HC Deb 30 June 1927 vol 208 cc736-41

Motion made, and Question proposed, "That the Clause stand part of the Bill."


I wish to oppose this Clause for the following reason. No one is a greater master of the art of making people happy by legislation and taxes than the Chancellor of the Exchequer. For instance, he puts a tax on imported goods and provides work for the people of this country, or on alcohol, and he makes people sober, but in this particular Clause he falls from that high level, and the result of it will be that a very serious injury will be caused to a number of charities in this country. I am quite sure that most Members of the Committee fail to realize that this apparently innocent Clause is really a most injurious one. The language of it is typically officialese and practically unintelligible to the ordinary reader, but the effect of it, we are assured, will be to do real injury and damage to many of the most deserving charities of this country.

The thing works out in this way. Under the Finance Act of 1922—whether it was the intention or not does not matter at the moment—charities which are not subject to Income Tax have been enabled to reap very great benefits. This Clause abolishes these benefits. May I explain in a few words exactly what takes place. A man who desires to subscribe to a charity to the extent of £25 a year signs a deed under stamp, a definitely legal covenant or contract, to pay to that charity for not less than six and a half years the sum of £25 a year. He actually pays£20 to the charity, and sends it an officially marked form known as R 185, which shows that he has paid £5 in Income Tax. He thus pays £20 to the charity and £5 in Income Tax. The charity then presents that form at Somerset House, and the £5 is refunded. Although he subscribes £20, the charity benefits to the extent of £25. Under the Act the charities have increased their income by not less than 25 per cent. in all cases where the subscriber has been willing to sign a deed binding himself for not less than six and a half years. That process is to be stopped by this Clause, and the result upon the charities which have previously benefited will be serious. What are these charities? Many of them are religious charities, with some of which I am connected. They are engaged in the building of churches, in religious work in foreign lands, and in payments to augment inadequate stipends. These charities have benefited very largely under the Section in the Act of 1922. Then there are charities connected with great works of social service which are admittedly for the benefit of the whole community. One of the largest beneficiaries is the League of Nations Union, which has a special income under this Section of not less than £10,000 a year. A large number of subscribers have guaranteed to pay their subscriptions for not less than six and a-half years. The voluntary hospitals have the greatest difficulty in keeping up their income to meet increased charges and to maintain their efficiency. Their difficulty has been so great that the Government recently made them a grant of £500,000 in order to keep them from bankruptcy. These hospitals will be seriously affected by the passage of this Section, and so will the great educational societies. I know quite intimately the condition of the great University of Leeds. They have a very large scheme under the Section of the Act of 1922, whereby subscribers spread their subscriptions over a period of ten years. They have schemes for a building programme for the next ten years and are getting a very considerable income through the operation of the Section. This is to be stopped. The Committee ought not to support the proposal in this Finance Bill without realising what they are doing. Charities have been exempted from Income Tax because they are regarded as objects beneficial to the State. Why, then, prevent this additional income going to them?

12 m.

In his speech on the Financial Resolution, the Financial Secretary to the Treasury defended the present proposal on the ground that most of the agreements were in the nature of bogus agreements. There was no bad faith at all in regard to this agreement. The agreement was come to quite openly with the full knowledge of all concerned. But the right hon. Gentleman the Financial Secretary to the Treasury, said that such agreements are not intended to be enforced, and that, if the subscriber fails to comply with it and to carry out his obligation, he will not be brought to Court to compel him to carry it out. I say emphatically that that is not so. There is every intention of having these agreements enforced and that they should carry the full consequences. So much is that so that there is actually at present a case before the Court to compel a subscriber to carry out the agreement he has made. Therefore, the main reason given by the Financial Secretary to the Treasury for the inclusion of this Clause, that the agreements are not intended to be enforced, is without foundation. I hope the Chancellor of the Exchequer will even now assent to the withdrawal of this Clause and that he will realise that by doing so he will earn the gratitude of the country generally and give encouragement to charitable people to subscribe to these great and beneficent institutions.


The Chancellor of the Exchequer is always genial, and I hope this morning that he is generous as well. I want to make a very urgent appeal to him to withdraw this Clause. The hon. and gallant Member for North-East Leeds (Major Birchall) who has just spoken has, I think, put all the points against this Clause eloquently, and if the finances of the country were more flourishing than they are at the present time it would be quite impossible for the Chancellor of the Exchequer to resist the urgent demands of all those interested in schools and other educational institutions and also the hospitals. The amount of money which is involved in this proposal is only, I believe, something like £150,000 a year. We are not asking for a new grant; we are not asking for more money, but merely for the withdrawal of this Clause. The point I want to make, and I am speaking it with real earnestness, is that in withdrawing this Clause the Chancellor of the Exchequer is losing nothing at all. I am quite sure, if he adopts this position, he will be able to use it as an instrument for resisting to some extent the increasing demands which will be made upon him by the educational institutions in this country and by our hospitals. I hope therefore, indeed I believe, the Chancellor of the Exchequer cannot resist this very reasonable request, and I confidently look forward to what he is going to say.


I support the appeal that has been made and I hope the Chancellor of the Exchequer will withdraw this Clause. The Clause itself, like the Finance Act of 1922 which it amends, is rather technical, but there is no doubt of its effect. The effects are far-reaching on educational institutions in this country and are very considerable on such institutions as the University of Wales and the National Library of Wales in which I am interested. The Chancellor of the Exchequer last year acted towards the Universities in a generous manner when he restored the grant, and this year, as the result of a deputation of which I was a member, he also met the educational institutions. I hope, in view of that, he will not refuse to accede to the request which we are now making on behalf of the educational institutions in regard to this Clause. I do not want to take up any time, because I know he is impressed by the importance of the matter. The Clause as it stands will involve a considerable hardship on the Universities. In the speech made by the Financial Secretary to the Treasury there seemed to be a misapprehension. He seemed to think that the charities were benefiting private institutions as opposed to private individuals. That is a mistake. That being so, I venture to join in the appeal which has been made that the Chancellor of the Exchequer should accede to our request


I want to join in the appeal that has been made. It is a very important matter indeed. I do not wish to speak because I want to relieve the taxpayer, but I speak on behalf of the hospitals. Some legal way could be enforced in regard to the matter, and, if the Chancellor of the Exchequer has any doubt, let him insist on a special form of appeal, say, through the Public Trustee. It is the case that charitable gifts have been immensely increased by this system. I take, as a special example, what has happened in East Leeds. An immense fund has been raised for the University of Leeds and a further sum for the Cancer campaign. I can imagine no more splendid work than the Cancer campaign at Leeds, and large sums have been obtained more easily by this system of gifts. I am sure the Chancellor of the Exchequer does not want to do anything to hinder those great enterprises getting money or charities getting money. If he is satisfied that these are perfectly genuine transactions, that a man who pledges himself to give money would be obliged to give it, and that proceedings would be taken in a court of law if he did not give it, I hope that a large part of the objections of the Chancellor of the Exchequer will be removed, and that he will see his way to agree to the deletion of the Clause.


In logic and in equity, undoubtedly the case for this Clause stands quite unassailed. There are no grounds in logic and equity for saying that any individual citizen, however much he may desire to do a charitable action, should do a portion of that action at the expense of the general taxpayer. Therefore, if we were to judge this question on grounds of logic and equity, there would be no reason for receding in any way from the arguments on which this Clause is based. But I acknowledge that sentiment plays its part, and sentiment ought to play its part, and, mixed with sentiment is undoubtedly the practical considerations which have been urged by the right hon. gentleman the Member for Colne Velley (Mr. Snowden) that, but for these benefactions, there are charitable institutions of many kinds which otherwise would be drawing very near to the moment when they would make a demand upon the State. If the individual, by his benefactions deprives the State of a certain proportion of its revenue, at any rate he distributes a larger proportion, beyond what he would have contributed to the State, towards these worthy objects. In these circumstances, in view of the appeals which have been made in every part of the House, I desire to withdraw the Clause.


I am sure that I shall be expressing the gratitude which every hon. Member of the Committee feels when I say how delighted we are that the Chancellor of the Exchequer has seen his way to withdraw this Clause.


In view of the long connection which the right hon. Gentleman the Chancellor of the Exchequer had with the City of Dundee, may I be allowed to say that his decision is very gratifying, and in consonance with the information which we had as to an application which he had conceded to the asylums of Scotland. Both are quite satisfactory.

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

Clauses 20 (Amendment as to relief from, tax in respect of losses), 21 (Application of Section 29 of Finance Act, 1926, to, certain cases), and 22 (Amendment as to exemption from Income Tax in respect of profits of trades carried on by charities), ordered to stand part of the Bill.