FINANCE BILL.

HC Deb 22 June 1934 vol 291 cc693-725

Order for Third Reading read.

11.7 a.m.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha)

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

In what may be a brief, but I hope not irrelevant, compass, I rise to move the Third Heading of the Finance Bill. This is the first Measure of its kind for many years past to bring general and widespread relief. Its purpose is, of course, to raise the revenue necessary for carrying out the scheme outlined in the Budget statement. It is part of that scheme that a body of over 2,000,000 unemployed persons should have at their disposal, from 1st July next, well nigh £200,000 a week more to spend in the shops, to create a demand for goods and to help to stimulate still more that industrial activity which, it is emphasised from the benches opposite, must proceed from an enhanced purchasing power. Also, from 1st July next and thenceforward there will be given to a million of those who draw emoluments from the State another £100,000 a week, additional to what they at present receive. The outlay of this money will doubtless have a similar effect. Those who gain this advantage will not fail to realise that they owe it to a restoration of the public credit, just as the contributions which they were called upon to bear in 1931 were the inevitable outcome of an unbalanced Budget. Approximately, 3,500,000 Income Tax payers will retain in the course of twelve months £24,000,000 which they previously gave to the tax gatherer, and each one of them will save 2s. in every pound on the bill which otherwise he would have had to pay.

Such then, in broad outline, is the scheme. Alternative suggestions have been made for the distribution of the surplus, but the Government has felt compelled to resist them. It was not out of any disregard for their merits, but because they did not comply with the principle which my right hon. Friend the Chancellor of the Exchequer, laid down, namely, that those people had the first claim upon any available assets who had come to the aid of the country in 1931. In the course of these discussions hon. Members opposite have sought to lead us away from realities into those broad fields of generalisation in which they love to roam. Should more money be spent upon public works? What are the respective merits of direct and indirect taxation? Who are the spenders and who are the savers in the community? Such speculations are always interesting; but to-day we have to take a decision upon the simple issue of this Bill, and I do not hesitate to commend it to the House as a justification of those sacrifices which were made in 1931 and as a vindication of the financial policy which has made possible a partial restitution.

11.10 a.m.

Mr. MORGAN JONES

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

I am sure all Members of the House will be in entire accord to-day when I offer to the Chancellor of the Exchequer, and especially to the Financial Secretary, thanks for the way in which they have helped us in our discussions of this Bill. I would add a further observation to the Financial Secretary. He has undertaken an unusual share of the Budget discussions this year, and he has always done it with considerable advantage to the whole House. I gathered from his speech that he knows the weakness of the Budget, for he tried to anticipate what he thought would be the legitimate line of criticism which we may offer to the Bill, and I am very much obliged to him for having pointed officially, on behalf of the Government, to the demerit of the Bill. The consideration of the financial proposals for the year have occupied our attention intermittently for something like two months and, of course, everyone will agree that every detail of the Finance Bill has by now been closely examined, has emerged from our discussions entirely unchanged as far as the main proposals are concerned, and consequently it is not necessary for me to add that our criticism of it in its final shape remains unabated and our attitude towards it unchanged.

When the Chancellor of the Exchequer made his Budget statement on 17th April he was received with resounding cheers by his supporters. Indeed, for a time he seemed to wear a halo, but by now the halo has tended to disappear somewhat, and, judging from the state of the Government benches and, indeed, the state of the benches in all parts of the House this morning, the enthusiasm for the Budget seems to have evaporated. The right hon. Gentleman told us that he was able to rejoice in a surplus on last year's operations, I need not remind him, as other people across the Atlantic have reminded him by now, that a considerable portion of that surplus, indeed all of it, would have disappeared had our debts been paid.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

That is assuming that no debts to us had been paid.

Mr. JONES

No. I am speaking now of the American Note. I do not intend in any way to embarrass the right hon. Gentleman by discussing the American Note. That Note has brought us up against certain realities in relation to the burden of our debts, and I repeat what I have said on previous occasions, that both our external and internal debt, in relation to this Bill, is such that we cannot possibly allow it to remain without making some definite and formidable attack upon it in the immediate future. Hon. Members will forgive me if I quote one passage which not only sets out the position in relation to external debt but can equally be applied to internal debt. I quote from page 4 of Command Paper 4609, an address to the American Government on behalf of our Government in which they state: In respect of war advances totalling 4,277 million dollars, payments totalling 2,025 million dollars have been made up to date by His Majesty's Government to the United States Government. Yet despite these payments the nominal amount of the debt still outstanding as at 15th June, 1934, amounts to 4,713,785,000 dollars. That is up against the 4,277 million dollars, the figure which I previously cited. The same condition of affairs attaches to our total dead weight debt. The Financial Secretary corrected me during the discussion on the Budget Resolutions when I ventured the opinion that our dead-weight debt was £150,000,000 more this year than last year. He told me that it was not £150,000,000, but £175,000,000 more. That only shows how formidable is the prob- lem with which we are confronted. Beyond saying that, I do not wish to speak upon that matter, but we are involved in this discussion by reason of the fact that we are spending a substantial amount, I think about 6s. 8d. out of every pound of taxation that is gathered in this country, in respect of the interest and management of the National Debt. If in addition to that expenditure we estimate another 3s. 4d. in the pound spent upon armaments and preparing for possible future wars, we see that if additional heavy commitments are undertaken in respect of further armament expenditure, they will produce an outlook which is dark indeed, not only for ourselves but for our children.

I wish to say a few words in regard to two aspects of the Finance Bill: first, as regards the burdens which it imposes, and, secondly, as regards the reliefs which it grants. Perhaps I may be allowed before I pass to the discussion of those matters to say that we on this side of the House, while we make no complaint about it, wish to point out that we were unfortunately unable to raise a matter which we wanted very much to raise. That is the question of the effect of the co-operative tax imposed last year. Unfortunately, we have not been able to discover what the effect of the legislation of last year in that respect has been in the course of the subsequent 12 months. I had hoped that we should have been able to learn what the effect had been, but we have been deprived of the opportunity and I can only express my regret at the fact.

Mr. CHAMBERLAIN

What is the meaning which the hon. Gentleman attaches to the word "effect" in this connection? Does he desire to know whether the tax produced the amount which was anticipated? If so, may I tell him at once that it produced a little more.

Mr. JONES

I made the simple statement of fact that we should like an opportunity of discussing it. That is all that I implied by my observations. The Financial Secretary rightly anticipated that we should once again enter our emphatic protest against the increasing change in the relationship between direct and indirect taxation which is indicated in this year's Finance Bill. Indeed, it is characteristic of the Government's financial legislation that the burden of taxation has been steadily shifting on to the shoulders of those who are least able to bear it. We must emphasise this point. It is not an accidental result. It is the result of deliberate, cool calculation on the part of the Government. The Prime Minister, speaking at Kilmarnock, made it abundantly clear what was at the back of the Government's mind. He said: In the national interest and in the interest of every consumer it is wise to release economic forces"— What the right hon. Gentleman meant by that I do not know— that will scientifically and gently"— especially, gently— push up the level of prices. Since then, we have had a plethora of boards of various sorts springing up as plentifully as asparagus in May. The producers have been studied, but the consumers have been very largely ignored. Since the consumers in the main constitute the poor classes of the country they have had to pay the price for that gentle scientific push referred to by the Prime Minister. I do not stop to discuss that matter further. I wish to be as brief as possible on this occasion but I beg of the Chancellor of the Exchequer to understand that the brevity of our comments on the Finance Bill on this occasion is no indication of the strength of our resentment against it. I turn to the discussion of the reliefs which are granted by this Bill. The Financial Secretary I think in pleasant anticipation of resounding cheers which did not come—made the claim that the financial abatements allowed this year were based upon the principle that just as there was equality of sacrifice in 1931 so there was equality of restoration in this Bill. I do not accept the ground of that argument. I do not agree that there was equality of sacrifice in 1931, and I certainly deny that this Bill indicates equality in restoration.

Let me take first the restoration of the salary cuts. Half the cuts are to be restored as from 1st July this year. That is to say, those who will benefit from that restoration will already have lost by the end of this month when the restoration begins, one quarter of the year. In other words they will have made an extra three months' contribution in respect of the cuts which were imposed 2½ years ago. I suggest that that is inequitable, and I would beg of the Chancellor of the Exchequer to keep this in mind. These people, it is true, as from July will get one half of the cut in their salaries restored but they were equally involved in whatever burden was imposed through the added Income Tax of 1931. Therefore, to be fair to all, they should have been dealt with as Income Tax payers like everybody else, and their salary cuts should have been restored, because that is their own private remuneration, and was in addition to what was commonly imposed upon all other subjects. The right hon. Gentleman said the other day that the direct taxpayers began their contributions earlier in 1931 than some of these other people. I do not deny that. It is equally true that, just as the direct taxpayers made their contribution earlier in 1931, those civil servants to whom I am now referring, who came within the ambit of Income Tax impositions, also made their contributions as early as that in 1931. Therefore, they are exactly in the same boat, so to speak, as the rest of the taxpayers in that respect.

If I might speak of one particular section of these people only—not because their case is worse or more meritorious than that of anybody else, but because I happen to know it better—in the case of the teachers, they actually made a voluntary contribution in 1923 of 5 per cent. in respect of the then national crisis, a contribution which has never been restored to them. Therefore, I suggest that the claim of the Financial Secretary that there has been equality of restoration is not, so far as those people are concerned, justified by the facts. In respect of direct taxation, we adhere to every argument we have advanced from the beginning of these discussions this year. We take the view that if the Chancellor of the Exchequer decided that he could afford to give £20,250,000 in restoration of taxation to direct taxpayers, it would have been more equitable if that restoration had gone, first of all, through the medium of restored allowances, rather than by a grant to the direct taxpayers as a whole.

I can see the difference between us. The Chancellor of the Exchequer had to decide which was the best, from the public point of view, and is a difference of principle that we regard as rather important. As I understand it, the Government's case was that in acting as they have done they would thereby be enabling a larger number of people to put back into the reserves of industry the amount of money which they were saved by the restoration of taxation. I quite see that argument, though I cannot concede that it is as meritorious as the supporters of the Government seem to think. May I, in support of my contention, quote a passage or two from this month's "Lloyds Bank Monthly Review?" It is an unsigned article, on page 259, and, therefore, I cannot tell who the author is. But it is apposite to my argument. In the first passage he gives the two grounds that justify, as he thinks, the move which the Government have made in respect of direct taxation, and then he puts the other side, and I will take that second part of the argument for the sake of brevity. He says: Without being dogmatic, all available evidence suggests that there exists now an ample accumulation of savings for which the owners would only be too glad to find secure and profitable employment. There is also evidence that, so far from there being a need for additional machinery, there is much serviceable machinery standing idle. That is why the first factor, namely, the demand for the products of industry, predominates in importance. Then he proceeds, after a sentence or two, as follows: Now the demand for consumers' goods ultimately depends upon the volume of general purchasing power, that is, on the size of real incomes measured in commodities and not in money. Here, too, unlike the position that arose concerning the supply of capital, it is the smaller incomes and not the larger incomes which are most important, for the recipients of the smaller incomes are in the vast majority. Any action which adds to the more numerous small incomes is the action best calculated to increase the demand for consumers' goods and, as we have already seen, for capital goods as well. There, put very succinctly, in words I could not possibly manage myself, is the argument, as we see it, in favour of the method of restoring allowances as distinct from a general restoration for all taxpayers. The Financial Secretary to the Treasury used some time ago in this House a very remarkable argument in support of the Government's position. He was replying, if I remember rightly, to my hon. Friend the Member for East Fulham (Mr. Wilmot) and he made this statement: The standard rate of Income Tax is 4s. 6d. in the £, but a married man with three children enjoying an income of less than £400 a year, is exempt from taxation, or virtually exempt. He pays nothing either before this Bill or after this Bill, and if he has an income of £400 he pays an effective rate of tax not of 4s. 6d. in the £, but of 2½d. in the £."—[OFFICIAL REPORT, 16th May, 1934; col. 1903, Vol. 289.] I do not question the truth of that statement, but if the hon. Gentleman is going to base himself on what is the effective rate of tax in this country, may I remind him that if he will look at the last issue of the Statistical Abstract, table 123, page 175, he will find the following fact, that when the nominal rate of Income Tax in the £ was 5s., the effective rate was not 5s., but 24.19d., so that if we are to have the effective rate applied to those whom my hon. Friend cites, we must apply it all round, and it is as fair for me to cite as it was for the hon. Gentleman.

I turn from that to the last of the reliefs of which the hon. Gentleman spoke so enthusiastically this morning. The right hon. Gentleman the Chancellor of the Exchequer was rather severe with us some time ago because, apparently, we had not expressed our adulation of the effort he had made in respect of the unemployed cuts. We were chided in this House, and we were even chided over the wireless by the right hon. Gentleman the Secretary of State for the Dominions, for not having cheered the right hon. Gentleman's announcement. We have been told that we use this unemployment question for party purposes. Why was this talk on the wireless couched in such terms? Not for party purposes at all, of course. The right hon. Gentleman had no intention of making out that the Labour party were unwilling to have a restoration of unemployment cuts—far from it—but merely to tell the country something by way of a pleasant gossip, no doubt. What, in point of fact, has happened in this matter? I invite the Chancellor of the Exchequer to deny the truth of my argument. There are, of course, the people to whom we restored something like £4,000,000, the unemployed people on statutory benefit. Not one extra penny of that money comes from the right hon. Gentleman's own funds; not one penny falls upon his Budget this year.

There is a body of people, namely, the other body of unemployed, in receipt of transitional payments, and in respect of them the Chancellor of the Exchequer does find £3,600,000, but, after all, he can afford to be generous to that degree, for, if the answer given by the Minister of Labour still applies and the Government are still paying, shall we say, £21,000,000 less through the means test to the unemployed than they would be called upon to pay if the basis were the same as that prevailing when the Labour Government were in office, if they did, therefore, deprive the unemployed of £21,000,000 in that way, they can easily afford to be generous by giving back £3,600,000. If the hon. Gentleman wants to test it, I will make him an offer to give him £3 12s. any time he likes and as often as he likes to give me £21 in return.

That is exactly what the Chancellor of the Exchequer has done. When this announcement was made we were given to understand—and this is why the right hon. Gentleman's friend cheered—that all the unemployed were to have their cuts restored, but within two days we got the truth. As a matter of fact, not one unemployed man is bound automatically to get it. It all depends on the initiative and sympathy of the public assistance committees. If they determine, in applying the means test, that they are not warranted in giving a man anything extra, he will not get it. There is no guarantee that this money will go to the unemployed. I hope that the followers of the Government will cheer that fact as well. There is another fact which we must note. The unemployed have been called upon to make a further contribution in respect of the restoration; they have been called upon to make another three months' extra contribution as compared with the direct taxpayer. The taxpayer gets his cut restored from the 1st April, but the unemployed man is to go on contributing for another three months. How does the Government square that fact with the sentiment expressed in the White Paper from which I have already quoted, addressed to the United States Government, when they speak of the continuance of the unemployment benefit cuts as "imposing a severe strain on the national conscience." It did not strain the Chancellor of the Exchequer's conscience; he did not hesitate at all in making the unemployed give another three months' contribution beyond the time when the direct taxpayer gets his cut restored.

Finally, we take strong exception to the new feature which has appeared in this finance Bill after the Chancellor had delivered his Budget statement in April. I refer to the Clause dealing with land valuation. I know that the Chancellor has argued that these Clauses are largely useless and that nobody could make very much use of them. The Financial Secretary has said they would not be effective in this Parliament because we could get nothing out of them for another two or three years, and so on. What has justified this change? For, after all, we have had pledges of a rather striking kind from leaders of the Government. The Lord President of the Council repelled an attempt during the War to repeal the land valuation taxation of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). He spoke in these terms when the then Sir Frederick Banbury moved his amendment to abolish them: If we began to discuss a matter of this kind during the War everything which was not only moribund but dormant in our party spirit would spring once more into life and take possession of us like seven devils."—[OFFICIAL REPORT, 5th July, 1917; col. 1384, Vol. 95.] I have not reckoned the number of Conservative Cabinet Ministers in the Government, but I imagine there must be round about seven. If it were devilry to act in that way during the War, what is it now when we have a Government which has undertaken to forget all party allegiances and to act strictly in terms of the good of the nation. May I add another quotation from the Lord President of the Council during the lifetime of this Government in relation to this tax: Had this been a Tory Government"— which, of course, it is not— we should have repealed the Statute. …In the National Government there are five members who were members of the Labour Cabinet when this Act became law. …Would any one of you who had been a member of a National Government, who had gone through the fight we went through last autumn, who had taken part in the discussions on finance on the first construction of the National Government with men who fought during that Election like Lord Snow-den, when you had been met, by those who had been opposed to you, by their consenting to eviscerate this Act, and when they expressed to you their reluctance to see the Act finally taken off the Statute Book, do you think that I, going about the country as I did and knowing the force of Lord Snowden's speeches and broadcasts in helping to win seats which we should never have won, was going to say to them, 'Oh, no, now we have got a big Tory majority, much bigger than I expected, out you go.' Not much. That is why we stand for the Clause as it is in the Bill. We can accept neither a repeal of the Act nor the insertion of the Amendments."—[OFFICIAL REPORT, 26th May, 1923; col. 583, Vol. 266.] How does a thing that seemed impossible and disgraceful in 1932 become possible in April, May or June, 1934? The Financial Secretary told us the reason. He told us that in the generosity of his heart he wants the next Labour Government to have a clean slate; he did not wish to embarrass the next Government. Really the hon. Gentleman must not expect me to be grateful for nothing, for neither he nor any member of the Government can commit any succeeding Government. When, therefore, he and the Chancellor of the Exchequer said they were thinking of the freedom of the next Parliament, I can assure him that the next Parliament, if we have something to do with its control, will act without any kindness of this sort, from them. As to the real reason, it is easily found. The Lord President of the Council made it quite clear in June at the time when, we suppose, the Government were coming to a great financial crisis, when he said: I may say one thing about it that, if we get back to power, that tax will never see daylight. To-day we are taking leave of these Clauses which enable us to take a valuation of land. As to the Prime Minister and his share in this matter, we must speak quite frankly. I regret his absence, and if it be due to ill-health, I, like every one else, readily express regret and sympathy, but we have striven to secure the attendance of the Prime Minister on previous occasions because he has a personal share in this matter, and a personal responsibility. This is what he said: If there is to be partisan manoeuvring, I am not their man. The right hon. Gentleman was right. He is not their man. He is their slave. He is no longer master of his fate, or captain of his soul. He is just harnessed to the victorious chariot of the Tory party. We are entitled to say that this seems to be the last act of penance which the Prime Minister has been called upon to make in the last 2½ years to the Tory party for having had the audacity to help with others to build up a Labour movement in this country. Let us be perfectly clear about this matter. After these Clauses are passed the valuation of land may no longer be possible, but as sure as night follows morning the time will come when the landlords of this country will be called upon to bear their proper share of taxation as landlords. I have ventured to advance a few arguments, not, I admit, very new ones, because there is very little that is fresh to be said in regard to this Bill, but I have ventured to advance what I conceive to be the implication of the charge we make against this Bill. If I may summarise it in familiar words I would say "The right hon. Gentleman has left undone things which he ought to have done, and he has done things which he ought not to have done, and there is clearly no health in him."

11.47 a.m.

Mr. DAVID EVANS

My hon. Friend, in the opening sentences of his speech, described to the House the attitude of himself and his friends towards this Finance Bill, and said that he was proposing to deliver a formidable attack on the Budget. I am afraid that my attack will not be so formidable, because I am conscious that I am not the formidable person that my hon. Friend is. This Bill, like any Finance Bill, gives us some indication, at any rate, of the general financial and industrial policy of the Government. In the past Governments have been charged from time to time with making their financial proposals the instruments of a particular policy, and even within my recollection, although I was not then a Member of this House, the particular sin which was alleged against a Liberal Government before the War was that they put through proposals, cloaked as financial proposals, which were really intended to be the instrument of the particular policy in which they believed. The House will recollect the great controversy which arose over the land taxes in those days. As a consequence of that this House has laid upon you, Mr. Speaker, the duty of defining what is and what is not a Money Bill.

I submit to the House that during the progress of this Bill, and especially during this last stage, we cannot omit from our discussions the implications and consequences involved in these proposals. It is our duty to try to judge whether the methods which have been adopted by the Government for raising the money to carry on the business of government accord with what we regard as the correct canons of taxation, and whether it is distributed justly and equitably as between various classes of the community. We know that the money is needed, but we must also judge not only how the money is raised but how it is being spent. Even though the taxation may be levied in an equitable and a just way, there is still the question of whether the money is being spent needlessly, recklessly and without regard to the claims of the various national services. Further, I submit that it is incumbent upon us in this Debate to consider the proposals not only in the light of what they contain but what they omit. I want particularly to consider how the proposals of the Government affect the fortunes of industry and of trade. I do not hesitate to say that they are not very striking proposals, they can even be said to be humdrum, and possibly, according to the critics of the Government, they are unimaginative and lacking in enterprise. In some respects they are, indeed, harmful to trade and industry.

The land taxes have been referred to and we have heard distant echoes of past controversies. While I am as strong a supporter of land taxation in some form as is my hon. Friend the Member for Caerphilly (Mr. M. Jones) I confess that I am not going to lose tears over the dropping of this particular Section. That is not because I have ceased to believe that land, and particularly its increased site value, which is solely attributable to communal activities, is a proper subject for taxation; indeed, in my judgment, and in the judgment of a great many people of this country, it should be one of the first to be picked out. Anyone who goes along one of our main arterial roads must be struck by the immense aggregation of wealth to individuals who have done nothing to create it in most cases, and one is surprised that that sight has not before now caught the glad eye of the Chancellor of the Exchequer. I should think that the fact that this obvious source of taxation has escaped notice shows the strength of the vested interests in this particular form of property. But, on the whole, I do not moan or mourn for the disappearance of this particular skeleton, because, as my hon. Friend has reminded us, the Chancellor of the Exchequer's remarks give one hope for a glorious resurrection some day. He said, if I may quote his words: It leaves the situation open to any future Government to bring in any form of land taxation that they may think proper together with an appropriate system of land valuation."—[OFFICIAL REPORT, 18th June, 1934; col. 160, Vol. 291.] Although my hon. Friend does not thank the Chancellor for that, the House should be glad that the present Chancellor of the Exchequer has now virtually admitted that the question of land taxation is not dead. After the patchwork which was produced by the late Government another Government had better start afresh on the question of land taxes. In the Book of Books it is said that no man seweth a piece of new cloth on to an old garment lest the new show up the old. I confess that in this matter of land taxes I would, on the whole, prefer a Government which was starting afresh. I want, not a coat of many colours, but a coat of one colour, and that a new coat.

In regard to industry, it is well known that the Government claim that their protective policy has stimulated home industry to produce for the home market. Whatever opinons may be held about that, the House is aware of one great danger of any protective policy, which is that it may be an artificial stimulus to an inefficient industry behind a high tariff wall. I ask myself whether the Government's policy as disclosed in this Budget is an encouragement to reorganisation, and whether it tends to improve industry and make it more efficient. I hope the House will permit me to select one illustration. I refer to a claim which has been made year by year. Industry has been knocking at the door of the Treasury for years for better treatment in regard to allowances for depreciation and obsolescence. Last year, the Chancellor resolutely refused to give effective consideration to, or to grant, an appeal which has been made to him from time to time from all quarters, in respect of the claim for depreciation. Surely the Chancellor of the Exchequer realises the disadvantages under which industry labours. If he has studied the allowances for depreciation and obsolescence in other countries, he must know that it is very difficult for industry to compete in foreign markets.

Reference has been made to Income Tax abatements and allowances. I am inclined to agree that those allowances should be restored first to the smaller Income Tax payers. On the other hand, I approve of the reduction in the standard rate, for the reason that those who are in control of the smaller industries have suffered most by the high rate of taxation. Small though those industries may be, most of their proprietors have not gone into big groups or been rationalised; they are still trying to keep on a successful business. They have been used to a certain standard of living for many years, but they have now come up against great difficulties because of the Income Tax. The difficulty of finding new capital is a serious deterrent to them in the improvement of their machinery and the expansion of their industry. One result of high taxation has been that some of those people have unwillingly gone into those huge accretions of industry which have taken place in the last few years and which, in many instances, are highly undesirable. The Government's policy in that respect, in so far as it has gone, has the approval of those who know the circumstances, but the Government have done nothing to facilitate the free flow of available capital into those smaller industries.

I did not take any part in the discussion when the fuel oil duty was debated this year. Last year I spoke once or twice, but, as the Chancellor was adamant, and as I found him unresponsive to invitations given again this year, I came to the conclusion that he was as stubborn as ever. This is a new form of taxation, and it singles out one form of fuel. It is useless for the Chancellor of the Exchequer to deny that this is a real tax upon productive industry. I am not going into any details about it now, but I can tell the Chancellor that the metallurgical industry in his own city is suffering because of this tax. The only alternative fuel to take the place of oil is electricity, or, it may be, some form of gas, but we know that electricity, compared with oil, costs about three times as much. We are told that we shall get oil from coal. The technique which is learned in the operation of oil-fuel furnaces will be valuable when that time comes, as we hope it will.

The proposals of the Government are bound up with such agreements as the Ottawa Agreements. Even in the Bill there are provisions which are related to the agreements which were made at Ottawa. I invite the Government to pay attention to the criticisms that have begun, on those Agreements and their result upon British industry. Let the Government take notice, for example, of the memorandum recently issued by the Federation of British Industries, who have studied the results of the Agreements. In the memorandum, they say that the Ottawa Agreements have proved more beneficial to the Dominions overseas than to Great Britain. I am afraid that when those Agreements come up for review the Government must keep their eye upon the necessity of reviewing them, not particularly in the interests of the Empire as a whole, but in the interest of this country. The doubt expressed by the Federation of British Industries as to how far the improvement in British exports may be attributed to the Agreements and how much to other factors such as currency and the linking of Dominions currency with sterling, is of great interest. I have expressed my views on this Bill, and I not only invite the Government, now that they have successfully established in this country a protective duty, to reconsider the cruder forms of their financial policy, and to turn their attention from now onwards to a wider conception of monetary policy, which is all important.

12.5 p.m.

Mr. BOOTHBY

Despite the adverse observations of the hon. Member for Caerphilly (Mr. Morgan Jones), I think that the House as a whole is prepared to admit that the Budget itself is a remarkable achievement, and still more that it represents a remarkable achievement, which I venture to say is the admiration of every other country in the world to-day, and for which the Chancellor of the Exchequer himself is entitled to a great deal of credit which he has not always been very anxious to claim. There are, I think, one or two blemishes in the Finance Bill; I have never known a Finance Bill that was entirely free from blemishes. The only serious one, to my mind—I have never been able to change my view as to this, and I am rather surprised that the hon. Gentleman who led for the Opposition did not mention it—is the treatment of the debt on the Unemployment Insurance Fund.

Many of us have felt all through, and I still feel very strongly, that the least my right hon. Friend could have done would have been to apply the surplus to repayment of the debt which is imposed by this Bill on the new Unemployment Insurance Fund. For my part, I still think that he ought to have taken over the debt altogether, because I do not feel that it is fair to impose upon industry, and upon the workers of industry, the burden of paying for the mistakes of successive Governments in the past in handling this unemployment problem. It is not the fault of industry, and is still less the fault of the unemployed, that this enormous debt was incurred; it is the fault of all the Governments in this country since 1922, each one of which made a frightful mess of the problem, and allowed this debt steadily to accumulate. It seems to me that the taxpayers as a whole ought to take responsibility for the debt, and that it should not now be imposed upon industry—for it is a charge on industry. Supposing that my right hon. Friend had found himself able to take over that debt, or even a portion of it, the contributions of both employers and employed could have been reduced far sooner than they now will be, and I can imagine no more direct stimulus to industry in this country than that would afford. I would beg my right hon. Friend most sincerely to reconsider this question with a view to dealing with it in next year's Budget; I recognise that he cannot deal with it now.

The minor blemishes which I see in the Bill concern whisky and oil. My right hon. Friend was obviously sympathetic when some of my friends raised in Committee the question of the tax on whisky. I think it can be safely said that it is the only really savage tax on the Statute Book at the present moment. It is a penal tax, out of all proportion and out of all relation to any other tax; and, if a tax is obviously unfair, as some of us feel that the tax on whisky is, it ought to be removed as soon as possible. I wish my right hon. Friend had been able to see his way to increase the tax on wines coming from abroad, and to make a proportionate reduction in the duty on whisky, so that he should not lose any revenue.

With regard to the question of heavy hydrocarbon oils, which ha" been raised by the hon. Member for Cardigan (Mr. D. Evans), the Chancellor of the Exchequer gave during the Committee stage some figures which greatly puzzled me. He claimed that, under the tax on these oils, 378,000 tons of coal had been regained from oil; that another 95,000 tons had been saved which would have been lost had not the tax been imposed; and that in addition about 100,000 tons of coal had been sold in the place of oil. If this be so, it is obvious that oil must have lost about 350,000 tons of trade during the past year, or about a third of the total inland trade in oil. But this is not the Case. And I cannot help feeling that these figures, supplied by the Coal Utilisation Council, are not in every respect accurate. The consumption of fuel oil in this country was higher in 1933 than in 1932, and, according to my information, it is likely to be still higher in 1934. I do not think the Chancellor can have it both ways; he cannot say that he is getting a great deal of revenue and at the same time say that he is saving the coal trade from the incursions of the oil trade by reducing the amount of oil consumed in this country by this very large amount, when the facts appear to show the contrary. Certainly a great deal of revenue has been received from oil, but where is the Chancellor getting his revenue from? We have to import 450,000 tons of oil purely for lubricating purposes—oil which nothing can replace; and another 240,000 tons of gas oil for use by gas companies, which the coal industry could not supply. The remaining 1,000,000 tons imported is used by industries which admittedly might use coal or coal products, but which, as has been said by the hon. Member for Cardigan, find it more economical and efficient not to do so; they use oil because it is more economical and efficient.

I rather share the hon. Member's apprehensions about the duty. I do not think it is a good thing at any time, if it can be avoided, to tax efficiency and economy. There are many industries in this country which must use heavy hydrocarbon oil. I am informed by people who know a good deal about the industry that, if the tax were removed altogether, the maximum number of miners that would be affected would be 2,000 at the outside. There is, as my right hon. Friend will admit, a sharp discrepancy—perhaps it is inevitable—between the figures supplied by people interested in coal and the figures supplied by people interested in oil. There is too wide a discrepancy, and I am inclined to think that my right hon. Friend has been a little disposed to accept the figures supplied by the coal people as against those supplied by the oil people. At any rate, I hope that between now and next year he will endeavour to give the House some accurate figures compiled by one of his own Departments, and not leave us to rely purely upon figures supplied by the Coal Utilisation Council, which are open, on the face of it, to considerable suspicion.

Apart from these criticisms, the Budget and the underlying economic position in this country which it reveals is, as I have said, rightly an object of admiration in this country and throughout the world. That is due, I think, largely to the confidence and stability which have undoubtedly and unquestionably been introduced as a result of the very existence of the present Government; and, secondly, it is due to the policy of Protection which has been put into operation, and which, whatever any hon. Members opposite may say, has fully justified everything that those of us who have been fighting for it for years past have ever said of it.

Mr. KIRKWOOD

How does it affect herrings?

Mr. BOOTHBY

Unfortunately, it would be out of Order now to discuss the subject of herring; otherwise, I can assure my hon. Friend that I would have introduced the topic. The good result has been due also to the brilliantly successful conversion operation which my right hon. Friend carried through, and for which I think he has never either claimed or received sufficient credit. Our monetary policy since that time has been carried out with extraordinary skill. Some of us have been a little apprehensive lately about the fall in the deposits of the joint stock banks. They have gone down by about £120,000,000 since 1933, and this must have, and I think has had, a slightly deflationary effect. I believe it is due to the recent policy of the Treasury in reducing the Floating Debt to too great an extent. Anyway, I would ask my right hon. Friend, if he cannot make a statement on the subject now, to look into this policy from that point of view, and see whether in fact it has not been carried a little too far, whether the effect has not been on the whole deflationary, and whether it would not be advisable to have a somewhat larger amount of Treasury bills in circulation than there has been of late.

The reduction in the standard rate of Income Tax and the protective duties imposed by this Bill have certainly stimulated industrial activity; and I would say to hon. Members of the Liberal party that, if you have £20,000,000 or so to dispose of, there is no way in which you can dispose of it with a better psychological effect than by making a reduction in the standard rate of Income Tax. In my opinion, alterations in the allowances would not have had anything like the same stimulating psychological effect on industry generally throughout the country as the reduction in the standard rate, although I quite agree that, on purely social grounds, there is perhaps a stronger case to be made out for an alteration in the allowances. This, however, is one of those cases where you have to strike a balance between conflicting interests, and I think my right hon. Friend was quite right in making a reduction in the standard rate this year, and deferring any alteration in allowances to a later stage; for it is obvious that the Chancellor is anticipating a continuance of industrial revival in this country. Is he justified? Well, I think he is justified within limits, but not necessarily for an indefinite period.

As this Finance Bill is based very largely upon a continuance of the industrial revival, I would like briefly to examine the economic position at the moment in this country, because I have recently had an opportunity of going through a number of vital facts and figures compiled by one or two statisticians without any political bias. They reveal a very interesting underlying economic situation. The index of ordinary shares—a good rough test in this country—rose from a low point of 51.3 in May 1932 to 90.2 in May this year—a rise of about 76 per cent. That shows what can happen between a Labour Government and a National Government being in office. The quantity of industrial production all over this country is now up to the average of the three pre-slump years. That is a claim which can be made by no other country in the world except Japan and Sweden. There is no doubt that this industrial revival has been founded, first of all, upon a revival of home trade as against foreign trade; and, secondly, upon the increased activity in the "capital" or "investment" industries, as against an increase in the sale of consumption goods.

This brings me to the point raised by the hon. Member for East Fulham (Mr. Wilmot), and the whole question of direct or indirect taxation. Is your industrial revival going to be based on an increase in consumption goods, or upon an increase in capital or investment industries? The whole movement in America has been based upon consumption and, I think, that is one of the reasons why it is breaking down, because I do not think that an industrial revival based purely upon consumption is sound. Every test goes to prove that solid recovery has been based hitherto upon an increase in capital or investment industries, and that is why we have more reason to be satisfied at the present time than any other country, because it has also been proved that the expansion of activity in capital-producing industries creates at the same time a net increase in the puchasing power for all other goods. In 1931 a statistician, a friend of mine, made a very elaborate calculation. Roughly, it was that an increase of £ X in the aggregate output of investment trades should lead to an increase of £2.5 X in the value of general output all over the country, which would take place almost simultaneously. This calculation has been fulfilled in the case of our industrial revival in a very remarkable manner. The figures for the first quarter of 1934 show that the whole value of home-produced output has risen from the low point of 1932 by £75,000,000 a quarter, or £300,000,000 a year, as compared with a rise of £125,000,000 in the investment trades. That works out almost exactly in the proportions the statistician made in his calculation for 1931.

Mr. MAINWARING

Will the hon. Gentleman give briefly the figure in volume of goods, independent of money terms?

Mr. BOOTHBY

I have not got it worked out here.

Mr. MAINWARING

It is an easy proposition.

Mr. BOOTHBY

As a matter of fact, it is worked out in volume as well, because the values have been worked out in corresponding figures, so that it is easy to work it out in amount.

Mr. WILMOT

This is a very important point. There is a change of prices in the classes of goods.

Mr. BOOTHBY

I would dissent from that opinion; but, of course, it is a technical argument, and the hon. Member cannot expect me to argue these technical matters across the Floor of the House. Broadly speaking, I believe that my statements are true, and that the prices I have given correspond. Of this increase of £125,000,000, which is not in dispute, about 50 per cent. is accounted for by increased demand for fixed capital goods, particularly building. About 33⅓ per cent. represents re-stocking, and 16.2/3rds per cent. improvement in the balance of trade, due, obviously, to the protective measures which we are taking in this Finance Bill. Of the 50 per cent., building is the backbone; and it becomes clearer and clearer, the more you investigate the causes of this industrial revival, that it has been building activity which has been at the bottom of it, just as it was at the bottom of our recovery from the depression of the 'nineties and has been the basis of practically every sharp industrial revival. Our present industrial recovery is founded on building activity based on low interest rates. Of course, the Chancellor can claim a direct share in that, because no man has done more to reduce interest rates than he.

The building and contracting industry in this country is the largest. The annual output is £300,000,000, and we are now erecting dwelling houses at the rate of £100,000,000 per annum. It is enormous, but it cannot be expected to go on, and my right hon. Friend ought to give the closest consideration to the whole question of building activity, because while I admit that these figures are satisfactory and even spectacular, I do not think that the housing proposition is fundamentally sound, and I am sure it is in many respects unsatisfactory. I have never thought that speculative builders should be allowed a free hand to erect these monstrously ugly little houses which today disfigure the whole countryside. For the most part, the houses being built at the present moment are being built for a limited class, the lower and middle class, and saturation point is bound to be reached before long. Fortunately, from an aesthetic point of view a large number of these houses will fall down, and no one will regret that except the unfortunate people who have to go on paying instalments on them.

Potentially the situation is alarming, because if we are to continue this industrial revival, the present housing activity will have to be supplemented by some other kind of constructive activity, and I hope that my right hon. Friend will see to it that the next housing phrase—and no one knows more about the problem than he does—will be properly faced, and that better houses will be built for people who need them more. When it comes to restocking, there are indications at the moment that this is already on the wane. As for the balance of trade, the economic war all over the world is being intensified at the present time, and we cannot possibly look for any substantial revival in our export trade over the next few years; at least we should be very ill-advised to base any great hopes upon it. Therefore, when this immediate housing demand has been satisfied, our position may not be so good, unless the right hon. Gentleman takes definite and immediate steps to deal with it.

I would beg my right hon. Friend to consider whether it would not be possible between now and the next Budget, in order to ensure the continuance of industrial activity, to bring forward a really comprehensive scheme of slum clearance and the erection of workers' flats all over the country. I do not believe it can be done piece-meal. I do not believe it can be done by local authorities alone. I believe the Government must themselves take a hand, and that involves the establishment of a national housing corporation. Something has to be done to take the place of the present rather unhealthy, sporadic housing development. It is one of the most vital problems that confront the Government.

There is also the general question of national development. No one wants to see public works entered into recklessly, but I think we are still very behindhand in national development, and it is exasperating, when you think of the amount of British money that has gone into European countries in the last ten years, to rehouse them, re-road them, and develop them in every way, to have the sort of thing we had the other day when the Under-Secretary of State for Scotland refused even to consider financial assistance for putting up a road bridge across one of our main routes of communication. The London and North Eastern Railway has made the passage over the Forth in anything but a railway train impracticable. They cannot be blamed for it. They naturally want to get people into trains as much as possible. But the public are entitled to be considered, and for 20 years this question of a road bridge across the main East coast route between the North and the South of Scotland has been talked about and nothing has been done. I merely put this forward as an example in a plea for a more expansive policy as far as national development is concerned.

Similarly, there are no proposals in this Bill for giving any stimulus of a practical character to two industries at any rate, which are vitally affected by the present slump. The right hon. Gentleman has not taken any steps, and there is no indication that he is going to do anything, to stimulate shipping and agriculture, which would do a lot to continue and develop industrial activity, upon which the whole Budget and this Finance Bill must ultimately depend. I would ask him seriously to consider whether he would not be well advised to use some of the surplus revenue which he will probably get, and which he can take out of industries and individuals that are going to prosper more and more, and apply it to give a direct stimulus to one or two special industries which are suffering terribly, through no fault of their own.

I have never advocated the comprehensive Government planning of industry, I do not think it can be done except under a Communist régime with any chance of success. But during a world economic crisis it is necessary for the Government, and especially for the Chancellor of the Exchequer, occasionally to strike a better balance between industries which are prosperous and others which are in the doldrums. If the present Government have a fault at all, it is perhaps a slight lack of imagination. The Chancellor well knows how easily bored people become these days. The one thing that we want to avoid at all costs is a repetition of the incompetence and muddle which we must always associate with the advent to power of the Labour party. It ought to be avoided if we can possibly manage it in the course of the next two years. I think we can manage it, but only if we produce a constructive policy which will catch the imagination of the people.

12.30 p.m.

Colonel WEDGWOOD

I congratulate the Government. I do not remember, I do not think anyone remembers, any Finance Bill introduced by the National Government which has had the support of the hon. Member. This is indeed an occasion which should be celebrated. I am not quite so certain that the hon. Member is to be congratulated. I have always looked forward to the time when he would take his proper place, possibly in the Labour party, realising that his best chance was on this side, as he must indeed have realised himself. Now I see that his best chance is the re-shuffle next September. His speech really has shattered some of my fondest illusions. I have regarded him as one who really understood this question of the balance of trade and the advantages of inflation. Now the most deflationary Budget that has ever been introduced has received his blessing. I understand the reason. He attacked the Liberal party on the ground that they were still Free Traders and that, if it had not been for Tariff Reform, we should not have seen any recovery of trade, and the Chancellor of the Exchequer would not have been able to introduce this heaven sent beneficently inspired Budget. He knows as well as I do that, if there had not been any Tariff Reform, trade must still have balanced and goods would have been kept from coming into the country, not by tariffs but by the fall in the purchasing value of the £ sterling, that exactly the same results as far as our import trade is concerned would have been caused by the fall in the value of the £ as have been caused by the protective tariff which has been put on, with this profound difference, that whereas the tariff, by obstructing imports into the country, confers no benefit whatever on the export trade, increases indeed the cost of production of goods to some extent to the exporter, yet if trade had been balanced by the fall in the value of the £ then the export trade would have got the benefit of that fall in the value of the £. So that even now, when every one is so satisfied with the Government, when we see that all that we required was the right hon. Gentleman as Chancellor of the Exchequer instead of these reprobates on the Labour benches, when you take credit for all the prosperity which is being sung of so much today, and of which I see so little in my constituency, remember that coming of gold had a good deal more to do with it than Tariff Reform a la Birmingham.

But I really did not get up in order to raise this fundamental question of deflation versus inflation, nor to add to the chorus of post mortem requests to the Chancellor. We know that we cannot get anything out of him this year. Everyone has had his say in Committee and on Report. We have been prostrating ourselves all along the Appian Way before the right hon. Gentleman for the last three weeks. Now I suggest that we come off it. It is no good talking about oil. You cannot get that idea into his head. I do not propose to say anything more about penal taxation in the cinema trade. Let it have peace for a year. First in the queue. I wonder how many people will be first in the queue for next year. I am not certain there are going to be any doors open at all next year for the queue to enter.

I really want to speak on the Third Reading because I believe that I am not merely the last representative of the Manchester school but the last advocate of the taxation of land values remaining in this House. We have heard many speeches on the taxation of land values during these Debates, much wailing, but I did not hear one single speech understanding the issue or making promise for the future. Speaking straight from the horse's mouth, I may tell the House that the taxation of land values and the valuation we had on the Statute Book was of no earthly use. It was the production, first of all, of Mr. Philip Snowden, who did not understand it, secondly of the Treasury officials, who did understand it, and thirdly of the Opposition from that side of the House, from over there and from this side to the whole principle of cheapening land by the taxation of land values; the resulting Measure was one which I could inter without a sigh. I cannot also inter without a sigh the attitude of the Labour party towards the question. We know the Government view, and as far as I can make out the Liberal view has something to do with unearned increment.

What is the Labour party view? [An HON. MEMBER: "Nationalisation."] Now I have got it. It no longer appears on the Labour party programme. There is no longer the question of taxation of land values or the rating of land values appearing in any of the eloquent speeches at Labour meetings. I shall not be asked any longer to go to Labour meetings. I should like to know whether the prospective revival to which the right hon. Gentleman the Chancellor of the Exchequer referred not I think with hope, but with derision, is ever likely to come from the progressive benches or from the progressive party in this House. The real difficulty is that the vested interest in the land is pretty strong on the Labour benches. The second objection is that most Labour people have got nationalisation on the brain. At the last meeting which I attended I said, "Are you going to do it or not?" And they said, "We are really going to do the thing in style; we are going to nationalise the land."

I have heard land nationalisers talk for 30 years The only thing I know about them is that they are not stickers. Never a Bill. The real difficulty about nationalisation is, what are you going to nationalise? What is meant by the nationalisation of the land? As long as you talk in vague terms about the nationalisation of land, it is evident that you do not intend to get anywhere at all. Do you intend to buy the improvements on the land? If you intend to buy the improvements on the land, what do you intend to do with them? You cannot let them to anybody except the person who is using them at the present time. You cannot nationalise any land in this country unless you have at the same time the power of saying how that land is to be used. You buy up, say, a factory. To whom can you let the land? What is the State to do? It must either conduct the factory, or it must lease the factory. There is no one to whom to lease the factory except the man who has it at the present time. Therefore, the whole idea falls to the ground, because if there be only one person able to lease that hit of land he can pay as little for it as he likes.

Mr. MAGNAY

On a point of Order. It is very interesting and illuminating to hear the right hon. and gallant Gentleman from the front Labour bench breaking the Labour party to pieces like potter's clay, but I suggest that it is not in Order in a speech during the discussion of the Finance Bill.

Sir ARTHUR MICHAEL SAMUEL

May I make an appeal on behalf of the right hon. and gallant Gentleman the Member for Newcastle- under-Lyme (Colonel Wedgwood). He has suggested that he has at better way of raising revenue than that put into the Budget. Let us hear what he has to say. Let him destroy the old nationalisation plan and the Socialisation of industry as put forward by the official Opposition.

Mr. WEST

May we also discuss the pros and cons of land nationalisation versus the taxation of land values?

Mr. SPEAKER

The hon. Member has put me in a considerable dilemma. The right hon. and gallant Gentleman was stressing the question of the repeal of the Land Value Duties, but I cannot say whether nationalisation has anything to do with it.

Colonel WEDGWOOD

I thought that it was a God-given opportunity of saying what I feel about land nationalisation.

Mr. SPEAKER

I think that the right hon. and gallant Gentleman had perhaps better leave the nationalisation of land and come back to land values.

Colonel WEDGWOOD

I will leave that sad subject, returning to it later on, of course. There is one other point in the Budget besides the tragedy of the Land Value Tax upon which I would like to say a few words. It is a point with which it is rather more difficult to deal. I do not think that anybody in this House likes our situation vis-à-vis America at the present time. That situation is far more dangerous now than it was three weeks ago in view of the Bill which the Chancellor of the Exchequer or somebody else is to introduce next Monday. We are up against a really dangerous situation. It was not until this Budget was introduced that anybody, either here or in America, imagined that there would be anything in the nature of a repudiation of our debt to America. It was only when the unfortunate thing happened that what we owe America was just about the same amount as our stir-plus here, that the question really came home to the American mind. On Monday we are to put forward a scheme for securing for ourselves the payment of what Germany owes to us and refuses to pay; if I may say so, an admirable scheme. But I do not want to see that scheme or anything of its nature applied to Great Britain. Therefore, it is vitally urgent that in connection with this Finance Bill, with its surplus, the Chancellor of the Exchequer should take an opportunity of stating our case vis-à-vis America. I am certain that that case is perfectly straightforward. It is that we shall honour our obligations whatever the attitude of other countries towards us may be. We stand by the letter of the bond. The real difficulty is not that France is not paying us, but that there is difficulty in getting our payments into America. The difficulty with which we are faced is not that we have not the money, not that we do not intend to pay, but that America cannot take the things that we can send her. That has been met since the Budget came in, to a certain extent, by the American offer to take goods instead of cash. I do not know how far that offer goes.

Brigadier-General Sir HENRY CROFT

It is an inquiry, not an offer.

Colonel WEDGWOOD

I would draw attention to a rather important letter from Mr. Richard Holt, once an honoured Member of this House, which appeared in "The Times" the other day, suggesting that we should meet the debt by placing a credit in sterling in the hands of the banks here, upon which credit Americans would be entitled to draw when they were buying things from this country that would ensure that the whole £30,000,000 a year which we owe to America would be sold to America every year and, pro tanto, the debt would be met by the imports of British goods into America. That idea neglects the fact that we have at the same time to buy from America. We cannot be content to export and get nothing back. While that scheme does to a certain extent meet the views of America, and there is no doubt that the whole of that credit would be taken in imports, while we are about it we might arrange that the credits should be, shall I say, doubled so that we could pay America £60,000,000 a year in goods and they would pay us £30,000,000, the difference between the two being the debt payment. At the same time our payments would meet our necessary imports from America.

Mr. SPEAKER

Strictly speaking, there is nothing about the American debt in this Finance Bill.

Colonel WEDGWOOD

It ought to be in the Bill.

Mr. SPEAKER

I am not concerned with what ought to be in the Bill but with what is in the Bill.

Colonel WEDGWOOD

I am sorry that I have been transgressing the Rules of Order so frequently, but I have said all that I want to say. I should, however, like from the Chancellor of the Exchequer a definite assurance that, be the difficulties what they may, England is going to meet her bond in the long run and pay her debt of honour to America.

12.49 p.m.

Captain CAZALET

I, like every other hon. Member, listened with great delight to the speech of the right hon. and gallant Member. I think he is about the only remaining individualist in this House, and he has relegated the taxation of land values to the category of the Schleswig Holstein question, about which it was said by a certain individual that only three people ever understood it, two of whom were dead and he himself had forgotten it. The right hon. and gallant Member appears to be the only person who can understand the taxation of land values. I suppose he will not come to speak at any Conservative meetings. As he has said, he is not likely to be asked to any Labour meetings in the future, and as you, Mr. Speaker, have ruled him out of Order to-day, it is doubtful whether we shall ever hear the pure milk of the gospel of these taxes. It must, however, be some satisfaction to the Chancellor of the Exchequer that the right hon. and gallant Members approves the action that he has taken in repealing the particular Clauses dealing with the taxation of land values.

I listened with great delight, as I always do, to the speech of my hon. Friend the Member for East Aberdeen (Mr. Boothby). Although he did not refer particularly to the industry of his own constituency he always tries to put in a word for his own country, whether it be the national beverage or an endeavour to get a greater grant out of the taxpayers of England for the benefit of Scotland.

Mr. BOOTHBY

Hear, hear.

Mr. MACQUISTEN

In view of the enormous revenue to the National Exchequer from the Scottish national beverage, is not Scotland entitled to more consideration?

Captain CAZALET

Whatever Scotland may be entitled to the hon. Members who represent Scotland in this House try to ensure that Scotland gets it. In spite of the many other attractions to draw Members away from the House to-day, any supporter of the National Government who is fortunate enough to catch your eye, Mr. Speaker, must feel it a privilege to congratulate the Government on the Finance Bill, the Third Reading of which we are now discussing. I do not know whether to admire or congratulate the Chancellor of the Exchequer most on the present financial position of the country or on the manner in which for the past two or three years he has successfully resisted what may be called the specious expedients which have been put up to him by which it was suggested that he could bring about financial soundness and turn a deficit into a surplus. As the right hon. and gallant Gentleman has said, one of the most fortunate incidents that has taken place, and to which in a very large measure such prosperity as exists to-day is due, was the fact that we went off gold 2½ years ago. That was not due to the integrity of any one man but rather, one might say, to the fortuitous intervention of Providence. In spite of that, sound orthodox finance has been pursued and has won the day.

One cannot help comparing the situation in this country to-day with the situation prevailing in the United States of America. Never a day or a week goes by in America without some new experiment being suggested. I do not think that we could have a better instance of what happens when a Government starts to interfere with business than in what is happening in America. Once it has started to interfere it has to continue to interfere. One cry raised from all sections of the community in America to-day is that the Government should cease to interfere. It always seems to me that the duty of a Government is not to interfere any more than necessary in the conduct of industry but rather to create that atmosphere and those conditions in which efficient industries can run their own show and prosper. Conditions have improved in this country because of the policy pursued by the Government, because of the tariffs that have been imposed and the Agreements that have been made, and I believe that the improvements will continue. It is almost impossible to gauge the change that has taken place in regard to the financial situation of this country, unless one has been abroad and heard the testimonies which have been paid to this country by foreigners. What has happened? London has once again become the financial centre of the world, England is the chief exporting country of the world, Empire trade, in spite of world conditions, is increasing year by year, and I believe that the foundations of that trade, through the Ottawa Agreements, have been well and truly laid. But without a sound currency and a balanced Budget none of these benefits would have been achieved.

No Budget has had less criticism than this, but I suppose that every hon. Member has some particular fancy of his own. We may feel a little disappointed that the Chancellor of the Exchequer has not turned a sympathetic ear to our own particular subject, whether it is oil or cinemas, and hope and trust that he will look with favour on it next year. My own particular fancy is Death Duties. In years gone by the Chancellor of the Exchequer has spoken with considerable sympathy on this question. I think he has under-estimated the revenue he is going to receive in the coming year. I would ask him to turn his attention to the effect of Death Duties on agricultural estates—

Mr. SPEAKER

I do not think there is anything about Death Duties in the Finance Bill.

Captain CAZALET

Various forms of taxation are included in the Bill, and Income Tax has been discussed at some length.

Mr. SPEAKER

There is a special Clause dealing with Income Tax but not with Death Duties.

Captain CAZALET

I regret that I should have traversed the rules of debate and I will merely say this, that, if the right hon. Gentleman will examine with sympathy the force and manner in which Death Duties are applied to-day, I am certain that next year, if he has a surplus to distribute, he will consider sympathetically this particular form of taxation, which I hope to be able to deal with on some other occasion.

There is one other matter which I hope I shall be in order in dealing with, our debt to the United States. I only mention this because we may at any moment be in the position of having to make a settlement, and it is, therefore, an integral part of the finance of this country. Twice a year now a crisis arises. Surely it behoves us from the point of view of finance and Anglo-American relations to get the matter settled. This is a debt which is different in its character from almost any other debt. No one wishes to be a defaulter, and the only thing I regret in connection with the original settlement is that it did not contain a most-favoured-nation clause. The settlement was just and fair, and the best that could be obtained under the conditions prevailing, but since then other countries have made debt agreements far more favourable, and all I ask is that our debt should be settled on the same favourable terms, as for instance the debt of the Italian Government.