HC Deb 17 July 1930 vol 241 cc1582-616

I beg to move to leave out the Clause.

The necessity for moving this Amendment has arisen in consequence of the change which was made in the rate of Income Tax. We discussed this Clause at some length in Committee, so I will avoid going over the points with which we have already dealt. On the Committee stage I put down an Amendment which expresses what I then thought would meet the difficulty. It read as follows: Provided that relief shall not be granted at a greater rate than the maximum rate of Income Tax payable by the taxpayer. During the discussion in Committee on 5th June, 1930, the Chancellor of the Exchequer said: Of course, I do not like to be committed in detail. I do not say that to the minutest detail we shall be able to meet all these points, but we will make every effort possible to meet what is, I think, intended in the Amendment of the right hon. Gentleman the Member for Farnham."—[OFFICIAL REPORT, 5th June, 1930; col. 2445, Vol. 239.] To meet that, the Chancellor of the Exchequer has put down the following Amendment—in Clause 10, page 7, line 15, to leave out from the word "if," to the end of the Clause, and to insert instead thereof the words: at the end of sub-section (3) there were inserted the following new paragraph:— (f) shall, as regards premiums or sums in respect of which the claimant would but for this restriction be entitled to an allowance at halt the standard rate of tax, be given at a rate of tax greater than four-ninths of the standard rate—

  1. (i) where the taxable income of the claimant does not exceed two hundred and fifty pounds; or
  2. (ii) where the taxable income of the claimant exceeds two hundred and fifty pounds in respect of the amount, if any, by which the premiums or sums exceed the amount by which the taxable income exceeds two hundred and fifty pounds;
In this paragraph the expression 'taxable income,' in relation to any person, means the total income of that person, estimated in accordance with the provisions of the Income Tax Acts as they apply to income tax chargeable at the standard rate less any amount on which he is, by virtue of sub-section (1) of section forty of the Finance Act, 1927, entitled to relief by way of a deduction of tax. With your permission, Mr. Deputy-Speaker, if you will preserve my rights I would like to incorporate my remarks on Clause 10 with my criticisms of the Chancellor's amendment in order to bring them into line with the Chancellor of the Exchequer's Amendment and save time.


It might be for the convenience of the House if we took the full discussion on this Amendment, and avoided a lengthy discussion on the Amendment standing in the name of the Chancellor of the Exchequer.


The famous Dr. Abbott, of the City of London School, once wrote a book which I believe is on the desk of every civil servant entitled "How to write clearly." Let us examine the clear English of paragraph (ii).


I do not understand how this proposal deals with the Amendment. I should have thought, seeing that the Amendment to leave out the Clause altogether has been abandoned, it would have facilitated discussion if I moved my Amendment first.


I would like to say a word on that point. The Amendment in the name of the Chancellor of the Exchequer would alter the nature of Clause 7, and we desire to ask the right hon. Gentleman to give up the whole Clause. For the purpose of that discussion, Are want to consider Clause 10 in the form in which it will appear after the Amendment of the Chancellor of the Exchequer has been added. If we had been in Committee, then we might have assumed that the Chancellor of the Exchequer's Amendment had been carried, and we could have dealt with it on the Question. "That the Clause stand part of the Bill." We want an opportunity of discussing Clause 10 in the form in which it will appear in the Bill after it has been amended by the Chancellor of the Exchequer's Amendment.


What I had in mind was that in substance both the Amendment to leave out the Clause and the Chancellor of the Exchequer's Amendment the same issue is raised. The only proposal which I made to the House was that while we should take a full discussion on the Amendment to leave out the Clause, and that in discussion of the subsequent Amendment we should not go over the same ground again.


Our reason for desiring to take a discussion on Clause 10 is that the Chancellor of the Exchequer went a very long way towards meeting some of the arguments which we brought forward during the Committee stage. We think that, after putting the whole case again, the right hon. Gentleman might with to meet the extra cases, which are not financially so important as the concessions which he has already made. In those circumstances, the logical course would be to take a discussion on the whole Clause to see if we could persuade the right hon. Gentleman to take an extra step. If the right hon. Gentleman could see his way to do that, we should not be placed in the position of having to oppose the concessions of the Chancellor of the Exchequer afterwards, which we have no wish to do. Of course, we should not want to take the same debate twice over.


I am not quite clear that the plan suggested by the right hon. Gentleman would serve the purpose which I think we have at heart. I take it that the point that the Opposition want to raise is in regard to the allowance for life insurance premiums to persons affected by the half-rate. If my proposed new Clause, as I might perhaps call it, were discussed, with the Amendment to leave out paragraph (ii), that would be acceptable. I want to adopt that course which is likely to make the discussion most practical—to confine it., as it were, to the real gist of the matter that is in dispute with us. I do not mind at all what form we adopt, provided that it is likely to serve that purpose.


I do not think that our point of view would be met even if the Chancellor of the Exchequer were to abandon paragraph (ii), which I think, in proportion, is not the main point. We object to paragraph (i) as well as paragraph (ii), and, therefore, if the discussion were on the whore question, the Chancellor of the Exchequer could take his own decision with regard to the arguments which we laid before him, and, after that, if he carried his point with regard to the whole Clause, we should not wish to repeat the discussion on the Amendment which he proposes, and which, from our point of view, we should be prepared to accept.


I feel that the Chancellor is not hostile. We merely want to get at the facts. In the first place, let us try to understand what is in his mind in putting down these two paragraphs, (i) and (ii). I take it that he is endeavouring to carry out faithfully the undertaking which he gave on the 5th June. I know that the right hon. Gentleman takes exception to the statement I recently made that I spent half-a-day trying to understand a Clause, and that he regards me as, perhaps, not competent to understand English. I will ask him and the House to try to understand what these paragraphs mean. Paragraph (i) read as follows: where the taxable income of the claimant does not exceed two hundred and fifty pounds. That is plain enough, but paragraph (ii) offends against every canon of reasonable drafting, against everything that Doctor Abbott laid down about clear English. I will read it: where the taxable income of the claimant exceeds two hundred and fifty pounds in respect of the amount, if any, by which the premiums or sums exceed the amount by which the taxable income exceeds two hundred and fifty pounds. I am incapable of understanding what this means, although I have tried to understand it. I solve it by guessing that it means that, if the man pays on £250, he only gets 2s. in the £ off his premium, but, if his taxable income is £280, and he pays a premium of £30—I take that as an example—his relief is to be at the rate of 2s. 3d. in the £ on his life insurance. I speak subject to correction, and I should be perfectly prepared to hear the Chancellor of the Exchequer say that I am quite wrong. Anyhow, I do not think that many Members on this side of the House have understood what this paragraph means. If it means what we think it means, I think it is bowled out by Section 32 of the Income Tax Act, 1918. I understand paragraph (ii) to mean that, if a man's taxable income is £280, and he pays an insurance premium of £30, his income is to be deemed to be £280, and he is to get an allowance of 2s. 3d. in the £ on £30. If that be so, it is entirely nullified by Section 32 of the Income Tax Act, 1918, and I want to know how the Chancellor of the Exchequer is going to get over this difficulty. Section 32 of the Income Tax Act, 1918, says that: (1) Any person— (a) who has made an insurance on his life shall be entitled to a deduction of the amount of the annual premium"— and so on. Then Sub-section (3) says: No such allowance— (b) shall entitle any person to claim any exemption, abatement or relief on the ground that his total income is thereby reduced below any standard amount. Unless that Section of the Act of 1918 is cancelled, the Chancellor of the Exchequer's paragraph (ii), if my reading of it is correct, will not be operative. Besides, what happens if the premium is £35 and the taxable income £280?

These reliefs in regard to Income Tax on life insurances are almost vested interests, or, if not vested interests, at any rate an understood inducement under the report of the Royal Commission of 1920. The purpose of such reliefs, according to the report of the Royal Commission, is to encourage life insurance, and I would say here, as the Chancellor of the Exchequer seems to have twisted my words about so as to make me say that I would advocate anything to help or favour life insurance companies, that that is not so. I say again that the reason why we wish to stimulate life insurance is purely on the ground of public policy. It is a form of thrift which cannot be bettered. I am aware of the advantages of building societies and savings banks, but the Royal Commission said that one of the most healthy things that have appeared in the last 70 years has been the considerable growth in life insurance, and they took into consideration the benefit which would accrue to the public and the nation by the encouragement of real life insurance, and, therefore, advocated this relief.

They did so, however, for another reason which is not so well known, and which has barely been referred to during these debates. They realised that it was necessary to adjust the overcharge in the way of Income Tax on life insurance premiums in the case of the life insurance companies. I will explain what that means. A large number of people who take out life insurances are people with small incomes, so that the total amount of Income Tax due from them is, perhaps, on an average, only 1s. 6d. or 2s. in the £ in relation to the present standard rate. These people, as I said earlier in the debate, pay their premiums to the life insurance companies, who invest these premiums, and those premiums form the reserve funds upon which the life insurance policies rest. These funds, with their yield of income, pay interest and dividends, and they provide the sum which is paid on a man's death or endowment date; but these sums bear, not the rate of Income Tax that is applicable to the small man's income, but, after deducting some small amount for expenses, the full rate of Income Tax.

The consequence is that a large number—the main body—of small policyholders are being charged Income Tax on the funds which belong to them, and which are in the hands of the insurance companies, at a rate which the State has no right to take from them. They are perhaps taking 4s. 6d. minus the allowance made for expenses for running the insurance companies, whereas in the individual capacity of the man who takes out the policy he can only be charged perhaps 1s. 6d. or 2s. Therefore, the Chancellor is making no concession to this man. He is only doing what an honest man must do. He is taking what is arranged by law in the form of Income Tax from the life insurance fund a rate of tax which he ought not to take from the policy holders individually, and, therefore, the State is countenancing a relief in respect to the Income Tax of small policy holders in the first place to encourage them to be thrifty and, in the second place, to restore to them in some measure what has been taken away from them improperly.

What will the Treasury lose if it wipes out the Clause? The most that the Treasury can surrender a claim to is the amount applicable to small policies after the big ones have been let out by the Amendment. The Chancellor is letting out the big men. I am not fighting for the big men. We on this side are fighting for men whose incomes are £200 or £300 a year. The Chancellor has admitted the justice of what we said in an earlier debate. He said he was trying to see that those who pay a small Income Tax shall get correctly proportionate relief and, in doing that, he has let out entirely the pre-1916 policy holders, and the post-1916 policies of big insurances. What is the whole amount at stake? He gave it on 5th June at £500,000.

£500,000 in all, but the amount that would be taken from each individual would be very small."—[OFFICIAL REPORT, 5th June,.1930; col. 3440, Vol. 239.] He went on to say that £150,000 of that was in the pre-1916 premiums. The amount, therefore, is £350,000 after you have taken out the pre-1916 policies. The amount at stake is only £350,000 before you let out the big men, and now that you have let out the big post-1916 men it is only a trumpery sum left at stake. It is a grave injustice to the little men, and the insurance people say this withdrawal of the old relief will be a blow to insurance and will reduce what they have held out as an inducement for the small men to insure. Imagine what will happen if by any chance, whatever party is in, it may be necessary to raise the Income Tax. Are you going to rearrange the whole thing if you get next year a tax of 5s.? Are we to change the Clause and make it four-tenths instead of four-ninths'? What a muddle!

9.0 p.m.

The Clause ought to be withdrawn for another reason. The Government is to deal with men whose taxable income does not exceed £250. The lower a man's income is, the greater claim he has to increase of relief in respect of tax upon his premiums, because the poorer a man is, the smaller the rate he ought to be charged in respect of funds, which are charged at the full rate when in the hands of the insurance companies. The premiums belong to the man though they are in the hands of the insurance companies. They are accumulated till his death and they are paying between 3s. 4½d. and 4s. 6d., yet it would appear that the Chancellor would prevent these men getting back what is due to them, and the poorer they are the greater the claim they have on the relief allowance. He made the point the other day that he was making a concession to poor men in that he was going to raise the first taxable income from £225 to £250 and was going to charge these not very prosperous people only 2s. instead of 2s. 3d. and, therefore, we ought not to grumble on their behalf that they are not getting the full benefit of this insurance relief. What an argument to use! Why should the thrifty who have taken out insurance policies be compelled to surrender part of the benefit of the £250 at 2s. because they are thrifty? A man who has not taken out a policy gets the whole of the benefit of the relief which the Chancellor has put down based upon the £250 at 2s. in the £, but directly he takes out a policy the Chancellor says, "I will punish you and take some of the relief back." That is a very bad argument, and when he sees how we have shown the blemishes in his own Clause, I think he will say there is a good deal to be said for the point of view we have taken. We are not fighting for the millionaire. We are fighting entirely for the little man. The Government has given way to those who have incomes beyond the amount defined by the Chancellor's Amendment, but he leaves a grave injustice on men of small means. Perhaps there are 500,000 men who have small incomes who may be hurt by the retention of this Clause. I hope the country will take note that we have made a fight to save the rights of these small men who hold small policies, and that the Chancellor has tried to take away what we think they are entitled to.


I beg to second the Motion.

I know the Financial Secretary has seen representatives of the life insurance offices and gone into this matter very carefully indeed with them, and I have not the least doubt that the right hon. Gentleman has had reported to him exactly the views of the life insurance offices on this Clause. I want to make my appeal to the Chancellor simply a reinforcement of the very carefully thought out arguments that were put before the Financial Secretary by these great experts in life insurance matters. The first, of course, is that relief is given in respect of insurance premiums, as shown by the report of the Royal Commission on Income Tax, for two reasons, one to encourage life insurance, and the other to redress the overtaxation resulting from the taxation of funds in the hands of the life offices. The life offices have authorised me to state this as the considered opinion of the Life Offices Association, that they think if this Clause were passed in its amended form it would be a very serious blow to life insurance.




The right hon. Gentleman, at any rate, is saying that not to a statement of mine, but to a statement by the representatives of the life offices, the people who are the greatest experts on that subject. If the right hon. Gentleman says that their opinion is nonsense, I can only ask the House, with great respect to the right hon. Gentleman, to say whether on a matter of this kind the opinion of these men is not worth more than the opinion of any Chancellor of the Exchequer. It is not very difficult to see one reason why this is going to be a blow to life insurance. The life offices have found in past years that one of the most useful forms of advertisement to persuade people to insure their lives has been the statement on the face of the prospectus or proposal form that the insured would get a rebate of half the standard rate of the Income Tax in respect of the premiums paid. I want to urge upon the Chancellor of the Exchequer and upon the House that, at any rate, it is the view of these people who ought to know more about it than anyone else. The Chancellor of the Exchequer in his speech in the Committee said: If I thought the proposals in this Finance Bill were going to strike even the mildest blow at the thrifty habits of the people I should be quite prepared to sacrifice the comparatively small revenue which the Exchequer receives."—[OFFICIAL REPORT, 5th June, 1930; col. 2441, Vol. 239.] The right hon. Gentleman has been good enough, in reply to arguments brought forward in Committee, to make a very considerable concession upon this Clause, but the remarkable part of it is, that, having made that concession, we find that the Clause in the revised form will have a result which surely the right hon. Gentleman could hardly wish. It is, on the face of it, a restriction of relief—or in other words equivalent to an increase of tax—a restriction of relief in respect of rebates on insurance premiums on the poorest class, namely, those whose incomes do not exceed £250 a year. The right hon. Gentleman, by the concession which he has made, has given up the greater part of the money involved, and I suggest to him very earnestly that nobody in this House wants at the present time to increase the burdens or to reduce the relief to those whose incomes are only some £250 or £300 a year. It is really on those grounds that we ask the Chancellor of the Exchequer to go a little further than he has done. We say that he has already given away the greater part of the comparatively small amount involved in the Clause as it originally stood. The remainder which we are now asking him to give up if he does not give it up, will come out of the pockets of those whom he has endeavoured to relieve in other respects. He will in this case lay himself open to the accusation which he has thrown across the Floor of the House to others of taxing the poor instead of the rich. It is really a case in which we hope that the Chancellor of the Exchequer will on this occasion accept the very definite opinion of the life offices, that if he goes on with this Clause he will be striking a blow, which is far more than "the mildest blow" to which he referred, at the habits of the people in life insurance.

There is only one other thing which I want to say, and that is that, in regard to paragraph (f ii) in the right hon. Gentleman's Amendment, I rather gathered—I do not know whether I was right—that he was prepared to give way on the matter. We considered the matter yesterday evening in conjunction with mathematicians and others, and I came to the conclusion that I understood the meaning of it, but I should hesitate to try and explain it to the House now. I suggest to the right hon. Gentleman that there would be more money spent on lawyers' fees and upon litigation in finding out the meaning of that very complicated little paragraph than the money which would be involved in it. If the Chancellor of the Exchequer will not give us what we ask and let the Clause go altogether, I hope he will leave out that very difficult and complicated paragraph which I do not think will mean very much.


I appreciate the disposition of my right hon. Friend the Chancellor of the Exchequer in desiring to meet the insurance industry on this particular point, but the more I examine the Amendments on the Order Paper the more I feel that we are making confusion worse confounded. It appears to me that we have gone astray on a very vital and cardinal principle on a very small point as far as life assurance business is concerned. There was a time when the whole amount of the Income Tax was allowed against life assurance premiums. It is true that at that time the Income Tax was only up to 3s. in the £. We need not go into ancient history on the matter; suffice it to say that for a long time there has been in the legislature a determination to give relief in respect of life assurance premiums. Indeed, to do the Chancellor of the Exchequer full justice, I do not think that he ever intended that it should be otherwise, but in framing his Finance Bill and his Budget proposals he seems to have stumbled over a point where he fancies that he might be rendering a rebate in excess of what the taxable limit might be upon an individual. I do not think that that can ever arise. There is no fund provided for the purpose, and there is no method of paying any excess from the Treasury to the insured person.


No money can be got back again.


My right hon. Friend said in his Budget speech: As regards life insurance allowance, I propose to leave the old rates of 2s., 3s., and 4s., unchanged. For the overwhelming majority of taxpayers the gain from the change of graduation will be found to outweigh any loss due to the retention of the old rates of life insurance relief."—[OFFICIAL REPORT, 14th April, 1930; col. 2676, Vol. 237.] He therefore postulates a loss by this change in respect of the relief, because he says that the other thing will outweigh any possible loss. The relief to which he refers, which is to outweigh any loss on the relief in respect of life insurance premiums, is common to the whole taxable community, whether they are insured, or not, and I think it is doing violence to the principle of giving special relief in respect of life assurance. The people who do not see the matter from the life assurance point of view, may say: "Why all this fuss about the difference between 2s. and 2s. 3d.?" I would not be disposed to raise my voice much as to the difference between 2s. and 2s. 3d., but I do want to raise my voice against the change of principle.

If we go back to the 1920 Finance Act we find that a Royal Commission had sat on this subject and they came to the principle of using a common denominator of one-half, one-fourth, and so on. That is simple, because if at any time we should be in the happy position of securing a reduction in the Income Tax—I hope the Chancellor of the Exchequer does contemplate that—these common factors would operate far more simply and fairly than the insertion of figures such as 2s., 3s., and 4s., as the Chancellor of the Exchequer suggests. Would my right hon. Friend have contemplated an alteration of the principle of using a common denominator of one-half, had there been a reduction in Income Tax? I do not think that he would have inserted, for instance, 1s. 9d., or half the standard rate of Income Tax, had the Income Tax this year been reduced to 3s. 6d. It may seem a small point, but I have noticed that each speaker on this Amendment has been vague and confused. Even the hon. Member for Watford (Sir D. Herbert), who ought to understand legal jargon as well as anybody, confesses himself rather doubtful As a man who never pretended to understand the Clause as drafted, I say that this confusion is an added reason why we should get down to the simple denominator, and say whether it should be one-half or one-fourth at a certain point of Income Tax.

I hope that we shall be able to look to my right hon. Friend with some degree of confidence that his real intention will not be frustrated by putting in the complexity of his proposed Amendment. It would be a very small matter if he accepted the Amendment to delete Clause 10. That would give us the status quo so far as the principle is concerned. The money for premiums for life insurance is in a very different category from the money that people spend in consumable commodities. When you put £50 or £100 into life insurance it is a very different proposition from putting £50 or £100 towards the cost, say, of a motor car, which will depreciate 50 per cent. in a year and will be reduced to zero perhaps in four years. The money for life insurance is going into the funds of the big business institutions, which are subject to taxation at the higher rate. The money, after it has been taxed year after year in the funds of these big institutions, comes back again to the policy holder or to his assignees or heirs in the event of his death, and there again it meets with the incidence of taxation so far as Death Duties are concerned.

There is an overwhelmingly justifiable reason why we should not make the position any worse than it is, so far as the principle is concerned. The Act of 1920 arose out of the Royal Commission, and this matter was gone into very exhaustively at that time. Among the members of that Royal Commission was my right hon. Friend the President of the Board of Trade. Nothing has happened in the interim which requires the Chancellor of the Exchequer to amend the Act of 1920 so far as the principle is concerned. The reasons are overwhelming why the present Government, through the Chancellor of the Exchequer, should maintain the attitude of encouraging thrift, for the benefit that it brings to the policy holders and also for the relief that it brings to the nation itself, which would have to make a very much larger provision in respect of its social services but for the thrift that is being practised under the life insurance business in this country. For that reason, I hope that the position will be reviewed by my right hon. Friend arising out of this discussion. I understand it is the intention to take the full range of discussion on the whole Clause, and I hope we shall reach a conclusion such as I have suggested. Quite frankly, and with the best will in the world not to embarrass the Chancellor in this matter, my advice to him would be that he should accept the Amendment, and that the Clause should be withdrawn.


I quite agree with the last speaker as to the importance of life insurance, and I think he will agree with me that this country, as a country, is very much under-insured. If you compare the amount of life insurance here with that of the United States, you will see that there is a very remarkable and disquieting difference. It is partly for that reason that I appeal to the Chancellor as strongly as I can and, with some confidence, put before him exactly the effect of his amended Clause. He is withdrawing a concession and therefore increasing the burden where the concession is withdrawn. He increases that burden to the greatest extent on those with the smallest incomes. If the income of a taxpayer is less than £250 a year, the whole force of the reduction in the relief falls on him, for the only rebate that that taxpayer gets is at the rate of four-ninths of the standard rate. As the income gets greater, the burden gets less, so that the heaviest burden is thrown on the poorest. As you rise over £250 a year, slowly the extra burden gets less until at a certain point in the income the burden ceases altogether, and persons with high taxable incomes are put back to the conditions of 1920. I do not believe the Chancellor means that or wishes that the whole cost of this denial of relief should fall on persons with the poorest incomes, and yet that is the effect.

I, like my hon. Friend the Member for Watford (Sir D. Herbert), have spent some difficult times in working out the mathematical answers to Sub-sections (1) and (2), and I can assure the right hon. Gentleman, unless I am very much mistaken and have quite misinterpreted Subsection (2), that the extra burden he is imposing on the backs of the Income Tax payers decreases as a man gets richer. I know that the excuse that will be made in extenuation of that will be Clause 9 of the Finance Bill which, of course, gives extra concessions to persons of smaller incomes. I quite agree, but as the hon. Member for Greenwich (Mr. Palmer) said so forcibly, these concessions are not confined to the policy holders, but are given all round and all persons with incomes under a certain rate will receive these concessions. It is really a little bit ungenerous to give with one hand and to withdraw with the other, and especially is it unfair when the withdrawal is made from certain classes of taxpayers only who are told that they are not going to be given the whole of the concession.

Look at the position. The Royal Commission of 1920 expressly related rebates to the taxation of the reserves of life offices. Take the case of a mutual company, where there are no shareholders and no profits in dividends, but the premiums all belong to the members, and after they have paid the amount due on the policies, all the reserves belong to the members. The more you increase taxation and the more at the other end you give remissions, the greater the gap between what the taxpayer pays and the standard rate. Those reserves will all have to pay the full 4s. 6d. in the £ and the majority of the holders of those reserves are not taxable at that rate. So these smaller incomes deserve to have a bigger concession. I am not pleading for the bigger incomes. I think the Chancellor's full intention's are not expressed in Sub-sections (1) and (2). It is a fact that the greater burden is laid on the weaker backs.

Finally, for how much is the Chancellor doing this? The whole of the money brought in by the original Clause 10 was £500,000, and of that £150,000 a year was brought in by the changes in relation to pre-1916 policies. A sum of £350,000 a year is left. How much of that is taken away by the concessions that are contained in the present Amendment of the Chancellor? Surely a very large amount. Surely he is giving away a very large part of that £350,000. I do not believe that more than quite a small fraction of it will be left, and, since he has gone so far, cannot he go further? I know that when a Government makes a concession it is sometimes an ungenerous thing to try to press for more, but I believe the thing is so small and is not worth the trouble it will create, and that the Chancellor has meant to do more than the Clause actually does. I do sincerely believe that the Clause does the tiling in the wrong way, and, in view of the very small amount of money involved, I do appeal to him to grant a concession and to withdraw the whole Clause.


The right hon. Gentleman who has just sat down said quite truly that it did appear to be rather mean, after a generous concession had been made, still to press for more. That is the feeling I have had during the whole time I have been listening to this debate. It has been said that the amount of money at stake is not very large. It is not a very large sum in relation to the amount of taxation that we have to face, but at any rate it is not a negligible sum. I want to call the attention of the House to what took place in Committee. The hon. Member for Farnham (Mr. A. M. Samuel) has made discoveries since the Committee stage of the Bill, because on that occasion, along with other Members, he accepted my contention that taxation should not be remitted on account of life insurance premiums at any higher rate than the rate at which a person actually pays. That was accepted in every part of the House, and, as proof of that, the hon. Gentleman has on the Paper to-day an Amendment to the effect that no allowance should be made at a greater rate than the rate of the tax which had been charged. The right hon. Member for Lichfield (Sir A. Steel-Maitland) questioned the statement I made as to the general and unanimous opinion of the Committee when this matter was raised.


It was general but not unanimous.


It is rather cruel after the speech of the right hon. and gallant Member for Ripon (Major Hills) to call him in support of the case I am now mentioning. The right hon. and gallant Member referred to this question of allowances where the taxpayer pays a tax at only 2s. in the £, and he said: Nobody on this side of the Committee wants that. May I quote the opinion of my predecessor, the right hon. Member for Epping (Mr. Churchill), who said: We on this side have never sought to leave the right hon. Gentleman in the anomalous position of having to allow a rebate at 2s. 3d. on income which is chargeable only at 2s. We wish to meet him on that. What has taken place in the meantime? The life assurance offices have been very actively at work. I suspect that they did raise this point in the brief which they sent to Members of Parliament during the Committee stage, but Members of Parliament do not appear to have then understood it and, therefore, the point of view of the life assurance companies was not clearly stated. There has been, I believe, a large meeting of members and the representatives of the life assurance offices within the last few days; hence the changed attitude of hon. Members on the other side of the House. Of course it is the business of life assurance companies to get as large concessions as they possibly can and then to use them for advertising purposes, but who would maintain that a man is influenced as between taking out a life assurance policy or not by the matter of a few coppers or a few shillings; and in no case amongst the cases we are now considering can the difference amount to more than a few coppers. If a man has a taxable income of £250 a year and he pays the big premium of £50 a year for a life assurance policy the difference would only amount to 50 threepences.


It is taxable income which is chargeable.


I agreed when the matter was under discussion in Committee to consider what could be done, but we were then all under the impression that what the Committee wanted was a proposal which would cost about £150,000 a year; and I used the words which have been quoted, that if £150,000 a year would avoid a blow being struck I would be willing to make the concession. But I also said that I would not commit myself to any details and I am quite sure that the House will agree with me that in no case was the concession which I promised to consider to amount to the enormous sum of £400,000 a year. The sum of £150,000 was mentioned, and that was in the minds of hon. Members during the Committee stage and what I undertook to consider, without committing myself to details, was how I could make that concession amounting to £150,000. When we came to go into the matter we found that it was impossible to deal with it in regard to pre-1916 policies and post-1916 policies, except on the lines of the Amendment I am now moving and reluctant as I was to incur that additional expense, or rather to lose that amount of revenue, I said that I had given a pledge to the House of Commons to consider this matter. Although we probably did not clearly realise what it would involve, the House of Commons is expecting that I should make the concession and therefore I will give it, although on examination it will cost a great deal more than I expected. May I say a word about limiting the rebate to 2s. instead of 2s. 3d.? The hon. Member for Farnham (Mr. A. M. Samuel) used some rather strong language about taking money away from the taxpayer penalising the taxpayer and so on.


I said the poor man.


The poor man. But it is only to-day that the hon. Member has discovered that this does penalise the poor man because he has hitherto been most prominent in supporting what will be the case if my Amendment is accepted. It took the hon. Member a long inquiry to discover what the effect would be. There is no penalising the poor man. He will get as much abatement upon his life assurance policy as he gets at the present time and if I were to concede what has been demanded this evening the State would be making a gift to that man. [HON. MEMBERS: "No!"] Of course it would. I know the point which the hon. Members have in mind. It never occurred to them until the life assurance offices put it into their minds. Under my Amendment he will not pay a penny more than he has been paying in the past. There is no additional charge. Hon. Members have used the phrase "an additional charge"; there is no additional charge. Let me come to the point made by the hon. and gallant Member for Ripon on which I dare say we shall dwell a great deal more before this discussion ends. It is claimed that the owner of an insurance policy has an interest in the profits of the company—in the reserves of the company—and that when the company pays 4s. 6d. in the £ this man is taxed at 4s. 6d. in the £. As I understand the position that is put forward by the life insurance companies it is that he should be given more than he has ever been given before in order to compensate him for what is supposed to be his loss, because of the increased taxation of the companies' profits.


Not more, but the same proportion.


What is to be the position? We have heard a great deal about the poor man to-night, and have been told that it is the poor man who ought to be encouraged to take out an insurance policy. But what will be the position, if I concede the point that has been put forward? It is only the small Income Tax payers who are insured who will benefit. But what about the millions of policy holders who do not pay Income Tax? Are they going to get anything They will get nothing at all, and the logical conclusion of the proposal, if carried into effect, would be that, although they do not pay Income Tax, they ought to make a claim upon the insurance company for the amount of Income Tax that they are supposed to suffer. I shall stand by the proposal of my Amendment. I am not going to agree to something which gives back to a policy holder more than he is actually paying. The discussion so far this evening upon this Clause has almost made one feel that the very generous concession I have made ought not to have been offered. An hon. Member behind me says, "Why not withdraw the concession?" That is the alternative. I shall be perfectly willing to withdraw it. Having done so much more than was expected from me at the time when I offered to consider this matter, I ought to have been met in a more generous spirit. If, after having wrung from me this very costly concession, hon. Members are not satisfied and are not going to be satisfied with what I have given to them, then I go back to my original position.


It is an extraordinary speech to which we have just listened. We all of us recognise the concession which the Chancellor of the Exchequer has made, and we have said that we appreciate it. That was made known before the discussion of this Clause began. There is no lack of appreciation, but we are putting before the House what we think should be considered in the public interest. The Chancellor of the Exchequer has referred to the Committee stage of the Bill. He said that the opinion was then universal that nobody who under Clause 9 was paying only at the rate of four-ninths, or 2s. in the ought to be allowed to get an Income Tax rebate at the rate of 2s. 3d. Of course, the fact is that these things are not related to one another. It is not the case that the man who is paying the 2s. pays that and no more.

During the Committee stage we were not all of us unanimous on this side. Personally I was definitely opposed to the point then made by my hon. Friend the Member for Farnham (Mr. A. M. Samuel). I had read the Royal Commission's report. The question of the investments made by the insurance companies was also involved. If there was any mistake made at that time it was a mistake made by the Chancellor of the Exchequer himself, for he related the 2s. on the taxable income not exceeding £250 that would be paid under Clause 9, to the 2s. 3d. under Clause 10. He will find what he said on the subject in the OFFICIAL REPORT, and I will read it to him if he wishes me to do so. To-day he has criticised the insurance companies for having been so active in their propaganda. The insurance companies have not been active in that sense. The fact is that some of us found this Clause extraordinarily difficult to understand. I do not know whether hon. Members opposite have read it and tried to construe it. It was not until the Committee stage was well advanced that some of us came to the conclusion that we had been mistaken in our view, and we then asked the life assurance companies to send delegates to meet us. I say that in fairness to the companies. I am sure that when the Chancellor of the Exchequer thinks the matter over he will realise that the action of the companies generally on this Budget and on Clause 12 is not a subject for criticism, but that on the whole they have had a very considerable regard for public interest.

Let me put to the right hon. Gentleman again the real merits of this Clause. Although he cannot see his way to go as far as we think that he ought in fairness to go, and although we appreciate the concession that he has made, yet we think that the whole of the House, if it understood fully what some of us have taken great pains to understand, would agree with us. On the face of it it looks rather strange and illogical that a man with an income not exceeding £250 should be given a concession so that he pays Income Tax at the rate of 2s., and that afterwards, when it comes to the rebate on his insurance premium, we should ask for a rebate at the rate of 2s. 3d. On the face of it it looks wrong. It looks as if the man would get back more than he has paid. If that were so any talk about this Clause penalising policy holders would really be nonsense and insincere. Of course the facts are not so.

This is what was said before the Royal Commission. The small insurers just as well as the larger policy holders have a vested interest in the investments made by the insurance companies with which they insure. Those investments bear interest, and that interest, less expenses, pays Income Tax at the full standard rate, which at present is 4s. 6d. The smaller insurers, whose case we are arguing, since their own incomes are not large enough to render them liable to Income Tax at the full rate, are greatly overtaxed on their share of the interest on the investments of the insurance companies. In support of that view let me quote the opinion, not of anybody on this side, not of the insurance companies, but of the Assistant Chief Inspector of Taxes, in his official evidence before the Royal Commission: The simple fact is that the real difference between life policy and investment is that the interest is continually growing on the policy but is not paid to the man. In the other case, where he makes an investment, it is growing and it is paid to the man. It is credited to him in the case of the policy, but just because it is not taken out he misses his power to claim repayment of tax. I think the hardship should certainly be met. It is quite clear to me that policy holders as a class pay a great deal more tax than they ought to pay in that way. 10.0 p.m.

That was the evidence of Mr. Furtado, of the Board of Inland Revenue, to the Royal Commission. The remark that they pay more tax than they ought to pay really applies only to the poorer persons. The richer man would, of course, pay Income Tax whether on investments in the hands of an insurance company, or on his own capital, at the full rate of 4s. 6d. It is the poorer man, who owns a share of the investments held by the insurance company, and who is made to pay at 4s. 6d. because the company pays at the full rate, whereas, on his own income, he would only be liable to Income Tax at the rate of 2s., who is over-taxed. What is the degree of over-taxation? At the present time the standard rate of Income Tax is 4s. 6d. in the £. On the other hand, the rate which these poorer people themselves would have to pay on their own incomes is only 2s., and therefore the amount of over-taxation on their share of the investments held by the insurance company is the difference between 4s. 6d. and 2s. To do them justice therefore they ought to receive compensation at the rate of 2s. 6d. in the £. That is clear on the official evidence of the Inland Revenue before the Royal Commission. How, then, can this comsensation be arranged? It has been calculated—again by the Inland Revenue and not by us or by the insurance companies—that the amount of this sum which the insurance companies receive in interest is equal to about half the amount of the premiums that are paid. It is clear that if the interest is equal to half the premiums, then 2s. 6d. on the interest is equal to 1s. 3d. on the premiums. If you are going to compensate them for being overtaxed to the extent of 2s. 6d. on the interest, you have to give them the equivalent of 1s. 3d. on the premium. I hope that is clear so far. It is a sum which everybody ought to understand.

Let me now come to another side of the question. The rebate generally given in these matters takes the form of giving people not merely compensation for overtaxation but an inducement to insure, and the main inducement given at the present time is half the rate of the Income Tax which they pay. In the case of the rich man the half of 4s. 6d. is 2s. 3d. and that is what he gets. In the case of the poor man who pays 2s., the half of the 2s. is of course 1s. Now 1s. is the inducement to insure and 1s. 3d. is the compensation for over-taxation and it, is by adding these two together that we get the 2s. 3d. for which we are asking. That claim is based solely on the arguments put forward to the Royal Commission by the Inland Revenue authorities themselves. That is why we think that, in justice, it ought to be conceded. We do not wish to ask for anything which we do not think absolutely just. I do not want to criticise paragraph (f, ii) of the Chancellor's Amendment, but if the right hon. Gentleman works it out in detail he will find that it does not achieve its object. A person with an income of over £278 who makes an insurance of over £30 pays Income Tax at the rate of 2s. 3d., but anyone with an income above that amount does not get his full share of rebate even on the right hon. Gentleman's own showing.

I do not wish to labour a minute and complicated point but, as the Chancellor of the Exchequer spoke rather vehemently just now I wish to put this to him. We realise the difficulty that he is in but we ask the House to recognise that this is really a question of principle, and it is a principle which is based not merely on unofficial or on commercial beliefs, but on the official evidence given at the Royal Commission and the conclusions based upon it by the Commission. The position of the Chancellor of the Exchequer is difficult and we realise the difficulty. We feel however that while this concession is costing him a good deal more than he calculates, a comparatively small additional amount would probably do justice all round and also conform to the spirit of the recommendations of the Royal Commission on Income Tax. The Chancellor of the Exchequer has derided the possibility of this being detrimental, and discouraging insurance. When I saw some of the representatives of the insurance companies, I cross-questioned them about this matter very closely because, knowing the difficulties, I did not want to press on the right hon. Gentleman anything which I could not justify up to the hilt. There is a certain detriment in the amount itself but I am sure hon. Members opposite as well as hon. Members on this side feel that it is not so much the amount itself which is detrimental on the source of industry created. We thank the Chancellor for restoring what I call the fraction of the standard rate because that takes away one source of insecurity. But it also means this—that when you depart from the simple or recognised fraction which we had before you create a sense of insecurity on the other hand which is not easy to overcome.

Again, if you really want to encourage insurance, you must make a fairly simple and intelligible proposition to the ordinary person who wants to insure. It is no good going into elaborate calculations with him. This very complicated concession which the Chancellor of the Exchequer has given has this drawback, that if you want a poor person to insure you have to say to him, "What is your taxable income?" The man will not know what his taxable income is, and, even if he can find out what his taxable income is for that year, probably the next year or the year after he will get a rise in wages and his taxable income will not be the same. When the Royal Commission on Income Tax made the proposal which has been referred to Income Tax was 6s. in the £. When you consider the difference in the new rate of taxation on the investments in the hands of the insurance companies, we believe that what we are proposing would make the concession, instead of being a costly one which will still leave a sense of soreness, one which would not be much more costly, which would leave the position simple and which would do justice to those concerned.


The right lion Gentleman who has just spoken made great play with the evidence which was given by an official of the Inland Revenue before the Royal Commission. Is he aware—I am quite sure he cannot be aware or he would not have used that evidence in the way he has done—that the evidence was given in support of a scheme of rebate on life insurance premiums much less generous than that which is in operation to-day?


I was not aware of that; but the facts as stated are independent of any particular scheme. The conclusions that I have stated are the conclusions of the Royal Commission, from which the Chancellor himself departs.


The Chancellor of the Exchequer has come before the House in quite a new role. He has appealed for our support on the ground that he has been bullied, battered and browbeaten by the Opposition after making a certain concessionn. I am quite certain that those of us who know him will not allow this appeal to our sympathy on this ground to deflect us or prevent us from stating the case, that we believe to be a just case, on the part of the small taxpayer. He taunted us also by saying that it was only within the last few days that we had discovered this particular point. When you have such a Sub-section as paragraph (f, ii) of Clause 10 put before you as part of the Finance Bill, is it really any wonder that the full significance of it should not be realised immediately? Should it be accounted unto us for shame, after we have been informed by those who understand the Clause of its full import, that we should rise in our places and try to explain this point and make an appeal to the Chancellor of the Exchequer? The whole import of this Clause is that relief at half the standard rate is given on life insurance premiums for every person who has an income above the figure of £250 a year.

When this was debated on the 23rd of June, it was said that there should be some relation between the standard rate of Income Tax and the relief which was given on life insurance policies. Why is it that this relief is not to be given to this particular type of taxpayer? It was said that if it is to be given at 2s. 3d. in the £ they would be receiving back something from the Exchequer. That was shown later to be an impossibility. Secondly, it was held that, under Clause 9 of the Finance Bill, a certain concession had been given. Everybody has acknowledged that concesison to the small Income Tax payer, but surely this Clause is taking away with one hand what the Chancellor of the Exchequer has prided himself upon giving with the other. The effect of this will be that he is giving greater concessions to the improvident than to the provident person. The effect of the Chancellor of the Exchequer's proposal to grant relief at 2s. only is largely to nullify the intended relief in the case of the provident man. In the following examples which I shall give it has been assumed that 10 per cent. of the income is spent on life insurance.

Take the case of a man with an earned income of £400 a year. The relief to the provident man who has insured his life is 2s., whereas the relief to the improvident man is 12s. In the case of a man with an income of £500 a year, the provident man will receive relief to the extent of £1 6s. while the improvident man will receive £1 13s. In every case the relief is greatest to the improvident man, whereas you would expect that the greater relief would be given to the provident man. If we take the case of a man who, instead of investing £50 in life insurance premiums, invests £50 in Consols, he gets relief at the rate of 2s. 6d. in the £ on the interest on that money. We claim that the relief should be given at the same rate to the man who has invested in insurance. We get the figure in this Clause of four-ninths of the standard rate. It happens this year to work out at four-ninths of 4s. 6d.; but I think it would tax the ingenuity of the Chancellor of the Exchequer to work out what four-ninths would be in the regrettable event of the rate of Income Tax rising to 5s. next year. What would be four-ninths of 5s.?

Imagine the position of the agent going round and trying to explain exactly how much under this Clause the relief will be. He will have to deal either in packets of pins or use decimal points to many places. Enough has been said on these benches to show, and evidence has been given from a variety of sources to indicate—although the Chancellor rather brushes it aside—that this Clause will create an attitude of uncertainty among a large section of the community. May I ask the Chancellor if I understand paragraph (f, ii) correctly. I take the following example. Take the taxable income of an individual at £275. The premium he pays is £50; the taxable income of £275 exceeds £250 by £25. Therefore he will get relief of 2s. 3d. on one £25, and 2s. on the other £25. I think that that is a correct interpretation of this paragraph. If it is, I would ask the Financial Secretary if it is not possible to express it in slightly simpler language.


Is it worth while to pass this Clause as amended and put it on the Statute Book, considering the terrible complications and all the objections which have been raised in the House to-night? The Chancellor said that we were asking for some special concession for a particular section of the taxpayers. We are doing nothing of the kind. We are asking the Chancellor to leave the status quo, to leave these taxpayers like the rest of the taxpayers in receipt of the particular rebate which was settled in 1921, when all this question was gone into. The Chancellor's proposal will be a blow to the extension of insurance. I will tell him why. The poor man with an income which comes within the statutory relief asks the insurance man, "What am I going to get out of this?" That is a simple way of looking at it. The insurance man will say, "You will get relief on your premium at half the standard rate of Income Tax. If Income Tax goes up to 5s. or 5s. 6d. or 6s. in the £, or if it goes down, you will always get, relief at half the standard rate of Income Tax."

That is a thing anybody can understand, but what does the Chancellor propose that the insurance agent shall say in future? He will have to point to these words in an Act of Parliament, and he will have to ask, "What is your income this year?" The man will say, "I do not quite know, because my salary has not been settled." When it is finally settled, the question arises," What is you income next year going to be?" and an entirely different calculation will have to be made next year. Then the question will arise further as to what the Income Tax is going to be, because the relief is going to be limited to four-ninths. Four-ninths of 4s. 6d. is a perfectly easy sum, and I suppose that the Chancellor having become hypnotized by the fact that he has raised the Income Tax to 4s. 8d., fixed this fraction. Four-ninths of 4s. 6d. is an easy sum to work out, but the probability is that next year the Income Tax will be at least 5s. in the £, and, if the Chancellor is in his present position for another year, it will probably be 5s. 6d., or some odd figure like 5s. 9d. While four-ninths of 4s. 6d. is an easy sum, I ask the Chancellor of the Exchequer to work out, four-ninths of 5s. or 60 pence. That is not an easy sum. Nor is four-ninths of 5s. 6d., which is 66 pence, nor four-ninths of 5s. 9d., which is 69 pence, an easy sum to do. We ought to make things easy from the point of view of inducing a man to ensure.

I come back to my question, Is this change worth while? The Chancellor of the Exchequer complains that we are like Oliver Twist, asking for more, when he has already given so much. If he has given so much, there is very little left to give. He told us it was a matter of only a few pence in each individual case. A few pence may be a considerable sum to someone who has an income of barely £250 per year and a good deal of responsibilities, but they are a very little sum to the Chancellor of the Exchequer, and the smaller the sum the more the Chancellor of the Exchequer should feel inclined to give way. I do not understand his position in thinking it is worth while to have in the Bill this Clause 10, elaborated by the insertion of the words on the Order Paper. It, has taken some of us a good deal of anxious thought to find out how these words will work out in individual cases, and why should he substitute them for the procedure which was adopted, after hearing elaborate evidence, as being the simplest way of putting small taxpayers in the same position as the larger taxpayers—having always in mind the fact that the income of the insurance company is taxed at the full rate of Income Tax?

What is the object of this change. Simply that the Chancellor has got it into his head that somehow or other a man who has given 2s. will be entitled to ask him for 2s. 3d. We have absolutely exploded that idea. Nobody will get out of the Treasury 2s. 3d. when he has only put in 2s.; because he cannot get out anything which he has not put in, as is clear under the Act of 1920. We have met and refuted every argument which the Chancellor has put forward, and we say simply that in the interests of simplicity, of justice and of continuity it is unwise to interfere with a well-established practice, particularly one that concerns a matter of insurance, and to create a position in which no man will know what alterations are to be made from year to year. This has been the accepted practice for 10 years, and countless thousands of insurance policies have been taken out in that time, and hitherto everybody has believed that the practice would be maintained no matter what Government were in power. It is a curious thing that when a Socialist Government come into power the people with the smallest incomes are to find that what has been good for 10 years under Conservative Governments is now to be abolished, and that they will not know what allowance is to be made on their small insurance premiums.

I ask the Chancellor of the Exchequer to leave the matter where it is. That is all we are asking. The law has worked well for 10 years and we ought not to be messed about by being given a new Clause which it takes a Member of this House days to understand. The Chancellor of the Exchequer has told us that we did not fully expose the case during the Committee stage. What is the value of the Report stage of a Finance Bill in this House if we are not to have the opportunity of getting all the information we can, and putting the arguments on the Report stage which we could not put on the Committee stage? The Chancellor of the Exchequer is absolutely deaf to every argument that is put forward and he only taunts us with not having known all about it. When we bring fresh arguments to bear and we are told that that is a fault on the part of the Opposition we have come to a very strange pass in the procedure of this House. I ask the Chancellor of the Exchequer even at the Eleventh hour not to stand firm on this question in his determination to make no concession to argument which he has not made to force.


I took part in the original debate, and I do not agree that the Chancellor of the Exchequer has been deaf on this point because he has met us very generously in this matter. I wish he could go a little further than he has done from the point of view of the Treasury itself. I think this debate has shown every Member of the House who has listened to it with any acuteness that there must be vast administrative difficulties, because every single case must come up. As I read the new Clause every single new case must come up for consideration. A case may be the subject of correspondence, dispute, and investigation, and it is quite possible that in asserting what may be a very clever Treasury point discovered by one of our able Treasury officials the Treasury itself may actually expend, in the course of any given financial year more, in trying to get all the innumerable cases settled that will have to be settled more than the money involved in each single year. I hope before the Financial Secretary replies to this debate, if he is going to reply, that he will think this point over, because I am sure that in getting this complicated matter settled, the Treasury and the insurance offices are letting themselves in for a vast amount of detailed labour and investigation which have no relation to the financial results.


May I make a final appeal to the Chancellor of the Exchequer to reconsider this question. If ever arguments were sincerely put forward to this House they have been put forward sincerely on this occasion. I happen to have a great and intimate friend high up in the insurance world, and he assures

me that the passing of the Chancellor of the Exchequer's Amendment, which is really a new Clause, will indeed make it very difficult to work the insurance business and will be harmful to their efforts to get people to insure and will do harm throughout the country. May I ask the Chancellor of the Exchequer this question: What is the difference in the cost to the Exchequer between the Clause as he wishes to have it, presuming his Amendment to be carried, and the full concession to delete the whole Clause? If he would give me an answer to this question, I should be very grateful.


If the hon. Member had been in the House half an hour ago, there would have been no need for him to ask that question. I gave the figure. The cost of my Amendment will be £400,000 a year, and the full cost would be £500,000.


Then the difference between the Chancellor of the Exchequer's Clause as he wants it and the deletion of the whole Clause is £100,000, and he is holding up the whole of the insurance business for the sake of £100,000.

Question put, "That the words proposed to be left out, to the end of line 15, stand part of the Bill."

The House divided: Ayes, 224; Noes, 163.

Division No. 441.] AYES. [10.33 p.m.
Adamson, Rt. Hon. W. (Fife, West) Cameron, A. G. Graham, D. M. (Lanark, Hamilton)
Adamson, W. M. (Staff., Cannock) Cape, Thomas Graham, Rt. Hon. Wm. (Edin., Cent.)
Addison, Rt. Hon. Dr. Christopher Carter, W. (St. Pancras, S. W.) Grenfell, D. R. (Glamorgan)
Aitchison, Rt. Hon. Craigie M. Charleton, H. C. Griffiths, T. (Monmouth, Pontypool)
Alexander, Rt. Hon. A. V. (Hillsbro') Chater, Daniel Groves, Thomas E.
Alpass, J. H. Clarke, J. S. Grundy, Thomas W.
Ammon, Charles George Cluse, W. S. Hall, G. H. (Merthyr Tydvil)
Arnott, John Clynes, Rt. Hon. John R. Hall, Capt. W. G. (Portsmouth, C.)
Attlee, Clement Richard Cocks, Frederick Seymour Hamilton, Mary Agnes (Blackburn)
Ayles, Walter Compton, Joseph Hardie, George D.
Baker, John (Wolverhampton, Bilston) Cove, William G. Hastings, Dr. Somerville
Baldwin, Oliver (Dudley) Daggar, George Haycock, A. W.
Barnes, Alfred John Dallas, George Hayday, Arthur
Batey, Joseph Dalton, Hugh Hayes, John Henry
Bellamy, Albert Davies, Rhys John (Westhoughton) Henderson, Arthur, Junr. (Cardiff, S.)
Bennett, Capt. Sir E. N. (Cardiff C.) Denman, Hon. R. D. Henderson, W. W. (Middx., Enfield)
Bentham, Dr. Ethel Dukes, C. Herriotts, J.
Bowen, J. W. Duncan, Charles Hirst, G. H. (York W. R. Wentworth)
Bowerman, Rt. Hon. Charles W. Ede, James Chuter Hirst, W. (Bradford, South)
Broad, Francis Alfred Edmunds, J. E. Hoffman, P. C.
Bromfield, William Edwards, E. (Morpeth) Hopkin, Daniel
Bromley, J. Egan, W. H. Horrabin, J. F.
Brooke, W. Forgan, Dr. Robert Hudson, James H. (Huddersfield)
Brothers, M. Freeman, Peter Isaacs, George
Brown, C. W. E. (Notts, Mansfield) Gardner, B. W. (West Ham, Upton) John, William (Rhondda, West)
Brown, Rt. Hon. J. (South Ayrshire) Gardner, J. P. (Hammersmith, N.) Johnston, Thomas
Brown, W. J. (Wolverhampton, West) Gibbins, Joseph Jones, Morgan (Caerphilly)
Buchanan, G. Gibson, H. M. (Lancs, Mossley) Jowett, Rt. Hon. F. W.
Burgess, F. G. Gill, T. H. Jowitt, Sir W. A. (Preston).
Buxton, C. R. (Yorks. W. H. Elland) Gossling, A. G. Kelly, W. T.
Calne, Derwent Hall- Gould, F. Kennedy, Thomas
Knight, Holford Noel Baker, P. J. Snowden, Thomas (Accrington)
Lang, Gordon Noel Buxton, Baroness (Norfolk, N.) Stamford, Thomas W.
Lansbury, Rt. Hon. George Oldfield, J. R. Stephen, Campbell
Law, Albert (Bolton) Oliver, George Harold (Ilkeston) Stewart, J. (St. Rollox)
Law, A. (Rosendale) Palin, John Henry Strachey, E. J. St. Loe
Lawrence, Susan Palmer, E. T. Strauss, G. R.
Lawrie, Hugh Hartley (Stalybridge) Parkinson, John Allen (Wigan) Sullivan, J.
Lee, Frank (Derby, N. E.) Perry, S. F. Sutton, J. E.
Lee, Jennie (Lanark, Northern) Pethick-Lawrence, F. W. Taylor, R. A. (Lincoln)
Lewis, T. (Southampton) Phillips, Dr. Marion Taylor, W. B. (Norfolk, S. W.)
Lindley, Fred W. Potts, John S. Thomas, Rt. Hon. J. H. (Derby)
Lloyd, C. Ellis Price, M. P. Thorne, W. (West Ham, Plaistow)
Logan, David Gilbert Quibell, D. J. K. Tillett, Ben
Longbottom, A. W. Raynes, W. R. Tinker, John Joseph
Longden, F. Richards, R. Toole, Joseph
Lovat-Fraser, J. A. Richardson, R. (Houghton-le-Spring) Tout, W. J.
Lowth, Thomas Riley, F. F. (Stockton-on-Tees) Townend, A. E.
Lunn, William Ritson, J. Trevelyan, Rt. Hon. Sir Charles
Macdonald, Gordon (Ince) Roberts, Rt. Hon. F. O. (W. Bromwich) Viant, S. P.
MacDonald, Malcolm (Bassetlaw) Romeril, H. G. Walkden, A. G.
McElwee, A. Rosbotham, D. S. T. Walker, J.
McEntee, V. L. Rowson, Guy Wallace, H. W.
MacLaren, Andrew Salter, Dr. Alfred Wallhead, Richard C.
McShane, John James Samuel, H. Walter (Swansea, West) Watkins, F. C.
Mansfield, W. Sanders, W. S. Watson, W. M. (Dunfermline)
March, S. Sandham, E. Watts-Morgan, Lt.-Col. D. (Rhondda)
Marcus, M. Sawyer, G. F. Wellock, Wilfred
Markham, S. F. Scurr, John Welsh, James (Paisley)
Marley, J. Sexton, James West, F. R.
Marshall, Fred Shepherd, Arthur Lewis Westwood, Joseph
Mathers, George Sherwood, G. H. Whiteley, Wilfrid (Birm., Ladywood)
Matters, L. W. Shield, George William Whiteley, William (Blaydon)
Maxton, James Shiels, Dr. Drummond Williams, David (Swansea, East)
Messer, Fred Shillaker, J. F. Williams, Dr. J. H. (Llanelly)
Middleton, G. Shinwell, E. Williams, T. (York, Don Valley)
Mills, J. E. Short, Alfred (Wednesbury) Wilson, C. H. (Sheffield, Attercliffe)
Milner, Major J. Simmons, C. J. Wilson, J. (Oldham)
Montague, Frederick Sinkinson, George Wilson, R. J. (Jarrow)
Morgan, Dr. H. B. Sitch, Charles H. Winterton, G. E. (Leicester, Loughb'gh)
Morley, Ralph Smith, Ben (Bermondsey, Rotherhithe) Wise, E. F.
Morrison, Robert C. (Tottenham, N.) Smith, Frank (Nuneaton) Young, R. S. (Islington, North)
Mort, D. L. Smith, Rennie (Penistone)
Mosley, Sir Oswald (Smethwick) Smith, Tom (Pontefract) TELLERS FOR THE AYES.—
Murnin, Hugh Smith, W. R. (Norwich) Mr. Charles Edwards and Mr.
Naylor, T. E. Snowden, Rt. Hon. Philip Paling.
Acland-Troyte, Lieut.-Colonel Crookshank, Capt. H. C. Hanbury, C.
Ainsworth, Lieut.-Col. Charles Culverwell, C. T. (Bristol, West) Hartington, Marquess of
Albery, Irving James Dalrymple-White, Lt.-Col. Sir Godfrey Harvey, Major S. E. (Devon, Totnes)
Allen, Lt.-Col. Sir William (Armagh) Davies, Dr. Vernon Henderson, Capt. R. R. (Oxf'd, Henley)
Allen, W. E. D. (Belfast, W.) Davies, Maj. Geo. F. (Somerset, Yeovil) Heneage, Lieut.-Colonel Arthur P.
Amery, Rt. Hon. Leopold C. M. S. Davison, Sir W. H. (Kensington, S.) Hennessy, Major Sir G. R. J.
Aske, Sir Robert Dawson, Sir Philip Herbert, Sir Dennis (Hertford)
Atkinson, C. Dixey, A. C. Hills, Major Rt. Hon. John Waller
Balfour, George (Hampstead) Duckworth, G. A. V. Horne, Rt. Hon. Sir Robert S.
Balfour, Captain H. H. (I. of Thanet) Dugdale, Capt. T. L. Hunter, Dr. Joseph
Balniel, Lord Dudgeon, Major C. R. Hurd, Percy A.
Bevan, S. J. (Holborn) Eden, Captain Anthony Iveagh, Countess of
Birchall, Major Sir John Dearman Edmondson, Major A. J. Jones, Sir G. W. H. (Stoke New'gton)
Bird, Ernest Roy Elliot, Major Walter E. Kedward, R. M. (Kent, Ashford)
Bourne, Captain Robert Croft Erskine, Lord (Somerset, Weston-s. M.) Kindersley, Major G. M.
Bowyer, Captain Sir George E. W. Everard, W. Lindsay King, Commodore Rt. Hon. Henry D.
Bracken, B. Falle, Sir Bertram G. Knox, Sir Alfred
Brass, Captain Sir William Ferguson, Sir John Lamb, Sir J. Q.
Briscoe, Richard George Ford Sir P. J. Lane Fox, Col. Rt. Hon. George R.
Brown, Col. D. C. (N'th'l'd., Hexham) Fremantle, Lieut.-Colonel Francis E. Leighton, Major B. E. P.
Brown, Ernest (Leith) Ganzoni, Sir John Lewis, Oswald (Colchester)
Brown, Brig.-Gen. H. C. (Berks, Newb'y) George, Major G. Lloyd (Pembroke) Llewellin, Major J. J.
Buckingham, Sir H. Gibson, C. G. (Pudsey & Otley) Long, Major Eric
Butler, R. A. Glassey, A. E. Lymington, Viscount
Butt, Sir Alfred Graham, Fergus (Cumberland, N.) McConnell, Sir Joseph
Cadogan, Major Hon. Edward Grattan-Doyle, Sir N. MacRobert, Rt. Hon. Alexander M.
Cautley, Sir Henry S. Gray, Milner Maitland, A. (Kent, Faversham)
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.) Greene, W. P. Crawford Makins, Brigadler-General E.
Cazalet, Captain Victor A. Grenfell, Edward C. (City of London) Margesson, Captain H. D.
Christie, J. A. Gretton, Colonel Rt. Hon. John Marjoribanks, E. C.
Colman, N. C. D. Griffith, F. Kingsley (Middlesbro' W.) Mason, Colonel Glyn K.
Colville, Major D. J. Guinness, Rt. Hon. Walter E. Meller, R. J.
Courtauld, Major J. S. Gunston, Captain D. W. Merriman, Sir F. Boyd
Courthope, Colonel Sir G. L. Hacking, Rt. Hon. Douglas H. Mitchell-Thomson, Rt. Hon. Sir W.
Cowan, D. M. Hall, Lieut.-Col. Sir F. (Dulwich) Mond, Hon. Henry
Cranborne, Viscount Hammersley, S. S. Monsell, Eyres, Com. Rt. Hon. Sir B.
Moore, Lieut. Colonel T. C. R. (Ayr) Salmon, Major I. Titchffield, Major the Marquess of
Morden, Col. W. Grant Samuel, A. M. (Surrey, Farnham) Todd, Capt. A. J.
Morris, Rhys Hopkins Samuel, Samuel (W'dsworth, Putney) Train, J.
Morrison, W. S. (Glos., Cirencester) Sandeman, Sir N. Stewart Tryon, Rt. Hon. George Clement
Morrison-Bell, Sir Arthur Clive Savery, S. S. Vaughan-Morgan, Sir Kenyon
Muirhead, A. J. Shepperson, Sir Ernest Whittome Ward, Lieut.-Col. Sir A. Lambert
Nicholson, O. (Westminster) Simon, E. D. (Manch'ter, Withington) Waterhouse, Captain Charles
Oliver, P. M. (Man., Blackley) Sinclair, Sir A. (Caithness) Wayland, Sir William A.
Oman, Sir Charles William C. Smith-Carington, Neville W. Wells, Sydney R.
Owen, Major G. (Carnarvon) Smithers, Waldron Williams, Charles (Devon, Torquay)
Peto, Sir Basil E. (Devon, Barnstaple) Somerville, A. A. (Windsor) Wilson, G. H. A. (Cambridge U.)
Pybus, Percy John Somerville, D. G. (Willesden, East) Windsor-Clive, Lieut.-Colonel George
Ramsay, T. B. Wilson Southby, Commander A. R. J. Womersley, W. J.
Ramsbotham, H. Spender-Clay, Colonel H. Wood, Major McKenzie (Banff)
Reid, David D. (County Down) Stanley, Lord (Fylde) Young, Rt. Hon. Sir Hilton
Remer, John R. Stanley, Maj. Hon. O. (W'morland)
Reynolds, Col. Sir James Steel-Maitland, Rt. Hon. Sir Arthur TELLERS FOR THE NOES.—
Ross, Major Ronald D. Thomas, Major L. B. (King's Norton) Sir George Penny and Captain
Ruggles-Brise, Lieut.-Colonel E. A. Thomson, Sir F. Wallace.
Russell, Alexander Weil (Tynemouth) Tinne, J. A.

Question put, and agreed to.


I beg to move, in page 7, line 15, to leave out from the word "if" to the end of the Clause, and to insert instead thereof the words: at the end of sub-section (3) there were inserted the following new paragraph: (f) shall, as regards premiums or sums in respect of which the claimant would but for this restriction he entitled to an allowance at half the standard rate of tax, be given at a rate of tax greater than four-ninths of the standard rate—

  1. (i) where the taxable income of the claimant does not exceed two hundred and fifty pounds; or
  2. (ii) where the taxable income of the claimant exceeds two hundred and fifty pounds in respect of the amount, if any, by which the premiums or sums exceed the amount by which the taxable income exceeds two hundred and fifty pounds;
In this paragraph the expression 'taxable income,' in relation to any person, means the total income of that person, estimated in accordance with the provisions of the Income Tax Acts as they apply to income tax chargeable at the standard rate less any amount on which he is, by virtue of sub-section (1) of section forty of the Finance Act, 1927, entitled to relief by way of a deduction of tax.


There is in my name and the names of some of my hon. Friends an Amendment on the Order Paper to the proposed Amendment of the right hon. Gentleman to leave out paragraph (ii). I do not propose to continue the debate on this Clause. I am not certain whether the Chancellor of the Exchequer is prepared to accept my Amendment or not.


indicated dissent.


If the right hon. Gentleman thinks that he cannot accept the Amendment, we do not wish to go to a Division. I would only say that the Amendment moved by the Chancellor of the Exchequer will not achieve the object of the right hon. Gentleman. He will find that if he includes an income above a total of £278 a year it will not achieve his object.

Amendment agreed to.