Sitting of 3 May 1938

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

MILITARY MANOEUVRES, 1938 (MILITARY MANOEUVRES ACTS, 1897 AND 1911) (ORDERS IN COUNCIL).
The Vice-Chamberlain of the Household (Mr. Cross)reported His Majesty's Answer to the Address, as followeth:
I have received your Address praying that I will make three Orders in Council under the Military Manoeuvres Acts, 1897 and 1911, drafts of which were presented to your House on the 1st day of February last.
I will comply with your advice.

PRIVATE BUSINESS.
Provisional Order Bills (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, referred on the First Reading thereof, no Standing Orders are applicable, namely,
Ministry of Health Provisional Order (Keighley) Bill.
Bill to be read a Second time To-morrow.
Crewe Corporation Bill (King's Consent signified),
Bill read the Third time, and passed.
Gateshead and District Tramways and Trolley Vehicles Bill [Lords] (by Order),
Second Reading deferred till Thursday, 12th May.
Lancashire County Council (Rivers Board and General Powers) Bill [Lords] (by Order),
Second Reading deferred till Thursday.
Manchester Corporation Bill [Lords] (by Order),
Plymouth Extension Bill [Lords] by Order),
Read a Second time, and committed.
Wakefield Corporation Bill [Lords] (by Order),
Second Reading deferred till Thursday.

ORAL ANSWERS TO QUESTIONS.
  TRADE AND COMMERCE.

    UNION OF SOUTH AFRICA (GERMAN TRADE).
    Mr. Manderasked the Secretary of State for Dominion Affairs whether he has any statement to make with reference to the negotiations between the German delegation of industrialists and the Union Government of South Africa, whereby barter arrangements have been entered into which will have a detrimental effect on British trade; and what action is being taken in the matter?
    The Secretary of State for the Colonies (Mr. Ormsby-Gore): I have been asked to reply to this question, in the absence of my right hon. Friend. My right hon. Friend understands that trade between the Union of South Africa and Germany is at present governed by a payments agreement concluded in 1937, under which private barter arrangements are not allowed. He has no information as to any recent arrangements having been made which affect the position.
    Mr. Mander: If I bring to the attention of the right hon. Gentleman certain facts in connection with this matter, will he be good enough to make further inquiries?
    Mr. Ormsby-Gore: I will convey that to my right hon. Friend.

    TEXTILE INDUSTRY (POLISH COMPETITION).
    Mr. Roland Robinsonasked the President of the Board of Trade whether he is aware that grey cloth made from spun-viscose rayon is being imported from Poland into the United Kingdom in considerable quantities; that this cloth is finished and printed in the United Kingdom and is offered for sale in the

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    British market at low prices so that buyers are purchasing these fabrics in preference to Lancashire cotton goods; and what steps he proposes to take to protect the Lancashire cotton industry from this Polish competition?
    The Parliamentary Secretary to the Board of Trade (Captain Euan Wallace): The only imports of this character from Poland in the first three months of this year of which I am aware amount to 4,702 square wards of mixed artificial silk fabrics, or less than 1 per cent. of our total imports of this material.

    JAPAN.
    Mr. Gallacherasked the President of the Board of Trade what was the value of Japanese imports into Great Britain during the period January to March, inclusive, in 1937 and 1938?
    Captain Wallace: During the three months ended March, 1938, the total declared value of merchandise imported into the United Kingdom and consigned from Japan (including Formosa) amounted to £2,632,000. The corresponding figure for the three months ended March, 1937, was £2,630,000.
    Mr. Gallacher: Is the Parliamentary Secretary aware that most of these goods are actually dumped goods?
    Captain Wallace: Perhaps, if the hon. Member wishes for any further information, he will put down another question.
    Vice-Admiral Taylor: Will my right hon. and gallant Friend take note of the support that he is receiving from the party opposite?

    PIG IRÒN.
    Mr. A. Edwardsasked the President of the Board of Trade whether his attention has been drawn to the increasing surplus of pig iron; and whether he will help the manufacturers and workmen affected by the closing down of blast furnaces by arranging for the re-opening of warrant stores or some form of Government guarantee?
    Captain Wallace: I am aware that pig iron has recently been going into stock. Any question of reviving the warrant stores for pig iron is a matter for the trades concerned, but my right hon. Friend cannot see his way to adopt the suggestion for a Government guarantee.
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    An application from the industry for the imposition of a duty on foreign pig iron has been made to the Import Duties Advisory Committee, and is at present under consideration. I hope that an announcement will be made shortly.
    Mr. Edwards: Are not the Government concerned about the serious shortage of pig iron that may arise if blast furnaces in this country are allowed to go out, and about the serious unemployment which this will involve, at a time when, in the same district, the Government are appealing to trade unions for dilution of labour? Is not this a matter of serious concern from the point of view of national defence?
    Captain Wallace: I think that what I have said answers the hon. Member's question. We are aware that pig iron is going into stock, and the result is that an application has been made for a duty on foreign pig iron. If that application is recommended and approved, no doubt more home-made pig iron will be used.
    Mr. Edwards: In view of the seriousness of this question and the unsatisfactory nature of the answer that has been given, I beg to give notice that I shall raise the matter on the Adjournment.
    Mr. Edwardsasked the President of the Board of Trade how many blast furnaces have been closed down in the last six months, and the amount of pig-iron imported during the same period?
    Captain Wallace: The number of blast furnaces in operation at the end of March was 118, as compared with 132 six months earlier. The total quantity of pig-iron imported from British and foreign countries in the six months ended 31st March was 461,182 tons.

    GERMANY (WHEAT).
    Mr. Dayasked the President of the Board of Trade the quantity of German wheat imported into this country, registered as consigned from Germany, for the 12 months ended the last convenient date; and the comparable figure for the preceding 12 months?
    Captain Wallace: During the 12 months ended March, 1938, the total quantity of wheat imported into the United Kingdom and registered as consigned from

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    Germany was 376,000 cwts. The corresponding figure for the 12 months ended March, 1937, was 47,000 cwts. The German trade returns indicate that this wheat was not of German origin.
    Mr. Day: Can the Minister say whether this wheat is procured in Germany at a very much less price than that at which it can be obtained here?
    Captain Wallace: Not without notice.

    HEAVY INDUSTRIES (EXPORTS).
    Mr. David Adamsasked the President of the Board of Trade whether he is considering any trade agreements in the near future which will have bearing upon the exports of the British heavy industries?
    Captain Wallace: As the House will be aware, negotiations for trade agreements are proceeding with the United States of America and with Switzerland. Lists of the products on which the United States Government are prepared to consider the possible granting of tariff concessions were printed as supplements to the Board of Trade Journal on 20th January and 10th February, 1938. As regards Switzerland I am unable, while the negotiations are in progress, to indicate what benefits are likely to accrue to our exports. The recent agreement with Eire enables the heavy industries, like all others, to apply to the Prices Commission for a review of import duties in Eire. Negotiations with Australia will be opened shortly, but I cannot say what industries are likely to be affected.
    Mr. Adams: In view of the somewhat extensive decline in engineering and shipbuilding on the North-East Coast, does not the Parliamentary Secretary consider that it would be desirable to deal perhaps in a more generous way with Russian exporters and importers?
    Captain Wallace: That is a rather different question. If the hon. Member will put it down, I will give him an answer.

    CZECHOSLOVAKIA.
    Mr. Manderasked the Prime Minister whether he will consider the advisability of entering into trade negotiations with the Government of Czechoslovakia on the lines of the recent American-Czech treaty for the purpose of
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    offering to that country on a mutually-advantageous basis markets alternative to those recently closed by German action in Central Europe?
    The Under-Secretary of State for Foreign Affairs (Mr. Butler): His Majesty's Government are at all times anxious to adopt any course which would increase the trade between the United Kingdom and foreign countries on a basis of mutual advantage, and I can assure the hon. Member that no possibility of this kind will be overlooked.
    Mr. Mander: Was not this matter raised by the French Minister who came here last week, and cannot the hon. Gentleman say what action it is proposed to take as a result of the consultations which occurred last week?
    Mr. Butler: I am not at present advised that there is any opening for materially increasing our trade with Czechoslovakia. If any possibility should arise, I will certainly consider it.
    Mr. Mander: In view of the fact that one of the means of throttling Czechoslovakia is by economic strangulation by Germany, will not the Government give the matter their earnest consideration?
    Mr. Butler: I said that we are considering it.
    Mr. Noel-Baker: Will the Minister consider opening discussions with the Government of Czechoslovakia to this end?
    Mr. Butler: I am afraid that that is a broader question.

    FOOD SUPPLIES (DIVISIONAL OFFICERS).
    Mr. Dayasked the President of the Board of Trade whether he has now completed his arrangements for the appointment of divisional food officers who will be responsible for safeguarding food supplies during an emergency in London and the home counties; and will he give the names of the officers so appointed?
    Captain Wallace: The work which, in other parts of Great Britain, is being undertaken by the divisional food officers is at present being carried out in London and the Home Counties by officers at the Headquarters of the Food (Defence Plans) Department. It is not proposed to appoint divisional officers in London and

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    the Home Counties until the plans in preparation in the Department are further advanced, but arrangements have been made to secure the nomination of persons to act as food executive officer for all local authority areas in the Metropolitan Police District, and approaches are now being made to other local authorities in the Home Counties.
    Mr. Day: Do I understand that the local authorities are always consulted beforehand?
    Captain Wallace: I could not say without notice, but I expect so.

  BRITISH ARMY.

    RECRUITS.
    Major-General Sir Alfred Knoxasked the Secretary of State for War the number of applicants for enlistment in the Regular Army in the quarter ended 31st March, 1938, and the number of these men approved as recruits; and how these figures compare with those for the corresponding months in 1937?
    The Secretary of State for War (Mr. Hore-Belisha): The number of applicants for enlistment in the Regular Army in the first quarter of this year was 16,701. In the corresponding quarter of last year it was 13,830. The numbers accepted in these periods were 10,504 this year, and 7,116 last year.
    Mr. Kennedy: Have the War Office any information regarding the number of applicants for enlistment who were unemployed at the time?
    Mr. Hore-Belisha: I have not the information at the moment, but the majority of those who enlisted were in employment before they enlisted.
    Mr. George Griffiths: Is the Army attracting a better quality of men now that they are being given an increased wage, as shown on the tape to-day?
    Vice-Admiral Taylor: Is it not the fact that they have a very good job now?
    Mr. Hore-Belisha: The quality of all people in this country is getting better and better.
    Mr. Griffiths: Is it because they are getting butter instead of margarine?
    Sir A. Knoxasked the Secretary of State for War what percentage of the applicants for enlistment were approved as recruits in the quarter ended 31st March, 1938; and how this figure compares with the percentage in the same quarter in 1937?
    Mr. Hore-Belisha: 62.9 and 51.5, respectively.
    Sir A. Knox: Does that mean that the percentage of applicants accepted is going up; and does my right hon. Friend consider that by the end of the year he will have made up the present shortage in the armed forces?
    Mr. Hore-Belisha: The answer to the first half of the supplementary question is that the percentage of applicants has, I am glad to say, gone up. With regard to the future, I would not be so indiscreet as to be precise, but more and more men are enlisting every week as compared with last year.
    Sir A. Knox: Will my right hon. Friend consider giving some further inducements in order to get the larger number of recruits which is still necessary in order to make up the shortage this year? Does he think he will reach the number of 54,000 recruits required this year to complete the establishment?
    Mr. Hare-Belisha: In every respect conditions in the Army are improved and improving.
    Mr. R. J. Taylor: Would the percentage have been the same had the standard been maintained, instead of having been, as I understand, lowered?
    Mr. Hore-Belisha: I could not say without notice, but I do not admit that the standard has been lowered. It has been revised in accordance with common sense, but that revision is not in itself responsible for the increase, which is a substantive increase.
    Sir A. Knoxasked the Secretary of State for War what number of men were approved as recruits in the first quarter of the present year who would not have been accepted under the standards, medical and otherwise, in force previous to last autumn?
    Mr. Hore-Belisha: The common sense changes which have been made in the medical and other standards for recruits

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    secured for the Army during the first quarter of this year an extra 1,733 men, out of a total of 10,504 accepted.
    Sir A. Knox: Does this number given by the right hon. Gentleman include the older men, who would not formerly have been accepted, and married men, as well as men with less qualifications as regards hearing and sight?
    Mr. Hore-Belisha: The statement I have made is a complete answer to the question that was put.
    Captain Heilgers: What percentage of these sub-standard recruits go to the Canterbury Depot?
    Mr. Hore-Belisha: These are not substandard recruits. Those who have been to the Canterbury Depot passed into the Army on the full standard after receiving training. They are brought up to full standard, and are not included in these figures.
    Mr. Thurtle: Does the right hon. Gentleman suggest that common sense was conspicuously lacking at the War Office until he went there?

    COLONIAL ALLOWANCES.
    Vice-Admiral Taylorasked the Secretary of State for War what payments will be made to a major, with a wife and one child of 13 years of age, removing his family from England to Hong Kong, on account of the tickets for his wife and child; and what he will receive after arrival on account of the newly increased colonial allowance and marriage allowance, respectively?
    Mr. Hore-Belisha: I would propose, with my hon. and gallant Friend's permission, to circulate the figures required in the OFFICIAL REPORT.
    Vice-Admiral Taylor: Can my right hon. Friend say what the increase in the colonial allowance amounts to?
    Mr. Hore-Belisha: The answer is a little long. The increase, of course, varies with the rank, and I could not give a comprehensive statement in a simple sentence.
    Following is the answer:
    Free passages would be provided by the War Office for the wife and child, for whom a charge would be made of 6s. 6d. a day each as a contribution to the cost
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    of their messing on board ship. There is a half rate of 3s. 3d. a day for messing for each child between 1 and 12 years of age. Colonial allowance would be 3 dollars 90 cents a day. Marriage allowance is not issuable to officers. A married officer at Hong Kong whose family resides with him, but not in quarters, would receive higher rates of lodging, fuel, light and fan-current allowances than a single officer. In the case of a married major, the daily rates of these allowances total 6 dollars 74 cents. In addition, he would get furniture allowance at 2s. (sterling) a day.

  TERRITORIAL ARMY.

    ANTI-AIRCRAFT UNITS.
    Mr. Toucheasked the Secretary of State for War whether he is aware that men living near Holley and Crawley wishing to enlist in anti-aircraft units of the Territorial Army have no nearer depot than Guildford; and whether he will consider forming an anti-aircraft company in Horley, particularly in view of its proximity to Gatwick airport and the War Office mobilisation depot in construction at Hookwood?
    Mr. Hore-Belisha: The considerations to which my hon. Friend refers will not be lost sight of in deciding the ultimate geographical distribution of anti-aircraft units. In the meantime, I would point out that there are still vacancies for men of Surrey in the 4th and 5th Battalions of The Queen's Royal Regiment at Coulsdon and Reigate respectively, and for men of Sussex in the 4th Battalion of The Royal Sussex Regiment at Horsham, Haywards Heath and East Grinstead. The necessary travelling expenses to and from the drill halls are paid by the public.

    ROAD CONGESTION, HOLIDAY PERIODS.
    Mr. R. C. Morrisonasked the Secretary of State for War whether he is aware that on Good Friday the main Folkestone-London road was congested for a considerable period by convoys of Army vehicles carrying L signs, each containing a load of learners; and whether, in the interests of road safety, he will take steps to keep Army vehicular traffic of this description off main roads at holiday times?
    Mr. Hore-Belisha: The House will attach full value to the fact that the extent

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    to which the statement in the question is true is a measure of the public spirit of Territorials who gave up their Easter holiday for a national service.
    Mr. Morrison: Is it essential for large concentrations of army mechanical transport and tanks to be on main roads on Bank Holidays? Could the Minister not make arrangements whereby warnings could be broadcast or issued through the Press to motorists and cyclists who may also be using the main roads, so that they may avoid them and save congestion and delay?
    Mr. Hore-Belisha: These Territorials can only give up their spare time during a holiday, and I think it is equally essential that they should use the roads for a public service as that civilians should use them.
    Mr. Morrison: I hope the Minister will not misunderstand me. This question is not put down in any spirit of hostility to the Territorials, but, in view of the fact that on the Thursday evening before Good Friday an important officer of the Ministry of Transport broadcast a request that motorists should exercise every precaution during the holiday season, would it not have been helpful, in the interests of public safety, if people who might be likely to use these main roads could have been warned of the fact that congestion and danger might occur?
    Mr. Hore-Belisha: I do not think I misunderstood the spirit of the question, which directly asks me to take steps to keep Territorials off the roads at holiday times. I have explained that the only time at which the Territorial, as such, can give his time for service of this kind is during the holidays. I do not see how we can put the civilian traffic off the roads, and I hope the public will have toleration and respect for those who are giving up their holidays for this service.
    Mr. Gallacher: Surely the Minister does not think it desirable that the Territorials giving this service should be allowed to interfere with the holiday convenience of civilians?
    Mr. Morrison: Will the Minister take some steps to advise the public in future?

    STRENGTH.
    Mr. Dayasked the Secretary of State for War the present gross deficiency in the strength of the London and pro-
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    vincial Territorial units; and whether he proposes to offer any special inducements to young men to join the service?
    Mr. Hore-Belisha: In London units there are vacancies for 8,000 men, and in the rest of the country vacancies for 26,000. The fact that the strength of the Territorial Army has increased by nearly 40,000 since March, 1936, is an indication that no inducements are needed to attract men of public spirit. The attractions of the Territorial Army have, however, been considerably improved.
    Mr. Day: Will the Minister consider making an appeal to employers that the time given by the Territorials for service shall not interfere with their ordinary holidays?
    Mr. Hore-Belisha: Yes, Sir, such an appeal has frequently been made, both by my predecessor and by myself, and I am glad to say the majority of employers allow holidays with pay, in addition to their normal holidays, to Territorials who give up their time to go to camp.
    Mr. Day: Will the Minister consider emphasising again this appeal to employers?
    Mr. Hore-Belisha: Yes, Sir. I am much obliged to the hon. Gentleman for giving me this opportunity.

  SCOTLAND.

    HOUSING.
    Mr. Kennedyasked the Secretary of State for Scotland whether he is aware that local authorities in Scotland are finding increasing difficulty in the matter of securing materials to enable them to carry out their working-class housing programmes; that this difficulty is partly due to the diversion of materials required to luxury building; whether he proposes to take any action to ensure that such materials are made available at reasonable prices to local authorities in regular and sufficient quantities; and whether he is satisfied that the maximum available labour is now being employed in the building industry?
    The Lord Advocate (Mr. T. M. Cooper): My information is that the supply of building materials has considerably improved in recent months, and that in general local authorities are not now find-

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    ing any difficulty in obtaining supplies. If the right hon. Member has any particular case in mind, my right hon. Friend will be glad to make inquiries if he will let him have particulars. In regard to the last part of the question, the supply of labour on local authorities' housing schemes has also increased during the past year, and my right hon. Friend is endeavouring, by encouraging the use of alternative methods of construction, to provide further employment for trades in which there is available labour.

    TAILORS' HALL, EDINBURGH.
    Mr. Hannahasked the Secretary of State for Scotland whether he is aware that the buildings of Tailors' Hall, in Edinburgh, are rapidly disintegrating from the weather; and whether he can make any further statement?
    The Lord Advocate: I understand that the National Trust for Scotland and certain private interests are in touch with the corporation with a view to seeing what can be done to recondition Tailors' Hall buildings. My right hon. Friend realises that, unless steps are taken for the preservation of the building, there is a risk of deterioration taking place.

    AERODROME, RENFREW.
    Mr. Perkins (for Mr. Neil Maclean)asked the Under-Secretary of State for Air whether he is aware that, in consequence of procrastination and discourtesy of the Civil Aviation Department of the Air Ministry, the aerodrome at Renfrew will cease to function on 15th May; that should this aerodrome close down the valuable air ambulance services to the Western Isles would cease; and whether, in view of the Exhibition which opens at Glasgow on 3rd May, he can make a statement that will reassure all concerned in the continuance of this aerodrome?
    The Under-Secretary of State for Air (Lieut.-Colonel Muirhead): I am aware that it has been announced that the aerodrome at Renfrew will cease to function on 15th May, and that charges of procrastination and discourtesy on the part of the Air Ministry have been made. Some delay has admittedly taken place in the conduct of correspondence with the Renfrew Town Council, but nevertheless I cannot accept that my Department is
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    reponsible for the decision taken by the town council to close the aerodrome on 15th May. The Renfrew Town Council have asked for an assurance that Renfrew Aerodrome will permanently continue to be recognised as the civil aerodrome for the south-west of Scotland. The difficulty in regard to giving such an assurance arises from the fact, of which the town council have been aware, that the aerodrome, which suffers from certain disabilities, is not capable of being substantially improved and an assurance such as this might, therefore, militate against the needs of the district being served to the best advantage in the future. The town council at Renfrew have been informed that the Air Ministry is prepared to recognise the Renfrew Aerodrome as the civil aerodrome for south-west Scotland for a period of two years, but the council have informed the Air Ministry by telegram to-day that they are not prepared to accept this period. I am, however, still hopeful that they will agree to do so, and that they will in consequence not close down the aerodrome on 15th May.
    Mr. Maxton: Does the Minister think it is playing fair with a town that has pioneered this work in the West of Scotland to say that they are to carry on their work under conditions that may terminate all their activities definitely in a period of two years?
    Lieut.-Colonel Muirhead: I have indicated why it is not possible, taking the interests of the district into account, to give anything like a permanent assurance. If one cannot give a permanent assurance, it stands to reason that the best assurance that we can give is an assurance for a definite term of years.
    Mr. Maxton: This aerodrome has been in operation for a very extended period and a great deal of expenditure has been put out on it, and up to now it has satisfied the air needs of the West of Scotland. Does the Minister not think that two years without committing the Government to indefinite responsibility is altogether fantastic?
    Lieut.-Colonel Muirhead: I am aware that this aerodrome has been functioning for a considerable period, but when it comes to the question of giving anything like a permanent assurance, one has to

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    consider the needs of the district in future and what may in the end be the most suitable aerodrome to satisfy those needs. That is why having regard to what the Corporation have done for the aerodrome, it is not really possible to give anything in the nature of a permanent assurance, having regard to the needs of the district.
    Mr. Maxton: Is it not a fact that the conditions at Renfrew are better than the conditions at Inchinnan which the Ministry has accepted as a permanent aerodrome for its needs, situated a few miles away?
    Lieut.-Colonel Muirhead: It is not exactly a question of a comparison between Renfrew and another aerodrome, but the question is that the aerodrome at Renfrew is definitely not capable of improvement as regards size. Therefore, there is a possibility that the needs of the district may be served better by some other aerodrome. It stands to reason that in the public interests the Air Ministry cannot be expected to give a permanent guarantee.
    Mr. Gallacher: Is the hon. and gallant Member aware that this aerodrome has been carrying out very valuable services, especially in regard to ambulance work, and that had it not been for this last minute decision it would have been closed? Is he not prepared to make a definite statement as to what is to be the ultimate fate of the aerodrome, or is he going to allow the matter to drift on for another two years and then at the end of that period for the aerodrome to close?
    Mr. Speaker: That is the same question.
    Mr. Bellenger: I desire to ask your ruling, Mr. Speaker, on a point of Order. This question was put down by the hon. Member for Govan (Mr. Maclean). Is it in order for another hon. Member who has not been asked to put this question, to put it?
    Mr. Speaker: The rule, of course, is that an hon. Member asks another hon. Member to put the question. I assume that that has been done; although it is not always done.
    Mr. Garro Jones: Is it in order for an hon. Member who has not been asked to do so, to put a question? Is it possible for you, Mr. Speaker, to say whether that is in order or not, having regard to the
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    fact that there are occasions on which an hon. Member deliberately absents himself for reasons for which he does not desire to put the question?
    Mr. Speaker: My ruling is that an hon. Member must be authorised by the hon. Member before he asks a question on his behalf. In other words, an hon. Member ought not to ask another hon. Member's question unless he is authorised to do so.
    Mr. Maxton: Can you give a ruling in reference to an hon. Member who asks a supplementary question on a question which is unauthorised?
    Mr. Speaker: My ruling in regard to supplementary questions would be at considerable length if I began.

    ASTLEY GREEN COLLIERIES, MANCHESTER (ACCIDENT).
    Mr. Tinkerasked the Secretary for Mines whether his attention has been drawn to a shot-firing accident at Astley Green Collieries, near Manchester, on the morning of 25th April, in which four workmen were injured; whether his inspectors have investigated the cause; and, if so, at what conclusions have they arrived?
    The Secretary for Mines (Captain Crookshank): Yes, Sir. I have received a preliminary report on this accident, and I am glad to say that none of the four men appears to have been seriously injured. The accident has been investigated by His Majesty's inspectors, and it appears from their reports that the accident was caused by an explosion of firedamp ignited in the course of shot-firing operations in a tunnel being driven between two seams. The source of the ignition is still under investigation.
    Mr. Tinker: If I put a question down in, say, a fortnight's time, will the hon. Member be in a position to answer it then?
    Captain Crookshank: Perhaps the hon. Member will consult me, and I will let him know.
    Mr. Crossley: Is there to be a further report?
    Captain Crookshank: The hon. Gentleman is, apparently, going to ask another question.

    OFFICIAL SECRETS ACT, 1911.
    Mr. Manderasked the Attorney-General the number of times during the last five years in which his fiat has been granted and been refused in connection with criminal prosecutions under the Official Secrets Act, 1911, and the circumstances under which it was granted in the case of Lewis versus Cattle?
    The Attorney-General (Sir Donald Somervell): The fiat has been granted 28 times and refused 10 times. I should explain that in the latter cases, no proceedings were taken, as a result of the preliminary discussions with the Attorney-General, but there was no formal application for and refusal of the fiat. In the case of Lewis versus Cattle the fiat was granted as there had been a plain breach of a Section of the Act, subject to a question on which it was desirable to have a decision, namely as to whether a member of the Provincial Police Force was a person holding office under His Majesty within the meaning of the Act.
    Mr. Mander: Can the Attorney-General say when a decision is likely to be reached as to the future of this Act, in view of the fact that an interpretation is desired?
    The Attorney-General: No, Sir.
    Mr. Mander: Can the hon. And learned Gentleman say when a decision will be taken in regard to the future of the Act?
    The Attorney-General: I understand that a question as to the operation of Section 6 has been put down to my right hon. Friend the Home Secretary, and I think that that is the matter to which the hon. Gentleman is referring.

    DOCK ACCIDENT, LIVERPOOL.
    Mr. Thorneasked the Secretary of State for the Home Department the cause of the accident at Prince's Dock, Liverpool, on Tuesday last, when one man was killed?
    The Secretary of State for the Home Department (Sir Samuel Hoare): This accident was due to the falling of a roof truss which was being placed in position during the erection of a dock shed. The inquest has been adjourned until 11th May, and I should prefer not to make any fuller statement meanwhile.

  UNEMPLOYMENT.

    NEW FACTORIES, DURHAM COUNTY.
    Mr. W. Joseph Stewartasked the Minister of Labour the number of new works established in the administrative county of Durham and the county boroughs of Sunderland and South Shields by the Government and private firms each year since 1932; and whether there is any prospect of other works in the near future?
    The Parliamentary Secretary to the Ministry of Labour (Mr. Lennox-Boyd): As the reply is somewhat long and includes a tabular statement, I will, if I may, circulate it in the OFFICIAL REPORT.
    Following is the reply:
    One factory was established by the Government in the administrative county of Durham in 1937 in connection with the rearmament programme.
    The following is a statement of the new factories employing 25 or more work-people established by private enterprise in the administrative county and the county boroughs of Sunderland and South Shields in each year from 1933 to 1937 inclusive.

    Year.

    New Factories employing 25 or more workpeople established in—

    The Administrative County of Durham.

    The County Boroughs of —

    Sunderland.

    Shields South

    1933

    …

    2

    —

    1

    1934

    …

    4

    —

    —

    1935

    …

    2

    —

    —

    1936

    …

    5

    —

    —

    1937

    …

    4

    2

    —

    These figures do not include the factories on the Team Valley Trading Estate, which is in the county borough of Gateshead.
    As regards the facilities offered by the Commissioner for the Special Areas outside the Trading Estate the present position is as follows. At Pallion two factories are in course of construction; at St. Helens, Auckland, two factories are in course of construction and negotiations with another prospective tenant are almost complete; one factory is in the

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    course of construction at Crook. I am not yet in possession of complete information with regard to factories which have been erected or which are being constructed entirely by private enterprise since the end of 1937. I would also refer the hon. Member to the reply given on 12th April to the hon. Member for Jarrow (Miss Wilkinson) by the Parliamentary Secretary to the Board of Trade, in connection with the Jarrow Steel Works.

    BENEFIT (HOLIDAY PAY).
    Mr. Hollinsasked the Minister of Labour whether he is now in a position to take any action with regard to the position arising from the umpire's decisions upon holiday pay and their effect on claims for unemployment benefit?
    Mr. Lennox-Boyd: As my right hon. Friend informed the hon. Member on 18th November last, it was not possible to take any action in regard to this matter before the receipt of the report of the Committee on Holidays with Pay. This report has now been received and my right hon. Friend has asked the Unemployment Insurance Statutory Committee to consider the question whether any change should be made in the Unemployment Insurance Acts in relation to holidays and other periods of suspension from work and to advise upon the subject. I understand that the Committee will be glad to hear from persons or organisations interested before 31st May.

    SHADOW AIRCRAFT FACTORIES (CONTRACT ARRANGEMENTS).
    Mr. Thorneasked the Chancellor of the Duchy of Lancaster whether the shadow aircraft factories will receive £300 profit for each aeroplane produced, the Government paying the net cost; and what was the amount paid for the financial year ended March, 1937?
    The Chancellor of the Duchy of Lancaster (Earl Winterton): The payments to the managing firms of £200 or £225 per airframe according to type and of £75 per engine are for their remuneration for acting as agents to the Air Ministry in respect of the management of the shadow factories, these amounts being additional to the net cost of the aircraft and engines. No payments were made in this respect for the financial year ended March, 1937.
    Mr. Thorne: Does the Noble Lord think that the amount allowed is excessive or otherwise?
    Earl Winterton: No, Sir. I do not think it is excessive. It is rather difficult to explain the details of this contract arrangement in reply to a question, but I would refer the hon. Gentleman to paragraphs 6 to 11 of the Air Services Appropriation Account to be obtained in the Vote Office, together with the Comptroller and Auditor-General's explanation.
    Mr. Garro Jones: Is the Noble Lord aware that the Minister for the Co-ordination of Defence has several times been asked to make a comprehensive statement to the House, stating the amounts which he has contracted to pay by way of group management expenses to these shadow factories, and can he say when he will be able himself to make that statement having regard to the delay which is now taking place?
    Earl Winterton: In view of the complicated nature of the matter, the hon. Gentleman should put down a further question.
    Mr. Garro Jones: In view of the camplicated nature of the matter, may we not have a statement? Will not the Noble Lord, at any rate, make a statement showing the amounts contracted to be paid as fixed sums to the management groups?
    Earl Winterton: The complicated nature of the question is fully explained in the report to which I have called attention, but I will certainly bear in mind what the hon. Member has said.
    Mr. Thurtle: Is the Noble Lord satisfied that, under this system of payment, these aircraft companies are not losing money?

    POST OFFICE ROBBERY, GILLINGHAM, KENT.
    Mr. Thorneasked the Postmaster-General whether he can give any information in connection with the robbery at the post office, Victoria Street, Gillingham, Kent, on Thursday afternoon; what amount of money and notes were stolen; the age of the person in charge; and whether there was more than one person in charge of this office?
    The Assistant Postmaster-General (Sir Walter Womersley): The robber jumped over the counter, presented a revolver at

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    the assistant behind it and took about £36 from the till, nearly all in notes. The sub-postmistress employs two female assistants of whom one is 65 and the other 19 years of age. The senior assistant had left the counter temporarily in charge of the junior assistant just before the robbery and returned in time to give the alarm. The sub-postmistress was elsewhere on the premises.
    Mr. Thorne: Has the robber in question been caught?
    Sir W. Womersley: No, Sir, but we are hoping to get him.

  PUBLIC HEALTH.

    RHEUMATISM.
    Mr. David Adamsasked the Minister of Health what State facilities are now provided for the treatment of rheumatism and what extensions of these facilities are now being considered?
    The Parliamentary Secretary to the Ministry of Health (Mr. Bernays): Facilities for the treatment of this group of diseases are provided by most general hospitals and by a number of specialised voluntary institutions, and local authorities are increasingly making provision for the treatment of acute rheumatism in children. The medical advisers of the Department are in close co-operation with the various bodies concerned with combating, and with research into, rheumatic diseases in general.
    Mr. De la Bère: Has the hon. Gentleman ever heard of Droitwich Spa?

    MEDICAL BENEFITS (SPECIALIST AND PATHOLOGICAL SERVICES).
    Mr. David Adamsasked the Minister of Health whether he is aware of opinions widely held by certain experts that the nation is not obtaining a proper return for the money now expended upon public health; and whether the Government are considering measures, financial or administrative, to extend the scope of medical benefits so as to include consultant, specialist and pathological services, so that a more fundamental attack upon health problems may be made?
    Mr. Bernays: As regards the first part of the question, varying opinions have been expressed on this subject. As
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    regards the second part of the question, important matters of finance and administration are involved and my right hon. Friend could not undertake to make any pronouncement on the subject, which would have to be considered at the proper time in relation to the general financial resources of the country.
    Mr. Adams: In view of the widespread and urgent necessity for further action on the lines of this question, does the Ministry of Health intend to give it further and proper consideration?
    Mr. Bernays: The whole question is not solely concerned with insured persons. It is very largely, as the hon. Gentleman will agree, a question of hospital accommodation for special diagnosis and treatment, and, under the Local Government Act, 1929, the number of these hospitals is being steadily increased.
    Mr. Benjamin Smith: Can the hon. Gentleman tell the House the number of days lost through rheumatism by the working-class population in one year, so that we can get a measure of the need of these institutions?
    Mr. Bernays: Perhaps the hon. Member will put that question down.

    ACQUISITION OF LAND, WORKSOP (ALLOTMENTS).
    Mr. G. Griffithsasked the Minister of Health whether he can now state the area, the price and the previous rateable value of land being acquired by the Worksop Corporation in Sandy Lane and Eastgate for the purposes of allotments, and who is the vendor?
    Mr. Bernays: The corporation have acquired 2.687 acres at Eastgate from Messrs. James Turner and Sons, Limited, at a price of £268 14s. The land being agricultural is derated. A compulsory purchase order has been made by the corporation for approximately II acres in Sandy Lane, and is at present being considered by my right hon. Friend the Minister of Agriculture and Fisheries.

    KENYA (LEGISLATIVE COUNCIL, NATIVE REPRESENTATION).
    Mr. Rileyasked the Secretary of State for the Colonies whether the composition of the new Legislative Council for

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    Kenya has now been completed; if so, who are the two unofficial representatives of the native population; and whether the native population were consulted and approved of the two persons to represent them on the Legislative Council?
    Mr. Ormsby-Gore: The composition of the new Legislative Council has been completed, but I regret to say that one of the European elected members has since died. Mr. H. R. Montgomery and Dr. C. J. Wilson have been appointed as nominated unofficial members on behalf of the interests of the African community. As regards the last part of the question, in the present stage of political development of the native communities in the Colony, and their number and variety, it is necessary for the Governor to rely on his own judgment in the selection of the two most suitable unofficial persons to represent native interests, apart from their representation by Government officials.
    Mr. Riley: In view of the fact that it is considered desirable that the natives should have special representation on the Legislative Council, will the right hon. Gentleman consider whether it would be possible that the representatives should be natives, if such qualified persons are available?
    Mr. Ormsby-Gore: That is extremely difficult at the present stage, where you have a great admixture of races. It is necessary that you should have people who are familiar with very varied native conditions. Mr. Montgomery has been Chief Native Commissioner and is familiar with all the native races.
    Mr. Paling: In so far as it is possible to get the opinion of the natives—and I suggest that it is possible—could not these two gentlemen have that approval in some shape or form?
    Mr. Ormsby-Gore: No. It is extremely difficult in the circumstances, and I want to make it quite clear that there has never been any suggestion that these two people represent the natives. The arrangement is that in addition to the European elected persons, in addition to the official majority, there should be two representatives of native interests nominated by the Government, but there has never been any question of direct representation of the natives.
    Mr. Paling: Is it not really better and wiser that the natives should approve those who are in that position?
    Mr. Ormsby-Gore: I think that would be extremely difficult unless you have a native franchise and a native election.
    Mr. Mander: Is not one of these two representatives a civil servant who will be in the position of having to criticise his own administration? Is not that rather undesirable?
    Mr. Ormsby-Gore: I understand that both these gentlemen were civil servants, but they have retired and are now free individuals. One was a medical officer with wide experience of the natives and the other was a chief native commissioner.
    Mr. Mander: Will they not have to criticise what they have been doing themselves?

    MUNICIPAL ELECTION, CROYDON (PROSECUTION).
    Mr. H. G. Williamsasked the Attorney-General the name of the common informer on whose instigation the Public Prosecutor initiated criminal proceedings for alleged offences in connection with a municipal election in Croydon against Mr. Percy Harper, Mr. John Terry, and Mr. William Peacock?
    The Attorney-General: The question refers to a common informer, but this was not a prosecution brought by a common informer but was a prosecution by the Director of Public Prosecutions. It is contrary to the public interest to disclose the identities of any persons who may have given information to the Director of Public Prosecutions in relation to prosecutions undertaken by him. I need not add that the fullest inquiries were made before these proceedings were brought and the justices, after hearing evidence, committed the case for trial.
    Mr. Williams: Shall I be right in assuming that the Labour party of Croydon were very disappointed when the jury stopped the case?
    Mr. Thorne: Is the Attorney-General aware that the common informer is the most despicable man in the world?
    The Attorney-General: This case had nothing to do with a common informer.

    ANGLO-FRENCH CONVERSATIONS.
    Mr. Attlee (by Private Notice)asked the Prime Minister whether he has any statement to make regarding the recent conversations in London between British and French Ministers.
    The Prime Minister (Mr. Chamberlain): My Noble Friend and myself were glad to have an opportunity of reviewing with the French President of the Council, M. Daladier, and the French Foreign Minister, M. Bonnet, the various international questions which are a matter of preoccupation at the present time. The conversations have been of value in helping each Government to obtain a closer understanding of the other's point of view, and in demonstrating once again the community of outlook and interest which unites them. The results of the meetings have been set out in the official statement issued on 29th April at the conclusion of the conversations, the text of which I am circulating in the OFFICIAL REPORT.
    Mr. Thorne: I take it that all the questions which were under consideration have not been given?
    The Prime Minister: I have not given a verbatim account of the conversations.
    Mr. Bellenger: May I ask whether in these conversations arrangements were made for the nomination of certain higher Commands between the French and English Air Forces and miltary Forces in the event of certain emergencies taking place?
    The Prime Minister: If I understand the question correctly, that is not so.
    Following is the text of the final communique:
    During their stay in London M. Daladier and M. Georges Bonnet had a number of conversations with the Prime Minister, the Secretary of State for Foreign Affairs, and other British Ministers, in the course of which they discussed, in the spirit of mutual confidence which inspires the relations between the
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    two countries, the principal questions which at the present time affect the maintenance of peace.
    The French and British Ministers reviewed the results of the recent conversations between the Italian Foreign Minister and His Majesty's Ambassador at Rome, embodied in the agreement as published. The French Ministers welcomed this contribution to European appeasement. The British Ministers, for their part, expressed the hope that the conversations which the French Government have opened with the Italian Government will lead to equally satisfactory results.
    The French and British Ministers were of opinion that the appeasement in the Mediterranean which would result from these agreements would contribute to the entry into force of the resolution of 4th November, 1937, for the withdrawal of foreign participants in the civil war in Spain, and would facilitate the conclusion of agreements for the withdrawal of war material.
    They devoted close attention to the situation in Central Europe, and found themselves in general agreement on the action that might most usefully be taken to find the basis of a peaceful and equitable settlement of problems arising in that area.
    They also touched on certain questions relating to the situation in the Far East, and took the opportunity to discuss certain questions which appeared on the agenda of the forthcoming meeting of the Council of the League of Nations.
    The two Governments decided to continue, as might be necessary, the contacts between their General Staffs established under the Arrangement reached in London on 19th March, 1936.
    As a result of the very frank and full discussions which took place, it was once again recognised that France and Great Britain are bound together by a close community of interests, and the French and British Ministers agreed that it was, therefore, of the highest importance in present circumstances that the two Governments should continue and develop the policy of consultation and collaboration in the defence, not only of their common interests, but also of those ideals of national and international life which unite the two countries.

BUSINESS OF THE HOUSE.
Mr. Attlee: May I ask the Prime Minister whether he can make any statement with regard to the business of the House?
The Prime Minister: In the event of the Report stage of the Budget Resolutions being concluded about dinner time to-morrow, we propose to take the Committee stage of the Bacon Industry Money Resolution. The Bacon Industry Bill, as hon. Members know, is now before a Standing Committee. We desire to proceed with the Money Resolution as soon as possible so that the proceedings in Committee on the Bill shall not be held up.

POST OFFICE (SITES) BILL.
Reported, with Amendments, from the Select Committee (with Minutes of Evidence).
Bill, as amended, re-committed to a Committee of the whole House for Thursday, and to be printed. [Bill 136.]
Minutes of Evidence to lie upon the Table, and to be printed. [No. 109.]

MESSAGE FROM THE LORDS.
That they have passed a Bill, intituled, "An Act to make further provision for the improvement health local government and finance of the borough of Gateshead; and for other purposes." [Gateshead Corporation Bill [Lords.]
Also a Bill, intituled, "An Act to confer further powers upon the Mayor Aldermen and Burgesses of the Borough of Blackburn with respect to their water and electricity undertakings; to make better provision for the health and local government of the borough; and for other purposes." [Blackburn Corporation Bill [Lords.]
GATESHEAD CORPORATION BILL [Lords.]
BLACKBURN CORPORATION BILL [Lords.]
Read the First time; and referred to the Examiners of Petitions for Private Bills.

ORDERS OF THE DAY.
  WAYS AND MEANS.

    REPORT [26TH APRIL].
    Resolutions reported:
    CUSTOMS AND EXCISE.
    INCREASE OF CUSTOMS DUTY ON HYDROCARBON OILS.
    1. "That as from six o'clock in the evening on the twenty-sixth day of April, nineteen hundred and thirty-eight, the Customs Duty on hydrocarbon oils shall be at the rate per gallon of ninepence instead of eightpence, and any rebate allowed on the delivery for home consumption of hydrocarbon oils, other than light oils, shall be at the rate per gallon of eight-pence instead of sevenpence:
    And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
    EXCISE DUTY ON SPIRITS USED FOR MAKING POWER METHYLATED SPIRITS.
    2. "That—

    (1) on and after the second day of May, nineteen hundred and thirty-eight, there shall be charged on all spirits used for making power methylated spirits a duty of excise of ninepence for every gallon of the spirits so used;

    (2) in this Resolution the expression ' power methylated spirits ' means spirits methylated in the manner prescribed for making power methylated spirits by regulations for the time being in force under section thirteen of the Finance Act, 1924."

    INCREASE OF CUSTOMS DUTY ON TEA.
    3. "That as from the twenty-seventh day of April, nineteen hundred and thirty-eight, the Customs Duty on tea not being an Empire product shall be at the rate per pound of eightpence instead of sixpence, and the Customs Duty on tea being an Empire product shall be at the rate per pound of sixpence instead of fourpence.
    And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.''
    CUSTOMS DUTY ON REIMPORTED FILMS.
    4. "That—

    (1) no film printed, or produced by any other process, in the United Kingdom and exported therefrom shall be exempt from Customs Duty by virtue of any enactment relating to the exemption of reimported goods, unless the Commissioners of Customs and Excise are satisfied either that no imported film was used in the printing or production of the film as aforesaid, or that the duty chargeable on all imported films so used has been duly paid;

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    (2) in this Resolution the expression ' film ' means a positive or negative cinematograph film within the meaning of section three of the Finance Act, 1925, or a positive or negative sound track, whether developed or not."

    INCOME TAX.
    CHARGE OF TAX.
    5. "That—

    (1) Income Tax for the year 1938–39 shall be charged at the standard rate of five shillings and sixpence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess over two thousand pounds as Parliament may hereafter determine;

    (2) all such enactments as had effect with respect to the Income Tax charged for the year 1937–38 shall have effect with respect to the Income Tax charged for the year 1938–39.

    And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
    HIGHER RATES OF INCOME TAX FOR 1937–38
    6. "That Income Tax for the year 1937–38 in respect of the excess of the total income of an individual over two thousand pounds shall he charged at rates in the pound which respectively exceed the standard rate by amounts equal to the amounts by which the rates at which Income Tax was charged in respect of the said excess for the year 1936–37 respectively exceeded the standard rate for that year.
    And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of 'faxes Act, 1913."
    AMENDMENT AS TO RELIEF IN RESPECT OF LIFE INSURANCE PREMIUMS.
    7. "That, in cases where the allowance to be given in respect of life insurance premiums and other payments under Section thirty-two of the Income Tax Act. 1918, is restricted by paragraph (f) of Subsection (3) of that Section as amended by Section twenty-three of the Finance Act, 1935, the rate of tax by reference to which the allowance is so restricted shall be ten thirty-thirds of the standard rate instead of one-third of the standard rate. And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
    AMENDMENTS OF SCHEDULE C AND CONSEQUENTIAL AMENDMENTS OF SCHEDULE D.
    8. "That—

    (1) for all the purposes of Income Tax under Schedule C and Rule 1 of the rules applicable to Case III of Schedule D, the expression "public revenue" shall, except where the context otherwise requires, include

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    the public revenue of any Government whatsoever and the revenue of any public authority or institution in any country outside the United Kingdom;

    (2) where a banker or any other person in the United Kingdom, by means of coupons received from any other person or otherwise on his behalf, obtains payment of any foreign dividends elsewhere than in the United Kingdom, the tax under Schedule C shall extend to the dividends and the person obtaining payment shall be treated for the purpose of the paying agents rules as if he were intrusted with the payment thereof;

    (3) where a banker in the United Kingdom sells or otherwise realises coupons for any dividends, being foreign dividends, and pays over the proceeds to any person or carries them to his account, or where a dealer in coupons in the United Kingdom purchases any such coupons as aforesaid otherwise than from a banker or another dealer in coupons, the tax under Schedule C shall extend to the proceeds of the sale or other realisation, and the paying agents rules shall apply to those proceeds as if they were dividends, and shall apply to the banker or dealer as if he had been intrusted with the payment thereof;

    (4) the provisions of the last two foregoing paragraphs shall apply for the purpose of Rule 7 of the miscellaneous rules applicable to Schedule D (which relates to interest, etc., from colonial and foreign companies) subject to any necessary modifications;

    (5) for the purpose of this Resolution—

    (a) the expression ' banker ' includes a person acting as a banker and, notwithstanding anything in the paying agents rules, includes the Bank of England and the Bank of Ireland;

    (b) the expressions ' dividends,' ' coupons ' and ' coupons for any dividends ' have the same meanings as in the paying agents rules and the expression ' foreign dividends ' means dividends payable elsewhere than in the United Kingdom, whether they are also payable in the United Kingdom or not;

    (c) the expression paying agents rules ' means the rules applicable to Schedule C as to interest, etc., with the payment of which persons other than the Bank of England, the Bank of Ireland and the National Debt Commissioners are intrusted;

    (6) the provisions of Schedule C and Schedule D shall be deemed always to have had effect subject to the foregoing provisions of this Resolution:

    Provided that, where at any time after the twenty-ninth day of July, nineteen hundred and thirty-seven, and before the twenty-seventh day of April, nineteen hundred and thirty-eight, tax could have been charged on or deducted from any profits under Schedule C of the said Rule 7 if the provisions of this Resolution had been enacted at that time, but has not been so charged or deducted, those profits shall be chargeable under Case VI of Schedule D for
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    the year of assessment in which the profits arose.
    And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
    TRANSFERS OF INCOME ARISING FROM SECURITIES.
    9. "That—

    (1) where, in any year of assessment, the owner of any securities (in this Resolution referred to as ' the owner ') has sold or transferred or hereafter sells or transfers the right to receive any interest payable, whether before or after the sale or transfer, in respect of the securities without selling or transferring the securities, the following provisions shall have effect and shall be deemed always to have had effect:—

    (a) that interest, whether it would or would not be chargeable to tax apart from the provisions of this Resolution, shall, for all the purposes of the Income Tax Acts, be deemed to be the income of the owner or, where a beneficiary is entitiled to the income arising from the securities, the income of the beneficiary, and not the income of any other person, and be deemed to be income for that year;

    (b) in the case of a sale or other realisation the proceeds whereof are chargeable to tax under Schedule C or Rule 7 of the miscellaneous rules applicable to Schedule D, the amount of the interest deemed to be the income of the owner or beneficiary shall he an amount equal to those proceeds;

    (c) in any other case, tax at the standard rate in respect of the interest shall he chargeable on the owner or beneficiary under Schedule D;

    (2) nothing in the foregoing provisions shall affect any provision of the Income Tax Acts authorising or requiring the deduction of tax from the interest, or from the proceeds of any subsequent sale or realisation of the right to receive the interest;

    (3) for the purpose of this Resolution, the expression interest ' includes dividends, annuities and shares of annuities, and the expression ' securities ' includes stocks and shares."

    FUNDING BONDS ISSUED IN RESPECT OF INTEREST ON CERTAIN DEBTS.
    10. "That—

    (1) where any funding bonds are issued to a creditor in respect of any liability to pay interest on any debt to which this Resolution applies, the issue of the bonds shall be treated for all the purposes of the Income Tax Acts as if it were the payment of an amount of that interest equal to the value of the bonds at the time of the issue thereof;

    (2) where any person by or through whom any such bonds are issued in any year of assessment would be required under the said Acts to deduct tax from the said amount of interest if it had been actually paid by or through him, he shall retain bonds the value

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    Whereof at the time of issue is equal to tax at the standard rate for that year on the said amount of interest, and shall be acquitted in respect of the retention in like manner as if he had deducted such tax from the interest, and shall be chargeable with such tax accordingly:
    Provided that the Commissioners of Inland Revenue, if satisfied that it is impracticable to retain bonds as aforesaid, may relieve any such person from the foregoing provisions of this paragraph on such conditions as they think fit, and thereupon tax in respect of the amount of interest treated as having been paid by the issue of the bonds shall be chargeable for that year under Case VI of Schedule D on the persons receiving or entitled to the bonds;

    (3) the debts to which this Resolution applies are any debts incurred, whether in respect of moneys borrowed or otherwise, by any Government, public authority or public institution whatsoever, or by any body corporate whatsoever, and for the purpose of this Resolution the expression ' funding bonds ' includes any bonds, stocks, shares, securities or certificates of indebtedness;

    (4) the foregoing provisions of this Resolution shall he deemed always to have had effect:

    Provided that, where at any time after the twenty-ninth day of July, nineteen hundred and thirty-seven, and before the twenty-seventh day of April, nineteen hundred and thirty-eight, any bonds could have been retained under this Resolution if its provisions had been enacted at that time but have not been so retained, an amount equal to the value of the bonds at the time of the issue thereof shall be chargeable under Case VI of Schedule D for the year of assessment in which the bonds were issued.
    And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
    PROVISIONS AS RESPECTS SETTLEMENTS.
    11. "That

    (1) there may be included in any Act of the present Session relating to finance such provisions as to Income Tax as Parliament may determine in relation to—

    (a) settlements which are wholly or partly revocable or otherwise determinable in any circumstances whatsoever (including settlements whereunder the settlor's liability might cease on payment of a penalty);

    (b) settlements whereunder any income or property of any description is, or will or may become, payable to or applicable for the benefit of the settlor in any circumstances whatsoever;

    (c) the disallowance, in computing total income for purposes of Surtax, of the deduction of sums paid by a settlor to the trustees of the settlement or persons connected with the settlement;

    710

    (d) sums paid directly or indirectly, whether by way of loan or repayment of loan or otherwise, by the trustees of a settlement or persons connected with a settlement to the settlor;

    (2) subject to such qualifications and exceptions as Parliament may determine, the said provisions shall apply to any settlement wherever or whenever made or entered into, and shall apply for the purposes of assessment to Income Tax for the year 1937–38 and subsequent years;

    (3) for the purpose of this Resolution the expression ' settlement ' includes any disposition, trust, covenant, agreement or arrangement, and the expression ' settlor ' includes any person by whom a settlement was made or entered into directly or indirectly and, in particular, includes any person who has provided or undertaken to provide funds directly or indirectly for the purpose of a settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into a settlement; and references to a settlor include references to the wife or husband of a senior."

    AMENDMENTS AS TO AVOIDANCE OF INCOME TAX BY TRANSFER OF INCOME ABROAD.
    12. "That there may be included in any Act of the present Session relating to finance such amendments of Section eighteen of the Finance Act, 1936 (which contains provisions for preventing avoidance of Income Tax by transactions resulting in the transfer of income to persons abroad), as Parliament may determine, and any such Act may provide that the said amendments shall have effect for the purpose of assessment to Income Tax for the year 1937–38 and subsequent years, and shall apply in relation to transfers of assets and associated operations whether carried out before or after the date of this Resolution."
    ADMINISTRATION OF ESTATES.
    13. "That—

    (1) there may be included in any Act of the present Session relating to finance such provisions as to Income Tax as Parliament may determine in relation to the estate of a deceased person and the income arising therefrom before the completion of the administration of the estate, in relation to persons having an interest in the residue of an estate before, on and after the ascertainment thereof and persons to whom legacies are bequeathed by a will, and otherwise in relation to the administration of estates;

    (2) any such Act may provide that the said provisions shall have effect for the purpose of assessment to Income Tax for the year 1937–38 and subsequent years and shall apply in relation to the estate of a deceased person whether he died before or after the commencement of that year."

    VALUATION OF TRADING STOCK ON DISCONTINUANCE OF TRADES.
    14. "That—

    (1) when any trade is discontinued al treated for the purposes of Income Tax as if it had been discontinued, any trading

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    stock then belonging to the trade shall be valued, in computing for the purposes of Income Tax the profits or gains of the trade, as follows:

    (a) in the case of any such trading stock which is sold or transferred for valuable consideration to a person who carries on or intends to carry on a trade in the United Kingdom and may deduct the cost of the trading stock as an expense in computing the profits or gains of that trade, the value thereof shall be taken to be the amount realised on the sale or the value of the consideration given for the transfer;

    (b) in the case of any other such trading stock, the value thereof shall be taken to be the price which it would have realised if sold in the open market at the discontinuance;

    (2) provision shall be made for determining any questions arising under sub-paragraph (a) of the last foregoing paragraph for the purpose of computing the profits or gains of both the trades concerned;

    (3) for the purpose of this Resolution, the expression ' trading stock ' includes property of any description, whether real or personal."

    LOSSES OF CAPITAL REDEMPTION BUSINESS.
    15. "That

    (1) where any person carries on capital redemption business—

    (a) the capital redemption business, if carried on in conjunction with business of any other class, shall be treated for the purposes of Income Tax as a separate business; and

    (b) in ascertaining whether and to what extent he has sustained a loss in the carrying on of the capital redemption business for the purpose of setting off or giving relief in respect of the loss, any of his income derived from investments held in connection with the capital redemption business shall be treated as part of the profits arising from that business:

    (2) in this Resolution the expression ' capital redemption business ' means the business (not being life assurance business or industrial assurance business) of effecting and carrying out contracts of insurance, whether effected by the issue of policies, bonds or endowment certificates or otherwise, whereby in return for one or more premiums paid to the insurer a sum or series of sums will become payable to the insured in the future."

    ESTATE DUTY.
    ESTATE DUTY IN RESPECT OF RESIDUARY ESTATES.
    16. "That—

    (1) there may be included in any Act of the present Session relating to finance such provisions as to Estate Duty as Parliament may determine in relation to the residue of the estate of a deceased person and to the inclusion of property representing such residue in the property that passes or is
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    deemed to pass on the death of a person dying before the completion of the administration of the estate;

    (2) any such Act may provide that the said provisions shall have effect and be deemed always to have had effect in relation to a person so dying whether before or after the commencement of the said Act."

    ESTATE DUTY IN RESPECT OF PROPERTY TRANSFERRED TO, AND SHARES IN, CERTAIN COMPANIES.
    17. "That—

    (1) for the purpose of determining the rate of Estate Duty, property which is deemed to pass on the death of any person by virtue of Section thirty-four or Section thirty-five of the Finance Act, 193o, shall not be an estate by itself but shall be aggregated with other property passing on the death;

    (2) for the purpose of the definition of the value of the total assets of the company ' contained in Section thirty-eight of the said Act, the deduction to be made under paragraph (i) in respect of any debentures, debenture stock or preference shares of the company shall, instead of being the par or redemption value thereof, whichever is the greater, be the principal value thereof."

    ESTATE DUTY IN RESPECT OF SETTLED PROPERTY.
    18. "That the exemption conferred by Sub section (3) of Section five of the Finance Act, 1894, in the case of settled property where the interest of any person under the settlement fails or determines by reason of his death before it becomes an interest in possession and subsequent limitations under the settlement continue to subsist, shall cease in cases where the property would, if that Sub-section had not been enacted, have been deemed to pass on the death otherwise than by reason of the failure or determination of the interest."
    MISCELLANEOUS.
    NATIONAL DEFENCE CONTRIBUTION.
    19. "That Part III of the Finance Act, 1937 (which relates to the National Defence Contribution), shall be amended—

    (a) so as to re-define the circumstances in which a body corporate is to be deemed to be a subsidiary of another body corporate for the purpose of Section twenty-two of the said Act (which provides for the amalgamation of the profits and losses of subsidiary and principal companies) and of any provision made in pursuance of this Resolution;

    (b) so as to alter the provisions of the said Section twenty-two relating to the giving of a notice thereunder by a principal company as respects a subsidiary;

    (c) so as to disallow, in computing profits, any deduction in respect of any interest, annuity, or other annual payment, or any royalty or rent, paid by one body corporate to another, where one of them is a subsidiary of the other or both are subsidiaries of a third;

    (d) so as to disallow the carrying forward of any loss under sub-paragraph (2) of paragraph 2 of the Fourth Schedule to the said

    713
    Act, if and to the extent that the loss has been deducted from or set off against the profits arising from a trade or business, whether under the said Section twenty-two or otherwise;

    and that the said amendments shall be deemed to have had effect as from the date on which the said Part III came into operation."
    RESTRICTION OF RELIEF FROM TRANSFER STAMP DUTY ON CERTAIN INSTRUMENTS.
    20. "That any Act of the present Session relating to finance may restrict, in such manner as Parliament may determine, the relief from Stamp Duty given by Section forty-two of the Finance Act, 1930 (which relates to instruments the effect whereof is to convey or transfer a beneficial interest in property from one associated company to another)."
    First Resolution read a Second time.
    3.35 p.m.
    Mr. Kelly: I beg to move, in line 3, to leave out "ninepence," and to insert '` sevenpence.
    There is also a second Amendment to reduce the rebate from 8d. to 6d., and I am wondering whether it will be for the convenience of the House for the two Amendments to be considered together?
    Mr. Speaker: These two Amendments in the name of the hon. Member for South Shields (Mr. Ede) and the hon. Member for Rochdale (Mr. Kelly) are technically out of order. Hon. Members will realise that the existing duty is 8d. and it is suggested to reduce the duty from 9d. to 7d. in which case, if the Amendment were accepted by the House, no Money Resolution would be necessary as it would be a reduction of the duty. I do not propose to take that line and rule the Amendments out of order, but to allow the hon. Member to move his Amendments. I think it would be for the convenience of the House if they were discussed as one Amendment.
    Mr. Kelly: The first Amendment is to reduce the 9d. per gallon on hydrocarbon oils to 7d. and the second is to reduce the rebate from 8d. to 6d. For many years when Chancellors of the Exchequer have been looking for means of raising money they have turned immediately to the road transport industry. This industry, which is already heavily burdened, finds something like £88,000,000 a year, about 9 per cent. of the national revenue, and is now once again to have a further impost of one penny on the raw material they need for
    714
    their transport. One would have expected that the Chancellor of the Exchequer would have looked in other directions to find the money he requires. This burden is not confined to the people who are engaged in this particular industry but is passed on to most people in the country. It is passed on to those who travel as passengers on the roads and to those who purchase goods, most of which are now carried by road transport, and in placing this burden once again on family budgets in all parts of the country the Chancellor of the Exchequer has taken the easiest course to impose the extra taxation he requires.
    I hope the right hon. Gentleman will give further consideration to the position and realise the heavy burden that these people already have to bear. This extra penny may not sound very much, but, added to that which they are already paying, it is a serious matter for the industry. I wonder why there is this discrimination against this particular section of the transport industry. This taxation was originally imposed in the year 1909. I am not going to weary the House with a history of the matter, but we know that they were induced to accept it with willingness because it was intended to be used for road purposes. Various Chancellors of the Exchequer have rushed to this fund and raided it time and again, not utilising the taxation for the purposes for which it was originally intended, and to-day we find that greater burdens are being placed upon these people until there is now a duty of 9d. per gallon on hydrocarbon oil. I realise that this motor spirit if used for stationary engines or railway engines does not bear a duty to the extent of 9d. per gallon.
    In view of the serious position in which the road transport industry finds itself at the present time, and the fact that this impost will affect the cost of the things which many homes purchase for their maintenance, I ask the Chancellor of the Exchequer to give serious consideration to this Amendment, and to realise that the burden is too heavy for these people, and ought not to be imposed upon them in this way. The transport of food, and all forms of industrial and commercial transport will be affected. This is indeed a direction in which we did not expect the Chancellor would look even for the sum which he requires at this time. I urge

    715
    the right hon. Gentleman to accept the Amendment, so that there shall be no discrimination against these people and so that they may be given the opportunity of carrying their industry forward to greater prosperity, to the advantage of the country. If he does that, he will earn the thanks of the community.
    3.42 p.m.
    Mr. Benjamin Smith: I beg to second the Amendment.
    Ever since the Road Fund was initiated in 1909, there has been, with the exception of a few years, a continual impost for revenue purposes upon this industry. In instituting the tax, the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) gave a pledge on behalf of his Government—of course, I know that no future Government can be bound by such a pledge—and the House supported him, that the tax was to be for the purposes of putting the roads of the country in a proper state of repair and making them sufficient to bear the ever-growing traffic that would go upon them. The right hon. Gentleman said that in no circumstances was that revenue to be used for the ordinary purposes of taxation. The right hon. Gentleman the Member for Epping (Mr. Churchill) followed by imposing a duty on petrol, and he said much the same thing as the right hon. Gentleman the Member for Carnarvon Boroughs. The late Sir Austen Chamberlain again pledged the Government of which he was a Member that, whatever might be the revenue from this source, it was to be used for the roads of the country. Then a one-time colleague of mine, the late Viscount Snowden, apologised to the House in 1931, at a time when, presumably, there was a great slump and when an emergency Budget had to be brought before the House, for having to increase the tax on petrol, and he pledged himself that when any reduction of taxation came, this would be one of the first directions in which relief would be given. A year ago the present Prime Minister, when Chancellor of the Exchequer, decided to take away from the roads the whole of the revenue from this form of taxation and to place it at the disposal of the Exchequer. Let me observe, in passing, that it is said that the Government propose to give about £20,000,000 to the Fund this year,
    716
    an increase of approximately £6,000,000 over what was spent last year; but obviously it is untrue to say that, because there was a surplus in the account last year of approximately £6,000,000, so that the actual increase in the amount going from the Exchequer to that Fund will be about £900,000.
    There are one or two things which I wish to bring to the notice of the House. Let me take, first of all, the case of a taxicab driver, whose cab averages 18 miles to the gallon. Day in and day out, empty or full, a tax of ½d. a mile is levied on that taxicab. It is a formidable tax. On top of that, the man has to pay, as an owner driver, for two licences, and anything up to £16 a year for the registration of his vehicle, so that there is an imposition of something like £60 a year, if one takes an average mileage for the taxicab of from 35,000 or 45,000 miles per annum. Let it be remembered that such a man has to pay the rates and taxes which the ordinary citizen has to pay. This is an imposition upon his industry, and instead of being used to give better facilities on the road, it is now to be used by the Exchequer for the purposes of the ordinary revenue of the country. I have in my hand a letter which reads:
    " Can you not, on our behalf, enter a strong protest against any increase in fuel costs in the transport industry. Our wages bill last year for 10 men amounted to £2,080; taxes paid to the Government to £1,200."
    That means that taxation to an amount of upwards of 50 per cent. of the wages bill is placed upon this industry. How can one expect the industry to thrive as it should when such a preference is given to another section of the transport industry which, if it has standing engines or uses heavy oil in its engines, is to be taxed at the rate of only 1d. per gallon. I suggest that that is unfair discrimination as between one industry and another. I wish to bring to the notice of the House another aspect of this matter to which, perhaps, the House has not given much attention. An industry which has, by its work, to find a revenue tax, is a badly-paid industry. There is before the House a Road Haulage Bill which, if carried by the House, will fix the wages, as three Acts of Parliament, under the Ministry of Transport, have already fixed the hours in the motor-transport industry. There are in that industry

    717
    notoriously long hours and bad wages, the reason being that the industry cannot compete effectively with railway transport without making a drive into the working conditions of the people.
    If hon. Members doubt this, let me refer to another section of that industry. If the Minister of Labour will look into the wages paid to people employed in garages and serving at petrol pumps, he will find that they receive from 17s. 6d. to 30s. a week for a week of about 60 or 70 hours. [An HON. MEMBER: They get tips. They expect tips, but that is a pretty pernicious way of getting a living, and one which I am sure no hon. Member would support. In the drink trade, for instance, it is notorious that they are the worst-worked and worst-paid people, again because of the incidence of taxation. In the grocery and provisions trade, sugar, tea and coffee, arid so on, it is already contemplated that there shall be a trade board because of the rotten conditions applying throughout the country in regard to what are called the small men employed in that industry. The Chancellor of the Exchequer was once a great Free Trader, and I remember that on one occasion he told his constituents that the Government were even going to tax the currant in a halfpenny bun. To-day, the Chancellor sits with his new friends, and imposes taxes willy-nilly upon all and sundry.
    I drive a 14 horse-power car. As an ordinary citizen, I have to pay the increase of 6d. in the Income Tax; through my family I have to meet the impost of 2d. a lb. on tea; and there is a tax levied on me of a ½d. a mile for every mile I travel in my car, apart from buying petrol and maintaining that car in the proper condition in which it should be maintained. I say that it is unfair discrimination, not only against industry, but against individual citizens, to penalise one citizen who has to meet all the common obligations of revenue, imposed whether by his local authority or by the Exchequer and yet has this further impost placed upon him. The Chancellor of the Exchequer, when introducing his Budget, asked, could anything preferable to the present proposals be suggested? The right hon. Gentleman the Member for Caithness and Sutherland (Sir A. Sinclair) suggested various forms of taxation. I suggest one which, I think, would do a lot of good in the world,
    718
    and in this country in particular, and that is an inheritance tax. A lot of lazy drawing-room loungers are spoiling Mayfair and spending in the casinos of foreign countries wealth that has been earned by their fathers. They are debauching themselves and bringing this country into disrepute and the Chancellor of the Exchequer could make decent citizens of them by the imposition of an inheritance tax which would force them to work honourably for a living. There, I suggest, is a means of finding revenue without imposing hardship upon anybody. The dead are dead and you cannot hurt them any longer, but certainly the gentleman who, having received his inheritance, goes about the country wasting wealth is a very good subject for taxation by the Chancellor. I hope that all Members who believe that this is an unfair burden upon a growing industry, which last year paid £88,000,000 to the revenue of the country, will join with me in asking the Chancellor of the Exchequer to withdraw this tax, or to reduce it as suggested in the Amendment.
    3.53 p.m.
    Colonel Sandeman Allen: I cannot join with the hon. Member for Rotherhithe (Mr. Benjamin Smith) in all he has said, and I presume that if the dead to whom he referred were alive, they would not necessarily be driving 14-horse power cars. I must point out that there is no necessity for the hon. Member to drive a car at all. There is no necessity for any of us to drive cars and if we choose to indulge in luxuries, we have to pay for them. But I agree with him most heartily in his dislike of the discrimination in this tax. The fact that stationary engines and railway motors should be allowed to go free while road users are penalised, seems to be most unfair. I do not think any member of the community objects to paying a tax which he knows to be required for the safety of the country. What we do object to is the discrimination shown in this tax and the lack of that fair spread which ought to obtain in a case of national emergency. We realise that this is a question of national emergency, and that rearmament has to be paid for, but we say that the necessary taxation ought to be spread evenly over the various sections of the community, and not levied particularly on one industry to that industry's disadvantage in competition with

    719
    others. It is to that point that I hope the Chancellor of the Exchequer will address himself more particularly to see whether he cannot secure a little better levelling out of this necessary taxation.
    3.55 p.m.
    Mr. Holdsworth: I was astounded to hear the hon. and gallant Member for Birkenhead (Colonel Sandeman Allen) refer to the driving of a car in these days as a luxury.
    Colonel Sandeman Allen: For private citizens it is.
    Mr. Holdsworth: I do not care what qualification the hon. and gallant Member makes. Surely we have passed the time, in these days of speed and the necessity of getting quickly from one place to another, when the driving of a car could be defined as a luxury. I was very interested in the suggestion of the hon. Member for Rotherhithe (Mr. Benjamin Smith) as to a new tax, but I do not propose to follow him into that matter. I have, so far in my life, regretted that no one was ever good enough to leave me any money, either to live a good and sober life or to go in for debauchery. But I did want to refer to the history of this tax. The hon. Member for Rochdale (Mr. Kelly) said he would not weary the House by going into it. I do not want to weary the House either, but I think it is essential that something should be said on the subject.
    I do not think we realise the tremendous increase that has taken place in this tax. In that famous Budget, probably the most famous of all Budgets, the Budget of 1909–10, the then Chancellor of the Exchequer put two kinds of duties on the motor industry. One was a vehicle tax, and the other was a tax of 3d. on petrol. I ought to mention here, because it is an interesting reference to the industry with which the hon. Member for Rotherhithe was connected, that motor cars, omnibuses and hackney carriages were exempted from the vehicle duty, and commercial goods vehicles at that time were allowed a rebate of half the Petrol Duty. We ought to bear in mind, too, that the whole proceeds of those duties were allotted, without any deduction, to road improvements. The Finance Act, 1920, gave statutory form to the bond
    720
    between the motor taxpayer and the Government, whereby all the money raised was to be spent upon road improvement. Those arrangements held good until 1926, and then we saw the first raid on the Road Fund. The right hon. Gentleman the Member for Epping (Mr. Churchill) set a very bad example in the Budget of that year. From that year onwards there have been periodical raids on that fund, and in 1928 there was reimposed a duty on petrol of 4d. a gallon, and in 1931, in each of the two Budgets of that year, there were further increases of 2d. per gallon on petrol, making a total of 8d. a gallon at that time. Now there is to be a further increase of a rd. per gallon, making it 9d. per gallon.
    There are one or two figures which I wish to give because they are very striking. In 1910 the first result of the Petrol Duty was to bring in £321,000. In 1938–39, as the White Paper issued last Tuesday shows, the taxation on hydrocarbon oils amounts to £57,500,000, not including the vehicle tax. I want to be quite fair and, making an allowance for the tax paid on oil used for purposes other than transport, we get a net sum estimated to be produced this year, in oil taxation, of £51,500,000, the whole of which is paid by road transport. Let me put it in another way. The total national expenditure in 1930–31 was £799,000,000. In 1937–38 it was £844,000,000. That is an increase of £45,000,000 in that period. And the yield from taxation of motor fuels during that period increased by £31,000,000. If you also add the motor vehicle taxes in 1930–31, including Import Duties of £29,000,000, they rose in 1937–38 to £37,000,000. Of the total increase in those years of £45,000,000 in national expenditure no less than £39,000,000, or 87 per cent. of the increase, was found by motor transport —an astounding sum.
    Is that a fair proportion? I understand that the landed price of petrol is 4d. per gallon approximately, so that the real taxation on the absolute cost is 225 per cent. I should have thought that when seeking an article for taxation raw materials would not be selected. Oil for industrial purposes is used as a fuel for power and heat, and it is used for lubrication; and the cost of transport is a serious item in the cost of production of every manufactured article. It is interest-

    721
    ing to study what is the percentage of cost caused by transport. I am not going to give any figures because they are very difficult to work out, but I do not think I shall exaggerate if I say that a minimum of 7½ per cent. represents the cost of transport in any article of production I believe that this cost has a serious effect on the export trade. At the present time in Bradford and in the textile areas generally we are going through not a recission but a terrific slump in trade. The Chancellor of the Exchequer knows that area almost as well as I know it myself, and he knows that we are having a terrific struggle to keep going. All sorts of difficulties are to be met with, currency restrictions, depreciation of currency, and so on. I suggest to the Chancellor that, however small a burden is added to the cost of production, it does hinder recovery so far as the export trade is concerned.
    Let me give an illustration. The hon. Member for Rotherhithe has already given one or two interesting illustrations. Take the case of a small vehicle with an unladen weight under 2 tons. There is a tax paid of £25 a year. If we take an average running of 400 miles a week at 12 miles to the gallon we find that that vehicle pays £65 per year in Petrol Duty. It means a total, on a small vehicle of that description, of £90, or, to put it into weeks, a tax of 35s. a week. The hon. Member for Rotherhithe mentioned a 14 horse-power car. One pays for that a vehicle tax of 10 guineas a year. Running 25,000 in the year the tax paid is £46 17s., or a total of £57 7s., without the tax on the oil. Working it out we find it comes to 22s. a week for a small car.
    One other matter to which I must refer is the tremendous added cost to public service vehicles. I read somewhere that the London Passenger Transport Board—I do not want to take an oath on these figures because I am speaking from memory—will have to meet something like £146,000 additional charge per year on their cost of running. I believe that in Bradford this extra penny means an added cost of some thousands a year. Who pays this? I believe it is absolutely impossible for most of these undertakings to pay this added tax without putting up the fares or reducing the distance that a passenger can travel, and it is true that
    722
    this is another tax that will be largely paid by the workers. What have we done? For some years in this House one of the pleasing things has been the building of new houses and the encouragement given to people to get away from their work in the industrial areas and to live in pleasanter surroundings. I can best refer to Bradford because I represent one part of that city. We have in Bradford housing estates where the people in order to get into town have to pay a 3½d. bus fare. One of the great struggles of the workers nowadays is not merely payment of increased rent but the payment of increased fares in getting to and from their work. The transport charge is a terrific burden; in some cases it comes to 10s. or 15s. a week for a man and his wife and other members of the family who are working. They travel miles to their work. What is this extra charge going to mean to the ordinary worker and his family? It is certainly going to mean shillings a week in additional cost of transport to and from work. It seems to he of little use this House trying to encourage the worker to get away from an industrial area into healthier surroundings if we make the cost of transport a terrific charge on his weekly earnings.
    Further, this tax discriminates between one form of transport and another. Traditionally taxation in this country is for the sole purpose of raising revenue. But that has not applied for some years; other motives have crept in. In 1928 the Petrol Duty was reimposed avowedly to finance the derating proposals. The right hon. Member for Epping stated in his Budget speech that £4,000,000 raised by the 4d. imposed upon petrol was to be allocated to replace rates hitherto paid by the railway companies. It is true that the railway companies in return were to lower freights on coal, iron, steel, and other heavy goods. It always struck me as ironical that the road hauliers should have to present the railway companies with money in order that the railway companies might lower freights as the Government asked them to do. It was an absolute present to their own competitors. It seems to me the strangest form of taxation to tax one man in order that he might encourage his competitor to defeat him in the same industry. How would the railway companies like a similar tax on their fuel? In 1937 the railways consumed 15,000,000 tons of coal, and I

    723
    understand that the average pithead price for it was something like 15s. 2d. a ton. If there was a tax of 225 per cent. on their fuel there would be an increased operating cost of £25,500,000 a year placed on the railway companies. What a scream there would be in this House. I often think it is a pity that there are not in this House more people directly interested in road transport. The railway companies are very well represented.
    Mrs. Tate: Too well.
    Mr. Holdsworth: There is a great discrimination between the different forms of transport. I took the trouble to get out a note of what the Prime Minister said in his Budget speech of 1933. It confirms my statement as to discrimination. These were his words:
    " I have received very strong representations from the coal industry, supported by the gas and electricity industry and by the railway companies that in the interests of the British coal and allied industries I should review what they regard as an anomalous position.''—[OFFICIAL REPORT, 25th April, 1933; col. 52, Vol. 277.]
    The whole trend of legislation during these past few years has been to discriminate between road and railway interests. Ever since 1926 successive Chancellors have imposed further burdens on road transport not merely for revenue purposes but by way of penalising one form of transport. Let me give an illustration to show the burden on the road transport industry. Only a week last Saturday morning a certain gentleman whom I have known for years, who had started a small haulage business with one lorry, came to see me. That business had developed until the man had seven lorries. In our particular area business is almost dead at the present time, with the consequence that he ran only four lorries out of the seven. But he is scared to death that if he does not keep the whole of the seven licences he will lose his licences when he makes further application. The licence of each one of those vehicles costs 30s. a week, for they are heavy vehicles. Here is a poor fellow going through a terrible trade depression, wondering how to make ends meet, and because of our legislation here he has to spend £4 10s. a week on three vehicles that he cannot run, and now he has this added burden proposed by the Chancellor.
    724
    The whole basis of legislation with regard to road transport is penal in its character. It simply hinders people from running cheap forms of transport and prevents their rendering to people the service which they desire. Of course, that is now a thing of the past; people are not allowed to do that kind of thing. It was only last week that we learned that it was a crime to give people what they wanted at a price that they could afford to pay. That is the whole basis of our legislation. I really cannot understand why this should be done. If the matter were considered only from the point of view of employment, it should be remembered that this industry gives employment to more than 1,000,000 people in this country I believe it gives direct and indirect employment to nearly 1,500,000 people. If we reckon the manufacture of motor cars and lorries, the drivers, the oil industry, road conctruction and steel production, transport gives a tremendous amount of employment. If it could work without all this penal legislation it would lower the cost of production tremendously. It also saves a tremendous amount of time in delivery. It is not possible to assess the monetary value of the saving of time that this industry has caused for all the other industries. It has revolutionised transport. Why seek to impede progress by penal taxation? I am certain that the Chancellor desires, as we all do, to see this country prosperous, but in order to achieve this desire we ought to do everything in our power to assist a progressive, cheap and efficient transport.
    The Financial Secretary to the Treasury (Lieut.-Colonel Colville): Perhaps it will be for the convenience of the House if I now indicate the Government's views—
    Mr. James Griffiths: There are other aspects of this question which hon. Members wish to mention.
    Lieut.-Colonel Colville: I will gladly give way to the hon. Gentleman if he desires to speak.
    4.16 p.m.
    Mr. J. Griffiths: We are developing in this country a crazy kind of economics. We set one industry against another and make one man's meat another man's poison. A tax like this, for example, which fills the genial taxi-man in London

    725
    with a good deal of dread for the future sends a little ray of hope into the life of the miner that it will help on the use of coal for the production of oil. We ought to try to discover how these conflicting interests can be gathered together instead of having all sorts of vested interests which fight one another. One of the reasons given for the high taxation of petrol was that it would be an aid to the development of the industry of producing oil from coal at home. That is the only justification that I see for it. At the moment we are making the worst of both worlds. Our people are having to pay heavy transport costs because of this taxation, and the taxation is not coming to the aid, as it should, of the development of oil from coal at home. Originally this tax was the subject of negotiation, consultation and agreement between the Government and Imperial Chemical Industries when they set up their experimental plant at Billingham. From the beginning the nation has contributed towards that experiment and yet has not been allowed to know anything about it. Everyone who pays for a penny fare on the bus pays towards this tax which has contributed towards the Billingham experiment, and yet we know nothing about it. It is shrouded in mystery.
    We are no further forward in this country to a solution of the problem of producing our own oil from coal than we were seven or eight years ago. If what is now said is true, they have largely given up trying to produce oil from coal at Billingham and are producing oil from all kinds of mixtures. We really do not know what they are doing. Since then we have had the Falmouth Committee's report, and so far there has been no opportunity for the House to discuss it. I am profoundly disappointed with it. The Committee have taken an extraordinarily narrow view of the whole position. They have been tied down far too much to the question whether it is possible at this moment to establish an industry that will stand on its own feet. A far longer view ought to be taken. This Budget is the first of the rearmament Budgets, perhaps the smallest of them. We are getting apprehensive as to what the taxation in the next Budget will be like. Therefore, if we are asked to accept this Budget on the ground that it is essential for rearmament, it is appropriate that
    726
    we should discuss whether the best use has been made of the taxation from the standpoint of rearmament.
    Let me contrast what has been done in Germany with what has been done here. In the last five years the oil from coal industry in Germany has been developed so rapidly and extensively that whereas five years ago they were producing only 10 per cent. of the oil they consumed, they are now producing 47 per cent. In the eastern part of Germany they are producing oil from lignite only, that is to say, from brown coal, from what we regard as scrap coal. Yet in this country we are doing nothing in the matter that is worth while. I join with my colleagues in the view that there ought not to be any taxation which puts one form of transport at a disadvantage as against another. The only justification that I know of for putting this taxation upon petrol is in order to assist the coal industry. We know that one of the permanent factors in the decline of the coal-mining industry in this and every other country is the coming of petrol. The first consideration of those of us who speak for the mining industry in the last ten years have been how we can get a bit more work for our people. Therefore, when we see oil displacing our men, closing pits and rendering valleys derelict, we have had to look round to see if there were any means by which this menace can be overcome.
    It is a tragic thing how a new invention can become a new menace. The coming of this form of transport has been a menace in some respects. We, therefore, looked forward to the time when, by the aid of this tax and under its shelter, it would be possible for a new industry to be developed in the extraction of oil from coal. We are doing nothing effective about it, however. What is the good of having a tax of this kind if the only justification for it is not being carried out? We are spending enormous sums on aeroplanes and they will not be of any use unless there is petrol to fly them. We are dependent on imports for 95 per cent. of the petrol that we require, and we must have a network of far-flung communications from the oil wells to the storage places all over the country which are vulnerable to air and other kinds of attack. Yet we are doing nothing to encourage the home industry. Our Navy depends on oil, and the Army is becom-

    727
    ing more and more mechanised. Yet no real tangible effort is being made to supply the need. The Falmouth Committee reported three months ago. Disappointing as their report is, they do suggest that something should be attempted now in the hydrogenation process, but nothing has been done. The House has not had an opportunity of discussing the report and no announcement has been made. I put it to the Financial Secretary that it is no use defending this tax, as ather Chancellors and Financial Secretaries have done, on the ground that it provides a shelter under which a home oil-from-coal industry can be created, unless some real efforts are made to carry out the implications, which are to assist in the development of a real oil-from-coal industry in this country.
    4.27 p.m.
    Sir John Wardlaw-Milne: I was much interested in what the hon. Member for Llanelly (Mr. J. Griffiths) said regarding progress in Germany in the extraction of oil from coal. On another occasion I shall be still more interested if he can give us details about the cost of that production. I am informed that the cost is extremely heavy.
    Mr. J. Griffiths: It is impossible to discover any figures about anything in Germany in these days, but I have seen estimates of the cost. Probably for local internal reasons the Germans are extracting oil from lignite, and the cost of this should not be used as a basis for determining the cost of extracting oil from coal.
    Sir J. Wardlaw-Milne: I was not criticising the statements of the hon. Member, but I should be interested to know what the cost of production in Germany is. I have been very struck with the criticisms of this tax, and I am in entire agreement with the expressions of opinion as to the burden which it will cause to fall upon certain people. I do not think it is unfair to call this tax unfortunate in the sense that it is discriminatory and that it falls more heavily upon one class of user than another. I have no doubt that the Chancellor's answer to these criticisms would be, not that he entirely disagreed with what has been said, but that some form of taxation is necessary to raise the money he requires. I have on another occasion said that some of us thought that it was
    728
    not absolutely necessary to raise this extra £30,000,000 this year by taxation, but that is not a point into which I can go to-day. The Chancellor's main argument in his Budget statement was that he had to raise £30,000,000 and that he wished to spread the taxation over all the classes of the population. He will forgive me if I say that he then proceeded to raise about £25,000,000 of it from one small section of the population, about 3,500,000 people who pay Income Tax, and, if you allow for the extension of exemptions given to the small Income Tax payer, probably to far fewer than 3,500,000. But leaving that aside, it is probably true that this tax is one way of seeing that all sections of the population pay a share of the extra money required.
    The point that I want to raise this afternoon is this: Although we must all agree that in recent years the taxation of petrol has become part of the ordinary Budget receipts and can no longer be looked upon as a tax specially connected with the construction of roads, that does not alter the fact that, as the hon. Member for South Bradford (Mr. Holdsworth) said, the tax was originally designed to assist in the production of good roads, and I am therefore anxious to take this opportunity of putting before the House this one aspect of that matter. I think a good deal of harm has been done—I say it without offence, I hope, to anybody —by the visit about a year ago of a large number of people from this country to Germany to look at roads. Some of them, I think, came back with the idea that this country should follow Germany in the production of great lengths of large motor roads, but the fact is, of course, that the conditions in this country are totally different from those in Germany, and the problem can never be the same. The distribution of the population is different, the situation in the country districts is different, and in almost every way conditions which apply in Germany do not apply here.
    I do not suggest for a moment that I am opposed to the construction of good motor roads, more particularly if those roads are of value to the commercial transport and the trade of the country—in such a case we must all be in favour of such roads—but the point that I want to make is, Are we not really going too far in this matter? When I hear of a

    729
    proposal quoted to me by an hon. Friend who usually sits behind me, but who unfortunately is not in his place at the moment, that in the North of Scotland—and I am sorry the right hon. Member for Caithness and Sutherland (Sir A. Sinclair) is not in his place either when I say this—there is to be an expenditure of £6,000,000 upon secondary roads, mostly provided by the taxpayers of England, I am a little appalled, and I wonder whether this country realises how far it is going in this provision of secondary roads. I do not know the exact figure —I do not know that it has ever been quoted, and if this were a suitable opportunity, I should like to ask the Minister of Transport what it is—but I am informed that it may be something just under £1,000,000 for the construction of roads in the county of Sutherland, where, to my knowledge, there are miles and miles of roads on which there is not a single house. I feel that, although this tax may be absolutely necessary for the purposes of ordinary revenue, to fill a gap in the Chancellor's Budget, and although we must now look upon it not as a tax for the purpose of roads, still, those of us who remember, as most of us do, the earlier days of the proposal for a petrol duty and the object of it when it was first introduced, must, I think, wonder whether the enormous expenditure on roads at the present moment in our present financial circumstances, and especially on secondary roads, is really justified.
    I would only add this further word: I am not at all certain that the production of these great highways is necessarily the best way to put down the numbers of fatalities that take place on the roads. I think it is very questionable whether these wonderful roads do really reduce the death-rate. Although I agree with what has been said regarding the burden of this tax upon certain users of motor vehicles, I appreciate at the same time that it is part of the ordinary Budget taxation to-day, and on that account, if we are to have this enormous rearmament programme, I do not know that we can object to any more than we object to any form of taxation.
    4.35 p.m.
    Lieut.-Colonel Colville: I do not propose on this occasion to follow my hon. Friend the Member for Kidderminster
    730
    (Sir J. Wardlaw-Milne) on the question of expenditure on roads in the North of Scotland, except to observe that the improvement of the Highland roads is an important matter. I am glad that I gave way to the hon. Member for Llanelly (Mr. J. Griffiths), because he raised a point in which I am very much interested personally. I happen to represent a constituency in Scotland where shale oil is produced, and there the same point in which he was interested, in regard to encouraging the production of oil from indigenous sources, arises. I remember very clearly that the justification for the rise in the rate of taxation on oil was on Revenue grounds, but with the important sideline that by giving a preference at the same time to the oil produced from indigenous sources, we should encourage that industry. Therefore, while both the hon. Member and I would be glad to see the production of oil from coal encouraged, we cannot say that the whole purpose of this duty was to provide a large measure of protection for that industry. I would point out that if the Amendment were accepted, it would greatly worsen the position of the home industry, because it would considerably reduce the amount of preference which is given at present, and I assume, therefore, that the hon. Member's contribution was in the nature of a demonstration rather than a serious intention to support an Amendment which would only have the effect of lessening the preference given to the coal industry and the home shale-oil industry, which have considerably benefited from that preference.
    The very cogent reason why my right hon. Friend cannot accept this Amendment is because of its financial effect. The effect of these two Amendments, taken together, would be to reduce the duty on light hydro-carbon oils and heavy oil used as road fuel, that is, Diesel oil, to 7d. a gallon instead of increasing it to 9d., the duty on other heavy oils remaining at 1d. The loss of revenue from such a proposal would be approximately £10,000,000. It has already been made plain that the Chancellor of the Exchequer expects to obtain £5,000,000 this year from the increase in the oil duty, and if instead of the increase it was reduced by the amount proposed in the Amendments, the loss would be £5,000,000, the other way. While this

    731
    may not appeal to all hon. Members in the same way as it does to my right hon. Friend, I can assure them that it is a very cogent reason why the Amendments should not be accepted.
    A word on history. We have had a good deal of history to-day, some good and some bad. The history of the origin of the oil tax has been a little mixed in its presentation. In point of fact, the Road Fund never really had anything to do with the present tax on petrol, but was fed by the Motor Licence Duty. The petrol tax, which was introduced in 1928 by the right hon. Gentleman the Member for Epping (Mr. Churchill), whose name has been on the lips of several hon. Members this afternoon, was introduced at a time when, as the hon. Member for South Bradford (Mr. Holdsworth) pointed out, we required further revenue for the de-rating scheme. The Road Fund was related only to the Motor Licence Duty. The Road Fund still exists, but, as the House knows, what has been changed there is the source of its revenue.
    Mr. Benjamin Smith: And its destination.
    Lieut.-Colonel Colville: There are different views upon its destination, which I will not enter into now. The question of the Road Fund was decided by Parliament in the Finance Act, 1936, and I do not think we can reopen that whole discussion now.
    The reason for selecting this oil duty is one upon which I must spend a few moments. It relates to the history of the oil duty, and to the effect we have seen of the various additions which have been made to the oil duty. In 1928 there was the original duty of 4d; in 1931 there was an increase of 2d, and in the September Budget of that same year it was increased by a further 2d, bringing it up to the total of 8d. at which it has remained until the present time. Then again, in 1933, the then Chancellor of the Exchequer put a penny a gallon on the heavy oil, which includes kerosene or paraffin, lubricating oil, and fuel oil, and this was done by reducing the rebate from 8d. to 7d. Again, in 1935, the then Chancellor of the Exchequer, now the Prime Minister, taxed Diesel oil, which is the heavy oil used for motor vehicles, at 8d. a gallon, equally with petrol. So we have had various changes
    732
    during that period of years, but over that period the consumption of oil has gone steadily up. I will give the House some figures to show that, and I will then come to the question of price.
    In the year 1929–30, when a duty of 4d. was in force, the quantity of light oils, including Diesel oil, taxed was 903,000,000 gallons; in 1932–33, when the tax was up to 8d., the amount was just over 1,000,000,000 gallons; in 1936–37, with the tax still at 8d., it was 1,352,000,000 gallons; and in 1937–38 it was estimated at 1,416,000,000 gallons. The hon. Member for Llanelly said that we are seeking to put a prohibitive duty on heavy oils, but I think that was only a figure of speech, because there has been an immense increase in the quantity of imported oils during these years when the duty has been increased for Revenue reasons, and the increase has not checked the consumption of oil in this country. I should like to look at the price of petrol during the same period; that is really the kernel of our argument in demonstrating why we believe this tax can be borne without excessive hardship. We do not pretend there is not some burden attached to it—we admit that there is a burden attached to every fresh tax—but I do not think undue hardship will be inflicted by the burden which we are now imposing.
    Here is the price position: In March, 1929, when a duty of 4d. was being applied, the retail price of grader petrol from the pump was 1s. 7d. per gallon. I will take, not each year, but years which fairly illustrate the price movement. In 1931, also in March, with the same rate of duty, the price was Is. 2½d.
    Mr. Benjamin Smith: Do you say that was the average price for that year?
    Lieut.-Colonel Colville: No, only at that date. As I had given the price on 1st March, 1929, I gave the price in March, 1931. There are seasonal fluctuations.
    Mr. Smith: The average price was much above that.
    Lieut.-Colonel Colville: I took the comparable month. On 1st March, 1929, the price was 1s. 7d.; on 3rd March, 1931, is. 2½d., the same rate of duty applying. On 14th September, 1932, the price was is. 7½d.; there was a higher rate of duty

    733
    by then, the second Budget of 1931 having been passed. By May, 1933, the price had fallen to 1s. 5d., although the same rate of duty applied. In March, 1934, the price was 1s. 5d., while the rate of duty was still 8d. In April of last year the price was 1s. 7½d. and in February of this year it had fallen to 1s. 6½d. Since the duty now in operation was applied the price has again risen by a penny to 1s. 7½d., which is exactly the same as in April of last year.
    Mr. Smith: Then the industry must never benefit by price fluctuations?
    Lieut.-Colonel Colville: My point is that this does demonstrate that this taxation, which has been applied by stages during this period of years, has not had a crippling effect upon the industry, that the price of petrol has moved up and down for commercial and other reasons, and that to-day the price, with this additional taxation, is not greater than it was at this time a year ago. There have been much wider fluctuations than a penny at times when there was no variation at all in the duty. I therefore say again that while we do not claim that there is not some burden in this additional duty, the record of consumption and the record of price over a long period bear out my right hon. Friend's view that in the present circumstances, when he is looking for revenue, this duty on oil can be applied without producing an excessive hardship, and we believe that it will be accepted by the general public as a wise measure.
    The last time that the right hon. Member for Caithness (Sir A. Sinclair) spoke on this subject he raised a specific point which I should like to answer. He said there was actual discrimination between the Diesel oil used by locomotives on railways and the Diesel oil used by road vehicles the one being taxed and the other not taxed. I would point out that at this stage, at any rate, it cannot be said that this difference can have any serious effect, because the employment of oil-driven locomotives upon railways is still in an experimental stage. Out of a total of 20,000 locomotives fewer than 100 are of the Diesel-engine type, and therefore the total consumption of Diesel oil by the railway companies is negligible.
    Mr. Holdsworth: Would it not be as logical to say to the man who has only one lorry, "We will let you off the duty
    734
    while the man who has 10 lorries shall pay it "?
    Lieut.-Colonel Colville: The point is that the distinction has not operated to the disadvantage of one set of users as compared with the other, because so few locomotives are of the Diesel-engine type. The justification of our action rests on this, that my right hon. Friend has to find £30,000,000 by taxation; he is finding much the larger part of it by direct taxation; he is increasing only two indirect taxes, those upon oil and tea. In applying those taxes he has to review the whole field of taxation and consider how he can fairly get his revenue and yet not unduly damage industry or affect the interests of consumers. Having regard to the record of prices and consumption during the whole period in which the oil duties have been applied, we say that this is a burden which can reasonably be borne in the present circumstances.
    4.51 p.m.
    Mr. Pethick-Lawrence: I think those who have listened to the right hon. and gallant Gentleman defending this duty can scarcely be of opinion that he has made out a good case for the Government. We on these benches do not like this increase, because it is not merely an indirect tax but an indirect tax which is of a particularly injurious kind. Although it may be reasonable to put a certain amount of taxation upon oil, there does come a point beyond which we ought not to go. Perhaps the hon. Member for Kidderminster (Sir J. Wardlaw-Milne) will do me the honour of waiting to hear what I have to say in reply to him.
    Sir J. Wardlaw-Milne: I was leaving only because I had been called away.
    Mr. Pethick-Lawrence: I will take the hon. Member's speech first. He said that we might go too far, and I thought he was going to put forward an argument with which I should have sympathy, that though there might be some case for putting on a certain amount of taxation, we must not go beyond a certain point, but, as far as I could make out, what he wished to convey was that we must not go too far in making roads. There, is not the smallest suggestion that the proceeds of this taxation are going to make roads. The Financial Secretary has pointed out that that was not the origin of the tax, and there has not been

    735
    a single suggestion by the Chancellor of the Exchequer or the Financial Secretary that the purpose of imposing this duty is to enable more roads to be made. I think there is a very good case for extending the main roads of the country, extending them in districts which are now covered by second-class roads. The statement of the hon. Member that we ought not to go too far is thoroughly applicable in the case of the taxation of oil, because when it is at the figure to which the Chancellor of the Exchequer is proposing to raise it it really becomes penal taxation upon industry, and more harm is done to the income of the country as a whole than is gained in revenue by the State.
    I should like to give an illustration from a somewhat analogous case. There was a time when Chancellors of the Exchequer took the whole surplus revenue from the Post Office and it was rising year by year, but eventually Lord Bridgeman and others were appointed as a committee to investigate the question, and they came to the conclusion that it was thoroughly unsound for the State to take the surplus revenue from what was an industry serving the purposes of the public. They said that the State, after taking a certain sum every year—I think in the neighbourhood of £10,000,000 or £11,000,000—ought to stop there, and that any additional revenue which the industry was able to make ought to go to the improvement of the industry, either in giving benefits to the public or in improving the conditions of those engaged in the service. They said that the amount the State took from an industry of that public character ought not to go on increasing every year. The transport industry renders a very similar service to the public to that given by the Post Office, and the argument which Lord Bridgeman and his colleagues found of strong avail in the case of the Post Office applies equally, in our opinion, to the road services.
    It is no argument to say that the price of petrol has been coming down, apart from taxation, and that therefore the duty is only keeping it at about the old level. In the first place I do not know whether it is altogether true to say that the price has been coming down, but, if it be true, that fall in price ought to be of great value in enabling the services given to the public to be bettered. To say that any drop in the price of petrol
    736
    should be immediately mopped up by the Exchequer, and that this taxation upon oil is to go on increasing as the price falls, seems to be an entirely fallacious argument. Not only is this a tax upon industry which is injurious to the public, but it is a discriminatory tax. The Financial Secretary tried to pretend that we need not pay any attention to that argument, because the discrimination, though a large one in rate, did not have very considerable effect owing to the fact that the railways use this oil only to a very small extent. I cannot see that that argument is at all sound. If of two competitive users of oil one is to get his oil at a very much lower rate than the other, it is a very unsatisfactory position. It is a well known canon of taxation that it ought to apply equally to competitive goods and competitive services and that one ought not to be favoured at the expense of the other.
    Though I would not go so far as to say that the whole of the oil duty ought to be abolished, I do say that it would be very much better if some of the taxation at present levied upon oil were passed on to other things. I believe in the principle of the taxation of wealth rather than the taxation of industry. I believe it leads to the development of the country, and that it is what is required to enable us to utilise to the full the resources of potential wealth among our people. Therefore, I myself, and I think my hon. Friends behind me, will take this course, that we shall vote for this Amendment for the reduction of the duty from 8d. to 7d. The second Amendment concerning the deduction of the rebate is consequential, and if we are defeated on this first Amendment we shall not, therefore, vote on the second one, but vote against the main Resolution which imposes the increase.
    5.0 p.m.
    Mr. Assheton: I want to make only a very small point in relation to what the right hon. Gentleman opposite has just been saying and to the speech of my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne). This taxation is to increase the revenue by £5,300,000. Though it is true that the petrol tax has no relation to the expenditure on roads, nevertheless I call the attention of the House to the significant fact that we shall now have £5,300,000 additional taxation

    737
    of petrol on the one side, and that on the other side we are budgeting for an additional expenditure this year of £6,500,000 on roads. That fact seems to have escaped the attention of most Members.
    Mr. H. G. Williams: I would point out that last year a good deal of money was taken out of the old pool—about £5,500,000—and that this year they are taking a very much smaller sum, and although this year is appears as £6,500,000, it is really only an increase of about £1,000,000.
    Mr. Assheton: Yes, the actual expenditure has gone up by about £2,000,000 or £3,000,000 and the estimates are up by £6,500,000. There is a great deal of anxiety throughout the country, particularly among local authorities, at the extravagant expenditure which is going on in connection with the roads. At a time like this when we are obliged to spend an enormous amount of money on our rearmament programme, we do not want to cut down our social services if we can possibly help it. We have to see where the money is going, and road expenditure seems to be a way in which we can reasonably economise. I do not think that the anxiety which people are feeling in the City and in business circles is sufficiently appreciated. We are working up to a position similar to that of 1931, judging by the way in which expenditure has gone up in the last few years. We are spending £200,000,000 more on Civil Estimates than we were 10 years ago. I do not propose to make any further remarks on this subject now but I hope to have the opportunity on the Second Reading of the Finance Bill of saying something on the subject of expenditure. We have to watch expenditure as well as taxation.
    5.3 p.m.
    Mr. H. G. Williams: I do not differ from my hon. Friends as to the vital necessity of economy but I would point out that the figures presented in the Estimates this year create a misleading impression of the total expenditure to be incurred this year by Treasury grants on roads. I am going to vote for this Resolution because we have to find the money in the existing circumstances, and I am riot in a position, as a private Member, to propose an alternative, but Chancellors of the Exchequer must realise that they cannot look upon the Petrol Duty as one which they can increase indefinitely. It
    738
    was left at fourpence by my right hon. Friend the Member for Epping (Mr. Churchill) who introduced it in order to finance derating. Subsequent Chancellors have found it an easy way to raise revenue without at the same time arousing much protest.
    It is true that the price of petrol has fallen very much in recent years, and that the burden of the tax has not been felt, but it is not certain by any means that crude petroleum will continue indefinitely at its present relatively low level. If there is increased prosperity in the United States, the price of crude petroleum will rise very sharply and we shall find the taxes that we have imposed being really reflected in the retail price. It is also true that the bulk of the Petrol Duty has been absorbed, in the main, through the fall in price, and that we have been left very much where we were, but it is an extraordinary thing to reflect, when you fill up your petrol tank, that half of what you are paying is tax. It is a punitive tax upon the means of locomotion and of pleasure, and upon an important industrial development. Although we have to be careful of our expenditure I should have thought that road development which would facilitate more traffic, and, therefore, more revenue, was a sound policy upon economic grounds. I think it is better to spend a little more on the roads and to cut the social services, if you are seeking to bring about the maximum benefit to the people in the long run —but I must not get into a Second Reading speech. I was merely following the hon. Gentleman, and I think we are entitled to follow previous remarks.
    The Chancellor of the Exchequer ought to realise that there is very considerable discontent about the penny increase in the Petrol Duty. We, naturally, do not pay undue attention to the communications which we receive when we know that they have some common origin, but I notice on this occasion that communications are coming in the form of telegrams, and are a little more imperative than the normal communications we receive from our constituents. They have taken on a directness which is a little unusual; in fact, our constituents seem on this issue to be telling us, in modern parlance, where we ought to get off. It is some indication of the feeling which exists, and the Chancellor should warn his colleagues that the time has come to go a little slow,

    739
    particularly the Minister of Health, who, following the Russian example, has now invented a five-year plan of extravagance. It might be as well for him to go slow so that we might get back to a fourpenny duty on petrol next year.
    5.7 p.m.
    Mr. David Adams: I join with those who have spoken in condemnation of the petrol tax, which is a tax on industry, a discriminatory tax and one which removes further from the people the possibilities of enjoying motoring as a natural entertainment and amusement. In this respect, it is a tax upon the health of the general community. Nothing is more apparent than the difference between the position of the working classes in America and in Great Britain in this regard. In the United States, almost without exception, excluding only the very poorest of the coloured people, every family has a motor car. Every industry, including mining, agriculture and iron and steel, makes provision at the works for the motor cars of the workmen. This development is due to the fact that petrol and the motor car are not taxed in America as they are in Great Britain. When I was there last year the price of petrol varied from 11 to 20 cents, the equivalent of 5½d. to a maximum of 10d. per gallon. There was a small petrol war in California. The tax upon petrol throughout the State was but four cents, or 2d. per gallon. The horse power tax in the States was a negligible amount. Workmen look upon the motor car as one of their normal adjuncts enabling them to take their family to the country at week-ends during the summer and to expand their entertainment and healthy enjoyment to a degree quite unknown in this country.
    If we are to proceed upon a basis of taxing petrol and the industry in successive increases, we are removing further from the workers the great possibilities
    which are realised in the United States under general social conditions comparable to what we have here. It is not that the American workman receives a relatively higher remuneration for his services than does his British counterpart but that there are the added facilities for travel which this tax on petrol has helped to destroy in this country. The tax is discriminatory and this fact is surprising, as it violates all sound canons of taxation that there should not be discrimination and that one industry should not suffer by the advantage accorded to another. It is a poor argument for the Financial Secretary to urge that the railways have not taken advantage of the cheaper price of petrol, there were so few Diesel engines on the road. The advantage should not have been placed at their disposal and in due time without doubt they will undoubtedly benefit from it.
    This is a tax upon the workers' purses and upon the industry. Though there has been an increased consumption of petrol despite the rise in the rate of taxation, it can justly be concluded that if the tax had been reduced or had been left stationary there would have been a substantial rise in the amount of petrol consumption with the consequent expansion of all phases of the motor and motoring industry in this country. We admit the difficulties of the Chancellor of the Exchequer in the matter but I suggest there were numerous other directions in which he could have turned. Whatever his difficulties be next year, if he remains in his present office, we hope that the taxation of petrol and spirit and other taxes upon the amusement and entertainment and health of the people will be downward and not as threatened in an upward direction.
    Question put, "That the word ' nine-pence ' stand part of the Resolution."
    The House divided: Ayes, 228; Noes, 110.

    Division No. 191.]

    AYES.

    [5.13 p.m.

    Acland-Troyte, Lt.-Col. G. J.

    Balfour, Capt. H. H. (Isle of Thanet)

    Bower, Comdr. R. T.

    Adams, S. V. T. (Leeds, W.)

    Balniel, Lord

    Broadbridge, Sir G. T.

    Agnew, Lieut.-Comdr, P. G.

    Barclay-Harvey, Sir C. M.

    Brocklebank, Sir Edmund

    Albery, Sir Irving

    Barrie, Sir C. C.

    Brown, Brig.-Gen. H. C. (Newbury)

    Allen, Col. J. Sandeman (B'knhead)

    Beamish, Rear-Admiral T. P. H.

    Browne, A. C. (Belfast, W.)

    Anstruther-Gray, W. J.

    Beaumont, Hon. R. E. B. (Portsm'h)

    Bullock, Capt. M.

    Apsley, Lord

    Bernays, R. H.

    Burton, Col. H. W.

    Aske, Sir R. W.

    Bird, Sir R. B.

    Butcher, H. W.

    Asshaton, R.

    Blair, Sir R.

    Campbell, Sir E. T.

    Astor, Hon. W. W. (Fulham, E.)

    Bossom, A. C.

    Cartland, J. R. H.

    Baillie, Sir A. W. M.

    Boulton, W. W.

    Chamberlain, Rt. Hn. N. (Edgb't'n)

    Channon, H.

    Hope, Captain Hon. A. O. J.

    Rawson, Sir Cooper

    Chapman, Sir S. (Edinburgh, S.)

    Hopkinson, A.

    Rayner, Major R. H.

    Chorlton, A. E. L.

    Horsbrugh, Florence

    Reed, A. C. (Exeter)

    Clarke, Frank (Dartford)

    Howitt, Dr. A. B.

    Reid, Sir D. D. (Down)

    Clarke, Colonel R. S. (E. Grinstead)

    Hudson, Capt. A. U. M. (Hack., N.)

    Reid, W. Allan (Derby)

    Cobb, Captain E. C. (Preston)

    Hurd, Sir P. A.

    Ramer, J. R.

    Colfox, Major W. P.

    Hutchinson, G. C.

    Rickards, G. W. (Skipton)

    Colville, Lt.-Col. Rt. Hon. D. J.

    James, Wing-Commander A. W. H.

    Ropner, Colonel L.

    Conant, Captain R. J. E.

    Jones, L. (Swansea W.)

    Ross, Major Sir R. D. (Londonderry)

    Cook, Sir T. R. A. M. (Norfolk, N.)

    Kerr, H. W. (Oldham)

    Ross Taylor, W. (Woodbridge)

    Cooke, J. D. (Hammersmith, S.)

    Keyes, Admiral of the Fleet Sir R.

    Rowlands, G.

    Cooper, Rt. Hn. T. M. (E'nburgh, W.)

    Knox, Major-General Sir A. W. F.

    Royds, Admiral Sir P. M. R.

    Courthope, Col. Rt. Hon. Sir G. L.

    Lamb, Sir J. Q.

    Ruggles-Brise, Colonel Sir E. A.

    Cox, H. B. Trevor

    Lambert, Rt. Hon. G.

    Russell, Sir Alexander

    Critchley, A.

    Latham, Sir P.

    Russell, S. H. M. (Darwen)

    Croft, Brig.-Gen. Sir H. Page

    Law, Sir A. J. (High Peak)

    Salmon, Sir I.

    Crooke, Sir J. S.

    Leech, Sir J. W.

    Salt, E. W.

    Crookshank, Capt. H. F. C.

    Leighton, Major B. E. P.

    Samuel, M. R. A.

    Cruddas, Col. B.

    Levy, T.

    Shaw, Major P. S. (Wavertree)

    Culverwell, C. T.

    Lewis, O.

    Shaw, Captain W. T. (Forfar)

    Davison, Sir W. H.

    Liddall, W. S.

    Shepperson, Sir E. W.

    Dawson, Sir P.

    Llewellin, Colonel J. J.

    Simon, Rt. Hon. Sir J. A.

    De la Bère, R.

    Lloyd, G. W.

    Sinclair, Col. T. (Queen's U. B'lf'lt)

    Denman, Hon. R. D.

    Loftus, P. C.

    Smith, Bracewell (Dulwich)

    Doland, G. F.

    Lyons, A. M.

    Smith, L. W. (Hallam)

    Dugdale, Captain T. L.

    Mabane, W. (Huddersfield)

    Somerset, T.

    Dunglass, Lord

    M'Connell, Sir J.

    Somervell. Sir D. B. (Crewe)

    Ellis, Sir G.

    MeCorquodale, M. S.

    Somerville, A. A. (Windsor)

    Elliston, Capt. G. S.

    McKie, J. H.

    Spears, Brigadier-General E. L.

    Emery, J. F.

    Macqulsten, F. A.

    Spens, W. P.

    Emrys-Evans, P. V.

    Maitland, A.

    Stanley, Rt. Hon. Lord (Fylde)

    Entwistle, Sir C. F.

    Makins, Brig.-Gen. E.

    Strauss, E. A. (Southwark, N.)

    Erskine-Hill, A. G.

    Manningham-Buller, Sir M.

    Strauss, H. G. (Norwich)

    Evans, Capt. A. (Cardiff, S.)

    Margesson, Capt. Rt. Hon. H. D. R.

    Stuart, Hon. J. (Moray and Nairn)

    Everard, W. L.

    Maxwell, Hon. S. A.

    Tasker, Sir R. I.

    Fleming, E. L.

    Mayhew, Lt.-Col. J.

    Taylor, C. S. (Eastbourne)

    Fox, Sir G. W. G.

    Meller, Sir R. J. (Mitcham)

    Taylor, Vice-Adm. E. A. (Padd., S.)

    Fremantle, Sir F. E.

    Mellor, Sir J. S. P. (Tamworth)

    Thomas, J. P. L.

    Furness, S. N.

    Mills, Sir F. (Leyton, E.)

    Titchneld, Marquess of

    Fyfe, D. P. M.

    Mills, Major J. D. (New Forest)

    Tree, A. R. L. F.

    Gledhill, G.

    Mitcheson, Sir G. G.

    Tryon, Major Rt. Hon. G. C.

    Gluckstein, L. H.

    Moore, Lieut.-Col. Sir T. C. R.

    Tufnell, Lieut.-Commander R. L.

    Glyn, Major Sir R. G. C.

    Morgan, R. H.

    Turton R H

    Gower, Sir R. V.

    Morris, O. T. (Cardiff, E.)

    Wakefield, W. W.

    Graham, Captain A. C. (Wirral)

    Morris-Jones, Sir Henry

    Walker-Smith Sir J.

    Grant-Ferris, R.

    Morrison, Rt. Hon. W. S. (Cirancester)

    Wallace, Capt. Rt. Hon. Euan

    Grattan-Doyle, Sir N.

    Munro, P.

    Ward, Lieut.-Col. Sir A. L. (Hull)

    Gretton. Col. Rt. Hon. J.

    Neven-Spence, Major B. H. H.

    Wardlaw-Milne, Sir J. S.

    Gridley, Sir A. B.

    O'Connor, Sir Tersnce J.

    Waterhouse, Captain .

    Grimston, R. V.

    O'Neill, Rt. Hon. Sir Hugh

    Watt, Major G. S. Harvie

    Gritten, W. G. Howard

    Palmer, G. E. H.

    Wells, S. R.

    Guest, Han. I. (Brecon and Radnor)

    Patrick, C. M.

    Whiteley, Major J. P. (Buckingham)

    Guinness, T. L. E. B.

    Peake, O.

    Wickham, Lt.-Col. E. T. R.

    Hambro, A. V.

    Peat, C. U.

    Williams, H. G. (Croydon, S.)

    Hannon, Sir P. J. H.

    Perkins, W. R. D.

    Willoughby de Eresby, Lord

    Harbord, A.

    Pilkington, R.

    Wilson, Lt.-Col. Sir A. T. (Hitchin)

    Harvey, Sir G.

    Ponsonby, Col. C. E.

    Windsor-Clive, Lieut.-Colonel G.

    Haslam, Henry (Horncastle)

    Porritt, R. W.

    Wise, A. R.

    Haslam, Sir J. (Bolton)

    Power, Sir J. C.

    Withers, Sir J. J.

    Hely-Hutchimon, M. R.

    Pownall, Lt.-Col. Sir Astheton

    Womersley, Sir W. J.

    Heneage, Lieut.-Colonel A. P.

    Procter, Major H. A.

    Wood, Hon. C. I. C.

    Herbert, A. P. (Oxford U.)

    Purbrick, R.

    Wragg, H.

    Herbert, Major J. A. (Monmouth)

    Radford, E. A.

    Wright, Wing-Commander J. A. C.

    Higgs, W. F.

    Ramsay, Captain A. H. M

    Hoare, Rt. Hon. Sir S.

    Ramsbotham, H.

    TELLERS FOR THE AYES.—

    Holmes, J. S.

    Rathbone, J. R. (Bodmin)

    Mr. Cross and Major Sir James

    Edmondson.

    NOES.

    Acland, R. T. D. (Barnstaple)

    Cluse, W. S.

    Garro Jones, G. M.

    Adams, D. (Consett)

    Cocks, F. S.

    George, Major G. Lloyd (Pembroke)

    Adamson, W. M.

    Cove, W. G.

    Green, W. H. (Deptford)

    Alexander, Rt. Hon. A. V. (H'lsbr.)

    Cripps, Hon. Sir Stafford

    Greenwood, Rt. Hon. A.

    Ammon, C. G.

    Daggar, G.

    Griffith, F. Kingsley (M'ddl'sbro, W.)

    Anderson, F. (Whitehaven)

    Dalton, H.

    Griffiths, G. A. (Hemsworth)

    Attlee, Rt. Hon. C. R.

    Davidson, J. J. (Maryhill)

    Griffiths, J. (Llanelly)

    Banfield, J. W.

    Davies, R. J. (Westhoughton)

    Groves, T. E.

    Barnes, A. J.

    Davies, S. O. (Merthyr)

    Guest, Dr. L. H. (Islington, N.)

    Batey, J.

    Day, H.

    Hall, J. H. (Whitechapel)

    Bellenger, F. J.

    Dobbie, W.

    Hardie, Agnes

    Benson, G.

    Edwards, A. (Middlesbrough E.)

    Harris, Sir P. A.

    Buchanan, G.

    Edwards, Sir C. (Bedwellty)

    Harvey, T. E. (Eng. Univ's.)

    Cape, T.

    Foot D. M.

    Hayday, A.

    Charleton, H, C.

    Gallacher, W.

    Henderson, J. (Ardwick)

    Chater, D.

    Gardner, B. W.

    Hills, A. (Pontefract)

    742

    743

    Holdsworth, H.

    Marklew, E.

    Smith, Ben (Rotherhilhe)

    Hollins, A.

    Marshall, F.

    Smith, E. (Stoke)

    Hopkin, D.

    Maxton, J.

    Smith, Rt. Hen. H. B. Lees-(K'ly)

    Jones, A. C. (Shipley)

    Messer, F.

    Smith, T. (Normanton)

    Jones, Sir H. Haydn (Merioneth)

    Montague, F.

    Sorensen, R. W.

    Jones, J. J. (Silvertown)

    Morrison, R. C. (Tottenkam, N.)

    Stephen, C.

    Jones, Morgan (Caerphilly)

    Parker, J.

    Stewart, W. J. (H'ght'n-le-Sp'ng)

    Kelly, W. T.

    Parkinson, J. A.

    Summerskill, Edith

    Kennedy, Rt. Hon. T.

    Pearson, A.

    Taylor. R. J. (Morpeth)

    Kirby, B. V.

    Pethick-Lawrance, Rt. Hon. P. W.

    Thorne, W.

    Lansbury, Rt. Hon. G.

    Quibell, D. J. K.

    Thurtle, E.

    Lathan, G.

    Richards, R. (Wrexham)

    Tinker, J. J.

    Leach, W.

    Ritson, J.

    Viant, S. P.

    Lee, F.

    Roberts, W. (Cumberland, N.)

    Walkden, A. G.

    Leslie, J. R.

    Rothschild, J. A. de

    Watkins, F. C.

    Logan, D. G.

    Salter, Dr. A. (Bermondsey)

    Williams, T. (Don Valley)

    Lunn, W.

    Seely, Sir H. M.

    Windsor, W. (Hull, C.)

    Macdonald, G. (Ince)

    Sexton. T. M.

    Woods, G. S. (Finsbury)

    MeEntee, V. La T.

    Shinwell, E.

    Young, Sir R. (Newton)

    McGovern, J.

    Silkin, L.

    MacLaren, A.

    Silverman, S. S.

    TELLERS FOR THE NOES.—

    Mr. Whiteley and Mr. John.

    Question put, "That this agree with the Committee in the said Resolution."
    The House divided: Ayes, 233; Noes, 111.

    Division No. 192.]

    AYES.

    [5.21 p.m.

    Acland-Trayte, Lt.-Col. G. J.

    Dawson, Sir P.

    James, Wing-Commander A. W. H.

    Adams, S. V. T. (Leeds, W.)

    De la Bère, R.

    Jones, L. (Swansea W.)

    Agnew, Lieut.-Comdr. P. G.

    Denman, Hon. R. D.

    Kerr, H. W. (Oldham)

    Albery, Sir Irving

    Doland, G. F.

    Keyes, Admiral of the Fleet Sir R.

    Allen, Col. J. Sandeman (B'knhud)

    Dugdale, Captain T. L.

    Knox, Major-General Sir A. W. F.

    Anstruther-Gray, W. J.

    Dunglass, Lord

    Lamb, Sir J. Q.

    Apsley, Lord

    Eastwood, J. F.

    Lambert, Rt. Hon. G.

    Aske, Sir R. W.

    Ellis, Sir G.

    Latham, Sir P.

    Assheton, R.

    Elliston, Capt. G. S.

    Law, Sir A. J. (High Peak)

    Astor, Han. W. W. (Fulham, E.)

    Emery, J. F.

    Leech, Sir J. W.

    Baillie, Sir A. W. M.

    Emrys-Evans, P. V.

    Leighton, Major B. E. P.

    Balfour, Capt. H. H. (Isle of Thanet)

    Entwistle, Sir C. F.

    Lennox-Boyd, A. T. L.

    Balniel, Lord

    Erskine-Hill, A. G.

    Levy, T.

    Barclay-Harvey, Sir G. M.

    Evans, Capt. A. (Cardiff, S.)

    Lewis, O.

    Barrio, Sir C. C.

    Everard, W. L.

    Liddall, W. S.

    Beamish, Rear-Admiral T. P. H.

    Fildes, Sir H.

    Llewellin, Colonel J. J.

    Beaumont, Hon. R. E. B. (Portsm'h)

    Fleming, E. L.

    Lloyd, G. W.

    Bernays, R. H.

    Fox, Sir G. W. G.

    Loftus, P. C.

    Birchall, Sir J. D.

    Fremantle, Sir F. E.

    Lyons, A. M.

    Bird, Sir R. B.

    Furness, S. N.

    Mabane, W. (Huddersfield)

    Blair, Sir R.

    Fyfe, D. P. M.

    M'Connell, Sir J.

    Bossom, A. C.

    Gledhill, G.

    McCorquodale, M. S.

    Boulton, W. W.

    Gluckstein, L. H.

    McKie, J. H.

    Bower, Comdr. R. T.

    Glyn, Major Sir R. G. C.

    Maitland, A.

    Broadbridge, Sir G. T.

    Gower, Sir R. V.

    Makins, Brig.-Gen. E.

    Brocklebank, Sir Edmund

    Graham, Captain A. C. (Wirral)

    Manningham-Buller, Sir M.

    Brown, Brig.-Gen. H. C. (Newbury)

    Grant-Ferris, R.

    Margesson, Capt. Rt. Hon. H. D. R.

    Browne, A. C. (Belfast, W.)

    Grattan-Doyle, Sir N.

    Maxwell, Hon. S. A.

    Bullock Capt M

    Gretton, Col. Rt. Hon. J.

    Mayhew, Lt.-Col. J.

    Burton. Col. H. W.

    Gridley, Sir A. B.

    Meller, Sir R. J. (Mitcham)

    Butcher H. W.

    Grimston, R. V.

    Mellor, Sir J. S. P. (Tamworth)

    Campbell Sir E T.

    Gritten, W. G. Howard

    Mills, Sir F. (Leyton, E.)

    Cartland, J. R. H.

    Guest, Hon. I. (Brecon and Radnor)

    Mills, Major J. D, (New Forest)

    Chamberlain, Rt. Hn. N. (Edgb't'n)

    Guinness, T. L. E. B.

    Mitcheson, Sir G. G.

    Channon, H.

    Hacking, Rt. Hon. D. H.

    Moore, Lieut.-Col. Sir T. C. R.

    Chapman, Sir S. (Edinburgh, S.)

    Hambro, A. V.

    Morgan, R. H.

    Chorlton, A. E. L.

    Hannon, Sir P. J. H.

    Morris, O. T. (Cardiff, E.)

    Clarke, Frank (Dartford)

    Harbord, A.

    Morris-Jones, Sir Henry

    Clarke, Colonel R. S. (E. Grinstead)

    Harvey, Sir G.

    Morrison, Rt. Hon. W. S. (Cirencester)

    Cobb, Captain E. C, (Preston)

    Haslam, Henry (Horncastle)

    Munro, P.

    Colfox. Major W. P.

    Haslam, Sir J. (Bolton)

    Neven-Spence, Major B. H. H.

    Colville, Lt.-Col. Rt. Hon. D. J.

    Hely-Hutchinson, M. R.

    O'Connor, Sir Terence J.

    Conant, Captain R. J. E.

    Heneage, Lieut.-Colonel A. P.

    O'Neill, Rt. Hon. Sir Hugh

    Cook, Sir T. R. A. M. (Norfolk, N.)

    Hepburn, P. G. T. Buchan-

    Palmer, G. E. H.

    Cooks, J. D. (Hammersmith, S.)

    Herbert, A. P. (Oxford U.)

    Patrick, C. M.

    Cooper, Rt. Hn. T. M. (E'nburgh, W.)

    Higgs, W. F.

    Peake, O.

    Courthope, Col. Rt. Hon. Sir G. L,

    Hoare, Rt. Hon. Sir S.

    Peat, C. U.

    Cox, H. B. Trevor

    Holmes, J. S.

    Perkins, W. R. D.

    Critchley, A.

    Hope, Captain Hon. A. O. J.

    Peters, Dr. S. J.

    Croft, Brig.-Gen. Sir H. Page

    Hopkinson, A.

    Pilkington, R.

    Crookahank, Capt. H. F. C.

    Horsbrugh, Florence

    Ponsonby, Col. C. E.

    Cross, R. H.

    Howitt, Dr. A. B.

    Porritt, R. W.

    Cruddas, Col. B.

    Hudson, Capt. A. U. M. (Hack., N.)

    Power, Sir J. C.

    Culverwell, C. T.

    Hurd, Sir P. A.

    Pownall, Lt.-Col. Sir Assheton

    Davison, Sir W. H.

    Hutchinson, G. C.

    Procter, Major H. A.

    Purbrick, R.

    Shaw, Captain W. T. (Forfar)

    Walker-Smith, Sir J.

    Radford, E. A.

    Shepperson, Sir E. W.

    Wallace, Capt. Rt. Hon. Euan

    Ramsay, Captain A. H. M.

    Simon, Rt. Hon. Sir J. A.

    Ward, Lieut.-Cot. Sir A. L. (Hull)

    Ramsbotham, H.

    Sinclair, Col. T. (Queen's U. B'lf'st)

    Wardlaw-Milne, Sir J. S.

    Rathbone, J. R. (Bodmin)

    Smith, L. W. (Hallam)

    Waterhouse, Captain C.

    Rawson, Sir Cooper

    Somerset, T.

    Watt, Major G. S. Harvie

    Rayner, Major R. H.

    Somervell, Sir D. B. (Crewe)

    Wayland, Sir W. A.

    Reed, A. C. (Exetor)

    Somerville, A. A. (Windsor)

    Wells, S. R.

    Reid, Sir O. D. (Down)

    Spears, Brigadier-General E. L.

    Whitelay, Major J. P. (Buckingham)

    Reid, W. Allan (Darby)

    Spans. W. P.

    Wickham, Lt.-Col. E. T. R.

    Renter, J. R.

    Stanley, Rt. Hon. Lord (Fylde)

    Williams, H. G. (Croydon, S.)

    Rickarde, G. W. (Skipton)

    Strauss, E. A. (Southwark, N.)

    Willoughby de Eresby, Lord

    Ropner, Colonel L.

    Strauss, H. G. (Norwich)

    Wilton, Lt.-Col. Sir A. T. (Hitchin)

    Ross, Major Sir R. D. (Londonderry)

    Stuart, Hon. J. (Moray and Nairn)

    Windsor-Clive, Lieut.-Colonal G.

    Ron Taylor, W. (Woodbridge)

    Tasker, Sir R. I.

    Wise, A. R.

    Rowlands, G.

    Taylor, C. S. (Eastbourne)

    Withers, Sir J. J.

    Royds, Admiral Sir P. M, R.

    Taylor, Vice-Adm. E. A. (Padd., S.)

    Womarsley, Sir W. J.

    Ruggles-Brise, Colonel Sir E. A.

    Thomas, J. P. L.

    Wood, Hon. C. I. C.

    Russell, Sir Alexander

    Titchfield, Marquess of

    Wragg, H.

    Russell, S. H. M. (Darwen)

    Tree, A. R. L. F.

    Wright, Wing-Commander J. A. C.

    Salmon, Sir I.

    Tryon, Major Rt. Hon. G. C,

    Salt, E. W.

    Tufnell, Lieut.-Commander R. L.

    TELLERS FOR THE AYES.—

    Samuel, M. R. A.

    Turton, R. H.

    Major Sir James Edmondson

    Shaw, Major P. S. (Wavertree)

    Wakefield, W. W.

    and Major Herbert.

    NOES.

    Acland, R. T. D. (Barnstapte)

    Guest, Dr. L. H. (Islington, N.)

    Parkinson, J. A.

    Adams, D. (Consatt)

    Hall, J. H. (Whitechapel)

    Pearson, A.

    Alexander, Rt. Hon. A. V. (H'lsbr.)

    Hardie, Agnes

    Pathick-Lawrence, Rt. Hon. F. W.

    Ammon, C. G.

    Harris, Sir P. A.

    Pritt, D. N.

    Anderson, F. (Whitehaven)

    Harvey, T. E. (Eng. Univ's.)

    Quibell, D. J. K.

    Attlee, Rt. Hon. C. R.

    Hayday, A.

    Richards, R. (Wrexham)

    Banfield, J. W.

    Henderson, J. (Ardwick)

    Riley, B.

    Barnes, A. J.

    Hills, A. (Pontefract)

    Ritson, J

    Batey, J.

    Holdsworth, H.

    Roberts, W. (Cumberland, N.)

    Ballanger, F. J.

    Hollins, A.

    Sailer, Dr. A. (Bermondsey)

    Benson, G.

    Hopkin, D.

    Seely,.Sir H. M.

    Buchanan, G.

    John, W.

    Sexton, T. M.

    Cape, T.

    Jones, A. C. (Shipley)

    Shinwell, E.

    Charleton, H. C.

    Jones, Sir H. Haydn (Merioneth)

    Silkin, L.

    Chater, D.

    Jones, J. J. (Silvertown)

    Silverman, S. S.

    Cluse, W. S.

    Jones, Morgan (Caerphilly)

    Smith, Ben (Rotherhithe)

    Cocks, F. S.

    Kelly, W. T.

    Smith, E. (Stoke)

    Cove, W. G.

    Kennedy, Rt. Hon. T.

    Smith, Rt. Hon. H. B. Lees- (K'ly)

    Cripps, Hon. Sir Stafford

    Kirby, B. V.

    Smith, T. (Normanton)

    Daggar, G.

    Lambury, Rt. Hon. G.

    Sorensen, R. W.

    Dalton, H.

    Lathan, G.

    Stephen, C.

    Davidson, J. J. (Maryhill)

    Leach, W.

    Stewart, W. J. (H'ght'n-le-Sp'ng)

    Davies, R. J. (Westhoughton)

    Lea, F.

    Summerskill, Edith

    Davies, S. O. (Merthyr)

    Leslie, J. R.

    Taylor, R. J. (Morpath)

    Day. H.

    Logan, D. G.

    Thorne, W.

    Dobbie, W.

    Lunn, W.

    Thurtle, E.

    Ede, J. C.

    Macdonald, G. (Ince)

    Tinker, J. J.

    Edwards, A. (Middlesbrough E.)

    McEntee, V. La T.

    Viant, S. P.

    Edwards, Sir C. (Bedwallty)

    McGovarn, J.

    Walkdan, A. G.

    Foot, D. M.

    MacLaren, A.

    Watkins, F. C.

    Gallacher, W.

    Marklaw, E.

    Whitaley, W. (Blaydon)

    Gardner, B. W.

    Marshall, F.

    Williams, T. (Don Valley)

    George, Major G. Lloyd (Pembroke)

    Maxton, J.

    Windsor, W. (Hull, C.)

    Green, W. H. (Deptford)

    Messer, F.

    Woods, G. S. (Finsbury)

    Greenwood, Rt. Hon. A.

    Montague, F.

    Young, Sir R. (Newton)

    Griffith, F. Klngtley (M'ddl'sbro, W.)

    Morrison, R. C. (Tottenham, N.)

    Griffiths, G. A. (Homsworth)

    Muff, G.

    TELLERS FOR THE NOES.—

    Griffiths, J. (Llanelly)

    Parker, J.

    Mr. Groves and Mr. Adamson.

    Third Resolution read a Second time.

    5.31 p.m.
    Mr. H. G. Williams: I beg to move, in line 4, to leave out "ninepence," and to insert "fourpence halfpenny."
    This Amendment raises a question of principle quite different from that which we were discussing on the last Resolution. We were then dealing primarily with a problem of revenue. Here we are dealing partly with a problem of revenue and partly with a problem of protecting
    746
    home production against foreign competition. We are now a protectionist country, and, that being so, my hon. Friends and I see no reason why power alcohol produced in this country should not be accorded a measure of protection over the foreign article. It will be noticed that this duty is not accompanied by a customs duty. That is explainable by the fact that this spirit, unless made under special regulations, would be liable to a much heavier duty than would apply to potent alcohol. As that would apply to

    747
    all imported alcohol, there is no necessity for it to be accompanied by a special duty. This power alcohol is an alternative to either benzol or petrol. Here is an article made in this country, partly from home-produced raw material and, as I understand, partly from imported raw material. Generally speaking, it is made from molasses, which may be imported or made from home-grown sugar beet. Alcohol is one of the easiest things in the world to produce. Nature has made the extraordinary provision that any kind of rotting rubbish will ultimately produce alcohol, but not always in the form desired.
    Alcohol is one of the things that could be produced internally on competitive terms with one of the derivatives of petroleum. Since we accord a protectionist duty of 8d.—now increased to 9d.—a gallon to the products of Billingham, the products of shale oil of Scotland, and benzol produced in our gas works, it seems to me quite wrong that in respect of power alcohol there should be no protection at all. I do not understand that. I do not know what reply the Chancellor may have. I am not an expert on this particular commodity. It may be argued that, even at a 9d. duty, it is in a more favourable position than petrol or benzol. The Chancellor may tell us that those who produce this commodity get what is called a rebate, but that rebate does not represent any financial advantage to them. Anybody familiar with the production in this country of excisable commodities knows that they are subject to special restrictions, and that to compensate for that they have a lower Excise Duty. Everyone familiar with the production of matches knows that there is a difference of 2d. per gross of boxes between the Excise Duty and the Customs Duty in order to compensate the British manufacturers for their trouble in carrying out the very difficult excise regulations. There is a reference made in the Resolution to the
    " regulations for the time being in force under Section thirteen of the Finance Act, 1924."
    If my information is accurate, the rebate is only sufficient to compensate for the expense to which they are put. I am told that this alcohol, in addition to being used for mixing with petrol, is also used extensively for the manufacture of chemicals, high explosives and artificial silk.
    748
    This duty is a very heavy duty on the raw material of a variety of other manufacturing industries. For good reasons of revenue, we have decided to submit the raw material of the motor car industry to a tax of 9d. per gallon if imported, while retaining it entirely free of duty if produced in this country; and that with the assent of every party in this House. On the last Amendment, the hon. Member for Llanelly (Mr. J. Griffiths) pleaded for a more extensive oil-from-coal policy, which is only conceivable under a complete remission of the duty on petrol produced in this country. Here we have an alternative product, which also uses a substantial amount of coal in its production and which is one of the things this country can develop in order to make it less dependent on imports. We propose to deprive that industry of the whole of its protection.
    The Treasury might say that the circumstances of this industry are such that they are able to produce a gallon of this commodity much more economically than Imperial Chemical Industries can produce a gallon of petrol at Billingham, and that, therefore, they do not think it desirable that this industry should have full remission. I am not asking for that. I am only asking that it should be subject to only half the duty of the imported commodity. I sought out information after we had decided to put this Amendment down, and it was represented to me that the industry is very much afraid that the plants which have been put down to produce this spirit will become idle if the duty goes on at the full rate. The advantage will be wiped out. It is only in recent years that the use of alcohol has been developed. There is a risk that if you wipe out the whole of its protection, production will cease, and that a great decrease of employment will result. It is true that this production is small as yet in relation to the vast importation.
    I do not know whether hon. Members often look at the Trade and Navigation Returns. We are now buying more in imported fuel than we are getting by exporting our own fuel. That is a complete reversal of the previous position. In pre-war days we obtained 10 times as much for exporting fuel as we had to pay for importing petrol. Last year we spent 10 or 15 per cent. more in buying petroleum products than we gained in exporting coal, coke and manufactured

    749
    fuels. That is the biggest change to our detriment in our economic situation that has occurred in the last 30 or 35 years. Here is a means of preventing that from becoming worse. We should not run the risk of completely destroying this, as yet, young industry. It may be urged that the industry is making good profits, and that the protection it enjoys is now too much. I do not know, but there should be some measure of protection, and it seems to me reasonable that the duty they have to bear should be half the duty on the imported product.
    I ask hon. Members to support me in this. [HON. MEMBERS: "In the Lobby? "] It is suggested that we shall run away. If, as the result of the Debate, I find some Members are prepared to go in for the cheap martyrdom of being beaten, we shall not go into the Lobby. [Interruption.] Hon. Members on my side enjoy much more freedom in voting against our party than hon. Members opposite. They exist under a party tyranny which Members on my side would not tolerate. Having said that, I hope that I shall receive a substantial measure of support. I hope the arguments I have advanced will induce the Chancellor to examine this problem afresh. I am not asking him—I do not expect him—to make this concession this afternoon. We all know that the Debate on the Report stage of the Budget Resolutions is to draw attention to certain features of the taxation proposals which hon. Members think undesirable, in order that the Chancellor may examine them and make some concession on the Committee stage of the Finance Bill. That is the time to make concessions; not now. In these circumstances, I hope I shall enjoy a substantial measure of support.
    5.45 p.m.
    Brigadier-General Sir Henry Croft: Hon. Members will agree that the case has been put very forcibly and ably by my hon. Friend the Member for South Croydon (Mr. H. G. Williams), and I was a little surprised that anybody should suggest that he of all people has not the courage, if his conscience dictates, to go into the Lobby even against his own party. Quite definitely this House for many years past has laid down the principle that any fuel which might be produced at home should have an advantage over imported fuel. It is generally admitted that it is only by those means
    750
    that production in this country, in its infant stage at any rate, can live. That has been accepted with regard to benzol and petrol from coal, and yet for some extraordinary reason, on the question of power alcohol, we find that for the first time the advantage which existed before is to be removed. My hon. Friend is pressing the Chancellor of the Exchequer not to alter that principle.
    We hope that in the course of the various discussions on the Finance Bill he may be able to revise this decision, which seems to be going back upon the whole policy upon which this country has entered, namely, to give some reasonable advantage to home producers, which is not disputed either by hon. Members above the Gangway or hon. Gentlemen around me. The Financial Secretary to the Treasury, in speaking on the last Amendment, mentioned how valuable the preference was with regard to shale, and, surely, the same principle should apply here. I, therefore, urge the Chancellor of the Exchequer to consider this change, unless he can give some very vital reason why he should select one of the particular fuel-producing industries and say that it should not have the benefit which is now embraced within the general principal.
    5.48 p.m.
    Mr. Holdsworth: We have listened to a very able and clever speech from the Member for South Croydon (Mr. H. G. Williams), but its cleverness is not to be assessed by what he said so much as by what he left out. He has not given the House the whole of the information on the subject. It is not correct to say that there is not going to be a special privilege given to power alcohol, even now that the 9d. is put on. He brushed aside quite lightly the advantages gained from the excise allowance.
    Mr. H. G. Williams: I did not brush it aside, but pointed out that there was no advantage to compensate manufacturers for expenses incurred in administration.
    Mr. Holdsworth: What is the allowance?
    Mr. Williams: Fivepence.
    Mr. Holdsworth: They get 8¾d. as an excise allowance on the production of power alcohol.
    Mr. Williams: It is 5d.
    Mr. Holdsworth: We will see whether the Financial Secretary confirms my figure or not. The 5d. is per proof gallon, which works out at 8¾d. for an imperial gallon.
    Mr. Williams: A proof gallon is not a measure of quantity but an imperial gallon is.
    Mr. Holdsworth: They have a tremendous advantage from the excise allowance. The hon. Gentleman knows quite well that this particular allowance was not given to encourage the production of spirit, as far as petrol is concerned, but largely to encourage production for industrial purposes. The consequence has been that, in view of the excise allowance and of the fact that it was made duty free in order to compete with other producers of petrol, there has been a tremendous increase in power alcohol for fuel purposes. If there is to be fair competition, why should power alcohol, the greater part of which is produced from imported molasses, be exempt from tax and subsidised to the extent of 8¾d. per imperial gallon? Since the petrol tax was increased in 1931, when another 4d. was put on, the increase in the production of power alcohol has been tremendous. In 1931 it was 13,373 imperial gallons, and in 1937 it had risen to 5,646,000 gallons.
    Take the protection which it gives to molasses produced from home-grown beet and see what it means. What are the facts as far as production is concerned. In the year ended 31st March, 1932–33, 3,677,000 cwt. were brought into the country from imported sources, and in 1935–36 the total had risen to 6,666,000 cwts. The people who are making power alcohol from molasses have a tremendous advantage not only from the excise allowance, but also from the increase in the Petrol Duty. The Government have been giving away revenue in order that these people could put the money into their own pockets, and that is the reason why the Chancellor has put on this particular tax. The hon. Gentleman based a great deal of argument on the advantage to be got from home-produced raw material. I have given the figures of imports.
    Mr. Radford: Does the hon. Gentleman suggest that the imports of molasses are
    752
    solely for the purpose of making power alcohol?
    Mr. Holdsworth: I suggest that the Chancellor of the Exchequer has put on the duty because there has been a tremendous increase in petrol mixed with power alcohol which has escaped the duty. That is the reason why the tax is put on in this Budget. There is no other reason. The home production has increased from 397,000 cwts. in 1932 to 676,000 cwts. in 1935–36. You cannot even make out a case as far as the Empire is concerned. There is no challenge to the statement that it is a mere 17 per cent. of the imports which come from the Empire. The remainder comes from foreign sources. The hon. Gentleman the Member for South Croydon called attention to the advantages of preferences given to the home manufacturer in this country, and, under a protective system, I agree that it may be quite logical to do that.
    Mr. H. C. Williams: Since the bulk of the wool used in the Yorkshire textile industry is imported, does the hon. Gentleman suggest that the Yorkshire textile industry should not be protected?
    Mr. Holdsworth: Not a bit of it. I do not see that that argument is relevant at all. Practically the entire output of molasses from beet sugar grown in this country is devoted to the production of yeast. It is not produced for the purposes of which the hon. Gentleman spoke. I believe that there has been a tremendous abuse of the position because of the failure to put on this particular tax on petrol derived from power alcohol. An advantage has been taken such as was never intended when the excise allowance was made. It was never thought that it would come into competition with petrol imported in the ordinary way. The figures in the White Paper show that the Chancellor of the Exchequer expects to receive between £300,000 and £400,000 on this particular tax. If a Division is taken, I shall vote against the Amendment of the hon. Member, as it simply means giving to certain manufacturers an undue preference by allowing them to make exorbitant profits under the cloak of something which was given for another purpose. They are doing very well indeed out of the 8¾d. per gallon excise allowance, and it is not

    753
    true that they will not be in a better competitive position, as regards the production of petrol, than the petrol producers who import it in the ordinary way. I hope that the Chancellor of the Exchequer will refuse to accept the Amendment.
    5.57 p.m.
    Mr. Amery: The speech to which we have just listened is a complete confirmation of the argument which we have put forward. The hon. Member for South Bradford (Mr. Holdsworth) has pointed out that a very small amount of protection in this matter has led to a great increase in production. He complained that that increased production has largely been in the shape of imported raw material. Would that be an objection to the woollen industry or to any industry of this country? It is one of the strongest arguments for protection that it leads to a much greater use of imported raw materials instead of imported foreign manufactured articles. It is one of the strongest refutations of the Free Trade theory that Protection diminishes imports, that it has constantly led to an increase in the importation of raw materials. Therefore all the figures which the hon. Member has given only strengthen the case for giving a further reasonable protection in order to enable the continued development of industry. It benefits British shipping, as he himself has shown, and provides employment for a substantial number of workers, scientists and others in this country.
    Mr. Holdsworth: Is not the same amount of labour put into the manufactured article, that is, petrol, before it goes out on to the market, and does not the same argument apply in respect of the raw material, that is, crude oil?
    Mr. Amery: Undoubtedly in so far as petrol is manufactured in this country and not imported, I am entirely in favour of giving it a measure of protection. We do protect the home fuel industry. In putting forward this Amendment my hon. Friend the Member for South Croydon (Mr. H. C. Williams) and I had the intention of drawing the attention of the House not merely to this particular instance, but to the broader issue that now that we have a system of protective taxation in this country, the main object of which is to encourage and stimulate production, we ought not to maintain survivals of the old
    754
    theory that you must always tax imports and home production equally. To talk of a leakage in the revenue belongs to the old Free Trade conception of taxation for revenue only, a conception which is entirely inconsistent with the policy of protection which this country has adopted.
    We have to face increasingly in the future the really big problem that underlies our whole revenue system, and that is how to maintain the national production from which our expenditure is derived. One criticism that I would have made of the speech of my right hon. Friend the Chancellor of the Exchequer in introducing the Budget was that he treated it so much as a revenue problem and devoted a great deal of attention to what I regard as the immaterial distinction as to whether you borrow or tax for the £30,000,000. The actual burden is on the present in either case. It is a mere matter of internal adjustment whether you tax or borrow. The really vital question, which my right hon. Friend did not touch upon, is how long are the productive industries of this country to be able to carry the immense and permanent burden of expenditure for social and Defence purposes? What is really vital is to concentrate on how national production can be increased, and the essential test is that every item in our budget should as far as possible make some contribution towards production or, at any rate, that it should not hinder production in any way.
    6.2 p.m.
    Mr. Radford: I rise to support the Amendment, and I think it only right to say that I am an interested party. I am a director of the company which blends and distributes at least 75 per cent. if not 90 per cent. of the petrol blended with alcohol, which is the subject-matter of the Amendment. The hon. Member for South Bradford (Mr. Holdsworth) referred to the tremendous development in this use of alcohol as being due to a rebate which distilleries enjoyed under the existing law. The development is not due to any supposed advantage of that kind but is accounted for by the fact that after years of weary expenditure on research, which the company I represent could not at that time afford, we ultimately struck the right blend, which has proved enormously popular and has resulted in the growth of the figures referred to. When I come to deal with

    755
    some other figures I think the hon. Member will agree that his description of the alcohol gallonage as terrific was exaggerated. The alcohol so used in 1937, as the hon. Member correctly stated, was approximately 5,600,000 gallons, which is as the dust in the balance compared with some other figures which I will give to him.
    My hon. Friend the Member for South Croydon (Mr. H. G. Williams) was correct when he said that the proposal of the Chancellor of the Exchequer appeared to be going entirely counter to the policy of successive Governments in encouraging as far as possible the production of oil or the derivatives of oil from home sources, and thereby putting us into a stronger and more independent position of supplies from abroad. Benzole, which is made from coal but does not come under the category of light hydro-carbon oil, has always been free from any duty. The British Hydrocarbon Oils Production Act of 1934 left home-produced petrol and oil free from the excise or customs duty of 8d. per gallon, which duty is now being put up to 9d. In their report, issued four or five months ago, the Sub-Committee on Oil produced from Coal reported in a disappointing way as to the home supplies capable of being produced from coal but recommended, as an encouragement to further research taking place,
    " The continuance of a guaranteed preference for a period of is years from 1938, the rate being increased from 4d. to 8d. per gallon, and the guarantee extended to include diesel oil for the use in motor vehicles."
    I promised to give some figures which would interest the hon. Member for South Bradford. The hon. Member referred to what he described as fabulous figures relating to alcohol used for blending with petrol, which he said were due to the exceptional privileges that the producers of that alcohol had enjoyed. What about the benzole which has been free from duty all the time and is still to be free so far as home-produced benzole is concerned? The Sub-Committee to which I have referred say:
    " while production in 1936 of 51,000,000 gallons of motor fuel was a helpful contribution to the needs of this country "—
    I would ask hon. Members to note those words, "a helpful contribution to the needs of this country "—
    756
    " it represented only 4 per cent. of the total requirements. As the information given above indicates, there is a further potential supply available which, if it were possible for all gas works to scrub their gas for benzole, and to be brought up to the present standard of recovery obtaining at coke ovens, would represent a further quantity of about 35 million gallons of crude benzole, producing 20 millions of motor benzole, in addition to smaller quantities of other refined products. On the basis of the present scale of activity of the two industries this would represent the practical limit of production."
    That would be an additional 20 million gallons of benzole for blending with petrol which would pay no duty and it is not proposed that it should pay duty. The amount of alcohol which in 1937 was blended with petrol, namely, 5,600,000 gallons, is absolutely dwarfed by these figures. This sub-committee had no idea that the Chancellor of the Exchequer either this year or in any year in the future was likely to put an excise duty on this motor fuel, which in the case of benzole they were urging, in the national interest, might be increased from 51,000,000 gallons to 71,000,000 gallons.
    There is no difference between this power methylated spirit and the benzole, except that the raw materials from which the former is made is imported in the form of molasses. It would be perfectly possible in a national emergency however to make the whole of this fuel out of vegetable matter grown in this country. The hon. Member for South Bradford is a Free Trader and he would surely not say that we should now produce it from vegetable matter grown here, when it is more economical to import it from abroad. In these circumstances, I am sure that he would not wish to exclude the imports which are so dear to his heart.
    What is the position of the Potato Marketing Board in regard to this matter? They are now seeking powers to enable them to make this fuel from surplus potatoes. They desire to make alcohols any synthetic organic chemicals prepared from ethyl alcohol. The Potato Marketing Board ought to have some knowledge of what potatoes are capable of producing, and it is significant that they are seeking permission to make this commercial alcohol out of surplus potatoes in this country. Therefore, I say to my right hon. Friend that, having regard to the fact that the raw material from which this power alcohol is made is capable of being

    757
    made out of home-produced raw material in any emergency (although it is more economical in the meantime to buy the raw material from abroad) it is reasonable to view it as practically equivalent to being made from indigenous raw materials. I am unable to see where equity lies in singling out one particular product manufactured in this country, which is blended with petrol, and making it subject to what is really penal treatment, although it is not intended to be penal.
    What view do other countries take in regard to making themselves self-sufficient in regard to motor spirit? In this country in 1936—I have not the figures for 1937—we produced—I will leave out the decimals—8 per cent. of our requirements out of such things as alcohol, or benzole, or oil made from coal, and oil shale. In Italy they produced just under 15 per cent. of their requirements, and in Germany over 39 per cent. out of substitutes. In Germany they produce it from such things as lignite and peat, but Italy's was almost entirely power alcohol made as to one-half out of imported materials and one-half from their own home-grown vegetable matter. That was in 1936, when they were in duress.
    The Chancellor of the Exchequer (Sir John Simon): What was the precise figure for Italy?
    Mr. Radford: The precise figure was 14.9 of their total requirements, practically all alcohol made from molasses.
    Sir J. Simon: The hon. Member gives the figure of 14 per cent. in the case of Italy, composed entirely of alcohol. Unless you mix alcohol with petrol in the proportion of something like 15 per cent. will you get a suitable fuel?
    Mr. Radford: I have not all the details in regard to Italy, but if they were to blend the 14.9 of alcohol with 86 per cent. of petrol they would meet the whole of their motor spirit requirements, and would save the importation of 14.9 of such requirements. If the Chancellor of the Exchequer sticks to his proposal in the Budget it is about equivalent to putting beer and stout on a different basis of Excise Duty, and that would hardly conduce to the contentment of the brewers of beer or the makers of stout. I recognise that the only justification anyone connected with the industry has for taking
    758
    part in the Debate is that he has knowledge which he can bring to the Debate, and which might be wanting if he did not take part. The only basis, of course, on which the House can proceed in this matter is that of the national interest, and there is not a shadow of doubt that the national interest lies in the encouragement of the making of this power methylated spirit. The blending of this spirit with petrol is not simply to eke out the petrol; it alters its whole character and gives it a high anti-knock value. It provides what is known as a high octane value which for aviation purposes is absolutely imperative.
    Mr. Fleming: Can the hon. Member tell us how the price per gallon of this blended power alcohol compares with the price of pure petrol?
    Mr. Radford: The retail price is 1s. 7½d. in each case. I submit that the national interest demands that all encouragement should be given to the production of this power methylated spirit, and that it should not be discouraged. In the Budget estimates it is calculated that the amount which will be realised in a full year is £375,000. That clearly postulates a sale for use on 'the roads of 10,000,000 gallons of this power methylated spirit during the coming year. I can tell the Chancellor of the Exchequer with some knowledge of the trade that if this impost had not been proposed there would not be 10,000,000 gallons sold during the coming year. The gallonage which his experts have advised him will be used is wrong, and I think I know how they came to be wrong. It came to my knowledge some weeks ago that a large oil company had put out an inquiry to producers of alcohol for a fantastic number of gallons of power methylated spirit, which presumably could only be for the purpose of going in largely for this alcoholic blend. The figures were so fantastic that it would have taken 10 years before the company could have taken the quantity for which they made inquiry. This inquiry was generally known in the motor spirit industry, and I am confident that our Customs and Excise officials, who are most efficient, heard of it; indeed I am certain that steps were taken that they should not fail to hear of it, and it seems to me that the proposals in 'the Budget have to some extent been based on that inquiry.
    Sir J. Simon: That is rather an unpleasant suggestion. The hon. Member was good enough to inform me privately that he entertained certain suspicions, and I at once made an inquiry, and I will tell him that whether the Department is right or wrong in its estimate, it has been in no way influenced by the matter to which he has just referred. We none of us can be sure that an estimate is right, but the Excise Department in this matter dealt with it on the best calculations they could get, and were perfectly unaffected by anything to which the hon. Member has referred.
    Mr. Radford: I, of course, accept the right hon. Gentleman's assurance that the estimate in the Budget has not been influenced at all by this inquiry, but if the figures are to remain somewhere around the present level, I doubt whether it would have been considered necessary to introduce these proposals in the Budget.
    6.23 p.m.
    Sir Arnold Wilson: I support the Amendment with particular reference to the announced intentions of the Potato Marketing Board. Power alcohol is a by-produce of some form of food, whether it is potatoes, or cane sugar or beet. If we do not take steps to maintain the production of power alcohol in this country we shall be wasting one by-product and running the risk of increasing the cost of other by-products of the raw material. If we cut out the production of power alcohol we make sugar slightly more expensive; if we do not give the Potato Marketing Board the powers and inducements it requires we shall discourage pro tanto the production of potatoes in this country. What we want to do is not to prohibit anybody growing more food in this country but to provide factories in which the potatoes which are not required for food can be converted into food in another form, whether as flour or whether as alcohol. It seems to me a most retrograde step to put suddenly, without any notice, a duty upon a locally-made fuel which is derived directly from the sun and the soil. So far as molasses are concerned, they are imported mostly from our own Colonial possessions; what will they think if a duty is suddenly imposed on a trade which has been running for so many years, the raw material of which is carried in British bottoms and the industry managed, owned and controlled by British
    760
    capital and worked with British machinery? It is not possible to expect that trade to develop; it might be contracted.
    I have had some experience in the daily work of the petroleum industry; I have visited power alcohol plant in a good many parts of the world. In almost every country in the world the production of power alcohol is being encouraged, and is going up and up. It is being stimulated in every part of South America; we hope to introduce it into our own Colonies. The researches and experiments which have gone on in this country are of vital importance to the British Empire and to all our Colonies, which are seeking means, particularly in West Africa, of producing fuel for motor spirit more economically than by relying on imports. It affects our balance of trade. I would urge upon the Chancellor of the Exchequer that this matter should have far more consideration than it has yet received at the hands of the Minister of Agriculture, the Colonial Office and the Board of Trade.
    6.27 p.m.
    Lieut.-Colonel Colville: I think it will be convenient if I put the Government point of view now, not in any way to stifle discussion but in' order that the House should have certain facts before it. The hon. Member for South Croydon (Mr. H. G. Williams) was right in saying that to some extent it is a problem of revenue. The position is that power alcohol, used in motor engines after it has been treated so as to render it unpotable, is to pay a duty at the rate of 9d. per gallon. This material is being increasingly used, not as a simple substitute for petrol, but as an addition to petrol in the proportion of some 12 to 15 per cent.; this power alcohol counteracts the knocking tendency in engines and the mixture has been found to make a very efficient motor petrol. The growth of its sale in this country has been due to the fact that this mixture has proved to be very valuable to motorists. We recognise that, and hope that this valuable property in power methylated spirit will enable it to retain its place after the duty has been applied. If we assume the consumption at 10,000,000 gallons in 1938–39, then the revenue in a full year from the duty will be about £375,000; this year it will be about £350,000. That is not a huge sum,

    761
    but the consideration which my right hon. Friend had to bear in mind was the grave one of a potential loss of revenue. As regards the estimates which have been made as to the amount likely to be used, I can assure hon. Members that the Department do their best to provide absolutely fair and correct estimates, and in their view the estimates on which we have based our calculations are proper.
    Mr. Radford: May I ask why a mere matter of 5,000,000 or 6,000,000 gallons is picked out for the production of this revenue and over a hundred millions of gallons of other products go free?
    Lieut.-Colonel Colville: I hope my hon. Friend will allow me to develop my argument, and I shall be very glad to show why we thought it necessary to make this proposal. Although petrol has been taxed since 1928, power methylated spirits so far have been free from taxation. In common with all alcohol used for industrial and similar purposes, they are exempt by law from the Spirit Duty. In addition, they still receive the statutory allowance as a compensation for the increased cost of production due to the restrictions imposed upon distillers for the protection of the spirit revenue.
    Mr. H. G. Williams: Is that of any advantage to the producer?
    Lieut.-Colonel Colville: I think it is.
    Mr. Williams: Since the Excise authorities designed this allowance for the precise purpose of compensating them exactly for the increased cost, why were the Excise authorities so incompetent that they gave them too much?
    Lieut.-Colonel Colville: I do not think I can go into the whole history of this subject. That is a matter of the past. The point which was made was why we are making the suggestion to apply this tax. Here I will give some figures of the development of the production of power methylated spirits. Hon. Members have already given some figures on this subject, and they may differ from the figures which I give, but the reason is that I am giving the figures for the financial years, whereas in some cases the figures for the calendar years were given. In the financial year 1931–32, the figure was 18,000 gallons; in 1932–33, it was 85,000 gallons; in 1933–34, it was 361,000 gallons; in
    762
    1934–35 it was 1,036,000 gallons; in 1935–36 there was a slight recession and the figure went down to 914,000 gallons; in 1936–37 the figure went up considerably to just under 3,000,000 gallons; and for 1937–38, the figure for part of the year being an estimate—and I am told that it is a conservative estimate based on the year that has just closed—the figure is 8,000,000 gallons. These figures demonstrate a considerable growth in the manufacture and consumption of power alcohol. I do not complain, for hon. Members know that the National Government have in various other ways attempted to encourage home production. While it is not a matter for complaint, it is proper that my right hon. Friend the Chancellor should examine the effect which this may have on the revenue. I agree with my right hon. Friend the Member for Spark-brook (Mr. Amery) when he said that one must not use that argument too strongly, but that, in addition to looking at the revenue position, we must also look at the industrial position.
    Mr. Amery: And its effect on the revenue.
    Lieut.-Colonel Colville: They are bound up together. Nevertheless, it is proper that the Chancellor should have regard to a tendency which might grow to a considerable extent and lose him a good deal of revenue. What is the position? As a fuel, alcohol is inferior. I think that is not disputed. It is said truly that it gives only about 75 per cent. of the mileage obtainable from petrol, and there are certain other disadvantages. Only when it is mixed with petrol in fairly small proportions does it achieve the valuable results to which I have already referred, although I was not able to deal with them in technical language, as some hon. Members have done. If it were to reach 15 per cent. of the existing petrol consumption—I agree there is a considerable gap between the present figure and that figure, but this is a consideration which has to be taken into account—it would mean the displacement of some 200,000,000 gallons of petrol a year, and then one would be faced with a substantial loss of revenue which would amount to some £7,500,000 a year. I put it no higher than this, that in framing the estimates of revenue and expenditure, in which the Petrol Tax is an important element, my right hon. Friend could not

    763
    ignore the growth—the perfectly healthy growth from an industrial point of view —in the use of this substance as a mixture with petrol, which was increasing by leaps and bounds, and which might, if the tendency continued, displace revenue to the extent of £7,500,000.
    This is a very technical matter, and this is the first discussion of it. Other opportunities will occur. Hon. Members have made some very technical observations to which I am doing my best to reply, and I assure them that all their observations will be carefully considered. We had the best technical advice we could get before making this proposal, but what has been said by hon. Members to-day will be very carefully examined. It is a question which my right hon. Friend fully agrees should be examined in all its aspects. My hon. Friend the Member for South Croydon (Mr. H. G. Williams) wished to make out a case that this industry should, at any rate, be treated no worse that the industry which produces petrol in this country. I would point out that the petrol which is refined in this country from imported oil bears the full rate of taxation. The hon. Member agrees that that is so, and I mention it only in case any hon. Member should be under a misapprehension. But petrol which is produced from indigenous coal and shale is exempt. When the Petrol Tax was imposed for the purpose of raising revenue, that exemption was given at the same time in order to encourage the coal and shale industries, which were depressed.
    Mr. J. Griffiths: I do not think the right hon. and gallant Gentleman is quite accurate. Is it not a fact that Imperial Chemical Industries were given a guarantee that the tax would remain at 4d. over a period of years? Was there not a definite guarantee to the industry?
    Lieut.-Colonel Colville: I do not want any misunderstanding to exist. Certainly, there was a guarantee of its continuance for a period, but the original intention of the tax was a revenue-raising one, but with it there was an exemption to help the coal and shale industries. I come now to the position as regards homegrown molasses. Here we have an exact counterpart of the petrol produced from home coal and shale. The position is this. Alcohol which is made into
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    power methylated spirits is obtained by distillation from molasses, either imported or home-grown, and the bulk is imported at the present time. The quantities of molasses derived from homegrown beet used in the production of power methylated spirits are not known, but the quantity used in the manufacture of spirits of all kinds—and obviously the figures I am about to give will be slightly larger than the figure which refers to power methylated spirits during the financial year 1935–36 was 145,000 cwts., and in the year 1936–37, 73,000 cwts. I am advised that, broadly speaking, 1 cwt. of molasses produces three bulk gallons of power methylated spirits, and on the basis of a duty of 9d. a gallon, the burden on the above quantities, even if they had all gone into the production of power methylated spirits, would have been only about £16,300, and £8,200 respectively. In other words, if one takes what is on a strict analogy with the shale and coal industry, that is to say, what is produced from the indigenous home product, the total amount of tax would have been less than £16,300 and £8,200. Those are not large amounts.
    The purpose of the exemption in the case of coal and shale was to help those industries, which were depressed, but the industry affected here, which is largely the sugar-beet industry, is very largely assisted from public funds in other ways. There is a subsidy of over £2,000,000 to that industry. Therefore, it should be borne in mind that one cannot compare it strictly with those other two very hard-hit industries which are not assisted in the same way. I repeat that all that has been said in the Debate will be carefully considered, but my right hon. Friend must have regard to a tendency which might in certain circumstances lead to a loss of revenue of £7,500,000. [HON. MEMBERS: "No !"] I explained how it was.
    Mr. Radford: Does my right hon. and gallant Friend think it is a reasonable argument to anticipate that the industry will develop to the extent of 40 times its present production, asd they say that he will lose that amount of revenue?
    Lieut.-Colonel Colville: I gave the figures of increased production, which show that my argument is far from un-

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    reasonable. I will give them again. In 1931, the total amount was 18,000 gallons, and to-day it is 8,000.000 gallons. If that rapid increase were to continue, my right hon. Friend would be in serious difficulties. It would not be prudent to disregard that tendency. Having said that everything that has been said to-day will be carefully considered, I cannot do more at this stage than repeat that we cannot accept the Amendment.
    6.41 p.m.
    Mr. Macquisten: I wish to add one or two points for the consideration of my right hon. Friend the Chancellor of the Exchequer. I am not so much moved by the question of the revenue that might be lost, although that would be serious. There could not be a greater benefit to this country than producing all our power within the borders of our own island. Some 15 or 16 years ago, the late Sir Edward Manville, then a Member for one of the Birmingham Divisions, and a half a dozen other hon. Members, tried to get up a scheme to get the beet sugar subsidy extended to power alcohol distilleries, for the benefit of agriculture, which was just as distressed an industry as the others which have been mentioned. One could put up a distillery for £40,000 or £50,000, whereas a beet-sugar factory costs from £250,000 to nearly £500,000. In addition, potatoes could have been planted without limit, and the surplus could have been used for the making of power alcohol as is done in America, France and Germany. The farmers realised that if they had too many potatoes, they could have sent the surpluses to power distilleries, which could have been scattered up and down the country, and thus would have helped to stimulate agriculture. That is the direction in which we should aim, and it would help us enormously if we could develop the power alcohol industry in our own country. Whatever you are doing, you are killing the gosling that will ultimately lay the golden eggs, and not merely the goose that did lay them.
    Mr. J. Griffiths: The marketing boards are.
    Mr. Macquisten: All these boards are unnecessary excrescences. They are enormously increasing the cost of food to the people. If there had been power
    766
    alcohol distilleries scattered throughout the country, supplying all these products for cattle feeding and taking all the surplus products of agriculture, you would never have needed these huge bureaucracies, which are strangling everything. That would not happen if you had natural development. Agriculture is still a distressed industry and apparently will always be a distressed industry, and the more distressed it becomes, the more millstones we hang around its neck. Here is a simple method of using our system of taxation in a way which would do good to the people concerned. Put a duty on molasses coming from abroad if you want to, but try to secure that the raw material will be grown in this country and in that way you can strengthen the resources of the country and improve the incomes of the people and ultimately you will derive a far bigger revenue in that way, than you can get from any miserable tax of this kind.
    6.47 p.m.
    Mr. Levy: From a National Government point of view, the argument advanced by the Financial Secretary in justification of this tax was a most amazing one. If we were to carry the right hon. and gallant Gentleman's reasoning to its logical conclusion, there seems to be no reason whatever why a tax should not be placed upon steel which is manufactured in this country because we place a tax upon the importation of steel from abroad. If such a proposal were made, I am sure he would be the first to object to it as being detrimental to the commerce of this country and to say that, apart from questions of revenue, the principle was a bad one. We on this side have always argued that in protecting the industries of the country we are encouraging their extension, whether it applies to petrol or any other commodity or to agriculture or any other industry. We changed to a tariff system in order to protect home industries. Yet here is a case in which, apparently, home industries are to suffer for the sake of the revenue. It is impossible to believe that it is beyond the wit and ability of the Treasury to devise means of collecting revenue without acting detrimentally to industries which are endeavouring to develop themselves in this country. I ask the Chancellor of the Exchequer to give this question his serious consideration and to bear in mind the im-

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    portance of doing nothing which would injuriously affect these young industries.
    Mr. Amery: In view of the conciliatory reply of my right hon. and gallant Friend, I do not press this matter further. I only ask the Government to give it further and serious consideration, remembering that anything which checks production must, in the long run, injure revenue, whereas as long as they look after production, revenue whether in meal or in malt, will look after itself.
    6.50 p.m.
    Mr. Lewis: I am rather disappointed at the speech of the Financial Secretary, for this reason. Unlike some of my hon. Friends I am not a great enthusiast in the matter of protective duties. I have always regarded protective duties as, at the best, a necessary evil. Now that we have embarked on a policy of protection we ought to try as far as possible to be consistent in the duties which we impose. In this case we have put a duty on oil for revenue purposes, and in order that it may have a protective effect, we exempt oil produced in this country from coal and shale. If the Financial Secretary had said, "We have examined the cost of the production of this oil and as a result of that examination we can show that that product is capable of bearing a certain amount of this duty without harm," and if he had asked us to agree that some part of the duty should be borne by that oil, he might have been able to make out a case. But he does not offer any such explanation.
    His argument is that he is not concerned with the taxation which the industry can bear, but with maintaining the imports of petroleum from oversea, so that he shall continue to get his revenue thereon. That view seems to be irreconcilable with what he said about aiming at an increase in the supply of duty-free petrol produced from coal or shale. The Chancellor of the Exchequer has promised to consider the matter further and therefore I do not wish to detain the House now, further than to say that I hope, if this proposal is included in the Finance Bill, we shall have an examination of the costs of production of this commodity so that we may be able to form some estimate for ourselves of the effect which the duty is likely to have in restricting that production.
    Amendment negatived.
    6.53 p.m.
    Mr. Chater: I beg to move, in line 3, to leave out "eightpence," and to insert "fourpence."
    The effect of this Amendment would be to reduce the duty on tea by exactly the same amount as that by which the Chancellor of the Exchequer in the Resolution proposes to increase it. I wish to preface my remarks on the Amendment by a reference to a statement by the Chancellor of the Exchequer in his Budget speech. Towards the end of that speech, having dealt prospectively with the revenue which he expected to derive from various sources to balance his Budget, he arrived at a deficiency of £3,000,000. I do not know exactly what process the right hon. Gentleman followed, or whether he cast his eye upon any other possible sources of income, but, at any rate, he came down on the side of an additional tax on tea. Evidently there were some slight misgivings in his mind as to whether such a tax would commend itself to the working classes or not and he sought to soften the blow to some extent by the following expression:
    " I well understand that even an extra halfpenny per week is a material and appreciable addition to the expenses of those with the smallest incomes."
    Having thus given expression to his keen appreciation of the burden which people with small incomes would have to bear if he put a halfpenny per lb. on tea, the right hon. Gentleman promptly proceeded to tax those people four times that amount. I can well understand that some of my constituents in North-East Bethnal Green would feel more grateful to the right hon. Gentleman if he withheld his appreciation of their economic position, having regard to the form which it took in this instance. I would not be surprised to find deputations waiting upon him from the working-class women in my constituency asking him to withhold such appreciations of their economic difficulties on future occasions lest it should cost them still more. At this stage in the right hon. Gentleman's speech some hon. Members evidently felt rather puzzled as to why he was putting this tax on tea

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    after the expression of his appreciation of the unfortunate economic position of those who would have to bear the larger part of it. Then, the right hon. Gentleman said:
    " I believe there is a willingness and even a pride in the humblest homes to take a share in this rearmament outlay."—[OFFICIAL REPORT, 26th April, 1938; col. 66, Vol. 335.]
    I could not help noticing that it seemed to require an effort on the Chancellor's part to bring himself up to the point of making that heroic pronouncement. I would like to introduce him to a few meetings of working-class women in my constituency. I can assure him he would find that while they were perfectly polite in his presence their criticisms would, at least, be forcible. As I say, we propose by this Amendment a reduction and not an increase in the duty on tea. We would prefer to be in the position to-day of discussing not that the tax should be one-third less than the present rate, but that it should go altogether. It has always been a cardinal point in the policy of the party on these benches and one of the chief points in the policy of the great cooperative movement, of which I am proud to be a representative, to oppose all taxes on necessary items of working-class diet. We have a very sound reason for that policy. Taxes on these vital and necessary items of diet seem to us to be a vicious and unfair method of raising revenue.
    These necessary articles of diet constitute, in the household budgets of the working class, apart from rent, the largest item of weekly expenditure. In the comparatively wealthier classes the burden of the cost of food does not make itself severly felt, but I can say with perfect honesty, from my knowledge of working-class families in my constituency, that there are hundreds and perhaps thousands of those families who are never able in any week to spend enough on food to provide that standard of nutrition which, according to the highest medical and scientific authorities, they ought to have. They have to economise upon food in order to be able to afford other necessities such as clothing. Therefore we say that this proposal to tax one of the vital necessities of working-class diet is not only vicious but unjust and unfair.
    I wonder in what sense did the right hon. Gentleman use the word "income "
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    when he referred to these people. We know that the classes represented by the right hon. Gentleman have what are called incomes derived very often from investments. The amount that comes into the wealthy household is more or less regular and of a substantial character, but the people who are to bear this tax have only scanty wages coming into their households, from week to week. Their "incomes" have not the characteristics of regularity or amount which apply in the case of better-off people and in many cases are not sufficient to sustain life at anything like a decent level. The incomes of the greater proportion of the working population in Bethnal Green vary between £2 and £3 a week. I doubt whether there are many, if any, Members opposite who have the slightest appreciation of what it means for the worker, and especially for his wife, who has to struggle along week after week, with the cost of living at its present level, and try to make ends meet. The Chancellor has such a keen appreciation of the economic disabilities of these unfortunate people that he promptly puts another 2d. a pound on their tea. I think they will ask to be preserved from the blessing of his appreciation.
    Tea in working-class homes is far from being a luxury. It has become a vital necessity not only in working-class but in other homes. In working-class homes it performs another function. The womenfolk have to rise early in the morning and get ready the meals for the wage earners, then perform their household drudgery and, with the return of the workers in the evening, there is more drudgery in preparing meals, and then perhaps a fitful half-hour's rest before 10, 11 or 12 o'clock. What happens during all these long, weary hours? The woman, insufficiently nourished, can keep going only by recourse to constant stimulant, and that stimulant is tea. I do not see why the Chancellor should have put an additional tax on that while he lets the expensive luxuries in the way of stimulants of the wealthy classes go free.
    This tax is being put equally upon foreign and Empire teas. The poorest people are compelled, because of the smallness of what the Chancellor calls their income, to purchase the cheapest qualities of tea. I am informed that

    771
    frequently the cheapest qualities are those that come from foreign sources. The tax amounts to a percentage tax upon the value of the tea, before it is blended, of something like 50 per cent. It also means that this further taxation will cause these poorer sections of the community to go still more to the cheaper grades. That the tax bears more hardly upon the classes whom we represent than on those represented on the benches opposite is instanced by the fact that if the wealthy housekeeper of a Member opposite orders a pound of tea at 5s. she pays no more tax than a working-class woman who buys tea at only half-a-crown a pound. The incidence of the tax is, therefore, doubly severe on working-class women to what it is on women with ample means.
    In the Co-operative and Labour movement we shall always oppose this tax arid we look forward to the day when we shall get rid of it altogether and relieve our consciences of a most unfair and unjust burden upon a vital article of consumption to the working classes. It is said that the Amendment, if carried, would increase the Chancellor's difficulty in balancing his Budget, but this microscopic amount of £3,000,000, compared with a revenue approaching £1,000,000,000, is but a drop in the ocean, and the Chancellor might easily have found other means. We do not regard it as any great difficulty for him to find the amount from other sources quite easily. To my mind the tax is a mean and contemptible one and I hope that, at any rate, some hon. Members opposite will support us in resisting it.
    7.9 p.m.
    Mrs. Hardie: I beg to second the Amendment.
    We ask not only that the present tax shall not be imposed, but that something should be taken off it, and we are entitled to do so because it hits the very poorest class. The Chancellor congratulated himself on the fact that the women who paid it would be quite pleased to do so, because the very poor were quite delighted to pay for the defence of the country. The poorest people are always prepared to pay a fair share of the taxes, but we believe that they are paying much more than a fair share. There is already a very heavy tax on tea. If that were the only article of food taxed it would not
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    be so bad, but the burden of taxation that the housewife has to meet is very heavy. We reckon that it works out at 5s. in the When a woman goes to a store and buys provisions—tea, sugar and imported meat—when she spends £1 she gets 15s. worth. The other 5s. is tax. In addition you have quotas, restrictions and marketing schemes. It is the housewife who is paying for all that. It comes out of her ultimately in the higher cost of the commodities that she buys. This method of levying indirect taxes is very unfair and wasteful. I was a shopkeeper, and I know exactly what happens. The consumer does not only pay the tax but a profit on the tax because, when the shopkeeper pays 2d. more for the article, he charges the consumer 3d. Food taxes are never justified. Food is the last thing in the world that we should tax. It does not do a great deal of harm to do without some other article but food is essential, especially at present when there is such a tremendous amount of poverty and malnutrition.
    In a previous Debate a speaker opposite pointed to the small number of people who were being penalised because of the increase in Income Tax. It did not seem to occur to him that it was a tragedy that in a wealthy country such as this, with such an enormous national income, such a small proportion of people should earn enough to qualify to pay Income Tax. Income Tax is the only fair way to levy taxation. If it is necessary to make poorer people contribute, do not do it in this mean, underhand way so that they do not know exactly what they are paying. For years Governments have been shifting the burden from the direct to the indirect taxpayer. The amount of indirect taxation has increased by about £150,000,00o since 1918, while the direct taxpayer is paying that much less. That is why we resent this added burden on the poorer people and on the housewife. The housewife resents this extremely. She has already had a big increase in the cost of living. There has been a considerable increase in almost every commodity that she buys. We are told that wages have gone up to a certain extent, but in many cases it is the women who have to meet the increase. They have been protesting against the increase in the cost of living, and the Chancellor puts this extra tax on tea. That is a rebuff and an insult. I, there-

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    fore, protest against this increase in the tea tax, and suggest that, instead of increasing it, the Chancellor should reduce the existing tax and thereby relieve the people who are entitled to relief.
    7.16 p.m.
    Mr. Kingsley Griffith: As the hon. Lady who seconded this Amendment made her extremely sensible and practical speech and suggested that all food taxes should at all costs be avoided, I could not help thinking that those words must have raised some echo in the heart of the Chancellor of the Exchequer. I am sure that is a sentiment to which he himself on many occasions has given, not merely adhesion, but the most brilliant advocacy. It have been left a little wondering why cm this occasion, with so many expedients present to his fertile mind, he has chosen to select this one. We must all realise the large, indeed the enormous sums, of money which have to be collected in the present national emergency, whatever we may think as to the responsibility for that emergency arising. We all realise that when those sums have to be collected all classes must join in that effort. I am prepared to judge this tax by both those tests. A large amount of money has to he raised, but this tax really represents an infinitesimal portion of the Chancellor's main task. There is no question that he could have avoided it. There is no question, I should imagine, that he could avoid it even now. The difference in the Budget would not upset its balance to such an extent that he could not put it straight.
    When it is a question of all classes joining in the national effort, there is no question that they have already so joined, and the humblest classes no less than others. The changes in our fiscal system have seen to that. The immense amount of our indirect taxes, bearing without discrimination upon those from whom they are collected, already secures that there is no question of any humble people disregarding the importance of the national effort and thinking that this is something for which the rich have to pay. I do not believe anybody thinks that. That danger simply is not present. I must ask, therefore, what is the special merit of this tax? It is not a question of having a large yield. It does unquestionably cause a considerable amount of irritation at a time when, as the hon. Lady the
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    Member for Springburn (Mrs. Hardie) has pointed out, there was already a widespread feeling with regard to the rising cost of living. This particular addition, greater in some families than in others according to their habits and tastes, but present in nearly all working-class homes to a very considerable extent, comes as a special irritation and a kind of challenge.
    It is a tax which has a very bad and unequal incidence. My hon. Friend the Member for East Birkenhead (Mr. White), who has a considerable knowledge of this subject, said last week that the tendency is always to push the burden on those who buy the cheapest kinds of tea. I have myself some knowledge of selling in the tea trade. I know you cannot sell in indefinitely divisible fractions. If anybody is buying tea, he probably buys it at a certain penny rate, say, a 7d. rate for the quarter. If a tax arises which would make that 7½d., the buyer would still probably insist on getting the 7d. tea. Somebody, therefore, has to make up a tea of an inferior quality. The people who cannot escape are those who are buying the tea which is already the cheapest. As my hon. Friend pointed out last Thursday, the result of that is an increasing demand for the very cheapest kinds of tea. That in itself does not give me very much satisfaction. I do not like to see our people driven back to the cheapest, and probably the most unhealthy, article in any commodity. Apart from that, this special demand for the cheapest variety of tea, according to the operation of the laws of supply and demand, tends to put up the prices of those cheapest teas. Therefore, the calculations which are formed as to what the average cost per family of a tax like this will be are extremely difficult to work out. The burden upon those who can bear it least is liable to be very much greater than is worked out by the Treasury officials in just trying to arrive at a statistical result. The average may be only a comparatively small amount, but upon the people who can really bear the burden least the burden will fall with the greatest weight.
    There were plenty of alternatives—a tax on tobacco, for instance, and taxes on other kinds of consumable articles which would have caused less irritation, which would have been less universally

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    felt as an annoyance, and which would have been just as profitable. I will not go into different classes of taxes like the taxation of land values, which is obviously a large and additional source of revenue. I was endeavouring to confine myself to taxes of the same class and variety as that which the Chancellor has selected. I think that if he really appreciated the feelings which this tax aroused, he would not so easily imagine that the payers of this tax were going to do it with a kind of pride, feeling they were bearing part of the great national burden. It is a burden of the purpose of which, I cannot help feeling, a great many of them are still uncertain. They are not certain, either, whether the money is being wisely and properly expended. They are also uncertain whether there has been a real investigation by the financial authorities of the country as to where the burden could be put with the greatest equity and the least suffering. Thus, in spite of everything the Chancellor can say, I do not think there will be a feeling of pride in paying this tax, but a feeling of resentment and of irritation out of all proportion to any financial advantage which the Chancellor can expect to derive from the tax.
    7.24 p.m.
    Mr. Croom-Johnson: I listened with close attention to the speech made by the hon. Member for North-East Bethnal Green (Mr. Chater) in proposing this Amendment. I did so for a personal reason which arises out of matters which the House has probably long since forgotten. In April, 1929, in the last Budget produced by the Chancellor of the Exchequer in a Conservative Government, the right hon. Gentleman the Member for Epping (Mr. Churchill) removed in full the tea tax which, at that time, I think was 4d. a lb. A short time afterwards, I went to fight the first election at which I had submitted myself to the suffrages of my fellow-countrymen. I found that the repercussions of the removal of that tax were absolutely nil. I do not believe that a single vote was influenced as a result of it. We all thought that the Chancellor of that day was right, and I have no doubt that to-day the present Chancellor, if times were different, if our national problems were different, and if our national finances
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    were in a different state, could agree with many of the moving observations which came from the hon. Member who proposed and the hon. Member who seconded this Amendment. I cannot help thinking that they over-estimate the feeling which will be excited in the country by housewives or shopkeepers or other persons as the result of what is, after all, a small impost from one point of view.
    I hope the House will not think that I am unmindful of the fact that for many of our fellow-citizens the smallest compulsory readjustment of their pitiful budgets are things we should scrutinise with great care. I would say to the hon. Member who moved the Amendment, who talked of incomes from £2 to £3 a week, that there is no Member who sits, as I do, for a constituency which is overwhelmingly agricultural, who does not know that the vast bulk of the constituents are people who would regard a weekly wage of £3 a week as indeed a blessing. We are not unmindful of the smallness of the weekly budget of the agricultural labourer, whose family consumes perhaps as much of what has become the national beverage as the families of the hon. Gentleman's constituents in Bethnal Green. The results of the additional tax, as I understand it, in a family of four is likely to amount to 1½d. a week. I do not say for a moment that that will not mean to a great number of my constituents a definite pecuniary sacrifice. I think it will, but I have not found by correspondence or by any other means by which I keep in the closest contact with my constituents that they are objecting or raising any question about it at all. I hear somebody say that they cannot afford the stamp. I am there every week-end and they do not need one.
    I do not believe it is right to say—at least so far as my constituency is concerned—that the humble housewife with her market basket is going with any feeling of resentment or grouse at the present moment in our national finances to do shopping and to buy her little packets of perhaps very cheap tea after this tax has come into operation. I have found that a great many people in all parts of the country are always ready and willing to invite the Chancellor to substitute something else. I always think that Budget making is a very good round game. There is nobody that I have come across

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    anywhere in each succeeding year when we have had to discuss varying Budgets —and I think this is the tenth or eleventh Budget to which I have listened in this House—who does not think that in one way or another he could improve on the effort of the Chancellor of the Exchequer, guided and assisted as he is, as we know, by the most expert assistants, by persons who have paid the very closest attention to the matter and who have no axe to grind themselves. In these circumstances is it likely that our fellow citizens, knowing the difficulties and the dangers of the times, although they might perhaps think the tax might have been put on to something else—and, after all, which of us likes any tax when it comes to affect ourselves and would not prefer something else?—will feel in the very least, in regard to this tax, that it is either a disgraceful Lax or that it is one which is unfair or unjust or about which any of the epithets which have been used from the other side have been justly used?
    We are increasing a duty which, I say frankly, in other circumstances and at other times I should like to see abolished. We hoped in May, 1929, that the Tea Duty had gone for ever, and I am not at all sure that expressions to that effect were not used in this House—it was just before I came here for the first time—by Members in all parts of the House, but circumstances have unfortunately changed. Circumstances at the moment are in such a condition that I cannot believe, speaking on behalf of my own people, of whose budgets and affairs I can claim to have some intimate knowledge, that they will have the smallest possible objection to making this small contribution, although perhaps proportionately large to them, at a time when the national emergencies drive us to do a great many things that most of us, if we had the chance of remoulding this world and rebuilding it on a better design, would not seek, if we could, to put into a very different shape.
    7.33 p.m.
    Mr. W. H. Green: I find it very difficult, in a House constituted as this House is, to hope to make any effective impression on such a subject as the increase in the Tea Duty. It seems to me that in the Debates which will take place on the passage of this Budget through the House this, perhaps alone, will strike the human note. I feel that it is very difficult for
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    many Members here, placed as they are, adequately to appreciate the feelings with which some of us who represent industrial and very poor divisions are constantly brought face to face. I can assure the hon. and learned Member for Bridgwater (Mr. Croom-Johnson) that we on this side are not animated by any suggestion that we might catch votes by the attitude which we take on this Tea Duty. The majority of the people whose grievances we are ventilating already place their votes in the right direction, and we cannot expect to gain many votes as a result of our protests against this tax. The hon. and learned Gentleman seemed to make a point of the fact that the poorer people in his constituency did not approach him on this question. I am not at all surprised. If my borough were represented by a Member on the other side, I should not expect the poor people to approach him. I should know that they would expect that he would support such a tax as this, and it does not occasion me any surprise that those agricultural workers have long ago despaired of getting any justice from the Conservative party.
    Mr. Croom-Johnson: The hon. Member may think so, but they are never quiet on all other topics which affect either their industry or themselves.
    Mr. Green: I cannot escape a suspicion that their present plight is largely due to the fact that so many constituencies are represented as that constituency is to-day. It seems to me that the fact that, in a Budget of these astronomical proportions, this House should stoop to inflict what in relation to the existing Budget is a microscopic tax is really demeaning to this House, and whatever pride the Chancellor of the Exchequer may feel as in future clays he remembers that he piloted a record Budget through this House, I am certain that this particular tax will yield him very little satisfaction indeed. We do know, of course, and we appreciate as much as do hon. Members in other parts of the House, that money has to be raised, and we also appreciate the hon. and learned Member's remark that everybody who is taxed feels that he more or less has a grievance and would much prefer the tax to fall on some other section of the community. We know that the Chancellor's job is not an easy

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    one, but is it justifiable that at the present moment we should seek to impose what, after all—and the Chancellor's legal abilities and debating power will not cover this fact—when all is said and done, is a tax on poverty and a tax that falls the heaviest on the poorest section of the community?
    Most of the discussions during the Budget season will really be carried on by the representatives of vested interests seeking to escape their fair share of the burden of taxation. With the other two increases in the Budget, on Income Tax and petrol, we on this side may have very little fault to find, but when it comes to this Tea Duty, I really wonder whether there is a Member in this House who honestly, sincerely, and in his own heart would feel, if it was not for the party Whip, that he ought to support it. It does not take any stretch of the imagination to recognise that this increase in the Tea Duty is not in the same category in any degree as the other increases which are proposed. We generally pride ourselves in this House that such taxes as are imposed shall, at least superficially, suggest that they are equitable, fair, and proportionate to the backs that have to bear them. But that cannot be said under any circumstances of this tax. It is inequitable, as has already been argued, in that the very poorest type of tea, purchased in the main by the poorest section of the community, will pay exactly the same tax as the higher priced teas, purchased, of course, by the well-to-do and better placed.
    One cannot escape the thought that while Death Duties, Super-tax, and champagne escape the attentions of the Chancellor of the Exchequer when he seeks to find additional revenue, the Tea Duty of the poor should share that advantage. It almost leads one to ask the question, Has Britain really sunk so low, has it reached such a distressing state, that we have to go to the very poorest homes, to the old age pensioners, to the family trying to exist under the means test, to the hundreds of thousands of homes where the wages are under £2 a week, and ask them to pay the additional tax? I sometimes wish the housewives of this country were organised. If they were, I venture to say that the Chancellor would not dare to have suggested this further increase
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    of the tax on tea. The only argument that the right hon. Gentleman has used—and I do not imagine he really believes it himself; I think we know him better than that—
    Sir J. Simon: Do you believe in yours?
    Mr. Green: Well, I am sure the Chancellor will agree, when he asks for an increase of this tax in order that every class shall bear its share, that that is not the sort of thing that one can justify to one's own conscience. If these poorest people were not contributing anything by way of taxation to the increased expenditure, necessary, it may be, to the country, there might be something in that contention, but we all know, and the Chancellor knows better than any of us, that these poorer sections of the community are bearing an out-of-proportion amount of taxation at the present time through indirect taxes on foodstuffs, and when one recognises that, it does not seem to me that there is too much in the argument that every class should share the burden.
    I suggest that the man on the means test and the old age pensioner are bearing more than their burden of the national expenditure to-day, and some of us do not appreciate the other argument used by the Chancellor, that there will be a sense of pride, a feeling of happiness, in these poor homes, where life is a constant struggle from one week's end to another, in paying 1½d. or 2d. a week extra towards the national Defence. No one doubts their patriotism or their love of their country, although it has not treated them very well, but at any rate one does feel that you are hardly dealing fairly with these people when you suggest that the test of their patriotism will be their pride to starve themselves a little further than they are doing already on incomes which are totally inadequate to keep body and soul together. I know that what is meant by 1d., or 1½ 2d. a week cannot be appreciated by the bulk of hon. Members sitting opposite, but some of us fancy that we do know what it means, and because of that we say that this tax ought to be rejected. It is not as if there were not other sources available that could be tapped without any feeling of hardship or grievance being created. In the main, as many of our poorer people will resent this tax and feel that it is art

    781
    injustice, and that their patriotism is being exploited, we urge the Chancellor of the Exchequer to reconsider even now the removal of this additional tax on tea.
    7.45 p.m.
    Mr. Lewis: This Amendment raises a very important matter of principle. The Chancellor of the Exchequer has explained in his Budget statement how the acceleration and the increase of the rearmament programme has necessitated the finding of a larger sum of money than was otherwise anticipated. As a consequence of that he is obliged to bring before us some proposals for increased taxation. He suggested in that statement that as this increased provision for armaments was something which directly affected us all, something that was of absolutely primary-importance to us all, therefore, as far as could be devised, all classes of the community should make some extra contribution to meet this extra charge. He suggested, in order to spread this burden widely, that there should be an increase in the Income Tax, the Petrol Duty and the Tea Duty. Hon. Members who support this Amendment seek to get that increase of the Tea Duty removed. If they had their way the result would be that the great bulk of the population would not make any extra contribution towards this extra burden of rearmament, because, broadly speaking, the result would be that the extra burden would be borne only by those whose incomes came within the limit of the full Income Tax charge or who would become liable to extra duty through the use of petrol, and, of course, those classes are a comparatively small number compared with the whole of the community.
    The hon. Member for Deptford (Mr. Green) seemed to think there was something extraordinary, something almost improper, in the suggestion that at a time of national emergency like this the great bulk of the people should be not merely asked to make a contribution towards that extra expense but should be expected to make it gladly. He could not understand why. I can assure him that there are great numbers of people in this country, very poor people, who will make their contribution quite cheerfully, having regard to the purpose for which it is asked, and I venture to say that there will not anywhere be much murmuring, except among those who have so far
    782
    absorbed the principles of Socialism that they expect somebody else to bear all their burdens. As to the actual duty proposed I would remind the Committee that the Tea Duty has in past years been much higher than it is to-day. That is often forgotten. At the time of the Great War it rose to 1s., and, if we go still further back, in the Crimean War it was as high as 1s. 9d. I would remind the House that during that interval of time, in which this tax has been either remitted or been so much smaller, direct taxation has increased enormously. Therefore, it cannot be suggested that any relatively severe burden of fresh taxation is being placed upon the consumers of tea.
    Some Members, of course, raise the question whether tea is a proper subject for taxation at all. I have argued in this House before that tea is a particularly good subject for taxation, because it is a luxury of almost universal consumption. It is by far the most popular stimulant that we use. For my part I think tee-totallers, in particular, should be very glad of this opportunity of making some small further contribution to a revenue which for so long has taken a quite disproportionate share from those who use other stimulants in the form of beer or whisky. As to the burden of the tax, those hon. Members who took part in or listened to the Debate on this subject two years ago may remember that the then Financial Secretary to the Treasury gave us some interesting figures to show what the burden of this tax was. He estimated that there were at that time some 35,000,000 people in this country who drink tea, and that the average consumption per head was in the neighbourhood of 9¼ lbs. A simple calculation will show hon. Members that an addition of 2d. per lb. to the duty means an additional charge of somewhere about 1s. 6d. per head per annum. I would commend those figures to those hon. Members opposite who sincerely think that this extra charge will be grudged by the great majority of the men and women in this country, bearing in mind that it is asked for to meet the greatest of all national needs, the safety of our homes.
    As to the ability to pay the tax, it is perfectly true, as the hon. Member for Deptford said, that if an income be sufficiently small any additional charge is a serious matter. That is obvious, but I

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    would point out, as we are considering relative matters, that hon. Members opposite when they stress this argument, ought at the same time to remind their audiences that as a result of the same policy pursued by the present Government the position of the great mass of the wage-earning classes of this country has greatly improved during recent years. There was a very interesting article on that subject in the "Daily Herald" a week or two ago, in which their industrial correspondent pointed out that the total net gain through wage increases in 1937 was somewhere in the neighbourhood of £50,000,000. When we are considering the imposition of what is admittedly an additional burden, we ought also to have regard to an improvement in the capacity to pay. I do not think the one can be fairly considered without the other. As to the Amendment as a whole, I would say that I think hon. Members opposite are very slow to realise any new thing. They were very slow to realise the necessity for rearmament. They voted against the Service Estimates long after everyone else realised their imperative necessity, and just as they were very slow to recognise the necessity for rearmament so, tonight, they are very slow to realise that rearmament has to be paid for.
    7.55 p.m.
    Mr. George Griffiths: I have listened with interest to the hon. Member for Colchester (Mr. Lewis) and the hon. and learned Member for Bridgwater (Mr. Croom-Johnson). Both of them represent working-class constituencies. I should like to follow the hon. Member for Colchester for two or three minutes, and then I shall come back to the Chancellor for about five minutes. The hon. Member for Colchester said that tea is a luxury. It may be a luxury to him, who was practically born with a silver spoon in his mouth, but it is not a luxury to the old age pensioner, to the widow and to the unemployed. It is not a luxury to persons on relief, of whom there are now 230,000 more than when the Labour party went out of office. It is not a luxury to the men who have been maimed in industry. In the industry which I represent 178,000 men were maimed last year-25 per cent. of the number working in the industry, one in every four. When a man gets maimed he gets his wages
    784
    cut in two, and when this taxation is put on he does not regard it as a luxury. Last Sunday afternoon I was in Oldham speaking about the Budget, and I said that the Stock Exchange had christened the Chancellor "Simon the Tanner," and a lady who stood just in front of me said, "He is not Simon the Tanner to us; he is Simon the Starver, because he put the tax on tea." That was the name they gave him in Lancashire. What they will give him in Spen Valley I do not know.
    I have heard four Budgets since I came into this House, and I have never heard a Chancellor put it across so nicely and smoothly as the present Chancellor did. He practically hypnotised the House for a time, until he came to mention this extra "tanner," and then I saw one of his followers get up. He had to go out to get a drink because he was fainting. When he came back he looked as though he had been revived. There is one passage in the Chancellor's speech which I have marked in the OFFICIAL REPORT in both black and red, because I intend to use it in the by-election at Barnsley. The Chancellor knows something about elections in Barnsley, because at the last election he had a pretty warm time there. This was the astounding thing which was said by the Chancellor:
    " I well understand that even an extra halfpenny per week is a material and an appreciable addition to the expenses of those with the smallest incomes. [HON. MEMBERS: ' Why do you do it? '] Why do I do it? "
    He pulled himself up to his full height, taller than I am—I was sitting there looking at him—and he said:
    " I believe that there is a willingness and even a pride in the humblest homes to take a share in this rearmament outlay, for defending those homes from peril."
    They have not been defended from poverty—never mind peril. I want to come back to the hon. Member for Colchester in a few minutes. I have a few figures not from Colchester but from Yorkshire. I was reading:
    " defending those homes from peril, just as much as in the homes of more comfortable and wealthy people."—[OFFICIAL REPORT, 26th April, 1938; col. 66, Vol. 335.]
    I have some figures from Yorkshire showing the numbers of people who are on poor relief at the present time, and who are pensioners. They have had to apply to the West Riding authorities for additional help. They are people who do

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    not look upon tea as a luxury; they look upon it as a necessity. I would tell the hon. Member for Colchester that a lot of those people buy their tea two ounces at a time. I do not suppose that he ever heard of that in his life. When I was a lad at home I was sent to get the tea two ounces at a time. My father was earning about 21 bob a week for the eight of us. My mother would fetch it in a piece of white paper. It used to be taken out of the caddy with a spoon and weighed. The shopkeepr will have to charge on those two ounces for the extra 2d. per pound. He charges on the two ounces and there are eight times two ounces in the pound. Those people have to buy their tea like that. In the West Riding at the present time the number of married couples who are both contributory pensioners on relief is 1,055 and the relief paid out to them during the last 12 months was £28,756. The number of couples on relief containing one pensioner, that is to say with only 10s. a week between the two of them, is 1,239, and the amount paid out in relief is £5,500.
    In such a case, the man draws his contributory pension. When he gets to 65, generally speaking, the boss sends for him to the office and says: "You have been a jolly good worker, Jack; you have worked for this firm for the last 40 years, but, you know, you are not so good as you used to be. We can't expect it. We have got to reduce the staff next week. We are sorry to lose you, but you know you get a pension now." The man gets his pension of 10s. a week for the next three or four years, and nothing else. I could go down the list and give the total figures relating to relief in the West Riding. Leaving out the cities, the full total is £197,370. That is where the additional spending goes about which the hon. Member for South Croydon (Mr. H. G. Williams) cannot sleep at nights. The rates are going up all over the country. Rates are the hon. Member's bogy. We are paying £197,354 in contributory pensions. When it comes to non-contributory pensions we are paying £61,000 in the West Riding to poor people who look upon tea not as a luxury but as a necessity. They cannot sit with their feet across the fender singing:
    "Rescue the perishing, care for the dying."
    It is not easy for those people, because the 2d. in the lb. is a burden to them.
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    We appeal to the Chancellor of the Exchequer to take that burden away from them, and from that lady in Oldham who said he was not Simon the Tanner but Simon the Starver. I cannot very well forget that description. Why? Because these poor persons feel that the 2d. tax is an addition which is taking something away from them. I appeal to the Chancellor and to the Financial Secretary to take this matter into their consideration and to find the additional £3,000,000 from some other source.
    8.5 p.m.
    Colonel Nathan: A few moments ago the hon. Member for Colchester (Mr. Lewis) said that he did not think it was in the least likely that the housewives of the country would grudge the payment of the extra 2d. per lb. on tea. This afternoon I was addressing a meeting of women not very far from here. I did not go to speak about the Budget and I said very little about it, but on the mere mention of this 2d. tax on tea there was a shout throughout that gathering of housewives. It is not asserted that if this additional tax stood alone and if the level of the cost of living were lower, the extra 2d. per lb. would make all the difference in the world, but hon. Members sometimes fail to realise that the extra 2d. comes on the top of so many other increases, some of which are due to the immediate action of the Government in imposing taxes and some to the indirect effect of Government policy. The increase is also on the top of a gradually rising curve of expenditure, which has been rising now for six or seven years. It is that fact which makes the burden so heavy.
    On the other side of the House hon. Members may feel that the extra 2d. in the lb. does not make much difference to them. I say at once that it does not make much difference to me. I shall not go without anything because of it. Probably most of us will not notice it, but will take it unobserved in our stride. The real complaint against hon. Members opposite, and against the Chancellor of the Exchequer, is that they do not understand what happens in the ordinary homes of the ordinary people in the byways and side-streets of our great cities and our countryside. The extra ½d. on the 4-oz. packet of tea makes a real difference to the householders of the kind

    787
    whom I have in mind. My hon. Friend has just referred to tea being bought in screws of 2 ozs. and he was, of course, quite right, but the price will be put up for those 2 ozs. not one farthing but one halfpenny, and, in spite of the increase of tax being 2d. in the lb., for the people who buy tea in those small quantities the additional tax will be 4d. in the lb. That is the sort of thing which is happening in the everyday life of the ordinary people whom hon. Members on the other side seem so often to overlook or not to understand—not of ill-will, but because they do not realise the position. Well-inclined though they may be, they just do not know what difference small items make to people who have to live on the narrowest margins and often —too often—without any margins at all.
    It was sad to listen to the Chancellor of the Exchequer a few days ago bringing forward this tax in his very first Budget as Chancellor of the Exchequer, because one remembers how for a generation, at least from 1906 onwards, he was one of the protagonists of a reduction of the tax on tea. He was spokesman on every platform in the country of the policy of the free breakfast-table. How lamentable it is that this Chancellor of the Exchequers of all politicians, with that record behind him, should take a hand in making the breakfast-table less free than it was when he took office. When we remember the scanty budget of the ordinary working-class housewife, how meat is up in price, the price of bread is up fantastically, the price of milk is so high that it is becoming almost prohibitive, bacon has almost disappeared from the breakfast-table of the poor and the price of potatoes, flour and a vast range of every-day commodities which are the very staple of life in working-class households, one realises what an enormous difference and what a tremendous burden this extra tax is for those people.
    I sometimes wonder whether hon. Members on the other side ever make it their business to work out exactly how the working-class budget is expended. I refer to hon. Members on the back benches upon the Government side of the House. Even the Government cannot tell us what the burden of indirect taxes is upon the private citizen. In answer to a question some days ago on this very question of the burden of indirect taxes,
    788
    the Chancellor of the Exchequer blandly answered that he really did not know, and that the Government did not possess statistics which would enable him to give to the House the information. What a shocking thing it is that any Chancellor of the Exchequer should put forward proposals for an increase, whether of direct or indirect taxation, without knowing what the burden of that taxation would be upon the private citizens who had to pay it. The Chancellor of the Exchequer openly admitted on the Floor of this House that he really did not know; I suggest that it is about time that the Government informed themselves upon this subject, as others have endeavoured to do, in order to be in a position to give necessary information to the House of Commons. If they did so they would find that the burden of indirect taxation—
    Mr. Deputy-Speaker (Captain Bourne): The hon. Member is discussing the tea tax as though it were still an annual duty. There will be a further opportunity for considering the question of indirect taxation, but I would remind him that nowadays the tea tax is not an annual duty, and, therefore, the same opportunity for debating it does not arise.
    Colonel Nathan: I bow to your Ruling. I will put my argument in a different way. If such an inquiry were made I believe that the Chancellor of the Exchequer and the Financial Secretary would be surprised to find what a difference is made in the burden of taxation upon the smallest income by this extra 2d. in the pound on tea. An hon. Member opposite asked why every class in the community should not bear some proportion of additional taxation. I wonder whether he has looked at the White Paper presented by the Chancellor of the Exchequer; or, if he will read the Chancellor's speech, he will realise it. He will find that special steps have been taken, and it is made a boast by the Chancellor, so that certain taxpayers shall escape a part of the additional burden. I refer to the lower ranges of the earned Income Tax payer, who suffers no additional burden—
    Mr. Lewis: He shares the burden of the petrol tax and the tea tax.
    Colonel Nathan: I shall not allow myself to be drawn into an argument as

    789
    to the merits or defects of the addition to the petrol tax. I will only say that the petrol tax does not directly affect the Income Tax payer any more than it affects the payer of indirect taxes. It affects all of us indirectly, through the whole machinery of movement and the occasions for the use of petrol. I wish, however, to press upon the Government the undoubted burden that this additional taxation involves for the poorest households in the community, and I want to ask the Government whether they will not even now, at long last, take some steps to inform themselves and to enable them to inform the House and the country as to the burdens which this taxation involves upon every class of taxpayers.
    8.18 p.m.
    Mr. Tinker: There is one thing to be said for those hon. Members opposite who have supported this tax, and that is that they have shown courage in backing up the Government in what they are attempting to do. As a rule we get silence from the benches opposite; there is no effort to defend the Government. Therefore, I somewhat admire the attitude of hon. Members opposite who put forward reasons for the vote they are going to give. I would recommend them to make inquiries of their constituents as to whether this tax is really acceptable in the form in which it has been imposed. I think that, if they put the case before their people, they will find that there is a great deal of opposition from those upon whom the tax has been imposed. Apart from that, even if there were no outcry from the people of this country, it would be our duty here, as Members of Parliament, to draw the attention of the Chancellor of the Exchequer and the Government to the fact that we shall always oppose indirect taxation, whatever form it may take. I think it is a wrong method of attempting to get money, because many people do not realise where they are being called upon to pay, and I claim that all taxes ought to be so prominent that everyone knows what he is being called upon to give to the Treasury. Then we should know exactly what had to be done.
    I claim that this money could have been found from other sources. To-day I had a reply from the Financial Secretary giving me the information I desired. I suggested, in the Debate on the Budget statement, that, if the present limit of £2,000 for Super-tax were reduced to
    790
    £1,500, the money could be found in that way. To-day the Financial Secretary tells me that that would bring in an additional £8,000,000 per annum to the Treasury. It might be said that that would be too big a burden for Super-tax payers, but I have never held that view. When once men and women have a certain standard of life, which gives them all that they desire, I claim that above that standard all the money ought to go to the relief of taxation. I claim that this would be a more sensible method than attempting to put the burden on a commodity that is used in every household. I do not argue that there will be any reduction in the drinking of tea. There will not. Because it is such a necessity in the household, people will go on drinking the same amount as they did before; they will not try to save on that. But when a commodity like this, which is used in every household, is being deliberately taxed by the Chancellor on the plea that the people of the country are all anxious to give something to the national credit to meet this armament boom, or whatever it may be, I think he is entirely wrong in his conception of what working-class people think. It would have been far more honourable if he had simply said, "I want the money, and I am going to have it."
    The poor are suffering in many ways owing to the burden of armaments, apart from this taxation on tea. At the present time the Income Tax is giving a greater yield than it has ever given for many years, judging from the figures I have examined to-day. A penny on the Income Tax now brings in £5,000,000, and it has never been at such a high figure since 1927. In 1925 it was slightly more. That goes to prove that the fairly well-to-do are doing exceedingly well out of the present position of the country—that is to say, the middle class, and I put most of those who pay Income Tax into the middle class or the better class. They are doing far better now than they have done for many years. Therefore, I claim that this additional money could have been got by much fairer methods from the people who are well able to pay, rather than resorting to the class of people mentioned by my hon. Friend the Member for Hemsworth (Mr. G. Griffiths). The old age pensioner whose pension still remains at 10s. a week, when he has his

    791
    cup of tea has to pay more for it out of his 10s. a week. The same applies to the widow on pension, to the unemployed man, and to the man on what is called public assistance. All those people with a meagre allowance have to meet this additional burden, and, even though it is only a slight amount, it assumes, in the case of very small incomes, rather large proportions, much more than the extra 6d. on the Income Tax will mean; because again I argue that, when you have enough to live upon, the additional money that is taken from you does not affect you as it does these poor people.
    Many of us who will be called upon to pay additional Income Tax will not be any worse off. We shall not have to give up any suits of clothes, or any pairs of boots; we shall not have to miss a meal; we already have enough. But to the poor people this extra cost will represent a large amount. It would be far better for the Government not to have done what they have done. However, I suppose it is no use arguing in the hope of getting them to alter what they have set out to do. The only effective remedy that we can use is to voice our protest and make it known to the country, and, then at the first opportunity we get, to urge the people to turn out a Government that resorts to such mean methods as those of this Budget.
    8.25 p.m.
    Colonel Clifton Brown: I want to say a word or two from this side of the House in defence of this tax, because I realise, like everyone else, that it is not exactly a popular tax—no taxes are ever popular. I anticipate fairly well that, when the next election comes, there will be a little leaflet and the names of all of us who vote for the tax will be on it, and I thought I would not give a silent vote. I am prepared to have those leaflets issued in my constituency—as they have been before, with very little effect—and say a word in defence of the Chancellor and this tax. I am aware that this tax produces hard cases. Every tax does. When Income Tax, for instance, is increased, and a business man's employés get discharged in consequence, the employés are the hard cases. The old age pensioners are the hard cases in connection with this tax. But they are not the only people affected. This tax will touch millions.
    792
    Those who are earning or £3or£4 a week would pay no extra taxation at all unless there were some tax of this kind, which I, like others, am prepared to believe they are only too proud to pay. I do not think the other side help their case by exaggerating the hard cases or the hard times during which this tax is imposed. An hon. Member has told us that there are more people on Poor Law relief even than there were five years ago. That is not so.
    Mr. G. Griffiths: Will the hon. and gallant Member look up the returns published last July, which show that there are 230,000 more persons on relief? They are the Government's figures, not mine.
    Colonel Brown: I may be wrong; but I made inquiries, and that is the answer I was given. I will look into it, and if I am wrong I will withdraw the statement. The hon. Member for North-East Bethnal Green (Mr. Chater) told us that prices were rising and people were hard up. But there is a definite gain, as a result of the rise of wages, over the cost of living. While one must deplore the fact that there must be an increase in taxation, I do not think one can reasonably complain of a tax which is distributed over such a wide field, and which is not too hard for a large number of our people.
    Mr. G. Griffiths: Is it not a fact that the rise in the cost of living since 1933 has been 18 per cent., and the rise in wages 7½ per cent.?
    Colonel Brown: The Chancellor has been accused of having no imagination and of having only accepted the view of the Treasury officials. One knows that the great idea of the Budget was that all classes should pay a fair proportion. If the Treasury were the authors of this Budget, who were in a fairer position really to distribute the burden than those officials, who are able to survey the whole field? On the whole, when you consider the increase of other taxes—the increase of direct taxation, coming on top of the increase of direct taxation last year, when there was no increase of indirect taxation —it does seem to the ordinary person that this is a very fair tax to impose, and it has the advantage that as a rule, with a tax on tea, it is direct, and there is not much wastage in middlemen's costs.

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    I have one recollection of a Budget when the other party was in power, when the tax on tea was reduced by a penny. On that occasion, the moment was chosen so badly that, owing to the state of the tea market, the price never fell anything like that. I have sufficient confidence in the Chancellor to make me believe that he will have studied the tea market, and that the price of tea probably will not rise by anything like the amount of the tax, and probably will not rise at all.
    It seems to be suggested by the party opposite that if a tax affects millions of our fellow subjects, it should not be put on. This tax is, of course, unpopular. The Chancellor cannot have wished to impose a tax which would be unpopular, but if the great mass of our citizens never have any tax put on them we shall be killing the goose which lays the golden eggs. True leadership will face the fact that our working people are just as willing as anybody else to pay their fair share of taxation. I have had some experience, having fought an election when people were far poorer than now—at my first election, 28 years ago, there was indirect taxation far higher than there is to-day—and I used to be amazed at the patriotism of the people. Nothing would ever persuade me that their patriotism consisted only in shouting songs and waving flags; it goes far deeper.
    8.34 p.m.
    Mr. Gallacher: We have had a demonstration this evening of what representation means to the Members on the other side. I hope that those who are interested in the by-election which is taking place at Lichfield will take due note of what has happened here. It is necessary to draw attention to the fact that in discussing the Resolution before this, where there was a tax which affected profit, the hon. Member for Rusholme (Mr. Radford), who was interested in profits in that particular industry, made a real fighting speech, which staggered the Treasury Bench. The Financial Secretary to the Treasury got up at that Box and said the whole matter would be reconsidered. Member after Member on the other side got up. There was a regular barrage directed against the Treasury Bench on the question of a tax that was going to affect profits, but, when it comes to a tax which is going to affect constituents, where are the Christian
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    gentlemen? There is the hon. and learned Gentleman the Member for Bridgwater (Mr. Croom-Johnson). He represents an area in which there are very poor agricultural workers, who would consider a wage of£3 real affluence, they are so poor. Do you find hon. Gentlemen opposite fighting for their constituents in a manner in which they are prepared to fight for profits? No, Christianity is forgotten, and all the gentlemanly qualities disappear, and their constituents are thrown to the wolves on the Treasury Bench. They have no opportunity of expressing any dissent. The Chancellor of the Exchequer is very sensitive.
    Mr. J. J. Davidson: Did the hon. Member say "sensible "?
    Mr. Gallacher: No, not sensible, but very sensitive. Why is he so sensitive? Because he is conscious of his own guilt. When the hon. Member for Deptford (Mr. Green) said that the Chancellor of the Exchequer did not believe in his own argument, the right hon. Gentleman responded quickly; he was so affected and upset. I have heard the Chancellor of the Exchequer using all the great brilliance that has been so often talked about, to try to prove without the shadow of a doubt that the one great and desirable thing in this country was a free breakfast table, and say that anything that interfered with a free breakfast table was an evil and something not to be supported and encouraged by him. Did he mean it? Do hon. Gentlemen who believed his arguments then reject his arguments now?
    But the right hon. Gentleman has gone a long way since then. What a company he is in. He recognises the parlous condition of the poorest of the poor. As the Mover and Seconder of the Amendment said, he is very concerned about their plight, but he puts an extra tax upon them. He says that they have a right to pay and will take a pride in helping to pay for rearmament. Are they not already paying for armaments? What are all these increased prices but payment for armaments? [An HON. MEMBER: "Wages."] The Unemployment Statutory Committee say that they cannot increase relief to meet the actual needs of the unemployed because wages are so low. They are cutting down unemployment relief, but prices are soaring. Did

    795
    the Chancellor of the Exchequer ever hear of rent, and how the payment for armaments is affecting rent? There has been an extra cost of £126 in the provision of a workman's house during the past two years. Is that not paying for armaments? There has been £30 for increased cost of material, as the Secretary of State for Scotland told us, £20 increased cost of superficial area, and £6, increased cost of wages, making £56 as the actual increased cost. What of the other £70? The Secretary of State groped around and then told us that "floating factors accounted for this. "Floating factors "? It is robbery for armaments.
    The poorest of the poor are the most hardly hit in every direction. It is monstrous to say that they would take a pride in paying for armaments. An hon. Member opposite who has spoken and has now left the Chamber is so melancholy-looking that one would naturally think that he had been brought up on a starvation diet. I do not know what is the matter with his internal organs, but he does not seem to enjoy the wealth that somebody has provided for him. He says 'that tea is a luxury. I have spent most of my life doing pretty hard work, and year after year my principal diet, knocking off at nine o'clock for breakfast, and at one o'clock for the midday meal, consisted of two slices of bread and butter, with maybe a piece of cold ham or bacon between, and tea, not champagne and all the different kinds of wines and cognac. The poorest miners go to work in many of the villages with a tin of bread and butter and a flask of tea in their pockets.
    The very necessaries of life are being affected. The Amendment proposes that the 2d. should be taken off and the tax reduced by 2d.; that instead of £3,000,000 extra from tea there should be £3,000,000 taken off. That is the proposal. Cannot Surtax stand another £6,000,000? Of course it can. We should make the rich pay. Some hon. Members have said that the poor people should pay for rearmament; it is for the protection of their homes. Is there any hon. Member prepared to say that there is any protection for the homes of the poor people of this country? We have all this babble about air-raid precautions, and all this mess, muddle and nonsense about gas attack.
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    What has that to do with the protection of the homes of the people? Explosive bombs will destroy homes everywhere. There is no protection for the homes of the people against bombs. One of my comrades, the leader of my party, Harry Pollit, was in Spain and he stood looking at Tortosa where there was not a building left and the population had been scattered. What protection is the Home Office giving for the people? I have raised the question of evacuation.
    Mr. Deputy-Speaker: I must ask the hon. Member to keep to the subject of the Amendment.
    Mr. Gallacher: There is no protection for the homes of the people of this country. The armaments are not for the protection of the people but for the protection of the privileged people and their property. The whole policy of the National Government makes that clear. The people who will get protection from rearmaments are the rich. The Chancellor of the Exchquer spoke about the Surtax payer, the fellow who has married a woman who has Surtax qualifications and who sends some of his capital to America. That man said that he was doing it because he was afraid of what would happen if a Labour Government came into office. Hon. Members heard in the court recently the case of a Member of this House. Why should such people be left with money which is so valuable and could be used for the people instead of being wasted and squandered?
    Mr. Deputy-Speaker: The hon. Member must keep to the Amendment.
    Mr. Gallacher: I was about to suggest that the £6,000,000 we are asking for in this Amendment is modest, and that it can be obtained without putting an extra penny of tax upon anybody. I would ask the Financial Secretary to the Treasury to give special consideration to this point. He said that he would give great consideration to the point raised by the hon. Member for Rusholme (Mr. Radford). If the Financial Secretary would recommend the Chancellor of the Exchequer to accept this Amendment and if the Government would deal thoroughly with the question of tax evasion they could get the £6,000,000 without putting another extra penny of tax upon anybody. The tax evasion amounts to about £10,000,000,

    797
    and they are proposing to get only £1,000,000 from that source in the Budget.
    Lieut.-Colonel Colville: Will the hon. Member say who estimated the amount of tax evasion?
    Mr. Gallacher: It was an estimate made during the Budget discussion, and I should have to look it up. The estimate was not seriously disputed. There is a possibility that the figure may have been slightly exaggerated, but the fact remains that there is a big field over and above the £1,000,000 which is proposed to be obtained by the Budget from that source. I am certain that if effective means were applied to prevent tax evasion by the higher range of taxpayers the Government could accept this Amendment and get the necessary £6,000,000. It is a shame and a scandal that the old age pensioner and the very poorest people should have any further burden put upon them.
    This increased Tea Duty is bad for the working class as a whole. The Chancellor of the Exchequer says that they have a right to pay, as if they were not paying already in other directions. What about the N.D.C. contribution? We were told that that was to be a tax on armament profits. Then it was changed and it was made into a Co-operative tax. The old age pensioner who has a few shares in a co-operative society, and all the other working people who have cooperative shares, have to contribute towards N.D.C. Therefore, this extra duty on tea is an addition to the heavy burdens already being borne by the masses of the people, who are getting no protection for the money they are paying. In view of the fact that the working people are already more than sufficiently taxed I would ask hon. Members opposite to forget profits for a moment and for once to put the interests of their constituents foremost and to fight for their constituents as they would fight for profit. If they would do that the Amendment would be carried and the Chancellor of the Exchequer would have to find the £6,000,000 in some other way.
    8.52 p.m.
    Sir H. Croft: I have an Amendment on the Order Paper which, I understand, will not be called, and I should like briefly to make the point which I should other
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    wise have made had I been allowed to move the Amendment. It is 28 years ago this month since I had the honour of making my maiden speech, and it happened to be on the subject of tea. On that occasion I urged that we should lower the amount of the duty on tea coming from India and Ceylon, which was consumed in large proportions by the working classes, and raise the duty on foreign tea. I have been consistent to that principle, and it is to that subject that I should like to call the attention of the House.
    On the broad question I do not want to follow the arguments of the last speaker, but I would point out that this instrument of the Tea Duty has generally been recognised, I think for 300 years, as the normal duty by which a greater number of people can contribute in case of emergency. That duty was not removed entirely during all the period when Liberal, Socialist, Conservative, Coalition or National Governments were in office, except when the right hon. Member for Epping (Mr. Churchill) was Chancellor of the Exchequer. It was during his Budget in, I think, 1928, that he removed the Tea Duty. It was always a favourable subject of election speeches. When my right hon. Friend removed the duty I remember that one of the most brilliant debaters among the left wing supporters of the Opposition at that time declared: "Thank you for nothing." I think I am right in saying that, taking the average working class family, throughout the year the value represented by the duty was something like 7s. 4d. It is true that when we went to the electors and told them the great advantages we had given them in taking off the Tea Duty the only response we got from the housewives was, "What about bacon? "—and there was no duty on bacon at that time. It will be agreed that if the masses are to be asked to contribute to any form of taxation probably this is the lightest of the various duties which could be proposed, and that is the reason why ever since tea has been imported into this country it has been regarded as a legitimate fiscal instrument.
    I want to deal with one particular point. The Chancellor of the Exchequer is raising the Tea Duty by 2d. in the lb. —6d. to 8d.—and 4d. to 6d. on Empire tea. The point I want the House to appreciate is this, that the preference under the old scale of duties was a prefer-

    799
    ence of 50 per cent. over foreign tea, and that by the present proposals this preference is being reduced to 33½ per cent. To that extent the advantage to tea producers in the Empire is narrowed. I feel most strongly that we should be careful whenever we make alterations in our taxes not to narrow the advantages which this country has declared should be given to producers in the British Empire. I feel this all the more strongly because it is really vital that we should do everything to maintain the proportion of tea from India. There is such an enormous number of workers employed in the industry in India that it is of supreme importance we should maintain the industry in full work, and it is all the more important at the present moment, when we are by negotiation trying to get better facilities for the products of Lancashire in India, that there should be no appearance of narrowing the preference.
    I do not think the Chancellor of the Exchequer did it deliberately but I believe he would have been much wiser if he had left the Empire duty at 5d., which would have given an advantage to Empire tea which is consumed by the working classes of this country, even if he had increased the duty on foreign tea. I cannot propose that, but I hope we shall have an assurance that if it is possible the Chancellor of the Exchequer will see if he cannot modify his proposal so as to maintain the preference as it was. It may interest the Committee to know that when the Tea Duy was abolished by the Budget of the right hon. Member for Epping, Empire tea was 85 per cent. of our consumption. Last year it had sunk to 82 per cent.—not a great decline—and at the present moment it is something like 90 per cent. When the preference is restored you immediately see an increase in the amount of Empire tea coming into this country. Although there may be a difference of opinion on all kinds of fiscal measures I believe there is one principle which is now accepted by all parties, and that is that wherever we can, without injury to our own people, we should prefer the products of the people of the British Empire. I do not think hon. Members above the Gangway would ever take away a preference which has been granted.
    Mr. Lansbury: You do not know of what they would be capable.
    Sir H. Croft: I have every respect for the sincerity of the right hon. Gentleman, but I cannot think that there is any hon. Member on the Front Opposition Bench who would be prepared, when no injury is being done to the people of this country, to have any part or lot in injuring the preferential duties in the Empire. For these reasons I urge the Financial Secretary to give consideration to this matter. If we on this and other occasions continue to narrow the advantages of Imperial Preference without the House realising that there is an alteration of the principle which the House has adopted, we shall be taking a course contrary to the will of the country as a whole.
    9.1 p.m.
    Mr. T. Smith: The hon. and gallant Member for Bournemouth (Sir H. Croft), as we all know, takes a keen interest in Empire affairs, and particularly in financial matters relating to preferential taxation. I was privileged less than 12 months ago, in one of our Colonies, to spend a very interesting day on a tea plantation, and would say to the hon. and gallant Member that I want to see the position of the natives improved. I asked the proprietor of this tea plantation the wages that were being paid to the natives, and he told me that it was from 8d. to 10d. and is. a day. One person who was present said that they had a handful of rice per day, and I remarked that it was because they could not afford anything else. A lady member who was present said, "Perhaps you are right." When we talk about the Empire and all it stands for we must have some regard for the welfare of the people who produce the products. When you get 8d. as the price of a pound of tea f.o.b. and you notice the prices being paid in the shops there is a gap which should be investigated.
    I suppose there is no Member of this House more open to the charge of inconsistency than the present Chancellor of the Exchequer. I took the precaution at the week-end to look up some of his past speeches. I do not intend to weary the House by giving quotations from the right hon. Gentleman's speeches, but there is one quotation which is worth giving. Referring to the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), the present Chancellor of the Exchequer said:

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    " I know well that what that remarkable man says at one time is no sure indication that he will do it at another."
    That was said when the right hon. Gentleman was in opposition. He is now Chancellor of the Exchequer and he can justify anything. He attempted to justify this 2d. on tea by saying that tea drinkers in the United Kingdom will willingly raise the cup which cheers and does not inebriate because it is all for the national good. The sooner we clear our minds of that sort of cant the better. I want to oppose this duty first because it is a burden which falls heaviest on the poorest of the community. The hon. Member for Colchester (Mr. Lewis) divided the taxpayers of this country into watertight compartments. He said that teetotallers will willingly pay this 2d. as if teetotallers are the only people who drink tea. I represent a constituency where most people drink tea, but where a lot of other people drink things other than tea. The hon. Member for Hemsworth (Mr. G. Griffiths) graphically described the poorest classes in the community who will feel this burden, which other members of the community will not. I have been a big tea drinker, as most miners are. For 16 years I was working underground, and my favourite beverage was tea. I had two quart bottles full of cold tea every day, and after being several hours in the pit, it tasted as good as when it was first brewed.
    Another point I wish to make is that this is a flat rate tax, and not a tax according to value. People with low wages usually buy the poorest kind of tea. If a woman buys a pound of tea at half-crown, which is the average price which a housewife in a working-class district pays, 6d. out of that half-crown goes as taxation, but with the better blends of tea which cost, say, 4s. 6d. a lb., the same taxation of 6d. is paid. The poorer people are, the greater the amount of tax they pay. It is no good arguing that there is any equality in this. In my opinion, if we have to tax tea and other commodities, it would be far better if we graded the tax in accordance with the value rather than levied the taxation at a flat rate. Hon. Members opposite are great advocates of teaching the electors of this country what there is to know not merely about the science of government, but about what is paid in taxation. I suggest that if they are anxious that
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    people should know what they are paying in indirect taxation, they ought to apply the same argument towards tea as they use with regard to foreign produce. For many years I have heard hon. Members opposite arguing that everything that comes into the country should be marked with its country of origin. I would like to see packets of tea not only stamped with the price of the tea, but containing a statement of how much taxation is paid on it. I do not believe that the Chancellor of the Exchequer, if he were a free agent, would be opposed to that. It would be one of the best ways of teaching people what they are paying in indirect taxation. If that were done, I will not say what adjectives would be thrown at the right hon. Gentleman by women who, on paying their money over the counter, saw stamped on the packets the amount of taxation they were paying. With regard to the question of the ability to pay these taxes, the hon. Member for Colchester said that, according to the "Daily Herald," wages have risen in this country during the past 12 months by something like £50,000,000, and that because wages are higher to-day than they were 12 months ago, poor people will willingly pay this taxation. I want to ask the hon. Member why and how wages are higher to-day than they were 12 months ago. Is it not a fact that under our system, the only time that the workers can get an increase in wages is when they threaten to strike?
    Mr. Lewis: No, Sir.
    Mr. Smith: Can the hon. Member tell me when the mine-workers of this country got their wages increased without agitation? Surely, the hon. Gentleman remembers the way in which the public, or some of them, willingly agreed to pay is. a ton more for coal because wages were so low. Although wages are slightly higher in some industries, that increase has been more than countered by the increase in the cost of living. If the hon. Member cares to investigate that statement, he will find that it is true. The Ministry of Labour are collecting information from different classes in order to test whether the cost of living index is right or not. I assert that there has been a definite increase in the cost of living, which has fallen very heavily on the backs of those with fixed incomes, such as un-

    803
    employed persons and old age pensioners, and on wage earners, and that because of that increase in the cost of living, the workers have had to agitate for more wages. This tea tax is an additional burden which cannot be justified, and I hope that my hon. Friends will not hesitate to go into the Lobby in favour of this Amendment.
    Mr. Levy: Is it not true to say that wages to-day are 4 per cent. higher than they were in 1929, and that the cost of living is 4 per cent. lower than it was then?
    Mr. Smith: The hon. Member may make a statement about 4 per cent., but is it of any use going to a housewife in London who has a fixed amount of money, say,£2, coming in each week and saying to her, "Now, my dear, wages are up by 4 per cent."? What would she tell the hon. Member? It is no good discussing decimal points in connection with the cost of living with a housewife. She has so much money coming in, she will have to pay 2d. a pound extra on tea, and she will have so much less for other things.
    9.11 p.m.
    Sir Alfred Law: The hon. Member for Leigh (Mr. Tinker) said that he was not in favour of there being any indirect taxation. Does he, therefore, advocate that there should be some direct taxation paid by those who are now paying indirect taxation? Would he advocate a universal Income Tax? I have often heard that suggested, but if these were a universal Income Tax—
    Mr. Deputy-Speaker: I would point out to the hon. Member that under the old custom, when this tax was re-voted annually, it was legitimate to raise the question of the balance between direct and indirect taxation. Now that it is a permanent tax, that no longer applies, and the hon. Member may not go into the general question of taxation on this tax.
    Mr. A. V. Alexander: Further to your Ruling, Mr. Deputy-Speaker, we are debating to-night a proposal to increase the tax in this year. Surely we are entitled to make proper comments to the Chancellor about the effect which that has upon direct and indirect taxation. Indeed, we are moving in our Amendment to
    804
    reduce the tax below the level of last year. Therefore, we ought to be entitled to say to the Chancellor how we would propose to raise the revenue.
    Mr. Deputy-Speaker: I do not think anything I have said is contrary to the point which is put forward by the right hon. Gentleman. What I pointed out is that under the old custom, when the tax was re-voted annually, it gave an opportunity to raise the entire question of the balance between direct and indirect taxation. That was an understood custom on the Budget. The tax is no longer an annual tax, but a permanent one, and although it is in order to point out, as hon. Members in many parts of the House have done to-night, that the increase in this taxation could have been avoided if taxation had been levied in other directions, they may not now use this tax as an opportunity to go into the general question, not on the specific proposals before the House, but on the general question of indirect taxation.
    Sir A. Law: I will abide by your Ruling, Mr. Deputy-Speaker. Having pointed out to the hon. Member the alternative, J will leave that point. As regards that part of the Budget which deals with indirect taxation, and especially the Tea Duty, I must confess that I am rather sorry that resort has been made to an increase in the Tea Duty, because there are other means of indirect taxation which would not affect the poor as this will. I suggest that there should be a tax on football pools, a tax on luxuries, such as wines and spirits, and also a tax on bicycles. Motor bicycles are already taxed, and I do not see why some tax should not be put on "push" bicycles. When we come to consider the question of Income Tax—
    Mr. Deputy-Speaker: I would remind the hon. Gentleman that this is not an occasion for a general discussion on the Budget. On Report, we are limited strictly to the actual Resolution before the House.
    Sir A. Law: I was about to say that if we come to the question of the Income Tax—
    Mr. Deputy-Speaker: We cannot discuss the Income Tax on the Resolution which is now before the House.
    Mr. Lansbury: On a point of Order. I heard an hon. Member a short time ago suggesting that instead of increasing the taxation on tea we ought to increase Estate Duty or Excess Profit Duty or some other duty. Are we not entitled to say to the Chancellor of the Exchequer, "You can raise your money from taxation on land values or on something else," without necessarily going into the whole merits of such a proposal?
    Mr. Deputy-Speaker: The right hon. Gentleman has been long enough in the House to realise that on the Report stage of the Budget Resolutions we are limited to the Resolution before the House at the time. It would be in order, of course, to suggest that if the particular tax proposed were not agreeable to the House, there were certain alternative taxes, but, as I understood the hon. Member for High Peak (Sir A. Law), he was not dealing with that question. He was going into the general proposals of the Budget which is not allowable on this occasion.
    Mr. Lansbury: I do not want to be misunderstood and I agree that we cannot, on this occasion, discuss general taxation. All I am asking is whether we have not the right to reply to the Chancellor of the Exchequer when he asks, "How am I to find this money? "We ought to be in a position to tell him that he can find it elsewhere.
    Mr. Deputy-Speaker: The right hon. Gentleman would be in order if he put forward the suggestion that the money could be found, not in the way proposed, but by increasing Income Tax or Surtax or some other tax, but, as I have pointed out, the hon. Member for High Peak was not dealing with that question, but with the general proposals of the Budget.
    Sir A. Law: I submit to your Ruling, Mr. Deputy-Speaker, and I only wish to say a little more about the Tea Duty. I said just now that I was rather sorry that the Chancellor had put this 2d. on tea, because there are numerous other methods of putting on indirect taxation. The hon. Member for Leigh pointed out that there were unemployed people and old age pensioners and people in receipt of widows' pensions who would feel the proposed increase very keenly. Those who enjoy good wages or salaries will not feel the extra 2d. per lb. very much.
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    It has been computed that it would cost only about 1s. 6d. per annum. As I say, I agree that there should be some increase of taxation, but I regret that it should have been found necessary to impose it on tea.
    9.20 p.m.
    Mr. Graham White: The hon. Member for Normanton (Mr. T. Smith) made a, rather attractive suggestion when he proposed that each packet of tea sold, in addition to being marked with the price, should bear an indication of the amount of tax comprised in that price. I think that is an idea which might appeal to the Chancellor of the Exchequer and it would certainly enable the consumer of tea to realise at once the extent of the impost which he had to pay. The right hon. Gentleman said the other day that there would be pride in the homes of the most humble people, derived from the fact that by paying an enhanced price for their tea, they were sharing in the national burden. I certainly do not understand why patriotic sentiment should be stimulated more by paying a higher price for tea than by paying a higher price for any other article of common consumption. The hon. Member for Normanton went on to suggest that the tax should be graded according to the kind of the tea, but when he made that suggestion he was approaching a territory in which effective action would be very difficult.
    One of the difficulties in regard to the Tea Duty and in regard to this Amendment is that tea varies enormously in quality. There are many different grades and varieties of tea. It varies not only according to the country of origin, but also to the plantation where it is grown—the altitude of the plantation, the climate and the degree of cultivation to which it is subjected. Therefore, I think there would be great difficulty in carrying out that suggestion. The Amendment would, I think, add further to the existing complications. Everybody is wondering what will be the effect of the tax. This Amendment deals with tea from Ceylon and other places within the Empire and I notice that in auctions yesterday the price of Indian tea rose about a halfpenny per lb. We are all concerned to know whether the result of this increase is going to be the same as the result of raising the tax two years ago. The result then was—and to some extent it will be

    807
    the same this time—to concentrate buying upon the cheaper grades of tea.
    The right hon. and gallant Gentleman the Financial Sesretary the other day suggested that the consumption of tea was about 9¼ lbs. to 9½ lbs. per head of the population and he based upon that, an estimate that the extra tax would amount only to about is. 6d. per head of the population or that in the case of a family of four or five persons it would mean an increase from 6s. 8d. to 8s. 4d. per year. As a result of the concentration of demand upon the cheaper qualities of tea, in order that the people of this country may continue their long-established practice of buying tea according to price rather than according to quality, the dealers will be compelled to buy the cheaper qualities so as to enable the prices of their standard grades to be maintained at 2s. 6d. or 3s. or whatever they may have been. By steady gradations the prices of tea, following the imposition of the duty, rose steadily until it was necessary to put it up by 2d. a pound, so that the true result of the imposition of the tax was not an imposition of is. 6d. per head of the population but at least 3s., and we are wondering to-day whether the result of this tax, whether modified by this Amendment or some other, is not going to have exactly the same result as before.
    I have always been led to suppose that it is one of the canons of sound taxation that the Chancellor of the Exchequer should look for some tax that is expanding and giving an increased yield, and one in which there is some elasticity and buoyancy. That cannot be said in regard to tea. Anyone coming to London and arriving at any railway terminus is confronted by advertisements inciting him to drink, on the most lavish scale that has ever been seen. It merely indicates the extraordinary severity of the competition in beverages, which has made the consumption of tea a steady if not a declining quantity for some time past. Looking at the matter I may remind the House that from the point of view of the producer, a committee has been set on foot by agreement amongst Imperial producers to advertise in order to compete with other beverages and to try to bring back the consumption of tea to its former volume. The committee has been working for some years and has spent some
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    £50,000 in advertising, and now this duty comes along to knock their efforts on the head. The producer and the consumer, including the poorest members of the population, have to bear the incidence of the tax. I can think of nothing that can be said in its favour.
    There is an element of uncertainty in the situation. The price at the moment appears to be rising as a consequence of the imposition of the duty. Last year the committee liberated an extra 40,000,000 lbs. for the quota of production and from 1st April a further 40,000,000 lbs. will be liberated. That may do something to prevent the rise in price which would inevitably follow from the imposition of this ill-conceived tax. I suggest that the Chancellor should consult with the committee and ask them to liberate such quantities at such times as will prevent a rise in the market price.
    9.30 p.m.
    Mr. Silverman: It is a little difficult at this stage to make any point that is new, but I hope the House will forgive me, especially those who have listened to the greater part of the Debate, if I make my contribution, however unoriginal at this stage it is bound to be. As I understand it, the onus of proving that a new tax is fair, just and right, lies inevitably upon those who propose to inflict it. It is not for those who do not like a tax to prove that it is wrong. It is for those who seek to impose it to prove that they are right. Two arguments have been used, if they can be called arguments, to justify the tax. One is that the contribution that people will be called upon to make is very small, and the other is that, however small or large it may be, they will be proud to make it. The Chancellor of the Exchequer will find it extremely difficult to satisfy the House or the public that the tax will not impose very great hardship upon the very large numbers of extremely poor people who in the main will have to make the payment. It is not very much use saying they will be making a legitimate sacrifice. They have nothing to sacrifice. It is not that they will tell themselves, "We must do without a little tea," and that that is the end of the story.
    The means of the greater part of the people upon whom the burden of the tax will ultimately fall are so small that they cannot satisfy the needs of a normal,

    809
    dignified, human existence, and what you compel them to give up in tea, or what they have to give up in other things because of the extra cost of the tea, does not amount to the giving up of a luxury, which might perhaps legitimately be demanded, but simply alters the balance of the things that they buy to their further disadvantage, and the ultimate effect of this tax upon these people is not merely to depress still further the standard of living but to affect their health in an extremely serious degree. When you say that the burden is only a small one, what you mean is that their life is so miserable and poor and desolate a thing already that the small degree by which you increase its misery and desolation is something that it is not worth while to take into account. That is not a thing that this Chancellor of the Exchequer, of all people in the House, can be expected to defend. All he can say is, "I want the money and I am going to get it from these people because they are least able to resist it. I am following the path of least resistance. My business is purely the business of an accountant. I need the money. I can get it from these people and other things do not matter."
    I should be among the last to deny that the poorest of our people have a legitimate pride, and I suppose it is true that they have been the victims of that pride throughout the greater part of their lives. When you taken into consideration the points that have been repeatedly made as to the conditions under which these people are living, even if the right hon. Gentleman is right—and there is much doubt about it—that these people will make that contribution with pride, that will not justify the tax. The right hon. Gentleman will still have to answer the question, though they make the payment with pride ought he not to be ashamed to take the money? It is not sufficient to say that destitute people will render themselves a little more desolate by reason of their pride, of which the Chancellor is prepared to take advantage. He ought to be able to go further and say that it is right and proper that they should be allowed to depress their standard of living so much further so that advantage could legitimately be taken of their pride by the Chancellor of the Exchequer of the greatest and richest Empire the world has ever known. If, indeed, it be his purpose to raise the dignity of
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    the poorest people, Members on this side of the House could suggest many ways in which it could be done much more simply and far more effectively than by taking money out of their pockets. One might consider the operation of the means test, the houses in which they live, the standard of life which is imposed upon them, and how far in our system of society dignified human existence is possible to a great number of these people. If the Chancellor is concerned with raising and improving that dignity, it is significant and a little curious that the very first effort he makes in that direction is to pick their pockets.
    The hon. and gallant Member for Bournemouth (Sir H. Croft) wanted to alter this tax in such a way as to preserve to the Empire producers of tea the advantages which they would enjoy but for the tax now proposed. Are they not proud to make their contribution? Is there no pride in the Empire producers of tea? If the poorest people in this country can be called upon to pay more for their tea in order to satisfy their pride, may not the same demand be made with much greater justification throughout the Empire? I would like to remind the Chancellor that the Tea Duty has not merely a recent history. The duty is imposed now in order to assist in a preservation of the Empire. There was once a Tea Duty which lost an Empire. Unless I have misread history, I understand that the American Empire was lost on a Tea Duty, and that the principle behind it was the principle of no taxation without representation. I remind the Chancellor of that because it is now said that this tax is necessary in order to pay for rearmament. Who made that rearmament necessary? It has been said that the policy of the Government is one for which they have no mandate. They had a mandate for a policy in 1935, from which they say circumstances have compelled them to withdraw. It is said that they must now apply a policy vastly different from the mandate which they had in 1935 and that it is the very need of that policy which now requires this further contribution.
    May I remind the Chancellor of that principle of no taxation without representation, and suggest to him that he has no right to go to the poorest people in order to get further finances to back a policy which is not the policy the Gov-

    811
    ernment were elected to pursue, unless he is prepared first to go back to the people of the country and obtain a new mandate? Otherwise he may find that the additional Tea Duty, like the Tea Duty a century ago, far from preserving the things he holds dear, may result, as the other duty resulted, in the downfall of just those things he wants to preserve. It is a poor kind of civilisation and a poor kind of State which finds it necessary at this time, when we are spending £2,000,000,000 in five years upon rearmament, to go to the weakest, the oldest and the poorest, those who have had least out of life, and to take from them a contribution towards a defence in which, it is almost common ground, they will not share.
    9.42 p.m.
    Mr. Levy: This is not the first time we have heard a contribution from the hon. Member for Nelson and Colne (Mr. Silverman), who invariably makes his appeal to passion and emotion instead of to logic and reason. I have had opportunities of testing feeling in my constituency with regard to the Tea Duty. The people all realise that the money is required for national rearmament, and they are quite prepared to make that small contribution towards the safety and security which we hope the rearmament policy will bring about. They look upon it as an insurance premium, and they consider that the small contribution they make through the Tea Duty is cheap at the price. I have had no comments from any of my constituents that they are hardly done by in being called upon to make this small contribution, which is widely spread throughout the country. There is no duty more widely spread than the Tea Duty. They also realise that the revenue not only provides the security for which it is intended, but helps to maintain that large volume of social services from which the poor receive the most benefit. I intervene only to assure the Chancellor that the increased duty has not met with the disapproval which hon. Members opposite have been expressing for political propaganda purposes. He can rest assured that he has the whole of the country behind him in the collection of the duty, the prime purpose of which is national rearmament and the security of the country.
    Mr. Lansbury: I should like to say, in answer to the hon. Member for Elland (Mr. Levy), that his experience differs entirely from mine as to what people are thinking of this tax. Most of the people in my constituency, which is not much worse off on the average than his, think that this is the most iniquitous tax placed upon the very poorest people. I agree with the hon. Member opposite who just now chided us that those of us who were speaking or might speak would be saying very little that was fresh on this subject, but that is true of all discussion in this House, and every Member has the right, I think, to put the case that he desires to put in whatever way he pleases. There is no one, I think, who in the past has attacked this sort of tax more than has the right hon. Gentleman the Chancellor of the Exchequer. But I have risen to point out that people are speaking about the effects of this tax on the very poorest of the poor. Few of us realise that the poor people of this country pay relatively more than anyone else for everything they get. If you take house rent, furniture, food, clothes, they are really plundered in every sort of way. Take the rent that I pay for my house in proportion to the accommodation that I get for it, and compare it with the small room for which a person will be paying 5s. or 6s. a week, and it will be found that, for the size of the rooms in my house, there is no comparison in rent except to the detriment of the very poor person.
    I challenge anyone to contradict the fact that when it comes to housing, the very poorest people pay, in proportion to what they get in cubic space and accommodation, infinitely more than any of us in this House pay. That is true of everything that they buy and that they need, because they cannot buy in the quantities in which we can buy, they cannot go to the sort of stores at which we can buy, and they cannot in any way use their very small incomes in the sort of spacious manner—I use that word also relatively —that we are able to use our incomes. I think the Chancellor of the Exchequer has done a very bad thing indeed in bringing this proposal forward at this time of day, because whatever quibble you may make about the cost of living, you have only to go into the shops in the place where I live to find that the cost of things

    813
    has gone up very considerably. But the old age pensioner's pension has not gone up, the widow's pension has not gone up, and many another small fixed income has not gone up, because it is fixed. Then it is said that it is only a penny or twopence, and that that does not matter very much. I think that those who use that argument do not realise what pence: dean to the very poor people. I have not much hope that the right hon. Gentleman will give us any hope that this increase is not to be levied, but I wish it were possible for the House to have a free vote on it, so that we could really register our opinions.
    Now I want to say a word or two about the patriotism of this sacrifice. The sacrifice for patriotism must be measured, not by what you pay, but by what you have left after you have paid, and all through this talk about sacrifice, it must be remembered that very rich persons will not sacrifice anything of any real worth through the taxation that is put upon them, because if they deny themselves some big luxury or other, that is not a real denial at all. It is not the same as the denial that these poor people will be called upon to make. I was very much tempted, until we were reminded by Mr. Deputy-Speaker as to the limits of this discussion, to put to the Chancellor various proposals, and to elaborate them, for replacing this tax, but I only need mention one or two matters. One is the taxation of land values, about which I have heard the right hon. Gentleman speak most eloquently, and have agreed with him. There are many things on which I have agreed with him in the past, and that is one of them. He could quite easily have found all the money that he needs, for this purpose anyhow, and more, from the taxation of land values. I would also like to say that I have heard other hon. and right hon. Members in this House discussing the benefits of direct as against indirect taxation. I do not propose to argue the matter now, except to say that I am an unrepentant believer in direct taxation and no other taxation. I believe that once we got that, we should have got the real test of whether people like or did not like taxation. [Interruption.] I do not think any hon. Members really enjoy paying it; they may tell me that they do, but I shall not believe them.
    814
    It has been said—it is a very old saying of William Pitt's, and I remember hearing the late Philip Snowden recalling it in this House—" You can tax the shirt off a person's back by indirect taxation without his knowing you are doing it." People buy your goods and do not realise what they are paying in taxation, and that brings me to the point that I support the idea put forward by the hon. Member for East Birkenhead (Mr. White), that the Chancellor of the Exchequer should consider compelling the people who print the packets in which tea is packed to put on them how much tax is paid, because I do not think people, when they are buying food in these days, know how much they are paying in taxation. That brings me back to the first point that I made, that the poor, relatively to their income, pay much more than anybody else. Speaking for myself, if I drew only my income from this House of £600 a year, I should relatively pay less than the very poor person pays. Therefore, I repeat that I think that this is an iniquitous argument. I shall not attempt to talk about why the Government are raising this money. I am hoping to catch your eye, Mr. Speaker, when the Finance Bill comes up for discussion. I will only say, "For heaven's sake, don't go home and tell the world you have got to tax the very poorest of the poor in order to help you to get ready for the next catastrophic war."
    9.54 p.m.
    Sir John Haslam: I do not rise to argue the matter with the right hon. Member for Bow and Bromley (Mr. Lansbury), because, as he always does, he has put his case so reasonably and amicably that there are very few people who would quarrel with him. He said that the poor pay proportionately higher taxation, when it is put on food, than do the richer people. As one who has had some experience in these matters, I cannot deny that allegation, because anything that is bought in small quantities inevitably pays a higher proportion of tax. You cannot divide the tax up to the same extent when it is only a penny or twopence on a commodity that is sold in ounces. I was rather surprised at the right hon. Gentleman, as an ex-Cabinet Minister, suggesting that there should be a free vote on this matter in the House. I do not know whether the Socialist

    815
    Government, when they were in office, allowed a free vote on such matters, or whether, if ever they come back to office, they will be prepared to carry out the suggestion now made.
    I really rose to protest against the strong language used by the hon. Member for Nelson and Colne (Mr. Silverman). If we are to believe him the heavens will come down and all our civilisation will go by the board because an extra 2d. per lb. duty has been put upon tea. Overstating a case does it more harm than making no statement at all, and I would ask the hon. Member, when he rises again to talk about these subjects, to be more reasonable and moderate in his assertions, and I am sure he will then carry far more weight. He said also that it was not right that the people should pay a proportion of the cost of rearmament. I thought the party to which he belongs was in favour of rearmament, and if the working classes are not going to pay their proportion who is going to pay for rearmament?
    If the Government had not increased the Income Tax and the duty on petrol and other things I should have been one of the first to say that this increase in Tea Duty would press unduly on the wrong shoulders, but when 6d. has been added to the Income Tax and there has been an increase in the taxation upon petrol and other things surely it is not asking a great deal, or putting too onerous a burden upon the working classes, to put this 2d. upon tea. Everybody jumps to the conclusion that this addition to the Tea Duty will cost 1s. 6d. per head of the population. They get that figure by dividing the consumption of tea in this country by the population. Nobody knows better than the right hon. Member for the Hillsborough division (Mr. Alexander) that the huge cafes, the hotel people, the railway people will all pay a very heavy proportion of this tax. They will not increase the price of the cup of tea in consequence of the tax.
    Mr. Holdsworth: They have increased the price in the Lobby bar.
    Sir J. Haslam: I did not think they had increased it and if they have somebody is profiteering, because I do not believe they have paid an increased price for their tea, and really the grievance of the hon. Member lies against the Catering
    816
    Committee of this House and not against the Chancellor of the Exchequer.
    Mr. K. Griffiths: Is the hon. Member aware that the figure of is. 6d. per year per person does not come from anybody on this side of the House but from the Financial Secretary to the Treasury?
    Sir J. Haslam: It is the Financial Secretary whom I am trying to correct on this point. I never make a statement without giving a reason and I have given my reason, and from a long experience in the trade I should say that the average consumption of tea per member of a family—I challenge anyone to dispute it, and no one knows more about it that the right hon. Member for the Hillsborough division—is 2 oz. per week. If there is a family of four they use half-a-pound. I know that the quantity used varies, some use enormous quantities and others less, but on the average where there are two in the family they use a quarter of a pound per week, where there are four in the family half a pound and with eight in the family one pound.
    Mr. Alexander: The hon. Member is about 50 per cent. out. We find it is about three quarters of a pound for an average family of four.
    Sir J. Haslam: The right hon. Member's experience is different from mine and, as he knows, I have had a little experience in the matter. He may differ from me but I stick to my figures, and I think I can get confirmation of them. If it is as the right hon. Gentleman says, where does the proportion of tea which is used in hotels, restaurants, railway trains and other places come in? The general consumption only works out at three-quarters of a pound for a family of four or 1s. 6d. per person per year, and surely the right hon. Gentleman will admit that some tea is used by places such as I have mentioned; in fact, a very large proportion is used. I know there is one hon. Member of this House who will pay very heavily in consequence of this extra duty upon tea, I do not want to belittle the increase, but I do want it to be put in its right proportions, and I stick to it that the cost to a family of four will be about a penny a week, which is 4s. a year.
    I was very much struck by what the previous occupant of the Chair said when he told us that we could not discuss this

    817
    duty because it was a permanent duty. I always thought the Chancellor of the Exchequer was the person who decided whether a duty was permanent or changeable, and I should be sorry to hear that the Tea Duty was to be regarded as a permanent duty and not one to be put on year by year. The hon. and gallant Member for Bournemouth (Sir H. Croft) spoke about Empire Preference. I am not against an increased preference for Empire tea, which would come mainly from Ceylon and India, but I would impress upon Ceylon and India that Empire Preference cuts both ways, and that if we give a preference to them on their tea it would not do them any harm to give us in Lancashire a higher preference on our cotton goods. I have been a supporter of Empire Preference all my public life, but I have always thought that it should cut both ways, and it is not Empire Preference when it is only a one way preference.
    Two or three hon. Members said they would like to see the amount of the duty upon tea marked upon the packets of tea which are sold. I am not against that, but would they agree to the same thing being done in the case of beer and whiskey? It would be a little difficult, but I personally should not object. They would realise, however, the difficulties of carrying out that suggestion, and nobody knows it better than the right hon. Member for Bow and Bromley. Those who know anything of the tea trade know how difficult it is to sort out values. Values change according to the auctions and according to the imports and—
    Mr. Lansbury: The Tea Duty does not change in that way.
    Sir J. Haslam: I know that it does not change, but the right hon. Gentleman insinuated that the poorer qualities of tea pay a higher proportion of duty than the better qualities of tea. Some hon. Member spoke as though the average price of tea to the poor was 2s. 6d. per lb. I dispute that. I should think it does not average more than 2s. or 2S. 2d. per lb. When statements go out from this House they ought to be founded on something like the facts and not up the fancy or imagination of hon. Members.
    Mr. Silverman: This increase of Tea Duty is a flat rate of 2d. per lb., and does it not therefore follow that the lower the price of tea the higher the proportion of tax it bears?
    Sir J. Haslam: Certainly. I was pointing out the difficulty of deciding upon an ad valorem duty when you are dealing with a commodity such as tea. It is a blended article. It is not something which is gathered from the tea plantation and sold direct to the consumer. There are a dozen or twenty different blends in a pound of tea. There might be some tea as low as 8d. per lb., some at 2S. per lb. and some at 4s. or 5s. per lb. How can one work that out? The House will realise that it is almost impossible. I am not disputing the assertion that the lower price bears a higher proportion, because that is a fact recognised by everybody, but I am pointing out how impossible is the realisation of the ideal advocated by the hon. Member for Nelson and Colne. Much as we hate taxation—none of us like to pay it—we realise that it is inevitable. I want to congratulate the Chancellor of the Exchequer on producing a Budget which is very fair in its operation. If he had to raise so much money I do not know how he could have raised it in a fairer manner. For hon. and right hon. Members opposite to insinuate that the poor are paying a higher proportion is entirely beside the mark and absolutely untrue.
    10.7 p.m.
    Mr. Davidson: I regret having to intervene in the Debate at this late hour, but I want to make it clear to hon. Members that the lure of the Exhibition in Glasgow has not attracted all the Scottish Members of this House, and, secondly, that I welcome this opportunity of pointing out to the Chancellor of the Exchequer and to the two last speakers from the other side that I am redeeming a pledge made to my constituents at the last General Election that I would oppose all taxation on the foodstuffs of the working class while so much surplus wealth existed in the country. I want to make one or two points to the Chancellor of the Exchequer in the way which was so successful when speakers on the other side were dealing with a previous Amendment. They appealed to him for reconsideration of taxation which he intended to impose, and I appeal to him, in view of the many speeches made on this subject to-day and the expressions of opinion as to the hurtful influence of this taxation upon a certain section of the community, that he should promise to reconsider the question fully.

    819
    I do not wish to be accused by the previous speaker of making exaggerated statements. I thought it strange that when he addressed himself to my hon. Friend the Member for Nelson and Collie (Mr. Silverman) he gave him a lecture on over-statement and indicated that the heavens would burst and wrath fall upon the Chancellor of the Exchequer and other Members on the other side with regard to over-statements or exaggerations. I suggest that the hon. Member should try to avoid those things himself. Another hon. Member stated that no great feeling existed in his constituency with regard to this taxation. I would point out that last Sunday, which was the May Day of the working-class people of this country, we had the strongest, greatest and most enthusiastic May Day gathering that this country has ever seen, and that from thousands of platforms and thousands of audiences objections were made by the common people to the imposition of this tax. If the Chancellor really believes, with his supporters, that the people are not interested and perturbed about this increased taxation on tea, I suggest that he should stay in Spen Valley until the next General Election and test the people of the constituency from which he is now so anxious to disappear.
    Not only do I ask for consideration for the people of this country, but, as a Scottish representative, I ask the right hon. Gentleman to consider the exclusion of Scotland from this tax. I am not expressing that wish from a Scottish nationalist point of view. It has been proved in this House by facts and figures, and in statements from the Government Ministerial Bench, that Scotland is suffering to-day from an increasing poverty which is the worst that she has suffered for many years. Who are the working-class people in Scotland who are to pay—
    Mr. Speaker: I would remind the hon. Member that this is an Amendment to reduce the tax, and not to apply it only to the Scottish people.
    Mr. Davidson: I accept your Ruling reluctantly. I wanted to ask the Chancellor to recognise that the people who have to pay this increased tax and for whom I am appealing are those who are in receipt of public assistance, old age and widows' pensions and whose numbers
    820
    have materially increased during the last seven years. In 1931, we in Glasgow were paying £36,000-odd in public assistance relief; to-day we are paying £2,360,000-odd. A great number of the population are upon a fixed, poverty income. In Glasgow, and in every industrial town in this country to-day, as the Financial Secretary to the Treasury knows well, local authorities are paying to the people who are on the poorest and the lowest minimum allowance, more than the Government are giving them in pensions. The people who are on public assistance relief, the old age pensioners, the widow pensioners—these are people upon whom even one extra farthing in the week ought not to be placed while there are other obvious avenues for this taxation. I think I am perfectly logical in asserting that surely a man of such great experience as the Chancellor of the Exchequer, who has had such a varied political career, who has had the benefit of so many different political platforms and who has served in so many various offices in the Government, from Foreign Secretary and Home Secretary to Chancellor of the Exchequer, ought to be able to submit to the House a scheme whereby this further £3,000,000 could be raised without touching the poorest section of the community, and I ask the Chancellor of the Exchequer to use his powers to shift this burden on to shoulders more able to bear it. I do not want to stress overmuch the question of Scotland, but, if the Chancellor really believes in his tea tax, if he honestly and sincerely believes that the people of this section of the community will welcome the tax as an insurance for their defence, I would ask him to come to any industrial constituency in Scotland and try to prove that to the people there. They will not have it.
    As to the £3,000,000 for Defence, they are paying for that already. Those old age pensioners who have been refused an increase, every local authority that has had to impose extra rating burdens on its people because the Government's rearmament programme has made them refuse grants that ought to have been made to those local authorities—those people already, by their low housing conditions, by the lack of building of houses, by their low subsistence levels of relief, are already paying more towards the rearmament programme of this Government than any other section of the com-

    821
    munity. Hon. Members from all quarters of the House spend carelessly in the dining rooms of this House more money on one meal than those people who are being asked to bear another burden can spend on their children in one week.
    Such taxation is unfair. I believe that. if we are to have social services, if we have to have community services, the community ought to bear the cost of them fairly and squarely. They are not being asked to do that to-day. A burden is being placed upon people—and I ask the Chancellor to consider the matter from this point of view—who are unable o bear one extra farthing of reduction in their income to-day. I would also point out to him that there are many avenues—if he cares to speak to me at any time privately I will expatiate on those avenues—whereby other people who are living in luxury, who have never wanted, who have never lacked the best things of life, can be made to pay this extra £3,000,000 towards the defence of the nation, which involves their good more than it involves the good of the people for whom I speak.
    10.19 p.m.
    Mr. Alexander: I am sure that the Chancellor must have been a little surprised that the Debate on this Amendment has occupied so much of the time of the House. A good many people would not have imagined, in the early part of the Debate, that it was going to last, as it has done already, three hours and a half. But I think that on reflection the right hon. Gentleman will see that, whatever else may be said about his Budget, there is a very strong feeling of resentment at the attempt which he has made further to mulct the common people of the country—the poorer sections—in this additional burden. A great deal has been said to-day about what else the Chancellor could do. He had a Budget deficit of £120,000,000, of which he had already arranged to borrow £90,000,000. He had decided on an increase of 6d. in the Income Tax, which would bring in£20,000,000. What else was he to do?
    To start with, I feel that it is quite unnecessary for the House to be asked tonight to approve this additional burden upon the necessities of the poor when the Chancellor is making in the same Budget important Income Tax concessions to
    822
    profit makers. In the evening paper tonight I have seen another example of a company announcing its final distribution of dividend, which makes a total dividend of nearly 90 per cent. for the year, and there is also the promise of an issue of a 5 per cent. preference share of £1 for every four deferred shares of 5s. now held. That company, under the Chancellor's Budget, will he given double the allowance for wear and tear of its machinery in the coming year.
    Sir J. Simon: The last increase was 10 per cent. and the addition will now be 20 per cent. of the allowance. That does not make the allowance double.
    Mr. Alexander: I ought to have said he has doubled the increase. I am quite prepared to say "double the increase," because the Chancellor is also doubling the increase in the Tea Duty put on two years ago, and, as an exact set-off, he is doubling the increase for wear and tear to large companies. It was quite unnecessary for that extra allowance to be made, and especially if he would require in those circumstances to put this extra tax on tea. Much has been said by hon. Members like the hon. Member for Bolton (Sir J. Haslam), who has experience of trade, as to what the effect would be. It is only fair to say that long experience of the use of a Tea Duty as a means of raising revenue proves quite conclusively that the movement in the market prices follows exactly the average amount of duty imposed, and that, in fact the average dealer in the trade does not profiteer over the duty. I have all the figures for the last 16 years. But when the hon. Member for Bolton said that the cost to the average consumer is only 4s. per year—say for the average household—
    Sir J. Haslam: Of four.
    Mr. Alexander: —of four—he is very much out of touch with the situation. I am convinced, from inquiries up and down the country, that an average of ¾lb. of the commodity for a family of four is not only general but is often exceeded. When he takes into account supplies for hotels, restaurants and the like, it only emphasises that the rich section of the population drink far less tea per head than the working class. I was brought up among the working class, and I know that, day after day, week after

    823
    week, the only beverage in the household is tea. They do not have the variety of beverages that the rich have, they do not have Ovaltine at night, and they do not have liqueurs as the rich have. It is tea, tea, tea.
    Sir J. Haslam: I do not know whether the right hon. Gentleman is insinuating that I belong to the richer class. The home in which I was brought up was far humbler than his could possibly be, because my mother was left with six children under ten years of age, and I was only three months old, and there was no such thing as a widow's pension. Therefore I know what a humble home really means.
    Mr. Alexander: My mother was widowed at 28. I was not making any insinuation at all concerning the hon. Member. What I was saying to the hon. Member was that our experience showed that it was the richest section of the population who drank less tea per head and that that accounted for the difference. I come to the actual burden of the Tea Duty. If you take ¾lb. of tea for the ordinary household, with the tax on foreign tea at 8d., the average of the home cannot be taken at less than 7d. You have therefore to pay three-quarters of 7d. in the lb. of this new duty every week. Instead of the burden being about 4s. as an increase, there will be a burden of 22S. or 23s. per annum for every household of a family of four. What is more to the point—and the hon. Gentleman the Member for Bolton knows as well as anybody who has experience of the food trade—this is a superimposition upon the imposts made by the present Chancellor of the Exchequer and previous Chancellors upon the people.
    I have gone into the position of food taxation under the National Government during the last five years. When the right hon. Gentleman the present Chancellor of the Exchequer in company with his colleague who is now in the other House, Lord Runciman, made an appeal to the nation in 1931 as a section of the old Liberal party supporting the National Government, they pledged themselves specifically against the taxation of food, but to-day the food taxation per annum under the National Government is already over £40,000,000, and, with the addition of the Tea Duty, it will be £42,500,000.
    824
    There is not a working-class family of four who will not be paying by the end of this year £10 per annum at least in taxation. When you consider that, in many cases, that £10 will come from a working-class family with a total income of from £80 to £85 a year, it is not something special, as was said this afternoon, but it is an outrage. I say that especially, because the Chancellor could have avoided this particular increase by simply not giving an unnecessary additional allowance in respect of wear and tear. We were told in the Budget speech that the Chancellor of the Exchequer expects to get from this addition of 2d. in the lb. on the Tea Duty about £2,750,000, and in a full year £3,250,000. The Chancellor of the Exchequer expects to give out of his Income Tax yield just that sum in respect of additional allowance for wear and tear, and to give it to industry whether they need it or not.
    Therefore, I think we have a particularly strong case in respect of the Tea Duty. With regard to the price of the commodity and how the Tea Duty affects the consumer, I have taken out a list of prices of the common tea which could find a good sale. I have taken the figures from the year 1922, when the Tea Duty stood at 10d. on Empire and 1s. on foreign tea. The retail price was then 2s. 2d. for that common tea. There was a gradual reduction in the retail price according to the fall in the duty, until it was abolished in the year 1929. When the duty was abolished in 1929 the price was 1s. 2d.
    Lieut.-Colonel Colville: In 1922 the full duty was 8d. and the preferential duty was five-sixths of that sum.
    Mr. Alexander: I do not know where the Financial Secretary has got his figures, but mine are taken from pretty good book-keeping entries. I do not think that the interruption was relevant. These figures are taken from our books, and we are the largest sellers of teas in the world and the largest payers of duty out of bond to the Exchequer. Therefore, we know something about the subject. My point is that from 1922 until 1929 the retail price steadily went down. If we take the year after there was no payment of duty, we could get good common tea in 1931 at 1s. and 10d. and later in that year it was even down to 8d. I am told that in that

    825
    year there was a reasonable but not a high quality of common tea on sale at Woolworths at 6d. per lb. It may have been that that particular parcel sold at that price was an attractive parcel put up for the purpose of attracting other custom, but it is true to say that throughout the tea trade in the year when there was an absence of duty one could get drinkable tea at 8d. per lb. We shall not he able to get this year, with the rise in duty, tea of that quality at less than 2S. 2d.
    That is the measure of the difference in the burden that the housewife has to pay. It is not a question of whether it is 1d. or 2d. more now, but it is a question of the policy of the Government in gradually raising the price to the consumer from 8d. in the lb. in 1931 to 25. 2d. now. That is the case that we have to put to our consumers in the country as to the effect of the Government's policy upon prices. We are always told that there is no guarantee that these increased duties are going to be paid by the consumer. I remember that a few months ago, when the question of the cattle subsidy was before us and the basis of finance was changed and it was put on a receivable duty basis, it was said that the duty of ¾d. in the £ would not be paid by the consumer but by the cattle producer in Argentina. We all know that since that duty was put on instead of the ¾d. being paid by the Argentine producer it has been paid by the consumer, and that we have been paying 1½d. or 2d. per lb. more for meat, because of the duty, plus the extra rise alongside of it.
    It is quite certain that the consumer pays. In view of the astronomical figures of the Budget I am certain that £1,049,000,000 at least will have to be raised by the Chancellor of the Exchequer before the end of the financial year. To take £3,000,000 out of the working classes when there are so many other opportunities of raising the money in a manner in which people would pay according to their ability to pay, is unreasonable, and I hope we shall not be confined to Labour and Liberal support of this Amendment, but that hon. Members in all parts of the House, who have a real sympathy with the position of the workers, will have the courage to come into our Lobby and see that the people who voted for them in the belief that they would stand for
    826
    League policy and disarmament are not mulcted in these unfair charges.
    10.36 p.m.
    Sir J. Simon: The Debate has gone on for four hours, and I am sure there is no hon. Member who has attended it who at all grudges the time. The matter we have been discussing is certainly very important, and I think it is right that it should receive the very full treatment it has, though, of course, there will, I presume, be further opportunities after the Finance Bill is introduced of debating the general subject. Most of the points have been presented fully and fairly— do not doubt their importance—and I hope the House will now think it right if I say a few words in conclusion. First of all as to the Amendment itself. The hon. Member for Maryhill (Mr. Davidson) in his speech told us that he felt bound to intervene because he was pledged to his constituents never to vote in favour of any tax upon food. In that case I am afraid he will not be able to vote for the Amendment, because the Amendment is not that the tax should be abolished, but that it should be reduced to 4d.
    Mr. Davidson: May I point out to the right hon. Gentleman that my constituents can always appreciate my choosing the lesser of two evils?
    Sir J. Simon: I was for the moment reminding the hon. Member of the actual issue which is raised—raised, of course, for the purposes of a general challenge. The real issue is this. I have felt it my duty to present in the Budget a proposal under this head which will increase the revenue of the country this year by something under £3,000,000. The proposal now before the House is that, instead of there being an increase under this head, there should be a reduction, and I must point out, quite bluntly, that if the proposal is accepted, it means that the Budget which I have been at some pains to balance—
    Mr. Dalton: Misleading.
    Sir J. Simon: I hope not—the figures I have endeavoured to bring together would, in fact, be reduced by something like £5,500,000. I must ask the House and those who support the Government to see that I do not suffer that loss. The hon. Member for Bolton (Sir J. Haslam) made a forcible speech, because he spoke with the full authority of an hon. Mem-

    827
    ber who is speaking about things of which he really knows. He made an observation, in passing, about this Tea Tax being described as a permanent tax. In a sense no tax is permanent, but there is this distinction between the two kinds of taxes in this country. There are some taxes which last for the year, and at the end of the year would automatically cease unless, annually, by the action of Parliament, they were renewed. There are other taxes which, having once been enacted, continue on automatically year after year unless and until Parliament intervenes to do something to alter the position.
    In the old days there used to be two taxes which were called temporary taxes, one direct and one indirect. Income Tax has always, or nearly always, been regarded as a temporary tax, ever since it was introduced. When Mr. Gladstone was Chancellor in 1854, he produced a scheme by which Income Tax, which then stood at 7d. should be reduced in the course of the next seven years—he was looking far ahead—and at the end of seven years should disappear for ever. Unfortunately, the Crimean War intervened, and I am afraid that Income Tax did not disappear quite as Mr. Gladstone had planned. But Income Tax has always been, subject to that, a temporary tax, and that is why we renew it by vote every year. In the old days tea was also a temporary tax voted every year. One indirect and one direct tax—those were the two taps which it was regarded as right to turn in order to get the right quantity of liquid into the receptacle. Since 1932, I think, tea has not been provided for in that way, and the Tea Tax now is a continuing tax, subject, of course, to the right of Parliament every year to increase, decrease or abolish it. That, I think, is how the matter actually stands.
    Perhaps I may mention one other matter outside what I may call the broad merits of our present discussion which was raised by my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft). He was anxious to know—and I think he had an Amendment down for the purpose—whether, if the rate of the tax was raised, the extent of the Preference should not be altered so as still to bear the same proportion to the higher tax as it now bears to the lower tax. That is not the proposal I have made.
    828
    I have made the proposal that we should retain the Preference of 2d., moving up the level so that there is exactly the same difference of 2d. as existed before. I think that is the right view. At an earlier stage, the method that was adopted was that the Imperial Preference was not a fixed figure, but was a certain fraction—one sixth—of the duty. Therefore, when the duty was small, the Preference was, in fact, less than 2d. Subsequently, a change was made and the Preference was fixed at 2d. I do not think it would be a good reason for increasing the Preference merely because the fractional relationship between the Preference and the tax itself is now altered.
    Having disposed of those things, may I now come to the main subject of our controversy in this matter? I quite agree with hon. Members in different parts of the House that we should deal with the question before us now as a matter of principle. It is a matter of principle, no doubt. My hon. Friend the Member for Colchester (Mr. Lewis) made a speech earlier in the afternoon, and I think he was quite right when he said that there was a question of principle involved. I would like to state to the House what is my view of the principle. I have to decide what is the right action, and this is what I think is the question of principle. It seems to me that we must proceed on the basis that we need more money, and that we need more money for rearmament. There are other occasions when we may discuss that, but that is the basis on which we are proceeding to-night. We need £30,000,000. If that is so, should the contribution towards that extra sum, needed for the defence of the whole country, in principle be got by spreading it among the community as well as we can, or should we adopt the principle—which some hon. Gentlemen quite openly advocate, and which I can understand may be held—that even though the service for which it is required is essential to the country as a whole, and upon it depends the safety of the homes of the people, that none the less this additional money should be got from a portion of the community and that the rest of the community—I assume for this purpose the poorest—should make no contribution at all?
    Mr. Gallacher: They are making a big contribution.
    Sir J. Simon: I agree they are making a contribution now, but there is no point at issue about that. The point is that at this time practically the whole country is clear that it is necessary to find this extra money and it is being found for the defence of every home, for the defence of every roof in the country. That is the object and the question then is, which is right in principle—to get this money from a section of the population, which I will assume is the wealthier section, or to endeavour to get it from the population as a whole? That, I think, has been correctly described as a matter of principle. I well understand that there are hon. Members who take another view and are prepared to stand up for that view, but I wish to declare my own view that in the circumstances the right thing to do is to try to get the contribution from the community as a whole. Hon. Members opposite and I may differ upon that point. I have no quarrel with any hon. Gentleman opposite because he takes a different view from me upon it, but, none the less, I most definitely do hold the view that when we consider that this money is needed for air-raid precautions; when we consider that if an attack came upon us from the skies, there is no method by which one roof will escape because it covers poor people while another will be hit because it covers rich people; that there is no method of marking the doorposts so that the Angel of Death may not strike at a particular home—I say, in those circumstances the right principle to apply is that of having the contribution fairly distributed among the whole population.
    In the second place, if you are going to do that, I think you will find as a practical matter that under our system it is necessary to have resort to indirect taxation. I understand the ideal of which one or two hon. Members have spoken to-day, of having all taxation direct, and having the direct taxation applied to everybody. As an ideal, I understand that, but it is not a very practical proposal. We have proceeded on the opposite view. We do not exact Death Duties from the very smallest estates. We do not exact Income Tax until after a certain limit of income has been passed and you will find that for
    830
    practical purposes it is not possible by way of direct taxation to secure a contribution from the whole population and that it has never been done.
    Mr. Tinker: Does the right hon. Gentleman say that if you excluded the smaller incomes, direct taxation could not be applied to the whole?
    Sir J. Simon: I can assure the hon. Member and I always listen with great respect to what he says, that if he will think the matter out and perhaps have some conversation about it with others, he will find that that is not a very practical proposition. It is always necessary to have some recourse to indirect taxation for this purpose. I think I understand the objection to indirect taxation as well as anybody in this House. I have not changed my understanding of the difficulties of that taxation because I have changed my office or my position—not in the least. I perfectly understand that indirect taxation has this effect, that it does, in the circumstances, as hon. Members have said, press proportionately with greater severity on persons with small incomes than on persons with big incomes. Therefore, unless you are to have at the very least a proper combination of direct and indirect taxation very great injustice will be done and I conceive that one of the principles of our fiscal and financial system is to secure that our direct taxation is so applied and so administered that you get great contributions from those who have great possessions.
    At the same time, I must say that it is natural and right when we are facing a common responsibility like this, which is vital to every home in the land, that we should, at the same time, get some supplementary contribution from those lower in the scale. The hon. Member for Springburn (Mrs. Hardie) was wrong when she said that what was happening was that indirect taxation was being increased and direct reduced as a matter of proportion. The actual facts are exactly the other way. They were stated clearly by the Financial Secretary last week, who pointed out that the proportion as it would exist with the Budget proposals adopted was something like 63 per cent. from direct and 37 from indirect, whereas if you go back a year or two the proportions were 60 and 40, and if you go back to 1936 they were 59 and 41. I concede that in-

    831
    direct taxation has undoubtedly thrown a big burden upon poor people, and must do from the very nature of the case, but at the same time it is true that indirect taxation is taxation upon everyone. It is direct taxation that is not taxation upon everyone. Direct taxation is limited to those in the more comfortable strata.
    Having stated my general feeling about it, I come to the immediate question. If my principle is right and we are going to try to do this, what is to be selected as the article to tax? I must select an article, as far as may be, of universal consumption. The principle that everyone should contribute is fulfilled in choosing an article of very general consumption. The Noble Lady the Member for the Sutton Division of Plymouth (Viscountess Astor), if she were here, would have contributed an interjection suggesting another liquid which would be a better subject than tea. I think however for this particular purpose that, there is no particular reason why teetotallers, whatever the merits of their practice and the extent of their virtues, should escape contribution because they are teetotallers. Suggestions have been made about tobacco. I am not saying that tobacco may not in some circumstances be a proper subject for additional taxation, but if you try to get a very minute contribution from that source, instead of getting your additional revenue, you are very likely to get smaller cigarettes, or a smaller amount of tobacco in the cigarettes. I am bound to find a method which will really produce a contribution though it is, I agree, a small one.
    The right hon. Gentleman who spoke last painted a picture which I thought was very much exaggerated. I have never denied that even a halfpenny a week on those with very small resources is a matter of importance. I am not treating a halfpenny as if it were a matter of indifference at all. At the same time, I really cannot accept these estimates of the burden that is being thrown even on small homes, and I call a witness who seems to be very much in point. When the right hon. Gentleman the Member for Epping (Mr. Churchill) was Chancellor of the Exchequer and he repealed the Tea Duty altogether, comments were made by hon. Members opposite as to the value of this boon. I suppose it will be admitted that, if putting on this duty inflicts this intoler-
    832
    able hardship, as it has been described, taking it off must have produced a very substantial measure of relief.
    The right hon. Gentleman the Member for Hillsborough had as a colleague at that time on the Front Bench a Member of Parliament whom we all remember and whose death we all lamented, Mr. Willie Adamson. He was entrusted with the task of stating the case for the Opposition when the Tea Duty was withdrawn by the right hon. Gentleman the Member for Epping. He made the last speech of the day on 16th April, and I should like to read one sentence from what he said on behalf of the Labour Opposition. No doubt he had the advantage of having the right hon. Gentleman at his side with all the information he is able to collect from the Co-operative Society and with all the figures worked out to the nicest possible degree. Let us see what was the result only a few years ago when the Tea Duty was repealed. It was then 4d. This is the language that was used by Mr. Adamson:
    " On the calculation of the average amount of tea consumed, it "—
    that is to say, this relief—
    " may amount to something like 1d. to 1½d per head of the population per week in relief."
    I only make the observation, which is merely arithmetic, that if the plea of hon. Gentlemen opposite is that when you have a tax taken off tea to the extent of 4d. per lb. it merely means a relief of 1d. or 1½d. per head of the population, how much extra burden does it mean if you put on 2d.?
    Mr. Alexander: May I say how glad I am that the Chancellor has confirmed my figure? I put the case that a family household of four would use three-quarters of a pound a week, and that the charge would be 1d. to 1½d. per person. My figure was 6d. a week. That is just the figure the right hon. Gentleman mentioned.
    Sir J. Simon: Then we reach the end of this period of the Debate in a most happy state of agreement. I was also about right last Tuesday in the Budget speech when I said that I recognised that even an extra half-penny a week per person was not to be disregarded; but we should not put this thing higher than it deserves.

    833
    I do not think that some hon. Gentlemen altogether correctly reflect the view which I am sure prevails among a very large number of humble people in this country. They are proud of this country, they have had a great deal to do with building it up, and they know perfectly well that the work of Parliament in the last generation has been largely directed to doing the things for which I have honestly stood all my life, that is to direct the power of Parliament through the system of taxation towards wide measures of social reform so that those who have most to spare should contribute most and that the State should come to the help of those who need it most. That is not a party plea. It has become the general policy of the whole country The only difference is that we do not always agree how it should be done, but that is, in fact, the common purpose of all decent and honest people in all parts of the House. It is not true that even the very humblest of our fellow citizens are forgetful of the fact that we have by this means brought immense relief to those who need it most. It is not an insignificant circumstance that in this very Budget the estimate for social services has increased this year by £12,000,000 over the expenditure last year—by four times the amount of the produce of this duty. It is not a small fact that last year we were getting from revenue £50,000,000 a year more than we got in 1931 for the social services.
    That is one side of the picture. The other side of the picture is that indeed it is true that the poorest in our land none the less have a hard and difficult time. I am not for a moment suggesting that what I am proposing here to add to which they have to pay does not affect them. It does. But I believe it is true that if you tell the people of this country the truth as to the purpose and the need, you are not doing justice by them if you treat them as though they wanted to resist and avoid a small contribution. If we are putting some unfair burden on them, challenge it and improve it, but I have done my very best to make the contribution small, and I believe I have made it just. I have never supposed that this particular proposal would be popular. If you are seeking popularity, do not be Chancellor of the Exchequer and introduce a Budget like mine, but if you will tell the people, as I have tried to tell them, in all honesty
    834
    and straightforwardness, what the actual situation is, I do not believe it is true of our country that it is not prepared to see it through provided that the burden is fairly and properly distributed and shared. Therefore, I ask that the House should support my proposal. In ordinary times, and if there were plenty of other resources, I would never be a party to increasing the Tea Duty, but I think that in the circumstances I have no other course, and I invite the House to support me in taking it.
    11.3 p.m.
    Mr. MacLaren: I am impelled to intervene because of the argument put forward by the Chancellor of the Exchequer that there are certain sections of the community which pay certain contributions to the taxation of the State and that you can clearly define what those sections are. There are the very wealthy section, the intermediate section, and the lower or working-class section. The present Chancellor of the Exchequer, and the Prime Minister when he was Chancellor, both addressed their minds to this Tea Duty from the same plane, as it were, that is, that the lower strata of society might be called upon, owing to the obligations of the State, to make a contribution. That is the appeal. When will Chancellors of the Exchequer face the fact that the entire Budget is paid for by the working class? If any hon. Member opposite wishes to challenge that, I shall be delighted if he will get up and do so. All taxation as at present levied is extracted from the common pool of wealth produced by those who work in the production of that wealth, and when we are told that the working classes, owing to their small incomes, are therefore paying very little in taxation, I say that that is a travesty of the facts, and that it is a falsehood that should be challenged and demolished on the Floor of this House. If there is anything that is selfevident, surely it is the proposition that I have put forward. Only from those who produce the wealth can taxation be derived.
    Mr. Speaker: I am afraid the hon. Member is going a long way beyond this Amendment.
    Mr. MacLaren: I am leading up to the Tea Duty, but I wanted to clear this fallacy, which is constantly trotted out when these taxes are proposed. The

    835
    Chancellor of the Exchequer has told us that, owing to the fact that there is a probability of the country being subjected to indiscriminate bombing, we must therefore have indiscriminate taxation. That is what it means. "Let us scatter the taxes throughout the whole community." Once or twice he said so. I noticed that he gave us a little recitation, and I noticed that the Speaker did not rule him out of order. That is a liberty that a Chancellor has.
    Mr. Speaker: The right hon. Gentleman's argument was directed to quite a different point.
    Mr. MacLaren: The Chancellor told us that the process of indirect taxation was necessary, that there was no escape from it, that it had to be resorted to as an inevitable consequence. He knows as well as I do that indirect taxation is resorted to because you can always get more from people if they do not realise the extent to which they are being made to pay. If the Chancellor was looking for some common basis for his taxation, something from which he could get the money which was in common use by all, I can assure him that there is something else that he could tax besides tea. I will not mention it; the House knows what I mean. The Chancellor has emphasised to-night the peroration which he made in his Budget speech, that the people of this country will be proud to pay this con-
    tribution. Perhaps they will be, or perhaps they will not be. I think that if the Chancellor went round to the poorer sections of the community and told them that it was inevitable that they must be heavily taxed and should feel proud of it, because it was to defend their country, it might become dangerous propaganda, because the people might ask, "Is this to defend something which we own? "
    That would be a dangerous question, and I suggest when the next Chancellor comes to the same impasse as the present one, has a deficit and is looking around for a new tax, that if he is under the threat of a war there is no more appropriate basis from which to get the money than that element which we are all called upon in common to defend if war takes place. Having hinted what that is as clearly as I can I suggest that we should stop these subterfuges and sentimentality and emotional appeal and he frank. This is an indirect tax added to the other indirect taxes, and indirect taxation is resorted to not only by the Chancellor of the Exchequer of this country but of every country so that there may be extracted from the workers more than they are conscious of contributing to the enormous burdens of the State.
    Question put, "That the word ' eight-pence ' stand part of the Resolution."
    The House divided: Ayes, 229; Noes, 129.

    Division No. 193.]

    AYES.

    [11.9 p.m.

    Acland-Troyte, Lt.-Col. G. J.

    Butler, R. A.

    Eastwood, J. F.

    Adams, S. V. T. (Leeds, W.)

    Campbell, Sir E. T.

    Edmondton, Major Sir J.

    Agnew, Lieut.-Comdr, P. G.

    Cartland, J. R H.

    Ellis, Sir G.

    Albery, Sir Irving

    Carver, Major W. H.

    Elliston, Capt. G. S

    Allen, Col. J. Sandeman (B'knhead)

    Cary, R. A.

    Elmley, Viscount

    Amery, Rt. Hon. L. C. M. S.

    Cayzer, Sir H. R. (Portsmouth, S.)

    Emrys-Evans, P. V.

    Anderson, Rt. Hn. Sir J. (Sc'h Univ's)

    Channon, H.

    Entwistle, Sir C. F.

    Anstruther-Gray, W. J.

    Clarke, Colonel R. S. (E. Grinstead)

    Erskine-Hill, A. G.

    Apsley, Lord

    Cobb, Captain E. C. (Preston)

    Everard, W. L.

    Astor, Viscountess (Plymouth, Sutton)

    Collox, Major W. P.

    Fildes, Sir H

    Astor, Hon. W. W. (Fulham, E.)

    Colman, N. C. D.

    Fremantle, Sir F. E.

    Balfour, G. (Hampstead)

    Colville, Lt.-Col. Rt. Hon. D. J.

    Fyfe, D. P. M.

    Balfour, Capt. H. H. (Isle of Thanet)

    Conant, Captain R. J. E.

    Gledhill, G.

    Barolay-Harvey, Sir C. M.

    Cook, Sir T. R. A. M. (Norfolk, N.)

    Gluckstein, L. H.

    Beamish, Rear-Admiral T P. H.

    Cooke, J. D. (Hammersmith, S.)

    Goldie, N. B.

    Beaumont, Hon. R. E. B. (Portsm'h)

    Courtauld, Major J. S.

    Gower, Sir R. V.

    Beechman, N. A.

    Cox, H. B. Trevor

    Graham, Captain A. C. (Wirral)

    Bernays, R. H.

    Critchley, A.

    Grant-Ferris, R.

    Birchall, Sir J. D.

    Croft, Brig.-Gen. Sir H. Page

    Gretton, Col. Rt. Hon. J.

    Bossom, A. C.

    Crookshank, Capt. H. F. C.

    Gridley, Sir A. B.

    Boulton, W. W.

    Croom-Johnson, R. P.

    Grimston, R. V.

    Bower, Comdr. R. T.

    Cross, R. H.

    Gritten, W. G. Howard

    Boyce, H. Leslie

    Crossley, A. C.

    Guest, Lieut.-Colonel H. (Drake)

    Broadbridge, Sir G. T.

    Cruddas, Col. B.

    Guest, Maj.Hon.O. (C'mb'rw'll, N.W.)

    Brooklebank, Sir Edmund

    Culverwell, C. T.

    Guinness, T. L. E. B.

    Brawn, Col. D. C. (Hexham)

    Davidson, Viscountess

    Hacking, Rt. Hon. D. H.

    Brown, Brig.-Gen. H. C. (Newbury)

    Denman, Hon. R. D.

    Hambro, A. V.

    Browne, A. C. (Belfast, W.)

    Dugdale, Captain T. L.

    Hannah, I. C.

    Bullock, Capt M.

    Duggan, H. J.

    Hannon, Sir P. J. H.

    Butcher, H. W.

    Duncan, J. A. L.

    Harbord, A.

    Haslam, Henry (Horncastle)

    Mellor, Sir J. S. P. (Tamworth)

    Shaw, Major P. S. (Wavertree)

    Haslam, Sir J. (Bolton)

    Mills, Major J. D. (New Forest)

    Shaw, Captain W. T. (Forfar)

    Heilgers, Captain F. F. A.

    Mitchell, H. (Brentford and Chiswick)

    Shepperson, Sir E. W.

    Hely-Hutchinson, M. R.

    Moore, Lieut.-Col. Sir T. C. R.

    Shute, Colonel Sir J. J.

    Heneage, Lieut.-Colonel A. P.

    Moreing, A. C.

    Simmonds, O. E.

    Hepburn, P. G. T. Buchan-

    Morgan, R. H.

    Simon, Rt. Hon. Sir J. A.

    Herbert, Major J. A. (Monmouth)

    Morrison. Rt. Hon. W. S. (Cirencester)

    Sinclair, Col. T. (Queen's U. B'lf'st)

    Herbert, Capt. Sir S. (Abbey)

    Muirhead, Lt.-Col. A. J.

    Smith, L. W. (Hallam)

    Higgs, W. F.

    Munro, P.

    Somerset, T.

    Holmes, J S.

    Nall, Sir J.

    Somervell. Sir D. B. (Crewe)

    Hopkinson, A.

    Neven-Spence, Major B. H. H.

    Spens. W. P.

    Horsbrugh, Florence

    Nicholson, G. (Farnham)

    Storey, S.

    Hudson, Capt. A. U. M. (Hack., N.)

    O'Connor, Sir Terence J

    Strauss, E. A. (Southwark, N.)

    Hume, Sir G. H.

    O'Neill, Rt. Hon. Sir Hugh

    Strauss, H. G. (Norwich)

    Hutchinson, G. C.

    Ormsby-Gore, Rt. Hon. W. G A.

    Stuart, Hon. J. (Moray and Nairn)

    Inskip, Rt. Hon. Sir T. W. H.

    Palmer, G. E. H.

    Sueter, Rear-Admiral Sir M. F.

    James, Wing-Cammander A. W. H.

    Patrick, C. M.

    Tasker, Sir R. I.

    Keeling, E. H.

    Peake, O.

    Tate, Mavis C.

    Kerr, H. W. (Oldham)

    Peal, C. U.

    Taylor, C. S. (Eastbourne)

    Keyes, Admiral of the Fleet Sir R.

    Perkins, W. R. D.

    Thomas, J. P. L.

    Knox, Major-General Sir A. W. F.

    Plugge, Capt, L. F.

    Titchfield, Marquess of

    Lamb, Sir J. Q.

    Ponsonby, Col. C. E.

    Tryon, Major Rt. Hon. G. C.

    Latham, Sir P.

    Procter, Major H. A.

    Tufnell, Lieut.-Commander R. L.

    Leech, Sir J. W.

    Radford, E. A.

    Turton, R. H.

    Leighton, Major B. E. P.

    Ramsay, Captain A. H. M.

    Wakefield, W. W.

    Lennox-Boyd, A. T. L.

    Ramsbotham, H.

    Walker-Smith, Sir J.

    Levy, T.

    Rankin, Sir R.

    Wallace, Capt. Rt. Hon. Euan

    Lewis, O.

    Rathbone, J. R. (Bodmin)

    Ward, Lieut.-Col. Sir A. L. (Hull)

    Lindsay, K. M

    Rayner, Major R. H.

    Ward, Irene M. B. (Wallsend)

    Llewellin, Colonel J. J.

    Reed, A. C. (Exeter)

    Warrender, Sir V.

    Lloyd, G. W.

    Reid, W. Allan (Derby)

    Waterhouse, Captain C.

    Locker-Lampion, Comdr. O. S.

    Remer, J. R.

    Watt, Major G. S. Harvie

    Loftus, P. C.

    Rickards, G. W. (Skipton)

    Wayland, Sir W. A.

    Lyons, A. M.

    Ropner, Colonel L.

    Wells, S. R.

    Mabane, W. (Huddersfield)

    Ross, Major Sir R. D. (Londonderry)

    Whiteley, Major J. P. (Buckingham)

    M'Connell, Sir J.

    Ross Taylor, W. (Woodbridge)

    Wickham, Lt.-Col. E. T. R.

    McCorquodale, M. S.

    Rowlands, G.

    Williams, H. G. (Croydon, S.)

    Macdonald, Capt. P. (Isle of Wight)

    Royds, Admiral Sir P. M. R.

    Willoughby de Eresby, Lord

    McEwen, Capt. J. H. F

    Russell, Sir Alexander

    Windsor-Clive, Lieut.-Colonel G.

    McKie, J. H.

    Russell, R. J. (Eddisbury)

    Winterton, Rt. Hon. Earl

    Maitland, A.

    Salmon, Sir I.

    Wise, A. R.

    Makins, Brig.-Gen. E.

    Salt, E. W.

    Womersley, Sir W. J.

    Manningham-Buller, Sir M.

    Samuel, M. R. A.

    Wood, Hon. C. I. C.

    Margesson, Capt. Rt. Hon. H. D. R.

    Sanderson, Sir F. B.

    Wragg, H.

    Maxwell, Hon. S. A.

    Scott, Lord William

    Wright, Wing-Commander J. A. C.

    Mayhew, Lt.-Col. J.

    Selley, H. R.

    Meller, Sir R. J. (Mitcham)

    Shakespeare, G. H

    TELLERS FOR THE AYES.—

    Captain Hope and Mr. Furness.

    NOES.

    Acland, R. T. D. (Barnstaple)

    Garro Jones, G. M.

    Lunn, W.

    Adams, D. (Consett)

    Green, W. H. (Deptford)

    Macdonald, G. (Ince)

    Alexander, Rt. Hon. A. V. (H'lsbr.)

    Greenwood, Rt. Hon. A.

    McEntee, V. La T.

    Ammon, C. G.

    Grenfell, D. R.

    McGhee, H. G.

    Attlee, Rt. Hon. C. R.

    Griffith, F. Kingsley (M'ddl'sbro, W.)

    McGovern, J.

    Banfield, J. W.

    Griffiths, G. A. (Hemswerth)

    MacLaren, A

    Barnes, A. J.

    Griffiths, J. (Llanelly)

    Marklew, E.

    Batey, J.

    Groves, T. E.

    Marshall, F.

    Bellenger, F. J.

    Guest, Dr. L. H. (Islington, N.)

    Maxton, J.

    Benson, G.

    Hall, G. H. (Aberdare)

    Messer, F.

    Brawn, C. (Mansfield)

    Hall, J. H. (Whitechapel)

    Milner, Major J.

    Buchanan, G.

    Hardie, Agnes

    Montague, F.

    Charleton, H. C.

    Harris, Sir P. A.

    Morrison, Rt. Hon. H. (Hackney, S.)

    Chater, D.

    Harvey, T. E. (Eng. Univ'e.)

    Morrison, R. C. (Tottenham, N.)

    Cluse, W. S.

    Hayday, A.

    Muff, G.

    Cocks, F. S.

    Henderson, J. (Ardwick)

    Nathan, Colonel H. L.

    Cove, W. G.

    Hills, A. (Pontefract)

    Naylor, T. E.

    Cripps, Hon. Sir Stafford

    Holdsworth, H.

    Oliver, G. H.

    Daggar, G.

    Hollins, A.

    Owen, Major G.

    Dalton, H.

    Hopkin, D.

    Parker, J.

    Davidson, J. J. (Maryhill)

    Jenkins, Sir W. (Neath)

    Parkinson, J. A.

    Davies, R. J. (Wasthoughton)

    John, W.

    Pearson, A.

    Davies, S. O. (Merthyr)

    Jones, A. C. (Shipley)

    Pethick-Lawrence, Rt. Hon. F. W.

    Day, H.

    Jones, Sir H. Haydn (Merioneth)

    Price, M. P.

    Debbie, W.

    Kelly, W. T.

    Pritt, D. N.

    Dunn, E. (Rother Valley)

    Kennedy, Rt. Hon. T.

    Quibell, D. J. K.

    Ede, J. C.

    Kirby, B. V.

    Richards, R. (Wrexham)

    Edwards, A. (Middlesbrough E.)

    Lantbury, Rt. Hon. G.

    Riley, B.

    Edwards, Sir C. (Bedwellty)

    Lathan, G.

    Ritson, J.

    Evans, D. O. (Cardigan)

    Lawson, J. J.

    Roberts, W. (Cumberland, N.)

    Foot, D. M.

    Leach, W.

    Robinson, W. A. (St. Helens)

    Frankel, D.

    Lee, F.

    Rothschild, J. A. de

    Gallacher, W.

    Leslie, J. R.

    Salter, Dr. A. (Bermondsey)

    Gardner, B. W

    Logan, D. G.

    Seely, Sir H. M.

    838

    839

    Sexton, T. M.

    Stephen, C.

    White, H. Graham

    Shinwell, E.

    Stewart, W. J. (H'gh'n-le-Sp'ng)

    Whiteley, W. (Blaydon)

    Silkin, L.

    Stokes, R. R.

    Wilkinson, Ellon

    Silverman, S. S.

    Strauss, G. R. (Lambeth, N.)

    Williams, T. (Don Valley)

    Simpson, F. D.

    Summerskill, Edith

    Windsor, W. (Hull, C.)

    Sinclair, Rt. Hon. Sir A. (C'thn's)

    Taylor, R. J. (Morpeth)

    Woods, G. S. (Finsbury)

    Smith, Ben (Rotherhithe)

    Thurtle, E.

    Young, Sir R. (Newton)

    Smith, E. (Stoke)

    Tinker, J. J.

    Smith, T. (Normanton)

    Viant, S. P.

    TELLERS FOR THE NOES.—

    Sorensen, R. W.

    Walkden, A. G.

    Mr. Adamson and Mr. Anderson.

    Question put, "That this House doth agree with the Committee in the said Resolution."
    The House divided: Ayes, 227; Noes, 129.

    Division No. 194.]

    AYES.

    [11.18 p.m.

    Acland-Troyte, Lt.-Col. G. J.

    Erskine-Hill, A. G.

    Manningham-Buller, Sir M.

    Adams, S. V. T. (Leeds, W.)

    Everard, W. L.

    Margesson, Capt. Rt. Hon. H. D. R.

    Agnew, Lieut.-Comdr. P. G.

    Fremantle, Sir F. E.

    Maxwell, Hon. S. A.

    Albery, Sir Irving

    Furness, S. N.

    Mayhew, Lt.-Col. J.

    Allen, Col. J. Sandeman (B'knhead)

    Fyfe, D. P. M.

    Meller, Sir R. J. (Mitcham)

    Amery, Rt. Hon. L. C. M. S.

    Gledhiil, G.

    Mellor, Sir J. S. P. (Tamworth)

    Anderson, Rt. Hn. Sir J. (Sc'h Univ's)

    Gluckstein, L. H.

    Mills, Major J. D. (New Forest)

    Anstruther-Gray, W. J.

    Goldie, N. B.

    Mitchell, H. (Brentford and Chiswick)

    Astor, Viscountess (Plymouth, Sutton)

    Gower, Sir R. V.

    Moore, Lieut.-Col. Sir T. C. R.

    Astor, Hon. W. W. (Fulham, E.)

    Graham, Captain A. C. (Wirral)

    Moreing, A. C.

    Balfour, G. (Hampstead)

    Grant-Ferris, R.

    Morgan, R. H.

    Balfour, Capt. H. H. (Isle of Thanet)

    Grettan, Col. Rt. Hon. J.

    Morrison, Rt. Hon. W. S. (Cirencester)

    Barclay-Harvey, Sir C. M.

    Gridley, Sir A. B.

    Muirhead, Lt.-Col. A. J.

    Beamish, Rear-Admiral T. P. H.

    Grimston, R. V.

    Nail, Sir J.

    Beaumont, Hon. R. E. B. (Portsm'h)

    Gritten, W. G. Howard

    Neven-Spence, Major B. H. H.

    Beechman, N. A.

    Guest, Lieut.-Colonel H. (Drake)

    Nicholson, G. (Farnham)

    Bernays, R. H.

    Guest, Maj, Hon. O. (C'mb'rw'll, N.W.)

    O'Connor, Sir Terence J.

    Birchall, Sir J. D.

    Guinness, T. L. E. B.

    O'Neill, Rt. Hon. Sir Hugh

    Bossom, A. C.

    Hacking, Rt. Hon. D. H.

    Palmer, G. E. H.

    Boulton, W. W.

    Hambro, A. V.

    Patrick, C. M.

    Bower, Comdr. R. T.

    Hannan, I. C.

    Peake, O.

    Boyce, H. Leslie

    Hannon, Sir P. J. H.

    Peat, C. U.

    Broadbridge, Sir G. T.

    Harbord, A.

    Perkins, W. R. D.

    Brocklebank, Sir Edmund

    Haslam, Henry (Horncastle)

    Plugge, Capt. L. F.

    Brown, Col. D. C. (Hexham)

    Haslam, Sir J. (Bolton)

    Ponsonby, Col. C. E.

    Brown, Brig.-Gen. H. C. (Newbury)

    Heilgers, Captain F. F. A.

    Procter, Major H. A.

    Browne, A. C. (Belfast, W.)

    Hely-Hutchinson, M. R.

    Radford, E. A.

    Bullock, Capt. M.

    Heneage, Lieut.-Colonel A. P.

    Raikes, H. V. A. M.

    Butcher, H. W.

    Hepburn, P. G. T. Buchan-

    Ramsay, Captain A. H. M.

    Butler, R. A.

    Herbert, Major J. A. (Monmouth)

    Ramsbotham, H.

    Campbell, Sir E. T.

    Herbert, Capt. Sir S. (Abbey)

    Rankin, Sir R.

    Ctland, J. R. H.

    Higgs, W. F.

    Rathbone, J. R. (Bodmin)

    Carver, Major W. H.

    Holmes, J. S.

    Rayner, Major R. H.

    Cary, R. A.

    Hopkinson, A.

    Reed, A. C. (Exeter)

    Cayzer, Sir H. R. (Portsmouth, S.)

    Horsbrugh, Florence

    Reid, W. Allan (Derby)

    Channon, H.

    Hudson, Capt. A. U. M. (Hack., N.)

    Renter, J. R.

    Clarke, Colonel R. S. (E. Grinstoad)

    Hume, Sir G. H.

    Rickards, G. W. (Skipton)

    Cobb, Captain E. C. (Preston)

    Hutchinson, G. C.

    Ropner, Colonel L.

    Colfox, Major W. P.

    Inskip, Rt. Hon. Sir T. W. H.

    Ross, Major Sir R. D. (Londonderry)

    Colman, N. C. D.

    James, Wing-Commander A. W. H.

    Ross Taylor, W. (Woodbridge)

    Colville, Lt.-Col. Rt. Hon. D. J.

    Keeling, E. H.

    Rowlands, G.

    Conant, Captain R. J. E.

    Kerr, H. W. (Oldham)

    Royds, Admiral Sir P. M. R.

    Cooke, J. D. (Hammersmith, S.)

    Keyes, Admiral of the Reel Sir R.

    Russell, Sir Alexander

    Courtauld, Major J. S.

    Knox, Major-General Sir A. W. F.

    Russell, R. J. (Eddisbury)

    Cox, H. B. Trevor

    Lamb, Sir J. Q.

    Salmon, Sir I.

    Critchley, A.

    Latham, Sir P.

    Salt, E. W.

    Croft, Brig.-Gen. Sir H. Page

    Leech, Sir J. W.

    Samuel, M. R. A.

    Crookshank, Capt. H. F. C.

    Leighton, Major B. E. P.

    Sanderson, Sir F. B.

    Croom-Johnson, R. P.

    Lennox-Boyd, A. T. L.

    Scott, Lord William

    Cross, R. H.

    Levy, T.

    Selley, H. R.

    Crossley, A. C.

    Lewis, O.

    Shakespeare, G H

    Cruddas, Col. B.

    Liddall, W. S.

    Shaw, Major P. S. (Wavertree)

    Culverwell, C. T.

    Lindsay, K. M.

    Shaw, Captain W. T. (Forfar)

    Davidson, Viscountess

    Llewellin, Colonel J. J.

    Shepperson, Sir E. W-

    Denman, Hon. R. D.

    Lloyd, G. W.

    Shute, Colonel Sir J. J.

    Dugdale, Captain T. L

    Locker-Lampson, Comdr. 0. S.

    Simon, Rt. Hon. Sir J, A.

    Duggan, H. J.

    Loftus, P. C.

    Sinclair, Col. T. (Queen's U. B'if'st)

    Duncan, J. A. L.

    Lyons, A. M.

    Smith, L. W. (Hatlam)

    Eastwood, J. F.

    Mabane, W. (Huddersfiald)

    Somerset, T.

    Edmondson, Major Sir J.

    M'Connell, Sir J.

    Somervell, Sir D. B. (Crewe)

    Ellis, Sir G.

    McCorquodale, M. S.

    Spens. W. P.

    Elliston, Capt. G. S.

    Macdonald. Cant. P. (Isle of Wight)

    Storey, S.

    Elmley, Viscount

    McEwen, Capt. J. H. F.

    Strauss, E. A. (Southwark, N.)

    Emery, J. F.

    McKie, J. H.

    Strauss, H. G. (Norwich)

    Emrys-Evans, P. V.

    Maitland, A.

    Stuart, Hon. J. (Moray and Nairn)

    Entwistle, Sir C. F.

    Makins, Brig.-Gen. E.

    Sueter, Rear-Admiral Sir M. F

    Tasker, Sir R. I.

    Ward, Lieut.-Col. Sir A. L. (Hull)

    Windsor-Clive, Lieut.-Colonel G.

    Tate, Mavis C.

    Ward, Irene M. B. (Wallsend)

    Winterton, Rt. Hon. Earl

    Taylor, C. S. (Eastbourne)

    Warrender, Sir V.

    Wise, A. R.

    Thomas, J. P. L.

    Waterhouse, Captain C.

    Womersley, Sir W. J.

    Titchfield, Marquess of

    Watt, Major G. S. Harvie

    Wood, Hon. C. I. C.

    Tryon, Major Rt. Hon. G. C.

    Wayland, Sir W. A

    Wragg, H.

    Tufnell, Lieut.-Commander R, L.

    Wells, S. R.

    Wright, Wing-Commander J. A. C.

    Turton, R. H.

    Whiteley, Major J. P. (Buckingham)

    Wakefield, W. W.

    Wickham, Lt.-Col. E. T. R.

    TELLERS FOR THE AYES.—

    Walker-Smith, Sir J.

    Williams, H. G. (Croydon, S.)

    Captain Hope and Mr. Munro.

    Wallace, Capt. Rt. Hon. Euan

    Willoughby de Eresby, Lord

    NOES.

    Acland, R. T. D. (Barnstaple)

    Hardie, Agnes

    Parkinson, J. A.

    Adams, D. (Consett)

    Harris, Sir P. A.

    Pearson, A.

    Alexander, Rt. Hon. A. V. (H'lsbr.)

    Harvey, T. E. (Eng. Univ's.)

    Pethisk-Lawrence, Rt. Hon. F. W.

    Ammon, C. G.

    Hayday, A.

    Price, M. P.

    Attlee, Rt. Hon. C. R.

    Henderson, J. (Ardwick)

    Pritt, D. N.

    Banfield, J. W.

    Hills, A. (Pontefract)

    Quibell, D. J. K.

    Barnes, A. J.

    Holdsworth, H.

    Richards, R. (Wrexham)

    Batey, J.

    Hollins, A.

    Riley, B.

    Bellenger, F. J.

    Hopkin, O.

    Ritson, J.

    Benson, G.

    Jenkins, Sir W. (Neath)

    Roberts, W. (Cumberland, N.)

    Brown, C. (Mansfield)

    John, W.

    Robinson, W. A. (St. Helens)

    Buchanan, G.

    Jones, A. C. (Shipley)

    Rothschild, J. A. de

    Charleton, H. C.

    Jones, Sir H. Haydn (Merioneth)

    Salter, Dr. A. (Bermondsay)

    Chater, D.

    Kelly, W. T.

    Seely, Sir H. M.

    Cluse, W. S.

    Kennedy, Rt. Hon. T.

    Sexton, T. M.

    Cocks, F. S.

    Kirby, B. V.

    Shinwell, E.

    Cripps, Hon. Sir Stafford

    Lansbury, Rt. Hon. G

    Silkin, L.

    Daggar, G.

    Lathan, G.

    Silverman, S. S.

    Dalton, H.

    Lawson, J. J.

    Simpson, F. B.

    Davidson, J. J. (Maryhill)

    Leach, W.

    Sinclair, Rt. Hon. Sir A. (C'thn's)

    Davies, R. J. (Westhoughton)

    Lee, F.

    Smith, Ben (Rotherhithe)

    Davies, S. O. (Merthyr)

    Leslie, J. R.

    Smith, E. (Stoke)

    Day, H.

    Lipson, D. L.

    Smith, T. (Normanton)

    Dobbie, W.

    Logan, D. G.

    Sorensen, R. W.

    Dunn, E. (Rother Valley)

    Lunn, W.

    Stephen, C.

    Ede, J. C.

    Macdonald, G. (Ince)

    Stewart, W. J. (H'ght'n-te-Sp'ng)

    Edwards, A. (Middlesbrough E.)

    McEntee, V. La T.

    Stokes, R. R.

    Edwards, Sir C. (Bedwellty)

    McGhee, H. G.

    Strauss, G. R. (Lambeth, N.)

    Evans, D. O. (Cardigan)

    McGovern, J.

    Summerskill, Edith

    Foot, D. M.

    MacLaren, A.

    Taylor, R. J. (Morpeth)

    Frankel, D.

    Marklew, E.

    Thurtle, E.

    Gallacher, W.

    Marshall, F.

    Tinker, J. J.

    Gardner, B. W.

    Maxton, J.

    Viant, S. P.

    Garro Jones, G. M.

    Messer, F.

    Walkden, A. G.

    Green, W. H. (Deptford)

    Milner, Major J.

    White, H. Graham

    Greenwood, Rt. Hon. A.

    Montague, F.

    Whiteley, W. (Blaydon)

    Grenfell, D. R.

    Morrison, Rt. Hon. H. (Hackney, S.)

    Wilkinson, Ellen

    Griffith, F. Kingsley (M'ddl'sbro, W.)

    Morrison, R. C. (Tottenham, N.)

    Williams, T. (Don Valley)

    Griffiths, G. A. (Hemsworth)

    Muff, G.

    Windsor, W. (Hull, C.)

    Griffiths, J. (Llanelly)

    Nathan, Colonel H. L.

    Woods, G. S. (Finsbury)

    Groves, T. E.

    Naylor, T. E.

    Young, Sir R. (Newton)

    Guest, Dr. L. H. (Islington, N.)

    Oliver, G. H.

    Hall, G. H. (Aberdare)

    Owen, Major G.

    TELLERS FOR THE NOES.—

    Hall, J. H. (Whitechapel)

    Parker, J

    Mr. Adamson and Mr. Anderson.

    Fourth Resolution agreed to.

    Ordered, "That the Consideration of the remaining Resolutions be now adjourned."—[Captain Margesson.]
    Fifth and subsequent Resolutions to be considered To-morrow.

    NURSING HOMES REGISTRATION (SCOTLAND) BILL.
    Read a Second time, and committed to a Standing Committee.
    The remaining Orders were read, and postponed.
    It being Half-past Eleven of the Clock,Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

SCOTLAND.
  LAND DRAINAGE, KELVIN VALLEY.
  LAND DRAINAGE, KELVIN VALLEY.
  LOCAL AUTHORITIES.
  LOCAL AUTHORITIES.
  GERMAN AND AUSTRIAN REFUGEES.
  GERMAN AND AUSTRIAN REFUGEES.
  AIR-RAID PRECAUTIONS.
  AIR-RAID PRECAUTIONS.
  ANGLO-IRISH AGREEMENT.
  ANGLO-IRISH AGREEMENT.
  INCOME TAX AND SURTAX.
  INCOME TAX AND SURTAX.
  DEFENCE LOANS ACT.
  DEFENCE LOANS ACT.
TRADE AND COMMERCE.
  TEXTILE INDUSTRY (POLISH COMPETITION).
  TEXTILE INDUSTRY (POLISH COMPETITION).
  EGYPT (TARIFF ON COTTON GOODS).
  EGYPT (TARIFF ON COTTON GOODS).
  AEROPLANE ENGINES (EXPORTS).
  AEROPLANE ENGINES (EXPORTS).
  SHIPBUILDING (COST).
  SHIPBUILDING (COST).
GOVERNMENT DEPARTMENTS.
  INLAND REVENUE STAFF (WOMEN).
  INLAND REVENUE STAFF (WOMEN).
  TAXES OFFICE, CHORLEY.
  TAXES OFFICE, CHORLEY.
  SOMALILAND.
  SOMALILAND.
  WEST AFRICAN COLONIES (IMPORTS OF TRAPS).
  WEST AFRICAN COLONIES (IMPORTS OF TRAPS).
  SPAIN.
  SPAIN.
  VOLUNTARY CONTRIBUTORY PENSIONS.
  VOLUNTARY CONTRIBUTORY PENSIONS.
  CENSUS, 1931 (JEWS).
  CENSUS, 1931 (JEWS).
Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
GATESHEAD CORPORATION BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
BLACKBURN CORPORATION BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
POOR'S ALLOTMENT IN HANWELL BILL.
Brought from the Commons; read 1a; to be printed, and referred to the Examiners.
SALTBURN AND MARSKE-BY-THE- SEA URBAN DISTRICT COUNCIL BILL. [H.L.]
Returned from the Commons, agreed to with Amendments: the said Amendments considered and agreed to.
CREWE CORPORATION BILL.
Brought from the Commons; read 1a; and referred to the Examiners.

COAL BILL.
Order of the Day for the Second Reading read.
THE EARL OF MUNSTER: My Lords, I beg to move that this Bill be now read a second time. It falls to my lot to-day to present to your Lordships the Government's proposals, as embodied in this Bill, to deal with the great coal mining industry. As many noble Lords will desire to speak on this Bill, I shall endeavour to confine my remarks within the narrowest possible compass, but the measure is one of first class importance, and I trust therefore the House will hear with me while I unfold the explanations it is my duty to offer. The House must

745
now be fairly familiar with the three Parts of this Bill, all of which are inter-related and complementary to one another, and my efforts will be directed to explain the principal portions of each Part which I believe are likely to be of interest and concern to this House. Part I of the Bill deals with the unification of coal royalties, and will come as no surprise to noble Lords, for I have the clearest recollection that during our discussions last summer on the Coal (Registration of Ownership) Act, the noble Viscount, Lord Halifax, and I both informed your Lordships that that Bill was the preliminary of a more lengthy and comprehensive measure which the Government hoped to submit to Parliament this Session. For generations we in these islands have legally recognised the owner of the surface as the rightful possessor of minerals—other than gold and silver—found beneath it. Moreover the owner is the individual undoubtedly entitled either to work or lease the minerals—as he may think fit—for his own benefit. Thus, any measure submitted by the Government which seeks to transfer the ownership of coal from the hands of some thousands of private persons to the single ownership of a statutory Commission, must involve a Bill not only of a highly complicated and legal character, but one also affecting matters of vital importance to the industry at large.
The majority of this House will regard private ownership as something inherent in the system of trade and commerce which has been built up in this country over a period of centuries. For my part I yield to no one in my belief in the system of private enterprise, but I have long realised that the ownership of this raw material in private hands is not conducive to the better economical working and organisation of the industry. Nevertheless, if this valuable institution is to be discontinued it is fundamental that any transfer of private property to a statutory Commission set up by the State should be accompanied by payment of compensation upon a basis which Parliament is satisfied is both fair and equitable. Over a period of many months this vast project has been shaped and developed, and I believe that in the proposals contained in this Bill we have an effective, efficient and workable substitute for the existing system as we know it.
746
The purpose of the Government has throughout been that of unification, as opposed to nationalisation, recommended from time to time by noble Lords opposite; and, in pursuance of our policy of unification, we propose that the ownership of coal will vest in an independent statutory body free from all political interference in its day-to-day administration, and with a non-Civil Service staff. Moreover, on the matter of finance, the Commission will itself, backed if necessary by a Treasury guarantee, raise the money required for the purchasing of the property and the financing of the scheme. There is no question apart from the element of risk involved in a Treasury guarantee of either profit or loss to the taxpayer. Any profits which will accrue from the ownership of the coal after the vesting date will be devoted not to the State but to the relief of rentcharges at present imposed upon the production of coal. I thought it necessary to make those very brief observations so as to bring out in a distinct and clear light the essential differences between unification and nationalisation of the raw material of the industry.
I pass now to explain to the House how the method of purchase was arrived at. The Government and the Mineral Owners' joint Committee agreed from the beginning of their conversations that the proper method of compensation was the fixing of a global sum equivalent to the value of all the coal-property to be acquired; and, to help in determining this figure, the average net annual income for the seven years 1928 to 1934 was agreed at £4,430,000. All that was, therefore, necessary was to agree the number of years' purchase of this sum which should be taken to represent the value of the ownership of all coal in the future. After a period of negotiations there seemed little prospect of any settlement being reached between the Government and the Mineral Owners' Joint Committee, and by agreement with the latter body the issue was submitted to arbitration. The Government and the Mineral Owners' Joint Committee accepted the personnel and terms of reference of that tribunal, and the Mineral Owners' Joint Committee undertook to accept the findings of this tribunal as representing the compensation properly payable in the event of the Government proceeding with their Bill for the unification of coal royalties. But the

747
Government with its many financial responsibilities could not agree to accept an unknown figure, and it reserved the right to reject the findings, but it did give a most important guarantee to this Joint Committee that in such circumstances it would not proceed with a Bill for the unification of coal royalties except on a basis of some global figure previously determined between the two parties.
The terms of reference invited the tribunal to determine the amount to be paid for the fee simple of all unworked coal and mines of coal in Great Britain, and certain rights agreed between the parties. These included such underground rights as are necessary for getting the coal, including the right to let down the surface (1) where the rights as to compensation or otherwise are now defined, subject to those rights, and (2) in the case of coal unsevered from the surface, on the basis of reasonable compensation for damage due to letting down the surface and any buildings or works thereon. For the purpose of this global figure no surface rights are included, and the property to be transferred is subject to and has the benefit of all working agreements and existing colliery leases in so far as they relate to coal and underground rights. It was, therefore, made clear and accepted by both parties that the global figure should represent the total value of all coal, known or unknown, proved or unproved, in this country, together with the underground rights of working it. Just over a year ago, the tribunal reported to the effect that fifteen was the appropriate number of years' purchase, and that the compensation would amount to the figure of £66,450,000.
There is no need for me to enter into a long historical review of this great industry, but it is desirable that I should remind the House of two important events which are relevant to this Bill. In 1919 a Royal Commission was set up and presided over by my noble friend Lord Sankey, and, although in their Report the members of that Commission disagreed on nearly every issue before them, they were unanimous in favour of the State acquisition of coal. In 1925 another Royal Commission was set up and presided over by the noble Viscount, Lord Samuel, and in their Report the members of that Commis-
748
sion were in favour of the nationalisation of coal royalties by the method of "out and out purchase." They believed that there was great discontent aroused, particularly amongst the miners, by the system of privately-owned royalties and they held, to quote their own words, that
"A system which vests the ownership of minerals under the surface in the owner of the surface means that the planning of the mines is influenced continually by surface boundaries and surface rights. But surface boundaries have no relevance at all, and surface rights only a minor relevance, to the proper organisation of the industry underground."
Fifteen years after the Sankey Commission reported my noble friend Lord Gainford wrote these words:
"The antiquated provisions in many of the royalty leases ought no longer to exist, as they prevent working the coal underground to the best advantage. Possibly it would be better if royalties were nationalised, or at any rate in the hands of one body by whom the best terms could be given so as to secure the best underground working conditions and the most economical production."
If your Lordships accept my noble friend as one of the authorities on coal mining in this House, it is clear that in the opinion of this great expert the industry is hampered by petty restrictions and unscientific developments which by their nature add to the difficulties of an inherently difficult industry.
We are fortunate to have as members of this House both noble Viscounts who were Chairmen of the Royal Commissions to which I have referred, and I hope that during the course of our discussions we shall hear the reasons which led them to the recommendations contained in their Reports nineteen and thirteen years ago respectively. It is perfectly true to say that following the publication of the Reports of both Royal Commissions, legislation was introduced which proved to be a useful deterrent to the unreasonable mineral owner; but, nevertheless, it has been constantly represented to us that the present system of separate ownership of royalties is an inherent obstacle to the better organisation and to the effective and efficient working of the industry. In our proposals we are neither advocating universal confiscation, nor are we suggesting the repudiation of royalties without compensation. Indeed we would never be parties to the abolition of the system of royalties except on the basis of the payment of fair compensation. To a very great extent the procedure to be

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followed until the vesting day has been formulated with the assistance, co-operation, and advice of the Mineral Owners' Joint Committee, to whose constructive criticism of the machinery clauses of the Bill I should like to pay a well-deserved tribute.
I now turn to an explanation of the principal clauses of Part I of the Bill. Clause 1 and the First Schedule set out and explain the constitution of the Coal Commission, and their general functions in carrying out the provisions of Part I of the Bill are dealt with in the second clause. The House will observe that, except for searching and boring for coal, they are not to engage in the business of coal mining, but their duty is to control and manage the property transferred to them on the vesting date, by granting leases to colliery undertakings and otherwise, and thus promoting the interests, efficiency, and better organisation of the coal industry. I said earlier that the Commission would not be subject to interference in the day-to-day administration of their property, but subsection (2) of this clause provides, quite properly in my opinion, that the Government shall be able, through the Board of Trade, to give genera] directions on matters of national interest, and this responsibility given to my right honourable friend will bring the policy of the Commission before Parliament.
Under Clause 3, the Commission will acquire the fee simple in all coal and mines of coal now being worked or not, and whether now known to exist or not, and there are included in the acquisition any surface servitudes which are found to be, in a legal sense, inseparably annexed to coal, and, except as provided, such minerals other than coal as are actually comprised (with coal) in any coal-mining lease. Your Lordships will notice that the property is to be transferred to the Commission on the 1st July, 1942, called the vesting date, and the coal is to be held until that date by the existing owners as though a contract for sale had been executed by them on the 1st January next, called the valuation date, with provision for completion on the vesting date. During this period of three and a half years the present owners will retain their property but must not depreciate it, and, broadly, the normal rules of law and equity will apply. Clause 4 makes it
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clear that the property will vest in the Commission with the benefit of such rights and subject to the burden of such obligations as would attach to the property if transferred by a -normal conveyance as described in the Second Schedule. The House will observe that by Clause 5 existing colliery leases, and working rights secured by working facilities orders, are untouched and safeguarded by the Bill.
I now turn to Clauses 6 and 7 and the Third Schedule which deal with the ascertainment of the value of each holding to be acquired and the distribution of compensation. The House will recall that the object of the Registration Act passed last summer was to establish a Register of coal properties. It provided for the collection and elucidation of particulars of the property and rights for which compensation would ultimately become due. We propose to transfer to the Commission the functions and liabilities of the Board of Trade under the Registration Act, and to extend until the valuation date the period of liability for the payment of applicants' costs. On the passing of this Bill a Central Valuation Board will be set up in accordance with the procedure specified in the Third Schedule, and its duty will be to divide the country into a number of regions and allocate a portion of the global sum to each region. Immediately after that a Valuation Board for each such region will be appointed. It will be generally known to your Lordships that the valuation of mineral properties is a highly technical process, and the constitution of these Boards provides for the fullest possible use of the existing body of expert knowledge. Their duties will be to value each separate coal holding, as defined in Part I of the Schedule. including any subsidiary minerals or other subsidiary coal hereditaments which may be comprised in it; these latter, of course, will be paid for separately and as an addition to the global figure I have already mentioned.
Each holding will be valued on its merits, and all relevant factors will be taken into consideration. The fifteen years' purchase upon which the global figure was based will not necessarily be applicable to the valuation of individual properties, but the valuation in every case will be scaled up or down to bring the total of the individual valuations in each region to the amount of the regional share of the global figure, which was accepted by the Mineral Owners' Joint Committee.

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Noble Lords will know that some properties will have far too short a remaining life to merit a valuation at fifteen years' purchase, and it seems only reasonable to believe that, even after taking account of compensation for undeveloped properties, some developed areas will secure far more than fifteen years' purchase of their expected future yield. Any claimant who is dissatisfied with the valuation given to his property by the Regional Valuation Board can give notice to the Board of Trade to have his claim referred for determination by a referee selected from a panel appointed by the Board of Trade. Payment of compensation becomes due on the vesting date, that is 1st July, 1942, and from this date interest will become payable on all outstanding payments. There is in the Third Schedule, as noble Lords will have noticed, an important provision enabling the Commission, subject to certain conditions as to notice and so forth, to make payments-on-account in advance of the vesting date or before a valuation has been certified for assessment and payment.
Clauses 8 and 9 carry out what I have already said about the position of the present owners during the interim period. Clause 9 contains a provision requiring notice to be given to the Commission during this period of any alterations, variations or renewals of any leases, and generally for enabling owners to ascertain within a limited time whether there is any objection to any proposed dealing with their property. Clause 10 and the Fourth Schedule empower the Commission, when it thinks fit, to require the formal dissection after the vesting date of leases which comprise both premises which are and are not vested in the Commission. I think that one of the main objects of the unification of coal royalties is to remove the difficulties caused by a multiplicity of leases covering the coal of a single colliery or undertaking. My advisers have informed me that cases are known where a single colliery company has many leases each containing different terms for working the coal and each with a minimum rent—and as an extreme example, one case is known of a colliery with as many as thirty separate leases. It must be obvious that a system such as this does not lead to efficient or economical production of coal and after the vesting date the
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Commission will, of course, have power to grant a consolidated lease in agreement with the lessee, but it did appear to the Government that the work of unifying the various interests should not be held up until that date and accordingly Clause II provides an opportunity for consolidating leases before the vesting date, but it guarantees to the royalty owners concerned the net rent which they would have received up to the vesting date had the leases not been consolidated.
Clause 12 also deals with a special and important class of case. Your Lordships will, I think, have appreciated that throughout the Bill the rights of colliery lessees are respected, but there are a number of mines where the coal is worked by the individual or company owning the freehold, and of course in such cases there is no lease in existence. This clause provides that such individuals or companies shall, after the vesting date, be entitled to a lease on the terms and conditions ruling in the district or on more favourable terms and conditions if in the opinion of the Commission the acquisition of the royalty and the grant of a lease on the normal terms would seriously affect their financial position. Clause 14 extends to the Commission (or its licensee) subject to proper restrictions, such underground rights as are necessary for the working of coal. The House will observe that the coal in the Commission's hands will not be liable to any new payments for underground way-leaves.
I now turn to the financial provisions of the measure. Clause 20 provides for the establishment of a reserve fund, by annual appropriations from any annual surplus, of such an amount as the Government may require. Clause 21 provides that if at any time it appears to the Commission that, after providing for the service of the loan and other expenses and appropriation to reserve, it is likely to have a surplus income, that surplus may be used to make reduction in rents payable in respect of underground way-leaves or to remove anomalies in royalty payments in a particular district or between districts. After reduction of rents of the kinds I have mentioned has been substantially fulfilled, Parliament is to have an opportunity of considering in what form any further reductions in rents shall be made.
I am not in a position to give the House any indication when sufficient sums

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will become available to make one or more of these reductions. It must depend on a variety of factors including, in particular, the amount of the loan which the Commission will require to raise, the terms upon which it raises it and the output of the coal industry after the vesting date; which last depends both upon the course of trade and also on the continuation of peace in the industry and the settling of all differences by peaceful negotiation. I would like, however, to remind the House that, whilst it would be absurd to suggest that any reduction in royalties now averaging less than 6d. a ton could, of itself, have any outstanding effect upon the economics of the industry, it is a fact that any reduction in costs which result in any form from this Bill would assist the level of wages of colliery workers. The House will notice that the maximum sum which the Commission is authorised to borrow is £10,000,000 in excess of the £66,450,000 of the global figure for coal. This additional sum is to cover all such things as subsidiary minerals and surface servitudes acquired with coal; costs of registration, valuation and payment of compensation; interest on compensation-payments; interest on any loans which become due before royalties are available to meet it; and finally administrative expenses during the initial period.
Clauses 29 and 30 deal with bodies of the character of statutory undertakings, the maintenance of whose undertakings is obviously a matter of public importance. Clause 29 provides that un-worked coal actually owned by such a body and supporting its undertaking shall not be worked except with its consent or, on appeal, the consent of the Railway and Canal Commission, and Clause 30 makes it clear that any rights that any such bodies have, under any statutory mining codes, to restrict the working of minerals not owned by them are not affected by this Bill.
Let me now summarise quite briefly the advantages which we think will accrue to the coal industry after the vesting date—that is to say, the date upon which the coal is transferred to the Commission's ownership. It will make for the better organisation of the coal industry and the easier development of the mining of coal, for up to the present colliery companies have had to adapt their workings to the consideration of surface ownership
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by leaving barriers of coal underground as a boundary indication to the different royalty owners. If, by unification, we can sweep away these conflicting claims and interests and remove the difficulties experienced, the mining of coal in the future can be undertaken upon better economical terms and conditions. As I have said, in the course of time a surplus will be available for the reduction of royalty rents and this benefit will in the main be felt by a betterment of the organisation of the industry and there is of course the psychological effect of removing for all time one of the causes of discontent and unrest felt by the colliery worker. I have heard it said that the postponement of the final vesting of the property in the hands of the Commission until July I, 1942, will delay any advantages of unification to that extent, but there are clauses in the Bill, to which I have referred, for providing a substantial measure of control and influence over development on the part of the Commission during the interim period. The whole of Part I is designed as a constructive reform to assist the industry in the variety of ways I have mentioned.
I now turn to offer your Lordships an explanation of Part II of the Bill. This is not by any means the first time that your Lordships have been called upon to discuss the case for reducing the number of coal mining undertakings. Proposals of this nature have been argued again and again ever since it became the subject of recommendations contained in the Reports of Committees and Commissions issued since the War. With the knowledge that I have obtained during the last three years I do believe that there exists a case for amalgamations of colliery undertakings if rightly and properly selected, but I am under no illusion whatever that the mere act of amalgamation will provide the solution of all difficulties of the industry or that they are in all circumstances of beneficial and lasting value. I know that an examination of the constituent units of the industry and the distribution of productive capacity among them reveals that no less than 798 undertakings out of a total of 963 are producing 40 per cent. of the output, and this alone, I submit, quite clearly shows that a very considerable degree of amalgamation particularly in the case of medium sized concerns is at any rate in theory possible.

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In proper cases—and the Commission must, naturally, exercise great care in making recommendations to the Board of Trade—the promotion of such schemes will assist in reducing the costs of production and increasing efficiency which should result in improving the financial position of the industry and enable it to yield higher wages, increased profits and possibly reduced prices. Surely, is it not essential that if we give to the industry powers in regard to selling prices, we shall at the same time ensure that no remediable defects in internal organisation are left untouched? I can assure the House that I am only too conscious of the objections and difficulties of compelling amalgamations; but the industry has never availed itself sufficiently of the opportunity for voluntary reorganisation from within, and it was for that reason that Part II of the 1930 Act first contained machinery for compulsory powers. Noble Lords will recall that under that Act any scheme submitted by the Coal Mines Reorganisation Commission was not to be confirmed by the Railway and Canal Commission unless they were satisfied that it would be in the national interest to do so; that it would result in lowering the cost of production or disposal of coal; that it would not be financially injurious to any of the undertakings proposed to be amalgamated; and that the terms of the scheme were fair and equitable to all persons affected thereby. It ultimately proved that the provisions of the 1930 Act were quite ineffective, and it therefore became obvious that they could not possibly be retained.
It seems clear upon consideration that the question of national interest is not capable of proof before a Court of Law or, indeed, one that it would be proper to ask a judicial body to decide. Accordingly the responsibility for that decision is, by this Bill, transferred to Parliament, which by its very composition is the one and only body which can give a decision on any question of national interest. The House will recall that my noble friend Viscount Runciman, in May, 1936, introduced into another place a Bill which was ultimately withdrawn after he had given an undertaking that it would be amended to provide for a two years' respite from compulsion, to exclude ancillary undertakings, and to provide for an "independent impartial authority" to examine
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schemes before their submission to Parliament. Part 11 of this Bill goes a great deal further, by providing that questions affecting the national interest shall be investigated and considered by Parliament itself, and that subsequent questions as to the propriety and equity of any scheme when formulated shall remain with the Railway and Canal Commission.
Clause 42 provides that the Coal Mines Reorganisation Commission shall cease to exist, and transfers its responsibilities, powers and duties to the new Coal Commission; but the expenses of this work will continue, as before, to be borne by the Exchequer. Noble Lords will, I think, agree that, having set up a Commission charged with the duty of administering the landlord interest in all coal, this is the appropriate body to be charged with the duty of promoting desirable amalgamations and, where necessary, taking steps to have compulsion applied. Possibly it would be useful if I summarised the general effect and intention of these proposals. It will not be possible for any compulsory scheme to be submitted to the Board of Trade before December 31, 1939—that is to say, more than two years after the date of the introduction of this Bill. Even at that time there will still be no amalgamation by compulsion unless certain conditions are or have been fulfilled. The Commission will have to declare that the colliery owners in a specified area have not made adequate progress voluntarily. The Board of Trade have to accept this view, and submit to Parliament that it is expedient that the number of undertakings should be reduced by amalgamation in that area. Then Parliament has to approve by passing a Bill confirming an order laid before it by the Board of Trade to the effect that it is expedient that the Commission's powers should be exercisable in the specified area. Under Provisional Order procedure every affected person, whether coal owner, coal miner or local authority, will have an opportunity to appear and state his case.
Not until Parliament has approved for any specified area does the machinery for compulsion contained in the 1930 Act come to life again; and this in itself gives yet another opportunity for voluntary action before compulsion becomes operative. As before, these compulsory powers will reside in the Railway and Canal Commission on the application of the Coal Commission, but since Parliament will

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have already accepted the view that amalgamation is expedient in the locality in question, it will no longer be for this Court to consider whether amalgamations are or are not in the national interest. It will, however, still be necessary to prove to the Commission that the terms of any scheme submitted are fair and equitable to everyone concerned, and that it is calculated to avoid financial injury to the interests affected, and, further, that it will enable the amalgamated companies to be efficiently carried on. If the Court are satisfied as to these requirements, they will confirm the scheme. If not, they can modify it, or, if their view is that it cannot be made satisfactory by modification, they have power to reject the scheme. We hope that these powers will never be invoked, but that the industry itself will proceed without delay to proper reorganisation, which under this Bill is simplified by unification of coal royalties under a single ownership. It is far preferable that the industry should plan and make its own developments on a voluntary basis, than that the new Commission should exert the powers proposed to be given to it. Only in cases of complete and utter failure of the industry will the Commission take the necessary steps of having compulsion applied.
I come next to Part III of the Bill. The House must know that for some years the root cause of the troubles in the industry has been the excess of productive capacity over market demands and requirements. This has led to fierce competition between colliery companies, with the result that the proceeds of the industry have been continually reduced. The schemes which were introduced in 1930 provided for a system of quantitative regulation in order to bring production nearer demand and also for a system of minimum prices designed to restore prices to an economic level. Although these schemes did not succeed in raising prices or even maintaining the level, they did steady the fall during the worst years of depression, and they have now come to stay as an integral part of the coal industry. Three years ago, as your Lordships will remember, immediate trouble was threatening in the coal industry. The owners were faced with a demand for increased wages, and it was perfectly clear that the proceeds of the industry were quite insufficient to meet any such demand. Certain consumers were asked
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by colliery companies to agree voluntarily to an increase in their contract prices, in order to assist in the immediate grant of some improvement in wages. Although a large number of consumers readily agreed to this course, it is not one which can be repeated, and surely it falls upon the colliery owners to put their house in order as quickly and as rapidly as possible, in order to meet the unsatisfied part of the wage demand. These owners did indeed give a guarantee arid undertaking to the Government that by the middle of 1936 there would be in operation an organisation for the complete and effective control of the sale of coal in each mining district, with co-ordination between districts through the Central Council. These organisations were brought into operation by means of amendments to the schemes then in force under Part I of the 193o Act.
Although it is true that increase in price coincided with the introduction of selling schemes, the greater part was due to the increased demand for coal. I wonder if the House realises that wages for colliery workers follow prices the whole time and that any increase in the pithead price of coal directly affects the wages of those engaged in the industry. I am not in a position, nor, I think, is it possible, to say whether the output wll remain at the high level of 1937, but if trade conditions should weaken the industry will again be faced with an excess of productive capacity which, if unchecked, would bring about the same chaotic conditions as were prevailing in the past, and the continuation of these schemes is necessary if only as an adequate insurance against possible difficulties arising in the future.
I think it had always been understood that the Government would invite Parliament to extend Part I of the 1930 Act for a further five years from 1937. Indeed, without that understanding the threatened dispute of 1935 would never have been settled. Part III of the Bill proposes that Part I of the 1930 Act should be extended for a further period of five years, and that Section 5 of that Act, which deals with the committees of investigation, and Section 8, which deals with the disclosure of information by those committees, should be amended. Since the selling schemes conferred extensive powers on the coal industry, it was obviously necessary to afford consumers

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protection against possible exploitation, and committees of investigation were set up in each district and charged with the duty of inquiring into any complaint. Although the number of complaints has been surprisingly small, the Government believe that this strengthening of the powers given to the industry over the price of coal must have as a complement the strengthening of the committees of investigation, and the proposals in the Eighth Schedule are designed to this effect.
Representations have been made in the past to the Secretary for Mines by the Conjoint Conference of Public Utility Undertakings and the Central Council of Colliery Owners, that the independent chairmen of the committees of investigation should be of the legal profession, and although this has been done already by administrative action, paragraph I of the Eighth Schedule makes this statutorily binding on the Minister. The rest of the constitution of the committees of investigation remains unaltered, but there will be consultation with the noble and learned Lord on the Woolsack concerning the appointment of a member of the legal profession as Chairman of any Committee of Investigation or of the Central Appeal Tribunal. We further propose that, to avoid delay, if there should be a large increase in the number of cases brought before the committees of investigation, the Board of Trade shall set up a panel of reserve Chairmen, and in addition appoint two alternate members with each member of the committee. Under rules which are at present made by the Board of Trade the committees of investigation meet in private, unless they decide otherwise. It is now proposed, in accordance with the general rules of English justice, that these committees shall take evidence in public unless it relates to any particular business or for any special reason the committee otherwise decide, but in all cases their decisions must be delivered in public.
Organised consumers were somewhat doubtful whether these committees of investigation gave them adequate protection against exploitation under the schemes, and at the request of the Government the Central Council of Colliery Owners have given certain assurances, and without additional legislation the principle of these
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assurances will be embodied in the selling schemes, and thus be given statutory force. I attach considerable importance to these assurances, which perhaps I might quite briefly describe. Firstly, if a consumer desires to change his source of supply for good and sufficient reason—other than reasons of price—difficulties will not be put in the way. Secondly, the executive board in each district will be prepared to meet representative bodies of consumers, to discuss questions appertaining to the supply of coal, including the general level of prices. Thirdly, arrangements will be made whereby a purchaser will be able to refer to a committee of investigation any price quoted to him by a coal owner, and not merely the price fixed by the controlling authority, as was formerly the case. Fourthly and lastly, pending the result of a complaint lodged with a committee of investigation, the coal forming the subject of complaint will be reserved for the complainant on his giving an undertaking to purchase it when the proceedings are over, at the price resulting therefrom, and an amendment of price will follow a recommendation of the committee which is accepted by the executive board. And, finally, we propose to set in motion a Central Appeal Tribunal to which appeals can be taken from the committees of investigation. Its composition will be in accordance with the Eighth Schedule and its award will be final and binding on all parties. I feel that these assurances will go far towards meeting, the difficulties and the fears with regard to the operation of the schemes that might have been experienced or felt by consumers.
I have now completed my summary of the principal clauses of the three Parts of the Bill, and if I have delayed your Lordships too long, I plead to be excused on the grounds of the importance and the intricacy of the measure. The contribution we offer to the industry for its reorganisation and better efficiency is that of a long-term policy devoted to removing the difficulties experienced at the present time. If, as the mineral owners have stated, it is not their wish to be obstructive, we can with their help and the advice of your Lordships assist in the new development of an old industry, and by removing the causes of unrest and disquiet look to the future with more happiness than the past twenty distracted years. This Bill will, I feel sure, receive

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from the hands of your Lordships that careful deliberation that is due to it, and the House will recollect during the course of the debate that on this Bill rests the happiness, the security and the welfare of the homes of hundreds of thousands of our fellow citizens. I submit the Bill with every confidence for Second Reading.
Moved, That the Bill be now read 2£.—(The Earl of Munster.)
LORD ADDISON: My Lords, I am sure every one of your Lordships will have listened with great interest to the lucid exposition of the Bill which the noble Earl has given us, but I would recall your Lordships to some of his opening observations. The noble Earl said that this Bill represented the policy of His Majesty's Government for dealing with the coal industry. I hope that that somewhat narrow view of what the coal industry really includes is not the final word of His Majesty's Government. At all events, I do not think it will be at all difficult in the course of this discussion to show that the coal industry—using that expression in its proper and comprehensive form—includes very much more than is in this Bill, complicated as it is. I notice also that the noble Earl, quite properly, with the solicitudes he has to bear in mind, opened his observations with a tribute to private enterprise and a fervent disclaimer that the last thing His Majesty's Government desired was to interfere with the ark of the covenant. I confess that his logic is not quite so apparent as the charm with which he stated his case. Because if the "past twenty distracted years" (to use his own expression) are the outward and visible sign of the success of the conduct of this industry by private enterprise, it is a strange logic that the noble Earl commends to us.
After all, however we examine this Bill, from start to finish it is a limitation, or a control, or an alteration of the operation of private enterprise and, as such we on our side, represented by so tiny a section in this House but, I suggest, representing a much greater body of opinion outside, receive the proposals of the Bill in an entirely friendly spirit, although I shall have, on my noble friends' behalf, some criticisms to make as to its limitations. I would refer your Lordships to the first limitation—a very important one—in Clause 2:
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"The Commission shall not themselves engage in the business of coal-mining or carry on any operations for coal-mining purposes …."
Why is this limitation placed upon the Commission? It will be a highly efficient body. I confess that "the past twenty distracted years" do not seem to me to offer a very good justification for this veto upon the operations of the Commission. The noble Earl told us that the ownership in private hands of the underground minerals had not been conducive to the best development of the industry, that it had been hampered by unscientific development—I am using his own words. Well, if that is so, and it is so evidently, then why should not this Commission be allowed to make use of the skill and resources which it will be able to command and, at all events in some modest measure here or there, try an experiment or two in management by a National Commission of the business of the industry? I know it will be hopeless for us to suggest that this veto shall be removed, but I do suggest that its imposition is entirely out of accord with the whole of the speech of the noble Earl, and out of accord with the circumstances which have led to the presentation of the Bill.
However, I pass from that and will make a few observations on the question of the global sum. Those of us who take the view of things that I do notice that fifteen years' purchase of these undertakings is the estimate of the proper figure which an independent tribunal has arrived at. I have no doubt that this very instructive case will furnish material in the future for many speeches. Some of us think that much more than underground minerals ought to belong to the State, and some of us—I myself at different times in generous moods—have suggested that more than fifteen years' purchase might be equitable. But we know that in this case an independent tribunal has come to the conclusion that fifteen years is enough. I make no further comment. My friends, of course, would not say a word against that limitation, but we note it with interest. But I see that at all events there is a considerable period of grace. It is not to be till 1942, and I see that the calculations made in another place were to the effect that that would add about another £20,000,000 to the £66,450,000 in terms

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of receipts between now and then. Well, it will be at all events some comfort to those who had their claims reduced in this startling fashion, that at all events this sum will be added to the £66,450,000. I expect that the most reverend Primate who was here a few moments ago will have something to say later on about the way in which ecclesiastical funds will be affected by the global sum. It will be claimed, I feel sure, that ecclesiastical funds will be reduced to a considerable extent. But I surmise with considerable confidence that the frugal and efficient administration of ecclesiastical funds will not leave them much worse off.
Now I pass to the other and undefined section of compensation which I consider worthy of closer examination than the noble Earl permitted himself to furnish us with in his opening speech. I refer to the compensation which is to be accorded for subsidiary coal hereditaments. I am not quite sure what they are—I am not quite sure whether anybody knows what they are—but at all events a sum of £10,000,000 is allotted. If that sum is exceeded, sooner or later the Commission will come to Parliament and, like Oliver, ask for more. I suggest with a good deal of confidence that they will certainly come to Parliament and ask for more, and the reason is to be found in some words in subsection (4) of Clause 7 on page 7 to which I think exception must be taken. When the time comes, whether I am supported or not to any material extent, I shall certainly move an Amendment on this point.
I ask your Lordships to notice the basis of valuation for these acquired undertakings. It is to this effect:
"The value of a holding shall be taken to be the amount which the holding might have been expected to realise if … the holding had been sold on the valuation date in the open market by the existing owners thereof, selling as willing vendors to a willing purchaser."
These words, "a willing purchaser," should not be there. In the old Lands Clauses Act, which gave rise as we know to some very unjust awards against authorities acquiring land for public purposes, the injustice of the awards came in the end because of the existence in the old Act of these words, and they were removed in the Acquisition of Land Act, 1919. I would remind your Lordships of
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the formula which is embodied in that Act and which has worked with justice and smoothness ever since:
"The value of the land shall, subject as hereinafter provided, be the amount which the land, if sold in the open market by a willing seller, might be expected to realise."
Your Lordships will notice that the words, "to a willing purchaser," are not there, and they were deliberately omitted because it is clear that the value of a property to the purchaser is not an item in its value.
This change arose out of the extraordinary Thirlmere case which your Lordships will remember in which the Manchester Corporation acquired a considerable amount of land for its reservoir, which was relatively valueless hillside land. The value to the sellers was trifling; it would have been generous to have valued it at £5 an acre; at all events it was a very small sum; but the value of the land as a catchment area to the citizens of Manchester in providing them with water was, of course, very high, and accordingly the Manchester Corporation, because of the existence in the Act of the words "to a willing purchaser" had to pay a most exorbitant sum because the land was valuable to them for the purpose for which they wanted it. Another objection to these words is that a purchaser may make various uses of an undertaking or property so acquired. One purchaser may use it so as to enhance its value in a much greater way than another purchaser, but whatever may be the object and the ultimate operations of the purchaser they have nothing whatever to do with the existing value of the undertaking to be acquired. I suggest that it is a reversion to a very bad and unfortunate precedent, which Parliament had to remove in the public interest, that these words have been allowed, somehow or other, to creep into this Bill. I hope that before your Lordships have done with the Bill you will remove them.
Those who are concerned with the present ownership of these subsidiary coal hereditaments will derive great comfort from the Bill because all their costs are going to be paid. There will be registration of particulars, and all the claims for compensation and the fees of those who represent them are, I gather, going to be paid under the provisions of this Bill.

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According to the Schedule on page 68 the Commission will pay all the costs of the claimants unless they are in some degree amazingly unreasonable. I can see there will be a real good time for the members of the legal profession in contesting the claims here because the claimants will feel quite free, knowing that in any case they will not be prejudiced by the findings of the tribunal so far as costs are concerned.
I would like to turn to another important item in the Bill, and I deliberately confine myself to important items because so many of your Lordships wish to speak. The point here is, what is to happen in the fortunate event of the Commission having a surplus in its funds? I suspect it will be some time before that happens, considering all the costs that may fall upon them, but if the Commission has a surplus at any time, under Clause 21 on page 23 that surplus will be devoted to a reduction of rents. No one would take objection to a reasonable reduction of rents so far as the funds available may allow if the rents are held to be unreasonable, but why should the profits, if there are any profits, be confined to this purpose? I suggest that there are other people intimately concerned in the well-being of the industry besides those who happen to be running an undertaking for which they are paying rent. What about the miners? Surely they are entitled to some consideration in the event of this undertaking being profitable and successful?
There are also the consumers. I do not think the consumers will derive very great comfort from the amendments in respect of the Commission which the noble Earl has explained. I hope they will get something out of it, but it is a laborious and prolonged procedure. Surely it would have been better, if the Commission make a profit, that they should be enabled if they so wish to use some of that profit for helping the miners or for doing something to mitigate the costs of distribution. My noble friend Viscount Samuel will speak to us later and because of that I do not propose to say anything about the charges for the consumers and the costs of distribution, but the Sankey Commission and the Samuel Commission devoted a great deal of time and a great part of the Reports which they issued to the defects which at present attach to the selling organisations, and to the margin of increase of cost between the pithead and the
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consumer. There is not a word about any of that in this Bill, yet the noble Earl would have us believe that it is the last word of His Majesty's Government in the reform of the coal industry. I suggest that the costs between the pithead and the householder are just as worthy of control and scientific management, and need it just as much as the inequalities which have been shown to exist in other branches of the industry. It is an amazing thing that the Government should present proposals professing, at all events, to deal with the inequalities and inadequacies of the existing coal industry without providing any power whatever, so far as I can see, for the Commission that will help to remove the serious waste that at present attaches to distribution and marketing, apart entirely from any proposals to give the miners any share in the benefits which the Bill may bring.
The next topic to which I should like to refer for a few minutes is that of amalgamation. The noble Earl said that amalgamation was very necessary, that the Bill of 1930 had been provided for the purpose of promoting amalgamations, with necessary compulsion in the last instance, that it had been a failure, and that voluntary amalgamations of a private kind had proceeded too slowly, and so on. Here we are now to have at long last a proposal for achieving amalgamation, if necessary by compulsion, and the machinery is before your Lordships. I suggest that any manager of a colliery undertaking that objects to amalgamation may lose no sleep because of the proposals of the Bill, for anything more ludicrously inefficient it would be impossible to imagine. A report will be made to the Board of Trade, and they will then make a Provisional Order which will come before Parliament. May I remind your Lordships as to the limitations of that procedure? I believe I am correct in saying that the Provisional Order Bill will have to be laid some time or other between February and May and that all the rest of the year is excluded by the Standing Orders. That Provisional Order procedure requires the Bill to be laid before Whitsuntide, therefore none of these operations will be possible in any other part of the year.
Then, better still for some, the Bill will be referred to the usual Committee, and every party, as the noble Earl

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assured us, who may be interested, directly or indirectly, will be represented by counsel before the Provisional Order Bill Committee, and the proceedings will be, I dare say, exceedingly prolonged. Perhaps the noble Earl will tell us if the Commission are going to pay all the expenses of that procedure. So far as I can see they are, and it will be open, I gather, to any party to brief the most expensive Parliamentary counsel that he may be able to employ. If the Commission are to pay all the costs, if an Amending Order is ever made and reported by the Board of Trade we shall be presenting the Parliamentary Bar with largesse in an extraordinarily generous manner. I think the members of the Parliamentary Bar will not fail in their usual wisdom to take advantage of our generosity. Perhaps the noble Earl will tell us if it is really proposed that all the expense of this exceedingly costly procedure is to fall upon the Commission. I think it is. It is very important, however, that that point should be cleared up. If we have regard to the limitations which now apply to Provisional Order procedure and to the fight which will be possible before any order of the simplest and of the most reasonable kind can be made statutory by this procedure in Parliament, I think it is a fair thing to prophesy that the compulsory amalgamation orders that will be made under this Bill will be exceedingly few in number. For my part I think the procedure is now so cumbrous and is certain to be so costly that we cannot expect that there will be any compulsory amalgamation that matters at all so far as this Bill is concerned.
The one part of the Bill to which the Party I represent can give a modest measure of support is that dealing with the case some of us have tried to make so vainly outside. It is recognised that these minerals, if they are to be sensibly and properly developed, should belong to a national authority whose responsibility it should be to see that they are made scientific and good use of, but it is much to be regretted, I think, that a Bill which sets out to reform the coal industry should confine the benefits, if any, that are to be derived from these operations to the lowering of rents, that they should be limited to that one single monetary benefit, and that nothing should be done
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under the provisions of the Bill for those who get the coal, and that there is no substantial mention anywhere in the Bill of, and certainly no benefit so far as I can see for, any of those who use the coal. With those two remarkable limitations in the Bill I hope that the noble Earl will not persist in his presentation of it as representing the views of His Majesty's Government as to what ought to be done for the coal industry. But for its small blessings, limited as they are and cumbered as they are with so much costly procedure, recognising that they are there and that they are a little of the something that those of us who take my view have always wished for, we should give the Bill what support we can, moving a few Amendments in Committee.
THE MARQUESS OF CREWE: My Lords, in the first instance I wish to express my thanks, and I am sure the thanks also of my friends here, to the noble Earl who moved the Second Reading for the manner in which he performed his task. Speaking from some experience I can truly say that I cannot recall a case in which an important and complicated measure has been moved from the Government Bench by one of its occupants—not the most senior—more forcibly, or more lucidly, and, I would add with gratitude, more audibly. This, of course, cannot be regarded in any sense as a Party measure, because in its essence it does not contravene the principles either of the Conservative Party or the Liberal Party or the Socialist Party; but it is a measure which causes in many minds a strong degree of prejudice. The noble Lord who has just spoken did not pretend to regard it with a purely unprejudiced eye, and I equally confess that I do not approach it in any way without bias, because I am myself an owner of some mineral royalties, although on a very much more modest scale than that of some who will be later taking part in this debate.
The Bill divides itself into two main divisions, that is to say, one dealing with the transference of royalty rents and the other with certain matters affecting the actual working of the mines. These are in a sense completely independent of each other. I think we are all well aware that the royalty owner as such is not a particularly popular figure. The ownership of the minerals below the surface is not regarded as being precisely on all fours

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with the ownership of the surface itself even by some of us who, unlike noble Lords on the front Opposition Bench, do not hold that there ought to be no private ownership of either. But the difference between the surface and what is below the surface is not quite simple enough definitely to draw a sharp line between the two. A man who owns the surface digs a hole in the ground and from it he takes a quantity of sand. Even if it is common sand it is of some value, and if it is glass making sand he gets a very high price per cubic foot. He digs a rather deeper hole and he finds himself in possession of a stone quarry. Possibly if it is a very large hole, indeed it may be a slate quarry of far greater value than any coal enterprise covering a similar surface. But if he lets down a cage into a colliery apparently the position is quite different, and although, as we know very well, coal itself and other minerals, particularly lead, have been frequently worked from the surface, yet a distinction is attempted to be drawn between the two.
The result is, as I say, that the owners of minerals have been more shyly looked on than the owners of agricultural land. I venture to think that that is not quite fair. They have been regarded rather as the less considerate landlords in the South and West of Ireland were regarded before the land legislation there; that is to say, as people who abstracted a considerable revenue from other people's industry and did nothing whatever to assist it. That, as I say, I think is not quite fair. I think if the reports of the skilled mining engineers who manage the mineral estates were looked into it would be found that royalty owners very often have spent considerable sums in assisting the industry itself in such ways as by paying for experimental borings and so on, and in assisting the industry on the social side by contributions to churches, Nonconformist chapels and schools. Therefore I think they need not be so completely attired in a white sheet as some people seem to consider just.
At the same time I imagine that practically all royalty owners have realised for some time that their expropriation was inevitable since two Royal Commissions, that of the noble Viscount, Lord Sankey, and that of my noble friend beside me (Viscount Samuel), both recommended that it would be to the public advantage
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that such expropriation should take place. That was enforced in the debates on the Registration Bill by what fell from the noble Viscount, Lord Halifax—namely, that where it could be shown that expropriation was required in the public interest, it always would be carried out with due compensation to those who suffered. Consider for a moment the different interests involved by the operation of this Bill. In the first place, because they come first in order of the clauses, are the royalty owners; then the mineowners, those who work the mines; thirdly, those whom many people would consider most important of all, the mine workers, the miners themselves; then the consumers, and finally the general public or taxpayers.
The royalty owner, who certainly received no sympathy from the noble Lord who has just spoken, is not going to come off very well under this Bill. The Inland Revenue says to him: "If you have got such a fine gilt-edged security as you apparently think it is, why is it not as marketable as Bank of England stock or War Loan, and if you want the money, why do you not put it on the market and get the same number of years' purchase as you would for one of those securities?" The royalty owner replies: "I beg your pardon, but I do not regard this as a gilt-edged security at all; I regard it as the annual sale of a portion of a property which has come to me either by inheritance or by purchase. Of course, I do not argue the point whether such property ought to exist at all; but for hundreds of years it has existed. I am in the position of a man who has fortunately inherited twenty-five or thirty valuable works of art or manuscripts and, not being able to put them all on the market at once, sells one every year. When they are all gone, his income ceases, precisely like that of a man who has let a seam of coal on a twenty-five years' lease; it is worked out and all gone."lb/>
Then he adds to the Inland Revenue: "You want to treat it entirely as a gilt-edged security. In the first place—of this I do not complain—you take the two special taxes applicable, no doubt, to the special character of the industry: Mineral Rights Duty and Miners' Welfare; but in addition to those you take the full amount of Income Tax and of Surtax on it as though it were a gilt-edged security, and

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the result is that you get 70 per cent. and I get about 30 per cent. of the income. In spite of that, the new arrangement will mulct me to an extent which I cannot precisely estimate, but it is quite evident that under the figures as presented in the Bill there will be a considerable loss to the owners of royalties." That may be inevitable. But what deserves comment is that it is hardly possible that this loss will not fall very unfairly. I do not see how it is possible to prevent a most inequitable result from this system of district valuations. That was made quite clear in the noble Earl's speech, because he stated—which is undoubtedly true—that, when a particular property has been valued, it by no means follows that the owner will get the whole amount upon which the valuers agreed, because the amount will always be liable to be scaled down to the proportion which that particular property can get from the total which is allotted to the particular district. I say, therefore, that I do not see how it will be possible to avoid considerable unfairness to individuals when this valuation takes place.
I am anxious not to attempt to go into any detail, but it appears to me that some very difficult questions will be asked in the course of the debate with regard to what is to happen in the case of land valuable for other purposes—perhaps very valuable for building purposes—when the ownership of the surface is separated from that of the minerals. That is obviously a most complicated matter, and I feel that it will be very difficult to arrive at a just appreciation of what can be done to meet those cases.
I pass on to the mineowner, on whom I need not spend so much time. It will be for him to say if he prefers the possibly somewhat mechanical dealings of the Coal Commission to dealing with his previous landlord, on whom he has perhaps been able to put more friendly pressure than he could upon this rather formidable body. That is altogether apart from the questions arising under Part II. But I should like to ask whether there has not been a great deal of exaggeration of the advantage which the colliery owners are likely to get from the abolition of the boundaries between estates. My impression is that the effect of those
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boundaries between estates has been greatly exaggerated in much that has been said and written on the subject; and one very competent coal owner in another place devoted a considerable part of his speech to showing how much people had been deluded by that exaggeration.
Now I come for a moment to the miners. No one in your Lordships' House has a higher opinion of coal miners than I have. A great number of years ago, for a year and a half I was a candidate for the House of Commons for one of the principal mining constituencies in England. Untoward circumstances prevented my having the honour of representing them, but I had many excellent friends among the miners' leaders both in Yorkshire, where I was standing for Parliament, and in other parts of England. Therefore I can say fairly that I regard them most highly, and I thoroughly sympathise with their feeling that they have not by any means always received fair treatment. But I cannot help feeling that the miners have been considerably misled as to the effect in their favour of measures such as this Bill. Can you look forward to anything going to happen under this Bill which will result in a general system of higher wages, or what is even more important than higher wages, to regular and continuous work? I confess that I find it difficult to foresee it. I am bound to say that, looking at the industry as a whole, as the noble Lord on the Front Bench desired should be done, I cannot see, the industry being what it is, that the realisation of the noble Lord's hope—that is to say, the nationalisation of the collieries themselves as well as of the minerals—would tend to make a serious difference in the miners' favour, even supposing that all these collieries were unified or nationalised under whatever the official might be—a Coal-Master General, or whatever his title might be.
Of course, if the national object was to extract as soon as possible, in the quickest way, all the coal that can be got, I could quite understand that a system of that kind would help rapidly and largely in that regard; but that not being the case the question of the consumer comes in, and of the price which he is prepared to pay for coal, either for domestic purposes or for industrial purposes. Surely that would still apply if

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all the industries that used coal were nationalised, because it is obvious that it would be impossible in any circumstances to go on working all the collieries of England at a loss—that is to say, if the wages paid and the upkeep of the collieries themselves were not met by the productive results of the coal, when used either for domestic purposes or for industrial purposes. I cannot see how any of the varieties of coal, either steam coal or gas coal or bituminous coal for domestic consumption, can be cheapened by what is proposed in this Bill.
Then, finally, I would touch on the last of the interests I mentioned, those of the taxpayer. The noble Earl very clearly said that the taxpayer had nothing to expect from this Bill, and, as the noble Lord, Lord Addison, has pointed out, if any profits are obtained—and I think myself that those extra profits are some way off—whatever happens to them the public, the taxpayer, will not get the advantage. But then the taxpayer, surely, stands to lose something. It is impossible to estimate what the diminution of income of the owners of mineral royalties will be under this Bill, but I do not think you could put the loss to the taxpayer on Income Tax and Surtax which will result from this Bill at less than a million a year. I can imagine that it might be more. In these spacious times a million a year is not considered to be worth thinking of, but the taxpayer, I think, will be disposed to ask, if he does not see any rapid advantage arriving to any of the parties immediately involved, how it is that he is himself losing something on the entire transaction.
I do not pause for more than a moment on Part II of the Bill and the question of amalgamation. I can hardly suppose that this House will refuse to deal with this matter in some form, and I should hope very much in the form in which it appears in this Bill. My impression is—I shall be corrected if I am wrong—that in the first instance it was proposed to make these amalgamations compulsorily, by the issue of a kind of decree which would be more suitable to some countries on the Continent of Europe than to our practice here. The noble Lord, Lord Addison, thinks that the safeguards have gone too far the other way. That, I am sure, will be a matter for full consideration in Committee. I have no doubt that there are some large scale amalgamations that
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ought to take place, and that have been unduly held up, but from all I know of business the process of amalgamation can be overdone. There are some small collieries, dealing with some special kind of coal, which are quite satisfactory from every point of view, both of the mine-owner and of the miners, and which might definitely suffer from being hurled into a large amalgamation with other collieries that are doing an entirely different kind of business. But I hope that this matter will receive full consideration in Committee. I feel I have spoken rather grudgingly about this measure, but I fully recognise the great pains His Majesty's Government have taken in framing it and the strong hope that they have that this will enure to the real benefit of the industry. I confess I do not approach it with any very sanguine hopes myself, but certainly there will be no prospect of any opposition to it from these Benches.
THE LORD ARCHBISHOP OF CANTERBURY: My Lords, I must take some part in this debate, though I am little qualified by any expert knowledge to do so, because I represent a body which has by far the largest income from royalties in the Kingdom: I mean of course the Ecclesiastical Commissioners. And here at once may I associate myself with what has been said by the noble Marquess as to the speech with which this Bill was introduced. I must congratulate the noble Earl upon what seemed to me a most astonishing grasp of a most complicated and intricate Bill. I shall say nothing about Part II and Part III, because I am quite incompetent to do so, but I must speak about Part I—about what is called unification. Unification is a very pleasant euphemism: It might, I think, quite as reasonably be described as expropriation or nationalisation. I wonder whether in the history of euphemisms anyone has been more ingenious than this, and I congratulate the Government upon their ingenuity in discovering the expression. Undoubtedly this Bill inflicts a most grievous loss upon the Ecclesiastical Commissioners and, as I need hardly remind your Lordships, through them upon a class which is singularly unable to bear any additional loss, the clergy of the Church of England. For I need not remind your Lordships that the Ecclesiastical Commissioners exist upon a trust imposed upon them by Parliament

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to devote their resources primarily and mainly to the relief of the poorer clergy of the Church.
The loss may be measured in a very simple way. At present the Commissioners have an income of £230,000 from mining royalties. The compensation provided by this Bill will be only £110,000, leaving an annual loss of £120,000, which must be borne in the main by those who are little able to bear it. Your Lordships will remember that they are called upon to bear this loss after another much more grievous, for by recent tithe legislation a very large proportion of the legitimate property of the benefices of the Church has been taken away. I admit the very great advantages of the Tithe Act, but the fact remains that it took from some 7,000 benefices of the Church of England a sum in capital value of £20,000,000. As these benefices are vacated, the incumbents will find in all these cases that their income is reduced by 20 per cent. It is on the top of losses of that kind—I think your Lordships will admit, very patiently borne by the Church—that this additional loss is inflicted. By £120,000 a year the Commissioners will be less able to do what they are pledged to do, to augment these poor benefices—by £120,000 less able to do what everyone in the country knows ought to be done to enable the clergy more fitly to maintain themselves and their families.
But having said that I must at once admit that that £120,000 does not represent the actual net loss which the Commissioners will suffer. But that is not owing to any provisions of the Bill but to the prudent policy of the Commissioners. For the last thirty years the Commissioners have set aside from their mineral income a sum of no less than £80,000 a year. That, I must point out, has been not in order to meet any possible expropriation of royalties but to meet any possible exhaustion of coal. Moreover, though that sum of £80,000 has been invested every year, the income has not been accumulating and has been used to increase the spendable income of the Commissioners for the grants which they are under trust to give. I also ought to point out that this large sum set aside necessitates, and has necessitated, great reductions in the capacity of the Commissioners
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to meet their obligations. But there it is, and, thanks to that prudent policy—not in any way to His Majesty's Government—the actual net loss will be less. The £70,000 which represents the sum put aside from coal income (exclusive of income from other minerals) must be set against that £120,000, and therefore the actual net loss to the Commissioners will be £50,000 a year. That is of itself a very grievous loss. The surplus income available in the hands of the Commissioners for making its grants is this year £400,000. Now £45,000 a year has gone or is about to go through the loss of tithe, and to that must be added this £50,000. That is to say, the Commissioners lose one quarter of the income which they are charged to spend, and which they are eager to spend for the benefit of the poorer benefices of the country and of the new parishes which are now being rapidly created—I think at the rate of about one every fortnight—in the new housing areas which are rising in every part of the country.
But, quite apart from the loss which the Commissioners may suffer from the unification of their mineral income, your Lordships have to remember the case of some 2,000 or 3,000 benefices which own coal under their glebes. I think the losses may be stated thus—that whereas, speaking in round numbers, these benefices have £20,000 a year in royalties they will now, even under the compensation of this Bill, only have £10,000 a year, and the loss to them will obviously be very great. Here perhaps I may be permitted to make an interpolation. In the extremely complicated and laborious work of registering the ownership of these benefices and the claims that they have for compensation, the Commissioners have been most generously assisted by the co-operation of the Ministry of Mines and of the coal administration of the Board of Trade, and I am very glad to have this opportunity of expressing in public my gratitude to these Departments for their assistance.
Since such compensation as this Bill affords is so inadequate, since even with it a loss so grave is inflicted upon those who are least able to bear it, your Lordships might reasonably expect that I should advocate that a Second Reading be refused to this Bill. I make no apology that the Church possesses and has possessed these royalties. They are as legiti-

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mate a form of property as any in the country, and I venture to say that in the case of the Ecclesiastical Commissioners these royalties have been administered for no private benefit but for the public advantage. I wish I could see the end of the first Part of this Bill, of course. I am distressed when I think of those who will ultimately suffer, when I think of the loss it will entail. I do not know what my noble friend Lord Hastings, who has been so actively associated with this matter, may propose to your Lordships, but there are two reasons, I must at once say, which make it impossible for me on behalf of the Commissioners and therefore indirectly of the Church to take any such course.
I will deal with one of these reasons now and with the other when I come very shortly to the close of what I have to say. The first reason is that the Mineral Owners' Joint Committee, with which the Commissioners have been from the first associated and of which I believe the very able First Estates Commissioner, Sir George Middleton, acted as Chairman, asked the Government to allow compensation to be assessed by an impartial and judicial tribunal, and, wisely or unwisely I will not say, agreed to accept the award of such a tribunal. No one can question either the impartiality or the ability of the tribunal which was actually established, and although I am bound to say I am greatly disappointed by the award, it is impossible for the reason I have given now to raise objection to it.
I have no doubt that the Bill is capable of amendment in Committee. I hope very much that its incidence in certain respects may be less onerous than it is at present, but there is just one point I feel bound to mention at this stage. It is an important but a very complicated and legal point, and it might be thought it was one which ought to be kept for the Committee stage, but I bring it forward now because it is one to which I hope the Government may give serious attention and perhaps be able to deal with in Committee on their own initiative. The point is this. The Bill makes provision for the way in which the award is to be paid to various classes of owners, but there is one sphere of ownership of mineral rights about which the Bill so far as I can see is silent, and that is the case of manors. The relationship between the lord of the
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manor and the ex-copyholder is, as many of your Lordships know, one of extreme complication. Manors are very ancient and regulated by very varying customs, but the question has to be faced in regard to these manors—who owns the coal? To whom is the compensation to be paid? Ought the coal to be regarded as the sole property of the lord of the manor? Is the consent of the ex-copyholder to its working, which is necessary by law, to be regarded as an interest in the coal or, so to say, an interest against the coal?
The matter affects the Commissioners very closely because they are owners of a very great number of very ancient manors throughout the country. They have no wish to be left, as this Bill apparently would leave them, to establish their rights possibly by recourse to the Courts, or to involve the ex-copyholders, who are usually men of very little substance, in litigation. I submit that the matter is one that will concern the Coal Commission itself because it will be left, so far as I can see, to establish its own rights possibly by recourse to the Courts. It is in every way desirable that this Bill should make clear just how we are to deal with these rights and to whom the compensation should be paid in these manors up and down the country. I apologise for dealing with a point which might seem to be more naturally a Committee point, but in my opinion it is one to which the Government might give their attention and possibly deal with in their own way.
Now I come to the second reason why, most reluctantly, I do not feel able to oppose the Second Reading of this Bill. The coal industry is, as the noble Earl who introduced the Bill so fully indicated, one of the most important in the country. On it depend other industries, our export trade, the necessity almost of our people as well as the maintenance of a vast number of miners and their families. The Government, with full possession of the facts and with their special responsibility, have been driven to the conclusion both that the industry needs, for its future, drastic reorganisation and that it is essential in any such reorganisation that these royalties should be unified. The Church is bound, even more than private individuals, in the management of its property to consider the public welfare. I cannot bring myself, in the name of the Commissioners and therefore indirectly in

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the name of the Church, to oppose an essential part of a scheme which the responsible Government consider to be necessary for the welfare of this great industry. I have thought it right to explain the very grave loss which this Bill will inflict upon the property of the Church; I have not concealed from your Lordships that I regard this with the greatest possible regret; but I have done so in order to show what a very real sacrifice the Church is content to make for the good of the whole community.
LORD HASTINGS: My Lords, the noble Earl who presented this measure to your Lordships gave a most lucid exposition of its contents, an exposition upon which he has been congratulated by all the speakers who have succeeded him, and I would also like if I may to add my word of congratulation. But I confess that the remarks with which he prefaced that exposition were of greater interest to me. For the reason that a measure which proposes so drastic a reversal of previous policy and proposes to establish a precedent so dangerous to our accepted state of society, it is necessary that such a measure should have a justification which can only be described as one of urgent national need. I was, therefore, most particularly interested to hear what the noble Earl might have to say by way of commending to the House the necessity for this measure, and I confess that I thought his commendation was particularly thin. What had the noble Earl to say? He very unfairly, I thought, quoted to the House certain remarks made by my noble friend Lord Gainford fifteen years ago.
THE EARL OF MUNSTER: Not fifteen years ago; fifteen years after the Commission reported.
LORD HASTINGS: Fifteen years after the Commission reported. I apologise to the noble Earl. It was at any rate some long time ago. I suggest unfairly because he should at the same time have reminded the House that since those remarks were made certain amendments in the law have enabled the colliery proprietor, the colliery lessee, suffering from an unreasonable and recalcitrant lessor to take that lessor before the Railway and Canal Commission and have his grievance there redressed, and consequently the state of
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affairs to which my noble friend referred when he made his remarks no longer exists. There is no longer, from the colliery lessee point of view, the urgent need for a Bill of this character. That was held out as the case by the noble Earl when introducing the measure.
Then the noble Earl went on to commend the Bill to the House because it would act as the satisfaction of a long-felt grievance on the part of the workers in the industry. What he said in that direction might be equally applied to any enterprise, to any industry in which the "have-nots" coveted that which the "haves" possess. It was a very dangerous doctrine, I thought. The noble Earl paid lip service to the sanctity of private ownership, which should not be expropriated without full and fair compensation, evidently forgetting what he had previously said. At a later stage he proceeded with considerable gusto to commend the Bill to the House by reason of the surplus which would be available for division. That is a comment upon the fairness of the compensation offered which really answered itself. You do not acquire great surpluses available for the advantage of, maybe, colliery lessees or workers in the industry without having first taken the money from somebody else without paying for it, and, inasmuch as the Government propose under this measure to give to the Coal Commission a surplus of some £2,000,000 a year, acquired by reason of the fact that the compensation is by that much less than would constitute fair compensation, he is hardly, I think, entitled to say that "here is this surplus thus acquired available for such and such" and at the same time to claim that the compensation itself is fair.
On this occasion I do not propose to labour the matter of compensation. I would like to stress the danger, to my mind, of introducing a system of wholesale nationalisation such as this, conceal it by any other term that you will. His Majesty's Government, I feel sure, will not mistake the action or lack of action which is now being adopted by the House. I would, had it been reasonably possible, most gladly have tabled a Motion for the rejection of this measure on Second Reading, but it would not have been a reasonable thing to do. Neither I nor those whose advice I am always glad to take thought so. And what is the reason of that? The reason of that is that this Bill

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displays in a particularly blatant fashion the old vice of "tacking." "Tacking," as the House knows has been the subject of Parliamentary dissension ever since the days of Queen Anne, and here we have a very remarkable example of it. In Parts II and III of the Bill there are important proposals for the conduct of the industry and the machinery of government which obviously require to be debated in Committee. Part I, on the other hand—although the noble Earl who introduced the measure claimed that it was linked with the other Parts, a contention which I entirely deny—proposes to establish a principle not accepted in either Parliament or the State. It clearly should form a separate Bill and it now requires separate discussion. How is that to be achieved?
I hold the opinion that a large membership of this House would, however reluctant they may be to oppose the whole Bill—and their lack of action proves that reluctance—not be indisposed to challenge the proposals contained in Part I. People who feel as strongly about the subject as I do are apt to delude themselves in thinking that others must think the same. On the other hand, it may not prove to be a delusion at all, and I think it is only right that the opportunity should be given to those who feel as I do to give expression to their thoughts. With the consent of the House I propose, in order to get over the difficulty in which I find myself and in which others, I think, find themselves, to take a particular line of action, and it is this, that when on Thursday, the ninteenth day of this month, the Lord Chancellor proposes that the House do now resolve itself into Committee I shall then have a Motion upon the Paper that it shall be an instruction to the Committee to omit Part I. We shall then see whether the House is prepared to accept the principle of the nationalisation of private property on the great scale that this Bill proposes or whether it is not. That will also give us an opportunity of debating at length the whole question of compensation, the fairness or unfairness thereof, and the machinery of Part I of the Bill.
When the occasion arises it will be impossible to forget the remarkable arguments with which the noble Earl, Lord Munster, concluded his speech in commending this Bill to the House. He there used arguments which could be used
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with equal aptitude by any member of the Labour Party in commending to his own Party, or to any Parliament here or in the other House, the compulsory acquisition of any form of industry or enterprise in this country. It amazed me that a Minister in the National Government—a National Government supported in the main by the Conservative Party—should have felt himself compelled by circumstances to commend a Bill in the terms in which he did. My Lords, I do not intend to trespass on the time of the House for another moment. Given the consent of the House and the opportunity when we are about to enter into Committee, I shall take the liberty of dealing with the matter much more fully. For the time being I can but register a protest against the Bill and I would beg the House not to think that my failure or the failure of any other of us to move its rejection now implies consent either to its principle or to its detail in any part.
VISCOUNT SAMUEL: My Lords, the noble Lord who has just spoken has announced the course he proposes to take at a later stage of this Bill and he justified it on the ground that Part I is really an example of "tacking." But surely Part I is of the very essence of this Bill. This Bill was introduced by His Majesty's Government in accordance with a pledge given at the last General Election and that was so announced in another place by the Minister in charge of the Bill. The pledge that was given at the General Election related not to any of the matters in Part II or Part III or in later parts of the Bill, but to what is called unification of royalties. Furthermore, if my memory does not mislead me, when this Bill was announced in the King's Speech at the opening of the present Session again reference was made to the unification of royalties. To imagine that such a pledge could be fulfilled if Part I were omitted from the Bill, which is what the noble Lord, Lord Hastings, proposes, is obviously wrong. I venture to suggest that those noble Lords who are opposed to the unification of royalties ought properly to move the rejection of this Bill on Second Reading rather than to assent to the Second Reading and afterwards to propose the omission of that Part of the Bill which is really of its very essence.
My own view is the very opposite of that of the noble Lord who has just

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spoken. It appears to me that Part I is a measure long overdue. As the noble Earl who introduced the Bill said, in a speech which has won such universal and merited compliment, it was as long ago as the days of the Sankey Commission in 1919 that this measure was first advocated by a Commission which disagreed on all other matters but was united on this. That Commission included a number of representatives of the mineowners themselves. That was nineteen years ago. Then in 1926 the Royal Commission over which I had the honour to preside went once more closely into this matter. We had submitted to us an immense volume of evidence from every section of this industry and from all districts of the country, and we came unanimously to the conclusion that the coal-mining industry was on the whole badly organised, that its difficulties arose largely from that fact, and that it would be impossible to secure a really efficient organisation of the industry unless the mineral itself was in one hand, and in our view that hand should be the hand of the State. We were men drawn from different political bodies, representing different standpoints in economics and politics, but we were quite unanimous on this point.
We felt very strongly about it. Without any doubt or qualification we unanimously recommended unification of mining royalties. We held that the evidence was overwhelming; that the planning of mines in some degree, being largely dependent upon surface boundaries and rights, had been hindered and thwarted in its proper development since the development map underground had to conform to the estate map on the surface. We found that on the average each mine had to make its arrangements for working the mineral with no fewer than five mineral owners. That was the average, and of course in many cases there were very many more. We came definitely to the conclusion that the present system involved undue expense in development and great waste of time of the miners in travelling underground long distances owing to the difficulties that had been placed in the way of proper development of the mines. Furthermore, we found that our British system exists nowhere in the world in any important coal-producing country except the United States. The United States, where the law follows the
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English law, does admit these difficulties and complications, but every other important coal-producing country has ensured that the planning of the coalfields shall be controlled by an authority representing the community as a whole. We found with equal unanimity against nationalisation of the mines for reasons which seemed good to us and which are given expression in our Report. We found most strongly that there was a case for nationalisation of royalties.
That was twelve years ago. Even that is not all. After the Act of 1930 a Coal Mines Reorganisation Commission was set up to secure the better ordering of the industry as a whole. That Commission had not been long at work before its members found that their task was a hopeless one unless they could control the leases of the mineral itself and the future planning of the industry. With equal unanimity they again, men selected by the Government as being of a representative and authoritative character, found that it was essential for their work that there should be unification of royalties. That was five years ago. It is only now that after these repeated recommendations Parliament has taken action.
When my noble friend the Marquess of Crew asks what advantage is to be obtained to the public at large and the consumers from a measure such as this, the answer is that the proper organisation of this industry must bring economic advantages and enable production to be effected more economically, thereby reducing costs to the public without imposing losses on the producers, and that this measure is an essential part in such reorganisation. When my noble friend the Marquess of Crewe says that the taxpayer will lose £1,000,000 a year on Income Tax and Surtax, I think, if I may respectfully say so, he will find that he has been misinformed. The Coal Commission under this Bill when it has to make its financial arrangements will be hound year by year to pay Income Tax on any surplus it receives, while the present mineral owners will have to pay Income Tax, of course, on the sum they derive from the future investment of money they have received.
THE MARQUESS OF CREWE: On a very much smaller amount. That is my point. They will only pay about half in Income Tax or Surtax.
VISCOUNT SAMUEL: They may pay half, but the mineral owners will pay the other half, because they will receive income from investment of the compensation money they receive. They will get an income from that, and that will of course be liable to Income Tax and Surtax like every other source of income. The Commission itself will pay Income Tax on its own income, but there is a loss; there is a loss of Surtax. It will not pay Surtax on that half, and that is a loss to the State, but it is a comparatively small fraction of the £1,000,000 which my noble friend mentioned.
The noble Lord who has just spoken said that the position is different now from what it was when these various Commissions and Committees reported, because of legislation that has since been passed enabling mine owners to secure redress if they are badly treated by the royalty owners. But I venture to say that that legislation is totally inadequate to serve all the purposes that we have in view. My own view is that, although it has effected some mitigation of the position, it has by no means cured the whole evil of the underground planning depending upon the surface rights.
Turning to the question of the terms, of which the noble Lord who has just spoken complained as unfair, it has been asked why, when the Royal Commission of 1925 reported that the cost to the State of nationalisation would be in the neighbourhood of £100,000,000, the mineral owners are now to receive £66,500,000: why they are to receive only two-thirds of what a short time ago was found by a Royal Commission to be the right sum. In the first place, that is not a correct statement of the facts. The Royal Commission of 1925 recommended that the sum that would be payable for the royalties themselves and other incidental adjuncts was about £92,000,000, and about £8,000,000 was allowed for contingencies. The present sum allows £10,000,000 for contingencies. The valuation that we recommended was made by the chief valuer of the Valuation Department of the Board of Inland Revenue, and he took precisely the same number of years' purchase as is now taken—namely, fifteen years' purchase. The difference in the total between £92,000,000 and £66,000,000 is due to the fact that during the intervening twelve years the income from royalties has, from
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a number of various causes, declined. It is now £4,430,000, the agreed figure. It was then £6,000,000. That is why the sum now, at fifteen years' purchase, is different from what it was at that time.
I would point out that necessarily the sum payable must depend upon the income at the time. If mineral royalties had been nationalised fifty years ago, when the demand was first made, the owners would have received less even than they are receiving under this Bill. At that time the gross income—not the net income—from royalties was £4,150,000 and the net income was even less than £4,000,000. That is fifty years ago. So that those who think that they are receiving much less than the value of their property as it was in the hands of their predecessors may take some little consolation from the fact that, if the property owners had been bought out fifty years ago, they would have received very much less.
LORD GAINFORD: The output fifty years ago would have been very much smaller.
VISCOUNT SAMUEL: Undoubtedly, and that is why the compensation now is less than it would have been in 1925 or 1926. Similarly, ten years hence or fifty years hence we do not know but that the output may be less than it is now. Coal is subjected to many severe competitors, and it is quite possible that the British coalfields may in a few years time have a far smaller output than now. If that were so, and if this Bill is not passed, and if a similar measure is introduced then, the compensation to royalty owners will have to be even less than the sum of which complaint is now made. Of course, the essence of the matter is this, as has been pointed out by one previous speaker: that coal is a wasting asset. It is not like a permanent investment; it is not like land, which goes on producing, or like a factory, which, if you provide for depreciation, goes on yielding an income, everything being equal—
LORD CROMWELL: Can I ask the noble Lord whether he does not consider 500 years more or less correct?
VISCOUNT SAMUEL: No, but my noble friend forgets that an investment of capital in, let us say, Government

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securities goes on paying its income indefinitely unless it comes to an end, unless it is a terminable security, in which case he gets his money back and can invest it somewhere else. But a man who has minerals in the ground has what is really a petrified forest, and he sells a piece of it every year. When he has sold it all, it is gone. It is not a permanent asset, but a wasting asset.
LORD DARCY (DE KNAYTH): Would the noble Viscount tell us in how long he expects that income would come to an end? Would he tell us the estimate which he puts on this asset?
VISCOUNT SAMUEL: It depends, of course, upon the quantity of coal that there is in the property and the speed at which it is being worked.
LORD CROMWELL: The property is the asset.
LORD DARCY (DE KNAYTH): The noble Lord's argument depends on the figure at which he puts it. Could he enlighten us as to the figure on which he is basing his argument?
VISCOUNT SAMUEL: It is perfectly impossible, of course, to say offhand what the figure is, but this impartial tribunal has assessed it at fifteen years' purchase, confirming what the noble Lord said: that it is a wasting and not a permanent asset. On the average, it is fifteen years. Of course, in some cases it may be less, and in some it will be more. This fact is realised by the Ecclesiastical Commissioners and by the law. With regard to the coal that forms part of the glebe properties, I believe that the Statute requires that all income from it has to be put to capital. It is regarded not as annual income, but as capital. The Ecclesiastical Commissioners, as the most reverend Primate has told us, have put by £80,000 for the last thirty years because their asset is a wasting asset. It is perfectly right and quite prudent. But he has mentioned also that the income from that sinking fund which has been put by has not been regarded as part of the mineral property but has been spent on other purposes, which is perhaps not quite so prudent and not quite such sound finance. Now if the Ecclesiastical Commissioners have put by, as they have done, £80,000 for thirty years, they have
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accumulated under this head against possible future loss £2,400,000, and the income on that sum, I submit, is properly attributable to this head and ought not to be eliminated from it.
If the income from £2,400,000, which at 3¼ per cent. is £78,000 a year, is regarded as port of their mineral property—and the capital from which it is derived has been accumulated precisely because of some possible loss on royalties in general—then there would be no loss to the Ecclesiastical Commissioners from this, because the loss of income will be made good from the income of the depreciation fund which they have very properly been putting by for the last thirty years. In addition to that, they will no longer, as the most reverend Primate said, have to put by the £80,000 a year which they have been putting by in the past, and £70,000 of which is attributable to coal. Noble Lords seem somewhat sceptical about that argument!
VISCOUNT ELIBANK: They lost £50,000 a year on that sum.
VISCOUNT SAMUEL; They lose £50,000 a year, because they have spent, year by year, £70,000 on other purposes which is derived as interest from their sinking fund for coal—which I submit they ought not to have done. If they put by £80,000 a year because their coal income is liable to loss, then that ought to be regarded as a separate sinking fund and the interest should be devoted to the same purpose. If that had been done, they would not now be suffering this loss.
LORD DARYNGTON: May I interrupt for a moment, as an Ecclesiastical Commissioner? If the noble Viscount will read what the most reverend Primate said, he will see that he made a mistake in regard to this matter. It is rather complicated.
VISCOUNT SAMUEL: With great respect, I have taken the trouble to inform myself from a most reliable quarter, and what I have been saying represents, I think, the facts: that the £80,000 a year is put by to be capital, and the income from it, as I think the most reverend Primate said, is devoted to the general purposes of the Ecclesiastical Commissioners. But there is one other point to be borne in mind. Those who have complained about this valuation forget that

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when these royalties are valued for Death Duties, they are not assessed at fifteen years' purchase. They are assessed on nine- or ten-year periods, that is all.
THE EARL OF CRAWFORD: I deny that, except in particular cases.
VISCOUNT SAMUEL: My authority is the President of the Board of Trade.
THE EARL OF CRAWFORD: And my authority is the cheque I paid myself.
VISCOUNT SAMUEL: I am not saying that is universal. No doubt the President of the Board of Trade was quoting an average figure, but the President of the Board of Trade was in charge of this Bill in the House of Commons, and on the Third Reading of this Bill he made that statement. If members of this House are not to accept as accurate a statement of a Cabinet Minister in charge of a Bill it is rather difficult for us to conduct these discussions. No doubt the valuation for Death Duties is customarily, and as a general rule, far less than fifteen years, and that being so I do not see how complaint can be made, or why they should complain at getting half as much again as the value at which taxes are paid for the purpose of Death Duties. In any case I submit that the noble Lord who has just spoken, and other noble Lords, are debarred from making this point, for the reason that it was agreed that this particular point should be referred to an independent tribunal. The composition of that tribunal was agreed with the royalty owners, the terms of reference were agreed, and the royalty owners agreed to abide by the award. The award now having been given, it appears to me that they are estopped from further argument. It is rather like the trade unionist who said: "Call this arbitration; he has given it against us!" I submit, therefore, that this question has now become irrelevant. The matter has been adjudicated. The award has been given, and since there was an undertaking given beforehand that the award would be accepted there is clearly nothing more to be said.
THE EARL OF DUDLEY: Can the noble Viscount tell me what alternative the royalty owners had?
VISCOUNT SAMUEL: That is not my concern. I merely state the facts as they are. But not only that. In addition to
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the £66,500,000 awarded they have now received the equivalent of another £7,500,000 owing to the fact that for the three and a half years between the valuation date and the vesting date they are to receive their former income. The noble Lord, Lord Addison, said that the difference was £20,000,000, but I cannot see how he makes that out, and I do not think that figure can be substantiated. As a matter of fact it is for three and a half years the difference between the present income and the income of future investments and I think it works out at £7,500,000. So, although the award was given and accepted as £66,500,000, it is in fact £74,000,000 that the owners will receive. I do not quarrel with that. I think it is quite desirable to lubricate the transaction, but it is rather hard, after we have paid for the oil, that we should still have friction when the wheels revolve, and still hear a piercing note of complaint.
My criticism of that Part of the Bill is different from that of the noble Lord who has just spoken. I think an error has been made in dissipating what should be a national possession. The Bill provides that the Commission shall first be called upon to pay for service of the loan, including sinking fund, and its own administrative expenses and then equalise more or less the charges for royalties, so as to lessen any which are particularly burdensome, but after that any future income is not to go to the taxpayer but that the charges are to be extinguished altogether. I do not see why this natural resource, having come into national possession, should not yield a revenue to the taxpayer. It is almost an accident that it was not a national possession long ago. The matter was adjudicated upon as long ago as the reign of Queen Elizabeth, when it was held that gold and silver were royal metals, and coal was not a royal mineral. Three and a half centuries having elapsed there is now an absolute claim in law and equity in the mineral owners, but if that judgment had been the other way what an invaluable national possession there would have been, continuing ever since the time of Elizabeth until our own day.
Now that we are purchasing the mineral we are apparently going to make the same mistake that was made in the time of Elizabeth, and we are going to dissipate it for posterity. I do not see why those

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engaged in this industry, whether mine-owners or miners, should have this valuable property for nothing, and it was never claimed by the miners. The point was put clearly before their principal representative before the Royal Commission, and his answer was specific and definite. I, as Chairman, put to the representative of the Miners Federation, their principal witness, Mr. Tawney, this:
"… should royalties, or rent, or payment for the mineral itself—no matter how you may choose to phrase it—still continue to be payable?"
This is, after nationalisation. He replied:
"My view is, Yes—that the State should step into the position of the royalty owner.
"Q. That it is legitimate to charge for the coal itself—to debit the industry for the value of the actual coal itself?—The State would become the proprietor of the minerals, and as such it would charge a royalty for them against the industry.
"Q. The point I have in mind is whether the present sum of £6,000,000, or whatever it may be, which is derived from royalties should be thrown into the general finances of the industry and used to raise wages, for example?—That has not been contemplated. I have never heard that suggested."
To make it perfectly clear I put these questions:
"But the State itself should receive that as the future owner of the minerals?—Certainly, qua owner.
"As representing the community?—Yes."
That is their view, expressed on behalf of the Miners Federation, beyond any possibility of doubt, but now this Bill provides entirely differently and you have Clause 21 which says that the money for all future time is never to belong to the taxpayer, but to go wholly to the industry, first in the acquisition of royalties and after that to the owners and then the miners through the wage ascertainments will get the greater part. What has been the position of the Labour Party in this matter? They have forgotten their Socialism. Socialism intends to nationalise property in order that the community as a whole may get the benefit, but since the sectional interest concerned is the body of miners the Labour Party have forgotten all their principles in this regard and are willing to distribute what is really a national asset partly among the mine owners and partly among the miners.
LORD ADDISON: The noble Viscount did net listen to what I said. That was
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the very Part of the Bill to which I raised serious objection. I said it was wrong.
VISCOUNT SAMUEL: I only wish my noble friend's colleagues in another place had raised their voices in indignant protest against this particular clause, but I do not think there was even a murmur in the other House from that quarter to that effect. There is another defect to which I wish to draw attention. During the period of transition between now and the time that the Commission gets control of the property what is going to happen? After the valuation day, that is January 1 next, until the vesting day there is a period of three and a half years, and during that time it is possible that arrangements might be made between the mineowners and the mineral owners which might seriously handicap the Commission in securing a better layout of the industry in the future—arrangements which may have effect over a long period of years. Clause 8 is intended to be a safeguard against that, but I very much doubt whether it will really prove to be adequate. But even if it does prove to be adequate, what is to be the position during the present year, before there is any restriction of any kind upon these arrangements? And I must say I feel some alarm as to the arrangements which it may be to the interest of the landlord and the mineowner to make as between themselves, which may very seriously handicap the work of the Coal Commission in the future. I should be very grateful if someone speaking from the Government Bench at a later stage could reassure me on that point and define what action might be taken if during the present year such contingencies prove to be realised. It might even invite retrospective legislation in the future if anything is done during this year to defeat the plain intentions of Parliament.
I shall only speak for a very few moments about amalgamations. I support the provisions of the Bill in that regard, although I am sorry that the procedure to be adopted is so cumbrous and so dilatory. Although it is pointed out that after all there are only 120 undertakings that produce 77 per cent. of the product, still there are 843 undertakings that produce 23 per cent. of the coal, and in the words of Sir Lynden Macassey, who has an immense knowledge of this industry, as arbitrator and in other ways:

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"In every district a number of small collieries exist, the independent continuance of which is a drag on the coalmining industry, a menace to their efficient competitors, and a constant source of difficulty to the trade unions."
We do not propose that there should be universal amalgamation on any rigid and arbitrary principles—the Royal Commission strongly deprecated that. The most efficient size of the operating unit varies of course with the circumstances, and every case must be carefully examined on its merits. I notice in this connection that two arguments are advanced on behalf of the mineowners who oppose compulsory amalgamation. They say in the first instance that the importance of amalgamations is very much exaggerated, that they are of little value in any case, and often do harm; and then they say, in the second place, that the industry recognises the value of amalgamations, is already rapidly proceeding on a voluntary basis with them, and it is quite unnecessary to introduce legislation. Those two arguments are mutually destructive.
The fact is of course that amalgamations may sometimes be wrong, but are very often right. When they are right they are sometimes effected voluntarily, but they very often are not, and that is why legislation is essential. Even when all the economic and financial factors are in favour of amalgamation personal questions frequently arise which block them, and individual directors are unwilling to give up, perhaps very naturally, occupations in which they have been long engaged and have been deeply interested. Other considerations arise in this connection, but I will postpone any observations on that till the Committee stage. Finally there are, as Lord Addison said, other matters which might have been included in a Coal Bill, dealing with distribution and possibly retail profit, but on that a public inquiry is about to be held. Also the question of mineral transport is not dealt with in this Bill. But, faulty as it is in some particulars, on the whole the Bill is calculated to render service to the coal mining industry and therefore to the nation as a whole, and I trust it will receive the support of your Lordships' House.
THE EARL OF CRAWFORD: My Lords, I cannot help thinking that the noble Viscount who has just spoken has
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been very optimistic in his view of the advantages likely to arise from the unification of royalties. He seems to think that the Coal Commission are going to pay Surtax. Of course they will not.
VISCOUNT SAMUEL: No, I said not the Surtax.
THE EARL OF CRAWFORD: I beg the noble Viscount's pardon. We understood that he thought they would pay Surtax, in other words that the State was not going to lose the Surtax. But at any rate the State will lose the Death Duties. And the Death Duties have been rather higher in cases with which I am acquainted than he seems to think. I am a royalty owner, though I expect that for every pound I receive I pay three or four to other people. But I have some experience of them. The property in which I am concerned has eighty leases. We have no grievance against the people who take the coal. It all works perfectly smoothly, and if we had a grievance we could quite easily get it put right through the Act of Parliament passed some years ago. But where I differ most from the noble Viscount is in his assumption that the ease of removing mine pillars and boundaries and various things like that is going to make effective the reorganisation of the coalmining industry. Well, I think a good deal too much is talked about reorganisation. One thing that the coal industry is suffering from is excessive reorganisation, and when my noble friend below me talks, like others, about the coalowners putting their house in order—in that very admirable speech of his in which the tones alternated between those which were minatory and those which were dulcet—he underestimates the difficulties of the situation.
Let us look into the recent history of the coal industry. The coal industry was controlled by the State through the War and for a considerable time afterwards. That was during a period when coal was worth almost anything—when every country in the world was competing, not for coal as such, but for British coal. In spite of that the State, that is to say the taxpayer, was losing up to £1,000,000 per week. That was the effect of State intervention when the whole world was calling for English coal. What happened? The Treasury very naturally got tired. They gave the coal industry three months' notice, decontrolled it, and said to the

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owners: "You look after your loss of £1,000,000 a week, and do your best with it." The immediate result of course was chaos. The noble Viscount, Lord Sankey, was invited to hold an inquiry, which he did. The sudden decontrol forced the Government into taking some action. I think I was a member of the Government, so I am not blaming anybody in particular. The Sankey Commission reported in 1919. The Report was hardly concluded when an Act of Parliament, thoroughly ill considered, was passed. It began to break down. Then successive inquiries followed, one connected with the name of the noble Viscount, Lord Samuel, others under Lord Buckmaster, Lord Macmillan, Mr. Shinwell and Mr. McKenna, and each was followed by more confusion and more chaos. Most of them were followed by Acts of Parliament so ill drawn and so ill considered that they had to be amended year after year. Last year we had a Bill brought in and it broke down. This year we have another Bill brought in. I think the mineral part, from the technical point of view, has practically broken down already. I do not see how it can be worked fairly.
In spite of all these inflictions of the State upon the coal industry, that industry has managed to survive in a manner in which I defy any other industry to survive. When I hear people talk in this gay way of reorganising the coal industry because it is inefficient, I say, "Come and see for yourselves what is being done." There is no other industry in this country that has got a complete profit-sharing scheme. There are very few industries of our size which are working a complete annual holiday. We have done a very thorough re-equipment during the last ten or fifteen years of the technique of pits. I say no other industry could have done what the coal industry has done. For members on this side of the House I should like to quote the words of Lord Baldwin a few years ago in which he said:
"No general charge of inefficiency can be brought against the management of the coal industry."
I think myself that is thoroughly correct.
I wish to deal with two portions of the Bill. In Clause 2 there is a reference to safety. I was astonished in reading the introduction of this Bill in another place—
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twenty columns of it or more—to find that the word "safety" never occurred to the Minister. Again this afternoon, though I did not hear the whole of Lord Munster's speech, I learn from my friends that he did not deal with the question of safety at all. We people in the coal trade believe that coal cannot be considered apart from the question of safety. In the very forefront of this Bill there is this extraordinary passage dealing with safety, on page 2, Clause 2:
"The Board of Trade may give to the Commission general directions … in relation to … all matters affecting the safety of the working of coal."
The safety of the working of coal is the safety of the men who are working the coal, and unless we can get very good explanations of this from Lord Stanhope I for one shall certainly put down an Amendment to omit these words and, if I can find a Teller, take it to a Division.
I want members of the House to understand that the safety of people working coal is a very solemn obligation. The manager who does the wrong thing may be charged and convicted of manslaughter, and here this Bill is going to transfer to an amateur body of five gentlemen duties connected with all matters affecting the safety of coal and its working. I am amazed that anything of that sort should be put in and not be referred to by the Ministers in charge. Who are these gentlemen? There are only five of them. One of them, I suppose, must be an actuary or an accountant. One of them, I take it, will have to be a mine surveyor—that is to say, a member of a profession whose interests are very seriously disregarded in this Bill and to which the Government would do well to give some attention. Presumably there will be a miners' agent and a representative of the coalowners. There will be five altogether who are to be appointed only for five years. They are to have the power to execute orders given to them by the Board of Trade in all matters affecting the safety of coal working. A good deal more explanation is required than that. The organisation of safety in the mines is admirable. It is now vested in the Mines Department with an extremely highly skilled and efficient staff, many, if not most, of whom have been actually drawn from the coal face. If these people are to be brought under these five gentlemen in Westminster

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a situation will arise in which you will find that the mine managers of this country will make such a protest to the Government that this provision will have to be withdrawn. We demand complete explanations on this point before Clause 2 is passed.
Then I notice the ridiculous provision about the Commissioners. They have got to sell every share they have got in anything that is concerned with coal, machinery, or plant. If one of these gentlemen has got money in a gas company, which deals with a by-product of coal, he has got to sell his shares. He cannot belong to a company that makes locomotives or mining machinery or pitprops or electrical machinery. There is all this ridiculous nonsense about securing that these people will not be corrupt. I should have thought that these things were really unnecessary at this time of day. They are not only futile, they are insolent as well.
I will say one word, and one word only, about amalgamation. I read amalgamation very much in terms of safety. I believe you can amalgamate so much that safety will not receive the attention from the management that safety demands. A few years ago, when they were talking about amalgamation in Lancashire they proposed to divide the south coalfield between West Lancashire, East Lancashire, and Mid-Lancashire. That would have meant a number of units of coal production too great for supervision by a single firm. I am concerned with a firm which has twelve units of production. In my opinion that is about as many as can be managed unless the further amalgamation is one which naturally falls into the area of concentration. If you have to bring in all the other neighbouring and adjacent collieries—ten, twenty, forty, or even more of them—you are putting a number of danger points into a particular control which is greater than the demands of safety would justify.
I am all for amalgamation. My own affairs were amalgamated sixty or seventy years ago, and the business with which I am concerned was amalgamated with others quite recently. Where amalgamation is spontaneous and voluntary between persons of good will who know one another and realise the mutual advantages to be gained, by all means have
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amalgamation, but to force amalgamation upon companies with people who may not have the same views of how coal should be worked and who may be unsympathetic to one another is a very dangerous thing indeed. I consider it would have been excessively dangerous to have amalgamated the south coalfield of Lancashire into three groups from the point of view of safety. So far as I can make out, we are now back at the position that the amalgamation proposals occupied a few years ago. I thought these had been entirely discredited. The whole tendency in Germany is to de-amalgamate. These excessive amalgamations are bad business. They involve bad supervision. You get people who call themselves presidents and vice-presidents, but they do not get near the coal face. If you make amalgamations which are forced on a variety of units which do not wish to be amalgamated, it will not only be bad from the economic point of view but it will be dangerous to life and limb as well. This is a matter to which I attach the deepest importance, and I earnestly hope the House will pay attention to this aspect of the question which was so curiously neglected in the discussions in another place. I distrust the whole measure.
LORD TEYNHAM: My Lords, I, too, should like to join with other noble Lords in congratulating my noble friend the Earl of Munster upon the very excellent way in which he has propounded the Bill, but I fear I cannot follow him in his commendation of it. The President of the Board of Trade in another place said that this Bill was an attempt to strengthen the organisation of the coal industry, not only to help it in good times but to give it some protection in bad times. In so far as the Bill extends the operation of the selling schemes of the 1930 Act it certainly does so, but I do not think that the other parts of the Bill will be of any material benefit to the industry. I make no apology for referring in detail again to many matters in this complex Bill which have already been mentioned, and I hope your Lordships will bear with me for a short time at this very late hour.
The industry does not oppose the principle of the unification of royalties by State purchase as it considers that the transaction will rid the industry of a sub-

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ject of agitation that has been going on for very many years. On the other hand it considers that it will be of no material benefit to the industry because it believes that the powers given to the Railway and Canal Commission by the Mines (Working Facilities and Support) Act of 1923 is quite sufficient to deal with all the various difficulties which have been advanced from time to time as arguments against private ownership of the minerals. The Government of the day will, by virtue of Part I of the Bill, have absolute control of the coal mining industry. I need hardly remind your Lordships, as has already been done by the noble Earl, Lord Crawford, that the Board of Trade are empowered to give to the Commission
"general directions as to the exercise and performance of their functions"
and further, the Coal Commission is
"charged with the duty of controlling and managing the premises acquired by them by granting coal mining leases."
Consolidation of coal mining leases may give certain benefits to the industry. On the other hand, the renewal of a lease may be refused not only for reasons connected with the industry but under certain circumstances in which the Government of the day may have a different complexion to the present one, for political reasons, and in that event the colliery undertaking and in many cases the public as shareholders would lose all their capital invested in the undertaking.
There is only one category of colliery owner to whom security of tenure is given under this Bill and that is the colliery owner who owns his own freehold. That class of owner comprises about one-eighth of the industry, the remainder, the large majority, having no security whatever that the leases on which the whole value of their undertaking depends will be renewed on their expiration, or will be renewed on equitable terms. The Commission have absolute power to dictate terms and conditions which they as owners of the minerals may decide or to offer a lease to another party or to close or curtail the operations of the colliery by refusing to renew a lease at all. At the present time in the event of a royalty owner refusing to renew a lease, the lessee can make application to the Railway and Canal Commission who, under the Mines (Working Facilities and Support) Act
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have the power of granting the lessee the right to work the minerals if they think fit by exercising compulsory powers over the royalty owner. I do not suggest that every colliery lessee should have an absolute right to the renewal of his lease, but I do maintain that he should have a presumptive right, and if the Commission propose for reasons which appear sound to them to grant the lease to another party or refuse to re-lease the minerals, and if there is a dispute as to terms and conditions of renewal, the owner of the lease should be able to appeal to an independent tribunal.
The point I wish to make is that there is no provision in the Bill for an appeal to an independent tribunal such as the Railway and Canal Commission against the findings of the Coal Commission. In the Electricity (Supply) Acts of 1919 and 1936 there are provisions for appeal on the part of supply undertakings from decisions of the Electricity Commissioner and also of the Central Electricity Board, which occupies a somewhat analogous position to that of the Coal Commission, and moreover—an important point to remember—it is the general practice to-day to include an arbitration clause in coal mining leases. I shall propose at a later stage that the powers of the Board of Trade and the Coal Commission under Clause 2 of the Bill shall be curtailed by making provision for a right of appeal to an independent tribunal against the directions of the Board of Trade and the findings of the Commission.
Now let us consider what other supposed benefits there may be in this Bill for the industry. The main arguments that have been advanced in favour of the acquisition of the coal by the State as put forward by two celebrated Royal Commissions has been that the unification of royalties would be a great material benefit to the industry in having consolidated leases under one landlord, but I would venture to suggest that the separation of the ownership of the mineral from the ownership of the surface may give rise to difficulties and expenses which have not been previously experienced. At the present time when the surface owner and the coal owner are one and the same person, it is to his advantage to afford the colliery undertaking reasonable surface facilities for working the coal, but now that the coal is to be owned by

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the State and the mineral owner is to be bought out he will have no incentive to give any more facilities to the colliery company than he may be compelled to grant by law, and in many cases the result of the transfer of the coal to the State will mean the sterilisation of a large quantity of coal owing to the heavy compensation exacted by the surface owner if the coal is worked and subsidence takes place.
It has been said that one of the great advantages that will accrue to the coal industry through the nationalisation of royalties will be a reduction in royalty payments. I venture to suggest that the more closely the financial results of the nationalisation of royalties are examined the less attractive they become. It has been said that approximately £1,500,000 per annum will be available for the reduction of wayleaves and royalties, but this estimate appears to ignore the not unimportant items of taxation and expenses. At the present time the annual gross revenue from royalty is about £5,000,000, but on this figure Income Tax, which has already been mentioned, would be paid amounting approximately to £1,250,000, leaving a surplus of £3,750,000. The Coal Commission is also liable for Mineral Rights Duty, welfare levy, and any other tax, duty or rate now paid by the present royalty owner, whether general or local, and the aggregate taxation under these headings, apart from Income Tax, will probably be not less than £400,000 per annum, which will reduce the surplus to £3,350,000. Against this figure must be set the annual cost of the loan, including redemption. This cannot be less than £2,400,000, even after allowing for rebate of Income Tax on the interest, and there would then remain a surplus of only £950,000. In addition the Coal Commission will have to pay rent and other expenses for central and local offices, the salaries of its five full-time members and of its staff, including presumably provision for pensions, and of all the surveyors and other officials who will be necessary.
I understand it has been agreed by the Treasury and the Mines Department that the annual value of the services of the present mineral agents is approximately £220,000 and that these services will be utilised as soon as the Coal Commission takes over its property. The total expenses of the Commission, including the
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mineral agents, is unlikely to be less than £250,000 per annum and the surplus is therefore reduced to the very small sum of £700,000 per annum.
VISCOUNT SAMUEL: Would the noble Lord permit me to interrupt for a moment? He is assuming, is he not, that the Commission would have to pay Income Tax on the whole £5,000,000? Surely they would pay only on the income which is in their own hands, a much less sum.
THE EARL OF CRAWFORD: It is their income. They will have to pay on it.
LORD HASTINGS: Oh, yes.
LORD TEYNHAM: I understand Income Tax will be paid on the net revenue received from royalties by the Commission.
VISCOUNT SAMUEL: The net, not the gross.
LORD HASTINGS: On the gross.
LORD TEYNHAM: The amount of relief that the industry may expect is in any case reduced to very small proportions and against this problematical benefit must be set the additional expenses in which colliery undertakings will be involved as a result of the severance of the ownership of the minerals from that of the surface. In fact, the benefits of the financial transactions are so small that had the award of the Greene Tribunal been higher than the £66,450,000 the transaction would have been almost impossible, and the present royalty owners are now being asked to accept this award, which is certainly lower than the actual value of their property, and the whole transaction is going to be of very problematical value to the industry. The effect of this transaction, as mentioned by the noble Lord, Lord Hastings, is to reduce the total income of the mineral owners by approximately £2,000,000 per annum, which sum is transferred by the Bill from the pockets of the individual owners to those of the Commission without any compensation.
Another point to which I wish to draw attention is that in 1942, when the vesting date occurs, the present royalty owners will be deprived of their income from the coal, and I think it is highly probable that the Commission may not then be in a position to pay the complete purchase

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price. Certainly, judging by the activities of the Tithe Commission and the enormous delays which have occurred, that is highly probable. Default in payment of the purchase price may involve royalty owners who have to pay mortgage interests, etc., in great hardship and there should certainly be some provision to meet this situation. Another point is that there is apparently no provision in the Bill placing on the Commission an obligation to compensate mineral surveyors and their employees who may not be engaged by the Coal Commission. In fact, when the Greene Tribunal arrived at the figure of £66,450,000 a substantial reduction was made for the management from the royalty income. There is therefore all the more reason, apart from common justice, that compensation should be paid.
I wish to put a question to the Government which, as far as I know, has never been answered in connection with a scheme for unification of royalties without nationalisation. A draft scheme was prepared by eminent authorities and submitted to the Mines Department which would have secured unification of royalties without State acquisition. It was a proposal to form five coal-owning corporations to acquire and control the royalty owners' interests in the different coalfields of Great Britain. Each corporation was to be controlled by a board of directors or commissioners, appointed by the Board of Trade. I do not propose to elaborate further on this proposal. It was not asked that the scheme be accepted or rejected as it stood, but that it should form the basis for a policy of unification with adequate State control and without the dangerous controversial feature of nationalisation, but it was met by a complete refusal by the Government in spite of the fact that the noble Viscount, Lord Halifax, gave an assurance in the debate on the Second Reading of the Government's Coal (Registration of Ownership) Bill last year, that any alternative of the kind suggested would receive careful consideration. No doubt the noble Lord who is replying for the Government in this debate will be able to elucidate the facts of this matter.
There is another aspect of this Bill and that is the position of the colliery undertaking that already owns the minerals it is working. At least one-eighth of the
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total output of coal in this country has been raised in the past few years from areas which are in the freehold of the colliery owner, and an important point to note is that this section of the industry has had no chance of expressing an opinion or of being consulted as to the amount to be paid to them in compensation for their property. That section of the industry which now owns its own coal is bound to suffer a heavy loss when the mineral is acquired by the State. I know of a case where a colliery undertaking has had to buy the whole area because the royalty owner said, "I won't lease to you, I will only sell to you." This undertaking has been working for about fifteen years and has, of course, been writing off in the balance sheet a sum in proportion to the amount of coal extracted. Under this Bill on the very best calculation one could make this colliery company cannot lose less than between £60,000 and £70,000. The only reasons that can really justify the introduction of this Bill are that it should provide relief to the industry and in turn benefit the working miner, and I can see no justification for colliery undertakings to be put in a worse position than they are in at present.
It would be only equitable to give to the collieries owning their own minerals the option of either declining compensation and obtaining a lease in perpetuity at a purely nominal rent or receiving the compensation awarded and then taking the new lease on the usual terms and conditions. This option the Bill does not give but compels the colliery owner to accept compensation and a new lease. It can be argued that there is no reason why the colliery undertaking owning its own freehold should be in a better position than the royalty owner, but I would point out that as matters are to-day the public through the colliery owners have risked their money. The colliery owners have had the responsibility and energy to make use of it, whereas the royalty owner in most cases has not been in a position to risk anything. I shall propose at a later stage to introduce a suitable Amendment to rectify this gross injustice on a large section of the industry. It is true that a clause in the Bill has been already amended by the Government in an attempt to deal with this matter, but the position as it is is neither fair nor satisfactory to the industry.

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A great deal of agitation and discussion has been directed to Part II of the Bill both in the Press and elsewhere, but I should like to take this opportunity of making it plain that the opposition of the industry is certainly not to amalgamations as such provided there are really adequate safeguards. The plain fact is that amalgamations have been going on in the industry quite fast enough for all practical purposes. Amalgamation, as was said by the noble Earl, Lord Crawford, is satisfactory only when it is natural. When it is forced it has many bad effects. The colliery owner who is forced into an amalgamation cannot have the same sympathy towards the men who are displaced as when amalgamation takes place under voluntary conditions. A former secretary of the Mine Workers' Federation in a letter to the Press recently—I will not read it in full, owing to shortness of time—said:
"It is a matter of grave moment that not one 'tittle' of evidence has so far been submitted by any responsible Commission or Minister that compulsory amalgamations will be of benefit to the industry."
He went on to say that:
"The Commissioners of the Special Areas and the Nuffield Trust are all endeavouring to overtake the evils consequent upon too hurried amalgamation and ill-advised rationalisation."
The noble Viscount, Lord Samuel, during a debate in 1930 on the Coal Bill, if he will allow me to repeat his words, said:
"The question arises, should amalgamation be compulsory? I am strongly of the opinion that voluntary combinations are better, they are certainly preferable, and the Royal Commission came very definitely to that conclusion."
VISCOUNT SAMUEL: But I was in favour of compulsion when the voluntary agreements were not effected.
LORD TEYNHAM: My Lords, we have the statement of another member of the Government. The present Parliamentary Secretary to the Treasury, not very long ago, used these words:
"We, are proposing to create a new profession in this country: the profession of whole-time compulsory amalgamators, who will have full Parliamentary powers to coerce buyers and sellers—to make them willing, whether they intend to be willing or not."
Part II of the Bill gives power to a State organisation, the Coal Commiission being under the direction of the Board of Trade, to take the control of an undertaking out of the hands of its present owners with-
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out provision for compensation in cash, but only in exchange for securities of doubtful value. It is in fact a blank cheque to any future Government—I particularly stress "any future Government"—to do what it likes with any British industry. The noble Viscount, Lord Runciman, not so long ago stated his views in connection with the amalgamation of the coal industry in these words:
"What is sauce for one industry is sauce for another, and I really do not see why we should be asked to apply this kind of principle to the coal industry if those of us who are engaged in other industries would look very much askance at hearing it proposed to them."
The Government, after a great deal of pressure from other interests besides coal interests, have incorporated in the Bill Provisional Order procedure to examine the recommendations for amalgamation in a certain area that may be proposed by the Coal Commission and laid before Parliament by the Board of Trade. It is felt by the industry that, as the Bill is drawn, the Provisional Order need not contain any details of the scheme which the Coal Commission intend to put forward. Under the 1930 Act the national interest was determined by the Railway and Canal Commission. Now, however, very properly, it is to be determined by Parliament. But I maintain that Parliament should have before it all the evidence that can be obtained, so that the individuals concerned may have an opportunity of stating their case. As the Bill is drawn at present, the Coal Commission, through the Board of Trade, can put before Parliament a defined area which is considered suitable for the exercise of compulsory amalgamation. A colliery undertaking need not be told precisely what it will receive for its property until after the amalgamation is already in operation. The undertaking is therefore prevented from formulating a case to prove that the scheme would be unfair or injurious. It is a little unfortunate that the Government, after their previous experience with their Coal Mines Reorganisation Bill in the summer of 1936, did not take the industry into their confidence before launching the present measure. If they had done so, I feel that a large number of the difficulties in this Bill could have been avoided without altering its principle. I shall propose at a later stage to put forward a suitable Amendment to strengthen the clause gov-

807
erning amalgamation by Provisional Order so that all interests concerned may be protected.
I cannot conceive any Bill more calculated to please no one. The miners themselves dislike it because it does not go far enough along the road to Socialism and they realise that it will mean unemployment in the event of compulsory amalgamations. The industry itself does not like the Bill because it feels that increased costs and difficulties will be thrown upon it. Last but not least, the royalty owners realise that they are going to lose a large part of their income and property in return for a very problematical benefit to the industry, and benefit to the industry can be the only reason for the introduction of this Bill.
THE LORD SPEAKER (VISCOUNT MERSEY): My Lords, on behalf of my noble and learned friend the Lord Chancellor, I beg to move that this debate be now adjourned.
Moved, That the debate be now adjourned.—(Viscount Mersey.)
On Question, Motion agreed to and debate adjourned accordingly.

STANMORE UNUSED BURIAL GROUND.
Petition of William Arthur Steains Hewett, of the Rectory, Stanmore, in the
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County of Middlesex, Clerk in Holy Orders, praying for leave to introduce a Bill to provide for the removal of the restrictions attaching to certain land which is consecrated as a burial ground in the urban district of Harrow; to authorise the sale of such land and its use for building or otherwise; and for other purposes, together with a copy of the proposed Bill annexed thereto: Read, and referred to the Examiners.

WOKING DISTRICT GAS ORDER, 1938.
Special Order proposed to be made on the application of the Woking District Gas Company:
Laid before the House (pursuant to Act) for affirmative Resolution and referred to the Special Orders Committee.

BUSINESS OF THE HOUSE.
THE PRESIDENT OF THE BOARD OF EDUCATION (EARL STANHOPE): My Lords, before we adjourn, might I remind your Lordships that we meet at three o'clock to-morrow for Lord Derwent's Motion and the continued debate on the Coal Bill?
House adjourned at five minutes past eight o'clock.