HC Deb 21 June 1926 vol 197 cc77-117

Any university and any college or hall in any university of the United Kingdom, and any public school and any educational institution receiving a Government grant, shall he exempt from Income Tax in respect of any profit or gains forming part of the income of such university, college, hall, public school, or educational institution which are applicable to educational purposes only so far as the same are applied to educational purposes only.—[Mr. Withers.]

Brought up, and read the First time.


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

I move this important Clause with great deference as a very junior Member of the Committee, and I ask the indulgence of hon. Members on account of my in experience. First I should like to say a few words as to the nature of the institution mentioned in this proposed Clause. The first mentioned are the universities. I do not think I need to say much about the universities, nor about the colleges or halls in the universities. But with regard to the public school, I should like to say something quite definite. It does not mean in this connection one of great public schools as usually talked about, but a public, school within the meaning attached to it by the Income Tax Acts. Under those Acts the expression "public school" is interpreted as follows : It must fulfil the following conditions—it must have a perpetual foundation; a proportion of the income must come from charity; it must be managed by public bodies; no private person shall have any interest in the school, and no profit shall be in contemplation by the founders or managers, and the object shall be to benefit a large class of persons. Therefore, in general, a public school is a public endowed school. An educational institution in receipt of a Government grant. It must be recognised as efficient, and in the public interest and not carried on for profit, as, for example, the technical schools and training colleges.

5.0 P.M.

The reason for this Amendment arises from the decision of the House of Lords in the case of Brighton College v. Marriott. It arises in this way. Brighton College is a public school within the meaning of the Act, and it is also a charitable institution. It put by year by year certain surpluses, which were gained principally by charging rather higher fees to the parents of boys than it actually cost to teach them, and subsequently each year there arose a small surplus which was put aside and used only for the charity itself, no person having any benefit from the surpluses except the charity. When the case came before Mr. Justice Rowlatt, it was decided that it could not he said to carry on trading apart from the charity, and the case was decided against the Crown. The Court of Appeal and subsequently the House of Lords decided, notwithstanding that these surpluses were arrived at by carrying on the charity itself, that Brighton College was carrying on trading and that the profits must be taxed as such. It was a test case, and it was felt to be a very serious one. The position hitherto as regards educational charities, by which name I shall refer to all I have enumerated, is that they have special statutory exemption in respect of rents, buildings, interest., annual payments, the cost of public buildings and repairs, and the lands they occupy. There is a further curious exemption, which is in respect of profits and trades carried on by the beneficiaries of the charity. The annual income which a charity can have which is not exempted is the surplus which arises year by year from the carrying on of the charity itself. I suggest that it has never been the intention of Parliament to tax those surpluses or they would certainly have been taxed. I think myself that they have been simply overlooked and are now brought into notice owing to the financial stringency of the country and the anxiety of the Inland Revenue to get as much income as they can.

Let us now consider how these surpluses arise in respect of schools and the effect of taxing them. These surpluses are made by the individual efforts of the managers. They are utilised in keeping the schools up-to-date. For example, when a public school has not enough funds to buy a cricket ground, or to put in electricity, or to build a new wing to the school, it tries by the efforts of its managers to accumulate a certain amount in hand in each year and these surpluses are applied towards the extension of the school. The managers have no necessity whatever to do this. It would be quite easy for them to say, "Our job is to balance the accounts and let the future take care of itself," That is a very short-sighted policy and the result of it would be that the schools all over the country would get out of date, and the further result would be that in a few years they would be coming to the Government for a huge subsidy. In the case of schools it shows that the taxation of these surpluses is a short-sighted policy, because the Government benefit by the schools being self-supporting and not asking for grants of public money. If they do get into a bad state, they are entitled to ask the Government for money. Generally speaking, the same arguments apply with regard to the colleges and universities. The college makes a profit on its kitchen. It makes surpluses with which the managers repair the colleges, do necessary sanitary improvements, and build new extensions. They need not do that; they can let the colleges go to rack and ruin. Exactly the same argument applies to the Universities, and especially to Oxford and Cambridge. It is hoped that they will be creating some surpluses, but if those surpluses are to he claimed in this way they will be affected. The Government are giving Universities grants at this moment. It seems to me an absurdity to be giving the Universities grants with one hand and taking these surpluses with the other, as these surpluses are accumulated to avoid the grants. With regard to educational institutions, my suggestion is that the mere carrying on of the charity within four walls cannot be a trade. Unfortunately, it has been decided that that is not so, and therefore I put forward this Clause. No person gets any profit from these sulpluses. If they do they pay tax.

Let me draw attention to what I think are the arguments against this Clause. The first is that this is not new, that this has always been the contention of the Inland Revenue. That. may be so. They are a very astute body of men and everybody is proud of their astuteness. They, no doubt, have had this in their mind for a long time and have undoubtedly sporadically made these claims. When it was found that they were doing so generally, it was challenged with the result of this case, Brighton College v. Marriott. The second argument is that the Government do not like hidden subsidies. That can hardly be held to be a good argument at present, because the subsidies are extremely large already and, as a matter of principle, if once admitted, the only question is really whether this should really be included. Another good argument against the Government is that by the same judgment that Mr. Justice Rowlatt decided that the surpluses made by Brighton College did not make Brighton College a trade, he decided that the Royal Agricultural Society should pay Income Tax on the profits of the Royal Show. A special Clause was put in the Act of 1924 exempting the Royal Agricultural Shows from paying taxes. I feel that the education of human beings is at least as important as the fattening up of prize cattle and the growing of large turnips. Friendly societies and industrial societies have exemptions, and it can hardly be suggested that the University of Cambridge or some big school could register as a friendly society or an industrial society. Possibly they could not. Those are the answers I make to these arguments. I certainly hope the Chancellor of the Exchequer will favourably consider this appeal. It is not made in any factious spirit nor with any desire to score off him, but merely in the interests of these very deserving institutions. I beg him not to tax funds which are raised for the very purpose of avoiding Government grants. The loss to the Government will be small and temporary and the gain large and permanent if this exemption be granted.


I think it is clear that some of the observations I made when the last Amendment was under discussion are relevant here. After all, we are, in exactly the same way, being asked to extend the limits of the charity exemption to Income Tax, which already costs at a rate of 4s. in the pound upwards of £10,000,000 a year, and which were considered to be on the overindulgent side by the Royal Commission on Income Tax which reported during the time of the Coalition Government. Where should we be able to stop? That is one of the serious arguments which I am bound to face at the outset. Already we have had the hon. and gallant Member who moved the last Amendment asking for an exemption in favour of the Royal Asylums in Scotland. There is an Amendment on the Paper proposing to extend the exemption to Income Tax to the British School of Dramatic Art. Another Amendment is coming on this evening asking for exemption in the case of athletic clubs, and the right hon. Gentleman the Member for Hillhead (Sir Robert Horne) has kindly favoured me with another Amendment which is to enable the same Society of Dramatic Art to participate in the exemption now proposed. If I yielded to the instinct of natural goodwill, which the Committee, without exception, feel in regard to the present proposal, we should be drawn from the present arbitrary and anomalous—rough-and-ready, if you like to apply that epithet—limits and boundaries which govern and restrict the exemption of charities from Income Tax, we should be driven from those, boundaries, and we should move steadily clown an inclined plane, urged onwards at every step and stage by advocates of numbers of hard cases and border-line eases, all of which would acquire new force and impetus with every step we took. That is a serious objection which I feel.

Moreover this is not a good time for exemptions and concessions in taxation. We are not in a position to make remissions of taxation. As I have said, with every week that passes under the present conditions the possibility of the revenue having to be strengthened grows nearer, and I have to refuse all sorts of well-founded proposals for a remission of taxation. Moreover we must remember that the Economy Act, which has now passed into comparative twilight but which at one time was so much talked about in this House before, the late strikes and lockouts began, collected small sums of money from every conceivable quarter, and in spite of the criticisms and outcries involved the House supported the Government in retaining these sums of money large and small, although in every one of these cases we would gladly have let matters rest as they were but for our necessities.

Whether you look at this problem from the point of view of the breaking down of the present restrictions to which we confine the exemption or from the point of view of revenue, the state of our finances, and the kind of sacrifices we are asking from the general public, not much hope will be found on either count to encourage the Committee to agree with what is now asked. It is not as though we were proposing any new departure. The law is not being changed in any way. The case raised by the Brighton College was a challenge by them of the existing practice, and both the Court of Appeal and the House of Lords upheld the revenue authorities and dismissed the claim of the Brighton College. I am told that in a great many cases these institutions have been paying Income Tax on what is now sought to be exempted quite regularly for 15 or 20 years.

Then there is the argument about giving a subsidy, which has been expressed in some newspaper articles which I have read with a good deal more vigour and acerbity than I should care to import into this discussion. Of course we cannot be blind to the fact that exemption from Income Tax is in effect a subsidy. It has that effect, and then would arise the question whether if this exemption was given the subsidy would go exactly in those directions where it was most desirable it should afford its relief. On all these grounds I am bound at the present moment to express my inability with great regret to accept the Amendment proposed, and in that I include the Amendment of the right hon. Gentleman the Member for Hillhead. But I must recognise the essential hardship which exists in the present case. I am not attempting to go into the general principles which are raised by some of the Amendments on the Paper. Where a school is richly endowed, has large investments, it is not under the necessity of accumulating from profits or from fees the means by which it can be maintained or improved or extended, whereas a new institution, a new school, which has no large endowments and is not in the fortunate circumstances of having property descending to it from long past, anew school, greatly needed by the movements of the population and changes in the character of our life, or by the new classes which are pressing forward to gain higher and improved education, such a new school, such a new foundation, will have to make profits in order to acquire the proper outfit, plant and buildings, which are necessary for a great institution and establishment, and that they will have to do out of their profits all of which will be under the present law amenable to Income Tax. It is not the case that these fortunate, wealthy and prosperous schools are the schools which need relief or will get it, but it is much more the case that the new foundations which will be called into being will undoubtedly have this burden resting upon them.

Then there is the other argument. It is quite true that the law has not been changed. In a great many cases this tax has been collected for a number of years, but the Brighton College case undoubtedly throws into stronger and clearer relief and light the law on this subject. It does not alter it, but it places clearly before every one of the Income Tax inspectors the application which the Courts hold is perfectly legal and proper, and, in consequence, it is likely that some institutions, which in previous years have not been called upon to pay, may from time to time in the course of the year, as case after case is considered on its merits, be brought into the ambit of taxation for the first time; there may be certain extensions of the application of the law owing to the clarity with which its application has now been prescribed. I have tried to set the arguments on both sides in this matter, as far as I see them. I cannot underrate the difficulties of making such a departure now, nor would I be justified in holding out any expectation of a serious kind that I should be able before the Report stage to make any proposal. I am afraid that any proposals it would be in my power to make would only he quite general in their character and would throw open a very wide field to exemption on charitable grounds.

But I cannot feel entirely satisfied with the present state of the law. I cannot feel that the kind of discrimination which was referred to in the last Amendment and is referred to here is completely satisfactory. I cannot feel that these restrictions, though necessary and all we have at the present moment, are the last words that should be said in defining what is a charity deserving of exemption from Income Tax and what is not, and I will undertake, though I cannot suppose it will satisfy those who are interested in this matter, between now and next year to examine very carefully whether the frontier of charitable exemptions cannot be defined not less strictly, not less precisely, but with a somewhat nearer approximation to what we feel is right and just, and whether some better definition cannot be introduced. I will not go further than that, and I recognise that it is not going as far as those who have moved this Amendment would wish, nor indeed so far as to entitle me to ask them in any way to mitigate whatever Parliamentary action they may think it right and proper to take. But I will give the undertaking, that the matter shall be considered in principle and on general grounds, and with every hope and desire to, see if a better definition cannot be framed and embodied in legislation during the course of the present Parliament.


The suggested new Clause on the Paper raises one of the most difficult problems in Income Tax administration. I should like, from one or two rather different standpoints, to support the case which has been made by the Chancellor of the Exchequer. The hon. Member who moved the adoption of this new Clause referred to proceedings which had taken place in one of the Law Courts, and to the proceedings on appeal which followed. I agree it appears rather curious that there should be any attempt to compare, for the purposes of Income Tax, the kind of surplus which emerges in the conduct of educational institutions from year to year, and a profit in the ordinary trading sense of the term. No one can read the discussion which has surrounded a large part of this controversy without being forced to the conclusion that, for all practical purposes, the surplus which emerged in the Brighton College case was regarded as analogous to an ordinary trade profit, and was taxed accordingly. I agree, if we left the case at that, there would seem to be a very wide difference, and it would be practically impossible for the House of Commons to agree to taxation on that very narrow basis, but there is much more in it than that.

I have always felt, so far as I have been able to understand these matters, that we have to measure income in this country by some test other than the narrow test of monetary gain or profit, or as some kind of profit which can be measured in the ordinary way. There are other incomings or benefits which flow to people in this country, from year to year, and which are embodied collectively and individually in the kind of surplus now under discussion, and if the House of Commons is going to protect the Revenue at all, it must hesitate a long time before it takes outside the scope of taxable material incomings of that kind. Of course, education and philanthropy and benevolence of every description make, at all times, the strongest appeal to members of this Chamber, but the Chancellor of the Exchequer is on perfectly sound ground in pointing out that there is practically no limit to the possible extension of exemptions of this character, once the House of Commons embarks upon that course. I think as a matter of ordinary practice, and for reasons which I hope to show before I conclude there should be the greatest hesitation before relieving any incomings of any kind from the ordinary taxation under Income Tax administration.

If the Committee agree with that preliminary principle, in Income Tax matters, we pass immediately to another and important consideration which has been advanced by the hon. Member who moved the adoption of the new Clause. Part of his argument turned on this point; that here a surplus was being devoted to the education of the people by this particular institution, that it was not a question of private property, but was enuring to the general benefit of the students one way and another in the future. That is the old and familiar argument. of the destination or use of a surplus or profit, and I invite the Committee to answer this question: Is it not very dangerous, in the nature of Revenue practice in this country, to admit an argument of that kind? The very same argument has been advanced with great force in industrial matters within recent times, for the purpose of certain large scale exemptions from taxation, and every Chancellor of the Exchequer—whether the present Chancellor or the Chancellor in the spacious clays of 1924—has been obliged to resist an argument of that kind. If we begin to admit it in connection with this kind of surplus or income, it can be applied more immediately, more acutely, and with greater force in a dozen different directions at the present time, and we shall then be right in the field of destination or use of profits, a field from which we must keep clear, if we are going to do our duty in protecting the Revenue.

Reference has also been made to the fact that we give in our university and other grants, certain allowances to educational institutions, and it is suggested that it is illogical that we should give these grants from the State on the one side, and then proceed to tax these and kindred surpluses on the other. That does appear contradictory on the face of it, but after all, the two things are perfectly distinct. If we want to help educational institutions, by all means let us do so by increasing the volume of our university grants, or the provision which we are making under the percentage grant system for elementary and other education. That is the proper way to do it. The wrong way to do it is so to alter the law in a particular class of case as to give what the Chancellor of the Exchequer has rightly described as a form of subsidy, and create all kinds of anomalies in Income Tax administration in the process. The more we examined this claim for concessions at the Royal Commission on Income Tax in 1919, the more we were forced to the conclusion that for every concession which you give you are creating a dozen anomalies in directions which you can hardly see, or even forecast at the time. From that point of view the suggestion of the proposed new Clause would appear to he inappropriate, if not entirely wrong.

In conclusion the Chancellor of the Exchequer has made a definite proposal to the Committee. I am prepared to concede—if I may venture a personal word—as a member of the Royal Commission on Income Tax in 1919, that the particular chapter in our Report dealing with charities might have been much more definite and precise in its terms. But as will he remembered that Royal Commission had to work very hard against time in order to permit of its immediate recommendations being available for the Budget statement of the following year. Accordingly many large problems which deserved far more consideration than they were able to get at, our hands, only received one chapter each, and that chapter of a somewhat general character. Out of the short and general chapter in the Royal Commission's Report on this matter, however, these central facts emerged; that there was very great doubt as to what was meant by charity, that the term charity, in this country, for Income Tax purposes was covering a wide variety of considerations; that there was some contradiction in the existing practice, involving concealed subsidy and bonus of one kind or another, and that the proper course was for the Treasury and the House of Commons to sit down quietly and do some sound constructive work in framing a scheme for charities under which charity would be accurately defined. Thus you would get rid of anomalies and doubts and these recurring Amendments which give every Chancellor of the Exchequer great trouble from year to year. On this occasion—I think almost the first occasion in my life —I am in agreement with the Chancellor of the Exchequer. From the point of view of sound Income Tax administration I think this proposed new Clause ought to be resisted and the detailed investigation which the Chancellor of the Exchequer has recommended, carried out on the lines of the Royal Commission's Report.


I should like to say a few words to the Committee in support of the Clause, and to press upon my right hon. Friend the Chancellor of the Exchequer the necessity of considering before the Report stage, or if that is not possible, before next year, the principle on which these matters can be defended, and the very strong case that can be put up in favour of this proposal. It has been said by the Chancellor of the Exchequer that the law has not been changed. If I may say so, that is a well-known fallacy. As very great authorities show, a decision of doubtful law is equivalent to a change of the law. That is what has really taken place in this instance. Until the case of the Brighton College, the law on the matter was doubtful, and no one, neither the Inland Revenue nor the taxpayer, knew exactly whether these particular moneys were liable to taxation or not. I do not think it unreasonable to conjecture that that doubt influenced the administration of the Inland Revenue. Not feeling quite sure how the law stood, they did not, as the phrase goes, "press unreasonably" a claim which they thought all the time they might perhaps make in respect of these moneys. Therefore, the situation is really changed by the decision of doubtful law, as it always is. The great Roman jurists who advised Justinian in respect of the codification of the law, Sir Henry Maine and many other authorities have laid it down that the supreme judicial authority does change the law, because it determines doubtful law, and so erects new propositions of assured law on which further discussion arises, and of which perhaps further modification takes place.

While I assent to the proposition that it is not desirable to change the law, certainly not to change it unfavourably to the Revenue at the present time, I suggest, as the law has in reality been changed, we have to consider the change made by the House of Lords—in obedience, of course, to the obligation of giving a. strict technical interpretation of the letter of the law, as they stated. We have to consider whether we think it wise, and in accordance with the general policy of our law, to continue the definition of the law made by the House of Lords—a technical definition—or to modify it, as I suggest we ought to modify it, more in conformity with the policy we have already adopted. Therefore, while, as I say, I assent to the proposition that we ought not to change the law, by that I mean we ought not to change the policy of the law; we ought to adhere to the general principles of the law, or at all events not modify them unfavourably to the Revenue. What is the general policy and principle of the law in respect of these educational authorities? The law has adopted the proposition that money devoted to educational purposes should be exempt from taxation. I do not argue whether that is wise or not. I assume that is the policy of the Government., and of the Chancellor of the Exchequer, and of the right hon. Gentleman who spoke from the Front Opposition Bench. Is there any distinction, in any principle or general consideration, between the surplus profits made by the thrifty administration of an educational' institution and the benefactions out of which that educational institution, and others like it, draw their original revenue? I am quite unable to see that any distinction can be drawn.

The benefaction is exempt. Why Presumably because of its purposes and motives. It is exempt because the motive that induces it is zeal for education and, perhaps, also because education is thought to be a useful purpose, and the money is going to be devoted to that useful purpose. All people whose exertions contribute to make these surplus profits, either the people who pay fees, or the thrifty managers by whose judicious arrangement fees are allowed to accumulate into a surplus—all these persons are animated by the same motive of doing good for education. No doubt the people who pay the fees have in mind the education which they want to get for themselves or their children. They have in view educational advantage or what is necessary for it, but it is all educational money. It is all money which comes from educational motives, and is given for educational purposes. If the original benefaction is to be exempt, why in the world should we not exempt these profits which arise out of the management of institutions for which the benefactors gave the money, and which are swollen by contributions, made by persons who, even if it is only to promote their own or their chldrens' education, are just as zealous for education as the original benefactor?

The true distinction surely is as regards money which is either going to be spent for private objects, or has been accumulated by the operation of private motives—motives of private advantage. To say that the original benefaction, for example, the rent of a piece of land, is not to be liable to Income Tax if that rent is to be devoted to educational purposes, and that the surplus made by economies of management and by fees paid to an educational institution are not to be exempt, seems to me inconsistent with any rational thought. I cannot conceive that any human being, whether at the Board of Inland Revenue or not, can think rationally and think those two propositions. The real, true explanation of it is that when the Inland Revenue gave the original exemption, it had plenty of money, I suppose, at any rate, it was animated by a rare moment of generosity, and now it wants to save money and, therefore, it takes a different view; but no one can logically and rationally maintain that the original benefaction ought to be exempt and that the surplus profits made, though just as educational in every sense of the word, ought to be taxed. The two things cannot be maintained. We are told that this would open a very serious extension, but surely not. The right hon. Gentleman, of course, knows much more about the ultimate consequences of these propositions than I do, but why should it open a very serious extension if you strictly confine your concession to treating surplus profits on the same level as original benefactions? They must in any case be small sums of money, much smaller sums of money than the original benefactions which you have already exempted, and if you limit your concession strictly to giving exemption only to surplus profits in an institution where you already exempt the original income, you will not spend very much money, and you certainly will not allow a principle which is in any degree an extension of the existing principle, because you cannot distinguish between the two, as I have pointed out.

The right hon. Gentleman the Chancellor of the Exchequer repeated to us again—and it was echoed from the front Opposition Bench—that astonishing statement that an exemption from taxation is the same thing as a subsidy. I think that of all the aphorisms which spring from muddle-headedness, that is the best example. It ignores the fact that there is any right in respect of the money or property concerned in the person who owns it before the tax is levied; it altogether ignores the truth that until you take the money levied by tax away from a person it belongs to that person; and how can you say that that is the same thing as not giving him something which does not belong to him? As I pointed out to the right hon. Gentleman when I went on a deputation to him, at that rate you would say that almsgiving is the same as not picking pockets, arid that a person might go about saying; "How generous I am, how rich in the grace of almsgiving; think of all the people whom I have not robbed!" That really is a proposition not at all more absurd than to say that an exemption from taxation is the same thing as a subsidy. When you take money away from a man, it, was his, and it is yours; but when you give it to him it was yours, and it is his.

Therefore, I deny that altogether, and I differ from the right hon. Member for Central Edinburgh (Mr. W. Graham) when he says that if you are to help educational institutions, it is better done by an increase of grant than by giving this exemption. Surely that is a very unsound proposition from the point of view of national economy. If you give this exemption, you encourage economy of management, and it is worth the while of the managers of these educational institutions to save all they can, to make the best use of their money, and to work the institutions as efficiently and economically as possible, in order to have a surplus profit which in due course they may spend on the improvement of the educational institutions.


Four-fifths of it is still left.


That is true, that, pestilent though the Inland Revenue are, they do not destroy the whole of life. There still remains a great deal, but surely that is much better done than by giving them fresh money out of the apparently inexhaustible funds of the Exchequer, because that encourages extravagance of management. Of the two ways of helping educational institutions, it is surely much better to help them in a way which encourages economy of management than in a way which encourages extravagance. But let me say that the very fact that the Government give educational grants to these institutions shows how unfair it is to treat these surplus profits as really at all in the same position as private profits, because the Government would not for a moment give money for the benefit of a private person. If you recognise so emphatically in your policy of giving grants that these educational institutions are really public servants, doing public work—and on no other ground can you justify giving them grants—why should you niggle over the fact that they have saved a little out of their various benefactions and propose to use them for the very same purpose for which you are going to give them public grants? I think, therefore, the case is really a very strong one. I do not at all dissent from the reasonableness of the right hon. Gentleman's proposition that there should be a general inquiry into the whole matter, and that an effort should be made to draw a line so that people should understand why some things are taxed and others are not, but I suggest that in this particular case the argument is so clear and so unanswerable in favour of treating surplus profits made in the course of the working of an educational institution on the same footing as the benefactions under which a large part of the income of the institution originally arises, and the impossibility is so strong of drawing a distinction between these two that this Clause ought to be accepted.

There remains the question whether, if the Government oppose the Clause, my hon. Friends who support it would be wise in pressing it to a Division. I am not, of course, entitled to advise them, but after what the Chancellor of the Exchequer has said, I suspect that we should be wise on this occasion not to divide the Committee. I think that until the Inland Revenue have come to a final decision, and the whole matter has been thoroughly looked into and their policy is finally laid down, we ought not to press the matter unduly or in a manner which might seem to be irresponsive to the conciliatory tone which the Chancellor of the Exchequer's speech adopted. But if hon. Members do not press the Clause to a Division on this occasion, I hope the Treasury will clearly understand that we do intend to press it by all proper, constitutional means to the utmost of the influence—and it is not an inconsiderable influence—which these various educational institutions possess. We believe that our claim is entirely just and reasonable, and, therefore, we intend to press it to the utmost of our power.


I do not desire to add more than a sentence or two to the cogent and sparkling argument which has been put before the Committee by the Noble Lord, the Member for Oxford University (Lord H. Cecil), who has just sat down. In fact, I feel some diffidence in speaking on a matter of this kind at all. I am, like the apostle, "in a strait betwixt two." The spirit of the Exchequer is somewhat difficult to exorcise, as has been shown by the right hon. Member for Central Edinburgh (Mr. W. Graham), and, as one who has been a gamekeeper, I find it difficult to turn so rapidly into a poacher. But my conscience is entirely salved by a consideration which I would venture to put to my right hon. Friend the Chancellor of the Exchequer, in the hope that be may take it into consideration along with those other arguments which have been put to him this afternoon. I am not quite certain that the Treasury are going to save any money by the course which they are proposing to follow. It must be kept in mind, with regard to the great educational institutions of this country, that if they are not enabled to raise sufficient money to develop their organisations and to add to their equipment, they have a claim against the educational grants which I do not think the Treasury would be in a position to dispute, and, accordingly, what seems to-day to be a matter of economy may turn out to be a form of extravagance which the Chancellor of the Exchequer never anticipated. I would venture to say to him, accordingly, that there are many people to-day who are spending money on these schools which otherwise, if it were expended in other ways or were not extracted from the parents of children who are being educated, would have to be found by the Exchequer, and I think that that is a consideration which even the author of the Economy Bill ought to take into account in dealing with this question.

There is another point, which indeed was adverted to by the Chancellor of the Exchequer himself. He pointed out that the course which he was pursuing would not in the main hurt the great and well-endowed educational institutions of this country, whose revenue was untaxed, but it would be a serious burden upon the newer institutions which had to find the money for their future development. It was one of the astute methods which my right hon. Friend took in dealing with this proposition that he stated the argument, but never answered it, and indeed, as it seems to me, the argument is unanswerable. It is an impossible position to place the less well-endowed educational institutions of this country in a position in which they are to be affected by burdens from which those more affluent schools are to be free. My right hon. Friend the Member for Central Edinburgh stated, with that lucidity to which we are accustomed from him, two arguments which seemed to me to have already been dissipated by our previous practice. His argument went so far as to say that all the revenue of these schools ought to be taxed in the ordinary way, but, if that be true, why should not the Treasury put an impost on the annuities which those schools are enjoying? My right hon. Friend the Noble Lord opposite, with his irresistible logic, as it seems to me, blew that kind of argument into the air.

The other point which the right hon. Member for Central Edinburgh made was that we must not look—indeed, that it was very bad policy from an economic point of view to look—at the services to which money was being applied. If that be so, why are educational institutions exempt at all at the present time? I think it is impossible, as the Noble Lord said, to hold these two propositions at the same time, but I think perhaps he was somewhat optimistic in supposing that it would be possible at any time to get any rational theory out of the Finance Statutes, or to find a rational argument sustained in any two consecutive paragraphs that you could find in a Finance Statute. I do not propose to detain the Committee further. I only seek to reinforce the arguments which have been put before the Committee, and to add that if, as I hope, this Clause will in due time be accepted, then I should propose to have it amended to the effect of including educational institutions of dramatic art.


I should like to say just a few words about this Clause, because I want it to be clear that, after all, this is not a party question, and that there are a good many on this side of the House who do not altogether agree with my right hon. Friend who has just sat down. I would draw attention to the fact that my right hon. Friend the Member for Seaham (Mr. Webb) and the hon. Member for Southwark North (Mr. Haden Guest) propose a little later to insert words which, I think, would meet the point of the light hon. Gentleman the Member for Hillhead in regard to the Academy of Dramatic Art in which he is interested. I think the words "any educational institution receiving a Government grant" would cover the point. As a grant of £500 a year is now

6.0 P.M.

given to the Academy of Dramatic Art, these words would cover the institution in which the right hon. Gentleman is interested.

I am bound to say that I indulged the hope that the Government would not turn a deaf ear to this proposal, but would consider favourably so respectable a requisition. Practically all the University representation have their names to the Amendment. One would think that their specialist advice could not very well be disregarded, and that on such a question as this, if on no other, they ought to be allowed to guide the House. The House ought to care more for education than for Income Tax logicality. Hitherto it has been understood that there should be general exemption for education. Particularly, it is not at all obvious why there should be, any difference in financial policy between income derived from fees and income derived from endowments. That is the real question. The Chancellor of the Exchequer speaks about the hardship that the new legal decision has imposed. That is quite true, but the change in the situation is this: Since the War there are a very large number of schools and educational institutions that have had to depend more upon fees and income of that kind than before the War. Therefore, the need of the educational institutions has become very much greater. There are a very much larger number of these hit by a provision of this sort than before. That is what makes it important and imperative that the House of Commons should deal with this matter, and deal with it at once.

May I say one last thing with regard to something said by the right hon. Gentleman. He did realise that the schools which depended upon endowments are not affected by this Clause and by the present state of the law, but that the schools which were affected were those dependent upon fees. It is, however, not by any means only new schools that are so dependent. No doubt it is the case that most of them are new.

My right hon. Friend and his Financial Secretary, with myself, enjoy the inestimable advantage of having been educated at Harrow. The advantage of belonging to a school such as Eton, which is in the possession of so many endow- ments, is that the fees are a matter of lesser importance. In the case of Harrow, which has to depend upon fees and subscriptions, this proposal will make, or perpetuate the grievance. I am bound to say that it is a matter of regret to myself that the Chancellor should deal this rather unfilial blow at the great institution which moulded his intellect and matured his budding genius.


The case which the hon. Mover of the Amendment has put so fully and clearly has made some impression on the Chancellor of the Exchequer. I could wish that the impression were wider and deeper. The Chancellor of the Exchequer has spoken of the possibility of discriminating in favour of the newer and the smaller schools. I would ask him also to add to these the older grammar schools and other secondary schools outside the State system up and down the country, without which our educational system would be much poorer. There is, for instance, the Carlisle Grammar School, founded by St. Cuthbert in the Seventh Century and refounded by William Rufus. There is the King's School at Canterbury, which dates back to the time of St. Augustine and was refounded by Henry the Eighth. A large number of these schools all through the country are doing very good work. They are outside the State system, lint work side by side with it. The older schools, perhaps, lay more stress upon character and tradition. The newer secondary schools think more of vigour and progress. The schools with the older traditions try to teach standards of life. The newer schools teach how to get on in life. But they are both helping one another, and if this Income Tax is levied on the older secondary schools they will undoubtedly be enfeebled, and our educational system will suffer

We have been told by the Chancellor of the Exchequer that this is not a new tax, but Mr. Justice Rowlatt did not agree with him. Unfortunately the House of Lords did agree with him, in the recent judgment on the Brighton College case. Undoubtedly it is a new tax as far as these old schools are concerned, for it has not yet been levied on them. When, therefore, we are speaking of this matter we are not speaking of a possible loss to the Exchequer but of a possible gain. I would ask the right hon. Gentleman to remember that the Burnham scale and the Superannuation Act of last year have imposed additional burdens upon these schools. They have to pay their masters salaries at least equal to those outside. They have also to provide funds to meet the demands of the Superannuation Act of last year. In order to do this, they have gradually to build up a surplus by a small increase in the fees. The Treasury now are going to take away one-fifth of this surplus. I would ask the right hon. Gentleman to regard these surpluses as capital waiting to be invested in the improvement of buildings or in the improvement of salaries, and I would ask him also to remember that if the masters' salaries are improved then the masters themselves have to pay more in Income Tax, and so he will get something back in that way. The Chancellor of the Exchequer has told us he will inquire into the matter. May we hope that this inquiry will take place before the Report stage and that that Report will be favourable? Might I venture to remind him that at Leeds in January he expressed the strong hope that, before this Government went out of office, it might be able to do something substantial for the benefit of education. I would venture to ask him to do something now to fulfil those words, and to treat this proposed new Claude as favourably as possible.


Might I make a suggestion to the Chancellor of the Exchequer that during the interval in which he is going to consider this matter, and any concession he finds it possible to make, he will also take into consideration this particular point: It does seem to me that the taxation we are now considering is financially distinguished from the other taxation with which we are dealing for this reason, that, in nine cases out of 10, if not in all, the removal of the burden of taxation is the removal from institutions which are now obtaining the State grant. Hence you have a financial justification for giving the exemption asked for that perhaps no other exemption can claim it is very obvious that the legitimate desire of the Treasury must be to escape giving grants in larger sums than are absolutely necessary. But it is equally obvious that if you wish to escape making grants you encourage the institutions to realise surpluses which they are obliged to return and spend on up-keep so as to become independent.

It has been held by the Court that this taxation must be imposed upon charitable institutions because they are in fact carrying on trade. I thought it was always desirable to encourage those who carried on trade to put back some of the profits into trade. There is, however, this distinction in this case to be thought of, that while the charitable institutions, by their charters, are compelled to put back their profits into these institutions, while they are doing it solely for the benefit of the institution, it cannot be denied that the employer who is equally legitimately and properly putting back what he earns at the end of the year in the further development of his business, is doing it in the hope ultimately of increasing the profits to himself. That is the big consideration which differentiates the taxation of the profits derived from trading which being put back into the business will ultimately increase the trade and the present case where the surplus is likely to relieve the Treasury from the grants they are snaking.

I would say one word on behalf of the school, The Royal Academy of Dramatic Art, because it does seem to me that that institution affords a very excellent example of what would be gained by granting the exemption which the new Clause contemplates. The Chancellor of the Exchequer spoke of Mr. Tree's College of Dancing, or School of Dancing. What he means by that I have not the least idea. I do not suppose he can really mean The Royal Academy of Dramatic Art, because that is an institution recognised by the London University, who take the training there in consideration in the diplomas they grant; the County Council grant scholarships at this institution; and the Government recognise the good work that it does.

The case of this institution presents a golden opportunity to the Chancellor of the Exchequer. I think England is the only country in the world where the opera and State theatres do not receive some kind of subvention. In France, in Germany and other countries dramatic art is looked upon as of such educational importance that State theatres receive a State subvention, and such assistance is accorded to the opera as well. In England there is nothing of the kind. If the Chancellor of the Exchequer would grant this little exemption to this school, this academy of dramatic art, which is entirely self-supporting, which owes its success entirely to the voluntary efforts of some of our most distinguished dramatic authors and actors, it would be some sort of step in the right direction and a palpable encouragement to dramatic art. This taxation is coming to the Chancellor of the Exchequer in the shape of a godsend. A few unfortunate institutions may have been paying, but certainly the great part of them have not, and therefore I do hope that he will think this case over, giving it that attention which it deserves, and will come to the conclusion that this very small State contribution towards the support of dramatic art in the country is long overdue. I have great pleasure in supporting the Clause, and like the Noble Lord the Member for Oxford University (Lord H. Cecil), I hope that, after the promise he has made, the Chancellor of the Exchequer may see fit to grant this remission.


We have heard this afternoon a good deal about the objectionable nature of hidden subsidies. The Chancellor of the Exchequer has told us that the sum given in hidden subsidies to charitable institutions amount to £10,000,000, so that, if it be a bad system, at any rate it is very rife throughout the country. He has said there is a kind of vague margin to the list of those who have been regarded as qualifying for these hidden subsidies, these remissions of taxation, and that in his view it requires very close consideration—his words were "comprehensive and general consideration"—to decide whether a remission of taxation ought to be given or not in any particular case. All we ask is that money devoted to education should not be taxed. That is the "comprehensive and general consideration" that we put forward. A certain sum of money is spent every year on education. As far as the country is concerned, it matters nothing whether it comes out of the pockets of the Chancellor of the Exchequer, or from endowments, or from fees, or how it comes, for that sum of money is paid by the country for education, and the tendency is not to diminish the amount but to increase it. In these circumstances, any money taken from education by our system of taxation must be given back again in some other fashion. We cannot diminish the amount we are annually spending on education, and if the Government take away with one hand any sum already being spent on education they will have to give it back with the other hand and with this disadvantage as compared with the remission of taxation. The remission of taxation costs nothing; but it always costs money to collect a tax. If the amount is only £200,000 that sum cannot be collected from the schools of England without the expenditure of a considerable fraction of it on the actual cost of collection, and that fraction is wasted; but if we grant a remission of taxation that waste does not arise.

I speak mainly on behalf of the younger Universities, which are specially hard hit by this kind of taxation. It is all very well to say it is not a new system of taxation. As far as the younger Universities are concerned, it is, because they have not been accustomed to pay 'this tax, and it is perfectly certain that in years to come, after the attention of the inspectors of taxes has been called to it, that all the younger Universities will find themselves mulcted in more or less appropriate payments on this account. It takes a very long time to build up a University. Generous donors begin by giving a considerable sum of money, buildings are put up, and thus are laid the foundations of the University. You give it the name of University, but it is only by gathering moneys together —by economies in administration, by surpluses from fees and in one way and another, year after year and generation after generation—that perhaps, after a hundred years, you have a really efficient. University. It is very large built up, must be built up, out of the surplus from fees every year. If we cut away one-fifth of that amount we hit the younger Universities very hard.

I have had letters from schools over the country which are looking forward with, I was going to say, horror, but at all events with a very strong objection, to what is proposed. Our big schools have normally been equipped in this way. A capital sum of money has been borrowed on the security of the school fund and spent on buildings and other equipments for the school, and the school fund annually pays off a certain amount of that indebtedness until, finally, the debt is cleared away. The credit of the school depends upon the amount of the school fund, arid, practically, upon that margin which is provided by the surplus at the end of the year. That is really the sum of money on which the credit of the school depends, and its buildings, its equipment and its power of bringing itself up to a proper level of efficiency for its work depend, in the main, on its credit and its power of borrowing money. If the Chancellor of the Exchequer takes away one-fifth of the credit of every school in the country by this system of taxation, what good does that do to education? It does no good. It brings very little to the Treasury, and it is leading us farther and farther away from that efficiency which we are all desirous of obtaining.

We have looked to this Government as likely to take broad views on education and to help education, especially university and higher education. What have they done? Last year, under the Tithes Bill, they practically mulcted the old universities of some £300,000 capital. Now we have this new imposition, because it practically is a new imposition, of taxation on public schools. I ask the Chancellor of the Exchequer to consider this matter very carefully. I do not think he realises how strong is the feeling against his proposal throughout the whole body of schools, colleges and universities in the country. I hope that between now and the Report stage, and, if not then, between now and next year, he will reconsider this matter and will give us a much better answer.


I think the hon. Member who has just addressed the Committee must by now begin to share in the disappointment that many of us have felt as to this being a Government to which we can look for large educational reforms of any kind. I hesitate somewhat to speak on this subject, because after my right hon. Friend the Member for Central Edinburgh (Mr. W. Graham) has spoken on Income Tax I always feel that he has shown himself such an expert that it is dangerous for anyone who does not know the subject so well as he does to attempt to follow him, especially if speaking on opposite lines from those he has taken. I think the fate that has befallen him at the hands of the Noble Lord the Member for Oxford University (Lord H. Cecil) should be a warning to him not to keep company with the Chancellor of the Exchequer. I think he did say that this was the first time, and I can only give him the advice that I hope it will be the last. There are two points in the speech of the Chancellor of the Exchequer to which I wish to refer. In the first place, he tried to belittle the change that is taking place. According to my information, colleges and schools which in the past were exempt from this form of taxation have during the past three years, and as a result of a legal decision, been asked to pay tax. The Noble Lord has admitted that to some extent he is satisfied with what the Chancellor of the Exchequer has said. Speaking from a more impartial position, perhaps, than is occupied by one who is, at any rate nominally, a follower of the Chancellor of the Exchequer, I may say that I do not think very much of the promise of the Chancellor of the Exchequer. It seemed to me an exceedingly easy way of getting rid of a rather awkward subject.


I did not say I was satisfied.


I understood the Noble Lord intimated that he was not going to press the Clause to a Division, and that was what I meant by being satisfied, because it seems to me that the Chancellor of the Exchequer has simply shelved the question. A year hence the present Chancellor of the Exchequer may not be in a position to come to any decision on the question. The point which especially appeals to me, and which I would like to urge upon the Chancellor of the Exchequer or the Financial Secretary, is the supreme importance of education to this country at this time. Anything that can be done for education of any kind, whether it be for colleges or schools, if it is intended for the education of every section of society, is' a most important thing; and it is undoubtedly the most important thing to do to help the country through the difficult times with which we are now faced. I appeal to the Government seriously to consider this question, and not to add fresh burdens to institutions which are now grappling with this great problem.

We have been told that many of these schools and colleges in order to improve their education and make their schools better equipped have raised money on loan, and that at the present time the only way in which the loans can be paid off is by means of donations or gifts, which have been made by the wealthy supporters of those institutions, or by means of the fees which are now liable to taxation. The sooner we can free educational institutions of this kind from taxation of this kind the better it will be for everybody concerned. Personally, I am very much disappointed with the reply made by the Chancellor of the Exchequer. If what we have heard in this Debate is any indication of what may be hoped for in the future then those who are supporting this Motion are in a most unfortunate position. I hope the Committee will make it quite plain to the Government that they should really do something in regard to this matter, and, if the Noble Lord and his friends can see their way to press this proposal to a Division, I shall be only too glad to support them.

Commander WILLIAMS

On this question, I find myself in a rather difficult position. I agree that it is very easy to make out a really good case for this particular form of exemption. It is always very easy to come here and get a lot of sympathy for any good cause, and they are all good causes when it is a question of getting people exempt from taxation. I have not heard a single instance where one could not make out a good case from comparatively little material for the exemption of some particular section of the community. There can be very little doubt that, as far as these particular schools and various educational institutions are concerned, they are doing some of the finest educational work in this country that has ever been performed throughout the whole world. That is acknowledged on all hands, and no one is more willing to pay a tribute to it than I am and the Members of my party. I wish to point out, however, that it is a very difficult position when once you ask the Chancellor of the Exchequer to make exemptions, even if it is only just a little one here and one which seems good in its way and would undoubtedly be an enor- mous help. Directly you make one exemption you have someone else coming along on this side and the other side asking for more and more exemptions all along the line. That seems to me to be the whole trouble at the present time.

You have no Liberal party now because it is dormant or dead, and therefore there is no one to stick up for the general taxpayer of the country. Directly you give exemptions in one case it means that the rest of the taxpayers have to make up that deficiency. Therefore, it is absolutely essential, no matter how much sympathy may be expressed in one direction or another, that some Members of the Conservative party should emphasise the fact that, however kind your hearts may be, or however much you wish to help our oldest educational institutions which have done so much for the country, there is a time when some of us ought to support the Chancellor of The Exchequer and not be perpetually, as so many sections of this House are always doing, asking for some relief of taxation for some particular cause, although it could not be devoted to a better cause than this one. I would remind the Committee that every time you give relief somebody has to find the money, and you are simply placing more hardships on those who are bearing very heavy burdens at the present time.


I should not have intervened in this Debate but for the fact that I have spent a large part of my life in educational administration, and I know something about the great difficulties in which the Universities are placed, having for over 16 years been connected with one of those Universities. I have also noticed as the governor of various schools how badly they are in need of support, and the great difficulty they experience in keeping themselves up to date. Of course, we cannot ignore the legal position of this matter, and that has been very clearly stated by the Chancellor of the Exchequer. We are all aware that what the House of Lords decides is law, and we must take their decision as being a declaration of the existing law. Nevertheless, it is unfortunate that these schools and educational institutions have been working under a state of the law which they relied upon, and which was different from the decision given by the House of Lords, because one of the Judges who has given most attention to these matters, Mr. Justice Rowlatt, decided that the authorities were right in thinking they were not liable to pay this tax, and really it comes as a sudden blow to a large number of schools who are struggling to make both ends meet and to keep themselves up to date.

I ask hon. Members to put themselves in the position of those who are so badly hit by this tax and by the decision of the House of Lords. On this matter, I would like to say a word or two from the point of view of the taxpayers and the ratepayers. I say it would be good business from the point of view of the public purse to make this exemption, because I feel quite certain in the long run that, if you do not give this exemption for income on these fees, you will have to give grants in the near future either out of the rates or in the form of taxation, which will be far more than the amount of the tax which would be lost by this Amendment. I think on this subject I am the latest recruit on this side of the House, and I happen to know that there is a feeling going about that the Government are not very keen about educational matters and that in the past we used to show more sympathy for education. Let us look for a moment at the position of the schools. Take one which depends largely on fees and which wishes to keep itself up to date. As a rule, we find it has little or no endowments, or, if it has any, they are generally earmarked for certain purposes.

Such a school is mainly run by the fees paid by the parents. These schools have to make sure of an annual income in order to pay the masters' salaries, but, in addition to this, they must, from time to time, carry out various improvements if their work is to be properly carried on. A new lavatory may be required or sundry repairs or other improvements, and these things are absolutely essential. What fund have they got for this purpose? They have no funds at all, and are you going to say that these schools should not be allowed to carry on their good work? The only fund they have is that formed by the fees accumulated from year to year. You are practically saying to these schools, "You shall not take the cost of that equipment which is absolutely necessary out of the fund provided by your fees from the parents who send their children to those schools." I could mention one or two cases where such work has had to be done. You must have provision for supplying trained teachers.

I think the proposal we are discussing would be good business from the point of view of the taxpayers, and it is absolutely essential that we should have some relief for these schools and colleges. This is a question of calling upon these people to pay Income Tax when as a matter of fact a great many of them never dreamt that they would have to pay Income Tax under these circumstances. This kind of work has to be encouraged, and it is recognised on all hands that such educational work is done in the cheapest and best way by schools of this kind. Some hopes in this direction have been held out by the Chancellor of the Exchequer, but I trust that between now and the Report stage he will carefully consider whether something cannot be done to prevent this great hardship and this great blow which will be inflicted by this tax if these schools find themselves called upon to pay an Income Tax which will seriously cripple their work in the future.


I wish to deal with a point which has not been dealt with by previous speakers, and it is one to which I wish to call the attention of the Financial Secretary. Parliament never intended that this particular source of income should be taxed, anti if the House of Commons had had any idea that such a decision would have been given by the House of Lords they would never have drawn up the Act in that particular way. It is a form of taxation which I think I can show is utterly inequitable. The reason why I say that is this. It is proposed to tax certain moneys as profits which, if the concern were a commercial concern, would not be taxed. These concerns are being taxed on a certain surplus of receipts over expenditure. Those receipts are only obtained by reason of the fact that the institution has, in some form or other, very large capital, perhaps in the shape only of school buildings. The receipts are earned by that capital, but, in considering what are called the taxable profits, no allowance whatever is made for the capital expenditure or capital borrowing which would be necessary in the case of a commercial venture. For that reason I venture to suggest that this tax is absolutely inequitable and indefensible, and never could have been intended by Parliament. One of my hon. Friends on these benches has made an appeal to those Members of the House who are anxious to support economy, to which, in theory at any rate, I should have been inclined to make a very strong response; but I would like to point out that this is very different from the ordinary demands which are made, because, as has been pointed out over and over again, and I think conclusively, this is to all intents and purposes, in practice, the imposition of a new tax. My hon. Friend must at any rate admit that, however long it may have been the law, the law has not been enforced in any substantial sum of pounds, shillings and pence ever since it existed, but it is now proposed to enforce it to the utmost. Therefore, the Committee have really to consider the imposition of a new tax which I venture to suggest is, as I have already said, inequitable, and which Parliament would never intentionally sanction or pass.

There is another point of a somewhat similar nature. The Noble Lord the Member for Oxford University (Lord H. Cecil) has thoroughly exploded the suggestion that a remission of tax is equal to a subsidy, but, whatever it may be called—whether it be called a hidden subsidy or whether it be called something else—I want to point out one peculiarity which it has in this case. These moneys which it is proposed now to tax are used mainly for keeping up to date and effective, and sometimes for extending, those ancient gifts and endowments which have been given for educational purposes in the past. If these moneys are to be taxed by which is kept up to date that educational apparatus which has been voluntarily provided in the past, it will be placing a tax upon, it will be placing an obstacle in the way of, those who would be inclined in future to endow public schools and colleges and provide money for that purpose. That is one way, at any rate, in which this money differs very much from a subsidy. I hope the Chancellor of the Exchequer will remember that, as has already been pointed out to him from the benches opposite, many of these institutions, which are most deserving according to his own idea, are not necessarily new institutions at all; they are very old ones. There are old educational institutions, with valuable buildings and valuable educational apparatus—if I may use that as the best phrase for the purpose—which, by reason of their ancient charitable endowments, are enabled to carry on now a very great work. They can only continue to carry on that great work effectively if they can keep their educational apparatus up to date, and no apparatus in recent years has required more expenditure to bring it up to date than this educational apparatus.

Therefore, while thanking the Chancellor of the Exchequer for the obvious sympathy that he has for this proposal, I venture to press the Government very earnestly to consider this matter, not before next year, but before the Report stage of this There is really nothing in the argument as to this being the beginning of a slippery slope or anything of that sort. The Clause which is now proposed is perfectly clearly defined, is absolutely limited in regard to the money that is to be affected, and is absolutely limited in regard to the institutions which are to he affected. I personally cannot see any really good reason why the Chancellor of the Exchequer should not accept the Clause as it stands, except in one possible respect, which he himself mentioned, and that is the case of some of these old educational establishments—they must be very few—which have such a large income arising from their property and endowments—which are quite different from their actual buildings—that they can keep up their educational apparatus without making a surplus on the fees that they charge. I venture to suggest to the Chancellor of the Exchequer that the Movers and supporters of this proposed new Clause will he quite prepared to consider the addition to it of words to except institutions which are so wealthy that they do not need the benefit of it. With that addition, this Clause ought to be accepted, and T venture to express the earnest hope that the Chancellor of the Exchequer will try and see if he cannot find at least some amended form which he will be prepared to accept on the Report stage.


I desire to plead with the Chancellor of the Exchequer for some of the older endowed schools. In Bedford we have a very large endowment fund for schools. There are four schools, with some 2,300 pupils. In pre-War days we managed, by our surplus, to build up those schools during several generations, but to-day, owing to the increased cost of education, there is very little surplus. It would be interesting to know what is going to be the surplus. The accounts of these schools have never been sent to the Inspector of Taxes, but they will now be invited to send their accounts to the Inspector of Taxes, and he will challenge a good many items. For instance, I have here an item of expenditure of £2,500 for plant and apparatus, and there is also another of £1,500 for improvements and repairs. I venture to think that, when the Inspector of Taxes gets these figures, he will say that a certain proportion of it may be charged to income, but that the rest will be capital expenditure, on which tax will have to be paid. I think that that will interfere to a very great extent with the carrying out by the management of these educational schemes, while at the same time I think it will bring hardly any benefit to the Chancellor of the Exchequer. In fact, I think he is doing a very great deal of harm by instituting in this case what I call a new tax.


I only intervene to add one observation to the very full Debate which has taken place on this topic. I do not think the Treasury can possibly doubt that the request made by the proposal of this Clause for exemption from Income Tax of all the funds of educational bodies is a logical and sound proposal. There is only one case in which their profits are not at present exempt. I will not go into it, but their lands and investments are exempted as a matter of course. When, however, by good management, a certain surplus on their fees arises, that alone amongst all their financial assets is to be taxed. I venture to urge upon the Financial Secretary that this anomaly, for it is an anomaly, should be removed. It was interesting to hear the Chancellor of the Exchequer say that a full examination is going to be made into the legal meaning of the term "charity," but, whatever legal meaning is attached to it, surely, educational endowments and educational work must, fall within the definition of a charity. I am sure the Committee will agree that, even if the term charity were to be limited to the very narrowest scope, educational institutions must be regarded as charities, and, if that be so, there is, surely, no real reason for postponing the operation of this proposed new Clause. By all means let the investigation into the question what is a charity he undertaken with the greatest care, and let all the time necessary he spent upon it, but, while that investigation is going on, let us have the exemption of charitable institutions from Income Tax made complete.

I would urge the Financial Secretary to try and see his way to accept this new Clause on the Report stage this year, and not postpone it to a future year. No one would wish him to introduce into Ms Finance Act of this year a Clause which would have to be repealed next year. That would be foolish legislation. But there is no risk of that. I do not think that either the Committee or the House in future years would ever say that educational institutions are for the future not to be deemed to he charities. Therefore, I venture to urge the Financial Secretary, to accept this new Clause now, or give us a promise that it will he accepted on Report, for surely it is of national importance that educational institutions should know where they stand, and should have now the full benefit of the position which they occupy of being charitable institutions in the truest sense of the word.


I only want in one sentence to make a further appeal to the Financial Secretary to accept, at any rate in substance, this proposed new Clause. It is not asking for a concession; it is not asking for a subvention; it is not asking for a remission of taxation; it is merely asking that a new tax shall not be imposed on institutions which are doing valuable work for the country. I venture, therefore to join in the appeal which has been so relevantly made by hon. Members around me.


My two hon. Friends, the Member for Perth (Mr. Skelton) and the Member for York (Sir J. Marriott) have made a personal appeal to me to give an assurance of the acceptance of this proposed new Clause when we come to the Report Stage of this Bill. In the circumstances, I am bold enough to say that I do not think that that is a very reasonable request to make to me at the present moment. After all, how does the matter stand? We have had a very interesting and important Debate, which has brought out a very strong feeling on the question of this Clause, but there really has been very little difference of opinion. The strongest note of opposition to the Clause came, I think, from the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham), and with a great deal of what he said I personally find myself in agreement. Although he spoke strongly against the Clause, he, of course, showed that with the object in view he has the fullest possible sympathy.

7.0 P.M.

No one showed that sympathy more strongly than my right hon. Friend the Chancellor of the Exchequer. [Interruption] Of course, hon. Members may like to make an attack upon my right hon. Friend's sincerity. At all events, that is not the attitude of my hon. Friend who made the appeal, and seeing my Noble Friend the Member for Oxford University (Lord H. Cecil) had already, in his usual convincing way, put before the Committee the strongest possible case that could be made for the Clause and seeing that after hearing that speech my right hon. Friend expressed his warm approval of the object which we all have in view, but intimated to the Committee the technical difficulties which were known to him from the taxing point of view, and told the Committee that he intended to take the whole of the subject matter of which this Clause is only one part into consideration in the near future with a view to seeing whether the whole of this branch of Income Tax law could not be put on a more satisfactory basis, I think it is a little unusual to expect that I should get up here, after my right hon. Friend, and go considerably further than he felt able to do and give a definite pledge with regard to the Report stage. I cannot do that. I can only repeat, for my own part, my strongest possible sympathy, as my right hon. Friend has done, with the object which this Clause has in view and express the earnest desire that my right hon.

Friend will find it possible to deal in a satisfactory way with this matter.


Everyone must feel it would be difficult for the right hon. Gentleman who has just spoken to change what the Chancellor has said, in an earlier speech, but I do think that my hon. Friends will be justified, and in fact bound, to put down the Clause afresh on the Report stage in order that we may have put before us a little more convincingly the case for the Treasury against the Clause, unless they are prepared then to accept it. Either let them accept it on Report after reflection or let them put down some simple form of it themselves, or let them really give us rather a better case than, if I may so respectfully, we have heard to-day. I think the Financial Secretary to the Treasury must have been impressed by the great concurrence of opinion among hon. Members of different ways of thinking, and the great preponderance of argument on behalf of the Clause to which, indeed, he has himself borne witness. In these circumstances, I think we are entitled to something more convincing and satisfactory by way of reply from the Government on the Report stage, and I earnestly hope that that satisfaction will take the form of some substantial concession. At any rate, I think the Clause should be put down afresh on Report in order that it may he again discussed.


With reference to what has just fallen from my Noble Friend, I would remind him that so far from there being any possible objection to that course, the Chancellor of the Exchequer expressly said that he did not wish anything he said to he taken by hon. Members who are supporting the Clause as a deterrent from any Parliamentary action they wish to take, but he wanted to safeguard himself against the suggestion that he was going any further than he was in the direction of a pledge of that sort. If the Clause were put down again on Report, we should have the subject discussed again.

As regards what my Noble Friend has said as to the character of the Debate, it is quite true that there has been a great preponderance of opinion expressed in sympathy with the object of the Clause. I do not suppose anybody will differ from that, but there are two quite separate aspects. We can all desire to do all we possibly can for education in the widest sense of the word. You may be desirous of doing everything you possibly can, legitimately and fairly, to endow schools or to safeguard their endowments, but very few hon. Members have approached the subject at all from the rather narrow and perhaps technical standpoint of the taxing machinery of the country.

Hon. Members have never really addressed themselves at all to the question which the Chancellor of the Exchequer must look at as to the reaction which it will cause on the wider field of taxation. The right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) is very much alive to that, but one or two hon. Members seemed rather to brush it aside as if it did not exist, and one hon. Member, in his appeal to me to accept this Clause as it stands, even said there could be no possible objection to accepting it, and that there could be no reaction. I can only assure him that there is no one who has had any experience of the Treasury who will take that view. They are perfectly alive to the fact that it may be difficult—and will be extremely difficult—to accept this Clause, or to frame another Clause which would have this effect, without opening a very large door to exemption of taxation. Whether it would be necessary or desirable to do that is another question, but it would have that effect, and therefore, there is a larger aspect which has nothing to do with education or with one's sympathies with education, but which we have to keep account of. I only mention that, because so far as it is a reply to the statement of my Noble Friend, the Debate has been entirely one-sided in the sense I have indicated, and I hope the Committee will not lose sight of the other side.


In view of the sympathy shown by the Chancellor of the Exchequer and his statement that he will hold an.inquiry into the matter, I and my hon. Friends have decided that the right course is to withdraw this Clause at this stage, but we hope the inquiry will not he delayed very long and that something definite may he said one way or another by the Report stage. In that ease, we should feel no difficulty in putting down the Clause again.


I think somebody—

The DEPUTY-CHAIRMAN (Captain FitzRoy)

I would point out that if the Debate is to be continued the Clause cannot he withdrawn.

Captain BENN

If I may say so, that is a matter of indifference to me. I did not wish to continue the Debate, hut it seemed to me a great pity that no one should draw attention to the fact that the supporters of the Government who have made an excellent ease for the Clause are giving way to the Government in agreeing to withdraw it. The hon. Member for Cambridge University (Mr. Withers), with a meekness which does him great credit, has explained that in view of the sympathetic utterance of the Government he proposes to withdraw it. I do not think anybody could have gone further in the way of determined resistance to the clause than the right hon. Gentleman who is sitting on the Front Bench at this moment. He explained that the sympathy of the Government for education was well known—I think it is—and he went on to say that the difficulty was that they had not the necessary experts to devise a machine for exempting a special class of ease with which he felt cordial sympathy. He went further and warned the hon. Gentleman who is now proposing to put down the Clause on Report stage that it would receive no more consideration on Report than it has done now in Committee. I can put that, in a final sentence, to a very conclusive test. Will the Financial Secretary undertake that if this Clause is put down on Report and if a case is made out for it as good as has been made to-day, he will advise the Patronage Secretary to withdraw the Whips and have what is popularly called a free vote?


The hon. and gallant Member knows perfectly well that that is not a question to put to me.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes. 116; Noes, 244.

Division No. 296.] AYES [4.40 p.m.
Alexander, A. V. (Sheffield, Hillsbro') Cowan, D. M. (Scottish Universities) Harney, E. A.
Ammon, Charles George Dalton, Hugh Harris, Percy A.
Attlee, Clement Richard Davies, Ellis (Denbigh, Denbigh) Hartshorn, Rt. Hon. Verne,
Baker,.J. (Wolverhampton, Bilston) Day, Colonel Harry Hayes, John Henry
Barker, G. (Monmouth, Abertillery) Dennison, R. Henderson. Rt. Hon. A. (Burnley)
Barr, J. Duncan. C. Hirst, G. H.
Batey, Joseph Evans, Capt. Ernest (Welsh Univer.) Hirst, W. (Bradford, South)
Beckett, John (Gateshead) Fenby, T. D. Hore-Belisha, Leslie
Benn Captain Wedgwood (Leith) Garro-Jones, captain G. M. Hudson, J. H. {Huddersfield)
Bowerman, Rt. Hon. Charles W. Gardner, J. P. John, William (Rhondda, West)
Broad, F. A. Gillett, George M. Kelly, W. T.
Buchanan, G. Graham, Rt. Hon. Wm. (Edin., Cent.) Kenworthy, Lt.-Com. Hon. Joseph M.
Buxton, Rt. Hon. Noel Greenwood, A. (Nelson and Coins) Kenyon, Barnet
Cape, Thomas Grenfell, D. R. (Glimorgan) Lawrence, Susan
Charieton, H. C. Groves, T. Livingstone, A. M.
Cluse, W. S. Grundy, T. W. Lunn, William
Clynes, Rt. Hon. John R. Hall, F. (York, W. R., Normanton) MacDonald, Rt. Hon. J,R.(Aberavo[...])
Compton, Joseph Hall, G. H. (Merthyr Tydvil) Mackinder, W.
Connolly, M. Hamilton, Sir R. (Orkney a Shetland) March, S.
Cove, W. G. Hardie, George D. Montague, Frederick
Morris, R. H Sinclair, Major Sir A. (Caithness) Wellhead, Richard C.
Morrison, R C. (Tottenham, N.) Smith, Ben (Bermondsey, Rotherhithe) Walsh, Rt. Hon. Stephen
Murnin, H. Smith, H. B. Lees (Keighley) Westwood, J.
Naylor, T. E. Smith, Rennie (Penistone) Whiteley, W.
Oliver, George Harold Snell, Harry Wiggins, William Martin
Paling, W. Snowden, Rt. Hon. Philip Wilkinson, Ellen C.
Pethick-Lawrence, F. W Stamford, T. W. Williams, David (Swansea, East)
Ponsonby, Arthur Stephen, Campbell Williams, Dr. J. H. (Llanelly)
Potts, John S. Stewart, J. (St. Rollox) Wilson, C. H. (Sheffield, Attercliffe)
Richardson, R. (Houghton-le-Spring) Thomas, Rt. Hon. James H. (Derby) Wilson, R. J. (Jarrow)
Riley, Ben Thorne, W. (West Ham, Plaistow) Windsor, Walter
Runciman, Rt. Hon. Walter Thurtle, E. Wright, W.
Salter, Dr. Alfred Tinker, John Joseph Young, Robert (Lancaster, Newton)
Scrymgeour. E. Townend, A. E.
Scurr, John Trevelyan, Rt. Hon. C. P. TELLERS FOR THE AYES.—
Shepherd, Arthur Lewis Viant, S. P. Mr. T. Kennedy and Mr. A. Barnes.
Acland-Troyte, Lieut,-Colonel Edmondson, Major A..J. Hudson, R. S. (Cumb'l'nd, Whiteh'n)
Agg Gardner, Rt. Hon. Sir James T. Elliot, Major Walter E. Hume, Sir G. H.
Albery, Irving James Ellis, R. G. Hume-Williams, Sir W. Ellis
Alexander E. E. (Leyton) Elveden, Viscount Huntingfleld, Lord
Apsley, Lord Erskine, Lord (Somerset, Weston-s.-M.) Hurd, Percy A.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Erskine, James Malcolm Monteith Hutchison, G.A. Clark (Midl'n & P'bl's)
Atholl, Duchess of Evans, Captain A. (Cardiff, South) Inskip, Sir Thomas Walker H.
Baldwin, Rt. Hon. Stanley Everard, W. Lindsay Jackson, Sir H. (Wandsworth, Cen'll)
Balfour, George (Hampstead) Fairfax, Captain.J. G. James, Lieut.-Colonel Hon. Cuthbert
Balniel, Lord Falle, Sir Bertram G. Kennedy A. R. (Preston)
Banks, Reginald Mitchell Falls, Sir Charles F. Kindersley, Major Guy M.
Barclay-Harvey, C. M. Fanshawe, Commander G. D. King, Captain Henry Douglas
Barnett, Major Sir Richard Fermoy, Lord Kinloch-Cooke, Sir Clement
Barnston, Major Sir Harry Fielden, E. B. Lane Fox, Col. Rt. Hon. George R.
Beckett, Sir Gervase (Leeds, N.) Ford, Sir P. J. Locker-Lampson, G. (Wood Green)
Bellairs, Commander Carlyon W. Forestier-Walker, Sir L. Locker Lampson, Com. O. (Handsw'th)
Betterton, Henry B. Forrest, W. Loder, J. de V.
Bird, E. R. (Yorks, W. R., Skipton) Foster, Sir Harry S. Looker, Herbert William
Blades. Sir George Rowland Fraser, Captain Ian Lord, Walter Greaves
Boothby, R. J. G. Frece, Sir Waiter de Lowe, Sir Francis William
Bourne, Captain Robert Croft Ganzoni, Sir John Lucas-Tooth, Sir Hugh Vere
Bowyer, Capt. G. E. W. Gates, Percy Luce, Maj.-Gen. Sir Richard Harman
Braithwaite, A. N. Gault, Lieut Col. Andrew Hamilton Lumley, L. R.
Brass, Captain W. Gibbs, Col. Rt. Hon. George Abraham MacAndrew, Major Charles Glen
Brassey, Sir Leonard Gilmour, Lt.-Col. Rt. Hon. Sir John Macdonald, Sir Murdoch (Inverness)
Briscoe, Richard George Glyn, Major R. G. C. Macdonald. Capt. P. D. (I. of W.)
Brocklebank, C, E. R. Goff, Sir Park Macdonald, R. (Glasgow, Cathcart)
Brooke, Brigadier-General C. R. I. Grant, J. A. McDonnell, Colonel Hon. Angus
Brown, Col. D. C. (N'th'I'd., Hexham) Greene, W. P. Crawford MacIntyre, Ian
Brown, Brig.-Gen.H.C.(Berks, Newb'y) Gretton, Colonel John McLean, Major A.
Buckingham, Sir H. Grotrian, H. Brent Macmillan, Captain H.
Bull, Rt. Hon. Sir William James Guinness, Rt. Hon. Walter E. McNeill, Rt. Hon. Ronald John
Burgoyne, Lieut.-Colonel Sir Alan Gunston, Captain D. W. Macquisten, F. A.
Burton, Colonel H. W. Hacking, Captain Douglas H. MacRobert, Alexander M.
Butler, Sir Geoffrey Hail, Lieut.-Col. Sir F. (Dulwich) Makins, Brigadier-General E.
Cadogan, Major Hon. Edward Hail, Capt. W. D'A. (Brecon & Rad.) Malone, Major P. B.
Campbell, E. T. Hammersley, S. S. Manningham-Buller, Sir Mervyn
Cautley, Sir Henry S. Hanbury, C. Margesson, Captain D.
Cecil, Rt. Hon. Sir Evelyn (Aston) Hannon, Patrick Joseph Henry Marriott, Sir J. A. R.
Cecil, Rt. Hon. Lord H. (Ox. Univ.) Harmsworth, Hon. E. C. (Kent) Mason, Lieut.-Col. Glyn K.
Chadwick, Sir Robert Button Harrison, G. J. C. Meyer, Sir Frank
Chamberlain, Rt. Hon. N.(Ladywood) Hartington, Marquess of Milne,.J. S. Wardlaw
Charteris, Brigadier-General J. Harvey, G. (Lambeth, Kennington) Mitchell, S. (Lanark, Lanark)
Christle, J. A. Harvey, Major S. E. (Devon, Totnes) Mitchell, W. Foot (Saffron Walden)
Churchill, Rt. Hon. Winston Spencer Haslam, Henry C. Mitchell, Sir W. Lane (Streatham)
Churchman, Sir Arthur C. Hawke, John Anthony Monsell, Eyres, Corn. Rt. Hon. B. M.
Clarry, Reginald George Headlam, Lieut.-Colonel C. M. Moore, Limit-Colonel T. C. R. (Ayr)
Clayton, G. C. Henderson,Capt.R.R.(Oxford, Henley) Moore-Brabazon, Lieut.-Col. J. T. C.
Cobb, Sir Cyril Henderson, Lieut.-Col. V. L. (Bootle) Morrison, H. (Wilts, Salisbury)
Cochrane, Commander Hon. A. D. Heneage, Lieut.-Col. Arthur P. Morrison-Bell, Slr Arthur Clive
Cockerill, Brigadier-General G. K. Herbert, Dennis (Hertford, Watford) Nall, Lieut.-Colonel Sir Joseph
Cohen, Major J. Brunel Herbert, S. (York, N. R., Scar. & Wh'by) Nelson, Sir Frank
Conway, Sir W. Martin Hills, Major John Waller Newman, Sir R. H. S. D. L. (Exeter)
Cooper, A. Duff Hoare, Lt.-Col. Hon. Sir S. J. G. Newton. Sir D. G. C. (Cambridge)
Cope, Major William Hogg, Rt. Hon. Sir O.(St. Marylebone) Nicholson, Col. Rt.Hn W.G,(Ptrsf'ld)
Craik, Rt. Hon. Sir Henry Hohler, Sir Gerald Fitzroy Nuttall, Ellis
Crookshank, Cpt.H.(Lindsey,Gainsbro) Holbrook, Sir Arthur Richard Oakley, T.
Dalkeith. Earl of Holt. Capt. H. P. O'Neill, Major Rt. Hon. Hugh
Datzlel, Sir Davison Hope, Sir Harry (Fortar) Oman, Sir Charles William C.
Davies, Dr. Vernon Hopkins, J. W. W. Ormsby-Gore, Hon. Willliam
Davies, Maj. Geo.F.(Somerset,Yeovil) Hopkinson, Sir A. (Eng. Universities) Penny, Frederick George
Davison, Sir W. H. (Kensington, S.) Horlick, Lieut.-Colonel J. N. Perkins, Colonel E. K.
Dawson, Sir Philip Howard, Captain Hon. Donald Peto, Basil E. (Devon, Barnstaple)
Eden, Captain Anthony Hudson, Capt. A. U. M. (Hackney,N.) Peto, G. (Somerset, Frome)
Pilcher, G. Sinclair, Col. T. (Queen's Univ., Belist) Waterhouse, Captain Charles
Preston, William Skelton, A. N. Watson, Rt. Hon. W. (Carlisle)
Price, Major C. W. M. Smith, R. W. (Aberd'n & Kine'dine, C.) Wells, S. R.
Radford, E. A. Smithers, Waldron Whaler, Major Sir Granville C. H.
Ramsden, E. Somerville, A. A. (Windsor) White, Lieut.-Colonel G. Dalrymple
Rewson, Sir Alfred Cooper Sprot, Sir Alexander Williams, A. M. (Cornwall, Northern)
Reid, D. D. (County Down) Stanley, Col. Hon. G. F. (Will'sden, E) Williams, Herbert G. (Reading)
Remer, J. R. Stanley, Lord (Fylde) Wilson, R. R. (Stafford, Lichfield)
Remnant, Sir James Steel, Major Samuel Strang Windsor-Clive, Lieut.-Colonel George
Phys, Hon. C. A. U. Strickland, Sir Gerald Winterton, Rt. Hon. Earl
Rice, Sir Frederick Stuart, Crichton-, Lord C. Wise, Sir Fredric
Richardson, Sir P. W. (Sur'y, Ch'ts'y) Styles, Captain H. Walter Withers, John James
Ropner, Major L. Sueter, Rear-Admiral Murray Fraser Wolmer, Viscount
Ruggles-Brise, Major E. A. Sugden, Sir Wilfrid Womersley, W. J.
Russell, Alexander West (Tynemouth) Templeton, W. P. Wood, E. (Chest'r, Stalyb'ge & Hyde)
Rye. F. G. Thompson, Luke (Sunderland) Wood, Sir Kingsley (Woolwich, W.)
Salmon, Major I. Thomson, Rt. Hon. Sir W. Mitchell- Wood, Sir S. Hill- (High Peak)
Samuel, A. M. (Surrey, Farnham) Tinne,.J. A. Woodcock, Colonel H. C.
Sandeman, A. Stewart Titchfield, Major the Marquess of Worthington-Evans, Rt, Hon. Sir L.
Sanders, Sir Robert A. Wallace, Captain D. E. Yerburqh, Major Robert D. T.
Sandon, Lord Ward, Lt.-Col.A. L. (Kingston-on-Hull)
Shaw, Lt.-Col.A. D. Mcl. (Renfrew, W) Warner, Brigadier-General W. W. TELLERS FOR THE NOES.—
Shaw, Capt. W. W. (Wilts, Westb'y) Warrender, Sir Victor Major Hennessy and Mr. F. C. Thomson.
Division No. 297.] AYES. [7.12 p.m.
Agg Gardner, Rt. Hon. Sir James T. Grenfell, D. R. (Glamorgan) Purcell, A. A.
Alexander, A. V. (Sheffield, Hillsbro') Gretton, Colonel John Richardson, R. (Houghton-le-Spring)
Attlee, Clement Richard Griffiths, T. (Monmouth, Pontypool) Riley, Ben
Barker. G. (Monmouth, Abertillery) Grundy T. W. Runciman, Rt. Hon. Walter
Barnes, A. Hall, F. (York, W. R., Normanton) Salter, Dr. Alfred
Barr, J. Hamilton, Sir R. (Orkney & Shetland) Scrymgeour, E.
Batey, Joseph Hardle, George D. Scurr, John
Been, Captain Wedgwood (Leith) Hartshorn, Rt. Hon. Vernon Shaw, Rt. Hon. Thomas (Preston)
Bird, E. R. (Yorks, W. R., Skipton) Hayday, Arthur Short, Alfred (Wednesbury)
Bourne, Captain Robert Croft Hayes, John Henry Sinclair, Major Sir A. (Caithness)
Bowerman, Rt. Hon. Charles W. Henderson, Rt. Hon. A. (Burnley) Smith, Ben (Bermondsey, Rotherhithe)
Broad, F. A. Hirst, G. H. Smith, Rennie (Penistone)
Bromfield, William Hirst, W. (Bradford, South) Snell, Harry
Bromley, J. Hopkinson, Sir A. (Eng. Universities) Spencer, G. A. (Broxtowe)
Buchanan, G. Hore-Belisha, Leslie Stamford, T. W.
Butler, Sir Geoffrey Hudson, J. H. (Huddersfield) Stephen, Campbell
Buxton, Rt. Hon. Noel Hutchison, Sir Robert (Montrose) Stewart, J. (St. Roliox)
Cape, Thomas John, William (Rhondda, West) Sutton, J. E.
Cecil, Rt. Hon. Lord H. (Ox. Univ.) Jones, Henry Haydn (Merioneth) Thorne, W. (West Ham, Plaistow)
Charleton, H. C. Jones, Morgan (Caerphilly) Thurtle, E.
Close, W. S. Kelly, W. T. Townend, A. E.
Clynes, Rt. Hon. John R. Kenyon, Barnet Trevelyan, Rt. Hon. C. P.
Collins, Sir Godfrey (Greenock) Lawrence, Susan Viant, S. P.
Compton, Joseph Little, Dr. E. Graham Walsh. Rt. Hon. Stephen
Connolly, M. Livingstone, A. M Watts-Morgan, Lt.-Col. D. (Rhondda)
Cowan, D. M. (Scottish Universities) Lowth. T. Webb, Rt. Hon. Sidney
Crawfurd, H. E. Lunn, William Westwood, J.
Dalton, Hugh MacDonald, Rt. Hon. J.R. (Aberavon) Whiteley, W.
Davies, Maj. Geo.F.(Somerset,Yeovll) Mackinder, W. Wiggins, William Martin
Davies, Ellis (Denbigh, Denbigh) March, S. Wilkinson, Ellen C.
Davison, Sir W. H. (Kensington, S.) Montague, Frederick Williams, David (Swansea, E.)
Day, Colonel Harry Morrison, R. C. (Tottenham, N.) Williams, Dr J. H (Lianelly)
Duncan, C. Murnin, H. Wilson, R. J. (Jarrow)
Edwards, C. (Monmouth, Bedwellty) Newton. Sir D. G. C. (Cambridge) Windsor, Walter
Ellis, R. G. Oliver, George Harold Wright, W.
Gardner, J. P. Palin, John Henry Young, Robert (Lancaster, Newton)
George, Rt. Hon. David Lloyd Paling, W.
Gillett, George M. Pethick-Lawrence, F. W. TELLERS FOR THE AYES.—
Gosling, Harry Ponsonby. Arthur Mr. Withers and Sir Martin Conway.
Greenall. T. Potts, John S.
Acland-Troyte, Lieut.-Colonel Cayzer,Maj.Sir Herbt. R. (Prtsmth, S.) Foster, Sir Harry S.
Alexander, E. E. (Leyton) Cazalet, Captain Victor A. Foxcroft, Captain C. T.
Amery, Rt. Hon. Leopold C. M. S. Chamberlain, Rt. Hon. N. (Ladywood) Fraser, Captain Ian
Applin, Colonel R. V. K. Charteris, Brigadier-General J. Frece, Sir Walter de
Apsley, Lord Christie, J. A. Ganzoni, Sir John
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Churchill, Rt. Hon. Winston Spencer Gibbs, Col. Rt. Hon. George Abraham
Atholl, Duchess of Churchman, Sir Arthur C. Gilmour, Lt -Col. Rt. Hon. Sir John
Baldwin, Rt. Hon. Stanley Clarry, Reginald George Goff, Sir Park
Balfour, George (Hampstead) Clayton, G. C. Graham, Rt. Hon. Wm. (Edin., Cent.)
Bainlel. Lord Cochrane, Commander Hon. A. D. Grant, J. A.
Barclay-Harvey, C. M. Cohen, Major J. Brunel Greene, W. P. Crawford
Barnett, Major Sir Richard Colfox, Major Wm, Phillips Grotrian. H. Brent
Barnston, Major Sir Harry Cooper, A. Duff Guest,Capt. Rt. Hon. F. E,(Bristol,N.)
Beckett, Sir Gervase (Leeds, N.) Cooper, J. B. Guinness, Rt. Hon. Walter E.
Bennett, A. J. Cowan, Sir Wm. Henry (Islington, N.) Gunston, Captain D. W.
Bentinck, Lord Henry Cavendish Craik, Rt. Hon. Sir Henry Hacking, Captain Douglas H.
Betterton, Henry B. Croft, Brigadier-General Sir H. Hall, Lieut.-Col. Sir F. (Dulwich)
Birchall, Major J. Dearman Crookshank, Col. C. de W. (Berwick) Hanbury, C.
Blades, Sir George Rowland Crookshank,Cpt.H.(Lindsey,Galnsbro) Harland, A.
Bowyer, Capt. G. E. W. Curzon, Captain Viscount Harrison, G. J. C.
Braithwaite, A. N. Dalziel, Sir Davison Hartington, Marquess of
Brass, Captain W. Davies, Dr. Vernon Harvey, G. (Lambeth, Kennington)
Bridgeman, Rt. Hon. William Clive Dawson, Sir Philip Harvey, Major S. E. (Devon, Totnes)
Briscoe, Richard George Edmondson, Major A. J. Haslam, Henry C.
Brittain, Sir Harry Edwards, J. Hugh (Accrington) Hawke, John Anthony
Brocklebank, C. E. R. Elliot, Major Walter E. Henderson, Capt. R. R. (Oxf'd, Henley)
Brooke, Brigadier-General C. R. I. Elveden, Viscount Henderson, Lieut.-Col. V. L. (Bootle)
Broun-Lindsay, Major H. Erskine, Lord (Somerset, Weston.s.-M.) Heneage. Lleut.-Colonel Arthur P.
Brown, Maj. D. C.(N'th'I'd., Hexham) Erskine, James Malcolm Monteith Henn. Sir Sydney H
Brown, Brig.-Gen.H.C.(Berks, Newb'y) Everard, W. Lindsay Hennessy, Major J. R. G.
Buckingham, Sir H. Fairfax, Captain J. G. Herbert, S. (York, N. R. Scar. & Wh'by)
Burney, Lieut.-Com. Charles D. Falle, Sir Bertram G. Hills, Major John Waller
Burton, Colonel H. W. Falls, Sir Charles F. Hilton, Cecil
Cadogan, Major Hon. Edward Fanshawe, Commander G. D. Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Campbell, E. T. Fermoy, Lord Hogg, Rt. Hon. Sir D.(St. Marylebone)
Cassels, J. D. Ford, Sir P. J. Hohler, Sir Gerald Fitzroy
Cautley, Sir Henry S. Forestier-Walker, Sir L. Holbrook, Sir Arthur Richard
Cayzer, Sir C. (Chester, City) Forrest, W. Holland, Sir Arthur
Holt, Capt. H. P. Morden, Col. W. Grant Stanley, Got. Hon.G.F. (Will'sden, E.)
Hope, Capt. A. O. J. (Warw'k, Nun.) Moreing, Captain A. H. Steel, Major Samuel Strang
Hopkins, J. W. W. Morrison, H. (Wilts, Salisbury) Storry-Deans, R.
Hudson, Capt. A. U. M.(Hackney,N.) Morrison-Bell, Sir Arthur Clive Strickland, Sir Gerald
Hume, Sir G. H. Nall, Lieut.-Colonel Sir Joseph Stuart, Crichton-, Lord C.
Hunter-Weston, Lt.-Gen. Sir Aylmer Nelson, Sir Frank Stuart, Hon. J. (Moray and Nairn)
Hurst, Gerald B. Nicholson, Col. Rt.Hn.W.G.(Ptrsf'Id.) Styles, Captain H. Walter
Hutchison, G. A. Clark (Midl'n & P'bl's) Oakley, T. Sueter, Rear-Admiral Murray Fraser
Inskip, Sir Thomas Walker H. O'Neill. Major Rt. Hon. Hugh Sugden, Sir Wilfrid
Jackson, Lieut.-Col. Rt. Hon. F. S. Ormsby-Gore, Hon. William Sykes, Major-Gen. Sir Frederick H.
Jackson, Sir H. (Wandsworth, Cen'l) Penny, Frederick George Tasker, Major R. Inlgo
James, Lieut.-Colonel Hon. Cuthbert Perkins, Colonel E. K. Templeton, W. P.
Jephcott, A. R. Perring, Sir William George Thomson, F. C. (Aberdeen, S.)
Joynson-Hicks, Rt. Hon. Sir William Peto, Basil E. (Devon, Barnstaple) Thomson, Rt. Hon. Sir W. Mitchell-
Kennedy, A. R. (Preston) Pete, G. (Somerset, Frome) Tinker, John Joseph
Kennedy, T. Pilcher, G. Tinne, J. A.
Kindersley, Major Guy M. Preston, William Tryon, Rt. Hon. George Clement
King, Captain Henry Douglas Price, Major C. W. M. Vaughan-Morgan, Col. K. P.
Kinloch-Cooke, Sir Clement Radford, E. A. Wallace, Captain D. E.
Lane Fox, Col. Rt. Hon. George R. Raine, W. Ward, Lt.-Col.A. L. (Kingston-on-Hull)
Lister, Cunliffe-, Rt. Hon. Sir Philip Ramsden, E. Warner, Brigadier-General W. W.
Locker-Lampson, G. (Wood Green) Reid, D. D. (County Down) Waterhouse, Captain Charles
Lord, Walter Greaves, Ramer, J. R. Watson, Rt. Hon. W. (Carlisle)
Lowe, Sir Francis William Remnant, Sir James Watts, Dr. T.
Lucas-Tooth, Sir Hugh Vere Rhys, Hon. C. A. U. Wheler, Major Sir Granville C. H.
Luce, Maj.-Gen. Sir Richard Harman Rice, Sir Frederick White, Lieut.-Colonel G. Dairymple
Lumley, L. R. Richardson, Sir P. W. (Sur'y, Ch'ts'y) Williams, A. M. (Cornwall, Northern)
MacAndrew, Major Charles Glen Ropner, Major L. Williams, Com. C. (Devon, Torquay)
Macdonald, Capt. P. D. (I. of W.) Ruggles-Brise, Major E A. Williams, C. P. (Denbigh, Wrexham)
Macdonald, R. (Glasgow, Cathcart) Russell, Alexander West (Tynemouth) Williams, Herbert G. (Reading)
McLean, Major A. Rye, F. G. Wilson. R. R. (Stafford, Lichfield)
McNeill, Rt. Hon. Ronald John Salmon, Major I. Winterton, Rt. Hon. Earl
Macquisten, F. A. Samuel, A. M. (Surrey, Farnham) Wise, Sir Fredric
MacRobert, Alexander M. Samuel, Samuel (W'dswortn, Putney) Wolmer, Viscount
Maitland, Sir Arthur D. Steel Sandeman, A. Stewart Womersley, W. J.
Makins, Brigadier-General E. Sanders, Sir Robert A. Wood, E. (Chest'r, Stalyb'dge & Hyde)
Manningham-Buller, Sir Mervyn Sanderson, Sir Frank Wood, Sir Kingsley (Woolwich, W.)
Margesson, Capt. D. Sassoon, Sir Philip Albert Gustave D. Wood, Sir S. Hill- (High Peak)
Mason, Lieut.-Col. Glyn K. Savory, S. S. Woodcock, Colonel H. C.
Meyer, Sir Frank Shaw, Capt. W. W. (Wilts, Westb'y) Worthington-Evans, Rt. Hon. Sir L.
Milne,.J. S. Wardlaw. Smith, R. W. (Aberd'n & Kinc'dine, C.) Wragg, Herbert
Mitchell, S. (Lanark, Lanark) Smithers, Waldron Yerburgh, Major Robert D. T.
Mansell, Eyres Com. Rt. Hon. B. M. Spender-Clay, Colonel H. TELLERS FOR THE NOES.—
Moore, Lieut.-Colonel T. C. R. (Ayr) Sprot, Sir Alexander Major Cope and Lord Stanley.