§ As from the first day of April, nineteen hundred and thirty-nine, Section nineteen of the Finance Act, 1937 (which relates to charge of national defence contribution), shall not apply to any trade or business carried on by a society registered under the Industrial and Provident Societies Act, 1893, unless such trade or business is carried on by a society existing primarily for the purpose of earning and distributing profits on its capital.—[Mr. Barnes.]
§ Brought up, and read the First time.
The Deputy-ChairmanThis new Clause raises the same point as a new Clause on the Paper in the name of the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence)—(Charge of national defence contribution not to apply to housing associations)—and I suggest that the discussion might take place on both new Clauses, and that a Division be taken on the second one only if that be necessary.
§ Mr. George GriffithsDo I understand that the new Clause in the name of the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) and the Clause that you have called are to be discussed together? Are not these two separate Clauses entirely? Shall we take two Divisions after the Debate?
The Deputy-ChairmanBoth the new Clauses affect the charge for National Defence Contribution and I suggest that a broad discussion could take place on the first Clause
§ Mr. GriffithsDo I understand, then, that we shall be able to discuss both these Clauses together and take two votes instead of one?
§ 4.12 p.m.
§ Mr. BarnesI beg to move, "That the Clause be read a Second time."
I must apologise for not being in my place when this Clause was called. I hardly expected it to be reached so early in the proceedings. I think the Chancellor of the Exchequer is familiar with our main case, which is the origin of this New Clause, and on this occasion I do not propose to review the whole position, because I think that I gave it rather extensively on the Finance Bill of last year. We in no way go back on any of the arguments that were advanced on that occasion, and if I state that now perhaps the Chancellor of the Exchequer will accept the statement to avoid unnecessary repetition. But I would like to refer to the reply which the Chancellor gave last year to this proposal, when he stated the reasons or the principles that influenced him in exempting public utility companies from National Defence. The right hon. Gentleman will recall that our case is based upon the view that it is exceedingly unfair that co-operative societies should pay taxation of this description when there is exemption for certain classes of business, for the professions and for public utility companies. On 28th June, 1938, the Chancellor of the Exchequer used this argument in explaining why he exempted public utility companies from the operation of National Defence Contribution, but still insisted that societies registered under the Industrial and Provident Societies Act should continue to pay. I will quote the argument of the Chancellor on that occasion. He said, when dealing with public utility undertakings:
I cannot proceed on any other principle than that, in enacting this national contribution principle, we voluntarily decided to exempt companies where they are statutory undertakings, consisting, wholly or mainly. 957 in the United Kingdom or the Dominions, of certain services, such as the supply of water, gas, electricity and so forth.Later he stated:I do not think that it would be possible for the House of Commons to take out individual cases and say, 'It is true you are within the definition, but I will tax you.' You must proceed on some definition, and the definition here is the best we can make"—I want the Chancellor particularly to note the next sentence:though I confess that some of them are escaping when you might reasonably expect them to come in; that is because definitions sometimes break down on being interpreted. But the principle of the thing is as plain as possible. The principle is that where you have a public service company rendering public services in supplying water, gas, or electricity, where there are provisions which limit profits or charges, you are dealing with a special case rather different from the trader who is enterprising and endeavouring to carry on his business as successfully as he can."—[OFFICIAL REPORT, 28th June, 1938; cols. 1806– 7, Vol. 337.]I should like again to emphasise that the Chancellor voluntarily decided to exempt statutory companies when the statutory limitation of profits is in fact illusory, because in the Debate last year we advanced example after example of statutory companies engaged in gas, water, electricity and so on, whose profits and interest payments, not in an exceptional year, but over a long period of 10 or 15 years, averaged from 5 to 15 per cent., and in addition many of them made huge bonus distributions. The Chancellor has exempted professions and small businesses up to £2,000, and given modifications with regard to building societies under this scheme, and, therefore, our contention is that there are plenty of precedents in the arrangements made by the Chancellor himself for industrial provident societies being exempted. It will be observed that we specifically refer to the type of society which does not exist primarily for making profit.The second point that I would like to make is that our proposed new Clause does not offend the principle, which the Chancellor himself admitted, that governs public utilities. The Chancellor admitted that many of them should in fact be paying this tax, but he takes no steps at all to bring them under tax. These public utilities, the Chancellor argued, are different from the ordinary traders, but the differences, I submit, represent 958 advantage to the public utility companies, because they have a monopoly with their services, whereas industrial and provident societies have to compete with ordinary traders. Public utilities make handsome profits, because even 5 per cent. is a very reasonable profit in these days, and their profits are continuous, and in fact they represent sheltered businesses instead of the type of business that requires special privileges or assistance from the State. I think I am entitled, therefore, to argue that there is no case why they should be excused and why industrial and provident societies, not operating for profit, should be brought within the purview of the tax.
Take the case of the shareholders who invest their money in public utility companies. There is no difference in principle between that form of investment and any other form. The shareholders put their money in not primarily for the purpose of rendering a service to the community. That is not the motive of the investors in a public utility. Their motive rests entirely on profit, on the reasonable certainty that they will get regular and good profits, so that the public service on which the Chancellor hangs his case for exemption is a secondary factor, if it exists at all, as far as the investor is concerned. With regard to public utilities, which achieve a monopoly, no public test of efficiency is applied by the State in any way, and we have no general guarantee that these services operate at a cheaper ratio merely because they are a monopoly. As a matter of fact, in this direction the normal test of industry does not apply, because having a monopoly they can practically do what they like. In the case of the London Passenger Transport Board we have had an instance recently of a company that has increased its charges to the public merely for the purpose of maintaining its relatively high rate of dividend, or for the purpose of increasing its dividend. No one can argue that the increase in charges in that case is for improving the standard of labour of those operating the services, because recently that was refused.
Having stated that position, let me now consider the position of an industrial provident society. This type of business is organised—as a matter of fact, the Statutes lay it down—for improving the social conditions of the workers of this country. That is the test that is applied. 959 In the recent Prevention of Fraud (Investments) Act that was emphasised in Section 10, in endeavouring to give a definition to a society that should be registered under the Industrial and Provident Societies Act. So, here, Parliament lays it down that the primary purpose of an industrial and provident society must be that of improving the status or social or living conditions of the workers. Here is a type of business in which an investor is permitted to enter, not on the ground merely of making a profit or getting an assured rate of interest on his capital, but of aiming at a social purpose of the character that I have described. Then again, in public utilities, there is no limitation of share capital. A person can have £200 or £200,000 or more in a public utility company, but Parliament, for the purpose of ensuring that these societies are not used for the purpose of investment, has limited to £200 the amount of capital which a member can hold, and that is to ensure that the interest rate on invested capital in no way undermines the true purpose for which the society exists, namely, that any surplus arising should go to the members for their individual and collective improvement. If we take the average shareholding of the 8,000,000 members of the working and lower middle classes who are associated with this type of industrial organisation, we have proof that the societies have never moved away from the original purpose which Parliament had in mind when it passed these Statutes, in that the average shareholding works out at only about £18 per head. That is a clear indication that it is through this type of society that the great mass of the people have endeavoured to improve their social status and make their small wages go a little further than otherwise would be the case.
When we come to the surplus in these societies, ordinarily termed profit, the Chancellor is fully aware of our main argument on that case, that, the surplus in this instance being derived by the members trading with themselves and not with a third party, which normally must be the case for a taxable item like profits to be chargeable to Income Tax, the whole basis of the trade of these societies is with their individual members—
§ Captain Strickland indicated dissent.
960§ Mr. Barnes—and so the surplus becomes the difference between costs and the prices charged. That represents the great preponderance of the surplus arising through co-operative trade, and the amount of trade with what is known as the non-member is infinitesimal. Perhaps the hon. and gallant Member for Coventry (Captain Strickland) will permit me to state that since the principle of mutuality was originally departed from, in, I think, 1932, there has never been any desire on the part of the official machinery of the co-operative movement to avoid the problem of taxation of any trade done with non-members. I myself was present at an interview with the then Chancellor of the Exchequer, now the Prime Minister, just before the principle of mutuality was destroyed, when we offered that we would meet the difficulty by keeping separate accounts.
§ Captain StricklandI did not object to the statement of the hon. Member except in so far as that the trade of the co-operative societies was done exclusively on a mutual basis.
§ Mr. BarnesYou really can say "exclusively," because the amount of business that is done with non-members is, as I indicated, infinitesimal. It is so small as hardly to count in the vast sum of £430,000,000 which represents the total all-in turnover of the co-operative movement.
§ Captain StricklandHas the hon. Member the figures?
§ Mr. BarnesNo, but they have been got out from time to time, and they are so small that I think they are not worth bothering about. Nevertheless, I make this concession, that whether they are small or large, we have always recognised that the principle is there, and we have no real claim, except on the ground of the administrative convenience of the Treasury, that that amount of trade done with non-members should escape its legitimate charges. I was going on to explain that when the Prime Minister, as Chancellor of the Exchequer, in 1933 was contemplating this change that destroyed the principle of our mutuality position in Income Tax law, we made an offer to him that we were prepared to take any administrative action that was required for 961 the purpose of disclosing any trade with non-members so that it could be separately treated, if necessary. I have always regretted that the Treasury were not prepared on that occasion to explore that possibility, because I think it would have saved a long and unprofitable controversy. Members of the House should recognise that the feeling in the co-operative movement is not entirely with regard to the sum involved, although the sum under this progressive method of taxation, now that our mutuality position has been breached, tends to become larger. Apart from the sum there is a greater feeling in the co-operative movement that this mutuality position should have been destroyed in law, because we feel fundamentally that that is an injustice and a discrimination against almost half the population of these islands who have sought the co-operative movement as a method of investment.
Chancellor. We recognise as responsible elements in the community that the nation is faced with an abnormal situation. We recognise that the Chancellor must get the necessary money to discharge his liabilities. If the country were in a position where the Chancellor had adopted the attitude that because we were faced with abnormal expenditure, abnormal measures of taxation were necessary, and that he had to embark upon a method of taxation that was entirely different from the principles of taxation practised in this country hitherto; and if he had stated that that would apply to all, that there would be no exemptions, and that it would be outside the conditions applying to Income Tax, he might have had some case, but that has never been the Chancellor's position. National Defence Contribution falls within the four walls of Income Tax law and administration. The Chancellor himself, when he introduced the National Defence Contribution No. 2, proceeded to exempt certain categories of trade. Traders who are in business and making a profit up to £2,000 a year cannot be said to be doing a negligible business. Very often it is a considerable business to make £2,000 a year. The Chancellor himself introduced all these exemptions, and in our case the change has been aggravated because he has created a fourth category for co-operative societies.
962 Let me give the three categories of modification which the Chancellor has produced in National Defence Contribution No. 2. The complete exemptions are the public utility corporations, small businesses whose profits are under £2,000, and professional people. Then there are partial exemptions or modifications for companies whose profits are between £2,000 and up to£12,000 a year. Then there are modifications for building societies, private companies and certain classes of insurance. With regard to the third category, the Chancellor stated that companies which came into the National Defence Contribution will have to pay this 5 per cent. of their taxable profits, which will, in fact, be in the nature of one-fifth, or 20 per cent., increase in their Income Tax liabilities.
I submit that the industrial and provident societies do not come within any of these three categories. I ought to say to avoid any misunderstanding that a cooperative society whose surplus is less than £2,000 is exempted like any private trader. I ought to admit that a co-operative society whose surplus is between £2,000 and £12,000 gains the same advantages as other traders. When, however, we come to those societies whose surpluses are over £12,000, they do not fall within the third category of the companies which pay one-fifth of their Income Tax liability. For instance, I have the case of a society, which I will call Society A, whose Income Tax liability is about £126 10s., but under National Defence Contribution their payment will amount to £400. In another case of Society B, their Income Tax liability under the 1933 change is £178, but with their National Defence Contribution it amounts to £412. Members of the House have never really faced up to this particular fact. That is because the Treasury in this case have changed their practice with regard to co-operative societies. For this purpose they have charged the interest of co-operative societies and levied the National Defence Contribution on the full interest liability. When you take into consideration that 80 per cent. of our membership are not liable to Income Tax in any circumstances with regard to their personal income, it does aggravate the injustice. Once more we bring this new Clause forward in order to emphasise that if modifications are to be made for professions, public utility 963 companies and building societies there is an overwhelming case for the exemption of industrial provident societies. In any circumstances, the Chancellor is guilty of a gross injustice to this great group of citizens in changing the administrative practice of the Treasury in that regard.
§ 4.38 p.m.
§ The Chancellor of the Exchequer (Sir John Simon)Each year since the National Defence Contribution No. 2 has been enacted this matter has been raised on the Committee stage of the Finance Bill. The hon. Gentleman who has just spoken was justified in claiming that he had put the arguments forcefully on previous occasions and he endeavoured to summarise them on this occasion without, I think, any loss to their force. In the same way, I hope I shall not be expected to deliver any lengthy reply, because really our respective positions are the same. I do not think that the hon. Gentleman has produced any novel argument, and it may be that in what I have to say he will feel that I have not produced any novel defence. The bare bones of the matter can be laid down once again, and they are fairly simple. In the first place, in 1933 this Imperial Parliament, in the Finance Act, enacted that the surplus arising from transactions of cooperative societies should, be regarded as profits or gains for the purposes of Income Tax. Before that there was from the legal point of view a great deal to be said for the view that this was not within the statutory conception of income, but since 1933 the law has undoubtedly been what I have just stated. That being so, when the National Defence Contribution No. 2 was imposed, it was imposed with the provision that the rules to be applied should be, subject to some necessary modifications, the same as the rules that apply in the case of Income Tax. Therefore, there can be no doubt whatever that the provisions of the Act of 1933 do apply to co-operative societies
The dispute has been whether, when the National Defence Contribution was devised, it was right or wrong to make that application. As I have pointed out before, it is as well to remember that this result did not follow because any special provision has been made in the National Defence Contribution Clauses to catch co-operative societies. It is due 964 to the fact that once we have said that Income Tax principles shall apply they are automatically included. If the hon. Gentleman's proposal is adopted it will mean that there would have to be a special exception for the purpose of securing that the ordinary law is not applied. I do not think that that is in the circumstances a reasonable thing to do.
I will not again go through the explanation why it is that the charge in the case of the co-operative societies is the amount which the hon. Gentleman has just referred to. Their situation is exactly the same as that of a limited company which makes a profit of, say, £100,000, and distributes £60,000 of it, and retains £40,000. The amount of the Income Tax which the company would have to bear is the same as that of a co-operative society which had £100,000 surplus, distributed £60,000 and retained £40,000. The difference is this: It is true that under National Defence Contribution, neither in the case of a limited company nor in the case of a cooperative society, was any attention paid to the question of whether or not what is to be distributed is distributed among a great many people who are people of small incomes, or whether it is distributed among fewer and more wealthy people. That is the only difference there is, and it is not a difference which makes a co-operative society different from a company under the National Defence Contribution provisions.
There remains the point, which I admit is a serious one, with which the hon. Gentleman began. Anyone listening to him might have been excused for thinking that he was arguing that co-operative societies should be exempt and that certain other bodies such as public utility companies should be taxed. I agree that the comparison is a very natural one to make. I am just as much disturbed about any instances there are in which public utility companies which are exempt are known to make substantial incomes. Instances were given to me by the right hon. Member for Hillsborough (Mr. Alexander) two years ago. I looked at the matter with a great deal of attention, but the difficulty is that if you are going to make a change in this respect it must be made, not by picking out a number of companies, but by a general change. I think it is right to say that the public 965 utility company, whose profits are strictly limited and whose charges are strictly controlled, should be regarded as being in a special position when you come to impose upon them an. extra tax of this sort. Such a company is not free by law to adopt all the methods which other people may adopt, but it is the case that some public utility companies do, in spite of those limitations, make considerable profit, and I am as much disturbed about it as anybody else. As I said last year, that must be dealt with, and I think very soon dealt with, by stricter provisions in the case of electricity undertaking Bills. What I cannot do is to pick out certain members of this group and say that they shall pay National Defence Contribution No. 2 and that the rest shall not. I think that, on the whole, the general principle that public utility companies should not pay is probably the right one.
I have set forth the considerations which have influenced me in my decision, but I feel sure that I have not convinced or converted either the hon. Member or the right hon. Gentleman on the Front Bench, and they may be equally sure that their arguments, which are not more novel than mine, have not convinced me, and I hope that the Committee will reject the Clause.
§ 4.46 p.m.
§ Mr. Pethick-LawrenceIn accordance with your permission, Colonel Clifton Brown, to raise upon this new Clause the matter which occurs in the form of a separate new Clause in my name, I desire to put before the Chancellor of the Exchequer the position of housing societies. The Chancellor said, in reply to my hon. Friend the Member for East Ham South (Mr. Barnes), who spoke of the position of co-operative societies, that he raised no new point, and that from his point of view the position remains the same as it was last year. As regards housing societies, I venture to say that the position is in one respect, and that a very important one, substantially different this year from what it was last year. In order to make that point clear I should like to recall to the Chancellor what he said on 11th July last year when I brought a similar matter to his attention. In the Official Report for that date he said:
The societies for which the right hon. Gentleman is pleading are, as he said, bodies 966 established for the purpose, among other purposes—I call the attention of the House to the words 'among other purposes —of constructing, improving or managing or facilitating or encouraging the construction or improvement of houses for the working classes.At the foot of the next column he said, referring to the housing societies:I would point out that they have these housing purposes among other purposes, and my advisers are alarmed at the idea that there should be exemption in their favour, because it would be easy to have a housing association the object of which includes the provision of houses but also includes a lot of other purposes with a view to supplementing the money that is available for the main object."—[OFFICIAL REPORT, 11th July, 1938; cols. 1030–32, Vol. 338.]The new point which I wish to bring to the attention of the Chancellor is that those remarks of his, which had a certain validity last year, are very much affected by the passage of the Prevention of Fraud (Investments) Act of the current Session, because as a result of the passage of that Act industrial and provident societies must henceforth be either bona-fide co-operative societies or societies conducted mainly for the purpose of improving the conditions of living or otherwise promoting the social well-being of members of the working classes or otherwise for the benefit of the community. Housing associations are not co-operative societies and do not in a general way include bodies working as distinct from housing work for the benefit of the community. It therefore follows that henceforth industrial and provident societies which are not housing associations are operated mainly for the purpose of improving the conditions of living of the working classes, and in view of that fact the position is very different from what it was when the Chancellor made his remarks last year. But I am aware that he did not base his opposition solely on that ground. He based it also on the ground which is contained in his words on the same day:The ground on which a public utility company is given exemption is not that it does not work for profit or that the profit is limited; the ground is that it is one of those enterprises supplying gas, water, transport, electricity and so on which render a public service which puts it in a special category."—[OFFICIAL REPORT, 11th July, 1938; col. 1031, Vol. 338.]But though he made that statement on that occasion, a year previously when he was introducing National Defence Contribution he spoke of the public utility coms- 967 panies and said that the reason for their exclusion from National Defence Contribution was that they were not free, as others might be, to make what profits they please or to charge what they like. This afternoon he himself has been confessing that public utility companies as such are not wholly limited and do sometimes make quite substantial dividends—I do not want to exaggerate, a few may —but there is no doubt that the housing societies on behalf of which I am speaking are definitely limited to a rate of interest of which the Treasury approves, and therefore there can be no question that they do come under the words which the Chancellor used on 30th June, 1937, when he was introducing National Defence Contribution.Therefore, I think I have succeeded in showing that the second of the two points which the Chancellor made is hardly applicable to the case of N.D.C., especially in the case of housing societies, because they are limited, often to a greater extent than public utility societies. With regard to the first point, if they are industrial and provident societies the objection which he raised last year no longer applies, owing to the passage of the Act to which I have referred. It is just possible that the Chancellor may claim that he has a right to retain his objection of last year on the ground that all housing societies are not necessarily industrial and provident societies. I am informed that out of some 138 housing associations there are only two or three which are companies registered under the Companies Acts. If that is the point which the Chancellor makes, I should be quite willing to accept an Amendment framed not in the words in which my Clause is framed, but in such words as the Chancellor himself may decide upon, which would exclude housing associations formed under the Companies Acts. I cannot ask him to accept my new Clause, because it is not being called, but I hope that I have convinced the Chancellor that the main ground which he raised against my Amendment last year no longer applies, and in view of that fact I ask him to consider whether he cannot exclude from N.D.C. the housing associations, which on fair and reasonable grounds, ought not to have to bear this burden. It was designed for an entirely different set of 968 people and ought not to fall upon the public-spirited and philanthropically-minded people who are undertaking this work. In days gone by the Chancellor has from time to time expressed his appreciation of these associations, and I hope that to-day he will show it in a practical form by excluding them from the operations of this tax.
§ 4.55 p.m.
§ Mr. A. V. AlexanderMy right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) has put the case for the housing associations, but I am sure the Chancellor will not expect this part of the Debate to finish without some reply being made to his extraordinary hardness about the case of N.D.C. in relation to industrial and provident societies. It is always obvious to me, in listening to his very lucid but not convincing statements on this tax, that he continually finds himself in some difficulty about it. In the old days he had a good record with regard to his views about mutual profits and mutual organisations, and has given very sound advice to those organisations, and it is obvious that he finds great strain in producing an argument which can be said to be really effective in resisting our just demands in this matter. To paraphrase the Chancellor's words, he says, "I have nothing up my sleeve. There is no catch in it. We have been just following the ordinary rules relating to Income Tax and applying them to N.D.C. since 1937." That is so; but I want to take the matter back to 1933, because that is where the catch comes in. Ever since 1933 the industrial and provident societies have been suffering under a Section of the Statute which was so drawn that it is out of order for any representative of the taxpayers in this House to move for a redress of grievances. Apparently it was deliberately drawn for that purpose. There is the catch. There are no means of raising the matter except by putting to the Chancellor over and over again the double hardship which has existed since 1933 and since the introduction of N.D.C.
I should like the Chancellor, with his forensic outlook, to see what a great hardship is imposed upon members of industrial and provident societies. The law of 1933 was enacted in such a way that we are not entitled to move for a redress of grievances in this House before the grant 969 of supply. In 1937 the Chancellor was good enough to say, in reply to me, that he had never had the slightest difficulty in understanding our argument as it used to apply, and he admitted both the logic and the force of the argument, but whenever he has attempted to justify the additional burden which he is placing upon the industrial and provident societies he seems to have forgotten the logic and force of the argument. My hon. Friend the Member for East Ham, South, has put the general case, and I am not going over it. But there are one or two special points to which I would draw attention. In 1937 the Chancellor sought to justify his imposition of N.D.C. upon cooperative societies by saying: "They are very successful, and therefore they can afford to pay. This is not a question of dealing with the taxation of poor persons." That is no argument at all. The fact is that at least 99 per cent. of the surplus which arises in the accounts of industrial and provident societies is made out of mutual trading among their own members. In so far as you take first the Finance Act, 1933, and, secondly, the extra imposition of the 1937 National Defence Contribution, you actually take away from poor people, who have already paid all their taxable dues to the State, some part of what they ought then to be able to save by their mutual association in the spending of their net income. That is a very great injustice and hardship.
We must remind the Chancellor of the case which was put to him in 1937. If it were, as he seeks to imply this afternoon, merely a question of applying automatically National Defence Contribution to all trading organisations who were to suffer the tax, there would be some force behind it, but it is not true. The right hon. Gentleman referred, for example, to building societies, to whom he is giving relief purely on social grounds. There is no other ground for giving relief, except that otherwise it might possibly tend to restrict to some extent their operations. No hon. Member on these benches would object to a concession being given to building organisations who wish to use their power for the purpose of furthering the provision of housing for the working class, but the important fact is that the special treatment of building societies is based upon that social ground. We say that there is no organisation in the State per- 970 forming a social service in relieving the poor people of this country by giving them an opportunity for mutual association, which compares with the magnitude of the co-operative movement. There is no question about it. To-day we are giving back to the people spending power which otherwise they would not have after they had paid their ordinary dues to the State. From that point of view the Chancellor has not, I think, fully considered the matter.
When the Prime Minister was Chancellor of the Exchequer in 1933 he yielded to the demands, not of a sound fiscal system but of our competitors in trade, in putting a new burden of Income Tax upon the co-operative societies. He was advised by the Board of Inland Revenue that in the computation in the case of each society it was laid down that it would be necessary in the interests of the Treasury and of the people concerned to set off as a charge against the gross assessment not only the loan interest paid but the share interest which is paid, just as in the case of public utility societies at a fixed and very low rate. The figures that my right hon. Friend gave this afternoon show the inequity of the charge now made for National Defence Contribution upon the co-operative societies. In many cases they are very much higher than they should be, but the inequity of the charge for Income Tax arises almost entirely from the fact that in the case of the National Defence Contribution you do not allow to be charged against the gross computation the share interest, while you do, in the case of the Income Tax. On this point we have never had a satisfactory answer from the Treasury, and on these grounds alone the matter needs to be reconsidered.
§ Mr. Beverley BaxterThe right hon. Gentleman has said that this National Defence Contribution extra tax upon cooperative societies has caused a great deal of hardship. It must have been estimated how much each customer spends in a year; would the right hon. Gentleman tell us how much hardship he thinks there is upon each customer?
§ Mr. AlexanderIt must vary a great deal in varying districts. The hon. Member may be sufficiently aware of cooperative development and of what it has done for the people to see that the result 971 of the Income Tax and of the N.D.C. is really to impinge upon the collective power of the people concerned to improve their trade and their status all the way through, because it taxes their capital reserves.
§ Mr. BaxterThe right hon. Gentleman speaks in general terms. Could he not reduce them, because one thinks of hardship rather as personal than collective? To be felt as a cruelty a hardship must reach the individual breast or heart of some woman. We should like to know where this happens and to what degree the average co-operative member suffers?
§ Mr. AlexanderThe answer to the hon. Gentleman is that in so far as you restrict the power of an organisation by its capital reserves to go in for new development in which the poor people can join, you inflict hardship upon them. The last thing I want to say is, the Chancellor has essayed to reply to my hon. Friend with regard to what he said about special exemption which he has seen fit to give to the public utilities and similar organisations. I am sure he did not wish to present the case as though my hon. Friend were asking for new taxes to be placed upon the public utility companies. What we need to emphasise is that many of those companies are able to distribute large dividends upon shares, and not always upon small shares but sometimes considerable shares. They escape the tax altogether now. If it is found necessary to exempt those companies upon what are social grounds because they are engaged more or less in the monopoly provision of a necessary service, there is an equally strong argument for the same type of exemption to be given to other organisations who are doing equally important social work. Instead of exemption, the Chancellor of the Exchequer is imposing this additional burden of unfair taxation upon an organisation which is almost alone in the distributive trade in providing fair wages and conditons for its employés.
§ Mr. BrackenThat is a most astonishing statement. Can the right hon. Gentleman tell us why there are so many co-operative strikes?
§ Mr. AlexanderI shall be very pleased to answer that question and to give the 972 hon. Member chapter and verse. I will start with the facts of the situation. In the co-operative societies to-day, 96 per cent. of their hundreds of thousands of workers are members of trade unions. The second point is that not 6 per cent. of the employés of the competitive organisations in the distributive trades are in the trade unions at all. For three and a half years I have been sitting, under the direction of the Minister of Labour, on employers' conferences with regard to wages in the distributive trades. An attempt has been made to get a decent minimum wage, but we are hardly in any measure advanced in that direction except that a draft scheme has now been submitted to the Minister. In the course of these conferences a few trade union agreements have been made by some of the larger organisations, but the pressure on the trade unions concerned is very great because of the lack of trade union support in other cases. The wages that have had to be accepted under these agreements in the case of the ordinary distributive workers has been as much as 10s. below the rate paid by co-operative societies, and in the case of branch managers much more. I think the hon. Member for North Paddington (Mr. Bracken) will agree that I have stated my case.
§ Mr. BrackenNot at all. Does the right hon. Gentleman contend that cooperative employés are absolutely satisfied with their wages?
§ Mr. AlexanderI do not want to think of any great body of workers as satisfied and unwilling to take further measures for their own improvement. The number of trade union disputes with co-operative organisations is far smaller than in the case of other trades in which there is power for the workers to organise in trade unions. You do not get so many disputes in the distributive trades because the employés are not organised. That is the real position. You must have regular conciliation machinery sitting locally with arbitrators who judge disputes. We have no reasonable dissatisfaction with the general state of satisfaction in the cooperative movement. I must apologise to the Chancellor of the Exchequer for having had to deploy arguments in this direction as a consequence of interruptions from some of his hon. Friends below the Gangway, but I had to make the position clear. This is another of the great social 973 grounds on which, if there is to be exemption or partial exemption such as the Chancellor has given to the building societies and the public utilities, he should grant our reasonable request.
§ 5.11 p.m.
§ Sir J. SimonI listened with interest to what the right hon. Gentleman said on the subject of housing associations. I have in the past taken a great interest in these matters, and I am sure that these associations do a most admirable work. I made inquiries in regard to the new point which he made about the Prevention of Fraud Act, and I am told that that Act does not prevent a society having purposes other than housing. It appears merely to prevent undesirable registration, and although that may be a somewhat inhibiting factor, it will still be possible for a housing association to pursue its bona fide housing purposes, and other purposes, too. I must point out once more that I do not think it would be possible to give exemption to housing associations, because the question is at once raised whether building societies should be entirely exempt. I do not see how we can avoid that question. I have already got into trouble in another direction, in that building societies are treated in a modified way, and I am not prepared to start this new difficulty. The Housing Association movement deserves our support and encouragement, but I must point out that they make profits, although very limited profits, and that I do not think the excellence of their object would in itself be a sufficient reason for making any change.
In regard to the co-operative societies, I hope that the right hon. Gentleman will excuse me if I do not fight all those battles over again. It was natural that he should say what he did about them, but I noticed that his speech very much broadened the complaint. He said that the real complaint was the Finance Act, 1933. It is that Act, which lays it down that the co-operative societies' surpluses shall be regarded as taxable. That may be right or it may be wrong, but it is now the law, and it is my function to recognise that law and to apply my new taxation to that situation. I must say that I did not myself appreciate another point which the 974 right hon. Gentleman made. It is not for me to rule or decide on it, but I understood him to say that there was some special obstacle or difficulty, devised by the draftsman or by the wickedness of my predecessor, which prevented him from bringing the main issue before the Committee. I can only say that it does not quite appear to me why it would not be possible to propose to repeal that Section of the Finance Act, 1933.
§ Mr. AlexanderIt has been ruled continuously by the Chair that the repeal of that Section would impose a charge on the few societies exempted by the Section.
§ Sir J. SimonIt may be so; I do not know; but, at any rate, if there really is a view which can be sustained in the House that the provision of 1933 in this regard was unjust, I am quite certain that the House would be prepared to consider that claim, as it would any other claim, and deal with it accordingly. I must say that, although it was not the practice according to the technical view of Income Tax liability as interpreted before 1933, I regard the Section as being one which to a great many people would seem reasonable. You go down a street, and find on one side of the street a grocer's shop, or a provision shop, supplying people with various articles that they want. That shop is liable to Income Tax on the profit that it makes, and I think it would strike many people as curious if a co-operative society on the other side of the street, doing exactly the same thing by what is really in substance the same method, were not liable to Income Tax. I perfectly understand —no one better, if I may say so the legal argument by which it would be certainly asserted, as I have always asserted, and assert now, that before 1933 that was the law in regard to co-operative societies, but the House of Commons in 1933 said in substance that they ought to be under the same dispensation as other traders. So it was in 1933, and so it was when we came to the National Defence Contribution in 1937.
§ Question put, "That the Clause be read a Second time."
§ The Committee divided: Ayes, 110; Noes, 201.
935| Division No. 210.] | AYES. | [3.52 p.m. |
| Acland-Troyte, Lt.-Col. G. J. | Assheton, R. | Beaumont, Hon. R. E. B. (Portsm'h) |
| Adams, S. V. T. (Leeds, W.) | Astor, Viscountess (Plymouth, Sutton) | Beit, Sir A. L. |
| Albery, Sir Irving | Balfour, Capt. H. H. (Isle of Thanet) | Bennett, Sir E. N. |
| Alexander, Brig.-Gen. Sir W. | Balniel, Lord | Bernays, R. H. |
| Allen, Col. J. Sandeman (B'knhead) | Barrie, Sir C. C. | Bird, Sir R. B. |
| Anstruther-Gray, W. J. | Baxter, A. Beverley | Blair, Sir R. |
| Aske, sir R. W. | Beamish, Rear-Admiral T. P. H. | Boulton, W. W. |
| Boyce, H. Leslie | Granville, E. L. | Procter, Major H. A. |
| Bracken, B. | Grattan-Doyle, Sir N. | Ramsbotham, Rt. Hon. H. |
| Brass, Sir W. | Greene, W. P. C. (Worcester) | Rankin, sir R. |
| Briscoe, Capt. R. G. | Gridley, Sir A. B. | Rathbone, J. R. (Bodmin) |
| Broadbridge, Sir G. T. | Grigg, Sir E. W. M | Rawson, Sir Cooper |
| Brocklebank, Sir Edmund | Grimston, R. V. | Reed, Sir H. S. (Aylesbury) |
| Brooke, H. (Lewisham,W.) | Guinness, T. L. E. B. | Reid, W. Allan (Derby) |
| Brown, Rt. Hon. E. (Leith) | Hacking, Rt. Hon. Sir D. H. | Remer, J. R. |
| Brawn, Brig.-Gen. H. C. (Newbury) | Hambro, A. V. | Rickards, G. W. (Skipton) |
| Bull, B. B. | Hammersley, S. S. | Ropner, Colonel L. |
| Bullock, Capt. M. | Hannah, I. C. | Rosbotham, Sir T. |
| Burgin, Rt. Hon. E. L | Haslam, Sir J. (Bolton) | Ross, Major Sir R. D. (Londonderry) |
| Burton, Col. H. W. | Heilgers, Captain F. F. A. | Royds, Admiral Sir P. M. R. |
| Butler, Rt. Hon. R. A. | Hely-Hutchinson, M. R. | Russell, Sir Alexander |
| Caine, G. R. Hall- | Hepworth, J. | Russell, S. H. M. (Darwen) |
| Cary, R. A. | Horsbrugh, Florence | Salmon, Sir I. |
| Castlereagh, Viscount | Howitt, Dr. A. B. | Salt, E. W. |
| Cayzer, Sir C. W. (City of Chester) | Hudson, Capt. A. U. M. (Hack., N.) | Salter, Sir J. Arthur (Oxford U.) |
| Cazalet, Thelma (Islington, E.) | Hudson, Rt. Hon. R. S. (Southport) | Sandeman, Sir N. S. |
| Cazalet, Capt. V. A. (Chippenham) | Hulbert, Squadron-Leader N. J. | Sandys, E. D. |
| Chamberlain, Rt. Hn. N. (Edgb't'n) | Hunloke, H. P. | Scott, Lord William |
| Channon, H. | Hunter, T. | Selley, H. R. |
| Chapman, A. (Rutherglen) | Hurd, Sir P. A. | Shaw, Captain W. T. (Forfar) |
| Chapman, Sir S. (Edinburgh, S.) | Jarvis, Sir J. J. | Simon, Rt. Hon. Sir J. A |
| Chorlton, A. E. L. | Kerr, Colonel C. I. (Montrose) | Sinclair, Col. T. (Queen's U. B'tf'st) |
| Churchill, Rt. Hon. Winston S. | Kerr, Sir J. Graham (Scottish Univ.) | Smiles, Lieut.-Colonel Sir W. D. |
| Clarke, Colonel R. S. (E. Grinstead) | Keyes, Admiral of the Fleet Sir R. | Smith, Bracewell (Dulwich) |
| Clarry Sir Reginald | Kimball, L. | Smithers, Sir W. |
| Cobb, Captain E. C. (Preston) | Lamb, Sir J. Q. | Somerville, Sir A. A. (Windsor) |
| Colville, Rt. Hon. John | Lambert, Rt. Hon. G. | Southby, Commander Sir A. R. J. |
| Conant, Captain R. J. E. | Lancaster, Lieut.-Colonel C. G. | Spears, Brigadier-General E. L. |
| Cook, Sir T. R. A. M. (Norfolk, N.) | Leighton, Major B. E. P. | Stourton, Major Hon. J, J. |
| Cooke, J. D. (Hammersmith, S.) | Lennox-Boyd, A. T. L. | Strauss, H. G. (Norwich) |
| Cooper, Rt. Hn. A. Duff (W'st'r S. G'gS) | Liddall, W. S. | Strickland, Captain W. F. |
| Cooper, Rt. Hn. T. M. (E'nburgh, W.) | Little, J. | Stuart, Lord C. Crichton- (N'thw'h) |
| Cox, H. B. Trevor | Llewellin, Lieut.-Col. J. J. | Stuart, Hon. J. (Moray and Nairn) |
| Craven-Ellis, W. | Lloyd, G. W. | Sueter, Rear-Admiral Sir M. F. |
| Croft, Brig.-Gen. Sir H. Page | Locker-Lampson, Comdr. O. S. | Taylor, Vice-Adm. E. A. (Padd., S.) |
| Crooke, Sir J. Smedley | Mabane, W. (Huddersfield) | Thomas, J. P. L |
| Crookshank, Capt. Rt. Hon. H. F. C. | Macdonald, Capt. P. (Isle of Wight) | Thorneyoroft, G. E. P. |
| Crossley, A. C. | McEwen, Capt. J. H. F. | Thornton-Kemsley, C. N. |
| Davison, Sir W. H. | Macnamara, Lieut.-Colonel J. R. J. | Titchfield, Marquess of |
| De la Bère, R. | Makins, Brigadier-General Sir Ernest | Touche, G. C. |
| Denman, Hon. R. D. | Margesson, Capt. Rt. Hon, H. D. R. | Tree, A. R. L. F. |
| Danville, Alfred | Marsden, Commander A. | Tryon, Major Rt. Hon. G. C. |
| Doland, G. F. | Mason, Lt.-Col. Hon. G. K. M. | Tufnell, Lieut-Commander R. L. |
| Donner, P. W. | Medlicott, F. | Wakefield, W. W. |
| Dorman-Smith, Col. Rt. Hon. Sir R. H. | Mellor, Sir J. S. P. (Tamworth) | Walker-Smith, Sir J. |
| Drewe, C. | Mills, Sir F. (Leyton, E.) | Wallace, Capt. Rt. Hon. Euan |
| Duggan, H. J. | Mills, Major J. D. (New Forest) | Ward, Lieut.-Col. Sir A. L. (Hull) |
| Duncan, J. A. L. | Mitchell, H. (Brentford and Chiswick) | Ward, Irene M. B. (Wallsend) |
| Eden, Rt. Hon. A. | Mitchell, Sir W. Lane (Streatham) | Wardlaw-Milne, Sir J. S. |
| Edge, Sir W. | Moore, Lieut.-Col. Sir T. C. R. | Warrender, Sir V. |
| Edmondson, Major Sir J. | Moreing, A. C. | Watt, Lt.-Col. G. S. Harvie |
| Elliot, Rt. Hon. W. E. | Morgan, R. H. (Worcester, Stourbridge) | Wayland, Sir W. A |
| Emmott, C. E. G. C. | Morrison, G. A. (Scottish Univ's.) | Wedderburn, H. J. S. |
| Emrys-Evans, P. V. | Morrison, Rt. Hon. W. S. (Cirencester) | Wells, Sir Sydney |
| Entwistle, Sir C. F. | Munro, P. | Whiteley, Major J. P. (Buckingham) |
| Errington, E. | Nicholson, G, (Farnham) | Willoughby de Eresby, Lord |
| Evans, Colonel A. (Cardiff, S.) | Nicholson, Hon. H. G. | Windsor-Clive, Lieut.-Colonel G. |
| Evans, D. O. (Cardigan) | O'Connor, Sir Terence J. | Winterton, Rt. Hon. Earl |
| Findlay, Sir E. | O'Neill, Rt. Hon. Sir Hugh | Womersley, Sir W. J. |
| Fox, Sir G. W. G. | Peake, O. | Wood, Hon. C. I. C. |
| Furness, S. N. | Peat, C. U. | |
| Fyfe, D. P. M. | Pickthorn, K. W. M. | TELLERS FOR THE AYES.— |
| Gluckstein, L. H. | Pilkington, R. | Captain Waterhouse and Captain Dugdale. |
| Graham, Captain A. C. (Wirral) | Plugge, Capt. L. F. | |
| Grant-Ferris, Flight-Lieutenant R. | Pownall, Lt.-Col. Sir Assheton | |
| NOES. | ||
| Acland, Sir R. T. D. | Cluse, W. S. | Gardner, B. W. |
| Adams, D. M. (Poplar, S.) | Clynes, Rt. Hon. J. R. | George, Megan Lloyd (Anglesey) |
| Adamson, Jennie L (Dartford) | Cooks, F. S. | Gibson, R. (Greenock) |
| Adamson, W. M. | Collindridge, F. | Greenwood, Rt. Hon. A. |
| Banfield, J. W. | Cove, W. G. | Grenfell, D. R. |
| Barnes, A. J. | Daggar, G. | Griffiths, G. A. (Hemsworth) |
| Batty, J. | Davies, R. J. (Westhoughton) | Guest, Or. L. H. (Islington, N.) |
| Bellenger, F. J. | Davies, S. O. (Merthyr) | Hall, J. H. (Whitechapel) |
| Benn, Rt. Hon. W. W. | Day, H. | Hardie, Agnes |
| Benson, G. | Dunn, E. (Rother Valley) | Harris, Sir P. A. |
| Broad, F. A. | Ede, J. C. | Harvey, T. E. (Eng. Univ's.) |
| Brown, C. (Mansfield) | Edwards, A. (Middlesbrough E.) | Henderson, J. (Ardwick) |
| Charleton, H. C. | Edwards, Sir C. (Bedwellty) | Henderson, T. (Tradeston) |
| Chater, D. | Fletcher, Lt.-Comdr. R. T. H. | Hills, A. (Pontefract) |
| Hopkin, D. | Morrison, R. C. (Tottenham, N.) | Smith, E. (Stoke) |
| Isaacs, G. A. | Muff, G. | Smith, Rt. Hon. H. B. Lees- (k'ly) |
| Jenkins, Sir W. (Neath) | Nathan, Colonel H. L. | Smith, T. (Normanton) |
| Kennedy, Rt. Hon. T. | Naylor, T. E. | Sorensen, R. W. |
| Lansbury, Rt. Hon. G. | Noel-Baker, P. J. | Stephen, C. |
| Lathan, G. | Oliver, G. H. | Stewart, W. J. (H'ghtn-le-Sp'ng) |
| Leach, W. | Paling, W. | Strauss, G. R. (Lambeth, N.) |
| Leslie, J. R. | Parker, J. | Summerskill, Dr. Edith |
| Logan, D. G. | Pethick-Lawrence, Rt. Hon. F. W. | Thorne, W. |
| Lunn, W. | Poole, C.C | Thurtle, E. |
| Macdonald, G. (lnce) | Price, M. P. | Tinker, J. J. |
| McEntee, V. La T. | Ritson, J. | Viant, S P. |
| McGhee, H. G. | Roberts, W. (Cumberland, N.) | Watkins, F. C. |
| McGovern, J. | Sanders, W. S. | Wedgwood, Rt. Hon. J. C. |
| MacLaren, A. | Seely, Sir H. M. | Wilkinson, Ellen |
| Mainwaring, W. H. | Shinwell, E. | Williams, T. (Don Valley) |
| Mathers, G. | Silvernman, S. S. | Windsor, W. (Hull, C.) |
| Milner, Major J. | Simpson, F. B. | Young, Sir R. (Newton) |
| Montague, F. | Sinclair, Rt. Hon. Sir A. (C'thn't) | |
| Morgan, J. (York, W.R., Doncaster) | Smith, Ben (Rotherhithe) | TELLERS FOR THE NOES.— |
| Mr. Whiteley and Mr. Groves. |
| Division No. 211.] | AYES. | [5.19 p.m. |
| Acland, Sir R. T. D. | Griffiths, G. A. (Hemsworth) | Paling, W. |
| Adams, D. M. (Poplar, S.) | Groves, T. E. | Parkinson, J. A. |
| Alexander, Rt. Hon. A. V. (H'lsbr.) | Guest, Dr. L. H. (Islington, N.) | Pethick-Lawrence, Rt. Hon. F. W. |
| Anderson, F. (Whitehaven) | Hall, J. H. (Whitechapel) | Poole, C. C. |
| Aske, Sir R. W. | Hardie, Agnes | Price, M. P. |
| Banfield, J. W. | Harris, Sir P. A. | Pritt, D. N. |
| Barnes, A. J. | Harvey, T. E. (Eng. Univ's.) | Ritson, J. |
| Bartlett, C. V. O. | Hayday, A. | Roberts, W. (Cumberland. N.) |
| Batey, J. | Henderson, J. (Ardwick) | Sanders, W. S. |
| Bann, Rt. Hon. W. W. | Henderson, T. (Tradeston) | Seely, Sir H. M. |
| Benson, G. | Hills, A. (Pontefract) | Shinwell, E. |
| Bevan, A. | Hopkin, D. | Silverman, S. S. |
| Brown, C. (Mansfield) | Jagger, J. | Simpson, F. B. |
| Burke, W. A. | Johnston, Rt. Hon. T. | Sinclair, Rt. Hon. Sir A. (C'thn's) |
| Charleton, H. C. | Kennedy, Rt. Hon. T. | Smith, Ben (Rotherhithe) |
| Chater, D. | Lansbury, Rt. Hon. G. | Smith, E. (Stoke) |
| Cluse, W. S. | Lathan, G. | Smith, Rt. Hon. H. B. Lees- (K'ly) |
| Clynes, Rt. Hon. J. R. | Leach, W. | Smith, T. (Normanton) |
| Cooks, F. S. | Leslie, J. R. | Sorensen, R. W. |
| Collindridge, F. | Logan, D. G. | Stephen, C. |
| Cove, W. G. | Lunn, W. | Stewart, W. J. (H'ght'n-le-Sp'ng) |
| Cripps, Hon. Sir Stafford | Macdonald, G. (Ince) | Strauss, G. R. (Lambeth, N.) |
| Daggar, G. | McEntee, V. La T. | Summerskill, Dr. Edith |
| Davies, R. J. (Westhoughton) | McGhee, H. G. | Thorne, W. |
| Davies, S. O. (Merthyr) | McGovern, J. | Thurtle, E. |
| Day, H. | MacLaren, A. | Tinker, J. J. |
| Dunn, E. (Rother Valley) | Mainwaring, W. H. | Viant, S. P. |
| Ede, J. C. | Maxton, J. | Watkins, F. C. |
| Edge, Sir W. | Messer, F. | Wedgwood, Rt. Hon. J. C. |
| Edwards, A. (Middlesbrough E.) | Milner, Major J. | Williams, T. (Don Valley) |
| Edwards, Sir C. (Bedwellty) | Montague, F. | Wilmot, John |
| Foot, D. M. | Morgan, J. (York, W.R., Doncaster) | Wilson, C. H. (Attercliffe) |
| Gardner B.W. | Morrison, R. C. (Tottenham, N.) | Windsor, W. (Hull, C.) |
| George, Megan Lloyd (Anglesey) | Muff, G. | Young, Sir R. (Newton) |
| Gibson R.(Greenock) | Naylor, T. E. | |
| Greenwood, Rt. Hon. A. | Noel-Baker, P. J. | TELLERS FOR THE AYES.— |
| Grenfell, D.R. | Oliver, G. H. | Mr. Whiteley and Mr. Mathers. |
| Griffith, F. Kingsley(M'ddl'sbro, W.) | Owen, Major G. |
| NOES. | ||
| Acland-Troyte, Lt-Col. G. J. | Colville, Rt. Hon. John | Grimston, R. V. |
| Adams, S. V. T. (Leeds, W.) | Conant, Captain R. J. E. | Gunston, Capt. Sir D. W. |
| Albery, Sir Irving | Cooke, J. D. (Hammersmith, S.) | Hambro, A. V. |
| Alexander, Brig.-Gen. Sir W. | Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs) | Hammersley, S. S. |
| Allen, Col. J. Sandeman (B'knhead) | Courthope, Col. Rt. Hon. Sir G. L. | Hannah, I. C. |
| Anstruther-Gray, W. J. | Cox, H. B. Trevor | Haslam, Sir J. (Bolton) |
| Assheton, R. | Craven-Ellis, W. | Heilgers, Captain F. F. A. |
| Astor, Viscountess (Plymouth, Sutton) | Crooke, Sir J. Smedley | Hely-Hutchinson, M. R. |
| Baillie, Sir A. W. M. | Cross, R. H. | Hepworth, J. |
| Balfour, Capt. H. H. (Isle of Thanc[...]) | Crossley, A. C. | Hopkinson, A. |
| Balniel, Lord | Davison, Sir W. H. | Horsbrugh, Florence |
| Barrie, Sir C. C. | De la Bère, R. | Howitt, Dr. A. B. |
| Baxter, A. Beverley | Denman, Hon. R. D. | Hudson, Capt. A. U. M. (Hack., N.) |
| Beamish, Rear-Admiral T. P. H. | Denville. Alfred | Hudson, Rt. Hon. R. S. (Southport) |
| Beaumont, Hon. R. E. B. (Portsm'h) | Doland, G. F. | Hulbert, Squadron-Leader N. J. |
| Beechman, N. A. | Donner, P. W. | Hume, Sir G. H. |
| Beit, Sir A. L. | Drewe, C. | Hunloke, H. P. |
| Bennett, Sir E. N. | Duggan, H. J. | Hunter, T. |
| Bird, Sir R. B. | Duncan, J. A. L. | Hutchinson, G. C. |
| Boulton, W. W. | Eden, Rt. Hon. A. | Kellett, Major E. O. |
| Bracken, B. | Edmondson, Major Sir J. | Kerr, Colonel C. I. (Montrose) |
| Briscoe, Capt. R. G. | Ellis, Sir G. | Keyes, Admiral of the Fleet Sir R. |
| Brooke, H. (Lewisham, W.) | Emmott, C. E. G. C. | Kimball, L. |
| Brown, Rt. Hon. E. (Leith) | Emrys-Evans, P. V. | Lamb, Sir J. Q. |
| Brown, Brig.-Gen. H. C, (Newbury) | Entwistle, Sir C. F. | Lambert, Rt. Hon. G. |
| Bull, B. B. | Errington, E. | Lancaster, Lieut.-Colonel C. G. |
| Bullock, Capt. M. | Evans, Colonel A. (Cardiff, S.) | Leighton, Major B. E. P. |
| Burgin, Rt. Hon. E. L. | Everard, Sir William Lindsay | Lennox-Boyd, A. T. L. |
| Burton, Col. H. W. | Findlay, Sir E. | Liddall, W. S. |
| Gary, Ft. A. | Fox, Sir G. W. G. | Little, J. |
| Cayzar, Sir C. W. (City of Chester) | Furness, S. N. | Lloyd, G. W. |
| Cazalet, Thelma (Islington, E.) | Fyfe, D. P. M. | Mabane, W. (Huddersfield) |
| Cazalet, Capt. V. A. (Chippenham) | Gluckstein, L. H. | M'Connell, Sir J. |
| Chamberlain, Rt. Hn. H. (Edgb't'n) | Gower, Sir R. V. | McCorquodale, M. S. |
| Channon, H. | Graham, Captain A. C. (Wirral) | Macdonald, Capt. P. (Isle of Wight) |
| Chapman, A. (Rutherglen) | Grant-Ferris, Flight-Lieutenant R. | McEwen, Capt. J. H. F. |
| Chapman, Sir S. (Edinburgh, S.) | Granville, E. L. | McKie, J. H. |
| Chorlton, A. E. L. | Grattan-Doyle, Sir N. | Macnamara, Lieut.-Colonel J. R. J. |
| Clarke, Colonel R. S. (E. Grinstead) | Greene, W. P. C. (Worcester) | Macquisten, F. A. |
| Clarry, Sir Reginald | Gridley, Sir A. B. | Makins, Brigadier-General Sir Ernest |
| Cobb, Captain E. C. (Preston) | Grigg, Sir E. W. M. | Margesson, Capt. Rt. Hon. H. D. R. |
| Medlicott, F. | Rickards, G. W. (Skipton) | Sueter, Rear-Admiral Sir M. F. |
| Meller, Sir R. J. (Mitcham) | Ropner, Colonel L. | Taylor, Vice-Adm. E. A. (Padd., S.) |
| Mellor, Sir J. S. P. (Tamworth) | Rosbotham, Sir T. | Thomas, J. P. L. |
| Mills, Sir F. Leyton, E.) | Ross, Major Sir R, D. (Londonderry) | Thorneycroft, G. E. P. |
| Mill., Major J. D. (New Forest) | Royds, Admiral Sir P. M. R. | Thornton-Kemsley, C. N. |
| Mitchell, H. (Brentford and Chiswick) | Ruggles-Brise, Colonel Sir E. A. | Titchfield, Marquess of |
| Mitchell, Sir W. Lane (Streatham) | Russell, Sir Alexander | Touche, G. C. |
| Moreing, A. C. | Russell, S. H. M. (Darwin) | Tree, A. R. L. F. |
| Morgan, R. H. (Worcester, Stourbridge) | Salt, E. W. | Tufnell, Lieut.-Commander R. L. |
| Morrison, G. A. (Scottish Univ's.) | Sandeman, Sir N. S. | Walker-Smith, Sir J. |
| Morrison, Rt. Hon. W. S. (Cirencester) | Sanderson, Sir F. B. | Wallace, Capt. Rt. Hon. Euan |
| Munro, P. | Scott, Lord William | Ward, Lieut.-Col. Sir A. L. (Hull) |
| Nicholson, G. (Farnham) | Selley, H. R. | Ward, Irene M. B. (Wallsend) |
| Nicholson, Hon. H. G. | Shaw, Captain W. T. (Forfar) | Wardlaw-Milne, Sir J. S. |
| O'Neill, Rt. Hon. Sir Hugh | Simon, Rt. Hon. Sir J. A. | Warrender, Sir V. |
| Orr-Ewing, I. L. | Sinclair, Col. T. (Queen's U. B'lf'st) | Waterhouse, Captain C. |
| Palmer, G. E. H. | Smiles, Lieut.-Colonel Sir W. D. | Wayland, Sir W. A. |
| Peake, O. | Smithers, Sir W. | Wells, Sir Sydney |
| Pickthorn, K. W. M. | Somerville, Sir A. A. (Windsor) | Whiteley, Major J. P. (Buckingham) |
| Plugge, Capt. L. F. | Southby, Commander Sir A. R. J. | Williams, H. G. (Croydon, S.) |
| Procter, Major H. A. | Spears, Brigadier-General E. L. | Willoughby de Eresby, Lord |
| Raikes, H. V. A. M. | Spent, W. P. | Windsor-Clive, Lieut-Colonel G. |
| Rathbone, J. R. (Bodmin) | Stourton, Major Hon. J. J. | Winterton, Rt. Hon. Earl |
| Rawson, Sir Cooper | Strauss, H. G. (Norwich) | Wood, Hon. C. I. C. |
| Reed, Sir H. S, (Aylesbury) | Strickland, Captain W. F. | |
| Reid, W. Allan (Derby) | Stuart, Lord C. Crichton-(N'tw h) | TELLERS FOR THE NOES.— |
| Remer, J. R. | Stuart, Hon. J. (Moray and Nairn) | Captain Dudgale and Lieut-Colonel Harvie Watt. |