For the definition of "dealer" in Sub section (3) of Section forty-two of the Finance Act, 1920, there shall be substituted the following definition:—
The expression 'dealer' means a person who, being a member of a stock exchange in Great Britain, is recognised by the committee of that exchange as carrying on the business of a dealer.
§ Provided that if His Majesty in Council is pleased to declare that the Parliament of Northern Ireland have so amended the said Section forty-two in its application to Northern Ireland as to extend the benefits thereof to all persons who are dealers within the meaning of the foregoing definition, the said definition shall thereafter have effect as if for the words "Great Britain" there were substituted the words "the United Kingdom."—[Mr. P. Snowden.]
§ Brought up, and read the First time.1089
§ The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden)
I beg to move, "That the Clause be read a Second time."
I think I can explain the reason for this new Clause in a few sentences. For the last 10 years the provincial stockbrokers have felt that they were unfairly treated compared with the London brokers In the London Stock Exchange, when a dealer takes stock for which he has no immediate purchaser, and has to keep it on his hands, he pays Stamp Duty at a reduced rate. That advantage does not obtain in regard to the provincial dealers, because they are both brokers and jobbers. For a long time that has been felt to be unfair. Strong representations have been made to me. The reason why the discrimination was made was that the Revenue authorities thought there might be some difficulty because of the fact that provincial men were both brokers and jobbers, and the lower rate of duty was to apply only where stock was held by jobbers. But experience has shown that there was not much foundation for that fear, and it is felt that the discrimination may now be removed without any danger to the Revenue.
§ Mr. SMITHERS
Before this Clause is passed I would ask the Chancellor of the Exchequer whether he is correct in stating—I believe it was quite inadvertently—that if a broker on the London Stock Exchange had stock left on his hands he could put that in his name with a 10s. stamp. I do not think that that is the case.
§ Mr. SMITHERS
There is a great difference. It is true that if a dealer or jobber on the London Stock Exchange has stocks left on his hands that he does not want and never meant to buy, he is allowed to put that in his name for a limited time with a nominal stamp. But I would ask the right hon. Gentleman to notice this point: On the London Stock Exchange the rule is most strictly observed that no jobber is ever allowed to deal with the public. That rule is not only strictly enforced, but observed-The question in the Provinces is that there is not a sufficiently large margin to justify the existence of the jobber, 1090 but some of the country brokers have found it to the advantage of the marketability of the stocks there to act in the double capacity. My point is this: Is the Chancellor of the Exchequer quite sure that by this Clause he is dealing quite fairly by all the brokers and all the jobbers in all exchanges? Personally I do not think that he is, quite. Do I understand that a most honourable institution, a splendid institution, the Association of Provincial Stock Ex changes, has given an undertaking that this arrangement will not be abused? Otherwise I should feel compelled to ask the House to divide against the new Clause.
§ Mr. ALBERY
I hope that the Chancellor of the Exchequer will tell us whether the London Stock Exchange authorities have been consulted about this new Clause and whether they have expressed any approval or disapproval? We have heard about the brokers. Is the right hon. Gentleman aware that, although in practice there are not supposed to be two different sorts of members of Provincial stock exchanges, brokers and jobbers, in fact to some extent there are, and that on many Provincial exchanges there exists what is termed a shunter, and that he in fact is almost equivalent to the jobber or dealer in London. From the explanation up to the present it appears that this new Clause is going to make a distinct difference between the position of the broker in London and the broker in the Provinces. Will the Chancellor of the Exchequer tell us a little more about it?
§ Mr. P. SNOWDEN
In regard to the first point raised, if I used the word "broker" I meant "jobber" or "dealer." I am asked whether I have had an assurance that if this new practice were permitted it was not likely to be abused. I have had such an assurance. And, as I said when speaking before, the experience obtained in administering the existing arrangement has convinced the Commissioners of Inland Revenue that the arrangement can safely be extended as proposed. The hon. Member who spoke last asked whether the London Stock Exchange had been consulted. I do not think they have been.
§ Mr. SNOWDEN
May I correct what I said earlier? I understand now that the London Stock Exchange Committee were consulted and they raised no objection.
§ Clause added to the Bill.