HC Deb 12 June 1934 vol 290 cc1545-62

If any person makes an insurance on his life, or on the life of any other person, with any insurance company legally established in the United Kingdom or in any British possession, or lawfully carrying on business in the United Kingdom, and the policy of insurance expressly states that such insurance is made with the primary object of providing for estate duty which may become payable on the death of the assured, and that so much as the holder of such policy or his legal personal representatives may direct of the capital sum payable thereunder will, on the death of the assured, be payable by the insurance company direct to the Commissioners of Inland Revenue for the purpose of being applied in or towards the payment of such estate duty then, to the extent to which such capital sum is so paid and applied, the same shall not be aggregated with any other property for the purpose of fixing the rate of estate duty, but shall form an estate by itself.—[Brigadïer-General Brown.]

Brought up, and read the First time.

3.34 p.m.

Brigadier-General CLIFTON BROWN

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

The object of the Clause is to lessen the rate of duty where an estate has been insured. At present if you want to insure against Death Duties, the value of the insurance is added in calculating the Death Duties, a most unfair burden as it seems to many of us, and this merely seeks, not to relieve the insurance from taxation altogether but only to tax it on its merits. I want to approach the subject from an agricultural point of view. It is always acknowledged that the Death Duties hit agricultural land even more than any other. I suppose it is the general desire of everyone that future generations should have a fair start free of debt. I suppose that everyone will agree that businesses should not be suddenly crippled by a large amount of capital being withdrawn, that workers dependent on the development of the land should not be thrown suddenly out of a job, and that our countryside should not be impoverished and destroyed as is being done all over the country at present. The lightening of the burden of Death Duties on agricultural land has been approved by successive Chancellors of the Exchequer, including the Socialist Chancellor, but it is still a burden which must stop development and is injuring employment on the land to a far greater extent than is realised. Can we not find some way of insuring against these upheavals? We insure workmen against accident, against old age and against unemployment. Why can we not insure against the causes of unemployments It is, surely, worth considering, and it is in line with much of our legislation to-day.

The five years census of agricultural output just issued by the Ministry of Agriculture shows the state of affairs. It shows the estimated gross rental value, the estimated total capital value of the land and the estimated tenants' capital employed in the land, comparing 1931 with 1925, when the last census was taken. The total capital value of the land, which in 1925 was £815,000,000, is now £645,000,000, or a drop of 21 per cent. Rents were 13 per cent. lower in 1931 than in 1925. If we compare the total tenants' capital employed, we find that £365,000,000 has gone down to £280,000,000, or a drop of 23 per cent. If you add the drop in the capital value of the land, which is nearly all the owners' value, and the capital value of the tenants, it comes to £170,000,000. Is that a situation that we can go on contemplating with equanimity? Of that £170,000,000, we can only accuse the Death Duties of having taken £2,000,000 a year, or about £10,000,000 in the five years. The damage due to the decrease of £170,000,000 in the value of land is almost incalculable. What are people going to do to develop their estates? Is it worth while planting the hillside with trees, and spending money in building cottages and employing labour and so on? Is it worth while when money is given to other people instead of being spent on agriculture? Is not the old labourer, who for generations has been on an estate, in despair for fear the estate should suddenly have to be broken up? This is all the indirect effect of these Death Duties which we desire to minimise.

The suggestion in the Amendment is a very simple one. We should like to see something a great deal bigger. I know that the Chancellor of the Exchequer is very sympathetic towards it. Surely these figures show the effect of the heavy burden of Death Duties in respect of the Chancellor's annual Budget. If he wants to keep up his receipts from Income Tax he must be careful not to overdo it in the way of Death Duties. It has always been the pride of this country that our National Savings Certificates are so well supported by millions of people in this country. The creation of the desire for saving in the minds of the people is a great asset to the Chancellor of the Exchequer. It has been a very great asset in the troubles which we have had to face during the last three or four years. An enormous capital sum is invested in national savings. I desire the question to be looked into, as I think the principle should he supported. If you put away money for a particular object such as Death Duties, even if it is insurance like the National Health Insurance, it should be devoted to the object for which it was put away and not spent for other purposes. This is a sound principle in regard to insurance and national savings, and it would he equally sound for a person to be able to insure against Death Duties.

3.44 p.m.


Personally I much prefer the Clause which was put down in the name of 34 other hon. Members and myself, but as that Clause was passed over, I desire to support the present Clause which is a step in the same direction. The Clause which we put down excluded altogether from Death Duties the amount covered under an insurance policy to pay those duties. This new Clause provides that the amount covered under an insurance policy to pay Death Duties should be treated as a separate estate and should not be aggregated with the main estate. We do not ask the Chancellor of the Exchequer to make the same allowances with regard to Income Tax in the case of the premium paid for these policies to pay Death Duties. The Clause contemplates a special insurance for a special purpose and for no other, and, if necessary, the insurance can be taken out in the name of the Chancellor of the Exchequer. A person who insures against the payment of Death Duties now is doubly penalised. Not only has he to pay a large premium during his life, but on his death the amount of the insurance is added on to his estate, and not only has duty to he paid on the amount of the insurance in addition to the duty on the total of his estate, but very often the extra sum received from the insurance company towards paying the duty puts the estate in a higher category than would have been the case before. Consequently, practically no one takes out insurances of this kind. This is a point which makes it impossible for me to believe that it will cost the State anything if they accept the Amendment. If it had been the habit of people in this country to take out large insurances to pay Death Duties and the State had been accustomed to reap the additional duty on the insurance, it might perhaps have been said that it might involve the State in a loss. That has not been the case. People have not done it because of the penalties that would be inflicted upon them if they did so.

The object of the Clause is to encourage people to take out these insurances so that their estates shall not be broken up as they are to-day. Everybody agrees that it is inadvisable on the part of an individual to live on his capital, and what is true of the individual is equally true of the State, and yet we see week by week and month by month the State taking half, a quarter, or a third of the estate of a deceased person and using it very largely for the day-to-day expenditure of the State. Successive Chancellors of the Exchequer have admitted the evil of this, but nothing has been done. The Amendment on the Paper enables something to be done, for at no loss, or at any rate very trivial loss, to the Exchequer, these levies on capital can be replaced by an annual payment by the individual. My hon. and gallant Friend has dealt at length with the injury which these Death Duties have inflicted on landed property throughout the country. Farms have had to be sold to strangers and old farmers have often been turned out, and staffs generally reduced, thereby causing serious hardship.

While these duties are bad for all businesses and all trades, there is one particular industry which they more seriously affect perhaps than anything else, with the exception of agriculture, and it is tramp shipping. If my hon. Friend the Financial Secretary to the Treasury will refer to his colleague at the Board of Trade, he will find that he will confirm every word of what I am about to say. There is nothing which has so seriously affected tramp shipping in this country, one of our greatest industries, than the Death Duties. It so happens that nearly all the tramp shipping in this country is held either by families or by individuals, and in the past it was their practice to build up reserves so that their fleets could be continually renewed, but, owing to the succession of Death Duties payable by themselves and their families, it has not been possible to accumulate these reserves. Although they have been seriously hit recently by subsidies given to foreign shipping they might have been able to meet this competition if they had been able to provide reserves for the building of new fleets, as they would have done but for the effect of Death Duties. If they had been able to set aside an annual sum out of their profits to meet Death Duties, the tramp shipping of this country would have been in a very different state to what it is to-day. All this could have been obviated by an annual payment to an insurance company.

I submit that insurance against Death Duties will be a benefit not only to the individual family but to the community and to the State. First of all, the Chancellor of the Exchequer would be paid at once on the death of the individual the whole sum from the insurance company without having to wait for years, as is often the case now. The Financial Secretary in refusing an Amendment yesterday said that it was one of the incidents of the system of taxation attaching to Death Duties that you had to fix the value of an estate at the moment of death, and that all sorts of hardships were occasioned because circumstances might occur after the death, as a result of which an estate which was valued at £2,000 at death might only realise £400 or £500 by the time the property came to be sold. That is another difficulty which would be obviated. The family benefits by not having a forced sale of shares, or bonds or business in order to find the Death Duties, and, thirdly, and most important, it would be for the benefit of the community as a whole. I have often heard it suggested by hon. Members opposite that Death Duties are a matter which only concern the rich and the wealthy, and that they do not interest wage earners or the general public. This is a profound mistake, because actually while they are not a very serious hardship on the individual who succeeds to a large estate, he is probably a great deal better off than before, they are an incalculable hardship on a number of people who may be dismissed or who are in some way affected. [Interruption.] It is no use hon. Members objecting; it is a fact; it is an, incidence of this system of taxation.

The DEPUTY-CHAIRMAN (Captain Bourne)

I think the hon. Member is travelling rather wide of the Clause.


I am trying to show the desirability of the proposal to insure against Death Duty and the harm the present system of taxation creates. However, I will pass from that. My point is that Death Duties are eating into the capital reserves of the State and the State being only the sum total of individuals who compose it, it means that the total capital of the nation is being used up. From the year 1925–26 to 1932–33 no less than £600,000,000 was paid in Death Duties, and during the same period, and largely by the same parties, £2,600,000,000 was paid in Income Tax and Surtax. I suppose the Financial Secretary will tell us again that while he sympathises with the proposal he regrets that he is unable to accept it because it will involve the State in a loss. I hope he will clearly explain how that will be brought about; it has not been explained. If people had been in the habit of taking out this insurance I could understand the State being involved in a loss, but as they have not been doing so I cannot see how it does. It may be said that the Government cannot differentiate between one kind of saving and another, but this is not a saving in the sense that it benefits the family, it is to keep the estate in the same level and not have it broken up. In April of last year a writer in the "Times" put in a startling way the bare effect of these Death Duties. He pointed out that 13 large estates had recently been admitted to probate, the Death Duties on which amounted to £23,500,000.


On a point of Order, may I ask whether it is in order now to discuss the whole effect of Death Duties on a new Clause in Committee stage or whether we are discussing whether insurance should be included in the estate?


I was at the moment about to rise to point out to the hon. Member for South Kensington (Sir W. Davison) that we cannot discuss the whole policy of Death Duties. I think he is entitled to argue that it is a good thing to insure against them, and that the new Clause facilitates it, but that is as far as we can go.


I have made my point, to show how desirable it was that these estates should have been covered by insurance, because then the £23,000,000 would not have been paid out. That is my point. It would have been much better for the State if these large estates had been insured and kept intact, as they would then have continued to pay tax on an annual income of £1,175,000. It is the same thing as in the case of an individual, who might spend £23,000,000 in three or four years and sacrifice £1,175,000 a year. You would call such a person a spendthrift. I am asking the State to behave in the same way as we expect any reasonable individual to behave. If we take a long view there is no class more interested in seeing that Death Duties are insured against than those who make a special claim to look after those who receive benefit from our social services. If you continually reduce these estates——


The hon. Member is again going outside the Clause.


It is a little difficult to keep strictly to the Clause, but as I have made my case fairly clear I will be content. From the point of view of those concerned with maintaining our social services it is clearly advantageous for those services as well as in the best interests of the State to pass such a Clause as this, which will enable those who have to pay Death Duties to insure against them and so avoid the breaking-up of their estates.

3.59 p.m.


I should like to explain to the Committee the reasons why we are moving the new Clause. I support it for several practical reasons. I have followed the profession of a solicitor, and have had to deal with the difficulties of estates where they consist not of liquid assets but of a variety of forms of property, and it is undoubted that the necessity for some such provision as this increases with every increase in the rate of Death Duties. In years gone by it was not a serious matter that an estate should have to meet the withdrawal of a portion of its liquid assets, but, as every year goes by and Death Duties increase, the rate is so great that there is hardly any estate left by a person engaged in agriculture or in business which is so situated on the death of the person that it can with safety to the estate and to the State meet a withdrawal of the liquid funds necessary for the payment of Death Duty.

In the assessment of Death Duties the range of the duties, of course, increases with the value of the estate, but there are provisions whereby certain portions of the estate are not aggregated with the main estate. In other words, if you can separate such portions of the estate from the main body of the estate, you do not thereby increase the rate of duty upon them. If an estate consists of mills, machinery, real estate and property of that kind, in order to make it possible to carry it on, it has to have a certain amount of liquid money. I think that the Committee will see that such a state of affairs must exist in every estate where a person is engaged in business operations, and the same would apply if he were engaged in agriculture. What happen when such a person dies? Immediately there is withdrawn the pillar of support from the estate or business, and, in addition, you withdraw from the estate a tremendous amount, proportionately, of the liquid assets which are necessary to keep the estate going.

I would like hon. Members opposite particularly to notice this, because when a previous speaker was explaining, they seemed rather to dissent from the fact that such a state of affairs could have any hardship upon those connected with an estate. In a business such as I have outlined, in addition to the withdrawal of the pillar of the business through death, there is the withdrawal of a huge amount of liquid cash. Death Duties must always be paid, and, as a rule, when probate is applied for, almost before anyone can handle the estate, sell any portion of the estate or deal with the property Death Duties have to be paid to the Treasury. In the case which I have outlined you get an immediate draft upon the business. In many cases in recent years practically the whole life blood of the business has been withdrawn to meet Death Duties, and in such cases the unfortunate executors and others who have to handle these matters are left with a business or an estate which is denuded of its liquid resources. Difficulties immediately arise; applications have to be made for loans to bankers and others; and payments have to be made to widows, beneficiaries and other persons. Immediately their difficulties arise, and in recent years the heaviness of these duties and the way in which they fall, as I have endeavoured to illustrate to the Committee, have been so serious that business after business has bad to be closed down.

Further, the committee should notice that when the liquid moneys and the life blood of the business are withdrawn in this manner, the remaining assets, which may have had a value coupled with the life blood of the business, immediately become worthless, and, therefore, you get a catastrophe so far as the continuation of business is concerned. I happen to have had a very large experience of this difficulty in the West Riding of Yorkshire, and the position is getting so serious that unless the Treasury are prepared to do something in the nature asked for in this Clause, the conduct of business by private ownership or small companies will be impossible. I cannot go into the other side of the picture as to what would take its place, but that is sufficient for us to consider.

What are we asking in this Amendment to help us out of that great difficulty? I want hon. Members opposite to notice that we are not asking to be put in pocket in any direction, or that an estate should receive any concession in the nature of a gift. We are simply asking that if a person, who knows that there is going to be such a difficulty on his back, and he is a prudent person, he shall have the right to create, in the form of an insurance policy, a sinking fund to provide the liquid cash to meet an immediate obligation on death. I have had such an Amendment in my mind, and brought it to the notice of the Treasury ever since I came to the House, for the reason that the seriousness of it has been so apparent to me. I do hope that the Financial Secretary will not say this afternoon that this is going to cost the Government so much, because I have explained that it cannot on the present basis cost the Government anything. It will apply to policies of insurance after this date, and every new policy will be an addition to the estate as it exists to-day. Therefore, there will be an incentive for persons to take out these policies and, in so far as they do take out the policies, there will be an addition to the estate and an additional duty payable on the amount of the policies. To that extent the Treasury will benefit. The Inland Revenue Department have had before them in recent years sufficient illustration of the terrible disasters which have resulted to businesses and to estates by the immediate payment of these moneys, and if they can help to maintain estates, if, at the expense of the individual owner, they can do anything to mitigate this evil, they ought to do it.

I do not think there is any gentleman engaged in the legal profession or any Member of this House who has experience of the untoward events that may happen, and often do happen, on the death of a person who will be other than in sympathy with this modest proposal. I, myself, would have liked the Treasury to have admitted that the proceeds of any such policies should not be assessable for duty at all. Of course, there may have been an objection to that, but if they do accept this Clause, the Treasury know that any policy so taken out will have to bear some duty. Even small estates nowadays pay a considerable percentage—as much as 10 per cent.—and as the estate gets larger it pays a greater proportion; but if a policy could be taken up for, say, £5,000, even such an amount would pay a considerable duty, and it would encourage the establishment, so to speak, of an inner reserve in every estate to meet this difficulty. The continuation of business and employment would be made far more certain, the maintenance of the level of value of public stocks and shares would be maintained, and the position of the Inland Revenue would be made far easier in the collection of these heavy duties. I beg to support the Clause.

4.10 p.m.


I am very reluctant to oppose my hon. Friends on this new Clause which they have proposed so eloquently. Nevertheless, I feel that its acceptance by the Government would involve an unjustifiable differentiation in the treatment of different testators' estates, where a life policy was taken out in one case or investments accumulated for the purpose of defraying these duties in another case. After all, there are two distinct ways in which a testator should make provision for the Death Duties which he reluctantly anticipates will be paid in a certain event. Having made as nearly as he can some estimate of what duties will be payable on his decease, he should adopt one of the following courses. He should either set aside out of his income every year the requisite amount of money which he may either accumulate on deposit at the bank or invest; or, alternatively, he may take out a life insurance policy payable at death for an amount sufficient to cover the estimated amount of the duties. The life insurance company, assuming the normal expectation of life, accept premiums which they, in turn, invest and accumulate and out of which they have to make profit; so that if a testator in setting aside annual sums invests that money to as great advantage as the insurance company can invest it, he will accumulate as much money, assuming the expectation of life is fulfilled, as the amount payable under an insurance policy.

Brigadier-General BROWN

People will not do that, because it simply increases their Death Duties.


Perhaps my hon. and and gallant Friend will allow me to finish what I was saying, and I will then deal with that point. I think it is perfectly clear that the Committee could not possibly approve a position where of two men of identical -wealth, one decides to make provision by means of annual allocations of income to provide at compound interest for the duties payable, and the other one prefers to pay an equal amount to an insurance company as an annual premium, and when death supervenes the Death Duties should be more in the case of one estate than in the other, when both are leaving an equal amount of money. I am sure that the Committee would not approve of that.

In reply to the point just raised by my hon. and gallant Friend, if the Government, say, on the Report stage, would accept an Amendment or new Clause somewhat on the lines of this one, but giving the same rights irrespective of the nature of the provision which a testator had made for the payment of the Death Duties, I would be entirely with my hon. and gallant Friend, but not as long as that privilege is only to attach to a testator who has taken out a life insurance policy for that purpose. In the absence of some such pronouncement by the Government I am sorry I cannot support the proposed new Clause.

4.15 p.m.


The last speech was extremely interesting but it did not tackle the problem which we have in mind. What we have in mind is not the case of the wealthy man who manages to make large savings in the course of his life. The man we have in mind is the lower middle-class man striving to make a living out of a small business and to provide for his wife and family in the event of his death. The sort of thing which such a man is generally able to do is to purchase a home for his widow and perhaps a small annuity, but he does not realise that on his death she will have to pay Death Duties on the estate—both on the value of her home and on the value of the annuity—that she will probably have nothing whatever out of which to pay those duties and she may have to sell out her home in order to provide the money. On the other hand, it is true that a considerable number of people in this country have the sense to insure against Death Duties.

When people come to take the advice of a lawyer on the matter, they have to be told that they must insure not only for the amount which they think at the moment will cover Death Duties on the estate but for a larger amount. They have to be reminded that the insurance monies will be aggregated with the estate and if the existing value of that estate is on the borderline of one of the graduated stages, then, up will go the rate of duty. Consequently they must insure for a much larger sum than at first appears necessary because they will be called on to pay duty at the higher rate. When they are told all this a large number of them conclude that it is not worth while insuring at all. They take the risk; they do not insure, and the consequences in connection with many of these small estates are such as have been described to the Committee.

There is no doubt, however, that a certain number of people insure today for very large sums, that these insurances are aggregated with the estates, and that the Government get the full amount of duty on the larger sum. If a provision such as this were inserted in the Finance Bill it would encourage a great number of less well-off people to insure. They would be encouraged to do so because it would then cost them less and the result would not be so expensive to the estate. The practical question for the Government is what would they lose. No one can tell until it has been tried, but we submit that everybody in moderate circumstances ought to be encouraged to insure against these duties, for the sake of their own estates, for the sake of the revenue and for the sake of the country. If that encouragement were given, I believe there would be a great increase in these insurances which would prevent an enormous amount of misery to the people immediately concerned and would be, we believe, for the benefit of the State.

4.20 p.m.


I have listened to this Debate with some interest and sympathy. It has not been exactly a personal sympathy because I have never been able to contemplate insuring against Death Duties. The ordinary owner of agricultural land cannot possibly presume to indulge in luxuries of that kind. But I ask the Committee to realise that a very big principle is suggested here and that very large sums would be involved if that principle were adopted. We all know how these duties work and how steeply the rate of duty rises according to the amount of the estate. We know that in the case of very big estates a large proportion is taken in duty. We all know, therefore, that if an estate, on the occasion of a death, were divided into two parts, namely, the part which has been set aside to pay Death Duties and the part which had not been so set aside, and, if those were treated as two separate estates, the amount which the Treasury would lose because of the lower rate of duty applicable to those two estates would be considerable.

We ought to realise, too, that the amount which would be lost by the Exchequer and gained by the individual would be greater, the larger the total estate. The effect of having the estate divided and treated as two separate estates is, indeed, hardly a relief at all to the smaller man but it is an enormous relief to men who leave large fortunes. There is the case of the man who leaves £3,000,000 or £4,000,000. Such cases have occurred recently. On such an estate, £1,000,000 or so might be payable in Death Duties. But if an estate of that kind is to be treated as two estates as a result of insurance against Death Duties, the owner of that estate will promptly take that step, as a sensible man, and the estate of £4,000,000 will be treated as two estates, one of £3,000,000 and the other of £1,000,000 and the loss to the Exchequer will be considerable. A very large principle is involved in this proposal and that ought to be clear to the Committee, before they decide, as well as the relief to the lower middle-class person whose case has been advocated.

4.23 p.m.


I had not meant to intervene in this discussion, but the speech of the right hon. Gentleman the Member for North Cornwall (Sir F. Acland) calls for some comment. In the first place, I consider that his fears as to loss of revenue in the case of large estates are exaggerated. When a certain figure has been reached in the size of an estate there would be no loss to the revenue except in respect of what was directly due to insurance. There would be no loss on the remainder of the estate because it would still be at the highest possible figure which the duty can reach. But the real case against the right hon. Baronet was given by himself in his opening remarks when he said that, as an ordinary agricultural landowner, he had never been able to contemplate insurance against Death Duties. I do not believe that, in practice, the larger estates would get much benefit from this proposal because I do not believe that they could afford the enormous premiums which would be necessary for the required insurance. There might be individual cases, but I do not think they would be numerous. The kind of case that we have in mind in this proposal has been very clearly stated by previous speakers. It is the case of the man who is being charged duty on something which is not realisable at the value at which it is assessed. We believe that there should be some opportunity to guard against that eventuality.

Hon. Members opposite would probably say that if these estates were broken up it would be a very good thing and that if people were turned out of employment in consequence, it would be a necessary evil. We do not take that view. We believe that these estates should be kept together and in good working order in readiness for the time when the hon. and learned Member for East Bristol (Sir S. Cripps) is to take them over. We would hate to hand them over to him in anything other than a sound working condition, and therefore we wish to preserve them. I do not know whether this Clause as worded can be accepted or not, but we believe that something of this sort ought to be done in order to allow for the continuance of businesses and estates on which many people depend and in order to enable those concerned to take a prudent step and to pay these Duties without being penalised.

4.24 p.m.


This discussion has afforded an opportunity to some of my hon. Friends to express their views upon the Death Duties generally and I shall say nothing which would suggest that the incidence of those duties is not a considerable burden. This new Clause is apparently devised for the purpose of minimising that burden and I am concerned rather with the purely practical aspect of the matter and with what would happen under the Clause if it were in operation. I think the Committee are aware by this time of what would happen in those circumstances. The proposal is that insurance monies, in so far as they are used to pay Estate Duty, shall not be aggregated with the whole estate, in other words that there shall be two estates. As these duties are graduated and are on an ascending scale in relation to the size of the estate—the larger the estate the higher the rate of duty—it is plain that if an estate were divided into two parts the duty on each separate part would be at a lower rate than the duty on the two parts together treated as one estate.


If the whole estate were £2,000,000, duty would be paid on £2,000,000, but if the man owning the estate had insured for £1,000,000 extra, in order to pay that duty, he would not have his estate valued at £3,000,000. He would only pay on the £2,000,000—that is all.


I think there is some slight confusion in connection with this matter. Let me give my hon. Friend an instance which will make it plain to him. Take an estate of £1,050,000 which is liable at present to a rate of 40 per cent. giving a charge of duty of £420,000. That is what the Exchequer now receives. If that estate included £355,000 policy money the charge of duty under this new Clause would be on two separate estates, one of £695,000 at 36 per cent. and the other of £355,000 at 30 per cent. giving a duty of approximately £355,000 instead of £420,000 as at present. I hope that case will make it plain to my hon. Friend that the revenue would lose by this method of separating one single estate into two estates.


Would the hon. Gentleman kindly give the Committee the details of the calculation? At first sight, it is difficult to see how a person, out of that income, could pay premiums to that amount.


In order to say what happens in regard to any particular estate of course one would require to have the figures of the actual estate. I am giving one example and the hon. Member may take any other example. When we come to the case of estates of tremendous size of course the proposed new Clause would have no effect at all. Take the case of an estate of £10,000,000 If that estate included £2,250,000 of policy money, the duty would be 50 per cent. on the whole estate but the two separate estates of £7,750,000 and £2,250,000 would each be liable to duty at the rate of 50 per cent. Thus when we reach the very big estates, as has been pointed out, the Clause would have no value at all. In the case of estates below that level the Exchequer would lose every time. It is not a fact, as has been suggested, that these policy moneys are an addition to the estate which would not otherwise have been there. The size of the estate is exactly the same. A man can invest money in insurance or in War Loan or in property. [HON. MEMBERS: "Or spend it!"] It is always possible to avoid Death Duty altogether by spending all one's resources.


They do.


I am dealing with the estate as it now stands, and I think it must be plain to the Committee that by abandoning the principle of aggregation the Revenue would lose. I am in a position to inform my hon. Friends that, if full advantage were taken of this Clause, the loss to the Exchequer would be in the neighbourhood of £20,000,000. That is the closest estimate I can form.


Assuming that it is insured now?


I said "if full advantage were taken of this Clause" and the results that my hon. Friends think desirable were achieved, namely, that persons were insured to the full amount of the duty. If they were in sured for less, the loss to the Exchequer would be less, but in any event it would be considerable.


Has the hon. Gentleman taken account of the number of insurances which are not taken up? If all these insurances were taken up, the Exchequer would get a certain sum of money from the lower rate of Death Duties.


The more persons availed themselves of the Clause and the more they covered their Death Duties by insurance the more we should lose, and we should lose not only on Death Duties, but on Income Tax as well, because a special allowance is made for moneys paid by way of insurance. I do not think there is any escape from the deductions which I have drawn. I have the fullest sympathy with the case put forward by my hon. Friends, but really the general complaint about Death Duties has nothing whatever to do with this Clause, which is a specific proposal, open, as I say, from the Revenue point of view, to the gravest objections. Let us all hope that the time will come when it will no longer be necessary to raise so much revenue from this source.

Question, "That the Clause be read a Second time," put, and negatived.