HC Deb 08 July 1924 vol 175 cc2142-5

Where any person shall after the thirty-first day of December, nineteen hundred and eighteen, have expended any capital sum on buildings or equipment, or which shall be provided in pursuance of any statute or regulation, or which in the opinion a the General Commissioners shall be for the benefit of his employes, such person in computing the amount of the profits or gains to be assessed to income tax in respect of his trade or business may after the passing of this Act deduct such an amount as shall be equivalent to interest on such capital expenditure at the rate of five per cent. per annum.—[Mr. Hannan.]

Brought up, and read the First time.

Mr. HANNON

I beg to move "That the Clause be read a Second time."

I am afraid after the emphasis which the Chancellor of the Exchequer has laid that under the fundamental principle in Income Tax law administration no allowance can be made in relation to capital expenditure. I am put in a somewhat awkward position in submitting this Clause to the Committee. I would plead, however, that the capital expenditure incurred on welfare work which essentially has for its Objective the improvement of the conditions of work-people in the factories of this country ought to receive special consideration, even although it may be described as capital expenditure. This question has been before the House on previous occasions. In 1921 the right hon. Gentleman who is now the Chancellor of the Duchy of Lancaster a colleague of my right hon. Friend the Chancellor of the Exchequer made a powerful appeal to this House for the same object for which I am pleading and his Clause was practically on all fours with the one I am submitting to-night. In a speech to the House on that occasion he said: what we now want to do is to press on the Government— of course he was pressing on another Government at that time— the urgent necessity of treating money spent on putting up buildings for welfare work as a legitimate reduction of profits for Income Tax as calculated under this new Clause. I am asking the Chancellor of the Exchequer whether he will make an allowance or a rate of interest not exceeding 5 per cent. on capital expenditure incurred for this purpose. The progress of welfare work throughout the country during the past five or six years is one of the most interesting aspects of industrial organisation, and I am sure nobody in this House has a more friendly feeling towards social work of that character than the Chancellor of the Exchequer himself. There are a great many employers in this country who have expended a considerable sum upon this admirable work, and many people say that work of this kind is a very good business in itself; it enhances the efficiency of the workers and raises the productive capacity of the establishment in which they work. But the Chancellor of the Exchequer will also realise this that if he desires to have welfare work of this quality extended right through the country some inducement ought to be offered to a great many persons responsible for employment who have not the same generous conception of their public responsibility or those who have already taken up this work. It is mainly to bring within the fold those who have not taken a share in this work that I am moving this Clause. We are doing nothing better in this country to-day than the promotion of various schemes of this nature, and if the Chancellor of the Exchequer can help in promoting that work, even if he violates one of the great fundamental principles upon which Income Tax administration is based, he will be rendering a very great service to the country.

Mr. CLARRY

I have a Clause down in my name later on the Paper which is to the same effect in some respects, as the Clause before the Committee. It is a matter of opinion, I should say, as to whether welfare work is a capital charge or not. Without doubt it is of very great value to the workers and to the industry itself. It makes for much greater contentment amongst the workers. I hope the Chancellor of the Exchequer will consider one or other of the Clauses or an amalgamation of the two in dealing with this matter.

Mr. SNOWDEN

I do not think that the hon. Gentleman who moved this Amendment will quarrel with me when I say that this is the most impossible Amendment which has been put before the Committee during the course of the Debate. It not only violates the fundamental basis or conditions of the Income Tax law, but is a proposal to relieve employers from taxation of capital expenditure which has been employed by them for the sake, as was admitted by the hon. Gentleman, of increasing the profits of their business.

Mr. HANNON

That statement is entirely too sweeping. There are limitations.

Mr. SNOWDEN

But the hon. Gentleman who made the statement made no limitations. I remember having a conversation with Lord Leverhulme in the dining room in the House some time ago and he told me that in his early days, when he kept horses, he groomed them well and fed them well, and he found that they worked better for it. Then he said, "when I became an employer of labour and remembered my experience with horses, I tried it on men and found that men were like horses in that respect, that they responded to good treatment."

Of course any employer will spend money on welfare work because, as the American said to me, it pays. May I add that, under the existing law, annual contributions made by the employers for the maintenance of the welfare institutions are exempt.

Mr. HANNON

I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.