Commons Sitting of 23 May 1940

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

DETENTION OF A MEMBER.
Mr. Speaker: I have to inform the House that I have received the following letter from the Secretary of State for the Home Department relating to the detention of Captain Ramsay, a Member of this House:
"23rd May, 1940.
Sir,
I have the honour to inform you that I have found it my duty, in the exercise of my powers under Regulation 18B of the Defence (General) Regulations, 1939, to direct that Captain Archibald Henry Maule Ramsay, Member of Parliament, be detained. Captain Ramsay was accordingly taken into custody this morning and is at present lodged in Brixton Prison.
I am, Sir,
Your obedient Servant,
JOHN ANDERSON."
Mr. Thorne Mr. Thorne rose—
Hon. Members: Sit down.
Mr. Thorne: I am entitled to ask for information. I want to ask whether the Home Secretary is prepared to give information as to the reason why the hon. and gallant Member has been arrested? That is all I want to know.
Mr. Speaker: Not at this stage.

ORAL ANSWERS TO QUESTIONS.
  UNEMPLOYMENT.

    BUILDING INDUSTRY.
    Mr. De la Bèreasked the Parliamentary Secretary to the Ministry of Labour whether, with a view to preventing the increase of unemployment in the building industry which has arisen as a result of the war, the Government will consider creating a central co-ordinating authority or committee to direct generally, the entire building situation?
    The Parliamentary Secretary to the Ministry of Labour (Mr. Assheton):I would refer my hon. Friend to the statement on this subject made yesterday by the Lord Privy Seal.
    Mr. De la Bère: Is my hon. Friend aware that in France some such procedure has already been adopted?
    Mr. Assheton: We have some information of what is going on in France in this matter.

    MEANS TEST.
    Mr. McGovernasked the Parliamentary Secretary to the Ministry of Labour whether he has arranged or proposes to take the necessary steps to abolish the means test, and, if so, at what date will the change take place?
    Mr. Assheton: No, Sir.
    Mr. McGovern:Has this question been discussed by the new Government, and, if not, is it to be discussed in the near future, with a view to abolishing this means test, which is causing such tremendous tragedies throughout the working classes?
    Mr. Assheton: That question is not on the Paper.
    Mr. McGovern:Will the hon. Gentleman draw the attention of the Minister of Labour to the fact that all Labour conferences have decided to end this means test and that we expect that he will take steps to end it at the earliest possible moment?

    BENEFIT AND ASSISTANCE.
    Mr. McGovernasked the Parliamentary Secretary to the Ministry of Labour whether he is taking steps to give a substantial increase in allowance to the unemployed, and at what date the increase will come into force?
    Mr. Assheton:With regard to unemployment benefit, the hon. Member will be aware that rates of benefit are dependent on the resources of the Unemployment Fund. As regards Unemployment Assistance, my right hon. Friend is devoting all his energies to finding work for as many unemployed persons as possible.
    Mr. McGovern: But that is not the question I asked. I asked whether the Min-

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    ister is taking action substantially to increase the rates of benefit because of the fact that increased prices are going on all the time and the standard of existence of these people is being reduced accordingly; and has he discussed the matter with the Minister?
    Mr. Assheton: I need hardly say that I should not have given this answer without consulting my right hon. Friend.
    Mr. McGovern: Do I take it then, that the Minister does not intend to increase the rates of benefit?
    Mr. T. Smithasked the Parliamentary Secretary to the Ministry of Labour whether he is aware that increased wages received on account of the rise in the cost of living is being taken into account in households where an applicant for unemployment assistance resides, and that, in consequence, the assistance is proportionately reduced; and whether, in view of the circumstances of the present time, he will consider the modification of the present regulations?
    Mr. Assheton: I would refer my hon. Friend to my reply to a Question on the same subject put by the hon. Member for Stoke-on-Trent (Mr. E. Smith) on 25th January.
    Mr. Smith: Will the Minister keep in mind that here is a problem that is well worth looking into, in view of the fact that we are urging both men and women to do as much as ever they can in the various industries in which they are engaged?
    Mr. George Griffiths: Will the Minister consider that these men are being asked to work overtime, and that if they work any overtime the fact is brought to the attention of the Board and a reduction is made in the unemployment assistance? This is a serious matter.
    Mr. Assheton: I think I made it clear in the reply to the Question to which I referred the hon. Member that that is not in fact the full position. In the case of an increase of wages of the kind to which the hon. Member refers some advantage does accrue to the household under the present regulation.
    Mr. Smith: Is the hon. Gentleman aware that in the Question I admit that it is reduced proportionately, and will he give the House an assurance that this matter will not be lost sight of?
    Mr. Assheton: It is always under consideration.

  MILITARY SERVICE.

    EMPLOYÉ'S DISMISSAL (CARDENDEN).
    Mr. Gallacherasked the Parliamentary Secretary to the Ministry of Labour whether he is aware that Messrs. Robertson and Sons, bakers, of Cardenden, have dismissed an employé of nine years' service, on the grounds that he is shortly to be called up for military service; that as a consequence this man is likely to be unemployed for several weeks prior to starting on his military service; and will he take steps to prevent this treatment of men immediately prior to their Army time falling due?
    Mr. Assheton:The hon. Member has supplied particulars of this case, which has been under inquiry. I am informed that after the termination of his employment the employé in question found other work and has not made a claim to unemployment benefit. My right hon. Friend is considering what further action can be taken in the matter.

    MEDICAL EXAMINATION.
    Mr. Rhys Daviesasked the Parliamentary Secretary to the Ministry of Labour whether he has now made arrangements with the medical boards to avoid passing into His Majesty's Forces persons who are physically fit but of unsound mind?
    Mr. Assheton: As my hon. Friend has been informed in reply to previous Questions, the instructions issued to medical boards, provide for inquiry to be made into a man's personal and family history of nervous and mental illness and for a specialist's opinion to be obtained in cases of doubt. The attention of medical boards has recently been drawn to the importance of their examination of this condition, and the possibility of taking further steps with a view to the identification of mentally unfit men is also being explored. The matter will no doubt receive consideration by the committee under the

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    chairmanship of Lord Horder which has been appointed to advise on medical questions arising in connection with the examination of men by medical boards.
    Mr. Davies: Is the hon. Gentleman aware that mental welfare associations operating under local authorities will have almost complete lists of these young men, and is it possible for the medical boards to work in co-operation with these associations?
    Mr. Assheton: I hope very much that that can be done.

    RESERVED OCCUPATIONS.
    Sir Irving Alberyasked the Parliamentary Secretary to the Ministry of Labour to what extent the schedule of reserved occupations prevents unemployed men, who usually follow a reserved occupation, from volunteering for the Services?
    Mr. Assheton: It has been decided that in general, any man who has been unemployed for two months shall be at liberty to volunteer as a member of any of the Services of National Defence notwithstanding any restrictions in the Schedule of Reserved Occupations.
    Sir Robert Young: Will my hon. Friend say when it was decided?
    Mr. Assheton: I am announcing the decision now.
    Mr. Lyons: Can my hon. Friend say whether that statement which he has just made has been communicated to his representatives who are at the recruiting offices?
    Mr. Assheton: Any decision that is definitely come to is naturally communicated to our officers immediately.
    Mr. Robert Gibsonasked the Parliamentary Secretary to the Ministry of Labour whether he will consider placing qualified solicitors, who are carrying on business as such, in the same category in relation to reserved occupation as accountants and qualified solicitors employed as managing clerks?
    Mr. Assheton: The question of the reservation of solicitors under the Schedule of Reserved Occupations is at present under consideration.
    Mr. Gibson: Do I take it that there is no real reason in substance why solicitors in business themselves should not be in
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    the same category as qualified solicitors who are acting as managing clerks?
    Mr. Assheton: The Minister is to-day receiving a deputation from the Law Society, and I would rather not add anything to my answer at this stage.

    POSTPONEMENT (HUMANE GROUNDS).
    Mr. R. Gibsonasked the Parliamentary Secretary to the Ministry of Labour whether he has considered the extreme hardship to a widow whose only son, or the last of several sons, is about to be called up; and whether he will take steps to secure the indefinite postponement of the calling up of such sons?
    Mr. Assheton: I would refer my hon. and learned Friend to the replies given to the hon. Member for West Leyton (Mr. Sorensen) on 8th February and to the hon. Member for Llanelly (Mr. J. Griffiths) on 25th April.
    Mr. Gibson: Will the Minister keep in view the position after the last war of French women particularly who lost an only son in the war?
    Mr. Assheton:I think that the reply to which I referred the hon. and learned Member clearly shows that military service hardship committees are empowered to grant postponement in cases that they consider appropriate.
    Mr. Sorensen: Is the Minister aware that they cannot give postponement of service indefinitely?
    Mr. Assheton: There is no power, as the hon. Member is aware, to exempt under the Act. There is only power to postpone.

    ENGINEERING OPERATIVES (TRAINING).
    Sir Harold Webbeasked the Parliamentary Secretary to the Ministry of Labour whether he will, in consultation with the President of the Board of Education, arrange for the much fuller use of polytechnics and other educational institutions having suitable equipment for the training of engineering operatives in the more highly skilled branches of their trades; and whether he will take steps to see that the men so trained shall not at the conclusion of their training be enticed away from the employers for whom they are working?
    Mr. Assheton: The Board of Education recently issued a Circular, of which I am sending a copy to my hon. Friend, calling the attention of local education authorities to the importance of training for war-time industry and to the fact that technical institutions are particularly well adapted to provide courses of a higher grade in engineering and related subjects. This Circular was prepared in consultation with the Ministry of Labour and National Service and my Department will co-operate closely with the Board in ensuring that the fullest and best use is made of the institutions in war-time. As regards the second part of the Question, my right hon. Friend is giving urgent consideration to ways and means securing the distribution of skilled engineering labour to the best possible advantage.

    CONTROL OF EMPLOYMENT ACT.
    Mr. Higgsasked the Parliamentary Secretary to the Ministry of Labour when he intends to issue the Order referred to in Section 1 of the Control of Employment Act, 1939?
    Mr. Assheton:The powers contained in the Control of Employment Act have now been superseded by the Act passed yesterday.

    INDIA (POLITICAL SITUATION).
    Mr. Wedgwood Bennasked the Secretary of State for India whether he can indicate the attitude of His Majesty's present Government towards the problems facing them in India?
    Mr. Edmund Harveyasked the Secretary of State for India whether, in view of the recent encouraging pronouncements of Mr. Gandhi and Pandit Jawaharlal Nehru, he is able to make any statement about the political situation in India; and whether any measures have yet been taken to promote a small conference of representative India leaders of all parties to agree upon the next steps towards a solution of the constitutional deadlock?
    The Secretary of State for India (Mr. Amery): I am glad to have this opportunity of explaining, so far as I can within the limits of an answer to a Question, the attitude of the Government to the present regrettable political deadlock in
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    India. The attainment by India of free and equal partnership in the British Commonwealth is the goal of our policy as it was that of the late Government. We recognise, as my predecessor made clear in his speech of 18th April, that it is for Indians themselves to play a vital part in devising the form of constitution best adapted to India's conditions and to India's outlook. The promise already given that the present scheme of the Act of 1935 and the policy and plans on which it is based are to be open to re-examination at the end of the war, necessarily implies discussion and negotiation and not dictation. We have no desire to delay any of the steps that may pave the way towards an agreed settlement that will take account of the legitimate claims of all communities and interests. On the contrary we have been and are only too anxious to make bur contribution towards such a settlement. The difficulty at this moment lies in the acute cleavage of opinion which has developed in India itself effecting issues fundamental to the character of her future Constitution and even to the approach to the problem.
    I refuse to regard that cleavage as unbridgable. Even if no final agreement on the major issue is immediately in sight I cannot think that it is beyond the resources of Indian statesmanship to find at any rate such a provisional accommodation as would admit of the resumption of office with general consent by Ministers in the Provinces and the appointment to the Governor-General's Executive Council of representative public men on the basis already offered. I believe that such a solution of the present deadlock, provisional no doubt, but still easing the way to eventual agreement, would be eagerly welcomed by the overwhelming body of Indian public opinion. India has from the outset of the war made manifest her sympathy and support for the Allied cause and her anxiety to lend to that cause all the aid in her power. It is the sincere and earnest hope of His Majesty's Government that in the situation which faces the whole civilised world to-day, existing differences may be put aside and that the leaders of the great political parties in India will come together in agreement in support of the common effort.
    The Viceroy, with the approval of His Majesty's Government, has spared no effort to bring the parties together and to

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    endeavour to find a basis for progress which would be generally acceptable. His own readiness to help in any way he can remains unabated.
    Mr. Sorensen: May I ask the Minister whether he will confirm the report that Mr. Nehru has declared that under the existing circumstances in Europe civil disobedience is to be suspended, and whether he will take steps to confirm it and, if it is true, express appreciation of his action? May I also ask whether the right hon. Gentleman intends to make at an early date a personal visit to India to see those who are responsible?
    Mr. Amery: The latter question can only be considered when circumstances make it feasible. As to the first part of the question I do not understand that civil disobedience has been suspended by Mr. Nehru, but he has declared that he would not take advantage of our difficulties in order to change the rate at which he is proposing to deal with this particular question, and we appreciate that.
    Mr. Harvey: In thanking the Secretary of State for his reply may I ask whether any further step has been taken to call together a small informal conference representing Indian leaders?
    Mr. Amery: I think that is covered by the full answer I have given.

    "VOICE OF SPAIN."
    Major-General Sir Alfred Knoxasked the Secretary of State for the Home Department whether he has yet come to a decision regarding the weekly publication entitled "Voice of Spain," whose object is to upset existing good relations between Great Britain and Spain?
    The Secretary of State for the Home Department (Sir John Anderson):I am not yet in a position to add anything to the reply given on the 1st May to a Question by my hon. Friend the Member for Wirral (Captain Graham).
    Sir A. Knox: Is the right hon. Gentleman taking steps to find out particulars of this publication?
    Sir J. Anderson: Certainly, Sir.
    Sir A. Knox: Has the right hon. Gentleman any evidence of the source of its funds?
    Sir J. Anderson: That is a separate question.
    Miss Rathbone:Is the right hon. Gentleman aware that there is nothing in this publication which justifies the statement in the Question, and that it contains much valuable information as to actual trade, given by quotations from the Spanish official Press, and is, therefore, very valuable because it enables one to know the real situation?
    Sir J. Anderson:I think the hon. Lady made a similar statement when the matter came up on 1st May, and I can assure her that notice has been taken of what she said.

    HOURS OF LABOUR (SHOPS).
    Mr. Rhys Daviesasked the Home Secretary whether he has any information to show if the legal provisions regarding the hours of labour of young persons in shops are being enforced by local authorities?
    Sir J. Anderson: Yes, Sir. The information before me indicates that the provisions referred to are being generally observed. Only a few complaints have reached me and where necessary local authorities have taken proceedings to enforce the law.

  CIVIL DEFENCE.

    AIR-RAID PRECAUTIONS.
    Mr. Sorensenasked the Home Secretary whether he has any further information to give the House respecting the value and use of fluorescent and phosphorescent articles and paint in connection with air-raid precautions; and whether the special committee investigating the matter has yet issued any report or made proposals?
    Sir J. Anderson:As I have previously informed the hon. Member, a committee has been set up to investigate the question of luminescent materials, and the possibilities of their application for air-raid precautions purposes. This committee is actively pursuing its inquiries, but the committee is not yet in a position to issue a report, or to formulate proposals.

    CAMOUFLAGE.
    Sir John Graham Kerrasked the Home Secretary whether he will state the number of salaried posts connected with camouflage work, and their scale of salaries; how many of those appointed to such posts are professional artists; and what provisions are made for their undergoing a course of instruction in the science of camouflage?
    Sir J. Anderson: As the answer is long and contains a number of figures, I will, with permission, arrange for it to be circulated in the Official Report.
    Following is the answer:
    The following technical officers are engaged at the Civil Defence Camouflage Establishment on work for which qualifications as painters are required:

    Salary.

    1

    Chief Camouflage Officer

    £900 per annum.

    1

    Deputy Chief Camouflage Officer.

    £700 per annum.

    26

    Camouflage Officers

    £350–£500 (1 with additional allowance).

    16

    Senior Technical Assistants.

    £5–£6 per week.

    21

    Junior Technical Assistants—

    Men

    £3 13s. 6d. per week.

    Women

    £2 18s. 0d. per week.

    With the exception of three camouflage officers and one senior technical assistant, all these officers are either professional artists or at the time of recruitment were students in training at art schools. I know of no course of instruction in the science of camouflage which they could take: but they are guided in their work by the scientists and engineers who are associated with them.
    Sir J. Graham Kerrasked the Home Secretary whether he is aware that the establishment of the scientific principles which determine the effectiveness of camouflage is the work of biological specialists in this subject; that one of the leading authorities in this specialised branch of science is a British subject; and whether steps have been or will be taken to ensure that his full-time services shall be available to the country during the present emergency?
    Sir J. Anderson: I am aware that biological science has made an important contribution to the study of camouflage,
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    and I have invited a British biologist to serve on the Camouflage Committee. He has accepted my invitation and will, I have no doubt, be ready to give to the matter as much of his time as may be required.

    POLICE (POWERS OF SEARCH AND ARMS).
    Mr. Saltasked the Home Secretary whether in view of the danger to the State which may arise from persons assisting Germans arriving in our country by parachutes, he will have a systematic search made of all households which the police consider contain individuals whose loyalty is uncertain?
    Sir J. Anderson: The police do not hesitate to use the powers of search conferred on them by the Defence Regulations and statutory provisions and they do not require any further instructions.
    Mr. Saltasked the Home Secretary whether the police can be supplied with firearms?
    Sir T. Mooreasked the Home Secretary whether any decision has yet been reached as to whether it is desirable to arm all or any part of the police force of this country in view of the parachutist menace?
    Sir J. Anderson: Special steps have been taken to increase the arms available for the use of the police. While there is no intention of turning the police into a combatant force, it is desirable that many of them should be armed for their own protection and for purposes connected with the duties they have to perform in guarding certain places.
    Lieut.-Colonel Sir Thomas Moore:Will the right hon. Gentleman bear in mind that the Royal Ulster Constabulary have been armed since the outbreak of the war and that they have never used those arms?
    Sir J. Anderson: I can assure the hon. and gallant Member that I am well aware of that.

    SUBVERSIVE ACTIVITIES.
    Sir George Broadbridgeasked the Home Secretary whether, for the purposes of home security and having regard to what has happened in certain neutral countries, it has now been decided to ban all Communist and Fascist societies and, if necessary, to intern their members?
    Mr. Manderasked the Home Secretary (1) what action he proposes to take with reference to the Fascist organisation known before the war as the Imperial Fascist League, its members giving the Nazi salute and wearing the swastika badge, now replaced by the St. George's Cross; and whether he is aware that this organisation is circulating pamphlets and a weekly news sheet entitled "Weekly Angles" from the Angles News Service, 56, Crogsland Road, N.W.1, occupies the same headquarters as did the Imperial Fascist League and that its activities are contrary to the national war effort;
    (2) what action he proposes to take with reference to the British Council for Christian Settlement in Europe and the British Peoples Party, of which Lord Tavistock is chairman, to which are attached former members of the Nordic League and the Link; and whether he is aware that these bodies conduct propaganda of a defeatist and pro-Nazi character and are working contrary to the national war effort?
    Sir J. Anderson: All these matters are receiving the attention due to them in present circumstances, but it would be contrary to the public interest to announce beforehand the steps which are being taken to deal with any persons whose activities are calculated at the present time to impede the national war effort.
    Mr. Mander: Is the Home Secretary aware, and will he bear in mind, that the British Council for Christian Settlement in Europe has as its secretary Mr. John Beckett, who was associated before the war with Mr. William Joyce, better known as "Lord Haw Haw?"
    Sir J. Anderson: I will bear that in mind.
    Mr. Levy: Does the right hon. Gentleman intend to suppress the publications for which these particular societies are responsible, and which are now being sold or given away in various parts of the country?
    Sir J. Anderson: The question of publication is rather a different one, and I should like to see it on the Order Paper. The House knows that new regulations were made last week.
    Mr. Noel-Baker: Will the right hon. Gentleman take special steps to find out
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    whether any of these organisations are receiving funds from abroad, and when he has the information will he publish the sums and the sources?
    Sir J. Anderson:I have been giving close attention to that matter for some time and I shall certainly consider how I can best make available the information I have.
    Colonel Wedgwoodasked the Home Secretary (1) what steps have yet been taken to intern pro-German British or Irish subjects in Great Britain, especially members of the British Union of Fascists and Irish Republican Army;
    (2) whether, as the Irish Republican Army are suspected by the police of putting a bomb in a British transport, he proposes to take steps to eliminate citizens of Eire and other Irish suspects from this country?
    Sir J. Anderson: As regards members of the I.R.A., in addition to a large number who have been convicted and are serving long sentences, Orders have been made under the Prevention of Violence (Temporary Provisions) Act for the expulsion of 167 persons. Full use will continue to be made of the provisions of that Act. I should add, however, that the police have no information to confirm the suggestion made in the right hon. and gallant Gentleman's later Question. As regards other British subjects, Regulation 18B of the Defence Regulations was last night amended by the addition of a provision enabling me to order the detention of members of organisations which have had associations with the enemy or are subject to foreign influence or control and may be used for purposes prejudicial to the national security.
    Copies of the amending Regulation are available in the Vote Office. Under these new powers I gave instructions last night for the detention of a number of persons whose names will be made known as soon as the orders have been carried out. This action has been taken because of the danger that the organisations of which the persons concerned were leading members might be used in the execution of acts prejudicial to the security of the State, and not on account of any opinions held or expressed by them or on account of their propagandist activities. It is not to be assumed that the action taken this

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    morning under these new powers represents finality. Further action must and will be taken as circumstances may require.
    Colonel Wedgwood: While thanking the right hon. Gentleman for his reply, may I ask him whether, in view of the fact that 167 people have been deported, he is taking steps to prevent them and others coming back?
    Sir J. Anderson: That is very carefully watched, and I am satisfied that the watch that is kept is sufficient.
    Mr. Maxton: Did I hear the right hon. Gentleman use the word "detention" in connection with these Orders? Do I take it that this means that these men will not be brought for trial at any time? May I ask further whether the hon. and gallant Member of this House has been arrested as one of this particular group?
    Sir J. Anderson:No, Sir. The hon. and gallant Member for Peebles (Captain Ramsay) was taken into detention under Regulation 18B in the form in which it stood before last night's amendment. The other persons concerned are being taken into detention under the amended Regulation. The Orders direct that these persons should be detained in the circumstances that are set out quite clearly in Regulation 18B, and all the supplementary provisions of the original Regulation 18B will apply to action taken under the amended Regulation
    Mr. Maxton: Does this mean that the hon. and gallant Member will not be tried or charged with any specific action?
    Sir J. Anderson: This is a precautionary measure. The hon. and gallant Member, like others who have been taken into detention under Regulation 18B, will have his right to make representations to the Advisory Committee?
    Mr. Maxton: May I ask you, Mr. Speaker, whether any question affecting the Privileges of this House is involved in this matter?
    Mr. Speaker: If the hon. Member had any question of Privilege which he wanted to raise, it should have been raised immediately after I read the announcement from the Home Secretary. If anybody wishes to raise any question of Privilege at some other time, it would
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    be necessary for a Member to put down a Motion on the Paper and for the Government to afford time for it.
    Mr. Maxton: May I ask the right hon. Gentleman the Leader of the House whether he does not think this is a matter of sufficient importance to allow some time when the implications of it may be discussed here?
    Sir Percy Harris: Could not this matter be raised on the Adjournment?
    Sir Henry Morris-Jones: Is not my right hon. Friend aware that the House as a whole is completely satisfied that he is doing his work properly?

    AIR-RAID PRECAUTIONS PERSONNEL.
    Sir T. Mooreasked the Home Secretary whether he is aware that individuals holding Communist opinions are serving at air-raid precautions posts and expressing views hostile to this country; and whether he will investigate all such cases submitted to him?
    Sir J. Anderson:I am prepared to examine any reports that may be submitted to me supporting the suggestion in the first part of the Question. I may add that in present circumstances there is a particular duty resting on local authorities to satisfy themselves as to the reliability in an emergency of individual members of their A.R.P. services.

    AUXILIARY FIRE SERVICE.
    Major Sir Jocelyn Lucasasked the Home Secretary why a member of the Auxiliary Fire Service does not get full pay while sick or injured on the same terms as a regular fireman and members of the Fighting Forces; and whether this will now be altered?
    Sir J. Anderson: Members of the Auxiliary Fire Service receive sick pay on the same terms as Civil Defence volunteers generally and their conditions of service in this respect must be related to those of other Civil Defence volunteers rather than to those of the established services, such as professional firemen or the Fighting Forces.
    Sir J. Lucasasked the Home Secreteary whether members of the Auxiliary Fire Service who are in full-time employment can now be given a second suit of clothing, in view of the fact that professional firemen are provided with three suits and that when righting fires the men

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    nearly always get soaked with water and have nothing to change into when they get back?
    Sir J. Anderson: Fire authorities, who were originally authorised to supply one complete suit of uniform, have already been authorised to purchase, during the next 10 months, additional uniforms which should enable brigades to hold a reserve of garments available for use when occasion arises. In addition, each auxiliary fireman may be supplied with a suit of overalls and a waterproof coat and leggings.

    EVACUATION (INVALIDS).
    Mr. Martinasked the Minister of Health whether he will prepare a scheme for the evacuation of adult invalids such as those who are bedridden and therefore not able to make private arrangements for their own evacuation?
    The Minister of Health (Mr. Malcolm MacDonald): I am afraid that it is not practicable to include within the Government's evacuation scheme arrangements for the removal of adult invalids such as those who are bedridden.
    Mr. R. C. Morrison:In view of the fact that most voluntary societies which have many of these cases brought to their notice are unable to do anything about them and to get them away, could not the right hon. Gentleman do something to assist the local bodies carrying on this work?
    Mr. MacDonald:If we can do anything to assist these bodies we shall be glad to do so, but the whole position must be governed by the prospect of accommodation in the reception areas.

    ENEMY ALIENS.
    Colonel Burtonasked the Home Secretary whether the order for internment of enemy aliens applies to females as well as males?
    Sir J. Anderson: Hitherto I have not felt it necessary to order the wholesale internment of female enemy aliens or of any class of them, although I have not hesitated to order the internment of individual German or Austrian women where there were grounds for suspecting their attitude and disposition to this country.
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    The whole question whether any and, if so, what further measures are required in present circumstances is receiving close attention.
    Sir T. Moore: Is not the female of any species generally more dangerous than the male?
    Colonel Burton: Can my right hon. Friend tell us how many women have been interned and how many are still at large?
    Sir J. Anderson: I cannot give numbers without notice.
    Mr. Parkerasked the Home Secretary what arrangements have been made for the internment of enemy aliens; whether it is proposed to release any of them in the near future; and, if so, on what conditions?
    Miss Rathboneasked the Home Secretary whether, and how soon he hopes to review the cases of those aliens who have been recently interned, not on individual grounds, but under a general order; and whether particular attention will be given to the cases of men employed by employers urgently needing their labour and to the cases of youths undergoing training or education?
    Sir J. Anderson: I have ordered the internment as a measure of precaution, of all male enemy aliens aged 16 to 60 (except invalids and the infirm), throughout Great Britain, who are classified as "B," and of all male Germans and Austrians of the same age group in the coastal counties from Nairn to Hampshire. In taking this action I had contemplated that the general position would be reviewed as soon as circumstances permit; but I am afraid that, having regard to the paramount considerations of national security, there can be no question at present of individual review except possibly in the type of case referred to by the hon. Lady the Member for the English Universities (Miss Rathbone) or where release can be shown to be definitely and directly in the national interest.
    Mr. Parker: Can arrangements be made to allow men who are interned to communicate with their wives?
    Sir J. Anderson: Certainly.
    Miss Rathbone: In view of the fact that letters now take such a long time to get

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    through and that many of these people are anxious, may I ask whether the censorship of letters of internees can be hastened?
    Sir J. Anderson: I will certainly look into that matter.
    Colonel Wedgwood:Is it possible to allow these internees to have work to do which may be helpful to the country, in order to show that they are on our side? Also, will it be possible to allow the wives of these internees to go with their husbands?
    Sir J. Anderson:These are matters of detail which involve problems of organisation, and the action taken in the last few days will have to be allowed to work itself out before these ideals can be approached.
    Sir Ralph Glyn: Why has the age limit of 60 been fixed? Is it really supposed that people over 60 years of age cannot be harmful or helpful?
    Sir J. Anderson: No, Sir, but some age limit must be fixed. I would like the House to realise that the purpose of this action is not only to ensure that there shall be no way in which anyone shall have a chance of doing harm, but also to break up any organisation which may be in existence. The action is directed to that end.
    Sir R. Glyn: Does that mean that if it is proved that someone over 60 years of age is better locked up he will be kept in internment?
    Sir J. Anderson: I think the House will realise that from the outbreak of war the policy of the Government has been to take no risks and to put under restraint and, if necessary, intern, any person with regard to whom there is reasonable cause to think that he may be a public danger.
    Mr. Higgs: Is consideration being given to scientists who hold key positions and Class C certificates?
    Sir J. Anderson:If the hon. Member will look at my answer he will see that I refer to the possibility of releasing people whose release can be shown to be definitely and directly in the national interests.
    Vice-Admiral Taylor: How many people in category B are interned?
    Sir J. Anderson: They have all been interned.
    Mr. Sorensen: Will the Home Secretary give special consideration to Class C certificates in the case of those people who have been living on the coast and who would not have been interned if they had been living elsewhere?
    Mr. Crowder: Will the Home Secretary consider the possibility of sending some of these internees to the Dominions if the Dominions are willing to take them, and thus avoid congestion in this country?
    Sir J. Anderson: I must be allowed to deal with one problem at a time and I am dealing with the most urgent aspect of this problem.
    Captain W. T. Shawasked the Home Secretary how many male enemy aliens between the ages of 16 and 60 have been interned and whether any exceptions have been made in the categories already affected; whether it is his intention to intern all enemy aliens, men and women alike; and whether the women in the categories, where males have already been interned, have had any restrictions put upon them in respect of the use of cameras?
    Sir J. Anderson: I presume that my hon. Friend refers to the male aliens interned in pursuance of my recent directions. According to the latest returns available, these number some 5,000. The only persons in the categories referred to who were exempted from internment were the invalids and the infirm. As regards other categories of aliens, certain further measures are being taken but I cannot make details known in advance. As regards the third part of the Question, all women in Category B are subject to the special restrictions which inter alia prohibit the use of cameras.
    Captain Shaw: How many enemy aliens are there in this country who are unaffected by the Orders already made?
    Sir J. Anderson: Perhaps my hon. and gallant Friend will put a Question on the Paper so that I can give him an exact reply.
    Captain Shaw: Does not my right hon. Friend consider that if all enemy aliens and many aliens who have been naturalised were interned, it would increase the

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    feeling of security among the British people and so tend to increase their output?
    Sir J. Anderson: That is a question of opinion.

    FACTORY INSPECTORATE.
    Mr. Graham Whiteasked the Home Secretary whether he will state the present number of the permanent staff of His Majesty's inspectors of factories; and how many extra inspectors have been added to deal with the regulations dealing with hours for women and young persons which have been brought into force since the outbreak of war?
    Sir J. Anderson:It would not be satisfactory to appoint temporary inspectors to deal with particular questions such as the hours of work of women and young persons. The only satisfactory method is to recruit inspectors to deal with all the matters arising under the Factories Act. The number of recruits who can be added is limited by the rate at which newcomers can be trained by the existing staff. Recruiting has been proceeding as rapidly as possible; and, despite the withdrawal of inspectors to serve with the Forces and to assist other departments, the number of inspectors is slightly higher than at the outbreak of war. The number now is 297, and it is hoped to add another 10 or 12 inspectors at an early date.
    Mr. Thorne: In consequence of so much work being done by the permanent inspectors will the right hon. Gentleman consider the advisability of giving more power to local inspectors so that they can inspect under the Factory Acts?
    Sir J. Anderson: I am not quite sure that I understand what the right hon. Gentleman means by local inspectors. There has been a considerable delegation of power.
    Mr. Thorne: Is the right hon. Gentleman aware that sanitary inspectors, for instance, have no right to enter factories and operate under the name of a factory inspector?
    Sir J. Anderson:These people have their own work to perform, and as I have pointed out it is not satisfactory to entrust technical work to those not properly trained and instructed.

    REFUGEES.
    Mr. Parkerasked the Home Secretary whether the position of Dutch and Belgian refugees is being properly investigated to safeguard against the entry of Nazi sympathisers?
    Mr. Ralph Ethertonasked the Home Secretary whether it is practicable adequately to check the bona fides of refugees now reaching this country; whether any restrictions are placed on their movements; and what steps are taken to ensure that they do not include persons who have been acting as enemy agents or fifth columnists in Holland, Belgium, Denmark or Norway?
    Sir J. Anderson:I am fully alive to the dangers referred to, and these refugees are being carefully examined at the ports of arrival. As an additional safeguard I have made an Order, under Article 11 of the Aliens Order, 1920, the effect of which is to require war refugees from Belgium and Holland who are aliens to comply with restrictions similar to those imposed upon enemy aliens by Articles 6A and 9A of the Aliens Order. I can assure the House that every practicable step is being, and will be, taken to safeguard this country against the entry of enemy agents.
    Mr. Manderasked the Home Secretary why the recent tribunal at Birmingham for refugees was presided over by Mr. Wallington, K.C., who had the task of reviewing a number of his own decisions; whether a similar practice has been carried out elsewhere; and whether he is aware that permission was refused for the liaison officers between the tribunal and the local refugee committee appointed by the Home Office to take any part in the proceedings in spite of their willingness to do so, and their experience of the problem?
    Sir J. Anderson: I presume the hon. Member refers to the Regional Advisory Committee appointed for the Midland Civil Defence Region, of which Mr. Wallington is Chairman. In selecting the Chairmen of these Regional Advisory Committees, every effort was made to avoid appointing as Chairmen persons who had presided over local tribunals which had dealt with cases in the same area. The fact that the areas of the tribunals were much smaller than those

    299
    of the Advisory Committees was held to justify such an appointment as that of Mr. Wallington as an exceptional measure where no other arrangement could conveniently be made. As regards the last part of the Question, I have no information at present, but I am causing inquiries to be made and will communicate with the hon. Member.
    Mr. Mander: May I ask whether this was the only case where an appointment of this kind was made for a man to review his own decisions?
    Sir J. Anderson: I would point out that he does not sit alone for that purpose. I think the number of cases is exceedingly small. I am not sure whether this is the only case, but I know there are very few.
    Mr. Noel-Baker: Will the right hon. Gentleman bear in mind that it is in principle desirable that the liaison officer should, if possible, be heard?
    Sir J. Anderson: I agree.
    Mr. Parkerasked the Minister of Health whether he will reconsider the billeting of Dutch and Belgian refugees in London and other large cities as this influx is discrediting the Government's own evacuation scheme and persuading parents to bring back their children from reception areas?
    Mr. M. MacDonald: It would not be possible to receive war refugees from Holland and Belgium in the numbers for which it may be necessary to provide without making use of the accommodation in large towns. This course does not imply that the areas to which it is proposed to send refugees are considered safe from air attack. The purpose is to provide what shelter we can in this country, if necessary, for allies who have been rendered homeless.
    Mr. Crowder:Will my right hon. Friend consider discussing with the Dutch and Belgian Governments the possibility of getting these refugees evacuated in due course to the Belgian and Dutch Colonies?
    Mr. MacDonald: We are in touch with the Belgian and Dutch authorities on all relevant matters.
    Sir Francis Fremantle: Will my right hon. Friend consider the great possibility of many of these refugees, especially
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    female refugees, being used in domestic service, and therefore killing two birds with one stone?
    Mr. MacDonald:The question of making the best possible use of these refugees, both male and female, from the point of view of employment, is receiving very active consideration.

    FELTHAM BORSTAL INSTITUTION (OFFICER'S INJURIES).
    Mr. Messerasked the Home Secretary whether he is aware that, on the night of 22nd September last, Mr. F. Chambers, a quasi-permanent officer at Feltham Borstal Institution, was brutally attacked by a prisoner and suffered injuries, with the result that he has had to undergo a long period of sick absence; that, as a consequence of the injuries sustained, this officer has lost pay amounting to approximately £45 up to date; and whether he is prepared to authorise an ex-gratia payment to the officer so as to ensure that he does not suffer this financial loss solely as a result of an injury sustained in the performance of his duty?
    Sir J. Anderson: In the early hours of 23rd September, 1939, this officer, who is a re-engaged pensioner serving in a temporary capacity, was attacked by an inmate at Feltham, as a result of which he sustained certain injuries to his head. These were not of a serious character and Mr. Chambers made a good recovery; but as he was found to be suffering from high blood pressure he was unable to resume duty, and his case was dealt with under the Workmen's Compensation Acts. I regret that it is not possible to make an ex-gratia payment in addition to the compensation which is being paid to Mr. Chambers under those Acts.

    TRUCK ACTS BILL.
    Sir G. Broadbridgeasked the Home Secretary when he proposes to introduce the Truck Acts Bill?
    Sir J. Anderson: I hope to be in a position to make an early announcement.
    Mr. Rhys Davies: Before the right hon. Gentleman makes an announcement as to the amendment of the Truck Acts, will he consult the Trades Union Congress?
    Sir J. Anderson: Certainly, I will consider what consultations would be advisable.
    Colonel Nathan: Will the legislation be retrospective in its effect?
    Sir J. Anderson:I can only refer the hon. and gallant Gentleman to what I said before, but the possibility of including some provision for retrospective effect will have to be taken into consideration.
    Mr. Thorne:Is the Home Secretary aware that there are more important questions than this to be brought before the House, and will he not be too hasty about this matter?

  EDUCATION.

    CHILDREN (EMPLOYMENT IN AGRICULTURE).
    Mr. Rhys Daviesasked the President of the Board of Education what proposals he has received from the Westmorland County Education Committee relating to the employment of schoolchildren in agriculture; and what is his attitude towards these proposals?
    The President of the Board of Education (Mr. Ramsbotham):The Westmorland local education authority have not submitted any proposals relating to this matter.
    Mr. Davies: Is the hon. Gentleman aware that at the last meeting of this education authority, it was suggested that children of all ages attending school should be allowed to work in agriculture?
    Mr. Ramsbotham:The hon. Member asked me what proposals had been received from this education committee and I have told him that I have not had any proposals.

    EVACUATION AREAS.
    Mr. Sorensenasked the President of the Board of Education whether he is now satisfied that all children in evacuable areas, including London, are now receiving education; what progress is being made towards full-time instruction; whether there have been or are likely to be secondary schools recently re-opened in the London and extra-Metropolitan areas; and what arrangements he is making respecting the possible diminution in the number of scholars attending
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    evacuated schools and the corresponding increase of secondary school scholars requiring education next autumn in evacuable areas?
    Mr. Ramsbotham:Information regarding the progress made in the resumption of educational facilities in evacuation areas since 15th April, for which date figures were supplied to the hon. Member on 2nd May will not be available until returns showing the position to-morrow have been received by the Board. As regards the last part of the Question it is contemplated that evacuated children who gain admission to secondary schools should take up their places in schools in the reception areas since it would be contrary to the Government's policy to bring them back to the area from which they were evacuated in the interests of their safety.
    Mr. Sorensen: Does the Minister realise that next autumn we shall find a considerable diminution in the number of scholars attending secondary schools in reception areas and an increasing number wishing to use the secondary schools in their own home areas; and has he taken that matter into consideration?
    Mr. Ramsbotham: I think we had better wait and see what happens next autumn.

    SCHOOLS (WASTE PAPER COLLECTION).
    Sir H. Webbeasked the President of the Board of Education whether, in view of the serious shortage of paper, he will consider asking local education authorities throughout the country to arrange for the provision at every school in the country of sacks for the collection of waste paper, and by competitions, prizes or otherwise to encourage schoolchildren to bring waste paper from their homes to these points for collection by the local authority?
    Mr. Ramsbotham:The Board have already sent to local education authorities for circulation to the schools copies of a memorandum calling attention to the help schools can give to the organised collection of paper and other materials. I am sending my hon. Friend a copy of this memorandum. The methods of collection will vary with the local conditions, and schools have been asked to consult the local authority or local voluntary organisation to ascertain how best to co-operate.
    Sir H. Webbe: Will the Minister give a lead to local authorities in this matter, in view of the great importance of saving every ounce of paper?
    Mr. Ramsbotham: The Board's memorandum has given a lead.

    OLD AGE PENSIONS.
    Mr. Andersonasked the Minister of Health whether a person having attained 70 years of age will be entitled to apply for a supplementary pension under the Old Age Pensions Acts?
    Mr. M. MacDonald: Provided that he has an old age pension any person, other than a blind person, will be entitled to apply to the Assistance Board to have his pension supplemented under Part II of the Old Age and Widows' Pensions Act.
    Mr. Anderson:Does that mean that the means test at present operating in the case of persons over 70 years of age will be disregarded, and that they will then have to come under whatever new means test is applied?
    Mr. MacDonald: Persons qualified for old age pensions will come under the Regulations, which will be published shortly.
    Mr. Anderson:May I repeat the point? Will the present means test operating in respect of people over 70 years of age receiving the present old age pensions, be disregarded, and will the new Regulations have effect as regards those people?
    Mr. MacDonald: The new Regulations will apply to all those who apply for supplementary pensions.
    Mr. Woods: Can the Minister give us something more precise than "shortly" as to when this begins?
    Mr. MacDonald: There is another Question on the Order Paper on that point.
    Mr. George Griffiths: Is a widow who is not yet 60 and is drawing a pension for herself and children, to be given supplementation?

    GOVERNMENT (LEGISLATIVE PROGRAMME).
    Captain Pluggeasked the Prime Minister whether he can make any statement as to how much of the proposed
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    legislation now on the Order Paper the Government intends to take over, and how much it proposes to abandon or modify?
    The Lord Privy Seal (Mr. Attlee): There has been no opportunity of considering this matter to the extent which would enable me to give my hon. and gallant Friend the detailed information for which he asks.

    MUNITIONS PRODUCTION.
    Mr. Caryasked the Prime Minister whether he will indicate to the House the steps which are being taken in this country to accelerate rapidly the production of aircraft, guns, tanks and other munitions?
    Mr. Attlee: I would refer my hon. Friend to the statement which I made yesterday on the Second Reading of the Emergency Powers(Defence) Bill. My Noble Friend the Minister for Aircraft Production and my right hon. Friend the Minister of Supply have already given instructions to the firms concerned for full overtime and week-end working. The House will be aware of the appeal broadcast on Tuesday last by my Noble Friend, urging workers engaged on the production of aircraft and aircraft equipment to work day and night and also through the two forthcoming week-ends. Numerous other steps are being taken to accelerate programmes of production and I can assure my hon. Friend that all our energies will be directed to that end. Co-ordination will be effected by the Production Council under the chairmanship of my right hon. Friend the Minister without Portfolio, the establishment of which was announced yesterday. The House may be assured that the measures we have taken, with full and enthusiastic co-operation of all engaged in the industries, will result in a redoubled concentration of national effort to secure the maximum output of aircraft and munitions of all kinds.
    Mr. Lipson: May I ask whether the measures which are being taken include the provision of adequate material for those engaged in munition production?
    Mr. Attlee: My hon. Friend will realise that obviously one cannot get the production without the material.

    GOVERNMENT DEPARTMENTS (APPOINTMENTS).
    Mr. De la Bèreasked the Prime Minister whether he will consider giving instructions that, in future, all Government appointments be made solely on the grounds of efficiency and merit alone and without regard to seniority or any other system of privilege appointments?
    Mr. Attlee:I presume my hon. Friend has in mind appointments in Government Departments. I can assure him that full regard is always had to the considerations to which he refers.
    Mr. De la Bère: Does my right hon. Friend not realise the urgency of overhauling some of the existing appointments with a view to winning the war?
    Mr. Attlee: I entirely agree with my hon. Friend on the urgency of winning the war and all the necessary overhauling will, of course, be done.
    Mr. De la Bère: Perhaps my right hon. Friend will have a word with me about it afterwards.
    Mr. Thurtle: May I ask the Lord Privy Seal whether his reply also covers Army Staff appointments?

  AGRICULTURE.

    ALLOTMENTS (THAMES DITTON).
    Commander Sir Archibald Southbyasked the Minister of Agriculture whether he has any information as to the number of allotments provided by the Urban District Council of Esher, on the Ditton Lodge Estate, Thames Ditton; how many of these are still available; how many have been let to persons of the artisan or working classes; whether any of the users of the allotments have gardens available for growing vegetables; and what rent is being paid to the Milk Marketing Board for such allotments?
    The Minister of Agriculture (Mr. R. S. Hudson): As the reply contains a number of figures, I will, with my hon. Friend's permission circulate it in the Official Report.
    Sir A. Southby: Is the Minister aware that in October last the Metropolitan Water Board offered land to the council for this purpose in the immediate vicinity of the Ditton Lodge Estate and also at
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    East Molesey, and that the council did not take advantage of such offers?
    Mr. Hudson: If my hon. and gallant Friend will send me particulars, I will look into them.
    Following is the reply:
    I am informed that eight acres of land are held for allotments by the Urban District Council of Esher on the site mentioned and would provide about 90 10-rod plots. The area already marked out for allotments is six acres, and on this area 51 10-rod plots have been let and 17 plots are still available for letting. The remaining two acres are not yet marked out. I have no information as to the number of plots let to persons of the artisan or working classes or of the gardens attached to the houses occupied by the allotment holders, although I understand that most of the plot holders live in houses of low rateable value. The rent paid to the Milk Marketing Board is at the rate of £2 per acre per annum.

    LAND WORK (NATIONAL SERVICE).
    Sir I. Alberyasked the Minister of Agriculture whether he can now make any further statement concerning the employment of young men on the land, prior to their military service?
    Mr. Hudson: Plans have been prepared, in consultation with the representatives of headmasters, for encouraging the older boys leaving public and secondary schools to take whole-time employment in agriculture, as a form of national service for the war period or until they are called up for military duty. I hope to be in a position to announce further details shortly.

    GRASSLAND PLOUGHING.
    Mr. Wilfrid Robertsasked the Minister of Agriculture whether he can state the quota allocated to each county, together with the actual acreage ploughed, during the past season?
    Mr. Hudson: As the reply contains a number of figures, I propose, with the hon. Member's permission, to circulate it in the Official Report. I would add that the total additional grassland ploughed amounts in England and Wales to 1,542,236 acres, an excess of 42,000 acres over the target programme of 1½ million acres. When the Scottish and Northern Ireland figures of 220,000 and

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    270,000 acres respectively are added a grand total of 2,034,236 acres is obtained. I hope the House will agree that this total reflects great credit on all concerned in its achievement.
    Following is the reply:

    Statement as to the result of the ploughing-up campaign 1939–1940 based on returns made by County War Agricultural Executive Committees.

    County.

    Ploughing Quotas allotted to Committees.

    Area of grassland ploughed between 4th June, 1939, and 15th May, 1940.

    Acres.

    Acres.

    England.

    Bedford

    10,000

    17,458

    Berks.

    20,000

    19,729

    Bucks.

    30,000

    24,011

    Cambridge

    10,000

    12,799

    Isle of Ely

    2,000

    3,025

    Cheshire

    30,000

    40,450

    Cornwall

    35,000

    51,000

    Cumberland

    35,000

    38,320

    Derby

    25,000

    30,966

    Devon

    80,000

    98,200

    Dorset

    30,000

    31,500

    Durham

    20,000

    23,934

    Essex

    40,000

    26,939

    Glos.

    35,000

    43,471

    Hants.

    40,000

    46,964

    Isle of Wight

    3,000

    3,477

    Hereford

    25,000

    27,710

    Herts

    20,000

    14,104

    Hunts

    5,000

    7,222

    Kent

    30,000

    40,215

    Lancs.

    40,000

    48,800

    Leics.

    25,000

    30,876

    Lincs., Holland

    3,000

    4,906

    Lincs., Kesteven

    10,000

    12,321

    Lincs., Lindsey

    30,000

    28,567

    Middlesex

    2,000

    1,340

    Norfolk

    35,000

    37,150

    Northants

    30,000

    30,100

    Soke of Peterboro'

    2,000

    2,094

    Northumberland

    25,000

    35,954

    Notts.

    20,000

    19,669

    Oxford

    25,000

    27,207

    Rutland

    3,000

    4,027

    Salop

    40,000

    49,500

    Somerset

    40,000

    45,850

    Staffs

    35,000

    38,330

    Suffolk, East

    15,000

    17,188

    Suffolk, West

    10,000

    15,809

    Surrey

    15,000

    15,962

    Sussex, East

    20,000

    24,050

    Sussex, West

    15,000

    18,850

    Warwick

    25,000

    28,543

    Westmorland

    10,000

    11,044

    Wilts

    40,000

    42,610

    Worcs.

    15,000

    22,716

    Yorks, E.R.

    30,000

    26,600

    Yorks, N.R.

    35,000

    38,400

    Yorks, W.R.

    50,000

    45,500

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    County.

    Ploughing Quotas allotted to Committees.

    Area of grassland ploughed between 4th June, 1939, and 15th May, 1940.

    Acres.

    Acres.

    Wales.

    Anglesey

    10,000

    11,000

    Brecon

    10,000

    15,188

    Cardigan

    15,000

    18,100

    Carmarthen

    30,000

    35,261

    Carnarvon

    10,000

    10,930

    Denbigh

    20,000

    21,515

    Flint

    10,000

    11,528

    Glamorgan

    15,000

    17,454

    Merioneth

    5,000

    6,026

    Monmouth

    15,000

    16,060

    Montgomery

    15,000

    22,500

    Pembroke

    20,000

    21,571

    Radnor

    5,000

    9,646

    Area of grassland ploughed prior to the outbreak of war (estimated).

    150,000

    —

    Total England and Wales.

    1,500,000

    1,542,236

    CREDITS GRANTED.
    Mr. W. Robertsasked the Minister of Agriculture whether he can make a statement showing the extent to which the Agricultural Requisites Scheme has been made use of by farmers?
    Mr. Hudson: Between the inception of the scheme in February and 18th May the cash value of the assistance granted to farmers in England and Wales was £28,200, the number of farmers concerned being approximately 460. It is intended that the scheme shall supplement and not replace credit from normal sources such as banks and merchants, and consequently the sum of £28,200 represents only cases where normal sources of credit were not available. These figures do not include certain recent applications which have been approved direct by County War Agricultural Executive Committees and have not yet been notified to my Department.
    Mr. Roberts: Will the Minister be ready to review the conditions of this scheme with a view to a radical alteration so that credit facilities may be available on a much more comprehensive basis?
    Mr. Hudson:The scheme has been in operation for only three months, but I will certainly look into it and if other facilities are required I will consider the matter further.

    NATIONAL MINIMUM WAGE.
    Mr. T. Smithasked the Minister of Agriculture what progress is being made with regard to the fixing of a national minimum wage for adult male workers?
    Mr. Hudson: Before fixing a national minimum wage the Agricultural Wages Board is required by the Agricultural Wages (Regulation) Amendment Act, 1940, to consult the county agricultural wages committees. I understand that at the meeting held on 15th May the Board decided to ask the committees to furnish their observations in regard to the national minimum by 7th June, and to proceed to fix the national minimum wage as soon as possible after that date.
    Mr. Smith: Will the Minister take good care to see that there is no delay in fixing an adequate national minimum wage in view of the urgency of the matter?
    Mr. Hudson: Certainly.
    Colonel Burton: Will my right hon. Friend have regard to the cost of production when discussing the question of a minimum wage?

    REFUGEES (EMPLOYMENT).
    Mr. Lipsonasked the Minister of Agriculture whether, in view of the shortage of agricultural labour, he is arranging that refugees from Scandinavia and from Holland and Belgium, who have had previous experience of agriculture, shall be assigned through the county war agricultural committees to farmers who are able and willing to employ them?
    Mr. Hudson: Yes, Sir. I am in touch with my right hon. Friend the Minister of Labour on the matter.
    Mr. Noel-Baker: Will my right hon. Friend also bear in mind that there are many anti-Nazi Czechs, German and other refugees who were agricultural workers and might usefully be used in this work?
    Mr. Lipson: May I ask who obtain information as to the number of refugees from the countries mentioned who have had previous agricultural experience?
    Mr. Hudson: I think that is a matter primarily for the Minister of Labour and the Home Office.

    EIRE (INVASION DANGERS).
    Mr. Emeryasked the Prime Minister whether he has any information as to the attitude which the Eire Government would adopt in the event of an invasion of Southern Ireland by Germany; and whether he is satisfied that in that event our Western coast defences are adequate to meet subsequent enemy attacks?
    Sir H. Morris-Jonesasked the Prime Minister whether he is satisfied that all necessary measures have been taken to prevent an invasion of this country by Germany through the Dominion of Eire?
    Mr. Attlee:I feel sure that the Government of Eire are alive to the possibilities as, of course, are the Government here. So far as the Questions relate to our own defensive measures, hon. Members will realise that I am not able to make any statement.
    Sir H. Morris-Jones: Is it not a matter of extreme danger that this portion of our island home, on which we have conferred Dominion status, should have declared itself neutral and that there is a German Minister in Dublin; and is it not necessary that we should be assured by the Government that they are taking adequate and complete measures to see that we are not invaded in these islands through our Western flank, and that it is not a case of taking measures after the thing has occurred?
    Sir William Davison: Before my right hon. Friend answers that Question, will he explain a little more fully what he means by the words "I feel sure" and are definite arrangements being made with the Government of Eire, in view of the serious dangers to the safety of this country, to meet any attempt at invasion through that country?
    Mr. Attlee: Hon. Members must realise that there can be no question of this Government giving orders to the Government of Eire, which country is, of course, a member of the British Commonwealth with its own Government but all proper consultations have taken place.
    Sir H. Morris-Jones: I am not satisfied with the reply of the right hon. Gentleman and I beg to give notice that I shall feel it my duty to raise this matter on the Motion for the Adjournment of the House.

    PARLIAMENT (DURATION).
    Mr. Boyceasked the Prime Minister whether he is now in a position to state when a Bill will be introduced to prolong the life of the present Parliament?
    Mr. Attlee: I am not at present in a position to state when such legislation will be introduced.

    BOVINE TUBERCULOSIS DEATHS.
    Mr. Viantasked the Minister of Health whether he can supply an estimate of the number of deaths reported in England and Wales in the year 1938 as due to bovine tuberculosis?
    Mr. M. MacDonald: Of the deaths registered in England and Wales in 1938, 26,176 were classified as being due to tuberculosis. Of these 4,246 were classified as being due to non-respiratory tuberculosis; these deaths would include the majority of the bovine cases; in the absence of special investigation, it is not possible to give more definite information.
    Dr. Edith Summerskill:In view of the gravity of the answer which the right hon. Gentleman has given, can he say whether he proposes to take any action to prevent the sale of tubercular-infected milk?
    Mr. MacDonald: This is an indication of the great importance of getting ahead with schemes of pasteurisation?
    Dr. Summerskill: Can the Minister say whether he proposes to take any action soon in regard to that?
    Mr. MacDonald: I shall take any action which is practicable in present circumstances.

    TUBERCULOSIS (ENGLAND AND WALES).
    Mr. Gallacherasked the Minister of Health what was the number of beds reserved for tuberculosis and available for immediate occupation on 31st March in England and Wales, respectively; and the number of such beds expressed as the number per 100 annual tuberculosis deaths for England and Wales, respectively?
    Mr. MacDonald: The latest date for which complete returns are available is 31st December, 1939. On that date, the
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    number of beds reserved for the treatment of tuberculosis in England was 24,606of which 19,312 were occupied. The corresponding figures for Wales were 1,827 and 1,640. The annual death rate returns for 1939 are not yet available, but the number of beds reserved for the treatment of tuberculosis in England expressed as the number per hundred tuberculosis deaths in 1938 is approximately 102, while for Wales it is 91.

BUSINESS OF THE HOUSE.
Mr. Lees-Smith: Will the Prime Minister state the business of the House for next week?
Mr. Attlee:The business of the House for next week will be:
Tuesday—Supply (8th Allotted Day); Committee; Ministry of Information Vote. Report stage of the National Loans Resolution.
Wednesday—Second Reading of the Finance Bill. It will also be necessary, on grounds of urgency, to ask the House to pass the National Loans Bill through all its stages.
Thursday—Supply (9th Allotted Day); Committee; Board of Trade Vote.
Mr. Maxton: May I ask the right hon. Gentleman on what basis these Supply Days have been arrived at and how the subjects have been chosen?
Mr. Attlee: In the short time available steps were taken to ascertain the views of parties and the Votes which have been announced are those which were generally desired. After Questions I will make a statement on the subject of the allocation of Supply Days.
Mr. Maxton: May I ask that the accident by which I and my hon. Friends were omitted from this general consultation will not be repeated?
Mr. Attlee: The question of the method of selecting Votes for discussion on Allotted Supply Days has been considered. My right hon. Friend the Prime Minister desires the Leader of the House to make such business arrangements as will so far as is possible meet the views of the House as a whole. It is suggested that the best method will be for the usual channels to ascertain the subjects

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which hon. Members desire to debate on Allotted Supply Days, and all parties are invited to make their wishes known through the Whips. Every endeavour will be made to give effect to them in the limited number of days allotted to Supply. I venture to hope that this proposal will commend itself to the House, and that we shall thereby arrive at a satisfactory arrangement.
Mr. Maxton: I want to ask the Leader of the House if he will not add an additional safeguard? The Prime Minister will recognise that ultimately it is the Government which has selected these Supply Days. If one has to go to the Whips, I would point out that the only recognised Whips in this House are the Government Whips, and therefore it is the Government who are arranging these days. May I ask if some provision could not be added by which a requisition by a substantial number of back-benchers would be recognised as a demand that must be granted?
Mr. Attlee:I would say, on that, that in the past, in the usual division of this House there has been an allocation of Supply Days between the larger and smaller Oppositions, but that when I had the honour to lead the Opposition it was always my endeavour to consultmembers in all parts of the House, and on occasions from the Government side requisitions have come forward for different subjects. We have always endeavoured to fall in with them. Under present conditions it is essential, I think, to get the greatest measure of agreement in the House so that all sections will be able to raise the subjects they want. Therefore, while I cannot bind myself to accepting a requisition of a specific number I can state that the Government will certainly take into full consideration any general desire by any substantial body of Members for any subject.
Mr. Maxton:That does not satisfy me. It leaves us in the position in which the Government will decide this business, which has hitherto been a Back-Bench business. I want to be assured that, should there arise an occasion on which a substantial number of Members want a specific Vote discussed, to which the Government are hostile, there will be a provision by which we can insist on having that Vote.
Mr. Attlee: The hon. Member cannot really take it further than my statement and it is difficult to lay down some cast-iron rule. If there were any substantial number of Members who wanted a subject discussed no Government would refuse to give adequate facilities. I am sure that this Government would not.
Sir Percy Harris: Will my right hon. Friend make it clear who will initiate these various Debates? Will they be initiated from the Government benches or will the right of initiating them be allocated according to the various sections of the House?
Mr. Attlee: The suggestion, I think, would be that if one particular section of the House wanted to raise a matter they might agree on someone to open the Debate, but generally speaking I think the usual practice on Supply is that a statement is made by the Minister first. That is the easiest way of initiating the discussion.
Resolved,
"That this House, at its rising this day, do adjourn till Tuesday next."—[The Prime Minister.]

THE WAR.
The Prime Minister (Mr. Churchill):The German armoured forces which made their way through the breach in the French Army have penetrated into the rear of the Allied Armies in Belgium and are now attempting to derange their communications. Abbeville is in enemy hands and heavy fighting is proceeding around and in Boulogne. It is too early yet to say what the result of this coastal fighting may be; but it evidently carries with it implications of a serious character. Meanwhile, General Weygand, who is in supreme command, is conducting operations involving all the Allied Armies with a view to restoring and reconstituting their combined front.

MESSAGE FROM THE LORDS.
That they have agreed to—
Treachery Bill and National Service (Armed Forces) Bill, without Amendment.
That they give leave to the Lord Hyndley to attend in order to his being

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examined as a witness before the Subcommittee on Transport Services of the Select Committee appointed by the Commons on National Expenditure, if he think fit.

ORDERS OF THE DAY.

  LIMITATION OF DIVIDENDS BILL.
  Order for Second Reading read.
  3.54 p.m.
  The Chancellor of the Exchequer (Sir Kingsley Wood): I beg to move, "That the Bill be now read a Second time."
  The House will doubtless recall the references which my right hon. Friend my predecessor, now Lord Simon, made in the course of his Budget Speech to this Measure and to its general aim and purpose. I need, therefore, refer only briefly to one or two statements that were then made. In speaking of the large sum that had to be raised otherwise than by way of taxation, Lord Simon said:
  "What we have to do is to foster and improve the conditions under which the flow of voluntary contributions to Government loans may be stimulated and inflation may be avoided Whatever measures will help to restrict the misuse of spending power, and especially the misuse of increased spending power coming into the hands of an individual as a consequence of war conditions are of vital importance."—[Official Report, 23rd April, 1940; cols. 83–4; Vol. 360.]
  Therefore, I would state that the primary purpose of this Bill and of the limitation of dividends is to play its part in avoiding an increase of purchasing power in the hands of consumers which would, by increasing competition for available goods, contribute towards a rise in prices. The second purpose which I would give to this Measure is the creation of resources in the hands of companies out of which it is hoped they will give the utmost support to Government loans to be issued for the purposes of the war. It is a further benefit that these greater reserves will, by strengthening the financial position of companies, help them when, as must be expected, a period of difficulty and readjustment has to be faced after the war. I particularly emphasise the third purpose of the Bill because I am convinced that it is of increasing importance every day. The House has already generally approved of the aims and principles of the Measure, and I hope it will do so again this afternoon. When further details of the proposals were made on 25th April it was stated that it was not proposed to make the Bill retrospective, but an appeal was made to business men to do their utmost to secure that the spirit of the
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  arrangement should be observed in the interim period before the Royal Assent was given to the Bill. A number of companies which have declared their dividends for the year ending March last have obviously taken steps to conform to the proposed limitations and others have revised proposed dividends which they had already announced before the proposals were made public. I would like to express on behalf of the Government our gratitude to these companies for so readily meeting the appeal and the desires of the Government and for making an endeavour to follow out the principles of this Bill before it became law.
  The Bill applies to every company registered under the Companies Act, 1929, or the previous Companies Acts, and to companies incorporated by Act of Parliament or by Royal Charter, with the exception of private companies and companies which have no share capital. The Bill covers, for instance, various statutory companies whose dividends and earnings are already subject to control by other enactments or by orders made under enactments, such as gas companies, electric supply companies and water companies. I propose to say a word, because I observe the question has been put once or twice in the course of the Debates, as to why private companies are excluded from these proposals. Two main reasons can be given. The first is that I think it is pretty obvious that there would be very great difficulties indeed in ensuring effective control, so far as private companies are concerned, of the proposals made in this Bill, and I am afraid it must be stated—and I have endeavoured to look into the matter myself—that, apart from another consideration which I shall mention shortly, the administrative difficulties in war-time would really be too heavy to be faced. The second reason is that the inclusion of private companies would certainly raise very difficult questions indeed with regard to taxation where, as Members of the House know, special considerations arise as to what are known as one-man companies. Private companies number about 150,000, with an aggregate share capital of about £2,000,000,000. Public companies number some 15,000, with an aggregate share capital of over £5,000,000,000. Therefore, at any rate, this can be said, that the Bill covers the

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  principal field in which dividends are paid.
  I said there were considerations of taxation, apart from the obvious considerable administrative difficulties, in applying a Measure of this kind to such a large number of small companies, many or, I suppose, all of whom do not have to comply with the various measures which give publicity to the dealings and accounts of public companies. It would, in fact, in dealing with the administrative side of the proposals, involve very considerable additions to the staff and many inquiries, and it would be next to impossible to carry them out, especially in war time, in the necessary manner and with the particularity which would be necessary to see that the Measure was complied with. But there are important considerations on taxation. Individuals or partnerships trading as companies should pay Surtax on what they earn and not on what they purport to distribute, and in the case of trading companies the Income Tax law requires what is called a reasonable distribution of the profits to be made in order to secure Surtax on all profits which the exigencies of the business do not require to be withheld from distribution. If the Bill applied to these companies, a dividend which accorded with a statutory Measure like this could claim to be a reasonable distribution, whatever the exigencies of the business might have been. Therefore, I think it is pretty clear that the inclusion of such companies would conflict with the principles of the Surtax legislation designed to prevent evasion of tax by individuals forming themselves into companies.
  Mr. Levy: It is within the knowledge of my right hon. Friend that there is an Act of 1922 whereby, in the case of a public company in which all the ordinary shares are held by five people or less, the profits rank for Super-tax, and it is an offence if they are not distributed. How does he reconcile that Act of 1922 with these proposals?
  Sir K. Wood: Perhaps my hon. Friend will allow me to examine that point. I do not think it destroys the argument which I have just addressed to the House. I would like to say a word about the broad outlines of the general scheme itself. As Members know very well, the Bill limits the amount paid out in dividends,
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  other than fixed rate dividends, to the Sum which was paid out in the best of three standard years. I would like to emphasise four points in that connection. In the first place, under the proposals in the Bill "dividend" means the amount which has been paid and not the rate per cent. In the simplest case, it would come to the same thing, but many hon. Members will appreciate that the varieties of capital structure are so considerable and the changes in the amount of paid up capital and the differences of allotment are so great that we have reached the conclusion that the only practical way of dealing with the matter is to work on the amount paid out.
  Secondly, I would like to explain that fixed rate dividends payable on preference stock, or on any stock entitled to a fixed rate in priority to some other class of stock, are outside the scope of the Measure. It follows, therefore—I have received a communication from an hon. Member about this—that there is no interference with the payment of arrears of fixed rate dividends where the shareholder has cumulative rights in a company. Thirdly, "dividend," therefore, covers any amount paid out otherwise than in respect of fixed rate dividends, and it thus includes not only the ordinary dividends of which we commonly speak, but any sum paid in respect of participating rights of fixed rate stock over and above the fixed rate itself. Finally—my hon. Friend opposite put a question to me about this yesterday—"dividend"under Clause 3 (2) means the gross amount of the dividend. If, for instance, it is paid free of tax, the amount actually received by the shareholder has to be what is called grossed up by reference to the standard rate of Income Tax for the year of assessment in which the distribution was made.
  I would like to say a word about the standard period. The House will observe by reference to the Bill that these are the periods by reference to which an existing company must regulate its annual distribution, and the proposals in the Bill cover any accounting period ending after 30th June, 1936, and before 1st July, 1939. A company is open to choose whichever year suits it best, and the standard is the amount distributed in respect of that period. I had a representation made to me as to what was the object

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  of taking June, 1939, as the terminal date and whether the date could not be made later. The object of that is to exclude from the standard any period during which profits have actually been earned during the war or immediately prior to the declaration of war. The next step is this. A company, having ascertained the amount that was distributed in ordinary dividends for each of the standard years, can then, under Clause 2 (1), adjust the figures in two respects—where it has increased or reduced its ordinary capital, proportionately to the increase or reduction in that capital; the second adjustment that can be made is that where the lengths of the accounting periods in the standard and war years differ, a proportionate adjustment can then be made. Having done that, the company can take whichever of the standard years suits it best and can take the highest amount distributed in respect of any standard year as the amount which it can distribute annually during the war.
  But there is an alternative. Under Clause 2 (1, c) a company can pay for any year during the war period an amount equal to interest at the rate of four per cent. per annum on the paid-up ordinary capital of the company at the end of the accounting year, and that provision is inserted in the Measure in order to meet the case of a company which has been unfortunate in its dividend position throughout the standard years. I should add in that connection that in any of these calculations any increase of capital which is the result of a bonus share issue made after the standard period—I emphasise that—is to be ignored and is not to be allowed as a capital increase for the distribution of dividend, and in what I would call the four per cent. alternative, any bonus capital issued after 30th June, 1939, is excluded. This, of course, is done to assimilate this class of case to that of a company which has a dividend standard. There is another case which I should mention to the House, and it is the case of a company which is a new company as defied by this Bill, one for which the first accounting period after its incorporation ended after 30th June, 1939. That company, it is proposed in the Measure, is to be allowed to pay dividends during the war period of an amount equal to 5 per cent. on the paid-up ordinary capital at the end of the war period.
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  Two questions have been put about that particular part of the Bill, and I will endeavour to say a word about both. The questions are, What is the reason for taking 4 per cent. in the case of existing companies and 5 per cent. in the case of new companies? With regard to an existing company, you have to observe that the 4 per cent. is what I should call a hardship provision, which only operates when no better standard is available under the standard-year calculation. We must take it that such a company has been in a position where either losses have been incurred or profits have been small, and it is felt that in the circumstances 4 per cent. is a fair rate to fix, especially, and I emphasise this, as from the nature of the case that company is likely to be in a financial position which justifies a policy of adding to its reserves. In the case of the new company—where the figure is 5 per cent.—there is no standard whatever in existence, and the question is one of fixing a fair rate of dividend which will not unduly hamper any desirable new development.
  My hon. Friend asked why not 4 per cent. instead of 5 per cent. Considerable representations have reached me that in certain cases 5 per cent. would not, perhaps, be a sufficient inducement, and I think there is this to be said, that in cases where development is held to be desirable or even essential—and one can conceive of such cases with companies which might be helping us to win the war—there is a case for special consideration, and provision is made whereby an appeal can be made under the provisions of Sub-section (4) of Clause 2. One can very well visualise a case in which 5 per cent. might not be sufficient in certain circumstances to attract capital. People who take that view can under the procedure of Sub-section (4) of Clause 2 put their case. Therefore, I submit that both the 4 per cent. and the 5 per cent., having regard to the considerations which I have pat before the House, are on the whole fair and reasonable proposals. In the case of the new company, I again emphasise that there is an opportunity for appeal, and I have no doubt a fair hearing will be given.
  There are two further matters affecting the maximum distribution on which I should like to speak. They are dealt with in Sub-section (3) of Clause 2. If a company has issued or issues ordinary

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  paid-up capital which ranks for only part of its accounting year it would, I think, clearly be a hardship if an appropriate adjustment of the distribution were not made, and this Sub-section makes that adjustment possible. Further, when you are dealing with such a large number of companies as exist in this country, the limitations which we are laying down in this Measure must of necessity produce harsh results in some cases, and I think it is quite impracticable to attempt in this Bill to deal with every type of variation in capital structures—and changes which may have taken place, and which constantly take place, in capital structures. The conclusion was reached that in order to deal with such cases provision should be made for them to receive proper consideration where there was real hardship or exceptional difficulty, and accordingly in Sub-section (4) of Clause 2 provision is made whereby the Treasury may give special and individual consideration to such cases and may direct that the maximum distribution permitted under the Bill shall be increased by such amount as they think fit. But, of course, this dispensing power will be exercised on the advice of the Capital Issues Committee, presided over by Lord Kennet, which now advises the Treasury constantly on all matters affecting capital issues.
  I would bring to the attention of my hon. Friends one or two types of case which I suggest could only be dealt with equitably by a consideration of the facts in the individual case itself. I will mention two types. I do not say for a moment that they shall receive a special consideration by the Treasury, but at any rate they form what I would call a prima facie case. I take first a company which has gone through a very bad trading period, which has had to write off losses and has suffered a drastic reduction of capital. Under the Bill it will be entitled to assess its distribution at whatever it paid in the best standard year, if any, reduced in proportion to the reduction in its ordinary capital, or, in the alternative, it can pay an amount equal to 4 per cent. on its paid-up ordinary capital existing at the end of the war dividend period. Those are the alternatives which face a company in that position; they can take whichever is the more favourable. I think it can be said this afternoon, without pre-judging the decision in a case of
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  that kind, that there might very well be a burden which would bear very hardly indeed on a company, though the burden it would have to bear would, of course, vary according to the stage of recovery which it had reached. At any rate I suggest that that is an illustration of a case which offers some prima facie grounds for consideration and which this particular Sub-section is designed to meet.
  I will give one other illustration. Take the case of certain mining companies which have undergone a period of development and are just reaching the dividend stage. Here it is probably only just that some attention should be paid to the fact that a mine constitutes an investment with a limited life, and there are no doubt other cases in which special circumstances may arise. They will have the opportunity which is afforded by this provision to have their case dealt with on its merits. I should like to say, so far as companies generally are concerned, that I hope that before making any application a company will most carefully consider whether its circumstances really are exceptional and act to the utmost in the full spirit of this Measure. I would emphasise that, after all, this is not a taxing Measure, and that the result of forgoing a distribution of dividends is to strengthen the future position of the company.
  I shall perhaps be expected to say a word or two about Clause 3, which deals with the computation of the ordinary dividend and adds to the definition. Under the Bill the ordinary dividend includes not only the amount of the dividend on the ordinary capital but the amount paid in participating rights on preference shares, preferred ordinary shares or on any other form of fixed-rate capital, but always excluding the fixed rate itself. By Clause 3, for the purposes of the standard rate, "ordinary dividend" covers all cash distributed other than by way of fixed rate on preference capital or by way of repayment of any share capital. Thus a company which has distributed a cash bonus during the standard year counts it in reckoning its maximum distribution, because such a bonus is really indistinguishable from the dividend itself. But the other side of the picture is that for the purposes of the war dividend period the ordinary dividend includes not only cash in the sense which I have mentioned

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  but any assets other than cash distributed to the holders of share capital. The reason for that distinction is, I think, plain and reasonable and fair. It is, of course, that for the purpose of reaching its standard a company is not allowed to inflate the figure by anything it may have done in the way of distributing assets, such as giving shareholders a block of shares held in another company. It is necessary to stop that sort of device as a means of getting round the limitation in the war period; and so any distribution is counted as dividend, in order that the company may not transgress its proper limits as laid down in the Bill.
  In the same Clause, provision is also made to attach any such distribution to the accounting period immediately preceding the distribution, unless the distribution has been specially declared to be in respect of the current accounting period. I do not think I need say anything about the substantial penalties which are laid down for contravention of the provisions of the Measure. They will be found in Clause 1, Sub-sections (3) (4) and (6). I hope that, in the vast majority of cases, the business men who are associated with our companies will carry out the spirit and the intentions of this Measure, but one is bound, in a Measure of this kind, to provide penalties which I hope will not be required in the vast majority of cases.
  Clause 4 provides that the Treasury may make regulations modifying the provisions of the Bill in its application to special classes of company, in the first place, and exempting subsidiary companies from the provisions of Clause 1. The idea is this: After the Capital Issues Committee have considered certain types of case, it may become possible, so to speak, to codify their decisions in a form which would reduce applications to the committee and assist the companies themselves. If this is possible, we intend that it shall be done. We think that, in any event, it should be possible to produce regulations exempting from limitation cases in which a very substantial proportion of the ordinary capital of the subsidiary companies is held by the parent company. The parent company, and thus the distribution to the public, would, of course, be controlled by the Bill. We do not want to do anything that is unnecessary, and it is not necessary, so far
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  as one can see, to interfere with dividends passing between one company and another, unless the public is appreciably affected.
  Clause 5 contains provisions designed to close the door to certain devices by which the limitations under the Bill might be defeated. They are made retrospective to all resolutions passed after 15th May. As hon. Members will remember the Bill became available on 16th May. The provisions will apply to resolutions which may then have been taken in anticipation of these limitations. The first case is where a reduction in capital is proposed and submitted for the confirmation of the court. It is possible that companies which have appreciably increased their reserves by limitation of dividend might choose this method of conveying cash to their shareholders.
  Another case in which Treasury approval will be required will perhaps be a more likely means of evasion. It relates, first, to the conversion of capital from one class to another. It would, of course, be a simple process for a company having, say, £100,000 of ordinary capital, by the conversion of, perhaps, £50,000 into 10 per cent. preferred ordinary shares to increase its distribution. That would mean that the purposes of the Bill would be evaded.
  Again, there is the case of the alteration of the dividend rate attached to any class of shares in the company. If, say, preference shares were held substantially by the same class of shareholder as the ordinary shares, an increase in the fixed rate of the preference shares could be made and this would not be within the Bill. Then there is the application of assets to the satisfaction of uncalled liability in respect of any share capital. This, of course, is similar in effect to a bonus issue, but it does not come under the Capital Issues Committee's control. It is, therefore, being stopped by the Bill as a means of evading the limitation.
  Sir Frank Sanderson: Would this provision in the Bill prevent either insurance companies or banks calling up any unpaid capital on their ordinary shares?
  Sir K. Wood: I should like to examine that point.
  Sir Reginald Clarry: How does my right hon. Friend propose to prevent the evasions which he has just enumerated?
  Sir K. Wood: Before a company takes any step to put any of these matters into operation, the consent of the Treasury has to be obtained. I would say, in that connection, that the Treasury can, of course, attach conditions to its approval. If it is thought desirable—one does not want to penalise unnecessarily—it may modify the provisions of the Bill relating to the maximum distribution. I would say, in reply to my hon. Friend, that it is not desirable to prevent alterations in the form of capital, but it is essential to make sure that the maximum distribution is equitably adjusted so as to produce broadly the desired results from the Bill.
  Clause 6 enables the Treasury to obtain information, as is set forth in that Clause. It may be from time to time necessary for the Treasury to ask the companies for information, not of a general character but as is set out in Clause 6. In any case it is not expected that it will be necessary to set up much machinery for ensuring that the provisions of the Bill are observed. Most of the matters in connection with the Bill are publicly known in relation to public companies, but it is necessary to take power to obtain certain information from a company where a breach of these provisions is suspected. The saving in Clause 7, with one or two minor provisions, ensures that in the case of companies which are already controlled by or under other Acts of Parliament in relation to dividends, like gas companies and certain electrical supply companies, the limitations now proposed are additional and do not remove the existing limitations. Clause 8 is the standard Clause relating to expenses under the Measure.
  Mr. Lewis: Who is responsible for the figure of £4,000 suggested as being the probable cost? It would seem from what my right hon. Friend has told us that the cost must be very much greater than that.
  Sir K. Wood: I do not think so. I am afraid that I must take the responsibility for the assessment. It has been done, of course, on the advice of the officers of the Treasury who are very skilled and
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  cautious in these matters. I think the expenses in respect of this Measure will be in relation to the Capital Issues Committee. After this Measure has been in operation for a short time, I do not think that there will be any undue complications or difficulties. When a certain number of these companies have been to Lord Kennet's Committee I think we shall find in some classes of cases that a sort of general application of the rules has been laid down which we hope to be able to bring to the notice of other companies by the issue of regulations. I do not see a great deal of difficulty or unnecessary complication. We are obviously dealing with a very large number of cases and regard must be had to that fact; but my own impression is that, taking the Bill as a whole, in very many cases it has been welcomed as a very reasonable provision. No doubt from the point of view of many companies it is very desirable, especially when one looks at the complexities of business to-day.
  Mr. A. Bevan: Is the right hon. Gentleman fully satisfied that he is taking to himself enough power under Clause 6, which provides for information in respect of companies?
  Sir K. Wood:I will look at that point. As at present advised, I think it may be sufficient, but I will look at what the hon. Member has suggested. I do not think it will be necessary, and I dare say that he does not think so, in any but a few cases, to obtain such information. I would like to thank the House for listening to me so patiently this afternoon.
  Sir Irving Albery: I did not understand my right hon. Friend's reference to regulations.
  Sir K. Wood: When Lord Kennet's Committee have considered the cases of particular classes of company, they will no doubt say that, in relation to particular classes of company, their position is to this or that effect and for this or that reason; and in order that companies in the particular classes need not go to Lord Kennet's Committee, the position in regard to those companies will be put into a regulation stating exactly what the position is.
  Sir R. Clarry: Is "regulation" the right word to use? Is it not rather "information"?
  Sir K. Wood: "Regulation" is the word used in the Bill, and that is the intention.
  4.43 p.m.
  Mr. Pethick-Lawrence: When this proposal was originally brought forward by the predecessor of the Chancellor of the Exchequer there was, I think I am right in saying, no opposition shown to it in any part of this House. Therefore, the right hon. Gentleman may expect a similar reception for the Bill, which follows the Budget speech of the right hon. Gentleman who has now gone to another place. I take no exception to the Bill, and I am prepared to give my support to the Second Reading on this occasion. I believe that the Bill will be very valuable in withdrawing from immediate purchasing power certain sums of money and that, in consequence, it will, as far as it goes, help to find the finances of the war and, what is still more important, relieve the economic strain and, from the economic point of view, make the prosecution of the war more possible. In fact, it is a limited application of the principle which Mr. Keynes has described as deferred pay. It is not in any case a confiscation or even a tax, either upon the company as such or upon shareholders. If it had been a tax, it could, of course, have been included in the Finance Bill, and the very fact that it is not so included is an indication that it is a regulation and not a tax of any kind. As I understand it, it does not in the very least affect the Income Tax which the company will have to pay. What it does do, however, is to affect the amount of Surtax, because as the profits of a company in the current year do not find their way into the pockets of the shareholders, their income will not be extended by the additional amount, and, therefore, they will pay less Surtax in the current year than they would pay if this Bill did not come into effect, in the case of those companies which are affected by it. When the money does find its way into their pockets later, they will have to pay additional Surtax in those cases, and whether they gain or lose on the transaction will depend upon whether the rate of Surtax in the current year should in the end prove to be greater or less than it is in the year when the money actually flows into their pockets.
  I do not propose to take up the time of the House in discussing this Bill, which
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  I hope will have an easy passage, but there are three points on which I think there is a good deal of misconception, perhaps not in this House but in the country, as to the effect of this Bill. Therefore, perhaps I may say one or two words upon it. First of all, with regard to the question of the standard years, I think there is an opinion among people who have not studied the details of this Measure that you go straight from the standard year to the year under control; of course, that may be so in certain cases, but in what I think will prove to be the majority of cases there will be an intervening period. It depends upon the actual accounting periods of the various companies and upon the actual dates to which they relate, but in a number of instances there will be an intermediate period that is neither one of the standard years nor the year of control, and it is to those years that the Chancellor of the Exchequer more particularly referred when he said that companies were playing the game and were not trying to distribute an extra large dividend in the intermediate period. We can be glad that that is the case, but I think it is only what we should expect from any patriotic institution in this country, particularly in view of the special circumstances of the day.
  The next point about which I think there is some confusion is that it is not the actual net dividend which is paid to the shareholder but in general the gross dividend which is the subject of these provisions. I think the terms of the Bill in which the word "cash" is so very frequently used tend rather to mislead the casual reader. To take perhaps the simplest illustration, supposing a company in a previous year declared and distributed a dividend of 8 per cent.—that is to say, 8 per cent. before deduction of tax—if Income Tax was at the rate of 5s. in the £ the actual dividend which would reach the shareholder would be 6 per cent. Some people assume that the net dividend to which they will be entitled in the year of control will also be 6 per cent. That, of course, is not the case, because it is not the net dividend which is controlled; it is the gross dividend. So that if the highest amount in one of the standard years was 8 per cent. gross dividend, it will be 8 per cent. again in the year of control, and if in this year

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  of control the Income Tax is not 5s. but 7s. 6d. in the £, of course, they will be entitled only to 5 per cent. net instead of 6 per cent. in the standard year. That, I think, is rendered quite clear by paragraph (b) on the top of page 5 in Clause 3 of the Measure.
  The final point is one which has never been officially cleared up, but I think there is little doubt as to what the facts are. The Bill specifically uses the word "distribution" and not the word "declaration." Some ingenious people have taken the view that it would be quite possible to declare a bigger dividend than in one of the standard years though it is forbidden by the Bill to distribute it. So far as I can understand the position, that would serve no practical purpose from the point of view of the shareholder. Whether it would be possible for a company to declare a dividend and yet not distribute it seems to be a matter of some doubt, but the shareholder would gain no advantage whatever from that unless it should prove to be the case that the part of the dividend which had been declared but which had not been distributed gave the shareholder in some way a negotiable right. Perhaps the Financial Secretary, if it is the Financial Secretary who is to reply to the Debate to-day, will say a word or two on that point. I should imagine that the answer would be that the practice is one which is not very likely to be followed, that if it were followed it would have no valuable consequence from the point of view of the shareholder, that it would not therefore be any disadvantage to the Exchequer, but that if ever there could be some advantage, it would very soon be discovered by the Government, and they would take steps to put a stop to it.
  With those three points of detail I have said all that may be said at this stage of the Bill, and I will end as I began by hoping that after suitable discussion the wish of the Chancellor of the Exchequer that this Bill be read a Second time will be accorded by the House.
  4.54 p.m.
  Mr. Craik Henderson: One agrees thoroughly with a great many of the remarks of the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence). There is one point, however, with which
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  one finds a little difficulty in agreeing. He said that when the proposals were originally put forward by the late Chancellor there was no opposition from any part of the House and he expects there should be little now, but since then I think there has been a very material change which affects this Bill, namely, the introduction yesterday of the Bill by which Excess Profits Tax as I understand, is to be 100 per cent. If that is the case, this Bill ceases to have the importance it had originally, and it becomes largely a case of taking a steam hammer to crack a nut. I was also very glad that the right hon. Gentleman raised the question of the maximum distribution under Clause 2, because there is a good deal of doubt as to what is meant by that. I hope we shall have some statement as to what is meant, because the hardship is considerably greater if maximum distribution is the gross amount distributed in respect of any standard period.
  This Bill will undoubtedly cause a great deal of hardship. That can be justified if it can be shown that the Bill is necessary in the national interest. Despite the Chancellor's persuasiveness, I am afraid I am still not convinced that anything has been said to show that this Bill now really achieves anything in particular. As I understood him, he said that the two reasons for the introduction of this Bill were that it will keep down spending power and also will make undistributed profits available for loans. If 100 per cent. of excess profits are to be seized, then in the most important cases the amount available for loans, except in exceptional cases, must be very small indeed. With regard to keeping down the spending power, I think we are having rather contradictory arguments in this House, because in the short time I have been here I have heard on several occasions the argument put very strongly that the income and wages of civil servants or of workmen must increase to some extent with the increased cost of living. Here is an example of exactly the opposite. When thinking of companies, there is always a tendency to think of rich shareholders paying Surtax. Actually, inmost cases members of a company are probably holding 100 or 200 shares, and a very common case is that of a man who has taken out an endowment policy payable at 65, or a contributory pension payable at 65, by which he gets a sum of

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  £3,000 or £4,000, which he invests in a company. This will give him a return of, say, £200 at 5 per cent. If one company passes or reduces the dividend, probably another company will pay an increased dividend. The effect of this Bill will be that no company can increase its dividend and that inevitably the shareholder must receive a smaller sum for the reason, as the right hon. Gentleman the Member for East Edinburgh himself said, that Income Tax will be deducted at 7s. 6d. instead of 5s. and the amount which actually reaches his pocket will be smaller.
  It may be that it can be established that this is a Bill which is necessary in the national interest, and, if so, we can disregard the hardship which will be caused to hundreds of thousands of small shareholders by reason of the fact that while the cost of living is rising, their income by this Bill must be reduced. I submit that nothing has been said to show how this Bill will do anything in the national interest which would justify the infliction of such hardship. This Bill is also very contradictory. Under it the tendency is to prevent distribution. Under the 1922 Finance Act, as amended by the 1927 Finance Act, the Legislature tried to persuade companies to distribute dividends so that the amount so distributed might be made available for Surtax. This Bill is designed to prevent companies distributing beyond a certain amount, while, under the 1922 and 1927 Finance Acts, companies under the control of five or less persons were encouraged, as far as possible, to distribute, and in certain circumstances profits not distributed were made liable for Surtax. These two intentions are completely contradictory. If it can be shown that this Bill is necessary in the national interest, then, whatever the hardships, I am sure the House will pass it, but at the moment it seems unnecessary and futile, and, as far as I can see, it will inflict hardship without doing any particular good.
  5.1 p.m.
  Mr. Hely-Hutchinson: I wish to say a few words in support of the Bill. I fully approve of the first two main objects, and my comments are directed towards ensuring that those objects are in fact achieved. The first object, we are told, is to stop increased spending power coming into the hands of individuals. That, in time of war, is
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  most important. But we must be careful that in doing so we do not increase the incentive for the companies to spend. The second object is to help the Government bond market. That, I support without qualification. The third object mentioned by my right hon. Friend relates to the post-war position of companies. I suggest that that is an argument to which company directors will not pay very great attention. They can themselves best judge the position of the companies for whose finances they are responsible, and I think that, as far as this House is concerned, our view should be that in war there is only the present tense—we have to concentrate on the present effects of this Bill, rather than on what its effects may be at some time in the future.
  I think that the question which a great many directors of companies will ask when they consider the Bill, as they must, in conjunction with the Excess Profits Tax, is "What are now our terms of reference?" The directors are appointed by the shareholders, and are responsible to the shareholders, and are supposed to do their best for the shareholders. I think that business generally will willingly accept the formula that in war-time their duty is to conserve the assets of companies and to help the general national situation as far as possible, but there must be some lingering recollection in the minds of directors that they have a duty to shareholders; and if that recollection should linger in their minds, they are bound to consider the tremendous incentives that now exist for spending money. For instance, if a company is in a position where it can make certain charges to expenditure this year, which five or six years from now—when, we hope, taxation will be lower—will come back in the form of income, if those charges can be made, say, in the case of a tobacco company, for popularising a new brand of cigarettes, such expenditure will save them the payment of 100 per cent. in the form of Excess Profits Tax or three-eighths in the form of Income Tax. In other words, at least 37½ per cent. and perhaps as much as 100 per cent. of the risk will be borne by the Government. Therefore, the incentive is very great, and, indeed, it is the responsibility of the directors to pursue such a course if they can.
  Secondly, there is the question of capital expenditure. This Bill does nothing to help the Government bond market in

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  respect of a company whose directors may have come to the conclusion that any surplus assets they may have are better held in the form of plant or property or goods than in the form of cash or Government bonds. On all these matters, I think the directors need some guidance from the Government as to what their terms of reference are. I am quite sure the general run of directors will willingly accept whatever terms of reference the Government lay down, but terms of reference are not in this Bill. What my right hon. Friend has said in this House is not evidence in a court of law. Therefore, I am afraid we have to consider that there will be a certain number of directors who, under the strong incentive to spend money now, and with the responsibility to do so in the interests of their shareholders, will be exposed to a grave temptation to pursue such a course unless there are certain sanctions to prevent what I might call the unpatriotic kind from pursuing that course. The intimations that I am making are designed entirely to help the Government to achieve their objects.
  There will be a large number of companies which will fall in asort of borderline of hard cases. The Government will find it easier to deal with these cases if they provide that where increased dividend is paid it shall be in some form of blocked Government bonds. The machinery for that would be very simple. The ordinary process of paying dividends is for the company to pay a certain sum into the bank, and then to issue orders to the shareholders entitling them to receive certain amounts from the bank according to their respective shareholdings. It would be just as easy for the company to pay over to the Government a certain sum equivalent to the increased dividend, and for the company to issue to its shareholders orders on the Government for the money at some date, say, five to ten years in the future, such orders carrying interest at an appropriate rate meanwhile. In order to prevent present spending of money, the particular tranche of bonds which would be issued in respect of this money could be blocked for whatever period was thought necessary. The Government would then themselves have the power to put the money back into circulation when they wanted to. I make that suggestion solely in order to find some way of obtaining more elastic treatment
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  of hard cases, without defeating the purposes of the Government. One ought, too, in connection with hard cases, to draw a distinction between the class of company which for a number of years has been earning 15 per cent. and paying 5 per cent., and is now getting to the point when it feels that it ought to pay its shareholders more, and the class of company which has been earning 11 per cent. for a number of years and has been paying 10 per cent. The first of those classes can be regarded as a hard case. The course I have suggested would enable the Chancellor to deal with those companies with a good deal of liberality. May I say that I gladly support the main purposes of the Bill, and what I have said has been designed to assist the Government to achieve their objects?
  5.10 p.m.
  Mr. Mander: I agree with the remark made by an hon. Member just now that the importance of this Bill is considerably affected by the announcement that Excess Profits Tax will amount to 100 per cent., though I am not clear whether that applies to all companies. I understand that it does not. In that case, the Bill is more important perhaps than the hon. Member appreciated. I support this Measure, which seems to me thoroughly sound, and which will be welcomed all over the country, including financial and stock broking circles, so far as my information goes. No one would desire that at a time like this people should receive more in the way of income from dividends than they did before the war.
  Reference has been made to the Keynes plan. Certainly this Bill is an acceptance of a part of the Keynes scheme. It is compulsory saving for the purpose of release at a later period. Whether when that later period comes the spending of the money will be in the hands of the individual shareholders of companies, or whether a considerable part will be taken over and spent by the State, is perhaps arguable. I should imagine that the State would come in a good deal—indeed, it has been made clear by the Government that their policy is that there shall be no increase of war wealth on the part of individuals, and there shall be after the war some form of levy on war wealth. That will have an effect on these companies and on the reserves that they are building up. One cannot, on an occa-

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  sion like this, discuss the Keynes plan, but I would make this general remark. I have seen many arguments against it, based on prejudice, tradition and wishful thinking, but I have not seen any argument based on reason which has convinced me. I know of no alternative scheme at the present moment.
  I should like to deal first with the question of private companies, with which my right hon. Friend dealt at some length. I quite see the difficulties that he pointed out. I fully appreciate the point that the Treasury have been using their influence with private companies to make them pay out their profits in dividends, so that Surtax may be obtained, but I think that one might properly assume that the Treasury, with their well-known efficiency have been exercising this influence in the desired degree and that the full correct dividends have been paid, and, if so, the objection to limiting them further does not seem to me to be so very serious. It will be said, no doubt, that one of the difficulties about bringing in private companies is that the directors of these companies can increase salaries; that they need not pay dividends, but can pay the money in salaries to themselves. It is true that at present, under the Excess Profits Tax, there is no machinery for prohibiting that. But there was such machinery in the last war, under the Excess Profits Duty, and I should think it extremely likely that in the near future some provision of that kind will have to be brought in, in which case that objection to bringing in private companies will go too.
  It is wrong to assume that all private companies are family concerns that affect only a few individuals. Some of them are very large indeed; they are public companies in all but name. It is true, however, that there are some which are family concerns. I suggest that in this case, in spite of the difficulties, the fact that you had it on the Statute Book that there should be no increase in the dividends of private companies would be a very strong deterrent to any decent private company. They are nearly all of that type, I believe. It would be a very strong deterrent, and they would feel that they were not playing the game if they took advantage of the position to pay out to themselves in some form what the State obviously intended should not be paid.
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  In order to show the immense scope of these private companies, I will mention the names of one or two with their issued capital. There is Vickers-Armstrong, Limited, with a capital of over £17,000,000; the English Steel Corporation, Limited, over £3,000,000; Shell-Mex, with an issued capital of nearly £9,000,000; the Asiatic Petroleum Company, Limited, £31,000,000; the Anglo-Saxon Petroleum Company, £50,000,000; the I.C.I. (General Chemicals), Limited, with a capital of £5,000,000; Nobel's Explosives Limited, £4,000,000; and the British Dyestuffs Corporation, Limited, over £4,750,000.
  Mr. Levy: On what authority is the hon. Gentleman quoting when he says that these huge concerns are private companies and not public companies?
  Mr. Benson: The companies quoted by the hon. Gentleman the Member for East Wolverhampton (Mr. Mander) are private companies, but they are subsidiaries of some holding company, which is the company that pays the dividend.
  Mr. Mander: I take it that these companies are private companies. I will mention one more—the well-known milling combine of Joseph Rank, Limited, with a capital of £7,500,000.
  Sir R. Clarry: Does the hon. Member for East Wolverhampton (Mr. Mander) contend that these companies are outside the limitations of this Bill? Private companies are not included in the Bill, but do the companies that he has just quoted come outside the Bill?
  Mr. Mander: I think that some of them will be outside and some will be inside. [An Hon. Member: "They will all be inside."] It depends how far they are controlled, but in view of the fact that hon. Gentlemen have challenged that particular list, I will give them some figures of private companies in the sense of which they are thinking, notably Barclays Bank, France, Thomas Cook and Son, Copleys Bank, and C. Hoare and Co.
  Mr. Levy: They are all subsidiaries; they are not outside the Bill.
  Mr. Mander: They are private companies, and it is not entirely clear to me that they are outside the scope of the Bill. In any case, I hope that the

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  Chancellor of the Exchequer will be good enough to consider the question of private companies, because I think that for the reasons I have given there is a good deal to be said for the deterrent effect in certain cases that a provision of that kind would have.
  I would like to say a word about the permitted rate. That comes in Clause 2, page 3, line 21. My right hon. Friend dealt with the difference between 4 per cent. on the established companies and 5 per cent. on the new companies, and it did not seem to me that he really made out a very strong case. I should have thought that it would be simpler, if any company felt that it had a case for the payment of a higher dividend than 4 per cent., for it to take advantage of the provisions of Clause 2, Sub-section (4) and make an application for permission to pay a higher dividend. I should have thought that that would be the way to deal with it, but at the same time I do not think it is a very important point.
  I would next like to deal with the question of issuing shares which comes under Clause 2 (1, b). That provides that:
  "If the paid up ordinary capital of the company at the end of the war dividend period is greater or less than it was at the end of any standard period, the amount so distributed in respect of that standard period shall be deemed to be increased or reduced proportionately."
  Apparently, therefore, where after the end of the standard period shares have been issued to shareholders for cash, perhaps at a price substantially below the market value, they will be entitled to the same rate of dividend as the old issue. Let me assume the case of a company with a capital in the standard period of £100,000 in ordinary shares and a distribution by way of dividend of £50,000. After the end of the standard period the capital is increased, say, by the issue of a further £100,000 at par. The ordinary share capital would therefore be £200,000, and apparently the company could distribute as dividend £100,000 per annum. It would seem that where you had the issue of bonus shares prohibited the dividend would be restricted, but when the shares are issued for cash at possibly a good deal below their real value, in this case the dividend would not be restricted. Attention ought to be given to
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  that point to see whether there should not be some element of restriction brought in there too. Clause 2, Sub-section (3) provides machinery for dealing appropriately with free bonus shares, but apparently, as I have tried to indicate, where an issue is made on bonus terms, the new shares are entitled to receive a distribution up to the rate paid during the standard period on the old shares. That is a point to which I would like consideration to be given.
  I will next deal with the effect of the participating preference shares on the ordinary shares, and that comes in Clause 3 (1, a). That provides that the total amount distributed by a company, except the dividend at or on account of the fixed rate or preference capital, shall be regarded as paid by way of ordinary dividend. Where a company has participating preference shares, the dividend on the preference shares, so far as in excess of the fixed rate, is regarded as part of the amount distributed as ordinary dividend. If, owing to very low distributions in the standard years, a company's distribution under Clause 2 (1, c) is limited to an amount equal to 4 per cent. per annum on the paid-up ordinary capital, then when there are participating preference shares the amount of such participation will come out of the 4 per cent. Therefore, the amount left to the ordinary shareholders will in fact be less than 4 per cent. This seems to me to be rather inequitable in the way that it works out. If the 4 per cent. is really a proper minimum standard to be fixed for ordinary shares, why should it be reduced because the participating preference shares are entitled to take a dip into the amount. That is another point I want to put to the right hon. and gallant Gentleman who is to reply.
  The last technical point that I want to raise is on the definition Clause, which deals with preference capital. Preference capital means, according to this, any
  "Share capital carrying the right to dividends at a fixed rate payable in priority to all the dividends on some other class of share capital, whether or not it also carries the right to some further participation in profits."
  There may be some curious results from this definition, and I will give this example. I will take the case of Harrods (Buenos Aires), Limited. They have the following capitals: preference shares,

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  £2,937,500; ordinary shares, £2,409,151; and deferred shares, £12,000; a total capital of £5,358,651. After paying the fixed dividend on the preference shares, the profits are applicable to paying a dividend of 16⅔per cent. on the ordinary shares, any surplus being divided as to 20 per cent. to the ordinary and 80 per cent. to the deferred. Apparently under the definition in Clause 9 these ordinary shares will rank as preference capital. During the standard period their maximum dividend would be 1¼ per cent., but it seems to me that, if profits permitted, they could receive up to 16⅔ per cent. per annum. I ask my right hon. Friend to be good enough to consider these points which, I can assure him, are put forward under the very highest professional advice from people who are deeply concerned with these matters, and I am sure that they will receive the attention that they deserve.
  Lastly, I would say that I think the policy is perfectly right. It is pursuing a cheap money policy, which the Government rightly desire to follow. This is really a mild Measure compared with what is coming to us in the future. But whatever the Chancellor of the Exchequer feels obliged to bring before us in order to help to win the war, I am certain that the people of this country of all ranks, whether they have money or not, will be only too delighted to bear the burden.
  5.28 p.m.
  Mr. Levy: I do not propose in the few observations that I intend to make to object to the Second Reading of this Bill, but I feel that it bristles with anomalies, injustices and inequalities. I merely mention them now, but on the Committee stage I shall certainly put down Amendments in order to try to make the Bill more workable. May I claim the indulgence of the House for a moment or two while I quote a paragraph that appeared in the "Daily Telegraph," on 17th May, and which, I think, is true? It says:
  "It is true that provision is made for companies to appeal for special treatment in hard cases, but that is evidence in itself of official recognition that the plan as it stands is bound to involve anomalies and injustices. This scheme, like the original N.D.C., shows more enthusiasm for achieving the purpose than knowledge of practical business. It should be drastically amended."
  I propose on the Committee stage to put down some Amendments with regard to
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  it. One or two businesses have been mentioned, and one could mention businesses which have been in the habit of paying very large dividends, and go on distributing them in the same amount. My right hon. Friend referred to businesses which have been losing money or have made very little profit and were, therefore, unable to pay up to the allowed 4 per cent. I am sure he has not overlooked the fact that there are many firms which have been making respectable profits and using them for development and research. That may now have to come to an end, because you will say to them that, despite that, they must not distribute more than 4 per cent. I hope the Financial Secretary will give me answers to some of my questions. The Finance Act, 1922, which amended previous Acts, dealt with public companies in which all the ordinary shares were in the hands of five people or fewer and whose profits ranked for Super tax. Even though the profits were not distributed, they were said to have been distributed, and it was an offence if that was not so. Therefore, under that Act, as I understand it, you have to distribute profits or commit an offence, and under this Bill if you do distribute profits, you then commit an offence, and some explanation is needed in order to reconcile these two Measures, unless something is to be done to nullify the 1922 Act or bring it into line.
  My right hon. Friend also referred to paid-up capital shares, and I would like him to give me a clear definition on the point. I would ask him to give his attention to Clause 2, Sub-section (3) of the Bill, which says:
  "In computing for the purposes of this Section the amount of the paid-up ordinary capital of a company at the end of any war period, there shall be disregarded…."
  I want to emphasise the point about paid-up ordinary capital. What is paid-up ordinary capital? Imagine a 5s. share which is issued at 10s. The 10s. in the books will be the capital and the paid-up ordinary capital on that. If we turn to Clause 9 for a definition of the ordinary capital, we find that it says:
  "….in relation to a company means the whole of the company's issued share capital…."
  Therefore, the paid-up ordinary capital on 100 5s. shares issued at 10s. is at 10s.,

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  but here it conflicts because the Clause says that the ordinary capital shall be the issued capital. I would like the Financial Secretary, when he winds up the Debate, to give to the House and the country a clear and concise definition of what it really means.
  I appreciate the object underlying this Bill. Obviously, it is to conserve the capital in the companies and make it available, probably for the Government, whereas if no limitation was put upon it, these profits, if distributed, would go to millions of shareholders and be spent. I appreciate that object. We all agree that various measures are essential in war-time which, ordinarily, would not be brought before the House, but whether we are passing legislation in war-time or otherwise, I think every Member would agree that it is up to us to see that it is just and equitable for the whole of the population and all the companies. It is not fair that some companies should benefit and that others should suffer disadvantage.
  Take the cotton industry. Just before the war I had the honour to take some part in the Committee stage of the Cotton Bill for the purpose of endeavouring to put the industry on its feet. It had made no profits at all. When war came along that Bill was put into cold storage. It is now considered that owing to the orders that it is receiving the cotton industry is making large profits. Some firms in the industry have an exclusive trade and can continue, but other firms, which were in the dumps because of foreign competition, particularly Japanese, and were in the hands of the banks, and are now getting on their feet, are being told that they must not have any profit. You start off by taking 60 per cent. and charge 7s. 6d. in the £ on the 40 per cent. which is left, and you say to the shareholders, who have been nursing the baby for years and years without any profit, "You must not have more than 4 per cent." Personally, I do not think that that is quite equitable, although I appreciate that this Bill does not belong to my right hon. Friend. It is only a child which he has adopted, and he may be able to find some other home for it.
  I agree with the hon. Member below the Gangway who said he could not see anything to benefit the war effort so
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  far. If you want to take away profits and put them into War Loan stock, why not say so? Distribute them in the shape of War Loan if you like. I see no objection, if a company is in a position to pay 20 per cent., to allowing it to distribute 4 per cent. and the balance in the form of War Loan stock straight away. Perhaps my right hon. Friend will give consideration to this point. There may be a reason why it cannot be done. I thank the House for listening to me; I hope I have not been too long, but I must say to my right hon. Friend that we are proposing to put down some Amendments for consideration, and I feel confident that if they are an improvement, he will be one of the first, if I know him at all, to accept them, providing they do not injure the Bill.
  5.40 p.m.
  Mr. Benson: This is a very, very mild Bill, and I was much surprised by the amount of heat it engendered in the hon. Member who has just spoken. It is not a taxing Bill; it is merely a Bill which limits the amount of dividend payment to what has been a maximum payment in the last three years. I am quite prepared to admit that there may be anomalies, but I doubt very much whether the Treasury will discover very many really terrible hardships. The hon. Member mentioned the cotton trade. That industry will benefit by this Bill. It is true that a large number of firms have been in a very bad way for a number of years and that they are in a good deal better position now and might, in the enthusiasm of the moment, pay fairly high dividends. But one of the difficulties of the Lancashire cotton trade is that its reserves have been used up. The effect will be to prevent the cotton trade from distributing, in dividends, cash which might be far better used for building up badly depleted reserves. There is one point on which the hon. Member has misunderstood the law. There is no legislation which compels or urges a one-man company to pay any dividend—
  Mr. Levy:I was not referring to a one-man company. You can have as many debenture and preference shares as you like, which can be distributed among shareholders. I was referring to the ordinary shares where they are in the hands of five people or fewer.
  Mr. Benson: What is commonly known as a one-man company was frequently formed for the purpose of avoiding Surtax. There is no compulsion under the 1920 Act, the 1927 Act or any other of the Finance Acts to distribute any dividend. The law merely says that the earnings of such a company, whether distributed or not, shall, beyond a certain point, be regarded as having been distributed. These companies were formed as savings boxes for the purpose of dodging taxes. They can still be savings boxes. I think there is something in what the hon. Gentleman the Member for East Wolverhampton (Mr. Mander) said with regard to private companies. One does not, for administrative purposes, want to bring in a vast number of small companies, but it might well be worth while bringing in all private companies over a certain capital. There is a number of very big private companies which are not subsidiaries which, of course, must be excluded and the right hon. Gentleman might consider between now and the Committee stage whether other private companies with capital above a certain limit should be brought in.
  The hon. Member for Hastings (Mr. Hely-Hutchinson) went to the heart of a good deal of this type of legislation. He pointed out that with the imposition of various taxes, and now the limitation of dividends, there would be a possible tendency to defeat the object of the Government. I think that is true. We know perfectly well that it was true to a disastrous extent with regard to E.P.D. in the last war, and I do not see how, under the present system of private ownership, you can avoid the danger of destroying incentive to economy. If there is any sign that economy is not being followed, I hope the Government will take advantage of the legislation and powers which we gave them yesterday and take over the control of industry. If the same thing happens now as happened in the last war, when inside industry there was general extravagance, it seems to me that there is no alternative but for the Government to step in and take control to a much larger extent than they anticipate under the powers we are giving them. I think it should be made clear to industry that unless industry is prepared to play the game—I know the majority are—and if there is extravagance, the power of control will be used most ruthlessly.
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  There is one technical point which I should like to put to the Financial Secretary with regard to the case of a company not being an existing company. It is in Clause 2, Sub-section (2). There the rate of dividend is limited to 5 per cent. on the ordinary capital. The difficulty I see there is the possibility that in a new company the ordinary capital may be inflated. Share capital can be issued for considerations other than cash, and you may find, unless care is taken, that if you limit the ordinary share dividend of a new company to 5 per cent. you will get new companies formed with larger capital than the actual assets really warrant. It seems to me that on this point some control may be necessary.
  5.48 p.m.
  Mr. Hammersley: There appear to be two principles underlying this Bill which have received the general support of the House. They are the principles outlined by the right hon. Gentleman when he referred to the necessity for restricting purchasing power, and the difficulties which would arise by increased money getting into the hands of the people, causing competition for the purchase of goods and resulting in higher prices and inflation. Every one is very anxious that steps should be taken to prevent that kind of procedure. But are we quite satisfied that in fact this Bill really carries out our desire? As far as I can understand the Bill, if you have a very profitable company, which over a series of years has been making money and has in fact been paying out large sums in dividends, and, moreover, paying to its shareholders bonus shares, there is nothing in the Bill which prevents such companies paying equally large sums and indeed increasingly large sums when the bonus share distribution is taken into consideration. My comment is that it would appear that in the Bill there is some inequality between the treatment of companies and industries which have been very successful in the past and the treatment of companies engaged in trades which have not been so successful.

  ROYAL ASSENT.
  Message to attend the Lords Commissioners.
  The House went; and having returned—
  Mr. Speaker reported the Royal Assent to:
  1. Treachery Act, 1940.
  2. National Service (Armed Forces) Act, 1940.

  EIRE (INVASION DANGERS).
  Motion made, and Question proposed, "That this House do now adjourn."—[Captain Margesson.]
  6.0 p.m.
  Mr. Attlee:I desire to correct a statement which I made in the House to-day in reply to a Supplementary Question by the hon. Member for South Kensington (Sir W. Davison). It has caused some misapprehension. I stated that all proper consultations had taken place with the Government of Eire. I intended to say that all proper information had been passed to the Eire Government.
  Motion, by leave, withdrawn.

  LIMITATION OF DIVIDENDS BILL.
  Question again proposed, "That the Bill be now read a Second time."
  6.1 p.m.
  Mr. Hammersley: When the proceedings were interrupted, I was about to say that the second general principle underlying the Bill has also received general approval. That is the principle that no large dividends should be paid out by reason of the ability of companies during the war to make dividends which they could not have made had it not been for war conditions. I think that principle has the support of the House and the country. It appears to me that to a great extent the necessity for this Bill as far as that principle is affected has been very greatly weakened by the Finance Bill, which imposes 100 per cent. Excess Profits Duty in respect of earnings made by reason of war circumstances. Therefore, it would appear that the general effect of this Bill is to act on principles with which we are in entire agreement, but at the same time to cause a considerable amount of inequality. I desire particularly to draw the attention of my right hon. Friend to some of those inequalities.
  Let us take the case of a company which has not only made no profit, but has found it desirable, by reason of the
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  absence of a profit-earning capacity, drastically to write down its capital. It is clear that if there is a drastic writing down of capital the small amount of capital which is left in the company on which it is permissible to pay only 4 per cent. does constitute a grave hardship to those particular shareholders. This is dealt with, of course, in Clause 2, Subsection (4). I understand that such individuals will be able to make application to the Capital Issues Committee. I suggest that it is very desirable that the regulations which my right hon. Friend suggested would soon be made should be made very quickly. Who is going to take the initiative? Who is to be the first person to make these applications? If the applications are delayed, the position of the shareholders will be thereby jeopardised. On the other hand, if all the companies make application, the position of the Capital Issues Committee, having all these applications before it, will be a very unenviable one. Therefore, in practice, it might be desirable for the Treasury to arrange with a certain number of selected companies to make their applications as soon as possible so that the commercial community may have some guidance. Clause 4 makes some provision for the kind of inequality which I have in mind. It gives to the Treasury the power to make regulations in respect of special classes of companies. Here again, one would like to know on whose incentive these regulations are to be made. Some information on that point from the Financial Secretary would be helpful.
  There is one small point of detail which requires consideration. It is with regard to Clause 5, Sub-section (2, c), which deals with the prevention of the application of assets to the payment of uncalled liability. Let us take the case of some of those companies which have shares carrying uncalled liabilities. Naturally many of these companies have not been in a position to pay dividends. It seems to me to be desirable, in the interest of the shareholders, that any sums which might be put towards the satisfaction of that uncalled liability should be allowed to be so used on condition, perhaps, that there should be no dividend paid in respect of the new paid-up capital. This would not in any way contradict any of the principles underlying the Bill, and at the same time it would give some security to many shareholders who have shares with un-

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  called liabilities. These shares in depressed industries are not an asset but a very great liability. Therefore, I hope that when the Committee stage of the Bill is reached, the Government will give consideration to these inequalities which have been pointed out.
  6.7 p.m.
  Sir Reginald Clarry: We had yesterday an excellent example of what the House can do when an emergency arises. When it was represented to the House, on the Emergency Powers (Defence) Bill, that it was necessary in the national interest, that Bill went through all its stages in a few hours. I am sure that on any other Measure on which it could be shown that it was in the national interest, there would be similar rapidity in getting the Measure through the House; but after listening to the Debate to-day, I wonder whether this Bill is really worth while. It is called the Limitation of Dividends Bill, but I think it might be freely interpreted as the limitation of the spending capacity of certain specified citizens. Without exaggeration, that would appear to be its effect. Those assets and that cash are to be retained in the company. That is the effect of the Bill. The real question before the House is, will the company spend that money to better national advantage than would certain citizens who are to be deprived of that income? There is no indication that it will do so.
  As far as I can see, the amount involved is not—as we are talking in hundreds of millions these days—a vast sum. In general terms it does not seem that the Bill is justified in making the upheaval which it will do in the financial world, for there is no doubt that this limitation of dividends will have a serious effect on new capital being brought in, particularly capital to be used on matters connected with the national war effort. One cannot get any return in the period of time, which is limited, when dividends and profits can be earned. I think this has to be taken into consideration. Another point which has occurred to me during the Debate is that the Bill will reduce the income or spending capacity of a certain class of consumers—that is to say, shareholders in public companies. Surely, to be logical—I do not advocate this—one should limit the spending capacity of every other section of the community, wage earners, salary earners, and traders.
  Mr. Kirkwood: That of the workers is limited right enough.
  Sir R. Clarry: If the spending capacity of one section is limited, why not limit the spending capacity of the whole community? That would seem to me to be inevitable from a logical point of view. However, I do not make a great point of that. If it can be proved at a later stage that this will be advantageous, I shall not be against the Bill. I should like to refer to a technical point that was mentioned by my hon. Friend the Member for Elland (Mr. Levy) concerning the definition of ordinary capital. In Clause 9, ordinary capitalis denned as follows:
  " 'ordinary capital' in relation to a company means the whole of the company's issued share capital other than preference capital."
  In Clause 2, Sub-section (3), ordinary capital is computed in a certain way. The question I want to ask is whether there are any other computations of paid-up ordinary capital than this one shown here in detail. I think the definition should be clarified to mean the same thing. By making a special computation in this Clause, there is an inference that there is some other computation in the definition. I should be glad if the Financial Secretary would elucidate that point when he replies. At a later stage I shall perhaps be helpful by trying to make this a workable Measure, if it is proceeded with.
  6.12 p.m.
  Mr. Lewis: As I understand it, the Government have three objects in view in introducing this Bill, two of which may be described as primary objects and one as subsidiary to the others. The primary objects are, first, to restrict the consumption of consumable goods, and secondly, to make available more savings for Government borrowing. The subsidiary object appears to be to strengthen the reserves of certain companies for that difficult period which will follow the conclusion of the war. With regard to the principal objects, I should like to say this. As to the restriction on consumption, undoubtedly the Bill must have some effect in that field. A smaller amount will be distributed by way of dividend than otherwise would have been, and, undoubtedly, some part of it would have been spent on consumable goods. To that extent that purpose is accomplished.

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  As regards the second purpose—to make available additional savings for Government borrowing—I think the effect of the Bill is a little less certain. After all, if these extra amounts which will not be distributed now had been distributed, some part of them at any rate would have been used by the shareholders themselves to lend to the Government. On the other hand, now that these amounts are to be retained by the companies, some part of them at any rate will not be lent to the Government. It depends on what the difference between the amount that would have been lent by the shareholders and the amount that will be lent by the companies works out to be. This seems to me to be in the realm of guesswork. It is perhaps reasonable to suppose that on balance there will be some increase, but I think it is a mistake to imagine that, as far as that purpose is concerned, very much is likely to be accomplished. The subsidiary object—to strengthen the reserves of certain companies—will no doubt be accomplished. Conservative directors who would in any case be inclined to distribute a small proportion of the profit will find their hands strengthened, while reckless persons who might be in charge of other companies and who might be inclined to distribute more largely will find themselves restrained. Undoubtedly, on balance, some companies at any rate will one day be thankful that this Measure was passed.
  So much for the purposes which the Government have in mind. Now for the objections to the Bill. Stress has been laid upon anomalies and hardships which are likely to arise. No doubt, there is provision in Clause 4 (1, a) for dealing with such cases, but I noticed a very interesting thing in the Chancellor's speech. He kept referring to Lord Kennet's Committee and said that people would have the right to go before that committee and that the committee would consider this, that and the other. I cannot find in the Bill, however, any mention of that committee. The only body mentioned in the Bill is the Treasury, and there is no obligation on the Treasury to consult the committee. As my right hon. Friend has thought it worth while to impress upon us the advantage of this committee, and how it strengthens the position of persons who may be affected by this Measure, I suggest that something
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  should be put into the Bill to ensure that the committee will be consulted. I do not think that an unreasonable proposition. As the provision reads at present, not only is there no mention of the committee, but there is no mention even of hardship. If we read this all-important Sub-section we find that under it:
  "The Treasury may make regulations for
  (a) modifying the provisions of this Act in their application to special classes of companies to which this Act applies."
  That is all. It does not give any guidance to the Treasury as to the reason why they should make any modification. For all the Bill says, the purpose might be that the Treasury should make the Bill even stricter and not that it should make it possible, in certain cases, for more dividends to be distributed. The purpose might be in certain cases to reduce the limits even below those already put in the Bill. That seems a perfectly reasonable interpretation of the language of the Sub-section as it stands. I suggest that if the purpose of the Government is to prevent, as far as possible, hard cases arising, then words should be inserted to show that that is the intention and that the purpose of Clause 4 (1, a) is to enable relaxation of the existing restrictions to take place where such seems desirable, and not to increase those restrictions, I ask my right hon. Friend, between now and the Committee stage, to consider with his advisers whether those two points should not be met—first, that there should be a definite reference in the Bill to Lord Kennet's Committee, and, secondly, that it should be made clear that the purpose of Clause 4 (1, a) is that of mitigating and not increasing the restrictions. Having said that, I would add that while I do not entertain quite such high hopes of this Bill as some have expressed, it seems to me that, in the circumstances, a good case has been made out for it.
  6.19 p.m.
  Sir Herbert Williams: I speak under some disadvantage because, owing to the fact that I have been serving on a Select Committee, I have missed the bulk of the Debate and it may be that some of the points which I propose to raise have been dealt with already. I was very much surprised when the right hon. Gentleman's predecessor introduced this Bill. I tried to

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  find out what its purpose was and up to now I have failed to see any real good purpose behind it.
  Mr. Kirkwood: Its purpose is to go and get the money where the money is.
  Sir H. Williams: I remember, if the hon. Member for Dumbarton Burghs (Mr. Kirkwood) has forgotten, that on many occasions he has gone cheerfully into the Division Lobby in support of proposals to inflict penalties on companies because they did not distribute enough in dividends. I would refer him to Section 21 of the Finance Act, 1922, and the numerous amendments which have been made to it. Those provisions are not limited to private companies as many people think. They are limited to companies which are under the control of not more than five persons. If I remember aright, the "persons" now include relatives of the people concerned and, in fact, now a substantial number of public companies are under a penalty if they fail to distribute enough in dividends—the object being to prevent the avoidance of Surtax. One of the evils of the Bill is that it will limit the amount which we take from taxpayers in Surtax. I do not suppose that the hon. Member for Dumbarton Burghs realises that one of the effects of the Bill is that definitely less tax will be collected if the Bill is passed, than would be collected if it were not passed. Year after year, we have had amendments of Section 21 of the Finance Act, 1922, all aimed at stiffening up its provisions in order to make it more difficult for people to avoid Surtax by retaining what the Inland Revenue regarded as unduly large reserves. The object of this Bill is the exact opposite. Therefore we should have some justification for the complete reversal of a policy which, if my memory serves me aright, has been urged on the House by Chancellors belonging to all three political parties. Indeed, one might accurately describe the Bill as the Payment of Surtax (Limitation) Bill.
  The Bill will also encourage waste. If I discovered a company which was making very large profits and was prohibited from distributing them, what is there to prevent my saying to that company, "These dividends are not much good to you and you might as well give me a very fat job. It will not cost you much and as you cannot give the money to the shareholders, you might as well
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  give it to me, because I know a very good use to which I could put it." I am certain that in a large number of cases the effect of this limitation will be to encourage wasteful administration of public companies. We all know that that was the effect of the Excess Profits Duty in the last war. The combination of the present Excess Profits Tax and this Measure will further encourage wasteful administration of businesses and is therefore in conflict with the public interest.
  Let us also take into account those institutions which depend largely on dividends received from others. I am thinking of insurance companies and investment trusts. They represent a very large amount of the collective savings of the people, both of the well-off, and of those who are not by any means well-off. An insurance company or investment trust endeavors to distribute its investments in such a way that it can look forward to a fairly steady income. Naturally if they are skilful in their chain of investments, that brings about the effect of increasing their net receipts. Under this Bill you will have this situation. Where they make losses on the swings—because in time of war the yields of many enterprises diminish and the dividends from those will be reduced—the insurance companies and investment trusts will not be in a position to make up that loss on the roundabouts, that is to say by increased dividends from shares in companies which, in war time, are making larger profits. Thus, an embarrassing situation will be created for insurance companies and investment trusts. I hope the Chancellor of the Exchequer will take that fact into account. Very often these insurance companies and investment trusts affect, not a few rich people, but literally millions of people many of them in quite humble circumstances. That is an aspect of the question to which full consideration must be given.
  It often happens that for perfectly legitimate and proper reasons, companies are converted from private to public companies. I am not certain whether under Clause 2 (2) a company which is the successor in title to a private company, is to be regarded as an entirely new company. If that is the case, clearly any private company which is doing fairly well, even though it is in the public interest that it should be converted into a

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  public company, will not dare to allow itself to be so converted because the net result will be that its dividends will be limited to 5 per cent., though the company may be earning substantially more. Therefore, there will be an interference with economic development which may be definitely adverse to the public interest I find a little difficulty in regard to Clause 2 (3). I think this is the point which was referred to by my hon. Friend the Member for Newport (Sir R. Clarry). There is a definition in this Sub-section of "paid up capital." It is not easy to interpret exactly what that definition means, but if I can read English aright, it is in conflict with the definition of "ordinary capital" for other purposes under the Measure, as set forth in the Definition Clause. I hope we shall hear from the Financial Secretary to the Treasury the reasons for this contrast. It is well known that shares are, sometimes, quite properly issued at a premium and where there is an issue of shares at a premium it seems to me that considerable difficulty will arise. Yet it would be improper not to issue shares at a premium, assuming that permission is given for the raising of additional money and in some cases it is right and proper that additional money should be raised. These are circumstances which seem to arise under this part of the Bill and to which proper attention should be given.
  I have indicated that I do not understand what good purpose can be served by the Bill and I can see that it might do substantial harm. We are all anxious not to embarrass His Majesty's Government in any conceivable way at this time. We do not wish to be fractious in criticism or opposition. I think, however, that this Bill calls for considerable amendment if the public interest, and not the selfish interest of a few rich people, is to be properly preserved. I hope that the Financial Secretary to the Treasury will give us some assurance that he and the Chancellor of the Exchequer will give reasonable consideration to any Amendments which are put forward, from any part of the House, in order to deal with the problems which have been raised in this Debate.
  6.27 p.m.
  The Financial Secretary to the Treasury (Captain Crookshank): We have spent a considerable time on this Bill, the Second
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  Reading of which actually raises only one point, namely, the desirability of limiting dividends in the present emergency. The speeches made to-day have dealt with very minor points on Clauses, some of them almost drafting points; but I do not complain, because this may save time later. All I can say to the hon. Member for South Croydon (Sir H. Williams) is that the whole object of debate on a financial Bill is to offer opportunities to the Chancellor of the Exchequer and myself and our advisers to take account of criticisms and of points made to us where these are of substance, and to indicate where the Bill needs to be amended in order to carry out the purpose for which it is intended. My right hon. Friend has made to-day, his first speech in this House as Chancellor of the Exchequer. I am sure we all hope that his occupancy of that high office will be most successful notwithstanding the fact that he is undertaking it at a very grave time. He gave a very full explanation of the Bill and I do not propose at this stage to go into all the details which were mentioned in the subsequent Debate. There were however one or two points which I may, without disrespect to any speaker, describe as rather more important than others, and to these I wish to refer.
  First, there is the point made by the right hon. Gentleman who opened the Debate. He asked whether, in fact, there might not be some curious results if, while the actual dividends themselves were limited, a company could declare a higher dividend. So it could under the Statute, but it could not distribute that dividend. That point had been raised elsewhere, and we have, of course, considered it to see whether there was anything in it, but I do not think that there is, because the suggestion that the dividends might be declared of an amount in excess of what this Bill, if enacted, would allow does not seem to be a course which is very likely to commend itself to a responsible company. Why should a company take such a course at all so long as the proposed Act is in operation, that is to say, for the war period? All it would be doing by adopting such a plan is entering into a sort of promise, so far as it was concerned, to be put into effect after the war—a promise that it would make a payment in circumstances which could not possibly be foreseen. That, I should have

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  thought, would be a rash and somewhat foolish thing to do.
  But, even if a company did enter into such a course, it would not, in fact, be evading the proposed Act, because this Bill deals with limiting the amount paid out during the war period. Therefore to that extent this point does not exactly constitute a loophole; but, of course, if such should be the case, which I do not think it could be, and something along these lines could be twisted into an evasion of what is proposed under this Bill, that loophole would have to be stopped up. I hope that the hon. Member will agree with me on this point. I know that he did not put it forward as his own suggestion, because it is not sensible enough to be his, but he had heard of it, and he rightly put it forward. On the whole I think that this aspect of the matter will work out as I have described.
  The other series of questions which were raised really dealt with the problem of the exclusion of private companies, and the hon. Gentleman who has just spoken and others—the hon. Member for Elland(Mr. Levy) was, I think, the first to do so—have referred to Section 21 of the Act of 1922. The fact remains that there is possibly a small number, a very small number so far as I am aware, of public companies which were concerned with that Section of the Act and subsequent legislation. There may be a few, and in so far as there are a few, it might be that what has applied to them in the past would in fact be what will apply under this Bill. If that were not so, it might very well have to be dealt with, but, on the other hand, the provision for the so-called hardship case would probably come into effect. Generally speaking, all the subsequent legislation has been dealing with private companies.
  Then the question which followed, and which the hon. Gentleman asked, is why are no private companies brought within the ambit of this Bill, and that is the chief question which has been asked during the Debate. My right hon. Friend did deal with that in his opening statement. Very briefly, I will repeat the point. A great number of private companies are akin to partnership firms and so on, and therefore, quite apart from the difficulty of finding out what is distributed by a private company by way of divi-
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  dends in time of war, one group belongs to that type. But the group with which this House has been for so many years concerned has been an entirely different kind of private company, and generally speaking hon. Members have got rather into the habit of considering them as private companies and ask to-day why they are excluded from the Bill. The answer to that, broadly speaking, is that the reason, the method, and the theory behind all the recent legislation has been in regard to taxation; it has been an endeavour to get proper contributions, more particularly by way of Surtax, from those companies, some of which were formed primarily for the purpose of evading Surtax. This Bill, as my right hon. Friend pointed out, is not a taxation Bill, and I am trying to explain that the tax law as it has now been evolved by this House is based upon the principle that the whole of the income of the company of the type I am talking about is distributed to an individual behind it so as to secure the maximum payment of Surtax. It would obviously be illogical and completely wrong to turn round now and say that we are going to take action to limit the amount of dividends which such a company is deemed to pay out. In such cases of tax dodgers it would be found that there would be merely a distribution of a very much less sum, and that is why from that aspect the private company has been excluded from the Bill. On that point the argument is, I think, conclusive, and I hope that hon. Gentlemen who have attended the whole of the Debate and have heard the case put will agree that that is so.
  The hon. Member for Ealing (Sir F. Sanderson) inquired whether there was anything which would prevent under this Bill an insurance company or bank calling up unpaid capital. There is nothing which prevents them from doing that. What we are dealing with is the problem the other way round, that is to say, that they should not distribute their profit in the way referred to in Sub-section (2, c) of Clause 5 That is quite a different problem from the other one of being allowed to call up unpaid capital. Several hon. Members, and more particularly the hon. Member for Colchester (Mr. Lewis), have touched on the Kennet Committee. It is quite true that the Bill does not say that the Treasury acts on the advice of the Capital Issues Committee, but, on the

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  other hand, it is a fact that ever since the Defence (Finance) Regulations were introduced and ever since the control of capital has been enforced, it has been done on the advice of that committee. The committee has earned the approbation of all those who come into contact with its knowledge of the problems involved and with the methods with which it has dealt with them under the distinguished chairmanship of Lord Kennet, who was so long with us in this House and whom we all know. The members of that committee give their services voluntarily, and it may be found that that is the explanation why the cost of this Measure is not anticipated to be very much. The figure quoted in the Financial Memorandum on the front page of the Bill really covers what we think is likely to be required in the way of extra clerical staff, but the main work will be conducted by that committee on a voluntary basis as in the past.
  The hon. Member for East Wolverhampton (Mr. Mander) read out from a document a list of what he called private companies. I did not take them all down, but he may take it from me that those cases and other matters mentioned in the House will be looked into. I do not think in fact that he will find all his fears are correct. Some of the companies the names of which he read out may be technically private companies, although I do not know, but the fact remains that what we are dealing with in this Bill is not the subsidiary units but the final unit which does distribute dividends to the public.
  Mr. Mander: I think the Chancellor of the Exchequer himself rather tended to mislead the House in the sense that he gave a high figure for private companies. I fancy that a considerable amount of the dividends of those companies would actually be collected by reason of the fact that they are subsidiary, and I should be glad to know that that was not the case.
  Captain Crookshank: I do not know, but so long as we reach the objective on which we are all agreed, I think it would be better to proceed on those lines rather than to engage upon a statistical research at this moment on matters of this kind. The point is that we are dealing with the amount which is finally distributed to the shareholders and not the dividends which pass, say, from one subsidiary to another—perhaps to a parent company—where
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  the public is not at all concerned. The public is concerned at the end, and in dealing with the Bill I think a great deal of confusion, at any rate outside this House, would be saved if it were remembered that we are not talking about percentages, but about the actual total amount of money which was distributed in the standard years and the amount which is to be distributed now. If we keep in the front of our minds that we are dealing with the amount, we shall avoid confusion about percentages, and, above all, we shall realise what is the primary object of the Bill. As my right hon. Friend said in his opening remarks, the object—and this has also been pointed out by his predecessor when the matter was first raised in this House—is to avoid increasing purchasing power. If that were not so, we all know that we should very soon get into a situation of rising prices with all its disadvantages and dangers. To avoid that position is the primary object of this legislation. The Bill, I think, does achieve that, and the general impression of the House this afternoon has, I think, been that it does. I will not claim that all the details of the Bill are necessarily in the right form, but we shall look at all the points which hon. Members have made to-day, and I hope they will excuse me if I do not answer them in detail now. We shall look into the points, and as there will probably be Amendments proposed at a later stage, I think it would be better to wait and deal with the points when we see the Amendments.
  Generally speaking, we have to remind ourselves that this is not a taxation Measure. It is part of the method of dealing with the general economic problem. In answer to some things which have been said to-day about the fear that if dividends are limited it must inevitably lead to great extravagance by companies and so on, I would only say that we should remember that we are not now in either 1914, or 1915, or 1916, or 1917 or 1918. What may have happened during the last war as regards this and many other problems will not automatically be repeated now. The opportunities which companies or individuals had of expenditure then will not necessarily be available to-day. We are in the middle of a difficult week and in the throes of a very serious struggle, and if this Bill can help in some measure on the economic

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  front it will serve its purpose. My right hon. Friend is very much obliged for the way in which the Measure has been received. We will look into the matters which have been raised, and I hope it will not be unduly long before the Bill gets on to the Statute Book.
  Mr. Levy: By an oversight my right hon. and gallant Friend forgot to answer a question which two hon. Members and I put clearly and definitely. We asked whether he would give us a definition with regard to Clause 2, Sub-section (3), which deals with paid-up capital, because it conflicts with the definition of issued capital which is dealt with in Clause 9.
  Captain Crookshank: I never purposely fail to answer questions, but I did overlook that one, and I apologise. I think that is just the sort of case that had better await the further stages of the Bill, because it is apparently my hon. Friend's view that the words in Clause 2 conflict with the words in Clause 9, and I am advised that they do not. Perhaps my hon. Friend's legal advisers and mine take different views. If his question is, "If you issue a 5s. share at 10s., what is the capital?" the answer is "5s."If, however, there is a conflict, it will have to be resolved at a later stage, but I am advised that there is no conflict.
  Mr. Levy: If you issue a 5s. share at a premium of 5s., making it 10s., the capital of the company as written in the company's books will be the money which is subscribed for the share, irrespective of its face value. If I am right, there is a conflict with the definition in Clause 9, which deals with paid-up capital on the basis of the issue of the shares.
  Question, "That the Bill be now read a Second time," put, and agreed to.
  Bill read a Second time.
  Bill committed to a Committee of the Whole House for Tuesday next.—[Mr. Grimston.]

  LIMITATION OF DIVIDENDS [MONEY].
  Considered in Committee under Standing Order No. 69.
  [Colonel Clifton Brown in the Chair.]
  Resolved,
  "That for the purposes of any Act of the present Session to limit the dividends of cer-
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  tain companies and to impose certain restrictions as respects their share capital, and for purposes connected there with, it is expedient to authorise the payment out of moneys provided by Parliament of the expenses incurred by the Treasury for the purposes of the said Act."—(King's Recommendation signified.)—[Sir K. Wood.]
  Resolution to be reported upon Tuesday next.

WAYS AND MEANS.

  NATIONAL LOANS (No. 2).
  Considered in Committee.
  [Colonel Clifton Brown in the Chair.]
  Motion made, and Question proposed,
  "That,

  (1) the power of the Treasury to raise money under Section one of the National Loans Act, 1939, shall include power to raise any money required for raising any supply granted to His Majesty for the service of the year ending the thirty-first day of March, nineteen hundred and forty-one, and in addition a sum not exceeding two hundred and fifty million pounds;

  (2) the Treasury shall be released from any contractual obligations to issue securities under the said Act in the form of bearer bonds or bond certificates."—[Sir K. Wood.]

  6.52 p.m.
  Sir K. Wood: This Ways and Means Resolution consists of two parts, and it is the Resolution upon which it is proposed to found a Bill which will be, in the main, an extension of the powers taken under the National Loans Act, 1939. Section 1 of that Act gave the Treasury the power to raise, in such manner as they thought fit, any money required for the Supply grants for the year ending 31st March, 1940, and, in addition, a margin of not more than £250,000,000. It is now necessary to take comparable enabling powers in respect of the Supply grants for the year ending 31st March, 1941, with, of course, a similar margin of not more than £250,000,000. Except for the £250,000,000 the powers conferred by the 1939 Act were related to the expenditure of 1939–40. Since borrowing to meet the expenditure of any year must take place in that year, the power lapsed at the end of March. It is, therefore, necessary to seek further powers. This Resolution is the preparatory stage for a Bill for this purpose. Our financial policy has been discussed in the Budget Debate and it can be raised again on the Finance Bill. It is, perhaps, proper

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  for me to say now, however, that while the new powers given to the Government yesterday will enable us better to strengthen our financial defences as and when necessary, I ask this evening for further borrowing powers on the basis that the general balance between taxation and borrowing will be maintained. We should not forget that the financial weapon will continue to be used as a powerful instrument in this great struggle, and I am sure that no one will underestimate its value.
  The second part of the Resolution is designed to take power to release the Treasury from any contractual obligations to issue securities under the National Loans Act in the form of bearer bonds or bond certificates. This provision is consequential on measures recently taken to tighten up our exchange control with special reference to the ability of the Germans to get hold of the sterling assets of the countries they have over-run. Control of the transfer of bearer securities is much more difficult than such control in the case of registered securities. Under the Defence Regulation issued on 11th May the issue of bearer securities of any kind in future is prohibited. There are, however, two instances in which the Treasury are at present under a contractual obligation to issue bearer bonds which could not be covered by the Regulation for technical reasons. These instances are the 2 per cent. Conversion Loan offered in January last in exchange for the 4½ per cent. Conversion Loan to be repaid on 1st July, and the 3 per cent. War Loan issued for cash in March. In both these cases the position up to yesterday was that legislation was necessary to relieve the Treasury of their obligations and this Resolution was accordingly drafted. I was advised this morning that under the Emergency Powers Defence Act of yesterday action could now be taken by Regulation, but I thought that on the whole it was right that I should proceed with the matter in this way so that I could explain it to the Committee. The House would probably prefer me to do that rather than issue a Regulation in view of the fact that I had already tabled the Resolution.
  6.58 p.m.
  Mr. Pethick-Lawrence: I do not think the Committee will
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  wish to spend many words in discussing this proposal. It is, of course, one of tremendous significance and involves sums which are astronomical in their size and which, in the course of their issue and expenditure, will involve exceedingly large and grave problems. That is not a reason why we should waste words in talking about them. I can only say that I shall offer no opposition to the proposal. With regard to the second part of the Resolution, I think it is wise in this instance, at any rate, to have a specific proposal which, I gather from the right hon. Gentleman, will be carried out in legislative form, rather than to proceed through Regulation in accordance with the wide powers that were conferred on the Government yesterday. Both parts of this proposal have my agreement and support.
  7.0 p.m.
  Mr. Benson: One phrase was used by the Chancellor of the Exchequer of which I did not understand the implication. He said that the general balance between taxation and borrowing was to be preserved. Are we to understand that he means that the very inadequate proposals that were outlined to us in the Budget are accepted by him as the balance between borrowing and taxation which is to be preserved? If so, I think the Committee will be very much disappointed with his first utterance as Chancellor of the Exchequer. There was a heavy body of criticism from all sides of the House on the inadequacy of the taxation proposals, and I hope the Chancellor will be able to say that he proposes to alter the present balance between taxation and borrowing.
  7.1 p.m.
  Sir K. Wood:All I want to say at this moment is that I did not intend to indicate that. This Resolution will enable us to raise the whole of this terrific sum, to which my right hon. Friend has referred, by borrowing alone, and I would like to correct any impression that there was any intention on the part of the Government that there should not be a fair allocation between borrowing and taxation.
  Question put, and agreed to.
  Resolved,
  "That,

  (1) the power of the Treasury to raise money under Section one of the National Loans Act, 1939, shall include power to

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  raise any money required for raising any supply granted to His Majesty for the service of the year ending the thirty-first day of March, nineteen hundred and forty-one, and in addition a sum not exceeding two hundred and fifty million pounds:

  (2) the Treasury shall be released from any contractual obligations to issue securities under the said Act in the form of bearer bonds or bond certificates."

  Resolution to be reported upon Tuesday next; Committee to sit again upon Tuesday next.

AGRICULTURE ACT, 1937.

  LAND DRAINAGE GRANTS.
  7.2 p.m.
  The Minister of Agriculture (Mr. R. S. Hudson): I beg to move,
  "That the Land Drainage Grants (Postponement of Prescribed Date) Order, 1940, postponing the prescribed date provided for in Sub-section (3) of Section 15 of the Agriculture Act, 1937, a copy of which was presented to this House on 30th April, be approved."
  In the Act of 1937 it was laid down that these land drainage grants should continue for three years, and power was given to continue them for two successive periods of 12 months each. This is the first of the successive periods, and we require authority to continue their operation for a further period of 12 months. The scheme has been singularly successful. The total grants amount, roughly, to £500,000, and applications have been increasing at a very rapid rate lately. It is interesting that, whereas in the first 2½ years schemes involving only just over £700,000 were put forward, in the short period from January to May this year, the schemes put forward amount to £330,000, and their number is still rapidly rising, which seems to indicate that the grants are serving a very useful purpose and are appreciated.
  7.3 p.m.
  Lieut.-Colonel Heneage: I am very glad that this power is being extended, especially in view of the amount of drainage work to be carried out under the Agriculture (Miscellaneous War Provisions) Act of this year, but there are one or two important observations to be made on the situation. Although this money can be voted it cannot be spent unless the labour situation improves. There is a drift of labour away from the drainage authorities to industry. I hope
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  that that will be stopped under the powers conferred upon the Government yesterday, and I ask the Minister to be prompt in stopping it, for the sake of the drainage authorities. Under the increases envisaged under this Order there will be more work to be done, and we shall want more men, and we should like to have an option upon prisoners of war, interned aliens and any others who are available for this work. They worked very well in gangs in the last war, and I hope they will be so employed in this war. As regards schemes which have been carried out with this money, some Drainage Boards have gone in for as many as 30 new schemes. The machinery of the Act is working well on the whole. There may be a little difficulty with the county councils, and I hope that the Ministry will continue their previous excellent work of negotiating with the authorities concerned, because in the past they have been very helpful with their assistance and advice in working the scheme and in dealing with the many local authorities who are involved. I should like to thank the Drainage Department of the Ministry of Agriculture, which has been most helpful; and as far as the catchment authorities are concerned, I wish to say that we shall do our best to carry on the work.
  7.6 p.m.
  Mr. Henry Haslam: I should also like to welcome this extension Order. Drainage is one of the most urgent problems which agriculture has to face, and there are very large areas in Lincolnshire which require more drainage facilities. I hardly think I should be in order in referring to field drainage, but as the previous Minister of Agriculture said in answer to a Question that it was receiving attention I should like to express the wish that attention will be concentrated on this very important problem. Apart from that side of it, drainage work is proceeding well, and I should like to express my gratitude to the Minister for the encouragement which he is giving to it.
  7.7 p.m.
  Mr. Kirkwood: We have seen wonders being performed between yesterday and to-day—it shows what can be done in an hour or two in this House—and there is certain action which I should like the Minister of Agriculture to take. In connection with this

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  grant for land drainage, which according to the landlords' representatives is going to improve the land, going to improve food production in this country and in crease the income of the farmers, I want the Minister to take precautions against the landlords taking advantage of it to increase rents. We have seen the sort of Measure which can be put through this House in two hours. This business is a mere bagatelle by comparison with it. During the last war we issued an Order-in-Council—
  Mr. Deputy-Speaker (Colonel Clifton Brown): This Order offers only a very limited field of discussion. We can discuss only the extension of time and not the object of the Order as a whole.
  Mr. Kirkwood:We are giving power to disburse money, and that money is going to the landlords, and I want to point out what was done during the last war. We were able to get through this House an Order-in-Council providing that for the duration of the war and six months afterwards there should be no increase in house rents. I want to see the same thing done for farmers, so that there shall be no increase in the rents of farms for the duration of the war and five years afterwards. That will ensure that the farmer who gives of his best in order to produce the necessary food will get a return and have a security such as he feels at the moment that he has not got. I ask the Minister to see whether it is possible to do that, because it is evident to me that this House is prepared to give any powers, and surely it is not too much to ask the landlords not to take any more than they have been taking. They have walked away with all the grants that have gone from this House to subsidise agriculture, and if rents go up it means that wages go down. It is because rents have been high that the wages of agriculture have been low. I would like an answer from the Minister, if it is possible.
  Mr. Haslam:I would like to point out to the hon. Member that in Lincolnshire, at any rate, many landlords are not receiving any rent at all. Further, it is not a question of rent going up and wages going down; for the last 10 years it has been wages going up and rents going down.
  Mr. Kirkwood: I have replied before in this House to that argument. We are
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  willing to take this burden off your hands and to take the land. How the landlords can continue to cling to a business which is such a burden the Lord only knows, for I do not. We have offered to take this burden away from you. Why do you not agree? Because the statement is not true. Therefore, I would ask the Minister to reply to my question.
  Mr. Speaker Mr. Speaker rose—
  Mr. Kirkwood: On a point of Order. May I not ask for a reply from the Minister to the question which I put to him? Or is this the way we are to be treated because there is no Opposition?
  Mr. Speaker: The Question is, "That this Order be approved."
  Mr. Kirkwood: On a point of Order. I put a question to you, Mr. Speaker, and you are the guardian of the rights of private Members. As a private Member I put it to you: Have I not the right to a reply to the question which I put to the Minister in a perfectly Parliamentary manner?
  Mr. Hudson: I hope that the hon. Member will acquit me of any desire to refuse to answer, but this is a question, a very narrow one, as Mr. Deputy-Speaker pointed out, of whether or not this Order shall be continued. The question of landlords and rent does not arise. On a proper occasion I shall be glad to deal with that matter. This Order, made in 1937, has worked extremely well. Now we want it to be continued for another 12 months under existing conditions.
  Mr. Kirkwood: I thank the Minister for rising and giving the reply. That is all I want; I only want a reply. We shall continue this matter at the proper time.
  Question put, and agreed to.
  Resolved,
  "That the Land Drainage Grants (Postponement of Prescribed Date) Order, 1940, postponing the prescribed date provided for in Sub-section (3) of Section 15 of the Agriculture Act, 1937, a copy of which was presented to this House on 30th April, be approved."

  LAND FERTILITY SCHEME.
  7.14 p.m.
  Mr. Hudson: I beg to move,
  "That the Land Fertility Scheme (Postponement of Prescribed Date) Order, 1940, postponing the prescribed date provided for

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  in Sub-section (3) of Section 1of the Agriculture Act, 1937, a copy of which was presented to this House on 30th April, be approved."
  Like the last Motion, this one arises out of the Act of 1937. The three years for which it was to operate have expired, and it is now desired to extend it for another 12 months. It has been extremely successful. About 4,250,000 tons of lime and 1,250,000 tons of slag have been put on the land, at a cost of£3,000,000, very largely due to the excellent work of the committee under the chairmanship of Lord Cranworth which has been supervising these operations. I hope that the advantage of this service will continue, because there is plenty of land in the country requiring this treatment.
  7.15 p.m.
  Mr. Wilfrid Roberts: I wonder whether the Minister can give us a little more information as to the cost and the use of this excellent scheme, which has worked extremely well. Can the Minister tell us, for example, whether the use of lime and slag has gone up recently, and the comparative figures between different periods? Has he in mind any plans for meeting the unequal distribution which appears to exist? In some parts of the country very full use has been made of these benefits, but in others, very little use seems to have been made. Is there any power by which he can recommend or compel farmers to use lime? Can he cheapen the lime and slag, and particularly the lime, in some parts of the country which may be far from sources of lime? I do not know whether that information is available, but if it is, some of us, I am aware, would like to know whether increased use is being made of these subsidies and advantages which the farmer has, and whether farmers all over the country are taking advantage of them.
  7.17 p.m.
  Mr. Snadden: I do not want to detain the House for more than a minute, but I understand that the Motion before us applies to Scotland. I would like to ask the Minister whether he has considered supplying synthetic manures, other than basic slag. No restriction should be placed at all in the way of agriculture or of any other industry when it comes to mobilising the resources of the country. Looking ahead, I feel that
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  the slogan of 1941 will probably be "Manure for victory" instead of "Dig for victory." Will the Minister consider, in the light of victory, that ultimate objective of Government policy, the necessity of producing the maximum amount of food from the land? If this objective is to be attained, no restrictions should be placed in the way of its achievement.
  At the present time two restrictions stand in the way of the land fertility scheme. First, there should be no separation whatever between the land fertility scheme and the land drainage scheme, because the one is dependent on the other. I would also ask the Minister whether it is unlikely that we shall get an increase in 1941 in our cropping programme, because of the existing conditions, and whether he will consider the extension of the subsidy given to basic slag to include all phosphatic manures. This is a very important point in Scotland, where we have many types of land. Any practical farmer knows that the application of high-grade slag to certain types of land has a miraculous effect. On heavy land and heavy clay the result is extraordinary, but on lighter soil, and particularly on what we call shallow land, it is equivalent to throwing a cheque on the fire to put basic slag upon the land; but that land responds to mineral phosphates. I am not sure whether ground mineral phosphates are in good supply or not, and the Minister will no doubt inform me as to that, but it is necessary that the Government should extend the grant available for basic slag to 50 per cent. instead of 25, and give an equivalent grant to the farmer who may be unable to use basic slag but can use ground mineral phosphates.
  I hope I am in order in mentioning this point, but I think that it is now becoming evident that a long-term agricultural policy is not necessarily the one which is going to be the best We are told that we are involved in a short-term war and we probably want a short-term agricultural policy. Therefore, this question should be considered very thoroughly at the present time.
  Lieut.-Colonel Heneage: I would like to ask the Minister whether the war agricultural committees have power to order the farmer to use some of

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  these manures which are mentioned in the Order, or whether there is no power. There is a division of opinion. If there is such a power it would be a most excellent thing and it would be very beneficial in the coming season.
  7.21 p.m.
  Mr. Kirkwood: Perhaps the Minister is not yet aware that the Scottish farmer views the situation with alarm. If he puts his back into it, as he is doing at the moment, using slag and lime and every other kind of manure that he can get, in order to make the production of food more prolific, he fears that rents will be raised.
  Mr. Speaker: I hope that the hon. Gentleman will not pursue the same argument that he used in relation to another Order. It is quite out of order.
  Mr. Kirkwood: I do not intend to use the same argument. We are on another question. I could make the same speech and still be in order, but all I wish to say is this: There is no better farmer in the world and no more patriotic man in the country than the Scottish farmer, and he is viewing the situation with alarm because of what happened after the last war. He wants to do what he can to get a guarantee from the present Government that there will be no increase in his rent. Landlords in the past have always taken advantage—
  Mr. Speaker: We are concerned with the extension of this Order for another year.
  Mr. Kirkwood: I do not wish to fall foul of you, Mr. Speaker.
  Mr. Speaker: Then do not do it.
  Mr. Kirkwood: Supposing it is being extended only for another year. It means that this is coming before the House, and it is one of our opportunities because these matters come before the House whereby we can raise questions which affect the men who will get this grant.
  Mr. Speaker: The hon. Member is out of Order.
  7.25 p.m.
  Mr. Hudson: The hon. Gentleman opposite asked if I could give any figures to show what has been done since the grants were made. It is difficult to say
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  exactly what the increase was in comparison with the years immediately before because there were no figures which are comparable. The best estimate I can give is that the total quantity supplied in the first year is four times as great and in the second year four and a half times as great compared with any normal pre-war year. The actual amounts are: 300,000 tons of lime in the first year, and 700,000 tons in the next year. A question was also asked about difficulties of supply. One of the results of the Act has been to increase the number of lime burners in the country and therefore there has been more for agricultural purposes.
  I was asked a question about phosphatic manures. In general I can say that the total quantity available has already been used. Therefore, to increase the grant for them would not increase the quantity available.
  Lieut.-Colonel Heneage: I asked the Minister whether the War Agricultural Committees have power to order farmers to use these manures?
  Mr. Hudson: The answer is "Yes."
  Mr. J. J. Davidson: Has the question of rents been considered? I would like to know whether the rents of the farmers are likely to be raised to such an extent that it would have a prejudicial effect upon the fertility scheme? If the farmers left the land and did not take part in agricultural production because of higher rents, would not that affect the land fertility scheme?
  Mr. Hudson: As far as I am aware at present, that is an unsettled question. Perhaps we can wait to discuss it when the situation arises.
  Mr. Davidson: Have you no evidence of that taking place?
  Mr. Hudson: None whatever.
  Mr. Davidson: You should apply to the Scottish Secretary to get some.
  Question put, and agreed to.
  Resolved,
  "That the Land Fertility Scheme (Postponement of Prescribed Date) Order, 1940, postponing the prescribed date provided for in Sub-section (3) of Section 1 of the Agriculture Act, 1937, a copy of which was presented to this House on 30th April, be approved."

  COLONIAL DEVELOPMENT AND WELFARE [MONEY AND REMISSION OF DEBT].
  Resolution reported,
  "That for the purposes of any Act of the present Session (hereafter in this Resolution referred to as 'the new Act') to make provision for promoting the development of the resources of Colonies, Protectorates, Protected States and Mandated Territories and the welfare of their peoples, and for relieving Colonial and other Governments from liability in respect of certain loans, it is expedient to authorise—

  (1) the payment out of moneys provided by Parliament of any sums required for the purpose of schemes made under the new Act for any purpose likely to promote the development of the resources of any Colony, Protectorate, Protected State or Mandated Territory or the welfare of its people, so however that, unless Parliament otherwise determines—

  (a) the sums so paid for the purposes of schemes for promoting research or inquiry shall not in the aggregate exceed five hundred thousand pounds in any financial year; and

  (b) the sums so paid for the purposes of any other schemes shall not in the aggregate exceed five million pounds in any financial year and no such other scheme shall continue in force after the thirty-first day of March, nineteen hundred and fifty-one;

  (2) the payment into the Exchequer of—

  (a) any sums received by way of interest on or repayment of the principal of any loan made in pursuance of any such scheme as aforesaid; and

  (b) such moneys as may be in the Colonial Development Fund on a day appointed by the Treasury;

  (3) the remission of sums amounting in the aggregate to nine million, eight hundred and fifty-five thousand, six hundred and forty-three pounds, nine shillings and nine-pence, being the outstanding balance of the principal of certain loans made out of moneys provided by Parliament, and of all arrears of interest in respect of the said loans;

  (4) the amendment of certain schemes made under the Colonial Development Act, 1929, providing for advancing by way of loan sums amounting in the aggregate to
  390
  one million, one hundred and five thousand, four hundred and thirty-one pounds, six shillings and seven pence, so as to provide—

  (a) that so much of the said sums as has not been advanced before the commencement of the new Act may be advanced by way of grant instead of by way of loan; and

  (b) that the outstanding balance of the principal of the remainder of the said sums and all arrears of interest in respect thereof shall be remitted;

  (5) the amendment of certain other schemes made as aforesaid, providing for advancing by way of loan sums amounting in the aggregate to two hundred and seventy-nine thousand, eight hundred and ten pounds, three shillings and three pence, so as to provide—

  (a) that one-half of so much of the said sums as has not been advanced before the commencement of the new Act may be advanced by way of grant instead of by way of loan; and

  (b) that one-half of the principal of the remainder of the said sums and all arrears of interest in respect of that half shall be remitted;

  (6) the grant out of moneys provided by Parliament of so much of certain sums proposed by the current estimates to be lent out of moneys so provided, amounting in the aggregate to one hundred and sixty-three thousand, five hundred and nine pounds, as has not been advanced before the commencement of the new Act, and the remission of the principal of the remainder of the said sums and all arrears of interest in respect thereof."

  Resolution agreed to.
  The remaining Orders were read, and postponed.

  ADJOURNMENT.
  Resolved, "That this House do now adjourn."—[Mr. Buchan-Hepburn.]
  Adjourned accordingly at Twenty-eight Minutes after Seven o'Clock, until Tuesday next, pursuant to the Resolution of the House this day.