HC Deb 26 April 1932 vol 265 cc232-342

10. "That section sixty-one of the Finance Act, 1921, shall have effect and shall be deemed always to have had effect as if, in all cases whatsoever where by virtue of any enactment the accounts of any local authority are subject to audit by district auditors, it required the stamp duty chargeable in respect of the audit to be calculated in accordance with the scale fixed under that section."

First Resolution read a Second time.

Mr. RHYS DAVIES

I beg to move, in line 7, to leave out the word "four-pence," and to insert instead thereof the word "twopence."

The House will remember that when the Chancellor of the Exchequer made his Budget statement he produced a new duty, an impost of 4d. per lb. on tea, with 2d. per lb. on the Empire product. It falls to me to move that the 4d. be reduced to 2d. We have tabled this Amendment as the best means that we know of showing our opposition to any duty whatever on tea. We are, of course, opposed to even a 1d. duty on this commodity, but we felt that by moving to reduce the duty by 2d. we might be able to carry the Government with us for once. Our first objection to this duty is that it is an indirect tax. It is imposed just to hoodwink the people that they are not contributing anything at all to the revenue, while in fact every time they drink a cup of tea, after the passage of this Budget, they will be contributing to the cost of the last War and the cost of armaments for future wars. [An HON. MEMBER: "By how much?"] It is not the amount that matters, but the principle. In fact this Government has done nothing at all since it came into existence but to impose indirect taxation on the people who are least able to bear it, and they will go down in history as the Government of indirect taxation.

While I shall deal with tea exclusively in my few remarks, I think I am entitled to point out exactly what the Government have planned by way of indirect taxation up to the present. They began by imposing duties on horticultural products and thereby increased the price of certain vegetables forthwith. They then imposed a general duty on manufactured goods and compelled the consumer to hand over small donations to the industrialists on almost every article that he bought. Later on they called upon the consumers of bread to contribute £6,000,000 per annum to the farmers of this country. Every step that the Government have taken to deal with the finances of the country has been in favour of indirect taxation. The policy is now carried further still. The Budget is full of proposals for indirect taxation, and the meanest proposal of the lot is the tax on tea. There is to be no general increase in Income Tax or Super-tax or Death Duties. In fact financiers are going to have a lift by the way by the establishment of the Exchange Fund of £150,000,000. Manufacturers are to have protection against the foreigner in the imposition of additional duties, and the result will be an increase in the price of their commodities, which will mean a further additional tax on the consumer. Collectors of taxes are to receive compensation, too.

This new duty on tea is a very serious imposition to the poorer section of the community. Statements about the poorer sections of the community have been received with a degree of contempt on the other side when we have made them. I hope to prove what this Tea Duty actually means in the homes of average working-class people in the country. I am very much afraid that some hon. Members have no idea what it means to the working folk to add even 6d. a week to the cost of living. I am sure it has never dawned on them. Some of them get their money so easily, and some of them probably get their money they do not know how or where. Consequently they have no conception of what 6d. a week means. I propose to analyse what this 4d. a 1b. on tea actually means. If I know anything about the wholesale and retail trade, those in the retail trade in any case will see that they make no distinction between Empire and foreign tea, and the consumer will have to pay the 4d. a lb. on all teas alike.

I am very glad to see the Lord President of the Council present, because he was in the House when Lord Snowden of Ickornshaw moved the abolition of the Tea Duty. Lord Snowden was a Yorkshireman, and I am a little astonished that he belongs to a Government that is to reimpose the duty. He ought to take a hint from a little tea party that took place in another part of Yorkshire last week—in Wakefield. Wakefield, by the way, was an indication of the mind of the people on this Tea Duty. But let me come down to details. Let hon. Members picture the home of the ordinary working man, a painter, plumber, bricklayer, or even a collier. They would find that a workman, a wife and four children would consume as much as 2 lbs. of tea a week. An hon. Gentleman opposite shakes his head. Whatever the hon. Gentleman may understand about the buying of tea wholesale, I am positive that he does not know what is happening in working-class homes by way of consumption of tea. Let me give him the actual facts.

Take the case of the man and his wife and four children. Where the man goes out to work this is what happens to him, and I am sure that hon. Members opposite would find such cases by the score in their own divisions. The workman gets a cup of tea before he starts out in the early morning. He takes tea with him for his breakfast and lunch. Hon. Gentleman opposite will know at any rate, if they consult their good ladies, that when tea is used in that way, broken up in small quantities for use at several meals by individual members of the family, it means that more tea is used than when all the family remain at home for all their meals. Consequently it is not an over-statement to say that a working-class home of six persons will sometimes consume 2 lbs. of tea per week. See what that means. It does not mean much to hon. Gentlemen here, but, according to the calculations which I have here, if these people buy the tea which they desire, or, indeed, if they buy any tea, then in spite of the preference of 2d. to Empire-produced tea, they will pay roughly an additional 4d. per lb. That will be an addition to their cost of living of 8d. per week or about 35s. per annum. In other words, it represents a reduction of 8d. a week in their income. When we remember that some of these people are unemployed and that some of them are subject to the means test, we must recognise that 8d. means a great deal to them.

The tragedy of it is that the incidence of this tax is grossly unfair. I should imagine that the poorest people buy the cheapest tea, probably at 1s. 6d. a lb. Hon. Gentlemen in this House probably have tea at 3s., 4s. or even 5s. a lb. in their homes. [HON. MEMBERS: "NO!"] In any case, tea at 3s. or 4s. a lb. is sold in this country and somebody must buy it. But let me deal with the 1s. 6d. tea, and show how unfair is the incidence of this new tax. An addition of 4d. on 1s. 6d. represents about 22 per cent. An addition of 4d. on tea at 4s. per 1b. represents very much less and consequently this tax weighs very much less upon the people who are able to buy the best quality of tea, than upon the poorer people who buy the 1s. 6d. tea. At a rough guess, I estimate that of the £3,000,000 which the Exchequer expects to get out of this Tea Duty about £2,500,000 will represent a decrease in the income of the working class. It is, practically, a reduction in wages of £2,500,000 per annum. True, it is a tax imposed on the afternoon tea of the rich; but it is a tax imposed on almost every meal consumed by the poor. It falls more heavily on the navvy than on the banker, and hits the operative much more severely than the employer. Such is always the case with a tax on the food of the people.

Another aspect of the problem must be borne in mind. A duty of 4d. per lb. cannot be divided into small fractions by caterers and by keepers of refreshment establishments, in fixing the price of tea supplied, as in restaurants or railway station refreshment rooms, for instance. While 4d. per lb. may not add one-tenth of a farthing to the price of a cup of tea, it is practically certain that the charge will actually be increased by a halfpenny per cup if not by one penny. That does not mean much, as I say, to the man who can afford to go anywhere and buy anything and spend 10s. or 15s. a day on his meals. But it affects the poorer section of the community. What happens in practice in fixing the price of tea? If a retailer has been selling tea at 2s. 7d. per lb. before the imposition of the duty, he will now have to add 4d., making it 2s. l1d. per lb. It is very much easier, however, to say 3s. a lb., and so when the Government impose a duty of this kind, not only is the duty added to the price, but the wholesaler and the retailer might easily take advantage of the imposition of the duty to make a profit actually out of the transaction itself. I think I know a little about the wiles adopted for that purpose.

Mr. PIKE

Has the hon. Gentleman any evidence that that has happened in the past?

Mr. DAVIES

I am surprised at the innocence of the hon. Member.

Mr. PIKE

I am asking for evidence.

Mr. DAVIES

I suppose that hon. Gentlemen opposite do not like these arguments but they are arguments which they will have to meet and there will be an opportunity of doing so in due course. It is worth while knowing that we are the largest consumers of tea in the world. The figures are interesting. The total tea consumption of the importing countries is 900,000,000 lbs. per annum, and in this country alone we consume more than half. That figure, of course, leaves out China and India where tea is pro- duced. To give an illustration of what this problem means to us I may point out that while we consume over 400,000,000 lbs. of tea per annum, the United States, with a population of 120,000,000 has a total tea consumption of only 88,000,000 lbs. and Germany with a population of about 70,000,000 consumes only 11,000,000 lbs. of tea per annum. The unpleasant fact to us is that this new impost will be passed on to the consumers at a time when wages are declining and when unemployment benefit has already been reduced. An hon. Gentleman opposite seemed rather to doubt my statements just now. Let me read something from "The Grocer," a weekly periodical: We fully expect to see the usual crop of schemes to catch the unwary. Whatever form the schemes may take, it does not require much intelligence to know who pays for the supposed concession. A 2d. duty is after all a 2d. duty and has to be paid for to the Customs by someone and at once. If the consumer is not asked to pay directly, then you may be quite sure he will have to pay indirectly.

Mr. PIKE

Would the hon. Gentleman say whether there is any evidence that directly or indirectly, he is called upon to pay 3d. where only a 2d. duty is imposed. He said just now that 5d. was paid in respect of a 4d. duty.

Mr. DAVIES

I am again astonished at the innocence of the hon. Member.

Mr. PIKE

And I say again that I want evidence.

4.0 p.m.

Mr. DAVIES

I think I recollect that when Parliament increased the duty on beer by about a halfpenny or three-farthings a pint the price to the consumer was increased by a penny a pint. But I hope to provide the hon. Member if he likes with a statement of facts later on. I am very sorry that the Government are so touchy upon these points. I notice hardly one Liberal on the Front Bench. I do not know how they feel about this matter. I come now to the protest which I desire to make against the increase of indirect taxation. My hon. Friend the Member for Limehouse (Mr. Attlee) in the Debate on the Budget said that, on the present Budget, indirect taxation would account for 41 per cent. of the revenue compared with 36 per cent. last year. This figure of 41 per cent., becomes all the more striking if we go back to the War period. The House will, I feel sure, allow me to analyse what has been happening in this country as a result of the increase of indirect as against direct taxation. In my view, direct taxation is the only honest way of taxing the people. Indirect taxation has always been held to be a back-door method of raising revenue. It is assumed that the people do not know that they are paying anything because it is an indirect form of taxation. Therefore these figures are very interesting. In 1917–18 the percentage of revenue from indirect taxation was only 17 per cent. of the total. That percentage rapidly increased until 1923. There was a drop in 1924 as one would expect because there was a Labour Government in being. The percentage went down, but there was a steady increase during the next administration and it went up to 39 per cent. There was a drop in 1930–31 until in the latter period the percentage was 33.84. The increase of 7 per cent. in indirect taxation in this Budget, I am informed, is the sharpest increase in any Budget during modern times. That is a very important factor in the situation as far as the working people are concerned.

Part of the new duty, of course, is of a preferential character and it is expected to yield £3,600,000. If it were not for the preference given to Empire products, I believe that the revenue would gain £7,000,000. One is bound to assume that as soon as the present stocks of tea are exhausted, the tendency will be to raise the price of Empire tea as nearly as possible to the price of the foreign tea, plus the duty, and that the working class consumer will pay the duty of 4d. or nearly 4d. a lb. on all tea. It will mean that from four-fifths of the consumers the Treasury will receive only 2d. a lb., while the wholesaler and retailer will see to it that they exploit the preference for their own advantage. The Treasury will hardly gain anything by that process, because the price of the Empire product will naturally gravitate as soon as possible to the price of the foreign product without the Treasury having any advantage at all.

Let me analyse the position as it affects Lancashire. The poor cotton operative who is practically down and out will be charged this duty on his tea to subsidise Indian and Ceylon producers. On the other hand, India levies heavy import duties upon cotton piece goods, and is competing successfully against Lancashire. I have yet to hear that Great Britain enjoys any substantial preference for her imports into Ceylon. I would like to know how much British capital is behind some of these so-called Empire producing tea firms. I heard a, statement only to-day as to what capitalism can do nationally and internationally, and there would not be as much opposition to this preference on Empire tea as far as I am concerned if I felt that this patriotism was as genuine as it is supposed to be. When patriotism comes up again capitalism and international capitalism it becomes mere sham and hypocrisy, and I would like to know whether in giving this preference on Empire products we are not actually handing over an advantage to foreign capitalists operating in the British Empire. The capitalist of course knows no frontier of any kind anywhere.

As I have said, we are the greatest consumers of tea in the world, and of course the Treasury is always anxious to take advantage of that fact. One should judge of this duty, after all, by what is the standard of a good tax. Such a tax should be, at any rate, equitable; it should be economic, it should be productive, and it should not fall upon the necessities of life. The Government proposals, in my view, do not comply with any one of those standards. The tax is not equitable, since it bears heaviest upon the poorest classes of the community who purchase the cheapest tea. It is uneconomic because the process of calculation involves bigger profits and larger cost to the consumer than the amount actually reaching the Treasury. I have looked into this duty with as much care as I can, and I am positive that had the electorate last October known that this was to be one of the Government's proposals, not so many of their supporters would be sitting in Parliament to-day. For those reasons, that the duty is a new one and an indirect tax which bears in the main upon the working classes, I move the Amendment, and I hope that the Treasury will see its way clear to adopt it.

Lieut.-Colonel Sir WALTER SMILES

After the speech of the hon. Member for Westhoughton (Mr. Rhys Davies), I feel prouder than ever that I have been an Assam tea-planter. When I think of the comfort and solace that the planters of Assam have given to the working people in this country, I can indeed feel proud. The hon. Member for Westhoughton suggested that there were some people who made money easily. I can assure him that no planter makes money easily; at present, in fact, it is extremely easy to lose money in planting, and I am now speaking on behalf of people who have no votes or influence in this House—the tea-planters of Ceylon, of Kenya and of India. I would point out to the hon. Member for Westhoughton that it was not Viscount Snowden who abolished the Tea Duty; it was the right hon. Member for Epping (Mr. Churchill) when he was Chancellor of the Exchequer, and who pointed out at that time that it was a very old duty which had always been imposed in this country since the days of Queen Elizabeth, and that between the days of Queen Mary and the right hon. Member for Epping there has always been a duty of some kind on tea. According to history, when Queen Mary died full of remorse, the word "Calais" was written upon her heart. Had it not been for the prompt action of the Chancellor of the Exchequer, perhaps the right hon. Member for Epping might have died in similar circumstances not with "Calais," but with "Indian Tea" written upon his heart full of remorse because he had destroyed that great industry.

When we think of this Tea Duty, there are four considerations to be borne in mind. The hon. Member for Westhoughton has mentioned the consumer, and I agree that the consumers are the first people to be considered. I put immediately after the consumer the producer of tea, I mean the actual labourer who plucks it and manufactures it. In 1929, when I was on a garden in Assam, and we got the horrible news in the middle of April that preference had been abolished, I had to point out to my labourers why we would not pluck Section 2 this year, that another section somewhere else had to be abandoned, that we could not allow them to work on Saturdays and Mondays, and that we should have to cut down their tasks because the industry must be able to pay its way. That is what happened in April, 1929, and is happening to-day. It is no use to say to these Indian labourers what the right hon. Member for Epping did, that we had proposed to abolish the preference for tea grown within the British Empire and help the foreigner in every possible way we could. The Indian labourer simply turned away from me and said, "Puggalah Sahiblog," which, being interpreted, means, "The mad English people, quite true." The men we next had to consider were the educated natives, men who could read and write very well, educated very much on the lines of Macaulay when he originated the system and they read regularly the vernacular papers. The cancellation of the Empire preference is a handle all over India for disloyalty to the British Empire. How could I stand up and pretend that this Mother of Parliaments was thinking all the time of India when it took away their livelihood? It could not be done.

Mr. WALLHEAD

Is the right hon. Member for Epping responsible for the disorder in India?

Sir W. SMILES

I say that education and the vernacular Press are largely responsible for it, and this preferential duty will help the loyal people in India to counteract this insidious propaganda against us. It may be that the hon. Member for Westhoughton scorns the preferential duties which are given in India to imports from Great Britain, but it is very difficult for the planting members of the Legislative Assembly or the Provincial Councils in India to point out the preference we give in England to Indian produce. Next week they will be able to point out a very definite preference which will do a tremendous lot to encourage good feeling among the Indians. After the labourer and the Babus I talk about the European planters. The planters do not mind what you do to them; they will be loyal to this Government because they have the same sort of unreasoning loyalty that you get from the six counties in Ulster—the more you illtreat them, the more loyal they get. Most of these planters are Scottish and many of them trade unionists, and if a man is a Scotsman and a trade unionist, he must be thrifty and energetic. Therefore, it cannot be the fault of the planter that the industry is not making money at the present time. [Interruption.] Some of the greatest benefactors to the tea industry have come from Aberdeen, and when a company wants to get a new assistant, it is a standing joke out there that you should set 'a brick trap outside Aberdeen and bait it, not with a bottle of tea, but with a bottle of whisky, and you are certain to get a useful man.

I would point out to the hon. Member for Westhoughton that, for all he said, tea is still the cheapest drink in the whole world. You can and do get 150 cups of tea out of a pound, and you can get no other drink at the present time in the British Isles to compare with that. I take grave exception to the hon. Member's figures of the amount that is taken for tea out of a working man's income. I went into consultation this morning, having seen to my horror such an Amendment as this on the Paper yesterday evening, with the chairman and the vice-chairman of the Indian Tea Association in Mincing Lane. We worked it out most carefully and found that a fair estimate would be 9d. per adult per annum. I admit that with the exception of Australia this country drinks more tea per head than any other country in the world. It is very nearly 10 lbs. per head, but the hon. Member for Westhoughton need not think that because a duty of 2d. per lb. has been put on Empire tea, the cost to the consumer will be 2d. per lb. The most optimistic estimate of a tea grower is that we expect to get more for our tea next year to the extent of about three farthings per lb.

Looking up the Debate on the 1929 Budget, I see that there were two Members who spoke vigorously against the preference for British Empire tea growers being abolished. One was the hon. Member for Bridgeton (Mr. Maxton) and the other was the right hon. and gallant Member for Burton (Colonel Gretton). I know they always sit close together in this House, but I would not say that for that reason they always vote in the same Lobby. The hon. Member for Bridgeton said on that occasion that he was thinking of the Indian labourers on the tea gardens in Ceylon and in Assam. The Indian tea planters have had very excellent chits for the way in which they look after their labour, from two official reports. One was the Royal Commission on Indian Labour, presided over by Mr. Whitley, and the other was the report of the Agricultural Commission in India. Both these blue books gave excellent chits to the tea planters. Mr. Whitley pointed out that these labourers came up from Madras and other parts of India and, after four or five years' work, were independent, owning their own land, with capital of their own, and were able to work six months on their own land and six months on a tea garden—a very much happier condition of affairs than we have in these islands at the present time. We have practically native savages who come up to the planters in Assam, having never worn a rag or any kind of cloth in their lives before, and I am glad to say that, after a month or two, they are wearing good Lancashire cloth, and plenty of it, have good homes, and are independent.

This morning I looked into the "Financial News," in which, on every Monday morning, may be seen a report on the tea gardens and their sales to date in Mincing Lane, and how they have fared this year as compared with last year. I picked out a company which, fortunately for me, I have never noticed before. They made a heavy loss last year, and possibly if I had seen the name before, I might have been unfortunate enough to invest in it. I picked out the Surmah Valley Tea Company. It can be seen in the "Financial News" of last Monday that their average of sales to date of last year's crop was 7d.; that was the actual cost price per pound that they received for their tea. I turned up one of the books issued by a firm of stockbrokers, Messrs. De Zoete and Company, and I looked to see what they got for their tea in 1928, the last year in which there was a preference for British Empire tea, and the average then was l0¾d. On the 1928 working that company made a profit of £4,000, and on the 1930 working they made a loss of £12,000. The 1931 accounts are not out yet, but I expect that they will have made a loss of about £16,000.

The hon. Member for Westhoughton admitted that the consumer of tea gets a great deal of enjoyment, pleasure, and stimulus out of tea, but can he expect these producers to go on making losses like that? You cannot expect anything for ever to be sold at under the cost of production. Doubtless the hon. Member also is interested in the labourers and would like to hear that they were paid proper wages. I heard the hon. Member for Silvertown (Mr. J. Jones) telling us last night a true and graphic story of the trials of the dockers at the present moment. It does not make the trials of the dockers any easier because the people in Lancashire or the colliers in Wales are in the same bad way. It makes the dockers feel all the worse, and I am sure that the dockers, the people in the coal mines, and those up in Lancashire feel just as badly about the people who work in the tea gardens of Assam and do not want to feel that they are not getting a decent and a proper wage. I would also point out to the hon. Member for Westhoughton that it is not the poorest people who buy the cheapest tea. If I had tea to sell that was really good tea, I would very much rather run my chance of selling it to the peasant people in the West of Ireland, near Galway, than I would in Park Lane. There is no doubt that tea is sold every day still in Galway for 4s. 6d. per lb., and you will be extremely lucky to get more than 2s. 6d. in the West End of London.

The right hon. Member for Epping, at the beginning of his speech on Thursday last, said he wished that a similar preference of 50 per cent. on British goods going into India and Ceylon could have been arranged first. I quite agree, and I am in entire and absolute sympathy with him there, but the difficulty is the size of India. It is just as easy to say to a person in Bombay, "Look here, they have given a preference to Assam tea; what about some further preference for Lancashire cotton?" The distances are so great that it is very difficult to convince these people that India is a nation when it comes to the subject of preferential tariffs. It would be just as easy for the President of the Board of Trade, when he is trying to arrange an extra quota for British coal admitted into France, to say to the French people, "I suggest that you might allow more British coal into France because we are allowing more oil to come into this country from Rumania," because the difference between the people of Rumania and those of France is not as much even as the difference between the people of Bombay and those of Assam. They wear different clothes, they speak different languages, they are different castes, they cannot understand each other, and indeed the only tie and the only common language that bring them together are the British tie and the English language.

Already this House has very generously granted a decided preference to the British Colonies. Lots of foreign goods have been taxed anything from 10 to 20 per cent., and nothing at all has been put on any of these goods coming in from the Colonies. That is a fair and generous measure, and it is likely to encourage the Colonies to meet us on a fair and equal footing at Ottawa. But when you are doing that sort of thing, you cannot leave India out. The Indians are very ready, especially at present, to look for any slight, and it is up to us to do exactly the same fair and generous thing to encourage them at Ottawa as we have done with the rest of the British Empire. After all, we have been telling people that India stands in exactly the same position in the British Empire as the rest of the Colonies, and it is necessary to make them feel that their interests are not being sacrificed. I understand that India is going to Ottawa as an independent party and that there will be four or five Indians going there, to look after Indian interests, who, I believe, will be paying a visit to this country on their way. It cannot do anything but good that the Chancellor of the Exchequer should have granted them this preference for Indian tea.

The hon. Member for Westhoughton talked about capitalists and an international ring. I believe there is hardly £1,000, as far as I know, of foreign capital invested in the tea industry, and I am talking now not only about the producer, but about the distributor here. Firms like Brooke Bond, Lyons, Maypole Dairy, Mazawattee are run, as far as I know and believe, entirely on British capital. There is no ring or cartel of any kind among either producers or distributors. The position in India at present is that in the planting industry there is approximately £76,000,000 of British capital invested, and of that capital I admit that 10 or 12 per cent. is Indian capital. If the hon. Member for Westhoughton or the right hon. Member for Epping wish to ruin the British tea industry, they should remember that for every nine Englishmen whom they ruin they will only ruin one Indian. It is a great sadness to me that there are not more Indians who have got money in tea. The reason is that the Indians have not been so far-seeing as British people in tea, and that they have not built up strong reserve funds, and when these different crises came along the poor chaps had to go to the wall.

Only this year I have seen two letters from Indian planters wishing to sell their gardens. I wrote back to them for two reasons. The first is, of course, that I could not advise any company in which I was interested to buy, because when things are very cheap the natural thing is that nobody has any money with which to buy; and the second reason is that I did not want to see those Indians ruined. We want plenty of Indians interested in tea when further responsible government is given to that country. I said to them, "Hang on till the middle of April and see if the Chancellor of the Exchequer will give a preference to Indian tea." I am sure that those two Indians are glad to-day that they have hung on and still see a chance. We have had plenty of crises in tea before. Take the Assam Company. At one time it owned a territory almost as large as the whole of Assam, and had powers almost the same as those of the old East India Company, but there was a time when their £100 shares were selling as low as 2s. 6d., and you could hardly give them away. It is like the rubber industry to-day. The shares of rubber companies may be good things to hand on to your great grandchildren; that is, of course, if the hon. Member for Bridgeton has not nationalised the whole industry before then.

There have been so many crises in tea, and those companies which have had huge reserves behind them have again and again seen the weaker ones go to the wall. Take 1920, when it was stated by the Indian Government in the Legislative Assembly that the exchange was going to be stabilised at 2s. Admittedly in those days they had not a reserve fund of £150,000,000 with which to stabilise the exchange, and the first thing that happened was that the exchange went up to 2s. 10d., at which it stood for a time, and then back it came to 1s. 3d. You can imagine what the people who were interested in tea were feeling then. They did not know from day to day how to carry on, and the weak companies, which were mostly, unfortunately, the Indian companies, went to the wall. In 1931, I can assure this House, 80 per cent. of the tea companies in India were definitely making a loss, and in my opinion there are only 20 per cent. of those companies which will be able to show a profit on 1931 working. It is only those companies that could make really stand-out, fine tea which is bought by the poorer people who are able to make a profit. The hon. Member for West-houghton was talking about 3s. 6d. being a good price to pay for tea. There are people still who are willing to pay 10s. 6d. per lb. for tea, and not wealthy people either, but they are connoisseurs of tea and appreciate a good thing when they see it.

4.30 p.m.

The twopence preference which the Chancellor of the Exchequer proposes will enable 70 per cent. of the tea companies in Assam to make a profit in 1932. I admit that there will still be 30 per cent. of them which may make a, loss. One reason is that they own old gardens and gardens which have been planted on soil which is not suitable, or are in districts in Sylhet where the climate is not so good as in Upper Assam, or they have not been looked after in the way that they should be. I know two gardens, one in the Purniah Valley and one in Darjeeling. The first is fit for nothing but a snipe bog and the other only suitable as a grouse moor. If people plant tea in places like that they must expect to make a loss. When the planters in Assam read the good news in the "Statesman" last week, I know the first thing of which they thought was how they could show their gratitude to the British people. The first thing they will do is to make large crops of good tea because the British Empire growers are able to supply every pound of tea that is consumed in these islands and the British Empire. There is no reason to import any Dutch tea at all. Then they will see how many orders for hoes they can place in Birmingham, for pruning knives in Sheffield, for fencing in places like Darlington, for machinery in places like Gainsborough, and for oil engines in Manchester and Coventry. Tea planters have been going through bad times during the last two or three years, and they will now be able to replace their worn out agricultural implements with British goods. I know of companies which refuse to accept cheaper foreign goods because they want to place their orders in Britain where they sell their tea.

There will also be an effect on the Income Tax. I hope that the Chancellor of the Exchequer will get a good deal more for the Income Tax from those tea companies which are registered in England than he did last year. If, however, the preference is reduced to a penny, as has been suggested by the hon. Member for Westhoughton, I can assure the Government that there will be no extra Income Tax to be expected. There might be another 10 per cent. of the companies able to make a profit in 1932, but it will not help the situation in Assam very much. Another thing which the planters can do is to use all their efforts to encourage good feeling between this country and India. I can assure the Committee that the Indian planters have a good record on both the Legislative Council and the Legislative Assembly for doing their best to work with the Indian peoples. It does not mean that they agree at once with anything that is proposed by the official Government. I remember how once in Assam they stood up for the ryots who were getting their property and crops destroyed by wild elephants. These things do not come before this House, but such events are vital and commonplace in Assam, for elephants are a monopoly of the Government of India and the Government of Assam make a good deal of money out of them. The interests of the planters and the ryots are identical, and the planters championed the cause of the peasants against the Government of Assam on this occasion. I am glad to say that the Government of Assam gave way gracefully, but I hope that the British Government will not give way on this Amendment.

We have to thank a number of Viceroys for what they have done for the tea industry. Lord Curzon was not appreciated when he lived, but he was the first man to point it out to the tea planters what they should do to en- courage their markets. He said, "You are talking about markets all over the world, but here is a fine market in India," and he encouraged and helped the planters to subscribe a farthing per pound of tea in order to undertake propaganda for Indian tea all over the world. They spent over £1,000,000 in advertising tea in America, Australia, in these islands, and on the Continent. Our competitors the Dutch were asked to come in, but they refused to subscribe. They said, "We are doing very nicely; you are doing all the advertising and spending all the money for us. You have created a very fine market for us in the British Isles, and why should we subscribe a farthing?" As a matter of fact, they lived up to their reputation as a nation that has always been inclined to give too little and to ask too much. I have done my best to give a frank and fair summary of the whole situation. I have not tried to gloss over it in any way. If the preference is not given, it will mean the ruin of at least 40 per cent. of the tea gardens in Assam. The measures that are proposed by the Government have created light hearts among my friends the planters in India. I know of one man, a Scotsman, who wrote to me and said, "I have a garden in Sylhet. I am under notice to go, but the proprietors are holding on until the 19th April to see if the preference comes." If the preference is given, this good fellow will be able to hold his job and send his wife and two children home to Scotland, for his children to be educated there. That is one of many instances that could be given. I hope that in view of what I have said the hon. Member for Westhoughton will not press his Amendment.

Mr. TINKER

We are now on the practical side of the Budget. Yesterday we were discussing the theoretical side of finance. I am bound to confess that I am to-day on more familiar ground than I was yesterday, because I can never understand matters of high finance properly, and I was not much better off after yesterday's Debate. We have had two speeches to-day, one from the hon. Member for Westhoughton (Mr. Khys Davies), who gave a practical speech from the consumers' point of view, and another from the hon. and gallant Member for Blackburn (Sir W. Smiles), who has given an extremely interesting account of the conditions surrounding the growing of tea. I could not follow a remark which he made that the more you put on the natives the more loyal they become. It follows, if that be true, that if we give them the preference they will be disloyal.

Sir W. SMILES

I was talking about the European planters.

Mr. TINKER

The same thing would apply to the planters. I cannot follow the point. At present we are consuming Empire tea to the extent of 80 per cent. of our consumption. I understand that this duty will not go to the planters, but will be collected by the State and will go to- the State. The £3,600,000 which is estimated is needed to help the Budget. The preference is designed to get a greater proportion of the Empire-grown tea consumed in this country. I do not see how it will make so many more plantations more prosperous as the hon. and gallant Member suggested, for it is only a question of a greater consumption of Empire tea in this country and consequently more tea grown in Assam. None of this tax will go to the planters, and therefore it becomes a question to us on these benches of direct as against indirect taxation.

Although many people outside have not understood the Budget in its vast implications, they are certainly alive to the meaning of the tax on tea. When I went home last week I was met by certain housewives who asked me when the duty will be put on, because on Friday they said they had had to pay it on their tea. It must have been Empire tea, because the extra was 1d. on half-a-pound. They wanted to know if this was the kind of National Government that they had supported, and they are now wondering if they voted right in voting for the National Government. The Tea Duty brings home to them what the National Government stands for. No one expected that the first Budget brought in by the National Government would put back what we thought had been removed for ever.

This tax was taken off by the right hon. Member for Epping (Mr. Churchill), and it is now put back again by another Tory Chancellor. It brings us up against the question which must dominate the House of Commons at some time or another; that is, the relative position of direct and indirect taxation. It is true that the Chancellor is short of money, but he could have turned in another direction to balance his Budget rather than put the burden on the backs of the poor. There is no getting away from the fact that tea is consumed in greater quantities in poor families than in rich families. Therefore, the tax does not hit all equally. That is our point of contention in this Budget. We say that the Chancellor of the Exchequer has no right to introduce indirect taxation which bears hardly on poor families, and we are moving this Amendment in order to test the House. We want to see whether hon. Members on the other side will follow the lead of the Chancellor of the Exchequer. If they agree that this is the way to balance the Budget, that is, by putting the burden on the backs of the poor, they will support the Chancellor; but, if they agree with us that this tax will hit the poor and that the Budget should be balanced in another way, they will vote for the Amendment. The Division on this point will be a real test of the attitude of the National Government supporters to the needs of the poorer classes in the community.

Sir ARTHUR STEEL-MAITLAND

I am not sure whether the speech of the hon. and gallant Member for Blackburn (Sir W. Smiles) was a maiden speech or not, but may I be allowed to say for myself what a great pleasure it was to listen to a speech from one who has such an acute and deep practical knowledge of his subject; and perhaps he might allow me to say one more thing. He spoke of the thrift of the Scottish tea planter abroad, but as I listened to him I thought not only of the virtue of thrift but of that self help which he himself stands for in a quite unusual degree and which must make him a distinguished son of his great progenitor. The point with which I wish to deal was raised by the hon. Member for Westhoughton (Mr. Rhys Davies) during the latter part of his speech. First he gave us a highly-coloured picture of what the effect of a duty of 2d. would be, and then, laying on the colours in a still more lurid style, said he was certain—or at least it was most probable—that the capitalist would take care to see that the price of Empire-grown tea was raised by the full amount of the 4d. duty put upon foreign tea. The seat of the hon. Member is in Lancashire, but I am sure he must have drawn upon an imagination inherited from the gallant little Principality before making that statement.

What conceivable grounds has he for endeavouring to frighten this House and the country by such a statement? In the first place, it is one of the duties of the Advisory Tariff Committee to point out if duties are being used to increase improperly the price of commodities to the consumer, and the report we have just received from them, whether we criticise it in other respects or not, shows that they are perfectly alive to that duty, at any rate. But even supposing that should not be the case, what ground has he for making that kind of misstatement? In the first place, as I am sure the hon. and gallant Member for Blackburn will agree, the number of tea planters is by no means a limited one. The possibility of all the tea planters in India coming together in a cartel to put up the price of tea artificially by another 2d., doing away with all competition among themselves, is, for all practical purposes, inconceivable; and if it were true of India, the hon. Member must recollect that Ceylon is also a great producer of tea, which would make it even more inconceivable.

I was only aroused to speak by that statement, which was put with such confidence before the House, but I wonder whether the hon. Member has paid any attention to the course of the prices of all the great vegetable products during the past 10 years. The history of that period is littered with unsuccessful attempts to restrict the production of or artificially to raise the prices for cotton, sugar, rubber, wheat and coffee, even when the attempt has been undertaken not by individual producers but by Governments. Up to now all those attempts have met with nothing but the most—I will not call it lamentable—absolute failure in each case. In view of that record, the idea that the Assam and Ceylon tea planters, or the merchants in London, will be able to frustrate the Tariff Advisory Committee by putting up the price by an additional 2d. passes the credulity, I should have thought, of the most credulous elector in this kingdom. It is like one of those figments of the fancy with which nurses try to frighten children. If that is the kind of opposition to be advanced against this endeavour to give some help to a body of planters who have tried to uphold the British tradition in our great dependencies, whether in India or Ceylon, during a time of great depression and hardship, I trust it will meet with the ill success which it deserves.

Mr. PRICE

I feel that the House must consider this problem from another point of view than that of giving preference to India. I was interested in the speech of the hon. and gallant Member for Blackburn (Sir W. Smiles), and should have been more interested still if this had been the occasion of a lecture upon tea plantations and the promotion of syndicates and companies; but what we are considering now is the imposition of new taxation, laying duties of 2d. and 4d. per 1b. on tea. This Amendment is a definite protest against the direction which new taxation is taking. Why has this duty been imposed? In dealing with the financial position of the country the Chancellor of the Exchequer definitely stated in his Budget speech that direct taxation had reached its limits, and that other resources would have to be found from which to draw the money with which to carry on the services of the country, but surely we cannot be asked to believe that our finances are so bad that further imposts must be laid on the poorest people in the country in the shape of taxation on food. As the hon. Member for Leigh (Mr. Tinker) said, during the election no Member of the Government ever told the electorate that this would be the policy of the National Government; but ever since November they have been introducing Measures which have lowered the purchasing power of the general population. In two or three instances they have imposed new taxes on food, and now they are imposing taxation to the extent of £3,500,000 a year on what is the common drink of the poorest people.

With us it is not a question of Imperial Preferences. What concerns us is that alongside their action in reducing wages and reducing unemployment pay the Government are now, by this taxation on food and on tea, making a still further attack on the incomes of the poor—of the pen- sioners. The poorest widow in the land is called upon to contribute towards this £3,500,000. Hon. Members ought to face the position frankly and honestly, and ask themselves whether there is any need to seek further revenue for the maintenance of the national services by taxing the poorest people in the land. We are not prepared to admit that the time has arrived to stop the imposition of further direct taxation, and, instead, to put all new taxation indirectly on the poorest people. We say that this duty will affect the poorest families in the land to the tune of nearly 1s. a week. The hon. Member who opposed this Amendment admitted that the national consumption of tea in this country is nearly 10 lb. per head per annum.

He went on to say that this additional duty would not interfere with the general housekeeping expenses, but I suggest seriously that this new imposition will affect the poorest people, and that there was no need to impose taxation on tea. There are plenty of other sources of taxation in this country without going to the poorest in the land. Men who are on transitional payments and receiving, in some cases, less than 10s. a week to maintain a wife and children, will bear some of this additional taxation, and we protest against that strongly, and would emphasise the point that we do not agree that this time has arrived when all further taxation must be applied indirectly. There are plenty of riches in this country to bear all the taxation that is necessary. [An HON. MEMBER: "The co-operative societies!"] The National Government ought to be ashamed of themselves. First they put a tax on our bread, and now they are going to put a duty on tea. If that is all they can do, if that is their only policy, then this Government of national leaders, this pool, as we were told, of the brains and intelligence of the whole universe, ought to get out and let somebody else have a chance.

Mr. PIKE

The hon. Member for Westhoughton (Mr. Ehys Davies) in moving this Amendment stated, as an excuse on behalf of his party, "It is the best means we know of opposing the duty on tea." The very best means the Labour party can suggest for opposing a duty on tea is to submit an Amendment to reduce the duty from 4d. to 2d. In all honesty we are entitled to ask why, if this duty is iniquitous, if it is robbing the poorest of the poor, the Labour party do not have the courage to go the whole hog and oppose any duty on tea at all?

Mr. LANSBURY

Hear, hear!

5.0 p.m.

Mr. PIKE

The Leader of the Opposition and his supporters now cheer the sentiment which I have placed in their hands as propaganda, but why did they not think of it before? It is no good saying they did not, because they did— it is perfectly obvious they did; but they were afraid of the implication that they were also opposed to giving that impetus to colonial trade which will be supplied by the preference of 2d. Hon. Members opposite must go forward honestly as the hon. Member for Hemsworth (Mr. Price) has suggested if they are to carry this call into the depths of the country. It is said that this duty will put on every cup of tea consumed by every poor person a charge which means nothing more nor less than a payment for the cost of the last War, and a payment in preparation for future wars. This is amplified by the suggestion that the policy of the Government in this respect is so to increase indirect taxation in every direction that when the next war arrives the great mass of the public will have been so drained of their resources that their position and power will be reduced to one of complete starvation, and they will then make good fodder for the guns. This was the call during the last War, and it fully complies with what underlies the statements which have been made by the hon. Member for Westhoughton.

While it might be true that the Government have found it necessary to impose additional indirect taxation, it is palpably true that it has been a painful operation to them to have to apply it. That application has been necessary, not because of their own inefficiency or lack of constructive ideas or of courage in facing the problems of this country, but because of the gross inefficiencies and mismanagement of the Administration that preceded them prior to last autumn. Had we been able to get rid of the Administration of hon. Members opposite a little sooner we should probably have been in the happy position of the Chancellor of the Exchequer in the late Con- servative Government when he completely abolished the duty on tea. I should imagine that the Government of to-day, together with the majority of hon. Members who support them, are anxiously awaiting the time when the Tea Duty can be abolished entirely.

It has been suggested that, in the case of the average family of six persons, the net cost of this duty will work out at 35s. per annum. The hon. Member for Blackburn (Sir W. Smiles), who spoke so well and so informatively, pointed out that from every pound of tea it is possible to make 150 cups of tea. I have made a rough calculation, and I find that that means that a pound of tea actually produces 4i gallons of liquid food, or liquid sustenance, and that 35s. per annum roughly would provide each family with 2 lbs. of tea per week, which would mean exactly nine gallons of tea per week per family of six persons, equal to an average consumption per member per day of two pints. If we accept the calculation of the hon. Member for Hemsworth the total consumption would actually be four pints of tea per person per day. No doubt there are persons who drink four pints of tea per day, but I should imagine that the doctor who examined their livers would no doubt say "that the ailment of cirrhosis from which you suffer is due to no other cause than excessive tea drinking." If for the purpose of securing four pints of tea per person per day a person only pays 35s. a year, I think it is an exceedingly cheap form of refreshment to enjoy throughout the year. Taking this estimate, may I point out that hon. Members are considering not only the question of Empire tea but also the question of foreign tea, and if the people only bought Empire tea in preference to foreign tea the advantage would be much greater.

Personally, I think that this preference to Colonial tea planters will result in a great addition to the present demand not only for tea machinery and for British tools used in the tea trade, but for British labour necessary for all those factors which go to make the tea-growing industry practical and effective. In Sheffield, we look anxiously forward to the development of the tea trade with the Colonies, because we provide a large part of the machinery which is necessary for tea industry. We provide that industry with most of the tools which are necessary on the tea plantations, and I assure hon. Members that that demand has been considerably reduced, not only during the past four or five years, but during the past eight or 10 years, and it is only by the restoration of this duty, which will afford better facilities and give a new incentive to our Colonial tea planters, that we are likely to restore that loss of trade. The difference in the cost of tea to the people who make those tools and machinery will be infinitesimal compared with the regularity of wages and employment which the Colonies will be able to give in return for the preference given under the Tea Duty.

What amazed me more than anything else was the questionable statement made by the hon. Member for Westhoughton that the retailers of this country, in reference to the duty chargeable on their tea of 4d. per lb., will not be content with 4d. He asked the House to imagine a lb. of tea at 2s. 7d., and asked: "Do you think a retailer will make the price 2s. l1d.?" He suggested that the retailer would say that it would be easier to fix the price at 3s. Does the hon. Member for Westhoughton suggest that this duty is placing in the hands of the tea retailers of this country a method by which the public are to be robbed? A statement of that description demands, in justice to the persons concerned, evidence of proof. I sincerely trust that the retailers of tea, whether in half ounces, in quarter lbs., lbs., or 2 lbs. in the Westhoughton Division of Lancashire will take a note of the aspersion which their representative has thrown upon retailers of tea across the Floor of this House. I would like to ask whether the hon. Member for Westhoughton, in making that statement, had in mind the fact that one of the greatest retailers of tea in this country is the co-operative stores? Was the hon. Member speaking from practical knowledge of that great organisation when he made that charge? Would the hon. Member directly throw that slur, or directly throw that same allegation at the co-operative stores in the same way as he throws it at the private traders? If not, why not? I know why not.

One of the greatest advantages of this duty will come from the fact that there will be a feeling in the country generally that everybody is paying their share of the burdens that are still necessary to carry us through to the avenues of industrial prosperity. It has been a bone of contention that the tea consumer in this country has been long untaxed, and I believe that when he is personally applied to upon this point it will be found that the tea consumer is just as anxious to pay his whack of the national cost of taxation as the beer drinker has been to meet his liability. I think we are justified in saying that this duty is a remedy for the omission of the Tea Duty in past Budgets especially in the three preceding Budgets presented to this House.

We know that there is a little feeling against us in India and other Colonies, but the development of the tea plantations must considerably enhance and increase facilities for trade, and that will be a great advantage to our Colonies and ourselves. The Indian people are extremely anxious to arrive at as good an understanding with us as they possibly can, and I can think of no better way of accomplishing this than by offering them greater facilities for trading with us, and a preference on Indian tea is a step in the right direction. With regard to what has been said about hon. Members on this side not having had the courage to advance these views on the Tea Duty during the last election, it may be interesting to hon. Members opposite to hear that in the Attercliffe Division, which is a large industrial constituency, I not only openly advocated a tax on tea, but I advocated the complete prohibition of any article coming into this country provided it could be shown that we could produce it ourselves to our own advantage. I have no regret that the Government have taken this step in regard to the Tea Duty, and I do not think that the people of this country will feel that they are in any way being unduly taxed. The Tea Duty is not a tax which differentiates between class and class. So far as I know people are mostly moderate consumers of tea, but, if a person with £ 10,000 a year chooses to consume tea which is retailed at 4s., 3s. or 3s. 6d. per lb., that is his business, and he may get a certain amount of satisfac- tion from the fact that he can afford to pay 4s. a 1b. for tea. Nevertheless, the rich man can only drink one cup of tea at once, and consume a certain quantity, and he drinks it in the same quantities as people who can only afford to buy tea at 1s. 7d. or 1s. 9d. per lb. To suggest that this is a class issue is propaganda of the lowest type. It might go down at the street corner, but it will never go down in the House of Commons or throughout the Press of the country. I believe that this is an honest attempt to distribute fairly and equally an indirect form of taxation over the whole community, and I hope that the Opposition will withdraw their Amendment, or, failing that, I hope that the Government will resist it whole-heartedly.

Mr. LAWSON

The hon. Member for Attercliffe (Mr. Pike) has, I am sure, interested the House. Indeed, he has impressed the House so much that the right hon. and gallant Member for Ripon (Major Hills), who was sitting beside him, has left his place and gone out of the Chamber. The House always enjoys someone who addresses it so vividly as the hon. Member has done, and some of my friends here were saying that they thought they recognised the accent. I am not so sure that the hon. Gentleman has not preached at the street corner in his time.

Mr. PIKE

I am glad you say you are not sure.

Mr. LAWSON

From the hon. Gentleman's speech, and from those of others who have spoken against this Amendment, one might gather that, tea being the cheapest and the best drink in the world, those people who drink it ought to feel that they are highly honoured by having to pay another 4d. a pound for their tea. The hon. Member for Attercliffe has made an attack upon the abolition of the Tea Duty some years ago, and I gathered that that was also the point of view of the hon. and gallant Member for Blackburn (Sir W. Smiles), whose contribution to the Debate was an interesting one, because, as the right hon. Gentleman the Member for Tamworth (Sir A. Steel-Maitland) said, he based his case on facts. We are always interested to hear anyone who speaks with intimate knowledge of the realities of the situation from his own point of view, but the House will appreciate that there are those of us who speak from just as intimate an acquaintance with realities. Here is what the right hon. Gentleman the Member for Epping (Mr. Churchill) said, in his Budget speech on the 15th April, 1929: There is no other comfort which enters so largely into the budget of the cottage home, or the still humbler budgets of the old, the weak, and the poor… Javanese tea enters to a great extent into the cheapest blends used by the poorest people. To maintain for preferential reasons a tax on this foreign tea would therefore exclude from the benefits of remission the very class for whose sake, most of all, this serious sacrifice of revenue is being made."— [OFFICIAL REPORT, 15th April. 1929; cols. 63–4, Vol. 227.] That is the whole case against this special tax. It is true that tea is a cheap drink, but the question of its cheapness depends upon the angle from which you look at it. It is not so dear to pay 4d. a pound extra if you are paying for the whole pound, though that is bad enough, but when you live in a home where tea has to be bought in pennyworths, it is a different proposition altogether, and it is not so cheap for people of that description. Therefore, we say that, by this extra duty of 4d. a pound, a penalty is being placed upon the poorest of the poor, and, the poorer they are, the more they have to pay and the more they suffer. It is true that the poorest people drink the most tea. I remember, as one of a very large family, when we had to drink tea to fill up; it was a sort of compensation for something else that we ought to have had.

Major SALMON

Would the hon. Member kindly say if he bought it in pennyworths, or in half-pounds, or in quarter-pounds?

Mr. LAWSON

I am not ashamed to say that we generally had to get it in pennyworths, or coppers' worth, and I say that such families suffer most from a tax of this kind. It is all very well to say that this is going to bring work indirectly, because of the preference. The hon. Member for Attercliffe said that he went down to one of the very poorest divisions in this country during the election and suggested and supported a tax on tea.

Mr. PIKE

I advocated it.

Mr. LAWSON

I hope that the candidates in Attercliffe will take note of that statement. I would say to the hon. Member, however, that the conditions of the General Election were not conditions in which it was possible to get serious consideration of anything, as Wakefield has recently shown. Indeed, a gentleman on the other side said in the country the other day that in some cases the Government could have put up a sack of potatoes and it would have been accepted as a Member. I understand that the hon. Member for Attercliffe had a minority vote, and I would suggest to him that, if he makes another speech or two of that kind in this House, and if his speeches are reported to the people of Attercliffe, his vote will be such a minority at the next election that he will not be here at all.

Mr. PIKE

To me all opponents are comrades.

Mr. LAWSON

That goes to show that the hon. Gentleman has been at the street corner in other interests.

Mr. PIKE

No.

Mr. LAWSON

The point has been made by Members on this side that we have to add this tax of 4d. a pound on tea to all the other taxes that have been imposed by the Government, and a1l the other penalties which have been placed upon the people, directly and indirectly, during the last few months. Hon. Members opposite have almost the same kind of cynicism that was exhibited by the statesman who said long ago, "If you tax the people indirectly, you can tax the shirts off their backs without their knowing it." That is true up to a certain point, but, at the rate at which the Government are going, it is clear that they are not even deceiving the people. They are getting ½d. on the loaf, they are getting 4d. a pound on tea, they are getting it on sugar, they are getting it on reduced unemployment benefit, and, with their various tariffs and economies of one kind and another, it is clear that the net result is going to be a real reduction of wages for the great mass of the people. Let us be frank about it. Is not that what hon. Gentlemen opposite stand for? I should like to hear that denied by any Member of the Government. The position of the Government opposite has always been the position of the Federation of British Industries— that they dare not reduce wages, but that what they want is a redistribution of the burden of taxation.

We have been asked why we do not suggest taking the whole 4d. off tea, instead of only 2d., but this is only a sort of second line of defence; hon. Members will get the opportunity of voting for the 4d. as well as the 2d. When we suggested a reduction of 2d., we thought that we might get some reasonable consideration from Members of the House, but, apparently, that will not be given us. The Government are pursuing the known Conservative policy, the policy which was advocated long ago in pamphlets, leaflets and booklets by the industrialists of the country—the policy of reducing wages by increasing taxation. I wonder how much longer the Liberals are going to stand this kind of thing. They do not attend here very much; they seem almost afraid of attending. They are throwing up a sort of smoke-screen about the defence of the nation by the National Government, and behind it they are enabling the Government to get back to a whole system of indirect taxation and tariffs, to a state of society in which the wealthy have their heel more and more upon the necks of the people. Hon. Gentlemen opposite have been quite straight and frank about their policy. As I said the other night, there was not the slightest doubt about it at the election. If Lord Snowden had any doubts about it, he was the only person who had. It must have been clear that the Conservatives were going to carry out their policy of laying as large a burden of taxation as they dare upon the great mass of the people, of standing for the rich against the poor, of standing for the employer against the worker. [Interruption.] Yes, that is what I came here to say; that is what I said when I was in the pit.

Lieut.-Colonel MAYHEW

May I venture to suggest to the hon. Member that he said at the election all that he is saying now, and that it did not make any difference, for very few of his party came back?

5.30 p.m.

Mr. LAWSON

Hon. Members have an unfortunate habit of saying and re-saying all that they said at the General Election, but I suggest to the hon. and gallant Member that quite a number of the things that he said at the last General Election he very likely will not say at the next. We say that this tax on tea is only a piece of the whole policy of the Government, which is to relieve the rich at the expense of the poor, to strengthen the employer at the expense of the worker and to reassert the old balance, to keep the mass of the people in their place so that the country will go on in the good old Conservative way, giving wealth and ease and comfort to a comparatively small number of people while the great mass of the people have to bear the burden of the ills and the troubles of the national life. We are not under any misunderstanding as to what this taxation means. It is part of a whole policy. I repeat that I wonder how much longer the Liberals are going to stand this kind of policy. We will give them a chance to vote against the 2d. and we will also give them a chance to vote against the 4d. We expect hon. Members opposite to pursue this policy. The right hon. Gentleman knows enough about the philosophy of the people to know that, although he may be able to answer across this Box, he cannot answer himself effectively.

Major SALMON

In listening to the hon. Gentleman, one must be struck by the unreal way in which the Opposition have taken part in this Debate. They start with the premise that the whole of the 4d. is a duty on the tea that is consumed in the country, whereas, as a matter of fact, 80 per cent. of the tea that comes here is only going to be charged 2d.

Mr. LAWSON

Was the hon. and gallant Gentleman here when it was said that the planters themselves would get at least ¾d. a lb. more?

Major SALMON

It is clear that the hon. Gentleman does not quite understand the way in which tea is dealt with. The price that the producer will get will entirely depend upon the quality of the tea that is sold at auction. To suggest that the public are going to be called upon to pay any largely increased price for tea is, in my view, a mistake. I believe you will find in practice that the price will not alter to any material extent, because they will provide the tea at a price that the public can afford. After all, you have to have regard to what the public will pay when you are selling a competitive article, and there is no commodity sold in the country that is more competitive than tea. When it is suggested that huge profits are made on the sale of tea, I ask the leaders of the Opposition to consult their friends, the co-operatives, and get private information, and they will be surprised to find that the profits of tea are very small indeed. When it is suggested that this will cost the working classes such a sum that it will seriously affect their budgets, the hon. Gentleman forgets that, until a few years ago, we had a much higher duty than is now proposed, and I think it was a great mistake that the duty was ever taken off. Tea is being sold wholesale to-day at prices which are not economic to the producer. I have often heard it said by the Opposition that it was essential that commodities should be sold at such a figure that they were at least remunerative to the producer. Did they not set up a Commission to deal with the selling of coal so that they could get a much higher price for it?

Mr. BATEY

We did not get it.

Major SALMON

Because you tried to do something that was neither businesslike nor economic. Had you gone the right way about it, you would probably have got it. If you try to amalgamate a number of concerns that do not want to be amalgamated, you are bound to make a failure of it. If hon. Members went into the facts before making these wild statements as to the effect of the duty, they would find that there is no justification for them. As regards the general question of trying to make the rich richer by tariffs, they seem to think they are the only representatives of the people who are really concerned with the welfare of the country. Notwithstanding the fact that they tried to misrepresent what the National Government proposed at the last election, and to mislead the public, the public were not hoodwinked, the proof of which is the smallness of their numbers now. I do not think for a moment that the British public are going to be hoodwinked by the statements that one has listened to to-day. I believe tariffs are the only means of balancing the Budget, and that is a very important thing indeed if we are to restore industry and reduce unemployment. I do not be- lieve that a duty on tea or sugar will be to the detriment of the working classes and I do not believe it will have any material effect on their budgets.

Mr. COCKS

The hon. and gallant Gentleman suggests that there are no profits in tea. His speech reminds me very much of similar utterances that we hear from coal owners, that there are no profits in coal. In both cases the Death Duties tell a different tale. After hearing the hon. and gallant Gentleman's speech, I am more confirmed than ever in my view that the outcome of this is that the poor tea drinker is going to be thrown to the lions. The speaker who preceded him on the other side seemed to have forgotten that we are discussing an Amendment, and an Amendment is not a direct negative. In order to make it an Amendment, we have moved to reduce the tax, but we intend on the main question to vote to abolish the duty, which shows that the hon. Member's point, like his position in this House, is the result of a mistake. The Government, which is represented here by the Financial Secretary, seems to take the greatest pleasure in inflicting upon the poorest of the poor every indignity and every penalty they can possibly conceive. By the cuts in unemployment benefit they are keeping people half starved and by the means test they are robbing them of their self respect, and now, by simultaneously taxing both their beer and their tea, they are depriving them not only of the convivial delights of the hostelry but of the domestic felicities of the fireside. I read a description of tea the other day by a writer of the eighteenth century: He said: Tea, thou soft, thou sober, sage and venerable liquid, thou female tongue-running smile-smoothing, heart-opening, wink-tippling cordial, to whose glorious insipidity I owe the happiest moment of my life. And he concluded with the words "let me fall prostrate," which seems to show that tea in those days was a little stronger than it is now. Surely it is beyond argument that this is a tax upon the comfort of the poor. We have the very eloquent words of the right hon. Gentleman the Member for Epping (Mr. Churchill) on the point, so eloquent that they have already been quoted twice by hon. Members in front of me who have robbed me of the pleasure of repeating them. Not only did the right hon. Gentleman say it was a relief to the humbler budgets of the old, the weak and the poor, but the present President of the Board of Trade, in a very convincing speech in favour of taking off the duty, said that by taking it off we were: freeing the budget of the poorest classes from a charge which ought to have been abolished years ago. We have heard about Java tea. I have here a report issued by the Imperial Economic Committee which shows that Java tea is the cheapest, and is only half the cost of the best Ceylon tea. As the right hon. Gentleman the Member for Epping said: Javanese tea enters to a great extent into the cheapest blends used by the poorest people. In the Budget speech in which he removed the duty the right hon. Gentleman the Member for Epping waxed quite lyrical. He even burst into poetry. He said there had been a tea duty ever since the days of Queen Elizabeth who, I believe, was the originator of the custom of drinking beer for breakfast. He further said that although this tax had been there since the days of Elizabeth, the reign of George V would witness its total, immediate and, he believed, final abolition. As usual he was mistaken. He did not foresee that there would one day be a National Government which did not include him. He did not think the days would come when the Financial Secretary to the Treasury would re-impose the duty with the sneering approval of Lord Snowden, the self-appointed apostle of the free breakfast table.

Lastly, may I remind the right hon. Gentleman of the famous lines from the "Rape of the Lock": Here thou, great Anna! whom three realms obey. Dost sometimes counsel take and sometimes tea. I suggest that it is time for the right hon. Gentleman and the Government now to take counsel from this side of the House and to leave our tea alone.

The FINANCIAL SECRETARY to the TREASURY (Major Elliot)

The Debate has occasionally touched the immediate tax which is before us, but it has, on the whole, ranged more widely to realms where I do not propose to follow it. We have to deal not with the past but with the present, and, in particular, the raising of revenue sufficient to carry on the State for the year. No one has made any suggestion as to how we should deal with the Budget deficiency which would result, if, in fact, we remitted the taxation as suggested in the Amendment. We hope to get from the tax £3,600,000 this year, and £4,100,000 in a full year, and the proposed remission would mean that we should need to find just over £1,000,000 in some other form this year, and £2,000,000 in a full year. The suggestions which were made by the hon. Member who moved the reduction of the duty are not fully borne out in the experience either of the House or of the country. He suggested that the reduction would be as high as 8d. per family per week, and worked out the total cost to the family at something like 35s. a year. As far as our calculations go, they would indicate a cost to a family of four or five people of less than 8s. in the year, or an actual sum of 7s. 4d.

Mr. RHYS DAVIES

Surely the right hon. and gallant Gentleman will bear in mind the point which I tried to make, that the working class are very heavy tea drinkers? I do not think that it is fair to average the cost of the duty over the whole of the families of the country, because he includes the better-to-do families where tea is not used in such great quantities.

Major ELLIOT

The numbers of the well-to-do families, according to the calculations which I have so often heard the hon. Member make, are so trivial that it would not seriously affect the great number of households in the land which he assures us continually are those of workers who have been reduced to beggary by the successive assaults of successive Governments ever since the days of Queen Elizabeth. The House should remember that the tax has been paid by everyone in the land during the lifetime of the youngest among us, with the exception of the last two or three years. The suggestion that some vast burden is now about to be put upon the shoulders of the working classes could only be agreed to if it were also agreed that some vast burden was lifted from the working classes three years ago when the tax was removed. I failed to see any processions of rejoicing, any flags being hoisted, or any grateful deputations from the co-operative societies or workers going to the right hon. Gentleman the Member for Epping (Mr. Churchill) when the tax was removed. Whether, in fact, it proved a boon to the workers or not is very difficult to say, and to bring forward exaggerated claims as to the injury which it is about to cause to this country weakens instead of strengthens the facts, because it cannot be claimed that a burden of 7s. 4d. in the year on a family of four or five people is a burden which is going to crush down into beggary people who would otherwise be living happy and prosperous lives.

Mr. McENTEE

It would be doing so to you if you were getting transitional benefit.

Major ELLIOT

When the hon. Member for West Walthamstow (Mr. McEntee) speaks of transitional benefit, he is in fact speaking of a subject to which he has not applied his mind in connection with this case, because it is a question of needs payments, and if the needs increase it is legitimate for the payments to be increased also.

Mr. McENTEE

Most of them are almost on a starvation level, and you know it.

Major ELLI0T

I do not intend to enter upon a controversy with the hon. Member for West Walthamstow across the Floor of the House on this occasion. I am saying, what everybody knows, that to describe a certain reduction in the purchasing power of those to whom the taxation is applied as being the difference between beggary and prosperity is the greatest exaggeration, and is not borne out by anything either in practice or in theory.

The other argument brought forward by the hon. Member for Westhoughton (Mr. Rhys Davies) was that the taxation will not merely be a burden in itself, but the trader will add to the taxation a substantial sum and thereby make a profit upon the tax. I will quote this against him when he moves, as subsequently he will move, a reduction in the Entertainments Duty. Does he really think that the cinemas of the land greeted with joy the imposition of a tax on the ground that they would be able to increase their charges and that it would be a source of profit to the cinema industry in the country? Not at all. They complained, and with some justice, that not only were they not able to make a profit but that they were not even able to take the whole of the tax from their patrons. Therefore the tax did not even completely fall upon the patrons of those entertainments, let alone the industry itself making a profit out of the duty which had been levied.

The quotations as to the incidence of direct and indirect taxation are only brought into relation with this tax by the hon. Gentleman by supposing that all the tariff duties fall directly upon the commodities used by the poorest in the land, and only by the poorest in the land. Surely he will not contend that the duties to which the tariffs extend are levied on substances which are consumed in large quantities by the poor people of the land. Alas, he does not explain the continuous fall in the cost-of-living index which has gone on so that to-day the cost-of-living index is lower than it was when the National Government came in, and far lower than it was when the Labour Government was in office in 1924. My right hon. Friend the Member for Hillhead (Sir R. Horne) gave interesting figures of a 29 per cent. fall in commodity prices, of a 11½ per cent. fall in retail prices, and of a 3½ per cent. fall in wages. So far from the contention of hon. and right hon. Members on the other side that there had been a reduction in real wages since 1928 being correct, those figures actually demonstrate a rise of real wages of 8 per cent. I do not wish to push any of those calculations to the extreme, but that it has been the pursuit of the present Government to grind down the poor people and to levy taxation upon them is disproved by the figures themselves. And the cost-of-living index is certainly a figure one can bring up when one is challenged as to the policy of the Government being to levy heavier burdens on the poor people than those from which they had to suffer before.

The duty is imposed for the purposes of raising revenue. The preference is given for the purpose of encouraging trade with Ceylon and India. Their point of view has been most eloquently expressed by the hon. and gallant Member for Blackburn (Sir W. Smiles) in a speech to which Members on all sides of the House have paid tribute. It is a point of view which ought seriously to be taken into account by hon. and right hon. Members in all parts of the House. When the duties were on, we at first obtained 90 per cent. of our tea from Empire sources. When the duties were taken off the percentage fell to 81 from Empire sources. We still derive over three-quarters of our tea consumption from sources within the Empire, and that enables us confidently to anticipate that the rise in the cost of tea will not be more than a 2¼d. rise, and perhaps not even that. If the drop had been allowed to continue so that it had fallen to 50 per cent. drawn from Empire sources, or 40 per cent. or lower, it might easily have been that we should have found ourselves far more at the mercy of producers outside the Empire than we are to-day, and therefore in a much weaker position with regard to our supplies of. tea.

There are many Amendments which have to be considered which raise many practical points. The amount of duty which is to be charged will, I hope, be determined by the Committee in the Division to which I hope we shall now be able to proceed. But there is the question of the Excise Duty on stocks of tea which are held, and other practical points which the trading community of this country, and particularly the trading communities of the great multiple stores, and the co-operative societies, are most anxious to have elucidated. Therefore, I hope that the House, after the considerable, interesting and informed discussion which has taken place, will now be able to go to a Division and allow us to pass on to the further Amendments.

Mr. T. GRIFFITHS

I did not intend to take part in the Debate until I heard the remarks of the Financial Secretary. It seems to me that the right hon. and gallant Gentleman has forgotten, or really does not understand, how the working class live. I have been to Sheffield. I heard the speech of the hon. Member for Attercliffe (Mr. Pike), and a very good contribution it was, but I do not believe that he really understands the life of the steel and iron workers of this country.

Mr. PIKE

I live there.

6.0 p.m.

Mr. GRIFFITHS

I have been there. I want to impress the following position upon the Financial Secretary. I have worked before the furnaces in the iron and steel industry for 20 years. I can remember the time, even when I went to Sheffield, when 20 or 30 years ago there was far more beer drinking than there is to-day. The working classes now drink tea instead of beer. You have to remember that the people working in the heavy industries and in the mines have to get up at five or half-past five o'clock in the morning, and that the first thing to which they look forward is a. cup of tea. The matter does not end there. The wife has to get up at the same time as the miner or the steel worker—I do not know what happens in the cotton industry, but perhaps the position is the same—and the first thing she has to do is to make a fresh pot of tea in order to fill the can of the miner, the tinplater or the steel worker, which he takes with him to work. Tea is the drink he takes with him. The wife then has to make another pot of tea for the children before they go to school. But it does not end there. There may be men living in the same family working on three different shifts. One of them may finish at 2 o'clock in the afternoon. If he likes a glass of ale, he may have one when he gets home to dinner, but the man who has to work from 2 to 10 must have his can of tea to take to the works. The same thing happens on the 10 to 6 shift. There probably is as much spent in tea in a working-class house in the heavy industries as there is spent on bread. There is a tax on bread, and now an extra tax is being imposed on tea. I am sorry that the hon. and gallant Member for Harrow (Major Salmon) has left. He would realise this economic point. You are going to place a tax of £3,000,000 on the tea drinkers of the country. If that £3,000,000 is to be spent on tea in working-class families, it means that they have £3,000,000 less to spend on something else. Therefore, instead of creating more employment we shall create less employment in the industries where that £3,000,000 would have been spent. If we take it that the working-class people are able to afford to pay 2s. a 1b. for tea and the rich classes are able to afford 10s. a lb., it means that the working class are going to be taxed 4d. per lb., or 1s. 8d. on 10s. worth of tea, as against 4d. per lb. that the rich will have to pay on their tea at 10s. a lb. I am not making a debating point of it, but I do hope that when the next Amendment is discussed, the Financial Secretary will keep the point in mind.

Mr. WALLHEAD

I would not have intervened but for certain remarks made by the Financial Secretary. He is always a very close debater, but he shows the characteristics of his race in attempting to ride off sometimes on rather shallow arguments. I want to re-enforce the remarks made by my hon. Friend in regard to the Tea Duty. It is not only a question of the miners or of the steel smelters, but of the millions of men engaged in other trades who have to leave their homes early in the morning and who drink tea. Hon. Members will have seen men working on the roads, at their midday meals; in the majority of cases they have a can of tea. That is the usual thing. That has been my observation in the early days in the building trade. The average working-class family consumes more tea pro rata than the people who are better off. That is very natural. I do not blame the other people for drinking less tea. People who drink tea drink it not so much because they like it, but because it is the best that they can get. Moreover, it helps to pay a tax. It is something to be borne by people who are driven to that particular kind of liquid nourishment.

With regard to the size of the tax, it may not run to 34s. per annum. It may be only, as the right hon. Gentleman said, about 8s. per annum, but it is not merely the fact that it is only 8s. per annum that counts. We have to remember that a tax of this kind is one of a number of small taxes. There is the tax on tea, the tax on cinemas, the tax on tobacco, and the tax on this, that and the other. It is the cumulative effect that counts. One can pile on small taxes, and it is the total sum of the small taxes that become oppressive. The right hon. Gentleman talked about the prices of commodities going down and that, therefore, the tax does not matter. Is not that rather due to the fact that we have not yet reached the bottom of the fall in world prices? If that is true, is it not also true that prices would be lower except for the tax? If we have not reached the bottom of the fall in world prices, then the tax retains the price at a higher level than would otherwise be the case. I want hon. Members to remember that point when they talk their Protective stuff and suggest that these things do not matter.

These taxes are coming on while wages are continually falling. The fall in wages is a terrible tax, and we have not reached the end of that yet. Therefore, we are justified in entering our protest against the imposition of this relatively small tax. I shall vote against the tax with a light heart and with great pleasure, because it is a tax that will be paid in the main by the poorest people. I represent some of the poorest people in the country, who have been hit for a long period, for whom the world looks very black and for whom there seems no prospect in the future, as far as one can see. Therefore, I protest against a tax of this sort. It is all very well for hon. Members opposite to protest their love for the workers and to explain to them that this does not matter. I am reminded of what Disraeli said. He knew the Tory party. He was linked up with the Tory party because there was no other party that could give him a career. He knew the Tory party and he called them an organised hypocrisy. If the Tory party represent to the working people that this tax means nothing and that it will have little or no effect in their lives, they are still what Disraeli called them, an organised hypocrisy of the very worst kind.

Mr. McENTEE

I felt impelled to make an interjection during the speech of the Financial Secretary because I knew from personal experience what a tax of this sort imposes on a poor family. I was somewhat horrified by the light spirit in which the right hon. Gentleman approached what he called a tax of practically no importance to a working class family. He used averages which he must know were not accurate, and from those figures he made a statement that the tax only represents 7s. 4d. per annum on an average family. Even 7s. 4d. on an average family is not small when it is taken in conjunction with other similar amounts, other small taxes that have been imposed by this Government on the average family. They mean in the aggregate a sum that makes their lives almost unbearable. The frame of mind and the outlook of hon. and right hon. Members opposite suggest that they have no conception of the conditions under which many thousands of very poor people are living to-day.

I was interested in some of the statements made by the hon. Member for Attercliffe (Mr. Pike). He used the extraordinary argument that poor people will have a feeling of joy that they are being permitted to contribute their share towards the necessities of the nation. He must have been saying that with his tongue in his cheek. He told us that in his Division machinery is being exported to the Colonies, and that as a consequence of the imposition of this tax the people who are manufacturing that machinery will export more machinery to the Colonies than they have done hitherto. [HON. MEMBERS: "Hear, hear!"] I am glad of that "Hear, hear!" Presumably it is the policy of the hon. Members who said "Hear, hear," and of the hon. Member for Attercliffe that if an industry is so inefficient that it is not capable of holding its own in the manufacture of this class of machinery, in competition with other nations, the only way by which that manufacture can be put on a sound financial basis is to put a tax on tea, because machinery is used in connection with the tea industry. Inefficiency is bolstered up in this case, as in the case of the farmers when we were discussing the duty on wheat. The hon. Member for Attercliffe said that he stated in his Division that he would support a duty on tea, and that he advocated the prohibition of the importation of everything that we can make within the Empire. By and by we shall get into a state when the Attercliffe Division will refuse to allow anything to go into that Division from outside. The argument is really too absurd for serious consideration. We are to bolster up Sheffield's inefficient manufactures by putting a tax on people all over the country, a tax which lies very heavy and heaviest on the very poorest.

The hon. and gallant Member for Harrow (Major Salmon) said that tea is being produced uneconomically. That may be so, but there are large tea selling organisations in this country which for a great number of years have regularly shown a dividend of 40 per cent., and the hon. and gallant Member is perhaps better acquainted with that dividend than any other hon. Member in the House. If he desires a reason why growers of tea have to produce tea uneconomically, he may find the reason there, rather than suggest that the uneconomic condition of the growers of tea should be made economic by the imposition of an extra tax on the people. The Financial Secretary to the Treasury attempted to draw an analogy between the Cinema Tax and the duty on tea, and ridiculed the argument that people would have to pay more than the extra 4d. or 2d. He knows very little about it. If he will go down to any poor street and watch the people from their homes every morning in the week, he will find that they go into the little general shop at the corner and buy half an ounce of tea, and pay for it, and if he makes any calculation he will find that by the end of the year they will have paid far more than an extra 7s. 4d. In fact, that amount will not cover a month, let alone a year. The tax is undoubtedly passed on to the consumer.

He instanced the Cinema Tax and said that it was not passed on. I suggest that there is no analogy between the Cinema Tax and this Tea Duty. You cannot divide up the Entertainments Tax in the same way that you can divide up and add to a tax on tea. And may I remind him that there are scores and hundreds of cinemas which have been forced out of business altogether by the imposition of the tax, and the hon. and gallant Member must be aware of the representations being made by the cinema industry to the Government to get the tax taken off because it is interfering with the industry? Then, again, the Financial Secretary said that the cost of

living is going down. That may be true. It has gone down to a slight extent, but he knows that the spending power of the workers has gone down considerably. The average worker of this country is worse off now than he was when the National Government came into office. There have been reductions in his wages and in the social benefits he receives; and, coupled with an increase in various taxes, direct and indirect, he is now infinitely worse off than he was a short time ago. Let me put it into rhyme: A little bit off tea, A little bit off bread, A slice off the dole and wages, and you'll very soon be dead.

That is the only outlook for the poor hard-working manual worker in this country to-day. I protest strongly against the statement of the Financial Secretary. It shows that he knows very little about the conditions under which poor people are living. I can take him to scores of little streets where it is impossible to spread out the duty over the small quantities that are being bought, and if he does not know these things, it is our duty to tell him, and to make it perfectly clear to the people of this country that the Government have on this occasion, as on many previous occasions, used their power, not for doing the things which they said they were going to do, but for the purpose of transferring taxation from the people who are best able to bear it to those who are least able to bear it. That has always been the Tory policy. It is their policy to-day, and Liberal Members in this House have allowed themselves to be dragged into it, apparently forgetting their old war cry of previous elections of a free breakfast table.

Question put, "That the word 'four-pence' stand part of the Resolution."

The House divided: Ayes, 343; Noes, 49.

Division No. 153.] AYES. [625 p.m.
Acland-Troyte, Lieut.-Colonel Baldwin, Rt. Hon. Stanley Bracken, Brendan
Agnew, Lieut.-Com. P. G. Barclay-Harvey, C. M. Braithwaite, Maj. A. N. (Yorks, E. H.)
Ainsworth, Lieut.-Colonel Charles Barrie, Sir Charles Coupar Braithwaite, J. G. (Hillsborough)
Aitchison, Rt. Hon, Cralgie M. Barton, Capt. Basil Kelsey Briscoe, Capt. Richard George
Albery, Irving James Beaumont, Hon. R.E.B. (Portsm'th, C.) Broadbent, Colonel John
Allen, Sir J. Sandeman (L'pool, W.) Blindell, James Brocklebank, C. E. R.
Allen, Lt.-Col. J. Sandeman (B'k'nh'd) Boothby, Robert John Graham Brown, Ernest (Leith)
Anstruther-Gray, W. J. Borodale, Viscount Brown,Brig.-Gen. H.C.(Berks., Newb'y)
Applin, Lieut.-Col. Reginald V. K. Bossom, A. C. Buchan, John
Apsley, Lord Boulton, W. W. Buchan-Hepburn, P. G. T.
Astor, Maj. Hn. John J. (Kent, Dover) Bower, Lieut.-Com. Robert Tatton Burghley, Lord
Atkinson, Cyril Bowyer, Capt. Sir George E. W. Burton, Colonel Henry Walter
Baillie, Sir Adrian W. M. Boyce, H. Leslie Butt, Sir Alfred
Cadogan, Hon. Edward Gunston, Captain D. W. Mitchell, Sir W. Lane (Streatham)
Caine, G. R. Hall- Guy, J. C. Morrison Morris, John Patrick (Salford, N.)
Campbell, Edward Taswell (Bromley) Hales, Harold K. Morris-Jones, Dr. J. H. (Denbigh)
Campbell, Rear-Adml. G. (Burnley) Hall, Capt. W. D'Arcy (Brecon) Moss. Captain H. J.
Caporn, Arthur Cecil Hamilton, Sir George (llford) Muirhead, Major A. J.
Carver, Major William H. Hammersley, Samuel S. Munro, Patrick
Castlereagh, Viscount Hanley, Dennis A. Nail-Cain, Arthur Ronald N.
Castle Stewart, Earl Hannon, Patrick Joseph Henry Nation, Brigadier-General J. J. H.
Cautley, Sir Henry S. Harbord, Arthur Newton, Sir Douglas George C.
Cayzer, Sir Charles (Chester, City) Hartington, Marquess of Nicholson, Godfrey (Morpeth)
Cayzer, Maj. Sir H. R. (P'rtsm'th, S.) Hartland, George A. Nicholson, Rt. Hn. W. G. (petersf'td)
Cazalet, Capt. V. A. (Chippenham) Haslam, Sir John (Bolton) Normand, Wilfrid Guild
Chalmers, John Rutherford Headlam, Lieut.-Col. Cuthbert M. North, Captain Edward T.
Chamberlain, Rt. Hon. Sir J.A. (Birm., W) Heilgers, Captain F. F. A. Nunn, William
Chapman, Sir Samuel (Edinburgh, S.) Henderson, Sir Vivian L. (Chelmsford) O'Neill, Rt. Hon. Sir Hugh
Christle, James Archibald Heneage, Lieut.-Colonel Arthur P. Ormsby-Gore, Rt. Hon. William G. A.
Clarry, Reginald George Hepworth, Joseph Palmer, Francis Noel
Clayton, Dr. George C. Hills, Major Rt. Hon. John Waller Patrick, Colin M.
Cochrane, Commander Hon. A. D. Hopkinson, Austin Pearson, William G.
Colfox, Major William Philip Hornby, Frank Peat, Charles U.
Colville, John Horne, Rt. Hon. Sir Robert S. Penny, Sir George
Conant, R. J. E. Horobin, Ian M. Petherick, M.
Cook, Thomas A. Horsbrugh, Florence Peto, Sir Basil E. (Devon, Barnstaple)
Cooke, Douglas Howitt, Dr. Alfred B. Peto, Geoffrey K.(W'verh'pt'n, Bilston)
Cooper, A. Duff Hudson, Capt. A. U. M.(Hackney, N.) Pickering, Ernest H.
Courtauld, Major John Sewell Hudson, Robert Spear (Southport) Pike, Cecil F.
Courthope, Colonel Sir George L. Hume, Sir Georgo Hopwood Potter, John
Craddock, Sir Reginald Henry Hunter, Dr. Joseph (Dumfries) Powell, Lieut.-Col. Evelyn G. H.
Cranborne, Viscount Hunter, Capt. M. J. (Brigg) Procter, Major Henry Adam
Crooke, J. Smedley Hurst, Sir Gerald B. Raikes, Henry V. A. M.
Crookshank, Col. C. de Windt (Bootle) Hutchison W. D. (Essex, Romford) Ramsay, Alexander (W. Bromwich)
Crookshank, Capt. H. C. (Gainsb'ro) Inskip, Rt. Hon. Sir Thomas W. H. Ramsay, Capt. A. H. M. (Midlothian)
Crossley, A. C. Jackson, Sir Henry (Wandsworth, C.) Ramsay, T. B. W. (Western Isles)
Cruddas, Lieut.-Colonel Bernard James, Wing-Com. A. W. H. Ramsden, E.
Culverwell, Cyril Tom Jamieson, Douglas Rankin, Robert
Dalkeith, Earl of Jesson, Major Thomas E. Rathbone, Eleanor
Davison, Sir William Henry Johnstone, Harcourt (S. Shields) Rawson, Sir Cooper
Dawson, Sir Philip Jones, Lewis (Swansea, West) Rea, Walter Russell
Denman, Hon. R. D. Ker, J. Campbell Reed, Arthur C. (Exeter)
Despencer-Robertson, Major J. A. F. Kerr, Hamilton, W. Reid, David D. (County Down)
Donner, P. W. Kimball, Lawrence Reid, James S. C. (Stirling)
Drewe, Cedric Kirkpatrick, William M. Reid, William Allan (Derby)
Duckworth, George A. V. Knatchbull, Captain Hon. M. H. R. Remer, John R.
Dugdale, Captain Thomas Lionel Knight, Holford Rentoul, Sir Gervais S.
Duggan, Hubert John Lamb, Sir Joseph Quinton Rhys, Hon. Charles Arthur U.
Duncan, James A. L. (Kensington, N.) Law, Sir Alfred Roberts, Sir Samuel (Ecclesall)
Dunglass, Lord Law, Richard K. (Hull, S. W.) Robinson, John Roland
Eastwood, John Francis Leckle, J. A. Ropner, Colonel L.
Eden, Robert Anthony Leech, Dr. J. W. Ross, Ronald D.
Edmondson, Major A. J. Leighton, Major B. E. P. Ross Taylor, Walter (Woodbridge);
Elliot, Major Rt. Hon. Walter E. Lennox-Boyd, A. T. Ruggles-Brise, Colonel E. A.
Ellis, Robert Geoffrey Levy, Thomas Runciman, Rt. Hon. Walter
Elliston, Captain George Sampson Liddall, Walter S. Runge, Norah Cecil
Elmley, Viscount Lindsay, Noel Ker Russell, Albert (Kirkcaidy)
Emmott, Charles E. G. C. Lister, Rt. Hon. Sir Philip Cunliffe- Russell, Alexander West (Tynemouth)
Emrys-Evans, P. V. Little Graham-, Sir Ernest Russell, Hamer Field (Sheffield, B'tside)
Entwistle, Cyril Fullard Llewellin, Major John J. Russell, Richard John (Eddisbury)
Erskine, Lord (Weston-super-Mare) Lloyd, Geoffrey Rutherford, Sir John Hugo
Erskine-Bolst, Capt. c. C(Blackpool) Locker-Lampson, Rt. Hn. G.(Wd. Gr'n) Salmon, Major Isidore
Evans, Capt. Arthur (Cardiff, S.) Loder, Captain J. de Vere Salt, Edward W.
Falle Sir Bertram G. Lovat-Fraser, James Alexander Samuel, Sir Arthur Michael (F'nham)
Fermoy, Lord Lumley, Captain Lawrence R. Samuel, Rt. Hon. Sir H. (Darwen)
Fielden, Edward Brocklehurst Mabane, William Sanderson, Sir Frank Barnard
Foot, Isaac (Cornwall, Bodmin) MacAndrew, Maj. C. G. (Partick) Scone, Lord
Ford, Sir Patrick J. MacAndrew, Capt. J. O. (Ayr) Shaw, Helen B. (Lanark, Bothwell)
Fox, Sir Gifford McCorquodale, M. S. Shepperson, Sir Ernest W.
Fremantle, Lieut.-Colonel Francis E. McEwen, Captain J. H. F. Sinclair, Maj. Rt. Hn. Sir A. (C'thness)
Fuller, Captain A. G. McKie, John Hamilton Skelton, Archibald Noel
Ganzoni, Sir John Maclay, Hon. Joseph Paton Smiles, Lieut.-Col. Sir Walter D.
Gibson, Charles Granville McLean, Major Alan Smith, Louis W. (Sheffield, Hallam)
Gilmour, Lt.-Col. Rt. Hon. Sir John Maclean, Rt. Hon. Sir D. (Corn'll N.) Smith, R. W. (Ab'rd'n & Kinc'dlne, C.)
Glossop, C. W. H. McLean, Dr. W. H. (Tradeston) Smith-Carington, Neville W.
Gluckstein, Louis Halle Macquisten, Frederick Alexander Somerset, Thomas
Goldie, Noel B. Maitland, Adam Somervell, Donald Bradley
Goodman, Colonel Albert W. Mander, Geoffrey le M. Somerville, Annesley A. (Windsor)
Gower, Sir Robert Manningham-Buller, Lt.-Col. Sir M. Somerville, D. G. (Willesden, East)
Graham, Fergus (Cumberland, N.) Margesson, Capt. Henry David R. Soper, Richard
Grattan-Doyle, Sir Nicholas Marsden, Commander Arthur Sotheron-Estcourt, Captain T. E.
Greaves-Lord, Sir Walter Mason, Col. Glyn K. (Croydon, N.) Southby, Commander Archibald R. J.
Grenfell, E. C. (City of London) Mayhew, Lieut.-Colonel John Spears, Brigadier-General Edward L.
Gretton, Colonel Rt. Hon. John Millar, Sir James Duncan Spencer, Captain Richard A.
Griffith, F. Kingsley (Middlesbro',W.) Mills, Sir Frederick (Leyton, E.) Spender-Clay, Rt. Hon. Herbert H.
Grimston, R. V. Mills, Major J. D. (New Forest) Stanley, Lord (Lancaster, Fylde)
Guest, Capt Rt. Hon. F. E. Milne, Charles Stanley, Hon. O. F. G. (Westmorland)
Guinness, Thomas L. E. B. Milne, John Sydney Wardlaw- Steel-Maitland, Rt. Hon. Sir Arthur
Stevenson, James Todd, A. L. S. (Kingswinford) Wills, Wilfrid D.
Stones, James Touche, Gordon Cosmo Wilson, G. H. A. (Cambridge U.)
Storey, Samuel Tryon, Rt. Hon. George Clement Windsor-Clive, Lieut.-Colonel George
Stourton, Hon. John J. Vaughan-Morgan, Sir Kenyon Winterton, Rt. Hon. Earl
Strauss, Edward A. Wallace, Captain D. E. (Hornsey) Wise, Alfred R.
Strickland, Captain W. F. Wallace, John (Dunfermline) Withers, Sir John James
Sueter, Rear-Admiral Murray F. Ward, Lt.-Col. Sir A. L. (Hull) Wolmer, Rt. Hon. Viscount
Sugden, Sir Wilfrid Hart Ward, Irene Mary Bewick (Wallsend) Womersley, Walter James
Sutcliffe, Harold Ward, Sarah Adelaide (Cannock) Wood, Rt. Hon. Sir H. Kingsley
Tate, Mavis Constance Waterhouse, Captain Charles Wood, Sir Murdoch McKenzie (Banff)
Taylor, Vice-Admiral E.A.(P'dd'gt'n, S.) Watt, Captain George Steven H. Worthington, Dr. John V.
Templeton, William P. Wayland, Sir William A. Wragg, Herbert
Thomas, Rt. Hon. J. H. (Derby) Wedderburn, Henry James Scrymgeour- Young, Ernest J. (Middlesbrough, E.)
Thomas, James P. L. (Hereford) Wells, Sydney Richard
Thomas, Major L. B. (King's Norton) Weymouth, viscount TELLERS FOR THE AYES.—
Thompson, Luke White, Henry Graham Mr. Shakespeare and Major George
Thomson, Sir Frederick Charles Whiteside, Borras Noel H. Davies.
Titchfield, Major the Marquess of Williams, Herbert G. (Croydon, S.)
NOES.
Adams, D. M. (Poplar, South) Griffiths, T. (Monmouth, Pontypool) Maxton, James
Attlee, Clement Richard Grundy, Thomas W. Morris, Rhys Hopkin (Cardigan)
Batey, Joseph Hall, F. (York. W.R., Normanton) Owen, Major Goronwy
Bevan, Aneurin (Ebbw Vale) Hall, George H. (Merthyr Tydvil) Parkinson, John Allen
Brown, C. W. E. (Notts., Mansfield) Hicks, Ernest George Price, Gabriel
Buchanan, George Hirst, George Henry Salter, Dr. Alfred
Cape, Thomas Holdsworth, Herbert Tinker, John Joseph
Cocks, Frederick Seymour Janner, Barnett Wallhead, Richard C.
Cripps, Sir Stafford Jenkins, Sir William Watts-Morgan, Lieut.-Col. David
Daggar, George Jones, Henry Haydn (Merioneth) Williams, David (Swansea, East)
Davies, David L. (Pontypridd) Jones, J. J. (West Ham, Silvertown) Williams, Edward John (Ogmore)
Davies, Rhys John (Westhoughton) Jones, Morgan (Caerphilly) Williams, Dr. John H. (Lianelly)
Duncan, Charles (Derby, Claycross) Lansbury, Rt. Hon. George Williams, Thomas (York, Don Valley)
Edwards, Charles Lawson, John James
Evans, R. T. (Carmarthen) Logan, David Gilbert TELLERS FOR THE NOES.—
George, Major G. Lloyd (Pembroke) Lunn, William Mr. Duncan Graham and Mr.
Greenwood, Rt. Hon. Arthur McEntee, Valentine L. Groves.
Grenfell, David Rees (Glamorgan) Maclean, Neil (Glasgow, Govan)
Mr. McENTEE

I beg to move, in line 16, at the end, to insert the words: In the operation of this paragraph any stocks of tea held in a branch establishment for sale by retail shall be deemed to be in the possession of the manager of such branch establishment. This Amendment should commend itself to the Financial Secretary and to the whole House. I do not believe it was ever intended that the Tea Duty should operate in the way that the wording of the Resolution leads one to believe it would operate. In any town or village there may be, say, a small shop and a branch establishment of a multiple store or co-operative society in the same street. The small shop might hold a stock of tea up to 1,000 pounds in weight and not be called upon to pay any duty, whereas the multiple store branch or co-operative society branch holding a stock of perhaps only 50 or 60 pounds of tea would be called upon to pay Tea Duty on the lot. The purpose of the Amendment is to allow the branch establishment of any of the large stores, co-operative or otherwise, to rank in the same way as the small shop of the private owner in relation to the operation of this Tea Duty. Take the Home and Colonial Stores as an example. That company has a great number of shops all over the country, but as things are they would be unable in those shops to have freedom from duty for the same quantity of tea, that is up to 1,000 pounds, as the small shopowner would have.

It would be infinitely fairer and more reasonable if each branch of a larger establishment ranked in the same way as the shop of an individual owner, that is for each branch to have the same right as any ordinary shopkeeper to hold a stock not exceeding 1,000 pounds of tea free of duty. I do not know how many shops the Home and Colonial Stores have, but possibly they have well over a thousand. If these branches have only ½ lb. or 1 lb. of tea in each branch shop, that tea would be subject to duty, whereas another shop in the same street, owned by an individual owner, could have up to 1,000 pounds of tea entirely free of duty. That would lead to an extraordinary position so far as the purchasers of tea are concerned. One has to assume that the stores and shopkeepers generally will pass on this duty to the consumer. Even if they do not pass it on to a greater extent than the 4d. or the 2d., as the case may be, one can imagine the existence of a Home and Colonial Store with a small grocer's shop next door, and in such a case the small grocer would be able to sell his tea at the present price because no duty has been charged on it, whereas the Home and Colonial Store branch, or any similar branch of a larger establishment, would be compelled to put 2d. or 4d. on to the prices of tea. There would thus be exactly similar tea sold at entirely different prices at two shops in the same street or town.

Mr. GEORGE HALL

I beg to second the Amendment.

Mr. PIKE

I hope that the Government will reject the Amendment. At the back of it I see an intention to protect the stores, and especially one great industrial distributive concern—it is productive at the same time—the co-operative societies' stores. If the Amendment were accepted it would mean that if, by a far-seeing policy and the forestalling of the Budget, co-operative stores had increased their stocks of tea abnormally during the past three or four weeks, each branch of every society could hold a large stock of tea free of duty, or the stocks of the society could be distributed equally among the branches, and these stocks, so distributed, would escape duty. As a consequence, instead of the co-operative stores paying on the stocks of tea which they had on hand, the moment this duty was declared operative, they would, by this distribution, avoid the tax completely, with disastrous loss to the revenue and damage to the principle attached to the duty.

I urge the House not to be led away by the arguments of the Mover of the Amendment. I agree that the same thing would apply to the case of the Home and Colonial Stores. I do not suggest that the Home and Colonial Stores are blind to the possibilities of avoiding payment of taxation, even in a matter of this description, although I would not allege against them that they would try to do so. Nevertheless I recognise that their eyes are open to the possibilities. The eyes even of hon. Members are open to the possibilities of the legal avoidance of taxation wherever possible. So are mine. I admit that, frankly. None of us are perfect angels in this world. We are all looking for anomalies to make use of them if we can possibly find them to the advantage of ourselves or the disadvantage of somebody else. This is an attempt, in my opinion, to destroy the power of the Government to tax stocks of tea which I know, personally, have recently been accruing for the purpose of overcoming the immediate difficulties of this tax, and I ask the House to reject it.

Mr. DENMAN

I have a somewhat open mind on this Amendment. It raises a point on which I hope the Financial Secretary will give us more information. Apparently the tax is to depend upon the precise situation of the tea, upon where the tea happens to be on 20th April 1932. We are told in the Resolution that if it is in the possession of any person who holds more than 1,000 lbs. thereof it shall be taxed. That will obviously give rise to some injustice if the person in whose possession it happens to be has already contracted to sell it to somebody else. Take the case of a merchant who has the tea in his warehouse but has contracted to sell it to consumers, distributors, or anybody else. Under the Resolution as it stands he will have to pay tax on that tea, and will not be able to pass it on to the consumer or other purchaser, because he has contracted to sell it at a particular price. I hope that in the Finance Bill there will be a Clause making it plain that purchasers, under contracts entered into prior to 20th April, shall be deemed to be the owners or possessors of the tea. The purchaser in such a case is clearly the person who ought to pay the duty, but there is nothing in the Resolution to make that clear, and I am sure it is not the intention of the Financial Secretary to put the burden on the wrong shoulders.

Major ELLIOT

I admit that at first sight the Amendment appears reasonable and the hon. Member for West Waltham-stow (Mr. McEntee) in his persuasive speech, did his utmost to recommend it by saying that its reasonableness was so apparent that we should yield to it at once. He will realise that when a duty is put on in circumstances like these, there are large stocks in the country of the dutiable article, and if these large stocks are not to escape, some Excise Duty of some kind must be levied upon them. That was the case when the Petrol Duty was imposed. If the revenue is not to lose £1,700,000— for it is reckoned that there are six months' supplies in the country—some Excise Duty must be levied in this case. I think he would agree that that is just; we have agreed, therefore, that if a tax is to be imposed, an Excise Duty ought to be levied upon large stocks in the country.

The question then arises, ought it to be on all stocks. The administrative difficulties of tracking down small stocks would be very great. It would create a great sense of intrusion, and of prying by Government agents, if they were to go into all the small shops to try to detect whether shops were or were not carrying stocks of tea, because stocks of tea are carried not merely by grocers, but by shops, such as confectioners and others. Therefore it is reasonable that there should be a limit of exemption, and that also was carried out in practice when the Petrol Duty was imposed. Stocks above a certain level were taxed and stocks below that level were not taxed. That was not done from any sense of abstract justice, but because the administrative task of investigating these small stocks would be so great as seriously to hold up and delay the administration and collection of the duty. An arbitrary limit therefore must be fixed, and the arbitrary limit in this case is 1,000 lbs. As the level at which the limit is to be fixed is the subject matter of a subsequent Amendment, I need not discuss it now.

The only question which remains between us is: Is this exemption to be granted to the person in whose physical possession the stocks are, or should it be allocated among all the branch establishments of multiple stores, or shops of whatever kind, which are handling the dutiable commodity? I think it will be seen that the considerations which we had to take into account regarding the investigation of the stocks of small shops, do not apply to the case of the multiple shops. It is easy to find the amount of the dutiable article held by the multiple shops, and, therefore, from the administrative point of view that difficulty does not arise in their case. The final question is: Is it unjust or inequitable. On that, I admit, there is a stronger case. If, however, the hon. Member will consider, he will see that it is precisely the small grocery and small confectionery shops which have the greatest difficulties under modern conditions. The small scale of their purchasing operations affects them and puts them at a disadvantage which we all recognise as against the large multiple establishments. The large multiple establishment commands resources of cash and skill which the small man does not.

Finally, the large multiple establishments are, relatively speaking, as prosperous as any undertakings in Great Britain to-day. They are vigorously conducted, ably managed, and make good use of their great resources in passing on to the consumer the very considerable advantage which they derive from that skill. I think, therefore, that the point as to whether we ought or ought not to exempt stores in possession of multiple shops is one on which we ought to decide against them, and I shall ask the House to decide against the Amendment accordingly. There is one further point which was raised by the hon. Member for Central Leeds (Mr. Denman) as to the duty being passed on in cases where contracts had been made. The Finance Act of 1901 provides that when a price has been fixed in a contract by a seller and a duty has been imposed, subsequent to the contract, the duty may be added to the contract price. I think that covers the hon. Member's point.

Mr. DENMAN

I think it does, but it is well to be quite clear about this matter. Where a merchant has in his warehouse a considerable store he will be liable to the duty, but if he has contracted before the 20th April to sell at a given price, he may have made that contract with a person who is quite a small consumer, and who would at no time have anything like 1,000 lbs. in his possession. In those circumstances will the small consumer pay 2d. a lb. because the merchant happens to have had more than 1,000 lbs.? If the contract had been with a retail shop which had not had 1,000 lbs. in stock, then the consumer would escape. I am not sure what the intention of the Financial Secretary is in regard to such a case but it ought to be made clear.

Major ELLIOT

I think that further point turns on the question of possession, and obviously a man may possess a thing which is stored in the premises of another. If it is in his possession, then he possesses either more or less than 1,000 lbs. of tea. If the shopkeeper possesses less than 1,000 lbs. of tea, whether that tea is in his own cellar or warehouse, or in the cellar or warehouse of someone else, it seems to me that that tea would belong to the shopkeeper, and so he would be exempt from the tax. Of course, I am not giving a final ruling on that point just now. We have not yet come to the Clauses of the Finance Bill but it seems to me that this point all turns on the question of possession, and that if you possess a stock of less than 1,000 lbs. you are exempt and if you possess a stock of more than 1,000 you are charged. The actual allocation of the tea does not enter immediately into that question.

Sir STAFFORD CRIPPS

On the question of possession, I think the right hon. and gallant Gentleman is right in what he has said, but I think it comes under the word "ownership" and not the word "possession." The expression used is "ownership or possession." Possession would be the physical possession of the stocks but ownership might be the ownership of stocks in another place.

Major ELLIOT

I think the words "ownership or possession" cover the point fully. If it is a person's property, if it is a case of having utere, abutere et fruendi the right of the use and the abuse and the enjoyment of the stocks, if they inhere in a particular individual, then that particular individual would be the one to know where the stock was, and how much he had.

Mr. PIKE

Will the right hon. and gallant Gentleman consider this question rather from the point of view of the capital fund from which these purchases have been made, or the authority which has been responsible for the purchase, initially, on behalf of a group of branch businesses?

7.0 p.m.

Major ELLIOT

I would like to see that question in the OFFICIAL REPORT before giving an answer to it. An opportunity will arise before the discussion of these matters when the Bill, of which these Resolutions are only the foundation, is drafted, and its Clauses come to be examined in detail. I have indicated the intention of the Government and, as far as I can, the policy which they will ask the House to adopt with regard to this particular Amendment.

Mr. NEIL MACLEAN

The right hon. and gallant Gentleman has made it clear that his reasons for applying this tax are not reasons of equity in tax administration, but that this is taxing particular firms because it is possible for the tax administrators to have access to their books and to their stocks more readily than to those of any other section of shopkeepers and traders in the country. We hold that this is an iniquitous method of applying a tax. The tax is not a fair tax, and the Government themselves recognise that they are not applying it fairly. From what the hon. Gentleman has said, it is obvious that they are taxing multiple shops and co-operative stores because it is easy to trace the large stocks they hold and because, in his own words, it is difficult for the Treasury to trace down the stocks held by individual shops and traders. It is because of that difficulty that the Government propose to give a bonus of the amount of the tax to these firms. I am right in calling them firms, even though they are only one-man shops, because they have been recognised as firms by the law of this country under an Act passed during the War and another passed since the War. By this policy the Government are giving these firms a bonus, although the multiple shop next door may be paying the tax. That shop may be a Lyons' shop selling tea in packets by weight, or it may be one of those co-operative stores, against which the hon. Member for Attercliffe (Mr. Pike) pursues such a bitter vendetta, or it may be the Home and Colonial Stores. Just because it is one shop owned by one individual or one firm, a rebate of tax is given on 1,000 lbs. of tea, whereas the multiple firms with 1,000 lbs. of tea spread over 500 shops or a thousand shops are taxed on every pound. This is bringing taxation to an absurdity.

The hon. Gentleman spoke about £1,000,000 being involved on over six months' stocks, but those stocks are not held in the distributive stores or in the multiple shops. The great bulk are held in the central stores. These multiple shops and co-operative stores do not each hold six months' stock of tea. If they did, the dry tea would not be very suitable for use in any home at' the end of six months and the hon. Gentleman would be the first to protest against tea, which had been in the shop for six months, being served to him. The six months' stocks are in the hands of the importers in this country in Mincing Lane, and are in bond. It may be true that there is six months' supply of tea in the country, but it is not in the distributive shops. We are, therefore, making a perfectly fair proposal in this Amendment, which in no way discriminates against any class of shopkeepers. We are asking for the same treatment

for the individual trader, for the multiple shop, and for the co-operative stores. As long as the co-operative stores are engaged in legitimate business, they are entitled to all the rebates given by the law. The hon. Member for Attercliffe and his friends may look upon them as something which ought to be prohibited but, as long as they are permitted by the laws of the land, they are entitled to every rebate under this particular tax, and to every right given to every legitimate trader. The hon. Member may inveigh against them, but the insistence of his criticism is a justification of their conduct.

Question put, "That those words be there inserted in the Resolution."

The House divided: Ayes, 41; Noes, 315.

Division No. 154.] AYES. [7.10 p.m.
Adams, D. M. (Poplar, South) Grenfell, David Rees (Glamorgan) Maclean, Nell (Glasgow, Govan)
Attlee, Clement Richard Griffiths, T. (Monmouth, Pontypool) Maxton, James
Bevan, Aneurin (Ebbw Vale) Grundy, Thomas W. Parkinson, John Allen
Brown, C. W. E. (Notts., Mansfield) Hall, F. (York, W.R., Normanton) Salter, Dr. Alfred
Buchanan, George Hall, George H. (Merthyr Tydvil) Tinker, John Joseph
Cape, Thomas Hicks, Ernest George Wellhead, Richard C.
Cocks, Frederick Seymour Hirst, George Henry Watts-Morgan, Lieut.-Col. David
Cripps, Sir Stafford Jenkins, Sir William Williams, David (Swansea, East)
Daggar, George Jones, J. J. (West Ham, Silvertown) Williams, Edward John (Ogmore)
Davies, David L. (Pontypridd) Jones, Morgan (Caerphilly) Williams, Dr. John H. (Llanelly)
Davies, Rhys John (Westhoughton) Lansbury, Rt. Hon. George Williams. Thomas (York, Don Valley)
Duncan, Charles (Derby, Claycross) Lawson, John James
Edwards, Charles Logan, David Gilbert TELLERS FOR THE AYES.—
Graham, D. M. (Lanark, Hamilton) Lunn, William Mr. Groves and Mr. Price.
Greenwood, Rt. Hon. Arthur McEntee, Valentine L.
NOES.
Acland-Troyte, Lieut.-Colonel Burghley, Lord Davies, Maj. Geo. F.(Somerset, Yeovil)
Agnew, Lieut.-Com. P. G. Burton, Colonel Henry Walter Davison, Sir William Henry
Aitchison, Rt. Hon. Craigle M. Cadogan, Hon. Edward Dawson, Sir Philip
Albery, Irving James Caine, G. R. Hall- Denman, Hon. R. D.
Allen, Lt.-Col. J. Sandeman (B'k'nh'd.) Campbell, Edward Taswell (Bromley) Deepencer-Robertson, Major J. A. F.
Amery, Rt. Hon. Leopold C. M. S. Caporn, Arthur Cecil Dickie, John P.
Anstruther-Gray, W. J. Castlereagh, Viscount Donner, P. W.
Applin, Lieut.-Col. Reginald V. K. Castle Stewart, Earl Drewe, Cedric
Apsley, Lord Cautley, Sir Henry S. Duckworth, George A. V.
Aske, Sir Robert William Cayzer, Sir Charles (Chester, City) Dugdale, Captain Thomas Lionel
Baillie, Sir Adrian W. M. Cayzer, Maj. Sir H. R. (Prtsmth., S.) Duncan, James A. L. (Kensington, N.)
Baldwin, Rt. Hon. Stanley Cazalet, Capt. V. A. (Chippenham) Dunglass, Lord
Balfour, George (Hampstead) Chalmers, John Rutherford Eastwood, John Francis
Barclay-Harvey, C. M. Chapman, Sir Samuel (Edinburgh, S.) Eden, Robert Anthony
Barton, Capt. Basil Kelsey Christie, James Archibald Edmondson, Major A. J.
Beaumont, Hon. R.E.B. (Portsm'th, C.) Clarry, Reginald George Elliot, Major Rt. Hon. Walter E.
Bevan, Stuart James (Holborn) Clayton, Dr. George C. Ellis, Robert Geoffrey
Birchall, Major Sir John Dearman Cochrane, Commander Hon. A. D. Elliston, Captain George Sampson
Blindell, James Colfox, Major William Philip Elmley, Viscount
Boothby, Robert John Graham Colville, John Emmott, Charles E. G. C.
Bossom, A. C. Conant, R. J. E. Emrys-Evans, P. V.
Boulton, W. W. Cook, Thomas A. Entwistle, Cyril Fullard
Bower, Lieut.-Com. Robert Tatton Cooke, Douglas Erskine, Lord (Weston-super-Mare)
Bowyer, Capt. Sir George E. W. Cooper, A. Duff Erskine-Bolst, Capt. C. C. (Blackpool)
Boyce, H. Leslie Craddock, Sir Reginald Henry Evans, Capt. Arthur (Cardiff, S.)
Bracken, Brendan Cranborne, Viscount Fermoy, Lord
Braithwaite, Maj. A. N. (Yorks, E. R.) Crooke, J. Smedley Foot, Isaac (Cornwall, Bodmin)
Braithwaite, J. G. (Hillsborough) Crookshank, Col. C. de Windt (Bootle) Ford, Sir Patrick J.
Broadbent, Colonel John Crookshank, Capt. H. C. (Galnsb'ro) Fox, Sir Gifford
Brocklebank, C. E. R. Croom-Johnson, R. P. Fremantle, Lieut.-Colonel Francis E.
Brown, Ernest (Leith) Crossley, A. C. Fuller, Captain A. G.
Brown, Brig.-Gen. H. C.(Berks., Newb'y) Cruddas, Lieut.-Colonel Bernard Ganzoni, Sir John
Buchan, John Culverwell, Cyril Tom Gibson, Charles Granville
Buchan-Hepburn, P. G. T. Dalkeith, Earl of Gilmour, Lt.-Col. Rt. Hon. Sir John
Glossop, C. W. H. McKie, John Hamilton Rutherford, Sir John Hugo
Gluckstein, Louis Halle Maclay, Hon. Joseph Paton Salmon, Major Isidore
Goff, Sir Park McLean, Major Alan Salt, Edward W.
Goldle, Noel B. Maclean, Rt. Hon. Sir D. (Corn'll N.) Samuel, Sir Arthur Michael (F'nham)
Goodman, Colonel Albert W. McLean, Dr. W. H. (Tradetton) Samuel, Rt. Hon. Sir H. (Darwen)
Gower, Sir Robert Maitland, Adam Samuel, Samuel (W'dsworth, Putney)
Graham, Fergus (Cumberland, N.) Mander, Geoffrey le M. Sanderson, Sir Frank Barnard
Greaves-Lord, Sir Walter Manningham-Buller, Lt.-Col. Sir M. Scone, Lord
Grenfell, E. C. (City of London) Margesson, Capt. Henry David R. Shakespeare, Geoffrey H.
Gretton, Colonel Rt. Hon. John Marsden, Commander Arthur Shaw, Helen B. (Lanark, Bothwell)
Griffith, F. Kingsley (Middlesbro', W.) Mason, Col. Glyn K. (Croydon, N.) Shepperson, Sir Ernest W.
Grimston, R. V. Mayhew, Lieut.-Colonel John Sinclair, Maj. Rt. Hn. Sir A. (C'thness)
Guinness, Thomas L. E. B. Millar, Sir James Duncan Skelton, Archibald Noel
Gunston, Captain D. W. Mills, Major J. D. (New Forest) Smiles, Lieut.-Col. Sir Walter D.
Guy, J. C. Morrison Milne, Charles Smith, Sir Jonah W. (Barrow-in-F.)
Hales, Harold K. Mitchell, Sir W. Lane (Streatham) Smith, Louis W. (Sheffield, Hallam)
Hamilton, Sir George (Ilford) Morgan, Robert H. Smith, R. W.(Ab'rd'n & Kinc'dine, C.)
Hanley, Dennis A. Morris, John Patrick (Salford, N.) Smith-Carington, Neville W.
Harbord, Arthur Morris-Jones, Dr. J. H. (Denbigh) Somerset, Thomas
Hartington, Marquess of Morrison, William Shephard Somervell, Donald Bradley
Hartland, George A. Moss, Captain H. J. Somerville, Annesley A. (Windsor)
Harvey, Major S. E. (Devon, Totnes) Muirhead, Major A. J. Soper, Richard
Haslam, Sir John (Bolton) Munro, Patrick Sotheron-Estcourt, Captain T. E.
Headlam, Lieut.-Col. Cuthbert M. Nail-Cain, Arthur Ronald N. Spears, Brigadier-General Edward L.
Heilgers, Captain F. F. A. Nathan, Major H. L. Spencer, Captain Richard A.
Henderson, Sir Vivian L. (Chelmsf'd) Nation, Brigadier-General J. J. H. Spender-Clay, Rt. Hon. Herbert H.
Heneage, Lieut.-Colonel Arthur P. Newton, Sir Douglas George C. Stanley, Hon. O. F. G. (Westmorland)
Hepworth, Joseph Nicholson, Godfrey (Morpeth) Steel-Maitland, Rt. Hon. Sir Arthur
Hills, Major Rt. Hon. John Waller Normand, Wilfrid Guild Stevenson, James
Hopkinson, Austin North, Captain Edward T. Stones, James
Hornby, Frank Nunn, William Storey, Samuel
Horobin, Ian M. O'Donovan, Dr. William James Stourton, Hon. John J.
Horsbrugh, Florence O'Neill, Rt. Hon. Sir Hugh Strauss, Edward A.
Howard, Tom Forrest Ormiston, Thomas Strickland, Captain W. F.
Howitt, Dr. Alfred B. Ormsby-Gore, Rt. Hon. William G. A. Sueter, Rear-Admiral Murray F.
Hudson, Capt. A. U. M. (Hackney, N.) Palmer, Francis Noel Sugden, Sir Wilfrid Hart
Hudson, Robert Spear (Southport) Patrick, Colin M. Sutcliffe, Harold
Hunter, Or. Joseph (Dumfries) Pearson, William G. Tate, Mavis Constance
Hunter, Capt. M. J. (Brigg) Peat, Charles U. Templeton, William P.
Hurst. Sir Gerald B. Penny, Sir George Thomas, James P. L. (Hereford)
Hutchison, W. D. (Essex, Romford) Petherick, M. Thomas, Major L. B. (King's Norton)
James, Wing-Com. A. W. H. Peto, Geoffrey K. (W'verh'pt'n, Bilston) Thompson, Luke
Jamieson, Douglas Pike, Cecil F. Thomson, Sir Frederick Charles
Jesson, Major Thomas E. Potter, John Titchfield, Major the Marquess of
Johnstone, Harcourt (S. Shields) Powell, Lieut.-Col. Evelyn G. H. Todd, A. L. S. (Kingswinford)
Jones, Henry Haydn (Merioneth) Pybus, Percy John Touche, Gordon Cosmo
Jones, Lewis (Swansea, West) Raikes, Henry V. A. M. Train, John
Ker, J. Campbell Ramsay, Alexander (W. Bromwich) Tryon, Rt. Hon. George Clement
Kerr, Hamilton W. Ramsay, Capt. A. H. M. (Midlothian) Vaughan-Morgan, Sir Kenyon
Kirkpatrick, William M. Ramsay, T. B. W. (Western Isles) Wallace, John (Duntermilne)
Knatchbull, Captain Hon. M. H. R. Ramsbotham, Herwald Ward, Lt.-Col. Sir A. L. (Hull)
Knebworth, Viscount Ramsdan, E. Ward, Irene Mary Bewick (Wallsend)
Lamb, Sir Joseph Quinton Rathbone, Eleanor Ward, Sarah Adelaide (Cannock)
Law, Sir Alfred Rawson, Sir Cooper Waterhouse, Captain Charles
Law. Richard K. (Hull, S.W.) Reed, Arthur C. (Exeter) Watt, Captain George Steven H.
Leckle, J. A. Reid, David D. (County Down) Wedderburn, Henry James Scrymgeour-
Leech, Dr. J. W. Reid, James S. C. (Stirling) Wells, Sydney Richard
Leighton, Major B. E. P. Reid, William Allan (Derby) Whiteside, Borras Noel H.
Lennox-Boyd. A. T. Remer, John R. Wills, Wilfrid D.
Levy, Thomas Rentoul, Sir Gervals S. Wilson, G. H. A. (Cambridge U.)
Liddall, Walter S. Rhys, Hon. Charles Arthur U. Windsor-Clive. Lieut.-Colonel George
Lindsay, Noel Ker Roberts, Sir Samuel (Ecclesall) Winterton, Rt. Hon. Earl
Lister, Rt. Hon. Sir Philip Cunliffe- Robinson, John Roland Wise, Alfred R.
Little, Graham-, Sir Ernest Rosbotham, S. T. Withers, Sir John James
Llewellin, Major John J. Ross, Ronald D. Wolmer, Rt. Hon. Viscount
Lloyd, Geoffrey Ross Taylor, Walter (Woodbridge) Wood, Sir Murdoch McKenzle (Banff)
Loder, Captain J. de Vere Ruggles-Brise, Colonel E. A. Worthington, Dr. John V.
Lovat-Fraser, James Alexander Runciman, Rt. Hon. Walter Wragg, Herbert
Lumley, Captain Lawrence R. Runge, Norah Cecil Young, Ernest J. (Middlesbrough, E.)
MacAndrew, Maj. C. G. (Partick) Russell, Albert (Kirkcaldy)
MacAndrew, Capt. J. O. (Ayr) Russell, Hamer Field (Sheffield, B'tside) TELLERS FOR THE NOES. —
McCorquodale, M. S. Russell, Richard John (Eddisbury) Mr. Womersley and Commander
Southby.
Mr. G. HALL

I beg to move, m line 16, at the end, to insert the words: In the operation of this paragraph where any person holds more than one thousand pounds of such tea duty shall not be payable in respect of the first one thousand pounds. I trust that I shall be able to persuade the right hon. and gallant Gentleman that this Amendment is as reasonable as it looks on the Paper. I quite understand the desire of the Chancellor of the Exchequer to tax the stocks of tea at present in the country, for if there was one part of his Budget which was anticipated, it was this tax upon tea. The hint that he gave when the 10 per cent. import duties were introduced was, I think, caught by the tea dealers in the country, with the result, as he said when introducing his Budget, that there are something like six months' stocks of tea at present in the country. I quite understand how desirous he is to bring these stocks into his financial net and to make them revenue-producing, but I am not dealing with the general principle. We understand that the Chancellor is of the opinion that 1,000 lbs. of tea is a reasonable stock for retailers to hold and that any stock which is in excess of the 1,000 lbs. is to be revenue-bearing—not only that which is in addition to the 1,000 lbs., but the tax is to be paid from the first pound. That in itself, we think, is an anomaly, for we find that we have a large number of small retailers who have stocks amounting to 1,000 lbs. There must be hundreds of small retailers in towns where they own just two or three shops. They may have, say, 400 lbs. of tea in stock in, say, three shops, which would give them a total stock of 1,200 lbs., and that must mean that they will pay the tax from the first pound, whereas if the stock which they held was 999 lbs., that amount of tea would be exempt.

We therefore ask the Government to exempt the first 1,000 lbs. of tea, and unless that is done it will place a number of these small traders at a disadvantage. Mr. Jones, who may own a shop in the next street, may have 1,010 lbs. of tea in stock, and he will have to pay tax on the whole 1,010 lbs. Mr. Thomas, in another street, may have 999 lbs. of tea in stock, and he will not have to pay a single penny of revenue on the 999 lbs. We think that the request which we make, that the first 1,000 lbs. of tea shall be exempt, is reasonable; and it will not lose the Treasury very much revenue. We quite see the point which the Financial Secretary has made, that where you have a large number of multiple shops, or where you have, as he said, co-operative stores with centres, it is impossible to do what was asked in the last Amendment, but we think that this Amendment is reasonable.

Sir WILLIAM DAVISON

I have had a number of letters from my constituents on the point raised by this Amendment, and while I quite realise that in the present state of the finances of the country the Government must have revenue, I think they ought to obtain that revenue as fairly as possible. As has been pointed out by the Mover of the Amendment, it does not seem strictly fair that a man who has 1,001 lbs. of tea should have to pay the duty on 1,001 lbs., whereas a man who has 1,000 lbs. of tea should have to pay no duty at all. The Amendment provides that there should be no duty payable by any man who has only 1,000 lbs. of tea, and that is quite fair, but I can readily understand that the Chancellor of the Exchequer can say that under his calculations he cannot afford this loss of revenue. I, therefore, suggest to the Financial Secretary that, in order to make this tax fair, even if he cannot afford to give 1,000 lbs. free, he should have some lesser amount, say, 500 lbs. or 600 lbs. of tea, free of tax in all cases, and that anything above that should start immediately paying on each pound. I think the discrepancy of one shopkeeper having to pay a duty of 2d. or 4d. per lb. on 1,001 lbs. of tea, when his trade rival may possibly have 999 lbs. of tea and will not have to pay a penny on it, is an injustice, and I would ask whether some modification in the form of this rebate cannot be made, so as to make it fairer as between shopkeeper and shopkeeper.

Sir FRANK SANDERSON

I am very reluctant to intervene, but I have received so many letters from my constituents in connection with this Amendment that I feel compelled to support it. It must be clear to the House that where there are two shops together, and one has a stock, let us say, of 900 lbs. of tea, that amount is free of duty, but there may be a shop next door which happens to have 1,010 lbs. weight of tea, on which duty would have to be paid, not on the 10 lbs. of tea only, but on the whole 1,010 lbs. I really would ask my right hon. and gallant Friend to see whether he cannot meet us in this matter, because I feel that it is one which affects Members in all parts of the House, and, as has been suggested by my hon. Friend opposite, if the loss to the Exchequer by accepting the Amendment would be too great, could he not reduce the amount of tea allowed free to, say, 500 lbs.?

Mr. CAPE

I want to support the Amendment, and I do so the more readily because in every quarter of the House there is a desire that the Government should accept it. Whether we are in favour of the tax or against it, it seems to me that there should be a sense of fairness to everybody concerned. The Chancellor of the Exchequer may want revenue, I quite understand, and I realise that we have to strain to the last ounce to get the revenue with which to carry on the country, but I feel sure that if the right hon. and gallant Gentleman the Financial Secretary to the Treasury could see his way to accept the Amendment, it would give fair play to everybody now in the tea trade in this country. The small man is as much entitled to fair play as is the big man.

7.30 p.m.

Major ELLIOT

The suggestion which has been put forward from all parts of the House appears, on the face of it, to be reasonable, but I would ask the House to consider that always in the marginal case there is a point at one side of the line which is caught, and a point at the other side which escapes; there will always be a marginal case in which hardship occurs. Hon. Members opposite have had some particular experience of that in the case of old age pensions or of benefits of one kind or another, where a person who has entered insurance at a certain date receives benefit and a person who has not is denied it. With the best will in the world, such cases of anomaly will arise as between one side or the other of a fixed line. In the present case, fortunately, the sums involved are not very serious. The duty which is levied on existing stocks is not 4d., but 2d., and the amount of duty involved in the individual case for 1,000 pounds of tea is not more than £8 6s. 8d. That is the only sum which is at stake in this matter.

It is suggested that the firm with two or three shops should be considered as a hard case, as against another firm with only one shop, the firm with two or three shops having 1,001 pounds and the firm with only one shop having 999 pounds, thereby escaping the tax altogether. If one makes exceptions, one has to take into account the effect of this upon the administration of the tax, and again I confine myself purely to the question of administration. The difficulty in which we are placed in this House is that we are always asking for fewer and fewer civil servants and for greater duties to be undertaken by them. To determine the stocks in small shops would undoubtedly take more staff than the proposals of the Government. The exemption of the first 1,000 pounds would mean that the tax could be levied on one pound of tea, and we should no doubt be met with condemnation from all parts of the House for sending an inspector to weigh up the tea and, finding 1,001 pounds, demanding a tax of 2d. for the odd pound.

Sir S. CRIPPS

What is the difference? If he finds 999 pounds, he gets nothing and walks away again.

Major ELLIOT

But if he finds 2 lbs. more, he is rewarded for his visit. [An HON. MEMBER: "It is unfair!"] Unfairness is a term that one must consider in a relative sense. We are dealing with problems of taxation. No doubt to go into a man's house and take away his money is regarded in all cases as unfair, and he suffers from a sense of grievance, but I am dealing with a practical point. The sum demanded by the Government is the relatively unsubstantial sum of £8 6s. 8d., which is not a crippling burden to the shopkeeper, though no doubt it is a burden that he would rather be without. It does, however, mean that £8 6s. 8d. is charged, whereas, under the Amendment, only 2d. could be charged. The House can see the difficulty in which the Revenue will be thrown by the collection of these trivial sums of revenue up and down the country. We must draw a line, and draw it not merely with consideration for abstract justice, but with consideration for the problems of administration. That is, I am afraid, the answer which I have to give to hon. Members in all parts of the House who have most persuasively advanced this contention. I have to have regard not merely for the traders of the country, but for the tasks which the administration is being asked to perform, and, balancing the one against the other, I have reluctantly to come down on the side of the present proposal.

Sir S. CRIPPS

If we offer the right hon. and gallant Gentleman a way out of his difficulties, he will, I am sure, after his sympathetic speech, be glad to seize it. I quite appreciate his difficulty, which is that if he sends down an inspector who finds 1,001 lbs. of tea, the first 1,000 will be exempt and there will be only 2d. duty to collect. In order to get over that difficulty, let me suggest that he makes a regulation by which the first 750 lbs. are not chargeable, so that if the inspector finds 1,001 lbs. of tea, he will charge on 251 lbs. He will therefore get something over £2 for his visit, and that will surely be well worth while. It will go a long way to alleviate what will be a great injustice if the Government's proposal be carried. The 1,000 lbs. limit is a purely arbitrary limit which nobody could have anticipated in any circumstances. It is not even a multiple of cwts., which is the unit in which tea is always sold. Therefore a man who has nine cwts. will be just over the limit, and he will have to pay tax on the whole amount. His next door neighbour, however, who by the purest chance has 8½ cwts. left over when the axe falls, will not pay anything at all. What will be the result in the competitive trade. One of these traders will have to sell his tea without adding anything to the price because his next-door neighbour, not having had to pay the tax, is doing the same. The result is that a charge of £8 6s. 8d. will be put on the small trader, and he will have to carry it out of his own pocket.

I am sure that the right hon. and gallant Gentleman does not think that that is fair. If it had been possible for anybody to anticipate or to suspect this method of dealing with tea, it might have been said that people should not have had as much as 1,000 lbs. in their possession, but no such argument can be raised in this case. If the only difficulty is that the right hon. and gallant Gentleman does not want to have to charge on one pound of tea in the case of the possession of 1,001 lbs., he can get out of it by leaving the limit of 1,000 lbs. and saying that the first 750 or 800 lbs. shall not be charged in any event. He will then get left with a reasonable amount to be charged and everybody, including the right hon. and gallant Gentleman, will be satisfied. It will not increase the cost of the administration and will create no difficulties, but will go a long way to alleviate the real hardship, not only as between people who have got two or three shops and those who have one shop, but between two individual traders in the same street, one of whom by the purest coincidence has more than 1,000 lbs. of tea, and the other less than 1,000 lbs. Unless we can have some undertaking from the right hon. and gallant Gentleman to consider this again, we shall be forced to go into the Division Lobby for the Amendment.

Mr. TINKER

The Financial Secretary did not seem too happy in explaining the case against the Amendment. Hitherto he has been quite confident in what he has said, but on this Amendment I felt that he was not satisfied in his own mind with the explanation which he gave. When this matter was brought to my notice last week I refused to believe it, and said that the House of Commons could never agree to the position in which a man who had over 1,000 lbs. of tea would have to pay on the whole, while a man with less than 1,000 would get off altogether. I agree that there has to be a line of demarcation, but I never understood that in a case like this there should be a penalty for the man who was just over the line. To fix a limit in this way creates an untenable position, and there is not a Member who could get up on a platform and defend it. Many times I have been able to state a case on the platform where I could see the point of view of the other side, but in this matter I could not.

Sir JOHN HASLAM

May I appeal to the right hon. and gallant Gentleman to agree to this Amendment? I am surprised that he said we must not draw the line in regard to justice. I am sorry to hear that in this House, because if anybody ought to be just in their dealings as between trader and trader, it is the House of Commons. The right hon. and gallant Gentleman said that there must be a standard somewhere. There is a standard in Income Tax, and the man who is liable pays only on the amount above the standard. What would be thought if the working man with an income of £250, who had an exemption on the first £160, were called upon to pay on the whole of the £250? It is most illogical, and I cannot understand the action of the right hon. and gallant Gentleman. Last night my wife had the privilege of being in the Gallery, and at the close of the Debate commented very favourably on the speeches' of the Financial Secretary. She is not in the House to-night, and for the reputation of the right hon. and gallant Gentleman I am glad she is not. As one who knows something about the tea trade and has been all his life in it, I

appeal to the right hon. and gallant Gentleman to do justice as between various sections of the tea traders. The trade has collected millions of pounds for the Exchequer in the past, and it will go out to them as a fair and equitable action if the Financial Secretary will concede this very reasonable demand. As a loyal supporter of the Government, I appeal to him to grant this concession.

Question put, "That those words be there inserted in the Resolution."

The House divided: Ayes, 44; Noes, 278.

Division No. 155.] AYES. [7.45 p.m.
Adams, D. M. (Poplar, South) Grenfell, David Roes (Glamorgan) Maclean, Neil (Glasgow, Govan)
Attlee, Clement Richard Grithffis, T. (Monmouth, Pontypool) Maxton, James
Bevan, Aneurin (Ebbw Vale) Grundy, Thomas W. Owen, Major Goronwy
Brown, C. w. E. (Notts., Mansfield) Hall, F. (York, W.R., Normanton) Parkinson, John Allen
Buchanan, George Hall, George H. (Merthyr Tydvil) Rathbone, Eleanor
Cape, Thomas Haslam, Sir John (Bolton) Salter, Dr. Alfred
Cocks, Frederick Seymour Hicks, Ernest George Tinker, John Joseph
Cripps, Sir Stafford Hirst, George Henry Watts-Morgan, Lieut.-Col. David
Daggar, George Holdsworth, Herbert Williams, David (Swansea, East)
Davies, David L. (Pontypridd) Jenkins, Sir William Williams, Edward John (Ogmore)
Davies, Rhys John (Westhoughton) Jones, J. J. (West Ham, Silvertown) Williams, Dr. John H. (Lianelly)
Duncan, Charles (Derby, Claycross) Jones, Morgan (Caerphilly) Williams, Thomas (York, Don Valley)
Edwards, Charles Lansbury, Rt. Hon. George
George, Major G. Lloyd (Pembroke) Lawson, John James TELLERS FOR THE AYES.—
Graham, D. M. (Lanark, Hamilton) Logan, David Gilbert Mr. Groves and Mr. Price
Greenwood, Rt. Hon. Arthur McEntee, Valentine L.
NOES.
Acland-Troyte, Lieut.-Colonel Cazalet, Capt. V. A. (Chippenham) Elliston, Captain George Sampson
Agnew, Lieut.-Com. P. G. Chalmers, John Rutherford Elmley, Viscount
Aitchison, Rt. Hon. Craigle M. Chapman, Sir Samuel (Edinburgh, S.) Emmott, Charles E. G. C.
Allen, Lt.-Col. J. Sandeman (B'k'nh'd.) Christle, James Archibald Emrys-Evans, P. V.
Anstruther-Gray, W. J. Clarry, Reginald George Entwistle, Cyril Fullard
Applin, Lieut.-Col. Reginald V. K. Clayton, Dr. George C. Erskine, Lord (Weston-super-Mare)
Aske, Sir Robert William Cochrane, Commander Hon. A. D. Evans, Capt. Arthur (Cardiff, S.)
Baillie, Sir Adrian W. M. Collox, Major William Philip Evans, R. T. (Carmarthen)
Baldwin-Webb, Colonel J. Colville, John Fermoy, Lord
Balfour, George (Hampstead) Conant, R. J. E. Foot, Isaac (Cornwall, Bodmin)
Barclay-Harvey, C. M. Cook, Thomas A.. Ford, Sir Patrick J.
Barton, Capt. Basil Kelsey Cooke, Douglas Fremantle, Lieut-Colonel Francis E.
Beaumont, Hon. R.E.B. (Portsm'th, C.) Cooper, A. Duff Fuller, Captain A. G.
Bevan, Stuart James (Holborn) Courthops, Colonel Sir George L. Ganzonl, Sir John
Birchall, Major Sir John Dearman Craddock, Sir Reginald Henry Gibson, Charles Granville
Bird, Ernest Roy (Yorks., Skipton) Cranborne, Viscount Gilmour, Lt.-Col. Rt. Hon. Sir John
Blinded, James Crooke, J. Smedley Glossop, C. W. H
Boothby, Robert John Graham Crookshank, Capt. H. C. (Galnsb'ro) Gluckstein, Louis Halle
Borodale, Viscount Croom-Johnson, R. P. Goff, Sir Park
Bossom, A. C. Crossley, A. C. Goodman, Colonel Albert W.
Boulton, W. W. Cruddas, Lieut.-Colonel Bernard Gower, Sir Robert
Bower, Lieut.-Com. Robert Tatton Culverwell, Cyril Tom Graham, Fergus (Cumberland, N.)
Bowyer, Capt. Sir George E. W. Dalkeith, Earl of Grattan-Doyle, Sir Nicholas
Boyce, H. Leslie Denman, Hon. R. D. Greaves-Lord, Sir Walter
Braithwaite, Maj. A. N. (Yorks, E. R.) Despencer-Robertson, Major J. A. F. Grimston, R. V.
Braithwaite, J. G. (Hillsborough) Dickie, John P. Guinness, Thomas L. E. B.
Broadbent, Colonel John Donner, P. W. Gunston, Captain D. W.
Brockiebank, C. E. R. Drewe, Cedric Guy, J. C. Morrison
Brown, Ernest (Leith) Duckworth, George A. V. Hales, Harold K.
Buchan-Hepburn, P. G. T. Dugdale, Captain Thomas Lionel Hanley, Dennis A.
Burghley, Lord Duggan, Hubert John Harbord, Arthur
Cadogan, Hon. Edward Duncan, James A. L. (Kensington, N.) Hart land, George A.
Calne, G. R. Hall- Dunglass, Lord Harvey, Major S. E. (Devon, Totnes)
Campbell, Edward Taswell (Bromley) Eastwood, John Francis Headlam, Lieut.-Col. Cuthbert M.
Campbell, Rear-Adml. G. (Burnley) Eden, Robert Anthony Hellgers, Captain F. F. A.
Caporn, Arthur Cecil Edmondson, Major A. J. Henderson, Sir Vivian L. (Chelmsf'd)
Cayzer, Sir Charles (Chester, City) Elliot, Major Rt. Hon. Walter E. Heneage, Lieut.-Colonel Arthur P.
Cayzer, Maj. Sir H. R. (Prtsmth., S.) Ellis, Robert Geoffrey Hepworth, Joseph
Hills, Major Rt. Hon. John Waller Morgan, Robert H. Smith, Sir Jonah W. (Barrow-ln-F.)
Hopkinson, Austin Morrison, William Shephard Smith, Louis W. (Sheffield, Hallam)
Hore-Belisha, Leslie MOSS, Captain H. J. Smith, R. W.(Ab'rd'n & Klnc'dine, C.)
Hornby, Frank Munro, Patrick Smith-Carington, Neville W.
Horobin, Ian M. Nail-Cain, Arthur Ronald N. Somerset, Thomas
Horsbrugh, Florence Nation, Brigadier-General J. J. H. Somervell, Donald Bradley
Howard, Tom Forrest Nicholson, Godfrey (Morpeth) Somerville, Annesley A. (Windsor)
Howitt, Dr. Alfred B. Normand, Wilfrid Guild Soper, Richard
Hudson, Capt. A. U. M.(Hackney, N.) Nunn, William Sotheron-Estcourt, Captain T. E.
Hudson, Robert Spear (Southport) Oman, Sir Charles William C. Southby, Commander Archibald R. J.
Hunter, Capt. M. J. (Brigg) O'Neill, Rt. Hon. Sir Hugh Spears, Brigadier-General Edward L.
Hurst, Sir Gerald B. Ormiston, Thomas Spender-Clay, Rt. Hon. Herbert H.
James, Wing-Corn. A. W. H. Ormsby-Gore, Rt. Hon. William G. A. Stanley, Lord (Lancaster, Fylde)
Jamieson, Douglas Palmer, Francis Noel Stanley, Hon. O. F. C. (Westmorland)
Jennings, Roland Patrick, Colin M. Steel-Maitland, Rt. Hon Sir Arthur
Jesson, Major Thomas E. Pearson, William G. Stevenson, James
Jones, Henry Haydn (Merioneth) Peat, Charles U. Storey, Samuel
Jones, Lewis (Swansea, West) Perkins, Walter R. D. Stourton, Hon. John J.
Ker, J. Campbell Petherick, M. Strauss, Edward A.
Kerr, Hamilton W. Peto, Geoffrey K.(W'verh'pt'n, Bilston) Sueter, Rear-Admiral Murray F.
Kimball, Lawrence Pike, Cecil F. Sugden, Sir Wilfrid Hart
Kirkpatrick, William M. Potter, John Sutcliffe, Harold
Knatchbull, Captain Hon. M. H. R. Pybus, Percy John Tate, Mavis Constance
Knebworth, Viscount Raikes, Henry V. A. M. Templeton, William P.
Law, Sir Alfred Ramsay, Alexander (W. Bromwich) Thomas, James P. L. (Hereford)
Law, Richard K. (Hull, S.W.) Ramsay, Capt. A. H. M. (Midlothian) Thompson, Luke
Leckie, J. A. Ramsay, T. B. W. (Western Isles) Thomson, Sir Frederick Charles
Leech, Dr. J. W. Ramsbotham, Herwald Titchfield, Major the Marquess of
Leighton, Major B. E. P. Ramsden, E. Todd, A- L. S. (Kingswinford)
Lennox-Boyd, A. T. Rawson, Sir Cooper Touche, Gordon Cosmo
Levy, Thomas Reed, Arthur C. (Exeter) Train, John
Liddall, Walter S. Reid, David D. (County Down) Tryon, Rt. Hon. George Clement
Lindsay, Noel Ker Reid, James S. C. (Stirling) Wallace, Captain D. E. (Hornsey)
Little, Graham-, Sir Ernest Reid, William Allan (Derby) Wallace, John (Dunfermline)
Llewellin, Major John J. Remer, John R. Ward, Lt.-Col. Sir A. L. (Hull)
Llewellyn-Jones, Frederick Rentoul, Sir Gervals S. Ward, Irene Mary Bewick (Wallsend)
Lovat-Fraser, James Alexander Roberts, Sir Samuel (Ecclesall) Ward, Sarah Adelaide (Cannock)
Lumley, Captain Lawrence R. Robinson, John Roland Waterhouse, Captain Charles
MacAndrew, Maj. C. G. (Partick) Rosbotham, S. T. Watt, Captain George Steven H.
MacAndrew. Capt. J. O. (Ayr) Ross, Ronald D. Wedderburn, Henry James Scrymgeour-
McCorquodale, M. S. Ross Taylor, Walter (Woodbridge) Wells, Sydney Richard
Macdonald, Capt. P. D. (I. of W.) Runge, Norah Cecil Whiteside, Borras Noel H.
McEwen, Captain J. H. F. Russell, Albert (Kirkcaldy) Wills, Wilfrid D.
McKie, John Hamilton Russell, Hamer Field (Sheffield, B'tside) Wilson, G. H. A. (Cambridge U.)
McLean, Major Alan Russell, Richard John (Eddisbury) Windsor-CIive, Lieut.-Colonel George
Maclean, Rt. Hn. Sir D. (Corn'll N.) Rutherford, Sir John Hugo Winterton, Rt. Hon. Earl
McLean, Dr. W. H. (Tradeston) Saimon, Major Isidore Wise, Alfred R.
Macquisten, Frederick Alexander Salt, Edward W. Withers, Sir John James
Maitland, Adam Samuel, Rt. Hon. Sir H. (Darwen) Wolmer, Rt. Hon. Viscount
Mander, Geoffrey le M. Samuel, Samuel (W'dsworth, Putney) Wood, Sir Murdoch McKenzie (Banff)
Manningham-Buller, Lt.-Col. Sir M. Scone, Lord Wragg, Herbert
Margesson, Capt. Henry David R. Shakespeare, Geoffrey H. Young, Ernest J. (Middlesbrough, E.)
Mason, Col. Glyn K. (Croydon, N.) Shaw, Helen B. (Lanark, Bothwell)
Mayhew, Lieut.-Colonel John Shepperson, Sir Ernest W. TELLERS FOR THE NOES.-
Mills, Major J. D. (New Forest) Skelton, Archibald Noel Mr. Womersley and Major George
Milne, Charles Smiles, Lieut.-Col. Sir Walter D. Davies.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. ATTLEE

We have had a considerable discussion on the various Amendments dealing with the Tea Duty, but I wish to say a few words in order to indicate the attitude of hon. Members on this side of the House who object to the Tea Duty altogether. It is very difficult to-day to discuss these various food duties, because we have not a well-thought-out and balanced scheme of taxation, though almost everything that comes on to our breakfast table, our tea table, or our dinner table is now taxed under one enactment or another. Bread comes under the quota scheme, meat comes in in another way, and tea and sugar come in here. I think the design of the Government is to try to hide the cumulative effect of all these taxes on the cost of living. Some extraordinary fallacies have been put forward during this discussion on the Tea Duty, a good many of them by the Financial Secretary to the Treasury. He talked of the advantage that would accrue to Britishers in India engaged in tea planting, and said that was a point of view that we must consider very carefully. That is the right hon. Gentleman's point of view. What he is doing, in effect, is to take a number of pence out of the pockets of poor people in this country and give them to a certain number of tea planters in India and Ceylon, who may or may not be well off. The right hon. Gentleman's view is that they are the people to be considered—not the people from whom he filches the money, but the people on whom he bestows it.

Considered in relation to the tea planters in India, this duty is, I think, put forward on very peculiar grounds. It is put forward as a means of helping an industry of very great importance which has been passing through very hard times. I am well aware that they have had their difficulties in Assam. I know something of the conditions out there, and it may be a sound proposition to help them, but I cannot see why that assistance should be given at the cost of the poorest of the people here. Further, it is not altogether a question of the Assam tea planters, because we have been assured that we shall get some of this money back in the Income Tax which will be paid by tea companies in this country. The Assam tea planters are the employéd of capitalist interests in this country. Even there the Case was over-stated, because I think something like 50 per cent. of the companies engaged in tea plantations in India are on a rupee basis, and only so far as there are companies over here shall we get Income Tax.

8.0 p.m.

It is a thoroughly unsound proposition to load this tax on to the cost of living in this country as a subvention to another part of the Empire. This is a very curious way of binding up the Empire. In order to grant this benefit to our overseas Dominions and to the tea planters, the workers are asked to pay more for their tea. They are going to be asked to pay more for their sugar, and in the end I feel sure the workers will be convinced that for the great advantage of having an Empire they have to pay all the time. We know that the Government intend to send representatives to the Ottawa Conference in order to see if arrangements for reciprocity can be made with the Colonies. We understand that India will be represented at that Conference as an independent unit and that a tariff policy will be considered.

We find that a tax is to be placed on tea and a preference is to be given to India, but there has been no suggestion of reciprocity. I would like to know if this duty is to be the subject of a bargain at Ottawa. I would also like to ask: If it is found that India is not willing to give us certain advantages in return for this preference on tea, will the Chancellor of the Exchequer be ready to come back to this House and propose the abolition of the preference which he is now giving? This is a very curious way of dealing with this matter. We always have to pay before any question of reciprocity has been arranged. I do not think much of the argument that we shall get a great advantage by sending more machinery and so forth to the Colonies, because I believe that will be a small thing. Some hon. Members have suggested that as a result of this policy there will be a large capital expenditure upon machinery and tools and that a great deal of that work will be done in this country. I think those who have put forward that argument have tried to prove too much, for they said that the Trade was so bad that even this Preference would only just make it pay.

The Financial Secretary tried to prove a great deal too much when he said that the people of this country could easily afford to pay more for their tea because the cost of living had not risen. We have had it from the right hon. Gentleman the Member for Sparkrook (Mr. Amery) and the right hon. Gentleman the Member for Billhead (Sir R. Home) that the great aim of taxation is to raise the price level all over the world, and that view has been acquiesced in by the Government. Therefore, it is agreed that the object of the series of tariffs which have been put forward is to raise price levels, and they are bound to have the effect of raising prices. It has been argued that these tariffs are comparatively small matters, but I would like to point out that a series of comparatively small indirect taxes have gradually been piled up. We have been told that the working-classes have been asked to pay only 8s. per year more for their tea. They will have to pay so many shillings more for their sugar, and they will probably have to pay 15s. or 20s. a year more for bread. When all these small amounts which the working-classes will have to pay are reckoned up, they come to a considerable sum.

I do not know what is the view of the Financial Secretary about the proportion of direct and indirect taxation. On this side of the House we have always stood for taxing people, not according to what they buy or use, but according to their income and means. I should like to comment here on the total absence from this Debate of the great historic party which used to talk big about the importance of the free breakfast table, but I presume that they are staying away because they are so shy. Why do they not come forward in these Debates in defence of their principles? There are a number of Liberals who are entirely National and wish to keep their places in the National Cabinet, and they have been entirely absent. I suppose the answer will be given by the Financial Secretary telling us that the great need of the present day is to balance the Budget. I agree that it is the business of the Chancellor of the Exchequer to balance the Budget, but that is no excuse for bringing forward unsound propositions. The business of the Financial Secretary is to justify this particular means of raising revenue as compared with other means. I think it is very unfortunate that the Ministers of the National Government, in the actual working out of these duties, have made some appalling blunders in their arrangements. There has been some trouble already at the docks over the method of imposition of the duties. The Financial Secretary said that he had to see to it that the whole value of the tax from a revenue point of duty was not done away with by the large stocks existing in this country.

The Chancellor of the Exchequer could have dealt with this matter much better by merely putting an Excise duty on the removals of tea from bond, and he could have accomplished this by accepting either or both of the Amendments which were moved from this side of the House. Perhaps the right hon. Gentleman has made a mistake and his idea, is to stick to it, but the result has been a great injustice to that section of the people who deal in tea. I do not know whether the intention of the right hon. Gentleman is to support the small grocer, but, if so, I imagine that he is trying to compound for greater sins because the whole policy of the Government up to now has been to approve the formation of trusts and combines all over the country, and now the right hon. Gentleman is trying to give a special advantage to the small grocer or the general shop as a set off to what has been done for the large combines.

The Financial Secretary knows perfectly well that the proposals for the taxation of co-operative societies are entirely inequitable and unreasonable, and at the suggestion of the Prime Minister this question has been sent to a Royal Commission for investigation. We think that the reimposition of the Tea Duty is a dangerous step, because it means that the Chancellor of the Exchequer has resolved to become even more reactionary than the right hon. Gentleman the Member for Epping (Mr. Churchill). My view is that when the Tea Duty was taken off by the right hon. Gentleman the Member for Epping it was not because the Government thought it was a hardship on the working classes, but because the right hon. Gentleman knew that there was going to be a General Election in two or three months time, and he did not expect to be at the Exchequer again. Consequently, they thought it would be a nice gesture to the workers to advocate a free breakfast table. That gesture did not come off, but the Government waited until they had a National majority, and now they are restoring the Tea Duty, because they think that there will not be another election for some time to come.

Major ELLIOT

If the Opposition desire it I shall be happy to reply to the Debate upon this Motion. The hon. Member for Limehouse (Mr. Attlee) has again stated the general considerations in his own mind and in the minds of hon. Gentlemen opposite for voting against this duty. The duty is one of the oldest in the history of our fiscal system; it goes back over hundreds of years. It has been imposed by the most pure Free Traders and Chancellors of the Exchequer, and it was a duty which was maintained by Mr. Gladstone. The hon. Member has been twitting the National Liberal Members for not opposing the duty, but I would like to remind the Opposition that this is a duty which had the sanction of Mr. Gladstone, and therefore it is not one of which any Liberal need reasonably feel ashamed. It is true that the last Labour Government were somewhat cramped, but it is the fact that, during the previous Administration, in 1924, who inherited enormous sums from their predecessors, and transmitted considerable sums to their successors, the duty was 4d. per lb. That was a higher level than is now proposed for 80 per cent. of our supplies of tea, a proportion which may be expected to rise to something like 90 per cent. in a short time. The Tea Duty is justified by history and has been adopted by Chancellors of the Exchequer, not only when the country is suffering from financial stringency, but even when it has been enjoying abundant revenues. I think those facts may be set against the accusation, that the Tea Duty is an unfair and unjust burden to lay upon the shoulders of the poorest of the poor. The other and novel feature of this duty is that a considerable preference is given, but the hon. Gentleman seems to be under some misapprehension on the question of preference. He talked as if a preference were an increased burden on the consumer in this country, but, on the contrary, it is a diminution of the duty. This duty is not fixed at 4d. a pound rising to 6d. for Empire tea; it is fixed at 4d. falling to 2d. for Empire tea, so that the tea user in this country gets a remission of half the tax—

Mr. ATTLEE

One of the contentions put forward in favour of this tax is that, if you have not the tax, you cannot have the preference.

Major ELLIOT

That is one of the advantages, but the advantage which appeals to us at the Exchequer, and which has appealed to every Chancellor of the Exchequer, including Viscount Snowden, is the revenue to be derived from the duty. Viscount Snowden was never specially enthusiastic for the principle of Empire preference. The duty is 4d. with a remission to 2d., and that is a very great advantage to the consumer in this country. When we come to deal with sugar, the hon. Gentleman will find that the concession which is being given to Empire sugar is again not an increase of duty, but a diminution of duty, and, therefore, the suggestion that "The Empire will cost you more" is not a reasonable one. The hon. Gentleman made the point that the administrative difficulties were great, and that serious blunders had been made. It is true that the argument was brought forward, not from one side only, but from all quarters of the House, and particularly by the hon. Member for Bolton (Sir J. Haslam), who has considerable knowledge of these matters, that, whenever a novel introduction is made, anomalies are created. It is the business of the administration to examine those anomalies and see whether they can be altered, but I should be deceiving the House if I suggested that by any rearrangement of these duties it would be possible to avoid anomalies when they were introduced. That, however, should not deter us from making changes.

The suggestion that a blunder of great magnitude has been committed here because a tax of £8 6s. 8d. is levied upon a multiple store or shop which otherwise would not be levied upon it, is overstraining the effects of the remission. It cannot be suggested that the Home and Colonial Stores or the Co-operative Societies would suffer a very serious alteration in their revenues if they had 1,000 pounds of tea left free this year which otherwise would have to pay duty. [Interruption.] The Amendment as to branch establishments has been dealt with, I think to the satisfaction of the House. I agree that this Amendment concerning the exemption of 1,000 pounds has raised criticisms which went much further, and which made, as I admitted, a considerable appeal in argument. I examined the matter from every point of view, and was unable to see how I could make the concession asked for, and I do not wish to hold out false hopes to hon. Members that I shall be able to make the concession which they desire. The duty as a whole will bring in £3,600,000 this year, and £4,100,000 in a full year. Its average level is lower than the Tea Duty has ever been in this country, and it is sanctioned by the tradition of a long line of Chancellors of the Exchequer, many of whom had the utmost sympathy with the poorest classes in the community. As a revenue duty it has been used and administered in the past, and has been found to be fairly reasonable to all classes of the community. I confidently commend the Resolution to the House, and hope that they will allow us to have it.

Mr. LANSBURY

I only rise because of the historical references which the right hon. Gentleman made. It may well be that the Tea Duty has been imposed for all these years—for centuries, I am told; but it is also true that rates were levied for centuries on agricultural land and buildings and so on; and the same Chancellor of the Exchequer who got rid of the Tea Duty wiped the last remnant of rates off the farmers of this country. The mere fact that a thing is hoary-headed does not necessarily justify it. [Interruptions.] The right hon. Gentleman spoke as if this agitation against the Tea Duty had been brought into being all of a sudden, but, being hoary-headed myself, I am old enough to have sat at the feet of Mr. Gladstone when he was in his prime. He put before the nation the proposal of a free breakfast table. He was against all taxation on the people's food, and especially on sugar and tea; and for years I was "led up the garden" by Members of the Liberal party who waved that sort of slogan in front of us. I thought the right hon. Gentleman knew that, and I think he must have had his tongue in his cheek when he was defending the Liberal party just now. I think he will find that Lord Snowden, when he was Chancellor of the Exchequer, had to apologise to his own followers again and again because he was not carrying out the policy of his party.

He may have had good reasons, or bad ones, for not doing so; we will leave that to the judgment of those who are capable of judging; but the Chancellor of the Exchequer in the last Tory Government before this Tory Government— the right hon. Gentleman the Member for Epping (Mr. Churchill)—did wipe this tax out, and made just the same kind of statement in favour of wiping it out that I have no doubt he would make, if called upon to do so, in favour of wiping it in. We are entitled in this House, however, to take speeches at their face value, and the right hon. Gentleman the Member for Epping, speaking at that Box, declared that this remission was long overdue—as, of course, it was if the duty had been imposed for a century or two. He declared that it was a reform which would comfort the aged and bring solace to the widow, and I think the orphan came in also. He painted one of those word pictures of his, and it appealed to me, because I am a great tea drinker. When I go home at night, I do not sit in the corner and sup a little whisky, but I drink a little tea, and there are scores of people around me who drink tea, and to whom this tax will mean a great deal. In this House we are accustomed to talk about the poor and their money as if we could really experience their conditions, but, honestly, we cannot. These pennies and half-pennies in the districts that many of us represent make a great deal of difference. If I could view this in the light-hearted manner in which I have been talking about Mr. Gladstone, or the right hon. Gentleman has been talking about the Liberal party, or if I could feel that you were not really imposing an additional burden, I should not trouble to go into the Lobby against it.

I have been rebuked on several occasions by Ministers and others. I have said, "This is only a very small thing, a piece of expenditure." They have said, "Yes, but what the right hon. Gentleman forgets is that he gets one little thing here and another there, and it all piles up in the end and makes a big sum." It is no use denying that a very considerable amount is going to be taken from somewhere by new duties imposed on all sorts of articles, foodstuffs and other things necessary for the life of the people, and all these together must put a new burden on the poorest of the poor. No one says the foreigner will pay this Tea Duty, or a Sugar Duty which is capable of being passed on.

Mr. HOWARD

Is the right hon. Gentleman aware that already some of the large multiple stores are announcing that they are not going to increase the price by 2d. a pound?

Mr. LANSBURY

The hon. Member may know all about the multiple stores, but in my district they are charging more, and I am prepared to stand by that. [Interruption.] I am not talking about the co-operatives. Do not get the cooperative complex. Even if it is true that the tariffs are not increasing prices at the moment because of the tremendous fall, if it were not for them everything would be cheaper. We need not indulge in prophecy. We will say to you what a great Liberal once said from that Box: "Wait and see." We are content that that shall be the determining factor. The only thing I am certain about is that the people in Bow and Bromley and Poplar are being obliged to pay more for tea than they otherwise would do. They are extremely poor people and pennies and twopences are very valuable to them and the country is rich enough to do without them.

Division No. 156.] AYES. [8.29 p.m.
Acland-Troyte, Lieut.-Colonel Evans, Capt Arthur (Cardiff, S.) McLean, Dr. W. H. (Tradeston)
Agnew, Lieut.-Com. P. G. Everard, W. Lindsay Macquisten, Frederick Alexander
Albery, Irving James Fielden, Edward Brocklehurst Maitland, Adam
Allen, Lt.-Col. J.Sandeman (B'k'nh'd) Fremantle, Lieut.-Colonel Francis E. Manningham-Buller, Lt.-Col. Sir W.
Applin, Lieut.-Col. Reginald V. K. Fuller, Captain A. G. Margesson, Capt. Henry David R.
Aske, Sir Robert William Ganzonl, Sir John Mayhew, Lieut.-Colonel John
Baillie, Sir Adrian W. M. Gibson, Charles Granville Mills, Major J. D. (New Forest)
Baldwin-Webb, Colonel J. Gilmour, U.-Col. Rt. Hon. Sir John Morgan, Robert H.
Balfour, George (Hampstead) Glossop, C. W. H. Morris, John Patrick (Salford, N.)
Balfour, Capt. Harold (I. of Thanet) Gluckstein, Louis Halle Morrison, William Shephard
Barclay-Harvey, C. M. Goff. Sir Park Moss, Captain H. J.
Barton, Capt. Basil Kelsey Goldle, Noel B. Munro, Patrick
Bateman, A. L. Goodman, Colonel Albert W. Nall, Sir Joseph
Beaumont, Hon. R. E. B.(Portsm'th, C.) Graham, Fergus (Cumberland, N.) Nail-Cain, Arthur Ronald N.
Benn, Sir Arthur Shirley Grattan-Doyle, Sir Nicholas Nation, Brigadier-General J. J. H.
Bird, Ernest Roy (Yorks, Skipton) Greene, William P. C. Nicholson, Godfrey (Morpeth)
Blindell, James Grimston, R. V. Normand, Wilfrid Guild
Borodale, Viscount Guest, Capt. Rt. Hon. F. E. Nunn, William
Bower, Lieut.-Com. Robert Tatton Guinness, Thomas L. E. B. Ormsby-Gore, Rt. Hon. William G. A.
Bowyer, Capt. Sir George E. W. Gunston, Captain D. W. Patrick, Colin M.
Boyce, H. Leslie Guy, J. C. Morrison Pearson, William G.
Braithwaite, Maj. A. N. (Yorks, E. R.) Hales, Harold K. Peat, Charles U.
Broadbent, Colonel John Hanley, Dennis A. Perkins, Walter R. D.
Brocklebank, C. E. R. Harbord, Arthur Petherick, M.
Brown, Ernest (Leith) Hartland, George A. Peto Geoffrey K.(W'verh'pt'n, Bliston)
Buchan-Hepburn, P. G. T. Harvey, Major S. E. (Devon, Totnes) Pike, Cecil F.
Burghley, Lord Haslam, Sir John (Bolton) Potter, John
Butt, Sir Alfred Headlam, Lieut.-Col. Cuthbert M. Procter, Major Henry Adam
Campbell, Edward Taswell (Bromley) Hellgers, Captain F. F. A. Pybus, Percy John
Campbell, Rear-Adml. G. (Burnley) Henderson, Sir Vivian L. (Chelmsf'd) Raikes, Henry V. A. M.
Caporn, Arthur Cecil Heneage, Lieut.-Colonel Arthur P. Ramsay, Alexander (W. Bromwich)
Cayzer, Maj. Sir H. R. (Prtsmth., S.) Hepworth, Joseph Ramsay, Capt. A. H. M. (Midlothian)
Cazalet, Capt. V. A. (Chippenham) Hills, Major Rt. Hon. John Waller Ramsay, T. B. W. (Western Isles)
Chaimers, John Rutherford Hopkinson, Austin Ramsbotham, Herwald
Chapman, Sir Samuel (Edinburgh, S.) Hornby, Frank Ramsden, E.
Clarry, Reginald George Horobin, Ian M. Rankin, Robert
Clayton, Dr. George C. Horsbrugh, Florence Rawson, Sir Cooper
Cochrane, Commander Hon. A. D. Howard, Tom Forrest Reed, Arthur C. (Exeter)
Colfox, Major William Philip Howitt, Dr. Alfred B. Reid, David D. (County Down)
Colville, John Hudson, Capt. A. U. M. (Hackney, N.) Reid, James S. C. (Stirling)
Conant, R. J. E. Hunter, Capt. M. J. (Brigg) Reid, William Allan (Derby)
Cook, Thomas A. Hunt, Sir Gerald B. Remer, John R.
Cooke, Douglas James, Wing-Corn. A. W. H. Rentoul, Sir Gervals S.
Coopor, A. Duff Jamleson, Douglas Rhys, Hon. Charles Arthur U.
Courtauld, Major John Sewell Jennings, Roland Roberts, Sir Samuel (Ecclesall)
Courthope, Colonel Sir George L. Jesson, Major Thomas E. Robinson, John Roland
Craddock, Sir Reginald Henry Jones, Lewis (Swansea, West) Rosbotham, S. T.
Cranborne, Viscount Kerr. Hamilton W. Ross, Ronald D.
Crooke, J. Smedley Kimball, Lawrence Ross Taylor, Walter (Woodbridge)
Crookshank, Col. C. de Windt (Bootle) Kirkpatrick, William M. Ruggies-Brise, Colonel E. A.
Croom-Johnson, R. P. Knatchbull, Captain Hon. M. H. R. Runge, Norah Cecil
Crossley. A. C. Knebworth, Viscount Russell, Albert (Kirkcaldy)
Cruddas, Lieut.-Colonel Bernard Law, Sir Alfred Russell, Hamer Field (Sheffield, B'tside)
Culverwell, Cyril Tom Law, Richard K. (Hull, S. W.) Russell, Richard John (Eddisbury)
Dalkeith, Earl of Leech, Dr. J. W. Rutherford, Sir John Hugo
Davies, Maj. Geo. F.(Somerset, Yeovil) Leighton, Major B. E. P. Salmon, Major Isidore
Denman, Hon. R. D. Lennox-Boyd, A. T. Salt, Edward W.
Despencer-Robertson, Major J. A. F. Levy, Thomas Samuel, Samuel (W'dsworth, Putney)
Dickie, John P. Liddall. Walter S. Sanderson, Sir Frank Barnard
Dixey, Arthur C. N. Lindsay, Noel Ker Savery, Samuel Servington
Donner, P. W. Lister, Rt. Hon. Sir Phllip Cunliffe- Scone, Lord
Drewe, Cedric Little, Graham-, Sir Ernest Shakespeare, Geoffrey H.
Duckworth, George A. V. Llewellin, Major John J. Shaw, Helen B. (Lanark, Bothwell)
Duggan, Hubert John Llewellyn-Jones, Frederick Shepperson, Sir Ernest W.
Duncan, James A. L. (Kensington, N.) Loder, Captain J. do Vere Smiles, Lieut.-Col. Sir Walter D.
Dunglass, Lord Lovat-Fraser, James Alexander Smith, Sir Jonah W. (Barrow-in-F.)
Eastwood, John Francis Lumley, Captain Lawrence R. Smith-Carington, Neville W.
Eden, Robert Anthony Mabane, William Somerset, Thomas
Edmondson, Major A. J. MacAndrew, Maj. C. G. (Partick) Somervell, Donald Bradley
Elliot, Major Rt. Hon. Walter E. McCorquodale, M. S. Somerville, Annesley A. (Windsor)
Ellis, Robert Geoffrey Macdonald, Capt. P. D. (I. of W.) Soper, Richard
Elliston, Captain George Sampson McEwen, Captain J. H. F. Southby, Commander Archibald R. J.
Elmley, Viscount McKie, John Hamilton Spencer, Captain Richard A.
Emmott, Charles E. G. C. McLean, Major Alan Spender-Clay, Rt. Hon. Herbert H.

Question put, "That this House doth agree with the Committee in the said Resolution."

The House divided: Ayee, 256; Noes, 43.

Stanley, Lord (Lancaster, Fylde) Thornton, sir Frederick Charles Wells, Sydney Richard
Stevenson, James Titchfield, Major the Marquess of Weymouth, Viscount
Stones, James Touche, Gordon Cosmo Whiteside, Borras Noel H.
Storey, Samuel Train, John Wills, Wilfrid D.
Stourton, Hon. John J. Vaughan-Morgan, Sir Kenyon Wilson, G. H. A. (Cambridge U.)
Strauss, Edward A. Wallace, Captain D. E. (Hornsey) Wise, Alfred R.
Sueter, Rear-Admiral Murray F. Wallace, John (Dunfermline) Withers, Sir John James
Sugden, Sir Wilfrid Hart Ward, Lt.-Col. Sir A. L. (Hull) Wood, Sir Murdoch McKenzie (Banff)
Sutcliffe, Harold Ward, Irene Mary Bewick (Wallsend) Wragg, Herbert
Tate, Mavis Constance Ward, Sarah Adelaide (Cannock) Young, Ernest J. (Middlesbrough, E.)
Templeton, William P. Waterhouse, Captain Charles
Thomas, James P. L. (Hereford) Watt, Captain George Steven H. TELLERS FOR THE AYES.—
Mr. Womersley and Lord Erskine.
NOES.
Adams, D. M. (Poplar, South) Greenwood, Rt. Hon. Arthur Maxton, James
Attlee, Clement Richard Grenfell, David Rees (Glamorgan) Owen, Major Goronwy
Batey, Joseph Grithffis, T. (Monmouth, Pontypool) Parkinson, John Allen
Bevan, Aneurin (Ebbw Vale) Grundy, Thomas W. Price, Gabriel
Brown, C. W. E. (Notts., Mansfield) Hall, F. (York, W.R., Normanton) Salter, Dr. Alfred
Buchanan, George Hall, George H. (Merthyr Tydvil) Tinker, John Joseph
Cape, Thomas Hicks, Ernest George Watts-Morgan, Lieut.-Col. David
Cocks, Frederick Seymour Hirst, George Henry Williams, David (Swansea, East)
Cripps, Sir Stafford Holdsworth, Herbert Williams, Edward John (Ogmore)
Daggar, George Jenkins, Sir William Williams, Dr. John H. (Llanelly)
Davies, David L. (Pontypridd) Jones, Henry Haydn (Merioneth) Williams, Thomas (York, Don Valley)
Davies, Rhys John (Westhoughton) Jones, Morgan (Caerphilly)
Duncan, Charles (Derby, Claycross) Lansbury, Rt. Hon. George TELLERS FOR THE NOES. —
Edwards, Charles Logan, David Gilbert Mr. Groves and Mr. Duncan
Evans, R. T. (Carmarthen) McEntee, Valentine L. Graham
George, Major G. Lloyd (Pembroke) Maclean, Neil (Glasgow, Govan)
Mr. PARKINSON

I beg to move, in line 3, after the word "a," to insert the words "Dominion or."

The Resolution provides, among other things, for a reduced Customs' Duty on sugar from the Colonies—except Southern Rhodesia—and the mandated territories, but it does not apply to the Dominions. I ask the right hon. Gentleman why it has been found possible to give preferential treatment to the Colonies as against the Dominions. We have in our Dominions a considerable production of sugar and export of sugar, and we are now giving a preference which was not extended in the last Amendment which was before the House. No distinction has been made between the Dominions and the Colonies in that connection. We have heard a good deal during the last two or three years, particularly from hon. Members who sit on the opposite side of the House, about questions of Empire Free Trade and of bringing the Empire together and making a united and happy family, but this kind of preference is not likely to accomplish that object. We have Dominions producing and exporting a fair amount of sugar, and they ought to be taken into consideration in regard to the question which is now before the House. The whole of our foreign imports amount to over 7,250,000 cwts., of a total value of £2,500,000. The Union of South Africa is producing sugar and in 1930 exported nearly £1,500,000 worth. She exported nearly 220,000 cwts. in the first three months of 1932. From Australia we have received nearly 2,250,000 cwts. in the same period. The sugar from these two sources for the period of three months amounted in value to something like £1,130,000.

In view of the fact that we are to have a Conference at Ottawa, where we expect to make arrangements for the whole of our Dominions and Colonies and to establish reciprocity, or some kind of working arrangement between the Mother Country and the Dominions, it seems to me that we are going the wrong way about it in regard to the question of sugar. We have an opportunity of putting the Colonies and the Dominions on one status, but we are refusing to do it, and I would like to ask the right hon. Gentleman why we are creating this difference. I do not think that it is in the interests of the Mother Country or of the Dominions or the Colonies to separate them any more than they are separated. In view of the fact that there is this production of sugar, which is being exported in large amounts, the Dominions ought not to be singled out and to be left in a worse condition than the Colonies and mandated territories. In view of the Ottawa Conference I would appeal to the Minister to take this question into consideration.

This is an Amendment about which much might be said. We are going to the Ottawa Conference with one hand tied behind us when we are debating questions relating to the Dominions and the Colonies if we do not treat them on an equal footing with regard to this question of sugar. It is better that the Minister should accord equal treatment to the Dominions and Colonies rather than create a difference when the Conference takes place. By accepting my Amendment we shall be putting the Dominions on the same footing as the Colonies, and that would help in the work which lies before the Government at the Ottawa Conference.

Mr. MABANE

There is a simple explanation why the Dominions should not be included in this preference. It has been said that sugar is imported from the Union of South Africa and Australia. The category in the first instance is the Union of South Africa and South-West Africa, and the sugar comes principally in that category from South-West Africa. For the rest of the sugar from the Dominions it comes almost entirely from Australia. The reason why Australia should not be given a preference is that for many years past the Australian Government has given to the sugar producers in Queensland a very considerable subsidy on their sugar production. That sugar is produced actually at a cost double, or even more than double, the world price. A somewhat similar situation has arisen between New Zealand and Canada. A trade treaty was concluded between New Zealand and Canada, whereby Canada gave a preference on New Zealand butter. It was then discovered that New Zealand was subsidising that butter production, and the sole effect of the preference was to allow New Zealand to diminish the subsidy given. If we were to give a preference to Australia on sugar, which is really the only sugar in question, all that we should be doing would be to allow the Australian Government to reduce the subsidy to the Italian sugar producers of Northern Queensland. For that reason the Amendment ought to be resisted.

The FIRST COMMISSIONER of WORKS (Mr. Ormsby-Gore)

I am a little surprised at the innocence of the hon. Member who moved the Amendment. This is not the first time that the question of sugar duties has been Debated between those who state the special case for the Colonial sugar producers, and the Labour party, who for years past have consistently declined to face up to the very special situation that exists in the sugar-producing Colonies and Dependencies. The position, owing to the steady and continuous fall in the world prices of sugar, in the British non-self-governing dependencies, which have practically no home market for their sugar and are entirely dependent upon sugar exports, has been pressed by us for years, so much so that the late Labour Government appointed two special Commissions, one to visit the West Indian sugar-producing Colonies, under their erstwhile Socialist supporter, Lord Olivier, and another under the famous sugar technologist, Sir Francis Watts, to the sugar-producing dependencies. The Commissions were invited to make recommendations and they did so, practically of an identical character. We remember the long correspondence in the newspapers and the Debates that took place in another place between Lord Olivier and Lord Passfield when the Labour Government treated Lord Olivier and his report as though they had never sent out the Commission. They ignored it completely. Their record in this matter is one of continuously letting down the native producer and the native dependencies, for whose welfare we in this House are responsible.

In moving the Amendment the hon. Member utterly failed to recognise the very special case that the non-self-governing Dependencies can bring forward. He asks why we differentiate between the Dominions and the non-self-governing Dependencies. The reply is that the Dominions producer will continue to get the substantial preference of £3 15s. as against the foreign producer, but he will not get the additional preference which we propose to give to the Colonies because we in this House are directly responsible for the welfare of the peasantry and workers in Trinidad, British Guiana, the Leeward Islands, Mauritius and a few other small islands. They are our wards in this matter. The Australian and the South African producer has a large protected home market, and in the case of Australia a subsidised export. Therefore, it is obvious that our first duty is to consider our wards, who are not in a position, as is Australia and South Africa, to look after their own peoples. Very wisely the Government have, deliberately and of set purpose, made this preference, as was recommended by Lord Olivier and the Commission sent out by the late Labour Government.

The Amendment would mean a loss this year to our revenue of about £500,000, and possibly more, because one of the effects of the Amendment would be to divert the export of South African Dominion-grown sugar, which at present goes to Canada, to this country, as it would increase the preference given by us to South Africa over the preference given by Canada. The proposals of the Government are designed to assist the non-self-governing Dependencies in tropical lands which grow sugar and the mainland colony of British Guiana, and it is the minimum amount of assistance which it is absolutely necessary to give to maintain the industry in these Colonies. The ruin of the industry in these Colonies would not only involve the planters but the workers, and particularly the negro workers, in complete destitution, and, further, it would involve, as it has already by the failure of the Labour Government to implement the recommendations of Lord Olivier's Commission, a failure to give grants-in-aid to keep a decent standard going in these Dependencies.

It is a far better policy to enable these Colonies, in what we hope is a period of temporary depression, to maintain the industry, and therefore some employment, and some local Colonial revenue, rather than merely to carry on by doles paid by the British taxpayer. Consequently, this special further assistance for these stricken Colonies, in the Way of a further £1 per ton preference in the first instance and in regard to particular quantities of sugar a still further preference of £l per ton over and above the preference which we give to the Dominions, is amply made out on the grounds of humanity and Imperial duty. Our Imperial responsibilities for these islands are special and great, and as the Dominions are already receiving a substantial preference and are in a position to protect their own industry, we are wise to limit this further assistance to those Colonies for whose welfare and government this House is directly responsible.

Sir S. CRIPPS

If the speech of the right hon. Gentleman had anything to do with the subject we are discussing it would have been very interesting. We are not suggesting taking away the benefit from the Colonies, and I do not think the right hon. Gentleman would consider that, if this preference was extended to the Dominions as well, it would take away their market for colonial sugar. Both markets will be under the theory which is behind this Resolution, operating at the expense of the foreign sugar which is coming into this country. At the present time foreign sugar is something like seven-tenths or six-tenths of the total; Dominion sugar is about two-and-a-half-tenths and Colonial sugar about one-and-a-half-tenths. We are quite willing to do what is stated as regards the Colonies. There is no question of taking away any preference from them, and I do not imagine that the right hon. Gentleman really thinks that this is anything but a small palliative for the Colonial sugar provision. He does not imagine that this extra preference of £l per ton over foreign sugar or Dominion sugar is going to solve the difficulties of the Colonies. It is a little assistance for them.

9.0 p.m.

What the right hon. Gentleman has completely forgotten is that we are approaching the Ottawa Conference. We are as anxious as anybody that this Conference should be successful. We do not agree with the tariff policy of the Government, but, as tariffs have been imposed, we hope they will be used to the best purpose at Ottawa to get the best possible results for the Dominions and this country. It has been stated over and over again by the Government that it is most undesirable, in view of Ottawa, to put any taxes upon the Dominions except where it is absolutely necessary, and the whole principle of the Import Duties Act is to exclude them entirely until Ottawa so that the whole field may be free for discussion at the Imperial Conference. Here you have a complete reversal of that policy. Here you have a differentiation between the Colonies and the Dominions which does not appear in any other tariff proposals introduced by the present Government. Their policy has always been to treat the Dominions and the Colonies alike, to leave them both free until the whole matter can be discussed at Ottawa. In the circumstances it is a wise policy. The right hon. Gentleman the Member for Spark-brook (Mr. Amery) took the same point in the Budget Debate. It is idle for the First Commissioner of Works to speak as if it were a permanent policy designed to give a permanent cure to the Colonial sugar difficulty. It is a temporary expedient, and as such it is much wiser to leave the matter open for full discussion and arrangement at Ottawa, just as other duties have been left open, rather than, as in this case, to make a differentiation between the Dominions and the Colonies which may lead to friction and trouble at Ottawa. The amount which might be lost to the revenue, about £500,000, is so small a matter—

Mr. ORMSBY-GORE

Oh!

Sir S. CRIPPS

Compared with the risk of having no results at all from the Ottawa Conference that I suggest, in view of the possibility of this risk, that it would be far wiser to adopt in this case the attitude that has been adopted in other cases until the Ottawa Conference. I do not know whether the £500,000 is the calculation for the whole year—

Mr. ORMSBY-GORE

For the year.

Sir S. CRIPPS

In that case, as we are only proposing to wait until the Ottawa Conference, it would be about £250,000, and it would be far wiser to risk the loss of that small sum of money than risk any difficulties arising in this matter at Ottawa, and to show what is called the generous hand to the Dominions. We shall certainly press for the insertion of this preference for the Dominions as well as for the Colonies as it is in the best interests of the Empire as a whole.

Mr. T. WILLIAMS

Would the right hon. Gentleman inform us exactly what will be the price per ton of sugar after this preference has been given to Mauritius or any other colony? I ask for that information so that we may be able to see how far the Government have gone towards carrying out the recom- mendation of the two Committees to which the right hon. Gentleman referred. The right hon. Gentleman is very ingenious, is almost an expert in indicating the weaknesses of the last Socialist Government. When short of an argument he readily descends to attacking the Socialist Government, and not infrequently he rises to such giddy heights that he almost makes us believe his arguments are sound. The Chancellor of the Exchequer mentioned that the recommendation of the Indian Commission was that £12 per ton be paid for sugar and he proceeded to say that the present price was round about £8 2s. 6d. a ton. Will the right hon. Gentleman tell us what the price will be as received by the growers in Mauritius or other colonies after the preference has been conceded to them?

The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister)

That subject might more properly be dealt with in another part of the Debate. The question ought to have been addressed to me. I can only say that no one on God's earth can answer. I do not think there is anyone who would venture to express a firm opinion as to what the world price of sugar will be over the next year. We saw a scheme introduced which was supposed to stabilise the price of sugar. Had that scheme done what was expected sugar to-day would probably be 7s. 6d. It is 4s. 9d. No one can say what the movements in price are going to be. All we know is that the price at present is unremunerative even to the most efficient producer in the West Indies or Mauritius. What is certain is that on all sugar coming from the Colonies there will be an advantage of a shilling, and sugar which carries the certificate will enjoy a further advantage of 1s. That is all that one can say. Anyone would be very foolish who attempted to prophesy what prices will be.

If prices remain at their deadly depressing level of to-day, some material advantage at any rate is given. If by some Providential decree prices should rise, then the advantage will be greater. But—it is perhaps a forlorn hope—if they rise to the heights envisaged in the later stages of this Resolution, when without this preference sugar-growing would be remunerative to these Colonies, then the extra preference really is equivalent to a grant in aid. What you are really giving here is a Grant-in-Aid. This is quite frankly in order to put those Colonies for which we are particularly responsible in a better position to pay their way. If prices were to rise to unexpected heights and this preference were no longer necessary to enable the Colonies to pay their way, it will be seen from the later stages of the Resolution that the extra preference will gradually diminish

with each rise of 6d. above the figures which are set out. So that if we arrive at a situation in which sugar-growing paid its way, both the Domnions and the Colonies would stand on exactly the same footing, and would both enjoy the major preference which would give them a perpetual turn of the market against the foreign producer.

Question put, "That those words be there inserted in the Resolution."

The House divided: Ayes, 41; Noes, 254.

Leighton, Major B. E. P. Potter, John Southby, Commander Archibald R. J.
Lennox-Boyd, A. T. Procter, Major Henry Adam Spencer, Captain Richard A.
Levy, Thomas Pybus, Percy John Spender-Clay, Rt. Hon. Herbert H.
Liddall, Walter S. Ralkes, Henry V. A. M. Stanley, Lord (Lancaster, Fylde)
Lindsay, Noel Ker Ramsay, Alexander (W. Bromwich) Stevenson, James
Lister, Rt. Hon. Sir Philip Cunliffe- Ramsay, Capt. A. H. M. (Midlothian) Stones, James
Little, Graham-, Sir Ernest Ramsay, T. B. W. (Western Isles) Storey, Samuel
Llewellin, Major John J. Ramsbotham, Herwald Stourton, Hon. John J.
Llewellyn-Jones, Frederick Ramsden, E. Strauss, Edward A.
Loder, Captain J. de Vere Rankin, Robert Strickland, Captain W. F.
Lovat-Fraser, James Alexander Rawson, Sir Cooper Sugden, Sir Wilfrid Hart
Lumley, Captain Lawrence R. Reed, Arthur C. (Exeter) Sutcliffe, Harold
Mabane, William Reid, David D. (County Down) Tate, Mavis Constance
MacAndrew, Maj. C. G. (Partick) Reid, James S. C. (Stirling) Templeton, William P.
McCorquodale, M. S. Reid, William Allan (Derby) Thomas, James P. L. (Hereford)
Macdonald, Capt. P. D. (I. of W.) Remer, John R. Thomas, Major L. B. (King's Norton)
McEwen, Captain J. H. F. Rentoul, Sir Gervals S. Thomson, Sir Frederick Charles
McKie, John Hamilton Rhys, Hon. Charles Arthur U. Titchfield, Major the Marquess of
McLean, Major Alan Roberts, Sir Samuel (Ecclesall) Touche, Gordon Cosmo
McLean, Dr. W. H. (Tradeston) Robinson, John Roland Train, John
Macquisten, Frederick Alexander Rosbotham, S. T. Vaughan-Morgan, Sir Kenyon
Maitland, Adam Ross, Ronald D. Wallace, Captain D. E. (Hornsey)
Manningham-Buller, Lt.-Col. Sir M. Ross Taylor, Walter (Woodbridge) Wallace, John (Dunfermline)
Margesson, Capt. Henry David R. Ruggles-Brise, Colonel E. A. Ward, Lt.-Col. Sir A. L. (Hull)
Mayhew, Lieut.-Colonel John Runge, Norah Cecil Ward, Irene Mary Bewick (Wallsend)
Millar, Sir James Duncan Russell, Albert (Kirkcaldy) Ward, Sarah Adelaide (Cannock)
Mills, Major J. D. (New Forest) Russell, Hamer Field (Shef'ld, B'tside) Waterhouse, Captain Charles
Milne, Charles Russell, Richard John (Eddisbury) Watt, Captain George Steven H.
Morgan, Robert H. Rutherford, Sir John Hugo Wells, Sydney Richard
Morris, John Patrick (Salford, N.) Salt, Edward W. Weymouth, Viscount
Moss, Captain H. J. Sanderson, Sir Frank Barnard Whiteside, Borras Noel H.
Munro, Patrick Savery, Samuel Servington Wills, Wilfrid D.
Nail, Sir Joseph Scone, Lord Wilson, G. H. A. (Cambridge U.)
Nail-Cain, Arthur Ronald N. Shakespeare, Geoffrey H. Windsor-Clive, Lieut-Colonel George
Nation, Brigadier-General J. J. H. Shaw, Helen B. (Lanark, Bothwell) Wise, Alfred R.
Normand, Wilfrid Guild Shepperson, Sir Ernest W. Withers, Sir John James
Nunn, William Smiles, Lieut.-Col. Sir Walter D. Womersley, Walter James
Ormsby-Gore, Rt. Hon. William G. A. Smith, Sir Jonah W. (Barrow-In-F.) Wragg, Herbert
Pearson, William G. Smith-Carington, Neville W. Young, Ernest J. (Middlesbrough, E.)
Perkins, Walter R. D. Somerset, Thomas
Petherick, M. Somervllle, Annesley A. (Windsor) TELLERS FOR THE NOES.—
Peto, Geoffrey K.(W'verh'pt'n, Bilston) Soper, Richard Captain Austin Hudson and Sir
Pike, Cecil F. Sotheron-Estcourt, Captain T. E. Murdoch McKenzie Wood.
Mr. T. WILLIAMS

I beg to move, in line 36, at the end, to insert the words: This paragraph shall not apply to sugar manufactured from home-grown beet unless the Commissioners of Customs and Excise are satisfied that the grower of such beet has been paid a price representing a rate not less than thirty-eight shillings per ton, calculated in accordance with rules to be made by the Minister of Agriculture and Fisheries. The object of the Amendment is plain. When, last year, the reduction of the subsidy took place, the then Minister of Agriculture discovered that unless some assistance were given to the growers of sugar beet there was a likelihood of a tremendous contraction of the beet-producing area. Therefore, after long and almost painful discussions with the factory owners, an agreement was reached with 12 out of the 18 factories that a certain guaranteed price should be given to the producers of beet. The Anglo-Dutch group, however, felt disposed to remain outside the arrangement. As a result of the agreement reached with the 12 factories, 1s. 3d. a cwt. extra, over and above the amount arranged for under the Act of 1925, was guaranteed to the factory owners who, as a result of the conditions laid down, were unable to take one penny piece of the sums provided by the Exchequer.

That arrangement may or may not have been justified on the basis of the facts of the situation but for the moment that point is not in question. The point in question at the moment is: are we to grant a further concession of £200,000 to £260,000 to the owners of the factories without demanding in return that these factory owners shall provide some guarantee to the State that they will give every grower of sugar beet the benefit of this subsidy? We think that the present Government, having taken off the means test provided for last year, have committed a blunder and we fail to see why this sum should have been granted without some guarantee of the kind I have mentioned. May I recall the statement made by Dr. Addison when he provided for a similar financial arrangement during 1931? He said: The whole of the extra amount provided by Parliament must be passed on to the growers, and cannot be kept by the factories. It is entirely different from the original method of this subsidy scheme. I need not trouble the House with all the details of the scheme, but it is thoroughly sound and we can administer it with certainty. It provides that, up to 7s. 9d., the whole of the additional amount shall be passed on to the growers, and in that way the factories were able to pay 38s. a ton for sugar beet of 15½ per cent. sugar content, rising half-a-crown for each 1 per cent., which is the usual increase. In that way we are able to secure for the grower of sugar beet with 17½ per cent. content that 43s. a ton will be paid. Later on the right hon. Gentleman said that this extra expenditure would go directly into the pockets of the growers, and he continued: We have stopped up the leakages or possible leakage very effectively by our arrangements."—[OFEICIAL REPORT, 14th July, 1931; cols. 405-6, Vol. 255.] We are not at the momen debating the wisdom or otherwise of an increase in the subsidy. We are merely debating the question as to whether or not the taxpayer should be called upon to make this financial provision without some guarantee being provided for the growers of beet. The right hon. Gentleman and his colleagues have said time and time again that agriculture required assistance. Surely it is the producer of the sugar beet who should be assisted, and not so much the owner of the factory? Almost every hon. Member of this House has been inundated by literature during the past three or four months. We have been informed that the factory owners were able in seven short years to distribut dividends of an amount equivalent to the total capital involved, and in that period they have set aside for reserves a sum in excess of the total estimated value of their factories. Therefore, in seven years the factory owners have received almost twice the original capital invested in those factories, and also a subsidy provided by the State. It seems to me that before any more money is provided, we should be satisfied that the farmer is going to be the recipient and not the owner of the factory.

9.30 p.m.

The right hon. Gentleman may remind me that last year only 12 of the 20 factory owners entered into this agreement. The other eight factory owners, including the Anglo-Dutch group, re- mained outside, and still they made some arrangement with the growers of beet and were able to carry on very nicely without entering into the arrangement made by the Minister of Agriculture. If that was the case, and eight out of 20 factories can manage without the extra subsidy provided 12 months ago, the remaining 12 can manage very nicely without it. I am not, however, pressing that point at the moment. The point I am pressing is that if the Government, and through them the taxpayer, is called upon to make this provision of £225,000, it ought only to be done if we are satisfied beyond any doubt that the factory owners will deal fairly and squarely with the farmers who are producing the sugar beet. There is a second question I want to ask the right hon. Gentleman. I remember on 14th July last year the then Minister of Agriculture brought forward for Second Reading a Bill to extend the period for the payment of this extra 1s. 3d. per cwt. The present Home Secretary was the chief opponent of the Measure and before the Minister of Agriculture had an opportunity of moving the Second Reading, the present Home Secretary, who was then sitting below the Gangway rose to a point of Order, which was: Would it be in order to point out the somewhat lavish expenditure that has taken place under this subsidy as indicating that this further payment may not be necessary?"—[OFFICIAL REPORT, 14th July, 1931; col. 404, Vol. 255.] The right hon. Gentleman made many other statements in the course of the Debate. He went on to prove that for every man employed for one day, in subsidy alone the taxpayer would have to pay ƒ1. He argued that it was the biggest ramp this country had ever known. That may or may not be the case, but at all events it calls for the very careful attention of hon. Members before we accede to the request of the Chancellor of the Exchequer to hand over a further sum without any such guarantee. I remember some of the statements made by an ex-Financial Secretary who frequently sat below the Gangway not very far from the right hon. Gentleman the Member for Epping (Mr. Churchill). He described this sugar subsidy as the biggest ramp this country had ever witnessed. However, I do not want to deal with the past; it is the present that really matters. I should like the right hon. Gentleman, when he comes to reply, to tell the House exactly what the changed circumstances are that brought about the withdrawal of the conditions imposed on the factory owner last year. If the financial position is the same to-day as in July last year, the conditions ought to remain the same also and all possible leakages should be stopped, so that this sum of money should go to the farmer who produces the sugar beet. For that reason, I am moving my Amendment, and I am hopeful that the right hon. Gentleman has reconsidered the whole position and will now be willing to apply this means test to the factory owners, instead of leaving them to receive the money without any guarantee that either the farmers or the agricultural workers will benefit at all as the result of the, subsidy.

Mr. LAWSON

I beg to second the Amendment.

Mr. ORMSBY-GORE

I quite understand why the hon. Gentleman has raised this point again, because, as he said, there is a difference in practice between the Anglo-Dutch group of factories and the other factories, and the point really arises out of that difference of practice. I presume this Amendment is meant to be drafted with words inserted after the words "thirty-eight shillings per ton" to describe the percentage sugar content, because it is a variable scale.

Sir S. CRIPPS

Not less than 38s.

Mr. ORMSBY-GORE

The whole question has been argued on the basis of 38s. per ton for beets of a content not less than 15½ per cent. Assuming that is the intention of the Amendment, 13 out of the 17 factories which are to operate this year would not be affected by the Amendment, because they have already entered into contracts for a flat rate of payment of 40s. There remain the four factories in the Anglo-Dutch group. Last year there were five factories of that group operating, but one, Kelham, made a loss and is not going to operate again, and we are left with the four remaining Anglo-Dutch factories. They have offered a rate of 35s. a ton, plus four-fifths of the profits of the manufacture.

I am not and the Government are not going to lay down or say which is the best form of contract from the farmer's point of view. I understand that when the accounts are finally made up on the basis of last year, when all the profits in the Anglo-Dutch group went to the farmer, the farmers dealing with the four successful Anglo-Dutch factories—Cantley, Ipswich, Ely and Lynn—will by the end of the year get actually a higher price than that provided for by the minimum flat rate contract that was inserted in the Act of last year. Of course, there is the element of gambling. If it is a very bad year, then they only get the 35s. in those four, and the other people will get the 40s. On the other hand, if the year is successful, they will probably get, dealing with the Anglo-Dutch factories, a bigger net profit at the end of it all than the people dealing with the 13 flat-rate factories. That is the position, and the Government do not wish to prejudge that situation.

I understand that a very large number of the growers who deal with the Anglo-Dutch group are satisfied with the offer that has been made this year. That is the full ex-planation why we think it is undesirable to accept the Amendment and force a flat rate of 38s. on all factories, but let me make it quite clear that the bulk of the factories have already entered into a flat-rate contract of 40s., and the Anglo-Dutch group into a co-operative contract on the basis of a minimum 35s., plus four-fifths of the profits, and in. view of that arrangement it is considered undesirable for Parliament to attempt to interfere. Accordingly, I ask the House to agree with the Committee and reject this Amendment.

Sir S. CRIPPS

The right hon. Gentleman says it is undesirable to interfere, though he appreciates that we are interfering to the extent of giving 1s. 3d. a cwt. I gather that he does not think that that is undesirable interference, but that it becomes such the moment this House puts any condition on the grant of 1s. 3d. a cwt. A sum of 1s. 3d. a cwt. must be given, apparently, without any conditions, without any control, and without seeing that it goes to the right people. What the right hon. Gentleman has told us does not in the least affect the question of principle which is involved, and that question of principle is whether this House, in making a grant to the sugar factories, is going to take the trouble to see that that money goes to the benefit of the farmer, or whether it is going to leave it for settlement between the farmer and the sugar factory as to who gets it.

If, as the right hon. Gentleman says, the farmers who deal with the Anglo-Dutch group are going to get more than 38s., then the Anglo-Dutch group will not be in the least affected by the Amendment being inserted, because what the Amendment says is that the Customs and Excise must be satisfied that the grower of the beet has been paid a price representing a rate of not less than 38s. a ton. If the Anglo-Dutch group gives 35s. first and a portion of the profits afterwards, so long as it comes to that amount per ton, it does not matter. They will be covered just as any other contract will be covered, but the only case that will not be covered will be such a case as the factory at Kelham, which has gone out of production this year, where apparently last year the farmers did not get 38s. a ton, and where, if the money had been paid to Kelham, it would have gone directly to the losses of the factory under the existing scheme, and the farmers would definitely have been that much worse off. What is there to guarantee that during the coming year some other of the four factories will not find themselves in the same position; and, if they are, this money which the House is providing will go to a cause which the right hon. Gentleman himself will admit is the wrong one, because he does not wish it to be used for paying for the losses of inefficient factories, and, if he admits that, it seems to me that he admits the whole case.

We are not particular about the words of the Amendment, though they are the words that were in the Act of Parliament. If he desires some other words, we should be only too pleased that they should be inserted. He admits the principle that it is right that the House should see that this money goes to the farmers, and he admits that in the existing circumstances it may be that the money will not go to the farmer owing to the form of contract which certain factories have entered into. Having admitted that, he then refuses to make any provision whatsoever to see that the proper desire of this House is carried out, and it seems to me that that is allowing the idea of non-interference, which consists of only providing money and never providing control, to run itself to death. We shall certainly do our best to see that this House puts proper provisions in the Financial Resolution to see that its admitted objects are to be attained, and not leave it to the mere whim of the Anglo-Dutch or any other factories to treat the farmer as they like when the House intends that the money should go to the farmer.

Colonel Sir GEORGE COURTHOPE

I should like to correct one misconception in the minds of both the speakers on the Front Opposition Bench, as to what constitutes or causes a loss, and has caused a loss in the case of the Kelham factory in the last year. It is the failure to receive sufficient raw material to run the factory. That will not apply to the four remaining factories of the Anglo-Dutch group which propose to operate in the next season, because they have all four got what, in the opinion of their directors, is an adequate supply contracted for. There may be a total failure of crop, and that might bring loss to any factory.

Sir S. CRIPPS

Was not the position the same with Kelham last year? The directors thought that they had enough to run the factory, and they found that they had not.

Sir G. COURTHOPE

No, not at all. The directors of the Anglo-Dutch group had four factories under their control and one under a lease. They were unable, owing to the conditions under which they had issued capital to the public, to enter into the arrangements with the Minister of Agriculture and the Treasury which were entered into by the factories of the other groups. Consequently, they offered to operate their five factories for the farmers, reserving nothing for dividends, reserves, depreciation, directors' fees or increases of salary. They operated the five factories, and the farmers took all the excess of receipts over expenditure. They grew so small a quantity of beet for one factory that the amount to be distributed was very small, and came out at less than 38s. a ton, but, having once entered into that arrangement with the farmers, it was not open to the directors to refuse to operate the factory. This year contracts were offered on the co-operative basis and the power was reserved in the hands of the boards, if an adequate acreage was not contracted for up to a certain date, to return the acreage offered to the factory which was short and not to run it. That has happened in regard to the leased factory. The four factories in the group have got an adequate supply, and they will operate on the cooperative basis, which we believe is infinitely better for the general interest of agriculture and farmers than a flat rate. If, as we hope, there is some world recovery in the price of sugar, under our co-operative contract the farmers will have four-fifths of such advantage. We think that it is better that they should have a direct interest in the market fluctuations of sugar than that they should be tied down to a flat rate fixed at a time when the world price of sugar is extremely low.

Mr. T. WILLIAMS

Was not the failure to obtain the requisite quantity to maintain continuous work at Kelham due to the hesitancy on the part of the factory owners to enter into suitable arrangements from the farmer's point of view? Was it not the case that the farmers, not having a guarantee of an adequate price, refrained from growing and that consequently Kelham was unable to carry on? Does not the hon. and gallant Gentleman think that the farmer will always put his back into his work if he has a guaranteed price and if the gambling element is eliminated?

Sir G. COURTHOPE

I do not think that the first point really arises. The failure last year on the part of the farmers to grow may have been because the contracts were very late, but it was not due to any hesitancy on the part of the factory owners. Up to a very late date none of the factories had seen their way to offer contracts at all. The Minister of Agriculture, Dr. Addison, intervened and made an offer to the factories in the Anglo-Dutch group. They were debarred from accepting that offer by the conditions under which they had issued their capital to the public. The difficulty arose in this way, that an obligation was undertaken by the factories which had accepted that offer of 1s. 3d. to repay that sum in future years in certain circumstances, such as a rise in the world price of sugar in the next few years. The capital in question had been offered to the public by the Anglo-Dutch group and had been taken up by the public in London on conditions which debarred the directors from undertaking any obligations for future years beyond the year under consideration. We were not able to accept the possibility of being called upon to pay in one year in respect of a change of conditions in another year, and consequently incur an unforeseeable loss. Consequently, all that the Anglo-Dutch group were able to do was to offer to operate their factories simply for the benefit of the farmer. That was done, and it was up to the farmers to grow sufficient beet to make the transaction a success if they wished. They did that in the case of four factories, but failed in the case of the fifth. Farmers are perfectly satisfied to enter into co-operative contracts with a minimum of 35s. because two of the factories, at all events, have been almost overwhelmed by the amount of acreage which has been thrust upon them. We have had to stop taking contracts long before the flow of contracts would have stopped of itself.

Mr. ATTLEE

It is difficult to find out what is the collective mind of the Government, if they have one. I do not know how far the Home Secretary is concerned in this matter, for he is not here and is not quacking on this subject to-night. Taking those who are present and their past record, I cannot make out what the Government's ideas are. We have had a great discussion this Session about the need for giving a guaranteed price to the farmers for their wheat. When we come to the question of sugar, we are told that it is most desirable that the farmers should depend on world prices going up and down and making profits or losses accordingly. That was the burden of what the hon. and gallant Gentleman the Member for Eye (Sir G. Courthope) has told the House. He wants a cooperative principle, and he wants the farmers to have an interest in the market. They have got to gamble. The First Commissioner of Works used a fallacious argument when he suggested that because certain arrangements had been come to between the farmers and the sugar factories, this House should abdicate its responsibility in the matter altogether. In industry the men have an arrangement for a minimum wage and there is nothing to prevent an employer giving more. The important thing is to have a guaranteed wage. In this case we want a guaranteed minimum price to the growers. The point is that we do not get it, and that the House of Commons is putting up money to be gambled over.

We consider the money was put forward as a definite subsidy, not to the sugar factory, but to the grower of beet, and these things ought not to depend on some vague contracts. The contracts of which the hon. and gallant Gentleman has told us were extraordinary, and the constitution of those sugar factories seems to be extraordinary. I am not fully acquainted with the articles of association of the company referred to, but they certainly seem to have tied themselves up into a pretty fair knot. As far as I could gather, when an offer was made to them last year they could not accept it because they had tied themselves up in some mysterious way to their shareholders. The result was that

Division No. 158.] AYES. [9.58 p.m.
Adams, D. M. (Poplar, South) Grenfell, David Bees (Glamorgan) Maxton, James
Attlee, Clement Richard Griffiths, T. (Monmouth, Pontypool) Owen, Major Goronwy
Batey, Joseph Grundy, Thomas W. Parkinson, John Allen
Brown, C. W. E. (Notts., Mansfield) Hall, F. (York, W.R., Normanton) Price, Gabriel
Buchanan, George Hall, George H. (Merthyr Tydvil) Rathbone, Eleanor
Cape, Thomas Hicks, Ernest George Salter, Dr. Alfred
Cocks, Frederick Seymour Hirst, George Henry Tinker, John Joseph
Cripps, Sir Stafford Jenkins, Sir William Watts-Morgan, Lieut.-Col. David
Daggar, George Jones, Morgan (Caerphilly) Williams, David (Swansea, East)
Davies, David L. (Pontypridd) Lansbury, Rt. Hon. George Williams, Edward John (Ogmore)
Davies, Rhys John (Westhoughton) Lawson, John James Williams, Dr. John H. (Llanelly)
Duncan, Charles (Derby, Claycross) Logan, David Gilbert Williams, Thomas (York, Don Valley)
Edwards, Charles Lunn, William
George, Major G. Lloyd (Pembroke) McEntee, Valentine L. TELLERS FOR THE AYES.—
Greenwood, Rt. Hon. Arthur Maclean, Neil (Glasgow, Govan) Mr. Duncan Graham and Mr.
Groves.
NOES.
Acland-Troyte, Lieut.-Colonel Borodale, Viscount Clarry, Reginald George
Agnew, Lieut.-Com. P. G. Boulton, W. W. Clayton, Dr. George C.
Altchison, Rt. Hon. Craigle M. Bowyer, Capt. Sir George E. W. Cochrane, Commander Hon. A. D.
Albery, Irving James Braithwaite, Maj. A. N. (Yorks, E. R.) Colfox, Major William Philip
Allen, Lt.-Col. J. Sandeman (B'k'nhd.) Broadbent, Colonel John Colman, N. C. D.
Amery, Rt. Hon. Leopold C. M. S. Brocklebank, C. E. R. Colville, John
Applin, Lieut.-Col. Reginald V. K. Brown, Ernest (Leith) Conant, R. J. E.
Apsley, Lord Brown, Brig.-Gen. H. C.(Berks., Newb'y) Cook, Thomas A.
Aske, Sir Robert William Buchan-Hepburn, P. G. T. Cooke, Douglas
Atkinson, Cyril Burghley, Lord Cooper, A. Duff
Baillie, Sir Adrian W. M. Burgin, Dr. Edward Leslie Courtauld, Major John Sewell
Baldwin-Webb, Colonel J. Butt, Sir Alfred Cranborne, Viscount
Balfour, George (Hampstead) Campbell, Edward Taswell (Bromley) Crooks, J. Smedley
Balfour, Capt. Harold (I. of Thanet) Campbell, Rear-Adml. G. (Burnley) Crookshank, Col. C. de Windt (Bootle)
Barclay-Harvey, C. M. Caporn, Arthur Cecil Croom-Johnson, R. P.
Barton, Capt. Basil Kelsey Cassels, James Dale Cruddas, Lieut.-Colonel Bernard
Beaumont, Hon. R. E. B.(Portsm'th, C.) Castle Stewart, Earl Culverwell, Cyril Tom
Bevan, Stuart James (Holborn) Chalmers, John Rutherford Dalkeith, Earl of
Bird, Ernest Roy (Yorks., Skipton) Chapman, Sir Samuel (Edinburgh, S.) Davies, Maj. Geo. F.(Somerset, Yeovil)
Boothby, Robert John Graham Chorlton, Alan Ernest Leofric Denman, Hon. R. D.

they went ahead without a subsidy, they could not pay the farmers the price, and they made a loss. That is all very unsatisfactory, and I think the sooner the company gets its articles overhauled the better. Meanwhile, we here take responsibility as a House of Commons for these subsidies. We live in days of crisis and emergency, and we have another emergency now. The point is that whenever there is an emergency the Government proceed to shell out money all round absolutely unconditionally. That is the "rake's progress" upon which they have embarked—nothing but handing out money to various sections of their supporters, without any guarantee of efficiency, without any test as to whether they ought to receive it, and without the slightest attempt to see that it gets into the right hands. [Interruption.] Of course, there is no needs test, that is only for the working class. We shall certainly press this Amendment, because of the thoroughly vicious principle of handing out subsidies absolutely unconditionally.

Question put, "That those words be these inserted in the Resolution."

The House divided: Ayes, 43; Noes, 263.

Dickie, John P. Kimball, Lawrence Robinson, John Roland
Donner, P. W. Kirkpatrick, William M. Rosbotham, S. T.
Drewe, Cedric Knatchbull, Captain Hon. M. H. R. Ross, Ronald D.
Duckworth, George A. V. Knebworth, Viscount Ross Taylor, Walter (Woodbridge)
Duggan, Hubert John Law, Sir Alfred Ruggies-Brise, Colonel E. A.
Dunglass, Lord Law, Richard K. (Hull, S.W.) Runge, Norah Cecil
Eastwood, John Francis Leech, Dr. J. W. Russell, Albert (Kirkcaldy)
Eden, Robert Anthony Leighton, Major B. E. P. Russell, Hamer Field (Sheffield, B'tside)
Edmondson, Major A. J. Lennox-Boyd, A. T. Russell, Richard John (Eddisbury)
Elliot, Major Rt. Hon. Walter E. Levy, Thomas Rutherford, Sir John Hugo
Ellis, Robert Geoffrey Liddall, Walter S. Salmon, Major Isidore
Elliston, Captain George Sampson Lindsay, Noel Ker Salt, Edward W.
Elmley, Viscount Lister, Rt. Hon. Sir Philip Cunliffe- Sanderson, Sir Frank Barnard
Emmott, Charles E. G. C. Little, Graham-, Sir Ernest Savery, Samuel Servington
Emrys-Evans, P. V. Llewellin, Major John J. Scone, Lord
Erskine, Lord (Weston-super-Mare) Llewellyn-Jones, Frederick Shakespeare, Geoffrey H.
Erskine-Bolst, Capt. C. C. (Blackpool) Lloyd, Geoffrey Shaw, Helen B. (Lanark, Bothwell)
Evans, Capt. Arthur (Cardiff, S.) Loder, Captain J. de Vere Shepperson, Sir Ernest W.
Everard, W. Lindsay Lovat-Fraser, James Alexander Smiles, Lieut.-Col. Sir Walter D.
Fermoy, Lord Lumley, Captain Lawrence R. Smith, Sir Jonah W. (Barrow-in-F.)
Fielden, Edward Brocklehurst Mabane, William Smith, R. W. (Ab'rd'n & Kinc'dine, C.)
Ford, Sir Patrick J. MacAndrew, Maj. C. G. (Partick) Smith-Carington, Neville W.
Fremantle, Lieut.-Colonel Francis E. McCorquodale, M. S. Somerset, Thomas
Fuller, Captain A. G. Macdonald, Capt. P. D. (I. of W.) Somerville, Annesley A. (Windsor)
Ganzoni, Sir John McEwen, Captain J. H. F. Soper, Richard
Gibson, Charles Granville McKie, John Hamilton Sotheron-Estcourt, Captain T. E.
Gilmour, Lt.-Col. Rt. Hon. Sir John McLean, Major Alan Southby, Commander Archibald R. J.
Glossop, C. W. H. McLean, Dr. W. H. (Tradeston) Spears, Brigadier-General Edward L.
Gluckstein, Louis Halle Macquisten, Frederick Alexander Spencer, Captain Richard A.
Goff, Sir Park Maitland, Adam Spender-Clay, Rt. Hon. Herbert H.
Goldie, Noel B. Manningham-Buller, Lt.-Col. Sir M. Stanley, Lord (Lancaster, Fylde)
Goodman, Colonel Albert W. Margesson, Capt, Henry David R. Stanley, Hon. O. F. G. (Westmorland)
Gower, Sir Robert Mayhew, Lieut.-Colonel John Stevenson, James
Graham, Fergus (Cumberland, N.) Mills, Major J. D. (New Forest) Stones, James
Greene, William P. C. Milne, Charles Storey, Samuel
Gretton, Colonel Rt. Hon. John Morgan, Robert H. Stourton, Hon. John J.
Griffith, F. Kingsley (Middlesbro', W.) Morris, John Patrick (Salford, N.) Strauss, Edward A.
Grimston, R. V. Moss, Captain H. J. Strickland, Captain W. F.
Guinness, Thomas L. E. B. Munro, Patrick Sugden, Sir Wilfrid Hart
Gunston, Captain D. W. Nall-Cain, Arthur Ronald N. Sutcliffe, Harold
Guy, J. C. Morrison Nation, Brigadier-General J. J. H. Tate, Mavis Constance
Hales, Harold K. Normand, Wilfrid Guild Templeton, William P.
Hall, Capt. W. D'Arcy (Brecon) Nunn, William Thomas, James P. L. (Hereford)
Hanley, Dennis A. O'Neill, Rt. Hon. Sir Hugh Thomson, Sir Frederick Charles
Harbord, Arthur Ormsby-Gore, Rt. Hon. William G. A. Titchfield, Major the Marquess of
Hartland, George A. Pearson, William G. Touche, Gordon Cosmo
Harvey, Major S. E. (Devon, Totnes) Peat, Charles U. Train, John
Haslam, Sir John (Bolton) Perkins, Walter R. D. Tryon, Rt. Hon. George Clement
Headlam, Lieut. Col. Cuthbert M. Petherick, M. Vaughan-Morgan, Sir Kenyon
Heilgers, Captain F. F. A. Peto, Geoffrey K. (W'verh'pt'n, Blist'n) Wallace, Captain D. E. (Hornsey)
Henderson, Sir Vivian L. (Chelmsf'd) Pike, Cecil F. Wallace, John (Dunfermilne)
Heneage, Lieut.-Colonel Arthur P. Potter, John Ward, Lt.-Col. Sir A. L. (Hull)
Hepworth, Joseph Procter, Major Henry Adam Ward, Irene Mary Bewick (Wallsend)
Hills, Major Ht. Hon. John Waller Pybus, Percy John Ward, Sarah Adelaide (Cannock)
Hornby, Frank Raikes, Henry V. A. M. Waterhouse, Captain Charles
Horobin, Ian M. Ramsay, Alexander (W. Bromwich) Watt, Captain George Steven H.
Horsbrugh, Florence Ramsay, Capt. A. H. M. (Midlothian) Wells, Sydney Richard
Howitt, Dr. Alfred B. Ramsay, T. B. W. (Western Isles) Weymouth, Viscount
Hume, Sir George Hopwood Ramsbotham, Herwald Whiteside, Borras Noel H.
Hunter, Capt. M. J. (Brigg) Ramsden, E. Wills, Wilfrid D.
James, Wing.-Com. A. W. H. Rankin, Robert Wilson, G. H. A. (Cambridge U.)
Jamieson, Douglas Rawson, Sir Cooper Windsor-Clive, Lieut-Colonel George
Jennings, Roland Reed, Arthur C. (Exeter) Wise, Alfred R.
Jesson, Major Thomas E. Reid, James S. C. (Stirling) Womersley, Walter James
Johnstone, Harcourt (S. Shields) Reid, William Allan (Derby) Wragg, Herbert
Jones, Henry Haydn (Merioneth) Remer, John R.
Jones, Lewis (Swansea, West) Rentoul, Sir Gervals S. TELLERS FOR THE NOES.—
Ker, J. Campbell Rhys, Hon. Charles Arthur U. Captain Austin Hudson and Sir
Kerr, Hamilton W. Roberts, Sir Samuel (Ecclesall) Murdoch McKenzie Wood.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Sir S. CRIPPS

Before the Resolution is finally passed, there are one or two questions which I wish to ask, and which I hope the Financial Secretary will be good enough to explain to the House. First of all, I am a little puzzled why the duty on saccharin manufactured in the Colonies is different from the excise duty upon saccharin manufactured in this country. There are a number of figures dealing with molasses, glucose and saccharin, each of them relating to manufactures in the Colonies or other countries. I notice that the total imported during the first three months of this year is nil and in 1930 it was only one ounce. If these figures are compared with the excise duty they are the same in every case with a penny or a halfpenny more. On molasses which amounts to 70 per cent. the duty is 3s. excise duty and for amounts up to 70 per cent. it is 2s. 11d. Where the molasses exceed 50 per cent. but do not amount to 70 per cent. the amount is 2s. 1½d.

Will the right hon. Gentleman explain why there is a penny difference in the over 70 per cent. standard of molasses and the same excise and import duty when it does not exceed that standard? Is there something in the Colonial manufacture which leads to that differentiation in the case of molasses? There is a difference of one halfpenny and one penny in regard to glucose. In paragraph (e) of the Resolution it states that the Resolution applies to all the Colonies except Southern Rhodesia. Why is Southern Rhodesia not included as a colony? I presume there is some special status in the case of Southern Rhodesia which for the purpose of sugar means that it should not be dealt with as a colony. If the Financial Secretary will explain these matters, I shall be much indebted to him.

Mr. AMERY

I do not propose to follow the hon. and learned Gentleman in the somewhat detailed and ingenious questions which he has put, but I should like to make one or two general observations upon the proposals which the Government have introduced in connection with sugar. It is a pity that the Government, in extending the sugar preference, should not have extended it to the Dominions. I know that this question has been discussed earlier this evening, and I do not propose to embark upon any long argument now. I will only say that if I had been in my place when this question was discussed I should have supported hon. Members opposite in asking for that extension. After all, in connection with every other duty which has been imposed in the course of this Parliament the full preference has been given to the Dominions. I think in these matters we ought to give every preference we can, and here an exception seems to have been made to the general policy which we have so far pursued.

Probably the reason which will be given for this policy is that this preference would have involved a further loss of revenue, but that is the result of dealing with the whole sugar problem in the wrong way, namely, by a remission of the Empire duty instead of an increase in the foreign duty. I think the same reason has been responsible for the very curious, elaborate and cumbrous way of dealing with Colonial preference. Apparently, the second shilling of additional preference is to be given only for a certain quota. That quota is fixed at 275,000 tons, and that amount is about half of the total export production of the Colonies. In adjudicating it, the Government are at once driven to regulations which are bound to work unfairly, or, at any rate, rather curiously.

I observe that one Colony which is to receive a substantial quota of 40,000 tons of sugar is Fiji. Fiji normally sends all her export sugar to Canada or New Zealand, and very little Fiji sugar comes to this country. Nevertheless, Fiji is to receive a preference in this country on sugar which she does not send here, in the shape of a quota which she is free to sell to other Colonies. There may be something to be said from the point of view of giving a bonus or dole to the sugar interests in the different Colonies, but, from the point of view of preference, it surely would have been better to have given a frank preference to all Colonial sugar coming into this market. The figures on which preference has been given seem to me to be lamentably inadequate. When Lord Olivier reported, not so long ago, he urged that the sugar crop of the Colonies should be bought by this country at £15 a ton, and certainly his report made it clear that sugar could not be grown profitably at a figure very much lower than that. Since then, sugar has fallen to £9, £8, £6, and now to something over £4 a ton, and a preference even of 2s. is really inadequate to give the Colonies a fair chance. But at any rate, in their difficulties, it would have been the generous and broad thing to have given the 2s. preference. Instead of that, they get 1s., and then 1s. on half their crop conditionally on the price being below £8, and, if the price rises above £8, that is taken away.

The whole thing seems to me to be inadequate to the magnitude of the problems with which we are dealing. They are handled in what I might call a niggling, Treasury fashion, instead of being dealt with broadly as a great question of Empire development. Surely it would have been infinitely better to have put an additional ¼d., or, better still, ½d. on foreign sugar, and to have given both the Dominions and the Colonies adequate preference. It would have given them a chance of carrying on their industry, would have paved the way for Ottawa, and would have created a favourable sentiment throughout the Empire towards the negotiations at Ottawa. This particular way of dealing with the matter, weighing out preferences by pennyweights, and making quite sure that not an ounce of sugar should be diverted from Canada to this country, is unworthy of the greatness of the issues with which we are dealing, and I am afraid it is only a reflection of the rather niggling character of the whole way in which the financial problem has been approached in this Budget. I think it would have been far better if the Budget had reflected more adequately the greatness of the issues with which we are dealing, and had approached them, with an eye to Ottawa, in a more generous spirit. I regret that I should have to make these critical observations, but I feel that this issue of sugar is somewhat typical of the attitude in which a number of our problems have been approached recently and I felt that I could not let this Resolution pass without, at any rate on my own behalf, making this protest.

Major ELLIOT

We have, on this Resolution, two sets of questions and criticisms—those of the hon. and learned Member for East Bristol (Sir S. Cripps), which are of a narrow and, indeed, viva voce character, and those of my right hon. Friend the Member for Sparkbrook (Mr. Amery), which have a wider range. The points which have been raised by my right hon. Friend the Member for Sparkbrook were dealt with fairly fully during the discussion on the Amendments, and, therefore, I think it is undesirable to go into them again at length, save to say that we do, of course, appreciate the criticisms which he has made, and I am afraid we must stand confessed as dealing with these matters in a niggling and, indeed, a Treasury spirit. But what else would one expect from the Treasury representatives than that they should deal with these matters in a Treasury spirit, and that it should always appear to hon. and right hon. Gentlemen who have seen the vision, as my right hon. Friend said, of a glowing mass of enthusiasm, that any consideration of pounds, shillings and pence is, indeed, niggling. Unfortunately, however, we have to approach these matters with the recognition that we are very cramped for room in these lean years, and that a sacrifice of revenue on the one hand, or an increase in the duties which might lead to an increased cost of living on the other hand, has to be approached by us in the most gingerly fashion at the present time.

Nothing would do more harm to this great experiment that we are now embarking upon than to associate it in the mind of the ordinary people of the country, and still more the ordinary shopping housewives of the country, with a sudden rise in the price of articles in common use, which they would attribute to the new policy into which we desire to sail with a favourable wind. We are also, in connection with the Dominions, emboldened to approach it cautiously. The duties that we propose with regard to sugar are as nothing compared with those that they impose. In Australia the duty amounts practically to an embargo. There is, in fact, a licence for the importation of quantities of sugar, tout that is never used, and the producers in 1927 got up to as much as £20 a ton and no importation as against our suggestion for £4 8s., £3 8s. and £2 8s. for certificated Colonial sugar and £8 3s. per ton for foreign sugar. Compare that with £20 a ton which Australia grants to her tome producers. In such circumstances it is not unreasonable that we should say it is a matter for discussion, as they are enjoying such exceptional advantages in their home markets as against the sugar producing islands, which have no such home advantages. In South Africa there is an import duty of £16 a ton, which practically excludes anything in the nature of the importation of foreign sugar. My right hon. Friend will, therefore, excuse us if, on this occasion at any rate, we have approached the matter cautiously, because we have great responsibilities, more particularly, first of all, to the home producer and the home user of sugar and, secondly, to the Colonial producer who, if he cannot look to us here, can look nowhere for a market; and after that to the Dominion pro- ducer to whom we ought to give all possible advantages, but who can reasonably afford to wait a little while because he is not subject to all the adverse factors to which the Colonial producer is subjected.

That brings me to the question put by the hon. and learned Gentleman the Member for East Bristol (Sir S. Cripps) who asked why a certain advantage appears to be given in the excise duty to the home producer as compared with the Colonial producer. The axiom on which we work is that the home producer is entitled to the first turn at the market. The Dominions and Colonies understand perfectly well that the borne producer is entitled to a turn of the scale in his favour even as against Colonial and Dominion producers. That is the reason why he finds a penny difference in some of the scales. We rounded it off to the nearest halfpenny and that is why in the case of molasses of 50 per cent. and under he finds 1s. 0½d. in both cases. In this case it meant a levelling of the duty so that neither the home producer nor the Colonial producer enjoyed any advantage one over the other. That I think deals with the specific questions asked by the hon. and learned Gentleman except the interesting point as to why Southern Rhodesia was not considered to be a Colony. Southern Rhodesia is not considered to be a Colony because in fact it is not a Colony.

Sir S. CRIPPS

It says all the Colonies except Southern Rhodesia, which implies that it is a Colony but it is excepted.

Major ELLIOT

I was about to descant upon the peculiar constitutional position of Southern Rhodesia. I should be out of order in going into it at length, but it is a Colony which is in process of evolution towards a Dominion and it has already reached a certain stage in that evolution. It is neither wholly the one thing, nor yet wholly the other. It is in process of transition, and we have to allow for these things, in the British Empire. It is in a somewhat similar position to that of Iraq, which is in process of moving from a mandated territory into something very like a State, but that transition may run for a period of years. The particular thing to be observed in Southern. Rhodesia, in the Colony, or the Dominion of Southern Rhodesia, or the self-governing area of Southern Rhodesia, is that while it has a great deal of autonomy in its own private affairs, certain very important things are reserved for this country. Therefore, it is an excepted Colony, and that is about as near a definition of the State as I can give at the present time.

Sir S. CRIPPS

Why should it have a preference?

Major ELLIOT

Because it is not in fact a colony, and nothing would annoy the State of Southern Rhodesia more than to be lumped in as a colony.

Sir S. CRIPPS

It is called a colony.

10.30 p.m.

Major ELLIOT

No, it is called an excepted colony. It has the constitutional privileges and rights of areas which are excepted colonies. The area of Southern Rhodesia enjoys its own rights and privileges, and has not the privileges either of a colony or of a Dominion, and on that constitutional position it is necessary for us to stand. I am afraid that I can go no further than that. I think I have dealt with the specific questions asked by the hon.. and learned Gentleman the Member for East Bristol (Sir S. Cripps), and I hope that he will now enable us to have the Resolution.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Third Resolution agreed to.

Fourth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. LEVY

I congratulate the right hon. Gentleman in, at last, beginning to remove one of the anomalies that are so prevalent throughout the whole of the silk industry. It was a question that. I put down which drew attention to this particular anomaly, whereby a trader was charged a specific duty while private individuals could bring over whatever quantity of silk goods they desired. Provided they stated that it was for their own use, they were only charged on the silk content basis, with the result that fraud was rife, and the Silk Duties ceased to draw that revenue that they were entitled to draw. I congratulate the right hon. Gentleman on the fact that, even at this late hour, he is beginning to deal with the silk industry, and this is one of the first anomalies to be dealt with.

Captain WATERHOUSE

Will the Minister tell us exactly what this Resolution is designed to do? My recollection is that about £55,000 was involved one way or the other, but I am not quite clear whether, on balance, it will be for the benefit of the importers or for the benefit of the manufacturers in this country. I very much hope that it is for the benefit of the manufacturers, because the House will realise that during the past week-end the manufacturers in the silk and artificial silk industry received a staggering and, as they bettered, an unmerited and unexpected blow. This Resolution may or may not be designed to help them, but we have not heard any declaration from the Government. If it is not so designed I lope that on the next Resolution we may see an Amendment on the Order Paper removing them from the very invidious position in which they find themselves under a certain section of an earlier Resolution. The point I want the Financial Secretary to answer is whether this is going, to be any benefit at all to the manufacturers, and, if not, will he bear it in mind before the Budget Resolutions leave this House and see that they get redress.

Mr. REMER

On this Resolution I know that we cannot discuss the silk industry as a whole, but, nevertheless, it is of considerable value inasmuch as it removes an injustice. There are many other injustices from which the silk industry suffers, but I should not be in order in referring to them. All I want to do is to ask the Financial Secretary to bear in mind that this is a matter of considerable moment to the silk industry as a whole and that in succeeding Resolutions I hope that he will do real justice to the industry which has suffered so much in the past.

Major ELLIOT

It will be agreed that the Resolution is an advantage to manufacturers and to the industry as a whole, inasmuch as it removes an anomaly from which the industry has suffered in the past. The concession which was originally made purely for the personal convenience of travellers has led to a considerable amount of fraud and, indeed, was giving foreign manufacturers and importers an undue advantage over manufacturers and legitimate traders in this country. For instance, under the Acts as they previously stood a foreign dressmaker might bring over a consignment of gowns, pay an ad valorem duty, exhibit them in this country, take orders, and then re-export the gowns, getting a drawback. He could then post the consignments to the individual purchasers in this country, who could very properly declare that the articles were imported for their own use. In that case they would pay duty on the weight, and not on the ad valorem basis. Obviously, that is an abuse which it is desirable to check; and this Resolution checks it. That is all that it is necessary to say on the Resolution. As to the wider question, the position of the silk trade as a whole, obviously it would be out of order for me to go into that matter on this very narrow Resolution. These wider questions will come up for Debate at full length at an early date when the Order is brought before the House for confirmation, and it will then be possible for hon. Members who desire to discuss these matters to go into them frilly. On this Resolution I am glad to have had the approval of hon. Members who have technical experience in this industry, and I hope the House will accept the Resolution.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Ordered, That the Consideration of the remaining Resolutions be now adjourned. —[Captain Margesson.]

Remaining Resolutions to be considered To-morrow.