§ Sir HUGH O'NEILLI beg to move, in page 2, line 28, to leave out the words "and sixpence."
§ This Clause raises the very important question of the amount of the Income Tax, which the Government propose to continue at the rate of 4s. 6d. in the £. As has been stated this evening more than once, the time table under which we are operating makes it impossible properly to discuss these very important taxes, and as there are many other points arising on these Clauses which deal with direct taxation, I shall not spend very much time in the arguments which I propose to address to the Committee. As the right hon. Gentleman the President of the Board of Trade knows very well, one of the greatest incentives to the depression from which the country is suffering at the present time is the very high rate of direct taxation, and this Amendment to reduce the Income Tax by 6d. is really moved from these benches in order to emphasise our feeling of how important it is in the present state of our national finances to give some relief to those who have to bear the burden of direct taxation. Income Tax at 4s. 6d. in the £ operates very harshly upon a large section of the community.
§ There is also this evening on the Paper an Amendment to exempt company reserves from Income Tax, and I should like to ask, on a point of Order, whether you propose to call that Amendment, Mr. Dunnico, because if not, I think it would be appropriate for me to make some reference to it now.
§ The DEPUTY-CHAIRMANI cannot say now what Amendments I may select, but the right hon. Member must keep to this particular Amendment in moving it. There are Amendments that may not be selected, but they could be mentioned on the Motion "That the Clause stand part of the Bill."
§ Sir H. O'NEILLThe question of Income Tax on company reserves could be quite properly argued on this Amendment, supposing the other Amendments were not to be called, I take it?
§ The DEPUTY-CHAIRMANIt would not be in order to do so on the present Amendment.
§ Sir H. O'NEILLI moved an Amendment like this on the Report stage of the Budget Resolutions, and the whole question of company reserves was gone into 704 on that Amendment to reduce the Income Tax by 6d. However, I will, of course, bow to your Ruling and not refer to that matter now. As I say, the enormous burden of direct taxation is having a tremendous and deleterious effect upon the industry of the country. It has risen out of proportion, as the right hon. Gentleman well knows, to indirect taxation. Year by year the proportion of direct as against indirect taxation has been increasing, and more and more in these days we find the direct taxpayer having to bear this colossal burden. I think the time is coming, perhaps sooner than the right hon. Gentleman thinks, when there will have to be some move in a downward direction with regard to Income Tax, because if that and other direct taxes are kept up to the level of to-day, the revenue simply will not be produced. There is nothing more vital in the present stage of our industrial development and of our financial difficulties than that there should be, and that soon, a reduction of direct taxation, and primarily in the basic rate of Income Tax.
Sir HILTON YOUNGThis Amendment undoubtedly brings the Committee to close quarters with one of the biggest economic issues before the country at the present time, and I know that the President of the Board of Trade fully realises that fact. I know that, as one who has his finger on the pulse of the nation's economic health, he desires to be free in order to do his best for the economic salvation of the nation, and I should like to encourage him to think that, whatever action he finds himself advised to take as a result of the Debate upon this most important question, he will be free to take it and that it will be in accordance with what perhaps we might call the staff orders of his commander-in-chief, by which, in a previous instance already in to-day's Debate, we know that he considers himself bound, because in his opening speech upon this year's Budget the Chancellor of the Exchequer used the following words. He told us that he had explained on several previous occasions that it was his
desire to avoid, if possible, all forms of taxation which, whether from the economic or the psychological point of view, would have a depressing effect on industry, and which might retard recovery in trade and employment."—[OFFICIAL REPORT, 27th April, 1931; col. 1403, Vol. 251.]705 The argument which will be addressed to the Committee is this, that the Income Tax at its present excessive height is a form of taxation that, both from the economic and psychological point of view, has a depressing effect on industry, and that it will retard, and is retarding, recovery in trade. What we recommend to His Majesty's Ministers is the most serious consideration whether they can ever expect successfully to grapple with the present economic troubles of the country unless and until they bring themselves to deal with the gravest of our economic evils at the present time, namely, the excessive burden of taxation, and especially the excessive burden of direct taxation in Income Tax.The argument is familiar, I think, to the mind of the whole country, that many of the gravest evils from which we are suffering are the results of the excessive burden of direct taxation. Does not the President of the Board of Trade recognise that in every quarter there is a deep-seated, in some places suspicion, in other places conviction, that it is this excessive burden of direct taxation that is responsible for our lack of prosperity, for bad times, and for unemployment? Are we not to suppose that, with a nation informed in matters of business, informed in matters of public finance and economies, what is held by all people at all times in all places has a large measure of truth in it? There is a large measure of truth in it, and I will detain the Committee only long enough to specify the actual black and white reasons, the arguments, which underlie that wide-seated conviction which is now held, as I say, in all well-instructed quarters in the national mind.
There is, first of all, this, that by our present excessive burden of Income Tax you are depleting, below what is necessary for the economic prosperity of the industries of the country, the pool of fresh capital available for the maintenance of those industries. If you compare our present lack of prosperity with that of our continental rivals, you will Burely see that the greatest need of our time is the re-equipment of our productive machinery. Merely, I think, because of the fact that we got such a long start on other nations in productive machinery, we have settled habits, we have a certain force of inertia which has resulted in our falling somewhat behind in the 706 equipment of our productive energy. At the present time the great fact is the necessity for re-equipment to meet the increasing competition of the world. Not only because we have fallen behind in the up-to-dateness of our plant, but because this is the age of invention and rapid growth in the equipment of productive machinery, and in order to keep pace with the more rapid temper of the time, we need a bigger supply of fresh capital.
Just at the time when this is our greatest need, and the one characteristic need of the country in comparison with other countries, we have embarked on this fatal policy of a rapid increase of the direct burden thrown upon industrial production through the Income Tax. That is the first reason. The second reason why this excessive burden of Income Tax is one of the causes of our lack of prosperity, is more deep-seated still. The first reason to which I have referred, the depletion of the pool of savings, is in relation to the productive machinery as a whole. The second reason is in relation to the individual—the individual worker of the country and the individual Income Tax payer. The present excessive burden of Income Tax is working infinite mischief in our economic life because by the burdens it imposes it is reducing the reward of the efforts of the class of the Income Tax payer and is diminishing those efforts. You cannot reduce the reward of effort below a certain proportion in relation to the natural reward without injuring and diminishing the effort itself. That, of course, is of peculiar gravity to a nation such as ours, which is equipped to be a great manufacturing and producing organisation for the whole of the world. We depend upon nothing else so much as upon the brains and the energy of the managerial class, of the class that are the natural leaders of production, the natural organisers, the natural pushers, drivers and inventors; and that class is undoubtedly under the present organisation of society very largely co-extensive with the class of Income Tax payers.
Thus, by laying this excessive burden in this particular quarter, we are laying it in precisely that quarter where it can work most harm to the vigour and the successful competition of our national economic system as a whole under 707 present conditions. I know that it has been argued in the past that the Income Tax does not enter into the cost of production and so does not amount to any disadvantage in competition with foreign rivals. I believe that that is the most dangerous and untrue piece of rough approximation to the truth that has ever been stated in economic controversy. It is so rough an approximating to the truth that it is much more an approximation to falsehood than an approximation to the truth. I dare say that in some ideal world, with a very small Income Tax applied by measures of absolute science and perfect equity, controlled by a fiscal machine which can only exist in a paradise and in no world of practice, a small Income Tax might be so devised as not to enter into the cost of production; but an Income Tax of the size we have in this country, imposed upon the basis and according to the fiscal regulations that we have in this country, does notoriously, to the knowledge of every practical man, enter into the cost of production and hamper us in competition with our foreign rivals.
The truth is that if Income Tax is to have no effect on the cost of production, it has to be a pure tax on profit. Another truth is that our Income Tax is a great deal more than a tax on profit. If Income Tax were confined to a direct tax on profits, so that it was only paid out of income, it would, according to any reasonable signification, be looked upon by any sane man as profits. If it were only paid out of that fund, it would be a bad look-out for the Exchequer and the country. As a matter of fact, the burden of Income Tax falls on a much wider area than anything which can reasonably be called profit. Thus it does enter into the cost of production. The argument amounts to this, and it is an argument which most needs the attention of the country at the present time, that by the excessive burden of direct taxation on industry you are starving the industries of the country and smiting them on the head with a blunt instrument and reducing them to a stunned condition. If we lived in the world alone, wholly defended from any form of foreign competition, you might do what you liked. You might impose taxation of a kind which a Socialist Government imposes 708 if there were a single State in the world and one economic organisation, and I dare say you would not produce the effects which I have described, because in that case people could not escape from it. But when you live in a world in which we have many States and independent economic organisations, you cannot do it, because effort and capital can escape from it, and they will escape from it if you impose burdens on them greater than those imposed in any other part of the civilised world.
The burdens are greater than in any other part of the civilised world, and what is the result? Capital at the present day is international. It flows like a mobile liquid from State to State. Effort and brains become increasingly international, too, and in the organisation of the modern world effort and invention and capital will seek that State where they can earn the biggest reward. How then can you expect them to come to this country if you impose on them bigger burdens than any other country? How can you expect the economic system of this country to maintain itself in the face of its foreign competitors unless it attracts to itself a fair share of the annual increment of brains, invention and capital? It is because under present conditions we are frightening all that new blood in endeavour from our shores, more than any other reason, that we are falling back in the race of production, and the competition for the world's production. In that we see the fatal symptom of a rapidly diminishing share of the world's international trade held in this country.
I know that the easy line of the President of the Board of Trade to take on an occasion such as this is to say, "You are proposing to reduce the Income Tax by 6d. The yield is about £4,000,000 per penny tax, in spite of the slackening of the yield, and the reduction will mean that the Exchequer is being asked to give up £24,000,000 of revenue. It cannot be done, and I cannot afford it." The fact is, however, not that the Government cannot afford to spare this £24,000,000, but that they cannot afford not to do it. You cannot afford not to make some alleviation, some concession in the tribute which you are exacting from the productive effort of the country. Surely, things have gone on from bad to worse long 709 enough for us to be no longer content with the short view that this is a convenient way, and that, after all, the revenue will come in. Has not the time come when the Government are prepared for once to take a longer view, and to understand that it is impossible for them not to afford some such relief to the overburdened productive system of the country?
The right hon. Gentleman may say, "Unless I get this revenue, how are we to maintain the social services of the country?" It is no longer a question of maintaining the social services of the country by the present scheme of taxation. If you attempt to do so, if you attempt by continuing this excessive burden of direct taxation to maintain the present level of social services, do you not realise that year by year you are running downhill towards a point at which you will no longer be able to maintain those services, and will be compelled to reduce them? In any such predicament as that in which the nation finds itself, you must withdraw to jump it; you must ease the burden in order to enable the beast of burden to continue on its journey. If you do not do so, the whole process stops.
The point is that in the long view, which is so rapidly becoming the short view, unless you are prepared drastically to remit the direct burden on industry, you will wreck the existing machinery of taxation and will no longer be able to produce the money to maintain the social services, and the whole present system of finance will be brught to standstill. I may be asked what alternative I have. This is not the time to discuss it, but I know perfectly well that the quip will be addressed, as it is constantly addressed to us when we use an argument of this sort, "What is the good of asking us to abandon £24,000,000 of revenue unless you have an alternative?" In a single sentence I will defend myself against that easy retort. The alternative is a revenue tariff.
§ 8.0 p.m.
§ Mr. TINKERWhen I saw this Amendment on the Paper I did not expect it to be moved, because on the 5th May we had a long Debate on this subject. The right hon. Gentleman was able and lucid in explaining the position then, and the House of Commons defeated it by 260 votes to 196. I should have thought that that was conclusive, 710 and that the Opposition would have devoted more of the time at their disposal to some other subject. When the House of Commons has expressed itself in that way, one would have thought that the Opposition would have gone no further with it. I welcome the question of the distribution of wealth being raised. When we get on to Income Tax and the hard life of the people who have to pay it, it always leads me to ask where the money is to come from, whether it should come whence there is a fair amount to be got, or whence there is a little and where poverty exists. If we remit this 6d., the total loss to the revenue will be a little more than the right hon. Gentleman mentioned. The figures show that Income Tax is expected to bring in this year £248,000,000. One-ninth of that, that is 6d., represents £27,500,000, a little more than the right hon. Gentleman mentioned. That £27,500,000 is needed, and, if it is not to be got from this source, where is it to be found? The right hon. Gentleman suggested revenue duties. The country is not having revenue duties. It sent a Labour Government here against revenue duties. [HON. MEMBERS: "What about the Petrol Duty?"] If it is suggested that Income Tax payers are too hard-hit, will hon. Members opposite suggest some other source of revenue with which we could agree? I find that the Super-tax payers, who last year contributed £67,832,000 to the revenue, will this year pay £72,000,000, which indicates that they will have more income this year than last year. In 1928–29, according to the report of the Board of Inland Revenue, there were 97,600 Super-tax payers, and their incomes totalled £541,000,000, or an average of £5,500 a year. Four thousand of them had from £8,000 to £10,000 per year, or £176 a week, 4,500 had from £10,000 to £15,000 per annum, or £240 a week. The Super-tax payers, who are the inflated Income Tax payers, if I may put it so, certainly have a lot of money, and, if hon. Members opposite complain that we are now hitting too hard capable business men, it may be suggested that we might turn to some of these Super-tax payers, who certainly cannot be called people in want. Only those people pay Super-tax who have an income of £2,000 or more. If hon. Members opposite 711 would be willing to secure more revenue from them we might very well agree to help them.
They might go a step further, and try the Death Duties. The Death Duties are an important source of revenue, and we ought to tap it more than we do. Death Duties are expected to contribute £90,000,000 to the revenue this year. "We could very easily get another £30,000,000 from Death Duties. If we were to do that, we should be suiting the right hon. Member for Edgbaston (Mr. Chamberlain). When he was speaking on the Land Tax proposals he criticised the Chancellor of the Exchequer for sparing the dead and taxing the living, pointing out that graveyards were being exempted from the Land Values Tax. I would recommend this to him: Let us get at the dead through Death Duties; because the people who have passed away will not feel the loss of the money we take from them. As he said that we are sparing the dead and taxing the living, I would point out that here is a real opportunity to tax the dead by increasing the Death Duties and save some of the living.
Hon. and right hon. Members opposite ought to realise the position in which the country finds itself. We agree that the burden of taxation is very hard to bear, but at the same time they must realise that the poorer classes are suffering more than anyone on the opposite side, if I may say so respectfully, because those who have to pay Income Tax are at any rate sure of a comfortable home and a meal whenever they want it. The poorer classes, who would have to pay more in indirect taxation if we altered the present taxation, cannot say that they are sure of a covering for their head or a meal whenever they want. If this question is put to the vote, and I do not think it will be, we ought to show ourselves just as emphatic as we were on 5th May and reject the Amendment.
§ Mr. HASLAMI would like to reinforce the cogent arguments and the weighty warning addressed to the Committee by my right hon. Friend the Member for Sevenoaks (Sir H. Young). He referred to the fact that Income Tax is not only a tax on profits but also a tax upon reserves. It is not, as the hon. Member for Leigh (Mr. Tinker) has just said, a tax paid out of monies which 712 are in the possession of persons to do with as they like. The hon. Member quoted various large sums of money which, he said, represented the incomes of persons liable to Income Tax and Super-tax. I would like to point out that those sums of money do not represent the incomes of those Super-tax payers in the sense in which the hon. Member used that word. They are the incomes upon which the various taxpayers are assessed, but a business man or a company, any institution carrying on trade for the purpose of profit, is absolutely bound to put aside a portion of what has been earned in a good year in order to prepare for bad times which may ensue and to meet all sorts of charges which arise in business. The figures which the hon. Member put forward as being the spendable income of the persons assessed to these taxes are not a true representation, by any manner of means, of their spending incomes. Everyone who has knowledge of these matters knows that a man may not have to spend anything like the amount of money to which he is assessed for Income Tax and Super-tax.
§ Mr. SANDHAMHear, hear.
§ Mr. HASLAMI am very pleased to think that certain hon. Members agree with me.
§ Mr. SANDHAMThat is my sense of humour.
§ Mr. HASLAMI would like to go into the question of company reserves more closely. The hon. Member for Leigh referred to the large majority with which the House passed the general Income Tax proposition, but when the Income Tax was increased from 4s. to 4s. 6d. in the £ the question of the taxation of company reserves and the necessity for companies to maintain such reserves was brought prominently under discussion.
§ The DEPUTY-CHAIRMANWe cannot discuss the question of company reserves on this Amendment. There is another Amendment dealing with this matter.
§ Mr. SANDHAMTell us something about the forces of inertia.
§ Mr. HASLAMI think I might be protected from such interruptions as that. The point I desired to put was that the question of relieving company reserves from Income Tax was gone into very 713 closely last year, and it was found impossible to secure that relief, and I wish to submit now that the only way in which we can give companies the relief that is required is by reducing the tax from 4s. 6d. to 4s.
§ The DEPUTY-CHAIRMANI must point out, in the first place, that the hon. Member is anticipating an Amendment which is on the Order Paper, and, in the second place, that that Amendment is not in order on this Clause, but must be moved as a new Clause. While it would be quite proper for him to make a reference to company reserves it would not be proper for him to make them the substance of his argument.
§ Mr. HASLAMFrom a technical point of view your Ruling is, no doubt, just, but I do feel that the question of reserves comes into this question of Income Tax.
§ The DEPUTY-CHAIRMANIf the hon. Member wants to argue that at length, he must wait till the new Clause is called. At present he must keep within the terms of this Amendment.
§ Mr. HASLAMI am glad to think that there will be a further opportunity of dealing with this matter. It is to be hoped that the time limit under which we are discussing this Bill will not prevent this important matter being raised. A point I would like to make in passing is that the ordinary individual trader is not allowed to calculate any reserves at all, although he is bound to put aside a sum of money for future use, and therefore it is not correct to say that we are taxing only what one may call his spending income at 4s. 6d. in the £, because we are limiting the amount he may put aside for future development.
The hon. Member for Leigh seemed to be under the impression that it has become a choice between direct and indirect taxation, between taxes on well-to-do people and taxes on poor people. We are all agreed that the working people can hardly afford to pay any more taxes, and I should never support any tax which might fall on them, but does not this Income Tax fall upon them? If we take it out of the power of the traders of this country to extend their businesses we are damaging their employing capacity. It is noteworthy that the last 10 years of very severe unemployment—up to a year or 714 two ago it was more severe in this country than in any other country—have been years in which this country has suffered under an enormous Income Tax. Our direct taxation is higher than that of any other country in the world. I suggest that there two facts may very well be correlated. After all who are the people who give employment? They are the business people and the employers of labour, and, if further burdens are piled upon them, surely it must be evident that that course acts against further employment and the expansion of business and it may even act in such a way that business cannot proceed and unemployment becomes much worse. I appeal to hon. Members opposite to examine this matter of direct taxation with greater closeness, because I believe that high direct taxation will prevent a return to prosperity in this country. For these reasons, I shall support the Amendment.
§ Mr. BENSONI do not think that the party opposite have treated this Amendment very seriously. There is a small band of the faithful left, but the Mover and Seconder of the Amendment have left the Chamber after delivering very perfunctory speeches having as it were thrown the dog a bone to gnaw. I was very disappointed with the effort of the right hon. Gentleman the Member for Sevenoaks (Sir H. Young). Really it is a very good speech, and one which has done service on innumerable occasions in this House. When the brother of the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain) pleaded against the Budget of 1914, he made the same speech and made it far more effectively than the right hon. Gentleman the Member for Sevenoaks. Indeed, this speech has been made every time there has been an increase in the Income Tax. The perfunctory methods which have been adopted in the speech of the right hon. Gentleman the Member for Sevenoaks seem to me to suggest that the Conservative party are getting rather tired, or else they feel that it is rather hollow. In 1842, Mr. Wood made this speech magnificently on the introduction of Peel's Income Tax, and proved conclusively that an Income Tax of 7d. in the pound would inevitably drive all the capital out of the country. I ask hon. Members to read that version of the speech and compare it with the version which has been delivered to-day by the right hon. Gentleman the 715 Member for Sevenoaks. May I also make a quotation from the original form of this speech as delivered by Sir John Sinclair in this House, who on the first introduction of the Income Tax by Pitt said?:
Allow me to ask how long it can be expected that either the wealth or the industry of the people can hold out under even the apprehension and terror of such exactions.Sir John Sinclair continued:and must we, on that account, give way and submit, even without a struggle, to such a mischievous project, as the one now under consideration; a project, Sir, which could only have been occasioned by the most unbounded profusion, could only be originated in the harshest tyrannical principles, and must either terminate in the disgrace and ruin of the bold projector or destruction of the nation.I ask hon. Members to compare those words with the milk and water stuff we have heard to-day, because they are words used on the same subject. I should prefer to treat this speech as it should be treated, that is as a piece of imaginative literature, comparing one version with another in literary merit, but I noticed that the right hon. Gentleman the Member for Farnham (Mr. A. M. Samuel) took it seriously so I must proceed to examine one or two of the suggestions which have been put forward by the right hon. Gentleman the Member for Sevenoaks. The right hon. Gentleman suggested that high taxation is responsible for unemployment and he also stated that this country was much more highly taxed than other countries. If high taxation is responsible for unemployment in this country how is it that in countries with lower taxation there are even higher rates of unemployment than in this country. Germany has over 5,000,000 unemployed and there is thus a higher rate of unemployment in Germany than in England. In America we are told there are 10,000,000 unemployed. There is an authentic figure published by the American Federation of Labour showing that never since 1926 has there been less than 24 per cent. of their membership unemployed. If you take Australia and Canada you find exactly the same thing, namely, that those countries not merely during the last year but during the last four or five years have steadily had a higher unemployment rate than we have in this 716 country. Again I ask how is it if unemployment is due to our high taxation that other countries with a lower taxation are suffering in regard to unemployment to an even greater degree.It has been suggested that the slump in trade is due to our high taxation, but the slump is common to all countries. This country did not feel the slump before other countries, and our rate of taxation at the present moment is no higher than it has been for the last 10 years. In 1924 we raised nearly £30,000,000 more in Income Tax than it is proposed to raise this year. Did that affect our trade and industry? On the contrary, despite a stable rate of taxation for the last 10 years our trade, industry and national wealth has steadily increased. Sir Josiah Stamp estimated that between 1924 and 1929 the increase in our national income, despite falling prices, amounted to no less than £400,000,000. In about five years the net taxable income of the country increased by about £120,000,000. During the same period, our index of production increased from 100 to 112. During all this period, the present level of taxation has obtained, and I suggest that it is really farcical to attribute unemployment and the present slump to a level of taxation which has been stable for the last 10 years—in fact, ever since the War. I say definitely that, despite our high taxation, we have withstood the effect of the world slump better than our rivals.
The right hon. Gentleman the Member for Sevenoaks, although he looked anxiously at the Chair when he said it, gave as his alternative a revenue tariff., Let me point out that the United States, which has a revenue tariff, is faced with a deficit of £200,000,000. We at any rate have carried through the last financial year, not with a deficit, but with an actual surplus—[Interruption.] The hon. Gentleman forgets that in our theoretical deficit there is reckoned £60,000,000 of debt reduction. In the American deficit of £200,000,000, there was £88,000,000 of debt reduction, leaving a net absolute deficit of £112,000,000. If you take our actual surplus, leaving out questions of theoretical debt reduction, you will find that, including the £9,000,000 that came from Germany, we had a surplus of £52,000,000, which is exactly the amount of the deficit from which Germany has 717 suffered during the same period. We have a surplus of £52,000,000, and we are the only country in the world that has a surplus of £52,000,000, or anything like it; most countries have failed to balance their budgets at all. I am afraid that this is not the place to discuss a revenue tariff, but I would suggest that, as the one completely Free Trade country—
§ The DEPUTY-CHAIRMANI am afraid I cannot allow that. I have allowed the hon. Member to make a brief reply on the question of a revenue tariff, and he must be content with that.
§ Mr. BENSONEveryone knows that we are the only Free Trade country in the world, so I content myself with saying that we are the one country in the world that has been able to produce for the year 1930–31 a financial result of so magnificent a character.
The right hon. Gentleman the Member for Sevenoaks, in the various perfunctory arguments that he used, suggested that this tax is damaging in that it heavily taxes managerial ability. That is not seriously true. I do not know what managerial salaries average; I suppose they vary within very wide limits; but a very fine managerial salary is £2,000, and I find that the amount of Income Tax payable on an earned income of £2,000 is £275. No one can suggest that that is very damaging. On the higher level, if one takes a managerial salary of £5,000, the tax, including Surtax, is only £1,250, which is not very serious. I suggest that it is not the managerial salaries, it is not the salaries of the brain workers, that are being severely hit by this tax. The people who are severely hit are the people with large incomes, the major portion of which, of necessity, owing to their size, come from unearned sources.
Following very far behind Mr. Wood in 1842, not only in point of time hut also in point of vigour, the right hon. Gentleman the Member for Severnoaks suggested that our high rate of Income Tax must inevitably drive capital abroad to those happier climes where Income Tax is lower. What is the fact? As I have pointed out, for 10 years we have had our present level of taxation, infinitely heavier than the taxation prior to the War, and, according to Mr. Layton, the economist, in his evidence before the Colwyn Committee, the amount of capital 718 exported abroad before the War was approximately £160,000,000 a year. That figure he gave as the average. All our authorities, the Colwyn Committee itself, and Sir Josiah Stamp in a more recent estimate, put the export of capital for the 10 years subsequent to the War at £100,000,000. If one allows for the very large difference in value, one sees in a moment that the amount of capital that went abroad prior to the War was very much higher than it has been of recent years.
There is no evidence that taxation is frightening capital away; there is no evidence that there is a shortage of capital. On the contrary, there is plenty of evidence to show that there is capital in the country—frozen capital awaiting investment—capital which is frozen for two reasons. One of them is the slump, and one is a psychological reason for which hon. Gentlemen opposite are very largely responsible, by the preaching of defeatism and pessimism with which they have always met any attempt on the part of the Labour Government to improve the conditions of the working class.
§ Mr. ARTHUR MICHAEL SAMUELThe hon. Member for Chesterfield (Mr. Benson) gave a number of quotations as to what our income was. I do not care very much for his quotations from well known gentlemen; I prefer to turn to what I have to face in the way of facts, namely, 2,500,000 poor people out of work. That is what we have to face as a result of Labour legislation—[HON. MEMBERS: "No."] We have had two years of Labour legislation—[Interruption]. Perhaps hon. Gentlemen will look at the figures of 18 months or two years ago, and see the number of those who were out of work then, and will also look at the number of people who are in suffering and misery to-day through unemployment. We have not been in power during these last 18 months or two years, but previously we gradually and steadily did what we could and reduced the number of people who were in that miserable state.
I am very much astonished to hear the-arguments about unemployment in Germany and the United States. The hon. Member argued that there was a great deal more unemployment in Germany than here. I, and most of us in this House, have very sad reason to know 719 why Germany has more unemployed than we have. We know that there has been a War. We have to think of graves of our own people over there. [Interruption.] My bank balance was not increased; my gains were nil; part of my family circle is gone. [Interruption.] You cannot talk about the War with Germany in terms of money; you can only talk about the War in terms of tears. Germany is a defeated nation, and the wonder is that there are not more unemployed there now, even than there are. To compare a defeated Germany with England, so far as unemployment is concerned, is to show a complete misapprehension of what the comparative situation is.
As regards unemployment in America. I have discussed, in this House and elsewhere, the question of the shipment of gold to America. The breakdown that we now see in America was bound to come. America, surfeited with gold and unable to digest it, with the power of production in her factories extended beyond all reason, turned to gambling. The position of the United States is a disaster, not connected with production or manufacture, but with Wall Street gambling, boosted up by borrowing for gambling. That is what has brought America to the position of unemployment that she is now in. It was not caused by legitimate expansion of trade. It was the expansion of credit for gambling. People who compare America and Germany with us have not begun to understand what the two positions are. It is a perfectly false analogy. [An HON. MEMBER: "What about Canada"?] Canada has been drawn, just as the re3t of the world has been drawn, into the maelstrom and the difficulties set up by Wall Street gambling. [An HON. MEMBER: "Is that the cause of the world slump"?] It is one of the great causes. The mal-distribution of gold upon which credit is based—
§ The DEPUTY-CHAIRMANThe discussion is getting very broad.
§ Mr. SAMUELI admit the justice of your rebuke, Sir, but it was not my fault. I was drawn into the point. What is the result of this high taxation here? Let me quote something that was said not many weeks ago: 720
The General Council of the Trades Union Congress, in putting their unemployment proposals before the Commission on Unemployment, said that they desired the removal of charges on industry and recognised—and this is one of the most important statements that has been made recently—That the cost of the social services of health and unemployment does represent a handicap particularly serious when the products of his (the employers') firm have to meet the competition of commodities which do not contain a similar item of cost.'"—[OFFICIAL REPORT, 5th May, 1931; col. 302, Vol. 252.]I agree with that. It supports my view that this heavy taxation prevents us selling our goods in foreign markets, creating new customers and holding our old customers. As to the hon. Member telling us that the revenue balances, is he not pulling our leg? He must know that the revenue did not balance. You do not balance national accounts by pawning capital possessions. You must pay your way out of income. In order to make the last revenue account balance, the Chancellor of the Exchequer had to borrow something like £40,000,000 for the Unemployment Fund.
§ Mr. BENSONI am fully aware of that, but our balance was £52,000,000, and if you deduct the £40,000,000 it still leaves a definite and clear balance of £12,000,000.
§ Mr. SAMUELThe hon. Member must not think that I agree on that point. I remember very well in an earlier stage an hon. Member on this side explaining what the net repayment of Debt was. He showed, after making the proper deductions, instead of paying off £50,000,000 we paid off no more than £3,000,000 or £4,000,000.
§ Mr. BENSONEven if I give the hon. Gentleman all his calculations that figure still shows a balanced Budget.
§ Mr. SAMUELHow can it be a balanced Budget if the Sinking Fund had to be borrowed? We are now running into debt to the extent of £1,000,000 a week. The hon. Member shows that he has not started to grasp how these accounts are running. What have we at present in the way of taxation? Roughly £800,000,000 of national taxation and £200,000,000 of local taxation. The hon. Member quoted Sir Josiah Stamp saying the income of the general population was so many thousands of millions of pounds—perhaps 721 four thousand. We are now by the heavy taxation which we are trying to keep down by this Amendment working, each one of us, rich and poor alike, three months in the year for the tax collector. I was astonished to hear the hon. Member for Leigh (Mr. Tinker) advocate an increase of Death Duties and of taxation. Hon. Members opposite seem to think that the only cure for our maladies is further taxation. The proper thing to do is to increase wealth and not to impose further taxation. Not only does not this Budget balance, but I make so bold as to say as a rejoinder to what was said by the hon. Member for Chesterfield that I do not believe, notwithstanding all that was forecast by the Chancellor of the Exchequer in his Budget speech, that the current year will balance by £20,000,000. We are living in illusion. We are not paying our way and we shall not pay our way in the current year. The system in which the minds of hon. Members opposite move seems to be to devise means to divide up wealth. I never hear a proposal put forward by them for the purpose of increasing wealth. They forget that the population does not stand still.
§ Mr. SANDHAMNeither does robbery.
§ Mr. SAMUELI am sure the hon. Member could make an erudite speech which would interest the Committee. If he will do so I will sit down, but if not, I must ask him to extend to me the usual courtesy. Every year children are born and the population increases. If there are 10 people in a house and 10 loaves of bread, that is one for each person. If you have an extra person unless you increase the number of loaves, the newcomer takes a little from the rest. If the population goes up as it does 200,000 or 300,000 every year, you must increase the general wealth of the population, otherwise the standard of living goes down. Wealth here is not being adequately increased. There is no inducement to make wealth. Let me quote some figures from the report of the Commissioners of Inland Revenue. Take the income assessed as Surtax for the last four years. It has steadily decreased while the population has increased. It dropped from £556,000,000 in 1925–6, £555,000,000 in 1920–7, £544,000,000 in 1927–8, to £541,000,000 in 1928–9. That is to say, the wealth of the nation has decreased 722 instead of growing. The tax yield has fallen from £57,000,000 to £52,000,000. The money which has to be paid in Surtax is needed for new ventures. A large number of ventures are started because people believe that there is a likelihood of big profits being made. They say, "We can afford to lose sometimes because sometimes we make great gains." The inducement of great gains makes men willing to lose in new ventures. We have to-day a large number of factories which were extended, owing to the War, beyond their power of selling their products. It is therefore necessary to-day to found new industries just as we founded two or three new industries in the past. I have particularly in mind artificial silk and the products of the Soya bean.
§ The DEPUTY-CHAIRMANI am sorry to have to interrupt the hon. Member, but the Amendment which we are discussing is whether we shall have a 4s. or a 4s. 6d. Income Tax, and I think that his arguments are getting rather wide of the Debate.
§ Mr. SAMUELYou are very gentle with me, Mr. Dunnico, and I will endeavour to keep within your Ruling. We want some of the extra money which goes in Surtax in order to encourage the investment of capital in new undertakings which will supplant and supplement old industries which fail to give the employment necessary for our people. Therefore, it is of the greatest advantage that taxation should not be too high. It should be reduced in the sense that my hon. Friend has suggested in order also to give people an inducement to venture their money. With the Income Tax at 4s. 6d. in the £—we are seeking to bring it down to 4s.—plus the very large amount of Surtax, and then Death Duties which hon. Gentlemen opposite advocate should be increased, there is no inducement for a man to venture his money. [Interruption.] The hon. Gentleman opposite must know that when a man makes a great deal of money, practically half of it is taken away by taxation, and if he has saved any of it, much of it is taken away by Death Duties. On the other hand, the State gives nothing back again; if a man fails he loses everything. In the interest of the accretion of wealth, of finding employment for our 723 people and ensuring them a higher standard of living, it is necessary that you should remove the discouragement of heavy taxation. I have tried to make my arguments on that line in order to show that we require new ventures, and money to put into those ventures. No money will be available to be risked to such ventures as long as we remain so heavily taxed.
Hon. Gentlemen opposite must have noticed the terrible object lesson of the financial collapse of Australia. Over-taxation there—and it is happening here—beyond the economic strength of that great people has brought them into terrible trouble. They borrowed just as we are borrowing. Fortunately we are able to borrow at home, but they, unfortunately, had to borrow beyond the seas. We should not increase our expenditure to such an extent that as taxation cannot meet it it necessitates our having to turn to borrowing for current expenditure. We have unfortunately found it very easy to raise money by-taxation in the past. As my right hon. Friend the Member for Sevenoaks (Sir H. Young) said, Income Tax and Surtax are very easy to raise. If they should fail we turn to borrowing. Such a course can only lead to sorrow. The limit of taxation has been passed. Looking at the position in a disinterested and perfectly reasonable way, I think that it will be admitted that we have got beyond the limit of taxation. I would remind the Committee that the right hon. Gentleman the Chancellor of the Exchequer came down here in the spring and electrified the House by saying the same thing in stronger language than I am using.
§ Mr. REIDI wish, for a moment or two, to try to follow the steps of the hon. Gentleman the Member for Farnham (Mr. A. M. Samuel). An hon. Gentleman who spoke from the opposite side of the Committee said that we had had this taxation for 10 years. We have 2,500,000 unemployed, and I believe that the fact that we have had this taxation for 10 years is legitimately concerned with the state of unemployment. Hon. Gentlemen opposite, no doubt, take another point of view. They think that enterprise can be carried on by the State. Personally, I believe that enterprise 724 carried on by the State would result only in failure and starvation. Under the existing system, enterprise has to be carried on by the private individual. The taxation which has been levied upon private individuals is breaking the heart of enterprise. I have practised at the bar for a good many years, though I am not practising at the moment, and solicitors have come to me and told me of a number of clients who had done fairly well for themselves but found that it was useless to stay in business. They said to him, "The more profitable our business, the higher the taxation. It pays us, now that we have got our money, to go out of business and live in the country." I am not stating a theory but telling the Committee of what has happened within my own knowledge. Each one of those cases resulted in a number of men employed in a business for a number of years being definitely thrown out of employment.
Hon. Gentlemen opposite tell us that Income Tax does not affect the cost of production, and that it does not affect enterprise, because it is levied only on realised profits. What are realised profits? [Interruption.] I ought to be allowed to make my speech. If the hon. Gentleman opposite has not a grip of the situation, he should not interrupt. These people who are in business do not look at the normal rate of profit. When a man goes in for a particular enterprise he looks at the net amount of money in the shape of profits he is going to get after he has paid all the outgoings including Income Tax, Surtax and everything else. Is the amount which the enterprise yields sufficient to compensate him for the risk? If you raise Income Tax, Surtax and other taxes, the amount which a man can receive to compensate him for his risk is comparatively low. That means that there are a great number of enterprises which he would not touch in existing circumstances. If he touched them, it is quite possible that he might lose his money. If he were able to make reasonable profit, he would give employment to people in the country.
Hon. Members opposite bar out all that kind of thing. It is a vicious circle. You levy taxation upon a man. First of all, you prevent him putting money by in order to engage in new enterprises, 725 and you actually discourage him from using the money he has got because you do not make it worth while for him to continue in business. So long as the system of private enterprise obtains in this country, you must make it worth while for private enterprise to devote money, energy and skill to doing something new, and thereby creating employment for the people of this country. If you make it more discouraging for an Englishman, Scotsman or Irishman to do any particular thing which foreign countries may do for their own citizens, then this country will go down. We have definitely to do something which will make it worth while for people to put their energies into business enterprises. How does it pay the Government to discourage the rich man who has capacity, not to use his capacity? I know cases of men who have very large incomes and have business ability, and I have talked to several of them. They have pointed out to me that they are suffering an enormous handicap, because they say that in regard to every penny of profit they make they start on a higher level of taxation. If a man is a poor man and he makes profits we encourage him to keep some of the profits to increase the business. If he is a rich man, do not try to keep him out of business, but let him come into business and give employment.
§ Mr. K. GRIFFITHWith a great deal of the very reasonable speech of the hon. Member for Down (Mr. Reid) I am completely in agreement, but I cannot help thinking that if he were in the position of the Chancellor of the Exchequer and were confronted with this Amendment, he would find it very difficult to give way to it. He has said that we are breaking the hearts of men of enterprise, but it is a fact that the breaking of the hearts of the men of enterprise has gone on for 10 years, and he has to produce a reason why the process of breaking their hearts should be suspended by this Government, whereas previous Governments could not do it. Everyone knows that the Government are exposed to very difficult world circumstances which, incidentally, do impose very large burdens on the Exchequer in various ways. Therefore, the position of the Government is not less difficult but more difficult than the position of those who went before. Whatever reasons were 726 good enough to cause the right hon. Member for Epping (Mr. Churchill) to impose an Income Tax at this rate are accentuated at the present time.
§ Mr. GRIFFITHI am prepared to meet the hon. Member on that point, but at any rate under the right hon. Member for Epping and the present Chancellor of the Exchequer the Income Tax re mains the most suitable way of raising revenue and it is chosen, and rightly chosen, by one Government after another as being preferable to other ways. If hon. Members come forward to criticise the Income Tax, they must do one of two things. They must either tackle it on the question of expenditure, or they must point out some fairer or better way of raising the national income. If they try to find a better and a fairer way of raising the income, I do not think they will be able to do it. It takes a certain amount of the money which people are receiving year by year and it is graduated more or less in accordance with the ability of people to pay. Almost all other taxes err either by trying to anticipate something which people have not yet got, or by imposing a tax which bears with very different degrees of weight on different classes of the community. Although a great deal of what the hon. Member has said may be perfectly true, when you are actually faced with the burden of finding money in a particular year, I think this is a most difficult tax to alter. On other occasions, by all means, if expenditure can be reduced so that the burden becomes less, there will be an opportunity for everybody, according to their several lights, to make their contribution, but faced with a burden that has to be met it seems to me that this is the most difficult tax of all to reduce, because it is the one which Government after Government of all parties has been forced to rely upon as the foundation of their Budget.
§ Mr. W. GRAHAMI will reply very briefly as hon. Members opposite are anxious to reach other Amendments on the Order Paper. It will be sufficient for me to say that to accept this Amendment would cost £20,000,000 in the 9.0 p.m. current year and £26,000,000 in a full year. For that 727 reason, we cannot accept it. I will not enlarge on the subject. What I said when the subject was debated on the Financial Resolution stands. We can take the Division and the Committee will
§ then be able to proceed to the later Amendments.
§ Question put, "That the words 'and sixpence' stand part of the Clause."
§ The Committee divided: Ayes, 269; Noes, 196.
731| Division No. 279.] | AYES. | [9.3 p.m. |
| Adamson, Rt. Hon. W. (Fife, Watt) | Gibson, H. M. (Lancs, Mossley) | McGovern, J. (Glasgow, Shettleston) |
| Adamson, W. M. (Staff., Cannock) | Gill, T. H. | McKinlay, A. |
| Addison, Rt. Hon. Dr. Christopher | Gillett, George M. | MacLaren, Andrew |
| Altchison, Rt. Hon. Craigle M. | Glassey, A. E. | Maclean, Sir Donald (Cornwall, N.) |
| Alexander, Rt. Hon. A. V. (Hillsbro') | Gossling, A. G. | Maclean, Nell (Glasgow, Govan) |
| Alpass, J. H. | Gould, F. | McShane, John James |
| Ammon, Charles George | Graham, D. M. (Lanark, Hamilton) | Malone, C. L'Estrange (N'thampton) |
| Angell, Sir Norman | Graham, Rt. Hon. Wm. (Edin., Cent.) | Mander, Geoffrey le M. |
| Arnott, John | Gray, Milner | Mansfield, W. |
| Aske, Sir Robert | Greenwood, Rt. Hon. A. (Colne) | March, S. |
| Attlee, Clement Richard | Grenfell, D. R. (Glamorgan) | Marcus, M. |
| Ayles, Walter | Griffith, F. Kingsley (Middlesbro' W.) | Marley, J. |
| Baker, John (Wolverhampton, Bilston) | Griffiths, T. (Monmouth, Pontypool) | Marshall, Fred |
| Baldwin, Oliver (Dudley) | Groves, Thomas E. | Mathers, George |
| Barnes, Alfred John | Grundy, Thomas W. | Matters, L. W. |
| Barr, James | Hall, G. H. (Merthyr Tydvil) | Maxton, James |
| Batey, Joseph | Hall, J. H. (Whitechapel) | Messer, Fred |
| Bennett, Sir E. N. (Cardiff, Central) | Hall, Capt. W. G. (Portsmouth, C.) | Middleton, G. |
| Bennett, William (Battersea, South) | Hamilton, Mary Agnes (Blackburn) | Mills, J. E. |
| Benton, G. | Hamilton, Sir R. (Orkney & Zetland) | Milner, Major J. |
| Bevan, Aneurin (Ebbw Vale) | Hardie, G. D. (Springburn) | Montague, Frederick |
| Birkett, W. Norman | Harris, Percy A. | Morgan, Dr. H. B. |
| Bowen, J. W. | Hastings, Dr. Somerville | Morley, Ralph |
| Bowerman, Rt. Hon. Charles W. | Haycock, A. W. | Morrison, Rt. Hon. H. (Hackney, S.) |
| Broad, Francis Alfred | Henderson, Arthur, Junr, (Cardiff, S.) | Morrison, Robert C. (Tottenham, N.) |
| Brockway, A. Fenner | Henderson, Thomas (Glasgow) | Mort, D. L. |
| Bromfield, William | Henderson, W. W. (Middx., Enfield) | Muff, G. |
| Bromley, J. | Herriotts, J. | Muggeridge, H. T. |
| Brooke, W. | Hirst, G. H. (York W. R. Wentworth) | Murnin, Hugn |
| Brothers, M. | Hirst, W. (Bradford, South) | Nathan, Major H. L. |
| Brown, C. W. E. (Notts, Mansfield) | Hoffman, P. C. | Naylor, T. E. |
| Brown, Rt. Hon. J. (South Ayrshire) | Hollins, A. | Newman, Sir R. H. S. D. L. (Exeter) |
| Brown, W. J. (Wolverhampton, West) | Hopkin, Daniel | Noel Baker, P. J. |
| Buchanan, G. | Hunter, Dr. Joseph | Noel-Buxton, Baroness (Norfolk, N.) |
| Burgess, F. G. | Isaacs, George | Oldfield, J. R. |
| Buxton, C. R. (Yorks. W. R. Elland) | Jenkins, Sir William | Oliver, George Harold (Ilkeston) |
| Calne, Hall-, Derwent | John, William (Rhondda, West) | Oliver, P. M. (Man., Blackley) |
| Cameron, A. G. | Johnston, Rt. Hon. Thomas | Owen, Major G. (Carnarvon) |
| Cape, Thomas | Jones, Llewellyn-, F. | Palin, John Henry |
| Carter, W. (St. Pancras, S. W.) | Jones, Henry Haydn (Merioneth) | Palmer, E. T. |
| Charleton, H. C. | Jones, Morgan (Caerphilly) | Parkinson, John Allen (Wigan) |
| Chater, Daniel | Jowett, Rt. Hon. F. W. | Perry, S. F. |
| Church, Major A. G. | Jowitt, Rt. Hon. Sir W. A. (Preston) | Pethick-Lawrence, F. W. |
| Cluse, W. S. | Kedward, R. M. (Kent, Ashford) | Phillips, Dr. Marion |
| Clynes, Rt. Hon. John R. | Kelly, W. T. | Picton-Turbervill, Edith |
| Cocks, Frederick Seymour | Kennedy, Rt. Hon. Thomas | Pole, Major D. G. |
| Compton, Joseph | Kenworthy, Lt.-Com. Hon. Joseph M. | Potts, John S. |
| Cove, William G. | Kinley, J. | Price, M. P. |
| Cripps, Sir Stafford | Knight, Holford | Pybus, Percy John |
| Daggar, George | Lambert, Rt. Hon. George (S. Moiton) | Ramsay, T. B. Wilton |
| Dallas, George | Lang, Gordon | Rathbone, Eleanor |
| Davies, E. C. (Montgomery) | Lansbury, Rt. Hon. George | Raynes, W. R. |
| Davies, D. L. (Pontypridd) | Law, Albert (Bolton) | Richards, R. |
| Davies, Rhys John (Westhoughton) | Law, A. (Rossendale) | Richardson, R. (Houghton-le-Spring) |
| Day, Harry | Lawrence, Susan | Riley, Ben (Dewsbury) |
| Denman, Hon. R. D. | Lawrie, Hugh Hartley (Stalybridge) | Riley, F. F. (Stockton-on-Tees) |
| Dukes, C. | Lawther, W. (Barnard Castle) | Ritson, J |
| Duncan, Charles | Leach, W. | Romeril, H. G. |
| Ede, James Chuter | Lee, Frank (Derby, N. E.) | Rosbotham, D. S. T. |
| Edge, Sir William | Lee, Jennie (Lanark, Northern) | Rowson, Guy |
| Edmunds, J. E. | Lees, J. | Salter, Dr. Alfred |
| Edwards, C. (Monmouth, Bedwellty) | Lewis, T. (Southampton) | Samuel Rt. Hon. Sir H. (Darwen) |
| Edwards, E. (Morpeth) | Lindley, Fred W. | Sanders, W. S. |
| Egan, W. H. | Lloyd, C. Ellis | Sandham, E. |
| Elmley, Viscount | Logan, David Gilbert | Sawyer, G. F. |
| England, Colonel A. | Longbottom, A. W. | Scurr, John |
| Evans, Capt. Ernest (Welsh Univer.) | Longden, F. | Sexton, Sir James |
| Freeman, Peter | Lovat-Fraser, J. A. | Shakespeare, Geoffrey H. |
| Gardner, B. W. (West Ham, Upton) | Lunn, William | Shaw Rt. Hon. Thomas (Preston) |
| Gardner, J. P. (Hammersmith, N.) | Macdonald, Gordon (Ince) | Shepherd, Arthur Lewis |
| George, Major G. Lloyd (Pembroke) | McElwee, A. | Sherwood, G. H. |
| Gibbins, Joseph | McEntee, V. L. | Shield, George William |
| Shiels, Dr. Drummond | Taylor, R. A. (Lincoln) | Welsh, James (Paisley) |
| Shillaker, J. F. | Taylor, W. B. (Norfolk, S. W.) | Welsh, James C. (Coatbridge) |
| Simmons, C. J. | Thomas, Rt. Hon. J. H. (Derby) | West, F. R. |
| Simon, E. D. (Manch'ter, Withington) | Thorne, W. (West Ham, Plaistow) | Westwood, Joseph |
| Sinkinson, George | Thurtle, Ernest | White, H. G. |
| Sitch, Charles H. | Tillett, Ben | Whiteley, Wilfrid (Birm., Ladywood) |
| Smith, Ben (Bermondsey, Rotherhithe) | Tinker, John Joseph | Whiteley, William (Blaydon) |
| Smith, Frank (Nuneaton) | Tout, W. J. | Williams, E. J. (Ogmore) |
| Smith, Rennie (Penistone) | Townend, A. E. | Williams, Dr. J. H. (Llanelly) |
| Smith, Tom (Pontefract) | Trevelyan, Rt. Hon. Sir Charles | Williams, T. (York, Don Valley) |
| Smith, W. R. (Norwich) | Vaughan, David | Wilson, C. H. (Sheffield, Attercliffe) |
| Snowden, Rt. Hon. Philip | Viant, S. P. | Wilson, J. (Oldham) |
| Snowden, Thomas (Accrington) | Walkden, A. G. | Wilson, R. J. (Jarrow) |
| Sorensen, R. | Walker, J. | Winterton, G. E. (Leicester, Loughb'gh) |
| Stamford, Thomas W. | Wallace, H. W. | Young, R. S. (Islington, North) |
| Stephen, Campbell | Watkins, F. C. | |
| Strauss, G. R. | Watson, W. M. (Dunfermline) | TELLERS FOR THE AYES.— |
| Sullivan, J. | Watts-Morgan, Lt.-Col. D. (Rhondda) | Mr. Hayes and Mr. Paling. |
| Sutton, J. E. | Wellock, Wilfred | |
| NOES. | ||
| Acland-Troyte, Lieut.-Colonel | Duckworth, G. A. V. | Mitchell, Sir W. Lane (Streatham) |
| Ainsworth, Lieut.-Col. Charles | Eden, Captain Anthony | Monsell, Eyres, Com. Rt. Hon. Sir B. |
| Albery, Irving James | Edmondson, Major A. J. | Moore, Sir Newton J. (Richmond) |
| Alexander, Sir Wm. (Glasgow, Cent'l) | Elliot, Major Walter E. | Moore, Lieut.-Colonel T. C. R. (Ayr) |
| Allen, Sir J. Sandeman (Liverp'l., W.) | Erskine, Lord (Somerset, Weston-s-M.) | Morrison, W. S. (Glos., Cirencester) |
| Amery, Rt. Hon. Leopold C. M. S. | Everard, W. Lindsay | Mulrhead, A. J. |
| Astor, Maj. Hon. John J. (Kent, Dover) | Falle, Sir Bertram G. | Newton, Sir D. G. C. (Cambridge) |
| Astor, Viscountess | Ferguson, Sir John | O'Connor, T. J. |
| Atholl, Duchess of | Fielden, E. B. | Oman, Sir Charles William C. |
| Atkinson, C. | Fison, F. G. Clavering | O'Neill, Sir H. |
| Baillie-Hamilton, Hon. Charles W. | Ford, Sir P. J. | Peaks, Capt. Osbert |
| Balfour, George (Hampstead) | Fremantle, Lieut.-Colonel Francis E. | Penny, Sir George |
| Balfour, Captain H. H. (I. of Thanet) | Galbraith, J. F. W. | Percy, Lord Eustace (Hastings) |
| Balniel, Lord | Ganzonl, Sir John | Perkins, W. R. D. |
| Beamish, Rear-Admiral T. P. H. | Gault, Lieut.-Col. A. Hamilton | Power, Sir John Cecil |
| Betterton, Sir Henry B. | Gilmour, Lt.-Col. Rt. Hon. Sir John | Pownall, Sir Asshetou |
| Bevan, S. J. (Holborn) | Gower, Sir Robert | Preston, Sir Walter Rueben |
| Birchall, Major Sir John Dearman | Graham, Fergus (Cumberland, N.) | Ramsbotham, H. |
| Bird, Ernest Roy | Grattan Doyle, Sir N. | Rawson, Sir Cooper |
| Boothby, R. J. G. | Greaves-Lord, Sir Walter | Reid, David D. (County Down) |
| Bourne, Captain Robert Croft | Greene, W. P. Crawford | Remer, John R. |
| Boyce, Leslie | Grenfell, Edward C. (City of London) | Rentoul, Sir Gervals S. |
| Brass, Captain Sir William | Gritten, W. G. Howard | Reynolds, Col. Sir James |
| Briscoe, Richard George | Guinness, Rt. Hon. Walter E. | Richardson, Sir P. W. (Sur'y, Ch'te'y) |
| Broadbent, Colonel J. | Gunston, Captain D. W. | Roberts, Sir Samuel (Ecclesall) |
| Brown, Ernest (Leith) | Hacking, Rt. Hon. Douglas H. | Rodd, Rt. Hon. Sir James Rennell |
| Brown, Brig.-Gen. H. C. (Berks, Newb'y) | Hall, Lieut.-Col. Sir F. (Dulwich) | Ross, Ronald D. |
| Buchan-Hepburn, P. G. T. | Hamilton, Sir George (Ilford) | Russell, Alexander West (Tynemouth) |
| Buckingham, Sir H. | Hammersley, S. S. | Salmon, Major I. |
| Burton, Colonel H. W. | Hanbury, C. | Samuel, A. M. (Surrey, Farnham) |
| Butler, R. A. | Hannon, Patrick Joseph Henry | Samuel, Samuel (W'dsworth, Putney) |
| Cadogan, Major Hon. Edward | Harvey, Major S. E. (Davon, Totnes) | Sandeman, Sir N. Stewart |
| Campbell, E. T. | Haslam, Henry C. | Sassoon, Rt. Hon. Sir Philip A. G. D. |
| Carver, Major W. H. | Henderson, Capt. R. R. (Oxf'd, Henley) | Savery, S. S. |
| Castle Stewart, Earl of | Heneage, Lieut.-Colonel Arthur P. | Shepperson, Sir Ernest Whittome |
| Cayzer, Sir C. (Chester, City) | Hennessy, Major Sir G. R. J. | Simms, Major-General J. |
| Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.) | Herbert, Sir Dennis (Hertford) | Sinclair, Col. T. (Queen's U., Belfast) |
| Cecil, Ht. Hon. Lord H. (Ox. Univ.) | Hope, Sir Harry (Forfar) | Smith, Louis W. (Sheffield, Hallam) |
| Chadwick, Capt. Sir Robert Burton | Howard-Bury, Colonel C. K. | Smith, R. W. (Aberd'n & Kinc'dlne, C.) |
| Chamberlain, Rt. Hon. N. (Edgbaston) | Hudson, Capt. A. U. M. (Hackney, N.) | Smith-Carington, Neville W. |
| Chapman, Sir S. | Hurd, Percy A. | Smithers, Waldron |
| Christie, J. A. | Hurst, Sir Gerald B. | Somerset, Thomas |
| Cobb, Sir Cyril | Inkslp, Sir Thomas | Somerville, A. A. (Windsor) |
| Cohen, Major J. Brunel | Jones, Sir G. W. H. (Stoke New'gton) | Somerville, D. G. (Willesden, East) |
| Colfox, Major William Philip | Knox, Sir Alfred | Southby, Commander A. R. J. |
| Colman, N. C. D. | Lamb, Sir J. Q. | Spender-Clay, Colonel H. |
| Colville, Major D. J. | Latham, H. P. (Scarboro' & Whitby) | Stanley, Lord (Fylde) |
| Conway, Sir W. Martin | Law, Sir Alfred (Derby, High Peak) | Stanley, Hon. O. (Westmorland) |
| Cooper, A. Duff | Leighton, Major B. E. P. | Steel-Maitland, Rt. Hon. Sir Arthur |
| Courtauld, Major J. S. | Lewis, Oswald (Colchester) | Stewart, W. J. (Belfast, South) |
| Cranborne, Viscount | Little, Graham-, Sir Ernest | Sueter, Rear-Admiral M. F. |
| Crichton-Stuart, Lord C. | Llewellin, Major J. J. | Thomas, Major L. B. (King's Norton) |
| Croft, Brigadier-General Sir H. | Locker-Lampson, Rt. Hon. Godfrey | Thompson, Luke |
| Croom-Johnson, R. P. | Lymington, Viscount | Thomson, Sir F. |
| Culverwell, C. T. (Bristol, West) | Macdonald, Capt. P. D. (I. of W.) | Titchfield, Major the Marquess of |
| Cunliffe-Lister, Rt. Hon. Sir Philip | Maitland, A, (Kent, Faversham) | Tryon, Rt. Hon. George Clement |
| Dalkeith, Earl of | Makins, Brigadier-General E. | Turton, Robert Hugh |
| Davidson, Rt. Hon. J. (Hertford) | Margesson, Captain H. D. | Vaughan-Morgan, Sir Kenyon |
| Davies, Dr. Vernon | Marjoribanks, Edward | Ward, Lieut.-Col. Sir A. Lambert |
| Davies, Maj. Gao. F. (Somerset, Yeovil) | Meller, R. J. | Warrender, Sir Victor |
| Davison, Sir W. H. (Kensington, S.) | Merriman, Sir F. Boyd | Wayland, Sir William A. |
| Despencer-Robertson, Major J. A. F. | Milne, Wardlaw-, J. S. | Wells, Sydney R. |
| Williams, Charles (Devon, Torquay) | Wolmer, Rt. Hon. Viscount | |
| Wilson, G. H. A. (Cambridge U.) | Womersley, W. J. | TELLERS FOR THE NOES.— |
| Windsor-Clive, Lieut.-Colonel George | Wood, Rt. Hon. Sir Kingsley | Captain Sir George Bowyer and |
| Winterton, Rt. Hon. Earl | Wright, Brig.-Gen. W. D. (Tavist'k) | Captain Wallace. |
| Withers, Sir John James | Young, Rt. Hon. Sir Hilton |
Question put, and agreed to.
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Sir A. STEEL-MAITLANDI rise just to make this statement, that under normal circumstances we should wish to debate other Amendments and to divide upon them, and that in normal circumstances we should wish to divide against the Clause, but the time allotted for discussion is so grossly inadequate that we do not propose to do so.