Sitting of 13 July 1914

Preamble
The House met at a Quarter before Three of the clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
Private Bills [Lords] (Standing Orders not previously inquired into complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, originating in the Lords, and referred on the First reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:—
Great Central Railway (Pension Fund) Bill [Lords].
Ordered, That the Bill be read a second time.
Private Bills [Lords] (No Standing Orders applicable),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, originating in the Lords, and referred on the First Reading thereof, no Standing Orders are applicable, namely:—
Hesketh Estate (Flood Defences) Bill [Lords].
Ordered, That the Bill be read a second time.
Provisional Order Bills [Lords] (Standing Orders applicable thereto complied with),—Mr. SPEAKER, laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, brought from the Lords, and referred on the First Reading thereof, the Standing Orders which are applicable thereto have been complied with, namely:—
Education Board Provisional Order Confirmation (London) Bill [Lords].
Ordered, That the Bill be read a second time To-morrow.
Norwich Electric Tramways Bill,
Lords Amendments considered, and agreed to.
Birkenhead Corporation Bill [Lords],
As amended, considered; to be read the third time.
Newport Corporation Bill [Lords],
As amended, considered; Amendments made; Bill to be read the third time.
Oxford and District Tramways Bill,
Shropshire, Worcestershire, and Staffordshire Electric Power Bill [Lords],
Yorkshire Electric Power Bill [Lords],
As amended, considered; to be read the third time.
Bristol Corporation (Tramways) Bill [Lords],
De Trafford Estate Bill [Lords],
Read a second time, and committed.
Edenbridge and District Gas Bill [Lords],
Falkland and Pluscarden Estates Bill [Lords],
Glasgow Corporation (Tramways, etc.) Bill [Lords],
Read a second time, and committed.
Mersey Docks and Harbour Board Bill [Lords],
To be read a second time To-morrow.
Porthcawl Urban District Council Bill [Lords],
South Western and Isle of Wight Junction Railway Bill [Lords],
Read a second time, and committed.
Swindow Corporation (Wilts and Berks Canal Abandonment) Bill [Lords],
To be read a second time To-morrow.
Wimbledon Corporation Bill [Lords],
Read a second time, and committed.
Local Government Provisional Order (No. 3) Bill,
Consideration, as amended, deferred till To-morrow.
Clyde Navigation Order Confirmation Bill,
"To confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1899, relating to Clyde Navigation." Presented by Mr. MCKINNON WOOD; read the first time; and ordered (under Section 9 of the Act) to be read a second time upon Tuesday, 21st July, and to be printed. [Bill 319.]
Private Bills (Group J),
The CHAIRMAN OF WAYS AND MEANS reported, That the parties opposing the Local Government Provisional Order (No. 18) Bill [Plymouth Order], had stated that the evidence of Edward Roland Soames, of 10, Lower Belgrave Street, S.W., was essential to their case; and, it having been proved that his attendance could not be procured without the intervention of the House, he had been instructed to move that the said Edward Roland Soames do attend the Committee on Group J of Private Bills To-morrow, at Eleven of the clock.
Ordered, That Edward Roland Soames do attend the Committee on Group J of Private Bills To-morrow, at Eleven of the clock.

TRUSTEE SAVINGS BANKS.
Return presented relative thereto [ordered 8th July; Sir Frederick Banbury]; to lie upon the Table, and to be printed. [No. 347.]
NATIONAL INSURANCE ACT.
Copy presented of Special Order, made by the National Health Insurance Joint Committee and the Welsh Insurance Commissioners, acting jointly, entitled the National Health Insurance (Wales) (Special Customs) Order, 1913 [by Act]; to lie upon the Table, and to be printed. [No. 350.]

SHOPS ACT, 1912.
Copy presented of Orders made by the Councils of the boroughs of Bridgwater and Blackpool and the urban district of Ogmore and Garw, and confirmed by the Secretary of State for the Home Department under the Act [by Act]; to lie upon the Table.
Copy presented of Order made by the Secretary for Scotland, dated 4th July, 1914, affecting certain classes of shops in the burgh of Kilmarnock [by Act]; to lie upon the Table.

POLLING DISTRICTS (WEST RIDING OF YORKSHIRE).
Copy presented of Order made by the Council of the administrative county of the West Riding of Yorkshire, constituting certain polling districts in the Otley Parliamentary Division, and assigning polling places thereto [by Act]; to lie upon the Table.
COMPANIES (WINDING-UP).
Copy presented of Twenty-third General Annual Report by the Board of Trade under Section 283 of The Companies (Consolidation) Act, 1908 [by Act]; to lie upon the Table, and to be printed. [No. 348.]
EAST INDIA (PRESS ACT, 1910).
Return presented relative thereto [Address 9th July; Mr. Morrell]; to lie upon the Table, and to be printed. [No. 349.]
ORAL ANSWERS TO QUESTIONS.

  Portuguese West Africa (Arrest of Rev. J. S. Bowskill).
  Mr. MURRAY MACDONALDasked the Secretary of State for Foreign Affairs whether the report of the British Consul relating to the arrest of the Reverend J. S. Bowskill has been received; if so, whether he will state its purport; and what action it is proposed to take upon it?
  Lord H. CAVENDISH-BENTINCKasked whether any Consular reports upon the recent disturbances at San Salvador have yet been received; and, if so, whether these will be published at an early date?
  The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Acland): A report has lately been received from Mr. Vice-Consul Bell on this subject, and is still under consideration.
  Mr. HOARE: Will the report be issued to the House?
  Mr. ACLAND: That is under consideration, and I cannot say. It is a voluminous report. I am having it printed, and, if I may, I will let the hon. Member know as soon as I can give him a full answer.

  Heather Beetle.
  Colonel BURNasked the President of the Board of Agriculture if his attention has been called to the damage done by the heather beetle on hundreds of thousands of acres of moorland in the north of England and south of Scotland; and will he consider, as the best means of ridding the country of these pests, the advisability of passing legislation to authorise heather being burnt between the months of May and August?
  The PRESIDENT of the BOARD of AGRICULTURE (Mr. Runciman): So far as England is concerned the Board have no reason to believe that the damage caused by the heather beetle is serious. With regard to Scotland, the hon. and gallant Gentleman should address his question to my right hon. Friend the Secretary for Scotland. I am advised that in England the burning of heather during the summer months is not illegal.

  Anthrax and Foot-and-Mouth Disease.
  Mr. CHARLES BATHURSTasked the President of the Board of Agriculture whether, in the opinion of his expert advisers, the disinfectant commercially known as lysol or beta-lysol has been proved to be effective as an agent for the destruction of the germs of anthrax and foot-and-mouth disease in animal skins and hides; and, if so, whether the Board will press for the treatment with it of such articles prior to their shipment from abroad to this country?
  Mr. RUNCIMAN: I am advised that the disinfectant referred to, like many others of the same class, is capable of destroying the virus of foot-and-mouth disease, but that disinfectants of that class cannot be relied upon to destroy the spores of anthrax. I am not prepared at present to follow the suggestion made in the latter part of the question.
  Mr. C. BATHURST: Is the right hon. Gentleman able to say whether any disinfectant has ever been discovered which will destroy the spores of anthrax?
  Mr. RUNCIMAN: I would ask for notice of that quesiton.

  Housing Bill.
  Mr. C. BATHURSTasked the President of the Board of Agriculture if it is proposed under the Government's Housing Bill to provide houses for agricultural labourers in purely rural districts only on in semi-industrial areas also, where they are apt to be crowded out of the available cottages by the higher paid employés of more profitable industries; whether it is proposed to let all Government cottages at a full economic rent representing 5 per cent. upon the capital outlay; whether a garden will be provided in every case; and, if so, what will be its minimum area?
  Mr. RUNCIMAN: The hon. Gentleman will find the answer to the first part of the question in Clause 1 of the Bill. It
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  is the intention of the Government that all the cottages provided shall be let at an economic rent, but I am not prepared to accept absolutely the hon. Gentleman's definition of that phrase. Gardens will be provided wherever necessary; the size will naturally depend upon various circumstances, and I am not prepared to pledge myself to a minimum.
  Mr. C. BATHURST: Are not gardens necessary in every case?
  Mr. RUNCIMAN: They cannot be necessary for people who cannot work in them.
  Mr. C. BATHURSTasked why it is proposed under the Government Housing Bill to apply so large a sum as £2,000,000 for housing accommodation at Rosyth; how many workmen's houses will this sum provide; and what will happen to them when the constructional work there is completed?
  Mr. RUNCIMAN: The hon. Gentleman is under a misapprehension. A sum not exceeding £2,000,000 is proposed to be made available for the purposes set out in Clause 2 of the Bill, and when introducing the Bill I mentioned Rosyth only as one specially urgent case to be dealt with under that Clause. With regard to the latter parts of the question, I must refer the hon. Gentleman for details to my right hon. Friend the Secretary for Scotland, but I may explain that the houses proposed to be erected at Rosyth will be occupied by Admiralty employés when the constructional work now in progress is completed.
  Mr. C. BATHURST: Can the right hon. Gentleman say what proportion of the sum of £2,000,000 it is estimated will be spent at Rosyth?
  Mr. RUNCIMAN: I could not say without notice.
  Colonel GREIG: Will the expenditure also apply to the Greenock torpedo factory and the employés there who live at Gourock and the surrounding districts?
  Mr. RUNCIMAN: I could not answer that without notice.
  Sir A.GRIFFITH-BOSCAWENasked whether it is intended under the terms of the Housing Bill to borrow £2,000,000 for the purpose of providing housing accommodation at Rosyth and £3,000,000 for the same purpose in the whole of the rest of Great Britain; and how many houses it is proposed to build at Rosyth and in the rest of the country, respectively?
  Mr. RUNCIMAN: If the hon. Gentleman will refer to the Bill he will see that a sum not exceeding £3,000,000 is to be made available for the purposes set out in Clause 1—that is to say, the provision of dwellings and gardens in agricultural districts. It is impossible to estimate precisely the number of dwellings which are required in agricultural districts, but I have no reason to think that the sum named in the Bill will be insufficient to meet the immediate demand. For particulars of the Government's proposals in regard to Rosyth I must refer the hon. Gentleman to my right hon. Friend the Secretary for Scotland.
  Sir A. GRIFFITH-BOSCAWEN: Do I understand that a sum not exceeding £2,000,000 is necessary for Rosyth and other Government factories, and that a sum not exceeding £3,000,000 only is all that is required for the rest of the country?
  Mr. RUNCIMAN: No, Sir. The hon. Member is not right in drawing that inference.
  Sir C. KINLOCH-COOKE: Is the right hon. Gentleman prepared to say what the size of the gardens will be?
  Mr. LANE-FOX: Do the Government propose to start building immediately, or can the right hon. Gentleman say at what time they expect to do so?
  Mr. RUNCIMAN: When we have the powers we shall certainly waste no time in making a start. We have not yet got the powers.

  Royal Gardens (Kew).
  Mr. C. BATHURSTasked the President of the Board of Agriculture if he proposes to pay a personal visit to Kew to discuss with the Government employés at the Royal Gardens the terms and conditions of their employment; and, if so, when such visit will take place?
  Mr. RUNCIMAN: I spent last Friday morning at Kew Gardens discussing with the employés the conditions of their employment, and the representations which were made to me are receiving careful consideration.

  Keighley Waterworks (Hospital Accommodation).
  Mr. J. WARDasked the President of the Local Government Board whether his attention has been drawn to the fact
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  that, so far, the Keighley Corporation have not made any provision for hospital accommodation upon their waterworks now in course of construction, and that the nearest hospital for the treatment of accident cases is over five miles from the works over rough roads; and whether he proposes to insist upon the corporation making immediate accommodation for such cases on the works in accordance with the Act authorising their construction?
  The PRESIDENT of the LOCAL GOVERNMENT BOARD (Mr. Herbert Samuel): I have been in communication with the Corporation of Keighley on the subject of this question, and I am sending the hon. Member a copy of their reply.

  Punishment Diet (Workhouses).
  Mr. W. THORNEasked the President of the Local Government Board if he can state how many men and women, respectively, have been placed on bread and water punishment diet in the various workhouses, and the periods and reasons of the punishments; and if he will state separately the number of cases where the punishment was ordered by the committee or by order of the workhouse master; whether he will consider the question of issuing new Regulations stating that before inmates of Poor Law institutions are ordered bread and water punishment diet their cases shall be dealt with by a committee formed from boards of guardians throughout the country, the various clerks of the unions concerned to be present to hear the evidence and statements of the inmates, and records of punishments to be kept in a book by the clerk to each board; and whether he will take steps to issue an Order that every inmate of a workhouse who is taken before a bench of justices or to Quarter Sessions for any offence be defended by a solicitor in order that the hardship may be removed of poor people, unskilled in legal matters, having to contend with highly-trained officials?
  Mr. HERBERT SAMUEL: The answer to the first part of the question is in the negative. The establishment of a National Committee to review all cases of punishment does not appear to be practicable. An offences and punishments book is already kept by the master of each workhouse, and his power to punish an inmate is subject to regulations made by the

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  guardians. The last part of the question should be addressed to the Home Secretary.

  Tuberculosis (Domiciliary Treatment).
  Mr. ASTORasked whether Regulations or Orders determining the nature of domiciliary treatment and the extent to which it may be given by local authorities to tuberculous non-insured persons are necessary for the guidance of such authorities; and, if so, on what date such Regulations were issued?
  Mr. HERBERT SAMUEL: I would refer the hon. Member to the reply I gave to a similar question on the 18th of June.

  ROYAL NAVY.

    ROYAL DOCKYARDS.
    Lord CHARLES BERESFORDasked the First Lord of the Admiralty whether he will state the number of discharges of civil labourers in the Admiralty Departments during the last two years; whether the vacancies so caused have been filled in by naval and Marine ratings; whether it is claimed that these ratings were used in case of emergency; and, if so, why civil labour was not employed to do the necessary work?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): The number of civilian workpeople discharged from Admiralty establishments during the period referred to from all causes, including their own request, exceeded 8,000. Of this number rather less than half were labourers, skilled and otherwise. The total discharges were more than balanced by total entries, so that the net result is an increase on total numbers during the period in question. So far as can be ascertained, no vacancies were filled by naval or marine ratings.
    Sir C. KINLOCH-COOKE: Does the right hon. Gentleman mean to infer that no vacancies have ever been filled by naval and marine ratings?
    Dr. MACNAMARA: They have not been filled, as suggested in the question, by the discharge of civilian workmen.
    Sir C. KINLOCH-COOKE: Has it not been the result of those discharges?
    Dr. MACNAMARA: No, I should not think so.
    Lord C. BERESFORDasked the First Lord of the Admiralty whether he is aware that there is dissatisfaction in the Royal Dockyards at the number of petitions that remain unanswered, some of these petitions having been sent in some time ago; and whether it is possible to hurry the answer to these petitions?
    Dr. MACNAMARA: The existence of any general dissatisfaction of the kind referred to has not been brought to notice. The petitions for 1912–13 were replied to in detail on 29th September last. New petitions were received in the latter part of April this year, and since that date I have received six large deputations of the petitioners in London, and have visited Haul-bowline, Pembroke Dock, Devonport, and Portsmouth to hear deputations of workmen in support of their petitions, Altogether, about 200 deputations have been received since the end of April, and I have still to visit Chatham, Sheerness, Dover, Portland, and Greenock. I would remind the Noble Lord that there are some 55,000 dockyard employés distributed over more than 100 classes in many separate departments and establishments. A survey of the kind followed cannot be disposed of in a few weeks; and I am confident that the employés generally fully realise the great amount of time and care bestowed on the hearing and consideration of their petitions, and that they are satisfied that all possible expedition will be used in replying to the petitions which they have presented this year.
    Sir C. KINLOCH-COOKEasked the First Lord of the Admiralty whether he is aware that the corporations of Chatham, Portsmouth, and Devonport are paying their labourers 28s. 3d., 26s., and 26s., respectively; and if he will consider the advisability of raising the rates of pay for established and hired ordinary labourers so as to make these rates correspond more nearly with the current wages paid to men doing similar work for the corporations mentioned?
    Dr. MACNAMARA: The rates of wages paid by the corporations of the dockyard towns have been put before me in the representations which have been made by the dockyard employés in their petitions for increases in wages. In dealing with the applications from the dockyard employés for advances in wages, every available relevant fact is most carefully considered.
    Sir C. KINLOCH-COOKE: Does not the right hon. Gentleman understand that on former occasions he has told me that the rate of wages payable to dockyard labourers is based upon the rate paid in the district?
    Dr. MACNAMARA: That is no doubt the fact. The hon. Member takes certain cases which do not represent the whole field of operations outside the yard, but these have been placed before me, and I most carefully consider every case.
    Sir C. KINLOCH-COOKEasked the First Lord of the Admiralty when he expects to be in a position to answer the petitions which were presented from His Majesty's dockyards?
    Dr. MACNAMARA: As soon as my visits to the yards, and the consequent consideration by the Board of Admiralty of the questions raised, are complete. The hon. Member will see from the reply to the Noble Lord the Member for Portsmouth that a very great deal of time and labour are involved.
    Sir C. KINLOCH-COOKEasked how many skilled and ordinary labourers in His Majesty's dockyards have been promoted to chargemen, recorders, and inspectors during the twelve months ending 30th June, 1914?
    Dr. MACNAMARA: Fifteen skilled labourers have been made chargemen during the period in question. No skilled or ordinary labourers have been promoted to recorders or inspectors during the same period.
    Sir C. KINLOCH-COOKE: Does not the right hon. Gentleman think the time has arrived when that should be the case?
    Dr. MACNAMARA: They are eligible for recorders, but they are not often selected because more suitable, men are available.
    Sir C. KINLOCH-COOKErose—
    Mr. SWIFT MacNEILL: May I direct your attention, Sir, to the fact that there are 127 questions on the Paper?

    MARRIED ALLOWANCE.
    Sir C. KINLOCH-COOKEasked the First Lord of the Admiralty when he expects to be in a position to do something to meet the requirements of married seamen in the Royal Navy; whether any married allowance is given in the Aus-
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    tralian Navy; and, if so, what is that allowance and what are the conditions, if any, surrounding it?
    Dr. MACNAMARA: I would refer the hon. Member to the First Lord's answer to the hon. Member for East Leeds on the 12th February, 1913. I understand that in the Royal Australian Navy, under certain conditions, married allowance of 2s. a day is given to warrant officers and commissioned warrant officers, and to chief petty officers, petty officers and other ratings over five years' man's service at rates varying from 1s. 3d. to 1s. 9d. a day.
    Sir C. KINLOCH-COOKE: Does the right hon. Gentleman contemplate giving married men in the Navy any additional allowance?

    SUBMARINE A 7 (DISASTER).
    Sir C. KINLOCH-COOKEasked the First Lord of the Admiralty whether any and, if so, what special consideration has been shown to the dependants of those who suffered through the disaster to submarine A 7; and whether he is prepared to receive further applications from that source?
    Dr. MACNAMARA: I would refer the hon. Member to the reply I gave to the Noble Lord the Member for Portsmouth on 12th February last, in which I gave details of the pensions and allowances which had at that date been awarded. Since then the following additional awards have been made: A pension of 5s. a week to a widow, with allowances amounting to 3s. a week for her children; a gratuity of £30 8s. 4d. to a mother; a gratuity of £57 15s. 10d. to a mother. The awards detailed represent the utmost that can be given from Greenwich Hospital or Naval funds; but it is understood that in most if not all of the cases the awards have been liberally supplemented from non-official sources.
    Sir C. KINLOCH-COOKE: Is the right hon. Gentleman aware that one of the mothers is afflicted owing to the loss of her son, and is he prepared to pay the necessary money to maintain her?
    Dr. MACNAMARA: I was not aware of it.

    H.M.S. "AMPHION" (LEAVE).
    Sir C. KINLOCH-COOKEasked the First Lord of the Admiralty whether he is aware that notice has been given to His Majesty's ship "Amphion," now lying at Harwich, to the effect that after

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    the review that ship is to return to Harwich and give seven days' leave to each watch; that this means an outlay of £1 5s. to each man living at Devonport; and whether, in view of the fact that the crew abroad His Majesty's ship "Amphion" are mostly West Country men, he can see his way to make such changes in the order as will allow of the men not being out of pocket by having to pay expensive railway fares before they can join their wives and children?
    Dr. MACNAMARA: I am aware that the existing orders are as stated by the hon. Member, but as orders are being issued for His Majesty's ship "Amphion" to be recommissioned at Devonport at an early date leave will now be given to her crew at that port on paying off.
    Sir C. KINLOCH-COOKE: Does the right hon. Gentleman intend to put in force the statement made by the First Lord of the Admiralty some little time ago that he would himself see into this matter?
    Dr. MACNAMARA: The "Amphion" will pay off at Devonport, and therefore the men will not have to pay these railway fares.

    LOWER-DECK RATINGS (APPEALS).
    Sir C. KINLOCH-COOKEasked whether the Government are considering the present mode of appeal on the part of lower-deck ratings; and, if so, on what lines it is proposed the modification shall proceed?
    The FIRST LORD of the ADMIRALTY (Mr. Churchill): It is not proposed to modify the system, which is working satisfactorily.

    CAPTAIN KEMP.
    Mr. EYRES - MONSELLasked whether Captain Kemp has been placed on half-pay, and has been officially informed that he will not be employed again afloat; whether any recommendation on this subject was received from the admiral under whom he was serving; and, if so, did the admiral recommend this course?
    Mr. CHURCHILL: The answer to the first part of the question is in the affirmative. With regard to the remainder of the question, I must decline in the public interest to give any information upon the confidental reports of flag officers to the Admiralty.
    Mr. EYRES-MONSELLasked whether it is the function of the First Sea Lord to deal, in the first instance, with supercessions of post-captains in His Majesty's Fleet; and, if so, what proposals did the First Sea Lord make in the case of Captain Kemp?
    Mr. CHURCHILL: The duties of the First Sea Lord of the Admiralty are as set forth in the Memorandum of distribution of business which has been laid before the House, and in accordance with that Memorandum important matters of discipline are referred to him. It would be contrary to precedent, and not in accordance with the public interests, that any advice given by the First Sea Lord on such a matter should be published.
    Mr. EYRES-MONSELL: Is the right hon. Gentleman sure that he is not overriding naval opinion on this occasion?
    Mr. CHURCHILL: I should require some definition of what naval opinion is. I do not know whether the hon. Gentleman presumes to include himself.

    ANGLO-PERSIAN OIL CONTRACT.
    Mr. F. HALLasked whether there is a maximum price which the Admiralty can be called upon to pay the Anglo-Persian Oil Company for their supplies of oil under the sliding scale; if so, what is that maximum price, or does the price paid for the liquid fuel depend upon whether a profit is made on the numerous products manufactured and sold by the Anglo-Persian Oil Company in various markets?
    Mr. CHURCHILL: I have already stated that it is not the practice or in the public interest that the price should be disclosed.
    Mr. F. HALL: Is there a maximum price or not? If there is a loss on the by-products does it naturally increase the price of the oil, and if it does not, how is the loss made up?
    Mr. SPEAKER: The hon. Member must give notice.

    BATTLESHIPS, SUBMARINES, AND AIRSHIPS.
    Sir WILLIAM BYLESasked the First Lord of the Admiralty whether, in view of the recent progress in the science of aviation and the growing size and importance of the submarine, he will state what modification, if any, in the policy of

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    building battleships and the consequent reduction in naval expenditure may be hoped for?
    Mr. CHURCHILL: It is not possible to deal with issues of this magnitude within the restricted limits of question and answer.
    Sir W. BYLES: Has my right hon. Friend seen the report of the proceedings of the congress of Naval Architects held last week, and can he not say whether what was said there will assist in enabling the Admiralty to form an opinion on this important public question?
    Mr. CHURCHILL: The Admiralty give the fullest attention to all discussions in regard to naval construction which are likely to afford them useful guidance. It is possible that when the Navy Estimates are Tinder discussion I may feel myself in a position to deal with the matter.
    Sir W. BYLES: When will that be?
    Mr. CHURCHILL: That is a question of business which must be addressed to the Prime Minister.

    ENGINE-ROOM ARTIFICERS (SERVICE ON FOREIGN STATIONS).
    Mr. FALLEasked whether any of the engine-room artificers now serving on submarines at Hong Kong have been on that station since 1912; and, if so, why have such men not been relieved, and if they can be relieved this year; and, if not, if their continuance at their present work for a further period, that is till the next relief, will mean money compensation for them or if the extra period served on this station will count specially towards promotion?
    Dr. MACNAMARA: Two engine-room artificers in these submarines have been on the station since June, 1912. I regret that in my answer to the hon. Gentleman of 1st July I overlooked that fact. When the crews were last relieved in April, 1913, these men were absent from home less than a year, and would be retained until the crews are again relieved in March, 1915, in accordance with the drafting regulations. In the case of this particular service, however, arrangements will be made to relieve men at the earliest suitable opportunity after completing two years' service. The answer to the last part of the question is in the negative.
    Mr. FALLE: May I ask the right hon. Gentleman to bring the matter before the Board of Admiralty, so that the men should not be asked to spend more than two years on an apparently unhealthy station?
    Dr. MACNAMARA: In the case of these particular men they will have very little more than two years on that station.

  NATIONAL INSURANCE ACT.

    DRUG FUNDS.
    Mr. GODFREY LOCKER-LAMPSONasked the hon. Member for St. George's-in-the-East, as representing the Insurance Commissioners, whether the Government can now make any announcement in regard to the insurance committees which have deficiencies on the drug fund in respect of the year ending January, 1914; what the approximate amount of the deficiency is in each case; and whether the Government propose to make a Grant so that the panel chemists may get paid for the drugs they have supplied on the doctors' orders?
    Mr. WEDGWOOD BENN (Lord of the Treasury): For the reasons already given in my previous replies I am unable to make any general announcement as to the position with regard to any deficiencies for the year 1913. The rest of the question docs not, accordingly, arise.
    Mr. G. LOCKER-LAMPSON: When will the Government be able to make an announcement?
    Mr. BENN: There are many committees, and in those cases where there is any doubt scrutiny is proceeding, and when the scrutiny is complete a full answer can be given.

    SICKNESS CLAIMS.
    Mr. F. HALLasked the Prime Minister if, in view of the consideration raised by the recently published Annual Report of the National Health Insurance Commissioners as regards the financial position of the approved societies, the position of deposit contributors, the excessive claims of women, and the bearing of the question of unemployment upon the operation of health insurance generally, he will consider as to the appointment of a special committee to inquire into the working of the Act as a whole, with a view to formulating comprehensive proposals for its amendment in the light of

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    the experience now available; and if, in the meantime, he will postpone any proposal for amendment or limit such proposals to matters of detail which will not admit of delay?
    The PRIME MINISTER (Mr. Asquith): A special committee appointed last autumn has been examining the whole question of sickness claims under the Insurance Act, and will, I am informed, report shortly. The Chancellor of the Exchequer has already announced that the Government propose to deal with these questions by such means as experience has proved desirable.
    Mr. F. HALL: Will the Report be published and issued to the House before the House rises?
    The PRIME MINISTER: I cannot say without notice.

    SCOTLAND.
    Mr. JAMES HOGGEasked whether Cd. 7496 is the only Report of the National Insurance Act to be issued for 1913–14, or whether there is to be a separately bound copy for Scotland?
    Mr. BENN: I would refer my hon. Friend to the reply given to the hon. Member for the Enfield Division on the 9th instant.

    CASUAL LABOUR.
    Mr. F. HALLasked what will be the cost of administering the scheme drawn up by the National Health Commissioners for applying the provisions of Part I. of the National Insurance Act to casual labour; and if similar schemes have been framed for Scotland or Ireland?
    Mr. BENN: The proposed scheme for the insurance of casual waterside labour in the Port of London will, if a formal demand is received, be the subject of a judicial inquiry under Section 19 of the Act of 1913, and pending such inquiry my right hon. Friend is not prepared to make any statement in regard to the details of the scheme.
    Mr. F. HALL: Has the hon. Gentleman considered the question as applying not only to waterside casual labour, but to casual labour generally? The question said nothing about waterside casual labour.
    Mr. BENN: This question applies to the Special Order which has been promulgated with which an inquiry will be held.

    APPEALS.
    Lord HENRY CAVENDISH-BENTINCKasked how many appeals have been made to the Insurance Commissioners against decisions given in pursuance of the disputes rules of approved societies, and in what proportion of such cases the Commissioners have decided in favour of the insured person?
    Mr. BENN: The several bodies of Insurance Commissioners have in all decided forty appeals under Section 67 of the National Insurance Act; twenty-three decisions have been given in favour of insured persons.

    DISPUTES
    Lord H. CAVENDISH-BENTINCKasked the Chancellor of the Exchequer (1) whether any and, if so, how many approved societies are in the habit of requiring a deposit of 10s. or more to be made before a member can take proceedings to recover benefit which he believes to be wrongfully refused or stopped; and (2) whether, in view of the importance of procuring eventually some uniform, cheap, and simple procedure for the settlement of disputes between insured persons and their approved societies, he will publish a statement showing the different forms of procedure in operation for the settlement of such disputes, and the number of societies which require deposits to be made before such procedure can be brought into operation; the amount of such deposits, and the number of women members of the societies in question?
    Mr. BENN: The complete information asked for would involve a special and elaborate examination of the rules of over 2,000 societies. A statement as to the rules adopted by societies covering the vast majority of the insured population shall, however, be compiled and sent to the Noble Lord as soon as practicable.

  FINANCE ACT.

    INCOME TAX.
    Mr. GODFREY LOCKER-LAMPSONasked the Secretary to the Treasury what were the numbers of claims made and the amount of the repayments for each of the last four years in respect of Income Tax on interest paid to banks?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): The number of claims made in respect of Income Tax

    1483
    on interest paid to banks in the years 1910, 1911, 1912, and 1913, were 8,200, 9,300, 10,485, and 11,650, respectively. The figures for the first two years are approximate only. No information is available as to the amounts of the repayments.
    Mr. G. LOCKER-LAMPSONasked under what Act and Section of the Income Tax Acts employés of limited companies are assessed under Schedule E?
    Mr. MONTAGU: The assessment is under the third rule of Schedule E contained in Section 146 of the Income Tax Act, 1842.
    Mr. G. LOCKER-LAMPSONasked the Chancellor of the Exchequer what Regulation has been or will be made to repay the excess Income Tax in cases where 1s. 4d. in the £ has been deducted by companies paying dividends to persons resident abroad; and whether it will be necessary for such persons to incur the expense and inconvenience of swearing affidavits, as in the case of claims in respect of foreign and Colonial dividends?
    The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George): The dividends referred to being paid out of profits charged to Income Tax by direct assessment on the companies, the question of adjustment in respect of any excessive deduction of tax is one for settlement between the companies and their shareholders. No affidavits would therefore appear to be necessary.
    Mr. G. LOCKER-LAMPSONasked what is the number of employés of limited liability companies assessed to Income Tax, Schedule E, on average under the Board of Inland Revenue's concession?
    Mr. LLOYD GEORGE: Precise figures are not available, but at a rough estimate the number would be 200,000.
    Mr. CASSEL: May I ask whether there is any authority for allowing averages under Schedule E, and why it is allowed in some cases and not in others?
    Mr. LLOYD GEORGE: I should like notice of that question.
    Mr. CASSELasked what is the number of married women in respect of whose incomes returns are made by their husbands; and what is the total amount of income thus returned in the latest year for which figures are available?
    Mr. LLOYD GEORGE: To obtain the information asked for by the hon. and learned Member would involve the re-examination of all Income Tax returns, and I am not prepared to give directions to this effect.
    Mr. CASSELasked the Chancellor of the Exchequer what is the amount which it is estimated that the revenue would lose if the incomes of husband and wife were treated as separate for the purpose of Income Tax and Super-tax; and how is this estimate arrived at?
    Mr. LLOYD GEORGE: No definite figures are available, but from the calculations which have been made it is estimated that the immediate loss to the revenue would amount to at least £2,000,000. This figure does not take into account the loss which would inevitably arise from the transfer of income from husbands to wives for the purpose of avoiding taxation.
    Mr. CASSEL: How is it possible to arrive at that estimate without knowing the amounts?
    Mr. LLOYD GEORGE: This estimate was made some years ago for the purpose of discussion on the question of the separation of husband's and wife's incomes, and that is the conclusion they came to. Of course, it must very largely be a matter of estimate.
    Mr. CASSEL: How is it possible to arrive at that estimate without knowing the amount returned as the wife's income, and without knowing what proportion is deducted at the source?
    Mr. LLOYD GEORGE: I have no doubt inquiries were made in that year. That is an estimate, and can only be an approximate one at best.
    Mr. CASSELasked the Chancellor of the Exchequer when he proposes to put on the Paper the Clause for giving some relief to life insurance offices from the admitted grievances to which they are subject in relation to Income Tax which were recently called to his attention by a deputation representing those offices, and which will be greatly accentuated by the Finance Bill?
    Mr. LLOYD GEORGE: I have placed one Amendment on the Paper as a result of the representations made to me at the deputation referred to. I hope to find an opportunity of making a statement on this

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    question in the course of to-day's proceedings in Committee.
    Mr. CASSEL: Can the right hon. Gentleman not see his way to putting down an Amendment with regard to the expenses of the insurance offices?
    Mr. LLOYD GEORGE: I did make a statement in Committee the other day about that.
    Mr. CASSELasked whether it is intended that in the case of income arising from rent in any place out of the United Kingdom and not received in the United Kingdom the same deductions and relief should be allowed under Section 5 of the Finance Bill as under Schedule A of the Income Tax Acts, or whether it is in tended that any and, if so, what deductions should be allowed from gross rent?
    Mr. LLOYD GEORGE: It is provided by Clause 5 of the Finance Bill that in estimating for Income Tax purposes the amount of any unremitted income arising from rents abroad, it shall be subject to the same deductions and allowances as if it had been received in the United Kingdom and to a deduction on account of any annual payment payable out of the income to a person not resident in the United Kingdom. For the deductions and allowances applicable to income from rent which is remitted, I would refer the hon. and learned Member to the first and fifth cases of Schedule D, in Section 100 of the Income Tax Act, 1842.
    Lord ROBERT CECILasked the Chancellor of the Exchequer whether the provisions of the Finance Bill giving effect to the Resolution authorising an Income Tax at the rate of 1s. 4d. have been rejected; and, if so, what authority there is now for the collection of any Income Tax having regard to Section 1 (b) of the Provisional Collection of Taxes Act, 1913?
    Mr. LLOYD GEORGE: The Resolution authorising Income Tax at the rate of 1s. 4d. has not ceased to have statutory effect, and the second part of the question does not therefore arise.
    Lord ROBERT CECIL: As the provision contained in the Finance Bill for the purpose of confirming the Resolution has been, in fact, rejected on the Motion of the right hon. Gentleman, when he moved that 1s. 4d. should not stand part, and that 1s. 3d. should take its place, is it not the fact that under the Provisional Collection
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    of Taxes Act, if, after the introduction of the Finance Bill, the confirming Resolution is rejected, the Resolution ceases to have effect?
    Mr. LLOYD GEORGE: The point has been considered, and if the Noble Lord will look at the Provisional Collection of Taxes Act he will find that the variation has been made, not in Committee, but by the House, and therefore the alteration would not take place until the 1s. 3d. had been adopted on the Report stage by the House. That is the opinion obtained.
    Lord ROBERT CECIL: Will the Resolution then cease to have effect altogether?
    Mr. LLOYD GEORGE: Yes, the 1s. 4d. Resolution will have ceased to have effect except to the extent of 1s. 3d. Power is given to vary only by the House and not in Committee.

    Scottish Office of Works.
    Mr. JAMES HOGGEasked the Secretary to the Treasury whether he can arrange for the Office of Works Vote to be put down at an early date to enable a discussion to be taken on the proposed reduction in status of the Scottish Office of Works; and, if so, will he give the date?
    The PARLIAMENTARY SECRETARY to the TREASURY (Mr. Illingworth): Unless a general desire is expressed, I am afraid no further opportunity for the discussion of Office of Works Votes will occur this Session.
    Mr. HOGGE: Is my hon. Friend aware that a singularly important change of policy has been adumbrated by the Board of Works and that it may be carried unless an opportunity is given for the discussion of the Office of Works Vote?
    Mr. ILLINGWORTH: The hon. Member must endeavour to arrange with the Secretary for Scotland.
    Mr. HOGGE: I am not the Leader of the Scottish Liberal party.
    Mr. PIRIE: Will any opportunity be given on a Scottish Vote for the discussion of the subject?
    Mr. ILLINGWORTH: It could be discussed on the Appropriation Bill, but not on a Scottish Vote.
    Mr. HOGGE: As my right hon. Friend the Prime Minister is a Scottish Member perhaps he may assist me.

    British Museum.
    Mr. BENNETT-GOLDNEYasked the Secretary to the Treasury (1) if he will ascertain from the keeper of the prints and the keeper of British and mediæval antiquities if they are satisfied with the arrangements made for the exhibition of the works of art in their departments as regards space and position of cases and as regards light; if such arrangements have been found to be defective, whether steps are being taken to remedy them; and (2) if he is now in a position to say which of the keepers of the collections to be housed in the new building of the British Museum were consulted before the plans were passed and the building begun; if he will ascertain whether any of the keepers were shown any of the proposed plans before the building was built; whether any of them were asked to send in reports as to their special requirements as to space, arrangement of cases, and lighting; and if the keepers of the different collections have, since they have seen the accommodation provided for the collections, expressed their satisfaction or their disapproval?
    Mr. MONTAGU: I cannot undertake to obtain the opinions of individual officers in the employment of the Trustees of the British Museum, and can add nothing to my answer of the 17th February last.
    Mr. BENNETT-GOLDNEYasked what structural use the wooden columns in the new buildings of the British Museum allocated to the librarian's department are serving; what is the diameter of these wooden space-occupying features of decoration; and whether they are fireproof?
    Mr. BENN: It is assumed that the columns referred to are those in the north library. They carry the weight of the galleries above. Their diameter is 2 ft. 9 in. They are not made of wood, and are of fireproof construction.
    Mr. BENNETT-GOLDNEYasked the Secretary to the Treasury if he will ascertain whether the bookshelves fitted in the new buildings of the British Museum are fireproof; whether these new shelves are of metal like the bookshelves in the older portions of the library and like all modern bookcases in all famous American and Continental public libraries; and, if the new cases and shelves are not of metal, why metal has been discarded in
    1488
    the British Museum for an inflammable material?
    Mr. MONTAGU: The bookshelves in the parts of the new buildings allotted to book storage are of metal, so far as they have yet been provided, and will be wholly so. In the room which connects the old buildings with the new they are of wood as in the older portions of the library.

    Civil Service (Royal Commission).
    Sir GILBERT PARKERasked the Prime Minister whether the nature and scope of the Commission or Committee to be appointed to investigate the whole relationship of the State towards its employés in regard to the settlement and adjustment of wages and conditions of employment have been decided, and what they are?
    Mr. SHIRLEY BENNasked the Prime Minister what steps he is taking to fulfil the promise of the Government that they will set up some body which shall inquire what shall be the future relations of the State with its employés, both as to remuneration and general conditions of labour?
    The PRIME MINISTER: The matter is still under consideration, but I hope to be able to make a further announcement on the subject shortly.

  GOVERNMENT OF IRELAND BILL.

    FINNER CAMP.
    Mr. SWIFT MacNEILLasked the Prime Minister whether he is aware that on Friday, the 3rd instant, on the eve of the breaking up of the Finner camp, Ballyshannon, county Donegal, Colonel Madden, the officer in command of the 3rd battalion Irish Fusiliers, ordered the guns and bayonets of the men of that battalion to be taken from them, packed up, and dispatched by rail to headquarters, and that the men of the battalion marched out of camp unarmed, whereas the men of two other battalions left the camp with guns and bayonets; whether Colonel Madden has been called on for an explanation of this course of procedure; if so, what explanation, if any, has been tendered by him; and what action have the authorities of the War Office taken or what action do they intend to take in respect to this proceeding on the part of Colonel Madden?
    Mr. VINCENT KENNEDYasked the Prime Minister whether he is aware that

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    Colonel Madden, the colonel in command of the 3rd battalion Irish Fusiliers, the Queen's Militia, ordered the men of that regiment on Friday, the 3rd instant, to give up their guns and bayonets, which were conveyed by rail to the headquarters, and that on Saturday, the 4th instant, on the breaking up of the camp at Finner, county Donegal, where the regiment was training, the men of that regiment marched out of the camp disarmed, while the men of other regiments who were also training at Finner camp were allowed to retain their arms; were the rank and file alone deprived of their arms, or were the officers of the regiment also disarmed, or if any distinction in this respect was made between the officers and the men; what was the reason of that distinction; and whether the War Offiffice authorities intend to take any, and, if so, what action in the matter?
    The PRIME MINISTER: I am informed that the procedure has been, entirely normal and dictated in each case solely by consideration of what was the most economical method of getting the arms back from the camping place to the usual place of storage. In one case, as the troops were themselves proceeding to the place where their arms are stored, they took them in their hands; in the other, as they were proceeding elsewhere, the arms were collected and sent by train.

    ROYAL ASSENT.
    Mr. NEWMANasked the Prime Minister whether he is aware that the Under-Secretary of State for Foreign Affairs was able to tell his audience at Huntingdon on the 8th instant that the hope entertained by some persons that the Government of Ireland Bill would be refused the Royal Assent would be proved false in the immediate future; and whether the Under-Secretary had obtained the authority of the Government before making the statement referred to?
    The PRIME MINISTER: My hon. Friend expressed his views as to what would happen in the future. There was no need for him to obtain the authority of the Government before doing so.

    AMENDING BILL.
    Mr. BONAR LAW: I desire to ask the Prime Minister when he proposes to take the Second Reading of the Government of Ireland Amending Bill?
    The PRIME MINISTER: I cannot make, obviously, any definite statement with regard to a Bill the final stages of which have not yet been completed, but I should hope we may be able to proceed with the Bill in the course of next week.
    Mr. BONAR LAW: Can the right hon. Gentleman not make it a little more definite? It is understood that the Bill will leave the other place to-morrow night, and, if that should be so, can the right hon. Gentleman not give a definite date for taking it here?
    The PRIME MINISTER: No. The matter will require a good deal of consideration. I do not know when the Bill will reach here, but certainly time ought to be given to consider its provisions very carefully, and, as I have said, we hope to take it in the course of next week.
    Mr. BONAR LAW: May I put another question to the right hon. Gentleman as soon as we know exactly when the Bill has left the other place?

    Civil Disturbance (Use of Troops).
    Mr. ARTHUR HENDERSONasked the Prime Minister whether he is now in a position to state when the inquiry into the use of troops in times of civil disturbance is to be instituted; and the nature and composition of the body to be appointed?
    The PRIME MINISTER: It is intended to appoint a Select Committee of the House of Commons to inquire into this matter. The terms of reference have been drawn up and arrangements, which will, I hope, be shortly concluded, are being made through the usual channels for its establishment.
    Mr. RAMSAY MACDONALD: May we have the terms of reference, or are they not yet fixed?
    The PRIME MINISTER: Yes, I will give them.

    High Courts.
    Sir EDWIN CORNWALLasked the Prime Minister whether it is proposed to give effect this year to the recommendations of the Royal Commission on legal delay in the High Courts; that arrangements should be made for the trial, during the Long Vacation, of Order XIV. cases, of cases in the speedy trial list, and of such others as the judge may hold to be

    1491
    really pressing; and that the Long Vacation should be reduced to two months, lasting from 1st August to the 1st October?
    The PRIME MINISTER: I understand that the Judges of the King's Bench Division have made the arrangements suggested for business during the Long Vacation, but that the question of its reduction is regarded as part of the recommendations depending on the number of judges, to be fixed by Parliament.

    Lord Saye and Sele.
    Mr. NEVILLEasked the Prime Minister whether Lord Saye and Sele is still a Member of the Government?
    The PRIME MINISTER: Yes, Sir.
    Mr. NEVILLE: May I ask the Prime Minister a question of which I have given him private notice, namely: Whether Lord Saye and Sele did not in his personal statement admit that he—
    Mr. SPEAKER: The hon. Member is not entitled to put a question of that character unless it is urgent, and he ought to bring the question to the Table and let me see if it is in order and urgent.

    Committee of Imperial Defence.
    Mr. F. HALLasked the Prime Minister if there are any representatives of the Colonies on the Committee of Imperial Defence; if not, what opportunity is afforded to the Committee of ascertaining the views of the Colonies on the matters coming before them; and if it is proposed to take steps with a view to establishing a permanent committee or other body containing representatives of the self-governing Colonies to deal with all matters affecting Imperial defence, so as to avoid friction arising through the adoption of measures which do not have regard to the special knowledge of local conditions which can only be possessed by the Colonial Governments themselves?
    The PRIME MINISTER: The only Member of the Committee of Imperial Defence is the Prime Minister, who summons to attend its meetings such persons as he thinks fit. As regards the second part of the question, Dominion Ministers, when visiting this country, are in accordance with arrangements made at the last Imperial Conference invited to attend meetings of the Committee. Since May, 1911, twenty-one Ministers of the
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    Dominions have attended meetings. The views and intentions of His Majesty's Government with regard to the third part of the question were recently published in Cd. Paper 7347.

  BRITISH ARMY.

    INDUSTRIAL TRAINING.
    Mr. J. WARDasked the Prime Minister whether he can state the reasons why his Department refuses to publish the Report of Sir Edward Ward's Committee on the Industrial Training of the Army?
    The PRIME MINISTER: The publication of the Report of Sir E. Ward's Committee on Industrial Training of Soldiers has been held over pending consideration of its bearing on the reference to the Committee dealing with the Civil Employment of the Ex-soldier.
    Mr. WARD: Am I to take it for granted that a second Committee has been appointed for the purpose of delaying the publication of this Committee's Report?
    Mr. LEE: May I ask the right hon. Gentleman whether it is proposed to publish the Report of the Committee?
    The PRIME MINISTER: The matter is under consideration.

    DUTIES OF OFFICERS.
    Mr. J. WARDasked the Prime Minister whether any officers or any branch of the Army have indicated their unwillingness to obey orders under certain stated circumstances; and, if so, will he give the names of such officers or the names of the regiments that have given this indication to the Army Council?
    The PRIME MINISTER: As far as I am aware, the answer to the first part of the question in the negative. The second part does not therefore arise.
    Mr. WARD: Is the right hon. Gentleman aware of the speech made by Lord Roberts in the other House, in which he stated that this had been done?
    Mr. SPEAKER: The hon. Member is not entitled to refer to speeches made in the other House.

    RESERVISTS.
    Major HOPEasked the Secretary of State for War whether the recent Order inviting Sections A and B, Army Reservists, to return to the Colours is confined to Reservists of particular regiments,

    1493
    and, if so, of which regiments; and whether it is proposed to offer any bounty in order to induce these Reservists to rejoin in sufficient numbers to make good the present shortage of 11,084 men in the Regular Army?
    The UNDER-SECRETARY of STATE for WAR (Mr. Tennant): The invitation is confined to certain Cavalry and Infantry units at home, some seventy-four in number. I can send the hon. and gallant Member a list if he desires. No bounty is being offered.
    Major HOPE: Is it not the case that 250 rupees is offered to induce time-expired men in India to extend their service with the Colours, and is it not almost equally important to maintain the Regular Army at home up to strength?
    Mr. TENNANT: That is a different kind of case.
    Major HOPE: Has the hon. Gentleman no effective scheme or proposal to make good the present shortage at home?

    ROYAL GARRISON ARTILLERY.
    Sir GILBERT PARKERasked the Secretary of State for War whether it is the case that under the new organisation of the Royal Garrison Artillery no officer in future can become more than a major or command a greater force than a single company, whereas in other branches an officer may look forward to commanding eventually a regiment, a battalion, or a brigade with corresponding rank; and if under the new organisation officers who have commanded regiments are now reduced to the command of single companies?
    Mr. TENNANT: As I stated on the 6th instant, no existing officers will be reduced in rank, and the position and status of existing lieutenant-colonels will also remain unchanged as long as they continue to serve. As regards the first part of the question, it is recognised that the new organisation, which has been adopted in the interests of national defence generally, may involve some change of prospects, but it is not the case that officers of the Royal Garrison Artillery will be in a different position from the officers of all other branches of the Territorial Force.

    TEMPORARY WRITERS.
    Mr. WORTHINGTON EVANSasked the Under-Secretary of State for War whether the memorial dated 14th Febru-
    1494
    ary, 1912, from the Federation of Writers (War Department) and Ex-Soldier (War Office) Clerks has been received and considered by him; and whether he can state if the request of the so-called temporary writers to be put upon the establishment will be complied with?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. H. Baker): This memorial was received and considered. It is regretted that the request cannot be granted
    Mr. WORTHINGTON EVANS: Does the hon. Gentleman mean that none of these men will be put on the establishment?
    Mr. BAKER: Yes.

    BREAD CONTRACTORS.
    Mr. WORTHINGTON EVANSasked the Under-Secretary of State for War if he is aware that Mr. Thomas Robinson, of The Lake, Snaresbrook, Essex, formerly bread contractor to the Army, was removed from the list of Government contractors in 1910, and has been suspended from the list of contractors eligible for four years; whether the reason for his removal from the list was failure to exhibit the wages sheet in his factory; and whether he will reconsider the case?
    Mr. BAKER: This contractor was placed upon the ineligible list in 1910, as a careful investigation showed that the complaint of low wages and long hours of labour in his establishment was fully justified. It had been previously necessary to take exception to his methods of business in other directions. His subsequent applications to be allowed to tender have all been carefully considered, but in view of all the circumstances I can hold out no hope of a reversal of the decision.

    Home-Grown Tobacco.
    Mr. WILLIAM REDMONDasked the Secretary to the Treasury if the Treasury will accede to the request made by the recent deputation of British and Irish tobacco growers for an allowance in respect of Home-grown tobacco for exportation?
    Mr. PATRICK WHITEasked whether the allowance of 2d. per pound granted to Home-grown tobacco, when the manufactured article is used in this country, will be extended to all growers in the United Kingdom, whether the crop is used at Home or exported?
    Mr. MONTAGU: My right hon. Friend the Chancellor of the Exchequer is prepared to accede to the request of the deputation so soon as an opportunity occurs for obtaining the necessary legislative sanction.

    Customs Officers.
    Mr. GOLDSMITHasked whether 120 Customs examining officers and port clerks have been appointed to the surveying grade during the past two years under the amalgamation scheme, but no Excise officers have been appointed; whether the allowance of £20 per annum promised as compensation for the reduction in the number of higher posts is not payable to an Excise officer until he has completed seven years more service than would have qualified him for promotion under the pre-amalgamation conditions; whether the Customs officers appointed to survey Excise work are necessarily unsuited to perform this duty; whether they have to be instructed in the work by those whom they have to supervise; whether, while payment for the insurance work is promised to both branches of the service, all the work is done by the Excise officers; and whether the payment for this work is in the form of an increased maximum which many of those now doing the work will probably not live to receive?
    Mr. MONTAGU: The answer to the first part of the question is in the negative; to the second part, that there is no warrant for the assumption that promotion would have come to Excise officers at any fixed period of service; to the third and fourth parts, that surveyors of Customs origin are instructed at headquarters in Excise duties, and their superior officers report in satisfactory terms as to the manner in which they have performed those duties; the answer to the fifth part of the question is in the negative; and to the last part, that the new maximum was granted as payment for the whole of the work of the class, and was not earmarked to insurance work alone.
    Dr. CHAPPLEasked the Secretary to the Treasury whether the 1,550 officers and men employed on Customs and preventive duty in Scotland have made any complaint as to the conditions of their employment; and, if so, can he offer any encouragement to them in their hope that those conditions might be improved?
    Mr. MONTAGU: I have received and recently replied to representations put
    1496
    forward on behalf of the 1,550 Customs preventive officers and men in the United Kingdom, of whom 200 are stationed in Scotland. Further representations have now been received and are under consideration.

    Bradford Goods Exported.
    Sir GEORGE SCOTT ROBERTSONasked the President of the Board of Trade whether he can give the value of the goods exported from the Bradford district to the United States for the month of June; whether he can say how that total compares with the same period of last year; and can he give the figures for the half-year ended in June as compared with those for 1913 and 1912, respectively?
    The PRESIDENT of the BOARD of TRADE (Mr. Burns): I am informed that goods to the value of £578,403 were exported to the United States of America from the United States Consular district of Bradford in June, 1914, as against £147,088 in June, 1913. In the first six months of the year the value was £3,594,959 as against £1,035,855 in the corresponding period of 1913, and £1,441,479 in the corresponding period of 1912.

    Mining Disasters.
    Lord H. CAVENDISH-BENTINCKasked whether the Government, in view of the number of mining disasters which have occurred in the last few years, culminating in the one at Senghenedd, will take immediate steps to summon an international conference to collect the knowledge so far obtained among the mining nations of the world in reference to the causes and preventive measures for explosions in mines, and to consider what further progress can be made?
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. McKenna): The President of the Board of Trade has asked me to reply to this question. The Government have had under consideration a proposal to a similar effect which has been made by the United States Government, and they have expressed their willingness to summon a conference with a view to securing fuller interchange of views and co-operation between the mining departments and experimental stations of the different countries in regard to questions of safety in mines. It will be more useful, however, that the conference should take place when the important investigations which, as the Noble

    1497
    Lord is no doubt aware, the Home Office has been carrying on for some time into the question of explosions in mines are completed, and I have accordingly suggested that the conference should take place next year. I may add that the Committee which is conducting the Home Office investigations keeps itself informed of the work which is being done in the chief experimental stations abroad, and the results of its own work have been made available in the five full reports which the Home Office has already published.

    Victoria Docks, Canning Town (Juvenile Labour).
    Mr. W. THORNEasked the President of the Board of Trade if his attention has been called to the unsuitable and inadequate nature of the accommodation at the juvenile Labour Exchange at Victoria Docks, Canning Town, East; if he is aware that the Labour Exchange building is unfit for the purposes for which it is used; and if he will take action to provide suitable accommodation?
    Mr. BURNS: Yes, Sir, I am fully aware of the unsuitability of the accommodation in question. New premises have been obtained in Barking Road, which will, I understand, meet all requirements.

    Labour Exchange (Canning Town).
    Mr. W. THORNEasked the President of the Board of Trade if he is aware that land has been purchased by the Government in Barking Road, Canning Town, for the purpose of erecting a new Labour Exchange building; and if he will state whether the contract has been given out and when the proposed building will he completed
    Mr. BURNS: I am afraid I can only refer my hon. Friend to the answer given by my hon. Friend the Member for Tower Hamlets on the 12th February last, of which I am sending him a copy.

    Peninsular and Oriental Company (Foreign Seamen).
    Mr. FELLasked the President of the Board of Trade the nationality of the Europeans employed on the steamers of the Peninsular and Oriental Company, and how many of the 145 Europeans forming part of the crew of the ss. "Medina" are of British and how many of foreign nationality?
    Mr. BURNS: On the last completed voyage of the ss. "Medina" there were 144 persons on the European agreement, and of these all were British, except three cooks, who were born in Germany, Switzerland, and Goa (India), respectively. The extraction of corresponding particulars for all the vessels owned by the Peninsular and Oriental Company would involve a large amount of labour, but if the hon. Member will specify any particular vessels which he has in mind I will endeavour to furnish him with information in regard to them.

    Burgh Registers (Scotland) Bill.
    Mr. FREDERICK WHYTEasked the Lord Advocate if he will state when he proposes to take the Second Reading of the Burgh Registers (Scotland) Bill?
    The LORD ADVOCATE (Mr. Munro): I regret that it is not possible for me at present to make any statement in regard to the matter referred to by my hon. Friend.
    Mr. F. WHYTE: Will my right hon. Friend proceed with the Bill this Session?
    Mr. MUNRO: I cannot say.

    Inspection of Factories (Report).
    Mr. ARTHUR HENDERSONasked the Secretary of State for the Home Department whether he can now state definitely when the Annual Report of the Chief Inspector of Factories will be published?
    Mr. McKENNA: The Report was published last Wednesday.

    White City.
    Sir WILLIAM BYLESasked the Home Secretary whether tribal practices of a revolting nature are permitted and witnessed by the public in the Indian reservation at the White City; whether these include the killing, stewing, and eating of dogs in celebration of the midsummer full moon, accompanied with songs, dances, and other weird and savage rites; and whether the performance of these rites in public received the sanction of the Home Office?
    Mr. McKENNA: I am informed by the Commissioner of Police that no practices of a revolting nature are permitted and witnessed by the public in the Indian reservation in the White City; and that it is

    1499
    not the case that dogs have been killed and eaten. At the feast to which the question appears to refer, a lamb, killed by a local butcher, was roasted and served to the Indians.
    Sir W. BYLES: Will my right hon. Friend send somebody to ascertain the actual facts?
    Mr. McKENNA: I believe they have been ascertained already. I believe the lamb was consumed long ago.
    Colonel LOCKWOOD: Will the right hon. Gentleman assure us that nothing of that nature is allowed to take place?
    Mr. McKENNA: So far as my information goes nothing of that kind is allowed or does in fact take place, but if my hon. Friend has some other information to give me I shall be very happy to inquire further.
    Sir W. BYLES: Certainly I will; but may I ask whether it is a proper Ministerial statement to say, "So far as I know nothing of the kind has occurred." May I ask him to be kind enough to send somebody to inquire?
    Mr. McKENNA: That is exactly what I have done. The answer which I gave to my hon. Friend was given to me by the polite authorities, who made inquiries and came to the conclusion that my hon. Friend's information was ill-founded.
    Mr. EDWARD WOOD: Will the right hon. Gentleman consider the advisability of asking his hon. Friend to make a personal report?

  POST OFFICE.

    TELEPHONE SERVICE.
    Mr. W. THORNEasked the Postmaster-General if he is aware that Clause 103 of the Staff Rules and Regulations of telephone workers in Leeds and district states that non-established workmen may receive twelve days' holiday after a qualifying period of two years; if he is aware that the workmen in question only receive one day's holiday for each month of service after the qualifying period, and that the effect is that a workman has to serve for three years before he gets twelve days' holiday; and if he will see his way to order that workmen become entitled to twelve days' holiday immediately on completion of the two years qualifying period of service?
    The POSTMASTER-GENERAL (Mr. Hobhouse): The rule in question states that unestablished workmen commence to earn annual leave on the completion of two years' service. For the period between this date and the end of the calendar year, they are given a proportionate amount of the full annual leave of twelve days. This is in accordance with the usual practice of the Post Office in the case of persons becoming entitled for the first time to annual leave.
    Mr. FELLasked the Postmaster-General the reason why certain telephone operators cut off subscribers almost immediately after they are put in communication with another subscriber; if there is any time limit imposed on conversations; if warning can be given before cutting off subscribers; and if the Regulations or instructions to the operators, on the subject can be laid upon the Table?
    Mr. HOBHOUSE: There is no good reason why subscribers should be interrupted in the manner suggested; and if the hon. Member will give me particulars of any actual cases I will have inquiry made. In the case of trunk calls the unit period of conversation is three minutes; and at the end of that period subscribers are asked whether they desire to have another three minutes, for which a second fee becomes due. The statutory Telephone Instructions, dated 10th October, 1910, prescribe that no person shall be entitled to use a trunk line or an exchange system continuously for a time exceeding six minutes. Telephonists are instructed to give subscribers warning before terminating conversations at the end of the prescribed period.
    Mr. FELL: Do I understand that the right hon. Gentleman requires instances? They are occurring every few minutes.
    Mr. HOBHOUSE: As the hon. Gentleman makes that allegation, I am entitled to ask him for his source of information.
    Mr. PIRIEasked the Postmaster-General if the telephone directories in use in the various areas in Scotland are at the present moment as bad as the one in use in the Aberdeen area, the names being in small print, and the book being full, from the front page to the back, of advertisements, and, as a fresh directory has been issued for London, how long this present state of affairs is to continue in Scotland; if he is aware that subscribers

    1501
    who have two telephones, for which the combined payment of a flat service is £10 10s., have only received one copy of the telephone directory of the July issue, and on request for a second copy were informed that they would have to pay an extra 1s.; and whether it is in keeping with the traditions of a public Department to treat its subscribers in such a fashion?
    Mr. HOBHOUSE: The printing and arrangement of matter in the Telephone Directory are the same for Scotland as for the rest of the United Kingdom, with the exception of some slight differences in the London section. The new half-yearly issue is not confined to London, but is being made throughout the United Kingdom. The existing contracts for printing and advertisements in all the telephone directories will expire in January next, and the question of improving the type and the general arrangement of entries and advertisements is being carefully considered. A subscriber is entitled without payment to a copy of the directory for each exchange line rented by him, and I shall be happy to have inquiry made if the hon. Member will furnish me with particulars of any case in which this rule appears to have been disregarded.

    NEWSPAPER RATE TO INDIA.
    Mr. DENNISSasked the Postmaster-General if he will take the opportunity of the new contract with the Peninsular and Oriental Steamship Company to effect a reduction in the rate of postage on newspapers and periodicals between Great Britain and India from 1d. per quarter pound, which is the rate at present, to 1d. per pound, which is now the rate for newspapers between this country and Canada and New Zealand?
    Mr. HOBHOUSE: I am not prepared to extend to India or to any other country the specially reduced rates of postage applicable to British newspapers, magazines and trade journals sent from the United Kingdom to Canada and Newfoundland. There is no special rate of postage on newspapers from this country for New Zealand.

    INCREASED PAY (SHREWSBURY DISTRICT).
    Mr. BUTLER LLOYDasked the Postmaster-General when the increases recommended by the Holt Committee and granted nearly seven months ago will be paid to the postmen in the Shrewsbury
    1502
    district, the money having been already paid in London and in some country districts?
    Mr. HOBHOUSE: It is hoped to complete the necessary adjustments in the Shrewsbury district in the course of a few days. The revision of wages has involved a large amount of labour, and, apart from this, some delay has unavoidably occurred in settling various points of detail

    BENBECULA (POSTAL FACILITIES).
    Major ANSTRUTHER-GRAYasked the Postmaster-General whether he will look into the postal facilities of the island of Benbecula, with a view of improving the conditions of this district?
    Mr. HOBHOUSE: I will look into the question of improving the postal facilities of the island of Benbecula, and will communicate with the hon. Member on the subject.
    Major ANSTRUTHER-GRAYasked the Secretary for Scotland whether he will endeavour to visit and cross the north and south fords of the island of Benbecula during the coming Recess in order to make himself acquainted with the desirability of improved facilities of transport for the people of this and neighbouring islands?
    The SECRETARY for SCOTLAND (Mr. McKinnon Wood): I am not in a position at present to say what special business I shall be able to undertake during the Recess, but I will bear in mind the hon. and gallant Member's suggestion.

    Free Education.
    Mr. LEACHasked the President of the Board of Education if it is the intention of the Government to introduce fresh legislation to secure free education, seeing that the Act under which such education is at present given is to be repealed?
    The PRESIDENT of the BOARD of EDUCATION (Mr. J. A. Pease): I may refer the hon. Member to the answer which I gave to the Member for North Somerset on 2nd July, a copy of which I am sending him.

    Enlarged Grants (Nonconformists).
    Mr. LEACHasked the President of the Board of Education if, with the proposed enlarged Educational Grants, it is intended to attach conditions which will enable Nonconformists to be appointed to head teacherships in any schools receiving aid from the rates?
    Mr. PEASE: I must ask the hon. Member to await the introduction of legislation. I cannot anticipate any proposals which may be laid before Parliament.
    Lord ROBERT CECIL: Would it not be possible with respect to these new Grants for the Education Department to attach any conditions they please to them?
    Mr. PEASE: It is rather a complicated matter, and I think I ought to have formal notice.

    Dowlais Roman Catholic School.
    Lord NINIAN CRICHTON-STUARTasked the President of the Board of Education whether the Merthyr local education authority are liable for the salaries of the teachers of the Dowlais Roman Catholic school since 1st May, having in view Section 49 of the Report on the case?
    Mr. PEASE: If the hon. Member will allow me, I propose to postpone any expression of opinion on this question until I have heard the views of the local education authority.
    Lord N. CRICHTON-STUART: Are the local education authorities to make any communication to the Department?
    Mr. PEASE: Yes; I anticipate an early answer from them.
    Lord N. CRICHTON-STUARTasked the President of the Board of Education whether any further investigation will be held into the Dowlais Roman Catholic school case?
    Mr. PEASE: The Board propose to investigate certain charges brought by the managers against the headmistress.
    Lord N. CRICHTON-STUARTasked the President of the Board of Education whether he can state whether official Reports have been made to the Board that the Dowlais Roman Catholic school was efficiently maintained by the Merthyr local education authority, in view of the fact that from 1st May to 8th June eighteen teachers received no salary?
    Mr. PEASE: I have not yet received any official Report with reference to the period in question.
    Lord N. CRICHTON-STUART: Will the right hon. Gentleman say whether an official was sent down to investigate, and was a report made to the Board of Education?
    Mr. PEASE: Yes; there was an official investigation, and a report was made to the Board of Education.
    Lord N. CRICHTON-STUART: Can the right hon. Gentleman not agree to that report?
    Mr. PEASE: The matter is under my consideration. I have received the report.
    Lord N. CRICHTON-STUART: Can the right hon. Gentleman not take the report of Mr. Barker as a correct report of the case?
    Mr. PEASE: There is so much conversation going on that I cannot hear accurately what the Noble Lord says.
    Lord N. CRICHTON-STUART: In view of the unsatisfactory nature of the right hon. Gentleman's reply, I shall raise this question on the Adjournment as early as possible.
    Mr. KILBRIDE: In sending the reply to the Noble Lord, will the right hon. Gentleman have it dated 12th July?

    Tasmania (Governor).
    Mr. SWIFT MacNEILLasked the Secretary of State for the Colonies whether any petitions to the Crown complaining of the conduct of Sir William Ellison Macartney, as Governor of Tasmania, have been forwarded by him to the Secretary of State for the Colonies pursuant to Royal instructions in such cases; and whether such petitions will be laid upon the Table of the House of Commons?
    The SECRETARY of STATE for the COLONIES (Mr. Harcourt): An address has been received from the Tasmanian House of Assembly, and it will be laid shortly before Parliament, with other Papers on the subject.
    Mr. SWIFT MacNEILL: How long ago is it since the right hon. Gentleman received the address?
    Mr. HARCOURT: I do not remember the exact date. I received it in the ordinary course of post, after it was posted by the Tasmanian House of Assembly.
    Colonel LOCKWOOD: If these Papers are laid on the Table, will the answer of the Governor also be laid?
    Mr. HARCOURT: I am considering what Papers it is competent to lay.
    Mr. SWIFT MacNEILL: When may we expect the Governor's resignation?

    Covent Garden Estate.
    Mr. NEWMANasked the Chancellor of the Exchequer whether he is aware that an estate known as the Covent Garden estate has changed hands recently for a sum of money stated to be approximately £3,000,000; whether all the hereditaments comprising this estate have had their total and site values ascertained and recorded; whether they have been assessed for increment land value duty on the occasion of such sale; and whether be has been able to form an estimate of the total sum that will accrue to the State by way of increment value duty?
    Mr. LLOYD GEORGE: My attention has been drawn to the transaction to which the hon. Member refers. Particulars of the reported sale are, however, not yet available to the Commissioners of Inland Revenue, and no answer can accordingly be given to the second part of the question. The answers to the third and fourth parts of the question are in the negative.
    Mr. NEWMAN: May I have an answer to the last part of the question?
    Mr. LLOYD GEORGE: I have no official information on the subject.

BUSINESS OF THE HOUSE.

  GOVERNMENT PROGRAMME—NEW SESSION.
  Mr. CHARLES BATHURSTasked the Prime Minister if, for the domestic convenience of Members of this House and their families, he will now state whether the House is likely to be still sitting on 15th August or, alternatively, on 31st August?
  The PRIME MINISTER: I will make a statement on this subject in reply to Question No. 59.
  Mr. GEORGE FABER54. Mr. GEORGE FABER had given notice to ask the Prime Minister whether, in view of the fact that there are now only one and a half days before the 5th August which are not already ascribed by the Government to necessary Parliamentary business in this House, he will say if the Government of Ireland (Amendment) Bill will be entered upon in this House before or after that date?
  I understand that a question will be put later to the Prime Minister by the Leader of the Opposition on this matter, and therefore I do not now propose to put this question.
  Lord ROBERT CECILasked the Prime Minister (1) whether the Government proposes to ask the House to sit in the autumn; and (2) when he proposes to lay before the House his proposals for the reform of the Second Chamber?
  The PRIME MINISTER: It is the intention of the Government to ask the House, in addition to the necessary financial business and to the passing of measures of such a character that they can be disposed of in accordance with practice after eleven o'clock or on Fridays, in which category I hope the Housing Bill may be included, to deal before the prorogation with the Irish Amending Bill, the Indian Budget, and the House of Lords Resolutions. They will advise that a new Session should begin in the early winter; I am unable at present to name a more exact date; so that the provisions of the Revenue Bill (for Valuation and Allocation of Grants), which the Government regard as essential, should be carried in time for the Grants to the local authorities to be included in the Estimates for the next financial year. I will make a fuller statement as to the course of business on Friday, when we shall move the suspension of the Eleven o'Clock Rule.
  Mr. BONAR LAW: Can the Prime Minister give any indication as to when he anticipates this Session will end?
  The PRIME MINISTER: I hope some time in August.
  Mr. BONAR LAW: Can the right hon. Gentleman not go any nearer to it than that? Can he give the House any reason for adopting a plan which seems to have the disadvantage of prolonging the present Session and having an extra Session in winter?
  The PRIME MINISTER: The length of the present Session all depends en the course which is taken in regard to the Government of Ireland (Amending) Bill. Until we know more about that we cannot possibly indicate the time in August when the House will be up. I hope that it will be up in a reasonable time in August.

  EDUCATION RATES (RELIEF).
  Mr. W. CLOUGHasked the Prime Minister whether he could see his way to carry through all its stages in the House of Commons during the present Session the Education (No. 2) Bill.
  The PRIME MINISTER: No, sir, such a course is unnecessary, as the relief of local education authorities offered in that Bill will, I hope, be provided on a permanent basis and a more generous scale by the financial arrangements already announced.
  Mr. HOARE: Does the Prime Minister's answer mean that there will be no Education Bill this Session?
  The PRIME MINISTER: Yes.
  Mr. WORTHINGTQN EVANS: Can the right hon. Gentleman make any statement about the National Insurance Act Amending Bill?
  The PRIME MINISTER: I will make a full statement on Friday.
  Mr. CROFT: What has the right hon. Gentleman to say as to his pledge of honour in regard to the House of Lords?
  The PRIME MINISTER: The hon. Member did not listen to my answer.

LOCAL LEGISLATION COMMITTEE (SECTION B).
Mr. Gardner reported from the Local Legislation Committee (Section B); That the parties promoting the Manchester Corporation Bill had stated that the evidence of William Richmond, J.P., Gaskin Street, Downing Street, Ardwick, Manchester, and of Richard Wiseman, 106, High Street, Manchester, was essential to their case; and, it having been proved that their attendance could not be procured without the intervention of the House, he had been instructed to move that the said William Richmond and Richard Wiseman do attend the said Committee To-morrow, at half-past Eleven of the clock.
Ordered, That William Richmond and Richard Wiseman do attend the Local Legislation Committee (Section B) Tomorrow, at half-past Eleven of the clock.

PRIVATE BILLS.
London, Brighton, and South Coast Railway Bill [Lords],
Midland Railway Bill [Lords],
Reported, with Amendments; Reports to lie upon the Table, and to be printed.

STANDING COMMITTEE (CHAIRMEN'S PANEL).
Mr. Eugene Wason reported from the Chairmen's Panel: That they had appointed Mr. T. P. O'Connor to act as Chairman of Standing Committee C (in respect of the Merchant Shipping (Convention) Bill; and Mr. Arthur Henderson to act as Chairman of the Standing Committee, on Scottish Bills (in respect of the Police (Weekly Rest-Day) (Scotland) Bill).
Report to lie upon the Table.

SELECTION (STANDING COMMITTEES).
Sir Daniel Goddard reported from the Committee of Selection; That they had discharged the following Member from) Standing Committee C (in respect of the Merchant Shipping (Convention) Bill): Dr. Addison and Mr. Keating; and had appointed in substitution (in respect of the said Bill): Mr. M'Ghee and Mr. Solicitor-General.
Sir Daniel Goddard further reported from the Committee; That they had added the following Member to Standing; Committee C (in respect of the Merchant Shipping (Convention) Bill): Lord Henry Cavendish-Bentinck.
Sir Daniel Goddard further reported from the Committee; That they had discharged the following Member from Standing Committee A (in respect of the Control and Supervision of Clubs Bill): Mr. Needham; and had appointed in substitution (in respect of the said Bill): Mr. H. T. Cawley.
Reports to lie upon the Table.

FARMERS AND POULTRY KEEPERS (COMPENSATION) BILL.
Second Reading upon Wednesday.
ORDERS OF THE DAY.

  FINANCE BILL.
  Considered in Committee.
  1ST ALLOTTED DAY.—[Progress, 2nd July.]
  [Mr. WHITLEY in the Chair.]

  FINANCE BILL.

    CLAUSE 3.—(Super-tax for 1914–1915.)
    (1) In addition to the Income Tax charged at the rate of one shilling and fourpence under this Act there shall be charged, levied, and paid for the year beginning on the sixth day of April, nineteen hundred and fourteen, in respect of the income of any individual, the total of which from all sources exceeds three thousand pounds, an additional duty of Income Tax (in this Act referred to as Super-tax) at the following rates:—

    In respect of the first two thousand five hundred pounds of the income

    nil.

    In respect of the excess over two thousand five hundred pounds—

    for every pound of the first five hundred pounds of the excess

    fivepence

    for every pound of the next one thousand pounds of the excess

    sevenpence

    for every pound of the next one thousand pounds of the excess

    ninepence

    for every pound of the next one thousand pounds of the excess

    elevenpence

    for every pound of the next one thousand pounds of the excess

    one shilling and a penny

    for every pound of the next one thousand pounds of the excess

    one shilling and threepence

    for every pound of the remainder of the excess

    one shilling and fourpence.

    (2) All such enactments relating to Super-tax as were in. force with respect to the Super-tax granted for the year beginning on the sixth day of April, nineteen hundred and thirteen, shall have full force and effect with respect to the Super-tax granted under this Section.
    The CHAIRMAN: Perhaps it may be for the convenience of the Committee if I indicate the first two or three Amendments I propose to select for consideration. The first is that in the name of the hon. Member for Colchester (Mr. Worthington Evans), the next is that of the Chancellor of the Exchequer, and the third is that of the hon. Member for the Falmouth Division (Mr. Goldman).
    Mr. JAMES HOPE: May I ask, Sir, if before arriving at this conclusion you are able to assure the House that you are fully seized of the importance and meaning of the Amendments standing in the name of the hon. Member for Stirling (Dr. Chapple), and if you cannot give that assurance would you allow the hon. Gentleman to make an explanatory statement?
    The CHAIRMAN: I have given such study as I am capable of to the Amendment standing in the name of the hon. Member for Stirlingshire, and, after that study, I have arrived at the decision which I have just announced.
    Mr. WORTHINGTON EVANS: I beg to move, in Sub-section (1), after the word sources ["from all sources"], to insert the words "after deducting therefrom the amounts paid for Undeveloped Land Duty and Mineral Rights Duty."
    The object of this Amendment is to provide that the Super-tax should be payable only upon the income actually received by the person taxed. The Amendment is based on the principle of taxation, professed by hon. Gentlemen opposite, of
    1524
    putting the burden on the broadest backs and taxing those who are best able to bear the taxation. If ability to bear taxation is the proper test, the test must be applied to the net income received by the person taxed, and not to the gross income which, in fact, never reaches his hands. If this Amendment is not made, a different amount of tax will be payable by people of the same income. I can best illustrate that by comparing two cases. Take the case of a man with an income of £3,001. I select that figure because that is the first rate at which Super-tax is payable. Assume that he derives his income from stock and share investments: he will have to pay £190, or thereabouts, in Income Tax and £10 Super-tax, a total of £200, equivalent to about 6½ per cent. on his income. Take another man with exactly the same income of £3,001, and assume that £1,000 is derived from a building estate upon which Undeveloped Land Duty is payable, another £1,000 is derived from mining royalties upon which Mineral Rights Duty is payable, and the remaining £1,001 is derived from stock and share interest. There you have two men with exactly the same gross income. In the second case £1,000 is derived from an income of £2 a year per acre from 500 acres—I know such a case—where the Undeveloped Land Duty is equal to £1 per acre, the land being valued at between £500 and £600. In that case the man would have to pay £500 a year for Undeveloped Land Duty in respect of the income of £1,000 a year which he derives from letting building land for grazing pending building. In respect of the £1,000 derived from mineral royalties, he will have to pay Mineral Rights Duty of £25 a year. Therefore, his net income will be, not £3,001 upon which he is charged Super-tax, but £2,476, and yet he has to pay exactly the same amount of Super-tax and Income Tax, namely, £200, representing 8.1 per cent. on his actual net income, whereas, if the deductions of Undeveloped Land Duty and Mineral Rights Duty were first made, the tax payable would be £155, or 6½ per cent., the precise proportion that would be paid in the first case. I submit that on the principle to which the Government pretend to adhere of putting the tax upon those who can best bear it, you ought to have the same taxation for the same income, and not, as you will have if this Amendment is not accepted, a tax of 6½ per cent. in one case and 8 per cent, in another.
    Mr. LEIF JONES: Would the hon. Member give the figures again?
    Mr. WORTHINGTON EVANS: Yes, certainly.
    The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George): Including those for the Undeveloped Land Duty.
    Mr. WORTHINGTON EVANS: In the first case there is an income of £3,001 from stocks, shares, and other investments, upon which there is an Income Tax of £190 in round figures, and £10 Super-tax; that is a total of £200, or 6½ per cent. on the income. In the second case I assume that the same gross income is received, but that only £1,001 is derived from stocks and shares, £1,000 from the grazing value of £2 an acre on 500 acres of land, and £1,000 from mining royalties which are specially taxed. With regard to the 500 acres of undeveloped land, which is let for the moment at £2 per acre, there is Undeveloped Land Duty of £1 per acre. The Chancellor of the Exchequer seems to think that that is an exceptional case, but anywhere round London he will find lots of land paying up to £1 an acre.
    Mr. LLOYD GEORGE: Five hundred acres?
    Mr. WORTHINGTON EVANS: Up to £1 an acre; and I imagine that must be so round nearly all the big centres of population. Thus there is £500 Undeveloped Land Duty, and the income from mining royalties is subject to Mineral Rights Duty of £50.
    Mr. LEIF JONES: I thought you said £25.
    4.0 P.M.
    Mr. WORTHINGTON EVANS: It should be £50. Hence you have a net income of £2,451, and upon that income exactly the same amount is payable in the way of Income Tax and Super-tax as is payable in the first case on £3,001. If taxation is to be apportioned according to ability to pay, there can be no justification for continuing to tax one man at 6½ per cent. on his income and another man with exactly the same income at something over 8 per cent. Let me put this to the right hon. Gentleman. If this property were subject to a mortgage, he would allow, as a proper deduction from the gross rental received, the interest that was paid upon that mortgage. That is always done. That is a debt voluntarily incurred. Here we get a debt incurred by
    1526
    Statute, a liability placed upon that property, not the least bit less onerous than a mortgage, and having exactly the same effect of reducing the gross income by the sum for the interest on the mortgage, or the amount of the Undeveloped Land Duty. If you are entitled to deduct, as you are now if there is an interest on the mortgage, surely you ought to be not less entitled to deduct because Parliament comes in and puts a tax upon that income? The same principle of deduction is allowed in many other cases. For example, the premium on life insurance can be deducted, because it is the annual payment upon the gross income of the taxed person. The person does not have his income taxed or super-taxed upon the gross income, but is allowed to deduct what he pays for insurance. If it is thought to be fair to deduct the premium that he pays for insurance, surely it is even more fair that there should be a deduction allowed on the sum which Parliament places upon that property as a burden? Even in the case of our salaries of £400 a year we do not pay Income Tax or Super-tax upon the gross amount. The Chancellor of the Exchequer has recognised the principle of deduction. How he did it nobody has ever been able to discover. But he did it.
    He said that £100 a year of the £400 was to be treated as necessary payments, and tax was only to be paid on £300. Surely it is much fairer to allow Undeveloped Land Duty to be deducted than a purely imaginary sum for the expense of a Member of Parliament. I do not want to argue—it is not open to me to argue—whether there ought or ought not to be Undeveloped Land Duty. It is there. Surely, then, Parliament ought to recognise that it is there, and allow it as a deduction along with the Mineral Rights Duty from the gross income upon which taxation is being levied. If not, the whole principle of ability to pay, and the idea that that ability to pay is the ground for taxing entirely goes by the board; because, although I have taken a case of £500, I dare say it will be quite possible in exceptional cases to find that a man's income was still further reduced by Undeveloped Land Duty and Mineral Rights Duty. I am not taking an exceptional price and an exceptional amount per acre, nor do I think that I have taken an exceptional number of acres. I gathered just now from the appearance of the right hon. Gentleman

    1527
    when I stated five hundred acres that he thinks that exceptional. Assume, for a moment, that it is exceptional; is it any the less just that the deduction should be made in the case I say, 50 acres? It is only a matter of degree. On 50 acres the tax would be levied at £50, which is not increment at all! Now that the Income Tax and the Super-tax are a permanent part of our taxation, it is the more necessary that obvious injustices, such as I submit this is, should be remedied, and I hope the Government may be able to accept my Amendment.
    Mr. LLOYD GEORGE: I cannot see my way to accept this Amendment. It is an Amendment of the kind which has been moved before in Committee, more though in reference to the Income Tax than in respect of Mineral Rights Duty and Undeveloped Land Duty. The hon. and learned Gentleman made no case at all about Mineral Rights Duty. He has not said a word about it. His illustration is entirely concerned with Undeveloped Land Duty. I should rather like to take the case he gave. He said that he knows cases of the kind where a man with an income of £3,000 and 500 acres of undeveloped land pays £1 an acre in respect of the Undeveloped Land Duty. That means that the 500 acres are worth £240,000. Let us take the two cases. The first is that of a man who has £3,000. I assume that the £3,000 represents good capital value. Capitalise it on a basis of 5 per cent. and that man's property is worth £60,000. Take the man with the 500 acres of undeveloped land. His property will be worth very nearly £300,000. The hon. and learned Gentleman complains that the man who has got the property worth £60,000 is let off very easily compared with the man whose wealth is rolling in in the form of increase in value at the expense of the community. I should have thought that the latter was the very last man who ought to complain. On the contrary, some might consider the charge a most inadequate sum. Improvements have been created in his district and the value has no relation to anything he has done. Whatever is due to his own expenditure is deducted. The situation has nothing to do with agricultural value, because the agricultural value is £2 per acre. Therefore, the whole is value clearly created by the exertions of the community.
    Lord HUGH CECILmade an observation which was inaudible in the Reporters' Gallery.
    Mr. LLOYD GEORGE: The Noble Lord is entering into the question of whether Undeveloped Land Duty ought or ought not to be charged. I am not discussing that. I am following the very good example of order set by the hon. and learned Gentleman, and simply discussing the rival positions of these two happy possessors of an income each of £3,000 a year. I now come to the second point, although I do not think I have anything to answer in relation to the Mineral Rights Duty; the hon. and learned Gentleman never mentioned it.
    Mr. WORTHINGTON EVANS: I do not want to interrupt the right hon. Gentleman, but as a matter of fact I assumed in the second case a gross deduction of £50 a year as Mineral Rights Duty. I did not elaborate it, because I thought the House would know how the case stood.
    Mr. LLOYD GEORGE: That the Mineral Rights Duty is in the same position as Income Tax is the contention set up by the Opposition, and it has been their general attitude throughout. I have always treated it as one of the land taxes. It is not Income Tax in any sense of the term. The position is that it is a contribution made by the owners of these mineral rights in respect of the income from land. Where every other interest in land is contributing heavily to local expenditure they are contributing nothing. You may have a colliery proprietor paying about five, six, or seven shillings in respect of what he has risked his capital on, while the owner of the mineral rights is only contributing his shilling. I do not look upon that in the same category as Income Tax. It is a totally different matter. I do not think there is any case for deducting either of these taxes before you arrive at the Super-tax. The Super-tax is not a separate tax; it is purely a graduation of the Income Tax. If the hon. and learned Member will look at the White Paper which has been circulated he will find that its scale has been graduated, so that the passing from the Income Tax category to the Super-tax scale is almost imperceptible. [Laughter.] It is not now really a serious business. The scale has now been so graduated that the payer really never knows when he is passing from one to the other. There is just the same claim for deducting these things in respect of Super-tax as there would be in the case

    1529
    of a man with £2,000, and it were proposed, to deduct off the Income Tax what is paid in respect of the first thousand. It comes to exactly the same thing. There is no reason why you should draw the line at £3,000, and say that the man with £3,000 shall be entitled to make all these deductions, when the man at £2,000 cannot do it. There is no logic at all in the position which the hon. and learned Member has taken up. There would be much more logic in a case for relief to the Income Tax payer now on the score that the Income Tax payer is practically paying rates. What hon. Members opposite forget is that not merely in respect of money which has been raised, but that which will be raised under this Budget, the Income Tax payer is making a contribution in respect of the rates. If anything is to be deducted at all from the Super-tax payer, then the Income Tax payer, too, ought to be in a position to make a deduction. If you begin making these deductions it comes to really the same thing in the end. If you are going to make them, they must be made all round. If they are made all round, then there is a deficiency which will have to be made up by an extra halfpenny or penny on the Income Tax.
    Mr. WORTHINGTON EVANS: Then the proper people will pay it.
    Mr. LLOYD GEORGE: I am not so certain about that! If the hon. and learned Gentleman means by the proper people the men whose property has been enhanced enormously in value from the rates spent upon it, and spent not merely upon it, but in the neighbourhood, then the proper person to get relief is not that man. It would be a curious method to give relief: to put a penny on the Income Tax in order to give something in the way of deduction, for the same person who got the relief would have paid for it!
    Mr. BONAR LAW(who was indistinctly heard): The right hon. Gentleman has not given as much consideration to this Amendment as I think it deserves. He referred to the prejudices in the minds of hon. Members behind me against royalties on minerals. But as regards royalties, he forgot this is a tax not only upon royalties but also upon minerals. The whole theory of Income Tax is that a man has to pay upon his net income and his net income alone. What happens here? A man has an income of £2,000. The right hon. Gentleman puts on a new tax which is as much a burden on property as anything else, and
    1530
    which diminishes that man's income to the extent, say, of £200 a year. You are, therefore, going to charge him in future, not upon his net income, but upon his income plus the additional charge which the Government laid on him. You may just as well say in case of a man who owns house property that when he makes a return for Income Tax he must do so without deducting the rates. In the one case as in the other, it is gross income; and I think the object of the Income Tax ought to be to get the revenue out of the net income of every man. All the right hon. Gentleman refers to is ability to pay the tax. That does not meet the case at all; it may be a reason for putting on additional land taxes, but it can be no reason for making a man pay Income Tax upon an income which he does not receive. Surely the right hon. Gentleman missed the whole point in his last remarks! He said it simply was a case of taking it out of one pocket and putting it into another. It is not that at all.
    This Undeveloped Land Duty or any other duty is a burden placed upon particular kinds of property without any regard to the ability of the owner to pay the larger charge. If you make this man pay his Income Tax upon net income, and not an imaginary income, it may be necessary to raise the Income Tax as a whole, but you would be raising it upon everybody in proportion to their income. What you are doing now is, you are really penalising the owner of a particular kind of property, nothing more nor less, and I think it is especially hard to put on this additional burden, because in the case of undeveloped land it falls upon agriculture. The land must be employed in some form of agriculture, and by making this additional burden you are simply, to that extent, putting an additional burden upon agriculture in this country. I am sure if hon. Gentlemen opposite would think that out, they would see that in effect there is no reason, if undeveloped land should have to pay duty, and if income in consequence is reduced, why a man should have to pay Income Tax upon an income which is not his; and I venture to say that on its merits this Amendment ought to be considered by the Government, and that the readjustments necessary ought to be made which would make the tax much fairer.
    Sir ARTHUR MARKHAM: The hon. Gentleman who moved this Amendment tried to justify it on various grounds. As a matter of fact, as the Chancellor of the

    1531
    Exchequer has pointed out—though I did not catch the figures—taking Mineral Rights Duty at twenty years, where you get a total of something like £300,000, taking that at 4 per cent., it represents £12,000 a year, but the owner has only to pay a tax of something like 2 per cent. Here is a man in possession of property at a value of something like £300,000. If it is unrealisable, he can break it up and allow it to be acquired for other purposes for the community. So far as Mineral Rights Duty goes and Undeveloped Land Duty, the property pays not one penny of taxation. Why should not a landlord pay his share of the rates just as any other person? I hope the Chancellor of the Exchequer will stick to what he has said, because I am quite sure he has expressed the views of those who support him.
    Mr. LEES SMITH: I was surprised to hear the doctrine of the Income Tax put forward by the right hon. Gentleman opposite. In the sense of the term in which the right hon. Gentleman used the words "net income" his doctrine would be obviously quite impracticable. The argument he used was that you ought to charge Income Tax not upon the income a person receives after he pays the expenses of his business, but on the income he has to spend when he pays his taxes. Why not deduct the Inhabited House Duty, which is in the nature of Income Tax, and the Licence Duty and the gun licences and dog licences on the same principle? The fact is we can only follow one or two quite plain courses: laying it down that only deductions would be allowed and expenses which are incurred in earning income can be followed. If you followed the other course advocated in this Amendment, this House would be leading up to hopeless chaos in trying to distinguish between a tax which was and a tax which was not Income Tax, and therefore the Amendment seems to me to be quite impracticable.
    Lord HUGH CECIL: The hon. Gentleman is mistaken in thinking that Undeveloped Land Duty is necessary in order to make an income out of land. If you do not use your land you have to pay a penalty. So far as the general argument goes, I think that the sound principle of taxation is that the taxpayer should not be taxed upon a payment which he makes to the revenue, and that he should only be taxed upon what is his income. The whole basis of the argument by which the
    1532
    State is justified in putting on a tax is not that a person has a large property, but that you propose to levy Income Tax upon people who have large incomes. Income Tax means that you tax a man's income, but to tax a man upon the whole of his property is merely to turn Income Tax into a Finance Act. I strongly disapprove of the Undeveloped Land Duty Tax. On the same principle you might have to tax food, and why should you pick and choose? I do not want from Germany either a high protective tariff, conscription, or the right to fight duels; neither do I want this adaptation of the German system which the Chancellor of the Exchequer seems to have chosen. I quite agree we cannot go into these matters and all the muddle-headedness and insane assumption on the value supposed to underlie land values. The Chancellor of the Exchequer first of all talks nonsense upon land values, then he seeks to found a system of finance upon that nonsense, and thirdly, he taxes people upon a taxation they pay upon his financial scheme founded upon nonsense. It is wrong to talk nonsense in finance and it is wrong to found taxation upon nonsense, and, thirdly, it is wrong to tax people upon what they have already paid.
    Mr. OUTHWAITE: The Noble Lord referred to the methods of the taxation of land and land values. In any taxation of land values we accept the principle that the State creates the value. What is the position as regards the unfortunate individual who possesses undeveloped land? If the land is worth a quarter of a million it should pay and ought to pay, and if it is not worth a quarter of a million it will not pay. If it is worth a quarter of a million the owner can turn in an income, say, of £10,000, and it seems to me that the principle or object of this system of the taxation of undeveloped land was to secure that the land should be brought into use. The Leader of the Opposition objected to this Undeveloped Land Tax on the ground that it is a tax upon agricultural land. I support the Chancellor of the Exchequer in the attitude he has taken up on this matter. Whenever we have regard to the complaints under which this land is held up we find it is held up in great urban centres, and regarded as agricultural land so that it may escape its just contribution to the rates and taxes. I really rose because of a statement made by the Leader of the Opposition in regard to this

    1533
    being a tax upon agricultural land. I think that misconception has arisen from the fact that this land was rated as agricultural land. The land we are dealing with is really urban land needed for building purposes, and it is being withheld from use. [HON. MEMBERS: "NO!"] I will take one or two examples.
    Mr. EDWARD WOOD: May I ask, Mr. Whitley, whether if the hon. Member is permitted to pursue this line of argument, we shall be permitted to reply to him?
    The CHAIRMAN: Of course, if I allow the hon. Member to pursue that line of argument I shall have to allow others to reply. It seems to me that the hon. Member is entitled to make a reply to the Leader of the Opposition, but he must not develop that line of argument upon the Undeveloped Land Duty. On this point the position taken up by the hon. Member for Colchester (Mr. Worthington Evans) is the correct one.
    Mr. OUTHWAITE: I was replying to the statement made by the Leader of the Opposition that this was a tax on agriculture. Perhaps I might be allowed to give an illustration. Take, for example, the suburban area of Croydon, where there are 9,000 acres in the borough, and of that area I find 2,643 acres rated as agricultural land making a contribution of £520 to the rates. It is utterly absurd to suggest that that so-called agricultural land, which comes under the Undeveloped Land Duty is land properly devoted to agricultural purposes. As a matter of fact it is land which is needed for building. I will take one or two other large cities. In the city of Manchester I find that there are 21,000 acres of land of which 5,300 are rated as agricultural land, or, roughly, about a quarter of the area of that great city—
    The CHAIRMAN: I think the hon. Member is now arguing on the merits of the Undeveloped Land Duty, and he must not do that.
    Mr. OUTHWAITE: I was only pointing out that people find it advantageous to invest part of their capital in land, and keep it out of use, waiting for the people to make it more valuable every year.
    Mr. PRETYMAN: I think the hon. Gentleman opposite has confused the issue. The real issue is, are people who happen to own realty to be charged a different Income Tax to the people who hold other kinds of property. The Income Tax professes to be levied at an equal rate, no
    1534
    matter what source the income may be derived from. We have imposed an Income Tax in this House upon all kinds of property. Then the Chancellor of the Exchequer selects one particular kind of property upon which he imposes additional taxation, thereby reducing the income which the owners of that property can derive from it. When that has happened the owners of that kind of property are to go on paying Income Tax on the old figure just as it their incomes had not been reduced. That is part of the old story we object to, and that is the way the rate of taxes paid by different members of the community is confused and has become impossible of comprehension. This is a claim not so much for the reduction of the amount of the duty as for fair treatment in the way those taxes are levied. If the Chancellor of the Exchequer thinks the Undeveloped Land Duty is too low a tax, let him propose more, and let us hear what the House has to say. But do not levy the Undeveloped Land Tax and then pretend that the owner has got the same income after his income has been reduced, because by that method you are taxing him upon a higher income than he has actually got, and you are setting aside the rate of taxation which has been imposed by this House, and charging a higher rate without the authority of this House. That is really what is being done. My hon. Friend was absolutely justified in saying that this was a tax upon agriculture. The reason for that is not because of any recondite questions in regard to the Undeveloped Land Duty as to whether it is agricultural land being put to its best use. I think the hon. Member for Hanley (Mr. Outhwaite) stated on the platform that land which is being used for agriculture is land which is unused land, but that is not the view we take.
    Mr. OUTHWAITE: I never said that.
    Mr. PRETYMAN: We consider agricultural land is land which is being put to a good use. The hon. Member opposite has called agricultural land unused land.
    Mr. OUTHWAITE: I must deny that statement.
    Mr. PRETYMAN: The hon. Member regards it as unused land. He made that statement, and I did not suppose that he would support it by argument. But that shows the bent of his mind, and that is the whole basis of this tax. We say that we are dealing with Income Tax.
    The CHAIRMAN: I am afraid if we once begin to argue that question we shall inevitably go into a general Debate on the Undeveloped Land Duty.
    Mr. PRETYMAN: I was only speaking of the Income Tax in passing, and I was making a passing reference to the hon. Member's arguments. We say agricultural land is affected, because the only income which can be derived from land of tins character on which these two taxes are paid is from the agricultural user. The whole of the income on which Income Tax is paid under this Amendment must be derived from the agricultural use of the land. It is therefore a direct burden upon agriculture and upon nothing else. If this Amendment is applied to the Super-tax and the Income Tax, obviously the argument is stronger, and I am sure if the Chancellor of the Exchequer sees his way to meet this case he would no doubt offer it to the Income Tax payers just as much as to the payers of Super-tax. I will take the case of a piece of land worth £500. On that piece of land £1 is payable for Undeveloped Land Duty, or just over that amount.
    Mr. LLOYD GEORGEindicated dissent.
    Mr. PRETYMAN: But that is the fact.
    Mr. LLOYD GEORGE: The statement I was challenging was that this land was worth £500. The income which is received has really no reference to the value of that sort of land. The hon. Member was presupposing land worth £500, but the Income Tax has no reference to that land.
    Mr. PRETYMAN: The right hon. Gentleman will not deal with this case, and he goes on raising prejudice on another issue. What I was pointing out was that the whole income of this land is being derived from its agricultural use, and that is the only source from which the income can be derived. Take the ordinary case of a piece of ripening land, not absolutely ripe, upon which the larger amount of this duty will be leviable. That will be agricultural land. The ripe land has probably had sums of money spent upon it which exempt it from Undeveloped Land Duty. It is ripening land being used for agricultural purposes, which is mainly the subject of the Undeveloped Land Duty. Take a piece of land which has a site value of £500. On that there is £1 per acre Undeveloped Land Duty possible. The owner of that land previous to this enactment
    1536
    was deriving £1 from that land as agricultural rent, the sole income he gets from that land until it is ripe. It is not ripe but only ripening, and nobody will buy it. It has not got any frontage to the main road, and it is only producing the owner £1 for grazing purposes. The whole of the £1 is taken as Undeveloped Land Duty.
    Without coming here and asking for special authority in the form of a new tax, the Chancellor of the Exchequer charges that man Income Tax at the full rate upon that £1 as if he was still receiving it, when, as a matter of fact, he is not really receiving a single farthing. Is it just or reasonable that a man who is receiving £1 income should have to pay the whole of it in the form of an Undeveloped Land Duty, and that you should continue to charge him Income Tax on that £1 as if he were still receiving it? That is confusing the issue and raising taxation upon a different level to that which you purpose to raise it. I do not think a stronger case could be made out than that for a readjustment of this tax in order that people may pay upon their real income. When you point this out, the Chancellor of the Exchequer begins to compare other kinds of property in regard to which the deductions and the assessments are upon an even basis. Here you are taking realty and treating it upon a different basis to every other form of property. One hon. Member opposite spoke about taxation in Germany. I do not know whether he reads the "Westminster Gazette," but a few days ago that journal gave the amount of taxation raised upon land in this country as being rather more than four times the amount raised upon land in Germany. The owners of land in this country, who pay at a rate four times greater than Germany, are still to pay Income Tax as if they still received the incomes from the lands. That seems a very unjust proceeding, and if the Chancellor of the Exchequer cannot alter it now, I hope he will give it careful consideration and make some readjustment.
    Dr. CHAPPLE: I hope the fact that you overlooked my Amendment, Mr. Whitley, was not due to the fact that you did not understand it. [HON. MEMBERS: "Order, order!"] That observation arises out of the fact that hon. Members opposite seem to be casting a reflection upon your ability, Mr. Whitley, to understand my Amendment. The hon. Member opposite said the issue was confused. That is because we are

    1537
    not getting a clear idea of the different kinds of taxation. In the first place, there is a revenue tax, and, secondly, there is a policy tax. [HON. MEMBERS: "Hear, hear!"] I am glad to hear that hon. Members opposite are familiar with the aims and purposes of a policy tax. The Income Tax is simply a revenue tax, the purpose of which is to fill the Exchequer with funds, but the Undeveloped Land Duty is not a revenue tax at all.
    Mr. JOYNSON-HICKS: Will the hon. Gentleman say whether he has the authority of the Government for that statement?
    The CHAIRMAN: Before the hon. Member answers that question I must point out once again that it is not in order on this occasion to discuss the merits of the Undeveloped Land Duty. We are simply dealing with it as ail existing tax.
    Mr. JOYNSON-HICKS: Will the hon. Gentleman answer that question?
    Sir F. BANBURY: The hon. Member was not discussing the merits of the Undeveloped Land Duty. He was stating a fact, that it was not a revenue tax.
    Dr. CHAPPLE: I have no intention whatever of discussing the merits of the Undeveloped Land Duty, but I am going to show how foolish it would be to make a deduction of the amount paid in Undeveloped Land Duty. Its purpose and intention is not primarily to produce revenue, but to produce a policy end, and the policy end is to bring idle land into use. No man need pay Undeveloped Land Duty, and a tax you need not pay is not a very burdensome tax. Every man can get out of the tax by making use of his land.
    The CHAIRMAN: I really must impress upon hon. Members that this question does not arise on this Amendment.
    Dr. CHAPPLE: I will not pursue it. The hon. Member opposite referred to land which produced an Undeveloped Land Duty of £1 per acre. That works out that it is worth £480 per acre. Can any one call land worth £480 per acre agricultural land, i.e. land which is used for agriculture, and which can be used for nothing better? Whenever it becomes building land it ceases to be agricultural land, and, if it is worth £480 per acre, it is a pure misnomer to call it agricultural land. The hon. Member who moved the Amendment suggested that you
    1538
    should deduct the £500 that is paid in Undeveloped Land Duty, but I maintain that you would stultify the whole purpose of the Undeveloped Land Duty by making any such deduction. If a man has land worth £80 per acre, and is paying £1 per acre Undeveloped Land Duty, it shows that it pays him to withhold that land from its best use because he could easily get out of the duty by bringing the land to its highest investment use.
    Mr. HAMILTON: My hon. Friend who moved the Amendment gave an instance of very great unfairness to the Income Tax payer. The Chancellor of the Exchequer did not attempt to answer the principle raised by my hon. Friend. He immediately jumped off on a side issue, and said, "Here is a very wealthy man with 500 acres of undeveloped land, and he can easily afford to be taxed on income which he never receives." Other speakers have followed on the same line. The question is this: Is a man to pay Income Tax on money which he never receives as income? This week-end a friend of mine, a lawyer in Manchester, told me of an actual instance where a client receives £22 per year rent for some land—undeveloped land I dare say, let for agricultural purposes, near Manchester. It has all been up for sale, but he cannot sell it. He therefore has to pay £22 per year in Undeveloped Land Duty, and he has to pay Income Tax on that huge income of nothing. That is the principle at the bottom of this Amendment. The man does not receive the £22. It is taken from him by the Treasury in Undeveloped Land Duty, and he never sees it at all. When he is charged Income Tax he is charged on the £22 which he has never received. It is not fair to charge Income Tax on an income which a man never sees and never receives, and I hope that my hon. Friend will take the Amendment to a Division.
    Mr. EDGAR JONES: There is a fundamental difference between hon. Gentlemen opposite and those who advocate this duty. We say that it is the man's own fault if he is in that position. He has no need to be in that position. He could get out of it, and it is not in the best interests of the community that he should of his own free choice remain in that position. That is the point taken up by hon. Members on this side of the House, and the difficulty is that Ave cannot argue the whole case. The Leader of the Opposition regarded it as an Income Tax. Of course, if we

    1539
    accepted that point of view there would be a good deal to be said for the arguments advanced by hon. Gentlemen opposite, but we do not regard it as an Income Tax, and if the Chancellor of the Exchequer decided to do this, he would surrender the whole argument for the duty altogether. [HON. MEMBERS: "Policy!"] It is not entirely a matter of policy. A man with £240,000 capital value would be getting a regular legitimate income; it would not be merely a potential income, and, while he was getting it, he would be paying Income Tax; but this man, with his £240,000 capital, leaving it there to increase in capital value, with a potential income in times to come, is not paying Income Tax at the present time. I should like to hear from an hon. Member opposite where the analogy of the Dog Tax breaks down. Let us suppose that the Chancellor of the Exchequer in his next Budget decided to put an extra tax of £1 per dog on everybody who has got more than ten dogs. You can take the case of a man who, for his own purposes, keeps 100 dogs. Are you going to pretend that because he chooses to pay £100 it should be deducted as an Income which he never receives? I do submit that once you accept the principle of the Undeveloped Land Duty—of course it is an arguable point, and will be argued to the end of our days—there is absolutely no case at all for allowing it to be deducted any more than allowing a man to deduct his Dog Duty for Income Tax purposes, and I am glad that the Chancellor of the Exchequer will give no countenance at all to the demand.
    Mr. WEIGALL: I should not have risen had not the last speaker asked for an answer to the wholly futile analogy of the Dog Tax. On the one hand, the keeping of 100 dogs is a purely voluntary action, and, on the other hand, the Undeveloped Land Duty is levied on the £240,000 capital value arrived at by hypothetical means, and wholly unrealisable. I could give the Chancellor of the Exchequer any number of cases of men who own land on the outskirts of every large industrial centre, which they cannot sell, which has been valued at between £400 to £500 per acre and charged with Undeveloped Land Duty, but which is unripe, and only used, and can only be used, for agricultural purposes. I could give a typical instance of a property I looked after for twelve years. There were 300 acres outside the city of
    1540
    Northampton. It was up in the open market for sale at from £400 to £500 per acre. If a man has got £60,000, and is enjoying an income of £2,000, you may say that he is reasonably taxed on his income, but you cannot put him on the same plane as the man who has a hypothetical £240,000, which he cannot realise, and the only income from which is an agricultural income of £2 or £3 per acre. Hon. Gentleman on the opposite side of the House, for their own political purposes, will insist on shutting their eyes to this one bald fact. There is no justification for selecting for extra taxation any form of income.
    The CHAIRMAN: Hon. Gentlemen seem determined to debate the merits of the Undeveloped Land Duty. I am afraid we shall never get on if we do that.
    Mr. WEIGALL: I only wanted to point out that the man with £240,000 unrealisable capital arrived at by absolutely hypothetical means cannot be put on the same plane for Income Tax purposes as the man with £60,000 realisable property bringing him in an assured income. There is no justification for not allowing the man who owns the hypothetical £240,000 of undeveloped land to be charged for Income Tax purposes on the net income he receives the same as the man who owns the £60,000.
    Mr. POLLOCK: I am glad that the analogy of the Dog Tax was given. You pay Income Tax on the assumption that you receive or could receive some income, and my hon. Friend has moved to insert his Amendment, because, he says, you do not receive income in respect of payments which you make on behalf of Undeveloped Land Duty. "Yes," hon. Members opposite say, "but you could receive it if you liked," and the analogy of the man who keeps dogs is given, because it is said if he did not spend the money in keeping dogs he would have it in his pocket. Does that analogy really apply to this particular case?
    Mr. E. JONES: That was not my analogy.
    Mr. POLLOCK: Then will the hon. Member please let me have it?
    Mr. E. JONES: I said that once you admitted it was a special tax put on for a special purpose, as the Dog Tax, then the analogy applied. The analogy applies to the proposal to deduct it.
    5.0 P.M.
    Mr. POLLOCK: The hon. Member was much clearer in his first speech. He has rather blurred the impression by making his second speech. Do you get any income in respect of which you pay this Undeveloped Land Duty, or do you wilfully refuse to receive the income you could refuse? That is really the point. This case is put over and over again: "Here is land outside a big town. It goes up in value because of its proximity to the town, and therefore it is charged Undeveloped Land Duty on the basis that it is not really agricultural land, and would produce much more annually if developed as it can be developed." We have had three years of this system, and I would ask hon. Members opposite if they are not aware of the existence of vast quantities of land for which there are willing sellers, but for which there are no purchasers. The Chancellor of the Exchequer has put an end to cottage building and to sales of land in immediate proximity to large industrial centres—
    The CHAIRMAN: I am sorry to intervene so often, but clearly we shall never come to the end of the Finance Bill if we follow up all the lines of argument opened up by the Amendments. I must ask the hon. and learned Member to keep to the simple point—admitting the Undeveloped Land Tax—is it right or wrong that this deduction should be made.
    Mr. POLLOCK: I was only pointing out that there is no money received in respect of which Income Tax can be paid. I only put it forward as part of my argument.
    The CHAIRMAN: The hon. Member is quite entitled to state that point, but not to develop it.
    Mr. POLLOCK: I beg to state, with all respect, that that is all I was doing. I was only pointing out that, in fact, there is no income received here in respect of which Income Tax is being paid. There is no income which can be said to be received or to be wilfully refused, and that is the point at issue between us. How does any owner of land wilfully refuse? The argument of hon. Members opposite is that he does so by refusing to accept the price offered, or by neglecting to develop the land. Can you show there are cases of persons who are wilfully refusing? The ordinary case put from the other side is that of some rich person, but in my belief this matter affects not so much the greater
    1542
    estates in the country as the smaller estates—the estates owned by persons who are just on the margin of the Super-tax. There are many cases in which the Super-tax falls very hardly on a person who may be in possession of an income which is just on the border line. There may be a great many calls upon that income, and it may be the sole source from which a large number of persons draw their sustenance. You have to show that there are these cases of wilful refusal to accept income. As a matter of fact, no illustrations of that have been put forward, and to deal with estates where there are many thousands of pounds involved is altogether beside the real facts of the case. Because no illustration has been given of wilful refusal to accept the income that could be received I support this Amendment, which I believe is required in the interests of justice to persons whose incomes are on the border line. It does not concern the very wealthy to any great extent.
    Mr. HIGHAM: The Amendment was moved on the ground that the tax was being levied on incomes which were not being received. But that argument was set aside by the hon. Member for Colchester (Mr. Worthington Evans), who said that tax should be levied on real income. I contend there is an entire mistake in use of the word "income" from the point of view of the hon. Member. Let me illustrate my point. An investor spends, say, £100,000 in buying a cotton mill, and he invests £20,000 on land near the mill and round the town. Up to the present moment these two investments have been dealt with on an entirely different footing. The mill in the first year makes a profit of £10,000, and the owner spends the whole of that sum in renewing the machinery, and otherwise improving the mill. His income thus goes back into the mill, but still he has to pay Income Tax on every farthing of it. On the land round the mill he builds houses for his workmen, and he spends £100,000 altogether; consequently the land goes up in value year by year, but he pays no Income Tax upon it. In the second year his mill again makes a profit of £10,000, and the money all goes back into it in improvements. Again he pays an Income Tax on every farthing of the profit. This may go on for four, five or six years. But in regard to the land, he is keeping that for ripening purposes. He invests any income he gets from the land in the land, and he pays no Income Tax on it at all. Still

    1543
    worse, if eventually he sells the land for £150,000, he will not even pay Income Tax on the £50,000 profit, because it was no part of his ordinary business—it was something outside his business. But if he sells the mill at a profit of £50,000, he is taxed on that increase of capital. My hon. Friends opposite do not seem to recognise this fact, that this land having been bought for ripening purposes, it is not what comes from it for agricultural use, but its increasing value year by year, that ought to pay Income Tax and Super-tax in exactly the same way as the cotton mill does.
    Mr. NEWMAN: The hon. Member has just managed to get through his speech without being called to order, and I hope I shall be able to do the same, although I am not very sanguine. The hon. Member who introduced this Amendment gave as an instance the case of a man who owned a certain acreage, on which he paid £200 a year, the land being worth £150,000. Of course, when he quoted that instance he put up a coco-nut for the Chancellor of the Exchequer to knock down, and having knocked it down, the right hon. Gentleman seized it, broke it open, and ran away sucking the milk from it. I am really sorry this particular instance was adduced, because hon. Members must know that great quantities of land can always thus be put as a cock-shy. I am not only this particular man who is called upon to pay the Undeveloped Land Duty. There is another class of men smaller in number, but still substantial men whose interests we have to consider. I want to take the case of market gardeners. Hon. Members laugh at that, as I expected they would. They suggest that there are no market gardeners or nursery gardeners who are called upon to pay Super-tax. But that is not so, and I can assure the Committee that, in my own Division, there are certainly two and probably three market gardeners whose incomes exceed £3,000 a year. There is one man who grows grapes, not by the pound or the bunch, but by the ton, and I am certain his income is well over £3,000 a year. He would, therefore, have to pay Super-tax. It may be suggested that a man who can make £3,000 a year out of his business ought to pay Super-tax. Only a comparatively small amount of money is needed to be sunk in a big business of this sort, and if a man invested £20,000 in it and got a return of 15 per cent. that would
    1544
    make him liable to Super-tax. Market gardening is not the small business it used to be considered. Hon. Members no doubt think of market gardeners as men who have to rise very early in the morning—
    The CHAIRMAN: I must ask the hon. Member to keep to the Amendment.
    Mr. NEWMAN: It is surely unfair to take money away from these men by way of Undeveloped Land Duty. I know a case of a man who has just had to pay £60 for Undeveloped Land Duty. Naturally he thinks it unfair that he should be liable to pay Super-tax as well. I have a new Clause on the Paper proposing to allow certain deductions to be made in the case of Income Tax which I am sure the Chancellor of the Exchequer will accept, and I really think that, in common justice, he should accept this Amendment as well.
    Mr. LEIF JONES: I do not think one need feel much sympathy for the man referred to by the last speaker, who has had to pay £60 as Undeveloped Land Duty, seeing that that was possibly on a valuation of £28,800. If hon. Members wish to bring forward cases for opposing this duty on the ground of poverty, they should adduce instances of real hardship.
    Mr. NEWMAN: We want justice.
    Mr. LEIF JONES: I rose to deal with the argument put forward by the hon. and gallant Member for Chelmsford (Mr. Pretyman), who always poses in this House as the great champion of the agricultural owner. I have some interest in agricultural ownership, and I should be sorry if this championship were to succeed in this instance, because it would mean levying heavier taxation on the owners of agricultural land than they are called upon to pay at the present time. [HON. MEMBERS: "Why?"] It is admitted that if this Amendment were carried the result would be that the Super-tax would have to be levied at a higher rate on those who are liable to pay it, because the money has to come from somewhere, and any deficiency caused by effecting this particular saving, must be made up by the other payers of Income Tax. Thus if you succeeded in carrying this Amendment you will increase the burden all round of the ordinary owner of agricultural land, who is not, as a rule, the owner of undeveloped land. To take a step in taxation which should have the result of throwing upon

    1545
    owners of agricultural land taxes which, under the Budget are going to be paid in part by owners of undeveloped land, is to pursue a policy which I should not have expected the hon. and gallant Member to advocate, seeing that he poses as the champion of agricultural land in this country. I should like to point out to the hon. and gallant Member that the owners of undeveloped land do not contribute to the rates of their district in the same proportion as the owners of ordinary agricultural land. It may fairly be argued, however you dislike the Undeveloped Land Duty, it is a means of getting some contribution from it in lieu of the contribution it does not make towards the rates, and whether or not we admit there is anything in the complaint as to the holding up of land, it is clear that land which is of much more value than the agricultural land round about it is not paying an equal contribution to the rates. As to the case of a man with 300 acres, dealt with by the hon. Member for the Horncastle Division (Captain Weigall), who was not able to sell it for the price he asked for it, surely he could have sold it at a value.
    Captain WEIGALL: I do not think he could.
    Mr. LEIF JONES: On his own showing the agricultural land was worth £3 and £4 an acre, and I suspect that he could have sold it for more than thirty times the agricultural value. It is not unfair to regard the Undeveloped Land Duty as a contribution somewhat corresponding to the rates. If you are going to allow landowners to deduct the rates before they pay Income Tax, it will be very unfair to allow the Undeveloped Land Duty payer to deduct his tax before he pays Income Tax.
    Mr. F. HALL: The hon. Member has rather let the cat out of the bag. He said in reply to my hon. Friend that we were not going to argue that land could not be sold. The argument from hon. Members opposite has always been that these landowners hold up land so that it is impossible to build houses upon it for poor people. This is the first time I have heard that statement—it was made honestly, although possibly by mistake—by the hon. Member for the Rushcliffe Division (Mr. Leif Jones) that land might be sold for a value. We admit that in all probability the land could be sold for a value. The Government value the land
    1546
    and state whether it is agricultural land or land fit for building purposes. The owner can do nothing. He may appeal, and he does appeal time after time, but the result is that he has got to grin and bear it or sell the land. We have had a discussion this afternoon in regard to the Undeveloped Land Duty, but I notice that part of my hon. Friend's Amendment says, "After deducting all payments."
    The CHAIRMAN: The hon. Member moved the Amendment without those words. We disposed of the question of Income Tax on the last day of the Committee stage.
    Mr. F. HALL: Unfortunately, I was called out by a wretched green ticket and did not hear the Amendment moved. I hope after the remarks which fell from one of the right hon. Gentlemen's well-known supporters that he will consider whether there is not something in the argument that before you state that a man is liable for Super-tax you should consider whether the land is worth the amount that has been placed upon it by the Government, or whether it was reasonably taxed as land, having regard to the purposes for which it could be utilised.
    Sir FREDERICK BANBURY: I should like to ask the Chancellor of the Exchequer one question. I understand the point we are discussing is that a man should not be called upon to pay Income Tax on an income he does not receive. The argument of hon. Members opposite is that he could sell this undeveloped land and by means of the price receive an income. If the Chancellor of the Exchequer adheres to that argument. I would ask him why he does not put a tax upon an investment in the shares of the company which does not pay a dividend?
    The CHAIRMAN: That is quite another question.
    Sir F. BANBURY: May I point out that the deduction proposed by the Amendment is proposed because there is no question of income in it? I am arguing that in the case of an investment which does not pay a dividend that it is not charged because there is no income. There is no tax put upon an investment to compel a man to sell that investment and reinvest the money in something which produces an income. I will not infringe your ruling. Sir, and discuss the merits of the Undeveloped Land Tax.
    Mr. ELLIS DAVIES: The statement made by the Member for the Horncastle Division (Captain Weigall) is rather important. He based his argument for the Amendment on the fact that land which is at the present moment subject to Undeveloped Land Duty is not realisable in the market. For the last two years the argument on the other side has been that the Government valuers were fixing the values—
    The CHAIRMAN: The hon. Member is again following the wrong line. That is one of the points on which other Members were ruled out of Order, and I cannot allow him to raise it.
    Mr. ELLIS DAVIES: The hon. Member made a statement, and I assumed I was entitled to point out its bearings on the arguments addressed to the Committee.
    The CHAIRMAN: The hon. Gentleman is not entitled to follow up a point on which I have ruled out other hon. Members and stopped them from dealing with it.
    Mr. ELLIS DAVIES: May I point out that you did not pull up the hon. Member for the Horncastle Division. [HON. MEMBERS: "Order, order."] I accept your ruling, Sir. I would only make the point that the answer to the argument in favour of the Amendment, namely, that the land was not producing income, is that if the land is realisable it is the fault of the owner if he does not realise it and obtain an income therefrom. The hon. Member who moved the Amendment suggested that a man was entitled to deduct the interest he pays on a mortgage. That is true, but the Income Tax on the mortgage money is paid by the owner of the mortgage. In this case the suggestion is that the owner of the land should be exempted altogether from paying the duty. The hon. and gallant Member for Chelmsford (Mr. Pretyman) suggested that this was a tax upon agricultural land. I did not gather that he suggested it was a tax upon agriculture. If so, the only possible way in which it could be that would be for the landowner to add the Undeveloped Land Duty to the rent he was obtaining on the agricultural land. If there is any real objection to the Land Duties it is that the revenue already obtained from the undeveloped land of this country is a great deal smaller than it ought to be.
    Mr. JAMES HOPE: I will assume that all the arguments of hon. Gentlemen oppo-
    1548
    site as to the Undeveloped Land Duty are perfectly sound, because I am afraid that were I to combat them I should come under your ruling, Sir. I will assume that it is as easy to get rid of the land at a fair price as it is to kill your dog. But what of the Mineral Rights Duty in the case of a man working the minerals direct? In that case he is doing what hon. Members want him to do. He is developing the natural resources of his property, and developing them to the public advantage. It is a burden which he cannot get rid of. He cannot, like the owner of undeveloped land who is supposed to be able to sell it, sell the rights and reinvest the money. He is doing the very thing it was proposed that he should be taxed to do, although the undeveloped mineral tax broke down in 1909—he is making the best use of his property according to the most advanced theories of the Glasgow school. He is getting a legitimate income, yet if he goes over the £3,000 margin you are taxing him on that part of his income no less than three times over.
    Mr. NEWTON: As there may be a Division, I should like to be a little clearer in my own mind than I am at present on the matter. I am quite sure I shall not fall foul of your ruling, Sir, because I agree that the great bulk of the speeches have been out of order. The point of the Amendment is that Income Tax should not be charged upon income which is not received. If that is so, it is not necessary for hon. Gentlemen opposite to take the case of a man with an interest in undeveloped land who is piling up his fortune. I think the expression used by the Chancellor of the Exchequer was "Rolling up his fortune." That may be perfectly true. We are not debating the merits of the Undeveloped Land Duty now. If the argument of the Chancellor of the Exchequer is correct, his proper course is to deal with undeveloped land in a more drastic manner. I should have thought he would have admitted that his various Land Taxes did deal with the problem of undeveloped land. He is now attempting to deal again with the same problem by inflicting an injustice in the mode of assessing Income Tax. There seems to be no answer to that point. An hon. Member opposite said that the Undeveloped Land Duty was a Policy Duty. I am rather inclined to sympathise with him, although I remember the Prime Minister said that if these taxes brought in no revenue they had no right to

    1549
    remain in the Budget. If the Undeveloped Land Duty be a Policy Duty, I do not believe hon. Members will say that the Income Tax is also a Policy Duty. In common justice the grievance of which we complain should be removed, and if it is desired to do anything further with regard
    to Undeveloped Land Duty it should be done by means of the Land Taxes.
    Question put, "That those words be there inserted."
    The Committee, divided: Ayes, 115; Noes, 257.

    Division No. 163.]

    AYES.

    [5.28 p.m.

    Agg-Gardner, James Tynte

    Gibbs, George Abraham

    Parker, Sir Gilbert (Gravesend)

    Amery, L. C. M. S.

    Gilmour, Captain John

    Pease, Herbert Pike (Darlington)

    Anstruther-Gray, Major William

    Goldman, Charles Sydney

    Peto, Basil Edward

    Baird, John Lawrence

    Goldsmith, Frank

    Pollock, Ernest Murray

    Baldwin, Stanley

    Goulding, Edward Alfred

    Pretyman, Ernest George

    Banbury, Sir Frederick George

    Gwynne, R. S. (Sussex, Eastbourne)

    Prothero, Rowland Edmund

    Barnston, Harry

    Hall, Frederick (Dulwich)

    Pryce-Jones, Colonel E.

    Benn, Arthur Shirley (Plymouth)

    Hambro, Angus Valdemar

    Quilter, Sir William Eley C.

    Bennett-Goldney, Francis

    Hamilton, C. G. C. (Ches., Altrincham)

    Rawson, Colonel Richard H.

    Boles, Lieut.-Col. Dennis Fortescue

    Hardy, Rt. Hon. Laurence

    Remnant, James Farquharson

    Boscawen, Sir Arthur S. T. Griffith-

    Harris, Henry Percy

    Ronaldshay, Earl of

    Bowden, G. R. Harland

    Henderson, Major H. (Berks, Abingdon)

    Samuel, Sir Harry (Norwood)

    Brassey, H. Leonard Campbell

    Henderson, Sir A. (St. Geo., Han. Sq.)

    Samuel, Samuel (Wandsworth)

    Bridgeman, William Clive

    Hewins, William Albert Samuel

    Sanders, Robert Arthur

    Burn, Colonel C. R.

    Hills, John Waller

    Smith, Rt. Hon. F. E. (L'p'l., Walton)

    Campion, W. R.

    Hoare, Samuel John Gurney

    Spear, Sir John Ward

    Carlile, Sir Edward Hildred

    Hope, James Fitzalan (Sheffield)

    Stanley, Major Hon. G. F. (Preston)

    Cassel, Felix

    Hope, Major J. A. (Midlothian)

    Stewart, Gershom

    Cecil, Evelyn (Aston Manor)

    Jessel, Captain H. M.

    Strauss, Arthur (Paddington, North)

    Cecil, Lord Hugh (Oxford University)

    Joynson-Hicks, William

    Swift, Rigby

    Cecil, Lord Robert (Herts, Hitchln)

    Kerry, Earl of

    Sykes, Sir Mark (Hull, Central)

    Clyde, James Avon

    Lane-Fox, G. R.

    Talbot, Lord Edmund

    Coates. Major Sir Edward Feetham

    Law, Rt. Hon. A. Bonar (Bootle)

    Terrell, George (Wilts, N.W.)

    Cotton, William Francis

    Lloyd, George Butler (Shrewsbury)

    Thomas-Stanford, Charles

    Crichton-Stuart, Lord Ninian

    Locker-Lampson, G. (Salisbury)

    Tickler, T. G.

    Croft, Henry Page

    Locker-Lampson, O. (Ramsey)

    Tryon, Captain George Clement

    Dalrymple, Viscount

    Lockwood, Rt. Hon. Lt.-Col. A, R.

    Valentia, Viscount

    Dalziei Davison (Brixton)

    Lowe, Sir F. W. (Birm., Edgbaston)

    Weston, Colonel J. W.

    Denniss, E. R. B.

    Mackinder, Halford J.

    Williams. Col. R. (Dorset, W.)

    Dickson, Rt. Hon. C. Scott

    Meysey-Thompson, E. C.

    Wills, Sir Gilbert

    Duncannon, Viscount

    Mills, Hon, Charles Thomas

    Wilson, Captain Leslie O. (Reading)

    Eyres-Monsell, Bolton M.

    Morrison-Bell, Capt. E. F. (Ashburton)

    Wood, Hon. E. F. L. (Yorks, Ripon)

    Faber, George Denlson (Clapham)

    Morrison-Bell, Major A. C. (Honlton)

    Wood, John (Stalybridge)

    Falle, Bertram Godfray

    Mount, William Arthur

    Yate, Colonel C. E.

    Fell, Arthur

    Neville, Reginald J. N.

    Younger, Sir George

    Fisher, Rt. Hon. W. Hayes

    Newman, John R. P.

    Forster, Henry William

    Newton, Harry Kottingham

    TELLERS FOR THE AYES.—Mr.

    Foster, Philip Staveley

    Nicholson, William G. (Petersfield)

    Worthington Evans and Captain

    Ganzoni, Francis John C.

    Ormsby-Gore, Hon. William

    Weigall.

    Gastrell, Major W. Houghton

    Paget, Almeric Hugh

    NOES.

    Abraham, William (Dublin, Harbour)

    Buckmaster, Sir Stanley O.

    Denman, Hon. Richard Douglas

    Acland, Francis Dyke

    Burns, Rt. Hon. John

    Dickinson, Rt. Hon. Willoughby H.

    Adamson, William

    Burt, Rt. Hon. Thomas

    Dillon, John

    Addison, Dr. Christopher

    Buxton, Noel (Norfolk, North)

    Doris, William

    Agnew, Sir George William

    Byles, Sir William Pollard

    Duffy, William J.

    Ainsworth, John Stirling

    Carr-Gomm, H. W.

    Duncan, C. (Barrow-in-Furness)

    Allen, Arthur A. (Dumbartonshire)

    Cawley, Harold T. (Lancs., Heywood)

    Edwards, Sir Francis (Radnor)

    Armitage, Robert

    Chancellor, Henry George

    Elverston, Sir Harold

    Arnold, Sydney

    Chapple, Dr. William Allen

    Esmonde, Sir Thomas (Wexford, N.)

    Baker, Harold T. (Accrington)

    Clancy, John Joseph

    Esslemont, George Birnle

    Baker, Joseph Allen (Finsbury, E.)

    Clough, William

    Falconer, James

    Balfour, Sir Robert (Lanark)

    Clynes, John R.

    Farrell, James Patrick

    Baring, Sir Godfrey (Barnstaple)

    Collins, Godfrey P. (Greenock)

    Fenwick, Rt. Hon. Charles

    Barlow, Sir John Emmott (Somerset)

    Collins, Sir Stephen (Lambeth)

    Ffrench, Peter

    Barnes, George N.

    Compton-Rickett, Rt. Hon. Sir J.

    Field, William

    Barran, Sir J. N. (Hawick)

    Cornwall, Sir Edwin A.

    Fitzgibbon, John

    Beale, Sir William Phipson

    Craig, Herbert J. (Tynemouth)

    Flavin, Michael Joseph

    Beck, Arthur Cecil

    Crooks, William

    Furness, Sir Stephen Wilson

    Benn, W. W. (T. Hamlets, St. George)

    Crumley, Patrick

    George, Rt. Hon. D. Lloyd

    Bethell, Sir J. H.

    Cullinan, John

    Ginnell, Laurence

    Birrell, Rt. Hon. Augustine

    Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)

    Gladstone, W. G. C.

    Black, Arthur W.

    Davies, Ellis William (Eifion)

    Glanville, Harold James

    Boland, John Pius

    Davies, Timothy (Lincs., Louth)

    Goddard, Sir Daniel Ford

    Booth, Frederick Handel

    Davies, Sir W. Howell (Bristol, S.)

    Goldstone, Frank

    Bowerman, Charles W.

    Davies, M. Vaughan- (Cardigan)

    Greenwood, Hamar (Sunderland)

    Boyle, Daniel (Mayo, North)

    Dawes, James Arthur

    Greig, Colonel James William

    Brady, Patrick Joseph

    De Forest, Baron

    Grey, Rt. Hon. Sir Edward

    Brunner, John F. L.

    Delany, William

    Griffith, Rt. Hon. Ellis Jones

    Gulland, John William

    Marshall, Arthur Harold

    Richardson, Thomas (Whitehaven)

    Gwynn, Stephen Lucius (Galway)

    Mason, David M. (Coventry)

    Roberts, Charles H. (Lincoln)

    Hackett, John

    Meagher, Michael

    Roberts, Sir J. H. (Denbighs)

    Harcourt, Rt. Hon. L. (Rossendale)

    Meehan, Francis E. (Leitrim, N.)

    Robertson, Sir G. Scott (Bradford)

    Harcourt, Robert V. (Montrose)

    Meehan, Patrick J. (Queen's Co., Leix)

    Robertson, John M. (Tyneside)

    Harmsworth, Cecil (Luton, Beds)

    Middlebrook, William

    Robinson, Sidney

    Harmsworth, R. L. (Caithness-shire)

    Molloy, Michael

    Roch, Walter F. (Pembroke)

    Harvey, T. E. (Leeds, West)

    Mond, Rt. Hon. Sir Alfred M.

    Roche, Augustine (Louth)

    Hayden, John Patrick

    Money, L. G. Chiozza

    Rowlands, James

    Hayward, Evan

    Montagu, Hon. E. S.

    Runciman, Rt. Hon. Walter

    Henderson, Arthur (Durham)

    Mooney, John J.

    Russell, Rt. Hon. Thomas W.

    Henry, Sir Charles

    Morgan, George Hay

    Samuel, Rt. Hon. H. L. (Cleveland)

    Hewart, Gordon

    Morrell, Philip

    Scanlan, Thomas

    Higham, John Sharp

    Morison, Hector

    Scott, A. MacCallum (Glas., Bridgeton)

    Hinds, John

    Morton, Alpheus Cleophas

    Seely, Rt. Hon. Col. J. E. B.

    Hobhouse, Rt. Hon. Charles E. H.

    Muldoon, John

    Sheehy, David

    Hodge, John

    Munro, Rt. Hon. Robert

    Sherwell, Arthur James

    Hogge, James Myles

    Murray, Captain Hon. Arthur C.

    Simon, Rt. Hon. Sir John Allsebrook

    Holmes, Daniel Turner

    Needham, Christopher T.

    Smith, Albert (Lancs., Clitheroe)

    Holt, Richard Durning

    Neilson, Francis

    Smith, H. B. Lees (Northampton)

    Hope, John Deans (Haddington)

    Nolan, Joseph

    Smyth, Thomas F. (Leitrim, S.)

    Hughes, Spencer Leigh

    Norton, Captain Cecil W.

    Strauss, Edward A. (Southwark, W.)

    Illingworth, Percy H.

    Nugent, Sir Walter Richard

    Sutherland, John E.

    Johnson, W.

    O'Brien, Patrick (Kilkenny)

    Sutton, John E.

    Jones, Edgar (Merthyr Tydvil)

    O'Connor, T. P. (Liverpool)

    Taylor, Theodore C. (Radcliffe)

    Jones, H. Haydn (Merioneth)

    O'Doherty, Philip

    Taylor, Thomas (Bolton)

    Jones, J. Towyn (Carmarthen, East)

    O'Dowd, John

    Tennant, Rt. Hon. Harold John

    Jones, Leif (Notts, Rushcliffe)

    Ogden, Fred

    Thorne, G. R. (Wolverhampton)

    Jones, William (Carnarvonshire)

    O'Kelly, Edward P. (Wicklow, W.)

    Thorne, William (West Ham)

    Joyce, Michael

    O'Kelly, James (Roscommon, N.)

    Toulmin, Sir George

    Kellaway, Frederick George

    O'Malley, William

    Trevelyan, Charles Philips

    Kelly, Edward

    O'Neill, Dr. Charles (Armagh, S.)

    Verney, Sir Harry

    Kennedy, Vincent Paul

    O'Shaughnessy, P. J.

    Walton, Sir Joseph

    Kenyon, Barnet

    Outhwaite, R. L.

    Ward, John (Stoke-upon-Trent)

    Kilbride, Denis

    Palmer, Godfrey Mark

    Wardle, George J.

    King, Joseph

    Parker, James (Halifax)

    Wason, Rt. Hon. E. (Clackmannan)

    Lambert, Rt. Hon. G. (Devon, S. Molton)

    Parry, Thomas H.

    Wason, J. Cathcart (Orkney)

    Lambert, Richard (Wilts, Cricklade)

    Pearce, Robert (Staffs, Leek)

    Webb, H.

    Lardner, James C. R.

    Pearce, William (Limehouse)

    White, J. Dundas (Glasgow, Tradeston)

    Law, Hugh A. (Donegal, West)

    Pease, Rt. Hon. Joseph A. (Rotherham)

    White, Sir Luke (Yorks, E.R.)

    Lawson, Sir W. (Cumb rid, Cockerm'th)

    Philipps, Col. Ivor (Southampton)

    White, Patrick (Meath, North)

    Leach, Charles

    Phillips, John (Longford, S.)

    Whitehouse, John Howard

    Levy, Sir Maurice

    Pirie, Duncan Vernon

    Whittaker, Rt. Hon. Sir Thomas P.

    Lewis, Rt. Hon. John Herbert

    Pollard, Sir George H.

    Whyte, Alexander F. (Perth)

    Low, Sir Frederick (Norwich)

    Pratt, J. W.

    Wiles, Thomas

    Lynch, Arthur Alfred

    Price, C. E. (Edinburgh, Central)

    Williams, Aneurin (Durham, N.W.)

    Macdonald, J. M. (Falkirk Burghs)

    Price, Sir Robert J. (Norfolk, E.)

    Williams, Penry (Middlesbrough)

    McGhee, Richard

    Priestley, Sir W. E. B. (Bradford, E.)

    Williamson, Sir Archibald

    Maclean, Donald

    Primrose, Hon. Neil James

    Wilson, Hon. G. G. (Hull, W.)

    Macnamara, Rt. Hon. Dr. T. J.

    Pringle, William M. R.

    Wilson, W. T. (Westhoughton)

    MacNeill, J. G. Swift (Donegal, South)

    Radford, George Heynes

    Winfrey, Sir Richard

    MacVeagh, Jeremiah

    Raffan, Peter Wilson

    Wood, Rt. Hon. T. McKinnon (Glasgow)

    M'Callum, Sir John M.

    Rea, Rt. Hon. Russell (South Shields)

    Yeo, Alfred William

    M'Curdy, Charles Albert

    Rea, Walter Russell (Scarborough)

    Young, William (Perthshire, East)

    McKenna, Rt. Hon. Reginald

    Reddy, Michael

    Yoxall, Sir James Henry

    M'Laren, Hon. H. D. (Leics.)

    Redmond, John E. (Waterford)

    M'Laren, Hon. F.W.S. (Lincs, Spalding)

    Redmond, William (Clare, E.)

    TELLERS FOR THE NOES.—Mr. Geoffrey Howard and Captain Guest.

    Markham, Sir Arthur Basil

    Redmond, William Archer (Tyrone, E.)

    Marks, Sir George Croydon

    Richardson, Albion (Peckham)

    Question, "That those words be there added," put, and agreed to.

    Mr. LLOYD GEORGE: I beg to move, at the end of the Clause, to insert the words:
    "Provided that in estimating total income for the purposes of Super-tax for the year beginning the sixth day of April, nineteen hundred and fourteen, a deduction may be made (in addition to those authorised in paragraph (a) of Sub-section (2) of Section sixty-six of the Finance (1909–10) Act, 1910) of any additional sum on which it is shown to the Commissioners of Inland Revenue that duty would have been repayable in respect of maintenance, repairs, insurance, and management if this Act had been in force during the year by reference to which the total income is estimated."
    1552
    The object of this Amendment is to enable Super-tax payers to get the advantage this year of the abolition of the 25 per cent. in respect of repairs. In the Budget of 1909 we extended the limit of deduction to 25 per cent. in respect of repairs and maintenance. In the present year we propose to remove that limit altogether, so that a landowner who spends more than 25 per cent. of his income on repairs, insurance, and management, shall be able to deduct the full amount for legitimate expenditure upon the maintenance and repair of his property. If we had not introduced this Amendment the Super-tax payer would be in the position he was in in 1910, and he might not be

    1553
    able to claim the full amount because he is taxed in respect of his income for the preceding year, and therefore we propose in the present Amendment that Super-tax for 1914–15 should be charged as if the abolition of the 25 per cent. limit had effect for Income Tax purposes for 1913–14. I think that will commend itself to the Committee.
    Mr. PRETYMAN: I am obliged to the Chancellor of the Exchequer for moving this Amendment, which I think is satisfactory. I do not suppose we shall get an opportunity of discussing Clause 8, but I take it what this really means is that the owner of property may be practically assessed to Income Tax on Schedule D. The value of the concession which the right hon. Gentleman is giving, both in this Amendment and in the Section to which it refers, will largely depend upon administration, and owners of land, so far as my knowledge goes, have no cause whatever to complain of the way in which the enactment he has referred to in the 1909–10 Finance Act has been administered. It has been liberally and reasonably administered, but that was under the 25 per cent. limit, and I know it is the experience of many landowners that the 25 per cent. limit is so easily reached that you do not have to go into any detail at all. All you have to do is to state the sum which has been expended, making it up to the 25 per cent. limit. That does not involve any accuracy, because you can go so far beyond that figure in a great many cases. You have only to state enough to cover the 25 per cent. Now with this Amendment it will be necessary to go into detail, and the Department will have to exercise rather more care. Until there has been some little experience of the administration of this new Clause, I am not quite sure how it will work out. We do not know exactly yet what items of estate expenditure will be passed and accepted as maintenance, repairs, management, insurance, and so on. I dare say hon. Members opposite hardly appreciate what an enormous proportion of the income of an owner of agricultural property in many parts of the country is outgoings, over which he really has no control. I could show figures which would perhaps surprise them. If this is administered on the Schedule D principle, and it all the real, legitimate outgoings—I will not say necessary, because that might be differentially interpreted—upon an agricultural
    1554
    estate are admitted in this, and are deducted for the first time, an agricultural owner is put in respect of that much on the same footing as owners of other kinds of property, and I think the Chancellor of the Exchequer realises, now that the rate of Income Tax is so high, and when Super-tax is also brought into being, that it would create an intolerable hardship upon an owner of land who has nominally an income of thousands a year on which he is assessed on Schedule A, with a 25 per cent. maximum deduction, when on every £100 of which it consists, possibly the owner may not put more than £8 or £10 into his own pocket. They are the kind of cases which exist in large numbers.
    So far as principle goes this is a fair proposal, and I am obliged to the Chancellor of the Exchequer for doing it this year. He can hardly have done otherwise than include it this year, or the increased burden would have been very heavy indeed. If my hon. Friend the Member for Wiltshire had been here, I should have left him to reply, for I think it was in the first instance in response to questions from him that the Chancellor of the Exchequer dealt with this matter. I have to thank the right hon. Gentleman for the Amendment, and I hope it will be administered in what I will call the Schedule D spirit.
    Mr. EDWARD WOOD: There is one point which I think should be made clear, and that is whether or not my hon. Friend has correctly interpreted the feelings and the desire of the Chancellor of the Exchequer in saying that this concession is tantamount to placing landowners under Schedule D. If that is the intention of the Chancellor of the Exchequer, I think, he will find it necessary either to insert an Amendment of his own, or to accept one of the Amendments standing in the name of hon. Friends of my own on Clause 8; otherwise the scheme as limited to £8 houses will still stand, and the demand we have made to be placed under Schedule D will still remain unmet. If that is not so, the right hon. Gentleman will really have met the Amendment standing in the name of the hon. Member for Falmouth to add to Clause 8 the words:—
    "and, so far as houses are concerned, this provision shall be extended to all houses without any limitation of annual value."

    1555
    The right hon. Gentleman knows that it is rather an important point. It has always been the main point advanced by the agricultural interest, and I hope he will give it his attention. The only other matter I wish to ask is this: Now that we have got the Chancellor of the Exchequer to this point, is it necessary to have the calculation on a five years' average? It would be simpler in many cases if you were able to take the figures of the preceding year and use them for the purpose of your calculation. It would be simpler for many people who have no facilities for keeping correct records if they were allowed to produce the figures for the preceding year.
    Mr. POLLOCK: I wish to call attention to one point which, perhaps, the Attorney-General will consider, namely, whether or not the proviso is satisfactory as it stands. I would ask him to consider whether the word "year" in the last line ["during the year"] should not be altered to "period." That may be right or wrong, but my impression is that it would better meet the purpose of the Chancellor of the Exchequer if he said "if this Act had been in force during the period by reference to which the total income is estimated." I can conceive of cases in which if the Act had only been in existence during a particular year, that would not be enough for the part of the income so derived for the purpose of Super-tax for the previous year. You will find that if this proviso was held to be in force during the year, that would not be satisfactory.
    Mr. GOLDMAN: In view of the fact that Clause 8 will probably not come under discussion, I wish to ask the Chancellor of the Exchequer whether in respect of all houses owners are to come under Schedule A or Schedule D? Under Schedule D a man is entitled to deduct in respect of expenditure for insurance and repairs. The question I wish to ask is whether the limitation of £8 which is continued under the 1910 Act is to be continued under the present Act, or whether the limitation is to be removed, so that in future owners will get deductions in respect of repairs, insurance, management, and maintenance? I may point out to the Chancellor of the Exchequer that a man might be carrying on business in houses just as another man might be carrying on any other ordinary business. The man in an ordinary business would have a deduction in respect of
    1556
    expenses of management. I do not see why the owner of houses should not have the right to an abatement in respect of the management of these houses.
    Mr. G. LOCKER-LAMPSON: I should like to ask the Chancellor of the Exchequer why he brings in the Commissioners of Inland Revenue. He knows very well that the special Commissioners are the only Commissioners who have power of assessment under the Super-tax Clauses. They are the only people to whom appeals can be made under the principal Act of 1909–10. I do not see why the Commissioners of Inland Revenue should be brought in at all. It seems to me that you are creating a very roundabout way of dealing with the matter, because the surveyor of taxes is the man who deals with the accounts to see what repayment has to be made. Under the right hon. Gentleman's new Clause the surveyor of taxes will have to send the claims as set out to the Commissioners of Inland Revenue, and they will have to send them to the special Commissioners, who will make the assessment. It appears to me that it would be very much simpler to leave it, as at present, to the surveyor of taxes to deal directly with the special Commissioners. I do very much dislike the idea of the Income Tax payer being brought more and more under the power of the central administration which is represented by the Commissioners of Inland Revenue.
    Mr. LLOYD GEORGE: I will endeavour to deal with the various points which have been raised. With regard to the last point raised by the hon. Member opposite (Mr. Locker-Lampson), the reason why this is done is because the surveyor of taxes is the person who inspects the accounts and the claims made for deductions, and the Commissioners of Inland Revenue, and not the special Commissioners, operate through the surveyor of taxes. I am under the impression that this is the machinery of the Act of 1909–10, but I will look into that matter. I think it is the best way of dealing with it. I cannot see that anybody can check the amounts except the surveyor of taxes, and the Commissioners of Inland Revenue will operate through him. Another point was raised by an hon. Member, who asked me whether what is now proposed is practically extending the principle of Schedule D. I do not like to use these words: I prefer the other words, as to whether a deduction is to be allowed on useful and legitimate expenditure. I

    1557
    prefer adopting that phrase instead of the expression that this is extending the principle of Schedule D. It is not applicable to the same kind of case. What you really want is that where a landlord spends money not only legitimately, but serviceably, upon the repair of his property, he should be entitled to a deduction. You wish to include the man who is spending upon repairs and upon the upkeep of his cottages. That is the sort of expenditure you want to see reduced before the landlord is called upon to pay Income Tax. He may spend an enormous sum of money on improvements which may be in the nature of capital expenditure. I did not understand the hon. Gentleman to mean that. That would be deducted under Schedule D. I understood him to refer to improvements which could not be deducted under Schedule D. I mean expenditure for maintenance, repairs, and the general upkeep of the property. The hon. Gentleman is very keen and alert, and I used the word, which I am afraid was rather too comprehensive, and I am afraid I could not altogether stand by that.
    6.0 P.M.
    The hon. Member for Ripon (Mr. E. Wood) raised a question as to what would be the effect of a subsequent Amendment on Clause 8. In so far as that refers to the question now before the Committee, I think it will be in order to refer to it now. There are many landlords who spend various sums on their property for maintenance and repairs, and if you began to investigate every step a landlord takes you would add enormously to the work of the Inland Revenue Commissioners and their officials. We would have to increase the number of officials very considerably, and we do not wish to do that. Whether it would be desirable to raise the limit is another matter. One hon. Gentleman put the point to me the other day in the course of Debate, that now that the Government propose to build houses for agricultural labourers, the £8 limit seems to be rather out of place. I think it is well worth while to consider whether that limit ought not to be raised. I am not prepared to give an answer on that point now, but I might be able to give an answer before we reach the Report stage of the Bill. That is an Amendment which could be made on the Report stage. I think there is something to be said for raising the £8 limit, because it does not cover every case of agricultural property. You must assume, for the purpose of rent, that you are charging an
    1558
    economic rent. Therefore, I think there is a great deal to be said for raising the limit. It is desirable that every encouragement should be given to landlords to keep their property properly in repair. These cottages have not paid in the vast majority of cases. Therefore I think it very desirable, in so far as taxation can give any encouragement in cases of that kind, that at any rate we should not charge full taxes upon something which is not really an income. Because if cottages are kept in good repair, the net income received by the landlord in many cases is not considerable, and, therefore, I think that there is a good deal to be said upon this other point. I would rather like to hear suggestions—and, as I have no desire to prolong the Debate, not so much in Debate as afterwards—as to what would be a fair limit for cottages in the rural areas. I do not think that you could raise it very considerably. Otherwise you would get into an area where the machinery of the Income Tax Commissioners would absolutely break down, because they could not possibly investigate the hundreds of thousands of cases which would be added on. However, I agree that there is a great deal to be said for raising the limit.
    Mr. PRETYMAN: Will the right hon. Gentleman undertake that when we get to the Report stage this matter can be dealt with? It arises only under Clause 8. The right hon. Gentleman's Amendment only refers to rural cottages. When you come to small house property in towns the question can be raised with great effect, but it cannot be argued on this Amendment. It is very important that we should get an opportunity of raising this point if we cannot reach Clause 8 to-night under the Guillotine Closure. Will the Chancellor of the Exchequer undertake that Clause 8 will be reached in such a manner that this matter can be discussed?
    Mr. LLOYD GEORGE: The hon. Gentleman knows perfectly well what time we have at our disposal. If he can so arrange the Amendment that this matter can be raised, it shall be done.
    Mr. PRETYMAN: It is for the Government to arrange the time-table and not for us.
    Mr. LLOYD GEORGE: It will depend very largely upon the Amendments in the name of the hon. Member for St. Pancras, and how much time he is going to take on the first Clause.
    Mr. PRETYMAN: It is an Amendment to Clause 8 itself.
    Mr. LLOYD GEORGE: I do not think so.
    Sir F. BANBURY: The Government cannot alter the time-table now. The only way in which it could be done is for the Government to put down a new Clause?
    Mr. WATSON RUTHERFORD: The great objection to this Amendment as it stands is that it refers to Section 60 of the Finance Act of 1909–10. When we refer to that Section, we find that the whole benefit of it is restricted to the smallest class of property, namely, that which is limited to £8. I think upon the merits that it is hardly a proper thing for the Government to come within that limit, because though there are plenty of cottages rented at less, there are, as the Chancellor quite rightly pointed out, other conditions attached to the letting in the way of service, and, therefore, there is an increased rent which is paid in another manner. What is really wanted is that the benefits of Clause 8 of this Amendment, as applying to that particular Section of the Finance Act of 1909, should be extended to all labourers' dwellings and small properties both in the country and in the towns.
    The DEPUTY - CHAIRMAN (Mr. Maclean): There is an Amendment handed in which I have not been able to accept. This is only relative to Clause 8, and I ask the hon. Member not to pursue it.
    Mr. RUTHERFORD: I was pointing that the real objection to this Amendment is the limit which is found in the Clause of the previous Bill. To the extent to which it will give some relief to small agricultural property, it is, of course, a good thing. But the whole principle which is at the bottom of this Amendment is one of a highly debatable character. I do not know whether I should be in order in referring to the world at large, but the principles which obtain, for instance, in Germany, which the Chancellor is very fond of quoting on the subject of spending money on property improvement, are quite different from those which obtain in this country.
    The DEPUTY-CHAIRMAN: That is too wide a question for the Amendment.
    Mr. RUTHERFORD: I bow to your ruling, but there should be some stage in
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    connection with this Bill in which this matter can be to some extent manipulated, as it is a very important question; but of course if you rule me out of order in referring to it, I shall sit down.
    Mr. LANE-FOX: There is one question which the Chancellor did not answer at all. It had reference to the five years' average necessary in order to claim this reduction. To ascertain that average would involve a freat deal of unnecessary clerical work, which would be extremely difficult in the case of an estate that has not got a well organised estate office. The Financial Secretary to the Treasury knows that in the case of small estates very often this would be a considerable hardship, as a great mass of figures would be involved in giving the average for so many years. I submit, that now that the thing is in more working order and that the Treasury have further experience, they could reduce the period. I do not know whether the previous years' expenditure, if taken as a test, would be sufficient, but I do think that five years is too much. It means keeping separate accounts for these particular works as distinct from all other works on the estate, for which reductions cannot be obtained. For instance, the amount of nails or lime used in that way would have to be kept separate from that used on other parts of the estate, for which reductions cannot be obtained, and to go into these figures for five years means an elaborate system of keeping accounts. Some of the estate officers have become more accustomed to it, and therefore it is not quite so hard as it was, but it still means that small estates which have not got an elaborate estate office and a staff of clerks, would have very great difficulty in making these claims at all. The result is that the claims made are not as many as the claims that might be made. Therefore I hope very much that the Government will consider the point as to whether they cannot make the details of the machinery less elaborate, and the process of claiming rather easier, more particularly in the case of small estates. The relief is more wanted in the case of these estates, and therefore the difficulties put in the way of obtaining it are all the harder. I welcome the suggestion of the right hon. Gentleman that he may be able to remove the difficulty in reference to the £8 houses. It is obvious to everybody that the £8 limit will be absolutely out of proportion to all existing conditions.

    1561
    It will be rather ridiculous when all cottages are paying economic rents, and general house rents all over the country have been rising in proportion. Nobody wants, and I am quite certain that the Chancellor of the Exchequer does not want, anything done to make more difficult the building and maintenance of property, and any reduction of this sort which will make it easier to secure the proper measures of repair, and anything that will cause cottages not to be looked on as a distinct loss, and an absolute drawback, will be a very great inducement to what, after all, has been for many years the great source of cottage production in this country, namely, the private owners.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): In reference to the point raised by my hon. Friend as to the five years' system, may I remind him that that system was arranged when the deduction was originally made in 1910, as a result of a compromise? The original suggestion was to have a period of seven years. The Chancellor of the Exchequer was pressed to make it three years, and eventually the system of five years was adopted, and I think that it has worked very well. After all, it must be remembered that the objections which the hon. Member took are not so great as he thinks. The smaller the estate the simpler the matter of keeping the accounts. In any case, whatever average you take, whether it is three, five, or seven years, the accounts have got to be kept from year to year. Therefore it is really not any great burden on the man who keeps the account, whatever the period of years may be, and there is no reason to alter it.
    Mr. CASSEL: There is one point on which we are entitled to more explanation than we have had. The right hon. Gentleman did not answer the question of the hon. Member for Salisbury as to why the Commissioners of Inland Revenue are introduced in this Amendment instead of the Income Tax Commissioners. I was not here, but I understood from my hon. Friend that no answer was given. There appears to be no answer possible why a different set of Commissioners should deal with claims arising in the current year from that which would deal with them in future years. In future years the claims would come before the Income Tax Commissioners. It is a perfectly simple point, and I only desire to have an explanation. Throughout this Bill there are signs that
    1562
    the Government wish to get the whole control of the Income Tax away from the Income Tax Commissioners into the hands of the Commissioners of Inland Revenue. That is a very serious departure. If it is to be done, it ought to be done deliberately, with the knowledge and intention, after full discussion of the matter, that the jurisdiction of the Commissioners of Income Tax should be transferred to the Commissioners of Inland Revenue. It ought not to be done stealthily, and transferred into a Clause here and a Clause there, and then, when the House comes to consider the question, the Government will be in a position to say that the Inland Revenue Commissioners will deal with this, and therefore the whole thing will be referred to them. It does seem to me to be absurd that one set of Commissioners will deal with the claims in future years, and that an entirely different set of Commissioners will deal with the claims in the current year.
    Mr. G. LOCKER-LAMPSON: I have handed in a manuscript Amendment, cutting out the words "Commissioners of Inland Revenue," and unless the Government can give some better reply than the Chancellor of the Exchequer gave a few moments ago, I shall have to press that Amendment. It appears to me that you are going about this matter in a roundabout way. I do not see in the least why the surveyor of taxes should not be put into direct communication with the special Commissioners rather than, first of all, having to go to the Commissioners of Inland Revenue, and then afterwards to the special Commissioners.
    The ATTORNEY-GENERAL (Sir John Simon): This is not really a very complicated matter, and it is not necessarily a matter of principle. The real explanation is that the special Commissioners do not deal with any sort of concessions at all, and that is why the Commissioners of Inland Revenue will deal with these matters. There is really no matter of principle between us at all. It is simply a reduction referring to the Super-tax, and it is properly left to be dealt with by the Commissioners of Inland Revenue. There is no subtlety about the point, and it is merely an ordinary arrangement. It would be quite unusual and contrary to practice for the surveyors to be in direct communication with the special Commissioners.
    Mr. CASSEL: I do not wish unduly to press the point, and I agree it is not very vital; but in subsequent years is it not the case that the Income Tax Commissioners will deal with these questions. The right hon. Gentleman did not deal with that point. If in subsequent years the Income Tax Commissioners are to deal with them, why should they not do the same in this year?
    Mr. JOYNSON-HICKS: It is my business as a lawyer representing clients, to be in touch with the Commissioners. I happen now to be dealing with a case of Super-tax before the Commissioners in Wellington Street, in regard to deductions. I have had to go to the special Commissioners in Wellington Street to deal with a large number of deductions, such as interest paid by banks, insurance premiums, and so forth, and all these points are dealt with by them. I want to know whether in a case where I have got a reduction on a claim in respect of Income Tax, I have, in, addition to my return made in Wellington Street, to make another return to the Commissioners at Somerset House, so that I would have to go over the whole of the work twice, at additional expense to my clients? Assuming that the right hon. Gentleman the Attorney-General himself has got to deal with a question arising on the Super-tax, is he to go to different sets of Commissioners in order to get one set of deductions in regard to interest or insurance premiums, and to another set in regard to other points, making it that the job has to be done twice over? The Amendment proposes a practical form for dealing with the matter from day to day.
    Mr. PRETYMAN: Is not that a change in the present practice? The present practice, as I understand, is that you really do not make a special claim with regard to Super-tax; you make your claim in respect of the Income Tax in the first instance. When the Income Tax is settled, then, in returning income for Super-tax, you return exactly the amount which has been settled in respect of the whole estate, when allowance has been made. If it is a question of referring them to the Income Tax authorities, who had made the allowance in the first instance on Income Tax, does not the proposal of the Government vary the present practice?
    Sir J. SIMON: I do not think so, though I do not want to make any statement about the matter which might go beyond
    1564
    my clear understanding of it. I do not speak with any certainty, but really I think it will be found that the provision makes no change in the present practice. I will undertake, however, to look further into the matter.
    The CHAIRMAN: The next Amendment on the Paper is in the name of the hon. Member for Falmouth (Mr. Goldman), but, since I indicated to the hon. Gentleman that it was one which he might propose, it has occurred to me that it would involve a charge, that while some people would gain a reduction, other people would have to pay a higher tax. I would like to bear him on that point.
    Mr. GOLDMAN: The whole Amendment produces a reduction, and if I am allowed to proceed with it I should endeavour to make that clear.
    The CHAIRMAN: As I understand the Amendment, it proposes to substitute the current year for the preceding year in assessing the Super-tax. Is that so?
    Mr. GOLDMAN: Yes.
    The CHAIRMAN: Supposing that in the current year some incomes have gone up and others gone down, then certain incomes would have to be charged more highly under the proposal of the hon. Member.
    Mr. GOLDMAN: In some cases you charge on the basis of averages. In all matters of business you go on the basis of averages in the current year, and you still find a reduction.
    The CHAIRMAN: I quite admit that, but it seems to make this substitution—must increase the tax of some. I am very sorry this did not occur to me earlier, but it appears to be a fatal objection to the Amendment. The point, however, can be raised by the Amendment now on the Paper in the name of the hon. Member for Salisbury (Mr. Godfrey Locker-Lampson). I refer to the third of the hon. Member's Amendments, which raises this very point, without the difficulty of increasing the charge.
    Mr. G. LOCKER-LAMPSON: I rather wanted to move the third Amendment, if that be in order.
    The CHAIRMAN: Under the powers entrusted to me I can select the third Amendment, but that does not necessarily rule out the two first, if we have time.
    Mr. G. LOCKER-LAMPSON: I beg to move, at the end of the Clause, to add:
    "Provided that any person who proves that his income from all sources for the year ended the 5th day of April, nineteen hundred and fifteen, did not exceed three thousand pounds, shall not be liable to Super-tax, and if an assessment has been made and the duty paid, he shall be entitled, on application, to repayment of the duty so paid."
    I hope that the House will accept this reasonable Amendment. This Super-tax, after all, is really a tax on a person, and basins the liability on the income of the preceding year is merely a method of calculation for the sake of convenience. That is borne out by the marginal note, which says "the Super-tax for 1914–15," showing that it is the Super-tax of the current year. I think that is the view which is generally accepted. It seems to me that unless the arrangement I propose is accepted, a great deal of hardship will be incurred by a good many people who come under the Act. The lowering of the Super-tax limit to £3,000 will naturally bring under liability a large number of people who have hitherto been exempt from Super-tax, and a large proportion of those people possibly will have had an income of over £3,000 for the year ending 5th April, 1914, when the liability only attached to incomes of over £5,000. Let me illustrate exactly what I mean. Take the income, say, for four years—1913, 1914, 1915, and 1916. Say it was £3,300, then £2,800 this year, £2,700 next year, and £2,500 the year after. The incomes for each of the three years since the lowering of the limit by this Bill is under £3,000, yet because the income for the year previous to the passing of this Bill was over £3,000, the taxpayer has to pay the Super-tax in the first of the three years, when his income was tinder £3,000. There seems to me to be absolutely no justice or sense in that. The Super-tax, according to the marginal note of the Bill, is for 1914–15, and I do not think you have any right to make a man pay Super-tax in respect of his income in the preceding year, supposing his income this year falls below the Super-tax limit. I think the Amendment is a very reasonable one, and I beg to move it.
    Sir J. SIMON: The hon. Gentleman has very fairly explained the particular case that he has in mind and which he proposes should be dealt with by this Amendment. Undoubtedly the case is one that deserves to be carefully considered. I would submit to him and to the Committee that, having regard to the scheme of Super-tax, his Amendment ought not to be accepted, and that we ought to treat the proposal in this Bill as being a proposal, to substitute three thousand for five thousand as the figure above which you cannot go without rendering yourself liable to pay Super-tax. May I point out to him that the arguments which he puts forward now would have applied with exactly the same force to the Super-tax when it was first imposed? That was in the year 1910, and in so far as the Super-tax was then collected or based on. average of previous years, it would be just as true, as it will be under this Clause, to say that since averages produce some intermediate figure between unequal figures, it is quite possible that in the year 1910 a man who had to pay Super-tax did not have £5,000 that year or anything like it. The hon. Gentleman must also remember that the case that he puts is only one variety of a great many alternatives. It is not true to say, although it is very commonly said, that Super-tax is exacted on the average of the three previous years. It is true so far as regards that part of the Super-tax which depends on the statutory income which itself depends on an average. But supposing we have an income from investments, different considerations would apply. It is an essential part of our Super-tax scheme and a device for the purposes of simplicity that you should say, so far as you use averages, calling the years one, two, three, four, and five, that in the year five a man for Super-tax is to be treated as if his statutory income was in the year four, and his statutory income in the year four might involve an average of the years one, two and three. It is perfectly true that that does in some cases involve what the hon. Member has said, and what the hon. Member for Falmouth (Mr. Goldman) was pointing out, and that that does mean that persons with falling incomes are asked to pay Super-tax on the basis rather of their past enjoyment than their present realisation.
    On the other hand, it is also true, and I trust it may be the actual experience of some of us, that the person who was asked to pay Super-tax is asked to do so,

    1567
    on a figure lower than that which he is earning in that particular year. If you are going to adopt the principle of averaging at all there is no justification for departing from that principle this year any more than there was in the original Super-tax provision of 1909–10. It is surely clear if the system of averaging is justified at all it is because it works out fairly over a series of years. In the case of Super-tax there is another reason for adopting these methods. You are able to collect the Super-tax fairly promptly. Thus the special Commissioners in Wellington Street in the present year already know the worst and the best about us for last year. If you are going to introduce considerations of what a man's actual income is in the year in which he pays, you upset the whole system of averages on which it depends. You confer a favour in the case where it suits the man and you do not make it extra in the case where you ought to do so. Consequently I suggest it is much better to keep to your present system.
    Mr. G. LOCKER-LAMPSON: This Amendment has absolutely nothing whatever to do with averages, but merely applies to the present year.
    Sir J. SIMON: With great respect, it has everything to do with that question. What you are saying is as far as this year is concerned if a man can show that his income in the year which started from the 5th of April last is not as much as £3,000 he shall be free of Super-tax. Suppose you have this case, after the provisions of the present Bill are passed, in which a man earned £2,000 two years ago, and £3,000 last year, and £4,000 in the present year, you do not on that account propose to tax the man on £4,000. You are going to take an average.
    Mr. G. LOCKER-LAMPSON: He would pay on the £4,000 next year.
    Sir J. SIMON: He might not. It is a perfectly possible point to make that there ought to be no averages at all, but it is not possible, basing your Super-tax upon average for the sake of simplicity and prompt collection, to depart from that system in the one case which happens to suit the taxpayer. For these reasons I am sorry I must reufse to accept the Amendment.
    Mr. GOLDMAN: I regret that the right hon. Gentleman does not see his way to
    1568
    accept the Amendment, and, more than that, the right hon. Gentleman actually advocates a principle which I consider to be highly objectionable, namely, the assessing of Super-tax and Income Tax on two different years of income. Our present system is that Income Tax is assessed on the basis of income for the current year, but, as regards the Super-tax, the assessment is in respect of the income made for the previous year. My hon. Friend spoke of the hardship that may arise owing to the level of the Super-tax being reduced in the present year. Let me take the case of a man earning from £2,500 to £4,500. He has paid his Income Tax on the past year, and has closed his books with reference to the matter. Suddenly now he is asked to pay Super-tax in respect to the previous year. It think it is highly objectionable that you should you perpetuate a system of retrospective taxation, and I think the House and the Committee should not sanction the principle of imposing taxes in respect of years that have passed. There is also the case of the professional man earning, say, £4,000, who is suddenly disabled, laid aside by sickness, prevented from following his profession, or who, owing to great reverses in business, may make heavy losses. He may not be earning anything like his usual income, and it is at the moment of his greatest poverty that you are going to call on him to pay in respect of the years of his greatest prosperity. I think that is a very great hardship that ought not to be tolerated by any Member in this Committee. There is then the case which is nearer home, namely, that of a Member of the Cabinet, which would be a very hard case, indeed, if, as a result of a change of Government, he suddenly had his income reduced from £5,000 to £400. The year of his diminished splendour is the year in which he is called upon, not only to pay Income Tax, but to pay Super-tax in respect of a salary which he no longer enjoys. That seems to offer another terror to the prospect of an early Dissolution.
    The Attorney-General referred to the question of averaging, which is a great hardship in the case of men whose business is going backward. The profits may reduce, say, from £10,000 to £8,000, and then to £6,000, and in the present year, say, the loss may be £4,000, and such a man might have to pay Income Tax on an amount which worked out at £3,300, but for the purposes of Super-tax he would pay on the average of the three

    1569
    years £10,000, £8,000, and £6,000, so that while he is paying Income Tax on £3,300 he will pay Super-tax on £8,000. I think those are anomalies that do not agree with a sound financial system. The Attorney-General says that this Amendment was introduced for the sake of simplicity, but a more complicated system you could not, I think, imagine, and you are increasing those complications, because a man has to make a return, not only for the ordinary Income Tax, but another for the Super-tax in respect of the previous years on the average of the three previous years. That adds enormously to the complexity of the system. The only way of dealing with the Income Tax in a sound and safe manner is to charge the Income Tax and Super-tax either during the year in which it is earned, or at the end of the year in which it has been received.
    Mr. LEES SMITH: The hon. Member for Falmouth (Mr. Goldman) and the hon. Member for Salisbury (Mr. G. Locker-Lampson) are rather on different points. The hon. Member for Falmouth put forward the argument that you should substitute the current for the preceding year for Super-tax. The hon. Member for Salisbury interrupted the Attorney-General to point out that his Amendment was confined to this year alone In any case the arguments of both hon. Members appear to me, if I understood them right, to be open to a very fatal objection which they do not appreciate. The Super-tax is levied upon the income of the preceding year. Their point is, that if the income of the current year has fallen below the income for last year, that the man should be permitted to substitute for Super-tax purposes the income of the current year for the income of last year. But that is only one side of the picture. If you are going to give the Super-tax payer the option against the Government, you must in justice give the Government the option against the Super-tax payer. The hon. Members assume that the man's income is diminishing. But suppose the Special Commissioners find from the Returns that the income has increased, in justice to the Government they must be permitted to levy Super-tax on the increased income of the current year. The hon. Member has not proposed that.
    Mr. G. LOCKER-LAMPSON: They will get it the next year.
    Mr. LEES SMITH: My answer to that is that in the case that the hon. Member
    1570
    takes the Super-tax payer will get the relief the next year. The hon. Member does not permit the Government to have an option against the Super-tax payer. I know that there are very good reasons for it, but as he does not permit it he advocates a merely one-sided arrangement, which makes the Amendment wholly impracticable.
    Mr. PRETYMAN: There seems to be an entire misapprehension. If we claimed that the taxpayer had a right to substitute the income of the current year when it suited him the State might equally claim the right to substitute the income of the current year when it was to their interest to do so. But that is not what the Amendment proposes. The Amendment deals with one case only. It does not cover the whole ambit of the Super-tax. It does not suggest that a man whose income drops from £5,000 to £4,000, or from £10,000 to £6,000 is to have any difference made. All it says is—and I think there is a good deal to be said for it—that there should be for the year a limit of actual income below which a man should not be charged any Super-tax at all. When Super-tax is paid for the previous year it must be and can only be paid out of the income of the year in which it is levied. I have a case in my personal knowledge where an eminent surgeon, who was earning at least £10,000 a year, contracted blood poisoning in the course of an operation in the hospital; he has been incapable of practice since, and has absolutely lost his income. A harder case could not arise. It is like dying on the field of battle. He has lost the whole of his income from an act of self-sacrificing duty, and great financial difficulties have resulted to his family and all concerned. If this Amendment were carried it would simply mean that, as that man has no income during the year, he would not be charged Super-tax on the incomes of the previous year. I do not know whether my hon. Friend intends to press his Amendment; if he does, I shall vote with him. The Chancellor of the Exchequer is not here, but it is a case which I think he might be asked to consider. It would not alter the principle of the Amendment to substitute £2,000 or £1,000 for £3,000. You simply say that there must be a certain limit of actual income available in that year below which you will not ask a man for Super-tax. It would not operate in many cases.

    1571
    It does not alter the principle of the tax at all. It does not authorise anybody to substitute the income of this year for the income of the previous year simply to suit themselves; it merely says that there shall be a limit below which Super-tax cannot be levied. Professional incomes, for example, are very subject to fluctuation. If the Attorney-General said that before Report he would bring the matter before the Chancellor of the Exchequer for consideration, I think perhaps my hon. Friend would be satisfied.
    Sir J. SIMON: I will certainly do that, but it must be on the clear understanding that I have not made any representation or promise of any sort. I should not be justified in doing that. I understand the point; it could not be put more clearly. I agree that it is not of the essence of the proposal to mention £3,000; it might well be some different figure. The point is that we should be sure that there is a fund out of which the Super-tax can be paid.
    Mr. JOYNSON-HICKS: Personally, I do not think the Amendment is necessary at all. I have held for some time past—I do not know whether there has been any decision on the point—that the Act of 1909, which instituted the tax distinctly enacts that Super-tax shall not be payable unless there is a Super-tax income. Section 66 says:—
    "In addition to the Income Tax charged at the rate of one shilling and twopence under this Act, there shall be charged, levied, and paid for the year beginning on the 6th day of April, 1909, in respect of the income of any individual, the total of which from all sources exceeds £5,000, an additional duty…."
    That is the taxing Section. No Super-tax is payable unless the income of the individual exceeds £5,000. By the next Section, when you have got the fact that Super-tax is payable by reason of the incomes being over £5,000—now £3,000—you have to take for the purpose of computing what that income is the income of the previous year. It may be a delicate or fine point. I do not think there has been a decision of it, but if the Attorney-General is consulting the Chancellor of the Exchequer with regard to the proposal of my hon. Friend I hope he will take that point into consideration.
    Sir HOWELL DAVIES: I do not know what the Government propose to do in this
    1572
    matter, but it seems to me that if the Attorney-General is making a proposal to the Opposition to consider the point it will be entirely upsetting the principle already adopted.
    Sir J. SIMON: I am not making any proposal at all.
    Sir HOWELL DAVIES: The reduction of the amount from £5,000 to £3,000 does not in any way affect the principle on which the Super-tax has been charged. I know from personal experience and from the experience of friends that when Supertax was imposed many people had to go back to 1907. In one business of a speculative character a very large income was brought in, although that income was succeeded, not merely by lean years, but by loss years, and Super-tax had to be paid in 1910 in respect to that large income derived in 1907. I contend that the reduction which is now being claimed does not justify an alteration in the system. If the system is altered, those who had to pay on back years when the Super-tax was imposed will have a just grievance against the Government. Therefore, I hope the Government will stand firm in this matter.
    Sir F. BANBURY: I do not know whether my hon. Friends will remember that five or six years ago there was a Clause in the Income Tax Acts providing that if an individual returned his income at a certain amount, and then found that his income did not reach that figure, he could obtain a deduction in respect of the Income Tax. That was altered by the present Government. When I objected to the alteration, the answer was that very few people knew of that particular provision, but that a certain number seemed to be finding it out, and, as they were finding it out, the Government were losing money, and therefore the provision must be withdrawn. I am not sure whether it was the present Chancellor of the Exchequer—I rather think it was the Prime Minster. If that provision had been in force my hon. Friend would have had nothing to say. I pointed out at the time that the only hardship that really arose was in the case of falling incomes. It did not matter in an ordinary business where the income varied from year to year, sometimes up, sometimes down, because it came right in the average. But, in the case of falling incomes, it operated very severely, and that, of course, is the case to which my hon. Friend alluded. It is true that there is nothing in the Amendment about

    1573
    averages. In some cases for the Super-tax you take averages; in others you do not. When you make the return for Super-tax on incomes from investments and landed property you do not take an average. Where you take the figures for the one year—that is, the last year—I do not see any hardship, because you really had that money, and, if the Super-tax is right, there is no hardship. I do not believe in the Super-tax; but that is not the point. If you are to have a Super-tax, there is no hardship in its being said that because in 1913 you received £7,000 you shall pay Super-tax in respect of that income in 1914. But when you go on averages it is a different matter altogether. With a falling income you may then pay Super-tax on an income which you have never had, and never will have. Therefore, if my hon. Friend had drawn his Amendment a little differently, and made it apply to cases where income has to be averaged for the purposes of Super-tax, I should have voted for it. I am not sure that I shall not vote for it now, but it will be on different grounds. I think the Government might very well, without injuring themselves, take some steps to remedy the injustice to which I have referred.
    Mr. G. LOCKER-LAMPSON: In view of the promise of the Attorney-General to communicate with the Chancellor of the Exchequer, I ask leave to withdraw the Amendment.
    Mr. WATSON RUTHERFORD Mr. WATSON RUTHERFORD rose—
    The CHAIRMAN: The Mover of the Amendment has asked leave to withdraw. The hon. Member cannot debate that; he can only refuse leave.
    Mr. W. RUTHERFORD: I object. The Attorney-General has really given no assurance whatever. This is a most important point, and the only chance of saying what we think about it is by going into the Division Lobby.
    It being Seven of the clock, the CHAIRMAN proceeded, pursuant to the Order of the House of 8th July, to put forthwith the Amendment already proposed from the Chair.
    Question put, "That those words be there added."
    The Committee divided: Ayes, 147; Noes, 284.

    Division No. 164.]

    AYES.

    [7.0 p.m.

    Agg-Gardner, James Tynte

    Crichton-Stuart, Lord Ninian

    Houston, Robert Paterson

    Amery, L. C. M. S.

    Croft, H. P.

    Hunt, Rowland

    Ashley, W. W.

    Dalrymple, Viscount

    Hunter, Sir C. R.

    Astor, Waldorf

    Dalziel, Davison (Brixton)

    Jessel, Captain H. M.

    Baird, J. L.

    Denison-Pender, J. C.

    Joynson-Hicks, William

    Baker, Sir Randolf L.(Dorset, N.)

    Denniss, E. R. B.

    Kerry, Earl of

    Baldwin, Stanley

    Dickson, Rt. Hon. C. Scott

    Kinloch-Cooke, Sir Clement

    Banbury, Sir Frederick George

    Duncannon, Viscount

    Lane-Fox, G. R.

    Baring, Maj. Hon. Guy V.(Winchester)

    Eyres-Monsell, Bolton M.

    Lawson, Hon. H.(T. H'mts, Mile End)

    Barlow, Montague (Salford, South)

    Faber, George Denison (Clapham)

    Lewisham, Viscount

    Barnston, Harry

    Falle, Bertram Godfray

    Lloyd, George Butler (Shrewsbury)

    Bathurst, Charles (Wilts, Wilton)

    Fell, Arthur

    Locker-Lampson, G.(Salisbury)

    Beach, Hon. Michael Hugh Hicks

    Fisher, Rt. Hon. W. Hayes

    Lockwood, Rt. Hon. Lt.-Col. A. R.

    Benn, Arthur Shirley (Plymouth)

    Forster, Henry William

    Lowe, Sir F. W.(Edgbaston)

    Bennett-Goldney, Francis

    Foster, Philip Staveley

    Mackinder, H. J.

    Bentinck, Lord H. Cavendish-

    Gastrell, Major W. H.

    Malcolm, Ian

    Bird, A.

    Gibbs, G. A.

    Mildmay, Francis Bingham

    Boles, Lieut.-Col. Dennis Fortescue

    Gilmour, Captain J.

    Mills, Hon. Charles Thomas

    Boscawen, Sir Arthur S. T. Griffith-

    Goldman, Charles Sydney

    Morrison-Bell, Capt. E. F. (Ashburton)

    Bowden, G. R. Harland

    Goldsmith, Frank

    Morrison-Bell, Major A. C.(Honiton)

    Boyton, J.

    Goulding, Edward Alfred

    Mount, William Arthur

    Brassey, H. Leonard Campbelt

    Gretton, John

    Neville, Reginald J. N.

    Bridgeman, William Clive

    Guinness, Hon. W. E.(Bury S. Edmunds)

    Newman, John R. P.

    Burgeyne, A. H.

    Gwynne, R. S.(Sussex, Eastbourne)

    Newton, Harry Kottingham

    Burn, Colonel C. R.

    Hall, D. B.(Isle of Wight)

    Orde-Powlett, Hon. W. G. A.

    Butcher, John George

    Hall, Frederick (Dulwich)

    Ormsby-Gore, Hon. William

    Campion, W. R.

    Hambro, Angus Valdemar

    Paget, Almeric Hugh

    Carlile, Sir Edward Hildred

    Hamilton, C. G. C.(Ches., Altrincham)

    Parker, Sir Gilbert (Gravesend)

    Cassel, Felix

    Harris, Henry Percy

    Pease, Herbert Pike (Darlington)

    Cautley, H. S.

    Harrison-Broadley, H. B.

    Peel, Lieut.-Colonel R. F.

    Cave, George

    Henderson, Major H.(Berks, Abingdon)

    Pollock, Ernest Murray

    Cecil, Evelyn (Aston Manor)

    Henderson, Sir A. (St. Geo., Han. Sq.)

    Prothero, Rowland Edmund

    Cecil, Lord Hugh (Oxford University)

    Hewins, William Albert Samuel

    Pryce-Jones, Colonel E.

    Chaloner, Col. R. G. W.

    Hibbert, Sir Henry F.

    Quilter, Sir William Eley C.

    Clay, Captain H. H. Spender

    Hoare, S. J. G.

    Rawlinson, J. F. P.

    Clyde, J. Avon

    Hohler, G. Fitzroy

    Rawson, Colonel R. H.

    Coates, Major Sir Edward Feetham

    Hope, Major J. A.(Midlothian)

    Rees, Sir J. D.

    Craik, Sir Henry

    Horne, Edgar

    Ronaldshay, Earl of

    Rutherford, John (Lancs., Darwen)

    Swift, Rigby

    Williams, Colonel R.(Dorset, W.)

    Samuel, Sir Harry (Norwood)

    Sykes, Alan John (Ches., Knutsford)

    Willoughby, Major Hon. Claud

    Sanders, Robert A.

    Sykes, Sir Mark (Hull, Central)

    Wills, Sir Gilbert

    Sanderson, Lancelot

    Talbot, Lord E.

    Wilson, Captain Leslie o.(Reading)

    Sandys, G. J.

    Terrell, G. (Wilts, N.W.)

    Wood, Hon. E. F. L.(Ripon)

    Scott, Sir S.(Marylebone, W.)

    Thomas-Stanford, Charles

    Wood, John (Stalybridge)

    Smith, Rt. Hon. F. E.(L'p'l, Walton)

    Thynne, Lord Alexander

    Worthington Evans, L.

    Spear, Sir John Ward

    Tickler, T. G.

    Yate, Colonel C. E.

    Stanley, Hon. G. F,(Preston)

    Tryon, Captain George Clement

    Younger, Sir George

    Steel-Maitland, A. D.

    Valentia, Viscount

    Stewart, Gershom

    Walker, Col. William Hall

    TELLERS FOR THE AYES.—Mr.

    Strauss, Arthur (Paddington, North)

    Weigall, Captain A. G.

    Watson Rutherford and Mr. Peto.

    NOES.

    Abraham, William (Dublin, Harbour)

    Duncan, Sir J. Hastings (Yorks, Otley)

    Lardner, James C. R.

    Acland, Francis Dyke

    Edwards, Sir Francis (Radnor)

    Law, Hugh A. (Donegal, West)

    Adamson, William

    Edwards, John Hugh (Glamorgan, Mid)

    Lawson, Sir W. (Cumb'rld, Cockerm'th)

    Addison, Dr. C.

    Elverston, Sir Harold

    Leach, Charles

    Agar-Robartes, Hon. T. C. R.

    Esmonde, Sir Thomas (Wexford, N.)

    Levy, Sir Maurice

    Agnew, Sir George William

    Esslemont, George Birnie

    Lewis, Rt. Hon. John Herbert

    Alnsworth, John Stirling

    Falconer, J.

    Low, Sir F.(Norwich)

    Allen, Arthur Acland (Dumbartonshire)

    Farrell, James Patrick

    Lundon, T.

    Allen, Rt. Hon. Charles P. (Stroud)

    Fenwick, Rt. Hon. Charles

    Lyell, Charles Henry

    Armltage, R.

    Ffrench, Peter

    Lynch, A. A.

    Arnold, Sydney

    Field, William

    Macdonald, J. Ramsay (Leicester)

    Asquith, Rt. Hon. Herbert Henry

    Fitzgibbon, John

    Macdonald, J. M.(Falkirk Burghs)

    Baker, Harold T.(Accrington)

    Flavin, Michael Joseph

    McGhee, Richard

    Baker, Joseph A.(Finsbury, E.)

    France, G. A.

    Maclean, Donald

    Balfour, Sir Robert (Lanark)

    Furness, Sir Stephen Wilson

    Macnamara, Rt. Hon. Dr. T. J.

    Baring, Sir Godfrey (Barnstaple)

    George, Rt. Hon. D. Lloyd

    MacNeill, J. G. Swift (Donegal, South)

    Barlow, Sir John Emmott (Somerset)

    Ginnell, L.

    MacVeagh, Jeremiah

    Barnes, George N.

    Gladstone, W. G. C.

    M'Callum, Sir John M.

    Barran, Sir John N. (Hawick B.)

    Glanville, H. J.

    M'Curdy, C. A.

    Barran, Rowland Hurst (Leeds, N.)

    Goddard, Sir Daniel Ford

    McKenna, Rt. Hon. Reginald

    Beale, Sir W. Phipson

    Goldstone, Frank

    M'Laren, Hon. H. B. (Leics.)

    Beauchamp, Sir Edward

    Greenwood, Hamar (Sunderland)

    M'Laren, Hon. F.W.S. (Lincs., Spalding)

    Beck, Arthur Cecil

    Greig, Colonel J. W.

    Harkham, Sir Arthur Basil

    Benn, W. W.(T. H mts., St. George)

    Grey, Rt. Hon. Sir Edward

    Marks, Sir George Croydon

    Bethell, Sir J. H.

    Griffith, Rt. Hon. Ellis Jones

    Marshall, Arthur Harold

    Black, Arthur W.

    Gulland, John William

    Mason, David M.(Coventry)

    Boland, John Pius

    Gwynn, Stephen Lucius (Galway)

    Meagher, Michael

    Booth, Frederick Handel

    Hackett, J.

    Meehan, Francis E.(Leitrlm, N.)

    Bowerman, C. W.

    Hancock, J. G.

    Meehan, Patrick J.(Queen's Co., Leix)

    Boyle, Daniel (Mayo, North)

    Harcourt, Rt. Hon. L.(Rossendale)

    Middlebrook, William

    Brady, P. J.

    Harcourt, Robert V.(Montrose)

    Molloy, M.

    Brunner, John F. L.

    Harmsworth, Cecil (Luton, Beds)

    Mond, Rt. Hon. Sir Alfred M.

    Bryce, J. Annan

    Harvey, A. G. C. (Rochdale)

    Money, L. G. Chiozza

    Buckmaster, Sir Stanley O.

    Harvey, T. E. (Leeds, W.)

    Montagu, Hon. E. S.

    Burns, Rt. Hon. John

    Haslam, Lewis (Monmouth)

    Mooney, John J.

    Burt, Rt. Hon. Thomas

    Hayden, John Patrick

    Morgan, George Hay

    Byles, Sir William Pollard

    Hay ward, Evan

    Morrell, Philip

    Carr-Gomm, H. W.

    Henderson, Arthur (Durham)

    Morison, Hector

    Cawley, Sir Frederick (Prestwich)

    Henderson, J. M. (Aberdeen, W.)

    Morton, Alpheus Cleophas

    Cawley, H. T. (Lancs., Heywood)

    Henry, Sir Charles

    Muldoon, John

    Chancellor, H. G.

    Hewart, Gordon

    Munro, Rt. Hon. Robert

    Chappie, Dr. William Allen

    Higham, John Sharp

    Murray, Captain Hon. Arthur C.

    Clancy, John Joseph

    Hinds, John

    Needham, Christopher T.

    Clough, William

    Hobhouse, Rt. Hon. Charles E, H.

    Neilson, Francis

    Clynes, John R.

    Hodge, John

    Nolan, Joseph

    Collins, G. P.(Greenock)

    Hogge, James Myles

    Norton, Captain Cecil W.

    Collins, Sir Stephen (Lambeth)

    Holmes, Daniel Turner

    Nugent, Sir Walter Richard

    Compton-Rickett, Rt. Hon. Sir J.

    Holt, Richard Durning

    O'Brien, Patrick (Kilkenny)

    Cornwall, Sir Edwin A.

    Hope, John Deans (Haddington)

    O'Connor, John (Kildare, N.)

    Cotton, William Francis

    Hudson, Walter

    O'Connor, T. P.(Liverpool)

    Craig, Herbert J.(Tynemouth)

    Hughes, Spencer Leigh

    O'Doherty, Philip

    Crooks, William

    Illingworth, Percy H.

    O Dowd, John

    Crumley, Patrick

    Johnson, W.

    Ogden, Fred

    Cullinan, J.

    Jones, Edgar (Merthyr Tydvil)

    O'Kelly, Edward P.(Wicklow, W.)

    Dalziel, Rt. Hon. Sir J. H.(Kirkcaldy)

    Jones, H. Haydn (Merioneth)

    O'Kelly, James (Roscommon, N.)

    Davies, E. William (Eifion)

    Jones, J. Towyn (Carmarthen, East)

    O'Malley, William

    Davles, Timothy (Lincs., Louth)

    Jones, Leif (Notts, Rushcliffe)

    O'Neill, Dr. Charles (Armagh, S.)

    Davies, Sir W. Howell (Bristol, S.)

    Jones, William (Carnarvonshire)

    O'Shaughnessy, P. J.

    Davies, M. Vaughan- (Cardigan)

    Jones, W. S. Glyn- (Stepney)

    Outhwaite, R. L.

    Dawes, J. A.

    Joyce, Michael

    Palmer, Godfrey Mark

    De Forest, Baron

    Kellaway, Frederick George

    Parker, James (Halifax)

    Pelany, William

    Kelly, Edward

    Parry, Thomas H.

    Denman, Hon. R. D.

    Kennedy, Vincent Paul

    Pearce, Robert (Staffs, Leek)

    Dewar, Sir J. A.

    Kenyon, Barnet

    Pearce, William (Limehouse)

    Dickinson, Rt. Hon. Willoughby H.

    Kilbride, Denis

    Pease, Rt. Hon. Joseph A.(Rotherham)

    Dillon, John

    King, Joseph

    Philipps, Col. Ivor (Southampton)

    Doris, W.

    Lamb, Sir Ernest Henry

    Phillips, John (Longford, S.)

    Duffy, William J.

    Lambert, Rt. Hon. G. (Devon, S.Molton)

    Pirie, Duncan V.

    Duncan, C. (Barrow-in-Furness)

    Lambert, Richard (Wilts, Cricklade)

    Pollard, Sir George H.

    1576

    1577

    Pratt, J. W.

    Runciman, Rt. Hon. Walter

    Wardle, George J.

    Price, C. E.(Edinburgh, Central)

    Russell, Rt. Hon. Thomas W.

    Warner, Sir Thomas Courtenay

    Price, Sir Robert J.(Norfolk, E.)

    Scanlan, Thomas

    Wason, Rt. Hon. E.(Clackmannan)

    Priestley, Sir Arthur (Grantham)

    Scott, A. MacCallum (Glas., Bridgeton)

    Wason, John Cathcart (Orkney)

    Priestley, Sir W. E. B.(Bradford, E.)

    Seely, Col. Rt. Hon. J. E. B.

    Webb, H.

    Primrose, Hon. Neil James

    Sheehy, David

    White, J. Dundas (Glasgow, Tradeston)

    Pringle, William M. R.

    Sherwell, Arthur James

    White, Sir Luke (Yorks, E.R.)

    Hadford, G. H.

    Simon, Rt. Hon. Sir John Allsebrook

    White, Patrick (Meath, North)

    Raffan, Peter Wilson

    Smith, Albert (Lancs., Clitheroe)

    Whitehouse, John Howard

    Rea, Rt. Hon. Russell (South Shields)

    Smith, H. B. L. (Northampton)

    Whittaker, Rt. Hon. Sir Thomas P.

    Rea, Walter Russell (Scarborough)

    Smyth, Thomas F. (Leitrim, S.)

    Whyte, A. F.(Perth)

    Reddy, Michael

    Soames, Arthur Wellesley

    Wiles, Thomas

    Redmond, John E.(Waterford)

    Spicer, Rt. Hon. Sir Albert

    Williams, Aneurin (Durham, N.W.)

    Redmond, William (Clare, E.)

    Strauss, Edward A.(Southwark, West)

    Williams, P.(Middlesbrough)

    Redmond, William Archer (Tyrone, E.)

    Sutherland, J. E.

    Williamson, Sir A.

    Richards, Thomas

    Sutton, John E.

    Wilson, Hon. G. G.(Hull, W.)

    Richardson, Albion (Peckham)

    Taylor, Theodore C. (Radcliffe)

    Wilson, W. T. (Westhoughton)

    Richardson, Thomas (Whitehaven)

    Taylor, Thomas (Bolton)

    Winfrey, Sir Richard

    Roberts, Charles H.(Lincoln)

    Tennant, Rt. Hon. Harold John

    Wing, Thomas Edward

    Roberts, George H.(Norwich)

    Thomas, J. H.

    Wood, Rt. Hon. T. McKinnon (Glas.)

    Roberts, Sir J. H.(Denbighs)

    Thorne, G. R.(Wolverhampton)

    Yeo, Alfred William

    Robertson, Sir G. Scott (Bradford)

    Toulmin, Sir George

    Young, W.(Perthshire, East)

    Robertson, J. M. (Tyneside)

    Trevelyan, Charles Philips

    Yoxall, Sir James Henry

    Robinson, Sidney

    Verney, Sir Harry

    Roch, Walter F. (Pembroke)

    Walton, Sir Joseph

    TELLERS FOR THE NOES.—Mr.

    Roche, Augustine (Louth)

    Ward, John (Stoke-upon-Trent)

    Geoffrey Howard and Captain Guest.

    Rowlands, James

    Ward W. Dudley (Southampton)

    Question, "That the Clause stand part of the Bill," put, and agreed to.

    The CHAIRMAN then proceeded successively to put forthwith the Questions necessary to dispose of the business to be concluded at Seven of the clock this day.

    CLAUSE 4.—(Modification of Belief given in respect of Earned Income.)
    (1) The following Sub-section shall be substituted for Sub-section (1) of Section nineteen of the Finance Act, 1907 (which provides for the reduction of the Income Tax payable in respect of earned income), namely—
    "(1) Any individual who claims and proves in manner provided by this Section that his total income from all sources does not exceed two thousand five hundred pounds, and that any part of that income is earned income, shall be entitled, subject to the provisions of this Section, to such relief from Income Tax as will reduce the amount payable on the earned income to the amount which would be payable if the tax were charged on that income at the rate of—
    ninepence if the total income does not exceed one thousand pounds;
    tenpence halfpenny if the total income exceeds one thousand pounds but does not exceed one thousand five hundred pounds;
    one shilling if the total income exceeds one thousand five hundred pounds but does not exceed two thousand pounds;
    one shilling and twopence if the total income exceeds two thousand pounds but does not exceed two thousand five hundred pounds."
    (2) Section sixty-seven of the Finance (1909–10) Act, 1910, shall cease to have effect.

    CLAUSE 5.—(Taxation of Income in respect of Foreign Property.)
    Income Tax in respect of income arising from securities, stocks, shares, or rents in any place out of the United Kingdom shall, notwithstanding anything in the rules under the fourth and fifth case in Section one hundred of the Income Tax Act, 1842, be computed on the full amount of the income, whether the income has been or will be received in the United Kingdom or not, subject in the case of income not received in the United Kingdom to the same deductions and allowances as if it had been so received and to a deduction on account of any annual interest or any annuity or other annual payment payable out of the income to a person not resident in the United Kingdom; and the provisions of the Income Tax Acts (including those relating to returns) shall apply accordingly:
    Provided that this Section shall not apply in the case of a person who is not a British subject, nor in the case of a person who satisfies the Commissioners of Inland Revenue that being a Britih subject he is ordinarily resident in a British Possession.
    The CHAIRMAN: I propose to take as the first Amendment that standing in the name of the hon. Member for Colchester (Mr. Worthington Evans), to leave out the words "place out of the United Kingdom," and to insert instead thereof the words "foreign country." This Amendment, I think, covers a number of the points in other Amendments, so I will reserve any decision with regard to the Amendments that follow until I have heard the Debate on the first.
    Mr. WORTHINGTON EVANS: I beg to move to leave out the words "place out of the United Kingdom" ["in respect of income arising from securities, stocks, shares, or rent in any place out of the United Kingdom"], and insert instead thereof the words "foreign country."
    May I take it we shall be allowed to have a general discussion on this first Amendment? May I remind you, Sir, that there was no Second Reading Debate at all on Clause 5? It was introduced by the Chancellor of the Exchequer in the course of his Budget Speech, but there has never been a Second Reading Debate. I think I am right in saying that not one single speech in regard to Clause 5 has been made, except the very few remarks of the Chancellor of the Exchequer in his Budget Statement. I think it will be for the general convenience if you allow us to range rather widely on this Amendment, and, incidentally perhaps, to deal with other Amendments, of course not repeating the arguments afterwards when we come to deal with individual Amendments.
    The CHAIRMAN: I have selected this Amendment for that reason. I think it will give a wide scope to the discussion, and that all the points referred to by the hon. Member will really be relevant to this Amendment.
    Mr. WORTHINGTON EVANS: I think it would be for the convenience of the Committee if I first state broadly what the effect of Clause 5 is, and remind the Committee of what the Chancellor of the Exchequer proposed to do by introducing this Clause. The Committee will remember that this is an entirely novel proposal with very far-reaching effects, and one which is expected by the Chancellor of the Exchequer to raise a fresh source of taxation amounting to something over £1,000,000 in a full year. The Chancellor of the Exchequer in introducing his Budget said he hoped to get revenue which at present
    1580
    escaped under arrangements purposely made by men who are rich enough to leave their incomes abroad for reinvestment. He was asked how he was going to touch these people who had hitherto purposely left their money abroad for the purpose of reinvestment so that Income Tax should not be payable. He replied that he would make it necessary that there should be a declaration with a penalty attached, and that arrears of Income Tax, or Income Tax which had been avoided, would be recovered when Death Duties came to be paid. The Committee will observe, in the first instance, that although this Clause purports to tax incomes which does not come into this country, there is no provision for enacting any penalty whatever in the event of evasion and at the time when Death Duties come to be payable. That part of the Chancellor of the Exchequer's proposal apparently has been considered impossible to carry out, and there are no such provisions in the Bill. I want the Committee to consider who the people are who are to be taxed under this Clause. First, he is to be a British subject who has invested money abroad in his own name and has had that income reinvested. At present he is entitled to escape the payment of Income Tax, so long as that income does not come into this country. On so much as comes in he has to pay Income Tax under the present law. If this Clause was to be effective, to catch those deliberately avoiding the payment of Income Tax, I would welcome it, but I think the case could be made that it assists rather than penalises those who endeavour to escape Income Tax. In my judgment it will be found to catch some, but not those specially intended by the Chancellor of the Exchequer, and those for whom the Chancellor of the Exchequer has devised it will very easily be able to escape the net which he is endeavouring to catch them in.
    The present method adopted by people reinvesting money in their own names abroad will be caught by this Clause. But that is not the only method employed at this moment, and if the Chancellor puts his wits and brain against those who think it worth their while to endeavour to escape him, I think he will have to give a great deal more consideration to the Clause than he has given up to the present time. Let me call attention to another method of escaping Income Tax which is at the present moment employed, and which, as far as I can see, this Clause will

    1581
    not operate to prevent. I want to impress upon the Committee the importance, if we are to have this Clause at all, of making it apply to all cases, because it would be obviously most unjust that a clever person should be allowed to escape, and that others, perhaps not so clever, and perhaps rather more scrupulous, should be brought within the Income Tax provisions. I do not think the Chancellor of the Exchequer can justify the Clause unless he can assure the Committee that all these methods of escaping it have been seen in advance and will be covered by the Clause. Let me take one method now employed, what is known as "and or" method. Sums of money are sent abroad and deposited in a bank, or with some investment or trust company, in what is known as the "and or" name, that is, it is put in the name of the previous owner, "and or" his wife, "and or" his son, with directions to the banker or agent to follow the instructions of any one or more of the names in which these investments are deposited. Assume for a moment that these are bearer securities. Instructions are given to the bank to tear off the coupons and to reinvest them, whether in the original investment or not. The instructions say that the banker or agent is to deal with these bonds and their income on the instruction of one or two of those names. What happens? Instructions are given to reinvest that income.
    The Chancellor says this Clause is designed to prevent such a case as that. "We do not allow, or intend to allow, anyone to reinvest his income abroad and so avoid Income Tax. He is obliged to make a declaration of what income he has got, and he is to be taxed upon it whether invested abroad or brought into this country." How is he to deal with the "and or" case? Whose income is it that is to be made a declaration of? Suppose the original owner of the bonds has parted with the ownership, because they are bearer bonds, and placed them in the name of anyone of these three people. Who is to make a declaration and to be liable to duty? I confess I should like to hear what the Chancellor has to say to that supposed method of escape. I am by no means sure that there is not an answer, and that he does not catch such a case as this. It might be held that the original owner of these bonds, although he transferred the legal ownership, yet has some equitable claim to them and the
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    interest, and is in some way a beneficiary under Section 13 of the Revenue Act of 1912, and that he might be brought to account, and that this Clause does bring him to account. But I should like to hear very much what the Chancellor has to say. Supposing that method failed, the Chancellor has got to pit his wits against other methods which would be devised. I will only take one case, and ask him whether this Clause will catch people in this particular instance that I will explain. As far as I can see his Clause will not cause income to be taxed, nor will any declaration made enable him to exact any penalty from those who adopt the method that I am going to ask him to consider. For simplicity's sake let me say that a man is an owner of £100,000 which he wants to put out of the country, the income of which he does not require, and which, therefore, he is willing shall be accumulated abroad, but in respect of which he wishes to avoid Income Tax, and therefore to escape the provisions of this Clause. There is a method of doing that which occurred to me the other day, and I cannot see that this Clause can possibly stop it. That man, with his £100,000, transfers that £100,000 of bearer's securities to a Canadian company which he registers for himself. The registration of a Canadian company is a very inexpensive thing, much less expensive than the registration of an equivalent English company. It may have a small nominal capital of 5,000 dollars, if you like. The procedure would be this:
    The owner of the £100,000 bonds would hand over to that Canadian company £100,000, and would take instead 5,000 dollar shares, so that he and his nominee would be the sole owner in every sense except the legal sense, of all the assets belonging to that small Canadian company. It is important to distinguish between the legal sense and the general sense of ownership, because a great deal will turn upon that. That man will hold 5,000 dollars in shares in the Canadian company. There is no Income Tax in Canada. The Canadian company holding this £100,000 of bonds will tear off the coupons in due course and accumulate the income of that £100,000 bonds, let us say at £5,000 a year, and that process goes on for eight years. At the end of eight years there will be, with income, about £150,000 of assets belonging to the Canadian company. The owner of the shares in that Canadian company will be able to dictate its policy, what it should

    1583
    invest in and whether dividends are to be declared or not. If he wants to avoid Income Tax he will take great care that no dividends are declared in that Canadian company, and when he comes to make his declaration of Income Tax in this country, he will make his declaration, of course, omitting to include any dividends from the Canadian company, because the Canadian company never declared any dividends, so that the Income Tax declaration will be in order. I challenge the Chancellor of the Exchequer to say whether that Income Tax declaration is right or not. No dividends have been declared by that Canadian company and the very thing which the Chancellor of the Exchequer by this Clause is expecting or hoping to prevent will have been carried on by means of investment in the Canadian company, and although the Chancellor has not been able to translate his proposed device into the Clause now in the Bill, let us see what will happen on the death of that man.
    His executors being perfectly honest people, not intending to make any declaration that would be false, will go to Somerset House and say, "We find that the testator has 5,000 dollars in a Canadian company, and that the assets are worth £150,000, and therefore we are giving a value to the 5,000 dollar shares of £150,000, and we propose to pay the full duty upon the £150,000." They need not do that if they wanted to avoid it, but I want to deal with one thing at a time, and I am dealing now only with Income Tax. The people at Somerset House will say, "The capital value of this estate is so and so. When we compare it with the Income Tax returns we find that there was no Income Tax paid upon the value of this £150,000," and they will call upon the executors to explain why no Income Tax was paid on the value of the £150,000. The executors will say, "We put this 5,000 dollars in at a fair valuation, they are the whole capital, and it is a fair way of valuing them," and they will say, "That company, in fact, never declared any dividends during the whole of the eight years, and therefore the testator was perfectly right in his declaration of Income Tax." I ask the Chancellor of the Exchequer how he is going to deal with that method of escape. To use his own words the Chancellor said, "The Clause is intended to catch those who in the past have escaped owing to arrangements pur-
    1584
    posely made," but I ask him how, if that method is adopted, is he going to catch these people. I want to anticipate another answer. The Chancellor of the Exchequer may say, "There must be very few people content to go without their incomes for the purposes of avoiding Income Tax. There will be many who would like to do so, but not many who can afford to see £5,000 a year rolling up abroad." It is quite simple. The same method can be applied by those who really want the equivalent of their income and yet do not want to pay Income Tax upon it. Let us see how that can be done. I am trying to put the matter quite fairly and by practical methods.
    For the benefit of hon. Gentlemen opposite who do not like the idea of this £5,000 rolling up, I will show them a second case. We will keep the same figures of the Canadian company registered as before with its 5,000 dollars or thereabouts, and an income from £100,000 bonds, but the owner in England says, "I must not let the company declare a dividend because I shall have to make a decaration, and include that in my Income Tax returns, and be taxed upon it. How can I get that money without paying a dividend?" It is very simple. He simply borrows £5,000 a year from this Canadian, company. Let us see how that works out. I want the Chancellor of the Exchequer to find means of stopping that. This Clause must be fair to all or it ought not to be there. Let me take the case of the gentleman who is willing to allow income to accumulate, but really wants to spend it over here, and does not want to pay Income Tax. The company lends him the £5,000 that it draws in dividends from the bonds. Consider what his Income Tax return is. That is the loan money that he has borrowed, and therefore not money upon which he will have to pay Income Tax.
    At the end of eight years let us take the position of his death. He will have borrowed, say, £50,000 from the company. Let me assume again that the company's assets are worth £150,000 at that moment. They would consist of £100,000 of the original bonds, and £50,000 loan owing to the company by the English shareholder. When he dies his executors go to Somerset House, and again they say, "We find our testator has 5,000 dollars worth of shares in a Canadian company. The value is £150,000, but amongst his liabilities there is a sum of £50,000 owing by him to the

    1585
    Canadian Company; that will be a set off, and he will pay duty on £100,000." The result would be exactly the same, as far as Death Duties are concerned, as if he had received the dividends on those bonds which he transferred to the Canadian company. He would, however, have escaped Income Tax and Super-tax. I ask the Chancellor of the Exchequer to deal with that case specifically in his reply, because it will make a very great deal of difference to me, and I think it must to every hon. Member, as to how they will vote upon this Clause. If this Clause is going to catch everybody alike, fairly and squarely, well and good. If, on the other hand, the right hon. Gentleman is going to have a net so full of holes that even the big fish which he sets out to catch are going to escape, and only some of those who under the circumstances ought not to come within the purview of the Clause are going to be caught, then the Clause is so faulty that it will be difficult to support it.
    Having shown that there is a large class who will get out of the tax, I want now to deal with the case of some of those who will come within the tax, and are going to be hardly treated in consequence. That is a point more germane to the particular Amendment, and is really the cause of the particular Amendment which I have put on the Paper. This Amendment will not defeat the object of taxing those who send money abroad to accumulate if that object can never be obtained by any form of Clause which the Chancellor of the Exchequer can invent, which at the moment I doubt. It would free income from Colonial investments which are not brought over here. It is important to remember that all income from Colonial investments which is brought over here is now taxed, and would continue to be taxed even if the Government accepted this Amendment. All I ask is that income from Colonial investments which is not brought over here, but reinvested in the Colonies for the benefit of the Colonies, should not be taxed. By all means tax that which comes over here, and if you do that you tax the interest on all the Colonial loans issued over here; and you tax the income and interests from the debentures and share capital of the trading companies registered over here which trade in the Colonies. All that you continue to tax as before, but there are cases which do not come within any of those categories, and those are the cases which I specially want to deal with.
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    Hon. Members opposite may object to this Amendment on the ground that it is preferential and under it there is some preference to colonists. I agree that it is preferential, but it is only to a minor degree, and I appeal to those who are afraid of treating our fellow subjects in the Dominions better than they treat foreign countries to put their fears on one side and support this Amendment. At the present moment men retiring, or about to retire, from a business they have been carrying on in the Dominions or in the Colonies return to England to reside here for the purpose of educating their children are going to be taxed on the whole of their income, whether brought to this country or not. The Chancellor of the Exchequer has recognised that there is a difficulty and a grievance there, because at the last moment he has put on the Paper a Clause which gives power to the Commissioners to exempt the person who proves that he is not domiciled in this country. The question of domicile is one of the most difficult which lawyers have to face; in fact, it is a regular trap for the unwary. Many men go abroad into the Colonies or elsewhere and never lose their British domicile at all.
    Let me give a case which I have in mind. Take the case where there are born in England and their domicile of origin is English. The very reason for their going abroad is to seek their fortunes and get an income, is because they have, a vision that they will come back later and occupy some small property which has been in the hands of their family for a long time. Meantime their property here may be occupied by their mothers or sisters, and afterwards they come home to live in the family house. They never lose their English domicile, even if they are away in the Colonies five, ten, or even fifteen years. After all, domicile is a matter of intention. What is the intention of a man like that The very object of his going out to the Colonies is to enable him to come back, and he never does in law lose his British domicile. The Chancellor of the Exchequer's Amendment must not be taken as a substitute for the Amendment I am moving, and it only affects a few of the cases I want to deal with. Anyhow it is a very bad principle to introduce, that the test of taxation should not be ability to bear the taxation, but should be the question of domicile which may never vary from year to year, and is extremely difficult to ascertain at any one time. Moreover it is putting a

    1587
    sort of premium on those who endeavour to shake off domicile in the United Kingdom. Let me take a typical case which is one of very many, and I will point out what I am trying to do by this Amendment. There are numbers of men who have gone abroad from time to time from Great Britain to be tea planters in Ceylon, farmers in Canada or Rhodesia, or they may be interested in Australia in ranching or in many other ways. Their intention is to live there for a time, to make an income there, and to come back for the education of their children, and finally to finish their life in the old country. There are thousands of such cases. Take a case where a man engaged in any one of these pursuits makes quite a large taxable income upon a relatively small capital. He puts a small amount into produce growing, say, in any part of our Dominions, and his income as measured by the Income Tax Acts may be very considerable. Let us assume that it is even £5,000 a year after a certain period in the Colonies. Habitually he never counts that £5,000 a year as income, because he generally puts it back again into extensions of his plantation or farm, and all he does is to treat a relatively small part of the whole as actual income.
    That is no fancy case, in fact it is the life history of nearly every planter. He goes out with a very small capital indeed. He makes a considerable income, but he does not treat it as income, because he keeps on extending his business. When that man comes over here, this Clause is going to say to him, "Your income according to the Income Tax Acts is £5,000 a year, and you have to pay on £5,000 a year, although you have never spent more than a couple of thousand pounds a year." Under this Clause the tax in such a case would be £390 a year, or something like 20 per cent, of the actual income he ever spent or intends to spend. You are making it too expensive a luxury for such a man to come back to the old country, to bring up his children, and give them an education here. It seems to me that that is extremely unwise. Those cases might be multiplied enormously, but even in those cases there is an easy way out if they care to escape by a somewhat devious plan.
    In some of the Dominions there is already an Income Tax so that the actual amount of tax that such a man is called upon to pay is a double tax. In South Africa the Income Tax is graduated up to
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    1s. 6d. in the £, and all companies bear an Income Tax of 1s. 6d. in the £. In New Zealand the Income Tax varies from 6d. to 1s. 2d. in the £, the latter amount being payable on incomes of £2,000 or over. In New South Wales individuals pay from 9d. to 1s. in the £, with one-third extra if it is an unearned income. Unless this Amendment is accepted, you are going to make these people pay a double tax. I do not say that you have no legal right to tax them, but I do say that it is most impolitic and most unjust. It is impolitic and contrary, as I have always understood it, to the best theories of taxation where you have self-governing Colonies, also with the power of taxation. I remember that in the discussions on the Home Rule Bill we had just this class of case. Would not the Chancellor of the Exchequer in this country by interfering with the possible sources of revenue of the Chancellor of the Exchequer in Ireland, and would not the reverse occur if the Irish Chancellor of the Exchequer were given free leave to roam over all the fields of taxation? This is what the Government are proposing as regards the Dominions. The Dominions are now getting revenue by an Income Tax from the very income which the Chancellor of the Exchequer proposes to still further plunder.
    I can understand hon. Gentlemen opposite saying that a case may be made out on similar lines for relieving all incomes from foreign places which does not come over here, and that you ought, therefore, to justify specially picking out income arising from other than foreign countries. I have no doubt that the Chancellor of the Exchequer will say, "If I accept this Amendment without any special reason, the next claim made upon me will be to exempt foreign property altogether, and in that way you will destroy the whole Clause." I would like to put before the Committee one or two reasons in justification of the preference. I do not suppose anybody doubts that as a general proposition it is highly desirable that people should be encouraged to invest in the estates of the British Empire, and should be encouraged by their money to develop the estates of the British Empire wherever they are within the British Empire. Nobody will dispute that as a general proposition. Everybody knows that there are vast areas crying out for capital, and, if men go out with capital, many more go out without capital, but with their labour to develop and support

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    the work that is done by the pioneers with capital. I suggest therefore, as a general proposition, that it can be defended on the ground that the preference would add an additional inducement and would strengthen the tendency for emigration within the Empire, and if it does that it will be all to the good. The Amendment would free the individual from arbitrary and often double taxation. It would secure the non-interference by the Chancellor here with the revenue of the Dominions and of India, and it would undoubtedly aid in developing the estates of the Empire. Perhaps I may summarise what I have said in this way: The Clause, as drawn up by the Chancellor, will not catch the rich man who chooses to take the trouble to escape; and, mind, the only justification for the Clause which the Chancellor gave when he introduced his Budget was that it was in order to capture those who were deliberately endeavouring to escape taxation! It will penalise investments in the Dominions, especially where a double tax is payable. It may interfere with the Dominion revenues. And it will especially and unequally affect on their return to the Homeland that large class who have pioneered abroad. I think unless the Chancellor can specifically deal with the methods that I have suggested to him whereby this Clause would be avoided, the Committee ought to feel great difficulty, however much they may be in sympathy with the general idea of not allowing anybody to escape, in supporting the Clause.
    Mr. CASSEL: I beg to second the Amendment.
    I am quite sure that hon. Members in all quarters of the House must feel sympathy with the object the Chancellor of the Exchequer has in view in inserting this Clause in the Finance Bill. His object is to hit a certain number of persons who now, by various means, escape paying their fair share to the revenue of the country, and by that means prevent other persons from paying more than they would otherwise have to pay. I have sympathy with the right hon. Gentleman's objects, but I think it is a Clause which requires very careful consideration. If there ever was a Clause which ought to have had opportunity for full discussion, both outside and inside this House, it is this Clause. It is an entirely novel departure. We have to bear in mind that the Prime Minister the other day announced that he was just about to appoint
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    a Commission to inquire into the whole subject of Income Tax. I really think it would have been wiser, before embarking on this wholly novel procedure, to have referred so difficult and so intricate a problem to that Commission, rather than to have hastily and under the guillotine in the few hours only which are available for the consideration of this matter taken a plunge, the result of which may be to defeat the very object the Chancellor of the Exchequer has in view. The right hon. Gentleman is really taking his aim at crows, and through the haste of his aim a great many of the crows will escape and he will hit a good many pigeons. My hon. Friend the Member for Colchester (Mr. Worthington-Evans) spoke of the crows which the Chancellor of the Exchequer would miss.
    Let me say a word or two about one or two pigeons he will hit. One set of pigeons he will hit will be the life insurance companies. They cannot resort to the devices to which my hon. Friend referred, and there are a great many conscientious people who feel it their duty under the law to make their contribution to the revenue of the country, and who would not resort to that sort of practice. At the same time you ought to make your Clause watertight, but if you proceed in such a hurry without adequate consideration, I do not think that you will be able to do so. The life insurance offices will be very hard hit by this Clause. Perhaps the right hon. Gentleman will allow me to put their case before him, because recently he was good enough to receive a deputation from them. They are taxed on their interest at the source, and not upon profits. The amount of the interest in the aggregate is nearly double their profits. The result is that they really pay Income Tax on nearly double the amount of their actual profits. Their interest and dividends are the sources from which they meet their liabilities or claims. They meet their claims from two sources, from the premiums and from the interest on investments, and, in calculating the rates of premiums and the amounts they can afford to pay, they take into consideration the rate of interest they expect to earn from their investments. The offices the right hon. Gentleman will hit hard are the British offices, because the foreign life insurance offices in competition with the British offices here will not be hit by this Clause even if the right hon. Gentleman's

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    Amendment to substitute the word "domiciliary" for the words "ordinarily resident" is accepted. The foreign offices are not domiciled in this country. The British offices will be subjected to this new and special form of taxation, because their investments, which accumulate abroad, and which previously enabled them to escape part of the injustice, will not be able in future to escape, while foreign companies will be able to do so.
    There is very keen competition in this country between the British and the foreign offices, and the right hon. Gentleman by this Clause is deliberately handicapping the British offices. He is not only handicapping the British offices in that competition in this country, but he is also handicapping British companies which do business abroad, because, if they do business abroad and have investments abroad, and use the interest of those investments merely for their foreign business, they will be still taxed in this country for the whole of that interest, although the money is actually spent abroad. They are handicapped both ways. They are handicapped in Great Britain in competition with the foreign companies here, and they are handicapped abroad in their competition with the foreign companies there. I really think it is a matter to which the right hon. Gentleman ought to pay very serious consideration, because it is contrary to public policy in a matter of this kind to handicap your own offices where they are in such serious and constant competition with offices elsewhere. Let me put another point which I think requires a little more consideration than the right hon. Gentleman has given to it. I do not know whether the right hon. Gentleman has really considered the effect of the word "rents" in this Clause. In the first place, he seems to be going contrary to a principle of international comity which Sir Wm. Harcourt accepted in the fullest sense when he introduced his Budget in 1894, and which was that immovable property abroad was not to be taxed by any other country except the country in which it was situated. Sir Wm. Harcourt gave effect to that principle by exempting from Death Duties land abroad. Anybody who owns land abroad is not liable to Death Duties at this moment, because Sir Wm. Harcourt accepted the principle that immovable property was the subject of taxation of the country where it was situated,
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    and Mr. Dicey, the great authority on international law, in his book, says:—
    "An Act of the Imperial Parliament never imposes duties in respect of immovable property which is not situated in the United Kingdom."
    8.0 P.M.
    I quite agree that the right hon. Gentleman proposes, not to impose it on the immovable property, but on the proceeds, the rent of the immovable property, but that rent is never brought into this country, and this country has no justification for taxing it. The person who wants to evade the Income Tax does not invest in real property abroad, because the taxes on real property abroad are already heavy. He renders himself liable to that taxation in any case, and therefore he is not likely to invest in real property abroad with a view of evading taxation. Thus the word "rent" is really inapplicable to the case. In this country there is no Income Tax on rent as such; it would be futile to put one on because all you would have to do to escape would be to pay a fine or premium on the grant of a lease. Abroad an arrangement is made for a premium or fine to be paid on the granting of a lease, instead of rent being paid, and in such cases the double taxation would not apply. The leasehold system does not obtain in foreign States. Entirely different relationships exist, and to these the word "rent" is really inapplicable. What are the deductions which the right hon. Gentleman proposes to allow from the gross rent received abroad? I asked him a question to-day, but I could not follow his answer, and, at this moment, I cannot gather what deductions are allowable. I want to know whether they will be the same as are allowed under Schedule A in this country. If so, these deductions seem to be wholly inapplicable because they are based on the annual value of the land, and not upon rent at all. That also is a point which requires full consideration and elucidation.
    I should like to join very strongly with my hon. Friend in the plea he put forward for exempting the British Empire from the provisions of this Clause, if the Clause is to stand part of the Bill at all. Surely it is in the interests of this country to encourage the development of the Empire by bringing in much needed capital to develop its resources wherever it is possible to do so. The Government themselves have shown that it recognises the importance of it, because they have advanced money for cotton growing in the Soudan and for railway construction in Uganda. But, at the same time, if a private individual does it,

    1593
    he is to be liable to double taxation for using his money in developing the resources of the Empire. If he leaves the interest or income arising from it in making further developments of the enterprise in which he is engaged, he is liable to be taxed both in the country in which he has made the investment, and in this country to which he does not bring the income or interest arising from the investment. There can be no justification for that whatever. Take the case of a man developing an estate in Canada. He uses such rent as he receives in making improvements which will further develop that estate. How can it be politic for this country to tax him upon that interest or upon those investments? There is a precedent dealing especially with Colonial investments of this character in the Finance Act of 1894—an important precedent that. I have put down an Amendment which I do not suppose will be reached under the guillotine in precisely similar terms to those used in the Act of 1894. When Sir William Harcourt was dealing with this matter he said, "I must exempt realty altogether, because it is contrary to the principles of international law to impose Death Duties on realty abroad." As far as personalty abroad is concerned, you impose a duty on personalty wherever situate if the deceased was domiciled in this country at the time of death, but so far as the British Dominions are concerned, you make a special exception in Clause 20 of the Finance Act of 1894, which provides that, from whatever duty is exacted in this country, there is a right of deducting any Death Duty charged abroad. If that is fair in the case of Death Duty, surely it is also fair in the case of Income Tax!
    If there is an Income Tax in the Colonies in which the interest or dividend is earned and spent, it surely is only right, and as Sir William Harcourt recognised to be fair in the case of the Death Duty, that the actual Income Tax or annual tax of any kind payable in the Colony should be deducted from the Income Tax payable in this country, in order that the man should not be subjected to two Income Taxes in that way within the same Empire. The Income Tax which is raised in the Colony may actually be used for the benefit of the British Empire. Take the case of South Africa, which has just imposed an Income Tax. The imposition of the Income Tax there might be combined with the question whether South Africa should make a
    1594
    naval contribution. The Income Tax levied at the Cape might actually go to help to swell the contribution which is made by the Cape to the Navy of the Empire, and then you tax the same man over again for the Navy in this country on that same income which has been earned and spent at the Cape, and never brought into this country. Surely that is a proposition which is grossly unfair! It is one of those cases where the right hon. Gentleman will be hitting the pigeon while the crows will escape.
    I would like again to press on the right hon. Gentleman the contention that this is a matter which requires very careful consideration. It is a subject that might be well deferred to the Royal Commission, the appointment of which the Prime Minister has just announced. It is eminently a matter which should be fully settled before we take any step in regard to it. It would be most unsatisfactory to pass a Clause and let it stand part of the Bill after being only half discussed—for there is no chance of our being able to discuss all the points arising on it—and in the case of a Clause introducing such a novel principle, I think it would be far more reasonable for the right hon. Gentleman to wait until it has been considered by this Commission, especially as he himself admits that this year it will produce very little revenue indeed. The difficulty which has arisen in connection with foreign investment has been realised for a very long time, and no Chancellor of the Exchequer has yet taken any steps to deal with it because of the very great difficulty of bringing forward any Clause which would really be watertight and which would effect the object in view. It would seem most rash and foolish, therefore, to choose the very moment when you are going to appoint a Royal Commission to inquire into the whole matter to first pass, without asking the opinion of that expert tribunal, a Clause imposing new taxation and then to inquire whether it is just or can possibly be put into operation.
    Sir THOMAS WHITTAKER: We have had a very interesting dissertation from the hon. Member for Colchester (Mr. Worthington Evans) on the ways in which payment of this tax might be avoided. I prefer to use the word "avoided" to "evaded." There can be no question about it that a good deal of ingenuity will be devoted to avoiding this tax, and I am sure the hon. Gentleman's remarks

    1595
    will be read with a good deal of interest. But I am not quite so sure that many people will avoid this tax under this suggested Canadian company scheme, although the private individual might be able to do so. The hon. Member did not touch upon one point upon which it would be interesting to hear him; it is this: In the case of private firms or in the case of public companies, and especially in the case of insurance companies, where they will have to bring into their revenue accounts something corresponding to this accumulation that has taken place abroad—insurance office accounts have to be made out in the form laid down by Act of Parliament, and they will have to bring these accumulations abroad into the account each year in some way or other—if they bring it in as interest, then I think they will have to be taxed upon it. If they bring it in as profit on the investment—and I do not see in what other form they could get it in—they will, of course, be taxed upon it as profit. I am not quite sure the Clause is watertight in connection with all such schemes, but I believe it would be for private individuals. With regard to the other suggestions referring to the investments of people who have been resident in the Colonies and have come here, that seems to me to be simply another form of Colonial Preference. I see some difficulties about it. Suppose this money were a foreign investment, but collected by a bank in Montreal and received here from Montreal, it would not be a Colonial investment in reality, but I think there would be some difficulty in the Inland Revenue people separating it and tracing it.
    Further reference was made to the case of the Colonial planter who makes £5,000 a year and invests £3,000 in developing his business. We are told that that becomes capital, and, therefore, ought to be spared the Income Tax upon it. But surely that case is not peculiar to the Colonial planter. Every business man in this country who is developing his business and making a suitable income does not regard the whole of his income as income going to be spent in the year. He is continually reinvesting it in his business and building up business in that way. If the Colonial planter is to be let off a portion of the tax on the ground that he has invested a portion of his income every year, that should apply all round or it would be Colonial Preference with a vengeance.
    1596
    The hon. Member for St. Pancras (Mr. Cassel) has referred to the position of insurance offices, and I should like to say a word upon that. There has for many years been a distinct grievance on the part of insurance offices. They have felt that they have been unjustly taxed, and that has applied to the life offices, as compared with offices with composite stock in particular. If you take the amount at which a life office is taxed at the present moment and the amount at which a fire office is taxed, and if you then take the amount at which these two offices, if combined in one, would be taxed on precisely the same income you find that under the present law the taxation of the two offices combined would be very much less than the taxation of the two offices separately. Obviously that is an inequality and an injustice to those offices which are not so combined, and it is an inequality which I believe the Chancellor of the Exchequer really recognises.
    There is also another point upon which Mutual offices feel that they have a grievance. My point is that this grievance is going to be very much accentuated by the operation of this Clause. A very large proportion, indeed, of the people insured in life insurance offices—I am not now referring to industrial offices, but ordinary life insurance offices—are very small people. The average policy issued by the insurance offices of this country is only £350—it is not an industrial policy—and that represents the small men. In the office with which I am personally connected one-third of our policies are not more than £150. In almost every case that represents a man who has an income which is smaller than would be liable to Income Tax, namely, the insurance of a man with less than £160 a year. The £150 men are men who would not be liable to Income Tax, and a great many of the others would only be liable to Income Tax at a reduced rate. These are their investments, their accumulations, their savings, and under the present Budget they would be charged at the rate of 1s. 3d. These men would not be liable for the tax if they had invested their money in an ordinary company from which they received dividends, because they could recover it. They are liable to the tax because their investment is in an insurance policy. The third grievance is that life insurance offices are not allowed to deduct their expenses from their income from interest. They incur costs in working their organisation, in managing

    1597
    their business, and in getting their interest, but they are not allowed to deduct their expenses. These are three definite grievances which are being strongly felt. They have been frequently put before the Chancellor of the Exchequer, but we have not felt so strongly about them as we might because we have been able to avoid a good deal of Income Tax by collecting the income on our Colonial and foreign investments out of this, and not bringing it here, and that has to some extent rectified the balance of the other grievances. But the fact that now, under this Clause, we are to be taxed upon all this money collected abroad, does make us feel more keenly and strongly than ever the other grievances under which we are suffering. In my judgment this extra taxation under this Clause ought not to be levied until the other grievances have been rectified.
    If, as I believe is the ease, the Chancellor of the Exchequer does not feel himself able to rectify this year those other grievances, which I also believe he largely recognises, he ought not to accentuate them by proceeding with this particular Clause. It is a very difficult Clause, it is a new one, and it is not estimated that he will receive a great deal from it. It would be well if he would consider the whole question of Income Tax together. There is one point upon which I am very glad to see that the Chancellor of the Exchequer has starred an Amendment which I have put down. That is with regard to income which has been collected abroad. It has been the custom for some years past for most of the insurance companies and other investing companies to collect a considerable amount of their income abroad. One condition of their being able to avoid the tax upon it was that they must reinvest it abroad. The moment they brought it here in the form of cash it became liable to Income Tax. The result was that they did not bring it here but kept it yonder and reinvested it there. Undoubtedly that is a disadvantage to this country. It is a disadvantage to the London investing market, because in order to avoid the tax the money must be reinvested abroad, therefore it does not come here, it is not invested here, and, naturally, it is invested in securities which can be collected abroad. Therefore it is money practically kept away from this country to the disadvantage of our home securities and of the financial people in the City of London. The tax is to be
    1598
    levied in future upon this income. The Amendment which I have put down makes clear what I understand the intention of the Government, namely, that the accumulated income which has been collected abroad—that is, the past income—may now be brought home without being liable to the tax, but that all future income for this year and in future collected abroad, will be liable to the tax. That will enable offices and investors to bring home that money which otherwise they never will bring home, and allow the income from it to be invested in this country to the advantage of everybody. I am very glad indeed to see that the Chancellor of the Exchequer has starred that Amendment. I should be glad if he could see his way either to rectify the other injustices and inequalities which I have mentioned, or to defer, for the moment, the putting on of this new tax.
    Mr. CAVE: I confess I am rather disappointed that the right hon. Gentleman (Sir T. Whittaker), who has great business, experience, has not thought fit to deal with the wider objections to this Clause. For instance, he said nothing whatever about the question of double taxation, which is really a serious one, and which, if the Clause is carried, is likely to cause very great injustice to persons who have property abroad. If the property, say land, is in a Colony or abroad, the income from it is taxed by the Government of the Colony or of the foreign country where the property is. They are perfectly entitled to tax it, because it is that Government which protects the property, which carries, on the daily functions of government in that country and is therefore entitled to levy upon the income earned there a proper tax for the purposes of government. But it is not right that when the income is taxed there it should be taxed again over here. To begin with, that is contrary, as my hon. and learned Friend the Member for West St. Pancras (Mr. Cassel) said, to the comity which prevails among the different countries with regard to the income derived from immovable property situated in those countries. Secondly, we are, by taxing the income again, diminishing the fund which is to be spent in the places where the income is earned. It will certainly be a great hardship to the individual who is taxed, who suffers by paying a double tax for receiving his income in a Colony.

    1599
    The least that should be done in that respect is to adopt the Amendment mentioned by my hon. and learned Friend, and to follow the precedent of Section 20 of the Act of 1894, and say, that if you tax foreign incomes or Colonial incomes here, you shall at least enable the taxpayer to deduct from the Income Tax payable here the amount of the tax on the income which he has paid in the Colony. That, surely, is the very least which in the interests of fairness you ought to do in that respect. Then may I ask another question which puzzles me: Why is it that you are going to tax income from stocks and securities abroad and in the Colonies belonging to a person domiciled in this country, but you are not going to tax the profits of a Colonial or foreign business received by a person domiciled here? What is the distinction, as a matter of fairness, between the case of a man who has a business abroad, or a share in a foreign business, and receives there a very large income from it, and who has to pay no tax under this Clause, and the other case of a man who has shares, say, in a commercial company situated abroad or in the Colonies, who, because he gets his income in the shape of dividends on shares and securities, is to pay income in this country under this Clause? There must be some reason behind the distinction, but at present it seems to me a very unfair one, and one which presses very hardly on a particular class of taxpayer, and lets off the possibly wealthier taxpayer who derives his income from a foreign business.
    Let me put another point. Surely the effect of this Clause will be to drive business more and more from this country. I am surprised that the right hon. Gentleman (Sir T. Whittaker) has not mentioned that point, which I am sure must appeal to him and all other business men. There is not only the case of the man who comes back in order to have his children educated here, and so on, but who has his investments abroad upon which he depends for his future. That person is to be taxed twice over. But apart from him there is the question of the effect on business in this country. Supposing a great business firm had to choose between making its headquarters, that is its domicile, abroad or here. Surely that firm will be influenced by the consideration that if it makes its headquarters
    1600
    here it will pay double tax on its foreign profits, while if it makes its headquarters abroad it will escape that double tax. The effect may be to drive these great businesses away, which by the Patents Act you are trying to bring home, and to impose a penalty upon people who otherwise would be, and are, prepared to carry on these businesses in this country. That is a thing which ought to be considered. Quite apart from any fiscal argument whatever, it seems to me to be a very unwise step. But if that applies to firms, it applies with equal force, and perhaps with greater force, to companies and corporations. The instance which has been given of insurance companies is only an instance of a wider class, and the consideration applies with especial force, I agree, to these companies, but it applies to all businesses. A big business corporation has often to choose between making its headquarters and registering its company in London, or in Paris, or in New York, and I know from my own experience that when that question arises the question of taxation is always raised in connection with it. If a great insurance company or a great corporation, considering whether it should carry on its great operations from London or from Paris, is faced with this Clause, should it become a Section of an Act, and is told, "If you carry on your business in New York you will pay Income Tax under the law of the United States and that is all, but if you make your headquarters in London you will pay in New York upon the income earned there, and you will pay in London upon income earned both in London and in New York," that is a tremendous handicap. We all know that there is great competition between foreign and Colonial insurance companies and British companies. They compete here, and they compete in foreign countries. You are going to handicap them in both spheres, and you are going to do a real injury, I believe, to the insurance business and to all businesses of that kind which are becoming more and more great corporations able to shift their domicile when they think fit, and are very likely to be influenced in that matter. I do not think that can have been fully considered. I hope it will be, because it is not a mere Parliamentary criticism; it is a real objection to this Clause.
    I do not quite follow the meaning of the Amendment which has been put down by

    1601
    the right hon. Gentleman (Sir T. Whittaker) and the Chancellor of the Exchequer. Does it mean, as it appears to do, that you are going to tax these persons and companies upon their gross income earned abroad? If it is not so, words ought to be inserted to make it clear. An insurance company has to pay its claims over here. For that purpose it relies—first, upon its premium income, and secondly, upon its investments, some of which may be Colonial, but its real profit is the amount of its receipts after deducting its liabilities, and if you are going to tax that business upon its gross receipts from foreign or Colonial investments you are going to impose a very heavy charge upon it indeed, and by so doing you must increase the amount of premium income to be levied upon its policy holders and, of course, increase the burden of insurance, which we should all like to make lighter. I want to press, first, that this change is a very serious change, and may have far-reaching effect and should not be carried in a hurry. This Clause has not been fully considered and its effects have not been fully understood, and I think the right thing would be, without negativing it, to withdraw it for this year, or for this Session, if you please, and give it further consideration before this change is made. In any case, I think the proviso my hon. Friend has put down for the purpose of preventing the double payment of tax ought to be accepted.
    Sir A. WILLIAMSON: In putting down this Clause the Chancellor of the Exchequer had in view a laudable object, and that was to attempt to collect income Tax from those who deliberately, by investing abroad, endeavoured to evade it. But in endeavouring to accomplish that there is always the risk, and I think the risk has been run if it is not removed by the Amendment, of striking at a great many other people who are conducting a legitimate business and who have to leave moneys abroad for the purpose of carrying on their business. That is really one of the great difficulties of the Clause. I am rather surprised at the hon. and learned Gentleman (Mr. Cave) not seeing any difference between a man who invests, we will say, some money in Central Railway shares in New York in order to escape Income Tax and a man who is carrying on a business for the benefit of British trade abroad and who is using the profits earned in that business for the extension of that British business abroad.
    Mr. CAVE: I did not say I saw no difference.
    Sir A. WILLIAMSON: I understood the hon. and learned Gentleman to say he did not understand the difference of treatment of a firm as compared with a company. There are various differences. First of all a man can invest in a company abroad without ever going abroad himself and bearing the burden and heat of the day in some foreign clime, in promoting not only his own interest but the interest of others in the foreign country. There is a distinct difference in the law as regards the income from these investments. Take the case of the Egyptian Hotel, where a company carrying on business in Egypt had, I think, an English board and Egyptian shareholders. That company was not found in the Courts liable to pay Income Tax on profits because it was managed in Egypt, and it was only obliged to pay on what was remitted to this country. The position of a British firm with a head office in London, and branches scattered in various places over the world, is this. If the head partners in London retain some ultimate control over the branches abroad, they have been held to be controlling the business from London, and to be liable to pay taxes on income. That is the difference between the position of a company and a firm. It is very much against the firm, and I think the effect of having preferential treatment would fall upon those who go abroad to promote British trade and not merely on those who stay at home and invest their money in foreign shares.
    There is one thing I should urge on the Chancellor of the Exchequer and that is that he should not accept the Amendment making a discrimination between foreign countries and British Colonies. If that were done, it would be very unfair to the investor of money in, say, the Argentine, as compared with the investor of money in Canada. To make a difference of this sort would, it appears to me, be invidious, and what is perhaps a more serious consideration, it would invite retaliation. Supposing we made a difference between money invested in the Colonies and in the Argentine and other foreign countries, this fact would be brought up in the Congresses of those countries, and when it came to the taxing of railways and other enterprises in those countries in which British capital is invested, the fact that we had made a discrimination would be borne in mind, and evil results would follow. I

    1603
    would ask the Chancellor of the Exchequer to bear in mind one point in connection with this Clause. He speaks of income arising from securities, and we are dealing rather broadly with the Clause at the moment. I wish to bring to his mind that there are certain British firms and companies and individuals who have investments and enterprises abroad, and who borrow money from the Banks in those countries for the purpose of promoting and carrying on their businesses. The view of the Inland Revenue at present is that if a company in California borrows money from the Bank of California, it has to pay Income Tax not only on the profits that the company makes, but also on the money it borrowed, and the interest it paid to the Bank in California. That appears to me to be an unjust state of matters. The theory is that we are not really taxing profits but taxing income; that it is the gross income we are taxing, and that, therefore, while we are allowed to deduct the interest we pay to the British Bank, and we are not allowed to deduct the interest we pay to the foreign bank. An anomaly still greater is that if you raise money by discounting bills, you are allowed to make a deduction in respect of the interest paid to the foreign bank. In estimating the income arising from securities, I hope the right hon. Gentleman will bear in mind that that income does include a good deal of interest which has to be paid to foreign banks. It would be a very great hardship to tax them also upon interest which is really a charge upon their businesses.
    Sir J. D. REES: I wish to say a word or two about the effect of this tax upon India. The matter has been fully dealt with by my hon. Friends on particular points, but somehow India has escaped notice. I think the whole principle is a bad one, but I am content to deal with the particular case of India, and more particularly from the point of view of Indian finance in general, and of the hardships to the payer of Income Tax. I think everyone knows how difficult it is to get capital into India for investments. It is difficult to get rupee and sterling capital put into railways in that country where the extent of the lines is small in proportion to what is required for carrying on the vast trade of the country. I would mention, by way of illustration, the difficulty of getting money for equipping the existing lines. Even for that there is not
    1604
    enough, and this proposal is going to have the effect of discouraging people who have capital to invest and deterring them from putting their money in Indian enterprises. The people of India are addicted to hoarding their money. They will not put it into industrial concerns in the country. It is the merchant who leaves his money there to be reinvested who is going to be penalised by this most unfortunate proposal. The tea, jute, cotton, and other industries of India have been created and financed by British investors, who are now going to be hit by this provision. Their habit is to leave in the country a large amount of liquid capital, which is employed in financing their businesses, and it is most desirable in the interest of the British Empire as a whole that they should continue to do that. Profits and dividends not remitted to this country or spent in India should be considered as part of Indian capital, and should be left to fructify there and improve the general trade of the country. The return upon these investments is extremely moderate. Government rupee paper of 3½ per cent. is at 4 discount, and sterling paper at 3½ per cent, stands no higher than 10 discount. Even under the existing law capital does not flow readily into India. It has to be coaxed into the country. One would have thought that no proposal would come before Parliament to impede capital from flowing to that country. Speaking on behalf of India, I say that this proposal is altogether indefensible. It is a hardship to merchants, and a damage to the trade of the country. There is also the question which was put to the right hon. Gentleman by the hon. Member for St. Pancras. Take the case of Indian officials who invest some of their savings in India. Public servants at present are paying in India an Income Tax of about 2½ per cent, to the Indian Government. Under this provision of this Bill they would be paying a tax of four times as much to the Government which does nothing whatever for them. India is a separate financial unit, which has a separate Budget of its own. Why are these people to be hit twice over, and to be taxed so much more heavily by the Government which does not protect them than by the Government which does? I need not dwell upon the great hardship which this causes to small Indian officials, and which will absolutely keep them out of this country, but I may read one letter from many which I have received. This

    1605
    was written by a retired Indian servant. He says:—
    "I have five children living with me. The hoys have to he maintained and educated"—
    he is now living in England—
    "practically until they are twenty-one. The Government at present mulets me in a sum which would at least clothe one of the children. I have written direct to the Chancellor of the Exchequer, but, of course, I have got no reply."
    It is quite easy to multiply cases like that. Those are typical cases, and feelings of compassion, which are displayed so liberally to people at the utmost ends of the earth, should be extended to fellow countrymen who are being oppressed so grievously by this new provision of the law. It is not fair that capital of the class which I describe should be taxed in this country. The Income Tax in India should be what the Income Tax in this country should be, but what under the right hon. Gentleman it has ceased to be, a war tax—something available when a levy is required for some sudden military or naval or other emergency. In this case that reserve must be sensibly diminished when the same capital is subject to Income Tax in this country as well as in India. Another effect of this tax will be to prejudice Indian loans. A rupee loan was issued recently at the very excellent rate of 95½ per cent., but I fear that in future, owing to the menace of this new taxation, we shall not see a similar success attending an Indian loan. I am only anxious for the moment to deal with the particularly injurious effect which this tax has upon this particular community. It must have the effect of causing many capitalists to renounce their nationality, to cease to maintain establishments in this country, to live in hotels, and to lessen their liability to general taxation in this country. The question of this double taxation was raised at the last Imperial Conference. The Government of New Zealand moved a Resolution that it was
    "inequitable that persons resident in the United Kingdom, who, under the laws of a self-governing Dependency, pay Income or other tax to the Government of such Dependency in respect of income or profit in that Dependency derived, should have to pay a further tax in respect of the same income or profits in the United Kingdom."
    A similar resolution was moved by the Government of the Union of South Africa, and I observe that at that time the present Chancellor of the Exchequer expressed an opinion which seemed to be to some extent sympathetic with those resolutions, and he is now the author of this Clause, which runs entirely counter to the spirit and, indeed, the letter of what he then said. India
    1606
    is more hit by this Clause than the Colonies. The Colonies are not in leading strings. They can retaliate, so to speak, against the British Government, in a matter like this. They are independent in regard to their taxation, whereas India, although financially an independent unit, is not entirely independent, and could not retaliate in respect of this tax in the same way as the Colonies can. It will be allowed, I think, by Parliament, that taxation of this character is unfair, because the principle has been conceded as regards Death Duties. Death Duties payable to the Government of India in respect of Indian assets should be deducted or allowed in assessing Death Duties payable on an estate when a deceased person leaves assets in India. I do not know why that is not provided now. At the very least, there should be a rebate equal to the Income Tax levied by the Indian Government. I would not accept that as sufficient, neither would those for whom I speak, but that is the very minimum of justice which might be done in respect of the claims which I am endeavouring to put forth. As this Clause is worded it would embrace profits or gains received in or through any Indian dividends or shares, held by a partner in a trade or business, when it was converted into a private limited liability company. I think that the Chancellor of the Exchequer must have overlooked this the other day when he answered a question put by the hon. Member for Wirrall.
    As to the drafting of the Clause I would like to express a doubt as to whether the expression "securities" might not be stretched to cover interest on the capital to which I have referred. I do not know what exactly would be covered by the word "securities" in that Clause, and I should be glad if the Solicitor-General, whom I see present, will give this matter his attention. On the general question of Indian taxation it is at a time when the neighbouring Empire of Japan which enjoys the coasting trade of India, while Indian and British-Indian ships are excluded from it, while they are piling up subsidies to fight British trade, that the British Government comes in and levies a double Income Tax from these unfortunate men. When the Americans are starting an Income Tax they have made it chargeable only on citizens of the United States, nonresidents being expressly exempt from its payment. I do not know why that principle is not good in this country. The American

    1607
    capitalist who remains a citizen of the United States and spends part of the year in this country, should be subject to the same treatment here as that which is given to capitalists in America under the new Income Tax Law. No one else has pointed out in the Debate how very heavily this new provision will fall upon India in general in the way of prejudicing the in flow of capital, which is so necessary, and the absence of which is deplored on all sides, and particularly how oppressive it is as regards the small man. The big man will be able to escape this net. If a man is a capitalist of the class who has agents in different parts of the Continent or the East, it is not difficult for him so to arrange as not to receive his income in this country, or at any rate to conceal its existence, whereas the small man is absolutely at the mercy of the tax gatherer. No man is poorer than the small Indian official like the gentleman from whose letter I read an extract who comes home, after spending thirty years in India, with a pension of about £300 a year, and who has a family to maintain. The man who has been able to carry along on an income perhaps double the amount, comes home tired out after his long service, perhaps having a family of five children—in some cases a greater number of children—and suddenly he finds himself confronted, on a smaller income, with this new demand. I know that the Chancellor of the Exchequer has no regard whatever for the Income Tax payer. He looks upon him as a natural foe to be plundered on all occasions. But I appeal to the Committee to do justice to this class of Income Tax payers, who, I presume, are believed to vote against the Government as being their natural enemies. I do not know how this is, but I should think that the way in which the Income Tax is piled up—
    The DEPUTY-CHAIRMAN: These are general observations.
    Sir J. D. REES: I was referring particularly to this Clause and its effect upon the Income Tax payers to whom I refer, and I sincerely hope that they will receive adequate attention from the Government.
    9.0 P.M.
    Mr. MOLTENO: I wish to draw attention to several general considerations regarding the effect of this Clause upon the trade of our Colonies and upon our own trade. We have not heard any ex-
    1608
    planation of the Clause, or any comment upon it, or whether there is likely to be any, on the part of the Government. This is a matter which I think ought to be very carefully considered before we enact a Clause of this kind. The first point to which I wish to draw attention is that the essential feature of this Clause is to tax property outside our jurisdiction, and in the jurisdiction of another country. That is really a somewhat delicate proceeding, and I am afraid that in course of time, if not immediately, it will cause very considerable ill will between different countries and us, and between our Colonies and us, for the reason that we have made in the Colonies investments which are necessarily developing those Colonies. And, further, the Colonies are more developed by British capital than by the capital of any other country. If we tax property in those Colonies we diminish in the first place their resources, and, in the second place, we discourage investments in those Colonies and tend to confine investments to the Mother Country. Some people think that is a proper course, and the Chinese think it a good thing to keep all business in their own country. We who are a great trading community, we who have wide-world trade, must regard as serious restriction of investments in foreign countries. Let us see what the process is. Let us take a country like the Argentine, where we have, I suppose, £300,000,000 or £400,000,000 invested. As a result of those investments we have to provide engines, rolling stock, and goods of every kind of manufacture in this country, employment being thus provided for working men here, besides which there is freight to and from for our ships. We are now receiving in return large quantities of meat, grain, live-stock, maize, and other food products which have really become essential to the feeding of the people of this country.
    Foreign investments of this kind ought to go on. If we put a limit upon our food importations, or restrict the free flow of money for these purposes, it will tend to increase the cost of living, and will ultimately restrict the number of people who can find a subsistence in this country. I hope we are to have some explanation or some assurance on the part of the Government that some such effect as I have described will not be created by the present Clause. Then, again, with regard to those gentlemen who are not ordinarily resident within the jurisdiction, who come

    1609
    here, but do not permanently reside here, if these restrictions are imposed, it will result in the traders of the Colonies having a considerable preference over our own merchants in this country. The change made by the Amendment of the Chancellor of the Exchequer will tend rather to increase the competition which our merchants here will feel than to satisfy any misgivings that may have been felt. No doubt those who are resident in the Colonies, and who come to this country, but are not ordinarily domiciled here, if you build up this Chinese wall, will deal with their own merchants in the Colonies, and our trade will dwindle. I hope that this will be considered by the Government. I think it would be wiser, seeing that they will get very little money from this proposal, to do as the Prime Minister has suggested, namely, to send the Clause to be considered by a Committee, and it should be deferred until we have had a report from that Committee. We would then have more certainty in the matter.
    Mr. PRETYMAN: I think that the Committee has had some right to complain of the action of the Government. Here we have a very novel, a most complicated, and extremely important proposal. We have just had a very interesting speech from the hon. Member who has just spoken, and who has dealt with it, not as a party subject at all, but as a business subject. It is not a party matter. To any sensible person it is perfectly clear—indeed, it is admitted that the object of this Clause is to catch people who, by putting their money out of the jurisdiction, are endeavouring to evade the taxes imposed by this House. Everybody has agreed on both sides of the House that that is the desirable object if you can fulfil it. As a business Assembly—and we purport to be a business Assembly—we have here a proposal by the Chancellor of the Exchequer which is considered likely to fulfil that object. What further effect is it likely to have? We have had an important speech from the hon. Member who has business knowledge, and during that speech one Member of the Government was present. I am inclined to move to report Progress, but under the guillotine I am prevented from doing so. Surely the Government are in honour bound on an occasion like this, when they have prevented us from taking normal means to give some attention to important matters. We find our-
    1610
    selves now, after two hours' Debate, without a single word from the Government Bench as to a most difficult and complicated Clause, as to which Members on both sides have been giving opinions as to its meaning. When the Chairman intimated there might be a general discussion, everybody assumed that after the Mover and the hon. Member for St. Pancras, we would have had an authoritative explanation either from the Chancellor of the Exchequer or the Attorney-General as to the real meaning of the Clause, but not one word.
    We are still absolutely in the dark as to a Clause, the drafting of which must necessarily be obscure. Hon. Members have asked what is its meaning but we do not know what it means, and we are arguing in the dark. Really I am moved to most serious indignation at what is a scandal. Here we are supposed to cover in four hours an immense amount of ground which everybody knows could not be covered in the time, and two hours wasted in discussing proposals which have never been explained. It is perfectly scandalous, and I hope the country will take note of the contempt with which the Government treat the House of Commons. In this we may be involved in most serious complications with our own Colonies. As the hon. Member (Mr. Molteno) has pointed out, we are now providing a distinct difference in the treatment of the Colonial and of the foreigner. The foreigner simply escapes the new double taxes, and the Colonial only escapes so long as he is to be or can be properly considered as still resident in his Colony. Thus an American subject who remains so and mainly resides here escapes, but the Colonial who does so, and who too has made his fortune abroad, is to be liable simply because he is a Colonial. That must cause very great discontent within the Empire. That is the position in which we find ourselves through the Chancellor of the Exchequer in his perpetual attempt to pile the whole of the taxation on to as few as possible and to persuade the rest of the country that he is doing no harm. We have had Chancellors on both sides, and most strongly the late Sir William Harcourt, pointing out that the effect of raising taxation of any kind, direct or indirect, beyond a certain limit is always to cause evasion or avoidance. It must be so. In pursuit of the avoider you are entering very deep and dangerous water.

    1611
    In the absence of any explanation as to this Clause I do not feel inclined and I do not intend to discuss it, but we see certain probable effects. We cannot be expected to discuss it until we have had an explanation from the Government. As I say, we are entering in this Clause upon deep water and we do not know where we are or what we may be doing. For this House in the absence of any explanation to carry a Clause like this, with all its consequences, is simply part of the thoughtless, inconsiderate and reckless finance of anything to meet the exigencies of the moment and pile the taxes on to a section of the people, and then when a mistake is made impose the tax in some other direction and never mind what happens or future consequences, about which nobody seems to think or care. I am glad to see that the Attorney-General has returned, and I repeat that I think it is hardly right that Ave should have had two and a quarter hours' discussion without any statement of any kind from the Front Bench, and I hope the right hon. Gentleman will tell us what this Clause really means and intends.
    Captain LESLIE WILSON: We have had very little time to discuss these Clauses, and this new Clause will have the most serious consequences right throughout the British Empire. We have had criticism directed at this Clause from both sides and I hope the Government will consider its operation and do their best in order to alter it to the advantage of those who will suffer grievances under it. There is not the slightest doubt that there are real grievances under this Clause. Like other hon. Members, I am not at all certain that those who invest their surplus income abroad and allow it to accumulate will be gathered by the Chancellor into his net. I think he will find them rather evasive people, though I, for one, would have no sympathy with them. But I am interested and I do speak for the British subject who, according to the view of the Commissioner of Inland Revenue, is ordinarily resident in this country either for a long or short time. Before this Bill was ever printed those British subjects suffered under distinct grievances and great hardships, and it is now proposed to accentuate and aggravate those hardships to an extent which I do not think is appreciated by
    1612
    hon. Members in this House. This Clause opens up a large and by no means a party question, but a great Imperial question.
    To extend this to all investment made in our Colonies is a proposition full of danger, and in my opinion will endanger the fidelity of our Colonies to a very large extent. I think the right hon. Gentleman must have had representations made to him by the Colonial Secretary, who has had representations made to him by the representatives of the Colonies in this country. I venture to say there is not one of those representatives who does not view with the greatest alarm the possible consequences of this Clause. The impolicy of the proposal is affecting those who are fighting our commercial battles overseas, and that is a matter which cannot be overlooked by the Government at the present time. No one knows exactly the position in which he stands. The phraseology of the Clause, which has not been explained by the Government, is certainly ambiguous. It is feared by Colonials that the Chancellor of the Exchequer contemplates the taxation of the profits of businesses in the Colonies which have a branch office in this country. The right hon. Gentleman has been approached on the subject by representatives of the Colonies, and I believe he stated—I hope that this will be confirmed—that no change is to take place in the provisions of the law in regard to liability in respect of profits derived from businesses carried on abroad. If that is the case, it is satisfactory to a certain extent. But it does not in any way help those Colonists who are now resident in this country, whose money is remitted to them from the Colonies, and who are liable to higher rates of Income Tax in addition to the taxation which they have to pay in their own country. I will take one or two typical cases to show the hardship under which these Colonists suffer, and in order that the Committee may realise the extent of the taxation which they have to bear now. Take a case connected with the pastoral industry of Australia. It will be generally recognised that that is the most important industry in Australia. It is the stable industry, the industry which has made the prosperity of the Commonwealth, and it is on the prosperity of that industry that the whole future of the Commonwealth depends.
    Take the case of an owner of pastoral property in Australia who, after leaving

    1613
    these shores perhaps twenty or thirty yeas ago, comes over to spend the rest of his life in England. He has been fortunate enough to have acquired property which is now worth some hundred thousand pounds, on which he gets an average return of 5 per cent. How is that man treated under this particular Clause when he comes over here? I will give the actual taxation which he pays in the Commonwealth and what he has to pay here. He pays over there a Federal Land Tax. Hon Members opposite may approve of that. It is not my duty to-night to say whether Australian land taxation is good or not. He pays a Federal Land Tax, amounting to £1,149 6s. 1d. on that £5,000 a year. He has to pay a State Income Tax of a shilling. That brings his taxation up to nearly £1,400. He then has to pay another £250 Income Tax and Super-tax here. That makes a total taxation of £l,650 on that income of £5,000, without counting any local taxation that he may have to pay. If he derives the whole of the £5,000 from property in Australia, he has to pay, in New South Wales for instance, a threepenny Property Tax. He will therefore pay over there an Income Tax of a shilling and a Property Tax of threepence, and then over here an Income Tax of 1s. 4d. and a Super-tax, making a total of £700 a year. I think the Government will realise that these are particularly hard cases. I could cite many others in which there is a real grievance, the existence of which must imperil the good commercial relations which at present exist between us and our possessions. There are only two alternatives open to the individuals affected in such cases. One is that they should take their capital away from the Colonies, which would be bad for the development of the Colonies. The other is that they should not become resident in this country, which would be bad for the Chancellor of the Exchequer, because they at any rate pay Income Tax on a certain portion of their income in this country. I would like to emphasise the point put by my hon. Friend, that you are letting off the man who is not a naturalised British subject. He can come here and enjoy all the advantages which Great Britain offers, and you let him off from this taxation, but you penalise almost to the extent of confiscation the man who has given the best years of his life to building up your Empire.
    Sir J. SIMON: The last speaker has perhaps not observed that there are on the Paper in the name of the Chancellor of the Exchequer two Amendments, which will slightly vary the effect of this Clause. It would be convenient if I offered to the Committee as clear a statement as I can of what is intended to be the scope of this Clause as I understand it. Let me first say that the Debate presents this rather curious feature. The Mover and Seconder explained that the Amendment was put forward by them because they warmly sympathised with the object of the Clause, and they were only concerned lest the method suggested should not be effective for its purpose. Nobody who heard only the later speeches in the Debate would imagine that that was the view of the Opposition. The hon. and learned Member for Kingston (Mr. Cave) took the view that the Clause would necessarily involve in most cases an unfair system of taxation, which he called double taxation, that it would drive capital out of the country, and all the rest of it. It does not appear that the criticism of the Clause is quite consistent. I am not clear now whether the view of hon. Gentlemen opposite is that the object of the Clause is a good one, but that the methods we propose are clumsy, or whether their view is that it is a bad proposal from first to last. [HON. MEMBERS: "Hear, hear!"] I thought that probably the revised version would be preferred to that put forward by the sponsors of the Amendment. I should have thought that, assuming you could do it with reasonable effectiveness—which I agree is a proper condition to lay down—there was no sort of income which, if you have an Income Tax at all, ought more obviously to be taxed than an income which comes from investments abroad and an income which is kept abroad. It is not merely income in the same sense as all other incomes, but the man who is entitled to it is in such a position that he does not need to spend it on his own wants in his own country. If there was any sort of income which it would be fair, if possible, to bring within the net of the Income Tax law, I should have thought it was an income of that sort which its owner does not even need to spend.
    I quite agree—it is a perfectly fair criticism to raise—that the question will then arise, Can you do it with sufficient certainty to avoid very unfair and undesirable consequences? I concede that that criticism is one well worth weighing. For

    1615
    instance, if it were true that we had to rely on nothing except the good faith and the honesty of the Income Tax payer, I think it would be a very fair criticism to make that this Clause is one which is really letting off insincerity at the expense of honesty. That is quite a fair criticism to make; but is it sol? We in this Clause have, of course, brought in the machinery and penalties of the ordinary Income Tax law. I doubt whether that machinery and those penalties always make certain even under our present law that income that ought to be taxed is brought under the review of the Income Tax authorities. Probably not! Well, this is something very much more effective than relying upon the good will of certain benevolent and patriotic persons who are prepared to volunteer to pay their taxes when nobody can make them. In the first place, you have the provision—which is familiar enough in our Income Tax law—that any man who makes a false declaration thereby exposes himself to a substantial penalty, and to three times the tax; and in the second place—and I mention this because I think the hon. Member who moved the Amendment referred to it—there is a further opportunity of correcting an inadequate statement when the taxpayer dies. I think the hon. Member who, in his speech talks about getting level with the defaulting person, did not observe that.
    The answer to his criticism, I think, is this—and, again, this is one of the general provisions of our Income Tax law—although you cannot exact penalties from the executors, and cannot send executors to prison, because of what the dead man, whom they represent, may have done, still you can exact—as you do exact—from the estate of the dead man when it comes under review at the time of the Death Duties, and the like stages, three years' Income Tax if it is found that it has been improperly returned. I say we are not here putting forward this new provision with the idea that we have simply to rely upon the goodwill and benevolence of the Income Tax payer to tell us. That, indeed, would be a broken reed upon which to rely. We have got the whole machinery of the Income Tax law which is available to be put in motion in this regard. Even so, it is quite true that there are obviously greater difficulties in dealing with income of this sort which does not come to this country than would
    1616
    be the case with income which is already within the purview of the authorities. That is quite true. I can say quite frankly, if the true criticism was that we have not got a reasonable and effective machine to secure that the just and the unjust both come under the same dispensation, it would be a very forcible criticism. Is that so?
    I submit to the Committee this: It has been said, "Why do you not wait until after the Committee or Commission which has been suggested on the Income Tax law have sat and reported?" I do not think we ought to wait. In the first place, if this is a case which ought to be covered by the Income Tax law we had much better begin by bringing it within that just law now, though it may very well be that experience will go to show that our machinery can be improved and tightened here and there. In the second place, this Committee which the Prime Minister has spoken of ought to be a very valuable body, and its recomendation will be much better worth attention if they are able to speak in the light, even of the briefest experience of the imposition of this tax. Let me give an illustration in connection with the ordinary Income Tax law. There are the Statutes of 1842 and 1853. Everyone whose business it is to learn about these knows that the Statute of 1853 was very largely concerned with screwing up the machinery and tightening up the loose joints which experience had shown to exist under the dispensation of 1842. It had other objects, of course, such as extending the Income Tax to Ireland. But the Statute of 1853 would never have been the effective piece of machinery it is if it had not been that we started in 1842, and the machinery devised in the light of experience did something to make the Statute work more effectively.
    I submit to the Committee these general, observations before I attempt an exposition of the Clause. I ask the Committee to assume that it is right that we should endeavour to bring this sort of income within the Income Tax law, and I ask the Committee to remember that we propose to use all the machinery of the Income Tax law, of declaration, of penalty, of treble duty, and the like, in order to make evildoers realise that they do evil at their peril! What is the substance of the Clause? What does it provide? As things are, if interest on money, dividends on shares, the produce of any possession in

    1617
    a foreign country, the proceeds of a security are remitted to this country, they are liable to tax. Hon Members will see that there is reference here to the fourth case in Section 100 of the Income Tax Act, 1842, under which the proceeds from securities remitted to this country are taxed gross. There is no question of their making any allowances whatever. They come to this country and are taxed just in the way in which ordinary interest is taxed, or ordinary dividends are taxed in this country, without any regard to the balance of profit or loss. The fifth case is the case of the remittance to this country of the proceeds of foreign possessions. In that case there are certain deductions and allowances made before you arrive at the sum which you are going to tax. For example, an instance which is very well known to lawyers who have to deal with this subject is the case of a man who had an interest in an Australian wool business, and who had remitted to this country from time to time the proceeds of that business, either in bales or cash. The Committee will see at once the reason for the first of the two Amendments to this Clause which the Chancellor of the Exchequer proposes. Under the existing law these sums are only taxed if they are remitted to this country. Supposing, for example, that a company has got possessions, investments, or securities abroad producing £5,000 a year. It may be that in one year they would not remit to this country any portion of the proceeds of the £5,000 which will lie outside this country; nothing will come under the tax. Next year these possessions or securities outside this country will produce another £5,000. Suppose that the owner of such securities or possessions remits then not only £5,000 of the second year, but the previous £5,000, making £10,000 in all to this country. As soon as he remits that to this country, then, although part of that is the proceeds of the previous year, and part of it the proceeds of the current year, the existing Income Tax law will get the whole of the £10,000.
    It, therefore, comes to this, that under the existing law you may remit sooner or later, but whenever you do remit you will be taxed on the whole amount you do remit. The Committee will see that as this Clause stands in the Bill, there is this conceivable danger—I do not say it will have this effect, but we have thought it right to make certain by the Amendment which we propose.
    1618
    If you are going to say to the owner of these foreign possessions or securities, "We propose to tax you year by year on your income, whether you remit it to this country or not," then it will mean that he would have to pay on the £10,000 in the second year by the remittance of the proceeds of both years. That is what occurred to us, and since that of course is not intended—whatever are the vices of the Chancellor of the Exchequer, it is not intended to perpetrate that particular fault—we thought it right to put down this Amendment in order to make it quite clear. Hon. Members will find on the Paper the suggested addition by the Chancellor of the Exchequer in Clause 5. And the effect of these words is to make it abundantly clear that, although the old law will still continue and we shall be able to tax remittances in the ordinary way as when they come to this country, so far as the taxpayers are caught by the new Clause they may have to pay year by year even though the amounts are not remitted into this country, and so we propose to add these words:
    "and in particular for the purpose of computing Income Tax in respect of securities, stocks, shares, or rents to which this Section applies, in pursuance of the rules under the fourth and fifth-cases in Section one hundred of the Income Tax Act of 1842, the income arising from the securities, stocks, shares, or rents shall be substituted for the sums, profit, or gain as the case requires, received therefrom in the United Kingdom."
    I think hon. Members will see that the effect of that is to say that, inasmuch as we are now going to bring within the Income Tax law the income year by year, although the income is not remitted into this country, we must not be entitled to tax it over again when it is remitted. Before I come to the second change may I say one or two words in reference to another criticism. The hon. and learned Member for St. Pancras had something to say about rents, and the hon. and gallant Gentleman who spoke just now had a question to ask about securities. As regards rents, of course it is quite true—the hon. and learned Gentleman quoted the authority of Professor Dicey and Sir William Harcourt—that we here in the British Parliament do not endeavour to put a tax upon foreign land. I doubt whether that is due simply to international comity; it is due to a very much simpler thing—that is,

    1619
    that you do not endeavour to put a tax upon foreign land because you could not exact it. You cannot go to a foreign country and put in a bailiff. Really, if one gets away from what are merely technical distinctions, there is no resemblance between the proposals in this Clause that you should bring into account rents which really are only one form of profit from foreign ownership, and that you should tax the land itself. The hon. and learned Gentleman says that rents is a new word in Income Tax law. As a word it may be. But, supposing you have a land company, of which there are many, whose head is in the City of London, whose directors may be Members of this House, and that land company buys land in other parts of the world and makes a profit on its rents from buying and selling land, does anyone say that this company, sitting here in London, has not to deliver a profit and loss account in order to be taxed under Schedule D?
    Mr. CASSEL: Not on rent.
    Sir J. SIMON: The hon. and learned Gentleman will see, if he avoids what is purely a technical distinction, the substance of the thing exists now. The company obtains part of its profit by letting lands, which enters into the balance of its profit and loss, and it is, as a matter of fact, taxed under our existing system. I am, therefore, wholly unable to see the distinction between a land company which is at present liable to Income Tax if managed from this country, although it has invested in foreign land, and if it lets foreign land and what is aimed at by this Clause; or take a hotel company that does nothing but let rooms—
    Mr. PRETYMAN: We want an explanation upon this, because the Attorney-General is arguing as if it was a question of profits derived from land. What we have in question is Income Tax in respect of income arising from land, it does not say profit it says income.
    Sir J. SIMON: I do not intend to escape from that point; I will come to it. For the moment I was pointing out that in our view we are not departing from the international comity or the principles of Sir William Harcourt or Professor Dicey, because we are bringing in the word rents. The hon. and gallant Gentleman asks a fair question. He asks what is going to be profit in the calculation. I think he
    1620
    will find the answer is this. Line nine contains the words:—
    "subject in the case of income not received in the United Kingdom to the same deductions and allowances as if it had been so received and to a deduction on account of any annual interest or any annuity or other annual payment payable out of the income to a person not resident in the United Kingdom."
    The hon. and gallant Gentleman will see supposing we were dealing with what had been remitted to the United Kingdom it would be what is remitted to the United Kingdom after the expenses of repairs and management were deducted. What we are interested in is what is left, and the object and meaning of this Clause, I respectfully submit, is not that you take the gross rents which a man who happened to own a house or property in Winnipeg is entitled to receive and is paid, but that you deal with that subject in exactly the same way in which it would be dealt with supposing it were remitted here, and it is the net and not the gross amount that comes into the calculation.
    Mr. PRETYMAN: I hope the Attorney-General will excuse me for interrupting him, but we want to understand this. There are deductions made here based upon the facts and customs obtaining in this country. Taxes and deductions abroad are on a totally different basis. Deductions in Winnipeg are quite different to here.
    Sir J. SIMON: That does not alter the fact if you say they are to be treated, subject to the same deductions and allowances received here, which you are able to apply in the case of rent, and in effect receive exactly the same consideration. Most certainly that is the explanation and meaning of the Clause. Then the hon. and gallant Gentleman asked about security. He asked what is the meaning of the word "security?" The word "security" is the word used, as no doubt the hon. Gentleman knows in the Income Tax Act, it is to be found in this very fourth case in Section 100. The distinction which is drawn between securities and possessions is this—
    Mr. PRETYMAN: I was arguing on the basis that I was under the impression that deductions were to be left as if the tax was levied in this country. If deductions are to be made when the sum is received it must open the door to other considerations.
    Sir J SIMON: Let me put this case to the hon. and gallant Gentleman. Just suppose he and I owned houses side by side in some place outside the United Kingdom. I have my rent remitted year by year—that is to say, it comes under the tax now. The tax is not on the gross rent but on the amount I receive. The amount I receive is the amount left after repairs and other expenses have been paid. Let me suppose that he, with his identically similar house, keeps his rent over there. He will not be taxed on a penny more than I am taxed now, but he will be entitled to say, "If my rent is remitted to me over here I shall have, first of all, to provide the expenses which fall upon the landowner, and I have only to account for the rest." That is what he would include in his return, and if it is possible to tax the rents when they are remitted to this country, why should they not pay on those rents, even though they are not remitted?
    Mr. PRETYMAN: The right hon. Gentleman has missed my point. He has his house and he remits what portion of the rent he pleases over here. He then pays Income Tax on that, but what he remits here is entirely at his option, and it is not based upon any definite regulations over which this country has any control. We each have a rent of £50. Suppose the right hon. Gentleman chooses to remit £25 home, he has not to account for that which he chooses to remit, and I do not remit anything.
    Sir J. SIMON: But you will now.
    Mr. PRETYMAN: The point is, how can any definite tax be based upon the right hon. Gentleman's remittance, which is wholly optional.
    Sir J. SIMON: I am assuming that the hon. and gallant Gentleman would have an honest agent there who would remit him every farthing except that which he could justify as having been spent upon the property. More particularly it will fall upon the taxpayer to make a fair and honest return. There is one other Amendment which we thought it right to make, and here again, I am sorry to say, that I think the hon. and gallant Gentleman has entirely misunderstood this Clause. Some hon. Members seem to think that the proviso at the end of Clause 5 was ingeniously devised to favour foreigners at the expense of the British people. Of course that is nonsense. The words at the end of the
    1622
    proviso do not say that everybody who is ordinarily resident in a British Possession shall be taxed. Even that provision does not go quite far enough in the interests of British subjects who come from Dominions beyond the sea. There are British subjects, Canadians and others, who are ordinarily resident in the United Kingdom, it may be in England or in Scotland, who none the less ought to be exempted though it cannot be said they are ordinarily resident in a British possession. Therefore, we have proposed a second Amendment in which, instead of saying that persons are to be exempted who are British subjects ordinarily resident in a British possession, we propose to say that the only persons who are to be included are persons who are domiciled in the United Kingdom, and of course persons who are British subjects. The effect of that is to get rid of some of the criticisms which have been made here, and though, of course, this is an experiment and everything new is an experiment, none the less we think it is one which we are well justified in trying. I remember on the Second Reading of this Bill the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) said that he was quite certain that this was so potent a fiscal instrument that it was going to produce a good deal more revenue than the Chancellor of the Exchequer thought it was. Now, in the right hon. Gentleman's absence, other hon. Members say that it is so leaky that it will not hold water for five minutes. We think that our Clause with our Amendments in it is calculated to be effective. No doubt experience will show that there are improvements to be made, but we think it all the better that the Clause shall be put into working order before the Committee or Commission sit on the Income Tax law in order that the Committee may deal with it in the light of some little experience. We ask the Committee to pass it, in the belief that it hits a class of income which, above all other incomes, deserves to be hit.
    Mr. J. M. HENDERSON: I would like to know if interest which has been earned abroad and invested may now be remitted without being taxed, or will that form of income be taxed when it is remitted? I am referring to accumulated income invested as capital abroad. Will that come here free of taxation or will it be taxed on the whole lot?
    Sir J. SIMON: We have by our Amendment made certain that having called upon a man to account for income as he earns it year by year—it does not matter what it is, for he may throw it into the sea or invest it as he pleases—we cannot call upon him to account for income remitted in a lump sum from time to time. Profits earned abroad, if remitted after three or four years, come under the tax for remitted incomes when they reach this country.
    Mr. J. M. HENDERSON: I am afraid I have not made my point clear. Take the case of insurance companies. Suppose they have accumulated funds amounting to £20,000 lent out there as fresh capital investments. From to-day or from the date of the Budget you are saying that all your income derived from investments there is to be taxed. Suppose the insurance companies say, "That is all right for the future, but are you going to tax the investment which we have received as interest and reinvested there, when we choose to bring it home and reinvest it in this country?"
    Sir J. SIMON: There is not the slightest intention of letting anybody off from paying the Income Tax. Do not let my hon. Friend think that he can bring home any ill-gotten gains—
    Mr. J. M. HENDERSON: I have no ill-gotten gains.
    Sir J. SIMON: All this is going to be taxed by our new process. If the income has already been invested there and is now brought home, as soon as it falls under Clause 5 it will be taxed as remitted.
    Sir T. WHITTAKER: The object of my Amendment was to provide that so much income as had accumulated prior to the 5th April last, before this provision came into force, when brought home was not to be taxed. The tax on income was to commence only this year and to go on in future, and the money which would otherwise be spent abroad and was accumulating prior to the 5th April last would, when brought here, not be taxed.
    Mr. JOYNSON-HICKS: I think the learned Attorney-General has not touched this point, which is that income accumulated abroad has now become capital. I think it would be well if the right hon. and learned Gentleman would make the point clear that in cases of remittance here of such capital there would be no taxation.
    Sir J. SIMON: I am sorry, but I did not appreciate the point. I did not realise that my hon. Friend was laying emphasis on the difference between capital and merely delayed income. I think he is right. We should not, as the result of this, legislation, because an insurance company now sends accumulations of income home on that account tax it. The object of our Clause was to make it perfectly clear that insurance companies in that respect are safe. It is a very complicated thing to explain, and I am very far from claiming to have put it clearly. A life insurance company, for example, may often have investments abroad, and indeed some foreign States—many of the States of the United States of America—insist on their having investments abroad. It is, I think, a very common practice in the case of both life and fire companies—I am sure that it is in the case of fire companies—to use the interest on their foreign investments to pay their foreign losses. You are by that means able to make the return on your foreign investments meet your foreign losses, or pay your foreign debts, or pay for your foreign fires, and to that extent the thing never crosses the Atlantic at all. It has, of course, been a very much disputed question whether insurance companies in those circumstances were obliged to bring into their profit and loss account the interest on their foreign investments. They have always said that they are like a barrister or a stockbroker, or anybody else. He undoubtedly has not got to bring into his profit and loss account the interest on his investments abroad as long as he does not bring them home. The distinction is this: If an insurance company, as part of the business of carrying on its affairs, must invest, then the investing of its money comes within its profit and loss account, and, indeed, if you do not bring into the account the interest on investments, some of the insurance companies in the world would be able to show that they were running permanently at a loss. Insurance companies could not pay their losses simply out of receipts from premiums. They pay their losses out of two things. One is the premiums they receive, and the other is the interest on the premiums which they have invested. It has been decided, as a matter of fact, quite recently in the House of Lords that an insurance company is obliged to include in its profit and loss account its investments whether at home or abroad; but, of course, that is quite a different thing from saying that

    1625
    people in general—barristers or stockbrokers, or private gentlemen—have got to account for their interest on their investments as long as they do not bring it home, and I cannot help thinking that the idea that insurance companies are particularly hit by our provision is really a mistake. The people who are hit are those who have hitherto escaped. The insurance companies have always had to bring in the interest on their investments.
    Sir T. WHITTAKER: Oh, no!
    Sir J. SIMON: Certainty. Take a fire insurance office like the Liverpool, London, and Globe.
    Sir T. WHITTAKER: No, take a life office.
    Sir J. SIMON: An ordinary fire insurance company, like the Liverpool, London, and Globe, have to bring into their accounts the interest on their investments as well as their receipts from premiums, and it is quite right that they should, because that is the way they carry on their business. That is a very different thing from taxing it on its remittances to this country. It is quite true that as regards a life company you have to make actuarial calculations, but it is also true that a life company, at any rate, if it is not a mutual company, has got to bring into its accounts in the ordinary way interest on its investments as well as other things. I think, therefore, that insurance companies will find that it is not they who suffer materially by this new Clause, and as long as it is clear to those who represent them that we do not seek to tax accumulations of capital sent to this country now—
    Mr. JOYNSON-HICKS: The right hon. Gentleman uses the words "accumulations of capital." Would he mind using the
    words "accumulations of capitalised income"?
    Sir J. SIMON: I mean that, That is, obviously, the intention of our Clause.
    Mr. CASSEL: Is it not the case that the Clause does not have that effect at all?
    10.0 P.M.
    Mr. LEIF JONES: I am sorry to say that I do not even now quite understand. It is not intended to tax any capital, but all capital, as I understand, is saved up income. All capital at some time or other was income, and I am anxious to know the date it is proposed to start. Am I right in supposing that this Clause is intended to tax income earned since 6th April this year, or is it income earned last year and brought into this country this year to be taxed? At what stage does accumulated income, in my right hon. Friend's idea, become capital? He has really not told us the date at which these foreign incomes turn into capital. I always supposed that last year's income was capital, and I want to know whether the income he wishes to tax is income earned since 6th April this year.
    Sir J. SIMON: I really must apologise to the Committee, but this is a most ghastly thing to talk about. I will accept the description of the hon. Gentleman opposite. One ought to describe this as "accumulations of capitalised income." The joint effect of our Clause and Amendments is that they are not brought under the tax at all. The object is to start them with a clean sheet.
    Question put, "That the words proposed to be left out, stand part of the Clause."
    The Committee divided: Ayes, 268; Noes, 197.

    Division No. 165.]

    AYES.

    [10.3 p.m.

    Abraham, William (Dublin, Harbour)

    Beauchamp, Sir Edward

    Chancellor, Henry George

    Acland, Francis Dyke

    Beck, Arthur Cecil

    Chappie, Dr. William Allen

    Adamson, William

    Benn, W. W.(T. Hamlets, St. George)

    Clancy, John Joseph

    Addison, Dr. Christopher

    Bethell, Sir J. H.

    Clough, William

    Agnew, Sir George William

    Black, Arthur W.

    Clynes, John R.

    Ainsworth, John Stirling

    Beland, John Pius

    Collins, G. P.(Greenock)

    Allen, Arthur A.(Dumbartonshire)

    Booth, Frederick Handel

    Collins, Sir Stephen (Lambeth)

    Allen, Rt. Hon. Charles P.(Stroud)

    Bowerman, Charles W.

    Compton-Rickett, Rt. Hon. Sir J.

    Armitage, R.

    Boyle, Daniel (Mayo, North)

    Cornwall, Sir Edwin A.

    Arnold, Sydney

    Brady, Patrick Joseph

    Cory, Sir Clifford John

    Baker, Harold T.(Accrington)

    Brunner, John F. L.

    Crooks, William

    Baker, Joseph Allen(Finsbury, E.)

    Buckmaster, Sir Stanley O.

    Crumley, Patrick

    Balfour, Sir Robert (Lanark)

    Burn, Rt. Hon. John

    Cuilinan, John

    Baring, Sir Godfrey (Barnstaple)

    Burt, Rt. Hon. Thomas

    Davies, David (Montgomery Co.)

    Barlow, Sir John Emmott (Somerset)

    Buxton, Noel

    Davies, Ellis William (Eifion)

    Barnes, George N.

    Byies, Sir William Pollard

    Davies, Timothy (Lincs., Louth)

    Barran, Sir John N.(Hawick Burghs)

    Carr-Gomm, H. W.

    Davies, Sir W. Howell (Bristol, S.)

    Barran, Rowland Hurst (Leeds, N.)

    Cawley, Sir Frederick (Prestwich)

    Dawes, James Arthur

    Beale, Sir William Phipson

    Cawley, Harold T. (Lancs., Heywood)

    Delany, William

    Denman, Hon. Richard Douglas

    Lambert, Rt. Hon. G. (Devon, S. Molton)

    Price, C. E.(Edinburgh, Central)

    Dewar, Sir J. A.

    Lambert, Richard (Wilts, Cricklade)

    Price, Sir Robert J. (Norfolk, E.)

    Dickinson, Rt. Hon. Willoughby H.

    Lardner, James C. R.

    Priestley, Sir Arthur (Grantham)

    Dillon, John

    Law, Hugh, A.(Donegal, West)

    Priestley, Sir W. E. B. (Bradford, E.)

    Doris, William

    Lawson, Sir W. (Cumb'rid, Cockerm'th)

    Primrose, Hon. Neil James

    Duffy, William J.

    Leach, Charles

    Pringle, Wiliam M. R.

    Duncan, C.(Barrow-in-Furness)

    Levy, Sir Maurice

    Radford, George Heynes

    Duncan, Sir J. Hastings (Yorks, Otley)

    Lewis, Rt. Hon. John Herbert

    Rattan, Peter Wilson

    Edwards, Sir Francis (Radnor)

    Low, Sir Frederick (Norwich)

    Rea, Walter Russell (Scarborough)

    Edwards, John Hugh (Glamorgan, Mid)

    Lundon, Thomas

    Reddy, Michael

    Elverston, Sir Harold

    Lyell, Charles Henry

    Redmond, John E.(Waterford)

    Esmonde, Sir Thomas (Wexford, N.)

    Lynch, Arthur Alfred

    Redmond, William (Clare, E.)

    Esslemont, George Birnie

    Macdonald, J. Ramsay (Leicester)

    Redmond, William Archer (Tyrone, E.)

    Falconer, James

    Macdonald, J. M. (Falkirk Burghs)

    Richardson, Albion (Peckham)

    Farrell, James Patrick

    McGhee, Richard

    Richardson, Thomas (Whitehaven)

    Fenwick, Rt. Hon. Charles

    Maclean, Donald

    Roberts, Charles H.(Lincoln)

    Ffrench, Peter

    Macnamara, Rt. Hon. Dr. T. J.

    Roberts, George H. (Norwich)

    Field, William

    MacNeill, J. G. Swift (Donegal, South)

    Roberts, Sir J. H.(Denbighs)

    Fiennes, Hon. Eustace Edward

    MacVeagh, Jeremiah

    Robertson, Sir G. Scott (Bradford)

    Flavin, Michael Joseph

    M'Callum, Sir John M.

    Robertson, John M.(Tyneside)

    France, Gerald Ashburner

    M'Curdy, Charles Albert

    Robinson, Sidney

    Furness, Sir Stephen Wilson

    McKenna, Rt. Hon. Reginald

    Roch, Walter F.(Pembroke)

    George, Rt. Hon. D. Lloyd

    M'Laren, Hon. H. D. (Leics.)

    Roche, Augustine (Louth)

    Gladstone, W. G. C.

    M'Laren, Hon. F.W.S. (Lincs., Spalding)

    Roe, Sir Thomas

    Glanville, Harold James

    Markham, Sir Arthur Basil

    Rowlands, James

    Goddard, Sir Daniel Ford

    Marks, Sir George Croydon

    Russell, Rt. Hon. Thomas W.

    Goldstone, Frank

    Marshall, Arthur Harold

    Samuel, Rt. Hon. H. L. (Cleveland)

    Greenwood, Hamar (Sunderland)

    Meagher, Michael

    Scanian, Thomas

    Greig, Colonel James William

    Meehan, Francis E.(Leitrim, N.)

    Scott, A. MacCallum (Glas., Bridgeton)

    Griffith, Rt. Hon. Ellis Jones

    Meehan, Patrick J. (Queen's Co., Leix)

    Sheehy, David

    Guest, Hon. Frederick E.(Dorset, E.)

    Middlebrook, William

    Sherwell, Arthur James

    Gwynn, Stephen Lucius (Galway)

    Molloy, Michael

    Simon, Rt. Hon. Sir John Alisebrook

    Hackett, John

    Moiteno, Percy Alport

    Smith, Albert (Lancs., Clitheroe)

    Hancock, John George

    Money, L. G. Chiozza

    Smith, H. B. Lees (Northampton)

    Harcourt, Rt. Hon. Lewis (Rossendale)

    Montagu, Hon. E. S.

    Smyth, Thomas F. (Leitrim, S.)

    Harcourt, Robert V. (Montrose)

    Mooney, John J.

    Strauss, Edward A. (Southwark, West)

    Harmsworth, Cecil (Luton, Beds)

    Morgan, George Hay

    Sutherland, John E.

    Harvey, A. G. C.(Rochdale)

    Morrell, Philip

    Sutton, John E.

    Harvey. T. E. (Leeds, West)

    Morison, Hector

    Taylor, Theodore C.(Radcliffe)

    Haslam, Lewis

    Morton, Alpheus Cleophas

    Taylor, Thomas (Boiton)

    Hayden, John Patrick

    Muldoon, John

    Tennant, Rt. Hon. Harold John

    Hayward, Evan

    Munro, Rt. Hon. Robert

    Thomas, James Henry

    Hemmerde, Edward George

    Murray, Captain Hon. Arthur C.

    Thorne, G. R.(Wolverhampton)

    Henderson, Arthur (Durham)

    Needham, Christopher T.

    Toulmin, Sir George

    Henderson, John M. (Aberdeen, W.)

    Neilson, Francis

    Trevelyan, Charles Philips

    Henry, Sir Charles

    Nolan, Joseph

    Verney, Sir Harry

    Hewart, Gordon

    Norton, Captain Cecil W.

    Walton, Sir Joseph

    Higham, John Sharp

    Nugent, Sir Walter Richard

    Ward, John (Stoke-upon-Trent)

    Hinds, John

    O'Brien, Patrick (Kilkenny)

    Wardle, George J.

    Hobhouse, Rt. Hon. Charles E. H.

    O'Connor, John (Kildare. N.)

    Warner, Sir Thomas Courtenay T.

    Hodge, John

    O'Connor, T. P. (Liverpool)

    Webb, Henry

    Hogge, James Myles

    O'Doherty. Philip

    White, J. Dundas (Glasgow, Tradeston)

    Holmes, Daniel Turner

    O'Dowd, John

    White, Sir Luke (Yorks, E.R.)

    Holt, Richard Durning

    Ogden, Fred

    White, Patrick (Meath, North)

    Hope, John Deans (Haddington)

    O'Kelly, Edward P. (Wicklow, W.)

    Whitehouse, John Howard

    Howard, Hon. Geoffrey

    O'Kelly, James (Roscommon, N.)

    Whittaker, Rt. Hon. Sir Thomas P.

    Hudson, Walter

    O'Malley, William

    Whyte, Alexander F.(Perth)

    Hughes, Spencer Leigh

    O'Neill, Dr. Charles (Armagh, S.)

    Wiles, Thomas

    Johnson, W.

    O'Shaughnassy, P. J.

    Williams, Aneurin (Durham, N.W.)

    Jones, Edgar (Merthyr Tydvil)

    O'Sullivan, Timothy

    Williams, Penry (Middlesbrough)

    Jones, Henry Haydn (Merioneth)

    Outhwaite, R. L.

    Williamson, Sir Archibald

    Jones, J. Towyn (Carmarthen, East)

    Palmer, Godfrey Mark

    Wilson, W. T.(Westhoughton)

    Jones, Leif (Notts, Rushcliffe)

    Parker, James (Halifax)

    Winfrey, Sir Richard

    Jones, William (Carnarvonshire)

    Parry, Thomas H.

    Wing, Thomas Edward

    Jones, William S. Glyn- (Stepney)

    Pearce, Robert (Staffs, Leek)

    Wood, Rt. Hon. T. McKinnon (Glasgow)

    Joyce, Michael

    Pearce, William (Limehouse)

    Yeo, Alfred William

    Kellaway, Frederick George

    Pease, Rt. Hon. Joseph A. (Rotherham)

    Young, William (Perthshire, East)

    Kelly, Edward

    Philipps, Colonel Ivor (Southampton)

    Yoxall, Sir James Henry

    Kennedy, Vincent Paul

    Phillips. John (Longford, S.)

    Kenyon, Barnet

    Ponsonby, Arthur A. W. H.

    TELLERS FOR THE AYES.—Mr.

    Kilbride, Denis

    Pratt, J. W.

    Illingworth and Mr. Gulland

    King, Joseph

    NOES.

    Agg-Gardner, James Tynte

    Banbury, Sir Frederick George

    Benn, Ion Hamilton (Greenwich)

    Amery, L. C. M. S.

    Banner, Sir John S. Harmood-

    Bennett-Goldney, Francis

    Anstruther-Gray, Major William

    Baring, Major Hon. Guy V.(Winchester)

    Bentinck, Lord H. Cavendish

    Archer-Shee, Major Martin

    Barlow, Montague (Salford, South)

    Bird, Alfred

    Ashley, Wilfrid W.

    Barnston, Harry

    Blair, Reginald

    Astor, Waldorf

    Bathurst, Hon. A. B.(Glouc., E.)

    Boles, Lieut,-Colonel Dennis Fortescue

    Baird, John Lawrence

    Bathurst, Charles (Wilts, Wilton)

    Bescawen, Sir Arthur S. T. Griffith

    Baker, Sir Randolf L.(Dorset, N.)

    Beach, Hon. Michael Hugh Hicks

    Boyton, James

    Baldwin, Stanley

    Benn, Arthur Shirley (Plymouth)

    Brassey, H. Leonard Campbell

    1628

    1629

    Bridgeman, William Clive

    Hambro, Angus Valdemar

    Pryce-Jones, Colonel E.

    Cull, Sir William James

    Hamilton, C. G. C. (Ches., Altrincham)

    Quilter, Sir William Eley C.

    Burdett-Coutts, W.

    Hardy, Rt. Hon. Laurence

    Ratcliff, R. F.

    Burgoyne, A. H.

    Harris, Henry Percy

    Rawlinson, John Frederick Peel

    Burn, Colonel C. R.

    Harrison-Broadley, H. B.

    Rawson, Colonel Richard H.

    Butcher, John George

    Henderson, Major H. (Berks, Abingdon)

    Rees, Sir J. D.

    Campbell, Captain Duncan F.(Ayr, N.)

    Henderson, Sir A.(St. Geo., Han. Sq.)

    Ronaldshay, Earl of

    Campion, W. R.

    Hewins, William Albert Samuel

    Rothschild, Lionel de

    Carlile, Sir Edward Hildred

    Hibbert, Sir Henry F.

    Royds, Edmund

    Cator, John

    Hills, John Waller

    Rutherford, John (Lancs., Darwen)

    Cautley, H. S.

    Hohler, Gerald Fitzroy

    Rutherford, Watson (L'pool, W. Derby),

    Cave, George

    Hope, James Fitzalan (Sheffield)

    Salter, Arthur Clavell

    Cecil, Evelyn (Aston Manor)

    Hope, Major J. A. (Midlothian)

    Samuel, Sir Harry (Norwood)

    Cecil, Lord Hugh (Ozford University)

    Horne, Edgar

    Samuel, Samuel (Wandsworth)

    Cecil, Lord R.(Herts, Hitchin)

    Houston, Robert Paterson

    Sanders, Robert Arthur

    Chaloner, Colonel R. G. W.

    Hunt, Rowland

    Sanderson, Lancelot

    Clay, Captain H. H. Spender

    Hunter, Sir Charles Rodk.

    Sandys, G. J.

    Clive, Captain Percy Archer

    Ingleby, Holcombe

    Sassoon, Sir Philip

    Clyde, James Avon

    Jackson, Sir John

    Scott, Sir S.(Marylebone, W.)

    Coates, Major Sir Edward Feetham

    Joynson-Hicks, William

    Smith, Rt. Hon. F. E. (L'pool, Walton)

    Courthope, George Loyd

    Kerry, Earl of

    Spear, Sir John Ward

    Craig, Norman (Kent, Thanet)

    Keswick, Henry

    Stanley, Hon. Arthur (Ormskirk)

    Crichton-Stuart, Lord Ninian

    Kinloch-Cooke, Sir Clement

    Stanley, Hon. G. F.(Preston)

    Croft, Henry Page

    Lane-Fox, G. R.

    Starkey, John Ralph

    Dalrymple, Viscount

    Larmor, Sir J.

    Staveley-Hill, Henry

    Dalziel, Davison (Brixton)

    Law, Rt. Hon. A. Bonar (Bootle)

    Stewart, Gershom

    Denison-Pender, J. C.

    Lawson, Hon. H. (T. H'mts., Mile End)

    Strauss, Arthur (Paddington, North)

    Denniss, E. R. B.

    Lee, Arthur Hamilton

    Swift, Rigby

    Dickson, Rt. Hon, C. Scott

    Lewisham, Viscount

    Sykes, Alan John (Ches., Knutsford),

    Duke, Henry Edward

    Lloyd, George Butler (Shrewsbury)

    Sykes, Sir Mark (Hull, Central)

    Duncannon, Viscount

    Locker-Lampson, G. (Salisbury)

    Talbot, Lord Edmund

    Du Pre, W. Baring

    Locker-Lampson, O.(Ramsey)

    Terrell, George (Wilts, N.W.)

    Eyres-Monsell, Bolton M.

    Lockwood, Rt. Hon. Lt.-Colonel A. R.

    Terrell, Henry (Gloucester)

    Faber, George Denison (Clapham)

    Mackinder, Halford J.

    Thomas-Stanford, Charles

    Falle, Bertram Godfray

    Macmaster, Donald

    Tickler, T. G.

    Fell, Arthur

    Magnus, Sir Philip

    Tobin, Alfred Aspinall

    Finlay, Rt. Hon. Sir Robert

    Malcolm, Ian

    Touche, George Alexander

    Fisher, Rt. Hon. W. Hayes

    Mallaby-Deeley, Harry

    Tryon, Captain George Clement

    Fitzroy, Hon. E. A.

    Mason, James F. (Windsor)

    Valentia, Viscount

    Foster, Philip Staveley

    Mills, Hon. Charles Thomas

    Walker, Colonel William Hall

    Gardner, Ernest

    Morrison-Bell, Capt. E. F.(Ashburton)

    Ward, A. S.(Herts, Watford)

    Gastrell, Major W. Houghton

    Morrison-Bell, Major A. C.(Honiton)

    Warde, Colonel C. E.(Kent, Mid)

    Gibbs, G. A.

    Mount, William Arthur.

    Weigall, Captain A. G.

    Gilmour, Captain John

    Neville, Reginald J. N.

    Weston, Colonel J. W.

    Giazebrook, Captain Philip K.

    Newdegate, F. A.

    Williams, Colonel R.(Dorset, W.)

    Goldman, C. S.

    Newman, John R. P.

    Wilson, A. Stanley (Yorks, E.R.)

    Goldsmith, Frank

    Newton, Harry Kottingham

    Wilson, Captain Leslie O.(Reading)

    Goulding, Edward Alfred

    Nicholson, William G. (Petersfield)

    Wilson, Maj. Sir M.(Bethnal Green, S.W.)

    Grant, James Augustus

    Nield, Herbert

    Wood, Hon. E. F. L.(Yorks, Ripon)

    Greene, Walter Raymond

    Orde-Powlett, Hon. W. G. A.

    Wood, John (Stalybridge)

    Gretton, John

    Ormsby-Gore, Hon. William

    Wortley, Rt. Hon. C. B. Stuart-

    Guinness, Hon. Rupert (Essex, S.E.)

    Paget, Almeric Hugh

    Yate, Colonel C. E.

    Guinness, Hon. W. E.(Bury S. Edmunds)

    Pease, Herbert Pike (Darlington)

    Younger, Sir George

    Gwynne, R. S.(Sussex, Eastbourne)

    Perkins, Walter Frank

    Haddock, George Bahr

    Peto, Basil Edward

    Hall, D. B.(Isle of Wight)

    Pollock, Ernest Murray

    TELLERS FOR THE NOES.—Mr.

    Hall, Frederick (Dulwich)

    Pretyman, Ernest George

    Worthing Evans and Mr. Cassel.

    Hall, Marshall (E. Toxteth)

    Prothero, Rowland Edmund

    Mr. LLOYD GEORGE: I beg to move, at the end of the first paragraph, to add the words,
    "and in particular for the purpose of computing Income Tax in respect of securities, stocks, shares, or rents to which this section applies in pursuance of the rules under the fourth and fifth cases in section one hundred of the Income Tax Act, 1842, the income arising from the securities, stocks, shares, or rents shall be substituted for the sums, profits, or gains, as the case requires, received therefrom in the United Kingdom."
    The object of this Amendment has been explained by my right hon. and learned
    1630
    Friend. It is that companies and others who have been holding income up in past years and reinvesting it, shall start with a clean sheet. If we were to treat this capitalised income as income for the year, it might be left abroad or in the Colony. In order to enable those who have been in the habit of rolling up their income and reinvesting it, to start with a clean sheet, we propose this Amendment.
    Mr. WORTHINGTON EVANS: The
    Chancellor of the Exchequer has explained that his right hon. and learned Friend has explained this Amendment. I am quite certain that most of those who listened to the explanation of the right hon. and learned Gentleman, notwithstanding his

    1631
    great cleverness, were left in considerable doubt as to what the Amendment really means. I confess I am in complete doubt as to what the Amendment means and what is proposed by the Chancellor of the Exchequer. Let me try to elucidate it by a few questions. I understand that the right hon. Gentleman proposes to give to the insurance companies and others a clean sheet, that they are to start afresh, that if they like they are to bring over accumulated income which has arisen in previous years, but which was not taxed because it was not brought over here, and that they are to be able to bring it over here without being taxed. Is that the intention?
    Mr. LLOYD GEORGE Mr. LLOYD GEORGE indicated assent.
    Mr. WORTHINGTON EVANS: If that is the explanation, then the Amendment requires some justification, because if they brought it over here before the Bill is passed, it would be subject to taxation, and it is these very people who have evaded or escaped Income Tax by leaving the income abroad. The Chancellor of the Exchequer is now going to say to them, "Bring it over now. We will let it go free," whereas if they had brought it over last week or the week before it would have been subject to taxation. I do not know on what grounds that can be justified. It may be because the right hon. Gentleman has some influential hon. and right hon. Gentlemen behind him who see what the grievances of the insurance companies are, and he is proposing to meet them in this way. It seems to be quite the wrong way to meet them. They have real grievances which ought to be met on equitable grounds, but this sop or bribe, as it appears to be, to his hon. and learned Friends behind him, seems without any justification whatever. The right hon. Gentleman is going the wrong way to work. That is the explanation of the intention of the Chancellor of the Exchequer. Does the Amendment carry it out? I very much doubt it. There is nothing about the clean sheet, nothing about the mystic date, the 5th of April, in (he Amendment or by reference to anything in the Amendment. It seems that the words of the Amendment, as the learned Attorney-General seemed to think in one of his previous explanations to the Committee, are such as would cause to be taxed any income which has been held back in a foreign country.
    1632
    The Committee will remember that when the Attorney-General was explaining it, he said it was not the intention of the Government to tax accumulated capital. It was my hon. Friend the Member for Brentford (Mr. Joynson-Hicks) who asked him to explain that, and suggested that it really meant capitalised income. The Attorney-General did not tell us about capitalised income before that moment. It seemed to be quite an afterthought on his part to accept the suggestion of my hon. Friend the Member for Brentford, and to say that what they did intend to let off was capitalised income. If it is capitalised income that he intends to let off, perhaps he will explain what capitalised income is? Suppose it is money lying at the bank as the current balance of an insurance company. Can you follow that income and say that a particular sovereign was derived from a particular investment, and it has remained a sovereign in that bank; or can you trace it into another form? Can you say that it has been invested in a security, some bond, or stock, or share, and that thereby it has changed its character of income and has become capital. It is a very convenient term of ordinary commerce to talk about capitalised income, and everyone broadly knows what it means when used in that way, that it is a surplus incoming which has not been spent but retained and invested. But is that the sort of capitalised income that the right hon. Gentleman means, or does he mean the whole of the income received from securities, which income has been left abroad? If the right hon. Gentleman means anything at all he does not mean capitalised income in the ordinary commercial sense, but the total income, dividend, interest and so on that have been left to accumulate abroad. That is totally different from what we ordinarily call capitalised income, which is the surplus income of one year, which has been treated as capital account, and invested to produce income one year. So far as it goes the Clause is probably right, but it has not got the effect that either the Chancellor of the Exchequer or the Attorney-General claim for it. It will not let off, in my judgment, the insurance companies at all, and presently when they come to rely upon it they will find that they are taxed on that so-called capitalised income.
    Sir T. WHITTAKER: The hon. Member has asked what is the reason and justification for this alteration. When I spoke

    1633
    earlier I gave the justification for it. It is a question of expediency for the benefit of the London financial market. This money is now collected abroad. In order to avoid being taxed here it must be again invested abroad and kept there. Consequently it does not come to this country. The moment it comes to this country it is taxed. What is the result? Since it was decided that this money would be taxed when it was brought back to this country, not a single penny of it has been brought, back by insurance offices, and it never will be. Therefore you will never get the tax upon it. But what is the result of keeping it out yonder? It is that it is invested again in securities out of this country. It is invested through brokers and bankers in New York, Montreal, or elsewhere. It is lost to the business men of the City of London. If that money were in the City of London for investment some of it might be invested in British securities. So long as you make it liable to taxation it will remain out yonder and will be so invested. Take the case of private individuals who may accumulate their money here. It is not necessary to keep the securities out yonder. The securities are already in this country, and the tax does not become payable until the securities are turned into cash here. When a private individual has the securities here, and afterwards they are turned into cash, do you think he will return it as income? Not a bit of it, and on the ground urged by the hon. Member that the taxes should apply equally to all, it is desirable that this provision should be made, because larger investing companies and insurance offices will not bring their money home, but if they did they would return and pay on it. The simple fact is that it will not be brought here, and, therefore, it does not mean that you are losing any revenue whatever. But it does mean that when you give this clean sheet, we are to pay the tax on all the income from 5th April last. After that it will be brought here and invested, and that will be an advantage to the London market.
    Sir F. BANBURY: I am not quite sure that I follow what has been said by the right hon. Gentleman. As I understand it, the right hon. Gentleman says very truly that where an insurance company has received interest from investments abroad they kept it abroad sooner than bring it over here to be taxed. The right hon. Gentleman says that this Clause is going
    1634
    to give them a clean sheet for doing that which the Chancellor of the Exchequer and the Attorney-General say was wrong, and because they have done wrong in the past they are going to do right in the future. I am not at all certain that they are going to do right in the future. Neither am I certain that this Clause has that effect. I do not wish to say anything disrespectful of the Attorney-General, but I think he really does not understand the meaning of this particular Amendment, or the meaning of the Clause. The right hon. Gentleman (Sir T. Whittaker) told us that an insurance company paid losses out of premiums and investments. Surely that is not so. The only income it has ever received is upon premiums, and therefore to say that an insurance company took the whole of the premiums to pay losses and made up the difference out of income, is to say that all the insurance companies are insolvent. There can be no question about it. I do not blame the Attorney-General. We are discussing Clauses which very few people in this Committee at the present moment understand. I do not believe the right hon. Gentleman the Member for the Spen Valley Division understands this Amendment. I am quite certain that I do not, and I am also quite certain that the Attorney-General does not. The real fact is that all this is done in order to catch somebody who, you suppose, is evading the tax. If there is anyone evading the tax, he is clever enough to evade it whatever you do. But what you are going to do is to tax people who are endeavouring to earn an honest livelihood. You will not tax the man who is evading. I am not at all sure what the result of this Amendment will be. Persons who have businesses abroad, and who get profits in the ordinary way from those businesses, provided they are domiciled in this country, will not be subject to the tax. But if they get profits from investment, whether insurance companies or private individuals, they will be subject to the tax under the Clause, and therefore the result will be that the people of whom the right hon. Gentleman speaks will be taxed because their profits come from investments, though if they were carrying on an ordinary business they would not be taxed. Is that fair? That is the result of this proposal.
    Sir T. WHITTAKER Sir T. WHITTAKER indicated dissent.
    Sir F. BANBURY: It is no use for the right hon. Gentleman to shake his head.

    1635
    That is the result of the Clause. If the right hon. Gentleman were to establish abroad the insurance company which he represents and entered into ordinary commercial business, as long as he was domiciled over here he would not be subject to the tax, but if he invested the savings and profits in foreign securities, then he would be liable for the tax on those investments. There can be no other way out of it. What does this mean?
    "the income arising from the securities, stocks, shares, or rents shall be substituted for the sums, profits, or gains, as the case requires, received therefrom in the United Kingdom."
    I cannot understand it. The Chancellor of the Exchequer said that the Attorney-General had explained it. He was in the House for only a portion of the speech—only when the Attorney-General said that it is a ghastly thing to have to explain. It is a very ghastly thing to have to explain. If I was Chancellor of the Exchequer, and my Attorney-General had said that, I would have something to say to him about it. Now that he has got advice, perhaps he will explain what those words do mean, and then I may have something further to say.
    Mr. J. M. HENDERSON: The whole of your Amendments are directed to relief, and when you get relief it does not please you. The hon. Baronet says that people have been doing wrong. They have been doing nothing of the kind. There is no law against any man investing abroad income which he receives abroad.
    Sir F. BANBURY: I did not say that they were doing wrong, but from the point of view of the right hon. Gentleman it was wrong.
    Mr. J. M. HENDERSON: And the insurance companies or anybody else is perfectly entitled to take his interest over there, and buy fresh securities and leave them there. That is what they have done. The Chancellor of the Exchequer is getting them to give up this thing, because if he does not let these investments return to this country free they will remain there, and all these hon. Gentlemen will talk about money invested abroad. We want to bring it back and have it invested here. Have you any objection to that? People have been doing exactly what they are entitled to do according to law, converting their interest into capital on the other
    1636
    side. They have kept their capital there, and accumulated it there, and there it will remain. But the Chancellor is willing that it should be brought back there and invested in this country, instead of being invested over there. What objection can you possibly have to that? All your cry was that the money was going out of the country. I think that it is a very necessary Amendment. So far as it may not be very clear, I think the hon. Baronet did not read the Clause properly. It has reference to the Income Tax Act of 1842, and these previous words are to be substituted for the words in the Act of 1842. I think it is a most excellent thing, and a thing of which you should be the last people in the world to complain, that a large quantity of capital can be transferred into this market and invested in British securities which is the whole object of this Clause.
    Mr. BUTCHER: I do not think the Chancellor of the Exchequer is to be congratulated either upon the clearness with which the Amendment is drawn or the clearness with which the intention of it has been explained. His Budget being a bungled and muddled one, it looks as if that process was to go on to the end. The Attorney-General says that capitalised income, earned abroad is not to be taxed when it comes over here. I should like to ask, first of all, would it be taxed under the existing law if brought over here. If so, as I conceive it would, why should we exempt it. [An HON. MEMBER; "Why not?"] Why should it? If it was right to tax it in the past why should it not be right to tax it now? I see no reason why we should not put a tax upon it when it is brought over, except that the supporters of the Government want it brought over. May I ask the Attorney-General the meaning of "capitalised income"? Take the case of a company. The capitalised income of a shareholder cannot merely mean certain income invested, because the money is often invested in the reserve fund for the purpose of equalising dividends, and so on. It is an amount of surplus income so capitalised that it is brought into capital account. If so, then I think it ought to be made to pay. Then again, comes the individual, and "capitalised income" applies to him as well as to a company. What is the meaning of capitalised income earned abroad as applied to the individual? Suppose a man has capital abroad, earning income last year, and he did not bring over his income to this country, but invested it

    1637
    abroad: would that be capitalised income? Neither the explanation of the hon. Gentleman (Mr. Henderson), although he may be right or may be wrong, nor that of the learned Attorney-General will have the slightest effect when the Clause comes to be interpreted by the Courts. I say that with all the respect which is due to the Attorney-General. Therefore, I submit, that the proper course for the Government to adopt is to withdraw this Clause so that they may reconsider what will be the effect of it. In that way we should be able to divide on some intelligible Clause, after we have had defined this question of capitalised income, which is of such a very vague character. If we go to a Division on a Clause which is unintelligible in itself, and which is not made more intelligible by the explanation offered by the hon. Gentleman opposite, we shall not be in a position to give an intelligent vote. Therefore, I submit, that we ought to have some further explanation, and then the Clause should be withdrawn.
    Sir J. SIMON: The hon. and learned Gentleman began by asking whether capital transmitted to this country—
    Mr. BUTCHER: I said capitalised income.
    Sir J. SIMON: At any rate, I thought the hon. and learned Gentleman first asked whether capital transmitted to this country, whether returned as capitalized income or anything else—
    Mr. BUTCHER: I used the right hon. Gentleman's own words, "capitalised income earned abroad." I asked would that, under the existing law, be the subject of taxation in this country?
    Sir J. SIMON: Let me avoid any difficulty by making my own observations without reference to what the hon. Gentleman said. I conceive Income Tax law applies to income and not capital. I am quite confident the Courts would take that view, because the House of Lords has said so. It is, no doubt, a difficult question sometimes to decide where the boundary line is to be drawn between what is income and capital. Using the expression capitalised income created confusion. What was referred to by the right hon. Gentleman the Member for Spen Valley (Sir T. Whittaker), was what was in my mind.
    1638
    Under our present Income Tax you have enterprises which earn profits abroad, and instead of transmitting those profits to this country, keep them abroad. I presume if those enterprises are well managed they do something with those profits? That is what I meant by capitalised income, whatever be its form, whether in reserve fund or otherwise. I apprehend that as long as the law remains what it is those enterprises are never likely to send any of that money to this country. Our object and policy is to secure that, inasmuch as we are going to impose this tax upon income even when it is earned and kept abroad, there should be a clean sheet in the matter. That is to say, if they send those funds to this country which they otherwise would not send, they shall not be penalised because they do. That is what I mean. I quite agree that there are difficulties. There are bound to be in drawing the line between what is properly classed as income and what is not. The intention which we have expressed is we believe carried out by giving that exemption. Obviously it would not be right if you are going to tax income earned abroad to tax that income over again when at three or four years' interval it is sent to this country. These words are designed to have that effect, and there is no need to withdraw anything. The Clause is by common consent an improvement, and the Amendment is an improvement on the Clause, as there was a doubt that the Clause would in certain cases tax things twice over, which it is not the intention of anybody here to do. The Clause is a very difficult Clause to be certain of, and that is because of the nature of the subject. The best thing to do is to add this Amendment to the Bill, and the Committee will then have the opportunity of seeing the Clause in that form, and if there be substance in the criticisms made those can be considered and debated. [HON, MEMBERS: "When?"]
    Mr. CASSEL: The right hon. Gentleman has told us what the object of the Clause is: it is to give a clean sheet with regard to the past. For myself, I agree with the right hon. Baronet (Sir T. Whittaker) that the Clause, so far as insurance companies are concerned, will be some small measure of compensation for the injustice that is being done. But our complaint is not with regard to the object, but that these words do not give effect to the

    1639
    object. They do not come within miles of doing so. These works deal entirely with the future, and not with the past at all. In regard to the future they do provide that there shall not be double taxation—that you shall not tax income because it is income earned abroad and not brought to this country and then tax it again when it comes as income brought into this country. But that is entirely with regard to the future. It is not treating the right hon. Baronet (Sir T. Whittaker) fairly to leave him under the impression that this gives him a clean sheet. I submit that it does not, and I would ask the right hon. Baronet to consider it very carefully before he accepts it. What words are there which have any reference to the past at all? I agree that relief ought to be given in respect of the past, but this Amendment does not give it or come anywhere near giving it.
    Mr. DAVID MASON: I must confess I am astounded to hear the right hon. Baronet (Sir T. Whittaker), and the hon. Member for Aberdeen (Mr. J. M. Henderson), arguing that this tax would affect the investments of insurance companies abroad. Why do insurance companies invest abroad? Only because they have large surplus funds from which they can get a better return abroad than in this country. Do hon. Members imagine that this tax is going to make these companies return the money to this country? It is ludicrous. Does any Member of the Government imagine that their Income Tax is going to affect to that extent the operations of the great insurance companies? I agree that this proposition may interfere with the full flow of the investment of capital abroad. That is another matter. But to imagine that these great companies, because of this Amendment, are going to send their accumulated funds back to this country, is to imagine the impossible. The only thing that would compel insurance or any other companies to bring their capital back to this country would be the fact that they could get a better return upon it here than abroad. If there is a better return to be obtained in the Argentine, Brazil, or India, this tax will have little effect. It will have the effect of penalising to a certain extent the free flow of investments abroad, and, as the hon. Baronet (Sir F. Banbury) pointed out, it penalises the in-
    1640
    vestors in stocks and shares as against ordinary merchants who may have interests in businesses abroad. The Clause is badly drawn, and ought to be reconsidered before we are asked to vote upon it. It seems to me to be unwise, and based upon a wrong principle. It interferes with the free flow of the investment of capital abroad. The investment of capital abroad is not a bad thing for this country. Whether it is invested in Brazil, the Argentine, or India, it goes out of this country in the shape of goods. The more capital we have to invest abroad the more we stimulate industries and manufactures in this country. Why should we penalise the investment of capital abroad: capital only goes abroad because it gets a better return than in this country. The more use you can make of capital in any part of the world the better for British industry! Therefore, to my mind, a Clause like this is interfering with those principles for which we on this side of the House stand. We are supposed to be Free Traders, and here we are giving a preference to traders as against investors. Why should we do it? We are interfering in the great investment businesses of the insurance companies, for if they make a good investment in any part of the world they deserve a good return for their enterprise. They are thereby enabled to give a better return, a better bonus, better dividends to the shareholders, and better terms to the insurers. To attempt to follow capital abroad will be to bring about means to evade the tax; it will lead to a great deal of perjury, corruption, and dishonest statements, and it is, to my mind, neither reasonable nor sound common sense.
    Mr. PRETYMAN: After the Debate we have heard we have rather less comprehension of the real inwardness of this Clause than when we started at seven o'clock. I think everyone on this side is at one with hon. Gentlemen on the other side and with the Chancellor of the Exchequer in desiring a tax on money placed abroad merely for the purpose of evading the legitimate taxation of this country. At the same time I am not convinced that this Clause will have the effect. For my part, I am very doubtful whether you will not leave these people free and tax others twice over—people that you do not desire to tax. Not one word has been said in the replies as to the taxation of people whose property

    1641
    is in India. We have had little information as to how rents are to be taxed—I do not see how it is possible to tax rents—and to make deductions from those rents proportionate or equivalent to the deductions which would be made if the rents were received in the United Kingdom.
    Such a phrase as that is strongly inviting litigation. It is most indeterminate. Before this Clause is accepted it ought to be considered either by the Select Committee that is to be set up, or certainly by some responsible body of business men with real knowledge of investments both at home and abroad. In this matter we do not know on what business men in the City the Chancellor of the Exchequer has relied for advice. So far as opinion has been expressed in this House he has had no support from anyone with authority to speak on financial questions. Under these circumstances, I think the Committee will be taking a very grave responsibility in passing this Clause into law with the information at present before it. I submit we have no right to pass this Clause, which may have most far-reaching, most mischievous, and most dangerous effects, until we are satisfied that not only the principle it is supposed to carry out is one with which we agree in detail, but that the actual provision will effect that which we desire and will not do more injury in another direction.
    Mr. M'CURDY: The Debate we have had, although interesting in many respects, must have convinced us of the justification of the Government proposal for the time limit with regard to discussion upon the present Finance Bill. Let us consider for one moment the use which has actually been made of the time at the disposal of the House of Commons. [Interruptions.]
    The CHAIRMAN: We had better not spend any more time upon that point now and keep to the Amendment,
    Mr. M'CURDY: I will pass by that and confine myself strictly to the Clause we are now dealing with. For many hours the time spent has, I submit, been wasted. [HON. MEMBERS: "Sit down," Interruptions.]
    The CHAIRMAN: I have asked the hon. Member to keep to the Amendment now before the Committee.
    Sir A. MARKHAM: We might have gone on until one o'clock discussing the Finance Bill every night if the Opposition had not opposed it. I agree with the hon. and learned Member who has just sat down. This Amendment and the Clause as it stands still leaves me in doubt as to what is meant. It will mean that judges will have to construe it, and judges construe Acts of Parliament very often in a different manner entirely from what the House of Commons intended, and totally different from what the Government wished. In my view of this Amendment anyone can evade this tax who wishes to do so. If an insurance company wishes to invest funds of £100,000 in ordinary £1 shares in a company at Winnipeg, and if instead of forming a company with a capital of £100,000 it forms a company of £1,000 and treats the rest of the money as loans, then in that case the company can repay to the shareholders in England all the interest on the loans without a penny of Income Tax.
    It being Eleven of the clock, the CHAIRMAN proceeded, pursuant to the Order of the House of 8th July, to put forthwith the Question on the Amendment already proposed from the Chair.
    Question put, "That those words be there inserted."
    The Committee divided: Ayes, 280; Noes, 190.

    Division No. 166.]

    AYES.

    [11.0 p.m.

    Abraham, Wiliam (Dublin, Harbour)

    Arnold, Sydney

    Beauchamp, Sir Edward

    Acland, Francis Dyke

    Asquith, Rt. Hon. Herbert Henry

    Beck, Arthur Cecil

    Adamson, William

    Baker, H. T. (Accrington)

    Benn, W. W.(T. Hamlets, St. George)

    Addison, Dr. Christopher

    Baker, Joseph Allen (Finsbury, E.)

    Bethell, Sir J. H.

    Agar-Robartes, Hon. T. C. R,

    Balfour, Sir Robert (Lanark)

    Black, Arthur W.

    Agnew, Sir George William

    Baring, Sir Godfrey (Barnstaple)

    Boland, John Pius

    Ainsworth, John Stirling

    Barlow, Sir John Emmott (Somerset)

    Booth, Frederick Handel

    Alden, Percy

    Barnes, George N.

    Bowerman, Charles W.

    Allen, Arthur A.(Dumbartonshire)

    Barran, Sir John N. (Hawick Burghs)

    Boyle, Daniel (Mayo, North)

    Allen, Rt. Hon. Charles P.(Stroud)

    Barran, Rowland Hurst (Leeds, N.)

    Brady, Patrick Joseph

    Armitage, Robert

    Beale, Sir William Phipson

    Brunner, John F. L.

    Bryce, J. Annan

    Holt, Richard Burning

    Pease, Rt. Hon. Joseph A.(Rotherham)

    Buckmaster, Sir Stanley O.

    Hope, John Deans (Haddington)

    Philipps, Colonel Ivor (Southampton)

    Burns, Rt. Hon. John

    Howard, Hon. Geoffrey

    Phillips, John (Longford, S.)

    Burt, Rt. Hon. Thomas

    Hudson, Walter

    Pirie, Duncan V.

    Buxton, Noel

    Hughes, Spencer Leigh

    Ponsonby, Arthur A. W. H.

    Byles, Sir William Pollard

    Illingworth, Percy H.

    Pratt, J. W.

    Carr-Gomm, H. W.

    Johnson, W.

    Price, C. E. (Edinburgh, Central)

    Cawley, Sir Frederick (Prestwich)

    Jones, Edgar (Merthyr Tydvil)

    Price, Sir Robert J. (Norfolk, E.)

    Cawley, Harold T.(Lancs., Heywood)

    Jones, H. Haydn (Merioneth)

    Priestley, Sir Arthur (Grantham)

    Chancellor, Henry George

    Jones, J. Towyn (Carmarthen, East)

    Primrose, Hon. Neil James

    Chappie, Dr. William Allen

    Jones, Leif (Notts, Rushcliffe)

    Pringle, William M. R.

    Clancy, John Joseph

    Jones, William S. Glyn- (Stepney)

    Radford, George Heynes

    Clough, William

    Joyce, Michael

    Raffan, Peter Wilson

    Clynes, John R.

    Kellaway, Frederick George

    Rea, Rt. Hon. Russell (South Shields)

    Collins, Godfrey P.(Greenock)

    Kelly, Edward

    Rea, Walter Russell (Scarborough)

    Collins, Sir Stephen (Lambeth)

    Kennedy, Vincent Paul

    Reddy, Michael

    Compton-Rickett, Rt. Hon. Sir J.

    Kenyon, Barnet

    Redmond, John E.(Waterford)

    Cornwall, Sir Edwin A.

    Kilbride, Denis

    Redmond, William (Clare, E.)

    Craig, Herbert J.(Tynemouth)

    King, Joseph

    Redmond, William Archer (Tyrone, E.)

    Crooks, William

    Lambert, Rt. Hon. G. (Devon, S. Molton)

    Richardson, Albion (Peckham)

    Crumley, Patrick

    Lambert, Richard (Wilts, Cricklade)

    Richardson, Thomas (Whitehaven)

    Cullinan, John

    Lardner, James C. R.

    Roberts, Charles H.(Lincoln)

    Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)

    Law, Hugh A.(Donegal, West)

    Roberts, George H. (Norwich)

    Davies, David (Montgomery Co.)

    Lawson, Sir W. (Cumb'rld, Cockerm'th)

    Roberts, Sir J. H. (Denbighs)

    Davies, Ellis William (Eifion)

    Leach, Charles

    Robertson, Sir G. Scott (Bradford)

    Davies, Timothy (Lincs., Louth)

    Levy, Sir Maurice

    Robertson, John M. (Tyneside)

    Davies, Sir W. Howell, (Bristol, S.)

    Lewis, Rt. Hon. John Herbert

    Robinson, Sidney

    Dawes, James Arthur

    Low, Sir Frederick (Norwich)

    Roch, Walter F.(Pembroke)

    Delany, William

    Lundon, Thomas

    Roche, Augustine (Louth)

    Denman, Hon. Richard Douglas

    Lyell, Charles Henry

    Roe, Sir Thomas

    Dewar, Sir J. A.

    Lynch, Arthur Alfred

    Rowlands, James

    Dickinson, Rt. Hon. Willoughby H.

    Macdonald, J. Ramsay (Leicester)

    Runciman, Rt. Hon. Walter

    Dillon, John

    Macdonald, J. M. (Falkirk Burghs)

    Russell, Rt. Hon. Thomas W.

    Doris, William

    McGhee, Richard

    Samuel, Rt. Hon. H. L. (Cleveland)

    Duffy, William J.

    Maclean, Donald

    Scanlan, Thomas

    Duncan, C. (Barrow-in-Furness)

    Macnamara, Rt. Hon. Dr. T. J.

    Scott, A. MacCallum (Glas., Bridgeton)

    Duncan, Sir J. Hastings (Yorks, Otley)

    MacNeill, J. G. Swift (Donegal, South)

    Seely, Rt. Hon. Colonel J. E. B.

    Edwards, Sir Francis (Radnor)

    MacVeagh, Jeremiah

    Sheehy, David

    Edwards, John Hugh (Glamorgan, Mid)

    M'Callum, Sir John M.

    Sherwell, Arthur James

    Elverston, Sir Harold

    M'Curdy, C. A.

    Simon, Rt. Hon. Sir John Alisebrook

    Esmonde, Sir Thomas (Wexford, N.)

    McKenna, Rt. Hon. Reginald

    Smith, Albert (Lancs., Clitheroe)

    Esslemont, George Birnie

    M'Laren, Hon. H. D.(Leics.)

    Smith, H. B. Lees (Northampton)

    Falconer, James

    M'Laren, Hon. F.W.S.(Lincs., Spalding)

    Smyth, Thomas F. (Leitrim, S.)

    Farrell, James Patrick

    Marks, Sir George Croydon

    Spicer, Rt. Hon. Sir Albert

    Fenwick, Rt. Hon. Charles

    Marshall, Arthur Harold

    Strauss, Edward A.(Southwark, West)

    Ffrench, Peter

    Meagher, Michael

    Sutherland, John E.

    Field, William

    Meehan, Francis E. (Leitrim, N.)

    Sutton, John E.

    Fiennes, Hon. Eustace Edward

    Meehan, Patrick J. (Queen's Co., Leix)

    Taylor, Theodore C. (Radcliffe)

    Flavin, Michael Joseph

    Middlebrook, William

    Taylor, Thomas (Bolton)

    France, G. A.

    Molloy, Michael

    Tennant, Rt. Hon. Harold John

    Furness, Sir Stephen Wilson

    Molteno, Percy Alport

    Thomas, J. H.

    Gcarge, Rt. Hon. D. Lloyd

    Mond, Rt. Hon. Sir Alfred

    Thorne, G. R. (Wolverhampton)

    Gladstone, W. G. C.

    Money, L. G. Chiozza

    Toulmin, Sir George

    Glanville, Harold James

    Montagu, Hon. E. S.

    Trevelyan, Charles Philips

    Goddard, Sir Daniel Ford

    Mooney, John J.

    Verney, Sir Harry

    Goldstone, Frank

    Morgan, George Hay

    Walton, Sir Joseph

    Greenwood, Hamar (Sunderland)

    Morrell, Philip

    Ward, John (Stoke-upon-Trent)

    Greig, Colonel James William

    Morison, Hector

    Wardle, George J.

    Grey, Rt. Hon. Sir Edward

    Morton, Alpheus Cleophas

    Warner, Sir Thomas Courtenay T.

    Griffith, Rt. Hon. Eilis Jones

    Muldoon, John

    Wason, Rt. Hon. E.(Clackmannan)

    Guest, Hon. Frederick E.(Dorset, E.)

    Munro, Rt. Hon. Robert

    Wason, John Cathcart (Orkney)

    Gulland, John William

    Murray, Captain Hon. Arthur C.

    Watt, Henry A.

    Gwynn, Stephen Lucius (Galway)

    Needham, Christopher T.

    White, J. Dundas (Glasgow, Tradeston)

    Hackett, John

    Neilson, Francis

    White, Sir Luke (Yorks, E.R.)

    Hancock, J. G.

    Noian, Joseph

    White, Patrick (Meath, North)

    Harcourt, Rt. Hon. Lewis (Rossendale)

    Norton, Captain Cecil W.

    Whitehouse, John Howard

    Harcourt, Robert V. (Montrose)

    Nugent, Sir Walter Richard

    Whittaker, Rt. Hon. Sir Thomas P.

    Harmsworth, Cecil (Luton, Beds)

    O'Brien, Patrick (Kilkenny)

    Whyte, Alexander F. (Perth)

    Harvey, A. G. C. (Rochdale)

    O'Connor, T. P. (Liverpool)

    Wiles, Thomas

    Harvey, T. E. (Leeds, West)

    O'Doherty, Philip

    Williams, Aneurin (Durham, N.W.)

    Haslam, Lewis

    O'Dowd, John

    Williams, Penry (Middlesbrough)

    Hayden, John Patrick

    Ogden, Fred

    Williamson, Sir Archibald

    Hayward, Evan

    O'Kelly, Edward P. (Wicklow, W.)

    Wilson, W. T.(Westhoughton)

    Hemmerde, Edward George

    O'Malley, William

    Winfrey, Sir Richard

    Henderson, Arthur (Durham)

    O'Neill, Dr. Charles (Armagh, S.)

    Wing, Thomas Edward

    Henderson, John M. (Aberdeen, W.)

    O'Shaughnessy, P. J.

    Wood, Rt. Hon. T. McKinnon (Glasgow)

    Henry, Sir Charles

    O'Sullivan, Timothy

    Yeo, Alfred William

    Hewart, Gordon

    Outhwaite, R. L.

    Young, William (Perthshire, East)

    Higham, John Sharp

    Palmer, Godfrey Mark

    Yoxall, Sir James Henry

    Hinds, John

    Parker, James (Halifax)

    Hobhouse, Rt. Hon. Charles E. H.

    Parry, Thomas H.

    Hodge, John

    Pearce, Robert (Staffs, Leek)

    TELLERS FOR THE AYES.—

    Hogge, James Myles

    Pearce, William (Limehouse)

    Mr. William Jones and Mr. H. Webb.

    Holmes, Daniel Turner

    Pearson, Hon. Weetman H. M.

    1644

    1645

    NOES.

    Agg-Gardner, James Tynte

    Gibbs, G. A.

    Nicholson, William G.(Petersfield)

    Anstruther-Gray, Major William

    Gilmour, Captain John

    Nield, Herbert

    Archer-Shee, Major Martin

    Glazebrook, Captain Philip K.

    Orde-Powlett, Hon. W. G. A.

    Ashley, Wilfrid W.

    Goulding, Edward Alfred

    Paget, Almeric Hugh

    Astor, Waldorf

    Greene, Walter Raymond

    Parker, Sir Gilbert (Gravesend)

    Baird, John Lawrence

    Gretton, John

    Pease, Herbert Pike (Darlington)

    Baldwin, Stanley

    Guinness, Hon. Rupert (Essex, S.E.)

    Peel, Lieut.-Colonel R. F.

    Banner, Sir John S. Harmood-

    Guinness, Hon. W. E. (Bury S. Edmunds)

    Perkins, Walter Frank

    Baring, Major Hon. Guy V. (Winchester)

    Haddock, George Bahr

    Peto, Basil Edward

    Barlow, Montague (Salford, South)

    Hall, D. B.(Isle of Wight)

    Pollock, Ernest Murray

    Barnston, Harry

    Hall, Frederick (Dulwich)

    Pretyman, Ernest George

    Bathurst, Hon. Allen B.(Glouc, E.)

    Hall, Marshall (E. Toxteth)

    Prothero, Rowland Edmund

    Bathurst, Charles (Wilts, Wilton)

    Hambro, Angus Valdemar

    Pryce-Jones, Colonel E.

    Beach, Hon. Michael Hugh Hicks

    Hamilton, C. G. C. (Ches., Altrincham)

    Ratcliffe, R. F.

    Benn, Arthur Shirley (Plymouth)

    Hardy, Rt. Hon. Laurence

    Rawlinson, John Frederick Peel

    Benn, Ion Hamilton (Greenwich)

    Harris, Henry Percy

    Rawson, Colonel Richard H.

    Bennett-Goldney, Francis

    Harrison-Broadley, H. B.

    Rees, Sir J. D.

    Bentinck, Lord H. Cavendish-

    Henderson, Major H. (Berks, Abingdon)

    Ronaldshay, Earl of

    Bird, Alfred

    Henderson, Sir A. (St. Geo., Han. Sq.)

    Royds, Edmund

    Blair, Reginald

    Herbert, Hon. A. (Somerset, S.)

    Rutherford, Watson (L'pool, W. Derby)

    Boles, Lieut.-Colonel Dennis Fortescue

    Hewins, William Albert Samuel

    Salter, Arthur Clavell

    Boscawen, Sir Arthur S. T. Griffith-

    Hibbert, Sir Henry F.

    Samuel, Sir Harry (Norwood)

    Bowden, Major S. Harland

    Hills, John Waller

    Samuel, Samuel (Wandsworth)

    Boyton, James

    Hoare, Samuel John Gurney

    Sanders, Robert Arthur

    Brassey, H. Leonard Campbell

    Hohler, Gerald Fitzroy

    Sanderson, Lancelot

    Bridgeman, William Clive

    Hope, James Fitzalan (Sheffield)

    Sandys, G. J.

    Bull, Sir William James

    Hope, Major J. A. (Midlothian)

    Sassoon, Sir Philip

    Burdett-Coutts, William

    Home, Edgar

    Scott, Sir S.(Marylebone, W.)

    Burgoyne, Alan Hughes

    Houston, Robert Paterson

    Spear, Sir John Ward

    Burn, Colonel C. R.

    Hunt, Rowland

    Stanley, Hon Arthur (Ormskirk)

    Butcher, John George

    Hunter, Sir Charles Rodk.

    Stanley, Hon. G. F. (Preston)

    Campbell, Captain Duncan F.(Ayr, N.)

    Ingleby, Holcombe

    Starkey, John Ralph

    Campion, W. R.

    Jackson, Sir John

    Staveley-Hill, Henry

    Carlile, Sir Edward Hildred

    Jessel, Captain H. M.

    Steel-Maitland, A. D.

    Cator, John

    Joynson-Hicks, William

    Stewart, Gershom

    Cautley, Henry Strother

    Kerry, Earl of

    Swift, Rigby

    Cecil, Evelyn (Aston Manor)

    Keswick, Henry

    Sykes, Alan John (Ches., Knutsford)

    Cecil, Lord Hugh (Oxford University)

    Kinloch-Cooke, Sir Clement

    Sykes, Sir Mark (Hull, Central)

    Cecil, Lord R.(Herts, Hitchin)

    Lane-Fox, G. R.

    Talbot, Lord Edmund

    Chaloner, Colonel R. G. W.

    Larmor, Sir J.

    Terrell, George (Wilts, N.W.)

    Clay, Captain H. H. Spender

    Law, Rt. Hon. A. Bonar (Bootle)

    Terrell, Henry (Gloucester)

    Clive, Captain Percy Archer

    Lawson, Hon. H. (T. H'mts., Mile End)

    Thomas-Stanford, Charles

    Clyde, James Avon

    Lewisham, Viscount

    Thynne, Lord Alexander

    Coates, Major Sir Edward Feetham

    Lloyd, George Butler (Shrewsbury)

    Tickler, T. G.

    Courthope, George Loyd

    Locker-Lampson, G. (Salisbury)

    Tobin, Alfred Aspinall

    Craig, Norman (Kent, Thanet)

    Lockwood, Rt. Hon. Lt.-Colonel A. R.

    Touche, George Alexander

    Craik, Sir Henry

    Lowe, Sir F. W. (Birm., Edgbaston)

    Tryon, Captain George Clement

    Croft, Henry Page

    Mackinder, H. J.

    Valentia, Viscount

    Dalrymple, Viscount

    Macmaster, Donald

    Walker, Colonel William Hall

    Dalziel, Davison (Brixton)

    Magnus, Sir Philip

    Warde, Colonel C. E. (Kent, Mid)

    Denniss, E. R. B.

    Malcolm, Ian

    Weigall, Captain A. G.

    Dickson, Rt. Hon. C. Scott

    Mallaby-Deeley, Harry

    Weston, Colonel J. W.

    Duke, Henry Edward

    Markham, Sir Arthur Basil

    Wheler, Granville C. H.

    Duncannon, Viscount

    Mason, James F. (Windsor)

    Williams, Colonel R. (Dorset, W.)

    Du Pre, W. Baring

    Meysey-Thompson, E. C.

    Wills, Sir Gilbert

    Eyres-Monsell, Bolton M.

    Mildmay, Francis Bingham

    Wilson, A. Stanley (Yorks, E.R.)

    Faber, George D. (Clapham)

    Mills, Hon. Charles Thomas

    Wilson, Captain Leslie O.(Reading)

    Falle, Bertram Godfray

    Morrison-Bell, Copt. E. F. (Ashburton)

    Wood, John (Stalybridge)

    Fell, Arthur

    Morrison-Bell, Major A. C. (Honiton)

    Wertley, Rt. Hon. C. B. Stuart-

    Finlay, Rt. Hon. Sir Robert

    Mount, William Arthur

    Yate, Colonel C. E.

    Fisher, Rt. Hon. W. Hayes

    Neville, Reginald J. N.

    Younger, Sir George

    Fitzroy, Hon. Edward A.

    Newdegate, F. A.

    Foster, Philip Staveley

    Newman, John R. P.

    TELLERS FOR THE NOES.—Sir

    Ganzoni, Francis John C.

    Newton, Harry Kottingham

    F. Banbury and Mr. E. Wood.

    Gardner, Ernest

    Question put, and agreed to.

    The CHAIRMAN then proceeded successively to put forthwith the Question on any Amendments moved by the Government, of which notice had been given, and the Questions necessary to dispose of the business to be concluded at Eleven of the clock at this day's sitting.
    Government Amendments made: In paragraph (2) leave out the words "who
    1646
    is not a British subject, nor in the case of a person."
    In the same paragraph leave out the words "being a British subject he is ordinarily resident in a British possession," and insert instead thereof the words "he is not domiciled in the United Kingdom."
    Question put, "That the Clause, as amended, stand part of the Bill."
    Mr. William Jones and Mr. Webb were appointed Tellers for the Ayes; but, no Members being willing to act as Teller for the Noes, the Chairman declared that the Ayes had it.

    CLAUSE 6.—(Relief of Small Incomes from Increased Tax.)
    (1)If any individual who has been assessed or charged to Income Tax, or has paid Income Tax either by way of deduction or otherwise, claims and proves in manner prescribed by the Income Tax Acts that his total income from all sources does not exceed five hundred pounds, he shall be entitled to such relief from Income Tax as will reduce the amount of Income Tax on his income to the amount which would have been paid if the tax were charged on that income—

    (a) at the rate of one shilling and twopence if his income exceeds three hundred pounds; and

    (b) at the rate of one shilling if his income does not exceed three hundred pounds;

    (2) The relief given under this Section shall be in addition to and not in derogation of any exemption, or other relief, or abatement under the Income Tax Acts, but where any such exemption, relief, or abatement is to be determined by reference to the amount of the Income Tax on any sum, the amount of the tax shall be calculated at the reduced rate.
    (3) All the provisions of the Income Tax Acts which relate to claims for exemption, relief, or abatement, or the proof to be given with respect to those claims, shall apply to claims for relief under this Section and the proof to be given with respect to those claims.
    (4)An individual shall not be entitled to relief under this Section in respect of any income the tax on which he is entitled to charge against any other person, or to deduct, retain, or satisfy out of any payment which he is liable to make to any other person.

    CLAUSE 7.—(Extension of Relief in Respect of Children.)
    Section sixty-eight of the Finance (1909–10) Act, 1910 (which gives to individuals whose total income does not ex-
    1648
    ceed five hundred pounds relief from Income Tax equal to the amount of tax on ten pounds in respect of every child under the age of sixteen years), shall have effect as if twenty pounds were substituted for ten pounds.

    CLAUSE 8.—(Relief from Income Tax in Respect of Maintenance, etc., of Laud and Homes.)
    The limit under Section sixty-nine of the Finance (1909–10) Act, 1910, on the amount of duty which may be repaid on account of the maintenance, repairs, insurance, and management of land or houses shall be removed as respects Income Tax for the year beginning the sixth day of April, nineteen hundred and fourteen, and any subsequent year.
    Committee report Progress; to sit again To-morrow (Tuesday).

  WAYS AND MEANS.
  Considered in Committee.
  WAYS AND MEANS.

    INCOME TAX (MARRIED PERSONS).
    Motion made, and Question proposed, "That it is expedient to make provision in the Finance Bill for enabling Income Tax (including Super-tax) in the case of married persons to be separately assessed and charged on the husband and the wife, and for enabling the amount payable in respect of Income Tax (including Super-tax) by the husband or the wife to be recovered either from the husband or the wife or both from the husband and the wife."—[Mr. Lloyd George.]
    Resolution to be reported to-morrow (Wednesday); Committee to sit again upon Wednesday.

PRIVATE BUSINESS.

  LONDON COUNTY COUNCIL (MONEY) BILL. (By Order).
  As amended, Considered.
  Mr. RAWLINSON: I beg to move in the Schedule, Part II, to leave out Item 33—

  Act for the purposes of which money maybe expended.

  Purposes of Expenditure.

  Total Parliamentary Estimate(gross cost).

  Estimated requirement for year ending 31st March, 1915.

  Estimated requirement for six months ending 30th September, 1915.

  (1)

  (2)

  (3)

  (4)

  (5)

  (6)

  (7)

  £

  £

  £

  £

  £

  33. Under the London County Council(Tramways and Improvements) Bill, 1914 (if it becomes law)

  Construction and equipment of tramways, purchase of lands, and other purposes of the tramway undertaking

  113,190

  50,000

  20,000

  Street Improvements and works in connection with tramways

  89,500

  35,000

  15,000

  85,000

  35,000

  In moving, as I have done for many years, certain omissions in regard to this Bill, I desire to explain my reasons for doing so. In the case of every other local authority, with the exception of the London County Council, before they get power to borrow money for any purpose they have to obtain the sanction of the Local Government Board. For that purpose an inspector of the Board has to hold an inquiry, and a case has to be made out for the necessity of borrowing the money on any particular occasion. In the case of the London County Council no such inquiry is necessary, but they have to come before the House of Commons, which has the duty cast upon it of inquiring whether or not the money they desire to borrow is necessary for the proper carrying out of the duties entrusted to the London County Council by Statute. On these occasions one watches from year to year to see whether there is any large increase in the amount of the borrowing powers sought by the London County Council.
  In this particular year, the increase is not a very large one, but it is a distinct increase, and, therefore, it is necessary to look at some of the items before we pass the Bill. The first item is No. 22, in connection with the building of the London County Council Hall. A considerable amount has already been borrowed from year to year for the purpose of buying the land and erecting the building. This year power is asked to borrow a further sum, some £460,000, and a further £200,000 during the succeeding six months. At present we have not any estimate as to what the total expense of the building is to be, and were it any other body than the County Council one would insist, before borrowing in a piecemeal way, on knowing what the estimate is of the total cost of the building and the value of the
  1650
  land. I will ask my right hon. Friend to let us know what the last estimate is, because these estimates have varied ever since the building began to be erected, and they invariably increase. As far as Parliament is concerned no limit has been put on the total expenditure which is contemplated.
  The second item to which I propose to call attention is a new and large item—No. 33 for new tramway enterprises this year. At present the tramway enterprises of the County Council are, I believe, being conducted at a loss. [HON. MEMBERS: "No."] I believe the profit is not very large if it is not an actual loss, and it certainly is not an opportune time for us to be asked to sanction a loan, in addition to the very large number of lines which are being asked for in this Bill, for lines which have already been passed by Parliament and are in course of construction. Many thousands of pounds are to be borrowed for such lines as those. In addition to Acts which have already been sanctioned there is here a fresh departure and a request to borrow £113,000 odd for construction and equipment of tramways and purchase of land, and for the purpose of tramway undertakings which are about to be sanctioned this year. In addition to that there is a sum of some £80,000 for street improvements in connection with these tramway extensions. I shall learn with interest whether that is really a commercial enterprise or is likely to be. There is another item—No. 26—for power to borrow a further sum of £915,000 odd for the purpose of purchasing, constructing and equipment of tramways and provision of buildings, and so forth, for existing tramways. So that you have now an item of £915,000 odd for existing tramways, larger numbers of extra borrowing powers for tramways which have been? sanctioned and have not yet been built

  1651
  and in addition a new sum of £113,000 for the present year.
  Some case ought to be made by my right hon. Friend before we pass these sums of money en bloc. If he can show that these are not improper enterprises, I should be the last to hinder the County Council from having the money they wish to borrow. I venture to think that the probabilities may be the other way. The next item to which I wish to call attention is our old friend the steamboat service. There was a sum borrowed last year, and we were told that it was the last one, as the whole matter was being put an end to. This year it has cropped up again quite cheerily. I have always said that I have an interest in steamboats, and that I am to a certain extent prejudiced. The vessels in which I was interested were run off by the County Council. There is a fresh estimate for an additional £4,000, of which £1,000 is required this year There is an item of £540,000 for certain local improvements. The House is naturally in the dark as to what that item includes, and I wish my right hon. Friend to explain the purposes for which the money is required. The same remark applies to the item with respect to the new street from Holborn to the Strand. Again the County Council ask further power to borrow. The new street was formed many years ago, and I should have thought that by this time some profit would be coming to the ratepayers on the money spent in laying out the street. I beg to move to omit the items I have indicated to the House. I do think when we are dealing with large figures like these the House should have some explanation of the purposes for which the money is required.
  Mr. SPEAKER: What is the item that the hon. and learned Member desires to omit?
  Mr. RAWLINSON: Items 33 and 72.
  Mr. SPEAKER: Take one Amendment. What is the item which the hon. and learned Gentleman wishes to omit?
  Mr. RAWLINSON: Item 33.
  Mr. HAYES FISHER: I regard it as a great compliment to the London County Council that the House should after half-past Eleven at night discuss the affairs of the Council. There is really no cause for alarm in the amount of money which the County Council are seeking power to
  1652
  borrow on this occasion. It is quite true that it is a little more than last year, but the County Council may be proud of the fact that last year they actually paid off more money than they borrowed. This year they have paid off almost as much as they have borrowed, and I think that their good management of their finances is a matter on which they should be congratulated. My hon. and learned Friend has complained on more than one occasion that he has not had a full estimate given him of the probable cost of the site and buildings of the new county hall.
  Mr. SPEAKER: The item which we are now discussing is the tramways.
  Mr. HAYES FISHER: I am very much relieved that I am not allowed to discuss that. Item 33 authorises the borrowing of £113,190 for the construction and equipment of tramways, the purchase of land, and other purposes of the tramway undertaking. There again I can comfort my hon. and learned Friend by telling him that in consequence of the action of a certain committee not long ago we shall only require half that sum. I do not think that that is a great deal to spend on new tramways for the great metropolis. The hon. and learned Gentleman says that he understands that the tramways have been run at a loss. I should demur to that statement. It is quite true that this year the revenue of the tramways does not enable us to pay the working expenses and the great debt charges, but the County Council are paying back no less than £400,000 debt charges in one year, and the deficit, which is £86,000, is about equal to what the Council have to pay this year for rates for the occupation of the roads, while their great rival, the General Omnibus Company, pay nothing in rates. The County Council are very much hampered in this way in the management of their trams.
  After all it may be wise for the County Council not to embark upon any very extensive scheme of construction until something can be done to place them on a more equitable footing as regards the General Omnibus Company. But it is a wise policy to consolidate what they have got and to link up and establish a busines-like undertaking. We are endeavouring to provide tramway facilities in connection with the omnibus company and the railways, and all that is being done in no party spirit. There is the same

  1653
  control over the London County Council as there is over other bodies. Remember that the London County Council is subjected to a very rigorous form of election, and also to very severe criticism every three years. Therefore, there is a good deal of control, after all, by those concerned in the expenditure of the money. Let us remember, also, that the tramways in London carry 500,000,000 passengers every year, and they have, what the omnibus company have not, a system of workmen's fares by which 52,000,000 working men are carried over the London County Council tramways. The County Council in regard to their tramways, have constantly to keep in mind the question of a general housing policy. Moreover, the County Council have to pay very large sums to make street improvements so that the tramcars may run with greater ease; whereas the omnibus company contribute nothing. Both the County Council tramways, and the omnibus company, carry each 500,000,000 passengers; both are friendly rivals, and both should run their concerns in the interests of the public as well as in other interests.
  Sir EDWIN CORNWALL: The hon. and learned Member who raised the question of item 33, which refers to the money required by the London County Council's tramway service, in which I understand there is a sum of £80,000 for street improvements—
  Mr. RAWLINSON: In addition.
  Sir E. CORNWALL: It raises the same point. The London County Council, since it has been running tramways, has had to pay for street improvements, which have been charged to the tramway service. That has always seemed to me a great injustice, and it was the right hon. Gentleman, who spoke for the County Council to-night and his party, that saddled the London County Council with all that charge. We had not only to carry the travelling public, we had not only to maintain the roadway and make street improvements, but we had to pay rates to the local authorities for using the roads.
  Mr. HAYES FISHER: I may state that it was never our policy to charge all the cost, but only a fixed proportion of the cost. The hon. Gentleman has no right to say that it was the policy of my party that the tramways should bear all the cost.
  Sir E. CORNWALL: I was wrong in using the word "all," but the experience of the London County Council was that
  1654
  the proposition was a very heavy charge, and they never proposed a tramway line but they were face to face with that heavy charge, which the right hon. Gentleman and his friends always insisted that the London County Council tramways should bear. I have seen recently arguments in favour of meeting that difficulty by putting a rate upon the omnibus traffic. That does not seem to me to be fair. I watched the proceedings and it seemed to me we were beginning at the wrong end by trying to rate omnibuses to meet the difficulty. The London County Council should have the power like other traffic running organisations in London of running their traffic and instead of handicapping the London County Council by improvement charges and rates they should be in as free a position as any omnibus company from charges and there should be a fair field and no favour. Here we have a proposal to add £80,000 to the London County Council's charges for street improvement. I am satisfied that one of the greatest difficulties with regard to the County Council has been this permanent charge which has always been put on the Council not for running its tramways but to bear charges which ought to fall in another direction.
  It is the duty of the London County Council and the duty of the local authorities to make streets wide enough for all traffic, and it is the duty of the local authorities to make these roadways wide enough for tramways and motor-buses. It is not fair to say to particular sorts of traffic "You must pay a heavy tax towards widening a street" and to another "You can run as freely as you like ". It is not our business here to decide, but if I had to go into the Lobby I should be more inclined to vote against the County Council having this £80,000 for street improvements—not because I do not think the County Council is entitled to spend its money with the electors behind them, but because I am opposed to the County Council spending tramway money for street improvements and then letting motor-buses and other kinds of traffic use those widened streets which the tramways make. I say that although on broad grounds I want to support the County Council Bill, I take this opportunity of telling the right hon. Gentleman that it is he and those who work with him who are largely responsible for the difficulties that the tramways are in, because of taking a particular view as to improvements, and in that way they have saddled the tramway

  1655
  system with street improvements which had nothing whatever to do with the tramway service.
  Mr. F. HALL: I am perfectly aware of the great assistance which the hon. Gentleman (Sir E. Cornwall) gave to the London County Council, but I think he is really away from the facts, when he says that the party to which I have the pleasure of belonging were only desirous of saddling part of the improvements in connection with the tramways. I am afraid the hon. Gentleman does not know the circumstances. Under the leadership of my right hon. Friend the Member for Fulham (Mr. Hayes Fisher), a Committee was set up composed of Members from all parts of the House, to decide the one important question as to how much of the cost of the improvements should be allocated to the tramways. That Committee sat whenever there was any question with regard to the cost of street improvements, and decided, after careful consideration of all the facts, and in many cases hearing the representatives of the borough councils, what proportion should be debited to the tramways. As a past Chairman of the Tramways Committee, I personally was surprised at the leniency with which they were dealt by the Committee. I am a very great believer in keeping your accounts. But it is impossible to keep your accounts unless you debit certain items which are specially in accordance with specific works. To enable you to keep your tramways accounts separately and to know what is the debit and credit, it is just as necessary to debit a certain proportion of the street improvements to the tramways accounts as it is to charge them with the cost of the rails, whether they are made in this country or in Belgium. We have had many discussions in the Council on these matters, and since I have been a Member of this House the same questions have come up here again and again. I have always been desirous of doing anything I could to further the interests of the tramway undertaking, and were I on the Council now I should adopt the same course as heretofore. At the same time I was never in favour of the trams being run as a municipal undertaking; but, as they were handed to us as trustees, we, the members of the Municipal Reform Party, have taken them in our hands and worked them for the benefit of the ratepayers and the travelling community at large.
  1656
  I hope my hon. Friend will not press this matter. The amount referred to is not a large sum; it is only about £58,000. I am sorry it is not possible to go on with the large improvements which I was desirous should be carried out. Anybody who knows anything at all about tramway enterprise knows that if you are desirous of getting the best results it is necessary to link up the various dead-ends that you have. If hon. Members are going to handicap the County Council in the work they are desirous of carrying on I shall be particularly surprised. It would be rather interesting, if this Amendment were pressed to a Division, to see how hon. Members would vote; but I sincerely trust that, after the explanation which has been given, my hon. Friend will withdraw his objection.
  Mr. RAWLINSON: My object was merely to call attention to the large sums that were being borrowed. I am glad to hear that the amount is likely to be only about half the sum mentioned, and, after the explanation that has been given, and having regard to the time, I ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Bill to be read the third time.
  The remaining Orders were read and postponed.

NATIONAL INSURANCE (ARREARS) AMENDMENT REGULATIONS.
Mr. GODFREY LOCKER-LAMPSON: I beg to move, "That an humble Address be presented to His Majesty praying him to withhold his assent to the scheme contained in the Regulations (No. 2), 1914, dated 6th July, 1914, made by the National Health Insurance Joint Committee, under Section 8 of the National Insurance Act,. 1913 (3 and 4 Geo. 5, c. 37), with respect to arrears."
I must apologise to the House for bringing this Question on so late at night, but it is quite impossible to bring it on early. I have postponed it from day to day, and I do not like to postpone it any further. I can assure hon. Members I shall be as short as possible—seeing the subject is technical and difficult—without being so short as not to be clear. These Regulations have, I suppose, been issued by the Insurance Commissioners as a result of the Clause passed last year in Committee up-

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stairs on the Health Insurance Amending Bill, but when that Clause was passed, I am sure no one in the least realised that the position of insured persons was going to be worsened in several very important respects. In many ways these new Regulations penalise an insured person far more heavily than the procedure under the original Act. But I think I know what the Government will say in reply. They will point out that under the new Regulations, if a man falls ill he is only penalised in respect of the arrears of the preceding year, the arrears of all other past years being remitted, and that under the original Act the arrears of all past years were perpetually accumulating against him in the event of his falling ill. But the fact in practice will be that the new Regulations will cause more loss to the sick man than under the original Act whenever the arrears in the year preceding his illness are heavier than the average of the preceding years since his entry into insurance. Under the original Act a man's arrears over the three weeks credit a year mounted up against his until he fell ill, and he had then to take the consequences of his own arrears in the shape of lower benefits. But under the new Regulations at the end of every year all a man's arrears are wiped out free of cost to him, if he keeps well during the following year. But in spite of this the arrears have got to be paid for somehow in order to keep the society solvent, and under the new Regulations they are paid for by lowering benefits of those who fell ill, in many cases by more than is necessary to wipe out their own arrears.
12.0 M.
If I may, I should like to show how these new Regulations will work out. In the first place what in plain language the new Regulations say at the start is this: If a man owes only one week of net or penalty arrears, that is to say, if he only owes 4d. he is to suffer a loss of 7d. a week for six weeks, or 3s. 6d. in all, and sickness benefit, if he is ill and incapable of work for six weeks or more in the following twelve months. If he owes two weeks net or penalty arrears, that is if he owes 8d., he is to suffer a loss of Vs. in similar circumstances and every extra 4d. owed is to entail an extra loss of 3s. 6d. in similar circumstances, except that where the penalty arrears do not exceed sixteen weeks, the man's benefit cannot be reduced to below 2s. a week, nor a woman's to below 1s. 6d. If the penalty arrears are over twenty weeks, sick and disablement benefit is suspended for a year, and if the arrears are
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over twenty-six weeks these benefits are suspended altogether. Now it is manifestly unfair that an insured person owing 4d. should be docked of 3s. 6d., and it is not only unfair but is actuarily unnecessary. If a man owes 4d. in penalty arrears he could easily clear his debt by forgoing the right of medical benefit for the next four weeks. Medical benefit costs roughly 1d. a week. A man pays whether he wants a doctor or not and whether he calls in a doctor or not, so that if he gave up the chances of medical benefit for four weeks he could wipe the debt out. Why cannot the Insurance Commissioners give a man this option? It would make the new scheme far more flexible and acceptable. Many would prefer to give up the chance of medical benefit for four weeks, a benefit they may not require, than give up 3s. 6d. sick pay if they fall ill for six weeks. If the Commissioners thought that il would not be wise to give insured persons this option, why not combine the penalty, why not combine the deprivation of medical benefit with the deprivation of sick pay and so diminish the sick pay penalty that will fall on the insured person? I should be curious to know whether the Commissioners have considered this alternative at all. But these new Regulations are a good deal harsher than the provisions of the original Act in various respects. May I give a few instances of what I mean?
Take a man who enters into insurance in July this year. Suppose during the following year between July, 1915, and July, 1916, he runs into seven weeks arrears and does not clear them off within three months, that is by October, 1916, the time by which under the Regulations he is obliged to clear them off, if he does not want to be penalised, and I mention seven weeks, because if the arrears are under seven weeks there is no deduction from benefits, as under the Regulations a man is allowed three weeks' credit a year, and he has been in insurance two years since July, 1914. Suppose, as I say, this man runs into seven weeks' arrears and falls ill in November, 1916. Under the original Act his gross arrears being seven weeks the average arrears per annum since entry into insurance would be three and there would be no deduction from benefit as the penalty only begins when the average is four, but under the new Regulations his gross arrears being seven weeks, and being allowed three weeks' credit a year, his net penalty arrears would be one week, and for the first six weeks of illness 7d. a week would be deducted from his sick pay, or

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3s. 6d. altogether, although his arrears only amounted to 4d.
Take another case. If he is eight weeks in arrear in November, 1916, under the original Act his average arrears per annum since entry into insurance would still be less than four weeks as he has been insured just over two years from July, 1914, to November, 1916, and there would be no deduction from benefit; but under the new Regulations, if he is eight weeks in arrear, since he is allowed six weeks' credit in two years, his penalty arrears would be two weeks, and for the first six weeks of illness twice 7d., or 1s. 2d., would be deducted each week from his sick pay, or 7s. altogether. If he happened to be nine weeks in arrear, under the orginal Act his average arrears would be about four weeks, and 6d. would be deducted from his sick pay until he recovered, and the deduction might continue for twenty-six weeks. But under these new Regulations his net penalty arrears being three weeks, 1s. 9d. would be deducted each week if he were ill for six weeks, or 10s. 6d. altogether; and I may remind the House that the average length of illness for average age is far below anything like twenty-six weeks—in fact, it is less than two. So that under the original Act the deduction for twenty-six weeks, or anything like it, would hardly ever occur. But if a man were ill for six weeks in this last case, under the original Act at a penalty of 6d. a week, his penalty would be only 3s. against 10s. 6d. under the new Regulations.
If the man had twenty-two weeks' arrears, under the original Act his average arrears being about ten weeks a year, 3s. 6d. would be deducted from his sick pay and, what is very important, no deduction would be made when disablement benefit was being paid. But under these new Regulations, if he was twenty-two weeks in arrear, which with the allowance of three week's credit a year, means sixteen penalty weeks' arrears, 8s. would be deducted each week from his 10s. if he was ill for six week, as, if the penalty arrears are not over sixteen weeks, benefit is not to be reduced below 2s. And if a man were receiving disablement benefit 3s. would be deducted each week from the 5s. payable—an entirely novel innovation. If his arrears were twenty-three weeks under the original Act, 3s. 6d. would be deducted from his sick pay as before, and no deduction would be made at all if disablement benefit were
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being paid. But under the new Regulations, as his penalty arrears would be sixteen weeks, all his sickness and disablement benefit would be stopped for the first six weeks of his illness, as his net penalty would be 10s. a week. Therefore, it is quite clear that the new Regulations are far more drastic in such circumstances than the provisions of the original Act.
May I give one final illustration showing what would happen over a longer period of time, in order that the Government may not accuse me of selecting short periods to suit my arguments? Suppose this same man did not fall ill till 1923, and suppose his arrears in November, 1922, for the seven previous years had been seven weeks each year, or forty-nine weeks altogether. Under the new Regulations, whether he had been ill or not for the last seven years, he would commence the year from November, 1922, with only seven weeks' arrears against him, or with the three weeks' credit allowed, four net penalty weeks' arrears. If he fell ill in January, 1923, 2s. 4d., or four times 7d. would be deducted from his sick pay each week for the first six weeks of illness, or 14s. altogether. But under the original Act, if he fell ill in January, 1923, it would be necessary to calculate the average arrears since his entry into insurance, that is, he would have been insured for 8½ years since July, 1914, and, taking his arrears again at forty-nine weeks, he would show an average of five weeks' arrears a year. That is only 1s. a week would be deducted from his sick pay, or less than half the penalty during the first six weeks than under the new Regulations. And, as I said before, the average arrears for average age are well under six weeks a year. In view of this I think I am justified in saying that these new Regulations press more hardly in many cases on an insured person who falls into arrear than the provisions of the original Act, under same conditions; in fact, these new Regulations will always cause more loss to a sick man than under the original Act whenever the arrears in the year preceding his illness are heavier than the average of the preceding years since his entry into insurance. All these, to my mind, are sufficient to condemn the introduction of these new Arrears Regulations by the Insurance Commissioners.
But there is another consideration. These Regulations are introducing an entirely novel principle which, I am sure, was never anticipated when the Committee upstairs last year passed the new Clause.

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The new scheme is not merely administratively, as was anticipated at the time, but essentially different from that of the principal Act. The arrears' scheme of the principal Act was to take the individual and fine him for his own arrears; he was not penalised for anyone else's arrears; but in the new scheme the arrears are being pooled in such a way that the sick man owing 4d., or one week of net or penalty arrears, may be fined 3s. 6d. to help men who are in arrear who do not happen to be ill within the following twelve months. This is just as if a society had 1,000 members in arrear and they decided to run the risk of being ill in the next twelve months. That is, they decided not to pay up any of their arrears and the society made up its loss by giving lower benefits to those who happened to fall ill. Some members might not fall ill but others would fall ill, and those who did fall ill would have to make good the loss on the whole thousand members. Those who did not fall ill in the following year would escape the penalty, but those who were ill would have to pay for all the thousand. That is, the member who fell ill would have to pay not only his own arrears but the arrears of the man who was not ill. This is exactly what these new Regulations are doing, and that is the reason why the man who owes 4d. penalty arrears may have to suffer a loss of 7d. a week for six weeks, or 3s. 6d. in all, to pay for those who do not fall ill.
Up to now the principle of insurance has been that the man who keeps well pays for the man who falls ill, but under this new Regulation exactly the contrary is going to happen. The man who falls ill will pay the net penalty arrears of the man who keeps well. That is, the healthy man will be let off his net penalty arrears (the arrears for the three credit weeks allowed him) and will be let off at the expense of the sick member. I cannot believe that this is sound insurance, and what is more important and graver still is that it is directly contrary to the provisions of the Amending Act of last year. Clause 8 says:—
"Insured persons who are in arrears shall be liable to such reduction, postponement, or suspension of benefits as may be prescribed so, however, that any such reduction, postponement, or suspension of benefit shall be approximately equivalent to the value of the loss occasioned by the failure to pay the contributions in arrear."
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These Regulations are making a man not only pay his own arrears but the arrears of others as well. Quite apart from the fact that the sick member is being more heavily penalised by these new Regulations than under the original Act, I believe that a radically unsound principle is being introduced by these new Regulations which was not contemplated and was not authorised by the Clause passed in Committee upstairs last year. For this reason, although I am sorry I have had to detain the House, I feel there is full justification for bringing the matter before them.
Mr. CASSEL: I beg to second the Motion.
Mr. WEDGWOOD BENN (Lord of the Treasury): The system of arrears which is brought into force by these Regulations is as follows: At the end of every July we find out how many contributions in arrear an insured person is. We then give him three months to pay them at the rate of 4d., minus the reserve of three contributions a year which is credited to him. Then, if he does not pay at the beginning of November, he becomes subject to a penalty, which is an amount of 7d., which is deducted from the sick pay for each arrear of contribution for the first six weeks; for instance, if he is one contribution in arrear, he gets six times 9s. 5d. instead of 10s. What is the history of this particular Clause? It was inserted in Committee, of which the hon. Member was a member, and I rather fancy it was voted for by the hon. Gentleman himself.
Mr. FORSTER: Quite wrong.
Mr. BENN: Perhaps the hon. Gentleman will point out where I am wrong afterwards. This Clause was inserted in Committee by a majority of 28 to 1, and the hon. Gentleman (Mr. G. Locker-Lampson) was one of the twenty-eight Members who voted for it.
Mr. FORSTER: It was within the power of the Commissioners to make the Regulations. We do not deny that.
Mr. BENN: I am speaking about the Clause. No one supposes the Regulations were inserted in Committee. After the Clause was inserted, a Memorandum was circulated to Members of this House setting out the details of the way in which the Commissioners intended to exercise the powers given to them under the Clause, and on the Report stage the Clause was agreed to without a Division. The Commissioners then laid the plan before the

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Advisory Committee, on which the insured persons, the societies, the employers and all the bodies concerned were represented, and it was unanimously approved by the Advisory Committee. One may therefore fairly say that it has been approved by all the parties concerned. What is the hon. Gentleman's complaint? It is that we are not following the practice of the old Section 10 of the principal Act. He says that is much fairer, and is in accordance with the average system. There is a good deal to be said in theory for Section 10 of the principal Act, but there is very little to be said for it in practice. The hon. Gentleman recommends it now to the favourable consideration of the House. This is what he said about it in the Committee. He said that during the past few weeks he had been pressed by big friendly societies and orders to put something on the Paper to meet this difficulty. The difficulty was just beginning. He held it would become absolutely intolerable for various officials of friendly societies unless they could pass some such Amendment as this into law.
That was the hon. Member's view about Section 10, which now he thinks is a fair and equitable way to put the case. These Regulations are made under the Clause which was passed in that way by Committee, which was approved by the House, And the Regulations under which had been approved by the Advisory Committee. Parliament laid down two principles to guide the Commissioners in making their Regulations, and of course they are bound to observe rules laid down by Parliament. These two prinicples are embodied in the Act. They are that the penalty should be approximately equivalent to the value of the arrears, and that it should be recovered by means of a reduction of benefits. The hon. Gentleman has said something about this being a system for making the sick pay for the well. I think that is a, fantastic reversion of the facts. The whole principle of insurance is that at any moment the persons who are well are contributing to the common fund for the benefit of the people who are sick, and that, which is the principle on which all insurance is founded, is as operative under this scheme as it has always been under the Insurance Act. The only difference is this. The common fund is rather smaller, because some persons have not paid into it. They have got into arrears, and therefore, when it comes to reciving their bonus, they get a smaller bonus, or they have paid a
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smaller premium on their insurance, and they get smaller benefits when it comes the time for drawing benefits, That is not making the sick people pay for the well. The fund consists of the contributions for the time being of people who do not need to draw benefits.
The hon. Member has criticised these Regulations, and has made some suggestions for some other ways in which you would recover arrears. I claim that the advantage of these Regulations is twofold. They are an advantage to the society and they are an advantage to the member. First of all as to the society. What the officials of approved societies want is simplicity. To manage their societies they want something which is easy to understand and can easily be carried out. They have found, as the hon. Gentleman himself said in Committee, the old average system impossible, and what they wanted was a system which gave them a clearly defined period on which to calculate their arrears. They wanted also a six-monthly card, which is one of the greatest steps forward in the direction of simplicity. You can only have a clearly defined period of calculation, and a six-monthly card if you have some such system as this, and it was welcomed by all the approved societies in the country. In fact, of 5,000 societies which have been visited by the officers of the Commissioners in reference to this scheme, only thirty-nine secretaries of societies have found any difficulty in its administration. The hon. Gentleman proposes that instead of a man paying arrears by deductions from cash benefits he should pay them by forgoing medical benefit for a certain number of weeks. I really wonder how he could possibly put such a scheme forward. Supposing a man has been put on a doctor's panel for a year and says, in the middle of it, "I will go out for five weeks. I am feeling very well," what are you going to do with the doctor? Are you going to recover 4d. or 5d. from him in respect of the weeks in which he thinks he will not need the doctor's services? It is only necessary to state the suggestion to see that it really is perfectly impracticable.
As to the member. The principles on which any Arrears Regulations should be based are three. They should make it as hard as possible for a man to get into arrears and as easy as possible for him to pay up the arrears, and above all, they should make it impossible for a man, as he gets older, to be crushed under a load of

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arrears and debt to his society. Hard to get into arrears. How is this calculated? First of all, during the very period when a man finds it most difficult to pay his contributions, the period of sickness, he has no contributions to pay under the Act. That is a boon which was never conferred and could never be, under the old voluntary system. Secondly, he has every year credited to him three weeks' reserve contributions, so that all persons who have been insured from the beginning will start with a reserve balance of six contributions before any arrears are deducted for the period which has elapsed up to the present moment. With those two things to help him we may fairly say that it is hard for him to get into arrears. As to the difficulty of paying after the calculation is made, he is given three months in which to find the money at the fourpenny rate, and in addition to that he has the benefit of all the reserve contributions which may have accumulated. There is no obligation on a man to pay up. He need not pay up unless he likes. If he does not pay up, he is absolutely quit of all obligation to the society after a year.
What happened under the old system? He had to pay his contributions all the time he was ill, and sometimes fines in addition. Under the old voluntary system if he exceeded the limit of credit which the society allowed, he would fall out of insurance in that society, and all his savings would be wasted. Thousands of old men who were brought back into insurance had been in insurance societies and had fallen out because of the accumulation of arrears. What is the present system? The present system imposes a penalty, and you must have a penalty under a contributory system. If you do not have a penalty, there is no incentive for a man to have his card stamped by the employer, and even if he falls into arrears, whatever his age, and however intermittent his contributions may be, in twelve months he is absolutely clear in the society's books. Even in the case of the older men, who most need help of this kind, six weeks is the limitation of the penalty. After six weeks, save in some exceptional cases, they are absolutely clear of the society's books, and all the time medical benefit and sanatorium benefit have been running. The hon. Gentleman says that there will still be hard cases, that there will be a large number of people in arrears, and that they will find themselves entirely deprived of
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benefit every year. There may be such cases, and to meet them the Chancellor of the Exchequer in his Budget statement announced that the Government propose to set up a Benevolent Fund which will be at the disposal of societies and branches who have members coming within the definition of the hard cases to which the hon. Member has referred. They will be in the best position to judge of the merits of each case. If the merits justify it, they will pay the arrears from the Benevolent Fund, so that a man will not fall out of benefit at all. I hope I have made the matter clear and justified the equity of the proposed rules.
Mr. WORTHINGTON EVANS: I would like to say one or two words with regard to this question, and I would like first to deal with the last statement with which the hon. Gentleman finished his speech. I understood him to say that the Chancellor of the Exchequer said he was going to form a Benevolent Fund.
Mr. BENN: I think so.
Mr. WORTHINGTON EVANS: I think if the hon. Member looks at the Budget speech he will find he is wrong. All that the Chancellor of the Exchequer said in the Budget speech was that there would be found some money for arrears. It makes a great deal of difference. The hon. Gentleman has said it is now going to be used in the Benevolent Fund, and all the arrears are going to be paid up.
Mr. BENN: It is very important it should be clear that that is not so. The Benevolent Fund is to pay the arrears of members of societies who fall into arrears through no fault of their own, but the arrears will continue.
Mr. WORTHINGTON EVANS: I am anxious not to misrepresent the hon. Gentleman, but I desire to know what is going to be done with the Benevolent Fund. It is one of the things we are anxious to find out. In cases where a man falls into arrear through no fault of his own then the Benevolent Fund is to be used to pay up all the arrears. If that is the real case, these Arrears Regulations are not necessary at all because they are to look after members who through unemployment are unable to continue their contributions. Unemployment is not the fault of the man. If the man is a worker, so long as he is employed, there will not be any arrears, and the arrears arise through

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unemployment, and if the Benevolent Fund is going to pay up arrears through no fault of his own, this question is reduced to a very small matter indeed. But these Arrears Regulations which we are asked to consider and approve, are not complete, and really the House is not in a position to give a final decision with regard to them. The Annual Report of the National Insurance Commission, after explaining what the Arrears Regulations are, what they are intended to do, says:—
"This explanation of the steps taken by the Commissioners to give effect to the direction of Parliament in the Act of 1913 would be incomplete without some brief reference to the special branch in aid of arrears which has been proposed to Parliament in connection with the financial arrangements."
And then it proceeds to say a few words about the Benevolent Fund, although it does not call it the Benevolent Fund. But at present the House is quite without any information from the Chancellor of the Exchequer of what this Fund is to be used for, and up to this moment this House has never voted any sums whatever towards the Benevolent Fund. For all that this House knows, no money will ever be voted for the Benevolent Fund. It is neither in an Act of Parliament nor in a Bill even, nor is it in an Estimate or Supplementary Estimate, and has never been put to the vote of the House of Commons, so that, if we could be quite sure that what he hon. Gentleman says about the Benevolent Fund is correct, we might pass away from these Arrears Regulations as being quite unimportant. Until the House has actually voted the money and passed the Votes for which it is to be used, we have to consider the Regulations as they are and their effect upon those who will come under them.
The hon. Member laid down three propositions, although I do not dispute at all as to the features that ought to be found in Arrears Regulations. He said it ought to be hard for a member to get into arrears, and then he claimed apparently for these Regulations that the insured person would not have to pay these arrears when sick. That has nothing to do with these Regulations. That was in the original Act. He also seemed to suggest that the reserve contributions were some effect of these Regulations; they are nothing of the sort. They were provided in the original Act, and what we want to see is that both these features should be taken into account and brought to the benefit of the injured person in the best possible way. He said that under these
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Arrears Regulations it ought to be impossible to crush a member under a load of debt. That is a very important element in Arrears Regulations, and the hon. Gentleman, as I understood, seemed to think that in most cases, if not all, a member would be free of the Arrears Regulations in six weeks. Of course he knows well that, if the arrears on the average exceed twenty weeks, then the arrears are not wiped out in six weeks.
The insured person is suspended altogether from the benefit, and if that goes on for two years, he is not only suspended from benefits but he loses his reserve value, and for ever after—and this seems to me to be quite the most serious part of the Arrears Regulations—he is in reduced benefit; whenever he is employed he has to pay the full contribution, but never again can he hope to get the so called minimum benefit of 10s. It is much more probable he will never afterwards get more than 5s., and yet he has to go on paying the full contributions. The hon. Gentleman, in explaining the effect of these Arrears Regulations, did not say anything about that, and that surely is crushing a member under a load of debt practically for all time. No one can venture to anticipate how many such persons there will be. That would, of course, largely depend on the application of the Benevolent Fund, and if it is elastic; but, if we take the Regulations as they are now, it is safe to say many thousands, possibly hundreds of thousands, in the course of time, will come under this suspension, and cease to receive any benefit at all, or rather will only be entitled to very much reduced benefits for all time.
Then the hon. Gentleman combated my hon. Friend's statement that the sick are made to pay for the well. He described that as a perversion of the Regulation. But, surely, there can be no doubt about it. The hon. Gentleman tried to explain it in this way: He said—"Ah, but the person in arrear pays a smaller premium, and, therefore, he must receive a smaller benefit." So far so good, but the benefit is reduced much more than is necessary. Because of the smaller premium paid by that Member, it is reduced so as also to take into account the smaller premiums of others in arrear who do not happen to be sick in a particular year.
Mr. BENN: They may be ill another year.
Mr. WORTHINGTON EVANS: That is quite possible. But the hon. Member does not suggest that every man's sickness is necessarily the same as every other man's sickness, and, consequently, it is perfectly obvious that my hon. Friend's statement, that those who are sick are going to pay while sick for the arrears of those who are well, is perfectly accurate. I do not want to detain the House any longer than I can help, but in the Memorandum which was issued, I think, by the Joint Committee, explaining the system of arrears and dealing with the actuarial part, it is quite clear that this is a pure gamble, and that no one can say whether these Arrears Regulations are fair as between one insured person and another. This is their statement:—
"There is, unfortunately, an almost complete absence of information as to the incidence of unemployment at different ages,"—
and, so long as there is that want of information, it is quite impossible to draw up a system which will be fair to all. Again they say:—
"There are no means of estimating in which direction the financial balance will incline after the imposition of a uniform rate of penalty, but the number of persons falling into this group must be extremely small, and the balance, if any, between losses and gains under the operation of the scheme must be quite insignificant"
It is quite evident that they are unable to say whether the amount of deduction actually made from the benefits paid to the sick person will really compensate, or will be more than necessary to provide for the arrears. But the complaint that I make is rather as to the method in which the Government have dealt with this, than the actual substance of the Arrears Regulations themselves.
I think the strictures that were passed by my hon. Friend are perfectly correct. These Regulations were published, I believe, in the first week in July. At any rate they could not come before the House earlier than the first week in July, because, when my hon. Friend tried a few nights ago to move the same Motion as he has done to-night, the hon. Gentleman (Mr. Wedgwood Benn) made the statement that they had not then been laid on the Table of the House.
An HON. MEMBER: That was in the middle of last week.
Mr. WORTHINGTON EVANS: The
result was that we could not call the attention of the House and the country to the Regulations until they were laid on the Table. The matter, therefore, could
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not very well have been brought on before this. Now, what is the present position? These Regulations come into operation almost at once, and before the twenty-one days have expired. They may, in fact, be said to be in operation now, because the new insurance books, one of which I hold in my hands at this moment, are already published, and the effect of the scheme is set out in that book. Just consider what would happen if we took a certain course. The whole of the insurance business would undoubtedly be hung up, and endless confusion would be caused in all the societies if the House of Commons did cancel the Regulations. All these books would have to be reprinted; there would be no scheme of arrears; societies would be continuing to pay full benefits for part contributions, and would be adding greatly to the risk of insolvency.
The House was supposed to have the control over these Regulations, but all this has been done purposely to prevent the House exercising that control. Matters would have been made perfectly easy if the Government had chosen to put the Regulations before the House three, four, or five months ago, when effective criticism of them might have saved insured people a great deal of trouble and loss. But they have put off the matter till the last moment, so that if the Motion were persevered in it would have the effect of disorganising not only the societies, but the whole machinery of insurance. In these circumstances I think the House does well to protest against the action of the Government, and my hon. Friend was quite right in calling attention to it to-night. The hon. Gentleman (Mr. Wedgwood Benn) said these Regulations were very simple, and that this was one of their great advantages. I wonder whether he has seen an insurance book which tries to explain these Regulations that he tells the House are so simple. There is not an insurance man who realises what has to be done by the secretaries of various societies who does not tremble to think what will be the result of these Regulations. The opportunity for mistakes, for irritation, and for discontent is so great that before long the Government will find that the actual results of the Regulations are a far more effective criticism than any other that can be offered.
Mr. BOOTH: I think it necessary, late as the hour is, to say a few words in answer to the hon. Gentleman who has just

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spoken. In my opinion the hon. Gentleman is perfectly correct when he says that the arrears question will cause a great deal of trouble to the societies and to the friends of the Insurance Act in the near future. There is no doubt that it will cause a considerable amount of trouble, and the critics on the opposite side must take their choice. Either they will be good friendly society men and will be guided by the principles which have been recognised throughout the whole history of the movement, or they will be merely party politicians. That is for Members of the Opposition to decide themselves. The attitude taken up to-night is one of complaint against the present Regulations. Well, I daresay there are many Members in this House who could find fault with them, and I daresay some of them would be inclined to try if it were not so late. But what is the argument of hon. Members opposite? It is something far worse. They complain that we are not standing by the original Act. Do they say that the Government have introduced something more complicated and unjust than the original idea? Is that their grievance? If it is, then I think it only needs to be stated to show the folly of it. The advisers of the Government in these matters are not in any sense party men. These Regulations are not framed by any party caucus. They come from permament officials who serve a Department and are quite as well able as any hon. Member in the House to deal with these problems. The case which could be made surely is, not that the Regulations need great care in carrying them out, but that they needlessly complicate the issue. But I can assure the House that the great approved societies regard these new Regulations as far superior to the old ones. You cannot get any friendly society official of standing in this country to say that he would perfer the old system rather than these new Regulations.
Mr. WORTHINGTON EVANS: They do not like these Regulations.
Mr. BOOTH: It must be obvious to anybody that when you alter a system of reduction of benefits, or fines, or modes of payment, or whatever it may be, that you can point to people who will have grievances. You can show that under system A a certain individual is better off than under system B, but the same thing happens if you put it the reverse way. It is quite easy to produce these cases, and
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I submit that what hon. Members ought to ask themselves is this: In the main, taking the whole working of the scheme, is the scheme more unfair to the insured persons than the previous one? I say it is more just to them financially, taking its operation on all individuals who will come within its scope, and also it is less complicated to work. I agree that it is bad enough and difficult enough; but any scheme would be difficult. The duty of the hon. Member for Colchester (Mr. Worthington Evans), as an expert, should have been to have got up and have dealt with the matter sympathetically. He should have shown how, by amending the book here and there, he could have saved secretaries of societies a good deal of work. But he has not made any attempt to do so. I could take hold of any friendly society's book, study it, find all kinds of fault, and say, "You want something simpler." That is easy enough; but it would be very difficult for me to produce simpler working. What is the statement made by the head of the greatest approved society in this country at the present moment? I will quote the words of Mr. Thompson—I do not know what his politics are, but he is certainly not a member of the Liberal party—the manager of the Prudential Insurance Society and President of the National Conference of Industrial Approved Societies. This is what he said:—
"He must describe the original Act as an impossible scheme, and it was practically agreed among the various approved societies that the only thing to be done was to repeal the provisions of the Act of 1911 relating to arrears, and confer on the Insurance Commissioners the power, with certain limitations, to deal with the matter by regulation."
There is an official statement that it has been found by the approved societies that a complete change is necessary. Therefore the whole of the approved societies—for he spoke in the name of all of them—asked for a new scheme of some kind. The Government have produced it, and have laid in on the Table of the House.
Mr. G. LOCKER-LAMPSON: Would the hon. Member read a little further?
Mr. BOOTH: Certainly, and I will present the hon. Member with a verbatim copy of the speech if he would like to have it. All the approved societies ask that the Insurance Commissioners should have power to frame a new scheme. The Commissioners have brought forward that scheme and it is before the House. It is not an answer to say that the scheme is a little difficult

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and complicated, because it is less complicated and difficult than the original Act, and more beneficial to the insured persons. It may be that after a few years longer we may get a better system still, but as the scheme is a substantial improvement on the scheme of 1911, I think the House should vote for it.
I would just point out to my Friends the trade unionists here, with a vast improvement it will be with regard to the man on a prolonged strike. Under the original scheme, if there were a prolonged strike, extending nearly a year—and sometimes there are these unfortunate troubles—then that man would not have been in benefit for the whole of his life; whereas, in this case, however long the period, he gets quit of his past—surely in the case of a prolonged strike it is black enough—he gets rid of it in the next year, and goes forward to his future life entirely untrammelled By the big burden that this must otherwise mean. I am sure the suggestion which the hon. Member opposite made, that there should be an option for medical benefit, has not come from any approved society. Although they are interested in distributing sick pay, I do not think any of them would like that that option should be given, or that a man, on getting into arrears, should cut off his doctor.
I appeal to the hon. Member to revise his view of things. We all want to stick to the medical benefit, the maternity benefit, and the sanatorium benefit. If there is to be a reduction, let it be on the amount of class sickness pay, rather than on these great questions, one of which affects mothers; another, people in consumption; and the other, the continuous medical attendance to the breadwinner. If the only suggestion of a practical character that can come from the other side is that there ought to be given an option which—as my hon. Friend (Mr. Wedgwood Benn) pointed out, in his admirable speech—is utterly unworkable, then I am afraid that this evening has not been very well spent. I therefore appeal to my friends, as one who foresees a considerable amount of trouble in the future in working this Act in regard to these Arrears Regulations, to vote for them, because they are an improvement on the original Act. They have been asked for by the friendly societies; and if, by any mischance, they were defeated now, it woud throw the whole work into hopeless confusion, and would be of no benefit either to the officials or to the insured persons.
Mr. FORSTER: If the House thinks that the hon. Gentleman who has just sat down has given a fair version of what fell from the manager of the Prudential Company, in that speech which he has quoted, it will be under a very considerable misapprehension.
Mr. BOOTH: I read the exact words.
Mr. FORSTER: Yes, and I am going to read some more. If the hon. Gentleman, who quoted the manager of the Prudential Company, had continued the quotation the House would have seen that so far from the representative of the Prudential Company being satisfied with these Regulations, as the hon. Member for Pontefract represent him to be—
Mr. BOOTH: I never said that. I must object to this misrepresentation. When I quoted the manager of the Prudential Company, I quoted his exact words, from the verbatim extract that he himself presented to me. I have never gone beyond that. I have made it clear that I would have preferred simpler Regulations, but that I was not in a position to suggest them. The manager of the Prudential Company would have preferred simpler Regulations, but he is quite firm in the opinion that they are better than the original ones.
Mr. FORSTER: Yes, the hon. Member is going a bit further than he went in his speech.
Mr. BOOTH: No.
Mr. FORSTER: I propose to continue the quotation which the hon. Member began. This is what Mr. Thompson, the general manager of the Prudential Assurance Company, said:—
"These Regulations have been issued for some little time, but, although the scheme set out in these Regulations must be described as an improvement on the scheme contained in the original Act—"
That is about as far as the hon. Member opposite went—
"it is, notwithstanding, of such a complicated nature, and involves so much work, and such infinite possibilities of error, that I am voicing the views, I believe, not only of the officials of the industrial insurance approved societies, but of all those who are responsible for the administration of most of the other forms of approved societies, when I say that I view with very grave apprehension the coming into operation of these Regulations."
I will not trouble the House with the full extract, but a little later on in the speech which the hon. Gentleman obviously has in his hands, and which therefore he did not quote as fully as he might have done—
Mr. BOOTH: I have a copy; you may have it.
Mr. FORSTER: He goes on to say:—
"I believe I shall not be wrong in expressing the view that, even now, the Insurance Commissioners would be well advised to withdraw their scheme, and to substitute for it something much simpler, even though somewhat rougher justice had been done."
I think the hon. Gentleman opposite rather played with the credulity of the House of Commons, when he professed to represent a quotation, which he made from the speech of this official of one of the greatest approved societies, as being more or less favourable to the Regulations which we are now discussing. I will not take up time by going over the ground which has been covered by my hon. Friends. I think my hon. Friend the Member for Salisbury (Mr. Godfrey Locker-Lampson) was well justified in drawing the attention of the House to the shortcomings of these Regulations, and in pointing out directions in which individual insured persons will undoubtedly suffer hardship in future.
But I cannot leave out of account—and here I am bound to adhere to the attitude which I have adopted with reference to this insurance problem from the first—that the main object which the House of Commons—so well as it can, on the information given to it, and the opportunities afforded to it—the main object of the House of Commons must be to safeguard the financial stability of the fund, and to secure to the general body of people, brought into insurance, whether they wished it or not, the opportunity of getting the benefits which have been promised to them. That is the prime business of the House of Commons. The hon. Member for Colchester (Mr. Worthington Evans), no less than the hon. Member for Salisbury, has pointed out that these Regulations, framed by the Insurance Commissioners under the Act of 1913, have been considered, re-considered, altered, and amended by the Advisory Committee.
1.0 P.M.
I think the draft was first submitted to the Advisory Committee in October of last year, and that draft did not meet with approval. It was withdrawn, and something of the draft which we are now considering was submitted to the Advisory Committee, in January of this year. This received the
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unanimous support of the Advisory Committee. It is in the Annual Report of the Commissioners, from which my hon. Friend quoted. We find that this has been the subject of actuarial investigation and examination by the Actuarial Department of the Insurance Commissioners. Under these circumstances, I think we should not be well advised if we were to press this matter to a Division to-night—[HON. MEMBERS: "Oh!"]—however disappointing such a course may be to hon. Gentlemen who have sat up merely to go into the Division Lobby. Having regard to the fact that these Regulations have been approved by the Advisory Committee and supported by the Actuarial Department of the Insurance Commissioners, I, for one, do not feel prepared to take upon myself the responsibility of dividing against them, although I feel that my hon. Friend was perfectly justified in calling attention to them. The Government and their advisers must take the responsibilty of carrying these Regulations into effect, and upon them will rest the responsibilty for any shortcomings that they may contain.
Mr. GODFREY LOCKER-LAMPSON: After what my hon. Friend has said, I do not propose to divide on this Motion. I do not want the hon. Member opposite—
Mr. SPEAKER: The hon. Member is not entitled to make another speech. If he wishes to withdraw, I will put the Question that the Motion be now withdrawn. If not, I will—
Mr. GODFREY LOCKER-LAMPSON: Yes, Sir, I will withdraw it.
Mr. SPEAKER: The Question is that the Motion be withdrawn—[HON. MEMBERS: "No, no."].
Motion, by leave, withdrawn.
It being after half-past Eleven of the clock on Monday evening, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at One minute after One a.m., on Tuesday, 14th July.

FINANCE BILL.
  INCOME TAX.
  INCOME TAX.
  FOREIGN INVESTMENTS.
  FOREIGN INVESTMENTS.
  Assessors and Collectors of Taxes.
  Assessors and Collectors of Taxes.
  Civil Service (Lower Grades—Wages).
  Civil Service (Lower Grades—Wages).
  Houses of Parliament (Workmen's Wages).
  Houses of Parliament (Workmen's Wages).
  Post Office Committee.
  Post Office Committee.
  East Kerry Election Petition.
  East Kerry Election Petition.
  Kilfenora Railway Crossing.
  Kilfenora Railway Crossing.
  Strike Riot (Dublin).
  Strike Riot (Dublin).
  National School Teachers (Ireland).
  National School Teachers (Ireland).
  Malicious Injuries (Ireland).
  Malicious Injuries (Ireland).
  Land Purchase (Ireland).
  Land Purchase (Ireland).
BRITISH ARMY.
  TERRITORIAL FORCE (STRENGTH).
  TERRITORIAL FORCE (STRENGTH).
  Northern Rhodesia (Native Commissioner).
  Northern Rhodesia (Native Commissioner).
  Exemptions from Vaccination.
  Exemptions from Vaccination.
  Glycerinated Calf Lymph.
  Glycerinated Calf Lymph.
  Rates and Exchequer Grants (1900 to 1911).
  Rates and Exchequer Grants (1900 to 1911).
  Education Grants.
  Education Grants.
POST OFFICE.
  INDOOR STAFF (MEAL RELIEFS).
  INDOOR STAFF (MEAL RELIEFS).
  SURVEYORS.
  SURVEYORS.
  WELLS (SOMERSET) OFFICE.
  WELLS (SOMERSET) OFFICE.
  SENIOR TELEPHONIST, PLYMOUTH.
  SENIOR TELEPHONIST, PLYMOUTH.
  LETTER DELIVERY, NOTTINGHAM.
  LETTER DELIVERY, NOTTINGHAM.
  ACCOUNTANT-GENERAL'S DEPARTMENT.
  ACCOUNTANT-GENERAL'S DEPARTMENT.
  Labour Exchanges (Clerks' Pay).
  Labour Exchanges (Clerks' Pay).
NATIONAL INSURANCE ACT.
  NATIONAL UNION OF GASWORKERS.
  NATIONAL UNION OF GASWORKERS.
  Importation of Cattle (Scotland).
  Importation of Cattle (Scotland).
  Farm Schools (Scotland).
  Farm Schools (Scotland).