HC Deb 02 July 1924 vol 175 cc1381-413

I beg to move, in page 12, lines 19 and 20, to leave out the words "or has not become final and conclusive before."

In moving the Amendment, may I call attention to the wording, as it will be necessary to read with it the Amendment which stands in the name of the hon. Member for Moseley (Mr. Hannon)—in page 12, line 27, to leave out the words "and shall be deemed always to have been." It is necessary that the Amendments should be taken together, because the object of the Amendment is to do away with the retrospective character of the Clause. I would appeal to the Chancellor of the Exchequer to withdraw this Clause, because, although it purports to do something for the future, in that case it is redundant. Its only real effect is its retrospective character with respect to that very large class of the community whose earnings are dependent partly on salary and partly on bonus which is variable with the cost of living. There are something like a quarter of a million of these individuals, and up to the year 1922 they were entitled to be assessed on the average of three years or on the preceding year, at their option. The 1922 Finance Act made the basis of the assessment within the year of assessment, but it did nothing to make it retrospective, so, therefore, this large class of the community are entitled to make claims for repayment, presuming that they came within a certain category, in respect if the years 1920–21 and 1921–22. This is based upon a decision of the House of Lords, in the case of McDonald v. Shand. The question as to whether these cases do come within that decision is a point which might be more properly decided by the Courts than by the House of Commons, but at the present time the position is this. These people claim, and they advance very strong reasons, that they do come within this decision. If they do come within it, then they have at this moment certain rights and will have them if Clause 20 be not carried into effect. They are content to test the question in the Courts of Law, but the position of the Government, according to a letter, is "We are advised by our Law Officers that you are not so entitled, but if you are so entitled, we are going to take care that you do not get any benefit out of it." That is contained in a letter—[An HON. MEMBER: "Read the letter."] I will read the letter. It is dated 28th April, and is addressed from Treasury Chambers, Whitehall, to Mr. A. C. Winyard, of the Civil Service Joint Committee. The letter reads: With further reference to your letter of the 25th April, in regard to the question of the assessment of bonus For Income Tax purposes, arising from the recent judgment in the House of Lords in the case of McDonald v. Shand, I am desired by the Chancellor of the Exchequer to enclose for your information copies of the answers recently given by the Financial Secretary to the Treasury in Parliament. It will be observed that the Government are advised that the judgment of the House of Lords in the case of McDonald v. Smith does not, involve the treatment of an emolument of the character of war bonus, whether determined by reference to the cost of living or not, as a perquisite within the meaning of the Rules of Schedule E of the Income Tax Act, 1918. But it will be seen further that if this view were not accepted by the Courts and the Courts endorsed some such view as that which is taken by the counsel who have advised your Joint Committee, there would then arise so great a disparity between the rights of different taxpayers whose cases were upon merits identical as still to call for the intervention of Parliament to place the matter upon a proper footing. In these circumstances, the Chancellor sees no adequate reason to modify his intention to propose to Parliament declaratory legislation such as will set at rest at the present stage the doubt which has arisen in this matter. I venture to suggest that what I gave as a summary was a very fair summary of this letter. I would be sorry to misrepresent it in any way. What was the position in the case of McDonald versus Shand? Shand was the manager of Nobel's explosives, and he was paid by salary and by a fluctuating bonus, dependent on profits. The revenue claim was that he was liable to assessment on his earnings during the year of assessment. It was impossible for him to declare his income before he knew what his earnings were to be. He claimed that this variable bonus was a perquisite within the meaning of the Finance Act of 1918, and that he had the alternative of choosing as his basis the year of assessment or the average of three years. It went to the Scottish Courts and ultimately to the House of Lords, and McDonald won his case. Then we got the Act of 1922 which was not retrospective, and many claims have been made and relief has been granted in a number of cases. The persons principally affected are municipal, Government and railway servants who are paid upon the cost-of-living bonus. I may remind hon. Members that the cost-of-living bonus was subject to a variation every four months in the first 12 months and every six months in the second year, and it varies according to the cost of living so many points according to the increase or the decrease in the cost of living. It is, therefore, a variable thing and nobody knows or can know from time to time what amount of money he will actually receive. If we pass this Clause as it is, it will be seen that everybody is to be barred in respect of these years, because the words to be inserted are shall be, and shall be deemed always to have been, chargeable to tax as fixed salary remuneration," etc. Therefore, the insertion of these words takes away the right that has been given by this decision. It takes away from everybody who is in the position of Shand, and from others, the rights which they clearly have under the House of Lords' decision. We believe that it takes away the rights of a very large number of people who are paid by salary and variable bonus. Another case has happened since this matter was before the House on the Financial Resolution. Only last month, in an appeal, the Commis- sioners of Income Tax for the Kensington Division found, following the case of McDonald v. Shand, that a cost-of-living bonus variable with the cost-of-living index was assessable as a perquisite within the meaning of Rule 4 of Schedule E; and they discharged an additional assessment made on the basis of the actual year. The Revenue Department expressed dissatisfaction in order to preserve their right to demand a case for appeal to the High Court, which is being held over pending the decision of Parliament on this Clause.

The Financial Secretary to the Treasury, on the last occasion, made very great play with the fact that the Government could not give way on this case because while it would remedy some inequalities it would create greater inequalities. Let me examine that position. I have gone very carefully into the question since then. All employés assessable under Schedule D, that is to say, all except employés of public companies, corporations, and local authorities and the State, had the benefit of the three years' average under the Rules of the Income Tax Act. As regards employés assessable under Schedule E, that is to say, employés of companies, corporations, and local authorities, it was the general practice of the District Commissioners, with the assent of the Inland Revenue Department, to allow as a concession the benefit of the three years' average, in all cases except the holders of distinctive office, that is to say, directors, managers and secretaries, in accordance with the Report of the Royal Commission on the Income Tax, 1920. In the case of employés to whom this concession was not granted, it was the general practice of the District Commissioners, also with the assent of the Inland Revenue Department, to permit the assessment of any fluctuating or varying part of the emoluments upon the basis of the preceding year, and this practice is still continued. Reference to the speech made by the Financial Secretary to the Treasury in the debate on the Finance Bill of 1922, will show that an undertaking was given that there would be no variation or departure from the practice which then existed. The speech is of importance, and I beg leave to quote the relevant part of it. It was delivered on the 29th May, 1922.

It has been the practice hitherto of all Local Commissioners who are closely concerned with such taxpayers to make this arrangement, that the variable portion of the income, or of the whole income if it is variable, should be assessed upon the preceding year. There is no intention of interfering with that administrative arrangement, so that it will still be possible for the Commissioners to assess any variable part of the income, such as commission, etc., upon the preceding year instead of upon the actual year."—[OFFICIAL REPORT, 29th May, 1922, cols. 1853–4, Vol. 174.] It is clear, therefore, that the abandonment of the Clause, so far from creating inequalities, would diminish the existing inequalities and wipe them off. What the people who are mainly affected say is this: "We are quite willing to take the verdict of the Courts as to whether this judgment does or does not apply, but do not take away our right to go to the Courts." What the Government are proposing to do is to say, "Whether you have rights or not, these words— and shall be deemed always to have been"— will take away that right. That will always be pleaded against any attempt to test the question as to whether or not these people have these rights. I appeal to the Chancellor of the Exchequer seriously to consider whether he cannot see his way to withdraw Clause 20. He does not require the Clause for the future, because the provisions of Clause 20 are already covered by the Finance Act of two years ago.

The Financial Secretary to the Treasury said, on the last occasion, that if our point were conceded it would cost £3,000,000. Surely, if that be so, that must be taken as an admission by the Financial Secretary that these people are entitled to the money, and that they have been taxed in excess. Obviously, if they are not entitled to it—and he still persists in that view, for, in an answer which he gave to me a few days ago, he said that they were advised that these people were not so entitled—the cost to the country would be nothing, except the cost of the action to determine which of the parties is right. I strongly appeal to the Chancellor of the Exchequer to withdraw the Clause and to leave the aggrieved persons to have full recourse to the Courts to see whether or not their contention that they should be given the advantage of this decision can be sustained in law.


I should like to join in the appeal which has been made so powerfully by my hon. Friend. The proposal which the Chancellor of the Exchequer is making in this Clause is thoroughly undesirable. It is another attempt, one of many which unfortunately have been made in this House during the last two or three years to bar subjects of the Crown from going to the Courts of this country and obtaining their rights there. There has already been a legal decision on this matter carried to the highest Court, and, in the judgment of the people who are affected, they are advised by eminent King's Counsel that they will have the benefit of that decision. The right hon. Gentleman says, "Whether you are advised or not, I am going to prevent you from getting the advantage of the House of Lords decision." He said so in a most peculiar way, because he says," I am advised by the Law Officers of the Crown that this does not apply to you, but if it does, I am not going to allow you to have your legal rights."

It is a most undesirable and unfair suggestion to make to a body of people whom we ought to look after. They are not wealthy people. There are about a quarter of a million of them, and they are what we might call small employed taxpayers. If the Government wants to start a new series of retrospective suggestions of this kind, these are the last people against whom we ought to be asked to legislate. Yesterday, in another place, a Bill was rejected mainly on the ground that it endeavoured to close the Courts of this country to its citizens, and it also endeavoured to upset a decision which had been obtained in the very highest Court. This Clause is a repetition of that principle, and it ought to be resisted in the same way that hon. Members resisted the suggestions in the War Charges (Validity) Bill. This is in no sense resistance against this particular Government. Many of my hon. Friends took exactly the same line when a proposal was made by a Government which, on general grounds, we always supported. I hope my hon. Friend will divide the Committee on this proposal, because it is a thoroughly bad one on the question of principle alone. I have received a communication from the Civil Servants' Joint Committee, in which they say: The point at issue is a comparatively simple one. The legal right of the employed taxpayer to average for Income Tax purposes over three years that portion of his emoluments which is of a fluctuating character has been established by a decision of the House of Lords in the recent case of McDonald v. Shand. In the opinion of eminent King's Counsel who have been consulted on the question there is no doubt that the decision in that case applies to the bonus which varies by reference to the cost of living. Under that decision a very large number of small income Tax payers, estimated at about one quarter of a million, who either have had no opportunity to appeal, or having given notice of intention to appeal have not yet had their appeals heard, have the right to adjustment and repayment for the years 1920–21 and 1921–22. The Government propose by retrospective legislation to deprive these taxpayers of their rights. I think that is a very fair summary of the suggestions which the right hon. Gentleman is making——

6.0 P.M. The opinion of counsel has been conveyed to the Chancellor of the Exchequer and to the Financial Secretary to the Treasury, and the course of the Debate indicates quite clearly that the Government is conscious of the fact that but for the introduction of retrospective legislation the taxpayers concerned would probably make good their claim. My Committee urge very strongly that what the Government is proposing constitutes a grave breach of equity and respectfully requests that during the Debate these rights may be preserved to the people from whom they have been taken. I say to the Chancellor of the Exchequer that that is a very moderate statement of the case. My own belief is that, whatever the sum of money involved, it is unwise and undesirable to take away people's rights in this way. I remember very well that when the Bill in connection with rents was introduced by the last Government, when a very small measure of retrospective legislation was suggested, which many of us on this side opposed, no one was more insistent in objecting than the present Prime Minister. I remember his getting up and making a speech, which I suppose his supporters would say was powerful, objecting roost strongly to legislation of this character. Yet to-day we have a Chancellor of the Exchequer bringing in retrospective legislation and hitting a class of the community which ought to receive the protection of the House and particularly of this Committee. I, therefore, hope that my hon. Friend who moved the Amendment, if he does not get satisfaction this afternoon, will register in the Lobby his conviction that this is not a proper or just or equitable way of dealing with a very large body of deserving people.


I would like to say a few words on this matter, which is one of very considerable importance, although it is highly technical in some of its aspects. The Chancellor of the Exchequer will not suppose that I am viewing with any favour any raid on the Treasury. On the contrary, I sympathise to the fullest possible extent with him in his vigilant guardianship of the interests of the general taxpayer against any particular section of the community. From that point of view—I do not know the precise sum that may be involved—my sympathies would be prima facie in favour of the Treasury. But I think that this is a rather serious and a very exceptional case. There are two classes of people involved. First of all, there are those who fall within the actual decision of the House of Lords in what is called the Shand case. I do not presume to pronounce an opinion, or even to suggest an opinion, as to whether the judgment of the House of Lords in that case was right or wrong. Here we are bound to defer to the decision of our supreme legal authority, and we must presume that the decision was right. In fact, there was no dissentient voice in any of the Courts before which the case came, or in the House of Lords itself. The result, therefore, is that we must take it that the law which was there laid down applies to people who are affected by this Clause, that is to say, to persons who, in addition to salary, receive a bonus, the amount of which is dependent on the profit of the year. I do not know haw many people are affected, but that right may he taken away by the Clause. It is a vested right, given to them by the decision of the highest tribunal in the land. I do not know whether the amount is small or great. I think it would be a bad example if that right were taken away by legislation, as is proposed in this Clause.

The other class of persons includes employés—we are told largely civil servants and many of them in the employment of local authorities and other bodies—whose eases may or may not be covered by the decision of the House of Lords. My law is far too rusty and out of date for me to presume to express even a hypothetical opinion on that point. It is an arguable point, and there is no lawyer in this House who will not say that it is an arguable point. The effect of this Clause, if passed as it stands, would be that these people would be precluded from asserting in the courts of law what may be an ill-founded but may be a well-founded claim in respect of the past. In other words, they have not been paid their full salaries; they have been paid salaries, less a deduction, the legality of which is open to question and dispute. I do not express any opinion as to what the possibilities of failure or success may be, but I suggest to the. Chancellor of the Exchequer, particularly in a case of this kind, with the persons concerned highly meritorious people and for the most part of small means, that it would leave in their minds a biting sense of hardship and that it would be a very bad precedent for this House to shut the door, not for the future, but to shut the door on what may be a well-founded claim based upon past services. I have no disposition or desire to embarrass the Government in the matter. On the contrary, I am giving them the best advice I can in the general interest. There is no question whatever about that, and the Chancellor of the Exchequer knows it perfectly well. I think it is not worth while to press a point which is open to so many objections, whatever may be the precise pecuniary advantages or disadvantages. I therefore appeal to my right hon. Friend not to press the Clause, but to allow the law to be settled in the Law Courts, and to allow all these vested rights, decided already by the judgment of the House of Lords, not to be interfered with.


I am afraid that I must ask for the indulgence of the Committee while I deal with a question which, as has been stated, is highly technical. I think I am justified in making that request in view of the importance of the principle at stake and the very large sum of money which is involved. The whole House will agree that no Government, whatever its political complexion, would have introduced a Clause of this kind in a Finance Bill unless there had been some very strong and commanding case. The question is whether, in all the circumstances, there is such a strong and powerful case as to justify the undeniably retrospective element of this proposal. We can best understand what the position is by going back to the exact facts of the employment of Shand. I make no apology for asking the attention of hon. Members to these details, because they go to the very root of the controversy before the Committee. Shand was employed by Nobel's Explosives under an agreement which amounted in popular form to this—that he got a salary of about £1,500, plus a fluctuating bonus, based on the profits of the concern from year to year, subject to a condition that under no circumstances would he get less in all than £4,000 a year. Originally, he was assessed in terms of the Act of 1918, which was a mere consolidation Act relating to previous legislation. He was assessed on the basis of his salary, plus the three years' average of his perquisite or fluctuating sum. Afterwards the Inland Revenue authorities sought to place the fluctuating element alongside the salary as a whole, and to assess the lot on the year of assessment. In other words, he was to be substantially in the position occupied by all people under Schedule E. Against that Shand brought an action in the Court of Session in Edinburgh, and the case afterwards went through the usual channels until the final decision in the House of Lords in 1923. In any case the Court of Session in Edinburgh and the House of Lords decided that that was a perquisite within the meaning of the rule embodied in the Act of 1918 or in earlier legislation, and therefore entitled, as distinct from the salary in Shand's case, to be placed on the basis of three years' average.

Let us be perfectly clear on the simple issue—that the salary was on the one year and this fluctuating perquisite or bonus ultimately on the three years' basis. Before any hon. Member jumps to the conclusion that there is any strict connection between what happened in Shand's case and the case of the War bonus in the Civil Service, I ask him to direct his attention to the comments of the learned Judge the Lord President of the Court of Session. There is not the slightest doubt that he founded his decision upon the fluctuating character of this bonus, something which emerged only after the profits had been ascertained, and what was in fact very largely the child of chance so far as this business was con- cerned. Can any hon. Member establish a close connection, or any kind of connection, between that fluctuating perquisite in a commercial concern and the War bonus of civil servants—that is what is mainly at stake—based on the rise and fall in the cost of living, but, at all events, something determined as to scale in advance.


If that be so, then these people will fail in the proceedings that they bring. Therefore, this is a re argument of the case.


May I make an appeal to the Committee? I shall be delighted later to reply to any questions, but it would help if hon. Members would bear with me during our statement of the case. In my judgment, there is no connection between the fluctuating bonus in this commercial undertaking in Shand's case and the War bonus of civil servants. Hon. Members may say, "If that he true, why do you introduce legislation which will make it impossible for these people to take the judgment of any Court in this country, and determine whether, in fact, their War bonus is on all fours with the decision in McDonald v. Shand." Everybody knows, first of all, that there is always an element of chance. I do not dispute it, and any Chancellor of the Exchequer at this Box would be compelled to tell the Committee that, if he was satisfied no real injustice was being done and that no anomaly of the kind I will afterwards mention would occur, it was his duty to protect the revenue against a chance decision on a technicality arising from certain circumstances affecting Income Tax within the Civil Service itself. That is the first point which I desire to put in making our case for the introduction of this retrospective Clause, and I hope to show in a few minutes that, in point of fact, if our opponents in this case succeeded to-night, it would introduce a new element into Income Tax administration as applied to the Civil Service and other classes of professional occupations in the community.

Before saying anything about that matter, I wish to take up one point made by the right hon. Gentleman the Member for Paisley (Mr. Asquith), because it is a point of real importance in connection with this Clause. The right hon. Gentle- man appeared to be under the impression that all people in the commercial world in the position of Shand, would be adversely affected by this retrospective proposal. May I make it perfectly plain that nothing of the kind is the case. This Clause has no reference whatever to the commercial world. This Clause, as it stands, is confined to War bonus in respect of the rise or fall in the cost of living. That is the beginning and the end of the Clause and to that extent the right hon. Gentleman's objection fails. What are the circumstances within the Civil Service? Here I must trespass on the patience of hon. Members in describing a situation which is from some points of view simple, but from others complicated. The Committee will recall that there was introduced in the Finance Bill of 1922 a Clause which deprived anybody, after that date, of this right to average fluctuating sums or perquisites instead of taking the actual remuneration of the year. So there is no difference of opinion on the fact that after 1922 no one had any case at all in this respect. As regards the state of affairs before 1922, nobody has any case at all whose assessment was final and conclusive at any time prior to that date. It is accented by all ex-Chancellors of the Exchequer, and I should suppose by every Member of this Committee, that if it were possible under any legal decision given in the Courts of this country, to go back and re-open assessments which were final and conclusive, the position of any Government, financially, and of any Chancellor of the Exchequer would be intolerable. A Chancellor of the Exchequer must have certainty as regards these final and conclusive assessments, and, therefore, the whole problem before us—and I do press this very strongly upon the Committee—is the simple problem, lying in the main within the Civil Service, as to how certain classes of assessments, not final and conclusive, are affected by this Clause.

May I remind hon. Members that the Income Tax system in this country as applied to the Civil Service, is materially different from the Income Tax system elsewhere in force. The Income Tax law has grown up in stages, with all kinds of anomalies and exemptions remedied from time to time as the result of Reports of Committees and Commissions and undoubtedly containing for the energetic and ingenious taxpayer a great many loopholes, which everybody knows can be discovered in a Court of Law. But the system within the Civil Service itself, has been described as archaic if not obsolete because it is a system of departmental assessment. It is common ground that under that system of departmental assessment, it is difficult to say when the assessments are final and conclusive. In so far as they are final and conclusive within the Civil Service to-night, no civil servant has any claim. In so far as they are not final and conclusive it is conceivable—although we are advised they have no claim in law—that civil servants might succeed. I have already reminded the House, as other Members have done, that they have not yet succeeded in a Court of Law, and I think therefore from that point of view the retrospective element is weakened. The assessments I am told turn very largely upon the initials of certain superior officials in particular offices and, if our opponents succeeded in defeating this Clause, a perfectly impossible state of affairs would arise within the Civil Service. We would come to this point, that in certain Departments in which the assessments were final and conclusive, they would have no claim whatever and in other Departments where the assessments are not final and conclusive—making the large assumption that they succeeded in a Court of Law—they might get repayment of certain sums of Income Tax in respect of an average of that bonus as opposed to the amount for the year of assessment.

I do not think that any hon. Member will dispute that it would be a perfectly impossible state of affairs and moreover—and I wish to press this point very strongly—it would be a state of affairs utterly inconsistent with the whole Income Tax practice in the Civil Service during recent times, at any rate, and I should think, for many years past. Be it remembered, it never occurred to any civil servant to prepare this claim until attention was directed to the decision in McDonald v. Shand in an entirely different sphere and because of certain circumstances in the Civil Service, into which I need not enter to-night, it was thought that this was a means of getting something from the revenue by asking for an average on a bonus determined by the rise or fall of the cost of living. There cannot be a shadow of a doubt or dispute about that general contention. You would, if this Clause were defeated, introduce something new, something that no civil servant had ever expected and something which would be, in my judgment, disastrous to the highest interests of the Civil Service and costly to the State. The hon. Member for Aylesbury (Mr. Keens) who promoted this Amendment, said if it was true that the cost would be £3,000,000 within the Civil Service, that was a measure of the injustice which had been done to civil servants. I think not. There has been no injustice to civil servants at all, because the civil servant who is mainly affected never made any claim for an average of this kind, and, as I have just said, never expected it until McDonald v. Shand crossed the horizon.

The whole importance of the financial prospect before us to-night lies first in the undoubted difficulty which would arise in administration, and secondly in the very large cost to other taxpayers, if a small section within the Civil Service get the benefit of this technical anomaly. I have ventured to take up the time of the Committee by arguing certain of these points, because there has been a campaign outside these walls, which we can all understand, but which I am afraid in large measure has been very far removed from the facts. A word or two about the cost and the possibilities of this Amendment if it were carried. We are reliably informed it would probably cost £3,000,000 for the section of civil servants involved. But the question would at once confront Parliament as to what we were to do to place all civil servants on a basis of uniformity. No, doubt, some hon. Members would argue that if uniformity were to be achieved, the only proper course would be to extend the benefit—up to 1922 at all events—to other classes of the Civil Service as well, and that would cost anything from £5,000,000 to £6,000,000 or more, apart altogether from the fact that it would be a departure from Income Tax practice in the Civil Service. There are also certain people outside, notably those employed by municipal authorities and others, who fall undeniably within Schedule E, and probably, in so far as their assessments were not final and conclusive, they could prefer a somewhat similar claim.

What the cost of that unexpected windfall to these taxpayers would be I am not in a position to-night to estimate. That it would be costly to the State there is not the least shadow of doubt, so that in all from £4,000,000 or £5,000,000 to £6,000,000 or £8,000,000, in round figures, is at stake, and I venture to suggest neither on the merits of the people affected, nor in the light of McDonald v. Shand, nor in the light of what is desirable in the Civil Service and what is desirable in Income Tax administration, can this Clause be successfully resisted. At all times, it is difficult for any Government to propose retrospective legislation. I fall back upon the question which I asked at the beginning of this speech—whether the circumstances of the case justify this course? I submit they do, and, moreover, I submit that no one is penalised in the commercial world—it does not touch them at all—and it merely maintains for civil servants and public officials the exact state of affairs which they had accepted all along until McDonald v. Shand appeared on the scene. That being so, I respectfully ask the Committee to reject the Amendment.


I am sure the Committee will not quarrel with the hon. Member for going at some length into the facts connected with this Clause and the questions raised, which I, personally, have found somewhat complicated and difficult to understand in all their bearings. That it is a question of great importance is emphasised by the presence of the right hon. Gentleman the Member for Paisley (Mr. Asquith), who has come down this afternoon to give us the benefit of his great weight, experience and authority upon a matter in which we may take it he has a special interest as an ex-Chancellor of the Exchequer. I, too, though only for a very brief period, was connected with the Treasury, and I feel it is one of those questions where one must take into consideration, as an important factor in the case, what is going to be the cost to the taxpayer for the benefit of only a section of the community.

That is only one fact, and it is not the one, I think, which any of us desire to emphasise as the most important, because if by this Clause we are really doing an injustice to a number of people, if we are really depriving them of something to which they have a just right and title, then I do not think we ought to be deterred from doing them justice by the cost to the Treasury, even if it rose to a much higher sum than the figure named by the hon. Gentleman opposite. But I would like to say a few words upon the equities of the case, as I have been able to understand it from the inquiries I have made, and from the speeches to which we have listened. The right hon. Member for Paisley, in his review of the circumstances, divided the cases which would be affected into two classes, first, those which were exactly on all fours with the case of McDonald v. Shand, and, secondly, those of the civil servants and others who have been in receipt of a War bonus.

I think the hon. Member opposite has disposed of the first of those two classes of cases, and has shown, as I myself have understood, that this Clause does not take away from them anything they have gained by the decision of the House of Lords, and applies only to the strictly limited class of cases connected with War bonus. As to whether those cases are likely to be covered by the House of Lords decision, of course it is not for a layman to express an opinion. I remember that the right hon. Gentleman did hold out to us a suggestion, in an earlier discussion on the subject, that we might have the benefit to-night of a statement from one or other of the Law Officers of the Crown. I do not see either of them here—[An HON. MEMBER: "There is only one"]—and I have some reason to suppose we are not likely to see more than half the number in any case. But I rather hope that, in view of the suggestion made by the hon. Gentleman himself upon an earlier occasion, it will be possible for us to hear the Attorney-General, and to know what is the view he takes on this particular matter.

But I think the real importance of the matter that we are discussing is that it raises again the question of retrospective legislation, and the House, very properly, will desire always to examine, with the greatest possible care, any appearance of anything in the nature of retrospective legislation. Before we consider whether this particular case is one which would justify legislation of that character, we might, perhaps, ask ourselves why we do object so strongly to retrospective legislation. I think it is because if a man has done something which is perfectly legal, which is in accordance with the law of the land, which he would not have done if the law had been different, and if, subsequently to his performing that action, the law is altered retrospectively, then he is made to have done something illegal which he would not have done had he been in possession of the coming change. Let me illustrate it by a very simple example. Suppose I buy a piece of land under which I know there are minerals. I pay a price for the land which includes the value, or the reputed value, of the minerals which are supposed to lie under it. If after that a law is passed of a retrospective character providing that as and from a certain date previous to the date at which I had completed my purchase the value of any minerals which lie under the surface shall not accrue to the owner, but shall accrue to the State, that is retrospective legislation of the worst possible kind, and it is entirely unfair and repugnant to our sense of justice.

In considering the particular case before us, I have tried to put to myself whether there is anything in it which is analogous to the sort of case that I have just illustrated. The only period which is covered is the period of the years 1920–21 and 1921–22. Nothing before 1920–21 or after 1922 can possibly be the subject of claims which might be made under the House of Lords decision. When did civil servants—because it affects civil servants for the most part—first become aware of the possibility of their getting anything back in respect of assessment made in those earlier years? Not till March, 1923, and, therefore, it is quite clear that even if such speculative and hypothetical rights as they may have, on the supposition that the case McDonald v. Shand may also cover the case of war bonus, were taken away from them, it cannot be said they are in the position of a man who has either done something or omitted to have done something in consequence of his believing the law of the land would remain the law of the land Nothing has been done or undone by those civil servants which they would not have done or undone if the law had been quite clear and altered in the sense of this Clause before 1923. Therefore, it seems to me, looking at the matter from the point of view of retrospective legislation, that if we consider the real reason why we object to retrospective legislation, that reason does not exist in this particular case, and the only objection, therefore, we have to legislation of that kind does not really, or ought not really, in this case to have any weight with us.

There is another question, and that is the question of the inequalities which might occur. Incidentally, I might, perhaps, put this point, which I do not think has been mentioned up to now. There was another celebrated case in the Courts which will be familiar to many hon. Members, namely, that known as the Sutton case. In the Sutton case, again, the question arose as to whether War bonus was, or was not, part of the full civil pay, but in that case the Civil Service contended that it was part of the full civil pay. They won their case, and I think it has cost, and may cost, the Treasury a considerable amount of money. Surely, they cannot have it both ways as part of the civil pay, and as a perquisite, and not part of the civil pay. I do suggest, therefore, that hon. Members who are taking it for granted that their contention must be right in this particular case, ought to bear in mind what happened in the Sutton case, because it is perfectly obvious that if the decision in the Sutton case be applied to this case, then the so-called perquisites must be reckoned as part of the regular pay of the civil servant.

There remains this further point. Whatever you do in this case, you cannot get equal justice for everybody. Certain individuals would come into a favoured position as compared with other individuals, not because of any extra right or justice on their side, not because they themselves were more deserving than the others, but simply by the accident that, through some laxness, or archaic procedure in certain Departments, their forms of assessment were not legally valid, and, consequently were not final and conclusive, and I cannot see any possibility of arguing that you should give this privilege which did not exist even in theory, until March, 1923, to these particular individuals, and deny it to all the others who happened to have been employed in a Department where the forms were properly complied with. I should think, for instance, in the Post Office, that the forms would be all final and conclusive, and that none of the officials in that Department, therefore, could come in for any of the possible benefits under the House of Lords decision. Then, I think, it has been suggested that certain municipal officials might also be deprived of their rights under this Clause. There, again, in the majority of cases where War bonus was given to municipal officials, their assessments have been closed once and for all, but you will get here and there certain individuals who slipped through, without it being known at the time that they were liable to Income Tax, and whose assessments, therefore, are not yet final and conclusive, and they alone would be the ones to benefit, if it were possible for them to claim under the House of Lords decision.

I have given careful thought and consideration to this question. My first impression was against this proposal, because I thought it was retrospective legislation, and I had a general dislike, as so many of us have, to that particular form of legislation, but further investigation of the facts, and further consideration of their bearings upon the whole situation, brought me finally to the conclusion that this Clause will not do injustice to anyone, but that if it were withdrawn, or if it were rejected, there would be an injustice, not merely to particular individuals, but to the general body of taxpayers.


I think everybody who has listened to this Debate will agree that it is a very interesting discussion, and it has this great merit, that though the actual matter which comes to be reviewed is a very technical matter, it can be debated, and it is in this discussion being debated, on grounds of general public policy. I care nothing at all about the mere technical aspects of the matter, but I think everybody feels that all of us here, Members of the House of Commons, have a really difficult duty to discharge, because we have to reconcile in our action to-day two very important responsibilities under which we live. One is the responsibility, not by any means limited, if I may say so, to the Chancellor of the Exchequer or the Government, but the responsibility of every Member of the House, to remember that we are guardians of the public purse in the vote we give, and I am not at all disposed, for my part, to encourage Members of the House, merely because they are not Ministers of the Crown, to regard themselves at liberty to vote away unlimited sums of public money without any regard to the taxpayers.

There is the second responsibility, which is very difficult to discharge. We have a great responsibility to see that if we are going to embark on that most dangerous and exceptional device, the device of deliberate, retrospective legislation, we do not do substantial injustice to a number of people who are entitled to call for fair treatment here. There is a sense in which people here are specially involved, people who are mostly, I believe, civil servants, and who believe they have got a special right to claim in this connection. It was not mentioned by the right hon. Gentleman opposite—I have no doubt he knows it, because of his experience at the Treasury—but the House may not always remember that a civil servant is in this very unusual position: he not only gets no notice of what the assessment of Income Tax affecting him is, he is not tendered any account, record, or statement which shows why it is deducted and how it is deducted, until very recently he had really no means of finding out.

That is to say, if a civil servant is in a position where his salary is £300 a year, he does not get the payment, month by month, or quarter by quarter, which that £300 represents, and is left himself to pay the Income Tax: what he gets is a smaller sum, pounds, shillings and pence, and the difference between the two is supposed to represent the just deduction according to the law made by the Department which he serves. Nobody doubts that those in the Department do it as well as they can, but it is quite obvious, if that is the position of the civil servant, if the fact is that a wrong deduction has been made, a deduction which leaves him with a less net salary than he ought to have, it is no light matter for the House of Commons to say: "If we leave things as they are you will get your correct salary; therefore, we will enact retrospective provision which will secure that you will have to be content with the salary which you get, which is less than that to which you are entitled."

While we have to reconcile these two things as fairly as we can for the civil servant—the civil servant has got into a position of tutelage where he has nothing to do with reckoning his own Income Tax, the thing is done by a high authority, which tenders him less than what is his due—where he has no means of knowing exactly what is right or wrong. I do say it is a strong order that these are the circumstances in which retrospective legislation can be passed. There is another circumstance to which I was rather surprised that the right hon. Gentleman did not refer. It is true it had reference to a colleague, the right hon. Gentleman the Member for Hillhead (Sir R. Horne) who was, I think, Chancellor in the year 1922, but the right hon. Gentleman opposite spoke again and again as if this suggested remedy to civil servants was something which first arose in the House of Commons in March or April, 1923. That is quite a mistake. That is the date of the decision in the House of Lords—the decision of the final Court. We are aware of the fact that there were people who were alleging that what was called Rule 4 under Schedule E really applied to taxation that was based upon the average of three years, and not the year of charge, before April, 1923, and indeed the right hon. Gentleman the Member for Hill head who was Chancellor of the Exchequer in 1922 introduced into the Finance Act of 1922 a provision which repealed the right of people to rely upon this Rule 4 which permitted the three years' average, and insisted for the future that if they were persons coming under Schedule E at all they must be taxed on the year of charge.

This very point, which is now presented as a difficulty of revenue, ought to have been present to the mind of the Chancellor of the Exchequer in 1922. He did what was perfectly right and proper. He came to the House of Commons, and said, I want you to agree to put into the Finance Act of 1922 that for the future this shall not happen, to put it, if you like, in the Schedule of repeal of provisions in the Finance Act of 1922—it will be found there—hon. Members will find that this House of Commons, in 1922, at the request of the then Chancellor of the Exchequer, a member of the Conservative party did what? We did not repeal retrospectively Rule 4! We said from 1922 onwards that if we were to have retrospective legislation that that was the time to do it. It really surprises me to hear the right hon. Gentleman opposite the Member for Ladywood (Mr. Chamberlain), an ex-Chancellor of the Exchequer saying in 1924, "I think the decision was quite right, we should, as before 1922, treat people who want to rely upon Rule 4 as if Rule 4 had never been on the Statute Book at all." In other words, in 1922 Parliament having so acted, we in 1924 are asked to legislate that everyone is to be treated as they had not been treated in 1920 and 1921.


Does not the right hon. Gentleman consider that what he says indicates that my right hon. Friend the Member for Hill head had no doubt in his own mind whatever at that time that there was therefore not any question of coming to any decision on the matter, that he was then merely legislating for the year 1922; and that, also, no civil servant at the time had the slightest idea that this question would probably arise later?


It is not a matter for heat; and we are trying to find out how this was; but I do think it is important to observe that what we are being asked to do in 1924 in regard to Rule 4, which has been cut out of the Statute Book since 1922. The question now comes, what is the right way to treat this thing? May I say, with very great respect, that though, of course, I have not officially the information—and I. make no claim whatever to understand this thing from the legal point of view—I am very greatly mystified by the language used by the Financial Secretary to the Treasury. The right hon. Gentleman suggests that if we leave things as they are we are perpetuating a gross inequality. I cannot understand that at all. I apprehend that the way in which civil servants, or the servants of a municipality, or the servant of anybody else, should raise this question would be quite simple. It would be by saying to his employer: "You have not paid me my proper salary, therefore pay me a little more." The idea that litigation would be litigation with the revenue is, I venture to think, quite a mistake. The issue is perfectly simple. I am, say, employed at the salary of £300 a year, and from that my employer has deducted, before he pays it to me, a certain sum which he states to be the right amount for Income Tax. I have only got the balance. I cannot understand how it can be said that it is necessary to pass this retrospective legislation in order to prevent fraud arising, and to prevent inequality as between one civil servant and another. It is the common experience of ordinary life that sometimes people can and sometimes people cannot enforce what you may call a stale claim—a claim as regards the past. If things are left as they are—if, indeed, these people have got any claim—about which I say nothing—then those who have a claim and make it any time will get the money due to them. Here we are being asked to legislate so that these people shall not get money due to them as salary.

On a Resolution during the early hours of the morning, a speech was made by the hon. and learned Gentleman the Member for Central Bristol (Sir T. Inskip), who was Solicitor-General in a previous administration. I would commend to hon. Members who may not have read it, the speech that the hon. and learned Gentleman then made. The hon. and learned Gentleman pointed out that you really would, by this retrospective legislation, be depriving people of their rights; otherwise, it was said, you would lose a lot of money. That is a most subversive proposition to lay down, certainly at this moment. The hon. and learned Gentleman pointed out—however, let me read his words—— What makes the case a little worse is that these are small men. My hon. and learned Friend was speaking in this way early in the morning—— I would rather see the Super-tax increased by a shilling or two shillings than that retrospective legislation should be imposed on the small men who can ill afford to bear this loss. I think the House of Commons will wish to realise how the matter stands. The hon. and learned Gentleman went on to say: The men who are affected are just the people who are touched by a difference of £3, £4 and £5 a year. They are men not of £700 a year, but of £300 or £400 a year with children to bring up. Feeling as I do upon this general principle of retrospective legislation my objection to this particular resolution is reinforced by the unpleasant feeling that we are taking action against the small man in whose defence I think any Member might desire to be eloquent and persistent."—[OFFICIAL REPORT, 12th May, 1924; col. 1096, Vol. 173.]


Will the right hon. and learned Gentleman permit me to say that in this matter the civil servant has lost nothing at all. The members of the Service now concerned have all he paid on the basis which is current now throughout the whole Civil Service. If this Clause were taken out of the Bill these civil servants might get something which they never expected to get.

7.0. P.M.


Surely, the hon. Gentleman will see that that argument is an argument for any sort of retrospective legislation! The point is, where you think, or fear, or suspect that the law, as we now understand it, may confer a benefit on the taxpayer, the Government of the day has to review the decision of the supreme tribunal, if the decision is one which leaves the Government surprised or uncomfortable, then, if they think well, they may come with retrospective legislation and take advantage of it! Surely, nobody can seriously lay that down. What makes the matter worse and not better here is that the hon. Gentleman the Financial Secretary has told us that he is, in his own mind, quite confident that there is, in fact, no resemblance at all between the case of these civil servants and the case of Shand. He adopted my Amendment on the Money Resolution to postpone the matter because he wanted to consult the Law Officers. I understand, therefore, that the Law Officers have been consulted. I am glad to see the, Attorney-General present. No doubt he will tell us whether he has not advised the Government that, as a matter of fact, the civil servant cannot take advantage of this. Supposing that is so—it is probably the case that the Attorney-General is right—what are we doing then? We are putting on the Statute Book, perfectly gratuitously, a gross piece of retrospective legislation which is certainly going to give a very large number of people to think that you have dealt with them harshly, unfairly—and all for nothing! I am bound in all candour to say, because I wish to serve the House as well as I can, that I myself do not think that all the arguments that have been suggested against the civil servants' case are quite as strong as could be supposed. For instance, the right hon. Gentleman opposite referred to the case of Sutton. I feel pretty confident that the case of Sutton has little to do with it. The question there was whether a Post Office servant who, early in the War volunteered for active service under a promise from the Post Office that he would get his civil as well as his military pay, was not entitled to say that his military pay should be added to the civil rewards for the time being made to people who were continuing in the Post Office at St. Martins-le-Grand. If I may say so without offence, I am certain no lawyer would imagine that the interpretation of a document which turned on the meaning of the word "pay" has much to do with the proper construction of Rule 4 of the Income Tax Act.

The conclusion, however, of the whole matter is this. I earnestly desire to do everything I can to help to protect the revenue in every proper case. I do not rule out the possibility of retrospective legislation in every or any circumstances. I do not think the right hon. Gentleman who has just spoken has been successful in drawing this distinction. You are here dealing with a number of people who are apparently advised, rightly or wrongly, that they have a certain right. Their right is going to be the right of saying to different Government Departments, "In 1920 and 1921 you paid me £5 or £10 too little." I have no doubt that is very annoying to the Departments. It means a great deal of inquiry and is extremely disturbing. I am afraid I take these estimates of prodigious losses as highly speculative estimates. No doubt they are the best figures available. I do not see my way to say we ought to authorise the Labour Government in these circumstances to pass what is a perfectly clear piece of retrospective legislation which has no effect whatever unless it is the effect of depriving a number of people, and mostly small people, of a right they conceive that they have.

I would beg hon. Gentlemen in all quarters of the House to consider what is going to be the nature of this precedent. We ought to limit retrospective legislation to the smallest dimensions. If it turns out, as it very well may, that these people have no right under the decision at all, no harm is done; whereas, if we do this in the House of Commons to-day, what answer have we if, on some other occasion, when some other class of the community is believed to have established its rights in a Court of Law, and others try to do the same, the Govern- ment say, "We do not care anything about the Courts of Law; we propose to mould and mould retrospectively the law of this country, so that it shall fit in with our views." It was said that this is nothing more than a technicality. The civil servant has no means of finding out whether the deduction is right or wrong. It was not until 1922 that he was given any right to appeal like any other taxpayer. We are bound here to have regard to the claims of these men who, as I should hope people in all parts of the House will think, cannot really be got rid of by saying, "This is a piece of good fortune which retrospectively we should take away."

The ATTORNEY - GENERAL (Sir Patrick Hastings)

I only interpose to say one word more or less in answer to questions put by my right hon. and learned Friend the Member for Spen Valley (Sir J. Simon). The case on this Clause has been put by the Financial Secretary and the right hon. Gentleman the Member for Ladywood (Mr. N. Chamberlain), and I think it would be wasting time if I were to add anything in support of their arguments. I understand my right hon. and learned Friend has asked whether I am in a position to say that those civil servants have no claim in law under McDonald v. Shand. My answer to that, and I think it is the only one I could give, is that no legal man could ever say that. It is exactly the same question as was put before this House when we were discussing the War Charges (Validity) Bill, when the question arose as to whether those cases were barred by the indemnity. There has been a decision that they were. One hon. Member who was a lawyer expressed the view that that decision was right. I remember I was asked the same question whether it was right or wrong, and the answer was bound to be that nobody could tell until the decision of the highest Court. I do not believe anybody can undertake to say with any degree of certainty whether these civil servants have a claim or have not.

One further word on a matter which seems to me, quite apart from the matter of the law, merely dealing with the fundamental principle underlying it. The position is this. As all Members will realise, in almost every case of a person who is assessed to Income Tax there comes a moment when he does not appeal against it, and the assessment becomes final and conclusive. There is with regard to some of the civil servants a hiatus. There is a very intricate method of calculating their Income Tax assessment, and in some cases we are advised that the assessment is not technically in proper form. It has not been signed in the right place. Some rule has not been complied with. It is only in respect of those cases that any claim can arise.

Arguments about retrospective legislation are very familiar. Everyone objects, in theory and practice, to retrospective legislation, but by the time we know there are cases where it must be, as in the War Charges Validity Bill. Here, in this case, the only object of this Clause is to prevent a real injustice which would be an injustice to all others who would be liable to make good this deficiency, and injustice to them and in favour of whom? Of people who never had anything but merely technical rights. They were in exactly the same position as every one of their fellows. What would happen if this Clause were not passed is this. On one side you would have members of the Civil Service who did not claim at all, whether this Clause be passed or not, and alongside, others who, owing to this technical defect, might conceivably have a claim; and the claim is one of which they were not only completely ignorant but which no one ever intended or thought or desired should arise. Anyone who has anything to do with it knows that in every Income Tax Act innumerable technical difficulties arise, because there may be one irregularity which may conceivably affect a very small proportion. I do with some confidence ask the Committee to accept the argument of my right hon. Friend the Member for Ladywood and the Financial Secretary and say that it is a case in which far greater injustice would be done by not passing this Clause than by passing it.


I cannot understand the last argument put forward by the Attorney-General. I understood from the speech of the Financial Secretary to the Treasury that very large sums were involved, running up to £8,000,000. Now the Attorney-General has explained that the only cases which can arise are cases where there is some sort of irregularity which must apply only to a small number of civil servants, and I submit that the sum involved cannot be very large. I think the House is entitled to know before it is asked to embark on this retrospective legislation whether the sums are large or whether there are only a few cases. I am very much opposed to retrospective legislation, and it will take a great deal of argument to convince me that we should go in for it.


In spite of the very clear and convincing way in which the Financial Secretary to the Treasury put his case, and the support from my right hon. Friend the Member for Ladywood (Mr. N. Chamberlain), I am still unconverted. I regard this as a matter in which I have the greatest sympathy with the Government's case, and I do not think it is a case which any of us should treat from the party point of view. The seriousness of it is in the precedent that we shall establish if we pass this Clause. May I point out one thing which may be apt to mislead the House. As the right hon. and learned Gentleman the Member for Spen Valley (Sir J Simon) has pointed out, this case has not yet been decided by the Court, and the Government are proposing, before the case ever comes before the Courts, to put an interpretation on law in the past and debar the Courts from giving to the subject the right which he has under the law. I do urge hon. Members that, however much this might cost, there is a principle at stake which this House should not let go whatever the cost may be. It is not merely a question of retrospective legislation in the ordinary sense of the term but it is a question of whether Parliament is going to be setting a precedent for overriding the Courts of Law, and constituting Parliament—which is by no means constituted by lawyers, thank Heaven for that—a supreme tribunal, not merely for the making of laws, but for the interpretation of laws under which the subjects of this country have been living in the past. Therefore, in spite of the very convincing case put by the Financial Secretary to the Treasury, I cannot do otherwise than Support the Amendment, or oppose the Clause as it stands, and I hope the bulk of my friends will take that line,


May I put one consideration before the Committee? It seems to me that the Committee is to-day discharging a function for which it is not qualified. It is, in fact, trying a case in regard to civil servants when it is not determined whether that case comes within "McDonald v. Shand." We have had legal arguments on one side and the other. The Financial Secretary to the Treasury put a strong legal argument before the Committee indicating that It was his opinion that civil servants are not entitled to benefit by this judgment On the other hand, the Attorney-General has not spoken with equal confidence, and the right hon. Gentleman the Member for Ladywood (Mr. N. Chamberlain) has gone with great care into the issue involved. Let me make this clear, that this is a point upon which this Committee is not fitted to pronounce judgment, and, if this Bill is passed, we shall be taking away rights which certain people possess. I suggest that we are not in a position to

do anything of the kind. Either these people have a sound cause of action, or they have not. If they have, it is not for us to pronounce judgment. Let them go to the Courts. If, as the Financial Secretary suggests, they have a bad case, they will lose in the Courts, and the Treasury will lose nothing. If, on the other hand, they have a sound cause of action, if they have been wrongly charged with Income Tax, they are surely entitled to a return on their money. Then if any injustice arises as between different classes of civil servants, it will be for the House of Commons to intervene. Under the circumstances, I think it is our duty to reject the Clause.

Question put, "That the words proposed be left out stand part of the Clause."

The Committee divided: Ayes, 242; Noes, 185.

Division No. 127.] AYES [7.20 p.m.
Adamson, Rt. Hon. William Davidson, Major-General Sir J. H. Hennessy, Major J. R. G.
Adamson, W. M. (Staff., Cannock) Davies, Evan (Ebbw Vale) Hillary, A. E.
Alden, Percy Davison, J. E. (Smethwick) Hirst, G. H.
Alexander, A. V. (Sheffield, Hillsbro') Dickson, T. Hodge. Lieut.-Col. J. P. (Preston)
Alexander, Brg.-Gen. Sir W. (Glas. C.) Dukes, C. Hodges, Frank
Alstead, R. Duncan, C. Hoffman, P. C.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Dunnico, H. Hogg, Rt. Hon. Sir D. (St. Marylebone)
Astor, Maj. Hn. John J. (Kent, Dover) Edwards, C. (Monmouth, Bedwellty) Hope, Rt. Hon. J. F. (Sheffield, C.)
Astor, Viscountess Edwards, G. (Norfolk, Southern) Howard, Hn. D. (Cumberland, Northrn.)
Attlee, Major Clement R. Egan, W. H. Howard-Bury, Lieut.-Col. C. K.
Ayles, W. H. Elliot, Walter E. Hudson, J. H.
Baker, Walter Erskine, James Malcolm Monteith Hughes, Collingwood
Baldwin, Rt. Hon. Stanley Finney, V. H. Jackson, Lieut.-Colonel Hon. F. S.
Barker, G. (Monmouth, Abertillery) Forestier-Walker, L. Jackson, R. F. (Ipswich)
Barnes, A. Gardner, B. W. (West Ham, Upton) Jenkins, W. (Glamorgan, Neath)
Barnston, Major Sir Harry Gardner, J P. (Hammersmith, North) Jephcott, A. R.
Batey, Joseph Gavan-Duffy, Thomas Jewson, Dorothea
Beckett, Sir Gervase Gibbins, Joseph John, William (Rhondda, West)
Bellairs, Commander Carlyon W. Gibbs, Col. Rt. Hon. George Abraham Johnston, Thomas (Stirling)
Betterton, Henry B. Gillett, George M. Jones, Morgan (Caerphilly)
Bondfield, Margaret Gilmour, Colonel Rt. Hon. Sir John Jones, T. I. Mardy (Pontypridd)
Bowerman, Rt. Hon. Charles W. Gosling, Harry Jewett. Rt. Hon. F. W. (Bradford, E.)
Brassey, Sir Leonard Gould, Frederick (Somerset, Frome) Kennedy, T.
Bridgeman, Rt. Hon. William Clive Graham, D. M. (Lanark, Hamilton) Kenyon, Barnet
Broad, F. A. Graham, W. (Edinburgh, Central) King, Captain Henry Douglas
Bromfield, William Greenall, T. Kirkwood, D.
Brunner, Sir J. Grenfell, D. R. (Glamorgan) Lambert, Rt. Hon. George
Buchanan, G. Grenfell, Edward C. (City of London) Lane-Fox, Lieut.-Colonel G. R.
Buckle, J. Griffiths, T. (Monmouth, Pontypool) Lansbury, George
Bull. Rt. Hon. Sir William James Groves, T. Law, A.
Bullock, Captain M. Grundy, T. W. Lawrence, Susan (East Ham, North)
Burman, J. B. Guest, J. (York, W. R., Hemsworth) Lawson, John lames
Cape, Thomas Guinness, Lieut.-Col. Hon. W. E. Leach, W.
Cayzer, Sir C. (Chester, City) Hacking, Captain Douglas H. Lee, F.
Chamberlain, Rt. Hn. J. A. (Birm. W.) Hall, F. (York, W. R., Normanton) Lloyd-Greame, Rt. Hon. Sir Philip
Chamberlain, Rt. Hon. N. (Ladywood) Hall, G. H. (Merthyr Tydvil) Locker-Lampson, G. (Wood Green)
Charleton, H. C. Hardle, George D. Loverseed, J. F.
Church, Major A. G. Harland, A. Lowth, T.
Clarke, A. Harmsworth, Hon. E. C. (Kent) Lunn, William
Clayton, G. C. Hartshorn, Rt. Hon. Vernon Mackinder, W.
Climie. R. Hastings, Sir Patrick Maclean, Nell (Glasgow, Govan)
Clynes, Rt. Hon. John R. Hastings, Somerville (Reading) Macnaghten, Hon. Sir Malcolm
Colfox, Major Wm. Phillips Haycock, A. W. Maitland, Sir Arthur D. Steel-
Conway, Sir W Martin Healy, Cahir McNeill, Rt. Hon. Ronald John
Cope. Major William Hemmerde, E. G March, S.
Costello, L. W. J. Henderson, Rt. Hon. A. (Burnley) Martin, W. H. (Dumbarton)
Cove, W. G. Henderson, T. (Glasgow) Maxton, James
Crittall, V. G. Henderson, W. W. (Middlesex, Enfld) Middleton, G.
Crooke, J. Smedley (Derltend) Honn, Sir Sydney H. Mills, J. E.
Milne, J. S. Wardlaw Roundell, Colonel R. F. Varley, Frank B.
Mitchell, W. F. (Saffron Walden) Samuel, A. M. (Surrey, Farnham) Viant, S. P.
Montague, Frederick Samuel, H. Walter (Swansea, West) Vivian, H.
Morel, E. D. Scott, Sir Leslie (Liverp'l, Exchange) Wallhead, Richard C.
Morrison, Herbert (Hackney, South) Scrymgeour, E. Ward, Col. L. (Kingston-upon-Hull)
Mosley, Oswald Scurr, John Warne, G. H.
Muir, John W. Sexton, James Watson, W. M. (Dunfermline)
Murray, Robert Shaw, Rt. Hon. Thomas (Preston) Watts-Morgan, Lt.-Col. D. (Rhondda)
Naylor, T. E. Sherwood, George Henry Webb, Rt. Hon. Sidney
Newman, Sir R. H. S. D. L. (Exeter) Shinwell, Emanuel Wedgwood, Col. Rt. Hon. Josiah C.
Nichol, Robert Simms, Dr. John M. (Co. Down) Welsh, J. C.
Nixon, H. Smillie, Robert Westwood, J.
O'Grady, Captain James Smith, Ben (Bermondsey, Rotherhithe) Wheatley, Rt. Hon. J.
O'Neill, Rt. Hon. Hugh Smith, T. (Pontefract) Whiteley, W.
Paling, W. Snell, Harry Wignall, James
Palmer, E. T. Snowden, Rt. Hon. Philip Williams, David (Swansea, E)
Parkinson, John Allen (Wlgan) Somerville, Daniel (Barrow-in-Furn'ss) Williams, Dr. J. H. (Llanelly)
Pease, William Edwin Spence, R. Williams, Lt.-Col. T. S. B. (Kennington)
Penny, Frederick George Spender-Clay, Lieut.-Colonel H. H. Williams, Maj. A. S. (Kent, Sevenoaks)
Percy, Lord Eustace (Hastings) Stamford, T. W. Stephen, Campbell Williams, T. (York, Don Valley)
Perry, S. F. Stewart, J. (St. Rollox) Wilson, C. H. (Sheffield, Attercliffe)
Pethick-Lawrence, F. W. Sutton, J. E. Wilson, Col. M. J. (Richmond)
Pilditch, Sir Philip Sykes, Major-Gen. Sir Frederick H. Wilson, R. J (Jarrow)
Ponsonby, Arthur Thomas, Rt. Hon. James H. (Derby) Windsor, Walter
Potts, John S. Thompson, Piers G. (Torquay) Winterton, Rt. Hon. Earl
Pownall, Lieut.-Colonel Assheton Thorne, W. (West. Ham, Plalstow) Wolmer, Viscount
Raffety, F. W. Thurtle, E. Wright, W.
Raynes, W. R. Tinker, John Joseph Yate, Colonel Sir Charles Edward
Richards, R. Tout, W. J. Young, Andrew (Glasgow, Partick)
Richardson, R. (Houghton-le-Spring. Trevelyan, Rt. Hon. C. P.
Ritson, J. Turner, Ben TELLERS FOR THE AYES.—
Romeril, H. G. Turner-Samuels, M. Mr. Spoor and Mr. John Robertson.
Rose, Frank H.
Acland, Rt. Hon. Francis Dyke Edmondson, Major A. J. Linfield, F. C.
Agg-Gardner, Rt. Hon. Sir James T. Ednam, Viscount Lorimer, H. D.
Ainsworth, Captain Charles Edwards, John H. (Accrington) Lowe, Sir Francis William
Allen, R. Wilberforce (Leicester, S.) Emlyn-Jones, J. E. (Dorset, N.) Lumley, L. R.
Aske, Sir Robert William England, Colonel A. Lyle. Sir Leonard
Balfour, George (Hampstead) Falconer, J. McCrae, Sir George
Barclay, R. Noton Falle, Major Sir Bertram Godfray MacDonald, R.
Barrie, Sir Charles Coupar (Banff) Ferguson, H. Macfadyen, E.
Blrchall, Major J. Dearman Fletcher, Lieut.-Com. R. T. H. McLean. Major A.
Black, J. W. Foot, Isaac Macpherson, Rt. Hon. James I.
Blades, Sir George Rowland Frece, Sir Walter de Makins, Brigadier-General E.
Bonwick, A. Fremantle, Lieut.-Colonel Francis E. Mansel, Sir Courtenay
Bourne, Robert Croft Galbraith, J. F. W. Marriott, Sir J. A. R.
Bowater, Sir T. Vanslttart Gates, Percy Martin, F. (Aberd'n & Kinc'dine, E.)
Bowyer, Capt. G. E. W. Gilbert, James Daniel Mason, Lieut.-Col. Glyn K.
Bramsdon, Sir Thomas Gretton, Colonel John Masterman, Rt. Hon. C. F. G.
Brass, Captain W. Grigg, Lieut.-Col, Sir Edward W. M. Millar, J. D.
Briant, Frank Hamilton, Sir R. (Orkney & Shetland) Moles, Thomas
Briscoe, Captain Richard George Hannon, Patrick Joseph Henry Mond, H.
Buckingham, Sir H. Harbord, Arthur Morris, R. H.
Burnie, Major J.(Bootle) Harney, E. A. Morse, W. E.
Butt, Sir Alfred Hartington, Marquess of Muir, Ramsay (Rochdale)
Cassels, J. D. Harvey, T. E. (Dewsbury) Nesbitt, Robert C.
Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.) Herbert, Dennis (Hertford, Watford) Nicholson, O. (Westminster)
Chadwick, Sir Robert Burton Hill-Wood, Major Sir Samuel Nicholson, William G. (Petersfield)
Chapman, Sir S. Hindle. F. Nield, Rt. Hon. Sir Herbert
Chapple, Dr. William A. Hobhouse, A. L. Oliver, P. M. (Manchester, Blackley)
Churchman, Sir Arthur C. Hogbin, Henry Calrns Oman, Sir Charles William C.
Clarry, Reginald George Hohler, Sir Gerald Fitzroy Owen, Major G.
Cobb, Sir Cyril Hood, Sir Joseph Pattinson, S. (Horncastle)
Collins, Sir Godfrey (Greenock) Hopkinson, A. (Lancaster, Mossley) Pennefather, Sir John
Collins, Patrick (Walsall) Hore-Bellsha, Major Leslie Perring, William George
Cory, Sir Clifford Howard, Hon. G. (Bedford, Luton) Phillipps, Vivian
Cowan, D. M. (Scottish Universities) Hume-Williams, Sir W. Ellis Pilkington, R, R.
Cowan, Sir Wm. Henry (Islingtn. N.) Hunter-Weston, Lt.-Gen. Sir Aylmer Pringle, W. M. R.
Croft, Brigadier-General Sir H. Huntingfield, Lord Raffan, P. W.
Cunliffe. Joseph Herbert James, Lieut.-Colonel Hon. Cuthbert Rathbone, Hugh R.
Davies, Ellis (Denbigh, Denbigh) Jenkins, W. A. (Brecon and Radnor) Rea, W. Russell
Davies, Maj. Geo. F. (Somerset, Yeovil) Johnstone, Harcourt (Willesden, East) Rees, Sir Beddoe
Davies, Sir Thomas (Clrencester) Jones, C. Sydney (Liverpool, W. Derby) Rees, Capt. J. T. (Devon, Barnstaple)
Dawson, Sir Philip Jones, Henry Haydn (Merioneth) Remnant, Sir James
Deans, Richard Storry Jones, Rt. Hon. Leif (Camborne) Rhys, Hon. C. A. U.
Dickie, Captain J. P. Jowitt, W. A. (The Hartlepools) Richardson, Lt.-Col. Sir P. (Chertsey)
Dixey, A. C. Kay, Sir R. Newbald Roberts, Samuel (Hereford, Hereford)
Dixon, Herbert Kedward, R. M. Robertson, T. A.
Dodds, S. R. Kindersley, Major G. M. Robinson, Sir T. (Lancs., Stretford)
Duckworth, John Laverack, F. J. Robinson, W. E. (Burslem)
Dudgeon, Major C. R. Leasing, E. Ropner, Major L.
Russell, Alexander West (Tynemouth) Stuart, Hon. J. (Moray and Nalrn) Wheler, Lieut.-Col. Granville C. H.
Russell-Wells, Sir S. (London Univ.) Sturrock, J. Leng White, H. G. (Birkenhead, E.)
Samuel, Samuel (W'dsworth, Putney) Sunlight, J. Williams, A. (York, W. R., Sowerby)
Sandeman, A. Stewart Sutherland, Rt. Hon. Sir William Willison, H.
Savery, S. S. Tattersall, J. L. Wilson, Sir C. H. (Leeds, Central)
Seely, H. M. (Norfolk, Eastern) Terrington, Lady Windsor-Clive, Lieut.-Colonel George
Simon, E. D. (Manchester, Withington) Thompson, Luke (Sunderland) Winfrey, Sir Richard
Simon, Rt. Hon. Sir John Thomson, Trevelyan (Middlesbro. W.) Wintringham, Margaret
Sinclair, Major Sir A. (Calthness) Thornton, Maxwell R. Wise, Sir Fredric
Smith-Carington, Neville W. Vaughan-Morgan, Col. K. P. Yerburgh, Major Robert D. T.
Somerville, A. A. (Windsor) Warrender, Sir Victor
Spencer, H. H. (Bradford, S.) Watson, Sir (Pudsey and Otley) TELLERS FOR THE NOES.—
Spero, Dr. G. E. Webb, Lieut.-Col. Sir H. (Cardiff, E.) Mr. T. Keens and Sir Kingsley
Stanley, Lord Wells, S. R. Wood.
Starmer, Sir Charles Weston, John Wakefield

Question, "That the Clause stand part of the Bill," put, and agreed to.

The DEPUTY-CHAIRMAN (Mr. Entwistle)

I do not propose to take any further Amendments on this Clause.

Clause ordered to stand part of the Bill.