§ Order of the Day for the Third Reading, read.
§ Moved, "That the Bill be now read 3a."—(The Earl of Rosebery.)
§ THE MARQUESS OF SALISBURY
My Lords, I wish to ask a question of the noble and learned Lord on the Woolsack. I regret very much that I was prevented from being in my place on Friday when the noble and learned Lord made a statement which appears to me to be so interesting and important that I wish to ask for further information on the subject. I gather from the noble Lord's statement that the Judicial Committee of the Privy Council has on some occasion decided that this House has no constitutional power to amend Money Bills. If they have so decided, I believe they are entirely wrong; but that is not the point. They have no power of binding us. But I am rather disturbed that they should have entered upon the subject at all. It appears to me to be an extreme exercise of their power. To decide on matters which are in conflict between the two Houses of Parliament is not within their jurisdiction at all. If they were deciding upon the construction of an Act of Parliament, of course I at once admit that they would be within their rights; but I can hardly imagine an Act of Parliament passed, dealing with the position of the two Houses in respect of this 1223 matter, without its having been carefully watched in this House. I, therefore, wish to ask the noble Lord whether he will give me a Reference to the decision the Privy Council has come to, and whether he will also produce the Judgment to which he referred? It appears to me to be a matter of considerable importance, because I do not think that in the present state of things the legal power of this House ought to be diminished in the very slightest degree by any action of this House or concession which this House can make. And though I quite admit that a decision of the Privy Council cannot bind this House, still it comes perilously near to limiting the legal powers of this House when the Privy Council comes to a decision of that kind. My Lords, I draw a very strong distinction—as strong as it is possible to draw—between the legal powers of this House and the House of Commons and the practice which considerations of obvious convenience in the interest of the public welfare may induce the two Houses to adopt. It is perfectly obvious that this House in point of fact has not for many years past interfered by Amendment with the finance of the year. The reason why this House cannot do so is that it has not the power of changing the Executive Government; and to reject a Finance Bill and leave the same Executive Government in its place means to create a deadlock from which there is no escape. If the House of Commons had rejected this Finance Bill during the present month, there would, no doubt, have been considerable inconvenience, but at least another Executive Government would have been provided whose duty it would have been to have suggested an alternative for making fresh provision for the year. But if this House were to reject a Finance Bill, or to amend it so that the House of Commons would reject it, as the same Executive Government would remain in Office, there would have been obviously the greatest inconvenience in dealing with the public finance. I do not, therefore, in the least degree, dispute the necessity of the accepted practice that this House should not, as a rule, interfere with the finance of the year; but at the same time I think it very important, in view of the changes which 1224 have come over the Constitution, the proceedings, and, I must add, the authority of the House of Commons, that we should rigidly adhere to our legal powers, whatever they may be. It is necessary to call attention to the fact that the differences between the legal rights of the House of Commons and its moral authority are of the widest possible character. The legal rights of the House of Commons are equally strong and powerful if they are exercised by a majority of a single vote. They are in all circumstances the same; but the moral authority of the House of Commons varies infinitely with the circumstances of the case. The legal power of the House of Commons is the same as the legal power of the House of Lords, neither more nor less. It is sometimes claimed that the moral authority of the House of Commons is greater; and undoubtedly under certain circumstances it is very much greater; and there are circumstances under which it may be overwhelmingly irresistible. These circumstances are when the House of Commons not only theoretically but practically represents a distinct expression of the will of the people of these Three Countries. There is no resisting the national will. But when the House of Commons does not represent that national will then its authority diminishes, and may diminish to any extent you please, until it has ceased to exist. It occurred to me, after reading the speech of the noble and learned Lord on the Woolsack, to consider what was the legal and moral authority of the House of Commons in reference to this Finance Bill. It was passed, as your Lordships are aware, by a majority of 14. That is to say, eight Members voting in another direction would have thrown out the Bill. What is the moral authority of these eight Members? It depends upon the amount of the popular and national support which they represent. It depends, according to our modern theories and views, upon the numbers they represent. If they represent an overwhelming majority of the people, the authority of the House of Commons is overwhelming; but not in any other case. It is worth while to call your Lordships' attention to the moral authority actually represented by these eight Members who passed this Finance Bill and introduced this revolution in our finance. What is the amount of moral 1225 authority which they actually represent? I have taken out—not their names, of course; I would not do that, but the names of eight constituencies—namely, Central Finsbury, Ayr, North Somerset, North-West Ham, South Northampton, Inverness, Boston, and the Exchange Division of Liverpool—all of which were represented in the Division which gave the Government a majority of 14. The Members for these constituencies were returned by exceedingly small majorities, so small that, if 150 voters had voted the other way, the results of the elections would have entirely changed the majority of the House of Commons for this purpose and would have thrown out this Finance Bill which has made such an extraordinary change in the finance of England. Therefore, the moral authority of the House of Commons for this purpose is the moral authority you choose to attach to 150 householders or lodgers living in those eight constituencies I have named. I need hardly point out to your Lordships that when it comes to a question of 150 men, we could find 150 non-voters in the House of Lords who would condemn the Bill quite as heartily as any 150 voters in those constituencies would support it. Without claiming anything for aristocratic descent or for privileges belonging to the House of Lords, I suppose those 150 non-voters are as good as any 150 lodgers or householders who are to be found in those eight constituencies. I dwell on this matter, because there seems to me to be a constant tendency in the public mind to confuse the moral authority and the legal authority of the House of Commons. I repeat that the legal authority is good if it is exercised by a majority of a single vote, but the moral authority of the House of Commons depends on the popular strength which it represents, and which lies behind it. This particular measure undoubtedly has been passed by moral authority of the very weakest kind—by 150 householders and lodgers, not better men than 150 Peers. My Lords, on these grounds I attach very great importance to the preservation intact of the legal prerogatives and rights of this House, because we do not know when it may be expedient to insist upon and to exercise them. I quite understand the duty and necessity of exercising any of those powers with great reserve and cir- 1226 cumspection; but I confess I heard with great disquietude the language of the noble and learned Lord on the Woolsack, which seemed to me rather like an attack. The noble and learned Lord, basing himself upon some extraordinary proceeding of the Judicial Committee of the Privy Council, attacked the legal powers of the House of Lords. We know not when they may be wanted, and I earnestly protest against any attempt to diminish them. While I am on my legs I wish to contradict, with all courtesy and deference, a statement of the noble and learned Lord on the Woolsack, which will not bear scrutiny. He informed the House that there was nothing new in this principle of graduation, that it had been adopted by Mr. Groschen and Sir S. Northcote, and was merely extended now. While anxiously desirous to avoid anything like uncivil language, I must say that appears to be a mere juggle of words. There is no real similarity between what is called graduation in the proposals of Mr. Goschen and Sir S. Northcote and the graduation put into this Bill. Of course, I am anxious about it, because I myself am responsible for what both Mr. Goschen and Sir S. Northcote did. What they did was to render more easy the burden of the Income Tax in the first place, and to some extent the Death Duty in the second at the lower end of the scale, where they pressed very hard on persons of small means, who had great difficulty in making their living. It was an action of sympathy and compassion—of consideration; I do not think it can be in the least degree blamed or attacked or for a moment compared to the scheme of the present Bill. The transition from indirect to direct taxation is so harsh, and the Income Tax is so severe upon men who are struggling at the extreme end of the social scale for the supply of their ordinary wants, that I am not only not surprised Parliament should have interfered, but it was highly necessary and laudable Parliament should do it. But let not the noble and learned Lord say this principle began with Sir S. Northcote or Mr. Goschen. When Sir Robert Peel limited the Income Tax to £150 he did exactly the same. He recognised that graduation, if you choose to use the word, at that end is necessary; but this graduation for the benefit of the poor 1227 has no similarity or analogy or connection with the graduation now introduced at the other end, which is introduced for the purpose of enabling people with small fortunes to put their ordinary burdens on people who are richer than themselves. Of course, you may say it is just to graduate and make people of large fortunes pay at a greater rate than those with small ones. Justice in political matters is to a large extent a question of conventional tradition. But this is absolutely new. It has been done in no country before. It was never done in this country before the present time. If the usual practice had been followed I suppose there would have been a Death Duty of about 4 per cent., or a little more all round, and the people of small fortunes would have paid their proportion as the people of large fortunes do upon the old principle. The effect of this operation has been constantly described as a contest between rich and poor. It is nothing of the kind. The poor people have nothing to do with it. It is a fight between people of small fortunes and those of large fortunes; and the people of small fortunes are to be enabled to place their burdens, contrary to principles of taxation accepted from time immemorial, upon the shoulders of people with large fortunes. Now, I am not going to represent that as a serious public calamity, or anything which need alarm us, as legislators. It is very disagreeable to people with large fortunes, and very pleasant to the people with small fortunes. It is a very clever device ingeniously carried out. But what I wish to point out is the danger which it involves in the future. You have parted with any standard. Up till now everybody paid a fixed proportion of taxation upon a well-defined standard on income or capital. There was no doubt what you had to do. But now the proportion depends upon the Chancellor of the Exchequer of the day. You may say of it as used to be said of chancery in the old times—the measure of it "depends upon the length of the Chancellor's foot." There is no reason why 8 per cent. should be selected more than 10, or 10 more than 20, or 20 more than 50. There is nothing in the nature of the case, no principle whatever to guide you or to restrain people in the future from 1228 carrying so very convenient a principle into practical application. I think the noble Lord opposite (Lord Farrer) told us the other night there is no danger, because people will not commit suicide. But it is not committing suicide when people with small fortunes put their burdens upon people with large fortunes. It is for them a pleasant operation enough. There is no reason why it should not be repeated indefinitely, and it will be repeated indefinitely unless something else should happen. I have noticed, in the Debates on this subject, it has been more than once said that the process ought to be extended till you come to the point of evasion. I do not admit the word "evasion." To withdraw yourself from the operation of this tax is no more evasion than refusing to build a house is evading the House Duty; but I quite believe that the effect of what has been done will be to stimulate people to consider how they can withdraw from its operation, even at the risk of its exposing themselves to much inconvenience. And in doing so they will not act only on the ordinary motives for withdrawing from the operation of this tax; they will not only be saving their own money, but they will know that they are protecting their own pecuniary class from further and even less defensible encroachments of the same kind. If the tax is successful in raising the Revenue, this principle of graduation, which has no natural or ascertainable limits whatever, will be carried further; if the tax fails to do so, the probability is it will not be carried further. You have, therefore, announced to people that in withdrawing themselves from the operation of the tax they are not only saving themselves, but all who are in positions like to them, from its further and less defensible application. That does not seem to me to be very wise or skilful finance. A great deal is to be said, no doubt, and a great deal was said, which I shall not deal with now, on the Second Reading against this Bill. There is a great deal to be said against the oppression of this new application of the Death Duty, which, instead of levying what contributions are thought necessary for the constant and yearly increase of Revenue as it arises, cuts down at an uncertain time and for an unascertained period and levies a huge sum for the Executive. That is a very 1229 objectionable proceeding in the public interest, because of its violent and unexplained character, and because it interferes with all the ordinary operations by which money is disbursed in the community. Again, there are great objections to this plan, because placing a very heavy penalty on the possession of works of art must inevitably drive them from this country. These are very great evils, but they do not seem to me to be anything like the evils, or to involve anything like the severe condemnation deserved by a plan which, from its very nature, encourages and stimulates what you call evasion to an extraordinary degree, and which will, therefore, probably not only lose the objects at which it aims, but will weaken and diminish the yield of other former taxes—analogous taxes—which already exist, and which, so long as they were not treated in any exaggerated spirit, were not resisted by those on whom they were levied. I have spoken of this principle of graduation, because I repudiate with all the energy that Parliamentary Forms will permit me to employ, the suggestion that either Mr. Goschen or Sir Stafford Northcote are responsible for instituting the principle of graduation. There is no possible ground for laying it upon them. I agree that it will introduce great confusion in our finance. I believe it will work great injustice, and possibly it will produce great social evil; but whatever the evils that come from it may be, the responsibility for this violent revolutionary departure from former principles of finance lies with the present Chancellor of the Exchequer, with the present Government, and with nobody else.
§ THE LORD CHANCELLOR (Lord HERSCHELL)
My Lords, I thought in answer to the noble Duke on Friday evening, I had made clear the action of the Judicial Committee of the Privy Council in the case to which the noble Marquess has referred. Unfortunately, I seem to have failed in my endeavour to do so. I pointed out on that occasion that the Report then made by the Committee to Her Majesty could, of course, not control or affect any privileges of this House—that it could have no legal operation of that kind. But I think the noble Marquess must be aware that there are many cases in which, although a tribunal has no power whatever to ex- 1230 press or give a decision which will bind in a particular matter, it may nevertheless, for the purpose of a point it has to decide, and over which it has jurisdiction, be absolutely necessary to pronounce an opinion upon it. That opinion may be the very basis of the decision at which it arrives, though not necessarily, although necessary for the purpose of that decision, binding in itself. Now what happened was this: At the instance of the two Chambers in one of our colonies it was referred to a Committee of the Privy Council, on which judicial members sat, to determine whether the Upper Chamber had a constitutional right to amend a Money Bill. The conclusion arrived at by the Committee was that the intention of the Legislature in constituting these two Chambers had been that their relation to one another, as regarded Money Bills, should be the same as the relations of these two Houses of Parliament to one another. There were provisions with regard to the introduction of Money Bills, and so on, which were obviously copied from parts of our Constitution. Whether right or wrong, the conclusion arrived at was that such was the intention of the Legislature. If that be so the question arises as to the power of the Upper House to amend a Money Bill. It was impossible to give an answer to the question submitted to the Committee without first answering the question. Has this Upper House a constitutional right to amend a Money Bill? Because once you find that the relation is the same as between these two Houses, you must first determine the relation of these two Houses to each other. The conclusion arrived at was that it was not a constitutional right of the Upper House to amend a Money Bill, and that then it followed that it was not within the constitutional right of the Upper Chamber as between these two branches of the Colonial Legislature. It became absolutely indispensable and unavoidable that we should form an opinion on the point, and, although the noble Marquess has called it monstrous, I am at a loss to understand how he or anybody else could avoid it. That opinion does not and could not bind this House; but none the less it was the conclusion arrived at by those who were considering the matter, not at all from a political point of view or in a Party spirit, but 1231 merely for the purpose of answering a constitutional question submitted to them at the instance of the two Colonial Chambers. That is the real explanation, and I hope the noble Marquess will find it satisfactory, because it appears to me I have shown that it was not only within the right of the Privy Council to form such an opinion, but that it was absolutely impossible for them to answer the question submitted to them by Her Majesty with regard to the Constitution of the Australian Chamber without first forming an opinion upon it. Beyond that we did not go. With regard to the noble Marquess's suggestion that Papers should be laid on the Table, the Report could be presented, but it contains only a simple answer to the question submitted to the Committee, because in these cases it is not customary to give at length the reasons for the conclusion arrived at. As to the noble Marquess's question in reference to graduation, I was not intending to cast blame on anyone for introducing the principle which I was maintaining was a sound principle. The noble Marquess says that to represent that graduation was ever introduced before was a juggle of words. That is a matter of opinion. I maintain that it has been introduced before, although it may be somewhat extended and elaborated now. Unless I am much mistaken, the Inhabited House Duty differs according to the rental at three stages. I call that graduation, and I cannot call it anything else. There are three steps in the case of the Inhabited House Duty, and there are eight steps in the present case; but whether the steps are three or eight, it is equally graduation. As regards the Estate Duty, the noble Marquess says it was only a provision for the relief of the poor from the pressure of taxation. But I cannot see, if it is right that those who have over £10,000 should pay more than those who have under £10,000, why, on the same principle, those who have £40,000 should not pay more than those who have £20,000. It seems to me that the same principle precisely is involved, and both of them go upon this: that you ought to temper your taxation to the means of those who have to bear it, and that just the same reasoning which justifies diminution in the one case justifies this graduation in the other. The noble Marquess has dwelt, in connection with 1232 what he calls the legal powers of this and the other House, upon the moral authority of the House of Commons. He says that, whatever the legal authority of the House of Commons may be, its moral authority depends upon the weight of public opinion which lies behind it. In a sense that is true; but I think it would be very difficult to draw the line and say where a House could be said to have moral authority or not according to its constitution. Of course, it must have a majority in order to carry measures at all. What majority of the House is supposed to have the moral authority of the nation behind it? That seems to me a question very difficult to answer. The noble Marquess has been connected with Governments that have not had the moral authority of the nation very strongly behind them, because they certainly have not had a very overpowering majority. But if you come to look, not merely at the majority in the House of Commons, but to the number of votes by which the Members of that majority won their seats, I have understood that the noble Marquess had a majority in the House of Commons which had been elected by a minority of the voters of the United Kingdom, and, therefore, the House lacked all moral authority during an entire Parliament. The noble Marquess asks what is the constitution of the majority by which this Bill was carried. He puts the majority at 14, and says that eight Members would have turned it the other way. That, I believe, is a mistake, for on the Third Reading the majority, I think, was 23.
§ THE LORD CHANCELLOR
The House thought better of the Bill when the Third Reading came; and when they saw it in all its final glory, with its amendments, and in its ultimate shape, they acquired wisdom, and came to the conclusion that it was a desirable measure to pass. Therefore, it needs 12 Members and not eight to turn the decision the other way. But let us take eight. The noble Marquess chooses eight particular Members who were in the majority, and he says—"Look at the very small majority by which they were returned—150 votes in eight places would have turned the scale." I have not had time to make a 1233 corresponding analysis of Members of the minority, but I venture to say I will find eight Members of the minority returned by smaller majorities than the eight Members to whom the noble Marquess has alluded. Therefore, we may fairly set the one against the other, and that is an end of the argument as to the small moral authority of those who carried this measure by reason of the number of votes supposed to be behind them. After all, according to the Constitution of this country, a majority is a majority, and a majority of the House of Commons is, whether large or small, competent to carry a Bill. If the noble Marquess says that a small majority gives this House a greater right to disregard the action of the other House, that is, of course, a matter which this House will have to settle with the other House, and with the country, according as the country is or is not at the back of the House of Commons. I do not think it would be of advantage to enter on the present occasion into a further discussion, and longer detain your Lordships with a repetition to a great extent of what took place on the previous occasion.
§ LORD ASHBOURNE
said, it was beyond dispute that never before was a Bill making such vast changes and causing such intense uneasiness and heartburning all over the country, carried through the House of Commons by so trivial a majority. With regard to the colonial case to which the Lord Chancellor had referred, that was not a case calling for the decision of the Privy Council as a judicial tribunal. It was a case referred by the Colonial Secretary not to the Judicial Committee of the Privy Council, but to a general Committee of that body; and he would like to know how that Committee was constituted? Also, it would be desirable for their Lordships to know what actually took place; and he would, therefore, ask the Government to lay on the Table not only the Report of that Committee, but an additional statement showing how many meetings the Committee held, who were the witnesses, if any, called before it, whether precedents were examined, whether any evidence was taken, or whether the very able officers of their Lordships' House were consulted and the Journals of the House referred to as to the practice and procedure of their Lord- 1234 ships' House in reference to the discussion, amendment, or rejection of Money Bills. He would like to know whether counsel were present to assist the Committee by argument on any precedents that existed? Or was the whole thing as he had suggested—a mere reference by the Colonial Secretary to the Committee for his own guidance? That obviously was a question of great importance. It was obvious that a bare Return, giving merely the answer of the Committee in a few lines, would be insufficient. They were aware, from the speeches of the Duke of Argyll and the Duke of Rutland on the Second Reading, that there was a great deal of learning upon this question, and a bald Return would be of little use. Therefore, he trusted that when the Return was made it would be found to contain some real and valuable information, so that their Lordships might judge of the character of the decision referred to. The noble and learned Lord on the Woolsack evidently attached great weight to the opinion of the Committee as a matter of constitutional importance. The Inquiry, therefore, was one not to be lightly entered upon, but ought to be conducted with great caution and prudence. It might be suggested that this was a matter ultra vires a Committee of the Privy Council. It was an immense constitutional question not to be hastily decided upon an opinion given indirectly in deciding another case.
§ Motion agreed to; Bill read 3a accordingly, and passed.
§ THE MARQUESS OF SALISBURY
gave notice that he should move for a copy of the decision referred to by the noble and learned Lord on the Woolsack. He would insert the Reference if the noble and learned Lord would give it him.