§ For the removal of doubts be it enacted that proviso (b) to Sub-section (1) of Section, thirty-two (which relates to exemption of superannuation funds from Income Tax) of the Finance Act, 1921, shall not apply in respect of any payments to a superannuation fund which is established under any local Act or any Order confirmed by or having the effect of an Act of Parliament for the superannuation of persons employed by local authorities.—[Mr. William Graham.]
§ Brought up, and read the First time.
§ Mr. W. GRAHAMI beg to move, "That the Clause be read a Second time."
Superannuation schemes were established under certain rules of the Friendly Societies Act on the one hand and other superannuation schemes under Acts of Parliament. As hon. Members know, superannuation grew up in this country in a rather haphazard way, and some years ago local authorities adopted superannuation schemes under the Friendly Societies Act and later, particularly in 1922, other superannuation schemes for Local Government officers were adopted under an Act of Parliament.
Under the Finance Act of 1921 the contributions to a superannuation scheme are definitely excluded from Income Tax, but it so happens that, where schemes are registered under the old Friendly Societies Acts, they get only a partial abatement of Income Tax, whereas, if a scheme proceeds under the general Act of Parliament of, say, 1922, it gets the benefit of the full abatement. Whatever was the intention of the Clause regarding friendly societies, I am sure the House will agree that it was never intended to treat local government officers differently in this matter, because, after all, you are dealing here with exactly the same class of people, namely, local government officers employed by the local authorities in this country, and we find ourselves in this extraordinary position, that, because certain schemes happen to be registered under the Friendly Societies Acts, they get only a partial abatement for Income Tax purposes, whereas, if they are registered under the general Act of Parlia- 1248 ment, they get a full abatement. That was never intended at all, and I am quite sure I have only to state the case to the Chancellor of the Exchequer to find a remedy to-night.
The other point is this: The House knows that very often, under a superannuation scheme, it is necessary for an employed person—and here again it is a local government officer in question—to pay in a lump sum contribution in respect of previous service. Now where he is making the ordinary annual contributions year by year he gets an abatement for Income Tax purposes, but if he pays in a lump sum in respect of prior service that is not treated as an ordinary annual contribution. Let me make it perfectly clear that I agree at once that it is not an ordinary annual contribution, but the strange position is this, that if an employed person was asked to pay a little higher rate for a year or two in respect of that prior service, that would be regarded as an ordinary annual contribution, and he would get the benefit of the Income Tax exemption. Now that state of affairs is, I think, altogether unexpected, and I would even say irregular. The whole object of the recommendations of the Royal Commission on Income Tax in 1919 was to give a definite encouragement—at all events, it was part of the intention—to the formation of these superannuation schemes. I hope that by the adoption of the Clause the right hon. Gentleman will do away with an anomaly which undoubtedly exists in the treatment of the Income Tax on these superannuation funds.
§ Mr. GEORGE THORNEI do not desire to amplify what my right hon. Friend the Member for Central Edinburgh (Mr. Graham) has just stated, but having myself been for many years associated with local authorities, I have been brought very closely into contact with those whom they employ, who are referred to in this new Clause, and they, I know, as the House will recognise, render such effective service to the community that it would seem to be a special matter of regret if they felt themselves subject to any special injustice. My right hon. Friend has indicated what we regard as the injustice, and if it be an injustice, as I believe it is, I feel sure it will receive the favourable considera- 1249 tion of the Government, and I hope they may be able to respond to my right hon. Friend.
§ 11.0 P.M.
§ Mr. BANKSI would very much like the right hon. Gentleman to apply His mind to a little doubt which the speech of the right hon. Member for Central Edinburgh (Mr. W. Graham) raised in my mind. The Clause refers, I apprehend, to the position of local government officers, and the right hon. Gentleman said that in some cases where a superannuation fund is operative it was necessary for some persons, to put themselves into benefit, to pay contributions in respect of a period already gone by, and if they paid a lump sum they could not get any abatement, but if the retrospective payments were spread over a period by annual contributions they did get an abatement. A little difficulty has arisen in my own constituency about a matter of this sort. In 1922 the Great Western Railway inaugurated a superannuation scheme, and in that year it was decided that the incomings and outgoings of railway servants had to be assessed on the actual incomings and outgoings of the year, and not of the three previous years. Those in the superannuation scheme, in order to put themselves into immediate benefit, had to pay contributions for 10 previous years and it was arranged that they should do so by an increased rate of annual payment for the succeeding four years. They put down that annual payment as an allowance in their return, and for two years the Income Tax authorities allowed it, but now they have all received notice that the Income Tax authorities have made a mistake, that it was not an ordinary annual contribution, but in the nature of lump sum retrospectively for a previous period, and they are asked to return very substantial sums to rectify the error.
I only put that case because I think it is to some extent connected with the Amendment. It raises a little difficulty which seems, on the face of it, to constitute a discrimination, and if the right hon. Gentleman would make some suggestion on that point I should be very much obliged, as it certainly affects several 1250 thousand persons employed on the Great Western Railway in my own constituency.
§ Mr. CHURCHILLThese are matters of considerable complexity. In the first place, we are dealing, admittedly, with a somewhat anomalous and exceptional state of the law. In the second place, we are dealing with two Amendments at once. Dealing with the first of the two Amendments, an exception for the purpose of Income Tax has been made in the case of the superannuation funds which are registered friendly societies and certain other forms of superannuation funds. In this case, the employé receives an allowance for his contribution, not under the head of expenses, but under the head of life insurance allowance, and it is out of that working of the law which has grown up step by step, precedent on precedent, that the anomalous situation dealt with in the first Amendment of my right hon. Friend arises. He proposes a certain remedy, but I am advised that the result of that remedy would be to create a worse anomaly than the one he seeks to relieve. The technical rule governing life insurance allowance would come into play, and, if this Amendment were accepted, I am told that the small employés of local authorities might find their charge for Income Tax increased by a few shillings, while the liability in the case of a comparatively small number of highly paid employés would be reduced. I understood there are several thousands of employés of the Great Western Railway concerned. That is a point that has substance and reality. I understood that an employé contributing to a superannuation fund receives an allowance on his Income Tax assessment on account of his contribution. Usually, it is made under the head of expenses. The exemption of the people who come in later or at irregular times, and who pay a large sum in order to place themselves in proper relation to the fund is the difficulty, and the request, as I understand it, is that these people who pay the lump sum should be given the benefit of the immunity asked for.
§ Mr. BANKSWhere a superannuation fund is in existence and a person comes into it late and pays a lump sum, it is only reasonable that he should be so regarded, but the difficulty I mentioned was the case of a superannuation fund 1251 started in 1922, and where I believe everybody practically paid a larger sum in order to put themselves immediately into benefit?
§ Mr. CHURCHILLWe have not yet been able to devise a system to give exemption in the case of the lump sum payment contributed on behalf of the belated adherents to the scheme. The difficulty of doing it has prevented us from doing it. There is the difficulty of paying the benefit on account of these lump sum contributions. We have not been able up to the present to devise a scheme without a great addition to the labours and complications of the case. If one found that this case really rises to large proportions and becomes a serious grievance, the matter would have to be studied in greater detail, and the extra labour which seems to attach to the calculations would have to be made. I am quite ready in any future Budget that I may have to put forward to go into the matter in detail. The Treasury view is that these lump sum contributions in respect of past years, and paid to secure any further annuity, cannot be exempted, and if you were to open out that question of exempting from Income Tax these capital payments, you would have to frame your legislation in regard to many other points than those put forward.
§ Mr. GRAHAMMay I ask the Chancellor one question? If he is unable to meet us as regards lump-sum payments, cannot he at all events accept the first
§ Amendment, which merely puts local government officers in this country on a uniform basis whether they are under a friendly societies' superannuation scheme, so to speak, or under a superannuation scheme under the general Act of Parliament? I do not dispute that it makes little difference. Local government officers recognise that, but there is no reason in the world why you should have a different rate of allowance in what is really, in fundamentals, a common superannuation scheme. I do press the Chancellor of the Exchequer at least to give way on that point, because I think he himself recognises that that is a perfectly sound case.
§ Mr. CHURCHILLI only speak again with the permission of the House, and only for a moment. I am advised that the consequence of adopting the remedies proposed would be to create much greater anomalies than that which it is sought to remedy, and that the advantage you give to a comparatively small number of rather highly-paid officials would be balanced by a disadvantage, admittedly of only a few shillings a year, to a much larger number of smaller subordinates of the local authorities. Though I would like to go into the matter in detail with the hon. Gentleman in the months that lie before us, while I feel as at present I should greatly hesitate to adopt the suggestion.
§ Question put, "That the Clause be read a Second time."
§ The House divided: Ayes, 129; Noes, 272.
1255| Division No. 200.] | AYES. | [11.12 p.m. |
| Adamson, Rt. Hon. W. (Fife, West) | Crawfurd, H. E. | Hayday, Arthur |
| Adamson, W. M. (Staff., Cannock) | Dalton, Hugh | Hayes, John Henry |
| Alexander, A. V. (Sheffield, Hillsbro') | Day, Colonel Harry | Henderson, Rt. Hon. A. (Burnley) |
| Ammon, Charles George | Dennison, R. | Henderson, T. (Glasgow) |
| Attlee, Clement Richard | Duncan, C. | Hirst, G. H. |
| Baker, J. (Wolverhampton, Bilston) | Dunnico, H. | Hirst, W. (Bradford, South) |
| Barker, G. (Monmouth, Abertillery) | Edwards, John H. (Accrington) | Hore-Belisha, Leslie |
| Barnes, A. | Forrest, W. | Hudson, J. H. (Huddersfield) |
| Barr, J. | Garro-Jones, Captain G. M. | Jenkins, W. (Glamorgan, Neath) |
| Batey, Joseph | Gillett, George M. | John, William (Rhondda, West) |
| Benn, Captain Wedgwood (Leith) | Gosling, Harry | Johnston, Thomas (Dundee) |
| Bentinck, Lord Henry Cavendish- | Graham, D. M. (Lanark, Hamilton) | Jones, Henry Haydn (Merioneth) |
| Bowerman, Rt. Hon. Charles W. | Graham, Rt. Hon. Wm. (Edin., Cent.) | Jones, Morgan (Caerphilly) |
| Broad, F. A. | Greenall, T. | Jones, T. I. Mardy (Pontypridd) |
| Bromley, J. | Grenfell, D. R. (Glamorgan) | Kelly, W. T. |
| Charleton, H. C. | Griffiths, T. (Monmouth, Pontypool) | Kennedy, T. |
| Clowes, S. | Groves, T. | Lansbury, George |
| Cluse W. S. | Grundy, T. W. | Lawson, John James |
| Clynes, Rt. Hon. John R. | Guest, J. (York, Hemsworth) | Lowth, T. |
| Collins Sir Godfrey (Greenock) | Guest, Dr. L. Haden (Southwark, N.) | Lunn, William |
| Compton, Joseph | Hall, F. (York, W.R., Normanton) | Mackinder, W. |
| Connolly, M. | Hall, G. H. (Merthyr Tydvil) | MacLaren, Andrew |
| Cove, W. G. | Hamilton, Sir R. (Orkney & Shetland) | Maclean, Neil (Glasgow, Govan) |
| Cowan, D. M. (Scottish Universities) | Hardie, George D. | March, S. |
| Maxton, James | Rose, Frank H. | Trevelyan, Rt. Hon. C. P. |
| Mitchell, E. Rosslyn (Paisley) | Saklatvala, Shapurji | Varley, Frank B. |
| Montague, Frederick | Scrymgeour, E. | Viant, S. P. |
| Morris, R. H. | Shaw, Rt. Hon. Thomas (Preston) | Walsh, Rt. Hon. Stephen |
| Morrison, R. C. (Tottenham, N.) | Short, Alfred (Wednesbury) | Watson, W. M. (Dunfermline) |
| Murnin, H. | Slesser, Sir Henry H. | Watts-Morgan, Lt.-Col. D. (Rhondda) |
| Naylor, T. E. | Smillie, Robert | Webb, Rt. Hon. Sidney |
| Oliver, George Harold | Smith, Ben (Bermondsey, Rotherhithe) | West wood, J. |
| Palin, John Henry | Smith, Rennie (Penistone) | Wheatley, Rt. Hon. J. |
| Paling, W. | Snell, Harry | Whiteley, W. |
| Parkinson, John Allen (Wigan) | Snowden, Rt. Hon. Philip | Wilkinson, Ellen C. |
| Pethick-Lawrence, F. W. | Spencer, G. A. (Broxtowe) | Williams, David (Swansea, East) |
| Ponsonby, Arthur | Stamford, T. W. | Williams, T. (York, Don Valley) |
| Potts, John S. | Stephen, Campbell | Wilson, R. J. (Jarrow) |
| Rees, Sir Beddoe | Sutton, J. E. | Windsor, Walter |
| Richardson, R. (Houghton-le-Spring) | Taylor, R. A. | Wright, W. |
| Riley, Ben | Thomas, Rt. Hon. James H. (Derby) | Young, Robert (Lancaster, Newton) |
| Roberts, Rt. Hon. F. O. (W. Bromwich) | Thomson, Trevelyan (Middlesbro. W.) | |
| Robertson, J. (Lanark, Bothwell) | Thurtle, E. | TELLERS FOR THE AYES.— |
| Robinson, W. C. (Yorks, W. R., Elland) | Tinker, John Joseph | Mr. Charles Edwards and Mr. |
| George Thorne. | ||
| NOES. | ||
| Acland-Troyte, Lieut.-Colonel | Crooke, J. Smedley (Deritend) | Hohler, Sir Gerald Fitzroy |
| Agg-Gardner, Rt. Hon. Sir James T. | Brookshank, Cpt. H. (Lindsey, Gainsbro) | Holbrook, Sir Arthur Richard |
| Albery, Irving James | Crookshank, Col. H. (Lindsey, Gainsbro) | Homan, C. W. J. |
| Amery, Rt. Hon. Leopold C. M. S. | Curzon, Captain Viscount | Hopkins, J. W. W. |
| Ashley, Lt.-Col. Rt. Hon. Wilfrid W. | Dalkeith, Earl of | Horlick, Lieut.-Colonel J. N. |
| Ashmead-Bartlett, E. | Davidson, J. (Hertf'd, Hemel Hempst'd) | Howard, Capt. Hon. D. (Cumb., N.) |
| Astor, Viscountess | Davidson, Major-General Sir John H. | Hudson, Capt. A. U. M. (Hackney, N) |
| Atholl, Duchess of | Davies, Maj. Geo. F. (Somerset, Yeovil) | Hudson, R. S. (Cumberl'nd, Whiteh'n) |
| Baldwin, Rt. Hon. Stanley | Dawson, Sir Philip | Hume, Sir G. H. |
| Balfour, George (Hampstead) | Dean, Arthur Wellesley | Iliffe, Sir Edward M. |
| Balniel, Lord | Dixon, Captain Rt. Hon. Herbert | Inskip, Sir Thomas Walker H. |
| Barclay-Harvey, C. M. | Doyle, Sir N. Grattan | Jackson, Lieut.-Colonel Hon. F. S. |
| Barnett, Major Richard | Drewe, C. | Jackson, Sir H. (Wandsworth, Cen'l) |
| Bennett, A. J. | Eden, Captain Anthony | Jacob, A. E. |
| Bethell, A. | Edmondson, Major A. J. | James. Lieut.-Colonel Hon. Cuthbert |
| Betterton, Henry B. | Elliot, Captain Walter E. | Jephcott, A. R. |
| Bird, E. R. (Yorks, W. R., Skipton) | Elvedon, Viscount | Joynson-Hicks, Rt. Hon. Sir William |
| Blades, Sir George Rowland | England, Colonel A. | Kennedy, A. R. (Preston). |
| Blundell, F. N. | Erskine, Lord (Somerset, Weston-s.-M.) | Kidd, J. (Linlithgow) |
| Boothby, R. J. G. | Everard, W. Lindsay | Kindersley, Major G. M. |
| Bourne, Captain Robert Croft | Fairfax, Captain J. G. | King, Captain Henry Douglas |
| Bowater, Sir T. Vansittart | Falle, Sir Bertram G. | Kinloch-Cooke, Sir Clement |
| Bowyer, Capt. G. E. W. | Fielden, E. B. | Knox, Sir Alfred |
| Boyd-Carpenter, Major A. | Finburgh, S. | Lamb, J. Q. |
| Bridgeman, Rt. Hon. William Clive | Fleming, D. P. | Lane-Fox, Lieut.-Col. George R. |
| Briscoe, Richard George | Ford, P. J. | Leigh, Sir John (Clapham) |
| Brittain, Sir Harry | Forestier-Walker, Sir L. | Lister, Cunliffe-, Rt. Hon. Sir Philip |
| Brocklebank, C. E. R. | Foxcroft, Captain C. T. | Little, Dr. E. Graham |
| Brooke, Brigadier-General C. R. I. | Framantle, Lieut.-Colonel Francis E. | Locker-Lampson, G. (Wood Green) |
| Broun-Lindsay, Major H. | Gadie, Lieut.-Col. Anthony | Locker-Lampson, Com. O.(Handsw'th) |
| Brown, Brig.-Gen. H.C.(Berks, Newb'y) | Ganzonl. Sir John | Loder, J. de V. |
| Bullock, Captain M. | Gates, Percy | Looker, Herbert William |
| Burman, J. B. | Goff, Sir Park | Lougher, L. |
| Burney, Lieut.-Com. Charles D. | Gower, Sir Robert | Luce, Maj.-Gen. Sir Richard Harman |
| Burton, Colonel H. W. | Grant, J. A. | MacAndrew, Charles Glen |
| Butler, Sir Geoffrey | Greene, W. P. Crawford | Macdonald, Capt. P. D. (I. of W.) |
| Cadogan, Major Hon. Edward | Gretton, Colonel John | McDonnell, Colonel Hon. Angus |
| Campbell, E. T. | Grotrian, H. Brent | Macintyre, I. |
| Cayzer, Sir C. (Chester, City) | Guest, Capt. Rt. Hon. F. E. (Bristol, N.) | McLean, Major A. |
| Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.) | Guinness, Rt. Hon. Walter E. | MacMillan, Captain H. |
| Cazalet, Captain Victor A. | Gunston, Captain D. W. | Maitland, Sir Arthur D. Steel- |
| Cecil, Rt. Hon. Sir Evelyn (Aston) | Hacking, Captain Douglas H. | Makins, Brigadier-General E. |
| Cecil, Rt. Hon. Lord H. (Ox. Univ.) | Hall. Lieut.-Col. Sir F. (Dulwich) | Malone, Major P. B. |
| Chadwick, Sir Robert Burton | Hall, Capt. W. D'A. (Brecon & Rad.) | Manningham-Buller, Sir Mervyn |
| Chamberlain, Rt. Hn. J. A. (Birm., W.) | Hammersley, S. S. | Margesson, Captain D. |
| Charteris, Brigadier-General J. | Hannon, Patrick Joseph Henry | Marriott, Sir J. A. R. |
| Christie, J. A. | Harland, A. | Meyer, Sir Frank |
| Churchill, Rt. Hon. Winston Spencer | Harrison, G. J. C. | Milne, J. S. Wardlaw- |
| Churchman, Sir Arthur C. | Harvey, G. (Lambeth, Kennington) | Mitchell, Sir W. Lane (Streatham) |
| Clarry, Reginald George | Harvey, Major S. E. (Devon, Totnes) | Monsell, Eyres, Com. Rt. Hon. B. M. |
| Cobb, Sir Cyril | Haslam, Henry C. | Moore, Lieut.-Colonel T. C. R. (Ayr) |
| Cockerill, Brigadier-General G. K. | Hawke, John Anthony | Moore, Sir Newton J. |
| Colfox, Major Wm. Phillips | Henderson, Capt. R.R. (Oxf'd, Henley) | Moore-Brabazon, Lieut.-Col. J. T. C. |
| Cooper, A. Duff | Henderson, Lieut.-Col. V. L. (Bootle) | Morden, Colonel Walter Grant |
| Cope, Major William | Heneage, Lieut.-Col. Arthur P. | Morrison, H. (Wilts, Salisbury) |
| Courtauld, Major J. S. | Henn, Sir Sydney H. | Morrison-Bell, Sir Arthur Clive |
| Cowan, Sir Wm. Henry (Islington, N.) | Hennessy, Major J. R. G. | Nail, Lieut.-Colonel Sir Joseph |
| Craik, Rt. Hon. Sir Henry | Henniker-Hughan, Vice-Adm. Sir A. | Nelson, Sir Frank |
| Croft, Brigadier-General Sir H. | Herbert, S. (York, N. R., Scar. & Wh'by) | Newman, Sir R. H. S. D. L. (Exeter) |
| Crook, C. W. | Hogg, Rt. Hon. Sir D.(St. Marylebone) | Newton, Sir D. G. C. (Cambridge) |
| Nicholson, O. (Westminster) | Samuel, A. M. (Surrey, Farnham) | Thomson, Sir W. Mitchell- (Croydon, S.) |
| Nicholson, Col. Rt. Hn. W. G.(Ptrsf'ld.) | Samuel, Samuel (W'dsworth, Putney) | Titchfield, Major the Marquess of |
| Nuttall, Ellis | Sanders, Sir Robert A. | Tryon, Rt. Hon. George Clement |
| Oakley, T. | Sanderson, Sir Frank | Vaughan-Morgan, Col. K. P. |
| O'Connor, T. J. (Bedford, Luton) | Sassoon, Sir Philip Albert Gustave D. | Waddington, R. |
| O'Neill, Major Rt. Hon. Hugh | Savery, S. S. | Wallace, Captain D. E. |
| Oman, Sir Charles William C. | Shaw, R. G. (Yorks, W.R., Sowerby) | Ward, Lt.-Col. A. L. (Kingston-on-Hull) |
| Ormsby-Gore, Hon. William | Shaw, Lt.-Col. A. D. Mcl.(Renfrew, W) | Warner, Brigadier-General W. W. |
| Pennefather, Sir John | Shaw, Capt. W. W. (Wilts, Westb'y) | Warrender, Sir Victor |
| Penny, Frederick George | Sheffield, Sir Berkeley | Waterhouse, Captain Charles |
| Percy, Lord Eustace (Hastings) | Shepperson, E. W. | Watson, Sir F. (Pudsey and Otley) |
| Perring, William George | Simms, Dr. John M. (Co. Down) | Wells, S. R. |
| Peto, Basil E. (Devon, Barnstaple) | Skelton, A. N. | Wheler, Lieut.-Col. Granville C. H. |
| Power, Sir John Cecil | Slaney, Major P. Kenyon | White, Lieut.-Colonel G. Dairymple |
| Preston, William | Smith, R. W. (Aberd'n & Kinc'dine, C.) | Williams, Com. C. (Devon, Torquay) |
| Price, Major C. W. M. | Smith-Carington, Neville W. | Williams, Herbert G. (Reading) |
| Raine, W. | Smithers, Waldron | Wilson, Sir C. H. (Leeds, Central) |
| Rawlinson, Rt. Hon. John Fredk. Peel | Spender Clay, Colonel H. | Windsor-Clive, Lieut.-Colonel George |
| Reid, Capt. A. S. C. (Warrington) | Stanley, Col. Hon. G.F. (Will'sden, E.) | Winterton, Rt. Hon. Earl |
| Reid, D. D. (County Down) | Stanley, Lord (Fylde) | Wise, Sir Fredric |
| Remer, J. R. | Stanley, Hon. O. F. G. (Westm'eland) | Wolmer, Viscount |
| Remnant, Sir James | Steel, Major Samuel Strang | Womersley, W. J. |
| Rentoul, G. S. | Storry Deans, R. | Wood, B. C. (Somerset, Bridgwater) |
| Rhys, Hon. C. A. U. | Stott, Lieut.-Colonel W. H. | Wood, E. (Chest'r Stalyb'dge & Hyde) |
| Rice, Sir Frederick | Strickland, Sir Gerald | Wood, Sir Kingsley (Woolwich, W.) |
| Richardson, Sir p. W. (Sur'y, Ch'ts'y) | Stuart, Hon. J. (Moray and Nairn) | Woodcock, Colonel H. C. |
| Roberts, Samuel (Hereford, Hereford) | Sueter, Rear-Admiral Murray Fraser | Worthington-Evans, Rt. Hon. Sir L. |
| Ropner, Major L. | Sugden, Sir Wilfrid | Young, E. Hilton (Norwich) |
| Ruggles-Brise, Major E. A. | Sykes, Major-Gen. Sir Frederick H. | |
| Russell, Alexander West- (Tynemouth) | Templeton, W. P. | TELLERS FOR THE NOES.— |
| Rye, F. G. | Thompson, Luke (Sunderland) | Colonel Gibbs and Major Sir Harry |
| Salmon, Major I. | Thomson, F. C. (Aberdeen, South) | Barnston. |