HL Deb 14 March 1916 vol 21 cc377-86
LORD BERESFORD

My Lords, I desire to call attention to the amount of Income Tax paid by the officers of the Navy and Army, and to ask His Majesty's Government whether some reduction cannot be made. I consider that the burden which is at present imposed upon these officers is grievous and unfair. They had to pay Income Tax before the war, but they now have to pay at double the prewar rates, with an addition of 20 per cent. upon that increase. After pressure in the House of Commons the Chancellor of the Exchequer agreed to allow officers whose income was under £300 a year to continue to pay the old tax at 9d. in the £ as long as their income remained below that figure. In July, 1914, the Income Tax was 9d. in the £ then it was raised to 1s., and later to 1s. 6d.; and the last Budget added a further 20 per cent., which makes the tax which the officers of the Navy and Army have to pay amount to a little over 1s. 9½d. in the £. I look upon it as very unfair that officers who are risking their lives in defence of the country should have to pay a War Income Tax. In other words, their pay is reduced from the sum which the Admiralty and the War Office considered necessary during peace.

The position of the soldier and the sailor is totally different from that of the civilian. I know that there is hardly any family, hardly any man or woman, in the country who has not bad some very hard and terrible stress to endure during this war. But the civilian does not risk his life. As a matter of fact, he pays the soldier and the sailor to defend the country. The soldier and the sailor on active service may lose his health, he may be wounded and incapacitated, or he may lose his life. I plead for these officers that they should not be required also to pay the War Tax. With regard to the Naval Service, two orders have been issued regarding allot- ments. First, an order was issued stating that in no case had instructions been given for a stoppage of allotment; but the order which succeeded that one was in these words— Immediate steps are to he taken to reduce the allotment in any case where an officer's net pay— that is, after deducting Income Tax and providing for mess charges— is insufficient to meet the amount of that allotment. Those apparently are contrary orders, and I invite the noble Duke to be good enough to explain which is the correct one.

As I said just now, this War Income Tax which is now imposed upon officers constitutes a reduction of their pay. The Government contracted with these officers to pay them a certain income, and I submit that to call upon them to make this additional contribution to the war in money—for they are already risking their lives—is really in the nature of breaking the contract entered into with them. If through being penalised in this way the officer has to pay more than he has allowed himself, the allotment to his wife and family will be reduced, and this will add further to his anxieties. He must pay for his messing and his washing. Therefore the money must come out of the allotment, and his family must suffer. I contend that this is a very unfair use of the powers of the Treasury. Another point is that these officers, being away on active service, have no means of protesting; and there is an order—a very right order—that officers on active service are to hold their tongues, to obey orders, and not write to the newspapers or make speeches.

A large number of cases are known to your Lordships in which the accounts of Officers at the bank are overdrawn, and that comes very hard on the families at home and on others dependent upon them. Therefore in addition to risking their lives officers have to think about their wives and children at home, who may be pinched owing to this unfair tax. If the Chancellor of the Exchequer and a few Treasury officials were to spend three months in a destroyer or in the trenches, we should find this tax considerably reduced. Officers are underpaid in peace and are mulcted in war, and some of them have to leave their families in absolute poverty. It must be remembered that officers in the Army and Navy, with very few exceptions, have nothing but their pay. There is no abatement allowed after £700 a year, and your Lordships are aware what the abatements are up to that income. The claim for abatement has to be put in by these officers in the usual way. Here is an officer fighting in the trenches or in the North Sea, or somewhere at the other end of the world. How on earth can he find time to put in an abatement claim? That would be considerably relieved if the War Tax were taken off. It is most unfair that while officers are fighting for their country they should be charged the War Tax. The naval officer may have under his control a ship costing £2,000,000, and have under his orders a thousand officers and men. The commander of a battleship has not a moment to himself day or night. His mind is full of anxiety, and this War Tax is going to add to his anxiety. Normally the expenditure on board ship is exactly the same in time of war, but in the homes of these officers the expenditure is abnormal; yet they are called upon to pay this inequitable taxation.

I do not think the nation wants to see officers penalised in this way. I believe that the nation would wish that they should be fairly, if not generously, treated. In addition, there are the Death Duties, which I regard as an unfair tax. An officer goes out to fight for his country and is killed. Death Duties have to be paid. That is another question which should be looked into. The Chancellor of the Exchequer the other day made what I can only describe as a futile remark, because he knew that the course he suggested could not occur. He said that the right remedy would be to raise the rate of pay. If the pay of officers in the Army and Navy was raised to a fair rate compared with other institutions in the State, it would cost the country an enormous sum of money, whereas the grievance could easily be adjusted by taking off the War Tax. Personally I do not think that officers should pay any Income Tax at all. They certainly should not pay in respect of the war in which they are fighting. That is really what it amounts to. I have not calculated what the cost to the State would be if the War Tax and the 20 per cent. addition were taken off in the case of officers, but I think it would be roughly about £1,250,000. I believe that if the country realised the case they would agree in respect of officers to the abolition of the Income Tax altogether, but I am certain they would demand the abolition of the War Tax and the 20 per cent. I have brought this matter before the notice of your Lordships in the hope that the case will receive consideration, because I really think that at present officers and their wives and families are placed in a very unfair position.

THE CIVIL LORD OF THE ADMIRALTY (THE DUKE OF DEVONSHIRE)

My Lords, this is a question which my noble and gallant friend has made very much his own. It is one to which he has devoted a great deal of attention in the past, and in connection with which, as far as one can judge, he has already achieved a considerable amount of success. In November of last year this question was brought up in the debate on the Finance Bill, and under the pressure which was applied from all sides of the House the Chancellor of the Exchequer made a concession. That concession took two forms. By the clause which the Chancellor himself introduced in fulfilment of the pledge which he gave in that debate, it was enacted that if an officer's total income did not exceed the pre-war exemption figure of £160, he should be exempt from taxation altogether. The general rule is that only persons whose income does not exceed £130 are exempt. A still further concession was made, that if the officer's total income is over £160 but does not exceed £300, he was entitled to an abatement of £160. The general abatement in respect of an income not exceeding £400 is £120; so that this represents a considerable concession given to officers.

I do not wish to remind my noble and gallant friend too much of his past speeches, but I think he will recall that in November of last year he thanked the Chancellor of the Exchequer for what he had done. He also said he thought it a generous offer, knowing what the Chancellor's views were; and he made the suggestion that the limit of £300 then named by the Chancellor should he increased to £400. The words which he used were— I would suggest to the right hon. gentleman that £300 is rather too little. I think if he said £400 it would really meet the ease. I am not prepared to argue the question whether there is any peculiar merit in this particular figure. Certainly £400 a year has rather a familiar ring about it. Neither am I in a position to say what were the precise reasons which actuated the Chancellor of the Exchequer in fixing the limit of £300, as he did at that time. Indeed, I am afraid that I am unable to give my noble friend very much consolation. If I were the Chancellor of the Exchequer at this moment, I should have to fall back upon the old and familiar observation frequently made in another place at this time of the year—namely, that I was anticipating making a Budget statement at no very distant date and was afraid it was impossible for me to make any reference beforehand to what that statement might contain. But I shall be glad to see that the observations which my noble and gallant friend has addressed to your Lordships are conveyed to the Chancellor of the Exchequer.

My noble friend also raised the question of allotments. I hope that the position in regard to this matter can he now cleared up. Certain observations have been addressed to the public Press with regard to this subject which are not strictly in accordance with the facts. In no case have instructions been given for the stoppage of allotments. Officers can allot at their discretion any part of their pay to their dependants within a limit which leaves a margin for the recovery of Income Tax and messing charges. Only in those cases in which the increased tax would, if the allotment remained at the previous level, bring the officer in debt to the Crown, has it been necessary for the amount of the allotment to be reduced; but the amount of such reduction in no case represents more than a comparatively small portion of the allotment. In the collection of this tax the Accountant-General for the Navy does realise how important it is that this burden should be spread as evenly as it possibly can be, and the fullest precautions are taken to prevent any large sum being collected at one no particular moment. It is true that complaints have been received since these new orders came into force; but if my noble friend is able to furnish me with any individual cases of hardship which for obvious reasons it would be undesirable to mention in your Lordships' House, I shall be glad to undertake that they shall be at once inquired into. As to the question of further exemptions up to £700, I must fall back upon the answer that this could only be done by legislation; and whatever may be the intentions of the Chancellor of the Exchequer in the future, I am afraid we must keep our minds in waiting until he makes the important Budget statement which we anticipate at no very distant date.

LORD BERESFORD

The noble Duke is quite correct in saying that I stated in the House of Commons that if the figure were fixed at £400 it would meet the case. But that was last November. Since then I have had an immense number of letters showing exceptionally hard cases, and I now ask that the whole matter should be reconsidered and the War Tax removed.

THE DUKE OF DEVONSHIRE

As I have said, I will bring the point to the notice of the Chancellor of the Exchequer.

VISCOUNT MIDLETON

My Lords, this is a matter which I have pressed upon the Treasury on many occasions, and I do not think there is any subject on which the House may legitimately feel more strongly. I had some cases in the last war which really went to one's heart. I had cases of officers being shipped back from South Africa, who had been sent there from India—they had been unable to break up their establishments in India, or had done so in the greatest haste and at great loss—and who arrived at Southampton without any money at all, and had they not been succoured by some of the numerous organisations which have worked so quietly and admirably on behalf of officers, and to which many members of this House have contributed, they would literally have been in the greatest difficulties. All questions of sickness and disease have, I believe, now been dealt with generously. But there is no class of persons who have suffered by this war who have been treated less generously by the State than the officers who were in the Army at the time the war broke out. The War Office have made great concessions in the case of all those who have come in since. They have provided equipment for them, and a young officer who has his equipment provided and gets the improved rate of pay which was granted by the present Secretary of State to junior officers has a great advantage.

But take the case of the numerous officers who have not had the advantage of the grant for equipment. Officers have been brought from India to France in the middle of winter, having in the greatest haste to equip themselves fully with winter clothing. Officers have been ordered from France to the Dardanelles in the heat of summer, and have had to provide themselves with a completely new kit. They have had no allowance of any sort or kind made to them. Many men, out of their daily pay, cannot afford to find the sums that have been necessary. Then on top of this comes the increase in the Income Tax, which, even with the concessions which the noble Duke has just explained, constitutes a great hardship on officers who have little private fortune. I venture to say that what is due from us as a country and from your Lordships as a House of Parliament is to demand at the hands of the Government that this question should be considered—not simply from the point of view of what concession the Chancellor of the Exchequer can afford to make, but what is due from the country to its officers—by a Committee which should inquire into the whole question of the position of officers in time of war. Personally, I cannot help sympathising with what fell from my noble and gallant friend. When an officer is fighting in the trenches or in the North Sea, to subject him to a tax that should be paid surely by those who are unable to go to the Front rather than by the man who is risking his life for a mere pittance, does seem to me an extraordinary want of fairness quite apart from generosity.

There is one other point which I want to raise. It is pretty well known that in time of peace there is hardly a post in the Army which pays its own way. I doubt whether of any other department paid by the State the same can be said. I have gone into the question in regard to all the higher posts which are made to figure in the Estimates for comparatively large sums, and I have never found one—at least, I think there is hardly one—in which the actual sum paid to the officer meets the charges to which he is put. Therefore I do not think that the mere selection of small incomes and the determination to subject them to a less charge than in the case of ordinary civilians altogether meets the case. I know we have not the Secretary of State for War, or the Chancellor of the Exchequer, or the First Lord of the Admiralty here, and I know it is not in the power of the Government to give any pledge; but I would ask them to consider whether it is not possible for some Committee to be formed to consider the whole position. I do not think the public charge would be a very serious one, and I am quite certain that of all charges which could be put upon the country at this moment this is the one which would fall most legitimately, and for which a great amount of public sympathy would be felt.

THE MARQUESS OF CREWE

My Lords, I have very little to say in reply to my noble friend opposite, except that His Majesty's Government will certainly take into consideration the suggestion that he has made for a more formal consideration of this question. He will understand that it is not possible for us on this Bench to make any kind of promise as to the appointment of a Committee such as he proposes. There are, as we know, a great number of Committees sitting on different subjects, and I am not able to say that the Government would be prepared at the moment to appoint another for this particular purpose. As the noble Viscount has pointed out, the question is one not only of great difficulty but one of very large magnitude indeed. The fact is—this applies more, of course, to the Army than it does to the Navy—that there has not been a pretence in the past, with our small Army, of fixing the pay of the officer on a scale which would enable him to live and possibly to carry on all the expenses of an establishment out of the pay which he receives. That has been the system on which our Army has been conducted. The Army, generally speaking, has been officered from what are called the upper classes, with a considerable proportion of well-to-do people, and for a man to enter the Army as a profession from which he could make a living has hardly been a possibility. It has sometimes been barely possible in India, but it has never been possible in this country. After the war and in the entirely new conditions which we now observe, when the Army is both manned and officered, as we see it, in such a different manner from that to which we have been accustomed, the whole question will no doubt have to be faced. Whether it will be found possible or desirable to make the Army in that sense a really self-supporting profession it is, of course, altogether impossible for me to say at this moment; but I quite agree with the noble Viscount that the question is one which will have to be faced at the proper time, The case of the Navy, as my noble and gallant friend (Lord Beresford) knows very well, is also one of urgency. In former days it was more or less possible for a naval officer to live on his pay, but for some little time past that has definitely not been the case; and, as we know, certain advances have been made, particularly in the pay of the junior officers, in order to meet the difficulty. The whole question, I quite agree, is one which will have to be taken into consideration, although, as I have already observed, we cannot promise on behalf of the Government to engage now in the particular form of inquiry for which my noble friend asks.

House adjourned at a quarter past Five o'clock, till To-morrow, a quarter past Four o'clock.