CLAUSE 32.—(Increase of standard profits in certain cases.) (Hansard, 28 June 1944)

§ Sir J. Anderson
I beg to move, in page 19, line 36, at the end, to insert: (2) Where—

(a) a trade or business is carried on by a partnership or by a company the directors whereof have a controlling interest therein; and

(b) the standard profits of the trade or business are ascertained by reference to the minimum amount specified in subsection (2) 739 of section thirteen of the Finance (No. 2) Act, 1939; and

(c) there are three or more working proprietors in the trade or business;
subsection (1) of this section shall have effect as if for the reference to one thousand pounds there were substituted a reference to such greater sum, not exceeding two thousand pounds, as is arrived at by allowing five hundred pounds for each working proprietor in the trade or business. As the Clause left the Committee, provision was made, in the case of small businesses, whether partnerships or director-controlled, for adding to the standard a sum of £1,000. In the case of a business with one working proprietor the addition was £1,000, and in the case of the business with two working proprietors the addition worked out at £500 for each working proprietor. During the Committee stage an argument advanced by my hon. Friend the Member for Stockport (Sir A. Gridley), which received a measure of support, was directed to making a case for including the small business with more than two working proprietors. The suggestion was that the purpose of the Clause, which was to encourage the small man and give him the means of expanding his business, and putting profits back into his business, would be more effectively met, if the line were not drawn at two working partners. On behalf of the Government it was promised that consideration would be given, between the Committee stage and the Report stage, to the possibility of making some slight extension of the principle embodied in the Clause. I have gone into the matter, and I feel that, while any extension of the £1,000, in order to meet this particular case, would, to some extent, mar the symmetry of the proposal I put before Parliament, which was that there should be a flat addition of £1,000 in the case of all alternative standards—everything but the ordinary profits standards—I am bound to say I was influenced by the arguments put forward. I think, on the whole, we might hold that a case has been made out for giving to the small business with three or four working proprietors, the same proportional advantage per working proprietor as is proposed in the Clause in the case of two working proprietors. For that reason, I have submitted this Amendment for acceptance by the House.

§ Mr. R. C. Morrison (Tottenham, North)
Is the right hon. Gentleman satis- 740 fled that the concession he is proposing will not be liable to abuse?

§ Sir J. Anderson
I am pretty certain that it will not be liable to abuse, because we are guarding ourselves elsewhere against abuse in regard to the number of working proprietors, and I think I shall be able to show, when we come to an Amendment to Clause 33, that we have taken effective measures to that end. I am very anxious, and I believe the House is anxious, to give every encouragement to the small working proprietor business, and I think we shall not go far wrong if we make this small extension. I ought to tell the House what the cost to the Exchequer is likely to be, because that will enable hon. Members to judge of the practical effect of this concession. Making allowance for the additional Income Tax that will be collected, when the excess profits standard is raised, the best estimate I can give of the probable cost is £600,000 a year.

§ Mr. Woodburn (Clackmannan and Stirling, Eastern)
While not disapproving of the Amendment I must point out that it does raise a question in regard to the adjective "working". We understand that that will be interpreted literally, because the large number of sleeping partners in industry to-day who draw considerable incomes from companies, though playing no effective part in production, is a scandal, and I would not like to think that that was to be assisted by a side wind in this way.

§ Sir J. Anderson
I think I can safely give my hon. Friend that assurance.

§ Sir Arnold Gridley (Stockport)
May I, very briefly but very earnestly, thank the Chancellor for agreeing to meet us on this point in the way he has? His concession will be very much appreciated; and, as he himself has recognised, a good deal of that which he gives with one hand, he will collect back with the other. I hope the House will unanimously agree to the Amendment.