FINANCE BILL.

HC Deb 25 July 1930 vol 241 cc2569-655

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read the Third time."

Sir LAMING WORTHINGTONEVANS

I beg to move, to leave out the word "now," and, at the end of the Question, to add the words "upon this day three months."

We have now come to the last stage of the Budget discussions, and no doubt this Bill will be carried within the next few hours by a composite majority of Socialists and Liberals, although it contains Clauses which the majority of the Liberal party voted against when they were discussed in Committee. The Bill imposes heavy taxation both in Death Duties and in Income Tax, at a time when rigid and even harsh economy and the lifting of the burdens of industry are necessary for the recovery of trade and prosperity. A number of the taxes are being applied unnecessarily to the Sinking Fund. The Chancellor of the Exchequer is taking £5,000,000 this year, and as far as he can he is pledging the revenues of the next year and the following year for the Sinking Fund, although he has an unexpected receipt of £8,750,000 from Reparation moneys, which he is also applying to the Sinking Fund. He is increasing the Sinking Fund provision by £13,750,000, at a time when he is borrowing still larger sums for unemployment and public works. He is, in effect, borrowing in order to increase the Sinking Fund, a practice which has been condemned as foolish and wasteful by every student of public finance. No doubt, in good times, it is wise to use surpluses to add to the Sinking Fund, but it is obviously more important to-day to increase employment than to increase the Sinking Fund. Who can doubt that we should add more to the financial strength of the country by putting back into productive industry a few thousand men rather than adding a few thousand pounds to the Sinking Fund?

In his broadcast speech the Chancellor of the Exchequer said that his first concern in framing his Budget was to re- store a spirit of confidence and enterprise amongst those responsible for the conduct of trade and industry. The writer of a thoughtful article on the banking year in the "Times" yesterday in reviewing the present depression, said: It is open to one main explanation—namely, lack of confidence, the principal cause of which is to be found in the disastrous trend of national financial policy. The additions made to the cost of social services, particularly unemployment last year, and the tone and composition of Mr. Snowden's Budget speech did more than he perhaps realizes to undermine still further the confidence of the business world. The Chancellor of the Exchequer had a magnificent opportunity; for restoring confidence to the manufacturing and producing concerns of the country by accepting an Amendment which we moved to exempt reserves from Income Tax, but notwithstanding all the arguments which both Oppositions in the House advanced, he remained obstinate and roughly refused to accept the Amendment. His refusal was based on a gross misrepresentation or misapprehension of the facts. He blamed companies for paying dividends instead of placing money to reserve. He exaggerated the dividends of the three companies which he named, and he accused them of not keeping enough money in hand for reconditioning their plant. It is true that afterwards he withdrew his statement and apologised, but although he did that he did not alter the policy he had built up on this fallacious foundation. He could have caused the reserves to be used for the purpose of providing employment at a quarter of the cost of many of the schemes which the Government are now pursuing.

There are other parts of the Bill like the Clauses which deal with tax evasion in which we promised and did give the Government considerable assistance. It is no use for the Chancellor of the Exchequer to smile. It is very ungrateful, because he cannot deny the facts. That we did help him is absolutely certain. If we did not, why did he accept something like 30 Amendments which were put down, and accept them either in their actual words or in words which he substituted for them? He has complained time after time that we unnecessarily prolonged the debates. On several accasions the right hon. Gentleman adopted his Hague manner, a manner which lost this country millions at the Hague, and which lost him many hours in the course of our debates, but he cannot blame us for that. As long as he was reasonable we also were reasonable, and helped him considerably to improve his Bill. Consider what happened with regard to the single premium Clause. We pointed out that the Clause, as he put it forward, was hopeless, that it interfered with legitimate business. The consideration of it was postponed, and conferences were held with the insurance companies, in which hon. Friends on this side of the House took a leading part.

Mr. ERNEST BROWN

And there were others.

Sir L. WORTHINGTON-EVANS

Both Opposition were represented, and the result was that the Clause was redrafted entirely and brought back as an agreed Clause. It now forms part of the Bill, but it is quite unlike the Clause which the Chancellor of the Exchequer originally proposed. It is an improved Clause which will do what the Chancellor of the Exchequer desired to do. Consider what happened with the one-man company Clauses. What is the history of those Clauses? As proposed they were utterly unintelligible, and the Chancellor of the Exchequer had to agree to publish a White Paper explaining what it was he was trying to get at. He produced a White Paper, and then it was possible for us to see his intention. What was the result? We began to put down Amendments, and the Chancellor of the Exchequer put down Amendments and the position was such that it became absolutely necessary to reprint the Clause before the Committee could see the nature of the task before them. As a result of this wholesale revision by the Chancellor of the Exchequer this reprinting took place. Even now, notwithstanding our efforts, these Clauses are fundamentally wrong. Instead of dealing with the tax evader they purport to tax foreign companies which may never come within the jurisdiction of our Courts and impose penalties upon foreign directors which can only be enforced, if at all, at the risk of international complications.

But at the last moment, on the last day of Report, the Chancellor of the Exchequer moved an Amendment to the effect that property which is deemed to pass under Clause 33 of the tax evasion Clauses should not be aggregated but should be an estate by itself, and a consequential Amendment was made in similar terms on Clause 32. I want the House to follow this, and I will try and deal with it in non-technical terms. What is the result? If any person forms a private company to which this Bill applies and comes within the Bill as a tax evader, he is rewarded by the Chancellor of the Exchequer by a greatly reduced duty. The Chancellor of the Exchequer by his Amendment is inviting everybody to become a tax evader. I will give three examples, simple examples, without going into the question of real and personal estate.

Take the case of an individual who holds £100,000 in war loan. Under these Clauses, if that owner chooses to transfer his £100,000 of war loan in ten equal proportions to ten small companies of which he is the sole shareholder, and of which he has complete control, and which is an evading company within the meaning of this Bill, each one of those 10 companies will be treated as an estate by itself and that estate of 210,000 will be subject to a 4 per cent. Duty, or in the aggregate to £4,000 Duty for the £100,000. But if he does not transfer to a tax evading company and dies possessed of the £100,000 his estate would have to pay £19,000 in Duty. The Chancellor of the Exchequer by his last Amendment on the tax evading Clauses has made a present to such a person, who never would have dreamt of attempting to evade taxation, of £15,000. Similarly, an estate of £200,000, if it is divided, will pay a duty of £16,000 instead of a duty of £56,000 if it is not divided.

Consider the temptation to the millionaire. If he died with £1,000,000 of war loan in his own possession, his estate would have £380,000 to pay, but if he followed the process of dividing it into 10 equal packets, he would be let off with £190,000 and the Chancellor of the Exchequer is giving him a present of £190,000. The same thing applies, of course, to other forms of property; it does not matter what the form of property is.

The House should remember that this was not an Amendment proposed by the Opposition. It came from the blue as far as we were concerned. It was a last- moment afterthought of the Chancellor of the Exchequer. I confess that when it was originally moved I did not realise the effect that it would have. For days we have been kept discussing these Clauses in order to stop evasion, with the final result that the Chancellor of the Exchequer himself has devised a method whereby he makes a present of £15,000 to the £100,000 man, of £40,000 to the £200,000 man, and of 2190,000 to the millionaire. I do not want tax evasion, and so I am deliberately exposing the futility of these Clauses in case anyone may rely on them and be tempted by the Chancellor's ineptitude to adopt the method which he has laid open to them. It may be too late to deal with it this year; I am not sure. I suppose that the Chancellor would admit that a glaring error has been made, and if it cannot be corrected this year, it will have to be corrected another year. Meanwhile, no doubt, the Chancellor of the Exchequer or the Financial Secretary will tell me what his idea of the Clauses is. I believe that I have given a correct interpretation of them, but I should like to be told whether I am correct or not.

Let me here say that we are suffering under a considerable difficulty because the Bill has not been printed since the Committee stage. The Amendments that ought to have been put in wore put in on Report, but they do not appear on the printed copy of the Bill that we get at the Vote Office. It is a matter of some embarrassment, and it is not very easy, therefore, to follow the complicated alterations. The Bill also penalises thrift in an unjustifiable way. There was originally a Clause which deprived the holders of life policies taken out before 1916 of a right to deduct the premium from income and so get a rebate of tax. At first the Chancellor of the Exchequer strenuously defended the original draft, and it was not until he was beaten in debate by representatives of both Oppositions that he capitulated and promised to amend the Clause. He has amended the Clause; he has omitted to interfere with the pre-1916 policies. But he has done the meanest of mean things; he has settled upon the man with the smaller income between £250 and 2300 a year, and he has deprived him of a very small rebate of 3d. in the pound on his insurance premium. For a miserable 3d. in the pound he has altered the previous plan of allowing a half deduction for insurance premiums in these cases. So while we find him chipping 3d. off the income of men with £250 to £300 a year, we find him making a present of £190,000 to the tax evader.

The Chancellor of the Exchequer has missed a great opportunity. He has run the risk of creating a deficit at the end of this financial year by applying £13,750,000 prematurely to the Sinking Fund. Even if he continued to refuse to reduce taxation, it would have been wiser and safer to have kept the £13,750,000 in hand until he saw the result of the increases of expenditure and the decreases of revenue which are already apparent. He has misused the Sinking Fund and wantonly pledged next year's revenue. He has attacked the thrift of the small man, and deprived great employing companies of resources which are needed to promote employment. He has made an unasked-for and unwarranted gift of hundreds of thousands of pounds, perhaps even millions, to the tax evader.

Mr. LEIF JONES

The right hon. Gentleman has delivered himself of a strong attack upon the Chancellor of the Exchequer, of whom he has evidently formed a very unfavourable opinion. He finds fault with the Chancellor's manners, with his methods, with his policy, with his principles, with what he has done and with what he has not done, and even when the Chancellor smiles he falls foul of him. There is no pleasing the right hon. Gentleman. For my part I take a very different view of our present Chancellor of the Exchequer. I have now heard him introduce two Budgets, and they are in refreshing contrast to the Budgets of his predecessor. This year he is not in as happy a position as in 1924. Then he had a surplus of £48,000,000: this year he has found himself face to face with a deficit, after five years of the Chancellorship of the right hon. Member for Epping (Mr. Churchill). In his last Budget he was reducing taxation; this year he is putting on taxation. Naturally he has had a rougher passage for the Budget than in 1924. But certainly to-day I think we ought to join in congratulating him on having successfully piloted the Bill through a very subtle and dangerous Opposition. The worst thing about the Budget this year is the large amount that the Chancellor of the Exchequer has to raise. It is nearly £100,000,000 more than he had to raise in 1924. For that, the Chancellor of the Exchequer is not the person whom we ought to blame. I think it is sometimes forgotten, in the criticisms which are directed at the Chancellor of the Exchequer, that he is not the person who spends the money. He has to find the money which the House votes.

Mr. CHURCHILL

You never remembered that in my case.

Mr. LEIF JONES

I have many times quoted the words of the right hon. Gentleman the Member for Epping (Mr. Churchill) on that very subject in which he defended himself strongly on the ground that all he had to do was to provide the money which the House so freely voted. There is a great deal in that argument and I do not think that our present Chancellor of the Exchequer can fairly be blamed on that ground. He has been attacked, even by Members of his own party, because he has resisted expenditure and only a few nights ago I heard him called "the parsimonious Chancellor". I suggest that a Chancellor of the Exchequer ought to be parsimonious. I believe that the first Chancellor of the Exchequer ever appointed was put into that office to prevent the Lord High Treasurer from dipping into the public purse. The House of Commons has now taken the place of the Lord High Treasurer and is for ever dipping into the public purse and one of the chief duties of the Chancellor of the Exchequer is to resist the efforts of the House of Commons, always to be spending money—and a very difficult job he has.

The present Chancellor of the Exchequer gives me a restful feeling. He is attacked on the ground that he is not flexible enough. It is said of him that one knows beforehand what he is going to say regarding various proposals. It is quite true that we know very largely what the right hon. Gentleman is likely to do in a Budget, but that, if I may say so, is a very good thing. We never knew what the right hon. Gentleman the Member for Epping was going to do. He was the most fidgety Chancellor of the Exchequer we ever had. You never knew where you were with him and I suggest, in all seriousness, that what is far and away most destructive of public confidence and injurious to the business of the country is unrestfulness and fidgetiness on the part of the Chancellor of the Exchequer. Therefore I am grateful to the present Chancellor of the Exchequer for the firmness with which he holds on to his well-known principle. It is said that he ought to have an open mind. Certainly an open mind is desirable for new facts and argument, but surely you are not to be for ever considering the bases of your economic faith and the principles on which you act. The Chancellor of the Exchequer in this Budget has carried on this well-known principles and has struggled for economy. We knew what to expect in the Budget and I think on the whole we got it.

The right hon. Gentleman had to raise a very large sum of money and had to put on new taxation. Where was he to go for it? We knew beforehand where he must go. He had to go where the money was for him, and it is good for the propertied classes of this country to know that if they go in for expensive policies and spend money, they will have to find the money and make good the expenditure incurred. The right hon. Gentleman had raised the Income Tax from 4s. to 4s. 6d. and I think he has done quite rightly. I am sorry that it had to be done, but as he had to raise the money I suggest—and I am bound to say that the Opposition have not really argued against the raising of the Income Tax—the right hon. Gentleman was practically bound to raise the Income Tax. My feeling was one of relief that the increase was not 1s. instead of 6d. Of course, it is very much more difficult to deal with a 4s. Income Tax than with a 5s. Income Tax, because 5s. in the is a nice simple fraction, whereas nine-fortieths is an awkward fraction for anyone dealing with the nation's accounts. But we have no ground for complaint in the fact that the Chancellor of the Exchequer, faced with the necessity of raising this extra money, has gone to the Income Tax to find it.

I would, however, put in a plea to the Chancellor of the Exchequer in regard to one matter. He has refused to do anything to meet the Amendments put forward from these benches and other parts of the House dealing with the reserves of companies and seeking to enable companies to quicken their re-equipment and to encourage them to go ahead in that respect with a view to helping to meet unemployment. I think there was something in the Amendment put forward from these benches. I do not think that the actual Amendment could have been accepted by the Chancellor of the Exchequer, but I wish he had given a more favourable reception to the idea. I suggest to him that the Revenue authorities, for some years, have been pressing too hard in the matter of the reserves of public companies. The truth is, of course, that people are not too prone to save money and the temptation to a, company all the time is to declare dividends as fully as possible. I think companies which increase their reserves, and try to build up a stong position deserve all the encouragement which a Chancellor of the Exchequer can give them.

I still think that the right hon. Gentleman might have given a more favourable reception to the idea that companies should be encouraged to proceed with re-equipment so as to provide employment. I hope he will deal with this matter when he addresses the House and will say whether he cannot do something in the course of the next 12 months—when I hope to see him bring in another Budget, because I cannot think of this Budget as the end of what the right hon. Gentleman has to do—to encourage companies to build up strong reserves. The right hon. Gentleman has complained in these Debates that companies did not do so sufficiently in past years. I say that they have not been encouraged by the Revenue authorities to do so. Great pressure is put upon companies to distribute all they can in dividends, and really the pressure ought to be the other way. Companies are all too ready to declare dividends and not anxious enough to save and I hope the right hon. Gentleman will bear that in mind.

Having increased the Income Tax and the Estate Duties it naturally followed that the right hon. Gentleman was almost bound to strengthen the provisions against tax evasion. Tax evasion grows with increasing taxation and with our very heavy taxation to-day there is a constant temptation to companies and individuals to escape taxation if they can. Indeed they are hardly to be blamed for it. Therefore the Chancellor was obliged in this Finance Bill to introduce these tax evasion Clauses in which he has had such warm support from the Opposition above the Gangway. [Interruption.] I do not think that anyone who was here during the debates on the Finance Bill will readily admit that the suggestions made above the Gangway have been very helpful. It is true that the right hon. Gentleman accepted some of their Amendments. [interruption.] The hon. Member for Chislehurst (Mr. Smithers) who has just interrupted me himself said that after all the assistance which he and his Friends had given to the Chancellor of the Exchequer, these Clauses were not at all water-tight. The hon. Member said, I think two days ago, that he had a scheme in his pocket by which he could get round these Clauses. He did not reveal it to the House. Why did he not do so when it was still in time? If the hon. Member has such a scheme he ought to have given it to the House and not to have kept it until it was too late to amend the Finance Bill.

I daresay it is true that the ingenuity of the lawyers might drive a coach and horses through these Clauses, but, if it is so, it will be necessary for a future Chancellor of the Exchequer to amend them again. I think we have done well to put in these Clauses, and I hope they are going to be successful in their purpose, because nobody really wishes the person who ought to pay a tax to escape it by some failure on the part of the law. We shall see whether the Clauses are water-tight or not, and, if they are not, as I say, I hope my right hon. Friend will amend them in his next year's Budget.

I want now to touch on the growing use of capital taxes in the Budget and the continual increase of the Estate Duties. The Chancellor of the Exchequer had to get the money, and he went to the Income Tax and the Estate Duties, but I am sure he will admit that there is a limit to what you can get in this way of capital taxation. Capital taxation is in essence not very just taxation, because capital is not a reality but a valuation; it is a conception, an idea. Income is a reality. A man knows what he has received, and it can be properly measured, but it is very difficult to measure capital, and the complaints which were voiced in our debates from the landed interests, in particular of the heavy taxation upon agricultural estates, are on the whole just.

These taxes fall with tremendous severity upon the agricultural estates of the country, and the reason is quite obvious. The capital value of the estates is not based upon their income value. The truth is that land owning, the owning of agricultural estates, in this country is not a business; it is a rich man's luxury, ant only rich men can really afford to own agricultural land to-day, because the return in income on its value is so small by comparison with other industries. That being so—I will not go into the reasons now—it follows that this taxation falls very heavily upon these agricultural landed estates, and, though there is considerable relief in our taxation in regard to those estates, still owners of them, I think, suffer rather specially under this taxation; and I think it should be a warning to Chancellors of the Exchequer that there is a limit to the extent to which they can use the sort of capital taxation which is represented by the Estate Duties.

Finally, the right hon. Gentleman the Member for St. George's (Sir L. Worthington-Evans), in opening this debate, attacked the Chancellor of the Exchequer because of the large provision which he makes for the Sinking Fund and his policy of redeeming debt, and the right hon. Gentleman the Member for Sevenoaks (Sir H. Young), I was a little disappointed to see, fixed upon the same point at which to attack the Chancellor of the Exchequer. I think it is all to the good that our Chancellor of the Exchequer has emphasised the necessity for Haying off Debt in this Budget. The right hon. Gentleman spoke of it as an exceptional increase. It is an exceptional increase, but it was to recover from the exceptional decrease which was inflicted upon the Sinking Fund by the right hon. Member for Epping. When the right hon. Member for Sevenoaks invoked the ghosts of the past, which he said were hovering around the Chancellor of the-Exchequer, I would remind him that a debt unfortunately is something much more substantial than a ghost. The bailiffs in the house is the proper analogy-there, and a bailiff in the house is a very unpleasant visitor. Therefore, I think the Chancellor of the Exchequer is to be congratulated in that he has made this large-provision for redeeming Debt.

The right hon. Gentleman spoke of the astonishing argument of the Chancellor of the Exchequer that you are benefiting industry by taxing it in order to pay off Debt, but surely that is sound economics. How are you to pay off Debt at all except by taxes? And all taxation falls upon industry. But what you do when you pay off Debt, what the Chancellor of the Exchequer is doing with the £5,000,000 which he is taking for this purpose, is to take it from the taxpayers and to pay it to the people who have invested in Government loans; that is to say, he is taking it from the taxpayer and paying it to the industrialist. The chances are that the investor will reinvest it, and therefore it may be—indeed, it is most probable—that by taking it from the taxpayer and repaying it to the investor, you set free money which is reinvested in some form of public enterprise.

Therefore, up to a certain volume, it is a perfectly sound argument that it is well to pay off Debt, even at the cost of putting an extra burden upon the taxpayer. Indeed, I suggest that it is the only way in which you ever can pay off debt, and in putting an emphasis upon paying off debt, as he is doing, the Chancellor of the Exchequer is doing something which is most helpful to our finances. Then it is urged that it is after all only a pious opinion, and that, the Chancellor of the Exchequer may never fulfil it, but I suggest that it is a pious opinion, and not an impious opinion which says that it is not necessary to pay off debt.

A one time Member of this House, Sheridan, once said that the worst use you could make of money was to pay your debts with it, but I suggest that the Chancellor of the Exchequer is right in emphasizing the necessity of paying off debt. It has a great phychological effect on the credit of the country in the eyes of the world, and I think the Chancellor of the Exchequer may fairly claim that this strong effort to pay off the Floating Debt has contributed to the reduction of the Bank rate and so to improving the general credit of the country. That is what your spendthrifts always forget, that they are steadily damaging their credit, whereas the Chancellor of the Exchequer, when he devotes himself to paying off debt, to making sacrifices to pay off debt, is steadily improving the credit of the country and thereby doing his best to relieve industry. I do not dispute that a heavy burden is thrown on industry, but I think the converting of this great debt is the greatest hope that we have of a large reduction in our annual expenditure, and, therefore, anything which contributes to that is good finance, and I thank the Chancellor of the Exchequer for it.

I claim that the Budget of this year is worthy of the author of it. It is based upon those firm and rigid principles of Free Trade and economy for which the right hon. Gentleman is famous throughout the country and the world. He has not gone as far as one would wish him to go. The McKenna Duties and the Safeguarding Duties still disfigure the fiscal structure of this country, but we have not done with the Chancellor of the Exchequer yet, and the right hon. Gentleman will have another Budget, in which I hope to see these principles carried to their full fruition. I thank him for what he has done.

Mr. JAMES HUDSON

I ought to offer a word of congratulation to the right hon. Gentleman who has just spoken for the generous and helpful way in which he had treated the Chancellor of the Exchequer and the Finance Bill. His speech was a contrast to the point of view of the Opposition, particularly from the Tory benches. I would say that generally if the Liberal point of view had been expressed, as it has been expressed just now by the right hon. Gentleman, the relations in this House and the opportunities of arriving at decisions might have been very much improved. I realise, of course, that the right hon. Gentleman has serious criticism to make of points here and there in connection with the Chancellor's proposals, and he has voiced those criticisms, but at least he realises that the Chancellor of the Exchequer has been placed in an extremely difficult position by the financial policy of those who preceded him, and in tackling special difficulties in a particularly difficult time, he has produced a Budget which ought to receive the support of all fair-minded people.

I can only say upon the special points of criticism which the right hon. Gentleman has raised, especially the question of the exemption of companies' reserves from taxation, that I think he himself realises that, however much there may be in theory to support those processes, when you come down to practice, it is extremely difficult to arrive at methods which will prevent even greater evasions than go on at the present time. After all, the Members of his party have much experience in financial matters, and ought to have put an Amendment on the Order Paper that was more watertight than the Amendment that was put on the Paper if really fair consideration was to be given to these proposals. Though the right hon. Gentleman said that capital value was only an idea while income was a reality, it was Sir William Harcourt who first, discovered the value of the idea from the taxation point of view, and although there may be many changes in the process of taxing the idea or the reality, capital or income, and although there are limits to the taxing processes, I am certain that we have not yet exhausted the means by which Death Duties can be extended.

Mr. LEIF JONES

What I ought to have said was that the money value of capital was imaginary, and difficult to arrive at with anything like accuracy.

12 n.

Mr. HUDSON

As I say, Sir William, Harcourt took the risk. I think that we shall have still further to continue that process until, at any rate, we decide to drop it. We are fortunate, indeed, in having had the right hon. Member for St. George's (Sir L. Worthington-Evans) to open this debate. The constituency which he represents reminds us of what has been the nature of the struggle we have been through during the last few weeks. It has been a struggle of wealth holding on to what it possesses, determined to give up nothing of what has been gained in order that the poorer classes of the community should bear the burdens which they themselves ought to bear. The right hon. Member has been expressing a point of view against which the Members of this party hays struggled for many years. We were sent here by those who elected us to remove some of the very heavy burdens which the mass of the people have had to bear, and place them upon the shoulders of those whom the right hon. Gentleman more particularly represents, and who are far better capable of bearing those burdens. The Colwyn Committee pointed out some years ago—and the unfairness has not yet been greatly redressed—that people with an income of £2 a week paid, in direct and indirect taxation nearly 12 per cent. of their income, while those whose incomes were £500 a year, that is, £10 a week, paid on an average, in direct and indirect taxation, only about 6 per cent. of their income. The percentage, of course, begins to rise when you get beyond £500 a year, rising to a very much higher amount than 12 per cent. which the poorer people have to bear. But by all the canons of taxation in the past, not merely the canons preached by my right hon. Friend, but going back to the days of Adam Smith, it has been held that those whose incomes are low are not in a position to pay at the same percentage of their income as those whose incomes are high, and statesmanship years ago ought to have aimed at removing entirely from the burden of taxation those incomes which must be used up entirely in keeping body and soul together, if the productive capacity of the community is to be maintained.

We have, therefore, always thought that, in the interest of the State as well as in the interest of the poor whom we were trying to help, there should be made in every Budget an effort to redress this inequality by which the 12 per cent. could be lowered and the percentage of taxation paid by the more fortunate could be raised. My right hon. Friend the Chancellor of the Exchequer has pursued that course, and in doing so has met with an opposition that has taught us on these benches what the wealthy will do when once they are confronted with a real attack upon their fortunes. My right hon. Friend has attempted to prevent the tax-dodger from carrying on his evil work, but Members opposite have shown by every Amendment they have moved that they wanted to assist the tax-dodger.

We heard the other night a bitter speech from a Member of a large landed family in this country, the hon. Member for Westmorland (Mr. O. Stanley), who made an attack upon the Chancellor of the Exchequer because he would not accept an Amendment regarding a 12-year limit upon the collection of tax from those who form companies for land owners. As a matter of fact, the proposal, as put by Members opposite, was that the tax should fall only upon those companies which had been constituted during the last three years, and the hon. Member knew when he was speaking that this evil has developed over a period corresponding to all the years since the War. It is since 1918, and particularly down to 1928, that most of this type of evasion has gone on, and if the hon. Gentleman's party had succeeded in getting that Amendment accepted, the result inevitably would have been that those who have been so successful in avoiding their rightful dues to the community would have been entirely saved from meeting those dues.

I am very glad that my right hon. Friend has resisted all these Amendments. We have been determined that the time shall come when the wealthy classes of this community—who, although I admit that they bear greater burdens than they used to bear, are still far better able to bear them than the poorer classes—shall meet the claim upon them to a fairer degree than has been the case in the past. I would refer to the determined effort that has been made by hon. Members opposite during the debates on the Finance Bill to raise again the question of the extension of Safeguarding Duties to carry out the policy which the right hon. Gentleman the Member for Epping (Mr. Churchill) has called the imposing of protective duties for revenue purposes. We have been able in this Budget to resist those proposals. I have no doubt that, if hon. Gentlemen opposite ever come back on to these benches, they will carry out a determined policy of extending Safeguarding and placing new duties upon manufactured commodities. Their aim again is to shift the burden of taxation on to the shoulders of the people who must buy the commodities. They know that even where the Safeguarding Duties have been imposed, commodities are still imported into the country and pay the taxes that are charged upon them. It is true that up to the present they have only succeeded in taxing commodities which represent between one and two per cent. of the total imports into this country, but, if they had their way—and they confess this openly—they would raise revenue upon 30, 40, 50 or even a greater percentage of the commodities which we import.

Who will pay the taxes that would be collected upon these commodities? They say that the foreigner would pay. They do nut agree, of course, that the foreigner can be entirely depended upon to pay when it comes to the question of taxation upon food, for they have long hesitated about meeting the demand of the farmers in this matter. They know perfectly well that the foreigner does not pay the taxes, and, if there should be any doubt about the matter, may I recommend hon. Members opposite to read carefully the notes that were issued to Conservative speakers by the head office of the Conservative party, to which my right hon. Friend referred a few days ago. Hon. Gentlemen opposite will find in those notes that the revenues that are collected by our Dominions who have tried the policy of Protection, to a very large extent consist of money collected upon import dues, and, having warned Conservative speakers against—

Mr. SPEAKER

It is a, well-known rule in this House that on the Third Reading of any Bill only those things in the Bill should be discussed. The hon. Member is going rather outside the Bill.

Mr. HUDSON

I must bow at once to your Ruling, but there have been so many efforts by hon. Gentlemen on the opposite side during these debates to raise this matter that I thought that when you were in the Chair I might be excused for raising it also.

Mr. SPEAKER

I am referring only to Third Reading.

Mr. HUDSON

In those circumstances, I must at once bow to your Ruling, hoping that there will be a study of those leaflets and booklets. I was saying that the aim of the Chancellor of the Ex- chequer in this Budget has been to place the burden more justly upon the shoulders of those who are best able to bear it, and that it was essential that he should do this in connection with the financial policy for which this party must be responsible, because we realise that on all hands we have been confronted by proposals which, if they are carried out, will leave heavier burdens than those which our people are now bearing.

The right hon. Member for Camborne (Mr. Leif Jones) has dealt very effectively with the point repeatedly made in these discussions that the Chancellor's proposals will lead to the redemption of Debt at the same time that new debts are being imposed. He has pointed out that the result of the policy of the redemption of Debt which the Chancellor is carrying out, will be that new investments are likely to be made. He did not, however, deal with an objection made by the right hon. Gentleman the Member for St. George's, who suggested that there was something unfair in a policy which led to the making of a new debt in order to meet the needs of the unemployed. The new debt that is being incurred is a debt to the Unemployment Insurance Fund, and the result of making that new debt will be the creation of new flesh and blood and of new productive energy in the community. If we do not incur that debt upon ourselves, we must raise money by taxation, or leave the unemployed to starve. Hon. Gentlemen have to be more frank about their statements on this question. Are they prepared to say, when the unemployed rise to numbers which are to be counted in millions, that we must draw away from them such arrangements that we have been able to make to prevent them from starving Is that their policy?

Brigadier-General Sir HENRY CROFT

Employment.

Mr. HUDSON

The hon. and gallant Member supports a leader who time and time again has said that in any case a Government can do very little in order to secure conditions of employment. I agree that if opportunity be given to us in the difficult time through which we are passing, we will find a way of meeting the point which the hon. and gallant Member has made, but for the present we are faced with nearly 2,000,000 unemployed. What are we going to do with them? Hon. Members opposite propose that nothing should be done, and that the unemployed should wait until employment is found. We propose that at least they shall be fed, and we have provided, in connection with our new insurance legislation which has imposed this new debt, that they shall be fed. The money is not lost, the productive capacity is not lost, for that capacity is as much built, up—in my judgment more built up—by that process than by spending money even on Debt redemption. We know that in the past when Income Taxpayers have been exempted from Income Tax, and Super-taxpayers exempted from Super-tax, they have not spent the money in new machinery, but rather on their own pleasure and on wasteful forms of expenditure. We hold that our provision for keeping the unemployed from starvation is in the long run building up the stamina and the strength of the country, and the Chancellor of the Exchequer is to be approved and encouraged in the policy which he is pursuing.

I am delighted that we have had the opportunity of resisting the tendency pursued for years by the right hon. Gentleman sitting opposite, by which the poor continue to pay more taxation while the friends of hon. Members opposite continue to be exempted and relieved of taxation. That period has come to an end, and, as far as the right hon. Gentleman can give us a lead to new and better things, that lead has been given, and all of us who are keen about the rights of the poor and the opportunities of the poor, are thankful that he has resisted the tax dodgers and the friends of the tax dodgers, and given us a Budget which brings us nearer to the time when those who can best bear the burdens of this community shall be compelled to bear them.

Sir HILTON YOUNG

It appears to me that a good deal of the speech of the hon. Member for Huddersfield (Mr. J. Hudson) consisted of that search for indirect motives in his opponents 'which always sterilises our debates. We feel convinced that hon. Members opposite will never do justice to the vital questions that come before this House until they can apprehend that what has to be decided here is not an issue between the rich and the poor, but an issue between two points of view, profoundly differing, but held with equal honesty, and supported by statistics, arguments and logic of comparable force—two points of view as to what is best for the future of our nation as a productive machine. It is on that issue that I would venture to detain the House far a few moments.

First, let me make a passing reference to the kindly criticism of some of my own recent humble observations made by the right hon. Member for Camborne (Mr. Leif Jones). He objects to the criticisms, advanced by myself and others on these benches, of the Sinking Fund policy of the Government. He said in particular that my recent contention that the Chancellor of the Exchequer ought not to allow himself to be haunted by the ghost of the deficits of past years is wrong, because a debt is more solid than any ghost. Undoubtedly a debt is more solid than a ghost, but the right hon. Gentleman has failed to observe that what is haunting the Chancellor is not a debt but a failure only to carry out to the full an intention as to the reduction of Debt. There is all the difference in the world between the two. The right hon. Member submits that it is true to say that it benefits industry to tax it in order to pay off debt. It is true that it benefits industry to pay off Debt, but it is not the taxation that benefits industry, it is the reduction of the debt, and the criticism passed upon the Chancellor of the Exchequer is that industry is getting the mischief of the taxation without the benefit of the reduction of debt, because the Chancellor is borrowing with one hand what he is paying off with the other.

Mr. MARCH

We generally do that.

Sir H. YOUNG

We have not fallen to such a pitch of inanity in our policy of public finance as generally to do that. This is the last opportunity we have of calling attention to some of the more important and profound errors of policy of the financial scheme embodied in the Finance Bill. I feel under something of an obligation to make if but a single observation upon this subject, because it has been my lot of recent years to have some experience of the public finances of other countries. Although one must not for a moment compare that task with the enormous responsibilities which rest upon the Chancellor of this great country, yet the difference is, perhaps, one of quantity rather than of quality, and if one can cull any experience in order to put it at the disposal of the House one is perhaps under an obligation to do so.

Contemplating the financial scheme of the Chancellor for this year I have imagined how it would strike somebody looking at it from the outside and trying as an impartial observer to form an estimate of our state of affairs. The first, thing that would strike him would be that the essential point of this year's Finance Bill is a large increase of taxation through the Income Tax and the Death Duties, and that that big increase of taxation is being imposed in a year of great trade depression and constantly mounting unemployment. That would stimulate the candid investigator to search for the explanation of this extraordinary reversal of the ordinary rules of common sense. He would have to take a look at the present economic state of the country, and I think he would be impressed by this outstanding characteristic, more prominent than any other the very high standard of living in this country. If one compares the standard of living here with that of other countries which are struggling with economic difficulties, it is impossible not to realise that it is exceptionally high. [An HON. MEMBER: "In which class?"] In all classes. I say without hesitation that hon. Members will fail to realise the problem which lies before them if they do not appreciate the fact that the wage earners of this country, and all other classes, enjoy an exceptionally high standard of living beside that of other comparable countries.

The second characteristic which would force itself upon the attention of any candid and impartial investigator is that that standard of living is no longer being maintained by the productive system of this country. It was built up upon the start we got as producers of the world's primary needs through the intiative and enterprise of our forbears. With the loss of that start, in which the War was the last straw, we are ceasing to maintain by actual annual production the standard of living that we are enjoying. Our investigator would convince himself of that by looking particularly at the rise of unemployment and the rise of taxation and at the falling off in the proportionate savings of the country to be put at the disposal of industry. Having noticed those two things, he would come to this obvious and common-sense conclusion, that if the standard of living is not to be reduced—and Heaven forbid that it should be, because it is the object of all of us to maintain it—then the effective production of the country must be increased.

If that be so, then the most dangerous of all things that could be done at the present time is to deceive the country into thinking that it can go on as it is without increasing its effective production. The surest way to conceal that from the country is to encourage the country to go on living from hand to mouth upon its accumulations. That is the greatest danger before the country—that it may be deceived into thinking that it can maintain its present standard of living by living on its accumulations without increasing effective production. That is exactly what the financial scheme of the Chancellor of the Exchequer does. It performs the worst disservice that it is possible to perform to the country, by helping to delude the country into continuing to live on its accumulations and not to tackle the necessity for increasing effective production. How does it do that? By the increase of the Income Tax and the increase of the Death Duties. What is the purpose of increasing the Income Tax? Simply to enable the general average standard of living to continue at its present high level by consuming more of the accumulation of the more productive classes. [Interruption.] That may be a startling paradox. It awakens reaction and entertainment in those who have not realised the real facts of the case. Such paradox may contain the deepest truths.

The second way in which it performs the highest of all disservice to the country is by making it easier for the country to put off the evil day when it must confront the necessity of increasing markets. It does that by encouraging us to live on accumulated capital in the form of Death Duties. There is a peculiar mischief in the particular form of consumption of capital effected by the Death Duties in this, that the capital which is in the hands of families, not actively engaged in industry is soon eaten up by Death Duties and passes away. But live capital in the hands of a descent actively engaged in industry from generation to generation bears a larger and more lasting burden. Death Duties specially burden the productive use of capital.

The great need of the country at the present time is precisely the same as the need of the private business. It is that we should concentrate upon economising consumption and make every effort to develop production. We should economise every form of expenditure that is not essential to increasing output. We see no signs of that in the financial scheme of the year. On the other hand we should turn the whole of our energies and attention to the search for new markets and new forms of production to replace the old forms which are lost. The financial scheme of the Government offends against both those most essential needs of the present day. It encourages consumption, and it does nothing whatever to increase effective output and earn the means of supporting our high standard of living. The present system will accentuate every economic evil in the country, and do nothing whatever to effect any economic improvement.

Mr. TOWNEND

I rise, in the first place, to refer to the opening remarks of the right hon. Gentleman the Member for Sevenoaks (Sir H. Young), who seemed to find grounds for complaint against the Chancellor of the Exchequer in his attempt to discover the motives for the policy advocated by hon. Members on this side. I think hon. Members on this side of the House are able to explain and to justify the policy embodied in the Finance Bill, the Third Reading of which we are now discussing. To suggest an inquiry into such motives is to sterilise discussion. The suggestion made is very far from the truth and it is something that we cannot accept.

I desire to add my small tribute to the congratulatory terms employed by the right hon. Gentleman the Member for Camborne (Mr. Leif Jones) to the Chancellor of the Exchequer for initiating an entirely new policy as compared with that to which we have been accustomed for the last three or four years. I well remember the introduction of Budgets by the late Chancellor of the Exchequer for the years 1926, 1927, 1928 and 1929. It is quite true that, although we never knew exactly the lines which the right hon. Gentleman was going to take, more especially in Committee, the process was aptly described as jumping from crag to crag. We seldom knew what the policy of the late Chancellor of the Exchequer was going to be. Even those who were working and supporting the right hon. Gentleman (Mr. Churchill) never knew exactly the policy that the right hon. Gentleman the Member for Epping was going to submit to the House. We are all aware what happened when the late Financial Secretary to the Treasury submitted a proposal with regard to the taxation of mechanical lighters. We know the different points of view which were presented, and how wrongly the late Financial Secretary interpreted what he believed to be the views of his Chief. I think it is due to those of us who have had very little opportunity during the Second Reading and the Committee stage of discussing this Bill to express our appreciation of what the Chancellor of the Exchequer has done, because the right hon. Gentleman has completely reversed what has been the practice for the last few years.

The right hon. Gentleman the Member for Sevenoaks made a statement that the issue which we have to consider in dealing with the finances of the country is not an issue between the rich and the poor. Our experience in the past has been that invariably it has been an issue between the rich and the poor, and between those who have and those who have not. I go to the other side of the House for my authority on that point. In the last House of Commons we had a very asute critic of his own Government in the former Member for York, Sir John Marriott, and he, in discussing the Budget of the late Chancellor of the Exchequer pointed out how necessary it was that such proposals as he was then enunciating should be "understanded of the common people who have to pay the revenue." That is the difference between the intention of the Chancellor of the Exchequer and the policy voiced by a very strong supporter of the Tory Government some two years ago.

Now we have a change, and I want to suggest, to those who on occasion have submitted very harsh criticism of the Chancellor of the Exchequer—alleging that he has departed from his old ways, that he has left behind him his old faith and his old creed—that, if my interpretation of that faith be right, it is well concentrated in a very short sentence. The concentrated creed of the Socialist idea is: "From each according to his ability; to each according to his need." The Chancellor of the Exchequer has not only endeavoured to apply the first part of this maxim, but I make bold to say that he has actually applied it in the policy of the present Finance Bill. It is true that in his attempt he has met with very strong objections. Statements have been made by right hon. Gentlemen on the other side of the House this morning that they have rendered great assistance to him in piloting his Bill through the House, but, surely, ocular demonstration during the last few weeks has clearly shown the very opposite. For the right hon. Gentleman the Member for St. George's, Hanover Square (Sir L. Worthington-Evans) to claim credit for all that is good in this Finance Bill is, surely the very height of audacity, while his suggestion that their proposals contained all that is worth while in this Bill, is, surely in the light of what we have seen, a suggestion that we cannot accept.

I am delighted that the Chancellor of the Exchequer has so successfully resisted the attempt of hon. Gentlemen on the other side to keep continually open the door for the evasion of taxation. It has even been submitted from the other side that to some extent evasion of taxation is justifiable. That may be a business morality of certain people, but, surely, again, it is something that we are not prepared to accept. The complaints from Members on the Tory benches that the inquiries which are necessary for discovering the material which the Inland Revenue Department requires, in order to deal with tax evasion, are, surely, a pitiable exhibition. They are a complete reflection upon the business honesty of those who are connected with the huge undertakings which to-day go by the name of finance. It may be the standard to which they are accustomed; I do not know; I hesitate to believe that it is; but I say that, on the other hand, according to my own experience, we have in Indus- try to-day hundreds of thousands of men who come well below the Income Tax line, and who have in their hands confidential information of the kind that the Inland Revenue authorities must inquire into—confidential information of a highly important character, upon which the businesses of this country depend; and yet, in the whole of my 30 years' experience in industry, I have known very few, if any, cases where those lowly-paid individuals have ever betrayed the trust reposed in them. I suggest, therefore, to hon. Members on the other side, that, in the inquiries to which they object, but which are essential, and which, as the late Chancellor of the Exchequer will remember, he himself declared two years ago to be necessary, there is certainly nothing for them to be afraid of unless they are attempting to hide something. If they are attempting to hide something, then the policy of the Chancellor of the Exchequer for the prevention of tax evasion is justified right up to the hilt.

I want to say, in conclusion, that, just as I am confident that complete effect has been given to the first part of the axiom to which I have referred, in the spreading of the burden on the shoulders best able to bear it, so I am confident that equal effect will be given to the second part of that axiom in good time, and, I hope, in a short time. I want to assure hon. Members opposite of the support which the Chancellor of the Exchequer has, and which will enable him to carry the Third Reading of this Bill, and that he can equally count upon the support of well-wishers for the welfare of society as a whole. I do not desire to divide the classes, but, in regard to the second part of that axiom, namely, that to each should be given according to his need, the Chancellor of the Exchequer will get the fullest possible support, the most ready and willing support, in the work that will then lie to his hand. I want again to congratulate him on the way in which he has resisted all attempts to weaken the application of his policy in this Finance Bill, and to assure him that on these benches behind him he will find the necessary support for carrying it out.

Mr. BUTLER

Like the previous speaker, I do not propose to detain the House for very long. I wish, first of all, to deal with some of the extraordin- ary remarks of the right hon. Gentleman the Member for Camborne (Mr. Leif Jones). Much as we enjoyed his speech, we shall, no doubt, as it comes from so eminent a source, look at it with that seriousness which he would probably prefer. He declared that, in relation to the national finances, we should return to those elementary principles that we learned in doing our early algebra in the nursery. One result of the sort of precociousness with which the right hon. Gentleman and I started our algebra at so early an age was that he and I at that time learned that certain fractions were much easier than others, and the right hon. Gentleman informs us that it would be much easier if we had a fraction of one-quarter, that is to say, 5s. in 20s., as the basis of Income Tax. I think a suitable reply to that suggestion would be that, surely, a fraction of four-twentieths, or one-fifth, which I think the right hon. Gentleman will agree with me is the correct algebra, would be even simpler than 5s. in 20s., or one-fourth. I think that that is a suitable reply to that somewhat strange argument of the right hon. Gentleman.

The next extraordinary argument that he used was that there was less uncertainty with the present Chancellor of the Exchequer than with the late Chancellor of the Exchequer, whom he described as being of a fidgety disposition. I would only say that one great objection that we have had to the present Chancellor of the Exchequer is that, whether he wishes it or not, he has undoubtedly created a great feeling of uncertainty in the country, and that feeling of uncertainty, particularly with reference to the Safeguarding Duties, is at the basis of a great deal of the present industrial depression. The right hon. Gentleman may say that it was not his intention to create uncertainty, but the fact remains that, if one looks back over the many Chancellors of the Exchequer in the past, there have been few who have succeeded in creating greater uncertainty; and yet we have the right hon. Gentleman the Member for Camborne saying that the present Chancellor of the Exchequer gives him a sense of satisfaction and a great sense of certainty. I can only say that that appears to me to be exactly contrary to the impression in the country. I am convinced, and, indeed, we have already had proof, that the impression in the country is totally contrary to the impression created in the Liberal party, and, therefore, it is not surprising that the right hon. Gentleman should not be interpreting to the full the spirit of the country in this matter.

Mr. LEIF JONES

The hon. Member seems to be under the impression that the impression here is the impression in the country, but I assure him that it is not.

Mr. BUTLER

I can only reply that, in the great words of Mirabeau, we are here as the representatives of the people, and it will be my business to-day to represent the wishes and feelings of the people, and particularly the wishes and feelings of the people in the district which I represent. In my own district there is a factory which has been hit by the uncertainty about Safeguarding which has been one of the greatest charges in the indictment against the right hon. Gentleman.

I wish to make a few straightforward and simple remarks about the agricultural aspect of the Bill, and to explain why I consider that it is of no use to the agricultural interest. We moved several Amendments in Committee about beer, but we had absolutely no result, and I consider that the Chancellor has lost a very great opportunity of assisting the countryside, and the growers of barley in particular, in some sort of Excise rebate. He could have done it quite easily. We had hoped that he would prove his sympathy for the arable districts by helping us in the matter of beer, but we have been bitterly disappointed. Beer is a great leveller and, if we could have had beer made from British hops and pure ingredients, it would have proved itself a greater leveller than it has ever been. It would have tied the men of the past, who have made the country what it is, with the men of the present, who could have drunk pure beer if they were encouraged by the Chancellor. He could have made the towns realise the difficulties of the country because, as they drank their beer, they would have realised the labour and the troubles of the men who produced the barley which ought to be the chief ingredient.

The Chancellor of the Exchequer has shown a lack of imagination in dealing with the Beer Duties and has lost an opportunity of helping the depressed section, the arable section, of agriculture. Another opportunity he lost in connection with agriculture was on the question of mechanically-propelled vehicles. He declared that concessions had already been granted by the late Chancellor, but we maintain that, despite that fact, there are many anomalies still existing whose removal would very much benefit the agricultural user of tractors and lorries. The points have been gone over so many times about the roads not being built for the benefit of agriculture that I think the right hon. Gentleman realises what the country districts feel on the point. I only raise it to show that he lost another opportunity of helping the agricultural industry under Clause 6.

The last point I wish to raise is a larger and more general one which was dealt with very fully in Committee. That is the question of the Death Duties on agricultural lands and the new Estate Duty Clauses. Many of us feel that the only reason why the Labour party has been able to command any respect is because they have said they are the party of youth. They have said, "Give us a chance and we will introduce new ideas, we will introduce a new millennium, and we will make Great Britain a pleasanter and greener place," but in every example that I have seen of their legislation they have stuck more to past principles than any party has ever done. This is particularly true of the great opportunity that was given to them to deal with the Estate Duties and with the future of agriculture. There is need for a great deal of imagination by our statesmen if agriculture is ever to be made prosperous again and, when the Financial Secretary to the Treasury said in Committee that he could not depart from the existing principles of Estate Duty taxation, it was an indictment of the present attitude of the Labour party. It was pointed out to the Financial Secretary that those principles of Estate Duty do not even represent the principles of Adam Smith, which have been quoted by the hon. Member for Huddersfield (Mr. J. Hudson) to-day as being the principles which ought to be at the basis of taxation.

If those principles do not even represent Adam Smith, and do not fit the world to-day, it should be the party which says it has the imagination of youth to make England a better place which should consider an alteration in the Estate Duty and should attempt to put the Death Duties on the capitalised value of what is taken out of the land instead of the present condition which makes it so difficult for any landlord to inherit land at this time. He has the courses before him of either letting a new proprietor come in who does not understand the countryside, or dividing up his estate amongst his tenants and making them buy it, in which case their capital is so tied up that they cannot improve their farms or have the capital which is so necessary, or he can mortgage his estate, which will prevent him running it in a businesslike manner.

We want to take a statesmanlike view of the future of agriculture. We want to see an entire regeneration of English agriculture, binding it up with the industries of the country. If it is going to be taxed in such an unfair way and in a different way from every other industry, we cannot build up agriculture and the industries of the country together as they ought to be. We want to develop our agriculture in an industrial way, in fact to industralise it, without removing any of the rural amenities which at present are its great attraction, but we have heard no word of that. There is no such looking into the future by the Chancellor of the Exchequer. As far as we can see, they do not appreciate or understand the difficulties of agriculture. There is practically nothing due to the right hon. Gentleman that agriculture can be thankful for in the Bill and I think he should be ashamed of having lost such a great opportunity of looking into the future.

Mrs. HAMILTON

I do not know whether the Chancellor of the Exchequer regrets the opportunity of looking into the future which apparently has been denied him, and I am sure he is not very anxious to receive a large number of bouquets even from his own side of the House, but I should like to join the sentiments of my own industrial constituents with those which have been expressed by other Members on this side of the House, having realised that up and down the country, particularly in the North of England, there are very large bodies of people who understand the general drift of the Budget very well indeed and are profoundly grateful to the Chancellor for the fact that he has placed himself between them and the very acute and grave distress which they would otherwise have to suffer. If Sevenoaks, St. George's, Hanover Square, and Saffron Walden are not satisfied, he can take comfort from Huddersfield, Stockport, Blackburn and the great mass of the industrial districts of the North. Since the hon. Member for Saffron Walden (Mr. Butler) has been indulging in nursery reminiscences, I am reminded of a poem which used to be frequently cited to us in our young days to the effect that "while papa says 'Pooh! she may,' mamma says, 'No, she shan't.'" The Chancellor of the Exchequer is obliged to a very large extent, through no wish of his own, to be continually in the position of mamma who says to the child who thinks that big cake would be so delicious, or this or that particular thing might be done, "No, you must not. I am there to look-after you to see that you have what is good for you and do without what is not." We have to depend very largely on his wisdom as to whether the contribution which this House can make to the welfare of the community is of value.

It is from that point of view that I want to place on record the fact that we on this side in all sincerity take a point of view of national economy which is wholly different from that expressed by the hon. Member for Sevenoaks (Sir H. Young). If we do not always express our views with that objective calm which he does, I think that it is because a great many of us are too deeply concerned with and too near to some of the difficulties of this period of distress to keep our calm of judgment or our complete objectivity. He used one phrase—I want to be entirely just—about the standard of life of our people. He said "Heaven forbid that we should lower it." If we were going to rely upon Heaven to forbid the lowering of the standard of life of our people, we should be in a poorish way at the present time. We on these benches prefer to rely on the efforts of the Chancellor of the Exchequer. The chief point of his Budget and the reason why it is so bitterly attacked is simply that he has chosen to look in the right place when he has to discover which in fact are the productive classes in this country. He recognises the obligation of this country, which is not only a moral but an economic obligation, to maintain to the social services, and so give the workers—the genuinely productive classes—an opportunity of giving their contribution to industrial reconstruction.

It is surely not reasonable at this period in our history to have Members in any part of the House talking as if British industry, an industry in difficulties, were to be located simply in the offices of the great business concerns and to be made exactly identical with their directors. Industry covers more than them. Industry consists of the brains of the country, the men and women who carry on productive work, and the existing class of British employers are not to be identified with British industry as if their present position were permanent and as if it were on them alone that we had to depend for recovery and expansion. Fortunately, we have other forces to depend upon. I hope that when the need of making a case has passed away hon. Members opposite will do more justice than they have yet been able to do to the contribution which the Budget really makes to that confidence in the future of our country and that optimism about its vital resources which are so necessary to us to-day.

I do not pretend to have followed the whole of the debates which have taken place, but I have read them all with less improvement than I should have hoped after such an intensive and detailed course of reading. I studied the tactics of the self-immolators who threw themselves in front of the Chancellor of the Exchequer's chariot in sacrificial attitudes with the intention of delay, and was painfully reminded of an incident which happened, I believe, to an hon. Member of this House some years ago. He was so unfortunate as to be thrown down by a tram which was passing along the Embankment. He was seriously injured, and he certainly did not delay the tram, but he was deprived of all his outer garments, and naked and ashamed slunk away. I think that the more the public generally study the opposition which has been put up against the Budget, the less they will feel that there is any ground for congratulation of the persons who have led it. One can only assume that their style has been cramped by too much resemblance to that marvellous lady who appears in the pages of Dickens, Mrs. Gummidge. Mrs. Gummidge, as hon. Members will remember, was always thinking of the old 'un. Hon. Members opposite have also been thinking of their old 'un, of their Mr. Gummidge, a gentleman very different from the Chancellor of the Exchequer, whose character certainly does not emerge very clearly from the pages of David Copperfield, since only one trait is mentioned of him, and that is that he was kind to his friends. The Chancellor of the Exchequer has different friends. That is made clear in the Budget. That the country knows. I hope that Members of the party opposite will have plenty of opportunities of attacking the Chancellor of the Exchequer, not only on this Budget, but upon a series of Budgets.

1.0 p.m.

Sir H. CROFT

I am sure that the House will have been very interested to hear the openings of the various speeches which have been delivered this afternoon. I think that at least we can congratulate the Chancellor of the Exchequer on the fact that he has had so many bouquets from his own side, to which he has not been accustomed very recently. He also had a heartening speech from the representative of the Liberal party, the right hon. Member for Camborne (Mr. Leif Jones), and he can also, I think, congratulate himself on this occasion that Liberal votes will probably coincide with that Liberal speech, and that he will probably have the support of the Liberal party in the Lobby. The hon. lady the Member for Blackburn (Mrs. Hamilton), in her delightful speech of quotations, was encouraging us to keep perfectly calm in these times, when we on these benches, at any rate, hold the view that there has been far too much calm in the party opposite. Our complaint is that the Finance Bill adds to the burdens of the country in the face of the terrible problems which are confronting us, and that in fact no real attempt has been made to solve the great problem of unemployment except by mere palliatives. The hon. lady referred to the Dickensian character of the Chancellor of the Ex- chequer, or otherwise—I am not quite sure which it was. I think we can at least say that he has all the qualities of Mr. Micawber, and that he is expecting that something will turn up.

I rose this afternoon to endeavour to point out to hon. Gentlemen opposite—I may be quite unsuccessful—that in all their great desires to make wealth pay its fair share, as they call it, to make more levies upon the wealth of this country, they are entirely missing the point. That might be very well if you were merely budgeting for this year or for next year, but, if you pursue this course, it is going to have a disastrous result upon the finances of this country in the future. I know if you mention a rich man that you create a feeling of wrath among hon. Gentlemen opposite. A very large number of rich men in this country—and I think that the fact will be admitted—have been smilingly bearing their burden since the war, all the time hoping that this colossal taxation was going to be reduced, and trusting that trade was going to get better and so on, and that gradually we might get somewhere near the normal rate of taxation. The people who have to pay this great taxation are undoubtedly—and there is nothing immoral in this—taking steps to distribute their wealth. I know that hon. Gentlemen opposite will say that that is extraordinarily good Socialism, but it is not going to be good for the finances of this country. I do not think there is anybody in this House who does not agree that graduated taxation is good, but, when you pass a certain point, you are going to defeat the whole idea of graduated taxation. May I remind the House that the right hon. Member for Darwen (Sir H. Samuel) pointed out that a very rich man with an income of £50,000 a year in his Income Tax, in his Super-tax and in his insurance against Death Duties is actually paying over £50,000 per annum. The figure he gave was £50,900.

Hon. Members opposite know that if we are going to see an expansion of industry in this country it must come from the investment of large liquid wealth. Where is that wealth to come from if you are going to dry up the sources of that wealth, as happens in this kind of taxation? When big money has been required to rationalise industry to put in new plant, up to now it has nearly always been got from the men upon whom the Chancellor of the Exchequer's scorpions are being used today. The Income Tax and Super-tax paid by a man with an income of £50,000 is £25,690. Supposing that money were divided equally among 10 men—this process must go on, because people will not stand that kind of injustice—do hon. Members realise that it would be very bad business for the Exchequer, because those 10 men would only pay in taxation £13,690? There would be a loss to the Revenue at once of £12,000. If that income were divided among 50 men, the taxation paid would amount to £8,150, and the Exchequer would lose £17,400 a year. If right hon. and hon. Members opposite really believed that the revenue was going to flow in more expeditiously, that the country was going to be better off by this sort of legislation, and that we should be able to retain the whole of the wealth that is required for industry, there might be something in this policy, but you have reached such a time that you are, undoubtedly, going to decrease the yield from these great fortunes, if this sort of policy continues, and then the last state of the country will be worse than the present.

Somehow, we must get down to the fundamental fact that what we need to achieve is greater work and greater production. The hon. Member for Blackburn referred to that point. I am glad that she addressed her remarks to the Chancellor of the Exchequer, who seems to have forgotten the producer. He thinks too often of the consumer. I would remind the hon. Lady that the consumer is not the person who ought in the first place to have our consideration. All wealth comes from production. We may Consider the lilies of the field, how they grow; they toil not, neither do they spin. It is the great mass of producers that we have to think about to-day, tomorrow and the future, if we are to build up the wealth of this country. I have noticed that the Floor of the House is narrowing and that there are many leading trade unionists who are beginning to realise that fact. I think the Chancellor of the Exchequer neglected that fact when he dealt with the existing Customs Duties. We have had an explanation why he is going to drop the Safeguarding Duties, some of which are included in our discussion to-day, as are the McKenna Duties. I cannot understand how he can justify himself in allowing he duties on the smaller industries to lapse: industries which had to prove their case, had to go through a most exhaustive examination and were almost down and out, and yet he proposes to maintain fairly high Protective Duties upon those substantial industries which have very large voting power in this country. It may be an explanation that he gets a larger revenue from the larger industries, but some of us are surprised that at such a period he should have allowed himself to be deflected in that manner from his strict economic duties.

The right hon. Gentleman made a speech the other day—I think he was referring to me, but I did not have the opportunity to reply—which shows what has guided him in the policy that he has adopted to these duties. He told us that if the foreign worker produces goods in his own country and sends them here, he is providing employment for a British workman. I am not going to argue that matter, because the time is not suitable and it would be out of place. Supposing that we admit the accuracy of his contention—of course, he means that goods are paid for by goods, if he takes the case of invisible experts—I think he will agree that invisible exports do not give the same employment as productive industry. Is it not equally true that goods are paid for by goods that are made in this country, and that if he is giving employment, say, to a British glove maker rather than to a foreign glove maker, those goods are exchanged for goods in this country. Therefore, if his argument is true about the foreign workman, if the work can be carried out equally well in his country, there is a treble advantage, to British labour, to British industry and to the British Exchequer, if those goods are manufactured in this country.

We have seen very great increases in the national burden for the upkeep of our unemployed. The Chancellor of the Exchequer, when he is contemplating these duties says: "After all, look at the position of this country when compared with other countries. Even though it may be true that we are going through difficult times, look at our trade as compared with foreign trade, and look at our exports per head of population." Let us look at the figures from 1880 onwards. I take the year 1880 because I suppose we may say that the system to which the Chancellor of the Exchequer clings was then well under way, and it was a period when the opposite systems in our chief competitive Protected rivals were also well established. In 1880, the United Kingdom export of manufactures amounted to £197,000,000, while those of France, Germany and the United States combined amounted to only £181,000,000. In other words, those three great countries exported £16,000,000 worth less manufactured goods than did this country. In 1913 the position had so completely reversed that those three countries exported £325,000,000 more manufactures than we did. The right hon. Member for Darwen (Sir Herbert Samuel) who, I think, mentioned these facts in a previous debate, cannot be satisfied with that extraordinary change. Those three countries which in 1880—at a time when we had only recently adopted the policy of free imports—exported less manufactures than we did, exported in 1929, £841,000,000 more than we did.

Mr. DEPUTY - SPEAKER (Mr. Dunnico)

How does the hon. and gallant Member relate this argument to the Third Reading of the Finance Bill? On the Third Reading of a Bill we must discuss what is in the Bill and not what the hon. Member thinks ought to be in it.

Sir H. CROFT

Of course, I bow to your Ruling, lint I submit that I am not going outside the usual limits of the debate if I refer to the implications of the McKenna Duties, which are included in the Finance Bill, and the Safeguarding Duties, so long as I do not stretch my argument to other subjects such as food taxes, which were raised by the hon. Member for Huddersfield (Mr. Hudson), and who was allowed to pursue his argument. May I dismiss the subject by reminding the Chancellor of the Exchequer that we have no satisfaction, so far as our position in regard to the export of manufactures is concerned, when we realise that since 1913 the United Kingdom has increased her exports per head of the population by 26.7 per cent., while France has increased hers by 46.5 per cent., Germany by 54.2 per cent. and the United States of America by 115.8 per cent.

Sir HERBERT SAMUEL

Shall we be in order in replying to the hon. and gallant Member for Bournemouth (Sir H. Croft) by pointing out the fallacy of percentages and referring to the fact that the experts of the United States includes £100,000,000 worth of petroleum.

Mr. DEPUTY-SPEAKER

That is the reason why I pulled up the hon. and gallant Member a few moments ago. On the occasion of the Third Reading of a Bill the only matters the House can discuss are those contained in the Bill itself. If the hon. and gallant Member was allowed to pursue his argument I could not deny the right of reply to other hon. Members, and therefore he must not continue along those lines.

Sir H. CROFT

I have no desire whatever to transgress the rules of debate, and perhaps, Mr. Deputy-Speaker, you were not in the House earlier when the hon. Member for Huddersfield made a general statement regarding Free Trade and Protection—

Mr. J. HUDSON

And I was pulled up and prevented from continuing my argument.

Sir H. CROFT

The hon. Member for Huddersfield was allowed to speak about Safeguarding and the McKenna Duties and food taxes. If he will refer to the OFFICIAL REPORT he will find that I am correct. I will only say this, that under our present financial system we are year by year imposing greater burdens upon productive industry. There is only one way in which we can alter this, and that is to pursue the course which the Chancellor of the Exchequer is allowing under the McKenna Duties. He raised a large revenue from these duties last year and included in the present Budget is £12,000,000 of revenue, which is coming from foreign countries without inflicting any hardship upon our industries and which, indeed, are a perfect Godsend to the industries concerned. In the course of our debates on the Finance Bill the Chancellor of the Exchequer has mentioned that it is possible to raise very large sums of money by Customs Duties. He spoke of a figure of £100,000,000, and I think he mentioned £200,000,000 if you include food duties. He, of course, is opposed to that; but there lies the opportunity and he has himself assented to a small start in this present Bill in regard to the sugar bounties and the McKenna Duties. He has assented to the principle, and we are never going to reduce taxation in this country and set our industries upon their feet again unless we extend that principle and raise this large revenue, which, in my opinion, is possible, from our foreign competitors.

Mr. BENSON

I have listened to almost every speech that has been made during the debates on this Finance Bill, and, although many of them have been of an extraordinary character, none has been quite so extraordinary as the speech of the right hon. Member for Westminster, St. George's (Sir L. Worthington-Evans), who opened the debate this afternoon. His description of the course of the discussion on the tax evasion Clauses was little less than a travesty of what actually took place. He suggested that the Conservative party were desirous of helping the Chancellor of the Exchequer to prevent tax evasion. If their attitude really was intended to be helpful then I am certain that every night my right hon. Friend prayed to be protected from his friends. As a matter of fact, there was no intention of helping. Through the whole of those debates we had a cynical fight designed for the purpose of maintaining the possibility of tax evasion and for blocking in every way the aim of the Chancellor of the Exchequer to prevent tax evasion. The right hon. Member for St. George's claimed that they had improved the Clauses, and as an evidence he said that 30 Amendments moved by the Opposition were accepted by the Chancellor of the Exchequer.

That is true, but what were those Amendments? Not a single one was fundamental. They were all little niggling verbal Amendments to make something clearer. Occasionally, the Chancellor of the Exchequer said that he would accept them although the point was already implicit in the Clause, but that if hon. Members opposite desired it to be made doubly certain he was prepared to accept the Amendment. If the other 300 Amendments moved by hon. Members opposite had been accepted there would not be mere loopholes for tax evasion but carriage ways, through which a coach and four might be driven. The right hon. Member for St. George's said that there were still loopholes for tax evasion. It is not possible in one Finance Bill to make the system watertight, and although there may be loopholes there is one thing upon which we can congratulate ourselves, and it is this, that despite all the efforts of the Opposition we have succeeded at any rate in stopping some of the larger and more important loopholes for tax evasion The right hon. Member for Camborne (Mr. Leif Jones) summed up the attitude not only of the right hon. Member for St. George's but of the whole Opposition very admirably when he said that no matter what the Chancellor of the Exchequer did or did not do he would be blamed.

The right hon. Member for St. George's said it was despicably mean to refuse the threepence rebate on the insurance policies of poor people, but when the Chancellor of the Exchequer in his Income Tax proposals safeguarded the interests of people with small means and proposed that the incidence of the increase should fall upon those with larger incomes there was no congratulations from the right hon. Member that he had safeguarded the interests of poor people. The fact that a small number of large incomes had to bear the burden was described as class war and corruption, and by almost every adjective to which hon. Members opposite could lay tongue. It is not often that I agree with bon Members opposite but I am most heartily in agreement with the right hon. Member for Sevenoaks (Sir H. Young) when he said that the taxation of industry to pay off debt is bad. I hope the Chancellor of the Exchequer will listen to what I propose to say. I go further than that. I say that all taxation of industry is had. I have always believed that; and the reason why I am so enthusiastic about this Budget is that it reduces taxation upon industry and places it upon profits.

This Budget completely reverses the system that has been growing up in the last five years under the right hon. Member for Epping (Mr. Churchill). [Interruption.] Really hon. Gentlemen oppo- site should not be flippant immediately taxation upon industry is discussed. They squeal about it when they get taxation put upon profits upon unearned income, upon dividends and upon rents, but they should really try to get into a serious frame of mind when we are discussing the problem of taxation on industry, which is a bad thing. The whole direction of this Budget is towards a reduction of indirect taxes, the taxes on lace, the taxes that fall directly upon industry, the protective taxes, and an increase in the direct taxes which do not affect industry. Income Tax is not a burden on industry. It falls upon profits. Income Tax is not merely collected but is actually assessed after the goods produced by industry have been sold and probably consumed. It cannot in any shape or form enter into the cost of industry.

Mr. ARTHUR MICHAEL SAMUEL

Then why do co-operative societies squeal so much about it?

Mr. BENSON

Because they object to—[interruption.]

Mr. SMITHERS

On a point of Order. Is it in Order for one hon. Gentleman to call another an ignoramus and to tell him to shut up?

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden)

I did not say "Shut up!"

Mr. SAMUEL

I take no offence. The British people do not like rudeness and abuse. The hon. Gentleman injures himself just as much as an hon. Member injured himself the other day when he walked off with the Mace.

Mr. BENSON

I am asked, why do the co-operative societies squeal, as the hon. Member calls it? The co-operative societies do not squeal about Income Tax. What they do object to is payment of Income Tax upon dividend which is not income. That is the position. [Interruption.] Hon. Members may laugh. All I can tell them is to read the Royal Commission's Report. With regard to Income Tax, we know perfectly well that it is not a cost on industry. It is necessary only for hon. Members to read the Colwyn Report. If that does not satisfy them, common sense and an examination of the facts should convince them that Income Tax, direct taxation, does not fall upon industry, does not increase industrial costs and is not an industrial burden. It may be a burden on the gentlemen who take the profits of industry. About that we are not worrying.

With regard to indirect taxation, which hon. Gentlemen opposite regard as the desirable method of taxation, I regret to note that some relic still remains in this Budget. Indirect taxation is a very direct taxation upon industry. It falls, not upon the product of industry, the profit, but upon the raw materials of industry. It is bound to increase the price of the raw material. You have only to compare price levels in taxed countries with price levels in this country to realise that fact. If we have to compete with foreign markets—we are finding it difficult enough now, Heaven knows!—how can we hope to compete if the price of our raw materials is to be raised by indirect taxation? There is only one way in which you can do it, and that is to make a saving on other matters than raw materials—on wages. Indirect taxation is going to have two effects. It will not merely increase the cost of what the poor buy, but it will increase the cost of production, and that can only be met at the expense of wages. Therefore, indirect taxation, which is the sheet-anchor of the industrial policy of hon. Gentlemen opposite, will have a two-fold effect on wages—it will reduce wages in order that we may continue to compete abroad, and increase the price of everything that is bought. It is because direct taxation is once more adopted as the sheet-anchor of the Chancellor of the Exchequer, and because he has shown that he realises how important it, is that industry shall be protected from taxation, that I am such a whole-hearted supporter of the Budget.

Lord STANLEY

. Not one of the political supporters of the Chancellor of the Exchequer, of whom the hon. Member who has just spoken is one, can possibly deny that the Budget is completely out of tune with the requirements of modern-day industry and modern-day conditions. We all remember how often before and during the Election we were told that the keen and vigorous modern minds of the Socialist party were going to perform the miracles which could not be performed by the effete old parties. We, therefore, looked forward to this Budget with a certain amount of apprehension but with a great deal of interest. We did think that we should find some new and original method of taxation proposed and some further suggestions for the development of industry. Yet we find the whole way through no single syllable which will give us any assistance in that direction. The Government have merely turned to the most obvious and most disastrous form of raising money, and that is by an increase of direct taxation. Throughout the Budget there is no hope given of providing employment for a single man or woman, except possibly the Clauses dealing with companies and tax evasions, which, I understand, will give more than full-time employment to the legal profession for many years to come.

The only legacy which the Chancellor has left to us by his budget is a feeling of despondency and uncertainty. He has certainly done one thing, and that is to fulfil one of the pledges which he and his party gave at the election. That pledge was that they would increase direct taxation in their first Budget. The right hon. Gentleman has fulfilled that pledge at the expense of raising the number of unemployed men and women to very nearly 2,000,000. This Finance Bill shows the fundamental difference between the party opposite and our own party with regard to taxation and trade and industrial questions generally. We believe that the one essential is to have the industry of the country prosperous, and men and women fully employed, and that by the money thus made the Chancellor of the Exchequer of the day will be able to provide the social services which we are always so anxious to vote for in this House. The Socialists take the contrary point of view and put the cart before the horse. They are ready and anxious to spend money, and yet more money, on social services, without first deciding where the money is to come from. They seem to think that because money comes by direct taxation from people whom they consider to be in a position to pay increased taxes, that There is going to be a never-ending supply. They utterly fail to realise that any increase in direct taxation must, inevitably, be a burden on industry and increase the number of the unemployed.

The present Government are like so many individuals of whom one knows. Nothing seems to be their fault. Anything that goes wrong is due to circumstances over which they have no control. When we were in power they were always telling us and telling the country that if they held the reins of office they would immediately be in possession of a golden key which world open the door of prosperity. Now that they are in power, now that they have the opportunity of bringing prosperity to this country, they complain bitterly about world conditions and wicked financiers ruining their well-laid plans. They never seem to consider that it may not be the fault of outside conditions, but, fundamentally, the fault of their own policy. We are fortunately to rise for a fairly long vacation before many days, and I hope that hon. Members opposite will take the opportunity of going to foreign countries, or preferably of going to the countries of the Empire, and seeing for themselves, some of the effects of this heavy taxation on our export trade. I have been fortunate enough to be able to go abroad on one or two occasions since I have been a Member of Parliament, and wherever I have gone, I have found that our failure to sell our goods in various countries has been due to two causes. The first is inadequate salesmanship, over which, obviously, hon. Gentleman opposite have no control. The other is the prohibitive cost.

Speaking particularly of the export trade of Lancashire, what we want to do there is not to sell a small amount of cotton at a very high cost, but to sell a large amount of cotton at a very low cost. The people to whom we want to sell are terribly poor, and unless we can cut down our cost to rock-bottom and produce in competition with other countries like Japan and India we have little chance of increasing our export trade. We find the cotton trade in its present appalling condition and then the Chancellor of the Exchequer comes down upon it, not with any possible solution of its troubles, but with an increased burden in the form of added taxation. There is no doubt that this increased taxation is giving manufacturers a feeling of hopelessness. There were some who were making small losses, but who were hanging on in the hope that better times would come, that governments would change, and that they might eventually return to a condition of reasonable prosperity. Their hopes have been completely killed and I know of many firms which have gone out of business for good and all, with resultant unemployment. We find that state of things on the one hand, and on the other hand we get a great increase in the Death Duties which, again, must act as a deterrent on people saving during their lifetime. It may indeed be said that it increases the horror with which one views the approach of death, to think that half one's savings are going to be taken, not for some cause that is fundamentally for the good of the nation, but to buy off some of the rebellious members of the Chancellor's own party.

I wish to speak for a few moments on the unfair reaction of Death Duties on land values. I am sorry that the Chancellor of the Exchequer is not now in his place because I think that the Financial Secretary heard these arguments at considerable length during the Committee stage, and I wish the Chancellor of the Exchequer had been here to give us his views on this part of the Bill. I admit that I am, in this matter, an interested party, but if Members are not to be allowed to speak on subjects of which they know something, merely because they are financially interested, we should not get very far in our Debates. I do not expect any sympathy from the Members of the party opposite or of any other party who have the old-fashioned and antiquated ideas of the uselessness of landlords. I know there are some people, chiefly to be found in the ranks of the Government party, who hold that view and I think it is largely that view which has prevented the Government from being able to come forward with an agricultural policy. It is the fact, however, that while there may be bad landlords as there are bad capitalists and possibly bad trade unionists, the great majority of them are good and useful members of the community.

They have to know their business and carry it on efficiently. They may be people who have inherited homes, which have been in possession of their families probably for centuries, and in such a case it is only by careful business management that the owner is able to stay in that home for a lifetime and hand it over to his son. They may be people who have gone into farming as a business and are determined to make it pay if possible. But I think it will be found that landowners, on the whole, run their estates with considerable business ability, and that they are being unfairly hit by the Death Duties, as those duties are at present worked. In all other forms of investment and property one knows the exact value upon which one is going to be taxed, whether shares or anything else, and no question of amenity value arises. What we complain of as landowners is that we are not assessed on the value of an estate for agricultural purposes as we ought to be. Amenity value and the possible future value for other purposes are taken into consideration. That we claim, and I think justly claim, weights the scales unfairly against us.

There can be no reason for the desire to break up these large agricultural estates into small units. It cannot help the Treasury, because a large land-owner is probably now paying Super-tax, whereas if the estate is broken up into 20 or 30 farms, none of the tenants who will become the owners of the farms will be in a position to pay Super-tax. Therefore the Treasury will lose. Agriculture will lose, because capital which is so vitally necessary to carry on experimental and research work will be going out of the industry. When in all other forms of industry, the tendency is, quite rightly, towards organising on the larger units, why should the Government by these heavy Death Duties try to produce the opposite effect in agriculture, and break up the big units into smaller units which cannot be economically or satisfactorily worked.

There is no doubt, the fact that a prejudice exists against agriculture, particularly against agriculture on a large scale, deters people from putting capital into the industry. There is no doubt at all that one of the reasons for the depression in agriculture is the appalling lack of capital. I agree at one point with the last speaker, and that is that we have had considerable lack of success in having our Amendments accepted by the Chancellor of the Exchequer. The more is the pity, both for the country and for the reputation of the Chancellor, but hard as we have fought him over his Budget, we intend on this side to fight a great deal harder, and, we are sure, with a great deal more success, to ensure that no further Budget of such a disastrous character can possibly be introduced either by the right hon. Gentleman or by any successor belonging to the Socialist party.

Mr. ALBERT LAW

I want to put before this House the confusion of mind that comes to an amateur such as myself when listening to the exposition of the experts on finance. It has been suggested to us again that direct taxation is detrimental to the prosperity of the nation, and others have emphasised the virtues of indirect taxation as a means of restoring the depressed industries of this country. It has been suggested that some of us should go abroad to study the conditions of our competitors, in order that we might understand the difficulties of our own people in industry. Some of us have never had the opportunity, and are not likely to have it, of enlarging our knowledge in direct contact with conditions abroad, but I feel that the Chancellor of the Exchequer has certainly taken a step in the right direction in his Budget. While he has not yet been able to carry out his complete ideal, as given to the Members of his own party and to the public on other occasions, by the removal of every tax on the food of the people, that is certainly a goal to which he is moving, and which some of us are hoping to see him accomplish in a Budget of the immediate future.

In regard to the arguments about taxation as the impediment and the destructive element in our industry to-day, it has been suggested that there will have to be a different approach to the problem of industrial conditions if industry is to revive and to provide employment for our people now unemployed. I agree that there will have to be a different approach, but I think our friends need to realise that in the cotton industry, with which I have been connected all my life—for over 40 years I have had to earn my livelihood on my bare feet, so that I know something of the problem—we are to-day selling our goods to the foreigner as we have always sold our cotton products, but we are taking from the foreigner to-day in return for our cotton products more money than ever we received from the foreigner before the war. In spite of the fact that over 50 per cent. of our cotton operatives in Oldham are unemployed, in spite of the fact that scores of our factories are idle to-day, more money is coming into our country now from our foreign customers than came to us in the days before the war.

It is not a reduction in the capacity of the foreigner to purchase that is responsible for our unemployed factory operatives; it is the abnormal charge that we are making for our products that limits the capacity for their consumption, and I am more concerned in finding our people back in the mills than I am about extracting further contributions from the people who buy the products of our mills. Therefore, I want the costs of our production to come down, but the Balfour Committee has shown us quite plainly that it is not along the lines of reduced taxation that there is this larger hope to be held out to our people.

Sometimes operatives are reminded that they are conservative in their attitude to the industry's welfare as a whole. We are told that we must break away from the conservatism of the past in our trade unions and that we must agree to certain modifications to meet the new demands in the circumstances of the day. As an operative for over 40 years, I have always tried to be intelligent in my understanding of my industry, and the confidence of my colleagues from time to time has shown to me that they have appreciated my efforts to encourage them and to lead them into an intelligent understanding of their industry. Yet I say to-day, deliberately, that if all the cotton operatives in the industry agreed to work for no wage at all the cotton industry would not be in a competitive position in the markets of the world. Therefore, to ask us to break from our conservatism and to say that we have the power to make a contribution that will restore the industry is asking us to do the absurd and the impossible thing. Our operatives in Lancashire to-day could not make the contribution that would put the industry into a competitive position in the world market.

There are other things, and while we have heard of efforts that have been and are being made, while it may not be in order now to refer to other matters than the Finance Bill, I say that our Chancellor of the Exchequer has done, in this present Budget, more than could reasonably have been anticipated from the point of view of industrial recovery so far as the Lancashire cotton trade is concerned. We want our people back into their jobs; we want them at work; we do not want them to be either receiving the dole or spending what little bit of reserve they may have. We know something of the tragedy of the years that have passed, and we are hopeful that the Chancellor's contribution, in the opportunities which he has provided for the employers in the cotton industry of Lancashire, will be responded to. I say that they are not pursuing the right lines. They will not, of course, receive from me any instruction, and they will only consider that I do not understand either the ramifications of finance or the complications of commerce, but I say that they are not going the right way, and that they are not making the right response to the provision which the Chancellor of the Exchequer has made.

For that reason, I want to deplore some of the criticisms that have been made against the Budget, and some of the conclusions that have been suggested that by a different method of taxation the Chancellor of the Exchequer might have made a greater contribution to the restoration of our depressed industries. The suggestion has been made that he should develop certain elements which he has already consented to accept in the circumstances, retaining in this Budget some of the things that he deplores, some of the principles that he condemns, but the circumstances have compelled him to allow things to continue, and there are some right hon. Members here who believe that he should extend those things which he deplores, and which we deplore, which he condemns, and in his condemnation of which we support him.

It is not along those lines that we are going to restore our industries at all. We have heard some of the ideas of taxation that are lauded across the Floor of the House by Members who point out how virtuous the results of those methods of theirs have been. They do not tell us, but they leave us to find out as best we can, how their ideas of taxation have resulted in the things that we deplore most. Our people are gradually becoming unemployed in consequence of the application of those ideas of taxation that our friends on the other side of the House so loudly proclaim, and, for that reason, I fear the consequences of their ideas being brought into the actualities of the financial arrangements of the Chancellor of the Exchequer. I am glad that he has been able to resist up to now, and that he has given indication that he has not lost his hold of his ideals in Chancellorship, and that the day is coming when he will have the liberty and the privilege to produce a Budget that will declare to the people of this country that all taxes are gone from their food.

2.0 p.m.

Mr. ALBERY

I think it was the right hon. Gentleman sitting on the front Liberal bench who said earlier in this debate that we ought not to blame the Chancellor of the Exchequer for the amount of money that is being raised, that is to say, we ought not to blame him personally. I do not think that that argument can carry very much weight. We certainly do not blame him personally; in fact, many of us believe that if some other right hon. Member or hon. Member of the Socialist party had been occupying his place, the present Finance Bill would have been very much worse, from our point of view, than it is. At the same time, we know he has very great influence in the counsels of the Socialist party. We know that they cannot, in fact, expend money unless they win his consent, and, therefore, we are justified in holding him responsible not only for the raising of the money, but also, to a very large extent, for the spending of it. In considering this Finance Bill, we are justified in asking ourselves what it does to help the difficulties of this country at the present time or what it does to hamper them, and I will read, if I may, a few words which were spoken by the hon. Member for Gorbals (Mr. Buchanan) in 1928, when speaking on the Finance Bill of that year. I regret that he is not in his place to-day. At that time, he was taking a great interest in the Finance Bill, because he had been told by the present Secretary of State for India that it was everybody's duty to take a great interest in it, that it was the most important Bill of the year, and that what was done in the Finance Bill governed the whole of the policy of the Government. I want to read to the House a few words of what he said, as they appear to me to have a considerable bearing on the present situation. He said: I remember that when I first came to the House I used to speak to an ex-Member of the Liberal party, who, I am happy to say, has now joined the Labour party, and I learned a good deal from him. I refer to the ex-Member for Leith (Captain Benn). I remember him telling my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) and several of us that the Finance Bill ought to be taken more notice of than any other Measure in the year. The Finance Bill provides the finances for the year's work of this House, and he said that it ought to be closely criticised and closely watched. He went on to say: What is the feature of this Finance Bill? That was the Finance Bill of my right hon. Friend the Member for Epping (Mr. Churchill). The feature of it is not so much what it does but what it leaves undone. What is the greatest problem that this nation has to face at this moment? The greatest problem is that of unemployment, and I admit that there is at least this to be said for the Chancellor of the Exchequer, that whatever criticisms we may make of him, he has, at least, produced a rating scheme with the object of doing something for the unemployed. He also said: They have done this, because they realise that the greatest problem in this country is the problem of poverty and of unemployment. They think that by providing so many millions for the purpose of rating relief they can help the unemployed."—[OFFICIAL REPORT, 27th July, 1928; cols. 1718–9, Vol. 220.] The reason I read that out is that I think that to-day we want more definitely to judge the present Finance Bill in relation to its work for or against unemployment, and in the course of this Debate I have not heard any Member on the Socialist benches even make the claim that the present Finance Bill has done anything of a really constructive nature for unemployment in this country. On the other hand, there are many of us on this side, and, I believe, some on other benches, who believe that the present Finance Bill has definitely aggravated unemployment. We believe that adding to direct taxation at a time like the present aggravates unemployment, and I think we have every reason for that belief. There never was a time during the last few years when there was a greater feeling of despondency amongst those to whom you might look for efforts in the creation of new industry calculated to provide employment.

The Chancellor of the Exchequer said in this House the other day that it was easy to find money for industry—I think he said "successful" industry; at any rate, he qualified the words in some way. It is quite true that you can always find money at a remunerative rate of interest to lend to an industry which provides a good security, but you do not provide necessarily very much employment by that. What creates employment, what makes up for the loss of employment which naturally occurs every year in some direction, is the creation of fresh enterprise and new industry, and what we have been suffering from is that at the present moment there is practically no fresh enterprise being started by capital in this country. Such capital as is being employed for the creation of new industry, unfortunately, goes abroad, to the Dominions and elsewhere, and the reason it goes abroad is because, like any other commodity, money is directed to those quarters where it appears to be most desired, and it escapes from those places where it does not appear to be appreciated.

I am stating the view of many Members on this side of the House when I say that I have no objection to placing the burden on the shoulders that can bear it. I do not mind how high you make direct taxation, provided that in doing it you are not destroying the capabilities of this country. It is merely a question of practical politics. Most of us will agree that taxes should be raised from those best able to bear them, but we must consider how far we can go and what the results of them are. It is an astounding thing to me, when I hear hon. Gentlemen on the other side discussing financial matters, to see how little they realise the extent to which Socialism has already advanced in the world to-day. They always regard money as the property of the individual, but how much is it the property of the individual? If a man owns a certain amount of capital and money, under the law of this land, we can take from his revenue as much as we decide; when he dies, we can take from what he leaves just as much as we decide. We have gone a very long way from the time when a man could honestly regard the property which he had in trust for the time being as his own individual property. Of course, you may say that some people may misuse it, but that is another thing. We have to look at the matter from the large point of view.

The amount of capital in this country is the capital of the country, and the people who handle it handle it in trust for the time being. If you want to secure that it shall be better handled, or if you want to snake some such offence as criminal self-indulgence or something of that kind, I do not know how you can do it, but that is a matter which the House under different circumstances might consider. It is necessary that everybody in this House, and above all people on the other side of the House, should realise that capital is an asset of the country and is under the control of the country, and that when you waste it you are wasting the country's property and you must damage the country in doing it. It is all very well talking about an additional £5,000,000 one year and £5,000,000 another year to the Sinking Fund; that has no appreciable effect on the figures of the Debt, Revenue and expenditure of this country as they are to-day. What has an effect is if the real Sinking Fund of the country is being built up, and the real Sinking Fund is the capital of every individual member of the community, and not least of those who handle finance. Nobody in the country districts would deny that rich men are an asset to a village. They may be pleasant or unpleasant people, or most objectionable people, but if you go to a village where there are a few rich men—and some of them are generally decent people—you will find that the inhabitants are more prosperous than those of a village where there are no rich men. The country where there are rich men, and which encourages them, is usually prosperous. The country which gets rid of them, always in the end suffers for it.

I wish also to make reference to the question of the raising of taxation. I do not suppose that the Chancellor would deny that he is raising onerous direct taxation. There have been many complaints in the past, and they still exist, that the machinery by Which we raise these taxes has become extremely complicated. The bulk of the Amendments that have been put forward to this Bill have been to simplify the machinery, and one of the faults of the present Finance Bill is that the Chancellor has added further complications to this already complicated machinery. I do not think that it is sufficiently realised in this House that this direct taxation is raised, collected and paid by a body of taxpayers who have grown accustomed by tradition and by good will to pay that taxation, and to see the taxes collected. If the taxation which we have in this country had to be transferred bodily to another country which was not used to it, we could not possibly collect it. Nobody could collect it. You can only collect direct taxation, as it is collected in this country, by the good will of the taxpayers. If you lose that good will, then you have indeed reached the summit of what this country can afford to pay in direct taxation, and more than the summit of what you will be able to collect.

That has some relationship to another matter which has been frequently discussed during the passage of this Bill—the question of evasion. Nobody who pays direct taxation wants to help somebody else to evade it because the more evasion, the bigger the burden that will be put on others. Therefore the Chancellor has the sympathy of everybody in doing everything he can to stop evasion, but he must take certain other things into account. Immediately after the War, people in a spirit of patriotism were still willing to pay direct taxation in this country at a higher rate than was paid in any other country in the world, but, after four or five years had passed, they hoped that direct taxation would be decreased, because they thought that they were entitled to expect that their Government would not tax them more heavily than other competing countries were taxed. It must be borne in mind that there is nothing so volatile as capital, and that that country which penalises it most must inevitably gradually lose it. One of the reasons why this country in the past was so prosperous and had always at its disposal such large amounts of capital, was that there was no other country in the world which gave capital such fair treatment and security.

Many of us on this side cannot regard the additional Sinking Fund as being anything but a form of weakness. We regard it as unworthy of the present Chancellor, and I cannot but think that he is probably more virtuous in the matter than would appear on the surface. The fact of the matter is, he knew that his own followers would insist, even in these depressed times, that he should increase taxation. He knew they would insist on his getting all that it was possible to get. At the same time, we know that he has great understanding in financial matters, and no doubt he was unwilling that this capital, the capital of the whole country, should be wasted; and, therefore, rather than be compelled to waste it in unwise or unnecessary forms of expenditure, he has transferred it to what he calls the extra Sinking Fund. That is my understanding of the real reason why he has done that. He has done it to try to save something and to make some economy. If that be the real reason, and I think it is, then we owe him something on that account. Finally, in yesterday's debate, we had a quotation from what the Chancellor of the Exchequer had said at the last General Election: In our first session we shall deal with unemployment and bring relief and hope to the workers of this land. We shall not disappoint those who have shown their confidence in us. I come back to what I said at the beginning, that I have still to hear what has been done in this Budget to help unemployment or to bring the relief which was promised.

Mr. MUFF

I rise to oppose the Amendment which is backed by the right hon. Member for St. George's, Hanover Square (Sir L. Worthington-Evans) and the right hon. Member for Epping (Me. Churchill). The right hon. Member for Sevenoaks (Sir H. Young) reproached us on these benches for being too free in imputing motives to the other side, and suggested that we had invented class warfare and class distinctions. I would remind him that it was a late leader of the party of his adoption who brought into practical politics the phrases about class warfare and class distinctions. It appeared in a book which he called "The Two Nations." Therefore, we on this side of the House are not going to take any share of the blame. The right hon. Member for St. George's and the hon. Member for Saffron Walden (Mr. Butler) commented upon the uncertainty and lack of confidence created by the Chancellor. So far back as a year ago, on the King's Speech, the sapping and mining by hon. Members opposite began. They started their attack by the unprecedented means of trying to secure from the Chancellor of the Exchequer a statement of what he proposed to do in relation to the silk duties. We know to our cost that thousands of operatives were thrown out of work by that plan of campaign by hon. Members opposite, and we are not going to take any share of the blame for the unemployment that has been caused. I am sorry again to impute motives, but the plain man in the street believes there has been a definite plan of campaign among the party opposite to talk of this lack of confidence, to create this spirit of defeatism, and as a result thousands of our own folk are walking the streets.

However, I did not rise merely to oppose the Amendment. I want to support the Third Reading of the Finance Bill, and though neither the Chancellor nor the Financial Secretary to the Treasury need a certificate of character from me I want to congratulate them upon having reached the end of these protracted proceedings, unduly protracted by the mass attacks of the hon Members for East Toxteth (Mr. Mond) and Watford (Sir D. Herbert) and the twitterings of the hon. Member for Eastbourne (Mr. Marjoribanks) and others. Notwithstanding the efforts of these people who, like lawyers with a brief, have been trying to save their friends in the City from revaluation and to save one-man companies from paying their rightful share of taxation, we are presenting to the country a Finance Bill; soon to become a Finance Act, which will have lasting and fruitful results.

When the right hon. Member for St. George's was opening the debate one might have thought from what he said that the Chancellor had inherited a balance, instead of a deficit of nearly £15,000,000 as a result of the rake's progress of his predecessor. His predecessor, with the mind of a mendicant, had picked every political pocket he could put his fingers into, had depleted every fund, and when our Chancellor took office he had to clear up the mess and muddle. The hon. Member for Gravesend (Mr. Albery) asked me what this Budget has done. I say to him—and this is what we believe in, this is what counts with the people on this side of the House—the Finance Bill will be the instrument supplying the money for Old Age Pensions for 500,000 additional widows and their dependants.

Mr. ALBERY

I asked what this Finance Bill had done for employment.

Mr. MUFF

I have been trying to show what hon. Members opposite, by their proceedings, have done for unemployment. Another positive thing this Budget does is to provide £3,000,000 more for education, increasing the number of State scholarships and making additional provision for educational facilities. That, again, is what counts with us. Then the Chancellor has had to provide £18,000,000 or £19,000,000 more for the Unemployment Fund, as a result, of which 200,000 or 300,000 additional names are upon the live register. The previous Tory Government regarded those people as being dead so far as insurance is concerned, and the only thing left for them to do was to knock at some workhouse door and ask for pauper relief. The Budget also provides an additional £3,000,000 for police pensions. I wish we could secure the mentality under which we should have taxation which would find money not simply for police pensions but for pensions on a similar scale for everybody else.

We are raising by this Budget an additional £29,000,000 for local taxation. I suggest to this House that, at any rate, the present Budget is a 20s. in the £ Budget. The right hon. Gentleman the Member for Epping is not present, but I know that on previous occasions he has pointed out to the House that in his view the Labour party have only paid 10s. in the £ on their election promises. At any rate, this Bill is a good start, and even 10s. in the is better than the 4s. in the £ which was approved by hon. Members opposite as a composition for our foreign debts. This Budget provides £304,000,000 for interest on the National Debt, and we are paying 20s, in the £ upon an inflated value. There is no suggestion from hon. Members opposite that we should pay a composition in regard to this account.

The members of the Conservative party have criticised the amount which this Budget devotes to the Sinking Fund for a reduction of our national indebtedness. Do hon. Members opposite suggest that we should not pay our debts? I suggest that in these matters we have to get a proper focus, and the Third Reading of the Finance Bill affords a good opportunity for getting the proper focus in regard to our financial proposals. Yesterday the Chancellor of the Exchequer was called bleak, and a few days before that he was called weak, but hon. Gentlemen opposite cannot say that he has ever been oblique. Hon. Members at one time used to throw flowers, but now they are throwing bricks at the Chancellor of the Exchequer for that upon which they used to compliment him. Hon. Members a year ago said that the right hon. Gentleman was a "No, no" Chancellor, but we are proud of the right hon. Gentleman for his Yorkshire brusqueness. We are proud of our Yorkshire Chancellor of the Exchequer who has got sufficient Yorkshire common sense to accept Amendments even when they are suggested by right hon. Gentlemen opposite. The hon. Member for East Aberdeen (Mr. Boothby) on one occasion said that his ambition was "to be a doorkeeper in the house of his God." Had the right hon. Gentleman the Member for Epping been present, I should have made a few more vivid comparisons between him and our Yorkshire Chancellor. At any rate, I can say that the right hon. Gentleman the Member for Epping is a versatile artist capable of playing the part of a quick-change artist in a one-man show. When I think of the right hon. Gentleman the Member for Epping, he makes me believe in reincarnation. I think that the disembodied, restless soul of Sarah Jennings must rise within him because he possesses the soul of a chambermaid. Our own Yorkshire Chancellor has been called a man of steel. To paraphrase that famous saying used a generation ago, the right hon. Gentleman has the characteristics of the worm-eaten lath.

Mr. SPEAKER

I do not see anything about that in the Bill.

Mr. MUFF

I will bow to your Ruling, Mr. Speaker, and I will conclude by finishing my comparison. The right hon. Gentleman the Member for Epping has two supporters, and the right hon. Gentleman the Member for Colne Valley (Mr. P. Snowden) has 1,000,000 votes behind him in the county of Yorkshire. I am sure that, if the late Chancellor of the Exchequer were tempted to put up as a candidate for Yorkshire, it would take him all his time to save his election deposit money. It is a matter for regret that in this Budget the Government have not been able to ask on a Valuation Bill, which would provide a valuation of ground values, but that Measure will come along as a result of the fruitful legislation which will be passed to-day.

Mr. SPEAKER

That also is not in the Bill.

Mr. MARLEY

Perhaps the hon. Member is getting out of order, because there is no light in the Chamber, and he cannot see his notes.

Mr. SPEAKER

I will remedy that.

Mr. MUFF

I suggest that this Bill is of such a nature that it will provide not only the necessary money to carry on the affairs of State for the next 12 months, but it will constitute a foundation of finance which will provide solace for our own folks in the future.

Major GEORGE DAVIES

The bon. Member for East Hull (Mr. Muff) has just finished his speech in a blaze of light. Unfortunately, there are no flowers by request, although the hon. Member for East Hull has distributed a number of bouquets of a somewhat critical nature in the course of his speech. Those who heard the speech of he hon. Lady the Member for Blackburn (Mrs. Hamilton) will not be quite sure whether they should address the Chancellor as "good Lord" or "My God". I presume we must regard that as a reincarnation of Juggernaut.

Mr. DENMAN

Is that in order?

Major DAVIES

We have good reason to compare him with the mythical deity. I wish to draw the attention of the House to the matter and the manner of the introduction of this Finance Bill. Those who have taken part in the discussions throughout all the stages of the Bill will remember that, when the Committee stage opened, and the Order Paper was covered with Amendments, most of which had been put down by my friends and colleagues on this side of the House, hon. Members opposite were apparently appalled At the impudence of any member of this House in criticising, or, at least, seeking to amend, a Finance Bill which, when brought forward, was in their view completely perfect in all its relations, and was being produced by a completely perfect Chancellor of the Exchequer, and they considered that, if we ventured to make a criticism or move an Amendment, we were merely actuated by motives of unconcealed obstruction. I would ask those who took that view, and who apparently share it now, to consider this Bill as we see it to-day, or as it is going to be, though we have not had the privilege of seeing it in its final form, as was pointed out by my right hon. Friend who opened the debate. If it were possible for hon. Members to see in black and white the Measure to which we are giving a Third Reading to-day, and to compare it with the Measure which was brought forward with such a flourish of trumpets from hon. Members opposite, they would not recognise the present Measure as being anything that they had ever contemplated when it was first brought in; and I doubt very much if I am wronging hon. Members opposite when I say that not one in 20 of them has ever read this Bill through, and that a far more exiguous minority would have understood it if they had read it. Indeed, the Chancellor of the Exchequer, who, I am glad to see, has just re-entered the Chamber, himself said, in regard to certain parts of the Bill, that he did not profess to understand all the details. There is no doubt that that was perfectly true, because, when criticism was applied to the different provisions of the Measure, it was seen how raw some of them were, and how far they fell short of putting into operation the right hon. Gentlemen's intentions.

In spite of jeers from the other side of the House, there is no difference of opinion about the tax dodger. Those of us who are large taxpayers know that, the more people there are who dodge taxes, the bigger is the burden that we have to assume unfairly, and, therefore, even from the most selfish point of view, it is to our interest to check the tax dodger. Our criticism of the provisions relating to tax dodging has been that the method of trying to stop up the loopholes is inefficacious, that not only does it not stop the loop-holes, but it enlarges some and create new ones, and that, in those directions in which it does catch a few, it affects many perfectly harmless methods of enterprise in this country, and thus strikes one more blow at the confidence of industry.

A Chancellor of the Exchequer, in bringing forward a Budget, has, of course, one principal duty, and that is to see that the national accounts of income and expenditure balance. Even from that point of view, I doubt very much whether hon. Members opposite will be as proud of this first production of their Iron Chancellor as they are at this moment, when they find that the balance which he has tried to achieve, and which he announced to us three months ago, is far from being realised in another nine months' time, when his colleague at the head of the Ministry of Labour has every now and then to come and ask for £5,000,000 or £10,000,000 more pocket money in order to keep her accounts straight.

It seems to me that the possibilities and the functions of the Chancellor of the Exchequer in bringing forward a Finance Bill do not cease merely at the balancing of the commitments of the different Departments. He has an enormous power of encouraging or discouraging industry, of adjusting the burden so that it will be more easily carried by the community as a whole. Hon. Members who have preceded me in this debate have admitted that all taxation of industry was bad, and we agree. I go further, and say that all taxation is to that extent bad, because it is an interference with the freedom of individuals, and with their efforts to create the wealth which, after all, is the foundation stone of prosperity and of employment. Nevertheless, we have to face the fact that some taxation is necessary. At a time like this, as was pointed out a little while ago by one of my hon. Friends on these benches, it is necessary for everyone, whether the Chancellor of the Exchequer or anyone else, to keep in the forefront of his mind the great problem of unemployment which exists in the country. A Budget can help or hinder, and our real charge against this Budget is that, so far from helping, its tendency is going to be to hinder. It is no solution, it is no assistance to that problem to give more generous maintenance to anyone, whether to people out of work, or widows, or what not. That is no solution to the problem of encouraging industry, which gives employment.

The Chancellor of the Exchequer's methods discourage industry. He is piling burdens of taxation, both Income Tax and Death Duties, on to the only basis in our public life which can possibly give employment. I go further, and make this charge, that, in saying that he is compelled to find this additional taxation because of the wild methods of his predecessor, he is making the whole community suffer in order that he may gratify a personal vendetta against his predecessor. The Chancellor of the Exchequer has lost no opportunity of piling on the agony in order to show what an enormous deficit he was compelled to meet out of the revenues of this year. We say that in these ways he has unnecessarily and unfairly exaggerated, in order to show how badly his predecessor has handled the finances of the country. I hold no brief for his predecessor, except to say this, that in his subterfuges, as they are called, for finding more revenue, in his shaking of the trees in order to increase the number of windfalls, he was actuated by the motive of avoiding the putting of additional taxation on to the already over-burdened taxpayers of this country in the hope that, instead of further depressing the chance of a prosperous recovery, he was going to foster it. The present Budget does nothing of that sort. It does not even appear to appreciate the fact that there is a problem of industrial depression. It piles on an additional burden of taxation without adequate reason.

The lost opportunities of the Chancellor of the Exchequer are shown in the case of our great agricultural industry. We do not expect a Finance Bill to be an Agricultural Relief Bill, but I do say, and I think it will not be controverted in any quarter of the House; that you can encourage or discourage by the provisions of the Finance Bill of the year, and here there is nothing but discouragement for the industry, which, above all others, is the one that can give real relief to our unemployment problem, and which is admittedly bearing an unfair share of national taxation. I say that, when the people of the country realise the implications of this Measure, while they may not understand why there is this widespread lack of confidence in financial circles, it will come home to them that the price which they are paying for the Budget of a Socialist Chancellor of the Exchequer is such a heavy one that their staggering steps will no longer be able to carry the burden.

Mr. SORENSEN

Our friends on the other side of the House cannot, surely, grudge us the passing to-day of flowers to the Chancellor of the Exchequer, because they can counterbalance that by the number of epithets that they have hurled at him during the last few months. I am quite certain that, if we examined the vocabulary of the late Chancellor of the Exchequer, we should find it to be extremely extensive as regards the epithets that he has applied to my right hon. Friend. If we counterbalance that in some small measure this morning by offering to my right hon. Friend a few of the congratulations which we genuinely feel, I suggest that our friends on the other side cannot complain.

Complaint has been made to-day from the other side of the House, and particularly by the right hon. Gentleman the Member for Sevenoaks (Sir H. Young), that we are constantly imputing motives to our friends on the other side. I want to say quite frankly and definitely that none of us denies the sincerity of Members on the other side of the House. There is no reason why we should deny it. We believe that they are perfectly sincere. We believe that they are actuated by, from their own standpoint, the highest of motives. But merely to say that is not to go very far. Probably the most sincere man in the world was Mr. William Sykes. He had a perfectly sincere desire to get as much as he could from other people. I suggest that to grant the sincerity of our friends opposite, to grant that they were actuated by the highest motives, does not alter the fact that we on this side hold very strongly the view that their judgment is continually coloured by class interests, and by the enjoyment of the power which for a long time they have possessed. Anyone wishing for a justification of that claim of ours have only to turn to some quotations from the late Chancellor of the Exchequer.

May I point out how easily and naturally so many hon. Members opposite speak of the country as if they who possess the wealth represent the country. They speak of uncertainty as if the only uncertainty that mattered was uncertainty to them and to the small class who possess a disproportionate share of the wealth of the country. I am not suggesting that they are conscious of it, but the mere fact that they are unconscious of it is an indication that they are biased by their long enjoyment of power in one way or another. What we are trying to do in legislation, and what we have been trying to do by this Finance Bill, is to relieve the country of the uncertainty that has hovered over it like a cloud for so many years. Can it be denied that during the last century, under Governments not of a Labour or Socialist complexion, we have had not only an enormous increase of wealth, but an enormous increase in poverty as well? We cannot be accused of creating the slums, or what the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) claimed to be a C3 nation. In the last century the working classes were living in a perpetual state of uncertainty as to how they were going to eke out their lives and face the grim necessities of old age. All that the Budget tries to do is in some small measure to decrease the luxuries that are enjoyed by hon. Members opposite and their friends in order to increase the necessities that are required by the poor. This Budget does not injure the small class that possesses wealth. I need only quote this. Said the late Chancellor of the Exchequer in April: As far as new wealth is concerned, I think the late Chancellor of the Exchequer is probably right in saying his new taxation will not, in his own words, mean any deprivation of the necessaries of life or of reasonable luxuries. We quite agree with those words. We say that none who are affected by the new provisions of the Finance Bill will be seriously affected. They may give up a motor car or a few pets, or they may limit their period of holiday abroad, but that, after all, is very little.

Mr. ALBERY

I agree that to give up a motor car means very little to the man who gives it up, but what about the people who make it?

Mr. SORENSEN

All that happens is that the money which enabled him to buy the motor car will be diverted to others to enable them to employ their own fellow workers in making necessities instead of luxuries. May I give some illustrations of the class bias which unconsciously creeps out whenever hon. Members opposite tackle this matter. Although it has been denied by the other side that there is any sympathy on the other side with tax dodgers, many of them never lose an opportunity of asserting the ineffectiveness of the proposals to prevent tax evasion, but they have not produced any method whereby it can be stopped. They never lose an opportunity to sneer at what they call the wastrels amongst the working classes. They never lose an opportunity of suggesting that there are considerable numbers of the working classes who are wilfully and consciously trying to dodge their obligation. There is this tendency always to find signs of evil and degradation in the working classes and, on the other hand, to protect their own class interest. That class bias prejudices their judgment. May I give another quotation from the same Gentleman on the same date: Where direct taxation uproots families from the homes in which they have lived for centuries, it does inflict a great sentimental injury upon them. It may be that a sentimental injury is inflicted on a wealthy family having to move from an ancestral home to another, but it is not to be compared with the up-rooting of working class families in thousands of homes who never have a word of sympathetic expression. I have two more quotations from the same right hon. Gentleman: To ask the surgeon or the engineer or the scientist or the professional man to pay these very heavy charges at this time, is indeed to ask much of him when he knows that this additional burden is cast upon him, partly for the purpose of providing out of work benefit to persons who need not even be asked to prove that they are genuine seeking work. There is only one inference to be drawn from that statement. It is that there are large numbers who will benefit from the operations of the Labour Government unjustifiably who are work dodgers, who will not even have to satisfy the genuinely seeking work provision. It is characteristic of the right hon. Gentleman to use those words. There is a readiness always to find out the worst about the working classes and to protect the prejudices and interests of the class to which he belongs. May I give a final quotation which is even more illuminating: In effect, the taxpayer has been exposed to the worst of both worlds. At one end we have had the right hon. Gentleman in the capacity of financial purist and pedant professing to practice principles of financial orthodoxy, and on the other hand we have had the Socialist agitator handing out lush doles with both hands to great crowds."—[OFFICIAL REPORT, 15th April, 1930, col. 2778, Vol. 237.] Again, I say that reveals the mind of the man. It is an attitude which many hon. Members opposite possess. They speak of the expenditure in which we have engaged in the past year, and for which we have made preparations in the Finance Bill, as simply meant to throw cut lush doles to hungry and wastrel crowds. Can anyone gay after that that we are wrong in accusing many of them, not of being insincere, but of having their judgment clouded by hostility to those who are decreasing a certain amount of their power in order to increase the power of the industrial class?

Much has been said about the injury which the provisions of the Budget are likely to do to industry. All that will happen is that a certain amount of the wealth of the country will be diverted from one source to another. The purchasing power of the country will not be diminished. How can it be diminished? After all, the millions that we have given to the widows, the orphans and the old will enable them to purchase more commodities than they could purchase before. That means that, although there may be decreased purchasing power in one direction, there is increased purchasing power in another. I am not saying that in order to buttress or support the argument that a mere increase of purchasing power will solve the unemployment problem. I am pointing out the fallacy that the taxation of wealth, and the diversion of that wealth to the pockets of the multitude, means any decrease in the purchasing power of the people or would have any real effect upon industry.

We have endeavoured in some small measure—some of us think in an all too small measure—to assist the overburdened sections of this country. No one can deny that there are hosts of women, including widows, children and old people who, if it were not for the financial benefit they now receive, would certainly have a harder and more difficult life than they have to-day. If we are going to engage in those social services the money has to be found. The only deduction that one can properly draw from the hostility displayed so tenaciously day after day in every kind of ingenious fashion by hon. Members on the other side is that they do not want these social services. They think that they are a mistake, or, I will add, that they are a mistake particularly at this time. We believe that the finest way by which we can help this country to become prosperous is to encourage the producers of this country and the producers are not merely those who are represented by hon. Members on the other side. The labourers of this country are producers as much as those who sit in their offices. The toilers in the mine, in the field, on board ship and in factory are the producers to whom encouragement should be given. We believe that the best way by which we can encourage the real producers of this country to do their best to increase wealth and thereby enjoy the wealth they help to produce is by giving them incentive or inducement and some kind of security in their old age and widowhood and other circumstances which come upon them.

I am disappointed that land valuation has not proceeded any further, but I would say that on the other hand we are glad that the Budget has got as far as it has. We do not believe that it is a final Budget, but that it is the preface to a long series of Budgets which will help the great mass of the people to get more enjoyment out of life. When I reached home last night I took down from my bookshelf a little booklet, "The Socialist Budget," by Mr. Philip Snowden, which was written some 25 years ago, and I was interested to notice how all the suggestions made in that little booklet are now being carried out or have been carried out during the past few years. I congratulate the Chancellor of the Exchequer on the way in which he has proceeded steadily towards the achievement of our aim. He does not go as far as some of us would like him to go, but we at least believe he has made a preparation and done something towards decreasing the super-enjoyment of life which some possess in order to add a little enjoyment to those whose lives are grave and grey.

Captain BOURNE

I do not propose to follow the hon. Member for West Leyton (Mr. Sorensen), because I realise that the Front Bench will shortly want to reply to this Debate. If I were to pursue the arguments of the hon. Gentleman, I fear that I should occupy far too much time at the end of these very long discussions on the finances of the year. The hon. Member and one or two other hon. Members who have spoken from that side of the house have taken a point, of view which really shows the divergence of opinion between this side and that. The hon. Member said that during the last century the wealth of this country had increased and that the conditions of the working classes had not improved.

Mr. SORENSEN

I did not say anything of the kind.

3.0 p.m.

Captain BOURNE

I thought that I was summarising the speech of the hon. Member, but the time is short. I may say that I have heard that argument put, not perhaps quite so boldly, time and time again. I believe that a study of history will convince anyone that that is not an accurate view. The second point of view of the hon. Member is that those who toil in our fields, in our factories, in our mines and elsewhere are the producers of the wealth. Within limits, I think that that is true, but, if that were really a true argument, the point should surely be that those who work the longest hours anywhere in the world and live the hardest lives should produce the most wealth. We all know, if we look over the world where the conditions are the worst and the hours are the longest, that the people are the poorest. Work is one of the ingredients of the production of wealth, but it is only one; brains and capital are other ingredients. I do not think that you are ever going to solve this problem and difficulty by looking merely upon one of the three parts in industry.

What really is the position of the finances of the Chancellor of the Exchequer each year He has to find a certain amount of money, and he has so to frame his taxation in order to raise it. I submit that it is the duty of any Chancellor of the Exchequer so to frame his taxation as to distribute it most evenly over the country. You may argue that Income Tax is not a burden upon industry. I venture to differ from that argument and to say that all taxation is a burden upon industry in whatever form it may be levied. There is no other method of paying taxation than out of the wealth of the country. To my mind, what the Chancellor of the Exchequer wants to take into account in framing his Budget is, how he can best distribute that taxation to cause the least amount of disturbance to the trade of the country.

The right hon. Gentleman has taken one method. He has increased direct taxation, and he believes that an increase of direct taxation is the best way. I differ from him on that point. I differ from him completely, because I believe that an increase of direct taxation beyond a certain point is not remunerative to the Exchequer and that it has a discouraging effect upon industry. I realise that time is short, but I will try and expand that argument. The right hon. Gentleman says, that, if you put a tax on property and you put a tax on wealth, it does not, injure the trade of the country. I believe that it does. For one thing, it discourages enterprise. He has really founded his argument upon what I believe to be a complete fallacy, namely, that it is the poorer people of this country who support the wealthy. I believe that it is those who, perhaps, may be wealthy to-day who have pushed the enterprise of this country into the distant parts of the world which has enabled us to carry the enormous population per acre which we carry at the moment. The only way in which we are going to face the extra heavy burdens we have to bear as a nation is to try and encourage that enterprise and so to increase the wealth of the country all round that our burdens will be lightened and even the burden of those social services to which so much reference has been made this afternoon will be lessened.

I do not believe it is possible for any Government in any part of the world to increase direct taxation over and above the amount which the direct taxpayer thinks that he is justified in paying. You can only carry it, I believe, by consent. [Laughter.] Hon. Members opposite may laugh, but after all it is very easy for any individual—he need not be an Englishman—to transfer business from this country to another. He is bringing wealth to the nation so long as he is trading here and paying contributions towards our taxes. It is easy for him to remove it to some other country which is less taxed, and if he does so the nation is the poorer. There is no method except the old one practised by the medieval Kings, who put men into gaol and tortured them, by which you can extract wealth over and above the sum which is fair. It is true that you will hit those who have permanent interests in the country, but the vast majority at home who bring wealth into the country, those invisible exports about which we hear so much in our financial debates, are people whom no Government can touch if they do not wish to be taxed. I do not believe that you can increase taxation over and above a certain limit. You cannot, no matter how ingenious your taxation methods may be, compel the direct taxpayer to pay beyond what he thinks the State ought to ask him to contribute.

The Chancellor of the Exchequer in carrying out in this Budget many of the maxims of the old Free Traders, has forgotten one of the most important, that along with Free Trade there must be the utmost economy, almost parsimony, in Government expenditure. Free Trade can only carry on if side by side with it there is the utmost limitation of Government expenditure, a policy which was practised by all the famous Free Trade Chancellors of the Exchequer of the last century. If the country wants expensive services, you cannot do it on a system of purely direct taxation. I believe for that reason, among others, that this Budget will fail, and that when the right hon. Gentleman comes to make up his balance sheet next year he will find that, instead of the surplus for which he hopes, he will be faced with a deficit, and a deficit which, under his present financial orthodoxy, he will be unable to meet.

Mr. CHURCHILL

I gather that it will be for the convenience of the House if I rise at this moment to express on behalf of the Opposition our final words upon the Budget of the right hon. Gentleman. When I knew that this task would fall to me, I took a last look round over the course of our long debates and over the wide field which this Budget, like every other Budget, opens to us, but I am bound to admit and, indeed, to confess, that some considerable reflection left me unable to find very much new that could be said in condemnation of the policy of the right hon. Gentleman. But when I came here this morning I listened to a speech from the right hon. Member for Camborne (Mr. Leif Jones), which gave an entirely new orientation to my thoughts. The right hon. Member for Camborne urged me and those who sit on this side of the House to congratulate the Chancellor of the Exchequer upon the achievements which the conception and the conduct of this Budget represent. I find that a much more fertile field, and if the House will permit me I will endeavour to couch all my remarks in a laudatory vein. Looking round for matters upon which I might pay my tribute to the Chancellor of the Exchequer, let me, first of all, congratulate him on the skill, the tact and the patience with which he has conducted the Budget debates.

I must admit that at first I was a little puzzled by his methods. I could not see why, at the beginning of so complicated a Bill with so many Clauses, he should, as it were, deliberately seek to offend the House; why he should use the Closure in the first few hours of our Committee discussions; why he should throughout the discussions refuse all concessions on merits to his opponents; and why he should seek to go out of his way to pick quarrels now here and now there. Gradually, however, we saw his deep design. The right hon. Gentleman wished to kill a great mass of foolish social legislation. He wished to sweep from the path of the Government such embarrassing and dangerous items as a Trade Dispute Bill and a Bill for the raising of the school age. This purpose became apparent to us as our debates continued, and the moment we saw what the right hon. Gentleman had in his mind we endeavoured to collaborate with him, and as a result we have, I believe, taken three times as long to discuss the present Budget as was required to discuss the very extensive proposals which formed the subject of Budgets of the last few years: and with this further result, that the whole Socialist programme of the Session has been cast aside, and jettisoned, and all those Bills from which the future regeneration of mankind was to be expected, have to be subject to the massacre of the innocents, the only survival being the dear Coal Bill, now, I suppose, the dear Coal Act, which is to keep the home fires burning in the winter. I congratulate the Chancellor of the Exchequer upon his strategy.

The right hon. Gentleman the Member for Camborne wishes me to praise him for his economy. I have found some difficulty with the best will in the world to find a foundation of fact upon which I may rest such an eulogy. After all, the Chancellor of the Exchequer is responsible as a member of the Cabinet for the demoralisation of our insurance system by abolishing the provision which required people to prove that they are genuinely seeking work before receiving the bounty of the State; and he has on more than one occasion needlessly increased the expenditure of the Government by giving a more extended bonus to civil servants in proportion to the cost of living than the scale in this country, which already far exceeds the scale of any other country in Europe, warranted. Therefore, I found some difficulty in responding to the appeal of the right, hon. Member for Camborne to praise the Chancellor of the Exchequer for his economy. But I must admit that almost equally important with the expenditure he has contracted under these two heads, in defiance of economy, is the relief which he has secured to the Exchequer by effectively destroying the School Leaving Age (Extension) Bill through the protracted debates upon the Budget and by concentrating upon himself and his Measure such a large proportion of Parliamentary time. I am able to go this far with the right hon. Member in praising the Chancellor of the Exchequer for economy.

Evidently this was a very profound design on the part of the Chancellor of the Exchequer, and in order to carry it into effect it was necessary for him to repress and hold in strict control all the natural amiability of his nature. I am sorry to say that, from a very good motive, in the cause of economy, and in the cause of preventing foolish legislation, he had very often to show us, as it were, the rougher side of his character and he had sometimes to disguise himself as a spiteful, irritated harridan. He has also had to do a thing which I should have thought any Chancellor of the Exchequer would have found extremely repugnant—he has had to present deliberately ill-drafted Clauses on highly technical matters to the House, thus occupying whole days and even weeks of Parliamentary time which could easily have been saved with a little forethought, application, and perspicacity in the Department over which he presides. I recognise the sacrifice, moral and sentimental, in his failure to adopt these rules and methods, and made for a good end, an end which we have achieved in common.

In the second place, I must congratulate him upon his chivalry. I had occasion to speak nearly a year ago, before the Budget was introduced, at the beginning of our financial disputes, of that tolerance and fairness which is enjoined by the great Lord Bacon in regard to the actions of predecessors upon Ministers attaining office. But the right hon. Gentleman has defended my reputation in a manner for which I shall ever be grateful. For one likes to think one's work is appreciated. When one has held an office so difficult and harassing, so surely surrounded with hostile criticisms and so certain to be attended with disagreeable results in one quarter or another—when one has held an office like that of the Chancellor of the Exchequer for nearly five years, one likes to feel that one's work is not wholly condemned. But I must admit that a year ago there were a lot of ignorant, short-sighted and prejudiced people in this country who took quite an unfavourable view of my financial achievements.

It is the right hon. Gentleman who has defended me from these aspersions, and he has defended me not by mere words, but he has defended me by actions, which are stronger than words. I feel very much better about it all now. I can go about and meet people who a year and a-half ago were rather inclined to shake their heads, because in trying to save industry from heavy indirect taxation I employed expedients and devices, legitimate but still unusual, and by using windfalls and discovering hidden resources tried to smooth our financial passage in order that we might recover from the disasters of the great strike without reimposing heavy taxation. [HON. MEMBERS "Hear, hear!"] That cheer I perhaps should not have received a year ago. It is a proof of how effective the advocacy of the Chancellor of the Exchequer has been in re-establishing the reputation of his predecessor, and for that also I pay him my tribute.

I must also congratulate the Chancellor of the Exchequer upon his impartiality. He has not sought to ingratiate himself with any one section of this House. He has distributed his blessings with evenhanded equity on all sides. No one has been left out. There is no Member of the House, wherever he may sit, in whatever quarter of the House, who can really feel himself forgotten. Even those who do not like the right hon. Gentleman, and there are some I am sorry to say, though I hope to change their opinion before I have finished—even those who do not like the right hon. Gentleman very much, would be bound to admit that he has been just as rude to his supporters as he has been to his opponents. The same genial smile which plays upon Mayfair or Throgmorton Street also cheers the would-be workers of the Clyde. The same honeyed tones which restored harmony to Europe at The Hague will presently greet the Dominion representatives when they arrive. This, Mr. Speaker, shows an even disposition which deserves admiration on the part of the House.

Lastly, I must congratulate the right hon. Gentleman upon his great admirer and supporter the right hon. Gentleman the Member for Camborne. What a mellifluous smile would broaden upon the saintly countenance of Mr. Cobden, if only he could see these twin Victorian dodos carressing each other, encouraging each other across the Floor of the House, pledging each other, as it were, in libations of cold wafer. "Direct taxation" says the Chancellor of the Exchequer "is a stimulus to industry." "Make it a shilling," says the right lion. Gentleman the Member for Camborne. "I doubt if 6d. on the Income Tax is enough; better make it a shilling while you are about it." And so, from side to side, this happy agreement advances from stage to stage. I could not help thinking to myself that if only they added Lord Hunsdon to their triumvirate we should then have what the Prime Minister has called a Council of State, which would really embody all that was most archaic in the three parties. I will venture now in the very few moments during which I will trespass further upon the time of the House, to carry my tribute into a still wider sphere.

The right hon. Gentleman said, quite modestly, some time ago, that it would take him two years to put the finances of this country into thoroughly good order. Well, Sir, we have had one year and we may, I think, take stock of the position at this stage—the Third Reading of the Finance Bill. If I may use a phrase which the Chairman of Committees has heard on more than one occasion, we may "report progress and ask leave to sit again." It must be a great pleasure to the Chancellor of the Exchequer to see the fruits of his labours already becoming apparent in so ninny directions. Look where you will. Look at the rate of expenditure, rising in the dead level total, rising steadily and swiftly with almost every decision that is taken. Look at the dividends which are being paid by the railway companies and the great industries of this country. Look at the change which has taken place in the values of securities, particularly the industrial securities, upon which the employment of the great manual labouring masses depends. Look at the rate of unemployment. All these reveal the touch of a master hand. We see this great country swiftly responding to Socialist inspiration. Look with great particularity at some of the specific decisions which have ministered to this general recovery. Look very briefly at the Debt policy, the austere, unflinching, orthodox, courageous Debt policy, the austere, unflinching, orthodox, courageous Debt policy of the Chancellor of the Exchequer: Danton—"No weakness"! If his predecessors may have erred, he will repair the error and correct the fault. Re will pay back to the Sinking Fund the £15,000,000 deficit of the last year, even if he has to go round the corner and borrow it.

Look at the great discovery which he has contributed to our finance. He has discovered that you can raise the main proportion of the revenue of this country by taxing the idle rich. That has given great confidence to our mercantile and industrial classes, who felt that they were not going to be heavily burdened in the matter because the right hon. Gentle man has discovered this great truth and possibility; and I must say, for the mercantile and industrial classes, that they seem to be responding to the stimulus which has been given. Take the McKenna Duties and the other duties of a protective character which are now in force. There the right hon. Gentle man has made a manly stand for Budget secrecy. There has been no weakness there. He has thought it necessary to emphasise Budget secrecy to the highest possible point by first of all threatening all these industries with having the conditions under which they carry on fundamentally deranged, and then, in spite of all the clamour which was raised, firmly adhering to his policy of keeping them perpetually in suspense.

Last of all, we had, in the week that has just closed, the Chancellor of the Exchequer's contribution to the success of the forthcoming Imperial Conference. Everyone is looking forward with expectation and anxiety or with hope to that momentous meeting. After all, the Dominion Prime Ministers, busy men in their own countries, travel across vast distances of ocean and land to reach these shores; they only come here once in four years, and I think the Chancellor of the Exchequer was quite right to give them the assurance that at any rate in one quarter a warm welcome awaited them. Then there is the right hon. Gentlemen's policy of diminishing the reserves available for productive industry. There again I am trying, I must say, all through, in response to the appeal made by the right hon. Member of Camborne, to put the most favourable construction upon the Chancellor's actions. Of course, these reserves are a source of great preoccupation to companies and to productive businesses. They go on, they accumulate, they gather, and each year, or may be at intervals in a year, the boards of management have to decide whether they will keep them in hand for a rainy day, whether they will use them to replenish their plant, or whether they will make a new issue of dividends or bonuses to their shareholders. The right hon. Gentleman solved all their problems; he put an end to their anxieties; they have not got to worry about it at all. He has taken all the money!

I leave the past, and I leave the present, which we are now enjoying, but what of the future? Here, at any rate, we start fair. There is great confidence in what an hon. Member who spoke earlier in the debate, in his enthusiasm, called "our glorious Yorkshire Chancellor," will do in his next Budget. We know his policy. It is perfectly plain. His policy is to lay the whole burden of taxation upon a limited class. The right hon. Member for Camborne credited me with having been a fidgety Chancellor. There is nothing fidgety about this. Put it on, put it up and keep it there. The right hon. Gentleman has invested the whole of our Income Tax system with an air of permanence and stability. He has shown people quite plainly what they should reckon on. It is a great thing for them to know where they are. It is a great thing for any business to know that there is one feature, at any rate, amid the many uncertainties of life, that is sure and certain. Enterprise and initiative require firm foundations now. They know, at any rate, that their burdens are not going to be reduced in any way. They have an assurance in that respect for the future upon which they can build, or not build, as the case may be.

Then there are the unemployed. They know very broadly what the outlook is for them. They know that nothing is going to disturb them, to find them work, for instance, to revive general industry, to replenish our plant, to stimulate enterprise. They need not worry themselves about that. They are not going to be disturbed by any new-fangled notions of that kind. No, Sir, the policy of the Chancellor is the dole in its integrity and universality. The dole, the whole dole and nothing but the dole. There is the constructive unemployment policy, and these men now know the system on which they may organise their lives, their homes, their marriages and holidays. There is nothing fidgety or disturbing about this aspect of the Chancellor's policy—restful, and sure and calm, and during the winter which is coming on—grim winter—we shall be considering, like me were last year, the prospects of next year's Budget. Industry and tirade will be wondering whether the Chancellor of the Exchequer will have further blessings in store for them, if he should be in a position to bestow them, and they will look forward to the next Budget, knowing well the principles on which it, will be framed, and knowing by experience the consequences which will follow from the application of those principles. In that spirit, and in those circumstances, British industry may face the future if not, without anxiety, at least without ill-founded hope.

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence)

Many hon. Members of this House have enjoyed the speech of the right hon. Gentleman the Member for Epping (Mr. Churchill), but I am quite sure that, as usual, there is one man in this House who has enjoyed it far more than anyone else, and that gentleman is the right hon. Gentleman the Member for Epping. I sometimes wonder whether he would enjoy himself quite so much if he did not mistake hilarity for admiration and mirth for respect. But underneath the persiflage, which was the substance of his remarks, what is the fact that emerges, according to his own avowal and admission? It is that the debates, which he did so much to carry on during the stages of the Finance Bill, were not designed to improve the Finance Bill, but, were designed to hinder and prevent the Government from carrying out the business of the Session. That avowal had already been made in the Press by some of his supporters, and we now have it quite clearly from the mouth of the right hon. Gentleman himself in this debate.

This was not the explanation furnished at the time by the right hon. Gentleman, and I prefer to take what he told us at the time. At the time, he told us that his object in carrying on the debates was to prevent the Chancellor of the Exchequer from carrying out his financial intentions in their entirety. In fact, we have in the Bill as it comes before us to-day, in every essential partitular, the proposals which my right hon. Friend put forward in his Budget, and the reason why the right hon. Gentleman the Member for Epping comes down to the House and treats us to this wonderful persiflage, is that he knows that he has been beaten on the Budget. He told my right hon. Friend that he would compel him to cut out Clauses of his Bill and to modify others, and that the Opposition could force him to take that course. In fact, we have the Bill, and we have everything that my right hon. Friend proposed. My right hon. Friend has got the money that he requires for the National Exchequer, and he has got it in the way that he proposed. He has erected the barriers against tax evasion which he intended to erect. What, perhaps, the right hon. Gentleman the Member for Epping likes least is that my right hon. Friend has put, for the first time for five years the finances of this country in an honest and intelligent form.

We have prolonged the discussions at various stages of the Budget and the Finance Bill to an almost unprecedented time; we have carried it over 20 days—

Mr. CHURCHILL

I have not done it.

Mr. PETHICK-LAWRENCE

The right hon. Gentleman says that he has not done it, but I would like to know who has been more responsible. It is perfectly right and proper that in the constitution of this country the House of Commons should give meticulous examination to the financial provisions of the year. The fact that this Bill of all Bills cannot be amended in another place makes it imperative that due consideration should be given here. That ought not to be abused, and I should have thought that no one would have boasted to this House that they were so disrespectful of the privileges of this House, that they would use that right, given to them for constitutional reasons, to get something quite different from the avowed object.

I turn from the speech of the right hon. Gentleman and come to the last stages of what has occupied us all this time. I notice that the right hon. Gentleman has now left the House. [HON. MEMBERS: "He is coming back."] He has absented himself from half the debate. [HON. MEMBERS "Withdraw!"] I do not withdraw the statement that he has been absent during the greater part of the debate. I think he was in for only a few minutes before he made his speech. I was proceeding to say that we have given great discussion to this Budget, And that no one his wished to curtail discussion so long as constructive and helpful criticism was put forward. One part of the Budget which is most essential to the success of the financial provision of the year consists of the Clauses for preventing the evasion of taxation. My right hon. Friend said at the very beginning that those Clauses would be open to discussion and amendment, because, as every one knows, it is by no means easy to frame suitable Clauses which at one and the same time will prevent evasion and not take improper action against other people.

I am sure that my right hon. Friend will agree with me when I say that by the helpful and constructive criticism of all parties in the House those Clauses have been improved, and when the right hon. Member for Epping tells us that my right hon. Friend has made no amendment in the Bill, has been unwilling to listen to arguments. [Interruption.] I noticed at the time that he said the Chancellor had shown himself unwilling to make any changes in the Bill in respect to sound argument and criticism. [Interruption.] The right hon. Gentleman did make that remark, and it is in the recollection of the House, and I say that he must either have forgotten or must have absented himself from our debates when those Clauses were under consideration, because my right hon. Friend, having announced at the very beginning that it was his intention to carry those Clauses with the general consent of the House, was rightly willing to listen to all reasonable and constructive suggestions. It has been said to-day that those Clauses are still far from perfect, that they still provide great loopholes of escape, great opportunities for evasion. I suppose we all admit that it is impossible to frame Clauses which will, in the first instance, prevent all evasion, but my right hon. Friend has set up barriers which will prevent people who have attempted evasion in the past from escaping their due mead of taxation. It may be that in the future some people will try to get round the barriers, and, if so, further means will be taken to prevent it.

What my right hon. Friend has done is to set up a notice board outside evasion wood proclaiming either "Trespassers will be prosecuted "or" Beware of the Dog," or, better still, "Those who go into this wood and engage in that pastime do so at their own peril." [Interruption.] I have no doubt that if the right hon. Gentleman had the opportunity of speaking again he could propose various other words. If people adopt those tactics in the future, there are Clauses in this Bill which will catch them, and consequently they will fail to escape taxation. If they try to evade taxation, not only will they have to pay the duty, but they will also have to face the trouble and expense to which they will be put in attempting evasion, and they will gain nothing by it.

But where the Chancellor of the Exchequer has proved amenable to argument in the sunny atmosphere of constructive criticism, the boisterous and windy eloquence of the right hon. Gentleman the Member for Epping has only induced him, like the Traveller in the fable, to pull his cloak closer together and stand firm. This has only been possible owing to the splendid loyalty and support which has been given to my right hon. Friend by hon. Members. [Interruption.] I am sure my hon. Friends would not like me to withhold this mead of approval on their behalf also to hon. Gentlemen opposite below the Gangway. My hon. Friends have made great personal sacrifices sitting all through the night listening to Motions to report Progress which have been quietly voted down, and we have got on with the business.

What are the changes which the Third Reading of this Measure enables us to carry into law? We started with a large gap in the financial position of the country. There was a large gap for the current year, and a still greater gap for years to come. The right hon. Gentleman the Member for Epping proposed a permanent charge, and an amendment of the Petrol Duty was suggested for meeting the expense to the Exchequer of de-rating. The Chancellor of the Exchequer has been able to meet that expenditure in accordance with sound canons of taxation, and in accordance with the principle that the burden of taxation should be placed on the shoulders of those best able to bear it.

Lieut.-Colonel Sir FREDERICK HALL

Those who do the work.

Mr. PETHICK-LAWRENCE

Then, according to the hon. and gallant Member for Dulwich (Sir F. Hall) the great mass of the people who do all the hard work of manual labour are excluded from his definition of those who do the work.

Sir F. HALL

May I ask the Financial Secretary if his theory is that only those who do manual work are carrying on the work of the country?

Mr. PETHICK-LAWRENCE

The hon. and gallant Member's interruption meant that the great mass of the workers of this country did not come under the description of those who do the work. So far as the Income Tax is concerned, my right hon. Friend is, I think, to be congratulated on the fact that, by the continuance of the 2s. provision, and the extension of the figure to £250, he has enabled the humbler people who pay Income Tax to escape an additional burden. In view of the special liabilities to which they are subject, that is something which stands out in this Budget as a successful achievement. With regard to the Death Duties, I have noticed that, during the debates that we have had on the additional Death Duties, very few Members on the other side have ventured to object to the Death Duties as a whole, and, particularly, the provision that has been made in this Bill for their extension in the case of those who own large estates. An attempt has, however, been made to single out first one particular interest and then another particular interest, and to say that this particular form of holding ought to pay at a lower rate or escape altogether.

I was particularly interested in the remarks of the right hon. Gentleman the Member for Sevenoaks (Sir H. Young) this afternoon. He said that it may be all very well to tax the rentier, that it may be all very well to tax people who have made some other form of provision for thrift, but that the people who have put their money into their own business are particularly hard hit by the Death Duties. I think there is something to be said for that argument, but it is in exact opposition to some of the Amendments that were moved during the Committee stage of the Bill. I remember that the hon. Member for Farnham (Mr. A. M. Samuel), when I was suggesting that there was more than one form of thrift than that of putting money into insurance, and that a man might put his money into his own business, took exactly the opposite view to that taken by the right hon. Gentleman the Member for Sevenoaks; and he divided the House upon it, and his party went into the Lobby to support him. The fact is, that if you are going to have Death Duties, you must put them on all forms of property passing at death, and this attempt to get out of them by singling out some particular form of property which should escape that taxation is the wrong direction in which to meet the problem.

Before I sit down I want to say a few words with regard to the provision which my right hon. Friend has made, and which is included in this Bill, for carrying forward the deficit from last year to the current year, and for that being done in future years. Frankly, I have been amazed at the criticism which was brought forward, particularly from the other side of the House, against this proposal. I am quite certain that the time will come when hon. Members who have given expression to that view will regret the statements that they have made. Let us examine the position. We have a deficit, on last year's working, of £14,500,000. My right hon. Friend has decided that this deficit must be brought forward to the current year, and he has further decided that in future years any deficit which arises must be carried forward to the year afterwards and met, unless there is an express decision of the House of Commons to the contrary.

Let the House consider what would be the converse of that proposal. The converse is that the present Chancellor of the Exchequer, or any future Chancellor of the Exchequer, would have no need to meet a deficit arising in the year. My right hon. Friend has reverted to the practice that existed before the War. Since the War, until the provision in this Bill, it would have been open to any Chancellor of the Exchequer entirely to ignore a deficit that arose during the year. He might run up £50,000,000, £100,000,000, or £200,000,000 of debt, borrow the money, and not come to the House of Commons for sanction at all. I think that is not a party question. It is not even an ordinary financial issue. It is a House of Commons matter. The House of Commons ought to have the right to authorise the expenditure of large sums of money and not allow the Chancellor of the Exchequer to run up debt without its sanction.

I consider, finally, that the Chancellor of the Exchequer has introduced sound finance into the Budget, and intelligibility. I am not at all surprised that the right hon. Gentleman the Member for Epping (Mr. Churchill) quarrelled with him over this. We have quarrelled, and the House has quarrelled, with the right hon. Gentleman because it was part of his method of finance to introduce unintelligibility into the financial provisions of the year. If you want to get away with dishonest finance, that is the easiest way of doing it. Good finance is intelligible. It is said that money ought not to have been put into the Sinking Fund, but ought to have been given to industry, and concurrently it is argued that the whole provision is illusory because we have been borrowing at the same time. Those two arguments are mutually inconsistent. You cannot have it both ways. The borrowing that has been done has been done at the direction of the House of Commons, and the fact that we are borrowing very largely in order to promote industry, and to try to check unemployment, makes it all the more necessary that suitable provision should be made far the redemption of debt.

We have come to the end of our deliberations, and our business is to carry this Budget through its Third Reading into law, and I trust, if that decision is not going to be given unanimously, that at any rate it will be given by an overwhelming majority.

Mr. SMITHERS

I want to answer a friendly attack made upon myself by the right hon. Gentleman the Member for Camborne (Mr. Leif Jones). He told us that I have suggested that there were certain ways of driving a coach and four through Clauses 10, 12 and 29 to 33 and he asked me why I had not told the House. The reason is that I wanted to keep my word to the Chancellor and not give the show away.

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

The House divided: Ayes, 223; Noes, 185.

Division No. 461.]	AYES.	[3.59 p.m.
Adamson, Rt. Hon. W. (Fife, West)	Hayday, Arthur	Pole, Major D. G.
Adamson, W. M. (Staff., Cannock)	Henderson, Arthur, Junr. (Cardiff, S.)	Potts, John S.
Addison, Rt. Hon. Dr. Christopher	Henderson, W. W. (Middx., Enfield)	Price, M. P.
Aitchison, Rt. Hon. Craigie M.	Herriotts, J.	Quibell, D. J. K.
Alexander. Rt. Hon. A. V. (Hillsbro')	Hirst, G. H. (York W. R. Wentworth)	Ramsay, T. B. Wilson
Ammon, Charles George	Hoffman, P. C.	Rathbone, Eleanor
Arnott, John	Hollins, A.	Raynes, W. R.
Aske, Sir Robert	Hopkin, Daniel	Richardson, R. (Houghton-le-Spring)
Attlee, Clement Richard	Horrabin, J. F.	Riley, F. F. (Stockton-on-Tees)
Baker, John (Wolverhampton, Bilston)	Hudson, James H. (Huddersfield)	Ritson, J.
Baldwin, Oliver (Dudley)	Hunter, Dr. Joseph	Romeril, H. G.
Barnes, Alfred John	Isaacs, George	Rosbotham, D. S. T.
Barr, James	Jenkins, W. (Glamorgan, Neath)	Rowson, Guy
Beckett, John (Camberwell, Peckham)	Jones, Rt. Hon Leif (Camborne)	Salter, Dr. Alfred
Bellamy, Albert	Jones, Morgan (Caerphilly)	Samuel, Rt. Hon. Sir H. (Darwen)
Benn, Rt. Hon. Wedgwood	Jones, T. I. Mardy (Pontypridd)	Sanders, W. S.
Bennett, Capt. Sir E. N. (Cardiff C.)	Jowett, Rt. Hon. F. W.	Sandham, E.
Benson, G.	Jowitt, Sir W. A. (Preston)	Scurr, John
Bentham, Dr. Ethel	Kelly, W. T.	Sexton, James
Bevan, Aneurin (Ebbw Vale)	Kennedy, Thomas	Shaw, Rt. Hon. Thomas (Preston)
Bondfield, Rt. Hon. Margaret	Kenworthy, Lt.-Com. Hon. Joseph M.	Shepherd, Arthur Lewis
Bowen, J. W.	Kinley, J.	Sherwood, G. H.
Broad, Francis Alfred	Knight, Holford	Shield, George William
Brockway, A. Fenner	Lansbury, Rt. Hon. George	Shiels, Dr. Drummond
Bromley, J.	Lathan, G.	Shillaker, J. F.
Brooke, W.	Law, Albert (Bolton)	Short, Alfred (Wednesbury)
Brown, C. W. E. (Notts, Mansfield)	Law, A. (Rosendale)	Simmons, C. J.
Brown, Ernest (Leith)	Lawrence, Susan	Simon, Rt. Hon. Sir John
Brown, W. J. (Wolverhampton, West)	Lawrie, Hugh Hartley (Stalybridge)	Sinclair, Sir A. (Caithness)
Burgess, F. G.	Lawson, John James	Sitch, Charles H.
Burgin, Dr. E. L.	Lawther, W. (Barnard Castle)	Smith, Ben (Bermondsey, Rotherhithe)
Buxton, C. R. (Yorks, W. R. Elland)	Leach, W.	Smith, Frank (Nuneaton)
Caine, Derwent Hall-	Lee, Jennie (Lanark, Northern)	Smith, Tom (Pontefract)
Cameron, A. G.	Longbottom, A. W.	Smith, W. R. (Norwich)
Cape, Thomas	Longden, F.	Snell, Harry
Carter, W. (St. Pancras, S. W.)	Lowth, Thomas	Snowden, Rt. Hon. Philip
Charleton, H. C.	MacDonald, Rt. Hon. J. R. (Seaham)	Snowden, Thomas (Accrington)
Chater, Daniel	MacDonald, Malcolm (Bassetlaw)	Sorensen, R.
Church, Major A. G.	McElwee, A.	Stamford, Thomas W.
Cluse, W. S.	McEntee, V. L.	Stephen, Campbell
Clynes, Rt. Hon. John R.	MacLaren, Andrew	Strachey, E. J. St. Loe
Cocks, Frederick Seymour	Maclean, Sir Donald (Cornwall, N.)	Strauss, G. R.
Daggar, George	McShane, John James	Sullivan, J.
Dalton, Hugh	Malone, C. L'Estrange (N'thampton)	Sutton, J. E.
Davies, E. C. (Montgomery)	Mansfield, W.	Taylor, R. A. (Lincoln)
Davies, Rhys John (Westhoughton)	March, S.	Taylor, W. B. (Norfolk, S. W.)
Day, Harry	Markham, S. F.	Thorne, W. (West Ham, Plaistow)
Denman, Hon. R. D.	Marley, J.	Thurtle, Ernest
Dukes, C.	Marshall, Fred	Tillett, Ben
Duncan, Charles	Mathers, George	Tinker, John Joseph
Ede, James Chuter	Matters, L. W.	Townend, A. E.
Edmunds, J. E.	Maxton, James	Vaughan, D. J.
Edwards, C. (Monmouth, Bedwellty)	Melville, Sir James	Viant, S. P.
Edwards, E. (Morpeth)	Messer, Fred	Walker, J.
Elmley, viscount	Middleton, G.	Wallace, H. W.
Gardner, B. W. (West Ham, Upton)	Milner, Major J.	Wallhead, Richard C.
Gardner, J. P. (Hammersmith, N.)	Montague, Frederick	Watkins, F. C.
George, Major G. Lloyd (Pembroke)	Morley, Ralph	Wellock, Wilfred
George, Megan Lloyd (Anglesea)	Morrison, Robert C. (Tottenham, N.)	Welsh, James (Paisley)
Gibbins, Joseph	Mort, D. L.	West, F. R.
Gibson, H. M. (Lancs, Mossley)	Mosley, Sir Oswald (Smethwick)	Whiteley, Wilfrid (Birm., Ladywood)
Gillett, George M.	Muff, G.	Whiteley, William (Blaydon)
Gossling, A. G.	Muggeridge, H. T.	Wilkinson, Ellen C.
Gould, F.	Murnin, Hugh	Williams, David (Swansea, East)
Graham, Rt. Hon. Wm. (Edin., Cent.)	Naylor, T. E.	Williams, Dr. J. H. (Llanelly)
Granville, E.	Newman, Sir R. H. S. D. L. (Exeter)	Williams, T. (York, Don Valley)
Gray, Milner	Noel Baker, P. J.	Wilson, C. H. (Sheffield, Attercliffe)
Grenfell, D. R. (Glamorgan)	Noel-Buxton, Baroness (Norfolk, N.)	Wilson, J. (Oldham)
Griffith, F. Kingsley (Middlesbro' W.)	Oldfield, J. R.	Wilson, R. J. (Jarrow)
Groves, Thomas E.	Oliver, George Harold (Ilkeston)	Winterton, G. E. (Leicester, Loughb'gh)
Grundy, Thomas W.	Palin, John Henry	Wise, E. F.
Hall, F. (York, W. R., Normanton)	Paling, Wilfrid	Wright, W. (Rutherglen)
Hall, G. H. (Merthyr Tydvil)	Perry, S. F.
Hall, Capt. W. G. (Portsmouth, C.)	Pethick-Lawrence, F. W.	TELLERS FOR THE AYES.—
Hamilton, Mary Agnes (Blackburn)	Phillips, Dr. Marion	Mr. Allen Parkinson and Mr.
Hamilton, Sir R. (Orkney & Zetland)	Picton-Turbervill, Edith	Hayes.
NOES.
Acland-Troyte, Lieut.-Colonel	Duckworth, G. A. V.	Muirhead, A. J.
Ainsworth, Lieut.-Col. Charles	Dugdale, Capt. T. L.	Newton, Sir D. G. C. (Cambridge)
Albery, Irving James	Eden, Captain Anthony	Nicholson, O. (Westminster)
Alexander, Sir Wm. (Glasgow, Cent'l)	Edmondson, Major A. J.	Nicholson, Col. Rt. Hn. W. G. (Ptrst'ld)
Allen, Sir J. Sandeman (Liverp'l., W.)	Elliot, Major Walter E.	Nield, Rt. Hon. Sir Herbert
Allen, Lt.-Col. Sir William (Armagh)	Erskine, Lord (Somerset, Weston-s-M.)	Oman, Sir Charles William C.
Amery, Rt. Hon. Leopold C. M. S.	Everard, W. Lindsay	O'Neill, Sir H.
Astor, Maj. Hn. John J. (Kent, Dover)	Falle, Sir Bertram G.	Ormsby-Gore, Rt. Hon. William
Atholl, Duchess of	Ferguson, Sir John	Penny, Sir George
Baillie-Hamilton, Hon. Charles W.	Fielden, E. B.	Peto, Sir Basil E. (Devon, Barnstaple)
Baldwin, Rt. Hon. Stanley (Bewdley)	Fremantle, Lieut.-Colonel Francis E.	Pilditch, Sir Philip
Balfour, Captain H. H. (I. of Thanet)	Ganzoni, Sir John	Power, Sir John Cecil
Balniel, Lord	Gault, Lieut.-Col. Andrew Hamilton	Pownall, Sir Assheton
Beaumont, M. W.	Gilmour, Lt.-Col. Rt. Hon. Sir John	Ramsbotham, H.
Berry, Sir George	Glyn, Major R. G. C.	Rawson, Sir Cooper
Betterton, Sir Henry B.	Gower, Sir Robert	Reid, David D. (County Down)
Birchall, Major Sir John Dearman	Grace, John	Remer, John R.
Bird, Ernest Roy	Graham, Fergus (Cumberland, N.)	Rentoul, Sir Gervais S.
Boothby, R. J. G.	Grenfell, Edward C. (City of London)	Reynolds, Col. Sir James
Bourne, Captain Robert Croft	Gretton, Colonel Rt. Hon. John	Richardson. Sir P. W. (Sur'y, Ch't'sy)
Bowater, Col. Sir T. Vansittart	Guinness, Rt. Hon. Walter E.	Roberts, Sir Samuel (Ecclesall)
Bowyer, Captain Sir George E. W.	Gunston, Captain D. W.	Rodd, Rt. Hon. Sir James Rennell
Boyce, H. L.	Hacking, Rt. Hon. Douglas H.	Ross, Major Ronald D.
Bracken, B.	Hall, Lieut.-Col. Sir F. (Dulwich)	Salmon, Major I.
Braithwaite, Major A. N.	Hamilton, Sir George (Ilford)	Samuel, A. M. (Surrey, Farnham)
Briscoe, Richard George	Hanbury, C.	Sandeman, Sir N. Stewart
Brown, Brig.-Gen. H. C. (Berks, Newb'y)	Hannon, Patrick Joseph Henry	Sassoon, Rt. Hon. Sir Philip A. G. D.
Buchan, John	Hartington, Marquess of	Simms, Major-General J.
Buckingham, Sir H.	Harvey, Major S. E. (Devon, Totnes)	Sinclair, Col. T. (Queen's U., Belfst)
Burton, Colonel H. W.	Heneage, Lieut.-Colonel Arthur P.	Skelton, A. N.
Butler, R. A.	Hennessy, Major Sir G. R. J.	Smith, R. W. (Aberd'n & Kinc'dine, C.)
Cadogan, Major Hon. Edward	Herbert, Sir Dennis (Hertford)	Smith-Carington, Neville W.
Carver, Major W. H.	Hills, Major Rt. Hon. John Waller	Smithers, Waldron
Castle Stewart, Earl of	Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.	Somerville, A. A. (Windsor)
Cautley, Sir Henry S.	Horne, Rt. Hon. Sir Robert S.	Southby, Commander A. R. J.
Cayzer, Sir C. (Chester, City)	Howard-Bury, Colonel C. K.	Spender-Clay, Colonel H.
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)	Hunter-Weston, Lt.-Gen. Sir Aylmer	Stanley, Lord (Fylde)
Cazalet, Captain Victor A.	Hurd, Percy A.	Stanley, Maj. Hon O. (W'morland)
Cecil, Rt. Hon. Lord H. (Ox. Univ.)	Iveagh, Countess of	Steel-Maitland, Rt. Hon. Sir Arthur
Chadwick, Capt. Sir Robert Burton	Jones, Sir G. W. H. (Stoke New'gton)	Stewart, W. J. (Belfast, South)
Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)	Kindersley, Major G. M.	Sueter, Rear-Admiral M. F.
Chamberlain, Rt. Hon. N. (Edgbaston)	King, Commodore Rt. Hon. Henry D.	Thomas, Major L. B. (King's Norton)
Christie, J. A.	Lamb, Sir J. Q.	Tinne, J. A.
Churchill, Rt. Hon. Winston Spencer	Law, Sir Alfred (Derby, High Peak)	Titchfield, Major the Marquess of
Cobb, Sir Cyril	Leigh, Sir John (Clapham)	Todd, Capt. A. J.
Cockerill, Brig.-General Sir George	Leighton, Major B. E. P.	Train, J.
Cohen, Major J. Brunel	Lewis, Oswald (Colchester)	Tryon, Rt. Hon. George Clement
Colman, N. C. D.	Llewellin, Major J. J.	Vaughan-Morgan, Sir Kenyon
Courtauld, Major J. S.	Locker-Lampson, Rt. Hon. Godfrey	Warrender, Sir Victor
Courthope, Colonel Sir G. L.	Long, Major Hon. Eric	Waterhouse, Captain Charles
Cranborne, Viscount	Lymington, Viscount	Wayland, Sir William A.
Croft, Brigadier-General Sir H.	Macdonald, Capt. P. D. (I. of W.)	Wells, Sydney R.
Crookshank, Capt. H. C.	Maitland, A. (Kent, Faversham)	Williams, Charles (Devon, Torquay)
Cunliffe-Lister. Rt. Hon. Sir Philip	Margesson, Captain H. D.	Windsor-Clive, Lieut.-Colonel George
Dalkeith, Earl of	Marjoribanks, E. C.	Winterton, Rt. Hon. Earl
Dalrymple-White, Lt.-Col. Sir Godfrey	Mason, Colonel Glyn K.	Withers, Sir John James
Davidson, Rt. Hon. J. (Hertford)	Meller, R. J.	Wood, Rt. Hon. Sir Kingsley
Davidson, Major-General Sir J. H.	Mitchell, Sir W. Lane (Streatham)	Worthington-Evans, Rt. Hon. Sir L.
Davies, Dr. Vernon	Mond, Hon. Henry	Young, Rt. Hon. Sir Hilton
Davies, Maj. Geo. F. (Somerset, Yeovil)	Monsell, Eyres. Com. Rt. Hon. Sir B.
Davison, Sir W. H. (Kensington, S.)	Moore, Sir Newton J. (Richmond)	TELLERS FOR THE NOES.—
Dawson, Sir Philip	Morden, Col. W. Grant	Sir Frederick Thomson and Captain
Dixey, A. C.	Morrison-Bell, Sir Arthur Clive	Wallace.

Bill read the Third time, and passed.