FINANCE BILL. (Hansard, 29 July 1930)

HL Deb 29 July 1930 vol 78 cc986-95 986

§ Order of the Day for the Second Reading read.

§ THE SECRETARY OF STATE FOR THE COLONIES (LORD PASSFIELD)
My Lords, I do not know how much you wish to hear about the Finance Bill. It is probably by this time very familiar to you from various channels. Perhaps I ought to draw attention to the fact that last year closed with a deficit of £15,000,000 in very round figures and that when the Estimates and adjustments for the present year were made that deficit was increased to £26,000,000. Of course both those figures cover a number of in and out transactions, but the net result is that the Chancellor of the Exchequer has to provide for a deficit of £26,000,000 odd. He has provided, as your Lordships will be aware, for that deficit by an increase of taxation, partly upon beer to the extent of £3,000,000, and partly upon direct taxation—the Income Tax, the Surtax and the Estate Duties 987 against which there are some reductions —to the extent of £31,000,000 leaving a probable surplus of £3,000,000 odd.
Your Lordships may have differing opinions about that, but I would at any rate like to call attention to one thing —that it is a very straightforward Budget, that an attempt is made to pay our way as we go, and that there is some attempt made to maintain the Sinking Fund. That has been criticised from two points of view. Some people think it is partly nullified by hidden borrowing in another direction, and that it is, generally speaking, not adequate. On the other hand, the opinion is expressed that we need not provide so much. Between the two possibly a safe course has been adopted.
I would also like to draw attention to the fact that the Estimates of Revenue, prepared, as your Lordships will be aware, by very experienced officers whose Estimates have been on the whole remarkably accurate, show that the Income Tax without taking into account any alterations—the Income Tax taken on the old basis—is expected to yield nearly £2,000,000 more than it did last year, and that Customs and Excise, also on the old basis, are expected to yield another £2,000,000 or more. I do not draw attention to that for any other reason than to point out that it ought to give a little encouragement to those who are apt to believe that this country is not making any profits. In spite of all our stages of depression and our incorrigible habit of self-depreciation, it does seem as if in the aggregate the income of the country is being maintained, and we are entitled to believe that it is even slightly increasing. The other feature of the Budget is, as I say, that an attempt is made plainly and simply to pay our way as we go. Opinions will differ as to whether the wisest taxes have been chosen for that purpose, but I venture to think that on the whole it is better that we should take up the position of placing the burden in proportion to the ability to pay. Certainly, Whether that is accepted or not, that has been the principle upon which the Chancellor of the Exchequer has proceeded.
I want to say one word about another feature of this Finance Bill. Finance Bills inevitably are long and extremely complicated, but I think your Lordships may pass over all the other clauses if 988 you will allow me to refer for a moment to a set of clauses designed to prevent, I will not say the evasion of taxes, but the avoidance of taxes which has been up till now, in certain directions, law. It is part of the right of a British subject so to arrange his private affairs that he can avoid within the law any of the taxes which would fall upon him. It is also part of the right, and I should say the duty, of the Government when they discover such avoidance on any considerable scale to come to Parliament to get the law altered so as to prevent that avoidance in any way which is contrary to the spirit at any rate of the enactment of the tax. Care has to be taken, of course—care ought to be taken—in such a matter not to interfere, first of all, with the course of business, and secondly not to interfere with the quite legitimate arrangements of individuals which are not intended to avoid the taxes. I think the discussion which has taken place in another place and also consideration of the drafting of the clauses have shown that very great care has been taken to avoid both these things.
The clauses as they now stand may be taken to represent the best that can be done by those expert in the subject to counteract and to prevent that avoidance of taxation which has grown up—there are several forms of it which are dealt with in this Bill, as your Lordships will know—and, at the same time, care has been taken that these new provisions should not either improperly interfere with the proper course of business or injuriously affect individuals who are not engaged in the endeavour to avoid taxation. I think, perhaps, I shall consult the convenience of your Lordships if I do not say anything more on the subject, and I will therefore move now that the Bill be read a second time.

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

§ EARL BEAUCHAMP
My Lords, I do not think any of your Lordships can view with any great satisfaction the passage of this Bill to the Statute Book. I do not wish to quarrel with the clauses to which the noble Lord who has just spoken chiefly confined his attention—those dealing with the evasion of various taxes. The one merit of the Bill seems to me that it is an honest and straightforward attempt to pay for the extravagance of our Government during the last 989 few years. All this extravagance was not that of the present Government. Some of the provisions in this Bill mean that they will have to pay some of the debts incurred by the last Chancellor of the Exchequer. But the present Government are not entirely guiltless of having added to the expenditure of the country. The last Chancellor of the Exchequer for five years played with a number of items of a capital nature. He raided reserves to meet current account until no reserves were left. Then, when there were no reserves, Mr. Churchill himself was not in office. The reserves disappeared and the Chancellor of the Exchequer disappeared at the same time. Now we find that Mr. Snowden's first duty has been to pay the debts which were incurred by other people, and in that he has the sympathy of everybody. We do not have much sympathy for people who have to pay their own debts, but, when they have to pay other people's debts, we feel it is rather hard on them to be obliged to do so.
None the less we must point out that he has added much to the expenditure of the country and to our debts. In twelve months there has been an increased Expenditure on a very large scale indeed towards the payment of people who are out of work. Last week there was a Bill passed, which reached your Lordships' House only this afternoon, called the Unemployment Insurance (No. 4) Bill. The sting of the Bill lies in the tail of the Title. It is the fourth time in one single Session of Parliament that His Majesty's Government have been obliged to come to the Houses of Parliament in order that they may raise the money necessary to pay for the unemployed in this country. No wonder that, in these circumstances, His Majesty's Government find themselves obliged to add 6d. to the Income Tax, but that 6d. will help to cripple industry and to put off that revival in trade for which we hope. Increased taxation must always have an ill effect upon the business of this country and my complaint is that there is nothing in this Finance Bill which will prevent more taxation being necessary when the time comes next year.
It is quite true that the Chancellor of the Exchequer promised he would put on no more taxes next year, but I cannot help wondering whether, in view of the 990 large increase in the unemployment figures, he has not already regretted the promise he made when he introduced the Finance Bill. Unemployment has gone up no less than 800,000 in numbers since His Majesty's Government took office. Not only that, but the Minister of Labour said in another place the other day that she thought by the end of the year the numbers might be as great as 2,300,000. These figures are appalling and it is perfectly obvious and perfectly simple that the amount of money needed for these unemployed must be at least double what it was when the numbers were half the present figure. It is obvious there is no hope for a reduction in our Expenditure and an increase is inevitable and more taxation next year seems to me necessary. His Majesty's Government do not seem to be doing anything to avoid that increased unemployment in the course of the winter.
I am not sure that we are not all of us a little bit to blame in this matter. We are all too much used to seeing the figures of unemployment week by week in the newspapers. We are deadened to the appalling calamity involved by the fact that there are so many unemployed in the country. Last week £10,000,000 was voted in another place unanimously and all Parties agreed that it was necessary that it should be raised and spent. I wonder very much, ii there would have been the same unanimity if the House of Commons had been asked to vote a similar sum of money or even a larger sum for a Development Fund that would have given a large amount of money to a people out of work. Your Lordships will remember that a large Development Loan was part of the policy put before the people of this country at the time of the last General Election. £70,000,000 was all that we suggested should be spent in the first year. We were attacked as if it was almost an indecent suggestion to make. Yet, on the other hand, the interest would have been secured, it would have meant no increase in the taxation of this country, it would have been covered by the existing duties without levying another penny of taxation, while the interest payable has been swallowed up over ten times already in the amount of money that His Majesty's Government have raised in Unemployment Insurance Acts since they came into office.
991 It would have been far better to have raised that loan in order to keep a large number of people at work instead of paying them as we do under our present system. It was attacked as a quack remedy. There are circumstances where a quack remedy that is efficient is better than no remedy at all. Although the charge was made that some of the money might have been wasted, we are getting no return at all from the money now being spent in unemployment insurance and all that money is, from the remunerative point of view and from the point of view of adding to the capital of this country, entirely wasted at the present time. For my own part, I look upon this Budget as a necessary evil and I only regret that we cannot have from His Majesty's Government some statement that they hope to diminish Expenditure during the coming year, since the alternative must be a substantial and disastrous increase in the taxation of this country.

§ LORD JESSEL
My Lords, I am very glad the noble Earl, who is the leader of the Liberal Party, has made such profound remarks upon the Second Reading of this Bill. We have often passed this Bill in silence in your Lordships' House. There has never been a Bill in modern times which has called for so much comment as the present Finance Bill. I am not going to follow the noble Earl in his remarks about the expenditure of the late Chancellor of the Exchequer, because that is past history and the late Chancellor of the Exchequer is well able to defend himself, as he has done in another place. I would like to refer to what the noble Earl has said about the increased Expenditure in this Budget. A great deal of that Expenditure is, of course, due to the amount required for unemployment. One of the reasons for the increased unemployment which occurs in this country is the increased taxation. The increased taxation and the general lack of confidence in affairs and in this Government have no doubt got something to do with it.
I am not going to be unfair to the Government, because we all know that there is world-wide depression in practically every country, but, when the noble Lord refers, as he has done so eloquently, to the question of unemployment and to the amount of money that we have to 992 pay to the Unemployment Insurance Fund, I would remind him that we on this side of the House did all we could to tighten up the rules and regulations affecting the administration of what is known outside this House as the "dole." Nothing astounds foreigners and foreign countries more than the fact of the "dole" here. They do not understand it. When you explain that originally it was a three-party bargain between the employer, the workman and the State for purposes of insurance, they reply that they understand that but do not understand what it is now—a gigantic form of outdoor relief. I am glad that the Government have at last awakened to the fact and are appointing a Committee to enquire in that direction. We got very little help in this House from the noble Lord and his friends when we tried to tighten up the administration in the Act which passed through this House in the earlier part of this Session dealing with unemployment.
There is one question on which I would like a reply from the Government Benches. Why is it that this Bill has not been certified by the Speaker of the House of Commons as a Money Bill? It is rather unusual for a Finance Bill to come to this House which is not certified by the Speaker. I know the reason perfectly well. It is because there are a lot of clauses dealing with valuations and alterations in valuations of property, especially in the Metropolis. It does seem to me a principle that we ought to object to, the tacking on to a Finance Bill of extraneous matters. That was one of the great arguments against the Finance Bill of 1909. I hope that, when the noble Lord replies for the Government, he will tell us why there have been tacked on to this Bill matters that are not essential to a Finance Bill. I think that is a matter of constitutional moment, and I hope that, if possible, an adequate answer will be given from the Government Bench.

§ VISCOUNT NOVAR
My Lords, I had no intention of speaking on this Bill, and I do so only because the noble Lord in charge of it devoted most of his speech to the provisions for outlawing the land companies from the ordinary Companies Acts. He has led your Lordships to imagine that these companies were 993 formed to evade taxation. That is not a fair representation—in fact, it is a very unfair one. The companies were formed because of the unfair incidence of certain forms of taxation (especially one form) upon the agricultural industry as compared with any other industry. They were formed so that the Super-Tax on agriculture might be levied on the same basis as that on which it is levied on other industries.
Let me give your Lordships an example. Take an estate of £100,000 in land and an estate of 100,000 in Stock Exchange securities. Taking the two forms of investment over the last ten years, you world find that a large agricultural estate—I have such a case in mind—returned a revenue of less than nothing, while the revenue from the £100,000 in Stock Exchange securities came to about £4,000 a year. That was largely due to the Super-Tax unjustly charged on the agricultural industry. It was for that reason that these companies were formed and, if there is any shame connected with the matter, it rests upon the Governments that have raised an undue proportion of taxation from the agricultural industry, as compared with any other industry.

§ LORD PASSFIELD
My Lords, except in courtesy to the noble Lords who have spoken, I do not think that I have any need to trouble your Lordships again, but I will venture to answer very briefly the remarks that have been made. The noble Earl, Lord Beauchamp, was apprehensive of further Expenditure. All Governments are in the position of having to resist pressure for further Expenditure, as any rate in another place, and even in this House I apprehend that tomorrow, when we come to the subject of sugar, some pressure will be put upon us to incur further Expenditure from Government sources.

§ EARL PEEL
From your own side, I think.

§ LORD PASSFIELD
I only hope that the desire for no further increase in Expenditure will be remembered when this is done. In reply to the noble Lord, Lord Jessel, I would only say that, whatever lack of confidence in the Government there may be, it is a very significant thing that the estimated receipts from Income 994 Tax during the current year are actually more than they were last year and, I believe, more than they have ever been.

§ LORD JESSEL
Because the tax is higher.

§ LORD PASSFIELD
I am taking it on the same basis as last year, and of course I am not including the extra 6d. The figure is £239,000,000, as compared with £237,000,000. The fact is that, though there are parts of the country that are suffering very severely, in the aggregate the country is not making a lower income than it has been making. I am very glad that it should be so.
The noble Lord, Lord Jessel, asked why the Bill was not certified. The business of certification is carried out by the Speaker in another place, and the Government have no communication with him on the subject, but I should like to point out that, of all the Finance Bills that have come up to your Lordships since the Parliament Act, just about half have been certified and half have not been certified. I do not know on what grounds the Speaker has proceeded, but it is not an unusual thing for the Finance Bill not to be certified. The noble Lord, Lord Jessel, made his own suggestion. He thought that it was because there were clauses in the Bill relating to valuation. That may possibly have been the case. It is often found convenient to put matters of that kind, which are exactly germane, for instance, to Income Tax, into the Finance Bill, and that practice has been repeatedly followed by Chancellors of the Exchequer of all Parties.
The noble Viscount, Lord Novar, reproached me, I think, for practically endorsing the outlawing of land companies. I did not mention land companies, and I did not have them in my mind at all, but the noble Viscount has, I think, given himself away, because he has explained very candidly that these companies were formed in order to avoid the unfair incidence of certain forms of taxation which were unjustly charged upon agriculture. I would only remind your Lordships that this was not done exclusively or mainly by those with whom I am generally associated. That wicked action was common to the Chancellors of the Exchequer on both sides. Of course those who seek to avoid taxation 995 always assume that the taxation is unfair and unjust. Whilst it is the right of every individual to seek to avoid taxation, so far as he lawfully can, it is equally the right of the Government to put it to the House of Commons that their intentions should be carried out and enforced. The noble Viscount's remedy is really against the Government which introduced and carried through such unjust charges and unfair incidence. I hope that your Lordships will now give this Bill a Second Reading.

§ On Question, Bill read 2ª: Committee negatived.

§ Then (Standing Order No. XXXIX having been suspended), Bill read 3ª, and passed.