We are able this afternoon to discuss the financial statement in a calmer atmosphere than that which was generated by the fervid eloquence and the studied rhetoric of the Chancellor of the Exchequer yesterday. I shall not attempt to emulate the style of that speech. I should be a dismal failure if I even attempted it. The discussion of a series of financial questions, involving hundreds of millions of the taxpayers' money, ought not to be undertaken in a spirit of buffoonery, and jokes are no substitute for serious argument. I ventured to predict yesterday that the reception of the Budget in the country and in the Press would be very different from its reception by the right hon. Gentleman's supporters behind him. That forecast has been amply fulfilled.
I have to-day indulged for a few moments in a pastime which does not often occupy me, by reading the leading Tory newspapers of this morning. Not one of them is in the least enthusiastic about the right hon. Gentleman's Budget. All kinds of descriptions have been given of it. The right hon. Gentleman began his speech yesterday with a review or retrospect of his five years' tenure of office. I am able to emulate the right hon. Gentleman in that respect, but I am afraid that my review of his financial record will bear a very different complexion from the one which he gave yesterday. As the old saying goes, "One tale is good until another is told." The right hon. Gentleman admitted that his career had been somewhat chequered, but that, of course, was not his fault. It was his misfortune. If the Tory Government had not provoked the coal stoppage and the General Strike, what a happy time the Chancellor of the Ex- chequer would have had! I am convinced that the last words which the right hon. Gentleman will utter will be "General Strike," and I am sure that the post mortem will reveal those words engraved upon his heart.
Now I turn to his review. He made four claims—improved trade, higher spending power among the people, increased savings, and more employment. I take those four claims. First, in regard to trade, the right hon. Gentleman was answered by his colleague of the Board of Trade four days ago. The President of the Board of Trade reported that the value of our exports last month was 9½ per cent. lower than in the corresponding month of last year. So much for that claim. The right hon. Gentleman made no mention of the number of unemployed. He repeated what has been said so often by Tory speakers, that there are more persons employed to-day than was the case four years ago. The right hon. Gentleman himself answered that point yesterday when he told us that there had been an increase of 1,000,000 in the population in those years, and the further fact might be noted, that in those years 1,500,000 children have left school seeking-employment in the industrial market. But this truth cannot be denied, that a larger proportion of the would-be industrial poulation is unemployed to-day than was the case four years ago. [HON. MEMBERS: "No!"] I will give a perfectly fair comparison. In September 1924, that is just about the end of the Labour Government's term of office, the number of unemployed was 1,205,000. On the corresponding date in September 1928, the number was 1,343,000. But, as everybody knows, those figures are not strictly comparable. The Minister of Labour has admitted that tens of thousands of men who would have been included in the unemployment figure five years ago, or four years ago, are not so included in the register of unemployed.
Now what about wages? In 1924, weekly wages rose £554,000. I do not mean that they rose by that figure every week. In 1928, there was a decrease of £142,000 per week. So much for one point in the right hon. Gentleman's claim. He said that another indication of increased prosperity was to be found in increased savings, and he made special reference to the figures of the Savings Certificates. The right hon. Gentleman was unfortunate, because a few minutes later we were provided with the white Financial Statement. That statement shows that more money was withdrawn last year from Savings Certificates than was actually put into Savings Certificates. The total figure which the Chancellor gave included building societies—that item being, by far, the largest item in the increase which he claimed. What is the explanation? Everybody knows that the explanation is that, owing to the failure of the Government to provide houses to let, people have been compelled to make sacrifices which they could not afford, by acquiring houses through those institutions—admirable institutions when people can afford to use that means—namely, the building societies and co-operative societies.
There were one or two other indications mentioned by the right hon. Gentleman to show the prosperity of the last five years. He cited the increased consumption of tea as a proof, but that claim cuts both ways, and he himself put another construction upon that matter when speaking about the reduction of the Tea Duty. That is a matter which enters Very largely into the expenditure of the very poor, but an increase in the consumption of tea may mean increased poverty rather than increased prosperity, because it may mean that people may be turning to tea, which is one of the cheapest commodities. Now, in regard to sugar, another indication of increased prosperity, I notice that the right hon. Gentleman this year is estimating for a reduction of £3,000,000 in the Sugar Duty, which is not by any means wholly accounted for by the bargain that he made with the sugar refiners last year.
Having dealt with these things, I will pass on to other points in the right hon. Gentleman's speech. He said that he hesitated to mention economy. I do not wonder. It is a painful thing to me, loving the right hon. Gentleman as I do, to have to remind him of the pledge that he made five years ago. He was going to reduce expenditure by £15,000,000 a year. [Interruption.] May I remind hon. Members once more of the terms of that pledge or aim? He was going to save £10,000,000 a year on the Supply services and £5,000,000 a year certain upon the Debt services, or £15,000,000 a year altogether. In 1924, calculated upon the new basis, the total expenditure was £730,000,000. This year it is £742,000,000, but on an average over the last four years it has been £26,000,000 a year more than the total expenditure of 1924. Of course, the explanation is the General Strike! If the right hon. Gentleman's aim and pledge had been carried out, the total expenditure this year, instead of being £742,000,000 would have been £670,000,000. Therefore, he is £72,000,000 below his aim and pledge. He said yesterday that it is easy to get popularity by huge expenditure. If that be so, the right hon. Gentleman ought to be the most popular man in the country.
He said that one great economy had been upon armaments. Let us test that by hard figures. In 1924—that is the year by which the right hon. Gentleman always makes his comparisons—the total expenditure upon armaments was £114,700,000. Now the estimate, which is a different thing from actual expenditure, this year is £114,610,000, or £41,000 less; and the average for the four years has been £116,759,000. In the Army Estimates—and the same thing applies to the other Service Estimates—there is a reduction this year, in wages and fuel, of about £550,000. Now the average expenditure upon the Fighting Services over the years of the right hon. Gentleman's tenure of office has been £2,000,000 more than the expenditure in 1924, and we have to remember, because he himself emphasised this point strongly yesterday, that there has been a fall in world prices during that period, but that has not reflected itself in the total expenditure upon the Fighting Services.
I come to the Debt charges, and let the Committee remember the £5,000,000 a year promised reduction. In 1924–25, it was £312,000,000; last year it was £311,500,000, or practically the same figure, but during four years it has averaged £2,000,000 a year more than the figure of 1924–25. If the pledge of the right hon. Gentleman had been redeemed, the figure last year, instead of being £311,000,000, would have been £292,000,000. Now take the Debt. The right hon. Gentleman told us yesterday that £75,000,000 had been paid last year in the reduction of Debt. I find in this White Paper that the total net National Debt, deducting the bonds held by the National Debt Commissioners, at the end of March was only £27,000,000 less than in the preceding year. So much for the right hon. Gentleman's record in the sphere of economy. Well may we say to the right hon. Gentleman that we have had "disillusionment in our time."
I now come to the Estimates for this year. There are not many items about which I make any complaint, except the interest on the Debt, with which I will deal at some length a little later. I think the right hon. Gentleman is taking a great risk in his estimate of the yield of Death Duties during the coming year, but I hope his estimate will be realised, because it means a great deal to us. I feel very confident that he has overestimated the yield of the Stamp Duties. Last year was an exceptional year for Stock Exchange transactions and new issues. During the last few weeks, I understand, the stock markets have been very much depressed, and there is certainly a falling off, judging by the advertisements of prospectuses which appear in the Press, in new issues, and I shall be very much surprised if, at the end of the year, the right hon. Gentleman realises his estimate of the yield from Stamp Duties.
There is something rather remarkable and somewhat difficult to understand in the falling off in the yield of the Super-tax and the increase in the Death Duties, because there ought to be a relation between these two things. If the Death Duties are increasing, the Super-tax class are getting richer, and it ought naturally to follow that there should be an increase in the Super-tax revenue. I have always had the impression that somehow or other the people who ought to pay Super-tax find some means of evading their full liabilities, and I suggest that this is a matter into which the Commissioners of Inland Revenue ought to look very closely. The right hon. Gentleman yesterday deplored, from the Revenue point of view, the falling off in the consumption of beer—he welcomed it, of course, because of the social advantages which it might bring—but I notice that he is estimating for an increase in the Beer Duty this year of £3,000,000. What is the explanation of that? I can only suggest one explanation, which is probably the correct one. There is to be a General Election, and the right hon. Gentleman has no doubt estimated that the free beer given by Tory candidates will bring in an additional revenue of £3,000,000. That represents 36,000,000 gallons of free Tory beer.
I must turn to a very important, and I am afraid rather dull, part of the Financial Statement; that is, the Sinking Fund. The most serious feature of last year's financial transactions was the treatment of the Sinking Fund and the provision for interest on Debt. The right hon. Gentleman's tenure of office has been characterised by many discreditable transactions, but by none so bad as the treatment of the Debt problem. He said yesterday that borrowing was good fun so long as it lasted—
Spending and borrowing. [HON. MEMBERS: "No!"] Well, the right hon. Gentleman must have had a great deal of fun in spending borrowed money. He said yesterday something about there being two ways of spending—spending money that was raised by taxation, and spending money that was borrowed. The right hon. Gentleman has used a third method, that of spending money that was stolen. Every time the right hon. Gentleman has raided the Sinking Fund, he has prefaced his remarks—
I did not submit the right hon. Gentleman during his speech to a running fire of interruption, but I can quite understand it; the right hon. Gentleman is not enjoying the fun of it just now. He has prefaced every raid upon the Sinking Fund by platitudinous talk about the importance of maintaining national credit. Yesterday, he said that no Government would ever think of doing anything that would injure national credit. Now he claims to have had a surplus last year of about £18,000,000. Let us look into this. Fortunately, I am relieved from applying my own description to the method by which he achieved this fictitious surplus by the description given to these methods by the leading Tory journal, the "Times," which described it as "concealed burglary and open robbery." That is very strong language to appear in the leading article of a newspaper which, I understand, circulates in every Tory rectory in the country. The circumstances fully justify that description. The fact is that the right hon. Gentleman last year had no surplus at all. He had a substantial deficit judged by every test of sound finance.
Last year he introduced his new method of a fixed Debt charge. He did so because he said the old system was unscientific, and it was open to an unscrupulous Chancellor of the Exchequer to raid the Sinking Fund. Last year, he gave us to understand quite clearly in his Budget speech that he intended that year to follow the practice of applying a fixed sum for Sinking Fund purposes of £65,000,000, but it was only the persistence of my hon. Friend the Member for West Leicester (Mr. Pethick-Lawrence) which drew from the Secretary of State for War, when he was substituting for the Chancellor of the Exchequer, that that was not the intention, and that the total sum of £369,000,000 was to cover both Debt interest and provision for the Sinking Fund. He claims to have provided £57,500,000 last year for the Sinking Fund. I give this point to the Chancellor: Last year the interest on the Savings Certificates was £18,000,000, about £5,000,000, I believe, more than was estimated. Why was the estimate £5,000,000 less? There is no justification for it. It is known quite well that upon the Savings Certificates which are now being surrendered there is a much larger amount of interest. Therefore, it was only reasonable to expect that the Savings Certificates surrendered last year would exceed the total of the previous year. Now the right hon. Gentleman estimated for a total debt reduction of £78,000,000 including the interest upon the Savings Certificates, but he has only achieved something like £75,000,000. He estimated there would be £7,000,000 to the Sinking Fund for Savings Certificates. That has not been done. Probably the amount is not more than £2,000,000, because last year the Savings Certificates required for interest £18,000,000. We must deduct from that £57,500,000, £13,200,000 which the Chancellor took from the Currency Reserve Account, which was already in the Sinking Fund, and he had also £6,000,000 Dominion Debt repayment which, in an invisible way, has gone to pay Debt interest; and £2,000,000 for liquidation of the Sinking Fund from Savings Certificates. Therefore, we have to deduct from the £57,500,000 this figure of £21,000,000, and it therefore brings down the figure of £57,500,000 to £36,500,000, and that is all that the right hon. Gentleman provided last year for the Sinking Fund, which was £14,000,000 less than his obligations for the Sinking Funds attached to particular debts. He has not provided within £20,000,000 of the Baldwin Sinking Fund, £50,000,000, and, with the invisible Sinking Fund, £56,000,000. He has not come within £20,000,000 of that figure, and he has not provided within £13,000,000 for his obligations to the Sinking Fund which is attached to these specific loans. He himself said last year that the Currency Reserve was obviously a fund that could not be used for present purposes. He took that out of the Sinking Fund, put it into revenue, spent it on current expenditure and then called it a surplus.
The truth is that last year, as I have said, he had a deficit, that is, he had a deficit on the year out of genuine revenue. As a matter of fact, in every one of his Budgets except the first he has had a real deficit. In two of these Budgets he admitted a deficit of over £50,000,000, and he has had a deficit concealed in every one of his other Budgets. It is no wonder that the interest on the Debt does not fall. It is no wonder that the right hon. Gentleman cannot convert except at a higher rate of interest than five years ago. This is the fourth year in succession in which Debt interest has considerably exceeded the estimate, and this year by something like £7,000,000. There is a further point. Last year the right hon. Gentleman took Parliamentary powers to prevent surpluses from going, as they ought to have done, into the Sinking Fund. That was £22,000,000. He put that into the suspensory account to provide for the de-rating scheme. He seems to think that he is providing by the Petrol Tax for his de-rating scheme. He is doing no such thing. That has gone to pay for the ordinary expenses, and he proposes to finance the de-rating scheme the first year or so by these two raids upon the Sinking Fund. The effect of this upon national credit will be that it will do far more damage to the industry of the country than any good that can be reasonably expected by the operation of the de-rating plan.
I come to the provision for Debt redemption. Not warned by the experience of the last four years, the right hon. Gentleman is only estimating for £304,500,000 for interest and redemption of the Debt. Instead of regarding this fixed Debt charge as a unit in the financial statement, he has divided it into Debt, Interest and Sinking Fund. Is it reasonable to expect that the amount to be provided for Saving Certificates this year will be less than it was last year? Last year it was £18,000,000. Taking that from the £304,000,000, you get only £286,000,000 for interest upon the Debt, and last year, according to the statement made by the Secretary of State for War, the interest charges were £293,500,000. Is it reasonable to expect that the interest upon the Debt is going to be less than it was last year, that is, £7,000,000 more than the sum he is estimating? There is not a man on the Government side of the House, there is not a financial authority in the country and there is not a man in the City who believes that the interest on the Debt this year will not be more than the figure for which the right hon. Gentleman has estimated. Let it be remembered that the increased rate on Treasury Bills operated only for two months of the last financial year. Do we expect a reduction in the Bank Bate during the next few months? If the present Bank Rate operates during the whole of the present financial year, the cost of the Floating Debt will be more than £6,000,000 more than it was last year. Really, I must protest against the right hon. Gentleman carrying on a conversation.
I deeply regret if I have incommoded the right hon. Gentleman, but occasionally when he makes what he considers an important and searching criticism, some comment must be passed and some comment has always been permitted between Ministers sitting on this bench. [Interruption.]
I am sorry if I have incommoded the right hon. Gentleman. It was not on account of any want of attention to his remarks. It was on account of the closeness of the attention of the Secretary of State for War, who will presently reply, that he asked me a question, and I was following with the closest attention the speech of the right hon. Gentleman. I greatly regret if the half-muttered colloquy—[An HON. MEMBER: "Half-muttered!"]—Pardon me, but I have been in this House 30 years, off and on, and I have never known objection taken to reasonable colloquies between Ministers on the Front Bench. Certainly, no discourtesy was intended to the right hon. Gentleman and, if the conversation became too loud, let me express my regret. But do not let us be tyrannical about it, because we are not always treated with the most impeccable courtesy from the other side.
I have not the least objection to an occasional conversation between Ministers opposite, but there has been hardly a single moment since I have been addressing the House that the right hon. Gentleman has not either been making muttered interjections to myself, or talking with his colleague, and if, at the same time, he has been paying close attention to what I was saying, I wish he would take some other way of indicating his attention. I was dealing with the probabilities of money rates during the coming year, and I pointed out that there is no reasonable expectation that they will be less than they are at the present time. The right hon. Gentleman's policy increased the amount of the floating Debt last year by £48,000,000, involving increased interest charges during the present year. The right hon. Gentleman himself said yesterday that a change in money rates might easily upset a Budget by £20,000,000. It is perfectly preposter- ous for him, after the experience of the last four years, and in view of the fact that interest charges were £311,500,000 last year, when the rate of Treasury borrowing was 1 per cent. less than the last two years—it is almost an insult to the House of Commons to put down a figure £7,000,000 less than last year. If the right hon. Gentleman had provided a reasonable estimate of interest charges during the current year he would not have had a surplus at all. As a matter of fact, he has not got a surplus; he has only got this fictitious surplus of £10,000,000 or £11,000,000 by underestimating what the Debt charges will certainly be during the current year. Of course, it was necessary for the right hon. Gentleman to make a pretence of having a surplus. It was necessary for Election purposes that he should be able to provide some remission of taxation without any consideration at all as to what the ultimate consequences would be. His remissions of taxation are not made out of a genuine surplus; they are simply another raid upon the Sinking Fund.
Turn again to his own account of his record during the last four years—economy, increased taxation, no reduction of Debt, no reduction of interest. But that by no means exhausts the right hon. Gentleman's record, and I want very briefly to refer to one matter, about which not enough is being said, and that is the right hon. Gentleman's debt settlements with our continental debtors. No more scandalous transaction has ever been carried through by a British Minister. I know I shall carry with me the silent sympathy of Members on the other side of the House. They will not express it, but I know that many of them are quite as indignant as we are about these transactions. What has the right hon. Gentleman done? Take France—and there was only about one statement in the right hon. Gentleman's speech yesterday with which I heartily agreed, and that was his reference to the financial policy of many of the Continental Governments. Talk about Russia having confiscated property! They have done no worse than France has done. France has repudiated four-fifths of her national debt, and many British people who patriotically lent to France during the War have been practi- cally ruined by France "bilking" her national obligations. During these later years France has been the most prosperous country in Europe. Industry is flourishing; there is no unemployment. It was with a country like that that the right hon. Gentleman made his shameful settlement. On a total debt, at the time, of £653,000,000, the total annuities will amount only to £799,000,000.
It is not that the right hon. Gentleman could not have made a better bargain. America did. What are the terms of the American-French agreement? Contrast them. France's debt to America was £800,000,000 and the annuities under the agreement amount to £1,359,000,000—the payment of the whole capital debt and £659,000,000 of interest. If the United States could get that, why did not the right hon. Gentleman get it? Take the case of Italy, which is worse still. The right hon. Gentleman has commuted her debt of £610,000,000 for a total sum of £270,000,000 in annuities. What about the United States settlement with Italy? If Italy and France could afford to pay the United States, they could afford to pay us, because we have done for France what the United States did not do. If it had not been for British help, financial and human, France would not have been an independent country to-day. Yet take the American settlement with Italy. Our settlement is £270,000,000 for a debt of £610,000,000; the United States settlement on a debt of £420,000,000 is that Italy has to pay, over 62 years, a total in annuities of £490,000,000.
The total debt which has either been ratified or agreed to or funded is about £1,500,000,000. We are paying interest upon this. Our taxpayers have to pay taxes upon the whole of that debt—5 per cent. interest. The right hon. Gentleman has commuted all these debts for an annual payment of £20,000,000. We are paying £37,000,000 a year to the United States, a burden which the late Mr. Bonar Law said would put the people of this country in bondage for a generation. Perhaps the worse feature of all in the agreements which the right hon. Gentleman has made is this: that if ever we get more from those annuities and German reparations than our payments to the United States we have to reduce the amount of the annuities to be received from our Continental debtors. We have never subscribed, let it be remembered, to the principle of the Balfour Note. I think that was an infamous Note.
The Labour party. Certainly we did not. And we should hold ourselves open, if the circumstances arose, to repudiate the conditions of that Note. [Interruption]. Certainly we should.
I am sorry to interrupt the right hon. Gentleman, but that is a very serious expression, because the principles of the Balfour Note have been embodied in the agreements which have been made between us and France and between us and Italy, and I think it is a very dangerous thing for the right hon. Gentleman, who tells us that he has expectations of holding high office in the future, to utter a word like that in regard to engagements which have been definitely entered into between this country and foreign countries. It might endanger, I may say, the payments which are even now being made and on which we are counting this year.
Does the right hon. Gentleman then maintain that an agreement which is made by a Government supported by a party which happens to have a temporary majority in the House of Commons commits every other party in the State to the confirmation and the acceptance of that agreement in the future? If that be so, it is a doctrine to which I cannot subscribe. The right hon. Gentleman said just now that there may be a danger that these annuities will not be paid. Let me remind the right hon. Gentleman that France has not yet ratified this agreement. It is not a definite settlement; it is not a settlement at all; it is simply a temporary arrangement. Sooner or later it is bound to come up for further consideration. I have only this further thing to say on this point, that if the right hon. Gentleman had made the same settlement with our debtors as America has made with her's we should have been getting £50,000,000 a year instead of £20,000,000.
Before I pass to deal briefly with his proposed tax changes, I want the House to remember how he got his alleged surplus. He had no money to give away. His confession yesterday about his re- mission of Income Tax five years ago was extremely interesting. He then gave away money he could not afford, in view of the expected expenditure, and that has been an embarrassment to him ever since. He is doing the same thing now—but unfortunately the embarrassment will not be his but somebody else's. But there is no doubt at all that he has no revenue to give away. As I said just now, his proposed remission of £6,000,000 or £7,000,000 a year is another raid upon the Sinking Fund. Let us take, first, the Tea Duty. It is high time the Chancellor of the Exchequer did something for the women, because in practically every one of his previous Budgets he has laid additional taxation upon them. This, therefore, is a death-bed repentance. It is an electoral appeal which, I am quite sure, as I said yesterday, will not achieve the purpose in view. When Members opposite are telling their constituents about the reduction of the Tea Duty I hope they will, at the same time, tell them about the £38,000,000 a year of indirect taxation which has been imposed upon the people during the last five years. It is incumbent upon hon. Members opposite to do that if they tell the whole truth. Now we, of course, welcome, even when it comes from the party opposite, this reduction of the Tea Duty—[Laughter.] Well, surely, I am as much entitled as any man in this House to say that. If we had remained in office for another year and if in the ordinary course of the fluctuations of political fortunes the party opposite had come in there would have been no Tea Duty for the right hon. Gentleman to remove now.
That would not have been done within a month of a General Election. I pass to the relief given to the farmers. The Tory party are evidently apprehensive of the revolt of the farmers and land-owners, and are trying to do something to stop the stampede. I noticed that one of the newspapers this morning had a list of the people who were dissatisfied with the Budget, and I should like to add one other to that list. What is productive industry going to say about this? Why are our manufacturing trades not to enjoy an advantage similar to that given to the agricultural interest? For some years now the agricultural interest has had the relief of rates which is to be given to ordinary productive industry when the scheme comes into operation.
At this point, it might be of interest if I referred to another statement in the right hon. Gentleman's speech when he was speaking about the McKenna Duties and the duties on artificial silk yarns. The right hon. Gentleman thought, no doubt, that it was necessary to say something upon that matter in view of the demands which have been made by his protectionist colleagues, but I am sure that the Chancellor of the Exchequer did not believe a word of what he said on that subject. [HON. MEMBERS: "Oh, oh!"] In the last two Budget speeches which the Chancellor of the Exchequer made he said the very opposite. Of course, that was before he had been called over the coals for giving expression to his free trade views. It was the right hon. Gentleman himself who said that the imposition of a duty on artificial silks had intercepted a fall in prices. It was the Chancellor of the Exchequer himself who said that the McKenna Duties upon motor cars were not to be taken as evidence in favour of protective duties because the artificial silk trade and the motor cars trade were new industries. The right hon. Gentleman made a great deal of the argument about the expansion of the artificial silk trade during the past three or four years. Why did he not deal with the expansion of the silk industry before the duties were imposed? Why did the right hon. Gentleman not tell us that Courtaulds gave £18,000,000 as bonus shares out of profits to their shareholders before those duties were imposed, and they did this on a subscribed capital of only £2,000,000.
The right hon. Gentleman cannot have followed what I said. The Chancellor of the Exchequer spoke about the expansion of the silk trade since the duties were put on. I am speaking of the expansion of that trade during Free Trade years. During those years Courtaulds were able out of their profits to present their shareholders with £18,000,000 of bonus shares.
May I remind the Chancellor of the Exchequer that there is some relation between profits and the volume of trade.? What have these Silk Duties done? Take the case of Courtaulds. The right hon. Gentleman said that Courtaulds were in a protected market, but what has been the effect of that? The result has been that in March of this year the price of artificial silk yarn, of which Courtaulds have a monopoly, was 50 per cent. more than the price of a similar yarn in continental markets.
No, it is the same quality. The Government have now realised that their doles to the brewers under the De-rating Act are not likely to prove good electioneering tactics, and the Chancellor of the Exchequer has tried to repair that mischief by giving us a still more popular appeal. I can imagine an interview between the Chancellor of the Exchequer and the brewers in which the right hon. Gentleman would say to them, "We are having an awful time about this de-rating relief which is coming to your industry. It is having a bad effect upon the chances of Conservative candidates in the constituencies, and something must be done." Then I can imagine the right hon. Gentleman submitting his proposal to increase manufacturers' licences. After that I can imagine the brewers saying to the right hon. Gentleman: "We have always been the best friends of the Tory party. Can you not do something better than that for us?" Then came the second suggestion made by the Chancellor of the Exchequer for a reduction of £1,000,000 a year in the licence duties.
There are three relationships between the brewers and the licensees or managers of public-houses. The first one is very common in cities like Liverpool and Birmingham, where it is the practice to put in a manager who is simply the agent of the brewers. On this question I can speak from my own experience when I was in the Inland Revenue service. At that time these licences often passed through my hands, and I know that when a new manager came in he had to sign an agreement securing the transfer of the licence, and this was held by the brewers, who had power under the agreement to give the manager a week or a fortnight's notice, and then they would apply to the magistrates for a transfer of the licence. In that case the whole of the relief which is proposed by the Government would go to the brewers.
Let me take the second case, which is quite common. It is an arrangement between the licence holder and the brewer, providing that the Licence Duty is to be divided between the two in the proportion of half and half. In those cases, half the relief from Licence Duty will certainly go into the pockets of the brewers. In the third case, the licence holder is more or less a bona fide licence holder, and he pays the Licence Duty himself. When that licence holder takes a house, he calculates the rent and he adds to it the Licence Duty. Consequently, in the case of a new tenancy it is quite certain that the whole of the relief will go into the pockets of the brewers. Therefore the plan of the right hon. Gentleman really means that he is taking £400,000 from the brewers and compensating them by a gift of £1,000,000. I would suggest that these facts and these truths should be made the main subject of another Tory electioneering placard.
The right hon. Gentleman has stated that the Betting Duty has proved to be a fiasco. He suggested that I should read some of my former speeches. I would suggest that the Chancellor of the Exchequer should read some of my old speeches on the Betting Duty. I understand that the motive of the right hon. Gentleman in repealing the Betting Duty is not that it has been a financial fiasco, but is entirely altruistic, and that the right hon. Gentleman wants to save the Labour party from being exposed to the moral contamination of the betting fraternity. I think that would be a much more natural association for the Tory party. I think I said yesterday all that need be said about the bare-faced bribery of these Budget proposals. I repeat that the Government are taking the taxpayers' money and using it for Tory electioneering purposes.
The Chancellor of the Exchequer concluded his speech yesterday by a summary of his record during the last four years, and I will do the same. In his first Budget, the Chancellor of the Exchequer squandered the surplus which he had inherited by lavish gifts to his own special favourites. In every succeeding Budget, the right hon. Gentleman has imposed new taxes or increased old taxes. He has imposed more new taxes than any other Chancellor of the Exchequer during the last 80 years. The right hon. Gentleman has added indirect taxation which was estimated to yield £38,000,000 a year. In his first Budget speech the Chancellor of the Exchequer estimated for a reduction of annual expenditure amounting to £15,000,000, but he has added to that expenditure an average of £26,000,000 a year. The Chancellor of the Exchequer has raided every national reserve he could lay his hands on. He has robbed the soldiers and the sailors of their sick and disablement pay; he has taken away a considerable sum from the thrifty savings of insured people under the National Health Insurance Act, and he has reduced State benefits for the unemployed. In addition to this, the Chancellor of the Exchequer has raided the Road Fund and diverted from that Fund £4,000,000 a year to ordinary revenue. He has also taken £13,000,000 from the Currency Note Reserve, and about £6,000,000 from the invisible Sinking Fund for current expenditure.
By a hasty return to the gold standard, the right hon. Gentleman has raised the cost of Treasury bonds, and the cost of all commercial borrowing. In these circumstances, it is no wonder that there have been practically no savings on conversions. In some cases, conversions have been made at a higher rate of interest, and in every case at a much higher rate of interest than was possible five years ago. The right hon. Gentleman has never provided a Statutory Sinking Fund out of revenue, and, in every year he has had an admitted or concealed deficit. This brief summary of the right hon. Gentleman's record should provide material for another Tory placard. Financially, the right hon. Gentleman's career of profligacy is coming to an end. He will leave as a legacy a very bad inheritance to whoever succeeds him. It will take years of careful husbanding to bring back the nationtal finances to a condition of soundness and stability. His dismissal from the stewardship he has abused will be hailed with relief by people of all parties, and all who have some regard for sound and just taxation and for honest finance.
Yesterday afternoon, the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) said that no one enjoyed his own rhetoric so much as my right hon. Friend the Chancellor of the Exchequer. I think that perhaps it would not be an unjust reflection to say that nobody enjoys his own acidities so much as my right hon. Friend's predecessor in his office. I sometimes wonder whether the right hon. Gentleman the Member for Colne Valley feels all the things that he says, and whether his sentiments are quite so bitter as the words which he uses to convey them. His speeches remind me very much of a conversation that I once heard when I was coming out of a Scottish Church in the country, where the clergyman had been threatening the wicked with the most appalling consequences in the way of torture. I heard two old ladies conversing, one of whom said to the other, "What do you think was wrong with that minister this morning?" The other said, "I just think he did not like the look of us." I sometimes wonder whether the attitude which the right hon. Gentleman the Member for Colne Valley uniformly takes in all these Debates is due to the fact that he is so perturbed by the appearance of the people who sit opposite him. Whatever the real reason may be for the venom which he customarily displays, I would venture to assure him, reversing what he said with regard to my right hon. Friend, that we enjoy it just as much as he does, and that an exercise which appears to give him so much pleasure does not do us one single whit of harm.
If the success of my right hon. Friend's Budget were to be measured by the gloom which descended upon the benches opposite in the course of yesterday afternoon, I think we should be able to describe it as a personal triumph for my right hon. Friend; and, indeed, I think it was so, because, at a time when he had very little money with which to make changes in the financial arrangements of the country, he has succeeded in bringing a relief, of which the right hon. Gentleman opposite is very jealous, to the poorest part of the community, in the taxation on a commodity which they very much use—a relief which he admits that he himself would have liked to give. My right hon. Friend has brought accelerated aid to agriculture, he has given some help to employment, he has increased the chances of business by improving the facilities for communication in the country by telephone, he has made at least a commencement in the improvement of the equipment in connection with our transport system; and, taken by and large, to have been able to do all these things—each of which in itself is of benefit to the country—upon the narrow margin within which my right hon. Friend has had to work, is an achievement for which I think the country is in a position to thank him.
May I just in a few words refer to some of the elements in the Budget which, as it seems to me, deserve our commendation? In the first place, with regard to agriculture, that is a depressed industry which very much requires any aid that it can get from the State, and my right hon. Friend has succeeded in accelerating the relief which he proposes to give to it. I quite agree with the right hon. Gentleman the Member for Colne Valley that it is a misfortune that steps were not taken at the same time to accelerate the relief to industry as a whole, but the Committee will readily understand, so far as these reliefs are concerned, that, so long as proper discrimination had to be made between the classes of hereditament which came under the relief, it was impossible to accelerate the relief; and, accordingly, while we may regret that industry is not receiving the benefit of these reliefs at the present moment, we must recognise that the situation cannot be helped.
In the next place, while the right hon. Gentleman the Member for Colne Valley chooses to make gibes about the Betting Duty, I think it is very obvious what were the motives which animated the Chancellor of the Exchequer in cancelling that unfortunately unsuccessful Duty. I was one of those who supported the Betting Duty, but I was always sceptical of the method which had been taken for the purpose of imposing it, and, if my Budget speeches for the last few years are looked at, it will be found that I always predicted that the turnover tax would prove so unjust that evasion would constantly take place. Of one thing I am certainly assured, with the Chancellor of the Exchequer, and that is that this tax has proved a failure upon such a basis; and, when you have an acknowledged failure, why should one be so dishonest as to keep it going? The Chancellor of the Exchequer, in my view, took the right line in abandoning that tax and turning to a system which will put some taxation upon an admitted luxury, but, at the same time, a form of taxation which can be properly enforced.
Turning to the Motor Duties, it is a great advantage, as it seems to me, that some remission of taxation should be given in the case of commercial vehicles, but I would like to make a plaint, which I have uttered in this House before, to the effect that I am convinced that our system of motor taxation in this country at the present time is established upon an entirely erroneous basis. The tax upon power is one which works against our success in the markets of the world, and I hope that at some time or other it will be found possible for a system of taxation which, at the present time, robs us of enormous industrial activity, to be so changed as to give us an opportunity of competing an equal terms with our rivals in the world's markets.
The concession made in respect of telephones will be of enormous advantage to the State, because it will increase the business of the country. I noticed yesterday afternoon, when my right hon. Friend was talking about giving a concession to telephone users, although, in fact, it did not yield a profit, there was a suggestion from the Socialist Benches that in some way or other that was applying the Socialist point of view, that it was something which only a State system of Socialism could adopt. But everyone who has engaged in private enterprise knows that not every branch of your business pays, and that you carry on many branches at a loss, taking the view that on the general turnover you are going to make a profit, and the carrying on of the branches which you may operate at a loss is very often an advertisement for your whole system. Accordingly, it does nothing to redound to the credit of a national organisation that telephones should be put in various places where they are not expected to pay.
Let me take as an illustration a great enterprise which is known to all of us, and which has been discussed in this House in quite recent times—the London General Omnibus Company. Everyone knows, or ought to know, that that company runs omnibuses on a very large number of routes at a loss, in order to supply a transport system which will justify its existence in London, and in many other cases private enterprise is carrying on in the same way branches which may not operate at a profit, but which are of benefit to the country. The concession to the railways is the commencement of a re-equipment of those great organisations in our transport system which also will be of benefit to the community at large.
Coming to the last of the detailed matters mentioned by the right hon. Gentleman the Member for Colne Valley, the Tea Duty, I think it is recognised in every part of this House that the benefit which is to be given to the citizens of the country at large by a complete remission of the Tea Duty is one that will operate for the benefit of the country, and is one to which no party will be found to take exception in the Lobby. In connection with that matter, I should like to take up a point which the right hon. Gentleman suggested in regard to what he thought, apparently, was too light taxation upon Super-tax and Income Tax payers. I would venture to point out to the Committee that in the older days Chancellors of the Exchequer used to attempt to keep a more or less even balance between direct and indirect taxation, and, in the year before the War, direct taxation amounted to 48 per cent. of the full amount collected in revenue, while 52 per cent. fell upon the indirect taxpayer. That position has for some years been completely reversed, and the direct taxpayer was last year paying 58 per cent., as against 42 per cent. paid by the indirect taxpayer. Now, with this relief in the shape of the abolition of the Tea Duty, the direct taxpayer will be bearing 60 per cent. of the taxes of the country, and the indirect taxpayer only 40 per cent.
I should imagine that in these circumstances it will be admitted that the direct taxpayer is bearing his full share of the burden of the country's taxation. That point is reinforced when it is realised that, of all the people who are outside the exemption limit for Income Tax, more than half are relieved from taxation at the present time, and that, while there are 27,000,000 voters now on the registers of this country, more than half of the full taxation of the country in every shape and form is borne by 2,250,000. More than that, if you analyse the figures still further, you will find that there are not quite 100,000 people who have incomes of over £2,000 a year. Consideration of these figures, I am sure, must bring it home to the minds of all of us that the burden of taxation is certainly being put upon the backs of those who are able to bear it, and that indeed a very large portion of our population are being relieved of a burden, which would naturally fall upon them, by a very few members of the community.
What are the criticisms that are made against my right hon. Friend's Budget? It has been suggested to-day, though it is not quite germane to the topic of this immediate Budget, that in some way or another he has made a bargain with France and Italy which is to the detriment of our interests. I am surprised to hear any person who has been in a responsible position at the Exchequer, and hopes to be there again, making the attack that was made upon these settlements to-day by the right hon. Gentleman the Member for Colne Valley. It has been the attitude of this country steadily throughout the last few years that we were not going to exact more from our debtors than would enable us to pay our debt to the United States, and up to now I have never heard that view challenged from any of these benches. Not only that, but, as I understood the attitude of the Labour party, which now seems to be shopping and changing from day to day, they were in favour of a complete remission of all debts and considered that our position ought to have been the magnanimous one of saying that, whether we collected any debts or not, we were going to let off those who were indebted to us. To-day, we find the right hon. Gentleman the Member for Colne Valley in the position of Shylock, saying he is going to demand the uttermost farthing from all our debtors, and blaming the Chancellor of the Exchequer because he is making arrangements by which he desires to do that which we all thought was the least we could do, namely, get only from our debtors that which would enable us to pay our creditors. Apparently, the attitude America has taken up is not nearly severe enough for the Labour party, and we are to be asked to go out as debt collectors against the rest of Europe, and to repudiate agreements we have made with half the countries of Europe in regard to these settlements. If the Labour party is going to the country on that cry, I think we should have no fear of the result.
The right hon. Gentleman fell upon my right hon. Friend's failure to meet the full amount which it was expected would be paid into the Sinking Fund. I have no real sympathy with those arguments at all. If you fix a certain amount which you are going to pay in a year as your Debt charge, it is nonsensical to say you will alter that with every shift of fortune. It is true that this year, because of the high rate of interest which has to be paid on short term loans, the amount that was applied to Debt charge has not proved to be sufficient to pay the full sum estimated for Sinking Fund, but next year or the year after, certainly in recurring years, when the rate falls below 4 per cent., the Sinking Fund will get the benefit of the increments which are available in those years.
Four per cent. was taken as a kind of middle figure by the Chancellor. It does not happen in this year to be enough. It may possibly not be enough in the current year, though my own prognostication is that it will be, Certainly, the rate of interest of money will go down.
It certainly will. I venture to make that prediction. And in the future you will find that, so far from there being the heavy deficit which may occur in this transitory time of dear money, it will be far more than made up. But it would be nonsensical to fix a sum and then begin to depart from it whenever you find it does not entirely meet the case. We are looking over an expanse of 50 years and, in estimating for that period of time, this general average will be enough to meet our needs.
The next point the right hon. Gentleman took was a complaint about the arguments of my right hon. Friend on the matter of the Safeguarding Duties. We all know the position he has constantly taken up on that matter, and I do not propose on this occasion to go into the figures he gave yesterday, nor to give others. I only wish to refer those who take this sinister attitude towards the Safeguarding Duties—which, with the McKenna Duties and the Silk Duties, yield £13,000,000 of revenue in a year—to the report of a totally independent Committee appointed by the right hon. Gentleman the Member for Aberavon (Mr. MacDonald) when Prime Minister—I mean the Balfour Committee, which was composed of people of different opinions and for the most part, I should imagine from reading their names, people who were inclined to a strict Free Trade theory. What is the conclusion to which they came after their investigations? They say the results up to now are somewhat inconclusive, because there have not been enough of these duties in operation. They say the evidence shows that no other trade has been in any respect injured by any Safeguarding Duties which have been applied. They say that in certain cases there is definite evidence of increased employment in the industries which have had the benefit of those duties. They recommend that the duties should be extended, and they say something that is directly contrary to all the right hon. Gentleman has said to-day. So far from these Safeguarding Duties being of the nature of protective duties, they say that they are incompatible with any theory of general tariffs at all, because of the necessity of proving in each case the particular circumstances which justify the imposition of the duty.
My impression is that he signed the main Report and signed the caveat to the minority Report, which, however, does not take any exception to the point to which I have referred, but, if I have included his name wrongly, I withdraw it. There was a minority Report which did not question the main conclusions I have been referring to, but they indulged in a general disquisition, as they might have been expected to do, of socialistic theory which was not very applicable to the practical matters that were before them.
I pass from that question to the one that was suggested by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) yesterday, a suggestion that is always being made—I observe it in many speeches throughout the country—that the Government have not done enough in the way of introducing economy. I am not one who will support whole-heartedly everything the Government have done in that respect, and perhaps there are Members in the House who recall criticisms which I have made from time to time in that regard. But there is one particular element of expenditure which is being criticised by Members on the benches both above and below the Gangway on which I entirely join issue. It is being constantly suggested that not nearly enough has been done to reduce military expenditure. On Friday of last week the right hon. Gentleman the Member for Carnarvon Boroughs stated that our expenditure on military forces was much greater than before the War. He entirely failed to tell his audience—he must have forgotten to tell them—that the change in the value of money is entirely responsible for that difference, and that if you correct the figures to allow for the difference in currency values there has been an actual reduction in expenditure. You cannot buy war stores at present at the price at which you could buy them in pre-War days.
It has not come down below 64 per cent. above the pre-War level. The pay of the seaman and the soldier has been raised because of the lower value of money. Indeed, it would be quite impossible to approach the pre-War cost of our military forces without rapidly bringing down the pay both of the soldier and the sailor. Is that the view that is going to be put forward by the Opposition? It does not lie in the mouth of anyone to complain of our military expenditure, if you correlate it with what is happening in other countries. Alone of the great countries of the world, we have brought down expenditure on the Army in the last four years. The expenditure of America, France, Italy, and Germany has gone up. The United States and France are both paying £20,000,000 a year more for their armies than we are. Can it be complained against us that we are not sufficiently reducing our military expenditure in these circumstances?
Turn for a moment to the Navy. [Interruption.] I know there is a section of the Labour party who, when they come into power, are not going to pay either for Army or Navy or pensions. I think they will not last a week if they put that before the House of Commons. The cost of the Navy again, estimated in the pre-War value of our currency, is very much less than it was before the War. There is a very striking series of figures to which the Committee ought to pay attention. We have brought down the personnel of our Navy by one-third since the War. America, Italy, Japan have all gone up, and to-day it is the fact that while we talk about the one-Power standard, America has 12,000 more men in her Navy than we have. What of the Air Force? At the end of the War we had the most powerful Air Force in the world; to-day we are only fifth among the Air Forces of the world. Why? I venture to say to this Committee, looking to the enormous commitments that we have, to the garrisons that we have to keep over the vast area of the globe, to the trade routes we have to keep open, to our vulnerability to air attack, that Great Britain has taken more risks for peace than any country in the world and done more than all the rest of the nations in the way of disarmament.
I turn to a single point before I sit down. The right hon. Gentleman the Member for Colne Valley says that the Chancellor of the Exchequer's anticipations are far too optimistic; that he will not be able to get the revenue which he suggests. For my part, I can easily see criticisms which might be made upon the basis of last year's returns, but I am one of those who now, for the first time since the War, believe that a real turn has taken place in our trade. You can see what has happened in the coal trade. It is much better now than it was. I do not say that it is anything like approaching prosperity, but it is better than it was. There are very definite reasons why I think that this change is going to persist, and that it is founded upon considerations which are going to remain permanent. The first of these is that we are now beginning to get back a large number of the coal markets which we lost during the stoppage of 1926. [An HON. MEMBER: "What about Reparations?"] Well, Reparations, perhaps, have something to do with it, too. At all events, a very definite factor in the situation is that some of our coal-producing rivals were clever enough during the coal stoppage to make long contracts with the people who used to be our customers and these contracts are now running out. Several of them have run out. I think that there is no question at all—it is the belief of all people engaged in the coal trade—that we have got back into those markets, and that we shall be able to keep them.
I was amazed to hear the right hon. Gentleman the Member for Colne Valley talk about the Chancellor of the Exchequer returning to the gold standard, when I remember him in the House of Commons at the time supporting the return to the gold standard amidst a good deal of doubt and disaffection on the part of those who sit behind him—[HON. MEMBERS: "No!"] Well, I am very glad to hear it. If hon. Members were unanimous in the matter, I shall claim the support of everybody on those benches.
You might as well regret the Equator. Let me explain. The situation was absolutely fixed by the fact that on 31st December of the year in which it was done, you had either got to renew an Act of Parliament which forbade the export of gold, by which you would have destroyed your rising credit in every country of the world, or you had to adopt the gold standard—one or the other. I said then, and I say it now, that if you had not been forced to take definite action at that time by the termination of an Act of Parliament I would rather have seen the time extended until we had been brought to a better condition of things; but we were forced by the termination of this Act of Parliament to take the definite course of action that we did. I recall perfectly well that the right hon. Gentleman quite definitely supported the action which was being taken. [HON. MEMBERS: "No!"] Whatever fear he had as to our financial position, he gave complete support to the decision the Chancellor of the Exchequer had taken. One effect, of course, of the return to the gold standard was to make our position as an exporting country more difficult, although it made our position as a purchasing country much more beneficial. I think that both sides were taken into account, and on balance, I think, the action was right and that we gained more by a higher purchasing power than we could possibly lose in the way it affected our exports. At any rate, I need not argue that point now.
It was a hard road for us to take. It undoubtedly had the effect of putting us in a position of having higher costs in this country in the matter of wages. I am not indicating any exception to that, but it did have the effect of putting us on a basis of higher costs than operated on the Continent of Europe where there were debased currencies. Now Europe has been following our course of action. Germany did it rapidly. France now has revalorised its currency, with the result that it is now in a stable position with regard to gold. Things have not changed all at once, but they are gradually changing, and the fact is that on the Continent of Europe wages tend more and more to approach British wages. They are not near our level yet, but they are gradually approximating to the British level, with the result that competition in those external markets has become easier for us than it was before, and we are gradually getting a better position. This is one of the permanent factors which, I think, is going to make for the improvement of our trade. I am distinctly of opinion that the Chancellor of the Exchequer is right in taking a more optimistic view of the next year than he could have done of the past year.
The right hon. Gentleman the Member for Carnarvon Boroughs, I am pleased to say, realises the improving position of trade. I am perfectly certain that it was one of the factors largely responsible for the launching of the scheme which he put before the country. In some aboriginal countries which I have visited there are people who gain a great reputation in those parched lands by being supposed to be able to bring rain when there has been a drought lasting for a long time and the crops are not doing well. These people utter some great incantations and the rain comes down. These gentlemen are surrounded with glory, and they get the best of everything. But you will generally find that they are men who have a very keen eye on the weather, and when conditions are not very favourable for rain coming they are very sound asleep or on a journey, but when conditions become more favourable they come out with their incantations and the rain comes down. My right hon. Friend is a great rain-bringer, and I am perfectly certain that he had his eye on the future of the country and its rising trade. There are certain elements in his scheme to which I certainly could not give my adherence. I know very well that much has been done in the course of the years that has passed since the Armistice in the way of making roads in this country. Indeed, I had the honour to be a Minister under my right hon. Friend in the first Government that he formed after the Armistice, and we were very busily engaged in making roads in many parts of the country.
Yesterday the Chancellor of the Exchequer stated the number of millions which had been spent during the existence of the present Government in the making of roads and in the re-equipping of docks and harbours, re-afforestation and many other relief works of that kind. I think that my right hon. Friend did not quite follow, or, at least, when he replied he did not quite reply to the point which the Chancellor of the Exchequer had put. My right hon. Friend the Chancellor of the Exchequer said that all that expenditure had resulted in very little in the way of bringing employment to the country, and he was right. He did not mean—at least I did not understand him to mean, and I do not think that anyone believes that he meant—that the employment that had been given by the expenditure of money on wages had been useless, but he did mean that when you had spent that money unemployment had been very little relieved. That has been the experience of relief works through all processes of time. There was a very interesting letter in the "Times" this morning from the chairman of the Charity Organisation Society entirely bearing out what is written in a very illuminating book by a Mr. Davis on which analyses all relief schemes and relief works since the days of Queen Elizabeth, and the concensus of opinion given of the historical examination is to the effect that relief schemes very seldom have resulted in increasing permanent employment in the country. Obviously that is right because, as my right hon. Friend who, I understand, is going to speak in this Debate, has already pointed out elsewhere, if you borrow in peace time and take money away from trade, to that extent you embarrass the ordinary resources of the country which would be employed in industry. He said, forecasting the boat-race analogy of my right hon. Friend, that when you raise loans in that shape you are going to pay for them sooner or later. He went on to say that the only real way in which you can affect employment so as to make it permanent is by getting an increase in trade.
I was amused to see my right hon. Friend the Member for Carnarvon Boroughs claim Lord Grey as one of his supporters in this matter. I read Lord Grey's speech with great interest and great care, and he said, of course, that the idea was all right. The idea is one that every Government has been applying since the Armistice. There is not a single new venture suggested by my right hon. Friend. They are all things which have been attempted but never upon the scale or so rapidly as he proposes. What does Lord Grey say? He says that the idea is all right, but the pledge is all wrong, and that the number of years it will take to do it in no one can estimate. We have all been working on this idea for years, and the whole point of my right hon. Friend's proposal is the pledge to do it in a year. I was rather tempted by the presence of the right hon. Gentleman to go into this matter, but I will not pursue it any further.
I do say this, following the right hon. Member for West Swansea (Mr. Runciman) that the only way to effect employment in this country is to get an increase of trade. Increased trade depends upon prices, and prices depend upon costs. The man who gets at costs and realises the crux of the situation, is the man who is going to do something for unemployment. I give the present Chancellor of the Exchequer his meed of credit for having realised this great factor in our economic life at the present time, and for having devised a de-rating scheme which directly gets at the cost of manufacture, and, therefore, affects prices and helps us in the markets of the world. When we are all older and we look back upon the troublous times through which we have been passing, the thing that we shall regard more than any other as having brought us into a new time of prosperity will not be the present Budget of the Chancellor of the Exchequer, but the Budget in which he announced the principle of de-rating.
The right hon. and learned Member for Hillhead (Sir R. Horne) has devoted himself mainly to the proposals which have been enunciated by the Liberal party in the country, and only to a very small extent to the present Budget. Owing to the latitude which is allowed to us on these occasions it was open to my right hon. and learned Friend to deal with matters which will, no doubt, be fully debated in the country in the weeks that are to come, but our real business this afternoon is to deal with the finance of the year. I have no objection to entering into a discussion with my right hon. Friend on the proposals which have been under his review. I would say, unhesitatingly, that the contribution which has been made to public discussion on that subject during the past eight weeks has been of inestimable value to the country. It will be reflected in the relief which will be given to hundreds of thousands of men who are now out of work and who will be put into work, owing to the stimulus applied to the movement for which my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) was originally responsible, and which is supported by the whole of his political associates, and it will also react upon the general trade of the country.
I have never hesitated to say, either here or elsewhere, that there can be no permanent cure for unemployment except a general revival of the trade of the country, in particular of our foreign trade. When one remembers the way in which our trade has been built up and the conditions on which it depends, we are bound to come to the conclusion that unless we have a prosperous foreign trade we shall always be in the deplorable condition of having 1,000,000 or 1,250,000 of our people out of work. That is a kind of thing that we cannot afford in this country. If I were to put it on no higher level than that we are not getting value for our money, there is ample reason why the £60,000,000 now distributed each year among the unemployed should be put to better use. I am not in favour of engaging in large loan operations, because I do not believe that for the initiation of this particular work large loan operations are necessary. You can do an immense amount with £60,000,000 every year. If the truth be told, that expenditure of £60,000,000 is not increasing our national assets, although, of course, it is serving the purpose of keeping people from starving.
We want not only to see our roads improved, but we want better and cheaper tranport. We want to see some of our canals re-opened, as they ought to be, not closed, as they are, at the behest of the railway companies, not stifled, simply because they have been allowed to drop out of date and no money has been made available for their restoration. We want the canals made once more one of the main means of transport in this country, as in the past. There is good reason why we should spend money on our harbours. The Chancellor of the Exchequer is well aware of that. The excellent arrangement made for the harbours represented by his Parliamentary Private Secretary and other hon. Members will, no doubt, do a great deal of good; but a paltry £40,000, £50,000, or £60,000 is not going to see us through the great problem of making the natural ports of this country into the most efficient in Europe. I need hardly turn to some of the other projects of the Budget which are not really strictly in order, but I must mention them in passing because I would express my entire disagreement with my right hon. Friend opposite. I have often agreed with him on business and financial matters in the past, both in public and in private, but on this occasion he has allowed his party feeling to carry him away from the main stream of common sense.
I should like to clear up one or two figures which are a constant mystery to the Members of the Committee. No one who has considered the Blue Paper which was issued yesterday, or the two White Papers which have been circulated this morning, will have succeeded, in the time at his disposal, in reconciling all the figures to be found there. The totals are made out differently, the comparisons are not identical, and there are some figures omitted for some years which appear to be included in others. In order that we may have a clear conception on these matters I would, as a preliminary, ask that four items in the new form of accounts should be dealt with by the representative of the Treasury who is to speak in this Debate. Last year, the Chancellor of the Exchequer said:
Following a suggestion of the Estimates Committee…in future the sums received from the sale of fee stamps shall be appropriated in aid of the respective Votes, instead of being brought into the Exchequer.
The second item referred to by the Chancellor of the Exchequer was that:
The contributions received towards the cost of teachers' pensions will be shown as an appropriation-in-aid of the Education Votes.
He further said that:
The outstanding debt of the Unemployment Fund will in future be paid direct by the fund to the National Debt Commissioners without passing through the Budget.
In regard to the fourth item he said:
In certain cases where the cash outstanding on Government funds is temporarily borrowed for the use of the Exchequer…it has been decided not to raise any formal charge for interest in future."—[OFFICIAL REPORT, 24th April, 1928; col. 833, Vol. 216.]
I understand that these four items are all covered in the accounts for the year ending 31st March last, which were published on 1st April. May I ask whether the total of £823,000,000 published in the Treasury tables on 1st April as the total expenditure for 1928–29, including the Road Fund and the Post Office, also includes the minor accounting changes dealt with last year by the Chancellor of the Exchequer? I think they amounted to something like £7,000,000 for 1927–28. What did these minor items amount to for 1928–29? I do not ask this question for the purpose of debate to-day, but for the purpose of further discussion and the comparisons which may be made of the expenditure from year to year. I should like to know whether the £7,000,000 was or was not included in the accounts for 1928–29 and whether it has been dealt with in identically the same way in the accounts for 1929–30.
I turn from that subject to some of the taxation proposals of the Budget. I join with other right hon. Gentlemen in welcoming the abolition of the Tea Duty. I can do that with all the more consistency because I have either proposed or have voted for an Amendment to wipe out the Tea Duty again and again in this House, and certainly during every Budget in the present Parliament. The abolition of the Tea Duty will do something to reduce the cost of living, but not a very large amount, it is true. It will probably work out at about 15 shillings per head of the population in the course of a year—not much, but still, it is something.
Well, make it three shillings. It is not a large amount, but it is going in the right direction. It means freeing the Budget of the poorest classes, in which tea plays a very large part, from a charge which ought to have been abolished years ago. I remember the late John Redmond, speaking from the place in which I stand to-day, pointing out every year the very large part which tea plays in the economy of the poorest people in Ireland, and what is true in Ireland is equally true in Great Britain. We all welcome the abolition of the Tea Duty. But when the Chancellor of the Exchequer is wiping out the Tea Duty, I should like to know whether he has forgotten that only a short time ago he enunciated the principle that the duties then established were made equitable as between tea, coffee and cocoa. Seeing that that principle was acted upon in the Budget of 1924 and since, I understood that it was likely to be followed in this Budget. Why is the right hon. Gentleman differentiating against cocoa and coffee? I would point out that coffee is a struggling industry in some of our most important Crown Colonies, and to differentiate against coffee will give rise to a great deal of misapprehension and misgiving in some of our Crown Colonies. I would instance Kenya. Some of the Kenya coffee growers have a great struggle to keep their heads above water, in competition with Brazil. Similar conditions exist in the West Indies. I should like to know from the Chancellor of the Exchequer why this concession has been given to tea and not to coffee. I hope that he will be able to do something for the coffee growers before the Budget goes through.
I will make only a few comments on the remaining taxes which come under discussion in this Budget. I heartily welcome the wiping out of the Betting Duty. I voted against that Duty on every occasion. I voted against it when, I think, there were only seven of us who went into the Lobby against it. It turns out that we were right and that the Chancellor of the Exchequer was wrong. The Betting Duty has now gone, and I Venture to say that it will never be reimposed either by the right hon. Gentleman or by any of his successors. There is also the readjustment of the tax on the brewers, a subject which, naturally, the right hon. Gentleman would wish to set right before the General Election. It was obvious that it would be impossible to justify from a public platform the granting of great rating relief to brewers while not granting anything to other equally deserving citizens. That point has been mentioned over and over again in the House and in the country, and I doubt whether the right hon. Gentleman has heard the last of it. The present arrangement of the Chancellor of the Exchequer does not get rid of his favourite trade; it is not dismissed altogether from his financial operations. It is true that in return for the £480,000 de-rating benefit which the brewers, distillers and tobacco manufacturers are to receive there is to be imposed a manufacturing licence duty of £480,000, but there is also the sum of £1,000,000 which is to come on to the on-licence holders and, as the right hon. Gentleman for Colne Valley (Mr. Snowden) has pointed out, in respect of certain classes of on-licence holders the benefit will go straight to the brewers to whom their house is tied. That means that by this transaction the trade is to receive the benefit, under the Chancellor of the Exchequer's financial operations of £1,000,000 per annum. We shall not forget to remind the country of that fact.
I wish now to discuss one or two of the purely financial aspects of the Budget which have a direct bearing upon the trade of the country and upon the employment of our people. It is impossible to deal with matters of the, public debt and of the interest charge on the Debt and to make it as exciting as many of the topics of which we shall hear so much on the hustings; but lying at the very root of good government are the principles of sound finance, and if they are deserted by the right hon. Gentleman and the Treasury then, certainly, we should have to pay for it either in meal or in malt, sooner or later. How does it happen that the rate of interest which the Government have to pay in the market for the money which they borrow remains high? The real reason for that is to be found in the fact that the Chancellor of the Exchequer has not actually been wiping out debt, but he has been creating debt as quickly as he has been wiping it out. I should like to know how it happens that although year after year the right hon. Gentleman and the Treasury have been expecting cheap money, their expectations in regard to interest charges have been belied. There has not been a single instance in the last five years in which there has not been a remarkable under-estimate of the interest to be paid by the Treasury for the service of the Debt. My first question on that is: Why is the interest charged this year up by £7,000,000? What is the explanation of that? As far as I can ascertain from the accounts, and from what is known in the market, it is entirely due to the operation of the last few months.
Will the right hon. Gentleman say that recent operations since the turn of the year are not largely responsible for the £7,000,000 additional charge which falls on interest account? I think he is bound to say that. What is actually known in the market is enough to make it quite clear that a great deal of this £7,000,000 is entirely due to the operations since Christmas last. The reason why I say that is very simple. During the last two months we have had the benefit of a conversion operation which represented something like £173,000,000. The total value of Government Bonds which were due for repayment on 1st February this year was £173,000,000. Of this total, conversion applications for Treasury 4½ per cent. 1922 Bonds accounted for £101,000,000. Then there were cash applications, about 10 per cent., which came to £4,500,000, and the total amount available to the Treasury on or before 1st February was £105,000,000 with which to meet £173,000,000. How did the Chancellor of the Exchequer proceed to deal with the transaction? He went to his bankers and overdrew at the bank. He increased the Floating Debt to a large amount. It was necessary to put the Floating Debt up by something like £67,000,000, and while this was reduced by the sums received in respect of the payment in full of Treasury 4½ per cent. partly paid Bonds, the fact remains that the Floating Debt in the last three months was higher than it has ever been in the Chancellorship of my right hon. Friend.
That has had a very obvious effect. An enormous addition like that to the Floating Debt has undoubtedly affected the money market, and I am not so sure that it is not to some extent connected with the rise in the Bank Rate. I can understand why the banks, not being able to ascertain how far the increase in the Floating Debt was going to go, were bound to adopt a more conservative policy than if my right hon. Friend had not been taking such a full advantage of his overdraft at the bank. I say that the increase in the Floating Debt and the maintenance of a high rate of interest are closely interlocked. If the Chancellor of the Exchequer had been able to replace the £173,000,000 Debt on a larger basis, with the current rate of interest payable by the Government at a lower level, we should not have had all these additions to the Floating Debt. The influence which the repayment of debt has upon the money market is perfectly obvious. Last year I referred to it at some length, and the Secretary of State for War in replying to me said that all this calculation about the Sinking Fund was incorrect, and that as a matter of fact the Government had wiped out debt at an enormous rate. He read out a long list of the nominal sinkings and then added up the total and exclaimed, "What a formidable total"; but he altogether forgot the way in which the Sinking Fund had been provided for.
It was provided for by all those seductive dodges to which the Chancellor of the Exchequer referred. There was the £19,000,000 taken from the Road Fund. That was an asset, but it was an asset which was used to wipe out an asset. That does not add to the Sinking Fund. Then there was the brewers' credit, £10,000,000, coming in a little earlier than usual. That was an asset, something up the Chancellor's sleeve. He used that asset for the redemption of Debt. It was not a provision for the redemption of debt. Then there was the £17,000,000 under Schedule A. That, again, was money which the Chancellor had as an asset and upon which he could lay his hands in the course of the year, but he preferred to take it then, and the £17,000,000 asset was used to wipe out an asset.
The Chancellor had it there as an asset. Why lay hands upon it? His successors will not be able to operate as though it had not been taken. The interest on the whole of that amount will be a permanent charge against the Treasury account. Then there were currency notes £13,000,000. These are items which went to supply the Sinking Fund, and the Secretary of State for War thought it was the way in which you could wipe out Debt. There is only one way in which you can wipe out Debt, and that is to apply your free revenue balance for the redemption of Debt. It is only your free revenue balance which can do that. I repeat that the maintenance of a high rate of interest is due almost entirely to the fact that the Government have not redeemed Debt out of free revenue, which is the only way by which it can be done. Of the £173,000,000 of net Sinking Fund, 1925 to 1928, no less than £137,000,000 was provided out of these various accounts. That means that the Debt remains at its present high level, interest is not reduced, it is impossible to carry through conversion at an economic rate, and the Floating Debt has consequently been largely increased.
Now a word as to the effect of keeping up a high rate of interest payable on Government loans. It is not a matter merely for the revenue accounts for the year; it not only affects the provision to be made by the Chancellor of the Exchequer but it affects every public body in the country, every great company which wishes to borrow money and every individual who wishes to borrow money. Unless the rate of interest is reduced, it will be impossible to get back to anything like an economic basis and put our resources to their best use. What have the Chancellor of the Exchequer and his colleagues done to get us back to the lowest basis? He has failed, as the right hon. Member for Colne Valley pointed out, to make ends meet year after year, and what is called a surplus this year is nothing of the kind. Even his own newspapers, some of them conducted by the best financial brains in the City of London, condemn his financing and have pointed out that this year the surplus is non-existent. The way in which he has dealt with our national finances, and particularly with our Debt, has left a mountain of embarrassment for his successors. The one great problem which will face Chancellors of the Exchequer in the future is the re- demption of the 5 per cent. War Loan. It will appal anyone, and I am not surprised that the Chancellor of the Exchequer is tiring of the work with such a tremendous problem before him. It will demand the courage of the most intellectual financial brains that are available, and I wish he had devoted as much energy and attention to the redemption of Debt as he has to the policy of some of his political opponents. If he had devoted himself to carrying out the financial principles which his own father laid down two generations ago he would have gained for himself a reputation in the City and in the country which any man might envy.
At the end of his four years of office our debt remains one of the greatest problems which we shall have to face. It will embarrass industry and commerce for many years to come. Although it is such a gigantic problem, it can be dealt with provided this House has the courage to set free a large amount of revenue each year and devote it to the redemption of Debt; and provided we have a Chancellor of the Exchequer and a Ministry with the courage to recommend it. Unless that be done, we shall not secure that permanent return of good trade which we all desire, and which is the most essential thing that can happen to this country. We are now in the last days of a Parliament which has been notable for a great deal of legislation, and a good deal of financial activity. We have had Budgets introduced by the Chancellor of the Exchequer in speeches which are almost unrivalled in their successful raillery, humour and rhetoric. The Chancellor of the Exchequer, however, will not be judged by his debating skill but by the record he leaves behind him. He is coming to the end of his career as Chancellor of the Exchequer. I cannot believe that the country will send the present Government back to deal with our finances, which is the one of the many things it is disquieted about, or to deal with the cutting down of our expenditure which is just as important as an increase in revenue. I cannot believe that it will be satisfied with the assurances now given for the fourth time by the right hon. Gentleman that economy is the outstanding consideration in his mind. Therefore, as I do not anticipate that he will be there in the years to come, I say now—and I am sure those who are watching our financial operations from outside will endorse it—that lying at the roots of all good Government is sound finance, and the only way in which you can reach a basis of sound finance is by a reduction of expenditure. Unless your revenue exceeds your expenditure, you cannot add to your national assets; unless you add to your national assets, you cannot have expanding trade; and unless you have expanding trade you cannot have a well employed community.
Sir HILTON YOUNG:
The right hon. Member for West Swansea (Mr. Runciman) has recommended a close attention to the finances of the year. But he allowed himself a certain latitude in that respect, and I am sure he will forgive me if I follow his example rather than his argument. I have a large measure of sympathetic agreement with him in his orthodox anxiety on behalf of the proper maintenance of Sinking Funds; but he on his part will agree with me in the orthodox opinion that it is no good maintaining a Sinking Fund when you have to borrow in order to maintain it. I was asking myself while he was speaking, how he reconciles his anxiety for the maintenance of the Sinking Fund with the party programme, to which he gives general adherence, which will entail borrowing, for works which are unproductive, sums far in excess of the amount of the Sinking Fund. It is like paying great attention to the patching of a pinhole in one corner of the vessel while there is a large gushing leak in the other.
To confine oneself strictly to the finances of the year is perhaps less easier than usual this year because, as I am sure the Chancellor of the Exchequer would be the first to agree, this is not a Budget of profound importance from the point of view of the development of national financial policy. There are no great matters of new principle raised by the Budget. Such matters have been raised and decided by the Chancellor of the Exchequer in past years, as in the case of the Sinking Fund and the de-rating scheme, but this year we are dealing with a smaller matter, one nevertheless of peculiar interest, and that is the distribution of a surplus. There it is pleasant to be able to join in what is on the whole a general chorus of congratulation to the Chancellor of the Exchequer on a sensible way of distributing a small amount.
I would like to pause for a moment to invite some information, from the Chancellor of the Exchequer or whoever is to reply, as to what is the measure of accuracy which we can now attach to the surpluses estimated on modern Budgets. That is a matter which needs attention and on which public opinion needs some education. In pre-War years we were dealing with surpluses of an order of 10 per cent. or 5 per cent. of the Budget. They are now of the order of only one per cent. of the Budget. It might tend to assist enlightened criticism and prevent disappointment, and to discourage calculations which are exaggerated in their attempts at accuracy, if we were told what is the measure of accuracy which can be attained in estimating a surplus at the present day. What is the possible error in the surplus estimated this year?
In the actual distribution of the surplus there have been one or two touches of imagination which call for special appreciation. The assistance of the rural areas by the spreading of postal and telephonic facilities is a matter which shows a true touch of imagination. It is not only an improvement of the amenities of rural life; it is an actual and direct contribution to the prosperity particularly of small trade in rural areas, and will be appreciably felt. Again, a thoroughly sensible provision and one which has long awaited fulfilment, is the abolition of the Railway Passenger Duty. That Duty was arranged, I believe, on the basis of securing a return for a monopoly; but since the railway companies have ceased to operate under monopoly conditions it has become both irksome and unfair. There will not be the least difficulty in great railway companies finding a far wider field, even, than that required by the Chancellor of the Exchequer for the investment of fresh capital in development, as a recognition of this concession.
As to the principal proposal, the abolition of the Tea Duty, there is a most engaging measure of universal agreement. In past years some of us have not hesitated to maintain that in the interests of really sound finance, in the the economic interests of the country, the Income Tax is the first tax that should be reduced. The case is not altered to-day. On the contrary, the case is still stronger and remains unanswerable, that the country cannot regain that elasticity of productivity which it had before the War, under the burden of Income Tax and Super-tax from which it suffers to-day. The interests of the wage-earning classes, those who pay only indirect taxation, would indeed be better served in the long run, by a reduction of the Income Tax than by the reduction of indirect taxation. The argument for that has been often advanced and is well known. Nevertheless it has become quite clear in the course of years that the popularity of the case for the abolition of the taxes on tea and sugar is so great that the Income Tax payer cannot hope for further reduction of his burden until the Tea and Sugar Duties are cleared out of the way. So we may rejoice to see so important a step taken in that direction.
What remains to be said about the Budget is principally on the high matter of credit, and employment, of which the question of the credit of the country is one aspect. In this regard the close, the technical argument advanced by my right hon. Friend the Member for West Swansea, requires a reply with official information. All that one without such information can say is this: There is no better means, no safer way of avoiding all those pitfalls which await one whose information is from outside only, in estimating the reduction of debt, than that adopted by the Chancellor of the Exchequer in his Budget speech—the calculation and comparison of the actuarial value of the total debt of the country at two dates, and a comparison of the interest charges. If we make those, and contemplate a total reduction in four years of £175,000,000 of real value of dead weight debt, and the reduction of the interest charges of the country by £11,000,000, that is a substantial achievement. It is above what the country ought to be doing in the present circumstances of difficulty, leaving a bigger effort for reduction of debt until our safe re-establishment after the difficulties that followed the War.
In his final attack upon the Chancellor of the Exchequer the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) argued by steps to a logical conclusion almost like a proposi- tion of Euclid. In the end there was this resemblance also between his argument and Euclid that he might very well have made use of the old formula, "which is absurd"; because he arrived at a conclusion which was patently absurd—that our national credit has decayed and is bad; whereas it is well known that our national credit has improved and is still, short perhaps of that of the United States, the very best in the world. We can borrow more freely and at a cheaper rate than any other borrower in the world. When one finds that the hon. Member's conclusion, that is solidly based on his logic, is false, one cannot but suspect his logic. Perhaps he is not so great a man as Euclid after all.
Certainly no single man by a single utterance has ever in a shorter time dealt of late a shrewder blow at the national credit than the right hon. Gentleman has done to-day in suggesting that if he and his colleagues become responsible for the Government of the country they claim the right then to repudiate all the agreements for the settlement of War debt entered into by Great Britain. I believe that the party opposite claim to be ardent champions of the cause of the League of Nations. It has been my high privilege on three occasions to represent my country in a humble capacity as a delegate to the Assembly of the League. It has been my duty in that capacity to study what I would call the public opinion of the League. Permit me then to say this. In such a public opinion as that being slowly built up at Geneva there are a document and its consequences which are looked upon above all others as a fixed rock round which things are being stabilised after the shattering blows of the War and the post-War period, and that fixed rock is the Balfour Note, and our settlement with our War debtors and creditors. Peace is being constructed upon that as one of the foundation stones of peace after the War—upon our agreement to take only that part of our debts from our War debtors which we are called upon to pay to the United States. Even if there had been no agreements with our debtors, the liberal principle of the Balfour Note would still be one of the foundation stones of the resettlement and reconstruction of Europe.
It is the right policy from the point of view of common sense. It is only by making these debt settlements that you can stabilise exchanges and restore foreign trade. The threat to tear up these settlements once more threatens to throw the exchanges of Europe once more into the melting pot, with grave injury to our foreign trade. But binding agreements have actually been made. It is a question of the credit and the faith of our country that is involved. Upon that, upon the credit and the good faith of the Empire in the undertakings which it has given to forgo debt the peace and reconstructive prosperity of Europe are being refounded. If that faith comes to be questioned, then, indeed we are back into the maelstrom of confusion which leads to war.
But redemption of debt is only one aspect of the foundation of credit. The establishment of national credit does not depend only on the amount of debt redeemed in the year. Indeed, you may shake national credit by trying to redeem too much debt. National credit is founded upon the taxable capacity of the nation, and the taxable capacity of the nation can be benefited by a prudent expenditure and by investment just as much as it can be by the redemption of debt. I wish to refer to what was said by the Chancellor of the Exchequer as to the use of our great asset of national credit. Here I have to express not a criticism but a regret. There is no criticism, because as he said, the Budget Speech is not as suitable as a later occasion for outlining national policy in the matter of the use of our asset of national credit for the sake of promoting industry and employment. The regret is that he should have made no provision for the use of this asset of credit in a certain direction this year. The direction in which one would have liked to see some provision made is—the use of our credit in promoting capital works for the development of production in the British Empire overseas, and particularly the Colonies and the lesser tropical dependencies.
I base my observations in that regard on these grounds—that we reject both the Liberal and the Labour programme for public works on the ground that they are going on the wrong line, in so far as they hinder private enterprise and initiative, and deprive them of capital, in so far as their finances are unsound, and in so far as they would not tend to promote the employment of the unemployed in their own trades. But when we have rejected such schemes of Government work in relief of unemployment it does not follow that there is nothing that can be done by the State that will promote employment in a prudent way in private industries. It is there that one would like to see some small beginning made even this year, in the promotion of normal private enterprise by a stimulus from the Government. Of course fresh capital works that are so profitable that they can at once obtain capital on a commercial basis, in competition with other commercial enterprises ought not to be assisted. On the other hand, works that are so unprofitable that they will never pay ought not to be assisted either. But, between the two, there is a margin of works of development, enterprises which though not likely to be so profitable immediately as to be able at once to obtain capital on a commercial basis, nevertheless give a sure promise of a profitable return within a short time.
It is in that direction that we ought to look for works to be encouraged by the stimulus of State assistance. I very much doubt whether there is a large volume of work of that sort still to be done in this country; but quite certainly there is an enormous amount of work of the sort to be done in the British Empire overseas—in the Colonies particulary, if not in the great Dominions. In the Colonies, we find works which are almost ripe to be started on a commercial basis, works which could be so started in one or two or three years time, but which cannot get the necessary capital just yet. The Government can get it for them, with the assistance of a guarantee; and one other form of assistance is necessary—that is a small grant for free interest. This suggestion is on the lines of the Trade Facilities scheme; but there is a great difference. The Trade Facilities scheme was designed for a specific purpose, namely to promote the undertaking of works which were delayed by lack of confidence brought about by the War. There is no need for such an effort now. Confidence is re-established. Under the Trade Facilities scheme only a guarantee was given; there was no grant for free interest because it was assumed that the works would immediately become com- mercially productive. Now, in order to get work of the sort to which I have referred started in the Empire overseas, it is necessary to give the further benefit of a few years free interest. The essence of the scheme is to accelerate the work by covering the unremunerative period.
I quote an instance where a work of the sort I have indicated has been actively undertaken, and has shown all the benefits which I have described. That is the establishment of the cotton growing area of Ghezireh, in the Sudan. That work was advanced by a State guarantee in connection with the building of the Makwar Dam. It has led to the increased productivity of a large area with the following results. This country has received orders for goods in connection with the capital spent on the works, and those orders have benefited employment here. This country has got £3,000,000 or £4,000,000 worth of cotton from the estates to assist Lancashire. This country also gets orders for consumable goods from the many thousands of natives there who now have money to spend on the purchase of goods. There is no inflation as a result of the borrowing, because there is a direct increase of productivity which covers it; and, finally, there is no interference with private enterprise, because the undertaking is being carried on by private initiative and not under the State, which is in the position, as it ought to be, only of a debenture holder.
That is the hall-mark of the particular form of State activity to which I refer. That is what differentiates it from the proposals of the Labour party and the Liberal party. They both propose State enterprises. The proposal for the development of the Trade Facilities scheme in the way I suggest does not involve State enterprise, because the actual works are initiated and carried out by private enterprise, the State being, as I said, simply in the position of a debenture holder, without managerial control and without other powers of interference. Nevertheless, in the case of Colonial works it is sometimes undoubtedly necessary to go further. It is sometimes necessary that the State should actually itself initiate works, if only for the reason that in many Colonies all the assets are in the possession of the State, and the officials of the State alone have the necessary knowledge and the necessary influence with the natives. There is one other example which I must quote, because it is so striking, of a place where hesitation and lack of enterprise in our Imperial policy is delaying the development of the Empire. That is the case of the Zambesi bridge. We are remitting the Tea Duty and so increasing the market for the tea-grower. In Nyasaland there are areas which might almost produce all the tea consumed in this country; but the development of the productivity of that place is delayed by the delay in building the Zambesi bridge which is an essential of that development. Until it is built, cost of transport paralyses development. That is an unusual instance of hesitation in Imperial policy.
Hon. Members on this side of the House need feel no fear but that the proposed use of our credit is consistent with our principles and practice in supporting private initiative and enterprise. In nine cases out of ten of this sort, the assisted enterprise and the initiative can be in private hands, where it should be. It is only the exception, where the Colonial assets are for historic reasons State assets, that the Colonial Government itself need undertake the work. That the Government should make use of our credit, to raise taxable capacity and reduce unemployment, by accelerating profitable enterprises for the development of the overseas Empire—this is a touch of imaginative construction still required to complete our policy.
I am glad that the right hon. Gentleman the Member for Norwich (Sir Hilton Young) has gone some way at any rate on the question of providing funds for development, either in this country or in the wider Empire overseas, and I am particularly glad that he singled out one of the actions of the Labour Government for his particular approval. The Chancellor of the Exchequer yesterday devoted a great deal of his speech to his own record in the past four years and devoted a very few words at the end to the actual features of this Budget. I propose to reverse the order and to deal first, in a few words, with the Budget proposals and then to come to the general financial record of the Chancellor of the Exchequer. This Budget consists of a number of gifts which I think the right hon Gentleman's Department in another connection would term "gifts made in anticipation of decease." But though those gifts are many and varied they are so exiguous for the most part in the amount that I do not think the beneficiaries will be particularly grateful. In fact, in this Budget they are being given away with a pound of tea.
I am glad that the Chancellor of the Exchequer has seen his way to get rid of the Betting Duty which has been attacked consistently by hon. Members on these Benches. It would have been better had the Chancellor of the Exchequer yielded to judgment and reason, instead of waiting until he found that the electoral consequences of standing out against the right course would be inconvenient. Personally, I am glad that he is taking off the remains of the Tea Duty. Hon. Members opposite seem to imagine that they have put us to some inconvenience by, at last, adopting a proposal which we have all the time advocated. They are quite wrong. I think the incoming Labour Government will be very much advantaged by their action. It will save the incoming Labour Chancellor of the Exchequer from having to spend £5,000,000 or £6,000,000 in removing this duty. Nor do I think we have anything to fear from the effect upon the Election. The Chancellor of the Exchequer, as I say, devoted most of his time to his five years' record and the posters that are appearing all over the country at present do not deal only with the events of the last few weeks. The Conservative party are calling attention to their whole record and we propose to call attention to their whole record in the matter of indirect taxation. We must remember that the removal of the Tea Duty is practically the only relief that has been given in remission of taxation to the working people, and that all through the last five years the Chancellor of the Exchequer has been piling on to the working people a little tax here and a little tax there. When we take these facts into consideration, we shall not have the smallest difficulty in demonstrating to the people of the country that the Chancellor of the Exchequer has not been their friend. It is only when he fears their condemnation at the ballot that he comes forward with some slight remission for them.
The burden of the Chancellor's speech yesterday was the coal stoppage of 1926. When he had to deal with some failure on his part he always came back to the same thing. All would have gone well, his finance would have been the most remarkable and wonderful in the history of the country, if it had not been for what happened in 1926. Unfortunately, the time table does not bear out his statements. The coal stoppage and the General Strike occurred in the late spring and early summer of 1926. My memory and, I think, the memory of many people in the country, goes further back. Our minds go back to the Economy Act which was passed before the coal stoppage and before the Budget of 1926. We remember the infamous action of the Chancellor of the Exchequer in that Economy Act. We remember how he caused the State to default in connection with National Health Insurance, how he deprived the approved societies of the contribution from the State to which they had looked forward and on the strength of which they had intended to increase maternity benefits, dental benefits and many other benefits. We remember how the Economy Act stole the money from the Road Fund and the Unemployment Fund and how it reduced the State contributions towards Unemployment Insurance. Possibly the Chancellor of the Exchequer might attempt to argue that, even though this action anticipated the coal stoppage, It followed on the subsidy which the Government had to give to the coal industry. That might conceivably justify the use of a capital sum from the Road Fund but it could not possibly justify taking money in perpetuity from Health Insurance or Unemployment Insurance. For the depletion of the State contribution towards Health Insurance and Unemployment Insurance, the Government have absolutely no excuse and, inasmuch as their action in this matter ante-dated the coal stoppage and the events of 1926, it is mere nonsense for the Chancellor of the Exchequer to pretend that his sound financial behaviour was injured by events which took place after he had committed this injustice.
I am prepared to go even further back. We find that the figure for unemployment which had been below 10 per cent. in 1924, had gone up, even in 1925, to as high as 12 per cent. That circumstance cannot possibly be attributed to the coal stoppage or the General Strike or any of the things for which the Chancellor of the Exchequer erroneously blames the Labour party. On the contrary, these are things for which the Chancellor himself is responsible. There is no doubt that the difficulties that have faced the Government have not been fortuitous, but have been brought upon them, not by the malign and wicked Labour party, but by their own misdeeds, and it is perfectly clear what brought about the rise in unemployment and the injury to industry in 1925. Directly the Chancellor of the Exchequer came into office he and the financial authorities set to work on a renewed policy of deflation, which culminated in the mistaken action of a precipitate return to the gold standard. The Chancellor does not in the least deny what the effect of that has been. He glories in the fact that his financial policy has resulted in a steady fall in prices. He talks very glibly about a fall of 18 points in retail prices. I do not know what he means by so many points, and I am very dubious about the 18, if he is comparing like with like. What I do know is that retail prices have fallen some 7 per cent. since the Conservative Government came into office, but that wholesale prices have fallen no less than 17 per cent., and the Chancellor of the Exchequer glories in the action of his finance in bringing about a fall in the general price levels of this country.
Is there any manufacturer in this Committee who doubts that a fall of 17 per cent. in wholesale prices was responsible for causing the slump in trade? Every manufacturer knows that that was the cause, and, if my word is not taken for it, let me remind the Committee that Sir Josiah Stamp, Chairman of the London, Midland, and Scottish Railway Company and one of the Directors of the Bank of England, who was specially appointed by the Government to investigate the cause of the trouble in the coal industry in 1925, came to the conclusion that it was due to the fall in prices and that that fall was brought about by the financial action of the Chancellor of the Exchequer and the Treasury. Therefore, it is not some wild, extremist view as to the facts, but the sober, carefully-con- sidered view of a man like Sir Josiah Stamp, whom, I believe, everybody in this House honours as one of the greatest economists and business men in this country. Therefore, even the very trouble in the coal trade, the very events to which the Chancellor pins his faith as the reason for his failure, are in a large measure due to the action which he took.
The right hon. Gentleman said yesterday that his action in finance had caused temporary inconvenience and loss, and I believe that that is the first time that he has admitted that. When we suggested at the time that his action would influence industry, he said it would have as much influence on industry as would the Gulf stream, but now he has admitted at last that the influence was temporary. What right has he to say it was temporary? Is the slump in industry over? Has unemployment improved? We know very well that unemployment in the beginning of this year, and even to-day, is far worse than it was during the tenure of office of the Labour party, and worse than it has been at any time since 1920–21. The right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), in the pamphlet to which so much reference has been made already, singles out this return to the gold standard as one of the causes of our unemployment at the present time. I cannot help being rather amused at that, because he did not say that at the time when it was being done, and he was Prime Minister when a far greater deflation than that undertaken by the present Chancellor of the Exchequer took place in 1920–21, but it is interesting to see that after the event he, who always has his nose to the ground, recognises what actually took place. The fact is that the Chancellor of the Exchequer butchered British industry in order to make a City of London holiday, and it is rather interesting to realise that, though he did that, he has not pleased the City of London. If the views of the City are to be taken from the City correspondence in the papers which I have read, they are very far from satisfied either with this Budget or with the general record of the Chancellor of the Exchequer.
My right hon. Friend the Member for Colne Valley (Mr. Snowden) has exposed the financial record of the Chancellor of the Exchequer, so far as the Sinking Fund is concerned, and held it up to the ridicule and condemnation, not only of this Committee, but of all those who are acquainted with finance throughout the country. It is not easy to add anything to that, but I will just say that the country and those who are concerned with reducing the rate of interest on the National Debt have been looking forward to the running out of the short term obligations in the confident hope and belief that a great saving could be made in the rate of interest and in the total amount of interest on the Debt thereby reduced. When these conversions actually came to be made, however, the Chancellor's financial policy has been so disastrous, and we have got such dear money at such a high rate of interest, that it is with difficulty that he has got out on the right side at all. He has been able to effect some very slight reductions in the total amount of interest, at the expense of a greater evil in the shape of a very large increase in, at any rate, the face value of the Debt. The right hon. Gentleman gave some wonderful calculations, but he gave us no clue as to how they were constructed. He attempted to show that our Debt was in a very much better position after his conversions than before, but personally I entirely distrust those calculations and believe them to be unsound; and I would remind the Committee that the Chancellor of the Exchequer and the Treasury have persistently and consistently flouted the opinion of the Colwyn Committee with regard to the method of conversion which they should undertake.
Anyhow, after all the conversions to which people have been looking forward, there has been practically no saving, and the Chancellor seems to think that he is considerably better off, because there will be a smaller proportion of conversions available, and there will be no opportunity of a further reduction in the interest on the Debt. In any case, the City of London certainly is not favourably disposed towards the Chancellor of the Exchequer. All his devices, his wanglings, his schemes, his little bits cooked up here and cooked up there, his book-keeping entries to disguise the real facts from the Members of this Committee, have not taken in the solid financiers in the City of London, and when the right hon. Gentleman leaves his office they will be thankful that they have got rid of a man who has attempted, all through his term of office, to throw dust in the eyes of the public with regard to the finances of this country.
The Chancellor of the Exchequer has boasted that his finance has brought about a fall in prices, but I do not think that either he or the Members of the Committee fully realise the implications of what he has done. The wholesale price level has fallen by 17 per cent. and the retail price level by 7 per cent. When the right hon. Gentleman boasts that if he has not made great economies in the services of the State, at any rate they have not increased very much in pounds, shillings and pence, that fall in the general level of prices must not be forgotten, for what it means is this, that if any Estimate has remained the same in pounds, it really involves an increase of anything from 7 per cent. to 17 per cent. in actual amount, and if an Estimate has been reduced a little bit, it will mean an actual increase in expenditure. We are so apt to be deceived by this changing value of money, which people do not at all appreciate, that we do not give sufficient attention to the fact that during a period of falling prices a Chancellor ought to be able to make very considerable economies, and that if he has not done so, that is a bad mark against him.
There is another matter in regard to which I am certain that the Chancellor of the Exchequer is aware of what he is doing and has used the opportunity for deceiving the public, and that is with regard to the question of the Safeguarding and other duties which he has imposed. The general trend of prices has been downward, and, therefore, if whenever a duty has been imposed the price has remained the same, what that means is that, compared with the prices of other articles, the price of that particular article has gone up. The Chancellor knows that very well, and when he imposed the duties upon artificial silk he stated it quite openly to the House. He said "I do not think it will be found that in consequence of these duties the price of artificial silk will go up, but I do intend the great bulk of these duties to be passed on to the consumer, and what I anticipate is that, whereas the price in this rapidly growing industry would come down, the effect of my proposals will be to draw away, before it reaches the consumer, the benefit of the fall in price that would otherwise take place." The Chancellor was perfectly frank with us at the time, but yesterday he trusted to the convenient memory that the Committee might have and that they would forget the very premise with which he started when he introduced these duties. The fact is that the Safeguarding Duties may not have actually increased prices, but in so far as they have prevented the fall in prices that would otherwise have taken place, they have acted in precisely the same manner as a tax upon the working people of this country, a tax taking money out of their pockets to pay into the National Exchequer.
The Chancellor claims credit for the fall in the retail level of prices, which he says has benefited the working people. I do not believe that in fact the working people are any better off to-day, if as well off, as a result of the action of the Chancellor of the Exchequer in finance, because they have lost as much in unemployment as they have gained, possibly, by the reduction in retail prices; and the Chancellor must remember that it is not only the people who are wholly out of work and on the register who have to be taken account of, but the enormous numbers of people who are working short time in various ways, who never appear on the register at all, but who nevertheless draw lower wages owing to the slump in trade. My own opinion is that they are a complete offset against any slight advantage that might be gained by falling prices. The people who have gained are the rentier class. They have had nothing offset. There has been no reduction in their money incomes. On the contrary, the Chancellor of the Exchequer has singled them out for giving, in the course of his five years' tenure of office, the one really solid benefit in relief of taxation. The £40,000,000 odd which he has struck off the burden of the rentier class is the one big thing of the whole of his term of office. They have not only had that, but they have had the enormous boon of the fall in the level of prices as well.
They have gained in every way, just as they have gained in every way since 1920 by the action that has been taken. They are passive elements in our civilisation at the present time, and the reason that our industry is so far from flourishing, the reason we have this enormous unemployment, the reason the workpeople of this country are rightly grumbling against what has happened and are turning vigorously against the Conservative Government, is that the whole effect of the policy of the right hon. Gentleman the Chancellor of the Exchequer has been to increase the amount of the national product which goes into the pockets of the passive, the rentier class, and to take away the portion which should go into the pockets of the productive element, both employers and employed, who are actually producing the things which are needed in this country. The Conservative Government and the Chancellor of the Exchequer's action will be judged by the people of this country on these results, and the tiny gifts which the Chancellor has distributed as a kind of largesse just at the end of his rake's progress in finance will not serve to rally the retreating forces of the Conservative party, and they do not trouble us in the very least, because we know that the people will look behind and beyond this to the whole record of the Chancellor; and on that they will condemn him and the Government at the Election.
One has heard many speeches from the hon. Member for West Leicester (Mr. Pethick-Lawrence), and one wonders, in these financial matters, what will satisfy the hon. Member. He puts up a series of assertions which he generally does not attempt to prove, and he claims on these assertions that something which he wishes to be done has not been done. I need not detain the Committee by attempting to deal with the remarks which he has made; if they are worth replying to, no doubt the Financial Secretary to the Treasury will deal with them. I gather that the complaint of the hon. Gentleman is that the reductions in the Income Tax made by the present Government were entirely for the benefit of those who draw fixed incomes. He is forgetful that Income Tax is not imposed on fixed incomes only, it is imposed on all income—incomes derived from business and production, and the profits of every company. Reductions in Income Tax are probably the most widespread of all the benefits that could be given.
I think it may be expected that I should offer one or two observations upon the Brewers Licence Duty. I will not attempt to deal with the distillers or tobacco manufacturers. These Licence Duties are estimated to produce something like £350,000. At the time that the right hon. Gentleman the Minister of Health was introducing his de-rating scheme, some of us said that we did not want to be included in it and would rather be left alone, but the answer given to us by the right hon. Gentleman was that he insisted upon the symmetry of his scheme. It was, he said, a great scheme to relieve producing manufacturers of a portion of the rates which they ought not to pay, and brewers, distillers, and tobacco manufacturers could not be left out. In spite of our disclaimers, we were included in the scheme. Then comes along my right hon. Friend the Chancellor of the Exchequer, and he says: "On consideration, I have found a way round. I will preserve the exact symmetry of my right hon. Friend's scheme, and it shall not be disturbed, but we will get the money, and we will make an adjustment by charging an increased manufacturer's Licence Duty, which will replace the money which the Treasury will have to pay towards the rates of brewers, distillers, and tobacco manufacturers."
That is all very well. We all know quite well that in making these adjustments, the Treasury are very careful to cover themselves, and in fact the adjustment is in favour of the Treasury, for they will get a little more than they will pay out. It is not possible to say at this stage what that will amount to, but, in dealing with a number of instances this morning since the proposals of the Chancellor became known, I found that in every case the brewer was worse off than he was before my two right hon. Friends brought in their proposals. This matter in the general question of finance is a comparatively small one, but I do think that even in this small case we have been perhaps a little hardly used. If the Government had seen their way to leave us alone, we should have known where we were, but now we have to deal with one set of officials and experts to settle what are our de-rating allowances, and on the other hand we are to have the usual struggle with the collectors of revenue to find out what we ought to pay on the brewers' licence. We shall be harassed from two sides, and be somewhat worse off than we were before as the result of the two operations of my right hon. Friends.
I turn to the question of the retail licences. In this matter, the retail licence holders had a very real grievance for a long time. In the period of the War, the Licence Duties were increased, and that, being a War tax, was submitted to without complaint. Then the right hon. Gentleman the Foreign Secretary, when he was Chancellor of the Exchequer, put a further increase on the duty. Later on, under the Defence of the Realm Act Regulations, the hours of opening of licenced houses were reduced from 12 to eight. This is a real grievance which, when we settled down again to normal conditions ought properly to be readjusted. The retail traders have expressed themselves for a long time on their grievances, and now that there is money available to remove one of them, I think that the Chancellor of the Exchequer was perfectly right to remove it, and I thank him for the action which he has taken. The right hon. Gentleman the Member for Colne Valley (Mr. Snowden) made play with the fact that some brewers may get an advantage out of the reduction of the retail licences; he made great play also about the licenced houses which were under management, and about cases where the brewer had come to the rescue of the hard pressed retailer and agreed to pay his licence duty. These cases are exceptions. I will give another exceptional case which will benefit and which the right hon. Gentleman forgot. These retail licence duties will affect all those benevolent institutions like the Public House Trust Company, and so on, which hold many hundreds of licences, and they will share in the benefit of the reduced licences. The majority of cases, however, are tenants of houses who have to pay their own rates and taxes and licence duties, and in those cases undoubtedly it will go directly to their relief. I am prepared to say on behalf of leading members of my trade, with whom I have consulted, that we shall use our utmost influence with the brewers and retailers generally to see that the benefit shall go to the relief of those for whom it is intended.
May I make a remark on tea? I am not complaining that the Tea Duty has been abolished, except in one particular. It is a very great pity that the preference has not been maintained on the tea produced within the Empire. No one would raise a voice against removing all taxation from tea produced in the Empire, but there is a great deal of common tea which is produced in Java; there is China tea, which is a diminishing quantity, though Java tea is an increasing quantity which might, I believe, in justice to the Dominions, continue to bear some measure of taxation. I am not sure that there is not a breach of faith or breach of undertaking involved, because a Resolution was passed by this House to the effect that where immediately before 1st July, 1926, a duty of Customs was chargeable at preferential rates in the case of an article of Empire produce, these articles would, during the period of 10 years from the 1st July, 1926, continue to enjoy that preferential rate. There may be reasons why that should not be applied to tea, but undoubtedly it was the intention to apply it to tea at the time it was passed, and I would suggest for the consideration of the Government and the Committee that they will find it before very long necessary to offer to Ceylon, India and elsewhere within the Empire where tea is grown some equivalent to the preference which they now propose to withdraw.
I am not going to follow my hon. Friends in endeavouring to make a long examination of the financial position. There is serious doubt as to what is the real surplus on the revenue of the year. We have not yet the full quarterly returns of the revenue and expenditure, and I prefer not to commit myself to any detailed remarks on these matters until the returns are available and the figures may be checked from all points of view. The reduction of expenditure has not been equal to expectations. There seems to be some failure in the Estimates in the coming years to take account of the inevitable increased expenditure on certain items. The growing expenditure on de-rating has been men- tioned, and we have also to face a growing and continually increasing expenditure for some time on pensions. There is also an increase of expenditure in another direction which will probably shock hon. Members above the Gangway. The time is inevitably coming when we shall have to make a larger expenditure on rebuilding and replacing the ships of the Navy. No one in this House is bold enough to say that he would abolish the Navy and a great deal will have to be spent on replacement, because nothing could be worse than a Navy which is not efficient. You must provide efficient ships, and, as the Navy runs down and the ships wear out with age and use, they will have to be replaced.
I was astounded at one remark made by the right hon. Member for Colne Valley when he said that the Super-tax and the Death Duties ought to increase simultaneously. That was astounding because the Death Duties are doing away with capital which produces Super-tax and the Income Tax. When you, in this financial year, absorb and take from private hands some £87,000,000 of capital, that £87,000,000 of capital is no longer going to produce either Income Tax or Super-tax. You are destroying your revenue. You are going, by this rapid destruction of accumulations of capital in the form of Death Duties, to destroy that source of revenue in no very long period and that source of income will have to be replaced. Super-tax is not an inexhaustible well into which future Chancellors of the Exchequer can dip. Taxes which are over-strained are apt to diminish and dry up. I shall not pursue the subject beyond saying that I was astounded at that very remarkable statement which I heard from the right hon. Member for Colne Valley, and I thank the Committee for allowing me to make these few remarks. I do not propose to say more upon the general financial situation.
I gather from the remarks of the right hon. and gallant Member that the proposals of the Chancellor with regard to the drink trade do not entirely meet with his approval. I feel rather dubious whether the final outcome of what will happen between the brewery companies and those responsible for the running of these public-houses will be quite on the lines he suggested. I understand that the right hon. and gallant Member intends to carry out the intentions which he has just explained to the Committee and which he informs us are also the intentions of others in the trade. At the same time, we are not legislating for the next year or two during which the right hon. Member and his friends may be at the head of the brewery trade, but we are legislating for many years to come. It reminds me of another instance in connection with another of the Government's proposals, the proposal to remove from agricultural land the last burden of rates. When this subject came before the House, some of us on this side said exactly the same thing about what would be the final destination of that money—
Personally, I very much hope that that will be so, and I entirely accept that statement, but, on this other question of the destination of the rating relief, I will give this instance. When we mentioned that there would be a considerable leakage of the money which was being given in relief of rates so that instead of going to the farmers it would go to the landowners, we were told that nothing of the sort would happen. Before the Bill was through the House I had drawn to my attention a case in which a man was negotiating to take over a small farm in one of the central counties in England, and the only question that was in doubt was the rent proposed by the landlord. When a friend of mine was discussing with the surveyor who was acting for the would-be tenant as to whether the rent asked was not much too high, the surveyor said that no doubt the landlord had in his mind the fact that in six months there would be no rates to pay on that property, and that was the reason why he was asking a higher rent. This was a purely business transaction in no way connected with politics, but confirming almost at once the statements we made from these benches that a certain amount—not all, of course—of the benefit intended for the farmers would go to the landlords.
Hon. Members cannot argue away my case. It is the case of a new tenant, and in years to come there will be many similar cases among new tenants, though I agree it is difficult to say what proportion of the whole community will be affected. I bring this forward because it is a case we have constantly brought forward in the discussions on agricultural rating relief. I am glad to think that in the case of the breweries the fears of my right hon. Friend that the same thing might happen are not likely to materialise. It has specially interested me to see how hon. Gentlemen on the back benches opposite who are interested in finance always come forward to support the Chancellor of the Exchequer even in all the unorthodox financial transactions he has carried through in the last four or five years. When another Government sits on those benches it will be no use their complaining that anything any other Chancellor may do is unorthodox. There is no hon. Member opposite, with the exception of the hon. Member for the City of London (Mr. E. C. Grenfell), who has dared to get up and tell the Chancellor of the Exchequer that the things he has done are in many cases opposed to what are considered the old Conservative ideas of finance. The Chancellor has met with no objection among the hon. Members opposite towards his starting an entirely new principle in our finance, namely, carrying forward a surplus. The basic principle of finance in previous years has always been—I am sorry to have to give the Conservative party a little lesson in what is really conservative finance—that you should never raise money except what was required for the actual expenditure of the year. The Chancellor said, "I am going to bring a surplus into existence," and hon. Members opposite never said a word against it or denounced it as Socialist finance. Simply because it was done by a Conservative Minister they do not point out the great innovation that has been made. It is not the only innovation. We have had other innovations, one of which was protested against by the hon. Member for the City of London.
There is another thing that must have filled some of the hon. Members opposite with disappointment. During the life-time of this Parliament we have had reports—though, of course, we have not been privileged to know what took place—that hon. Members opposite have held meetings to urge upon the Chancellor that economy should be carried out. At one time, it was suggested there was even a revolt in the Tory party, but, of course, that never took place. Now the Chancellor in this, probably his last, Budget speech, gives a parting kick to this economy committee by informing us yesterday that there is no room for large cuts in the social services. In our finance, there are three great divisions; one is debt, the second is the expenditure on military, naval and air forces, and the third comes under the heading of what the Chancellor calls the social services. In one of these divisions, the Chancellor has said that there is no room for economy. Any economies in future will have to be effected in the Fighting Services or by a reduction in debt. Those are the only two. Already, the right hon. and gallant Member for Burton (Colonel Gretton) has just informed us that there will have to be a large expenditure on the Navy, so he evidently feels the chances of economy in that direction have gone. We are left with the statement from the statesmen of the Conservative party that the only hope is a reduction in the interest on the Debt.
It struck me as one of the strangest things to listen to the speech of the right hon. Member who addressed the House from the Liberal benches. He was in a very peculiar position. The party with which he is connected have announced that they will, if they have the opportunity, raise a large sum of money in order to carry out certain definite measures to help the unemployed; in other words, that they would be prepared to increase the National Debt for this purpose. I am not criticising it because in different words it is very similar to the proposals which have for some time been made from these benches. It was put in a different way, but, whichever proposals are carried out, whether the Liberal proposals or the proposals which we have made, a large expenditure of public money would obviously be involved. But the strange part was the peculiar position of the right hon. Gentleman, because, as he went on with his speech, he forgot about the Liberal programme and showed himself to be the most Conservative financial expert in this House. He is the man who really lives on the old principles of Conservative finance, which have been given up by right hon. Gentlemen opposite. In the end, he held forth about the great necessity of doing something to reduce debt. But I listened with amazement to some of the statements he made. In view of the possibility that the party to which I belong may before very long be sitting on the benches opposite, I wish to say at once that I do not share the attacks the right hon. Gentleman the Member for West Swansea (Mr. Runciman) made upon the Government in regard to the rate of interest on Government stocks. I think, possibly, my view may be rather different from that held by many people, but from my experience in the City I consider that the conditions of the London money market to-day differ so enormously from what they were before the War that it is a delusion to talk as though one could finally fix what the rate of interest on Government stocks is going to be by what is done in this country.
We have had a good illustration of that in the last few months. The right hon. Gentleman suggested that one of the reasons for the raising of the Bank Rate had something to do with the Floating Debt, and the terms on which the last Government loan had been brought out. I rather imagine the reason why the last Government loan was brought out in the way it was, and why a certain part of the payment was postponed until early in April—the 1st or 2nd of April, I think—was out of consideration for the fact that the London money market is always short of money during February and March on account of the taxes which are being collected. The reason why the Government made this postponement was to help the floating of the loan. I never heard the slightest suggestion that the increase in the Floating Debt has anything to do with the raising of the Bank Rate. It has always been assumed that, in order to defend our gold reserves, it was absolutely essential for money rates on the London market to be higher, so that the difference between the rates paid in New York—where so much stock exchange speculation has been going on—and London should not be such as to draw money from London to New York. We were falling behind New York. We were the victims, so to speak, of what was going on in New York, and it seems to me that nothing could have been done in this country to save us, in view of our position following on our having gone back on to the gold standard. That important point has to be borne in mind when we are considering the chances of a reduction in the interest on our Debt.
I, and I think a good many other people in the City, heard with surprise the statement of the Chancellor of the Exchequer in which he made an estimate of the cost of the interest during the coming year. One imagines that it is altogether too low. One cannot understand how he can possibly expect to get his Treasury Bills out at a cheap enough rate to bring the figure within the proposals Be has put forward, and one would be glad to hear a little more information about that from the Financial Secretary. I should also like to ask the hon. Gentleman if he could inform us why it is, as shown in Table 3 on Page 4 of the White Paper, that the Ways and Means advances net repayment during last year amounted to £124,000,000, and that on the other side of the account we find a more than corresponding increase of £175,000,000 in Treasury Bills.
There are two further questions on which I wish to say a few words. I wish to support the point made by my hon. Friend the Member for West Leicester (Mr. Pethick-Lawrence) in regard to the effect of the fall in prices upon the rentier class, and I would impress upon the Committee that this fall in prices means that the burden of the debt presses all the more heavily upon the great mass of people than it did before. In an interesting supplement published by the "Economist" last November there was a statement by Sir Henry Strakosh in which he pointed out that out of our national income, estimated at £4,000,000,000, £1,070,000,000 was spent on Debt services, rent and fixed interest—the figure being equal to 26 per cent. of the total. Supposing there were a reduction in the level of prices from the figure of 100 to 80, then, assuming everything else remained the same, the percentage of the burden would be represented by 33 per cent. instead of 28 per cent. That has to be borne in mind as a set-off against the advantages pointed out by the Chancellor of the Exchequer in connection with the fall in prices.
To my mind, the most important financial proposal before us is one which I regret the right hon. Gentleman the Member for West Swansea did not deal with more fully than he did, and that is the proposal to help unemployment by the use of loans. When the Prime Minister was speaking two or three weeks ago he referred to the reasons why he did not believe in this suggested raising of loans. He said:
If that money is taken from existing resources that are now being used, you merely then may make something on the swings which you will certainly lose on the roundabouts.
As far as I can understand the line taken by those who support the Prime Minister, they seem to proceed on the assumption that there is a fixed amount of money. It is as if one has so much water in a basin; if one person takes a cupful out, there is that much less for the others. The arguments used in other quarters against the proposal were much on those lines. Take the Chancellor's illustration of the boat race. The Chancellor said: "There is so much energy in the crew who are rowing the race, and if you call upon that energy too soon there is so much less for the latter part of the race." That illustration lent weight to the argument of a limit somewhere, to the view that if we used the money in one direction we could not have it in another. I suggest that that is a false illustration, and that the funds available are not limited, certainly not in the way indicated
by those who oppose the proposals of the Labour party or the proposals of the Liberal party.
How do you get credit in this country? An increase in credit is based upon an inflow of gold. When gold goes into the Bank of England the Bank of England usually—unless there is some special policy against it—buys securities or makes advances or in some other way expands credit. Upon that expansion the banks then once again begin to increase advances, and you get a larger basis of credit. That is usually what happens at the time when there is trade prosperity. The argument of the Prime Minister would seem to be that this fund was always at its limit. But why should it be at its limit? I looked at some figures recently which showed that a few years ago, in 1921 and 1922, although the holding of gold in the Bank of England had practically remained the same, the deposits in 40 or 50 of the large banks for which figures were given had fallen from £2,700,000,000 to £2,553,000,000. At the same time it was found that the advances had fallen from £1,680,000,000 to £1,452,000,000. It seems to me that it stands to reason that in a time when trade is bad if the demand does not come to the banker automatically the advance is not made, and deposits are correspondingly smaller. Perhaps I may remind the House of a quotation from Mr. McKenna:
The actual spending power of the public is gauged by the total amount of currency in circulation added to the total amount of bank deposits.
If those bank deposits are not expanded to the limit they might be, surely there is a great reserve which might be drawn upon by a Government who want to provide work for the unemployed. That is the first point I would like to bring before the consideration of those who are interested in this question. I listened with amazement to the speech of the right hon. Gentleman the Member for Norwich (Sir H. Young) who was urging that the Trade Facilities Act should be brought into existence again. One of his arguments was that if a thing was done by private enterprise the results were not inflation, whereas if it were done by the Government it might lead to inflation. That is absurd. You get inflation if you manufacture more money than that money produces goods, but so long as you have the money and the
goods being produced at the same rate it seems to me there is no inflation.
Another point I wish to raise is the relationship of money passing from one country to another. We have had some experience of this in the case of Germany. A few years ago Germany had hardly any capital at all, and she owed large sums of money to the Allies. How did she pay off those debts? She did so by borrowing from America as much money as she owed. Germany found herself in desperate straits without capital, and, after borrowing the money, she postponed her debt repayments and used a large part of that money in the development of trade. That was the way in which Germany got out of her difficulties. Supposing this country said, "We must have £100,000,000 or £200,000,000 to deal with the unemployment problem." At the present time, we owe £35,000,000 to America, and supposing we went to America and borrowed £35,000,000, and so postponed payment of that year's debt and then proceeded to develop our resources at home with the £35,000,000 we had raised by taxation.
Would not this be a possible way of raising fresh money for an emergency? It is exceedingly difficult to tell how much capital is available on account of the money that is passing from one country to another. It may be attracted from America to this country or from America to Germany. Among the different money markets large sums are constantly changing hands. Although you talk about money passing, technically it does not pass at all. Mr. McKenna once told us that it is not the money that passes, but it is the control of it that passes. I think, however, this money does have some effect upon the amount of money available for loans.
I should very much like the Government to undertake an investigation as to what is the real effect of foreign loans upon our inland trade. The orthodox theory is that if you lend money it should go out in the shape of goods, and accordingly it is said it does not matter how much money you lend. I am not quite sure that that is exactly what takes place. Supposing a country, instead of buying goods from us, buys them from some other place and wishes to transfer the credit it has here elsewhere. Somebody wishing to bring money from that country to this country might provide the funds, and then no money would pass, and trade here would be left stagnant. How far is that possible? If there is any truth in the contention it may be that we are lending too much money, and therefore what we ought to do is to see that our credit is really being used in ways which mean that work will be at once supplied.
Quite apart from these problems, it seems to me that there is one advantage in loans of this kind, and it is that you know that the money so raised is going to be spent in giving employment, and consequently there is much justification for proposals of that kind. The terrible needs of the unemployed and the tragedy we see in the coalfields of so many young men being unemployed year after year should be faced up to. I am glad to think that the attention of the country has been drawn to this matter, and that is why I have brought forward these arguments in the hope that they may be considered.
An attempt is now being made to kill the schemes of the Labour party by saying that they do no good and that their effect will be simply to take money that would be more usefully employed in other directions. I believe that is untrue and it is a fallacy. The schemes of the Labour party are practical and would give employment which would be greatly for the benefit of the people. It is on those grounds that I believe that this is one of the most important financial questions we have before us, and I hope all who are interested in the solution of this problem will give this subject their most careful consideration.
It is quite interesting to hear a speech from the Labour party which has not indulged in abuse. I wonder how far the hon. Member for Finsbury (Mr. Gillett) is in touch with the financial proposals which have emanated from the leaders of the Labour party. I listened very carefully to the Budget statement made yesterday by the Chancellor of the Exchequer. I have heard many Budget speeches, but I have never heard a clearer or a more concise statement dealing with our national finances than that which was made yesterday by the Chancellor of the Exchequer. I think the right hon. Gentleman has had a very good Press, and even the criticisms of the Budget proposals which have been made in this House and outside do not cut very much ice. It is a great pity that so many speakers from the Opposition side seem to delight in trying to belittle any improvement in our national finance or our national trade, instead of congratulating ourselves that there is some prospect of an improvement.
I know it has been said with great force and sometimes with that bitterness to which we are accustomed from the right hon. Gentleman the Member for Colne Valley (Mr. Snowden), that this is an electioneering Budget, and that that is the reason why these proposals have been brought forward. It is a very curious thing that the removal of the duty on tea is a good thing when it is put forward by the right hon. Gentleman the Member for Colne Valley, but, when it is pro posed by a Conservative Chancellor of the Exchequer, it is called electioneering. Surely, it is the duty of the Chancellor of the Exchequer to find out where the shoe pinches, and make every effort to relieve the pressure and make things easier for the people of the country generally. Why should hon. Members opposite think that they alone represent the working-classes when as a matter of fact the Conservative party represents a greater number of working people in the constituencies of this country. I was very much struck with the look of dismay on the faces of those who sit on the Socialist Benches when the right hon. Gentleman announced the abolition of the Tea Duty. That look of dismay was almost as bad as when those hon. Members hear of any improvement in the unemployment figures of this country.
We can look back with much satisfaction on the steady improvement in the condition of the workers of this country during the last four and a-half years. We have already heard that there has been a reduction in the cost of living and that has been accomplished without any reduction in wages. That has not been accomplished by the unwise policy of cutting prices which cause wages to fall. Undoubtedly, there is a general improvement in the condition of the workers. We notice this in the housing provision which has been made in various parts of the country. We also see it in the ap- pearance of the children, the women, and the workers generally; we notice the improvement in their clothes, their demeanour, and in their facilities for obtaining recreation; the whole outlook of the country has undoubtedly improved, and I am glad to think that it is still improving. Changes have taken place in the habits of the people. They are now more sober and possess better means of recreation.
I was glad to hear that the facilities for investment at home and abroad have increased. In this country, we are so dependent on our raw material that it is absolutely necessary that there should be money available to purchase that raw material in the cheapest market. I have noticed some of the ways in which our credit has been used during the past four and a-half years. Very little has been said about the great improvement in our electricity supplies, which have not yet arrived at full fruition. Facilities for further credit should be given in order that electricity schemes may be pushed forward. I welcome the proposal of the Chancellor of the Exchequer to take away immediately all the rates on agricultural land. It is within the knowledge of every hon. Member of this House that it is extremely difficult to assist agriculture on account of the variety of ways in which that industry is carried on, and what suits one district does not suit another. One part of the country asks for a tax on malt and barley and another district requires assistance in the development of a wheat belt. There are many different aspects of the case and by assisting one particular area you may do no good to the country generally.
I have been very much surprised at the extraordinary aversion of the agricultural community to co-operation. I have myself been particularly interested in that subject, but up to the present I have not met with very much success. I am glad that further relief is to be given to agriculture. I am pleased to hear that the Hop Duty is being continued, and I should like to know whether it is intended to extend it for one year or whether it means a renewal of the five-year period. I hope that further assistance will be given to agriculture on the lines of encouraging research and marketing. I believe that research and improved marketing conditions will give more real help to agriculture than any other proposals. I am pleased that there is going to be an extension of relief to agriculture rates. Personally, I hope it will be possible for these various proposals to be put into force at the same time. I think it is a much better policy to keep people working in their own trade as much as possible. The taking of men from their own homes involves the provision of houses for them. Many of these men, while they may be skilled mechanics, will not turn out to be skilled roadmen, and employment will have to be found for them in other directions. The only hope of a really permanent improvement of the trade of the country is by encouraging, by such means as the Minister of Health has proposed, the getting of people back into their own trades when their trades are again in a healthy condition.
With regard to the speech of the right hon. Gentleman the Member for Colne Valley, although I have heard most of this Debate I do not think that any comment has been made on certain passages in that speech which struck me as being of rather dangerous significance. The right hon. Gentleman stated that he was not satisfied with the Debt settlements between this country and the United States, and between this country and France and Italy, and he said that, owing to the action of the present Government, we had worse treatment than the Americans have given to France and Italy. He disclaimed responsibility, and I rather gathered that he suggested that, if the Labour party came into power, they would immediately re-open the whole of the Debt settlements which had been made. It strikes me, as one who has never been in an official position, that it is rather a dangerous thing to say across the Floor of the House of Commons, as statements made here may be repeated in the foreign Press and may react adversely to the interests of this country; and I think it would be of considerable interest to the Committee to know whether the right hon. Gentleman this afternoon was speaking on his own behalf only, or whether he was acting as spokesman for the right hon. Gentleman the Member for Aberavon (Mr. MacDonald), who has not only been Prime Minister but also represented this country at the Foreign Office. That is a matter which I think ought to be cleared up before this Debate closes.
I should think that the right hon. Gentleman the Member for Colne Valley must be congratulating himself on not having to frame a Budget on the Socialist proposals, because that would have been a greater tax upon his ingenuity even than criticising the speech of my right hon. Friend. I do not know whether the right hon. Gentleman was responsible for the financial proposals of the Labour party. I have not them here now, but, as far as my recollection goes, of the 63 or 65 proposals two-thirds would increase expenditure, generally by the simple method of saying that 10s. is not enough for a widow and she would be given £1, and that the present old age pensions were not sufficient and would also be doubled. Those proposals, while they may be desirable in themselves, would be found by the right hon. Gentleman to be extraordinarily difficult to put into effect if he happened to be Chancellor of the Exchequer at that moment. If we consider that, in addition to this large expenditure for which the Labour party say they would make themselves responsible, they propose to abolish altogether the Safeguarding Duties and the McKenna Duties, we shall appreciate the fact that, should this country have the misfortune to be governed by the Socialist party, the right hon. Gentleman would have to find additional taxation to the amount of £300,000,000. He made great play with the damage done to the Sinking Fund owing to alleged misappropriation of money which ought to have gone into it, but it seems to me that the credit of this country never stood higher than at present. One has only to look at the fact that War Loan stands now at a higher figure than ever it did before to see that the credit of the country has not been impaired by any action of the Chancellor of the Exchequer. I do not propose to go further into the details of the Budget, but would like to add my word of congratulation to the Chancellor of the Exchequer on his wonderfully able, witty, and, to my mind, true exposition of the finances of the country.
For the first time yesterday I had the pleasure of listening to the Chancellor of the Exchequer unfolding a Budget in this House, and I was very much interested in his speech from one or two particular points of view, though I was surprised at some of the sentiments that he expressed. While I expected to hear a real statement of the financial position of this country, with estimates for the coming year, I found that much of the right hon. Gentleman's speech was occupied with what appeared to me to be an attempt to prepare the way for hon. Members of his party to face the electors in the near future. I noted that, as on previous occasions, the Chancellor of the Exchequer was very anxious about economy, and had much to say with regard to the acomplishments of the Government in that matter. He prided himself on the fact that this Government had made great economies in administration, and on the fact that the greatest economies that had been effected were in the direction of reduction of armaments. He told us that the reduction per annum during the past five years was £7,500,000, but I suggest that such a reduction in the expenditure of this country on armaments will not satisfy the electorate, who are looking for something very much larger than that. Personally, I feel that the question of reduction of armaments ought to be one of the first things to which any Government should put their hand. Recently, I have been among the electorate, and I find that a cut of £7,500,000 per annum in expenditure on armaments will not be looked upon by the electorate as a great achievement, even by this administration; and I sincerely hope that some ways and means may be found whereby further cuts will be made in this direction, in which I believe great economies ought to be effected.
I listened particularly to hear what exactly the right hon. Gentleman proposed to do for the agricultural community and the rural population of this country. I was glad to note, and I desire to congratulate the Government on the fact, that they have at last realised the importance of increased telephone facilities for rural districts. I was surprised to find that at least 6,000 rural post offices and at least 1,600 rural railway stations had neither telegraph nor telephone facilities, and I am glad to note that the Government contemplate establishing telephone call boxes at some 5,000 of these rural post offices and some 1,300 rural railway stations. I am surprised that this very much overdue improvement, which has been pressed upon the attention of the House and of the Government from time to time, has taken so tremendously long to bring about. I notice that the expenditure entailed, namely, £1,750,000, is to be raised under the borrowing powers of the Post Office, and, that being so, as an ordinary business man I should have imagined that the Postmaster-General would have taken the matter into consideration very much earlier, and would have granted to the rural population these facilities for which they have been asking certainly during the whole time that this Government has been in power. I should have thought that, since the expenditure will have to be met out of the profits made by the Postmaster-General and his Department, the Government, and particularly the Post Office, would, as a mere matter of business, have given these facilities earlier. However, I suppose I ought not to complain, as the rural population which I particularly represent desire these facilities, or to inquire just how and when and why they are given, but ought to say on their behalf, "Thank you very much for granting us these extra facilities."
I noticed that the Chancellor of the Exchequer and the Government have at last realised that the agricultural community, upon whom Conservative Governments always seem to rely for their support, are growing terribly impatient. I do not know whether the results of the by-elections in Eddisbury and Holland-with-Boston have caused the Chancellor of the Exchequer to realise that these people are beginning to get very impatient, but I suppose I ought to say that the farming interest and the landlords of this country will welcome his proposal to ante-date the de-rating proposals so far as agricultural land and buildings are concerned. We are told that this is going to cost the country £2,500,000, but I imagine that the reply of the farmers will be that it has been costing them a considerable sum for the last 12 months, and that this ante-dating after all, is not such a great concession to give to them. While, on behalf of the farmers, I welcome this proposal, I want the Committee to realise that the money which is being handed back to the farmers is largely money provided by the agricultural community themselves, and also that, while this will help the farming interest and the landlords of this country, there is nothing in it for the agricultural labourer. Under the original proposals, although I dare say it is rather late to say so now, the agricultural labourer was to be called upon to contribute towards the money required for de-rating the land of his employer, through the kerosene tax which was proposed in the Budget last year. I want to say, on behalf of the agricultural labourers, that they have nothing to thank this Government for, and, while they have been and will be called upon, as a result of the Petrol Duty, to find some of the money, this Government is only attempting, after all, to help a section of the agricultural community.
The Chancellor of the Exchequer showed great pride in the results which had accrued from the imposition of the new Import Duties and the Safeguarding Duties. He told us that a revenue of £13,000,000 had been obtained, and also that, while the exports of some of the articles in question had increased, imports had gone down; and he suggested that employment had increased. All of these, I believe, are debatable points, but I was glad to note that he did not commit himself, as most hon. Members who usually sit on the benches opposite do when they get into the country, to the statement that the imposition of these duties has resulted in lower prices to the consumers of the articles in question. On behalf of the farming interest of this country I should like to ask, if the imposition of these duties really means that a lower price will be charged to the consumer, why are the Government afraid to impose these duties as regards the agricultural industry? The agricultural industry has been asking for a similar duty. The Government have promised every other industry that it shall receive help, but to the great farming industry they have said, "Your duty is to pay, and we have nothing to offer you." The farmers are positively dissatisfied with the attitude that is being adopted towards them, and I entirely agree with the National Farmers' Union when they say that if the imposition of these duties has worked to the benefit of other industries, either they ought to be included or, as I should prefer, the whole of the duties should be swept out of the way altogether.
The Chancellor of the Exchequer has been dealing again with the de-rating proposals as they affect the brewers and distillers. I wonder why he should have wasted so much time in his last Budget in presenting the de-rating proposals, and then, 12 months afterwards, say, "My proposals to-day are only taking away from a certain class of people what I presented to them 12 months ago." Perhaps I am quite wrong, but I feel that for the Chancellor of the Exchequer to bring proposals to the House to-day, to be debated day after day, and to tell us that the reason they are put forward is to rectify a tremendous mistake that I should have thought the Government ought to have been aware of when they made their original proposals is a waste of time. I notice that retail on-licences are to be reduced. Here, again, to my mind there is the danger that applied to the original de-rating proposals, that the money saved as the result of the reduction of these licences will not find its way into the pockets of the people for whom it is really intended. Unless safeguards can be devised which will guarantee that the on-licence holders themselves will receive the whole of the benefit, I feel that there is a danger that some of this money may find its way back to the brewery interests concerned.
As a new Member, I am delighted to know that the Government have at last decided to help along the free breakfast table and have taken off the duty on tea. That, of course, will be a feather in their cap when they have to face the electors presently, but it is the only feather I can see. It is the only thing they have to offer that they can take to their constituents and ask for a renewal of confidence, which it will be very difficult to obtain. It is certainly something, but, wrapped up with all the other proposals of the Budget, I do not think they are going to induce the electors again to return the Conservative party to power. I would very much rather have heard a bold statement and some really bold proposals for dealing with agriculture, which would, in one way or another, have helped the industry along. I would very much rather have heard a statement that the Government intended to help along the idea of creating more small holdings and getting people back to the land. I would very much rather have heard the Chancellor of the Exchequer expound a really bold scheme for dealing with the unemployment problem than heard him chip and jibe both Opposition parties because they were really facing up to the problem. The Liberal party have faced up to it, and the Government have failed to do so, and because our proposals are capturing the imagination of the electorate the right hon. Gentleman thought it was worth while to attack our leader. I take it as a huge compliment that, while having nothing to offer the country with regard to this great problem, he spent so much time attempting to ridicule and criticise the people who have really faced up to the problem.
May I first offer my hearty congratulations to the new Member for Holland-with-Boston (Mr. Blindell), which is in my county, on his admirable speech. I can say with truth that it is one of the best maiden speeches I have heard, at any rate during this Session. Perhaps I take particular pride in it because it happens that the hon. Member and I have been close friends for something like 20 odd years. [An HON. MEMBER: "He is one of your constituents, is he not?"] I am trying to get his vote and that of his wife and family. He and I have lived in the same town for many years, and there is no wonder we have had such an admirable speech, because that town is the greatest fishing port in the world and its inhabitants eat a lot of fish. Fish is food for the brain, and there you are! He and I have been associated in trade organisations for many years, and I can say with truth that I have never had any difference of opinion from him until he joined the Liberal party. I can congratulate him on this, that he has succeeded, at eight o'clock on a Tuesday night, in filling the Liberal benches. I never remember seeing the Liberal benches so full for the last four years on a Tuesday evening at eight o'clock. [Interruption.] I cannot fill my benches just now, though it is possible that, if I were making a maiden speech and had won a sensational by-election, a few Members on my side would deprive themselves of a little of their dinner hour to listen to my speech. I sincerely and heartily congratulate the hon. Member, because, although I do not agree with many of the points he raised, still the excellence of the delivery and making the best of a bad case is something that we can commend in so new a Member of the House.
I did not rise merely to compliment the hon. Member, though I am glad that I have had that opportunity. I want to say a word or two about a statement made by the Chancellor which does not seem to have excited a great deal of notice. He himself called it a modest matter. I refer to the
provision of about £30,000 a year for reducing harbour dues in certain cases where they press unduly upon fishermen, especially upon those engaged in the herring fisheries in Scotland and for assisting in the discovery of deep sea fishing grounds or in other ways. In addition certain debts to the Exchequer which weigh upon these fishing harbours and prevent them making full use of the rating relief will be eased either by remission or suspension."—[OFFICIAL REPORT, 15th April, 1929; col. 51, Vol. 227.]
He did not give us any details of the scheme he has in mind. Possibly, with all the great sums of money that are being mentioned in connection with this great Budget, this little matter of £30,000 may have escaped notice, but I hope we shall have a statement from the Secretary of State for Scotland or the Minister of Agriculture as to the intentions of the Government. Although this remission of harbour dues will not affect the trawling section of the industry, which I especially represent, we who belong to that section welcome anything which will assist the fishermen who sail from the small ports round the coast of England and Scotland, because we recognise that, although we are to a certain extent rivals in business, there is plenty of scope for all. Our men served along with them in the minesweepers and the patrol boats and we are not at all jealous of any little thing that is done on their behalf which will help them. We realise that they form a great recruiting ground for some of the best men we get into our trawlers later on and, therefore, we welcome this. It is rather a serious matter for the drifter men who follow the shoals of herrings round the coast during the herring season. They have to go into various harbours sometimes four and five times a week and they pay these dues each time. It is only something like 10s. to
12s. in some harbours but, in these times when the earnings are not too great, with these small boats it is rather a hardship, and if this proposal will relieve them of a considerable portion of these harbour dues we welcome it and we thank the Chancellor for even this small concession. I hope it is an earnest of better things to come in future years, because I think the money will be well spent and will encourage an industry which is a great asset to the nation.
I want to refer to the right hon. Gentleman's words,
for assisting in the discovery of deep sea fishing grounds or in other ways.
When I spoke upon fishery matters in the first Session, I pointed out that the trawling section of the industry did not require anything in the shape of doles. What they asked for was assistance in a practical way to enable them to extend their business, and that way was the way of exploration to find new fishing grounds. Practical men in the industry told me there were thousands of miles of sea yet unexplored which might be productive of good catches of fish. I suggested that something should be done in this direction. These suggestions had been made before I became a Member of the House. I have here a report in which detailed suggestions were put up to Government after Government many years back, but nothing was ever done on behalf of the fishermen in this practical way. I am glad this Government at any rate has moved in the right direction. In the first place, in conjunction with the Fleetwood Fishing Vessels Owners' Association, they fitted out a boat which went en an exploration voyage with very satisfactory results. Then a difficulty arose as to financing further operations. I took it to the Chancellor and now he has arranged for a certain sum to be devoted to this special work. If that is so, on behalf of the fishing industry I say, "Thank you very much for a very practical form of help to a very important industry."
In arranging this scheme I hope the Minister who is responsible for the administration of the money will take into consultation leading men in the industry as well as the experts he will find at the Admiralty, who know a good deal about this work of research. If he does that, I am certain the money will be well spent and will bring in, I hope in the form of taxes which he will be able to collect from the industry because of its increased prosperity, more than he spends upon this practical work. I again thank him for this help. We feel that it is possibly enabling this great industry to expand further and further. We have had the greatest advertisement that any trade could possibly have during the last week or two in the announcement by certain eminent doctors that one of the greatest helps towards the King's recovery to health has been the fact that he has partaken of a fish diet, which has been eminently suitable to the condition in which he was and supplied those vital vitamens that were required to help along his recovery. When that is known throughout the length and breadth of the land, as it will be, it will be of great help to this great industry. I hope that, as a result of what the Government have offered to do in this matter, we shall find greater prosperity coming to that industry which, I am proud to say, I represent to the best of my ability in this House.
I want to say a few words about another subject. It will probably be within the recollection of the Committee that after the last Budget was introduced, I moved Amendments to the Betting Duty during the Committee stage of the Finance Bill. I believed then, as I believe now—and I am glad to know that the Chancellor of the Exchequer has come to the same conclusion—that it was a tax which my right hon. Friend could not defend. I have consistently voted against it. My reason for doing so, as I then stated, was because it was a tax on turnover. I suggested that in place of a tax on turnover a licence duty should be charged, and also a licence charged for each telephone used by the bookmaker. I further suggested a form of graduated licence duty which, I think, would probably meet the case better than the one which the Chancellor of the Exchequer has now introduced. I am glad to know, however, that the Chancellor of the Exchequer, after due consideration, realised that the old form of tax with regard to betting was an unfair one. I will not say that it was altogether unpopular, but I think I can say with truth that it was unpopular certainly as far as the bookmakers were concerned, and that it was resented by many people.
I am glad that the Chancellor of the Exchequer has at last realised this, and I want to congratulate him upon being strong enough, once having realised that a mistake had been made, to rectify the error as soon as possible. I do not believe for a moment that it will in any way detract from the good wishes of those who believed that the tax itself was right in the first place. I quite agree with what the right hon. Gentleman said yesterday, that when the tax was first introduced, it was hailed with satisfaction by many people. They said: "It is a tax on luxury, and no one will mind paying the tax. It will be all right, and people will please themselves whether they pay it or whether they do not." But these same people did not foresee what some of us foresaw, that difficulties would arise when the tax was imposed. We spoke of the great anomaly that existed between the cash bookmaker and the credit bookmaker. We showed how the wealthy man who had a telephone could bet with impunity, and how the poor man who wanted to put on his shilling would be liable to be hauled up before a Court and heavily fined. I am sorry to say that even in these proposals we are not going to do away with the anomaly. It is a real grievance as far as the working-class of the country is concerned—the sporting section, at any rate. Even those who do not bet at all feel that it is an injustice that one section of the community can bet with impunity while another section can be fined for doing the same thing by means of ready-money betting instead of by credit-betting. I hope that this Committee will realise that we have to do either one thing or another. We have to make the whole of the betting business illegal, or see to it that there are no such anomalies as I have mentioned to-night. Nevertheless, I am glad that the Chancellor of the Exchequer has withdrawn this tax, and is going to substitute a licence duty in its place. At all events, he will satisfy those bookmakers who do their business over the telephone.
I regret very much to note that nothing has been done in the way of remission of the Entertainments Duty. I had been led to believe that this was being carefully considered by the Chancellor of the Exchequer and his advisers, and I hoped that something was going to be done, particularly in regard to the lower priced tickets of admission to entertainments. It may be said that this is a luxury tax, and people can please themselves whether they visit picture houses, theatres or football grounds, and that putting on a copper or two of tax will not make any difference. At the moment it is making a considerable difference to the poorer people, who, I think, more than any others, do require something in the way of diversion and entertainment. It is making a considerable difference to the takings of many of the places of entertainment in the smaller towns. People point to the prosperity of the industry and say: "Why do not the proprietors of these places pay the tax, and charge less to the people who wish to enter these places?" Probably some of the big places in London ere very prosperous, but in the smaller towns throughout the provinces there are many houses which are only just paying their way, and others which are not even paying their way. I am told by the proprietors of some of these houses that if the tax were taken off the cheaper-priced seats, they would be prepared to take an equivalent amount off the price of entry into those places. This would mean that they would get more people to attend these places of entertainment, and they would reap their benefit in this way. I hope that the next Chancellor of the Exchequer whoever he may be, will give consideration to this matter, because I believe that the working people are feeling the effect of this tax. Being a War-time tax it ought to be taken off the cheaper-priced seats at any rate.
I welcome the bulk of the features of this Budget. I believe that the Chancellor of the Exchequer has brought forward a courageous Budget, and if it can be said against him that he has brought it in as an electioneering Budget, I do not think that there is anything much in that to worry about. I think I am right in suggesting that perhaps at the moment all the speeches which are made in this House from all sides are made with one eye on the ballot box and the other eye on the Chairman of this Committee.
There are one or two matters upon which I should like a little more information. Yesterday the Chancellor of the Exchequer made a statement, and put it into three different forms. I think that he had some difficulty in substantiating his statement, but he did not give us sufficient information to enable us to check it. He said, for instance:
The cost of living, according to the latest figures, which I only received at the end of last week has declined by 18 points at least, while money wages over the whole country are almost exactly at the level of 1924."—[OFFICIAL REPORT, 15th April, 1929; col. 28, Vol. 227.]
He does not tell us with what figure he started. In 1924 the average increase in the cost of living, taking 1914 as 100, was 175. In October, the month this Government took office, it was 180. It increased to 181 in December. The cost of living immediately started to rise. The last figure which I have is for 1st March, 1929, and is 166. If one takes 166 from 180, it leaves 14—not 18. I should be sorry if the arithmetic of the Chancellor of the Exchequer went wrong on such a simple sum as that. The other assertion that he makes that wages for the whole country are almost exactly at the level of 1924 cannot be borne out. He saves his face by saying "almost." I would like the Chancellor of the Exchequer to be a little more accurate than that, because wages have been reduced since 1924 by £32,176,000. They were increased by £1,960,000 in 1926. That leaves a net decrease of £30,216,000 in the annual wage bill of the workers of this country.
That may not be a serious matter for the Chancellor of the Exchequer who deals with hundreds of millions of pounds, but I fancy that he would have felt a little less comfortable yesterday had he found himself with a deficit of £30,000,000, and had to explain how it came about that he had miscalculated or that some abnormal circumstances had occurred which made it impossible to balance his Budget. This decrease of £30,000,000 in the wages of the workers of this country is making it impossible for them to balance their budgets. It has to be remembered that this reduction follows reductions of wages since 1920 of over £560,000,000 a year. There have been only two years since 1920 in which the increases have been greater than the de- creases, one was 1924, when the wages increased by £28,000,000 a year, and the other was 1926, to which I have already referred. All the other years have shown decreases in wages. Whilst the decrease of £30,000,000 since 1924 may not be a great sum in the opinion of those who are accustomed to counting in millions of pounds, it has to be added to the huge decreases which have previously occurred, and is indicates a tendency.
I should like a little, further information in regard to the Chancellor of the Exchequer's method of calculation. He said:
What is the burden of these remaining taxes on tea and sugar compared to the relief afforded to the consuming public by a decline, of 18 points in the cost of living? This identifiable increase in the purchasing power of the wages of insured wage and salary earners alone is equivalent to a remission of indirect taxation of £160,000,000 a year."—[OFFICIAL REPORT, 15th April, 1929; col. 36, Vol. 227.]
If the right hon. Gentleman's first figure is wrong, his conclusion is wrong. His conclusion cannot be substantiated, because it leaves out of account the reduction in weekly wages, it leaves out entirely the fact that there are millions of workers at this moment whose, wages fluctuate with the cost of living and whose wages follow downwards any fail in the cost of living. Their new wage will not purchase any more than their old wage would do. It is intended that that should be so, by this scheme. Therefore the Chancellor of the Exchequer is wrong if he has not taken that into account.
Another point not taken into account by the Chancellor of the Exchequer, is the number of people who are working short time. The right hon. Gentleman is dealing not with earnings but with wage rates. A man who is supposed to be earning £3 a week but only working three days gets 30s., but the Board of Trade reckons him as a £3 a week man. If his wages rise or fall, they rise or fall on the base rate or the wage rate, but the Board of Trade cannot take into account the number of days that a man loses. That would be too tremendous a task for the Board of Trade. In the iron and steel trades the employers, in making their return, take into account the number of days worked by their men. They make returns of a group that is supposed to work full time, another working overtime and so on, and these figures approxi- mate a little nearer to accuracy than can possibly be done by the Board of Trade simply saying, "Here is a rise of wage for the engineers. It means 1s. or 2s. per week." Moreover, the right hon. Gentleman's calculation does not take into account the people who are unemployed to-day but who were employed in 1924. I feel safe in asserting that the purchasing power of the working-classes of this country is not greater than in 1924 but is less, and I should be glad if the representative of the Treasury would give the figures on which they base their argument that the purchasing power of the workers is £162,000,000 higher in 1928 than it was in 1924. It will take a great deal of demonstration.
I have been looking at the returns of the Inland Revenue Commissioners, and I find that for the incomes which came under review—it does not represent the total income of those receiving other wages, or income from investments, but only the income which comes under review—the sum is down by £500,000,000 since 1920, and it is down by £66,000,000 since 1924. If we go into another category of Income Tax payers, leaving out the manual labour class, and the class below the exemption limit, we find that their incomes have been increasing each year for a number of years. There has been a steadying up so far as the Super-tax payers are concerned. For the people above the £2,000 a year limit, the purchasing power has increased, because they have not only more money but they have the advantage of the lower prices of commodities. Consequently, on two scores they can purchase more than they could in 1924. Of the people below the Income Tax limit, their incomes have not been increasing for a number of years, but are less. Notwithstanding the drop in the cost of living, their purchasing power to-day, in my opinion, is considerably less than it was in 1924.
I hope the Financial Secretary to the Treasury will pay some attention to my query, because I am afraid that the statement of the Chancellor of the Exchequer, which has been repeated twice in this House to-day, will do harm to the lower-paid people. It will give an impression in the minds of others, who could help, that these people are becoming better and better off. I am associated with 50,000 or 60,000 of these people, and am continuously travelling about the country amongst all sorts and conditions of people who are below the Income Tax paying level, and I know that they are worse off than they were in 1924. I am not taking the year 1924 because that was the year of the Labour Government. I want to get corrected a statement which may do considerable harm to people who need help, the low-paid people, the people who are not within measurable distance of the Income Tax paying group, people who are working short time, people who are unemployed now who probably were employed in 1924.
I have not had the figures for April, probably I shall get them to-morrow at the office, but according to the figures for March there are nearly 200,000 more unemployed workpeople in this country to-day than at the same date in 1924. Those people have not more purchasing power, and they are being injured by the broadcasting of a statement, its publication in the newspapers, and its use by Members of this House not only here but on political platforms, that they are becoming better and better off. The Chancellor of the Exchequer is evidently convinced that they are better off, and I suppose that if he remained in office for the next 100 years they would be quite well off. He took the trouble to repeat his statement three times. He said:
I have already spoken of the immense boon of at least £160,000,000 a year conferred upon the wage-earners by the reduction in the cost of living."—[OFFICIAL REPORT, 15th April, 1929; col. 63, Vol. 227.]
I see no statistics in tie Inland Revenue Commissioners Reports or the Board of Trade Reports, or in the Ministry of Labour Reports, to bear out that assertion. I should be pleased if the Financial Secretary would tell us if they took 175 as the basic figure in 1924, or did they take 180 or 181, also whether the present figure is 166 or 162? Have we had a drop of four points in the last month?
The Government are pinning their faith to their de-rating scheme to help unemployment. I assert that it will not help unemployment in the least. The assumption was that de-rating would give the employing class more money to reduce prices and that reduced prices would bring increased trade and, consequently, increased employment. That is an illusion. It ought to work out something like that; that is the old theory, but the old theory is being cast to the winds by many businesses to-day. The railways ought to be carrying goods at lower prices but I am told that steel works have had the price of their coal increased in some cases up to an amount equivalent to the advantage of the reduced transport, which has gone to the colliery company. In other cases the price of coal has been increased higher than the advantage which reduced transport might have given, and that has also gone to the advantage of the colliery company and not to the steel manufacturer for whom I understood it was intended to enable him to reduce his prices and get more trade.
The price of coke has increased consequentially upon the increase in the price of coal, and because we have been going through a period of severe weather markets for coke have sprang up on the Continent where you can get 6s. and 7s. per ton more for coke than in this country. Naturally the coke maker out for a living and not for old clothes wants the best price he can get. If the pig iron manufacturers at home wants coke they have to pay more for it, and instead of getting it for 12s. 6d. per ton as they did last year they have to pay as much as 20s. per ton. That means that pig iron has advanced in price. And steel will advance in price. Some brands have already risen. If this Government is depending upon de-rating to reduce prices then their scheme has gone astray. Prices have not been reduced; they have gone up. Fortunately for them and for the country there has been an increase in the price in iron and steel, coal and coke in foreign countries, and they are not in such a good competitive position in relation to ourselves as they were previously and our trade is slightly better. We are importing less pig iron, and making more; we are importing less steel, and making more. That is all to the good of the country.
I am not making this criticism in order to score political capital. I can say that with a clear conscience, because during the debates on the De-rating Act I said that I had no objection whatever to the Government helping the steel makers on to their feet, but that if that help was going to reduce wages then I had a strong objection. I am in the same position now. I think they would help trade much more if they had gone another way to work. They should have made unemployment a national charge and given help to firms which were making an effort to survive so that they could get money at lower rates of interest. When hon. Members opposite tell us that the credit of the country is higher to-day than ever before and quote the prices of Government stock, I would remind them that all other stocks have dropped and that people who have money to invest are afraid to invest it in industry. If they are to have any interest at all on their money they have to leave it on deposit at a low rate or buy Government stock which will give them a better return, and they are much more likely to buy Government stock than leave their money on deposit. It must be remembered also that in 1924 the Bank Rate was 4 per cent., whereas now it is 5½ per cent., and people with overdrafts have to pay 6½ per cent. That 6½ per cent. in the case of manufacturers in the iron and steel trade, is a heavy burden. If the Government had proceeded in another way and used the Trade Facilities Act, as the right hon. Member for Norwich (Sir H. Young) supported, they would have accomplished some good and would have really helped trade to get on its feet. The small amount of gain there will be in de-rating will not be sufficient to help the iron and steel industry in this country to reorganise. De-rating will not help works which are not working. We have 464 blast furnaces in this country, and 145 were working last month. What has become of the others? They are going to wreck and ruin; they cannot compete in their own country, much less with the better class furnaces in other countries. These people want help, and de-rating, as far as I can see, is not going to touch them at all, whereas an extension of trade facilities might have helped.
The right hon. Member for Norwich made me smile when he assured his colleagues that this was not socialism. I am not worrying as to whether it is socialism or not. If it is going to help industry and give the working people a better standard of living I shall support it. The right hon. Member for Norwich could have given other illustrations. You are growing cotton at the Southern end of Lake Victoria and the Government have spend £11,000,000 in making a railway from one point to another to join up with another railway which will take that cotton to the coast so that it can be sent to Lancashire. That is socialism. I support it as cheerfully as the right hon. Member for Norwich supports an extension of the Trade Facilities Act; and I do so for two reasons. I do not mind some capitalists being benefited if you are going to make this country independent of America for cotton, and if you are going to give us a second market in the world. In that case we shall be in a better position to keep our cotton industry running in Lancashire and be able to keep the men in the workshops rather than trotting about the streets. In that way the Government could have helped enormously, even under private enterprise, to restore some of our basic industries. My disappointment is that they have not tried to do so. They do not see eye to eye with us on this side. They prefer to gibe at us and to tell us that our proposals could not be carried out. But they go on carrying them out. What is de-rating if it is not State action in an attempt to help industry? Why is it that this House taxes one section of the community to relieve another section and to help it to survive, even though it is represented by private capitalists? It is State action. What is the House doing when it gives pensions and unemployment pay and all the rest of it? That is State action. It is intended to increase the amenities of life in this country.
I was pleased to hear the Chancellor of the Exchequer admit that the return to the gold standard had two effects. It did a large measure of good, he said, and everyone expected that it would do a certain measure of harm. I am one of those who believe that the harm far outweighs the good. I believe that the good was done to people who did not need help, and that the harm was done to those who needed help. It improved the position of those who live upon interest, people with fixed incomes; it injured those who live upon weekly wages and have no other sources of income. I wish that the Chancellor of the Exchequer had seen that picture more clearly before he consented to go back to the gold standard, when he did and in the hurry that he did, and then probably we would not have had quite so much suffering between 1925 and 1929 as we have had.
I shall be forgiven, I hope, if in spite of the earnest, moderate and widely informed speech to which we have just listened, I do not follow the hon. Member into the technical and mathematical details with which his speech was filled. However, in passing I would make two comments. The first is that in his calculations and figures with regard to the comparative cost of living, the hon. Member entirely omitted to take into consideration the enormous and steadily mounting sums of money that are being spent on what are known as social services, of which those sections of the community who are in the greatest need of assistance get the greatest proportion. Secondly, his remarks about the present quotations on the Stock Exchange—if he was accurate, which I am not prepared to affirm or contest—would seem to indicate that, as soon as the investing public is assured that a Conservative Government is to be returned to power after the next Election, the low quotation of stocks to which reference was made will be rectified with great rapidity.
When the oracle has spoken and the box of Pandora has been opened before us, the Chancellor of the Exchequer must expect the mixed grill that is inseparable from the day after Budget day, and he has not been disappointed in that respect this afternoon. Criticism and suggestion, praise and blame, have been equally administered—primarily criticism and blame from the benches opposite, and suggestions and praise from these benches. I do not wish to speak on the question of broad finance or such matters as the Sinking Fund and the gold standard. As my right hon. Friend the Member for Norwich (Sir Hilton Young) said this afternoon, this Budget does not primarily raise questions of high finance, but rather the distribution of a comparatively moderate surplus, a good deal of which has been spread over a wide surface. It is with regard to those matters that I wish to say a few words.
Of course the biggest matter with which the Budget deals is the remission of the Tea Duty. I whole-heartedly support the action taken. But not solely for the reasons put forward hitherto, not because it is taking a tax off an article which is so widely consumed, not because of a reduction of the cost of living which will go into the homes of the poorest. There are still a few among us who believe that there is greater nutriment in British beer brewed from British barley than in the tannin which, like a snake ill the grass, lurks in the tea-cup. I welcome the abolition of the Tea Duty because once for all we are to be free from the tedious repetition of annual speeches as to whether the Duty should or should not be taken off.
As a representative of an agricultural constituency, it is only natural that I should look to those features of the Budget which particularly touch agriculture. Naturally I welcome the fact that it has been found possible to bring forward the rating relief of agriculture more rapidly than was at one time anticipated. But this is a Budget of small things widely distributed, and what agriculture will appreciate more than its pure cash value is something much smaller, and that is the development of rural telephones. It is only those of us whose lot is cast in the comparatively sparsely populated countryside who realise how completely cut off one can be not only from social amenities, but from ability to get into touch with markets and prices and from something that goes right to the homes of everyone in the country, and that is the ability in an emergency to get hold of a doctor. On that comparatively trivial basis I believe a sigh of relief will go through the whole of the English countryside because there is the prospect of an immediate and comparatively widespread increase of telephone facilities in our rural district.
There are people who maintain that in dealing with a surplus a reduction in Income Tax is a much sounder thing for the general financial and industrial welfare of the country than frittering it away in such a way as a reduction of the Sugar Duty or the Tea Duty. I am entirely unorthodox in that respect. We hear a great deal about the increased purchasing power of the community, and although hon. Members opposite get entirely unbalanced over that matter, at the same time I believe it is a statement that contains a very great truth. If we get back trade prosperity, which is the best way of absorbing the unemployed, side by side with that comes obviously the increased purchasing power of those who are earning full-time wages. That leads to increased activity in our distributing trades and, therefore, in those producing trades from which they purchase. If you have a £10,000,000 surplus, I cannot see that it matters whether you use it for a reduction in the Income Tax or for a reduction of taxation on the people as a whole. Money cannot be destroyed. Unless people hoard it like French peasants in stockings, it must circulate, and it must ultimately get back into those channels by means of which it will be used for reinvestment and for the development of industry, thus giving more and more employment. Those who advocate using a surplus always for reduction of Income Tax, rather than for the remission of widespread taxation, do not seem entirely to appreciate the importance of that consideration.
There is one thing in the Budget on which I should like heartily to congratulate the Chancellor of the Exchequer. Yet in this matter he has followed in the steps of his predecessor in office, who has, this afternoon, made a speech far from complimentary to his opposite number. In the United States there are certain taxes which are known as "nuisance taxes." These are taxes which cause the maximum amount of irritation to the taxpayer, and give the minimum amount of benefit to the Treasury. The right hon. Gentleman the Member for Colne Valley (Mr. Snowden) during his term of office removed one nuisance tax which was called Inhabited House Duty. It caused a great deal of irritation and involved the filling up of one more form. The Chancellor of the Exchequer on this occasion has removed the Railway Passenger Duty, which I regard as an archaic nuisance. But many taxes of this kind still survive. I include in that category the relics of the Land Taxes. It is all very well to say that some people have now redeemed the Land Tax and, therefore, would be unfairly discriminated against by its removal now, but the fact of the matter is that the Land Tax is an archaic survival from a less civilised age, and the sooner it is done away with the better.
Another tax which might be abolished—although hon. Gentlemen opposite may loudly contest the proposal—is the Licence Duty in respect of male servants. It may be said that well-to-do people ought to pay for the privilege of employing male servants, but I contend that we are subsidising additional unemployment by continuing that form of nuisance tax. It is high time that it was done away with, and also such taxes as the Licence Duty on armorial bearings. These things, trivial in themselves, have a great effect on the mentality of the people for whom we in this House of Commons are responsible, especially at this time when we are considering the tax system of the country. Therefore, while congratulating the Chancellor of the Exchequer generally on the way in which he has distributed the comparatively small surplus which is available, I commend to him and to his successors the suggestion that they should consider the discontinuance of these trivial and irritating taxes of which I have spoken. I conclude by repeating what cannot too often be repeated—that every Chancellor of the Exchequer and indeed every Parliament ought to use the positive "must" instead of the negative "cannot" before the word "economise."
I wish in the first place to congratulate the hon. Member for the Holland-with-Poston Division (Mr. Blindell) on his maiden speech. The hon. Member possesses a remark able fund of self-confidence and an entire absence of that stage fright usually felt by new recruits to this assembly upon their first appearance. I do not propose to detain the House at great length but I could not resist the temptation to intervene in a Budget Debate. I have heard some 12 or 13 Budget speeches. There is a singular attraction to me in Budget speeches, and particularly in the Budget speeches of the last five years, owing to the personality of the present Chancellor of the Exchequer. The right hon. Gentleman on this occasion has excelled his previous records. He has made a speech of characteristic vividness and wit—the most remarkable piece of electioneering propaganda that I have ever heard from the hustings in all my political history. I am not complaining. It is the game, and, in the words of the late Lord Curzon, "What a game!" It all resolves itself into a question of Mahomet and the mountain. It has been quite evident from the last few by-elections that the mountain not only refused to come to Mahomet, but was getting as far away from Mahomet as it possibly could. Therefore, Mahomet found it necessary to come to the mountain, and he has come—with this Budget. I regret to say that the only result, as far as I can see, is not even the proverbial mouse but an insignificant chirping cricket vainly endeavouring to hide its past identity.
The Chancellor of the Exchequer has charged his political opponents with various sins of omission and commission including the engineering of the General Strike. I do not know what the Chancellor of the Exchequer would do without the General Strike. Those words are like a sweet morsel on the right hon. Gentleman's tongue on every possible—and impossible—occasion. It comes with exceedingly bad grace from the right hon. Gentleman with his past record to accuse anybody of political inconsistency. It has been my privilege to enjoy his acquaintance for over 25 years. Yesterday, he reviewed five years of his record, but I can go back much further than that. I do not intend, however, to do so to-night. I wish to deal only with the right hon. Gentleman's record of the past five years and with this remarkable Budget. The salient points with which I am concerned are the removal of the Betting Duty, the removal of the Tea Duty and the immediate relief to agriculture. The most regrettable thing about the whole business is the humiliating confession, disguised under a light, fantastic tone, that in the Betting Duty he backed a "wrong 'un." It-is not the only "wrong 'un" which he has backed. His de-rating Measure particularly started as a first-class favourite, but I think it will be admitted now, even by its backers, that it is eventually included among the "also rans."
His dark horses on this occasion are agriculture and the Tea Duty. I think I am justified in describing his abolition of the Tea Duty as something like a death-bed repentance, because I may remind the Committee that in the last Budget discussions the Labour party tabled an Amendment, not for the abolition of the Tea Duty, but simply for a reduction of it, and the Chancellor of the Exchequer and all his followers vigorously opposed it and went into the Lobby in opposition, not to its abolition, but to a slight reduction of the duty. We on this side of the House are often twitted with having done very little during our nine months' tenure of office, but I may remind the Committee that the Tea Duty, in some shape or form, dates back to the time of Queen Elizabeth, and that it has taken the Conservative party hundreds of years to recognise the virtue of the abolition of the Tea Duty. The virtue of what I suppose the right hon. Gentleman would call the free breakfast table never occurred to the Conservative party until its own political skin was in danger, but what is the use of talking about a free breakfast table to millions of human beings who have neither table nor breakfast at all? Practical men would talk about supplying both table and breakfast before taking off a tax of this sort.
The right hon. Gentleman's estimate of the consumption of tea was rather a curious one. If I heard him aright—and I am open to correction if I am wrong—his estimate of the consumption of tea was 9 lbs. per head of the population per week.
Well, I may be mistaken, but, speaking from practical experience, I should say that the average weekly consumption of a family of five or six does not amount to more than 1 lb. or 1½ lb. Those who buy their tea by the pound or the half-pound are not so badly affected by the duty of 4d. or 2d., but there are millions of people in this country who cannot afford to buy a pound of tea, or half a pound, or a quarter of a pound. They buy it in pennyworths and two pennyworths, and how are they going to benefit by the abolition of the duty of 4d. per pound on tea? The comparison between the consumption of tea and the consumption of alcoholic liquors is again a mistaken estimate of the real situation, and shows a lamentable want of knowledge of the true facts of the case as they affect the poor people for whom the right hon. Gentleman claims that the abolition of this Tea Duty will be a benefit. The facts are undeniable. The economic conditions of these people for years and years have been of such a character that those who could afford to buy beer can no longer do so. Their staple food is tea, bread, and margarine, or, as the casual docker puts it, in his picturesque language, "a pint of scaldy and a doorstep."
I assume that the right hon. Gentleman has included in his estimate of the consumption of tea the hotels, the restaurants, the cafés, and the foreign visitors to this country, but if he looks into the question very carefully, I think he will find that what I state is true, that there are millions of human beings in this country to-day who cannot possibly receive any benefit from the abolition off the duty on tea, simply because they buy it from hand to mouth, in very small quantities; yet these are the very people upon whom he claims to be conferring some advantage, the very people whom he has thrown upon the human, or inhuman, scrap heap, and for whom he declares, almost with tears in his voice, that nothing can be done and that they will have to welter in their own poverty until trade improves.
The right hon. Gentleman has produced a few dark horses and has managed occasionally to get his nose first past the judge's box, by bumping his opponents. This is a repetition of the same old trick. He is trying again to bump his opponents, but I venture to say that the inevitable result will be that he will eventually, and very soon, be warned off the course altogether. There was not a word for the unemployed. Nothing can be done for them, and in almost tragic tones the right hon. Gentleman told us they must welter or stew in their own unfortunate juice. Day by day, in my own constituency, I have seen men going to the Poor Law guardians, begging, shut off the live register, and although the live register represents 1,250,000 unemployed persons, there are at least another 750,000 who are not on the live register, some of whom never were and others of whom have been shut off it. These are the people to whom the hon. Gentlemen opposite are going to appeal in a few weeks from now. All I can say is that the Government should bear in mind the words, "These be thy gods, O Israel."
I would like to ask the Financial Secretary two questions. One is whether he can give the Committee any particulars of the conditions under which licences will be granted to book-makers in order to avoid any possible inconvenience and fraud to the people who deal with them. I will give an illustration. One of my constituents, a commission agent, has been in business for 20 or 30 years, and has earned the respect of all the sporting fraternity in the community. He does not bet himself, but one of the more unscrupulous and slippery members of the book-making profession has taken out a licence in his name. The commission agent has been to the police and to the Revenue authorities, and they say that they cannot help him because at the present time any one can take out a licence in any name he likes. I appeal to the hon. Gentleman to assure the Committee that when the time comes he will make regulations so that no man shall be able to take out a licence in somebody else's name. The other question I desire to ask is from what date off-licence holders will be able to sell half bottles of spirit. Does it date from yesterday, and if not, from what date?
The hon. Member for St. Helens (Mr. Sexton) said that he had followed the Chancellor of the Exchequer with great interest for 25 years. I am a much younger man than the hon. Member for St. Helens, but I have had the privilege of following the career of the Chancellor for 30 years. I was closely identified with him when he contested a seat in Oldham, and my father and I can claim a first-hand interest in him from that day. He was then of the type that we looked up to. I remember the time, and the hon. Member for Oldham (Mr. Wiggins) may well remember it, when my father predicted a great future for the then lad who contested the Division. He was opposed for his optimism, but I maintain that the speech which the right hon. Gentleman made yesterday justified the claim which my father made 30 years ago for his future. I have only one criticism to make of the Budget. I hoped when the Chancellor said that agriculture was to be relieved from 1st April, that something was going to come for industry, and I am disappointed that our poor cotton trade is not to have some immediate assistance. I regret it. Certain industries do not require assistance, but we certainly require every assistance that we can possibly have. I am not jealous and selfish and think that cotton is the only industry on earth, but had the Chancellor taken one or two distressed industries like cotton, wool and steel, and relieved them at once, and left the more prosperous industries until October, I should have been happy and satisfied. We are looking forward with optimism that when we are relieved later in the year, it will help to turn the tide.
I have not heard a constructive criticism yet from the Opposition benches. Alternative schemes have been put forward. The scheme of the official Opposition has not been put forward by the Leader, and the ex-Chancellor of the Exchequer has not contributed anything to the Debate of a constructive nature. The right hon. Member for Derby (Mr. Thomas) made a speech last week on what a Socialist Government would do. He said that they would raise the school leaving age to 15, and reduce from 65 to 60 the age of old age pensioners. He said that without any real consideration for the financial point of view. To raise the school age would have two or three very serious effects upon the life of the country. In the first place, we have not sufficient schools to accommodate the children if the school leaving age were raised, and it would mean spending money on new schools and providing extra teachers. In other words, it would mean increasing the education grant. The other alternative would be to increase the size of the classes and so to decrease the education facilities of each child. Hon. Members cannot have it both ways. We have not the money to provide new schools.
I represent perhaps the biggest industrial town in this country, and it is essential in our industry that we should have children of 14 employed, because our trade is highly specialised and depends upon nimbleness of fingers, acuteness and sharpness of the mind. It is essential that these children should be nimble and fit to be trained, and the older they get the firmer their limbs are set, and they become not so valuable at 17 as they are at 14. I am prepared to take this question to Lancashire and to discuss it with the Lancashire fathers and mothers, and to fight an election upon it. Hon. Members want to raise the age to 15. Why not raise it to 16 or 17 and take the children away and do away with unemployment altogether? I went to work when I was 13 years of age, and I know what I am talking about. If that attitude is to be taken up, what is to be the position? You are going to denude the labour market of an essential commodity, namely, the youth. I submit that we are a productive nation first, and we cannot exist unless we can sell our products abroad. If you are going to take it up to these ridiculous ages which have been suggested, some of these youngsters are going to be courting before they start working.
Then they say we ought to reduce the age for old age pensions from 65 to 60. What effect is that going to have? You will be trying to pauperise men who are capable of filling a really good niche in industry, and there are many men who would take very strong exception if it were suggested that they were not fit at 60. That is the only constructive thing we have heard from the Socialists, but we get from the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) a road scheme. I want to apply this particularly to Lancashire, because that is my little world. I want to remind hon. Members behind me that the cotton trade of Lancashire has been under a cloud for the past seven years. There are more women than men employed there. What are you going to send them to? To road making? That is a fair question. In the town which I have the honour to represent, they are on two-thirds time—that is working a fortnight and off a week. I have heard no suggestion how that is to be met, and I challenge hon. Members to produce one. I am prepared to vote for this scheme if hon. Members can answer two questions. Is there a spindle or a loom or a lathe in Lancashire which is stopped because the roads at present are inadequate for business? My next question is: When the right hon. Gentleman has made the roads, will that start one spindle, one loom, or one lathe in Lancashire? If hon. Members can show me that it will, I will vote for this scheme. Those are the questions which I submit to the right hon. Gentleman who is the author of this scheme. I contend that there is nothing in it and that the cure for our troubles must come from other directions. That is the attitude which the Chancellor has taken up. We have the de-rating system which is going to help us, and I challenge anyone to show that it will hinder us.
This Budget is absolutely sound in principle. The drum-beating game comes from the Opposition Benches and from street corners where they promise the people all sorts of things which they know they cannot possibly fulfil. Money does not grow on trees or drop like manna from heaven. It has to be earned, and it is one of the first principles of life that you cannot get something for nothing. Let hon. Members realise that, and then we shall be able to examine the principles and details of a Budget of this description to our own special advantage.
In conclusion, I make a special appeal to the Chancellor of the Exchequer to examine one or two little loopholes which are still left. I was rather disappointed to find that there were a number of things that would find employment for Lancashire people which had not been touched. I was more or less promised—and when I say promised, I mean semiofficially—in regard to one question of the duties which the Chancellor mentioned yesterday, mainly on tyres. He mentioned how many mills had been built. I mentioned on a previous occasion what is taking place in regard to the importation of cotton fabrics to make these tyres. I was very definite, and I am rather disappointed that this matter has not been touched. I do submit to the Treasury that this is a point which is causing great uneasiness. I have received many letters from Lancashire manufacturers and have had many conversations with men who have said, "You were quite right to bring it up in the House." I could give evidence of places where the fabric is being imported from abroad. I do object to French, Italian, and American cotton spinners being employed on sending goods into this country when our spindles and looms in Lancashire could make better stuff under the same conditions of labour and wages. Hon. Members above the Gangway talk about the brotherhood of men, but they do not mean it. The brotherhood of men begin[...] at home. I ask the Financial Secretary to take note of these practical suggestions which would give more employment and would start spindles and looms and help Lancashire to regain her prosperity.
The hon. Member who has just sat down has made a very amusing speech, and there is one point I should like to mention about the raising of the school age to 15. He suggested that the children would be getting married before they started work.
I would ask the hon. Member if his children started work at 15? Does he realise what it means to start at this age if he does not send his own children to work at that age? What is good for his children and for hon. Members opposite, and for ours if we can afford it, is good enough for the children of the world. When we set out to raise the school age higher than it is, it is for the purpose of improving the outlook and physique of working-class children at the same time giving opportunities for people between 15 and 60 to get work. What is the use of putting children into the market when there are a lot of adults out of work? That is our argument. Then he went on to ask "Where will you find the money?" This same Chancellor of the Exchequer granted relief to the extent of £43,000,000 to Income Tax payers and Super-tax payers in the Budget of 1925. Taking the whole period of five years, that means more than £200,000,000. If that sum of money had been applied in the ways we suggest, schools could have been built and we could have secured the conditions which we are anxious to bring about. But so long as money is given to the richer people there will never be any surplus for the purposes to which we wish to apply it. The hon. Member praised the Budget. Of course he would praise the Budget. All the rich men praise the Chancellor, because he protects their interests. The hon. Member spoke about self and the brotherhood of man. Private enterprise is made up of self. There is no brotherhood of man on the other side of the House. There, it is a name only.
I wish to say that I agree with the reduction of indirect taxation. That is something I have advocated ever since I came into this House. The Chancellor told us that he reduced the percentage of indirect taxation from 4.43 to 2.91, the reduction being equal to £6,000,000. I wish the Chancellor of the Exchequer had "gone the whole hog." That would have meant another £12,000,000, but it would have removed indirect taxation altogether. But I wish to point out to the House that the Labour Government, in their Budget, dealt with indirect taxation in a still more effective manner. We reduced the taxation on sugar by some £18,500,000 and on tea by some £5,500,000, a total of £23,000,000 or £24,000,000. The reduction for which the Conservative Government have made themselves responsible is really a vote catching reduction. If they had wanted to do the thing properly they would have made the reduction in 1925, so that the benefits might have been enjoyed during the intervening years. But they postponed the reduction till now and now, I suppose, they will appeal to the country and tell the people what they have done towards reducing indirect taxation. But I hope the country will note closely what the Tory Government have done all along the line. If they do that, the answer of the country will be what we want it to be, and we shall have seen the last of a Conservative Government for a considerable time.
I wish to endorse what the hon. Member for Leigh (Mr. Tinker) has just said; I hope the people of the country will note carefully what the Tory party have done during the past four years. But on this occasion I wish to confine my brief remarks to expressing on behalf of a large section of the agricultural community their appreciation of what the Chancellor has done for the great industry of agriculture. I fully support what the hon. and gallant Member for Yeovil (Major Davies) said regarding the advantage to the agricultural community of the extension of telephones in rural disricts, but I am concerned to express the gratitude of agriculturists for the relief afforded by the entire abolition of all rates on agricultural land and agricultural buildings. For many years I have held the view that the rates which a farmer paid upon his land were a tax upon his wheat and other produce, and that as foreign com- petitors were allowed to send their produce into the country free of tax it was not equitable that the British agriculturists should be taxed. I am glad to say that the Chancellor has now accepted that view, and by removing the whole of the rates upon agricultural land he has given British agriculturists a certain measure of equality in the competition with foreign producers.
When I was speaking on this subject last year and expressing the same sense of gratitude I made an appeal to the Chancellor that this relief might take effect from October, 1928, instead of October, 1929. We realise to-day that the Chancellor of the Exchequer is a very good sportsman indeed. He is a good loser. The betting duty was a loser, and he showed very great courage in admitting that. He has been a good sportsman, also, to the British agriculturist. I made an appeal last year that this relief to agriculture should be predated one year, and he has now met that request halfway by allowing the relief to take effect as from 1st April this year. Agriculturists will now be in this happy position: A farmer who has received his demand for rates from those terrible people who are always worrying agriculturists will be able to take it and either tear it up or return it to the man who sent it, and to say "We agriculturists have to-day found a fairy godfather to look after us. He is prepared to pay these rates for us. Send your rate demands to the Chancellor of the Exchequer, and he will pay them."
In my boyhood I was taught to say "Thank you" upon receipt of a present, and I found that teaching very useful. I received many more presents because I had been brought up to be polite. A year ago I expressed gratitude to the Chancellor of the Exchequer for the de-rating of agricultural land. He has to-day given us something further by allowing that de-rating to take place six months earlier. Am I not justified in taking the view that the Chancellor has been good to us this time because of our thanks to him last year? At any rate I can assure the Chancellor of the Exchequer that I shall take courage for the future, and another year, when he is sitting at that Box and I am sitting in this corner, I shall ask him for still more for those who are engaged in this great basic industry of agriculture. And I shall continue to ask for more.
I hope that this great primary industry will then be put into the position of prosperity in which we all desire to see it. Again, I desire to express my gratitude to the Government for what they have done.
In his Budget statement, the Chancellor of the Exchequer announced that certain railway taxation was to be remitted upon the condition that the advantage of that remission should go in the form of better freightage and more efficiency on the railways. If the hon. Member for Leominster (Mr. Shepperson) can guarantee that the advantages of the remission of agricultural taxation will bring about a better condition of the agricultural industry and better agricultural buildings, I should be inclined to support him. I am afraid that the advantage of the remission of agricultural taxation is much more likely to find its way into the pockets of the landlords. I submit to the hon. Member for Leominster and to the Government that if it is possible to so arrange the incidence of taxation that one can impose upon a particular industry the way in which the advantage should be used for the public weal and development, it ought to be possible to prevent the advantage of the remission of agricultural taxation going into the pockets of the people who are of no particular value to agriculture, namely, the landlord class. I am very keen upon agricultural development in this country because I believe that if we could bring back a considerable measure of prosperity to agriculture it would be of the greatest advantage to the workers in relieving them from the pressure of economic competition from the Continent and other parts of the world. It is one of our economic tragedies that we should have lost our agricultural prosperity to the extent we have done and this has brought us right down to the lowest denominator of industrial conditions in foreign countries.
The hon. Member for Bolton (Mr. Hilton) spoke about increasing the age for working-class education, and urged certain reforms in regard to pensions. The proposal of the Labour party is aimed directly at improving the conditions of the labour market, withdrawing as far as possible by encouragement the competition of young people and also the competition of the labour veterans of industry. If that policy was encouraged and proved successful, I am sure it would be economic, because it would provide employment for those who are now a charge upon the country and who are drawing unemployment pay without giving any economic service. This would go far towards paying for the extra cost of the better education of the working classes and better pensions. I think that is a perfectly sound economic argument. It is not only Socialists who agree with that policy, but there are many others who consider it is not for the benefit of the country that the working classes should have to compete with youthful and aged workers.
The point made by the hon. Member for Bolton is that you cannot apply our policy to the cotton industry of Lancashire. I do not know anything about the technicalities of the cotton industry, but I would like to comment upon the hon. Member's argument. I think it will be admitted by most educationists that it would not be a bad thing if secondary education was provided for all children up to 15 years of age. If secondary education is good for the middle classes, then it is good for the children of the working classes, and to keep children at school up to the age of 16 is a desirable thing from, the point of view of education and industrial and national efficiency.
This argument has been raised in relation to the position of one particular industry, but it has been used against every educational reform. It was also used against the Factory Acts and the abolition of the practice of sending little boys up chimneys. At that time, we were told that it would be impossible and uneconomic to adopt any new method of cleaning chimneys, and the children were not relieved of that form of slavery until an Act was passed, although more modern mechanical implements were available at that time for cleaning chimneys. The explanation of this is that the employment of boy labour was cheap, and so long as labour is cheap obsolete methods will take the place of more modern methods. I suggest that there is a possibility, if the question of cheapness is placed upon one side, of finding methods of efficiently carrying on the cotton industry without employing children at the age of 14 years. In my boyhood days I used to work 15 hours a day, and consequently my opportunities in life were very much handicapped. I submit that with the development of a country like ours, with its wealth producing possibilities, it ought not to be necessary to employ children in any industry at 14 years of age.
I want to come to one of the more general questions raised in the speech of the Chancellor of the Exchequer and in some of the speeches which have followed. The burden of a great number of those speeches was that if you borrow, or if you tax wealth to any extent that can be called considerable, the result would be that you would interfere with the credit of the nation, and prevent the availability of surplus capital so far as the normal industrial development of the country is concerned. That is the kind of argument that has been used for the last five years by the Chancellor of the Exchequer. It is based upon the assumption that this nation is a nation which is calling out for capital, a nation which is poor and impoverished. I want to take exception to that statement. I suggest that this nation is not poor, that it is not impoverished, but that it is a richer nation than it was in 1913, even allowing for the increase of population and the difference in the value of money; that there is more unused taxable wealth in this country—or borrowable wealth, if you like, from the Liberal point of view—that there is more wealth available for national development than there ever has been in the history of this country.
I have here the Orange Book issued by the Liberal party, entitled, "We can conquer Unemployment." The difference between the policies of the Liberal party and of the Labour party is this: The Liberal party proposes to borrow £200,000,000 for national development. We have had experience of borrowing since 1914, and we know what a millstone of national debt is so far as the national finances are concerned. The Liberal party proposes to borrow £200,000,000 in order, as the Chancellor of the Exchequer says, to win the General Election. In any case, the idea is that the money is available for borrowing, on the statement made by the authors of this pamphlet that, if the money were not borrowed for national development, it would remain lying idle in the banks or would go abroad. What is the exact position with regard to the national capital of this country? According to Professor Bowley and Sir Josiah Stamp, than whom I suppose there are no better authorities on the subject in this country, the national income of this nation is over £4,000,000,000 a year. That income is divided in this way: One half of it goes to 2,500,000 income drawers, and the other half is divided among 17,250,000 income drawers. Of that total national income, the amount invested in British industry last year—not allowing for un distributed profits and other reserves, but investments out of income, which is what we are talking about if we are talking about taxation—the amount invested in British industry last year, out of that vast national income, was the paltry sum of £250,000,000.
I am speaking comparatively. Compared with the amount of wealth in the country, as represented by the national income, it is paltry. The amount invested was £250,000,000, and I will show the Committee why it is paltry in a few moments, taking the Liberal figures and statistics for the purpose of my case. There was £250,000,000 invested in British industry, £200,000,000 went abroad, £800,000,000 was paid in national taxation, and £180,000,000 was paid in local rates. Those were all the burdens upon British industry last year, and, if you take that amount away from the total national income, you have enough left to provide an average income per family in this country of very nearly £6 a week; and yet we are told that it is impossible to alter a system under which hundreds of thousands of children are compelled to go to work at 14 years of age. This country is not calling out for more capital; what the country is calling out for is the trade and the industrial development that will justify the investment of that capital. If £200,000,000 is available for borrowing, that is the finest justification that the Labour party
has for its statement that there is quite enough in this country to justify taxation upon excessive incomes for the purpose of social services, including education. That is the difference between the policies of the Labour party and the Liberal party. The Liberal party's proposal is to oblige the investing public by opening up a new form of profitable investment, on the same principle that, while I threw up my prospects in life to fight in the War, a large number of people in this country did their bit during the War by investing their surplus wealth at comfortable interest. The Liberal party believes in that system; I do not. I say that, if there is this unused capital in the banks of this country about which the Liberal party talk, that proves that there is exploitation and a wrong division of the national income. What do the Liberal party say? They say:
It is quite wrong to assume that all savings available for investment are always being fully utilised. In a time of trade depression 'frozen savings' accumulate; that is to say, sums available for investment have to await the arrival of a suitable enterprise to 'thaw' them out. This fact has just been strikingly confirmed in Mr. Mckenna's 1929 address to the shareholders of the Midland Bank, in which he showed the gradual increase in the ratio of time deposits to demand deposits from 1919 to 1928 'Time deposits' represent broadly motley awaiting investment or money for which no trading use can be found for the moment. 'Demand deposits' are essentially money in active use in business.
Then the figures are given, showing that there was an increase, from 1919 to 1928, from 28.6 to 44.7, and the Liberal Orange Book goes on to say:
The restoration of the ratio of 1920 would raise this to £43,000,000. The Midland Bank is the largest in the world. If we assume its experience is representative and apply the same method to the total deposits of the 12 principal British banks, these figures are raised to, say, £85,000,000 and £210,000,000 respectively.
In other words, according to the Liberal party, there is over £200,000,000 of money lying idle in British banks, unused, because there is no industrial call for the profitable investment of that capital; and yet we have the Chancellor of the Exchequer and Tory and Liberal Members using the argument that you cannot afford to carry out the Labour party's extravagant plans because it would affect the credit of the country, and would deplete the
available surplus of British capital. That capital is there, and the reason is the unfair distribution of the national income. Let me say, incidentally, that the claim that the Labour party never produced an unemployment scheme is altogether fallacious, and it is typical of the electioneering methods of our Liberal friends when they talk in that strain.
The joke about the rabbits and the hat is a very old one. I think the Society for the Prevention of Cruelty to Animals ought to look after those rabbits. May I remind the hon. Gentleman that that retort about rabbits out of a hat came from a statement made by Dr. Macnamara? It was Dr. Macnamara who, on the 30th July, 1924, welcomed the speech of the then Labour Chancellor of the Exchequer outlining the Labour proposals with regard to unemployment. What did he say? He said, "These are fine schemes. Get on with them, and you will find the whole of the Liberal party behind you." That is what Dr. Macnamara said about the Labour schemes for unemployment, which the Liberal party in this pamphlet say never existed, and the Liberal party kicked the Labour party out of office upon an irrelevant, not to say fraudulent issue, which shows how much the Liberal party were concerned about the fine schemes of the Labour party for the relief of unemployment. The point is this. The Labour party say it is not going to solve any economic problem merely to give the investing public, especially those sections which have overwhelming wealth to invest, an opportunity for squeezing more wealth, in the shape of interest, out of the community. The best way is to see that at least at the top, where you have vast fortunes which are totally unearned and are produced by the labour of the useful members of the community, taxation shall be imposed, and, if there is any justification for taxation from the standpoint of investment and national credit, the justification comes from the Liberal party although the Liberal party really stands, as the Tory party does, for the interests of the investors and those who have their manacles upon the income of the rest of the community.
The hon. Member who has just sat down seems to be under some misapprehension in regard to the reasons why we on this side of the House do not believe that the expenditure of vast sums of money in relief schemes is going to be of any real or lasting benefit to unemployment. We do not believe that we cannot afford it or that the money is not there. We believe it is more profitably employed in the ordinary channels of trade and will in that way give better employment than if the Government takes a hand. The figures the hon. Member gave us as to the division of national income last year, namely, £250,000,000 in foreign investments and £200,000,000, I understood him to say, in home investments—
Whichever way round it is—seem to show conclusively that it would be quite impossible for any Government to follow out the Liberal scheme of raising £200,000,000 by loan—at a lower rate of interest let us mention—without severely stopping the flow of money into home trade. The reason, no doubt, why so much capital goes abroad is because of the considerably higher rates of remuneration that it will thereby earn, and it is indeed unlikely that a vast Government loan would really compete with that capital. It would rather compete with the capital, which earns a lower rate of interest, that is used in home industry.
The hon. Member issued a challenge in regard to agriculture and the rating relief which the Chancellor of the Exchequer has given to the farmer. He asks whether it will not be possible for that rating relief to go into improvements in the agricultural industry, in the same way that the Chancellor made the condition that the relief of taxation on the railways should do. The farmer has sustained too severe losses. Too many of them are on the edge of bankruptcy. Too many of them do not see how they can go along and even find the money for the wage, small as it is, for there to be much hope that they could individually employ to any large extent the comparatively small relief granted in the way the hon. Member suggests. The Ministry of Agriculture has throughout the last four years been helping the industry to start schemes of organisation which will improve it and will lead the way to a better basis for it.
The hon. Member mentioned the old story which both parties opposite are so fond of, that the money is going into the pockets of the landlord. It is difficult to understand the point of view of Members who put that forward in the case of an industry so heavily hit for so many years as agriculture. The wage of the agricultural worker, considering that he is skilled, is a low one. It is so low that the worker with a large family is hard put to it to find the barest necessities and decencies for his children. The farmer, who does not grudge that wage, in too many cases, especially in arable districts, is so hard hit that he does not know where to turn, and in these circumstances the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) deprecates this comparatively small assistance.
I should like to follow the lead of the hon. Member for Leominster (Mr. Shepperson), in expressing appreciation of this relief. Really I do not think hon. Members need grudge it. Not only has the farmer been heavily hit, but in the last four years, although technically he has only been paying 25 per cent. of the full rate which might be levied on him, yet that rate, if you compare it with that paid by a townsman of similar income, is very considerably higher. The farmer, even at the quarter rate, is rated far in excess of any comparable man in other businesses. I should also like to point out that when the other 25 per cent. was given in 1923, it was followed by a rise in wages. Indeed the rise in wages more than swallowed up the relief. That half went into the pockets of the agricultural worker, and it was right that it should, because at that time the wage of the agricultural worker was driven down below subsistence level. I do not say on this occasion that that relief will cause any rise in wages. I do not think it will be right to hold out the hope, considering the state of the industry, but that example surely shows that the rating relief goes fairly and squarely to those who are working in the industry.
I should also like to express my hearty appreciation of the relief given in the total abolition of the Tea Duty. That is a relief which will be welcomed in many a humble village home. It is a relief of taxation of the agricultural worker. I should like to ask if it is not possible to effect more graduation in the taxation of the manual worker than we have to-day. The principle of graduation is well established in regard to the higher range of income. It is agreed by all parties. But I would point out that it is not even begun in the wages of the manual workers. The agricultural worker with an income, say, of 32s. to 35s. per week, if we allow that it is reasonable for him to indulge in the humble comforts of a pipe of tobacco and a glass of beer, is a heavily taxed man. He has to bear the same taxation as a worker in the town with £3 or £4 per week; he has to bear comparable taxes with a business man who, perhaps, will be earning £4, £5 or £6 per week, and who gains relief owing to the concessions which the Chancellor of the Exchequer has in recent years given to Income Taxpayers on various accounts. I would put forward a suggestion that it is right and just that graduation should be attempted in these lower incomes. I am aware that in coming to the questions of the taxation of beer and tobacco, the problem may be a very difficult one. At any rate, that is a reason why I welcome the abolition of the Tea Duty. That does relieve these very low paid workers, and I am sure they will welcome that reduction very much.
I should like in conclusion to say a word on the taxation of motor vehicles. That taxation hits very hard the small business man who wants to set up a van for trading purposes. The Chancellor of the Exchequer seems to think that all persons who use motor cars do so solely and simply for their own use and pleasure. That is not entirely the case. In the rural districts motor transport based on cheap petrol and the cheap cars which the McKenna Duties have given us, has been a very great boon and a great aid to agriculture. I would suggest that as soon as the national finances allow it there should be some reduction, preferably by way of the licence duty, or, if not, by way of the Petrol Duty. Locomotion is the life blood of trade in the rural as in other districts. I would like to express my appreciation of the telephone facilities, which will be an immense advantage and will greatly assist that development which the hon. Member for West Islington (Mr. Montague)—and I should like to say that I quite agree with him in that expression of opinion—desired to see.
It is a wonderful Budget, and I think that listening to it gave me almost as much pleasure as it gave the Chancellor of the Exchequer to propose it. It is a really enormously pleasing thing to see good men doing a good thing well. But that song which he sang yesterday showed, I think, one little rift within the lute. There was one point where the melody sank into slightly low and subdued praise. It was where he began to speak about the Income Tax payer that I feel constrained, as representing the 563,000 people who are the real payers of Income Tax, to make a few remarks. The Chancellor of the Exchequer, with that radiant smile upon his face, yesterday was making gifts all round, but so far as the Income Taxpayer was concerned it was a case of
There's one for thou, and one for thee,
And one for him, and one for he,
But never, ah, never, a one for me!
I represent, the Income Tax payer. The Chancellor of the Exchequer rehearsed some slight benefits which in past years he thought he had given to the Income Tax payer who earned his money. He said that if such person had three or four children living in his house he got off a considerable amount of extra taxation, and that if he had an income of £700, £800 or £900 a year he was given a certain amount of allowance in respect of earned income. He did not go into what, I think, is the natural corollary to that, namely, that all along the line, however small or however great the earned income may be, it ought to be treated as a different thing entirely from income arising from property or settled money. I cannot see why all earned income should not have an advantage as compared with unearned income. To say that those who have a small earned income shall profit under the Income Tax law, but that those who have made a somewhat larger earned income shall not profit to anything like the same extent, seems to me to be fundamentally unjust.
There is one further point on which it seems to me that it would have been quite within the possibilities of the Chancellor of the Exchequer to do something for the unfortunate Income Tax payer. In connection with Budget after Budget I have protested against the tax on the tax. When the earned income of a man has reached £2,000 a year, why should he be super-taxed, not on the money that he has received, but on money that he has never seen or touched, on money that has been already deducted in the way of Income Tax, and before the 16s. out of the pound which are left to him have ever reached his pocket? There was a great chance when money was going yesterday for the Chancellor of the Exchequer to have put right that extremely unjust thing, namely, the tax on the tax. It is entirely contrary to equity that a man should be taxed not actually on the income that he receives, but on his income plus whatever he may have had deducted already, and which he has never seen or fingered.
I was yearning to hear the Chancellor of the Exchequer make an attack upon one enormous source of revenue. He did not do so. I do not agree with the hon. Member who spoke from the Labour Benches, and who seemed to have the conviction that the right thing was to say, "Here is some wealth, let us tax it." That is not altogether correct, but there is one form of wealth which does give the Chancellor of the Exchequer a great chance, and that is the revenue which may be derived from advertisements. If I might parody Shakespeare, I would say to a really enterprising Chancellor of the Exchequer, "Sweet are the uses of advertisements," if you only know how to treat them. Every foreign country taxes advertisements. I go through the Surrey lanes and see glaring pictures of horrible policemen eating lozenges, or rows of beer bottles arranged in long avenues. If I saw such a thing in France or Italy I should know that they would be paying the State some money and if I looked at the corner of the advertisements I should see the stamp 40 centimes, or lira, showing that money had been paid upon them. I know that it would be an invidious thing to tax advertisements, but there is the chance. It will be said that the public would have to pay in the end, but I imagine that that is not really true, and if it slightly decreased the number of advertisements in the lanes of Surrey or on the walls of London, I should be very pleased indeed. Of course, one would have to tax advertisements all round, not merely those on the walls, but also those advertisements which make the middle pages of what were once nice-looking London dailies look rather repulsive, those pictures of ladies, shall I say, in deshabille, or other intimate things, which the "Times" or the "Morning Post" of 40 years ago would not have tolerated. There is no doubt that advertisements in newspapers ought to be taxed just as much as advertisements on walls. The papers would, of course, raise a vigorous protest, but they would simply put the tax on to the advertiser.
Suppose a penny tax was added to each notice of a marriage or birth or death, is there the slightest doubt that the paper would say, "Our prices are so and so, plus one penny tax," and would anyone resent the penny? For the whole middle sheet of the "Morning Post" or the "Times" the sum charged would be quite considerable, but it is obvious that gentlemen who are prepared to pay £200 for an advertisement would not mind paying £200 5s. for the same amount of space. I am quite aware that the forces which would be aroused by a tax on advertisements would be very great, but we have a courageous Chancellor of the Exchequer, and really I had some hopes that this enormous source of taxation would have been touched at last. Every foreign country taxes advertisements; why should not Great Britain do so? If one looks around the walls of London and through the newspapers of London and in the country, it is obvious that the income would be simply enormous. I make the suggestion for what it is worth. I can only say that it has been found to work abroad, and that I do not see why it should not work here.
There is one, view that will find expression In the country among a very large and long-suffering section of the community as to this Budget, and that is that it does not attempt to deal with the vast problem of the unemployed. No doubt there are many who will talk in this House about high finance, but the fact that will be remembered by the majority of the people will be that the Budget makes no preparation for dealing in any way with the case of the unemployed. It was interesting to hear an hon. Member say that the workmen of to-day whose salaries are below Income Tax level, or who do not pay Income Tax because of allowances for children or other burdens, should be brought within the purview of Income Tax. Whatever the Chancellor of the Exchequer may say about the wages of to-day being equal to those of 1924, my experience tells me that such is not the case. It may be that my experience is not true of the country as a whole, but it is the experience of an industrial constituency like Liverpool, and it shows that the people are steadily growing poorer. Their housing, their food and their general demeanour more and more suggest the poverty stricken area.
There are vast numbers of unemployed, of half-timers and of casual labourers. Despite all the money that we are spending in one way or another, the great amount collected in Income Tax and the large sums spent on rates, the great majority of the working classes are getting loss and less joy and benefit and pleasure and real help in life. No suggestion for dealing with the problem has been made by the Chancellor of the Exchequer or other speakers from the benches opposite. We are told to hope that better trade or something will turn up. After five years it is the hardest thing in the world to say to people who for two years and longer have been suffering, "It is all right, the tide is turning. You just keep patient a bit longer." I am not very much concerned about the Liberal proposals, but surely the Government, or those who claim to be statesmen—I am merely a boiler maker and an ordinary tradesman—those who know about governing countries and about sound finance, should feel it their bounden duty to do all that is possible for the solution of this terrific problem.
I suggest that some of the Chancellor of the Exchequer's audacity might have been used in the preparation of schemes for dealing with unemployment. We have all read of the days when he risked something. Why cannot he risk something in the solution of the unemployment problem—a solution which would mean so much to vast numbers of people in Liverpool and in other great cities. A simple suggestion has been put forward by an hon. Member who spoke from these benches a short time ago. Surely it would be worth money to take off the industrial market some of the younger generation and to keep off it some of the older generation, and to provide them with an adequate living, if, by that means, you could save the manhood and womanhood of the country from the effects of unemployment. There will be a disappointed crowd of people in this country when it is found that the policy of the Tory party holds out no hope at all for the great mass of the people, who, in the main, are fine reliable people, and who deserve better treatment from this Government than the treatment which they have received during the past four or five years.
I have heard a great part of this Debate, and I have been particularly struck by the manner in which the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) dealt with the unemployment figures. The right hon. Gentleman skated very skilfully over the subject, but I should have been more satisfied with his speech had he, in addition to the figures which he gave us, stated the unemployment figures as they stood at the end of April, 1926, and compared them with the employment figures at the end of May, 1926. But the right hon. Gentleman left out that comparison entirely. As a matter of fact, I believe that the unemployment figures in April, 1926, for the first time for several years, fell below the million mark, whereas in a fortnight they had mounted to 1,600,000. This Debate seems to have centred largely on the question of unemployment. In the past few years several remedies for unemployment have been offered. In 1923 the Socialist party claimed that they had the only sure remedy for unemployment, but, with the exception of some statement about drawing rabbits from a hat, we heard nothing more of that Socialist remedy until 1st May, 1926, and then we found what it was. It was the General Strike. I do not think it helped much to deal with unemployment.
As a matter of fact, I think the very last thing the Socialist party wish to see is a reduction in unemployment, because unemployment is part of their stock-in- trade for the General Election. The reason why the General Strike came about in May, 1926, was that they noted with alarm that then, for the first time for several years, the unemployment rate had fallen below the million mark. Recently another remedy for unemployment has been brought before the country. That is the remedy proposed by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) which is, I think, the most reckless and ridiculous electioneering stunt that has ever been tried. It will be noted that the right hon. Gentleman's proposed remedy carries with it the condition that he must he put into office as Prime Minister. Supposing a doctor was convinced that he had a sure and certain remedy for cancer, what would the country and the world think of him if he would only produce that remedy for the benefit of suffering humanity on condition that he was made President of the Royal College of Physicians? I do not think the country or the world would think much, either of him or of his remedy. He will only put this in action if you make him Prime Minister. As the hon. Member for Bolton (Mr. Hilton) said earlier in the Debate, supposing you make a million miles of roads in this country, will you put one more loom in operation, or have one more jenny working, or get one sovereign's worth of foreign trade? I am only surprised that the right hon. Gentleman, when he made the pledge, did not go further and promise everyone in the country a motor car to drive over the new roads when they are made.
The hon. Member for Bolton mentioned a point with which I have had to do for a considerable length of time now, and I shall be very pleased to get an assurance from the Financial Secretary to the Treasury that something is going to be done in the matter, and that is the question of the safeguarding of tyres. In safeguarding tyres the mistake has been made that while you have safeguarded the complete tyre, you have not taken steps to safeguard its component parts. The chief labour in building up a tyre is the weaving of the cotton fabric which forms the canvas of the tyre, and although there are a good many tyre works started in the country, employing thousands of people, if we could safeguard or protect the cotton fabric that goes to build up these tyres, we could put a good many mills in Lancashire on full time at once. I hope something will he done in this matter before long.
The hon. Member for Bolton also spoke on the question of the extension of the school age for children, and his remarks were hotly contested by another hon. Member, who thought it very advisable to extend the school age and who contested the statement of the hon. Member for Bolton as to children not being required to go into the mills at an early age. I was for 25 years Certifying Factory Surgeon in a Lancashire district, and during those 25 years it fell to my lot to examine some thousands of children every year. I remember the old days when children went to work at 12, and although I do not wish to go back to that time, I say definitely and distinctly that, from a health point of view it was far better to go to a mill at 12 than to a school, [Interruption.] I am speaking from a health point of view, because the atmosphere of a modern cotton mill is better than the atmosphere of any elementary school. [Laughter.] Hon. Members may laugh, but I am speaking from actual experience. The cubic space alone in any modern factory is far in excess of that in any schoolroom, even the most modern schoolroom. I am not advocating a return to that system, but I must say that, notwithstanding the enormous amount of money which we are spending on education today, my 25 years' experience taught me that the boy and girl of a few years ago were far less intelligent and far worse educated than the children of 20 years ago. Some 20 years ago the children in the elementary school were well versed in the three R's. At present there are a great many children leaving school at 13 or 14—
I was answering something which had arisen previously, but I bow to your ruling. The remedy put forward by the Socialist party, the remedy of a general strike, proved a failure, and the remedy offered by the right hon. Member for Carnarvon Boroughs is sure to prove a failure. Therefore, you have the remedy put up by the present Government, the provision for which is made in this Budget. The de-rating will benefit the Lancashire cotton districts to the extent of £1,500,000 a year, and if we can get that reduction in our overhead expenses, recovery will come again very shortly.
Mr. W. M. ADAMSON:
I do not intend to follow the hon. Gentleman into the later point which he developed, but I want to take the Debate back to his first suggestion with regard to his complaint that the right hon. Member for Colne Valley (Mr. Snowden) omitted the figures for April, 1926, with regard to unemployment. I fail to see why he conceives any advantage from that argument, because in April, 1926, the figures were below the normal figures of unemployment. That was more reason why the Government should have prevented what they termed the calamity of May, 1926. I happen to represent what is largely a mining area, and if the hon. Member for Withington (Sir T. Watts) conceives that the miners were not entitled to resist the lower wages and ultimately longer hours, I will compare his argument with that of his own profession, the medical profession. I have vivid recollections that at one time the medical profession threatened to withhold their services unless they were given the terms that they laid down and dictated to the then Government with regard to the operation of the Health Insurance Act. If that be so, why deprive—
On a point of Order. The hon. Member is making a statement which is not absolutely true. I think that the members of the medical profession said that they would not accept the terms, but they gave a definite pledge that no patients would be refused attendance under any possible circumstances.
I do not wish to carry the matter further, but will rely upon what is generally the accepted evidence of those who were in the negotiations. One hon. Member made an original suggestion with regard to the taxation of advertisements. It would be a very convenient method. For instance, if we take the Press reports that were given to the Chancellor's speech, the personal advertisement which he received would bring revenue into the Tory party, but the revenue from the point of view of its electoral success would be of a different character. Various points of view have been expressed with regard to the balance between indirect and direct taxation which is usually established in the Budget proposals. I agree with hon. Members on this side that the position in regard to indirect taxation is that it is a most iniquitous system for extracting revenue in an excessive form from the pockets of the poor as compared with that from the rich by means of Income Tax or Super-tax payments. There is the injustice that follows equally to the unemployed individuals who may be deprived of State benefit—the injustice and inequality of that kind of taxation which places on the poorest of the poor a burden that he is compelled to pay, due to the fact that he is on the meagre cost of living basis and, therefore, has no opportunity of getting any drawback which would be an advantage.
When we are discussing these high financial proposals, it is certainly the view of this side that there ought to have been greater relief to the indirect tax payers as compared with that given to the direct taxpayers. If I recollect aright, it was in 1925 that the first instalment of relief of taxation was given to the Income Tax and Super-tax payers. They have had from the Conservative Government three years of the relief as compared with the amount of relief which is just given by the abolition of the Tea Duty. With that incompatibility we are expected to believe that this relief of taxation is an act of grace on the part of the Chancellor just before the election. We do not complain, of course, of this relief in indirect taxation, for, whatever the percentage may be calculated upon, it may give some advantage to the poorest of the poor. It has been suggested that on the calculation of the average amount of tea consumed it may amount to something like a penny to a penny-halfpenny per head of the population per week in relief. How is that to be compared with the huge amount given in relief to Super-tax payers? It is incomparable when one considers the enormous number of people who receive it as compared with the Super-tax payers. When you value things from that standard, you begin to appreciate and understand how much has been given on the one hand to the rich and on the other hand how little has been given to the poor. We can only say that while a Conservative party may explain to the electorate how much they have given to the workers and how much relief by de-rating is going to be brought about in October or November, they ought also to indicate how little they have done to help the relief of unemployment and destitution and poverty at this time and to give an opportunity for the workers to be employed usefully and so to earn a living for themselves and for their dependents. Hitherto economic forces have been so used against the workers that they have been unable to develop their lives to the full, and if their position could be bettered and their spending power increased it would bring about an improvement in our social and economic conditions.