§ LORD STRACHIE had given Notice to call attention to the statement made by Sir Frederick Banbury in the Morning Post of June 17, in reference to Sir William 139 Vestey and the Peerage conferred on him; and to ask the Government if they were aware of the facts quoted by Sir Frederick Banbury from the Report of the Royal Commission on Income Tax; and, if so, would they have recommended that a Peerage should be conferred on Sir William Vestey.
§ The Noble Lord said: My Lords, the Question I have on the Paper concerns a statement made and published in the Morning Post of June 17 by the senior member for the first constituency of this country; I refer, of course, to Sir Frederick Banbury, the senior member for the City of London, and also a Privy Councillor. Any statement made by him ought, one would have thought, to receive, general notice, but it appears that, in some directions, little attention has been given to that statement.
It is possible that many noble Lords may not have seen that statement, or may desire to refresh their memories, and I will therefore read it. It runs as follows—
The name of Sir William Vestey appeared a few days ago in the list of people upon whom a Peerage had been conferred. The same name also appears in the minutes of evidence before the Royal Commission on the Income Tax on the 31st July, 1919. The following is an extract from the evidence—
Evidence in chief of Sir William Vestey of the firm of Vestey Brothers. We are proprietors and managers of freezing works, cold stores, or cattle ranches in Great Britain, Russia, China, Australia, New Zealand, United States, Venezuela, Brazil, Paraguay, Argentina, South Africa, Madagascar, Prance, Spain, Portugal and other countries. The capital employed in the business, and that of the affiliated concerns under the same management, is in excess of £20,000,000. Up to the end of the year 1915 we conducted the business from London. In that year taxation was imposed which made it impossible to continue working from England. We did all we could to be allowed to remain in England, and after several interviews with the highest officials, who were most sympathetic, we had no alternative but to remove the business abroad, and we are now domiciled in the Argentine Republic.
Later he was asked the following question (95n) by a member of the Commission—
Where are you domiciled at present—in this country?
Answer—No, Buenos Aires. I am technically abroad at present but came over specially to appear before this Commission. The present position of affairs suits me admirably. I am abroad. I pay nothing."
No doubt there are a great many people who would think it very desirable to contribute nothing towards Income Tax, as stated by Sir William Vestey, now Lord Vestey.
§ I am so fortunate, I am told, as to have I his presence here in this House, so that, I whatever I say, I shall be saying it to him face to face. But I should like at once to state that I have no intention of making any personal attack, or attributing any base motives, to Lord Vestey, because, as the law now stands, Lord Vestey is, of course, perfectly justified, from his own point of view, if he thinks it desirable to remove, an enormous sum of money out of this country in order to avoid Income Tax. In so doing, he does not act against the law; he is doing nothing he has not a perfect right to do from his own personal point of view. Every man must be the judge of his own honour in such matters. My point is that His Majesty's Government may not have been aware of this circumstance, and I ask my Question because I cannot think that they were aware of it.
§ I also venture further to ask them whether, if they had been aware of it, they would have recommended Sir William Vestey for a Peerage. Why do I say that? Because although it may be quite legal and quite right for any subject of this country to avoid paying Income Tax on an enormous sum of money, yet I do not think the fact of his doing so is exactly a good reason for conferring the great honour of a Peerage upon him. Certainly, I know that the feeling, whatever it may be in this House, is very strong outside that there should be no inducement to avoid, or rather no reward to people for avoiding, taxation in this country.
I notice in this Report that Sir William Vestey said that this was not a limited company, so that it is not a question of what he thought ought to be done for his I shareholders. Apparently, it is simply Vestey Brothers, a private concern, as he states in answer to Question 9440. He says that the capital is £20,000,000, and that, prior to 1915, the head office and the control were in England. Now, it is in Buenos Aires, where, I am told, there is no Income Tax. When Sir William Vestey appeared before the Royal Commission on
the Income Tax, he was asked this Question (No. 9472)—
You want some limitation of liability to taxation by having control in this country, and, secondly, you want the law to be restored to the position it was in before 1914, when foreign profits which were not remitted to this country were not charged?
That was what was put to Sir William Vestey, and he answered—
We should come back to England to-morrow, and we should employ from 3,000 to 4,000 men.
He would do this if the law was as it existed in 1914.
Then again, in answer to another Question (No. 9570), he said—
There are from 3,000 to 5,000 men now out of employment because I am not working in this country.
I think that is one of the most serious statements given in this evidence. Sir William Yestey says that his action in leaving this country meant that from 3,000 to 5,000 men were out of employment at the present time. It is, of course, entirely a question for Sir William Vestey to consider, whether that action is right or not. I am not criticising that, but I say it is a matter of criticism that you should reward a gentleman who openly says that but for moving this control there would be employment for between three and five thousand men.
Again, he was asked (Question 9516)—
How much do you think you ought to pay in taxation to this country?—I will give you £100,000 a year, beginning to-morrow, to be allowed to come and work in this country.
That shows what enormous profits the noble Lord must be making outside this country. In answering another Question (No. 9526), Sir William Vestey said—
What I suffer is, if I am unfortunate enough to make £100 in England, I pay £82, while the American can make £100 in England and pay nothing, and I am not going to compete with a strong rival on that basis.
Then again, in further reply to Questions 9527, 9528, and 9529, he said it would appear that taxation would not prevent any profit being made, but not as big as the American, and he ought to pay no more taxation than a foreigner. So that is the real contention: not that the business would be absolutely ruined by having the control in England, and having to pay Income Tax like other people, but that he would not make so much profit as other people would do, and he ought to
be able to do as well as the Americans were doing.
§ Sir William Vestey was good enough to send to me, through a Member of the House of Commons, a sort of memorandum of his case, and I notice that what he deals with is that unless he did this the Americans would force him out of all work in this country. It makes no difference to us, because although he has not been forced out of competition he contributes nothing in this country towards taxation. He further tells me he is domiciled abroad, as he said in the statement that I have already quoted. If the noble Lord is domiciled abroad, I cannot quite see what is the advantage in making him a member of this House, because it is generally supposed that a Peerage is conferred upon someone well qualified to take part in our proceedings and help in the government of the country. If he is domiciled abroad I do not see that it is likely he can render very valuable assistance or help.
§ Further, I would like to point out what a very large amount of money the country has lost owing to this transaction. If you take it only during six years, the country has lost in Super-Tax and Income Tax something approaching £3,000,000. I say that this is a very serious matter from the point of view of the Government, because they have bestowed this honour upon a gentlemen through whom, owing to the transfer of the business abroad, the country has lost this enormous sum in taxation. I think the feeling of most people would be that this was not the sort of man who ought to be rewarded for evading taxation and thereby throwing a heavier burden of taxation upon those who have to pay taxes.
§ I noticed that Lord Crewe asked the other day whether it was the fact that the Government wished to show how necessary it was to reform the House of Lords, and that that was the reason why we have such cases. If the noble Lord has been appointed a member of this House because he is domiciled abroad and so cannot attend our sittings, that would seem to be another reason for altering the right to sit here. I make no personal attack upon Lord Vestey. It is, as I have said, a question for himself, whether he considers it right that he should avoid taxation upon £20,000,000, and that, as he has told us, by his action large numbers of men in this country are out of employ- 143 ment. As lie is here, and as your Lordships have had so much discussion lately upon the sale of honours and corruption in this matter, no doubt the noble Lord will be glad to take the opportunity of assuring the House that neither directly nor indirectly has he paid any money for the Peerage which he now possesses.
THE EARL OF CRAWFORD
My Lords, I understand that the noble Lord, Lord Vestey, is going to make a statement on the more technical aspect of the matters raised by Lord Strachie. So far as the Government are concerned the evidence which Lord Strachie has summarised had been published, I think, two years ago, and the Government therefore must be deemed to be technically aware of the document. I believe that the Prime Minister had not studied the evidence in question, and certainly I confess that I had not studied it. I have studied the Report and the evidence given by the noble Lord is not referred to in the Report at all.
I do not know what I should reply as to the last question by the noble Lord, about what would have been done had this evidence been before the Government. It is a hypothetical question. I believe that Lord Vestey has rendered great services to the State, particularly during the war, and that it was upon those grounds the recommendation was made to the King. Having read the evidence, I could comment a good deal upon some of the inferences drawn by Lord Strachie, some of which I thought were not well founded; but I will refrain from doing so, as I have answered to the best of my ability the Questions directed to the Government as to the evidence published in the Report of the Royal Commission.
§ LORD VESTEY
My Lords, I wish to make a personal statement as to the reasons which caused me to go abroad. The firm in which I am interested has built up (in the face of very strong American competition) the largest English business of its kind. Our principal competitors have always been the large American meat companies, who have enormous capital, and who dominate the English market. It became a question of whether we should sell the business to the American companies or continue to struggle and build freezing works in the, countries from which Great Britain imports foreign meat. We decided 144 to adopt the latter course. With our new works adjacent to the American companies' works in these foreign countries and their selling organisations alongside ours in the principal markets of Great Britain, it was obvious that on those new foreign businesses it was impossible for us to compete if we were to be subject to exceedingly heavy taxation which was not imposed upon the American companies on the meat which they brought to this country from works adjacent to ours. Therefore, while our English business, which is very large, has throughout remained domiciled in England and paid English Taxes, I was forced to become domiciled abroad, so far as the foreign businesses were concerned, but that did not affect the English business.
Before deciding to go abroad I made every effort to try to arrange with the Government some basis which would have enabled us to compete with the Americans on equal terms, and with this object in view I interviewed various members of the Government, including, among others, the President of the Board of Trade, Sir John Bradbury, and high officials of the Inland Revenue Department, but, although they all expressed the greatest sympathy, they were unable to suggest any remedy, and, therefore, with the very greatest reluctance, I decided to go abroad. If I had not taken the course I did our new foreign businesses would have had no chance of success, and the strongest competitor of the American meat companies in Great Britain would have been eliminated. As it was, these works were of very great assistance to the Government in providing large quantities of frozen and preserved meat to this and Allied countries, to a large extent from hitherto undeveloped sources.
I may add that I am now domiciled in this country and have been for the last eighteen months. If I have to compete with the American Meat Trust in foreign trade, the business of which is wholly clone abroad, I must be on an equal basis with them, or I cannot go into the business at all.
§ EARL STANHOPE
May I ask the noble Lord whether it was necessary for him to take out foreign naturalisation papers in order to get his business domiciled abroad?