HC Deb 02 May 1939 vol 346 cc1722-843

"That the National Debt Commissioners shall, as and when the Treasury request, pay into the Exchequer out of their account of unclaimed dividends, under Part VII of the National Debt Act, 1870, sums not exceeding in the whole one million five hundred thousand pounds, and may for that purpose sell any stock standing to the credit of that account."

First Resolution read a Second time.

4 p.m.

Mr. Charles Brown

I beg to move, in line 8, to leave out "11s. 6d." and to insert "10s. 6d."

I think there is general agreement that if there must be increased taxation it is better to tax luxuries than to tax necessities. But it is not always easy to decide what is a luxury and what is a necessity. Habit can make a thing that is a pure luxury into a necessity for some folks, and that is the case in regard to tobacco smokers. I know men of middle age and old men who would rather be deprived of almost anything than of their pipe of tobacco. Many an old age pensioner who has to be careful about every half-penny he spends will feel this increase in the Tobacco Duty very severely. It may be argued that sentimental considerations of this kind should not be allowed to stand in the way of meeting a national expenditure of nearly £1,000,000,000, but at any rate we ought to see to it, when we are meeting our expenditure, that no action of ours causes more un-happiness or sense of deprivation than is absolutely necessary.

I do not pretend to have examined carefully the whole history of the Tobacco Duty, but I am informed that this is the first time there has been a flat rate increase in the Duty as far as manufactured tobacco is concerned. That means, of course, that the increased duty will fall as heavily on the cheaper kinds of tobacco as on the better qualities, and whereas the rich may have many luxuries the poor have but few, and amongst those few tobacco finds a very prominent place. I ask the Chancellor of the Exchequer, why could not the increased duty on manufactured tobacco have been an ad valorem duty instead of a flat rate duty? In its present form the duty will have adverse effects on some sections of the tobacco industry in this country. It would be best to give an illustration of how a flat rate increase will affect a specific branch of the industry. Imported manufactured tobacco goods are being let off at a much easier rate in consequence of this flate rate increase in the duty. Whereas imported cigars paid 18s. per lb. weight the duty on the raw material was 9s. 6d., the difference between the duty on the raw material and the manufactured article being 8s. 6d. This difference made it possible for the British cigar manufacturer, particularly the smaller firms, to carry on their business in a competitive fashion.

The 2s. increase in duty on the raw material is nearly 20 per cent. increase. The 2S. increase on the imported cigar, the increase from 18s. to 20s., means an addition of only 10 per cent. on that article. Therefore, the imported cigar has been given an advantage by the flat rate increase as against the British-made cigar. It is contended that the British cigar manufacturers, particularly the smaller manufacturers, will be greatly hampered in these intensified competitive conditions. I imagine, of course, that this proposal will not affect very much the larger companies who have interests also in imported cigars, but it will seriously affect the smaller manufacturers. As hon. Members opposite are always telling us that they are in favour of the small trader as against great combines and companies and businesses, I hope they will support us to-day and demonstrate in the Lobby the principles that they so frequently profess. What ought to be done is that the imported cigars should carry a relative duty and not a flat rate duty. This, I understand, has always been the case before, and I ask the Chancellor why he has departed from the usual procedure. The duty on the imported cigars I have mentioned should be 4s., not 2s., to keep the competitive conditions as they exist at the present time.

Why, by this change of duty, should the Chancellor place any section of British manufacturers, at this time especially, at a further disadvantage in the competitive struggle against imported manufactured goods? How often have I heard hon. Members opposite talk about putting on higher and steeper tariffs to keep manufactured goods out of the country? Probably they will be supporting to-day a proposal for a flat rate increase of duty which will considerably injure a certain section of British cigar manufacturers. I am told that because of this duty some of the smaller factories may very likely have to close. There is a good deal of unemployment now amongst them. I ask the Chancellor whether he will reconsider the matter.

I conclude by suggesting that my Amendment to reduce the duty by is, would be of real benefit to very large numbers of people in this country, particularly the poorer classes, who do attach a great deal of importance to their smokes. We should not do anything to injure them any more than we can possibly avoid. I know that the Chancellor will talk about the amount of money that he will lose by adoption of the Amendment, but when I heard him open his Budget and explain why he had to raise another £24,000,000 by extra taxation, I really could not understand why he should trouble about extra taxation at all. Expenditure was on such a colossal scale that it did not seem to me that £24,000,000 more mattered very much. I hope he will not argue that he cannot afford to lose the sum of money represented by my Amendment.

Mr. Ellis Smith

I beg to second the Amendment.

4.9 p.m.

Mr. R. C. Morrison

There is one point I wish to make, but I do not want to cover the ground already covered by my hon. Friend the Member for Mansfield (Mr. C. Brown). I wish to ask the Chancellor whether, in imposing a tax of this kind, he makes any inquiries to ascertain that the amount of dislocation that will be caused to the industry concerned is as small as possible. I am not speaking on behalf of anyone. The Chancellor knows very well that a great deal of the cigarette trade is now done through the medium of automatic machines, with slots for sixpences and shillings. I know it is impossible for the Chancellor to inform the people concerned as to the amount of tax that he intends to place upon them, but surely it is not outside the bounds of possibility for the right hon. Gentleman's officers to ascertain whether the people concerned may be able in some definite way to adjust the circumstances to the new tax. We have read in the newspapers that there has been a good deal of confusion, and that the confusion still exists, as to whether automatic machines are to be adjusted to convey packets of nine cigarettes instead of 10, and 18 cigarettes instead of 20, or whether the slots are to be altered so as to require 1s. 1d. to be inserted and a halfpenny change given by being wrapped up in the cigarette packet. It has also been stated that it will be necessary for the automatic machine makers to accumulate vast amounts of farthings to put inside the packets as change. The whole change in duty seems to me to have caused the maximum of confusion. My point is this: When a tax is placed upon beer, say, there is never any doubt in the mind of the public or the people concerned as to what the tax will mean when it is passed on to the consumer, but in this matter there seems to be a considerable amount of confusion caused. It must be remembered that many hundreds of people get their living in attending to these automatic machines. They have been held up for some time and the difficulty has not yet been resolved.

4.13 p.m.

Mr. Lewis

At a time like the present, when the Chancellor of the Exchequer has to raise vast additional sums for the purpose of rearmament, it does seem to me important that the idea suggested by the hon. Member for Mansfield (Mr. C. Brown) should not obtain acceptance—the idea that since we are obliged to borrow very large sums, £20,000,000 or so does not matter and that we might as well borrow that too. It seems to me abundantly evident that it is important that the Chancellor should raise as large a proportion as possible of the money required by means of taxation; further, that that taxation should be spread as evenly as possible over the whole population. Obviously the major contribution must come from the payers of direct taxation, but I think it is also desirable that some further share should be asked from the community as a whole by means of indirect taxation. No one likes paying taxes. At the same time I venture to suggest that the ordinary British citizen who happens to be a smoker, when he finds as a result of this proposed duty that a particular tobacco he smokes costs him more, will not in present circumstances grudge that extra payment. I think the money will be cheerfully paid. To any who may wonder why this particular article should be chosen for an increase, I would say that from the point of view of the Chancellor it has the great benefit that it is a duty easily collected, and there is the further fact that the article is so widely used that a small duty brings in a very large sum. I hope that the Chancellor will not be persuaded to alter the proposal.

4.15 p.m.

Mr. George Griffiths

I should like to put to the Chancellor of the Exchequer a point of view which directly opposes that of the hon. Member for Colchester (Mr. Lewis). I bring my point of view direct from the people, who asked me only this week-end to appeal to the Chancellor to consider them. They were not very cheerful about paying this extra 1½d. an ounce on tobacco. This week-end I was in South Wales, and at a meeting in Dowlais there was a choir of 25 old age pensioners, some of whom had been out of work for 15 years before they got their old age pensions and they asked me whether something could not be done to prevent them from having to pay 1£d. an ounce more for their tobacco. They are not the type who smoke cigarettes, such as were referred to by the hon. Member for North Tottenham (Mr. R. C. Morrison). They do not put a penny in a machine to get their cigarettes. The old age pensioner is a man who has been used to smoking a pipe and buys his tobacco in ounces or half ounces, and now finds that he will have to pay 1£d. an ounce more. Yesterday afternoon I was speaking in a picture hall to about 200 old age pensioners, men and their wives, and they raised this question. They were complaining that they could hardly live on their old age pensions as things are, and that now the Chancellor would curtail one of their little bits of pleasure. The Chancellor of the Exchequer knows —I do not know whether the Financial Secretary to the Treasury does, because he is new to the job, and was dealing before with a lot of colliers—that 265,000 old age pensioners have to make application to the public assistance authorities to supplement the 10s. a week. Those people have very little to spare for extra taxation and they are not paying these taxes cheerfully. I am appealing to the Chancellor's heart and to his head, and I hope that he will get up and say that he agrees to the Amendment.

4.18 p.m.

Mr. Ritson

I have a word to say on behalf of the people who smoke the so-called common tobaccos. I have heard many miners say they would rather miss a meal than miss their pipe. When I was in the pit I used to smoke seven ounces of tobacco a week, and some miners smoked more than that. When they had to do without a smoke in the pit they chewed; it was a twist that would have stiffened the back of even the present Prime Minister; but they liked it, and why should we do anything to deprive them of it? I have spoken of smoking seven ounces a week, but I knew a man who smoked 14 ounces a week. He was not an old age pensioner but an employer of labour. It was twist that he smoked, and he lost his reason. In that he has anticipated the Chancellor. But, joking apart, I know men who are not old age pensioners but are working hard on a minimum wage who will have to pay 10d. or 11d. a week more for their tobacco on account of this increased taxation. I do not know whether the hon. Member for Colchester (Mr. Lewis) will go North and speak there on the lines on which he has spoken to-day. The people there are willing to do a lot for their country. They have done a lot in the past, and they know that their sons will have to go off to war if the occasion should arise, and I suggest that nobody is making a greater sacrifice for the State than those old men who have been such valiant servants of industry. Yet when they get their old age pensions they still have to go to the public assistance committees for extra money. They have no margin left, and yet it is from them that the Chancellor is proposing to take an extra 6d. or 8d. a week.

I was a very heavy smoker before I came here, and have been a heavy smoker since I have been here, and I can assure the Chancellor that it will mean a great deal to the man who has been used to smoking three or four ounces of tobacco a week if as a result of this extra taxation he has to be content with a little less. There are men who will tell you that they could not go on without having some tobacco about them —even in the pit where they must chew if they cannot smoke. I am not worrying so much about cigarettes, because to begin with they are a nuisance, although I smoke them, but these old people stick to the old twist or black tobacco and the tax which is being put upon it is out of proportion to the amount of taxation which is being imposed on other people who are grumbling, about what they call heavy taxation. I hope the Chancellor of the Exchequer will realise that we are not putting forward this plea as a joke, because tobacco is, in a way, a part of the life of the man who is working in the pit or at the pit head, and although some people may say that this is only a little extra tax upon a luxury that man does not regard his tobacco as a luxury but as part of his "make-up."

4.23 p.m.

Mr. Gallacher

I have always been a tobacco smoker, and the tobacco I smoke is the sort that comes in as raw material and is manufactured in this country. The hon. Member for Colchester (Mr. Lewis) said that nobody likes to pay taxes. It depends upon what the taxes are and for what purpose the money is to be used. I know hordes of people in this country who would be very happy to be in a position to pay the taxation which he has to pay, and I know that he would be a much more miserable man even than he appears to be at the present time if he were in the position of people who do not pay such direct taxes as he does. I do not know how much this taxation will mean to the man who smokes cigarettes. I smoke an especially obnoxious kind of tobacco. I have a notion that Shakespeare must have known a smoker like me, because in Hamlet he makes one of his characters say: O, my offence is rank, it smells to heaven. I have often heard remarks of that kind when I have been smoking my pipe. On an average I smoke four ounces of tobacco a week—black twist tobacco. It has been costing 9½d. an ounce. Before the War I could get it at 2½d. an ounce and then I was paying at least a penny in tax. Now it is going to cost me 10½d. or 11d. and I shall be getting at the most 1½d. worth of tobacco and paying 9½d. in tax. On tobacco alone I shall be paying 3s. 2d. a week in taxation, and I object to that. There is nobody among all the robbers who have piled up wealth in this country who are paying taxes at a rate which is proportionate to the tax upon tobacco. If a man with a wage of £3 a week who smokes three or four ounces of tobacco a week has to pay 11d. an ounce for that tobacco it is a terrible burden upon him. It will be a still greater burden on the old age pensioner who likes his smoke but is getting only 10s. a week pension.

I do not object to paying taxes if they are for a desirable purpose. If the Chancellor said to me and to other hon. Members on this side, "I want to put another 1½d. on your tobacco or another 1d. on your tea in order to raise money to increase old age pensions" we should have no hesitation in agreeing to it, but we certainly have a right to object, and we do strongly object, to an increase of the Tobacco Duty and other taxes in order to provide protection for the property of hon. Members on the other side, especially when the needs of so many people are being neglected. I do not understand how any one with the bowels of human compassion can give any support to the Chancellor for this tax. He has a heart that is harder than Pharaoh's, and it will be a miracle if any one is found who is able to soften it. He refuses to give consideration to the claims of these poor people; instead, he puts another impost upon them. Last year the old age pensioner had to pay a little more for his tea out of his 10s. a week, and now he has to pay a little more for his tobacco. The Chancellor will claim to be deeply sympathetic towards all those who may be suffering any privation—he will make that claim, I have heard him make it before—but if he feels like that how can he go forward with this increase of taxation when there is so much wealth around him which could be taxed?

I have had occasion to say before, and I say again, and I insist upon it, that it is a crime to take from those who have not enough at the present time, those who are in the direst need, while there is an enormous surplus in the hands of those who have an abundance of good things. I ask the Chancellor to withdraw this tax and to raise the money by other means. If he is in any difficulty as to how to raise the money we on this side will be willing and ready to advise him. There will be no difficulty about it. There is not a Member on this side who will not be only too willing to meet the Chancellor in his room and to give him, in the fullest detail and in the simplest possible form, particulars of how he can get the money without imposing this tax upon tobacco users and on the poorest of the poor. I ask him for once to perform a humane action, such as will bring joy to thousands upon thousands of people in this country. I ask him to withdraw this tax and to make a decision that, during the course of these discussions, he will advise us that he has changed his attitude and that he is going to increase taxation in order to produce a sum that will provide an increase for old age pensioners.

4.30 p.m.

Mr. Silverman

I do not suppose that I could discharge the function suggested by the last speaker and soften Pharaoh's heart, but I would like to make one comment about this tax. I understand that the theory behind it is that when you are in a time of emergency, it is right that luxuries should pay a little more, so as to make their contribution to the new need, and that in the main, for most people, the smoking of tobacco is a luxury. I could quite understand that, and if the form of tax were a different form, my attitude to the Amendment might be different, but it has always seemed to me that the great injustice of this tax, and still more of this kind of increase of this tax, arises out of the fact that it is a flat rate and not an ad valorem duty. Even if it be granted that luxuries pay a little more, it really is a little difficult to understand why that little more, in the case of a very expensive cigar, should be precisely the same as it is in the case of the humblest cigarette or the cheapest form of pipe tobacco. There would be no great hardship in saying that if a man paid 2s. 6d., or 2s., or 1s. 6d. for a cigar, he ought to pay at this time 1d., or 1½d., or 2d. more. There would, at any rate, be very much less hardship in saying that than in saying, at the other end of the scale, to an old age pensioner who smokes an ounce or two ounces of twist a week, that he shall pay another 6d. for the privilege. It is not fair, it is not equitable, and you cannot, with a tax of that kind, make the claim that the Chancellor of the Exchequer would like to make for this Budget, and that has been made on his behalf, that it spreads the burden evenly and equitably over those who consume the article taxed.

That claim cannot be made with regard to this tax, and I wish the Chancellor would give us some reason why it should have been found necessary to retain this as a flat rate duty instead of an ad valorem duty, or, if there were insuperable obstacles in the way and it had to be a flat rate duty, why he could not have found some other form in which to raise this money, by taxing luxuries a little more, by making life a little less pleasant, so that we might all know what the policy of His Majesty's Government is costing us. He should, at any rate, have spread the burden evenly and equitably, put the greatest burden upon the broadest backs, and not claimed that he was distributing that burden equitably when he requires a man who smokes very expensive forms of tobacco to make exactly the same contribution as he demands from the humblest consumer of it.

4.35 p.m.

Mr. Collindridge

I cannot say that I can speak too personally about the tobacco tax, because I have been a non-smoker all my life, but coming from an industrial district, where I know the major portion of the people are smokers and that they derive some solace from it, after their arduous labours—I have seen miners even after an accident and after washing at the pit-head bath asking for a smoke—I realise the necessity for the continuance of this habit and the desire that there should be no extra infliction upon it. I speak also upon this matter from the point of view of an effort in my own town to render the lives of the aged folk a little happier and brighter, and to augment their meagre old age pensions by voluntary collections. We have in my town what is called the Old Folks Treat Fund, and this organisation gets the old men and the old ladies together every year, gives them a day out and a feed after a ride, and makes them a gift, at the conclusion of this one day of brightness in the year, of a few ounces of tobacco to the old men and a little portion of tea to the old ladies.

That organisation is acting under very great difficulties in these hard times and is helping against big odds to make the lives of the aged folk brighter, and there have been times when an infliction of this description—in short, the last straw which breaks the camel's back—has been calculated to put a stop to their well-meaning efforts. I can conceive that, at the meeting which this Old Folks Treat Fund Committee will have in reviewing their income for the year and considering the new tobacco tax, they will wonder whether they can continue their well meaning efforts, and I would suggest that if the Government cannot remove a tax from the tobacco needs of the people who can afford the luxurious types of tobacco —and I speak unlearnedly on this question, but I hope I speak sincerely and simply—0surely they are not going to continue this tax to any greater extent on the commoner forms of tobacco.

What prompted me to join in this discussion were the remarks of the hon. Member for Colchester (Mr. Lewis). His point of view, if I understood it aright, was that in these times of stress we should endeavour to get taxation from all the people in the country. I have heard that argument quite a lot in these Budget discussions, until I have really felt there was a point at which one ought to try to get hon. Members opposite to see how incongruous, how illogical, the argument was. I have heard it said that taxation is not what you take, but what you leave, and when I heard the hon. Member for Colchester likening the taxing the old people on their tobacco with the taxation that is inflicted on people in better-off circumstances, I made a sort of rough calculation. An old age pensioner, smoking a meagre two ounces of tobacco a week, is inflicted with this tax of 3d. It may seem a very small amount, but I would ask hon. Members to compare that with the well-off individual, who has been sympathised with by so many hon. Members on the Government benches as sharing equally this taxation.

Take an individual who dies and leaves £1,000,000. The suggestion is that wealth is being conscripted by the Death Duties, but they would leave to his next successor, not £600,000 as formerly, but a paltry £560,000. Such an individual, despite the new taxation which the Chancellor is introducing, which has nearly caused tears in the eyes of some people to think about—such an individual, with his £560,000 invested at 4 per cent., would receive £430 a week. Is it fair to suggest that the comparison is equal as between that individual, with his £430 a week, and an old age pensioner with his humble 10s. a week being inflicted to the extent of even 3d.? We feel that hon. Members opposite are really unaware of poverty, of what it means to live on short commons. I have often felt inclined to suggest that the best practical education for well-off folk, when they talk about the impossibility of rectifying the lot of the old age pensioner, would be for them to make an effort for one week alone to live on 10s. a week. They would then know that even a humble few coppers, week by week, of extra taxation could not be borne. I feel sure that hon. Members opposite are not devoid of hearts, but they do not accompany that heart tendency with kindly sympathy, and they should use their brains better to adjust the difficulties with which these unfortunate poor folk have to contend. I hope we shall have a response to-day to our appeal that this tax should not be inflicted on the poorer qualities of tobacco.

4.42 p.m.

Mr. Gurney Braithwaite

As an inveterate pipe smoker, I am bound to have a certain sympathy with the Amendment, if only on the principle enunciated by the Chancellor of the Exchequer himself during our previous Debates that we are all in favour of someone else paying taxation in order that we may not have to pay it ourselves. I think it is true to say that the pipe smoker will get the worst of this particular tax. As I see it, it will fall more heavily upon him than upon anybody else, but we must not take a selfish attitude in these matters. We were reminded last night by the Chancellor of the Exchequer that his post bag after a Budget speech is some indication of the feelings of the country as to his proposals. So, to a much lesser degree, is the post bag of the average Member of this House, and I am bound to say that on this occasion, while I have had some correspondence about certain other proposals in the Budget, there has been no complaint of any volume at all from my constituency as to this proposal for an increased Tobacco Duty, although my constituency contains a large number of agricultural workers, whose wage standards are lower than those of many others in the community and who smoke very heavily. I think those of us who were discussing the Budget problems before my right hon. Friend introduced his proposals would agree that, into whatever quarter of society we might have gone to discuss the taxes which might be imposed, we should have found the suggestion made in nine cases out of ten that tobacco might bear an increased tax and was the sort of commodity which ought to be taxed in these times.

I was very attracted by the suggestion of the hon. Member for Nelson and Colne (Mr. Silverman) in favour of an ad valorem method as compared with the flat rate. That is, in theory, extremely attractive, but I imagine that the Chancellor will tell the House that the machinery of collection under such a system would add very greatly to the problem of collection. I am open to correction by the Chancellor of the Exchequer, but I believe I am right in saying that the percentage of tobacco consumed in cigars is something like 1 per cent. of the total tobacco consumed in this country. Therefore, to create such an upheaval for the purpose of carrying out what has been suggested from the opposite side, seems to me impracticable.

Mr. Silverman

The hon. Member will recollect that I used that instance only for illustration purposes. There is a very wide range of all sorts of tobacco, cigarettes and cigars between the humble twist at the one end and the most expensive cigar at the other.

Mr. Braithwaite

The hon. Member will recollect that I indicated when I began my remarks that I thought this increased duty was going to fall more severely upon the pipe smoker than the cigarette smoker or the cigar smoker. The difficulty is more one of machinery of collection than anything else. I suggest that there is no great opposition in the country to the proposed increased duty, certainly less opposition than to the increased Tea Duty last year, and infinitely less than on one famous occasion when a predecessor of the Chancellor of the Exchequer failed to reduce the Beer Duty. I well remember the correspondence we had on that subject, spontaneous correspondence from working men. This Tobacco Duty is ideal in this respect that no one need pay it who does not wish to do so.

4.48 p.m.

Mr. Hubert Beaumont

I took part last Saturday in one of the old folks gatherings to which reference has been made. The old men were presented each with an ounce of tobacco, and one dear old fellow, 82 years of age, came to me and said: "Well, Sir, I shall not have to pay the tax on this bit of 'bacca, no matter what it costs me in a week or two." That indicates that there is a considerable amount of opposition to this particular tax. I have in my hand a letter which I received this morning. It says: I see you have delivered your maiden speech and mandate, but you have another one to make about the old age pensions. You said you would make it in the House of Commons when you were returned. There is only one way of getting it, and that is the same as the ladies did to get their votes—fight for it. The last Budget they put 2d. a pound on our tea. Now, they are taxing sugar and tobacco. It is giving 10s, per week with one hand and taking it away by instalments with the other. Enclosed with the letter is a cutting showing what has been done in New Zealand, a country which has been spoken of deprecatingly by certain hon. Members to-day. In my view, any taxation that hits the lower class of people—by "lower class" I mean lower in the amount of money they get, but not in regard to their status, their ability or their mentality—is a tax definitely penalising poverty. Whatever inconveniences or hardships have to be suffered, they ought to be suffered by those who are best able to bear them, and not by the poorest of the people.

I hope that even at this hour it may be possible for the Chancellor of the Exchequer to demonstrate a little inward sympathy for the poor by deciding that in some form or other he will prevent this additional taxation from coming upon them. When one is in receipt of only 10s. a week, an additional three halfpence a week is a very important matter. It means that if the poorer people continue to indulge in what is not a luxury—as a smoker I regard tobacco as a necessity— they will be penalised. If we are going to tax these poor people, who have such a small amount of money, on this little luxury or necessity, it may mean that they will continue to smoke, and therefore they will have to pay an additional amount of money, and will be deprived of some other necessity of life. This is an important matter and, despite what the hon. Member opposite said, there is much opposition to it. He said that in regard to the Beer Duty there was considerable opposition, but he forgets that the opposition to the Beer Duty had behind it a very well-organised trade, whereas opposition to the increased Tobacco Duty, which makes the conditions of the poorer people much harder, cannot be organised but can only be expressed in this House.

Mr. G. Braithwaite

I hope the hon. Member will not think me offensive if I say that when he has been in the House a little longer he will be able to distinguish between letters which he receives as the result of an organised drive from a powerful interest and those written spontaneously by constituents. In the case of the Beer Duty we got both in very large numbers.

Mr. Beaumont

I seem to be fated to be interrupted by the hon. Member. He does me the honour of interjecting when I am speaking. He did it when I made my maiden speech.

Mr. Braithwaite

I am sorry.

Mr. Beaumont

Apparently, also, it is going to be my fate to follow the hon. Member, in which case I shall always have something to talk about, because almost invariably I disagree with what he says. If it is possible for the Chancellor of the Exchequer so to adjust this Tobacco Duty that it will not fall upon the poorest class of the community, we on this side of the House will be prepared to accept it, but we are definitely out to do everything in our power to prevent any further imposition on these people, and any further hardening of their lives.

4.55 P.m.

The Chancellor of the Exchequer (Sir John Simon)

The Debate has naturally ranged over fairly wide ground and the Amendment moved by the hon. Member for Mansfield (Mr. C. Brown) was, I imagine, designed to give an opportunity for a general discussion. His actual proposal does not, of course, satisfy the test just laid down by the hon. Member for Batley and Morley (Mr. H. Beaumont), since, if the Amendment were adopted it would mean that the Tobacco Duty would still be increased but it would only be increased to the extent of one-half the amount proposed in the Budget. I recognise that that was a convenient way of raising the question for general discussion.

Mr. H. Beaumont rose

Sir J. Simon

I would remind the hon. Member that I am not the hon. Member for Holderness (Mr. G. Braithwaite).

Mr. Beaumont

I appreciate that, and perhaps it is extremely audacious on my part to interrupt the right hon. Gentleman. I may be wrong, but even if the Amendment were accepted and it meant that the increased duty would be cut down to one-half, might not that half be put upon the people who smoke the more expensive tobaccos and cigars and not upon those who smoke the cheaper sorts?

Sir J. Simon

The actual proposal made by the hon. Member for Mansfield does not have any of those effects. No doubt, if I were in a position to be in a yielding spirit on this matter we could frame the duty in many ways, but I am very much afraid that it is not possible to contemplate any tax of this sort which could be paid by some people and not paid by other people. I am afraid that the tax cannot be so framed that it is paid by some and not by others, for the very obvious reason that it is a tax primarily on an imported commodity. It is not a case that there is a single duty. There is a vast range of charges, but the governing charge, which affects everything else, is the charge made per pound on un-manufactured tobacco leaf coming into this country.

The hon. Member for Nelson and Colne (Mr. Silverman) mentioned the possibility —I recognise that he was not arguing the point elaborately—of an ad valorem duty being arranged. I think the difficulty of doing that will be readily appreciated. I should doubt off-hand whether it would be possible to devise an ad valorem duty on imported raw material. It is difficult, for instance, to conceive how you could have an ad valorem duty on imported raw cotton. Some cottons are more valuable than others. Prices and qualities differ, but still cotton is cotton. More particularly is it true that it is not practicable to put a different scale of duties on imported tobacco leaf by inspecting the particular leaf, though one leaf is, no doubt, finer tobacco than another. In a case of this sort if you have to put a duty on tobacco it cannot be an ad valorem duty like the ad valorem duty on imported motor cars and other manufactured goods, where you add a percentage as duty to the amount of the value of the particular manufactured article at the ports.

We have to face the position that, with all its inconveniences and open as it may be to criticism, this kind of tax is bound to be in the nature of a tax which is not an ad valorem tax on a primary commodity. The tax, apart from the present proposal in the Budget, was 9s. 6d. per lb. on the imported raw tobacco leaf. In order to manufacture it into tobacco for the pipe, cigarettes and cigars, moisture may be added. There are various other operations. There is in the Schedule an article called Cavendish or Negrohead which, for some reason which I cannot understand, has a duty all to itself. I believe that is partly due to the fact that it contains an ingredient of sugar and partly owing to the fact that there used to be a good many Irish Members of this House and they made a row about this matter. I should like the Committee to appreciate that although the Schedule deals with tobacco of various sorts, the governing factor is the import duty on the raw tobacco leaf. The proposal that we make is that the 9s. 6d. duty per pound be increased to us. 6d., an increase of 2s., which ought to work out at 1½d. an ounce.

As regards cigars, the hon. Member who moved the Amendment had his attention called to what was thought to be a grievance of the home manufacturers of cigars—the British made cigars. But they have very considerable protection as compared with the imported article, and I venture to think that the hon. Gentleman has been wrongly informed if he supposes that the changes now being made put the British manufacturer of cigars in an appreciably worse position than he was in before the Budget. The position was this. The Customs Duty on raw imported tobacco leaf was 9s. 6d. per lb. The duty on imported cigars such as Havana cigars from Cuba is, of course, much higher. It was 18s. 1d. per lb. If we subtract the one figure from the other, we find that there was a preference, an advantage, a help to the British manufacturer of 8s. 7d. per lb., presumably to meet increased charges for labour or other special burdens which he has to bear, as compared with the manufacturer of the competitive article which comes from the other side of the Atlantic. You, therefore, have it that on every pound of raw tobacco leaf which he uses in making up his products, he gets the assistance of a preference of 8s. 7d. Under the new scale imported tobacco leaf will be paying us. 6d. instead of 9s. 6d., but the imported cigars will be paying 20s. 1d. instead of 18s. 1d., so that the British manufacturer continues to get practically the same measure of assistance, namely, 8s. 7d.

I do not myself see how that does him any injury, because, of course, the things for which he needs this special assistance are those items of wages or other costs of manufacture which do not vary according to the cost of the raw material land provided he is given practically the same degree of shelter as before, I cannot see how he has any matter for complaint. It is true, and this is probably the point at the back of the hon. Member's mind, that in the earlier history of the tobacco taxes there has been a habit—I do not think it can be justified—whenever those taxes have been raised of increasing the actual money amount of the difference, not by arithmetical calculation, but on some rule of three, which does not seem to be a sound principle. It is not the principle applied, for example, in reference to most of the preferences which we know and which, I think, the House as a whole would agree is the right principle to apply, namely, to determine the degree of protection which the home manufacturer ought to enjoy and to secure that in that protection, he should not suffer because the tax upon the raw material, the basic article, goes up or down any more than he would suffer if the price of the raw material apart from the tax went up or down. I have explained this matter at some length, because I am anxious that hon. Members opposite should see that there is really an answer to the point which has been put, but I do not see any grounds for departing from the conditions which have been laid down.

I was also asked how this taxation was going to be worked out by the tobacco companies. It is undoubtedly an inconvenience, and it may be a considerable inconvenience, to any great established trade to learn with the suddenness which is necessary in the case of a Budget statement, that, just as the clock points to a certain hour, the rate of duty has been changed. That inconvenience is much less probably in the case of a trade that has been accustomed to deal with duties than it is in a case in which some entirely new kind of tax is imposed. But I do not deny the inconvenience. I am certain, however, that a trade which is so well-managed and so well-organised as the tobacco trade, will adjust itself pretty quickly to this new scale of taxation. I believe I am right in saying that even before now there have been cases in which cigarette slot machines have been used from which in addition to the carton of cigarettes the purchaser got a penny or a half-penny as change for the coin originally put in and, therefore, I take it it will be possible to make the necessary adjustments in this case, and that these are being made. I saw some announcements in the newspapers to-day or yesterday upon this matter and I feel sure that the industry will settle that for itself. I am anxious that the public should realise the exact extent to which the duties are being altered, because they will be quick to see that they are not on that account made to bear more of an additional burden than the tax itself warrants. I hope and believe that the tobacco companies have not the slightest intention of attempting to ask the public to bear more than the tax warrants. They have to look after their customers and I am sure that the customers will also look after themselves.

I come to the last point which has been made by hon. Gentlemen opposite. For my own part I have no desire to spend the time in protesting volubly and audibly and with expressions of sympathy, my appreciation of the fact that a tax of this sort, undoubtedly, is an additional burden, a sensible burden, especially on the poorest people. I hope we ail appreciate the fact that it is, but I do not think the suggestion is in the least likely to carry any conviction that that realisation and that sympathy are to be found only in one quarter of the House.

Mr. Gallacher

Of course they are.

Sir J. Simon

The hon. Member shows his own sense of virtue and no doubt it is all the greater because he denies it to anybody else. But I think that we may proceed on the common ground that a common tax dealing with a widely used article like tobacco, is bound to be felt by all who use that article, and is bound, in proportion to the total income, to be felt more severely by the person with a small income, than by the person with a larger income. It is for that very reason that though we impose very severe taxation on the richest section of the community the number of people who are poor being much greater than the number of people who are rich, the taxation of the rich necessarily does not produce as much in the total amount. It is for that very reason also that it is right and necessary, that you should put the most severe taxation on the richest. That is necessary in order to satisfy the sense of justice in the community. I saw a very ill-informed observation the other day in a newspaper to the effect that my Budget plans were manifestly unfair, because the amount which was being got by the extra Surtax was less in total money, than the amount which was being realised by the taxes on articles of general consumption. Of course that statement is a grotesque fallacy. It entirely depends on how many rich people there are. If there were only 10 rich people in this country and if everybody else of the 40,000,000 was very poor, then naturally the taxation of the poorer people would produce much more money than the taxation of the very limited number of rich people. [HON. MEMBERS: "Why?"] I suppose there is only one reason. The point is a very simple one, and I think if hon. Members opposite give it consideration they will see that it is sound.

Mr. McGovern

But there are many more than 10.

Sir J. Simon

I therefore concede at once that taxes levied on articles of general consumption which are contributed to by all sorts and kinds of people, undoubtedly do fall upon those with limited incomes with greater severity and require them to make far greater sacrifices than the sacrifices made by very rich people in that respect. That must happen even under a system of taxation which tries to be just by putting other taxes of very great severity upon accumulations of wealth or very large incomes. But I do not agree that, on that account, you can say that there should be no tax whatever which will fall in the smallest degree upon the poorer members of the population. I do not think that that is a sound principle. I believe that the purposes for which the money is wanted are purposes which they recognise as being necessary and right just as much as the rest of us, and I believe that within their powers they are not unwilling to make their contribution. We have, therefore, to adjust these matters, remembering the great inequalities of fortunes which exist in this country and I am sorry to say that I cannot on that account accept the Amendment.

5.12 p.m.

Mr. A. Edwards

May I ask a question? I am glad that the appeal which was made to the right hon. Gentleman's heart did not fall on stony ground. He agrees that this taxation is specially hard on the old-age pensioners and others of that class. He agrees that the old-age pensioner is penalised by this tax to the extent of 6d. a week, which is a reasonable estimate. I recognise the difficulties in the way of segregating classes, but I am sure the right hon. Gentleman would not wish to impose a burden of 6d. a week on the old-age pensioners. Would it not, therefore, be possible, if he has real sympathy with these people, and if he cannot vary the classification, for him to indicate that at a later stage he will propose an increase of 1s. a week in old-age pensions, to compensate for this taxation?

5.13 p.m.

Mr. McGovern

I always feel reluctant to take part in Budget Debates because there is a feeling of complete unreality about them. On the day when the Budget is introduced the taxes proposed in it are carried into effect. They operate from that evening or the following morning. Then, in the following week, we meet here and hon. Members suggest that certain taxes should not be imposed. But in the meantime they have been imposed. I am told that these Debates provide a guide for the Chancellor of the Exchequer or possible successors, as to the taxes that are popular and those that are unpopular. I have never discovered popular taxes in this House or in this country, because what is popular on this side is unpopular on the other, and vice versa. The Amendment suggests that the Tobacco Duty should be modified, largely because of the hardship which it will entail to certain persons in the community. As a non-smoker, and to a large extent a teetotaller—except possibly at Christmas time—I have often wondered why it is assumed that the man who smokes or drinks, should have an unlimited amount of taxation imposed upon him. I do not know why it is assumed that beer, whisky, wine and tobacco should always be selected for imposition.

I take a detached view, because these taxes do not touch me. We know that all taxes are bound to hit some people unfairly. An extra 6d. per week payable by the man who smokes four ounces of tobacco a week does not mean much to the man with £8 or £10 a week, or more, but it is a serious amount to a man on the means test, a man drawing unemployment benefit, an old age pensioner, or a man with a low wage and a large family. I heard the Chancellor deal with slot machines and speak about getting a packet of cigarettes and one halfpenny back. A good many people sometimes put 6d. or 1s. in a machine and get neither cigarettes nor money back. That is a fairly common thing, and I have seen men in the evening trying to break the machines in order to get their cigarettes. I could have appreciated it if the Chancellor had imposed a special tax upon the tobacco trust, which threw up £11,000,000 or £12,000,000 in dividends last year. To impose this tax on tobacco is to impose it not on a luxury, but on what is a necessity in view of the drab, colourless lives of large sections of the people. It ill becomes the Chancellor to attempt to deprive them of even the smallest amount of colour in their lives, even if it is only sitting by their fire smoking the pipe of peace and dreaming dreams of what life might have been if there had not been a National Government and a capitalist system.

During the War a suggestion was made by a Liberal colleague of the Chancellor of the Exchequer that the cinema tax should be abolished and he said at that time that it was far better to keep the population watching Charlie Chaplin on the screen than that they should stand at the street corner listening to anti-war and Socialist speeches. The same may be true in regard to many of these taxes. The more you deprive the poorest sections of the opportunity of living, even in the smallest way, you create in their minds and hearts an antagonism against society, especially when their cupboards are bare and their pockets are denied the wealth given to other sections. The Chancellor has a large field over which he can operate and he can raid the hen-roosts of the rich, to use a phrase of one of his predecessors. He has people, like the Duke of Sutherland, who try to evade their ordinary taxation, and people like the Marquis of Bute who recently sold £20,000,000 of land in Cardiff. Three halfpence means little to these people, but it means a lot to the people at the bottom of the social ladder on which capitalist society rests. The Chancellor used the excuse rather than the argument that if there were 40 rich men in this country taxation was bound to be more on the many than on the smaller number. There are, however, a great many more than 40 rich people in the country. There are 97,000 people who take over £400,000,000 per year. There are a large number who escape a measure of taxation because the Chancellor operates for that class, and not for the class at the bottom. He attempts to convince the people at the bottom that he is taking successfully from those at the top. Those at the top, however, do not produce the wealth. It is the people at the bottom who do that. Everything the human eye can see in ordinary life is created by the energies of the people who produce, and the rich people live on the wealth that the workers produce.

If there are a few thousand extremely rich men we are entitled to take from them first before we go down to the poorest of the poor and impose additional taxes on them. It is not convincing to say to the old age pensioner that he has to bear an extra 6d. per week because the bond-holding interest of the rich class is in danger throughout the world. It is not right that the young man who is chased around on the means test and his family who have to live on one income should have to bear these additional burdens while the rich class walk off with the wealth created by the class at the bottom. I look upon all these impositions on the working class as not only obnoxious, but unjust and as a pure evidence of rich-class rule. A civilised and just system of government would not permit them. It would abolish all indirect taxation and substitute direct taxation on those who can bear the burden. Those at the bottom would thus be freed of unequal burdens. As ordinary common men and women more and more realise this class rule by the alleged National Government and the financiers who are behind it spurring it on they will want to abolish it and these unjust taxes; and when the people take their courage in their own hands and use their brains they will substitute the rich-class rule government for working-class rule government.

5.22 p.m.

Mr. A. V. Alexander

I do not suppose, in view of the excellent case that has been stated by my hon. Friends in regard to this duty, that I need address a speech to the Chancellor, but I do not want him to think that, because no long speech has been made from the Front Bench, we are not entirely associated with the case that has been put so well by my hon. Friends. It will be necessary to debate the principle which they have advanced on tobacco at some length on the next Resolution with

regard to sugar. I am dissatisfied with the reply of the Chancellor, and I propose to ask my hon. Friends to show their view of it in two ways. The first is to take careful note when they speak in the country of the Chancellor's references to the ratio of sacrifice which is involved in his Budget which I thought were most vivid.

Sir J. Simon

I said nothing about the ratio of sacrifice involved in my Budget. I said, what is a commonplace to every thoughtful man, that to tax a very widely used commodity, taken by itself, is of course a burden more difficult for the poor than for the rich people to bear. I went on to say—and I hope that if hon. Members repeat the first they will also repeat this—that this is the reason why any good system of taxation must call as well for a high and special contribution from the richer classes.

Mr. Alexander

Of course, we will, if we quote the first part, also quote the second part, but we shall be entitled to analyse how much is left in the hands of the rich people in the way of purchasing power. That will be a fair presentation of the argument. The other thing I propose to ask my hon. Friends to do is to divide twice on this matter. We ought to vote very strongly for the Amendment, and then we ought to vote against the Resolution.

Question put, "That '11s. 6d.' stand part of the Resolution."

The House divided: Ayes, 231; Noes, 131.

Division No. 86.] AYES. [5.26 p.m.
Acland-Troyte, Lt.-Col. G. J. Browne, A. C. (Belfast, W.) Crookshank, Capt. Rt. Hon. H. F. C.
Adams, S. V. T. (Leeds, W.) Burton, Col. H. W. Cross, R. H.
Agnew, Lieut.-Comdr. P. G. Butcher, H. W. Crowder, J. F. E.
Albery, Sir Irving Caine, G. R. Hall- Cruddas, Col. B.
Allen, Lt.-Col. Sir W. J. (Armagh) Cary, R. A. Culverwell, C. T.
Anstruther-Gray, W. J. Cayzer, Sir C. W. (City of Cheater) Davidson, Viscountess
Apsley, Lord Cayzer, Sir H. R. (Portsmouth, S.) De la Bère, R.
Assheton, R. Cazalet, Capt. V. A. (Chippenham) Denman, Hon. R. D.
Astor, Hon. W. W. (Fulham, E.) Channon, H. Despencer-Robertson, Major J. A. F.
Baldwin-Webb, Col. J. Chapman, A. (Rutherglen) Doland, G. F.
Barrie, Sir C. C. Chapman, Sir S. (Edinburgh, S.) Donner, P. W.
Baxter, A. Beverley Christie, J. A. Duckworth, Arthur (Shrewsbury)
Beauchamp, Sir B. C. Churchill, Rt. Hon. Winston S. Dugdale, Captain T. L.
Beechman, N. A. Colfox, Major W. P. Duncan, J. A. L.
Bennett, Sir E. N. Colville, Rt. Hon. John Eastwood, J. F.
Blair, Sir R. Conant, Captain R. J. E. Eckersley, P. T.
Bossom, A. C. Cook, Sir T. R. A. M. (Norfolk, N.) Eden, Rt. Hon. A.
Boulton, W. W. Cooke, J. D. (Hammersmith, S.) Edmondson, Major Sir J.
Bower, Comdr. R. T. Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs) Elliston, Capt. G. S
Braithwaite, J. Gurney (Holderness) Cooper, Rt. Hn. T. M. (E'nburgh, W.) Emmott, C. E. G. C.
Brass, Sir W. Courthope, Col. Rt. Hon. Sir G. L. Emrys-Evans, P. V.
Brocklebank, Sir Edmund Cox, H. B. Trevor Evans, Capt. A. (Cardiff, S.)
Brooks, H. (Lewisham, W.) Cranborne, Viscount Everard, Sir William Lindsay
Brown, Rt. Hon. E. (Leith) Craven-Ellis, W. Findlay, Sir E.
Brown, Brig.-Gen. H. C. (Newbury) Croft, Brig.-Gen. Sir H. Page Flaming, E. L.
Fox, Sir G. W. C. Magnay, T. Sandeman, Sir N. S.
Fremantle, Sir F. E Maitland, Sir Adam Sanderson, Sir F. B.
Furness, S. N. Makins, Brigadier-General Sir Ernest Scott, Lord William
Fyfe, D. P. M. Manningham-Buller, Sir M. Selley, H. R.
Gilmour, Lt.-Col. Rt. Hon Sir J. Margesson, Capt. Rt. Hon. H. D. R. Shaw, Captain W. T. (Forfar)
Grant-Ferris, Flight-Lieutenant R. Markham, S. F. Shute, Colonel Sir J. J.
Grattan-Doyle, Sir N. Marsden, Commander A. Simon, Rt. Hon. Sir J. A.
Gretton, Col. Rt. Hon. J. Mason, Lt.-Col. Hon. G. K. M. Smiles, Lieut.-Colonel Sir W. D.
Gridley, Sir A. B. Mayhew, Lt.-Col. J. Smith, Bracewell (Dulwich)
Grimston, R. V. Medlicott, F. Smith, Sir R. W. (Aberdeen)
Guest, Hon. I. (Brecon and Radnor) Mellor, Sir J. S. P. (Tamworth) Smithers, Sir W.
Guinness, T. L. E. B. Mills, Sir F. (Leyton, E.) Snadden, W. McN.
Gunston, Capt. Sir D. W. Mills, Major J. D. (New Forest) Somervell, Rt. Hon. Sir Donald
Hambro, A. V. Mitchell, Sir W. Lane (Streatham) Somerville, A. A. (Windsor)
Hannah, I. C. Moreing, A. C. Southby, Commander Sir A. R. J.
Hannon, Sir P. J. H. Morris, O. T. (Cardiff, E.) Spears, Brigadier-General E, L.
Harbord, A. Morris-Jones, Sir Henry Stanley, Rt. Hon. Oliver (W'm'l'd)
Harvey, T. E. (Eng. Univ's.) Morrison, G. A. (Scottish Univ's.) Stewart, J. Henderson (Fife, E.)
Haslam, H. C. (Horncastle) Morrison, Rt. Hon. W. S. (Cirencester) Stourton, Major Hon. J. J.
Heilgers, Captain F. F. A. Neven-Spence, Major B. H. H. Strauss, H. G. (Norwich)
Hely-Hutchinson, M. R. Nicolson, Hon. H. G. Stuart, Hon. J. (Moray and Nairn)
Heneage, Lieut.-Colonel A. P. O'Connor, Sir Terence J. Sueter, Rear-Admiral Sir M. F.
Hepburn, P. G. T. Buchan- O'Neill, Rt. Hon. Sir Hugh Sutcliffe, H.
Hepworth, J. Orr-Ewing, I. L. Tasker, Sir R. I.
Herbert, A. P. (Oxford U.) Peat, C. U. Tate, Mavis C.
Holdsworth, H. Peters, Dr. S, J. Taylor, Vice-Adm, E. A. (Padd., S.)
Hopkinson, A. Petherick, M. Thomas, J. P. L
Horsbrugh, Florence Pickthorn, K. W. M. Thorneycroft, G. E. P.
Hudson, Capt. A. U. M. (Hack., N.) Pilkington, R. Thornton-Kemsley, C. N.
Hulbert, Squadron-Leader N. J. Ponsonby, Col. C. E. Touche, G. C.
Hunloke, H. P. Pownall, Lt.-Col. Sir Assheton Turton, R. H.
Hunter, T. Procter, Major H. A. Wakefield, W. W.
Hutchinson, G. C. Radford, E. A. Wallace, Capt. Rt. Hon. Euan
Jones, L. (Swansea W.) Raikes, H. V. A. M. Ward, Lieut.-Col. Sir A. L. (Hull)
Kerr, Colonel C. I. (Montrose) Ramsay, Captain A. H. M. Ward, Irene M. B. (Wallsend)
Kerr, J. Graham (Scottish Univs.) Rathbone, J. R. (Bodmin) Wardlaw-Milne, Sir J. S.
Kimball, L. Reed, A. C. (Exeter) Waterhouse, Captain C.
Knox, Major-General Sir A. W. F. Reed, Sir H. S. (Aylesbury) Watt, Lt.-Col. G. S. Harvie
Lamb, Sir J. Q. Reid, J. S, C. (Hillhead) Wayland, Sir W. A.
Leighton, Major B. E. P. Reid, W. Allan (Derby) Wells, Sir Sydney
Levy, T. Remer, J. R. Whiteley, Major J. P. (Buckingham)
Lewis, O. Robinson, J. R. (Blackpool) Wickham, Lt.-Col. E. T. R.
Liddall, W. S. Ropner, Colonel L. Williams, C. (Torquay)
Lindsay, K. M. Ross, Major Sir R. D. (Londonderry) Williams, H. G. (Creydon, S.)
Lipson, D. L. Ross Taylor, W. (Woodbridge) Wilson, Lt.-Col. Sir A. T. (Hitchin)
Little, Sir E. Graham- Rowlands, G. Womersley, Sir W. J.
Loftus, P. C. Royds, Admiral Sir P. M. R. Wood, Hon. C. I. C.
Mabane, W. (Huddersfield) Ruggles-Brise, Colonel Sir E. A. Wright, Wing-Commander J. A. C.
M'Connell, Sir J. Russell, Sir Alexander York, C.
Macdonald, Capt. P. (Isle Of Wight) Russell, R. J. (Eddisbury) Young, A. S. L. (Partick)
McEwen, Capt. J. H. F. Russell, S. H. M. (Darwen)
Macnamara, Lieut.-Colonel J. R. J. Samuel, M. R. A. Lieut.-Colonel Herbert and Mr. Munro.
Adams, D. (Consett) Dalton, H. Henderson, A. (Kingswinford)
Adams, D. M. (Poplar, S.) Davidson, J. J. (Maryhill) Hicks, E. G.
Adamson, Jennie L. (Dartford) Davies, R. J. (Westhoughton) Hills, A. (Pontefract)
Adamson, W. M. Davies, S. O. (Merthyr) Jagger, J.
Alexander, Rt. Hon. A. V. (H'lsbr.) Day, H. Jenkins, A. (Pontypool)
Ammon, C. G. Dobbie, W. Jenkins, Sir W. (Neath)
Attlee, Rt. Hon. C. R. Dunn, E. (Rother Valley) Johnston, Rt. Hon. T.
Banfield, J. W. Ede, J. C. Jones, A. C. (Shipley)
Barnes, A. J. Edwards, A (Middlesbrough E.) Kennedy, Rt. Hon. T,
Barr, J. Edwards, Sir C. (Bedwellty) Kirkwood, D.
Bartlett, C. V. O. Fletcher, Lt.-Comdr. R. T. H. Lansbury, Rt. Hon. G.
Batey, J. Foot, D. M. Lathan, G.
Beaumont, H. (Batley) Frankel, D. Leach, W.
Benn, Rt. Hon. W. W. Gallacher, W. Leonard, W.
Bevan, A. Gardner, B. W. Logan, D. G.
Bromfield, W. George, Major G. Lloyd (Pembroke) Lunn, W.
Brown, C. (Mansfield) George, Megan Lloyd (Anglesey) Macdonald, G. (Ince)
Buchanan, G. Gibson, R. (Greenock) McEntee, V. La T.
Burke, W. A. Green, W. H. (Deptford) McGhee, H. G.
Cape, T. Greenwood, Rt. Hon. A. McGovern, J.
Charleton, H. C. Griffiths, G. A. (Hemsworth) MacLaren, A.
Chater, D. Groves, T. E. MacLean, N.
Cluse, W. S. Guest, Dr. L. H. (Islington, N.) MacMillan, M. (Western Isles)
Cocks, F. S. Hall, G. H. (Aberdare) Mainwaring, W. H.
Collindridge, F. Hall, J. H. (Whiteshapel) Mander, G. le M.
Cove, W. G. Hardie, Agnes Marshall, F.
Cripps, Hon. Sir Stafford Harris, Sir P. A. Maxton, J.
Daggar, G. Hayday, A. Messer, F.
Milner, Major J. Seely, Sir H. M. Tinker, J. J
Montague, F. Sexton, T. M. Viant, S. P.
Morgan, J. (York, W.R., Doncaster) Shinwell, E. Walker, J.
Morrison, Rt. Hon. H. (Hackney, S.) Silkin, L. Watkins, F. C.
Morrison, R. C. (Tottenham, N.) Silverman, S. S. Watson, W. McL.
Muff, G. Sinclair, Rt. Hon. Sir A. (C'thn's) Westwood, J.
Naylor, T. E. Sloan, A. Whiteley, W. (Blayden)
Oliver, G. H. Smith, Ban (Rotherhithe) Williams, E. J. (Ogmore)
Paling, W. Smith, E. (Stoke) Williams, T. (Don Valley)
Parkinson, J. A. Smith, Rt. Hon. H. B. Less- (K'ly) Wilson, C. H. (Attercliffe)
Pearson, A. Smith, T. (Normanton) Windsor, W. (Hull, C)
Pethick-Lawrence, Rt. Hon. F. W. Stephan, C. Woods, G. S. (Finsbury)
Price, M. P. Stewart, W. J. (H'ght'n-le-Sp'ng) Young, Sir R. (Newton)
Pritt, D. N, Stokes, R. R.
Quibell, D. J. K. Summerskill, Dr. Edith TELLERS FOR THE NOES.—
Riley, B. Taylor, R. J. (Morpeth) Mr. Mathers and Mr. Anderson.
Ritson, J. Thorne, W.

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

The House divided: Ayes, 237; Noes, 131.

Division No. 87.] AYES. [5.36 p.m.
Acland-Troyte, Lt.-Col. G.J. Donner, P. W. Liddall, W. S.
Adams, S. V. T. (Leeds, W.) Dower, Lieut.-Col. A. V. G. Lindsay, K. M.
Agnew, Lieut.-Comdr. P. G Duckworth, Arthur (Shrewsbury) Lipson, D. L.
Albery, Sir Irving Duncan, J. A. L. Little, Sir E. Graham-
Anstruther-Gray, W. J. Eastwood, J. F. Loftus, P. C.
Assheton, R. Eckersley, P. T. Mabane, W. (Huddersfield)
Astor, Hon. W. W. (Fulham, E.) Eden, Rt. Hon. A. Macdonald, Capt. P. (Isle of Wight)
Baldwin-Webb, Col. J. Edmondson, Major Sir J. McEwen, Capt. J. H. F.
Barrie, Sir C. C. Elliston, Capt. G S. McKie, J. H.
Baxter, A. Beverley Emmott, C. E. G. C. Macnamara, Lt.-Col. J. R. J.
Beauchamp, Sir B. C. Emrys-Evans, P. V. Magnay, T.
Beechman, N. A. Evans, Capt. A. (Cardiff S.) Maitland, Sir Adam
Bennett, Sir E. N. Everard, Sir William Lindsay Makins, Brigadier-General Sir Ernest
Blair, Sir R. Findlay, Sir E. Manningham-Buller, Sir M.
Bossom, A. C. Fleming, E. L. Margesson, Capt. Rt. Hon. H. D. R.
Boulton, W. W. Fox, Sir G. W. G. Markham, S. F.
Bower, Comdr. R. T. Fremantle, Sir F. E. Marsden, Commander A.
Bracken, B. Furness, S. N. Mason, Lt.-Col. Hon. G. K. M.
Braithwaite, J. Gurney (Holderness) Fyfe, D. P. M. Mayhew, Lt.-Col. J.
Brass, Sir W. Gilmour, Lt.-Col. Rt. Hon. Sir J. Medlicott, F.
Brooklebank, Sir Edmund Grant-Ferris, Flight-Lieutenant R. Mellor, Sir R. J. (Mitcham)
Brooke, H. (Lewisham, W.) Grattan-Doyle, Sir N. Mellor, Sir J. S. P. (Tamworth)
Brown, Rt. Hon. E. (Leith) Gretton, Col. Rt. Hon. J. Mills, Sir F. (Leyton, E.)
Brown, Brig.-Gen. H. C. (Newbury) Gridley, Sir A. B. Mills, Major J. D. (New Forest)
Browne, A. C. (Belfast, W.) Grimston, R. V. Mitchell, Sir W. Lane (Streatham)
Burton, Col. H. W. Guest, Hon. I. (Brecon and Radnor) Moreing, A. C.
Butcher, H. W. Guinness, T. L. E. B. Morris, O. T. (Cardiff, E.)
Caine, G. R. Hall- Gunston, Capt. Sir D. W. Morris-Jones, Sir Henry
Cary, R. A. Hambro, A. V. Morrison, G. A. (Scottish Univ's.)
Cayzer, Sir C. W. (City of Chatter) Hannah, I. C. Morrison, Rt. Hon. W. S. (Cirencaster)
Cayzer, Sir H. R. (Portsmouth, S.) Hannon, Sir P. J. H. Munro, P.
Cazalet, Capt. V. A. (Chippenham) Harbord, A. Neven-Spence, Major B. H. H.
Channon, H. Harvey, T. E. (Eng, Univ's.) Nicolson, Hon. H. G.
Chapman, A. (Rutherglen) Haslam, Henry (Horncastle) O'Connor, Sir Terence J.
Chapman, Sir S. (Edinburgh, S.) Heilgers, Captain F. F, A. O'Neill, Rt. Hon. Sir Hugh
Christie, J. A. Hely-Hutchinson, M. R. Orr-Ewing, I. L.
Churchill, Rt. Hon. Winston S. Heneage, Lieut.-Colonel A. P. Peat, C. U.
Cobb, Captain E. C. (Preston) Hepburn, P. G. T. Buchan- Petharick, M.
Colfox, Major W. P. Hepworth, J. Pickthorn, K. W. M.
Colville, Rt. Hon. John Herbert, A. P. (Oxford U.) Pilkington, R.
Conant, Captain R. J. E. Hoare, Rt. Hon. Sir S. Ponsonby, Col. C. E.
Cook, Sir T. R. A. M. (Norfolk, N.) Holdsworth, H. Pownall, Lt.-Col. Sir Assheton
Cooke, J. D. (Hammersmith, S.) Hopkinson, A. Procter, Major H. A.
Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs) Horsbrugh, Florence Radford, E. A.
Cooper, Rt. Hn. T. M. (E'nburgh, W.) Hudson, Capt. A. U. M. (Hack., N.) Raikes, H, V. A. M.
Courthope, Col. Rt. Hon. Sir G. L. Hulbert, Squadron-Leader N. J. Ramsay, Captain A. H. M.
Cox, H. B. Trevor Hunloke, H. P. Rathbone, J. R. (Bodmin)
Cranborne, Viscount Hunter, T. Reed, A. C. (Exeter)
Craven-Ellis, W. Hutchinson, G. C. Reed, Sir H. S. (Aylesbury)
Croft, Brig.-Gen. Sir H. Page Inskip, Rt. Hon. Sir T. W. H. Reid, J. S. C. (Hillhead)
Crookshank, Capt. Rt. Hon. H. F. C. Jonas, L. (Swansea W.) Reid, W. Allan (Derby)
Cross, R. H. Keeling, E. H. Romer, J, R.
Crowder, J. F. E. Kerr, Colonel C. I. (Montrose) Robinson, J. R. (Blackpool)
Cruddas, Col. B. Kerr, J. Graham (Scottish Univs.) Ropner, Colonel L.
Culverwell, C. T. Kimball, L. Ross, Major Sir R. D. (Londonderry)
Davidson, Viscountess Knox, Major-General Sir A. W. F. Ross Taylor, W. (Woodbridge)
De la Bère, R. Lamb, Sir J. Q. Rowlands, G.
Denman, Hon. R. D. Leighton, Major B. E. P. Royds, Admiral Sir P. M. R.
Despencer-Robertson, Major J. A. F. Levy, T. Ruggles-Brise, Colonel Sir E. A.
Doland, G. F. Lewis, O. Russell, Sir Alexander
Russell, R. J. (Eddisbury) Spears, Brigadier-General E. L. Ward, Lieut.-Col. Sir A. L. (Hull)
Russell, S. H. M. (Darwen) Stanley, Rt. Hon. Oliver (W'm'ld) Ward, Irene M. B. (Wallsend)
Salt, E. W. Stewart, J. Henderson (Fife, E.) Wardlaw-Milne, Sir J. S.
Samuel, M. R. A. Stewart, William J. (Ballast, S.) Waterhouse, Captain C.
Sandeman, Sir N. S. Stourton, Major Hon. J. J. Watt, Lt.-Col. G. S. Harvie
Sanderson, Sir F. B. Strauss, H. G. (Norwich) Wayland, Sir W. A.
Scott, Lord William Stuart, Hon. J. (Moray and Nairn) Wells, Sir Sydney
Selley, H. R. Sueter, Rear-Admiral Sir M. F. Whiteley, Major J. P. (Buckingham)
Shaw, Captain W. T. (Forfar) Sutcliffe, H. Wickham, Lt.-Col. E. T. R.
Shute, Colonel Sir J. J. Tasker, Sir R. I. Williams, C. (Torquay)
Simon, Rt. Hon. Sir J. A. Tate, Mavis C. Williams, H. G. (Croydon, S.)
Smiles, Lieut.-Colonel Sir W. D. Taylor, Vice-Adm. E. A. (Padd., S.) Wilson, Lt.-Col. Sir A. T. (Hitchin)
Smith, Bracewell (Dulwich) Thomas, J. P. L. Womersley, Sir W. J.
Smith, Sir R. W. (Aberdeen) Thorneycroft, G. E. P. Wood, Hon. C. I. C.
Smithers, Sir W. Thornton-Kemsley, C. N. Wright, Wing-Commander J. A. C.
Snadden, W. McN. Touche, G. C. York, C.
Somerset, T. Tryon, Major Rt. Hon. G. C. young, A. S. L. (Partick)
Somervell, Rt. Hon. Sir Donald Turton, R, H.
Somerville, A. A. (Windsor) Wakefield, W. W. TELLERS FOR THE AYES.—
Southby, Commander Sir A. R. J. Wallace, Capt. Rt. Hon. Euan Lieut.-Colonel Herbert and Captain Dugdale.
Adams, D. (Consett) Gibson, R. (Greenock) Muff, G.
Adams, D. M. (Poplar, S.) Green, W. H. (Deptford) Naylor, T. E.
Adamson, Jennie L. (Dartford) Greenwood, Rt. Hon. A. Oliver, G. H.
Adamson, W. M. Griffiths, G. A. (Hemsworth) Paling, W.
Alexander, Rt. Hon. A. V. (H'lsbr.) Groves, T. E. Parkinson, J. A.
Ammon, C. G. Guest, Dr. L. H. (Islington, N.) Pearson, A.
Anderson, F. (Whitehaven) Hall, G. H. (Aberdare) Pathick-Lawrence, Rt. Hon. F. W.
Attlee, Rt. Hon. C. R. Hall, J. H. (Whitechapel) Price, M. P.
Banfield, J. W. Hardie, Agnes Pritt, D. N.
Barnes, A. J. Harris, Sir P. A. Quibell, D. J. K.
Barr, J. Hayday, A. Riley, B.
Bartlett, C. V. O. Henderson, A. (Kingswinford) Ritson, J.
Batey, J. Hicks, E. G. Seely, Sir H. M.
Beaumont, H. (Batley) Hills, A. (Pontefract) Sexton, T. M.
Benn, Rt. Hon. W. W. Jagger, J. Shinwell, E.
Bevan, A. Jenkins, A. (Pontypool) Silkin, L.
Bromfield, W. Jenkins, Sir W. (Neath) Silverman, S. S.
Brown, C. (Mansfield) Johnston, Rt. Hon. T. Sinclair, Rt. Hon. Sir A. (C'thn's)
Buchanan, G. Jones, A. C. (Shipley) Sloan, A.
Burke, W. A. Kennedy, Rt. Hon. T. Smith, Ben (Rotherhithe)
Cape, T. Kirkwood, D. Smith, E. (Stoke)
Chater, D. Lansbury, Rt. Hon. G. Smith, Rt. Hon. H. B. Lees- (K'ly)
Cluse, W. S. Lathan, G. Smith, T. (Normanton)
Cooks, F. S. Leach, W. Stephen, C.
Collindridge, F. Leonard, W. Stewart, W. J. (H'ght'n-le-Sp'ng)
Cove, W. G. Logan, D.G. Stokes, R. R.
Daggar, G. Lunn, W. Summerskill, Dr. Edith
Dalton, H. Macdonald, G. (Ines) Taylor, R. J. (Morpeth)
Davidson, J, J. (Maryhill) McEntee, V. La T. Thorne, W.
Davies, R. J. (Westhoughton) McGhee, H. G. Tinker, J. J.
Davies, S. O. (Merthyr) McGovern, J. Viant, S. P.
Day, H. MacLaren, A. Walker, J.
Dobbie, W. Maclean, N. Watkins, F. C.
Dunn, E. (Rother Valley) MacMillan, M. (Western Isles) Watson, W. McL
Dunn, E. (Rother Valley) Mainwaring, W. H. Westwood, J.
Ede, J. C. Mander, G. le M. Williams, E. J. (Ogmore)
Edwards, Sir C. (Bedwellty) Marshall, F. Williams, T. (Don Valley)
Fletcher, Lt.-Comdr. R. T.H. Mathers, G. Wilson, C. H. (Attercliffe)
Foot, D. M. Maxton, J. Windsor, W. (Hull, C.)
Frankel, D. Messer, F. Woods, G. S. (Finsbury)
Gallacher, W. Milner, Major J. Young, Sir R. (Newton)
Gardner, B. W. Montague, F.
Garro Jones, G. M. Morgan, J. (York, W.R., Doncaster) TELLERS FOR THE NOES.—
George, Major G. Lloyd (Pembroke) Morrison, Rt. Hon. H. (Hackney, S.) Mr. Whiteley and Mr. Charleton.
George, Megan Lloyd (Anglesey) Morrison, R. C. (Tottenham, N.)

Fourth Resolution read a Second time.

5.45 P.m.

Mr. Alexander

I beg to move, in line 12, to leave out "14s. 0d.," and to insert "9s. 4d."

We have been discussing, both in the general Budget Debate and on the last Amendment, the relation between the taxation which presses most heavily on the working classes and other forms of taxation. It has been said during these discussions that, in a time of emergency, a good deal of argument was possible in favour of special taxation on articles which might be regarded as being in the nature of luxuries, but it cannot be said that the commodity with which this Amendment deals is in any way to be regarded merely as a luxury. We want to make it plain to the Chancellor of the Exchequer that we consider sugar to be a vital necessity for the people of this country. It is a vital food, it is a very important energising food, and it is of especial importance in the diet of young children. Therefore, we want to make it clear that we are attacking the Chancellor's policy with respect to this commodity from the point of view that it is wrong that he should seek to extract this additional revenue from so important a food of the people.

It will be observed that we are not merely asking that the duty should be lower than the figure proposed by the Chancellor, but that it should be lower than the pre-Budget rate. I would ask the House to consider the present market position and the probable price position of this commodity. I have heard already this week complaints from certain quarters that a warning has been given that the retail price of sugar is likely to be, not ¼d. per lb. higher than was the case on the morning of the Chancellor's statement, but ½d. per lb. higher, and questions are being asked, by many consumers who are unaware of the real market position, about the notice given of that expected further rise in price. Taking as the basis of my comments the effect on granulated sugar of the quality known as "Tate's packed," I find that the price on 1st March was 21s. 1½d. per cwt. to the trade. This morning it is 25s. 4½d., there having been an increase of 4s. 3d. per cwt. in the wholesale market price of a very large proportion of the granulated sugar sold in this country, while the in crease in duty which the Chancellor pro poses in his Budget as 2s. 4d. There has been a steady and continuous rise, usually by movements of about 1½d. per lb., for the last five or six weeks—

Mr. Holdsworth

What is the reason?

Mr. Alexander

I will deal with that presently. It is very important that the price of this vital food should remain at a reasonable level to the consumer, and, in view of these marked movements, it is reasonable to ask, not merely that the duty should not be increased, but that it should be reduced by another ¼d. per lb. The reasons for the steady advance in the wholesale market price are, first, that there was a partial failure of the sugar-beet crop in this country last season; secondly, that there was an even heavier failure of similar types of sugar production on the Continent; and, thirdly, that in the last few weeks there has been quite heavy Continental buying of this commodity, and there has been no corresponding relief, although there has been some relief, through the sugar quota of the International Sugar Commission.

I do not believe, from my examination of the position, that there is any real world shortage of sugar stocks at the present time, but there has been a fall in the stocks in this country, which, in company with the Continental buying, has been sufficient to account for the fairly steep rise in the wholesale market price. It is very unfair that, at the time when the Chancellor comes along and asks for a further imposition on this commodity, the consumer should be faced also with an unnecessary rise in price because of a control in which British authorities at least have had some say. We now control our home beet-sugar production, largely through the operation of an Act of Parliament, by an impartial Sugar Commission of our own, who must, of course, have their representations to make to the financial body which controls the quotas and stocks in the world. In these circumstances it is important that we should take such steps as we can to prevent the price of this very important food from becoming unduly high.

I shall leave it to some of my hon. Friends on these benches to argue as to the actual burden that is placed upon the housewife, and will confine myself to the importance of this primary food commodity as a raw material in many manufactures of other foods in this country. I remember that, when I first came to London, in 1920, to do political and Parliamentary work in connection with trade, one of my first duties was to organise the presentation of the case on sugar taxation and the consumption of sugar generally to the then Chancellor of the Exchequer, now Viscount Home; and I remember then being able to produce figures which showed that the very steep taxation upon sugar during the War had not only had an effect on the consumption of sugar as such per head in its direct use by the population, but also a very serious effect on the various trades that were using sugar as a raw material. Sugar is used especially in the manufacture of jam, and of cakes, biscuits and confectionery, and also, though perhaps this might be regarded as more of a luxury, though nevertheless it is very often used as food, in the manufacture of chocolate.

Sir J. Simon

And of beer.

Mr. Alexander

If the Chancellor has any special information that he can give the House about the effect of the Sugar Duty upon beer, we shall be very glad to hear it. I myself know nothing from the manufacturing point of view of the value of sugar as a raw material in that trade, but in the trades I have mentioned it is a very important factor, and we have to think of the general effect upon the consumer. I dare say other Members of different parties will recognise that there has been some difficulty with the jam trade in the past season, because there was a pretty poor fruit crop, and, unless there is a marked improvement in the general fruit position available to jam manufacturers within the next few months, there will be a still further adverse effect on the price of this very important part of our food. Moreover, one may include in jam the general process of canning, a section of British industry which many of us are desirous of seeing extended. It seems to me that there will certainly be some reaction in that direction if the Sugar Duty is increased now, and, unless we make our proper protest, it may go on increasing, with the result of dealing a very severe blow at the industry as a whole.

A suggestion, with which I had some sympathy, was made by an hon. Member below the Gangway in dealing just now with the Tobacco Duty, as to the possibility of getting some of the revenue that the Chancellor is after out of the heavy profits of the combines that deal with that commodity; but while, perhaps, the Chancellor might find some part of the money he wants in that direction, it is the fact that, as I said last night, in the sugar trade generally and in the distribution of the commodity there is really no margin from which the Chancellor could get this revenue. Sugar has been used in the retail trades as a means of attracting people into grocers' shops, until the competition has become so ruinous that, as regards the commodity itself, there is no net profit on the retailing of sugar, and, therefore, it is quite impossible to think that the tax can be recovered by any other means than passing it on directly to the consumer. The usual margin in the process between the wholesaler and the retailer is at most 8 or 9 per cent., and if the Chancellor will take the opportunity, between now and the Finance Bill, of looking up what is the average wage cost per lb. of distributive sales, he will find that generally the wage costs of the distribution of sugar are not met by the close margin which usually prevails in the retailing of sugar as such. It is clear, therefore, that this duty will have to be passed on as a whole to the consumer of the sugar, whether in the form of a primary commodity or in the form of a manufactured article of which the sugar is a constituent.

I feel that the Chancellor ought to call a halt in regard to the way in which taxation on foodstuffs is increasing in this country. It is not so very long ago since it was said—at the time of the Budget of Lord Snowden for 1929–30—that taxation on food as such had almost disappeared. Now we have returned to a situation in which not only have we such forms of taxation as the levy to provide money for the wheat subsidy and the restriction of bacon supplies in order to provide the subsidy on pigs but in other forms, until we are paying much more than £40,000,000 a year in taxation on food. The time has come to tell the Chancellor that he has to call a halt to this increasing tendency to tax the food of the people of this country. The best way would be to force a Division this afternoon, and in the course of the discussion to say that not merely should there be no increase in the duty, but actually a reduction, in order to bring this important food commodity within the reach of the main body of consumers. I am not persuaded that it is impossible for the Chancellor to get this extra £4,000,000 to £4,500,000, which he hopes to get from the Sugar Duty, by way of Super-tax from those who are better able to bear it.

6.2 p.m.

Mr. Chater

I beg to second the Amendment.

If the Amendment had been so framed as to propose the abolition of the Sugar Duty altogether, I would second it with much more enthusiasm. I am opposed altogether to taxes on vitally necessary foodstuffs. Sugar, as my right hon. Friend has said, is a necessary foodstuff, and unless people consume sufficient of it malnutrition inevitably results. I believe that food taxes are altogether wrong in principle. When it is argued, as it has been by the Chancellor, that the increase may be excused on this occasion because of the national interest, and that even the very poorest of the population should be called upon to bear some share of the national burden, I suggest that the poorest sections of the community already pay in indirect taxation more than their fair share. When we consider what people with incomes of £2 to £3 a week—and there are many hundreds in my constituency who do not get even £2 a week—have to pay for rent and other necessary expenses, it is easily realised that the amount which they pay to the Exchequer is far out of proportion to their means. This taxation on poverty has been steadily increasing under two National Governments, and, as my right hon. Friend said, it is time a halt was called. Yet I feel no hope that that halt will be called by this Government. On the contrary, it seems to me that the spirit which is abroad on the benches opposite is rather in the direction of trying to put, and desiring to put, a greater proportion of the burdens of the country on the shoulders of the poorer sections of the community.

In the great co-operative movement, which I and my right hon. Friend have the honour to represent in this House, we are painfully aware of the poverty-stricken conditions which govern the lives of a large proportion of our members from the time of their birth to that of their death. Therefore, we are bound to oppose all taxation of food. In this case, we are called upon not only in the name of our members, but on behalf of the general community, to make a protest against this increase. I am quite aware that the Amendment would deprive the Chancellor not only of the increase of ¼d. a lb., but also of another ¼d. If I remember rightly, he estimated that the increased amount he was going to get in taxation as a result of this additional duty was something in the region of £4,000,000. Therefore, this Amendment would involve a loss of £8,000,000. I am not going to suggest alternative methods of raising that money, because I do the Chancellor the honour of believing that his personal ingenuity would at least be equal to the task of finding other sources. I hope the Amendment will be accepted, although I have very little hope.

6.9 p.m.

Mr. Lunn

I should like to support the Amendment, which has been so ably proposed by my right hon. Friend. I do not think that anybody should apologise for objecting to taxation on our food supplies. No one has protested against it more effectively than the present Chancellor of the Exchequer did in the past. He presented a marvellous case not only in opposition to the taxation of food, but in support of the principle that taxation should be a matter of ability to pay. I believe that it was a maxim of the right hon. Gentleman many years ago that if taxes were to be imposed they should be borne by those best able to bear them. Of course, it is not difficult for Ministers to change their minds. But I think it is unreasonable and unfair to put a tax on sugar, and I do not think that anyone can justify this increase. It will add to the hardships of the poor considerably-. The effect will be felt in millions of homes where old age pensioners, widows and people with miserably low wages are living. The duty is increased by ¼d. a lb., but in many parts of the country we have no farthings; shopkeepers have hardly ever seen them, and they are charging an extra ½d. a lb. Many people cannot purchase two pounds of sugar at a time, in order to get it for 5½d., and so they have to pay 3d. for a single pound. The Chancellor ought to deal with that matter. I look upon sugar as an absolute necessity for everybody. It is used in many articles of food, as well as in a cup of tea. I think the Chancellor could have found other means of getting the money he requires, and if he believes in the test of ability to pay I suggest that he should look for this money in other directions which are known to himself perhaps better than to anybody else in this House.

6.13 p.m.

Mr. Tinker

I think everybody on this side of the House ought to raise his voice in protest against this tax. We listened very attentively to the Chancellor of the Exchequer when he expounded his Budget statement. He said that he was. £24,000,000 short, and that that had to be found somewhere. As he proceeded to describe how he was going to raise the money, he met, to a large extent, with our approval in regard to many of the taxes that he imposed. I welcomed the proposal about Surtax and the provision regarding Death Duties. After that, I was wondering whether he would leave us anything to criticise. Then he reached his proposals in regard to indirect taxation. First, there was the Tobacco Duty. I am not so very much upset about that. But when he came to sugar, all the good feeling I had had for him was swept away in a surge of anger. It may be that some people can manage without sugar, but very few can. Tea, which is the stable drink in ordinary households, is usually taken with sugar. I was at a tea party on Saturday when, I believe, sugar was demanded by every person present.

When the Chancellor of the Exchequer touches sugar he is making a direct attack on every household, though not in the same proportion. Rich people do not use sugar in the same proportion as poor people, and the extra farthing a pound on sugar will hit the poorer people harder than it does other classes of people. The Chancellor of the Exchequer could very well have turned his attention in other directions to raise this £4,000,000 or £5,000,000, for instance by further increasing the Surtax or Estate Duties. When I think of the poorer people, my mind always goes back to the old age pensioners. Many who draw the old age pension have no other resources, and they cannot afford any luxuries. They cannot get either tobacco or beer, but they do look forward to the solace of a cup of tea, and now another burden is to be placed upon them because of the increased taxation of sugar used for sweetening their tea, the Tea Duty having been increased last year.

There are no signs of approval from the Treasury Bench in response to the demand for an increase in the old age pension. This extra burden by way of taxation has to be borne without any corresponding advantage. The Chancellor of the Exchequer has done an entirely wrong thing, as the money required could have been found in other directions, and I do not think that the Sugar Duty will meet with any approval in the country. There may not be a big shout against it because many of the poor people are inarticulate and do not know how to combine and make a protest effectively, but there is a deep-seated feeling that the tax ought not to have been put on at a time like the present. These people are being called upon under the Military Training Bill to provide the manpower and at least they can expect to be relieved of indirect taxation such as that which is now being put upon them. I do not think that it is too late even now to ask the Chancellor of the Exchequer to turn in some other direction for the money. If the proceeds of a tax amount to a large sum of money, say, of £20,000,000 or £30,000,000, it is almost impossible to get the Government to review the position, but if sufficient agitation is created against them where the amount at stake is perhaps £3,000,000 or £4,000,000, the outcome is successful. If the Chancellor of the Exchequer can give way on any taxation at all, it should be on the Sugar Duty. I hope that we shall make our protest as strong as possible, with the object of getting the Chancellor of the Exchequer to review the tax and see if he cannot get the money from other directions.

6.21 p.m.

Mr. R. J. Taylor

My mind goes back, in discussing this question, to an occasion some years ago when the Chancellor of the Exchequer was a Member of the Liberal party, and when the right hon. Gentleman the Member for Epping (Mr. Churchill) was Chancellor of the Exchequer. In those days Chancellors of the Exchequer also had their financial difficulties. I remember, as a visitor in this House, Sitting under the Gallery when the present Chancellor of the Exchequer occupied a seat just below the Gangway. I enjoyed that visit tremendously because the right hon. Gentleman the present Chancellor of the Exchequer made a great speech attacking the then Chancellor of the Exchequer because he had raided the Insurance Fund. I do not remember the year at the moment, but I am sure that the right hon. Gentleman will recall the occasion. As I listened to the speech of the present Chancellor of the Exchequer on that occasion I was thoroughly convinced that the then Chancellor of the Exchequer had committed an unpardonable sin, and that it was little short of a criminal act to rob the Insurance Fund of the surpluses of the ordinary insured contributor, and even the soldiers and the sailors were robbed on that occasion. There was no limit to the vocabulary of the right hon. Gentleman as he poured scorn and condemnation upon the then Chancellor of the Exchequer for what he had done; but how much more should we be justified, if we could command the vocabulary of the Chancellor of the Exchequer, in pouring scorn on the taxation of food at the present time. The right hon. Gentleman, in view of the financial circumstances in which the Government find themselves, ought to have avoided any taxes on food at the present juncture. I fear that, with the tremendous loan that is to be brought forward this year, and the withdrawing of men from industry, we are aiming at a steep rise in the cost of living.

The Chancellor of the Exchequer has mentioned in Budget speeches the number of holes which need plugging up, but it is a remarkable thing that the right hon. Gentleman is going on at such a leisurely gait. If he knows that there are holes through which tax evaders are squeezing and escaping, why does he not stop up those holes, when he would probably get the £4,000,000 that he is after from the increase in the Sugar Duty. It has been said by some hon. Members opposite that we must not adopt a selfish attitude in regard to these taxes. When the Prime Minister was Chancellor of the Exchequer and put his first impost on tea he said that it was put on so that the poor people of this country might feel that they were playing their part in contributing towards the rearmament expenditure. We are getting the same sort of thing here.

The people for whom I am concerned are the old age pensioners and those who are on public assistance, who will be much worse off if there is a rise in the cost of living during next year. There is no evidence of the Minister of Labour making any recommendation that men on Unemployment Assistance Board scales are to have any increase. I refer to the means test men. The burden that we are inflicting upon the old age pensioners is a most onerous one. The people who are going to feel this taxation most hardly are those who have already played their part. They are the old age pensioners, and the elderly men on Unemployment Assistance Board scales, for whom the nation cannot find jobs. At election times hon. Members opposite make most fulsome promises to old age pensioners. We have got to the position that these old people can no longer have the full benefit of their 10s. a week. They have to pay their share of these indirect taxes, and many of the old men, to whom smoking is not a luxury but a necessity, are being called upon to pay more for their tobacco. The Chancellor of the Exchequer is adding to a burden which is already too heavy for the old age pensioners, and I hope that he will find a way to relieve them of this burden.

6.30 p.m.

Mr. Leonard

My hon. Friend who has just sat down has referred to one of the speeches made some years ago by the present Chancellor of the Exchequer. What I am concerned with on the present occasion is that I am told that the Chancellor of the Exchequer has made a great effort to equalise the burden of taxation as it applies to all sections of the people of this country. On that point I would like more details, proving that the incidence is equalised over all sections of the community. One of the main points to which I want to draw the right hon. Gentleman's attention was mentioned by the right hon. Gentleman the Member for Hillsborough (Mr. Alexander)—namely, that in 1930 the impost on tea was 1s. 10d. per cwt. and that it is now to be 14s. per cwt. I should like to know whether that percentage of increase bears any relation to other increases imposed by other provisions in the Budget, and if it does not, I say that the Budget does not conform to the Chancellor of the Exchequer's expressed effort to equalise the burdens over the whole community.

Sufficient has been said on the Sugar Duty to show that it is of tremendous importance to the common people. I want to refer to the practice of the very poorest. It is not always possible for them to buy sugar by the lb. I represent a division in Glasgow which has six lodging houses. I trust that the word "lodging house" will not be thought to convey the idea that the people who live in them are any worse than we are; they are just as good. But they have not the facilities. There are 400 people in each of these lodging houses, and some of them have a splendid status and character. But they buy their sugar not in lbs. but in very small quantities, in sub- divisions of a lb., and I feel that the incidence of the tax on them is going to be greater than it is on the general body of the public. Reference has been made to the production of jams, and it brought to my mind the fact that in working-class districts one of the most popular and cheapest fruits with which to produce jam is rhubarb. It is very cheap, and the poor people buy it in great quantities. But it has this feature about it, that it needs just a little more sugar than does ordinary jam and, therefore, this is putting an additional burden on people who have to rely chiefly on this form of jam.

The only other point to which I wish to draw the attention of the right hon. Gentleman is that a little while ago this Empire of ours was much agitated about a place called Jamaica, which grows sugar cane, but the organisation which was referred to by the right hon. Member for Hillsborough is restricting the production of sugar cane in that country. This is a part of the Empire where you are creating unemployment by a restriction on production from which you expect to get a revenue. So great was the trouble in Jamaica that an official, in order to prevent bloodshed, had to promise an immediate disposal of £500,000 to prevent further trouble. This taxation should be taken into consideration because its incidence is much higher on sugar users than is the incidence of other taxation on any other taxpayer who will be expected to bear a burden as a result of the Budget proposals.

6.36 p.m.

Mr. A. Jenkins

I should like to add my appeal to the Chancellor of the Exchequer to give further consideration to this tax. The hon. Member for Morpeth (Mr. R. J. Taylor) has drawn attention to the attitude of the right hon. Gentleman some years ago to the taxation of foodstuffs. The right hon. Gentleman has changed greatly in recent years. There cannot be any justification at all for imposing this tax on the poor. The Chancellor of the Exchequer must face the fact that some of the people who will have to bear this tax will be the poorest in the land. Will he say that old age pensioners with 10s. a week are able to pay more for their sugar? It is true that it is only a small amount, but the hon. Member for St. Rollox (Mr. Leonard) has just told us that the taxation of sugar since 1930 has risen from 1s. 10d. per cwt. to 14s. per cwt. That is roughly eight times as much. Can the Chancellor of the Exchequer deny the fact that the imposition of this tax on the poorest of our people is not a complete violation of all the canons of taxation which he himself has advanced many times? He has pointed out that taxation should be borne by those who are able to bear it.

These are poor people, old age pensioners, those on unemployment benefit, and large numbers whose wages are very low. If you take the miners, their average income is £100 per year for every family, and they cannot afford to pay any more in taxation than they are paying at the present time. In fact, many members of these families axe suffering from malnutrition, and still the Chancellor of the Exchequer imposes this further taxation. If he has to get a certain sum of money, £4,000,000, it would be far wiser to seek some other source of revenue. I do not think it is beyond his ability to find sources which are much more able to provide it than are these poor people. I hope he will give further consideration to this matter, but I would ask him whether or not he is prepared to advocate that the poorest people in our land should be called upon to pay increased taxation on their sugar?

6.39 p.m.

Mr. Lewis

In times past, when proposals have been brought forward in this House to lay burdens on great trading corporations, hon. Members have pointed out that the shares in these corporations were often held by poor widows and other persons of small means. That argument has sometimes been stressed so far as to give the impression to a casual listener that the capital of our railways and other great corporations is held by people of small means. I have often heard hon. Members protest against an abuse of that argument. Something of the same thing is happening now when we are discussing the question of indirect taxation. Listening to some hon. Members opposite one would think that the great bulk of the tobacco, tea and sugar consumed in this country is consumed either by old age pensioners or by persons who are so unfortunate that by reason of lack of skill or physical infirmity they are unable to obtain employment. The truth of the matter is that both these arguments are appeals for the purpose of creating prejudice when we are discussing proposals which affect a very much larger class of people.

We are not asked to consider some special impost directed only at these very poor people of whom so much has been heard this afternoon. We are asked to agree to an impost which is to apply to a commodity of universal use. It is no doubt very regrettable that one effect of that is undoubtedly to increase the expenses of the poorest section of the community, but the argument in my judgment is hopelessly overdone as a reason why the imposition should not be imposed at all. It is the very circumstance that this commodity is one of universal use that makes it so suitable as a means of raising revenue and affording an opportunity to all sections of the country to make some contribution towards its finances, for the express purpose of bearing the burden of our expenditure on armaments, which is designed to protect the homes, the liberties and the lives of all sections of the community, without respect to class or grade.

Mr. Jenkins

Are we then, when taxation is being imposed, to disregard the damaging effect of the tax upon old age pensioners, upon 2,000,000 unemployed and probably some 5,000,000 or 6,000,000 people in this country, when you know that in certain cases it is bound to have a damaging physical effect on the people?

Mr. Lewis

The point I was making was that there is no reason why a tax of a very wide application should not be proposed because on a certain minority it will bear hardly. If that principle was followed it would strike at the root of nearly every form of taxation. It is impossible for the Chancellor of the Exchequer to raise revenue if he has to pay attention to that plea. In the present circumstances the proposals of the Chancellor of the Exchequer are eminently reasonable and I do not believe that in the country as a whole there is any great resentment against them.

6.44 p.m.

Miss Wilkinson

I do not know whether the hon. Member for Colchester (Mr. Lewis) ever reads his speeches in the Official Report, but if he does he will realise that what he has just been saying is nonsense. He has said that it would strike at the basis of all taxation if we object to a tax because it bears more hardly on the poorest sections of the community. Surely, the very idea of the super-tax is that it is a tax which does not bear hardly on the poorest sections in the community; you are taxing a man according to his ability to pay. Our objection to this tax is that it bears most hardly on those who have no ability to pay, and who ought indeed to be receiving a greater amount from the community if their standard of nutrition is not to fall below civilised levels. When the hon. Member says that he has yet to hear that anybody is making any complaints about this tax, I can only say that I do not suppose that, in the circles in which he moves, he hears any complaints about the duty on sugar. It is not his wife or his friends who would be likely to complain if even one shilling a lb. was the tax on sugar. But the hon. Member should come up to the areas for which some hon. Members on this side speak. I come from one of the most distressed areas in the country. In that area, there has been recently an inquiry into the condition of malnutrition in the schools. That inquiry has shown that we have in that area a condition of malnutrition which is one of the worst in the country.

Sugar is a valuable food for children. I am not speaking at the moment of the old age pensioners, of whom hon. Members opposite may say that, after they have given a life of useful service, the quicker they get into the grave and are no longer a burden on our taxes, the better; I am speaking of our future citizens, our future defence, children who, if they are starved now, will have to be rejected, when they are wanted later as conscripts, on the ground of bad health, and so on. Sugar is one of the major forms of food for the poor—in a way, it is unfortunate that it is so much a major food—and the particular meanness of this tax is that it is placed on a very cheap form of food which, in its poorest and roughest kind, is wanted not merely by the old age pensioners and the people who are unemployed, but by a very large number of people who are employed by those on the other side of the House at wages that are very little higher, if at all higher, than the amount the men would get if they were on the means test. It is these people who hon. Members opposite say ought to pay this tax.

In a few minutes, I suppose we shall hear the beautiful voice of the Chancellor of the Exchequer uttering those sentences which I can almost repeat before he says them, about how necessary it is that all sections of the community should feel the burden and have the gladness and joy of making some sacrifice for the common cause. And that, said with a few sobs in one's voice, will go down at a Primrose League meeting. It would be no use the Chancellor coming and talking to my women in that way. Their sacrifice for the common cause, a sacrifice which saves your rates and taxes, is bad teeth and badly-nourished bodies. That is their sacrifice to the common cause for the purpose of saving taxation, while you are selling ships to Germany and getting high rates for the things needed for munitions. And then hon. Members opposite talk about sacrifices for the common cause. I say it is a scandal that there should be any taxation placed on the food of the working classes, and no beautiful sentiments, expressed in the beautiful voice which the Chancellor can produce, can justify such a scandal.

6.49 p.m.

Mr. Gallacher

The hon. Member for Colchester (Mr. Lewis) is the authentic voice of the other side of the House. I ask the Chancellor whether he wishes me to accord him any virtues. Does he wish me to bless him as one whose heart is beating with a love of humanity? Does he want me to credit him with unselfishness? No, in speaking as he did, he expressed the greed, selfishness and evil that is represented by the whole side of the House for which the Chancellor of the Exchequer will speak. If there were a tax on sugary language, instead of the nice mellow tones of the courthouse, we should get from the Chancellor the harsh voice of the counting house, as we got it from the hon. Member for Colchester. A tax on sugar is a tax on the poorest of the poor, and the poorer they are the more they will have to pay on this tax, because the poorer they are, the more they have to economise by baking and making jam. In my own home, I remember that when I was a boy, and my mother had been doing a day's work, she came home at night and did all sorts of baking in order to try to provide the family with the necessary and essential food Sugar was a necessary item.

When one goes into the poorer homes and sees how much they have to use sugar to help with baking, jam-making and so on, one is amazed to hear the Chancellor claim that hon. Members on his side of the House have as much sympathy for the poor as we on this side have. None of the hon. Members opposite believes the Chancellor of the Exchequer. The Chancellor is the man who made most wonderful orations on the free breakfast table, and if it had not been for his orations on the free breakfast table, he would not be sitting on that Front Bench now. Always, when we are discussing the question of taxes on the poor, the right hon. Gentleman gets up and says, "But we are putting heavy taxes on the wealthy—Income Tax and Surtax." Hon. Members on this side are not children. They know how to count. They can read the newspapers and the financial journals. I challenge the Chancellor of the Exchequer to deny that the wealth of the wealthy people is increasing. Will anybody deny that, in spite of the Income Tax and the Surtax, the wealth of the wealthy people is increasing? Income Tax and Surtax are a fraud and a deception, for all the time the wealthy people are being left with more than they had before. "But," says the hon. Member for Colchester—the Chancellor is sympathetic, and the hon. Member for Colchester is not, but they both say the same thing—"every body wants to make a contribution." I ask, who builds the ships, who makes the guns, who runs the factories, digs the coal, and carries on transport? Is that not making a contribution? It is almost incredible that hon. Members opposite—loafers who have never contributed one thing to the production of the wealth of the country, who have never contributed to the making of a ship or a gun or the carrying on of transport—

Mr. Speaker

The hon. Member is getting a long way off sugar.

Mr. Gallacher

Thank you, Mr. Speaker. I will introduce a sweeter note. With all the effort that it is possible for me to muster, I do not know whether I could put myself in the position of the Chancellor or some of his friends when, in the courthouse, they make appeals that soften the heart of the judge and get a decision in favour of their clients. Who are the clients of hon. Members on this side of the House? We have the most hard-working and the poorest people in this country. We have the unemployed and the old age pensioners, who after 50 years of service in industry have to live on 10s. a week and who are now to be taxed on sugar as well as on other things. I make an appeal to the Chancellor, on behalf of these old people, on behalf of the mothers who have to care for large families and who have to use so much sugar to maintain their families. I do not know whether the Chancellor of the Exchequer is going to reply to the Debate. If the Chancellor does not give the kind word, then the Financial Secretary to the Treasury will be overflowing with sympathy, but sympathy will not make scones or jam.

Dr. Edith Summerskill

Not without sugar.

Mr. Gallacher

I want to make a special appeal to the Chancellor of the Exchequer. One of my hon. Friends said that it would be a good thing if the right hon. Gentleman the Chancellor of the Exchequer would try to live for a week on 10s. I think it would be better if, instead of going away to some of the country houses at the week-ends, he would spend a week-end with an old age pensioner—I will get him fixed up—or with a widow who has a large family. [Interruption] I am looking at the matter from the point of view of a woman who has a hard and bitter struggle to make ends meet. I wish hon. Members were not so quick in the uptake. I would like to put the right hon. Gentleman in touch with someone who has a hard and bitter struggle to make ends meet, and in the course of that struggle has to use a large amount of sugar. I am certain that if the Chancellor were brought into touch with the old age pensioner, with the widow who has to toil week in and week out in order to bring up a family, if he were brought into touch with the average member of the working class, and realised what sugar means to them and what an extra burden the extra tax will be, he would be prepared to reconsider this tax. If the right hon. Gentleman asserts, as he has done many times, that he is sympathetic by nature—it is very difficult for us to believe that—and if he has a large human feeling for those who are toiling, sorrowing and suffering, then let him show it now. Let him give it some practical expression. Let him not only say that he has sympathy, but show that he has it by withdrawing this tax.

6.59 p.m.

The Financial Secretary to the Treasury (Captain Crookshank)

If I rise to make a few observations on this Amendment, it is not because I want to save my right hon. Friend the Chancellor of the Exchequer from the embarrassment of dealing with the invitation which the hon. Member for West Fife (Mr. Gallacher) has presented him. I think the House ought perhaps to be reminded, particularly after the speech of the hon. Member for West Fife, that although the Debate has been more or less a general Debate on the rates of Sugar Duty and their effect, it is really a discussion of an Amendment to reduce the duty, and not to abolish it. Hon. Members opposite have not put down any such rash Amendment in the present circumstances of our financial situation; they have not suggested that the duties should be taken off altogether. They have merely suggested that the pre-Budget rates should be reduced by exactly the same amount by which the Budget increases them. Perhaps while I am on the subject I might deal with the point raised by the hon. Member for Rothwell (Mr. Lunn). If objection is taken to the difficulty caused by increasing the duties by a farthing, it stands to reason that exactly the same difficulty would arise if the tax was decreased by the same amount.

Mr. Lunn

Does the right hon. and gallant Gentleman regard that as an answer to my question?

Captain Crookshank

Certainly, because the hon. Gentleman is presumably supporting the official Amendment of his party and, if it was carried, it would have the same effect as may or may not be the effect of the increased duty as outlined in the Budget statement. But, of course, the short answer to the criticism that we have heard is to be found in one remark of the hon. Member for North-East Bethnal Green (Mr. Chater), who said that, if the Amendment were carried, it would cost some £8,000,000. That is just what the House is faced with in this proposition. It means that instead of getting the estimated £4,000,000 of extra revenue this year which my right hon. Friend has thought it necessary to ask from this class—which is the totality of taxpayers—you would get £4,000,000 less than on the pre-Budget basis.

But I do not want to leave it at that. The hon. Member for St. Rollox (Mr. Leonard), for example, quoted something which the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) had said about the rate of duty before the War. It is as well to remind ourselves that that was a quarter of a century ago, and a good many things can happen in 25 years. We must also bear in mind that what the State collected in 1913–14 from the total direct and indirect taxes was £163,000,000, and what my right hon. Friend has had to budget for this year from these two sources is £916,000,000. We are now dealing not only with vastly increased demands on the taxpayer, but must consider rates of wages and hundreds of other factors if we are talking about the difference between to-day and 25 years ago.

It was the right hon. Gentleman, with his experience and knowledge of the matter, who launched the larger attack. Other of his hon. Friends have more or less concentrated on the "hardship" aspect of the situation. The hon. Lady who came in at one door, made a speech, and went out at the other door, concentrated on the aspect of "hardship" on the young. The great bulk of the "hardship" speeches have dealt with the "hardships" which, it is anticipated, will fall upon the old, and particularly the old age pensioners. My hon. Friend the Member for Colchester (Mr. Lewis) pinned the question that they raised firmly down when he reminded them that what was under discussion was a tax that was going to be paid by everyone, whether old age pensioners or people in work or youth or anyone else. That is the whole essence of this type of indirect taxation— it falls upon everyone.

As the question of indirect taxation has been raised I would remind the House that, taking into account the proposals of the Budget as it was opened, the ratio between indirect and direct taxes this year is in fact more favourable to the indirect taxpayer, about whom we have been talking all the afternoon, than it was in the bad years of the depression. It would be difficult for anyone making a survey of the general situation to say that the country is in a worse position to-day than it was in the years 1932–33 and 1933–34, but I repeat that the proportion this year is more favourable than it was then for the indirect taxpayer. [An Hon. Member: "Can you give us the ratios?"] Yes, if the hon. Member likes. The percentage of indirect taxation proposed by this year's Budget is 37.5 to 62.5 direct. In 1932–33 it was 39 indirect as compared with 61 direct, and in 1933–34 it was still more unfavourable for the indirect taxpayer—39.7 to 60.3.

Mr. Mainwaring

Does the right hon. and gallant Gentleman consider that all other factors are equal?

Captain Crookshank

I am dealing with one thing at a time. I was dealing with the factor of the direct and indirect taxpayers proportion. The right hon. Gentleman used a most extraordinary argument, repeating what he said last night, to the effect that he had been making some inquiries, and that this tax was bound to be passed on, because most people, while they do not sell sugar at a complete loss, do not make more than a small gross profit, since they use sugar as a catch-penny to attract the customer into the shop. He reminded me of the hon. Member for Silvertown (Mr. Jones), whose absence we all regret, who was always referring in his speeches to a "little bit of sugar for the bird." It seems an extraordinary argument to adduce for the Chancellor of the Exchequer not to increase the duty if for other reasons he thinks it necessary. After all, they need not use sugar for this extraordinary catch-penny system that the right hon. Gentleman has indicated, and whether they do or do not has no relevance to my right hon. Friend's proposal. He decided that sugar should bear this year a further burden, and he reminded us, as I remind the House again, that in the last three years increases of direct taxation have been such as to produce some £75,000,000 per annum, and that increases in indirect taxation during the same period only amount to some £12,000,000 per annum.

I commend the right hon. Gentleman's opening remarks to those who were not here when he opened the Debate, because he told us something about what he considered was likely to be the market trend of sugar prices in the future. He was perhaps performing a useful function in pointing out that, if there is a further rise in price, it will not be due to this tax but to outside causes. He has certainly put it on record that, if there should be any considerable increase, it will not be the fault of this farthing extra tax.

Mr. Alexander

The right hon. and gallant Gentleman cannot get away with it like that. I took the actual figures. I said that the increase in the wholesale price since 1st March last year has been 4s. 3d., of which 2s. 4d. was duty. It is no use for him to try to hide the fact that more than half of the increase is due to the increase of the impost.

Captain Crookshank

The right hon. Gentleman also gave it as his opinion that there was going to be a further rise owing to the rise in the international price of sugar.

Mr. Alexander

And that it was reasonable not to increase the tax at such a time.

Captain Crookshank

That may be the right hon. Gentleman's opinion, but it still remains to be put on record that there are many other important factors which may tend to produce a rise in the price of sugar quite irrespective of this. This, it is admitted, represents a farthing a pound at present, and that would bring the price up to 2¾d., which is a farthing more than what has been the retail price generally since February, 1937. As the result of this the price will go up—assuming that it goes up by the full farthing—to 2¾d., and then it reaches the price at which it was in July, 1929. I think it is just relevant to bear in mind that in July, 1929, the Ministry of Labour cost-of-living index number was 161. At present, with that extra farthing added to the 2½d. which has been the average price since February, 1937. the cost-of-living index figure is 153. Let us bear those figures in mind when considering what this extra burden may involve. I really have nothing more to say except to reinforce the fact that this proposal would lead to a loss to the Budget this year of about £8,000,000. I am sure that, on further reflection, even hon. Members opposite will understand that it is not a proposal which my right hon. Friend could in present circumstances possibly accept, and therefore we must ask hon. Members on this side to support us in rejecting it.

7.14 p.m.

Mr. Ede

I suppose we have all had the experience of going to a theatre expecting to hear one of the great performers on the stage and have found a slip inside the programme to tell us that, owing to some personal misfortune, we shall have to put up with an understudy. I am sure that the right hon. and gallant Gentleman who has just done his best with the Amendment will not feel that I am passing any unduly heavy criticism on him if I say we feel very much the same now, because we had been hoping to hear a repetition of the right hon. Gentleman's speech on sugar, which many of us recall having heard for many years. The right hon. and gallant Gentleman completely failed to deal with the dilemma put to him by my hon. Friend the Member for St. Rollox (Mr. Leonard), a dilemma which the Chancellor of the Exchequer was always very fond of putting on this point. Is sugar a foodstuff or is it a raw material? My hon. Friend the Member for St. Rollox, in the example of jam, gave an instance which the right hon. and gallant Member did not attempt to answer. I do not think that the right hon. Gentleman would have been lured into the mathematics of the problem in the way the right hon. and gallant Member was. He asked us to bear in mind that even if the tax were now 14s. the Budget was £916,000,000, though it is my recollection that the amount we are raising out of taxation is £942,000,000; but a mere difference of £26,000,000—

Captain Crookshank

We may as well get this right. If the hon. Member will look at the last page but one of the Financial Statement, he will see that the total budgeted for from taxes is £916,720,000. The other receipts come from other sources.

Mr. Ede

We will take the taxation alone. In 1913–14 the receipts from taxation were £153,000,000, and to-day they are £916,000,000. That is to say taxation to-day is five and a half times as high as in 1913–14, but this tax, as pointed out by my hon. Friend the Member for Pontypool (Mr. Jenkins), is eight times as big, and therefore it does not seem to me that the right hon. and gallant Member has got us very far by that comparison. It does not justify the figure that is now proposed, and would hardly justify a tax at the level it would be at if this Amendment were accepted.

A point was made by the hon. Member for Colchester (Mr. Lewis) which is continually being put forward from the other side of the House. He said that this was a tax to protect the homes, the liberties and the lives of all members of the community, and that therefore everybody ought to pay. I put again the point which I put in Committee yesterday. Does any one imagine that in any of the countries with which we may unfortunately go to war, there can be any envy of the homes and the lives of the people in the poorest streets of my constituency, where 30 per cent. of the people are still unemployed, or in the adjoining borough of Jarrow, or in the constituencies of my hon. Friends from South Wales? I venture to say that as the principal sufferers in war would clearly be those whose lot is far more pleasant than that of the people of whom I have just been speaking, it is fair that we should protest against this additional burden being placed on those people if

it can be supported by no better argument than those which have been adduced by the right hon. and gallant Member. Many of those people live on so narrow a margin that the last penny is budgeted for and even the most trifling alteration in the price of foodstuffs leads to some alteration of the weekly budget, to such an alteration in the whole planning of the lives of those people as entails great hardship. I sincerely hope that my right hon. Friend the Member for Hillsborough (Mr. Alexander) will not be content with the rejection of his plea by the right hon. and gallant Member but will take this Amendment to a Division. I notice that the right hon. and gallant Member obviously felt that his arguments had been singularly lacking in conviction, because in his last sentence he made no appeal to the House as a whole. All he said was that he would rely on his party whips to get Members into the Lobby to support him, and we on this side of the House view with the greatest regret the attitude of the Government to the Amendment.

Question put, "That' 14s. 0d.' stand part of the Resolution."

The House divided: Ayes, 218; Noes, 140.

Division No. 88.] AYES. [7.21 p.m.
Acland-Troyte, Lt.-Col. G J. Chamberlain, Rt. Hn. N. (Edgb't'n) Fremantle, Sir F. E.
Adams S. V. T. (Leeds, W.) Channon, H. Furness, S, N.
Agnew, Lieut.-Comdr, P. G. Chapman, A. (Rutherglen) Fyfe, D. P. M.
Albery, Sir Irving Christie, J. A. Gower, Sir R. V.
Allen, Lt.-Col. Sir W. J. (Armagh) Clarke, Colonel R. S. (E. Grinstead) Grattan-Doyle, Sir N.
Anderson, Sir A. Garrett (C. of Ldn.) Colfox, Major W. P. Gretten, Col. Rt. Hon. J.
Anstruther-Gray, W. J. Colville, Rt. Hon. John Gridley, Sir A. B.
Apsley, Lord Conant, Captain R. J. E. Grimston, R. V.
Assheton, R. Cook, Sir T. R. A. M. (Norfolk N.) Gritten, W. G. Howard
Astor, Hon. W. W. (Fulham, E.) Cooke, J. D. (Hammersmith. S.) Guest, Maj. Hon. O. (C'mb'rw'll, N. W.)
Baillie, Sir A. W. M. Cooper, Rt. Hn. A. Duff (W'st'r S, G'gs) Gunston, Capt. Sir D. W.
Balfour, G. (Hampstead) Cooper, Rt. Hn. T. M. (E'nburgh, W.) Hambro, A. V.
Balfour, Capt. H. H. (Isle of Thanet) Craven-Ellis, W. Hammersley, S. S.
Beauchamp, Sir B. C. Crooke, Sir J. Smedley Hannon, Sir P. J. H.
Beechman, N. A. Crookshank, Capt. Rt. Hon. H. F. C. Harbord, A.
Bennett, Sir E. N. Cross, R. H. Haslam, Henry (Horncastle)
Bernays, R. H. Crossley, A. C. Heilgers, Captain F. F. A.
Blair, Sir R. Crowder, J. F. E. Hely-Hutchinson, M. R.
Boulton, W. W. Cruddas, Col. B. Heneage, Lieut.-Colonel A. P.
Bower, Comdr. R, T. Davidson, Viscountess Hepburn, P. G. T. Buchan-
Bracken, B. De la Baèe, R. Hepworth, J.
Braithwaite, J. Gurney (Holderness) Denman, Hon. R. D. Herbert, Lt.-Col. J. A. (Monmouth)
Brass, Sir W. Despencer-Robertson, Major J. A. F. Hogg, Hon. Q. McG.
Briscoe, Capt. R. G. Doland, G. F. Hopkinson, A.
Brocklebank, Sir Edmund Donner, P. W. Hudson, Capt. A. U. M. (Hack., N.)
Brown, Rt. Hon. E. (Leith) Duckworth, Arthur (Shrewsbury) Hulbert, Squadron-Leader N. J.
Brown, Brig-Gen. H. C (Newbury) Dugdale, Captain T. L. Hunloke, H. P
Browne, A. C. (Belfast, W.) Eastwood, J. F, Hunter, T.
Burghley, Lord Edmondson, Major Sir J. James, Wing-Commander A. W. H.
Burton, Col. H. W. Emmott, C. E. G. C. Jones, Sir G. W. H. (S'k N'w'gt'n)
Butcher, H. W. Emrys-Evans, P. V. Jones, L. (Swansea W.)
Carver, Major W. H. Entwistle, Sir C. F. Keeling, E. H.
Cary, R. A. Everard, Sir William Lindsay Kerr, Colonel C. I. (Montrose)
Cayzer, Sir C. W. (City of Chaster) Findlay, Sir E. Kerr, J. Graham (Scottish Univs.)
Cayzer, Sir H. R. (Portsmouth, S.) Fleming, E. L. Keyes, Admiral of the Fleet Sir R.
Cazalet, Thelma (Islington, E.) Fox, Sir G. W. G. Kimball, L.
Knox, Major-General Sir A. W. F. O'Connor, Sir Terence J. Storey, S.
Lamb, Sir J. Q. O'Neill, Rt. Hon. Sir Hugh Stourton, Major Hon. J. J.
Law, R. K. (Hull, S.W.) Orr-Ewing, I. L. Strauss, H. G. (Norwich)
Leighton, Major B. E. P. Peat, C. U. Strickland, Captain W. F.
Levy, T. Peters, Dr. S. Stuart, Hon. J. (Moray and Nairn)
Lewis, O. Petherick, M. Sueter, Rear-Admiral Sir M F.
Liddall, W. S. Pickthorn, K. W. M. Sutcliffe, H.
Lindsay, K. M. Ponsonby, Col. C. E. Tasker, Sir R. I.
Lipton, D. L. Radford, E. A. Tate, Mavis C.
Little, Sir E. Graham- Raikes, H. V. A. M. Taylor, Vice-Adm. E. A. (Padd., S.)
Loftus, P. C. Ramsbotham, H. Thorneycroft, G. E. P.
Lyons, A. M. Rathbone, J. R. (Bodmin) Thornton-Kemsley, C. N.
Mabane, W. (Huddersfield) Reed, A. C. (Exeter) Titchfield, Marquess of
M'Connell, Sir J. Reed, Sir H. S. (Aylesbury) Touche, G. C.
Macdonald, Capt. P. (Isle of Wight) Raid, J. S. C. (Hillhead) Train, Sir J.
McEwen, Capt. J. H, F. Reid, W. Allan (Derby) Tryon, Major Rt. Hon. G. C.
Maclay, Hon. J. P. Remer, J. R. Wakefield, W. W.
Macmillan, H. (Stockton-on-Tees) Robinson, J. R. (Blackpool) Wallace, Capt. Rt. Hon. Euan
Macquisten, F. A. Ropner, Colonel L. Ward, Lieut.-Col. Sir A. L. (Hull)
Magnay, T. Ross, Major Sir R. D. (Londonderry) Ward, Irene M. B. (Wallsend)
Maitland, Sir Adam Ross Taylor, W. (Woodbridge) Wardlaw-Milne, Sir J. S.
Makins, Brigadier-General Sir Ernest Rowlands, G. Warrender, Sir V.
Manningham-Buller, Sir M, Royds, Admiral Sir P. M. R. Waterhouse, Captain C.
Margesson, Capt. Rt. Hon. H. D. R. Ruggles-Brise, Colonel Sir E. A. Wayland, Sir W. A.
Markham, S. F. Salmon, Sir I. Wedderburn, H. J. S.
Mason, Lt.-Col. Hon. G. K. M. Salt, E. W. Wells, Sir Sydney
Mayhew, Lt.-Col. J. Sandeman, Sir N. S. Whiteley, Major J. P. (Buckingham)
Mellor, Sir R. J. (Mitcham) Simon, Rt. Hon. Sir J. A. Wickham, Lt.-Col. E. T. R.
Mellor, Sir J. S. P. (Tamworth) Smiles, Lieut.-Colonel Sir W. D. Williams, C. (Torquay)
Mills, Major J. D. (New Forest) Smith, Bracewell (Dulwich) Williams, H. G. (Croydon, S.)
Mitcheson, Sir G. G. Smith, Sir R. W. (Aberdeen) Womersley, Sir W. J.
Morris, O. T. (Cardiff, E.) Smithers, Sir W. Wood, Hon. C. I. C.
Morris-Jones, Sir Henry Snadden, W. McN Wright, Wing-Commander J. A. C.
Morrison, G. A. (Scottish Univ's.) Somervell, Rt. Hon. Sir Donald Young, A. S. L. (Partick)
Morrison, Rt. Hon. W. S. (Cirencester) Somerville, A. A. (Windsor)
Neven-Spence, Major B. H. H. Spears, Brigadier-General E.L. TELLERS FOR THE AYES.—
Nicholson, G. (Farnham) Stanley, Rt. Hon. Oliver (W'm'ld) Mr. Munro and Lieut.-Colonel Harvie Watt.
Nicolson, Hon. H. G. Stewart, J. Henderson (Fife, E,)
Adams, D. (Consett) Green, W. H. (Deptford) Montague, F.
Adams, D. M. (Poplar, S.) Greenwood, Rt. Hon. A. Morgan, J. (York, W.R., Doncaster)
Adamson, Jennie L. (Dartford) Grenfell, D. R. Morrison, R. C. (Tottenham, N.)
Alexander, Rt. Hon. A. V. (H'lsbr.) Griffiths, G. A. (Hemsworth) Muff, G.
Ammon, C. G. Groves, T. E. Nathan, Colonel H. L.
Attlee, Rt. Hon. C. R. Guest, Dr. L. H. (Islington, N.) Naylor, T. E.
Banfield, J. W. Hall, G. H. (Aberdare) Noel-Baker, P. J.
Barnes, A. J. Hall, J. H. (Whitechapel) Oliver, G. H.
Barr, J. Hardie, Agnes Paling, W.
Bartlett, G. V. O. Harris, Sir P. A. Parker, J.
Beaumont, H. (Batley) Harvey, T. E. (Eng, Univ's.) Parkinson, J. A.
Benn, Rt. Hon. W. W. Hayday, A. Pearson, A.
Bevan, A. Henderson, A. (Kingswinford) Pethick-Lawrence, Rt. Hon. F. W.
Bromfield, W. Henderson, J. (Ardwick) Price, M. P.
Brown, C. (Mansfield) Hills, A. (Pontefract) Pritt, D. N.
Buchanan, G. Jagger, J Quibell, D. J. K.
Burke, W. A. Jenkins, A. (Pontypool) Richards, R. (Wrexham)
Cape, T. Jenkins, Sir W. (Neath) Riley, B.
Charleton, H. C. Johnston, Rt. Hon. T. Ritson, J.
Chater, D Jones, A. C. (Shipley) Roberts, W. (Cumberland, N.)
Cluse, W. S. Kennedy, Rt. Hon. T. Rothschild, J. A. de
Cocks, F. S. Kirkwood, D. Seely, Sir H. M.
Collindridge, F. Lansbury, Rt. Hon. G. Sexton, T. M.
Cove, W. G. Lathan, G. Shinwell, E.
Daggar, G. Lawson, J. J. Silkin, L.
Dalton, H. Leach, W. Silverman, S. S.
Davies, R. J. (Westhoughton) Leonard, W. Simpson, F. B.
Davies, S. Q. (Merthyr) Leslie, J. R. Sinclair, Rt. Hon. Sir A. (C'thn's)
Day, H. Logan, D. G. Sloan, A.
Dobbie, W. Lunn, W. Smith, Ben (Rotherhithe)
Dunn, E. (Rother Valley) Macdonald, G. (Ince) Smith, E. (Stoke)
Ede, J. C. McEntee, V. La T. Smith, T. (Normanton)
Edwards, A. (Middlesbrough E.) McGhee, H. G. Stephen, C.
Edwards, Sir C. (Bedwellty) McGovern, J. Stewart, W. J. (H'ght'n-le-Sp'ng)
Fletcher, Lt.-Comdr. R. T. H. MacLaren, A. Stokes, R. R.
Fool, D. M. Maclean, N. Summerskill, Dr. Edith
Frankel, D. Mainwaring, W. H. Taylor, R. J. (Morpeth)
Gallacher, W. Mander, G. le M. Thorne, W.
Gardner, B. W. Marshall, F. Tinker, J. J.
Garro Jones, G. M. Mathers, G. Viant, S. P.
George, Major G. Lloyd (Pembroke) Maxton, J. Walkden, A. G.
George, Megan Lloyd (Anglesey) Messer, F. Walker, J.
Gibson, R. (Greenock) Milner, Major J. Watkins, F. C.
Watson, W. McL. Williams, E. J. (Ogmore) Young, Sir R. (Newton)
Welsh, J. C. Williams, T. (Don Valley)
Westwood, J. Wilson, C. H. (Attercliffe) TELLERS FOR THE NOES.—
Whiteley, W. (Blaydon) Windsor, W. (Hull, C.) Mr. Adamson and Mr. Anderson.
Wilkinson, Ellen Woods, G. S. (Finsbury)

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

The House divided: Ayes, 214; Noes, 140.

Division No. 89.] AYES. [7.31 p.m.
Acland-Troyte, Lt.-Col. G. J. Fyfe, D. P. M. Peters, Dr. S. J.
Adams, S. V. T. (Leeds, W.) Gower, Sir R. V. Petherick, M.
Agnew, Lieut.-Comdr. P. G. Grattan-Doyle, Sir N. Pickthorn, K. W. M.
Albery, Sir Irving Gridley, Sir A. B. Ponsonby, Col. C. E.
Allen, Lt.-Col. Sir W. J. (Armagh) Grimston, R. V. Radford, E. A.
Anderson, Sir A. Garrett (C. of Ldn.) Gritten, W. G. Howard Raikes, H. V. A. M.
Anstruther-Gray, W. J. Guest, Maj. Hon. O. (C'mb'rw'll, N. W.) Ramsbotham, H.
Apsley, Lord Gunston, Capt. Sir D. W. Rathbone, J. R. (Bodmin)
Assheton, R. Hambro, A. V. Read, A. C. (Exeter)
Astor, Hon. W. W. (Fulham, E.) Hammersley, S. S. Reed, Sir H. S. (Aylesbury)
Baillie, Sir A. W. M. Hannon, Sir P. J. H. Reid, J. S. D. (Hillhead)
Balfour, G. (Hampstead) Harbord, A. Reid, W. Allan (Derby)
Balfour, Capt. H. H. (Isle of Thanet) Haslam, Henry (Horncastle) Remer, J. R.
Beauchamp, Sir B. C. Heilgers, Captain F. F. A. Robinson, J. R. (Blackpool)
Beechman, N. A. Hely-Hutchinson, M. R. Ropner, Colonel L.
Bennett, Sir E. N. Heneage, Lieut.-Colonel A. P. Ross, Major Sir R, D. (Londonderry)
Bernays, R. H. Hepburn, P. G. T. Buchan- Ross Taylor, W. (Woodbridge)
Blair, Sir R. Hepworth, J. Rowlands, G.
Boulton, W. W. Hogg, Hon. Q. McG. Royds, Admiral Sir P. M. R.
Bower, Comdr. R. T. Hopkinson, A. Ruggles-Brise, Colonel Sir E. A.
Bracken, B. Hudson, Capt. A. U. M. (Hack., N.) Salmon, Sir I.
Braithwaite, J. Gurney (Holderness) Hulbert, Squadron-Leader N. J. Salt, E. W.
Brass, Sir W. Hunloke, H. P. Sandeman, Sir N. S.
Briscoe, Capt. R. G. Hunter, T. Simon, Rt. Hon. Sir J. A
Brocklebank, Sir Edmund James, Wing-Commander A. W. H. Smiles, Lieut.-Colonel Sir W. D.
Brown, Rt. Hon. E. (Leith) Jones, Sir G. W. H. (S'k N'w'gt'n) Smith, Bracewell (Dulwich)
Brown, Brig.-Gen. H. C. (Newbury) Jones, L. (Swansea W.) Smith, Sir R. W. (Aberdeen)
Browne, A. C. (Belfast, W.) Keeling, E. H. Smithers, Sir W.
Burghley, Lord Kerr, Colonel C. I. (Montrose) Snadden, W. McN.
Burton, Col. H. W. Kerr, J. Graham (Scottish Univs.) Somervell, Rt. Hon. Sir Donald
Butcher, H. W. Keyes, Admiral of the Fleet Sir R. Somerville, A. A. (Windsor)
Carver, Major W. H. Kimball, L. Spears, Brigadier-General E. L.
Cary, R. A. Knox, Major-General Sir A. W. F. Stanley, Rt. Hon. Oliver (W'm'l'd)
Cayzer, Sir C. W. (City of Chester) Lamb, Sir J. Q. Stewart, J. Henderson (Fife, E.)
Cayzer, Sir H. R. (Portsmouth, S.) Law, R. K. (Hull, S.W.) Storey, S.
Cazalet, Thelma (Islington, E.) Leighton, Major B. E. P. Stourton, Major Hon. J. J.
Channon, H. Levy, T. Strains, H. G. (Norwich)
Chapman, A. (Rutherglen) Lewis, O. Strickland, Captain W. F.
Christie, J. A. Liddall, W. S. Stuart, Hon. J. (Moray and Nairn)
Clarke, Colonel R. S. (E. Grinstead) Lipson, D. L. Sueter, Rear-Admiral Sir M. F.
Colfox, Major W. P. Little, Sir E. Graham- Sutcliffe, H.
Colville, Rt. Hon. John Loftus, P. C. Tasker, Sir R. I.
Conant, Captain R. J. E. Lyons, A. M. Tate, Mavis C.
Cook, Sir T. R. A. M. (Norfolk, N.) Mabane, W. (Huddersfield) Taylor, Vice-Adm. E. A. (Padd., S.)
Cooke, J. D. (Hammersmith, S.) M'Connell, Sir J. Thorneycroft, G. E. P.
Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs) Macdonald, Capt. P. (Isle of Wight) Thornton-Kemsley, C. N.
Cooper, Rt. Hn. T. M. (E'nburgh, W.) McEwen, Capt. J. H. F. Titchfield, Marquess of
Craven-Ellis, W. Maclay, Hon. J. P. Touche, G. C.
Crooks, Sir J. Smedley Macmillan, H. (Stockton-on-Teas) Train, Sir J.
Crookshank, Capt. Rt. Hon. H. F. C. Macquisten, F. A. Tryon, Major Rt. Hon. G. C.
Cross, R. H. Magnay, T. Wakefield, W. W.
Crossley, A. C. Maitland, Sir Adam Wallace, Capt. Rt. Hon. Euan
Crowder, J. F. E. Makins, Brigadier-General Sir Ernest Ward, Lieut.-Col. Sir A. L. (Hull)
Cruddas, Col. B. Manningham-Buller, Sir M. Ward, Irene M. B. (Wallsend)
Davidson, Viscountess Margesson, Capt. Rt. Hon. H, D. R. Wardlaw-Milne, Sir J. S.
De la Bère, R. Markham, S. F. Warrender, Sir V.
Denman, Hon. R. D Mason, Lt.-Col. Hon. G. K. M. Waterhouse, Captain C.
Despencer-Robertson, Major J. A. F. Mayhew, Lt.-Col. J. Watt, Lt.-Col. G. S. Harvie
Doland, G. F Meller, Sir R. J. (Mitcham) Wayland, Sir W. A.
Donner, P. W. Mellor, Sir J. S. P. (Tamworth) Wedderburn, H. J. S.
Duckworth, Arthur (Shrewsbury) Mills, Major J. D. (New Forest) Whiteley, Major J. P. (Buckingham)
Dugdale, Captain T. L. Mitcheson, Sir G. G. Wickham, Lt.-Col. E. T. R.
Eastwood, J. F. Morris-Jones, Sir Henry Williams, C. (Torquay)
Edmondson, Major Sir J. Morrison, G. A. (Scottish Univ's.) Williams, H. G. (Croydon, S.)
Emmott, C. E. G. C. Morrison, Rt. Hon. W. S. (Cirencester) Womersley, Sir W. J.
Emrys-Evans, P. V. Nail, Sir J. Wood, Hon. C. I. C.
Entwistle, Sir C. F. Neven-Spence, Major B. H. H. Wright, Wing-Commander J. A. C.
Everard, Sir William Lindsay Nicholson, G. (Farnham) Young, A. S. L. (Partick)
Findlay, Sir E. Nicolson, Hon. H. G.
Fleming, E. L. O'Connor, Sir Terence J. TELLERS FOR THE AYES.—
Fox, Sir G. W. G. O'Neill, Rt. Hon. Sir Hugh Mr. Munro and Lieut.-Colonel Herbert.
Fremantle, Sir F. E. Orr-Ewing, I. L.
Furness, S. N. Peat, C. U.
Adams, D. (Cornett) Griffiths, G. A. (Hemsworth) Parker, J.
Adams, D. M. (Poplar, S.) Guest, Dr. L. H. (Islington, N.) Parkinson, J. A.
Adamson, Jennie L. (Dartford) Hall, G. H. (Aberdare) Pearson, A.
Adamson, W. M. Hall, J. H. (Whitechapel) Pethick-Lawrence, Rt. Hon. F. W.
Ammon, C. G. Hardie, Agnes Price, M. P.
Anderson, F. (Whitehaven) Harris, Sir P. A. Pritt, D. N.
Attlee, Rt. Hon. C. R. Harvey, T. E. (Eng. Univ's.) Quibell, D. J. K.
Banfield, J. W. Hayday, A. Richards, R. (Wrexham)
Barnes, A. J. Henderson, A. (Kingswinford) Ritson, J.
Barr, J. Henderson, J. (Ardwick) Roberts, W. (Cumberland, N.)
Bartlett, C. V. O. Hills, A. (Pontefrast) Rothschild, J. A. de
Batey, J. Jagger, J. Seely, Sir H. M.
Beaumont, H. (Batley) Jenkins, A, (Pontypool) Sexton, T. M.
Benn, Rt. Hon. W. W. Jenkins, Sir W. (Neath) Shinwell, E.
Bevan, A. Johnston, Rt. Hon. T. Silkin, L.
Bromfield, W. Jones, A. C. (Shipley) Silverman, S. S.
Brawn, C. (Mansfield) Kennedy, Rt. Hon. T. Simpson, F. B.
Buchanan, G. Kirkwood, D. Sinclair, Rt. Hon. Sir A. (C'thn's)
Burke, W. A. Lansbury, Rt. Hon. G. Sloan, A.
Cape, T. Lathan, G. Smith, Ben (Rotherhithe)
Charleton, H. C. Lawson, J. J. Smith, E. (Stoke)
Chater, D. Leach, W. Smith, T. (Normanton)
Cluse, W. S. Leonard, W. Stephen, C.
Cocks, F. S. Leslie, J. R. Stewart, W. J. (H'ght'n-le-Sp'ng)
Collindridge, F. Logan, D. G. Stokes, R. R.
Cove, W. G. Lunn, W. Summerskill, Dr. Edith
Daggar, G. Macdonald, G. (Ince) Taylor, R. J. (Morpeth)
Dalton, H. McEntee, V. La T. Thorne, W.
Davies, R. J. (Westhoughton) McGhee, H. G. Tinker, J. J.
Davies, S. O. (Merthyr) McGovern, J. Viant, S. P.
Day, H. MacLaren, A. Walkden, A. G.
Dobbie, W. Maclean, N. Walker, J.
Dunn, E. (Rother Valley) Mainwaring, W. H. Watkins, F. C.
Ede, J. C. Mander, G. la M. Watson, W. McL.
Edwards, A. (Middlesbrough E.) Marshall, F. Welsh, J. C.
Edwards, Sir C. (Bedwellty) Maxton, J. Westwood, J.
Fletcher, Lt.-Comdr. R. T. H. Messer, F. Whiteley, W. (Blaydon)
Fool, D. M. Milner, Major J. Wilkinson, Ellen
Frankel, D. Montague, F. Williams, E. J. (Ogmore)
Gallacher, W. Morgan, J. (York, W.R., Doncaster) Williams, T. (Don Valley)
Gardner, B. W. Morrison, R. C. (Tottenham, N.) Wilson, C. H. (Attercliffe)
Garro Jones, G. M. Mull, G. Windsor, W. (Hull, C.)
George, Megan Lloyd (Anglesey) Nathan, Colonel H. L. Woods, G. S. (Finsbury)
Gibson, R. (Greenock) Naylor, T. E, Young, Sir R. (Newton)
Green, W. H. (Deptford) Noel-Baker, P. J.
Greenwood, Rt. Hon. A. Oliver, G. H. TELLERS FOR THE NOES.—
Grenfell, D. R. Paling, W. Mr. Mathers and Mr. Groves.

Fifteenth Resolution read a Second time.

7.39 p.m.

Mr. T. Williams

I beg to move, in line 5, to leave out "fourpence halfpenny" and to insert "one penny."

I do so to enable the Chancellor of the Exchequer to clarify what it a difficult problem to many people in the film industry. Particularly do I want to ask the right hon. Gentleman to clarify the situation with regard to the rebate on wastage referred to by him in his Budget speech. The right hon. Gentleman has accomplished many feats in his time, but he accomplished almost a miracle a week ago to-day, for whereas the right hon. Gentleman the President of the Board of Trade and all his predecessors for about 10 years have been trying to produce unity within the film industry, and have failed, the Chancellor accomplished that feat in about two minutes in his speech and apparently the industry is now united in opposition to these proposals of the right hon. Gentleman. At first sight, it may be that there is a good deal of misunderstanding with regard to these proposals and that their effect will not be nearly so disastrous as some of those within the industry seem to imagine, but there is genuine apprehension in certain quarters, and I hope the right hon. Gentleman will be able to relieve the tension and to satisfy those who may be adversely affected that the position is not nearly so bad as they imagine at the moment.

The first question that I want to put to the right hon. Gentleman is with regard to wastage, and I want him to give a categorical reply concerning film that is wastage in the production, for I under stand that it is not at all unusual, in the production of a 5,000 feet film, for 4,000 feet to be wasted before the final product is turned out. If we take a 5,000 feet film and some four-fifths of the mute and sound track are wasted, that will involve the producers a considerable loss unless for the whole of that waste, rebate is available. We understand from the appropriate Department that their calculation of the Minister's proposals is that for 1,000 feet of 35 millimetre film, the Excise Duty will be about £2 3s., while in the production of the finished article one requires a triplicate film—mute, sound, and married—which would increase the £2 3s. to £6 9s. for the final article. If 4,000 of the 5,000 feet of film used was waste, that would involve the producer in a loss, for Excise Duty alone, of no less than £25 16s., whereas on a 1,000 feet film, as the President of the Board of Trade knows, that can be anywhere from 2½ per cent. to 5 per cent. of the total cost of that particular film. If the right hon. Gentleman will tell the House that on all the waste involved in the production of either small, short, documentary films, or news reel or feature films, a rebate will be allowed for, I am sure he will relieve the anxiety within the industry.

Then I want to submit to the Chancellor that while the circumstances of the moment may be abnormal and revenue must be obtained from some source, it seems to be absurd that the documentary film, or the short film, or the educational film, belauded so much by the President of the Board of Trade when the Film Bill was passing through this House, the very thing we were all anxious to encourage, should now suffer this disability which falls upon it through the Excise Duty. As I explained just now, the documentary film is usually round about 1,000 feet long, and the Excise Duty on the first 1,000 feet—that is, the negative— would be £6 9s., but as each copy would cost £2 3s., and approximately 20 copies would be required of these documentary films for exhibition North, South, East and West, the total cost for increased copies beyond the negative, for Excise Duty alone, would be approximately £43. I understand that a documentary film might cost £1 a foot or it might be 10s. a foot, according to the subject and according to the good fortune of the producer. An Excise of £43 on a 1,000 foot film may be 5 per cent. or even more of the total cost of what we all regard as an educational feature. I do not think that this is the time when we ought to be imposing further burdens on that phase of the film industry, which is struggling very hard to hold its own and which, I believe, has been justifying itself in the past year or two.

The feature film is a different proposition. Here the Excise Duty on a 7,000 foot film would be £45 3s., and if 20 prints of the feature film were produced it would involve the British producer in an excess cost for Excise Duty alone of somewhere about £346. Spread over a film that cost £7,500, or £15,000, or £22,000, £346 may not appear a very large sum; it may not mean the difference between the continuation of the production of the British film, or not, but, as the President of the Board of Trade in particular must know, the British film industry is struggling for its very life at this moment, and it seems extremely difficult to justify imposing further burdens, especially at a moment when we have 80 per cent. of the cine-technicians unemployed.

I do not want to go into the figures of film production, we passed through that phase in 1938, but it is certainly relevant to the subject to tell the Chancellor of the Exchequer that he should have made meticulous inquiry before he indulged in this form of taxation, so that he might know exactly what would be the effect upon the production of British films. We learn that two years ago the output of British films was 270, but in the last year for which figures are available, the number was approximately 90. The independent companies are struggling to hold their own in very difficult circumstances. I do not want to exaggerate the danger to the industry, but I do want to say that while the President of the Board of Trade was trying to encourage the production of British films this increased duty seems to me to be a form of discouragement, of which we do not quite see what the ultimate effect will be. The President of the Board of Trade recently negotiated an agreement with America. It is well known that of the films shown in this country, 90 per cent. approximately are American, and in order to fulfil the British quota they have to put £2,000,000 of their money into the production of films in this country. Again, I would say that on a £50,000, £60,000 or £80,000 film. £346 more for Excise Duty will not make the difference between profit and loss, or make the difference between production or going out of production, but it will not improve the relationship with the importing country.

A most important feature—and I want the right hon. Gentleman to give us the benefit of his general knowledge on this point—is connected with the news reels. I am credibly informed by those responsible for producing news reels that if the Excise Duty remains as is suggested by the Chancellor of the Exchequer, there will be no more news reels in this country. The news reel has become not only a part of every programme but a very welcome part of it. As a political partisan, in view of the propaganda that the cinemas have been giving to the present Government, I should say: "Away with the news reels," and I think the right hon. Gentleman would be doing us a good turn in that way, but, as the President of the Board of Trade said, the news reel has answered well in the past, and some news reels are the best part in our cinema shows. We all know that not only has the news reel been a good agent for propaganda for the Navy, the Army, Royalty, the opening of hospitals, the laying of foundation stones, etc., but it has formed a pure British propaganda, and I am bound to confess that if the fears told to me are real, then the Chancellor of the Exchequer ought to reconsider the Excise Duty, particularly as it affects the production of news reels.

What are the figures as we see them? If a news reel is 1,000 feet, on the first copy £6 9s. will be paid in Excise Duty, but instead of printing some 20 copies of the news reel, as they might do of the documentary or the feature film, they will print many more. There are only five companies producing news reels for exhibition in this country, and there are 5,500 cinemas. A news reel must be used, and it must not be stale. You cannot show a month or two months hence a news reel taken this week. If they attempted to do that, it would no longer be news. Instead of 20 copies of this 1,000 feet news reel, approximately 1,000 copies would be required, and as each copy would cost in Excise Duty alone £2 3s., that would involve the producers in an Excise cost for duty alone of something over £2,000. I am informed that this Excise Duty will actually not only dispose of any profit that otherwise might have been made, but it is so heavy a burden that the new news reel producers cannot hope to carry on.

I am not sure whether the right hon. Gentleman studied this question before he produced this proposal last week. If he did study the question before he made the proposal, then I imagine he must have made up his mind to do one of two things. If the question was studied as meticulously as it should have been, and the cost involved to the producing companies was clearly understood, the right hon. Gentleman must have had in his mind the feeling that some exception should be made as far as news reel producers are concerned. If that was not in the mind of the Chancellor of the Exchequer, then, quite clearly, he must have had a second thing in his mind, which meant one of two other things, either that the exhibitor exhibiting news reels would have to pay far larger sums than he pays to-day, or alternatively no more news reels would be produced.

I hope that I have been clear enough for the right hon. Gentleman to get some idea of the points I want to submit to him. First, I hope he will clear up the position, for there is anxiety within the industry, and state categorically that when he said a rebate would be available for wastage, he meant that the rebate would be available for all wastage involved in the production of the finished article ready for the screen. Secondly, I would ask whether he feels it to be his duty to insist upon imposing a burden upon those who produce documentary or educational films, since a very small margin may mean the difference between profit and loss. If there is one film that we desire more than all else in this country it is the kind of film which shows our industries, our social life, our general social development, our incomparable countryside and the things that mean so much to the British people. Finally, I would ask whether as regards the news reels he feels that he can afford to do anything that may contribute towards putting that kind of film out of production. On the reply given by the right hon. Gentleman we shall decide whether or not we ought to vote for a reduction from4½d. to 1d. per foot, which at least would not impose the burden upon this hard-pressed industry that the proposal of the right hon. Gentleman does.

7.58 p.m.

Mr. Leonard

The examination directed to this matter by my hon. Friend the Member for the Don Valley (Mr. T. Williams) is sufficient for my purpose; but I would plead with the Chancellor of the Exchequer that he should very seriously reconsider his intentions. He will recollect that this House, or many Members of it, spent a considerable time examining the position of the cinema industry in Great Britain not long ago. The industry was deemed to be of such importance that a Statutory Committee was set up for the purpose of examining matters for the guidance of the Board of Trade. That special Committee consists of 21 members, 11 of whom are independent, and represent various sections in this House. Speaking as one of the 11 independent Members, I would impress upon the right hon. Gentleman the fact that the whole of the Committee are seized with the great difficulty of the British production units, and they feel that nothing should be done to weaken their position. Therefore, the Chancellor of the Exchequer ought to pay some attention to that point. The right hon. Gentleman will bear in mind that the quota film to rank for the British quota is fixed on a financial basis. A financial formula is the form for determining the quota. It would not be good for the industry that of the financial requirements a considerable portion of the money was required for taxation. Because of that rather simple but important point, I trust the right hon. Gentleman will reconsider the matter.

8.0 p.m.

Colonel Baldwin-Webb

I followed closely the remarks of the hon. Member for Don Valley (Mr. T. Williams), whose interest in and knowledge of the film industry are so well-known, and I strongly support the view which he has expressed. I hope the Chancellor of the Exchequer will see his way to meet the request which has been made in regard to educational films and news pictures. We do not wish to do anything which would restrict that side of production in this country. Furthermore, I understand that the proposals, as they stand, would seriously affect the continued production at home of coloured pictures, both educational pictures and others. I hope that the Chancellor of the Exchequer will collaborate with the President of the Board of Trade in giving consideration to this very important question and will recognise the importance of doing all we can to encourage the production at home of films of educational value, not only for exhibition at home but also for exhibition overseas, in exactly the same way as we should encourage the production in this country of bigger and better news reels.

8.2 p.m.

Sir J. Simons

The hon. Member for Don Valley (Mr. T. Williams), not for the first time, has dealt with this necessarily rather complicated subject in a manner which I am sure has gained general acceptance in the House and I am much obliged to him for having stated his points so clearly and precisely. He manifestly and rightly, was well prepared to put those points before the House accompanied by figures and calculations in which he will not expect me to follow him here and now. I will examine with my advisers what he has said, but I think it would be useful, at this stage, to make a short statement, even though it should be of a rather more general character than the hon. Member's speech. I am confident that I can go a long way towards satisfying my hon. and gallant Friend the Member for The Wrekin (Colonel Baldwin-Webb) on some, at any rate of the anxieties which he has expressed. I may mention that the hon. Lady the Member for Jarrow (Miss Wilkinson) has also put in a manuscript Amendment to which I shall refer later.

First, let me say that it is necessary for us to get a view of the scheme of these duties, all taken together, and I propose to say something about that, while not forgetting that there are special questions of wastage, of educational films, and of news reels, which I must mention separately. Though this proposal is one for which I am responsible, it has only been put forward after a great deal of consideration, during which my right hon. Friend the President of the Board of Trade has been brought into consultation. I think it will be found that, in principle, the proposal is a good one, though I am willing to admit that, as is often the case with new taxes which are complicated and rather technical, it may be necessary to consider proposals for adjustments on certain points some of which will have occurred to hon. Members already. What one has to bear in mind is that the scheme involves an Excise Duty on the manufacture in this country of blank film and a Customs Duty on imported blank film and imported picture film. There is no Excise Duty on a British picture as such, although the blank film used for making the picture is subject to an Excise Duty.

This brings me to some remarks about the question of wastage. I do not think that I was obscure upon that point in my Budget speech. I meant exactly what I said then, and I think it was accurately phrased. Perhaps it took the cinema industry by surprise, and I agree that it goes much further than one usually goes when making any sort of rebate or allowance for wastage. But I repeat that I meant exactly what I said, namely, that under suitable conditions we propose to give back the whole of the Excise Duty in respect of film in this country which is wasted. I do not speak with the knowledge of some hon. Members opposite, but I am aware that in the making of a picture in this country there is a large amount of film which, for one reason or other, is not ultimately used. It may be spoiled or there may be some other reason for not using it. I do not profess to use technical language, but I am stating the matter as clearly as I can. What I mean is that there may be thousands of feet of blank film which has paid Excise Duty. I propose that so far as it is shown to be wasted in production, we should pay back not a part but the whole of the Excise Duty on the amount of that wastage.

I hope I have made that plain and I am glad to have had this opportunity of doing so. I know something of the difficulties of the industry from the limited opportunities which I have had of seeing its working in Wardour Street or in the studios, and I know that there is constantly an immense amount of waste which is not represented fruitfully in earning power. I think it would be intolerable to charge Excise duty on that part of the film which is shown to be wastage.

Sir Adrian Baillie

Part of the industry at least is still in doubt about this matter of wastage and the precise extent of the proposal. A film which runs to 10,000 feet on the screen may represent the expenditure of 80,000 or 100,000 feet of film. I am sorry if I am raising a point which has been mentioned already, but the question uppermost in the minds of producers is, whether all that is not shown on the screen is wastage, or what exactly is to be wastage. If it is just to be a matter of short ends of blank film, it will be very difficult to check.

Sir J. Simon

I do not know that the point which the hon. Member now puts is different from that which was put earlier by the hon. Member for Don Valley. I will see whether I can produce, if desired, a technical definition which is, I imagine, what the trade would like, but I think that on this matter they would be well advised to do what other sections of the trade are doing, and put themselves in communication with the Customs and Excise Department. We are having special expert advice on the subject, and I am sure that any difficulty of the sort which has been indicated can be solved. It will be understood that, speaking here, I cannot use technical language because of the possibility of causing misunderstanding.

If I may resume, I would point out that, subject to this rebate or return of duty for wastage, the Excise duty proposed is 4½d. per square foot. I understand the hon. Gentleman opposite would like to delete 4½d. and substitute 1d. The reason we chose the square foot as the unit of measurement for domestic made films, is because, in practice, it is much more convenient. I think the common width of cinema film is 1⅜ inches and if you multiply that by nine, you get almost exactly 12. Therefore, 4½d. on the square foot is very much the same thing as ½d, per linear foot. That is the Excise duty which we propose, subject to the rebate I have already explained. That is the new duty and I cannot agree that I am, necessarily, inflicting an injury on the British cinema trade or discouraging British films by that part of the proposal. What is necessary, of course, is that the Customs duty should be in a suitable proportion. At present there is a Customs duty on imported blank film. It is rather complicated and based on a combination of two formulae, but it is enough on this occasion to say that it is equivalent to something between 3d. and 5d. per square foot, dependent on value and various other factors. What I propose is that we should make the Customs duty on imported blank film 9d., which, contrasted with the Excise duty of 4½d., roughly maintains the difference between the home made blank film and the imported blank film which exists at present.

I am as much alive as anybody can be to the great importance of not putting any clogging burden upon the British film industry which everybody wants to encourage for every reason. The principal reason is that British films, as far as I have seen them, are uncommonly good and are improving rapidly—not only the picturesque and romantic films of which some admirable productions have been made recently, but also educational films, news films and others. I contend that to rearrange the duty on blank film so that there still remains the full degree of difference between the Customs duty and the new Excise duty, cannot, in itself, be a discouragement to British films as far as what I may call the raw material is concerned.

I would observe that the cinema industry is a very great industry now. It has had its difficulties and we have discussed them often in this House, but if the figures given to me are right, the box-office takings of the industry in this country now amount to between £45,000,000 and £50,000,000 per annum. I do not think, therefore, that an Excise Duty which, from first to last, is calculated to produce £600,000 is going to bring about a complete revolution. The industry may take a little time to shake down as between producers, distributors and proprietors of cinema theatres but every new duty is like that. Of course it is not the duty of the Chancellor of the Exchequer and the Treasury merely to tell everybody to take a scheme of this kind just as it is proposed. What they may have to do is to consider adjustments, if there are places where the new scheme does not fit. That applies to this proposal, but the principle is one which, I think, the House of Commons will regard as sound.

That is as regards the duty on blank films. Now we come to the case of the picture film. When I first examined this very interesting subject it struck me as most remarkable that I should be able to calculate on gaining something like £600,000 from the Excise Duty on cinema film which is purely internal, and yet expect to get a smaller amount from the Customs Duty, the two together making with the remainder of my proposals a total of something like £1,000,000. The explanation is not only that British films are—as I hope with all my heart they are —going ahead, after great difficulties but that the Hollywood film introduced from abroad, arrives here, in many instances, as a single specimen and is then reproduced here. The reproduction even of an American film is largely a matter of English reproduction and English blank film. Therefore, the Excise Duty mounts up while the Customs Duty does not provide as much as one would expect. Of course there is a great deal of justice in saying that if the film is one of which many reproductions are made, if it is going to be used in a great many cinema houses, if it is calculated to have a wide circulation, the amount which it contributes to the revenue should rise, as it would rise because, of course, an increased amount of blank film is being used.

I am entirely of the view that we have to see how this new plan will really work in reference to films which have a special value from the point of view of their influence and educational usefulness, but which in some cases may not have anything like so wide and prominent a circulation as the popular romantic film. I want to examine carefully what the hon. Gentleman has said with my advisers, who include those with great knowledge of this industry. The Customs and Excise Department will consider with the representatives of the industry whether modification is needed. My own view is that some modification may be needed, but the form which it should take has to be considered. If it were possible to show that a particular film had not been reproduced it might have a claim for preferential treatment over one which was multiplied and circulated all over the Kingdom.

It was with these things in mind that I framed the new Customs Duty. Originally the idea of the Customs Duty on imported picture film was to put a high charge of 5d. per linear foot on the negative of the film, but that on the positive copies that came in the Customs charge should be 1d. per foot run. As I explained in the Budget speech, and I believe I am confirmed by the trade, methods are in common use which avoid the higher duty for the first entrant by not having any negative imported at all. One would have thought it was difficult to print from the positive, but science is a wonderful thing, and it is possible to import from abroad a single positive picture and to reproduce it and circulate it throughout the country. If that is the case, no negative copy ever enters at all, and the real object of the duty, which was to put a stiffer tax on the first entrant, was being defeated. I think the House will agree with me that it is right to revise that because the principle was a true principle, but it was not being applied. I have, therefore, arranged in the new Customs Duty that the first copy of the picture film—whether it is a positive or negative does not matter—shall pay the full rate and that subsequent copies shall pay the lower rate. In view of the fact that we have now an Excise Duty, it seemed to me right to increase the Customs Duty and make the duty on foreign-made picture films 6d. for the first copy instead of 5d.

Mr. T. Williams

What the right hon. Gentleman has just related with regard to negatives and positives is correct. It did create an anomaly, but in the process of side-stepping the original purpose by sending a positive film here and having a negative made from the positive, it has tended to create a good deal of work for technicians in our own laboratories. I do not ask the right hon. Gentleman completely to dispose of his original intention, but when he re-examines it perhaps he will look at the employment created.

Sir J. Simon

My attention has been called to that, and I appreciate that it is an important point. If what one gets from abroad is not a negative from which one can print at once, but is a positive strip, no doubt there are additional processes which have to be applied and which, therefore, find inside this country employment for specially trained people. It thus helps to give employment and I agree that that factor cannot be overlooked.

I have tried to give to the House a picture of the scheme of the new duties. I think the scheme is good and I hope the House will come to that conclusion. I cannot believe that an Excise Duty which is expected to produce £600,000 will prove a really serious clog to a great industry which is now taking at its box offices £45,000,000 to £50,000,000 in the year. I am anxious to meet the objections raised by the hon. Member. I have made inquiries of the Customs and Excise to-day and they tell me that they are already in communication with the various branches of the industry. They have instructions and themselves wish to consider the causes of difficulty, some of which were mentioned here to-day. The case of the news reel is very present to my mind. The point about it is not so much that it is reproduced, but that it lasts such a very short time. News soon ceases to be news. Anybody who has seen that most interesting feature in a cinema entertainment knows how extraordinarily quickly any particular picture included in the news reel disappears, for when you send your friends to look at it the message often comes back that it has been taken off.

Mr. T. Williams.

As in the case of the right hon. Gentleman.

Sir J. Simon

I was taken off after five minutes. That was only fair. I hope I have shown the House the basis and principle of this new tax which I strongly commend. At the same time, I repeat the assurance that I appreciate that modification may be necessary, and I hope to consider that question with the help of the trade. This is not the subject for a prolonged Debate or declaration. It is a technical subject in which I hope, with general co-operation, we shall be able to work out a good scheme.

8.23 p.m.

Mr. Pethick-Lawrence

I do not profess to have any expert knowledge on this subject, but I would like to express what, I think, is the view of my hon. Friends before we part with this Amendment. It was not easy to follow the precise effect of what has been said in the House from hearing it, but, as far as we can understand, the right hon. Gentleman is prepared to do the straight thing in this matter. Therefore, we do not propose to carry the Amendment to a Division. We shall watch carefully when the Finance Bill is introduced to see whether what the right hon. Gentleman says is, in our opinion, fully implemented in the terms of that Bill. We hold ourselves free to take any action when that time comes that we may think necessary. In view of what the right hon. Gentleman said and his obvious desire to deal fairly in this matter, we do not propose to divide the House on the Amendment.

Mr. T. Williams

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

8.25 p.m.

Miss Wilkinson

I beg to move, in line 6, at the end, to insert: Provided that the present rate of import duty shall still apply in the case of the import of a first copy where the importer signs an affidavit undertaking not to allow the whole or any part to be copied and to operate with only one copy. This Amendment raises rather a different point from that with which the Chancellor has dealt. He was speaking, as he rightly said, of a great industry which has found a means, when a positive film is introduced, of printing from it a very large number of copies, and that is a point with which the right hon. Gentleman is going to deal. The Amendment deals with a very different industry, one which is very highly individualised and specialised but which 'is essential if the work now admittedly being done to improve British films is to be extended. It is important that our younger technicians and our interested film-going public should have the opportunity of seeing the very best work that is being done elsewhere, in foreign films, and other kinds of specialised films. Generally speaking, those films have practically no general appeal. They appeal to a specialised public which is partly technician and partly consists of those who take a great interest in films.

At the present time there are the London Film Society and a number of other film societies in this country, and there are specialised art cinemas. I might mention the Curzon Cinema. There are others of that kind who specialise in these films. They constantly use only one copy. There is no question whatever of a positive being introduced and a very large number of positives being printed from it, or of avoiding the duty, which is a very difficult matter for them. I am speaking as a member of the council of the Film Society. When we introduce a film novel, it pays a duty of £40, and when you are giving only one show that £40 is almost prohibitive. We are continually dealing with the Customs officers, trying to get films scheduled as educational, but not all of them are so scheduled that ought to be. I give the figure of £40 merely as an illustration.

A film which now pays the £40, will have to pay £240 if this Customs Clause goes through. That would mean that the London Film Society, or theatres like the Curzon Theatre, would have to pay precisely the same for only one week's showing of their film as would be paid by people who might bring in a Greta Garbo film to be shown in thousands of cinemas all over the country. The effect of the change would mean the closing down of all the film societies. There is no point in the film societies showing films that are easily accessible to ordinary cinema audiences in this country. They show films which are not ordinarily going to the cinemas; that is in their articles of association. The second thing is that, even though the highly specialised theatre might not have to close, it would be restricted only to those films which they could be sure were non-commercial films. They might, for instance, regard the new Zola film as having a certain sensational interest and likely to have a long run, and they might pay the £240 on that but some other plays like "Le Roi S'amuse," of interest only on technical grounds, might have only a short run.

The Chancellor has shown himself in every way fair to representations of this kind, and I hope we can get him to consider allowing to this almost miniature section of the industry such a rebate as I have suggested in the Amendment. It might not be the best way of dealing with the matter. The best thing to do would be to cut out altogether the duties on this highly specialised work. That would re-pay us a thousand fold, as a nation desiring to put forward our national point of view on the films as the Americans have done. This is really highly educational work, although we are not suggesting that it is highly educational to the general public. The general public will not go and see these films. If they would, these questions would not arise. The work is highly educational to people who want the opportunity of seeing these things and to students in the film academies and in universities. It is for that kind of public that this kind of film exists. If the Chancellor cannot cut out the duty altogether, I suggest that he should allow us the rebate in the way suggested in my Amendment.

Mr. Jagger

I beg to second the Amendment.

8.34 p.m.

Sir J. Simon

I would like to assure the hon. Lady that I am not suggesting that you can improve the standard of British art by putting a tax on foreign art. I sympathise entirely with the spirit of much that she has said. We have already quite understood the interests of this particular section of the cinema movement, represented, I believe, by the showing in this country, for example, of certain French films which some people would call high-brow, but at the same time are of great interest and importance. In devising these taxes the best way to secure fair treatment in such a case as she has put forward is a matter for consideration, but I can assure the hon. Lady that I have not the least intention of allowing the full burden of this duty to fall upon cases such as she has mentioned. I have no doubt that we shall find a way to see that we do not hamper unduly a very interesting section of the cinema movement which is not primarily commercial, and which is of very great importance both in the development of new ideas and to cinemas showing this type of film.

Miss Wilkinson

I thank the Chancellor warmly for his sympathetic reply, and beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

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

8.36 p.m.

Mr. Alexander

Before the House leaves the question of films, I want to bring to the Chancellor's notice another matter in which great difficulty has been experienced by processing laboratories in connection with the class of films described as sub-standard. Quite apart from the section of the film trade to which the Chancellor has been giving sympathetic consideration, these sub-standard films are subject to a very great deal of trade credit and to large discounts, and, in consequence of the working of these discounts as between, first of all, the processing laboratories and the wholesalers, and then between the wholesaler and the retailer, until finally they are passed on to the amateur user of the film, there is a great deal of difficulty as to how the duty shall be arranged. At the rate proposed by the Chancellor, it works out at 2s. per 100 linear feet. I do not wish to go into the matter in detail at this stage, but simply to say that, because of the opera- tion of these discounts in the case of this class of film, considerable difficulty has been experienced, and it is suggested that, instead of passing on a duty of 2s. per 100 feet, it will be necessary to double that rate, and thereby very largely discourage trade in that section of the industry. May I ask the Chancellor if he will undertake to receive more details and technical trade representations between now and the Finance Bill?

Sir J. Simon


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

8.38 p.m.

Captain Crookshank

This Resolution relates to a perfectly legitimate practice which already takes place in brewing, namely, the practice of priming and colouring. "Colouring" is self-explanatory and "priming" is the addition of some sugar solution in the course of the production of the beer. Up to the present time these additions of "priming and colouring solutions" have always been made at the brewery itself, but I understand that owing to recent developments in connection with bottling and so forth, this is now more often done at depots nearer the place of consumption rather than at the brewery itself. In view of the fact that priming and colouring should be done at the last moment in order that the best beer may be produced, a desire has been expressed by the brewers that facilities should be given for the priming and colouring to be done elsewhere than at the brewery. This Resolution is designed to permit the introduction of a Clause into the Finance Bill for that purpose, in order to meet what is in effect a growing development of trade practice. So far as I know there is no objection to this proposal. The reason for the Resolution is simply that, if the trade wish to have this facility, it is only reasonable that they should pay for it in the form of licence duty. The licence duty is intended to cover the general cost of supervising the priming and colouring when it is done at depots instead of at the brewery. I hope that this is a clear explanation of the Resolution.

Mr. Pethick-Lawrence

I take it that the Chancellor of the Exchequer does not expect to get any revenue from this duty, but merely to pay the expenses of carrying out a method which is more convenient to the trade?

Captain Crookshank

That is so; from the Exchequer point of view there is no money in it, but we do not think it right that the State should lose by this new practice and the object broadly is to cover the extra cost.

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

8.42 p.m.

The President of the Board of Trade (Mr. Oliver Stanley)

This Resolution clears up a very small point that was left over from the Anglo-American Trade Agreement. As hon. Members know, most of the reductions of duties resulting from that Agreement were brought into effect by Order, but, owing to a technicality which I will explain, this particular one involved a point which had to wait over until the Budget. Prior to the Anglo-American Agreement, the rate of duty on this class of goods was 15 per cent. ad valorem, but during the negotiations the Dominions agreed to the substitution of the specific duties set out in the Resolution. As far as the United States were concerned, with their scale of prices for this class of goods, the specific duties represented a very considerable decrease on the ad valorem duty of 15 per cent., and, if that had been the only country involved, it would have been possible to bring them in in the ordinary way by a Treasury Order. But there is a certain class of imports, very small in quantity, coming from Japan, where the price is so low that specific rates are about equal to, or in some cases slightly over, the 15 per cent. ad valorem, and, as the Treasury Order procedure can only be used for a reduction of duty, it was not possible to bring them fully into effect by that means; under the Treasury Order procedure we had to put on a specific duty or a duty of 15 per cent. ad valorem, whichever was the less. We are now removing the alternative ad valorem duty altogether. The only effect of the Resolution is that, while carrying out our undertaking to the United States under the Agreement, it gives some protection to Dominion producers against a small section of very low-priced commodities coming from Japan.

8.44 p.m.

Mr. Alexander

The effect of this Resolution will be to take away from the consumer any advantage which might accrue to him where the ad valorem duty would show a lesser yield than the new specific duty. I suppose that what the right hon. Gentleman has in mind are cheap tinned articles—

Mr. Stanley

Fruit salad and pineapple.

Mr. Alexander

—from Japan. With regard to other classes of canned goods in syrup, I take his remarks to mean that the Americans would gain by this provision in the case of sliced pineapple, though I should hardly have thought that that would have been the case as regards pineapple chunks. I do not propose to regard the matter as important enough to divide about, but it is clear that whatever advantage the consumer might have got where the ad valorem duty was lower than the specific duty is now to go, and the consumer is to pay.

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

8.45 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Cross)

This Resolution gives effect to an undertaking in the Trade Agreement recently concluded with the United States of America that (he duty on patent leather not shaped shall be reduced from 15 per cent. ad valorem to 7½ per cent. ad valorem. The rate of 15 per cent. ad valorem was guaranteed to the Canadian Government under the Trade Agreement of 1937. Linked with this reduction in the United Kingdom duty is a reduction of the United States duty to the same level, because Canada agreed to the reduction in the United Kingdom duty only on the understanding that the United States duty should be similarly reduced. So we have here a good example of a trade agreement producing an all-round reduction of a tariff.

The Resolution covers goods composed wholly of patent leather on which no additional duty is payable under the Import Duties Act. It is, in fact, practically certain that any patent leather, either shaped or made up, would be charged the full duty. For instance, shaped patent leather for shoes would be charged with a duty of 20 per cent. ad valorem. There is therefore no reason to think that any of the home industries will be deprived of protection. The production in the United Kingdom in 1935 was approximately 8,500,000 square feet. The United States product is similar to the Canadian, which is already coming in free, and there is no reason to anticipate any adverse effect on the home industry. The other reductions arising out of the agreement with the United States were made by Treasury Order, and took effect from 1st January last. But the powers to reduce duties by Treasury Order apply only to duties imposed under the Import Duties Act, the Ottawa Agreement Act and with some limitations to the Silk Duties. The duty on patent leather is imposed under the Finance Act, 1934. For that reason, it is necessary to seek the authority of the House of Commons to make this reduction.

8.48 p.m.

Mr. Stanley

I beg to move, "That this House doth agree with the Committee in the said Resolution."

The object of this Resolution is to substitute the new agreement signed with India last March for the agreement which is now scheduled to the original Ottawa Act. The Indian Agreement has been published in the Press; it has had a considerable amount of publicity given to it, and I do not think the House would expect me to-night to do more than run over the most salient points. Hon. Members will recollect the circumstances in which this new treaty was inaugurated. The initiative for the negotiations came from the Government of India, who in May, 1936, gave notice to terminate the existing Ottawa Agreement owing to an adverse resolution which had been passed in the Indian Legislative Assembly after the pledge they had given that if the decision of the Assembly was adverse they would denounce the agreement. Subsequently it was arranged between the two Governments that pending the negotiation of a new agreement, the Ottawa Agreement should, subject to denunciation at three months notice, remain in force. Ever since I came to the Board of Trade, two years ago, these negotiations with India have been proceeding, and it is no secret that they have been among the most difficult negotiations which the Board of Trade has ever had to conduct.

Although the denunciation of the treaty originated in India, on the grounds that they were dissatisfied with the operation of the original treaty and desired something better from their point of view, a considerable number of complaints have also come from industries in this country, which wished for a modification of the old treaty. At an early stage in the negotiations it became quite apparent that the Government of India were not prepared to conclude any new agreement which did not permit of the discontinuance of a substantial number of the tariff preferences which were secured to the United Kingdom by the original treaty at Ottawa. From the outset, therefore, His Majesty's Government were faced with the decision as to whether they were prepared to accept that in return for other concessions which might be made in a different direction and with which I shall deal later, or, if they were not prepared to accept it, whether they were prepared for the old treaty to lapse. The result of that would have been that we should have lost not only the preferences which under the new treaty we have had to give up, but the preferences—of a very considerable amount—which under the new treaty we retain. The Government came to the conclusion that, on economic grounds alone—apart from the political significance, which is obvious to everyone, of a trade war with India—it would be better to conclude a new treaty, even if it meant the sacrifice of some of our preferences. If it was compensated for— as we had reason to believe it might be —by concessions to that very hard-hit industry, cotton, that would be preferable to a failure to reach agreement at all, which would have left a position of very strained economic relations. The time which has been taken in the negotiation of the details of this Agreement is some criterion of the difficulties, even when that general principle is accepted, of getting agreement upon the actual details.

The general effect of the Agreement is as follows: It involves the loss to the United Kingdom of about half the preferences which we enjoyed under the Ottawa Treaty. On taking the year 1937–38 as the standard year, it means a loss of preferences valued at about £7,500,000 and a retention of preferences valued at about £6,750,000. Those are preferences secured by the Ottawa Agreement. This does not touch the very large class of preferences, covering almost a quarter of our exports to India, which are secured under the differential duty system in India, which is not affected by this Agreement. In discussing the preferences which were to be surrendered and those which were to be retained, we have made efforts to retain, as far as possible, the preferences which were of most use to us —although, in certain circumstances, the Government of India were not prepared to allow the retention of existing preferences. It is interesting to note that if we take the classes of goods on which these preferences have been retained we shall find that they are goods of which the sale in India has been increased by nearly 40 per cent. since the Ottawa Agreement was reached—from £4.8 millions to £6.7 millions—whereas in the classes of goods where the preferences have been surrendered, there has been in that period comparatively little change—a slight increase from £6.9 millions to £7.5 millions. That, I think, is evidence that we have retained the preferences in those classes of goods where the preference has given the most impetus to the securing of more trade and the broadening of our market. We have obtained one new preference—for motor cycles and motor scooters—which is a complement to the preferences on motor vehicles which were given under the original Ottawa Agreement and which we still retain under this Agreement.

On the other side of the picture, the very important concession which we obtain in return for the surrender of these preferences is the concession which has been made in respect of cotton piece goods. The provisions with regard to cotton are, I am afraid, very complicated, but I think I can explain the salient points fairly simply. In the first place, the basic charge upon United Kingdom cotton piece goods has been reduced from 20 per cent. to 15 per cent., and on prints it has been reduced from 25 per cent. to 17½ per cent., but that advantage, substantial as it is in itself, is not the completion of the picture. In subsequent years the duties to be levied upon United Kingdom cotton piece goods will depend upon two factors, first, the volume of the import of such goods into India, and, secondly, the quantities of Indian raw cotton which are imported into this country. In regard to the first consideration—the amount of the imports of our cotton goods into India—the rough scheme is, that we have a top and a bottom level. If the imports go above a certain figure, then the duty against our goods is increased until we get back to the middle figure. If they go below the bottom figure, then the duties are decreased, and the decrease remains until the level has risen to the middle figure. The top figure is that of 500,000,000 yards. In 1937–38 our exports to India were something like 267,000,000 yards. If we were to go above the top figure of 500,000,000 yards, we should be subject to an increase in the basic rate, and the increase of the duty would remain until we had got back to the middle figure of 425,000,000 yards. If our exports fall below 350,000,000 yards —and last year they were very considerably below that figure—there is an additional reduction of 2½ per cent., in addition to the basic reduction of which I have already told the House. That new reduced rate of duty will stand until the imports from this country have risen to a figure of 425,000,000 yards, that is to say, 160,000,000 yards more than in fact we exported in 1937–38. It is almost certain that, after the first 12 months of the currency of this Agreement, we shall in fact get an additional reduction of duty for Lancashire cotton goods, and I think there is every hope that under this new system we shall be able to bring the export of our cotton goods from Lancashire towards the middle figure of 425,000,000 yards, which will mean a very substantial increase above what we are now doing and a considerable amount of employment for Lancashire.

The other factor which governs the sliding scale is the import of Indian raw cotton into this country. I do not know that I need trouble the House with the rather complicated details, but what happens is, that a standard is laid down that we shall try and import every year, and if we fall below that standard, provision is made for a sliding scale, which, according to the amount by which we fall below the standard of a particular year, will affect the figures which I have just been giving to the House on which we are entitled to a decrease of duty. If we rise above a particular figure, a very important concession will be given to us, that the duties on prints, which now under the basic rates are higher than the duties on ordinary piece goods, will be reduced to the level of the duties on piece goods.

These concessions are, I believe, regarded in Lancashire as very substantial and hold out promise of a considerable restoration of trade with India, although it is idle to expect that there is any possibility of the restoration of our cotton trade with India to the high level at which it used to be before the War, or even to the high level that we have known in post-war days.

I have endeavoured to give to the House a rough outline of the effect of this agreement, which His Majesty's Government think gives to the trade between the two countries a better chance of development than would have been given by a failure to agree and to substitute a new agreement for the old one which had been denounced. It is true that the new agreement does not give to many of the industries in this country the relief and the advantages which they hoped and expected to get, and which His Majesty's Government tried their best to get for them. It has, I think, in some cases resulted in disadvantage to our trade through loss of preferences which we resisted to the utmost, but I am convinced that on balance this agreement, which we present in this Command Paper, and which is now to be scheduled, from the purely economic point of view, represents for this country a very much better position than would have been obtained by a breakdown of the negotiations and an economic war between the two countries. If that is true upon the economic basis, I need hardly emphasise to the House the political aspect, which certainly makes it advisable that, in these days, we should strain every nerve to agree on matters of this kind, knowing full well what pleasure failure to reach agreement would give in certain quarters of the globe.

9.4 p.m.

Mr. Alexander

The statement which the President of the Board of Trade has just made under this quiet, little Budget Resolution is one of considerable importance. It is true, as he says, that the Board of Trade gave publicity to the new Trade Agreement with India in the Press, but, as far as I can remember, since the date of this agreement of 20th March there has been no opportunity of debating the details of it in the House, and, therefore, we have to take it now as an established fact. In this little backdoor amendment of the law introduced in a minor Resolution under the terms of the Budget Statement of 1939 there is to slip through the formal approval of this very important Trade Agreement upon which the President of the Board of Trade has been speaking. I am speaking only for myself when I say that I have been taken by surprise, though I dare say that there are other Members of my party who have followed more closely the progress of this trade treaty with India than I have been able to do in this very busy year. Nevertheless, the way in which the President of the Board of Trade has explained the matter puts the arrangements with India in a much more favourable light than they were under the Ottawa Agreement.

I remember the great indignation which was expressed in many Indian quarters that apparently the only real concession made in the sphere of British preferences to India as a great self-governing Power in the British Empire was on linseed. Now I see in the schedule to this agreement that very considerable preferences to Indian traders are given in the British market. Certainly this list of preferences seems to be much longer and more important than anything in the Indian section of the original Ottawa Agreement. I remember that one of the great difficulties with which I had to deal immediately after that agreement was the effect on the linseed oil industry in this country. I had to put a case before the Import Duties Advisory Committee.

Mr. Stanley

That is the next Resolution.

Mr. Alexander

I hope we shall get a little more information on that as well. In the meantime, in the midst of all the juggling with tariffs and preferences which now goes on it is true to say that the arrangements made under this Agreement—the top level and the bottom level in regard to these countervailing preferences from one side to the other—are likely to do a considerable amount of good, but I should liked to have heard a word from the President as to how far these preferences will make it possible for Lancashire goods to meet the competition of piece goods and print goods from Japan in the Indian market.

Mr. Stanley

These are not preference but reductions in the actual rate of duty.

Mr. Alexander

I use the term "preferences," but they are countervailing reductions in the duty in return for preferences. I should like to know how far this reduction of a minimum of 7½per cent. will have a real effect in enabling Lancashire goods to compete with the piece and print goods of Japanese production. I should have been happy to have had a little more explanation about that, but I think it would be more convenient if we had another look at this Agreement and reserved any more detailed remarks about it when we come to deal with the Vote of the right hon. Gentleman's Department.

9.10 p.m.

Mr. Lansbury

I did not come into the House to take part in this very exciting Budget Debate, but if I am in order I want to congratulate the President of the Board of Trade, and especially the Indian Government and people, on this treaty. This is an example of what this country is endeavouring to do with India, not perhaps as quickly as I should like it to be done. This is trying to give the Indian Government the right to manage their own affairs, and the fact that the right hon. Gentleman has been able to negotiate so very difficult a question and bring it to a successful issue with the consent of all parties in India is, I think, something upon which this House of Commons and this country may be congratulated. This is an example of how the British people are endeavouring to bring about a real commonwealth by giving what is called the subject race the right to real self-determination in what are fundamental questions, that is economic questions, concerning their relationship with the outside world. I feel that I must say that without entering into a discussion as to the exact benefits which we are going to get out of it. I think the treaty will be beneficial both to the masses in India and to our own people.

Mr. Stanley

In reply to what the right hon. Gentleman opposite has said, it is the view of the Board of Trade and the cotton industry that this reduction in the duty will give them a real chance of increasing their sales in India. I cannot make any definite forecast, but, given reasonable trading conditions, I am satisfied that this hope will be fulfilled. Unfortunately, the signature of the Agreement coincided exactly with the entry of the Germans into Czecho-Slovakia, which changed the situation, but I am convinced that, given normal trading conditions, it will provide an opportunity of increasing the quantities of English cotton goods sold in India.

9.12 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Cross)

I beg to move, "That this House doth agree with the Committee in the said Resolution."

This Resolution gives effect to a provision in the Trade Agreement between this country and India, under which the United Kingdom undertakes to make modifications in the allowances of the drawback on duty paid foreign linseed. This duty which is one of 10 per cent. ad valorem, was imposed as a result of the Ottawa Agreement with India, and drawback schemes were introduced to meet the needs of United Kingdom exporters. The Agreement also requires the maintenance of a duty of 15 per cent. on foreign linseed oil. This duty has been increased from time to time on the recommendation of the Import Duties Advisory Committee in order to protect the home seed-crushing industry against the import of linseed oil from foreign countries; and it now stands at £5 per ton. There is a provision for a drawback on the export of goods made from duty-paid linseed oil similar to the drawback which relates to foreign linseed.

Linseed is used for the production, in the first place, of linseed oil, and it will be seen from the Resolution that that product is not affected by the new drawback provisions. It is also used to produce linseed oil, which in turn is used as an ingredient of paint, enamel, varnish, printers' ink, putty and "mixed oils." Both linseed oil and the last mentioned range of products come under the same drawback scheme. There are no separate statistics to show what amount of drawback may be paid in respect of each of them, but the quantity of linseed oil which is exported is enough to account for all the linseed in respect of which drawback is payable. Therefore, it would seem that this drawback scheme is used only to a limited extent—it may be to an almost negligible extent—in connection with the export of paints, varnishes, and so on.

Mr. Alexander

What about linoleum?

Mr. Cross

I shall come to that in a moment or two. From the inception of these drawback schemes, India regarded them with a good deal of disfavour on the ground that the schemes diminished the value of the preference which had been granted under the Ottawa Agreements, and that they might tend to divert this country's purchases from India to the Argentine. Consequently, the Indian delegation pressed for the abolition of all drawback schemes on both linseed and linseed oil. This matter was the subject of very long and difficult negotiations. Viewing it from the Indian point of view, we were unable to see that India could gain substantially from the abolition of the schemes. The import of linseed from India in 1931 amounted to 71,000 tons, and it had risen in 1938 to 229,000 tons, and a possible gain to India of some part of the 13,000 tons of linseed which is used in the manufacture of exported linoleum—an item to which the Indians look particular objection and to which I will refer later—seemed to be too small to justify their attaching any very great importance to it. At the same time, we on our side were very reluctant in principle to abolish any drawback scheme. Nevertheless, the Indian delegation made it clear that they attached the very greatest importance to the question and indeed treated it as a major issue, and they went further and said that they would not conclude a treaty which did not satisfy them on this particular point. After much discussion and consultation with the trade interests with a view to finding a basis of compromise, we came to the conclusion that the best possible compromise from the British point of view was the one which is contained in this Resolution.

I have dealt with the effects with regard to paints, enamels and other items in that category, which appear to be either very limited, or it may be negligible; but there is a further group of industries, to which the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) referred just now, which are affected and which come under a separate drawback scheme. They are the industries concerned with linoleum, floorcloth, cork carpets, felt base, cellulose plastic flooring, fishing nets, oil baize and leather cloth. These use, as I have already indicated, the product of 13,000 tons of linseed a year, a figure which compares with the import from India alone of 229,000 tons in 1938. These industries are left with an alternative method of getting the drawback, and that is that they should use foreign linseed oil. Therefore, it was a question as to how far would the British seed crushers be affected by the transfer to foreign oil of a part, or, to take the blackest possible case, the whole of the 13,000 tons.

If we take the extreme and improbable case that the whole of this business would be transferred to foreign oil, the question is, how far would that affect imports of foreign oil? How far would those foreign imports be increased, and consequently, what would be the detrimental effect on British seed crushers? I find that the import of foreign oil into this market amounted to some 19,000 tons in 1938, which is far more than is required to cover all the drawback which is allowed for foreign linseed oil, together with any addition we have to make in respect of the 13,000 tons of linseed. The figure for 1938 was 8,000 tons of imported foreign linseed oil for which the drawback was allowed. We must then add to that some further amount in respect of the 13,000 tons of linseed, which I understand is the equivalent of a further 4,000 tons of linseed oil, and this gives us a total of 12,000 tons of foreign linseed oil to meet requirements. There is, therefore, a total of 12,000 tons of foreign linseed oil which—on the basis of past requirements plus an addition in respect of the 13,000 tons of linseed—would be necessary as against an existing import of 19,000 tons every year. Consequently, it does not necessarily follow that imports of foreign linseed oil would be increased or that the seed crushers in this country would suffer. It remains only for me to add on this subject that the proposal put forward would take effect as from 15th August next, four months from the time of the signing of the Agreement, so that the manufacturers would be allowed a period of four months in which to adjust themselves to the altered provisions.

9.22 p.m.

Mr. Alexander

The more I listened to the Parliamentary Secretary, the more I was surprised. I have already said that I have not been able to give much consideration to the Indian trade treaty, but when the hon. Gentleman said that all the interests had been consulted, I wondered who those interests were. About three and a half years ago, I made a pretty big attack on the Government with regard to linseed, and I would point out to the President of the Board of Trade, in passing, that during the whole of the discussions that have taken place, his Department have not deigned to communicate with us, although we are vitally interested in the question of linseed oil and the drawback. We did not hear a word from his Department. We have now been told that all the trade interests have been consulted. That is the first word I have heard on the subject. I am reminded very forcibly of what we had to say about the original negotiations that went on with regard to linseed, and the back-scratching arid wire-pulling that took place before the Import Duties Advisory Committee, when seed crushers were asking for a gradual raising of the duty on foreign linseed oil.

There was a special concession to these very important industries, which employ a large number of people, such as the linoleum, paint, varnish, and white-lead industries. These industries use large quantities of linseed oil, and they were given a special right to a drawback in respect of whatever products they used which had been subject to duty, in order that they might be able to maintain their position in the export market. We were blandly told, in a very mixed and technical speech, by the Parliamentary Secretary, who no doubt put, the matter as clearly as he could, that these drawbacks are now to be dealt with in a different way. As far as I could gather from his argument, although I am not very clear about it, he said that all the drawbacks are to go, except that the users of the oil in the paint, varnish and linoleum trades will be able to use foreign linseed oil, and that that will come, in any case, in a sufficient quantity, so that they will be able to meet their requirements and get the drawback.

I think that was the argument. I shall certainly have to consider it a little more carefully in the morning when I see it in print in the OFFICIAL REPORT before I shall thoroughly understand it in regard to the total supply. At any rate, if it is the fact that between 1931 and 1938 the export of linseed from India to this country has increased from something less than 100,000 tons to over 229,000 tons, I hope it indicates that there is, as the result of closer arrangements between us and that country, a real development of acreage of linseed cultivation, because my recollection of the matter as it happened some four or five years ago seems to indicate to me that unless there were an expansion of something like 3,000,000 hectares of production in India we should always more or less be dependent on imports from such countries as the Argentine for the main quantity of that commodity which we could use for crushing and for other purposes. It might be interesting, before we leave this Resolution, if we could have some information about that. But I protest very strongly indeed that interests with which I am connected and for whom I appeared before the Import Duties Advisory Committee on the whole question of duties and drawbacks after the Ottawa Agreements have never, as far as I know, had a word of notice or consultation from the Board of Trade or from the Advisory Committee during the whole time that the negotiations on this Treaty were going on. I do not think that that is quite the treatment that one is entitled to expect or to receive.

Mr. Stanley

Could the right hon. Gentleman tell us in what capacity— crushers or users?

Mr. Alexander


Mr. Stanley

For what purpose?

Mr. Alexander

Paint, varnish and linoleum—in every respect.

Mr. Stanley


Mr. Alexander

Yes, certainly. It was in our capacity as manufacturers that I went before the Committee. This is the first we have heard of the negotiations.

Mr. Stanley

Does the right hon. Gentleman's body co-operate with various trade associations? Would they be members of a trade association representing paint and varnish manufacturers?

Mr. Alexander

Very rarely.

Mr. Stanley

Probably that is the reason

Mr. Alexander

I cannot understand how it could arise in that way, because Government Departments ought to know by now with whom they should communicate. It is a long-standing arrangement. We are as much entitled to be consulted as any other section of the trade. Before the Finance Bill comes I shall take particular care to look at the explanation that has been given to the effect of the drawbacks, and, if necessary, take whatever steps I can to see that our position is safeguarded.

9.30 p.m.

Mr. Ede

I think some back-bencher ought to join in the protest that my right hon. Friend has made. I am sure no one objects to India being put in a better bargaining position that she was in years gone by. We can only rejoice that she is getting into this more favourable position, as is evidenced by the negotiations that have taken place on these two Resolutions. I gather from the Parliamentary Secretary that there were occasions when they kept a stiff upper lip in a manner which would have done credit to negotiators with many centuries of tradition behind them. I am sure that none of us regrets that India should be put in that position. But one is alarmed at the way in which in these days very important matters come before the House almost by accident.

Mr. Stanley

The hon. Member must not say that. There is nothing unprecedented in it. I remember, two years ago exactly the same procedure on the Canada Agreement, with ample opportunity for discussion at this stage and on the Finance Bill.

Mr. Ede

I do not want to say anything which may appear a reflection upon the right hon. Gentleman. I have had too many negotiations with him not to know that he would not do anything to mislead the House or deprive it of any of its rights, but one finds now that these matters appear unexpectedly on the Order Paper, and they go through pro forma. One gathers that, if we pass this stage, we have virtually approved in principle the whole of this Agreement, in so far as it relates to the matters now brought before us. I think the right hon. Gentleman must expect that we shall have to reserve our right to criticise this and similar proposals when the Finance Bill appears. If this goes unchallenged to-night, it must not be thought that we have abandoned our right to express any criticism which may appear necessary when more detailed examination of the matter has taken place.

There is one matter on which I should like some enlightenment. My earliest recollection of linseed is that it was the main ingredient of a poultice which was supposed to cure all ills. The exterior application of a linseed poultice and the interior application of Epsom salts was supposed to be a complete cure-all for juvenile ailments. I did not hear the properties of linseed for poultices mentioned amongst the uses to which it is now put. Are we to understand that modern medical science has dispensed with it?

Mr. Dingle Foot

I was a little alarmed by the hon. Member's prophecy. I am also interested in the last Resolution and in this, but I understood that there will be an opportunity to discuss the Indian Trade Agreement on the Finance Bill. It was the intention to embody it in the Bill. May I take it that I am right in that understanding?

9.35 p.m.

Mr. Cross

I beg to move, "That this House doth agree with the Committee in the said Resolution."

This is a small matter. The Resolution gives effect to a further provision of the Agreement with India. This country has undertaken to discontinue the drawback on duty-paid foreign ground nuts. Foreign ground nuts axe chargeable with a duty of 10 per cent. ad valorem, and the maintenance of this duty was guaranteed under the old Agreement and is guaranteed under the new Agreement. The discontinuance of the drawback is not a matter of great importance to industry in this country. The imports from foreign sources amount to something under a third of 1 per cent. of our total imports. In 1937, the last year for which I have complete figures, the total imports into this country were 270,000 tons, of which only 700 tons were derived from foreign sources. It will be seen, therefore, that the quantity affected is quite small, but the Indian Delegation did attach importance to this matter. The acceptance of this proposal facilitated the conclusion of an agreement which affects other matters of very great importance, and it is for these reasons that we agreed to discontinue the scheme.

9.36 p.m.

Mr. Alexander

In view of the very sketchy way in which we are able to consider this matter in relation to the Indian trade treaty I hope the House will understand that because we do not divide against the Resolution we are not necessarily committed to complete support of this proposal when we come to the Finance Bill. It is important to make that plain. Like my right hon. Friend the Member for Bow and Bromley (Mr. Lansbury) we are all anxious to see a development of understanding on trade and economic questions between this country and India, and to negotiate with a free self-governing community which we hope to see growing up to its full stature in that country. But that does not mean that we agree that every action by our Executive Government is necessarily of advantage to the citizens of this country, and we still have citizen rights to maintain and to defend. Arrangements of this kind need to be examined in great detail. Since the Import Duties Act and the Ottawa Agreements Act there has grown up a terrible structure of new duties, new preferences and new drawbacks through the mazes of which traders have to try to find their way, until now nearly all big interests have to keep special staffs doing nothing else but deal with these fiscal questions, instead of getting on with the work of production, distribution and imports. It is difficult to keep track of every one of these developments, and so if we do not divide upon this Resolution—because it has not been possible to get all the information we want—it must not be taken that we shall necessarily give a free passage to the subject-matter of the Resolution when the Bill comes on, and we may have to offer very serious criticism.

9.38 p.m.

Mr. Parker

I beg to move, in line 11, to leave out "17s. 6d.," and to insert "15s. 0d."

We on this side are not at all happy about the whole of the increased duties on mechanically-propelled vehicles, particularly, first of all, because we think the increased duties upon motor cycles and the cheaper motor cars are impositions upon the poorer sections of the people who use mechanically-propelled vehicles. There are now a good many people not belonging to the wealthier classes who use motor cycles and motor cars. Among the 12,000 workers in the Ford works at Dagenham there are 1,500 to 2,000 who possess motor cars of their own, and a very large number own motor cycles, and this increased duty will be a serious imposition upon such people, who use their cars and motor cycles for going to and from work. Also, we believe that this increased duty, so far as it affects poorer people using mechanically-propelled vehicles, will defeat its own ends, because it will lead to a reduction in the receipts from the petrol tax We believe that any increase in the licence duties will mean, first, that fewer people will take out licences for motor cycles and the smaller type of motor cars, and, secondly, that those who do possess them will lay them up in winter or for a large part of the year, and as they will not be using them they will not use petrol, and therefore the receipts from the petrol tax will automatically decrease.

Another thing which we believe is likely to result from the general increase in the licence duties is that people will buy fewer motor cars and motor cycles. Commercial travellers and the like, who use small motor cars for business purposes, instead of buying a new car every year and selling the old one for a fairly high sum, will make a car last, perhaps, three years, and therefore the tax as a whole will not merely hit users but will hit the motor car trade. That trade has been in rather a bad way recently. If I may again quote Dagenham, in my own constituency, during the past winter unemployment in the motor trade has been much higher than it has ever been. The figures for last January were twice as high as the year before. There has been some small improvement recently, but this extra duty will, I think, hit the trade once more at a time when it is sorely tried.

If trades like the motor trade which are found in many of the newly developed industrial districts are hit in this fashion, we shall have new distressed areas created in places like Dagenham. That will be a very bad thing for the country, particularly in new areas where the motor industry flourishes, because there the people generally are buying their own houses, and if they are to be thrown out of work we shall find them having to give up those houses, on which they have already paid a great deal of money. Let me again quote the example of Dagenham. The Ford Company built at Dagenham a motor car factory which adjoins one of the London County Council's housing estates. That is an estate which was built primarily for Londoners and people coming from other parts of the country to work at Dagenham were not allowed to live on that estate and had to buy houses in areas adjacent to it. Any increased imposition upon the motor industry will seriously hit those who work in that industry, and may lead to the development of new depressed areas in some of these newly-developing districts. Therefore, because we regard the increased duties as a whole as an imposition on the poorer users of motor vehicles and because they will hit the motor trade as a whole, I am moving this Amendment. I hope that the Government will consider it sympathetically, because the motor cyclist is the person who is least able to meet an increase in the duties.

9.43 p.m.

Mr. David Adams

I beg to second the Amendment.

The proposed increase in the duties impose an additional burden upon the poorer sections of the community and is in line with the increases in the taxes upon tobacco and sugar. As long as we have a very large proportion of our population not in receipt of incomes sufficiently large to enable them to play their proper part as citizens maintaining their families, no Chancellor of the Exchequer has any right to impose taxation upon that class, and there is no doubt that this motor tax will affect considerably the lower reaches of those who use mechanically-propelled vehicles. The Budget propose to increase the tax upon a motor cycle from 12s. to 17s. 6d., an increase of 5s. 6d., or 45 per cent. over previous taxation. The right hon. Gentleman might have been more considerate in this motor taxation. He might have adopted some system of graduation, which would have relieved the poorer classes, many of whom are compelled through business reasons to use the motor cycle. This particular tax may be described as a vindictive one. Certainly, it is very harsh. In the main it is a tax upon the smaller and poorer section who use motor cycles. It will tend to reduce the use of the motor cycle, and I think the Chancellor of the Exchequer would agree that it is to that extent a tax upon sport and health. Why is the tax to be increased to so large an extent? The Government have considerable sympathy with the demand of the railways for a freer hand in the matter of charges, and the tendency of this tax will be to drive more citizens to use the railways as against the roads.

When one looks at the culpability of the tax and one considers that the National Defence Contribution has remained unchanged, although it is bringing to the Exchequer only a trifling sum, £25,000,000, out of the many millions of profits made, it is the more surprising that this additional tax should have been placed upon the motor industry. One would not have complained if only the richer section of the community had been called upon to pay the additional taxation, but to ask the other classes to find still more money while at the same time the Chancellor of the Exchequer is not making any increased demands on the richer sections so far as National Defence Contribution is concerned, is an act of injustice which the Chancellor of the Exchequer would have difficulty in defending.

The motor industry is to be called upon to pay in taxation some £100,000,000 per annum. It was never intended in common sense and reason to place so heavy a burden upon the industry. I am satisfied, from conversations with those who are concerned as manufacturers and salesmen of the lesser type of motor cars and motor cycles, that this increased duty will have a damaging effect upon sales and upon our export trade in these vehicles. It will diminish employment and will have a detrimental effect upon the workers, the manufacturers and the distributors. The general position in this country, so far as motoring and cycling are concerned, is considerably worse than the position in the United States of America. The United States Government has seen the wisdom of not impairing the opportunities of the industrial workers to engage in this healthy and necessary modern pastime. The result of that is that petrol taxation there is low, and the horse-power taxis virtually unknown, but there is a registration tax upon cars. In conversation, a Senator stated that you could never persuade the United States Government to place heavy burdens upon that which was looked upon as a fundamental necessity of the population of the States—motoring.

The increasing duties which we are putting on the motor industry are steadily reducing the possibilities of our lower paid workers from indulging in motoring. In the United States there is not a family, except members of the lower paid coloured classes, which has not a motor car. The collier, the iron worker and other grades of labour go from their homes to their work in motor cars or on motor cycles, more largely in motor cars, which are within reach of the average wage of the industrial worker. For these reasons I think that the Chancellor of the Exchequer, who has adopted a benevolent attitude towards the film industry and has given an assurance that he will consider that matter at a later stage in a favourable light, ought to be good enough to consent to reconsider the taxation upon the lower grades of cars and motor cycles. If he does that, we should be very happy to withdraw the Amendment.

9.53 p.m.

Mr. Gurney Braithwaite

I do not desire to stand between the House and the Financial Secretary, but I should like to make a few observations on this Amendment. The hon. Member for Romford (Mr. Parker), who moved it, and the hon. Member who followed him have spoilt their case by overstating it. Anyone on reading the Order Paper might be led to think that they propose a reduction of tax on the mechanically-propelled vehicles used by the poorer sections of the community generally, whereas the Amendment deals only with motor cycles. The hon. Member for Consett (Mr. David Adams) spoke at some length about the lower-powered motor cars. On inquiry I find that in 1938 the number of motor cycle licences taken out was 462,000. The figure has been falling steadily year after year. Yet the hon. Members suggest that here is an Amendment which is designed to prevent a hardship being placed upon large sections of workers who go to their work by motor vehicle. I was a little surprised that the hon. Member for Consett did not paint a picture of the old age pensioners being deprived of the opportunity of motor cycling. That is the sort of impression that was left by the speech to which we have just listened.

Mr. David Adams

I might have done so if I had been sitting on the other side of the House.

Mr. Braithwaite

To suggest that this is an attack on the health of the people is a little far-fetched. The argument has been put forward—and incidentally it was a rather remarkable tribute to the system under which we live—that we have reached a time when the working classes can go in their own cars and mechanically-propelled vehicles to their work. That is unusual, and far more go on the old-fashioned push bicycle. The way in which the argument was put was exaggerated, and I do not think any useful purpose would be served by carrying the Amendment. I shall, therefore, vote against it if it goes to a Division.

Mr. David Adams

When I was referring to the working classes going to their work in cars I was referring to the United States as against this country.

9.57 p.m.

Mr. Silverman

I think the hon. Member for Holderness (Mr. G. Braithwaite) has omitted to notice that although only motor cycles are concerned with this Amendment, it must be quite clear to the House that this is the first step in an argument, and that what is being suggested here is that the general pro- posal made in the Budget for raising the tax on motor cars is mistaken.

Mr. Braithwaite

There is no other Amendment on the Paper dealing with motor cars.

Mr. Speaker

I suggested that the whole motor vehicle tax should be treated in one debate.

Mr. Silverman

The hon. Member spoke earlier when we were discussing the Tobacco Duty, when I too spoke and made the point, which the hon. Member was good enough to call an attractive point, that the tax might have been better if instead of being a flat rate, it had been an ad valorem duty, so that the increase in the cost could be graded and the poorer people would pay a proportion of it more in accordance with their means and the richer people who use the more expensive article pay a little more. The hon. Member was unable to support me in that argument, and his reason for not doing so was the practical difficulties in the way. The Chancellor, when he replied, told us some more of the practical difficulties, and although I do not pretend to have been convinced—I think that with good will those difficulties could be surmounted —still the difficulties were no doubt there.

Mr. McGovern

The Whips were there.

Mr. Silverman

In this case I think the Whips are there, because the other practical difficulties that applied in the case of tobacco do not apply here. It would be the simplest thing in the world—there is no difficulty of collection, no adding to the expense, no abstruse valuation required—to say that in the case of a 20, 25 or 30 horse-power vehicle the tax should be increased proportionately more than in the case of a small 7, 10 or 12 horse-power car, or still more in the case of a light-weight motorcycle. If the last speaker found the other argument attractive, there is no reason why he should not find this argument attractive, because, in fact, it is the same argument, with this added advantage, that the difficulty he saw in the other case does not apply here. If, therefore, I find that the hon. Member is not accepting the argument, however attractive, and is not adopting the proposal, however simple, I am afraid we are driven to the conclusion that his sympathy is purely a verbal thing and that he does not mind in the least being sympathetic to a poor person so long as richer persons are not called upon to pay: for the sympathy.

He said something about the state of civilisation that we have reached when so many people are able to use mechanically-propelled vehicles. I am amazed that so few people get that privilege. Nowadays, when we have achieved so much, when our mechanical inventiveness has gone so far that almost at the wave of a hand we could destroy the whole of our civilisation within 24 hours, when we are able to produce these things so rapidly, and so many of them, and produce them so powerfully, when we are able to build our roads and our bridges, and so organise our lives in cities that we are able to rely upon these mechanical things in order to enable us to live further out, with all the wealth of our mechanical civilisation, what is it that on the one hand stands in the way of the overwhelming majority of the working class having these things and, on the other, makes our very mechanical inventiveness almost the means of mass suicide? I have no hesitation in saying that it is this economic system which produces poverty at the one end and war as its inevitable consequence at the other, but that is not what we are now debating. We are debating the point that if you have reached the stage when your fear of war has made it necessary to restrict still further the advantages that are to be derived from our civilisation, at any rate let the burden be graded, let it be borne equitably, let the broader shoulders carry the greater part of it. That could easily have been done in this case, and I cannot see any reason why the Amendment, and other Amendments consonant with it, should not be accepted, except the desire which one reads into the Chancellor's, speech to see that the poorer section of the population should bear the greater part of these burdens.

10.4 p.m.

Captain Heilgers

I should like to appeal to the right hon. Gentleman who is going to reply for further consideration of this question. I am not entirely happy about the position so far as motor cycles in the rural areas are concerned. The hon. Member for Holderness (Mr. Braithwaite) said that the number of motor cycles licensed had fallen steadily. That is true, but I do not believe it is true as far as the rural areas are concerned. The motor cycle does enable skilled men like the thatcher to seek work far a field, which he could not do before, and it enables the sugar-beet man and the fruit and vegetable worker to go further afield as well. The motor cycle is not used in the rural areas for pleasure. I agree that in the old days it was a very common thing to see a girl on the back of the bicycle, but to-day the girl demands a car and not a motor cycle. I submit that this is a proposal to tax not a luxury but a necessity. It involves taxing a means of providing work, and, therefore, the proposal is, to some extent, wrapped up with the question of employment. The motor cycle affords the worker in the country increased opportunities for seeking employment further afield, and on that account any increase in tax upon it should be avoided.

10.6 p.m.

Colonel Nathan

When fresh money has to be found by taxation, there is a good deal to be said for adapting well-recognised and well-tried methods of taxation to the new requirements. I do not grudge the right hon. Gentleman the £6,250,000 which he expects to get from this tax this year, or the £11,500,000 which it is expected to realise in a full year as additional taxation from the users of motor cars. What I do object to is the arrangement of the tax and the manner in which the burden is to be borne by those who come within the purview of this proposal. The question of the motor cycle has been dealt with by my hon. Friend the Member for Romford (Mr. Parker) and the hon. and gallant Member for Bury St. Edmunds (Captain Heilgers), and I do not propose to say any more about that. I desire, however, to say something about the ordinary motor car.

Looking at the matter objectively and forming the best opinion I can, I do not believe that this additional tax, in so far as it falls upon those who are comfortably placed, will make the least difference to their manner of life, to their luxuries or their enjoyments. I do not believe that anyone of those who are comfortably placed, is likely to have to give up his car because of this increase in the horsepower tax. But there is a large and increasing number of motor car owners who do not buy new cars. There are many people whose ambition it is to become proud possessors of second-hand cars which they can use at week-ends to take their wives and children from the towns to the country to enjoy the green fields and the fresh air. Very often those people make great sacrifices in order to acquire second-hand cars. Very often the car is paid for painfully, out of weekly earnings, and I do not think it an exaggeration to say that in a number of cases the amount of additional taxation payable annually under this revision will be as much as the capital sum which has been paid for the car itself. That will certainly be so as regards higher-powered cars. Frequently cars are bought by artisans and workpeople for £15 or £10, or even £7 10s., and I have known them to go as low as £5. Doubtless these are cars which many of us would not be very anxious to own, but there are people to whom the possession of such a car is the achievement of an ambition. This additional taxation will fall very hardly upon such owners.

I am not suggesting that the amount derivable from the tax should be reduced, but I suggest that within the purview of the tax there might be adjustments of its incidence. There is, for instance, a distinction to be drawn between the new car and the second-hand car and that is a rather important matter. The right hon. Gentleman may with some justification say that in suggesting that a difference should be made as between the new car and the second-hand car, I am moving away from the canon of taxation which I mentioned at the start, namely, that one should try to adapt well-tried and well-recognised methods to new conditions but I do not think I am really moving away from that position. I venture to ask the right hon. Gentleman, in the first instance, to consider whether it is possible to draw a distinction between the new car and the second-hand car so as to adjust this tax in a favourable direction towards the second-hand car—the kind of car in which one sees the small tradesman, the artisan, the ordinary working man on the road at the week-end and which has possibly been bought for a smaller amount than the actual horsepower tax under this provision.

Further, I would ask the right hon. Gentleman to consider whether it is possible so to adapt his tax as to make it fall more heavily per horse-power upon the second and third cars of those owners who own more than one. I do not think it is to be assumed that those people who own more than one car can necessarily bear the burdens of a steeply graded tax without feeling it, but I consider that they will feel it a great deal less than the small man who owns the second-hand car will weel the burden of having to pay exactly the same rate of tax as the wealthier owner who can buy his Rolls Royce, or Daimler or Austin, or whatever make it may be. I know that Chancellors of the Exchequer do not care to consider modifications of their proposals which are suggested from the Opposition side of the House. It is human nature that that should be so, but having made clear that I am not asking the right hon. Gentleman to reduce the total amount demanded from motor-car owners, I ask him to give favourable and sympathetic consideration to a modification along the lines which I have indicated.

10.14 p.m.

Sir Stanley Reed

I should like to express my appreciation of the way in which the Mover and Seconder of the Amendment dealt with this question and to support the suggestion that the Chancellor should either give further consideration to this subject or silence some of the doubts entertained by some of those who are only too anxious to support him. When we go back into the history of this tax we see it is the greatest fraud on a section of the community that has ever been perpetrated. It was a tax introduced for the sole purpose of improving the roads. It was immediately raided, and finally it passed into the general revenue. It is now being used to single out one section of the community for a heavy additional contribution to the Budget. While I take that view, I shall vote against the Amendment because at a time like this we cannot stand in the way of the Chancellor obtaining the taxation which is needed to meet the emergency.

There are two points which I venture to impress on the Chancellor. The first is that the tax as graded must fall with special severity on the users of small cars, who form an important section of the community. The man with a motor cycle or small car cannot switch over to a yet smaller horse-power, so that he must pay the full rate of duty. The man with the higher-power car can switch over to the smaller car which mechanically will suit his needs as well as the higher-power car. I would welcome some statement from the Treasury Bench that this is a point they are prepared to consider.

Another point on which I should be glad to have my doubts removed is whether this tax as graded will give the Chancellor the revenue he expects from it. He wisely spoke of the psychological effects of a rise in Income Tax. There will be a psychological effect in the Motor Car Duty, inasmuch as it was generally expected that it would be restored to its old amount of 20s. Instead, it has been increased to 5s. above that amount, and the psychological as well as the practical effect will be that a large number of people are now considering changing their cars for smaller horse-power cars so as to escape the full incidence of the tax, while many of those who have a second car are thinking of doing without it so that the whole increase will not fall upon them.

If those practices are followed they must operate in two ways. The Chancellor will not get the revenue from the Registration Duty that he expects, and the revenue from the Petrol Duty will be reduced, because it is the higher-power cars which are the most greedy users of petrol. I welcome the effect of the proposals on social life, because they may drive off the roads the high horse-power cars, the 40 horse-power "suffer little children," and the road hogs which cause so many accidents. I would like to be satisfied on two points—whether there ought not to be a reconsideration of the incidence of the tax so that it will not throw its full weight on the users of small cars, and whether the Chancellor will consult his experts and silence our doubts as to whether a tax so steeply ranged will have the result he expects from it and which we hope he will get.

10.19 p.m.

Mr. Montague

The hon. and gallant Member for Bury St. Edmunds (Captain Heilgers) put up the argument that the motor car tax was bad because it was a tax on a necessity of life.

Captain Heilgers

I was referring to motor cycles.

Mr. Montague

I will accept that. The hon. Member early this evening voted for the taxes upon tobacco and sugar. I do not know whether he regards sugar as a necessity of life, or whether he considers that motor cycles are more of a necessity than sugar.

Captain Heilgers

If the hon. Gentleman challenges me, I would reply that what I said was that motor cycles were a necessity of employment and not necessarily a necessity of life.

Mr. Montague

The hon. and gallant Gentleman is speaking about a necessity of life. I will leave that point. The question of what is necessary ought to be considered from a different angle from that which he is taking. The point which interests me particularly, as a member and an official of an organisation which is very much concerned about this tax, was stressed recently in this Debate, when an hon. Member raised the question whether working men used motor cars to go to work. They do so to a large extent in America but not to the same extent in this country. There is, however, a type of working men, many thousands in number, who not only go to work in motor cars but do their work in a motor car. I refer to the commercial traveller. Large numbers of commercial travellers own cars and use them for the purpose of their business, and because they have to carry samples with them they cannot do as many people are doing to-day, and are willing to do because of this tax—swap their cars, sell them and get smaller cars.

That is an important consideration in the issue raised by the hon. Member who spoke last, as to whether the tax will really secure for the revenue what is expected and desired. Commercial travellers cannot do this, because it would not suit their business. They cannot put their cars up for the winter, as many people are determined to do in the winter of this year because of the tax. The car is part and parcel of the business and the life of the commercial traveller. The commercial traveller who uses a car is not supplied with it by his employer. Very often he works entirely upon commission, especially if he owns a car for some reason or other. In the trade papers you will frequently find advertisements for the services on commission of travellers possessing cars. The increase of tax imposes upon commercial traveller owners of cars of 10, 12 or even higher horse-power a direct tax upon income. They cannot get out of it. If their cars are only of 12 horse-power the proposed increase puts another £6 a year upon them, equivalent to about half a crown a week. To the average commercial traveller that is a big tax upon income and is very unfair. We contend that a tax of this kind ought to be effectively graded.

I would like to make a serious suggestion to the Chancellor of the Exchequer in respect of the commercial traveller and his car. It is true that the commercial traveller gets a remission of tax because his car is part of his expenses, but that makes no difference to the fact that the extra charge puts so much tax upon his income irrespective of the normal advantages that are gained. I suggest that it would be fair and very practical if the Chancellor could arrange that the remission of tax in respect of the use of a car for purposes of business should be looked into, with a view to making for the commercial traveller a corresponding extra advantage which would counteract the effect of this additional tax. I do not think it would make very much difference to the Chancellor's revenue, and it would be very much fairer to the commercial traveller. I think the right hon. Gentleman will realise that a tax of this description on a motor vehicle which must be used for purposes of business, and which in the majority of cases cannot be a small car, is a very great hardship that could be rectified, and I suggest that it might be rectified.

10.26 p.m.

Mrs. Tate

I should like to mention one business that will be very seriously affected by this tax, and to stress the argument of the hon. Member for West Islington (Mr. Montague). One body of people on whom this tax will fall, because they need a car for the carrying on of their profession, are the district nurses and midwives. As hon. Members will be aware, since the passing of the Midwives Act it has been necessary in country districts to increase the funds raised towards the payment of a district nurse, and the tax will fall upon this body of women with very great severity. It is almost impossible already to raise the necessary funds, and it really will not be possible to raise the extra £6, £8, or £10 a year. These women are already working exceedingly hard, and a car is an absolute necessity to them. I hope that, between now and the Finance Bill, the Chancellor will consider whether there is not some way in which he can differentiate between a car which is a luxury and one which is a necessity for the purpose of carrying on a business. I have very little sympathy with the argument of the hon. and gallant Member for Central Wandsworth (Colonel Nathan) about the man who buys a car for pleasure at week-ends. We have come to a stage in our national history when we may have to do without luxuries in order to defend ourselves adequately, but district nurses and commercial travellers are in a different category, for to them a car is not a luxury, but an absolute necessity. I hope that, if the Chancellor can do so, he will differentiate to some extent in this particular instance.

10.29 p.m.

Mr. McGovern

I must express surprise at one or two expressions that were used by the hon. Lady. She states, in relation to the working-class family, that to take a small car out at the week-end—

Mrs. Tate

I never said anything about the working-class family. There are many people whom the hon. Member would class as idle rich wh take cars out at week-ends. I was merely saying that, where a car is a luxury, we have to have this tax, much as we deplore it, but that in the case of the district nurse or the commercial traveller the car is not a luxury.

Mr. McGovern

If the hon. Lady would have a little more patience, she would probably see that I was going to deal with that point. The hon. Lady was replying to what was said by the hon. Member for West Islington (Mr. Montague). He spoke of the families that take out second-hand cars for enjoyment in the country at week-ends, and the hon. Lady condescendingly says we must be prepared to sacrifice our luxuries. The luxury she is going to sacrifice is the working man's week-end enjoyment in a second-hand car. I sympathise with her plea for the nurses and others who are going to be affected by this tax. On the day it was imposed I said to a colleague of mine that I believed that one of the most unpopular taxes would be this. It is going to hit a large number of small people in this country who have previously been supporters of the Government, and who are now making approaches to almost everyone in public life in order to get some remission of this tax. The hon. Member for West Islington made a very good case. There are a large number of commercial travellers, small tradesmen and other people who have very low incomes who are going to be affected by this unjust tax. I would never dream of pleading for the people with high-powered cars and decent incomes, who are always quite well able to make their wishes known to the Chancellor and the Cabinet and get more consideration than the small man usually gets.

The hon. Member on the back benches talked in a contemptuous manner about a statement made by an hon. Member on this side that a large number of workers use motor cycles for their work. He must have very little contact with the working classes if he does not know that a considerable number of workers use motor cycles in connection with their business. In the housing estate in which I reside there are probably at least 20 or 30 young men, some of them bricklayers, plasterers and tradesmen, who go out into the country in connection with their work, and use motor cycles for the purpose. The hon. Member was making an attack on this country when he suggested that the workers of the country probably could not afford motor cycles. It has been mentioned that in America there are probably more than here. I remember going through an industrial works in Germany, where I was specially asked to take note that there were 1,000 workers and that there were 320 cycles chained in places provided for them at the works, 76 motor cycles and 39 small cars, all belonging to the workers in that factory. In every factory I visited there I discovered hundreds of cycles, motor cycles and cars, owned by the workers. This was in Nazi Germany, the land of poverty and terror. Therefore, the suggestion which the hon. Member made that the workers in this country were not able to provide themselves with motor cycles for their work, if it were true, would be a reflection on the standard of life of the common people of this country.

I hope there is to be some attention paid in this House to the small man. We have often heard that the small man has been the backbone of this nation; that the small man in business, the small man who is the owner of a house or the owner of a car and who has some little savings has to get consideration. When I was in Germany I also visited the great motor works that are being erected in order to produce 100,000 cars per year. They were hoping to put on the market for the little man 100,000 cars a year at a cost of £50 each, or something in that region. These great works in Germany are catering for the small man. At a time when that country of terror and brutality is able to cater to such an extent for the small man, we have in this House the repression of the small man and disdainful references to the small man that he is to get off the road and make way for the high-powered cars. This has been the kind of talk in this House to-night— after all, if it clears the little man off the road and makes way for the man with the high-powered car, so much the better. [AN HON. MEMBER: "Who said it?"] It was said during the Debate. I do not remember exactly by whom it was said, but it was said by an hon. Member in this House. I am prepared to await the publication of the OFFICIAL REPORT to-morrow, when I will examine it, and, if I am wrong, I will come down and apologise to this House. I am convinced of it. The statement was definitely made that, if it clears the little fellow off the road, then so much the better. It ill becomes those who, in the past, have exploited the little man to the utmost to come to this House and glory in the fact that something is going to be done to clear him off the road. We are going to sacrifice the small man. As the hon. Lady said, she is prepared to make sacrifices because of the emergency, and the small man will be her sacrifice.

This is an unpopular and an unjust tax. Am I irritating the right hon. Gentleman? He appears to be showing signs of great irritation. He has often given greater cause for irritation to Members of this House than I am giving at the present moment, and I say to him that this tax will probably have a greater effect than he expects. The additional tax is going to hit very hard the small man because it means all the difference between keeping a car and surrendering a car. At least seven or eight people that I know personally have stated that they are prepared to surrender their cars because the burden will become unbearable. I shall oppose the tax, not because of the men with the high-powered cars and the large incomes, but because of the small men with ordinary incomes upon whom the tax will bear heavily and unjustly. I intend to cast my vote against the tax because I believe that these men ought to be supported in this House, and in the country and that justice should be done to them.

10.40 p.m.

Sir J. Simon

The hon. Member for Shettleston (Mr. McGovern) has said that an observation has been made by an hon. Member during the Debate that this tax is welcomed because it will sweep the little man off the road, and that he proposes to search the OFFICIAL REPORT to-morrow, and if it is not so will express his regret for his mistake. What I thought the hon. Member for Aylesbury (Sir S. Reed) said was that for his part he was prepared to welcome the tax if it had the result of sweeping off the road those whom he described as road hogs, who were exposing children to danger, and he thought that it might have that result. It is not for me to say who is right or wrong.

Mr. McGovern

I am wrong in your estimation.

Sir J. Simon

I know that the hon. Member will not mind my pointing out that that is what I thought the hon. Member for Aylesbury (Sir S. Reed) said, and I think I am within the general recollection of the House.

I think it is convenient that I should state the view we take on this matter. Hon. Members will realise that the considerations which have been discussed in the course of the Debate are considerations which have been carefully weighed. I will state as clearly as I can the reason why I reached the conclusion that this tax should be imposed. In the first place, it is a direct tax; there is no doubt about that. I suppose that an indirect tax may correctly be described as a tax which can be passed on to somebody else. There is no doubt that this is a direct tax and is paid by the person who has to pay the horse-power tax. It is not necessarily a good tax or a bad tax on that account, but that is the nature of the tax. I do not agree that a horse-power tax is a tax without graduation, because the very conception that you should multiply the horse-power of the different cars by a figure is itself a method of graduation. There is no doubt whatever that the tax is a graduated tax which rises in proportion to the horse-power of the car. Whether it should rise more steeply or not is another question, but it is essentially a graduated tax on the individuals who have to pay it.

There are two different points of view from which the tax must be examined, apart from the fiscal point of view of what it produces. I was glad to hear hon. Members say that they realised they have to view this proposition on the basis that if it is going to be varied it must still produce the money required, that is £11,500,000 in a full year. I have examined a number of suggested modifications with that in mind, and I should like to assure the House that I intend to examine carefully the suggestions which have been made to-night. At the same time it is only right for me to say that I have examined some of them and that I see great difficulties in adopting some of the modifications suggested. For example, an hon. Member opposite asked whether it would not be possible to draw a distinction between the tax on a new car and the tax on a second-hand car of the same horse-power. I am sure the hon. Member will see the difficulty of that. It would appear to lead to an arrangement by which two people buy two new cars and the next day sell them to one another. It would obviously be extremely difficult to adopt such a suggestion.

I would point out the economic consequences which might be expected to follow. It seems to me that if we do increase the horse-power tax the economic effect is likely to be, at any rate, in the case of the high-powered cars, that the second-hand prices for them would tend to fall. I am sorry for the second-hand car dealers, I am sorry for anyone who wants to sell a car second hand, but at the same time, that may be noted, because, as the hon. Member said, it is true that a good many of the people of whom he was more particularly thinking are people who buy second-hand cars. Indeed, I have known cases, and I think the hon. Member will confirm me when I say that there are cases, where people having a very humble income acquire, very much second hand, a rather high-powered car. My hon. Friend the Member for Frome (Mrs. Tate) would like to see a distinc- tion drawn between a car used as a luxury and a car used as a necessity, and the matter was put rather more precisely by the hon. Member for West Islington (Mr. Montague), who called attention to the important case of commercial travellers. Of course, what he said was quite true. Quite a number of commercial travellers in the country are required to provide themselves, out of their own pockets, with cars, and the hon. Member said that sometimes indeed they are advertised for as persons who must have a car, and by means of the car are enabled to carry on their business.

There is, however, this point. Although I do not profess to be specially instructed on the matter, I feel sure that in a case where such a car in the possession of a commercial traveller is used entirely for his business, the expenses of that car are an expense deductable for purposes of Income Tax. [AN HON. MEMBER: "Sometimes"] Perhaps the hon. Member will correct me when I have finished, if he thinks I am wrong. If the car is used for the purposes of the commercial traveller's business, I think that would be so, and that being so—and it is on this that the hon. Member wanted to be assured—if the amount which the commercial traveller has to pay as horsepower duty goes up, so does the amount which he is entitled to deduct for purposes of Income Tax. I will go further. Supposing that, as is commonly the case, the commercial traveller uses his car for business purposes and also sometimes for private purposes, I think I am right in saying—I will have this checked and at a later stage assure the House about it one way or the other—that a proportion of the expenses, including the increased tax, of running the car is allowed to rank as a business expense when calculating the Income Tax of the commercial traveller. I think that is an important point in the particular cases which the hon. Member had in mind. I should suppose that the same principle would apply—again, I do not profess to be specially instructed—in the case of a doctor who is running a car either wholly or partly for the purposes of doing his business as a medical man.

Mr. Montague

I am sure the right hon. Gentleman would not wish to mislead the House on this matter. The right hon. Gentleman says that when a commercial traveller or anyone else is running a car for business purposes, those expenses may be taken into account for purposes of Income Tax, but we must remember that it is only for purposes of Income Tax. Such a man does not get the full amount of the additonal taxation taken off, but only that proportion represented by Income Tax—namely, 5s. 6d. in the £.

Sir J. Simon

I think that is quite plain. It is an expense just as any other expense deductible for Income Tax purposes; but I agree with the hon. Member that the result is that it relieves such a man to the tune of the rate of Income Tax in each £,

Mr. Pritt

If that is so—and I think it must obviously be so—then, of course, the right hon. Gentlemen will not get all the revenue he wants from this tax, because the people will pay the tax with one hand and receive back 5s. 6d. in the £ in another. I do not know whether the amount is a serious one, or whether any calculation of it has been made.

Sir J. Simon

Of course that has to be taken into account, and there are a great many things which have to be taken into account. Before I gave the Committee of Ways and Means an estimate of what this would produce I had the most careful inquiries made of the Ministry of Transport and elsewhere and I have given the House the figures as they were given to me.

Now I must deal with the matter in rather more general terms. I quite see the force of some of the objections and difficulties that are raised, though as a matter of fact difficulties can be raised to any and every tax. I thought it was better to arrange for an increase in this direct tax rather than, for example, to increase the Income Tax or reduce the rates of allowance for Income Tax. I do not present it as anything other than an additional burden falling upon the very large numbers who have to carry it, but the question is whether or not it is regarded, when analysed and examined, as on the whole a better proposition than any other form of direct taxation which could be substituted for it. It is the best that I could do after a great deal of consideration. The hon. Member who first spoke thought it was going to have an injurious effect on motor production, and that is an important point also. I looked at the figures very carefuly, because we do not want unnecessarily to interfere with the carrying on of an important trade. I am quite convinced, having examined the figures over a series of years, that, whatever may be the impression elsewhere, the number of shillings in the horse-power tax is not the thing that really decides the extent to which British motor cars are sold or exported.

No doubt this is adding to the burden of the motorist, but it is not the governing consideration to a person who is buying a car. The price of the car, especially in the case of high-powered cars, is necessarily a far greater consideration. Another is petrol, and anyone who is acquiring a car, whether high-powered or low-powered, can make a calculation and find out whether or not the horse-power tax or the price of the petrol is the more important item. The extent to which there is an active sale of cars is reflected by the general prosperity of the country at the time. If you take the figures over the last 10 years they do not show any sudden change, in relation to horse-power, and I do not expect to see any very sudden change now. The reason is very simple, that the expense of running the car and other necessary expenses much exceed the multiplication of the horsepower. The same thing is particularly true as regards high-powered cars. I have looked at the figures there. Sales are not really dependent on the rate of the horse-power tax. They necessarily mainly depend on other considerations.

I think that that will appeal to the common sense of all hon. Members, as to anybody who has considered the accounts of his own motor car, without its being further developed. At the same time it is, of course, an additional burden. I can assure hon. Members that I do not take pleasure in putting burdens upon anybody, but I submit that it is preferable that we should raise this £11,500,000 in this way—with the result, unquestionably, that the higher-powered car has to pay more than the lower-powered car— than that we should make any other change in direct taxation, which of course is always available, and which I think would be very much more resented, certainly by business people, and I think, certainly, by the great mass of the citizens.

I do not think the question has been raised, but I have had a number of letters asking whether it would not have been better to have put on a sales tax. Assuming that I must produce £11,500,000 in a full year, if we take the number of new cars that are sold in a year and divide it into the £11,500,000 we shall get the average figure of what the sales tax must be. Of course nobody would dream of having a flat sales tax; it would have to be graded steeply. I think I am right in saying that a division sum will show that the average flat-rate tax would be somewhere between £40 and £50 a car, and when it had been graduated so as really to pile it up, as would have to be done on the higher-powered expensive cars, the addition to the price of those cars would be a very serious matter indeed in the eye of the motor manufacturer. I want the House to appreciate that these matters have been considered anxiously and carefully by myself and my advisers, and in the light of what I have said I think hon. Members may be prepared to take the view that, assuming that additional revenue is to be got by this means, there is a great deal to be said for increasing the horse-power tax in the way I have proposed, and it really is a graduated tax for the reasons I have pointed out.

I must say a word now on the proposed tax on motor cycles. I agree entirely—and the scheme of the taxation shows that I have agreed—that we should not make as steep an increase of taxation in the case of these light motor cycles as I have thought it necessary to make in the case of motor cars, and for the reason, which has been pointed out from both sides of the House, that undoubtedly a much greater proportion of these motor cycles are used by poor people. Therefore, in the case of the light motor cycle the scheme is to raise the annual amount from 12s. to 17s. 6d., which is a substantially smaller percentage rise than the rise from 15s. to 25s. per horse-power in the case of motor cars. I am not saying

that it is not a material burden, no doubt it is. It means an increase of 5s. 6d. a year, or 1¼d. a week, and undoubtedly there are people who will find that extra 5s. 6d. hard to come by. I do not deny it. But I have done my best to modify the tax so far as the light motor cycle user is concerned, because I entirely agree with what has been said, on both sides of the House, that it is far more difficult for the ordinary motor cycle user to find the money than it may be for the average motor car user.

The other case in which an exception has been made, besides the light motor cycle, is that of the light motor tricycle. It does not arise very often, but there are such cases, though it is not very common to see motor tricycles on the road. That particular form of vehicle did not enjoy the advantage of a reduction which took place some years ago, and that being so I have only put up the tax in this case by 25 per cent.

I may not have covered all the points, but I have tried to make to the House a perfectly straightforward statement of some of the considerations that have been working in my mind, and I hope the House will see that some of those considerations have very great force. I do not think they would find it easy to devise an alternative which would get £11,500,000 from motor users. Broadly speaking, I claim that this is, on the whole, a just way of finding the necessary £11,500,000, and it is one in which we shall get the man with the big, expensive car paying, as he ought to pay, more than the man with the small, low-powered car. I hope, therefore, that the good sense and reasonableness of this proposal will commend it to the House.

Question put, "That '17s. 6d.' stand part of the Resolution."

The House divided: Ayes, 188; Noes, 118.

Division No. 90.] AYES. [11.3 p.m.
Acland-Troyte, Lt.-Col. G. J. Beechman, N. A. Browne, A. C. (Belfast, W.)
Adams, S. V. T. (Leeds, W.) Bernays, R. H. Bull, B. B.
Allen, Lt.-Col. Sir W. J. (Armagh) Bird, Sir R. B. Burghley, Lord
Anderson, Sir A. Garrett (C. of Ldn.) Boulton, W. W. Butcher, H. W.
Apsley, Lord Bower, Comdr. R. T. Carver, Major W. H.
Aske, Sir R. W. Boyce, H. Leslie Cary, R. A.
Assheton, R. Bracken, B. Channon, H.
Astor, Hon. W. W. (Fulham, E.) Braithwaite, J. Gurney (Holderness) Chapman, A. (Rutherglen)
Baillie, Sir A. W. M. Briscoe, Capt. R. G Christie, J. A.
Baldwin-Webb, Col. J. Broadbridge, Sir G. T. Clarke, Colonel R. S. (E. Grinstead)
Balfour, Capt. H. H. (Isle of Thanet) Brooke, H. (Lewisham, W.) Colfox, Major W. P.
Baxter, A. Beverley Brown, Brig.-Gen. H. C. (Newbury) Colman, N. C. D.
Conant, Captain R. J. E. Hunter, T. Reed, Sir H. S. (Aylesbury)
Cook, Sir T. R. A. M. (Norfolk, N.) Hutchinson, G. C. Reid, W. Allan (Derby)
Cooper, Rt. Hn. T. M. (E'nburgh, W.) James, Wing-Commander A. W. H. Remer, J. R.
Cox, H. B. Trevor Jones, Sir G. W. H. (S'k N'w'gt'n) Ropner, Colonel L.
Croft, Brig.-Gen. Sir H. Page Keeling, E. H. Ross, Major Sir R. D. (Londonderry)
Crooks, Sir J. Smedley Kerr, J. Graham (Scottish Univs.) Ross Taylor, W. (Woodbridge)
Crookshank, Capt. Rt. Hon. H. F. C. Keyes, Admiral of the Fleet Sir R. Rowlands, G.
Cross, R. H. Kimball, L. Royds, Admiral Sir P. M. R.
Crowder, J. F. E. Lamb, Sir J, Q. Rugglas-Brise, Colonel Sir E. A.
Cruddas, Col. B. Leighton, Major B. E. P. Russell, Sir Alexander
Culverwell, C. T. Lennox-Boyd, A. T. L. Russell, S. H. M. (Darwen)
Davidson, Viscountess Levy, T. Salmon, Sir I.
Denman, Hon. R. D. Liddall, W. S. Salt, E. W.
Doland, G. F. Lipson, D. L. Sandeman, Sir N. S.
Duckworth, Arthur (Shrewsbury) Llewellin, Colonel J. J. Sandys, E. D.
Dugdale, Captain T. L. Loftus, P. C. Scott, Lord William
Duncan, J. A. L. Lyons, A. M. Shaw, Captain W. T. (Fortar)
Dunglass, Lord Mabane, W. (Huddersfield) Simon, Rt. Hon. Sir J. A.
Eastwood, J. F. M'Connell, Sir J. Smith, Sir R. W. (Aberdeen)
Edmondson, Major Sir J. MacDonald, Sir Murdoch (Inverness) Smithers, Sir W.
Elliot, Rt. Hon. W. E. Macdonald, Capt. P. (Isle of Wight) Snadden, W. McN.
Elliston, Capt. G. S. McEwen, Capt. J. H. F. Somervell, Rt. Hon. Sir Donald
Emery, J. F. McKie, J. H. Somerville, A. A. (Windsor)
Emrys-Evans, P. V. Maclay, Hon. J. P. Spears, Brigadier-Central E. L.
Everard, Sir William Lindsay Magnay, T. Spens, W. P.
Fildes, Sir H. Makins, Brigadier-General Sir Ernest Stanley, Rt. Hon. Oliver (W'm'l'd)
Fleming, E. L. Manningham-Buller, Sir M. Stourton, Major Hon. J. J.
Fremantle, Sir F. E. Margesson, Capt. Rt. Hon. H. D. R. Strauss, H. G. (Norwich)
Furness, S. N. Markham, S. F. Stuart, Hon. J. (Moray and Nairn)
Fyfe, D. P. M. Maxwell, Hon. S. A. Tasker, Sir R. I.
Gower, Sir R. V. Mayhew, Lt.-Col. J. Tate, Mavis C.
Grant-Ferris, Flight-Lieutenant R. Medlicott, F. Thorneycroft, G. E. P.
Gridley, Sir A. B. Mills, Major J. D. (New Forest) Thornton-Kemsley, C. N.
Grimston, R. V. Mitcheson, Sir G. G. Titchfield, Marquess of
Gritten, W. G. Howard Morrison, G. A. (Scottish Univ's.) Wakefield, W. W.
Gunston, Capt. Sir D. W. Munro, P. Walker-Smith, Sir J.
Hambro, A. V. Nail, Sir J. Wallace, Capt. Rt. Hon. Euan
Hammersley, S. S. Neven-Spence, Major B. H. H. Ward, Lieut.-Col. Sir A. L. (Hull)
Hannah, I. C. Nicholson, G. (Farnham) Ward, Irene M. B. (Wallsend)
Hannon, Sir P. J. H. Nicolson, Hon. H. G. Watt, Lt.-Col. G. S. Harvie
Harbord, A. O'Neill, Rt. Hon. Sir Hugh Wells, Sir Sydney
Haslam, Henry (Horncastle) Orr-Ewing, I. L. Whiteley, Major J. P. (Buckingham)
Heilgers, Captain F. F. A. Patrick, C. M. Windsor-Clive, Lieut.-Colonel G.
Hely-Hutchinson, M. R. Peters, Dr. S. J. Womersley, Sir W. J.
Heneage, Lieut.-Colonel A. P. Petherick, M. Wood, Hon. C. I. C.
Hepburn, P. G. T. Buchan- Power, Sir J. C. Wright, Wing-commander J. A. C.
Hepworth, J. Procter, Major H. A. York, C.
Herbert, Lt.-Col. J. A.(Monmouth) Radford, E. A. Young, A. S. L. (Partick)
Holdsworth, H. Raikes, H. V. A. M.
Hopkinson, A. Ramsbotham, H. TELLERS FOR THE AYES.—
Hudson, Capt. A. U. M. (Hack, N.) Rathbone, J. R. (Bodmin) Captain Waterhouse and Lieut.-Colonel Kerr.
Hunloke, H. P. Reed, A. C. (Exeter)
Adams, D. (Consett) Edwards, Sir C. (Bedwellty) Leonard, W.
Adams, D. M. (Poplar, S.) Foot, D. M. Leslie, J. R.
Adamson, Jennie L. (Dartford) Frankel, D. Logan, D. G.
Alexander, Rt. Hon. A. V. (H'lsbr.) Gallacher, W. Lunn, W.
Ammon, C. G. Gardner, B. W. Macdonald, G. (Ince)
Anderson, F. (Whitehaven) Garro Jones, G. M. McEntee, V. La T.
Attlee, Rt. Hon C. R. Gibson, R. (Greenock) McGovern, J.
Banfield, J. W. Graham, D. M. (Hamilton) Maclean, N.
Barnes, A. J. Green, W. H. (Deptford) Marshall, F.
Barr, J. Greenwood, Rt. Hon. A. Maxton, J.
Bartlett, C. V. O. Grenfell, D. R. Messer, F.
Batey, J. Griffiths, G. A. (Hemsworth) Milner, Major J.
Beaumont, H. (Batley) Groves, T. E. Montague, F.
Benn, Rt. Hon. W. W. Hall, G. H. (Aberdare) Morrison, Rt. Hon. H. (Hackney, S.)
Buchanan, G. Hall, J. H. (Whitechapel) Morrison, R. C. (Tottenham, N.)
Burke, W. A. Hardie, Agnes Muff, G.
Cape, T. Harris, Sir P. A. Nathan, Colonel H. L.
Charleton, H. C. Harvey, T. E. (Eng. Univ's.) Noel-Baker, P. J.
Cluse, W. S. Hayday, A. Oliver, G. H.
Cocks, F. S. Henderson, J. (Ardwick) Paling, W.
Collindridge, F. Hills, A. (Pontefract) Parker, J.
Daggar, G. Jenkins, A. (Pontypool) Parkinson, J. A.
Dalton, H. Jenkins, Sir W. (Neath) Pearson, A.
Davidson, J. J. (Maryhill) Johnston, Rt. Hon. T. Pethick-Lawrence, Rt. Hon. F. W.
Davies, S. O. (Merthyr) Jonas, A. C. (Shipley) Price, M. P.
Day, H. Kennedy, Rt. Hon. T. Pritt, D. N.
Debbie, W. Kirkwood, D. Quibell, D. J. K.
Dunn, E. (Rother Valley) Lathan, G. Richards, R. (Wrexham)
Ede, J. C. Lawson, J. J. Riley, B.
Edwards, A. (Middlesbrough E.) Leach, W. Ritson, J.
Roberts, W. (Cumberland, N.) Stewart, W. J. (H'ght'n-le-Sp'ng) Welsh, J. C.
Sexton, T. M. Strickland, Captain W. F. Westwood, J.
Shinwell, E. Summerskill, Dr. Edith Whiteley, W. (Blaydon)
Silverman, S. S. Taylor, R. J. (Morpeth) Williams, E. J. (Ogmore)
Simpson, F. B. Thurtle, E. Williams, (Don Valley)
Sloan, A. Tinker, J. J. Windsor, W. (Hull, C.)
Smith, Ben (Rotherhithe) Viant, S. P. Woods, G. S. (Finsbury)
Smith, E. (Stoke) Walkden, A. G. Young, Sir R. (Newton)
Smith, T.(Normanton) Watkins, F. C.
Stephen, C. Watson, W. McL. TELLERS FOR THE NOES.—
Mr. Mathers and Mr. Anderson.

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

The House divided: Ayes, 184; Noes, 116.

Division No. 91.] AYES. [11.12 p.m.
Acland-Troyte, Lt.-Col. G. J. Grant-Ferris, Flight-Lieutenant R. Orr-Ewing, I. L.
Adams, S. V. T. (Leeds, W.) Gridley, Sir A. B. Patrick, C. M.
Allen, Lt.-Col. Sir W. J. (Armagh) Grimston, R. V. Petherick, M.
Anderson, Sir A. Garrett (C. of Ldn.) Gritten, W. G. Howard Power, Sir J. C.
Apsley, Lord Gunston, Capt. Sir D. W. Procter, Major H. A.
Aske, Sir R. W. Hambro, A. V. Radford, E. A.
Assheton, R. Hammersley, S. S. Raikes, H. V. A. M.
Baillie, Sir A. W. M. Hannah, I. C Ramsbotham, H.
Baldwin-Webb, Col. J. Hannon, Sir P. J. H. Rathbone, J. R. (Bodmin)
Balfour, Capt. H. H. (Isle of Thanet) Harbord, A. Reed, A. C. (Exeter)
Baxter, A. Beverley Haslam, Henry (Horncastle) Reed, Sir H. S. (Aylesbury)
Beechman, N. A. Heilgers, Captain F. F. A. Reid, W. Allan (Derby)
Bird, Sir R. B. Hely-Hutchinson, M. R. Remer, J. R.
Boulton, W. W. Heneage, Lieut.-Colonel A. P. Ropner, Colonel L.
Bower, Comdr. R. T. Hepburn, P. G. T. Buchan- Ross, Major Sir R. D. (Londonderry)
Boyce, H. Leslie Hepworth, J. Ross Taylor, W. (Woodbridge)
Bracken, B. Herbert, Lt.-Col. J. A. (Monmouth) Rowlands, G.
Braithwaite, J. Gurney (Holderness) Holdsworth, H. Royds, Admiral Sir P. M. R.
Briscoe, Capt. R. G. Hopkinson, A. Ruggles-Brise, Colonel Sir E. A.
Broadbridge, Sir G. T. Hudson, Capt. A. U. M. (Hack., N.) Russell, Sir Alexander
Brooke, H. (Lewisham, W.) Hunloke, H. P. Russell, S. H. M. (Darwen)
Brown, Brig.-Gen. H. C. (Newbury) Hunter, T. Salmon, Sir I.
Browne, A. C. (Belfast, W.) Hutchinson, G. C, Salt, E. W.
Bull, B. B. James, Wing-Commander A. W. H. Sandeman, Sir N. S.
Burghley, Lord Jones, Sir G. W. H. (S'k N'w'gt'n) Sandys, E. D.
Butcher, H. W. Jones, L. (Swansea W.) Scott, Lord William
Carver, Major W. H. Keeling, E. H. Shaw, Captain W. T. (Forfar)
Cary, R. A. Kerr, J. Graham (Scottish Univs.) Simon, Rt. Hon. Sir J. A.
Channon, H. Keyes, Admiral of the Fleet Sir R. Smith, Sir R. W. (Aberdeen)
Chapman, A.(Rutherglen) Kimball, L. Smithers, Sir W.
Clarke, Colonel R. S. (E. Grinstead) Lamb, Sir J. Q. Snadden, W. McN.
Colfox, Major W. P. Leighton, Major B. E. P. Somervell, Rt. Hon. Sir Donald
Colman, N. C. D. Lennox-Boyd, A. T. L. Somerville, A. A. (Windsor)
Conant, Captain R. J. E. Levy, T. Spears, Brigadier-General E. L.
Cooper, Rt. Hn. T. M. (E'nburgh, W.) Liddall, W. S. Spens, W. P.
Cox, H. B. Trevor Lipson, D. L. Stanley, Rt. Hon. Oliver (W'm'l'd)
Croft, Brig.-Gen. Sir H. Page Llewellin, Colonel J. J. Stourton, Major Hon. J. J
Crooke, Sir J. Smedley Loftus, P. C. Strauss, H. G. (Norwich)
Crookshank, Capt. Rt. Hon. H. F. C. Lyons, A. M. Stuart, Hon. J. (Moray and Nairn)
Cross, R. H. Mabane, W. (Huddersfield) Tasker, Sir R. I.
Crowder, J. F. E. M'Connell, Sir J. Tate, Mavis C.
Cruddas, Col. B. MacDonald, Sir Murdoch (Inverness) Thomas, J. P. L.
Culverwell, C. T. Macdonald, Capt. T. (Isle of Wight) Thorneycroft, G. E. P.
Davidson, Viscountess McEwen, Capt. J. H. F. Thornton-Kemsley, C. N.
Denman, Hon. R. D. McKie, J. H. Titchfield, Marquess of
Doland, G. F. Maclay, Hon. J. P. Wakefield, W. W.
Dugdale, Captain T, L. Magnay, T. Walker-Smith, Sir J.
Duncan, J. A. L. Manningham-Buller, Sir M. Wallace, Capt. Rt. Hon. Euan
Dunglass, Lord Margesson, Capt. Rt. Hon. H. D. R. Ward, Lieut.-Col. Sir A. L. (Hull)
Eastwood, J. F. Markham, S. F. Ward, Irene M. B. (Wallsend)
Edmondson, Major Sir J. Maxwell, Hon. S. A. Watt, Lt.-Col. G. S. Harvie
Elliot, Rt. Hon. W. E. Mayhew, Lt.-Col. J. Wells, Sir Sydney
Elliston, Capt. G. S. Medlicott, F. Whiteley, Major J. P. (Buckingham)
Emery J. F. Mills, Major J. D. (New Forest) Windsor-Clive, Lieut.-Colonel G.
Emrys-Evans, P. V, Mitcheson, Sir G. G. Womersley, Sir W. J.
Everard, Sir William Lindsay Morrison, G. A. (Scottish Univ's.) Wood, Hon. C. I. C.
Fildes, Sir H. Munro, P. Wright, Wing-commander J. A. C.
Fleming, E. L. Nail, Sir J. York, C.
Fremantle, Sir F. E. Neven-Spence, Major B. H. H. Young, A. S. L. (Partick)
Furness, S. N. Nicholson, G. (Farnham)
Fyfe, D. P. M. Nicolson, Hon. H. G. TELLERS FOR THE AYES.—
Gower, Sir R. V. O'Neill, Rt. Hon. Sir Hugh Captain Waterhouse and Lieut.-Colonel Kerr.
Adams, D. (Consett) Grenfell, D. R. Parker, J.
Adams, D. M. (Poplar, S.) Griffiths, G. A. (Hemsworth) Parkinson, J. A.
Adamson, Jennie L.(Dartford) Groves, T. E. Pearson, A.
Adamson, W. M. Hall, G. H. (Aberdare) Pethick-Lawrence, Rt. Hon. F. W.
Alexander, Rt. Hon. A. V. (H'lsbr.) Hall, J. H. (Whitechapel) Price, M. P.
Ammon, C. G. Hardie, Agnes Pritt, D. N.
Attlee, Rt. Hon. C. R. Harris, Sir P. A. Quibell, D. J. K.
Banfield, J. W. Harvey, T. E. (Eng, Univ's.) Richards, R. (Wrexham)
Barnes, A. J. Hayday, A. Riley, B.
Barr, J. Henderson, J. (Ardwick) Ritson, J.
Bartlett, C. V. O. Hills, A. (Pontefract) Roberts, W. (Cumberland, N.)
Batey, J. Jenkins, A. (Pontypool) Sexton, T. M.
Beaumont, H. (Batley) Jenkins, Sir W. (Neath) Shinwell, E.
Benn, Rt. Hon. W. W. Johnston, Rt. Hon. T. Silverman, S. S.
Buchanan, G. Jones, A. C. (Shipley) Simpson, F. B.
Burke, W. A. Kennedy, Rt. Hon. T. Sloan, A.
Cape, T. Kirkwood, D. Smith, Ben (Rotherhithe)
Charleton, H. C. Lathan, G. Smith, E. (Stoke)
Cluse, W. S. Lawson, J. J. Smith, T. (Normanton)
Cocks, F. S. Leach, W. Stephen, C.
Collindridge, F. Leonard, W. Stewart, W. J. (H'ght'n-le-Sp'ng)
Daggar, G. Leslie, J. R. Summerskill, Dr. Edith
Dalton, H. Lunn, W. Taylor, R. J. (Morpeth)
Davidson, J. J. (Maryhill) Macdonald, G. (Ince) Thurtle, E.
Davies, S. O. (Merthyr) McEntee, V. La T. Tinker, J. J.
Day, H. McGovern, J. Viant, S. P.
Dobbie, W. Maclean, N. Walkden, A. G.
Dunn, E. (Rother Valley) MacMillan, M. (Western Isles) Watkins, F. C.
Ede, J. C. Marshall, F. Watson, W. McL.
Edwards, A. (Middlesbrough E.) Mathers, G. Welsh, J. C.
Edwards, Sir C. (Bedwellty) Maxton, J. Westwood, J.
Fool, D. M. Messer, F. Williams, E. J. (Ogmore)
Frankel, D. Milner, Major J. Williams, T. (Don Valley)
Gallacher, W. Montague, F. Windsor, W. (Hull, C.)
Gardner, B. W. Morrison, Rt. Hon. H. (Hackney, S.) Woods, G. S. (Finsbury)
Garro Jones, G. M. Morrison, R. C. (Tottenham, N.) Young, Sir R. (Newton)
Gibson, R. (Greenock) Nathan, Colonel H. L.
Graham, G. M. (Hamilton) Noel-Baker, P. J. TELLERS FOR THE NOES.—
Green, W. H. (Deptford) Oliver, G. H. Mr. Whiteley and Mr. Anderson.
Greenwood, Rt. Hon. A. Paling, W.

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

Sixteenth and subsequent Resolutions to be considered To-morrow.

The remaining Orders were read, and postponed

Forward to