HL Deb 16 July 1923 vol 54 cc1030-51

Order of the Day for the Second Reading read.

LORD HYLTON

My Lords, I rise to move the Second Reading of the Finance Bill which, as your Lordships are all aware, is an annual measure that at this time of the Session comes to us from another place, embodying and legalising the taxation and the financial arrangements proposed by the Government and sanctioned by the House of Commons. This Bill, of course, has to pass through all the usual stages in this House, and I think I may claim that for a good many years you have been in the habit of according the various stages of the Bill without any discussion. I believe, how-ever, that this afternoon the noble Earl, Lord Beauchamp, proposes to make some observations on certain parts of the Bill. Perhaps, therefore, the most convenient course would be that I should now formally move the Second Reading of the Bill and that, after the noble Earl has made those observations which he thinks proper, I should endeavour to reply to them. I am entirely in your Lordships' hands in the matter, but I think that would be the most convenient course, and I formally move the Second Reading of the Bill.

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

EARL BEAUCHAMP

My Lords, I am much obliged to the noble Lord opposite for the course which he has taken in the matter. It is, as he knows, usual that something should be said on the subject of the Finance Bill in this House and, indeed, it has become, I think, specially necessary that this should be done since the passing of the Parliament Act. One of the clauses of that Act, the whole results of which are insufficiently appreciated by noble Lords opposite, was a provision which it made in regard to Finance Bills coming into this House. We made special arrangements that although this House should not have the power of rejecting Bills, they should have the power of discussing Bills. We felt at that time, and I have no doubt we should say so still, that generally speaking the governing body in this country is public opinion. We have always felt that debates in this House on the subject of finance would do a great deal of good in influencing public opinion, and that if at any time there were provisions in the Bill which were unfair, this House would have its share, by discussion of the subject, in influencing public opinion and bringing about an amendment of the law either in that year or on a subsequent occasion. Therefore it is that I venture to make some observations to your Lordships this evening.

Your Lordships will readily understand that the Finance Bill of the year contains a large number of clauses dealing with a great many very interesting topics. I shall enumerate some of them only to pass them by because I do not wish to discuss them. There is, to begin with, the most important and vital question of economy, and I note with regret the fact that we are still spending no less than, £127,000,000 a year upon armaments. Then there is the great burden upon the people of this country of the Taxes which we have to pay and which, added to the local rates, come to no less than £876.000,000 a year. Then there are connected with our general financial position our indebtedness to others and the indebtedness of others to us. I hope the Government will allow me to say how glad I am that they have concluded so satisfactory an arrangement with the United States of America. I have nothing more to add on that except that I wish that the united States would apply the same pressure to other countries that they applied to us.

I pass from that subject in order to mention one or two smaller items, and, chiefly, I wish to express my regret at the disappearance of the Land Valuation Department. I was one of those concerned in trying to establish that Department and to give it more power; therefore, it is with particular regret that I notice its disappearance. The Finance Bill also contains the various smaller provisions made by the Government for the remission of taxation—certain concessions in the postal charges, in the taxes on cider and mineral waters and on entertainments, but on none of these matters do I wish to say anything. There is another satisfactory provision and that is the one which deals with the Sinking Fund. Again, I hope the Government will allow me to offer my congratulations upon the fact that they have established the Sinking Fund this year. Some might have wished to see a larger sum devoted to the purpose, but it is satisfactory to realise that the Government recognise the importance of the matter. Many taxpayers will be grateful for the reduction in the Income Tax. One is almost tempted to say something upon high taxation and the capital levy, and it is well worth noting that if we were able to borrow the money at a lower level than we do so much more money would accrue to the Government that they would be able to reduce the Income Tax by no less than one shilling. There is also the reduction in the duty on beer, upon which I do not wish to offer any congratulations to the Government. Indeed, to put it quite frankly, I would very much rather that they should have devoted every reduction which they felt they were able to make to the reduction of the tax on sugar.

The tax on sugar brings me to the points to which I am especially anxious to draw attention. They are connected with the preference given to goods grown in or coming from within the Empire, with special regard to the Economic Conference that is going to be held in the autumn under the auspices of the noble Duke, the Secretary of State for the Colonies. I venture to do this particularly to-day because, as it seems to me. there is a considerable attempt being made on the part of a good many people to represent this country as having entirely departed from its old Free Trade system, and although it is quite true that in this particular respect of Preferential Duties, and in other directions, too, there are departures from that system, yet, as a whole it is correct to describe our system as being a Free Trade rather than a Protective one. I believe that the larger number of people in this country still are Free Traders, and wish to maintain that system to-day. After all, what we have to remember is that if we wish to assist in the institution of Preferential Duties which are really going to be of use, we can only do it by instituting a Preferential Tariff, and the very words Preferential Tariff mean that before you can give any preference you must first of all have a high general tariff. The English farmer complains already of his condition, and I do not suppose that he would say that he is helped at present by the preference given to Empire products.

He would also say, I think, that, generally speaking, the Colonial farmer is better off than he is himself.

Supposing we were to sweep away all this talk of Preference and were able to regard nothing but the naked facts of the case, we should then be able to look at the question from the purely statistical point of view. From that point of view we should be able to calculate the exact sum of money which a system of Preferential Duties meant in the expenditure of the working classes and we should be able to consider without the atmosphere of sentimentality whether it was likely that the people of this country would agree to sacrifice so many pennies every week in order that they might contribute to the prosperity of the Colonial farmer. I believe we should find that they would say that the cost of food was already too high. I should like to see the cost of food reduced, and I shall venture to suggest to your Lordships one or two ways in which that result might be attained.

At the present moment the preference which is given is really hardly worth while. Some interesting figures were given on April 30, when it was stated in another place that the amounts of duty collected on goods admitted to preference consigned from the Dominions named during the financial year 1922–3 were as follow: Australia, £270,000: Canada, £749,000; New Zealand, £2,000: South Africa, £969.000. These figures do not represent a very large sum for us to give. But the amount of Import Duties remitted upon imports of food staffs produced in the Empire abroad is about £4,500,000 annually, of which £500,000 is in respect of tobacco, while on motor cars the amount is about £150,000 a year. I do not think that it is possible to claim that in any one of those respects the Preferential Duty has reduced the cost of any of those articles to the consumer—not even in regard to tea. There has not been, I think, any reduction in the price of Indian or Ceylon teas as a result of preference, although the remitted duty—the duty, that is to say, which is lost by the taxpayers of this country—is no less than £2,000,000. Those £'2,000,000 go rather to the growers and the tea companies than to the labourers in the Indian and Ceylon tea gardens. And in regard to all the other goods I think the claim is hardly made that prices have been reduced.

It was in old days common ground that Food Taxes did increase the price of food, and the extent of the preference given at the, present time, certainly has not shown that it does mean a reduction to the consumer in this country. It is quite clear that a reduction in the taxa tion of imports of Empire produce whilst similar imports from foreign countries are subject to a higher tax effects no reduction in the price of the lower taxed goods, and if it did it is quite obvious that it, would be no advantage at all to the person who produced the goods somewhere on the other side of the world What really happens at the present time is this. The. Empire producers of food stuffs that we import get about £4,000,000 more for their produce than if there was no preference at all; the consumer gets his food no cheaper; the Treasury loses the £4,000,000 and the unhappy taxpayer has to find the difference and to make up the £4.000,000 instead.

That that is so is, I think, proved by the case of sugar at the present time. Empire sugar is not a penny cheaper because of the preference of 4s. 3d. a hundredweight given to it, and English sugar is no cheaper either because it pays no Excise Duty at all. Something more ought to be said on the case of sugar. The West Indian grower is not satisfied with the present Preferential Duty which he gets. He has been promised a preference of one-sixth, but is asking, I think, for a preference of one-third, and that that should last at least ten years. One reason why sugar found no place among the reductions in taxation this year is to be found in the difficulty that there must naturally be in granting any reduction of duty on an article upon which there is already a preference. In that way the mere existence of a preference prevents a reduction in the cost of living, or any attempt to reduce the duty which is levied upon it. It is curious to remember that nearly all these food-stuffs come, not from the self-governing Dominions, but from other parts of the Empire, and India, which probably gets a larger proportion than any other, is unfortunately the particular part of the Dominions which, at this moment, seems less and less likely to give us advantages in its markets, while it seems more likely to raise tariffs against us.

I am anxious to quote to your Lordships a passage from a speech made by Sir Robert Home, in Glasgow on November 6 last. He said: Under present conditions no wise man would ever think of starting a system of tariffs in this country. Instead of helping trade it would inevitably tend to dislocate it. So far as I am concerned there will be no question of tariffs being voted in the next Parliament. I give that assurance in accordance with the same statement made by Mr. Bonar Law last night. If such a question arises in the next Parliament I would feel myself bound to give no vote in favour of any tariff system until my constituents have been consulted. In the present condition of the world's markets I can see no period in the near future at which it would be advantageous to this country to adopt any form of tariff. I regret to notice that the President of the Board of Trade has issued a memorandum dealing with such preferences as already exist.

It sets out the percentage rates of those preferences, but it does not show that, even allowing for those preference rates, the amount of duty which is raised in the self-governing Dominions upon British goods going into those countries is so high as to be almost prohibitive. It only deals with preferences granted by Australia, New Zealand, and Canada, omitting South Africa, where the preference only amounts to a rebate of three per cent. It" whole tendency is to exaggerate the value of the preferences which we now receive, and to hold out the danger of losing them if we do not take steps to increase those which we now grant. Surely experience is beginning to show that even a preference of 33⅓ per cent. is not enough to satisfy those who are so anxious to get this preference. There was a time when ten per cent. was suggested as being an outside rate. Thirty-three and a third per cent. is not enough, and we are sometimes being asked for more.

The difference between the Free Trade country and the Protectionist country is surely this, that in a Protectionist country they make a profit on their home market, and they are able to dump abroad. A Free Trade country makes a profit on its home market and also in foreign markets, and it gets the advantage of the dumping which it enjoys from foreign countries who, owing to the high prices at which they sell at home, are able to sell abroad at a lower cost. There is yet another point and it is this: Preference would prevent both ourselves and the Dominions from having agreements with other countries. It would make it a great deal more difficult obviously, and it would reduce the value of the preference which would be given. Consider for one moment how much more difficult it would be for Canada to enter into those preferential agreements with the United States of America which are now being suggested if she had already with us a very large and extensive system of Preferential Duties.

At this moment, as your Lordships know, the chief demand for Preferential Duties comes to us from Australia. They are particularly anxious, I think, that we should give them an advantage upon the dried fruits which they are now producing. There are obvious difficulties in the way. Raisins are included in a convention between ourselves and Spain which can only be denounced after three years' notice. We also have a convention with Greece which would have to be denounced. But there are two still greater difficulties in the way. One is that Canada is trying to push the sale of the same kind of goods; she is developing the same kind of trade, and we should have to give her as well as South Africa the same advantages—at least I hope we should—as we gave to Australia; and the mere fact that we gave those advantages would go some way, I am afraid, to reduce their value. The fact, which I do not think will be contested, is that if we are to do anything to help Australia in this matter we must give them a preference upon the goods which they produce. With the rise of the Country Party in their Parliament one sees the beginning out there of something very much like the old contest between the country and the town that there used to be here. We shall, no doubt, have it-voiced when the distinguished Australian who is now their Prime Minister comes to this country in the autumn. I venture to hope that he will not think it necessary to follow the example of his predecessor and interfere in matters of domestic concern here.

Now I have already pointed out to your Lordships the difficulties there are; the impossibility, indeed, of having any scheme of preference to help Australia or any other country if we do not institute a general scheme first. A speech was made the other day by Mr. Bruce—to whom I have just referred—who is now the Australian Prime Minister. He has been making a series of speeches in Australia before leaving for London. Speaking at Hobart he said this: There are a number of manufacturers who are a little alarmed because I have stated that we should have a reciprocal trade basis inside the Empire. They think I am in favour of granting further and further concessions to British traders, which would have the effect of killing the industries which are already established here. That, however, is neither my intention nor that of the Government. It is now time that Great Britain should, of her own free will, give something to Australia. If we cannot have an Empire policy, Australia will have to take advantage of the offers that are "being made to her by countries outside the Empire. On that extract I shall offer three remarks.

The first one is that it is quite evident that Mr. Bruce has no idea of giving any further preference to the people of this country. He says quite clearly and emphatically that if is not his intention to give further and further concessions to British traders. Indeed, I am sure that it would be impossible for him to do it, in view of the state of public opinion in that country. We know how Prefer-once was established in that country. They had a general system of duties which was established in July. 1913, and the new scheme had been sent round to all the different ports when suddenly the idea of Preference occurred to them, and they sent a series of telegraphic instructions to the various ports telling them that from the day on "which the new system of collection was to begin preference was to be given to goods coming from this country by raising the amount of duty to be collected on goods which came in from outside the British Empire.

Not for a moment would I wish to deny the fact that some advantage has accrued both to them and to us from the existence of Preference, though not so much advantage as we should like, and for this reason. Here is a letter sent by an exporting correspondent to an Australian importing firm: We impose no tariff on Australian goods, and we fail to see the value of preferential treatment to British manufacturers, if the duty imposed is sufficient to keep such goods as ours out of Australia … we still see nothing to encourage us to take the slightest interest in Australian trade. The second passage to which I should venture to direct attention is that in which Mr. Bruce says that it is time that we should, of our own free will, give something to Australia.

For some time we in this country have given very large sums of capital on very cheap terms. In the course of last year the Australian Commonwealth raised, I think, £10,000,000. South Australia raised a loan in January; Victoria raised a loan in February; West Australia raised a loan in April, and New South Wales raised a loan of £5,000,000 in May. The result of those loans—an admirable thing—is that Australia has bought from us a large quantity of goods. It is a very useful thing, both for them and for us that they should apply to us for this cheap capital. We have always given Australia a free market for her goods which others have kept out by tariffs. We are most grateful to her for all that she has done for us, and I hope that on the whole we may be said to have been not unmindful of our responsibility in the matter of her defence.

Then the last matter is the question of Reciprocal Tariffs and agreements on which I shall not say very much except that attempts have been made time after time for more than thirty years to come to some form of reciprocal trade agreements between certain of our self-governing Dominions. There have been constant and continual difficulties in the way, and it would be easy to point out how long protracted those negotiations have been and how small has been the result. I shall not, however, detain your Lordships by doing that on this occasion, but it is only right, I think, to point out that Mr. Philip Snowden, in a letter which he wrote to the Morning Post on June 28, said that a Labour Government would be expected at once to reduce materially the Food Taxes and as quickly as possible to abolish them altogether. What that really means is that if these Food Taxes go so also must the Preferential Duties go, and the high hopes which are built upon the possibility of those preferences are, certain, therefore, to disappear entirely when, or if, a Labour Government come into office.

The condition in our other self-governing Colonies is very much the same as it is in Australia. Mr. Fielding, who was Canadian Minister of Finance in 1902, is, I think, Minister of Finance again. His views are very much the same, and in a debate which took place recently in the House of Commons in Canada he made it quite clear that he was not willing that there should be any large concessions made to British goods imported into Canada. In regard to New Zealand our relations are most happily of the very-best. We take all the goods which they can send to us, and they in return take from us practically all the goods which they require. There is a small duty upon goods going into that country, but that is the way in which they collect money for their various necessities. And in South Africa, quite lately, General Smuts has said that they would follow the example of Canada who, granting us what she could and accepting what we offered, would abstain from putting any pressure upon us.

Where we are likely to make a mistake is in believing that there is really any tendency on the part of Australia to take our manufactured goods. That is rot, I think, the tendency in that country. They are anxious to keep out goods from whatever country they come, in order that they may build up their own manufacturing interests, and it is, I am afraid, only too likely that there will be a very real disappointment when people find out how-unwilling Australia is to accept these goods. And indeed the position between Australia and Papua is one which somewhat goes to show that that is so. There was a cable from the Australian special correspondent in the Morning Post, on July 3, in which he pointed out that Papua is declared by the Navigation Act to be Australian territory, yet the Customs administration imposes the extreme foreign tariff against its products. The correspondent then gives an extract from the Sydney Morning Herald which asks how the Australian Government can reasonably expect the British Government to assist Australian produce in the home market when it is guilty of such ruthless treatment of its own dependency.

Further, I find this in the report from the Lieutenant-Governor of Papua, speaking of the application of the Navigation Act: By the operation of the Navigation Act we shall be prevented from trading with any country but Australia, and shall be, in practice, confined to a single Australian port. The result will be that the rice we purchase will continue to go south past our door to Sydney, and then must be transshipped and sent north again to Port Morseby. And so with everything else we buy that is not grown or manufactured in Australia. It will be the same with our exports. Even if their destination is London, they must begin with a long and expensive journey to Sydney, nearly 2,000 miles in the opposite direction to that in which they are intended to go, and then after trans-shipment in Sydney they start at last on their journey north to London. He goes on to complain of the treatment which they have received in other respects. I regret to think that there is not likely to be a very large market for our manufactured goods in Australia for some years to come.

I now turn to the question of sugar--sugar on which there exists an Empire Preference at the present time, and in regard to which I think that there is an extra claim upon His Majesty's Government for consideration if it be possible to reduce some of that taxation. In 1008 the tax was Is. Id. per cwt. In 1918 it was raised to 25s. 8d. per cwt. It is interesting to know that a fall of a penny per lb. in the cost of sugar would mean a fall of two points in the cost of living. It is obvious to your Lordships that any reduction in the cost of sugar must mean three good things—first of all, a stimulus to consumption; secondly, a stimulus to manufacture; and, thirdly, a stimulus to employment. Therefore it was that I ventured to say at an earlier stage that I wished His Majesty's Government had seen their way to reduce the cost of sugar rather than to give any advantage to beer. There is this further point. Supposing the Empire duty on tea was abolished, we in this country would lose £260,000 a year in revenue, but at the same time we should be able to reduce the cost of tea to the consumers of this country by the amount of the Preferential Duty, which is 1s. 3d. At this time, when the cost of living is so high, it would be a real advantage to the very poorest households in this country if there could be some such reduction as that.

It is true, of course, that our trade with different parts of the Empire is different according to the places to which it goes, and that it does not in any way depend upon the existence of preferences. There are places where it is good, and places where it is bad, independent of the fact that there is a preference. Last year I am glad to think that Australia had a very large amount for export. She sent it to us. She had here a free market which she was denied by the existence of tariffs in other countries. We paid for these foodstuffs, which came so happily into this country, by the export of a certain amount of our manufactures. it was partly that, and partly, no doubt, the cheap capital to which I have already referred, which was responsible for the improvement in our trade last year.

I come to my last point, I am glad to say, which touches the West African Colonies. The noble Duke, no doubt, knows that the question to which he has succeeded is an old one—namely, that of imposing on native raw material Export Duties. There has been a very interesting report from Sir Gordon Guggisberg, who is the Governor of the Colony, upon the advisability of reducing the Export Duty by a farthing. He says this: At this conference we went thoroughly into the probable effects of reducing various classes of duties; in particular we worked out the probable result of a reduction of half the cocoa duty. On paper this amounted to a loss to Government of £326,000 in the current year. Both my banking and trade advisors were, however, of the opinion that the impetus given to trade by a reduction of the cocoa tax would be such as practically to make up the loss. On the statistics produced at the conference it was the opinion of the members that we might not have to face a greater loss than £23,000. The result of the reduction, however, was surprising even to the Governor and his financial experts, for at the end of a year he said: I am glad to say that the results have justified the anticipations of the merchants. Trade has improved to such an extent that our revenue for the current year is £190,000 greater instead of being £23,000 less as we anticipated when we took off the tax. I think that this is yet another point in favour of our contention that the freer trade is the more likely it is to prosper.

The Protectionist demands which are now- being made in this country, and also in the Dominions beyond the seas, do not find much justification for their success in the figures which I have given to your Lordships. Protection has not been successful in the past, and it is not possible, I think, to grant any of these Preferential Duties in the future without, at the same time inflicting such burdens upon the poorest consumers of this country as I hope no Government is likely to wish to inflict.

THE EARL OF DENBIGH

My Lords, I ask your Lordships' permission to intrude in this debate in order to say a few words upon the question of sugar. For many years I have been very much interested in the question of promoting the cultivation of sugar beet in this country. I think it is about seventeen years since I made a speech on this subject of something like an hour's duration, and taxed your Lordships' patience very considerably, I am afraid. Perhaps that was the first time that sugar beet growing in this country had ever been mentioned in your Lordships' House, and I called attention to it at the time on account of the extraordinary ignorance which prevailed everywhere with regard to the possibilities of establishing that industry in this country.

We have heard from the noble Earl opposite some criticisms of the policy of His Majesty's Government in regard to the preference on sugar. He has complained of the absence of any reduction in the Sugar Duty. He touched upon the question in various aspects but he never uttered a single word with regard to the home industry which we are trying to establish, and which is rapidly becoming established through the sympathetic action of His Majesty's Government. The Government supported by the noble Earl, in spite of repeated requests, refused to have anything to do with it. The noble Earl spoke, apparently with approval, of the advantages to be gained in a Free Trade country by dumping. He said that they had the advantage of goods dumped cheaply from another country which makes its profits by selling them at a high price to its own consumers. I do not know whether it has ever occurred to him that the Free Trade policy of this country in regard to sugar was the direct cause of the sugar famine which was experienced during the war. In Germany and Austria the sugar industry reached its height, and the sugar producers in those countries were able to make large profits in their own country through their various organisations, sell at a very cheap rate here, and thus inflict an enormous amount of harm on our West Indian producers. When any complaint was made, the only answer we got from the Free Traders was that if Germany and other Continental countries choose to tax themselves in order to provide us with cheap sugar, let them do so.

When I began my campaign on behalf of sugar beet growing in this country I was struck by the extraordinary ignorance of the general public as to the source of our sugar supplies. Not one person in a thousand had the smallest idea that the greater proportion of our sugar was beet sugar which came from Austria and Germany. I called attention to it from time to time, and pointed out that if there was a European war the first certain result would be a sugar famine. It is rather poor consolation now to know that these words of warning were so neglected and that what I predicted came true. When our Government found themselves faced with the situation they began to consider the question, and, fortunately, by the aid of Government assistance, another factory was built and started in Nottinghamshire. The one at Cantley in Norfolk was built two years before the war by Dutch capital because no English capitalists would face the risk.

What I want to point out is that although the preference accorded to sugar may seem very high, you have to remember that the initial difficulties in starting an industry of this description are very great. It was no easy matter to start this new industry of such many-sided complexities. There were the agricultural side, the mechanical side, the commercial side, and what I may call the social side—the social amenities in the rural districts, and the necessity for providing housing accommodation for the people employed in the industry—to be considered. The industry, of course, is essentially a rural one. All these difficulties can be overcome, and are being overcome with experience. But to overcome them has been an expensive matter, and the consequence is that in the first year's working of the Kelham factory a loss was made. The financial purists who will have nothing to do with anything that savours of Protection have seized upon that loss and have used it as an argument against the industry as a whole.

I contend that these difficulties are initial and that with experience they can be overcome. But they cannot be overcome without fiscal assistance over a period of time in order to train the workers, the managers, the farmers and the labourers, so as to get the whole thing going as it is upon the Continent. As an example of what can be done if we only have time, may I point out that in Holland, where the climate is much the same as ours, the industry, after many years' experience during which it received ample fiscal assistance, is now going quite successfully without any preference whatever I I am confident that if we could get a fair chance here to establish the sugar beet industry in the interests of agriculturists and consumers of sugars, and also make ourselves less dependent than we are on foreign supplies—if that could be made a national policy the country would derive great benefit from it. Farmers now are undoubtedly keen. The whole situation has completely changed during the last two years; that is, since they have had practical experience of the proposal. The proof of that is shown that when offers of contracts were made last spring for some 16.000 acres to be grown for the two factories they were taken up within a few days, and instead of having to ask farmers to grow sugar beet the two companies have had to refuse many applications which came in a little too late.

What we want are capital and experience. Obviously capital will not be forthcoming unless it can be invested at a profit, and it will not be forthcoming unless there is some settled policy which will give confidence to those who are willing to invest their money in the' industry. The difficulties with which we are faced at the present are only another instance of what happens in this country, where only about one-fifth of the population is engaged and dependent on agriculture, when anything is put forward for the purpose of helping agriculture. About four-fifths of the population is urban or industrial, and. unfortunately, they seem to be concerned only with the question of how they can get their food cheaply, quite irrespective of where it comes from. They seem to resent it as rather a grievance that the farmer should be anxious to make a profit on his industry, although they would not continue very long unless they made a profit on theirs.

We are anxious at the present moment to do everything possible to prevent more land going out of cultivation. As your Lordships are well aware, a very serious crisis prevails at the present moment, and land is everywhere going down to grass. Anything that can be done to promote rural industry is to the good. There is no rural industry that will have a greater effect upon agriculture as a whole than the sugar beet industry. It perforce compels a very large cultivation. To keep one of these factories going you need from 8,000 to 10,000 acres under beet each year within an economical distance of the factory. On the four years' rotation, that means that you must have some 40,000 or 50,000 acres of land suitable for that purpose within an economical distance. When you remember that, from experience gained, farmers say that they employ about one extra man for every ten acres of sugar beet which they cultivate, and when you realise that the factories, operating in the winter, each employ from 300 to 500 men according to their size during the three or four months of the winter, and that they distribute weekly between £1,000 and. £1,200 in wages, your Lordships will realise how important this activity must be to a rural district.

The point which I fail to comprehend is the position of the Labour Party, who seem to have taken an attitude of hostility to the whole business. The other day, when the Prime Minister was speaking in another place concerning the amount of land that was going out of cultivation, I noticed that he was greeted with cries of "Shame !" from the Labour benches. Yet you find this very Party, which cries "Shame" on an occasion like that, doing all it can to stop an industry which will do more to bring land into cultivation than anything else. What we need at the present moment is an increase, in the number of factories. There are two in operation, and the experience gained, though it may have been costly, has been very valuable. Applications are coming in upon all sides for the building of factories, and the capital will undoubtedly be forthcoming if only some confidence can be felt and some indication can be given of a national desire to further the industry.

With your Lordships' permission, I should like to utter a word of warning. In consequence of these applications people are going about endeavouring to make profits by promoting sugar com-panies. There could be no greater mistake than to suppose that this is an industry which can be made profitable to the promoter. I happen to be President of an organisation known as the British Sugar Beet Growers' Society, which has a large membership, including, I dare say, some of your Lordships. That organisation is well supported. It does not exist for the purpose of endeavouring to make any profits out of the industry, but for the purpose of trying to promote the industry itself and to establish factories for the benefit of the agricultural industry generally. We are doing everything we can to keep matters straight and to preserve the industry from the hands of the ordinary company promoter. But we, do hope that we may have some settled policy and that people will really understand what is required and will realise the necessity of helping on the effort that is being made to promote the cultivation of land for the good of agriculture. I apologise for taking up the time of the House, but I desire, on behalf of all those who are concerned in this important industry to thank His Majesty's Government for, and congratulate them on. the firm stand which they have taken upon this matter and the way in which they have resisted all attempts to destroy the preference which is given to this home industry.

LOUD HYLTON

My Lords, the speeches to which the House has listened from the noble Earl opposite, Lord Beauchamp, and from the noble Earl behind me have covered perhaps a somewhat wider range of topics than many noble Lords might have anticipated. I think your Lordships will agree that such speeches would possibly be more properly dealt with by the representative of the Board of Trade or the Ministry of Agriculture, or by the noble Duke behind me, the Secretary of State for the Colonies, than by a representative of the Treasury who is moving the Second Beading of a Finance Bill, though I do not wish to complain for one moment of the variety of topics which the noble Earl opposite introduced into his speech.

He deplored the increase in the cost of armaments; he regretted the great rise in taxes and rates; he expressed his sorrow at seeing the abolition of the Land Valuation Department. He also dealt with various other details with which, as I think he himself admitted, he did not expect, nor, I think, will the House expect, that I should deal at any length. Further, the noble Earl also quoted to your Lordships certain speeches made by Australian statesmen and by General Smuts, but really, if the noble Earl will forgive me for saying so, it would be quite out of the question for me to attempt to refer to them in any detail in my reply this afternoon. I think the noble Earl will agree that these matters may profitably be dealt with by the Conference that is to be held on October 1 to discuss several of the points which he mentioned. The noble Earl also told us of several developments which were to be expected when a Labour Government came into office. There again, with your Lordships' permission, I must respectfully decline to be drawn into a discussion.

There is one point, however, which I should like to emphasise this afternoon in reference to the main topic of Imperial Preference to which the noble Earl opposite devoted the greater part of his remarks. That Preference was introduced as a matter of principle, and no great immediate effect on trade or revenue was anticipated. I think that the late Chancellor of the Exchequer, Mr. Austen Chamberlain, speaking in another place, really summed up the matter when he said: It is true preference has been given in the case of the duties now in force, but it is a very small one. Measured in money it is very small, although measured in potentialities within those limits it may be considerable. It may, however, and I think it will, just give the stimulus to development which may mean the difference between early and late development, and between poverty and prosperity, in many of our Dominions. I do not justify it on the grounds of the development it will lead to, nor on the ground that if you approve it in respect of these duties you will some day propose other duties and extend it to them also. I justify it as a spiritual recognition of a spiritual unity. It is something for which all the Empire has asked. For that reason, and not because of the profits they get out of it, it is justified. Those are Mr. Chamberlain's words, uttered in the House of Commons on July 9, 1919.

The noble Earl opposite gave your Lordships a number of figures with regard to the result of the Preferential Duties which I could not, I am afraid, follow entirely, but he must not think, therefore, that I admit the accuracy of all of them. The principal articles to which preference has been applied are (a) tea, (b) cocoa, (c) coffee, (d) sugar, (e) spirits, (f) wine, and (g) tobacco. The broad results to date may be stated as follows:—In tea the grant of preference reduced the duty on about 90 per cent. of the tea consumed in this country from 1s. to 10d. per lb. The reduction of the duty in 1922 made the rate on foreign tea 8d, and on Empire tea 6⅔d. per lb. the preference thus becoming 1⅓d. instead of 2d. Retail prices of Empire tea in this country have throughout been lower by the amount of the rebate, the benefit of preference being thus obtained by the public, but the proportion of Empire tea consumed has not risen, being now about the same as before the war. The foreign tea is mainly Java and Sumatra used for blending purposes.

Next, take cocoa. The proportion of Empire raw cocoa has risen, since the grant of preference, from under 50 per cent. to over 90 per cent. of the total consumed in this country, British West African cocoa having replaced the cheaper kinds of foreign cocoa. The development of the West African industry, however, was proceeding rapidly before 1919, and does not seem to have been affected by preference, as the United Kingdom only takes a small part of the output, and competition is severe, supplies of cocoa in the world generally being in excess of demand. But the benefit of preference has been felt by the consumer in lower prices.

As regards coffee, the proportion of Empire coffee consumed in this country before the war was about 20 per cent. In 1921–22 it was about 45 per cent.; in 1922–23, owing to the partial failure of crops both in British East Africa and in India, only 35 per cent. But, as with cocoa, the increase in the Empire proportion is due to the great development of production, mainly in Kenya, which cannot be ascribed to preference. The amount of the preference, formerly 7s, and now 4.s. 8d. per cwt., is too small to have any marked effect on the trade.

As regards sugar, on which Lord Denbigh made some interesting remarks to your Lordships, the proportion of Empire sugar consumed in this country has risen from about 7 per cent. before the war to 27 per cent. in 1921–22 and 22 per cent. in 1922–23. This cannot be attributed entirely to preference, but preference has greatly benefited the producers, in the West Indies and elsewhere, as they have been able to obtain higher prices practically to the full amount of the preference (over £4 per ton on fully refined sugar) for all sugar sold to this country.

In the case of spirits, rum, from the West Indies and British Guiana, is the only Empire spirit which is largely consumed in this country. The proportion has risen from 81 per cent. before the war to over 38 per cent. in 1922–23, largely as a result of the higher duty on Cuban rum under preference. As to wine, Empire wine is mainly Australian, and prices have been lowered by the amount of the preference. It is doubtful whether the producers have yet gained any pecuniary benefit, but the preference appears to be regarded in Australia as of considerable value. South African wines are now being imported, but their future in this country is uncertain.

As to tobacco, the proportion of leaf tobacco from the Empire (mainly Nyasa-land, Indian, Bornean, and Rhodesian) used in this country has risen from less than 1½ per cent. to more than 6 per cent. of the total, and it is agreed that preference has been of assistance. Moreover, some brands of British manufactured tobacco made mainly from Empire leaf are being sold ½d. per oz. cheaper than those made from foreign leaf. Empire cigars (from India and the West Indies) have also been sold cheaper as a result of the preference.

The preference on dried fruits has not affected figs, none of which are received from the Empire, and has only applied to a very small quantity of plums, prunes, &c, about 2 per cent. of the total supply, but the imports of raisins from the Empire (mainly Australia) have increased considerably, being nearly 17 per cent. of the total supplies in 1922–23. Australia attaches much importance to the preference on dried fruits, and the growers are anxious that it should be extended.

Under the head of the new Import Duties, the imports of clocks and watches, musical instruments, and cinematograph films from the Empire are insignificant, but those of motor cars, parts and accessories, mainly from Canada, have increased rapidly, and the. value of the imports in 1922–23 formed nearly one-third of the total value of imports under this head retained for use in the United Kingdom.

It has been objected—I think the noble Earl rather adopted the argument—that Preference had caused a large loss of revenue. The only statement that can be supplied on this point is one showing the difference between the full and the preferential rates of duty on the net quantities of dutiable goods which have obtained a preferential rebate. But while this difference may be regarded as a loss to the Exchequer, except in so far as the rebate has led to a rise in consumption, there is no loss to the country when the rebate is passed on to the consumer in lower prices. In the case of the Tea Duty, which is the chief item in a table to which I shall refer, what the Exchequer has lost the consumer has gained.

I have a table showing the approximate amount of preferential rebate in the years 1919–20, 1920–1, 1921–2, 1922–3, on the various articles which I have enumerated. I can give them to the noble Earl now if he likes, or hand them to him afterwards, but I may say that against these amounts is to be set the, gain to the Exchequer from the extra 2s. 6d. per gallon imposed on non-Empire spirits. This amounted to about £230,000 in 1919–20, £270,000 in 1920–1, £170,000 in 1921–2 and £130,000 last year, thus making the net loss about £3,650,000 in 1919–20, £4,510,000 in 1920–1, £5,530,000 in 1921–2 and £4,550,000 in 1922–3. Corresponding figures were given for the calendar year 1922 in regard to certain articles entitled to preference, in reply to a question by Mr. Charles Roberts on the 9th May, 1923.

To turn to what perhaps is really the most important of the noble Earl's remarks, at the time of the last General Election, in November, 1922, Mr. Bonar Law gave a public pledge not to make any fundamental change in the British fiscal system during the present Parliament. By that pledge the present Government is still bound. Since Mr. Austen Chamberlain's Budget of 1919 it has been part of our established fiscal system to give a preferential abatement from Customs Duties on imports from the British Empire. The subject of Preference, as the noble Earl knows—and he referred to it in his speech—will come up for discussion at the forthcoming Imperial Economic Conference, which opens, I believe, on October 1 next. It will then be for His Majesty's Government to consider any proposals or requests made from the other parts of the Empire, and they will be prepared to recommend to Parliament any changes in the existing preference that may seem desirable as the result of the discussions at the Conference. But in any case any such changes must conform to Mr. Bonar Law's pledge, to which I have already alluded, and must not involve any fundamental change in our present fiscal system; and they cannot become operative, of course, without the consent of Parliament. As to the kind of changes that, if proposed, could be adopted, it would, in the opinion of the Government, be obviously premature to say anything this afternoon.

On Question, Bill read 2a: Committee negatived.