HC Deb 30 June 1936 vol 314 cc241-373

As amended, considered.

NEW CLAUSE.—(Extension of relief under s. 5 (2) of 57 & 58 Vic. c. 30 to cases where Estate Duty has been paid in Northern Ireland.) The payment (whether before or after the passing of this Act) of Estate Duty chargeable under the law in force in Northern Ireland on the death of a party to a marriage shall, for the purpose of any relief given by Sub-section (2) of Section five of the Finance Act, 1894, as respects the payment of any duty on the death after the passing of this Act of the other party to the marriage, have the like effect in all respects as if the duty paid had been chargeable under the law in force in Great Britain.—[Mr. Chamberlain.]

Brought up, and read the First time.

3.56 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

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

This Clause concerns Estate Duty payable on settled property which passes under a will or deed on the death of a spouse to the remaining spouse for life. Under the existing law if such an estate has been already charged with British Estate Duty on the death of the first spouse, it has still to pay Northern Ireland Estate Duty on the death of the second spouse should that take place in Northern Ireland. Conversely, if an estate has been charged to Estate Duty in Northern Ireland on the death of the first spouse, then it has to pay British Estate Duty on the death of the second spouse should that take place in Great Britain. It has been represented to us that it is desirable to make a reciprocal arrangement with the Government of Northern Ireland so that the Estate Duty payable on one side shall be counted as though it had been paid on the other side for this particular purpose. We are proposing, therefore, under this Clause to extend the principle of relief on the second death to the case where Northern Ireland Estate Duty has been paid on the first death, and the Northern Ireland Government have undertaken to introduce similar legislation in Northern Ireland in the autumn, so that an estate there will be exempted from duty if it has paid duty in Great Britain on the death of the first spouse.


Can the Chancellor tell us what difference this will make in the returns? Will there be any difference in the income?


It is impossible to say, because we do not know who will die here and who will die in Northern Ireland, but it is a reciprocal arrangement.


The point is that an alteration is being made for some purpose, and I am supposing that it will make some change in the income.


It must make a change, because in the case of an estate on which duty has been paid in Northern Ireland on the death of the first spouse if the second spouse dies, being domiciled in the United Kingdom, duty will not in future be paid here which, but for this Clause, would have been paid, because the payment of the duty in Northern Ireland will count as if that spouse had been domiciled in the United Kingdom. Exactly the same thing will happen in the reverse case, and we may take it that this reciprocal arrangement will not act prejudicially to either side.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

NEW CLAusE.—(Life insurance policies for payment of estate duty to be taken at surrender value.) In the case of every person dying after the date of the passing of this Act moneys payable under a policy of assurance on the life of the deceased effected after the passing of this Act expressly for the purpose of payment of estate duty payable in respect of property passing on the death of the deceased shall be taken at its surrender value on the day on which the deceased died.—[Sir TV. Davison.]

Brought up, and read the First time.

4.0 p.m.


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

The object of the Clause is to encourage taxpayers to take out life insurance policies specially earmarked for the payment of Estate Duty in the name of the Chancellor of the Exchequer, or otherwise as the Treasury may think desirable. I hope to be able in a few words to show that so far from the Treasury losing heavily, or indeed at all, by accepting the Clause, it will gain substantial benefits through the preservation of moderate sized estates intact, which will continue to yield Income Tax and Surtax and future Death Duties, while any immediate loss in the first instance is infinitesimal. It is, of course, absurd for the Treasury to argue, as they have sometimes done in the past, that they would lose Estate Duty on the life insurances which people may take out in order to pay Death Duties, for by reason of the present law no person is so foolish as to do such a thing. That is to say, if they take out an insurance in order to pay Death Duties the amount of the insurance is added to the estate, and in many cases not only have they to pay the additional Estate Duty but the whole estate is put in a higher category.

The adoption of this Clause would also bring our legislation, with regard to the taxation of life insurance on death, into line with the taxation in that regard in the United States and Canada. I am advised that in America, if life insurance is payable to the estate of the testator there is an exemption up to £10,000 in respect of federal inheritance tax, while in the case of Canada, with the exception of British Columbia and Quebec, the amount of any life insurance policy effected by a deceased person on his life and expressly earmarked for the purpose of paying succession duty, is exempt from duty except as to any excess over the amount of the duty payable. It would be the same in this case. For a number of years past other hon. Members and myself have moved new Clauses to the Finance Bill with the object of enabling taxpayers to make provision during their lifetime for the payment of the heavy duty which will be levied on their estate at death. To show the urgency of this matter at the present time, I have only to remind the House that no less a sum than £88,000,000 was taken from the capital of individuals last year in payment of Death Duties, and that the Chancellor of the Exchequer estimates in his Budget for the coming year that a sum of £89,000,000 will be derived from this source. That is to say that £89,000,000 will be taken from the capital of individuals and used for the most part for the current expenditure of the State.

I know that I should not be in order if I spoke at length as to the harm which Death Duties do not only to the individual but to the State. The House is, however, well aware of the serious effect of these duties, especially on agriculture, but also on small businesses. In the case of agriculture farms have often to be sold, tenant farmers have either to give up their tenancy or they have to raise money in order to purchase their farms, which they can very ill afford to do very often, and the consequence is that their ready capital, which ought to be used in providing manures and other materials, is not available, the farms are starved and great injury is done to agriculture. The same remark applies to farm labourers, farm servants and others, who are often given notice because the owner of the farm or estate cannot any longer afford to maintain such a large establishment. Friends of mine have been to the Inland Revenue and asked for time to pay on succession to an estate. They have been through the estate expenses with the Revenue officials and they have frequently had it suggested, "You could do with fewer men here and there," and their reply had been generally, "I could, but the property that my father or relative had cannot then be kept up as it was kept up before." The result is that men are dismissed.

The same disastrous effects are to he seen in businesses, especially small businesses, which have to realise capital that is urgently required for maintenance and development at a time when those concerned are most seriously hit by the removal of the head of the business. It is a generally recognised practice in this country to provide for unforeseen contingencies, such as unemployment, sickness, old age, fire and death, by means of insurance, but owing to the present law with regard to insurance against Death Duties it is impracticable to do so, and as a matter of fact people do not do so because it does not pay them to do it. Chancellor after Chancellor has expressed sympathy with the idea of insuring against Death Duties. but has always regretted that he is unable to accept any such proposal, mainly on two grounds: The first ground is loss of revenue to the State, and the second ground—on the face of it, it seems a reasonable suggestion—is that it is not fair that people who pay an annual sum in premiums on insurance to secure a policy for payment of Death Duties should be in a privileged position compared with other people who save that amount of money each year and accumulate it, thereby increasing their estate. It has been urged in the past, and I think rightly urged, that that is not fair. I hope to show that the total accumulations, at compound interest, of the amount which would have to be paid for insurance premiums, would be practically the same as the surrender value of the policy.

Let me first refer to what the Financial Secretary to the Treasury said last year. He said that the Government "were not opposed to the principle" of the proposed new Clause, which was a Clause whereby Death Duty insurance should be treated as a separate estate. He further stated that the Government recognised that there was "a. genuine grievance and hardship at the present time for those who had to pay Death Duties," and that it was recognised that Death Duties did not hit only the very rich people. He concluded his speech by admitting that there was a problem, and said that if Members of Parliament could think of a better way than the proposal then made of dealing with it, the Government would be only too glad to examine such a proposal.

I hope I have established that we have the sympathy of the Government in this matter, and that is something for which we are grateful, and it takes us some way on our road. I hope to be able to show that both the difficulties to which I have alluded can be overcome. First, there would be no loss of revenue to the State. I say that for three reasons: First, the Treasury will not be losing something which under present circumstances it has no chance of obtaining, because these insurances are not as a fact taken out; every one admits that. Secondly, the State will obtain a substantial revenue by the taxation of insurances such as those suggested in the new Clause, if taken at their surrender value. There will be a large number of insurances taken out if the taxpayer is allowed to have them taken at their surrender value. Thirdly, the Treasury will gain in Income Tax, Surtax and Death Duties in having estates kept intact which otherwise would be greatly reduced in value. If Death Duty insurances are taken at their surrender value they will as a rule be approximately of the same amount as the total savings which a taxpayer would have by the investment of the premiums of life insurances to meet Death Duties. Taken at their surrender value on the day when a person dies they will amount approximately to the same sum as if the premium of £100, or whatever it may be, had accumulated for a number of years to the time of the person's death.


Does the hon. Member say if the Death Duties were taken at their surrender value?


The surrender value of a life insurance policy is the proper value at which such insurance should be assessed for Estate Duty, seeing that it is practically the same amount as would be accumulated had a testator invested the amount of the premium each year at compound interest.


The new Clause as it is printed seems to me to be nonsense.


Does it not mean, shall be taken for the purpose of calculation for Estate Duty?


Yes. If other words can make the Clause clearer and achieve the same purpose, they can be inserted. Any new Clause that any hon. Member brought forward the Treasury would alter. The object of the Clause as drafted is one which, I think, it is in the interests of the State and the individual to secure. If by these words we do not secure that object, I hope the Treasury will suggest other words. If the House will bear with me I will give two examples which have been verified by actuaries and which I have reason to believe are quite accurate. It will then be seen that what I have said is actually the case, that if you invest each year, at 3 per cent. compound interest, the sum which you would use otherwise to pay premiums on an insurance policy, you get practically the same sum as the surrender value at your death. Take the case of a man aged 30 next birthday, with an estate of £20,000. He could effect life insurance for £2,000 at a net yearly cost of about £28. If he died after 10 years the surrender value would be about £150. The total sum on which Estate Duty would be calculated would be £20,150. At 8 per cent. the duty would be £1,612. Compare that with an annual investment of £28. In all probability many people would not invest the sum at all, and a fortiori the Revenue would lose accordingly. But I assume that he does invest the £28 every year. If it were regularly invested and accumulated at 3 per cent. compound interest, at the end of 10 years the accumulation would be £331, so that the total estate would be £20,331. Duty at 8 per cent. would amount to £1,627, as against the £1,612 which I have already mentioned, or a difference of only £15.

Take an estate of £52,000, owned by a man who is aged 40 next birthday. There would be 15 per cent. Estate Duty. On a life insurance of £8,000, which would be required, the net yearly premium would be £158. If the owner died after 10 years, the surrender value would be about £940, so that the total sum on which Estate Duty would be calculated would be £52,940, and at 15 per cent. the duty payable to the State would be £7,941. These figures have been verified, and I can give them to hon. Members afterwards should they be unable to follow them. If, on the other hand, the annual premium of £158 were invested and accumulated at 3 per cent., at the end of 10 years the accumulation would amount to £1,866, so that the total estate would be £53,866, on which 15 per cent. duty would be £8,080, compared with £7,941, or only £139 more than would be the case under the proposal which is now before the House. The accumulation of income in this case would be only £139 more. Under present arrangements, the amount of the estate left, after payment of the duties, would be £45,786, and if the yearly income produced by this were at the rate of 4 per cent., it would amount to £1,831. Under the proposed new Clause, the amount of the estate left after payment of duties, would be £52,000, plus the policy for insurance, £8,000, less the duty, £7,941, that is to say, £52,059, which, at 4 per cent., would produce £2,081 per annum, as against £1,831. If you take the revenue on that, the Income Tax and the Surtax, you will find that the revenue would gain each year after the death. by Income Tax on the increased income of £250 per annum, about £60 per annum, against a single loss of £139 on death, and the estate would be intact. In a couple of years they would have regained that which they had lost and, in the case of the small estate, the increased income would be £15.

I have pointed out that the calculation which has been made in the past about a loss to the Revenue in respect of his insurances to meet death duties is negligible, because the insurances are not taken out. I agree that the Clause will not apply to the very large estates, because the taxation there is so heavy that none of those big people could afford to take out an insurance of the kind. It therefore applies only to estates of moderate size, say of £60,000 or £70,000. I would point out that in the case of the death of a person who owns stocks and shares, those stocks and shares are taken at their value on the day of the death. If, for example, after I have put these very clear figures before the House, I survived only until 10 o'clock to-night, my estate would not be valued at to-morrow's Stock Exchange prices, but at the prices to-day, the day of my death. The fact that Members opposite smile reminds me of the man who decided he would insure his life even if he died the next day and said, "I always was a lucky fellow."

It is only right that insurances for this purpose should be taken at their surrender value. Suppose a man were 95 years of age and his insurance was for £20,000, the surrender value of the policy would very likely be about £17,000 or £16,000. Why should you value stocks and shares upon one principle and not value insurances on the same principle, which would be the fair thing to do? Only recently I knew of a large estate where the man's death involved a heavy fall in the value of the shares, because he had held a great number of them. The executors had to pay Estate Duty on the value on the day of his death, before the fall occurred. It would be only fair to take insurances at the surrender value on the day of the death.

I have shown that the new Clause should be accepted not only on grounds of equity, which I hope is clear—[Interruption.] Hon. Members opposite seem to think that there is some evil purpose in trying to alleviate the burden of Death Duties, and that the object of any proposed change in the law is only in order to benefit wealthy people. These duties are undermining the weath of the country, upon which we depend for social and other services. It is absurd for Socialists to be always jeering at anything like this, which is quite as important to the State as to the individual. In these difficult times, when we require more and more taxation for re-armament in order to hold our place in the world, and for the ever-increasing social services, if they are to be maintained, we must enable people to pay these heavy duties by making provision during their lifetime, when they are still in a position to earn money and to provide for them.


I beg to second the Motion.

4.22 p.m.


The hon. Member for South Kensington (Sir W. Davison) has raised a very interesting problem. I would have said that those who have large estates do not insure, because they cannot afford the very heavy increase in Death Duties, owing to aggregation. The amount of insurance which comes under review for Death Duties each year is somewhere about £21,000,000.


Those are ordinary insurances, made for certain provisions relating to family settlements, and not insurances to meet Death Duties.


The purpose for which the insurances are taken out is not a matter which concerns the Board of Inland Revenue. The total amount of insurance which comes under review yearly for Death Duties stands at the figure which I gave, somewhere between £20,000,000 and £21,000,000 a year. One has only to look at the revenues and the size of the great life assurance companies to know that the companies do a far greater volume of business than is represented by that figure. If we examine the report of the Board of Inland Revenue, we find the rather interesting fact in regard to the distribution of those life insurances that something like £15,000,000 a year, or rather less, as the hon. Member suggested, is taken out by people who are in a less wealthy category. That sum out of the £20,000,000 is part and parcel of estates of less than £20,000, which represents no less than one-half the wealth that annually comes under review. So far as their proportion of insurance is concerned, they represent between three-quarters and four-fifths. That is not the total volume of insurance that is done. What happens is that large estates, which come in for a very heavy incidence of Death Duties, must necessarily insure to meet it, and it is much more important that you should have a fluid fund of available money for an estate of £1,000,000, which is to have a very much higher rate of Death Duty, than for an estate of £10,000, or £15,000, on which the duty is perhaps 9 per cent. or 10 per cent.


They cannot afford to pay the premium. As I pointed out in my speech on the Budget, the very large incomes actually are taxed if they make any provision for death duties at more than 100 per cent. of their income. This was admitted by Mr. Snowdon when Chancellor of the Exchequer. They cannot afford to insure against death duties. It is riot a question of merit; they have not the money to do so.


The hon. Gentleman makes an ex cathedra statement. I am suggesting only that the £20,000,000 which annually comes under review is nothing less than the total amount of life assurance business which is done in this country. I am not opposing the hon. Gentleman's proposed new Clause, but I am dealing with what seems to be a rather interesting point. What happens is that, on account of the aggregation and the still greater increase in the rate of Death Duty, insurances are not taken out by the life that is assured, but by the beneficiaries. I am not concerned with who pays the premium, but with the fact that in a great number of cases policies are taken out in the names of the beneficiaries in order that aggregation may be prevented.


On that assumption, the revenue is losing a large sum of money and the beneficiaries are outwitting the revenue, legally, from what the hon. Member says. If my proposal were accepted, the authorities would be getting revenue on the surrender value of policies.


I am neither supporting the hon. Member's proposed new Clause nor opposing it, but am merely drawing the attention of the Chancellor of the Exchequer to a fact which seems to me to be deducible from the figures of the Board of Inland Revenue, on a matter which is worth consideration. It may be that some modification such as is suggested by the hon. Member is worth while, from the point of view of the revenue, but I am not convinced that the Clause, as it is drawn, would have that effect; because if it is found possible to avoid aggregation on the death value of the insurance, it is just as easy to avoid aggregation on the surrender value of the policy. The Chancellor of the Exchequer might take into consideration the fact that there is a very vast sum of insurance done and insurances paid, which escape his net. The fact that nearly £20,000,000 a year comes under review for Death Duties is a matter which the Chancellor should take seriously into consideration.

4.30 p.m.


A few days ago I had the advantage, in common, probably, with other Members of the House, of reading a very interesting and, as far as I can understand the figures, very able memorandum on this subject, prepared by the head of one of our large insurance companies, in which he worked out the figures and made this suggestion, which, quite frankly, was new to me, as to the way in which this matter might be dealt with. I very much hope that the Chancellor of the Exchequer will consider this subject. One so often finds in this House that the conventional view is taken that, if a certain answer has been given in the past, that answer will continue to be given in the future. We are not here discussing the merits or demerits of Death Duties, upon which there might be a good many different opinions, and it may be that, in view of certain traditions which I have, I might not agree with some other Members on the subject. We are discussing the question of a method by which these Death Duties could be paid in the least harmful manner.

I am certain that one of the great troubles of present-day social life is that people act so largely on the principle that, as long as things last their time, that is all that matters. That mode of action, however, does not benefit anybody. If there are to be Death Duties, and it is accepted by everybody that there are to be Death Duties, and heavy ones under the present conditions, what we want is that people should, if they possibly can, provide for those duties during their life. That is the decent thing which we should all think right in our own lives, and it is the thing that is best from the point of view of the country—not that people should live right up to their incomes, but that they should set aside so much every year in order to provide for their families after they are gone. The best way of doing this is by taking out a policy of insurance.

The great objection to that—and it applies particularly in the case of people who acquire their money late in life, and whose premiums, therefore, are much heavier than those of persons who are quite young when they start to insure—is that, when they die, the whole value of the insurance policy is added to the other money that they have, and Death Duties have to be paid on the total amount, so that the money which comes in under the insurance policy is not available as a separate fund for the payment of Death Duties, but is itself added to such money as existed already. The hon. Member for Chesterfield (Mr. Benson) said that there was not so much difficulty in regard to payments in the case of, if I understood him rightly, smaller estates, which were probably more liquid than the bigger estates in the case of which it might be necessary to insure, but I wonder whether that is quite right? I think we have all encountered cases in which Death Duties levied upon very small fortunes have entailed great hardships on the family.

In the case of a very wealthy man, his money is quite likely to be invested in stocks and shares, which can be readily realised, but in the case of small people carrying on a shop, or perhaps a small business, it is probable that every penny that they have is invested in that shop or small business, and cannot possibly be got out unless the business is broken up and disposed of. We have all come across cases of that kind, where a man has carried on a business quite happily during his life, but when he dies his family are forced to realise it because they have no ready cash other than what is invested in the business, and the business, comes to an end. In consequence something which is useful to the count[...] and which gives employment is discontinued. A short time ago I happened to be talking with someone about this matter, and had to confess that I had not realised what a great burden was thus inflicted upon very small people who perhaps had only £10 or £20 to pay. I had never realised the difficulty in which such people were placed by the death of the head of their family when, in addition to the funeral expenses and perhaps the expenses of an illness, they were faced with a demand of £10, £20 or £50.

It is for the benefit of everyone, as I see it, that people should be encouraged to insure, and the Chancellor of the Exchequer could easily avoid any considerable loss of revenue by accepting this Clause, which does not exclude from liability for Death Duties the amount coming in under the policy of insurance, but merely says that the policy shall be taken at the value which it has on the day on which the man dies, not taking into account the increase in value represented by the actual amount due under the policy. I suppose that anybody who takes out an insurance policy becomes at once, in the words of the old farm labourer, worth more when he is dead than when he is alive, and it is that element that we want to be excluded by taking into account the surrender value computed on the basis of the premiums paid, but leaving out of account that sudden large increase which arises purely as a, result of death. For instance, if a man's life were insured for £20,000, on his death, it might be a few days afterwards, his representatives would be paid £20,000, but the value of the policy to himself on the day before he died might be only £15,000 or £16,000. That is the principle of the Clause. It does not raise any general social question, but merely the question that it is for the benefit of all who have to pay Death Duties—and even small people have to do that—that they should provide for them during their lifetime, and should not say, as so many people say to-day, that the world will last their time, and those who come after them can look after themselves.

4.39 p.m.


I was somewhat surprised to hear my hon. Friend the Member for Sunderland (Mr. Furness) playing the part of the Devil's advocate. We know that for years past the hon. Member for South Kensington (Sir W. Davison) has advanced proposals of this character, and that on each occasion the Chancellor has rejected them. I certainly hope that he will reject this proposal today, because I think that, of the many methods of providing for Death Duties which have been suggested by the hon. Member, this is about the worst. My hon. Friend the Member for Sunderland has talked about the poor small proprietors who are damaged at present by the operation of the Death Duties, and the hon. Member for South Kensington has suggested that this Clause, if it were accepted, would not apply to large incomes; but surely that is exactly what would happen. Supposing that a man 70 years of age felt impending dissolution coming upon him, and knew that on his death a large amount would be payable in Death Duties, he would then take out a large insurance policy—[HON. MEMBERS: "He could not do it."] He certainly could—


He would have to take out a policy with an insurance office, which has to pay dividends, and the insurance office is not going to allow a man of 70, in a bad state of health, to take out a policy for, say, £250,000 in order to pay Death Duties when he is likely to die shortly.


The hon. Member has omitted to realise the manner in which the surrender value is arranged. It would be possible to have a policy of such a character that the surrender value after a relatively short time would be very small indeed. The hon. Member is asking us to believe that the surrender values arranged by all insurance companies are more or less the same, but that is not the case. It is possible to take out a policy which will have a very high surrender value in 10 or 15 years' time, or, on the other hand, to take out a policy the surrender value of which would be very low. Clearly, if an insurance were taken out for this purpose, the policy would be one which had a very low surrender value. In this Bill we are endeavouring to stop up the means whereby taxation can be legally avoided, and it would be the worst possible thing for us to do to embark on what in my view would be making legal another form of tax avoidance even worse than those at present dealt with in the Bill. I would remind the House of what has been pointed out previously, that everyone who now takes out an insurance gets a certain advantage by way of Income Tax remission. I sincerely hope that the Chancellor of the Exchequer will not be deluded by the pathetic plea of my hon. Friend the Member for Sunderland, but will resist this, the latest and most ingenious effort of the hon. Member for South Kensington.

4.43 p.m.


The hon. Member for South Kensington (Sir W. Davison) and the hon. Member for Sunderland (Mr. Furness) will forgive me if I do not enter at large upon the whole question of Death Duties and their effect on the body politic. That is a larger question than the one which confronts the House in this Clause. The hon. Member who moved the Clause produced some calculations, which I confess on the spur of the moment I was not able to follow, but which seemed to have the curious effect of showing that this proposal of his would give a larger yield to the Treasury from this form of taxation which he so whole-heartedly reprobated in the earlier part of his speech. The fact is, however, that he is here proposing one of the many devices which have been suggested for dealing with this particular problem. I am not going to look too closely at the wording of the Clause, because I think that, even with the greatest good will in the world, it is impossible to make actual sense out of its language, but the intention appears to be that for the purpose of Estate Duties one particular form of property shall be valued in a different way from other forms of property. [HON. MEMBERS: "No!"] The ordinary method of valuation for Estate Duty purposes as regards capital assets is to take the principal value at the time of death, that is to say, the principal value of the asset when the man is dead—


On the day of his death.


When he is dead. There is no question of Death Duties until the man is dead, and it is not until he is dead that the question arises.


Is that really the case? Is it not a fact that pictures and other works of art are valued, not on the day of the man's death, but when they are sold?


In every case the estimate to be arrived at is the value of the estate when the man is dead. There are difficulties with regard to certain works of art of which the value is problematical, but in the case of ordinary monetary assets no duty becomes chargeable in the first place until the man is dead—


The question is how it is assessed.


It is assessed at the value at the time of death, when the man is dead.


Surely, to take the case that I raised in my speech, supposing that I or any other Member of the House were to die at 11 o'clock this evening, my estate would be valued on the basis of the Stock Exchange quotations for this afternoon.


In that case there is no change in the valuation. But in this case the hon. Member is asking us to take, not the full value of the policy, not the full sum assured and payable on death, but the lesser sum representing the surrender value. He is asking the Revenue to accept that as the basis of valuation of the policy for the object that he has in view. But if my hon. Friend were the next-of-kin to whom the value of that policy was due, would he accept the surrender value before death as the value of the policy? Would he not demand, quite rightly, that, if he were entitled to the reversion of the policy, he should be paid the full sum accruing under the contract of insurance? That is the main difficulty of principle in the way of the step that my hon. Friend is asking us to take. Whatever any Government might deem it fit to do to assist people in this position, I do not think that this is a plan which would commend itself to the House. My hon. Friend produced a very interesting set of figures, which I could not follow unless I had them before me. He claimed that they had this curious result, that the Treasury, by valuing this form of property at less than its true value, would not be losing money. If my information is right, there must be something wrong with his calculations, because I am advised that acceptance of the proposal would involve a loss of between £500,000 and £750,000 in the immediate future. I ask the House to consider what the ultimate result of the proposal might be. We are asked to apply to this form of property a canon of valuation different from what we apply to other forms of property in this, that it attaches to it a lower value than the true value. It would not be long before people would find out the preferential position in which we were putting insurance policies effected for the purpose of Death Duties and, instead of leaving their money in other forms of property which are valued at their full value, they would tend to take out insurance policies for this purpose, and lock their money up in this form of property.


I understood my hon. Friend to mean that it was not proposed to take the entire policy, but only so much of it as was necessary to pay Death Duties.


That is not as I understand the Clause. It seems to me that, if you value this form of property at a lower standard than other forms of property, so far from being a gain to the Treasury, it would to some extent involve a loss. I am told that, if the Clause were accepted, it is easy to foresee within a reasonable space of years that the loss might be £3,000,000 or £4,000,000 a year. I cannot commend the Clause to the House for the reasons that I have stated. There are objections on grounds of principle and, in any case, it is too expensive to be contemplated at present.


The trouble has been in many cases that, by adding the full amount of the insurance to the value of the estate, you put the estate into a different category, and it has to pay a higher rate than it would if the owner had not insured. Would it be possible to treat the insurance as a separate item, and only charge it on the percentage at which that sum pays Death Duties?


That is a different question, and it is another method that has been suggested of giving some form of relief to Estate Duty payers. If my hon. and gallant Friend asks me whether that would involve a loss to the Exchequer, certainly it would. You might as well propose that a man with an income of, say, £3,000, should be able to put it into two pockets and say, "I have not an income of £3,000, but two incomes of £1,500." It is bound to reduce the rate of duty.

4.52 p.m.


I am very disappointed with my hon. and learned Friend's arguments. He made a very great point of one thing. He said, "You are taking one particular form of property." You are not taking one particular form of property, because that particular form of property does not exist when the person is living. It is not like houses or shares which the owner can realise when he likes. He has paid certain premiums, which have a certain surrender value, and that is the value of the property. To my way of thinking the amount that you get from an insurance company after your death is a different form of property from any other, and I think my hon. and learned Friend is wrong when he says that is not so. What happens really is that the individual has contributed a certain amount towards thrift and, if the Clause were passed, as I hope it will be, it would encourage thrift. If my hon. and learned Friend's argument is agreed to, it will appear that the House is anxious that thrift should not be encouraged. On this ground alone I feel very strongly that the Clause should be supported.

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

NEW CLAUSE.—(Exemption from, and reduction of tax in certain cases.)

(1) An individual who proves that his total income does not exceed one hundred and fifty pounds shall be entitled to exemption from Income Tax. (2) An individual who, not being exempt as aforesaid, proves that his total income is less than two hundred pounds, shall be entitled to have the amount of Income Tax payable in respect of his total income, if it would but for the provisions of this Subsection exceed a sum equal to one-fifth of the amount by which his total income exceeds one hundred and fifty pounds, reduced to that sum. (3) All such provisions of the Income Tax Acts as apply in relation to deductions of tax under Section forty of the Finance Act, 1927, shall, with any necessary modifications, apply in relation to exemptions from or reductions of tax under this Section.—[Mr. Leach.]

Brought up, and read the First time.

4.54 p.m.


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

On this matter the Chancellor of the Exchequer last year made a very small concession by fixing the maximum non-tax basis at £125 not only for earned but for unearned incomes as well. I have been trying to discover how many people were taken out of the tax area by that concession, but I have failed in the effort. I should be interested if we could be given some information on the matter. I suspect that the number taken out would be an exceedingly small one. I desire to increase the non-taxable basis from £125 to £150, and the two following Sub-sections are, as one might say, adjusted copies of the existing law in order to fit them in with the new figures that we propose. We are dealing with a class of Income Taxpayers who generally pay every penny that they owe the State. For the most part the small number, as I assume them to be, of those included on the unearned income basis will have their incomes properly surveyed by the competent machinery now in existence, and those who are on the earning side will have their wages and salaries fully disclosed by their employers, making evasion absolutely impossible.

These taxpayers, therefore, are among the most respectable and necessary citizens of the nation. Luxury is beyond them. They have to maintain very modest standards, and their little investments are on so small a scale that consideration should be given to their circumstances. The £3 a week man or, to put it more correctly, the £2 17s. 6d. a week man is a good, steady citizen who works for his living and generally has all he can do to pay his way. His spendings are confined to the staple necessaries of life, thereby promoting the industries which are necessary for national wealth and prosperity. At all times this man is perilously near to the danger line of poverty. His rent and his rates are always a trouble to him. He has to meet his weekly obligations in the matter of unemployment and national health insurance, superannuation charges and so forth. The slightest mishap, either of accident, or unemployment or sickness, completely floors him. He has also, generally speaking, no stake in the country. He owns no land, no houses, no property, no shares, except a small section which comes on the unearned income basis. Some two-thirds of the taxation that he has to pay goes to prepare for war, to pay for past wars, or to protect something which he, at all events, does not possess. His living standards are already low enough, and I want this Clause to protect them against further incursions by the Chancellor of the Exchequer. We dealt a few minutes ago with a matter that affects the opulent taxpayer, and that was turned down. I hope, having put in this plea for the modest and certainly not opulent citizen, the Chancellor of the Exchequer will see his way to accept it.

5.0 p.m.


I beg to second the Motion.

I wish to advance a few reasons in support of the Clause. I do not propose to follow the example of the hon. Member for South Kensington (Sir W. Davison), and will refrain from trying to persuade the Chancellor of the Exchequer that he will effect a saving by the adoption of the Clause. The Clause is simple and calls for no explanation, and, in my judgment, requires very little justification. Sub-section (1) simply means that the class of persons liable now to pay Income Tax shall be excluded if their incomes do not reach more than £150. The Chancellor of the Exchequer in his Budget speech gave expression to the idea that the Budget had been deliberately framed with a view to imposing extra taxation upon every section of society, including those whose means were of the very smallest. He tried to justify the extra taxation on the ground that, since all were interested in the purposes for which the taxation was to be raised, they should make their contribution. Even if we admit an argument of that kind, I do not think that the Chancellor of the Exchequer would venture to dispute the suggestion that taxation should, as far as possible, be pro- portioned to the capacity to pay. The capacity of the individual in receipt of an income of under £150 per annum to pay such extra taxation would be strained to an extent that would necessarily result in the deterioration of his own life if he happened to be, as in most cases would be the case, the head of a family.

What is £150 per annum measured in terms of life to-day? Hon. Gentlemen opposite are better able perhaps to appreciate the proper answer to that question than many hon. Members on this side of the House, many of whom have known the experience of having to subsist with their wives and families on a very much less sum than that. That has not rendered any the less keen the appreciation of the fact that we have surrendered far more in life than we have been able to take advantage of. Speaking for myself, and with a fair knowledge of the class to which I belong, we should not unduly grumble at the sacrifices we were thus called upon to make, if we could be convinced that the sacrifices were just or necessary. I am not convinced that the resources of this country at the present time are so mean as to require that any family should have to subsist upon an income of less than £150 per annum. Even in these depressed times and industrial inactivity we are in a position to boast of a total national income which, if it were equally divided among the households of the land—and I am not for a moment suggesting that it should be thus equally divided—would provide every household with an annual income of £500. I should be interested to hear the Chancellor of the Exchequer or the Financial Secretary to the Treasury, whoever is to reply, dispute those figures. I suggest that they will not do so.

The man in receipt of an income of less than £150 per annum should be exempt from the special form of taxation which Income Tax takes. We are asking him to submit to a further sacrifice to which we have no right to call upon him to submit until the resources of the country have been more fairly adjusted among the population of the country, and particularly among that section of the community which plays so large a part in the creation of the wealth of the country. There is no moral or economic justification for regarding a man with the meagre income of £150 per annum as an object capable of being exploited in the form of the payment of extra taxation.

What do the resources of such a man provide? I speak with knowledge when I say that, as far as rent and rates are concerned, the probabilities are that he will have to pay on an average £39 or £45 per annum out of his £150, and a great deal more than that in London, as I am reminded by my hon. Friend. I take the reasonable average throughout the country of £40 per annum. That leaves him with £110 per annum upon which to keep himself and his wife and an average family of two or three children. I may be met with the objection that a good many of these people are single men, but I should like to have justification for any such suggestion. I am rather of the opposite opinion that most of those persons are married men with families. I think that it is reasonable to assume that when we are dealing with the man with an income of under £150, we are dealing principally with the man who has a wife and family. The £110 which is left after deducting the £40, taking an average of five persons to the family, leaves an average of £22 per person per annum for food, clothing, education, recreation and shelter. I would ask the Chancellor of the Exchequer how much he expects a man to get out of what would remain after he had provided for his rates and rent, if his income were only £110 per annum? If we are to have extra taxation, there should be some justification for placing it upon those who have to bear it. There can be no justification in this case, if you consider the maxim that taxation should be proportioned to capacity to pay.

Sub-section (2) of the Clause is merely to avoid a great hardship to a person whose income is, say, £155, being suddenly called upon to pay not only Income Tax upon the extra £5, but a very stiff rise in tax. If the Chancellor of the Exchequer looks at the matter, in a reasonable light, there can be no possible objection to the Clause except that, if the concession is made, it will mean that additional burdens will have to be imposed in other directions. Let me, therefore, relieve his conscience and his mind on that point by reminding him of the prosperity to which he looks forward as a result of the policy of the National Government in the years before us. In the stimulation of industry for the purpose of providing armaments, he may find sources of income to give him an increased yield which will more than compensate for the small loss he will have to experience if he grants this concession.

5.10 p.m.


I ask the Chancellor of the Exchequer to state, as lucidly as possible, the grounds upon which he is to resist this Clause, and not to ride away on the mistaken ground adopted by my hon. Friend the Member for Collie Valley (Mr. Marklew) that this Clause relates to married persons, whereas it relates to single persons. What are the facts of the case as embodied in the Clause? The present income of an unmarried person which is untaxed amounts to £125 per annum, and if a man is married it is £170, though it is true that in the Bill now before us this amount has been raised to £180. No concession is given to an unmarried person. In 1931 the income allowance for a married man was £225, and £135 in respect of a single man. We were told by the Chancellor of the Exchequer a year ago that we had recovered about 80 per cent. of our prosperity since 1931, and I think we may, therefore, assume that we have now recovered 100 per cent. If that is the case, I should like to know why there is any objection to going back to the incidence of Income Tax on small incomes as it existed in 1931.

My hon. Friend the Member for Central Bradford (Mr. Leach) has made it very clear—as everybody must admit—that an income of £150 a year does not enable a man to live a very extravagant life. A young man as a general rule looks forward to undertaking the responsibilities of married life and household expenses, and I suggest to the Chancellor of the Exchequer that it is not sound public policy to place difficulties in the way of people with limited incomes enjoying a decent standard of living and spending as much as their incomes as possible upon purchasing power, thus making increased employment. It would be sound public policy, altogether apart from principle, that taxation should be placed upon those who are best able to bear it. From the point of view of public policy, it is all to the good to allow small incomes derived from wages and salaries to remain as free as possible from Income Tax so as to encourage employment and an increase of purchasing power. On these grounds I would ask the Chancellor of the Exchequer to make clear what are the reasons, if he has any, for resisting the new Clause.

5.15 p.m.


The last speaker has observed that he thinks I am going to ride off on the false ground on which the hon. Member who preceded him described the effect of the new Clause. I must remind the hon. Member that the onus of proof lies on those who bring forward a new Clause, and unless they can make a ease for the Clause there is no case for me to answer. I watched with certain amusement the growing discomfort of hon. Members opposite as the hon. Member for Colne Valley (Mr. Marklew) proceeded with an argument which was based upon the assumption that if it were carried the Clause would mainly affect married people. If he had taken the trouble to read the Clause he would have understood that it does not apply to married people, and that those who would be affected by it, if it were carried, would be single people. He said that the Clause required very little justification; but he gave none.

Let us see what the position really was in 1935 before I introduced the Budget. A person in receipt of an income of £125, all of which was earned, was exempt from Income Tax. He was exempt because he had a personal allowance of £100 and £25 allowance for earned income; but a person whose income of that amount was not earned but unearned, from investments, was not exempt. In the proposal which I made that year I explained that it seemed to me that the latter person had in many cases suffered hardship because his income had been reduced by reason of the fact that conversion had taken place. His income came from securities which had been paying him 5 per cent., and the yield had been reduced to a much lower figure. For that reason I proposed that the exemption should apply to all cases of income of £125, whether earned or unearned. The effect of that proposal, as embodied in the Finance Bill, did not make any difference in the case of a man whose income was earned, but it gave a certain amount of relief to the man whose income was unearned. Now, the hon. Member for Central Bradford (Mr. Leach) comes forward with a proposal to alter the figure of £125 to £150. That would apply both to earned and unearned income, and would raise in both cases the exemption limit to a limit much higher than anything which has been known in this country since the War.

What ground is there for making a proposal of that kind? I imagine that the real ground is that the hon. Member wants to outbid the proposals of the Government and to go one better. We have not only to consider one case alone, the case of the single man who has an income between £125 and £150; we have to consider the rest of the community, and in making the remissions which I have been able to make in the last two years I have thought that those with family responsibilities ought to have preference and priority in the matter of relief over those who have not such responsibilities. That has been the policy which has guided me in deciding how to distribute such relief as it was possible for me to give. The proposal in the new Clause goes directly contrary to that policy. That is my answer to the hon. Member for Dewsbury (Mr. Riley). The new Clause is going in an exactly opposite direction from that which I have thought it desirable to go.


May I remind the right hon. Gentleman that in 1930 the exemption limit of income for a single person was £135, and that it is now £125?


The amount for a married person was £225, and even with the relief that I have given this year it would be only £180. Therefore, there would be something owing to the married person in the matter of moral claim in front of the single person. A relief of the kind suggested could not be given without costing some money. We estimate that it would cost about £1,000,000. That £1,000,000 would have to be taken from somebody else, or from some other source, and as there is no other source from which I can find £1,000,000, it is impossible for me to provide the £1,000,000. Apart from that, I say quite frankly that if I had £1,000,000 to dispose of I would not dispose of it in this way, because there are ways in which the Income Tax payer could be relieved other than the way proposed.

5.20 p.m.


The Chancellor of the Exchequer said that we have to make out a case for the new Clause. I think we could make thousands of cases for it.


Give me one.


I will give one. When I got home a week last Saturday a young man came to my house and produced an Income Tax demand note. He had to pay up quickly. He was not like some of those chaps who go about the country owing £20,000 Income Tax. This lad had had the good fortune to work regularly at a pit, and his income for the first six months on which he was assessed was £82. His income, for the second six months was £75, making a total of £157. He has a father at home suffering from tuberculosis, who has not done a stroke of work for 15 years. He has also a mother and sister at home. The sister has to stay at home in order to help to clean the house and attend to things. This lad tips up—I do not know whether the right hon. Gentleman will understand that phrase—his money every week-end when he arrives home. He does not pay board of 25s. and keep the rest in his pocket. His mother gives him some pocket money.

At the end of 12 months the Chancellor of the Exchequer comes along and says, "If tha has'nt spent thy pocket money, my lad, I want 17s. 6d. of it." The lad has to help to keep the home going, and he cannot get any relief from that taxation. The Chancellor of the Exchequer says that we must give him a case. That is a case. It was not manufactured in America. It came from the Hemsworth Division. In my Division during the past two years resolutions have been passed at different places, especially since the Unemployment Assistance Board scales have been in operation, with regard to lads who have been helping to keep their fathers who, because of mechanisation in the coal mines, are too old at 40 or 45 for employment. These lads have been helping to keep their parents, and we have been asking by resolution that something should be done in these cases. I put a question about nine months ago, and the future Chancellor of the Exchequer, the hon. Member for Huddersfield (Mr. Mabane) said to me: "I have managed that for a lot of men in my constituency." I cannot manage it for any men in my constituency. We are desirous of doing something for them. This is a very small amount. It is not a dead man's Clause. The other Amendment related to Death Duty; Hon. Members were then bothering

about a man when he is dead. I am bothering about this young lad while he is living, and his father and mother. I ask the Chancellor of the Exchequer to allow the Financial Secretary to get up and say that we have made out a case.

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

The House divided: Ayes, 121; Noes, 239.

Division No. 259.] AYES. [5.25 p.m.
Adams, D. (Consett) Groves, T. E. Pethick-Lawrence, F. W.
Adams, D. M. (Poplar, S.) Hall, G. H. (Aberdare) Potts, J.
Adamson, W. M. Hall, J. H. (Whitechapel) Pritt, D. N.
Alexander, Rt. Hon. A. V. (H'Isbr.) Hardie, G. D. Quibell, D. J. K.
Anderson, F. (Whitehaven) Henderson, J. (Ardwick) Richards, R. (Wrexham)
Attlee, Rt. Hon. C. R. Henderson, T. (Tradeston) Riley, B.
Banfield, J. W. Hills, A. (Pontefract) Ritson, J.
Barnes. A. J. Hollins, A. Roberts, Rt. Hon. F. O. (W. Brom.)
Barr, J. Jagger, J. Robinson, W. A. (St. Helens)
Batey, J. Jenkins, A. (Pontypool) Rowson, G.
Bellenger, F. Jenkins, Sir W. (Neath) Sexton, T. M.
Benson, G. Johnston, Rt. Hon. T. Shinwell, E.
Bevan, A. Jones, A. C. (Shipley) Simpson, F. B.
Bromfield, W Jones, J. J. (Silvertown) Smith, Ben (Rotherhithe)
Brooke, W. Jones, Morgan (Caerphilly) Smith, E. (Stoke)
Brown, Rt. Hon. J. (S. Ayrshire) Kelly, W. T. Smith, Rt. Hon. H. B. Lees. (K'ly)
Buchanan, G. Kennedy, Rt. Hon. T. Smith, T. (Normanton)
Burke, W. A. Kirby, B. V. Sorensen, R. W.
Cape, T. Kirkwood, D. Stephen, C.
Charleton, H. C. Lansbury, Rt. Hon. G. Stewart, W. J. (H'ght'n-le-Sp'ng)
Chater, D. Lawson, J. J. Strauss, G. R. (Lambeth, N.)
Cluse, W. S. Leach, W. Taylor, R. J. (Morpeth)
Clynes, Rt. Hon. J. R. Lee, F. Thorne, W.
Compton, J Leonard, W. Thurtle, E.
Cove, W. G. Lunn, W. Tinker, J. J.
Daggar, G Macdonald, G (Ince) Viant, S. P.
Davies, D. L. (Pontypridd) McEntee, V. La T. Walker, J.
Davies, R. J. (Westhoughton) McGhee, H. G. Watson, W. McL.
Day, H. MacLaren, A. Welsh, J. C.
Dobbie, W. Maclean, N. Westwood, J.
Dunn, E. (Rother Valley) MacNeill, Weir, L. Whiteley, W.
Ede, J. C. Mainwaring, W. H. Wilkinson, Ellen
Edwards, Sir C. (Bedwellty) Marklew, E. Williams, D. (Swansea, E.)
Fletcher, Lt.-Comdr. R. T. H. Marshall, F. Williams, E. J. (Ogmore)
Frankel, D. Maxton, J. Williams, T. (Don Valley)
Gallacher, W Messer, F. Wilson, C. H. (Attercliffe)
Gardner, B. W. Montague, F. Windsor, W. (Hull, C.)
Garro Jones, G. M. Morrison, R. C. (Tottenham, N.) Woods, G. S. (Finsbury)
Greenwood, Rt. Hon. A. Muff, G.
Griffiths, G. A. (Hemsworth) Naylor, T. E. TELLERS FOR THE AYES.—
Griffiths, J (Llanelly) Paling, W. Mr. John and Mr. Mathers.
Parkinson, J. A.
Acland, Rt. Hon. Sir F. Dyke Boulton, W. W. Clarke, F. E.
Acland, R. T. D. (Barnstaple) Bowater, Col. Sir T. Vansittart Colfox, Major W. P.
Acland-Troyte, Lt.-Col. G. J. Bower, Comdr. R. T. Collins, Rt. Hon. Sir G. P.
Agnew, Lieut.-Comdr. P. G. Brass, Sir W. Colville, Lt.-Col. Rt. Hon. D. J.
Albery, Sir I. J. Briscoe, Capt. R. G. Cook, T. R. A. M. (Norfolk, N.)
Allen, Lt.-Col. J. Sandeman (B'kn'hd) Brocklebank, C. E. R. Cooke, J. D. (Hammersmith, S.)
Amery, Rt. Hon. L. C. M. S. Brown, Col. D. C. (Hexham) Cooper, Rt. Hn. A. Duff(W'st'r S.G'gs)
Anderson, Sir A. Garrett (C. of Ldn.) Brown, Rt. Hon. E. (Leith) Cooper, Rt. Hn. T. M. (E'nburgh, W.)
Anstruther Gray, W. J. Brown, Brig.-Gen. H. C. (Newbury) Crooke, J. S.
Apsley, Lord Browne, A. C. (Belfast, W.) Crookshank, Capt. H. F. C.
Aske, Sir R. W. Bull, B. B. Cross, R. H.
Astor, Visc'tess (Plymouth, Sutton) Burgin, Dr, E. L. Culverwell, C. T.
Astor, Hon. W. W. (Fulham, E.) Burton, Col. H. W. Davies, C. (Montgomery)
Balfour, G. (Hampstead) Campbell, Sir E. T. Davison, Sir W. H.
Barclay-Harvey, Sir C. M. Cartland, J. R. H. Dawson, Sir P.
Beamish, Rear-Admiral T. P. H. Cayzer, Sir H. R. (Portsmouth, S.) De Chair, S. S.
Beaumont, Hon. R. E. B. (Portsm'h) Cazalet, Thelma (Islington, E.) De la Bère, R.
Bernays, R. H. Chamberlain, Rt. Hn. N. (Edgb't'n) Denman, Hon. R. [...].
Blair, Sir R. Channon, H. Despen[...]er-Robertson, Major J. A. F.
Blindell, Sir J. Chapman, Sir S. (Edinburgh, S.) Drewe, C.
Boothby, R. J. G. Chorlton, A. E. L. Duckworth, G. A. V. (Salop)
Bossom, A. C. Christie, J. A. Duckworth. W. R. (Moss Side)
Dugdale, Major T. L. Liddall, W. S. Rothschild, J.A. de
Duggan, H. J. Lindsay, K. M. Runcieman. Rt. Hon. W
Dunglass, Lord Lloyd, G. W. Russell, A. West (Tynemouth)
Ellis, Sir G. Lyons, A. M. Russell, S. H. M.(Darwen)
Emery, J. F. Mabane, W. (Huddersfield) Salmon, Sir I.
Emmott, C. E. G. C. McCorquodale, M. S. Salt, E. W.
Emrys-Evans, P. V. MacDonald, Rt. Hn. J. R. (Scot. U.) Samuel, Sir A. M. (Farnham)
Entwistle, C. F. MacDonald, Rt. Hon. M. (Ross) Samuel, M. R. A. (Putney)
Evans, Capt. A. (Cardiff, S.) Macdonald, Capt. P. (Isle of Wight) Scott, Lord William
Evans, D. O. (Cardigan) McEwen, Capt. J. H. F. Seely Sir H. M.
Everard, W. L. McKie, J. H. Selley, H. R.
Findlay, Sir E. Macnamara, Capt. J. R. J. Shaw, Major P. S. (Wavertree)
Fox, Sir G. W. G. Magnay, T. Shaw, Captain W. T. (Forfar)
Fremantle, Sir F. E. Maitland, A. Shepperson, Sir E. W.
Furness, S. N. Makins, Brig.-Gen. E. Simon, Rt. Hon. Sir J. A.
Goldie, N. B. Mander, G. le M. Sinclair, Rt. Hon. Sir A. (C'thn's)
Goodman, Col. A. W. Manningham-Buller, Sir M. Sinclair, Col. T. (Queen's U. B'If'st)
Gower, Sir R. V. Margesson, Capt. Rt. Hon. H. D. R. Smiles, Lieut.-Colonel Sir W. D.
Graham Captain A. C. (Wirral) Markham, S. F. Smith, L. W. (Hallam)
Gretton, Col. Rt. Hon. J. Mason, Lt.-Col. Hon. G. K. M. Smithers, Sir W.
Griffith, F. Kingsley (M'ddl'sbro, W.) Mayhew, Lt.-Col. J. Somervell, Sir D. B. (Crewe)
Grimston, R. V. Meller, Sir R. J. (Mitcham) Somerville, A. A. (Windsor)
Gritten, W. G. Howard Mellor, Sir J. S. P. (Tamworth) Southby, Comdr. A. R. J.
Guest, Hon. I. (Brecon and Radnor) Mills, Sir F. (Layton, E.) Spears, Brig.-Gen, E. L.
Guest, Maj. Hon. O.(C'mb'rw'll, N.W.) Mills, Major J. D. (New Forest) Spens, W. P.
Gunston, Capt. D. W. Mitchell, Sir W. Lane (Streatham) Storey, S.
Guy, J. C. M. Morris-Jones, Dr. J. H. Stourton, Major Hon. J. J.
Hamilton, Sir G. C. Morrison, G. A. (Scottish Univ's.) Strauss, E. A. (Southwark, N.)
Hannah, I. C. Morrison, W. S. (Cirencester) Strauss, H. G. (Norwich)
Hannon, Sir P. J. H. Muirhead, Lt.-Col. A. J. Strickland, Captain W. F.
Harbord, A. Munro, P. Stuart, Hon. J. (Moray and Nalrn}
Haslam, Sir J. (Bolton) Neven-Spence, Maj. B. H. H. Sutcliffe, H.
Hepburn, P. G. T. Buchan. Nicolson, Hon. H. G. Tasker, Sir R. I.
Hills, Major Rt. Hon. J. W. (Ripon) O'Neill, Major Rt. Hon. Sir Hugh Tate, Mavis C.
Holdsworth, H. Orr-Ewing, I. L. Taylor, Vice-Adm. E. A. (Padd., S.)
Holmes, J. S. Palmer, G. E. H. Thomas, J. P. L. (Hereford)
Hope, Captain Hon. A. O. J. Patrick, C. M. Titchfield, Marquess of
Hopkinson, A. Peat, C. U. Touche, G. C.
Horne, Rt. Hon. Sir R. S. Penny, Sir G. Tree, A. R. L. F.
Howitt, Dr. A. B. Percy, Rt. Hon. Lord E. Turton, R. H.
Hudson, Capt. A. U. M. (Hack., N.) Perkins, W. R. D. Ward, Lieut.-Col. Sir A. L. (Hull)
Hudson, R. S. (Southport) Petherick, M. Ward, Irene (Wallsend)
Hunter, T. Pickthorn, K. W. M. Warrender, Sir V.
Hurd, Sir P. A. Pllkington, R. Waterhouse, Captain C.
Jarvis, Sir J. J. Plugge, L. F. Wells, S. R.
Jones, H. Haydn (Merioneth) Purbrick, R. White, H. Graham
Jones, L. (Swansea, W.) Radford, E. A. Wickham, Lt.-Col. E. T. R.
Keeling, E. H. Ramsay, Captain A. H. M. Williams, C. (Torquay)
Kerr, H. W. (Oldham) Ramsden, Sir E. Williams, H. G. (Croydon, S.)
Kimball, L. Rathbone, J. R. (Bodmin) Willoughby de Eresby, Lord
Kirkpatrick, W. M. Rawson, Sir Cooper Wilson. Lt.-Col. Sir A. T. (Hitchin)
Lamb, Sir J. Q. Rayner, Major R. H. Windsor-Clive, Lieut.-Colonel G.
Latham, Sir P. Reed, A. C. (Exeter) Withers, Sir J. J.
Law, Sir A. J. (High Peak) Reid, Sir D. D. (Down) Wolmer, Rt. Hon. Viscount
Law, R. K. (Hull, S.W.) Remer, J. R. Wood, Rt. Hon. Sir Kingsley
Leckie, J. A. Rickards, G. W. (Skipton)
Leech, Dr. J. W. Robinson, J. R. (Blackpool) TELLERS FOR THE NOES.—
Lees-Jones, J. Ropner, Colonel L. Major Sir George Davies and
Lewis, O. Ross Taylor, W. (Woodbridge) Lieut.-Colonel Liewellin.

NEW CLAUSE.—(Amendment to 25 and 26 Geo. V., c. 24, s. 4.)

Notwithstanding anything in subsection (1) of section four of the Finance Act, 1935, tower wagons used for the repair of overhead electric trolley wires shall, on and after the first day of July, nineteen hundred and thirty-six, pay a duty of excise in respect of their horse-power and not in respect of their weight.—[Mr. H. G. Williams.]

Brought up, and read the First time.

5.34 p.m.


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

The point involved here I also raised in the Committee stage, when we were considering what is now Clause 10 of the Bill. Under that Clause certain classes of vehicles are exempted entirely from duty on the ground that they exist for the purpose of conveying machinery necessary for the making or repairing of roads. In connection with the tramway system there are machines which are used to grind the tram rails in order to eliminate the corrugation which is the cause of so much noise. I understand that a machine is exempt from duty under Clause 10 if it is used for the maintenance and repair of roads, and I suggest that the maintenance of overhead trolley wires is just as much a traffic matter as the machines which are exempt under Clause 10. But under Clause 10 tower wagons which are used for the repair of overhead electric trolley wires are subject to duties which are really oppressively high, having regard to the fact that the distances they travel are relatively small, because they have to remain at rest whilst men standing on the insulated towers are engaged in the repair of the overhead wires.

From investigations I have made I think it is hardly possible to ask that they should be totally exempt in the same way as other vehicles under Clause 10, but I have made an alternative proposition that instead of being taxed on weight they should be taxed on horse-power, which is relatively small because they do not travel at high speeds. In existing circumstances they are taxed oppressively high, and there is a. strong case for some adjustment. In the last two Finance Acts a number of adjustments have been made in regard to exceptional vehicles whose primary purpose is not really that of a vehicle but the carriage of machinery. The Minister of Transport has already corrected some anomalies, but others still exist and this is one, and I hope that the Parliamentary Secretary will be able to give this proposal favourable consideration. If he cannot exempt these vehicles altogether I hope he will give some undertaking that the position will be reviewed between now and next year, so that we can do away with some of the stupid anomalies which now exist.


I beg to second the Motion.

5.38 p.m.


As the hon. Member for South Croydon (Mr. H. G. Williams) has said, this is a rather complicated matter. It seeks to make an exception from a Section which was put into the Finance Act of last year by virtue of which tower wagons became chargeable for duty on the basis of their unladen weight, whereas before they were chargeable on the basis of horse-power. The result in their case is that they have had to pay a substantial increase in taxation. Tower wagons usually weigh about 3½ tons unladen weight, and under the existing law they would be assessed for duty at £50, to which would be added a £15 duty if they were drawing a trailer.

I understand that they usually draw a trailer, which carries the electric cable. That is, a total duty of £65, whereas in the old days, if they were 24 horse-power, they would pay a duty of only £18 and would not be liable to trailer duty. That is the case which is put forward by the hon. Member. But I would ask the House to consider why the Section was passed in the Finance Act of last year.

The position then was that vehicles which carried nothing but fixed machinery were taxed on horse power, whereas other vehicles, almost exactly the same in character, on which the machinery was not fixed, were taxed on unladen weight. At that time pressure was being put upon the Ministry to alter this anomaly and put all these vehicles, which are in effect of the same class, on the same basis of taxation. Under the Finance Act of last year they are now all taxed exactly the same, on their unladen weight. Some have benefited by the alteration and naturally we have not heard very much from them. Others have not benefited, and asked for an exemption to be made in their case. We always have great sympathy with any cases of alleged hardship, but in looking into this matter with the greatest care I really do not think that I can ask the House to accept this new Clause so soon after the alteration which was made last year to deal with an anomaly, and create yet another anomaly. I do not think we can be expected to do this by a new Clause moved on the Report stage of the Finance Bill. If we agree to this concession we are bound to have a large number of other requests for special consideration. The hon. Member for South Croydon was wrong when he said that the machines used for grinding the rails of tramways were in a special category. They are not: they are taxed.


They come under Clause 10 of the Bill.

Captain HUDSON

Clause 10 says that machines made for the construction of roads shall not be taxed at all. I understand that they do not come under that Clause. If we accept this proposal we shall be asked to deal with vehicles which are used for the repair of overhead lamps. If these vehicles are to have special consideration because they are necessary for the rapid repair of these wires, then you will have to consider those vehicles which are used in ever-increasing numbers on our roads to deal with mechanical breakdowns. For these reasons I must ask the House not to accept the new Clause. I hope the hon. Member will withdraw it. We certainly cannot accept it in its present form, but I can assure him that we shall watch carefully the incidence of taxation on special types of vehicles, of which this is one.

5.45 p.m.


I rise only because of the last remark made by the Parliamentary Secretary, which appeared to give some prospect that he would accept this new Clause at some future time. I can see no reason why he should look upon it so favourably. It is one of a series of proposals coming from the other side which appear to be designed to give relief to some deserving cause. First there was the case of road construction vehicles, now there is the case which the hon. Member for South Croydon (Mr. H. G. Williams) has brought forward, and previously there was the question of relief for invalid chairs. On the face of them, these proposals seem designed to give some relief in worthy cases, but if one examines them a little further, one sees that they are not really designed to give relief to the users, but to give greater profit to the manufacturers. I am very much afraid that in a great many cases the pleas which are put forward by the other side are designed really to reduce the selling price and consequently increase the turnover of the manufacturers of the articles in question.

It is certainly very interesting to observe the sympathetic response which pleas of this nature obtain from the Front Bench, and the different attitude which is adopted towards the creation of new anomalies. I notice that whenever we on this side propose a new Clause or an Amendment the effect of which would be the giving of definite relief to a large number of people, the Chancellor of the Exchequer says that he cannot possibly increase the number of anomalies and that for every anomaly he removes he creates new ones. That argument may have some substance in it, and it has particular substance in the case under discussion, because the proposal of the hon. Member for South Croydon is designed to remove an anomaly which was itself created as a result of a previous anomaly being removed last year at the behest of the hon. Gentleman and his friends. I trust that the Treasury will apply the same principles when the removal of anomalies is designed really to give a substantial amount of relief to users as they would apply when the removal of anomalies is designed to give increased profit—if I may say that quite inoffensively—to manufacturers. I trust that the Parliamentary Secretary will not accept the new Clause.


Is the hon. Member speaking now against the anomaly being removed for borough councils and county councils?


I had concluded my remarks, but I am glad to be able to give an answer to the hon. Member. If anomalies are to be removed at the expense of the Treasury, I can conceive of directions in which they could be far more usefully removed than in this case. Here there is concerned a very wealthy body which can well afford to pay the small amount of taxation which is involved. If the hon. Member wishes to give encouragement to local authorities in the construction of roads and so on, he will have to approach the Chancellor of the Exchequer with a much bigger proposal and a much bigger plea in relation to the Road Fund, instead of absorbing the time of the House on a matter which, when one considers the scale of expenditure of local authorities, is a minute one, but which, on the scale of the turnover of a firm manufacturing this particular kind of vehicle, is a big one.

5.50 p.m.


I should like to make a few brief observations and then to ask leave to withdraw the Motion. I think the hon. Member for North Aberdeen (Mr. Garro Jones) is under some misapprehension. The people principally concerned by this Amendment are, in fact, the local authorities; and they are, in any event, all public utility bodies engaged in maintaining public services. The general principle underlying the taxation of road vehicles is to attempt to tax them to some extent in proportion to the use they make of the roads. The vehicles in question are, in fact, part of the repair machinery. Trams are re- paired in the tram sheds, but overhead wires can only be repaired on the spot, and the mechanical construction used for repairing them is transported on four wheels. If an ordinary step ladder were erected temporarily in the street, there would not be any tax on it.

I can see that my hon. Friend is rather disappointed that certain other Amendments have not been accepted. His implication that there is some vested interest of manufacturers behind this new Clause is based on a complete misunderstanding of the situation, and I think it shows that he had not read the Clause before making his speech. I am very encouraged by the remarks of the Parliamentary Secretary, because I think I am fairly interpreting what he said when I say that he has really promised to look into all these rather complicated anomalies between now and next year. In view of the difficulties to which the new Clause would give rise, and as there is no chance of carrying it in any event, I beg leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Issue of licence for a new vehicle to replace an existing vehicle.)

If the holder of a licence under Section thirteen of the Finance Act, 1920, in respect of a mechanically-propelled vehicle makes application for a licence for a period of not less than three months commencing at the expiration of the first-mentioned licence in respect of another such vehicle not previously licensed paying the appropriate rate of licence duty, and satisfies the licensing authority that he will use the last-mentioned vehicle in substitution for the first-mentioned vehicle and not in addition thereto, the licensing authority may, on the surrender of the first-mentioned licence, issue to the said holder a new licence for the period stated in the application, and such new licence shall entitle him to continue to use the first-mentioned vehicle during a period of not more than seven days before and seven after the expiration of the first-mentioned licence and, during that period, to transfer the new licence to the vehicle not previously licensed, and to continue to use that vehicle so long as such new licence is in force.—[Lieut.-Colonel Sandeman Allen.]

Brought up, and read the First time.

5.52 p.m.


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

The object of this new Clause is to facilitate matters for the convenience of traders in general. I know that taxation has to be raised, but I feel that the convenience of traders should be considered. All we ask in the new Clause is that the licence on the old vehicle may be transferred to the new vehicle without any delay and without any additional expense. The delivery of the new vehicle should not depend upon the time the licence expires. At the present time the vehicle comes out of the works, and in some cases it has to be held up for three weeks until the old licence has expired, or the old licence has to be surrendered at considerable unnecessary expense to the owner. For instance, if the delivery of the new vehicle takes place immediately after the licence is renewed for a short period, the owner has either to continue operating the old vehicle or has to surrender the licence and reclaim the value of it. That does not seem to be in the interests of trade, and for that reason this anomaly ought to be remedied.

I know of one case of four vehicles where the tax is £160 for each. The owner either had to wait three weeks at a cost of £3 per vehicle per week, or he had to use the old lorries until the new ones were delivered. In another case of which I know personally, it is a question of replacing the licences of the commercial travellers' cars every year. When the firm gets delivery of the two dozen vehicles in question it has to call its commercial travellers from all over the country either to the works of the firm or to the works of the motor company which is delivering the vehicles on 31st December, so that the old vehicles can be handed over and new vehicles, newly licensed, obtained on 1st January. That throws out of gear the whole system on which the firm works, and it seems to me, as I hope it will seem to the House, to be absolutely unnecessary. The Ministry would be involved in little trouble if it enabled the licence of the old vehicle to be transferred without cost to the new vehicle. I trust I have made the ease clear to the House, and I hope the Minister will see his way to accept the new Clause.

5.55 p.m.


I beg to second the Motion.

The principle of taxation on road vehicles has now reached the stage at which it is accepted as inevitable, but in the case of the particular anomaly with which we are trying to deal, the person concerned is being taxed twice. During the overlapping period between the expiry of his old licence and the introduction of the new vehicle, he pays double tax, although he is using only one vehicle. I think the proposition which we make is a businesslike one. It is that a man licensed to run a vehicle shall be able to run his vehicle continuously, and that after the old vehicle goes out of work, he may pass the licence on to the new vehicle. I think this is a reasonable Amendment. I do not wish to give any ideas to the House, but the objection which may be raised is naturally of an administrative nature. I do not think the Chancellor would ask for a double licence to be running at one and the same time owing to circumstances over which the licensee has no control. He may say that the new Clause would cause administrative expenses, but I do not think that would be an insuperable difficulty. It is a concession which would be very greatly appreciated by what I suppose is now the largest industry, or one of the largest industries, in the country, the transport industry. If the Parliamentary Secretary could see his way to make this concession, it would be greatly appreciated by the men who do this road transport work, which is so necessary to our modern life.

5.57 p.m.

Captain HUDSON

This new Clause, in effect, provides that when a new vehicle which is licensed for the first time is substituted for an old vehicle, the licence of which is about to expire, the licence for the new vehicle may be used on the old vehicle for seven days before and seven days after the time of expiry of the licence of the old vehicle. It is a little complicated, and I thought that in the speech of the Mover there seemed to be some doubt as to whether the old licence would be transferred to the new vehicle or the new licence transferred to the old one. So far as I understand the Clause, it is the new licence which would be transferred to the old vehicle for seven days before and seven days after the expiry of the old licence.


On the surrender of the old licence a new licence is granted, and it would be on that new licence that the man would run his old vehicle, pending the time which might elapse before the delivery of the new vehicle which is expected. One cannot tell to an exact day when he will get the new vehicle, but if he is able to run his old vehicle, after surrendering his old licence, on the new licence until the new vehicle is delivered, there would be continuity of service.

Captain HUDSON

In that case I was right. It is the transfer of the new licence to the old vehicle. I would point out incidentally that there is no question here of enabling a man simultaneously to use both the old and the new vehicles, but there is one outstanding objection to the new Clause, and it is that it cuts right across one of the fundamental principles on which our motor licensing system is founded, namely, that each licence is issued for a particular vehicle and cannot be transferred to another vehicle. I think that principle must be retained. I am afraid that if we altered the system, even in the way suggested here, we should have very great difficulty in detecting frauds, and that the door might be open to the possibility of very serious abuses. As it is, with our licensing system it is sometimes difficult to check that every vehicle is properly licensed and that the licence is current and has not run out.

I understood that this new Clause was intended to deal mainly with commercial travellers, but I hope my hon. and gallant Friend will realise that we could not confine it to any class of persons. If we made the concession at all, we should have to make it for every motorist who wished to avail himself of the new facility. It would, I am informed, add considerably to the expenses of the licensing authorities and also to the expenses of the police in checking the issue and the proper use of licences.

There is one other objection arising out of the wording of the new Clause. It makes no provision for financial adjustment in the event of the duty payable on the new vehicle being less than the duty on the old vehicle. In other words, if by any chance a person came on evil times and had to give up a Rolls Royce for an Austin Seven, he would pay the same amount of tax. Some adjustment would certainly be necessary in that respect. In our opinion the administrative difficulties in this case outweigh the advantages of the proposed system, and while I have considerable sympathy with the object of my hon. Friends, their proposal cuts right across our complicated motor licensing system and I must ask the House to reject the Clause.


I would only ask the Minister to consider that there may be other ways of killing a dog besides hanging him, and to suggest that it might be possible to find some way out of this difficulty, which is a very real one in the case of goods and passenger vehicles.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Amendment of s. 60 (2) of Finance (1909–10) Act, 1910.)

Sub-section (2) of section sixty of the Finance 1909–10) Act, 1910, shall have effect as if at the end of the proviso there were added the words "and provided also that, in the case of real property where it is shown to the satisfaction of the commissioners that the whole property could not be realised at reasonable and prudent prices if placed on the market at one and the same time, the commissioners shall, in estimating the principal value of such property, include no more than the present value of any deferred market prices.—[Brigadier-General Clifton Brown.]

Brought up, and read the First time.

6.3 p.m.

Brigadier-General CLIFTON BROWN

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

After the long debate we have already had on this question I do not propose to weary the House by going into the details of the matter again. The proposal of the new Clause is a comparatively small one. It is intended to amend Section 60 of the Finance Act of 1910 in relation to the valuation of property for Estate Duty. According to that Section, the principal value for Death Duties is the market price at the time of the death of the deceased, and no reduction in the estimate is allowed because the property is assumed to be put on the market at one and the same time. In the case of a large estate it would be impossible to sell the whole in one day; not only, however, is no reduction in value allowed, but interest is charged in addition if payment is made by yearly instalments. The object of the Clause is to provide in such a case for discounting the prices which could not in practice be realised except over a number of years. Farms and estates have had to be sold in some instances to realise Death Duties and in some cases they have not fetched sufficient money to meet the duties. It costs a great deal of money to sell even a comparatively small estate. There are advertisements, auctioneers' expenses and so forth, but the value has been fixed and those expenses come out afterwards. We feel that the suggested Amendment of the Act of 1910 would meet contingencies which are bound to arise in those cases where an estate cannot all be sold in one day. We think it would be fairer to all concerned and make the collection of the duty easier. It is a relatively small point but it would give a certain relief to agricultural estates.

Lieut.-Colonel ACLAND-TROYTE

I beg to second the Motion.

6.5 p.m.


This new Clause raises a very technical accounting matter, really a valuation matter, which could be more adequately discussed, I think, by a few expert Members than in a Debate across the Floor of the House. We find ourselves unable to accept the proposal because it would introduce a complication into the existing system of valuation for Estate Duty purposes and would not achieve the purpose which my hon. and gallant Friend has in mind. The value of property for Estate Duty purposes is fixed on a system which is known as the open market value system, that is to say, the value is fixed on an estimate of what would be paid for the property in the open market by a willing buyer, assuming that there was a willing seller. There are, however, two different sorts of property involving different methods of valuation. You may have what is called a developed property or you may have an undeveloped property. If you are dealing with undeveloped property, in making a valuation at the time of death you have to take into account the present value and also the future value of the land as developed. You have to value an expectation. That land may be fully developed some years hence and you have to consider what is the present value of that chance of development. When we come to developed property, including agricultural land—property developed to its full use—the ordinary method adopted is to capitalise the rents and profits arising from the land.

This new Clause is directed to one problem. It sometimes happens that when a big estate, such as an agricultural estate, has to be valued, it is found difficult to realise the open market value of such a large block of land all going into the market at once. It is obvious that the larger the amount of land the more restricted the market becomes. The principle adopted by valuers in those cases, and indeed the principle that has been laid down by the courts, is to divide the estate into suitable lots, to take each lot separately and try to assess the value of each lot and then take an aggregate of all those lots. I gather that the new Clause does not dispute that system. What my hon. and gallant Friend says, in effect, is that some lots might not be saleable for some years, and he wants the market value to be discounted by that adverse factor. The difficulty is that he proposes to put on the Statute Book in this connection one factor only of such a valuation, without taking into account the other side of the medal. If you took into account the fact that some of these lots cannot be realised for some years, you would also have to take into account this question: What are you to do with the profits and rents arising from them? To put on the Statute Book a fragment, as it were, or one condition only, to be taken into consideration in these valuations would be a lop-sided arrangement.

Brigadier-General BROWN

The new Clause says "where it is shown to the satisfaction of the commissioners." It would be entirely in their hands.


It would be equally difficult. You would be leaving to future valuers, in a statute, a definition of the considerations which they were to take into account in these cases, and it would be a partial definition. I suggest that if my hon. and gallant Friend and those associated with him have any particular cases in which they think the valuation has not been properly made or has not taken into account all factors that should fairly be taken into account, he might communicate with my right hon. Friend or myself or with the Board of Inland Revenue, and if there is any real grievance it will be considered. I suggest that the way to deal with this matter is rather by a discussion of that sort and not by putting on the Statute Book a partial definition of the considerations to be adopted.

6.10 p.m.


No grave problem is raised by the difficulty of selling an estate immediately. It is not a unique difficulty. It is always difficult to find an immediate purchaser for any property of that kind which comes into the market and that does not apply to agricultural land only but to other property as well. The normal and customary thing is for the valuer to make what, may be called a theoretical valuation on the basis of the price which would be reached between two hypothetical persons, the willing buyer and the willing seller. All probate valuations are made in that way. But the wording of this new Clause is nonsense, because the valuer is instructed to include "no more than the present value of any deferred market prices." What on earth does that mean? It is perfectly simple to calculate the present value of a deferred price if you know the number of years for which it is deferred. You have only to turn up Inwood's tables and you can readily see that if the present value is so much 10 years hence it will be so much. But here there is no period of time at all and obviously no period could be agreed upon, because one property might never be sold and another property, if split up, might be saleable over a period of 10 years. There can be no criterion as to when property will sell, and therefore this vague phrase about deferred market price would make nonsense of the Clause.

6.13 p.m.


I am inclined to agree with the Financial Secretary that it would not be possible for the hon. and gallant Member to attain what he wants by this new Clause. When it comes to a valuation for probate the Government valuer and the private valuer for the vendors or executors meet, and discuss a suitable value to be fixed for probate. My experience is that, generally speaking, the probate valuation is not on the excessive side. Naturally, the Government always try to get as much as they can, but the valuer acting for the executors or the vendors consults with the Government valuer and they generally agree on a figure satisfactory to both sides. In the case of an estate which is to be sold at some future date I believe the Government valuer is always prepared to accept that price, when it is realised, as the probate valuation, and I think the hon. and gallant Gentleman will find that he is better suited by the existing circumstances than he would be if this new Clause were carried.

Brigadier-General BROWN

In view of what the hon. Gentleman and the Financial Secretary to the Treasury have said, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

CLAUSE 1.—(Increased Customs Duties on tea.)

6.15 p.m.


I beg to move, in Page 2, line 1, to leave out "increased."

In previous Debates on the Tea Duty many sound and cogent reasons have been adduced by hon. Members on this side of the House against its imposition. It is not my intention to repeat them, as evidently, so far as I can judge, they have had no effect. In fact, his reply seemed to indicate that he was determined to maintain the role of the Iron Chancellor and to make us no concessions whatever in that direction. At the same time I should like to make some comment on the reasons which he gave for the increase. He said: The arguments which have been addressed to me by hon. Members opposite are not likely to weigh with me, because they take no account at all of the reason I have given for imposing the tax."—[OFFICIAL REPORT, 27th April, 1936; col. 604, Vol. 311.] A few moments later on he added that he was looking for one that people would feel, because he thought everyone should make some contribution towards the Government's rearmament programme. I wonder whether he really thinks it is necessary that the working-class folk of this country should have some tax specified in order to remind them of the sacrifices which they have to make towards the armament of their country. I should imagine that in the homes of the ordinary folk, on the walls of many a humble dwelling, already there is sufficient reminder of the sacrifices that have been made by the people of this country in its defence, without having some tax specified for that purpose. But what the Chancellor really means is not that he wants people to realise that they have to contribute to the defence of their country, but that he wants them to feel it still more acutely than they do now. I wonder whether he imagines that the working-class woman, for instance, will fail to appreciate, when she purchases her pound of tea every week and finds that she pays an increase of 2d. or more per lb., that she is making her sacrifice to the piling up of armaments. In another sense I think we might say that the necessity for this increase in taxation, and especially in view of the purpose to which the right hon. Gentleman has dedicated it, may be said to arise directly from the foreign policy of the present Government.

There is one other peculiarity about the Chancellor's proposal. In specifying the purpose of the tax, he seems to have adopted a new method by allocating it to a special object. I am rather inclined to invite him to extend that practice in future Budgets. It would be all to the good that the democracy of this country should know exactly what it pays for armaments and the precise taxes which it pays for that purpose. The right hon. Gentleman said again that the denunciations from this side of the House were chiefly responsible for the irritation which the tax may cause, and that if it were not for our denunciations, that irritation would speedily disappear. Quite so. The Chancellor carefully chose his ground. He imposed a tax which, in his opinion, was so slight that he hoped it might be easily forgotten, but surely that clashes with his other desire that it shall be remembered and felt. It will be the duty of those of us on these benches to see that the people of this country do remember, not only the increase of the tax, but the reason why it is increased.

The right hon. Gentleman said, in reply to an intervention by my right hon. Friend the Member for Hillsborough (Mr. A. V. Alexander), that tea is not a commodity produced in this country. That is true. It never has been, and in its nature it never can be. All the same, for a very long period of time it has been an article of working-class consumption in this country, and one of very great magnitude. I do not doubt for a moment that in the financial atmosphere in which the right hon. Gentleman exists an increase of 2d. a lb. on tea will pass entirely unnoticed. Folk living in that rarified atmosphere have the opportunity of access to stimulants of a more expensive nature than the humble beverage of ten, but in the class to which I happen to belong tea is perhaps the main, if not almost the sole, stimulus of large numbers of working-class people, and I would ask the right hon. Gentleman to remember that in millions of working-class homes, where the women are accustomed to the long domestic drudgery which is characteristic of those homes, time After time during the day they need stimulant. I do not intend to refer to the pathetic case, so often quoted, of the old lady living on her weekly pension of 10s., but as a stimulant tea plays a prominent part in the lives of the workers, of the men in the factory, in the workshop, or on the open road as well as of the women. When their labour power becomes jaded and less effective, they turn to tea as a stimulant in order to reinforce their receding energies.

Although the Chancellor was careful to point out how slight was the effect of this tax, I think we on this side are entitled to remind him that, after all, it is not the effect of one tax that counts; it is the cumulative effect of the many increases in the cost of food which have been brought about by the fiscal policy of the Government that counts. I appeal to the right hon. Gentleman to forgo this small increase of £3,500,000 in his revenue for the ensuing year. I imagine that there are plenty of other sources from which he could gather that comparatively small amount without any difficulty whatever, and although I very much fear that it is impossible that we shall be able to soften his heart in order either to forgo this increase or to give us a reduction in the duty, to which we think we are equally entitled, at the same time we are compelled to make this appeal to him on behalf of the class to which we belong.

6.25 p.m.


I beg to second the Amendment.

On many occasions Members of this House rise full of optimism and expectation in putting forward Amendments to the Finance Bill, but I fear that there is little prospect of any concession being made in regard to tea, though neverthe- less we have to ask for it. It is one of the most difficult things for a Member of Parliament to think out any new and original reasons to urge either for or against this duty, and indeed the distinction on this occasion has fallen to the Chancellor of the Exchequer, who thought out a. new reason, to me at any rate, and I have listened to Debates on Finance Bills in this House for nearly 10 years. The Chancellor, in putting forward this proposal, said he was putting the additional tax on tea in order to convince people of the gravity of the position of this country, lest they should fail to realise it. That was certainly, to me, a new and original reason and one which I hope the right hon. Gentleman will not repeat, because it has fallen rather flat. People scarcely appreciate the idea of old age pensioners, who drink tea three or four times a day because they cannot afford anything more expensive, being told by the Chancellor of the Exchequer that they have to pay for their share in the additional defences of the country.

I leave the Chancellor with the unenviable task of trying to think out an original reply to the Amendment, but I will draw his attention to the fact that the Labour party annual conferences have a very excellent system of transacting their business, whereby resolutions that are regarded as hardy annuals, once they have been disposed of, are not allowed to appear on the agenda again for three years. While, of course, it would appear to be heresy on the part of a Member of the Opposition to put forward such a suggestion, and while it would come better from me if I were sitting on the Government side of the House, at the same time it seems to me that we might in future, in view of the fact that the whole of the arguments for and against the Tea Duty have been exhausted long ago, come to some arrangement, through the usual channels—I believe that that is the way to put it—that the Tea Duty should in future be taken as read.

6.27 p.m.


In spite of the suggestion of the hon. Member for North Tottenham (Mr. R. C. Morrison), I should like to say a word or two about this duty, although my remarks will be very brief. It is rather difficult to tackle the Chancellor of the Exchequer on this particular tax. In the ordinary way, when one is attempting to resist an increase of taxation, one approaches the right hon. Gentleman and tries to point out that it will be felt, that it will be a burden on certain sections of the community, but it is no good saying that to the right hon. Gentleman on this occasion, because he says, "I know it will; that is why I put it on." Really, when a Chancellor of the Exchequer is in that mood, one has to approach him from a different standpoint. All the same I desire to make the point still, that this, as a household tax coming home to the lives of the people, is one that should have been avoided if possible and should not have been put on merely for the sake of gratifying the impulses of the Chancellor of the Exchequer to make people feel as widely as possible the burden of the armament programme. I think this burden, and the nature of armaments as in their essence a burden, will be realised by the people of this country in any event, without any artificial means of this kind, and I should have thought the Chancellor of the Exchequer, if he desired to commend the rearmament programme of his Government to the country, would have taken steps to ameliorate its burden and to recommend it to the people rather than make it as burdensome as possible.

The point that I wanted particularly to draw to the attention of the right hon. Gentleman is that he is, after all, the reformer of the fiscal system of this country, the carrier-out of the great programme of his father, and though I will not attempt to argue the merits of the whole protective system, I am only arguing it as it affects this particular kind of tax. We were always led to believe that once we had a general system of protection where indirect taxes would come under the protective duties, the purely revenue taxes on goods which were not produced in this country would come off. That was one of the advantages that were held out to us. Therefore, I should have thought that the right hon. Gentleman, in justice to his own policy, to his ancestral policy, would have endeavoured to justify, as far as he could, the benefits that had always been claimed for it. Instead of that, we find that we are having all the taxes at once. 'We are having the protective taxes' and the indirect taxes, and the benefits do not accrue. Therefore, I should have thought that the right hon. Gentleman would have been reluctant to impose this particular increase, which is not only a, hardship in a great many directions, but is contrary to his own inherited fiscal policy.

6.31 p.m.


The hon. Member for North Tottenham (Mr. R. C. Morrison) made a most disarming speech in support of the Amendment and one which has found response in many bosoms on this side, certainly in that of the Chancellor of the Exchequer. Discussion on the Tea Duty, whether there are any alterations or not, have been a regular feature of the Debates on the Finance Bill for many years, and I do not think that there is anything that can be said on that side of the House or on this that has not already been said. I do not propose to repeat what I have said in the Debates on the Budget Resolution and on the Committee stage of this Bill, and I only wish to refer briefly to the new reason which the hon. Member said I had introduced. I am not prepared to accept the description of my reason given by the hon. Member for West Middlesbrough (Mr. K. Griffith), nor is it my purpose to go into the issue he raised with regard to fiscal changes.

My purpose in introducing this particular tax, as I have said before, was not to alarm people or to punish them, but because I do not think that it is right that the country should be involved in very large expenditure, no matter what it is, whether on armaments or on anything else, and that one section of the people should feel that, although they are going to share in whatever benefits may be derived from that expenditure, they should have no part in paying for it. That is not the proper way in which to treat the people of this country. It is a wrong principle. I think that people are prepared to accept the view that the defence of the country is not the business of one section of the population. We do not expect everybody to contribute alike, of course, but everybody has to contribute according to means.

When hon. Members say that it is all very well for the Chancellor because he does not notice the tax on tea. Perhaps he does not, but he notices the Income Tax. The hon. Member who moved the Amendment forgot to mention that out of the £15,500,000 of new taxation which is being raised only £3,500,000 is coming out of tea, although that is being paid by a vastly larger number of people than will contribute the remainder, which comes out of Income Tax. I have had to try to devise my new taxation so that everybody should pay some of it, but that the contributions of particular sections should be roughly proportionate to their capacity. I may not have succeeded, but that has been my endeavour. That is the principle on which I have gone, and it is the principle by which I stand.

6.36 p.m.


If I understood the Chancellor of the Exchequer aright, his new argument in support of this tax was that with the increased prosperity that will come to the country as a result of the armaments programme, those who shared in it should share in helping to pay for it. Anybody who derives benefit from the increased armaments programme, however, is not going to spend it on tea. Those who derive no benefit will still have to spend the same amount on tea, because it is one of those commodities on which most people spend on equal amount of money whether they are prosperous or unprosperous. If anybody finds that the armaments programme is bringing them a profit of an extra £1 or £100 a week, they will not increase their consumption of tea. They will spend the money on something else, and it is the luxuries on which they will spend their money that the Chancellor, if he wished to act on a sound principle, would put the increased taxation. MY hon. Friend said that there were no new arguments, but that does not alter the fact that all the old arguments against a tax on tea remain valid.

I was in some ways pleased to hear the Chancellor of the Exchequer say that he did not propose to repeat the arguments which he had already used, because some of the arguments he has used are entirely fallacious. For example, he has repeatedly given us a computation based on the total consumption of tea in this country; he has put 2d. per 1b. on to that consumption, and has offered the House the argument that that is the total amount of burden which will be borne by tea consumers. I rose on one of the occasions on which he made that assertion and pointed out that the consumers will not have to bear merely the 2d. a 1b. which he is putting on tea. There is also the percentage profit put on in the commodity market, the percentage profit put on by the wholesaler, and the percentage profit put on by the retailer. I have seen invoices charged to a large wholesale tea merchant for tea bought direct from the plantation. I have seen his costs put on, including the Customs duty, and 100 per cent. is put on to that amount by the time the retail price is arrived at. When, therefore, the Chancellor offers us 2d. as the amount of the burden that would be borne by the consumers, he is 50 per cent. too low.

I ask the 'Chancellor to be good enough to make it clear that in giving this computation he was giving the House an erroneous argument. He obtained a considerable amount of applause for it when he first gave it, and he repeated it on a subsequent occasion. regret to say that the Financial Secretary to the Treasury repeated it, although it had been refuted. I know that the Chancellor of the Exchequer is a man of purpose and that once he gets an idea into his head it is difficult to disabuse his mind of it. If the purpose were good, it would be a matter on which his colleagues could congratulate him, but unfortunately his purpose is nearly always bad. In this case his argument is bad, and yet he sticks to it and is not willing to listen to its refutation, and I doubt whether he will get up and withdraw it to-day.

There is a further point in connection with the Tea Duty which has not been sufficiently dealt with. I refer to the nutritive value of tea. I am not referring to the tea itself, for I do not claim that by itself tea has a high nutritive value, but we know that tea is only drunk in 99 per cent. of cases in conjunction with milk and sugar, or, in the case of people with more bizarre tastes, with a little lemon.


The sergeant-major puts something else in.


I really wish this argument to be given its proper weight. We have read various treatises by important authorities on the nutrition of the nation, and they have pointed out in the last six months that under- nutrition is a serious factor in public health at the present time. What will happen when people find that the Tea Duty is costing them more? Instead of putting milk into their tea, they will use skimmed milk or less sugar, or in some other way deprive themselves of that essential minimum of nutrition which a proper consumption of tea might give them. I do not propose to offer all the old arguments, but I hope that we shall not be misled by fallacious arguments which have been put up by the Chancellor to strengthen the validity of this proposal, and I hope that the Chancellor will be so good as to admit that he has been mistaken.

6.43 p.m.


I understand that those who put forward this Amendment are anxious not merely that the rate of duty on tea should not be increased, but that the existing rate should be decreased. There are, we are told, some 35,000,000 people in this country who drink tea. It would be very interesting if we could have a direct expression of opinion from those people on this Amendment. I think the result would greatly astonish hon. Members opposite. Tea drinkers have been invited by the Chancellor of the Exchequer to make a contribution towards the increased cost of armaments. The last speaker sought to divide the people of this country into two classes—those who got benefit from the increased expenditure on defence and those who did not. In support of this extraordinary suggestion, he went on to speak of those who made a profit out of re-armament. The purpose of the increased expenditure on defence is not in order that capital or labour should secure a profit, but that this country should be the better protected and that we should be more secure. That is a benefit which is felt by all persons resident in this country.

As to the burden, the Financial Secretary pointed out on the Committee stage that the average consumption of tea per head is somewhere about nine and a-quarter pounds, and on that basis the extra cost per head of the proposed increase in the duty amounts to somewhere about 1s. 6d. a year. I do not think there is any evidence that the majority of tea drinkers in this country grudge that contribution. It is true that some Socialists who drink tea grudge that contribution—that is admitted—but, then, Socialists are people who are taught to expect other people to do everything for them. Other people are to pay their taxes, other people are to provide them with incomes and pensions, other people are to fight for them. Fortunately, that spineless doctrine never has appealed, and I hope never will appeal, to the majority of the people of this country. When this matter was raised on the Committee stage some exception was taken by certain hon. Members to my describing tea as a luxury. I think some hon. Members opposite think that luxuries mean silks and satins, and motor cars and things of that kind. As I understand it, the distinction between a luxury and a necessity is between something that we can do without and something that we cannot do without, and in that sense tea is clearly a luxury. But when I point out that we can do without tea I would not have it thought for a moment that I suggest that we should do without tea. I did not then suggest and I do not now suggest that anybody who wishes to drink tea should be prevented from doing so.

I thought the description given by the Mover of this Amendment of the value of tea to the working classes and, more particularly, to the women folk in the working classes, was a very fair and a very clear statement. I take no possible exception to anything he said on that point, but that does not alter the fact that tea is in essence a luxury, and I think that as a widespread luxury it is obviously a most suitable subject for taxation. I suggest that what is wanted in this matter of the taxation of tea is a sense of proportion. I do not think it can be argued that tea is in itself an unsuitable object of taxation. What we have to consider is whether the rate of taxation suggested by the Chancellor is reasonable or not. In my own view, having regard to the present cost of production of tea and the present supplies available, the weight of taxation suggested is eminently reasonable, and I propose to support it.

6.50 p.m.


It seems to me that every time the hon. Member for Colchester (Mr. Lewis) addresses hon. Mem- bers on this side he looks somewhat condescendingly upon us. It may be just his habit, but it always seems to me that he looks down upon us as though we have no right to speak upon anything at all. He has decided that as yet we shall be allowed to drink tea; he has not knocked it off for the time being, though I expect him to say that henceforth we shall have to have bread-and-water. However, we are to go on with tea a little longer, and for that I am grateful. We have been talking about taxation of tea ever since the Budget was introduced—at every stage when it has come before us and—and no doubt everybody is tired of the whole business, but I claim that I have a right to raise the subject again, because hon. Members opposite never miss an opportunity on Death Duties and Income Tax to claim some redress for their grievances. I am glad that the Noble Lady the Member for the Sutton Division of Plymouth (Viscountess Astor) is present. She is dead against beer and anybody who drinks beer, and so we must have some other beverage. If tea is taxed it will prevent us from getting as much tea as we should otherwise have, and so I should expect the Noble Lady to support us in the Lobby.

Viscountess ASTOR

If the hon. Member and his Friends will promise me that they will give up beer and drink tea I will support them.


On a point of Order. Is it in order for the Noble Lady to suggest bargains which are open to the suggestion of corruption?


The Noble Lady was challenged, and accepted the challenge.


With the amount of beer I drink I can give the Noble Lady the promise she asks for, and so I hope she will now vote with us against this tax on tea. When we are talking about indirect taxation the Chancellor tells us that we must recognise that owing to the change in our fiscal policy by the introduction of tariffs the present incidence of indirect taxation cannot fairly be compared with what it was in times gone by. I agree that indirect taxation has gone up by reason of the tariff policy of the Government, and I would ask him not to put on further indirect taxation, as is proposed in the case of this Tea Duty, because the indirect taxation under the tariff policy has hit poor people harder, I believe, than it has hit the rich. Therefore, the poor, by this increase of Tea Duty, are having to bear a double burden. That is the only new argument which I think can be brought forward at this stage, and so I would ask the Chancellor, if he has not closed his mind against any concession, to consider the question from that aspect, because he will realise that the poor already bear their share of the increased cost of armaments.

6.54 p.m.


I am intervening because of the arguments advanced by the Chancellor of the Exchequer in defence of his Tea Duty. He said that as expenditure was to be undertaken for the defence of the State, and everyone in the community would enjoy security through that defence, it was his desire to spread the cost over the whole of the community, and he thought it well that the poorest should make their contribution through the Tea Duty. He emphasised that point by saying it would not be fair to make any particular section of the community pay the taxation put on specifically for defence purposes. We have been having some sort of fun over this question; there has been joking, including the unconscious humour of the hon. Member for Colchester (Mr. Lewis), one of those icicle gentlemen whose lack of a sense of humour makes him almost comic. Now, however, I wish to deal with this question rather seriously. The only people who pay taxation in any State are the people who produce wealth—they and they only. I hope that is clearly grasped, because every Chancellor who gets up in this House—and, indeed, in most other Houses—seems to think that other people pay taxes besides the working class. No one can pay anything who does not produce wealth.


Suppose a man inherits a fortune and pays Income Tax on it? Would the hon. Member say he neither pays taxation nor produces wealth?


A man may inherit wealth, but how long would that wealth exist if someone did not work to keep it in existence?


Does he pay tax or does he produce wealth?


I am saying that no wealth could exist without someone to produce it.


That is different.


I did not interrupt the hon. Member, and I had to suffer him long enough. As taxation is a deduction from the wealth produced by the community it is a logical inference that all taxation is paid by the producers of wealth. If there are people who have fortunes, who produce nothing, then indeed, it is the duty of a fair-minded Chancellor to take as much as he can from them. This is what happens in this country. The Income Tax which is levied on the rich in this and other countries is passed hydrostatically right back to the man at the bottom of the scale who produces wealth, and, therefore, when the Chancellor says that he is anxious to make the poorest in the community contribute something towards defence I would remind him that every penny of taxation which he takes, whether it is Income Tax, Super-tax or any other tax, is a deduction from the wealth produced by the working classes who produce the wealth of the country. They bear all taxation, because if the worker—I mean the man working by hand or brain—ceased to operate in the field of production there would be no Budget to realise. So let it be clearly understood that the people who bear all the burden of the Budget in this country are the producers of wealth.

Another argument is that the defence of the country is so essential that the poorest in the land should contribute towards it by an extra £3,500,000 on the Tea Duty. I ask who gains most by the defence of this country against aggression? Who gains most by the expenditure on armaments to keep this country secure from an enemy? Is it the man who drinks tea? Is it the poor who come under this contribution of £3,500,000? Who enjoy most out of the expenditure to maintain this country in safety and security? It is the people who gain most as a result of that expenditure in defending the land of the country whom I would make pay to the full in defence of the country. But we look for people who have tea boxes, and wonder how far we can get our hands in, and along the merry road goes this hypocrisy of indirect taxation. If I had my way I would put over every provision stores' door, "The Chancellor's taxation Department." It will be a sorry day for the Chancellor when working-class women discover that when they go into the shops to buy their commodities they are actually going into the department which is taking a pretty fair "creaming" off their income by way of taxation. Therefore I am meeting this first—that it is necessary to tax tea in order to make the poorer working classes contribute towards the defence of their country. I emphasise again, and challenge contradiction from any right hon. or hon. Member opposite, that the working classes, whom the Chancellor of the Exchequer is anxious to get at by way of a levy on their tea, alone pay the entire taxation of this country, and if that remains unchallenged, you will see how much there is in the argument that it is necessary to put an indirect tax on tea so as to make the poorest of the poor participate in this joy which the hon. Member for Colchester said they had in contributing to the defence of their country. I wish it were their country.

Lieut.-Colonel C. KERR

The hon. Member has challenged the House. Does he, then, suggest that all those who are what we might term captains of industry, some of whom have risen from being working men right up to the top positions in industry, are absolutely useless, that the enormous amount which they contribute to the taxation of the State is absolutely useless, and that they are not workers?


I am sure that I will not be misunderstood. Any man who renders any useful service, whether it be direct labour production or organising production, any man who is a useful unit in the processes of the production of the wealth of this country, any man who is a unit by hand or brain in the processes of wealth production—it is that section of the community that produces the wealth of the community, and they being the producers of the wealth of the community, and taxation being a deduction from the wealth they produce, I hold that there is no ground for the argument of the Chancellor of the Exchequer today, that in order to make the poorest of the poor contribute towards defence he is instituting a Tea Tax, because my argument is that it is the workers of the country who bear the entire Budget of the country.

Captain RAMSAY

But does the hon. Gentleman refer to both types of workers?


Certainly. Surely it is an honourable designation for any man to have, to say that he is a worker. Therefore I speak about the working classes. [An HON. MEMBER "Most of your party do not!"] I have nothing to do with any misunderstanding which the hon. Gentleman may have about statements made from these benches, but when we speak about the working classes we mean the useful producers of this country—manual labour in combination with organising ability, who produce the wealth of this country, and they, and they only, are the creators of the wealth which is taken by the Chancellor of the Exchequer. If that be so, where stands the argument of the Chancellor of the Exchequer about his anxiety to enlist the loyalty of the poorest section of the community, and to get them over-conscious of the great security which they are enjoying because of the expenditure of the State?


I accept what the hon. Gentleman says about the wealth of the country being produced by brain and by manual labour, but the point of the Chancellor of the Exchequer is that he wishes the poorer class of manual labour also to have a share in the defence of the country in which they are equally interested with the richer classes.


It is always well to give way when there is an illumination to be passed across the Floor of the House. A supporter of the Chancellor of the Exchequer now suggests that while agreeing that the workers by hand and brain are the producers of the wealth that go to make up the Budget, the enthusiasm of the Chancellor extends beyond that. He is anxious to make the poorest of the poor pay more.

But enough of this fooling talk about indirect taxation. Hon. Members may laugh about the arguments which I am using. Your taxation is towering up; it is rising, and you cannot stop it. You have pursued this process of indirect taxation year in and year out. It means that you are eating into the income of every working-class home in this country.

[An HON. MEMBER: "Social services!"] Better far that you give men justice than social services and charity, but if you will not remove the causes which necessitate the social services, you must pay for them. The Tory party know what they are doing. They know that by this taxation on the food and necessities of the working classes they are sucking from the workers millions of pounds per annum. If the workers had to pay that openly, there would be a revolution in this country. It is better to do it quietly so that they will not see how you do it. Something on tobacco; something on tea.

It is said that the budgets of this country and other countries are maintained by the great Income Tax payers. Whence are those incomes drawn? They are drawn from the sweat and blood and agony of the workers of every country, and when the Chancellor of the Exchequer comes to that Box—much regard as I have for him—and asks for £3,500,000 so that the poor will contribute to the defence of this State, keeping strictly to order—and it is difficult to do so—I could tell the Chancellor of the Exchequer where to get more than £3,500,000 without putting a penny on the tea of the poorest of the poor. What is more, not an hon. Gentleman dare challenge what I am saying. The spot where I would put the taxation would be on the very place where it is derived as a result of the defence for which the Chancellor of the Exchequer has now got to pay. The defence of this country, the maintenance of the security of this country, is not coming back in the shape of increased fortunes for the tea drinkers of this country. I hope that it will not be long before I, or somebody else, is in the place of the Chancellor of the Exchequer; we shall be able to show you where to get the money.

7.8 p.m.


The hon. Member challenged us, and so I want to make one remark. Re said that he would get all the finance necessary for defence from certain classes, and he implied that the poorer people had no interest in defence. But is it not a fact that the standard of life throughout this country and the social services are on a much higher scale than those in any other country of Europe, and therefore the working classes and the poorer people have a direct interest in maintaining that standard of life and those social services? But if the defence services are unequal to the demand made on them, you may have this country conquered by another country where the standard of life is not as high. Is it likely that that country would maintain our present standard of

life and our social services? So that I maintain that the Chancellor of the Exchequer is right in asking every section of the country to contribute something to the defence of the country.

Question put, "That the word 'increased' stand part of the Bill."

The House divided: Ayes, 217; Noes, 144.

Division No. 260] AYES. [7.12 p.m.
Acland-Troyte, Lt.-Col. G. J. Emmott, C. E. G. C. Meller, Sir R. J. (Mitcham)
Adams, S. V. T. (Leeds, W.) Emrys-Evans, P. V. Mellor, Sir J. S. P. (Tamworth)
Agnew, Lieut.-Comdr. P. G. Entwistle, C. F. Mills, Sir F. (Leyton, E.)
Albery, Sir I. J. Errington, E. Mitchell, Sir W. Lane (Streatham)
Allen, Lt.-Col. J. Sandeman (B'kn'hd) Evans, Capt. A. (Cardiff, S.) Moreing, A. C.
Amery, Rt. Hon. L. C. M. S. Everard, W. L. Morrison, G. A. (Scottish Univ's.)
Anderson, Sir A. Garrett (C. of Ld[...].) Flldes, Sir H. Morrison, W. S. (Cirencester)
Anstruther-Gray, W. J. Findlay, Sir E. Mulrhead, Lt.-Col. A. J.
Balfour, G. (Hampstead) Fleming, E. L. Munro, P.
Balfour, Capt. H. H. (Isle of Thanet) Fremantle. Sir F. E. Nall, Sir J.
Barclay-Harvey, Sir C. M. Furness. S. N. Neven-Spence, Maj. B. H. H.
Baxter, A. Beverley Ganzoni, Sir J. Nicolson, Hon. H. G.
Beamish, Rear-Admiral T. P. H. Glyn, Major Sir R. G. C. O'Connor, Sir Terence J.
Beaumont, M. W. (Aylesbury) Goldie, N. B. Orr-Ewing, I. L.
Beaumont, Hon. R. E. B. (Portsm'h) Goodman, Col. A. W. Palmer, G. E. H.
Bernays, R. H. Grattan-Doyle, Sir N. Peat, C. U.
Blair, Sir R. Gretton, Col. Rt. Hon. J. Penny, Sir G.
Blindell, Sir J. Gridley, Sir A. B. Percy, Rt. Hon. Lord E.
Boothby, R. J. G. Grimston, R. V. Perkins, W. R. D.
Boulton, W. W. Gritten, W. G. Howard Peters, Dr. S. J.
Bracken, B. Guest, Maj. Hon. O.(C'mb'rw'll,N.W.) Porritt, R. W.
Brass, Sir W. Guinness, T. L. E. B. Radford, E. A.
Brocklebank, C. E. R. Gunston, Capt. D. W. Ramsay, Captain A. H. M.
Brown, Col. D. C. (Hexham) Guy, J. C. M. Ramsden, Sir E.
Brown, Rt. Hon. E. (Leith) Hacking, Rt. Hon. D. H. Rathbone, J. R. (Bodmin)
Brown, Brig.-Gen. H. C. (Newbury) Hamilton, Sir G. C. Rawson, Sir Cooper
Browne, A. C. (Belfast, W.) Hannah, I. C. Rayner, Major R. H.
Bull, B. B. Haslam, Sir J. (Bolton) Reed, A. C. (Exeter)
Burgin, Dr. E. L. Heneage, Lieut.-Colonel A. P. Reid, Sir D. D. (Down)
Campbell, Sir E. T. Hepburn, P. G. T. Buchan. Rickards, G. W. (Skipton)
Cartland, J. R. H. Holmes, J. S. Robinson, J. R. (Blackpool)
Cary, R. A. Hope, Captain Hon. A. O. J. Ropner, Colonel L.
Cayzer, Sir C. W. (City of Chester) Howitt, Dr. A. B. Ross, Major Sir R. D. (L'derry)
Cayzer, Sir H. R. (Portsmouth, S.) Hudson, Capt. A. U. M. (Hack., N.) Ross Taylor, W. (Woodbridge)
Cazalet, Thelma (Islington, E.) Hudson, R. S. (Southport) Runciman. Rt. Hon. W.
Cazalet, Capt. V. A. (Chippenham) Hume, Sir G. H. Salmon, Sir I.
Chamberlain, Rt. Hn. N. (Edgb't'n) Hunter, T. Salt E. W.
Channon, H Jarvis, Sir J. J. Samuel, M. R. A. (Putney)
Chapman, Sir S. (Edinburgh, S.) Jones, Sir G. W. H. (S'K N'W'gt'n) Scott, Lord William
Christie, J. A. Jones, L. (Swansea, W.) Selley, H. R.
Clarke, F. E. Keeling, E. H. Shaw, Captain W. T. (Forfar)
Collins, Rt. Hon. Sir G. P. Kerr, Colonel C. I. (Montrose) Shepperson, Sir E. W.
Colville, Lt.-Col. Rt. Hon. D. J. Kerr, H. W. (Oldham) Simon, Rt. Hon. Sir J. A.
Cook, T. R. A. M. (Norfolk, N.) Keyes, Admiral of the Fleet Sir R. Sinclair, Col. T.(Queen's U. B'If'st)
Cooke, J. D. (Hammersmith, S.) Lamb, Sir J. Q. Smiles, Lieut.-Colonel Sir W. D.
Cooper, Rt. Hn. T. M. (E'nburgh, W.) Latham, Sir P. Smith, L. W. (Hallam)
Crooke, J. S. Law, Sir A. J. (High Peak) Smithers, Sir W.
Crookshank, Capt. H. F. C. Law, R. K. (Hull, S.W.) Somervell, Sir D. B. (Crewe)
Croom-Johnson, R. P. Leckle, J. A. Somerville, A. A. (Windsor)
Crowder, J. F. E. Leech, Dr. J. W. Southby, Comdr. A. R. J.
Culverwell, C. T. Lees-Jones, J. Spears, Brig.-Gen. E. L.
Davies, C. (Montgomery) Lewis, O. Spens, W. P.
Davies, Major Sir G. F. (Yeovil) Liddall, W. S. Stanley, Rt. Hon. Lord (Fylde)
Davison, Sir W. H. Liewellin, Lieut.-Col. J. J. Stourton, Major Hon. J. J.
Dawson, Sir P. Locker-Lampoon, Comdr. O. S. Strauss, E. A. (Southwark, N.)
De Chair, S. S. Loftus, P. C. Strauss, H. G. (Norwich)
De la Bère, R. Lyons, A. M. Strickland, Captain W. F.
Denman, Hon. R. D. MacDonald, Rt. Hn. J. R. (Scot. U.) Stuart, Hon. J. (Moray and Nairn)
Despencer-Robertson, Major J. A. F. MacDonald, Rt. Hon. M. (Ross) Sueter, Rear-Admiral Sir M. F.
Drewe, C. MacDonald, Sir Murdoch (Inverness) Tasker, Sir R. I.
Duckworth, G. A. V. (Salop) McEwen, Capt. J. H. F. Thomas, J. P. L. (Hereford)
Duckworth, W. R. (Moss Side) McKle, J. H. Titchfield, Marquess of
Dugdale, Major T. L. Magnay, T. Tree, A. R. L. F.
Dunglass, Lord Maitland, A. Tryon, Major Rt. Hon. G. C.
Eales, J. F. Manningham-Buller, Sir M. Turton, R. H.
Eastwood, J. F. Margesson, Capt. Rt. Hon. H. D. R. Ward, Lieut.-Col. Sir A. L. (Hull)
Eckersley, P. T. Markham, S. F. Ward, Irene (Wallsend)
Ellis, Sir G. Maxwell, S. A. Wardlaw-Milne, Sir J. S.
Emery, J. F. Mayhew, Lt.-Col. J. Warrender. Sir V.
Waterhouse, Captain C. Willoughby de Eresby, Lord Womersley, Sir W. J.
Wells, S. R. Wilson, Lt.-Col. Sir A. T. (Hitchin) Wood, Rt. Hon. Sir Kingsley
Wickham, Lt.-Col. E. T. R. Windsor-Clive, Lieut.-Colonel G.
Williams, H. G. (Croydon, S.) Winterton, Rt. Hon. Earl TELLERS FOR THE AYES.—
Dr. Morris-Jones and Mr. Cross.
Adams, D. (Consett) Hall, J. H. (Whitechapel) Parker, J.
Adams, D. M. (Poplar, S.) Hardie, G. D. Parkinson, J. A.
Adamson, W. M. Harris, Sir P. A. Pethick-Lawrence, F. W.
Alexander, Rt. Hon. A. V. (H'Isbr.) Henderson, A. (Kingswinford) Potts, J.
Ammon, C. G. Henderson, J. (Ardwick) Pritt, D. N.
Anderson, F. (Whitehaven) Henderson, T. (Tradeston) Quibell, D. J. K.
Attlee, Rt. Hon. C. R. Hills, A. (Pontefract) Rathbone, Eleanor (English Univ's.)
Banfield, J. W. Holdsworth, H. Richards, R. (Wrexham)
Barnes, A. J. Holland, A. Riley, B.
Barr, J. Hollins, A. Ritson, J.
Batey, J. Jagger, J. Roberts, Rt. Hon. F. O. (W. Brom.)
Bellenger, F. Jenkins, A. (Pontypool) Robinson, W. A. (St. Helens)
Benson, G. Jenkins, Sir W. (Neath) Rowson, G.
Bromfield, W. John. W. Salter, Dr. A.
Brooke, W. Johnston, Rt. Hon. T. Sexton, T. M.
Brown, Rt. Hon. J. (S. Ayrshire) Jones, H. Haydn (Merioneth) Shinwell, E.
Buchanan, G. Jones, Morgan (Caerphilly) Short, A.
Burke, W. A. Kelly, W. T. Silkin, L.
Cape, T. Kennedy, Rt. Hon. T. Simpson, F. B.
Charleton, H. C. Kirkwood, D. Sinclair Rt. Hon Sir A. (C'thn's)
Chater, D. Lansbury, Rt. Hon. G. Smith, Ben (Rotherhithe)
Cluse, W. S. Lathan, G. Smith, E. (Stoke)
Clynes, Rt. Hon. J. R. Lawson, J. J. Smith, Rt. Hon. H. B. Lees- (K'ly)
Compton, J. Leach, W. Smith, T. (Normanton)
Cove, W. G. Lee, F. Sorensen, R. W.
Cripps, Hon. Sir Stafford Leonard, W. Stephen, C.
Daggar, G. Leslie, J. R. Stewart, W. J. (H'ght'n-le-Sp'ng)
Davies, D. L.(Pontypridd) Logan, D. G. Strauss, G. R. (Lambeth, N.)
Davies, R. J. (Westhoughton) Lunn, W. Taylor, R. J. (Morpeth)
Davies, S. O. (Merthyr) Macdonald, G. (Ince) Thorne, W.
Day, H. McEntee, V. La T. Thurtle, E.
Dobble, W. McGhee, H. G. Tinker, J. J.
Dunn, E. (Rother Valley) MacLaren, A. viant, S. P.
Ede, J. C. Maclean, N. Walker, J.
Edwards, Sir C. (Bedwellty) MacMillan, M. (Western Isles) Watson, W. McL..
Evans, D. O. (Cardigan) MacNeill, Weir, L. Welsh, J. C.
Fletcher, Lt.-Comdr. R. T. H. Mainwaring, W. H. Westwood, J.
Frankel, D. Marklew, E. White, H. Graham
Gardner, B. W. Marshall, F. Wilkinson, Ellen
Garro Jones, G. M. Mathers, G. Williams, D. (Swansea, E.)
Glbbins, J. Maxton, J. Williams, E. J. (Ogmore)
Graham, D. M. (Hamilton) Messer, F. Williams, T. (Don Valley)
Green, W. H. (Deptford) Milner, Major J. Wilson, C. H. (Attercliffe)
Greenwood, Rt. Hon. A. Montague, F. Windsor, W. (Hull, C.)
Grenfell, D. R. Morrison, Rt. Hon. H. (Ha'kn'y, S.) Woods, G. S. (Finsbury)
Griffith, F. Kingsley (M'ddl'sbro, W.) Morrison, R. C. (Tottenham, N.) Young Sir R.(Newton)
Griffiths, G. A. (Hemsworth) Muff, G.
Griffiths, J. (Llanelly) Oliver, G. H. TELLERS FOR THE NOES.—
Hall, G. H. (Aberdare) Paling, W. Mr. Groves and Mr. Whiteley.

CLAUSE 5.—(Extension and amendment of 11 and 12 Geo. 5. C. 47.)

7.21 p.m.


I beg to move, in page 4, line 13, to leave out Sub-section (3).

As far as I can tell from examination of this piece of legislation by reference, it involves, as the Parliamentary Secretary to the Board of Trade will appreciate, an Amendment to the powers already vested in the Board of Trade under Clause 1 (5) of the Act of 1921, and somewhat extends their powers at the same time. As I read that Sub-section of the Act, it was intended to remove doubts as to whether certain substances, which might be taken to be in the list of goods included in the Schedule of that Act, were, for the purpose of the Act, to be taken as coming within the Schedule. The Board of Trade have power, under that Sub-section, to make such additions to or withdrawals from the list as would remove any doubt. It might be, in regard to that Schedule of goods, that there might be added by the Board of Trade to the list certain substances which were taxable under the Safeguarding of Industries Act, without further reference to this House. Sub-section (3), which I am moving to delete, says that the power which the Board of Trade have, under the Sub-section which I have quoted, to issue a list of those articles to be taken as falling under the Schedule of that Act, shall include power to amend any list so issued. Then it goes on to adopt what I take it are provisions for appeal. On this side of the House we are concerned with the fact that this legislation will extend, and stabilise for a period, the general provisions of the Key Industries Act, and will tighten the power of the Board of Trade. The Parliamentary Secretary shakes his head. I should be very happy if I could get a really legally official assurance that that is not so. It appears to us that under the Sub-section the Board of Trade will be given power to amend lists of articles appearing in the Schedule, and that there might be additions of commodities to the Schedule for taxation which had not been approved by the House. That would be taxation of citizens in regard to which no specific authority had been given through this Chamber. We move the deletion of the Sub-section in order to get clear official information, and if we are not satisfied we may have further questions to put.

7.24 p.m.


The Amendment has been moved really for the purpose of asking for an explanation of the insertion of this Sub-section. I felt quite sure when I saw it that it had been moved under a misapprehension, and the speech to which we have just listened shows that that is the case. Let the House understand the position. Under Section 1 (5) of the Safeguarding of Industries Act, 1921, there is already power in the Board of Trade to make an additional list. The whole point of the present Sub-section is to take something out of a list. I feel sure that the right hon. Gentleman, who dislikes the Safeguarding of Industries Act, would not seriously move an Amendment to deprive the Board of Trade of power to take an article out of the list to which the Safeguarding of Industries Act applies. Let me explain what I mean. You issue a list under Section 1 (5), and you find that by a slip you have put in slightly more than you wanted to put in. The Board of Trade have no power at present to make the necessary deletion. Suppose something has been inaccurately described, quite a small technicality—I would remind hon. Members that the Safeguarding of Industries Act is quite a technical subject—there is no power to make the necessary slight Amendment.

The right hon. Gentleman who moved the Amendment feared that there would be some idea of introducing new substances. That power exists under Section 1 of the Safeguarding of Industries Act, 1921. It is quite simple for the Board of Trade, if they desire to make a new list, to use the powers given by that Section. This is quite a different power. This Sub-section will enable the Board of Trade, when the list has been issued, to take something out of it or, if a list has been issued in which there is an inaccuracy, to correct that inaccuracy. The Sub-section is drafted to implement an express Recommendation of the Committee in Section 42 (3) on page 73 of the White Paper. So far from the Clause being sinister, as the right hon. Gentleman suggests, it merely does what he would wish: it gives to the Board of Trade power to remove and power to amend. I hope, after that, explanation, that the right hon. Gentleman will agree that I have fully met the spirit in which he has moved the Amendment, and that the Amendment is unnecessary.

7.28 p.m.


I am obliged to the Parliamentary Secretary for the explanation which he has given, but I should have thought if the only intention was to carry out that recommendation given. to us in the White Paper, that the words would not be so narrow. I cannot find it in my mind at present to understand the words: shall include power to amend any lists words as being entirely confined to the removal of commodities from the list. It is not sufficient to say that there is already power in the Act of 1921 to add to the list. I cannot see that this Sub-section confines the change to the power to remove substances from the list.

7.29 p.m.


I thought I had made it clear that it gives power to remove, and to vary a description. In the Act of 1921 there is power to issue a list. That power, and the power to amend a list already issued, are different things. It is thought that there is no power to make either a deletion or an alteration in a description, and the Sub-section was put in in order to implement, in terms, the recommendation of the Committee to give the Board of Trade power, instead of cancelling a list and issuing a completely new list, to cancel, say, Article No. 19, or to alter the description of No. 18, if that description is inaccurate.


I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

CLAUSE 6.—(Power to remove or reduce additional duties in respect of certain iron and steel goods.)

7.29 p.m.


The next Amendment I select is that in the name of the right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) to leave out Clause 6. It is not usual upon the Report stage to take an Amendment to leave out a Clause before considering Amendments to the Clause, but in this case that will be the simplest way of dealing with the Amendments. I suggest that the series of Amendments in the name of the hon. Member for South-West Bethnal Green (Sir P. Harris) should be discussed upon the Amendment to leave out the Clause. The remaining Amendments, in the name of the hon. Member for East Edinburgh (Mr. Pethick-Lawrence), will be taken separately.

7.30 p.m.


I beg to move, to leave out the Clause.

As you have said, Mr. Speaker, it is not usual to take an Amendment to leave out a Clause in the first instance, but, as the House will remember, the discussion on which we are now embarking was rather unusual in its character during the Committee stage. During the Committee stage there were complaints throughout the Committee that the new Clause 6 had not been fully appreciated, and, as a consequence, the Minister agreed to issue a White Paper explaining its provisions, and to provide time for a very ample discussion on the Report stage. The Clause deals with the iron and steel trade, and with the provision by which that trade has, through its federation, entered into an agreement with the international cartel. I would say immediately that the White Paper gives a very full explanation of the position, and, indeed, on reading its technicalities, I am surprised that the Government ever conceived that it would be possible for the Committee to discuss the Clause intelligibly merely on an explanation given in a speech from some notes by the Minister. I will just state what the main contents of the White Paper are and ask the Minister certain questions, and will then give my own views.

The White Paper tells us that the Iron and Steel Federation has entered into an agreement with the International Steel Cartel by which, practically speaking, imports of steel into this country are to be limited, or at any rate are to be confined as far as possible, to 525,000 tons a year. It is not a limitation outright, because a provision is introduced, which is unprecedented in our tariff system, by which up to 525,000 tons a year there will be a duty of 20 per cent., and on any amount above that a duty will be imposed, decided by the Import Duties Advisory Committee, but, as I gather from the White Paper, intended to be 33½ per cent. This, therefore, is an arrangement, I think quite unprecedented, of a double-decker character for foreign countries. A certain amount of iron and steel goods coming from the cartel countries is to be taxed at the rate of 20 per cent., and any further amount coming from those countries or from non-cartel countries is to be taxed at the rate presumably of 33½ per cent. In other words, this is the introduction of a system of preference over this whole range of articles—a preference, not to our own Colonies and Dominions, but to a group of foreign countries.

The first question which I think it would be valuable for the Minister to discuss is as to what effect this is going to have on the most-favoured-nation Clause. Perhaps the Minister may say that it will have no effect at all. As there is a licensing and quota system attached, and as the 525,000 tons are to be introduced under a quota, I quite realise that, by the interpretation of the Economic Committee of the League of Nations, the most-favoured-nation Clause does not apply, because, as I understand it, it is not to apply to limitations which are due, not to a tariff, but to quota restrictions. Nevertheless, the result to which it leads is the same as that produced by differential tariffs; it is the same as if there had been an obvious ordinary breach of the most-favoured-nation Clause; that is to say, it leads to a, quota with a differentiation between articles coming in within the quota and articles coming in outside the quota. I would point out to the Minister that the fact that this arrangement is covered by a quota will not prevent a tariff retaliation, and his own experience will tell him that that is the case. Although I was not here at the time, I remember reading in 1934, when I think the hon. Gentleman was in charge of many of the negotiations, about the long retaliatory conflict which we waged with France on account of her differential quota whereby she gave a preference to the United States and, I think, to Belgium. The fact that we are acting by quotas instead of by tariffs will not prevent a retaliatory war from following our policy.

I should like to hear a statement from the Minister as to what he anticipates is going to be the effect on foreign countries, and what attitude they will take towards this particular device. Of course, the most-favoured-nation Clause is being invaded by one device or another in every direction. Imperial Preference is an invasion of the most-favoured-nation Clause. Technically it is not, but actually, to a foreign country, Canada is an independent economic unit. While I am asking this question, I would say that I do not mean to indicate that I personally consider that the present most-favoured-nation Clause should be retained unchanged. In the modern world of high tariffs and special arrangements, so many exceptions to it are being made that I doubt whether it will remain in its present form for many more years. But I maintain that, if it is to be changed, it should be changed on a comprehensive, intelligible and logical plan, and not changed piecemeal in a chaotic manner which may at any moment lead to retaliatory action on the part of other countries against our export trade, which is in far greater difficulties than our iron and steel trade.

I come now to the other portion of the Clause, which affects our own internal trade. The question was asked with a great deal of force, in the last Debate on the subject, who was going to have the right and privilege of distributing this 525,000 tons? The people who obtain their share of these imports will be in a highly privileged position. They will be obtaining imports which come in on a tariff of 20 per cent., whereas those who obtain anything outside that limit will be obtaining imports which come in on a much higher tariff; and the first question I want to raise is, who will determine who is to have the privilege of receiving the 525,000 tons? The answer given in the White Paper is simply that the determination is to be left in the hands of the Iron and Steel Trade Federation, that they are to determine this matter, which will mean fortune or loss of fortune either to those who receive these imports or to those who are denied them. I know that they have written a letter to the Minister saying that they will distribute this 525,000 tons fairly, and that they will even see that those who are outside the Federation shall be fairly treated, and shall be allowed to affiliate with the Federation if, in the rather significant phrase used, they will obey its rules and regulations. Let us see what the whole arrangement now comes to. It means that the iron and steel trade has succeeded in completely insulating itself from any foreign competition in this country, and that it has also succeeded, by a system of price agreements and price control, in completely eliminating competition within this country itself, and, incidentally, in making it practically impossible for any new man or any new firm to enter the trade except with the consent of the Federation itself.


The right hon. Gentleman makes an important and alarming statement. He says that it is now made impossible for any new firm to enter the iron and steel industry except with the consent of the Iron and Steel Trade Federation. May I ask what authority he has for making a statement of that kind?


I make it, to begin with, on this Clause alone. If a firm wants to get a share of the 525,000 tons of imports, it can only do so by taking that share away from someone already in the trade, and the determination whether or not that will be allowed will be in the hands of the body representative of those who are already in the trade. Therefore I say that they have the power, if they choose to exercise it—an[...] I have been told that they have exercised it—of closing the trade to those who are not already in it.

We have been told for some years now that the iron and steel trade is very prosperous, and it is true that it has been able to renovate its plant and equipment. Owing to the prosperity arising from its privileged position, it has been able to obtain the capital with which to carry through the renovation of its plant and equipment which is well known throughout the world, and in regard to which this country was very behindhand up to 1932. But the question which the House is entitled to ask at this stage is, what internal contribution in the direction asked for by the Import Duties Advisory Committee has the trade itself made in return for the privileges which have been granted to it? The Import Duties Advisory Committee insisted that this internal contribution should be the reorganisation of the structure of the trade. That does not merely mean spending money on plant and equipment and introducing here methods which are well known on the Continent of Europe.

That is not what the Import Duties Advisory Committee ask for. They asked for the reorganisation of the whole structure of the trade. It is worth while realising that this industry is now by far the most privileged in the country. It has had the highest tariff, a tariff that went up to 50 per cent. In addition, it has a quota. It has had the advantage that it has been producing for trades which have been expanding, like the motor trade, and now the armaments trade. It has had the power to fix the prices which other industries must pay for its products, and all the time it has had the advantage of cheap coal, its own raw material. There is no trade that has had so many privileges in the last few years. But those privileges were given to it on condition that it carried out an internal reorganisation by which its costs of production would be diminished, and, indeed, if you are going to allow a trade to settle for itself the price which it shall charge to other industries, unless it reduces its costs of production by internal reorganisation it is going to become a burden on the whole community.

It is in this part of its activities that I find that this White Paper and the series which have preceded it are very depressing. I have read them all. The history of them is that the Import Duties Advisory Committee said to the iron and steel trade, "We will take off your tariff unless you carry through this internal reorganisation on a national scale." They did not do anything striking. Then the Import Duties Advisory Committee complained that nothing was happening, and said the tariff would be extended only for another two years in order that at the end of that time some definite results might be shown. At the end of the two years the federation gave itself a new constitution. It is stated in the White Paper that that new constitution was not a reorganisation, but merely the machinery by which reorganisation might be carried through. The federation passed certain resolutions of a general character, and on them the advisory committee made their tariff permanent. Since that date there is no reference in the White Papers to any further steps in the direction of internal reorganisation taken by the industry. What is pointed out is that in the energy, enthusiasm and zeal which the industry has thrown into its mechanism for determining prices against the rest of the public and keeping out foreign products, it has gone far ahead of the mechanism for internal reorganisation as a condition of which the tariffs were originally given. There are complaints in all directions about the increase of prices. Lord Nuffield, some years ago said that, if he were a young man, he would set up works himself in order to get raw material at a reasonable price. Since the Minister spoke last week, I see that a paper representing the smaller purchasers, the "Ironmonger," has had very strong protests against this Clause and against the policy of the iron and steel trade. It points out that its readers have to think of an export trade and asks, if other industries have to serve an export market, why cannot the steel makers? It adds that the conception of competition in the home markets has been entirely eliminated and that other industries are at the mercy of this trade. I believe that by their latest increase the price of steel is 25s. higher than when the tariff was first granted.


To what class of steel does the right hon. Gentleman refer?


Basic pig iron.


That is not steel.


It will equally well carry out my argument that this industry in all its branches has the power to set the prices to the public by its own internal arrangements, and not by the ordinary processes of competition. Here is a letter quoted in the White Paper referring to a proposal for an increase of 20s. per ton on acid billets containing up to 0.25 per cent. of carbon.


May I ask the right hon. Gentleman where he gets his 25s. per ton increased price of basic pig iron?


That is in the "Ironmonger" of 6th June. My argument is a very simple one. I do not object to the elimination of competition and the substitution for it of the internal organisation of an industry, but I object to the whole of the prices being in the hands of the employers and manufacturers in the industry itself. What we have practically reached is this: the iron and steel industry is now in very much the same position as a public utility corporation, but we have none of the safeguards that we have in the case of the electrical, or the gas industry or the London transport system. We have now given this industry the right, by a stroke of the pen, to increase the cost structure of the whole of British industry. That is not a right that ought to be given to any group of private individuals. The issue is a very fundamental one, because the Government have taken special steps to carry out what is really a transformation in the nature of modern capitalism. That is what we are now witnessing. Hon. Members opposite speak of private enterprise and competition. Where is private enterprise or competition in the iron and steel trade now? It is disappearing as the result of the action of the Government. It is disappearing in most other staple trades as the result of the action of the employers themselves. Competition will go. We do not object to organisation, but organisation will be a peril to the State if it is carried through by self-interested industry. It can only safely be carried through under some kind of public control or public ownership.

7.56 p.m.


This is a very remarkable Clause. Any stranger or any old Parliamentarian of pre-War days who came to the House would be surprised to know that we are discussing the Bill to raise the necessary revenue for the year. I can understand how eloquent the President of the Board of Trade would be, if he were sitting on this side of the House, about the unsoundness of mixing up this kind of legislation with the Finance Bill. We really ought to have had a special Bill dealing with the problem of the iron and coal industry which we could discuss on its merits. The importance of the Clause was unearthed by the vigilant eye of that arch-Protectionist, the hon. Member for South Croydon (Mr. H. G. Williams), and we are duly grateful to him. In Committee on the Bill I asked for a White Paper, and I thank the President of the Board of Trade for producing it, with this qualification, that it ought to have been produced at an earlier stage. It ought to have been circulated when we came to the Committee stage, and we ought not to have had to ask for it. It is a very remarkable document of great educational value. I am not an expert in iron and steel. Obviously, Members of Parliament cannot be conversant with all the ramifications of industry. Many Members representing industries which are users, as well as producers, of iron and steel did not realise that there was this very important Clause dealing with the whole future of the trade in this Bill.

When we embarked on our new policy four or five years ago of protecting iron and steel we never contemplated, or certainly none of our Protectionist friends warned us, that one of the first results would he the establishment, or rather the wedding of this iron and steel industry to an international cartel. We were told that one of the reasons why we were parting from our traditional fiscal policy was that it was in the interests of the nation to put our iron and steel industry on its legs so as to be independent of world exploitation, and now we find that it is part of an international cartel. It is true, and I have no doubt that whoever replies to the Debate will be able to say that we have had this interesting experiment against our fiscal views, and as a result there has been a minor improvement in the iron and steel trade. [An HON. MEMBER: "Major!"] I do not mind what adjective is used, but there has been an improvement in the production of iron and steel. The Chancellor of the Exchequer was able to say with pride, of which I do not grudge him, that the iron and steel output of this country has doubled since the bad year of 1932. I am not saying this in criticism of either the rightness or the wrongness of this particular duty, but prosperity in the iron and steel industry has been general throughout the world. It is one of those curious cycles which it is very difficult to explain, but the output of iron and steel in the United States, Canada, and Germany in the same period increased fourfold, the output in Czechoslovakia threefold, while Sweden and Russia more than doubled their output. Therefore, apparently it is general. As far as I can see, we with our great tradition as an iron and steel producing country, and our marvellous record, are not getting at any rate more than our share of the general revival in the prosperity of iron and steel throughout the world. It may be argued on the percentages which I have quoted that we are rather getting less than our share.

The reason may be found to some extent in the cartel which we are now going to bless in this Clause of the Finance Bill. Our export trade has by no means come back. In the year 1929, a boom year, our exports were 4,380,000 tons, value £68,000,000, a, truly remarkable trade. In 1933 they were down to 1,900,000 tons, value £29,879,000. In 1934 they revived to 2,250,000 tons, value £35,000,000, and in 1935 they had gone up to 2,370,000 tons, value £37,000,000, compared with the £68,000,000 of 1929. So they are nothing to boast about or of which to be proud. It is interesting to note that in the first five months of this year there was a decline compared with the first five months of last year. Although there is cause for satisfaction we have a, right, whether, like the hon. Member for South Croydon (Mr. H. G. Williams) we take the protectionist point of view, or whether we take the Free Trade point of view, to scrutinise very carefully this particular Clause. This country has always been suspicious of monopolies. Right back to the statute monopolies of Queen Elizabeth this country has always disliked any kind of monopoly. From whatever angle of approach, we ought to be very careful that nothing we do in this House will strengthen monopoly.

The long account in the White Paper makes one realise that the import Duties Advisory Committee are very concerned to protect the interests of the outside world. I believe that they have endeavoured to do that, but the more I study the Clause the less watertight I think it is, and that is the reason why I hope that my Amendments will be in order and that they will be accepted by the Government. The right hon. Gentleman is perfectly right, except for the fact that I think the 50 per cent. duty was dropped after it was successful as a weapon to force the cartel to let this country come in and share the swag.


I did not intend to indicate that it was still in force.


That was the instrument which resulted in the cartel allowing us to come in as a full member to share the advantages of it. As a result of the revival of trade, largely, as I have reason to believe, owing to the boom in armaments, the increased demand not for shipbuilding but for battleships, guns, aeroplanes and various other weapons of destruction, there has been a tremendous demand for certain goods, particularly those mentioned in the Schedule of the Bill and in the White Paper. So great has been that demand that many traders have not been able to get their requirements and have had to look abroad in order to obtain supplies. The Government came along, recognising that, if there is not some change in the import duty, many of our smaller industries, such as were particularly pointed out by the "Ironmonger," would be handicapped in regard to their supply of raw material by having to pay import duty. The Government in their wisdom decided on the advice of the Import Duties Advisory Committee that there should be some reduction. As I understand the position, in certain circumstances, not only will the extra duty go, but even the 10 per cent. duty may be suspended completely. But it is to be upon a basis of quotas.

We have travelled a long way since 1931, when we first embarked upon a tariff policy. There was no talk then of quotas. The duty was to be the one effective weapon to do everything, on the one hand, to find markets for our goods, and; on the other hand, to protect our industries. In the light of five years' experience they have come down―I will not say that they have come down in a white sheet—wiser, and propose to add the weapon of quotas to our tariff armoury. As far as this particular Clause lowers duties, I as an unrepentent Free Trader ought to be grateful, and I am not entirely objecting to it, but when it comes to using a quota the whole House, whether hon. Members are Free Traders or Protectionists, want to see the distrition of the quantities fair and aboveboard. [An HON. MEMBER: "Hear, hear!"] I think there is general agreement. There should be no privilege, but an open door for all concerned.

I think that the Government, the Import Duties Advisory Committee and even the Federation of Iron and Steel Industries recognise the fact. They have an ingenious way of getting over the difficulty. I do not know whether the House has studied the White Paper very closely, but it is very interesting to see how it is to be done. We are not, as far as I can gather, to give the privilege of importing even to the Federation of Iron and Steel Industries. It is to go to the various members of the cartel. If hon. Members will turn to page 8, Annex 1, they will see a description of the organisations that are to decide who is to buy foreign steel and how the purchases are to be distributed: the French group represented by the Comptoir Siderurgique de France, Société Anonyme a Capital Variable"— a very powerful organisation in France that has been the subject of very considerable attacks in the recent elections in France— the Belgian group represented by the Groupement des Hauts Fourneaux et Acieries Belges, Société Co-operative, Brussels; the Luxemburg group represented by the Groupement des Industries Siderurgiques Luxembourgeoises, Société Co-operative, Luxemburg. Lastly there is: the German group represented by the Stahlwerks-Verband Aktiengesellschaft. It is quite international, cosmopolitan. But that is not the whole of the story, for it says: The aforesaid groups being represented collectively by the Entente Internationale de L'Acier, Luxemburg, hereinafter called the 'E.I.A.' The Federation of British Industries is now admitted into that holy company of international, cosmopolitan groups, who are to decide who are to have the privilege of buying various iron and steel goods free of duty, or subject only to 10 per cent. duty. That is clear from the White Paper. To wrap up in a Finance Bill this kind of legislation which brings our Government and Parliament into contact with an international, cosmopolitan cartel is something that we should view with very grave suspicion. We little contemplated, when we embarked upon our Protectionist policy during an outburst of nationalism which was going to make Great Britain independent of the whole world, that the iron and steel industry, as the result of legislation, would bring us into contact with a world-wide international group of this character.

My right hon. Friend above the Gangway rightly raised the question of the most-favoured-nation Clause. But this report repeatedly points out that the imports from foreign countries outside the group have always been relatively small. Actually in practice the bulk of the supplies of our traders, business men, manufacturers and merchants can be got only from these four or five great international groups. In paragraph 13 it is pointed out that the purchases of all imports will come through this international cartel. It is true that the arrangement is made, no doubt owing to the intervention partly of the Parliamentary Secretary to the Board of Trade and partly of the Advisory Committee, to protect consumers so that consumers who are not members of the associations affiliated will receive a fair share of the quotas. They are to have a fair share, provided that they will keep the rules.

What are the rules? Are they like the rules of the M.C.C.? Is it merely a question of playing the game, with a straight bat? Or does it mean that they will have to adhere to the prices fixed? In other words, if they could afford to sell more cheaply, at a price that would help other industries to sell in the export market, they will not be able to get their share of the quota. They will have to go cap in hand, very often to their competitors, and say for what purpose their supplies are to be used and where they are to go. That is an arrangement which in the long run will not be in the interests of British industry, or help our foreign trade and stimulate our exports.

Paragraph 15 of the White Paper says that an absolute guarantee in respect of prices is impossible. That is true. But when we talk about prices, it may be to the advantage of many of our industries, the shipbuilding industry, for instance, which has to meet very severe competition from other countries, particularly Belgium, that there should be lower prices. There is an arrangement in the original Act of Parliament endeavouring to protect the interests of the shipbuilding industry, under which they are to have a guarantee for their raw material, yet from information that I have received they can get their supplies only from the cartel. Even if they go abroad to buy their raw materials this arrangement is so manipulated that they do not get any advantage. Wherever they buy, whether they buy in Belgium, France, Germany, Luxemburg, or Great Britain, they have to take their materials from the international cartel. We have arrived at that state of affairs by this new policy.

I hope that the Clause will not go through in its present form. If possible I should like to be allowed to move my Amendments, so that the industries that are dependent for their supplies of iron and steel on these particular sources will have some safeguard against exploitation and will have an open market. The House and the country as a whole are entitled to more explanation than is contained in the White Paper.

8.18 p.m.


I was not present during the last Debate on 9th June on this subject, but I have read very carefully what was said on that occasion, and I should like to say that I am delighted at the opportunity we have had this evening of further discussion on the basis of the White Paper. The iron and steel industry has been under very close public scrutiny for some years, and the industry feels that it has made one step after another with the full concurrence and the full support of the public of this country. We want to continue to do that, and therefore I for one welcome this Debate. The question largely focuses round the licensing position, whether licensing is necessary, and what its results are going to be. Licensing is absolutely necessary in order that the industry, as reorganised, can consummate its arrangements with the international steel makers. It is altogether a laudable object that we should try to get into touch and try to make arrangements with our opposite numbers in other countries. It gives security to the steel makers in all countries. It tends to avoid periods of slump and prosperity, which are the greatest menace to our industry to-day, a menace which is most terrible from the point of view of the working classes.

The prices that we are getting are reasonable prices in all the markets. Previous to this agreement we had prices which did not give a fair return to the people engaged in the manufacture of iron and steel. I make that statement and challenge any Member of the House to contradict it. The wage position in the iron and steel industry has been one of the most satisfactory in all the industries of the country. Wages are apparently agreeable to all concerned, and the machinery for settling those wages is worthy of tremendous praise. Under the licensing arrangements there is no question of any country being treated differently from another. Whether a, country is a member of the cartel or not, it will receive its fair deal under these arrangements on the basis of a percentage applied to its imports. With all respect to the right hon. Member for Keighley (Mr. Lees-Smith) I do not think that the most-favoured-nation Clause is in any way infringed by the arrangements which have been made.

The intention of the industry is that the necessities and requirements of all those engaged in dealing with iron and steel shall be met either from British steel or from imported steel, imported under the licensing arrangements. That is the ultimate object. There is no question of starving any consumer in this country. No man who has any conception of business could conceive of a great industry making arrangements under which its consumers would be treated unfairly and not be able to get what they required. I am not a member of the iron and steel trade, but I am in a position to observe what goes on, and I can state, without any fear of contradiction, on the very best authority, that the iron and steel industry has no intention that any consumer shall go short of his requirements or be treated unfairly with regard to price. The right hon. Member for Keighley has disparaged our efforts at reconstruction, but let me tell him that those efforts have been very great and very successful not only for the industry but also for its consumers. In the process of that reconstruction we have created a vast machine, not only to deal with our own affairs in our home markets but to try and stabilise the position in the world from the point of view of steel, a basic commodity, and that machine is gradually coming into working order. We may compliment all those connected with it for its extraordinarily smooth working up to date. I frankly admit that there have been cases in which consumers have been put in a difficult position. There have been very few cases, and those cases have been dealt with, and I can assure hon. Members that every case of a similar character will receive sympathetic and immediate consideration, because it is not the policy of the iron and steel industry that consumers shall not receive a square deal.

In connection with the reorganisation of the industry we have been met with a series of attacks from both sides of the House. The hon. Member for South Croydon (Mr. H. G. Williams) is frightened because there is planning. The right hon. Member for Keighley and his followers are afraid because the planning has gone too far and has been too well done. The right hon. Gentleman says that the industry now is so strong, so uncurbed, so free, that it can go out into the world and smash its consumers, as if the first thing that any great organised industry would do would be to destroy the confidence of its consumers and play the part of a bull in a china shop. That is not the case. All through the reorganisation every effort was made to keep in the closest contact with primary consumers, and all the various advances that have been made in reorganisation have been made with their co-operation. The re-rolling interests, the big constructional interests, the shipbuilders, we have been working with them and helping them in the export markets. We have given them help in the way of a rebate of their prices in the export markets. I can prove this at any moment, and I challenge anybody to deny that the industry has had its eye on the export markets and the position of its consumers. Only by doing this can it succeed.

We have been challenged on the question of prices. The hon. Member for South-West Bethnal Green (Sir P. Harris) and others have quoted from the White Paper, but no hon. Member so far as I have heard has dealt with the correspondence between the Import Duties Advisory Committee and the British Iron and Steel Federation in regard to prices. Steel makers at the present moment are probably selling ahead for between six and nine months. They have been facing an increase in the cost of raw materials. There has been an increase in the cost of coal, and the steel industry was the first to concede to the coalowners and the colliers an increase in the price of coal. They have faced this situation boldly and generously. Their prices have gone up, I should say at a guess, between 23s. and 24s. per ton in the last two years, but they have been able to negative a proportion of that increase by increased efficiency. That was another challenge made to he industry. It was said, "Where is your increased efficiency? We asked you to reorganise. What have you done? Have you made yourself more efficient?" There was an increase in the price of steel plates of 12s. 6d., but the increase was only kept at this small figure by the increased efficiency of the industry, which brought down the costs by at least 10s. per ton. These are facts which I am glad to have an opportunity of mentioning to the House.


The hon. Member referred to an increase of 24s. I did not gather whether that was an increase in the general costs of iron and steel or of raw materials.


It is an increase in the cost generally of basic steel products. I do not take any responsibility for the figure; I give it as my opinion. These increases in prices to which I am drawing attention were calculated after the costs of representative companies in the iron and steel in dustry, audited costs, had been submitted to the Import Duties Advisory Committee, and on that basis the various increases were agreed, and have now been put into operation. The principle behind the increases is that every single process in the manufacture of steel shall be conducted at a profit. The industry is not ashamed of saying that every process, every manufacturing process, should be made profitable for those who work in it and for those who put their energies into it. When you have a regular control of prices over the whole range of the iron and steel industry and audited costs, it seems to me to give the consumer very real protection against any unwarranted increase in prices. I understand that at a later stage the question of Jarrow steel works will be brought forward, and perhaps hon. Members who represent the distressed areas will make a plea for steel works in their areas as well.


Before the hon. Member goes any further on that point may I ask your ruling, Mr. Deputy-Speaker, on the matter. The question on the Clause is whether we are to allow imports of steel to come in under licence to this country. As a member representing a constituency on Tyneside I would like to know why we should allow this importation of steel when distressed areas like Jarrow can make all the steel that is required. Are we to be allowed to bring in the question of Jarrow on this Clause, because if the hon. Member says another wor about Jarrow I shall claim the right to speak upon it.

Mr. DEPUTY-SPEAKER (Captain Bourne)

Hon. Members will realise that I am not an expert in the iron and steel trade and it is rather difficult for me to decide whether or not this particular Clause would or would not include arrangements for steel works in any given area. I was waiting to hear whether the argument of the hon. Member for Darlington (Mr. Peat) would be of any assistance to me in making up my mind as to how far that argument can be allowed to go on this Clause. I should be sorry on a Clause which licences imports to say how far the argument as it affects any particular area may or may not be at this moment relevant.


May I put this point to you, that the Jarrow steel works are given as being the most vital illlustration as to how this licensing system may or may not work, and while we are using it as an illustration it is only part of the question which is raised by the White Paper.


I think the hon. Member for Jarrow (Miss Wilkinson> may be right. I am merely guarding myself at the moment by saying that I wish to hear the argument before I give a Ruling. I am not quite clear whether the Clause would necessarily alter the position of Jarrow or any other place in the least.


This is a money Bill, and it is an old device to put a Clause like this in a money Bill in order to get over the difficulty of having to bring in a separate Bill. But it does shut our mouths. I suggest that, although it is a Finance Bill, we ought in the special circumstances to have the right to express the fears of Tyneside, but at the moment we are shut out from debating the matter.


The fact that the Clause is put in the Finance Bill does not in the least alter what would be or would not be in order in the discussion now before the House. If the matter is in order in the discussion, it will be in order whether it is a Finance Bill or not. I think the hon. Member slightly misunderstood the purpose of putting the Clause into the Finance Bill.


In coming to your decision on this matter, might I ask you to consider the following point? By this Clause and the White Paper great powers under the licensing system are given to this particular federation, and it can be argued, taking Jarrow as an example, whether the federation is likely properly or improperly to use the powers which this Clause gives it. I hope you will bear that point in mind.


Before you come to your decision, Sir, I would like you also to bear another point in mind. I am not raising this point for the purpose of preventing Jarrow from being discussed, but I would like you to bear in mind that the argument which is made against this Clause at the moment is that it is a licensing Clause which limits the amount of steel coming into the country. If you do not limit the amount of steel coming into the country and allow it to expand, does it not follow that there will be less chance for Jarrow and other places to work? Therefore, the question of the amount of steel coming in under this Clause has really nothing to do with the working of Jarrow, Maesteg and Penistone, or any other steel works which has been closed down during the past 12 years.


The point raised by the last hon. Member who spoke appears to me to be an argument on the merits of the case rather than on the point of Order. The point raised by the right hon. Member for Keighley (Mr. Lees-Smith) is one of the points I shall have to bear in mind. I merely said I would like to listen to the argument before giving a definite decision.


It seems from your Ruling, Sir, that I am to try out the argument, which I am not very willing to do. I would like to discuss the matter, but I would have liked to know how far I can go before I deliver the answers which I have. I think, without going outside your Ruling in any way, I can say that the present licensing system is not unfavourable, all things being equal, to the starting of new enterprises in this country in the iron and steel industry. The imports which have now been agreed upon are only 34 per cent. of what they were in 1932, which means giving a very large amount of elbow room for new production in this country. In dealing with that subject, I think it is only fair to say that the iron and steel industry is prepared, among its own members, for a self-denying ordinance, in so far as capital expenditure is concerned, and that from their point of view there can be no injustice if they state on technical and commercial grounds what they believe would be the result of starting new works in various areas, whether they be depressed or not. I do not wish to go any further than that.

The suggestion has been made that the British Iron and Steel Federation, like some sinister octopus, has its tentacles round the neck of any new enterprise and that it strangles that enterprise at birth. Nothing is more false and foolish than that statement. The iron and steel industry has reorganised itself on the only basis possible, that is, into a series of interlocking associations and firms which work together and control prices, as I have attempted to show to the House. The present organisation would not be damaged beyond all repair if there were a number of powerful outside units breaking into its arrangements and its price agreements, cutting across its rules and regulations, which are necessary and healthy in an organised industry—


I did not wish to interrupt the hon. Member, but this matter is of great importance. Does the statement he is making affect firms and organisations which have very carefully stated from the very beginning that they are willing to accept any of the rules and regulations made by the federation?


I do not know of a company or association which has made application either for affiliation to the Federation or for membership on the ordinary terms and which is producing in a similar manner to the other members, which has been refused. Although I cannot commit the industry, I am sure that if any steel works is started anywhere in this country and is prepared to go to the British Iron and Steel Federation and say, "We may be financed from London, which is entirely outside your own people, we may have been brought into existence against technical advice and economic conditions, but here we are—will you take us in your Federation?" the answer would be, "Yes." In my opinion there can be no question of there being any other answer and to speak of a federation or an industry taking any other course is impossible.


Is the hon. Member stating facts?


I know that what I have to say is true, and if the hon. Lady can give me some reason for believing that I am wrong, I shall be very happy to withdraw.

I am afraid that I have delayed the House much longer than I intended, but it is not altogether my own fault. I would like to conclude by stressing the fact that our industrial organisation in this country cannot be static. In reply to those who accuse hon. Members such as myself of being planners or thinking ahead, I would say that we have to think five or six years ahead, particularly when we are talking about starting new works. We have to think what will he the productive position five or six years ahead. We have to face the fact that industry will of necessity assume a different form from that which it has had in past years. We have to make our sacrifices, but there has to be due and proper control so that the consumers, the public, shall not be prejudiced. I maintain that the reorganisation of the industry and this licensing Clause in the Finance Bill will not harm any individual or trader in this country, but will put the seal on important international arrangements which will go far to stabilise international trade-further, in my opinion, than many of the trade agreements into which we have entered. The very germ of international peace is within this proposal, because if we can make these international trade arrangements we shall get security and we shall get away from this frightful depression and slump, this cycle of trade which is cruel in the extreme to all engaged in industry, but especially to the workers who have nothing to fall back upon when they are thrown out of employment.

This will enable us to get away from the dreadful competition between nations; it will enable us also to secure the square deal for all essential primary producers. How can the industry pay a decent price for its coal unless it is getting a decent price for its own products? In considering this matter, we must look at the whole gamut of our productive capacity. This industry and every other industry must be wide awake to the changes which are becoming necessary and that is where I quarrel with the hon. Member for South Croydon. He tries to get the best of both worlds. He wants to have an Elizabethan house with (modern drainage. The reorganisation question which is before us to-day I consider to be most important, not only for this country but for the world in general. I hope that this Clause will receive the assent of the House, and that it will be the beginning of many undertakings of a similar character.

8.47 p.m.


I desire to speak particularly as one who is deeply interested in the iron and steel industry from the standpoint of the employés, and I draw the attention of those who are opposing this Clause to the fact that since 1920 and up to two years ago that industry has been in a depressed state. When I hear hon. and right hon. Gentlemen talk about the prosperity of the iron and steel industry, I wonder whether they have given any attention to the facts of the case. Even to-day, if we take the figures of 1935—a record year for output, surpassing the figures of 1929—we have still to remember that there is nearly 17 per cent of unemployment in the industry. I hear hon. Members talk about price arrangements and the hon. Member for South-West Bethnal Green (Sir P. Harris) pictured the terrible position in which the consumer would be placed as a result of these arrangements among steel makers. I would draw his attention to this fact that the wages in the industry which are regulated by the price of the commodity produced—the realised price at the makers works—are only 2s. a ton on 31st March this year more than they were in March, 1929.

The workmen approached the employers last July and got an ex gratia 5 per cent. addition to their wages because, through the agreement made between the employers and the Government, prices remained stationery and the workmen were not getting that benefit in the shape of increased wages which would have arisen from increased prices. Therefore the employers had to concede to the workmen that 5 per cent. in addition to the amount given to them under the ordinary operation of the sliding scale which is based on the price at the makers works. On plates which represent and have represented for years the major factor in the industry, that scale stands to-day at 28¾ per cent. above basic. In July, 1914, that scale was standing at 1373x00BE; per cent. above basic, so that comparing to-day with the pre-war month of July, 1914, there has been an increase of only 15 per cent.

When I think of the many industries with which hon. and right hon. Gentlemen in this House are connected, producing articles which enter more largely into the every-day necessities of life than iron and steel—which has only a remote and indirect connection with our daily lives—and when I consider the prices that are being given without demur, for those articles, I am amazed to hear talk about exploitation in the iron and steel industry and about the great octopus of the iron and steel trade federation. As a matter of fact price arrangements are no new thing. In pre-war days there were always price rings and price arrangements in the iron and steel industry. To me, there is a faintly familiar ring in all this talk to-night about price arrangements. I think I remember this subject being discussed in this House when it was suggested that price arrangements would be a good thing for the coal industry and the miners. It was also suggested—and the proposal went through this House—that selling agencies should be arranged in the coal industry to prevent those in that industry competing against each other and bringing prices to such an uneconomic level that the only way in, which they could recoup themselves was to reduce the wages of the employés.

We are told to-night that we are setting up in the Iron and Steel Trade Federation what is more or less an import board. There is also a faintly familiar ring to me about import boards, as having been suggested from this part of the House, as a method of dealing with foreign competition. While I disagree with the proposal that import boards should be set up by private associations of employers—'[An HON. MEMBER: "That is the point."] It is not the point, if the hon. Member will excuse me. It is merely the method which is being used in opposing this proposal. The point here is that while we want to see those things publicly owned and controlled, if we can get through the period when this House is not prepared to go the length of national ownership and control—and I do not think hon. Members below the Gangway are in favour of that—if we can get reorganisation which will build up the industry, then it is a far better thing for the people engaged in the industry even that it should be organised in the form of a monopoly than, organised in the higgledy-piggledy fashion in which it has been organised, whereby the people engaged in it are at the mercy of all forms of competition.

We have heard it stated, and the argument may be used later on, that this licensing system, whereby the Iron and Steel Trades Federation is able, with the cartel—and I want the hon. Member for South-West Bethnal Green to remember that when you are talking about the cartel, you are talking about something that exists outside Britain and that the iron and steel trade of this country is not a member of the cartel. He seems to be using the argument that under this Bill we are associating with people whom he does not like, and all that he can offer is that we should not put in such a Clause, that we should not have such an arrangement, because these people are not nice people to know, but that we should remove all restrictions and allow consumers to buy whatever they can from people whom they do not like and who are not nice to know. That cartel has been smashing prices in this country and has been competing against the iron and steel industry, and it is working longer hours and paying less wages. That may be of no interest to hon. Members who are still wedded to the goddess of Free Trade, and who would like to carry out to its logical conclusion all that that theory implies, which would mean free everything, and free labour as well, with no trade union organisation to step in and say, "Thou shalt not" at the various points.

I want to impress upon this House that the iron and steel trade has been told in this House, in Debate, to put its house in order. It was told to reorganise, to bring itself up to date, and I heard the right hon. Member for Keighley (Mr. Lees-Smith) stating that it had now brought itself up to date very much later than had been done in other countries in the world. As a matter of fact, that again shows a lack of knowledge of the situation. The iron and steel industry of this country has been in as advanced a stage technically as most of the other steel producing countries in the world. I know places in Scotland where records were beaten, and where they defeated any records in America, Germany, or any other place, but during the depression that came after 1920 the iron and steel industry was not in a position to introduce new capital into the industry, because the trade was not there. Germany, which was our competitor in those years, was using money that had been lent by the City of London for the industrial development of Germany, and that industrial development was used for the purpose of throttling the prices of iron and steel in this country, sending in cheap iron and steel, manufactured by people working longer hours than the British workmen and working for lower wages.

That, of course, is quite good Free Trade finance or Free Trade policy, but it is not the kind of policy for a country which is seeking to reorganise its industry in order to meet the entirely new situation that has grown up, where, in all the countries of the world, there is an economic nationalism, whether you like it or not, as well as a political nationalism. Have we to sit in this country and allow our industries to be shattered, and then to turn and tell the people in the industry, "Oh, but you ought to reorganise"? The word "reorganise" has been used like "that blessed word Mesopotamia,'" until no one really understands what it really means, because as soon as you reorganise you are told that it is a wrong thing to do. So far as the Labour movement is concerned, it has put forward a policy of reorganisation, it has advocated import boards, and it has advocated national ownership and control. We cannot get them, but while we are working for them, I am not prepared to see the industry going down, because of the number of people whose livelihood is involved in it.

Remember this, that while we are importing under this half-a-million tons or thereabouts, we are told by those who oppose this Clause that they would probably like to see more than half-a-million tons coming in. They do not like this system. If there is more steel coming in than is laid down under that agreement, how is there going to be any chance for Jarrow, Moss End, Penistone, or any of the other works that have been completely closed down since 1921? Remember also that when you are producing iron and steel in this country, you are using coal, and that for every ton of iron and steel that you produce you are using something like three tons of coal. If that is not a consideration for people who are concerned with the welfare of the country, I do not know what is. I think we ought to support this Clause, though not because it gives us everything that I would desire to see given in the way of organisation.

In conclusion, I want to say that the statement that the Iron and Steel Trades Federation is preventing people or companies from affiliating is a statement which is contrary to the fact, except in one particular instance that I know of. The Brymbo Company in North Wales want to come in, and the reason why they have been refused is that they are working under the rates. They are paying less wages, and the iron and steel trade employers cannot take them in until they pay the recognised trade union rates of wages. That is the only case I know, and surely that is not a case to be deplored; it is, rather, a case to be commended, because it shows that there exists in the industry trade union organisation. I am not saying that the employers in the industry are bands of angels—I know them—but I am not saying either that the foreign employer is an angel because he lives on the Continent. The iron and steel industry has been carried on, as far as wages negotiations are concerned, in an organised fashion, and that can only be kept up provided there is an organised industry. If the industry is thrown back into the chaos of internecine war and competition, it will be more difficult for the trade unions operating in the industry to achieve a decent standard of life for the men. employed in it.

9.6 p.m.


I am very grateful to the last speaker, because those of my friends who were in the last Parliament will remember that I did my utmost on many occasions to convince the hon. Member's colleagues in the Labour party of some of the facts which he has placed before them to-day. The right hon. Gentleman the Member for Keighley (Mr. Lees-Smith), who introduced the discussion on this Clause, took the usual line, which every Member on the Labour benches has taken in the last few years, of attacking the lack of organisation in the steel trade. I do not think there is any occasion on which I have spoken when it has not fallen to my lot to challenge or to disprove the suggestion that the iron and steel trade is not being reorganised. If the right hon. Gentleman had read the White Papers which have been issued from time to time by the Import Duties Advisory Committee, and the White Paper which is before us to-day, he would agree that the Advisory Committee would never have made the recommendations they have made to the Treasury for variations of the duties if they had not been satisfied that the iron and steel trade was carrying on its reorganisation to their complete satisfaction.

Ordinary intelligent reading of the newspapers ought to convince any hon. Member that in all parts of the country modern plants were being built and that complete reorganisation was taking place in some of the largest companies. I may remind hon. Members, for instance, that during the last 12 months a steel plant worth between £3,000,000 and £4,000,000 was started by Guest, Keen and Nettle-fold, of Cardiff. Then there is the work of the development of Dorman Long, and the works at Consett in the north of England. Here and there in various parts of the country complete new installations have been laid down in the last few years. I was delighted that the hon. Member for Motherwell (Mr. Walker), with his intimate knowledge of the inside of the industry, was able to state so definitely that our steel works are as efficient and modernised as those in any steel-producing district in any part of the world. That is my reply to the question of the right hon. Gentleman as to what was the internal contribution which the industry was going to make as a return for the protection which the industry had received from the Government.

The next important question with which the right hon. Gentleman dealt was that of price level. He made rather an amazing statement when he complained that the fixing of prices was to be left entirely with the iron and steel industry. I ask the House in all seriousness, who on earth is to fix the prices of a product if it is not the industry that produces it? The Labour party has dealt with the question of price level time and again. When in office in 1930 they introduced the Coal Mines Act and gave statutory effect to the schemes which colliery owners were adopting in various parts of the country to deal with the price level. When we were discussing the setting up of the central selling agency last week, I never heard any hon. Member opposite ask why the fixing of price should not be left to the selling agency. The iron and steel industry, of course, will take care, as it always has done, that prices are fair as between producer and consumer. At every stage when a variation in the price level of the products of the iron and steel industry has taken place the prices have been submitted to the Import Duties Advisory Committee for approval, and on every occasion audited statements of account and costs have been submitted to the Committee. We can say, therefore, that no variation in price level has taken place in the last few years without the approval of the Import Duties Advisory Committee.

The right hon. Gentleman made another statement which ought to be challenged, when he said that this industry has had the advantage of abnormally low-priced coal. I know his reputation as an economist, and therefore I was surprised that he should have made that statement. If he went to the Library, as I did this morning, and looked at the Board of Trade "Gazette," he would find that in the last 12 months the increase in the price of coal was 5½ per cent. and the increase in the price of steel was 4½ per cent. and the index price of coal was 104.9 while that of steel was 104.7. It is not true, therefore, to say that the steel trade has taken advantage of these powers and raised the price level while at the same time it has received abnormally low-priced coal. As a matter of fact, no industry in the country was more eager [...]o pay the coal industry higher prices for coal than the iron and steel industry in the early part of this year, when the miners brought forward their demand for increased wages.

The right hon. Gentleman also asked, in dealing with the importation of 500,000 tons of steel, who was going to distribute it? The White Paper states that the importation of this steel is, in the first place, under the control of the Iron and Steel Federation, hut, after the theoretical distribution of the material is made, the actual work of distribution is handed back to the representatives of the cartel companies. There is no fear that any consumers of steel will be short. The White Paper states definitely that any consumer of steel, whether he belongs to an affiliated association or not, will be treated as fairly as anyone within the association. I want to say, on behalf of the steel makers, that any genuine case of complaint of unfair treatment of a steel consumer or steel fabricator, will be looked into thoroughly with a, view to adjustment and doing away with any grievance.


We hear the same story continually from the Government Front Bench, and we know what it means.


I cannot go into that point. I want to say definitely, on behalf of the iron and steel trade, that we shall be very careful to see that the material imported or produced by the iron and steel trade is distributed among the consumers fairly and equitably. That is the answer I give to the right hon. Gentleman's question.

Another question raised concerned the attitude of the iron and steel trade to the Jarrow position. The hon. Lady the Member for Jarrow (Miss Wilkinson) seems to have the impression that the British Iron and Steel Federation has acted very selfishly over the Jarrow question. May I say officially, on behalf of the iron and steel trade, what has actually happened in this matter? We all know from what has appeared in the Press, and the movements that took place, of the purchase of the site of Palmer's shipbuilding yard at Jarrow. A number of North of England steel people were approached by the financial group interested to see whether it was not possible for them to take an interest in the laying down of a new steel plant in that area. A number of important steel firms examined the position from a technical and a commercial point of view, and were forced reluctantly to the conclusion that it was not a commercial and technical proposition. That is the conclusion they came to one after the other. There is nothing to stop any group of steel makers or financiers starting a steel plant at Jarrow.

It is suggested that the Iron and Steel Federation has some power to interfere, or to stop that step being taken. I say, frankly, that the British Iron and Steel Federation has no statutory authority, has no power, and has no influence to stop any group of individuals starting a steel works at Jarrow. What is more, there is no such thing as a quota in the iron and steel trade. I have heard it suggested that the iron and steel trade would refuse to give the Jarrow steel works a quota of production, but there is no quota in the iron and steel trade in this country. There is a quota system in the coal industry. You cannot start a new colliery unless you get a quota, or else buy a quota, but in the iron and steel trade there is nothing to prevent any body of men with capital laying down a new steel plant in any part of the country. There is no obstacle at all in the way of any corporation or any group of individuals starting a new plant at Jarrow to-morrow. But all the experts within the iron and steel industry on the North-East Coast who have examined the propositions which have been put to them are satisfied that the project is commercially unsound.

It would be very unfair for these experts to raise hopes in the hearts of any unemployed people in that part of the country by saying this was a scheme that was bound to succeed. All that has happened up to now is that the people who have been approached have said that they are not interested. I beg the House and the people of the North-East Coast to believe that the British Iron and Steel Federation has no power at all to place obstacles in the way of any group of individuals starting a steel works at Jarrow. I want to be very definite about it, and I hope the hon. Lady will accept what I say.


Is it or is it not the fact that Sir Andrew Duncan, chief of the iron and steel trade, said in December last to the North-East employers that, without them or with them, this proposal had to go on? Did he or did he not say that?


What Sir Andrew Duncan said in December last I do not know, but I have discussed this question with Sir Andrew Duncan even to-day, and all I am concerned about is to say that Sir Andrew Duncan, as independent chairman of the iron and steel trade, has no power to stop any group of individuals starting a new steel works in Jarrow.


He wanted it to go on and they did not.


If Sir Andrew Duncan wanted it to go on, all that remained was for the people on the north-east coast to find a group of financiers to put down the money and start it. There is one other question to which I should like to refer, the licensing of this half-million tons of steel. The suggestion is that that is of peculiar advantage to steel makers generally. The Iron and Steel Federation were encouraged not only to safeguard and develop their home industry in iron and steel, but were encouraged and pressed by the Government and others to develop their export trade. They had, therefore, to approach the International Steel Cartel. For many years the iron and steel trade in this country had endeavoured to come to an understanding with that cartel about the export trade of the world. Five or six years ago, or perhaps a little longer, that cartel were prepared to give a quota of output to Great Britain of only 7,000,000 tons. This year alone Great Britain is producing at the rate of 11,500,000 tons. It was as a result of the 50 per cent. duty, which operated for only a short while, that the iron and steel industry was able to demand from the cartel a fair share of the export market of the world. We have been able to use the tariff as a weapon not only to protect our own home market but to demand from the Continental cartel a fair share of the export market. On those two grounds, coupled with the fact that the iron and steel trade has proceeded at a really quick pace to reorganise its industry, I suggest that the House should approve of Clause 6.

9.23 p.m.


While this Debate has been proceeding I have become convinced of the truth of a remark made by the present Prime Minister, that he was staggered at the many facets of truth. I am glad that we have had from the hon. Member for West Swansea (Mr. L. Jones), who speaks with authority for the Iron and Steel Trades Federation in this country, something definite about the position of the Jarrow steel works, because there have been so many people making vague speeches of good will that we have not been able to get them tied down to the actual facts. Let us deal with the speech of the hon. Member. According to his kindly words some people were just asked to interest themselves in the matter and they came to the conclusion that there was nothing in it. What are the whole facts—because you can take all the speeches which have been made, including that of the hon. Member for Motherwell (Mr. Walker), and pick out little bits about the situation, and simply prove anything at all. There was the suggestion that a highly-modern steel plant should be set up at Jarrow. The matter was put before the Iron and Steel Trades Federation and at first they would not look at it. After that it was suggested, not that the people directly interested in preventing any competitors starting should consider it, but that there should be an outside expert's report.

Who was that expert? It was Mr. Brassert, of the firm of Brassert and Company who, as I think the hon. Member will agree, is one of the leading iron and steel trade men in the country, the man who was very largely responsible for the highly modern steel plant of Stewart and Lloyd. What was his report? It was that, considering the situation of the site offered at Jarrow, and provided that sufficient extra land could be obtained, this was a site with a seaboard so near that it offered a highly economic proposition for the production of steel. Mr. Brassert had no interest in the matter. He was simply called in as an expert. If the hon. Gentleman says that the various iron and steel works concerned were not interested in taking up shares because they wanted to preserve the position of their own works, I am willing to admit it, but he cannot, in view of the Brassert Report, say that this was a casual offer in which they were not interested. It was not on the views of the North-Eastern steel firms, but on the Brassert Report that Sir Andrew Duncan made the statement in December last that not only should this proposition go on, but that it ought to go on, a definite statement reported in all the Press of this country, including the "Times."

Now we come to the second argument of the hon. Member. He said that the British Iron and Steel Federation had no power to interfere. It is true to say that if this particular collection of people, or I myself, or anybody wanted to raise money to decorate the northern bank of the Tyne with a steelworks for our own amusement, the British Iron and Steel Federation could not stop us. They could not go to the law courts and say that we should not build a steel works at Jarrow. But Members of this House are not infants, even if they do not happen to know the precise meanings of all the terms used in the iron and steel trade. You have only to read in the White Paper the formidable powers that are in the hands of the Iron and Steel Federation to realise that if they put into operation the powers that exist nobody would put money into the iron and steel trade.


I know the hon. Lady wants to get at the facts. I want to say definitely that, whatever powers are said to be in the constitution of the British Iron and Steel Federation, there are no powers of any kind which the federation has either to help anybody to construct a steelworks or to place obstacles in the way. I want the hon. Lady to believe that. If you decided to-morrow to start a steelworks at Jarrow you would be welcomed as members of the British Iron and Steel Federation and get all the facilities that any other member gets.


Now, now, now, really these bedtime stories may go down in South Wales, but they will not go down in a hard-headed assembly like this. It is ridiculous for the hon. Member to insult the intelligence of this House by making a statement of that kind.


I thought I was able to make an honest contribution. If the hon. Lady is going to adopt the usual practice of being rude, I have nothing more to say.


I will be as polite as the hon. Member lets me, but it is not fair for him to suggest that to people who have read this White Paper. I am sure the hon. Member has the kindliest intentions to all God's creatures, but the fact remains that members of the British Iron and Steel Federation are not in it for the good of their health, and that they do not intend that anybody shall come into the pretty little garden arranged for them by the President of the Board of Trade. I challenge the hon. Member, and the hon. Member for Darlington (Mr. Peat). The federation can interfere at three vital points. They can interfere with regard to the import of raw materials—that is to say, they can interfere with regard to whether a steelworks is to get its share of the raw materials. What does the hon. Member say? That all these matters will receive due consideration. But by whom are they going to be considered? By their competitors, the people who have determined that they shall not come in and share. If they were going to be considered by an independent member of the community it would be a very different thing. The second thing is that if you take the question of selling, the proposed steelworks at Jarrow are going to produce certain things. Does the hon. Gentleman deny that the federation has given the syndicate a list of the things that they will not supply?


I would like proof of that statement. I say again that the British Iron and Steel Federation have no power to dictate to anybody what they should produce. They have no power to dictate to any manufacturer what he should manufacture.


There is no difference of opinion on that. It depends on what you call power. You cannot take people into the law courts; there is certainly no power to interfere like that, but every business man knows that where you have a tight monopoly the things that really matter are not the things which are down on paper—though in this case the rules and regulations are on paper—but the tremendous influence that an enormously strong monopoly like this can, in fact, use. Does the hon. Gentleman deny that they might say to customers: "We are anxious to supply you with all your needs, but if you buy from this steel works that we do not want, then we will not supply you with other goods"? That is an instance of the things that are happening every day, like the Light Castings Association, electrical fittings, and so on. The hon. Gentleman said that they had no power. Of course, he is talking about legal power.

Then the other question is that relating to capital. The hon. Member for Darlington has said: "If the people set up these works we shall be perfectly charmed to take them into our midst," but if they cannot get the guarantee which they are asking for, and if they are meeting with opposition everywhere, and if, as is a fact, they are also meeting with capital which is raised at the banks, what then? Should the Minister says: "We have no power to prevent this steel works being put into operation"? This is a matter of importance to Jarrow.

You, Sir, have very rightly ruled that this Debate should not be narrowed to one point. The whole question is whether this country is to be delivered, bound hand and foot to a monopoly controlling materials which are vital to its economic life, and controlling them not merely in this country but internationally. The hon. Gentleman the Member for Darlington spoke of the vast machine for the production of iron and steel, and hoped that it was going to be used in the interest of world peace. I cannot help feeling that in the House to-night we are creating a Frankenstein, a vast monster, upon an international scale that will con- trol the economic life of this country and other countries, in the interest of a very small group of people who are responsible to nobody. If we are to fight the next war that we seem to be rushing into, nations will be put into the position of having to draw their war material all from the same source. I see, from what the hon. Member said, this Frankenstein deciding that we are to fight because it suits its pocket, and deciding that we are to stop fighting because it no longer suits it; and all the time the hon. Member for Darlington and the hon. Member for West Swansea will be assuring us that they are ready to supply anybody, and that their only interest is the public interest.

I turn to the President of the Board of Trade, who will have placed in his hands by this Bill the most enormous power. If this Clause goes through without any Amendment and without any protest, and just by the House having to accept it, it may be that it will go out of our hands. We really are at a moment when the President of the Board of Trade can use power and influence. I ask him whether he thinks it is in the public interest that this monopoly should be created without any public control. On this side of the House we want to see planning and public control in the public interest. May I point out what planning means without public control? In speaking for Jarrow, I speak for a Jarrow that has been murdered in the interests of rationalisation—and I am not using too strong a term. Our shipping was closed down some years ago by the rationalisation of National Shipping Securities, Limited. When this site has come forward, when the right hon. Gentleman and the Prime Minister have expressed sympathy and when there is a very real hope for the town, based not upon charity but upon a report which has convinced even the hard-headed Chairman of the British Iron and Steel Trade Federation, a town where £300,000 a year of public money is being poured out in order to keep ablebodied men in idleness, eating their hearts out on public assistance and unemployment benefit, what are we doing as a country?

We have already raised the steel barrier, and by this Clause we are giving to this trade powers that no other trade possesses. At the same time we are allowing them, for the narrowest and most selfish of reasons—in order not to upset the hon. Member for West Swansea, shall I say, to use their influence?—against having these steelworks that would bring hope to the town and would use the labour of highly-skilled men that is rusting. It is not in the public interest for these men to rust. I ask the President of the Board of Trade, who has taken the most personal interest in the matter and, out of his very busy life has given special attention to it—I pay that tribute to him—whether he will use the power which this Clause seeks to give to him, before it is handed over, in order to see that this close monopoly shall not be continued and that the public interest must be considered when it is a question of new works being set up.

9.42 p.m.


The necessity of providing for the special importation of steel would be less if special facilities were permitted for steel being made in this country. I desire to follow my hon. Friend the Member for Jarrow (Miss Wilkinson) in stressing the importance of rebuilding the Jarrow steel works. I need not paint a lurid story of Jarrow as it was when I saw it first, two years ago. I would rather this matter were discussed on strictly business lines. Steel had been made in Jarrow for many years, not only at Palmer's, but at John Spencer's, and it was only at the coal strike of 1926 that these works were closed down. Some of the men who were discharged on that occasion have never worked since. As one who has been intimately connected for the last 20 months with these negotiations, perhaps I may tell the House something of the details, showing what has happened over this period.

In November, 1934, a small group of people interested in steel, at least some of them with philanthropic means, who wanted to help Jarrow, secured an option on the site of the steelworks there. After long-drawn-out negotiations the option was extended from time to time until the final option was ended and a contract for the sale of the works, not only the steelworks but the shipyard—was entered into at the end of last year. The matter went into stronger hands, and these people committed themselves to the purchase of the whole of the pro- perty. In spite of hopes and prospects, the project to-day is very nigh unto death, and the time has come when it is desidable that this House should know the real reason, not the reason adduced by my hon. Friend the Member for West Swansea (Mr. L. Jones), why Jarrow, forbidden in the past to build ships, is prevented from making steel. 1 would ask the House to remember that these steel works would give exactly the work that these men have been trained to do. It is no use bringing forward the argument, as has been done in the Press, that these men are not good enough for the job. They are. They are a very fine set of men at Jarrow, and they are of the right sort.

Last autumn I was able to test this matter by buying for them a small Greek ship to break up. They did it so successfully that, as the House may remember, the big "Olympic" was sent to them to break up also, and it may be of interest to the House to learn that next autumn the great "Majestic" will go to Jarrow to follow the "Olympic" and be broken up there. My object in trying to found this ship-breaking industry was to prepare the opportunity of providing raw material for the steel works at Jarrow. At the present moment this scrap is going to the nearest yard on the Tyne, which, as a matter of fact, is 12 miles from the Tyne, and the scrap has to be railed from Tyne Dock at a cost exceeding what it would cost to bring iron ore right across the ocean. I am not sure that that is really an economic proposition, but it is what is happening now. With regard to the great expert who has been called in, as mentioned by the hon. Member for Jarrow (Miss Wilkinson), and as admitted by the hon. Member for West Swansea (Mr. L. Jones), there is no question that he is one of the greatest experts in the world, if not the greatest. He has been called in by the greatest steel people in America, in Germany, and in this country, and only this week he has been given the contract for the great steel works in Turkey in competition with Krupps. There is no question that these people are very able people. Their report is on record, and is at the office of the President of the Board of Trade at this moment. It states without any qualification that, apart from the Northampton-shire ore fields, the best place in the whole country where steel could be most economically made would be alongside the deep water of the Tyne at Jarrow. While this project is in great jeopardy, not only are the people who have put up their money running the risk of losing it, but, what is far worse, the clock at Jarrow is being set back to zero, and all our strivings there to help a revival of trade on Tyneside may be brought to nought. The Steel Federation may deny that they have killed this scheme; I think my hon. Friend's observation was that they could not strangle it at birth. Whether it be infanticide or murder I am not going to argue, but the fact remains that, if they have not killed it, they have at all events drained it of its lifeblood and left it to its fate. Only last month the owners of the land were told the terms on which they would ho permitted to go on with the scheme, and I took with me to the President of the Board of Trade only the week before last a highly accredited witness who stated these facts to him. The terms were threefold—first, that only the least profitable iron and steel products should he made there; secondly, that these products must be sold at 15s. a ton more than those of any other member of the Federation; and, lastly, that the 15s. a, ton thus produced should be distributed among nominees of the Iron and Steel Federation.


Is it not only right, Mr. Speaker, that, when a statement has been made in the most dogmatic terms that there was no opposition at all by the Iron and Steel Federation, when I have countered it and said that I knew better, and when the hon. Member for Guildford (Sir J. Jarvis) is stating the facts, which are actually vouched for by Members on the Front Bench, my hon. Friends should be in their places to hear these statements?


May I point out that the hon. Member for West Swansea (Mr. L. Jones) has been in the House ever since the Debate started, and has only just gone off for a few moments to get something to eat?


So have I; I have been here since three.


I only hope that the hon. Member for West Swansea will hear what I have said by to-morrow, if he does not hear it to-night. No works would ever be started under such conditions, for no one would finance a company which started its existence with such drags as these on its wheels. It has been asked why we do not proceed to build these steel works without any permission from the federation, but everyone who knows about finance in the City of London knows perfectly well that you cannot get big finance of this kind for steel unless you have the blessing, or at all events have not the active opposition, of the Iron and Steel Federation; so that it is foolish to say that this money could be raised and buildings erected and then the federation would take us into its arms. It just is not true. There are many reasons and much evidence that I could give as to the need for these steel works. First of all, I would like to quote from a very trustworthy source, which I know hon. Members on the Government benches will not question, because it comes from the "Hints to Speakers" of the Conservative and Unionist Association, dated the 11th June. It says: It is true to say that the industry has emerged from a position of almost blank despair to one in which the demands upon its productive resources have assumed embarrassing proportions. To-day, speaking of the iron and steel industry as a whole, it is much less concerned over securing orders than it is over the problem of satisfying an insistent and almost unprecedented demand. I notice that among some Members of the House there is a disposition to question the authenticity of this statement, so I may add that I believe the extract comes from the "Iron and Coal Trade Review" of the 24th April. In the second place, the Clause itself indicates the need for great production, and, surely, it is better that more steel should be made in this country than that it should be brought from abroad, especially if we can give shipping its share by importing foreign ore in its place. The real points at issue are these: The Steel Federation say that the promoters of the scheme are asking far too much; the promoters say that the federation is seeking to impose impossible terms. It is a case where the Government could step in and appoint an arbitrator, for the facts are not seriously in dispute, and the evidence is available for a very quick decision.

Speaking in the House on the 3rd December, the Prime Minister made this statement: A great many people and a great many industries have benefited by the protection given to them by this Government and there are many industries to-day—I instanced the steel industry particularly—which, had the conditions of 1931 been allowed to go on, would have been bankrupt at this moment and are now enjoying great prosperity. No one grudges them that prosperity… There can be no better work for the men who have received well at the hands of the State than to pay back their debt to the State, to those who are most in need."—[OFFICIAL RETORT, 3rd December, 1935; col. 75, Vol. 307.] Those words had an immediate effect, because there was a meeting at Harrogate in December last, either of the Iron and Steel Federation or of one of its committees, and there it was decided that the steel works at Jarrow should go on; and the president of the federation stated, both to the owner of the land and to the owner at that time of the option that, with or without the co-operation of the North-East coast, the works at Jarrow should go on. It was only at a later date, when, unfortunately, competitors in the neighbourhood apparently rather feared that this was the beginning of a great modern and up-to-date steel works, that all the difficulties arose and all these conditions were presented. This is a matter of life or death to Jarrow, and of great moment to all Tyneside, and I most seriously urge upon the Government that they do not permit this steel works at Jarrow not to be erected until they have heard all the evidence and have come to a decision on the facts, which it would be perfectly easy to lay before them.

9.55 p.m.


I think that those who have listened to this Debate for the last three hours will agree that it is very rarely indeed that we get such a series of fine speeches on any subject. I am not going to enter into the question of Jarrow. I neither know whether what the hon. Member for Swansea West (Mr. L. Jones) said is absolutely correct in every detail or whether the hon. Member for Jarrow (Miss Wilkinson) herself was correct in every detail. I want to draw attention to the fact that this Clause gives monopolistic powers to the federation. Of that there can be no challenge. The other might be challenged, but that fact cannot. I wish every Member had read the White Paper, because it gives some astonishing revelations. It says in paragraph 13: In pursuance of Article IV (d) of the Agreement, arrangements have been made between the Federation and the Cartel whereby the former purchase all imports into this country from the Cartel and then, in effect, hand their imports back to the Cartel for distribution in this country in consultation with the Federation. I want to ask the House if it is prepared to give such power to the federation to purchase all the imports from the cartel countries and say to them, "We will give you a guarantee as to the price and as to equitable distribution between the people demanding this class of goods." It was astonishing to hear a Member of the Labour party backing up an arrangement of this kind. He said his party believed in import boards, but if they could not get import boards he was prepared to give a monopoly to private interests. I am neither in favour of import boards nor of cartels or federations being given monopolistic powers. I still believe, as I have said time after time, in individualism. A question was put to the Parliamentary Secretary on 9th June by the hon. Member for South Croydon (Mr. H. G. Williams) as to whether an individual importer, not being a member of the federation or an association attached to the federation would be able to import goods from cartel countries. This was the answer: I imagine that whether or not any particular individual in this country could import steel at the reduced rate would depend on the relations of that importer with the British Iron and Steel Federation."—[OFFICIAL REPORT, 9th June, 1936; col. 147, Vol. 313.] What a remarkable state of affairs we are coming to! A year or two ago the right hon. Gentleman who is to reply tonight would never have subscribed to a doctrine of that kind. Here is an importer perfectly prepared to pay a price, prepared to abide by the rules of a limited quantity coming to this country. Whether he can do that or not depends on whether the Iron and Steel Federation thinks he is a good lad or not. What an astonishing thing for a Member of the Conservative party to subscribe to that sort of doctrine! No individual can go abroad and purchase unless he is on good terms with the Iron and Steel Federation. It is astonishing to read further down the same page of the White Paper where the federation say to the British Parliament, through the Import Duties Advisory Committee, "Do not be disturbed. Perfect freedom will be given to anyone to join this association provided they keep the rules and toe the line." That is another astonishing thing for Conservative Members to subscribe to. What did you do about trade unionism? You said, "You shall not force a man into a trade union." I do not say that legally here you are forcing him, but by your action you are doing it. The Parliamentary Secretary made that statement, that the importer is to be a good lad and is to be on good terms with the Iron and Steel Federation.

Certain allegations were made by the hon. Member for Motherwell (Mr. Walker) about the speech of my hon. Friend the Member for South-West Bethnal Green (Sir P. Harris). My hon. Friend was not arguing merely on the question of Free Trade. It was wrong of the hon. Member to infer that my hon. Friend suggested that he was in favour of low wages in order that there might be free imports. What my hon. Friend and I think is that, if there is to be control of imports, it should be in the hands not of a federation of private individuals but of the Government. I believe that these imports should have been controlled either by the Import Duties Advisory Board or by the Board of Trade itself. We put down certain Amendments which would have had the effect of giving the Government control. We knew very well that we could not defeat this Clause on Report, but we tried to make it more in line with our own principle and say, "You shall not give monopolistic powers to individuals." if there is to be a monopoly, let it be controlled by a Government Department. We do not believe that it should be in the hands of any body of private manufacturers. You are delegating certain powers to an outside body which the Government should exercise themselves. It is simply handing over Government and law to a body of traders.

How have they used their powers so far as home supplies are concerned? Have they been just as between one user and another? Have they been just as between a member and a non-member of the federation? It is true that, so far as home supplies of steel are con- cerned, they are invoiced to members and non-members of the federation at a specific price. But there is a rebate given to members of the federation which non-members do not receive. [Interruption.] That is perfectly true, but there is another rebate and another set of rules. I am not an expert on this particular trade, but I was given this information on Saturday night by users of particular commodities who were prepared to show me their invoices and to substantiate the statement that, whereas users of fine steel who were members of the federation received a particular rebate of £1 per ton, and on high carbon steel a rebate of £3 per ton, such rebates are denied to non-members of the federation. They also made this further statement that they had been threatened that if £3 per ton was not enough to drive them into the federation, it would be increased.


Can the hon. Gentleman say what quality of high carbon steel, because £3 per ton represents an enormous figure indeed, far more than the profit made in the industry with which I am associated.


I cannot tell the hon. Gentleman the particular quality of the steel, but I am prepared to give him privately the name of the firm who gave me the particulars, and probably they would tell him the particular quality. I have no knowledge of the particular terms and so on of this trade. The point I am making is not whether it is £1, £1 10s., £2, £2 10s. or £3, but whether there is a differentiation between members and non-members of the federation. If there is, ought we to give to this body making such a differentiation the tremendous powers that this Clause will give them? Unfortunately I understand that the Amendments put down by the hon. Baronet the Member for South-West Bethnal Green and several of my hon. Friends are not to be called. Our purpose in putting down those Amendments was to give control, if there is to be control, of imports to the Government, and not to a particular body interested in a particular way. I have spoken several times on the right of the individual to free choice. It is astonishing to find a National Government consisting of those who have claimed time after time that their object is to prevent these imports coming in under control and so on. This lot—[Interruption.] I did not mean it in any insulting way, but they know what I mean. They have said to the electorate, "For Heaven's sake keep freedom in being. They will take away your freedom." Week by week, almost day by day, this House is passing legislation which denies to the individual trader the use of his own initiative and economic enterprise. Once more by this Clause we are handing over monopolist powers to groups of people in order that they may control not only the home production, but imports coming into this country, and I trust that those who have some sense of belief in individualism will go into the Lobby and oppose this Clause.

10.9 p.m.


Though one would expect to hear such sentiments from the benches from which the hon. Gentleman the Member for South Bradford (Mr. Holdsworth) has spoken, I should have thought that with regard to individualism he would not have been looking through spectacles of 1926 in 1936. He and many others in this House must realise that, having regard to the great depression in the iron and steel industry since that date, some steps were absolutely necessary to make sure that the industry would feel its feet again in competition with other countries. Though in 1926 I certainly felt that we would wish to retain to the full the individual attitude of traders in this country, to-day we must look at things in rather a different way. I think that the House will agree that never have hon. Members heard the claims of a depressed area so eloquently and ably put as they have been put to-night in this House by the hon. Lady the Member for Jarrow (Miss Wilkinson) and by my hon. Friend the Member for Guildford (Sir J. Jarvis). I feel sure that if that appeal had been based upon something which was absolutely sound in business, there would have been no difficulty in meeting it. It rather reminds me of the claims of the tinworkers in Cornwall when they were claiming that we should put those old tin mines to work again in the present day. If it is impossible to produce steel as economically and as efficiently at Jarrow as apparently it is at Corby, it would be folly of the Iron and Steel Federation to proceed with the matter.


It has been said so often that we are asking for something uneconomic. Does the hon. Gentleman not think that as the expert opinion given is admittedly that of the best expert in this country, and that as his opinion is agreed with by the President of the British Iron and Steel Federation, it is not pleading for charity?


Is my hon. Friend aware that this expert is not the expert of the people who want to build the steelworks at Jarrow only, but is the expert of the Iron and Steel Federation, and that he says that if there are £2,000,000 or £3,000,000 to be spent on steel the most economical place in England to spend it is Jarrow?


I think I heard the hon. Lady in her speech say that the federation were out to make profit, and if it is true that this is by far the best place in this country for an iron and steel works it passes my comprehension why the Iron and Steel Federation have not at once acceded to the suggestion. The hon. Member said that certain conditions were laid down by the Iron and Steel Federation, and I will read a note which was sent to me only yesterday from the Iron and Steel Federation with regard to this matter. It says: Shortly, the scheme was propounded by a financial group outside the iron and steel industry, who were proposing to raise the requisite capital without any previous consultation with the iron and steel industry. Subsequently the iron and steel producers on the North-East Coast were invited to consider participation in the scheme in one form or another, and it received the most careful examination, with the result that some of them did not consider the scheme was commercially justified. They therefore declined to participate in its development. Others have always maintained that if a scheme that could be commercially justified was propounded. they would he willing to participate in it, and assist in its development. That confirms the statement of the hon. Member for West Swansea (Mr. L. Jones), when he said that not only had the federation no power to prevent any syndicate erecting steelworks at Jarrow, but also that if such works were erected and producing they would be included in the Iron and Steel Federation. As a representative of an area where there are a very large number of small producers of steel—Sheffield, where they are very often referred to as the "little mesters"—if the statements from the other side of the House with regard to the overpowering attitude of this federation were true, how is it that during the period that the federation has been at work we have no disgruntled small manufacturers? They have got settled down in their groove, taking their part in this great organisation, and there is practically no evidence in the country that the small manufacturers are being charged too highly for their raw material, or that they have any grievances against the octopus referred to on the other side of the House.

Having regard to the terrible position of the iron and steel industry only a few years ago, and bearing in mind the very small increases in price which have taken place in many of the main products of the industry—for instance, in regard to ingots, there has been no change in price—the House may well consider it a marvellous bit of work that the federation has done, in so very short a time, for the industry. When one realises that in 1932 the output of the industry was only a little over 5,000,000 tons and that it has grown to 11,500,000 tons, I think the House will admit, especially seeing that prices have not been changed, that a very great deal of useful work has been done. It would be absolute folly, apart from the difficulty which, I agree, exists in Jarrow, if we made it impossible for this Clause to go through. I have great pleasure in supporting the Clause, and I hope there will be no doubt of it being carried.

10.17 p.m.


It has been said that one hon. Member who has spoken has left the House because he had had nothing to eat for some time. I have had nothing to eat since one o'clock, but I would creep on my hands and knees to come here and say a word for the distressed area of Jarrow. I had no grounds of complaint about the steel and iron ring until I read the White Paper, and until I had heard the story at first hand from the hon. Member for Guildford (Sir J. Jarvis) who, as the House and the country know, has been a real benefactor to Jarrow, putting the Government to shame. We have heard from him the story of the obstacles which have been deliberately put in the way of the resuscitation, the rejuvenation and resurrection of Jarrow. Friends of mine, Members of this House, who are important members of the federation, have made statements to me. They might have respected my opinion, seeing that I know them so well. They might have taken my word, for I knew what I was talking about. It is within the recollection of the House that they denied that any obstacles had been put in the way, but we have heard the true story from the hon. Member for Guildford.

I have come to the deliberate conclusion, after hearing the Debate, that the putative father of this steel and iron ring, the lamented Clarence Hatry, may well be proud of his child. They have done everything possible to stop what I call the resurrection of Jarrow. The hon. Member for the Hallam Division (Mr. L. Smith) has said that if it had been a business proposal the steel and iron ring would have considered it, but there are far greater things than that to be determined in this House. There is the question of humanity. Is Jarrow to be allowed to stew in her own juice, if there is any juice left? Is this House going to agree, after hearing the facts, that this Clause, which should never have been in a Finance Bill, shall be passed? It is an old device to get through easily what should not be put in a Finance Bill. Will the House deliberately agree to Jarrow being left derelict? It has been said that the people of Jarrow are less thankful than they ought to be; that they have not thanked the hon. Member for Guildford. Even if that is true, it is no reason why we should copy them in their manners. The White Paper proves conclusively that Jarrow should have its chance. In paragraph 12 it says: Each non-cartel country enjoying most-favoured-nation rights will be given treatment not less favourable than that given to any cartel country. In the name of humanity and common sense has not Jarrow the same right to not less favourable treatment than any cartel country? Surely England comes first. When anyone talks about the brotherhood of man and does not look after his own father and mother I doubt his honesty and sincerity. I doubt the man who slobbers over his fellow Russian teaches his own countrymen to distrust each other. I doubt the honesty of this paragraph, and say that Jarrow has a right in the name of humanity and common sense to treatment not less favourable than that of any cartel country. Then in paragraph 16 the White Paper says: In the discharge of the responsibility for ensuring adequate supplies of suitable steel the federation have already, during the period that the agreement has been provisionally in force, arranged for such additional importations of steel as have been shown to be necessary to meet the rapid increase of demands in this country. There would be some reason for the stand of the iron and steel ring if conditions of the industry in this country were static, but there is no doubt that the demand for iron and steel is increasing and expanding. It is our duty as well as our privilege to see that factories which can be started—as they can be if big finance will keep out of the way and not hinder—are started for the benefit of our own countrymen and our own manufactures. I am getting sick to death of this lack of consideration. We have Scottish brains with English finance loading the dice deliberately against the Tyneside. Until a certain person whose name I cannot mention came up to the northeast coast in 1929 no one ever took the slightest notice of us. I appeal to the President of the Board of Trade, a lifelong friend, to be done with charity and let Jarrow have a chance to work for themselves and be men again.

10.25 p.m.


I would invite every hon. Member in the House to ask himself what would be the position of this country at the present time if we had not a healthy iron and steel industry. No more important group of trades and industries can be imagined than that which we know as the iron and steel industry. In 1931 its plight was desperate, and one of the first matters that was considered by the Import Duties Advisory Committee after the Act of 1932 was help for the iron and steel industry. It was the expression of opinion of the Import Duties Advisory Committee that help should be given to that group of industries, because its preservation, its maintenance in force and its development were matters of vital necessity to the country. The method of protecting the iron and steel industry at first was a temporary tariff, with an instruction to the industry to reorganise. The temporary tariff proved only an encouragement to foreign competitors to redouble their efforts to gain possession of this market by selling quantities of cheap steel at prices not comparable to the cost of production in the countries of origin.

The Import Duties Advisory Committee, realising that it was impossible to protect iron and steel on a temporary basis, gave a high rate of duty for a long period of time. Before doing so, the industry was informed that it must reorganise in a manner satisfactory to the Import Duties Advisory Committee, which would at all times watch what went on in the industry with the closest possible scrutiny. The industry proceeded to form the federation about which so much has been said to-night; a very distinguished man was appointed as its chairman, and still holds that office—Sir Andrew Duncan; the closest possible association existed between the federation so formed and the Committee set up to control the tariff system of this country; and organisation proceeded. From quite an early stage the Import Duties Advisory Committee pointed out to the Treasury, and the Treasury in turn to the Board of Trade, and the Board of Trade to the House when the Orders were made, that one of the most important factors in the whole question of iron and steel in the world was the existence of the cartel in the great steel-producing countries. This is nothing new. The Clause that is now before the House in the Finance Bill on Report stage is but a logical sequence of matters to which attention has been called time and time again during the last three years by the Import Duties Advisory Committee.

Hon. Members in some parts of the House object to the word "cartel." Hon. Members see in that word the possibility of some control which they do not completely follow, and they suggest that the result of an agreement with the cartel must necessarily be a disadvantage. That is not the case. One of the matters that the Government had very prominently to consider last year was the export trade of this country in iron and steel. The House will probably know that of the whole world export trade in iron and steel products, roughly 25 per cent. is in the possession of the United Kingdom. Some of our most important markets were threatened. The foreign steel-producing countries, finding that there was a tariff wall against them here, finding a resolute attitude on the part of the Government of this country not to allow the internal market to be swamped by Continental steel, said that they would attack our export trade in the same products by unloading the cheap Continental steel on those markets which we hitherto had had to supply.

What do we gain by the agreement set out in the White Paper? We gain the maintenance of our share in the markets of all the world, including the Dominions, on the basis of what we had in 1934. Let the House understand that this is no unilateral bargain. This is not something done for the benefit of the foreigner, in order that he may send a smaller quantity of steel into this country at a higher price. This is a highly advantageous trade agreement negotiated between this country and all the other important countries which manufacture steel, by which, in return for a certain control and stability introduced into a great range of industries, we preserve intact in our Dominions and in the world at large, that share of the export trade which we had in 1934.


But not what we had in 1929.


The hon. Baronet seems to imagine that everything should stop at 1929—


It is not to be allowed to expand.


I am pointing out that markets which we risked losing completely are being preserved on the basis, at least, of the 1934 figure, and if the hon. Baronet examines the figures he will find that 1934 was quite a good year. I am pleased to have taken part in negotiations which have resulted in the preservation of the 1934 basis instead of bewailing its loss. That is what the agreement with the cartel involves. There has been a great deal of misapprehension in many parts of the House with regard to the meaning of the Clause. I endeavoured on 9th June to explain it, and since then the White Paper has been issued. I gather that there is no complaint that the information given in the White Paper is inadequate. On the contrary, the right hon. Gentleman who initiated the discussion paid a tribute to the complete manner in which the information had been placed before the House. I stated on 9th June, and I repeat to-night that I believe this bargain to be definitely advantageous to this country. Were it not so, I would not be advocating the Clause at this Box now.

Let us examine what the Clause does. It is of course a machinery clause, and it provides that the Treasury shall have power to make orders in a certain way with a view to the establishment of a normal rate of duty and a higher rate of duty and that then a licensing system shall be introduced. Hon. Members who bend their minds to what is involved in the task of distributing something like half of what hitherto came in, will realise some of the difficulties which confront anybody setting up a licensing system. The hon. Member for South Bradford (Mr. Holdsworth) exclaimed at the idea of having in this matter a body of traders some of whom might be competitors with other people. But fancy any other method of dealing with it. Fancy attempting to deal with all these mysterious and complicated classes of iron and steel goods without expert knowledge. Who could see to an equitable distribution of iron and steel, if not iron and steel traders—experts, people in daily contact with the markets and with knowledge of the needs of the consumer? The iron and steel industry is not the easy matter spoken of in many parts of the House to-day. It includes a whole family of extremely important and intricate industries in regard to which it is necessary to have absolute, precise, accurate and up to date knowledge.

In order to establish a licensing system it is necessary to take legislative power to insist on such matters as certificates of origin and so on as the Clause provides. The Clause is a machinery Clause, but, as the House readily understood when we were in Committee, the machinery is destined to be used to implement a specific agreement, and the specific agreement is set out in the White Paper, where the relative correspondence and other documents are also set out. The right hon. Gentleman who introduced the discussion asked about the most-favoured-nation Clause, about the attitude of other countries, about who would determine who was to receive the permitted quantity coming in, and about what organisation had been made by the industry. I think he has come to realise, from the way in which the Debate has proceeded, that in fact the most-favoured-nation Clause presents no obstacle to the full implementing of the Agreement. The most-favoured-nation Clause is not infringed by quantitative restriction. The four cartel countries have agreed, as part of the agreement among themselves, that they will not insist upon full most-favoured-nation rights as between the cartel countries themselves. That is one of the terms of the Agreement. Non-cartel countries must, of course, he allowed their full treaty rights, and those treaty rights will be respected, whatever period is taken.

I take the year 1934 purely as an example. Supposing the basic period is regarded as the year 1934, then there will be allotted to non-cartel countries their proper proportion of their previous exports into this country, as determined by reference to the basic year, in precisely the same manner as the given quantity will be divided in the cartel countries. The most-favoured-nation Clause presents no difficulty and is one of the express terms upon which the Government sanction this agreement to set up the licensing system which they are asking the House to approve—that treaty rights must be fully respected and that the most-favoured-nation Clause must not in any way be infringed. Now who is to decide how the 525,000 tons of iron and steel goods to take the later period, are to be distributed? The House is quite right in saying that the distribution of that steel represents a big responsibilty. Certainly, and without waiting for the House to ask him, the President of the Board of Trade made it a condition of this matter going forward at all that the federation should sit down and face the problem, the type of problem which was put by the hon. Member for South Croydon (Mr. H. G. Williams) last time, namely, Supposing a new entrant into the trade comes along and says, "I have not hitherto imported Continental steel, but I want to begin doing so from next week; what are my rights?" He made it a condition that that sort of position should be faced by the federation to whom was to be entrusted the task of the day-to-day working of this big operation of the distribution of this permitted amount of Continental steel. So the President said to this federation, "I intend to keep the real control in this matter; I intend to have the control that matters; I am going to control the sluice gate, the tariff."

Let the House clearly understand what this means. We are talking of an arrangement with cartel countries as to the amount that is to be permitted to come into this country at a certain rate of duty, and we are talking of the remaining importation outside that quantity coming in at another rate of duty, but the Import Duties Advisory Committee can at any time indicate that, in their judgment, the matter is not satisfactory, and they can indicate whether, in their judgment, increased quantities of steel ought to come in from cartel or non-cartel countries. The sluice gate is operated by His Majesty's Government. The control of the tariff is the greatest control of all in a matter of limited importation from foreign countries. Besides that control, the President says to this Federation, "You give me the undertakings that I, considering the interests of the consumer, can properly put before the House and recommend the House to accept." Those undertakings are set out in full on page 12 of the White Paper. They have not been referred to in detail by speakers in the Debate to-day. Now and again an hon. Member has read a phrase, but I invite the attention of the House to them because it is upon them and upon implicit trust in the implementing of them alone that the House is recommended to pass this Clause. I want the House to understand that His Majesty's Government believe the undertakings to have full face value, and it is in the absolute belief that they will be implemented in the spirit and letter that I am making this speech.

What do the Federation undertake to do? To have supplies to meet requirements of British consumers and to make arrangements, if necessary, for additional tonnage to be imported. That is, in other words, the lifting of the sluice gates. They also undertake to make arrangements for the disposal of the per- mitted imports and to secure the equitable distribution among all classes of consumers without discrimination as to whether or not they are members of affiliated associations. The hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris) issued a statement when placing his Amendments on the Order Paper, and it was subsequently reported in the Press. The first sentence of that statement is: We have tabled these Amendments in order to remove the element of discrimination appearing in the Clause as drafted between the steel users who are members of the British Iron and Steel Federation, a purely voluntary body, and those who are not. There is no such discrimination either in the Clause or anywhere else. The undertaking from the federation is in terms that distribution of the steel imported under these favourable terms shall not depend on whether or not a man is a member of an association.


May I put this point? It is important, and I am sure that my hon. Friend is anxious to do the right thing. There will be only a limited amount of importation under the quota system. Is it not reasonable to say that members of the federation will have the first cut in at these quotas, and will naturally exhaust the quota quantity, and, therefore, will have an advantage over those who have requirements after the quota quantity is exhausted?


It would be imaginable that if you set up a quantitative restriction scheme those who had imported particular steel from a particular country in the past would be likely to receive a larger share than anybody who had never imported steel from that country at all. That is natural, but the point I am making, and the point about which the hon. Baronet was confused, is the fact that if a person is not in the federation it is not a bar to his receiving steel. I want to make that clear, because it is the whole essence of my commendation of the Clause. I have taken great steps to inform myself as to whether this undertaking has got any possible catch in its working or meaning, and quite apart from its meaning I have interrogated firms responsible for giving it as to what they intend it to mean, and I affirm to the House categorically that it is not a condition precedent of receiving any of this steel that a man or company or association should be a member of this federation or any associated organisation.


Where is the actual protection to the consumer of steel in this undertaking? We know all about the Import Duties Advisory Committee. There are one or two of us who appear there over and over again in the interests of consumers. There is no protection in the satisfaction of the Import Duties Advisory Committee, and that is all there is in that undertaking.


The right hon. Gentleman has not been so accurate in this intervention as he is sometimes. The protection to which I am referring—and I have got to paragraph 2—is, first, that if the quantity of steel imported is not enough, additional tonnages will be brought in. It has been made clear in many parts of the House that it is not intended that a single consumer should go short. If he will buy British steel so much the better, and there is no possible hindrance to his doing so. If he wants Continental steel for some special reason then it is intended that he should have the opportunity of procuring that steel. The amount must, of course, be governed in some measure by the amount available, and as there is to be allowed under this arrangement 525,000 tons instead of, as in some years, something like 900,000 tons, it is obvious there is less to go round.


Those who get the first cut in will be able to exploit it.


I daresay those who arrive well after the time for dinner will go short. The second undertaking is that the distribution shall be equitable among all classes of consumers, equitable as to quality, and quantity and price, and that there shall be no discrimination as to whether or not the consumer is a member of an association.


This is all "to the satisfaction of the Import Duties Advisory Committee" and that is all. We have had experience of that.


This has nothing at all to do with the Import Duties Advisory Committee, but is an undertaking given by the Iron and Steel Trades Federation to the President of the Board of Trade.


Read paragraph (b) of the undertaking.


It says: To make such arrangements for disposal of the imports of foreign steel from the cartel as will secure to the satisfaction of the Import Duties Advisory Committee the equitable distribution.


Yes, but not to our satisfaction.


I fail to appreciate the point. The third undertaking—it is a very material one, the hon. Member for South Croydon raised the point and has raised it subsequently in correspondence—is as to whether obstacles are to be put in the way of a given person, firm or undertaking joining an association. That is a very material point, because it may well be that British steel is sold on different terms to members of associations and to non-members—a matter of internal organisation with which for the moment, I am not concerned. What I am saying here is that if somebody wishes to come inside there shall be no obstacle put in the way of his membership, provided he is eligible under the rules and willing to observe them. Those are three important and valuable undertakings. Then there is a fourth undertaking that prices shall not be in excess of certain given prices. Hon. Members who have read right through the White Paper will find increases in price have been accorded by full permission of the Import Duties Advisory Committee, bearing in mind the increased prices of ore, of coal and of scrap. The position I put to the House is that control is retained by means of the undertakings obtained by the President of the Board of Trade from the federation, and that the Government believe these undertakings to be valid.

A number of points have been raised on the Clause itself, but substantially the remainder of the Debate turned on Jarrow. I hope that no words of any Minister, no words of mine, will be thought to do other than represent the greatest possible sympathy for the position in which Jarrow finds itself. I want to deal very carefully with the speeches that have been made about Jarrow this evening. In my own view they are not strictly relevant to the discussion of the Clause, though, naturally, the discussion having been broad and having been allowed by Mr. Speaker, I find no fault with the speeches having been made on this occasion. It is a plain statement of fact that neither the Government, nor the federation, nor any member of the federation has any power to order an industry to start in a particular area or to prohibit it from starting in a particular area. Whether or not an industry can, under economic conditions, be started in any given area is not a matter which normally comes under Government knowledge or control.

All I am prepared to say to-night is this: I hope we are not, as the hon. Member for Jarrow (Miss Wilkinson) thought, talking of the death-knell of Jarrow, or anything of that kind. I hope that all that is being discussed is whether or not one particular works under one particular management should be erected on one particular site. I hope that no effort will be relaxed in bringing to that site, if not this industry, some other, and I am still confident in my own mind that such a possibility can be attained. But in view of the speech by the hon. Member for Guildford (Sir J. Jarvis), I should like to say that there is no foundation for the statement that Jarrow would have been required to sell at prices in excess of the normal price, and to distribute the difference between nominees of the federation. Certain information, which the hon. Member said was not his own, but was the testimony of some witness to whom he referred, has no foundation in fact. I have taken pains to verify that in the most intimate quarters, and I am authorised to read these few lines to the House.

I do not want the House to be misled on the position of Jarrow. Whether or not these works should have been started is not a matter connected with this Clause. The Clause deals with the quantity of steel that is to come in from abroad, and cannot have anything to do with home production. The circumstances in which that steel comes in are all set out in an agreement between the various countries, which gives to those countries stability of price and a fixed quantity, and gives to us, in return, the assurance that our industry will not be torpedoed from countries close at hand with different wage rates, government subsidies and other matters denied to our own industries. It gives us the possibility of maintaining in the export markets of the world, and in the Dominions, the share we had in 1934, and it is a bargain which I commend to the House.


May I ask the Parliamentary Secretary for an answer to the question which I raised on the extract I read from what the hon. Gentleman said on 9th June? I will read it again because it is essential for the House to know what is meant by those words: I imagine that whether or not any particular individual in this country could import steel at the reduced rate would depend on the relations of that importer with the British Iron and Steel Federation."—{OFFICIAL REPORT, 9th June, 1936; col. 147, Vol. 313.] What is the meaning of that?


It is a very shrewd observation.


It is too deep for me.


What it means is, you have a limited quantity of steel to be divided among an unlimited number of consumers. The case was put by the hon. Gentleman the Member for South Croydon (Mr. H. G. Williams) of a man who, quite casually, decided over the week-end that he would like to become an importer of steel. There is no earthly reason why he should not. He is fully entitled to do so. He goes to the British Iron and Steel Federation and says: "You have been dividing up your limited quantity of steel Please add one." They reply, "Certainly; x plus one." He then says: "What does that mean that I get?" "Are you a member of the federation? Have you imported much before? You are a newcomer? Well, we will put you on the list for what you will get next year."

10.57 p.m.


I hesitate very much to intervene in this Debate, the more so because I want to intervene on the relatively small point which was dealt with by the Parliamentary Secretary at the end of his speech—the question of Jarrow. The Parliamentary Secretary said that Jarrow was not merely relevant to this Clause, but I think it is, and that it raises the whole issue about which all parts of this House feel very keen. Almost all of us, with the exception of some hon. Members, believe that it was necessary to organise the steel industry on this sort of line. I think all Members are keenly conscious, as the result of the experience of the last two years, that we have never thought out the implications and the consequences of such organisation, when it comes to the relation between the rationalised industry, and this House and the Government.

There may be a great deal of argument, into which I certainly will not enter to-night, as to what form those relations should take, and as to the extent to which the Government should exercise control, but there can be no doubt that the Government must bear a certain responsibility to this House for every action of an industry organised on semi-monopolistic lines. That was, of course, the meaning of the speech made by the Prime Minister last December, and quoted in this Debate. The disturbing thing to me and to many other hon. Members about this Debate, and previous Debates, relating to the steel industry and to Jarrow, is that it seems impossible to get a clear statement of what has actually happened in Jarrow during the last two years. All the statements made by my hon. Friend the Member for West Swansea (Mr. L. Jones) about whether the Iron and Steel Federation has or has not any power, and by the Parliamentary Secretary as to whether the Government have or have not any power, are irrelevant because, ex hypothesi, we want this industry to be organised, and we therefore want Jarrow to get this steelworks, if it gets it by general agreement upon the merits of Jarrow's application. Therefore, it is of no use anyone washing his hands solemnly and saying, "I am not responsible whether Jarrow gets its steelworks or not." The whole point is that Jarrow should get its steelworks if on the merits it has a good case for it, and everyone should be convinced as to the merits.

With regard to the hon. Member for Guildford (Sir J. Jarvis), I am bound to say I did not gather from him any coherent idea of what happened. He said he had the steelworks practically in his pocket at Harrogate last December or January, as a result of the intervention of the Prime Minister, after three conditions had been made. Those conditions, apparently, my hon. Friend never saw in writing; they were never made to him direct; he had them on the authority of a very credible witness, who was taken to the Board of Trade. The Board of Trade now, having met my hon. Friend and his credible witness, and having, apparently, said nothing to either of them, tell my hon. Friend that his credible witness was making two utterly baseless statements. Did anyone ever hear of a business tranaction conducted on these hit-and-miss lines?


I did the only thing I possibly could. The statement was brought to my notice. It was made by a man of credibility and high standing, whom I took to the Board of Trade and asked to repeat his statement to the President of the Board of Trade. That was all that it was in my power to do.


I am not criticising my hon. Friend in the least, but what I want to know is, who is in charge of these negotiations, who is dealing with the Iron and Steel Federation? Apparently it is not my hon. Friend the Member for Guildford, because he only gets his information indirectly, through highly credible channels but sometimes inaccurately. Apparently it is not the Government who are dealing with the Iron and Steel Federation. Who is dealing with the Iron and Steel Federation? Is it the hon. Member for Jarrow (Miss Wilkinson)?


The right hon. Gentleman has probably not followed these negotiations. If he desires to have the names, it is perfectly easy to give them, though it is not usual to do so across the Floor of the House. There are representative men in the City of London, headed by a Member of the House of Lords, but the man whose opinion has been accepted, even by the President of the Iron and Steel Federation, is the leading consultant on these matters. We are dealing with people of financial standing, and, if the names are required, they can be given.


The hon. Lady misunderstood me. I was not criticising her argument.


I did not think you were.


What I mean is that the question whether a steelworks shall or shall not be started in Jarrow is a matter of public concern, in which the House is very much interested. The House has not the facts before it; it has not, had any opportunity to judge of the merits of the case. No facts of the case have been placed before it by the Government, and I feel that in this matter the Government cannot take the line that it is not their responsibility, that they are merely holding a benevolent watching brief. It is for the Government, in a matter of this kind, to form a clear judgment as to the merits of the controversy, to tell the House what those merits are, and to take the responsibility accordingly for seeing the scheme carried through or for telling the House that the scheme is not worth while.

11.5 p. m


If I had been Chancellor of the Exchequer, a Clause like this would not have been in the Bill, because I do not believe in this planning idea which is now so popular. In the meantime we have had an explanation. I congratulate the Board of Trade on the admirable way in which they have produced their White Paper. The difference between Conservatives and others is that we are empirical in our outlook. We are not theorists, and we like to try experiments and abandon them if they are a failure, which is a merit, because it is the scientific method. I am prepared to vote for the Clause, although I do not like it. I remember describing an imaginary constituent in Croydon who wanted to do certain things. A week after I made that speech I received a letter which began, "I am your imaginary constituent." I received a letter from another constituent. One of my constituents is the largest buyer of constructional steel in the South of England. I passed those letters on to the President of the Board of Trade and the Iron and Steel Federation. I received a letter from the Mayor of a town in the Midlands where I was once a candidate

describing his troubles and raising the same challenging issue of the influence of monopoly. They have all been looked into carefully by the Board of Trade and the Iron and Steel Federation. 1 have received assurances which seem reasonably satisfactory; therefore I say let us give this a trial. I do not like it in the least. It is entirely in opposition to the kind of thing in which I believe.

One of my letters tells me that the tube industry, so far as tubes are manufactured by small firms, may be entirely crushed out by a large firm of the greatest eminence for which I have a profound respect. If that is true, I do not like it. But let us give it a trial. Let us test the declaration which I have received in writing from the federation and which I have received in other forms from the Board of Trade. While I should never have proposed this scheme myself, these assurances seem reasonably good. I have not gone into the Jarrow case. I do not like the implications of that, because no one stopped it and it is not happening. That is what I do not understand. I do not think I ought to ask permission from anyone before I start a factory. That is my declaration of political faith. I am against anything that challenges that. I do not like the Clause, because it says I cannot import any iron and steel from the Continent. I do not believe in it being imported from the Continent. I think it ought to be produced in this country. But if anyone is going to import it, I am as much entitled as the iron and Steel Federation. That is my declaration of liberty. But, having regard to the assurances that I have received, and as all these great influences have been made to sit up a little as a result of this Debate, I am prepared to try it for another 12 months.

Question put, "That the words proposed to be left out to the second '(3),' in page 6, line 19, stand part of the Bill."

The House divided: Ayes, 241; Noes, 137.

Division No. 261.] AYES. [11.10 p.m.
Acland-Troyte, Lt.-Col. G. J. Astor, Hon. W. W. (Fulham, E.) Bernays, R. H.
Adams, S. V. T. (Leeds, W.) Baldwin-Webb, Col. J. Bird, Sir R. B.
Albery, Sir I. J. Balfour, Capt. H. H. (Isle of Thanet) Blair, Sir R.
Allen, Lt.-Col. J. Sandeman (B'kn'hd) Balneil, Lord Blaker, Sir R.
Anstruther-Gray, W. J. Barclay-Harvey, Sir C. M. Bossom, A. C.
Apsley, Lord Beamish, Rear-Admiral T. P. H. Boulton, W. W.
Astor, Major Hon. J. J. (Dover) Beaumont, M. W. (Aylesbury) Bowater, Col. Sir T. Vansittart
Brass, Sir W. Hannah, I. C. Pownall, Sir Assheton
Briscoe, Capt. R. G. Hannon, Sir P. J. H. Radford, E. A.
Brocklebank, C. E. R. Harbord, A. Raikes, H. V. A. M.
Brown, Col. D. C. (Hexham) Haslam, Sir J. (Bolton) Ramsden, Sir E.
Brown, Rt. Hon. E. (Leith) Hellgers, Captain F. F. A. Rankin, R.
Browne, A. C. (Belfast, W.) Heneage, Lieut.-Colonel A. P. Rathbone J. R. (Bodmin)
Bull, B. B. Hepburn, P. G. T. Buchan- Rayner, Major R. H.
Burgin, Dr. E. L. Herbert, Major J. A. (Monmouth) Reed, A. C. (Exeter)
Butler, R. A. Herbert, Capt. Sir S. (Abbey) Reid, Sir D. D. (Down)
Campbell, Sir E. T. Hills, Major Rt. Hon. J. W. (Ripon) Remer, J. R.
Cary, R. A. Holmes, J. S. Rickards, G. W. (Skipton)
Castlereagh, Viscount Hope, Captain Hon. A. O. J. Robinson. J. R. (Blackpool)
Cayzer, Sir C. W. (City of Chester) Hudson, Capt. A. U. M. (Hack., N,) Ropner, Colonel L.
Cazalet, Thelma (Islington, E.) Hudson, R. S. (Southport) Ross, Major Sir R. D.(L'derry)
Cazalet, Capt. V. A. (Chippenham) Hulbert, N. J. Ross Taylor, W. (Woodbridge)
Chamberlain, Rt. Hn. N. (Edgb't'n) Hume, Sir G. H. Ruggles-Brise, Colonel Sir E. A.
Channon, H. Hunter, T. Runciman. Rt. Hon. W.
Christle, J. A. Inskip, Rt. Hon. Sir T. W. H. Russell, S. H. M. (Darwen)
Colville, Lt.-Col. Rt. Hon. D. J. Jarvis, Sir J. J. Salt, E. W.
Cook, T. R. A. M. (Norfolk N.) Jones, L. (Swansea, W.) Samuel, M. R. A. (Putney)
Cooke, J. D. (Hammersmith, S.) Keeling, E. H. Sanderson, Sir F. B.
Cooper, Rt. Hn. T. M. (E'nburgh,W.) Kerr, Colonel C. I. (Montrose) Sandys, E. D.
Craddock, Sir R. H. Kimball, L. Sassoon, Rt. Hon. Sir P.
Craven-Ellis, W. Lamb, Sir J. Q. Scott, Lord William
Crooke, J. S. Latham, Sir P. Shaw, Major P. S. (Wavertree)
Crookshank, Capt. H. F. C. Leckie, J. A. Shaw, Captain W. T. (Forfar)
Croom-Johnson, R. P. Leech, Dr. J. W. Shepperson, Sir E. W.
Cross, R. H. Lees-Jones, J. Simmonds, O. E.
Crowder, J. F. E. Levy, T. Sinclair. Col. T. (Queen's U. B'If'st)
Culverwell, C. T. Liddall, W. S. Smiles, Lieut.-Colonel Sir W. D.
Davies, C. (Montgomery) Liewellin, Lieut.-Col. J. J. Smith, L. W. (Hallam)
Davies, Major Sir G. F. (Yeovil) Locker-Lampson, Comdr. O. S. Smith, Sir R. W. (Aberdeen)
Dawson, Sir P. Loftus, P. C. Smithers, Sir W.
De Chair, S. S. Lovat-Fraser, J. A. Somervell, Sir D. B. (Crewe)
Denman, Hon. R. D. Lyons, A. M. Somerville, A. A. (Windsor)
Dodd, J. S. Mabane, W. (Huddersfield) Somerville, D. G. (Willesden, E.)
Dower, Capt. A. V. G. MacAndrew, Colonel Sir C. G. Southby, Comdr. A. R. J.
Duckworth, W. R. (Moss Side) MacDonald Rt. Hn. J. R. (Scot. U.) Spears, Brig.-Gen. E. L.
Dugdale, Major T. L. MacDonald, Rt. Hon. M. (Ross) Spens, W. P.
Duggan, H. J. Macdonald, Capt. P. (Isle of Wight) Stanley, Rt. Hon. Oliver (W'm'[...]'d)
Duncan, J. A. L. McKie, J. H. Stourton, Major Hon. J. J.
Dunglass, Lord Macnamara, Capt. J. R. J. Srauss, H. G. (Norwich)
Eastwood, J. F. Maitland, A. Strickland, Captain W. F.
Eckersley, P. T. Makins, Brig.-Gen. E. Sueter, Rear-Admiral Sir M. F.
Edmondson, Major Sir J. Manningham-Buller, Sir M. Sutcliffe, H.
Ellis, Sir G. Margesson, Capt. Rt. Hon. H. D. R. Tasker, Sir R. I.
Elliston, G. S. Markham, S. F. Tate, Mavis C.
Emery, J. F. Mason, Lt.-Col. Hon. G. K. M. Taylor, C. S. (Eastbourne)
Emmott, C. E. G. C. Maxwell, S. A. Taylor, Vice-Adm. E. A. (Padd., S.)
Emrys-Evans, P. V. Mayhew, Lt.-Cot. J. Thomas, J. P. L. (Hereford)
Entwistle, C. F. Meller, Sir R. J. (Mitcham) Titchfield, Marquess of
Errington, E. Mellor, Sir J. S. P. (Tamworth) Touche, G. C.
Evans, Capt. A. (Cardiff, S.) Mills, Sir F. (Leyton, E.) Tree, A. R. L. F.
Everard, W. L. Mills, Major J. D. (New Forest) Tryon, Major Rt. Hon. G. C.
Fildes, Sir H. Mitcheson, Sir G. G. Tufnell, Lieut.-Com. R. L.
Findlay, Sir E. Moore, Lieut.-Col. T. C. R. Turton, R. H.
Fleming, E. L. Moreing, A. C. Wakefield, W. W.
Fox, Sir G. W. G. Morris-Jones, Dr. J. H. Walker-Smith, Sir J.
Fraser, Capt. Sir I. Morrison, W. S. (Cirencester) Ward, Lieut.-Col. Sir A. L. (Hull)
Fremantle, Sir F. E. Muirhead, Lt.-Col. A. J. Ward, Irene (Wallsend)
Furness, S. N. Munro, P. Warrender, Sir V.
Ganzoni, Sir J. Neven-Spence, Maj. B. H. H. Wells, S. R.
Gibson, C. G. Nicolson, Hon. H. G. Wickham, Lt.-Col. E. T. R.
Goldie, N. B. Ormsby-Gore, Rt. Hon. W. G. Williams, H. G. (Croydon, S.)
Goodman, Col. A. W. Orr-Ewing, I. L. Willoughby de Eresby, Lord
Gower, Sir R. V. Palmer. G. E. H. Wilson, Lt.-Col. Sir A. T. (Hitchin)
Greene, W. P. C. (Worcester) Patrick, C. M. Windsor-Clive, Lieut.-Colonel G.
Gretton, Col. Rt. Hon. J. Peake, O. Wise, A. R.
Gridley, Sir A. B. Peat, C. U. Withers, Sir J. J.
Grimston, R. V. Penny, Sir G. Womersley, Sir W. J.
Guest, Capt. Rt. Hon. F. E. (Drake) Percy, Rt. Hon. Lord E.
Guinness, T. L. E. B. Petherick, M. TELLERS FOR THE AYES.—
Gunston, Capt. D. W. Plugge, L. F. Mr. James Stuart and Captain
Guy, J. C. M. Porritt, R. W. Waterhouse.
Hamilton, Sir G. C. Power, Sir J. C.
Acland, Rt. Hon. Sir F. Dyke Attlee, Rt. Hon. C. R. Broad, F. A.
Acland, R. T. D. (Barnstaple) Banfield, J. W. Bromfield, W.
Adams, D. (Consett) Barnes, A. J. Brooke, W.
Adams, D. M. (Poplar, S.) Barr, J. Brown, Rt. Hon. J. (S. Ayrshire)
Adamson, W. M. Batey, J. Buchanan, G.
Alexander, Rt. Hon. A. V. (H'Isbr.) Bellenger, F. Burke, W. A.
Anderson, F. (Whitehaven) Benson, G. Cape, T.
Ammon, C. G. Bevan, A. Cassells, T.
Chater, D. Jagger, J. Potts, J.
Clynes, Rt. Hon. J. R. Jenkins, A. (Pontypool) Pritt, D. N.
Compton, J. Jenkins, Sir W. (Neath) Richards, R. (Wrexham)
Cove, W. G. John, W. Ritson, J.
Cripps, Hon. Sir Stafford Johnston, Rt. Hon. T. Roberts, W. (Cumberland, N.)
Daggar, G. Jones, A. C. (Shipley) Robinson, W. A. (St. Helens)
Davies, D. L. (Pontypridd) Jones, H. Haydn (Merioneth) Rowson, G.
Davies, R. J. (Westhoughton) Jones, Morgan (Caerphilly) Salter, Dr. A.
Davies, S. O. (Merthyr) Kelly, W. T. Seely, Sir H. M.
Day, H. Kirby, B. V. Sexton, T. M.
Dobbie, W. Kirkwood, D. Short, A.
Dunn, E. (Rather Valley) Lansbury, Rt. Hon. G. Silkin, L.
Ede, J. C. Lathan, G. Simpson, F. B.
Edwards, Sir C. (Bedwellty) Lawson, J. J. Sinclair, Rt. Hon. Sir A. (C'thn's)
Evans, D. O. (Cardigan) Leach, W. Smith, Ben (Rotherhithe)
Fletcher, Lt.-Comdr. R. T. H. Lee, F. Smith, Rt. Hon. H. B. Lees-(K'ly)
Foot, D. M. Leonard, W. Smith, T. (Normanton)
Frankel, D. Leslie, J. R. Stephen, C.
Gardner, B. W. Lunn, W. Stewart, W. J. (H'ght'n-le-Sp'ng)
Garro Jones, G. M. Macdonald. G. (Ince) Strauss, G. R. (Lambeth, N.)
George, Megan Lloyd (Anglesey) McGhee, H. G. Taylor, R. J. (Morpeth)
Gibbins, J. Maclean, N. Thurtie, E.
Greenwood, Rt. Hon. A. MacMillan, M. (Western Isles) Tinker, J. J.
Grenfell, D. R. MacNeill, Weir, L. Viant, S. P.
Griffith, F. Kingsley M'ddl'sbro, W.) Magnay, T. Westwood, J.
Griffiths, G. A. (Hemsworth) Mainwaring, W. H. White, H. Graham
Griffiths, J. (Llanelly) Mander, G. le M. Whiteley, W.
Groves, T. E. Marklew, E. Wilkinson, E[...]en
Hall, G. H. (Aberdare) Marshall, F. Williams, D. (Swansea, E.)
Hall, J. H. (Whitechapel) Messer, F. Williams, E. J. (Ogmore)
Hardle, G. D. Milner, Major J. Williams, T. (Don Valley)
Harris, Sir P. A. Morrison, Rt. Hon H. (Ha'kn'y, S.) Wilson, C. H. (Attercliffe)
Henderson, A. (Kingswinford) Morrison, R. C. (Tottenham, N.) Windsor, W. (Hull, C.)
Henderson, J. (Ardwick) Naylor, T. E. Woods, G. S. (Finsbury)
Henderson, T. (Tradeston) Oliver, G. H. Young, Sir R. (Newton)
Hills, A. (Pontefract) Paling, W.
Holdsworth, H. Parker, J. TELLERS FOR THE NOES.—
Holland, A. Parkinson, J. A. Mr. Mathers and Mr. Charleton.
Hollins, A. Pethick-Lawrence, F. W.

11.20 p.m.


I beg to move, in page 6, line 19, to leave out the second "(3)," and to insert "(2)."

This is a matter of considerable value to the House, as it will give certain supervision to the House over proceedings which may arise from the passing of the Clause. If the Clause is left as it is only certain of the Orders relating to these matters will come before the attention of the House. As the Clause stands an affirmative Resolution of this House will only be required in the case of an Order imposing or increasing a duty. What I want is that we should have an affirmative Resolution of this House when the Board of Trade acts in the reduction or variation of a duty, for that seems to me to be of considerable importance. Although an Order, technically, comes before this House, in fact only a negative approval is required, and, if the approval of the House is taken for granted unless a negative proposal is moved, then the attention of the House will not be called to certain changes which the Board of Trade may propose to make. I hope the right hon. Gentleman will accept the Amendment, and the consequential Amendment also.

11.22 p.m.


I think the point made by the right hon. Gentleman is a good one. In the case of an Order increasing the duty automatically an affirmative Resolution would be required, but it is clear that under the Clause besides Orders increasing a duty, there may be made other Orders proposing a reduction. I think the right hon. Gentleman is right in saying that it would be better that in all these Orders there should be an affirmative Resolution, and I therefore accept the Amendment.

Amendment agreed to.

Further Amendment made:

In page 6, line 22, leave out "other than an order."—[Mr. Pethick-Lawrence.]

CLAUSE 10.—(Exemption from, duty of road construction, vehicles.)

11.24 p.m.

Captain A. HUDSON

If beg to move, in page 9, line 7, at the end, to insert "at the public expense."

These words were omitted in error when the Clause was first drafted. The same words are in Clause 12. The Clause, dealing with road construc- tion and machinery used in the making of roads, was always meant to apply to public roads, as the licence duty in this case goes to the Road Fund and the Road Fund pays the contractor back in a grant towards the cost of making the road. There is no particular reason why machinery used solely on private roads, drives, factory construction and so on, should be exempted.


I agree that this alteration is an advantage and I support the Amendment.

Amendment agreed to.

Further Amendments made: In page 9, line 12, after "roads," insert "at the public expense."

In page 9, line 22, at the end, insert "at the public expense."—[Captain Hudson.]

CLAUSE 13.—(Provisions to facilitate prosecution, of persons using vehicles without excise licences.)

11.26 p.m.

Captain HUDSON

I beg to move, in page 10, line 36, after "Police," to insert: or a county council within the meaning of the Roads Act, 1920. The object of the Amendment is to require that the owner of a vehicle which is alleged to have been used without the appropriate licence should give information as to the identity of the driver when required to do so by the licensing authority. As the Clause now stands, the owner is only required to give that information on the request of the chief officer of police. That does not quite meet the objects for which the Clause was drafted. Some county councils use their own officers for the purpose of detecting evasions of the licensing law, and I would point out to the House that in all cases it is the council which takes the necessary steps both to collect the duty, and, if necessary, also to prosecute if the vehicle has been used in an irregular manner. It is no new principle, because the Minister has the power and has made regulations that the local taxation officer is empowered to require the owner of a vehicle to produce the registration book relating to that vehicle. This Amendment is proposed to strengthen this Clause, which as I explained on the Com- mittee stage, is to prevent tax evasion and frauds on the Revenue.

Amendment agreed to.

CLAUSE 18.—(Provisions for preventing avoidance of Income Tax by transactions resulting in the transfer of income to persons abroad.)

11.28 p.m.


I beg to move, in page 12, line 25, after "shows," to insert "in writing or otherwise."

Lieut.-Colonel ACLAND-TROYTE

I beg to second the Amendment.


This is an important Clause, and I think it would be for the convenience of the House that we should address ourselves to it at an earlier hour.

Ordered, "That the Debate be now adjourned."—[Mr. Chamberlain.]

Debate to be resumed To-morrow.


Resolved, "That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts, 1920 to 1934, on the application of the Mayor, Aldermen and Burgesses of the borough of Bridgnorth, which was presented on the 9th day of June and published, be approved.

Resolved, That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts, 1920 to 1934, on the application of the Newport (Isle of Wight) Gas Company, Limited, which was presented on the 9th day of June and published, be approved.

Resolved, That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts, 1920 to 1934, on the application of the urban district council of Winsford, which was presented on the 10th day of June and published, be approved.

Resolved, That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts. 1920 to 1934, on the application of the Lord Mayor, Aldermen, and Citizens of the city of Leicester, which was presented on the 18th day of May and published, be approved.

Resolved, That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts, 1920 to 1934, on the application of the Corporation of the city of Edinburgh, which was presented on the 21st day of May and published, be approved."—[Dr. Burgin.]