FINANCE BILL.

HC Deb 16 July 1937 vol 326 cc1665-752

Order for Third Reading read.

11.5 a.m.

The Financial Secretary to the Treasury (Lieut.-Colonel Colville)

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

This is the first occasion on which it has fallen to my lot to take part in the Debates on the Finance Bill, but from reading previous records I see that the Third Reading of the Finance Bill resembles in some ways a speech day which takes place at the end of a term at school. There is the usual occasion for merit to be ascribed to those boys who have done well during the arduous work of the term, and then there is an opportunity for some great man to come down and comment on the affairs of the day, and to advise the boys how they may best prepare their minds to meet all eventualities. This will be reserved for my right hon. Friend the Chancellor, who later in the day will give away the prizes.

The Finance Bill is the annual provision which the House makes for the needs of the country, and our discussions have really gone on since the Budget day on 20th April. In addition to providing for the needs of the country, the Finance Bill always provides interesting fare for the House of Commons, and we have had this year our full quota of controversy, intricacy, and, occasionally, cordiality. Of intricate questions we have had our full share, and the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence)—

Mr. Lees-Smith

He is not here to-day—

Lieut.-Colonel Colville

—who has been so prominent in the Debates from the Opposition point of view, has shown a real vigilance and assiduity throughout and a thirst for knowledge, which we on our side have endeavoured to assauge. I recollect that on one occasion that thirst for knowledge led me into a series of definitions on one of the finer points relating to professions that so mystified the House that the searchlight and brilliant exposition of my right hon. Friend was needed to clear away the fog. I was able to take heart, however, from the fact that the hon. Member for South Shields (Mr. Ede)—who usually addresses the House with such assurance—I regret he is not here—when he was seconding the Clause which stood in his name relating to the National Trust, admitted quite frankly and openly that he had not the slightest idea what the words meant, although he knew the intention that he wished to convey. We have had our intricate points to discuss, but I think that the brilliant expositions of my right hon. Friend and the great help afforded by the learned Attorney-General on these points cleared away any mists which lay over the Committee. I would like to express regret that the hon. Member for Chesterfield (Mr. Benson), who usually takes such a keen interest in Finance Debates, was unable to be here for a reason which we all very much deplore—his serious accident, and we on this side express our sympathy with him.

The Opposition Liberal point of view was mainly put by the right hon. Gentleman the Member for North Cornwall (Sir F. Acland), who, from his recollection of previous experience in my post as Financial Secretary, had a degree of understanding and sympathy though he did not always agree with us. On the Government side there were many who offered advice to us. Perhaps the most prominent among them was my hon. Friend the Member for Huddersfield (Mr. Mabane), and the hon. Member for South Croydon (Mr. H. G. Williams), though on one occasion the support which he accorded me was a little embarrassing because of the variation in our arithmetic. However that may be, much of the advice we had from these quarters was helpful, and such of it as we were able to accept, we did.

To refer to the more controversial questions, the House will agree with me that controversy this year has centred mainly round one feature of the Bill—the National Defence Contribution—and at least three-quarters of our time this year has been spent on this tax. It is worth reflecting that this tax, which is designed to raise only £2,000,000 this year and £25,000,000 in a full year, is just about one-fortieth of our requirements, but none the less it has taken up about three-quarters of our time. That is not, however, unnatural, because, when a completely new feature is introduced, it is proper that that should be the one which is closely examined in Parliament. The principle of taxing growth of profits which was contained in the first version of the National Defence Contribution was widely approved. From all quarters of the country there came an an acceptance of the desirability, if it could be done, of taxing the growth of profits, yet the tax was criticised as being too complicated.

The hon. Member for Bishop Auckland (Mr. Dalton) said, "Give us a simpler tax with a larger yield," and when the Prime Minister agreed to this, it was the Leader of the Opposition himself who thanked Heaven that we had a Government that was responsive to the will of the people. Speaking of the will of the people, he must deduct two people, one the hon. Member for West Fife (Mr. Gallacher), who throughout staunchly championed the earlier form of the National Defence Contribution, and I think that the other was the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood), who had the same view. So my right hon. Friend withdrew the first version of the National Defence Contribution and substituted the second. There is a French proverb which says, "It faut reculer pour mieux sauter." I will translate it because my French may be bad and my friends may not recognise it—" A step back makes a better leap." So when my right hon. Friend appeared to step back, it was not to retreat, as some people suggested, to the forces of organised obstruction, but rather to make a better leap, and he has, in fact, made that better leap; and in the National Defence Contribution in its present form as contained in the Bill, we have that better leap, and a more effective tax which we intend to apply to profits.

When we came to the House with our simpler tax with a larger yield, there were many people who not unnaturally settled down to see how this simpler tax, with its wide and general application, would affect particular interests with which they were connected. We had the point of view of the local authorities, the building societies, the insurance companies, the co-operative societies and of that rather indeterminate class, the ordinary shareholder. The ordinary shareholder is not always a person who simply specialises in holding ordinary shares. Most people who have ordinary shares have other shares as well, and I sometimes think that we speak too loosely of the ordinary shareholder being a man quite by himself.

The right hon. Member for Hillsborough (Mr. Alexander) and the hon. Member for East Ham South (Mr. Barnes) put the point of view of the cooperative societies with very great sincerity and force. Although the House did not agree with their point of view, it appreciated the way in which they stated their case. The right hon. Member for Hillsborough made no apology for representing the views of the co-operative movement in the House of Commons, and we perfectly understood that point of view. Nevertheless, the House did not agree with his contentions, and, although I do not wish to re-open the controversy, I think the country as a whole will endorse the attitude that we have taken in the application of the new tax to this form of trade as well as other forms of trade.

We have had much advice, some good, which we were able to accept and some bad which we had to reject. The advice we received reminded me of the story of the miller, his son and an ass going to market. The miller was riding the ass and the son was walking beside him. The first group of people they met said: "What a lazy old man, to ride and leave his poor son walking in the mud." Therefore, they changed positions, the miller walking and the boy riding the ass. The next passer-by said: "Look at that idle boy riding while his poor old father walks," thereupon the father mounted the ass beside his son, but when they met the next group of people they said: "That is cruelty to animals. See those two lazy people riding that poor ass. They are more able to carry it." The miller and his son dismounted and arrived at the market carrying the donkey. Had we accepted all the advice we received on the subject of the National Defence Contribution an absurd result would have been reached. [An HON. MEMBER: "Complete the simile."] No, I will not attempt to say in regard to this House which was the miller, which was the son and which the ass though I may have my own views as to where wisdom lies.

Now let us look at the picture as a whole and the financial requirements of the country as a whole. I should like to remind the House that when my right hon. Friend the Prime Minister, as Chancellor of the Exchequer, opened his Budget, he had to meet a total estimated expenditure of £862,000,000, and was faced with the task of finding additional revenue to the extent of £38,500,000. Fortunately, the growing prosperity of industry and the increased spending power of the population are being reflected in increased returns and, therefore, it was possible without any increase in the taxation imposed last year to estimate that the revenue would automatically increase by £23,500,000. The position would have been immensely more difficult had it not been for the increased prosperity of the country, for which I hold the policy of the National Government to be directly responsible. In consequence of that increased prosperity and the consequent estimated increase of revenue by £23,500,000, even without additional taxation, the deficiency was narrowed to £15,000,000, and the Chancellor of the Exchequer's problem was to deal with that. The increase in the standard rate of Income Tax to 5s., which from the revenue point of view is the principal feature of this year's Finance Bill, is estimated to bring in £13,000,000.

In increasing the standard rate my right hon. Friend left untouched all the allowances which have been given in the last few years, and which give such substantial relief to the taxpayer with a small income. I would emphasise the point that the taxpayer with a small income is in a better position to-day than when the standard rate was last at the figure of 5s, There have been appeals to us to make further concessions to the small taxpayer, which we had to resist on financial grounds. Therefore it is well to emphasise that in going back to the standard rate of 5s. and leaving the allowances untouched the small taxpayer is in a better position than when the rate was last 5s. The yield of £13,000,000 from the increase in the standard rate of Income Tax and £2,000,000 from the National Defence Contribution this year balances the Budget.

We are challenged about the National Defence Loan. I notice that the Opposition Amendment makes reference to it. On that point I would say that Parliament has accepted as a deliberate policy the principle of a loan for Special Defence purposes and recognised the necessity of seeing that our defences are put into a proper condition to meet the situation as it is in the world to-day. Parliament recognised that it was fair that this very heavy expenditure should be borne not only by ourselves but by those who come after us. For the period of 30 years we consider that it is perfectly proper that there should be some measure of contribution made to this quite exceptional expense which we have to face at the present time for the purpose of Defence. Parliament accepted that proposal and the country has accepted it, as has been shown by the 12 by-elections which have taken place since the policy was adopted. If hon. Members opposite seek to prove chat to assist our wholly exceptional Defence expenditure by loan is not accepted by the country, they will have a very difficult task.

Many demands are made from the benches opposite for increased social services, and I should like to deal with the cost of the present social services. The total estimated cost in 1937 for old age and widows' pensions, housing, health insurance, unemployment insurance, education and social purposes generally, is £215,000,000. I group these heads together as covering in general what we call our social services in order to get an idea of the growth compared with some years ago. In 1925 the comparable figure for the same group was £100,000,000, an increase of £115,000,000 on these services alone. Without adding to present taxation there is always a large automatic increase in the cost of the existing services. Take their question of pensions alone, about which I have been asked many questions at Question Time and with which I had to deal a few nights ago on the Adjournment. The cost of old age and widows' pensions for people over 65 years of age in 1937 was: old age pensioners over 70 years, £45,000,000; for those between 65 and 70, £21,000,000; and for widows between 65 and 70, £5,000,000. The £45,000,000 is paid entirely out of the Exchequer and of the remainder of the money, which is met out of the pension fund, there is an Exchequer contribution of £16,000,000. Therefore, you have a figure of £61,000,000 as the Exchequer expenditure on pensions in the present year, and this will automatically increase until a date when it will reach a figure of £80,000,000 without any further legislation.

The Government, however, have not hesitated to introduce further legislation affecting social services, although it does mean some additional charge. They have introduced such measures as the Pensions Act, the Special Areas Amendment Act, the Midwives Act and the Act for improving the facilities for physical training. All these are indications of what the Government have done, but I would remind the House that an immense sum of money is required annually for the social services, that it is automatically growing and when hon. Members ask for increased pensions and for larger sums to be spent on social services, they must take note of the great present outlay and of the automatic increase which takes place.

I hold, and the House, I think, will agree with me, that confidence in the financial administration of a country must be the basis of prosperity. During the past few months when we have been engaged in discussing finance, events have been taking place abroad. Governments have fallen and some foreign countries have had financial troubles, but in this country there has been continuous improvement in every respect, in employment, in home trade, and in overseas trade. At times there has been almost an embarrassing flow of funds from abroad into this country, an indication of the confidence which other countries have in us, while the confidence of our people at home in the administration is evidenced by the results of the last 12 by-elections.

Let me give one or two figures to illustrate the improvement which has taken place, in this country. In employment a record figure was reached in June in the number of persons in insurable employment; well over 500,000 more people were at work than a year ago, and well over 1,000,000 more than two years ago. Take the test of our home trade. The Chancellor of the Exchequer pointed out yesterday that the daily retail sales have gone up by no less than 13 per cent., as compared with a year ago, and there has been a marked increase in industrial production. Our home trade shows no signs of slackening off. Our overseas trade has also shown steady improvement, and I hope hon. Members will mark the really notable figures published two days ago of the improvement in our export trade. Exports in June were up by £12,000.000, or 38 per cent, on June of last year, and for the first half of this year our exports were £43,000,000 greater in value than for the same period last year. That is a really remarkable measure of recovery. With our activities so great at home there might be a tendency on the part of manufacturers to concentrate on the home market and neglect orders coming from abroad, but when we find that there is an increase of £43,000,000 in the value of our exports in the first half of this year, it is a fact from which we can take a considerable amount of satisfaction.

Then there is the effect of the Trade Agreements which are linked with the Finance Bill by the Canadian Agreement. In the year ending March, 1937, our total exports of all descriptions were £103,000,000 more in value than in the year 1932. I take the year 1932 purposely because it is the year before the agreements became effective. Of this £103,000,000 increase, no less than £81,000,000 is with Empire and foreign countries with which we have made trade agreements. I mention that because the Liberal party in opposition have persistently opposed our Imperial trade policy, and have also cast considerable doubt on the value of our trade negotiations with foreign countries. I ask them to reflect on the figure I have given, that out of £103,000,000 increase no less than £81,000,000 is related to Empire and foreign countries with which we have made trade agreements. We find other signs of activity when we look at capital issues, bank clearances, notes in circulation and savings in the National Savings Certificates and the Post Office Savings Bank. The reason is summed up in one word—confidence in the financial administration of this Government. The revenue is expanding steadily, and the yield from Customs and Excise duties is expanding. I would remind hon. Members of the Liberal party when they are continually attacking the tariff policy of the Government that that carries with it the responsibility to show how they would raise the money which would be lost if we adopted their suggestion and reduced or abolished tariffs.

Mr. Graham White

The Financial Secretary will know that I cannot possibly deal with these matters on this occasion. I can only deal with what is in the Bill.

Lieut.-Colonel Colville

In our debates on the Bill hon. Members of the Liberal party have sought to break right through our tariff policy by removing large classes of goods from the purview of the Import Duties Advisory Committee, and when they attack our tariff policy it is fair to remind them of the value to the revenue of the duties we have imposed. The result of the Government's policy of cheap money has been that the bank rate for borrowing has been maintained as low as two per cent, for the last five years. That is I think unprecedented in this or in any other country and I hold that the policy of cheap money has had a great deal to do with the recovery of industry in this country. If it had not been for the inescapable necessity of immense Defence expenditure the Chancellor of the Exchequer would indeed have been in a happy position with a considerable Budget surplus available for whatever purpose he felt right to apply it.

The people of the country have, however, shown quite clearly that they regard it as the Government's first duty to ensure their safety in present world conditions. It is held, not only in this country but in very many countries abroad, particularly those democratic countries to which hon. Members opposite are fond of referring, that in present world conditions the risk of European war diminishes with the knowledge of Great Britain's growing strength. With that responsibility on his shoulders, my right hon. Friend could not have done other than he has done this year in framing his financial proposals. Frankly, I read the Amendment of the Opposition with amazement. They may criticise the Finance Bill and vote against it, but if they were in office to-day, they would be faced with the same inescapable necessity of raising no less money than we are raising at the present time. Do they deny that? [HON. MEMBERS: "More."] We might well have been at war if we had adopted the policy of hon. Members opposite, and then the question of money would have been very different. I repeat that if hon. Members opposite were in office, they would be faced with the same inescapable necessity of raising no less money than we are raising at the present time, and in doing so they could not have devised a fairer or less burdensome method than that which we have adopted and when I say less burdensome, I mean less burdensome to the very people of humble means to whom the Amendment refers. This is the right hon. Gentleman's first Finance Bill, and he has indeed no cause to be apologetic for it. It will take its place among the wise Measures passed by the National Government in pursuance of their policy which has brought prosperity to this country.

11.38 a.m.

Mr. Lathan

I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof: this House cannot assent to the Third Reading of a Bill which, failing to raise revenue sufficient to meet current expenditure, accepts in principle a national deficit regardless of the temporary and artificial nature of the present trade prosperity, and imposes taxation which, by disregarding the differentiation based on personal income, places an unjust share of the burden on members of co-operative societies and other persons of humble means. It would be churlish not to allude in appropriate terms to the genial speech of the right hon. and gallant Gentleman the Financial Secretary to the Treasury, who has introduced an atmosphere which is of a somewhat unusual kind in a Debate of this character. Whatever else the speech may have indicated, it showed a measure of complacency on the part of the Treasury Bench and hon. Members opposite which we on this side, and I believe many millions of our fellow-citizens, find it difficult to understand. As the right hon. and gallant Gentleman proceeded in his speech, with references of a schoolmasterly sort to prosperity and improved conditions, I wondered whether, before he concluded, he would place me in the position in which I have been placed in the humble schools, which it has been my lot to attend, of receiving in addition to a lecture from the schoolmaster a bun and an orange in a paper bag. But perhaps that task will be left to the schoolmaster-in-chief, who has enlightened hon. Members—and I gladly admit it—in the revealing speeches which he has delivered from time to time in the course of the Budget proceedings.

I am not in a position, nor, I judge, is any hon. Member on this side of the House, to dispense either prizes or praise to the Government in connection with the Budget. Whatever else I may be disposed to claim, this morning I certainly shall not be in the position of a great man who has come to deliver a fine speech on the circumstances surrounding our attendance here. The right hon. and gallant Gentleman referred to the thirst for knowledge and information which has been displayed by my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) during the Budget discussions. I will only comment that it does not seem to me that, whatever thirst has been displayed, and whatever pressure we have endeavoured to bring to bear upon the Chancellor and upon the Government there has been in any very marked degree, any revelation of the Government's justification of the methods which they have adopted in framing this Budget, or anything that will enable us to reach a clearer understanding of some of the proposals embodied therein. The right hon. and gallant Gentleman also referred to the approval given from this side of the House to the desirability of taxing growing profits. We still indicate our approval, but we are bound once again to indicate our disapproval of the marked indisposition of the Chancellor to go where the profits are, and to ease the burdens which, in consequence of his reluctance, will fall upon the shoulders of those least able to bear them. I listened to the quotation which the right hon. and gallant Gentleman was good enough to translate—freely it seemed to me—for the benefit of my hon. Friends.

Lieut.-Colonel Colville

I translated the quotation only because I feared the House might not recognise my French.

Mr. Bellenger

We did not recognise the translation.

Mr. Lathan

The translation was more difficult to recognise, and I will say no more than that the proposition seemed to me to be a very doubtful one.

The right hon. and gallant Gentleman's allusion to the charges in relation to Customs duties revealed an attitude of mind which, to say the least, was ex- traordinary. I do not profess to be an authority on the matter, but the suggestion that the growth in Customs duties is to be regarded as a sign of prosperity appears to me to be an entirely perverted view. It is not a sign of prosperity. In the main, all that the increase in these duties indicates is that increased burdens are placed on the people, and, as far as a considerable proportion of them is concerned, upon the food of the people, a policy to which, in days gone by, I have heard the right hon. Gentleman the Chancellor of the Exchequer say he would never, never be a party.

Mr. Boothby

Do they not indicate a capacity on the part of our people to buy more things abroad?

Mr. Lathan

I will leave that to a more oppropriate occasion. The complacency of the right hon. and gallant Gentleman the Financial Secretary to the Treasury with regard to the by-election results was a matter of surprise. The right hon. and gallant Gentleman seems to be content with a situation which reveals a drop of 33⅓ per cent. in the Government vote in the country, and in which the only progress that has been made, limited as I readily admit it to be, is progress among the candidates of the Opposition parties. In my observations this morning, I shall not attempt to cover the whole of the ground over which the Financial Secretary ranged. Although I have no desire unduly to take up the time of the House in repetition of statements that have been made before, the truth bears repetition. I have no apology or excuse to offer for the Amendment with which I have been entrusted this morning. That Amendment, in my opinion, accurately crystallises the criticism which has been levelled at the proposals of the Government during the last three months. It indicates also, we believe, a point of view for which there is a growing measure of support in the country, and a measure of support which will continue to grow as a result of the operation of this Bill, when the taxpayers and the people of the country generally understand all that is involved in these proposals.

In the last three months there has been an abundance of comment and criticism on the Finance Bill, and few of those who have heard or participated in these discussions would have the hardihood to claim that there is anything like universal support in the country for this Measure. On the contrary, despite the boasting and special pleading of the Government Press and the Government supporters here and elsewhere, there is a growing feeling of uneasiness and resentment at the unfairness and inequity of the distribution which this Finance Bill imposes. The Chancellor of the Exchequer is mistaken if he believes that in the dialectical contests in which he has shone in this House, or in the mass voting of his obedient followers, those valiant battalions which are ranged behind him, he has secured a real victory over those who have claimed consideration for alternative courses.

In such submissions as I desire to make this morning, I do not claim, in my way, to speak as a financial expert. Rather do I wish to present if I can the point of view of the average citizen and householder, one of the millions who, pursuing their useful daily avocations, are constant in their endeavour fairly to discharge their responsibilities to those who are dependent on them, to meet all rightful dues and payments and in the matter of both local and national taxation, and to do what is required of them without undue complaint. What is more pertinent to my immediate argument is their universal desire to pay their way as they go and not to leave their duties and responsibilities to others. They certainly desire to shirk no burdens or liabilities which rightfully belong to them. These worthy citizens, of whom it may truthfully be said that they are the mainstay of the nation, are becoming increasingly uneasy to a degree which it would be difficult to exaggerate, at the grave financial circumstances to which we draw attention in the forefront of our Amendment.

The Government in this Bill are failing to raise revenue sufficient to meet current expenditure. They are, on the contrary, deliberately pledging the future. In other words, this Budget, as we have already indicated, and as I believe is admitted, is an unbalanced Budget. It is a Budget, I believe, such as would have caused grave anxiety to those who were responsible for the finances of the country in days gone by. As I have said, I do not pretend to speak as an authority on this subject, but I gather from those who are entitled to be regarded as such that the method adopted by the Government in respect of their undischarged responsibilities, outrages all the canons of sound finance. It shows a tendency to defer the meeting of liabilities, a policy which would cause some previous Chancellors of the Exchequer to turn in their graves. Why should there be these evasions, these postponements, these avoidances?

If we are to believe the supporters of the Government—and the claim has been made once again from that Box to-day—we are in the midst of a boom. It might be supposed that abounding and permanent prosperity was only just round the corner. I do not believe that, and I give the Chancellor of the Exchequer credit for not believing it either. The right hon. Gentleman must recognise, as every thoughtful supporter of his recognises, the artificial and temporary character of the present trade prosperity. He, I am sure, is under no illusion about the change which is bound to come in a few years. That, however, is no excuse for the policy which is now being pursued. The very contrary is the case. It must be obvious to any who give the matter a moment's thought that the Chancellor of the Exchequer, like his predecessor, has feared to go for his revenue where the money is. Those comfortable financial havens must not be disturbed. The real difficulty is the fear of vested interests.

I may be asked—and I can almost anticipate the characteristic eagerness of some of the hon. Gentlemen who are facing me, in putting the question "Where is the money?" I do not think either the Treasury or hon. Gentlemen opposite need any instruction on that point. Is there, in any quarter of the House, any doubt that the money is available, if only those responsible for our finances dared to take a step in the direction of where it is lying. I may be permitted to quote a striking extract from an article—which was described, I think correctly, as a remarkable article—in the "Economic Journal" by Mr. Colin Clark, who will be recognised even by hon. Gentlemen opposite as an economist of standing. That article showed that the gross national income had risen since 1933 at the rate of over £300,000,000 per annum and that last year the gross total was £5,273,000,000—an increase of £942,000,000 in the last three years.

Mr. H. G. Williams

What does the hon. Member mean by "gross national income"?

Mr. Lathan

I am sure the hon. Member does not need any instruction from me, and any attempt that I might make to instruct him would be a waste of time.

Mr. Thorne

It is the wealth produced by the country.

Mr. Lathan

I do not suggest for a moment that all that national income is taxable, but much of it is, and it should not be impossible to bring a large proportion of it under fair contribution to the needs of the State. Moreover, in recent times substantial savings have accrued in various directions. For example, Customs and Excise duties are up by about £85,000,000 a year. At the same time in accordance with the Government's policy of the avoidance of responsibility wherever possible, the contributions to the Sinking Fund have not been up to the standard, at which many believe they ought to be. They have been only £72,000,000 in the last five years, instead of a total of £280,000,000, or thereabouts. The conversion of £2,000,000,000 of War Loan to a lower rate of interest meant a saving also of approximately of £3,000,000 a year. War pensions are costing £10,000,000 less, and these amounts in the aggregate constitute a substantial contribution to the Chancellor's financial position which should enable him, we think, to meet his responsibilities without deferring them in the way that he is doing. I remember also that in 1931 the Chancellor and his predecessors and supporters insisted with portentous sternness upon balancing the Budget that year, despite the admitted difficulties of those times, deliberately exaggerated and exploited as they were. Since that time the national income has increased by more than £1,000,000,000. The Tories and their allies in 1931 insisted upon the Budget being balanced, and balanced it was, at the expense of the unemployed and the social services. That was the cruelly stern decree of those days. To-day they will not offend the profiteers in armaments and in the necessities of life by insisting upon a fair contribution to meet the nation's needs.

Viewed in the light of the requirements of the situation it is not an exaggeration—and I am endeavouring to avoid exaggeration where I can—to say that the National Defence Contribution, despite the declared satisfaction of the Financial Secretary to the Treasury, is miserably inadequate. It is a mere skimming, not of the cream, but of the froth from the overflowing vessel. I am not sure that it is even skimming. In too many cases—and this is, I think, the foundation of the satisfaction which was so generously expressed by those who represent financial interests on the other side of the House—it will be found that the charge can be passed on, and that ability to pass on the charge is one of the conditions which commend it to hon. Members opposite, who now find themselves prepared, as the Chancellor suggested in the course of his introductory submission a few days ago, to regard it almost as a voluntary contribution. Anyway, the profiteers escape. Of that, there can be no doubt. Moreover nothing whatever will come from those who have made fortunes from heavy appreciations in share values which are based upon the profits which can be exacted in present conditions. I know the comment which will be made about the increase in share values and the difficulty of going there under our present taxing arrangements, but the increase in share values is based, as everybody knows, upon the knowledge, or the belief at any rate, that concerns in respect of which these increases have taken place will be enabled, by the favourable surrounding circumstances of the day, to exact from those to whom they purvey the commodities which they produce higher and still higher prices.

Can there be any doubt in the mind of anybody of the profits which are being made in many quarters, I do not hesitate to say that the rises in the prices of commodities are literally scandalous. Every housewife in the land knows that to her cost. A few days ago my right hon. Friend the Member for Hillsborough (Mr. Alexander), who speaks with special authority on these questions, said that on 22nd April, on the basis of the British Medical Association's standard for food—a minimum, poverty standard, moreover, it should be remembered—it then cost £1 for what in 1933 could be obtained for 13s. 3d., and the prices are still going up. If evidence is needed to confirm that statement, one need only inquire at retail stores or of those who are compelled to go there. It is not in food alone, however, that these abounding increases in price are found. In supplies of all kinds, such as those for housing and building schemes, those responsible are being handicapped and progress made almost impossible by the extortionate advances in the prices of materials which have taken place. Over and over again questions in this House have indicated the difficulty on the part of local authorities proceeding with highly necessary building schemes because of increased prices. Nothing has been done of a thorough or sufficiently adequate character to meet that situation, and I know, as a member of the Public Accounts Committee of this House, that the Government as well as the private consumers are paying in this direction, because there has been abundant evidence there to show that rises in contracts have ranged from 15 to 20 per cent, in so far as costs are concerned. To-day, in the Prime Minister's own city, the municipal authorities are compelled to suspend their standing order not to purchase goods abroad, because of the way in which they are being fleeced by patriotic home producers. These are the people to whom the Chancellor has feared to go in order to secure a reasonable contribution to meet the nation's present needs. I want to make a final observation or two in regard to tax evasion. There are proposals in this Bill for which we all readily commend the Chancellor and those associated with him. I find it difficult to understand by what kind of moral code, if moral code indeed enter into the question, the dodger of taxation justifies his conduct. Here in this House he or his representatives determine what is a fair and reasonable contribution from every citizen in the State, and publicly they pretend to approve it, but immediately the tax is determined they set themselves, or their instruments, legal and otherwise, are employed, to devise ways and means of avoiding their responsibilities. Honest folk can only have the contempt which I feel the Chancellor himself must share for those who descend to such courses. I am only sorry that the right hon. Gentleman has not been more thorough in the action which he has taken, though I hope and trust I am justified in believing that his intentions have not been fully expressed in that direction and that he contemplates some further action at a later date.

May I indicate the extent to which this arrangement is going on? Hon. Members from time to time find it agreeable to their arguments to quote a paper with which some of us are associated—the "Daily Herald." A few days ago the city editor had a revealing and interesting article dealing with tax evasion. He pointed out that between 1930–31 and 1934–35 the total of incomes returned on the Surtax level fell from £593,000,000 to £407,000,000, and that it has not since recovered commensurately with the rise of profits. The Surtax yield is now much less than it was ten years ago, notwithstanding the admitted increase in profits in practically every direction. Lest it be thought that this is the view of only the city editor of the "Daily Herald," I would add that support for it comes from no less an authority than Sir Josiah Stamp in an article in the "Royal Statistical Journal" for 1936, dealing with the price level and higher incomes. He stated that the lawyers had devised a new subterfuge whereby a man with any income could avoid all Surtax whatever. He went on to describe in detail the method by which this curious and condemnable avoidance of responsibility was done.

I do not wish to keep the House by dealing with other points which arise on the Amendment which it has been my privilege to submit for the acceptance of the House. Those who follow me will deal in detail with the indisposition of the Chancellor to meet the reasonable claims put forward on behalf of the small taxpayers and the co-operative societies. The present Budget has been described, not inaccurately, as a war Budget. It is not unfair to describe it also as a golden calf Budget. It is tender to a degree to the vested interests and the fortunate few. It sets its face against any suggestion, however well founded, for the consideration of the less fortunate classes of the community. It may give satisfaction to Lombard Street, Throgmorton Street, and other places where financial interests are congregated, to the money magnates, to big business, and to the profiteers who now, and always, seize upon every opportunity arising from the people's needs and difficulties. To the great mass of the people, however, the millions who are doing useful and regular service in factory, field, workshop and office, the real creators of wealth who make our social life possible—for these unfortunate millions there is neither hope nor promise of any value in this Finance Bill; no hope of relief from the burdens which now weigh so heavily upon them, no promise, except it be that in the reaction which will inevitably follow the conditions which now surround us, their plight will assuredly be more unhappy than it is to-day.

12.11 p.m.

Mr. Leslie

I beg to second the Amendment.

The Amendment has been very ably moved by my hon. Friend. We have been told that the Finance Bill protects the small man. It is a fact, however, that people of humble means are hard hit when we take into consideration the numerous taxes on the necessities of life which affect the poorest of the poor. The Government seem to take credit for the world trade revival. The situation has certainly been made more favourable by the vast expenditure on armaments providing employment, but leaving the bills to be met later. The Government have charged the Labour party that when they were in office but not in power they became bankrupt. The Labour party however added £60,000,000 to the unemployment benefits and paid a proportion of the United States debt; but the present Government have added £15,000,000,000 to the debt and have paid nobody.

How has the Finance Bill protected the small man? I want to deal with a class in which I am particularly interested. No concession has been given to the single mean earning £150 per annum. If he works in the city and lives in the suburbs, his board and lodging will amount to anything from 30s. to 35s. a week, his fares will be from 6s. a week upwards, and his luncheons in the City will come to about 10s. That leaves him with only about 7s. 6d. a week with which to provide clothing and footwear, which are expensive items to clerical workers and those who work behind the counter. There is no allowance for protective clothing as in the case of the manual worker. What chance has that individual of an occasional visit to the theatre and of holidays, and, most important of all, what chance has he of saving if he wishes to enter the matrimonial state? From every point of view the Income Tax is a serious handicap to a young man, and the Government have done nothing to relieve such people.

12.15 P.m.

Captain Harold Balfour

My right hon. and gallant Friend the Financial Secretary to the Treasury made the analogy of the headmaster coming down to distribute prizes. It seems to me that so far as the headmaster and the form master and also those pupils who have been summoned to take part in the proceedings are concerned, that nothing is said about the possibility of lower fees to those who have to attend the school. The Finance Bill gives no hint of any form of economy. Despite the speeches of the Mover and Seconder of the Amendment, I think the Bill can be described as a measure of gigantic tax extraction. Opposition speakers have said that they would know where the profits were, and the hon. Member who moved the Amendment said that to "soak the rich" was the policy of his party. But soaking the rich has been tried once in this country, and has been tried in other countries, and where-ever it is tried beyond a certain point a man of initiative and enterprise and position will cease his endeavours, and finally we come to the position that human nature says, "I am not going to work for nothing."

Mr. James Griffiths

Why, therefore, do the Government feel that it is necessary to tax extraordinary profits?

Captain Balfour

I cannot follow that, because I should be out of order, and also I desire to be brief. I feel that today I am somewhat the sponsor of a lost cause, the cause of economy. [HON. MEMBERS: "NO."] Though I have just a few friends with me, but generally speaking, politically, on all sides, we can say that economy is out of fashion; it is not one of the words that people use today irrespective of their particular party views. Yet I submit that we may well yet have to face economy and the need for economy in our national expenditure if we continue to spend increasingly and to tax up to the hilt to pay for that expenditure with no reserves of revenue, as we are having to do now. Indeed the Finance Bill to-day not only gives no hint of any redress of the burden of taxation(but the right hon. Gentleman had quite naturally to take unto himself some pride that he has been able to find a new source of revenue to meet unexpected burdens of taxation owing to the increase of the Services. The Finance Bill meets an expenditure which has been rising steadily since 1925. I will take at once the point that some hon. Member may make, that the increase is due to the fighting Services. I admit that some increase is due, and has been due in past years, to the demand for the fighting Services; but the Finance Bill of 1934, deducting the fighting Services' expenditure so as to get a fair basis of comparison, met an expenditure of £670,000,000, and the present Bill, leaving out the Services, meets an expenditure of £712,000,000. That is an increase of £42,000,000, £30,000,000 of which is due to the increased provision for Civil Estimates.

My right hon. and gallant Friend the Financial Secretary gave us some figures of the increase of social services. I have got out some figures showing the increase of the total Civil Estimates provision. For 1937 it was £638,000,000, compared with £338,000,000 in 1934 and a mere £226,000,000 in 1925. In that connection it is worth remembering that the cost of administration is all the time going up, as is the number of Civil servants. In 1936 the civil staffs of Government Departments reached a total of 338,604, an increase of 11,000 over the previous year. When we come to the 1938 figures it is not unreasonable to expect that we shall see a further increase in Civil Service administration costs owing to an increase over the numbers for 1937. The only reduction which we can see in expenditure since 1937, as compared with 1934, is in the debt service, which has come down to £224,000,000 compared with £357,000,000 in 1935. Those figures are scarcely in accord with the argument of the Opposition that the investor has been winning all along the line. They are really solid proof that it is the saver, the investor, the fixed interest bearer, the rentier, who has suffered, and that the only reduction in national expenditure has really been carried out at the expense of the rentier class.

I think the outlook is gloomy if trade slows down, for as our population de- creases the percentage of recipients of pensions and of social service benefits is going to increase in relation to the total population. Therefore it will be left for future generations, my children and my children's children and those of other hon. Members, to bear the greater burden. They will have to toil in whatever walk of life they follow; and to work harder and harder in order to bear the increased percentage of social service expenditure which will fall upon fewer and fewer people.

Mr. Montague

Will the hon. and gallant Member say whether he voted for the increased Estimates for civil aviation?

Captain Balfour

Certainly I did.

Mr. Montague

Who pays for that?

Captain Balfour

The Government. I plead as guilty as any hon. Member on either Front Bench. I would come back rather, to justify our common fault, to the report of the May Committee in 1931. The last paragraph of that report I will quote: We referred in our opening chapter to the political developments since the War, which have resulted in Members of Parliament and Governments being returned to Westminster pledged in advance to vast and expensive schemes. The electoral programme of each successive party in power, particularly where it was formerly in opposition, has usually been prepared with more regard to attracting electoral support than to a careful balancing of national interests. The paragraph concludes with these words: The problem is a serious one, and it is hardly for us to suggest a solution: Yet a solution has to be found if democracy is not to suffer shipwreck on the hard rock of finance. I think that the confidence in the future which is displayed in this Finance Bill can be justified only if we had a large revival of international trade in order to allow some margin of receipts in relation to this vast expenditure which is mounting up and which we are always striving and scratching to meet by finding new sources of revenue. If we do not have a great revival of international trade, then on the first occasion when there is anything which is more than a temporary retrogression, the first occasion on which a world trade depression overtakes us, we shall be confronted with one of two alter- natives, either to cut down the social services, the fighting services and the whole level of our national expenditure, or to face a crisis such as we had in 1931. No matter what Government is in power, whether Socialist, Conservative or National, we cannot in national affairs, any more than in our private lives, go on spending more than we have. I sincerely hope that neither of those two alternatives will have to be faced. The Chancellor of the Exchequer says that revenue is buoyant and that trade is on the up-grade. I only pray that trade will be so much on the up-grade in this country and the rest of the word and that the revenue will be sufficiently buoyant, to meet the menacing situation which has been growing on us more and more since 1925.

12.26 p.m.

Mr. White

My right hon. and gallant Friend the Financial Secretary to the Treasury, in moving the Third Reading of this Bill with that ability, geniality, courtesy and generosity towards his opponents which we all recognise, drew a pleasing picture of a school speech day and seemed to liken our proceedings here to that well-known event. I am not sure that the simile was well chosen. I remember a great many school speech days, but I cannot at this moment recall one single observation which fell from the great man of the day on those occasions, nor can I recall a single sentence that I myself have addressed to a school when I was present in the position of the more or less great man. At all events, my right hon. and gallant Friend was right in this respect, that we had all the personnel here. The only people not here were those who are to receive the prizes, and after racking my memory I am not sure where are the prizes which are to be distributed or who are to get them. Is the Income Tax payer, who is to pay Income Tax at 5s. in the £, to be regarded as one of the lucky recipients? Is it the indirect taxpayer, suffering under a heavy burden of indirect taxation, a burden which is becoming increasingly heavy as the cost of living steadily rises? The burden of indirect taxation has reached such a level that the recipients of old age pensions, national health insurance benefits, unemployment insurance benefits, and all the social services, taking into account the amount of direct taxation plus the amount of the contributions which they pay direct, are exactly, or almost exactly, paying for the benefits which they receive. That is a result which has been established over the last five or six years, although it was not the intention of this House or of the Chancellor of the Exchequer when those measures were passed in the first instance.

I associate myself with very much of what was said by my hon. and gallant Friend the Member for the Isle of Thanet (Captain Balfour) in the very realistic speech which he made a few moments ago. The inescapable fact is that as long as the world continues to be controlled by everything except common-sense, as long as civilisation, if one can call it that, continues to expend the whole of its surplus of technique and of material, and even more than its surplus of technique and material, on weapons of destruction, there will inevitably be throughout the world a deterioration of the financial situation from which no country can escape. It is true that my right hon. and gallant Friend may say, and say very rightly, that this country is in a strong position, and that its finances are like a rock, but it is poor consolation to hear that when Income Tax is at its highest, when indirect taxation is very high, and when we are steadily increasing our financial liability by increasing the actual deadweight debt and have to face the task of finding the means for its repayment and the payment of interest. We can only hope that the general financial difficulties and the increasing hardness of life for the people throughout Europe and the world may lead Governments into saner courses. It is only on those terms that we shall be able to escape the serious situation which my hon. and gallant Friend indicated a few moments ago.

The Financial Secretary devoted some of his observations to the change which has taken place in the Finance Bill. Of course the Bill has been changed. I very much doubt whether it would have passed the House of Commons if it had not been changed, and if it had passed the House of Commons I think that some of us would have been regretting for the first time the passing of the Parliament Act, because we should have liked to have relied upon another place to help the House of Commons. But the National Defence Contribution has been altered, and I do not propose to spend very much time in speaking about it. I think that possibly the worst feature of it as it was introduced was the shock which it gave to the public, and to those who take note of these matters, in their confidence in the British Treasury. It is regarded, and rightly regarded, as one of the most highly competent, expert and efficient Departments of the State, and it was a shock that a proposal so ill digested and so inequitable in its incidence could have been produced by it.

I think there is a lesson for all of us in this. No consultation or hint of the proposal was given in advance, for fear of what might happen, but as a result of the secrecy which was maintained something very much worse happened than could have occurred if there had been discreet and proper consultation. One knows perfectly well that there are many items in a Budget which must inevitably be kept secret, but here was a matter on which there could have been consultations in the proper quarters, with a seeking of advice—which need not have been accepted—and in that way we might have avoided a serious loss to the Treasury and avoided an incident which I think we should all like to forget. The Financial Secretary said that the principle of this tax had been largely accepted. I have been trying to find out what is the principle of it. A letter appeared in the "Times" under the signature of Mr. Keynes in which there were some inquiries as to the principle of the tax, but up to now nobody has answered him. I think the right hon. and gallant Gentleman was right. I think there was something in the public mind which did respond to this tax. There was a sort of feeling that it was something which was going to do the right thing in taxing excessive profits made by those who were engaged in helping the country in a time of national necessity by the manufacture of arms and the like. That was where the public sympathy lay before the matter was thoroughly understood and it was realised that many of those people would in fact escape.

The fact that the tax has been withdrawn and another put in its place which is, by common consent, more equitable in its incidence, is not a less but a greater reason for the Government to continue to give attention to the unanimous decision of the Royal Commission on the manu- facture and trade in armaments with regard to profits made by armament firms. Having said that, I will leave the National Defence Contribution, except to observe that it is described as a temporary tax. I do not know whether my hon. and gallant Friend who spoke before me would join me in not thinking that this is a temporary tax. I am not sure that it makes adequate provision even for the period of five years. I wish we could be told, although I do not know whether I am in order in asking, whether any attention has been given to what is to take its place. My hon. Friend drew attention to a very important point in the changing age-structure of the population of this Kingdom. Nothing is more urgent or should be more carefully examined in its various aspects. Our social services are ragged. We need an inquiry to see how they are working, whether there is overlapping and whether there are gaps, or even whether there is competition among them. It is a matter of public importance that they should be entirely reviewed. We should inquire whether the pension system should not be based upon superannuation rather than upon our present system, and whether it is wise to go on paying State pensions to 350,000 people who are in full work and receiving salary. I am speaking now of pensions to people over 65 years of age.

I would refer to what, I think, is an element of danger in the arrangements, as I understand them, of the N.D.C., in relation to control of the money market. An important and beneficial aspect of Government policy has been the maintenance of cheap money, but if we are to raise this sum by loan—the financial arrangements of the year provide, I suppose, for five years for the interest on those loans, and also for the amortisation—the practice in the past has been, I understand, that the—

The Chancellor of the Exchequer (Sir John Simon)

I do not quite follow the hon. Gentleman. He said that the N.D.C. proposes—

Mr. White:

I am sorry to say that I was wrong. I meant to speak of the Defence loan, and I should not have said N.D.C. The financial arrangements of the Budget as a whole provide for the payment of interest and for the amortisation of the new loan. I am sorry that I misled the right hon. Gentleman. I understand that the practice in the past has been for the extra-budgetary resources of the Treasury, the surplus on National Health insurance, the Post Office Savings Bank and other Departments, amounting in rough figures to £750,000, to be loaned to the Government from time to time for various purposes. It is now proposed that the Post Office Savings Bank, for example, shall loan money to the Defence Departments, at 3 per cent., and that there shall be an arrangement whereby the money is repaid over a period of 30 years. The part which has been played by these large extra-budgetary resources in maintaining a policy of cheap money has been very important, and any loan conversions have always been facilitated by the fact that there have been large holdings by these authorities. Those authorities have been able to take their part in subscribing for whatever new issues might be made. The practice has, therefore, been of great assistance to the Treasury.

The position will now be altered. If the money which is available in the extra-budgetary funds is to be automatically loaned to a Defence Department at 3 per cent., the Government will later on lose those resources in the method of financing fresh expenditure, and will withdraw from the gilt-edged market that support. That seems to me to be a matter calling for very careful consideration. As it is, I doubt whether the financial provision for the year, and the arrangement of the National Defence Contribution for the next five years, will take care of those things, and whether it will come anywhere near taking care of the increased cost of maintenance of our defence forces, on the newly established basis. This is not the time to ask questions, but I suggest that there is no comparison in the cost of maintenance between the sum of £5,000,000 invested in a battleship and a corresponding sum invested in aeroplanes. It is a matter of which we have had very little experience and which may have very serious consequences.

I am afraid that I am taking longer over my speech than I allowed myself, but I would like to comment upon one or two observations which the right hon. Gentleman seemed to address specially to myself and to my hon. and right hon. Friends. He drew our attention to the Ottawa Agreement figures which have now been given, and in that connection he made use of a quotation. I also have at the back of my mind two or three quotations. Perhaps they are rather hypocritical because they may convey the assumption that one knows a great deal more than is in fact the case. There is a tendency in the world at large with regard to Ottawa, and I do not know whether the right hon. Gentleman has noticed it or not, which I might sum up by saying: "Post Ottawa, ergo propter Ottawa." I hope I have got it right. I admit at once that there has been an increase in trade between the Dominions and ourselves in consequence of the Ottawa Agreements, but it is very small. The economic situation of the world when the Agreements were completed was such that either the whole financial structure of the world was coming to an end or there was to be a recovery. If trade had continued on the level at which it was at that time, we should not be sitting here to-day, because the whole fabric on which society rests would have disappeared.

There are at least 10 important factors which impinge upon the trade current which has taken place between the Dominions and ourselves since the Ottawa Agreements were passed and which materially effect in one way or another those Agreements. If my right hon. Friend has not seen fit to consider all those factors, I would remind him that they are set out in the very impartial review of trade issued by the Institute of International Affairs, and show the various factors which have influenced the matter, besides the Ottawa considerations. It is not only between the Dominions and ourselves that there have been agreements, but between the Dominions and foreign countries which have traded with the Empire by various methods. There has been a change in values, and there have been changes in fashions. I understand that the Empire Marketing Board and the like, as well as a multitude of factors, have operated, and it means that one cannot take the figures which my right hon. Friend gave to-day without deceiving oneself, not entirely but to a very considerable extent.

Lieut.-Colonel Colville

The figure I gave was the figure of increased trade, not only with Empire countries since the Ottawa agreement, but also with foreign countries, so that our policy of making trade agreements, not only within the Empire but with foreign countries, has given us an increase of exports to the extent of no less than 80 per cent.

Mr. White

I am not quite sure that I carry all the figures in my mind, but the Financial Secretary did challenge me on the matter of trade agreements. Trade agreements have some advantage; neither side would make them if they had not; but the essential thing with regard to trade agreements is that we should adopt in future, wherever we can, the multi-lateral rather than the bi-lateral principle, and should base ourselves on the opinion unanimously expressed at the Imperial Conference that we have a duty, not merely to the members of the British Empire, but to the rest of the world. If peace is to be preserved in the world, we must cease to proceed on the principle of making agreements in which we take our own and the other party's interests solely into account—

Lieut.-Colonel Colville

The hon. Member will agree that the most-favoured-nation principle enters into all our agreements. Certain special provisions are made in certain instances, but our agreements are mainly based on the most-favoured-nation principle, and confer benefits on a great number of other countries besides those actually engaged in the negotiations.

Mr. White

I concede that point, and I do not want to pursue the argument, but rather to seek some measure of agreement with my right hon. and gallant Friend. I presume that he accepts the principle enunciated at the Imperial Conference, which, in fact, was a return to the policy announced by Mr. Joseph Chamberlain in 1896, when he proclaimed that the open door for the British Empire was the right policy. That quotation has often been made in this House, and it is the policy which we use to-day. If the Empire is to exist for its own purposes, and for its own purposes only, it will not last indefinitely.

The Financial Secretary rather twitted me and my hon. Friends for having moved certain Amendments relating to housing, but, if he will turn up the Press of Thursday of last week, he will see that the Manchester Corporation were considering their housing programme in relation to the increased cost of building, and the decision to which they came was that there were only two things to be done—either to restrict their building programme, which, of course, would be lamented by everyone, or to put up the rents. That seems to me to be an adequate reason for doing something to deal with this matter, and on the appropriate occasion I should be glad to discuss with my right hon. Friend the means by which he could avoid any loss of income from a concession in this direction, income which would be very hardly earned by the Government if it meant stopping housing and increasing unemployment—a very unbusinesslike means of raising additional income. Among those methods I should certainly include the taxation and rating of land values, which the Chancellor of the Exchequer used to advocate from time to time and in which we still believe.

In conclusion, I would say that we do not regret any lessening of the rigidity of the general fiscal policy of this country. That is a matter of great importance having regard to the urgent and grave necessity of seeking some form of economic appeasement, of doing something from the economic point of view to relieve the tension which runs throughout the world at the present time. I am not dismayed by the fact that the Government have not made any announcement in this regard. It would have been of profound importance if M. van Zeeland, in the course of the negotiations which he is conducting, could have carried in his pocket or in his notebook just those concessions and arrangements which the different governments whom he is meeting were prepared to make. I cannot conceive of his mission serving any useful purpose at all unless he knows within what limits the countries he is visiting are prepared to negotiate and concede, and to advance towards agreement and co-operation. For my part, however, I refuse to believe that in the present state of the world His Majesty's Government will not go a very long way to meet other countries in co-operation, in order to relieve the tension and show that democratic countries throughout the world are capable of co-operating for the common purpose of removing the causes of war.

Therefore, if I do not see any such proposals set out in the Budget, I realise that they may nevertheless be in the minds of right hon. Gentlemen who sit on the Government Front Bench, and I trust that in due course they will tell us what contribution they are prepared to make to the appeasement of the world. The present time is a time of change, and I cannot think that the Government would refuse to change the attitude which they adopted in 1931, or on other occasions, when such a change is called for in the cause of international co-operation and peace, merely because they have preconceived ideas on that matter. I refuse to believe that that is the case. If I have spoken rather warmly on the same lines as my hon. and gallant Friend the Member for the Isle of Thanet, I hope we may not have earned the title of Dismal Jimmies, but I also hope that some of the remarks which I have ventured to address to the House will be borne in mind in times to come.

12.52 p.m.

Lieut.-Colonel Moore-Brabazon

I must say that I have enjoyed this Debate very much, because the subjects of high finance and of gold are subjects about which we know very little, and one is glad to hear different points of view, no matter from what quarter they may be expressed. I also enjoyed the reference that was made by a Liberal that he regretted the passing of the Parliament Act. I never expected ever to hear that. The hon. Member for East Birkenhead (Mr. White) took the usual course, when he attacked the Government, of saying that when everything is going well with the country it is invariably due to world causes, while if anything goes wrong it is invariably due to the Government. That is a very old way of going for the Government, but it does not really cut a lot of ice. I think that this Finance Bill is rather a historic one. Although everyone believes that the House of Commons controls finance, it usually does nothing of the sort. What happens is that the Government introduce a Bill, and generally refuse to change a comma in it. But this year we have had a very big chunk of change, which has been entirely due, of course, to the House of Commons. We are getting on in this democratic age when we can do a thing like that with an all-powerful government, and I congratulate the House of Commons. There has also been a very great triumph from a personal point of view for some Members of the Government. Frankly, I think the Prime Minister has emerged from it with very great credit, because very few people could be so strong as to change their views and their policy when asked to do so by the general consensus of opinion of the country. He deserves great credit. He has found two very admirable successors in the Treasury. I welcome with enthusiasm the two who sit on the Treasury bench, and I think they will pull their weight very well indeed. I do not know whether I can say as much for some of the other changes. It was rather a general post. I never knew before that the Prime Minister had a very subtle sense of humour. I was rather slow to see the joke, but I now realise that anyone who has been responsible for 100,000 casualties a year is eminently a person to move from the Ministry of Transport to the War Office.

I wanted to raise to-day not questions of high finance, about which I and others know nothing, but a particular point with regard to roads. I know that you, Sir, are pricking up your ears to see if I am out of Order, but I do not think I am. The point that I want to make is this. Here again in this Finance Bill we find a discrimination in favour of one form of transport as against another. We find that the railway companies are to be exempt from N.D.C., although they benefit as much as anyone else from rearmament, and yet that the road transport companies are going to pay it. That is a policy of discrimination which has been adopted by Governments for too long, and it seems to me the very cruellest policy that one could adopt towards a modern system of transport. It has been said that the railway companies pay for their own track. That is quite true, but road transport also pays for its own track. It pays no less than £75,000,000 a year. At one time it expected that to be spent on our roads, but it has been taken by the National Exchequer to the extent that we now find ourselves one of the countries with the worst and not the best equipped roads. The Treasury is very much to blame here. It has always taken the view that it objected to the Road Fund qua fund and it objected to public works. Our own Minister of Transport only the other day drew attention to the fact that the casualties on the roads were largely due to the bad roads and to the inadequate facilities that are given to-day upon our great highways. That is a very big accusation by one Minister against another, and it is one of which the Treasury must really take notice.

But I feel that I shall be going out of Order if I travel any more along that road. I want really to impress on these new occupants of the Treasury bench who represent the Treasury that they should try to take a new attitude towards the road question. Will they realise that many of the lives that are lost on the roads are entirely due to the bad conditions and that the fault is theirs? Will they realise that of the enormous sum that is taken from motorists more should go to the provision of better roads? £16,000,000 was put into the Transport Vote as compared with £75,000,000 taken from motorists. Will they remember also that at the election we were promised an extra £100,000,000, and all that we have got is less than the ordinary expenditure? The promise has not been given effect to. It was something that we looked forward to. We realise that perhaps we cannot spend it, but do not let the Prime Minister leave a pledge like that unfulfilled. Let the Chancellor state that he is unable to find the money, and perhaps in time we may get back towards spending such a sum, though at present the exigencies of the situation prevent it.

1 p.m.

Mr. G. Strauss

If I do not follow the hon. and gallant Gentleman it is because I cannot be as agile as he was in keeping within the rules of Order. There are, however, one or two matters in connection with the Budget to which I should like to call attention. The main feature of the Budget, without question, is the immense expenditure on armaments, and I think the House and the country should realise that there has been an increase in armament expenditure, apart from the sums that are being borrowed, of £86,000,000 since 1934–35. The amount has risen from £114,000,000 in that year to £198,000,000 this year. It is no use the Government saying that they are in no way responsible for this increase. They are most definitely, in part at least, responsible, with their policy in foreign affairs, for the necessity of this country arming to the great extent that it is now doing.

I think the country should realise what an immense burden is being put upon it by this extra £86,000,000. That money, if devoted to social purposes, would make an immense difference to the life and health of the whole population. I have made a careful calculation, and I think it could be well established that if this money that the Government are spending, as a result to a large extent of their own bad foreign policy on armaments, were spent at home in improving the life of the people, one would be able to provide free milk to expectant mothers and to all children under five, and dinners every day of the year, with the exception of Sundays, to all the children in our junior and senior schools. On top of that it would be possible to abolish the means test and to add 3s. a week to the payment of those who are registered as unemployed. These payments could be made out of that additional £86,000,000—I am not talking of the £113,000,000 that we were spending before. If that money had been spent on social service it would have gone a long way towards doing away with the curse of malnutrition. But, obviously, if we had asked that it should be spent for these purposes, even if the foreign situation had been quite different we should have had the answer that it would be quite impossible to find any money for such a purpose.

I should like to deal with another aspect of the Budget and the Amendment that appears on the Paper; that is the inequity of the proposals as they fall on the two nations about which Disraeli wrote, the wealthy nation and the poor nation. The Financial Secretary was satisfied that the burden imposed by the Budget was quite fair. He said it would be impossible to have chosen a fairer and less burdensome method of imposing taxation on people of humble means. I think he will find it very difficult to establish his case on any recognised figures. I wonder if he realises that, as a result of the financial policy of the National Government, there has been a very considerable increase in the tax burden during recent years upon the poorer section of the community as compared with the wealthier section of the community. Some figures have been worked out very carefully, based on the Colwyn Report, which show that, whereas in 1925 that section of the community whose incomes fell below £250 per annum paid 28.6 per cent, of the national taxation burden, it is paying in 1935 33 per cent. That increase was clearly brought about by the Customs duties, import duties and similar concealed burdens which have been put upon the country, and which affect the poorer section of the population more severely than the wealthy.

If the National Government spokesmen could argue that they are quite justified in imposing a bigger taxation upon the poorer members of the community because they are to-day comparatively better off, they would have some good excuse, but in point of fact, the very reverse is the case. I will give these further figures. In 1931, the amount of the national income which went to rents and profits was 29.4 per cent. That figure had risen in 1935 to 34.5 per cent. In other words, making a generalisation, the proportion of the national income which went to the capitalists in this country—the industrialists and landlords—rose in that period by five per cent., and, similarly, the amount of national income which went to wages and salaries fell from 70.6 per cent, in 1931 to 65.5 per cent, in 1935. So that Conservative finance during recent years has had this double effect. A lesser proportion of the national income has gone to the poorer section of the community, while the poorer section of the community is being made to bear a higher proportion of national taxation. I suggest that while it is undoubtedly excellent Conservative finance that those interests in the country that are represented by the National Government should benefit—as far as they are concerned, they are getting a higher proportion of the national income and paying a lesser proportion of national taxation—this scheme, if it can be called a scheme, violates every sound and equitable principle of taxation as between one class and another.

Much has been made by the Financial Secretary to the Treasury in his speech to-day—and in point of fact it is constantly made by representatives on the Front Bench—as to the degree of prosperity which the country is enjoying today, and as to the responsibility for that increased prosperity resting upon His Majesty's Government. This is so frequently said that it is time it was contradicted. It has, of course, been constantly contradicted, but we should ask the Government for some justification of this contention, because there is none in actual fact. There has been an improvement in prosperity in every country in the world. There has been a sweep of better trade affecting the world in the same way as the worsening trade conditions of 1921–32 affected every country, whether they had a Left or a Right Government.

Mr. Boothby

How does the hon. Member account for the difference in the rate of the prosperity between this country and France?

Mr. Strauss

I was coming to that very point. The degree of prosperity is dependent to some considerable extent upon the time at which the various countries de-valued. This country de-valued in 1931, and a short time after that benefited very considerably in trade. But we cannot thank the Government for that. The Government seized power for the very purpose of keeping on the Gold Standard, and as far as additional prosperity arising from the departure from the Gold Standard is concerned, it has come not from the policy of the Government but from the abandonment of the policy for which the Government seized power. There has been a measure of increased prosperity as the result of the vast expenditure on armaments in this country and the Government are quite entitled to say that large numbers of people have been put into work as a result of that expenditure. Be it noted that they would never dream of spending anything like the same amount of money upon work of a socially useful nature.

It is only when Imperialist interests are at stake, as a result, largely of their own foreign policy, that armament expenditure has entered into it, and they can in that connection claim to some extent to be responsible for increasing employment and better trade, but, generally speaking, I maintain that they have no ground for that claim. Prosperity has been world-wide, and as far as the abandonment of the Gold Standard is concerned, which was such a major factor in restoring our foreign trade, we certainly cannot thank the Government.

Reference has been made in various parts of the House to the serious position at which this country may arrive in a few years' time as a result of the present financial policy of the Government. It has been assumed that we may expect the next trade slump in three or four years' time provided we have not had a European war before then. I believe that these forebodings are based upon sound facts, and that the position into which this country is being driven, and which the whole country will have to face in a few years' time, is very serious indeed. We have to face inevitably a period in which trade will slacken, and the armaments boom will come to an end—at least we are told by the Government that it will come to an end. There will be increased unemployment, and at the same time additional burdens to bear because of that increased unemployment. The revenue of the country will be contracted. There will be an expanding demand for more money and a contracting revenue.

We have been told to-day that this year we have been able to pay our way so easily because there was an increase of £23,500,000 in the annual revenue of the country. We shall have not increases but decreases of that and similar amounts in the future. On the top of that the burden of interest will be more severe because of the immense borrowings which are being made for armament purposes. We shall have to pay additional interest on £400,000,000. Indeed there is likely to be—and it is agreed by Members on all sides of the House—a very severe crisis within a measurable number of years. It will be a financial crisis, in my view, more severe than that of 1931, because it will not be a currency crisis as the last one very largely was. Moreover, the last crisis, while it was there, was very considerably exaggerated and exploited for political purposes. It was made to appear for political purposes very much worse than it was. The only consolation that one will have will be that when that crisis occurs, and if the present Government are still in power, the people who will get the opprobrium for the crisis and the suffering it will bring will be the people who themselves are responsible for the crisis. It will not fall as in 1931. At that time the Government in power were opposed to the capitalist system and had to take the blame for the crisis that arose, but the next crisis will have this satisfactory feature that the Govern- ment in power will be composed of people who support and defend the capitalist system, and they will have to take the national opprobrium and criticism for all the suffering that the crisis will bring.

My last words are in regard to the social services. The Financial Secretary to the Treasury told us of the wonderful things the Government have done in increasing the social services, and he gave us the idea, as Conservative spokesmen inside and outside the House are constantly giving us, that the Conservative Government are doing great things for the people of the country, that they are taking taxation from the wealthy section of the community and giving it to the social services and the poorer section of the community, for which measure of justice we have to thank the National Government. Nothing is further from the truth. The measures of the social services are those of unemployment, health and insurance benefits, old age and widows' pensions, public assistance, education, health and housing. I have spread the net very wide. Examinations based on the Colwyn Committee's Report, which have been brought out by a professional statistician, Mr. Colin Clark, show that 79 per cent, of the expenditure on these social services is borne by the people who benefit from those services, and only 21 per cent, comes from taxation of the wealthy section of the community. Therefore, it is ridiculous to say that in regard to social services the Government are doing a great, noble and equitable thing as between one section of the community and another in providing these benefits for the poorer section, when, in fact, the poorer section of the community pays for four-fifths of them.

It has been said that the social services are becoming such a burden on the general community that we may have to restrict them, particularly if a great crisis comes. Articles on the subject have recently appeared in the financial columns of the "Evening Standard," suggesting that the social services should be restricted already in order to provide money for armaments. It is ridiculous to suggest that the social services should be restricted. It has been stated that a section of the community which has to depend on the social services, old age pensioners and the unemployed, is growing, and it is asked how we are going to provide for these people unless we restrict the social ser- vices in another way. While there may be an initial truth in that statement with industry organised as it is to-day, there would be no force in the argument if industry were organised on a rational basis. Production is rising immensely. In the coal mining industry it has increased in the last 10 years by 25 per cent. per man. If we take industry as a whole, I think that figure will be found to apply to most industries and we shall find that productivity has increased by 25 per cent. in 10 years. In these circumstances is there any force in the argument that we shall have to restrict the social services? In view of the increasing productivity that has taken place there are very good grounds for increasing the social services to a very much greater extent than at the present time. Moreover, if on the top of that natural increase in productivity the 1,500,000 people who are out of work could be employed and help to contribute to the productivity of the country, the wealth of the country would be vastly greater, and there would be even better reasons for increasing and not reducing the social services.

In view of the facts which I have put forward, the heavier burden which is being put on the poorer section of the community in that they are being forced to pay a higher proportion of national taxation than 10 years ago, in view of the fact that the poorer section of the community are receiving a smaller proportion of the national wealth than five years ago—I admit that the dates are not exactly comparable—there is every reason for saying that the Budget is unsatisfactory in that it does not provide for a greater proportion of expenditure on the social services, and that it puts an undue proportion of the burden of taxation on the poorer section of the community. There is no case whatsoever for suggesting that the social services should be curtailed, but there is ample evidence to show that if our industrial and social systems were properly organised, if the labour-saving machinery that is being installed were being properly used for the benefit of the people and allowed to be a boon instead of a curse, as it is so often to-day, if the 1,500,000 people who are unemployed were able to be employed and so to help to increase the wealth of the country, we should be able to give social services out of all proportion to their present scope. We should be able to do away with a great part, if not the whole, of the malnutrition that exists, to do away with a great deal of unnecessary suffering and of social injustice; it would be possible by an equitable distribution of the national income to do away, to a large measure, with the poverty and insecurity that abounds in the country to-day.

1.24 p.m.

Mr. Boothby

The hon. Member for North Lambeth (Mr. Strauss) has made a speech which might lead one to suppose that this Finance Bill contained a terrific onslaught on the social services. There is no suggestion of curtailing or restricting the social services in any way. It may well be that the social services are not being extended as rapidly as the hon. Member would wish. That is a matter of opinion. For my part, I quarrel with some of the statistics which he put before the House, but I do not think a statistical argument is one that can be conducted across the Floor. I do not accept some of the percentages he gave; but there is a great deal to be said for expanding the social services as rapidly as possible. I only want to say in answer to his speech that he gave the impression that there is to be some attack on the social services, but, so far as I am aware, no such attack is contemplated.

A speech of considerable interest came from the Liberal benches. The hon. Member for East Birkenhead (Mr. White) truly said that we were conducting this Debate under the depressing shadow of the European situation, and that we had always to face the fact that common sense and reason no longer counted for much in the governments of the world. I am inclined to agree with the hon. Member. Reading a book the other day, I was rather interested to find that the author pointed out that everybody was talking to-day about the possibility of the collapse of civilisation. But he suggested that civilisation had, in fact, collapsed about 20 years ago, and that it was not, therefore, a question of worrying about what was going to happen in the event of a collapse of civilisation, but what we were going to do, now that it had collapsed, to get out of our present situation. I think that this is a fundamental consideration which does overshadow the whole of our discussions, whether on this or any other Bill.

I am a little surprised at the Amendment of the Socialist party. I could have thought of much better reasons for opposing the Finance Bill than those put forward in the Amendment. They complain of the deficit. Clearly if we tried to meet the whole of this large expenditure by direct revenue, without having recourse to borrowing, it would very definitely be deflation. The hon. Member for North Lambeth said, quite rightly, that the recovery of this country dated from our leaving the Gold Standard. I listened to his observations with complete equanimity because I continually opposed our remaining on the old Gold Standard, and welcomed our departure from it in the most cordial terms. I suggest that that was an inflationary step; and that if we were now to attempt to finance this immense expenditure entirely out of revenue it would be a deflationary step, and would in consequence have a most depressing effect upon business activities throughout the country. I cannot see why the Labour party should continue to be so wedded to the ancient traditions of the late Lord Snowden—to financial orthodoxy of the most iron and rigid kind. The hon. Member who moved the Amendment bewailed the fact that this Finance Bill was, strictly speaking, unorthodox, and said that financial Ministers of the past would turn in their graves if they knew we were putting so little towards Debt redemption and borrowing so much. I suggest to the Labour party—while we do not expect them to get along very fast—that they should by this time have got beyond the financial principles of Mr. Gladstone, and I would urge them to be a little bolder in their economic conceptions, although it will be many years before they catch up to hon. Members on this side of the House so far as financial matters are concerned.

The Amendment goes on to refer to the temporary and artificial nature of our prosperity. I wonder why the Labour party say that. It does not do any good. There are a lot of Jeremiahs wandering about the country now telling us to prepare for the next slump, but they are all people who have nothing to with the actual conduct of business. They are all saying, "Look out, be careful, we are going to have an awful crisis in the near future, much worse than that of 1931." I do not agree. I do not see that there is the slightest reason to suppose that this must necessarily happen. There are at present no indications of it. If the financial policy of the Government is wisely conducted—it was not wisely conducted between 1925 and 1932—there is no reason why we should have a recurrence of anything like 1931. I do not see why we should go around saying that our prosperity is purely temporary and artificial. I challenge contradiction when I say that our present prosperity does not arise primarily, or even mainly from our expenditure on remarmanent. It is not so. That has hardly yet begun to have an effect. Our present prosperity arises out of the prosperity of the building trade during the last three or four years.

Mr. A. Edwards

The hon. Member will agree that the moment manufacturers were assured that the present Government were going forward with their rearmament programme they began to extend their preparations for production.

Mr. Boothby

Up to a point that is so, but at the same time many of our manufacturers are unable to fulfil ordinary industrial contracts at the present moment because of the priority they have to give to Government contracts. If the Government pursue a wise policy it will be possible, when the time comes, to replace our rearmament programme by a revival of international trade. That is going on at the moment. Look at the figures. I see no reason from an economic point of view, or from any other point of view, why any one should go about saying that our present prosperity is purely temporary and artificial. There is not the slightest reason to suppose that it is so.

With regard to the Finance Bill, its main feature, of course, is expenditure. I should like to impress upon the Government the desirability of the course of action which was recommended by the hon. Member for East Birkenhead. Nobody wants to curtail social expenditure. I, for one, believe that we should expand it. But I think we all in our hearts agree that there is a good deal of waste so far as our present expenditure on social services is concerned, and that there is also a good deal of overlapping. Much of it has been allowed to grow up in a haphazard way and there is a genuine case for the appointment of a Royal Com- mission to examine the whole range of our social services, and to make recommendations not only how economies can be effected, but also how these services can be improved. There is a good deal of waste going on, and I believe that some of the money we are spending does not get to the right people. This is a suggestion I should like to support.

With regard to the question of direct as against indirect taxation, I think that the limits of productive direct taxation have been practically reached. I should rather have liked to have tried the experiment of increasing the Income Tax and Surtax instead of the National Defence Contribution, to see if the community could have stood it. I think it might have stood it; and, if so, it would have been a better way of meeting the increased expenditure. At the same time, I do not think hon. Members opposite have any reason to complain that the rate of direct taxation in this country is too low.

There is one point I should like to make with regard to the tax evasion Clauses, for I have discovered in life that nobody gets much credit for anything unless they take it for themselves. It will be remembered that last year I referred to the question of bond washing. I was the person who first raised that question in this House; and I confess I was bitterly disappointed the other day when the Chancellor of the Exchequer said that the attention of the Government to the question of bond washing was drawn by an hon. Member about a year ago. I was that hon. Member; and I do not see why I should not say so, since the Chancellor of the Exchequer did not say that it was the hon. Member for East Aberdeen.

Having said that, I should like to point out that the new edition of the National Defence Contribution is infinitely better than the first, but although it has in turn been greatly improved In Committee, nothing will ever persuade me that it is a very good tax. I do not think it is. I should have preferred an increase in direct taxation, accompanied by a more adequate control over expenditure on armaments on the lines recommended by the Royal Commission. That would have met the situation better than the new tax, on which we have wasted hours and hours—a tax which will cause a good deal of dislocation in the business community, and which in the end is only going to raise one-fortieth of our total revenue requirements. It seems to me that for £2,000,000 this year and £25,000,000 next year, we have had too much trouble and bother, and so has my right hon. Friend.

Lieut.-Colonel Colville

Perhaps the hon. Member has given himself too much trouble.

Mr. Boothby

I do not think any of us can take too much trouble in the service of our country. The main point I want to raise to-day is the general question of revenue. How are we going to raise the money, and, what is even more important, how are we going to go on raising it? To borrow £400,000,000 over a period of five years is not in itself very serious for a country of our financial strength and resources, and I think the proportion as between what we are going to borrow and what we are to raise in direct revenue is a very good one. But if this Budget is to balance, and still more if the next one is to balance, the revenue must not only be maintained, but must go up. There must be a continuously expanding revenue. And I suggest to my right hon. Friend that if he wants to get that, he must keep money cheap, he must keep wholesale commodity prices at a remunerative level, and he must do his very best to achieve a further revival in international trade.

With regard to the first point, which was raised by the hon. Member who spoke from the Liberal Benches, and which is a technical point, but a very important one, some people are inclined to say that if there is to be this enormous expenditure of £1,500,000,000 on the Defence Services, we cannot at the same time keep money cheap. If we were on a fixed gold standard at an artificial parity, as we were between 1925 and 1931, I agree that money could not be kept cheap, because it would be necessary for us to go on raising the Bank rate in order to conserve our gold. But we are no longer on a fixed Gold Standard. We have an adequate gold reserve at the moment, and I am glad to say we are adding to it. There is also great confidence, to which, I suggest, the hon. Member for North Lambeth did not attach enough importance. And in my submission there is no reason why the Government should not, by its own action, maintain cheap interest rates and be able to borrow on medium term and long term even cheaper than it has been doing recently.

If money is to be kept cheap, the Government must see that the cash reserves of the banks are ample. Normally the joint stock banks in this country try to maintain a minimum ratio of 10 per cent, between their cash reserves and their deposit liabilities. Now the amount of cash reserves of the joint stock banks is almost entirely determined by the policy of the Bank of England. If the Bank of England buys securities, the cash reserves of the joint stock banks subsequently rise, and with them the bank deposits. If the Bank of England sells securities, the cash reserves of the joint stock banks fall, because they are obliged to sell their assets and call in loans, especially loans to the money market, in order to maintain the ratio between their cash reserves and their deposit liabilities.

There is no doubt that, in the early part of this year, the Bank of England deliberately sold securities and used other means including its great influence—and it must have had the support of the Treasury in order to do it—to get the joint stock banks to call in loans. The cash reserves of the joint stock banks were reduced. What happened? Immediately there was a sharp fall in the gilt-edged market and a rise in interest rates, and money became dearer than was necessary. In view of the fact that interest rates were not too high at that time, and commodity prices were not high enough, I submit that that was a dangerous policy to pursue; and it only wanted a "gold scare" or two and the N.D.C. proposals, first and second edition, together with the foreign situation, which, like the poor, is always with us, to bring the business community within measurable distance of a temporary relapse and complete paralysis. I think that was quite unnecessary.

I want to urge upon my right hon. Friend that the Treasury and the Government should not think in terms of 5 per cent. as a sort of long-term average interest rate which should prevail in this country. We ought never to forget that for a century before 1914, if one takes five-year periods, we had an average interest rate of not more than 3½ per cent., and I do not see that there is any reason why our interest rate should rise in the measurable future above that figure. But make no mistake—the market has come to look very largely to the Treasury for guidance in these matters. The remedy lies in the hands of the Chancellor, because, unless there is a world war, he enjoys the confidence, the strength and the resources to make the interest rate pretty well what he likes. In borrowing money under these proposals, he should, in the interests of the taxpayers, borrow it as cheaply as possible, and there is no reason why he should not borrow it, either on short-term or medium term, at a rate which will not be unduly expensive to the taxpayers. For as Mr. Keynes said the other day: We are no longer under a compulsion to do what is ruinous. That is true, and I hope the Treasury will not forget it. My last word will be on commodity prices. Here again, I believe that to a large degree the Government are in control of the situation. By a moderately expansionist financial policy, plus the maintenance of confidence, the Government can bring about a moderate and continuous rise of wholesale commodity prices, and thus increase the prosperity of producers all over the world, which is more necessary than anything else in paving the way for that revival of international trade and prosperity for which we are all working. I have said before, I say it again, and I shall say it on every possible occasion, that the cooperation of the United States of America should be sought in carrying out this policy, because I believe it can be obtained.

I conclude that if we are to raise successfully the necessary revenue to meet this huge expenditure, we must keep money cheap, we must keep commodity prices at a reasonable level, and we must take steps to expand international trade. I believe that if our financial and economic policy be wisely directed, it is in our power to do all these three things. That is all I have to say, but once more I venture to emphasise to my right hon. and gallant Friend the Financial Secretary that there has never been a period in the history of this country when the Treasury was more powerful in every aspect of policy than it is at the present time, and I would ask him, and the Chancellor, not to be afraid to use that power.

1.42 p.m.

Mr. Ede

I understand that in his speech this morning the Financial Secretary to the Treasury alluded to this occasion as a prize distribution. The hon. Member for East Aberdeen (Mr. Boothby), who, apparently not having been placed on the prize list by the Prime Minister, has ostentatiously awarded himself a couple of certificates of merit—

Lieut.-Colonel Colville

My right hon. Friend the Chancellor still has to speak.

Mr. Ede

—seems to feel as I used to feel when I was at school, that if the prize list were only left to the pupils, they could arrange it on a basis which would show that justice is superior to mathematics. I have been attending prize distributions during two centuries, and I have found that it is easier to get to the prize table in the 20th century than it was in the 19th century. As a matter of fact, I got there only once in the 19th century, and that was when the headmaster warned me and a fellow pupil beforehand that after the prizes had been distributed, it would be our duty to remove the table from the platform. I understand that this morning I was called to the prize table in my absence by the right hon. and gallant Gentleman the Financial Secretary. I am bound to say that I had understood that it was customary that if one intended to allude to an hon. Member by malice aforethought, one at least gave him notice of it; and had I known that the right hon. and gallant Gentleman was going to refer to me, I should have been here to listen to him, although if he had nothing better to say than the elegant irrelevancies that I heard in the latter part of his speech, perhaps I did not miss very much.

Lieut.-Colonel Colville

I would have preferred to distribute my prizes in the hon. Member's presence, and I looked for him beforehand, but I could not find him. If he reads the OFFICIAL REPORT tomorrow, he will no doubt see that I did not say anything at which he need take offence.

Mr. Ede

I am sure of that, and at any rate I said that I was sure it was elegant, and probably irrelevant.

The speeches this morning have been commendably brief, and I shall try to follow the example which has been so well set. I desire to allude to the continued policy of the Government, as instanced in this Finance Bill, of restricting imports into this country. I find in a leading article in the "Times" on last Monday morning dealing with the; problem of raw materials and its effect on international affairs, the following two sentences: This development would not solve the problem of a better distribution of 'basic' raw materials, for the reason that Colonial areas do not produce them in large quantities. Sovereign States, who do produce them, put no obstacles in the way of actual export; but many of them do restrict ability to pay for raw materials by restricting imports. That appeared to be so wise, a statement in so unexpected a place that I thought attention ought to be drawn to it this morning. There is every indication in this Bill that the policy of restricting imports which the Government have been pursuing is to be continued. I am the more perturbed at this by something which appeared in another organ of public opinion yesterday. I do not often read the "Daily Mail" and I never buy it, but last night going home, and needing something to keep me awake in the last train, I read a copy of the "Daily Mail" which some other traveller had left behind. I found a comment on the last trade returns, the article being headed "Excellent" and there was this remarkable sentence: The figure of £88,000,000 for imports is a large one. But it can be pruned by a proper use of the tariff. It is clear that the leader-writer of the "Daily Mail" takes a different view from that taken by the leader-writer of the "Times" on this question, and I can only hope that the popular organs of the Press will take steps to instruct themselves in the greater wisdom that was shown by the "Times" earlier in the week. Representing as I do a great seaport town, I am bound to point out that we still have a very large measure of unemployment there which is due to the fiscal policy of the Government.

Mr. H. G. Williams

No.

Mr. Ede

The hon. Member represents an airport and not a seaport. [An HON. MEMBER: "A hot-air port!"] Well, the air is fairly hot when he is there, but he might realise that even in his constituency there is a feeling that some of the duties which are placed upon imports have a grave effect on the employment of those who have to deal with every form of international trade. The Financial Secretary to the Treasury knows that the arrangements in the particular port I have mentioned for collecting these imposts are not sufficient, either for the convenience of his officials or that of the traders who have to use the port. I am in correspondence with the right hon. and gallant Gentleman about one of these cases, and I can only hope that he will make a personal investigation into the way in which these duties have to be collected.

Lieut.-Colonel Colville

Is not the hon. Member's plea that trade is increasing?

Mr. Ede

No, the hon. Member's plea is that the number of heavy duties imposed on a large variety of articles, creates such difficulty at the ports that more attention should be given to the convenience of those concerned.

Lieut.-Colonel Colville

It seemed to me that the hon. Member was concerned more about the volume of business.

Mr. Ede

I do not think the right hon. and gallant Gentleman will find in my correspondence with him any reference to an increase of trade. I was concerned solely with the increase in the range of duties. The last letter which I wrote to him was on Tuesday of this week and with that letter fresh in his memory he should not have found it necessary to seek to correct me in what I have just said.

Mr. Levy

Does it not also create extra employment?

Mr. Ede

But the main complaint of the Conservative party this morning has been about the increase in the number of Civil servants. If the hon. Member for Elland (Mr. Levy) takes the view that that is something to be commended, then I must leave him to deal with his hon. and gallant Friend the Member for the Isle of Thanet (Captain Balfour) who produced figures to show that we ought not to regard such an increase with equanimity.

Mr. Levy

But does it not show in this case an increase in trade?

Mr. Ede

I do not follow the hon. Member's remark. I think that if this Budget debate is recalled afterwards, the two speeches which will attract most attention will be those of the hon. and gallant Member for the Isle of Thanet and the hon. Member for East Birkenhead (Mr. White), because both foreshadowed one of those drives for economy which periodically afflict the Conservative party and lead to the kind of drastic reduction of social services which took place under the Geddes Committee and again under the May Committee.

Mr. Lyons

Who found it necessary to appoint the May Committee in 1931?

Mr. Ede

I do not see the relevance of that interruption. I attend this House as frequently as most hon. Members and I rarely interrupt, but this morning raising a non-controversial matter and dealing only with elementary and accepted facts, I have been interrupted at almost every other sentence by hon. Members opposite who seem to be thinking about some speech other than the speech I am now making. I am ready to admit, if it is any consolation to the hon. and learned Member who interrupted last, that the May Committee was appointed as a result of a resolution moved by the Liberal party.

Mr. Lyons

And accepted by the Socialist Government.

Mr. Ede

Really, was there any need for that interruption except a kindly desire on the part of the hon. and learned Member to make my speech for me?

Mr. Lyons

I am only trying to refresh the hon. Member's memory. It was a Motion moved by the Liberal party and accepted by the Socialist party who were compelled to do so by sheer force of circumstances and who, having appointed the Committee, then ran away from it.

Mr. Ede

Did the hon. and learned Member think that my memory needed refreshing?

Mr. Lyons

I thought the hon. Member was deliberately trying to forget it.

Mr. Ede

The hon. and learned Member does not allow me to complete one sentence. The people who interrupted me earlier were good enough to allow me to get in a sentence and a half at a time, but the hon. and learned Member is not even as kind as that. I am prepared to admit that the Committee was moved for by the Liberal party, that the Motion was accepted by the Chancellor of the Exchequer of the day, was divided against by certain hon. Friends of mine and was carried, and that the report of the Committee contained sentences which have already been quoted from this side of the House. That does not alter by the slightest degree what I was saying. We have had again this morning the rumblings of the same kind of protest from a certain section of the Conservative party. The hon. and gallant Member for Thanet alluded to the same set of circumstances, and he was supported by the hon. Member for East Birkenhead, and I was saying that that is an indication, which I hope Members of the House will recollect when the matter reaches a stage further, that we are to be treated again to one of those agitations for economy in the social services which has made the regular conduct of public affairs, and especially of local government affairs, in this country so exceedingly difficult in the post-war period. One has alternate booms and slumps in these matters, and I hope that if the Government have any views with regard to the attitude adopted this morning by the hon. and gallant Member for the Isle of Thanet, they will let the local authorities of the country know, because it is very unfair that these services, which are first stimulated by grants and then suddenly damped down by a cessation of Government interest in the matter, should be dealt with in that way and that local authorities should be placed again in the difficult position in which they were placed in 1922 and 1931.

That was the only point that I was endeavouring to make. I regret that I should have had to take so long to make it, but that, I am sure the House will realise, was not my fault. I do not regard this Budget as one that anyone need feel very proud about. I am grateful to the Government for accepting one small Clause which I had the honour of seconding, though I frankly admit that if it does perform what they say it performs, it must be because the lawyers are able to read into what appears to me to be a complete confusion of words some sense that certainly ought to be enshrined in an Act of Parliament.

Notice taken that 40 Members were not present; House counted, and, 40 Members being present—

1.58 p.m.

Mr. H. G. Williams

I am most grateful to the hon. Member for Leigh (Mr. Tinker) for having provided me with a more generous audience than would otherwise have been the case, and I hope that on some suitable occasion I shall be able to return his kindness in the most appropriate way. I have just listened with great interest to one whom I always regard as representing the same part of the country as I do, because, although I believe he sits for some remote place called South Shields, his public life is really centred in Surrey, because he is chairman of the county council.

Mr. Ede

I regret having to interrupt the hon. Member, but he is living in the past.

Mr. Williams

Judging by the attitude of most of the Tories in one part of Surrey—I am in a county borough and therefore outside its administration—he seemed to me to be the permanent chairman of the county council, and it is an indication of the great tolerance of the Tories of Surrey that for several years they had a Socialist for their leader. The hon. Member protested that import duties were a great hindrance to his constituency, which is a seaport. I do not know whether he has studied the annual report of the Liverpool Steamship Owners' Association, but he will find there that in 1936 we imported into this country a greater weight of goods than ever before in our history. I am speaking from memory, but I think I am right in saying that the weight of goods imported in 1936 was over 30 per cent, greater than in 1931.—[An HON. MEMBER: "Question"].—I am speaking from memory, but I know that the increase was a very large one, and I say that it is a very startling thing that in five years after the adoption of the system of Protection there should be that enormous importation. It is largely the result of Protection, which has stimulated the importation of raw materials to such a very large extent and has resulted in increased employment for British shipping. Therefore, the hon. Member for South Shields (Mr. Ede) must not attribute any of the distress in his constituency to the adverse reaction of Protection on shipping.

The hon. Member protested about the most eloquent and effective speech made by my hon. and gallant Friend the Member for the Isle of Thanet (Captain Balfour), who asked this House to remember the question of economy. The hon. Member for South Shields said he did not want these periodical oscillations, these demands for economy, but what are the causes of the oscillations? It is the oscillations of extravagence which precede the oscillations in the demands for economy. If the wastrels will cease to waste, there will no longer be any need for Geddes and May Committees and so forth. I think there has been a good deal of waste, but I will return to that subject later.

I should like to make reference to the speech of the hon. Member for the Park Division of Sheffield (Mr. Lathan), who is not now in his place, in which he made a statement that frankly surprised me. He gave as his authority some famous economist called Mr. Colin Clark, whose name I had not previously heard, and he quoted from a notable article which this great gentleman had written in the "Economic Journal," in the course of which he said that the gross income of the people of this country was—I think I am quoting him correctly—something over £5,000,000,000. I interrupted the hon. Member to ask what "gross" meant, and he replied in effect that if I was not intelligent enough to understand that, why should I trouble to ask him? The reason why he did not want to answer that question—and I am sorry he is not present—was because I do not think he knew that Mr. Clark's statement was inaccurate.

Mr. Lyons

Who is this Mr. Clark?

Mr. Williams

I do not know.

Mr. Lyons

Was he not a Socialist candidate?

Mr. Kelly

I heard someone say that he was.

Mr. Williams

Anyhow, after the hon. Member had spoken I went out to the Vote Office to try to gain some information on the subject, and I obtained the document called the 79th Report of the Commissioners of His Majesty's Inland Revenue, which gives the gross amount of income assessed to Income Tax, which is not the same as the total income of the people of this country and is by no means the same thing as the net income of the people of this country assessed to Income Tax. I remember on one occasion getting an assessment to Income Tax which I returned to the gentleman who had sent it to me on the ground that I had already been assessed for it somewhere else, and those two items of my income were counted twice over in my gross assessment. Later they were included under the heading of "Other reductions and discharges." In the last available year I find that "Other reductions and discharges" amounted to £335,000,000, which we have got to deduct from the gross income. But assuming the gross income means anything for the purposes of our discussion to-day, the hon. Member said it was growing at the rate of £300,000,000 a year. Other hon. Members who were present when he said that will bear me out that I am quoting him accurately. Here we have the figures given year by year for the years 1926–27 to 1935–36. The highest figure was in fact for the latest year, which is only what one would expect, because population and production have been expanding. The total, instead of being £5,000,000,000 was £3,400,000,000, and that was only £9,000,000 above 1931–32, only £39,000,000 above the previous year, and £260,000,000 above the year before that. So his statement, which was used in support of his argument that the Chancellor has not gone where the money was—a statement which was taken from someone else—has no meaning, and related to figures which had no meaning and had been inaccurately quoted. It is not right that the public outside should be bemused by statements made in this Chamber, which is some respects the most effective loud-speaker that has been invented.

The hon. Member also said, again quoting from somebody else, that the rise in prices had been scandalous. His authority was the right hon. Gentleman the Member for Hillsborough (Mr. Alexander), who apparently said that what you paid £1 for now cost 13s. 3d. in 1933. The statement is nonsense. There has been no increase in prices comparable to that. We know that, more particularly in the last 12 months, there has been a rise in world commodity prices, which is something that was desired and urged by the right hon. Gentleman the Member for Keighley (Mr. Lees- Smith) who, I believe, is to wind up the debate. In 1932 or 1933 he made a great speech which I believe was in South Wales in which he said that one of the vital things for which the Socialist party was going to press was a rise in wholesale prices—and he was right. The world has been paralysed through the abnormal depression in prices, and the Socialist party were pressing for an increase, but that is no reason why one hon. Member for a Sheffield division should quote an hon. Member for another Sheffield division that the increase in retail prices is far in excess of what it has been, unless the right hon. Gentleman the Member for Hillsborough has seen a recent price list issued by one of the co-operative societies to its own members.

The Chancellor of the Exchequer is, no doubt, at this moment preparing for the ordeal which will come on him in about an hour's time and is making suitable physical preparation, and is, therefore, not with us. I am sorry, because I would like to take this opportunity of complimenting him on his conduct of the Finance Bill through Committee and the Report stage. It is not easy for a Chancellor of the Exchequer to take over somebody else's job, even if the somebody else is a Member of the same Government. The Finance Bill is built up after weeks of discussion and the weighing-up of different considerations, and when somebody else has to take over the conduct of it, it is not too easy a task, even when he is a man of the intellectual powers of the Chancellor of the Exchequer and a man with the long experience of quick mastery of new subjects which is one of the characteristics of distinguished members of the legal profession. I think that he has handled the situation with great ability and he has shown no rigidity of mind. When we have a new tax of many complexities, it is obvious that when it is presented to the public gaze different people, looking at it from different points of view, will discover defects. My right hon. Friend has not hesitated for a moment when a defect was plainly stated to him to do what he could to correct it. Last night a substantial number of important Amendments were carried practically without discussion, representing important adjustments and modifications to meet the legitimate points that had been put to him, and the House is entitled to express its gratitude to the Chancellor for the way in which he has handled the situation.

An hon. Member opposite referred to my arithmetic when I made a speech without preparation in replying to a proposal which would obviously involve a higher charge. I was rash enough to criticise the arithmetic of hon. Members opposite, and my conclusions were not accepted entirely by the right hon. Gentleman in front of me. I did not see anything wrong with my arithmetic, but I did not visualise to what extent those who would be relieved by the marriage allowance were paying Income Tax at the rate, not of 5s. in the £ but of 1s. 8d. The whole of my error was due to the fact that I was overlooking the enormous proportion of people who, under the systems of reliefs which now exist, do not pay 5s. They do not pay 2s. 6d. The bulk of those who would have been relieved by the extension of the married couple's relief are paying only 1s. 8d. on the effective part of their incomes. Of the 2,000,000 or 2,500,000 married persons who are assessed to Income Tax, such a large number pay on their incomes at that low rate that my estimate of the cost of the concession was double the Treasury estimate. It is not a reflection, in the long run, on my arithmetic.

Mr. Jagger

The hon. Member will agree that it is a reflection on the amount that they earn in a year?

Mr. Williams

Not at all, because if you take the present deductions—first of one-fifth of their income, next the fact that £180 is deducted as the personal allowance of married couples, and then the children's allowances, it means that people of to-day are earning incomes that many people will regard as substantial, but are nevertheless relieved to such an extent that they pay a small tax compared with those who are charged at the full rate. Therefore, I do not agree that I did make a mistake for which I was described by the hon. Gentleman opposite as the senior wangler.

Let us realise what this Finance Bill is. I regard it as the legislative expression of a defence Budget, or rather a peace preservation Budget. It represents a very heavy burden. I am quite satisfied that it is a burden which the majority of the people of this country will accept without the slightest grumble, and I hope that the inhabitants of other nations realise that fact. The people of this country are perfectly resolute in that they are willing to make whatever financial sacrifices are necessary in order that the preservation of peace, and, incidentally, the preservation of free institutions, may be assured. How long the folly will continue of nations that are nearly bankrupt indulging in armaments which are obviously beyond their powers it is difficult to say and the sooner they come to a sense of reality the better. It is in the meantime good that the rest of the world should know that the people of this country are willing to make the necessary sacrifices, not merely for the safety of this country, but for the preservation of world peace. That is the real significance of the Budget.

Having said that, may I join with my hon. and gallant Friend the Member for the Isle of Thanet who has made a contribution to our debates to-day of the utmost value. I hope that it will enjoy wide publicity, because the situation is one of great gravity. The tax burden of the present year is £835,000,000. I want to compare that with the tax burden of 1933–4, which was the same year selected by my hon. and gallant Friend, because it is the year of lowest expenditure in recent times. I would also like to go back to 1928–29, which is the last year for which a Conservative administration was responsible. We cannot consider our burden merely by taking taxes alone, because of the intimate relationship between our expenditure and that of the local authorities due to the enormous grants that we pay to local authorities. You must paint the picture by adding together the tax burden and the rate burden.

Mr. Cove

And take the assets into account also.

Mr. Williams

We will take them afterwards if there is time. This year the tax burden is £835,000,000 and the rate burden approximately £200,000,000, making a total of £1,035,000,000. On the same basis in 1933–34 it was £876,000,000, and in 1928–29 it was £874,000,000. That is a very large increase, a colossal increase. And it does not show the full picture, because in the first of those years we provided for re- demption of debt over £57,000,000. This year, leaving out of account the Defence Loan, the provision will work out, I imagine, at about £13,000,000 unless there is some change in the rate of interest on the floating debt, of which there is no sign at present. In 1933–34 we provided £8,000,000 for the redemption of National Debt. It is no good comparing the tax burden alone without considering the expenditure. Here we have this vast increase in the tax and rate burden at a time when we are making very small provision for National Debt.

The total increase in the tax and rate burden I make to be £161,000,000. That is the increase this year compared with the last Conservative year. In the last Conservative year we reduced the debt by £57,500,000, and this year, deducting from the amount to be borrowed under the National Defence Loan the amount which will be found in the Budget for reduction of debt, a probable increase of £67,000,000. So that the real position is worsened this year, compared with 1928–29, by £285,000,000. To me the sum is staggering. That is the increase in rising years. It is a staggering increase, which worries me. It is not all due to Defence. The increase on Defence is £165,000,000. That is the first claim on expenditure, but some people forget it. The only reason for having a Government is in the first place to have Defence. I do not deny the importance of all the other Services, but Governments were started only for the purpose of defence, internal and external. That is the fundamental justification of the existence of Governments, to safeguard the rights of property of the inhabitants of town and country and Empire.

Mr. Stephen

To safeguard the rich.

Mr. Williams

That may be, but judging by what happens in a war, I should say that it is to safeguard everyone. What has happened in the intermediate period? There has been an element of luck, assisted by wise judgment. We are borrowing on floating debt at the rate of about 10s. per cent. In the past we have paid as much as 6 per cent. If there is any serious rise in the interest on short-term money, we may have to find another £20,000,000 or £30,600,000, which for the moment we escape. In between we have converted about £2,500,000,000 of debt to a lower rate of interest. We cannot do that again. Between £30,000,000 and £40,000,000 has been saved in that way. In between those dates we have introduced a general protective system which has given us £45,000,000. Take these great items. We find the situation has worsened by £285,000,000 during that period, but we have had various strokes of luck from the financial point of view—cheap borrowing on Treasury Bills, the conversion of debt and a new revenue from tariffs. Those savings cannot be repeated.

The hon. and gallant Member for Thanet drew attention to the change in the age distribution of the population. It is of the utmost gravity. I do not know what will happen 10 or 15 years hence unless there is a complete change, with the enormous burden of old age pensions and a rapid increase in the number of them, the growing proportion of sickness amongst elderly people, the risk of a growing proportion of elderly people requiring unemployment assistance arising out of the difficulty of people between 55 and 65 years of age obtaining employment. All these things will add to the charges. But we are going on to-day as if they did not matter. The moment there comes a reaction in trade, that reaction will come when our taxation is at a level far higher than that at which it was left by the Conservatives in 1929, and therefore with our reserves eaten up. I am not blaming any particular party, but am taking the period which covers two years of Labour administration, the rest being covered by the National administration.

I have talked about this gigantic growth, about which the public is complacent. There is not the faintest interest outside in economy at the moment. There is no interest among hon. Members opposite and there is not much on this side of the House. But there will be an interest taken, maybe next year or the year after; and it may be of such a drastic character that we shall have to do things far graver than those which some of us were willing to do in 1931–dropping the subsidies, cutting the salaries of ourselves and every one else. It is no good blinding our eyes to the fact that we may be forced to it. With the reduction in the school population, the number of teachers might be reduced pro rata. I should regret it. The moment you start a new social service you create a new vested interest. You have to accept the fact and it cannot be undone. Our right policy is not to incur new obligations. Take the legislation for which right hon. Gentlemen on the Treasury Bench have been responsible in the last three or four years. They have piled up vast new burdens amidst the plaudits of their opponents. I have not voted for a number of them, and my responsibility is therefore less than that of others. But are we going on blindly, are we going to have another oscillation? Waste and retrenchment—are we going on indefinitely, or are we coming to a time when we shall take care to avoid new commitments and will say "No, we will not."? Are we going to have the courage to say to the people "No, you cannot have these things, because the nation cannot afford them."? The nation cannot afford it. That is the truth. It is no good hon. Members opposite saying the Chancellor has not "gone where the money is." That is an old tag. If he tried to "go where the money is," he would be signally disappointed at the little money he would find when he got there.

Take the case of a man who is called really wealthy, a man with a large income. Already two-thirds of his income is taken in taxation, and as a result of this Budget more than two-thirds will be taken. We have got taxation up to a limit beyond which we cannot get much more. Why are we indulging in what has been condemned as bad finance—and in one sense it is—by borrowing to meet current expenditure? Why are we borrowing £80,000,000? It is a frank recognition of the fact that we cannot get £80,000,000 by taxation at this moment without creating such a grave disturbance in the economic situation that the result would be to create unemployment That is the situation which this House and the nation will have to face, and if they delay facing it then the things which will befall will be infinitely worse than if they had the courage to face up to it now. I have great respect for the skill with which our finances have been administered in recent years, but that is no reason why those who hold the views that I do, like my hon. and gallant Friend the Member for Thanet and others on this side, should not state our views with all the force at our command, and I hope that in the next three or four years greater care will be shown before undertaking new commitments than has been displayed in the last nine years.

2.27 p.m.

Mr. Ridley

When I entered the House the hon. Member for South Croydon (Mr. H. G. Williams) was good enough to offer me a word or two of encouragement and congratulation. It would be superfluous for me to offer the hon. Member a word or two of encouragement, for he needs none, and I fear that he would hardly appreciate it if I did, but I take the risk of congratulating him on having made a speech of a character such as hardly anybody else in this House would have made. First of all, I think it is unfortunate, though in a sense courageous, that the hon. Member should desire to advertise—I am trying to think of a phrase that will not hurt his susceptibilities—his lack of adequate knowledge of Professor Colin Clark. He is not one to be dismissed as a Socialist propagandist, any more than the hon. Member for South Croydon could be dismissed by some such opprobrious term.

Mr. H. G. Williams

I had not heard of the gentleman before, and the only reason I gave the quotation was because I thought I ought to show how grotesquely inaccurate it was.

Mr. Ridley

Professor Colin Clark will probably go fifty-fifty with the hon. Member for South Croydon and say that he had never heard of him. Professor Clark is a very distinguished economist, is a Master of Arts at Oxford, a Professor of Economy at Cambridge and a Prizeman of the Royal Statistical Society. It would probably have done the hon. Member for South Croydon a little good if he had undertaken the same studies in connection with the Royal Statistical Society, for I have seldomed listened to a speech in this House which contained so many vague and unspecified statements and assertions. I hope that on some other occasion the hon. Member will tell the House a little more explicitly what he means when he says that the wastrels should cease to waste. I should like to know to whom he refers as wastrels and exactly what he regards as waste. Then the hon. Member thought, but he was not sure, and that is why it is impossible to criticise him to the full, that imports had gone up by, he thought, 30 per cent. Again, he rather thought, and I admire the forebearance of my right hon. Friend the Member for Keighley (Mr. Lees-Smith), that my right hon. Friend, or somebody else, had made a speech, he thought, in South Wales in which, he thought, he had said something which he then proceeded to deal with. I do not think anybody else in the House could safely be congratulated on having made a speech of that character.

One or two references have been made this afternoon, by my hon. Friend the Member for Southwark (Mr. G. Strauss) and by the hon. and gallant Member for Thanet (Captain Balfour)—to whom I would sincerely offer my congratulations, if so many had not been uttered that I fear that I should be painting the lily—about the crisis which to many people seems to be inevitable if present financial tendencies are pursued. The hon. Member for East Aberdeen (Mr. Boothby) who, unfortunately, has now left the House, seemed rather to qualify that statement. He did not believe there would be a crisis. The hon. Member always starts his speeches in a way which builds up the expectation that he will see political sanity before he finishes, but then dashes those expectations. I hope the hon. and gallant Member will not treat us to the same experience. The hon. Member for East Aberdeen does not think there will be a crisis. He must be an isolated figure in the modern economic and political world, for almost without exception every modern economist believes that in a period of restricting capitalism there are bound to be alternating periods of so-called prosperity and depression, and the economists agree that each new period of depression is likely to be longer and deeper than the period before and that the periods of prosperity so called—it is not to be discerned in my constituency—as they succeed one another will become shallower.

If the hon. Member for East Aberdeen had been present I would have suggested to him that he should read Mr. J. A. Hobson's "Economics and Unemployment." I should like to have told him that despite the terms of the Amendment moved by my hon. Friend the Member for Park (Mr. Leslie) a balanced Budget is not regarded by this side of the House as a fetish to be worshipped with un- restrained and unqualified devotion, no matter what the circumstances may be. There may be occasions and circumstances which justify and call for the unbalancing of a Budget, but an unbalanced Budget such as this must essentially be justified by both the occasion and the circumstances. There is at least one European country which has deliberately unbalanced its Budget in order to provide, as it believes it is providing, for permanent socialist expansion and for new foundations of social and economic life. An unbalanced Budget, no matter what the other reasons may be, can never be justified except in a period of financial stringency. I suggest that it is not possible for the Government in successive by-elections to brag about expanding prosperity and then for the hon. Member for South Croydon to say that additional taxation could not be imposed because there is not as much prosperity as would appear to be the case from what is said on by-election platforms.

Twenty years ago, and even 120 years ago, it was said that added taxation could not be borne. People are bearing taxation which all along they protested it was beyond their compass to sustain. This Budget is unbalanced for two reasons, first because it acknowledges the borrowing of £80,000,000 when recourse to borrowing is entirely unnecessary, and that amount could easily have been met by increased taxation; and, secondly, because, without acknowledging it, it borrows what otherwise would have been a Sinking Fund payment. I would draw attention to the fact, despite what the hon. Member for East Aberdeen said, that during the period of the Labour administration in 1929–1931 there was a rigid adherence to orthodox finance, and that there has been, for two reasons, an economy in national debt expenditure, in the last two years, first because conversions have relieved us of the burden of interest and, secondly, because recourse to borrowing in non-recognition of the Sinking Fund has added to that economy.

There is a difference between the National Debt burden in 1936–37 and that of 1929–30 of more than £130,000,000. Within that sum is the figure which should have been found this year for normal sinking fund purposes, which would still have meant a substantial economy in the total National Debt services. In a period in which financial stringency of a serious character does not exist, we are adding to the debt burden, instead of using the opportunity of reducing that burden. To the extent to which this economy is not being made, a liability is being heaped up for somebody else to meet. The hon. and gallant Member for the Isle of Thanet said that he felt that the crisis would come, no matter what the character of the Government might be. I would not use those words in the sense in which he used them, but I agree as to what the character of the Government might be. Some hon. Friends of mine on these benches expect that the character of the administration will syncronise with the coming of the crisis.

It is almost impossible to anticipate what economic and political developments will take place during the next two or three years, and in this matter I must be as uncertain as the hon. Member for South Croydon. In the next two or three years we shall reach the top and go down the other side of whatever prosperity is coming out of the armament boom. We shall have reached the top of a trade cycle. No preparation of any kind is being made by the Government to meet the aftermath of those experiences, although, having derived all we can from the armament boom and from the upward sweep of the trade cycle, we shall be meeting a very steep economic slump.

Mr. Levy

May I ask the hon. Member whether he really believes that what he is now saying is true? Will he tell me whether the Socialist programme does not advocate the spending of over £200,000,000 when that time comes, if his party should be fortunate enough to get a majority?

Mr. Ridley

I am afraid the hon. Member is casting aspersions upon my honesty and integrity in the form of an interrogation.

Mr. Levy

indicated dissent.

Mr. Ridley

The hon. Member said: "If I believe what I am saying". He is suggesting either that I am advocating that course or that I do not believe what I am saying. [Interruption]. I beg to be relieved from further interruption. It is believed that the crisis will be coincidental with a general election, which will result in the return of a Labour Government to the benches on that side of the House. If the hon. Member who interrupted me will turn to the Second Reading of the Ministers of the Crown Bill he will see that on two occasions the then Prime Minister referred to us as the alternative Government, and said that at no distant date the party on these benches would be seated on the benches opposite. That means that all the appalling consequences of a trade slump and of heaped-up debt obligations will have to be faced by the new Labour administration.

I am glad that the hon. Member for East Birkenhead (Mr. White) has returned to his place. It was something more than a coincidence that he should have suggested a new investigation into the social services. I noted that the hon. Member for South Croydon welcomed the suggestion which was made that, in this combination of circumstances, there should be a new May Committee. How could the difficulties then be faced? Either by extra taxation or by a very severe and almost inhuman restriction of the social services. In those circumstances, we shall make—

Mr. White

I am obliged to the hon. Member for giving way. I did not hear the observations of the hon. Member for South Croydon (Mr. H. G. Williams) or whether they coincided with mine, but I referred to the fact that our social services had been developed in a hahazard way and that they are now ragged, and I said it was high time to have an investigation into the whole field, not with the idea of cutting them down, but with the idea of getting them extended, especially with the possibility in mind of a nationwide scheme of superannuation.

Mr. Ridley

The hon. Member will notice that in the years before 1931 such an investigation was suggested. The hon. Member for South Croydon must be somewhat discomfited with the explanation which has just been given.

Mr. H. G. Williams

I made not the faintest reference to the suggested inquiry.

Mr. Ridley

I am within the recollection of the House when I say that the hon. Member for South Croydon referred to the suggestion that there should be an investigation, and went further and said that there should be a scheme—

Mr. Williams

No.

Mr. Ridley

I shall be within the recollection of hon. Members and within the terms of the OFFICIAL REPORT of the proceedings when they are available tomorrow morning. In any case, I suggest that, in these circumstances, with increased obligations to face in the middle of difficulties, since the present Government are taking no precautions at all to avoid the slump, we shall be faced with two alternatives only—either taxation for those people who can bear it or the restriction of social services against people who are too poor to stand it. We shall make those pay who can pay, and will jealously guard the interests of those who cannot.

I regret that in this discussion I am unable to contribute a Latin tag. I would seriously like to inquire what is to be done about the American debt and whether it is contemplated, as I have heard suggested, that Lord Bewdley, to whom I wish a long and happy retirement, should be given an opportunity of making a voyage to the United States and that he must not come back from there until he has repaired the damage which he did on a previous occasion. … We shall not quite forget The name of Baldwin till we're out of debt.

2.43 p.m.

Sir John Mellor

I hope the hon. Member for Clay Cross (Mr. Ridley) will forgive me if I do not attempt to follow him into the very wide field he covered in his speech. The Financial Secretary to the Treasury said that the old N.D.C. had provided a jumping-off place for the Chancellor of the Exchequer to make a better leap with the new N.D.C. I think the Chancellor of the Exchequer owes even more than that to the old N.D.C. So many people were gaily dancing on its grave that when the provisions of the new N.D.C. were brought forward they were accepted with a surprising degree of alacrity. One of those foreign critics who are always ready to attribute to British statesmen the most wonderful Machiavellian manœuvres in foreign policy might perhaps see in the history of the present Finance Bill an elaborate plan to win the people of this country to a more amenable frame of mind, a plan rather similar to the preliminaries which we know occur in a modern Russian State trial. The people of this country will attribute less guile and more sincerity to the Prime Minister. I agree with previous speakers who have said that the history of the N.D.C. far from impairing his prestige, has considerably enhanced it.

When the new National Defence Contribution proposals were first announced, deprived as they were of the element of computation of capital, which caused so much anxiety, and of the element of growth, they looked extremely simple until they appeared on paper. When we saw the new Clauses and Schedules on paper, we realised that they were still of great complexity. I think it is a great pity that we should have legislation, and especially legislation which affects such a vast number of individuals throughout this country, which does not appear in a form that can be understood by the ordinary man without professional assistance. I feel that in the case of this Bill the drafting might have been very much more simple. I hope I shall not, on the Third Reading, be out of Order in referring for a moment, for purposes of illustration only, to the text of the Bill. Clause 18 states that profits are to be computed on Income Tax principles in accordance with the provisions of the Fourth Schedule, and in the Fourth Schedule we find, in paragraph 4, the statement that the principles of the Income Tax Acts under which deductions are not allowed for certain matters shall not be followed—I have left out the cases therein described. The paragraph proceeds: Provided that nothing in this paragraph shall authorise any deduction in respect of certain other matters. Surely it is very difficult for an ordinary man to follow the implications of all these double negatives. One would assume that the words: Provided that nothing in this paragraph shall authorise any deduction in respect of imply that the paragraph authorises something, but I confess it is difficult to see exactly how it gives direct authority for anything at all. It is inevitable that, in a complex Measure of this kind, however skilfully the Ministers do their work, and however skilfully the draftsmen do their work, anomalies and errors of drafting must remain. I feel that that is the penalty which we have to pay, which the taxpayers have to pay, and, indeed, which the whole country has to pay, for this House having exclusive control over a Finance Bill, so that there is no further opportunity for the Government, after the Bill has left this House, to make necessary corrections. I am not referring to any matter of principle, but to questions of drafting. In view of the errors which remain and which were never noticed, there must be a considerable amount of litigation consequent upon the imposition of a new tax like this. Such litigation involves trouble and expense to His Majesty's subjects. I think it would be a good thing if, when cases arise which are due to some error in drafting that has been overlooked, the Treasury were prepared to arrange for a test case to be taken to the High Court, and if necessary to the House of Lords, and that in such circumstances the Treasury should be prepared to pay all the costs.

2.48 p.m.

Mr. Barnes

I very much appreciate the opportunity that has been afforded me of winding up this debate to-day on behalf of the Opposition, because I do not take part in these proceedings in the atmosphere of a speech-day at school. I could not offer nice words on behalf of this Budget. If I separated the Chancellor of the Exchequer and the Financial Secretary from their production, I should not desire to say any harsh things to them as individuals, but with regard to the production I do not feel that I can offer very favourable comments this afternoon.

Before I proceed to some reflections on the Finance Bill, I should like to refer to some of the statements made by the hon. Member for South Croydon (Mr. H. G. Williams). To me, a speech of that character is a prelude to a campaign for economy—not real economy, but economy aimed at those services whose object is to improve the conditions of the mass of the people. When the hon. Member was questioned, he tried to excuse himself by stating that the period over which he has discussed the tax and the rate burden of to-day included the period of the Labour Government as well as of the National Government. I should like to place on the records of the House the fact that it was in the period of the National Government that we went off the Gold Standard, and had all the advantage of going off the Gold Standard in relation to the tax, rate, and price burdens of the community; that within the period of the National Government we have brought into this area all the additional revenue from tariffs; that within the period of the National Government we have had the advantage of taking into our budgetary statement all the savings on conversion; that within the period of the National Government we have had the advantage in our national expenditure and revenue of the suspension of the Sinking Fund, which directly contravenes the recommendation of the Colwyn Committee; that within the period of the National Government we have suspended the payment of the American Debt; and that within the period of the National Government we have reached the high Income Tax rate of 5s. in the £, a Surtax rate of 8s. 3d. on the highest grade, and a revenue from indirect taxation of £333,000,000. Therefore, if hon. Members like the hon. Member for South Croydon view with some concern the present position of the country, and try to defend the raising of £80,000,000 by loan because of the intolerable tax position of the country, I would emphasise that that stringency has been produced entirely within the period of the National Government's administration.

I should say that the reception which this Budget and Finance Bill have received in the House and in the country is without precedent in these times. I know of no Budget raising such an enormous sum as £863,000,000 that has received so little notice from the community, and has been subjected to so little analytical criticism on the Floor of the House of Commons. And yet, despite the huge sum that is being raised by taxation, we have to acknowledge that the Budget is not balanced. A sum of £80,000,000 is to be raised by loan; we have reached a position where the sinking fund principle of our National Debt is almost treated with derision; a period of inflation has been commenced; profiteering is being encouraged by this Finance Bill and Budget, the American Debt is being ignored; prices are being artificially raised, and the enormous defence cost is the measure of the Government's double dealing in foreign policy and foreign affairs.

The whole Budget has been overshadowed, as the Financial Secretary himself acknowledged, by the introduction of a somewhat novel tax. The Prime Minister when he introduced the Budget, advanced this new tax definitely with the object of recovering some proportion of the growing and excessive profit which was arising from the placing of large contracts by the State. That growth of profits tax met with a tornado of opposition and criticism from the City of London, and that instinctive resentment and opposition of financial interests to any tax which threatened their opportunities of exploiting the community in difficult times created a situation which has overshadowed the Budget and the Finance Bill as a whole. We witnessed in the early stages of the Bill the spectacle of the Premier elect of the Conservative party being held to ransom by his own party profiteers, and he had to surrender or suffer defeat. Between 20th April and 1st June frantic efforts were made to take the sting out of the first National Defence Contribution proposal, but it was of no avail. We then had an example of the measure of patriotism of some of these people and interests who are so apt to wave the flag when it suits their electoral prospects. There was no patriotism in the City when it came to a tax on expanding profits. The City boycotted the Chancellor's loan of £100,000,000 for armament purposes, security values fell, and Conservative speeches showed clearly that they placed profits before even their party.

Mr. Mabane

Were not equally fierce attacks made on the tax by the Labour party?

Mr. Barnes

I am not stating that the tax was the responsibility of the Opposition. It is not my business to prove whether we were in favour of it or not. I am stating that the Government introduced the tax and the Prime Minister ran away from it, because of the pressure not of this side of the House but of the City and the vested interests. It is no use for the hon. Member to point to this side of the House and say that we disagreed with the tax. That is not the point.

Mr. Mabane

Will the hon. Member ask his Leader what were the words that he used?

Mr. Barnes

That has nothing to do with the issue. Hon. Members often try to ride off from their own responsibility on matters of this kind by stating that A, B and C disagree with it. Whether A, B and C agree with the withdrawal of the tax or not has nothing to do with my point, that we have witnessed the spectacle of the Prime Minister withdrawing a major tax proposal at the behest of financial interests outside the House. I want to use that in comparison with the attitude of the Government on another occasion. The Government practically accepted defeat almost on the Second Reading of the Bill. Then we get to the second stage of this new tax proposal, the original purpose of which was to recover some excessive profits that were being made as the result of Government contracts. The second tax met the chief objections of the financial interests. It abandoned all pretence to recover any proportion of excessive or expanding profits, and it became a tax which could be measured in the form of commodity production and price and passed on to a very large extent. It became a discriminatory tax. It exempted large and wealthy sections of industry and the professions. Observe the celerity with which the Government were prepared to accept the withdrawal of their first tax because it did not meet with the approval of the City. Observe their attitude in exempting the wealthy, sheltered, monopolistic, high-dividend paying statutory companies. A good many hon. Members opposite have large holdings in statutory companies. The Government have exempted the professions, and again the higher ranks of the professions are linked in their political interests with the Conservative party. They omitted from the tax businesses with profits up to £2,000. A profit of £2,000 represents a capital of £10,000 to £25,000 or £30,000. They have made special provisions with regard to building societies.

In the case of gas companies, electric light companies, road passenger transport companies, and building societies the passing on of a tax of this character is immediately discernible by the users of gas or electricity, or in the case of building societies it is shown by its effect on mortgage interest rates. It is not accident but design that has caused the Government to eliminate and to exempt large categories of this kind. Yet, when we, on the other hand, bring to the notice of the House the position of industrial and provident societies who have 7,000,000 of 8,000,000 holding members in this country—and on every test applied to utility companies, building societies, the professions or the small businesses there was an overwhelming case for special conditions to have been observed in respect of the co-operative societies—there is not to be a change in practice with regard to the Treasury administration in the application of a tax of this character. When we compare the circumstances of the production of the first tax and the attitude of the Government towards the withdrawal of that tax as a result of the Opposition, undoubtedly, of large business interests, and the discrimination which the Government have shown towards large sections of industry in this country, we are entitled to emphasise the fact that we realise the rigidity with which the Chancellor of the Exchequer has met the claims of the co-operative societies. I sincerly trust that the 7,000,000 co-operators of this country, many thousands of whose votes must be represented in the votes given to hon. Members opposite, otherwise they would not be sitting in such large numbers in this House to-day—and there is no body of voters spread so evenly throughout the country as the co-operative membership—will, on this occasion, observe the discrimination against themselves, and that it will be reflected in their votes at the next general election.

I will proceed further with the discriminatory effects of this tax. Does anyone doubt that, in the field of commodity production, this tax will be passed on? Is there any hon. Member who would assume for one moment that all the great armament firms and contractors in this country whom the first tax was designed to reach will not pass this new tax on in their contract prices? I will give a few typical examples of how the armament firms have improved their position under the general armaments policy of the Government. On 12th July, 1932, the value of the shares of Baldwins was 2s. 3d. and on 12th July, 1937, it had increased to 9s. 6d.; John Brown & Co., from 1s. 3d. in July, 1932, to 36s. 4½d. on 12th July, 1937; Cammell Laird, 1s. in 1932, to 2s. 9d in July, 1937; Guest, Keen and Nettlefold, 11s 6d. in July, 1932, to 34s. 6d. in July, 1937; and Hadfields, 4s. in July, 1932, to 33s. 3d. in July, 1937; Vickers, 6s. 1d. on 12th July, 1932, to 29s. 4½d. on 12th July, 1937. Here we have examples of excessive improvement in their position in that period. The Financial Secretary took credit for the National Government in connection with the expansion of trade and industry, and that is a point which has been emphasised all the way through the Debates on the Budget and the Finance Bill. Prosperity depends on the angle from which you look at it, and it is largely measured by how it affects yourself, or the class you represent, or the category of the community in which you are situated. How does the prosperity argument of the Financial Secretary and the Chancellor of the Exchequer work out? If we take the trend of profits, with an index figure of 100 in 1930, we find that in 1933 the trend of profits was 69.7, and in 1937, 106.7, an increase of 37 points.

Mr. Mabane

Hear, hear!

Mr. Barnes

The hon. Member cheers that statement. I agree that that is prosperity for the persons who enjoy the fruits of industry in the form of profit. I agree that that is prosperity for the owning class, for the wealthy section of the community, for those who buy and sell shares on the open market. Let the hon. Member for Huddersfield (Mr. Mabane) give his view on the following forms of prosperity for the community. In 1931 the Ministry of Health carried out a test to show the number of persons on Poor Law relief. The number of persons per 10,000 of the population who could be classified as destitute in a given period of that year was 284, compared with 390 per 10,000 in 1935. That is an increase in destitution of 106 per 10,000. Would the hon. Member for Huddersfield classify that as prosperity for those persons?

Mr. Mabane

It indicates increasing generosity on the part of the State.

Mr. Barnes

If it indicates increasing generosity, why does not the hon. Member take advantage of the State's generosity? It is humbug for people who are well fed and well conditioned to say that a person who has to receive public assistance is merely the recipient of the State's generosity. We know that a person does not go to receive Poor Law relief until he is absolutely at the lowest ebb, and nothing is more intolerable than to hear a situation of this kind described as benevolence on the part of the State. If we take the winter test, the same figures prevail. I quote these figures to show that prosperity depends upon the angle at which you look at it.

Let me deal with that part of our Amendment which relates to prices. I have given the rise in the value of armament shares, and I emphasised the point that a period of inflation has been started by the general policy of the Government. You can see it reflected in the rise in shares and primary commodities prices. This is not a natural increase in prices. This is an artificial situation. Compare the prices in 1933 with the prices on the 1st June, 1937. Bacon has gone up 26 per cent., flour 32 per cent., bread 26 per cent., tea 20 per cent., potatoes 54 per cent, and butter 12 per cent. I should be the first to admit that the prices of foodstuffs in 1931 or 1932 or 1933 were at an uneconomic low level, but those who are handling these commodities—and hon. Members opposite must know it also—observe how each month the ratio of growth in prices is accelerated. It is gathering momentum. The rise in prices is getting into its stride, and is upsetting in other directions every factor of business organisation. We shall soon have our business expenditure in a disorganised state in peace time, just as it was disorganised in war time.

My third point is to bring out what is the measure of the prosperity which is occurring in the community to-day. The London and Cambridge Universities Economic Services have made out a very valuable return covering a wide area showing the trend of industrial stocks and shares together with the movement of the wage level. Let us look at this return from the angle of the investor and the owner, and also from the angle of the worker and the producer. From 1932 to 1936 share prices increased by 91 per cent. Will anyone say that an increase of 91 per cent, over the wide range of industrial stocks and shares represents a healthy, normal expansion of industry? Not at all. It is nonsense to say that you can double the price of shares and that it represents normality in industry. It is the direct result of inflation, speculation and gambling, taking advantage of the pouring in of immense sums of national money into the production of armaments. But while share prices have increased by 91 per cent. in these four years, wage levels have increased by only 2½ per cent.

Where is the prosperity? Certainly prosperity, and substantial prosperity, has come through the policy of the National Government to the owners of shares, which have gone up by 91 per cent. There has certainly not been the same measure of prosperity for the wage earners. Their wage levels have gone up by only 2½ per cent, during the same period, and the buying power of wages has actually been reduced. I appreciate that the main publicity machinery of this country is behind the National Government and obscures the real test of their administration, but if the Government's record is judged accurately, and if the real test is applied to its administration, it represents rising national expenditure, rising taxation, rising prices, rising profits, and a rising danger of war. For that reason we are opposed to it.

3.21 p.m.

Sir J. Simon

The hon. Member for East Ham South (Mr. Barnes) has given the House a large number of figures and calculations designed, as he said, to show the House and the country how deplorable is the record of the Government and how specially open to condemnation is the present Finance Bill. Before the Finance Bill is given its Third Reading, I would like to offer for the consideration of the House a few figures. They will be few, because I think there is in these matters a great danger of failing to see the wood for the trees, and I believe that simplicity of statement, with a minimum of detailed figures, is absolutely necessary that we may regard this matter in its proper proportions.

The hon. Member began by declaring—and I think he was justified in this—that the Finance Bill is raising from the taxpayers of the country an unprecedented sum of money. I think the House might like one or two further facts which will bring that clearly out. Excluding the Post Office net receipts, and what is called the non-tax revenue, it is a fact that the Finance Bill seeks to raise by way of taxation a sum which is estimated at no less than £834,000,000. The hon. Member for East Ham South was quite right when he said that that is an unprecedentedly large figure. It is true that in the two or three years immediately following the Armistice, the figures might be regarded as even larger, but that was really because the Excess Profits Duty came in, and very largely it was Excess Profits Duty which was overdue and which was to be attributed to the War years. Subject to that qualification, it is a very grave and serious fact that we are now passing a Finance Bill which is seeking to raise by a process of taxation of the people of this country the enormous figure of £834,000,000. I think that in the whole of the official career of Mr. Gladstone, ther was never passed a Budget of as much as £100,000,000. I can remember, when I was a Member of the House just before the War, the astonishment with which the Budget in the spring of 1914 was received, when it mounted up to the figure of £200,000,000. Even after we allow for the change in the value of money and other circumstances, unquestionably £834,000,000 is a very sobering figure indeed.

The first question which suggests itself is: What are the main reasons why so large a sum of money should be raised? To go into that question in detail would be really to make a post-Budget speech, but it may be of some interest to the House and I hope to the country, if I put in the very simplest form the facts about the three main elements which go to build up this very large sum. There is the taxation which is being raised in order to finance and carry forward the social services. There is the taxation which is being raised for the purpose of meeting the interest on the National Debt, and there is the taxation which is being raised for the purpose of carrying out the Defence programme. Perhaps the House will allow me, in two or three figures, to put these three matters side by side. I think it is very striking to look at them in this bald way. The figures are accurate, although I am not for this purpose troubling about minor adjustments of quite small sums here and there.

I take the social services first, and for this purpose I include all that taxation provides towards the assistance of the unemployed. I also include the Special Areas. Taking health, education, old age pensions, widows' pensions and housing, in so far as it is a call upon the taxpayer, and all the other social services, in this present year the sum which is being raised from taxation for these social services amounts to £219,000,000.

Mr. Barnes

Does that include War pensions?

Sir J. Simon

No, they are about £40,000,000 and the figure is slowly decreasing. I am talking of what are really social services due to a change of policy or change of attitude, common to all parties and faithfully reflecting the general opinion of Parliament, namely, that the burdens which the State ought to assume are not limited, as they were thought to be in the old days to providing for our Defence and paying for our official machinery and so forth, but that there is also a claim upon the attention of the State for the assistance of those who need help most. Therefore, old age, sickness, unemployment and maternity benefit and all the rest come in. I am not arguing whether it is right or wrong, but the figure which is being provided out of taxation this year is as I say £219,000,000. Merely for the purpose of comparison—not in order to make any party point, but just to see where we are going,—let me contrast that figure with the corresponding figure raised in taxation in the year 1931. In that year the figure was £171,000,000. That is to say, as between 1931 and 1937 the increased burden put upon the taxpayer in respect of social services amount to just short of £50,000,000.

Secondly, I take the service of the Debt. I exclude for the moment the American Debt, though I shall have a word to say about it later. Here, again, if you make a comparison between 1931 and 1937 you at once observe a very striking thing. By far the greater part of the improvement that has taken place in the reduction of the burden of the taxpayer, is due to the Conversion operations carried out under the authority of the present Prime Minister. I thought I detected in what was said just now by the hon. Member for East Ham South that he regarded the Conversion operations almost as though they were like the rain that fell from heaven, for which no Government was entitled to take any credit, but which might just as well have happened under the Socialist Government of 1931 as under the National Government later on. But Conversion operations are not like changes in the weather, due to some apparently friendly influence which mankind cannot in any way affect. They are due to the pursuit of a steady, determined, resolute policy of sound finance, which, and which alone, enables cheaper borrowing to be made; and it is right to say that the relief that has thus been given to the taxpayer is estimated, under the heading of Conversion and corresponding operations, at no less than £40,000,000 a year, added to which is the further relief that flows from the cheap rate of money which enables Treasury bills to be financed so cheaply.

This is the result, that whereas in the case of social services there has been, as I have just pointed out, an increase of practically £50,000,000 a year in the amount which the taxpayers provide, as compared with 1930–31, in the case of the provision for interest on the National Debt the figure that had to be raised in 1931 was £282,500,000, and this year, thanks to Conversion and thanks to cheap money, it is £224,000,000; in other words, we have saved more by the reduction in the interest on the Debt than this additional amount which we have been able to spend on the social services.

Now let us come to the great item of the contribution to the Defence programme. As the House knows, the amount raised from taxation for this purpose is £198,000,000, and here I should like to deal for a moment or two, and I hope to deal kindly, with an attempt that is constantly made by hon. Members on the other side, in this House and still more, I have no doubt, in the country, by which they seek to argue that if the National Government in 1937 in connection with this Defence programme is prepared to concede an element of borrowing to supplement the main contribution which is provided by the taxpayer year by year therefore the National Government is acting inconsistently with the criticism which was so freely and forcibly made of the Socialist Government in 1931. We hear it—I have heard it in this Debate—constantly repeated in the country, but allow me to point out that in 1931 the borrowing that was going on under the last Socialist Government for unemployment was borrowing which was undefined in amount, which was unlimited in scope, which was hand to mouth, and which was unconnected with any scheme of repayment at all.

Mr. A. V. Alexander

That is not true.

Sir J. Simon

In the case of the Defence loan, the amount is denned and limited and the whole thing is part of a scheme. In 1931 the borrowing which was done was borrowing wholly for immediate and current needs. There cannot be anything more current than finding sums of money for the very next week for the purpose of relieving the unemployed; there is no element of capital about that. I heard the hon. Member for the Park Division of Sheffield (Mr. Lathan), who made such an attractive speech, if I may say so, in opening the Debate to-day, impeach the Government in this matter because, he said, they were failing to meet current obligations currently, Could we have a more apt phrase to describe what was happening in 1931? But the contrast here is this: We, in the Defence loan, are proposing borrowing for a programme designed to give security for a generation to the taxpayers of this country. We are not including in the borrowing any recurrent maintenance costs, and we are accompanying our borrowing by a large contribution from the taxpayer. In the third place, the matter which was criticised in 1931 was largely that no provision was being made for repayment.

Mr. Alexander

That is not true.

Sir J. Simon

I can only say that that was among the observations made with the authority of the Treasury. The Minute which the Treasury put up was published by the then Chancellor of the Exchequer, and it used the words "no provision for repayment." In contrast with that, may I point out that the provision now being made under the Defence Loan Act includes special provision for the redemption of what is borrowed over a period of 30 years and a charge on the Defence Votes of an annuity in order that we may meet both interest and sinking fund within a limit of time. Without spending any time on differences of opinion, at least we must have some regard to the effect on the country. What was happening in 1931 had a deplorable effect on credit. What is happening under the National Defence Loan is having no damaging effect on credit at all. On the contrary, there is a continuing increase in employment, a reduction in unemployment and an increase in production. In truth and in fact, whatever the explanation may be—it may be that hon. Gentlemen opposite were much misunderstood—

Mr. Alexander

Misrepresented.

Sir J. Simon

That was not for want of advertising their own virtues. Whatever the explanation, the fact remains that there was an utter lack of confidence, whereas we may fairly say that in the last five years the nation has recovered the confidence of the world. I make these observations because it is about time that this idle retort should be dropped which suggests that the criticism, made in the most authoritative quarters in 1931 was inconsistent with what we are now doing. I would like to make this observation on the general subject.

Mr. R. J. Taylor

Will the right hon. Gentleman mind giving the third classification of figures with which he said he would deal? He has dealt with social services and the interest on debt, and I understood him to say he would make a comparison with 1931 in the cost of Defence.

Sir J. Simon

I will do so with so pleasure. The armament programme in the present year involves expenditure of £198,000,000 from taxation. The amount of Defence expenditure in 1931 was about £110,000,000. I am not going to reargue whether rearmament is necessary. In fact, I rather understand from speeches to-day that hon. Gentlemen opposite do not dispute the necessity of raising these large sums of money, and that if they had their way they would raise a great deal more. I understand that they complain of the proportion of these large sums which are to be raised by loan, and from that it follows that they would not only raise larger sums of money but raise a larger proportion by taxation. Perhaps it is the circumstances that everybody realises that that is what they would like to do which causes some people to hesitate to give them their confidence. Some hon. Members made play with a phrase which the Financial Secretary employed when preferring the second edition of the National Defence Contribution to the first. But, at any rate, I think we must say that, so far as the indication of the elections goes, that if, indeed, they are claimed to be an indication of the approval of the country for the policy of the right hon. Gentleman opposite and his friends, there has seldom been a more elaborately arranged strategic retreat. They are withdrawing in every part of the country. But I listened with interest to the statement that this is merely a preparation for a really good ginger-up.

Let me now deal with some of the special points that have been mentioned. The hon. Gentleman who opened the Debate referred to two Clauses of the Bill which are aimed at preventing evasion of tax, and I am much obliged to him for what he said. He invited me to say something about it, and I wish to do so. In Clauses 12 and 13 of the Bill we have made provision to prevent evasion of tax. Those were evasions which had become prominent and which were in danger of becoming common, and we have not only legislated against them, but in one case at least, in view of the warning given by my predecessor, we have legislated retrospectively. I think it my duty to say a little more on the subject, because I do not suppose that by our present provision we have necessarily covered every possible evasion for the future. I am fully alive to the fact that there are other forms of avoidance of taxation which have been suggested and which may be practised, not only in the field of Income Tax, but also in the field of Death Duties, and, for my part, I think it may become necessary to deal with these matters further at an early date.

It is utterly impossible, especially when a Chancellor of the Exchequer has inherited another's Finance Bill, at the moment to cover every form of avoidance, and, of course, the process we have adopted is to deal as a matter of extreme urgency with the cases which we knew were the most dangerous, and might become most prominent. I am not going to specify the various methods by which avoidance may be practised. I do not know that I could do so. They are extremely complicated, and, in any case, I do not wish to give them any advertisement whatever. But I think it is desirable to refer to one method to which my attention has been particularly drawn. That is the method which was referred to by the hon. Member for the Park Division of Sheffield, when he quoted a passage from the financial column of a newspaper. It is the formation of accumulating trusts, under which Surtax payers are able to reduce their liability by transfer of income under trusts which are outside the provisions of Section 20 of the Finance Act, 1922. I believe that there are reasons for thinking that there is some growth in that form of avoidance, and if there is, early legislation to deal with it is essential.

I wish now to give a clear warning to anyone who may be contemplating the adoption of this particular device or any other form of avoidance that we shall certainly not hesitate to introduce provisions to deal with the subject. I should make it clear that legislation of this character, if it should be necessary, will be applied to the Surtax payable in the year in which the legislation is introduced, which is calculated on the previous year's income, and therefore it may affect not only future arrangements of this sort but also those, if any, which are now being made or have been made in the recent past. I feel that Members in all quarters of the House will think that in taking that course I have done right, and I intend to do my best to carry out what I have suggested.

In the few minutes which remain let me make a few observations, again of a general character, about one of the matters which have recurred again and again in speeches to-day. I think we talk of these matters with a great deal more confidence, and proclaim our views with a degree of certainty and authority greater than the circumstances permit, and greater than that to which most of us, and I include myself, can safely attain. People talk about booms and slumps, and it has become quite a commonplace, almost a platitude, to suppose that just because there has been a period of prosperity it must follow that we are approaching the edge of a precipice down which we are to fall to an almost unplumbed depth. I wish with great respect to take a slightly more moderate view. I am all for observing the warning against a possibly impending depression. That possibility is one which must always be borne in mind, and which anyone in a position such as I occupy can never be allowed to overlook.

For my part, not claiming to speak as an expert, but as a man who has studied these things as well as he could, I am not prepared to say that every spell of prosperity in our land ought to be re- garded as a sort of debauch which is to be followed next day by a very bad head. To my way of thinking that is what I may call a Calvinistic view of matters, and a view which I really do not share. If it were true that the present expansion of business was on unhealthy lines, that would be another matter, but I do not see any ground for believing that the present expansion of business is by any means complete. It has proceeded on healthy lines, and if we can continue to prevent unhealthy developments there is no reason that I can see why we should go about declaring that there must be some early, some serious and some extreme reaction.

I am interested to observe that leaders of the Opposition have now put on record in their Amendment, and I invite my friends to note it, that we are living in a time of present trade prosperity. That is now admitted by the Leader of the Opposition and his friends. They would not have dreamed of saying that five years ago, and it must be a great satisfaction to them to see what has been achieved. They go on to speak of this present trade prosperity as though it were of a temporary and artificial nature. When they say "artificial" what they mean is that they imagine that this trade prosperity is due to expenditure on armaments. There could not be a greater mistake. There was an immense improvement and a sustained improvement, judged by whatever test one cares to apply, long before expenditure on rearmament began. I am not disputing that after there had been this rise, spread over several years, the additional expenditure on armaments came further to assist the rise. Once it is appreciated that the expenditure on armaments is not the original cause, or the main cause, of this present trade prosperity, at which both sides of the House equally rejoice, what is the ground for saying that because we look forward to a time when the expenditure may be reduced—every Chancellor of the Exchequer and every taxpayer will do that—it follows that we are to fall into the depths of gloom and depression? To describe the present trade prosperity as having been created by something artificial is quite wrong.

I promised to make a reference to the American Debt. It is very odd how many times things have to be corrected before we can be sure that the error will not be repeated. I noticed, almost word for word, from the other side of the House, an error which was corrected with complete fairness and authority by the Prime Minister on the Second Reading of the Finance Bill. It is apparently a bull point that we made some payments to the United States in respect of the United States debt. If we are to make comparisons let us be sure what the comparison is. This is it: Whereas the Labour Government, when they were in office paid out £46,500,000 to the United States they received, in War debts and reparations, £54,000,000—they made something out of it—the National Government have paid £32,250,000 to the United States and have received in War debts and reparations £800,000. Because we are prepared to face a burden and discharge a particular debt of liability, what is the good of calling attention to the virtues of the Labour Government who, in this matter, were improving their finance and contrasting them in this ridiculous way with the burden which we have to bear?

The hon. Member who spoke for the Opposition had a peroration. His speech, as I have already indicated, was most acceptable and most moderately phrased, but he felt at the end that he must be allowed to let himself go. Having made his survey of the financial situation and criticised the Finance Bill he said, at the end, that here was a Bill which failed to make any relief of the burdens which pressed so heavily on the masses and on the middle classes. I could not help feeling that it was an unfortunate time to make those gloomy reflections on the state of the working classes. In a week or two they will be going to the seaside in their thousands—

Mr. Gallacher

And get no pay.

Mr. Ellis Smith

They work jolly hard for it.

Sir J. Simon

I hope nobody will get a holiday who does not work very hard. They will go to the seaside with more money in their pockets, owing to a rise of wages, than they have had. Hon. Gentlemen opposite know that very well. It may not have been observed by everybody that the Labour party, as part of its revival, are to have a special campaign at the seaside among the masses of the people in order that, while they are on holiday, they might be induced to support a policy of holidays with pay. While all of us would like things in every State to be better than they are, it is foolish to deny that, when one looks at the thing fairly, there is an immense improvement. Let me give three examples to the House. The Ministry of Labour, as the House knows, gets returns at intervals which show what are the actual rates of wages established by collective bargaining in all the trades of the country that carry through that progress. May I give the House two simple figures? Since the beginning of 1934, the rise in rates of wages recorded at the Ministry of Labour shows that the aggregate level of full-time rates of wages in the industries affected has risen by £1,100,000 per week.

How can it be said that there is nothing but misery and suffering in store for the masses of the working class in the face of a fact like that? [An HON. MEMBER: "How many workmen?"] I will give the figures. In the last 12 months, ending on the 31st May, about 4,250,000 workers covered by these figures obtained increases in rates of wages amounting in the aggregate to £600,000 per week. [Interruption.] Of course, the increase in the rates of wages is not the whole story, because, of course, there is the question whether people are working full time or half time. It is nothing

short of ridiculous to pretend that a Finance Bill of this sort indicates or prognosticates a series of injurious effects on the working classes of this country. I quite agree that things might be better, but I do not think it is likely that in my time we shall ever get all that everyone wants.

My right hon. and gallant Friend, in his opening speech, made a very amusing reference to prize days, and I could not help being reminded of the story about prizes in "Alice in Wonderland."—[Interruption.] "Alice in Wonderland" ought to be received reasonably everywhere. There was a story there about prizes in which everybody started in a race and nobody knew when it began or where it ended. The question was: 'But who has won?' This question the Dodo could not answer without a great deal of thought, and it stood for a long time with one finger pressed upon its forehead … while the rest waited in silence. At last the Dodo said 'Everybody has won, and all must have prizes.' 'But who is to give the prizes?' quite a chorus of voices asked. And then it appeared that there were no prizes to be given.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 171; Noes, 95.

Division No. 295.]	AYES.	[4.0 p.m.
Adams, S. V. T. (Leeds, W.)	Cary, R. A.	Gilmour, Lt.-Col. Rt. Hon. Sir J.
Alexander, Brig.-Gen. Sir W.	Castlereagh, Viscount	Gluckstein, L. H.
Anderson, Sir A. Garrett (C. of Ldn.)	Cayzer, Sir C. W. (City of Chester)	Goldie, N. B.
Anstruther-Gray, W. J.	Channon, H.	Granville, E. L.
Assheton, R.	Chorlton, A. E. L.	Grattan-Dovie, Sir N.
Atholl, Duchess of	Colman, N. C. D.	Grimston, R. V.
Baillie, Sir A. W. M.	Colville, Lt.-Col. Rt. Hon. D J.	Guest, Lieut. Colonel H. (Drake)
Balfour, Capt. H. H. (Isle of Thanet)	Conant, Captain R. J. E.	Guinness, T. L. E. B.
Balniel, Lord	Cooke, J. D. (Hammersmith, S.)	Harvey, Sir G.
Barclay-Harvey, Sir C. M.	Cox, H. B. T.	Haslam, H. C.(Horncastle)
Barrie, Sir C. C.	Croft, Brig.-Gen. Sir H. Page	Heneage, Lieut.-Colonel A. P.
Beaumont, M. W. (Aylesbury)	Crookshank, Capt. H. F. C.	Hepburn, P. G. T. Buchan
Beaumont, Hon. R. E. B. (Portsm'h)	Croom-Johnson, R. P.	Herbert, A. P. (Oxford U.)
Beit, Sir A. L.	Cross, R. H.	Hills, Major Rt. Hon. J. W. (Ripon)
Bennett, Sir E. N.	Crossley, A. C.	Hudson, Capt. A. U. M. (Hack., N.)
Bernays, R. H.	Cruddas, Col. B.	Hulbert, N. J.
Bird, Sir R. B.	De Chair, S. S.	Hutchinson, G. C.
Blaker, Sir R.	De la Bère, R.	James, Wing-Commander A. W. H.
Boothby, R. J. G.	Denman, Hon. R. D.	Keeling, E. H.
Boulton, W. W.	Despencer-Robertson, Major J. A. F.	Kerr, Colonel C. I. (Montrose)
Boyce, H. Leslie	Donner, P. W.	Kerr, J. Graham (Scottish Univs.)
Braithwaite, Major A. N.	Dorman-Smith, Major Sir R. H.	Keyes, Admiral of the Fleet Sir R.
Briscoe, Capt. R. G.	Dower, Major A. V. G.	Kimball, L.
Brocklebank, Sir Edmund	Drewe, C.	Latham, Sir P.
Brown, Rt. Hon. E. (Leith)	Duggan, H. J.	Leighton, Major B. E. P.
Bull, B. B.	Elliot, Rt.	Hon. W. E. Levy, T.
Bullock, Capt. M.	Emrys-Evans, P. V.	Lewis, O.
Burghley, Lord	Evans, Capt. A.(Cardiff, S.)	Liddall, W. S.
Burton, Col. H. W.	Findlay, Sir E.	Lipson, D. L.
Campbell, Sir E. T.	Furness, S. N.	Locker-Lampson, Comdr. 0. S.
Loftus, P. C.	Procter, Major H. A.	Strauss, E. A. (Southwark, N.)
Lyons, A. M.	Raikes, H. V. A. M.	Stuart, Lord C. Crichton- (N'thw'h)
Mebane, W. (Huddersfield)	Ramsay, Captain A. H. M.	Stuart, Hon. J. (Moray and Nairn)
MacAndrew, Colonel Sir C. G.	Ramsbotham, H.	Sutcliffe, H.
McCorquodale, M. S.	Rathbone, J. R. (Bodmin)	Tasker, Sir R. I.
MacDonald, Rt. Hon. M. (Ross)	Reed, A. C. (Exeter)	Taylor, Vice-Adm. E. A. (Padd., S.)
McKie, J. H.	Reid, W. Allan (Derby)	Thomas, J. P. L.
Macnamara, Capt. J. R. J.	Remer, J. R.	Tryon, Major Rt. Hon. G. C.
Manningham-Buller, Sir M.	Rosbotham, Sir T.	Tufnell, Lieut.-Commander R. L.
Margesson, Capt. Rt. Hon. H. D. R.	Ross, Major Sir R. D. (Londonderry)	Wallace, Capt. Rt Hon Euan
Marsden, Commander A.	Ross Taylor, W. (Woodbridge)	Ward, Lieut.-Col. Sir A. L. (Hull)
Mayhew, Lt.-Col. J.	Royds, Admiral P. M. R.	Wardlaw-Milne, Sir J. S.
Meller, Sir R. J. (Mitcham)	Russell, Sir Alexander	Warrender, Sir V.
Mellor, Sir J. S. P. (Tamworth)	Russell, S. H. M. (Darwen)	Waterhouse, Captain C.
Mills, Major J. D. (New Forest)	Samuel, M. R. A.	Watt, G. S. H.
Moore, Lieut.-Col. Sir T. C. R.	Sandeman, Sir N. S.	Wells, S. R.
Moore-Brabazon, Lt-Col. J. T. C.	Sanderson, Sir F. B.	Whiteley, Major J (Buckingham)
Morgan, R. H.	Scott, Lord William	Williams, C. (Torquay)
Morrison, G. A. (Scottish Univ's.)	Shaw, Major P. S. (Wavertree)	Williams, H. G. (Croydon, S.)
Morrison, Rt. Hon. W. S. (Cirencester)	Shaw, Captain W. T. (Forfar)	Willoughby de Eresby, Lord
Neven-Spence, Major B. H. H.	Simon, Rt. Hon. Sir J. A	Windsor-Clive, Lieut.-Colonel G.
Nicolson, Hon. H. G.	Smith, Bracewell (Dulwich)	Winterton, Rt. Hon. Earl
O'Neill, Rt. Hon. Sir Hugh	Somervell. Sir D. B. (Crewe)	Withers, Sir J. J.
Patrick, C. M.	Somerville, A. A. (Windsor)	Womersley, Sir W. J.
Petherick, M.	Southby, Commander A. R. J.	Young, A. S. L. (Partick)
Plugge, Capt. L. F.	Spens, W. P.
Ponsonby, Col. C. E.	Stanley, Rt. Hon. Oliver (W'm'I'd)	TELLERS FOR THE AYES.—
Pownall, Lt-Col. Sir Assheton	Stourton, Major Hon. J. J.	Major Sir George Davies and
		Mr. Munro.
NOES.
Adams, D. M. (Poplar, S.)	Henderson, A. (Kingswinford)	Riley, B.
Adamson, W. M.	Henderson, J. (Ardwick)	Ritson, J.
Alexander, Rt. Hon. A. V. (H'Isbr.)	Henderson, T. (Tradeston)	Roberts, Rt. Hon. F. 0. (W. Brom.)
Attlee, Rt. Hon. C. R.	Hills, A. (Pontefract)	Roberts, W. (Cumberland, N.)
Banfield, J. W.	Jagger, J.	Rowson, G.
Barnes, A. J.	Jenkins, A. (Pontypool)	Sanders, W. S.
Batey, J.	Kelly, W. T.	Seely, Sir H. M.
Bellenger, F. J.	Kennedy, Rt. Hon. T.	Shinwell, E.
Benn, Rt. Hon. W. W.	Kirby, B. V.	Simpson, F. B. '
Burke, W. A.	Lansbury, Rt. Hon. G.	Smith, Ben (Rotherhithe)
Chater, D.	Lathan, G.	Smith, E. (Stoke)
Cluse, W. S.	Leach, W.	Smith, Rt. Hon. H. B. Lees- (K'ly)
Cove, W. G.	Leonard, W.	Smith, T. (Normanton)
Dalton, H.	Leslie, J. R.	Stephen, C.
Davidson, J. J. (Maryhill)	Macdonald, G. (Ince)	Strauss, G. R. (Lambeth, N.)
Davies, F. J. (Westhoughton)	McEntee, V. La T.	Taylor, R. J. (Morpeth)
Davies, S. O. (Merthyr)	MacLaren, A.	Thorne, W.
Day, H.	Maclean, N.	Thurtle, E.
Dobbie, W.	MacMillan, M. (Western Isles)	Tinker, J. J.
Dunn, E. (Rother Valley)	Maxten, J.	Viant, S. P.
Ede, J. C.	Messer, F.	Walker, J.
Edwards, A. (Middlesbrough E.)	Milner, Major J.	Watkins, F. C.
Fletcher, Lt.-Comdr. R. T. H.	Montague, F.	Wedgwood, Rt. Hon. J. C.
Foot, D. M.	Morrison, R. C. (Tottenham, N.)	White, H. Graham
Frankel, D.	Muff, G.	Whiteley, W. (Blaydon)
Gallacher, W.	Nathan, Colonel H. L.	Williams, T. (Don Valley)
Gardner, B. W.	Naylor, T. E.	Windsor, W. (Hull, C.)
George, Major G. Lloyd (Pembroke)	Noel-Baker, P. J.	Woods, G. S. (Finsbury)
Gibson, R. (Greenock)	Paling, W.	Young, Sir R. (Newton)
Green, W. H. (Deptford)	Parker, J.
Hall, G. H. (Aberdare)	Parkinson, J. A.	TELLERS FOR THE NOES.—
Hall, J. H. (Whitechapel)	Pritt, D. N.	Mr. Groves and Mr. Charleton.
Harris, Sir P. A.	Ridley, G.

Bill read the Third time, and passed.

The remaining Orders were read, and postponed.

Whereupon Mr. SPEAKER adjourned the House, without Question put, pursuant to Standing Order No. 2.

Adjourned at Nine Minutes after Four o'clock until Monday next, 19th July.