HC Deb 25 April 1929 vol 227 cc1085-137

Order for Second Reading read.

The FINANCIAL SECRETARY to the TREASURY (Mr. Arthur Michael Samuel)

I beg to move, "That the Bill be now read a Second time."

This is the first of the two Finance Bills which are to give legal sanction to the proposals made by my right hon. Friend the Chancellor of the Exchequer before the House in his Budget Speech, and debated on several occasions during the last 10 or 12 days. This, the first of the two Bills, is intended to make the revenue safe. The second Bill will be necessary in order to deal with the complicated arrangements which are required to give effect to the changes which will not come into operation until later in the year. The House will notice that there are no new taxes in this Bill, and I cannot conceive a Bill less calculated to arouse controversy than this one. It will play its part in putting into effect a sound Budget, and it contributes a stimulus at many points to industry. At the same time, it takes a long step towards a free breakfast table. There are two Clauses in this Bill which, I am sure, will obtain complete assent in every quarter of the House—I mean the Clauses dealing with the abolition of the Tea Duty and the Railway Passenger Duty.

There are five effective Clauses in the Bill, but I do not propose to weary the House by going through them at any length. The first one deals with Income Tax. It does not alter anything which appeared in a similar Clause last year, except in a very trivial way. It drops certain temporary provisions for which the need has now expired, because their work has been done. Those two temporary provisions refer to the years 1927–28, and 1928–29, and as their work is now at an end, they drop out. I listened with great care and enjoyment, as everyone does, although all may not have been in agreement with him, to the speech of the right hon. Member for Central Edinburgh (Mr. W. Graham) in dealing with the Income Tax question last Monday. One or two points stood out in that speech, and I would like to make some observation upon them. He used these words: The other side is the side of industrial savings, that is, the amount which is available to-day for all kinds of industrial development calculated to increase employment. He went on to say: As industry and commerce recover, these savings will increase."—[OFFICIAL REPORT, 22nd April, 1929; cols. 657–8, Vol. 227.] I want to deal with the points to which he referred, but not in a hostile spirit. I agree with every word he said. I am glad he said it. It is better that he should say it than I. If I had said it, some would have remarked, "Well, Mr. Samuel is a Conservative." Here we have a member of the Opposition saying something with which I am in entire agreement. Let us see exactly where those observations lead. I accept the figure which the right hon. Gentleman the Member for Central Edinburgh quoted. He took the Report of the Colwyn Committee which was set up in 1924, and he pointed out that the Colwyn Committee arrived at a figure of £450,000,000 a year as the amount of the national savings. I agree with the right hon. Gentleman that £450,000,000 a year have been saved in the opinion of the Colwyn Committee, and have been saved for the last five years. I want to draw the attention of the House, and especially of Members on our side, to that fact. Here we have a kind of super-Sinking Fund going on in addition to the Sinking Fund for the repayment of debt set up by my right hon. Friend the Chancellor of the Exchequer. We are filling in the pool of industrial savings. Five years at £450,000,000 a year means that we have during the past five years added to the general pool of the assets of the nation £2,250,000,000. I had not realised it until the right hon. Gentleman put it in that form the other day. I hope the country does realise that we have added in five years to the pool of wealth in this country £2,250,000,000.

Mr. KIRKWOOD

The workers have done it.

Mr. SAMUEL

We have all done it. We are all workers. We have, as is well known, a War debt of something like £7,000,000,000. Part of the debt which now exists was pre-War, but I think I am correct in saying that, taking a round figure, the War debt is somewhere about £7,000,000,000. We are paying it off by a Sinking Fund, and yet we are all the time replacing wasted assets, wasted as a result of the War to the tune of £7,000,000,000. We have, according to the right hon. Gentleman's own showing, with which I agree, based on the Colwyn Committee's Report, put back into the pool of the national wealth £2,250,000,000 during the last five years—a very fine and very healthy position.

Let me take the House a little further, and let me appeal to hon. Members on my side to follow this line of thought. What stronger argument can there be, what better proof can there be of the wisdom of the country continuing this process under a Conservative Government? Let us have another 10 years of savings at the same rate as those cited by the Colwyn Committee, supported by the right hon. Member for Central Edinburgh and by me—and I do not think that we should be on the side of extravagance in saying that £450,000,000 a year is now being exceeded judging by the overseas trade balance, and seeing that our export trade is better. If we go on for another 10 years saving at the rate of £450,000,000 a year, making £4,500,000,000 added to the amount which the right hon. Member for Central Edinburgh has admitted, and which I agree was £2,250,000,000, you have there built up a fresh supply of assets, increasing the national wealth by approximately £6,750,000,000 or about the same figure as the debt due to the War. What is the result? The right hon. Gentleman said: As commerce and industry recover, these savings will increase. Industry and commerce are recovering, as shown by the various indices of national prosperity and these savings are increasing. I draw the attention not only of the House, but I shall call the attention of my own division to that fact. No prudent elector can wish to alter that condition of affairs by some untried nostrum which might upset our power to save money in that way. Electors will prefer to continue a state of things which has permitted us to save £450,000,000 a year. They will prefer leaving a Government to continue the same conditions which have brought us to the improved positon in which we find ourselves. This Budget will help towards that end.

There was some reference on the last occasion to the relative positions of indirect taxation and direct taxation. Although this is not quite so contentious as the point I have just made, seeing that Income Tax and Super-tax, which are dealt with in this Bill, are simply and purely direct taxation, I will ask the House to let me deal briefly with the relative position of indirect and direct taxation. I am not making a debating point, but merely trying to make a plain statement of fact. In 1913–14 indirect taxation—I will leave out decimal points—was 42 per cent. of the total taxation, and direct taxation was 58 per cent. In 1924–26 the figure of indirect taxation had fallen to 33 per cent., and direct taxation was 67 per cent. In the current year 1929–30, if you include those taxes which are indirect taxes, but are practically no burden on the poor, such as oil, betting, silk and the McKenna Duties—although, of course, I know they have every right to take advantage of purchasing the goods on which these taxes are placed, still these taxes are theoretically indirect—indirect taxation is 35.61 per cent. That is the total gross percentage, and if you take off these theoretically indirect taxes which I have just mentioned, amounting to 3.77 per cent., you have to-day indirect taxation 31.84 per cent.—the lowest figure on record—as against direct taxation 64.39 per cent.

Let me take again a figure on rather broader ground in order to answer those who think that the direct taxpayer is not paying his due share. The figures are 31.84 per cent. for indirect as against 64.39 per cent. for direct, or adding the theoretical indirect taxation, 35.61 per cent. as against 64.39 per cent. Thus you have the direct taxpayer paying nearly twice as much as the indirect taxpayer. Even then the picture is not complete. It does not show how heavy the burden is on the shoulders of the direct taxpayer. Although the direct taxpayer is, according to these figures, paying 65 per cent. as against the 35 per cent. of the indirect taxpayer, it must not be forgotten that in practice the direct taxpayer pays also indirect taxes, whereas a large proportion of the indirect taxpayers do not pay direct taxes at all.

If, as I understand from the speech of the right hon. Member for Central Edinburgh, it is the intention of his party to impose more rigorous or even more vindictive taxation upon the direct taxpayer, I would ask him in fairness to look at the financial statement on page 18 of White Paper No. 84. Out of a total of receipts from taxation of £666,000,000, direct taxes—Inland Revenue taxes, which comprise Income Tax, Super-tax, Estate Duty, Stamp Duty, Excess Profits Duty, Corporation Profits Duty and Land Tax—none of these are indirect taxes—amount to no less than £412,000,000. The balance of £250,000,000, which is indirect taxation—Customs and Excise—is borne not only by the indirect taxpayers but also by the direct taxpayers. Consequently the direct taxpayer is not paying less than his full measure of contribution towards the general expenditure of the nation.

When we look at the taxation of necessities and comforts, sugar, tea, coffee, cocoa and matches, we find that when the right hon. Member for Colne Valley (Mr. Snowden) left office, the amount raised was in the neighbourhood of £30,700,000. It is now £20,000,000 under a Tory Government. In 1924–25, 4.43 per cent. of our total tax revenue was derived from the necessities and comforts of the people. To-day the proportion is 2.91 per cent. That is the lowest figure on record.

I now pass to the second Clause of the Bill, which deals with the Betting Duty. I do not think I am justified in wearying the House by going over the points of that discussion again, and I merely draw attention to the fact that the Clause deals with the extinction of the turnover tax on Betting Duty. I will add something which has not yet been said, and that is that the Exchequer will benefit, by the saving on administration, through the extinction of this Duty, to the extent of £65,000 a year. The third Clause deals with the repeal of the Railway Passenger Duty. The capitalised value of that duty will be spent on modernising railway transport. Here you have the effect of the Budget giving a stimulus to industry. The money will be spent on such work as improvements in port equipment and in terminal facilities, improve- ments in the organisation of goods yards, and in the alteration of permanent ways and bridges in order to allow them to carry heavier rolling stock. Here we have a virtuous circle of benefit arising out of the repeal of the Duty. There will be a beneficial stimulus to the production of material for the purpose of these railway improvements. What is more, you will increase potential employment in an industry which already gives a livelihood to 600,000 men and their families.

Clause 4 deals with hops and merely continues the duty for another four years, and makes some slight alterations in the method of fixing the duty on hop oil, and allows duty on warehoused hops to be charged on delivery weight. Beyond that there is nothing to call for comment. Clause 5 abolishes the Customs Duty on tea and removes a burden of £6,200,000 off the shoulders of the poor. I have now given a short review of the five Clauses of the Bill. I assert without contradiction that there is nothing in the Bill to invite an adverse vote. The Bill will be welcomed in the House and in the country as giving effect to a policy which is based upon sound statesmanship.

Mr. DALTON

The hon. Gentleman in his apologia for this Bill said that he thought no prudent elector would desire to change a condition of affairs under which he, in association with the present Chancellor of the Exchequer, determined our financial policy. My mind goes out to certain parts of the country where, I can imagine, a large number of prudent electors will display their prudence in exactly an opposite direction to that which the hon. Gentleman imagines. I think the view will be taken by them that it is very imprudent to retain in office a Government which, at the end of five years, has left the finances of the country in such a miserable condition as I hope to show they are in now. The hon. Member said that one of the great merits of this Finance Bill was that it imposed no new taxes. I venture to say that we shall not get our national finances into right order until certain additional taxes and increases of existing taxes have been imposed. One reason why our national finances are in their present unsatisfactory condition is precisely because certain people have received remissions of taxation, and that the revenue has thereby been depleted with very unsatisfactory results.

The Financial Secretary said that this was a Budget which would pay its own way. It is paying its own way at the expense of the Sinking Fund, and I think we shall find, when the year is up, that once more there have been grave underestimates of certain branches of expenditure, particularly the National Debt charges. It is clear that unless the Bank Bate is soon lowered, of which there is no immediate prospect, it will be found that the cost of interest on the Floating Debt will again, as last year, be very-much above the estimate. The margin in this Budget is a surplus of only £4,000,000, assuming that the Estimates are correct. I think it likely that that £4,000,000 will be more than swallowed up by this one cause of under-estimating alone. The hon. Member, of course, made much play with the repeal of the Tea Duty. He said it was a long step towards a free breakfast table. It is also rather a slow step. In 1924 my right hon. Friend the Chancellor of the Exchequer in the Labour Government cut the Tea Duty in half by reducing it from 8d. to 4d. We have had to wait five years in order to get the remaining 4d. taken off. It has been publicly stated on many occasions that, if the Labour Government had remained in office, this repeal would have taken place not in 1929, but in 1925. Therefore this step is a little belated. The Liberal party, of course, promised a free breakfast table as long ago as 1895, in the well known Newcastle programme. Perhaps this is even more belated in relation to the promise of that time than in relation to the performance of the Labour Government five years ago.

The Chancellor of the Exchequer, who I see is not present, committed a historical inexactitude in his Budget speech, when he said that there had been a Tea Duty since the days of Queen Elizabeth. I know that the Financial Secretary is a keen student of history. Queen Elizabeth, as is well known, died in 1603. I find on consulting the authorities that the first reference to tea in a taxation Statute is in 1660. That is according to William's "King's Revenue," a well-known reference book on the subject, and in Buxton's "Finance and Politics," it is stated that it was not until nearly the end of the 17th century that tea was first taxed. The Chancellor of the Exchequer therefore, in small matters as in great, is somewhat inaccurate, and in this case he is wrong to the extent of more than half a century. Perhaps the Financial Secretary will look up the facts in order that we may get the position correct from a historical point of view. However that may be, it is indeed a solemn thought that we shall probably never again discuss the taxation of tea in this House. I am sure that future Governments, after this step has been taken, will never again seek to impose the tax A Labour Government would not desire, a Conservative Government would not dare, and a Liberal Government, which ex hypothesis is impossible, would not be able, to do so. In our financial debates of the future, there shall be no more tea.

I wish to raise a further question about the taxation of food. Why is it that coffee and cocoa are still to be taxed? In the past it has been a general practice to associate movements of the Tea Duty with corresponding movements in the duties on coffee and cocoa. For example, my right hon. Friend in 1924 swept away a considerable part of the taxes on these other foods and also, of course, on sugar, and although, as the Chancellor of the Exchequer rotundly informed us in the Budget speech, there are Gladstonian precedents for the independent treatment of tea, is it not rather hard on the people who grow coffee and cocoa, and especially our fellow citizens in other parts of the Empire, that they should be subject to what they will regard as unfair competition on the part of tea? Tea is to a great extent a substitute for coffee and cocoa, and if it be wholly untaxed, as it rightly is, coffee and cocoa will be prejudiced to that extent. It appears to me that there is no reason at all why the Government should not have swept away all the remaining taxes on coffee, cocoa and chicory. It could have been done at the cost of only £1,000,000. The Government could afford £1,000,000 to the brewers through the readjustment of the licence duties, and if they could afford that, why could they not have afforded the £1,000,000 necessary out of their prospective surplus of £4,000,000 in order to clear away the remaining taxes on the other foods competitive with tea?

I would like to draw the attention of the Government, who have often talked about Imperial preference, to the fact that as long as the duties on coffee and cocoa remain while tea is duty free, they are taxing the producers of coffee and cocoa within the British Empire, while they are allowing tea grown outside the Empire to come in untaxed. They are, therefore, giving a form of inverted preference to a number of growers outside the British Dominions. I submit that the proper course would have been to sweep away the whole of these additional duties on tea, coffee, cocoa and chicory, from whatever source they come.

With regard to the reduced Licence Duty, it has been argued by some that this benefit will inure, not to the brewers, but to the licensed victuallers.

Sir BASIL PETO

May I ask your advice, Mr. Speaker, whether we are entitled to discuss all the matters included in the second Finance Bill of 1929, as well as those in the Bill now before the House?

Mr. SPEAKER

I do not think that the House should be precluded from discussing the whole financial position of the country. I think that they ought to be able to do that, in spite of the Finance Bill being divided into two.

Mr. DALTON

I should like to say, by way of comment on the point which the hon. Member has raised, that these matters were dealt with as a whole in the Budget speech, and the Licence Duties are a part of the financial proposals of the year and of the Conservative party's electioneering apparatus for next month. It has been urged by certain apologists of the Conservative party that the licensed victuallers, and not the brewers, will get the advantage. But I read in last week's "Sunday Times," a paper which gives more steady support to the Government than most Sunday papers, that the City Editor was surprised that brewery shares had not yet gone up because, in his judgment, owing to the large number of tied houses in the country, this benefit is really going into the brewers' pockets. That is a very in- teresting authority which can be quoted against any statement to the contrary.

There is a small point arising out of this to which I should like some answer. Why is a differentiation made between England and Scotland with regard to this licence reduction? Why should the Scottish licensees not be placed on the same footing at the English licensees? I understand that there is considerable feeling in some parts of Scotland that the adjustment has not been made fairly, and that Scotland has not received corresponding advantages with England. It would give some reassurance if the Government gave a promise to make a corresponding reduction in the case of Scotland. I see that one of the representatives of Edinburgh is anxiously supporting the point of view that I am submitting.

Sir PATRICK FORD

On a point of personal explanation, may I say that I think that the hon. Gentleman is wrong. The real discrepancy is in the question of the off-licence, and not the on-licence.

Mr. DALTON

The whole adjustment of duties in England, of course, is dependent upon the fact that certain advantages are given in respect of on-licences, and other advantages in respect of off-licences. In Scotland, I understand, there are no corresponding advantages.

Sir P. FORD

The trouble is really a discrepancy with regard to the treatment of off-licence holders.

Mr. DALTON

This is a matter which I am quite content to leave to Scottish Members to elaborate in detail, but rumours have reached me that there is a feeling on this subject in Scotland, and I thought it my duty to refer to the point in order to give the Financial Secretary an opportunity of explaining what is to be done for Scotland in the matter.

Captain FRASER

When the hon. Gentleman is representing this feeling in Scotland, is it his desire that this concession should be extended to Scotland?

Mr. DALTON

I am not expressing any view; I am only pointing out the inequitable treatment. My view is that this reduction of licences is a dole to the brewers, and ought not to be embodied in the Budget at all. The point that I am putting is that there is a difference of treatment between England and Scotland, and that it would be helpful to know why this difference exists and if it is intended to continue it.

Captain FRASER

rose—

Mr. DALTON

Neither the hon. and gallant Gentleman nor I are representative of Scottish constituencies, and this matter might be left to Scottish Members to continue.

Mr. KIRKWOOD

They are capable of looking after themselves.

Mr. DALTON

The effect of the abolition of the Tea Duty upon the cost of living is exceedingly small. It has been estimated by the Colwyn Committee that a penny a pound on or off tea is worth only 2 per cent. in terms of the cost of living index number. Consequently, if the price of tea is reduced by 4d. a pound as the result of this remission, it will mean only 8 per cent. in terms of the cost of living index number. In other words, if the whole of this remission is passed on, it will not reduce the cost of living by even one point. That reinforces the argument that the food duties should be dealt with as a whole, and that they should all be swept away, including not only tea, coffee, cocoa and chicory but, much more important, sugar. A penny a pound off the price of sugar, in terms of the cost of living index number, is worth nearly two points on the scale, and unless we can get the Sugar Duty repealed as well, the effect upon the cost of living will be very slight. Putting it another way, it was estimated by the Colwyn Committee that the burden of the Tea Duty at 4d. a pound on an average family is something between 11s. and 12s. a year. That, of course, is a very small amount indeed in comparison with these other charges. We are glad that this burden should have been taken off—

Sir B. PETO

rose—

Mr. DALTON

I am glad that I am exciting so many hon. Members to desire to carry on a conversation, but I hope that I am not discourteous in not giving way, because if I did, we should never get on. My argument is that this remission of the Tea Duty is a very small contribution to the reduction in the cost of living for the great mass of the people, but as a very small contribution, we support it. We would ourselves, however, have done the same thing four years ago instead of waiting until now, and we would have supplemented it with a large number of very substantial remissions which the Government have not given. The Financial Secretary used various figures designed to show that the direct taxpayer was bearing a very large part of the tax burdens of the country, and that the indirect taxpayer was being let off comparatively lightly. I was astonished at some of the figures which he quoted, and I should like to go into the matter a little more in detail. The hon. Gentleman went back to 1913 for a comparison. That is rather ancient history. A more instructive comparison would be to go back to the period immediately after the War—1918–19, and to compare the position now with the position as it was in the first year of peace. If this comparison be made, it will be found that, whereas the poorer section of the community are more heavily taxed now than they were then, the richer sections are less heavily taxed since that year. During this time we have had a succession of Coalition and Conservative Governments in power, with only one brief year of a Labour Government.

During this period the policy of the Coalition and Conservative Governments has been to increase taxation upon the poorer section of the community, and to diminish it upon the richer section. That can easily be proved by a few figures, which again I quote from the Colwyn Report. Comparing 1918–19, the first) year after the War, with 1925–26, the last year for which the Colwyn Committee collected information, and which represented the position after my right hon. Friend's Budget, we find the following. Taking a man with £100 a year, whereas in the first year he was paying 11 per cent. of his income in taxation, in the second year, in spite of my right hon. Friend's remissions, he was still paying 13 per cent. A man with £150 a year was paying in the first year 10.2 per cent., and in the second year 12.7. A man with £200 a year was paying in the first year 9.1 per cent., and in the second year 11.3. These figures, which take account of both direct and indirect taxation, show that the poorer sections of the community were in 1925–26 paying a larger proportion of their income, even after the remissions of my right hon. Friend which, of course, considerably improved their position, than they were immediately after the War.

If we pass to a man with £2,000 a year, we find that whereas immediately after the War he was paying 28.1 per cent. of his income in taxes, in 1925–26 he was paying only 19.3. A man with £20,000 a year, who immediately after the War was paying 52.3, was in 1925–26 paying only 48.7. The richer sections of the community are paying a smaller proportion, and the poorer sections are paying a larger proportion, after seven years of peace than they were on the morrow of the War. That is an illustration of the way in which the tax system of the country has been handled by Coalition and Conservative Governments. The only lightening of this increased burden on the poorer section during this period was performed in 1924, when a large part of the food taxes was swept away. I do not attach very great importance to percentages of direct and indirect taxation, unless one is careful to explain what is included, and I gather that the hon. Gentleman shares my scepticism, although he endeavoured to use certain figures in such a way as to suggest that the direct taxpayer was paying at least his fair share, if not more. If one desires to make any comparison at all, a convenient plan is to take, on the one hand, Income Tax, Super-tax, and Death Duties, the principal direct taxes, and, on the other hand, the Customs and Excise, and leave the others out of account, partly because they are small and partly because their character and place in the classification is not clear.

Taking taxes on that classification, I find quite different results from those indicated by the hon. Gentleman. I find that in 1924–5, immediately after the introduction of my right hon. Friend's Budget—although, of course, the full effect of my right hon. Friend's reductions in taxation did not appear till the subsequent year, so far as the revenue was concerned—the amount of direct taxation was £396,000,000 and of indirect £234,000,000; that is to say, direct 63 per cent. and indirect 37 per cent. If we now come to the last year for which we have completed records, 1928–9, we find that the direct taxation has fallen to £374,000,000 and that the indirect taxation has gone up to £253,000,000; and in terms of percentages, the direct percentage has come down from 63 to 56 per cent., and the indirect has gone up from 37 to 44 per cent. Let me add that the result of this examination would be even more unsatisfactory from the point of view of a proper balance between the two kinds of taxation, were it not for the double phenomenon to which the Chancellor of the Exchequer referred in his Budget speech, namely, the failure of beer and the harvest of death. Had it not been for the diminution in the consumption of beer and the increase in the death rate among wealthy people, the balance would have been even more adverse to the indirect taxpayer than it is.

Having examined some of the most recent publications issued from the Inland Revenue, my feeling is that, as I said at the beginning of my remarks, we shall not get the national finances of this country into a satisfactory condition until we have made a very considerable re-adjustment of the comparative burdens borne by different sections of the community; and here I entirely agree with the speech of my right hon. Friend the Member for Central Edinburgh (Mr. W. Graham), which was referred to by the Financial Secretary. The hon. Member spoke at great length about the additions to savings that have been made in the last few years, and he said that they were calculated to promote employment. The calculations are very approximate, however, because unemployment, as we know, is still over a million and a quarter. Therefore, it would appear that mere savings are not enough to promote employment, and the hon. Gentleman will have to try some rather more carefully contrived policy than merely creating a state of affairs in which some people have such a large income that they cannot spend it all and, therefore, invest it in one form or another, many of the forms being of no direct advantage to the community at all.

The last Inland Revenue Report, to which I have referred, contains some very interesting figures, and I want to look at some of them in relation to the burdens of taxation which are borne and which, in our view, should be borne, by-various sections of the population. First of all, we have figures in regard to incomes, and we have, in particular, the figures relating to the Super-tax. The latest figure in the Inland Revenue Report for Super-tax assessments is for the year 1926–27. Of course, the hon. Gentleman knows as well as I do, and indeed better, from his intimate association with the Treasury officials, that there is a lag in the Super-tax assessment, and the last year for which we have information is 1926–27. But this is an interesting year for this purpose, because that was the year of the General Strike and the miners' lock-out; that was the year, in other words, in which there was a greater amount of poverty and misery and low economic conditions in this country than for many years before. None the less, we find that the increase in the number of large Super-tax payers was not checked in that year but went steadily on; and with regard to the richest section, those who have more than £100,000 a year, we find that there were in that year 147 such fortunate people, who divided between them £29,500,000 of income, which works out at an average of over £3,800 a week each. This fortunate group of people was more numerous and richer in 1926–27 than it had ever been before, and that is a fact which should make us reflect upon the great ease with which these huge incomes go on rolling up, even although the general economic condition of the country may be such as it was in that year.

The total amount of Super-tax charged upon the Super-tax payers as a whole—I take again the year 1926–27—was £54,000,000 on a total Super-tax income of £537,000,000. This works out at only 2s. in the £ on an average, in addition, of course, to the standard rate of Income Tax, on this great mass of super wealth. I submit that we have here a group which is not at the present moment paying anything like the full share that it ought to pay towards the revenue of the country, particularly when we take account of a further fact. We get figures for Super-tax, the number of Super-tax payers, and the amount of their income over a period of years, and if that period of years is the period since 1923 or 1924, we have to take account of this further consideration, that the value of money has gone up, that the purchasing power of money has increased, and that the increase in the wealth of this section is, therefore, greater than would appear on the surface. Not only are there more of them, not only do they receive more pounds in a year, but each of those pounds has a greater purchasing power. The enrichment of the richest group of people in this country is very much greater than appears at first sight, and correspondingly their taxable capacity is very much greater also; and, in my view, there is an unanswerable case in favour of putting increased taxation upon this group of people, particularly since they have been enriched by the financial policy of the Government, the return to the gold standard, and the consequent fall in prices that followed that act of policy. [An HON. MEMBER: "Hear, hear."] I am delighted at the agreement of the hon. Member opposite, and I can only infer that the hon. Member is either very public spirited or else just a little below the Super-tax exemption level.

If I turn from the Super-tax figures of income to the very interesting Estate Duty figures, I find there also a tremendous heaping up of wealth and a tremendous heaping up of taxable capacity in the hands of a comparatively small section of the community. The Treasury, generally so full of knowledge and foresight, have habitually underestimated the yield of the Death Duties in recent years. I think it will be found that on six occasions in the past seven years the Treasury have underestimated the yield of the Death Duties, and on only one occasion has their estimate been in error in the other direction. The phenomenon which we are witnessing here is partly to be explained by the steady rise in the total amount of property liable to Death Duty, and particularly by the still steeper rise, with regard to the larger estates, it is partly to be attributed, I think, in the last year or two to the fact that some of the War-profits are beginning to fall in as objects; of inheritance. Some of those who during the War were not active enough to fight, but who were active enough to enrich themselves at the expense of the rest of the community, are now coming into the list of those upon whose estates Death Duties are paid. After a decent interval those who made money out of the necessities of their country are joining those whose names appear on our war memorials in all the towns and villages of the land. The result, from a revenue point of view, is very pleasing, but the result from the point of view of justice is that, in my view, something less is being done than should be done to get a further contribution from these war profits as they make their first transition to heirs who have done even less than those who built them up to deserve them.

I will just give one figure to illustrate again what is happening at the top of the table. In 1925–26, seven millionaires' estates were subject to Estate Duty, and of those seven estates one exceeded £3,000,000; in 1926–27, 10 such estates were taxed, of which three exceeded £3,000,000; and in 1927–28, 15 such estates were taxed, of which four exceeded £3,000,000. Last year—the detailed figures are not yet out—the Death Duties, stimulated, as I suggest, by the falling in of War profits of large amount, touched a new high level. For the first time in our fiscal history they went above £80,000,000 for the year, and I have no doubt that, when the full figures are brought out, the record of the previous year, of 15 millionaire estates, four of which exceeded £3,000,000, will be found once more to have been passed. Some of these statistics may appear to be dull. None the less, my belief is that too wide a currency cannot be given to the class of facts which I have been quoting. There is a tendency now to talk as though the whole country was poor and" could not afford expenditure in various directions, such as housing, better old age pensions, and so on. There is a kind of common form developing, which is encouraged by many newspapers, to speak as though this was such a poor country that it had to cut its coat very narrowly indeed and that it had to turn down all projects for increased social expenditure.

I submit that that is not borne out by the figures in the official publication of which I have been giving a sample to the House. What we see, on the con- trary, is the natural working of the capitalist system under Tory rule. We see an ever widening gap between the increasing wealth of a small minority and the continuing poverty of very large numbers of our people. We see the forces of monopoly, unearned increment, inheritance, and compound interest piling up these large incomes and estates, and we do not see taxation increasing at the rate at which it should increase upon these socially created values and fortunes. It would be straying too far, even from the wide ruling which you, Mr. Speaker, have given with regard to relevance in this Debate, if I were to attempt to develop, even in the vaguest sketch, the alternative policy which my hon. and right hon. Friends on this side would propose to adopt, but I think it is sufficient to say that, whether it is in order to relieve, as it is our intention to relieve, the smaller incomes and the necessaries of life from taxation, or whether it is in order to develop a more adequate scheme of debt redemption, or to develop social expenditure on a more generous scale in certain directions which seem to us to be urgently necessary, for all these three objects we should take the view that increased taxation can and should be levied on the larger incomes and fortunes in regard to which I have been making one or two statistical observations.

5.0 p.m.

Now, if I may pass to the final point on which I wish to say a few words, we ought to look, when we examine the finances of the year, at both sides of the balance-sheet. We ought to consider, not only what is collected in taxation, but to whose advantage the expenditure inures, and at the present time we see that, as has been pointed out in previous Budget debates, the total yield of Income Tax and Super-tax is still falling below the charges for the internal debt of this country, even when the external debt is taken out. I am not passing away from this point, but I am rather illustrating it from another angle, when I quote the observations made by the Secretary of State for War when he was speaking in the Budget debate a few days ago and complained of our inclusion of the Oil Duties in the additions to indirect taxation which had been made during the life of this Government. The Secretary of State for War said: "You have no business to include those Oil Duties among the new burdens imposed by this Government because the revenue from oil is all being spent on de-rating, and therefore it is not a burden upon anybody, because what you pay on oil you get back in lower rates." That was his argument. I may say in passing that the Oil Duties have been collected for some time and that the benefits of de-rating are all in the future, and hypothetical at that; but I leave that point.

I notice, according to this principle laid down by the Secretary of State for War, that it is very proper when you are considering particular taxes to consider also the way in which the money which you get from them is spent; and following out his line of thought with regard to oil and de-rating, I point out to the House that in the current year the estimates show a total yield from Income Tax and Super-tax of £297,000,000 as against a fixed debt charge of £356,000,000, and if we subtract from that fixed duty charge the £33,000,000 which is attributable to the American debt payments, you still get a total of £322,000,000 which represents the debt charge for the internal debt of this country for interest and sinking fund, that is to say, £322,000,000 as against only £297,000,000 which is being collected from the Income Tax and Super-tax payers. Therefore, following the line of argument which was authoritatively expounded from that Box by the Secretary of State for War—and the Financial Secretary to the Treasury who was sitting by and listening did not rise and contradict his right hon. colleague—it follows that this year again, as in previous years, the Income Tax and Super-tax payers, taken as a group, are getting back in interest upon their debt, or in repurchase of their shares through the sinking fund, all and more than all that they pay. If we are to seek their contribution to the revenue, we can find it only in the death duties which they pay when they pass from this unhappy scene to one which we hope may be less unhappy.

I cannot believe that this state of affairs will be allowed by the prudent electors, as the hon. Gentleman calls them, to become permanent. The Debt charges—and this is one of the gravest points of indictment against this present Government—whether in terms of principal or whether in terms of interest, have hardly been reduced at all during the five unhappy years during which the Members of the present Government have adorned that bench opposite. Let me give a few statistics to prove what I say. In 1925 on the 31st of March, the principal of the debt was £7,646,000,000; in 1929 it is £7,501,000,000, a reduction in the principal of only £145,000,000 in five years. And let me say that the principal of the debt is a proper subject for statistical comparison. It is useless for the Chancellor of the Exchequer to say that the principal of the debt is an unimportant thing. It is nothing of the kind. The principal of the Debt is the sum which has sooner or later got to be paid off by the taxpayers of this country, and when the Chancellor of the Exchequer increases the principal of the Debt, as he has frequently done, by conversion of maturing debt at a discount—a practice strongly condemned by the Colwyn Committee in their Report—what he is doing is making a definite addition to the future liabilities of the country—adding to the total sum which the taxpayers have sooner or later to find in order to disengage themselves from this continuing burden. Therefore, I say that we are entitled to make comparisons of the principal of the debt at different dates, and in comparison with what it was when the present Government took office, there has been quite a derisory reduction brought about. We have paid money into the sinking funds, but in great part these sinking funds have been neutralised by the thriftless and unsound conversions which the Chancellor of the Exchequer has carried out, largely due to the fact, to which he himself has been unwilling to face up, that the national credit of this country is at the present time very low indeed, and does not even yet stand on a 4½ per cent. basis.

If I take the interest charge, the position is even worse. Whereas in 1925 the annual interest charge on the debt was £308,000,000, in 1926 it went up to £319,000,000 owing to the action of the Government in provoking a General Strike and thereby disorganising the trade and commerce of the country; in 1927–28 it had come down only to £314,000,000, and last year, 1928–29, it still stood at £311,000,000, £3,000,000 a year higher than in 1925–26. This is a good example of the complete failure of the Government to deal with the Debt problem. The Debt problem might invite a long digression, but all I wish to say here is that, the further we stand away from the War, the clearer two things become; first of all it becomes ever clearer that those who immediately after the War tried to persuade the country to undertake some great and courageous operation of debt repayment in order that we might not be weighed down all the years of our lives with the debt burden—and the party with which I am associated did take that line—were abundantly right, and that at that time in 1918, 1919 and 1920, we should have gone boldly forward with a big scheme for wiping off this burden and it becomes more and more clear as the years go by how very tragic was the loss of that financial opportunity owing to the fact that we had, not a Labour Government, but Coalition and Conservative Governments in office. That is one point—

Mr. ALBERY

Will the hon. Member permit me—

Mr. DALTON

No, I cannot let this discussion degenerate into a mere conversation. That is the first point; and I will repeat it. The hon. Member is entitled to take credit to himself for having provoked me to repeat, and in more precise language, what I was saying. It is due to the financial ineptitude and the cowardice of the Conservative party and their Liberal colleagues of that time that in 1918 and 1919 vigorous and courageous steps were not taken by the Government then to wipe out this enormous burden which now hangs round our necks. There is no doubt whatever as to the meaning of that statement.

Mr. ALBERY

There is.

Mr. DALTON

If there is, it is not my fault, it is the fault of the intelligence of the hon. Gentleman. The further point which is borne in upon us more and more as time passes is this: that unless there is some speeding up of debt redemption and some great improvement in national credit which will permit profitable conversions to be made—unless these things come about, and come about soon, we are going to have as our most enduring War memorial in this country the continuance of this debt throughout the whole of this present century. War pensions cease with the death of the pensioner, but this War Loan scrip is transmitted, under our laws of property and inheritance, beyond the grave from one generation to another. The prudent electors of this country, who have been referred to more than once during this Debate, will be very imprudent to allow this state of affairs to continue indefinitely throughout the future; and I say in conclusion that the way in which the Government has failed to face up to this problem of debt redemption and debt conversion is yet one more monument of their ineptitude, and yet one more evidence to us, who are endeavouring to win the ear of the prudent elector with the principles of sound finance and with principles of taxation which will be more in accordance with the scientific notion of adjusting taxation in accordance with individual ability to pay and not in accordance with influence in high quarters—it is one more evidence that, when the record of the Government as a whole is placed before the electors next month, their financial record will be one of the strong contributory factors which will bring about the downfall which they have so thoroughly merited by the way in which they have handled the affairs of this country.

Mr. E. C. GRENFELL

I listened with some satisfaction to the speech of the hon. Member for Peckham (Mr. Dalton), because it disposed satisfactorily to him and to his party of one of the chief criticisms which I wish to make of the Finance Bill and of the Budget. I have all along felt that in the Finance Bill the Chancellor of the Exchequer has possibly made a mistake in banking on the continuance of £80,000,000 a year from Death Duties. He agreed with my opinion last year that the fortuitous extra amount of £10,000,000 which he received in the previous year might not occur again; but it did occur again, and he received another £9,000,000 extra from the Death Duties, which helped him considerably to balance the expenditure. In introducing the Budget, the Chancellor of the Exchequer used the simile of the Boat Race, and I will use one of a horse race. I thought he was working the Death Duty horse too hard—that it had won in two races, but, if he brought it out again, it might fail him. He has done so; but the hon. Member assures me—and he evidently speaks with all sorts of inside knowledge—that the Death Duties are going to increase, and that the Chancellor of the Exchequer has probably under-estimated them this year, and that for the future they will be more than £80,000,000. Therefore, in view of the statement made by him, and the charming way in which he referred to the origin of the fortunes which contribute to these Death Duties. I withdraw all criticism of the Chancellor in this respect.

I still maintain what I said last year, when I did not agree with the Chancellor of the Exchequer in not continuing the old Sinking Fund. That I still dispute; but, apart from that, I think the Chancellor of the Exchequer has received too little praise for what I may call the non-advertising side of his last two Budgets. It would have been easy last year to make a Budget which, in view of a General Election last year or this year, might have gained him popularity, but in the most public-spirited way, as a good colleague, he backed up his associate the Minister of Health by giving him the wherewithal to carry out what I believe to be two of the most difficult schemes and yet two of the most proper schemes for restoring prosperity to this country. We have it on the authority of the hon. Gentleman opposite that the de-rating Bill and the other great Bill of the Minister of Health will not catch many votes. All the more credit for the Chancellor of the Exchequer for the assistance which he gave to the Minister of Health in the most loyal manner. I, too, have sufficient faith in the sense of the electors to believe that they will see the advisability of backing the Ministers who have introduced these Bills—Bills which even the other side had to commend, although they attacked the details—and that the voters a month hence will prefer the sound policy of those two Bills rather than believe in the fanciful promises, in party-coloured books, of the two parties opposite.

The Chancellor referred to the first lucid interval for some years, and that is so, because whether we refer to the lockout, as hon. Gentlemen opposite say, or strike, the Chancellor and the Government have had little opportunity of taking the requisite steps to pay off debt in the last few years. It is quite clear that to float loans at a discount must increase the nominal amount of the debt, but the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) is as aware as anyone else that you can only float loans at a price and in a category which will be taken by the public. It is no good trying to float a loan at par or at 99 if the public will not take it, or if other loans are more attractive. The right hon. Member for Colne Valley is perfectly aware of the difficulty which the Chancellor has had in the last six or seven years, and I congratulate the Chancellor on the fact that he has been able, even at any price to fund the enormous amounts of maturing debt which he has funded during the last five years. Whoever fills the office of Chancellor of the Exchequer next year will find that for the first year for many years he has to arrange for the repayment of a smaller amount of debt in the next 12 months than at any time in the last six years, or at any time in the further five years after next year. It is the Chancellor of the Exchequer 18 months ahead who will have to face the provision of more than £150,000,000 a year conversion for four years, but the Chancellor in the next 12 months will have a fairly easy time. And that is due to the fact that the present Chancellor has been able in the last four years to provide these enormous conversion sums.

There is another thing for which I would commend the Chancellor although I think many Members on all sides of the House will disagree with me, and that is his having resisted pressure to continue the Trade Facilities Act. The Trade Facilities Act was an extraordinary Measure devised to meet a time of exceptionally bad unemployment, but now that we have reached a lucid interval I think it is necessary to curtail all these extraordinary Measures. If we are in for a lucid interval let us get back afresh to the old principles, and abolish these extraordinary methods of meeting bad times. One thing I regret is that the Government have not seen their way to abolish the Export Credits scheme. Last year I suggested that it would be wise to abolish these credits. I said they were doing little good, and that individualists or capitalists were able to do the work in better fashion and without loss to the Government. An hon. Mem- ber opposite criticised that suggestion, saying that now, when the Government were at last building up a good business with export credits after many bad years, I, a capitalist, was suggesting that the individualists should reap the advantage. We find that this work has been conducted by the Government at a loss all these years; so far from having made a profit this year they are now making a loss of £90,000 a year, whereas in the previous year it was only £70,000. I believe the staff of that Department comprises over 70 people. That loss of £90,000 a year might now be given up, and the staff, which I presume runs into some expense, might be dispensed with, and individualists who have built up businesses and paying businesses on the same lines should be left to carry on the business without loss to the State. The hon. Gentleman who criticised me last year hinted that I had some interest in a company he referred to. Will he forgive me for saying that I had never heard of it until three weeks before I made that speech.

There is another point on which I would congratulate the Minister, and that is that he has resisted an attempt made in the Press by certain people—with the best intentions, they are wise people—to extend the list of trustee securities. Some years ago Mr. Chamberlain extended the trustee list to Colonial securities, and undoubtedly that has been useful to the Colonies and the Dominions. Now it is suggested by these gentlemen that this list should be further extended to include various industrial securities in England. I cannot imagine anything that would inure less to the repayment of debt than such a scheme as that. I have taken out the amount of trustee securities which existed in previous years. In 1900, counting railway debentures, counting the Colonies, and counting the British Government securities, the amount in which trustees could invest was £1,500,000,000. In 1913 this amount was raised to £2,000,000,000. In 1913 it had become £7,000,000,000, and in the present year it is £8,000,000,000. Can anyone pretend that with £8,000,000,000 there is not a sufficient sum in which trustees can make investments without opening the gate wider and diminishing the attraction of Government funds? Though the greater part of the increase I have men- tioned was in Government securities, I find that trustee securities have increased since 1923 by £375,000,000 of outside securities. It was a plausible temptation which was put forward and the Chancellor is entitled to credit for resisting it.

There is another difficulty from which the Chancellor has suffered, and that is the increase in the value of short money last year. He is inclined to believe that short money may be cheaper in the present year. I am not in a position to criticise his sanguine expressions, though, personally, I doubt its being any cheaper for some little time to come. The hon. Member for Bridgeton (Mr. Maxton), who I regret is not here, made a long speech in which he stated that when he first came into the House he was shy and ignorant of finance, but that he had got over both difficulties. He seemed to think that there is a sort of money trust; that all the bankers get together to see how they can raise the value of money. He said the Bank rate was raised 1 per cent. quite gratuitously. We all agree that a rise of 1¼ per cent. in the value of short money has inflicted a loss of anything from £7,000,000 to £9,000,000 on the Exchequer. But that is not done by a body of gentlemen sitting round a green table because they like it. It is forced on them, and, as the Chancellor said, the rise in the value of short money which has so upset his figures was due entirely to occurrences outside England; it was owing to gambling in America. It is no fault of the Chancellor's and no reflection on British bankers that what is actually a calamity has occurred. I would join issue with the hon. Member's criticism and endeavour to prove that this country has better banks, and more banking facilities for the poorer classes, than any other country in the world.

Mr. KIRKWOOD

If people have no money to bank, what is the use of banking facilities?

Mr. GRENFELL

The hon. Member for Bridgeton referred in his speech to a bank, which he did not name, which was paying 18 per cent. to its shareholders. I looked to see if there were any banks doing that, and I found two or three. I found that in two cases the capital of the bank was, say, £100,000, and the reserve was £100,000, making £200,000, and, there- fore, at 18 per cent., the dividend is only equivalent really to a 9 per cent. dividend. If you were to take the capital and reserve of a bank and were to invest them in 5 per cent War Loan, shut up the bank and merely take your dividends, you would then get 10 per cent. on your nominal capital. If you work it out you will find that that means 8 per cent. extra on the capital, or 4 per cent. on the capital and reserves was paid out for all the banking business that the bank has done. That bank has been in existence, probably, for 100 years. It has the experience of that period, and it has worked up its reserves, and for 4 per cent. extra, which it earns on that capital and reserve, it and others similarly situated carry on the whole business of the country.

I speak with some knowledge of the subject, because, although I am not a banker to-day, I was a bank clerk in my youth, and eventually rose to be manager of two or three small branches in one of the old-fashioned country banks. They are gone now; they have been merged in the big banks. It is often said that the banker to-day is less in touch with poorer people, less in touch with the district, than used to be the case. That is true to a certain extent, but the small old-fashioned banks, in which the partners or managers knew everybody in the district, have gone because they could not have continued under present-day conditions. Such a bank, operating in a small agricultural district, carried all its eggs in one basket, and if any calamity overtook agriculture that bank might possibly be ruined, so inflicting great hardship on the community. If the personal touch has gone since those banks were merged in the big banks, at least we have had a period of safety under the big banks, and, after all, safety ought to be the basis of the banking system.

As far as the facilities offered to the public are concerned, I have been astonished to note how, since I gave up my work in the banking world 30 years ago, the facilities have been extended. To my mind they have been extended far too much. So far from there being a money trust or a bankers' trust there is considerable jealousy between the banks. If one bank opens a branch in a small town or village, the whole five sometimes follow suit. Instead of there being a shortage of accommodation to the public there is rather a superfluity. At the time when I left off doing banking there was one bank in England to every 13,000 people. To-day, I find that, instead of there being 104 small banks, there are only 17 and the number of branches has risen from 2,000 to 10,000. To-day there is a bank for every 4,000 of the population, men, women and children. 30 years ago I think the banking accommodation given to the public was very good, but to-day I am perfectly astounded at the accommodation provided. There are a great many money boxes and small deposits and every facility is given to the poor people.

I have also gone into the question of the difference between the advances made to people and the interest allowed on their deposits, and I find if you work out the balance sheet of any great banking concern you will find that it shows that their profit is under one-half per cent. on the side of their balance sheet. The banks now work on a very small margin and when we consider the facilities offered now to the public by the enormous staff employed by banks and the skill of the managers in investing their money wisely and encouraging trade on a margin of one-half per cent., then I think that some of the theories and schemes for nationalisation will be found to be full of great danger.

The other day, I happened to look at a list of five balance sheets of big banks, and I found that the number of shareholders was 310,000 and the number of clerks employed in one of these banking concerns was 13,000. The number of people employed on the staff of our banks is large and the courtesy they extend to the public is very great. I was asked the other day what has happened to the poor man's bank and why were there not such things at the present day. I have had some experience of the working of poor people's banks. I know of one which failed and another case where the depositors were finally paid. There were two or three other very large banks which endeavoured to manage their affairs with the greatest care, but either by offering too large facilities or too much interest they got into difficulties. Fortunately everybody was paid off through the sup- port given by other banks. The poor man's bank which offers too large an amount of interest or facilities may cause far more harm and would lose far more than the one-half per cent. which is now earned.

I read in one of our leading weekly journals, which is well written, a criticism of the banks in which was stated that they were too safe, and that while many industries have crashed the banks do not. Surely the banks are the backbone and make for the stability of this country, and they compare most favourably with those in any other country. I am fully acquainted with the American and the Continental positions in regard to banking, and I say that the British banks by doing their own domestic business have conferred the greatest benefit on this country.

Miss WILKINSON

May I ask you, Mr. Speaker, if advertisements of banks are allowed in this House? I think the hon. Member is giving the banks a pure advertisement.

Mr. GRENFELL

I hope what I have said will not be interpreted as an advertisement, or as being out of order. I am not connected with any bank of deposit myself, and therefore I cannot be accused of furthering my own interests. I have gone into this question at great length, because I wanted to show that the difficulties in which the Chancellor of the Exchquer finds himself are not due to the banks. The increased rates were forced on the banks by the operation of the law of supply and demand throughout the world.

I will now turn to another subject. I believe I am in order in discussing certain foreign questions on the Second reading of this Bill. Within the last ten days unfortunately a remark was made by the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) which seems to have created a disturbance. I do not understand that it was premeditated, and I believe it was drawn from the right hon. Gentleman by what he considered were the ill manners and discourtesy of the Government Front Bench. If it was discourtesy then it has been apologised for by the present Chancellor of the Exchequer. It is within my own knowledge that in 1924 when the question of the Dawes Loan was under discussion, I went personally to the Prime Minister and told him that as I had some particular knowledge of the subject, as the representative of the City of London, I felt that it was my bounden duty to put my services or my advice and any knowledge which I possessed on the subject at his disposal, and I told the present Prime Minister that I was doing so.

Further, the Prime Minister of 1924 did me the honour of consulting me occasionally. All credit to the Socialist Government of that day for the way they conducted this operation. For the last six weeks the leading men of the foreign countries concerned have been endeavouring to implement the work done in 1924 by the right hon. Gentleman the Member for Colne Valley and the leader of the Opposition Something occurred last week—it was not necessarily anything which had been said by the right hon. Gentleman the Member for Colne Valley—which upset the arrangement which was being discussed in Paris. The engine is off the line, and we should try to put it back again I suggest that for the remainder of this Session nothing should be said from either side of this House which might appear to give any cause for dissension at that meeting in Paris where the representatives of the various foreign countries have assembled. In 1924 what was done was never meant to be a complete job, and an endeavour is now being made to see if what was done then can be placed upon a sounder basis. Any chance word uttered here which might create a bad effect in France, Italy or in Germany would be a misfortune.

Miss LEE

I have not so far intervened in the Debates of this House, because I thought, considering that I was a new and youthful Member, it would be more fitting before making any comment myself that I should hear what the leading spokesmen of the political parties represented here had to say on the Budget which is now before the House. I must confess that this dying House is not exactly a place of inspiration, and I look upon myself more as a chip of the next Parliament which has made a rather precipitate arrival than as one really belonging to the present House.

I listened to the hon. Member for the City of London (Mr. E. C. Grenfell) with interest. The hon. Member, I believe, is a director of the Bank of England, and certainly he is a substantial shareholder in some of the wealthiest firms in this country. I feel that I must make some comment on what he has said. I notice that the hon. Member had nothing but praise to shower on the Chancellor of the Exchequer in regard to the financial proposals for which the right hon. Gentleman has been responsible during the past few years. For the very reason that the hon. Member, representing the wealthy interests of this country, had so much to say in favour of the Budget, I, as the representative of a large industrial constituency in the North, have equally much to say, but of the very opposite nature.

I noticed that the hon. Member for the City of London congratulated the Chancellor of the Exchequer upon not having arranged his financial statement in order to gain electioneering credit throughout the country. I find that statement rather difficult to reconcile with statements which I find, not only in speeches made from all quarters of this House, but in leading financial papers and in papers that usually regard with disfavour the party to which I belong—I allude to such papers as the "Times" and the "Economist." I find that the "Economist" makes a statement to the effect that the Chancellor of the Exchequer, in order to have a prospective surplus and to create a favourable impression in the country, has over-estimated what he might reasonably expect from the Death Duties, the Stamp Duties, the Beer Duty and other sources of income; and he has seriously under-estimated the cost of the Debt charges which the Government will have to face. I make no comment on this. I prefer to wait until next year to see whether the Chancellor of the Exchequer has been justified in his forecast or not. But in the light of such statements it is rather difficult to understand why the hon. Member for the City of London wishes us to believe that nothing has been done by the Chancellor of the Exchequer to put an unduly favourable impression on the Budget for which he is responsible.

I am not here merely to comment on those details. In listening to the Debates in this House, I have throughout been wondering how those things affect the great mass of working men and women in the country. Is there anything in the statement which has been made which may lead us to believe that a glimmer of hope is held out to such people that more employment, better conditions of labour, or higher wages in the future than they have had in the past, will be the result of this Budget? The greatest indictment of this Budget is that it holds out to the great mass of the people of this country absolutely no hope that the years ahead will be any better or brighter for them than the years which have passed. I regret that, because, surely, there could be no greater opportunity than a Budget statement for the Government of this country, if they so desired, to do something to readjust the inequalities of income in this country.

I do not think that anyone so far has disputed the figures that have been given already from these benches, showing that, out of a national income of approximately £4,000,000,000, only some £1,600,000 is paid as wages to the workers of this country. That represents only two-fifths of the total income, and, surely, a Chancellor of the Exchequer who was genuinely concerned to improve the life of the people of this country would have had a very substantial margin, in the remaining three-fifths, in which to readjust the burdens of taxation. I discover, however, that the working women of this country are given, not the substantial readjustment that they were entitled to expect, but, instead, a copper thrown to them in the form of the remission of the Tea Duty, and, seemingly, some hon. Gentlemen imagine that this paltry thing, thrown to them in the last days of a dying Government, is going in some way to restore their feeling of confidence in hon. Gentlemen opposite. My experience recently, in talking to large gatherings of women in this country, is that, while, of course, we all agree that the remission of the Tea Duty is a desirable and long overdue change in our finances, they are saying that, if it had been offered four years ago by the Chancellor of the Exchequer, they might have felt that he was genuinely concerned to do something for us; but to have to have it offered at this last hour, and to find that, in spite of all the poverty, in spite of all the need for money for social services, the Chancellor of the Exchequer can at the same time spare £970,000 for the publicans and brewers of this country, is, I consider, a challenge, not only to the women, not only to the working people of this country, but to every man and woman who has any sense of honour, any sense of civic responsibility, any sense of fair play.

We say to hon. Members opposite that there is only one explanation of this Budget, and that explanation is that, in the eyes of the Chancellor of the Exchequer, the people of this country are made up in this way—the great majority of them are fools, and the remaining minority knaves. That is the only possible explanation of such a Budget as has been put before us, and I can only describe it, and with it the whole policy for which the party at present in office has been responsible, as a mixture—let me choose my words deliberately—I can only describe it as a mixture of cant, corruption and incompetence. These words, I consider, require some justification. I will take the second of them, having particularly in mind the report of the chemical combine in this country, headed by Lord Melchett. I find that Lord Melchett, in making a statement to that company a few days ago, told them that they already have a dividend of over 10 per cent., that they have profits of over £5,000,000, that their profits are on the increase, and that, in spite of all that, in the next year they may look forward to the dividing out of an additional £200,000, which is their little share in the wonderful de-rating scheme of the Chancellor of the Exchequer. I hope that not only this House, but the whole country, will realise what is meant by things such as that, that the present Government have abused the power entrusted to them, and that they have done nothing for those who most deserve relief at their hands. Let us give them all credit for their paltry little remission of the Tea Duty, but let us also remember that in this time of national stress and struggle, they have not omitted to hand over thousands of pounds to some of the wealthiest people in this country. These are some of the issues that will be settled in the next few weeks.

Before concluding, I cannot help referring to another section of the speech of the Chancellor of the Exchequer. In the earlier part of his speech he deplored the coal stoppage of 1926. He informed the House that the subsidy of 1925, and the subsequent trouble in the coalfields, had cost him £80,000,000. May I point out to hon. Gentlemen opposite that the interest on that money alone, even taking it at 5 per cent., a very modest rate, would amount to a sum of £4,000,000; and that sum of £4,000,000, which represents the interest on this money which has been squandered by the Chancellor of the Exchequer—because the industry is not a bit better off than it was before—the interest on this money which has been spent by the Chancellor of the Exchequer in defeating the miners, would have been sufficient to give pensions of £l per week to every one of the 70,000 miners now over 60 years of age who labour in the coalfields. I put it to the House that that is not a matter of sentiment, but a matter of sound business. Hon. Gentlemen opposite profess at this moment to be concerned about unemployment. I put it to them that money spent in that way would not only have done an elementary justice to these aged miners, but would also have made what this Government has always so miserably failed to make, namely, a substantial contribution to the unemployment problem in the coalfields. It seems, however, that before unemployment, before poverty, before any of these questions become for this House more than a matter of fooling and buffoonery, the Government of this country will have to be changed.

In expressing my criticism of this Measure, which seeks to perpetuate the inequality of things as they are, which lacks even an ordinary sense of self-preservation, as it makes little or no provision for developing the resources of this country, and is allowing Great Britain to lag far behind in the race, while America, Germany, France and all the other countries steal ahead, I feel that these matters will never be treated seriously in this House until the Government of this country is changed. Although comfortable Gentlemen opposite may smile, and may be little concerned about these problems, they matter very intensely to Members on this side of the House, they matter very intensely to the great majority of our people outside, and I hope and believe that the Chancellor of the Exchequer, in putting before this House the Budget statement that he has, has made it absolutely certain that, when the Election comes, all honest, honourable citizens of this country will rise in revolt and hound from office this Government which has so misused its opportunities and its power.

Sir P. FORD

It is, perhaps, appropriate that a fellow-countryman of the hon. Lady who has just spoken should be the first to intervene next in the Debate and have the opportunity of congratulating her upon her courageous, spirited, clever and dramatic speech. She has so far moved me that, although I really rose to deal with one point alone, I feel tempted just to touch upon another. The hon. Lady made a very gallant attack upon my hon. Friend the Member for the City of London (Mr. E. Grenfell), and there was also an interjection from a fellow-countryman of mine, the hon. Member for Dumbarton Burghs (Mr. Kirkwood), that, under the present Chancellor of the Exchequer and his predecessors, the finances of this country were run entirely in favour of the rich, and that the man of small means who wished to be thrifty had no chances. I took the trouble to find out the figures that might meet the interjection of the hon. Member for Dumbarton Burghs: What is the good of banking facilities when you have nothing to bank? I would like to point out that the Savings Certificates, with accrued interest to date, amount to £480,000,000, and that, of that total, at least £250,000,000 is held by very small investors. In addition, something like £200,000,000 is invested in building and kindred societies, to say nothing of the Post Office Savings Bank. Let us, therefore, cut out the cant and get back to the facts.

6.0 p.m.

The point that I desired to make was this: I was rather annoyed to think that we were not to have the opportunity of dealing with all the matters in the Budget; there are two Bills. I do not take the view that the liquor trade is an unclean thing, and I do not know of any Government that has done so, unless it has been a parasite on damnation, which I think was the phrase used by the Leader of the Opposition. Tremendous revenues are derived from that trade, and, if that trade is worthy of taking revenues from, you should see that fair play is given in the way that that revenue is levied. I was afraid that I should not be able to make the protest that I wanted to make, but the hon. Member for Peckham (Mr. Dalton) raised the very point that I wanted to raise, and Mr. Speaker ruled that he was in order in touching upon it. I do not want to do more than touch upon it, because it is not in the present Bill. I should like to state as briefly as possible what the grievance is. The on-licence holders in England and Scotland have had certain remissions on their licences. Those remissions have not been made in the case of the off-licence holders, but a concession has been made in England whereby they are allowed to sell small quantities, that is to say, half-bottles, of spirits. The Scottish off-licence holders say that that is not fair to them, because they have always had the right to sell these half-bottles, and, therefore, there is no concession to them. The reason why they have had that advantage over their fellow off-licence holders in England is this: In England, I understand, the bulk of the off-licence holders do licensed business and practically nothing else. In Scotland, the great bulk of the off-licence holders do the main part of their business in groceries and things of that kind, and yet both are assessed on the rental of the whole premises, and the licence they pay is in relation to that assessment. Consequently, the off-licence holder in Scotland is being assessed on property the bulk of which has very little to do with his licensed business. He is over-assessed. He did not object as long as his immemorial right of selling small quantities was allowed, but now that that concession has been extended to England he says: "Let me have one of two things. Either re-assess me, and only assess me for the purpose of licensing me on the proportion of my business premises which can be duly put down to my licensed trade or, if you will not do that, give me a less scale of licence." I wish we had been able to discuss that and decide it. We are going to the country with the concession made to these people rather up in the air. They do not know how it may be settled and, at any rate, they feel that there is an injustice there. I felt that it was my duty, in the interests of justice, to make that statement clear. I think I have got it correctly, but I speak subject to possible correction.

Sir FRANK MEYER

May I add my meed of congratulation to the maiden speech of the hon. Lady? I do not think, in my comparatively short experience of this House, I have ever heard a maiden speech showing greater gifts of oratory, command over the House, and sincerity, than the one to which we have had the pleasure of listening to-day. May I refer to the subject of the gold standard, which is often raised by hon. Members above the Gangway. I believe it is their contention that the Government made a great mistake and inflicted a great wrong on the working classes by returning to the gold standard. There are only three ways in which the question of currency can be treated—either to return to the gold standard on the pre-War basis, or devaluate your currency and return to the standard, or have no standard at all and allow your currency to fluctuate. I think everyone will agree that to allow your currency to fluctuate is the most injurious method of all, especially to the working classes. When the value of the £ varies from month to month, the people who suffer most are not the capitalists, and those with large sums of money at their disposal, but the weekly wage earners, because the rise in wages which is inevitably demanded as the price of money varies is always later by several months than the variation in the value of the £.

We have the experience of foreign countries to show that it is the working class who suffer most from fluctuations in currency. I believe everyone above the Gangway will admit that. Therefore, we have only the two alternatives. One is to return to the gold standard on a pre-War basis, and the other to return to the gold standard on some devaluated basis. I should like to know whether it is the contention of the party above the Gangway that we should have returned to a standard lower than the pre-War basis. If that is their contention, surely that would put us very much on the same basis as foreign countries which have lowered their standard. France, Belgium, Germany and Italy have returned to a fixed standard, but on a lower basis, and the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) stigmatised that process the other day by a very harsh word. If it is "bilking" for France to value her currency now at 125 francs to the pound, instead of the old basis of about 25, surely it would have been equally bilking for England to have restored her currency on a basis of 3 or 3½ dollars to the £ sterling instead of the position, on the pie-War basis, of 4.80. I should like to have at some time an authoritative statement from Members above the Gangway as to what, in their view, we should have done about this return to the gold standard and whether, if we had returned to a standard below the pre-War standard, we should not have been doing something equally dishonourable to what we are told France, and presumably other countries, have done.

In the course of a very interesting speech the hon. Lady referred to the Imperial Chemical Industries Company and pointed out the large profits it is undoubtedly earning, and the prospect of increased profits in the future. We grant her that, but we want to keep a sense of proportion. We want to realise that it is no good talking about profits of £4,000,000 or £5,000,000 without realising the size of the capital of the combine. It is in proportion to its capital that such profits must be judged. We also want to remember one or two other things. It is always assumed, when we talk of a very rich combine like this, or Courtaulds, or the Imperial Tobacco Company, that the vast majority of the capital is in the hands of a few very rich people. That is not so at all. Lord Melchett the other day said there were, I think, 150,000 shareholders, with an average holding of 200 or 300 shares each. That is a thing we want to bear in mind when we are judging whether it is a good thing that a company of this kind should earn large profits and distribute a dividend of 10 per cent. He also stated that, although this combine has been in existence only for about two years, already 850,000 shares are held by its employés. Therefore, we may assume that in years to come a very considerable proportion of its capital will be held by its own employés. Surely it is a good thing for the country that an organisation should be built up giving a great deal of em- ployment and good wages. I do not think anyone will deny that wages in the chemical trade now and for many years past have been good. There are excellent relations between employers and employed. There are evidently opportunities for saving, in that the employers are able to invest their money in their own concern. All these things must be taken into consideration, and it is merely creating unreasoning prejudice to attack a company like that merely on the ground that it is earning very large profits and that, as the result, the shares are high.

I do not think it would be in order, even on this Bill, to discuss the question of rating relief and how far that is going to affect unemployment, but we must remember that no one in any part of the House was able to suggest a way by which rating relief, which everyone agrees should be given to depressed industries, should not be given to other productive industries. Amendments were put down, but were never carried to a Division. No one was able to suggest where you could draw the dividing line between a depressed and a prosperous industry, or a depressed and a prosperous area. As long as that was not done, unless you were going to deprive the depressed industries, and those on the border line, of that rating relief you had to give it to all productive industries. [Interruption.] I should be very grateful if the hon. Member would explain how it would be possible to make that differentiation. I should like, through the medium of the Financial Secretary, to convey my thanks to the Chancellor of the Exchequer for the concession he has made, for which I have pressed for some years, of giving permission to sell half bottles to off-licence holders. I have always done so from the point of view of the inconvenience caused to the public. May I also ask the Financial Secretary if he could give us the reasons, from the point of view of the public, why the distinction has been made that this concession is only to be granted to those off-licence holders who hold a justices' license? There are a great many off-licence holders, mostly wine merchants, who do not hold justices' licences, and I should appreciate some reason being given why these people, who conduct a perfectly legitimate and honourable trade, are deprived of the benefits that are given to grocers and those who hold justices' licences.

Mr. MONTAGUE

One or two remarks made by the last speaker induce me to rise to reply to him. I do not profess to be an authority upon the gold standard I admit my limitations with regard to questions of finance and I am prepared to admit, purely for the sake of argument, that the restoration of the gold standard was a policy necessary to the stability and financial credit of the nation. But I think the real gravamen of the criticism that Labour has to make about the policy was, its precipitancy and the fact of its results being so unfair as between various sections of the community. I do not think anyone will deny that one of the direct results of that precipitate return to the gold standard was a depression in trade and an increase in unemployment, the burden of which falls upon the working people directly. Secondly, there is this criticism to be made. The effect of that restoration was that those people who enjoy fixed incomes—unearned incomes from interest and so forth—obtained the advantage of deflation in the spending power of their incomes, whereas the wages of working people came tumbling down rapidly.

Although it may be granted, for the sake of the argument—although I admit my inability to go very closely into the financial aspects of the case—that the restoration was necessary at some speed or other from the point of view of the national credit that surely is an argument in favour of other measures being taken by the Government in order to correct the unfair results of such a restoration upon the workers in the form of wages and also with regard to the subject of unemployment. I make that criticism by the way because, whatever may be stated in the House about stability and about finance, when we go down to a constituency where people are living in poor houses and obtain very low wages, it does not do for us to talk about intricate financial questions of that kind. They do not understand them, but they do understand the fact that they are getting low wages, that their lives are less secure and that there is a vast amount of poverty and unemployment in the country. I think that it is up to a Government which says that the nation must return to the pre- War standard to, at any rate, do some thing to make the position fair as between the different classes. If it is good enough for the working classes to have to pay for the restoration of the credit of the country, it is good for other classes of the community to have to pay their share as well. That is our point of view on the subject, or, at any rate, some part of it.

I want to say something about a statement made from the opposite benches, and also made by a right hon. Gentleman on the Liberal side some time ago and obtained a great amount of advertisement, namely, that a large amount of the capital of the country is owned by very small owners, and that the poor people and the working people are capitalists. It was the right hon. Gentleman the Member for West Swansea (Mr. Runciman) who, I think, said that there are 15,000,000 capitalists in this country. This was said to be a defence of the capitalist system and a justification for conserving the present system of society. I would like to make this comment. After all, what on earth is there to talk about with regard to the amount of capital in the hands of the working class folk in this country! It was stated in a newspaper correspondence recently that if the possession of a pound or two in a co-operative savings bank constitutes a capitalist, then the man who owns a back garden is necessarily a landlord. Even the man who has some earth in a flowerpot may be said to be a landowner. There can be no argument against the Labour point of view concerning the distribution of income. Seventy per cent. of the total national capital is owned by less than two per cent. of the population. That is our criticism. Some people own their own houses, and many hundreds of thousands of the working class find it necessary to put a few pounds in the bank and to do the best they can to store up something against a rainy day. That does not alter the fact that the great bulk of the people of this country are non-owners. They are not, in any real practical sense, owners of the capital or means of production of the nation. These means of production are owned by a small number of the community and are used by that small number in order to extract profit, and to build up more and more capital in the hands of the real industrial rulers of the community.

I am not going to make a speech upon any abstract Socialistic lines, and least of all do I want to indulge in what has been described in a recent Debate as soapbox oratory, but I think that it is necessary to point out that it is idle and useless to talk about the distribution of capital in this country. The people who own the) capital in this country and are effective capitalists are those who control the capitalist system. It is the system that we object to. That system, however much capital may be distributed, imposes poverty upon the vast bulk of the people of this country. It imposes unemployment because of the wrong distribution of income. The hon. Lady who spoke put that point very effectively. The reason that people are unemployed is because of the unfair distribution of the national income. The national income is distributed as far as the bulk of the population are concerned in very small amounts compared with the huge piling up of wealth and capital by a few people. Until that distribution is rectified, and until the people are able to bargain for what they are potentially capable of creating, there will be unemployment and poverty, and always the descending spiral of depression.

Major-General Sir ROBERT HUTCHISON

The hon. Member for Great Yarmouth (Sir F. Meyer) thanked the Chancellor of the Exchequer for a concession and said he thought that it would be an advantage to the public to allow the retail by the off-licence holder of the half-bottle of spirits. I rise to point out to the Financial Secretary to the Treasury the great hardship and the injustice which have been done to similar holders of licences in Scotland. The off-licence holder of Scotland, who is the grocer, is well known to have been the purveyor of a perfectly legitimate trade. For centuries he has been treated in exactly the same way as the on-licence holder. The Government have thought fit to give a concession as regards the licence duties of 25 per cent. to the on-licence holder but in the case of the grocer in Scotland who for centuries has had the same privileges of selling is entirely different from the off-licence holder in England, in that he has for a very long time been practically the wine merchant of the people of Scotland.

The English grocer has got this concession from the Government, whereas in Scotland we have nothing, and it seems only equity that a perfectly legitimate trade carried on in Scotland ought to have the same treatment as the on-licence holder. I think that this is partly due to the fact that the Treasury has not had brought to their notice the practice in Scotland for so many centuries. It was in 1860 that Mr. Gladstone brought in the system of the off-licence holder in England, but in Scotland the practice has been carried on for at least 200 years. Therefore, I hope that when the second part of the Finance Bill is dealt with, the Treasury—and I hope the Financial Secretary will make a note of the point—will deal with the hardship which has been placed upon these people in that they have not had the same treatment or the same concession as those south of the Border. We in Scotland are jealous of any concession given to people in England and Wales which is not also given to the people of Scotland. I would further point out that the amount involved on even a 25 per cent. reduction for the off-licence holders in Scotland would only amount to a total of something like £14,000. I do hope that the Financial Secretary of the Treasury will look into the question, as there is real hardship.

Another point to which I would like to draw the attention of the Financial Secretary is the hardship with regard to many of our people who have worked in India and in our colonies. When they come on a visit after years of residence abroad they are charged Income Tax on their income from whatever source for the year in which they arrive in this country. Those planters and others who are working in the Malay States and in India, if they happen to come here within the last two months of the financial year, are charged British Income Tax on the whole of their earnings abroad for that financial year. It seems very hard on those who have worked abroad in the heat and trial of the sun to be treated in this way. Another point in regard to the assessment of Income Tax is that many companies employ men in India and in the Malays, which are the two countries of which I have knowledge, to sell various articles on commission. This commission is subject to British Income Tax because it is held by the Income Tax authorities that because a business with headquarters in London or elsewhere in this country pays commission to its representatives out there, Income Tax should be deducted and paid to the Treasury. It is extremely hard that such a state of affairs should exist. We know of many cases of people living abroad purposely in order to avoid taxation. I have no sympathy with people who do that, but I have sympathy with people working in these countries, where the conditions demand tremendous exertion, who have to pay this Income Tax simply because they happen to be paid on a commission basis. I have noticed many letters in the papers on the subject, and I think that the Financial Secretary will be doing an act of justice if he will look into these particular cases.

The third and last case which I wish to bring to the notice of the Financial Secretary is one which, I think, he knows well. It is the case of those companies formed in 1925 in which the assessment becomes extremely hard on them, especially if they happen to have a bad year after, perhaps, two good years. I believe that the Chancellor of the Exchequer has admitted that it is a case of hardship. I cannot see why the particular hardships, especially of these companies working in the Malay States, should not be treated with a certain amount of compassion when one considers that the Government were to a large extent responsible for causing the situation which has arisen. There is no reason why these companies should not be assessed on the income of the year in question instead of on the previous years. I merely draw attention to this matter because the question was raised last year, and it has already, by means of a very representative deputation, been brought before the Treasury. I hope that when the second part of the Bill is discussed, a concession of some sort may be given to these very hard cases.

Mr. PILCHER

I should like to emphasise everything that my hon. and gallant Friend has said on the subject of the new treatment—for it is a recent revision of the old treatment—of these Income Tax payers who are temporarily at home in this country even for only a few weeks in the year. The very strongest resentment is felt in India and in Egypt at the new treatment, and I know that there is a very strong case indeed for a re-examination of the position. It does seem deplorable that when, on the one hand, we have a new organisation trying to attract people to this country, people whose home is not here, these operations of the Revenue authorities should really be almost driving people away from their natural home. I know that any revision of the latest document will be very much appreciated by British subjects who have to go and live overseas for the greater part of their lives.

I have intervened in this Debate to say something on the subject of the Tea Duty. There are some aspects of that duty which have not yet received detailed consideration. We have had an extraordinary speech from the Front Opposition Bench this afternoon, in which a good deal of attention has been paid to the Tea Duty. On the one hand, an effort was made to show that the remission of the duty was a mere bagatelle. It resulted, we were told, on the authority of the Colwyn Committee in a mere reduction of 8 in the percentage figure of the decline in the cost of living. We were also told that it meant very little in the working man's budget, but I would like to point out that the average of 3d. per week, which this remission of duty means to a man, his wife and three children, amounts, in the case of a farm labourer earning 31s. a week, to 1 per cent. of that man's entire income. It was shown in the same speech that the total contribution to the Exchequer made by such a person is something like 11 per cent. of his salary. Surely a reduction of 1 per cent. in such a budget is not a thing to be despised. Indeed, such an argument seems to come with a very ill grace from that quarter. How many times in these finance discussions have we not listened for hours to arguments from the Labour Benches suggesting that the time had come for the abolition of this duty?

The point which I particularly wish to put to the Financial Secretary is this. It was suggested by him that considerable relief was going to reach the working-class indirect taxpayer, as a result of the remission of the Tea Duty. Everyone would like to make quite sure that such relief will actually reach the consumer. Is my hon. Friend quite convinced that this rather sudden, final abolition of the Tea Duty is really going to benefit the consumer? It will be remembered that there was a reduction of the duty of 4d. in 1924, and, for a time, there was a decline in the price of tea following that reduction. But the price recovered its old position in a very short time, and the consumption increased from 8.3 lbs. per person in the country to 9 lbs. per person in the country within a year or 15 months after that remission. I suggest that if such an increase in demand now follows this further remission, and there is every sign that it will, there may be considerable doubt as to whether the ultimate result will not be merely to keep up the price of tea, and a loss of £6,000,000 to the Exchequer will have been caused, with no certain gain to the consumer.

The total production of tea in the world is about 800,000,000 lbs. per year of which 420,000,000 lbs., or considerably more than half is consumed by this country. I am not clear that the sources of supply are capable of an expansion sufficiently rapid to catch up the increase of demand which is likely to result from the disappearance of the duty. There are one or two things which the Government could do to assist the expansion of the sources of supply and enable that expansion to proceed a little more rapidly than might otherwise be the case. Assistance could be given, for instance, through the Empire Marketing Board. If there is to be expansion, and it appears there is to be, we might make sure that that expansion takes place within the British Empire. I am not convinced that the Ceylon source of supply can rapidly expand but there is room for expansion in India, if encouragement is given by means of the Empire Marketing Board and in other ways. May I also point out to my hon. Friend that the remission of this duty involves a lose to India, in the value of the preference, calculated at roughly £1,000,000 per year. India having lost that preference, which she was promised for a period of 10 years, there is quite a good case for trying to help her and, if necessary, spending money to help her as a compensation for the loss of the preference.

I am still a little afraid that in the effort to keep down prices—because it is clear that the great dealers are trying to give the public the benefit of this remission—we may give a further incentive to that increase in the consumption of foreign tea, particularly Java and Sumatra teas, to which I alluded a year ago. My allusion on that occasion resulted in inquiries being made, and an attempt was made before a Board of Trade inquiry to find a means of keeping the home market for British tea only. That attempt failed because of impracticability. Now the danger reappears in a more serious form, and I would draw my hon. Friend's attention to the position and ask him whether, through the Empire Marketing Board and by other means—possibly, for instance, through an improvement in the attitude of the Government of India to the recruitment of labour in India and by methods of that kind—something could not be done to keep this additional demand for tea inside the British Empire.

There is another point in this connection to which I would draw attention. A sum of £6,000,000 a year will no longer be collected in respect of the Tea Duty, and there will no longer be those vast stocks of tea in bond which have existed hitherto. The total value of the tea brought into this country each year reaches £35,000,000—possibly three or four per cent. of the total vast importation of this country amounting to £1,200,000,000. The sweeping away of all the administrative machinery necessary to the handling and watching of that trade, in so far as the Revenue Authorities are concerned, should produce a considerable economy, and I would press my hon. Friend, at the beginning of this protest, to make a serious effort to see that these changes do result in some administrative saving. In the last Budget we were told that economies in staffing to the extent of some 11,000 personnel had been achieved during the lifetime of the present Government, and, I think, the Chancellor of the Exchequer told us that he was working for a further economy of 8,000 in personnel. Here there seems to be a real chance of economy in personnel, and I imagine that certain large savings will be involved in the disappearance of the big warehouses in which the stocks of tea were kept. Oh the other hand, we shall no longer have the advantage of those exact statistics regarding the tea trade to which we have been accustomed. Since no tea will be kept in bond, it is clear that the handling of the trade will be confined to the trade itself, and we shall lose those statistics. It has been suggested in some quarters that this may result in a tendency to cornering and manipulation of the industry. I suggest that that is a possible danger which might engage the attention of my hon. Friend.

There is another and quite a different point which I take this opportunity of mentioning. A concession is being made to the railway companies in the matter of the Passenger Duty, and every thinking Member of the House appreciates this new attitude towards the railways and their difficulties. There is a growing realisation that more than one form of transport is necessary if this country is to hold its place in the competitive struggle. I appeal to my hon. Friend to consider whether, in making recommendations to the companies as to the way in which they are going to use this remission, he would bring before them the question of traders' tickets. These tickets, at the present rate, involve a serious burden on industry. I have here figures relating to traders' tickets in connection with an important centre in my own constituency, where we have one of the largest mineral export trades in this country. In 1889 a trader's ticket from London to St. Austell cost £59. In 1918 it was £97, and in 1920 £142, and it has since gone back to £97. I believe there is some logical explanation on the figure of £97, and that it represents a percentage increase on the pre-War basis. It might possibly be in the best interest of the railway companies to promote in every way they can cheaper travelling facilities for business purposes for the representatives of those great firms which bring them so much revenue. The particular industry to which I have just referred, with an export of 600,000 tons of minerals every year, is a valuable asset to the railway companies, and this might be an appropriate time to persuade the companies—even though it might involve some apparent temporary loss—to assist these great commercial concerns from whom they derive such a large proportion of their revenue.

Mr. TINKER

I join with the hon. Member who has just spoken in what he has said about the necessity for ensuring that the benefit of the remission of the Tea Duty should reach the consumer. I appreciate the remission of the duty, and all I am sorry for is that it did not come sooner. I wish it had come three or four years earlier. I would, however, emphasise the importance of keeping the price down to the point intended by the remission of 4d. per pound. I want that 4d. to get to the people, and something ought to be done to see that sooner or later the traders do not take advantage of it. I do not know myself what the House can do in the matter but I hope the Financial Secretary will give the question consideration. There is another point arising out of the de-rating scheme to which I think the House has not given proper attention. The hon. Member for Yarmouth (Sir F. Meyer) said that nobody had produced a scheme by which it was possible to get back from the successful industries the relief that was being given to them under the de-rating scheme. The Chancellor of the Exchequer, however, in his Budget speech said there had been considerable controversy about the relief given to brewers, distillers and others and about getting it back, and he went on to say: Here, again, it is our duty to help our weaker brethren, and not to place a stumbling block in their path. Luckily, there is a convenient method which does not man in any way the general symmetry of our rating reform scheme or the principle on which it is based. Manufacturers licence duties have now long been levied, though at very low rates, upon brewers, distillers and tobacco manufacturers. I propose to raise those duties so as to take away from these industries the equivalent of the relief they will obtain under the de-rating scheme."—[OFFICIAL REPORT, 15th April, 1929; col. 50, Vol. 227.] Evidently the right hon. Gentleman had found ways and means of getting back from the brewers and distillers the reliefs which were given to them under the derating scheme and, if that be so, how is it that he cannot get back from the chemical industry for instance the £600,000 which has been given to that industry? That industry in fact has no more right to that grant and no more need of it than the brewers or distillers; and Lord Melchett, in dealing with the matter, said his firm were getting £200,000 per annum because of this re- lief. I hope he will find ways and means of getting hold of that as he has done in the case of the relief given to the brewers. The Financial Secretary to the Treasury talked about national savings of £450,000,000 a year, and said that over five years, £2,200,000,000 altogether have been saved. I am quite at a loss to know what it actually means. Where does this money go? Who gets the benefit of it? The Financial Secretary spoke of it as being a great asset of the nation.

Mr. SAMUEL

The answer to the hon. Member was given by the right hon. Member for Central Edinburgh (Mr. W. Graham) in his speech on 22nd April. I will read what the right hon. Gentleman said: The other side is the side of industrial savings, that is, the amount which is available to-day for all kinds of industrial development calculated to increase employment. That was estimated by the Committee on National Debt and Taxation as something between £350,000,000 and £400,000,000 before the War, and it was thought that if allowance were made for increase in population and the rise in prices, the figure to-day should be perhaps about £600,030,000 and that the actual amount that we were saving in Great Britain was probably £150,000,000 per annum short of that total."—[OFFICIAL REPORT, 22nd April, 1929; col. 657, Vol. 227.] That is a quotation with which I entirely agree. Perhaps allowing a little for worn-out assets we are saving £450,000,000 a year, as the Colwyn Committee said about five years ago, and there has probably in late years been an increase in the amount of annual savings since the Colwyn Committee made that pronouncement. I am making some diminution in my mental total calculations on account of the disaster of 1926 and, therefore, I will assume that there has been no annual increase during the years since 1924. I am content to leave the figure at £450,000,000 a year as the average for five years. I accept the figure of the Colwyn Committee quoted by the right hon. Member for Central Edinburgh, given of £450,000,000 a year, and I multiply it by the five past years. That is how I get the total figure of £2,250,000,000 saved by the nation during the past five years and added to the national assets; or, in the words of the right hon. Member for Central Edinburgh are "industrial savings, that is the amount which is available to-day for all kinds of industrial development calculated to increase employment."

Mr. TINKER

I thank the Financial Secretary for his explanation. What I am trying to emphasise is this, that I do not see any great benefits arising from these savings when there is so much poverty at the other end of the scale. If the nation is saving so much, how is it that there is so much poverty at the other end? If these savings went into circulation would they not help poverty?

Mr. SAMUEL

If the nation had not had these savings poverty would have been infinitely worse.

Mr. TINKER

I give the matter up. I must confess that I do not understand it; I cannot balance these immense savings and the terrible poverty at the other end of the scale. The Financial Secretary said that prudent people would be satisfied. There must be a lot of imprudent people in this country, because there are a lot of poor people. Everyone who votes against the Government will, I suppose, be dubbed imprudent by the hon. Member. I can promise him that there will be a majority against the present Government because of the way they have handled the finances of the nation. If they are all imprudent there must be some cause for it. The reason is the extreme poverty in the land during the last four years, brought about by the present Conservative Government. It has not been equalled at any other time in the history of this country. That is why so-called imprudent people will vote against the Government.

The Financial Secretary also dealt with indirect taxation and pointed out that people who paid direct taxation were penalised more than those who paid indirect taxation. It must be apparent that the person who has the wealth can pay, and should pay. The taxes should come from the people who have the wealth. Direct taxation does come from these people, from the Income Tax and the Super-tax payers, and I am hoping to see the time when there will be nothing but direct taxes, in which case the people will know exactly what they are paying. It has been said by a well-known statesman in this country that it does not matter how you deal with taxation if you do it in such a way that the people do not know what they are paying. I want all indirect taxation removed and put on to direct taxation. Then the finances of the country will be kept up by those who are able to pay and the poorer classes will have a much better outlook than they have at the moment.

Sir B. PETO

The best proof that the Chancellor of the Exchequer has satisfied the House, and I believe the country, is the fact that he has disposed of his surplus in a way best calculated to help all classes in the country. The criticisms we have heard have not been in regard to matters in the simple Finance Bill we are now considering, but which are to be incorporated in a future Finance Bill, or the usual criticism about things which are not in either of these Bills. Some speeches have been made which I think want a little further reference. I am entirely in agreement with the hon. Member for Penryn and Falmouth (Mr. Pilcher) who spoke with so much knowledge of the tea industry, but the repeal of the Tea Duty in this case does away with an opportunity of giving a preference to tea produced within the British Empire. It is not a question of the more costly China tea. There is the cheapest tea from Java, which is to-day a keen competitor with the poorer quality tea from India and Ceylon.

I appreciate the arguments I have heard for the complete abolition of the Tea Duty. The Chancellor of the Exchequer had either to sweep the Tea Duty away altogether or leave a small duty only upon foreign tea. I have no doubt that the Chancellor of the Exchequer took the wiser course in this case. He has repealed entirely the Tea Duty, which has been asked for for years by Liberal and Labour Members, and it comes therefore with rather ill grace from the hon. Member for Peckham (Mr. Dalton) to try to prove that the remission means very little in the ordinary man's Budget; in fact, that it is not worth making at all. I wonder what sort of a speech the hon. Member would have made if the repeal of the Tea Duty had been brought in by a Labour Chancellor of the Exchequer? He quoted the Colwyn Committee's Report and said that the figures given there showed that a remission of 4d. off the duty only meant 11s. a year to the domestic household of a working man with a wife and two or three children. The Chancellor of the Exchequer has already answered that point. At the time of the Colwyn Report the consumption of tea was much lower than it is to-day. It was then about 6½ lbs. per head; it is now 9 lbs., and, therefore, it is necessary to add 50 per cent. to the figures given by the hon. Member for Peckham in order to arrive at the correct value of this remission. It is about 16s. or 17s. per year in the ordinary working man's household. That is a very different figure; and it is a very substantial figure. In many working-class homes the value of this 4d. remission will be at least £l per year.

7.0 p.m.

The hon. Member went on to argue that the value of the remission was trifling and that what the Government ought to have done was to remit the duties on sugar, cocoa and coffee. He emphasised the value of a remission of the Sugar Duty. As a matter of fact, the working classes gained enormously last year by the fact that the Sugar Duty was maintained and altered by the Chancellor of the Exchequer in the last Finance Act. The House will remember that when we were debating the last Finance Act we had a speech from the hon. Member for Greenock (Sir G. Collins) deploring the terrible state of unemployment in his constituency owing to the gigantic importation of refined sugar into this country and the consequent paralysis of the refining industry. He pointed out the enormous number of his constituents who were walking about doing nothing. The Chancellor of the Exchequer made an alteration in the Sugar Duty by giving an advantage of about one farthing per pound on sugar that was imported raw—

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