I beg to move, "That the Clause be read a Second time."
The Chancellor said just now that he had to deal, not with cases of hardship, so much as with cases of injustice and a fair apportionment of the burden as between different members of the community. The case for which I ask his attention is a case not of hardship, but of definite and clear injustice. I want to remind the Committee of the position with regard to Estate Duty on the estates of serving soldiers. As the law stands, all ranks up to and including lance-sergeant are completely and unconditionally exempted from duty if they die in the service of the Crown, and it does not matter to whom their estates are bequeathed. The Act which provides this was passed in the year of Waterloo, 1815. Since then there have been other Acts dealing with the matter, which can be summarised in this way so far as the higher ranks are concerned. Their estates are exempt for the first £5,000 if they are killed in His Majesty's service. After that, the amount payable is calculated by reference to the deceased's shortening of the expectation of life. There is a further condition that the estate must pass to the widow or near relation of the deceased. That is a provision which, I maintain, is fundamentally unjust. We no longer live in the time when it was assumed that everybody below the rank of an officer was almost penniless and when it was considered unwise and unnecessary to levy anything on the soldier's poor effects which were handed over to his widow. It was also an unusual thing for people leaving £5,000 and upwards to be in the ranks of common seamen, marines or soldiers. Indeed, some people still seem to think that.
This matter was debated in the House on a slightly different basis on the Finance Bill of 1942. The hon. Member for Nelson and Colne (Mr. Silverman) made the surprising statement that the reason why ranks up to lance-sergeant paid no death duties was that they leave nothing on which to pay. That is not the case today. That idea was derived from a period when the common soldier was considered to be a very poor man and the officer was a gentleman and a very rich man. That is no longer true, and I am glad that it is so. One of the advantages of conscription is that it has made us much more democratic in that sense, and people in different positions serve to-day in all ranks and branches of His Majesty's service. As a result of the changed conditions some extraordinary cases arise. There is the case of a man whose estate is normally liable to death duties who serves in the ranks and leaves his estate to anybody he likes. No Estate Duty is charged in that case. If, however, the same man got a promotion in rank above that of lance-sergeant, or obtained a commission a few weeks before his death, all the limiting circumstances would come into operation, and his widow or his mother or that part of the family which inherited his estate might have to pay a relatively heavy fine.
It may be said that there are two ways of remedying the anomaly. We could abolish the exemption from Estate Duty for lower ranks. But will anybody seriously get up at this moment, when we are fighting on the Continent one of the greatest battles of history, and propose that the House of Commons should abolish the privilege of the common soldier, seaman and marine? Is that what we should tell the relations of those who are fighting overseas? Of course, no one would get up and make that as a serious proposition. The alternative is, surely, the one I am suggesting, namely, that the estates of all ranks serving in His Majesty's Forces should be exempted from duty, when the estates pass to their next-of-kin.
I should be out of Order if I referred to that. I am dealing with a specific class of case, and I am prepared to take up that case on another occasion. An argument that is sometimes used against those who feel as I do on this matter, is that the amount involved is very large. I think the amount is not very large, because the highest proportion of casualties is among the younger men, who have probably not yet succeeded to property, or made their fortunes in their businesses or professions. The global amount, which may not be very big, may, however, be very serious to the individuals who are affected by the fines inflicted upon them.
Is it not extraordinary that the relations of a man who loses his life for his country should have this fine inflicted upon them by His Majesty's Government? It is the families who are affected. Estate Duty is a family fine, and upon the families of men who have fallen in His Majesty's Service. The fine is entirely unjust and should be abolished for all ranks. Could there be a less suitable occasion on which to inflict this fine on these families than when their affairs are thrown into disorganisation by the death of the head of the family? Some extraordinary injustices arise. There was a case in which an officer with considerable estate was killed in action a year or two ago. He was not married, and so his historic family estate passed to an uncle. Full Death Duties had to be paid on the highest scale, because the uncle was held not to come within the definition of "near relation." It must seem intolerable to everybody concerned, that the breaking-up of estates should occur, when the holder of the estate has fallen in the field of honour. Surely that is indefensible.
I ask my right hon. Friend to consider very seriously my plea. I do not want to be sentimental, and I am making the plea on the ground of injustice which we can and should remove. An injustice may affect a very few people but it is none the less felt as an injustice by the whole class concerned. It is not an answer to say that some officers died worth less than £500. That does not matter, because the whole class of officers is singled out for treatment, which does not apply to the junior ranks below lance-sergeant. The loss of revenue would not be great, and the concession would be appropriate at the moment. It would be an indication to the Forces overseas that we sometimes accompany our words of sympathy with deeds. It would be a reassurance to the families of the men upon whom the Estate Duty falls. In one case a widow had to consider giving up her house just after the death of her husband. I could give a good many examples, ranging from the days of Pericles and the magnificent speech which he made in the first year of the Peloponnesian war, to show how the families of people killed in war have been treated. I can assure the Committee that there is hardly a case in history, in which the families of those who died in service to their country, have been fined by the State. The case here is not against hardship, but on the grounds of injustice, and this is the most appropriate time to remedy that injustice. I ask the Chancellor of the Exchequer to give my appeal consideration.
I agree, on one point, with my hon. Friend who has submitted this new Clause, and it is that in the present state of affairs there is an anomaly, indeed a glaring anomaly. He put the matter, so far as that goes, quite fairly. It is the fact that the common soldier—and that expression must be taken to cover everybody up to the rank of lance-sergeant—has his estate exempt from taxation, if he loses his life on active service. The officer, on the other hand, does not come within the definition of "common soldier," and although he is not treated like the ordinary civilian, his estate is not exempted. I shall have to remind the Committee of the actual position, because I do not think that my hon. Friend, although he referred to the point, did full justice to the existing provisions of the law.
The provision affecting the common soldier is, as my hon. Friend pointed out, a survival from a very long time back. In the Stamp Act, 1815, provision was made for exemption from Stamp Duty, in respect of probate of will, letters of administration, confirmation of testament, inventory, etc., of the estate of the common soldier. I have no doubt that the view was taken—a view which could have been sustained by argument up to quite recently—that, broadly speaking, the common soldier is not a person possessed of ample means, the levying of Estate Duty on which could be regarded as a matter of any concern to the Exchequer. Where I part company with my hon. Friend is in regard to the dilemma which he sought to present to the Committee. He said there were two courses, one, to remove the exemption which the common soldier enjoys—and who would make such a proposition at this time?—and the other, to extend the exemption to the estate of the officer. The obvious alternative to both, is to leave things alone.
It would not commend itself, on the whole, to the people of this country at the present time, that an exemption which has been allowed to continue up to this point in the war—it might have been removed in different circumstances—should be suddenly, and, so far as the date is concerned, quite arbitrarily swept away. I accept that. I do not, however, agree that the proper course would be to extend the exemption. My hon. Friend put the case, and I mention it merely in passing to dispose of it, of the unfortunate uncle, who had succeeded unexpectedly to the estate of a nephew and found himself in the deplorable position of having to pay a substantial sum in Death Duties. These things had occurred. First, the uncle came into possession of a substantial estate. To single out the one feature of the liability for Estate Duty, and ignore the succession to the estate is not to put the matter in due proportion before this Committee.
I am quite sure of that. From the point of view of the family and the estate, the point is that while the nephew might have died and the uncle would have inherited and paid like everyone else, and no one would have raised the case, in this instance the nephew died quite prematurely because he was on His Majesty's service before he would normally have married and left descendants.
My hon. Friend has not improved his case by his intervention. I was making the point that the uncle's succession was fortuitous. When my hon. Friend goes on to refer to the prolongation of the life of the unfortunate officer who has died and the possibility of his having children who would have inherited the estate, my remark about the position of the uncle receives added force, because obviously, if 'my hon. Friend is right, the uncle would not have come into the estate at all. But that is by the way. I only mentioned it to dismiss that particular point before coming to the substance of the matter.
The substance of the matter, I would remind the Committee—and, incidentally, this question has twice been fully debated within recent times—is to be found in the Death Duties (Killed in Action) Act, 1914. The effect of that Act, which remains in force, is, as my hon. Friend said, that where an estate does not exceed £5,000 the whole amount is exempt from duty. But where the estate exceeds £5,000, what is the position of the family, because it is the position of the family that we have to consider? It is that the first £5,000 is exempt. In the case where the estate exceeds £5,000, as regards the remainder a rather complicated calculation is embodied in the Statute, the purpose and the effect of which is to render that estate liable to the amount of tax, making allowance for time and interest and so on, that would have been paid had the life of the deceased officer been prolonged to the extent of its normal expectation. Therefore, what the existing law seeks to do is to eliminate, so far as the tax is concerned, any additional charge resulting from the premature death of the officer in the service of his country. That is the position.
If you leave out of account, as I believe you must, the sharp contrast between the position of the common soldier and the position of the officer, I believe that the treatment which is given under the existing law to the estate of the deceased officer is as fair as it could possibly be made. One last word. It is not possible to treat this matter as if the only cases one had to consider are the cases of the common soldier and the officer. The treatment of all persons who lose their lives as a result of enemy action has been assimilated by recent legislation to that of the officer who loses his life in the service of the country. That position would certainly have to be maintained. Whatever might be done, if the law were changed for the officer, it would certainly have to be changed for all members of the community who may suffer death from enemy action. I suggest that this proposal should not be pressed.
I must say I differ from what the Chancellor has said. It is no good merely going back to 1815, which is a long time ago. What is really happening to-day? Let me approach this matter from a rather different standpoint, the position of the actual man in the unit. There are cases, probably known to hon. Members, where certain rich men have remained common privates in the ranks rather than accept promotion. It is a small but definite stimulus against taking promotion. I was not quite so convinced by my hon. Friend's allusion to the uncle. What does strike me is that it is most distasteful to the Chancellor to be collecting money from widows whose husbands have been killed in action. I can think of no more distasteful work for a Chancellor of the Exchequer. I see no reason why any concession given to the man who is killed in action, where he has gone of his own initiative, should be extended to those who by chance are killed through bombing in their homes here.
I hope the Financial Secretary, in the absence of his right hon. Friend, will reconsider this matter, and do so with a warmer heart and a greater appreciation of the situation in the Services. It is a face that at the present time the benefits of the common soldier apply to the Army and Navy but not, in broad practice, to the Royal Air Force, or at least to those engaged in operations in the Royal Air Force; they are usually wearing a higher rank than the appointment of lance sergeant. Most of the members of the Royal Air Force who are engaged in operations are given to the rank of sergeant-pilot. It does mean that unless this law is altered the Air Force, to whom we are as a nation very grateful, as has been expressed so eloquently by the Prime Minister, do not get the benefit of this 1815 Act. I think there is good ground for extending the 1815 Act so that it will include the higher ranks. I should like to see, anyhow, the junior officer and the non-commissioned officer included in the provisions of the 1815 Act. If the Government do not wish it to apply in the case of relations succeeding to the estate I think they have good grounds for that, but to take Death Duties from the widow or aged mother is, I think, extremely distasteful for the Government. I hope they will reconsider this matter, and try to be more generous in their attitude to the Fighting Services.
I am very disappointed with what the Chancellor has said. He has given no reply except, "I will not do it." That is no logical reply. You may get two brothers, one a private soldier, the other a second lieutenant. They both have the same fortune, and they both suffer the same misfortune—they are killed. In one case the duties are paid, and in the other they are not. In the days when this law was framed they had not invented things like O.C.T.U.'s, and so there was a more marked distinction between what was called the officer class and what was called the common soldier. It was possibly assumed that the common soldier would not die leaving anything worth mentioning, so they left him out. He has been left out for 150 years. It is no argument to say that it was not done 129 years ago. The Ten Commandments were made a much longer time ago. There is no basis in intellect or in sympathy for the attitude of the Treasury. They are behaving like the body of hardhearted brutes which the Treasury, collectively, are. We cannot admire them, we cannot love them, we cannot respect them, because they are so unsympathetic.
I also am very disappointed and hope the matter will be reconsidered. The mover of this Clause talked of fundamental unfairness. I want to mention, briefly, two aspects of that unfairness. To-day practically every young man or woman has to go into the Services and through the ranks before getting a commission. The best of them, who show, by powers of leadership and other tests, that they are worthy of greater responsibility, are given commissions. On being commissioned, they suffer, if they are persons of estate, by coming under a different rate of Estate Duty than before. There is very little reward in that for being more competent and more ready to take responsibility. The second example I want to give relates to non-commissioned officers. A lance-sergeant has to pay nothing—I am taking, of course, cases of N.C.O.'s with estates of more than £5,000, Directly he becomes a sergeant he is liable to the duty. Of course, the transition from lance-sergeant to sergeant is a very simple one; it is just a matter of a short record in Part II Orders, and it is finished. The man gets a few shillings more per week from public funds; but the State, if he dies, takes quite a large sum from his estate. That is very unfair. There are numerous other cases in which this unfairness shows itself, but I do not want to enlarge upon that.
I believe that very few people in the Services know that those below the rank of sergeant, and corresponding ranks in the other Services, are free of duty on their estates if they die or are killed in action. I believe that if it was well-known there would be a great deal more feeling about it than has been expressed. I am afraid I am very ignorant about these things, but until a day or two ago I did not know. I have a feeling that the hundreds of lance-sergeants that I have recommended for promotion ought to have been told that if they were men of substance, as many of them were, they were rendering themselves liable to taxation on their estates; but I could not have told them that, as I did not know. I give them the credit of saying that I think few of them would have turned down the promotion on that account, but I think that they ought to have been told.
We ought clearly to understand what this Clause proposes to do. The mover and seconder commended it as a concession to the Fighting Forces. As a matter of fact, it is a concession only to a very tiny section of the Fighting Forces—only those who leave more than £5,000. The more a man leaves, the greater the concession. That is a completely regressive proposal. If the Chancellor has money to spare to give concessions to our Fighting Forces, and to those men who lose their lives, that concession should be given on a far fairer basis than on the ground that the more a man leaves the greater the concession should be.
My hon. Friend the Member for Chesterfield (Mr. Benson) does not appear to have attempted to justify the law with regard to this matter as it stands at present. His argument seems to be that, provided the number of persons who suffer an injustice is not great, it does not matter how much the injustice is. That is not an argument which commends itself to me, or, I venture to think, is likely to commend itself to the Committee. I regret that the Chancellor was not able to see his way to make some concession on this matter, because I feel that this is a subject upon which opinion in the Committee is really out of harmony with opinion of the public as a whole. If you went to 99 people out of no, I believe that they would say that they thought it more fair that, when a man lost his life in the service of his country, his estate, whatever size it may be, should be free of Estate Duty.
I want to add only one further observation. I was unable to follow my right hon. Friend when he said that there was no injustice. The law on this matter is really out of date. It starts with the Act of 1815, and then, for certain classes of persons, there is the Act of 1914. If the basis of exemption had been the size of the estate, and not the rank of the deceased person, I could have understood it, though I could not have agreed with it. But that is not the case. The test is not the size of the estate, but the rank of the person to whom it belongs; and that seems to me, as my hon. Friend the Member for South Croydon (Sir H. Williams) pointed out, altogether indefensible from any logical standpoint. The sense of the Committee really is with my hon. Friend, and I hope that, before the Report stage, this matter may be reconsidered, and the law brought more into line with what I believe to be the feeling of the country.
The Chancellor did not suggest that there was any reason for preserving this anomaly except that the officer was being fairly treated. If that is so, is it not an inevitable conclusion that the private is being more than fairly treated, at the expense of the general taxpayer? That being the case, why does not the Chancellor repeal the 1815 Act? The obvious and only reason is that he has not got the courage to do so, because if he repealed that Act there would be a storm of protest. I suggest that the Chancellor ought to have a better reason for preserving this anomaly than timidity. I ask the Financial Secretary to look into this matter again before the Report stage.
I was not here during the whole of the Chancellor's speech, but I am quite certain that if I had been, I should have heard him say that the logical remedy for this anomaly—I know he regards it as an anomaly—would be to repeal the exemption of the common soldier. I think he holds the view that a soldier who is not a common soldier is not unfairly treated, but that the common soldier has favourable treatment and a great advantage. The hon. Member for Twickenham (Mr. Keeling) suggested that the Chancellor has not the courage to repeal the Act, and I very much resent that suggestion.
That is not the sort of suggestion that can be made against this Chancellor of the Exchequer, whatever else may be said. I suggest that the real reason is a very obvious one—that it is, at this stage of the war, quite out of the question to alter the law—[HON. MEMBERS; "Why?"] Because the war has been going on for over four years, and a very large number of people have been killed, and it would be quite wrong to alter it at this time. If it should be altered in the future, it ought not to be done in time of war. I do not think there is any reason for the alteration to be made now.
The Minister has spoken about the exemptions which the common soldier gets. May I remind him that the common soldier in the Home Guard gets no exemptions, and, whereas for duty purposes, the private soldier in the Home Guard has no exemption at all, an officer in that Home Guard gets the travelling expenses of a common soldier? It does seem to me that, when the personnel of the Home Guard lose their lives, as a result of their service, they ought to be treated as private soldiers.
I suggest that the appropriate procedure is to alter the rules and give the exemption to all ranks below commissions in the Royal Navy, Army, Royal Air Force and the Mercantile Marine. These latter splendid men enjoy no ecstasy of idling. Let the commissioned officer enjoy the rights he now enjoys, or which his widow will enjoy. There are many anomalies. I had two sons. One was a field officer who, a few months ago, gave his life, and £5,000 has been allowed. My second son is really a private in the Army, but has been lent to another unit as a pilot officer. I do not know how he would be dealt with. I have no doubt how my widow and family would have been treated, had I been killed as a member of the Home Guard, until a few months ago. My family would have had to pay, because I was a private in the Home Guard. If I had been a commissioned officer in the Home Guard, they would have had the privilege of the £5,000 exemption. Surely, there should be no distinction between men who have joined the Air Force, and men in the Army. To make an adjustment, if exemption cannot be granted to all men serving, I would suggest that at least all men, non-commissioned officers and warrant officers, should be exempt, thus including these very gallant men who are serving in the Royal Air Force and Mercantile Marine.
Surely, the mover and supporters of this new Clause, who are prepared to allow this exemption to apply to slightly higher ranks, and who, later on, will say it should be extended to second lieutenants and up to captains, must be resisted, because in due course they will come along and say, "Why do you perpetuate this anomaly?" In 1815, there was hardly anything in the nature of what hon. Members would refer to as Death Duties at all. In those days also, the distinction between the common seaman and the common soldier, and the officer class, was a very much greater distinction than exists at the present time. But, surely, the Committee ought to bear in mind that the real thing to do—I think it was a justifiable excuse put by the Chancellor that the war having gone on for 4½ years makes it difficult to do, and that it should have been done before the war started—is to remove this exemption altogether.
In this total war, men and women are liable to be directed, even if they do not want to go, into industry. Men and boys in my constituency, and in others, were very anxious to join the Forces, but the Minister of Labour thought that they should go down the mines, or be directed into other industries, or retained in the industries, in which they were engaged when war broke out. They are liable to be killed, and are killed. I remember seeing, a few weeks ago, a newspaper report of the first "Bevin boy" being killed. I do not see any reason why boys in that position should not have the same treatment as anybody else serving in the Armed Forces, or in the war as a whole. I feel that the Chancellor of the Exchequer is on perfectly sound ground in refusing, first of all, to withdraw this anomaly, in view of the fact that the delay on the part of his predecessor in doing so makes it awkward for him, and, secondly, because there is no justification at all for the continuation of this exemption.
The point, to my mind, is this. One hon. Member said that 99 people out of 100 would be very resentful if they heard of the existence of the present state of the law, but 99 people out of 100 leave no property at all. Therefore, this only touches a very few people. A large number of people who are wealthy enough to have more than £5,000 are likely to find themselves officers by this time. Others who have not that money also may be officers, but a large number of people in the ranks in all the Services are likely to leave very little, particularly in view of the fact that they are so badly paid. The Treasury are right in the stand that they have taken, and objection only comes from people who do not like Estate Duty at all. An hon. Member referred to Estate Duty as fining the family. It may be a phrase used earlier in this Debate, or other Finance Bill Debates, but it is an old-fashioned conception of Estate Duty. It is purely and simply that it is the wish of the State that not more than a certain amount should be inherited by certain people from deceased persons. People who believe that their privilege must be carried on by inheritance, naturally dislike any form of inheritance tax. That is why they, and they alone, are trying to make further holes into the Estate Duty at the present time by extending the exemptions.
I have sat through the whole of this Debate and I think it will be agreed that the sentiment of the Committee is entirely in support of the Clause which has been moved by my hon. Friend the Member for The Wrekin (Mr. Cole-gate). The Financial Secretary, although he was not here during the speech of his right hon. Friend the Chancellor of the Exchequer, should take cognisance of the views which have been given since he came into the Committee. The views expressed by Members must be carefully considered and weighed by His Majesty's Administration. With one or two exceptions—the sort of argument raised by the hon. Member for Nuneaton (Mr. Bowles), who would destroy all inheritance rights and privileges—the sentiment of the Committee is on the side of the Clause. It is pitiable that we should continue to move in the atmosphere of George III in this Committee. George III was a very excellent monarch, during a period of his reign, but I would not say that his faculties in 1815 were equal to sound legislation. The case made out seems to me to be unchallengeable. Take the case of my hon. Friend the Member for South Croydon (Sir H. Williams) of two brothers, one a non-commissioned officer who, because he is a lance-sergeant, is freed from Stamp Duty on his inheritance, and the other who because he takes a commission is deprived of that privilege. This is a case in which more has been said in Committee, and the Financial Secretary cannot disregard the views to which expression has been given and I hope that he will reconsider the matter.
I can only say that I and my hon. Friends are extremely dis- appointed at the reply we have received. I am not going to discuss Bevin boys or the injustices of other classes. I laid before the Committee a clear and obvious case of gross injustice. My right hon. Friend the Financial Secretary to the Treasury gave me one answer. His main answer was that he could not do it at this stage of the war. Why not? Is the fact that we are in the middle of a war an argument for not remedying an injustice? We did it yesterday. There was an injustice to parsons which we removed yesterday. No one said, "You cannot remedy injustice to people who are not getting sufficient allowances on their houses because we are in the middle of a war." Why, surely, at the very time when people are fighting overseas this is not the time to say that injustice cannot be removed. We can remove injustice on a rectory, on this, that, or the other, but to those fighting overseas we say, "We cannot remove the injustice on your family." That is a nonsensical argument Really I cannot accept it, and I cannot withdraw the Clause.