HC Deb 11 July 1939 vol 349 cc2137-51

7.15 p.m.

The Attorney-General

I beg to move, in page 14, line 8, to leave out from "and," to the end of the Sub-section, and to insert: the Special Commissioners may draw the inference that a person is likely to be able to secure that assets or income of a company will? be applied for his benefit, or, as the case may be, will be so applied to a greater extent than is represented in the value for apportionment purposes of any relevant interests which he has in the company, if and only if they are satisfied—

  1. (a)that he has, directly or indirectly, transferred assets to the company the value of which is not represented, or is not adequately represented, in the value for apportionment purposes of any relevant interests which he has in the company; and
  2. (b)that the persons who, whether as directors or shareholders or in any other capacity, have, or will at any material time have, powers or rights affecting the disposal or application of the income or assets of the company are likely to act in accordance with his wishes or that he is able to secure that persons who at the material times will have such powers or rights will be persons likely to act in accordance with his wishes."
I explained the purpose of this Clause at an earlier stage, but I will briefly recapitulate it in order to make clear the object of the Amendment. The Clause, which is drawn in wide terms and gives special and exceptional powers to the Special Commissioners, is, in our view, justified by past experience, not of many individuals or companies, but of a limited number; but as that limited number has. very considerable resources, a substantial amount of Surtax is involved. When the 1922 legislation was enacted, it contemplated that the transferor of the assets, the person who had formed the company under the control of not more than five persons, would be the principal shareholder. Therefore, the machinery of apportionment in order that money might not be accumulated without paying Surtax was an apportionment to the shareholders. Various devices, which need not be enumerated here in detail, were then resorted to by a limited number of persons in order that the real person interested should not be the person to whom the income was apportioned. The effect of that was that Surtax was not payable in respect of the income apportioned. Let me take a simple case. Suppose that the income is £5,000 a year, which is being accumulated, and that the person really interested does not intend to take it out until he has saved that sum for two or three years, without paying Surtax on it. The general purpose of the 1922 legislation is not, of course, to prevent his accumulating money, but to say that in cases within that Section Surtax should be paid on the income as if it had been distributed to him.

To take one artificial device, suppose that, instead of being himself the shareholder, he formed another company which was a shareholder in the company which owned the assets; he would then hold shares in the second company, and if then you were able to apportion only to the shareholders, no Surtax would be payable, because the company would not pay the Surtax. Other ways of retaining the effective interest without being at that moment within the definition of those to whom income could be apportioned, were dealt with in later years. As far as concerns persons with rights of any kind in the income or assets of the company, I think that probably they are now covered by existing legislation, but what is anticipated, with reason, is that that field having been covered, arrangements will be made by which the transferor of the assets and the person who ultimately intends to get the benefit of the accumulated income will not appear with any legal or equitable rights during the year the income of which falls to be apportioned, but will, in fact, be in a position to have such rights conferred on him as and when he wants them, because he will have put in, as the persons who control the company, persons who will comply with his wishes. This Clause is designed to meet that class of cases, and to give the Special Commissioners power to apportion income to someone who may have and will have no legal or equitable rights at the moment, but who may be, in fact, able to secure such rights, and as the Clause says, is a person likely to be able to secure such rights. It was on the words— Likely to be able to secure that income or assets will be applied for his benefit … etc."— that discussion arose in the Committee stage. It was said that those were very wide words and that they conferred a very wide discretion, and it was suggested a dangerously wide discretion, unless they were conditioned in certain ways. Under the Clause as originally drafted, there were certain pointers as to matters to which the Commissioners were to have regard in exercising their discretion, or rather in drawing the inference as to whether a person was likely to be able to secure the rights in the income or assets. I then stated that it was our intention that regard should be had to those matters by the Special Commissioners, but it was pointed out that the Clause as drawn did leave the discretion very wide, and that, although it might well be that the Special Commissioners would have regard to those pointers, at any rate, if it was intended to confine the exercise of their discretion, that was not put in the Clause as originally drafted. The purpose of the Amendment is so to confine their discretion. The matters mentioned in the Bill as it left the Committee stage fall under two headings, first: the question whether or not the persons who, whether as directors or shareholders or in any other capacity have, or will at any material time have, powers or rights affecting the disposal or application of the income or assets, are likely to act in accordance with his wishes. and also the very important case as to whether on the evidence it appears that the person to whom, under the Clause, income can be apportioned is a person who has transferred assets to the company which are not represented, or adequately represented, by a consideration in his hand. We feel that in the cases with which we desire to be able to deal under the Clause those conditions will be satisfied, and it really is only in cases where those conditions will be satisfied that we ever contemplated seeking to invoke the powers under this Clause. Therefore, the alteration made by the Amendment is this, and only this, that instead of the discretion being on the actual words of the Clause at large, instead of there being pointers as to how the discretion should be exercised, under, the Amendment the Special Commissioners can only draw the inference that a person is likely to be able to secure that assets or income of a company will be applied for his benefit … if and only if they are satisfied—

  1. (a) that he has, directly or indirectly, transferred assets to the company the value of which is not represented, or is not adequately represented, in the value for apportionment purposes of any relevant interests which he has in the company; and
  2. (b) that the persons who, whether as directors or shareholders or in any other capacity, have, or will at any material time have, powers or rights affecting the disposal or application the income or assets of the company are likely to act in accordance with his wishes or that he-is able to secure that persons who at the material times will have such powers or rights will be persons likely to act in accordance with his wishes."
When in the Committee stage I stated our willingness to turn these pointers into conditions, my hon. and learned Friend the Member for Ashford (Mr. Spens), although I do not think he felt that this would remove all his objections, felt that it would go at any rate some way towards meeting them. I hope that he and those who share those apprehensions will feel that the Amendment does go some way to meet the apprehensions about putting into a Clause so formidable a discretion, unfettered by any conditions. On the other hand, I assure those who may look at the matter, not differently—because everybody in the House is concerned with seeing that the gross tax evader makes his contribution—but who may scrutinise it from a different angle, that we are satisfied that the change which it is proposed to make will not hamper us. It was, of course, never intended that the Clause could be or should be used except on evidence that there was a proper case in which to ask the Commissioners to exercise their discretion. This is the class of facts, and the only class of facts, which we should regard as properly entitling the Inland Revenue to put in motion the machinery both for the Commissioners to consider evidence put before them and to exercise the discretion conferred by this Clause.

7.28 p.m.

Mr. Benson

I speak on this involved subject with a great deal of diffidence, but it seems to me that there is one very definite loophole here, and possibly others, although I am not quite sure about them. The Clause deals with the allocation of income for tax purposes to an individual who has no rights at law to it, an individual who has carefully divested himself of any legal right to the income, although by various subterfuges he can obtain the enjoyment of it. Obviously, if a man can obtain the enjoyment of any income, whether or not it is legally his, it ought to be attached to him. But under the Amendment it would be attached to him for tax purposes only if the Special Commissioners were satisfied that he had directly or indirectly transferred assets. This is a parable case to Clause 18 of the Finance Act, 1936, which relates to the transfer of assets abroad, and T think the same loophole will arise here as arises there, and that is that it is only the transferor himself who can come under the machinery of the tax. If he dies, his son may inherit the whole complex of companies; he may, in fact, inherit the power, although not the legal right, to obtain the income and he may be in exactly the same position as his father who had been caught under the Clause because he had definitely transferred assets. But because the man's son has hot transferred the assets, this Clause cannot come into operation. He is in the position of enjoying the assets, but because he has no right in law on the face of it, as his father had, he can avoid the tax. That is one loophole. In regard to others I am not so sure, but it seems to me that for tax avoidance purposes a man might transfer assets which he himself has no intention of enjoying to companies in which his son can obtain enjoyment of them. We know that where these very large incomes and estates are concerned, the question of the income of the children is of considerable importance. It might be worth while in the construction of these involved and complicated schemes to arrange that a son or heir would by inheritance or transfer, enjoy an advantage which this Clause, prior to amendment would have prevented.

There is one other point about which I am also rather doubtful, and that is the position of a wife. Under the Section in the 1936 Act relating to the transfer of assets abroad, it was considered necessary to define the transferor as including the transferor and his wife. In this case there is no such definition and it seems to me that it might be possible that the shares of a company might be held directly or indirectly in the name of a wife. The husband might transfer the assets and it would not be possible to aggregate the two incomes for tax purposes because ex hypothesi the wife would have no legal right to the income arising from the company, although she would be able to enjoy it. You cannot aggregate the husband and wife's income because she has no legal right to the income and you cannot tax the husband because he has transferred to his wife, who is the only person who can get enjoyment of the income. This is a rather complicated point but I suggest that it might be the case that the potential income of the wife was such that she could enjoy it under the terms of the Clause. I do not know but I think there are certain loopholes here. The question of inheritance raises one definite point. The others are more doubtful but I would ask the Attorney General to give them his attention.

7.34 p.m.

Mr. Hely-Hutchinson

My hon. and learned Friend the Member for Ashford (Mr. Spens) and I raised objections to this Clause on the Committee stage and we are grateful to my right hon. and learned Friend the Attorney-General for his attempt to meet our objections. That attempt has to some extent succeeded, but not altogether. It would be useless now to recapitulate our objections to the Clause which were ably set forth by my hon. and learned Friend in Committee but I would ask my right hon. and learned Friend to pay particular attention to the speech of the hon. Member for Chesterfield (Mr. Benson) because the hypothetical cases which he raised are, alone, sufficient to indicate the danger of legislating in what I may call the subjunctive mood. I hope that my right hon. and learned Friend will find it possible to return to the more normal process of legislating in the indicative mood.

7.35 p.m.

Mr. Silverman

As I read this Amendment, it is necessary that the Special Commissioners should be satisfied on both points set forth in paragraphs (a) and (b) before they draw the inference which the Amendment entitles them to draw. I wonder why the Attorney-General has thought it necessary to do that. I should have thought that either of these grounds would have been sufficient for the inference that is proposed. If we take paragraph (a) by itself it deals with the case in which assets have been directly or indirectly transferred and there is no corresponding right vested in the transferor. It is obvious that that might in certain cases give rise to the inference and no one would have any objection to that condition. But if we take paragraph (b) by itself what do we find? Suppose there was a case in which condition (a) was not satisfied, in which you could not prove that assets had been directly or indirectly transferred but in which, nevertheless, there were persons who, as directors or shareholders or in any other capacity had rights affecting the disposal or application of the income or assets of the company in accordance with the wishes of another person—who in other words, acted purely as nominees, or perhaps as trustees would have to act, if you could establish that they were in fact trustees. In those circumstances when those persons were acting in the disposition of the company's assets in that way, at the direction or behest of some other person who had no apparent or obvious interest in the assets, would it not be a reasonable inference that there had been some such transfer of assets as is postulated in paragraph (a)? Otherwise, why should persons holding a complete legal and exquitable interest in the assets of a company use their powers as directors or shareholders at the behest of or in accordance with the wishes of someone who has no interest at all in the company? I can see why the right hon. and learned Gentleman has thought it necessary to put down some Amendment in view of the discussions in Committee, and I certainly would not object to his having done so, but I think he has handicapped himself more than he need have done by requiring that both these conditions should be satisfied, and if they are examined separately it looks as though either of them would do.

7.38 p.m.

Mr. Spens

I thank my right hon. and learned Friend for this Amendment, but I feel that one or two of the speakers have not appreciated the fact that this Amendment applies only to the case in which a person is to be attacked, not because he is able to secure, but merely because he is likely to be able at some future time to secure, this benefit. The earlier part of the Sub-section, of course, catches everybody who is, in fact, able to secure the benefit by any means at any time, and therefore some of the instances given by the hon. Member opposite, as, for instance, the case of the father and son, do not apply. He gave a case in which a father might be taken as the person likely to be able to secure the benefit and in which the father was succeeded by the son, but in that case he comes within the rest of the Clause.

Mr. Benson

But suppose there is no transfer.

Mr. Spens

That does not matter. I was certain that the hon. Member did not appreciate that point. This refers to the person who is attacked, not as a person who is able to secure but as a person who is likely to be able to secure the benefit and it was because both those categories are so wide that I objected altogether to the framework of the Clause at an earlier stage. My right hon. and learned Friend however has assured us that he requires a Clause of this breadth and with these enormous powers, in order to cope with certain persons who are improperly trying to avoid taxation. Therefore, although, on principle, I think that the Clause, even with this Amendment, is very dangerous, I do not think it is possible on a question of principle to press my objection when we are assured by my right hon. and learned Friend that he must have this power if he is to prevent certain persons avoiding the payment of large sums which are due from them in duty. In those circumstances I am bound to say that I think the principle must for the time being go under to the necessity for a Clause of this kind. I hate the idea that it should be necessary to introduce such a Clause into our legislation and to give to any body of men the powers which this Clause will confer, but if it cannot be done without, then, for better or worse, I suppose we shall have to arm the Executive with these powers. What I think is only right is that as regards the much wider class of people who may be likely to secure a part of somebody else's income, at any rate you should not suddenly name Mr. A or Mr. B or Mrs. C who has not received one penny as a person likely to be able to secure it, until certain definite tests have been applied to show that such a person does in fact come within the scope of the Clause. In the circumstances, I am grateful to my right hon. and learned Friend for the Amendment, and although I do not like the Clause, I think we must submit to it becoming part of the law of the land.

7.43 p.m.

Mr. Pethick-Lawrence

I think it is true that, in its original form, the Clause was rather widely drawn and, therefore, I would not have been unwilling to see the words of the original Clause taken out if suitable words were put in their place, but I think the actual Amendment which the right hon. and learned Gentleman has proposed does lend itself to some doubt. I do not know how far he can answer the points which have been raised by my hon. Friend the Member for Chesterfield (Mr. Benson), but in default of anything further which the Attorney-General may have to say altering my view, I feel that these words do give a loophole and in those circumstances we shall wish to state our opinion against this Amendment. Accordingly I shall ask my hon. Friends to vote against the words being omitted. That does not mean that we think that these words should not be omitted in order to give place to more suitable words, but because we think it would be wrong to insert these words.

7.45 p.m.

The Attorney-General

I shall certainly endeavour to answer the various points which have been made. I am in the happy position that while my hon. Friend the Member for Hastings (Mr. Hely-Hutchinson) and my hon. and learned Friend the Member for Ashford (Mr. Spens) think I am not handicapping myself enough, hon. Members opposite think I am handicapping myself too much, which seems to indicate that I have hit the happy mean and introduced a fair and equitable solution of this problem. The hon. Member for Chesterfield (Mr. Benson) raised a point which was raised before, as to the position which would arise in the event of a death. The principle has been in these Clauses to deal with what I may call the original transferor. There are difficulties about dealing with what may happen upon succession, particularly in the case of such a Clause as Clause 18 where there is motive. Whether it is that those who resort to those devices are long-lived or whether it is that when, as the poet says, old age, disease and sorrow strike them, they wind up their companies, I cannot for the moment say, but in fact we have not been faced with this as a problem.

So far as this Clause is concerned, therefore, it would be quite wrong to depart from the general principle on which this legislation has been based and in this very wide Clause to introduce a new principle. A son might, as a result of succession, be a person of whom you can say he is able to secure. He might be able to secure that shares were issued to him and it might be a case in which the Commissioners could act under that part of the Clause. But if there was no provision for issuing shares, then I quite agree that the money could not be apportioned to the son under this Clause. I do not think it would be right to introduce in this Clause some new principle which has never been introduced in these Clauses, and which we have not found necessary.

With regard to the position of wives I do not know whether the hon. Gentleman has noticed 6 (a), under which provision is made that a person shall, in the case of an individual, be deemed to include the wife or husband of that individual. That goes a long way to cover his point. Where you are very much at large in considering whether things are done directly or indirectly I think that transactions of the kind suggested might also be covered by those words. With regard to his second case, I am bound to say that I did not quite follow it. I will certainly look into it, and, speaking generally, all I can say to the hon. Gentleman is that I am grateful for his suggestion. We have done our best to produce a form of words which we believe will be effective without being unduly wide. We shall have to see by experience how it works, and cases which he has in mind, if they do arise, will have to be considered. This Clause is introducing a far wider discretion than has been introduced before. It has been introduced for the reasons I have already described, and we think we shall be able to reach the people we want to reach.

The hon. Member for Nelson and Colne (Mr. Silverman) said, "Why have the two conditions?"I would suggest to him and to hon. and right hon. Gentlemen opposite that the two are really right and proper. Many times the hon. Member for Chesterfield has said "Why should a man be in any different position because he transfers his assets to a company?" I agree with that general description. That is the sort of broad underlying principle, though there are certain exceptions in detail to it. But that involves that you must start by saying that the person must be the one who has transferred the assets. If you did not have this condition you would be going too wide, and you would, so far as the words went, possibly put in jeopardy transactions which are really quite outside any intention of the Clause. Further I think it is right and reasonable that having started by specifying that you are going to ask the Commissioners to apportion income to a person who has no legal right to it merely on the grounds that he is likely to be able to get it, you must take on your shoulders the onus of showing that those in control, without whose action a penny of the income cannot be got, are persons as defined in (b), likely to act in accordance with his wishes. In considering the width of the discretion conferred, and considering the class of cases with which we are trying to deal, it cannot be said that it is unreasonable that we should assume both those two points as matters on which we are ready to satisfy the Commissioners.

7.51 p.m.

Mr. Pritt

I should like to say a few words on the question of whether it is right to have both (a) and (b). You do want to avoid loopholes and at first sight (a) and (b) together seem to avoid loopholes very well, but those people who are ironically called taxpayers—sbecause they spend a great deal of their time trying to avoid it—they will say "(b) catches us pretty well, but they cannot catch us at our pretty tricks unless they do so under (a) also. But two of us, without any obvious arrangement between us, will transfer assets with some decent- cover to other companies and when each of us is tackled hereafter it will be found that we were caught by (b) but not by (a) because we have not transferred any assets to a company at all. "If I recollect correctly, that sort of coupling of the arrangement in order to avoid the fulfilling of conditions has been done before. It was done particularly, I am reminded, with regard to settlements on children, and I would ask the right hon. and learned Gentleman the Attorney-General to have some consideration given to the question as to whether it would not be better to leave (a) out in those circumstances and let (b) stand alone.

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

The House proceeded to a Division, and Mr. SPEAKER having directed that the doors be locked—

Mr. Pethick-Lawrence

(Seated and covered): As I understand it, there has been some irregularity with regard to the Clock, because at your direction the doors were shut, as it appeared to many of us, before the six minutes had elapsed. When the mistake was discovered, the doors were opened and some Members went into the Lobby while others, who had assumed that your order at the time was correct, had gone away. May I suggest that the only way to put the matter right would be to have the Division called again?

Mr. Speaker

I will put the Question again.

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

The House divided: Ayes, 118; Noes, 186.

Division No. 233.] AYES. [6.56 p.m.
Acland-Troyte, Lt.-Col. G. J. Channon, H. Evans, D. O. (Cardigan)
Adams, S. V. T. (Leeds, W.) Chapman, A. (Rutherglen) Everard, Sir William Lindsay
Albery, Sir Irving Chapman, Sir S. (Edinburgh, S.) Fildes, Sir H.
Alexander, Brig.-Gen. Sir W. Christie, J. A. Fleming, E L.
Allen, Col. J. Sandeman (B'knhead) Clarke, Colonel R. S. (E. Grinstead) Foot, D. M.
Anderson, Sir A. Garrett (C. of Ldn.) Carry, Sir Reginald Fremantle, Sir F. E.
Aske, Sir R. W. Clydesdale, Marquess of George, Major G. Lloyd (Pembroke)
Assheton, R. Cobb, Captain E. C. (Preston) Gibson, Sir C. G. (Pudsey and Otley)
Baillie, Sir A. W. M. Colfox, Major Sir W. P. Gilmour, Lt-Col. Rt. Hon. Sir J.
Baldwin-Webb, Col. J. Colville, Rt. Hon. John Goldie, N. B.
Balfour, G. (Hampstead) Conant, Captain R. J. E. Gower, Sir R. V.
Balfour, Capt. H. H. (Isle of Thanet) Cooke, J. D. (Hammersmith, S.) Gridley, Sir A. B,
Balniel, Lord Cooper, Rt. Hn. T. M. (E'nburgh, W.) Griffith, F. Kingsley (M'ddl'sdro, W.)
Barrie, Sir C. C. Courthope, Col. Rt. Hun. Sir G. L. Grimston, R. V
Beamish, Rear-Admiral T. P. H. Craven-Ellis, W. Gritten, W. G. Howard
Beaumont, Hon. R. E. B. (Portsm'h) Crooke, Sir J. Smedley Guest, Lieut.-Colonel H, (Drake)
Beit, Sir A. L. Crookshank, Capt. Rt. Hon. H. F. C. Guest, Maj. Hon. O. (C'mb'rw'll, N.W.)
Bennett, Sir E. N. Cross, R. H. Guinness, T. L, E. B.
Bernays, R. H. Crossley, A. C. Gunston, Capt. Sir D. W.
Blair, Sir R. Crowder, J. F. E. Harbord, Sir A.
Boulton, W. W. Culverwell, C. T. Harris, Sir P. A.
Bower Comdr. R. T. Davies, C. (Montgomery) Haslam, Henry (Horncastle)
Braithwaite, Major A. N. (Buckrose) De la Bère, R Haslam, Sir J. (Bolton)
Briscoe, Capt. R. G. Denman, Hon, R. 0, Hely-Hutchinson, M. R.
Broadbridge, Sir G. T. Despencer-Robert3on, Major J. A. F. Heneage, Lieut.-Colonel A. P.
Brocklebank, Sir Edmund Doland, G. F. Hepburn, P. G. T. Buchan-
Brooke, H, (Lewisham, W.) Dorman-Smith, Col. Rt. Hon. Sir R. H. Hepworth, J.
Brown, Rt. Hon. E. (Leith) Drewe, C. Higgs, W. F.
Browne, A. C. (Belfast, W.) Dugdale, Captain T. L. Hogg, Hon. Q. McG.
Bullock, Capt. M. Duncan, J. A. L. Holdsworth, H.
Burgin, Rt. Hon. E. L. Edge, Sir W. Holmes, J. S.
Butcher, H. W. Edmondson, Major Sir J. Howitt, Dr. A. B.
Cartland, J. R. H. Ellis, Sir G. Hudson, Capt. A. U. M. (Hack., N.)
Carver, Major W. H. Emmott, C. E. G. C Hume, Sir G. H.
Cary, R. A. Entwistle, Sir C. F. Hunter, T.
Cayzer, Sir C. W. (City of Chester) Errington, E. Hutchinson, G. C.
Chamberlain, Rt. Hn. N. (Edgb't'n) Erskine-Hill, A. G., Jarvis, Sir J. J.
Jones, Sir G. W. H. (S'k N'w'gtn) Owen, Major G. Spears, Brigadier-General E. L.
Junes, Sir H. Haydn (Merioneth) Peat, C. U. Spens, W. P.
Jones, L. (Swansea W.) Pickthorn, K. W. M. Stanley, Rt. Hon. Oliver (W'm'l'd)
Kerr, H. W. (Oldham) Ponsonby, Col. C. E. Stewart, J. Henderson (Fife, E.)
Kerr, Sir John Graham (Sco'sh Univs.) Porritt, R. W. Strauss, H. G. (Norwich)
Kimball, L. Pownall, Lt.-Col. Sir Assheton Strickland, Captain W. F.
Lamb, Sir J. O. Procter, Major H. A. Stuart, Hon. J. (Moray and Nairn)
Leech, Sir J. W. Radford, E. A. Sueter, Rear-Admiral Sir M. F
Lees-Jones, J. Raikes, H. V. A. HI. Tasker, Sir R. I.
Leighton, Major B. E. P. Ramsay, Captain A. H. M. Tate, Mavis C.
Levy, T. Ramsden, Sir E. Thomas, J. P. L.
Liddall, W. S. Rankin, Sir R. Thomson, Sir J. D. W.
Lindsav, K. M. Rathbone, Eleanor (English Univ's.) Thorneycroft, G. E. P.
Lloyd, G. W. Remer, J. R. Thornton-Kemsley, C. N.
Loftus, P. C. Roberts, W. (Cumberland, N.) Touche, G. C.
McCorquodale, M. S. Ropner, Colonel L. Train, Sir J.
Mat Donald, Rt. Hon. M. (Ron) Rosbotham, Sir T. Tryon, Major Rt. Hon. G. C.
McKie, J. H. Ross Taylor, W. (Woodbridge) Wakefield, W. W.
Magnay, T. Rothschild, J. A, de Wallace, Capt. Rt. Hon. Euan
Maitland, Sir Adam Rowlands, G. Ward, Lieut.-Col. Sir A. L. (Hull)
Makins, Brigadier-General Sir Ernest Royds, Admiral Sir P. M. R. Warrender, Sir V.
Manningham-Buller, Sir M. Ruggles-Brise, Colonel Sir E. Waterhouse, Captain C.
Margesson, Capt. Rt. Hon. H. D. R. Russell, Sir Alexander Watt, Lt.-Col. G. S. Harvie
Markham, S. F. Salmon, Sir I. Webbe, Sir W. Harold
Mason, Lt.-Col. Hon. G. K. M. Salt, E. W. Wells, Sir Sydney
Meller, Sir R. J. (Mitcham) Sanderson, Sir F. B. Whiteley, Major J. P. (Buckingham)
Mellor, Sir J. S. P. (Tamworth) Schuster, Sir G. E. Williams, C. (Torquay)
Mills, Sir F. (Leyton, E.) Seely, Sir H. M. Williams, H. G. (Croydon, S.)
Mills, Major J. O. (New Forest) Selley, H. R. Willoughby de Eresby, Loral
Moreing, A. C. Shaw, Captain W. T. (Forfar) Wise, A, R.
Morgan, R. H. (Worcester, Stourbridge) Shepperson, Sir E. W. Wolmer, Rt. Hon. Viscount
Morris-Jones, Sir Henry Shute, Colonel Sir J. J, Womersley, Sir W. J.
Morrison, G. A. (Scottish Univ's.) Simon, Rt. Hon. Sir J. A. Wood, Rt. Hon. Sir Kingsley
Morrison, Rt. Hon. W. S. (Cirencester) Smith, Bracewell (Dulwich) Wragg, H.
Munro, P. Smith, Sir R. W. (Aberdeen) Wright, Wing-Commander J. A. C.
Nall, Sir J. Smithers, Sir W. York, C.
Neven Spence, Major B. H. H. Snadden, W. McN.
Nicolson, Hon. H. G, Somervell, Rt. Hon. Sir Donald TELLERS FOR THE AYES.—
O'Connor, Sir Terence J. Somerville, Sir A. A. (Windsor) Lieut.-Colonel Kerr and Captain
Orr-Ewing, I. L. Southby, Commander Sir A. R. J. McEwen.
NOES.
Adams, D. (Consett) Hardie, Agnes Price, M. P.
Adams, D. M. (Poplar, S.) Henderson, A. (Kingswinford) Pritt, D. N.
Adamson, W. M. Henderson, J. (Ardwick) Richards, R. (Wrexham)
Ammon, C. G. Henderson, T. (Tradeston) Ridley, G.
Anderson, F. (Whitehavtn) Hills, A. (Pontefract) Riley, B.
Banfield, J. W. Hollins, A. Ritson, J.
Barnes, A. J. Hopkin, D. Robinson, W. A. (St. Helens)
Barr, J. Jagger, J. Sexton, T. M.
Beaumont, H. (Batley) Jenkins, A. (Pontypool) Shinwell, E.
Benn, Rt. Hon. W. W. Jenkins, Sir W. (Neath) Silkin, L.
Benson, G. Johnston, Rt. Hon. T. Silverman, S. S.
Bevan, A. Jones, A. C. (Shipley) Simpson, F. B.
Broad, F. A. Jones, J. J. (Silvertown) Smith, Ben (Rotherhithe)
Bromfield, W. Kennedy, Rt. Hon. T. Smith, E. (Stoke)
Brown, G. (Mansfield) Kirkwood, D. Smith, Rt. Hon. H. B. Lees- (K'ly)
Buchanan, G. Lawson, J. J. Smith, T. (Normanton)
Burke, W. A. Leach, W. Sorensen, R. W.
Cape, T. Lee, F. Stephen, C.
Charleton, H. C. Leonard, W. Stewart, W. J. (H'ght'n-le-Sp'ng)
Cluse, W. S. Leslie, J. R. Stokes, R. R-
Clynes, Rt. Hon. J. R. Logan, D, G. Strauss, G. R- (Lambeth, N.)
Cove, W. G. Lunn, W. Summerskill, Dr. Edith
Cripps, Hon. Sir Stafford Macdonald, G. (Ince) Taylor, R. J. (Morpeth)
Daggar, G. McEntee, V. La T. Thorne, W.
Davies, R. J. (Westhoughton) McGhee, H. G. Tinker, J. J.
Day, H. McGovern, J. Tomlinson, G.
Dobbie, W. MacLaren, A. Viant, S. P.
Dunn, E. (Rother Valley) Maclean, N. Walkden, A. G.
Ede, J. C. Mainwaring, W. H. Watkins, F. C.
Edwards, A. (Middlesbrough E.) Marshall, F. Watson, W. McL.
Edwards, Sir C. (Bedwellty) Maxton, J. Welsh, J. C.
Edwards, N. (Caerphilly) Messer, F. Westwood, J.
Fletcher, Lt.-Comdr. R. T. H. Montague, F. Whiteley, W. (Blaydon)
Gallacher, W. Morgan, J. (York, W.R., Doncaster) Williams, E. J. (Ogmore)
Gardner, B. W. Morrison, Rt. Hon. H. (Hackney, S) Williams, T. (Don Valley)
Garro Jones, G. M. Nathan, Colonel H. L. Wilson, C. H. (Attercliffe)
Green, W. H. (Deptford) Naylor, T. E. Windsor, W. (Hull, C.)
Greenwood, Rt. Hon. A. Noel-Baker, P. J. Woods, G. S. (Finsbury)
Griffiths, J. (Llanelly) Paling, W. Young, Sir R. (Newton)
Groves, T. E. Parkinson, J. A.
Hall, G. H. (Aberdare.) Pearson, A. TELLERS FOR THE NOES.—
Hall, J. H. (Whitechapel) Pethick-Lawrence, Rt. Hon. F. W. Mr. Mathers and Mr. John.
Division No. 234.] AYES. [8.4 p.m.
Adams, D. (Consett) Groves, T. E. Parker, J.
Adams, D. M. (Poplar, S.) Hall, J. H. (Whitechapel) Parkinson, J. A.
Adamson, W. M. Hardie, Agnes Pearson, A.
Ammon, C. G. Henderson, A. (Kingswinford) Pethick-Lawrence, Rt. Hen. F. W.
Banfield, J. W. Henderson, J. (Ardwick) Price, M. P.
Barnes, A. J. Henderson, T. (Tradeston) Pritt, D. N.
Barr, J. Hills, A. (Pontefract) Quibell, D. J. K.
Batey, J. Hollins, A. Richards, R. (Wrexham)
Beaumont, H. (Batley) Hopkin, D. Ridley, G.
Benn, Rt. Hon. W. W. Jagger, J. Riley, B.
Benson, G. Jenkins, A. (Pontypool) Ritson, J.
Bevan, A. Jenkins, Sir W. (Neath) Robinson, W. A. (St. Helens)
Broad, F. A. John, W. Sexton, T. M.
Bromfield, W. Jones, A. C. (Shipley) Shinwell, E.
Brown, C. (Mansfield) Kennedy, Rt. Hon. T. Silverman, S. S.
Buchanan, G. Kirby, B. V. Simpson, F. B.
Burke, W. A. Kirkwood, D. Smith, E. (Stoke)
Cap., T. Lawson, j. J. Smith, T. (Normanton)
Charleton, H. C. Leach, W. Sorensen, R. W.
Chater, D. Lee, F. Stephen, C.
Cluse, W. S. Leonard, W. Stewart, W. J. (H'ght'n-le-Sp'ng)
Collindridge, F. Leslie, J. R. Summerskill, Dr. Edith
Cove, W. G. Logan, D. G. Taylor, R. J. (Morpeth)
Cripps, Hon. Sir Stafford Lunn, W. Thorne, W.
Daggar, G. Macdonald, G. (Ince) Tinker, J. J.
Dalton, H. McEntee, V. La T. Tomlinson, G.
Davies, S. O. (Merthyr) McGhee, H. G. Viant, S. P.
Dobbie, W. Maclean, N. Walkden, A. G.
Dunn, E. (Rother Valley) Mainwaring, W. H. Watkins, F. C.
Ede, J. C. Marshall, F. Watson, W. McL.
Edwards, A. (Middlesbrough E.) Mathers, G. Welsh, J. C.
Edwards, Sir C. (Bedwelty) Maxton, J. Westwood, J.
Edwards, N. (Caerphilly) Messer, F. Wilkinson, Ellen
Frankel, D. Montague, F. Williams, E. J. (Ogmore)
Gardner, B. W. Morgan, J. (York, W.R., Doncaster) Wilton, C. H. (Attercliffe)
Gibson, R. (Greenock) Morrison, Rt. Hon. H. (Hackney, S.) Windsor, W. (Hull, C.)
Green, W. H. (Deptford) Nathan, Colonel H. L. Woods, G. S. (Finsbury)
Greenwood, Rt. Hon. A. Naylor, T. E. Young, Sir R. (Newton)
Griffiths, G. A. (Hemsworth) Noel-Baker, P. J.
Griffiths, J. (Llanelly) Paling, W. TELLERS FOR THE AYES.—
Mr. Whiteley and Mr. Anderson
NOES.
Acland Troyte, Lt.-Col. G. J. Crooke, Sir J. Smedley Harris, Sir P. A.
Adams, S. V. T. (Leeds, W.) Crookshank, Capt. Rt. Hon. H. F. C. Haslam Henry (Horncastle)
Albery. Sir Irving Crossley, A. C. Haslam, Sir J. (Bolton)
Alexander, Brig.-Gen. Sir W. Crowder, J. F. E. Hely-Hutchinson, M. R.
Allen, Col. J. Sandeman (B'knhead) Davies, C. (Montgomery) Hepburn, P. G. T. Buchan-
Anderson, Sir A. Garrett (C. of Ldn.) Denman, Hon. R. D. Hepworth, J.
Aske, Sir R. W. Danville, Alfred Higgs, W. F.
Assheton, R. Despencer-Robertson, Major J. A. F. Hogg, Hon. Q. McG.
Baillie, Sir A. W. M. Doland, G. F. Holdsworth, H.
Baldwin-Webb, Col. J. Dorman-Smith, Col. Rt. Hon. Sir R. H. Holmes, J. S.
Balfour, G. (Hampstead) Dugdale, Captain T. L. Hudson, Capt. A. U. M. (Hack., N.)
Balniel, Lord Duncan, J. A. L. Hume, Sir G. H.
Bartlett, C. V. O. Edge, Sir W. Hunter, T,
Beamish, Rear-Admiral T. P. H. Edmondson, Major Sir J. Hutchinson, G. C.
Bennett, Sir E. N. Elliot, Rt. Hon. W. E. Jarvis, Sir J. J.
Blair, Sir R. Ellis, Sir G. Jones, Sir G. W. H. (S'k N'w'gt'n)
Boothby, R. J. G. Emrys-Evans, P. V. Jones, Sir H. Haydn (Merioneth)
Bolton, W. W. Entwistle, Sir C. F. Jones, L. (Swansea W.)
Bower, Comdr. R. T. Errington, E. Kerr, Colonel C. I. (Montrose)
Briscoe, Capt. R. G. Erskine-Hill, A. G. Kerr, Sir John Graham (Sco'sh Univs.)
Brown, Rt. Hon. E. (Leith) Evans, D. O. (Cardigan) Kimball, L.
Browne, A. C. (Belfast, W.) Everard, Sir William Lindsay Lamb, Sir J. Q.
Burgin, Rt. Hon. E. L. Fildes, Sir H. Lees-Jones, J.
Butcher, H. W. Fleming, E. L. Leech, Sir J. W.
Carver, Major W. H. Fremantle, Sir F. E, Levy, T.
Cary, R. A. George, Major G. Lloyd (Pembroke) Liddall, W. S.
Cazalet, Thelma (Islington, E.) Gibson, Sir C. G. (Pudsey and Otley) Looker-Lampson, Comdr. O. S.
Cazalet, Capt. V. A. (Chippenham) Gluckstein, L. H. Loftus, P. C.
Christie, J. A. Gower, Sir R. V. Mabane, W. (Huddersfield)
Clarry. Sir Reginald Grant-Ferris, Flight-Lieutenant R. McEwen, Capt. J. H. F.
Clydesdale, Marquess of Gridley, Sir A. B. McKie, J. H.
Cobb, Captain E. C. (Preston) Griffith, F. Kingsley (M'ddl'sbro, W.) Magnay, T.
Colfox, Major Sir W. P. Grigg, Sir E. W. M. Maitland, Sir Adam
Conant, Captain R. J. E. Gritten, W. G. Howard Makins, Brigadier-General Sir Ernest
Cook, Sir T. R. A. M. (Norfolk, N.) Guest, Mai. Hon. O. (C'mb'rw'll, N.W.) Mander, G. le M.
Cooper, Rt. Hn. T. M. (E'nburgh, W.) Gunston, Capt. Sir D. W. Margesson, Capt. Rt. Hon. H. D. R.
Courthope, Col. Rt. Hon. Sir G. L. Hacking, Rt. Hon. Sir D. H. Meller, Sir R. J. (Mitcham)
Craven-Ellis, W. Harbord, Sir A. Mellor, Sir J. S. P. (Tamworth)
Moreing, A. C. Ruggles-Brise, Colonel Sir E. A. Thorneyoroft, G. E. P.
Morgan, R. H. (Worcester, Stourbridge) Salt, E. W. Thornton-Kemsley, C. N.
Morris-Jones, Sir Henry Samuel, M. R. A. Touche, G. C.
Morrison, G. A. (Scottish Univ's.) Sanderson, Sir Ft B. Wakefield, W. W.
Morrison, Rt. Hon. W. S. (Cireneester) Schuster, Sir G. E. Wallace, Capt. Rt. Hon. Euan
Neven-Spence, Major B. H. H. Scott, Lord William Ward, Lieut.-Col. Sir A. L. (Hull)
Nicolson, Hon. H. G. Seely, Sir H. M. Warrender, Sir V.
O'Connor, Sir Terence J, Selley, H. R. Waterhouse, Captain C.
Orr-Ewing, I. L. Shaw, Captain W. T. (Forfar) Watt, Lt.-Col. G. S. Harvie
Owen, Major G. Shepperson, Sir E. W. Wayland, Sir W. A.
Petherick, M. Simon, Rt. Hon. Sir J. A. Webbe, Sir W. Harold
Pilkington, R. Smith, Bracewell (Dulwich) Wedderburn, H. J. S.
Ponsonby, Col. C. E. Smithers, Sir W. Wells, Sir Sydney
Pownall, Lt.-Col. Sir Assheton Somervell, Rt. Hon. Sir Donald White, H. Graham
Prester, Major H. A. Southby, Commander Sir A. R, J. Williams, Sir H. G. (Croydon, S.)
Radford, E. A. Spears, Brigadier-General E. L. Willoughby de Eresby, Lord
Raikes, H. V. A. M. Stewart, J. Henderson (Fife, E.) Wise, A. R.
Ramsden, Sir E. Stourton, Major Hon. J. J Womersley, Sir W. J.
Remer, J. R. Strauss, H. G. (Norwich) Wragg, H.
Roberts, W. (Cumberland, N.) Strickland, Captain W. F. Wright, Wing-Commander J. A. C.
Ropner, Colonel L. Stuart, Rt. Hon. J. (Moray and Nairn) York, C.
Rosbotham, Sir T. Sutcliffe, H. Young, A. S. L. (Partick)
Ross Taylor, W. (Woodbridge) Tasker, Sir R. I.
Rowlands, G. Tate, Mavis C. TELLERS FOR THE NOES.—
Royds, Admiral Sir P. M. R. Thomson, Sir J. O. W. Mr. Grimston and Mr. Munro.

Proposed words there inserted in the Bill.