Members of the Committee are naturally exhausted after listening so long to so many details from the Chancellor of the Exchequer, and 1 can well understand that they are not disposed to listen to another speech. I shall therefore not detain the Committee more than a few moments this afternoon, and shall reserve till a later date what I have to say on his proposals, after I have had time to examine them, free from the glamour and the fascinating rhetoric of the right hon. Gentleman. The right hon. Gentleman deserves—and this is no formal matter, as I believe I am expressing the wish of every Member of the Committee—our warmest congratulations upon the rhetorical success of his speech, and the clearness with which he has put very complicated matters of detail before us. He confessed at the outset that it would be a very sombre picture, but be has certainly enlightened it by many flashes of humour, very much to the entertainment of hon. Members. It is a great ordeal, not only mentally but physically, to present such a Budget statement, and I can assure the right hon. Gentleman that he can take what I am saying as a sincere expression of appreciation, not only on my own part, but on the part of every Member of the Committee.
I am afraid I cannot 'congratulate the Chancellor of the Exchequer altogether upon his proposals for increased taxation and the alteration of taxation which he has put forward in his statement. I am glad, however, to be able to mention a number of matters on which I am in agreement. I do not think he will find any opposition from this side of the House to his proposal to abolish the three years' average and estimate Income Tax upon the preceding year. That is a proposal which was recommended by the Royal Commission on Income Tax, and it is one which is not only to the advantage of the Exchequer, but will be a great convenience to the Income Tax payer. After many years of negotiations, I am glad the Chancellor of the Exchequer has been able to come to an arrangement with the Irish Free State Government for the settlement of the delicate and complicated matters between them, and, as far as I can understand, the arrangement he has made is satisfactory to both parties. I do not think there are any other proposals to which I need refer at the moment, but there are one or two on which I am glad to think we shall be able to co-operate with the right hon. Gentleman. The Chancellor of the Exchequer appears to take a delight in creating as much trouble as possible for himself and other people. Last year he had a surplus of £26,000,000, just sufficient to reduce the Income Tax by 6d., but, instead of confining himself to that simple operation, he took off a tax here, imposed a new tax there, and caused considerable commotion and unrest throughout many sections of the community.
I do not think the Chancellor of the Exchequer expects that the Budget proposals this year are going to pass through the House of Commons easily. He must anticipate that most of them will be very vigorously opposed. His proposal to tax betting will arouse intense hostility in quarters which are not usually in co-operation—the betting interests and the moral sense of the community. I shall do as the right hon. Gentleman did—leave any further observations on that important matter to a later stage. it is rather remarkable that the proposals of the Chancellor of the Exchequer have been anticipated so accurately. I cannot call to mind any previous Budget which has been anticipated so accurately by the public and the Press as the Budget the right hon. Gentleman has put before the Committee this afternoon. The forecasts have been correct down almost to the details, and the explanation of this is that the right hon. Gentleman himself has been much less reticent than his predecessors in that office, and less successful in hiding its features than his predecessors. I congratulate him on having found a hen roost of which I was not previously aware. I regret that in my ignorance I left him a nice nest egg to raid—that is, to lessen the term of credit to the brewers. There is not very much more that I can, with advantage, say to the Committee at this stage, hut I congratulate the right hon. Gentleman on the manner of his speech and the way he has placed the Budget statement before the Committee. I regret that 1 cannot extend my congratulations to many of the more important proposals of the Budget.
I propose to follow the example of my right hon. Friend who has just spoken, and to confine my observations within a very few minutes. Obviously, this is not an occasion when one can examine in detail, after so very little reflection, the proposals put forward by the Chancellor of the Exchequer. I wish, however, to join with him in congratulating the Chancellor of the Exchequer upon the very luminous statement which he has made I agree with every word that fell from my right hon. Friend as to the conspicuous clarity of the statement and the charm and fascination with which the Chancellor of the Exchequer has entranced the House of Commons. To me, as an old Member who has heard a great many Budgets in this House, it was a very remarkable achievement, and it filled me with great delight to listen to it. There are one or two questions that I would ask before I come to the proposals of the Chancellor. He did not tell us how much he expected to receive from German reparations this year. I would like the information, if he can give it to us, before the Debate closes.
Now I come to some of the statements that the right hon. Gentleman made. I wish that I could, after years of experience of the gold standard, find the same source of satisfaction as he seems to derive from the course that he pursued last year. The Chancellor did not state very fully the effect of that precipitation. It is not a question of the gold standard—we are all in favour of it—but a question of the time when it was done, the way it was done, and the results. He altogether omitted the effect upon our export trade. There is a general opinion among, all the traders in the country who are engaged in export business that it had a very restrictive effect upon most important export industries. Undoubtedly it had that effect upon coal; no one can doubt that for a moment. And it has cost us in subsidy, in another form, some millions of money, and has helped undoubtedly to precipitate the conflict, through the difficulties which it caused in the reduction in the price of coal in the foreign market. The same thing is apparent in other trades as well. In spite of the fact that the Chancellor of the Exchequer has claimed that there has been a steady improvement in trade, the exports for the last quarter of the financial year are £19,000,000 down, compared with the corresponding quarter of last year. I do not say that that is due to the gold standard, but all authorities are of opinion that the gold standard had a very pernicious effect upon the market in our foreign goods.
The Chancellor of the Exchequer has attributed to his action in regard to the gold standard what is really due to the fact that we were paying our way. It is because we had established our credit by sound finance. The Chancellor delivered a very eloquent passage upon what had been done by all Governments, including the present Government, in the way of debt reduction. It is the most remarkable achievement in the history of the finance of any country—the way in which hundreds of millions have been paid. The present Foreign Secretary, my right hon. Friend the Member for Hillhead (Sir R. Horne), and my right hon. Friend the ex-Chancellor of the Exchequer have all contributed to that, and the present Prime Minister and the present Chancellor of the Exchequer have all had their share in it. It is the fact that we have reduced our debt by hundreds of millions, that we have not had to borrow for current expenditure, and that every year we are making provision of tens and scores of millions for the reduction of debt. That is the thing that established our credit.
The right hon. Gentleman compared himself to a strong Channel swimmer who was invited to give up the feat just when lie was nearing the coast. That is not the case. What happened to my tight hon. Friend was this: he was getting near the coast, but, as too often happens with him, he became impatient, and he chartered a liner to pick him up, and carry him the rest of the way. And at very great expense to the trade of this country. That is really what happened. He ought to have kept on swimming, like all the other Chancellors of the Exchequer. It is a very unpopular thing to do. We were constantly tempted to in dulge in a little bit of inflation. It was a very tempting thing to do. But still, through all these temptations have been resisted, and that is what has made our credit. If the Chancellor of the Exchequer had been a little more patient the thing could have been done, without inflicting an injury upon our trade at a moment when it was recovering gradually. It has created difficulties, and we are not altogether through them. I am bound to make that protest straightaway, lest the right hen. Gentleman should be too happy over his achievement of the gold standard.
I come now to his proposals with regard to taxation. With regard to the tax on betting, I would like to see exactly what the proposals are. All that I know is this: that certainly once during the time when I was Prime Minister there was a Committee appointed to examine the question el a tax on betting. I know perfectly well that the majority of those who sat on the Committee were in favour of a tax on betting, and strongly in favour of it, when they became members of the Committee. But it is very remarkable that, after a prolonged investigation, they came to the conclusion that it was an unwise thing to do. I know one or two of them told me afterwards of their surprise, because they had always been strong advocates of a tax on betting. They were put on the Committee rather to represent that point of view, and to my amazement, they found at the end that they were strongly opposed to it; that was after hearing the whole of the evidence. The Chancellor of the Exchequer must remember that. A tax on betting is one of the things that look very plausible. It looks as if you would get a lot of money for nothing. But it is full of mischief.
The second Committee that was set up, I think by the present Prime Minister, was a Committee of men who were in favour of the tax when they went there; the majority were predisposed in favour of it. But when they came to examine it, the conclusion to which they arrived was that though practicable it was not desirable. Therefore, we have had two Committees. Both of them were composed of men the majority of whom were predisposed in favour of the tax. They both turned it clown after a prolonged examination. I am afraid that the Chancellor of the Exchequer may have the same experience. I am not going into the question of betting taxation on the ground of encouraging something which is in itself thoroughly mischievous. But what appears to me is that by the method which the Chancellor has adopted, he is really driving people to the most pernicious form of betting, namely street betting, which has been treated as illegal—the form of betting over which you have no control, and which is conducted by a different class of people from those who conduct the credit business. And oil the whole it does give to them an opportunity, and as a matter of fact they can afford it, to give better odds than the people whom the Chancellor of the Exchequer taxes. The proposal is a bonus upon street betting. There is no doubt about that, because they can give better —I do not know the exact term—
At any rate, they can charge less than the other bookmakers, and that is mischievous. I am very doubtful whether the harm done by this tax will not more than counterbalance the advantage which the Chancellor of the Exchequer will get from it. I am not much of a believer in restoring these freak taxes. The Chancellors of the Exchequer of the past, when they began to revise our financial system—I am not talking now merely of Protection and Free Trade—gradually dropped these freak taxes, because they were irritating and mischievous, and did not produce as much of revenue as of irritation and trouble. I think the Chancellor of the Exchequer is making a mistake in restoring these fancy and freak taxes. That is all I have to say for the moment on the Betting Tax.
With regard to protective duties—there is a very considerable number of them— I have no doubt at all that they will receive the same opposition as they have always received from this quarter of the House. Now I come to the question of the roads. I deeply regret that the Chancellor of the Exchequer has decided to raid the Road Fund. I do not agree in the least in the view which he seems to take with regard to the roads of this country, as if we had achieved the end of development and improvement.
The Road Fund was started in 1909, and the present Chancellor of the Exchequer was one of those responsible, with other Ministers, for it. The idea was, as he knows very well, to start a fund for the purpose of adapting the roads of this country to the new traffic that was beginning to develop then. It was only a beginning, to widen and straighten the roads and to make them free from danger, and above all to start a fund for the making of new roads. Whatever the need was then, it has become more obvious year by year. The Chancellor of the Exchequer scoffed at the idea that you can spend another £200,000,000 profitably upon new road development. Has he thought for a moment, from the point of view of the profit and loss account of business, what that means? He has only to consider what the cost of the present block in traffic is in every great city of the country. I saw a computation the other day that in London alone the loss in business, owing to delays created by the block in traffic, was £20,000,000 a year. If the right hon. Gentleman goes to Manchester, Birmingham, Leeds, Glasgow or any if the great trade centres he will find the same thing. It takes twice and three times as long to go from point to point as it ought to take, if there were great new roads.
When you come to consider the problem of housing, you find that transport is at the very root of the problem. It is no use spending huge sums of money upon the purchase of expensive sites inside the town. What you want to do is to open up new avenues, so as to give the industrial population the same opportunity for living outside a crowded area as at present the well-to-do classes enjoy. Therefore, the Road Fund is at the root of our traffic problem, and at the root of our social reform; and 1 think it is a retrograde step for the Chancellor of the Exchequer to begin to raid this Fund at the present moment. If the Chancellor were doing it in conjunction with a proposal to tax the values created by new roads, with a view to raising a fund out of those values for that purpose, then I could understand the Chancellor of the Exchequer doing it. All he is doing is taking away the revenue, whilst he is increasing the values and, at the same time, not taxing them. I hope we shall have further opportunities of dwelling upon these things later on when we come to examine these proposals. Obviously, this is not the time to do so, and I shall end as I began by giving my personal meed of felicitation to the Chancellor of the Exchequer upon a very fine Parliamentary achievement.
I rise, like two of my predecessors in the office of Chancellor of the Exchequer, to express my great admiration of the very clear and perspicuous statement which the Chancellor of the Exchequer has made on the nation's finances. He has surveyed a very wide field, and has given the Committee a great many details, without ever losing sight of the great principles by which the nation's finances ought to be directed. Like the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) I propose to sleep off the intoxication of the Chancellor's eloquence before I proceed to express considered views upon his proposals. There are just one or two things which I should like to say before sitting down. I think it is marvellous that, in a time of such extraordinary depression as that through which we are passing, the Chancellor should find the revenue so nearly approximating to that which he estimated in the Budget of last year. It says a very great deal, not merely for the system of finance under which we carry on our business, but also for the courage and perseverence and patience of our people that so much should have been done at a time when it might be supposed that everybody would be so discouraged as to be unable to put forth their best efforts. The figures which the Chancellor has given us to-day are indeed remarkable, especially those under the head to which my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) has referred, namely, the debt which we have succeeded in paying off since the War. It amounts to a colossal figure, and it is extraordinary that we should have succeeded in reducing our debt charge by so high a sum as £75,000,000 a year, while at the same time reducing our floating debt by £700,000,000. These are figures upon which we are entitled to congratulate ourselves.
I was glad to hear that the right hon. Gentleman proposes to collect the Income Tax upon the basis of one year's revenue. I think that is a change which ought to be made, and it is not a bad time for the Treasury to make the change, because, if you have any hopes at all of better years in the immediate future, then undoubtedly the revenue is going to get the advantage of not including the bad years in its computation. I suggest that, at the same time, the right hon. Gentleman should carry out another reform which is much needed. Super-tax is at present based upon the revenue of the previous year, and when this change is being made with regard to the Income Tax, it would he a suitable period at which to combine Income Tax and Super-tax. In fact, although these taxes arc differently described, they are graded as one tax, and it is quite an error to suppose that the impositions of Super-tax are impositions in many cases upon moneys which are already taxed. It is not so. The whole system is graded so as to form really one tax, but the public is very much confused about it, and I am certain it becomes almost impossible, by reason of this confusion, to induce the public to believe that Super-tax should ever be in any circumstances reduced. They imagine that it is being paid by people who are earning such enormous sums that they need not he considered. That is a hopelessly fallacious view of the country's finances, and I hope the right hon. Gentleman will take into consideration the suggestion of making an attempt at the same time to unite these taxes, and to present them in proper shape.
The right hon. Gentleman the Member for Carnarvon Boroughs referred to the return to the gold standard, and pointed out, quite properly and correctly, that it was by reason of the very great increase of our credit, through meeting our obliga- tions, that we were enabled to approach so nearly to the parity of gold at the time when the Chancellor's swimming operations became a little more active than they had been before. I do not think my right hon. Friend is making sufficient allowance for the fact that the Chancellor of the Exchequer had to make up his mind at the period when he was called upon to decide, whether he was going to make an effort to reach the shore, or give up swimming. In fact, the Act which placed an embargo on the export of gold was coming to an end, and there is no doubt that if at that stage our country had said, "We are not ready for a return to the gold standard" when other less important countries had already reached it we should have done ourselves the greatest possible detriment, and we should have led the world to believe that it would be a long time before we could hope to put our finances upon a proper footing. Whatever might have been said had there been no Act in existence, I am sure that in the circumstances in which the Chancellor found himself he had no option but to take the course which he did take.
When reference is made to the difficulties into which industry has been put by the appreciation of our currency, the advantages which we obtain from its increased value are sometimes forgotten. It is true that the higher value of our own currency makes it more difficult for other people to buy our goods. On the other hand, since we arc an industrial country and buy enormous quantities of food and raw material, it is obviously much cheaper for us to purchase with a currency of higher value. If you take the one side of the account, you must take the other. On the balance of considerations, I think when the whole matter is thought out, and the results are calculated, most people will come to the conclusion that it was a wise and prudent step. I shall leave for another occasion such remarks as I have to make on other parts of the Budget. In the meantime, I have great pleasure in congratulating the Chancellor on the way in which he has presented his Budget, and I am sure every Member of the Committee is grateful for the clear statement he has given us.
I wish to add my hearty congratulations to those which have already been ex- pressed to the Chancellor of the Exchequer upon the truly remarkable and ingenious speech which we heard from the right hon. Gentleman. I think it is quite clear that he has considered every form of cunning device in order to tide us over these difficult days, and I imagine that, but for the fact that we have great difficulties, he would not have explored roads and race courses and other places in order to maintain the balance of our finances. I expect, however, the Chancellor of the Exchequer shares the feeling, to which I confess, that we have come to a position where we must ask ourselves whether there is any great hope that we can improve matters to any extent. The Committee will remember that within the last week or two we have been discussing an Economy Bill, and I think it will be agreed that no other Measure was possible, by which we could economise to any extent without throwing further thousands of people on to the streets. That Measure was fought relentlessly by the two Oppositions, and it must be admitted that we have come to a cul de sac so far as the question of economy is concerned.
The Socialist party opposed the Economy Bill, according to plan, because they believe that there are inexhaustible sources of wealth which any Government can draw upon, and they have threatened that if they come into power they may depart from constitutional means of raising revenue. The Liberal party are in a different position. They are the relics of a force in this country whose foundation of belief, I might almost say, was economy. They were the great party of retrenchment, and it can now be said that the Liberal party, the heirs and successors to Gladstone, have resisted every economy proposed by the Government now in office. They have given us no practical constructive alternative. All they have been able to say is, "Reduce your armaments," and, before coming to what I hope will be some constructive suggestions, I wish to refer to that point. The Leader of the Liberal party last Thursday derided naval defence. Apparently the right hon. Gentleman was not satisfied with the fact that we have reduced our naval defences from a two-Power to a one-Power standard. He said there was not
an enemy visible, even on the haunted seas of the Navy League. Why then did the right hon. Gentleman resist the economy on Pembroke Dock? I must remind the Committee of these facts, because the right hon. Gentleman has held a responsible position, and I may recall the words which he used at the commencement of 1914. Interviewed on behalf of the "Daily Chronicle" in January, 1914, the right hon. Gentleman was asked:
Do you consider this to be a favourable moment for us to overhaul our expenditure on armaments?
His reply was:
I think it is the most favourable moment that has presented itself during the last 20 years. Our relations with Germany are infinitely more friendly now than they have been for years.
It may be said that even a long-sighted statesman, a man of great vision, possessing powers almost of clairvoyance and wizardry, would have found it impossible at that time to tell that a, great War was imminent. But, if that be so, he has no right to tell us now, that we should reduce our Fleet, because he can see no immediate enemy. He saw no immediate enemy even when the evidence was fairly strong in 1914. I ask the Committee to remember what he said in July, 1914, in answer to the present Foreign Secretary, who has said that we could not depend upon any economy in armaments.
I think that is not so. I think the right hon. Gentleman will find that next year there will be a substantial economy.
That profound and statesmanlike utterance was made in this House 12 days before the declaration of War. If anyone has proved a false prophet on the subject of naval defence it is the present Leader of the Liberal party. No one ought to know better than he, that the Royal Navy saved this country from disaster at the time of the Great War, and yet he now advises us to cease paying our insurance premium. He reminds one of the old woman whose house was burned down and who refused to insure her new house on the ground that she was unlikely to have a second fire.
The right hon. Gentleman, like the old lady, is prepared to gamble with the law of averages, but neither this House nor the country is prepared to gamble with our naval defence. The reduction of our defences is the only suggestion which has emanated from the apostles of retrenchment. With regard to the policing of the Empire with military forces, I think it will be agreed that the Liberal party before the War, in their long term of office, did not have an extravagant record. They told us at the time that the sky of Europe was quite clear, and they only gave us a regular Army necessary for policing the Empire. The post-war responsibilities for Empire defence are immensely greater, and yet we have reduced the regular Army very considerably below that which was considered necessary by the Liberal Government. The Army Reserve is very much down, the Special Reserve of 63,000 men has been completely wiped out, and the Territorial Force establishment is down by 100,000. I think, therefore, it will be agreed, in view of those figures, that, with our naval reduction, no country in the world can approach the economies which we have made in respect to these two forces in materiel and in man-power, and, that being so, I submit that, unless indeed the whole world is going to disarm, you are not likely to get any further economies in that direction.
The Chancellor of the Exchequer showed us very conclusively, in introducing his Economy Bill, that it is only upon a part of your expenditure that you can now really economise, and I believe that all the wild talk about great economies is holding out false hopes to the people and is a snare and a delusion. If we admit that further great economies are impossible, then surely we have only one alternative, and that is to produce more revenue and so to stimulate national production that we can the more easily bear the burden of our debt, and thereby eliminate what is now the greatest waste of all, material, moral, and physical, namely, our unemployment, the payment of unemployment benefit and the relief of the unemployed. I may be told that I should not offer such a platitude to this Committee, but what we in this House again and again fail to realise is that we are only going to cure unemployment by providing employment. How can we do that? While we wrangle over the mote of extravagance which is in the eye of His Majesty's Government, we are not considering the beam which is in the eye of every hon. Member in this House who is neglecting to do everything that he can to preserve national production, which, after all, is the fount of all national revenue and can alone restore our finances.
I want the Committee to consider some very serious figures. Our adverse balance of trade in 1922 was £202,000,000—that is to say, of course, imports over exports; in 1924 the adverse balance had risen to £253,000,000, and in1925 it was £415,000,000. That means that in three years the balance of trade against us had more than doubled. Bankers and doctrinaires may find consolation in the fact that the difference is made up by invisible exports, although I think even they will agree that the invisible exports barely cover the difference at the present time; but to regard the situation as it is now with complacency seems to me to be absolutely fatal, because, if this process continues, it means—let us face the facts—the death knell of British production. There is no other description for it, and I say quite frankly, as an individual, that if I have to choose between the great wealth of a hundred city magnates and the welfare of a million British workers, I am on the side of the British workers every time. We could possibly exist in this country without our international moneychangers, but we could not exist without the wage fund which supports some nine-tenths of our whole population. In case it may be thought that anything I say is tainted, I would like to quote the remarks of a great Free Trader, Lord Inchcape, who, after telling us the past year has been the worst which shipping has ever experienced—and of those remarks I make a present to the Liberal party, who tell us that shipping and Free Trade are the heavenly twins and always go together—said:
The excess of imports over our exports is a grave menace to the country's solvency. The value of our invisible exports is greatly reduced, and adverse trade balances, if continued, must in the long run damage our national credit and, by raising prices, reduce the real value of wages.
If the adverse balance of trade is admitted by the whole of this Committee, as it is by Lord Inchcape, to be a grave national menace, why not readjust that balance, which you can by simple Act of Parliament? I may be asked what evidence there is that national production is being sacrificed, and I am going to ask the Committee if they will listen to
one more brief set of figures. If you take the balance of trade in manufactures between this country and Europe, which before the War was very largely in our favour, you will find that in 1923 we sold to Europe £135,000,000 worth of manufactures and bought from Europe £149,000,000 worth, or an adverse balance of £14,000,000. In 1924 we sold to Europe £151,000,000 worth and bought from Europe £176,000,000, an adverse balance of £25,000,000, and if the figures for 1925, which unfortunately the President of the Board of Trade was unable to give me last week, were also issued, I am afraid you would find that the process has gone to an even greater extent in an adverse direction.
Does the country, does even this Committee, realise the vital change which has taken place in regard to our exchange of manufactured goods with foreign countries since the War? The excess of imports over exports, which was with us before the War, was then due entirely to foodstuffs and raw materials, but to-day Europe is invading our home markets for manufactures and has completely reversed that process. All this change has taken place in the last few years, and I submit that up to the present nobody has noticed it, and I do not think it has even been mentioned here. The result is that Europe has now got a grip over our citadel of industry, while excluding our manufactures from their own markets, and, but for the increased export of manufactures to the preferential market of the British Empire, I think it must now be admitted by any business man that we should have been long before this in an utterly parlous position. I am going to ask the Committee to exercise their imagination and to suppose that there is a country in some part of the world called, let us say, Suicidia, where there are over 1,000,000 unemployed, who are being entirely maintained by the people of that country, who simultaneously import manufactured goods which that country could produce equally well itself, and which have given employment to over 1,000,000 foreigners. What would you say of that country? You would say that they were stark, staring mad!
That is the position here. We, have over 1,000,000 unemployed, and all this nonsense which goes en in this House is deplorable. We have not got rid of unemployment. We have 300,000 more young people coming into industry every year with the natural increase of population, and we are not dealing with the problem, and while we have over 1,000,000 unemployed we are importing into this country manufactures which have given employment to 1,250,000 foreigners. That position is one which you cannot contemplate with any pleasure. If this process goes on, it seems to me that this House will be correctly called the grand inquest of the nation. The only thing is that it seems to me that the jury will be responsible for the corpse of British trade which lies before them. We have to act, and to act immediately. We have got to get to work in order to bring about the change desired, not only by Lord Inchcape, but, presume, by others.
First, we have to get to work to restore the balance of trade, and we can do that simply by safeguarding such industries as are at present being undermined. If it be a national menace, why not act? Secondly, we could provide revenue, which we must have, as the Chancellor of the Exchequer has explained, and we could provide that revenue by levying a toll against importers of foreign manufactured goods into this country in the same way as they levy a toll on the goods we send them. Thirdly, we could economise by absorbing in industry a vast number of our unemployed, who at the present moment are costing us in unemployment relief, in benefits, and in charity at least £120,000,000 a year. That is the greatest visible economy which we could really effect. Fourthly, we could develop the resources of the Empire overseas by granting loans in order to push right ahead with the construction of railways, bridges, power stations, and new homesteads and cities wherever possible, thus providing a greater market for our manufactured goods and giving preference for preference to the only people in the world who are both willing and able to buy our goods from us.
I submit that safeguarding alone can accomplish all these things, and that safeguarding alone can accomplish even one of them. Then I ask the question why, when this great party, of which I am so proud to be a member, with its enormous majority, is pledged up to the hilt to carry the policy of safeguarding, do we hesitate to go right ahead with a bold national policy, and why do we allow ourselves to be limited in our operations by this spectral White Paper, as if it were some sacrosanct thing, which it is not at all? The White Paper is no more a holy thing which you cannot alter, I submit, than when it emanated from the brains of one or two gentlemen in the Board of Trade, and we might quite easily make it more efficient and more businesslike if we chase to do so without violating any traditions. The historic tradition of the Conservative party, I believe, has always been to see to it that industry and agriculture in this country have a right to develop and to prosper, and if necessary we should nurse those industries against unfair competition and also preserve the right of our citizens to find employment and to enjoy the fruits of their labour. If cheap labour is the only hope of Free Traders and the professors of laisser faire, all that I can say is, with the evidence of the world now before us, heaven help their countrymen. But for the Conservative party, who believe neither in sweating nor in the products of sweating, there is a clear duty, and that is to preserve their birthright to the British people and to see that no worker and no industrialist in this country shall have his right to live filched from him, whether the invader be the armed hosts of a foreign Power or the purveyor of masses of manufactures which are calculated to destroy the livelihood of our people.
May I ask what has been our policy since we raised such great hopes at the time of the General Election? I believe something like 30 industries have applied for safeguarding, and I think only five of them have received it. It is harder for an industry to pass through the inquisition of the White Paper than for the rich man to go anywhere at all. A dozen industries were turned down by the Board of Trade Committees on the ground that they were too small. The steel industry was turned down on the ground that it was too large. No industry should be deprived of the defence which we undertook in our election man date to give them against unfair competition. I submit that no industry is so small that it is unimportant, and that no industry is so large that it must not be preserved from destruction. Steel is the key of the whole industry. We are
importing sufficient steel manufactures at me present moment not only to give employment to the whole of our out-of-work steelworkers, but also to all these we nave driven in despair to America during the last four or five years. Steel alone, as the Coal Commission has told us in the Report, can improve the home coal consumption, and thereby assist the coal industry of this country. I will read the exact words:
If the iron and steel trade were working up to its greatly increased capacity, its normal consumption would be 37,000,000 tons. In 1925 it was only 22,000,000 tons. It is only to the revival of these heavy industries that the coalmining industry can look for any substantial increase in the home demand for coal.
So by turning down the steel industry from safeguarding, you also turn down the coal industry. If we had safeguarded the steel industry, and full capacity had been started a year ago, how many pits would we have stopped from closing down? Nothing was more cheerful to me than to hear that at least the little ewe lamb of the Chancellor of the Exchequer was growing fat and flourishing. He admitted he went with trepidation into these matters, but he is converted. He has seen the success, and I think the whole Committee realise there has been a great success. I do not think it is an exaggeration to say that, if you take the motor industry, the glove industry, and the musical instrument industry, you can practically say we have solved the question of unemployment there. I know there are still unemployment figures in the motor industry, but it must not be forgotten that an enormous number of workers have gone into that industry since June. You can practically say that in those industries you have cured the unemployment question so far as you can cure it, because you always had similar figures existing, even before the War, in those industries. All the gloomy prognostications of hon. Gentlemen who sit on the benches opposite, and who led astray the hon. Gentlemen below them, thinking they had a good party cry—and I commiserate with hon. Members who were led astray—all those prognostications have proved to be false. Every single prognostication from those benches with regard to the McKenna Duties, the Safeguarding Duties and the duties on silk
have been falsified by the facts. They said it would destroy the export trade of artificial silk manufactures, whereas, in the first three months of this year it has gone up by 82 per cent., compared with the three months of last year, while the adverse trade balance, even with the small duties, has been certainly slightly redressed.
I ask hon. Members representing industrial constituencies to consider the industries which are not safeguarded, and what has happened during the last two years. If you take the increase of imports of manufactures in 1925, compared with the imports of manufactures in 1923, you find the following astonishing facts in round figures: iron and steel imports of manufactures increased in those two years by £10,000,000; nonferrous metals by £12,500,000; earthenware and glass by £2,500,000; cotton manufactures by£1,000,000; woollen and worsted by £3,000,000; other textile industries, except silk, by £4,000,000: and apparel by £4,500,000. Only in silk manufactures is there a decrease visible. If you take these fifteen principal imports of manufactures in 1925, excluding silk, you will find that they increased in value over 1924 by £25,000,000 and over 1923 by £58,500,000. We hear complaint, day after day, from the Liberal benches about the distress in the industrial areas of this country. In two years our imports of these manufactures have increased by £58,500,000. In other words, the increase in these 15 classes of manufactures imported into this country in two years gave employment to some 200,000 foreigners, which employment might have been given to a similar number of workers in this country.
I am perfectly ready to admit that by buying these goods abroad, purchasers in this country have saved something like £2,000,000. I will make a present of that to the representative of the Liberal party here. But what a saving, which has cost the British workers £30,000,000 in wages, and lost the Chancellor of the Exchequer £5,000,000 in Income Tax and Super-tax! That, of course, takes no account of the £60,000,000 approximately of extra trade circulating through all the industries, trades and professions of this country, had those goods been produced at home instead of being imported from abroad. When it is understood that this small calculation I have given, merely for the sake of example, refers only to the increased imports of manufactures in two years, it will be realised how immense is the field of economy and increased production over our total manufactures, if we only grasp the nettle, and extend this policy to those industries which really need it. If you really want to reduce Income Tax by 2s. in the £, here is the means. If you really deal with this question seriously; if you really want to economise and cut down taxation, this is the one and only way to do it.. I remember a most admirable speech by the right hon. Member for Colne Valley (Mr. Snowden) at the time when the right hon. Member for Carnarvon Boroughs was introducing his great Budget in 1909–10, known as the "People's Budget." None of us knew at the time why it was so called, but afterwards we learnt that it was because all the people suffered by it. At any rate, the right hon. Member for Colne Valley pointed out at that time, that all taxation, whether Super-tax or Income Tax, finally falls upon the working classes of the country, and that is true. That is why I say a policy such as I have indicated would be a boon to all classes in this country.
I am very grateful to the Committee for so kindly allowing me to offer these few words, and I want to say, in conclusion, that it seems to me we have come to an absolute impasse. Even those who are keener on this question than any other will now admit that you cannot effect any great economy. Feeble hands and over-cautious words will not solve these, great evils. The finger of fate is pointing a grave warning to us that 43,000,000 souls in this country are dependent upon our agriculture, the success of our factories, mills and our workshops, and there is no one who is not blind who does not now see that our great industries in this country, or a vast number of them, at any rate, are fighting for their very existence. I do hope and pray that all parties in this House, if they agree with me that you cannot really economise in any other direction with safety, or without great hardship, will resist further bickering over nonessentials, and will concentrate on this great national question, and have the courage to act before our industrial hour has struck.
We have just listened to a very eloquent and interesting speech, but it had very little reference to the Budget statement of the Chancellor of the Exchequer. I think in his half hour speech the hon. and gallant Gentleman the Member for Bournemouth (Sir H. Croft) hardly made any reference to it, except perhaps in a few words to the retention of one or two protective taxes. Most of his speech, if he will forgive me for saying so, was rather irrelevant to a debate on the Budget. There was an attack on the policy of the Liberal party in 1914 in reference to the defence of this country. All I can say is that in 1914 the country was so well organised for defence that we were able to hold our own against the most bitter foe, and that our Navy was so efficient that it was enabled to resist the highly organised Navy of Germany. I do not think it is necessary to say more than that the organisation of our defences suited the requirements of the nation at that time. All that has been pointed out by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) is that conditions have changed, that the German Navy is now et the bottom of the sea, that a new weapon has appeared in the form of the Air Force, and we have demanded that in future our national defence should be treated as a whole. I was very glad to hear the Chancellor of the Exchequer accept that policy in principle, and we understand there is to be a Debate at a Very early date on that question. I, and many on this side, contend that if you treat our national defence as one unit of defence, it will be possible to make very substantial economies. One of our main weapons of defence being the Air Force, it does seem necessary to review the expenditure of the Navy, and I understand that was the policy outlined by the Chancellor of the Exchequer when he referred to a policy of regarding our national defence as one.
Of course, the hon. and gallant Member for Bournemouth could not resist his one remedy. All our ills would disappear; we should all be employed, all wealthy, and Income Tax would be reduced by 2s., if we would only go in for a full-fledged policy of Tariff Reform. He has not been satisfied with the inquisition into many industries under the Safeguarding of Industries. There has been Committee after Committee, and we are now to understand that these Committees have not been efficient or satisfactory, and that they have been partial in their inquiries.
All I can say is that the hon. and gallant Gentleman pointed out that there have been 30 inquiries, and only five cases of success. I think it proves that, although many of these Committees were not weighted against Free Trade, they were satisfied, after inquiry, that it was not in the interests of our trade that there should be tariffs put on. I do not think it is unreasonable to say that the hon. and gallant Gentleman waxed eloquent about the great advantages of a large extension of tariffs, but quite ignored the facts as to Germany and France, where they have the advantages of full-fledged protection. In Germany, instead of trade improving as they got further away from the War period, the condition of employment grew steadily worse, and it is common knowledge that at present there are 1,900,000 people out of work in that country. France, in spite of the advantages of a general tariff to raise revenue, and highly organised machinery for the purpose, shows a deficit year after year; year after year she is unable to balance her Budget, and has not been able to pay her debts either to this country or America. If it be France that he envies, he has not got a very good example to follow, and we may be well content that, in spite of all the vicissitudes of trade and changes of Government, we have substantially retained that Free Trade policy which has enabled us to weather the storm, and to set Europe an example of financial stability and sound finance. Far from condemning the Chancellor for his adherence, at any rate in principle, to Free Trade, we ought to be thankful that, in spite of the company he has been keeping, and the pressure from hon. Members behind him, he still, apparently, retains intact his adherence to the principles of Free Trade. I congratulate him, even though he has engaged in various tariff experiments, in realising that they by no means justify a general extension of the policy of tariffs.
With reference to the Silk Duty, I am quite unrepentant, and I maintain that my expectations when it was imposed have been justified by experience. There were large imports of silk just before the imposition of the new duties, and the full evil effect of them has not been felt in our export trade. Large firms like Courtaulds have been able to carry on their industry from old stocks of raw material, and it has not been necessary for them to claim drawback; but in trade generally there has been a steady interference with many of our great exporting industries which depend, either directly or indirectly, upon the use of silk. During the first few weeks of the year there were no fewer than 18,000 claims for drawback from London alone. Every one of those claims has meant delay and extra trouble for many of our large export industries, and has helped to hinder trade. Forms have to be filled up, and money has to be found, and I say, with some knowledge, that some manufacturers have abandoned the export trade entirely because of the trouble caused by these new Regulations, the difficulty of getting the drawback, and the large amount of clerical labour involved. I am quite ready to give information to the right hon. Gentleman, but I am talking from personal knowledge.
Many of our great towns are suffering from this needless interference with industry. London, which is still the greatest town in the world, has thriven owing to its having been a free port; it is the largest shipping centre in the world. London is now losing a great many of its staple trades; they have been diverted to other ports, such as Antwerp and Hamburg, because of the difficulties created by these new taxes—the clerical labour involved, the money which has to be paid in order to get the goods into the country, and the difficulty of getting that money refunded. A great deal of trade which used to go through London, which used to be handled by our English merchants, packers and shipping agents, has now been diverted to other ports, and is permanently lost; at any rate, it will be very difficult to recover it. Lines that used to come to London are now going direct from Hamburg, and London has suffered considerably by this new experiment.
I am not going to be diverted by answering in detail the hon. and gallant Member for Bournemouth, who has not even had the courtesy to wait to listen to my reply, but I am glad to say that the Chancellor of the Exchequer has not been tempted to extend his experiments in Protection, save for one little instance, the case of wrapping paper. We managed to prevent its going through at the end of last year by keeping him up all night, and in that way we saved the industry of this country from a tax which is not going to help general industry. Wrapping paper is an article used by hundreds of small industries—by the confectionery trade, for instance, and by almost every other trade. Everybody knows there has been a large extension of exports in the form of parcels through the Post Office, and now, at a time of trade depression, and when the export trade is finding difficulty in holding its own, the Chancellor of the Exchequer comes along and puts on a new tax—a tax, actually, on the export of goods, on the packing of goods. Everybody knows it will be impossible to make the greater part of this wrapping paper in this country. The greater part of it comes from Sweden, where the raw material is produced and where they have the advantage of water power; and many of the users, and even the makers, of paper acknowledge that even with the aid of a protective tax the greater part of our wrapping paper will still have to be imported, and on that import 16' per cent. will be paid by the industry, adding to the cost of production of every article in which wrapping paper is used.
The hon. Gentleman is talking of a tax of 16⅔ per cent. on the export trade of this country. Is he aware that the Committee found that the average imposition upon these trades of which he is speaking will be ⅙th of 1 per cent.?
The users of wrapping paper are the people concerned. After all, we do not import the paper as an ornament, but for use. It is a very significant thing that the Chancellor of the Exchequer very carefully avoids putting a tax on the paper used by newspapers. The newspapers would not take that lying down. Instead, he picked out, or his Committee picked out, for protection an article used by every industry in the country, or by every industry that does an export trade. Every parcel put up is taxed, every package to be shipped is taxed, and every person who has to use paper in the course of his business is going to find that it will be increased in cost. It may be a small tax, but it is wrong in principle, and I cannot let this occasion go by without making my protest, and telling the Chancellor of the Exchequer that we on the Liberal benches will do our best to resist it and to make the passage of this new tax as long and as difficult as possible.
I am not going into the controversy over the taxation of wrapping paper, though I do wish the Chancellor of the Exchequer had seen fit to put a little tax on newspapers, because it would be a very suitable means of raising revenue. The newspapers all over the country have doubled their prices, and yet we bear from them great demands for economy and cries that everybody is overcharging, except themselves. It is owing to our currency that they have had this means of doubling their prices. The costs are not anything like double, and I think it would have been a very suitable proceeding if the Chancellor of the Exchequer had got some of their inflated profits by the taxation of newsprint. Cabinet Ministers are always afraid of newspapers. It is a great mistake, because they have very little influence on public opinion, no matter how much noise they make, as most people think for themselves. That fact was established in 1906, when the whole Press was in favour of a certain policy and the country swung the other way. I ask Cabinet Ministers not to pay too much attention to what appears in the Press, because there are a vast number of people who do not read it, and, even those who do, form their own opinions.
I was disappointed to hear that there is to be a raid on the Road Fund. The Road Fund has not all been spent as it should have been. The Minister of Transport went down and offered to build a huge tunnel under the Mersey out of the Road Fund, but I do not think the Government have any right to spend the money of motorists on such an undertaking, which is a matter for municipal enterprise. We could show the Chancellor of the Exchequer and the Minister of Transport plenty of places where all that is needed for development is good roads. We know places in Scotland where there is great need for building good roads, because the roads have been absolutely destroyed by motorists from over the Border. It is a great pity that we cannot get larger contributions towards those roads. I could show him one part of Scotland where £5,000,000 or £6,000,000 could be spent to the great benefit of the community—not only the residents in that particular part, but tens of thousands of motorists and holiday makers who visit Scotland.
With regard to the betting tax, I do not think the Chancellor of the Exchequer is going the best way about it in the line he has taken. There is a great deal to he said in support of the argument of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), because one can never understand why credit betting should be legal and cash betting illegal. I do not know anything about the turf or betting. I regard betting entirely as a vice, but, still, it is the people's own business if they choose to indulge in it; and it strikes me that a man who pays cash on the nail and knows exactly what he is likely to spend is in a better position and less likely to get into difficulties—it is a less vicious transaction—than the man who is running an account. Some weeks ago I made a suggestion in a question to the Chancellor of the Exchequer, which I am sorry he has not adopted. I believe that betting is a vice, and I do not believe it can be really seriously interfered with by legislation, because so many people engage in it. I have been informed by leading coal-masters and ironmasters that for one working man's home destroyed by drink 10 are destroyed by betting. There is no greater vice in this country than the vice of betting. I remember a workingman, who was making a big wage, and I asked him why he lived in such a small house, because he was living in circumstances which were not equal to his earnings. He told me, "I have lost my money all my life through backing slow horses." There is no doubt about the spread of that vice among children and among women, and it is very largely fostered by the Press.
The Press is simply full of betting news. There are six or seven editions of papers dealing with betting—miserable little half sheets for which they charge the full price of morning and evening newspapers. We cannot really interfere with indulgence in a vice, but we can object to people who foster indulgence in it. It is like the vice of incontinence. We cannot interfere with people indulging in that vice, but we can object to those who keep disorderly houses; and I object to newspapers putting in betting news, and I think it should be forbidden, because it is a way of fostering betting. If there were a tax of 50 per cent. of the ordinary price of any newspaper fostering betting and which publishes the odds we should get a far greater revenue than we shall get out of this particular tax. I was told by one newspaper editor that if I proposed to introduce a, Bill to forbid the publication of betting news, it would if carried kill 75 per cent. of the Press, to which I replied that that would be a very good thing because at least 75 per cent. of it did very little good in the matter of educating the masses. If you could get such a tax imposed, it would tend to lessen the vice of betting. Those who wished to go to a race course could engage in betting if they liked—there would be no objection to that—but there are many people who do not know one end of a horse from another and who engage in the vice for the sole purpose of getting money for nothing. Of course, I admit that betting is one of the primitive instincts in man, but it is a vice, and I do not believe we should allow newspaper proprietors to become millionaires by pandering to that vice.
I come to another tax. I was interested to hear the receipts from the Spirit Duty had gone down. The tax is too high obviously. I think there has been a state of affairs which has inflicted great hardships on the working classes, for working men are entitled to have a glass of spirits if they want it, and you have no business by class legislation to make it impossible by means of taxation. I have heard the Chancellor say that high taxation was a, much better thing for temperance than the American prohibition, but I say he has no right to carry out prohibition by taxation and to make it impossible for the working men or the people of small means to buy a bottle of spirits or whisky. That is a wrongful use of taxation. The consumption has gone down from 35,000,000 gallons in 1909 to 13,000,000 gallons, and that represents a great deal of dissatisfaction and discontent on the part of those who would otherwise have used a certain amount. I am not talking of, and I do not believe in, the regulation of the habits of the community in accordance with the need for dealing with that small and miserable percentage who overindulge, but there is a vast number of working people who like refreshment of that kind, and, if you are going to keep the tax up to the preposterous and ridiculous figure of 72s. 6d. per gallon, you will restrict their liberty. The duty would have been reduced in 1922, but the distillers themselves did not want the tax reduced, or at least gave no encouragement to it because they were doing such a very fine export trade. They sent it abroad duty free, and got a better price. There is also this difficulty about this particular tax, that the higher the tax, the bigger the profit the manufacturers of it make at home. They get a profit on the whole turnover duty included.
I can recollect that before the War when beer was very cheap, say 2d. to 2½d. a pint, no brewery companies paid big dividends, but as soon as they raised the tax to the high figure they made huge profits, because they make profits from the tax as well as from the beer. Therefore, in any attempt to get the Whisky Duty or the Beer Duty reduced you have very small support, because the trade themselves are not interested, for they do much better under high taxes. But I am thinking of the ordinary man of small means and the working man in the street who has got to pay so much for his beer and his whisky and tobacco. I remember a man saying to me. "Do what you can to get the taxes on beer, whisky and tobacco reduced, because they are the only pleasures we working people have." I said that if you took all the amusements of the wealthy, motoring, hunting, shooting or golfing, and took away the 19th hole and the little refreshment at the end of it, they also would have very little enjoyment. It is not right to keep taxes so high and reduce the contentment of the people.
I recollect that when the taxes on champagne and cigars rose to a high figure, the Chancellor of the Exchequer of the day came forward the following year and said the tax was not fulfilling its object because it was killing the trade. The same thing is happening here. This particular industry, which is one of the main backbones of the Highlands, is being killed by high taxation, and it has a bad effect on agriculture. Every farmer who grows an acre of barley, which was a very favourite crop in Aberdeenshire and other parts of Scotland, is taxed £350 on his acre. That is most unfair and wrong. There is no use talking about the cost of living being down for the working classes so long as the beer, whisky, and tobacco taxes are all at their present high rates. The cost of existence may be better, but the cost of living is not, because 99 per cent. of the working classes like to have some of these commodities. I submit that if these duties had been reduced to a reasonable figure you would probably never have had to indulge in a mining subsidy. It would have put down an immense amount of discontent. People do not like to get up and say these things on a public platform. I do not know anybody else who says these things except myself, and I say them because I believe them, and because I have heard them in private conversation with working men, who themselves would not go on a platform and have the frankness to say these things. I know how very bitterly they feel about them. It is class legislation, and it is a real hardship that these taxes should he kept at their present prohibitive figure on these three commodities.
I have seldom heard a more inconsistent speech than the one we have just listened to. The hon. and learned Member for Argyllshire (Mr. Macquisten) has spent some time in claiming that the Spirit Duty works harshly on the working classes and fulminating against any kind of class legislation of that sort. That may be all very well in itself, but only a single sentence before that he dealt with the betting question and sought to establish the fact that the working men ought not to be allowed to participate in betting. He actually went so far as to suggest that details in connection with betting and information about the horses who were going to run should be prohibited from being published in the newspapers. I suggest that that suggestion is purely on a class basis. If he is going to say that no kind of gambling should be permitted in this country, he ought to go a great deal further than that. I would direct his attention, not only to the columns of newspapers which give the results of races and the starting prices, but also those columns which give the prices on the Stock Exchange and the various things dealt with there. I invite him to consider that.
The hon. and learned Gentleman must think I know very little indeed about the Stock Exchange if he thinks I am going to accept that statement as being valid. It is a fact that a very large number of transactions on the Stock Exchange takes place within one account. A man buys to-day and sells in two or three days' time, and never really holds the stocks or shares he buys. Not only is that so in the case of these transactions, but it applies to things like options, which are a deliberate form of gambling, and there is a large amount of business of that sort going on.
Exactly; but it is certainly true that this is a kind of gambling. The hon. and learned Gentleman went on to deal with a kind of gambling which I submit is essentially the gambling of the poor, and I am only pointing out his inconsistency in telling us about the Whisky Duty, and then contending that there should be no class distinction of this sort. I submit to him, so far as this betting as a whole is concerned, that the proposal he suggested would certainly affect the poor very much more than the rich.
But I have not finished my illustration as to options. Anyone who cares to read up the "Financial Times" or other financial papers will find that there are wheat options nod cotton options, which are of a gambling character, and, if the hon. and learned Gentleman is going to be consistent, he will not only say that particulars about racehorses and their starting prices should not be published, but he will say that all these prices which concern the men who gamble on the Stock Exchange and on the various commodity exchanges ought also not to be published.
I did not rise, however, to deal with the inconsistency of the hon. and learned Gentleman. I rose to make a few comments on the speech of the Chancellor of the Exchequer. I venture to say that his speech has been a most disappointing one. It is true it was, as we might have expected, a very fine piece of oratorical work, for the Chancellor of the Exchequer is a master of the art of exposition, and he exercised that art to the full this afternoon, so that we were able to listen to him for more than two hours and not get bored. I fully appreciate that side of the speech, but when one comes to the matter in the speech, I submit, so far as the great mass of the people are concerned, the poor working-class people, that the speech is bound to be a great disappointment. You can read through the whole speech, and there is not a single proposal in it which tends to ameliorate the conditions of the working classes. As a matter of fact, I do not know any proposal which affects the working class at all, except the one which has been discussed by the hon. and learned Gentleman, namely, the Betting Tax. It may be that certain working men or women who go down to Epsom on Derby Day and venture to put on their shilling or two shillings on the horses may be affected by this proposal to put a tax on betting at racecourses, but that is the only proposal in the Budget which is even remotely connected with the interests of the great masses of the people. I submit that in this time, especially when the workers are in a condition of destitution and poverty probably unparalleled for a generation, we have a right to expect that the Chan- cellor of the Exchequer, when coming along with his Budget proposals, will do something to ameliorate their conditions.
I am suspicious of the right hon. Gentleman, because I know he is an astute politician, and, as I listened to him this afternoon, I could not help feeling he had a plan in his mind. He was not thinking of this year or next year, but probably the year after that, and he was endeavouring so to order and arrange the finances of this country that possibly in two years' time he would have a very large surplus available, and would use that surplus to distribute largesse of one kind or another to various sections of the electorate with a view to reaping electoral advantage therefrom. It may be that I am misjudging him, but I think he is sufficiently astute to have thought of that aspect of the situation. I want to submit that while that may be all very well, looked at from the standpoint of a party politician, it is not playing the game by the great mass of the people of this country whose wants are immediate and urgent and ought to be attended to, if it is within the power of the Chancellor of the Exchequer. I think I am not laying down any new doctrine when I say that the Budget is the one great Constitutional instrument whereby the great inequalities of wealth in this country may be re-arranged, whereby the wealth which has accumulated in a comparatively small number of hands may be—some of it at any rate—distributed among the great mass of the people. The Chancellor has not used his Budget for that purpose, and there is no reason why he should not have done so. He told us himself that the yield on the Super-tax had increased in the past year. That, surely, is an indication that the rich people are still in the position to pay a great deal more taxation than they are paying at the present time. A few months ago the Chancellor of the Exchequer went to the Oyster Feast at Colchester, where he touched upon the question of whether the wealth of the country was increasing or not. He said:
On the question whether we are living beyond our means, he was not at all satisfied that we were living on our capital; on the contrary, the advice he had received was that, although we were not getting richer as rapidly as we were before the War, we were nevertheless still getting richer and not poorer as a nation.
That statement must have meant that the comparatively wealthy section in this country are getting richer, because he cannot pretend that the great mass of the poor people are getting richer. Any one in touch with their condition knows that not for a generation have they been in such depths of poverty. Therefore, I say that now would have been the opportune time for him to do something by way of putting fresh burdens of taxes on those who are able to bear them for the benefit of those who are in need of much greater assistance.
I see that the present Death Duties on fortunes of £175,000 are 23 per cent.; £400,000, 26 per cent.; £800,000, 29 per cent. If the Chancellor of the Exchequer seriously needs money for the purpose of dealing with those social evils which afflict the country, he has an excellent source of revenue in a further steepening of the Death Duties. Permit me to inform the Committee of what is happening in Russia. I know that Russia is not considered an example which this country ought to follow, and I agree that in many respects that is perfectly true jut I submit that in the matter of Death Duties Russia has set an example to this country. In Russia a. fortune of £10,000 has a death duty levied upon it of £1,967, roughly 20 per cent.; a fortune of £20,000 roughly 27 per cent.. In the case even of the £10,000 fortune, the fortunate legatee has still £8,000 left to go on with, and I am sure that no one who has that sum is in immediate danger of starvation. On a fortune of £53,000 there is no less than 48 per cent. death duty levied. They act on this principle in Russia, that where people have accumulated much more wealth than is necessary for them, and where the State stands in need of income for urgent social work, the State is entitled to take a very large measure of that wealth and utilise it for the purposes of the nation as a whole. I submit that we ought to act on the same principle in this country. In the King's Speech, a few months ago, it was stated on behalf of the Government, in connection with the mines dispute, "that the interests of the nation as a whole are paramount." We believe that we have continually to emphasise that fact, that the interests of the country override and are superior to the interests of any section of the people. That means that if there are great crying social evils, and if to remedy them it is necessary to take from the people who have large quantities of superfluous wealth, then there is every reason why we should take that wealth, and there is no good Constitutional reason why we should not take it.
I am very much disappointed that the Chancellor of the Exchequer has not indicated that he is going to make very large savings in the expenditure on the Fighting Forces. I thought the House was beginning to agree that a very considerable part of this expenditure was wasteful and unnecessary. We arc not obtaining anything like security by this means, but we are doing something which most of the experts agree is unnecessary in maintaining a large Navy and. the Army at its present size. I am not asking you to take my views as an extremist who believes that we should economise on armaments altogether; but, even on the view of the experts who have thought this matter out, there could be very considerable economies effected on the Fighting Services.
The other expenditure which the Chancellor of the Exchequer should have had the courage to deal with is interest on internal loans. We are even now, although it has been reduced, spending over £270,000,000 a year on interest on the internal loan. It seems to me that this country ought not to be expected to carry that burden which it is staggering under from year to year. The Chancellor of the Exchequer ought to make proposals to reduce that burden to a very considerable extent. He said something about our not having to interfere with the lawful obligations of the State. That is all very well, but there are times when it suits his purpose to interfere with the lawful obligations of the State. We have spent a great deal of time discussing the Economy Bill, which, in the opinion of those on this side of the House, does interfere with the lawful obligations of the State. In this much bigger matter of the amount of interest we are paying on the internal debt, it is high time the Chancellor of the Exchequer reconsidered the whole position and did something to cut down drastically this heavy burden on the people of the country. As I said at the beginning, in my view, and I believe it is the view of the whole Labour party, this Budget is most disappointing. The people look for relief and the Chancellor of the Exchequer has given them nothing. "The hungry sheep look up, and they are not fed." I believe the time will come when the unfed sheep will see that they take their revenge on this Chancellor of the Exchequer and this Tory Government.
I cannot follow the hon. Member for Shoreditch (Mr. Thurtle) through his whole speech, but I have been rather surprised that anyone who has listened to the Chancellor of the Exchequer's speech could get up and say that, while there is to be a tax on the working man's shilling on his bet at Epsom, there is not a word in the speech which gives relief to the working-classes. The Chancellor of the Exchequer mentioned that he was budgeting for £5,750,000 to pay for widows' pensions and for £1,250,000 for increase in the old age pensions. In these two items alone you have £7,000,000 appropriated in the Budget for the people, and I am convinced that this Budget will go a long way, although not nearly so far as I would like, to find increased employment in many trades in this country. The hon. Member said that a much more drastic cut ought to have been made in our naval and military defences. Perhaps he has not looked at the Blue Paper. I know he is in favour of abolishing the Army and Navy altogether, but, at any rate, we are getting on. We are not going so far as the hon. Member would like, but we do show a diminution of expenditure in the coining year of £2,000,000 on the Army and £2,400,000 on the Navy.
I want myself to make two or three remarks about the Chancellor of the Exchequer's speech. I think the part that people will find to be the soundest and most courageous is that where he proposes to deal with the £14,000,000 surplus which he showed—the restoration, as I like to consider it, of money borrowed from the Sinking Fund established by the Prime Minister some years ago. I believe it will be an enormous satisfaction to the country as a whole to feel that in the great crisis which we had to meet last August, with the enormous expenditure which it involved—that even that has all been dealt with and met out of current expenditure. I am also extremely pleased with the Chancellor of the Exchequer's statement that Parliament will be asked in the Finance Bill to deal with the question, which affects a variety of safeguarding proposals, of the rapid collection of the Customs Duties from the foreigner who sends goods to this country. With regard to the Paper Duty, which has now been announced, I am delighted to see that it will be put in force on the 1st May. That particular duty has been hanging about ever since last December, and the foreigner has had plenty of time, but in future, at any rate, we shall not give him four or five months in which to compete and practically kill the trade which we are proposing to protect.
Another matter on which I think the Chancellor of the Exchequer deserves most hearty congratulations from every quarter of the House is what I call the stabilising of Imperial Preference. I think that that is a matter which has a direct bearing on the life and welfare of the poorer people of this country, because I, at any rate, am convinced that the future of the trade of this country lies very largely in the development of our Empire trade. Therefore, considering an utterance which the Chancellor of the Exchequer once made, before he had been converted to the true faith—an utterance which we all remember, and would like to forget—about slamming and bolting the doors, it is extremely satisfactory to find him announcing to-day that Imperial Preference is to be stabilised for several years to come.
With regard to the Safeguarding of Industries proposals, it is satisfactory to note that the Report of the Committee of the Board of Trade which has been considering Part I of the Safeguarding of Industries Act is going to be put into operation. Although it will not produce a very great deal of revenue, it will, at any rate continue to provide some modest amount of revenue for another l0 years, and, what is much more important, it will give those industries—quite small industries, most of them, but vital key industries—time to establish themselves thoroughly in this country, and, I believe, in many cases, to develop into industries employing enormously more hands than they employ at present. The Chancellor of the Exchequer told us about the motor trade and the Silk Duties, and the effect on the silk trade, noting that employment had increased while the prices of those articles had diminished. He also told us that, as we find from this Report as well, imports have diminished and exports have enormously increased. Last Tuesday we had, in answer to questions in this House, some very remarkable figures, and none of them were more remarkable than those relating to artificial silk exports, the increase for the quarter just ended being no less than 82.9 per cent. as compared with the corresponding quarter of the year before. Although that is a thriving industry, the Chancellor of the Exchequer admitted in his speech that it has recently experienced rather a set-back, and not an increase, in the demand for these goods, so that that increase in exports is the more remarkable.
Dealing with the question of employment, he gave, however, a word of caution. He mentioned that the motor trade, of course, was a very rapidly expanding trade anyhow. I would like to give him just two little facts regarding another industry which has been safeguarded, and which is not a rapidly expanding industry at all. I refer to the fabric glove industry, one of the minor industries of this country, which has been saved from absolute destruction by the safeguarding enacted last year. I should like to give some first-hand information from the chairman of one of the principal fabric glove factories. I inquired of him two or three dais ago what was the state of employment in the towns in which I and my hen. Friend the Member for South Molten (Mr. Drewe) are mainly interested, namely, Barnstaple and Torrington. I will only give one or two short extracts from his letter. He says:
We had a meeting of the Torrington Unemployment Committee (of which I am a member) yesterday, and there are to-day practically no experienced fabric glove workers on the Labour Exchange in Torrington; there are just a few girls off part time, simply because the special depart-meet in which they work happens not to he rushed.
He goes on to say:
My personal opinion about the Safeguarding Tax is that it has absolutely saved our trade from going to the dogs.
This is the more remarkable, as so great was the clumping before this duty
was imposed that it was not expected that any appreciable results would be seen for over a year. I am glad, therefore, to be able to give him this first-hand information. I should like to give one more quotation from a gentleman who owns or is interested in all the fabric glove factories in Barnstaple. He says that they are working full time in every case, and that there is no unemployment—in fact, that he could take on a further thirty skilled hands or so if they were available.
Turning to the Report of the Committee on Part I of the Safeguarding of Industries Act, which deals, not with trades like the motor trade, with an enormous and expanding demand, but with very small industries that were either non-existent or practically extinct in this country during and immediately after the War, and which have all had to go through extremely hard times, owing to the enormous inrush of foreign goods since the prohibition was taken off after the War, I will give only one short example, under the heading "Ignition Magnetos and Permanent Magnets." In almost every one of these small industries, however, the Committee find exactly the same. They say in paragraph 92 of their Report:
Prices have fallen as the output has increased, and as internal competition has developed among the British makers. The average price of the total sales effected in the year 1925 is hardly half the corresponding figure in 1921.
Again, in paragraph 93 they say:
The number of employés in the industry, so far as the firms in question are concerned, has almost doubled since 1921, and is now, we understand, in excess of 4,500.
I hope the Chancellor of the Exchequer will read that 'Report very carefully. Be is almost converted; he has returned to the fold, and I am convinced that, if he will just read that Report, he will say he will do away with even the proviso that is in his mind about expanding industries because he will find that the rule is absolutely the opposite to what we were always told. We were always told by every Free Trade orator, until we got pretty tired of it, that it would not increase employment, that it certainly would not increase, but would rather tend to kill, exports, and that you could not get both revenue and employment any how. Nevertheless, we find that, in
every single industry which this Committee has been inquiring into, there is increased employment, while the Chancellor of the Exchequer has told us to-day that there has also been a very appreciable and gratifying addition to his revenue. I do not want to detain the Committee any further, because it is not usual on these occasions for the Committee to sit very long. I never could make out why that is so, but it is one of the excellent traditions of the House that 1 should be very sorry to see broken.
As far as Budgets under the capitalist system go, I would readily grant that the Chancellor of the Exchequer has handled his task just as adroitly and cleverly as any other Chancellor of the Exchequer could. I agree with the remarks that were read out from the benches opposite, from a speech delivered about 15 years ago by the ex-Chancellor of the Exchequer in the Labour Government, to the effect that, whatever may be the tax paid, whether it be direct or whether it be indirect—first going from the worker's production to the master's pocket., and then going out of his pocket—it is in reality paid by the producer of the wealth, by the worker. That being so, I do not see that any very useful purpose is served by a mere wrangle as to how the money is taken ultimately from the production produced by the workers. Whether in one shape or another, it would make very little difference, except for the purpose of newspaper articles. I believe that the nation has now a right, quite seriously, to expect that there is an anti-capitalist party in this country, and that they should put forward a scheme of what an anti-capitalist Budget ought to have been. There is also an anti-militarist party in the country—a large one, representative of large sections of working-class opinion; and I think we have now a right to put, in Opposition, not merely criticism of raising Sugar Duties, or lowering Tea Duties, and so on, but the larger fundamental principles with regard to the national Budget.
We have been told from the Conservative benches that the one great fundamental difference within the capitalist system is on the question of Tariff Reform, and we are asked to believe that, if a vigorous and systematic tariff policy is followed, all will be well. I doubt it, however, very much. I have never heard an explanation, which it is very necessary that we should have, as to how the mere imposition of a tariff is going to prevent countries of cheaper production from selling in the outside markets belonging to Great Britain. I entirely fail to see how it is going to do so. You are losing your coal trade to-day. How can you recover your exports of coal by imposing a 50 per cent. duty on any coal that people may want to send into this country? It is absurd. You are losing your export trade in iron and steel, as against Czechoslovakia, or Belgium, or local production in India, and so on. How can you remedy that by imposing a duty on iron and steel that people may want to send into this country? It is not a question of what comes into this country; it is a question of what is sold in foreign countries by countries producing the same goods more cheaply than Great Britain, and I do not see how any kind of tariff or protective system is going to remedy that evil.
To my mind, the real solution lies, not in tariff duties, but in encouraging the international working-class movement, which aims at putting an end entirely to this cheaper production in one country than another. However much our friends are afraid of it at the present moment, the ultimate solution lies in all human beings who are engaged in the production of goods in any part of the world being given the same rights of life, and the same economic value in return for the goods they produce. It is a far better solution that all the nations should possess their rightful quota of trade, rather than that one nation should try to undercut another, or to starve some nations by destroying their trade in order to recover its own. Then people are puzzled as to how to reduce expenses on armaments. You keep on groping in the dark. I submit that this country, more than any other country in Europe, should honestly and sincerely take up the question of what should be done to remedy the great evil that in other countries the cost of labour is cheaper than it is here, and that it is cheaper here than in America. Everywhere the cost of production should be equalised; everywhere men and women engaged in production should be given the best available type of life, and, as prices all over the world assume uniformity, you will soon see that you have got out of your trouble of somebody stealing somebody else's markets and so on.
The other note that strikes me on the same line of argument is the suggestion about subsidies for the development of industries in the Colonies. I think this country has now got sufficient experience. It looks for the moment very -helpful to this country to grant large loans or subsidies to Australia, Canada, India, or any other country, provided that those loans are used as they were used 30 or 40 years ago in laying down railways, in constructing roads, in doing something which not only gave you immediate engineering trade, but which added also to your facilities in selling your wares in the future. But when new British investment abroad has assumed quite another shape and is used for erecting cotton and jute mills and iron and steel and engineering works in competition with the works here, the more you spend your money in that way the more you make it necessary to create a source of permanent and ever growing unemployment in this country. It would be quite all right as far as the Dominions are concerned, but when you take countries like Malacca, Palestine, Egypt and so on, and when they will be cultivated along this line, with large dividends and very low labour bills, it is not merely the loss of manufacture directly for the time being, but you even lose that business and that work which it was once necessary, to send in return for their products to this country, because British investments earning dividends in these outside countries are now obtaining raw materials from those outside counties without exchanging manufactured goods. Therefore, Great Britain of all countries should give up her fight for international Socialism and international equalisation of working class conditions and so on. That is an essential safeguard for the future for this country, if not for any other.
With regard to armaments and the National Debt, I again submit that the nation has the right now to want to know what the anti-capitalist and Socialist suggestions are for these purposes. It is no use merely criticising it and saying, "Lower the interest," and do this and that. I take it that complete disarmament is not coming to this, or to any other country in the world, by people sitting round a conference entertaining some enmities and ambitions and combative desires against one another and talking hypocritically about reducing ships and guns, and so on, and, though I met with some derisive response last time, I again say that something far more drastic, requires to be done, and it will not be done by all nations combined, but by one, two or three bolder nations taking the lead and showing their faith in international brotherhood rather than in international armaments. I again put it to the Committee that you could within the measurable time of a few months substantially do away with your large Naval and Air Force expenses. However absurd it may appear to you to-day, I do not see why you cannot become true and sincere friends with the people of France, and why you cannot say to France that, as far as the air area is concerned, Great Britain and France are practically one country.
If the people of France and Great Britain are sincere in their advertised professions that we are friends, that we are not going to fight one another, that we are not going to bombard each other's country from the air, I do not see why Great Britain and France, without waiting for any disarmament conference, cannot enter into a sort of partnership, maintaining only one Air Force for strictly defensive purposes, and give up their enterprise in bombing the Arabs, Moroccans, and so on. If you can see your way to make your armaments for bona fide defensive purposes, and if you can enter into partnership, each country curtailing its expense by 40 or 50 per cent. and maintaining one united Air Force, with personnel in each aircraft composed half of Frenchmen and half of Englishmen as an absolute guarantee that there can never be an air war between France and Britain, it will be a concrete example set of a sure way of real disarmament and a. real cessation of settling international quarrels by fighting, and so on. A similar step could be taken, without waiting for a disarmament conference, between Great Britain, Japan and America with regard to one combined naval organisation held in partnership by the three countries, first as a guarantee that these three foremost naval Powers make it practically impossible to wage war against each other, and, secondly, at a very much lighter burden they can hold a naval power sufficient for bona fide defensive purposes against any attack, and they must all surrender their ambitions of attacking other people's countries and maintaining armaments under the wrong pretence of requiring them for defence.
With regard to the National Debt, it again seems curious that the Chancellor of the Exchequer should seriously set about collecting £270,000,000 just for the purpose of giving it back to certain individuals in that nation—merely be put to the expenditure of collecting them and distributing them and just giving them back. The £270,000,000 annual charge on the internal debt is to be collected for the specific purpose of giving it back to the British people. Surely there must be some sensible way out of it without indulging in phraseology and slogans about confiscation, and this and that. There must be some common-sense plan. It is all very well to say this nation is the most highly taxed nation because it wants to tax itself and returns 7s. in the £ to some citizens who possess National Debt stock. I have suggested that something very drastic has to be done. As long as you entertain the pride in your heart that "that will be called confiscation," "it will set an example," "it cannot be done," "it should not be done," very well then. You will not proceed along that line and you will have a Budget which will, with armament charges and National Debt charges, swallow up about 60 per cent. of your revenue. What is the good of arguing and holding Debates? There is no meaning in it. The whole burden has got to be removed, and I do not see that the idea of confiscation comes in. It is not a Chinaman coming and saying, "I am taking away your wealth," or some outside Russian saying. "Give me these £270,000,000 every year.' That is not the idea: The whole idea is a simple one, that the nation pretends that she is in debt to herself, and the. Chancellor of the Exchequer has to keep an elaborate machinery to collect the money and another elaborate machinery to give it back. The only difference is that it is collected from certain indi- viduals and given back to other individuals, and so on.
The whole position could be simplified if only we gave up all these old time prejudices about rights of possession and so on. I ask the Committee quite seriously if it is wrong to tell the nation that you have incurred this debt. It is their National Debt and therefore each and everyone within the nation economically capable of bearing a share must compulsorily bear that share. I will go much beyond what my friends of the Labour party have put forward as a capital levy. They propose a limit of £5,000, I do not see why we should draw even such a limit. I am morally even opposed to such a limit. I deplore the fact—I myself feel ashamed of it, but there it is—that the whole of the working classes of the country, misguided or not, was just as enthusiastic about taking part in the War as the rich people were. However, I do not agree with the scheme that 90 per cent. of the population should be at liberty to vote for the War under the impression that the 10 per cent. who possess £5,000 and more will be compelled to pay for it, Then we shall have no end of wars. That is not enforcing pence. I do not see any justification for it that millions of men should enthusiastically go into the War and, when it comes to the time of payment, say, "We will make the rich pay and we will get out of it," as if that is the working-class patriotism. I say that if this country, having willingly gone in for it, having carried it out on the extravagant scale the she did carry it out, having financed it on the crazy method on which it was financed, must cheerfully bear the burden, and those who are not willing to bear it cheerfully may be made to bear it by legislative methods. I do not see anything morally wrong in saying to each man and woman in the country, "In accordance with your economic means, whether you are worth £5,000 or £1,000,000—of course, with a higher and higher percentage of the burden as your economic power is higher and higher—you should all compulsorily be owner and possessor of the nation's War debt." I do not think any other Member in the Committee would consider that wrong.
If that is so the position becomes quite simple. You can in the same Measure include a provision that amongst those who are economically capable should be included those who are really economically capable, and widows, or orphans, or charity funds, possessing those War Stock must not be considered persons who should bear the burden, and naturally there is no question of any calamity falling upon the indigent whose only source of income is War Loan and so forth. An ethical distribution of the National Debt having taken place, the position becomes quite plain, and again you may say the nation ought to bear the interest, and the Sinking Fund in proportion to the economic power of the individuals within the nation. It resolves itself immediately into the question of your 5 or 6 pet cent. interest or Sinking Fund being collected from you in the ratio of your holding of the War Loan, and then it resolves itself into the very simple question either of the Chancellor collecting it or we can tell the individual to collect his own tax and pay it back to himself as the interest on his own War Loan. I simply consider that is the way to look upon the nation's debt to be administered by the nation itself, and there is no reason why this large spectacular figure should continually be dragged along in annual Budgets from year to year and year to year. I submit that unless this Committee is now prepared quietly and. seriously to consider the merits of the claim of anti-capitalist measures disowning the rights of all those who possess large amounts of wealth, unless you are prepared to protect labour by destroying labour competition instead-of bringing forward tariff reform schemes which will increase international competition and the risk of international war, it is futile to discuss Budget proposals of this character. I submit once more that-the Budget of this nation should raise at least £400,000,000 a year, not with a view to reducing the Income Tax, but with the idea of building up the nation, which is not being maintained at the pitch at which it deserves to he kept.
Obviously this is the opportunity for the amateur financier to make his comments on what I think on the whole is a very satisfactory Budget. Of course, the amateur financier may make what comment he pleases and also what suggestions he pleases. The suggestion made by the last speaker that the National Budget would be simplified by a repudiation of our National Debt is one which is not likely to be carried out by this House. Nor do I find anything practical in the grievances of the Member who spoke before him from the same bench, whose complaints was that he could not see that the Budget's proposals did anything towards seizing the property of the well-to-do and distributing it amongst the masses. My hopes were not quite of such widespread intensity but there were two matters in regard to which I confess that being like other speakers a mere amateur, had dimly hoped that something might be heard in the Chancellor's speech. The first was a scheme of both a financial and a non-financial kind, designed for the safeguarding of the old historic and artistic treasures of the country. I had hoped that the time had now come when the continuous drift westward of the old store of historic treasures of England should cease, or if it could not be made to cease, at any rate, it should be made profitable in a certain degree to the Exchequer. I was hoping to hear that a scheme for taxing the export of all national works of art and national monuments and manuscripts would be brought in. I have a question down on the Order Paper for to-morrow on that particular topic. All those who have watched our auction sales of late will agree that the time has come to stop our hoarded wealth of artistic treasures from being alienated for the benefit of the momentary owners. May I point out as an example that Italy has scheduled every first-class work of art in the country—not merely pictures but other things—and she has prohibited their export unless an extremely heavy duty is paid before they are taken out of the country? I sincerely hope that some clay we may have a Chancellor of the Exchequer who will legislate in that direction, and say that the historic treasures of England should first of all he offered to the State, and if the State does not find itself in a position to purchase them, then they should be subjected to a heavy duty before being allowed to he exported.
My second point is that I was hoping to hear something of a much more ambitious and a much more financially important scheme, in regard to a question that has never come to fruition in a Budget, that is, the Taxation of Advertisements. I do not merely mean the taxation of the large boards that defile our highways and the tops of our mountains, informing us of the nearest point where Shell has its habitation in a garage, or which set forth the advantages of dealing with somebody's milk by means of large and ugly wooden figures of cows. I refer to something much more important, I mean advertisements in the newspapers of all kinds. Here is an enormous field for any Chancellor of the Exchequer who is bold enough to risk a bad Press by the imposition of a minimum tax on every advertisement in every newspaper, upon the same principle on which the Entertainments Duty was imposed by the Coalition Government, putting one single penny on every advertisement. This tax would produce millions in the course of a year, and it would not be any more the cause of general bankruptcy amongst newspapers than was the putting on of 2d. and 6d. on the theatrical and music hall prices, when the tax on amusements was brought in, the ruin of all managers. I am aware that any Chancellor of the Exchequer who brought this proposal forward would be abused by the whole Press, who would declare that he was attacking one of the vital industries of England, but it is equally true that that attack would be insincere, because the mere fact of advertisements being raised from 2s. to 2s. 1d. or from 6s. to 6s. 1d. would have no real effect upon newspapers whatsoever, and the advertising public would be well able to bear the extra penny, just as the public going to the theatre are able to bear the Entertainments Duty. The agitation against the Entertainments Duty was just as insincere as the agitation against an advertisement tax would be. I believe that the taxation of newspaper advertisements would be the financial salvation of the Budget.
But very near my heart also comes the idea that a good swingeing tax on outdoor advertisements, in places of picturesque beauty or of great public resort, would soon lead to a considerable thinning in the ranks of those abominations. We might by this means gain very little in taxation, but I think we should gain in public amenity enormously. Everyone who motors through the English countryside, when nearing a town or some beautiful point of view, has his eyes offended perpetually by this abominable practice, and often the lovely English countryside is completely spoiled by some rectangular multicoloured horror, which makes him wish that he had not taken that particular way. I am afraid that my two suggestions are probably quite futile, and probably they have been considered by many Chancellors of the Exchequer, and for fear of promoting wrath in certain quarters many Chancellors may have put them aside. Nevertheless, I think that I represent a considerable body of public opinion when I say that every man of good heart, who takes an interest in his own country, would like to see taxation imposed dealing with the two matters I have mentioned.
There are one or two points which I think ought to be made in any preliminary discussion of the Budget statement. Those who listened to the Chancellor making his speech must have been struck with the very little encouragement he got from hon. Members opposite. He found great difficulty in drawing forth their cheers. I cannot refrain from saying that, in my opinion, the warnings we gave from these benches last year have been more than justified. At that time we called the attention of the Government to the excessive remission of taxation in their first Budget, and can now inform them that had those remissions not been made in Super-tax and Income Tax the present financial position would have been a great deal easier than it is now and the Chancellor would not have been driven into the position in which he now finds himself. Before dealing with the makeshifts which have been adopted by the Government, I would like to draw attention to the fact that both the yield of the Super-tax and the Death Duties has been erroneously estimated to the extent of more than £5,000,000. The Super-tax has brought in £5,200,000 more than was estimated, so that last year's reduction is worth more than £10,000,000 in a full year. The increase of the scale of Death Duties which was supposed to balance this reduction has resulted in a fall in the Death Duties revenue below the estimate, so that the increase has turned out to be worth less than £10,000,000, and thus the reduction of the Super-tax has cost the revenue more than the increased Death Duties have brought in. Therefore the argument used last year that these two proposals would balance out in the accounts has not been borne out. The rich are not only growing richer but many of them are living longer and some of them have gone to Jersey, where it is said that our law does not apply.
We have been promised still more luxury taxation, but I confess I am an admirer of the old British methods of finance which have been in vogue during the last generation or so. I am a great admirer of those methods from which we now seem to be drifting. I admire the solid architecture of our Super-tax, Income Tax and Death Duties, which should be the main bases of our financial system. These comparatively second-rate expedients we are now adopting have come from France and other Continental countries where they attempt to collect a large amount of revenue from a large number of different commodities and transactions. To my mind this is a very inferior method of procedure. I am not enamoured of the safeguarding principle, but I should like to see a duty imposed in order to prevent the importation of these cheap-jack alternatives.
A few words upon the Debt charge. It has not been the practice of the Chancellor of the Exchequer in the past to pay any great attention to the heavy burden of the Debt charge in his speeches, but I notice that in his statement this evening he made considerable reference to it, and pronounced in favour of giving back to the Sinking Fund in the coming financial year part of what was taken from it during the year past.. I am glad to find the Chancellor of the Exchequer waking up to the importance of the Debt charge. The debt charge has remained, in terms of money, very nearly stationary during the last year or two, while the proceeds of direct taxation have been diminished. I have worked out a few simple percentages of the proportion of interest charges—leaving Sinking Fund out of account—upon the Debt to the total tax revenue, and I find that whereas in the last pre-War year the interest charge was only 13 per cent. of the total tax revenue, it has risen to 39 per cent. in 1922–23 to 42 per cent. in 1923–24 and to 45 per cent, in the present year.
The amount of dead wood in the financial tree—that is what the interest charge is, dead wood of a most unprofitable kind which yields no present advantage—is continually increasing. When we add the consideration that since three or four years ago the price level has fallen enormously, we see that the holders of War Loan who are receiving the same amount of money as before are, in fact, receiving a much higher purchasing power, because the money goes further. It is clear that the burden of the debt in terms of purchasing power, so far from having been decreased during the last few years by Sinking Fund operations, allowing for the fall in prices, has increased. The developments in the last few years in regard to this increasing burden of the Debt charge, viewed in this way, is a complete justification of those of us who advocated the Capital Levy a few years ago. Moreover, we are not yet informed what the alternative to the Capital Levy, which is being devised in secret by the Colwyn Committee, is to be. I hope the Chancellor of the Exchequer will press the Colwyn Committee to hasten with their Report so that we may see what better alternative their ingenuity can suggest.
I was very glad to hear the Chancellor of the Exchequer speak in praise of Sinking Funds, and to hear from him a statement which I have often made and which has sometimes been contradicted, that one advantage of a Sinking Fund is that every pound put into the Sinking Fund to pay off debt liberates one pound for the benefit of industry. The Chancellor of the Exchequer enunciated that doctrine this afternoon. Every Sinking Fund has the advantage that it liberates a large stun of money for investment in industry, whereas remissions of direct taxation to wealthy people do not have that commensurate effect, because a large part goes, not to the building-up of industry, but into luxurious expenditure which in the interests of the country might just as well not take place. Therefore, I hope that in the future the Chancellor of the Exchequer will increase the Sinking Fund to an even higher figure than the £60,000,000 proposed for the coming year.
When a local authority incurs debt, a period is set during which the debt must be paid off, and the period very seldom exceeds 60 years. When the British Government incurred a debt to the American Government, a period was set in the financial agreement entered into by the present Prime Minister of just over 60 years from the start of the funding period during which the debt has to be paid off. It is very unsound finance not to set a corresponding period for the repayment of our internal debt, particularly when, as compared with a debt incurred by a local authority, there is no material and tangible asset to set against our internal debt, such as a local authority may be able to claim against its debt in the form of tramway undertakings, gas works, or kindred assets. Sixty years is long enough in the lifetime of a man, and most of us will not be here 60 years from now if such a scheme were introduced. But at the present rate of going, with a £50,000,000 Sinking Fund, if that were to be maintained, it would take 150 years or more to pay off our present Debt, and even with a Sinking Fund of £60,000,000 a year, it would take over 120 years. That is altogether too slow, and I hope that in the years to come there will be a great speeding up in debt redemption. There are many alternative means, of doing this, but certainly some speeding up is essential.
I wish to make a few observations about conversion, which was referred to by the Chancellor of the Exchequer. Some people think that the burden of our debt may he reduced in the future by conversion of maturing debt to lower rates of interest. But I read in the "Times" this morning, a paper not altogether unfriendly to the present Government, the statement that the possibilities of converting debt at the present time are absolutely nil, owing to the fact that the national credit has depreciated during the regime of the present Government, as compared with the level at which it stood under the late Government.
I will give the right hon. Gentleman an illustration. Under the late Government, the late Chancellor of the Exchequer, the right hon. Member for Colne Valley (Mr. Snowden), was able to carry through some conversion operations. He issued a new 4½ per cent. Conversion Loan and by that issue and other conversion operations he was able to make some slight reduction in the debt charge. Some 5 per cent. War Loan was converted into 4½ Conversion Loan, with a slight advantage to the Treasury. But at the present time, as the "Times" City Editor states, it is not possible in his judgment, with which I agree, to convert the large maturing block of over £100,000,000 5 per cent.. Treasury Bonds with any advantage to the Exchequer this year, because British long-term credit is now in the neighbourhood of 5 per cent. The 4½ per cent. Conversion Loan stands below par, and it would not be possible to make even a saving of ½ per cent. on such a conversion. If we look forward to next year the prospects are even worse, because in 1927–28 there is a large amount of debt falling due to he converted, of which £80,000,000 are 4 per cent. National War Bonds, and £62,000,000 3½ per cent. War Loan. There you will have a connversion, but it will be a conversion the wrong way—a conversion upwards. You will only be able to renew that debt by offering a higher rate of interest than it now hears. The effect of that kind of conversion, which was familiar during the War, but of which we have not had much since, will be, of course, to increase the Debt charge. I will not weary the Committee with statistical estimates on this point, although I have made some. Perhaps on another occasion I may give them. I only mention that fact in order to show that I am not speaking at random.
When one works out statistics in detail one finds that the prospect of savings from conversions in the immediate future arc very small, particularly when account is taken of the fact that with the present rates of Income Tax and Super-tax, on every £4 which you save to the State in conversion you lose £1 in tax revenue. The right hon. Gentleman knows that that is so. Therefore the net gain from conversion is diminished by the fact that the reduction in the amount of interest on the Debt means a reduction also in Income Tax and Super-tax paid by owners of converted stock. It would appear, therefore, that any opportunities in this direction of reducing the real burden which rests upon the taxpayer are very limited, and such as they are they can only be achieved if the national credit is leliberately stimulated and raised by vigorous Sinking Fund operations—by setting aside large sums every year to swell the demand for British Government securities for cancellation.
There is one suggestion which perhaps the Financial Secretary to the Treasury will do me the courtesy to transmit to the Chancellor of the Exchequer. The Government, we know, are opposed to a Capital Levy. The Government, we know, in the present financial year do not propose to increase the Sinking Fund above £60,000,000, or to maintain that increase next year. We have heard much about the necessity of everyone making sacrifices. Why should not the Government invite the wealthier sections of the community to make a voluntary sacrifice regard to the Debt If they are opposed to a compulsory Capital Levy why should they not invite the holders of War Loan to make some voluntary sacrifice, either by surrendering some of their War Loan or by agreeing to accept a reduced rate of interest in the future on the whole or part of their holding? This is not a purely imaginary possibility. The Prime Minister, before he became Prime Minister, won the admiration of a large number of people in this country when it became known that he had himself surrendered a large part of his War Loan through a sense of public duty, and I would suggest that if the hands of the present Government are tied in regard to larger policies of Debt reduction they might at any rate make an attempt to secure some voluntary reduction on these lines and make an appeal to the people who can afford it to make some sacrifices in this direction. I can hardly believe that the present Prime Minister is solitary and alone in his sense of public duty in this connection, and I can well believe that some of the Super-tax payers would welcome the opportunity of making sonic sacrifice for their country.
I do not think the Chancellor of the Exchequer has been so lacking in foresight as may appear. At first sight the Budget appears to be a hand-to - mouth contrivance, but I am inclined to think that there is more thought and calculation behind it than that. Like the hon. Member for Shore-ditch, it strikes me as a Budget of delayed action, a Budget which is timed not to explode until two or two-and-a half years hence. The Chancellor of the Exchequer has a prospective surplus of £14,000,000, of which £10,000,000 has been tucked away this year in connection with the Sinking Fund, and he expects at the end of the next year to have a surplus of £23,000,000. We are now approaching figures of a magnitude which will allow of considerable alleviations to various classes of the taxpayers, and a tax reducing Budget next year or a year afterwards is possible. I am inclined to think that the Chancellor of the Exchequer has this in mind, and that he comforts himself by this thought for the disappointment and lack of enthusiasm among his own followers. I have seldom seen less enthusiasm and response from a party to a speech of one of its leaders than the complete absence of cheers arid approbation of this afternoon. The Chancellor of the Exchequer is rather more far sighted, and we can calculate that the Budget of next year, or two years hence, will be more spectacular and have a. much higher electoral value than the Budget of this afternoon.
I regard the Budget statement as being very satisfactory from almost every point of view, but there are one or two omissions and one or two things that might have been put in a slightly different way. Unlike the hon. Member who has just spoken, I am a believer in stunt taxation, and I was surprised to hear from the Socialist benches such conservatism as to former methods of finance. We have to get the money some way, and that is what the Treasury is interested in. I should like to have seen a tax on ladies' dresses of high quality, on furs, jewellery, and other matters of that sort, and I am sorry that the Chancellor of the Exchequer has not seen fit to copy the example of despised France and introduce a hotel tax, which is already in force in that country and elsewhere and is a very great success. It would be very desirable to introduce some of the taxes which are in operation in France from a revenue-producing standpoint. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) referred to the Betting Tax proposals of the Budget and spoke of the tax with much familiar knowledge! I do not profess to have any great knowledge on this matter, but I think he made a most ridiculous statement when he said that he thought the imposition of a tax on betting would mean an increase in the amount of street betting. Does he really think that Clarence Vere de Vere would give up his credit bookmaker in order to conduct his operations at the street corner?
I am disappointed with one other matter referred to by the Chancellor of the Exchequer. I agree with his general proposals as regards the Road Fund and motor taxation, and I think he is right in saying that the heavy commercial vehicles should pay a greater amount than they have in the past. But it would have been a much fairer adjustment of that burden if it was placed on vehicles which do not use rubber tyres instead of being placed solely on the basis of weight. It is the vehicles which do not use rubber tyres that do the most damage on the roads, and they should be the ones to pay. I do not think the Committee will be satisfied with the proposals of the Chancellor of the Exchequer with regard to the rural roads, in view of the state in which they are at the moment. There is a step in the right direction, but it is not nearly enough. You have an orgy of extravagance on the main roads, which do not need improving; you see them building new ones, which do not need to be built, and rounding off corners simply in order that the road shall be absolutely dead straight upon which motorists can scorch, and Then you look at the sixth and seventh class roads in the rural districts and find that they have been allowed to get into a state of absolute disorder, it is impossible to use them, and all this time this vast amount of money has been spent on the widening of wide trunk roads to make them wider, and on perfect surfaces to make them a little more perfect. I think it is high time this expenditure was readjusted and that some money was spent on the sixth and seventh class roads in rural districts so that they may be used to feed the railways, by facilitating goods being hauled to rural railheads. The railways, which the Chancellor of the Exchequer is rightly anxious to help, will he utilised for the carriage of goods rather than the trunk roads. At present these rural roads are often in so bad a state that children can hardly use them to go to school.
There is one other point I desire to mention, and it is in connection with Death Duties. I know that some hon. Members opposite regard these Death Duties as a most admirable form of taxation, but. I think there should be some readjustment as between Super-tax and Death Duties. Much the best way is to pay out of income by way of Super-tax than to pay out of capital in the form of Death Duties. There was a hint in this regard when the Chancellor said that they found that the Estate Duties did not realise expectations and there had been a falling off. It is only natural that people will take every opportunity of making legal evasions by transfers so long as the burden of Death Duties is so heavy. I believe he would find that he would benefit the Exchequer if he altered the distribution of the burden as between the Super-tax payer and the payer of Death Duties and amend the unfortunate mistake he made in last year's Budget. I hope that he will bear that in mind. My right hon. Friend is much more likely to see the people carrying out the law in the spirit in which it is framed and to play up to the task of carrying the national burden, if it were possible for them to pay out of income rather than to burden their successors with a burden which is very severe, not only on them and on their successors, but on employés in the country at large.
The Noble Lord who has just spoken adopted a different tone of criticism from that of the hon. Member for Oxford University (Sir C. Oman). The Noble Lord praised the Budget with faint damns; the hon. Member for Oxford University damned it with faint praise. The hon. Member for Oxford University described it as a bold Budget. I confess to having felt some amusement at that description, because, whatever it was, it was not a bold Budget. It is true that we are accustomed to picture the Chancellor of the Exchequer in the role of the bold soldier of fortune, advancing beyond the front line, taking positions which are dangerous, net only to himself, but to his comrades, who have to rescue him from awkward predicaments. But if that is his usual role he was in the very opposite role to-day. He was fighting a rear-guard action, only too glad to beat a retreat from the position of last year, willing to take advantage of every cover, dodging into shell-holes, adopting any resource if only he could return to the position in which he was at the beginning of last year, with a solvent reputation and a whole skin.
The Noble Lord made one or two references to what the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) said. He stated that it was ridiculous for the right hon. Member for Carnarvon Boroughs to state that the Budget proposals would lead to an increase of street betting, on the ground that Clarence Vere de Vere or another gentleman of that kind would not leave his credit bookmaker in order to bet with Joe Sykes or someone else in the East End. Nothing could have been further from the intention of the right hon. Member than to suggest that any individual of that type would change his habits. What he did suggest was that there are large numbers of people on the border-line, to whom it is nothing whether they bet on the racecourse or on the street corner before they go to the racecourse. If such people who go to the racecourse are to have a 5 per cent. tax levied on them, it is obvious and natural that they will bet at the street corner and save 5 per cent. on their stakes.
I assume that the people who go to the racecourse to bet do not go there because it is the easiest place to bet, but go there in order to see the horses and the races as well.
I cannot enter into an argument with the Noble Lord as to why people go to a racecourse. Some people go there to win 10s., and a small minority to get a look at the races and the horses. But those are the men who can walk about the paddock and the Royal Enclosure. I have been to the Derby once or twice and did not see much of it. However, I need not expand that topic for the moment. I did not intend to enter into a presumptuous criticism of the high finance of the Budget. I rose principally to make a protest, which I have made, perhaps very ineffectively, more than once, with regard to the efforts which are being made by the Chancellor to collect our debts from our foreign debtors. On every occasion when I have attempted to raise that subject, I have met with the most complete and chilling discouragement from every right hon. Gentleman who has had any reply to give from the Treasury Bench. The Foreign Secretary has regretted, deprecated and deplored every question that has been raised in this House, on the pretence that it will damage our relations with France. I attempted the other day to ask two or three questions with regard to the attiude of the French Finance Minister, but those questions were ruled out of order in the discretion of Mr. Speaker. I believe, however, that the wider latitude of Debate permits me to raise the questions again, and I wish to raise them now.
I wish to ask the Financial Secretary to the Treasury whether he has observed that the successive delays in the coming to this country of the French Finance Minister, which are retarding the settlement of the French debt to us, are being utilised in the meantime by the French Finance Minister and others—I do not say used illegitimately—to make the most intensive propaganda in favour of the French point of view and adverse to the British point of view. I have received two or three pamphlets of various kinds which set the point of view of our foreign debtors, whereas nothing is set out from our own point of view. The French Finance Minister, in addressing a meeting of American hotel keepers in Paris only a week ago, said that France was paying as much as 130,000,000 dollars a. year for War debts. I hope we shall have some explanation as to where that money is going. The one thing certain is that none of it is finding its way into our Treasury. He also insisted, in the most extravagant language, on the absolute necessity to fare serve the Safeguard Clause in all arrangements which might be entered into with this country. I hope that all these statements will not be allowed to go by default. Not only the statements of the French Finance Minister, but the Debates in the French Chamber, are intensive propaganda in favour of the French point of view. Similarly in the French Press; it is full of statements resenting any attempt by this country to collect its debt from France.
Only a few weeks ago two ex-Ministers of the French Government, one an ex-Minister of Finance and the other the rapporteur in the French Chamber, held a great public meeting in Paris, at the end of which, when all the speeches had been made, it was not France that owed £650,000,000 to us but we who owed £40,000,000 to France. That sort of thing creates a psychological reluctance to pay, not only in the mind of the French Government, but in the mind of the French taxpayer. I consider that the Chancellor of the Exchequer and the Foreign Secretary, if they allow all those statements to go unchallenged, are guilty of negligent custodianship of the public purse of this country, and ought to he censured for not taking more active steps in the matter. I am not asking that we should make all kinds of repartees against what goes on in the French Chamber. I know that if we were to enter into a kind of reciprocal invective against everything that is said there, it would not promote good relations. But I am asking that no attempt should be made by the Foreign Secretary or the Chancellor of the Exchequer or anyone else to interfere with freedom of speech and liberty of discussion. If we want to criticise the French Government, and the French attitude, especially in this matter, we ought to have the liberty to do so. I consider that freedom of speech, which has been won after such a hard struggle, and occasionally by force in this House, ought riot to be relinquished by persuasion from the Chancellor of the Exchequer or the Foreign Secretary or anyone else. In the long run, if we allow this spirit to guide our relations with foreign Powers, our friendship with them will degenerate into servility and we will lose not only their respect but their friendship.