HL Deb 07 March 1910 vol 5 cc71-112

Read 1a.


My Lords, this is a Bill to enable the Treasury to borrow money for meeting expenses authorised by the Consolidated Fund (No. 2) Act, 1909, and the Appropriation Act, 1909. These sums amount to, roughly, £125,000,000, and the amount which we have actually borrowed so far is £29,800,000. That is not an exact figure; it is approximate, because I understand the figure varies from day to day. It will be seen, therefore, that the borrowing powers of the Government are by no means exhausted; but under the Consolidated Fund (No. 2) Act we are obliged to repay such borrowings by March 31 of this year—that is to say, if the money borrowed is on Treasury Bills. We now seek not to obtain a new power of borrowing money, because, as will be seen, we have powers already, but to prolong those powers which we already have and to issue new Bills with a life beyond March 31. To show that this matter is one of considerable urgency I may mention that in three days time Bills for £4,500,000 fall due which otherwise, if this measure were not passed into law, could only be renewed for three weeks. The Bill is one of but two clauses. Subsection (1) of the first clause deals with the extending of the time during which the Treasury may borrow, and sub section (2) fixes the form under which the Treasury will have to borrow under this Bill. Clause 2 deals with the partial suspension of the Sinking Fund. With regard to that, I may say that it is, of course, obviously undesirable, if it can be avoided, to pay off debt with one hand whilst borrowing on the other hand to do so; and I may quote what Mr. Austen Chamberlain said on this point in another place. He admitted the temporary necessity of suspending the Sinking Fund for this purpose. I think that that, perhaps, absolves me from saying any more on this particular question. But it may be of interest to the House to know that, notwithstanding our suspending the Sinking Fund as we contemplate doing under this Bill, the deadweight Debt for the year 1909–10 will be reduced by some £9,500,000.

Moved, That the Bill be now read 2a.—(Lord Denman.)

*THE MARQUESS OF LANSDOWNE, who had given notice— On the motion for the Second Reading of the Treasury (Temporary Borrowing) Bill to call attention to the delay of His Majesty's Government in laying before Parliament their proposals for raising the revenue necessary for the current year; and to ask for information as to the date when those proposals will be made known to this House. said: My Lords, I ventured to put this Notice on the Paper because it seemed to me that it would scarcely be creditable to this House if this Bill were allowed to go through without some words of comment. It deals with large and important financial transactions—transactions touching very closely great issues in which this House has played a conspicuous part—and it is, moreover, to be passed through all its stages with a rapidity which stands out in marked contrast to the leisurely pace at which His Majesty's Government are proceeding with the main financial provisions of the current year.

The Bill, as the noble Lord who has just addressed us explained, deals with two separate questions. It authorises temporary borrowing by His Majesty's Government, and it also authorises the diversion of certain large sums of money, amounting altogether, I think, to £6,300,000, from the purpose for which it has up to the present time been earmarked. I mean the reduction of the indebtedness of the country. Both of these transactions are, on the face of them, obviously of an undesirable character. I could quote copiously from statements made by colleagues of the noble Earl opposite in regard to the desirability of providing for the year's expenditure out of the year's income, and, with regard to the Sinking Fund, I do not know that there was any feature in the policy of the present Government upon which the Prime Minister appeared more to pride himself than his policy of effecting a steady diminution of the National Debt through the operation of the Sinking Fund. Unless my memory plays me false, I think the Prime Minister once described himself as the "vigilant custodian" of the Sinking Fund, and the noble Lord who moved the Second Reading of the Bill readily admitted that any disturbance of the arrangements for reducing the debt of the country was in itself undesirable.

It seems to me, therefore, that, if my description of the contents of this Bill is an accurate one, we are entitled to say that it requires not only justification, but the amplest justification, at the hands of His Majesty's Ministers. The official defence of these proceedings, and I have no doubt we shall have it presently from the noble Earl, is that these exceptional measures are inevitable on account of the rejection of the Finance Bill in the month of December last by this House. I am quite ready to admit that the rejection of that Bill obviously led to a situation in which exceptional financial measures have to some extent become inevitable. But the question is whether these particular arrangements are justifiable, either wholly or in part. Now, with regard to the Sinking Fund, I appreciate the argument used by the noble Lord who moved the Second Reading of the Bill when he told us that it was scarcely reasonable to expect that His Majesty's Government should pay off old debt with one hand while they were incurring new debt with the other. That, I think, is prima facie a reasonable way of putting it, and the only question which I am inclined to ask with regard to that part of the case is this—I assume that a great deal of this taxation, which has not yet been collected and to replace which this borrowing is to take place, will eventually be recovered, and I should like to know whether His Majesty's Government have it in contemplation, when those sums have been wholly or in part recovered, to restore to the Sinking Fund any part of the money which they are now diverting from it? I dare say the noble Earl will be able to give me, in general terms at all events, some answer to that question.

But, my Lords, the question of temporary borrowings seems to me to need much more justification. I am, at any rate, disposed to suggest to your Lordships that the transaction which we are invited to approve is in itself a disadvantageous transaction to this country. I suggest that it is being resorted to without sufficient reason, and I suggest in particular that it might have been avoided either wholly or in part without any departure from the principles which His Majesty's Government have themselves laid down or from their own feeling of self-respect. I shall endeavour to explain what I mean. I wish, in the first place, to remind the House of the offers which we made in December last, if I may so put it, officially on behalf of the Opposition, to agree then and there to any reasonable proposals for meeting the disturbance in our financial arrangements which the rejection of the Budget of course occasioned. I regard it as beyond question that if those offers had been accepted the difficulty with which His Majesty's Government are now endeavouring to deal would, if it had not disappeared altogether, have been immensely diminished in extent. Our offer was rejected—rejected, I must say, with something like acerbity. I do not attribute acerbity to the noble Earl opposite because when I first ventured to make the suggestion in this House he passed it by without any notice at all. But the overture was certainly rejected elsewhere, and rejected on the ground that His Majesty's Government did not desire—I think this was the way it was put—to have any truck with the House of Lords on a question of this kind.

It seems to me that our offer was very much misunderstood and very much misrepresented. It has been described as a suggestion on our part that His Majesty's Government should take back their Budget and bring it to us again trimmed, altered, and presented in a shape more acceptable to us, but less acceptable to its authors. But I can assure the noble Earl that when we made that proposal we had no idea whatever of suggesting anything that could be reasonably regarded as offensive to the amour propre of His Majesty's Government. We were thinking not so much of the dignity of His Majesty's Government as of the interests of the British taxpayers. We found that owing to our rejection of the Finance Bill the arrangements for the year had been put out of joint, and we desired as reasonable and patriotic people to do what we could to diminish that inconvenience without prejudice whatever to the main issue which we desired to have referred to the people of this country. We were thinking, as I said a moment ago, of the interests of the taxpayers; and I am afraid you were thinking of the things that might be said of you by some of your own malcontents. His Majesty's Ministers were obdurate then; and they have remained obdurate ever since, for I take it there is no doubt whatever that if they had chosen, they could during the present session of Parliament either by a short and uncontroversial Bill or by a Resolution of the House of Commons have regularised the payment of a great part of these taxes, to which I shall refer presently, and which have been tendered in payment of their obligations by the people of this country, but which His Majesty's Government have declined to receive.

What is the argument which has been used to justify this refusal? It is suggested to us that the financial scheme of His Majesty's Government must be regarded as a complete, carefully-composed whole, of which no single part or fragment could be dealt with apart from the rest, and we are told that it has become the custom in this country to embody the whole of the finance of each year in a single measure, and that it is an unheard-of tiling that any part or portion of that measure should be dealt with separately from the rest. I own that that argument does not greatly impress me. I believe I am right in saying that the custom of dealing with the whole of the finance of the year in a single measure under the title of the Finance Bill does not date further back than the year 1894, and I cannot, for the life of me, see that there is anything so binding in the precedent then created as to make it impossible for the Government of the day, at a moment of emergency, to depart by an inch from the arrangement which has become usual.

The position which His Majesty's Government have taken up seems to me, I must say, quite untenable, and I do not think they are able to hold it. What is their argument? It is a two-fold one—first, that no part of the Budget of 1909 is to be brought before Parliament unless the whole of it is brought up; and the second position is that they are not to come to this House for assistance. My Lords, the Bill on the Table fails to comply with either of those conditions. This Bill contains a proposal to divert £3,500,000 from the Sinking Fund—a proposal which was part of the Budget of December last. That fragment of the old Budget you are reviving. You are dealing with it by itself in this Bill, and you are coming to this House, and not only coming to this House, but you are asking this House as a special favour to allow you to pass both these Bills through all their stages at a single sitting. I cannot for the life of me see why this proceeding, judged by your own standard, should involve no loss of dignity; why you should think it consistent with your dignity to come to this House and ask for leave to borrow money with which to pay your debts, when you are too proud to come to this House and ask for its assent to the taxes themselves. That does seem to me, I must say, a piece of technical, I will not say pedantic, reasoning which I think will not appeal very strongly to the public outside these doors.

May I revert for one moment to the taxpayer? In these days we do all that we can to encourage thrift. Now the transaction proposed in this Bill seems to me the most thriftless—I might almost say the most prodigal—transaction which financial ingenuity could contrive. What are you going to do in this Bill? You want a certain number of millions of pounds. You are going to borrow these millions from the public. You are going to pay—so I see it stated—something like £10,000 a week as interest on the money you are going to borrow. But you refuse to take the same millions, or a part of them, from the same public when the public comes with the money in its hand and asks you to take it. Surely that is bad business if ever there was bad business. And when you come to the manner in which this policy is being applied by those who have to give effect to it I own that I am very considerably puzzled, and I hope I may be able to elicit some explanations from His Majesty's Government. I understand that at this moment the Bank of England, with the concurrence of His Majesty's Government—I suppose I might say under the direction of His Majesty's Government—are deducting income-tax at 1s. 2d. in the £1 from the salaries of our Civil Servants. I also understand that the banks are collecting income-tax, at the same rate, at the source, and consequently hold large sums which they have in their hands at this moment, but that the Somerset House authorities refuse to accept payment of these sums—refuse, that is, to take the usual steps for the purpose of regularising the transaction, without which steps, of course, as prudent people of business, the banks are not very likely to consent to pay the money over. I am still more puzzled because I have heard since I came into the House this evening that in some parts of the country demand notes for the payment of income-tax are, as a matter of fact, actually being issued. So that I really want to know what the policy of His Majesty's Government is. Are they going to block these payments, to raise official difficulties in the way of their being made? Or are they, on the contrary, going to facilitate them and to do what they can to collect this large amount of over-due taxation? The proceedings, as far as they have taken place up to the present time, seem to me, I must say, to be proceedings likely to create and to prolong that very chaos which His Majesty's Government anticipated with so much alarm when we took the step of referring the Budget to the people. Of course, I am aware that some loss to the taxpayers is inevitable. There will be a loss, I take it, under the head of Stamps; there will be a loss, though not a very large one, under the head of Land Taxes, and a loss on the Death Duties. But what I want to know is why to that loss, which is no doubt regrettable, His Majesty's Government are trying to add the further loss which the taxpayer must inevitably sustain owing to the failure to collect this money.

The singularity of these expedients certainly seems to me to be a fresh illustration of the unfortunate results which are occurring, and which are bound to occur, from the procrastination of His Majesty's Government in proceeding with the Budget of last year. The withholding of that Budget seems to me to be most unfair to the country; and it is certainly most unfair to your Lordships' House. I would ask your Lordships to call to mind the language which was used by His Majesty's Ministers themselves with regard to the Finance Bill. It was described to us as a measure likely to create a new heaven and a new earth for the people of this country. We were told that we were doing a cruel wrong to the people in withholding from them the blessings showered upon them by this Budget. And when it was rejected by this House the first official announcement that was made by the Prime Minister was an announcement in the most unambiguous terms to the effect that the first business of the new Parliament, should the Government come back to power, would be to reintroduce their proposals and give validity to the measures which had been taken in the interim.

Throughout the whole of the election campaign, in almost every speech delivered by the adherents of His Majesty's Government, this statement was put in the forefront, that the first object and aim of the Government was to bring back their Budget and to force it through this House. The public was told that the Budget had been murdered, that John Brown's body was mouldering in the ground, but his soul was marching along. We were told that the Budget was to be brought back and driven through—"rammed through," I think was the expression—over the heads of this House. We were told that it was to come back unaltered, unmodified in the slightest particular, and unless I am mistaken the Chancellor of the Exchequer intimated his personal conviction that the Finance Bill would be on the Statute Book by March 31. When we read the gracious Speech from the Throne we found in it a statement which to us at any rate appeared to point to nothing else but this, that it was the intention of Ministers to place the Budget in the front rank and before any of their other proposals. I ventured so to interpret the King's Speech, and I was not corrected by the noble Earl opposite. That, after all, was a perfectly intelligible and perfectly justifiable policy on the part of His Majesty's Ministers. They had appealed to the people, we had appealed to the people, and the question which is now being pushed to the front—the Veto of the House of Lords—obviously arose only in the second line, because, if this House was right and rightly interpreted the views of the country in rejecting the Budget, then there could be no question of condemning us or of taking exception to the manner in which we had used our right of Veto. Surely in these circumstances the first duty of His Majesty's Government was to ascertain authoritatively what the finding of the country was on the question of the Budget.

But what has become of all that zeal, that desire for a prompt ascertainment of the views of the country? Six weeks have passed since the elections virtually came to an end, this is the third week of the Parliamentary session, and the Budget still hangs fire. If it was wrong of us to stand in the way of the progress of the Budget, why is it right for you to stand in the way of the progress of the Budget now? And is there not, perhaps, this difference between your action and ours, that we held the Budget up in order that the people might have the opportunity of expressing their opinion upon it, whereas you, as far as we can understand matters, are holding up the Budget in order to prevent the representatives of the people from saying, in the proper place, what their view with regard to the Budget is? I trust earnestly that the noble Earl will give us some enlightenment on this point, that he will tell us why the financial proposals of the year are being held back, that he will tell us how long they are going to be held back, and that he will also tell us one or two things in regard to the conditions under which these proposals will be resuscitated whenever they are resuscitated. We should like very much to know whether when we see the Budget again it will be the same Budget, or whether you, in your turn, will perform any of those trimming and altering operations which you deprecated so much when we suggested them? Will there be an expurgated edition of the Budget for special consumption on the other side of St. George's Channel? Then is there any truth in the statement, which is widely current, to the effect that when your proposals come before us we shall find that the old Budget and the new Budget are, as it were, telescoped together, and so mixed up that it will be impossible for us to ascertain with accuracy how far the original Budget has disappointed the expectations of its framers?

And, above all, we should like to know this—whether when the Budget comes up again it is to stand or fall on its own merits, or whether its merits are to be mixed up with another question, the question of the Veto of the House of Lords. Are we to see that verdict to which both sides looked forward confused in such a manner that some of those who may support the Budget will vote for it because they like it, while others will vote for it, in spite of their dislike for it, and because they regard it as a means of effecting the ulterior object they have in view—I mean the disruption of the United Kingdom? If that is the way in which the issue is to be put, all I can say is that I for one can scarcely regard it as fair fighting. It may be very slim, very ingenious, but I do not think it is the kind of ingenuity which will greatly commend itself to plain people in this country. But whatever may be thought of it outside the walls of Parliament, I do venture to say that such a course would be grievously unfair to this House, this House which joined you in your appeal to the people of this country, which is ready to abide by the result of that appeal, and which now waits for the verdict which the people of the country have been invited to give.


My Lords, I think it will be for the convenience of the House if I proceed at once to say a few words in reply to the observations of the noble Marquess. The noble Marquess seems to take a more close and intimate interest in these financial questions than do many of his right hon. friends in another place, who, I observe, are apt to leave these discussions rather to the skirmishers and franctireurs of their party, instead of invariably taking part in them themselves. The actual financial position as it stands has been stated by my noble friend behind me in moving the Second Reading of this Bill, and the noble Marquess has drawn attention to various points connected with it. He first of all drew attention to the further raid which it has been found necessary to make upon the Sinking Fund. That is, of course, in itself a regrettable circumstance, and the fact that that raid has to be made only shows how serious is the position created by the action of your Lordships at the end of last year. The noble Marquess asked whether it would be the object of the Chancellor of the Exchequer to restore to the Sinking Fund as much as possible of what was being in a sense unduly taken from it, if the financial position permitted of his doing so later on. Of course I have not had the opportunity of consulting my right hon. friend on that point, and I am sure that it would be impossible to prophesy at this moment; but I can say this, speaking generally, that it clearly must be the object of any Chancellor of the Exchequer to maintain so far as possible the payments to the Sinking Fund for the extinction of debt. But as to how far the leakage, which necessarily takes place before the arrears for 1909–10 can be collected, would prevent any such replenishment of the Sinking Fund, that, I take it, is a matter as to which it is impossible to give any opinion at this moment.

The charge we have to meet is that of needless delay in dealing with the financial position. The noble Marquess recurred to what took place in December last when he made what he evidently still considers to be a very handsome offer, that is to say, to assist us in passing into law certain parts—although we have never heard exactly what parts—of the Finance Bill which your Lordships rejected. I cannot help thinking that the noble Marquess was scarcely serious in expressing surprise that that offer was not accepted. The offer was of the kind which was once described by Cardinal Newman as "an olive branch shot out of a catapult." It certainly never occurred to any of us that it would have been possible to enter into a transaction of that kind, for reasons which I will develop a little later on. But for the moment I will only say that, assuming it to have been impossible for us to accept that offer then, January and February were, at any rate, inevitably lost for the purpose of collecting taxes. Then when Parliament met in the middle of February it was evident—as was explained by my right hon. friend in another place, and more briefly by myself here—that the first duty which fell upon us was in connection with Supply. It was quite clear to anybody who knows the merest rudiments of how the money matters of the country are conducted that, however desirable it might be to collect the taxes, what was absolutely imperative was to get authorisation for spending on Supplementary Estimates. And apparently the reasonableness of that occurred to everybody. No objection whatever was made in another place by the friends of noble Lords opposite to the taking of the whole time up to Easter for those necessary purposes, involving, as it did, a real hardship upon a very deserving class who get very little consideration now-a-days—namely, the private Members in another place. Their time was taken without even a murmur from them, and the attitude of the Opposition in another place, I think, makes it clear that it was intended that during these weeks before Easter no other business of any kind should be taken.

Well, the postponement of the formal collection of taxes undoubtedly, by common admission, involves a loss. It involves loss in two ways. You have to borrow money and pay interest on that money instead of receiving the money in the form of taxes, and the postponement may also involve, and in some cases probably will involve, certain irrecoverable arrears. Now, so far as regards the loss due to having to pay interest on the borrowed money, that, of course, is not disputed by anybody. The only point is whether the reasons which we give are sufficient excuse for asking the country to meet that loss. But as regards the question of irrecoverable arrears I do not think that it is likely that the postponement for a week or two more or less would make any appreciable difference in that respect, because it is important to remember that as regards the collection of these taxes there is no magic about the end of the financial year and March 31. You have got to collect the arrears of taxes. Whether you do it just before the close of the financial year or as soon as you can afterwards is not in itself an important matter, and, as some of your Lordships doubtless know, Income Tax is in no way concerned with March 31. It runs from April 5 of one year to April 6 in another.

Now we come back to the question which was asked by the noble Marquess—Why, at any rate, even if you were not prepared to bring in your Budget at once, could you not have brought in first a Resolution and then, I suppose, a Bill, to legalise the collection of Income Tax? The noble Marquess, of course, is quite right in saying that Income Tax, although it represents the major part of the deficit, by no means represents the whole. There are other sources of taxation for which the Budget provided, where the failure to collect helps to swell the deficit in no inconsiderable degree. But before I proceed to say a word on the general question of the separate Bill, I should like to deal with some of the observations made by the noble Marquess as to what is occurring at this moment. He says that the Treasury has declined to receive taxes. That is not an absolutely accurate way of putting it. What has happened is that the official Commissioners of Income Tax have not thought it right—of course under instructions from the Treasury—to make a direct demand for Income Tax, on the ground that an official demand ought not to be made for taxes which cannot be legally recovered. You have no right to put the Government of the country into the position of making a demand which it is open to anybody to refuse to meet. The noble Marquess says that there have been cases in which demands have been made for Income Tax. Income Tax is not all collected by the official Commissioners who are subject to the Treasury. There is the body in London called Special Commissioners and there are also Local Commissioners in various parts of the kingdom who are not under the Treasury, and they in some cases have, certainly not improperly, but without direct authorisation from the Treasury, issued demand notes, and in the ordinary way also I understand that a very considerable sum in Income Tax has, as a matter of fact, been paid.

Now, my Lords, I come to the question of whether it was the duty of His Majesty's Government, assuming it to be impossible, as it undoubtedly is—it has been shown to be impossible—to have brought in the Budget Bill during these first weeks of Parliament, because the time is given up to Supply—whether we ought to have brought in a Resolution followed by a Bill for the collection of Income Tax. The noble Marquess has adduced various arguments to show that it was our duty to have done that. But I can assure the noble Marquess and the House generally that no question of wounded dignity or of amour propre—I think those were the phrases he used, and they have been used elsewhere—ever crossed our minds in connection with this matter. It is a very much wider and deeper question than that. It is a very great Parliamentary question, and to suppose that we should deliberately sacrifice, so far as we are sacrificing—although the extent has been exaggerated—the public funds to any form of wounded pride, either as individuals or as a Government, I think is to do us some injustice, and I do not know that there is anything in the history of our four years of government which entitles anybody to suppose that we should act in such a manner. The arguments of the noble Marquess are very good as far as they go—they are excellent for their purpose, but they are entirely what I may call bank parlour arguments; they are none the worse for that, but they only represent one part of the case, and it is necessary in dealing with this matter to look at the political situation as a whole. This situation of affairs is the indirect consequence of your Lordships' action last December, and people must be taken to intend the indirect no less than the direct consequences of their action.

On this question of bringing up the Budget in more Bills than one I revert for a moment to the Budget debate of last December. At that time a number of charges of a rather random kind were made against us of having introduced tacked matter into the Budget. I think I am right in assuming now that those charges are entirely withdrawn. [Opposition cries of "No." They are not withdrawn? [Several noble Lords: "No."] Well, that, I confess, surprises me, and for the reason that I understood that you are going to pass the Budget when it comes up to your Lordships' House. It does cause me some surprise that you should say that you are going to pass a Bill into an Act which contravenes the old-established rule, admitted by us no less than by yourselves, against tacking. I make a present of that argument to noble Lords opposite. For I do not believe that the House ever seriously thought that the Budget Bill could be described as involving tacking—that is to say, it did not contain anything foreign to or different from the matter of Aid and Supply. What I believe was in your Lordships' minds, although I see you do not admit it, was that the propositions of the Budget were various and novel and therefore ought to have been introduced in separate Bills, but that is an entirely different question. But it has this very real bearing on the position at this moment—namely, that I think you will never find—certainly you will not find it in this House of Commons; you may find another House of Commons more subservient—you will never find that this House of Commons will agree to do anything which involves the splitting up of the Budget in any form into different Bills, and for the reason that they think, and I am not at all sure that they are wrong, that your Lordships would be very glad to win back the practice, which you lost in 1861 and finally in 1894, of splitting up the financial proposals for the year into different measures. I confess I greatly admire the ingenious arguments by which the noble Marquess sought to show that this Borrowing Bill which we are now bringing in really offends in that respect, and that it involves a splitting up of the Budget. Dialectically that is extremely ingenious, but I do not think that the plain man, to whom the noble Marquess is fond of appealing and to whom he appealed to-day, will agree that this simple proposition to borrow money for a time on bills has any analogy with the division into different measures of definite propositions involving policy of taxation in a Budget. The two things cannot be compared. And although, as I say, I greatly admire the ingenuity of the noble Marquess's argument, I cannot admit that it was convincing.

That, my Lords, is our position. We have to take the broad political ground on this matter. We greatly regret the necessity. We should, of course, have greatly preferred it had the House thought fit to pass the Budget and to allow matters to proceed in the ordinary course. But as that was not done, it is useless to expect that the other House will abandon the position which it has taken up. What would be said by any member of the majority in the House of Commons would be that something like a state of war exists at this moment between the two Houses. When a state of war exists you may have to blow up some of your own bridges and tear up some of your own line of railway, and those who suffer must be prepared to stand that temporary loss. If they are not prepared to do that, they had better go over to the enemy. If the country does not support us in taking this action I quite agree that the sooner we go about our business the better, and we must endeavour to adorn as best we can the private station to which noble Lords opposite would like to relegate us. But after all this is a practical matter.

What is the practical issue? The practical fact is that no proposition of this kind to bring in one part of the Budget, even though it should save the country a certain amount of money, would have the faintest chance of succeeding in the House of Commons as it exists at this moment. Even if His Majesty's Government were so impressed by the arguments of the noble Marquess that we endeavoured to engage in such a transaction, I do not believe there is one of those who support us in the House of Commons who would go into the Lobby in favour of a proposal of that kind. It is one of the occasions when, as was said in a well-known phrase, the chassepots would go off of themselves. Even supposing we were so deeply moved by the arguments of the noble Marquess that we would not go on as a Government, but placed our resignation in the hands of His Majesty, and noble Lords opposite came into power, they would not have the faintest chance, with the present House of Commons, of bringing about such a measure as is proposed. I do not believe for a moment that if noble Lords opposite, Say even with the concurrence of His Majesty's present advisers, were in office and attempted to get through a Bill of that kind, you would obtain a majority for it in the House of Commons, and the only effect obviously would be that until a new Parliament came together the whole matter would still remain sub judice, and the payment of these taxes would be still longer deferred. Therefore, my Lords, it is not practical politics to suggest that anything of this kind should be done. We do not think the suggestion reasonable, and if I have shown that it is impracticable, as I venture to think I have, I think that is sufficient for the purpose of to-day's debate.

The noble Marquess at the close of his speech put one or two questions to me with regard to the Budget. I am afraid that, in view of the fact that the whole of the time in another place up to Easter is to be occupied with Estimates, it would be impossible for me to give any answer which I could describe as accurate as to the time when the Budget is likely to come up to your Lordships' House. I can only suggest, therefore, that it is open to the noble. Marquess to raise the matter again before we adjourn for Easter, and some of the questions he has put to me—some of which, I confess, involve considerations which have never been brought to my mind at all, and of which I have never even thought—he may think fit to put again at a later date. But I do not think it would serve any useful purpose if I were to offer conjecture, which is all I could offer, as to the course of business in another place when it has not been announced by my right hon. friend there; and therefore I must ask the noble Marquess to postpone if he would be so good, such inquiries on this subject as he may wish to make.


My Lords, it is with some reluctance that I venture to rise to address your Lordships, as I feel that the statement of the noble Earl the Leader of the House was animated by what your Lordships must above all things admire and respect—absolute sincerity. If only we could feel equally assured of the wisdom and prudence of the policy which he has enunciated, there would be small reason to continue this discussion. My sole excuse, therefore, for venturing to occupy even a few moments of your Lordships' time must be this: There seems much in the present situation which goes beyond the legitimate field of Party politics and is concerned far more with the general financial welfare of the kingdom and the prosperity of the entire community.

I am not aware whether your Lordships have gathered from the speech of the noble Earl a very definite reply to the most definite Question which was addressed to him by the noble Marquess. Are your Lordships to understand that the Finance Bill is to be reintroduced and passed into law with all its provisions as they stood when that measure came up for discussion in your Lordships' House in November last? Are your Lordships to understand that some modifications or alterations will be introduced? Are some of the clauses of this measure to be now omitted? Are some concessions to be made, possibly in order to satisfy the clamour of a section of the community with whom His Majesty's Government may have been forced to conclude a sinister alliance? It would be a convenience to your Lordships to have a clear understanding as to what is intended. These, however, are questions of policy which have been, and will be, debated by experienced and distinguished speakers on both sides of the House. I trust that I shall have your Lordships' approval if I limit myself to my humbler sphere, and if I endeavour to indicate how far the present situation affects the financial conditions of this country.

There is one matter, and a matter of great importance, as to which no satisfactory reply has been received. This is the question of the collection of Income Tax. It is a question which has been fully debated in another place during the last few days. Your Lordships may have gathered from the reports of these discussions that, in spite of the remonstrances and supplications addressed to them by those well qualified to express an opinion, His Majesty's Government seem intent on refusing to authorise the payment to the Inland Revenue authorities of sums which have been actually collected, and the receipt of which would obviate, to a great extent, the necessity of the large borrowing operations in which the Treasury has of late been indulging. Perhaps your Lordships will allow me to give a brief statement of what actually has occurred. On December 2 last the Prime Minister, in another place, made the following statement— Our course is to advise, as we have advised, the Crown to dissolve this Parliament at the earliest possible moment. His Majesty has been graciously pleased to accept that advice, and the result, I trust, will be that a new House of Commons will assemble at such a time as to make it possible for it to provide, both retrospectively and prospectively, for the needs of the current financial year. If we are fortunate enough to enjoy its confidence, then our first act will be to reimpose from this week all the taxes and duties which were embodied in the finance Bill, and to validate all past collections and deductions. This statement of the Prime Minister had a reassuring influence, in that it showed that no chaos need exist. No chaos need have existed; no chaos did exist at that time. In spite of assertions now, attended as they are by triumphant allusions to speeches at Birmingham and elsewhere to the effect that this chaos is an accomplished fact to-day, I venture to suggest to your Lordships that the only chaos now existent is that which has been deliberately engineered by those responsible for the present policy of His Majesty's Government.

On December 4 a circular was issued to bankers, coupon dealers, and others, signed by the Secretary of the Board of Inland Revenue, and concluding as follows— The Board are authorised by the Lords Commissioners of His Majesty's Treasury to suggest that a similar course should be adopted on the present occasion, and that Income Tax should continue to be deducted at the rate of 14d. in the £ pending the introduction of another Finance Bill for the current year. On the strength of these official assurances, bankers and agents decided to continue to deduct Income Tax at the rate of 1s. 2d. from the warrants and coupons which they were called upon to pay. I am well aware that these deductions have been technically illegal, and that Resolutions of the House of Commons are not in themselves sufficient to give a permanent authority to such action. I am aware that these Resolutions would have to be renewed at the birth of a new Parliament. But I am also aware that such Resolutions bear the sanctity which attaches to convenience and to custom, and I fail to see any adequate reason why His Majesty's Government, by a measure which they could pass in five minutes time, should not authorise the payment to the Treasury of sums which for some time have been actually at their disposal.

It is, of course, quite true, as the noble Earl the Leader of the House points out, that the assessments are at this moment illegal. But surely this is a reason in itself for passing a law to make them legal. Assurances were given to His Majesty's Government that such a measure would be treated as non-contentious. I am led to believe that, during the last ten days, the evening sittings in another place have not been unduly protracted. Your Lordships will allow that the only people who have no right to the large sums which have been collected are those in whose hands they lie to-day. It is an irony of the present situation that the very capitalists whom this Government seem to regard with such suspicion should have a continued control and benefit of sums which surely should either be in the pockets of the taxpayers, or should be standing at the credit of a Government account. The apprehensions expressed last session in certain quarters—and these not the least well-informed quarters—that the welfare of the country was being sacrificed to Party interests are now unhappily confirmed by the extraordinary attitude of His Majesty's Government in wilfully creating financial chaos by refusing to regularise the tax collections. Much of this revenue, if not actually lost, is so hopelessly in arrear that I believe that the Treasury officials themselves would allow that the framing of a Budget for the next year or two will be more or less a matter of guess work.

The figures of the Income Tax returns, allowance being made for these arrears, are a significant indication that the prosperity of this country is waning. The first nine months of the present financial year, say to December 31, 1909, showed a decline of £750,000, in spite of the application of the 1s. 2d. tax levied on interest, dividends, warrants, &c. The figures up to the end of November last show a decrease of £600,000. It is hardly conceivable that the Chancellor of the Exchequer should have any intention of disguising these waning receipts by any such tactics as are evident to-day. It may be well for the Chancellor of the Exchequer to plead that there is no use in redeeming debt on the one hand, and borrowing afresh on the other. But why was the Government compelled to borrow? What must be the effect on the credit of a Government if, with millions in the hands of banks awaiting the Exchequer, it elects to borrow millions, to raise floating debt to abnormal amounts, and actually to suspend the redemption of the permanent Debt? I am no politician, and I fear I must apologise to the noble Earl the Leader of the House for what he will, perhaps, consider a bank parlour argument; but if this is not sacrificing great public interests to petty and Party ends I would be glad to be told how it should be described.

What has occurred to justify so complete a change of front since the Prime Minister made the statement I have quoted in one of the concluding debates of the late Parliament? What one real, sound, or satisfactory reason can His Majesty's advisers advance against the course which was officially indicated as recently as December 2 last, and which is still indicated by common honesty and by common sense? Are your Lordships to understand that this new Parliament, in its tottering and uncertain childhood, dares not adopt a course which would result in an immediate saving to the taxpayers of England? Are your Lordships to be told that such are the unhappy disorders consequent on the preoccupations of faction that all habits of method and prudence are to be cast aside? Surely no! I trust that His Majesty's Government will be able to give your Lordships such assurances as will guarantee that attention to the interests of the public good and of public economy which the people of England have an undoubted right to claim.


My Lords, I should not presume to enter upon those high questions of policy which have formed the subject of the speech of the noble Marquess. I will only venture to take that side of the question which deals with the financial machinery which is essential to the orderly management of our finance. In the first place, I was glad to see that the noble Marquess appeared to attach rather more gravity to the financial situation than he did at the time when the Finance Bill was under discussion in your Lordships' House. It has dawned upon him that the situation is a very serious one for the credit of the country; but I would hold that, as the matter stands now, no accusation of delay can be brought against the Government in the action which they have taken. It is necessary to understand what the actual situation is.

The charge which the noble Marquess brings forward, as I understand it, is that the Budget ought to have been introduced, and ought to be at this moment before the House of Commons. I believe that that is simply an impossibility according to the necessities of our financial regulations. There are three authorities necessary for the conduct of financial business. The first of those authorities is the Votes of the House of Commons in Supply, which sanction the expenditure of the State; the second is a power to the Executive to borrow in order to make certain that money would always be in the Exchequer sufficient to meet the demands of the Public Service. Those two authorities are absolutely necessary. If the Votes in Supply are not passed, the Service—and this is no mere method of speaking—comes absolutely to an end. If the Votes necessary at the beginning of the ensuing year and those that are necessary at the close of this year are not taken before March 31, the simple fact is that the Controller of the Exchequer refuses to issue the money. There is no question whatever about that, and the point, therefore, is that before everything else, and before any deduction can be drawn from the words of the Prime Minister quoted to-night, the first thing absolutely necessary is that that provision should be made.

The House of Commons met in the middle of February, and has only within the past few days been able to get into Supply. You have to bear in mind that provision has to be made before March 31 and must receive the sanction of Parliament before that date, not only for all Supplementary Estimates this year, but also for very large sums in the expenditure of next year. That involves discussion of the Army and Navy Estimates. It involves a free discussion by the House of Commons of a great number of points, and in the circumstances which have been brought about by the action of your Lordships' House there was, in my opinion, no alternative before the Government but to devote the short remaining time up to March 31 to the discussion of those Estimates. It is no argument to say that on certain nights the House of Commons did not sit the full time, because this House knows as well as the other House that just objection is taken if there is not fair time given in another place to discuss the Estimates.

Then when these necessary measures have been taken there comes the third authority—namely, the provision of taxation, which is set forth in the Budget; but there is not an absolute necessity that the provision of taxation should accompany, or indeed follow closely upon, the provision of what I have ventured to call the financial machinery. In our history there have been various cases, all of them, as I venture to think, very bad precedents, which show what may be done. The most celebrated case, I suppose, of emergency of this kind is that of 1784, when Mr. Pitt apologised to the House of Commons, in bringing in his Budget, that for two years the whole of the provisions for the orderly carrying on of the finance of the country had been in abeyance on account of political turmoil. There were various other occasions on which, through political emergency, the Budget had been brought forward quite late in the year—to give only one instance, Sir Robert Peel did not bring forward his Budget in 1841 until half of the year was over. I only mention these facts because I want to make it clear that the provision of taxation does not follow immediately, or necessarily very closely upon, the financial Votes. Therefore I cannot allow that the fact of the Budget not being brought forward immediately is not sanctioned by precedent.

I wish to put in a caveat against these precedents, and I should be sorry to quote them as a precedent for what is being done now; but I maintain that it was absolutely necessary for the Executive Government to ask Parliament to give the remaining time up to March 31 to secure the necessary Votes, and that, though it is no doubt most desirable that the Budget should be brought forward without unnecessary delay, there is nothing to make it absolutely necessary that it should be brought forward in one week or in another week. So far, I submit that no case has been made out against His Majesty's Government of having neglected their duty, or of having been guilty of undue delay in bringing forward their financial proposals; and the words of the Prime Minister which have been quoted to-night must be interpreted subject to the financial needs and machinery, without which the Public Service could not be carried on. But going beyond that, I do feel that some consideration is due from your Lordships' House to the Government in this matter. You must admit that it was by your act that the Budget was thrown out. It is not necessary for me at this moment to argue one way or the other as to the advisability of that course. You threw out the Budget saying that you wished to have the opinion of the nation upon it. Your wish was met, and the opinion of the nation was taken. But that has, necessarily, thrown us so far back that it has become impossible to make our present financial arrangements in order. Therefore I think your Lordships do owe to the Government a little consideration in the matter.

The noble Marquess asked a question as to the Sinking Fund to which I think there is a very simple answer. If the revenue gathered in the ensuing year exceeds the expenditure the noble Marquess need hardly trouble himself about it, for, as a matter of course, that excess goes to the Sinking Fund; it is already provided for, and therefore there is no necessity for any special provision being made. As regards the collection of the revenue at the present time, I think all of us who have any experience in that matter are aware that supposing the Budget Bill could have been passed in the last few days it would make very little difference in the amount of revenue collected before the close of the year. Do not let me pass over the extreme gravity of the present state of our finances. On February 26 there was still due on the revenue something like £43,000,000, and at that time the expenditure exceeded the revenue by £18,000,000. That, my Lords, is a situation such as in peace has never, I am happy to think, happened before, and that it ought to be remedied as early as possible no person can possibly question. But I do feel that His Majesty's Government have been put in an extremely difficult position and ought to have all due consideration given to them so far as the measures they take for regularising the financial position are concerned. The Budget, we may hope, will come before the other House early in April, and that is really as speedy a settlement of the financial question as we can possibly expect.


My Lords, there are certain features connected with the War Loan and the non-payment of Income Tax which I ask leave to be permitted to mention to your Lordships. I do not wish to occupy your time for long, because I feel that these Resolutions will be passed in due course, and they ought to be passed as they are for the good of the country. But I think we may learn from the experience of the present moment something which may be of use to us in days to come. First of all, I will take the case of the War Loan.


I am very unwilling to interrupt the noble Lord, but as a matter of fact the War Loan Bill has been passed, and I think if he desired to raise any points upon that he ought to have done so when the Bill was before the House.


I am quite aware of that, but what I had to say would not have taken long. However, if your Lordships desire it, I will omit that portion of my remarks.


If there is any point on which the noble Lord wishes to be reassured and will inform us privately, we will give him any assurance possible.


There is one question as to the issue of Exchequer Bonds which I will ask the noble Earl privately. The Income Tax at the present moment is partly in the pockets of the people and partly in the pockets of bankers. Naturally enough, that leads to a certain amount of loss. Leakage is going on, and, as has been mentioned to-night, part of the Income Tax, owing to the delay in collection, will never be able to be realised. One effect on the money market of the non-collection of the Income Tax by the Government is that it tends to make money too cheap now. The general condition of things at this time of the year is that gold accumulates in the Bank of England, to whom it is useful during the autumn months when gold is in great demand. But now, owing to the extreme cheapness of money, we see a different state of things obtaining, and gold, instead of coming to this country, is being paid out in large quantities. Last week the Bank of England got rid of nearly £1,000,000 to France, South America, and India, and therefore the effect of the Income Tax not being collected in due course by the Government must lead to a very dear money market and to a good deal of interference with trade later on in the year.

From the domestic point of view, the non-collection of Income Tax has led to confusion everywhere and a good deal of injustice. I will take this point. A man who has his money invested in Government Stock has his Income Tax deducted by the Government, but the man who has not his money invested in gilt-edged or Government or railway Stock has not paid his Income Tax. The result is that the Government have had to borrow large sums of money to pay for those who have not already paid, and the injustice comes in here—that the man who has paid his Income Tax has also to contribute to the interest on the Government debt which has been created by those who have not paid. That is obviously unfair, and we are face to face, owing to the non-collection of Income Tax, with a deficiency of £25,000,000 and the sweeping away for the time being of our much-valued Sinking Fund. I think we may be permitted to smile on this side of the House when we remember the "People's Budget" and the flourish with which it was introduced. Financially, we are lapsing into methods of barbarism and are experiencing to the fullest extent government by a Party for a Party and not in the general interests of the country at large. People move their money out of this country; money is pouring out of the country. Whether that is wise on the part of the public I know not. I am inclined to think it is not wise. At the same time, I have great respect for the general opinion of this country, and when the country does express an opinion of this sort I look upon it with very great respect. Money is going out, and gilt-edged Stocks are once more beginning to fall.

I am almost led to think that the Budget is being used as a kind of weapon against your Lordships' House. There seems to be a desire to make finance as difficult as possible in the future in case another Party should presently be in power. That, of course, is not for the good of the country. I confess I was rather astonished to hear the noble Earl who leads the House say that we on this side have apparently come to the conclusion that there was no such thing as tacking in the Finance Bill. On the contrary, that was the principal argument of some of us against the Budget, and it still is. With regard to the Licensing Clauses, I have always held that that was a gross case of tacking, because the Licensing Clauses had been already embodied in a Bill which had been submitted to and rejected by your Lordships. I was also somewhat surprised to hear the noble Earl say that the country were not inclined to make the demand that the Income Tax should be collected. I should have thought that the country at large were very anxious indeed that the Resolution enabling the Income Tax to be collected should be passed. It would not interfere with the other portions of the Budget. But I remember the words of the First Lord of the Admiralty a week or two back, the sense of which was that the House of Commons were not inclined to listen at all to any recommendation from the House of Lords. There seemed to be a certain amount of pique in that statement, and I cannot help thinking that that is not the way in which the finances of this country should be conducted. I do not know why we are face to face with all this financial mess. I suppose it is merely to keep a Party in power who dare not bring in their own Budget for the arbitrament of the House of Commons. I think that if we had made up our minds to pass a short Resolution authorising the collection of Income Tax we should have gone far to make up the deficit which we shall now have to face, and that that would have been the proper course to pursue in all the circumstances.


My Lords, I was very interested and gratified to hear the opening remarks of the noble Lord, Lord Faber, because to-day we are discussing a definite thing—the Treasury (Temporary Borrowing) Bill—and the noble Lord said that these Resolutions ought to be passed as they were obviously for the good of the country. I was very glad to hear the noble Lord make that statement, and I wondered whether his remark was equally satisfactory to the noble Marquess opposite, who, in the course of his remarks, declared that the Bill was one of the most prodigal that had ever been introduced and was clearly against the interests of the taxpayer. That was a rather curious support for the noble Marquess to receive from his banking friend who was put up to support his opinion from the financial point of view.

The financial position of the country is undoubtedly a serious one, and I do not imagine that anybody would attempt to deny it. The noble Lord who spoke second on the other side—Lord Revelstoke—imputed considerable blame to the Government because he said a great deal of this might be put right by a Resolution passed by the House of Commons on the subject of the Income Tax. My noble friend Lord Welby has already dealt with that. The noble Lord opposite also spoke of the sanctity of House of Commons Resolutions. Such Resolutions used to have the force of law because they were followed by a Bill. But, my Lords, you have killed the sanctity of a House of Commons financial Resolution. A House of Commons Resolution is no longer as a matter of course followed by a Bill through both Houses, and such a Resolution standing by itself, and as things are, could not possibly, in the eyes of the Judges, have financial sanctity in future.

I observe a curious difference in the attitude of noble Lords opposite from that which they took up when they threw out the Budget. I remember speech after speech on that occasion, and I have particularly in my mind the speech of the noble Viscount, Lord Milner, who has had as much experience of the collection of taxes in this country as any one, in which the House was advised that no very bad muddle at the worst would occur if the Budget was thrown out. What do noble Lords say now? What does the noble Marquess say? He says that a serious loss to the taxpayers anyhow must be inevitable. I have no doubt he is right. He also said that the financial arrangements for the year were out of joint. He is certainly right. Noble Lords recognise that to-day, but it is a different attitude from the one taken up when they threw out the Finance Bill. Lord Revelstoke went even further. He said he believed that not only the Budget for next year, but I think he went on to say the Budgets for some years further on, must be to a great extent a matter of guess work. Those are all very serious statements. I do not know that the last statement is not rather beyond the mark of our present misfortunes, but there is no doubt that the financial position is very serious, and that noble Lords opposite now recognise that to be the case, yet they denied that such a situation would arise when they threw out the Budget Bill.

The noble Marquess who initiated this debate to-day made a rather curious complaint. He complained of the leisurely pace of the Government as regards their financial provisions, and he went on to say that their procrastination in regard to the introduction of the Budget was damaging to the taxpayers and extremely unfair to this House. If he is most anxious to have the Budget I should like to know whether he is answering for his Party that they are in favour of it. The noble Marquess reminds me of what I believe is a common trick in local elections in this country. When there is a very unpopular man in a district a request is sent to him asking him to stand for election, and then everyone votes against him. It is considered a rather low-down trick. The noble Marquess is saying. "Please bring in your Budget." Why, noble Lords opposite threw it out only a few weeks ago! I think whoever is entitled to ask for the Budget and to press for it there is one person who is not so entitled, and that is the noble Marquess. Then he went on to gibe at the Prime Minister because he is not able to pay off debt. He is not, unfortunately. The noble Marquess said the Prime Minister used to boast that as Chancellor of the Exchequer it was his desire to pay off debt. When the noble Marquess and his friends were in office they piled up obligations—I am not saying it was their fault, but they did it—and they left the country enormously heavier in debt than when they came into office. In three years the Liberal Government that succeeded them paid off £40,000,000. Then the noble Marquess took a hand again, and the present financial position of the country is the direct outcome of the action of the noble Marquess and his friends. I think the gibes of the noble Marquess at the Prime Minister were, in the circumstances, out of place.

Then the noble Marquess urges that at any rate the Government should try to pass some taxes through this House. The Government cannot do very much more than they have done; they have tried to pass all their taxes. It would be interesting out of doors if the noble Marquess would state distinctly which taxes he is in favour of. I suppose he is not in favour of the Land Taxes. I suppose he is not in favour of the Licensing Taxes. And if we are going into it at all would he mind telling us if he is in favour of the Super Tax? Some of the ablest speeches during the Budget debate were delivered against the Super Tax, but I have seen it stated that there were not a dozen election addresses which contained an attack on the Super Tax—not a dozen candidates ventured to attack the Super Tax in the country. It would, as I say, be interesting if the noble Marquess would state distinctly which taxes he is in favour of, so that the Government may have some guide as to their future action. The noble Marquess laid great stress on the view that the Budget ought to come before the Veto. The noble Marquess and his Party have raised the whole trouble, but in his line of argument he is not likely to advance his own case, because people out of doors will see that the noble Marquess is extremely angry and upset because the Government are actually bringing in the Veto question before the Budget. The noble Lord who spoke second from the Benches opposite said the same thing—that the Budget ought to come first. But when people are attacking you and you protest that the course taken is unwise, it is more than likely that they will press on their attack on those lines; in other words, they will not take the advice of their enemies when they are planning out a campaign against them. I also noted the extreme anxiety of the noble Marquess that the question of the popularity or unpopularity of the Budget should not be affected by the question of the House of Lords. I should have thought that the noble Marquess and his friends would have held the view that this House was so strong and so popular—the most magnificent institution in the country, and an institution which all foreign nations envied—that the fact of the inclusion of the question of the House of Lords would have been to their advantage. But it is clear that the noble Marquess is afraid that the Budget would get through under cover of an attack on the House of Lords. That is an admission on the part of the noble Marquess which we may carefully note and profit by.


My Lords, my noble friend the Leader of the Opposition put two questions to the noble Earl opposite. In the first place he asked what was likely to be the future of the Budget, and secondly he asked why His Majesty's Government did not take steps to obtain the authority of Parliament for the collection of the Income Tax. With regard to the first question, I quite understand that the noble Earl opposite is not in a position to make a very definite statement on the matter. Such a statement would naturally first be made in another place, and anything more indefinite than the statements on the subject which the other place has been favoured with cannot well be conceived.

But I should like to know what was in the Prime Minister's mind when he said, on December 2, that the first act of the new House, if the Government obtained the confidence of the country, would be to pass the Budget which was rejected by your Lordships' House? The noble Lord on the Back Bench opposite, Lord Welby, suggested that the answer was that time was against any such proceedings; that in the first place it was essential to get Votes in Supply, and to obtain the authority of Parliament for the expenditure on the various Services. That I do not question for a moment. But again I ask what did the Prime Minister mean? He knew when he spoke on December 2 when the old Parliament would be dissolved, and when the new Parliament would assemble, and why then did he suggest, with his knowledge that the passing of certain Supply would be necessary, that the first act of the new Parliament would be to carry the Budget? I suspect the Prime Minister thought he would be in a position in the new Parliament to come down to the House of Commons and ask them to suspend their Standing Orders and pass the Budget by a single Resolution.

The Prime Minister prophesied before he knew, and as the result we see that nobody can tell at the present moment whether the Budget which was rejected by your Lordships has or has not a majority in the present House of Commons—in other words, has or has not the assent of the people—or whether it will not be necessary to secure that assent for the Budget by coupling with it such measures, entirely different from the Budget itself, as will secure the support of the Irish Nationalist Party. That, my Lords, I think is the answer to the question which my noble friend the Leader of the Opposition asked of the noble Earl opposite with regard to the future of the Budget. His Majesty's Government, I have no doubt, are doing their best by perfectly legitimate political negotiations with the Nationalists—assuming that they agree with the views of their Nationalist supporters, as I believe they do—to secure that essential support without which the people's Budget cannot possibly become law. Meanwhile everything is delayed. The collection of taxes cannot take place. Nobody knows what the financial future will be, and we are obliged to resort to the expedients, contained in this Bill, of borrowing for the necessary expenditure of the country, because His Majesty's Government cannot make up their minds or cannot get the House of Commons to make up its mind, on the merits of the Budget of last year. The noble Lord who has just sat down said that if His Majesty's Government were to accept the suggestion of my noble friend the Leader of the Opposition, for an early production of the Budget, and if it came to your Lordships' House, my noble friend would suggest that your Lordships should again reject it.


I think I was rather hinting at the noble Marquess's followers in another place. I did not in the least intend to suggest that the noble Marquess himself would go back on the pledge which I know he gave.


I suppose members of the Unionist Party in another place will vote according to their principles and consciences, and they have always voted against the Budget of last year. What my noble friend the Leader of the Opposition said was that if the present House of Commons returned the same Budget as was sent up last December your Lordships' House would pass it as the expression of the will of the people. Whether that will ever happen is one of the most doubtful things of the future.

But a smaller issue, although a very important issue, is the question of the collection of the Income Tax. Here is a tax a very large proportion of which is collected in the first three months of the year. Practically the collection of the Income Tax before January 1 is very small indeed, and amounts to hardly anything but the arrears of the previous year. It is quite true that nothing which Parliament could do now would avoid the delay which has already taken place in the months of January and February, or avoid the possible loss which may have arisen through that delay. But if during the present week, or on an early day next week, His Majesty's Government were to harden their hearts, and take the course I will venture to suggest to them, the collection of the Income Tax would be accelerated by some five or six weeks at the very least, a not unimportant matter in the collection of such an enormous sum as the Income Tax represents. What is the objection that has been raised to His Majesty's Government dealing with this matter? In the first place it has been said that the House of Commons gave up the time of private Members solely on the ground that there was certain necessary financial work to dispose of. That is true. But what can be more necessary than to secure the collection of taxes which everybody wants to pay, instead of borrowing and paying interest upon the sum which you could obtain from the taxpayers if you chose? Secondly, it is said that the whole time up to March 31 is so completely occupied with that other necessary financial business that nothing can be done to sanction the collection of the Income Tax. I cannot, of course, here discuss the procedure of the House of Commons. But what do we see? According to the daily newspapers the House of Commons adjourns day after day at a very early hour indeed, and hours remain which, I will not say are wasted, for I have no doubt hon. members employ them in a much more agreeable way, but which are not expended on public business, and which might be devoted to that purpose.


I do not think I ever said that the time of the House of Commons would not admit of the passing of a single Resolution devoted to the Income Tax. What I said was that, assuming that we were not prepared to split the Budget up in this manner, there would not be time before Easter to take the Budget as a whole. That was my argument.


I am glad to have the admission that there is time for the passing of a single Resolution in regard to the Income Tax.


There may be, but I did not say that.


The noble Earl says you cannot split up the Budget. I will quote the words of the noble Earl's colleagues. "The taxes of the Budget must be treated as a whole." "The Bill which authorises and ultimately gives the Resolutions Parliamentary sanction must also be treated as a whole." Then the Prime Minister said:—"I decline to single out this or that tax for special treatment and special decision on the part of the House of Commons." That, I think, represents the argument of the noble Earl. But what does it imply? In the first place, is it true to suggest, as the Prime Minister suggested, that the Resolutions relating to the Budget must be taken together? I have had some experience on that point. I know how days, and weeks even, pass between the dates of the several Resolutions relating to the same Budget. Sometimes even months have passed. Even last year, the Government, long after the Budget had been introduced, had to pass a small Customs Resolution in regard to a 3d. duty on beer which afterwards had to be embodied in the Finance Bill. Therefore, there is no necessity for the Budget being treated together, so far as the Resolutions are concerned, and it is contrary to what has been the general practice in the House of Commons in my experience.

Then the Prime Minister went on to say that the Bill which authorised the Resolutions and ultimately gave them Parliamentary sanction must be treated as a whole. I entirely agree. I have never suggested, nor do I think it ought to be suggested, to His Majesty's Government that they should bring in a Resolution authorising the collection of the Income Tax and embody it in a separate Bill to be presented to your Lordships' House. The noble Earl says—I have no doubt with complete truth—that there are certain persons—I hope he did not include himself—who regard the two Houses at the present time as being in a state of war, and that all the supporters of the Government in the House of Commons would unanimously reject any such proposition as that. I am not at all surprised at it. I speak as an old Chancellor of the Exchequer. I can assure your Lordships that the reason for embodying all the proposals relating to finance in one Bill is not only that the House of Commons desired, when Mr. Gladstone first proposed that course, to withdraw the facilities which this House had previously enjoyed in dealing with Money Bills, but also that no Chancellor of the Exchequer would be willing to allow the great waste of time in the House of Commons which would inevitably result from separating the proposals of the Budget into several Bills. No Chancellor of the Exchequer, whatever his political opinions, would willingly go back to the old custom in that respect. Therefore, I should never suggest to His Majesty's Government that they should bring in a separate Bill dealing with the collection of the Income Tax, which would have to pass both Houses of Parliament.

But why cannot the Government pass the invariable Resolution authorising the collection of the Income Tax, and allow the tax to be collected upon it? It is said that your Lordships put an end to all that when you rejected the Budget last year. I secured the rejection of a Budget in the House of Commons in 1885. The Resolutions had been passed, and taxes had been collected, which had to be paid back—so far as they could be paid—after the Budget had disappeared. It is perfectly possible to collect taxes under a Resolution, which Resolution is not afterwards authorised by legislation at all. I am not contending for a moment that the Resolution legalises the collection of the tax. I should be very sorry indeed if a Resolution of the House of Commons legalised anything of the kind. But it is the invariable custom to collect taxes on such Resolutions, even when afterwards the House of Commons refuses to sanction them by a Bill. I do not know in the least what objection there can be to such a course. I agree that it could not be adopted if the Government of the day had not the intention of passing into law the tax which the Resolution sanctioned. But does the noble Earl or anybody suppose that we can do in the face of our great expenditure without a 1s. 2d. Income Tax for the year 1909–10, and pretty certainly also, I am afraid, for the year 1910–11? You have but to pass the Resolution as soon as you can in the House of Commons and embody it in a Budget Bill which can be passed at any time before Parliament is prorogued, and everything will be done in a perfectly legitimate and proper manner in accordance with universal practice.

I should very much like to hear—perhaps we may hear from the noble and learned Lord on the Woolsack—what conceivable objection there can be to such a procedure on the part of His Majesty's Government. Is it that there is a state of war between the two Houses? What I am suggesting does not require the concurrence of your Lordships at all, except to the Bill ultimately legalising the tax. If there is a state of war between the two Houses it is very curious to my mind that we should have had produced to us this evening these two Bills which we have passed with unanimity; for if such a procedure as I have suggested would offend the dignity of the House of Commons it must have been far more offensive to their dignity to ask the assent of your Lordships to these Bills, than to pass a Resolution passed by the House of Commons alone for the collection of the Income Tax. I do trust that even now His Majesty's Government may consider whether it is not possible for them to adopt such a procedure as I have suggested. I approach this matter in no Party spirit whatever. I do not suggest for a moment that the course which His Majesty's Government are taking is actuated by Party motives. Nobody can desire that we should borrow money, pay interest on that money, and lose taxes by delay because we will not collect taxes which we could very well collect. Is there any Party in the House of Commons which would be opposed to a Resolution authorising a 1s. 2d. Income Tax? It is pretty clear from the debates which have recently occurred in that place that the Opposition would support it. The Labour Members have invariably supported direct taxation as against indirect taxation. The Irish Nationalists never in my time opposed a Resolution for Income Tax, and His Majesty's Government themselves must be in favour of a proposal which they themselves placed before Parliament. I contend that for a Government which has always had as its motto to pay your way, the course now pursued by them is so remarkable that it is impossible, consistently with the fairness that I desire to show towards them, to conceive for what reason they adhere to their present position.


My Lords, the speeches to which we have already listened have so thoroughly exhausted this subject that my remarks need be very brief; all the more so because the only arguments I have to advance are rather of the order which the noble Earl opposite very accurately described as "bank parlour arguments." I venture to think that the "bank parlour arguments" are the only arguments which apply in this case, and that there is no necessity whatever, except it be a Party neces- sity, for dragging in all the serious constitutional questions to which the noble Earl alluded in his speech. Looking at the matter from the bank parlour point of view, I very much doubt whether the archives of the Treasury contain any records of such remarkable financial transactions as those in which they are now engaged. On the one hand you have a creditor notoriously impecunious, and on the other hand a debtor who wishes to discharge his debts; the creditor turns round and says:—"No; I insist on not being paid. Although it is ruinous to me, I prefer to borrow. Put your money in your pocket." A more remarkable financial operation never took place.

Nothing whatever has been said as to how much these financial vagaries are going to cost the country. The Chancellor of the Exchequer did, in a burst of rather gloomy pathos, say, "No one can tell me how much I am going to lose over the Income Tax." It would have been more satisfactory if he had told us how much the country is going to lose over these transactions. It must be a very large sum. The noble Marquess mentioned a figure of £10,000 a week. I also noticed that in a leading newspaper, and I have seen other estimates. I do not know whether they are correct. So far as I can make out it amounts to this, that up to March 25 last about twenty-five millions were collected in Income Tax, and up to March 1 this year twelve millions were collected, thereby leaving a deficit of thirteen millions. Then there are three and a-half to four millions which the Chancellor of the Exchequer expected to get by the extra 2d.; that makes altogether seventeen millions of Income Tax. The interest on seventeen millions at two and a-half per cent. is £1,200 a day—a very respectable figure to pay.

The noble Earl opposite said there was no peculiar magic in March 31. That is very true; but there is a certain amount of magic from the taxpayer's point of view about paying £1,200 a day more than we need. It is manifest that amid the incidents connected with Party management and a good deal of not very profitable recrimination as to who is responsible for the state of things the real national interests may be lost sight of. There can be no doubt on which side the national interest lies—it is to cease borrowing and to collect the Income Tax as soon as possible. It appears to me that, judged by the financial standard, the action of the Government does not admit of any adequate defence, and I must also add that after listening to the debate I am inclined to think that the political arguments are as weak as the financial.


I do not know whether the last words of the noble Earl are intended to suggest that there is some political malice at the back of the action of the Government.


Not at all.


No, I do not suppose that his words were so intended, but I did not quite fully catch what the noble Earl said. I was glad to hear that the noble Viscount (Lord St. Aldwyn) has stated that he attributes no Party motives to the proceedings of His Majesty's Government. He also says—what I think everybody familiar with the House of Commons, and with the proceedings in regard to money which have been so little considered in this House for a few hundred years until last December, would know—that it was desirable, and even necessary, to have Supply before March 31. And therefore no complaint really can be made as to what is to be done before March 31, for the exceedingly good reason that the whole time of the House has, I understand, been secured for the purpose of Supply—necessary Supply alone—by the consent of all Parties in the House of Commons, and other business could not without their permission be taken.


Not alone; there are these two Bills.


Oh, yes—without their permission, I said, a permission which was given in the case of these two Bills. The result is a very lamentable financial condition, a most deplorable condition, and the country has to suffer for it. How was it created? It was created wholly and solely by the unprecedented and, as I think, constitutionally unjustifiable interference of this House by throwing out the Budget of last year. When I was young one used to hear all sorts of descriptions of causes and the relations of cause and effect analysed in various ways. There is no cause at all for the financial difficulty in which this country at present finds itself, except the fact that the Budget was thrown out last year. That is the sole and only cause of it, and your Lordships might well suppose that the House of Commons entertained a feeling of jealousy on that subject.

The noble Viscount, Lord St. Aldwyn, is not responsible for any part of this financial difficulty. It would not be courteous to have adverted to his absence from the debate on the Budget, but I do advert to his letter in the newspaper, which was published since the General Election commenced, in which he stated in substance that in his opinion there was no tacking in the Bill of last year. That was the opinion of one of the most experienced men in the House of Commons of this generation—and of a Chancellor of the Exchequer of far the highest financial authority—who has a seat in this Chamber. That was the view of the noble Viscount, but it was not the view of the majority, or on which the majority in this House acted, and the consequence is what we see.

How is it to be remedied? The noble Viscount suggests that it should be remedied by a Resolution. He said with complete accuracy that Resolutions are passed in the House of Commons and that many Resolutions may afterwards be embodied in one Bill, that the Resolution for some reason well understood by the Constitution but not known to the law—I draw attention to the difference—has acted for we know not how many hundreds of years as a warrant, the sole warrant, under which money is collected, though it is but a Resolution of the House of Commons. Well, that has to be followed by a Bill. Why, says the noble Viscount, does not the Government bring in this Resolution; it would be less humiliating to them or to the House of Commons than to come and ask your consent to a Bill for borrowing money? We need to take with us this fact, that your Lordships have thought fit to disregard constitutional usage and custom. I remember that I respectfully submitted to the House a distinction between the constitutional usage and the law in a speech I made on the Budget of last year. The noble Marquess, Lord Lansdowne, afterwards went to Plymouth and in a speech did me the honour to refer to what I said. He said he really did not understand the difference drawn by the Lord Chancellor between the law and custom. He did not understand it. I should have thought that this House, above all places in the world, would support and maintain custom and usage, and would have known that the whole relations between the Sovereign and the Government of the day subsist upon custom and usage, and not on the law, except in the minutest degree.

If a Resolution for the Income Tax was brought in by the House of Commons all I can say is that, as I read and understand that House and its present temper and what is said there, they would regard that as a step towards splitting up the Budget. Splitting up the Budget again introduces another serious constitutional question, to which the noble Viscount has alluded. He knows as well as I do that in 1860 this House took a step which was deeply resented by the House of Commons—that is to say, they refused to concur in a Bill for repealing the Paper Duty. That action of this House was made the subject of a reference to a Select Committee of the House of Commons. It was one of the strongest Committees—it had upon it Mr. Gladstone, Mr. Bright, Mr. Disraeli, Lord John Russell, and Lord Palmerston—and they made a Report which is the locus classicus on this subject, and which, I think, has not been considered by some of the noble Lords who have recently taken part in the debates on this subject. What did Mr. Gladstone do? The House of Commons resolved that they had it in their power to prevent an occurrence of this kind again, and Mr. Gladstone in 1861 and subsequent years brought all the Finance Bills of the year into one Bill in order that this House should never have an opportunity of treating a Finance Bill in the way they had except by refusing the whole Supplies of the year. The real beginning of that policy was in 1860.

That was the weapon by which the House of Commons then used the power of the purse to prevent your Lordships from being able to throw out Money Bills. After what happened last year, when the whole of the mischief was done which has led to the financial confusion so bitterly deplored by your Lordships to-night, can you wonder that the House of Commons is a little afraid of this Assembly, which sees no difference between law and custom, which has forgotten altogether usage, and proceeds upon the bare law, will itself proceed upon the bare law, and is not prepared to put itself in jeopardy by bringing forward Resolutions which admittedly have not the force of law and collecting money upon them, for fear that that should be a weapon to encourage further encroachments upon the rights, as they understand them, of the House of Commons? These are beginning to be the consequences—the bitter waters that flow from the original fountain, and the original fountain was the throwing out of the Budget of last year; and it matters nothing whether the Budget of last year is passed again or not for the purpose I have in hand—this has begun the strife which will never be abandoned by those who believe that the House of Commons ought to be the predominant House in this country, and it will end in consequences which even now we cannot foresee.

Your Lordships ask why was the House of Commons not taking this line which would have been so natural a year ago. Yes, my Lords, a year ago! It might have been natural a year ago, but I declare that I do believe that the House of Commons are using the power of the purse—the old familiar weapon with which they have broken down tyranny in this country and have effected so many things which are well known to students of constitutional history—they are using the power of the purse, and it is a very heavy hand of the House of Commons when it lays it on the money bags, as everyone knows who knows what use has been made of it in the past. I regret extremely the occasion that has led to this financial embroglio, but I must respectfully tell your Lordships here—I will not say these, things outside, because my loyalty to the House compels me to say them inside—that I think that the fault is wholly your own, and that this present financial difficulty is the consequence wholly and solely of your action.


My Lords, the noble and learned Lord has addressed your Lordships in terms of great gravity, and, if I may say so with all respect, with some irritation. I am not surprised at the slight disturbance of the equanimity of His Majesty's Government and of the noble and learned Lord. Things have not turned out exactly as they expected. I noticed that both the noble Earl who leads the House and the Lord Chancellor told us with absolute confidence that the House of Commons would not have this and would not have that, and they spoke in the name of the House of Commons. How do they know?


I did not presume to speak for the House of Commons. I inferred from debates in the House of Commons.


I am glad the noble and learned Lord has been so close a student of the debates in another place, but I have not drawn quite the same inference, and I am not sure that in the matter of this Budget the two noble Lords really speak in the name of the majority of the House of Commons. We have yet to learn what the majority in the House of Commons do think about the Budget and about the financial policy of the Government. The noble and learned Lord said that the whole of the cause of the confusion in which the finances of the country are placed is to be laid at the door of your Lordships' House, and I think the noble Earl used similar language. The noble and learned Lord said we had given a shock to the old-established usage by which Resolutions of the House of Commons have the force of law even before the Budget Bill which finally sanctions them is passed. Why do the noble and learned Lord and the noble Earl surround themselves with such fictions. The difficulty does not lie with the House of Lords, but with the House of Commons. It is because the Government are not certain of being able to pass their Budget through the House of Commons that these difficulties have arisen. If the noble and learned Lord and his colleagues were quite certain that they had a majoirty in the House of Commons they would have produced the Resolution which the noble Viscount has just suggested to your Lordships they should produce. They would have produced the Budget and passed it under a novel guillotine Motion in one sitting. But they did not dare to do that. Why? Because they could no longer command a majority in the House of Commons on finance. Then why should the noble and learned Lord throw the whole blame upon us? Why is it our fault that they have not got a majority in the House of Commons, except that we did our best to prevent them. That being so, I would invite the noble and learned Lord to approach this subject, if I may say so, with a little more frankness. Let him recognise on the floor of your Lordships' House exactly how the state of facts really lies. There would be no difficulty but for the fact that the Government, having gone to the country on the Finance Bill, have been defeated in the country on the Finance Bill. That is the root fact of the situation. Whether the Government will be able, by the manœuvres which in such very courteous language the noble Viscount described, between now and Easter to square those parties in the House of Commons whose support is necessary for the passage of the Finance Bill remains to be seen; but let them not throw the whole blame for the present financial situation on your Lordships, who are, so far as the latter stages of the history are concerned, completely blameless.


I did not blame the House of Lords for the fact that the House of Commons were not now taking steps for meeting the difficulty, but for the creation of the difficulty which noble Lords wish us to remove.


The noble and learned Lord is good enough to say that he does not blame us because the House of Commons will not take the obvious course of passing this Resolution authorising the payment of Income Tax. He may say that, but I think we are entitled to blame the Government for not taking that course, and I shall be very much surprised if the country does not blame them as well. The Government cannot be under any delusion whatever as to the attitude of your Lordships' House in the event of the Finance Bill of last year passing the House of Commons. They have the pledge of my noble friend who sits behind me, and who speaks with absolute authority in your Lordships' House on a matter of this kind. If the Finance Bill is passed again by the House of Commons, of course it will pass your Lordships' House. Provided the Government command a majority in the House of Commons the Income Tax Resolution which we invite them to propose would have the force of law from the moment it passed and afterwards, because it would be confirmed by the Budget Bill which would be passed by your Lordships' House. If the Government do not choose to adopt that policy they do so with their eyes open, determined to arrange the elaborate political strategy which we have watched with growing amazement during the last few weeks, the object of which is to place the interests of their Party and of themselves above the interests of the country.

On Question (Standing Order No. XXXIX. having been suspended), Bill read 2a: Committee negatived: Bill read 3a, and passed.

House adjourned at a quarter past Seven o'clock, till To-morrow, half-past Ten o'clock.