those commodities, or more than the amount of the last increase—an increase which hon. Members will remember was felt as a very severe burden. I will put it another way. The effect on coal would be an average reduction of 4d. a ton on all coal carried on railways. [An HON. MEMBER: "Who would get it?"] It would go into the mining industry.
Major-General Sir ROBERT HUTCHISON
Would that reduction be applicable to omnibus rates arranged with railway companies to carry coal inside a small area?
§ Sir P. CUNLIFFE-LISTER
I am not sure that I appreciate the question. It would come on all coal carried on railways. Of course, the ratification of the special application of the rates relief will require a Bill, and when that comes we can discuss it in detail: but the proposal is that all coal that is carried on railways should participate in this reduction and my calculation is 4d. a ton, taking all the coal of all kinds that is carried on railways.
§ Sir P. CUNLIFFE-LISTER
We are not giving any railway relief to steel. That is why we are confining railway relief on selected traffics to coal, coke, pit props, iron stone, iron ore, manganese ore and limestone. All these are the elements which go into the English steel works, if you carried that further and gave railway relief to some steel products you would have to extend that to foreign imported steel, and that is why I said we have so proposed our selected traffics that no single farthing of relief goes to a foreign commodity which has an effective domestic competitor?
§ Sir P. CUNLIFFE-LISTER
Certainly it applies to imported ore, because foreign ore comes into the English steel works.
§ Sir P. CUNLIFFE-LISTER
I do not want to be drawn into a long argument. The hon. Member knows enough about 977 steel works to know that Swedish ore goes to some works and other ore to others. He also knows that the great bulk of the relief will go to the English ore, which has a long haul.
The combined rating relief and railway freight relief will relieve collieries of a charge amounting to more than the whole of the royalties, which are something like 6¼d. a ton. The reduction of the freight on coal, coke and limestone passing into the steel works would be the equivalent of about a shilling a ton on the finished steel. While, of course, it is true in one sense that you cannot count the freight relief on coal twice over, and you cannot say that is a benefit to the colliery and also a benefit to the steel works, yet that is only partially true, not only because so many steel works own their own coal mines, but because steel is the best customer for coal, and anything that helps steel helps coal. Steel is the greatest of all the products of coal, and anything you can do to help steel is bound to react upon an increased coal consumption. As regards the working of the scheme, the railways have already agreed in principle to formulate and operate a pool. Discussions have shown that the principle is accepted by the principal freight-bearing railways, and that it can be carried out in practice. The railways will pool the relief received and draw on the pool in proportion to the traffic carried. The details will require some elaboration, and legislation will be necessary to confirm the arrangements.
§ Mr. W. THORNE
Will the big relief the railway companies' workshops will receive in a reduction of rates also be put into a pool'1 Take places like Crewe, Horwich and Wolverton and large centres where they make their own locomotives. That is productive work, and they are entitled to three-fourths reduction the same as anyone else.
§ Sir P. CUNLIFFE-LISTER
The arrangement we have proposed is that the relief should apply generally to all the rates that railways bear. It will pass into a common pool and be drawn out by the railways and the whole of it will be passed on to the users of the railways.
§ Mr. KIRKWOOD
Is it not the case that you are simply relieving a burden on an obsolete system—the railway system of the country—and taxing the more modern method by means of the petrol tax?
§ Sir P. CUNLIFFE-LISTER
I must leave the hon. Member to settle that with the right hon. Gentleman the Member for Derby (Mr. Thomas). I do not think I need quarrel with him, because what I am interested in, and I hope he is, is getting the relief to productive industry. I think railways are far from obsolete but, whatever be their condition, it is upon them that coal and steel have to travel. They cannot travel on anything else. It is to the railways on which coal and steel have to travel that we give the relief, and they pass it on to the consumer. The relief of rates is a stimulus to all industry at the expense of no industry. All industry is benefited and none suffers. On the contrary, the benefit any industry receives is really shared with others, because all industries are linked together. All industries serve one another and the benefit is cumulative. Coal serves all industries. Coal passes to iron and steel. Steel serves engineering. Engineering passes into every factory. If there is better trade and better production, that means that there is more freight carried on the railways, and it is only by more freight being carried that railway rates can be reduced. The distributive trades depend on the success of industry and those engaged in industry are their clients and their customers. We are therefore concentrating the relief where it is most needed and where it will be most productive.
We are being invited by the right hon. Gentleman the Member for Carnarvon Boroughs to fritter it away without any principle, simply as a dole distributed to as many recipients as we can find. We believe, on the contrary, that where we give we should give effectively. We should give upon a principle. We should give to productive industry, which is the great employer and which needs a stimulus to make it a snore effective competitor with the foreigner, and consequently to make it a breeder of trade for the shopkeeper at home. Moreover, the distributive trades do not feel the weight of depression in the way that industry does. It has been common 979 ground in this Debate, and the Leader of the Opposition a few days ago said that trade is not as good as you think it is, because the trade that is prosperous is the distributive trade. It is the shopkeeper. It is true the distributive trade does not feel the depression of hard times in anything like the way industry does, and the reason is not far to seek. Our social system, our great schemes of social legislation, which are often criticised by hon. Members opposite, but are far greater than those of any other country in the world, the whole system of unemployment pay, the whole system of poor relief is that it is paid out to the worker and it goes over the counter into the distributing trades. It does not go into the manufacturing trades at all, though the manufacturer has to pay for it. He is the man who pays the unemployment levy and he is the man who pays all the time. Not only do the distributive trades not need relief but, by giving this relief to productive industry, we shall in fact not only be doing the best for the industries employing the greatest number of people, but if we realise the common interest there is between trade and industry, we know we shall be giving the greatest possible stimulus to trade and commerce in all its aspects. All are interested in our industry; with it, all suffer or prosper.
§ Mr. WHEATLEY
I was more sympathetic to the Chancellor's statement yesterday than I am to-day. I do not think it improves on examination. The more one studies it or listens to an analysis of it, the more ineffective it seems and the less it enthuses. I thought the President of the Board of Trade would have been able to show us how it would substantially improve the trade of the country. I think we were all inclined to he super-sympathetic because of the general inclination to support anything that promises a way out of the present oppressive situation. Not one of the speakers to-day has dealt with the causes of trade depression. It is of the utmost importance that we should understand clearly the cause when we are asked to consider a remedy. One of the prime causes of trade depression could be found in the first line of the Blue Paper issued by the Chancellor yesterday. The first line in that Paper tells us that 980 £305,000,000 a year is to be raised and paid in interest alone on our National Debt. I should like the Committee to consider exactly what that means. It is three times the amount paid to all the mine-workers of the country. It is approximately equal to the total wages of 3,000,000 manual workers.
We heard something during the Debate on finance about the appreciation in the value of money during the past three years. We heard it from the Chancellor yesterday. No suggestion at all has been made that as money appreciated in value the amount of money to be paid in interest should be correspondingly reduced. I have not made a particular study of international finance, but I think I am right in assuming that our debt to America was based, not on the actual number of pound notes but on the value of the pound notes at the time the payment was made, and that an actual reduction in the total sum was made because of the appreciation in money. If I am right in assuming that, surely the British people are entitled to the same consideration as the American people. I submit that the governing factor in British trade is the purchasing power of the British people. The Chancellor yesterday reminded us again that the bulk of British trade is home trade. We are frequently led to believe that a very large percentage of it is foreign trade. If the bulk of our trade—as anyone who has given the most elementary study to the subject knows—is home trade, then the purchasing power of our customers at home is of primary consideration when we are dealing with the subject of trade. If the home trade is bad, it is because our people cannot buy enough. If British people could increase their orders, there would be an immediate improvement in the trade of the country, and I submit that this inequitable distribution of wealth, this payment of £305,000,000 in a year to a small group of moneylenders, who, whether they be producers or not, do not receive a penny of this money as producers, but as lenders—this payment out of the national income of £305,000,000 to this comparatively small group, and the payment of only an equal sum to 3,000,000 manual workers, creates a situation which makes good trade absolutely impossible. If you want to benefit trade, you should look at the position and the future 981 of the peole who create your trade, of your customers, without whose support you cannot hope to make any progress.
The object of this scheme is to help production. I want to know what is wrong with production? Are you not producing as much now as you can sell? Are you not producing far more than you can sell? With a million people still unemployed, with millions of people under-employed, you have glutted the market, you have stopped your factories, you have created congestion and stagnation, you have brought trade in many districts to a standstill. We are told, of course, that the Chancellor expects by cheapening production to capture a share of the market, of the world, but I think you have to bear in mind that the market for goods in every industrial country in the world is limited, and is being diminished. The Chancellor hopes that by cheapening production here you will capture for Britain a greater share of this limited world market. You hoped for the same in reducing wages. You expect to produce exactly the same beneficial effect for producers by this method as you did by a reduction in wages. What happened when you reduced wages? You got a temporary advantage—I am now dealing with the foreign portion of our trade, the smaller portion—at the moment when you made the wage reductions. But you forced the people in competition with you abroad, in self-preservation, to follow suit and reduce the wages of their workers. When the wages of their workers had been reduced, you were back in the circle exactly where you began, but you had done a considerable amount of damage en route. You had reduced the purchasing power of all the workers of the world, and the last state of your market was considerably worse than the first. You will get, probably, a temporary advantage here, which is the most that can be claimed, but after you have won this temporary advantage, will not exactly the same world process take place? Will not you and your foreign trade force the people abroad to make a corresponding reduction in their costs of production?
It is quite true that we have a deplorable situation with which to Contend. The Chancellor yesterday painted 982 a picture that was gloomy, but I do not think it was any gloomier than the facts of the case demanded. You have mines closing down. You have workshops being closed. You have general discontent. You have capital disappearing. But what, do you find when you come to consider the question, by whom are these people being crushed? Who are crushing, say, the mineowners and the mine-workers in Lancashire? It is not competition with the foreigner that is knocking them out of business; it is competition with one another. Their rivals are their neighbours. The shipbuilders on the Clyde compete with one another. There is not an adequate market for all the ships. The weaker have to go to the wall, and the stronger survive. Again, the Clyde competes with the Tyne. Lancashire coalfields compete with Yorkshire coalfields. Under this competitive system, our employers at home are crushing one another, and, through crushing one another, are bringing misery and destitution to the mass of the population.
I want to put this to the people who are supporting this scheme. Is it not the case—this has already been pointed out, I think, but I want to emphasise the point—that in the most depressed districts you have successful firms? You have successful firms on the Clyde, and you have firms on the Clyde who have gone on for years without paying a dividend. When you have applied this relief uniformly to employers on the Clyde, how are you going to help people who are crushed by competition to-day? Let me take the case of two shipyards. I could mention them by name if I wished, but I do not want to introduce the names of any firms or traders. One of them is paying a fairly decent dividend to its shareholders. The other has not paid a dividend for the past four or five years, and is not likely to pay a dividend for several years to come. What is proposed here? That the burden of each of them should be uniformly reduced; that the money of the State should be used to help the successful firm to the same extent as the unsuccessful firm. When you have done that, how far have you improved the position of the firm that is not able to-day to run its workshops at a profit? Has it any advantage 983 in competition with its successful rival as compared with the position to-day? I submit that it has no advantage at all, and that if it cannot get an order to-day in competition with the successful firm, it will be impossible for it to get orders to-morrow because of anything which is being done under this financial scheme.
It is the unfortunate firm, like the unfortunate district, that you want to help. Why should we spend public money in relieving the rates and in that way subsidise firms that are presently paying a substantial dividend to their shareholders? That is not the object of this scheme. That is not the desire of this House. The desire of this House is to help those who need help. There is no desire in any part of the House, I hope, to squander public money on aiding those who to-day, under the competitive system, are doing very well and proving that they can look after themselves. I think we ought to have from the Government a statement of the total money to he spent here, how much of it will go to firms that do not need help, and how much of it will go to firms that are running their business to-day at a loss' I think we are entitled to know that. If we are to spend £4 in aiding successful firms and prosperous districts in order to bring 20s. worth of aid to unsuccessful firms and necessitous areas, I submit that that is very bad business. I hope that before the Debate goes much further, a statement will be submitted to the Committee showing how and to whom this money is to be paid, and how much of it will be going to people whose industry to-day is being run at a loss. I am waiting anxiously to have a reply to a question already put to the Government as to what trades are to he helped—I am not going to debate the nice point as to who is a producer and who is a distributor—but I want to know if they really mean to subsidise all productive trades? I suppose it will be admitted that the printing trade is a productive trade. I happen to know a little about the printing trade. I am engaged in a small business. In Scotland half of the rates is paid by the property-owner and half by the occupier. No doubt that will be dealt with, and we shall get a statement-on the point as to how you are to deal 984 with that situation when the Secretary of State for Scotland comes to address the Committee. We pay £98 15s. a year. Under this scheme my little firm will have three-quarters of its rates wiped out. I ask the Government why they should be wiped out. My firm does quite well. People in the printing trade all over the West of Scotland do quite well.
§ Mr. WHEATLEY
Why should money be taken from public funds to subsidise these sheltered trades which are doing very well, in order that we may be able to get from the same funds a little for Bedwellty, a little for Durham, a little for Lanarkshire and for other places? I ask hon. and right hon. Members opposite whether this is a proper line of approach. The Chancellor yesterday said he was not going to treat this as a party question at all. He asked for the cooperation of the House. I am not approaching it from a party point of view. I put this to the Government, that this money should not he paid out uniformly and should not be paid out nationally, and that, by some co-operative scheme, by some collective action on the part of the industries themselves, you should find a method by which the £30,000,000 you are proposing to spend here should go to where it is most needed, where it is likely to be more productive and not squandered away in the manner proposed by the Government in the North and the South, to the successful and unsuccessful quite indiscriminately, and without any regard for trade.
Let me pass from that to the question of the proposed tax on imported oil. Speaking for myself, I do not feel my blood becoming cold when I hear a proposal to tax imported produce. It leaves me quite undisturbed. I admit that, in this case particularly, and probably in all cases, the consumer pays and that in this case he will pay 4½d. for a 4d. tax. I concede that it might have taken a halfpenny to collect the tax even if it had been collected by other people, but that will not disturb me. When we are dealing with such a ghastly situation as exists in the country at the present time, when millions of people are in jeopardy for the very necessaries of life much less the comforts, when, to 985 those who understand the question fundamentally, it is clear that the very future of the country may be at stake, I am not going to quibble over a 4d. tax on the products of Persia or the products of Russia. It leaves me quite undisturbed, and I am not moved from my position by the statement that exports pay for imports and that, when you reduce your imports, you reduce your exports and with them the demand for the labour of the people required to produce them.
I am not moved by that because I know it is nonsense, my reason tells me it is nonsense. We pay for goods by goods whether they are produced across the sea or across the street. We have to send goods to Persia in payment for Persian oil, and we would be required to send goods to West Lothian in payment for West Lothian oil. If I am to choose between creating employment in London to pay the Persian workers and creating employment in London to pay the West Lothian workers, then I take the position that the arrangement that employs two sets of British workers is better than the arrangement that only employs one set of British workers. That is my position. My objection to the party opposite is to their tariffs. I think tariffs are just as stupid as free competition. Free competition is dead and I hope that tariffs will very quickly follow because you only tax the thing that comes in and you only tax it after it comes in. If you want to keep it out, why tax it after it comes in? Why not keep it out? Why not prohibition? Why not some State regulation of trade? Why should not the Board of Trade make some estimate of what we require to import from abroad, and why should not all imports be conducted under some licence system? Why should we have the trade of the country, the food of the country, the lifeblood of the country left to the chance results of competition among people who are interested, and can only be interested, in their particular trades and in their own prosperity?
I want to conclude, as I started, by protesting that the workers of this country have not been brought into this scheme at all even for consideration except in the most incidental manner. 986 The idea behind it is that the workers will benefit last of all. I do not suppose I shall ever succeed in getting the people of my time to understand the situation which we have now reached. We have reached a situation in which production has outpaced the purchasing power of the people to such an extent that you cannot keep your factories going. I sometimes smile at the people who prophesy the future politics of this country. Your politics are being upset every Session of Parliament by industrial developments. What may you not have from America in the next six months? Do you know that in America just now there are four, five or six million unemployed? You told us some years ago that the competitive system could succeed in America in giving the necessary high wages to provide the American with the market required for the goods produced by the American workers. You can see there—and it is a great lesson for us—that, where a stimulus is given to production, productive powers are unlimited and that we can rush forward to an output of goods that would stagger the imaginations of the manufacturers of even a decade ago. Mass production in America has outrun even the high wages of America, and now you have in America exactly the same state of affairs that you have here. You have all these millions of workers unemployed.
The American Government, more alive than our Board of Trade, sat down immediately to investigate the cause of this industrial trouble and this overwhelming and ruinous unemployment, and they have issued an official statement, which, I suppose, has reached the Board of Trade. They tell us there that the present miners in America can produce all the coal required annually in America in six months, that all the boot manufacturers and workers in America can produce all the boots demanded by the purchasing power of America in exactly the same period, that all the window plate-glass required in a year can be produced in 17 days, and that 93 workers can produce to-day exactly the same amount of goods that was produced by 140 workers only 10 years ago. Let me emphasise that those 93 workers can produce what 140 produced 10 years ago, but that the 93 cannot buy all that the 140 could buy 10 years ago. Do you not see how you must bring into more har- 987 monious relations the purchasing power of your people and their productive capacity? These workers, although they will get no benefit from this scheme, are—it is vital to remember—also the consumers, and you cannot continue to produce more than the people can buy, nor can you continue to import more than the people can buy.
The purchasing power of our people is the governing factor in the whole situation. A wise Government will recognise this, and will recognise the difficulties of increasing wages under the competitive system, just as you realise the difficulties of easing the situation here to-day because of the competitive system, and they will bring State observation and study and help to bear on improving the position of these people. You must first improve the condition of the workers of this country—it is no longer a matter of sentiment or of class demand; it is a matter of national importance—for that is the first step. You cannot get improved trade until you have created your market. Until you realise that nationally it will pay you to invest hundreds of millions in creating a market in the demands of your poor and so give a stimulus to trade, you will be baffled by this problem, and be increasingly puting forward schemes like this, which, even if approved to-day, will be obsolete and discarded in 12 months.
§ Brigadier-General Sir HENRY CROFT
The speech to which we have just listened makes me blush, I confess, over the moderation of any fiscal views that I may have ever professed, and I can assure the right hon. Gentleman that his remarks have been listened to this afternoon with the greatest interest by the Committee as marking a great step forward amongst the members of the official Opposition, and as having laid for ever the Cobdenite ghost of the Liberal party, which we are glad to see here in such strength this afternoon. I do not want to get too far from the main debate, although the siren voice haunts tee, but the right hon. Gentleman has pointed out very clearly and emphatically something that is not understood by many people in this country, namely, that the purchase of British goods is paid for by 988 British goods, and that you thus get a double advantage to British labour and capital and also to the Exchequer. It is a speech of the utmost value and we shall always remember it. I should also like to congratulate the right hon. Gentleman on the tone of his speech, which was an example to the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), who appeared to be indulging in a speech of special pleading, in which he had not quite understood the proposals of the Chancellor of the Exchequer and tried to make small points over a very big subject and to belittle a grand feat. I congratulate the right hon. Gentleman the Member for Shettleston (Mr. Wheatley) on not having followed that course.
The right hon. Member for Carnarvon Boroughs is no longer here, or I would have replied to a few of his remarks, but I would like to say, in regard to this great question of the reduction of rates, that I am convinced both the right hon. Gentlemen are wrong when they suggest that you could have any system in this country which really amounts to the ladling out of doles to certain industries and certain areas. What we have to aim at in this House is to increase the productive power of the whole range of our industries, and, even though some successful industries will share in the results of that reduction of rates, I do not suppose any of the hon. Members on those benches desire to see anything but that those industries should become still more prosperous, employing more workers, and paying more wages as a result of this policy. If you deviate from that scheme and start out on something which would merely mean paying grants like the coal subsidy to different industries, it would only be making trouble for the future, and it would not be tolerated by this House for any length of time. The right hon. Member for Carnarvon Boroughs, unlike the right hon. Member who has just sat down, said nothing whatever about the question of employment. After all, we are rapidly getting to the position when most thinkers in this country on fiscal and economic questions agree that the question of how to employ our people is more important than any other consideration. We ought to do everything in our power 989 to increase as speedily as possible the purchasing power of the masses of the people of this country. That is self-evident, and I believe that Government intervention ought to do everything it can to help industries and to prevent reductions of wages, which begin a vicious circle and are fatal in the long run to the well-being of the community as a whole.
The right hon. Member for Carnarvon Boroughs had nothing to say with regard to the test of employment. Most fair people will agree that in one or two directions in the Budget this question has been immediately dealt with. I should like to say how delighted I am, as a humble individual, and I am sure that the majority of the Members of the Committee are with me on this point, that the Chancellor of the Exchequer has dealt with the anomaly of the sugar-refining industry in this country, because that industry was undoubtedly being crushed between the Scylla of dumped sugar from the continent, on the one hand, and the Charybdis of British beet-sugar, subsidised by the Government, on the other hand. That was a state of affairs which could not have been allowed to continue. I congratulate the Chancellor of the Exchequer upon having dealt with that matter, and we may hope to see some thousands of fresh workers absorbed in the industry in the next two or three years. That is something achieved. When I say that we may hope, I know that my hopes are shared by those who have been working with me on this subject in the past.
§ Sir H. CROFT
"Hope deferred maketh the heart sick," but we have the accomplished fact to-day, and that industry will have a chance of going forward. As the hon. Member for Bridgeton (Mr. Maxton) has come into the House to try to lure me from the straight and narrow path of debate, I would ask him whether he does not find some approval of the fact, having regard to the principle that it is necessary to secure new sources of employment, that the Government have done something for the Scottish shale industry. That industry has 990 been in a deplorable condition for the last few years. Here we have precisely one of those cases where the Government ought to intervene. I regret that they were not able to intervene a little earlier, even before the bye-election which took place in that part of the world. Here is one of those cases where you have great communities which have been built up for one special productive purpose, where you have churches, schools and other social institutions built to meet the needs of those communities, and the destruction of the shale industry meant ruin and despair, because no other industries could go into those particular localities. Here something has been achieved by the Government, and I hope that it may ultimately lead to the employment of 3,000 or 4,000 more people in that industry.
§ Mr. MAXTON
I did not come into the House to lure the hon. and gallant Member from the narrow line of Debate. I came to hear what he had to say, as I invariably do, because he is about the only logical Member of his party on this subject. I want him to make plain to me how the sugar proposals and the petrol proposals of the Budget are something achieved for the workers in the sugar industry or the workers in the shale industry.
§ Sir H. CROFT
I think the hon. Member will discover that from now onward there will be no further dismissals from the sugar refining industry, but there will be a considerable absorption of labour. I am credibly informed that that will be so. With regard to the shale industry, I am glad to tell the hon. Member that in to-day's Press it is stated that the shale industry have gone back to the 1927 wages. That is something achieved by His Majesty's Government.
§ Sir H. CROFT
I am sure that the hon. Member will hold a watching brief, and I shall be glad to do all that I can to help him. I am sure that he does not regret the fact that the shale industry is receiving this advantage. We will together rejoice when we find that 5.000 or 6,000 men have been re-absorbed into that industry, as I hope may be the case in the not far distant future.
§ Sir H. CROFT
I hope that I have made it clear that, as far as the rating proposals in the Budget are concerned, we have a magnificent concession. It is a fine idea, and the Chancellor of the Exchequer ought to be congratulated. The whole object of the proposal appears to be to increase the productive power of the people of this country. That is something which Members of all parties desire and, although we have had a few disparaging remarks, I doubt whether the official Opposition will be found eventually opposing this Measure in the country. I want to say a few words with regard to certain omissions from the Budget. I do not think the Government quite realise the strength of opinion among their followers in favour of taking immediate action to improve the state of industry in certain cases where, undoubtedly, within the terms of the Prime Minister's pledge at the last General Election, they ought to be improved. Last Session we discussed this question frequently, and it is no exaggeration to say that members of the Government and practically the whole of those who are behind them are of opinion that the terms of the White Paper ought to be scrapped at once in order to make it possible for the Prime Minister's pledge to be fulfilled.
It is a matter of great regret to many of us that the Government have not got rid of one or two of the absurd obstacles in the White Paper. It has been pointed out that the White Paper is not something sacrosanct. It was prepared by the Board of Trade and submitted to the Cabinet, but the Cabinet can cut it out to-morrow if they think that by so doing it will help them to get on with the business. If they had taken that course and followed the almost unanimous desire of their party, who approve the general principle of the Budget so strongly we should not have had the hosiery trade turned down. It is deplorable that a vast number of people in Leicestershire and Nottinghamshire, who have suffered so severely in the last few years, should have appealed again to the Safeguarding Committee and have been turned down on grounds which were certainly known to the Government before. Is it too late now for the Govern- 992 ment to get rid of some of these restrictive clauses in the White Paper, not the main ones, in order to get on with the business of putting people back into employment, not in October, 1929, but before October, 1928? That is what we all desire to see. The hosiery trade was turned down. We have had other industries turned down on the ground that they were too substantial, whereas one industry, the granite trade, has been turned down on the ground that it was too small. That is a ridiculous position for the Government of a great country to be in. Surely, that small point can be put right without giving offence to anybody. Whom have we to fear? A mere handful, a corporal's guard on the Liberal Benches, while not only the great majority of the Conservative party but the great majority of this House warmly advocate our going forward.
We see one industry after another having its heart broken, and then we come to the Budget, and what is given to us? A Duty on buttons. We are grateful for small mercies, and I do not wish to say anything derogatory about buttons, but if the Chancellor of the Exchequer considers it right to safeguard buttons, surely there are many other industries which might have received the same treatment. The Chancellor of the Exchequer, in his truly remarkable speech, made this statement, and I think we are entitled to lay states upon it:We have to face the tact that unemployment remains obstinately chronic around the dismal figure of 1,000,000, and that all those basic industries which used to be the glory of this Island, which must always constitute an essential element in the life of every nation, and which are vital to our export trade—all those industries are at at the present time in serious eclipse."—[OFFICIAL REIPORT, 24th April 1928; col. 844, Vol. 216.]I suppose the right hon. Gentleman meant every word when he said that, and from the bottom of my heart I am glad to think that by the end of next year when this reform—which cannot be hurried through more quickly—will come into operation, it will be an undoubted benefit to those great basic industries; but there are many of us who would like, and I have a shrewd suspicion that a large number of Members on the Opposition Benches also would like, to see the iron and steel 993 trade of this country secure as from the earliest possible date. It is a perfectly miserable state of affairs when you see splendid men in the iron and steel industries out of work. It is most depressing in places like Durham to see this splendid type of man out of work—I had the honour in the Great War of commanding sometimes 4,000 men from Durham, and magnificent soldiers they were and great-hearted creatures they were—and they come to tell you that for three, four or five years they have had no employment; all good men, who want work.
Do not let us wait for this great rating reform. Let us do something for the iron and steel industry next week. What have we to fear? I know that the Government have been wondering, knowing the ramifications of iron and steel, what would be the effect on other industries; but we find to-day practically the whole of the re-rollers of this country are asking for safeguarding and saying: "It is going to our turn next." We have the engineers, so I am credibly informed, completely changing their views on the subject. Some of the biggest shipbuilders are saying, "We must safeguard the iron and steel industry, because if we do not we are going to be at the mercy of the foreign steel industry in the days to come, in regard to prices" If these statements are true, I hope the Government will consider the question afresh. I do not ask for any new pledges to be given to-day. Heaven defend us from these negative pledges which have created so much harm to industry in the past! I hope the Government will consider at once the setting up of a fresh Committee to consider this question.
I want to give one or two instances of what has happened in the steel trade during the past year. Hon. Members who do not know these facts may be staggered by them. I want to compare the imports of iron and steel goods in 1927 with the imports in 1923. It may be urged that in 1923 we had the effects following the Ruhr disturbance, but the figures from 1925 to 1927 are also similar in their progressive results. I want the Committee to realise that here we have four years of imports of iron and steel goods, in which we led the whole world until 30 or 40 years ago. What do we 994 find? In the four years from 1923 to 1927 the imports of pig iron and ferro alloys have increased six times; imports of ingots nearly seven times; imports of bars, rods, angles and shapes of iron have been doubled; imports of sheet bars and tin-plate bars have been increased five times; imports of wire rods have been increased three times; imports of tubes, pipes and fittings have been increased three times, while the imports of steel bars have been increased four times, and so on. The total imports of iron and steel manufactures in those years have been increased nearly three and a-half times. It is a most astounding picture, and the time has come when we must ask the Government not to chew the cud of political philosophy but to get on with the business.
Cannot they do anything to save this industry, without further delay? The rating reform will be a tremendous help sometime hence, but it is now that these industries require help; it is now that these industries are really on their knees, as it were, urging and demanding fair treatment in the face of foreign competition. What is sometimes not realised is the loss that this country is incurring through this kind of policy. It is estimated that if we excluded 2,500,000 tons of foreign steel—I have checked these figures very carefully from every angle—we should be giving employment to something like 100,000 men in the iron and steel works and the coal mines of this country. Consider the immediate result of that! It would mean that if we had that additional number of men employed, we should have £14,000,000 or £15,000,000 more wages circulating in this country—a very important point, and a greater saving than the saving on the so-called cheap foreign steel. In addition, you would have a saving in unemployment benefit of something like £7,000,000 or £8,000,000, while the industry would he paying a dividend. All this increased amount of money would be coming into the Exchequer, and as there would be this million or so of foreign imports coming in, which you would not exclude, you would have a large sum of money quite sufficient to pay half the cost of this new rating scheme. Surely it is to, consideration if you can get from that one great industry alone a sufficient amount of national relief, shall I call it, which would pay half the total cost of 995 your rating policy. If we have to find the money, perhaps the motor industry is able to bear it best, but why should it bear it, and, after all, this policy is only necessary because you are allowing manufactures to come into this country which have not to bear these burdens of taxation and which are causing the very situation in this country about which we are so concerned.
I do not think I am advocating an unorthodox cause or one which is out of sympathy with the party to which I belong. I am not afraid of doing that if it be necessary. We are told that the Cabinet are most anxious to follow the decisions of the great democratic organisation of the Conservative party. Let me remind them that the National Unionist Association has given a unanimous vote on this question, and it has been endorsed by the council meeting recently in London attended by 1,000 members. I am in favour of equality of franchise between the two sexes and I am told that Members of the Cabinet were finally converted, some of them at any rate, because the National Unionist Conference carried this question by a large majority. If it is right for a reform, which is not too enthusiastically demanded by any party in the country, to be accepted by the Government, how more necessary is it that they should take note of the unanimous resolution of their party organisation demanding the safeguarding of steel. I will not say anything more. I am convinced that what I am asking fits in with the pledge of the Prime Minister, when he said that if the Government were returned to power they would safeguard any efficient British industry which was suffering from unfair foreign competition. This is an efficient industry, and it is suffering from foreign competition. I urge the Government to take their courage in both hands, especially if they want to win the next election, and safeguard the great. iron and steel industries. By doing so they will bring hope and comfort to hundreds of thousands of people and also bring effective aid to the coal-mining industry.
§ Mr. SULLIVAN
I should like to congratulate the hon. and gallant Member who has just spoken on the courage he has shown on many occasions in this House, but I assure him that he requires to use more courage and more skill among 996 hon. Members of his own party. When they wanted to win the last election, the Prime Minister committed them in a certain way in order to overcome the difficulty. They are now beginning to think of the next election. I am anxious that the country should improve, but I cannot follow the arguments used by the hon. and gallant Member for Bournemouth (Sir H. Croft) in this connection. Most of the coal in Durham is export coal. Durham and Northumberland exist on the export of coal, and I do not see how the argument of the hon. Member can benefit them. The coal sent from Great Britain into Germany is sold at 5s. a ton less than German coal. It is bought by the industrialists of Germany at something below cost price, and they use it to make iron and steel and, therefore, when there is a contract for iron and steel the foreigner can beat the Britisher because he gets his coal from Great Britain at a lower price than they can produce it in their own country. If the hon. Member's argument is right, we should be making iron and steel here, and home coal would be used for it. At the present time our home coal goes to the advantage of our foreign competitor. Taking it all round, I cannot see how the marked improvement can take place which the hon. and gallant Member has in mind. If I thought that any scheme was likely to bring about that improvement, I should have little hesitation in supporting it, but there is the idea in the minds of many people that we have only to put on tariffs and everything will be all right. The right. hon. Member for Shettleston (Mr. Wheatley) was dealing with a tariff country; and they have their difficulties just as we have here.
Coming to the Budget, I am very sceptical about the relief of rates proposal. I am very anxious to get some relief of rates, but the reason why I am sceptical about it is this. We give relief in the steel works and in the coal industry. That is all to the good, if they require it. But we have a professional class, and a shopkeeping class, people who own their own property, who are suffering as the result of high taxation. The Government must be prepared to make this declaration, that if a rating authority gives relief in rates to the extent of so many thousand pounds, then they are going to provide the full sum. If they do not, the result will be 997 these people in these areas who are suffering now will not only have to carry the present heavy burden of high rates but will have to assist in carrying other people's burdens as well. That is something about which the Government should think. If we are to give relief in industrial areas, why should we wait until October of next year? If the Government have made up their minds to do anything, why not set about it at once? The need exists, and the cure cannot be applied too soon. I do not know much about constitutional law, but I appreciate the point which was made by the right hon. Member for Colne Valley (Mr. Snowden). He asked whether the Government were going to raise the money up to October of next year, and not spend it. I do not know how the law stands, but the probability is that the Government might find themselves in the courts and an adverse decision would be very hurtful. If they believe this policy will help, they should apply it as speedily as possible in order to bring about an improvement. The country is suffering so much that anything we can do to help should be done at once. While I cannot see eye to eye with the Government on this matter, their scheme may do some good.
Marquess of HARTINGTON
As a very warm personal admirer of the right hon. Gentleman the Chancellor of the Exchequer I have been more than pleased to see the very favourable reception his Budget has received from all sides of the House, and especially this afternoon to observe how very weak indeed have been the attacks upon it. The right hon. Member for Shettleston (Mr. Wheatley) did not appear to attack it at all. His speech, indeed, was of great value as showing the close affinity which exists, and must exist, between the Protectionist and the Socialist; but it was in no sense of the word an attack upon the Budget. I am extremely sorry to strike a jarring note of any kind, but I must confess, that for my part I feel a certain alarm at the rating proposals of the Chancellor of the Exchequer—not with that part of his proposals which deals with the relief to agriculture or the reduction of railway rates. Everyone who knows anything about the subject will agree that agriculture does stand in an entirely different position from any other industry. The rates fall on it with great severity, and 998 to a large extent with unjust severity, because it makes a very small demand on the services provided by the rates. It deserves, therefore, very special treatment. The reduction of the railway rates is again different. It is not a reduction in rates, but really a subsidy towards the cost of transport which has become inflated owing to a variety of reasons into which I need not enter now. It is the other part of the rating proposals about which I have certain doubts.
The proposals with which I absolutely agree absorb about £10,000,000 of the proposed relief to the rates, and we are therefore left with the proposals for the relief of rates to the extent of between £10,000,000 and £20,000,000. The reduction of rates on productive enterprises will, undoubtedly, do a very great deal of good for industry, and is at first sight a most attractive proposition. I should agree with them whole-heartedly, or almost whole-heartedly, if I was sure that it would stop there and go no further. There is no doubt that rates do press far more heavily upon industry than taxes. The burden is too heavy and should be relieved; but there is also, I am afraid, no doubt that there has been a great deal of wasteful expenditure by local authorities, even greater than that by the Government. It is impossible to travel up and down the country without constantly seeing money wasted, wasted on unnecessary and unproductive things. There has been a very large amount of money wasted on schools. In the county in which I live perfectly good school forms, exactly similar to those on which I sat when I was at school are being scrapped and American forms substituted for them. To scrap a perfectly sound form, in order to replace it, is wasteful. That kind of expenditure by local authorities is going on throughout the country. Unless some far better means of control of expenditure by local authorities can be devised than has been devised so far, I fear that this proposal of the Chancellor may lead to even more wasteful expenditure by local authorities. It is, of course, not an accurate description of the proposal to say that the Chancellor of the Exchequer is going to give to local authorities £10,000,000 or £20,000,000 more to spend. He is going to allow them to spend the same amount, with less expense to the ratepayers in their 999 own area. It seems to me that he may find himself in a cleft stick. He grants this money from London. He pays the piper. He either does not call the tune, which is bad, or he attempts to call the tune, which is likely to prove very expensive and unsuccessful.
It is not so many years since the old Local Government Board, which has now become the Ministry of Health, was first set up. That Department was established very largely with a view to controlling and limiting the expenditure of local authorities. It may have had many admirable results. Almost certainly it has produced better and more efficient local government. It certainly has produced more local government, and a vast expenditure on a number of things which are required to be done in local government, and it has called for a vast increase in the expenditure of local authorities. No member of the House who has had any experience of local government matters can be unaware that a very large proportion of the expenditure which local authorities have to undertake is expenditure forced upon them by the modern successor to the old Local Government Board. Moreover, it seems to me that the actual method of relief which has been adopted by my right hon. Friend makes much more likely the disaster that I fear, namely, the disaster of unnecessary expenditure by local authorities increasing.
An hon. Member has already referred to the fact that, although high rates are immensely injurious to the small ratepayers, they very often fail to appreciate the fact owing to the compounding system and for other reasons. It is a fact, I believe, that the pressure for economy in local expenditure does not come, as one might expect it to do, from the small ratepayers, but mainly from the large ratepayers and from industrialists. Although industries have a very limited voting power, they have constantly exerted a very valuable pressure in favour of reduced expenditure by local authorities. The Chancellor's proposal will make that expenditure a matter of very much less moment to large industries. The right hon. Gentleman who spoke from the Treasury Bench earlier referred to the important speech of Sir Herbert Lawrence, and the threat that 1000 Vickers would remove from Sheffield. That is a threat of vast importance. Pressure of that kind, the threat of driving industry away from a district, has been, and is now, of great importance in keeping down rates. We run the risk of losing a very valuable incentive to keeping down the rates. We lose also the incentive, which is a very valuable incentive to local authorities, to be economical so as to attract industries within their rating area.
My right hon. Friend the Chancellor of the Exchequer told us that the burden of rates is too heavy and that something had to be done with it. The incidence of this burden is, of course, of very great importance, but what matters far more than the incidence is the amount of the expenditure. Unless some method can be adopted which will reduce the amount of unnecessary expenditure—I am not now referring to necessary expenditure—it seems to me that there is a very definite danger. It may seem presumptuous on my part to suggest the alternative method which I would prefer. I have spoken at some length about wasteful and extravagant expenditure by local authorities. There is no doubt that the percentage grant system is responsible for a very great deal of it. It is a thoroughly vicious system and is doing a great deal of harm. That system is to be retained so far as education is concerned. For my own part, though I do not condemn the proposals which have been made, I should have felt a great deal happier if we had seen a trial of the block grant system without any assistance at all. I feel grave doubt as to whether the block grant system will ever be found to be workable. Block grants have been talked about for three years and we have not seen them yet. There are very grave doubts indeed whether any method of block grants will be found to be workable. People talk about rationing spending departments. I believe that system would prove to be unworkable also.
As regards agriculture, I have said that I approve fully the Government's proposal. I am sorry that the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) is no longer in his place, because I think it would be well for him to know one or two things about the land before he begins to tell this House about it. The value of his remarks on 1001 that subject was shown when he betrayed his belief that the tenant of agricultural land pays tithe. He should know the facts about that kind of thing before he comes to the House and talks about the incidence of rates on agricultural land. The value of his opinion on this matter and the measure of his knowledge of the subject was shown by that quite extraordinary piece of ignorance. Instead of this proposed relief of productive industry I should have preferred to see the Government take over definitely certain services which are necessarily becoming more and more strictly national services. The police are definitely becoming a national service. The day will almost certainly come when the police throughout the country will become a national service. That would relieve the rates to the extent of about £10,000,000. Roads are becoming to an increasing extent a national service; they are more and more becoming of value to the whole country instead of to the immediate districts through which they run. I should have felt happier if the proposal had been to take over at least the main roads entirely, and the police, accompanied by a very rigid pruning of the percentage grant system. That proposal, I admit, would have had certain disadvantages which the present proposals have not, and would to that extent be of less advantage to industry. It would not give the same immediate relief to those industries which now stand most in need of relief. It would relieve all ratepayers instead of only the producers, but it would have the immense advantage that it would be a definite and final commitment and it would be incapable of expansion in the future.
My fear about the Budget proposal is that it will not be found possible to confine relief to where it is granted at present. Some hon. Members have already touched on that subject. It seems to me that as years go on, within the next one or two decades, it will be found almost impossible to maintain the system which will be established when these proposals have become law. You will have an unrated factory on the one hand and a heavily rated working-class home on the other. There will be enormous pressure to extend the relief to the home of, anyhow, the less well-to-do part of the community. We have seen the beginnings of it already. I am not quarrelling with 1002 this proposal at all, but prosperous factories and producers are to be helped just as much as the unprosperous ones. I welcome that proposal. It is far less vicious to subsidise the thriving as well as the ailing rather than the ailing only: it is far less vicious to apply relief all round to all producing industries than only to those which are not producing. The benefit will come back to all consumers in reduced prices.
I am not quarrelling with the proposal, but it does seem to me that it will be very difficult indeed to confine it within the limit suggested, because the pressure on Members of the House to have the relief gradually extended to other classes will tend to become enormous. There will be the immensely prosperous factory paying no rates at all on the one hand, and houses all around paying considerable rates. In course of time it will be difficult to maintain that system. For that reason the demands upon the general body of the taxpayers for assistance to local services will almost certainly tend to increase. It will be wrong if the demands increase beyond a certain point. The Chancellor of the Exchequer in his speech said that it was an unsound and vicious system under which rates varied according to a district and the local politics of a district, but what he really meant was that rates varied according to local expenditure. As the people spend, so their taxes are fixed. As the people, through their elected representatives, provide more or less social services of one kind and another, so they are taxed. I believe that that principle is not only not vicious, but that it is essential. Any attempt to reduce the local rates throughout the country to a dead level would be a mistake. In the same connection the Chancellor of the Exchequer spoke of the effect of the rates in forcing industries away from the centres where they are now established into new districts which escape the pressure of the rates. Again, that tendency may, in some cases, operate badly, but it is by no means a wholly vicious principle. The right hon. Gentleman in a fine passage described the great assets which industry enjoyed in centres of population where there was accommodation for the workers and their families, where there were docks and waterways, railways and other conveniences. True they have all these 1003 things, but in only too many cases they have slums as well. I believe it is a sound system which leaves an industry free to go away from a populous town, where there may be many advantages but also many disadvantages, and allows it to lay down new plant, in new districts under new conditions. That surely is not a wholly vicious process, and it is not one which ought necessarily to be held up by the Chancellor of the Exchequer. It is not so many years since the right hon. Gentleman himself was condemning the wicked landlords of this country for making it impossible for industry to set up in the agricultural districts, and it is a, strange thing to see him advancing this argument in favour of his Budget to-day.
There is one other feature of this scheme which causes me to fear it. It calls for additional financial provision, and the commodity which the right hon. Gentleman has selected for tax in this connection is notoriously a very volatile one. He is imposing this tax, on which his great reform rests, on a substance which is infinitely less stable than water and which has in the past been liable to violent fluctuations. This tax cannot possibly be regarded as a steady, reliable producer of revenue. I am not quarrelling with the tax. I think it is sound, but it cannot be relied upon to produce permanently the very large amount of revenue which will be required. It should be remembered that in this matter of rating we are undertaking a commitment which will be permanent. Future Governments will not be able to go back on these proposals and to re-impose on industry the burden which is now being taken off. We must recognise that this will be a permanent liability upon the taxpayers of the country, and we cannot be sure that petrol will go on providing the large amount required for this purpose. It is quite possible that, at some future period, petrol may again rise to a very high price, in which case it would be difficult to maintain this tax at 4d. That figure is quite reasonable now, but it might become a serious burden if petrol were to increase substantially in price.
It is possible also that the Chancellor's secondary object in imposing the tax may succeed. He may, conceivably, give such 1004 a stimulus to the production of benzol and power alcohol that his tax will become vastly less productive. I am not saying this in order to crab the tax, but only to show that it is not possible to regard this scheme as being based only upon a petrol tax. It must and will become a charge on the general body of taxpayers, and I cannot help feeling that the principle that local authorities can look to the general body of taxpayers, and more especially to the Income Tax payers, is a dangerous one. Pressure will become very heavy from all sides of the House of Commons for increases in the amounts contributed by the State towards the expenditure of local authorities. With this £10,000,000 or £20,000,000 I am in agreement, but if the local authorities can get more they will spend it. There is hardly any limit to what the local authorities could consume if they felt that they had the purse of the general taxpayers behind them. That is the real risk. Local expenditure can consume not only £10,000,000 or £20,000,000, but £40,000,000 or £50,000,000, or even £100,000,000 or £200,000,000.
One other consideration which I put before the Committee is this. The Chancellor of the Exchequer, by his own very candid confession, has been a conspicuous success in his office. He has made very large reductions in the expenditure of the country, but, unfortunately, owing to various reasons over which he has had no control, he has not carried out in full his original plan of reducing expenditure by £10,000,000 a year. I remember very well his first Budget speech, in which he said that reductions in the Income Tax would not in future be in sixpences but would be matters of twopences and threepences. The right hon. Gentleman has not been able to carry out the whole of his financial ambitions, but I would put it to him that if he has been a conspicuous success in his office, yet his success in cutting down expenditure has not been so conspicuous, the field of national expenditure has not been so completely gleaned, that it is safe for him to undertake an operation on the scale of this vast new scheme. We are taking on very large new commitments by putting the purse of the taxpayer at the disposal of the local authorities, however carefully we may seek to guard it. I would implore 1005 my right hon. Friend—that is my purpose in making this speech, and not to throw cold water on his proposals—as far as possible, to see, first, that the expenditure of this money is carefully controlled, and that it is not spent on wasteful objects and, secondly, to see that this new source of wealth—as the local authorities are bound to regard it—is not taxed to a greater extent than is provided for in the present Budget. I had hoped that after many vicissitudes, the Chancellor had at last got back to sound ground and was again treading the stony and uphill, but safe, path of financial solvency. My fear, and it is no more than a fear, is that he has been tempted into taking a short cut, across what looks from here to be a smooth and verdant mead, but may prove to be a boundless and bottomless morass.
§ Mr. ELLIS DAVIES
The Noble Lord who has just spoken accused the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) of being under the impression that tithes on agricultural land were paid by the tenants. The Noble Lord will find that the right hon. Gentleman was a Member of the House of Commons when the Act dealing with tithes was passed, and I think we may assume that the right hon. Gentleman knows on whom the liability for tithes rests. The Noble Lord himself must know that, in actual practice, the tithes remain a charge upon the land and consequently must be paid by the tenant. It is quite true that if the tithe is abolished the value of the land is put up, and I have no doubt that, with equal facility, the rent is also put up against the tenant. I welcome the proposals of the Government with regard to agricultural land. I have never quite understood why agricultural land should be subject to rates any more than the stock-in-trade of a shopkeeper. While I welcome this relief in regard to agricultural land, however, I would point out that in consequence of it the landowners' security must immediately be increased and I would like to know what steps are being taken to secure that this relief shall pass to the occupier of the land?
In the case, for instance, of the man who pays rates in his rent, what provision is going to be made that there will be a reduction of rent commensurate with relief which the landowner is to get 1006 in his rates? In a case where a farm becomes vacant, what provision will be made to prevent the landowner from increasing the rent to the extent by which he is benefiting in relief of rates? If provisions of this kind are not made, nothing whatever will go to the benefit of the occupier. With regard to the relief of industry, the Noble Lord expressed the view that that relief should have been a general relief and that view I share. I do not quite understand on what ground the successful owner of a quarry or a mine or a factory is to obtain substantial relief in rates, while there is to be no relief for the householder or the tradesman. Let us remember the heavy burdens which fall on the tradesmen and householders in this country. The right hon. Gentleman the Member for Carnarvon Boroughs made the point that, notwithstanding the fact that there was compounding for rates by the landowner, the burden nevertheless fell upon the tenant. While successful industrialists are going to he helped by the Government nothing is going to be done to deal with the great burdens which affect a majority of people in the country, and particularly those I have mentioned.
Even assuming that the £4,000,000 in connection with the Sugar Duty ultimately reaches the purchaser, the food duties in this country still remain at £23,000,000 a year. In other words, there is a burden of 10s. per head or £2 10s. per family of five in respect of food duties alone. Since 1915, £500,000,000 has been raised in taxes on food, and it must be admitted that by far the greater percentage of this was paid by the working classes of this country. I obtained from the right hon. Gentleman the Minister of Health a few months ago some figures in regard to local rates; he informed me that the local rates of the country had gone up from £70,000,000 to £140,000,000 between 1913 and 1926. I think those were the dates. That is to say, that there has been practically an increase of 100 per cent. in the rates of the country. That simply means that the rates on the working men's houses, on the shops, and on the offices of the tradesmen and those otherwise employed have doubled. In addition to the increased cost of living, something between 60 and 70 points over and above 1914, the actual local rates 1007 have been practically doubled in the same time, which, of course, is an immense addition to the cost of living of the working classes. I say the working classes for this reason, that in proportion to their income the working classes of this country, and the lower middle classes as well, including the smaller tradesmen, pay more in rents than any other class of the community, and if, as I contend, I am right in that statement, it necessarily follows that they are paying a greater part of the rates than any other class in the country, and consequently the burden upon them is greater.
That means another thing. It means also that their purchasing capacity is to that extent less. Something has been said to-night, I think it was by the hon. and gallant Member for Bournemouth (Sir H. Croft), about relieving industry. He said that a stimulus should be given to industry by increasing the purchasing capacity of the people in general. I agree, but the best way to do it would be to reduce the burden of rates and taxes, because to that extent you would immediately increase the purchasing capacity, and consequently the demand for manufactured articles and articles of food. Not only is the burden on the working men great, but they have no means of escape. We hear a good deal in this House about the taxation of wealth, but every man who has any business experience, particularly in the City of London, knows quite well that every means that legal ingenuity can devise is adopted by the rich of this country to escape taxation. Take, for instance, one hon. Member of this House, a great financier, is reported to have said that only mugs pay Income Tax. Let me point out that what is called the accumulated wealth of this country often is not the accumulation of income; it is the accumulation of immense profits made in big deals in property and on the Stock Exchange.
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Arthur Michael Samuel) indicated dissent.1008
§ Mr. DAVIES
I did not suggest that nothing was made in trade. What I suggested was that the greater part of the fortunes that are left are not made by accumulations out of income, by economies, by savings out of income, but by profits on big deals in property and on the Stock Exchange.
§ Mr. DAVIES
I have spent the greater part of my professional life in the City of London, and I hope the hon. Member will allow me to say that I disagree with him, for the very good reason that I have very extensive knowledge of how big fortunes have been made in the City. They not only escape Income Tax, because those profits are never returned for Income Tax purposes—I hope the hon. Member will allow that—but they escape Death Duties by transferring property during their lives. An hon. Member who sits by me put a question to the Chancellor of the Exchequer a few months ago as to whether he intended to take any steps to see that duties were paid on property that was voluntarily transferred during life in order to escape Death Duties. The right hon. Gentleman brushed it aside. I put a similar question some time before, and I was practically told that there was nothing in it.
I have no doubt that if the Financial Secretary to the Treasury will look up the statistics—he probably has done, as I have done—he will find that the total property passing voluntarily, according to the Inland Revenue returns, is slightly over £8,000,000 in value in a year, but anyone who is acquainted with the life of this country knows quite well that property is not transferred from father to son immediately, except with regard to realty, but that instructions are given for the investment of money in the names of the children, with the result—and I do not think there is any doubt on the question at all—that the owners of great wealth in this country escape Income Tax and Super-tax because they make their money by these big deals in property and on the Stock Exchange, and they escape Death Duties because they see that the investment of their money is made direct in the names of their children and others. If there is any doubt on the point, I will refer to 1009 the methods adopted in the City to escape the Super-tax. The Super-tax was at first only 6d. in the £, starting at £5,000, but some of the financial leaders of this country went out of their way to create annuities in favour of heir wives and children in order to escape it, to such an extent that in 1922 the Government had to put a Clause in the Finance Bill to deal with the evil, and the Financial Secretary knows quite well that they have not yet succeeded in stopping it, particularly with regard to one-man companies. That, however, is not the point that I wanted to make. I wanted to show that the present system of taxation—I am sorry the Chancellor of the Exchequer is not going to deal with this—is continuing the burden upon the working classes and the lower middle classes in this country, and to that extent is reducing the purchasing capacity of the country.
What is the position to-night? We have 1,000,000 people depending on the Poor Rate, and of these, 750,000, I understand, are women and children. We have over 1,000,000 men out of employment, and yet the remarkable fact is this, that while in 1913 the total value of property passing at death was £289,000,000, last year it was £466,000,000. We are continually being told that it is open to anyone in this country to accumulate wealth and to improve his position, and so far as the occasional individual is concerned, that is true, but so far as classes are concerned, it is utterly inaccurate, and I will prove it. The Colwyn Committee pointed out the very remarkable state of things that in 1913—they took the same year—79 per cent. of the wealth left at death in this country belonged to the very small class which left £5,000 each.
Notwithstanding all the changes that took place during the War, increased taxation, high Income Tax and Super-tax, they point out that the same small class left exactly the same proportion of money in 1925. It was the same in 1926–27. It proves conclusively that the conditions under which the people of this country are living, and the system of rates and taxes, have formed fetters and limits which prevent the possibility, except in a very small class of people, of accumulating money. It is a fairly obvious conclusion. If the income and the expenditure remain the same, it is obvious that the possible 1010 savings cannot change from year to year. I have a quotation from a speech made by the Chancellor of the Exchequer in 1925, which establishes the proposition I am trying to make. The Chancellor said that the capacity and the possibility of saving depends upon income, and I put it that the possibility of saving for the lower middle class is practically non-existent in this country. The Chancellor of the Exchequer found it necessary in 1925 to reduce the Super-tax. He reduced it on incomes, I believe, up to £40,000 a year, but he started the reduction at £2,000. The right hon. Gentleman said: "I am going to relieve the man on his Super-tax, but I am going to transfer the burden on to his estate." Then he prided himself on the fact that he had been able to arrange that the whole of the reduction, which had taken place in the Super-tax, had been transferred to the Death Duties. Here is what the right hon. Gentleman said, and I think it is a remarkable statement:I therefore propose to reduce the Super-Tax in as nearly as possible a corresponding proportion over as neatly as possible the same range of taxpayers and to approximately the same extent as I propose to increase the Death Duties, so that the new burden and the new relief will balance one another in each succeeding stage of the principal ranges of income."—[OFFICIAL REPORT, 28th April, 1925; col. 86, Vol. 183.]The first relief was given at £2,000 a year. There are very few people in this country who have £2,000 a year. I think the number is 92,000. The corresponding increase in the Death Duties took place when the estate reached £12,250. I think I am right, therefore, in arguing that, in the opinion of the Treasury, no man can hope to leave for his children the small provision of £12,000, unless he has an income of £2,000 a year. Is that really a satisfactory state of things in this rich country? There is something wrong in a country in which such a small class of people can leave £370,000,000 at death. There is not merely an escape by the wealthy of Income Tax and Super-tax, there is not only an enormous transfer of property during life in order to escape the Death Duty, but there are invested abroad immense sums belonging to people who are citizens of this country, and who enjoy the protection of this country, the income from which never reaches this country, but is re-invested abroad, and 1011 from which, consequently, we derive no taxes. On the other hand, we have this position, as the Colwyn Committee pointed out, that 79 per cent. of the wealth of this country belongs to a very small class. I was here when we had the Budget of 1909 and 1910, when we thought that, by the increase in the Death Duties and the establishment of the Super-tax, we were going to bring a real social change in this country. We have failed. In the meantime, what has happened? Better education has enlarged the views and the ideas of the possibilities of life for the vast majority of the people. Their experience in the War taught them that not only the necessaries, but the comforts of life, can be provided and can be enjoyed; and yet this Budget, so far as I can make out—although I hope it will help to relieve industry—will bring no relief of any kind to the working-classes, or to the lower middle-classes of this country.
§ Lieut.-Colonel MOORE-BRABAZON
We have listened with great interest to the speech of the hon. Member, but, in so far as it is addressed to this side of the House, I cannot believe that it will fall to the mantle of any private Member to answer the arguments which he advanced, because so many of them were criticisms of the administration of the Treasury. I cannot help agreeing with him that, undoubtedly, in recent years the ingenuity of the rich man in evading Super-tax has been on such a scale as to warrant the attention of the Treasury. A Conservative Government is never in such peril as in its fourth year of office. It is not because the Opposition is strong; it is because Conservative Governments are so liable to go to sleep. More and more does the Front Bench become occupied by door-mice, and Conservative Governments, as a rule, collapse, not because of alternative policies from the other side, but because of their own inertia and inaction. I have had occasion to criticise the Government lately because they have not enough imagination or vision. I criticised them for not dealing with the question of the Ministry of Defence, and because they did not deal with transport in a big way. Consequently, it is of interest to see what the Chancellor of the Exchequer has brought forward to this House. After all, the Chancellor of the Exchequer is a 1012 fountain; he is not a cistern; and I have thought perhaps that, coming in contact as he did with respectable and somewhat dull members of the Conservaive Government, he was finally reduced to a position of political flatulence and nothing else. But such is riot the case, for from yesterday I think a policy has been put forward from our Front Bench which will stimulate everybody on the Conservative benches to work as hard as they can for an ideal in which they honestly believe. It was something like that which we sadly wanted in our hearts to inspire enthusiasm in our ranks. All I can say is that I, personally, will do all I can to see the ideals at which we are aiming brought to fruition for the benefit of the country at large.
I want to say a word about the Oil Duty, and, frankly, I find myself in this somewhat difficult position. I have always argued against the petrol duty as compared with the horse-power tax, and yet, as everybody knows, I am interested in coal treatment, and nothing is more delightful from my personal point of view than to have a petrol duty; so I find myself in this difficulty, that I have always been arguing against a thing which, so far as my own pocket is concerned, will be of great advantage. The newspapers said the Chancellor of the Exchequer made only one joke during his speech, quoting the one about children. Surely the greatest joke he perpetrated on the whole nation was the imposition of the Oil Duty after the monster petition presented by my hon. and gallant Friend the Member for Chelmsford (Colonel Howard-Bury).
§ Lieut.-Colonel MOORE-BRABAZON
This particular duty will undoubtedly have an influence on coal treatment. The Chancellor of the Exchequer briefly referred to the possibilities, but I think the Committee may he interested to know just what it will mean. Oil obtained from coal is, of course, a heavy type of oil, not the light volatile oil which is usually used for power purposes. The coal found up and down the country will produce on the average about 20 gallons of oil to the ton, and of that quantity between 15 per cent. and 23 per cent. will be affected by this duty, which will, in fact, present the man who successfully 1013 treats coal with about 2s. or 2s. 6d. per ton. There is no doubt that many of these processes are on the very narrow margin between paying and not paying, and that this help will have very great influence on those scientific processes. I cannot help reminding the House that here we have what the right hon. Gentleman himself says is a virtuous circle, because if by any chance coal treatment proves to be a success, the whole of the heavy industries will start moving with accumulated speed. The installation of the plants employs steel, more coal will be wanted than at present, oil fuel is produced, and distillation starts. The whole thing is what the Chancellor of the Exchequer describes so happily as a virtuous rather than a vicious circle. But I must remind him that nothing is done in regard to the making of lubricating oils. People fail to realise that this country, which in all its industries is so much dependent upon lubricating oils, imports no less than 86 per cent. of its lubricating oil from America. I do not suppose that any country in the world is so dependent upon another for one of the basic essential things in its life as we are on America for lubricating oils.
Last year when the Chancellor of the Exchequer was stealing money from the Road Fund, I advocated that in order to avoid this in future we should have two separate species of taxation upon motor vehicles, one to go direct to the Road Fund and the other to go to the Exchequer. What I maintained then was that one tax should be inviolable, that is, the one which goes to the Road Fund, leaving the Chancellors of the Exchequer in succeeding years to ring their changes as they liked upon unfortunate motorists. This year the Chancellor of the Exchequer has left the horse-power tax as it is, and has put on an oil duty for another purpose altogether. I am approving of that, and think the advantages to the nation far outweigh the individual discomforts to motorists in this country; and I cannot help congratulating the Chancellor on not paying too much attention to the bosses of motoring. They come here and think they can bully the nation up and down. Nothing of the sort! They do not represent anything politically at all. They are "the yellow peril." They try to make the whole country ugly with 1014 their notices, they are self-advertising concerns, and politically they do not represent anything at all, except the man who wants to pay less taxation, and that is what we all want. The Oil Duty is undoubtedly a tax which is based on what one calls the "pay as you go system." The advocates of the petrol duty say it is an ideal system, because you do not pay if you do not use the roads, and you do pay if you do use them; and there is a certain amount of truth in that. The more you motor the more you pay. But it seems to me we have got the thing the wrong way round, because the duty that is on the basis of "pay as you go" does not go to the roads but is going to the Exchequer, and it is the tax on horse power which is going to the Road Fund. It would be more logical, though I do not say there is much in it, to reverse those two taxes, allowing the people who motor to pay as they go, so to speak, for the upkeep of the roads, and letting the Chancellor of the Exchequer ring his changes on a tax on motor cars every year, as he may want it, for other purposes.
I also congratulate the Chancellor of the Exchequer on not changing over wholly to a petrol tax in response to an agitation of motorist taxpayers. My right hon. Friend the Member for Hill-head (Sir R. Home) has been advancing arguments in newspapers to say that the horse-power tax has had a very bad effect upon the exports of our cars to our Colonies. That may be a fact. We have also to remember the other side of the question, which is that the horsepower tax, curious and illogical as it has been, has had the saving grace of creating an industry in this country. Not only have we a 33⅓ per cent. protection duty in this country against the import of foreign cars, but we have a yearly protection in the shape of the horse-power tax. The Ford motor car was completely knocked out in this country because it had to pay 25 per cent. of its value every year. I cannot help reminding hon. Members that it is under that extraordinary protection that the light car industry in this country has grown. Do not let any hon. Member think that the British motor car industry has grown because of its own merits. It has been late with everything. It was late with front-wheel brakes, late with superchargers, late with self-starters, and late in every single 1015 thing. There is no initiative or world competition in their trade.
§ Lieut.-Colonel MOORE-BRABAZON
They would be wiped out if it were not for protection, they would not exist. I am sorry the right hon. Member for Hill-head is not here, because one of his cries in regard to other industries is, "Look after your own markets and I will look after export." In this case, if we had not had this curious system of taxation, we should never have had an industry; in this country, and what his plea really comes to is an argument for killing the goose which lays one golden egg because it does not lay two. I am sorry that he is not here, but no doubt he will make his case to-morrow night, though as the Debate stops at seven o'clock we might not have been able to get in. The British motor industry is swollen up with a pride which I think is unwarranted. Some think that the saturation point in the consumption of motor cars is now reached, and that their markets lie not in this country but outside. There may be a certain amount of truth in that, and, if the Government in their wisdom think the time has come to change the incidence of taxation on motor cars, let them do it slowly and not with a great jump, because it may be a jump in the dark from the point of view of the English motor industry. Although I do not myself admire the tax very much, I would not like to see it knocked out at one blow by legislation. The Oil Duty Will undoubtedly put a very big burden upon the heavy motor cars, and I think the Government are to be congratulated upon allowing the reduction to those heavy vehicles which are fitted with pneumatic tyres. It is rather a curious thing that, although the owner of the heavy motor car will pay such a lot more through the petrol tax, we are not going to reduce his contribution to the Exchequer but his contribution to the Road Fund. That seems to me to require a certain amount of adjustment, and I cannot see why the Road Fund should not have its fixed revenue from the heavy vehicle. I know there are a good many other hon. Members who wish to speak, and for that reason I will not speak at any further length. All I will say, in conclusion, is that on the question of oil and motor 1016 cars, in so far as I can help in the House, I shall do all I can to make the Government scheme a success.
§ Mr. SEXTON
The most interesting part of the discussion to-day has been the remarkable difference between the oratorical atmosphere of the first day of the Budget Debate, and that which follows on the second day. Yesterday, we had many pæans of praise from speakers representing both Opposition parties in regard to the Budget speech, but to-day the atmosphere is quite different. I was very much tempted to praise the Chancellor of the Exchequer for what I consider is an entirely new departure on his part. The right hon. Gentleman's previous Budgets have been very curious mixtures; in fact, they reminded me of the early days when we used to meet the old travelling tinker who carried with him a most extraordinary collection of things, such as broken scissors, bits of copper wire, a couple of dilapidated soldering irons, some soft solder, and sometimes a packet of molasses candy. I am aware of the right hon. Gentleman's genius for brilliancy, but I think he has been wasting that brilliancy on the desert air by putting taxes on such things as knives and forks, scissors, and paper bags, and I can only characterise that as a great waste of raw material. However, I have been rather overjoyed to find an entirely new departure, and, as I listened to the right hon. Gentleman, my mind went back 33 years to a time when I used to meet the right hon. Gentleman in company with Mr. Keir Hardie and Mr. Hyndman. At that time, the Chancellor of the Exchequer was an ardent student of "progress and poverty," and he supported the taxation of land values. In view of the fact that he has at last produced some scheme to deal with this important question, I found some difficulty when I picked up my paper this morning in reconciling the views expressed in his Budget speech yesterday with those he held 33 years ago. I was amazed to find the right hon. Gentleman proposing taxes on buttons and pipe lighters. Consequently, my praise of the right hon. Gentleman must be considerably modified, and I regret that what I consider would otherwise have been a fairly good proposition has been very much discounted by the introduction of this dose of protection.
1017 The Chancellor of the Exchequer stopped at buttons, but why should he not tax button hooks and button holes? What is the use of a button without a button-hole. I was inspired with the thought yesterday that if the Chancellor of the Exchequer had been in office previous to the change in the fashion of ladies' hairdressing, he would have looked with an envious eye on hairpins, and he might have got a good revenue from that source. I regret that such a very able contribution towards the removal of some of our social evils as that contained in the scheme propounded in the right hon. Gentleman's Budget Speech should have been marred by the proposed taxation of such small things as I have mentioned.
Corning to the constructive part of the proposals, as a very humble back-bencher, not an expert in finance, I do not profess to be able to go into elaborate financial questions, which I must leave to my right hon. colleagues on the Front Bench. I may, perhaps, be allowed to say, however, that I happen to be one of those who, in the early days of the movement, endeavoured to direct their then tottering steps on the narrow path of political righteousness, and I am somewhat proud of my pupils. Therefore, I shall content myself with dealing with the general principles embodied in the right hon. Gentleman's suggestions as to the relief of industry. He invited criticism—what he called constructive criticism—and I shall endeavour to keep within that category, although it is very difficult when the only things one has to criticise are of such a nature as in the present case. I am glad that the right hon. Gentleman has now returned. I have been doing my best to console him, and, if he takes up the OFFICIAL REPORT to-morrow, perhaps he will remember the very pleasant incident in which we were associated some 35 years ago.
§ Mr. SEXTON
As he has invited criticism, I venture, as a humble backbencher, to lay my criticism—E hope constructive criticism—at his feet, in the hope that the feet will not be of clay, as they have been in the past. Take the agricultural situation. If I understand the right hon. Gentleman rightly, he is going to exempt agriculture from taxation, and I want to be quite sure, before 1018 I tender my allegiance to the proposal, how far agriculture goes with respect to it. I understand that not only are farmers to be relieved from taxation, but that the machinery used in traction and in agricultural production is also to be free from the petrol tax. I live in a farming district, and I would remind the right hon. Gentleman that up-to date farmers use petrol, not only for their tractors, but for conveying their produce to and from the markets twice a day.
Then there is the market gardener, who, perhaps, is not strictly to be described as an agriculturist. He is a horticulturist, and a large part of his business, I should say 40 per cent., requires him to send, not twice, but sometimes three and four times a day, his produce to the market. I do not speak on this matter without some experience. I happen to be, in an amateurish kind of way, a market gardener myself, and, when I knew that petrol was going to be taxed, I made inquiries of an ordinary market gardener who lives near me, as to the average amount used per week, and he assured me that it was anything from 30 to 50 gallons a week. Taking it at 50 gallons, a tax of 4d. per gallon means 16s. 8d. a week, or £38 a year. I need hardly put it to the Financial Secretary that common sense suggests that he is not going to take that lying down, but is going to transfer the extra cost to the consumer.
The Chancellor of the Exchequer made an eloquent claim with regard to a reduction in the cost of living. Let us leave agriculture for the moment and pass to industry. As T understand it—I may be wrong—only £3,000,000 is to be devoted to the relief of rates, and the relief of rates is only to apply to manufacturers in a city or a town. They are to be relieved of two-thirds of their rates, while those who do not manufacture are to bear the whole burden. The right hon. Gentleman has evidently forgotten the fact, and I would like to put it to him for his consideration, that outside the manufacturers there is a big constituency of distributors. Some of them, while they make a fairly good thing out of it, are not making a fortune. Some of them have three and four motor vans going round collecting orders and delivering goods in the town and its suburbs. I asked one of these what it would mean 1019 to him if a, tax were placed on petrol, and, to my great surprise, I found that a consumption of anything from 100 to 150 gallons per week would be required to meet his case. Assuming that it is 150 gallons, that would mean an extra cost to this distributor—and he is not the only one—of £130 yearly. The right hon. Gentleman, surely, does not ask us to believe that that is going to help to reduce the cost of living. Indeed, it is going to put it up by more than 10 points, because the distributing industry also is not going to take it lying down.
§ 9.0 p.m.
§ Mr. SAMUEL
His business will be greatly increased, owing to the fact that the local factories, as we hope and believe, will become more prosperous and will employ more men. Those men will, we hope, have constant employment, and will be able to spend their wages in the district. The distributor will, therefore, take more money from those men as customers, and will recoup himself by a greater amount than he has paid owing to the extra cost of petrol.
§ Mr. SEXTON
That is all very well, but there is an old adage:Hope deferred maketh the heart sick.There will be sick hearts before the anticipation of the hon. Gentleman is realised. Indeed, I am not going to accept entirely the theory that this will be an incentive to new industries. If I could be assured of that, I should have some hope, but I do not see how that is going to happen. The man who is heavily hit by this petrol tax will be so much handicapped by it that he will not be able to launch out in new ventures, and the whole community, who will be bearing the whole burden of the rates, will also have to pay the petrol tax indirectly, because it will be passed on to them. The result will be that they will have to bear the whole burden of the petrol tax, the increase in the cost of living, and the full rates as they are today. If the hon. Gentleman could remove that doubt from my mind, I should not have the slightest hesitation in saying that here at last is a Daniel come to judgment. Until then, however, I am afraid I shall remain sceptical as to whether this suggested revolution in local taxation is going to help industry.
§ Mr. SAMUEL
May I ask the hon. Member to realise one thing? No more than six or eight months ago, the price of petrol was 1s. 5d. per gallon. Adding the tax to the price at which petrol is to-day, it will not even come to as much as it was six months ago. Is that going to wreck industry?
§ Mr. SEXTON
That is a curious argument. Why should we butcher our economic circumstances to make our own holiday? We are living under certain economic conditions, and it is our business, our duty and our privilege to take advantage of seasonable economic circumstances. But now we are to be fined because fortune has favoured us in that respect. As I have said, I have the greatest admiration for the right hon. Gentleman's genius and bravery. I have known him for a good many years, and I knew his father before him. He has inherited all the brilliancy of his father, and perhaps a little more. I have been somewhat pained to watch his meteoric career, but I still have a sneaking regard for him, with all his backsliding. He has lately been associated with matters that are not consistent with the earnest desire, which I have no doubt he has, for better conditions for the people. I regret to see that he still sticks to the Betting Duty, and that his brilliant arithmetical powers led him to support what we now know as the totalisator, because, if it had not been for his advocacy, the Second Reading of that Bill would not have been agreed to by the House. His jockeyship of the last four years has been remarkable, and in his career he has had a good many mounts under varied colours—as varied as those of Joseph's coat. In that respect history is somewhat repeating itself, because there is no doubt—I do not suppose that it was his intention, but, the fact remains—that to all appearances he has surreptitiously borrowed the clothes, with respect to rating and agriculture, of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). [HON. MEMBERS: "No!"] Anyhow, in all his career he has managed always with his brilliancy to get his nose first past the post, but it has not been without boring his opponents. He is trying again, and I think the time is not far distant when he may be warned off the course.
1021 May I refer, in conclusion, to one or two points which I sincerely hope will be remedied. First of all, the tax on kerosene oil. Kerosene oil is a vital necessity to hundreds of thousands, if not millions, of inhabitants of the cities of dreadful night, the slums of our Empire. It is the only illuminant that has ever reached them. The houses are not up to date. Gas and electricity are strangers to them, and to tell me that a farthing off sugar is an equivalent to the increased price of kerosene is to say something that I am unwilling to accept. I hope, however, that the extra cost of their humble illumination will so illuminate their political intelligence at the next General Election that, in the words of a subconscious poetical friend of mine:Restriction sore long time he boreTo save the nation's muttons,But, alack and alas, it came to passThat he choked himself with buttons.
§ Major HILLS
The hon. Member has made one of those speeches which always delight the House, but I think he exaggerated the effect of the tax on petrol. Of course, all taxes must impose a burden, but the question really is, do you get any return for the money the tax raises and a fair equivalent for the bur den imposed? He said the tax on petrol would increase the cost of living. A short time ago petrol and kerosene were dearer by more than 4d. than they are now, and yet the cost of living was not higher. Then I do not think he ought to disregard the possibility that was mentioned by the right hon. Gentleman the Member for Carmarthen (Sir A. Mond), that we may start in this country a largely increased industry in motor spirit, which may result in cheaper motor spirit. Anyhow, it would be a British industry employing British capital and British labour. Then he talked about the burden on agriculture, especially on market gardens, which are a part of agriculture. If he went to agriculturists and asked them whether they would rather have a relief in rates plus a tax on motor spirit, or no relief in rates and no tax on motor spirit, I have not the slightest doubt what their answer would be.
I want to thank the right hon. Gentleman very heartily for something he has done. I pleaded last year for an increase 1022 of the family allowance, I got very powerful support from one quarter of the Opposition benches, from the hon. Member for Nottingham West (Mr. Hayday) and from other parts of the House, but I got a frigid reception from the Chancellor. But you never know your luck in this world, and I was as surprised as I was delighted to find that the concession was given. I do not believe any more valuable concession in Income Tax could be conceived. I agree that it affects only the Income Tax paying class, but a great many of them are very hardly hit. They find it very difficult to educate their children. This concession will, I hope, be, as the Chancellor said, a productive tax. Anyhow, it will relieve the burden upon a great many households.
Upon the national account, I have very few things to say. I am inclined to think that the Chancellor has cut rather fine the allowance for interest and management of the Debt. Last year, he spent a good deal more, but I suppose his advisers have very carefully calculated that. I am very glad that he is putting back the Sinking Fund of the National Debt, apart from Savings Certificates to £51,000,000 for subsequent years. I never liked the Sinking Fund at £65,000,000, even though there have been deficiencies in previous years. I do not believe that at the present time it is a good thing to tax the nation highly and to pay off debt quickly. I believe the better plan is to economise, always to economise, to pay off a reasonable amount of debt and to keep that debt as low as possible. Therefore, I welcome the stabilisation of the Debt charge at £355,000,000. I believe that that is a businesslike arrangement, and I hope that no subsequent Chancellor of the Exchequer will encroach upon it.
Most of the Debate this afternoon, quite naturally, has run upon the rating reform system. I listened with particular interest to the speech described by himself as a non-party speech of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). He opposed the whole system of the Budget. He wants a different system. I think hon. Members opposite have to make up their minds on one point. Do they support a stimulus to productive industry and agriculture, or do they not? Of course, if they do not their course is quite simple.
§ Major HILLS
I want to know: Do they support a stimulus, to productive industry or do they not? Because the whole of the right hon. Gentleman's speech, though he professed great sympathy with productive industry, was a plea to use the money in some different way. By the way, he surprised me by saying that he thought we had not enough Inquiries and Commissions and Committees. I should have thought that the time for Commissions and Committees had gone by and that action should be taken. He said that two things ought to be done. First of all, we ought to deal temporarily with the necessitous areas. That is all very well. Of course, there is a very strong case for that, but what we have to do is not simply to consider causes. Nothing will remove the distress from those areas half as quickly as stimulating industry. I am quite aware of, and I perfectly appreciate, the difficulties, but, when hon. Members put questions as to what really is productive industry and what is not, I confess that I am puzzled. Could not we all agree on the principle that we do want to stimulate productive industry? If we did, I do not think we should find much difficulty in coming to some agreement upon the class of industry that, we wanted to stimulate.
The right hon. Gentleman, for his second proposal, said that we ought to take the able-bodied persons off the Poor Law and put them on to the Exchequer and give them larger opportunities for work. I have noticed during my political life that when the Government propose one way of doing a thing the Opposition always say: "Oh, we want to do the same thing, but we want to do it in a different way." I believe in the way the Chancellor of the Exchequer has indicated. I believe we shall do much more by putting our great basic industries on their feet. The third point the right hon. Gentleman made, and with which he made free play, was that we shall apply the relief to industries that do not want it. That may be so. But if we are agreed that the charge of rates is a charge that ought not to fall as heavily as it does upon the back of industry, it is no objection to the scheme to say that 1024 in some cases the rain will fall upon the just as well as upon the unjust. Of course it will. In some cases, the relief will go to prosperous industries. I hope it will. I hope they will be able to extend. I do not see how they could be left out entirely, because, after all, there is room for a large extension in all industries. The rating of industry on the present system is wrong and obsolete, and I think it ought to he abolished in respect of the prosperous industries as well as in respect of the unprosperous industries. We have a long and perhaps critical task in front of us, but it is a cause in which I certainly believe. I believe that it is a great crusade that we have to carry out, and I venture to hope that some hon. Gentlemen opposite will see that side of it and will not tell us that we are trying to help the landlords and private individuals.
§ Major HILLS
We cannot always get things to-morrow, but, there is such a thing as hope, a certain hope. If they know that there is a letter time coming for the industry and they can see some gleam in the clouds. I think the industry will be in a much better position. I hope that hon. Members will believe me when I say that it is not, only the land-lards that will benefit. I remember that contentious Measure the Agricultural Rates Act of 1896. It was called the "landlords' dole." We were told—I very well remember the discussions at the time —that all the benefit would go into the landlords pockets. It has not, because rents have fallen rather than risen. The farmer is the person who is pressing for this. It is not the landlord who is the moving force behind the demand to take rates off agricultural land; it is the farmer. I have in the past winter addressed many meetings of farmers. I have met the complaint all round that 1025 they were not getting from the Act of 1925 all the relief in rates that they hoped to get,. It was at that time said that it would be the greatest boon that agriculture could have. Agriculture is under a great deadweight, and anything that we can do to help it, we ought to do. I have supported this proposal or a long time past. It is no new thing upon my part. I have always told the farmer that Protection was impossible, and that, short of Protection, I could conceive of no greater benefit than by taking the rates off agricultural land. I suppose from what we have heard to-day that we shall be challenged in the country and be called upon to defend our Budget. I shall accept that challenge with great goodwill. I believe we have got a new force here and one which goes right down to the root of our national prosperity, and I do not care how soon the election comes if it is fought on this issue.
§ Mr. MacLAREN
If there is one thing more interesting than another, it is to notice that at last the Conservative party have got some marvellous inspiration from their Chancellor of the Exchequer. One after another, these hon. Gentlemen have been rising in their places and making speeches which make me wonder if for many years past they have been sitting on those benches asleep. I remember in 1926, when this House was harassed over the question of the coal dispute, that we had one or two days entirely devoted to the discussion of the pros and cons of the problem, and I rose in my place and pointed out, at the twelfth hour of the Debate that night, that the real solution of the problem, if you wished to bring your prices of coal within the ambit of the foreign competitive market, was to squeeze out of the prices of coal the rates and taxes which were then part and parcel of the price. I cannot forget that when I pointed out that, instead of attacking miners' wages, as you were then doing, you should have been agitating, if you were men who understood the economies of your case, for a reduction of the rates on your output, almost every man on the benches on the opposite side joined in a chorus of laughter, seeming to suggest that I was getting on to a very old and ancient theme. There seemed to be no consideration then, but now this vivacious, resilient and resourceful 1026 gentleman who has become Chancellor of the Exchequer has made a volte face, carries with him some remnant of his old Radical training, and stands at that Box and says, "We now come to the fertile field where we get down to concrete proposals to deal with the problem of rating, and to remove this great incubus of rates and give a step forward or an impetus to production." Then there are loud cheers from the men who had hitherto protested and opposed any attempt seriously to tackle the problem.
I can remember years ago, long before I was a Member of this House, sitting in the Public Gallery and watching the demonstrations that were made by hon. Gentlemen opposite when proposals were made to deal in a national way with the problem of taxation upon the industries of the country. Hon. Gentlemen opposite spent night after night in fighting the 1909 Budget for all they were worth. They did not then seem to believe in the idea that industry could be given relief from taxation or even from local rates. I remember it, for I was often in this House watching the demonstrations against it. To-night, the whole matter seems to have changed.
Let us get down to the brass tacks of this business. Taxation is a deduction from the wealth produced by the working classes. Taxation—call it by whatever name you like—on incomes, paraffin oil, petrol, buttons, buttonhooks or anything, is a deduction from the common pool of wealth created by the working classes by labour applied to the land. All these Budget Debates really consist of are contentious points which are bound to find expression in various parts of the House as to how you should apportion various forms of taxation, but really, when it is all boiled down, this is what it comes to. Taxation is levied upon the people of the country who produce the wealth. The question I should have liked to address to the Chancellor would be this: He is proposing or at least suggesting that under this scheme of his, which is the most important part of the Budget, namely, rating reform, to give certain reliefs in local rates. Taxation in any form is of a given magnitude and no amount of gerrymandering or changing the rates or giving subventions to the rates, or readjustments between 1027 local authorities under any new scheme will reduce the magnitude. Will it?
§ Mr. MacLAREN
I am glad to have that reply. While it will shift the burden from here to there, it will not reduce the magnitude of rates and taxes upon industry. That is the point.
§ Mr. MacLAREN
All wealth is a result of the work of the producer, and taxation is a deduction from the wealth produced by the producer. This deduction amounts to £800,000,000, or more, in taxation plus £160,000,000 in rates. That is a solid block of deduction in the form of national and local taxes from the wealth produced in this country. I still put the question to the Treasury: Do they wish to ask any serious student of economics to believe that this great, magnificent and marvellous scheme will in any way reduce the magnitude and the weight of the burden which taxes and rates now levy upon the industry in this country? It is no answer to say that we shift it from A to B or from C to D. It does not reduce the dead weight levied upon industry.
To-day, we had a remarkable excitement in the House when it came to discussing the pros and cons of this most stupid—I agree with the right hon. Gentleman the Member for Colne Valley (Mr. Snowden)—monstrosity which should really not have received the attention of serious men for ten minutes. I was amazed to find that 600 men took it seriously when it was being discussed today. The right hon. Gentleman the Member for Carmarthen (Sir A. Mond) rose in his place and seemed to give considerable weight and importance to the arguments advanced from the other side, because of his marked influence in the financial development of this country. It was interesting to me to listen to the right hon. Gentleman saying that he had always been an advocate for the reduction of rates upon industry. I admired his dexterity to-day in standing in his place as long as he did, making a marvellous speech and almost an encomium upon the wonderful discoveries of the 1028 Chancellor of the Exchequer, and how he agreed to everything which the Chancellor was proposing. I was amazed at the dexterity with which he made his speech and kept clear of the main principle which would, if he had mentioned it, have put him at once at variance with the entire party with which he is now associated. The right hon. Gentleman, in my time, was chairman of a very influential group in this House who in season and out of season made it their duty to advocate the non-rating of improvements in industry. But they did not stop there. They put forward a definite alternative or basis upon which rates should be levied and that, in my opinion, is the whole question that ought to be discussed now.
It is no use the Chancellor of the Exchequer drawing his picture of the harrowing effects of rating upon industries, the depression, the psychological effect giving rise to discontent in the community. We know all that: we have known that for years and, knowing that, many of us persisted in advocating some reform in rating and taxation. I agree with classical writers in the field of economics that there is no engine more potent for the destruction of civilisation than the instruments and engines of taxation. Appreciating that, I have definitely kept my attention upon that point. It is no use the Chancellor of the Exchequer telling us the harrowing details of the effects of these rates and taxes if he is giving relief to industry and taking the burden from off given industries and not in any way changing the basis of assessment under his rating scheme, it can only mean that he is changing the burden from some part of the community and levying it upon another part of the community, and it will react with the same viciousness wherever it falls.
The removal of rates from industry should not be seriously discussed unless at the same time we positively propose a new system and basis of assessment. Take the proposal as it now stands. The subventions of the local authorities will be paid out of the pockets of the taxpayers. I can never understand why statesmen say that they are going to take every farthing that they can out of the pocket of the taxpayer, and then they offer a consolation by telling him that 1029 later on he will receive some subvention of his local rates. I do not see that there is much wisdom in that. The proposal now tabled by the Chancellor of the Exchequer amounts to this, that the social services of the localities shall be carried on with due restriction for a given number of years in order, as one hon. Member said, to prevent extravagant expenditure on the part of the local authorities because of the openness of the taxpayers' pockets. Local services are to be paid for as usual, with due regard to restrictions. What will be the nett result of these local expenditures? The Chancellor of the Exchequer in his varied experiences of politics happens to have passed through, in his early days, a good training ground, which suited him to understand pretty clearly the very problem which he would have us believe now is so perplexing him that he asks us, with his tongue in his teeth, to offer him some help, advice and criticism. In his early days—it is not so early, because it was in 1917, the present Chancellor of the Exchequer made a speech apropos of what I have been saying that rates will be paid for the making of roads, the making of general improvements and the carrying on of the social services. What was said by this Chancellor of the Exchequer who is so much bewildered with the problem that he is begging for help. The best help that we can give him is to take the words of wisdom out of his mouth and hand them back to him in his hour of perplexity. This is what ho said in 1917:Roads are made, streets are made, railways services are improved, electric light turns night into day, electric trams drive swiftly along the roads, water is brought from the reservoirs 100 miles away, from the mountains, and all the while the landlords sit still. Every one of these improvements is effected by the labour and at the cost of other people. Many improvements are effected at the cost of the municipality and of the ratepayers. Not one of these improvements does the land monopolist as a land monopolist contribute to make and yet by every one of them the value of his land is sensibly increased.If the right hon. Gentleman wants advice as to what he should do, here is a little bit of advice which we can offer him from a speech which he probably wishes he had never made. Take the scheme as now proposed. It means taking the burden from certain people and passing 1030 it on to other people, and the other people to whom you are passing it have just as many rates and taxes as they can meet now. There is some method in the proposal, because if there is one thing which the Conservative party are extremely anxious to do it is to "collar," as has been admitted, the goodwill of the agricultural districts. I want to put a few questions to hon. and right hon. Members opposite. This subvention will be paid out of the pockets of the taxpayers. Money will be spent in making roads and carrying out public improvements. Is there any hon. Member opposite who would dare to deny that every farthing of these improvements effected by public expenditure will enhance the value of the land of this country? The hon. Member for Ripon (Major Hills) said that during the discussion of the Agricultural Rates Acts of 1896 and 1923, it was averred that the reliefs to agriculture under those Acts would become part and parcel of the rent and the benefit would go into the pockets of the landowners.
§ Mr. MacLAREN
The hon. Member said that during the Debates on those Acts it was stated that it would go into the pockets of the landowners.
§ Mr. MacLAREN
The hon. Member went on to say that such was not the case. There was another incident which I. should like to recall to the hon. Member's memory—the Corn Production Act of 1917, which was the same in nature. It was to protect the agriculturists. Would the hon. Member support this argument, that the advantages of that Act did not accrue to the landlord? I remember well that, as a result of the advantages going to the landowners under that Act, a Bill was introduced into this House to get farmers out of their difficulties, because they had been forced to buy land at high prices by virtue of that Act being on the Statute Book. I could give case after case where high rents had been preserved, rents that might have extinguished themselves, but which were procurable by virtue of the fact that there was in existence these rate reliefs. I heard it stated from the 1031 Treasury Bench by the present Viceroy of India, who was then Minister of Agriculture, that every relief given in rates gave an enhanced chance to the landowners to get better rents and, vice versa, that where rates were high rents would be low. The so-called advantages given to agriculture under this scheme will still further entrench landowners; and I protest against it.
The question has been asked as to whether we on these benches are in favour of giving a stimulus to industry. I have constantly heard speeches by hon. Members on this side advocating doing something to relieve local rates. The right hon. Member for Colne Valley has time and time again advocated it in order to stimulate local industries. We are advocating it to-night; but we suggest that the way the Government are doing it, while ostensibly it would appear to be a relief, will, in fact, be no relief at all but will further entrench monopoly and enhance the value of land. Your proposal to relieve rates has not been followed by a definite proposal to levy these rates on the increased value of land due to the fact that you are spending millions of money on roadmaking and public improvements. The riparian landowners will be able to cherish the hope that in the near future they will pay no rates at all and will be left to continue their high game of speculation against the community, while the taxpayer will have the consolation of knowing that he has come to the relief of these riparian landowners and is helping the Tory party to still hold by a bribe the agricultural votes of the country. And the taxpayer is to pay for all this under the guise of stimulating the industries of this country.
I have never at any time missed an opportunity of advocating the removal of rates and taxes from industry in order that those who are employed might have a better chance of employment. When the question is put to us as to whether we consider any tinkering proposal in the form of taxation relief would do anything to affect employment I want to say that it is only by adjusting your rates and taxes in a proper and scientific manner that you can hope to see a revival in the industries of this country. The proposals in this Budget will do nothing. 1032 They are good window dressing for the Government. They will dangle before the eyes of the electors something which will come into being in 1929, but when it is attempted to put them into practice they will only have the effect of increasing the taxpayers' contribution, because the £160,000,000 of local rates will have to be borne by someone. Instead of it being borne by the monopolists, who have held this country by the neck for centuries, reaping the profits of every public improvement, the Chancellor of the Exchequer, knowing full well that the proposals he is now making will only aggravate the position, is prepared to leave the monopolists still entrenched. He has not the courage to go back to those old ideas and principles which he so eloquently advocated in the days when he wanted a seat in Scotland, and would rather hold his high office in the Conservative party by paying obeisance to the vested interests in the country. He uses phrases which sound scientific and economic in the idea that he will stem the crisis which must come in this country, because taxation will rise no matter to what devices the present Chancellor of the Exchequer may resort; and local rates will continue to rise also.
The question we have to face is how to achieve our purpose without impinging on honest industries. We are not doing that by this Bill. We are still further complicating the position, and I should like to know the opinion of the Minister of Health on this matter. When the Chancellor of the Exchequer was telling us of the marvellous Bills that are to be introduced, consequent upon these proposals, I wondered what the Minister of Health was thinking. How that during the period when the machinery under this new Bating and Valuation Bill is being built up the Chancellor of the Exchequer comes along and throws pig-iron into the middle of it and says: "I am giving you a chance to bring in another Bill later on." Is the Minister of Health satisfied that the complications arising out of the new assessment will he so easily overcome that it will be a dear working matter in 1929? I can see the Law Courts giving decisions as to what is or is not a place of production, and a local committee sitting up all night and scratching their 1033 heads wondering where they are going to. As a member of an assessment committee I shall take the keenest interest as to what is going to happen when this Bill comes into being. If the committee want serious advice on these matters they will give us this credit, that although we are opposing this as a relief to industry we are not doing it because we are opposed to the policy of stimulating industry. You are not imposing this taxation upon monopoly values in land; you are merely imposing a burden on industry which is already too highly taxed.
§ Colonel HOWARD-BURY
I should like to congratulate the Chancellor of the Exchequer on the general ideas of his Budget. The idea of relieving productive industry from the burdens that are now upon it is one that is going to be of the greatest value to this country, but where I do not agree with the right hon. Gentleman is in the various methods that are adopted for raising the necessary money for this purpose, and I cannot congratulate the Chancellor of the Exchequer on the very clever trick he has played on the motoring community of the country. It was a very clever trick indeed. Many people may laugh at it to-day, but I think the laugh, unless the Chancellor of the Exchequer can give the motoring community some concession or another, will turn against him one of these days. The Chancellor of the Exchequer, and also the right hon. Member for Colne Valley (Mr. Snowden), seem to look upon the motoring community as an uncle-serving community, whose only object is to be taxed. It is to be the milch cow for the rest of the community. Why should the motoring community alone have to bear practically all the burdens of this new rating reform? All the money that is to be raised for this reform is to come, practically, from the motoring community.
The Chancellor of the Exchequer looks upon motorists as those who go out only for week-ends in motor cars. He does not realise that motoring is the second biggest industry in this country to-day; that it is an industry that has increased since the War and is increasing still. When 920,000 of those who are interested in motoring dared, in the eyes of the Chancellor of the Exchequer, to come to him with a petition suggesting that the present taxes on motor cars were unfair 1034 and unjust, and dared to suggest the alternative of a petrol tax, I can imagine the Chancellor of the Exchequer saying to himself, "Who are these impertinent motorists who dare to come to the House and dare to suggest that my taxes are unfair? I am going to punish them; I am going to add to their taxes; I am going to make them realise that they have no business to come to the House and to bring petitions asking for remissions of, or changes in taxation." Let me recall to the memory of the Chancellor of the Exchequer a very ancient occasion, many thousands of years ago, when the subjects in the Kingdom of Israel, who had been heavily taxed by King Solomon, pleaded with Rehoboam for a reduction in taxation. Rehoboam first consulted with the older and wiser men, and they advised him to agree to the request. But then he turned to the younger men, and what did they say? They said:Thus shalt thou speak unto this people that spake unto thee, saying, Thy father made our yoke heavy, but make thou it lighter unto us; thus shalt thou say unto them, my little finger shall be thicker than my father's loins.And now whereas my father did lade you with a heavy yoke, I will add to your yoke; my father bath chastised you with whips, hut I will chastise you with scorpions.The motorists of the country appeal for a reduction of taxation and the Chancellor of the Exchequer meets them with an increase of 50 per cent. in taxation. What was the sequel to the incident in Israel?Israel rebelled against the house of David, unto this day.It was not in the time of Samuel, I agree. Had Samuel been alive, far wiser advice would have been given to King Rehoboam, and he would not have sinned in such manner. Why should motorists have been selected to pay for the whole of this new rating relief? Why is there this great hatred of motorists? As the Financial Secretary to the Treasury knows, at the present time the horsepower tax is doing infinite harm to the motor industry. Nearly half the motor cars in this country are laid up during the winter months in their garages. The supply of oil and fuel drops to a very low level. Many thousands are thrown out of work, as motoring becomes to a great extent a seasonable employment. Moreover, the second-hand market is 1035 completely killed by the present high horse-power tax.
There would be a great fillip to the industry were the Chancellor of the Exchequer to lower the horse-power tax, but if he continues with a high horsepower tax and imposes further taxation on the motorist, he will gradually kill the motor industry, which has flourished and is flourishing. We would wish it to flourish still more, but we are reaching the saturation point in this country, and when we look round for further markets we find that the markets in our great Dominions are the best potential markets before us. As long as we have the horse-power tax we cannot send out cars that are of use to the people in the Dominions. Roads are bad in the Dominions, and the type of car that is wanted there is the high horse-powered American car. We cannot produce that type of car because the present horsepower tax prevents it. It might be said that motor manufacturers should make two types of cars, one a light type for this country, and a car with higher horsepower for the Dominions. If they did that they could produce cars in only limited numbers and not on a system of mass production, as is done in America. It is only by production in large numbers that we can hope to sell cars in the Dominions and Colonies. Therefore the horse-power tax is becoming more and more detrimental to our exports.
The hon. and gallant Member for Chatham (Lieut.-Colonel Moore-Brabazon) said that the tax had acted as a great form of protection for the industry. That is perfectly true. And Mr. Ford, as a result, is coming forward with a 15 horse-power car to get under the tax of £23 a year which had to he paid on his former type of car. Mr. Ford is coming with mass production. Therefore the horse-power tax bit by bit will become of less avail. But if during the change-over from a horse-power tax to a petrol tax there should be difficulties in the manufacturing community, I should not object in the slightest if the 33⅓ per cent. duty on foreign cars were raised to 50 or 60 per cent. in order to protect our home market. The cars that we produce here are the best in the world, but they are not suited to the 1036 Dominions. The Chancellor of the Exchequer has introduced the petrol tax in addition to the horse-power tax and he has, therefore, the disadvantages of both systems. The small distributors are going to suffer twice over; they are going to pay the higher cost of petrol and they are not going to get any relief from the rates, as are the producers. Small firms tell me that their cost of distribution is going to increase enormously as a result of the petrol duty.
The Financial Secretary has told us that a year or more ago petrol was 7d. or 8d. a gallon more. That is perfectly true. The cost of living also was higher. It has since been coming down as a result of the price of fuel coming down and the cost of distribution falling. If the price of petrol increases so will distributing cost increase. Russian or Soviet petrol which is coming into this country to-day is being sold at a somewhat cheaper rate than American and other petrol. When petrol goes up in price, as it will, people will naturally look for the cheapest form of petrol, and that is going to give a boom to Soviet petrol. Of that I am convinced. I think that the Financial Secretary and the Chancellor of the Exchequer did not for a moment imagine that the Budget proposals would have that effect.
Let me suggest this to the Financial Secretary, and I wish that he would pass it on to the right hon. Gentleman. Had he reduced the horse-power tax by 10s. in the it would have been equivalent to about £11,000,000 a year. The new Oil Duty brings in £4,500,000 for every penny that it is increased, and therefore 4d. brings in nearly £18,000,000 a year. The horse-power tax should continue until 1st January in its existing state. In addition you will get about £10,000,000 out of this new oil fuel tax, which is all to the good. In the following year, if you keep on this oil fuel tax, which brings in some £18,000,000, and reduced the horse-power tax by 10s., which means a reduction of £11,000,000, there will still be a balance of over £7,000,000, and the Chancellor of the Exchequer will already have to the benefit of the fund a sum of something like £17,000,000 or £18,000,000.
§ Lieut.-Colonel MOORE-BRABAZON
I think the hon. and gallant Member is 1037 wrong in assuming that a reduction of 10s. in the horse-power tax would mean a reduction of £11,000,000, because, of the money which comes from motor taxation, only half comes from light cars. Only half of the money that goes into the Exchequer is on a horse-power basis at all, and the other half comes from taxation on weight and other systems of taxation on hackney vehicles, and so forth, which is quite different.
§ Colonel HOWARD-BURY
I agree, but I meant to take that into account, and there should still be a total amount equivalent to about £22,000,000 a year, and the Chancellor would have a balance of between £17,000,000 and £18,000,000 to the good. There is to be relief from all rates in respect of agricultural land and buildings. Will there be the same necessity for expenditure on the Road Fund? I suggest that it might be possible to cut down some millions from the Road Fund and to help in the reduction of the rate on horse-power. I ask the Financial Secretary to consider that matter, because I believe if the Government go on without giving any relief to the motoring community they are going to antagonise a vast body of opinion in this country which is very favourable to the Conservative party. Let the Financial Secretary remember that the motorists saved the country during the general strike. There is no gratitude in politics—all they get in return is an increase of 50 per cent. in taxation. We have all the evils of both systems, and I can conceive no better method than this of reviving the fortunes of the party to which the Chancellor of the Exchequer formerly belonged. It is going to do them more good than any yellow, green, or brown books they can issue. Unless the Chancellor of the Exchequer can give the motoring community some compensation you will do infinite harm to this party. We realise that the ideals for which he is working are excellent and that they will be for the good of the community; but I ask him, before he works out his plan, to give some relief to the motoring community of this country.
§ Mr. PETHICK-LAWRENCE
I desire at the outset to deal with the actual Resolution around which our discussion is taking place to-day. This Resolution 1038 deals with the Consolidated Fund and the matter of treating the interest on Savings Certificates.
§ The CHAIRMAN
The Resolution we are now considering deals with amendment of law. The other is not a Resolution in Committee of Ways and Means at all.
§ Mr. PETHICK-LAWRENCE
I am sorry if I have not given a correct interpretation of the Order Paper, but, at any rate, the subject to which I was about to refer was one of the matters dealt with by the Chancellor of the Exchequer in his Budget speech, and it is certainly germane and relevant to tonight's discussion. I take a special interest in this question of Savings Certificates because for several years past I have ploughed a lonely furrow, or very nearly so, in trying to convict the Chancellor of the Exchequer of error in dealing with the accounting of Savings Certificates. The Chancellor of the Exchequer has stood me out up to this year, and has contended that the method previously adopted was thoroughly sound. In my view it was not only unsound but preposterous, and it led to two very grave and undesirable results. It prevented the Treasury from forming any accurate estimate of the outgoings of the year. According to the number of Savings Certificates which persons chose to redeem in a year, the actual outgoings in interest fluctuated, it might be to the extent of as much as £8,000,000 or £10,000,000 in the year. In the second place it obscured the true amount of the Sinking Fund. While the interest was supposed to be about £10,000,000 or £12,000,000, in point of fact the actual interest which accrued was well over £20,000,000. I am very glad to see that the Chancellor of the Exchequer has at last come round to my way of thinking on this matter. He has admitted that the method in which these Savings Certificates have been treated hitherto has been entirely unsound and has decided to change the method in the future. So far so good, but I am not particularly satisfied with the actual figure which the Chancellor has selected in connection with this change.
As far as I can make out he has decided to work on the assumption that the total amount of interest including 1039 that on the Savings Certificates should be put at about £305,000,000. That figure, as I understand it, is several millions below the actual amount of interest if the Savings Certificates interest which accrued is included at the same time. The result is that though he has admitted the principle, so far as future yeas are concerned, he is actually considerably reducing the £50,000,000 figure which was originally set by the Prime Minister. The net result is that the Chancellor of the Exchequer is, for the forthcoming years, proposing to reduce the Sinking Fund considerably below the amount at which it was supposed to be permanently established. In order to get away with this change, he has taken this opportunity of altering the basis of accounting so as to enable him to do it, while he pretends that he is actually creating a fund which will more speedily reduce the Debt. I am not quite clear as to the precise method that is going to be adopted.
I notice that under the new form of accounts with which we are presented for the first time this year, and of the general principle of which I naturally and thoroughly approve, because it is a sound one, the Sinking Fund is put down this year at £65,000,000. I am at a loss to understand the use of the term "Sinking Fund" in this connection. It does not represent the amount which is being used to pay off debt; it does not reprosent the amount which is being used to pay off debt other than the interest on the Savings Certificates; in fact, it does not represent anything at all except, as far as I can understand, the excess of the allowance made in the Budget for the total debt charge—interest, repayment, and everything else—less, first of all, that amount of interest which is going on under the ordinary debt, and, secondly, the sum of £13,000,000 arbitrarily selected as the amount going in paying off the interest on the Savings Certificates. I get that figure from a figure which the Chancellor of the Exchequer gave us yesterday to put down on the sort of race-card which we were given.
§ Mr. SAMUEL
The figure appears on page 7 of the Financial Statement under the heading, "Interest on Savings Certificates." There is no race-card about it.
§ Mr. PETHICK-LAWRENCE
It is now in the White Paper, but I had it in the first instance on the card on which we were expected to put it down, and which did fully, at the Chancellor's directions yesterday. This figure of £13,000,000 is purely arbitrary, a pure guess. It is neither a figure that will actually be paid off in interest on Savings Certificates, nor is it the £20,250,000 which the Chancellor of the Exchequer told us was that given by the actuary as the correct annual amount of the accrued interest upon Savings Certificates. Therefore, T suggest that this £65,000,000 is a purely arbitrary figure, and I cannot see that it has any place in an exact statement such as this Budget statement professes to be. Further to that, I want to elicit a little more light as to this £13,200,000 that is being added to reinforce the Sinking Fund from the Currency Account. What T want to get clear—and I have not found anybody yet who is clear on it—is the exact form in which that balance is held at the present time.
§ Mr. SAMUEL
If the hon. Member looks at the Currency Note Account that is published every week, it appears in black and white, and he will see for himself exactly how it appears. It is in reserve, earning interest.
§ Mr. PETHICK-LAWRENCE
I quite appreciate that, but what I want to understand is this: If that reserve is already part of the monies belonging to the State, and if it is already earning interest which the State is taking to itself, are we gaining any definite advantage by placing that to the Sinking Fund to discharge debt?
§ Mr. SAMUEL
It has never come into the general Revenue Account, but has always been in the Currency Account.
§ Mr. PETHICK-LAWRENCE
I quite understand that, but I still hold the opinion that it is a pure hook-keeping transaction.
§ Mr. PETHICK-LAWRENCE
I think this is a pure book-keeping transaction, and I very much doubt whether its trans- 1041 ference to the Sinking Fund represents any redemption of debt in any real sense of the term. There is one other point on which I am not quite clear. The Chancellor of the Exchequer said something to the effect that any advantage which accrued from beneficial conversions would accrue to the Income Taxpayer. What he intended to convey is very obscure and perhaps we shall get some information when the time comes. As we have at last succeeded in wresting this change with regard to Savings Certificates from the Chancellor of the Exchequer, may we hope that another matter, which I have often dealt with, and on which I am reinforced by the strong opinion of the Colwyn Committee, will also receive some sympathetic attention from the right hon. Gentleman and the Treasury. I refer to the persistent habit of the Treasury of issuing loans at a big discount, a practice which has been dealt with by my right hon. Friend the Member for Colne Valley (Mr. Snowden), which is opposed by nearly all the financial Members of this House outside the Treasury, and has the unanimous condemnation of the Colwyn Committee; and now that the Chancellor has seen fit to mend his ways in regard to Savings Certificates, perhaps he will alter his practice in this other respect.
I will not go at any length into the main proposal in the Budget; dealing with rates, except to say that there is no question that we on this side of the House are in favour of transferring the burdens of rates to taxation. I believe that we on this side, from the very first, advocated that. It has been taken up and pushed by Members below the Gangway, and we are very glad to see that the Conservative party have at last come into line, and have realised that it is rates, much more than taxes, that injure industry, employment, and the people of the country generally. What we have still to be convinced about is that the precise method adopted by the Chancellor is the one most suited for this purpose. We are a little inclined to think that the Chancellor is falling between two stools. He is neither adopting a scientific method of relief of rates to be generally applied to all sections of ratepayers, nor is he specially assisting those industries, trades or places which are depressed; but he is proposing to give relief to all productive 1042 industries, including those industries which are extraordinarily prosperous, such as the cotton-thread trade, gramophones, chemicals, tobacco, artificial silk and others. It must be remembered that it is a very large gift that is to be given to productive industry, somewhere in the neighbourhood of £25,000,000 a year, which, capitalised, represents a gift of something like £500,000,000. It is important to make sure that, when these industries have this very large bonus given to them, it really does go to the improvement of employment, rathen than to swell the profits of the ordinary shareholders of some of the concerns, many of which are very prosperous.
The Chancellor has announced, as was expected, that he intends to amalgamate the Treasury note issue with that of the Bank of England. On the main question, I do not know that there will be a great deal of disagreement in any part of the Committee, but I am strongly of opinion that it is of the utmost importance that this step should be taken in a sound way, and in a way which will not mean that industry in future is placed in a straight jacket, which prevents its expansion when any improvement shows signs of taking place. The proposal has been made that the exact method which existed before the War of dealing with currency should be repeated on the present occasion. I am glad to hear from the Chancellor of the Exchequer that he does not propose to adopt that attitude, but that it is his intention to give greater elasticity than before.
I am one of those who think that within the ambit of the gold standard it is quite possible to provide a system which will be sufficiently elastic to meet the requirements of industry, and I believe that a system which is very different from what we had before the War can achieve that purpose. I need not remind the Chancellor that at Genoa a proposal for an international conference to consider how this should be done was carried not by some "currency faddists," some inflationists, as the Chancellor has been wont to dub those who disagree with him, but by the responsible authorities of the Crown and by the leading authorities of the central banks of the world. It is that proposal which it seems to me ought to be implemented before any final step is taken which places the currency system 1043 in this country in its ultimate form. If that be not done we may find that the currency system in this country has been settled in vacuo, that it has been settled in a way which may appear suitable to the financiers of this country, but which prevents industry from that recovery to which we in all parts of the House are looking forward. We cannot decide exactly the position which is going to be taken up by the Chancellor until we see the Bill for carrying out the new currency proposals which he has promised. If that Bill discloses a method which is elastic, that will be something to the good. Even then I shall regret that the international co-operation which I think is essential has not been taken before the Bill is put into shape.
It is quite clear that international action can mar any method adopted for dealing with currency. We had an example not very long ago in the action of the French Government in withdrawing gold, which acted very seriously upon the credit of this country. Even to-day the French Government have been withdrawing gold in large quantities from the United States of America, and there are many people who hold that the present industrial conditions in the United States and the unemployment there are in some measure, at any rate, due to that withdrawal of gold from America by the French Government bringing with it inevitably a reaction upon prices and the price level of the country. However that may be, if this Bill provides a reasonable amount of elasticity our criticism will be of a temperate kind; but if this Bill proves to be in effect a Bill to restore the inelastic system of currency which existed before the War then, in view of the dire effects which that must have upon any possibility of industrial development I, for one, shall give it implacable hostility.
§ Mr. SHEPPERSON
I feel that I must apologise to the Committee because I understand that on the average a Member speaks once during the Session, and I am now breaking that rule. I rise for the purpose of saying that in the interests of agriculture I wish to congratulate the Chancellor of the Exchequer, and thank him for the proposals dealing with this question which he has announced in the Budget speech. The view has been expressed by hon. Members 1044 opposite to the effect that what is proposed in regard to agriculture will be a gift, to the landlords, but it is nothing of the sort. The land is the raw material by means of which agriculturists manufacture the produce which they sell, and I submit that that raw material should be no more subject to taxation than the raw material of the cotton industry. Even if hon. Members do not accept the land as the raw material, they must at least accept it as part of the machinery of production, and I think we are entitled to appeal to the Government for the exemption from rates which has been promised.
It is held on all sides of the Committee that it is politically impossible to put a tax on foreign food coming into this country, and, under these circumstances, it is only just that you should treat the British agriculturist in the same way as you treat the foreigner. If you do not tax foreign foodstuffs, I submit that we have a claim that you should not tax the British agriculturist, and we all know that the rates on the land were a very heavy tax. I heartily thank the Chancellor of the Exchequer for the action he has taken in this matter in considering the interests of British agriculture. I also wish to thank him for the relief he has given to agriculture with reference to the Petrol Duty, and for having granted the same concession to the fishing industry. I was present when the hon. Member for Burslem (Mr. MacLaren) was speaking, and he said that the Conservative party hoped to collar the agricultural vote. I hope that expression used by the hon. Member will be repeated before every agricultural audience in the country, and then the electors will realise, from what he has said, that the Conservatives are out for the agricultural vote. I do not know whether it is a clerical error or not, but I read that it is proposed that the reduction of agricultural rates should not take place until October, 1929. I hone that is an error and that what the right hon. Gentleman really means is October, 1928. If his proposal refers to 1929 in the case of agriculture, I press neon him to alter it to 1928. I can assure the right hon. Gentleman that agriculture requires that help this year and at once, and I ask him to make it apply next October. I would like to remind hon. Members that the agriculturist is different from all other 1045 producers, because he produces one year and sells his produce the next year, and consequently he has to wait a whole year before he gets his returns. For these reasons, I ask the right hon. Gentleman whether it is not possible for him to make this remission of rates to agriculture apply in 1928.
§ Mr. SAKLATVALA
I hardly need offer any detailed comments on a Budget which I look upon as a very characteristic capitalist Budget. If I honestly had any alternative capitalist scheme which I could offer as being of value to the suffering masses and the unemployed workers, I would give up Socialism and follow that path, but I do not see such a way open to me at all. I should like to draw the attention of the Chancellor of the Exchequer, however, to one little point which has escaped the notice of almost all the speakers in the Debate. I submit, without any ill-feeling on my part personally, that, if certain items which are imaginary and non-existent are introduced as assets into the balance sheet of a company, the directors are guilty of deceiving the shareholders, and they may be dealt with accordingly. On page 6 of the Financial Statement issued this morning, in Table V, the Chancellor of the Exchequer holds out the hope to this country that there is roughly £2,000,000,000 due to Great Britain from other nations of the world. He has arranged with the Colonies to get interest, and some of them have a Sinking Fund. He has made some arrangement with the others, more or less favourable according to the growth of Fascism or Socialism in those countries. For instance, Italy, naturally, is let off most lightly, and this country may receive the £266,000,000 referred to after some centuries, if we are alive. Then, coming to the assets which are not funded, the Chancellor of the Exchequer shows the dishonest claim of Great Britain put forward against Russia for an amount of £887,000,000 odd. [HON. MEMBERS: "Hear, hear "] If all those cheers meant Russian gold, you are quite welcome to it, but, by merely putting forward a vexatious and false demand on the people of Russia, you are not doing them harm, but are deliberately deceiving the poor people of Great Britain into the belief that they 1046 are the owners of these assets, when you all know that you are not the owners of these assets and are not morally entitled to a penny piece out of them, and that by all your bluff and warlike preparations you are likely to lose a few more hundred millions in attacking Russia than receiving those £800,000,000. The Soviet Government have time after time allowed the British Government to understand that 95 per cent. of the people of Russia were not only not parties in incurring any such debt but have not the slightest knowledge of it. If you were dealing with autocratic Tsars and Grand Dukes, it is ridiculous to make the people of Russia answerable for such imaginary debts from which they had no benefit. But over and above that, the people of Russia and the Soviet Government have time after time rubbed it into you that you have done damage in their country, especially the Chancellor of the Exchequer, who actually embezzled British munitions and passed them on to Denikin and Koltchak in order to create damage in Russia, and he knows very well that if honest accounts are taken on both sides, Great Britain has to pay a few hundred millions rather than deceive the world that Great Britain is entitled to receive £800,000,000.
There were one or two small points that the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was very wisely and pompously putting forward. He said, for instance, that these accumulations of the Chancellor, collecting money this year and spending it in 1929, were an unprecedented thing. I think this sort of jugglery is practised under the capitalist system. It is not the right and proper thing to do, but it is done. For instance, under the insurance scheme when the men, the masters, and the Government pay their contributions, the revenue is collected in a certain time, but the whole of it is not necessarily spent. It is carried forward from year to year. The right hon. Gentleman drew attention to the Stamp Duties. I rather take the opposite view, and I believe many people of experience of commercial gamblers will too, that just as the bulls can stampede the market so also can the bears, and that after every boom in shares will follow the ruination of hundreds of 1047 thousands of families who will rush back to sell their shares for as many shillings as they paid pounds, and all the time the Chancellor will be gathering the Stamp Duty out of it. So this sort of quibbling argument does not impress me as eternal wisdom put forward for the benefit of the working-classes.
If I had my way—and, though it may look ridiculous to put it forward to-night, I am still not without hope that I shall have my way some day—a real economy could be effected in the estimated expenditure of £805,000,000 by cancelling that stupid and unjust item put down as £304,000,000 for National Debt service interest and £50,000,000 for Sinking Fund. It is a ridiculous and stupid capitalist method of keeping accounts. It is a most stupid thing that a nation pretends to be in debt to itself and that a costly machinery is kept up in order to collect money from the nation and redistribute it to them. The nation pretends to appear in the eyes of the world as a most heavily taxed nation by which it pays taxation of £800,000,000 and takes back nearly £400,000,000 and redistributes it among the same taxpayers. The whole thing is nothing but a deception.
The Government might to-morrow pass a law making it compulsory, first by taking an assessment of the wealth as well as of the income of every citizen in the United Kingdom, and in proportion to each one's wealth and in proportion to each one's income, on a sliding scale, for every citizen, even those possessing £100 of wealth, to bear the burden of the National Debt. Every citizen could be compelled to hold a script and everybody holding that script might pay to himself or herself five, six or 16 per cent. interest according to their own ability. At any rate, this item can easily be put out of this Budget. It is nothing but a national deception and an international deception.
In regard to other items—the Army, Navy and the Air Force—it is no use talking about economy. Our Conservative friends desire to talk about economy by dismissing a few more clerks from public offices. They will have their economies there, but they will have to consider alternative schemes of work, 1048 road construction or something, for their clerks or give them unemployment benefit, or give further subsidies or reliefs, which are a disguised form of subsidy, to employers on their behalf. Another item of economy could be brought about if you altered your Imperialist policy, if you gave up terrorising the Egyptians, if you gave up the shooting of people in Bombay, if you left India and China alone, and gave up your mania for grabbing everybody's land in this world, and if you gave up that false pretence of being trustees to guard thousands of miles of seas, and if you wiped out air armaments and similarly made a peaceful proposal to the various nations in the world. By merely changing your foreign policy of grab and robbery of other people's property in Africa, China and Egypt, if you will give up that policy, you can save £100,000,000 under these items of armaments very easily. It is in this way that the expenditure of this country can be brought down to about £300,000,000. Then you will have ample means to amplify the earning powers of the workers as well as putting forward schemes of social amelioration, of education, and even of expanding the industrial life and earnings of the nation.
On the other side of the Budget, I find that this country is capable of producing £812,000,000. Out of that, you might lose £23,000,000 which you are exacting now as taxes on food. You might very probably and quite rightly receive less on Income Tax. As soon as you gave up redistributing this £350,000,000 to the people of this country from whom you first collect it and to whom you redistribute it, probably on this basis, you might have a revenue of £700,000,000. You could improve on it, if my hon. Friend the Member for Bridgeton (Mr. Maxton) would just make a slight alteration in his surtax scheme, and, instead of fixing, a limit of £500 or £2,000, would make a substantial surtax, not of 2s. but of 12s. or 15s.
§ Mr. MAXTON
This is a matter of considerable importance. I hope he will not attribute to me any limit like that.
§ Mr. SAKLATVALA
I was only giving the hon. Gentleman an opportunity to put forward what was in his heart. By land valuation and by other schemes 1049 the capacity of this country for annual national revenue is very nearly £1,000,000,000, and if the country can raise that sum from the profits of industry and land valuation even under the capitalist system, and you wipe out this fictitious National Debt and Sinking Fund and do away with £100,000,000 on armaments, then with the proved ability of the working classes of the country to produce the finest quality of goods, this country as an industrialised country can become a happy home of well-fed and well-kept people, men, women and children. Though perhaps we shall have a few less magnates, bankers and financial experts, yet we shall have really a country filled with an industrial population which on fits own industrial merits can lead a life out of the slums into beautiful dwelling-houses and a life of plenty, comfort, and of social and cultural amelioration instead of the present miserable system.
§ Motion made, and Question, "That the Chairman do report Progress and ask leave to sit again," put, and agreed to.—[Commander Eyres Monsell.]
§ Committee report Progress; to sit again To-morrow.