INCOME TAX (CO-OPERATIVE SOCIETIES). (Hansard, 16 June 1932)

§ Mr. LEONARD
On the 25th May I gave notice of my intention to express 660 my dissatisfaction at the answers received in reply to three questions to the Chancellor of the Exchequer affecting the special committee to be brought into being to consider the position of the Cooperative movement and the Income Tax in this country. The points that I put in the questions were quite definite. I asked whether any member of the committee was a shareholder of or drawing income from any firm that had participated in the campaign for the increased taxation of co-operative societies. Secondly, I asked if the Chancellor was aware that the committee contained a director of a firm of drapers and whether that firm was in any way associated with any of the trade organisations that had prepared the campaign and made representations to the Chancellor. Thirdly, I asked if he was aware that one member of the committee was a director of the Columbia Graphophone Company and that that company was actively boycotting and restraining the trade of cooperative societies.
I regret that, in reply to those three specific questions, I received from the Financial Secretary to the Treasury, acting on the Chancellor's behalf, a reply which was not a reply, in my opinion, to the questions put, but an answer to the implications deemed to be contained in the questions and a disclaimer as to the position of Mr. Hill, giving us his professional status and qualifications. I would have much preferred to know if the details contained in my questions were within the knowledge of the Chancellor. Subsequent to that, reference was made to the terms of reference, and it is all the more important to the co-operative members in this country when we consider the great and wide power which this Committee will have. Apparently they will decide themselves whether the proceedings will take place in public or in private, whether legal representatives will be allowed to attend, and whether cross-examination is to take place.
But while the terms of reference and these facts are of importance, the statement of the Chancellor of the Exchequer on Budget day cannot be passed by without notice, because in introducing this matter he stated: 661 Under the existing law the co-operative societies enjoy a privileged position."—[OFFICIAL REPORT, 19t)h April, 1932; col. 1432, Vol. 264.] May I say, in passing, that I regret very much that if any such charge had to be made, the Chancellor did not make it when the opportunity presented itself to him when the deputation of co-operators saw him after he had received the deputation of the private traders of this country? Had the point been raised then, it would have been more fitting than in the speech that actually contained that reference. But now that the statement has been made, I submit that it is a charge against the co-operative societies of this country, and that if they are charged, they are in the position of being defenders and entitled to all the privileges and rights that defenders are accorded in the courts of this country. I trust that that point of view will be kept in mind.
The circumstances demand that suspicion should not attach itself to any decision or any recommendations that may be made, and I am inclined to the belief that suspicion will attach itself to a Committee of this composition. I note in the reply that the Chancellor of the Exchequer had satisfied himself that neither Mr. Hill nor his colleagues would have consented to serve on the Committee if they had been conscious of any circumstances which might prevent them from approaching the issues before them with complete impartiality. I asked: was the Chancellor conscious of any circumstances? That is the point that I wanted to know, and I doubt very much whether the gentlemen who are to take part in an inquiry such as this are the people who should say whether they are conscious of any circumstances which would unfit them for the job they have to do.
I want to make it clear that I am not in any way casting aspersions on Mr. Hill. My attitude towards him is quite respectful when I suggest that his relationship to the trading organisation I have mentioned brings up the question of his suitability for this Committee. I am not versed in couching the proper language to meet a position of this kind, but I have received considerable help from a publication issued to every Member by the hon. Member for Gloucester (Mr. Boyce). He sent us recently a reply to a pamphlet called "The Message" 662 which was issued by Sir Edmund Vestey, and some of his words are a help to me in my difficulty in regard to my personal attitude to Mr. Hill. He says: The status of a writer in no way disturbs the intellectual merit of the arguments he puts forward, but it often happens that the personal interest of protagonists lead them to confuse merits and prejudice. I leave it at that because there can be no doubt that Mr. Hill is a protagonist of one side, and that that side is against the Co-operative movement. The organisation of which he is a director has been approached by the Co-operative Society asking to be allowed to trade in the commodity that it produces. The society wrote to Mr. Hill's organisation: We should be pleased to fix up amicable trading relations with your good selves, and should be greatly obliged if you would kindly let us know on what terms you would allow us to retail your productions. The reply from the company with which is associated the gentleman who is supposed to be impartial in the matter of co-operative societies was: We tender our very best thanks for your letter of the 2nd May regarding your offering records of our manufacture for sale. In reply, we regret to inform you that we Cannot authorise Columbia products to be sold by any co-operative society. That is sufficient justification for the protest I am making. I say quite definitely that if the personnel of the Committee is not changed, the co-operators of this country will be entitled to have certain doubts about any decisions that may be come to and as to the impartiality of those decisions. I protest at the answers which I received in reply to my questions, and urge that the composition of the Committee even at this hour should be changed in order to remove all suspicion.

§ The FINANCIAL SECRETARY to the TREASURY (Major Elliot)
I am much obliged to my hon. Friend for having given me notice several days before that he intended to raise this matter, and for having postponed it on a previous occasion when it was more convenient for me to take it to-night. I fully agree that the co-operative societies are necessarily anxious in this matter and are desirous that their case should be given a full and fair hearing, but the difficulty in which we all are is the difficulty which was raised as soon as it was even 663 suggested that any inquiry whatever should be made into the position of the co-operative societies in regard to the Income Tax laws. The Chancellor of the Exchequer had scarcely got the words out of his mouth when a roar of derision arose, not confined to one side of the House, I admit. Members on this side greeted with some acerbity the suggestion that yet another committee of inquiry was to be set up, and Members opposite greeted with indignation the suggestion that any inquiry whatever was desirable or even possible. The fact of the matter is that when my hon. Friend the Member for St. Rollox (Mr. Leonard), with great temperateness suggests that if the committee has its present composition suspicion must attach to the impartiality of its findings—I think those were his words—he is a little overstating the importance which he and his friends, and indeed his friends outside, attach to the composition of this or any other committee. Can he name any circumstances in which suspicion would not attach to the findings of such a committee?

§ Mr. LEONARD
I confess I could not at the present time, but I do not know of any circumstances which so lend themselves to it as in this case.

§ Major ELLIOT
I wish to be perfectly fair to my hon. colleague in the representation of Glasgow. He holds very strong views, and I think it is not putting too high a strain on the language which was used then and subsequently, before the composition of the committee was announced, or, indeed, before it was adumbrated, to say that he and his friends suggested that it was unnecessary that any inquiry should be held, and that they would offer the most uncompromising hostility to any proposal to alter the taxation position in regard to co-operative societies, however great might be the authority on which these proposals were brought forward. [Interruption.] I am anxious to meet the point with regard to Mr. Hill, the member suggested, but I am commencing by saying that as soon as the committee was suggested hon. Members opposite indicated that the whole of the proposals would have their most consistent and uncompromising hostility.

§ Mr. ATTLEE
It was prefaced by a most tendencious remark and quotation by the Chancellor of the Exchequer.

§ Major ELLIOT
That alone seems to confirm the statement I have just made. We are told that the statement of the Chancellor of the Exchequer, the Finance Officer of this House, in making his Budget statement, was of the most tendencious character and entirely contrary to all official views. All I can say upon that is that if that is the spirit in which the proposal to appoint a committee is approached what are the prospects that the personnel of the committee can be approached without the closest examination and in a spirit of unmitigated party hostility? I do not complain of that. The hon. Member is quite entitled to his views that the co-operative societies are in no way enjoying any privilege, are bearing their full share of taxation, and that an inquiry, of whatever nature, is bound, if fair and unbiased, to disclose that, and the absolute justice of their case.

§ Mr. LEONARD
That is based upon the fact that other inquiries have preceded this one, and that no action was considered desirable or feasible.

§ Mr. NEIL MACLEAN
Did not the right hon. Member for Epping (Mr. Churchill) say practically the same thing as you are saying now?

§ Major ELLIOT
Although I am not of a betting or gambling nature, I am willing to wager that my right hon. Friend the Member for Epping said nothing of the sort. But let me continue. The Chancellor of the Exchequer's statement was immediately hailed by hon. Members opposite as displaying a tendency quite contrary to the whole nature of the facts. But remember that the Chancellor of the Exchequer instantly went on to say: "All these things are hotly denied." He could not speak fairer than that, and he therefore proposed to appoint a committee of inquiry to go into the whole matter. I am giving away no secrets when I say that in the opinion of many hon. Members and in the opinion of some of those who have given great thought and care to the matter, it was not desirable that further burdens should be 665 imposed in this Budget upon the cooperative societies. It was decided that further taxation should not be put upon the co-operative societies in this Budget, and that a fact-finding inquiry should take place before any suggestions for taxation were brought forward in this House. And upon that, hon. Members opposite, instead of meeting it as a concession, bring it forward as an insult, and suggest with great indignation that an injury has been done to the co-operative societies by proposals for taxation not having been brought forward this year. How many interests in this country would say they were injured if it had been suggested in. their case that no taxation should be made for this year and that nothing should be done except that an inquiry should be held? What a cry of delight would have gone up!

§ Mr. LEONARD
I uttered no protest against a committee of inquiry.

§ Mr. N. MACLEAN
Get to the point of the personnel of the committee!

§ Major ELLIOT
The personnel of the committee is not the only thing that is under discussion. The main thing that is under discussion is having a committee of inquiry.

§ Mr. MACLEAN
Was not the whole burden of the speech of the hon. Member for St. Rollox (Mr. Leonard) dealing with the position which one of the members occupies with regard to a particular company, and with the attitude of that company towards the co-operative societies? That is the matter under discussion.

§ Major ELLIOT
That is not the only matter under discussion. This is a Motion for the Adjournment, in which these matters are raised in the widest possible manner. The matter under discussion is not merely that—indeed one point upon which it is mainly founded is what the hon. Member for Limehouse (Mr. Attlee) called the "tendencious statement" made by the Chancellor of the Exchequer. The hon. Member repeated it in this House 10 minutes ago and said that it was highly contrary to the official view.

§ Mr. McENTEE
Get on with the point!

§ Mr. N. MACLEAN
Do not try to ride off on a side issue!

§ Major ELLIOT
I am having a good deal of interruption from hon. Members.

§ Mr. MACLEAN
You deserve it!

§ Mr. SPEAKER
Hon. Members are not entitled to interrupt the right hon. and gallant Gentleman when he is making his statement.

§ Major ELLIOT
It will be most desirable to review all the circumstances of the case. It is not merely the circumstances associated with one particular member of the committee, but the circumstances attending the appointment of the committee. I say, without hesitation, and this is the point I want to make that the postponement of taxation for a year was in the nature of a definite concession, and the proposals which are now being made for an inquiry of a fact-finding nature is in itself a concession which many other industries would willingly have desired before extra taxation, either last autumn or this year, had been laid upon them. I can imagine the indignation with which hon. and right hon. Members would have greeted a suggestion by the Chancellor of the Exchequer that, before he put an extra penny on beer, he was going to have an inquiry upon that, with a postponement of the whole matter for a year before he proposed any further taxation. Let me come to the particular point as to the membership of the committee. After all, the hon. Member for St. Rollox makes no objection to my approach to this case. It is perfectly reasonable that we should examine the general before coming to the particular. Let us agree that there is no objection to the chairman of the committee, Mr. Raeburn. It is agreed also that there is no objection to Sir Geoffrey Corbett—

§ Mr. LEONARD
I asked the right hon. and gallant Gentleman if he had satisfied himself that any of them were associated with or drawing income from any organisation that was part and parcel of the units that were carrying on the campaign of protest.

§ Major ELLIOT
When the hon. Member brings forward, after considerable notice, and being connected, as he is, with a great organisation, a Motion of condemnation of the Government in appointing certain members of the Committee, and he brings forward consider- 667 able objection to one member, I think I am entitled at any rate to say that if he had had objections to other members he would have brought them forward as well.

§ Mr. LEONARD
The right hon. Gentleman asked me a question and I have given him a reply. I asked him if he was aware of any.

§ Major ELLIOT
I am not aware of any, and, as my hon. Friend has not raised any objection, I take it that he is not aware of any objection either. In the first place, there is no objection to the Chairman of the Committee, and in the second place there is no objection whatever—I know of none and my hon. Friend knows of none—to Sir Geoffrey Corbett, who was Secretary to the Commerce Department of the Government of India. We now come to the only point at issue between us, as to whether there is or is not any objection to Mr. Hill of such a nature as should debar him from being a member of the Committee. What is the charge brought by my hon. Friend? It is that Mr. Hill has been and is a director of Columbia Graphophones, Limited, and also—I will give my hon. Friend this—

§ Mr. LEONARD
Peter Robinson.

§ Major ELLIOT
—and of the Peter Robinson Staff Society Limited. He is also a director of the Progressive Finance and Investment Company Limited. My hon. Friend asks me, first, whether we were aware of these facts when we appointed Mr. Hill, and whether we did not consider that holding these appointments should have been an absolute bar to his being appointed a member of any such committee. We were, of course, aware of these facts when he was appointed a member of the Committee. Naturally the Treasury was aware of these directorships, but neither then nor at any other time have Ministers thought it necessary to make detailed inquiries respecting the attitude adopted by these companies towards the question before the Committee. Mr. Hill had another qualification. He was the President of the Institute of Chartered Accountants. On such an occasion it is surely desirable that the chartered accountants—the skilled fact finders and figure manipu- 668 lators and handlers of this country—should be represented. We are all agreed that it is desirable that there should be a chartered accountant on such a committee.

§ Mr. McENTEE
Why not an unprejudiced one?

§ Major ELLIOT
We have the President of the Institute of Chartered Accountants—[Interruption]. We must take this step by step. We have picked the President of the Institute of Chartered Accountants. Does my hon. Friend suggest that we should pick no President of the Institute of Chartered Accountants if he is shown to hold any directorships whatever in any private company? That, obviously, would be an absurd position. Then it comes down to the question whether in fact the attitude of the Columbia Graphophone Company could be taken as so colouring and biasing the mind of every director of such a company that it would completely overrule his professional honour for acting on an. inquiry of this nature. Really, when one is asked to inquire into a matter of commercial importance, it is impossible to appoint anyone who is totally withdrawn from any connection whatever with any firm of any description. I am sure the hon. Member will agree with that. I am sure that he, with his emphasis upon organisation, upon regimentation, upon trade unionism, would agree that the chief officer of the society or union or organisation in question is a person to whom the Government might reasonably look. The whole trend of his argument on public affairs has always been along that line. If we were to leave out altogether from any such inquiries members of the unions concerned, I am sure no one would be quicker to declaim about it than hon. Members opposite.

§ Mr. LANSBURY
That is the point here. You have appointed a man who is qualified for the appointment but who happens to be prejudiced because he is connected with a company which boycotts the society into whose business he is to inquire. My case would be that if you appointed such a person, you should also appoint on the other side a person thoroughly well acquainted with the facts to be investigated, namely, a representative of the co-operative societies.

§ Major ELLIOT
The difficulty is whether you can trust a man to withdraw himself, professionally, from any such connection or whether having put such a man on, you must immediately put a man on the other side. I say, without hesitation, that in such a matter, touching professional honour, you must trust a man to be able to withdraw himself from his minor economic connections.

§ Mr. LANSBURY
You would never allow a trade unionist.

§ Major ELLIOT
I claim that you must in such a case consider that a man's professional honour as a professional man must be capable of over-riding any prejudice that he may have formed in connection with commercial life and such prejudice as man cannot go through professional life without forming to some extent. While we have appointed the President of the Institute of Chartered Accountants, who happens to have some connection with the Columbia Grapho-phone Company, Limited, we should certainly, without a moment's hesitation, have adopted a similar man if he had been in any way connected with a cooperative society.
A further point is that we approached another gentleman, and he was asked whether he would be able to speak without any bias whatever on the matter. 670 He felt that his connections were of a more intimate kind and that he might find difficulty in giving a completely unbiased judgment. He therefore begged to be excused from being placed on the committee and we then knowing Mr. Hill's connection with the Columbia Grapho-phone Company and the Peter Robinson Staff Society and the Progressive Finance and Investment Company asked him to serve if he felt confident, professionally speaking, that he would be able to give an opinion free from bias on the matter. He was satisfied that he could give such an opinion, and he was appointed. The final word on this matter will not come from any committee but from this House, and the recommendations of the committee will be considered from the point of view of their justice. If hon. Members opposite were in this position they would have to make appointments in spite of the fact that the persons whom they might appoint might have some connection with some form of organisation which had previously compromised the members of the committee in some way, and they would have to adopt a final criteria and trust to their verdict. Upon that basis we have taken our stand.