Chapter 18

The application of this principle of differentiation of income-tax has enabled the present Government sensibly to lighten the burden of the great majority of income-tax payers. Under the late Conservative Government about 1,100,000 income-tax payers paid income-tax at the statutory rate of a shilling in the pound. Mr. Asquith, the Prime Minister, when Chancellor of the Exchequer, reduced the income-tax in respect of earned incomes under L2,000 a year from a shilling to ninepence, and it is calculated that 750,000 income-tax payers--that is to say, nearly three-quarters of the whole number of income-tax payers--who formerly paid at the shilling rate have obtained an actual relief from taxation to the extent of nearly L1,200,000 a year in the aggregate. The present Chancellor of the Exchequer in the present Budget has added to this abatement a further relief--a very sensible relief, I venture to think you will consider it--on account of each child of parents who possess under L500 a year, and that concession involved a further abatement and relief equal to L600,000 a year. That statement is founded on high authority, for it figured in one of the Budget proposals of Mr. Pitt, and it is to-day recognised by the law of Prussia.

Taking together the income-tax reforms of Mr. Asquith and Mr. Lloyd-George, taking the two together--because they are all part of the same policy, and they are all part of our treatment as a Government of this great subject--it is true to say that very nearly three out of every four persons who pay income-tax will be taxed after this Budget, this penal Budget, this wicked, monstrous, despoliatory Budget--three out of every four persons will be taxed for income-tax at a lower rate than they were by the late Conservative Government.

You will perhaps say to me that may be all very well, but are you sure that the rich and the very rich are not being burdened too heavily? Are you sure that you are not laying on the backs of people who are struggling to support existence with incomes of upwards of L3,000 a year, burdens which are too heavy to be borne? Will they not sink, crushed by the load of material cares, into early graves, followed there even by the unrelenting hand of the death duties collector? Will they not take refuge in wholesale fraud and evasion, as some of their leaders ingenuously suggest, or will there be a general flight of all rich people from their native shores to the protection of the hospitable foreigner? Let me reassure you on these points.

The taxes which we now seek to impose to meet the need of the State will not appreciably affect, have not appreciably affected, the comfort, the status, or even the style of living of any class in the United Kingdom. There has been no invidious singling out of a few rich men for special taxation. The increased burden which is placed upon wealth is evenly and broadly distributed over the whole of that wealthy class who are more numerous in Great Britain than in any other country in the world, and who, when this Budget is passed, will still find Great Britain the best country to live in. When I reflect upon the power and influence that class possesses, upon the general goodwill with which they are still regarded by their poorer neighbours, upon the infinite opportunities for pleasure and for culture which are open to them in this free, prosperous, and orderly commonwealth, I cannot doubt that they ought to contribute, and I believe that great numbers of them are willing to contribute, in a greater degree than heretofore, towards the needs of the navy, for which they are always clamouring, and for those social reforms upon which the health and contentment of the whole population depend.

And after all, gentlemen, when we are upon the sorrows of the rich and the heavy blows that have been struck by this wicked Budget, let us not forget that this Budget, which is denounced by all the vested interests in the country and in all the abodes of wealth and power, after all, draws nearly as much from the taxation of tobacco and spirits, which are the luxuries of the working classes, who pay their share with silence and dignity, as it does from those wealthy classes upon whose behalf such heartrending outcry is made.

I do not think the issue before the country was ever more simple than it is now. The money must be found; there is no dispute about that. Both parties are responsible for the expenditure and the obligations which render new revenue necessary; and, as we know, we have difficulty in resisting demands which are made upon us by the Conservative Party for expenditure upon armaments far beyond the limits which are necessary to maintain adequately the defences of the country, and which would only be the accompaniment of a sensational and aggressive policy in foreign and in Colonial affairs. We declare that the proposals we have put forward are conceived with a desire to be fair to all and harsh to none. We assert they are conceived with a desire to secure good laws regulating the conditions by which wealth may be obtained and a just distribution of the burdens of the State. We know that the proposals which we have made will yield all the money that we need for national defence, and that they will yield an expanding revenue in future years for those great schemes of social organisation, of national insurance, of agricultural development, and of the treatment of the problems of poverty and unemployment, which are absolutely necessary if Great Britain is to hold her own in the front rank of the nations. The issue which you have to decide is whether these funds shall be raised by the taxation of a protective tariff upon articles of common use and upon the necessaries of life, including bread and meat, or whether it shall be raised, as we propose, by the taxation of luxuries, of superfluities, and monopolies.

I have only one word more to say, and it is rendered necessary by the observations which fell from Lord Lansdowne last night, when, according to the Scottish papers, he informed a gathering at which he was the principal speaker that the House of Lords was not obliged to swallow the Budget whole or without mincing.[18] I ask you to mark that word. It is a characteristic expression. The House of Lords means to assert its right to mince. Now let us for our part be quite frank and plain. We want this Budget Bill to be fairly and fully discussed; we do not grudge the weeks that have been spent already; we are prepared to make every sacrifice--I speak for my honourable friends who are sitting on this platform--of personal convenience in order to secure a thorough, patient, searching examination of proposals the importance of which we do not seek to conceal. The Government has shown itself ready and willing to meet reasonable argument, not merely by reasonable answer, but when a case is shown, by concessions, and generally in a spirit of goodwill. We have dealt with this subject throughout with a desire to mitigate hardships in special cases, and to gain as large a measure of agreement as possible for the proposals we are placing before the country. We want the Budget not merely to be the work of the Cabinet and of the Chancellor of the Exchequer; we want it to be the shaped and moulded plan deliberately considered by the House of Commons. That will be a long and painful process to those who are forced from day to day to take part in it. We shall not shrink from it. But when that process is over, when the Finance Bill leaves the House of Commons, I think you will agree with me that it ought to leave the House of Commons in its final form. No amendments, no excision, no modifying or mutilating will be agreed to by us. We will stand no mincing, and unless Lord Lansdowne and his landlordly friends choose to eat their own mince, Parliament will be dissolved, and we shall come to you in a moment of high consequence for every cause for which Liberalism has ever fought. See that you do not fail us in that hour.

FOOTNOTES:

[18] Lord Lansdowne has since been at pains to explain that he did not use the word "mincing." That word ought to have been "wincing" or "hesitation"--it is not clear which.

THE BUDGET AND THE LORDS

NORWICH, _July 26, 1909_

(From _The Manchester Guardian_, by permission.)

The Budget is the great political issue of the day. It involves all other questions; it has brought all other issues to a decisive test. _The Daily Mail_ has stated that the Budget is hung up. So it is. It is hung up in triumph over the High Peak; it is hung up as a banner of victory over Dumfries, over Cleveland, and over Mid-Derby. The miniature general election just concluded has shown that the policy embodied in the Budget, and which inspires the Budget, has vivified and invigorated the Liberal Party, has brought union where there was falling away, has revived enthusiasm where apathy was creeping in.

You cannot but have been impressed with the increasing sense of reality which political affairs have acquired during the last few months. What is it they are doing at Westminster? Across and beyond the complicated details of finance, the thousand amendments and more which cover the order paper, the absurd obstruction, the dry discussions in Committee, the interminable repetition of divisions, the angry scenes which flash up from time to time, the white-faced members sitting the whole night through and walking home worn out in the full light of morning--across and beyond all this, can you not discern a people's cause in conflict? Can you not see a great effort to make a big step forward towards that brighter and more equal world for which, be sure, those who come after us will hold our names in honour? That is the issue which is being decided from week to week in Westminster now, and it is in support of that cause that we are asking from you earnest and unswerving allegiance.

I do not think that there is any great country in the world where there are so many strong forces of virtue and vitality as there are in our own country. But there is scarcely any country in the world where there is so little organisation. Look at our neighbour and friendly rival Germany. I see that great State organised for peace and organised for war to a degree to which we cannot pretend. We are not organised as a nation, so far as I can see, for anything except party politics, and even for purposes of party politics we are not organised so well as they are in the United States. A more scientific, a more elaborate, a more comprehensive social organisation is indispensable to our country if we are to surmount the trials and stresses which the future years will bring. It is this organisation that the policy of the Budget will create. It is this organisation that the loss of the Budget will destroy.

But, we are told, "it presses too heavily upon the land-owning classes." I have heard it said that in the French Revolution, if the French nobility, instead of going to the scaffold with such dignity and fortitude, had struggled and cried and begged for mercy, even the hard hearts of the Paris crowd would have been melted, and the Reign of Terror would have come to an end. There is happily no chance of our aristocracy having to meet such a fate in this loyal-hearted, law-abiding, sober-minded country. They are, however, asked to discharge a certain obligation. They are asked to contribute their share to the expenses of the State. That is all they are asked to do. Yet what an outcry, what tribulation, what tears, what wrath, what weeping and wailing and gnashing of teeth, and all because they are asked to pay their share.

One would suppose, to listen to them, that the whole of the taxation was being raised from, or was about to be raised from the owners of agricultural estates. What are the facts? Nearly half the taxation of the present Budget is raised by the taxation of the luxuries of the working classes. Are they indignant? Are they crying out? Not in the least. They are perfectly ready to pay their share, and to pay it in a manly way, and two hundred thousand of them took the trouble to go to Hyde Park the other day in order to say so.

What are the facts about agricultural land? It is absolutely exempt from the operations of the new land taxation so long as agricultural land is worth no more for other purposes than it is for agricultural purposes: that is to say, so long as agricultural land is agricultural land and not urban or suburban land, it pays none of the new land taxation. It is only when its value for building purposes makes its continued agricultural use wasteful and uneconomic, it is only when it becomes building land and not agricultural land, and when because of that change it rises enormously in price and value--it is only then that it contributes under the new land taxation its share to the public of the increment value which the public has given to it.

Then take the death duties. One would suppose from what one hears in London and from the outcry that is raised, that the whole of the death duties were collected from the peers and from the county families. Again I say, look at the facts. The Inland Revenue report for last year shows that L313,000,000 of property passing on death became subject to death duties, and of that sum L228,000,000 was personalty and not real estate, leaving only L85,000,000 real estate, and of that L85,000,000 only L22,000,000 was agricultural land. These death duties are represented as being levied entirely upon a small class of landed gentry and nobility, but, as a matter of fact, there is collected from that class in respect of agricultural land only seven per cent. of the whole amount of money which the Exchequer derives from death duties.[19]

I decline, however, to judge the question of the House of Lords simply and solely by any action they may resolve to take upon the Budget. We must look back upon the past. We remember the ill-usage and the humiliation which the great majority that was returned by the nation to support Sir Henry Campbell-Bannerman in 1906 has sustained in the last three years at the hands of the House of Lords. That Assembly must be judged by their conduct as a whole. Lord Lansdowne has explained, to the amusement of the nation, that he claimed no right on behalf of the House of Lords to "mince" the Budget. All, he tells us, he has asked for, so far as he is concerned, is the right to "wince" when swallowing it. Well, that is a much more modest claim. It is for the Conservative Party to judge whether it is a very heroic claim for one of their leaders to make. If they are satisfied with the wincing Marquis, we have no reason to protest. We should greatly regret to cause Lord Lansdowne and his friends any pain. We have no wish whatever to grudge them any relief which they may obtain by wincing or even by squirming. We accord them the fullest liberty in that respect.

After all, the House of Lords has made others wince in its time. Even in the present Parliament they have performed some notable exploits. When the House of Lords rejected the Bill to prevent one man casting his vote two or three times over in the same election, every one in this country who desired to see a full and true representation of the people in Parliament might well have winced. When the House of Lords rejected or mutilated beyond repair the Land Valuation Bills for England and for Scotland, every land reformer in the country might have winced. When the House of Lords destroyed Mr. Birrell's Education Bill of 1906, every man who cared for religious equality and educational peace might have winced. When they contemptuously flung out, without even discussing it or examining it, the Licensing Bill, upon which so many hopes were centred and upon which so many months of labour had been spent, they sent a message of despair to every temperance reformer, to every social and philanthropic worker, to every church, to every chapel, to every little Sunday school throughout the land. If it should now prove to be their turn, if the measure they have meted out to others should be meted out to them again, however much we might regret their sorrows, we could not but observe the workings of poetic justice.

But I hope the House of Lords and those who back them will not be under any illusions about the Budget and the position of the Government. The Government is in earnest about the Budget. The Budget carries with it their fortunes and the fortunes of the Liberal Party. Careful argument, reasonable amendment, amicable concession, not affecting the principles at stake--all these we offer while the Bill is in the House of Commons. But when all that is said and done, as the Bill leaves the House of Commons so it must stand. It would be a great pity if Lord Curzon, the Indian pro-Consul, or the London _Spectator_--it would be a great pity if those potentates were to make the great mistake of supposing that the Government would acquiesce in the excision of the land clauses of the Budget by the House of Lords. Such a course is unthinkable. Any Liberal Government which adopted it would be swiftly ruined. The land proposals of the Government have not been made without long deliberation and full responsibility. We shall not fail to carry them effectively through the House of Commons; still less shall we accept any amendment at the hands of the House of Lords.

Is it not an extraordinary thing that upon the Budget we should even be discussing at all the action of the House of Lords? The House of Lords is an institution absolutely foreign to the spirit of the age and to the whole movement of society. It is not perhaps surprising in a country so fond of tradition, so proud of continuity, as ourselves that a feudal assembly of titled persons, with so long a history and so many famous names, should have survived to exert an influence upon public affairs at the present time. We see how often in England the old forms are reverently preserved after the forces by which they are sustained and the uses to which they were put and the dangers against which they were designed have passed away. A state of gradual decline was what the average Englishman had come to associate with the House of Lords. Little by little, we might have expected, it would have ceased to take a controversial part in practical politics. Year by year it would have faded more completely into the past to which it belongs until, like Jack-in-the-Green or Punch-and-Judy, only a picturesque and fitfully lingering memory would have remained.

And during the last ten years of Conservative government this was actually the case. But now we see the House of Lords flushed with the wealth of the modern age, armed with a party caucus, fortified, revived, resuscitated, asserting its claims in the harshest and in the crudest manner, claiming to veto or destroy even without discussion any legislation, however important, sent to them by any majority, however large, from any House of Commons, however newly elected. We see these unconscionable claims exercised with a frank and undisguised regard to party interest, to class interest, and to personal interest. We see the House of Lords using the power which they should not hold at all, which if they hold at all, they should hold in trust for all, to play a shrewd, fierce, aggressive party game of electioneering and casting their votes according to the interest of the particular political party to which, body and soul, they belong.

It is now suggested--publicly in some quarters, privately in many quarters--that the House of Lords will not only use without scruple their veto in legislation but they propose to extend their prerogatives; they are going to lay their hands upon finance, and if they choose they will reject or amend the Budget. I have always thought it a great pity that Mr. Gladstone made a compromise with the House of Lords over the Franchise Bill of 1884. I regret, and I think many of my hon. friends in the House of Commons will regret, looking back upon the past, that the present Government did not advise a dissolution of Parliament upon the rejection of the Education Bill in 1906. A dissolution in those circumstances would not merely have involved the measure under discussion, but if the Government of that day had received the support of the electors at the poll their victory must have carried with it that settlement and reform of the relations between the two Houses of Parliament which is necessary to secure the effective authority of the House of Commons. That is the question which, behind and beyond all others, even the Budget, even Free Trade, even the land--that is the question which, as the Prime Minister has said, is the dominant issue of our time.

Opportunity is fickle, opportunity seldom returns; but I think you will agree with me that if the House of Lords, not content with its recent exploits with the legislative veto, were to seize on the new power which its backers claim for it over finance--if, not content with the extreme assertions of its own privileges, it were to invade the most ancient privileges of the House of Commons--if, as an act of class warfare, for it would be nothing less, the House of Lords were to destroy the Budget, and thus not only create a Constitutional deadlock of novel and unmeasured gravity, but also plunge the whole finance of the country into unparalleled confusion, then, in my judgment, opportunity, clear, brilliant, and decisive, would return, and we should have the best chance we have ever had of dealing with them once for all.

These circumstances may never occur. I don't believe they will occur. If we only all stand firm together I believe the Budget will be carried. I believe the Budget will vindicate the strength of the Government supported by the House of Commons. I believe it will vindicate the financial strength of this great country. I don't believe, if we pursue our course without wavering or weakening, there is any force in this country which can stand against us. The Conservative Whip in the House of Lords, a friend of mine, Lord Churchill, said the other day that the House of Lords when they received the Budget would do their duty. I hope they will. But in any case be sure of this--that the Government and the House of Commons will do their duty. Then if there is anything more to be done, see that you are ready to do your duty too.

FOOTNOTES:

[19] Since the date of this speech the new concessions, doubling the allowance exempted from income tax for the expenses of agricultural estates, have been made public.

THE SPIRIT OF THE BUDGET

LEICESTER, _September 5, 1909_

(From _The Times_, by permission.)