The Framework of Home Rule

by Erskine Childers

The two classes are—(1) The Gladstonian; (2) the "Contract."

1. Mr. Gladstone's Schemes.—It is unnecessary to examine these in close detail, though, if the reader cares to do so, he will find details set forth in the Appendix. Four outstanding features were common to the schemes both of 1886 and 1893: (a) Permanent Imperial control over the imposition of Customs and Excise; (b) Irish control over all other taxation; (c) an annual Irish contribution to Imperial expenditure; (d) Imperial payment of part cost of the Irish Police.

With regard to (a), the most important point of difference in the two Bills was that under the first Ireland was credited with her whole "collected" revenue from Customs and Excise, under the second (as amended) with only her "true" revenue, which was less than the former by £1,700,000. Another point in which the two Bills differed was the permission to Ireland, under the Bill of 1893, after six years, to collect her own Excise. Both imposition and collection were wholly reserved under the Bill of 1886. I have already given grounds for the impolicy of retaining control over Customs and Excise. Let me only ask the reader, in conclusion, to figure the situation. How could Ireland frame a financial policy? Three-quarters of the revenue, as at present levied, of a country profoundly dissimilar economically from Great Britain, and in need of drastic reforms of expenditure and marked changes in taxation, would be permanently outside the reach of an Irish Chancellor of the Exchequer, and, in spite of the representation at Westminster which Imperial control would entail, would in the long-run fluctuate according to British needs and notions. In the long-run, I repeat; but incidentally there would be sharp and damaging conflicts. Occasions might occur like that of 1909, when the majority of Irishmen, rightly or wrongly, resented the form of new taxation, and would have secured the rejection of the Budget had not that step been hurtful to the prospects of Home Rule. It will be useless to blame either Ireland or Great Britain. Every country is bound to study its own circumstances. A similar crisis would have imperilled even the strongest Federation. We are not in the least concerned at the moment with the goodness or badness of that famous Budget. We are concerned with the effect on the relations of the two countries, and with the indefeasible right of Ireland and Great Britain to do what they consider best for their own interests.

With regard to (b), the Bill of 1893 differed from that of 1886 in the provision of a suspensory period of six years, during which all existing taxation in Ireland was to be under Imperial control, though Ireland could impose additional taxes of her own. After six years—and, under the Bill of 1886, from the outset—Ireland was to have control over all taxation other than Customs and Excise. Where is the wisdom in selecting direct taxation as peculiarly suitable to Irish control? It is already higher in Ireland than in any country economically situated as Ireland is. Yet Ireland's power to reduce it will be very small and very difficult to use, if she is rigidly excluded from changes in the indirect taxation which presses mainly on the poor. Would she naturally be inclined to increase direct taxation? Land Value Duties produce next to nothing in Ireland, and their extension would be unpopular. The existing rates of Income-Tax and Estate Duties cannot be raised, though their incidence might be extended to cover poorer elements of the population, as, for example, the small farmers. That is a kind of measure which the farmers would, if necessary, willingly agree to, in order to balance the accounts of a financially independent Ireland, but it is not the kind of measure they would care about when their national finance was dictated by Great Britain. If one cared to make a dialectical point, one could add that a common argument against Home Rule is a fear of oppressive taxation of the rich or oppressive taxation of North-East Ulster, at the hands of an Irish Parliament, through high direct imposts. The fear is one of those which scarcely need serious discussion. If Irish statesmen were as black as their most industrious traducers paint them, they could not by any ingenuity invent any new direct tax which would not hit all the provinces equally, saving perhaps a tax on pasture ranches, which would hit North-East Ulster least; while super-taxes on the exceptionally rich, if they were worth the trouble of collecting, would drive wealth out of a poor country at the very moment when it was most urgently necessary to gain the confidence of investors and the few wealthy residents.

With regard to (c), Mr. Gladstone's various devices for obtaining from Ireland a contribution to Imperial services possess now only a melancholy and academical interest, because, without an elaborate manipulation of the accounts, so as to disguise their true significance, no such contribution can possibly be obtained. In 1886 Mr. Gladstone provided for an annual payment from Ireland, fixed in amount for thirty years; in 1893 for the contribution of a quota—namely, one-third—of her "true" annual revenue from Imperial taxes, to run for six years, and then to be revised. His calculations were conditioned to some extent by (d), the part payment from the Imperial purse of the cost of Irish Police, coupled, of course, with continued Imperial control of that Police, pending its replacement by a new civil force. It is easy enough in ways like this to show a balance in Ireland's favour, and, at the same time, to cripple the responsibility of the Irish Legislature by transferring selected services from the Irish to the Imperial side of the account. We can extend the process to Old Age Pensions, the Land Commission, and what not. As I have repeatedly urged, this course is radically unsound. As for the Police, there can be no responsible government without control of the agents of law and order.

By crediting Ireland with her whole "collected" revenue, we can give her at once a balance of half a million. By freeing her from the payment of Old Age Pensions, we can make the balance three millions. With the elimination of the Land Commission and the Police, we can make it five millions. Then we can postulate an imaginary taxable capacity, an ideal contribution to Imperial services, and a hypothetical share of the National Debt, and so arrive at a Budget which will look well on paper, but which will deceive nobody, and be open to crushing criticism.

2. "Contract" Finance.—It will be seen that both Mr. Gladstone's schemes set up in Ireland—though under the Bill of 1893 only after six years—a dual system of taxation, Imperial and Irish, after the Federal model. The revenue, "collected" or "true," derived from Imperial taxes levied in Ireland, was to be paid, after the deduction of sums due to the Imperial Government on various accounts, into the Irish Exchequer. And into the same Exchequer went the proceeds of taxes levied by Ireland herself. The distinguishing feature of "Contract" finance is that it maintains the fiscal unity of the British Isles. All taxation in Ireland would be permanently levied and collected, as before, by the Imperial Parliament, Ireland being allowed only the barren and illusory privilege of levying new additional taxes of her own. Out of the Imperial Exchequer a lump sum of fixed amount, or a sum equivalent to the revenue collected in Ireland, would be handed over to Ireland, by contract, as it were, for the maintenance of the Administration.

The simplicity of this scheme seems to me to be its only merit. It disposes of all complicated bookkeeping, all heart-burnings over "true" and "collected" revenue, and all controversies, for a long time at any rate, over an Irish contribution to the Empire; while it involves and immensely facilitates a subsidy based on the reservation of selected Irish services for Imperial management and payment. On the other hand, it is not Home Rule. It annihilates the responsibility of Ireland for her own fortunes, and is, indeed, altogether incompatible with what we know as responsible government. Its germ appeared in the Irish Council Bill of 1907—a Bill which did not pretend to set up anything approaching responsible government, and to which the scheme was therefore in a sense appropriate, though it must, I think, have produced mischievous results if it had been carried into law.[150]

I wish to speak with the utmost respect of Lord MacDonnell and the other patriotic Irishmen who have advocated this kind of financial solution. There was a time when it might have been good policy for Ireland to obtain any—even the smallest—financial powers of her own as a lever, though a very bad lever, for the attainment of more. But we ought now to make a sound and final settlement, and I do earnestly urge upon all those who have Irish interests at heart to reject schemes which merely evade, if they do not actually aggravate, some of the pressing difficulties of the Irish problem of to-day. The fact that Contract finance works well in India is prima facie a reason why it should not work well in Ireland. It does not exist, and it could not be made to show good results, in any community of white men. If anyone is disposed to trace a faint analogy—which in any case would be a false analogy—with the lesser of the two small subsidies given by the Dominion of Canada in aid of the Provincial administrations,[151] let him imagine what the moral and practical consequences would be if, instead of constituting a small fraction of the provincial income, this subsidy were increased to a lump sum calculated by the Dominion Government as correct and sufficient for the whole internal government of the Province. And the pernicious results in a Canadian Province would be trivial beside the pernicious results in Ireland, where the whole system of expenditure and revenue needs to be recast; where large economies are needed, together with additional outlay on education; and where above all, the sense of national responsibility, deliberately stifled for centuries, needs to be evoked. Nothing could be more cruel to Ireland than to give her a fictitious financial freedom, and then to complain that she did not use it well. No nation could use freedom well under the Contract system of finance, whether based on a fixed grant or on revenue derived from Ireland. It is not in human nature to reduce expenditure unless the reduction is reflected in reduced taxation. Every official threatened with retrenchment, even in the services under Irish control and, a fortiori, in the services outside Irish control, would have a grievance in which the public would sympathize, while resentment at an unequal fiscal union would be unabated. Irish statesmen, like any other men in the same position, would be exposed unfairly to the continual temptation of preserving institutions and payments as they were, of making changes only of personnel, and of annually appealing to Great Britain for more money for new expenditure. These appeals could not possibly be refused. If Great Britain chooses to place Ireland in a position of financial dependence, she must take the consequences and pay the bill, as in the past, even if the bill exceeds the revenue derived from Ireland. But, indeed, under Contract finance, attempts to make Irish expenditure conform to Irish revenue would necessarily be abandoned.

Bad as the results must be, we are inexorably driven to some form of Contract finance directly we relinquish its anti-type, financial independence. There is very little practical difference between the Gladstonian and later plans. We may be drawn along the downward path either by considerations of revenue, or considerations of expenditure, or by both combined. To retain Imperial control of Customs and Excise, while crediting the Irish proceeds to Ireland, is in itself equivalent to making three-quarters of Irish tax revenue take the form of an annual money grant fixed by Great Britain. If Englishmen also want to retain control over Irish Police, and Irishmen are short-sighted enough to desire Imperial control, as a corollary of Imperial payment, of Old Age Pensions, National Insurance, or Land Purchase, there at once are four millions, or more than a third of present Irish expenditure, withheld from Irish authority. To cover the remaining seven millions by a Contract allowance, instead of going through the pretence of allotting items of revenue and of deducting a contribution to Imperial services, is a step which is only too likely to commend itself to harassed statesmen. But it would not be Home Rule.