Commons Sitting of 13 July 1922

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
Swansea Corporation Bill,
Lords Amendments considered, and agreed to.
Halifax Corporation Bill [Lords],
Read the Third time, and passed, with Amendments.
Ministry of Health Provisional Orders (No. 5) Bill,
Lords Amendments considered, and agreed to.
Glasgow Corporation Order Confirmation Bill [Lords],
Considered; to be read the Third time To-morrow.
Greenock Port and Harbours Order Confirmation Bill (by Order),
Second Reading deferred till Monday next.

NEW WRIT.
For the County of Down (North Down Division), in the room of Field-Marshal Sir HENRY HUGHES WILSON, Baronet, deceased.—[Colonel Leslie Wilson.]
ORAL ANSWERS TO QUESTIONS.
  NAVAL AND MILITARY PENSIONS AND GRANTS.

    DISABILITY PENSION (EX-LIEUTENANT VERITY).
    Mr. C. WHITEasked the Minister of Pensions whether his attention has been called to the case of ex-Lieutenant Verity, of 8, Orrell Road, Wallasey, Cheshire, who was invalided out of the
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    Army suffering from tuberculosis, directly attributable to military service, with 100 per cent. disability and full pension; whether he is aware that, after repeated medical examinations, the Ministry of Pensions changed the nature of the disability from tuberculosis to neurasthenia, and reduced the percentage of disability to 30 per cent., against which Mr. Verity appealed to the Medical Appeal Board, who decided that he was not suffering from neurasthenia: whether he is aware that this officer's pension has now been reduced to 40 per cent. disability pension, though he is quite unable to follow any employment, his health continually breaking down; and whether, under all the circumstances, he will restore Lieutenant Verity's full pension until his health is satisfactorily re-established?
    The MINISTER of PENSIONS (Mr. Macpherson): After most careful examination and consideration my medical advisers reached the conclusion that this officer is not suffering from tuberculosis now and has not suffered from this disease at any time since he relinquished his commission. Disablement by neurasthenia has, however, been admitted as due to service and was assessed at 30 per cent. by a medical board last February. Against that assessment the officer appealed to a medical appeal board which confirmed the diagnosis of neurasthenia and raised the assessment to 10 per cent. While this assessment must stand, I can assure my hon. Friend that any treatment necessary for the neurasthenia will be provided by my Department.
    Mr. WHITE: Is not the right hon. Gentleman aware that when this officer appeared before the medical board the neurasthenia was wiped out, and nothing was said as to what his disability was?
    Mr. MACPHERSON: That is not my information. My information is that he appealed against the first award on the ground that he was suffering from tuberculosis, and the Medical Appeal Board confirmed the diagnosis of the first.
    Mr. WHITE: Realisinģ that this cannot be decided by question and answer, I give notice that I will bring the matter up on the Adjournment oil Monday next.

    DEPENDANT'S ALLOWANCE (ELIZABETH HADFIELD).
    Mr. ALFRED DAVIES (Clitheroe)asked the Minister of Pensions whether an error has been made in the reassessment of allowance payable to Elizabeth Hadfield, aged 77 years, dependant of the late Gunner Charles Hadfield, No. 676,803, Royal Field Artillery; and whether he is aware that the allowance has been reduced from 12s. per week to 6s. per week, whilst the circumstances are exactly the same?
    Mr. MACPHERSON: I very much regret that this award was incorrectly reduced. Pension at the rate of 12s. a week has been restored with effect from the date of the last payment at that rate.

    PAY OFFICE, GREAT HARWOOD.
    Mr. DAVIES (Clitheroe)asked the Minister of Pensions whether he is aware that the Great Harwood War Pensions Committee strongly protests against the abolition of the pay office on the ground that it will be a very serious inconvenience to the disabled ex-service men, and will also involve considerable expense in travelling to and from Blackburn; that, in addition to the expense, it is two hours' railway journey; and whether he will reconsider his decision re retention of office, or allow- compensation for loss of time and travelling expenses?
    Mr. MACPHERSON: The volume of current work at Great Harwood is too small to justify the retention of a separate office there. Payments will in future be made by postal draft, and voluntary workers will be organised to interview and advise pensioners locally.

    RICHARD NICHOLSON, V.C.
    Mr. ATKEYasked the Minister of Pensions whether his attention has been drawn to the case of Mr. Richard Nicholson, V.C, particulars of which were extensively given in the Press of 18th June; whether he is aware that this soldier won the Victoria Cross in the Egyptian War of 1882–83; that he enlisted in the Great War in October, 1914, obtaining admission in the Durham Light Infantry at Leeds, when nearly 70 years of age, by dyeing his hair; that he was in France before Christmas, 1914, served until December, 1918, and was wounded
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    three times; that he had six sons killed in the War, and his wife died whilst he was on active service; that his pension has now ceased, and he has gone to the Kirkham Workhouse, possessed of 10 medals in addition to the V.C.; and will he inquire into this case?
    Mr. MACPHERSON: When I saw these Press reports I immediately had inquiries made. The records of my Department and of the War Office were carefully searched, but no trace could be found of a case corresponding to the particulars given, nor is there any record of the Victoria Cross having been awarded to a soldier of this name. The whole story appears to be a complete fabrication.
    Mr. ATKEY: Will the right hon. Gentleman take steps to give the same publicity to his answer as was given to the original statement?

  IRELAND.

    MALICIOUS INJURIES COMMISSION.
    Colonel NEWMANasked the Chief Secretary for Ireland whether, in view of the fact that on the decisions arrived at in some 10 cases by Lord Shaw's Commission the findings of the Commission in many thousands of other cases will be largely based, he is able to say that the first and second interim Reports of the Commission will be made available for Members of this House and for the general public; and will he say was there any verbatim Report of the proceedings of the Commission taken?
    The SECRETARY of STATE for the COLONIES (Mr. Churchill): I am in communication with the Commission regarding this matter, and I hope to be able to reply to the hon. and gallant Member at a later date.
    Colonel NEWMAN: Should I put down a question for next Monday?
    Mr. CHURCHILL: Say next Thursday.
    Colonel NEWMANasked the Chief Secretary whether the payments to be made on the awards for malicious and criminal injury when re-assessed by Lord Shaw's Commission will be made pari passu by the Governments of each country; and whether, after the first payment made by the Government of Great Britain, no further payment will be made

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    until the Government of Southern Ireland has made a payment of at least a similar amount?
    Mr. CHURCHILL: I would refer the hon. and gallant Member to the reply which I gave to a supplementary question addressed to me on the 11th instant by the hon. and gallant Member for Leith.
    Colonel NEWMAN: Are these payments to be made pari passu, one Government making one payment and another another at the same time, or is one Government to make all the payments in the first instance?
    Mr. CHURCHILL: All payments in the first instance ought to be made by the Provisional Government. If the Provisional Government is not able to make the payments, then we shall have to consider whether some of the money which would in any case be paid by us ought not to be devoted in the first instance to meeting, in part at any rate, the cases of those who obtain decrees from the Commission.
    Colonel Sir C. YATE: What is to be done by persons who have not got decrees?
    Mr. CHURCHILL: I did say that the Chancellor of the Exchequer was willing to consider special cases in regard to persons who are in great distress.
    Sir J. BUTCHER: What about persons who have got awards in undefended cases, whose awards have not been considered by the Commission?
    Mr. CHURCHILL: I would like to have notice.
    Colonel NEWMANasked the Chief Secretary whether, to expedite the rehearing of awards made under the Malicious Injuries (Ireland) Act, he will press for the appointment of sub-commissions to sit at convenient centres in Southern Ireland, and each to consist of one member nominated by the British Government, one member nominated by the Provisional Government, and as Chairman a member or ex-member of the British Bar, selected by the Chairman of the present Commission from a list submitted to him?
    Sir J. BUTCHERasked the Prime Minister whether he is aware that the
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    President of Lord Shaw's Commission for awarding compensation for malicious injuries in Ireland has gone to the United States; whether he can state when the President may be expected to return and resume his duties on that Commission: and, having regard to the large number and extreme urgency of the cases to be investigated, what steps he proposes to take during the absence of the President of the Commission to ensure that the trial of these cases shall be continued?
    Mr. CHURCHILL: The Chairman of the Commission is about to go to the United States, and will be absent for approximately two months. The Commission have, however, made good progress in the appointment of investigators and assessors in accordance with their terms of reference, and it is hoped that these appointments will be completed before the departure of the Chairman. During his absence the Commission will of course continue in existence with undiminished powers; and there is therefore no reason to suppose that any delay in the decision of cases will be occasioned by his absence; on the contrary, it is to be anticipated that the assistance of the investigators and assessors referred to will very greatly expedite the despatch of the work of the Commission. No grounds exist, therefore, for the taking of any special steps during the absence of the Chairman, nor, so far as can be anticipated, for the suggested appointment of sub-commissions.
    Colonel NEWMAN: Will those investigators take the cases singly or in groups?
    Mr. CHURCHILL: The matter rests with the Commission, but if a question be put down, I may be able to give an explanation.
    Viscount WOLMER: Has the right hon. Gentleman any idea as to how long these inquiries will take?
    Mr. CHURCHILL: I have no idea at all. It will take a long time as there is a great number of cases.
    Viscount WOLMER: Are these unfortunate people to remain penniless while inquiries are proceeding?
    Mr. CHURCHILL: If my Noble Friend had paid attention to my former replies he would not have asked that question.
    Viscount WOLMER: I have heard the replies. Is he aware that there are a great many men who are penniless and cannot get satisfaction from the Government in spite of what is said in this House?
    Mr. GWYNNE: How long will Lord Shaw be in America?
    Mr. CHURCHILL: I have already answered that question.
    Sir J. BUTCHER: Do I understand that the awards will continue to be made by this Commission during the absence of Lord Shaw in America?
    Mr. CHURCHILL: Yes.

    ROYAL IRISH CONSTABULARY.
    Lieut.-Colonel ARCHER-SHEEasked the Chief Secretary if he is aware that the conditions laid down in Section 8 of the Revised Terms of Disbandment of the Royal Irish Constabulary are not being carried out; that constant applications to the tribunal for dealing with individual cases of hardship produce no result: that the disturbance pay as laid down in Sub-section (a) is not awarded: and that great hardship is being caused by this neglect to carry out the terms of disbandment; and what steps he proposes to take to remedy this state of affairs?
    The CHIEF SECRETARY for IRELAND (Sir Hamar Greenwood): I am satisfied that the conditions laid down in the Revised Terms of Disbandment are being carried out; but if the hon. and gallant Member will let me have particulars of any case in which the contrary is alleged I will have inquiry made. The tribunal is sitting three or four days a week and is dealing with the cases as quickly as possible. Very few applications have been received under Sub-section (a), but there have been a considerable number of applications under Sub-heads (b) and (c) and in a large proportion of all these cases grants have been recommended. The last two parts of the question do not arise.
    Lieut.-Colonel ARCHER-SHEE: Is the right hon. Gentleman aware that even when claims have been allowed after long delay they are sent over to Ireland to be paid, which occasions further delay, causing great hardship to these people?
    Sir H. GREENWOOD: I am not aware of any delay in any case, but, if there is, I can assure my hon. and gallant Friend that I will see that it is dealt with immediately.

    PASSENGERS (SAFETY MEASURES).
    Brigadier-General COLVINasked the Secretary of State for the Colonies whether, in order to present undesirable persons travelling between Great Britain and Ireland, he will recommend as a temporary measure the institution of a rigid passport system between the two countries?
    Mr. CHURCHILL: The question of the supervision of passenger traffic between Great Britain and Ireland has been recently discussed in detail with the chief officers of police concerned, and the result of the conference goes to show that measures can be taken at the ports of entry which will provide at far less cost and inconvenience as effective a safeguard of the interests of the community here as would not be secured by any system of passports which would be incompatible with the maintenance of a considerable volume of traffic between the two countries. The measures, which, for obvious reasons, I cannot describe in detail, are in operation, and their working is being carefully watched. It is considered that these measures are adequate to the existing situation, but, of course, if circumstances require it, they can and will be strengthened to any degree necessary, irrespective of the inconvenience which would result in the intercourse between the two islands.
    Brigadier-General COLVIN: Will these measures be put into operation on both sides of the Channel?
    Mr. CHURCHILL: These particular arrangements are, I understand, in operation on this side, and, of course, certain measures are taken also in Northern Ireland.
    Mr. LINDSAY: Before the right hon. Gentleman puts any measures of this kind into operation in Northern Ireland, will he consult the Northern Authorities?
    Mr. CHURCHILL: I have no doubt that these matters are discussed between the police authorities on both sides of the Channel.
    Mr. GIDEON MURRAY: Is a careful watch kept at other ports besides those communicating with Ireland?
    Mr. CHURCHILL: At the present time we are not establishing a general system of passports, but we may have to do so. It would cause immense inconvenience, but one has to balance a certain measure of risk against a very much larger measure of inconvenience.
    Sir C. YATE: What is the good of watching the ports if undesirable people can come over here?
    Mr. SPEAKER: The hon. and gallant Member had better put that question on the Paper.

    PROVISIONAL GOVERNMENT (MUNITIONS).
    Mr. E. HARMSWORTHasked the Secretary of State for Air how many aeroplanes have been supplied to the Provisional Government of Southern Ireland and of what type; and if the aeroplanes so supplied have been sold or lent to the Provisional Government?
    Viscount WOLMERasked the Secretary of State for the Colonies how many rifles, machine guns, field guns and other artillery have been handed over to the Government of the Irish Free State?
    Mr. HOWARD GRITTENasked the Secretary of State for War how many rifles, field guns, and how much ammunition has been handed over to the Provisional Government of Southern Ireland since the 1st June, 1922; if any machine guns have been handed over and if any artillery of heavier calibre than field guns has been handed over; and, if so, whether these arms and ammunition were sold to the Provisional Government or lent?
    Mr. CHURCHILL: I do not think it would be desirable at the present moment to furnish detailed information of the nature and quantity of the munitions handed over by His Majesty's Government to the Provisional Government to enable them to cope with the present emergency. All munitions handed over will be included in the financial settlement to be made later between the two Governments.
    Viscount WOLMER: Can the right hon. Gentleman say why he thinks it necessary to conceal these facts?
    Mr. CHURCHILL: I conceal them because the Provisional Government, to whom these weapons have been handed, is engaged in warlike operations against the rebels, who hold large districts of Southern Ireland, and there is no reason why these rebels should receive military information which would he a great help to them.
    Lieut.-Colonel ARCHER-SHEE: Can the right hon. Gentleman say whether he has any information with reference to the statement published by the Republican Publicity Department, that they have recently captured 50 machine guns from the Collins forces?
    Mr. CHURCHILL: No; I have no confirmation of that statement, and I am sure that I would have been informed.
    Sir F. BANBURY: Will these guns and machine guns be returned to the British Government after the operations for which they are lent?
    Mr. CHURCHILL: In some cases certain weapons have been lent and will be returned after use, but other weapons have been definitely handed over for the purpose of forming the army of the Irish Free State within the limits of the Treaty, and they will be taken over by the Government of the Free State, assuming that everything works out in a satisfactory manner and then the cost of the weapons will be debited to Ireland in the general financial settlement between the two countries.
    Mr. RONALD McNEILL: Which category are the aeroplanes in? Will they be returned?
    Mr. CHURCHILL: I do not know whether they will or not. I suppose there will be a small air force in the possession of the Irish Free State, if they wish to have one. [HON. MEMBERS: "Why?"] Nothing can be less a menace to us than such an air force. If they choose to use the machines they have now in their possession. and pay us for them, and we can bring it into account in the ordinary way, I see no objection.
    Mr. G. MURRAY: Will the right hon. Gentleman say whether he proposes to put any limit upon the number of guns and other arms handed over to the Provisional Government?
    Mr. CHURCHILL: Naturally, as far as I am concerned, acting on the authority which has been given to me by the Cabinet, I watch most carefully every issue of arms made. I should like to point out that it is the constitutional right of the Provisional Government to place contracts for war material. They have refrained from doing this, and I think it is much better they should take their supplies from us who have a large store on hand.
    Mr. MARRIOTT: Have any conditions as to the use of these arms been imposed?
    Mr. W. THORNE: Are the rebels to get full swing?
    Mr. CHURCHILL: I do not quite see what better guarantee as to their use could exist than that which has been afforded by the fact that they are actually being used against those who are in rebellion against the lawfully constituted Free State.

    FREE STATE ARMY.
    Viscount WOLMERasked the Secretary of State for the Colonies what are the numbers of the army that the Irish Free State is entitled to maintain under the terms of the Treaty; and what is the number of troops the Irish Free State Government are now engaged in raising?
    Mr. CHURCHILL: In regard to the first part of the question, I would refer the Noble Lord to Article 8 of the Articles of Agreement for the Treaty which is published as a Schedule to the Irish Free State (Agreement) Act, 1922. I have no exact information as to the number of men who are being enrolled temporarily to meet the present emergency; but I would point out that the Irish Free State, like any other self-governing State, is entitled to call upon the whole of her manhood to assist in quelling an armed rebellion. The number of rifles in the possession of the Provisional Government are still well within the limits of the force contemplated under the Treaty.
    Viscount WOLMER: Is the right hon. Gentleman aware the Treaty does not state the actual numbers of the Army of the Irish Free State, but only the proportion?
    Mr. CHURCHILL: I am perfectly well aware of that, as I took part in a Debate on the subject which lasted several hours, and I say the number of rifles in the possession of the Provisional Government is well within the limits of the view which we took as to what must be permitted under the Treaty.
    Viscount WOLMER: Will the right hon. Gentleman answer the first part of the question, which asks what are the numbers of the Army which the Irish Free State is entitled to maintain? On the Government's interpretation of the Treaty, what was the actual number arrived at?
    Mr. CHURCHILL: That matter was very fully discussed when the Irish Free State Bill was going through, and if the Noble Lord would read up that Debate he would get a great deal of information on the subject out of it. As to what was considered a fair interpretation of the limit in this respect, it was stated on that occasion that between 30,000 and 40,000 men would be a fair interpretation.
    Mr. LAMBERT: Is it not desirable that the British Government should afford every support to the Provisional Government in quelling this rebellion?
    Rear-Admiral ADAIR: I wish to ask the Prime Minister whether the raising of this unlimited army in Ireland is not a grave menace to this country?

    RELIEF COMMITTEE.
    Lord H. CAVENDISH-BENTINCKasked the Secretary of State for the Colonies whether the Committee over which the hon. Member for Chelsea presides is competent to award relief to Catholics as well as to Protestants; and how many of the applicants are Catholics?
    Mr. CHURCHILL: I regret that the Noble Lord should have thought proper to repeat this question, which he addressed to me the day before yesterday as a supplementary, and to which I hoped I had suitably replied, and that he should think that my hon. Friend the Member for Chelsea (Sir S. Hoare) would consent to preside over a Committee which was debarred by sectarian considerations from giving relief to the victims of persecution and outrage. The reply to the first part of the question is in the affirmative, and the hon. Member for Chelsea informs me that relief is awarded to properly qualified

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    Catholics in exactly the same manner as to Protestants. The members are: Protestants 152, Catholics 143, and 88 whose religion was not stated. I hope the Noble Lord will see fit to express regret for the imputation into which he has been led.
    Lord H. CAVENDISH-BENTINCK: I assure my right hon. Friend I should not have put the question if he had the civility to reply to it the other day. It contains no imputation against the hon. Member for Chelsea; in fact it was at his request I put it down.
    Mr. CHURCHILL—
    Lord H. CAVENDISH-BENTINCK: On a point of Order. Am I not entitled to put a question without getting a reply containing rudeness and levity?
    Mr. SPEAKER: I think the Noble Lord is a little unnecessarily touchy.
    Lord H. CAVENDISH-BENTINCK: I know a gentleman when I see one.
    Mr. SPEAKER: The Noble Lord is entitled to put down a question—
    Lord H. CAVENDISH-BENTINCK: I am entitled to put it down without being insulted.
    Mr. SPEAKER: The Noble Lord must not interrupt. He is entitled to put down the question, but this is a question which might easily have two meanings, and I think the Colonial Secretary was perfectly justified, the question having been put, in giving an emphatic disclaimer, which is what the Noble Lord really desired.
    Lieut.-Colonel Sir S. HOARE: Is the right hon. Gentleman aware there is a misapprehension upon this point? I, as Chairman of this Committee, was very anxious the Noble Lord should put down this question, in order that there should be no misunderstanding at all, as to there being any distinction made between Roman Catholics and Protestants.
    Lord H. CAVENDISH-BENTINCK: The answer was unnecessarily rude.
    Mr. CHURCHILL—
    HON. MEMBERS: Withdraw!
    Mr. CHURCHILL: Not a word will I withdraw.
    HON. MEMBERS: Shame! Withdraw!
    Mr. SPEAKER: The House will please allow the right hon. Gentleman to proceed.
    Mr. CHURCHILL: I was, of course, ignorant of the arrangement between the Noble Lord and the hon. Member for Chelsea (Sir S. Hoare), but, as a matter of personal explanation, I took great exception to the suggestion that I, as the Minister responsible, or His Majesty's Government in general, would endeavour to draw a distinction on the grounds of religious belief, between persons who were entitled to assistance in distress. I did regard that as a wounding and offensive suggestion—
    Lord H. CAVENDISH-BENTINCK: I made no such suggestion.
    Mr. CHURCHILL:—which was also an absurd suggestion, and I am very much surprised that after the whole basis of that suggestion has been cut away, we do not get a more courteous response.
    Lord H. CAVENDISH-BENTINCK: May I ask—
    Mr. SPEAKER: It is quite clear there has been a complete misunderstanding as to the purport of the Noble Lord's question. The Noble Lord was perfectly justified in putting the question down.
    Lieut.-Commander KENWORTHY: Why does not the Colonial Secretary say so?
    Mr. W. THORNE: The House sat until two o'clock this morning.
    Mr. SPEAKER: It is obviously a complete misunderstanding. The right hon. Gentleman entirely misinterpreted the question of the Noble Lord and the reason for which it was put down.

    CIVIL AVIATION (SUBSIDIES).
    Mr. MALONEasked the Secretary of State for Air how much of the money allowed for civil aviation—subsidies, etc.—in the 1922–23 Estimates has not yet been allocated; how is it intended to utilise this sum; whether this sum is considered sufficient; whether he has recently received representations as to the serious position of the air industry; and whether he can make a statement as to the Government's policy?
    The SECRETARY of STATE for AIR (Captain Guest): I assume that my hon. Friend is referring to the Sub-head of Vote 8, which relates to "Civil Aviation Subsidies"; if he refers to the Vote as a whole he will see that the allocation of the money included in it is given in fairly full detail in the Air Estimates. As regards the sub-head for subsidies of £207,000, £107,000 was provided for the purehase of machines to be supplied on hire-purchase terms to approved civil aerial transport companies. £100,000 was provided for subsidies in cash to such companies. It is possible that the subsidy grants earned and the requirements in machines may be less than the Estimate, but I am not yet in a position to say what savings will arise or how they will be allocated. In considering the allocation of any savings, the Air Ministry would most certainly have regard to the present position of transport companies—whose not unreasonable estimates of traffic have not been fulfilled—and of the aircraft industry.

    COMMERCIAL SECRETARY IN CHILE.
    Mr. HANNONasked the Parliamentary Secretary to the Overseas Trade Department whether his attention has been drawn to the activity of the American and Spanish Governments in providing commercial facilities and advice throughout South America; and whether, in view of this fact, he will reconsider the closing of the office of His Majesty's Commercial Secretary at Santiago, Chile?
    The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Cecil Harmsworth): Yes, Sir. I regret that it should have proved necessary to include the post of Commercial Secretary in Chile among those which have been closed in order to secure the required reduction in the cost of the Commercial Diplomatic Service. I can assure the hon. Member that all considerations bearing upon the relative importance of the various posts concerned were very carefully weighed before the decision was taken.
    Mr. HANN0N: Is not this just the time when the representatives of British trade should be encouraged to continue in office?
    Mr. HURD: Does not the information at the disposal of the Overseas Trade Department show that the South American market at this moment is especially important to us, and cannot this decision be reconsidered?
    Sir H. BRITTAIN: Is it not true that more money is invested in Chile by the British than by any other nation?
    Mr. HARMSWORTH: I do not know. This case has been most carefully considered, and I understand that it is not possible to reconsider it. I will, how-over, present the views of my hon. Friends to the Department concerned.
    Sir C. YATE: Cannot the reduction of these consuls be avoided by raising the consular fees?
    Mr. HARMSWORTH: That is a different consideration altogether.

    LIQUOR TRAFFIC (STATE MANAGEMENT).
    Colonel Sir A. HOLBROOKasked the Secretary of State for the Home Department what was the cost of conversion of the building formerly used as a post office at Carlisle into a licensed public-house; whether he is aware that this building has been connected with a large hall known as the Lowther Hall; what sum was paid by the Control Board for the acquisition of these premises; and can he say if any, and what, profit has resulted from the trading carried on in them?
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Shortt): The total cost of the conversions and improvements which have been effected in the building formerly used as the principal post office at Carlisle and now known as the Gretna Tavern has been about £5,000; the hall now known as the Lowther Hall always formed part of the building, and became available as part of the Gretna Tavern in 1919 on ceasing to be used for post office purposes. The Central Control Board did not acquire these premises, which were already Government property, and were placed at the Board's disposal by the Postmaster-General. I am not prepared to publish separate trading results of individual premises.

    MESOPOTAMIA (MANDATED TERRITORY).
    Captain W. BENNasked the Secretary of State for the Colonies whether the territory in Mesopotamia for which the British Empire has accepted a mandate is coterminous with the territory of King Feisal's Government; if not, what form of Government exists outside Iraq; and who is responsible for maintaining order, by what means, and at what charge?
    Mr. CHURCHILL: The area in respect of which the British Government has accepted a mandate in Iraq is not coterminous with the territory at present administered by King Feisal's Government. It contains some Kurdish districts, over which a certain measure of political control is exercised by British officers acting under the orders of the High Commissioner for Iraq. The position in these districts was explained in my reply to the hon. Member for Moseley on the 5th July, to which I would invite the hon. and gallant Member's attention. Civil administrative expenses in the Kurdish areas are met from local funds, but the cost of the Iraq levies, which are employed in these regions as well as in the territory under King Feisal's administration, is a charge upon Imperial revenues.
    Captain BENN: Suppose trouble were to arise in those parts, who is responsible for quelling it, and who pays for it?
    Mr. CHURCHILL: I hope trouble will not arise in those parts, but we intend not to get entangled there, either in a military or financial sense.
    Sir D. MACLEAN: Do I understand that King Feisal's levies are an Imperial charge? I thought they were not.
    Mr. CHURCHILL: The Imperial troops in this country are an Imperial charge. The Arab army is a charge on the Iraq Budget, and the levies officered by British officers are an Imperial charge, and were dealt with in the Vote presented to the House.
    Mr. LAMBERT: How many troops are there in the area of Kurdistan, in which the right hon. Gentleman does not propose to get entangled in a military sense?
    Mr. CHURCHILL: We have no troops there at the present time. There are a few levies, but no Imperial troops beyond the town of Kirkuk.
    Sir C. YATE: Are the levies employed in Kurdistan Arab levies or Kurds?
    Mr. CHURCHILL: In some cases they are Kurds, and in some cases Assyrians.

    CHIEF SECRETARY FOR IRELAND.
    Captain BENNasked the Prime Minister whether he can give a definite date for the termination of the office of Chief Secretary to the Lord Lieutenant of Ireland, in accordance with the under taking given in February last that the office would cease within a few weeks?
    The PRIME MINISTER (Mr. Lloyd George): No, Sir: I am not in a position to add to the recent replies that have been given to questions on this subject.
    Captain BENN: Did not the Colonial Secretary say that this office would cease in a few weeks. How much longer are we going to pay for an office that is a useless one?
    The PRIME MINISTER: I have looked at the answer given and it does not infer that. No doubt, my right hon. Friend thought the whole situation might be cleared up, but naturally there is need, if this office were disposed of, for someone to attend to these matters.
    Captain BENN: Would the Prime Minister give any time limit for the duration of this useless office?
    The PRIME MINISTER: If the hon. and gallant Gentleman can give me a time limit for the troubles in Ireland.

    PEACE TREATIES.

      GERMAN REPARATION.
      Captain BENNasked the Prime Minister whether he can make any statement as to the present internal position in Germany and the reported request for a further moratorium in the payment of reparations?
      Mr. LAMBERTasked the Prime Minister if, in view of the chaotic condition of German finance, he is prepared

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      to make a statement as to what action the Government proposes to take in order that the reparation conditions of the Treaty of Versailles may not be evaded?
      The PRIME MINISTER: A communication has been addressed by the German Government to the Reparation Commission on the subject of a further moratorium in the case of cash payments due in respect of reparation and under various other Articles of the Treaty of Versailles. The text of this communication will be circulated in the OFFICIAL REPORT. It will obviously be necessary for His Majesty's Government and the other Governments concerned to take this matter into serious consideration and to consult with each other and with the Reparation Commission upon it. I am not at the moment in a position to make any statement as to the British Government's attitude beyond saying that we regard it as urgently necessary that such respite should be given to Germany as will enable her to restore order to her public finances and so be in a position to begin to make reasonable payments on account of her obligations at the earliest possible moment.
      Captain BENN: Are we to understand that the further consideration of the matter will be taken out of the hands of the Reparation Commission and considered by the Governments together?
      The PRIME MINISTER: That is not what I said.
      Lieut.-Commander KENWORTHY: Why should we wait for a catastrophe to occur? Why not try to prevent it? Will the right hon. Gentleman try to do that in future?
      Mr. SPEAKER: Lieut.-Commander Konworthy—
      Sir H. BRITTAIN: The catastrophe has occurred!
      The text of the communication mentioned is as follows:
      Deutsche Kriegslastenkommission.
      K. No.
      Paris, 12th July, 1922.
      Translation.
      In spite of grave economical objections which already have been set out in the note of 28th January of this year the German Government have up to now effected these payments. which had been fixed by the deci-
      1442
      sions of the Reparation Commission of 13th January and 21st March of this year.
      Meanwhile conditions in the rates of exchange have further altered to the detriment of Germany. In May, 1921, a rate of 60 paper marks for the dollar formed the basis for the fulfilment of the German reparation payments, while in March, 1922, the rate of exchange of the dollar has risen to 285 and in 6th July, 1922, to 500 marks. Supposing that in accordance with the agreements concluded at that time an amount of about 2 milliards of gold, mark3 of the obligations fixed by the London Schedule of payments of 5th May, 1921, was to be paid in cash, this amount would have required an inner covering of about 28 milliards of paper marks. For effecting the cash payments, reduced to 720 million gold marks by the decision of the Reparation Commission of March, 1922, an amount of 51·4 milliards of paper marks would, according to the rate of exchange of March, 1922, have been necessary, which amount, taking into consideration the present conditions of exchange, has now risen to 80 milliards of paper marks. To this sum must be added the other obligations of payments in foreign currencies which Germany is bound to make under the Treaty of Versailles, totalling about 600 million gold marks or 66 milliards paper marks annually.
      If, under these circumstances, the German Government would further be obliged to procure foreign currencies to an extent similar to the present for fulfilment of the obligations arising out of the Treaty of Versailles, the present depreciation of the value of the German paper mark would progress rapidly and perpetually and lead to a complete dissolution of the financial, economical and social life of Germany. For this reason the German Government are under the actual conditions unable to continue the cash payments in accordance with the decision of the Reparation Commission of 21st March, 1922.
      With reference to Article 234 of the Treaty of Versailles the German Government therefore request to grant them a respite for the cash payments falling due according to the said decision during the calendar year of 1922.
      As to the amount being due on 15th July next, this is to be reduced by at least 17 million gold marks which must be credited to Germany with regard to former payments. As to the remainder of 33 million gold marks, this amount is, it is true, at the disposal of the German Government, owing to their having been able to purchase, during the last few months, certain amounts of foreign bills, and owing also to the fact that, according to the state of account, no payment is to be made in the month of July for the clearing. However, the German Government would be short of the said amount, and they would be obliged to purchase the respective bills again at the actual rate of exchange as soon as the foreign cereals to be delivered within the next few months must be paid. The German Government are the more obliged to draw the attention of the Reparation Commission to this situation as they have spent during the

      1443
      last few weeks, together with the Reichs-bank, important means in order to stop the falling of the mark. In consideration of these circumstances, the German Government recommend to leave the amount in question at their disposal.
      With regard to the enormous seriousness of the actual situation, the German Government will only be able to restore the social and financial conditions, if they find the assistance of the Reparation Commission. There is no doubt for the German Government that, in order to re-establish the rate of exchange of the mark, measures must be immediately taken the effect of which would be felt still after the year of 1922; therefore, they consider it indispensable that Germany should be freed also during the years of 1923 and 1924 from payments in cash resulting of the Schedule of payments of 5th May, 1921.
      The decision asked for by the German Government will only attain its purpose, if all other payments arising besides the proper reparation payments out of the Treaty of Versailles in as far as they have to be paid in foreign currencies will likewise find due consideration. Among such payments are in particular to be regarded the obligations of the German Government arising out of the carrying out of Section IV of Part X of the Treaty of Versailles. The same reasons which make it impossible for the German Government to fulfil the obligation of payment arising out of the decision of 21st March, 1922, also apply to the carrying out of the agreements which were concluded on 10th June, 1921, with respect to the German payments to the Allied Clearing; Offices. For this reason the German Government will address a letter to the interested Governments with a view to arrive at another arrangement with respect to these clearing payments. They will inform the Reparation Commission of this and request the Reparation Commission to support on their part such demand with the respective Governments.
      The recent development of the rate of exchange of the mark, which began with the adjournment of the negotiations of the Loan Committee, necessitates a speedy, provisional settlement of the cash payments, the relief expected from a foreign loan having not yet been realised. In consideration of the above the German Government would be glad if the Commission would take their decision as to the demand for a respite with possible speed; they trust that such a decision will favorise the resumption of the loan negotiations.
      (Signed) FISCHER.
      To—
      The Reparation Commission,
      Paris.
      Lieut.-Commander KENWORTHYasked the Prime Minister whether time can be found before the Adjournment for a discussion of the Motion on German Reparations standing in the name of the hon. Member for Kingston-upon-Hull, Central Division—[That, in the opinion
      1444
      of this House, the Reparation Clauses of the Treaty of Versailles have proved to be unworkable in practice and injurious to the trade and commerce of this country; and that these Clauses should be revised forthwith].
      The PRIME MINISTER: No, Sir; I see no prospect of time being found for this Motion, but the subject can be raised on the Appropriation Bill.
      Colonel WEDGWOODasked the Prime Minister whether he will defer any interview with M. Poincaré in connection with the fall of the mark, and the, result of the fall on reparations, until an agreement has been arrived at with the French Government for a reduction of the claim for reparation?
      The PRIME MINISTER: I do not think it advisable to defer the interview.

      ASIA MINOR.
      Lieut.-Commander KENWORTHYasked the Prime Minister if he is aware of the injury to British trade that is being caused by the continuance of military and naval warfare in Asia Minor and the coasts thereof; whether any progress towards agreement was made during his discussions with Signor Schanzer on the question of Greece and Turkey in London last week; whether he can make any statement on the subject; and whether the question of offering Cyprus to Greece in exchange for Smyrna has been considered by His Majesty's Government?
      The PRIME MINISTER: The answer to the first part of the question is in the affirmative and to the third and fourth parts in the negative. As regards the second part, the exchange of views with the Italian Minister for Foreign Affairs was undoubtedly favourable to the prospects of agreement.
      Lieut.-Commander KENWORTHY: What is being done now in reference to bringing about peace between these belligerents? Are we taking any steps to call a fresh conference, or what are we doing?
      The PRIME MINISTER: That question has been repeatedly answered by the hon. Gentleman the Under-Secretary for Foreign Affairs.
      Mr. ORMSBY-GORE: Has the statement in the "Times" this morning, that it is proposed to hold a conference actually in Turkey on this question, any truth in it?
      The PRIME MINISTER: I have not seen it.
      Sir C. YATE: Is there any question of offering Cyprus to Greece?
      The PRIME MINISTER: No.

      GENERAL WRANGEL'S ARMY.
      Colonel WEDGWOODasked the Prime Minister whether the British Government makes or made any payment, direct or indirect, to the support of the trocps which form or formed a part of General Wrangel's Army in Bulgaria; and, if not, when such payments were discontinued?
      The PRIME MINISTER: The answer to tie first part of the question is in the negative. The remainder of the question does not, therefore, arise.

      HAGUE CONFERENCE.
      Lieut.-Commander KENWORTHYasked the Prime Minister if he will state the progress made at The Hague Conference, and the present position; when the Conference is expected to end; and, in the event of its sittings feeing prolonged until the rising of the House, whether the Government will make a statement before the Adjournment?
      The PRIME MINISTER: Full information as to the course of negotiations at The Hague has been communicated to the Press. We have not yet received any official confirmation of the Reuter report of yesterday evening that the Conference has definitely broken down. It is the fact that a deadlock has been reached, but we have no information beyond that at present. I cannot forecast when the work of the Commission will come to an end, but I hope to be able to give the House a general idea of the progress made before the Adjournment.
      Lieut.-Commander KENWORTHY: Is the right hon. Gentleman in personal touch by telephone or any other way with our representatives at The Hague, or can
      1446
      they terminate the negotiations finally without further reference to himself or this House?
      The PRIME MINISTER: They make daily reports.

      TRUSTS AND COMBINES.
      Mr. WATERSONasked the Prime Minister whether he is aware that on 9th March, 1921, the Parliamentary Secretary to the Overseas Trade Department announced in this House that it was the definite intention of the Government to proceed with legislation dealing with trusts and combines, both in the interests of the business community and the public; whether the absence of such legislation means that the Government's policy in this matter has changed; and, if not, whether he can now state the date on which such legislation will be laid before the House?
      The PRIME MINISTER: I would refer the hon. Member to the answer given by the Leader of the House to my hon. and gallant Friend the Member for Maidstone on the 15th February.

      HOUSING.

        NATIONAL SURVEY.
        Mr. JOHN DAVISONasked the Prime Minister whether it is the intention of the Government to make a complete national survey of the whole of the housing accommodation in England, Scotland, and Wales, with a view to the solution of the housing problem on a national basis; whether an inventory will be made of all slums and insanitary dwellings unfit for human habitation; and whether he can state when this necessary task of national reconstruction will be undertaken?
        The PRIME MINISTER: A survey of housing conditions was made by local authorities as recently as 1919; and although I do not think that the general results can be taken as a measure of the effective demand for additional houses at the present time, the individual surveys contain a great deal of valuable information in regard to areas needing consideration from a sanitary point of view, which is serving as a basis for action. It is, moreover, the duty of local

        1447
        authorities to carry out inspection of dwelling-houses in their districts, and a great deal of work is being done by local authorities in dealing with unsatisfactory houses. The Government have promised a contribution towards the annual losses incurred by local authorities in dealing with slum areas, and many local authorities have schemes in preparation or progress.
        Mr. DAVISON: Is the right hon. Gentleman aware that the policy indicated in the question is the policy advocated by himself for the past nine years, and practically constitutes the pledge given to the electors in 1918?
        Mr. T. THOMSON: Is the right hon. Gentleman aware that the survey to which he referred as being officially made by the local authorities has been discredited by the Minister of Health, and is he, therefore, prepared to ascertain what the actual facts and needs really are?

        RENT RESTRICTIONS ACT.
        Mr. MYERSasked the Prime Minister the composition of the Committee that is to be set up to consider the question of the continuance and amendment of the Rent Restrictions Act which expires in June, 1923?
        Sir WALTER de FRECEasked the Minister of Health if he can now state the composition of the Committee which is to be appointed to investigate the effect of the Increase of Rent and Mortgage Interest (Restrictions) Act; when it will commence its sittings; and, more especially, whether sufficient secretarial assistance will be attached to it to enable detailed examination to be made of the many points connected with the issue involved which may be brought to the notice of the Committee, either through Members of Parliament or direct from the general public?
        The MINISTER of HEALTH (Sir Alfred Mond): The composition of the Committee is not yet complete, but I hope to make an announcement at a very early date. The point referred to by the hon. Member for Ashton-under-Lyne will be borne in mind.
        Colonel NEWMAN: Will the right hon. Gentleman see to it that societies which can really speak for the average man should have a place on this Committee?
        Sir A. MOND: I think the societies would do better by appearing to give evidence.

        EDLINGTON AND DENABY MAIN.
        Mr. J. DAVISONasked the Minister of Health (1) whether he has received any Report on housing conditions at Edlington; whether he is aware that, of 924 houses inspected, 419 had lodgers or more than one family, and 217 had two families in each house: what action, if any, he proposes to take in the matter;
        (2) whether his attention has been drawn to the Report of the medical officer of health to the West Riding Public Health and Housing Committee, in which it is stated that out of a sanitary survey of 680 houses in Denaby Main there were 225 houses with lodgers of two or more families, 93 with two families, one with four families, and 128 overcrowded: and whether he proposes to take any action to remedy this state of affairs?
        Sir A. MOND: I am aware of the conditions in this district which is one where colliery undertakings have been rapidly developed. This is one of the districts in which the combination of colliery owners, to which I referred in my speech in Committee on the 13th June, is proposing to build houses, and legislation is at present before the House to facilitate the borrowing of money for these proposals. In addition I have informed the Conisborough Urban District Council that I am prepared to authorise the erection of a number of houses under the Assisted Scheme.
        Mr. LUNN: Has the Ministry of Health considered the excessive infantile mortality in this area through overcrowding?
        Sir A. MOND: I know that the conditions are by no means good, and I am endeavouring to remedy them.

        HONOURS LISTS.
        Commander BELLAIRSasked the Prime Minister whether the Government has taken into consideration the Resolution concerning the award of honours standing to the names of nearly 300 Members of the House: and whether the Resolution will be left to a free vote of the House?
        The PRIME MINISTER: The Government must treat the course they propose to adopt in reference to this Motion as a question of confidence.

        AIR POWER.
        Captain Viscount CURZONasked the Prime Minister whether he is aware that the deputation from the Parliamentary Air Committee to be received by the Committee of Imperial Defence will not include any representative able to speak for the naval side of the case; and whether, in view of the importance of the subject and of the fact that the Royal Navy is very much involved in the consideration of the problems of the air, he will allow an opportunity for certain members of the Parliamentary Navy Committee to appear before the Committee of Imperial Defence and state their views on the naval aspect of the problem of air defence?
        Major-General Sir J. DAVIDSONasked the Prime Minister whether he is aware that the deputation from the Parliamentary Air Committee to be received by the Committee of Imperial Defence will not include representatives able to speak from the Navy and Army sides of the case; and whether, in view of the importance of the subject and the fact that all three Services are closely involved in the problems of the air, he will allow an opportunity for certain members of the Parliamentary Army Committee to appear before the Committee of Imperial Defence and state their views on the military aspects of the problems of air defence?
        The PRIME MINISTER: The most convenient method would appear to be for the Parliamentary Navy Committee, in the one case, and the Army Committee in the other, to get in touch with the Parliamentary Air Committee with a view to a single deputation on the subject.
        Viscount CURZON: Is the right hon. Gentleman aware that the Parliamentary Navy Committee has met, and endeavoured to get into touch with the Parliamentary Air Committee, and they do not want the representatives of the Navy to accompany them?
        The PRIME MINISTER: I am sorry that there should be any difference of opinion. We are only anxious to get as much assistance as possible from Members
        1450
        who take an interest in this matter to help us to come to a right conclusion We are anxious to hear what can be said by those who are more cognisant of the Navy than the Army, and also those who are specially interested in the Army side of the question. I think that hon. Members who take an interest in the matter in both capacities should be able to come to an agreement as to the deputation to be received by the Committee of Imperial Defence.
        Viscount CURZON: Will the deputation to be received by the Committee of Imperial Defence not be limited to four persons?
        The PRIME MINISTER: I think it would be a mistake to have more; that is quite ample—two for one point of view, and two for the other.
        Viscount CURZON: If the Parliamentary Air Committee do not wish the Navy representatives to accompany them, may I bring the matter to the notice of the right hon. Gentleman again?
        The PRIME MINISTER: Yes.
        Captain BENN: Could not the right hon. Gentleman give an additional Supply Day to this very important Service?
        The PRIME MINISTER: Yes; if there be a general desire, the Government will try to find a Supply Day for the purpose. But I do hope before they come that the representatives of the Air Committee in this House will be able to accommodate their views to those of the other gentlemen mentioned, and present their case together before the Committee of Imperial Defence. We should like to have the matter examined by the Committee of Imperial Defence before the discussion in this House.

        NICKEL COINAGE.
        Sir HARRY BRITTAINasked the Chancellor of the Exchequer (1) what would be the saving per annum if nickel coinage of convenient size, comparable with that used in Belgium and France, was issued in place of the present halfpenny, penny, and threepenny piece;
        (2) whether, seeing that, by the reduction of the size of copper coinage by half,

        1451
        he would not only save a sum of roughly £40,000 per annum, but at the same time give the public a form of coinage more convenient to handle, he will reconsider the question?
        Sir JOHN BAIRD (for Mr. Hilton Young): The saving on the introduction of copper coins of smaller size or of nickel coins would depend in the first place on whether the existing coins were withdrawn (which would be expensive), and in the second place on the future demand for new subsidiary coin, of which it is impossible for form a reliable estimate at the present time. For the moment no new pennies or halfpennies are being coined at all. I am not aware of any general demand for a change such as suggested, and there would be considerable opposition from many quarters where a change would cause serious inconvenience, e.g., owners and users of penny in the slot machines.

        INCOME TAX (ARREARS).
        Sir A. HOLBROOKasked the Chancellor of the Exchequer what proportion of the £64,000,000, stated to be the amount of the arrears of Income Tax up to the end of May, has been now recovered; whether the whole of this sum was taken into calculation in his estimate on which taxation for the current year is based: and what steps, if any, are being taken to recover the arrears referred to?
        Sir J. BAIRD: I could not ascertain without great expenditure of time and labour the proportion asked for in the first part of my hon. and gallant Friend's question. In the preparation of the Budget estimate for 1922–23 due regard was paid to the amount of Income Tax outstanding at the 31st March, 1922, the collection of which is being carried out in the normal way.

        TAKORADI HARBOUR (GOLD COAST).
        Mr. ORMSBY-GOREasked the Secretary of State for the Colonies whether the principal object of the Takoradi (Gold Coast) Harbour scheme is that of providing facilities for ships to load alongside and of avoiding in future the necessity of lighterage: whether the provision of these
        1452
        facilities is a clear obligation of the contractors under the present contract for £1,600,000; and whether the depth of water to be obtained will be adequate for the largest class of vessels which call at ports in the Gold Coast Colony?
        Mr. CHURCHILL: The Takoradi Harbour is being constructed departmentally and not by contractors. The present modified scheme does not provide facilities—as the more expensive one would—for ships of the largest size to load alongside, but they will lie in still water close to the shore, and smaller ships will be able to lie alongside. The scheme is, however, to be regarded as a first instalment of a larger plan to be completed as and when circumstances permit —which will enable ships of the largest size to load at the wharves.
        Colonel WEDGWOOD: Can the right hon. Gentleman say what the cost of this scheme is likely to be when it is completed?
        Mr. CHURCHILL: I should like to have notice of that question.

        BELGIAN CONGO AND NIGERIA. (PALM PRODUCTS).
        Mr. ORMSBY-GOREasked the Secretary of State for the Colonies what is the rate per ton per mile for the railway transport of palm products in the Belgian Congo and Nigeria, respectively?
        Mr. CHURCHILL: In Nigeria palm kernels and palm oil are subject to special rates on the Government railway. From Jebba to Apapa, a distance of 303 miles, the rates, inclusive or terminal charges, are £5 1s. id. a ton and £4 14s. 7d. a ton, or 401 pence per ton mile and 3·74 pence per ton mile, respectively. For shorter distances the rates per ton mile are somewhat larger, as the rates are fixed on the principle of "taper," or charging a lower rate per ton mile the longer the distance. I have no official information as to the railway rates in the Belgian Congo, but I understand that the railway rates on these products have been greatly reduced and approximate to the rate charged on the Nigerian Railway on ground nuts from Kano to Apapa, which is £4 6s. 3d. a ton, or 1·46 pence a ton mile. Apparently

        1453
        the Congo Railway authorities, like those of Nigeria, have adopted a policy of specially encouraging, by low rail rates, a growing infant industry such as oil palm industry in the Congo and ground nuts in Nigeria.

      POST OFFICE.

        IMPERIAL WIRELESS CHAIN.
        Mr. HURDasked the Postmaster-General if he can make a statement as to the intentions of the Government respecting the Imperial wireless chain?
        The POSTMASTER-GENERAL (Mr. Kellaway): The Government have further considered the question of the Imperial wireless chain, and have decided to erect in England a station of the ultimate power contemplated by the Expert Commission, instead of the smaller power which they proposed should be used in the first instance. The Government are advised that this station will provide especially direct commercial communication with India, South Africa and Australia. In India the Imperial Government will erect and the Indian Government will work a station also capable of direct communication with England, South Africa and Australia. As a corollary of this decision, the proposed second station in Egypt and the station in East Africa will be deferred; and the question of erecting stations at Singapore and Hong Kong will be reconsidered. Communication is proceeding with the Union Government as to the station in South Africa, and the experts of the Canadian Government are expected to reach England very shortly in order to discuss the participation of Canada in the scheme.
        Mr. HURD: Can the right hon. Gentleman tell me whether, as a matter of fact, the experts of Canada have not bean coming to this country for the past two years?
        Mr. KELLAWAY: At any rate, they are much nearer arrival at the present moment.

        RECEIPT STAMPS.
        Sir MAURICE DOCKRELLasked the Postmaster-General if he is aware that there is some confusion in the public mind as to whether the l½d. postage
        1454
        stamp is or is not a valid receipt stamp; and will he have printed across the 2d. stamp receipt or postage, thus differentiating it from stamps of the other denominations as the stamp alone usable for acknowledgment of £2 or over?
        Mr. KELLAWAY: I am not aware that there is any general misapprehension on this point. The l½d. stamp, like all other postage stamps up to 1s., is inscribed "Postage" "Revenue" and is available in conjunction with a halfpenny stamp for payment of receipt duty. This arrangement is designed to meet the public convenience, which would not be promoted by the restriction which the hon. Member suggests.
        Sir M. DOCKRELL: Is the right hon. Gentleman aware that the words "Postage" and "Revenue" are printed in such microscopic characters that not one person in a hundred understands anything about it; and does he refuse to make it clear by printing across it the word "receipt" in order to show that it-is the only stamp to be used for that purpose?

        REGISTERED LETTERS TO IRELAND.
        Viscount WOLMERasked the Postmaster-General whether postmasters have been instructed to inform persons sending registered letters to Ireland not to put O.H.M.S. on the letters?
        Mr. KELLAWAY: No, Sir.
        Viscount WOLMER: Then any postmaster who has made such a request has exceeded his instructions?
        Mr. KELLAWAY: As no such instructions have been given, that appears to be obvious.

        NOTTINGHAM GUARDIANS (GIFTS TO CHILDREN).
        Mr. W. THORNEasked the Minister of Health whether the Nottingham Board of Guardians have asked him for permission to give 1d. per week to well-behaved children in their care under 10 years of age and 2d. per week to those over that age until they commence work; and if he can state whether the, Government intend giving effect to their application?
        Sir A. MOND: I propose to inform the guardians that it would be within their powers to award prizes for good conduct.

        BOARD OF GUARDIANS, POPLAR (AUDIT).
        Mr. W. THORNEasked the Minister of Health if he is aware that the Mayor of Poplar stated publicly that the Guardians of Poplar had at the present moment 17 Government auditors going through their books; if he can state whether the Poplar Board of Guardians have in any way violated their legal powers; and if he can give any reasons why 17 Government auditors are going through the guardians' books?
        Sir A. MOND: The audit referred to is the usual half-yearly audit, and only one auditor with a total staff of nine assistants and clerks is engaged on it. The work of the audit has been considerably increased owing to the necessity for checking the claims on the Metropolitan Common Poor Fund under the Act of last Session.

        PORT OF LONDON (TRADE DISPUTE).
        Sir F. BANBURYasked the Minister of Health whether he is aware that an agreement was entered into between the London employers and the joint standing committee representing the workmen of the Port of London on the 5th of last May which settled the rate of wages to be paid, and that the men, or some of them, threw over their representatives and preferred to receive out door relief; and whether he will refuse to render any assistance to the guardians to enable them to provide relief to men who can obtain work if they choose?
        Sir A. MOND: According to my information no agreement was arrived at on the 5th of May between the Joint Standing Committee and the London Ship-repairing Employers' Federation settling the rate of wages to be paid. I understand that discussions have proceeded for a considerable time between the parties, but that up to the present no agreement has been arrived at. It is quite clear that it is unlawful to give relief to men for whom employment is available, and I shall certainly take such steps as are within my power to prevent any board of guardians from giving such unlawful relief.
        Mr. W. THORNE: Is the right hon. Gentleman aware that 99 per cent. of the
        1456
        men responsible for this stoppage are not receiving Poor Law relief at all, and the men seeking relief are the labourers thrown out of work in consequence of the action of other men?
        Sir A. MOND: I am not aware of it.

        LOCAL AUTHORITIES (DEBT)
        Mr. MYERSasked the Minister of Health the amount of the outstanding debt of the local authorities of England and Wales, with the amount of the interest charges thereon, for the latest complete financial year for which the figures are available?
        Sir A. MOND: I am not at present in a position to give figures for a later year than I gave the hon. Member last October, but if he will repeat the question in the autumn, I shall hope then to be able to give him figures for the financial year 1920–21.

        SMOKE ABATEMENT.
        Sir ARTHUR FELLasked the Minister of Health why proceedings are not taken against the persons owning furnaces and factories or buildings used for trade which fail to consume the smoke emitted from their chimneys; and, in view of the chimneys that can be seen from every bridge across the Thames pouring out black and unconsumed smoke, will he say how many prosecutions for this offence were instituted by the sanitary authority last year?
        Sir A. MOND: I understand that in London there was one prosecution last year, and five, so far, this year. I would refer my hon. Friend to the Report of the Smoke Abatement Committee as to the difficulty of administering the existing law. The Government hope shortly to introduce a Bill on the subject.
        Sir A. FELL: Have the police instructions to report these cases when they see people obviously breaking the law?
        Sir H. BRITTAIN: Is it not a fact that the greater part of the smoke complained of comes from domestic grates and not from factories?
        Sir A. MOND: I could not answer a controversial question of that kind.

      UNEMPLOYMENT.

        NECESSITOUS AREAS.
        Sir W. de FRECEasked the Minister of Labour whether his Department has yet evolved an exact definition of the expression necessitous area, and whether, in that case, he will state what it is?
        Sir A. MOND: The answer is in the negative, but a scheme has recently been submitted on behalf of certain Poor Law authorities which is at present under consideration.

        BENEFIT (ROSE E. EDWARDS).
        Mr. FOOTasked the Minister of Labour whether he is aware that Rose E. Edwards, of Chippenham (unemployment book 134/K, 14,933), employed until recently at a milk factory, whose unemployment card has been regularly stamped since 16th January, 191V, has received benefit only for five weeks and is now out of benefit; and whether he can state why, as her contributions have been fully paid, she is not entitled to draw benefit for 15 consecutive weeks?
        The MINISTER of LABOUR (Dr. Macnamara): I am making inquiries locally in this case and will communicate the result to my hon. Friend.

      TRANSPORT.

        HEAVY VEHICLES (REFLECTORS).
        Sir PARK GOFFasked the Parliamentary Secretary to the Ministry of Transport, whether he will issue Regulations for all chars-a-banc, lorries, wagons, vans, and other heavy vehicles to be provided with reflectors?
        The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Mr. Neal): I would refer the hon. Member to paragraph 189 of the Second Interim Report of the Departmental Committee on the Taxation and Regulation of Road Vehicles and to the recommendations made therein, which are now under consideration.

        ROAD VEHICLES (DEPARMENTAL COMMITTEES).
        Sir P. GOFFasked the Parliament ary Secretary to the Ministry of Transport why he has refused the taxi-cab and
        1458
        hackney carriage proprietors of England any representation whatever upon the Departmental Committees on the taxation and regulation of road vehicles, and the licensing and regulation of hackney vehicles, although every other branch of motor transport is represented thereon; and if he can obtain the representation of the aforesaid proprietors thereon?
        Mr. NEAL: The constitution of the Committees referred to received most careful consideration and I am satisfied that they are fully representative of the interests concerned as is practicable. Associations representing hackney carriage proprietors will have every opportunity given to them to place their views before the Committee. I do not think it advisable to increase the number of members of the Committees.

        TRACKLESS TROLLEYS.
        Sir R. CLOUGHasked the Parliamentary Secretary to the Ministry of Transport, whether he can state the policy of his Department towards trackless trolleys; and whether, in view of the need of efficient roads where they are used, he is stimulating the policy, in all these cases, of more enduring road reconstruction?
        Mr. NEAL: Subject to the design and weight of trackless trolley vehicles being suitable to the roads on which they are run, I see no general objection to them, but each case must be judged on its merits. There is no substantial difference from a road damage point of view between trackless trolley vehicles, motor omnibuses and other heavy traffic, and no special kind of road reconstruction is necessary.

        WAR RISKS COMPENSATION.
        Mr. PENNEFATHERasked the President of the Board of Trade whether there is any appeal tribunal to which rejected claims to pension under the war risks compensation scheme can be submitted at the request of the claimant; if not, whether it is proposed to appoint one; and, if so, whether the claimant will be allowed to appear in person before such tribunal?
        The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Sir W. Mitchell-Thomson): I would refer my

        1459
        hon. Friend to the reply given on 3rd July to the hon. and learned Member for York (Sir J. Butcher).
        Mr. PENNEFATHER: Is the hon. Baronet aware that that reply has no bearing upon this question, which asks definitely "whether there is any appeal tribunal to which rejected claims to pension under the war risks compensation scheme can be submitted at the request of the claimant"?
        Sir W. MITCHELL-THOMSON: I think that if my hon. Friend consults the reply he will find that the question is dealt with, and dealt with, I think, more fully than he realises. The short answer is that there is an advisory committee, but that advisory committee functions purely as an advisory committee, and not as an appeal tribunal.
        Mr. PENNEFATHER: Would that advisory committee consider a case put forward by the claimant, or does it only consider cases submitted to it by the Board of Trade?
        Sir W. MITCHELL-THOMSON: If a claimant puts forward a case to the Board of Trade, and the case appears to be such as falls on or near the border-line, it is, as a matter of course, submitted to the advisory committee?
        Sir J. BUTCHER: Does the hon. Baronet realise that what is asked for is an appeal board and not an advisory committee, and will he consider the propriety of setting up an appeal board as against the present unlimited discretion of the Board of Trade?
        Sir W. MITCHELL-THOMSON: That is precisely one of the questions which, in reply to the hon. and learned Member last week, my right hon. Friend said he would consider.

        OLD AGE PENSIONS.
        Sir R. CLOUGHasked the Financial Secretary to the Treasury whether, in the case of old age pensions, pension officers reckon the income on savings in the Post Office Bank at 5 per cent., although only 2½ per cent. is paid; and, if so, if he will explain why this policy is followed?
        Sir J. BAIRD: I would refer the hon. Member to Section 4 of the Old Age Pensions Act, 1919, which provides that in calculating means for old age pension purposes the yearly value of any property, not personally used or enjoyed, shall be calculated as follows, namely:
        The first £25 of the capital value ignored.
        The next £375 of the capital value at one-twentieth.
        The remainder of the capital value at one-tenth.

      BRITISH ARMY.

        DISBANDED IRISH BATTALIONS.
        Brigadier-General Sir HACKET PAINasked the Secretary of State for War, whether, having regard to the decision to disband the second battalions of the Royal Inniskilling Fusiliers and the Royal Irish Fusiliers, the Government will consent to retain the depots of these regiments in their respective areas, thereby avoiding the great loss of identity and of esprit which the amalgamation of these regiments and their depots is boun4 to cause; and if he is aware of the great opposition felt to the scheme in the counties of Tyrone, Londonderry, Fermanagh and Armagh?
        The UNDER-SECRETARY of STATE for WAR (Colonel Sir R. Sanders): I can only say at present that the matter is receiving the personal consideration of my right hon. Friend. The two depots can only be retained at considerably increased cost.

        WAR DEPARTMENT LANDS, MALTA.
        Sir JOHN RANDLESasked the Secretary of State for War whether His Majesty's Government are contemplating the transfer to the Civil Government of Malta of lands hitherto under control of the War Department, and let by them on lease on encroachment terms for purposes such as seamen's rests, soldiers' and sailors' homes, hospitals, and the like; and whether, in that event and before such transfer, all holders of such leases will be guaranteed by the British Government undisturbed occupation of the sites on the same conditions as heretofore?
        Sir R. SANDERS: The War Department is at present in occupation of certain lands which are the property of the Civil Government, and the question of which of these lands shall be surrendered to the Civil Government has recently been the subject of arbitration. I understand that the arbitrator's award has now been received by the Colonial Office, but I have had no opportunity yet of examining its contents. It is possible, however, that the award will involve the surrender of land on which some of the encroachments in question have been erected. If so, it will be necessary for the occupiers to make their own arrangements with the Civil Government. All that the War Department could do would be to ask the Civil Government to give the occupiers all possible consideration.
        Sir J. RANDLES: Does not the hon. Baronet think that it is the business of the British Government authorities—the Imperial authorities—who granted these concessions, to make some arrangement with the civil authorities who will come into possession of the lands given up by the War Department?
        Sir R. SANDERS: The War Department will represent that to the civil authorities.

        TIBET (BRITISH MINING EXPERT).
        Sir W. de FRECEasked the Under-Secretary of State for India whether Tibet has asked for the loan of British advisers in any capacity; and whether, in that event, any recommendations are being made or have been made?
        The UNDER-SECRETARY of STATE for INDIA (Earl Winterton): The only request of this kind hitherto received from the Tibetan Government was for the temporary loan of the services of a mining expert. Arrangements were made accordingly for Sir Henry Hayden, late Director of the Indian Geological Survey, to pay a visit to Tibet.

        EX-INSPECTOR SYME.
        Mr. NEIL MACLEAN(by Private Notice) asked the Home Secretary whether ex-inspector John Syme was released from Pentonville Prison yester-
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        day at 11 o'clock, after nine days' hunger and thirst strike; whether he was informed, in a paper issued to him, that he must not leave his house; whether it is the case that, on leaving his house with the object of coming to the House of Commons to lay his case before Members of Parliament, he was stopped by two detectives, who, on being informed where he was going, re-arrested him and conveyed him back to Pentonville; whether the Home Secretary can quote any Clause in the Cat-and-Mouse Act which makes it possible for him to lay down such conditions as were laid on Syme; and whether, in view of the fact that this is the ninth occasion on which Syme has had to be released owing to hunger strike, he will see his way to remit the remainder of any sentence that has been passed upon this man?
        Mr. SHORTT: I only received notice of this question as I came into the House, and, therefore, I am sorry I cannot answer it in detail, but undoubtedly ex-inspector Syme was re-arrested yesterday. With regard to the last part of the question, if the friends of ex-inspector Syme would only persuade him to cease his threats against His Majesty and the Royal Family—threats which, I am sorry to say, there is every reason to suppose he would carry out—it might be easier to consider the suggestion.
        Mr. MACLEAN: If the Home Office will give their undertaking to do that which Syme has been trying to get done for the last 13 years, and have a public inquiry made into his case, John Syme's friends, both in the House and outside, will get him to give the undertaking desired by the Home Secretary. I would ask the Home Secretary whether he will be willing to grant the public inquiry that Syme has been demanding all these years?
        Mr. STANTON: May I ask the Home Secretary how long it is proposed to carry on with this cat-and-mouse business? If people elect to starve and defy the law, why not let them starve?
        Mr. SHORTT: That suggestion is easily made by those who have not the responsibility.
        Commander BELLAIRS: Is the right hon. Gentleman aware that that policy was carried out in the United States in regard to Communists, with immense

        1463
        success—that they let them starve and they gave up the game?
        Mr. SPEAKER: That matter does not really arise out of the question. I could only allow this question because of what was alleged to have happened yesterday. What is now being raised is the general question.
        Mr. MACLEAN: Should I be allowed to move the Adjournment of the House on this matter, involving, as it does, the probable death of this man?
        Mr. SPEAKER: There is no new matter here, according to the information given to me just now by the hon. Member.
        Mr. MACLEAN: Is it not a matter of definite public importance that a citizen of this country who, whether rightly or wrongly, is labouring under the belief that he is suffering injustice at the hands of the Home Office should be allowed to suffer in such a way as may bring about his early death? I have been informed that this man was in such a state of health when he was re-arrested yesterday that the probability is that his death may occur during this week-end, and I am asking, just as on a previous occasion, whether such a question as this is not a matter of definite public importance?
        Mr. SPEAKER: The administrative action in this case has been taken under a Statute passed by Parliament, and, therefore, there is no question that can arise to justify a Motion for the Adjournment of the House.
        Mr. MACLEAN: On a point of Order. I am sorry to trouble you in this way, but on a previous occasion, where a person was undergoing, or rather chose to undergo, a hunger strike rather than do what was imposed upon him in the prison, you or your predecessor was good enough to accept once or twice a Motion for the Adjournment of the House. I refer to the late Terence MacSwiney, the Lord Mayor of Cork. The Adjournment of the House was, as far as my recollection goes, moved at least on one occasion while he was undergoing a hunger strike, because it was claimed on that occasion, and conceded by Mr. Speaker, that it was a matter of definite public importance, involving, as it did, the ultimate death of the man.
        Mr. SPEAKER: Without notice, I cannot quite recollect that case, but I do not think it was on all fours with this.

BUSINESS OF THE HOUSE.
Mr. CLYNES: In asking for a statement of business next week, may I inquire, in view of the reported breakdown of The Hague Conference, the collapse of the mark, and the bearing of these two things on the whole problem of reparations, whether the Government can provide an opportunity for an early discussion in this House, and accordingly put down the appropriate Vote with reference to it?
The PRIME MINISTER: I am afraid it would be difficult, if not impossible, to have a discussion next week, for reasons which have been explained to my right hon. Friend, but in the week after next the appropriate Vote will be put down, by arrangement, on which both these questions could very conveniently be discussed. I hope that will meet the convenience of right hon. and hon. Gentlemen in the House.
With regard to the business for this evening, to-morrow, or next week, if anytime is available this evening or tomorrow I shall propose to proceed with minor Orders on the Paper, such as the Post Office (Pneumatic Tubes Acquisition) Bill, the Public Works Loans Bill, and, if further time be available, the Second Readings of the Education (Scotland) (Superannuation) Bill and the Allotments (Scotland) Bill, which have come down from the House of Lords.
With regard to next week, the business will be:
Monday (July 17th).—Honours Debate, and, if time permits, other Orders on the Paper.
Tuesday.—Supply: Navy Votes.
Wednesday.—Second Headings of the Scottish Bills—Education (Scotland) (Superannuation) Bill and Allotments (Scotland) Bill, if not taken before: Milk and Dairies (Amendment) Bill; Naval, Military and Air Force Canteens Bill, and Reports from Standing Committees upstairs.
Thursday.—Supply: Scottish Estimates.
Friday.—Report and Third Readings of various Bills.
Lord R. CECIL: Arising out of the first part of the question of my right

1465
hon. Friend the Member for Platting (Mr. Clynes), can the Prime Minister give any information as to what has occurred at The Hague?
The PRIME MINISTER: I have already answered a question with regard to that. I cannot give any information to the House beyond what has appeared in the papers, but I am afraid there is a deadlock. I have not, however, yet had any official information that there is a breakdown, but I promise that if any news comes in the course of the evening I will inform the House of it on the Adjournment to-night.
Mr. W. THORNE: Will the House be in a position to get all the questions put to the Russian Delegates and their answers?
The PRIME MINISTER: There must be some method of informing the House officially of what took place, but until my hon. Friend's return from The Hague I cannot say what is the exact form in which that information can be supplied.
Mr. THORNE: Will it be possible to get the questions put to the Russian Delegates, and their replies? Surely that is a very simple matter.
The PRIME MINISTER: I am sure that is an essential part of any information that is conveyed to the House. The House must have the information that will enable it to judge, if there is a breakdown, at what point the breakdown came.
Lieut.-Commander KENWORTHY: Can the Prime Minister say at what time the Debate on the Resolutions for the Reform of the other Chamber will be held in this House?
The PRIME MINISTER: As soon as they come down from the House of Lords.
Lieut.-Commander KENWORTHY: Were not the discussions to be simultaneous?
The PRIME MINISTER: Oh, no!
Sir DONALD MACLEAN: With regard to the list for to-night, I presume the phrase "if there be any time to spare" means before 11 o'clock?
The PRIME MINISTER: Yes.
Mr. MOSLEY: Before the Debate on Monday, will the Prime Minister circulate a Paper showing the average number of honours conferred annually during his administration and during preceding administrations?
Mr. NEIL MACLEAN: And the amount paid.
Commander BELLAIRS: With regard to the Honours Debate on Monday, and the decision of the Government to treat it as a matter of confidence, may I ask the Prime Minister whether the Government intends to negative the Resolution or to meet it by a reasoned Amendment? Is he aware of the great strain he will place on many of his supporters—
The PRIME MINISTER: I think I had better not make a statement in reference to the course which the Government is going to pursue until the Debate on Monday. I think my hon. Friends need not apprehend any strain upon their loyalty. Before they make up their minds, I am sure they will listen to what the Government has to say. A good deal has been said on the other side.
Captain BENN: If the Government have not yet decided what course they are going to pursue on Monday, how can they have decided to make it a question of confidence?
Mr. MACLEAN: In order to relieve his followers of the strain which they think is going to be put upon them, will the Prime Minister leave the matter to the open vote of the House and take the Whips off?
Mr. SPEAKER: That has been answered already.
Ordered, "That the Proceedings on the Unemployment Insurance (No. 2) Bill be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House).—[The Prime Minister.]
Ordered, "That the Proceedings on the Finance Bill and on the Unemployment Insurance (No. 2) Bill have precedence this day of the Business of supply.—[The Prime Minister.]

TRADE UNION ACT (1913) AMENDMENT BILL.
Reported, with Amendments, from Standing Committee A.
Report to lie upon the Table, and to be printed.
Minutes of the Proceedings of the Standing Committee to be printed.
Bill, as amended (in the Standing Committee) to be taken into consideration upon Monday next, and to be printed. [Bill 192.]

UNIVERSITIES (SCOTLAND) BILL [Lords]
Reported, without Amendment, from the Standing Committee on Scottish Bills.
Report to lie upon the Table, and to be printed.
Minutes of the Proceedings of the Standing Committee to be printed.
Bill, not amended (in the Standing Committee), to be taken into consideration To-morrow.

AGRICULTURAL HOLDINGS (SCOTLAND) BILL [Lords]
Reported, without Amendment, from the Standing Committee on Scottish Bills.
Report to lie upon the Table, and to be printed.
Minutes of the Proceedings of the Standing Committee to be printed.
Bill, not amended (in the Standing Committee), to be taken into consideration To-morrow.

KINGSTON-UPON-HULL CORPORATION BILL [Lords]
Reported, with Amendments, from the Local Legislation Committee; Report to lie upon the Table, and to be printed.

MESSAGE FROM THE LORDS.
That they have agreed to,
London County Council (Money) Bill,
London County Council (General Powers) Bill,
London Electric and City and South
London Railway Companies Bill, without Amendment.
Amendments to—
Great Northern Railway Bill [Lords] without Amendment.
That they have passed a Bill, intituled, "An Act to make provisions with reference to the undertakings of the Birmingham District Power and Traction Company, Limited, the Dudley, Stourbridge, and District Electric Traction Company, Limited, the South Staffordshire Tramways Company, the South Staffordshire Tramways (Lessee) Company, Limited, and the Wolverhampton District Electric Tramways, Limited; to confer powers upon those companies; and for other purposes." [Black Country Tramways and Light Railways Bill [Lords.]

BLACK COUNTRY TRAMWAYS AND LIGHT RAILWAYS BILL [Lords]
Read the First time; and referred to the Examiners of Petitions for Private Bills.
SELECTION (STANDING COMMITTEES).

  STANDING COMMITTEE B.
  Sir SAMUEL ROBERTS reported from the Committee of Selection: That they had discharged the following Members from Standing Committee B; Mr. Acland and Sir William Seager; and had appointed in substitution: Major Entwistle and Sir Robert Thomas.
  Report to lie upon the Table.

  INDIAN AFFAIRS.
  Second Report from the Standing Joint Committee brought up, and read.
  Report to lie upon the Table, and to be printed.

  BILLS PRESENTED.

    EASTGATE BAPTIST CHAPEL AND PROCEEDS OF SALE OF CONGREGATIONAL CHAPEL (LOUTH) CHARITIES BILL,
    "to confirm a scheme of the Charity Commissioners for the application or

    1469
    management of the charities consisting of a Baptish Chapel and proceeds of sale of a former Congregational Chapel in the Parish of Louth, in the County of Lincoln," presented by Mr. LANE-FOX; to be read a Second time upon Monday next, and to be printed. [Bill 195.]

    ISLE OF MAN (CUSTOMS),
    "to amend the Law with respect to Customs in the Isle of Man," presented by Sir JOHN BAIRD: supported by Sir Robert Home and Mr. Hilton Young; to be read a Second time upon Monday next, and to be printed. [Bill 196.]

    AIR MINISTRY (KENLEY COMMON ACQUISITION) BILL.
    Reported, with Amendments, from the Select Committee, with Minutes of Evidence.
    Report to lie upon the Table, and to be printed.
    Bill, as amended, re-committed to a Committee of the Whole House for Monday next, and to be printed. [Bill 193.]

ORDERS OF THE DAY.
  FINANCE BILL.
  As amended, further considered.
  FINANCE BILL.

    CLAUSE 14.—(Computation of profits under Case III of Schedule D.)
    The following Rule shall be substituted for Rule 2 of the Rules applicable to Case III of Schedule D:—
    Provided that—
    (ii) where the profits or income first arose on the sixth day of April in the year preceding the year of assessment, or on some day in the year next before the year preceding the year of assessment other than the sixth day of April, the person charged shall be entitled, on giving notice in writing to the surveyor of taxes at any time within twelve months after the end of the year of assessment, to be charged on the amount of the profits or income of that year, and if the tax charged has been paid, any amount overpaid shall be repaid.
    The following Amendment stood on the Order Paper in the name of
    Mr. G. LOCKER-LAMPSON: After paragraph (ii), insert a new paragraph:
    "(iii) Where in any year of assessment any income or profits in respect of which a person has been charged or is chargeable under Case III of Schedule D finally cease to arise to that person he shall, if he so elect, be charged for that year on the amount of the profits or income of that year, and if the tax charged has been paid any amount overpaid shall be repaid."
    Mr. SPEAKER: I wish to ask the hon. Member for Wood Green (Mr. G. Locker-Lampson) a question with regard to this Amendment. It appears to me to have been covered by a decision taken by the House yesterday. It is not identical, but the decision of the House covered the question of giving a person the option of assessment in one year or the other.
    Mr. G. LOCKER-LAMPSON: I think my Amendment was covered, and I do not move it.

    CLAUSE 15.—(Income Tax on offices, employments, and pensions to be chargeable under Schedule E.)
    (6) The provisions of Sub-section (1) and Sub-section (3) of this Section shall have
    1480
    effect and shall be deemed always to have had effect, for the purpose of any assessment to Income Tax which is made or becomes final and conclusive after the first day of May, nineteen hundred and twenty-two, in respect of any employment (other than that of a weekly wage-earner employed by way of manual labour) under any public department, or under any company, society or body of persons or other employer mentioned in Rule 6 of the Rules applicable to Schedule E.
    (7) Income Tax in respect of profits or gains which would but for the provisions of this Section have been chargeable under Schedule D for the year 1922–23, may be charged for that year either under Schedule D or under Schedule E, but the tax shall in all eases be computed in accordance with the provisions and rules applicable to Schedule E, as amended by this Act.
    Mr. WILLIAM GRAHAM: I beg to move, at the end of Sub-section (6), to insert the words
    "but these provisions shall not apply to assessments in respect of offices and employments (other than offices and employments of profit) held under, and pensions paid by, a railway company for the years ending the fifth day of April, nineteen hundred and nineteen, nineteen hundred and twenty. nineteen hundred and twenty-one, and nineteen hundred and twenty-two, and readjustments and repayments in respect of such assessments for those years may be made on the basis of Income Tax having been chargeable under Schedule, D, notwithstanding that such assessments would, but for this provision, have become final and conclusive."
    4.0 P.M.
    I regret very much that from many points of view it is necessary this afternoon to re-argue the case which underlies this Amendment, but I will endeavour to do so as briefly as possible. I would ask the House to believe that this Amendment raises a question of first-class importance in the administration of the Income Tax of this country. The position, shortly, is that some time ago the Inland Revenue Authorities assessed railway clerks under Schedule E. which at that time and now is the schedule in the Income Taxlaw which covers employments of a public character. At that time objection was taken to the decision by a clerk of the Great Western Railway Company, and they started litigation arguing that the railway clerks were not really in public employment at all, but were in fact in ordinary employment which is covered in the usual way by Schedule D. Here was litigation which was promoted, not by the railway clerks, but by the Great Western Railway Company, in order to settle a very important principle. That case was con-

    1481
    sidered through its various stages and eventually reached the House of Lords, which decided, one judge dissenting, that these railway clerks had been wrongly assessed under Schedule E, that in point of fact, their's was no more a public employment than any other class of employment in the country, and one would naturally assume, following that decision, that the railway clerks would be put back in the position which they should have occupied all along. That, in short summary, is the position of this litigation, and I beg the House to consider the very important point that now arises in what is undoubtedly the extraordinary attitude of the Inland Revenue Authorities on this question. Although that decision has been given by the House of Lords, and although it is plain that they took into account, as they were bound to do, the whole circumstances of the case, and although I think nine out of ten Members of the House would agree that a wrong assessment had been made, the Inland Revenue Authorities refused to concede to railway clerks as a class the benefit of the decision, and the position comes to this, that while the clerk Hall at Swindon, who was the particular clerk affected by this litigation, gets a refund of any money to which he is entitled, in other words, can be put back under Schedule D, that right is not afforded to all other railway clerks who were undoubtedly covered by this decision. I trust in this matter to the undoubted fairness of the House of Commons.
    If I may anticipate the reply which will be made by the Gvernment, I have no doubt, in part at least, it will be on these lines. They will say, "As regards this clerk Hall, we admit that the Bater decision must stand, and we are prepared to refund any money which, under that decision, he may be entitled to," and, in point of fact, the clerk Hall, within the past few days, has got a refund of that money. The Government will then, probably, argue that they are not, however, bound to extend that concession to other railway clerks. So that it comes to this, that that very important litigation, which was promoted by the Great Western Railway Company, and which they eventually took to the House of Lords. is to apply to only one clerk, after all that expense, unless other railway clerks throughout the country choose to
    1482
    bring action in terms of the Bater decision and get what are their undoubted rights against the Inland Revenue authorities. That is a perfectly intolerable state of affairs and from no point of view can it be defended by this House. The Chancellor of the Exchequer will probably argue that no very great hardship is involved and that, in any case, the learned judges who considered this problem passed opinions which were on the whole not complimentary to Income Tax law on these matters. It is true that if we read the opinions delivered by the judges in giving the Bater Judgment they did adversely criticise the chaos and the difficulty into which this part of Income Tax law has fallen. But no amount of obiter dicta or expression of opinion on the part of the judges in the case itself can get round this plain and simple fact, that what they were considering was particularly whether a railway clerk was in a public employment which would place him under Schedule E or whether in point of fact he was in ordinary employment under which he should have been assessed under Schedule D. In practice, the difference is this, that under Schedule E there is the one year's basis, whereas under Schedule D there is provision, until the modifications which are introduced by the present Bill, for a three years' average. There are considerable numbers of railway clerks who were on active service during the War, and it is particularly that section of the railway clerk community which will be penalised if the present decision stands.
    There is not the slightest doubt that this litigation was brought by the Great Western Railway Company to cover a class of employés, namely, railway clerks, and that they would never have thought of supporting this litigation because of the rights of a certain individual, and it is therefore our duty as a House of Commons to see that, for past years at all events, railway clerks get the benefit of this Bater decision. I wish to make it perfectly plain that we are making no criticism whatever as regards the future. This Finance Bill provides for a very great extension of Schedule E, and large numbers of people who have hitherto been assessed under Schedule D will now come under Schedule E and be assessed for Income Tax purposes like people who

    1483
    clearly and plainly hold employment of a public character. All we are saying is that as regards those past three or four years, and particularly as regards that period during which this litigation has been in progress, we cannot on any argument of any kind deny to the railway clerks as a class the benefit of the decision, which undoubtedly applied to them as a whole, under the Bater Judgment. I think Members in all parts of the House will agree that there was a wrong assessment by the Inland Revenue authorities. It took three years to obtain the Bater Judgment, showing that that was a wrong assessment, and yet although the assessment has been proved to be wrong as applied to a class—and, of course, under Schedule E it must apply to a class—these clerks are denied the right which this individual' clerk will enjoy by reason of the judgment which has been given. Nothing can get round the argument that the assessment was wrong, and that it would be manifestly unfair to put railway clerks in this position of injustice because of an error committed by the Inland Revenue authorities. I only ask that they shall get the benefit of the judgment of the highest Court in the land in the litigation brought by the railway company itself, and I think in making that plain I am asking for something which is eminently reasonable and fair. Every effort has been made to arrive at a settlement without putting this Amendment again on the Order Paper. I think the case the Chancellor puts is that there is some administrative or other difficulty, but on that point I am in a position to say there is no desire whatever to press for early adjustment. As a matter of fact, even if the adjustment took a year or two no railway clerk would complain. All I am asking is that they should get the benefit of the decision, which has established beyond the shadow of a doubt that they have been the victims of an erroneous assessment.
    Mr. WATERSON: I beg to second the Amendment.
    The CHANCELLOR of the EXCHEQUER (Sir Robert Horne): When this matter was last considered in Committee the hon. Member made a very cogent and persuasive speech upon this
    1484
    question, and I undertook to meet a deputation of railway clerks who would personally put the point of view which they held so that I should be better able to form a final and considered judgment upon this question. I bad that meeting, and I have reconsidered the whole topic and have come to the conclusion that the judgment which I originally formed must be that which I shall present to the House to-day. The matter is not an easy one, but I shall beg the House, in the first place to keep this clearly in view, that those who are assessed under Schedule E are assessed upon each single year's income instead of upon the average of three years' which is dealt with under Schedule D. These railway clerks have been assessed under Schedule E, each of them paying his Income Tax upon the basis of each particular year. The case which was raised has been described as being raised by the railway company. That, in fact, I am afraid, is an inaccurate statement. The case was initiated by Hall himself, and I have here a copy of the letter in which his original appeal against the assessment was made. It is an appeal by himself alone. But when he wanted to take the appeal to the Special Commissioners the railway company are the only people who can make the appeal, and accordingly I shall quote the words of the railway company in lodging their appeal. They state that the Special Commissioners were unable to accept Hall's appeal, and
    "the Great Western Railway Company, upon the request of Mr. W. H. Hall, hereby give formal notice of appeal against his assessment."
    There is no point at all to he made such as the hon. Member suggested that in truth this was an appeal by a railway company on behalf of a class of their employés whom they represented. It is not so at all. Hall initiated his own appeal. He had to go to the railway company to get their formal acquiescence in his appeal, and a statement of his appeal upon his behalf, and they made the appeal not because they themselves were urging it on behalf of any class of their employés, but simply stated an appeal on Hall's behalf alone. That is the fact, and no point of any sort can be made upon the ground that the railway company was titularly the appellant.
    Having dealt with that matter, let me remind the House that these people in

    1485
    the position of Hall have been assessed under Schedule E for a number of years, to everybody's knowledge. This question was raised, no doubt, not merely because Hall was dissatisfied, but because a number of others were dissatisfied by their being assessed under Schedule E instead of Schedule D. Let me remind the House of this fact, that in law once assessments are made against which no appeal has been taken they become final, and in law there is no claim on the part of anybody for an alteration of his assessment or for a return of what he has paid if he has not taken the steps that Hall took, for example, to have the matter altered. Accordingly, in law, it is true that no other railway clerk, even if his case was entirely the same as that of Hall, would toe entitled to make any claim, unless he had lodged an appeal and taken the proper steps. From the point of view of law alone, there is no legal claim, and my hon. Friend does not suggest that there is any, on behalf of anybody else except Hall, for the alteration in the amount of payment which he was bound to make in respect of Income Tax.
    My hon. Friend says that the Hall case covers the case of all the other railway clerks. I have read with care since the last Debate in Committee, the judgment of the House of Lords upon this question. As my hon. Friend has said, one of the distinguished Judges dissented from the conclusions arrived at by the others; but that does not affect the law. The law is as laid down by the majority. Is it possible to read the judgment of the majority and come to the conclusion that they have laid down any general rule whatsoever? They go into this case of Hall with the most meticulous care. They describe his experience in the railway service from the time of his entry into the service until the date that he brought his appeal, but nothing is said which would induce anybody to believe that any other case is, in fact, covered by that judgment. I will not quote the judgment, but anybody reading is would come to the conclusion that, whatever is to be said about the judgment, at least this must be said, that you cannot draw any conclusion as to any other case from the particular circumstances with which they dealt. In point of fact, three of the judges, the majority, refer with great particularity to Hall,
    1486
    and say that in his particular case they come to a certain judgment and they indicate that some change is required in the law. That change in the law we propose to make by the present Bill, and I understand my hon. Friend entirely agrees to that change. In future, railway clerks will be assessed, as they have been assessed in the past, under Schedule E.
    My hon. Friend says that in the case of Hall he has had a re-adjustment made for the last three years' period, and that therefore other railway clerks must be given the same privilege. As I have pointed out, the judgment did not, in fact, necessarily cover the case of anybody else but Hall. That in itself would not have finally induced me to make up my mind, but when I come to consider the question of equity and fairness I cannot find that there is anything inequitable or unfair in leaving the other railway clerks in the position in which they are now, and in the position in which they are going to be, and by their own acquiescence, in the future. Can they say that anything has been exacted from them which has not been imposed upon the other citizens of this country? They have paid their Income Tax upon that which they actually earned. They cannot say that there has been a greater exaction than was fair. They may say that if they were in the same position as Hall they would have got off with some payment less than they would have been obliged to pay in consequence of their being assessed on their actual earnings. That does not begin to make a very good case in equity; it is a purely technical point. All they can say is that they are not being so well treated as Hall, who has now succeeded in establishing a claim for himself, namely, being assessed upon the three years' average; but nobody can say that he is being assessed upon a greater sum than that which he actually earns.
    One last word upon the practical difficulties. If this Amendment were carried it would not be possible to stop at the railway clerks. It would be a very large operation to rip up the assessments of 250,000 people for the last three years; but it must extend far wider than that, if all the people in the position of these railway clerks are to have their assessments re-adjusted for the last three years, and be put upon the basis of Schedule D

    1487
    rather than upon the basis of Schedule E. There are 750,000 people assessed on the basis of Schedule E who would, if this judgment is as universally applicable as my hon. Friend suggests, be equally entitled to make the same sort of claim. He confines it to railway clerks, but if the judgment has an application to anybody more than Hall it is a judgment that is applicable, not merely to railway clerks, but to a very large variety of other people.
    Mr. W. GRAHAM: I am sure that the Chancellor of the Exchequer is the last to wish to be unfair. There can be no such confusion as he suggests. Under the rules to Schedule E in the Income Tax Act, 1918, various classes of public appointments are definitely specified and set forth. There can be no doubt at all there; but there was a doubt about railway clerks, and this Amendment is strictly confined to them. It cannot be extended in the way my right hon. Friend suggests.
    Sir R. HORNE: My hon. Friend will see the dilemma in which I am placed. After reading the judgment of the House of Lords, I say that either it is applicable only to Hall's case and, therefore, cannot be extended to other railway clerks, or that it has a far wider ramification and would extend to a large number of employés other than railway clerks, who would be equally well described by that judgment if it goes beyond Hall. Accordingly, I suggest that, in the first place, you cannot say that, necessarily, railway clerks other than Hall are covered by this judgment, and, in the second place, there is no inequity or unfairness in this particular case, because nobody can say that these men have been assessed on more than their actual earnings year by year. Nobody has been obliged to pay Income Tax on more than he has actually earned in the year. To seek now to alter this matter would involve administrative difficulties of a portentous kind which, from the practical point of view, I do not think the Inland Revenue would succeed in carrying out. Accordingly, for all these reasons, and having considered the matter with every desire to come to the most reasonable view which is possible, I feel I cannot accept the Amendment.
    Sir F. BANBURY: I am rather sorry that the right hon. Gentleman has come
    1488
    to that conclusion. As I understand his argument, it is that the railway company brought the appeal and not the clerk. I believe that is correct, but I do not see that it matters who brought the appeal. The fact remains, that the appeal was brought and the judgment was given.
    Sir R. HORNE: The right hon. Baronet must not misunderstand what I said. I did not lay any stress upon the fact that the railway company brought the appeal. I was simply replying to my hon. Friend and pointing out that the railway company brought the appeal at the instance of Hall, but I did not found anything upon it.
    Sir F. BANBURY: If that were a correct statement, I do not see that it has anything to do with the case.
    Sir R. HORNE: That is what I said.
    Sir F. BANBURY: Then I withdraw any statement I have made in regard to that. The next statement made by the right hon. Gentleman was, that under the law a person who has not made an appeal, or given notice that he intends to make an appeal, cannot get any re-assessment, or get back any tax, that was paid wrongly by him, because the tax has become authorised by law. That. I suppose, is the correct reading of the law; but this is an Amendment to alter the law in that respect and to give the Chancellor of the Exchequer power to give to these particular people a certain abatement. Therefore, that argument falls to the ground. The real position is that a certain man, one of the railway clerks who were in a different position from the other people to whom the right hon. Gentleman refers, brought an action. Whatever the reasons which were given by the House of Lords, and whither there was a majority or a minority of the Lords on the judgment, does not matter, because there was an actual majority, who decided that Hall was right and the Inland Revenue was wrong. That being so, is it advisable to take advantage of the strict letter of the law, which the right hon. Gentleman would be bound to do if this Amendment be not carried, to prevent this judgment being carried out to the full 3 We all know perfectly well that it is impossible for any private individual, whatever his rank or position in life, unless he is one of the few millionaires to whom hon. Members opposite refer,

    1489
    to proceed against the Inland Revenue, which has the resources of the whole country at its back. Therefore, what happens occasionally is that assessments are made which are not strictly legal. The individual in question then says to himself, "It will cost me so much, because the Government, who have the resources of the country behind them, will take the case to the House of Lords, because they do not care what they spend. If the case goes to the House of Lords, and even if I win, I shall lose much more than I should have had to pay if I had paid and said nothing." In this case, however, Hall brought an action, and succeeded. Is it not common justice, then, to allow those people who if they had brought an action would have benefited in the same way, to be treated as this particular person is being treated?
    Sir R. HORNE: If the right hon Baronet will read the judgment, I am afraid he will come to the same conclusion that I did.
    Sir F. BANBURY: Here was a certain railway clerk who was assessed under a certain Schedule, and he claimed that he was wrongly assessed, and that he ought to be assessed under another Schedule. The case went to the House of Lords, and the Lords held that he was right and that the Inland Revenue was wrong. Why should not that apply to other railway clerks in exactly the same position? I cannot see that it does not apply. I say that the Inland Revenue, having made a mistake, and having now an opportunity of rectifying that mistake, ought to accept this Amendment. The
    Government, by a Clause in this Bill, are altering the judgment of the House of Lords. Why should they not, by accepting this Amendment, allow that judgment to hold good during the years the man Hall has benefited? It is either right, or it is wrong. If it be wrong, do not do it; but, if it be right, do it, even if it causes a considerable amount of extra trouble
    Mr. HOLMES: The Chancellor of the Exchequer has said that the judgment is not likely to apply to other railway clerks but surely it is understood on both sides to be a test case.
    Sir R. HORNE: The hon. Member will find nothing to that effect in the House of Lords judgment.
    Mr. HOLMES: If the right hon. Gentleman thinks that the House of Lords judgment refers to Hall and Hall alone, why is he introducing this Clause and changing the whole of our Income Tax assessment?
    Sir R. HORNE: For a very simple reason. What we are doing now will not only make it quite certain with regard to all railway clerks, but it also deals with the whole range of people in similar employment about whom there has been considerable doubt, and some of whom have been assessed under Schedule D and others under Schedule E.
    Question put, "That those words be there inserted in the Bill."
    The House divided: Ayes, 98; Noes, 189.

    Division No. 224]

    AYES.

    [4.35 P.m.

    Adamson, Rt. Hon. William

    Graham, W. (Edinburgh, Central)

    Lawson, John James

    Asquith, Rt. Hon. Herbert Henry

    Griffiths, T. (Monmouth, Pontypool)

    Locker-Lampson, G. (Wood Green)

    Banbury, Rt. Hon. Sir Frederick G.

    Grundy, T. W.

    Lunn, William

    Banton, George

    Guest, J. (York, W. R., Hemsworth)

    Macdonald, Rt- Hon. John Murray

    Barker, G. (Monmouth, Abertillery)

    Gwynne, Rupert S.

    Maclean, Neil (Glasgow, Govan)

    Barrand, A. R.

    Hall, F. (York, W.R., Normanton)

    Maclean, Rt. Hon. Sir D. (Midlothian)

    Bowerman, Rt. Hon. Charles W.

    Hallas, Eldred

    McNeill, Ronald (Kent, Canterbury)

    Briant, Frank

    Halls, Walter

    Macquisten, F. A.

    Brown, James (Ayr and Bute]

    Hayday, Arthur

    Malone, Major P. B. (Tottenham, S.)

    Cairns, John

    Herbert Dennis (Hertford, Watford)

    Marriott, John Arthur Ransome

    Cape, Thomas

    Hills, Major John Waller

    Mildmay, Colonel Rt. Hon. F. B.

    Carter, W. (Nottingham, Mansfield)

    Hirst, G. H.

    Morrison, Hugh

    Cecil, Rt. Hon. Lord R. (Hitchin)

    Hodge, Rt. Hon. John

    Mosley, Oswald

    Clynes, Rt. Hon, John R.

    Hogge, James Myles

    Murray, Hon. A. C. (Aberdeen)

    Collins, Sir Godfrey (Greenock)

    Holmes, J. Stanley

    Murray, Dr. D. (Inverness & Ross)

    Davies, A. (Lancaster, Clitheroe)

    Houston, Sir Robert Patterson

    Myers, Thomas

    Davies, Alfred Thomas (Lincoln)

    Irving, Dan

    Naylor, Thomas Ellis

    Davies, Rhys John (Westhoughton)

    Jackson, Lieut.-Colonel Hon. F. S.

    Ormsby-Gore, Hon. William

    Davison, J. E. (Smethwick)

    Johnstone, Joseph

    Palmer, Major Godfrey Mark

    Edwards, C. (Monmouth, Bedwellty)

    Jones, Morgan (Caerphilly)

    Parkinson, John Allen (Wigan)

    Edwards, Hugh (Glam., Neath)

    Kenworthy, Liout.-Commander J. M.

    Raffan, Peter Wilson

    Fildes, Henry

    Kenyon, Barnet

    Rees, Capt. J. Tudor- (Barnstaple)

    Finney, Samuel

    Kiley, James Daniel

    Rendall, Athelstan

    Galbraith, Samuel

    Lambert, Rt. Hon. George

    Richardson, R. (Houghton-le-Spring)

    Roberts, Samuel (Hereford, Hereford)

    Thomas, Rt. Hon. James H. (Derby)

    Williams, Aneurin (Durham, Consett)

    Rose, Frank H.

    Thomas, Brig.-Gen. Sir O. (Anglesey)

    Wilson, Capt. A. S. (Holderness)

    Royce, William Stapleton

    Thomas, Sir Robert J. (Wrexham)

    Wilson, James (Dudley)

    Sexton, James

    Thomson, T. (Middlesbrough, West)

    Wolmer, Viscount

    Sitch, Charles H.

    Thorne, W. (West Ham, Plaistow)

    Wood, Major M. M. (Aberdeen, C.)

    Smith, Sir Malcolm (Orkney)

    Waterson, A. E.

    Wood, Major Sir S. Hill- (High Peak)

    Spoor, B. G.

    Watts-Morgan, Lieut.-Col. D.

    Sprot, Colonel Sir Alexander

    Wedgwood, Colonel Josiah C.

    TELLERS FOR THE AYES.—

    Sueter, Rear-Admiral Murray Fraser

    White, Charles F. (Derby, Western)

    Mr. R. Young and Mr. Kennedy.

    Swan, J. E.

    Wignall, James

    NOES.

    Adair, Rear-Admiral Thomas B. S.

    George, Rt. Hon. David Lloyd

    Nicholson, Brig.-Gen. J. (Westminster)

    Agg-Gardner, Sir James Tynte

    Gibbs, Colonel George Abraham

    Nicholson, Reginald (Doncaster)

    Ainsworth, Captain Charles

    Gilbert, James Daniel

    Nicholson, William G. (Petersfield)

    Armstrong, Henry Bruce

    Gilmour, Lieut.-Colonel Sir John

    Norman, Major Rt. Hon. Sir Henry

    Atkey, A. R.

    Glyn, Major Ralph

    Norris, Colonel Sir Henry G.

    Baird, Sir John Lawrence

    Grant, James Augustus

    Pain, Brig.-Gen. Sir W. Hacket

    Baldwin, Rt. Hon. Stanley

    Green, Joseph F. (Leicester, W.)

    Parker, James

    Balfour, George (Hampstead)

    Greene, Lt.-Col. Sir W. (Hack'y, N.)

    Pearce, Sir William

    Barlow, Sir Montague

    Greenwood, Rt. Hon. Sir Hamar

    Pease, Rt. Hon. Herbert Pike

    Barnes, Rt. Hon. G. (Glas., Gorbals)

    Greig, Colonel Sir James William

    Percy, Charles (Tynemouth)

    Barnston, Major Harry

    Guest, Capt. Rt. Hon. Frederick E.

    Perkins, Walter Frank

    Beauchamp, Sir Edward

    Guinness, Lieut. Col. Hon. W. E.

    Pilditch, Sir Philip

    Beckett, Hon. Sir Gervase

    Guthrie, Thomas Maule

    Pollock, Rt. Hon. Sir Ernest Murray

    Bell, Lieut.-Col. W. C. H. (Devizes)

    Hamilton, Sir George C.

    Rae, Sir Henry N.

    Benn, Capt, Sir I. H., Bart, (Gr'nw'h)

    Harmsworth, C. B. (Bedford, Luton)

    Randies, Sir John Scurrah

    Bennett, Sir Thomas Jewell

    Harmsworth, Hon. E. C. (Kent)

    Reid, D. D.

    Bethell, Sir John Henry

    Harmsworth, Sir R. L. (Caithness)

    Remnant, Sir James

    Bigland, Alfred

    Harris, Sir Henry Percy

    Renwick. Sir George

    Bird, Sir William B. M. (Chichester)

    Henderson, Lt.-Col. V. L. (Tradeston)

    Richardson, Lt.-Col. Sir P. (Chertsey)

    Boyd-Carpenter, Major A.

    Hilder, Lieut.-Colonel Frank

    Roberts, Rt. Hon. G. H. (Norwich)

    Brassey, H. L. C.

    Hoare, Lieut.-Colonel Sir S. J. G.

    Roberts, Sir S. (Sheffield, Ecclesall)

    Brittain, Sir Harry

    Holbrook, Sir Arthur Richard

    Robinson, S. (Brecon and Radnor)

    Broad, Thomas Tucker

    Hood, Sir Joseph

    Roundell, Colonel R. F.

    Brown, Major D. C.

    Hope, Lt.-Col. Sir J. A. (Midlothian)

    Royds, Lieut.-Colonel Edmund

    Brown, Brig.-Gen. Clifton (Newbury)

    Hopkins, John W. W.

    Rutherford, Colonel Sir J. (Darwen)

    Buckley, Lieut.-Colonel A.

    Hopkinson, A. (Lancaster, Mossley)

    Samuel, A. M. (Surrey, Farnham)

    Bull, Rt. Hon. Sir William James

    Horne, Sir R. S. (Glasgow, Hillhead)

    Samuel, Rt. Hon. Sir H. (Norwood)

    Burdon, Colonel Rowland

    Hunter, General Sir A. (Lancaster)

    Sanders, Colonel Sir Robert Arthur

    Burgoyne, Lt.-Col. Sir Alan Hughes

    Hurst, Lieut.-Colonel Gerald B.

    Sassoon, Sir Philip Albert Gustave D.

    Burn, Col. C. R. (Devon, Torquay)

    Inskip, Thomas Walker H.

    Scott, A. M. (Glasgow, Bridgeton)

    Butcher, Sir John George

    James, Lieut.-Colonel Hon. Cuthbert

    Scott, Sir Leslie (Liverp'l, Exchange)

    Casey, T. W.

    Jetton, C.

    Seely, Major-General Rt. Hon. John

    Cecil, Rt. Hon. Sir Evelyn (Aston)

    Kellaway, Rt. Hon. Fredk, George

    Shortt, Rt. Hon. E. (N'castle-on-T.)

    Cecil, Rt. Hon. Lord H. (Ox. Univ.)

    Kelloy, Major Fred (Rotherham)

    Simm, M. T.

    Chamberlain, N. (Birm, Ladywood)

    King, Captain Henry Douglas

    Stanley, Major Hon. G. (Preston)

    Churchill, Rt. Hon. Winston S.

    Kinloch-Cooke, Sir Clement

    Stanton, Charles Butt

    Clay, Lieut.-Colonel H. H. Spender

    Lane-Fox, G. R.

    Starkey, Captain John Ralph

    Clough, Sir Robert

    Larmor, Sir Joseph

    Steel, Major S. Strang

    Cobb, Sir Cyril

    Law, Alfred J. (Rochdale)

    Stewart, Gershom

    Colfox, Major Wm. Phillips

    Leigh, Sir John (Clapham)

    Sturrock, J. Leng

    Conway, Sir W. Martin

    Lewis, Rt. Hon. J. H. (Univ., Wales)

    Sutherland, Sir William

    Cope, Major William

    Lindsay, William Arthur

    Terrell, George (Wilts, Chippenham)

    Cory, Sir J. H. (Cardiff, South)

    Lister, Sir R. Ashton

    Thomson, F. C. (Aberdeen, South)

    Courthope, Lieut.-Cot. George L.

    Le ker-Lampson, Com. O. (H'tingd'n)

    Thomson, Sir W. Mitchell- (Maryhill)

    Cralk, Rt. Hon. Sir Henry

    Lorden, John William

    Tryon, Major George Clement

    Curzon, Captain Viscount

    Lowther, Maj.-Gen. Sir C. (Penrith)

    Turton, Edmund Russborough

    Davidson, Major-General Sir J. H.

    McLaren, Hon. H. D. (Leicester)

    Ward, Col. L. (Kingston-upon-Hull)

    Davies, Thomas (Cirencester)

    M'Lean, Lieut.-Col. Charles W. W.

    Warren, Sir Alfred H.

    Davison, Sir W. H. (Kensington, S.)

    McMicking, Major Gilbert

    Wheler, Col. Granville C. H.

    Dawson, Sir Philip

    Macnamara, Rt. Hon. Dr. T. J.

    White, Col. G. D. (Southport)

    Dockrell, Sir Maurice

    Macpherson, Rt. Hon. James I.

    Williams, C. (Tavistock)

    Du Pre, Colonel William Baring

    Magnus, Sir Philip

    Williams, Lt.-Col. Sir R. (Banbury)

    Elliot, Capt. Walter E. (Lanark)

    Mallaby-Deeley, Sir Harry

    Wills, Lt. Col. Sir Gilbert Alan H.

    Evans, Ernest

    Matthews, David

    Wilson, Col. M. J. (Richmond)

    Falle, Major Sir Bertram Godfray

    Mitchell, Sir William Lane

    Winterton, Earl

    Fell, Sir Arthur

    Mond, Rt. Hon. Sir Alfred Moritz

    Wise, Frederick

    Flannery, Sir James Fortescue

    Moore-Brabazon, Lieut.-Col. J. T. C.

    Wood, Hon. Edward F. L. (Ripon)

    Forrest, Walter

    Munro, Rt. Hon. Robert

    Wood, Sir J. (Stalybridge & Hyde)

    Foxcroft, Captain Charles Talbot

    Murchison, C. K.

    Worsfold, T. Cato

    Fraser, Major Sir Keith

    Murray, Rt. Hon. C. D. (Edinburgh)

    Worthington, Evans, Rt. Hon. Sir L.

    Frece, Sir Walter de

    Murray, John (Leeds, West)

    Ganzonl, Sir John

    Neal, Arthur

    TELLERS FOR THE NOES.—

    Gardiner, James

    Newman, Sir R. H. S. D. L. (Exeter)

    Colonel Leslie Wilson and Mr.

    Gardner, Ernest

    Newson, Sir Percy Wilson

    Dudley Ward.

    Gee, Captain Robert

    Nicholl, Commander Sir Edward

    Mr. SPEAKER: The next two Amendments on the Paper, standing in the name of the hon. Member for Thornbury (Mr. Rendall)—at the end of the Clause
    to insert the words
    1492
    "Provided that any persons whose income has hitherto been chargeable under Schedule D, and by this Section becomes chargeable under Schedule E, applies to the Commissioners before the thirtieth day of September, nineteen hundred and twenty-two, that his

    1493
    income should, during the present and the two following years, be chargeable under Schedule D, his income shall continue to be so chargeable—"
    and in the name of the hon. Member for North-East Derbyshire (Mr. Holmes)—at the end of the Clause to insert a new Sub-section
    "(8) Provided that in any case where the taxpayer can show that but for the operation of this Section the amount of the assessment made upon him would have been less, he shall be entitled to be assessed for the year 1922–23 in such an amount as is equal to the assessment which would have been made upon him but for the passing of this Section plus one-third of the difference between this assessment and the assessment made under this Section.
    For the year 1923–24 he shall be entitled to be similarly assessed, except that the amount to be added to the assessment that would have been made upon him but for the passing of this Section shall be two-thirds of the difference between the assessment under this Section and the assessment that would have been made upon him but for the passing of this Section"—
    deal more or less with the same point. The House has negatived the smaller proposition; therefore, it is not open to the House to accept the larger proposition.
    Mr. HOLMES: The Chancellor of the Exchequer said that he was taking advantage of this House of Lords decision to clear up the doubtful point whether certain people should be assessed under Schedule D or Schedule E. The Amendment just disposed of concerned only railway clerks. The Clause itself concerns every person in employment, and the Amendment which I have put down is an attempt to somewhat temper the wind to the shorn land.
    Mr. RENDALL: When I put an Amendment down for the Committee stage on this point, the Solicitor-General, with great skill, explained to the Chairman that I was under a great delusion if I thought that I had found the right place to move the Amendment. He argued that the Chairman ought not to allow the Amendment to be moved, because we were dealing with an explanatory Clause. It was therefore not discussed or dealt with in Committee at all.
    Mr. SPEAKER: The first Amendment proposes to give the taxpayer an option to choose his own Schedule. Yesterday the House decided against giving the taxpayer an option of heads I win, tails
    1494
    you lose. I will, however, allow a short Debate on the second Amendment, which covers the other point.
    Mr. HOLMES: I beg to move, at the end of the Clause, to insert a new Subsection—
    "(8) Provided that in any case where the taxpayer can show that, but for the operation of this Section, the amount of the assessment made upon him would have been less, he shall be entitled to be assessed for the year 1922–23 in such an amount as is equal to the assessment which would have been made upon him, but for the passing of this Section plus one-third of the difference between this assessment and the assessment made under this Section.
    For the year 1923–24 he shall be entitled to be similarly assessed, except that the amount to be added to the assessment that would have been made upon him, but for the passing of this Section, shall be two-thirds of the difference between the assessment under this Section and the assessment that would have been made upon him, but for the passing of this Section."
    The Chancellor of the Exchequer explained that he was taking advantage of this decision of the House of Lords in order to clear up a point that has always been doubtful with regard to certain employés. The Income Tax Act, 1918, was a consolidation of the Income Tax Acts from 1842 onwards. The 1842 Act was really a reprint of the Act of 1806, with certain alterations. The Act of 1806 was almost the same as the Act of 1805, and I think I am right in saying the term "office or employment" was there used. I think as far back as 1805—it may have been 1803—the term "office or employment" was used to include offices corporate or incorporate. The Inland Revenue since 1862 have assumed that those employed by limited companies under the 1862 Act come under Schedule E. It has always been done, and there has always been discussion as to whether they have a right to do so. Those who made our law in 1803 or 1805 did not see far enough forward to realise that we should have a system of limited companies commencing in 1862. The Chancellor of the Exchequer is now going to clear up what has always been a doubtful point by means of legislation.
    What has always happened in the past has been that when a business was turned from a private partnership into a limited company the chief officials have suddenly found themselves deprived of the three years' average, and compelled to pay on their first year's salary in the new com-

    1495
    pany. That has always been a matter of great discontent. Perhaps the Chancellor of the Exchequer has not come into contact with it so much as some of us who have to advise on these matters. We find that men, who have been receiving £400 or £500 a year, and who, if the firm had remained a firm, would have had the advantage of the three years' average, are suddenly told that, because their employers have turned their business into a limited company, they must give up the three years' average and pay on their salary of that year. The Chancellor of the Exchequer says, "We will make an end of this, and everybody shall pay on his actual earnings if he is in employment." That may be a good thing to do. The discontent will only last for three years, or two years from now, but for the next two years many will feel that they have been deprived of their rights, and what I am asking the Chancellor of the Exchequer in this Amendment is, as I said just now, to temper the wind to the shorn lamb; in other words, for next year, 1922–23, to say to the man, "You shall pay on the three years' average, plus one-third of the difference between your actual salary for this year and the three years' average, and next year you shall pay on the three years' average, plus two thirds of the difference between what your salary actually is and the three years' average." I think, if he did that, it would not cost him very much, and it would remove a great deal of discontent amongst what you might call the smaller officials, those who are in subordinate positions in many firms throughout the country.
    Mr. RENDALL: I beg to second the Amendment.
    I think it is a very reasonable one, because it would make it more easy for persons who are quite suddenly brought under a new law. There are a large number of young men, who went to fight in the Great War, whose education and training in their jobs was necessarily postponed. They came back from the War, and have had to learn their jobs, starting with very low salaries. I, have a case here of a man who the first year got a salary of £145, and next year £250, and the year after £400, as he was then getting on and being appreciated. As a result of earning those sums in those
    1496
    three years, about a month, before this Budget was introduced ho sent in his Income Tax return and, after making the deductions, the amount he would have to pay worked out at about £15 l1s. 3d., supposing this new law had not been made. As a result of the proposals in this Bill, he is now going to be made to pay on his present year's salary, which has now advanced to £500. It may be said that he is getting on so well that he can well afford to pay. There is something in that, but it is a big thing suddenly to ask this man to pay £50 12B. 6d. after all deductions have been made. This young man is to pay an extra £35, and the fact that he is getting on is not a sufficient excuse for that extra burden. All I am asking is that these comparatively few individuals, who ought to have a little help in getting over the next three years, ought not to be made quite suddenly to bear this extra taxation. It is an alteration of which I am entirely in favour, but when you make an alteration which is good for the general community, you ought not to injure the small number, but should make it easier for that small number to be able to bear the alteration of the law. I think the amount would be very small to the Exchequer, if this Amendment were accepted, and it would do away with the burning sense of injustice which these young men feel.
    Sir R. HORNE: The arguments which have been advanced in support of the Amendment are very insidious and seductive, but I have no doubt everybody could bring similar instances, in which he could show that a particular individual would be better off if he were allowed to remain under the three years average instead of being immediately assessed upon the current year's income. I am a little startled to hear these arguments, because, if there has been a pressure upon me at all during the course of the past year, it has been the pressure on the part of the great commercial community of this country to have the Income Tax assessment changed from a basis of three years' average to the basis of a single year's computation. Why is that? It is because we are in a time of depression, and that, being compelled to pay upon a three years' average, means in many cases that they are now paying a larger sum than they would be asked to pay if they were assessed

    1497
    upon the basis of, say, the immediate year's earnings. It may be that men are paying Income Tax to-day upon the three years' average when, in point of fact, they have received no income at all in the course of the past year, and the desire at the present time is to get to the one year. But those who have been gradually making more, although they are in an infinitesimal minority, take the other point of view, and wish to get off with a less payment.
    Mr. RENDALL: With the same payment.
    Sir R. HORNE: They want to get off with less payment than if this change were made. I am making this change this; year with regard to people who come under the category, more or less, of employed people. I am making this change in order to get rid of the vast confusion which exists at the present time. The change will cost the revenue £500,000, because of the fact that we are now in a period of depression, instead of a period of rising salaries, and we shall suffer accordingly, by reason of the fact that the great majority of people will be able to be assessed upon a less amount than under the three years' average. My hon. Friends are asking us to suffer a further burden. They ask it on behalf of the people who, instead of going down in the ratio of salary, are going up. My heart may be moved, but it is not so greatly moved as the hearts of my hon. Friends in that particular case. I think the man whose salary is rising is certainly in a better position to pay than the man whose salary is coming down. The latter is relieved by this operation, and, accordingly, I must resist the Amendment.
    Amendment negatived.

    CLAUSE 16.—(Income under revocable and certain other dispositions to be treated as income of disponor.)
    (1) Any income:
    (a) of which any person is able, or has at any time since the fifth day of April, nineteen hundred and twenty-two, been able, without the consent of any other person not being his wife or her husband, by means of the exercise of any power of appointment, power of revocation or otherwise howsoever, to obtain for himself the beneficial enjoyment; or
    1498
    (c) which by virtue or in consequence of any disposition made, directly or indirectly, by any person whether before or after the commencement of this Act, is payable to or applicable for the benefit of a child of that person for some period less than the life of the child;
    shall, subject to the provisions of this Section, but in cases under the above paragraph (c) only if and 60 long as the child is an infant and unmarried, be deemed for the purposes of the enactments relating to Income Tax (including Super-tax) to be the income of the person who is or was able to obtain the beneficial enjoyment thereof, or of the person, if living, by whom the disposition was made, as the case may be, and not to be for those purposes the income of any other person:
    Provided that in cases under the above paragraph (c) income shall not be held to include any income derived from capital which is required by such disposition to he held on trust absolutely for the child at the end of any period less than the life of such child.
    Mr. D. HERBERT: I beg to move, in Sub-section (1, a,) to leave out the words
    "or has at any time since the fifth day of April, nineteen hundred and twenty-two been able."
    5.0 P.M.
    This Amendment, as I hope, is merely a correction in the drafting of the Clause. I do not know whether the learned Solicitor-General will take that view of it. The paragraph brings within the operation of the Clause the settlement made by a man who reserves to himself a power of revocation, so as to be able to recover the income for himself whenever he pleases. May I take an actual case within my own experience. One of two sons, for reasons into which I need not go, was considered not to be trusted with money, and therefore the elder generation left a double share of the money, so to speak, to the other, knowing that he would always look after the brother. The one who had the money; more than a year ago entered into a settlement with an entirely independent person as a trustee, covenanting to pay so much a year to that trustee to be used for the maintenance of this brother; That settlement contained—and perfectly rightly, I think—a power of revocation, which was not likely to be exercised unless some particular event happened, but, dealing with such a person as the one dealt with, it was considered advisable. That is a settlement, of course, which the Solicitor-General

    1499
    would not for a moment suggest, I think, was an unfair settlement. Since the 5th April the settlor has not revoked it but has entered into a supplemental deed giving up the right to revoke it and to recover the money. I suggest that the words in question are unnecessary, and would cause injustice.
    Lieut.-Colonel SPENDER-CLAY: I beg to second the Amendment.
    Sir L. SCOTT: There is a misapprehension as to the effect on the Clause of the presence of the words which the Amendment proposes to omit. The words are necessary, and I think I can make it clear to the House why they are necessary. If they were not there, I think an argument somewhat on these lines would be possible, namely, that the person who wanted to argue that the income received by him prior to the coming into force of the Act would be outside the scope of the settlement, even although within this taxing year, might say: "It is true that from the commencement of the Act I am able to exercise a power of revocation and so obtain the enjoyment of future income and am therefore within the Clause, but I cannot to-day exercise that power retrospectively so as to obtain the enjoyment of the income from the 6th April, the beginning of this financial year, down to the present date, because that income has been in fact paid away to the beneficiary by the trustee, for the simple reason that during that period I have not in fact exercised my power of revocation." The Clause is aimed at the revocable trust during the whole of this current taxing year, and therefore, in order to make the Clause effective, we must deal with a power of revocation not merely from the date the Act comes into force but as from the beginning of the existing taxing year. As I understand the point of the hon. Member, it is this: You have had a trust with a power of revocation attached to it for a perfectly right and proper purpose, namely, the support of a brother by handing out the income to the brother in driblets because it was not advisable to give him control of his income generally. The hon. Member assumes that in such a case, as soon as this Clause becomes law, he will probably meet the Clause by giving up the power of revocation by a supple-
    1500
    mental deed, and his fear is that the insertion of these words would prevent his exercising that power, which he normally ought to have, to make a supplemental deed and escape from the scope of the Clause. The simple answer is that the words in question do not prevent that being done. In regard to the income down to the date when the Act comes into force, the income has gone and the power has not been revoked, and therefore, with regard to that, there is no trouble. If he then makes his supplemental deed, he will take the whole of that trust income out of the scope of the Clause altogether. I therefore suggest (a), that the words do not prevent what the hon. Member thinks ought to be done, and (b), that they are really essential to carry out the principle of the Clause as affirmed by the House already in Committee.
    Mr. HERBERT: I am obliged to take the Solicitor-General's opinion, although I cannot quite understand it at the moment, but if he assure? me that in the case of a settlement which does contain a power of revocation and some time, some weeks or months, after the 5th April a supplemental deed is executed giving up that power of revocation, that then the settlement will not be hit by the Clause, I will ask leave to withdraw my Amendment.
    Sir L. SCOTT: I beg to give that assurance.
    Amendment, by leave, withdrawn.
    Sir L. SCOTT: I beg to move, in Subsection (1, a), to leave out the words "not being his wife or her husband."
    This is an Amendment which must be read in connection with an Amendment standing on the Paper, in Sub-section (1), after the word "person"["purposes the income of any other person"] to insert the words
    "Provided that in cases under the above paragraph (a) —

    (i) where any such power as aforesaid can be exercised by a person with the consent of the wife or the husband of that person, the power shall, for the purposes of the said paragraph, be deemed to be exercisable without the consent of another person, except where the husband and wife are living apart either by agreement or under an Order of a Court of competent jurisdiction; and

    1501

    (ii) where any such power as aforesaid is exercisable by the wife or the husband of the person who made the disposition, the power shall, for the purposes of the said paragraph, be deemed to be exercisable by the person who made the disposition."

    It was felt in the Debate in Committee that there were cases where for practical purposes it was right to regard the husband and wife as one, so as to avoid an unintentioned operation of the first part of the Clause. It was felt that the words I now propose to omit were open to possibilities of misconception and misconstruction, and that it would be better to take them out and express quite clearly, in the form of a proviso at the end, what was really intended.
    Amendment agreed to.
    Sir L. SCOTT: I beg to move, in Subsection (1, a), after the word "howsoever," to insert the words
    "by virtue or in consequence of a disposition made directly or indirectly by himself."
    In the Committee stage, on an Amendment moved by the hon. Member for Watford (Mr. D. Herbert), he took this case as an illustration. He said:
    "A father of a family may have a close friend who dies and loaves a sum of money, the income of which is to be paid to that father's children unless and until the father should see fit to deprive them of the income and take it for himself. I cannot suppose that in those circumstances it would be intended that the father should be charged on income which is given by some other person altogether for the benefit of his children just by reason of the fact that the person who left the money, trusting the father, as being a good father, has given him a right to take that income for himself if he sees fit."—{OFFICIAL REPORT 20th June, 1922; col. 1202, Vol. 1.55.]
    I assented to that, and undertook to deal with the point by a suitable Amendment on the Report stage of the Bill. That is the genesis of the present Amendment.
    Amendment agreed to.
    Sir L. SCOTT: I beg to move, in Subsection (1, c), to leave out the words "whether before or after the commencement of this Act," and to insert instead thereof the words
    "after the fifth day of April, nineteen hundred and fourteen."
    This Amendment is to take out of the ambit of the Clause the dispositions in favour of children for a period less than
    1502
    the life of a child if made before April, 1914, the Clause as it stands having no limit in point of time as to the date when such settlement may have been made, and although it was quite clearly pointed out in Committee that there was no retroactive effect of the Clause before, it was felt that it was a reasonable thing to do to take the 5th April, 1914, both in this Clause and in the next Clause, relating to companies, as the starting point for this type of legislation to stop the gaps through which tax has been slipping away.
    Mr. A. M. SAMUEL: Are we to understand that there is really no afterthought, that the learned Solicitor-General has nothing in reserve in his mind about this Amendment? Does it really mean that there will be no possibility arising of a retro-active effect?
    Sir L. SCOTT: I am keeping nothing up my sleeve.
    Mr. BETTERTON: It was said by the Chancellor of the Exchequer that when the Government made a concession short of the original demand they got very little credit for it. I feel, therefore, that it would be rather ungracious and churlish not to thank the Chancellor of the Exchequer for this very small concession which he has made. At the same time, I think it would be idle to deny that the limitations which the Solicitor-General has added to the principles which I ventured to advocate in Committee make his concession of very little value. The Solicitor-General said he had nothing up his sleeve, but it is obvious that the reason why he put in the date of 5th April, 1914, was because the Income Tax in April, 1914, was either 1s. or 1s. 1d., and it is now 5s. He therefore excludes from the operation of this concession all settlements made since that date, and it is really of very little or no value. So, while thanking him for this concession, I must again express my opinion, and that of many of my friends, that the whole Clause, in justice and in equity, should not come into operation until after the passing of the Bill before the House.
    Amendment agreed to.
    Mr. D. HERBERT: I beg to move, in Sub-section (1, c), after the word "child"["benefit of a child"], to insert the words "or children."

    1503
    This Amendment is a purely drafting one, and is to be taken with the Amendment lower down to insert at the end of the paragraph the words "or one of the children." My Amendment is designed to meet the case of income payable in equal shares, or otherwise as the settlor may appoint, between several children, and therefore I think that it would be a more convenient drafting to make it read "child or children" in the first case and "the child or one of the children" in the second.
    Mr. S. ROBERTS: I beg to second the Amendment.
    Sir L. SCOTT: I am afraid that the result of this Amendment would be to extend the scope of the Clause, and therefore cause it to be out of order. But, if I may, I will try to meet the difficulty in the hon. Member's mind. If he puts in those words, there will be this difficulty. Take the case of a man with four children. He makes a disposition in favour of child A and child B for the whole of their lives in each case, And in favour of child C and child D he makes a disposition only up to the end of their period of education. As the Clause is worded at present, the income in regard to children C and D would be subject to tax. In regard to children A and B it would not be subject to tax. If we insert the words which the hon. Member desires, it will be possible for a legal interpretation to be adopted, under which it would be necessary for the father, in order to escape Income Tax at all, to make his trust for the life of all four children, for the whole of their lives: and if there were a trust in regard to his children, and it could be said that it was, in regard to one of the children, not for the whole life of that child, then the whole of the income, even as regards the three-fourths of it which was assigned for life, would be subject to tax. That is not the intention of the hon. Member. But it shows the kind of difficulties that there are in the insertion of this sort of verbal Amendment. As regards charge, suppose that that were the interpretation it would increase the scope of the charge. In such circumstances, it might be argued that the income would be payable for the benefit of the children of the settlor for some period less than the life of one of the children. If so, it would enlarge
    1504
    the scope of the Clause and tax the whole of the income, whereas, as the Clause now stands, it only taxes the income payable to those two children who are to have it for less than the whole period of their lives.
    Mr. HERBERT: I ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. HERBERT: I have put down an Amendment, to move, after the word of"["child of that"], to insert the word "that person or the life of."
    This was accepted in principle in the Committee, and I see that it is included in the Amendment of the Chancellor of the Exchequer at the top of the next page.
    Lieut.-Colonel SPENDER CLAY: I beg to move, at the end of Sub-section (1, c), to insert the words
    "unless such person has irrevocably deprived himself of any beneficial interest in such income."
    I am not at all sure whether these words should come in here or among the provisos later on. The object of this Amendment is to protect the person not having any beneficial interest himself, but who has got the power of appointment of a certain income anions; either children of his own, or, perhaps, wards confided to his care. I think that this is within the scope of the Clause, and the intention of the Government.
    Lieut.-Colonel WHELER: I beg to second the Amendment.
    Sir L. SCOTT: This is an Amendment to which I have given very anxious consideration. When it was put before us we understood that it was for an object somewhat different from that which is suggested by the hon. Member. We understood it was designed to meet such a case as this. Take the case of a woman who has children by a husband who dies. She then marries again, having property. She wants to settle it upon her children by the first husband absolutely and does so. But, having regard to the possibility that it is desirable to leave some discretion as to the proportions which the different children shall share, she reserves to herself a power of appointment, so as to give one child more than another. It was feared that that case might not be excluded from the Section as drafted.

    1505
    We considered it very carefully, and came to the conclusion that the Section as drafted does clearly shut out that case, and that there would be no risk of that case being brought within the Section, it being a case in regard to which obviously it would be wrong to attempt to treat the income which is disposed of absolutely for the benefit of the children as a whole, as within the scope of this taxing provision. This particular Amendment, as framed for that purpose, would not do, even if there were any doubt about the wording of the Clause without it, because it would seem to have certain undesirable effects.
    The principal objection to the Amendment is this, that whereas the object of the Clause is to say that if any man puts aside income merely for the purpose of educating his children, and is therefore doing what an ordinary citizen has to do as his duly, the ordinary citizen being under an obligation to pay Income Tax on the income out of which he does educate his children, the person who puts money out of his control during the educational life of his children ought not to be put in a better position, as regards taxation, than the man who keeps the money under his control, and carries out the obligations of the ordinary citizen. The question was discussed in Committee, that the mere accident that the father in question arranges that after he had educated his children he would irrevocably dispose of the income to some stranger was no reason why, during the period In which it was his duty to educate his children, he should not educate them on the same principle as everybody else, and pay the same tax as everybody else. This Amendment would rule out of this Clause altogether the father in such a case as I have described. That would be contrary to the genera) idea of the Clause and the intention of the Committee, and we could not accept this Amendment.
    It may be convenient now to deal with the difficulty which led to the proposal of this Amendment. The rule of law being that the singular includes the plural, and the scope and object of the Section being clear, we are satisfied that there is no danger of the Courts not applying the ordinary rule of interpretation that the singular includes the plural. So in such a case as the one which I have given,
    1506
    where the whole of the income was made applicable for the benefit of the children, as a family or group, for the lives of those children, then that application of the income would be outside the Clause altogether. By one of the other Amendments, which I shall have to move in a moment, we make a further qualification of this Clause that, if the father alienates the income for the whole of his life, it shall have the same effect of taking it outside the scope of this Clause and therefore out of taxation. With those safeguards the object of the Mover of the Amendment is met.
    Amendment, by leave, withdrawn.
    Amendment made: In Sub-section (1), after the word "person"["and not to be for those purposes the income of any other persons"], to insert the words
    "Provided that in cases under the above paragraph (a) —

    "(i) where any such power as aforesaid can be exercised by a person with the consent of the wife or the husband of that person, the power shall, for the purposes of the said paragraph, be deemed to be exercisable without the consent of another person, except where the husband and wife are living apart either by agreement or under an order of a court of competent jurisdiction; and

    "(ii) where any such power as aforesaid is exercisable by the wife or the bus-band of the person who made the disposition, the power shall, for the purposes of the said paragraph, he deemed to be exercisable by the person who made the disposition."—[Sir I., Scott.]

    Sir L. SCOTT: I beg to move, in Subsection (1), to leave out the words
    "Provided that in cases under the above paragraph (c) income shall not be held to include any income derived from capital which is required by such disposition to be held on trust absolutely for the child at the end of any period loss than the life of such child,"
    and to insert instead thereof the words:
    "Provided also that—

    "(i) the above paragraph (c) shall not apply as regards any income which is derived from capital which, at the end of the period during which that income is payable or applicable for the benefit of the child, is required by the disposition to be held on trust absolutely for, or to be transferred to, the child, or any income which is payable to or applicable for the benefit of a child during the whole period of the life of the person by whom the disposition was made; and

    1507

    "(ii) for the purposes of the said paragraph (c) income shall not be deemed to be payable to or applicable for the benefit of a child for some period less than its life by reason only that the disposition contains a provision for the payment to some other person of the income in the event of the bankruptcy of the child, or of an assignment thereof, or a charge thereon being executed by the child."

    Mr. D. HERBERT: I hope the House will forgive me if I ask to be allowed to express my thanks, and the thanks of other Members, to the Chancellor of the Exchequer and to the Solicitor-General for the way in which they have met us with Amendments on this Clause. It was an extremely difficult Clause, and I think I am right in saying that, so far as the Amendments moved by myself in Committee are concerned, the Solicitor-General has been good enough to meet me to my complete satisfaction, certainly on all Amendments which were on questions of principle. The only differences there have been between us have been on the question of drafting.
    Amendment agreed to.

    CLAUSE 17.—(Super-tax on, undistributed income of certain companies.)
    (1) Where it appears to the Special Commissioners that any company to which this Section applies has not, within a reasonable time after the end of any year or other period ending on any date subsequent to the fifth day of April, nineteen hundred and twenty-two, for which accounts have been made up, distributed to its members in such manner as to render the amount distributed liable to be included in the statements to he made by the members of the company of their total income for the purposes of Super-tax, a reasonable part of its actual income from all sources for the said year or other period, the Commissioners may, by notice in writing to the company, direct that for purposes of assessment to Super-tax, the said income of the company shall, for the year or other period specified in the notice, be deemed to be the income of the members, and the amount thereof shall be apportioned among the members:
    Provided that, in determining whether any company has or has not distributed a reasonable part of its income as aforesaid, the Commissioners shall have regard not only to the current requirements of the company's business, but also to such other requirements as may be necessary or advisable for the maintenance and development of that business.
    (3) A notice of charge to Super-tax under this Section shall in the first instance be
    1508
    served on the member of the company on whom the tax is assessed, and if that member does not within twenty-eight days from the date of the notice elect to pay the tax a notice of charge shall be served on the company and the tax shall thereupon become payable by the company:
    Provided that nothing in this Sub-section shall prejudice the right to recover from the company the Super-tax charged in respect of any member who has elected as aforesaid but who fails to pay the tax by the first day of January in the year of assessment or within twenty-eight days of the date on which he so elected, whichever is later.
    (4) Any undistributed income which has been assessed and charged to Super-tax under this Section shall, when subsequently distributed, be deemed not to form part of the total income from all sources for the purposes of Super-tax of any individual entitled thereto.
    Where a member of a company has been assessed to and has paid super-tax otherwise than under this Section in respect of any income which has also been assessed and upon which Super-tax has been paid under this Section, he shall, on proof to the satisfaction of the Special Commissioners of the double assessment, be entitled to repayment of so much of the Super-tax so paid by him as was attributable to the inclusion in his total income from all sources of the first-mentioned income.
    (5) This Section shall apply to any company—

    (a) which has, since the fifth day of April, nineteen hundred and fourteen, been registered under the Companies Acts, 1908 to. 1917; and

    (b) in which the number of shareholders computed as hereinafter provided is not more than fifty;

    (c) which has not issued any of its shares as a result of a public invitation to subscribe for shares; and

    (d) which is under the control of not more than five persons.

    For the purposes of the Sub-section—

    In computing the number of shareholders of a company there shall be excluded any shareholder who is not a beneficial owner of shares or who is an employee of the company, or is the wife or the unmarried infant child of a beneficial owner of shares in the company;

    A company shall be deemed to be under the control of any persons where the majority of the voting power or shares is in the hands of those persons or relatives or nominees of those persons. or whore the control is by any other moans whatever in the hands of those persons;

    The expression "relative" means a husband or wife, ancestor, or lineal descendant, brother, or sister;

    The expression nominee "means a person who exercises his voting power or holds shares directly or indirectly on behalf of another person;

    1509

    Persons in partnership and persons interested in the estate of a deceased person or in property held on a trust shall, respectively, he deemed to he a single person.

    (6) In this Section the expression "member" shall include any person having a share or interest in the capital or profits or income of a company, and the expression "employee" shall not include any governing director, managing director, or director.
    Sir L, SCOTT: I beg to move, at the beginning of the Clause, to insert the words
    "With a view to preventing the avoidance of the payment of Super-tax through the withholding from distribution of income of a company which would otherwise be distributed, it is hereby enacted as follows."
    This is designed to carry out a promise to insert words, which I indicated that the Government would be willing to insert when the Bill was in Committee, in order to make clear what was the general purview of the Clause, namely, that it was not to interfere with bond fide companies carrying on business in the ordinary way, without having an eye on escaping taxation.
    Mr. A. M. SAMUEL: I am very much obliged to the Solicitor-General for putting in these words. I think they do what I, and those who think with me, had sought to have laid down during the discussion of the old Clause 14 and now of this new Clause 17. That is to say, we have upheld with him the principle that legal tax-evasion by a loophole in legislation should be stopped, but that we wish to protect innocent people from being hurt by the operation of this Clause. The Clause, as it is now to be remodelled, will help us in that respect. We shall protect the innocent by this Clause, but the Chancellor of the Exchequer will not catch all the wicked with it. There are three certain ways by which the wicked, if the sum involved were large enough to make it worth while, could get out of the paying of Super-tax by means of limited liability methods.
    Sir L. SCOTT: Please do not go into details.
    Mr. SAMUEL: Very well; I will adopt the suggestion of my hon. and learned Friend, and I will not give away the details to the House or the public.
    Sir L. SCOTT: I shall be glad to hear them privately.
    Mr. SAMUEL: There are ways, unfortunately, in which it can be done. At all events we have done much of what we wanted to do for the protection of the innocent.
    Amendment agreed to.
    Mr. A. M. SAMUEL: I beg to move in Sub-section (1), after the word "company"["the said income of the company shall for the year"], to insert the words
    "after deducting such amounts as may be required for the maintenance and development of the business."
    This is a technical accounting point. I daresay the Solicitor-General remembers the point I made on the Second Heading. It was, roughly, this: If a party or company or person returns an amount as profit or income, which the authorities think is not a sufficiently large or proper amount, they will proceed to rip up the figures. But if they rip up the figures, they are then able to reconstitute the balance sheet only in accordance with the terms of the Income Tax Act, and if they do so, they will not be able to allow the person or company which they are assessing the advantages or reliefs which this Clause provides. I therefore suggest that the Commissioners, when they review figures which they have challenged, in putting the net profit at a figure which will satisfy themselves, must allow the company or person whom they are reassessing under this Bill the same advantages as could be claimed by the company or him under this Clause if he had at the outset returned an amount which satisfied them—that is to say, an amount which would not have made it necessary for the authorities to re-open the balance sheet for the purpose of preventing the avoidance of Super-tax by withholding income from distribution.
    Mr. D. HERBERT: I beg to second the Amendment.
    Sir L. SCOTT: The hon. Member moved this Amendment so graciously that its insidious character did not become quite evident. It involves a principle that has already been negatived in the new Clause.
    Mr, SAMUEL: If you adopt that view, do you not penalise the man by depriving him of the right to have the exemptions or abatements which he would have had, had he made returns which in the first instance suited the Commissioners? Sup-

    1511
    pose the difference challenged turns out to be small?
    Sir L. SCOTT: I think there is a misapprehension. The question involved here is really the question that was debated yesterday, as to whether or not, in the case of a private firm, money put to reserve for capital purposes out of the income after it has been earaed, should be allowed as a deduction from the income as costs of earning the income. That principle was contrary to the whole scheme of Income Tax legislation, and was negatived. The scheme of this Clause is that where a company is, in effect, similar in character to a private firm, and the company cloak is assumed only for the purpose of avoiding the taxation to which the income of those persons controlling it would be liable if that were a firm and not a company—the object of this Amendment is to allow just the same kind of deductions as were negatived yesterday in the case of the private firm. If that were done and it were applied to a private firm the cost would be very large.
    Mr. HOLMES: The Solicitor-General said one thing which rather surprised me. He has just inserted at the beginning of this Clause the words "with a view to preventing the avoidance of the payment of Super-tax," etc. That Amendment will shut out from the operation of this Clause any number of bond fide trading companies. Several alterations were made in the Committee stage. The date has been brought forward from 1909 to 1914. Are we to understand that after all these exceptions have been made the insertion of these words will cost the Exchequer £5,000,000 a year?
    Sir L. SCOTT: No. I fear that what I said may have given that impression. If the principle, which was negatived yesterday, in the case of firms were adopted and applied to firms as well as companies, that figure would be involved. I did not say that £5,000,000 would be involved in this Amendment.
    Mr. HOLMES: I am glad to hear that statement. I would like to ask how much the Chancellor of the Exchequer expects to get out of this Clause in its revised form?
    Sir R. HORNE: In point of fact, the figure can only be guessed at. Taking
    1512
    the Clause in its revised form and assuming a normal year, my anticipation is something like £500.000 altogether for the first year. Perhaps the House will allow me to say a word on the particular modification suggested in the Amendment. The intention is, or at least the effect of this Amendment would be, that you would be asking the Special Commissioners of Income Tax to determine how much should be put to reserve. We should not pretend for a moment to do that. We would not say to any company that it should put a particular sum to reserve. The whole idea of this Clause, as I have said, is to take hold of the egregious cases, the cases where every reasonable person ran see that the amount put to reserve is entirely unreasonable. We do not presume to say what is the amount which actually should be put to reserve. It is only the extreme leases that are being struck at, and We do not wish to strike at any case where~ there may be varying opinions as to how much should be put to reserve. It is only the cases which are perfectly apparent on the face of it, the class of case that leaps to the eye, which will be inquired into. We should not presume to sit as authorities on the precise amount which any company shall put to reserve, but what we propose to do is. in the egregious cases to say, "You really have acted in bad faith in this matter, and, accordingly, your penalty shall be that you shall be taxed as if you were a private firm." The Amendment goes rather contrary to that, in seeking to say that certain deductions shall first be made and that then we shall arrive at a sum. That is not the intention at all, and for that reason I cannot accept the Amendment.
    Amendment negatived.
    Mr. D. HERBERT: I beg to move, at the end of Sub section (1), to insert the words
    "and without limiting the foregoing words any income used, or reasonably intended to be used, for the purpose of the business of the company shall be deemed to be reasonably withheld from distribution."
    Mr. DEPUTY-SPEAKER (Sir Edwin Cornwall): This Amendment seems to be covered by a previous Amendment.
    Mr. HERBERT: With all respect, Sir, I submit that is not so. This is quite different from the previous Amendment,

    1513
    and I was certainly under the impression that I should be met with an acceptance of this Amendment, because, as the Chancellor may remember, in the Committee stage the principle was accepted, and I was given a very definite assurance in regard to it. The only difference between the present Amendment and the one which I moved in Committee is that on the suggestion of the Solicitor-General, so that there should be no narrowing of the. general words, I have put in the additional words "without limiting the foregoing words."
    Mr. DEPUTY-SPEAKER: I will allow the Amendment to be moved and seconded, but I reserve the right to revert to my first view of the Amendment.
    Mr. A. M. SAMUEL: I beg to second the Amendment.
    Sir R. HORNE: I quite well remember the discussion in Committee with regard to this particular suggestion of my hon. Friend. The words which he proposes now seem to be entirely covered by the proviso to the Clause itself. I cannot imagine, if that proviso is interpreted in terms as it stands, any new words such as he proposes will be found necessary.
    Mr. HERBERT: If that be the Chancellor's view, I do not wish to press the Amendment unduly.
    Sir R. HORNE: That is my view and the view of those who advise me.
    Amendment, by leave, withdrawn.
    Mr. SAMUEL: I beg to move, in Sub-section (3), after the word "pay" ["elect to pay the tax"], to insert the words "his proportion of."
    I think this Clause should be made more lucid, because as it stands it may mean that a person who is really not liable to pay Super-tax in the normal way has now to pay Super-tax, even though his total income is below the Super-tax zone. Such a person should not be penalised and his liability should be more closely denned by the addition of the words which I have suggested. I propose in a subsequent Amendment to also insert the words "calculated on the basis of his share or interest in the capital or profits or income of the company" I only mention those words in order to show what my meaning is.
    Viscount WOLMER: I beg to second the Amendment.
    Sir L. SCOTT: I assure my hon. Friend that these words are absolutely covered by the Clause as it stands. I would ask him to keep his eye on his own Amendment while listening to the terms of Subsection (1) of this Clause:
    "The Commissioners may, by notice in writing to the company, direct that for purposes of assessment to Super-tax, the said income of the company shall for the years specified in the notice be deemed to be the income of the members, and the amount thereof shall be apportioned among the members."
    Amendment, by leave, withdrawn.
    Mr. SAMUEL: I beg to move, at the end of Sub-section (3), to add the words
    "Provided that nothing in this Subsection shall prejudice the right of the company to recover from such of its members whose total income renders them liable for Super-tax any sums which have been paid on their behalf by members whose total income is within the limit of exemption for Super-tax."
    This Amendment proposes to deal with the case of a member of a company whose income is very small and whose total income would not be liable to Super-tax. Why should he be called upon to pay Super-tax, if the amount he receives from the company plus the amount he receives otherwise do not together amount to a total which would render him liable to Super-tax normally? If the two amounts together do not total that which would otherwise bring him up to the Super-tax level, he should be able by this Clause to recover that portion of Super-tax which should not have been charged to him from other members of the company who are liable to Super-tax. Under this Clause as it stands you make a man subject to Super-tax in a way which was not possible before—and indeed was, and perhaps is still, illegal.
    Major Sir GEORGE HAMILTON: I beg to second the Amendment.
    Sir R. HORNE: I certainly appreciate the object of my hon. Friend and the basis upon which he seeks to have this Amendment made, but there are considerations on the other side. It is the company by which the Super-tax is to be paid, and it is difficult to alter that provision in the way in which my hon. Friend seeks to alter it. The words which he uses are not very apposite for

    1515
    the purpose. In point of fact the money is not paid by these other people. It is really paid by the company, in the sense that it is taken out of reserves which would otherwise have been apportioned among the others, but not being distributed, the company is the persona liable to pay. I entirely appreciate the point of view expressed in the Amendment, and as no assessment can be made undo this until 1923–24—the date at which the Act begins having been altered and Super-tax being always assessed upon the year after the year in question—I. will undertake in the Department to see what arrangements can be made in order to meet this point.
    Mr. SAMUEL: I accept the spirit of the Chancellor's reply, and beg leave to withdraw.
    Amendment, by leave, withdrawn.
    Sir R. HORNE: I beg to move, after Sub-section (4), to insert a new Subsection:
    "(5) Where Super-tax is charged under this Section in respect of the income of a company for any year or other period, the Commissioners of Inland Revenue shall, on a certificate from the Special Commissioners that the Super-tax has been accounted for, repay-to the company the amount of any Corporation Profits Tax paid by the company in respect of the corresponding accounting period or part thereof."
    This is an Amendment which I undertook, in the Committee stage, to propose, providing that any company which was held liable, or whose members were held liable, for Super-tax on undistributed profits, should be exempted from the operation of the Corporation Profits Tax. The Amendment was originally moved by the right hon. Baronet the Member for the City of London (Sir F. Banbury), and the Amendment now on the Paper is designed to meet the point which he raised.
    Sir G. COLLINS: During the Committee stage of the Bill, if I remember correctly, this particular concession was announced at a late hour. I ask the Chancellor why he grants these further concessions to these particular companies? The Corporation Profits Tax was instituted because, in the opinion of the Government, limited liability companies had certain favours conferred on them by law, and the particular companies whom the Chancellor is anxious
    1516
    to rope in under this Super-tax law are the limited liability companies. They are not the public ultility societies; they are not like certain other companies which the Chancellor has exempted from the Corporation Profits Tax. They are, as certain hon. Members have described them during the Committee stage, tax-dodging companies, but the Chancellor exempted the fortunate owners and members of these companies from paying Super-tax this year on their profits last year. That appeared to many of us to be very unfair, especially as the Super-tax is at a very high rate, and there is to-day in the country a sense of unfairness that all these particularly clever people, whom hon. Members have described as tax-dodgers, are going to be exempt to the extent of £400,000 this year. This afternoon the Chancellor of the Exchequer grants another concession. inasmuch as the Corporation Profits Tax is to be refunded to them, and I ask the Chancellor or the Solicitor-General to inform the House why this further concession should be granted?
    6.0 p.m.
    Sir R. HORNE: One of the grounds upon which the Corporation Profits Tax is justified is that these corporations do not pay Super-tax. If you, in effect, say that they are really private firms masquerading under the companies laws, and must pay Super-tax, it is perfectly obvious you cannot ask for the Corporation Profits Tax as well. If this Bill has stripped the clothes of a corporation off this body of persons who pretend to be a corporation for the purpose of evading Super-tax and says that these men shall be regarded as private persons under the provision by which private firms pay Super-tax, you cannot, after stripping off the cloak and saying: "You must pay Super-tax," turn round, with complete inconsistency, and say: "You must also pay Corporation Profits Tax."
    Mr. SAMUEL: I thank the right hon. Gentleman for what he has said. This disposes of what some of us business men considered a gross injustice and we are obliged to the Chancellor for what he has done now. It meets our case in its particular respect and so much so that although I have another Amendment down on the next page, I shall withdraw that Amendment because I think that the Chancellor's words meet our contention. I am obliged to him.
    Mr. HOLMES: I am very much interested in the speech of my hon. Friend the Member for Farnham (Mr. A. M. Samuel). What the Chancellor of the Exchequer has now done by the insertion of these words is simply to make this Clause applicable to people who obviously and deliberately were indulging their fancy by turning themselves into limited companies. I think the hon. Member for Greenock (Sir G. Collins) does not quite grasp where we have arrived at in regard to this matter. This is a Clause designed to catch the tax-dodger who deliberately forms himself into a limited company in order to avoid the payment of Super-tax. He has had to pay Corporation Profits Tax, and that is far less than the Super-tax he would have to pay. The Chancellor, by the way in which he has redrafted the Amendment and subsequently altered this Clause, says that this particular man who has turned himself into a limited company is now to be regarded again as a private individual. He is going to pay Super-tax, which he will pay if he remains a private individual. Obviously it is going to bring in far more to the Exchequer if that man remained a company and paid Corporation Profits Tax. Some of my hon. Friends of the Labour party have asked for concessions in several ways for their workpeople, and have not got them, and they now find that these other people are getting concessions. I think it is a great mistake for the right hon. Gentleman to try to fan any feeling of that sort by a statement which I venture to think was very unfair.
    Amendment agreed to.
    Mr. HOLMES: I beg to move, in Subsection (5, a), to leave out the word "fifth"["fifth day of April"], and to insert instead thereof the word "fourth."
    The reason for this Amendment is that people have deliberately formed companies in order to evade the payment of Super-tax, and those who do so claim that their action is chiefly concerned with the post-War period. It occurred to me on the Committee stage that there is no reason why we should have the date of 5th April, 1914, though it is not the company's years, and has nothing to do with the registration of companies.
    Mr. G. TERRELL: I beg to second the Amendment.
    Sir L. SCOTT: Why the 5th April, 1914, was taken rather than the outbreak of the War was that it was the beginning of the financial year, and 4th August has no relation to the financial year. A second reason was this; that it was in the Finance Act, 1914, that the Super-tax was first graduated up to 1s. 4d., with Income Tax at 1s. 3d.
    Amendment negatived.
    Mr. D. HERBERT: I beg to move, in Sub-section (5, a), after"1917,"to insert the words
    "and is not a reconstruction of a company registered under those Acts before the fifth day of April, nineteen hundred and fourteen."
    The object of this Amendment is to give exemption to a company which for all practical purposes is a company registered before the date referred to, but owing to its having undergone a process which is perfectly well known to all lawyers and business men, the process of reconstruction, is technically a company which has been registered after that. The Solicitor-General in Committee thought those in charge of the Bill would see their way to accept the Amendment.
    Mr. SAMUEL: I beg to second the Amendment.
    I think this proposition made by my hon. Friend is a fair one. If those concerned can prove that the reconstruction after 1914 of the company was legitimate, with no intention of tax-dodging, I think the Amendment ought to be allowed. You will, however, find a snake in the grass. A trade is likely to grow up in the purchase, in order to alter the Articles of Association, of derelict and moribund companies, and it would, therefore, be possible to bring, by amalgamation, a new company outside the clutches of this Clause. If so, there is danger of tax-dodging in the Amendment moved by my hon. Friend. If, however, the Solicitor-General can see his way to get out of that difficulty I think the Amendment is a very good one.
    Mr. HERBERT: Perhaps I may explain to my hon. Friend that he has seconded the Amendment and has not entirely understood it. The person who wants to use one of these old derelict companies in the way suggested and in order

    1519
    to avoid registering his company does not reconstruct the company. He saves nothing whatever if he does. I quite agree that probably there may be a trade in the Articles of Association of derelict companies, but this does not affect this particular question of reconstruction in the very least degree.
    Sir L. SCOTT: This "snake in the grass" was the object of debate in Committee. The Chancellor of the Exchequer indicated the hope that he might be able to deal with the case which various Members have pointed out. Since then my right hon. Friend has considered the matter very carefully and has not found himself able this year to frame a useful Clause dealing with this particular mischief. As this Clause has, as will be seen, in deference to the recommendation of the Committee, been postponed in operation for a year, the urgency of the matter is not now as great as formerly. As the Chancellor of the Exchequer has decided, therefore, not to introduce any new Clause in this Bill dealing "with the snake in the grass," perhaps, under all the circumstances, the mover may see his way to leave the matter for the present.
    Amendment, by leave, withdrawn.
    Mr. A. M. SAMUEL: I beg to move, in Sub-suction (5, 6), after the word "fifty," to insert the word "and."
    The word is necessary to connect this and the following paragraph.
    Mr. G. TERRELL: I beg to second the Amendment.
    Amendment agreed to.
    Mr. N. MACLEANhad an Amendment on the Paper, in Sub-section (5), to leave out paragraph (d.)
    Mr. SPEAKER: The Amendment of the hon. Member for Govan is out of order, as it would impose a charge.
    Further Amendments made: In Subsection (5), leave out the words,
    "not a beneficial owner of shares"
    and insert instead thereof the words,
    "a trustee or nominee for 6ome person otherwise owning or beneficially interested in shares in the company."—[Mr. D. Herbert.]
    In Sub-section (5), leave out the words, "exercises his voting power," and insert instead thereof the words
    may be required to exercise his voting power on the directions of."—[Sir R Horne.]
    Mr. SPEAKER: I do not quite know at what the next Amendment, standing in the name of the hon. Member for Farnham (Mr. A. M. Samuel) aims.
    Mr. SAMUEL: I want more information. I want to know whether this Act can impose taxation by Super-tax on a limited liability company, when the law says that no Super-tax can be imposed upon a limited liability company.
    Mr. SPEAKER: If the hon. Member requires a legal answer, he had better move his Amendment.
    Mr. SAMUEL: I bog to move, in Subsection (6), after the word "person," to insert the words, "or limited liability company."
    Sir L. SCOTT: A limited liability company, included under Sub-section (6) by the interpretation and within the meaning of the word "person," will be thereby exposed to the liability of Super-tax, but there may be cases in which the members of the company include not only persons but also another company.
    Mr. SAMUEL: If the word "person" include a limited liability company, will not a limited liability company holding shares be able to defeat the object of this Clause, because Super-tax cannot be collected from a limited liability company?
    Amendment negatived.

    CLAUSE 18.—(Delivery of particulars for purposes of Super-tax.)
    (1) The Special Commissioners may, whether an assessment to Super-tax has been made or not, require any individual who has been required to make a return of his total income for the purposes of Super-tax to furnish to them within such time as they may prescribe, not being less than twenty-eight days, such particulars as to the several sources of his income and the amount arising from each source, and as to the nature and the amount of any deductions churned to be allowed there from, as they consider necessary.
    Mr. SAMUEL: I beg to move, in Sub-section (1), to leave out the words
    "to the several sources of his income and the amount arising from each source, and as to the nature and the amount of any deductions claimed to be allowed there from, as they consider necessary—"
    and to insert instead thereof the words,
    "the General Commissioners are empowered to order in a precept issued by them under Section one hundred and thirty-nine of the Income Tax Act, 1918."

    1521
    The reason for this Amendment is that the General Commissioners have already power under Section 139 of the Income Tax Act, 1918, to secure most elaborate particulars about these matters, and in fact to obtain all the particulars which are required. My object is to give the Special Commissioners the same power as that which is possessed by the General Commissioners under Section 139 of the Income Tax Act of 1918.
    Lieut-Colonel D. WHITE: I beg to second the Amendment.
    Sir R. HORNE: I am afraid that I cannot accept this Amendment. The right of the General Commissioners to order particulars under Section 139 of the Income Tax Act is in connection with another matter altogether. It is a case in which an appeal is made against the particular assessment, and the General Commissioners have power to ask for certain particlars in relation to that appeal, and it is obvious that the circumstances are quite different. What is required is that the person should give particulars of the other sources of his income and the amount arising from each source. These are items which it is essentially desirable we should obtain for the purposes of Super-tax and the particulars required on the Income Tax Act of 1918 is quite a different matter. While I agree that the provisions made for those particulars are comprehensive, they do not suit the particular circumstances with which who are dealing.
    Mr. A. M. SAMUEL: What about trade secrets?
    Sir R. HORNE: There would be no more danger in the one case than the other, and for these reasons I cannot accept the Amendment.
    Amendment, by leave, withdrawn.

    CLAUSE 19.—(Amendments as to Schedule B.)
    (1) The definition of the expression assessable value "in. Schedule B of the Income Tax Act, 1918, shall have effect as though for the words" an amount equal to twice the annual value "there were substituted the words" an amount equal to the annual value, "and as though for the words" an amount equal to the annual value "there were substituted the words" an amount equal to one-third of the annual value."
    Sir GODFREY COLLINS: I beg to move, in Sub-section (1), after the word "value"["annual value and as though"], to insert the words:
    "in respect of any land occupied for the purposes of husbandry the annual value of which does not exceed two hundred pounds."
    This Clause was modified in its relation to the farming industry in 1918, and when it was modified the fact was taken into consideration that the Income Tax was 6s., as compared with the low rate which had been in force previously for many years. It was quite apparent to the country at that time, and it has been more apparent since, that Income Tax payers would be forced to pay at the higher rate for several years. With a view, no doubt, to equalising the burden and placing the industrial classes more in line with the farming classes, the law was modified as it affects farmers in the Income Tax Act of 1918. The rate then fixed was twice the annual value, but if at any time a farmer thought that that rate was excessive under Schedule B of the Income Tax of that year, words were inserted that any person occupying land for the purpose of husbandry might elect to be assessed and charged under Schedule D if he thought he was being unfairly treated. This Amendment provides that all those who are farming and paying the rent, which does not exceed £200 a year, should remain as they are at present.
    Sir F. BANBURY: On a point of Order. I wish to point out that this Clause substitutes the annual value for the purpose of the collection of the Income Tax, and now the hon. Member wishes to move an Amendment which limits that substitution to a certain class of income, thereby increasing the charge on the other classes of income. As this is the Report stage, and as the hon. Member has not got the consent of the Crown, I suggest that this Amendment is out of order.
    Mr. SPEAKER: I think the right hon. Baronet is right.
    Mr. RAFFAN: If that be so, then no Amendment modifying this Clause would be in order, because obviously any alteration in a tax increases the burden placed upon other people.
    Mr. SPEAKER: The other Amendments are all in the nature of reliefs, but this Amendment, it appears to me, would increase the burden.
    Sir G. COLLINS: I do not think there will be any increased burden on those farming land under £200 a year. The point is. will this Amendment place a further burden on those farming larger farms? I have pointed out that under the Income Tax Act a farmer may elect to be assessed under Schedule D, and if he does this then he is only taxed on the profits he has actually made by farming his land. I submit that this Amendment would not place any fresh burden on these particular men.
    Mr. SPEAKER: I do not think that affects the point. The hon. Member might have a case on this ground. Supposing the effect of this Amendment be only to mitigate the relief as against the existing position. I do not know whether that is so or not.
    Major BARNES: The object of the Clause is not to relieve any farmer from paying the Income Tax due from him. The farmer now has an option, but it is understood that the exercise of that option is to enable him to pay the right amount, and if the law as it stands would make him pay more than the right amount, then he can come under Schedule I) and pay the right amount. Therefore I contend that the limitation of this proposal to those particular farmers who are farming land at a less rental than £200 a year cannot impose any burden on the farmers who are farming land and paying more than £200 a year. If the annual value amounts to more than the farmer ought to pay, he can come under Schedule D, and it seems to me that there cannot be any burden thrown upon any farmer farming land worth more than £200, because this proposal is limited to farmers paying a rental of under £200.
    Sir F. BANBURY: On a point of Order. My I state that the whole object of the. option which has been referred to was to allow farmers to pay a fixed sum. It is quite true that an option has been given, but the whole point was to allow the farmer who was unable to keep books to be charged Income Tax by the ordinary method. Now the hon. Gentleman comes along and on the Report stage of this Bill he says, "lam going to take away
    1524
    that privilege from certain farmers and limit it to other farmers." I contend that that would naturally mean a charge upon the farmers who pay a rental of over £200 a year.
    Mr. SPEAKER: I think I am now seised of the situation. The position is this. If this Amendment imposed a charge on the farmers over and above what obtained before this Bill was introduced, then the Amendment would be out of order. But the effect of the Amendment is to restrict the number of claimants for the relief proposed in this Bill. It would be competent, of course to move to leave out this Clause altogether, but I have not selected that Amendment, and, therefore, following that, it is in order to propose a diminution of the relief proposed under the Clause. That is the effect of the Amendment.
    Sir G. COLLINS: I was about to point out that under the Clause as it is drafted, farmers who are making no profits, and who to-day, before this Bill becomes law, may elect to be assessed under Schedule D, would be forced to pay on their annual value, and it might well be that if. this Amendment were carried, that would be to the advantage of the large farmer. I have endeavoured quite briefly to explain the Income Tax Law so far as it affects the farming industry to-day, and I ask the House whether this is the time to make this big change It has been argued that the farming class, from their inability to determine their annual profits, need to be assessed under a different system. That may hold good, and undoubtedly it does among large sections of small farmers, hut surely it does not hold good in regard to large farmers over £200. There can be very few of these farmers to-day who are not keeping books, and have not a very shrewd idea as to their annual profits. The Amendment would make no difference to these men in this respect, that they would still have the right of appeal to be assessed under Schedule D, and while agreeing that the concession should be granted by the Chancellor to the small farmer, I hope that the large farmer, farming land over £200 a year, will come under the scope of this Amendment.
    Major BARNES: I beg to second the Amendment.

    1525
    I quite gather chat the right hon. Gentleman opposite (Sir F. Banbury) is not opposing this Amendment with any idea of relieving any farmer from Income Tax that he ought to pay—that is not his position at all—that the option which at present is given to the farmers has been given with the idea that under either method they will pay the right amount, but that it is more convenient, owing to the fact that a number of farmers are not versed in bookkeeping, that they should be able to take the amount of their rent as a fixed standard for calculating their Income Tax. At the same time, I do not gather that the option is given to farmers with the idea that they can balance the thing, and say that if they come in in this way they will pay more than if they came in in that way. If that were the idea it would be directly in the teeth of the doctrine laid down by the Solicitor-General himself yesterday when the hon. Member for Wood Green (Mr. G. Locker-Lampson) put forward a motion that would have given an option. The Solicitor-General then laid it down in no measured terms that it would be distinctly improper that any taxpayer should have an option of choosing between two bases, because he would, of course, choose the lower. Therefore, I take it that the option given is not with the idea that they may secure the lower basis and pay a less amount than they should do. It is given on quite other grounds, which are that it is a rough and ready way of getting justice and making men pay what they ought, without putting them to a great deal of unnecessary trouble and expense.
    The position when the rate was raised west that the farmers were passing through a period of very great prosperity, and it was thought that raising it in that way would ensure that they paid their fair proportion. Then they were given the option. There is no doubt about it that farmers are not in any such position to-day. I want to put this as fairly as I can. They are not enjoying anything like the profits they were during the War—as some hon. Gentlemen remark, they are losing—and, therefore, it is not fair to maintain this double standard which would have to be resorted to by many farmers not able to keep proper accounts. I take it that what the Government is doing in bringing forward this Clause is not to relieve farmers from
    1526
    their proper burden, but to reduce it because they think it proper. If they did not reduce, but maintained it, that would drive the farmer to bookkeeping and the keeping of proper accounts, because otherwise, I think, he certainly would pay more than he ought if he paid on the fixed amount. From some points of view it would be a good thing if the great industry of agriculture was based on proper bookkeeping. I am quite sure that hon. Members opposite would be very glad if they could see every farmer a person of such knowledge and competence that he could keep proper accounts. The basis of all industry, and agriculture no less than any other, is cost keeping. You cannot do that in a year or so, and, therefore, I, for one, do not oppose the reduction per Se, while I think that the Amendment is one which imposes a proper limit. I think it is reasonable to assume that a man who farms land over £200 is a person who can, or ought to be, keeping proper accounts, and I would ask the Solicitor-General, who I am well aware is not only a great lawyer but a man of very great repute amongst agriculturists, and is very able to speak on this question, not only from the point of view of Income Tax Law, but from knowledge of agriculture, to consider whether the principle of this Amendment—which is not to bring all farmers, men who are paying hundreds and men who are paying thousands, within the limits of the new Clause, but is to impose some limit—is not really a sound principle. If this limit of £200 is thought to be too low, the Government might be prepared to accept some figure which would do two things, relieve the inexperienced account-keeping farmer from a possible injustice, while at the same time not relieving a man who ought to be keeping accounts and ought to be paying Income Tax on an exact figure from his liabilities.
    Sir L. SCOTT: I recognise at once the very reasonable attitude taken up particularly by the hon. Member for Newcastle (Major Barnes), who seconded the Amendment. May I at once deny the compliment he was good enough to pay me of having any knowledge of agriculture. I know nothing of agriculture, but I have had a good deal to do with farmers, and I know a good deal about them and their

    1527
    ways. The truth of the matter is, that the educational grounds advocated by the hon. Member who seconded the Amendment, of urging farmers to keep accounts, have much in their favour, but, after all, this is a Finance Bill and not an Education Bill. We have, I think, in a Finance Bill essentially to take facts as we find them, and to consider things from the point of view of raising taxation without unfairness to any particular body of persons. Out of the total number of persons who have agricultural holdings in this country, which, I am speaking from memory, is something between a quarter and half-a-million, there are something under 2,000 who pay under Schedule D. The fact is, that the majority of farmers, including a very large number who have farms of an annual value of £200 a year, do, in fact, pay under Schedule B and not under Schedule D. To pass here and now a taxing Clause which would, practically speaking, force all those men who are now paying under Schedule B under Schedule D would create an enormous, amount of trouble, both to the farmers and to the Inland Revenue, because that they would have to do it is assumed and is the basis of the Amendment. The Movers of the Amendment want to make them do it, and in the circumstances the reason why the Movers of the Amendment believe that that result would follow is, because they know that at the present time farmers' profits, as measured for the purpose of Schedule D, are nothing like twice the annual value of their holding as under the existing law to-day. Very few, I suspect, reach the single annual value of Schedule B as it stands in the Clause as drawn to-day.
    The position is that the farming community of this country is going through the worst crisis it has known since the eighties and nineties of last century. In these circumstances, to admit a Clause which may be regarded as an educational Clause coupled with a punitive provision against farmers who do not agree to adopt the educational process, which is, I agree, in the long run desirable, is a misuse of taxing powers. Let us, proceeding on the assumption that under the existing state of affairs most farmers do pay under Schedule B and most farmers, even over £200 a year annual value, would find it difficult and very
    1528
    troublesome to prove their case under Schedule D, see what this Amendment proposes. It proposes to take a hard and fast arbitrary amount of £200 annual value with this result, that farmer A, with a farm worth £199 a year, will pay on the £199 as the basis of his income, while farmer B, with a farm of £201 annual value, will pay on £402 as the basis of his income, which is the kind of disparity between man and man that this House, and particularly the taxpayers, dislike. I venture very strongly to submit to the House that the broad question of agricultural, education. and the desirability of farmers keeping costing accounts and so on, is a matter not really germane to the matter in band, which is to decide the taxing system.
    Mr. LORDEN: I cannot understand how the Movers of this Amendment can suggest that a farmer who pays a rent of £200 a year must be a big farmer. He does not want to farm many acres to pay that amount. In the old times land used to be something like 35s. to £2 an acre, but rents have had to go up, and a farmer who pays £200 a year would be quite a small farmer. If a farmer wants to adopt Schedule D, he has to give something like six to nine months' notice to the Surveyor of Taxes that he is proposing to come under Schedule D, and therefore, with this large number of farmers, there would probably be a. very large proportion of them who would be landed without being aware of what had been done. I am very glad, therefore, to hear that the Solicitor-C.eneral cannot accept the Amendment.
    Mr. RAFFAN: I think that the House will be very interested, after the numerous discussions that have taken place on Income Tax law, to hear the view of the Solicitor-General that it is a misuse of taxing powers to endeavour to secure that large bodies of people shall pay Income Tax on the amount of their income. That is the effect of the Solicitor-General's argument. He says, quite truly, that this is not an Education Bill. He says that it is a Finance Bill, and he says that it is a misuse of taxing powers to endeavour to secure an alteration in the law the effect of which will be that a large number of persons, who are not at present necessarily paying their Income Tax upon their incomes. shall be

    1529
    called upon to do so. I imagine that the. whole basis of the Income Tax is that, so far as it is possible to assess it, every person shall pay his Income Tax upon the income which he receives, and I think there is no other body of taxpayers in the whole community who are placed in this specially favoured position. I am specially interested also in the suggestion of the Solicitor-General that it is altogether wrong to make a sharp dividing line between one type of farmer and another. He appears to think that there is something extremely wrong in saying that the farmer whose rent is under £200 a year shall enjoy some privilege which is denied to the farmer whose rent is £210. The Government have, however, in this very Bill, and, indeed, in this very Clause, themselves made very sharp dividing lines. Where land is held by a farmer who farms it himself, he pays on a certain scale, but where is is held by a person who keeps it out of use, he pays on a much lower scale; and all our arguments failed to convince the Solicitor-General that this sharp dividing line should not be made.
    With reference to the point which was made by the hon. Member who spoke last, what we had in mind, in framing this, Clause, was that we should exclude what are technically known as small holdings. As the hon. Member will, no doubt, be aware, under the Small Holdings Act a smallholder is technically a person who farms not more than 50 acres of land; and I think there are very few small holdings, and certainly very few statutory small holdings, where the rent of a 50-acre holding would exceed £200. I agree that any distinction of that kind must be to some extent an arbitrary one, but, in effect, what will happen will be this: There can be but a Very small number of smallholders who are earning sufficient to make them chargeable for any considerable amount of Income Tax, and when we fix the limit at £200, and allow for the exemption in the case of a married man with children, it docs mean that, speaking generally, what we are asking is that this shall operate at the point where a married man with children will become liable to Income Tax. There can be no doubt as to its being desirable that the farming community should ultimately be brought into line with the business community
    1530
    in regard to this matter. Surely, the Chancellor of the Exchequer cannot contemplate going on for a long period putting one section of the community in the specially favoured position of not being required to make returns as to what their incomes are. At some period or other, surely, this change will be made.
    Sir L. SCOTT: Hear, hear!
    Mr. RAFFAN: I am glad to have that admission. Having secured it, may I say that in my view, as a result of the excellent work that has been done in regard to agricultural education by the present Minister of Agriculture and his predecessors, we have now reached a stage when the farming community will have been trained to keep accounts? It is one of the matters which the right hon. Gentleman has constantly kept in view, and it is a poor compliment to him to suggest that, in spite of his efforts, the farmers are still so ignorant that they cannot keep the elementary accounts which are necessary to make these returns. I hope the House will pass this Amendment, which has been described with perfect accuracy by the Solicitor-General as one which does not seek to make a sharp distinction between one man who is being assessed on one year's rent and another who is being assessed on two years' rent. It does seek to make it essential that farmers who farm comparatively largo holdings, and who, therefore, presumably, are men of education and intelligence, should be forced by stress of economic circumstances to act as other members of the community do, and make their returns.
    My last point, though it is obvious that one makes it with some hesitation, is that, if you were to attempt to deal with commercial men on these linos, and were to say that the commercial man should not be compelled to make a return, but that his income should be judged by the rateable value of the office he uses, everyone would say it was perfectly obvious that a very grievous injustice would be done. There can be no doubt at all that the present system does not operate fairly as between farmer and farmer. The system is a thoroughly haphazard one. A large number of farmers pay far too little Income Tax, and it is quite likely that a considerable number pay too much. What is desirable is that each should pay the

    1531
    tax which should fairly fall upon him, and that no one should pay more. I hope that, if this Amendment is not accepted, or if some concession is not made, a Division will be taken on the matter, and that we shall put an end to the anomaly which has existed for so long.
    Colonel WEDGWOOD: Before a Division be taken, I should like to point out to the House that this Amendment, if carried, would give a definite advantage to smallholders, and would, therefore, encourage small-holdings in the country. That is a desirable thing to do. We on this side of the House want to give a specially advantageous position to the smallholder. Members on the other side want to give a specially advantageous position to the large farmer. It may be that our constituents are either large
    farmers or small farmers, and that may dictate our vote to-day, but there can be. amongst people who want 10 benefit smallholdings and encourage them, no doubt as to how they ought to vote. The real difficulty is this: Farmers, for some reason that no one can discover, are put by this Bill in a specially advantageous position. We have been told over and over again that they are put in this advantageous position because they are unable to keep accounts, but that is not the reason. A quite sufficient reason why farmers are put in a specially advantageous position is that this Bill, which it is pretended is to the advantage of farmers, will in the long run redound solely in the interests of the landowners.
    Question put, "That those words be there inserted in the Bill,"
    The House divided: Ayes, 34: Noes. 228.

    Division No. 225.]

    AYES.

    [6.58 p.m.

    Ammon, Charles George

    Hall, F. (York, W.R., Normanton)

    O'Connor, Thomas P.

    Banton, George

    Hallas, Eldred

    Parkinson, John Allen (Wigan)

    Barker, G. (Monmouth, Abertillery)

    Halls, Walter

    Rendall, Atheistan

    Bell, James (Lancaster, Ormskirk)

    Hayday, Arthur

    Richardson, R. (Houghton-le-Spring)

    Bowerman, Rt. Hon. Charles W.

    Hayward, Evan

    Sexton, James

    Bramsdon, Sir Thomas

    Henderson, Rt. Hon. A. (Widnes)

    Sitch, Charles H.

    Briant, Frank

    Hirst, G. H.

    Spoor, B. G.

    Cairns, John

    Hodge, Rt. Hon. John

    Swan, J. E.

    Cape, Thomas

    Hogge, James Myles

    Thomas, Rt. Hon. James H. (Derby)

    Carter, W. (Nottingham, Mansfield)

    Irving, Dan

    Thomas, Brig.-Gen. Sir O. (Anglesey)

    Clynes, Rt. Hon. John R.

    Jones, Morgan (Caerphilly)

    Thomson, T. (Middlesbrough, West)

    Collins, Sir Godfrey (Greenock)

    Kennedy, Thomas

    Thorne, W. (West Ham, Plaistow)

    Davies, Rhys John (Westhoughton)

    Kenworthy, Lieut.-Commander J. M.

    Tillett, Benjamin

    Davison, J. E. (Smethwick)

    Kenyon, Barnet

    Waterson, A. E.

    Edwards, C. (Monmouth, Bedwellty)

    Kliey, James Daniel

    Watts-Morgan, Lieut.-Col. D.

    Entwistle, Major C. F.

    Lawson, John James

    Wedgwood, Colonel Josiah C.

    Finney, Samuel

    Lunn, William

    Wilgnall, James

    Galbraith, Samuel

    Maclean, Neil (Glasgow, Govan)

    Williams, Aneurin (Durham, Consett)

    Graham, W. (Edinburgh, Central)

    Murray, Dr. D. (Inverness & Ross)

    Wilson, James (Dudley)

    Griffiths, T. (Monmouth, Pontypool)

    Myers, Thomas

    Young, Robert (Lancaster, Newton)

    Grundy, T. W.

    Naylor, Thomas Ellis

    Guest, J. (York, W. R., Hemsworth)

    Newbould, Alfred Ernest

    TELLERS FOR THE AYES.—

    Major Barnes and Mr. Raffan.

    NOES.

    Adkins, Sir William Ryland Dent

    Boscawen, Rt. Hon. Sir A. Griffith-

    Cowan, Sir H. (Aberdeen and Kinc.)

    Agg-Gardner, Sir James Tynte

    Boyd-Carpenter, Major A.

    Dalziel, Sir D. (Lambeth, Brixton)

    Amery, Rt. Hon. Leopold C. M. S.

    Brassey, H. L. C.

    Davidson, J. C. C. (Hemel Hempstead)

    Armitage, Robert

    Brlttain, Sir Harry

    Davidson, Major-General Sir J. H.

    Armstrong, Henry Bruce

    Broad, Thomas Tucker

    Davies, Sir David Sanders (Denbigh)

    Baird, Sir John Lawrence

    Brown, Brig.-Gen. Clifton (Newbury)

    Davies. Thomas (Cirencester)

    Baldwin, Rt. Hon. Stanley

    Buchanan, Lieut.-Colonel A. L. H.

    Davies, Sir William H. (Bristol, S.)

    Banbury, Rt. Hon. Sir Frederick G.

    Buckley, Lieut-Colonel A.

    Du Pre, Colonel William Baring

    Banner, Sir John S. Harmood-

    Bull, Rt. Hon. Sir William James

    Edgar, Clifford B.

    Barlow, Sir Montague

    Burn, Col. C. R. (Devon, Torquay)

    Edge, Captain Sir William

    Barnes, Rt. Hon. G. (Glas., Gorbals)

    Casey, T. W.

    Edwards, Hugh (Glam., Neath)

    Barnston, Major Harry

    Cecil, Rt. Hon. Lord R. (Hitchin)

    Elliot, Capt. Walter E. (Lanark)

    Barrand, A. R.

    Chamberlain, N. (Birm., Ladywood)

    Elveden. Viscount

    Bartley-Denniss, Sir Edmund Robert

    Churchman, Sir Arthur

    Erskine, James Malcolm Monteith

    Beauchamp, Sir Edward

    Clay, Lieut.-Colonel H. H. Spender

    Evans, Ernest

    Beckett. Hon. Sir Gervase

    Clough. Sir Robert

    Eyres-Monsell, Com. Bolton M.

    Bell, Lieut.-Col. W. C. H. (Devizes)

    Coats, Sir Stuart

    Faile, Major Sir Bertram Godfray

    Bellairs, Commander Cariyon W.

    Cobb, Sir Cyril

    Farquharson, Major A. C.

    Bennett, Sir Thomas Jewell

    Cohen, Major J. Brunei

    Fell, Sir Arthur

    Betterton. Henry B.

    Colfox, Major Wm. Phillips

    Fildes. Henry

    Bigland, Alfred

    Colvin, Brig.-General Richard Beale

    Fisher. Rt. Hon. Herbert A. L.

    Birchall, J. Dearman

    Conway, Sir W. Martin

    FitzRoy. Captain Hon. Edward A.

    Bird. Sir William B. M. (Chichester)

    Cory. Sir J. H. (Cardiff. South)

    Flannery, Sir James Fortescue

    Foot, Isaac

    Locker-Lampson, Com. O. (H'tlngd'n)

    Richardson, Sir Alex. (Gravesend)

    Ford, Patrick Johnston

    Lorden, John William

    Richardson, Lt.-Col. Sir P. (Chertsey)

    Forrest, Walter

    Lowther, Maj.-Gen. Sir C. (Penrith)

    Roberts, Rt. Hon. G. H. (Norwich)

    Foxcroft, Captain Charles Talbot

    Mackinder, Sir H. J. (Camlachie)

    Roberts, Samuel (Hereford, Hereford)

    Fraser, Major Sir Keith

    McLaren, Hon. H. D. (Leicester)

    Roberts, Sir S. (Sheffield, Ecclesall)

    Ganzonl, Sir John

    M'Lean, Lieut.-Col. Charles W. W.

    Robinson, S. (Brecon and Radnor)

    Gardiner, James

    McMicking, Major Gilbert

    Royds, Lieut.-Colonel Edmund

    Gardner, Ernest

    Macnamara, Rt. Hon. Dr. T. J.

    Rutherford, Colonel Sir J. (Darwen)

    Gee, Captain Robert

    Macpherson, Rt. Hon. James I.

    Rutherford, Sir W. W. (Edge Hill)

    Gibbs, Colonel George Abraham

    Macqulsten, F. A.

    Samuel, A. M. (Surrey, Farnham)

    Gilbert, James Daniel

    Magnus, Sir Philip

    Sanders, Colonel Sir Robert Arthur

    Gilmour, Lieut.-Colonel Sir John

    Maitland, Sir Arthur D. Steel-

    Scott, A. M. (Glasgow, Bridgeton)

    Glyn, Major Ralph

    Mallalieu, Frederick William

    Scott, Sir Leslie (Liverp'l, Exchange)

    Goff, Sir R. Park

    Malone, Major P. B. (Tottenham, S.)

    Seddon, J. A.

    Greenwood, William (Stockport)

    Matthews, David

    Seely, Major-General Rt. Hon. John

    Gregory, Holman

    Meysey-Thompson, Lieut.-Col. E. C.

    Simm, M. T.

    Greig, Colonel Sir James William

    Mitchell, Sir William Lane

    Sprot, Colonel Sir Alexander

    Guest, Capt, Rt. Hon. Frederick E.

    Mond, Rt. Hon. Sir Alfred Moritz

    Stanley, Major Hon. G. (Preston)

    Guinness, Lieut.-Col. Hon. W. E.

    Moore, Major-General Sir Newton J.

    Stanton, Charles Butt

    Hall, Lieut.-Col. Sir F. (Dulwich)

    Morrison, Hugh

    Starkey. Captain John Ralph

    Hamilton, Sir George C.

    Morrison-Bell, Major A. C.

    Steel, Major S. Strang

    Hannon, Patrick Joseph Henry

    Munro, Rt. Hon. Robert

    Stewart, Gershom

    Harmsworth, C. B. (Bedford, Luton)

    Murchison, C. K.

    Sturrock, J. Long

    Haslam, Lewis

    Murray, Hon. A. C. (Aberdeen)

    Surtees, Brigadier-General H. C.

    Henderson, Lt.-Col. V. L. (Tradeston)

    Murray, John (Leeds, West)

    Sutherland, Sir William

    Herbert, Dennis (Hertford, Watford)

    Neal, Arthur

    Thomson, F. C. (Aberdeen, South)

    Hilder, Lieut.-Colonel Frank

    Newman, Colonel J. R. P. (Finchley)

    Thomson, Sir W. Mitchell- (Maryhill)

    Hills. Major John Waller

    Newman, Sir R. H. S. D. L. (Exeter)

    Tryon, Major George Clement

    Hinds, John

    Nawson, Sir Percy Wilson

    Turton, Edmund Russborough

    Hohler, Gerald Fitzroy

    Nicholson, Reginald (Doncaster)

    Wallace, J.

    Holbrook, Sir Arthur Richard

    Norman, Major Rt. Hon. Sir Henry

    Walters, Rt. Hon. Sir John Tudor

    Holmes, J. Stanley

    Norris, Colonel Sir Henry G.

    Walton, J. (York, W. R., Don Valley)

    Hopkins, John W. W.

    Norton-Griffiths, Lieut.-Col. Sir John

    Ward-Jackson, Major C. L.

    Hopkinson, A. (Lancaster, Mossley)

    Ormsby-Gore, Hon. William

    Warren, Sir Alfred H.

    Horne, Edgar (Surrey, Guildford)

    Pain, Brig.-Gen. Sir W. Hacket

    Watson, Captain John Bertrand

    Horne, Sir R. S. (Glasgow, Hillhead)

    Parker, James

    Wheler, Col. Granville C. H.

    Houston, Sir Robert Patterson

    Pease, Rt. Hon. Herbert Pike

    White, Charles F. (Derby, Western)

    Hunter, General Sir A. (Lancaster)

    Peel, Col. Hn. S. (Uxbridge, Mddx.)

    White, Col. G. D. (Southport)

    Hurd, Percy A.

    Pennefather, De Fonblanque

    Williams, C. (Tavistock]

    Hurst, Lieut.-Colonel Gerald B.

    Percy, Charles (Tynemouth)

    Wills, Lt.-Col. Sir Gilbert Alan H.

    Jackson, Lieut.-Colonel Hon. F. S.

    Percy, Lord Eustace (Hastings)

    Wilson, Capt. A. S. (Holderness)

    Jesson, C.

    Perkins, Walter Frank

    Wilson, Col. M. J. (Richmond)

    Jodreil, Neville Paul

    Perring, William George

    Winterton, Earl

    Johnstone, Joseph

    Philipps, Sir Owen C. (Chester, City)

    Wise, Frederick

    Jones. G. W. H. (Stoke Newington)

    Pollock, Rt. Hon. Sir Ernest Murray

    Wolmer, Viscount

    Kellaway, Rt. Hon. Fredk. George

    Pownall, Lieut.-Colonel Assheton

    Wood, Sir J. (Stalybridge & Hyde)

    Kidd, James

    Purchase, H. G.

    Wood. Major Sir S. Hill- (High Peak)

    King, Captain Henry Douglas

    Rae, Sir Henry N.

    Worsfold. T. Cato

    Kinloch-Cooke, Sir Clement

    Randies, Sir John Scurrah

    Worthington-Evans, Rt. Hon. Sir L.

    Lambert, Rt. Hon. George

    Raw, Lieutenant-Colonel Dr. N.

    Yeo, Sir Alfred William

    Lane-Fox, G. R.

    Rees, Capt. J. Tudor- (Barnstaple)

    Younger, Sir George

    Law, Alfred J. (Rochdale)

    Remer, J. R.

    Lewis, Rt. Hon. J. H. (Univ., Wales)

    Remnant, Sir James

    TELLERS FOR THE NOES.—

    Lloyd, George Butler

    Renwick. Sir George

    Colonel Leslie Wilson and Mr. Dudley Ward.

    CLAUSE 21.—(Amendment as to allowance for maintenance, repairs, etc.)
    (1) The following paragraphs shall be substituted for paragraph (3) of Rule 8 of No. V in Schedule A (which grants relief in certain cases in respect of the cost of maintenance, repairs, etc.): —
    "(3) This Rule shall apply to any land (inclusive of farmhouses and other buildings, if any) or house, the assessment on which is reduced for the purpose of collection:
    Provided that no repayment of tax shall be made under this Rule in respect of the cost of maintenance repairs, insurance or management, if or to such extent as that cost has been otherwise allowed as a deduction in computing income for the purposes of Income Tax."
    (2) This Section shall not have effect as respects Income Tax for the year 1922–23.
    Sir F. BANBURY: I beg to move, in Subsection (1), after the word "house"
    1534
    [" or house, the assessment on which is reduced"], to insert the words "where the owner or the tenant is liable for the cost of maintenance, or repairs, or insurance, or management."
    The object of the Amendment is to do away with an anomaly which I am informed exists and which consists of this, that if the tenant does the repairs and the owner pays the insurance he has to pay Income Tax on the insurance and cannot deduct it, whereas if he does the repairs he can deduct the insurance. It seems to me it is rather absurd to say in one case that he can claim a deduction for the amount he has paid in insurance and in another case he cannot do so. I understand where the tenant does the repairs a certain sum is deducted from the gross rent for repairs. It is supposed

    1535
    that that sum includes insurance, but as a matter of fact it does not do so.
    Mr. A. M. SAMUEL: I think this Amendment goes a little further than my right hon. Friend thinks it does. The word "management" ought to be explained. What does the Bill mean by management? Yesterday, when we were debating the concession given to the owners of mining royalties, I pointed out that the owner of a house is not allowed to deduct in respect of Income Tax any abatement for the cost of employing a person to collect rents, or for overseeing the condition of a house let on a full repairing lease, or for collecting ground rents. I should like to ask the Chancellor of the Exchequer whether I understood the Solicitor-General correctly yesterday that the concession for collection which was given to the mining royalty owner in regard to Income Tax applied to the owners of property. If that is so, we ought to have it cleared up at once so that we may know what the word means.
    Sir R. HORNE: I am not certain that I entirely understand the question. There is no doubt that under Clause 21 the expenses of management will be deductable by the owner.
    Mr. SAMUEL: Does that mean the collecting of rents?
    Sir R. HORNE: It will depend entirely upon circumstances. If you employ a factor to manage your property, which is the way it is ordinarily done, "other business" includes collecting the rents, and taking the whole thing together, the expense would be included in the expenses of management. On the other hand, you raise an entirely different issue, as I take it, though it would be for the Law Courts to decide, where an individual employed no one to collect his rents but collected them himself. Under those circumstances, it would be difficult to include the collection of rents under the head of management. Probably this word "management" has received interpretation before. At least, it has been in operation with regard to these allowances for many years, and I should think in practice its meaning is fairly well known by this time.
    Mr. RAFFAN: This is of great importance to a great many people. If you
    1536
    simply employ a person to collect your rents, and he has no other function, is that management?
    Sir R. HORNE: I am not prepared to give a competent opinion on that question. My own prima facie view is that the mere collector of rents can scarcely be described as the manager of the property, and, accordingly, the mere collecting of rents would not come within the category of management. If a man who is managing property includes in that the collection of rent, that expense would be allowed in the deductions TO be made.
    Mr. SAMUEL: Take this concrete case which I put yesterday. A trustee holds, among other investments, a provincial property which brings in £250 rent net, without any deduction whatever by the tenant, under a long leasehold term. He cannot go into the country to collect that rent, and he cannot go from time to time to see if the gutters and drains are in proper repair. He therefore employs a local estate agent and pays him £10 a year to collect the rents and look after the property. He receives £240 net, which he distributes amongst the beneficiaries. Is the property to be assessed for Income Tax on the £240, the amount he actually receives, or is it to be assessed on £250?
    Sir R. HORNE: I cannot give my hon. Friend an opinion which would necessarily safeguard him in is, court of law, because obviously what I say in my place in Parliament is not relevant in an argument in a court of law, but taking the case my hon. Friend has presented I should prima facie say these would be regarded as expenses of management and would under this Clause be deducted. On the other point raised by the right hon. Baronet that is a different question. The point he makes, as I understand it, is that where a tenant is liable for upkeep and repairs under the terms of his lease the landlord may be paying the insurance and, as the law is at present administered, the expense of insurance is not allowed to be deducted, whereas if the owner is himself liable for the repairs and maintenance the expense of insurance is included in the other charges and is allowed to be deducted.
    Sir F. BANBURY: The tenant does the repairs and the landlord by the lease pays the insurance.
    Sir R. HORNE: That again is one of those items in connection with repairs and management which I think is excluded and stands entirely by itself. I should have been very ready to agree to my right hon. Friend's suggestion—after all it is a very small matter—except for the fact that there are repercussions in other directions. If he will not press the Amendment I will have the matter gone into as against the Finance Bill of next year. No case, I think, has been pressed upon the Inland Revenue authorities on this matter and it is not a very clamant grievance, if there is any suffering at all from it, but I promise to take it into consideration and have it dealt with.
    Amendment, by leave, withdrawn.

    CLAUSE 23.—(Interest paid on arrears of Excess Profits Duty not to be allowed as a deduction.)
    In the computation of any profits or income for the purposes of assessment to Income Tax no deduction shall be allowed in respect of any interest paid on arrears of excess profits duty or munitions exchequer payments.
    Mr. HOLMES: I beg to move, at the end of the Clause, to add the words
    "but in the computation of any profits or income for the purposes of assessment to Corporation Profits Tax or Super-tax a deduction shall be allowed in respect of the interest in question of the gross amount which, after deduction of Income Tax at the standard rate, would give a net amount equal to the amount of interest actually paid."
    By the Clause the Chancellor of the Exchequer seeks to enact that the interest which he is charging on arrears of Excess Profit Duty shall not be a deduction from the profits of a business in computing the sum at which they are assessed to Income Tax. On 20th February I asked this question:
    "With reference to the interest at the net rate of 5 per cent. per annum without allowance for Income Tax to be charged on any arrears of Excess Profits Duty, whether the interest so paid will be allowed as a deduction from total income in calculating the amount of Super-tax payable by an individual, and whether if the answer is in the affirmative the amount to be deducted will be the interest at the net rate of 5 per cent. plus tax?"
    1538
    The Financial Secretary to the Treasury said:
    "My right hon. Friend the Chancellor of the Exchequer proposes that for the purposes of Corporation Profits Tax and Super-tax a deduction shall be allowed in respect of the interest in question of the gross amount which, after deduction of Income Tax at the standard rate, would give a net amount equal to the amount of interest actually paid."—[OFFICIAL REPORT, 20th February, 1922; col. 1529, Vol. 150.]
    I, therefore, expected that when the Finance Bill was introduced there would be a Clause inserted to the effect that while this interest would not be deducted for the assessment of Income Tax there would be a deduction for Corporation Profits Tax and Super-tax, but no Clause to that effect has appeared in the Bill. I have, therefore, put down this Amendment, which the House will see is in the exact words of the reply given on the 20th February by the Financial Secretary. I understand that the reply of the Chancellor of the Exchequer is that this is already covered by the existing law. So far as I can see, it is not dealt with in the present law. If he can show me that it is dealt with I shall be glad to withdraw the Amendment. In the first place, take the Corporation Profits Tax. Section 53 of the Finance Act, 1920, says:
    "Subject to the provisions of this Act, profits shall be the profits and gains determined on the same principles as those on which the profits and gains of a trade would be determined for the purposes of Schedule D
    That is, for the purposes of Income Tax. Clause 23 says that this interest paid on arrears of Excess Profits Duty shall not be deducted for the purpose of Income Tax. Sub-section (2) of Section 53 of the Finance Act of 1920 says that in regard to Corporation Profits Tax you shall arrive at the profits in exactly the same way as you arrive at the profits in respect of Income Tax, subject to certain provisions. 'One provision says:
    ("b) deductions shall be allowed in respect of interest on money borrowed for the purposes of the company."
    I do not know whether the right hon. Gentleman is going to tell us that the arrears of Excess Profits Duty which a person has not paid, and which the State are allowing to stand over to be paid by instalments, become money borrowed by the company from the State. If, as a

    1539
    lawyer, he says that that is a proper interpretation, I should say that this point is covered. As a mere layman, I cannot see that interest on arrears of Excess Profits Duty which are payable by instalments can be called interest on money borrowed for the purposes of the company. As far as Corporation Profits Tax is concerned, I suggest that, as the law now stands, the profits have to be arrived at in accordance with the Income Tax method, and by this Clause you are shutting that out. Now let me come to Super-tax. This is even simpler than Corporation Profits Tax. Section 5 of the Income Tax Act, 1918, says:
    "(1) For the purposes of Super-tax, the total income of any individual from all sources shall be taken to be the total income of that individual from all sources for the previous year, estimated in the same manner as the total income from all sources is estimated for the purposes of exemption or abatement under this Act."
    This means, as estimated for Income Tax purposes. Therefore, if for one year for the purposes of Income Tax a deduction of the interest on arrears of Excess Profits Duty is disallowed, then, in the following year, according to Section 5 of the Income Tax Act, 1918, it will similarly be disallowed for Super-tax. I leave the learned lawyers on the Government Bench to clear up this point. The Chancellor of the Exchequer says that what he says in the House does not become a matter of law, and I only want to be perfectly clear that the law carries out what is intended.
    Mr. RAFFAN: I beg to second the Amendment.
    Sir L. SCOTT: The point raised by the hon. Member is one of a very technical character, and of some legal difficulty, and I want to be quite frank with the House about it. I understand that the hon. Member has been in correspondence with the legal advisers of the Inland Revenue on the matter, and has had from them a letter containing an assurance that under the law as it stands the object of the Amendment is already obtained. and that the Amendment is superfluous. I was not anticipating that the Amendment would be moved, and I want to be perfectly frank with the House and to say that I have not given that thought to the point which, as a law officer, I always like to give, if I am going to make any statement to the House as to what I think is the law. I must candidly confess
    1540
    that I am only able to give the general impression that arises from my knowledge of the subject, without having given close attention to the particular point raised by the hon. Member.
    I want to remind my hon. Friend and the House that in the case of Estate Duty there is no comparable Clause to the Amendment which he now desires to insert. That is an analogous case to the question of interest on arrears with which his Amendment is dealing. In Section 53 of the Finance Act, 1920, to which the hon. Member referred, which is part of the Finance Act of that year dealing with Corporation Profits Tax, he pointed out the provision that the profits shall be the profits and gains determined on the Income Tax principle. That Section also has this proviso:
    "Provided that for the purpose of this Part of this Act …
    (b) deductions shall be allowed in respect of interest on money borrowed for the purposes of the company."
    The advisers of the Inland Revenue have always taken the view that that provision covers the deduction of arrears of Excess Profits Duty. The objection to adding the Amendment proposed by the hon. Member is not that there is any objection to what it does, because that: is common ground, for what it does is intended in the Bill as it is drafted. The objection is, that under the existing law what is proposed by the Amendment is already done. Having regard to the careful investigation that has been given to the matter by the legal advisers of the Chancellor of the Exchequer, I would ask the House to accept the statement which I make, after consultation with them, that the point is covered, and that the Amendment is not necessary.
    Mr. HOLMES: I have moved a good many Amendments on the Finance Bill in the last three years, but have never had such an unsatisfactory reply. I put forward two points of law, and apparently there is no reply to them. Obviously, as a matter of good faith, the Inland Revenue will allow the deduction of this interest in the case both of Corporation Profits Tax and Super-tax. I did hope that one would have had a better reply.
    Sir R. HORNE: I apologise to the hon. Member if we have not given him satisfactory information. We are advised,

    1541
    and we shall act upon the advice, that what my hon. Friend desires is really covered by the existing law, and in these circumstances he need not fear that there is going to be any injustice.
    Mr. HOLMES: I beg leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.

    CLAUSE 27.—(Payment of Excess Profits Duty by instalments.)
    (2) The Commissioners of Inland Revenue may as a condition of granting an application under this Section require the applicant to give such security for the due payment of the instalments as they think fit, and may at their discretion at any time revoke any authorisation granted under this Section.
    (4) Simple interest at the rate of five per cent. per annum, without deduction for Income Tax, shall be chargeable on Excess Profits Duty as from the date on which the duty becomes payable, or in the case of duty which became payable on or before the first day of January, nineteen hundred and twenty-two, as from that date.
    Any such interest shall be payable in money and shall be recoverable as a debt due to His Majesty from the person by whom the duty in respect of which the interest is charged is payable.
    (8) For the purposes of this Section, Exeese Profits Duty shall be deemed to become payable on the expiration of two months from the date on which the assessment to duty is made.
    Sir R. HORNE: I beg to move, at the end of Sub-section (2), to add the words
    "but in any case in which such security as aforesaid has been given, only after three months' notice has been given by the Commissioners of their intention to revoke the authorisation."
    This Amendment is designed to meet a point which was raised in the Committee stage of the Bill. It was suggested that the power to revoke should be withdrawn. I recognised the force of some of the cases that were brought forward, and, in the end, I took the view that it would be quite proper that notice should be given of revocation in particular cases where the security had been asked for by the Inland Revenue Department and had been given.
    Amendment agreed to.
    Sir R. HORNE: I beg to move, in Subsection (4), to leave out the word "five"
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    and to insert instead thereof the words "four and a half."
    This Amendment is carrying out a pledge which I gave in Committee to reduce the interest upon the unpaid instalments of Excess Profits Duty from 5 per cent. to 4½ per cent.
    Sir G. COLLINS: Perhaps the right hon. Gentleman can give the House some information as to the amount of arrears of Excess Profits Duty covered by this Amendment. I take no exception to the Amendment, but the Revenue returns for the last quarter show that the net yield of Excess Profits Duty is very small, about £1,000,000. I am anxious to find out how much money the State has had to repay during the last quarter or the last six months to those who have paid Excess Profits Duty in the past. It may be that the Chancellor of the Exchequer has not any such figures by him, and if so I will not press for an answer.
    Mr. SPEAKER: In any case, it does not arise.
    Amendment agreed to.
    Further Amendment made: In Subsection (8), leave out the word "two"["expiration of two months"], and insert instead thereof the word"three."—[Sir R. Home.]

    CLAUSE 28.—(Right of appeal as to amount of deficiencies or losses.)
    Sub-section (5) of Section forty-five of the principal Act (which allows an appeal against an assessment of Excess Profits Duty) shall apply as respects the determination by the Commissioners of Inland Revenue of the amount of any deficiencies or losses in respect of which a person carrying on a trade or business is entitled to a repayment of or a set-off against Excess Profits Duty as it applies to the amount of an assessment made upon him by the said Commissioners.
    Mr. HOLMES: I beg to move, at the end of the Clause, to add the words
    "and an appeal under this Section in respect of a past accounting period shall not be disallowed by reason of the provisions of Rule 5 of the Excess Profits Duty Regulations, dated the sixth day of January, nineteen hundred and sixteen."
    This Amendment is even more legal than the last one, and I wish to inform the Solicitor-General that it has been suggested to me by one of the most eminent counsel at the Bar, as it is feared that the cases affected will not be met by the Clause as it now stands. The original

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    Act of 1915 gave the taxpayer the right of appeal against any assessment of Excess Profits Duty made upon him, but failed to give him the right of appeal if a claim by him for a repayment or set-off were disallowed in whole or in part by the Inland Revenue. In Clause 28 the Chancellor is giving the taxpayer the right of appeal in such cases. It appears, however, in a number of cases that, unless the words contained in the Amendment are added, the right may be ineffective.
    There are two kinds of cases to be dealt with. There is the trade or business which has paid Excess Profits Duty, and, in a subsequent accounting period, shows a deficiency, and therefore claims the repayment of Excess Profits Duty already paid. The right of appeal in such a case is fully covered in this Clause. On the other hand, there is a trade or business which did badly in the early part of the War, and was able to set-off against its subsequent liability to Excess Profits Duty the deficiency of duty in the earlier accounting period, or periods. When an assessment in such circumstances was made upon it, it would be arrived at by deducting from the Excess Profits Duty already payable the amount of set-off which it had claimed in respect of the earlier periods. The owner of the business could, under Rule 5 of the Excess Profits Duty Regulations, of 6th January, 1916, which states that any appeal against the assessment shall be made within 30 days, lodge an appeal. I submit to the Solicitor-General that unless the words of the Amendment are added to the Clause, Rule 5 may be held to apply in such cases, and the taxpayer would lose his right of appeal, under Clause 28, against the amount of set-off which was allowed to him in respect of the early accounting period.
    Mr. HAYWARD: I beg to second the Amendment.
    Sir R. HORNE: The view that I and those who advise me take with regard to the proposal of my hon. Friend is that it is unnecessary, and that, as the law at present stands, there is no impediment to an appeal against the set-off. The Rule reads thus:
    "Any person dissatisfied with the amount of any assessment made upon him may at any time within thirty days from the date of the service of notice of assessment, or
    1544
    within such further time as the Commissioners of Inland Revenue may allow, give notice to the Surveyor of Taxes named in the notice of assessment of his intention to appeal against the amount of the assessment."
    The way in which that rule works at the present time is that the Commissioners can extend indefinitely the time in which appeals can be lodged. There is a provision in Section 39 of the Finance Act, 1921, which states that
    "repayments and adjustments of Excess Profits Duty may be obtained and made.…at any time as the case mar require, unless and until Parliament otherwise determines."
    The Commissioners of Inland Revenue have always taken the view that this provision entitles the taxpayer to give notice of appeal at any time, and it cancels the limitation of time in dealing with Excess Profits Duty. Therefore, the hon. Gentleman may rest assured that under Clause 28 there is no intention to limit the time in which appeals may be made.
    Lord ROBERT CECIL: I daresay the Chancellor of Exchequer is right. He has, of course, all the advantage of official advice, but it certainly seems an odd thing. I understand his point to be that, prima facie, the words of Rule 5 might be held to debar the taxpayer from the advantage of this Clause, but that there are two protections for him. In the first place, the Commissioners can extend the time if they like, and by another Section of some other Act of Parliament—-I do not quite know what it is—
    Sir R. HORNE: That dealing with the Excess Profits Duty.
    Lord R. CECIL: —this very Regulation is abolished. That is; a most astounding view. Here is a Regulation, dealing with Excess Profits Duty, and the right hon. Gentleman says that, notwithstanding its existence, it is in fact repealed by a Section of the Act dealing with the Excess Profits Duty. Surely, unless I have misunderstood the right hon. Gentleman, there must be some mistake. As to the power of the Commissioners to extend the time, that, of course, though it does not give the man a right of appeal, gives him a right of appeal dependent on the extension by the Commissioners, which is a very different thing. As I say, I may have misunderstood the Chan-

    1545
    cellor of Exchequer, but as I understood him it does not appear to be a very complete answer.
    Mr. HOLMES: I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.

    CLAUSE 29.—(Amendment of Section 38 (3) of 5 & 6 Geo. 5, c. 89.)
    Where the interest or any part of the interest in any trade or business of any person, being the proprietor thereof or a partner therein, passes by a voluntary disposition inter vivos made by that person or under his will or on his intestacy to the husband or the wife or any lineal descendant of that person, that last-named person shall, for the purposes of Sub-section (3) of Section thirty-eight of the principal Act (which allows a repayment of or set-off against Excess Profits Duty in case of a deficiency or loss), be treated as if he were the person from whom the interest passed.
    Sir R. HORNE: I beg to move, after the word "any"["any lineal descendant of that person"], to insert the words "ancestor or."
    This Amendment is intended to meet the case put to me by the hon. Member for Chelsea (Sir Samuel Hoare), in the course of the Debate in Committee. The hon. Member then pointed out that there would be as much hardship in the cases where property went from the son to the father, in dealing with Excess Profits Duty, as in the cases where it went from the father to the son, where profits had been earned, and excess profits had to be paid in one period, while deficiencies had taken place in a subsequent period. I, accordingly, move this Amendment to meet that difficulty.
    Amendment agreed to.
    Mr. SPEAKER: I am in some difficulty with regard to the next two Amendments on the Paper, standing in the name of the hon. Member for North East Derbyshire (Mr. Holmes). They seem to me to be a variation of the Amendments proposed by the hon. Member in Committee with the same purpose, but with different methods and different terms. I observe that the discussion of his Amendments in Committee occupies 32 columns of the OFFICIAL REPORT. However, if the hon. Member can show me some difference between these two Amendments and those discussed in Committee, I may be able to call one of them.
    Mr. HOLMES: I think the most important difference is this. The Chan-
    1546
    cellor of the Exchequer's argument against the acceptance of the Amendments in Committee was that it would cost too much—something like £10,000,000 in one year. Although he recognised the hardship of the case, that was the one ground for his refusing it. My two Amendments, though they differ from one another, both follow one plan. The number of cases in which people who would claim against the Chancellor of the Exchequer would be far less under the present Amendments than under those which I moved in Committee. In the second place, I now propose that any repayment may be made by instalments spread over a period of five years. If the Chancellor of the Exchequer is going to spread his collection of the arrears of Excess Profits Duty over a period of five years, I suggest that the period of repayment should be spread over five years. The charge will be far less in the aggregate, and it will be much less each year, because it will be spread over five years. I hope the Amendments will meet the great objection there is to paying out £10,000,000 in five years, and that you, Sir, will be able to permit me to move either one or the other of them.
    Sir L. SCOTT: On that question of order, may I add this? This Amendment is estimated—of course, it is only a very rough estimate — as being likely to cost something between £3,000,000 and £10,000,000.
    Mr. SPEAKER: Which of the two Amendments does the hon. Member prefer to move? I will allow a short Debate on one or the other.
    Mr. HOLMES: I beg to move at the end of the Clause to insert a new Subsection—
    "(2) Where a change in ownership has taken place which is not provided for under Subsection (1) of this Section the right to reclaim for a deficiency or loss under Section thirty-eight, Sub-section (3), of the Finance (No. 2) Act, 1915, shall exist to the new owner in so far as the persons beneficially interested in the old owner or owners remain beneficially interested in the new owner as provided for hereinafter by this Section, that is to say: —

    (1) The amount to be reclaimed under this Section shall be the ratio which the continuing beneficial interest bears to the whole reduced by an amount equal to the difference between the percentage of continuing beneficial interest and one hundred per cent.;

    (2) For the purposes of this Section continuing beneficial interests shall be

    1547
    taken to be the aggregate of such interests;

    (3) Any repayment under this Section may be made by instalments within the period of five years, ending on the thirty-first day of December, nineteen hundred and twenty-six, and simple interest at the rate of four and a-half per cent. shall be paid by the Treasury upon unpaid instalments;

    (4) Where claims under this Section are agreed and can be satisfied by a set-off against Excess Profits Duty due, such set-off shall be made forthwith and the balance of duty (if any) shall be paid forthwith."

    I need not explain my Amendment as fully as I did on the Committee stage. The reason for the Amendment is that a case was decided in April, 1921, by the House of Lords, in which a man called Gittus, on succeeding to his father's business in which he was previously employed, wished to claim back the Excess Profits Duty which had been paid by his father. This was refused on the ground that he was not the same person. This decision by the House of Lords, which was so unexpected by the business world, inflicted great hardship in many cases. I sought, by an Amendment last year, to reverse this decision. The Chancellor of the Exchequer then met us by saying that he-would endeavour as far as possible to cover the case administratively. Early this year I asked a question as to the method which was being adopted in order to meet these cases administratively, and the Financial Secretary to the Treasury answered that the Inland Revenue sought to meet it if there was substantial identity of interest, and to the extent to which there was substantial identity of interest between the old and the new owner.
    One found that in practice that was administered in a very narrow sense. It was thought, when that answer was given in the House, that in this sort of case where there were four partners in a private firm, each having a quarter share in the partnership, who turned their business into a limited liability company, and each held 25 per cent. of the shares, there was substantial identity of interest between the old and the new ownership. In practice, however, nothing of the kind happens. The Inland Revenue say that there is no man in the new company who held more than 25 per cent. of the shares in the old company, and therefore there
    1548
    is no substantial identity of interest between the partners in the firm and the shareholders in the new company. I gave seven or eight other instances in the Committee stage, but I will only mention one now. A company for the purposes of capital, which had a former capital of half a million pounds, formed a new company of two millions. They paid two bonus shares for one to each of the old shareholders, thus absorbing £1,500,000 of the new company. They then asked their shareholders to subscribe share for share for the other £500,000. The shareholders, to the extent of 99 per cent., did so, so that that company remains exactly the same as the old company to the extent of 99 per cent., yet the Inland Revenue say there is no substantial identity of interest, and that no money can be repaid.
    In the first place, the Chancellor of the Exchequer refused to reverse the Gittus case last year. That, no doubt, would have cost him many million pounds. Then, in Committee this year, he refused to accept an Amendment which would have met a number of cases, and would have cost him £10,000,000. Now this Amendment will cost a reduced amount—the Solicitor-General says it will cost from £3,000,000 to £10,000,000, spread over five years. The suggestion I make is that where there were four partners holding 25 per cent. each, that is, 100 per cent. of the shares in the old firm and each of those four partners takes 25 per cent. of the shares in the new company, then, having had 100 per cent. in the old and 100 per cent. in the new, they would be entitled to get everything back. But if they had 100 per cent. in the old firm or company, and only 70 per cent. in the new, the proposal under paragraph (1) of my proposed Subsection is that 70 per cent. should be deducted from the 100, leaving 30, and, instead of getting 70 per cent. back, they should get 40 per cent. back. The effect of that would be that, if the old members only held 50 per cent. in the new company, they would have no right to repayment, because from 100 you would take 50, leaving 50, and that would cancel it. This is considerably lcs than was suggested in Committee. It would meet a large number of hard cases. The very fact that there were so many columns in the OFFICIAL REPORT on the Committee-stage, shows that it was a matter in which,

    1549
    I venture to suggest, a large number of the Members of the House took great interest, and very strong pressure was brought to bear upon the Chancellor of the Exchequer. I hope, now that we have got down to something like a minimum of Jive years, at any rate the right hon. Gentleman will be able to do something.
    Sir L. SCOTT: I recognise that the Amendment, as drafted, is well adapted to meet some of the objections which were raised on the part of the Treasury when the original proposals were discussed in Committee, and that the hon. Member has very ingeniously got over some difficulties, but we really cannot accept this Clause. The broad distinction between this and the Clause as it stands in the Bill giving the concession which has been given, where a business passes from father to eon, or from husband to wife, is a concession limited to individuals in that degree of natural relationship. We said quite frankly when we were dealing with the subject before that is was illogical, that it rested on no principle, and that it was only justified as a concession to eases of hardship, where human emotions naturally are aroused. The Amendment under consideration is one which would extend the principle of identity from a man to a company, or from one company to another company, and, indeed, it would go further as a matter of legal interpretation, as I have no doubt is intended by the Mover, to extend even to the case of company amalgamations. The difficulties in practice, even assuming that the Exchequer could afford the concession, would, I am satisfied from, a very close investigation of the matter, be quite insuperable. It is quite easy to imagine cases, such as the case put most suceintly and adroitly by the hon. Mover, where the identity is so complete that it is difficult to deny the reasonableness of such a concession. But the truth of the matter is that, except in one or two exceptional cases of that kind, you get difficulties which make it impossible to draw the line. The duty being one in course of winding up, the Inland Revenue Commissioners have looked upon it with a very kindly eye in hard cases. I do not want to say more than that I think it is generally known that that is so, and that they are trying to give the benefit of the doubt wherever
    1550
    it is possible—an administrative practice about which I do not want to say anything.
    Take a couple of illustrations of the kind of complications into which you would get by this. The whole ten our of the Amendment depends upon the possibility of assessing quantitatively the value to the owner who remains pro tan to in the new ownership. How are you going to do that in companies, as we know them, in which there are different types of shares, in which it is very difficult to tell whether to take the money value or the voting power, or the degree of preference as the criterion of effective control, which, after all, must be the measure of value? Take the difference between degrees of preference. Some shareholders are entitled to a fixed dividend only of a cumulative or non-cumulative character, others to a share in profits, some to a share of profits above a certain level, some enjoy advantages in the company, some have voting powers restricted, and some have no voting powers. It is impossible to get any practical working criterion to test the value of the interest which is transmitted or retained. Similarly, the owner ship varies in the company from time to time, from the point of view of members of the company. Shares may change hands. A man may remain for a year after converting his business into a limited company, as the man with a dominating interest. He dies. His executors sell his shares, and they are divided up. All those kinds of difficulties in practice are, I venture to assure the House, as far as I am able to judge, after a rather careful consideration of it, insuperable. For those practical reasons—(1) the amount that it would cost the Exchequer, and (2) the impossibility of fairly working out the proposal in practice, we art obliged to resist the Amendment.
    Sir J. HARMOOO-BANNER: I am quite aware that the Chancellor of the Exchequer cannot grant the relief which has been asked for. It is too large an amount, and also it is rather too complicated. But I must confess I am interested by the Solicitor-General's remark that the concession in the Bill is given out of consideration for tears and family tenderness; and, therefore, while it is tears and family tenderness which have made the concession in this Clause, we cannot extend it further, because tears and family tenderness do not apply to

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    limited companies. My own opinion is that he ought never to have given the Clause at all, but, having given it, we have now learned that if ever we want anything from the Chancellor of the Exchequer we must at once put on an aspect of tears and family tenderness, and then, perhaps, we may get a concession, to which otherwise we are not justly entitled.
    Amendment negatived.

    CLAUSE 36.—(Profits of charitable and other companies registered without word "limited" exempted from Corporation Profits Tax.)
    (1) Corporation Profits Tax shall not be charged on the profits of an association which is registered under Section twenty of the Companies (Consolidation) Act, 1908, as a company with limited liability without the addition of the word "limited" to its name, so long as it continues so registered.
    Sir R. HORNE: I beg to move, in Subsection (1), after the word "registered" ["continues so registered"], to insert the words
    "or on the profits of a company which is established solely for the advancement of religion or education and which, under its memorandum or articles of association, is prohibited from distributing any part of its profits to its members."
    This Amendment is designed to exempt from Corporation Profits Tax institutions which are established solely for the advancement of religion or education, and which are prohibited from distributing any part of their profits to their members. The question was raised by the hon, and learned Member for Cambridge University (Mr. Rawlinson), and he presented very cogent reasons. An organisation which comes within the terms of my Amendment certainly seems to me an organisation which deserves consideration, and should certainly not be mulcted in Corporation Profits Tax. The hon. and learned Gentleman gave an instance in which an educational organisation had borrowed money and set up an institution, and was then compelled to borrow to pay the Corporation Profits Tax, although the institution was being run at a loss. Under these circumstances, I think it was certainly our duty to try to meet the case, and this Amendment is designed to meet that purpose.
    Amendment agreed to.
    Sir EDMUND BARTLEY-DENNISS: I beg to move, at the end of Sub-section (1), to insert the words
    "or on the profits of an association incorporated by Royal Charter which complies with the conditions as to its objects and profits or other income set out in Sub-section (1) of the said Section and so long as it complies with the said conditions."
    8.0 P.M.
    I wish to return the thanks of my hon. and learned Friend the Member for Cambridge University (Mr. Raw-linson) and my own thanks for the Amendment which has just been made. There is, however, one class of association which is left out. There are a considerable number of associations in this country which are established, not as companies under the Limited Liability Companies Act, but by Royal Charter. Those which are established by Royal Charter are in just the same position as those registered under the Companies Acts, which are not obliged to use the word "limited," because they make and distribute no profit and are not formed for the purpose of profit at all. For instance the Greenock Chamber of Commerce was incorporated by Royal Charter in 1913, and it makes no profit, and is just as if it had been a limited liability company registered under the Companies Act leaving out the word "limited." The Amendment follows exactly Section 20 of the Companies (Consolidation) Act, which says that associations may be registered as limited liability companies if they make no profits and are not formed for the purpose of profits. I am told—and, of course, there is great force in the contention—that whilst limited liability companies included under Clause 36 are under the jurisdiction of the Board of Trade, and the Board of Trade can see that they make and distribute no profits, and if they do make or distribute profits can revoke the registration and generally have jurisdiction over them, there is no Government Department which has jurisdiction over associations incorporated by Royal Charter. That may be a difficulty in the Chancellor's way in accepting this Amendment, and if he cannot incorporate it in the Bill now because he has not had time, as I suppose he has not—this was only sprung upon him by me on the Report stage—he will have plenty of time between now and the next Budget, and

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    I ask him if he will consult his advisers and see whether it is not strictly on all-fours with the new Clause which he has already incorporated in this Bill. That is the one plea I make. A promise of that kind will satisfy me, because, after all, these associations incorporated by Royal Charter have only just communicated with me, and it is not my fault or the fault of the Chancellor if they have not been more vigilant. The only other point I wish to make is this, that during this next year these associations will be subject to Corporation Profits Tax. It is the Inland Revenue officials who assess them for that tax, and if the Chancellor of the Exchequer will kindly intimate to those officials that during this year they should be very tender with these associations in regard to their assessments, and not treat their balances, or whatever they might be, as profits except in so far as they are absolutely obliged to do so, the effect may be the same as if this Amendment were accepted now. If the right hon. Gentleman can give me that assurance, I am sure I shall be quite satisfied.
    Lieut.-Colonel HURST: I beg to second the Amendment.
    The associations for whom my hon. Friend the Member for Oldham (Sir E. Bartley-Denniss) has just pleaded are on all-fours with those companies to whom the right hon. Gentleman has already granted immunity. They are associations which aim at the encouragement of commerce, art, science, religion, charity, or other useful objects, and, like the companfes to whom immunity has been given, they do not exist for the purpose of profits or for the purpose of distributing dividends among their members. For these reasons, it seems to me that exactly the same principle ought to apply to these associations, and I hope the Chancellor of the Exchequer will see his way to meet the very reasonable proposition which has been put forward.
    Sir R. HORNE: I am grateful to the hon. Member for Oldham (Sir E. Bartley-Denniss), who moved this Amendment, because he made both my speech and his own. I am under the difficulty which he describes. I have not had an opportunity of really investigating the problem which he has adumbrated sufficiently to be able to give a decided reply. I realise that there are eases, such as the Greenock
    1554
    Chamber of Commerce, to which he has referred, where it is anomalous that they should be treated differently, and I can give him the assurance that I shall look into these cases in the immediate future and that my advisers will be consulted, and we will see before the Finance Bill of next year is presented what the precise situation is and what can be done to remedy the grievance to which he has referred.
    Amendment, by leave, withdrawn.

    CLAUSE 37.—(Option as to payment of estate duty in certain cases.)
    Where any land or chattels settled by Act of Parliament or Royal Grant pass on the death of any person any Estate Duty payable in respect thereof, or of any interest therein, under Sub-section (5) of Section five of the Finance Act, 1894, may, at the option of the person authorised or required to pay the same, and notwithstanding anything in the said Section or in the Act of Parliament or Royal Grant settling the said land or chattels, be treated as a charge on and be raised and paid out of the corpus of such land or chattels, and the provisions of Section nine of the Finance Act, 1894, dealing with the charge of Estate Duty and the facilities for raising that duty shall apply.
    The option given by this Section shall be exercisable in any case in which Estate Duty in respect of such land or chattels, or any interest therein, to which Sub-section (5) of Section five of the Finance Act. 1894, applies, is unpaid at the date of the passing of this Act, irrespective of the date of the death which gave rise to the claim for that duty.
    Amendment made: Leave out the word "such,"["duty in respect of such"].— [Sir R. Horn]

    FIRT SCHEDULE.
    (4) The Special Commissioners may at any time by notice in writing require any company which appears to them to be a company to which Section seventeen of this Act applies, to furnish them with—

    (a) a statement of the actual income of the company from all sources, together with a copy of the company's accounts for any year or other period for which the company's accounts have been made up and such particulars as the Commissioners may reasonably require as to the income of the company and the manner in which the income has been dealt with; and

    (b) a statement for the same period of the names and addressee and particulars of the respective interests of all members of the company.

    Sir R. HORNE: I beg to move, at the end of paragraph. 4, to insert a new paragraph—
    "5. Where the Special Commissioners have issued a notice requiring a company to furnish them with particulars under paragraph 4 of this Schedule as respects any year or other period, and the auditor of the accounts of the company is a member of an incorporated society of accountants, the directors may, if they think fit, make and submit to the auditor such a statutory declaration as is hereinafter mentioned, and in such case the following provisions shall have effect: —

    (a) The directors of the company shall make a statutory declaration as to—

    (i) The amount which they regard, or regarded, as proper to be retained in the business out of the income of that year or other period; and

    (ii) The amount (if any) which they propose to recommend for distribution, or which has been distributed;

    setting out the reasons for such retention and giving such information as will enable the auditor to form an opinion whether the amount (if any) proposed for distribution or distributed, having regard to such requirements as are mentioned in the proviso to Sub-section (1) of the said Section seventeen, would be, or was, a reasonable part of the income for such year or other period:

    (b) If the auditor—

    (i) is satisfied that the information disclosed in the declaration is sufficient to enable him to form an opinion as to whether the proposed distribution or distribution (if any) would be or was a reasonable part of the income for such year or other period as aforesaid; and

    (ii) is satisfied that a prima facie case is made out by the reasons and. information given in the declaration that the proposed distribution or disbution (if any) would be or was reasonable

    he may so certify:

    (c) The certificate, together with the statutory declaration, shall be sent to the Special Commissioners who, unless they see reason to the contrary, shall take no further action in the matter."

    This is designed to meet a case presented by the hon. Member for North-East Derbyshire (Mr. Holmes). In dealing with companies which are suspected of having failed to distribute profits in order to avoid the Super-tax, much stress was laid by business men in the House on the embarrassment to which companies would be subjected by the kind of investigation and scrutiny which would necessarily be conducted by the Inland Revenue Department, and in order to
    1556
    avoid unnecessary inquiry it was suggested by the hon. Member that resort might be had to the great body of chartered accountants in this country, who would be in a position in many cases to grant a certificate which might avoid the unnecessary investigation. His original suggestion was that a firm of accountants might be entitled to give a certificate to the effect that the company was distributing a reasonable proportion of its profits, but it was impossible, according to our view, to put quite so big a responsibility upon the accountants. I have, however, succeeded in drafting a proposal which, I think, obtains the support of those chiefly interested in making the suggestion. Its general effect is this, that a company may make a statutory declaration as to the amount which they regard as profits to be retained in the business out of the income of the year, and the amount which they propose to recommend for distribution, and that in their declaration they should set out their reasons. On that declaration being submitted to an auditor, who must be a member of an incorporated society of accountants, he may, if he is satisfied that the information is adequate for him to give a certificate upon and that a prima facie case is made out, so certify. In such a case, the certificate may have the effect of inducing the Special Commissioners to say that an investigation is unnecessary, but if for other reasons, such, for instance, as that they may have information which leads them to suppose that, all is not disclosed which would enable them to form a just judgment on the case, they may still proceed to inquire. As the House will readily understand, a certificate by a firm of accountants giving a prima facie justification for what a company is proposing to do would in very many cases avoid the necessity of investigation altogether.
    Sir E. BARTLEY-DENNISS: I notice something in the right hon. Gentleman's Amendment which may be dangerous. I have had a great deal to do with societies of accountants, and in many Acts of Parliament these societies have been named. There are two great societies, the Society of Chartered Accountants and the Society of Incorporated Accountants, and I take it that no other society has ever been recognised in an Act of Parliament as the people upon whom the Legislature

    1557
    relied. May I point out to the Chancellor of the Exchequer that there may be—and indeed are—other societies of accountants besides those two great societies which may be incorporated as companies and that the terms of his Amendment would include these. I do not think the right hon. Gentleman wishes to rely upon any auditor unless he is a member either of the Society of Chartered Accountants or of the Society of Incorporated Accountants. Can he not put in words to make sure of that? I have had various societies of accountants writing to me in past years complaining that in the Friendly Societies Act and other Acts they have been excluded specifically, because those Acts only recognise the two great societies which I have named.
    Sir R. HORNE: I have considered very carefully whether it would be possible to confine the issue of such certificates to members of the two great societies to which the hon. Member has referred, and I have come to the conclusion that it would not be possible. There are such societies as the London Society of Accountants which would be excluded if only those two were mentioned and which, as is very well known, is a very important society, and it would be unfair to say that such a society should be entirely excluded from giving certificates under this Clause. The phrase I have used in this connection is already sanctioned by at least one previous Finance Act, and, it may be, by more than one.
    Sir E. BARTLEY-DENNISS: If the right hon. Gentleman is satisfied, I am.
    Amendment agreed to.
    Bill to be read the Third time Tomorrow (Friday), and to be printed. [Bill 194.]

    UNEMPLOYMENT INSURANCE (NO. 2) BILL.
    Considered in Committee.
    [MR. JAMES HOPE, in the Chair.]

    UNEMPLOYMENT INSURANCE (NO. 2) BILL.

      CLAUSE 1.—(Amendments of S. 4 of 12 & 13 Geo. 5 c. 7.)
      (1) The periods for which the Minister of Labour may, under Section four of the Unemployment Insurance Act, 1922. authorise a person to receive benefit during the third special period shall be periods not
      1558
      exceeding in the aggregate twenty-two weeks instead of periods not exceeding in the aggregate fifteen weeks, and the prohibition imposed by Sub-section (5) of the said Section four, on the receipt in the third special period of benefit for more than fifteen weeks in the aggregate, shall not apply in the case of benefit authorised by the Minister under that Section as amended by this Sub-section.
      (2) The period during which a person who has at any time received benefit under the said Section four in the third special period for periods amounting in the aggregate to five weeks is under Sub-section (2) of that Section not to be qualified for the receipt of benefit, shall be reduced from five week3 to one week:
      Provided that where by virtue of the said Sub-section any person is at the commencement of this Act disqualified for the receipt of benefit in the third special period, he shall continue to be so disqualified until the expiration of five weeks from the date on which he began to be so disqualified, or the expiration of one week from the commencement of this Act, whichever first happens.
      Mr. HAYDAY: I beg to move, in Subsection (1), to leave out the word "twenty-two," and to insert instead thereof the word "twenty-five."
      The Bill proposes to enlarge the period of benefit as set forth in the Act of April last. That Act provided for 15 weeks of benefit out of a total of 30 weeks up to the end of October, in periods of five weeks with benefit and five without. The. first period has now passed, and the proposal of the present Bill is that there shall be 22 weeks of payment out of a total of 30. One five weeks gap has passed, and from the 20th of the present month, when it is proposed that the Bill shall operate, there would be a period of five weeks for payment, one week of gap, five of payment, one of gap and two of payment making a total of 22 weeks to cover the period referred to. The Amendment would in effect add 10 weeks where the Bill proposes to add seven to the period of payment in the original Act. One of the reasons suggested for the amending Bill was that the gap created such a state of chaos and uncertainty and unnecessary suffering, bringing about almost a dislocation of Poor Law administration in the country, and as a result of Poor Law authorities' deputations to the Prime Minister, and the fact, I assume, that the Minister of Labour has somewhat over-estimated his liabilities in connection with the current loan, it was felt that the Unemployment Fund might be released to ease the responsibilities

      1559
      and anxieties that have fallen on the boards of guardians throughout the country.
      That opens up quite a wide field of speculation and argument, and at the moment one is concerned about the remaining gap of one week as against the gap of five. The Minister of Labour estimated for a sum of £60,000,000 as his liabilities in carrying on under the present Act until July, 1923. He also estimated that, with his increased borrowing powers, he would be able to mortgage future possible contributions to the Unemployment Fund, by drawing up to the extent of £30,000,000 through the Treasury, to meet what was agreed to be the abnormal circumstances of the time. We now find that the average estimate of £1,500,000 to draw from the fund was an overestimate up to the moment, and if the tendency remains as at present it will be a considerable over-estimate. We, of course, are pleased with that, and should be glad if we felt that all claims for unemployment were being made without the extreme tightening of the regulations having for their purpose the exclusion of what the Minister of Labour has described as non-actually-necessitous cases.
      If you remove four out of the seven weeks' gap—the suggestion is that this will cost £2,750,000—then we feel that you should remove the remaining three weeks, beceause the difference in the cost, in comparison with the suffering and the chaos that would come with one week, will be greater than that of the five weeks, because, as a member of one of the Birmingham divisions has said, you will have in that one week, when there is no income, the sudden rush and the sudden demand for machinery of the Poor Law authorities, as against the rush on the Poor Law machineries during five weeks. The extra cost therefore cannot amount-to much more than £750,000. That would make £3,500,000, and to prevent this chaos and get rid of those sources of great irritation, that would be well worth while. I believe that the Minister of Labour will find himself well within his Estimates and able, I hope, during the next period, to enlarge those weeks of payment and reduce the gap next year between November and July, because we must not forget that, while it is stated that the uncovenanted period from April
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      this year until July next year is considered as one during which those who have used up their right to benefit by reason of stamps, or who have no provision made at all, would be provided for to some extent, as the present Acs, provides in the period from April this year until July of next year for 37 weeks of benefit out of a total of 65, you have seen during the first period under the present Act the grave difficulties which are so intense at the moment, but will become greater next year.
      The Minister of Labour might say, "That is all the more reason why I should conserve as much of my funds as I possibly can during the present period, and that might enable me to be a little more generous in the next period." My answer to that is that if you have in the midsummer, of all periods, an acknowledged breakdown of Poor Law administration, and, as has been said, over-drafts already standing against the Poor Law authorities in the necessitous areas amounting to something over £6,000,000, it is time that the State looked upon this matter more in the light of its moral obligations than in the light of mortgaging future contributions, borrowing money, and debiting the fund with that money for the purpose of easing the pressure and agitation due to the breakdown of Poor Law administration. It is an obligation that should stand on the debit side of the State account and not on the debit side of the contribution account of workman, employer and State combined, the workman and employer having contributed three-quarters and the State one-quarter.
      That is not a complete list of our complaints because of the existence of these gaps. While 1,400,000 persons may be regularly registering as wholly out of work at the employment exchanges, I suggest seriously that there are not more than 1,100,000 persons drawing benefit. Your regulations have become so stringent that you have eliminated the right to the uncovenanted benefit of large numbers of single persons. These people are still registered, without the hope of any unemployment benefit. Therefore, the obligation of the State at the moment, far from being the average figure for which the Minister of Labour was estimating, namely, 1,500,000, is more like 1,100,000, while the registration of persons unemployed might lead the public outside to believe that there are 1,400,000 in receipt

      1561
      of unemployment benefit. I do not say that that statement has been made by the Minister of Labour. But such statements appear in the Press, and with the denunciation that too often finds its way into the newspapers in agitation against the payment of unemployment benefit, lead the public to believe that 1,400,000 people are being paid unemployment benefit. I understand that the Minister of Labour agrees with me that a total of 1,100,000 would be much nearer the mark. It appears to me, therefore, that you are already inflicting much suffering.
      There is a further fact. While there are boards of guardians which have been sufficiently sensible of their responsibilities during the gaps to make payments that will tide people over a period of hardship, that cannot be said of all boards of guardians throughout the country. Within my own knowledge there are some which, during the period when there was no unemployment benefit being paid, refused to grant any additional or any Poor Law relief during those periods. It is during those periods that you find the queues now, not outside grocers' shops waiting for 2 ozs. of margarine, but outside the pawnshops. That trouble is mainly caused by the gap system. It is a brutal system. Whatever can be done ought to be done to end it. it must be remembered that there are people who have been unemployed since April, 1921. I can imagine that if the Benches of this House were full many Members would imagine that those were shameless, lazy persons to be unemployed so long. The fact is that many of these men, such as the ironstone miners, the blast furnacemen, and those in the heavy trades, where business has been completely shut down, cannot get into other industries, because other industries have unemployed on their lists and always have large crowds waiting for work.
      If you trace these periods through, it will be seen that when the stamps were exhausted there came a period of six weeks. That was a period for deep scrutiny. Then there was a further gap. That was two months without unemployment benefit at all at the end of 1921. Again, there was a gap in the early part of 1922. Then you came to your third special period. five weeks in and five weeks out. The most thrifty of all men,
      1562
      who, after struggle and sacrifice and thrift, had saved £50 or £60, which is a big sum for a workman to be in a position to save, would then have found the money gone, together with their priceless treasures and heirlooms, for there are heirlooms in a workman's home as well as in the grandest castle. It means that the Government up to the moment have not accepted their responsibility as they ought to have done. We have not compelled the State to come to the rescue of those who are becoming gradually but surely submerged in this great struggle for an existence. The State's moral obligations ought to be fulfilled.
      The State ought not to travel on the? lines of ordinary business insurance concerns. I suppose the argument might be adduced by the business man that an insurance scheme must always provide for probationary periods, must always be sound on the credit side, and must always be able to meet its obligations. That may be very well in preparing for sickness or superannuation, or old age, or even death. But this is a question of insurance against starvation. It is something more than the average business law that ought to be brought into play. If you continue even the gap of one week, you will have a rush to the guardians, you will have applications turned down by the guardians, who will say that the State has met the case of the unemployed for four out of the five weeks. What is going to happen? Does the Labour Minister imagine for a moment that he can weigh in the balance the possible permanent injury to the child life, to the womanhood and manhood of this country, with the expenditure of an additional £2,000,000 or £3,000,000 in giving immediate relief and stopping the degeneracy which is now setting in far too rapidly.
      We have instances of it at the moment. Your housing problem will soon solve itself if you continue to drive two families to live in one room, with a curtain strung across the centre to retain the sense of decency. It is not because the people desire these conditions that things are in this state. It is not because they want it, but because they are being driven into this environment. Otherwise, they are as great an asset as a nation ever had. What is to be the result of that environment and of the degeneracy that it causes? People will get down to such

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      a level that they will lose all hope; they will lose the proper outlook on life, and there is the danger point. All the glowing talk about this heroic land and this free nation will prove mere phrase making. It will be an empty mockery. It is an empty mockery at the moment, with the treatment which is being meted out to these people. I say the State should deal with this matter, even though it may be necessary for the State to ask for further borrowing powers. I am not an expert like the Labour Minister, but I assert that without any alteration other than this Bill provides, you will never exhaust your borrowing powers at the commencement of July next year. The Labour Minister may say, "So much the better if we do not." Supposing you have not exhausted all the machinery and all the supplies which Parliament has placed at your disposal, will there be any satisfaction in looking back over the period, and saying, "We have not used up all that which we might have used, and we have been able to save so much, at the expense of somebody who has gone prematurely either to the asylum or the grave." That is the real picture, it is the true picture, and it is not an overdrawn picture, as can be seen by reference to every industrial city and every village and hamlet in the country where industry operates. You can see it every day in the week.
      I do not think it is right that you should even debit £30,000,000 of your borrowing powers against the very people you are borrowing for, and whom you are relieving, in the hope that when they get work they will be able to pay that back to the State. There is nothing generous in saying, "Well, old chap, I will help you a bit, but you cannot work without coming under my power, and as soon as you start you will be compelled to pay everything I have advanced to you." There is no great generosity in that. It is not as though I asked one of my hon. Friends here to lend me a shilling. Forgetting all about it I may not come within his purview any more, but the unemployed persons on whose behalf the State proposes to advance up to £30,000,000, if ever they work even one day, from that first day's money must come their share of that which the State has borrowed to help them in this difficulty.
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      The Cabinet have shelved their responsibility. The Cabinet have said, "The pressure on the boards of guardians is too great. The distress is abnormal. We look with fear to the next few months, but we are not going to subsidise or help the boards of guardians." Then they look round and they fix on the Labour Minister's Department and say, "What can you do to meet this? "Instead of the Cabinet meeting its responsibilities and obligations to the boards of guardians it has put the boards of guardians' obligations on to the Unemployed Workers' Fund. This only makes the deficiency period much longer, and makes the struggle harder for those who are in work to-day, and who are most willingly and generously paying their 9d. per week to the unemployed fund. That is a great spirit. It is a spirit worthy of something more than mere lip service. It is worthy of some real help. It is deserving of the Cabinet saying: "If it will take £4,000,000 do away with these gaps during this temporary period, and then the £4,000,000 will come from the nation to help you. We will shoulder this extra responsibility, because we feel it is ours. As a third partner, in future we are going to have at least one-third of the responsibility, and not shirk our responsibility by only meeting it to the extent of 25 per cent of the total."
      Mr. R. YOUNG: I wish, without reiterating the reasons stated by the Mover of the Amendment, to support the claim which we are putting before the Minister of Labour. We sincerely hope before the discussion ends to-night the right hon. Gentleman will see his way to accept the Amendment, thereby bridging over a period which is causing a great deal of anxiety and distress among the unemployed. The right hon. Gentleman told us yesterday that this Bill was brought in because of the very large amount of distress in the country at the present time. I should like to add one reason why we should do away with these waiting weeks and par the full 25 weeks' benefit. As the right hon. Gentleman is aware, there is no assistance to a very large number of unemployed—I may say to the majority—from sources other than the unemployed benefit;. The trade unions which used to augment, in some manner, the unemployed benefit are not in a position to do so now. Their funds have been exhausted almost entirely as a

      1565
      result of the long spate of unemployment through which the country has been passing, and if we retain these waiting weeks or these gaps, it will mean that those who are unemployed will have no assistance whatever for the purposes of livelihood during those weeks.
      As was pointed out by my hon. Friend yesterday, they will not be in a position during the weeks of their unemployment benefit to lay aside anything for the gap week. As a result of that much misery, distress, and anxiety will undoubtedly happen. The right hon. Gentleman knows very well what I am saying about the trade unions being able to assist at the present moment is true. In my own organisation 30 per cent. or thereabouts are at the present time signing unemployment forms and not receiving a penny. There is nothing coming from the engineers. There is nothing coming from other skilled trades as unemployment benefit. They will get nothing from their unemployment fund. As a result the distress and anxiety will be considerable. Why should the Government take up this attitude and still cling to these gap weeks when the only result will be that there will only be a transference from the unemployment fund to relief granted by the boards of guardians? He must recognise that it would be much to his advantage, and also to the advantage of the country as a whole, if that transference could be avoided, because he is not at all going to save anything in any direction for the State if the necessity for that transference should take place. To refrain from that transference would mean a considerable saving in at least administration expenses in one direction at least, that of the local authorities.
      There is a stronger reason why these gap weeks should be taken up. The industrial efficiency of those who are unemployed has been considerably lessened as a result of their experiences. I have only recently been in Glasgow. I had no real knowledge of the extent of the misery that existed in large industrial centres until I made inquiries in that great shipbuilding, engineering, and industrial town. I came across a very large number of men, many of whom had been out of work 18 months, others 13 months, and even to-day some who are working are only working one week in five. No one can expect men under circumstances
      1566
      such as these to be in a position adequately to provide for their families. Therefore, I insist that the right hon. Gentleman will be doing the right thing if he, in spite of the extra expense incurred, can see his way to do what he can by accepting the Amendment. In putting forward this Amendment we are not unmindful of the difficulties of the right hon. Gentleman, but, after all, we are not so hard pressed in this country that we are unable to provide, surely, for these three weeks for which we are asking. Why have the misery which will be entailed by the operation of the terms of this Bill? Why go on in such a way as to make the people realise that, however hard pressed they may be to-day, they are going to be much harder pressed to-morrow for the necessaries of life. Not only is there the anxiety to the man in the position of being unemployed, but there is the anxiety to his wife and children as well, who are suffering deterioration, the result of all of which will be bad for the country and the nation as a whole. Add to this what I have called industrial inefficiency to the community when the turn in the trade of the country takes place—because, after all, it is the duty of the nation to take every possible step it can devise to obviate distress, so that on the return of industrial activity those who obtain reemployment may be in a condition of physical fitness to do their very best in their daily occupation. That cannot be done unless we make full and ample provision, as far as in our power lies, for those who are out of employment through no fault of their own.
      In spite of all we hear from certain sections of this House concerning those who are unemployed, we must remember that the vast majority of the unemployed, with a few exceptions here and there, are out of employment through no fault of their own. They cannot find work. Not being in a position to find work, surely it is a duty of the State under these exceptional circumstances to do what it can by way of alleviation. Therefore I appeal to the right hon. Gentleman, the Minister of Labour, who has been able as a result of the money that has been placed at his disposal, having taken in so much of the waiting period, to take in also the fifth week, so that everyone may realise they will not be thrown out

      1567
      of the unemployment benefit to-day and into the hands of the board of guardians to-morrow and in that way forced to take up a position which to them is distasteful. The right hon. Gentleman said some time ago, on the introduction of this Bill, that he realised the working classes did not readily go before the Poor Law authorities. Unfortunately, seeing they have had to do so in large numbers, the fear of the degradation which it was supposed was incurred has been largely removed. I ask the Government so to act that people will not, having got into the habit of going to the board of guardians, be satisfied to continue without that feeling of fear—and I was going to say disgrace—which at one time obtained among the working people of this country. I do sincerely trust, therefore, that the Minister of Labour will not be adamant or harden his heart against this Amendment, but will do his best, and that the Government may authorise him to accept the Amendment before the Committee.
      Mr. CLYNES: In the ordinary course I might have reserved any observations I may have to make until my right hon. Friend had addressed the Committee. In case, however, he has not absolutely made up his mind as to the course to take on this Amendment, I take the opportunity of trying to reinforce what has been so cogently said by my hon. Friends who have spoken. We know full well that the right hon. Gentleman, listening to these speeches, is not less human than we who make them. Therefore I reach the conclusion that if it is possible for him, within the resources at his disposal and in keeping with such means as he may have to use, can do what we ask, he will do it. Acting upon that assumption, I venture to submit two or three reasons to show it is essential that this step, claimed in the Amendment, should be taken, and how it can be done. I understand the right hon. Gentleman takes the view that we are considering now the subject of insurance, and that in all matters of insurance there is to some extent such a condition as this gap of which we complain. That is to say there is an addition in the nature of an interval during which no benefit is paid at all. If we had to consider the matter merely as a business proposition of ordinary insurance, our
      1568
      case would have gone and the point of view of the right hon. Gentleman would hold good.
      This, however, is not a case of ordinary insurance at all, but it, is an extraordinary step taken by the Government to meet an extraordinary situation, so-extraordinary that in the past few weeks accredited representatives of the great municipalities have approached the Prime Minister and explained to him their state of desperation. They have become involved financially because they have to carry municipal burdens which do not ordinarily fall to local authorities and guardians in this country. The guardians have long had the duty of relieving ordinary conditions of distress, but here we are now suffering certain after-War effects which we believe are attributable to the peace settlement, and those conditions haw produced such an unusual state of prolonged unemployment that quite a new problem has been forced upon the country. It is a problem not for the boards of guardians and the local authorities, but it is the problem of the Government and the nation. So fully has that been recognised that, with the sanction of the Government and the approval of the Prime Minister, we are proceeding to amend the present Act.
      That Act deprives certain claimants of their benefits for a period of five weeks. It is now proposed to amend that, and reduce it to one week, and we put to the right hon. Gentleman this fact, which I challenge him even to contradict: The people who are getting this benefit cannot, during the period they are receiving it, do more than keep body and soul together with what they are getting. There is no means of saving out of their weekly relief, and they must eke out a miserable existence with what they receive. I agree with what has been said that to treat the recipients in this way, and to give them the money for four weeks and then tell them in effect to starve during the fifth week, is a mockery of which the right hon. Gentleman might well be ashamed. Clearly the household resources are exhausted, and they have not only exhausted their own resources, but those of their friends at a time when their friends are less able to assist them than formerly. The friends of the workmen who are now working are in receipt of much lower wages, and they have not got

      1569
      that margin for helping others which they had 12 months ago. Everything points to the fact that the distressed unemployed are sinking deeper and deeper into difficulties out of which the right hon. Gentleman might very well assist them.
      9.0 P.M.
      Let me put forward the view that there is some trade improvement. We are encouraged in this by daily signs and propects, and the Minister of Labour a few days ago on the Second Reading of this Bill gave us figures showing that the total number of unemployed was gradually being reduced. If such signs are to be taken as any real improvement I think we are entitled to take them as an argument. I assume an improvement in trade and a reduced number of claimants on the fund, and I think that should enable the right hon. Gentleman all the more to continue the full benefits to a lesser number of workers who are driven to seek this support. Certainly in the discussion of yesterday my right hon. Friend did not adduce any arguments at all in support of this Bill. I cannot recall on this particular point any justification or any argument used by the Minister of Labour which in any way supports the conclusion to which the Government has been driven. The gap to some extent was intended as a sort of moral corrective in the case of many people. It was intended to put them in the position of knowing that they would not idly remain on the funds certain that they would always receive their money whether they sought for employment or not. and it was intended to act as a spur. I do not argue against that, but it is a fact that in the last few months the general rules and regulations and administrative forms of this law have been made much more stringent, and have tended to weed out and exclude any section which could be described as being the least deserving and the least necessitous cases. And so we are driven to this conclusion, that only those who are really in need, and whose circumstances really prove their absolute necessity, have any chance of receiving benefit of any kind under this Act. If that is so what justification can there be for telling the most necessitous of these people that there is one week in which they shall get no benefit, no matter how fully or how completely exhausted their resources may be.
      1570
      The right hon. Gentleman was able to show the House yesterday on the Second Reading that this amending Bill was built neither upon further borrowings nor upon increased contributions, and I congratulate him upon that position. Contributors are not to be asked to pay more, and no further State obligation is to be assumed in the way of finding larger sums of money beyond the exercise of the borrowing powers which the Minister of Labour has at present. The right hon Gentleman therefore is able to fall back upon a device which may be termed the postponement of the state of insolvency of his scheme. That is the device by which the right hon. Gentleman is arranging to reduce the gap from five weeks to one week. No doubt that device is sufficient for the purpose of this proposal, but what reason can there be for fixing the postponement at some precise point where the loss of one week's benefit will have to be sacrificed. Our claim would mean no more than a slight further postponement of the period to enable my right hon. Friend to completely and fully meet the demands of this Amendment. We may reasonably expect a period of good trade, but even when the period of trade boom was over a comparatively short spell would make good and completely cover such additional financial outlay as might be involved in the course which we are suggesting that the right hon. Gentleman should take. I hope that what we are asking for can be done without borrowing and without increased contributions or involving the country or the Government in additional burdens of any kind. The Amendment if made would merely mean drawing rather slightly upon future anticipated reserves which will come into the insurance fund when a state of improved trade returns to us. I hope therefore our appeal will not fall entirely on deaf ears, for it is certain that the exhausted state of the considerable number of unemployed will mean that if the Government does not meet the demand of this Amendment the local authorities will have to dip into the ratepayers' pockets to find what should be found from this scheme of National Unemployment Insurance. In short, resistance to this Amendment will not only mean no saving to anybody, but possibly it will mean increased embarrassment for the local authorities and a feeling of stronger resentment than has yet existed. The

      1571
      right hon. Gentleman must feel that having gone as far as he has tried to do to breach the gap he might well make this little further advance we are trying to carry him. Let him brace himself to do that. It can be done without cost. It can be done by adopting more fully and completely than that he has done the device which is behind the main body of the Bill.
      Mr. T. THOMSON: I am sure the Minister will find it very difficult to resist the strong human appeal made in the three previous speeches, which, I am sure, will find an echo in every part of the House. The right hon. Gentleman said yesterday that he brought in this Measure in response to a very large deputation from all sections in the House which waited upon the Prime Minister and himself a few weeks ago. I want to put this point to him. If this is his answer to the deputation from the necessitous areas, every argument in favour of abolishing the four weeks is equally good for abolishing the five weeks. He is not dealing with this as an insurance scheme. The Colonial Secretary, the other day, told us that the Bill which was going to be introduced was the answer of the Government to the appeal made by local authorities to the Prime Minister on this question of the necessitous areas. If that is the ground for this Bill, I submit to the Minister that every reason which holds good for doing away with the four weeks equally holds good for doing away with the other week. What is going to be gained by retaining this fifth week? Has the right hon. Gentleman considered the dislocation which will be caused in every local authority, in every board of guardians, and in every Employment Exchange because of this one-week gap? Is it really worth it? The right hon. Member for Platting (Mr. Clynes) stated that to resist this will really cost the public a great deal more than the £750,000 involved in this Amendment, because it will mean that the unemployed in that fifth week will have to go to the guardians for relief. The men cannot starve. Their families cannot be allowed to starve. They have exhausted their private resources. The engineers' union and the other unions have exhausted their benefit funds, and, therefore, these people in this fifth week will go to the guardians, and
      1572
      instead of having the 15s. unemployment benefit, they will get from the guardians 20s., 25s., or 30s. It will cost public funds—and, whether it comes out of the Unemployment Insurance Fund, or whether it is paid by the guardians, it is public money just the same—it will cost public funds, not three quarters of a million, as suggested by tins Amendment, but twice that sum if the right hon. Gentleman refuses to accept it.
      I would remind the Minister, in view of the statement that this scheme is put forward as an answer to the local authorities, that in certain areas unemployment is still increasing. We were told yesterday by the Minister that there were signs throughout the country that it is decreasing, but there are areas, particularly in the iron and steel districts, where unemployment has reached over 34 per cent. In those districts it is increasing, and it is only right, in order to rqualise matters, that this fund should be drawn upon in order to help these most necessitous districts. I appeal to the right hon. Gentleman looking at it from the point of view of public policy. This being the answer which the Government is making to the appeals of the hardly-hit necessitous areas, he should give way on this point. He should do the thing properly and make a complete job of it. The Minister said yesterday he was very anxious that the men should retain their self-respect. Why not help them to do so by enabling them to still keep away from the guardians? I put it to the right hon. Gentleman, it is not worth the dislocation which will be occasioned by the proposal he suggests. He is putting a tremendous cost of administration on the guardians, and he is adding to the cost of the Unemployment Exchanges by retaining this gap. This Amendment would meet the case adequately and much better than he is doing. If he will give way on this particular point, and if he will look at the matte? from a national point of view, he will realise that the Government by accenting the Amendment will really help the unemployed to tide over these hard times.
      The MINISTER of LABOUR (Dr. Macnamara): It is impossible not to pay a tribute to the earnestness and fervour of the four speeches made in appeal to me in support of this Amendment, and if I seem to be ungracious in the substance

      1573
      of the reply which I have to make—not, I hope, in form—it is because I have no alternative. The hon. Member for West Nottingham (Mr. Hayday), in moving the Amendment, made, as he always does, a vary powerful speech, but I venture to think it suffered from the fact that he had, unintentionally, of course, overlooked what has been done during this long and depressing period of unemployment. A stranger from another country, listening to my hon. Friend, would never have supposed, for instance, that since the slump began in 1920, down to April of this year, we have managed to spend at east £80,000,000 on unemployment benefit, and much of that has gone to people with no covenanted right— through no fault of their own—to it, while from April to July, 1923, we have made provision for another £60,000,000 to be spent.
      Mr. HAYDAY: £20,000,000 of the £80,000,000 was from reserves built up under the Act of 1911.
      Dr. MACNAMARA: That may be so, but since then, let me repeat, £60,000,000 more has been provided between April and July, 1923, and a good one-half of that will be paid to those who would not be entitled under the covenant to insurance money. This is no fault of theirs. My hon. Friend might have pointed out to me that I ought to have reminded the Committee, as I have often done before, that a considerable proportion of that comes from the working people themselves;. Apart, however, from that £140,000,000 which has been and is to be provided, at least £40,000,000 has been put up by local authorities and the State for relief works of various kinds, and, further, during the period from the slump of December, 1920, down to April, the guardians must have put up another £50,000,000 in relief of unemployment. No one, if I may say so, listening to my hon. Friend's speech, would have thought that we had done inconceivably more than has ever been done before in this country or in any other country. I listened with great respect to the speech of my right hon. Friend the Member for Platting (Mr. Clynes), and I think I am entitled to make this comment: When we debated the Second Reading of the Labour party's Bill on the 12th May, my right hon. Friend, speaking on behalf of the Labour party, rather astonished me
      1574
      by speaking of financial assistance to the unemployed without some work in return as a deliberate waste of public money. In reply to my recital on that occasion of the amount of benefit we had been able to provide, my right hon. Friend used these words:
      "A parade of wastefulness of which any Government should be ashamed."—[OFFICIAL REPORT, 12th May, 1922; col. 2607, Vol. 153.]
      Again, yesterday I said that, by reducing the gap to one week, I was increasing the number of weeks' benefit between April and October, as my right hon. Friend has told us already, from 15 to 22, and my right hon. Friend again took that line. "Indeed," said he, "the whole system of relief as it has been followed is wasteful." The problem is much too serious to spend any time upon a mere debating point, and I do not want to do it, but I am a little perplexed that on Wednesday I am told that this is all wrong, that it is waste, and then, on Thursday, my right hon. Friend comes and says, "Give us three weeks more."
      Mr. R. RICHARDSON: Because you will not find work.
      Dr. MACNAMARA: I am dealing with my right hon. Friend's remarks, which leave me a little perplexed.
      Mr. CLYNES: May I make myself clear? What I said, as correctly quoted by my right hon. Friend, was said in support of my argument that what we should find, at such a time as this, is not mere payment for nothing, but work for wages.
      Dr. MACNAMARA: No one knows better than my right hon. Friend that there are large bodies of people—all the women, all the clerks, all the artificers who perform the more delicate parts of modern industrial operations—for whom you cannot find relief work. I know that my right hon. Friend will say in reply, "Find work for all the rest in national factories." I am well aware of that.
      The CHAIRMAN: We are getting very far from the subject of the Bill.
      Dr. MACNAMARA: I am sorry, Mr. Hope. Under the Insurance Act of last April, we provided for 37 weeks un-covenanted benefit to carry us to the end of June or the beginning of July, 1923,

      1575
      carrying on the grant to women and children during that period. Of those 37 weeks, I reserved 22 for the winter and early spring months that are before us, leaving 15 weeks out of the period of 30 weeks from April to the end of October in this year. In order to spread that out to the best advantage, I laid down, and Parliament accepted, in the Act of last April, five weeks' benefit, five weeks' gap, five weeks' benefit, five weeks' gap, five weeks' benefit, and five weeks' gap, covering the 30 weeks. Already the first five weeks' benefit has been drawn, and the first five weeks' gap covered; and we are now drawing to the close—indeed, this day week is the closing date—of the second period of five weeks' benefit. As the Committee knows, directly the first five weeks' gap was entered upon, we received representations from the Poor Law authorities to the effect that the five weeks' gap threw a burden upon them more heavy than they could bear. The House, therefore, gave us yesterday the Second Reading of this Bill, which reduces the gaps in the period between the 20th July and the end of October from five weeks to one week in each case, and, as I said yesterday, the programme as from next Thursday, if this Bill goes through, will be as follows: One week gap, five weeks' benefit, one week gap, five weeks' benefit, one week gap, two weeks' benefit. The Bill raises the total provision of uncovenanted benefit, between April and October, from 15 weeks to 22 weeks. This Amendment would make that 25—it would strike out the three separate single weeks, and would, in fact, provide continuous payment of benefit from this day week till the end of October.
      I have been told by, I think, two of my hon. Friends, to forget all about the fact that I am dealing with an Insurance Act, but that is what I am dealing with. It is an Insurance Act. I can understand that the very heavy burden which I have put on the emergency side, covering a volume of work at least as great as the permanent side, might make me and my hon Friends forget that sometimes, but nevertheless it is an Insurance Act From the time of the original Insurance Act of 1911, the scheme of providing a number of weeks of benefit less than the calendar period to be covered, has been the established principle and rule. From 1911 down
      1576
      to 1921, the benefit was 15 weeks and the gap was 37 weeks. I have to deal with this Act, which is an Insurance Act, and I am trying to make the utmost that I can of it. As I have said, from 1911 to 1921 the total benefit—covenanted in that case, of course—was 15 weeks, with 37 weeks' gap, if continuously drawn. From March, 1921, to October. 1921, when I introduced what I call the emergency side, paying benefit in advance of contributions, I made provision for 22 weeks' benefit to cover 35 calendar weeks, so that there was a gap of 13 weeks; and, as a fact, a very great many people were not receiving benefit under this Insurance Act for the period of 13 weeks between last August and the and of last October. From November, 1921, to July, 1922, had the provision continued which we made originally, there would have been 22 weeks' benefit to cover 35 weeks' calendar weeks, and that, again. would have meant 13 weeks of gap. When we brought in the Act of April last. there was also a nine days' gap before we started the new provisions of that Act.
      Therefore, from the very beginning, a break of non-continuity, whether as a moral corrective or not— into which I do not enter—has been a guiding principle in these Insurance Acts, and in the early days there were much longer gaps, as I have shortly tried to show. I now turn to the trade union practice in regard to insurance schemes, and many of the unions, of course, have such schemes. I think it is the universal practice amongst hon. Members opposite in their organisations not to afford continuous benefit. They have breaks in their schemes.
      Mr. YOUNG: No.
      Dr. MACNAMARA: I know the case of the Amalgamated Engineering Union. It calls upon a man to make ten years' payments. I know the times are difficult and the circumstances are abnormal, but when I am interrupted on the point of the Amalgamated Engineering Union I am entitled to point out that here we are paying benefit before there has been any contribution at all.
      Mr. YOUNG: No. These people have been insured for ten years.
      Dr. MACNAMARA: I know, but the Amalgamated Engineering Union policy is that if you have made ten years' payment—
      Mr. YOUNG: No. The Amalgamated Engineering Union policy is ten years' membership and not ten years' payment. A man may be entitled to periodical benefit during the whole of the ten years.
      Dr. MACNAMARA: The hon. Member knows the Amalgamated Engineering Union bettor than I do, but my information is that the Amalgamated Engineering Union rules provide that a member of 10 years' standing is the only member who can draw continuous benefit as long as he is unemployed. That is the point I am making. The boilermakers' scheme pays for 11 weeks in the year, and the Workers' Union pays for 12 weeks.
      Mr. TILLETT: They cannot make provision for more.
      Dr. MACNAMARA: It has never been done before, and I have brought things to a fine point. Here are men who come into benefit before paying any contribution. I hope and believe they will when good times come.
      Mr. R. RICHARDSON: In the case of the Durham miners, a man who has been a member for six weeks can draw unemployment benefit, if necessary, for two years.
      Dr. MACNAMARA: Again, on the uncovenanted side, benefit is paid before there is any contribution at all. So much for the practice, both in regard to the Government scheme and in trade union schemes with which I am familiar. There remains the financial question, which cannot be overlooked. After all, the right hon. Gentleman says, "All you are doing is postponing the date of solvency." That is true. I think it is fair, with the heavy contributions, especially on people on short time, that I should be in a position to reduce payments as soon as I can. I have come to the conclusion that it would be wrong to introduce a system now of continuous benefit without a break, even if I were in a position to do so. Look at the finance. I have been able to increase the benefit in this Bill from April to October, from 15 weeks to 22, because I have not yet borrowed as much as I expected. I expected to be in debt £19,000,000. I am in debt, in fact,
      1578
      £15,000,000. I have not got the £4,000,000 difference in hand. It is not that I have something more than I expected, it is that I have borrowed less. I have arranged to utilise £2,750,000 of that and thereby postpone the date of solvency of my fund pro tan to by wiping out four weeks, and in making the provision set forth in this Bill I am at once merely drawing upon three of the four millions which I thought I should otherwise have borrowed by this time.
      Mr. SWAN: Is that balance due to the fact that men who expected to have this payment have been deliberately turned down without any reason by the various committees?
      Dr. MACNAMARA: I said yesterday it is mainly due to a rather better state of employment than we had anticipated. But it is partly due to the fact that we have looked rather closely at the claims of boys and girls and young single men and women, because we wanted to conserve the fund as much as we could in view of the serious disabilities of men with women and children dependent upon them. In making the provision I have done, in bringing the five weeks' gap down to one, I have very little left if things go wrong. Therefore, much as I regret the fact, apart altogether from the merits of the proposition, apart from the merits of a continuous, unbroken period of benefit as against a gap, which has been the universal practice in all insurance Acts in the past, whether Government or trade union, I cannot undertake, on the finance of my scheme as it now discloses itself to me, to accept the Amendment which has been so powerfully pressed upon me.
      Mr. J. H. THOMAS: This is one of the occasions where one would regret that every Member of the House is not present to hear the case presented. Hon. Members opposite who have listened to the whole Debate would be forced to admit that a stronger case was never presented, and the Minister has not only not met the case, but has confused the whole issue as presented in the Amendment. He uses as an argument against it trade union practices. He knows perfectly well that we are dealing, not with a practice, but with an emergency. He himself justified the Bill that we are discussing on the ground of emergency

      1579
      absolutely, and if that be true, is it fair to attempt to justify the Government's action, or even excuse themselves, on something that is a regular practice as against an emergency? But let us compare the Government practice with their action a few weeks ago on National Health Insurance, because on the National Health Insurance Bill the Government did precisely what we are asking you to do at this moment. The Geddes Committee decided that certain economies should be effected by an additional payment of one penny per week. The Minister of Health brought in a Bill founded upon the Geddes Report, and a few days after he came along and said, "We not only withdraw the Bill but we are satisfied that we can give effect to the recommendations of the Geddes Committee without an additional copper contribution from the members or an additional charge upon the State." Then I drew his attention to the fact that the Geddes Committee had had a report from one of the financial experts, who pointed out that this could not be done except by a raid on the members' surplus. The Minister promptly said, "we can meet the entire case. It will cost no one any money. All we are doing is that the funds will be used in this way, but the period of solvency will be deferred." That is exactly what we ask you to do in this, the only difference being that we ask you to do it for a much shorter period and an amount nine times less than the amount in the case of National Health Insurance. Seeing that the Government found it necessary and did it, on the ground of Health Insurance, will anyone with any knowledge of unemployment do otherwise than recognise that at least there is not only a precedent for it, but an absolute obligation on the part of the Government to do the same thing now.
      The Minister of Labour said that if a stranger had been listening to this Debate, knowing nothing of the conditions of this country, but simply listening to the statement of my hon. Friend, he would be tempted to assume that the Government had done nothing. Supposing that same stranger, having heard my hon. Friend's statement, and having heard the right hon. Gentleman's reply, said to himself, "I will go down to some of the industrial centres and see the classes of
      1580
      people for whom this appeal is being made." When he got there he would discover that large numbers of them were men who only a few years ago were fighting for us, and were prepared to give their lives for their country. He would find them to-day with their homes being broken up, with themselves and their children suffering, and having reached the stage of desperation. We remember the old cry that our working-class people hated charity—a statement that was made from thousands of platforms by politicians —and that there was in this country an inherent dislike of charity amongst the people of this country. That was why the Poor Law system was so abhorred; but the economic condition of these people is such to-day that all those feelings have been broken down. That same stranger, when he had seen these people and their condition, would conic away saying that he marvelled at their patience and endurance.
      If it be true, as I have already indicated, that our Amendment will not put any charge on the State, and that at the most my right hon. Friend says that it means compelling those who are now paying their unemployment insurance to pay a higher contribution for a little longer period, what is there against the Amendment? It may not even turn out in that way, because if there is a trade revival the fewer people will you have in receipt of unemployment benefit. If you have fewer people to provide for than you budgeted for, the finances must benefit proportionately. Supposing both claims are wrong, and at the worst you are reduced to the position of saying to these people: "Oh, no! I cannot accept the Labour's party's Amendment. I was compelled to resist the Labour party's Amendment, because I was satisfied that you would refuse to pay a higher contribution—
      Dr. MACNAMARA Dr. MACNAMARA indicated dissent.
      Mr. THOMAS: That is the logical sequence of the right hon. Gentleman's argument. My right hon. Friend said that, so far as the Government is concerned, he must safeguard the interests of those people and see that they are not compelled to pay for a longer period a higher contribution than they otherwise would have to pay if this Amendment were not carried. The only logical conclusion from that argument is to say that

      1581
      he is resisting this Amendment because he does not believe that the workers are prepared to pay the higher contribution. I say that they are prepared to pay it.
      Dr. MACNAMARA: I agree.
      Mr. THOMAS: If the right hon. Gentleman agrees, what other argument is left for resisting this Amendment?
      Dr. MACNAMARA: I have to do all that I can. for these people, and I have wiped out the five weeks' gap and left one week. By this proceeding, I have pretty nearly absorbed £3,000,000 of the £4,000,000 which I have not yet borrowed. I do not know what will happen, and I have to look at several things at one time. What my right hon. Friend is now looking at is only one of them.
      Mr. THOMAS: I am dealing with them as the right hon. Gentleman outlined them All that you are compelled to do in accepting this Amendment is to defer the period of solvency for the fund. If certain circumstances arise, there is the necessity of the insured employed persons having to pay a higher contribution for a longer period. I answer that argument by saying that they will gladly pay. They have not shown themselves unmindful of their responsibilities, and they would be the first to say, "Yes. We will do in this, as we have always been ready to do, and that is, to help those not so fortunate as ourselves." Therefore, on the question of finance, there is no argument against the Amendment.
      How are you going to meet the position of the local authorities? It is admitted by this Bill that this gap of five weeks has not only been demoralising but disastrous to local finance. The local authorities have said to the Government, "We cannot continue," and the Government have said, "Very well, we will relieve you to the extent of four-fifths of your deficit. We relieve you, not by ourselves meeting the obligation, not by ourselves paying more money, not by any contribution from the Imperial Exchequer, but by using the prospective accumulation of your own money."
      Dr. MACNAMARA: And the State's.
      Mr. THOMAS: The joint contribution. You put the local authorities in this difficulty in regard to the one week gap, that they have to prepare special machinery for
      1582
      the one week and instead of saving money it is absolutely going to cost them very much more. I would say to the right hon. Gentleman," Is it not very nearly time you did the big thing? You have admitted the flaw in your case; you have admitted the difficulty. You know perfectly well the demoralising conditions now existing. You know that meetings are being held by local authorities; called by the town councils and city authorities in all parts of the country, to deal with this problem. Here is an opportunity of helping them. It will not cost you any money to meet the real hardship. "I hope the right hon. Gentleman, having regard to all the circumstances, will be able to accept the Amendment.
      Mr. C. WHITE: The technical and financial reasons put forward by the Minister of Labour why this benefit should not be paid are altogether beside the point. Here you are dealing with people on the verge of starvation, through no fault of their own, yet technical and financial reasons are put forward why they should continue to starve. In these days, that argument will not hold water. I heartily support the Amendment. I do not represent, in this House, an industrial district, but I know the terrible effect of this waiting period in the towns and villages of my constituency. Unemployment is not confined to the large towns. I represent 124 towns and villages, covering 100 square miles, in West Derbyshire. There is acute distress in every one of those places. It has been rendered much more acute by the waiting period which these people have to put up with during the last few months.
      Some of the people are living in a state of semi-starvation, and you find, perhaps, in the small villages a good deal more pride than in the large industrial districts. They have not been in the habit of applying for parish relief and are not inured to it, as, by force of circumstances, the people in the industrial districts have become inured to it. Too proud, even now, to ask for relief, the weeks they have had to wait have brought untold misery into their lives. A point, to which reference has not been made to-night is that parish relief, when asked for in rural districts, is not always forthcoming. The boards of guardians meet sometimes once a fortnight, and I know some boards which only meet once a month. What

      1583
      happens? These people, when they have exhausted unemployment benefit and have this gap between, go to the relieving officer. They often go many miles before they can see him. The relieving officer is not empowered to give them any money until the sanction of the board has been obtained. As a consequence, they only get an order for a few groceries and some bread, some of the absolute necessaries needed to keep life in the bodies of these poor people. That is all he can do. They get this order for a few groceries, but they are denied all the little comforts of life except the poor helping the poor.
      I live among them, and I am proud to do so. I know exactly their wants and sufferings. The sufferings of the children in the small towns and villages that I represent are pitiable to see. The self-denial of the parents in these difficult times is an inspiration to those who live among them, and who know their daily wants and sorrows. I have been sorry to-night to see the empty Benches while this matter has been so well put before the Committee by hon. Members here. There should be no economy at the expense of the health of the women and children of this country. We seem to forget that our children are our greatest national asset, and I sincerely hope, even now, that something may be done. It is a national duty; we must not neglect it, or we shall live to rue the consequences.
      Mr. JOHNSTONE: I was never reconciled to the five weeks' gap in the original proposals of the Government, and I never could understand it. Now that the Minister of Labour has been told of the evil effects of that gap on the local authorities, and of the complaints made by them, I think he might make a virtue of necessity and do away with it. As has been pointed out in this discussion, it is not worth while making two bites at the cherry. Having given way on the five weeks, I think the right hon. Gentleman might have given way altogether, and removed this deplorable gap. A man receives his unemployment benefit, and then there comes this gap of one week. He cannot continue without some help, and he is obliged to go to the Poor Law authority to get assistance during that week. While I agree with the view that reluctance to approach the Poor Law authorities has largely broken down,
      1584
      I know that in my own country, in Scotland, respectable working people would almost face death itself rather than go to the parish council for Poor Law relief. It stamps them with the pauper taint, a thing which respectable working people resist to the last ditch. Here they are compelled, in these terrible conditions, for the sake of one week, to go to the Poor Law authority and receive help. I cannot, for the life of me, conceive why the Minister of Labour should not have wiped out that one week altogether. I hope he will do so. It is a faint hope, because I find in this House that when a Minister makes a declaration to begin with that he is not going to give way, it is hopeless to convince him. I wish the right hon. Gentleman had kept his mind open until a later stage of the discussion, and had seen his way to have accepted the Amendment. That would have given infinite satisfaction; the right hon. Gentleman would not have imperilled his scheme, and he would have met the objections that many people conscientiously hold against seeking Poor Law relief. He would have put those in receipt of unemployment benefit in a more dignified position, by receiving support solely from that source instead of having to go to the Poor Law guardians or the parish councils in Scotland. I trust that even at this late stage the right hon. Gentleman may reconsider his decision, and accept the Amendment.
      Sir GODFREY COLLINS: I hope the right hon. Gentleman may reconsider his decision. He advanced the financial objection to this Amendment, but is he certain, or has he any surety, that there will be any real economy of public funds? The hon. Member for East Renfrew (Mr. Johnstone) has cited the case of Scotland. A few weeks ago a parish council in my own constituency saw roe on this subject. They pointed out that through the present Act they were paying large sums of money every week in the employment of inspectors, clerks and other officials to enable the parish council to pay unemployed workers when they were not drawing unemployment relief I think, with all respect to the Minister of Labour, that if he would wipe out this one week there would be no further inroad on the public funds. It is generally agreed on all sides that these men and women, during that one week, must be supported from one

      1585
      fund or another. The only question really before the Committee at this time is whether the money forthcoming for that one week should come from the Insurance Fund or from the local authorities. As the Minister of Labour has his machinery already sat up in every town and district in this country, would it not be much more economical and much more advisable in the interests of the insured persons that for that one further week during the five these men and women should draw their money from this particular fund?
      Mr. N. MACLEAN: I want to put a point to the Minister of Labour which, I think, he ought to consider before the Division is taken, or, at least, before this Bill passes this House. The Government were warned of what was likely to happen, but the warnings were not heeded, and the experience of the working of the Act has compelled the Government to come before the House with this arrangement. But still they cannot give way altogether, and they still retain a gap of one week. We are asking for three weeks' additional payments for the wiping-out altogether of the gap. The Minister put forward no argument against it, but he put forward the usual excuse of lack of money. He simply says he has a small balance, and you want to draw upon the balance of the money that still remains to be borrowed. It is not a case of money in hand, but you want to borrow some of the money still left. It is the right hon. Gentleman's own statement.
      Dr. MACNAMARA: I have serious obligations up to 20th July with the money still unborrowed.
      Mr. MACLEAN: What the right hon. Gentleman has to bear in mind is that the 1,400,000 unemployed have serious obligations to meet every week, and during. the week's gap. They have to find food for the home, and possibly other things just as necessary. What I want to point out to the Minister is this. He
      has stated that he is going to use up £2,750,000 of the money that is still left to be borrowed. That leaves a small balance from the £15,000,000 of £1,200,000. If the £2,750,000 is going to be exhausted by wiping out these gaps, then the three weeks' additional we ask is going to cost him £1,000,000 approximately. He has jibbed at the extra £1,000,000. Only a few days ago, not for such a large body of the community as is represented by the 1,400,000 unemployed, who, with their dependants, must amount almost to 5,000,000 people, this House was scattering millions of money to the wealthier class. You can find money when you want it for men who are sitting on the benches opposite and for their friends, but it is very difficult to find it for the unemployed who are asking for a few additional things during the period of unemployment. The only Members who have spoken from the Government Benches in this Debate have endorsed the attitude taken by the Labour party and other colleagues on these benches. Not one voice has come from any section of the Committee, other than the Front Bench opposite, backing up the Minister of Labour. Everyone has been in support of this, or, at least, too ashamed of the attitude taken up by the Minister of Labour to stand up., [An HON. MEMBKR: "Oh, no; we will vote for him all right."] Of course hon. Members will go into the Division. The crack of the whip will get them there. I ask the Minister of Labour to agree to wipe out this one week gap. It is little enough to ask. He has expressed the hope, and others have expressed the hope, that with the improvement of trade, he will be able to meet the obligations in 1923. Large numbers of these unemployed will then be in industry, and will be working to pay up that which is paid to them to-day.
      Question put, "That the word 'twenty-two' stand part of the Clause."
      The Committee divided: Ayes, 167; Noes, 73.

      Division No. 226.]

      AYES.

      [10 5 p.m.

      Adkins. Sir William Ryland Dent

      Banbury, Rt. Hon. Sir Frederick G.

      Benn, Sir A. S. (Plymouth, Drake)

      Agg-Gardner, Sir James Tynte

      Barlow, Sir Montague

      Betterton, Henry B.

      Ainsworth, Captain Charles

      Barnston, Major Harry

      Birchall. J. Dearman

      Amery, Rt. Hon. Leopold C. M. S.

      Bartley-Denniss, Sir Edmund Robert

      Bird, Sir William B. M. (Chichester)

      Armstrong, Henry Bruce

      Beckett, Hon, Sir Gervase

      Boscawen, Rt. Hon. Sir A. Griffith-

      Baird, Sir John Lawrence

      Bell, Lieut.-Col. W. C. H. (Devizes)

      Bowyer, Captain G. W. E.

      Balfour, George (Hampstead)

      Bellairs. Commander Cariyon W.

      Brittain, Sir Harry

      Bruton, Sir James

      Haslam, Lewis

      Norris, Colonel Sir Henry G.

      Buckley, Lieut-Colonel A.

      Henderson, Lt.-Col. V. L. (Tradeston)

      Pain, Brig.-Gen. Sir W. Hacket

      Bull, Rt. Hon. Sir William James

      Herbert, Dennis (Hertford, Watford)

      Parker, James

      Burdon, Colonel Rowland

      Hilder, Lieut.-Colonel Frank

      Pease, Rt. Hon. Herbert Pike

      Burn, Col. C. R. (Devon, Torquay)

      Hills, Major John Waller

      Pennefather, De Fonblanque

      Carr, W. Theodore

      Hinds, John

      Perkins, Walter Frank

      Casey, T. W.

      Hopkins, John W. W.

      Perring, William George

      Chamberlain, N. (Birm., Lady wood)

      Hopkinson, A. (Lancaster, Mossiey)

      Pollock. Rt. Hon. Sir Ernest Murray

      Churchill, Rt. Hon. Winston S.

      Horne, Edgar (Surrey, Guildford)

      Purchase, H. G.

      Churchman, Sir Arthur

      Horne, Sir R. S. (Glasgow, Hillhead)

      Rae, Sir Henry N.

      Clough, Sir Robert

      Hunter, General Sir A. (Lancaster)

      Ramsden, G. T.

      Coats, Sir Stuart

      Hunter-Weston, Lt.-Gen. Sir Aylmer

      Randles, Sir John Scurrah

      Colfox, Major Wm. Phillips

      Hurd, Percy A.

      Romer, J. R.

      Cory, Sir J. H. (Cardiff, South)

      Hurst, Lieut.-Colonel Gerald B.

      Renwick, Sir George

      Davidson, J. C. C.(Hemel Hempstead)

      Jodreil, Neville Paul

      Richardson, Sir Alex. (Gravesend)

      Davies, David (Montgomery)

      Johnson, Sir Stanley

      Richardson, Lt.-Col. Sir P. (Chertsey)

      Davies, Sir David Sanders (Denbigh)

      Jones, Sir Evan (Pembroke)

      Robinson, S. (Brecon and Radnor)

      Davies, Thomas (Cirencester)

      Janes, G. W. H. (Stoke Newington)

      Samuel, A. M. (Surrey, Farnham)

      Dawson, Sir Philip

      Kellaway. Rt. Hon. Fredk. George

      Sanders, Colonel Sir Robert Arthur

      Du Pre, Colonel William Baring

      King, Captain Henry Douglas

      Scott, A. M. (Glasgow, Bridgeton)

      Edgar, Clifford B.

      Lane-Fox, G. R.

      Seddon, J. A.

      Edge, Captain Sir William

      Law, Alfred J. (Rochdale)

      Shaw, William T. (Forfar)

      Edwards, Hugh (Glam., Neath]

      Lewis, Rt. Hon. J. H. (Univ., Wales)

      Smith, Sir Harold (Warrington)

      Elliot, Capt. Walter E. (Lanark)

      Lloyd, George Butler

      Stanley, Major Hon. G. (Preston)

      Evans, Ernest

      Locker- Lampson, G. (Wood Green)

      Stanton, Charles Butt

      Eyres-Monsell, Com. Bolton M.

      Lorden, John William

      Starkey, Captain John Ralph

      Faile, Major Sir Bertram Godfray

      Loseby, Captain C. E.

      Steel, Major S. Strang

      Fell, Sir Arthur

      Lowther, Maj.-Gen. Sir C. (Penrith)

      Stewart, Gershom

      Fildes, Henry

      M'Curdy, Rt. Hon. Charles A.

      Sturrock, J. Leng,

      Fisher, Rt. Hon. Herbert A. L.

      Mackinder, Sir H. J. (Camlachie)

      Sugden, W. H.

      Flannery, Sir James Fortescue

      M'Lean, Lieut.-Col. Charles W. W.

      Taylor, J.

      Ford, Patrick Johnston

      Macnaghten, Sir Malcolm

      Terrell, George (Wilts, Chippenham)

      Foreman, Sir Henry

      Macnamara, Rt. Hon. Dr. T. J.

      Terrell, Captain R. (Oxford, Henley)

      Forrest, Walter

      Macpherson, Rt. Hon. James I.

      Thomson, F. C. (Aberdeen, South)

      Fraser, Major Sir Keith

      Magnus, Sir Philip

      Tryon, Major George Clement

      Fremantle, Lieut.-Colonel Francis E.

      Malone, Major P. B. (Tottenham, S.)

      Turton, Edmund Russborough

      Gilbert, James Daniel

      Matthews, David

      Walters, Rt. Hon. Sir John Tudor

      Glyn, Major Ralph

      Mitchell, Sir William Lane

      Ward, Col. L. (Kingston-upon-Hull)

      Goff, Sir R. Park

      Moore, Major-General Sir Newton J.

      Warren, Sir Alfred H.

      Green, Joseph F. (Leicester, W.)

      Morden, Col. W. Grant

      Watson, Captain John Bertrand

      Greenwood, Rt. Hon. Sir Hamar

      Munro, Rt. Hon. Robert

      Williams, C. (Tavistock)

      Greenwood, William (Stockport)

      Murchison, C. K.

      Wilson, Lt.-Col. Sir M. (Bethnal Gn.)

      Greig, Colonel Sir James William

      Murray, Rt. Hon. C. D. (Edinburgh)

      Wise, Frederick

      Gritten, W. G. Howard

      Murray, John (Leeds, West)

      Wood, Sir H. K. (Woolwich, West)

      Guest, Capt. Rt. Hon. Frederick E.

      Neal, Arthur

      Worsfold, T. Cato

      Guthrie, Thomas Maule

      Newman, Colonel J. R. P. (Finchley)

      Yeo, Sir Alfred William

      Hall, Lieut.-Col. Sir F. (Dulwich)

      Newman, Sir R. H. S. D. L. (Exeter)

      Hamilton, Sir George C.

      Newson, Sir Percy Wilson

      TELLERS FOR THE AYES.-

      Hannon, Patrick Joseph Henry

      Nicholson, Brig.-Gen. J. (Westminster)

      Colonel Leslie Wilson and Mr.

      Harmtworth, C. B. (Bedford, Luton)

      Nicholson, William G. (Petersfield)

      Dudley Ward.

      NOES.

      Adamson, Rt. Hon. William

      Hall, F. (York, W.R., Normanton)

      Rendall, Athelstan

      Ammon, Charles George

      Halls, Walter

      Richardson, R. (Houghton-le-Spring)

      Banton, George

      Hayday, Arthur

      Rose, Frank H.

      Barker, G. (Monmouth, Abertiltery)

      Hayward, Evan

      Sexton, James

      Barnes, Major H. (Newcastle, E.)

      Hirst, G. H.

      Sitch, Charles H.

      Benn, Captain Wedgwood (Leith)

      Hogge, James Myles

      Spoor, B. G.

      Bowerman, Rt. Hon. Charles W.

      Holmes, J. Stanley

      Surtees, Brigadier-General H. C.

      Broad, Thomas Tucker

      Irving, Dan

      Swan, J. E.

      Brown, James (Ayr and Bute)

      Johnstone, Joseph

      Thomas, Rt. Hon. James H. (Derby)

      Cairns, John

      Jones, Morgan (Caerphilly)

      Thomas, Brig.-Gen. Sir O. (Anglesey)

      Cape, Thomas

      Kenworthy, Lieut.-Commander J. M.

      Thomson, T. (Middlesbrough, West)

      Carter, W. (Nottingham, Mansfield)

      Kenyon, Barnet

      Tillett, Benjamin

      Clynes, Rt. Hon. John R.

      Lawson, John James

      Wallace, J.

      Collins, Sir Godfrey (Greenock)

      Lunn, William

      Waterson, A. E.

      Cowan, D. M. (Scottish Universities)

      Maclean, Nell (Glasgow, Govan)

      Watts-Morgan, Lieut.-Col. D.

      Davies, Rhys John (Westhoughton)

      Maclean, Rt. Hn. Sir D. (Midlothian)

      White, Charles F. (Derby, Western)

      Davison, J. E. (Smethwick)

      MacVeagh, Jeremiah

      Wignall, James

      Edwards, C. (Monmouth, Bedwellty)

      Mallalieu, Frederick William

      Wilson, James (Dudley)

      Entwistle, Major C. F.

      Murray, Or. D. (Inverness & Ross)

      Wintringham, Margaret

      Finney, Samuel

      Myers, Thomas

      Wood, Major M. M. (Aberdeen, C.)

      Foot, Isaac

      Naylor, Thomas Ellis

      Young, Robert (Lancaster, Newton)

      Galbraith, Samuel

      O'Grady, Captain James

      Gee, Captain Robert

      Parkinson, John Allen (Wigan)

      TELLERS FOR THE NOES.—

      Graham, W. (Edinburgh, Central)

      Poison, Sir Thomas A.

      Mr- Arthur Henderson and Mr.

      Griffiths, T. (Monmouth, Pontypool)

      Raffan, Peter Wilson

      Kennedy

      Guest, J. (York, W.R., Hemsworth)

      Rees, Capt. J. Tudor- (Barnstaple)

      Question put, and agreed to.

      Mr. HAYDAY: I beg to move, in Subsection (2), to leave out the words
      "Provided that where by virtue of the said Sub-section any person is at the commencement of this Act disqualified for the
      1588
      receipt of benefit in the third special period, he shall continue to be so disqualified until the expiration of five weeks from the date on which he began to be so disqualified, or the expiration of one week from the commencement of this Act, whichever first happens."

      1589
      I move this Amendment in order to obtain an explanation which, I hope, will clear up a little misconception. An unemployed person having exhausted his first five weeks of benefit and passing through the first gap would have done, we will say, three out of the five weeks by the time this Bill operates on 20th July. The purpose of my Amendment is that he shall not be called upon to serve a further one week, but shall come into immediate benefit on the 20th July and be able to draw that week of benefit on 27th July. There may be difficulties so far as the wording of the Amendment is concerned, for were it successful I understand it would leave the man in a more unsatisfactory state, but I trust to hear what the Minister has to say upon it.
      Dr. MACNAMARA: I am sure my hon. Friend will not press his Amendment when he sees the effect of it. The object of the proviso is to secure that an unemployed person shall not have to serve a longer gap than five weeks. If he had served 4½ weeks and this proviso were omitted, he would have to serve another week instead of another half week, and I am sure my hon. Friend does not wish that.
      Mr. HAYDAY: In the circumstances, I ask leave to withdraw my Amendment.
      Amendment, by leave, withdrawn.
      Motion made, and Question proposed, "That the Clause stand part of the Bill."
      Sir F. BANBURY: The Minister of Labour will remember—whether it was a year and a half or two years and a half ago, I cannot recall—that when he first proposed making an inroad into his reserves he informed the House that it would be all right in a short period. I ventured to say that it would be all wrong, and that the more he used his reserves the greater would be the demand for these doles, and the larger would be the amount of money spent, and every word that I said on that occasion has come true. It is perfectly clear that as long as you give a man a sufficient sum of money, to give him nearly the same amount of comfort as if he were in work, he will continue to do nothing in preference to working. I warn; to call special attention to the question of how the right hon. Gentleman is going to administer his powers under this Clause. I have in my
      1590
      pocket a letter from a certain firm in Poplar—I am willing to give the right hon. Gentleman the name—who are ship repairers, and who inform me that they had no dispute with their men, as they were actually paying them the old original rate of wages, plus the bonus. There had been a dispute with other ship repairers in that district who had refused the bonus, but this particular firm had not refused the bonus and were paying their men the full rate of wages, plus the full bonus. On the loth May the union withdrew these men and refused to allow them to continue to work, because there was a dispute with another lot of ship repairers. My information is that the right hon. Gentleman is paying these men benefit.
      The CHAIRMAN: The whole purpose of this Clause is to reduce the gap referred to, and I do not see how, on that question, the right hon. Gentleman can go into the case with which he has been dealing just now.
      Mr. RICHARDSON: Is the right hon. Gentleman right in using the word "dole," when the people pay for it?
      The CHAIRMAN: That is another point of order which, perhaps, the right hon. Gentleman will consider.
      Sir F. BANBURY: Then I will say honorarium. Clause 1 diminishes the gap, and, therefore, imposes a larger charge, and I shall not vote that it stand part unless I understand that the right hon. Gentleman is not going to use those terms to give an honorarium to men who are out on strike.
      Dr. MACNAMARA: My right hon. Friend's information must be incorrect. The main Act provides that in the case of a stoppage of work, due to a trade dispute, unemployment benefit cannot be paid.
      Sir F. BANBURY: I am well aware of that. My point is that the right hon. Gentleman is doing something which is illegal, and I am calling his attention to the fact.
      Dr. MACNAMARA: I think that my right hon. Friend is mistaking me for the boards of guardians.
      The CHAIRMAN: On the narrow issue raised by this Clause, the whole of this discussion is out of order. I have listened to the right hon. Gentleman with great

      1591
      attention, and, though it is very seldom that I can say it of him, yet he has on this occasion gone beyond the limits of order.
      Mr. RICHARDSON: We do not care to be insulted by the right hon. Gentleman, who thinks that when a man falls out of work and gets out of work benefit, he never cares to work again.
      The CHAIRMAN: The hon. Gentleman is equally out of order.
      Clause, 2 (Short title and repeal) ordered to stand part of the Bill.
      Bill reported, without Amendment; read the Third time, and passed.

      POST OFFICE (PNEUMATIC TUBES ACQUISITION) (RE-COMMITTED) BILL.
      Considered in Committee.
      [Mr. JAMES HOPE in the Chair.]

      POST OFFICE (PNEUMATIC TUBES ACQUISITION) (RE-COMMITTED) BILL.

        CLAUSE 1.—(Confirmation of agreement and vesting of tube.)
        The said agreement is hereby confirmed and made binding and shall be carried into effect accordingly, and the tube and the subterranean space bounded by the outer part of the tube and all such right to and powers of the company in relation thereto as the Postmaster-General may require in accordance with the terms of the said agreement shall on the payment of the balance of the purchase money, by virtue of this Act, vest in the Postmaster-General.
        Motion made, and Question proposed, "That the Clause stand part of the Bill "
        Mr. HAYWARD: I rise to ask the Postmaster-General one or two questions about this Bill. The House is indebted to the right hon. Gentleman in the first place for reverting to the practice of publishing a memorandum explanatory of the Bill. That memorandum, however, gives but very meagre information. If one read it, and did not read carefully also the Schedules of the Bill, one would be led to understand that for an outlay of £7,500 the country was being saved an expenditure of £40,000. This is not exactly a gift horse. Therefore, we are entitled, if not to look at it in the mouth, at least to give it a cursory glance.
        1592
        Reading the contract, which is the Schedule to the Bill, one or two very interesting questions arise. It is a contract for the acquisition of a tube for use by the Post Office for a sum of £7,500. I would call attention to a recital in the contract. It reads as follows
        "Whereas the company has not for many years past worked the tube and the same is not now in working order, and divers persons, companies and local authorities have. without the leave and licence of the company, made breaches from time to time in the tube as originally constructed. Some of which breaches are indicated by breaks in the red lines on the said plan, and have placed tunnels, sewers, drains, and other things in such breaches, and have placed electric lines and other things in parts of the tube…"
        From that it seems clear that the Post Office is purchasing a derelict tube. I have no doubt the matter has been very carefully considered by the Post Office engineers and others, and that a very careful survey has been made, and I am the last person in the world to accuse the Post Office of making bad contracts on behalf of the public. But this is a matter which ought to be cleared up. We ought to be told what is the estimated cost of placing this tube in working order. Further questions arise, because it appears that the tube is being broken into. Apparently there have been many trespasses upon it, and in the first clauses of the contract it will be seen that the Post Office is not even purchasing the rights of the vendor company against those persons who have committed the trespasses. Apparently the Government are left without any remedy with regard to the breaches, and the question I put to the Postmaster-General is, how are they going to proceed to make the tube workable and usable, if they have not got these rights in respect of trespasses already committed? Paragraph 4 of the First Schedule provides that
        "The tube having as aforesaid been broken into and things having been placed therein as aforesaid it is old to the Postmaster-General in its existing state and subject to any obstructions existing therein and to all rights (if any) of the persons companies or local authorities making such breaches or placing such things as aforesaid."
        That Clause contemplates what is probably the fact, that people have already acquired by prescription certain rights as against the original owners of the tube,

        1593
        because, be it observed, the vendor company was formed in 1853, and is operating under Acts of Parliament dated, respectively, 1859, 1864, and 1872, so if people have at random been making breaches in this tube ever since 1872, prescriptive rights have probably arisen. Can the Postmaster - General clear up these various points and assure the Committee he is making a good bargain and not buying what appears on the face of it to be A pig in a poke?
        The POSTMASTER-GENERAL (Mr. Kellaway): I hope to be able to satisfy my hon. Friend and the Committee regarding the points which have been raised. I am afraid my hon. Friend had not the advantage of hearing the previous discussions which took place on this Bill, when all these points were dealt with. This tube is one which has been lying derelict for 40 or 50 years, and it is a fact that the Borough Councils of St. Pancras and Holborn and also the London County Council have made incursions into certain parts of it. But those incursions have not been, so to say, lateral; they have been in the other direction, so that the portions of the tube interfered with by those incursions is extremely limited, and they will be got over by the Post Office engineers by a diversion which I am advised will be inexpensive and will in no way interfere with the telegraph and telephone lines which will be laid. All these points have been carefully considered by our own engineers after discussions with engineers representing the local councils who may be regarded as the traspassers on the tube. The point on which the Committee desires to be satisfied is that the Post Office has got a bargain and the advice given to me by the competent engineers is that if instead of being able to use this tube for carrying our wires, we had to open up the streets and lay new ducts in which to place the wires, it would cost between £50,000 and £70,000. We are now getting a tube which, over the greater part of its length has not been in any way interfered with., and is still sound, for £7,500, and we are carrying out the work without the intolerable nuisance of opening the streets. We ought to be grateful to the Holborn Borough Council who first suggested we should make use of this derelict tube. With that explanation J hope the Committee will give me the Bill.

        Clauses 2 (Application of Telephone Acts), 3 (Payment of Expenses) and 4 (Short Title and Repeal) ordered to stand part of the Bill.
        First and Second Schedules ordered to stand part of the Bill.
        Preamble agreed to.
        Bill reported, without Amendment; read the Third time, and passed.

        EDUCATION (SCOTLAND) SUPERANNUATION BILL.
        Order for Second Reading read.
        The SECRETARY for SCOTLAND (Mr. Munro): I beg to move, "That the Bill be now read a Second time."
        Despite recent happenings I am sanguine enough to hope that the Bill which is now before the House will receive its Second Reading as an agreed Measure. As the House is aware, there is nothing novel in the principle of contribution so far as the teaching profession in Scotland is concerned. From 1912 to 1919 we in Scotland had a contributory scheme of our own in operation. That scheme worked with perfect smoothness and to the complete satisfaction of all the parties interested in it. Of this the teachers themselves have made the most generous acknowledgment. Most of us, no doubt, have seen the manifesto which was issued some time ago by the Educational Institute of Scotland referring to the proposal now before the House. Referring to the scheme of 1912 to which I alluded the manifesto said:
        "During the seven years of its existence no murmur of complaint was heard in regard to its operation."
        The manifesto goes on to speak with no uncertain note of the Scottish contributory scheme "which has been so carefully planned and developed." Scottish teachers, I think I am right in saying, parted from the contributory scheme with a considerable amount of reluctance. I am not going to suggest that that is a reason why they should welcome a return to the contributory principle now. I feel bound, however, to point out that the reason which made a contributory scheme imperative in 1919 makes the

        1595
        passage of this Bill not less imperative to-day. In 1919 it was not, I fear— though the manifesto seems to suggest it—the persuasive arguments of my right hon. Friend the President of the Board of Education that reconciled Scottish teachers to the scheme. It was the hard fact that the arguments which he used had convinced the House of Commons. The interests of the profession in the two countries are so very closely interwoven that when England instituted, as she did, a non-contributory scheme it would have been quite hopeless for Scotland to stand aside. And so to-day the same result appears. The House has given a Second Reading to a Bill which imposes a 5 per cent. contribution for superannuation purposes on the salaries of English teachers, and no reasonable Scottish teacher—I assume that they are all reasonable—will maintain that there is any reason for differentiation of treatment between the teachers of Scotland and the teachers in England. On the circumstances which have rendered it necessary to impose a 5 per cent. contribution from English as well as from Scottish teachers I do not feel called upon to enlarge. The existing financial stringency is only too well known to all of us, and it constitutes, I think, an unanswerable argument in favour of the proposal which is made. That this stringency should have been so great as to demand the present Bill is, to myself, a matter of considerable regret. Had the national finances been to-day in the position anticipated when the gift of a non-contributory scheme was made to the teachers, there would have been no going back on the liberal concessions which were then made. The disappointment of our expectations, however, leaves us no option, and forces us to reconsider the whole position. And so far as Scotland is concerned, the hands of Parliament are, I hold, absolutely free. A letter was addressed by the Secretary for the Scottish Education Department to the Select Committee so ably presided over by the right hon. Gentleman the Member for Camborne (Mr. Acland), and it indicated quite clearly that in Scotland the situation was governed by conditions quite different to those in England. As one who has consistently wished the teachers of Scotland well, I have no hesitation in saying that I think it would be in their
        1596
        own best interests to leave the matter there. I am quite prepared to discuss it further if necessary, but I am satisfied that any such discussion, instead of benefiting the teachers in Scotland, would do them a real dis-service.
        Therefore, I pass at once to the details of the Bill which can be quite briefly explained. Clause 1, which follows the English analogy, provides for the collection from every teacher by way of contribution towards the cost of providing benefits under the superannuation scheme of an amount equal to 5 per cent. of his salary. The machinery which it is proposed to employ for this purpose is identical with that which ran so smoothly between 1912 and 1919. The end once granted, I do not think the means can be improved upon. Should any modifications be made in the English Bill, I shall make it my business to see that these changes are reflected by changes in the present Bill at a corresponding stage so far as the conditions in Scotland admit of it.
        Clause 2, as the House will see, directs the Department to frame and lay before both Houses of Parliament, with a view to approval by Order in Council, an amending scheme to provide for the repayment to individual teachers, in such cases and on such conditions as may be prescribed therein, of any sums which may have been, or may be. deducted from their salaries in terms of the first Clause of this Bill. It is necessary to have that provision in cases of teachers who die or who may retire. Circumstances in Scotland render it necessary to proceed in this matter in what may seem an indirect fashion. The House will remember that the Scottish Act is an enabling Act merely, and that the real framework of the whole superannuation arrangements is an approved scheme. This scheme regulates the relation between the Department and the managers on the one hand, and between the Department and individual teachers on the other hand. It is, therefore, by an Amendment of this scheme that provision for the replayment of contributions can in: most simply and appropriately be made. The conditions of their return to be laid down in the amended scheme will be determined by the shape which Clause 2 of the English Bill may take as it passes through the House. It will be generally agreed, I

        1597
        think, that the terms offered to the English and the Scottish teachers should be as nearly alike as the differing circumstances of the two countries permit.
        The second part of Clause 2 is not mandatory as is the first. It is permissive in its character, and its object is to keep open the possibility of reviving what was undoubtedly a very valuable feature of the old contributory scheme, namely, payment by individual bodies of managers of a definite contribution towards the cost of the pensions of the teachers whose salaries they were fixing. Whether advantage will be taken of the possibility thus left open, is a point upon which no decision can be come to until steps have been taken to ascertain the views of the educational authorities in Scotland. The cost of the superannuation of Scottish teachers is borne wholly by the educational authorities of Scotland collectively and, obviously, these authorities ought to have a say on the question whether payment should be made collectively from the undivided fund or partly collectively and partly individually. So far as I am concerned, I am strongly in favour of the latter alternative. The experience of the 1912 scheme proved it to be both practicable and efficacious and, under the changed conditions, there is the added advantage that it would bring a reasonable contribution from the managers of non-grant-earning schools where such schools have been admitted to the privileges of the scheme. But I should not think it right to come to a final decision on that matter until I had before me the views of the parties mainly interested. So much for Clause 2.
        Clause 3 of the Bill follows the analogy of the English Measure, and I need not detain the House by reading it. Clause 4 has no corresponding provision in the English Measure. Its counterpart is found in Section 12 of the School Teachers' Superannuation Act, 1918. This has a rather curious history. When the arrangement made in that Section for the payment of annuities received the approval of Parliament it was not realised that as the English Act applied only to England, the reference to the deferred annuity fund could only be to the English portion of that fund. The Scottish teachers had contributed to that fund, and the Law Officers of the Crown having advised that the English Measure applied
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        only to the English conditions, the Clause which I am now moving is designed merely to extend the provisions for the payment of the annuities to Scotland. That provision, I may remind the House, was that instead of annuities being paid from the Deferred Annuity Fund they should form a charge on the Consolidated Fund of the United Kingdom. That Deferred Annuity Fund has now been cancelled and such money as has since been required has been annually provided by the Treasury under a separate Sub-head in the Estimates. The Treasury and the Department I represent are at one in thinking that advantage should be taken of the present opportunity to have the position regularised.
        May I say this one final word? It will be noted that in the present Bill there are no provisions which correspond to Clauses 3 and 4 of the English Bill, the reason being that, in the circumstances of Scotland, no such provisions are required. The Scottish scheme contains nothing that is equivalent to the English scheme embodied in Section 14 of the English Act, which made withdrawal from any other pension scheme a condition of admission to the benefits of the Act. No question, therefore, of compensation arises. On the other hand, the Scottish scheme already gives the Department all the powers which Clause 4 of the new English Bill seeks to confer upon the Board of Education. These, in very brief outline, are the provisions of this Bill. I hope that I have not been too sanguine in the expectation which I have expressed, that the discussion, which I apprehend may be continued to-morrow, will result in showing that it is an agreed-on Measure, with regard to the principle of which there is no division at all.
        Major GLYN: The right hon. Gentleman has passed over Clause 3. Under the Act of 1911 the payment was made to the National Debt Commissioners, and I would ask the right hon. Gentleman to say a word on this Clause.
        Mr. MUNRO: I thought I had dealt with that, but if there is any difficulty about it I shall be very happy to give an explanation.
        Captain W. BENN: I beg to move, "That the Debate be now adjourned."
        I express no opinion on the Bill itself. I am inclined to agree with very much

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        of what the right hon. Gentleman has said, but, in view of the fact that many Scottish Members wish to speak, and that the Bill has come on rather unexpectedly, I think that, perhaps, it would meet the general convenience of the House that the Debate should be now adjourned.
        Colonel LESLIE WILSON (Joint Parliamentary Secretary to the Treasury): In accordance with the arrangement arrived at with my hon. Friends opposite, I shall be quite willing to agree that the Debate be now adjourned.
        Debate to be resumed To-morrow.

        PUBLIC WORKS LOANS BILL.
        Considered in Committee.
        [Mr. JAMES HOPE in the Chair.]

        PUBLIC WORKS LOANS BILL.

          NEW CLAUSE.—(Loans to companies for housing.)
          In the application of Section sixty-seven of the Housing of the Working Classes Act, 1890, to any company established for the purpose of constructing or improving or of facilitating or encouraging the construction or improvement of dwellings for the working classes, which does not trade for profit, or whose constitution forbids the issue of any share or loan capital with interest or dividend exceeding the rate for the time being proscribed by the Treasury, paragraph (d) of Sub-section (2) of the said Section sixty-seven, shall have effect as if the words "seventy-five per cantum" were substituted for the words "one moiety."
          Provided that the Public Works Loan Commissioners shall, in any such case, require, in addition to a mortgage of any land or dwellings, a further security of such value as they may think fit.—[Sir John Baird.]
          Brought up, and read the First time.
          The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Sir John Baird): I beg to move, "That the Clause be read a Second time."
          This Clause, which very clearly expresses its purpose, is intended to enable
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          the Public Works Loan Commissioners to advance up to 75 per cent. of the value of houses to be built in certain cases which are set forth in the Clause. Under the Housing of the Working Classes Act, 1890, the Public Works Loan Commissioners are authorised to advance up to 50 per cent. of the value of the land and dwellings, which are mortgaged, but under the proposal contained in this Clause the Commissioners are authorised to advance up to 75 per cent., on receiving what they consider to be sufficient additional security. The reason for the Clause is that certain proposals have been received by the Ministry of Health, under which private enterprise by companies will come into operation. provided that the necessary capital is forthcoming, and such schemes will not involve the payment of any housing subsidy. Therefore no additional charge is involved on the State by this proposal. There is every reason. to hope that by perfectly legitimate use of national credit there will be quite an appreciable increase in the number of houses which will be built for the people who are particularly in need of them.
          Mr. WATERSON: The Clause contains the words, "which doc? not trade for profit." I do not exactly know how far that is going to take us. There are societies which do not trade for profit which have built thousands of houses, and have never made an application for public works loans. I want to know whether societies of this kind will be able to participate in the benefits this Clause will give. I observe that these words are not incorporated in Section 67 of the Housing of the Working Classes Act of 1890, and probably in the past that has deterred these organisations from appealing for public works loans. I have in mind one of these organisations, which has built at least 200 houses, and has built a street which is one of the finest in the town. It does not trade for profit. It has never appealed for assistance. Am I to understand that there is a possibility of these co-operative societies. which built houses for the working classes, coming within the scope of this Clause and being able to get assistance from the State, if they desire to borrow, to the extent of 75 per cent. of the approximate value of the houses? If the Clauee is going to

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          allow that to be done, it will be a step in the right direction. Everyone recognises the necessity of assisting those organisations which are going to build houses and which do not trade for profit.
          Sir F. BANBURY: The Clause is rather diflicult to understand, because there is a good deal of reference to previous Acts. Does it apply to companies which have already built houses? Can they ask the Government to advance 75 per cent. of the value of houses they have already built, or does it mean that when they build houses in the future they shall be allowed to borrow 75 per cent. of the cost? It is evident that if they are able to borrow 75 per cent. of the value of houses they have built there is considerable risk to the public funds, because the cost of houses is far in excess of their value at the present time. In that case, 75 per cent. advance on the cost of the houses built would be more than their value to-day. I do not know whether that is the reason the proviso says:
          Provided that the Public "Works Loan Commissioners shall, in any such case, require, in addition to a mortgage of any land or dwellings, a further security of such value as they may think fit."
          If, on the other hand, it only means that, they can receive these advances on the houses they may build in the future, probably the security will be better, because the cost of building houses has gone down. Even now, however, I do not think it is a very sound commercial proposition to advance 75 per cent. on the houses which are being built at the present time, because probably in a few years we shall be building at a far less price than to-day.
          Sir J. BAIRD: The proposal applies to the future and not to the past. With regard to the security may I draw attention to the last paragraph, which provides that
          "The Public Works Loans Commissioners shall in any such case require, in addition to a mortgage of any land or dwellings, a further security of such value as they may think fit."
          Therefore, there is no question of the value of the house and land being the only security for this advance, and the composition of the Public Works Loans Commission is sufficiently wall known to make
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          it quite certain that they will deal with this matter on business lines.
          I cannot give the hon. Member for Kettering (Mr. Waterson) an answer about the particular association or company which he has in mind without knowing more of its composition, but if it tomes within the description which is very clearly set forth in considerable detail in the new Clause, obviously, their proper course will be to apply to the Public Works Loan Commissioners, who will have power, if this Clause be passed, to consider every application on its merits, and will be bound to carry out the proposals contained in the Clause. Without further information with regard to these matters of detail, it is impossible for mo to say anything further in regard to any hypothetical case. The reason why we put in this Clause is that certain proposals have been made to the Minister of Health which would enable a very considerable number of houses to be built if this additional assistance could be given, and it appears to us that we can give this assistance with ample security of public funds. If the case which my hon. Friend has in mind comes within the definition contained in the Clause, 1 suggest that his friends should submit their scheme to the Public Works Loan Commissioners.
          Clause read a Second time, and added to the Bill.
          Schedule ordered to stand part of the Bill.
          Bill reported, with an Amendment.
          Sir J. BAIRD: May I appeal to the House to allow us to Report the Bill now.
          Sir F. BANBURY: I object. We cannot do that now.
          Sir J. BAIRD: This is really a matter of routine every year. There would be no difficulty if the new Clause had not been added to the Bill. That Clause will be an alleviation of the extremely difficult question of housing. It is purely with a view to assisting in this most difficult matter of housing that we are asking for the Report stage to-night.
          Bill, as amended, to be considered Tomorrow.
          The remaining Orders were read, and postponed.

        HAGUE CONFERENCE.
        Motion made, and Question proposed, "That this House do now adjourn."— [.Colonel Leslie Wilson.]
        Lieut.-Commander KEN WORTHY: May I ask the Colonial Secretary if he has any information about the Hague Conference? Also, when a statement will be made on the course of events at The Hague, and whether Papers will be laid?
        The SECRETARY of STATE for the COLONIES (Mr. Churchill): I quite understand the interest and tender
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        solicitude with which the hon. and gallant Gentleman has been following the recent course of events at the Hague—
        Lieut.-Commander KENWORTHY: So have a million unemployed.
        Mr. CHURCHILL:—but I regret to say I am not in a position either to offer him the encouragement of hope, or to send him to bed with the comfortable certainty of complete despair.
        Lieut.-Commander KENWORTHY: It is a pity you cannot give the unemployed a little help.
        Adjourned accordingly at Three Minutes after Eleven o'Clock.