Lords Sitting of 6 November 1929

Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
THE EARL OF MIDLOTHIAN.
Albert Edward Harry Meyer Archibald Earl of Midlothian, Viscount Mentmore of Mentmore, in the County of Buckingham, and Baron Epsom of Epsom, in the County of Surrey, D.S.O., M.C.,—Was (in the usual manner) introduced by virtue of a Patent dated the 3rd day of July, 1911, his father, the Right Honourable Archibald Philip Earl of Rosebery in that part of the United Kingdom of Great Britain and Ireland called Scotland, K.G., K.T., who was created an Earl of the United Kingdom by the said Patent, never having taken his seat as Earl of Midlothian.
LORD GREENWOOD.
The Right Honourable Sir Hamar Greenwood, Bart., having been created Baron Greenwood of Llanbister, in the County of Radnor—Was (in the usual manner) introduced.

BUSINESS OF THE HOUSE.
THE MARQUESS OF SALISBURY: My Lords, before your Lordships go to the Orders of the Day, I would ask leave to put a Question to the noble and learned Lord the Leader of the House as to whether he can tell us what Bills are likely to be brought before this House during the present sittings. There will be, I suppose, other business besides Bills; notably, there must be some discussion upon the Egyptian Treaty either initiated by His Majesty's Government or by ourselves. That, no doubt, must take place. Beside that I would like to put a question with reference to an Order in Council which I understand the Government are to lay before both Houses of Parliament in respect of the East African Reports; that is to say, the two Reports which have been made in respect of the East African Protectorate. I understand that the object is to lead up to a Joint Committee of both Houses of

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Parliament. I should like to know when the discussion of that Order in Council is likely to be undertaken by the Government.
THE LORD PRESIDENT OF THE COUNCIL (LORD PARMOOR): My Lords, I had better perhaps deal with the last question first. I do not think there is the least chance of the Government initiating a discussion at this stage on the Egyptian Treaty. Their view certainly was, and I think is, that it would be contrary to the public interest to have a discussion at any rate before the Elections have been finally disposed of in Egypt. I do not know, of course, what the noble Marquess's view would be about that; but until the Elections in Egypt have been disposed of certainly we shall not initiate any discussion, because we do not think it would be in accord with the public interest.
On the other question which the noble Marquess asks me, I appreciate that very important questions may arise regarding East Africa; but my noble friend Lord Passfield, the Secretary of State for Dominion Affairs, is not here and I am afraid, therefore, that I cannot answer the noble Marquess's question. I have not heard of any such intention. That does not mean that there is net one; but I will get the information from my noble friend Lord Passfield and we will supply it at the next public meeting of your Lordships' House. I am sorry that I cannot give any further information than that to-day.
With regard to the future, the noble Marquess knows what there is on the Paper. At the present time, so far as I can see, at the beginning of next week the only possible matter that might be put on the Paper for Tuesday would be the concluding stages of the Children (Employment Abroad) Bill. That is likely to be formal. If that is the only matter to be put on the Paper for that day, I would, of course, consider some other day when it could be taken formally at any convenient time. Then, as I think the noble Marquess knows, we have on Wednesday Lord Danesfort's Motion on certain actions of the Irish Free State in reference to a decision of the Privy Council, and on Thursday we have the Motion of the noble Earl, Lord Midleton, on the Army. I am informed that Lord Lamington's Motion, which was
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on the Paper for that day, regarding our relations with the Imam of Yemen, has been deferred for a week.
As to the future of Bills in this House, I think one or two important questions arise. In the first place, the Civil Procedure Bill, which will be introduced by the Lord Chancellor, which deals with a very important question of the procedure on behalf of the Government in civil proceedings, and which has been very carefully considered, is, I am told, ready to be introduced subject to printing. Everything is ready except printing and the noble and learned Lord, the Lord Chancellor, is willing at the first possible opportunity to ask leave to take the First Reading. That will probably be early next week. Then, as I have already stated, we are hoping that the Road Traffic Bill may be introduced in this House. Again I am told the difficulty is rather with the draftsman and with the printing of the Bill. I hope that next week that also may be introduced into this House. Then there is a very important Bill, the Widows', Orphans' and Old Age Contributory Pensions Bill, which is now being discussed in another place. I hope it will be here by the third week in November. That, I think, will take up most of your Lordships' time whilst it is under discussion, because it is necessary to pass that Bill into law before the end of November.
I think that is as far as I can go at the present moment in indicating the business that your Lordships will have before you, and I am sure that I shall have the sympathy of the noble Marquess when I say that I am endeavouring that we in this House, who often have time at our disposal, should have before us some of the non-contentious Bills which may nevertheless require a good deal of discussion at the Committee stage. That is a class of Bill with which, I think, we are specially fitted to deal, and in reference to which we are likely to have adequate time. I cannot give the noble Marquess any further information at the present time.
THE MARQUESS OF SALISBURY: My Lords, I am very grateful to the noble and learned Lord for what he has been able to say and also for his promise to introduce important measures into your Lordships' House.
LORD PARMOOR: If I can.
THE MARQUESS OF SALISBURY: That remains with the noble and learned Lord and his colleagues, and I have no doubt he is very influential. I would only add, if I may be allowed to do so, that with regard to the Widows' Pensions Bill I understand that he hopes to get it here in the third week of November with a view of passing it before the end of the month.
LORD PARMOOR: Yes.
THE MARQUESS OF SALISBURY: The noble and learned Lord will realise that does not allow us a very great deal of time for a most complicated Bill. I should not like to enter into any engagement with him as to the time which it will take, so far as we are concerned on this side of the House, to deal with it, and I hope he will realise on a very important measure like this that we ought to have ample time. May I also say one word with regard to the Egyptian discussion? I observed that the noble and learned Lord used the phrase that he thought it would be contrary to the public interest to have a discussion upon the Egyptian Treaty at the present moment. That is a very important phrase for him to use, and in the circumstances I cannot enter into any undertaking with reference to it. I am sure he will understand that, but, of course, I take note of the phrase.
LORD PARMOOR: I am very much obliged, and, in answer to the noble Marquess's suggestion, I should like to say that the Widows' Pensions Bill, which undoubtedly requires a good deal of discussion, will be in charge of the noble Lord, Lord Arnold, and will be brought here at the first possible moment. Later the noble Lord, Lord Arnold, may be able to tell us, if it is convenient, what he would desire as to leaving as much time as he possibly can between the First and Second Readings. I should like to have at least a full week if that is possible. I do not know at the present time what is the most convenient way to deal with a Bill in which there is so much detail, but I promise the noble Marquess this, that not only will any suggestion coming from him have full consideration but we shall adopt it if we possibly can do so.

UNCOLLECTED TAXES.
LORD MONKSWELL LORD MONKSWELL had given Notice to ask His Majesty's Government if they will issue a return showing the rates of Income Tax, Super-Tax and Death Duties for each complete year from the year beginning April, 1919, onwards, together with the amounts leviable in each of these years, the collection of which had to be postponed or abandoned; and to move for Papers.
The noble Lord said: My Lords, after the War and before Income Tax was reduced to its present level, a number of statements were made in the House of Commons which showed that it was quite impossible to collect anything like the full assessments subject to direct taxation. Speaking from memory I think it was stated that for at least one year the Treasury was something like £150,000,000 short. No doubt a good deal could be extracted from the Parliamentary debates, but the information given was very scrappy, and I know of no place where full particulars were given. I venture to think that a statement on this subject, giving full details, would be a matter of the highest interest; in fact, it goes to the roots of the prospects of this country. We have adopted a system of government which makes it certain that the great majority of electors will be people who are profoundly moved by the fear of destitution, people who, if they are in efficient or unlucky, can hope to survive only by living on the fruits of the efforts of other people. So long as democracy lasts it is certain that this state of things will be progressively intensified. No political Party would think of fighting a General Election without promising at least a substantial increase in the amount of public money to be distributed in largesse among the mass of the electors. It does not matter what form this largesse takes. At the present time it is fashionable to call it pensions. It is all the same in the end. So long as the majority of the electors are people for whom the fear of personal destitution is a more serious matter than the survival of the country no improvement can be hoped for. My motive in asking for this return is that it is likely to throw light on what margin, if any, there is now left before further largesse will require more money than the Treasury can collect.
In particular I should like to draw your Lordships' attention to one aspect of this question which political Parties are too apt to ignore. Let us assume that some political Party or other has bound us bylaw to find more money than the tax gatherers are able to collect. Obviously, resort will be had to inflation. The money will simply be printed off. In these circumstances nothing that Parliament or anybody else can do will prevent the exchange from progressively falling and the price of living from going up, also progressively. The agricultural resources of this country are quite insufficient to provide all the food we want. In these circumstances it is only necessary for the exchange to continue to fall for a certain time when the imports of food from foreign countries will dwindle and finally cease altogether. I need not dwell on the appalling character of such a catastrophe, but so far as I know the margin of safety that still covers us is alarmingly small, and the questions affected by the return for which I ask are vital to our very existence. I beg to move.
THE PAYMASTER-GENERAL (LORD ARNOLD): My Lords, I will do my best to give the noble Lord the information which he has asked for, and I venture to hope and to think that in doing so I shall be able to allay his apprehensions. The first part of the Question asks if the Government will issue a return showing the rates of Income Tax, Super-Tax and Death Duties for each complete year from the year beginning April, 1919, onwards. That information is already available in a convenient form. The fact is the rates of Income Tax, Super-Tax and Death Duties, and the changes in taxation, including the changes in the rates, are published in the Annual Reports of the Commissioners of Inland Revenue year by year, and there are summaries for several years. For instance, the last published Report of the Commissioners, that is the 71st Report, Command Paper No. 3176, gives all the rates for Super-Tax and Death Duties up to 1927–28, and there was no change in 1928–29. This Report also contains the Income Tax rates and allowances from 1920 to 1927. There was no change in the rates in 1928 or 1929, but increased allowances for children, as your Lordships may remember, were made in 1928. As regards
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1919 the Income Tax rates and abatements for that year will be found in the 68th Report, which is Command Paper No. 2347. Therefore the information, so far as the first part of the Question is concerned, can be easily obtained by the noble Lord; and, indeed, I will venture, if I may, to utter a word of commendation with regard to this Report of the Commissioners of Inland Revenue. It is a most excellent production and to those interested in these matters it is almost as absorbing as a novel. It is well worth perusing.
As regards the second part of the Question, the noble Lord goes on to ask whether, in addition to the information to which I have referred, the Government will also give the amounts leviable in each of those years the collection of which had to be postponed or abandoned. It is not possible to give the information asked for in the second part of the Question, but it is possible to give a great deal of information and I am going to do it. I will do my best to satisfy the noble Lord, but I must explain to him that the Income Tax and the Super-Tax are taxes the assessment of which for any year may extend throughout the whole of the six following years. Not only so, but the tax, whether it be Income Tax or Super-Tax—though my next remark applies much more to the Income Tax—is continually subject to adjustment as liabilities are being settled and allowances and reliefs to which taxpayers may be entitled are made. The recovery of arrears is also a continuous operation and it is not possible at any point of time to say what amount will be collected or may ultimately prove to be recoverable. It is impossible to say as regards the tax leviable for any year, any one twelve months, how much will subsequently be collected, or again how much may have to be abandoned.
But it is true—and this is relevant information as to arrears of Income Tax—that estimates of a certain kind have been given from time to time in another place. Those are estimates of the amount of tax assessed in a given year. I hope I make this quite clear. I know it is very complicated. It is the amount of tax assessed in one year that has not been collected at the end of that year. I give these figures right back to the end of 1920–21. In 1920–21 the standard

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rate of Income Tax was 6s. in the pound and the arrears from that year 1920–21 were estimated by the Board of Inland Revenue—it is only an estimate—to be on March 31,1921, £51,100,000. The next year, 1921–22, the arrears were estimated to be at the end of March, 1922, £70,300,000. The next year, down to March, 1923, they were estimated to be £46,400,000. The next year they were estimated to be £44,800,000. The next year they were estimated to be £35,400,000. The next year they were estimated to be £32,000,000. We have now come to 1926–27. For that year the arrears were estimated to be £29,500,000. Then we come to 1928, the last available year, when the estimated amount was £21,300,000. I would like to make it quite clear that these figures represent the tax that remained to be collected at the end of the year out of the assessments made in that year.
LORD MONKSWELL: That is Income Tax alone?
LORD ARNOLD: Yes, I am coming to the Super-Tax. The bulk of these assessments will be charged in respect of that year, but a certain amount in each year will be assessments charged in respect of previous years which for one reason or another have not been collected. These matters often take a great deal of time, as your Lordships are aware, as a great many points have to be decided. Now I come to Super-Tax. The only relevant information there is the amount of Super-Tax remaining to be collected at 31st March each year out of all assessments whenever they are made, for whatever year they are made, the duty on which is at March 31 unpaid. These figures again have been given from time to time, but I will furnish them to the noble Lord. I am doing my best to meet him. At March 31,1921—it is the same date at which I began with the Income Tax—the arrears remaining to be collected were estimated at £16,300,000. In March, 1922, the amount was £24,200,000; in March, 1923, the figure was £23,000,000; in 1924 it was £26,000,000; in March, 1925, the amount was £25,000,000; in March, 1926, it was £23,400,000; in March, 1927, it was £19,300,000, and in March, 1928, it was £14,500,000. So much for the Super-Tax.
The noble Lord also asked about the Death Duties. As regards the Death
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Duties, it has to be borne in mind that these taxes, as your Lordships are very well aware, are not assessed on a time basis like the Income Tax and Super-Tax. They are, of course, taxes payable on the occasion of death. In the case of the Estate Duty—and it is the Estate Duty which accounts for seven-eighths of the total Death Duties revenue—the bulk of the duty is paid as a condition precedent to the grant of probate. No question of postponement arises as this duty falls to be paid as and when probate is being taken out. Also, as your Lordships are aware, the law provides that the Estate Duty charged on certain kinds of property may be paid by instalments—many of your Lordships are very familiar with that—and further payments of Estate Duty to those made prior to the grant of probate may fall to be made at a later date as the clearance of the affairs of the estate shows that the value of the estate may have been greater than that originally declared. The assessment of additional liabilities to Estate Duty and of liabilities to Legacy and Succession Duty and the consequent collection of revenue is continually in progress so that it is not possible to say with regard to the deaths in any particular year how much duty remains to be collected. But I am going to give the noble Lord some figures which I really think will satisfy him on this point to the full. That really is my reply so far as information is concerned. Now we come to what I may call the debatable part of the question.
LORD MONKSWELL: You are going to give figures of the Death Duties? You have not done so.
LORD ARNOLD: I have said I cannot for the reasons I have stated. I am going to give some figures which I think will satisfy the noble Lord, but I am taking the matter in a different order for certain reasons. I want to deal with the noble Lord's main contention which, if I understood him aright, was that high rates of tax are responsible for heavy arrears. I think that is putting it fairly.
LORD MONKSWELL: Yes.
LORD ARNOLD: Then I have put the point fairly. My reply to that is that a conclusion of this kind cannot be drawn as the result of experience, because a study of the figures I have given shows

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that when Income Tax was 6s. and 5s. in the pound the arrears were not much greater proportionately than when the tax was 4s. in the pound. A big factor in explaining the proportionate difference was the trade depression following the War, and, if I may be allowed to use the common word, which is very expressive, the slump which took place in stock values and prices generally, particularly in 1921. Those factors necessarily affected the collection of Income Tax. Heavy depreciation of stock values and prices consequent upon the severe slump naturally made it temporarily more difficult for some persons to pay their Income Tax promptly. That, I think, is quite clear. If stocks have depreciated very much, and perhaps cannot be realised, there is not the same amount of ready cash. But that was an entirely exceptional state of affairs, and it would have affected any collection of Income Tax. As a matter of fact, even in 1921 when things were at their worst and the Income Tax stood at 6s. in the pound, the arrears were not really heavy.
I should like to remind the noble Lord of another point which, I think, is very relevant to the Question he has raised. It is a very interesting Question and I hope I am treating it with the respect that it deserves. He has, I think, rather overlooked, in speaking of the difficulty of collecting these taxes, and particularly Income Tax, the fact that a big proportion of Income Tax is collected at the source—that is to say, it is paid by limited companies in lump sums and under Schedule A deductions and so forth. In fact about 75 per cent. of all the Income Tax is collected at source in one way or another. A further considerable percentage of the remaining 25 per cent. of Income Tax is paid on salaries. When those two considerations are borne in mind, it will be seen that the work of collection is very greatly simplified, and also the possibility of evasion is vastly reduced, whether the Tax stands at 4s. or 6s. in the pound. I will give the noble Lord a further assurance, which I think he will welcome, regarding the points he has raised. This is a point of great importance. In the last five years there has been a progressive improvement in the collection of the Income Tax and Super-Tax. Every year in the last five years—and during that time Income Tax and Super-Tax have
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been altered only slightly—the Inland Revenue has been able to collect an improved percentage of the tax in assessment.
I would suggest that this means that, the further we get away from the unsettled condition which followed the War, the more effective the collection of revenue becomes. In the case of Income Tax, for instance, it is estimated that there is collected by March 31 about 80 per cent.—this is only a broad estimate—of the collectible tax that is payable in the March quarter. In the case of Super-Tax, the percentage collected by March 31 exceeds 80 per cent., and it must be remembered that some of the Super-Tax assessments are made only in February and March. This does not, of course, mean that the remainder is not collected at all. Let me make that quite clear. It means that it may be collected somewhat later.
LORD MONKSWELL: The noble Lord has not said what part of it is postponed and what part is abandoned. That was part of my Question.
LORD ARNOLD: I have already explained in great detail, if the noble Lord has been good enough to follow me, that it is impossible to give this information for the reasons I have stated.
LORD MONKSWELL: You simply do not know how much you have to abandon?
LORD ARNOLD: No, I do not. I cannot give the noble Lord information which I do not possess, but I am giving all the relevant information that I can. His Question raises the matter of arrears, and I am dealing with that as fully as I can. With regard to Death Duties, I will give the noble Lord further figures. This is my last point. The rates of Death Duties are, of course, very much higher than they were before the War, yet the yield is extremely satisfactory and, indeed, in the last two years it has exceeded by between 10 per cent. and 15 per cent. the Chancellor of the Exchequer's estimate of what he expected. The pre-War yield of Death Duties was about £25,000,000. In 1928 we raised £80,600,000 from Death Duties, although the estimate of the Chancellor of the Exchequer when the Budget was introduced was for only £72,000,000. There does not, therefore, appear to be very much difficulty in collecting Death Duties. In the previous year

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the yield from Death Duties was £77,300,000, whereas the Chancellor of the Exchequer's estimate had been £67,000,000. I have here the figures going back to 1922, and in every year, with the single exception of 1925, the estimate given in the House of Commons when the Budget was introduced by the Chancellor of the Exchequer, whoever he was, of what he expected the Death Duties to yield has been exceeded, and in some years, as I have shown—particularly in the last two years—exceeded very considerably.
There really is nothing here to support the view of the noble Lord that these high rates of tax make collection difficult. Indeed, I submit that these figures do not help the noble Lord in his contention, but rather prove that there is no great difficulty. They tend to destroy his contention. I think that, in view of what I have said, it is scarcely necessary for me to deal with the rather scarifying prospect, if I may call it so, which the noble Lord adumbrated of some Government indulging, apparently without any thought whatever, in inflation. There is absolutely not the slightest fear of anything of the sort. It is out of the question altogether. The figures that I have given have distinctly disproved that. I want to make it quite clear in conclusion, although I think it is unnecessary to do so, that nothing that I have said bears in the slightest degree upon the intentions of the Chancellor of the Exchequer one way or the other. I am not speaking of taxation. It would, of course, be highly improper for me to say anything that impinged in any way upon his province. All that I have been doing is to discuss from various angles the contentions of the noble Lord. I very much hope that I have been able to satisfy him on the figures—the only official figures that I could give—that his apprehension really has no foundation in fact.
LORD LAMINGTON: My Lords, I think the noble Lord is to be congratulated on his courage in bringing forward this Question, regarding a subject which many people feel great delicacy in touching upon and in which a limited few are very vitally interested. I do not see why this information should not be given in a form in which it could be studied by the people of the country. It would be
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studied with some interest if it were provided in a concise form, showing the various taxes and their yield. I wonder whether the experienced men who feel the pulse of the life blood of the people have ever wondered whether, so far as Death Duties are concerned, the sum collected will in the future diminish owing to the extortionate amount which is at present being extracted from those who represent the capitalistic class of the country? It does seem to me that the time must come when there will possibly be a diminution in the amount of wealth that can be taxed. Death Duties on their present vast scale are a barbaric tax, and it would be interesting also to know whether these able men of the financial Departments have estimated or considered whether there will be a reduction in the amount that can be levied.
EARL STANHOPE: My Lords, I suppose the noble Lord could not give us any figures with respect to businesses which have had to be wound up as a result of having to find Death Duties. We all know of cases where great businesses have had to realise capital, and have not had sufficient money to carry on as before. I do not know whether the noble Lord has figures to show to what extent businesses have had to be wound up, and to what extent land has been bought by occupiers, as the result of the breaking up of estates, owing to these duties? It would no doubt be difficult to get accurate figures, but they would be interesting.
LORD ARNOLD: The noble Earl will no doubt realise that I am not in the least complaining of his intervention, but a question of that kind requires notice. I very much doubt whether the Inland Revenue would be able to give such figures, but I will make this observation, speaking from memory, that I believe the evidence given before the Committee on the Increase of War Wealth showed that somewhere about 80 per cent. of the businesses of the country are carried on by limited companies. I would suggest to the noble Earl that that being the case the figures which he desires, even if given, would not be of a very serious character.
EARL STANHOPE: If you excluded private companies it might make a rather different situation.
LORD ARNOLD: Again I would say that it is impossible to discuss the matter without notice, but I would only suggest to the noble Earl that I do not think it would make a great difference. If, however, he desires to have a discussion on the subject, I shall be glad to answer him, but we must have a separate Motion on the Paper.
LORD MONKSWELL: I am very much obliged to the noble Lord for the figures he has given. They are certainly very much fuller than I thought it likely we should get. They are very interesting figures, and although I cannot say that they have removed my apprehensions with regard to the future, I shall study them with great interest. I do not know whether the Government will allow them to be printed and circulated. I think it would be an excellent thing to do so.
LORD ARNOLD: If I may be allowed to intervene again, I will consult with the Chancellor of the Exchequer as to the advisability of issuing a White Paper with the figures. I do not think I can go further for the moment. The figures will be in the OFFICIAL REPORT and in the books which I have mentioned, and I scarcely think anything would be gained by issuing them in a White Paper.
LORD MONKSWELL: It would be so convenient to have them in a small compass. Pew people will take the trouble to look for them in the OFFICIAL REPORT.
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More people will study them if they are published and circulated, and I hope the noble Lord will suggest to the Chancellor of the Exchequer that that would be a good course to take. I beg leave to withdraw my Motion.
Motion, by leave, withdrawn.

REPRESENTATIVE PEERS FOR SCOTLAND.
The LORD CHANCELLOR acquainted the House that the Clerk of the Parliaments had received (by post) from the Lord Clerk Register of Scotland, Minutes of the meeting held on the 31st of May last of the Peers of Scotland for the election of their representatives to sit and vote in the ensuing Parliament of the United Kingdom: and also. Return by the Lord Clerk Register of Scotland concerning titles of Peerages called at the said meeting, in right of which respectively no vote had been received and counted for fifty years last past as at the date of the said meeting: Ordered that the said Minutes of Election, etc., be printed.

ROLL OF THE LORDS.
The LORD CHANCELLOR acquainted the House that the Clerk of the Parliaments had prepared and laid it on the Table: The same was ordered to be printed.
House adjourned at five minutes before five o'clock.