Commons Sitting of 4 June 1945

Preamble
The House met at a Quarter past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]

BUSINESS OF THE HOUSE
Mr. Attlee (by Private Notice)asked the Deputy Leader of the House whether he can now state the position regarding the Family Allowances Bill, and whether there is still a possibility of it reaching the Statute Book before the General Election.
The Chancellor of the Exchequer (Sir John Anderson): I have been asked to reply. The Government are desirous of seeing this Bill pass into law before the General Election. This will only be possible if agreement can be reached immediately on the outstanding points. As my right hon. Friend the Leader of the House stated last Thursday, discussions are taking place. I fear, however, that there are difficulties which still have to be overcome.

BUSINESS OF THE HOUSE BILLS REPORTED

  EAST GRINSTEAD GAS AND WATER BILL
  Reported, with Amendments, from the Committee on Group A of Private Bills (with Report on the Bill).
  Bill, as amended, and Report to lie upon the Table; Report to be printed.

  WEAVER NAVIGATION BILL
  Reported, with Amendments, from the Committee on Group B of Private Bills (with Report on the Bill).
  Bill, as amended, and Report to lie upon the Table; Report to be printed.
  Proceedings on Government Business exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House).—[Mr. Bracken.]

  ORDERS OF THE DAY

    FINANCE (No. 2) BILL
    Order for Second Reading read.
    2.22 p.m.
    The Chancellor of the Exchequer (Sir John Anderson): I beg to move, "That the Bill be now read a Second time."
    I do not think that it would be in accordance with the wishes of the House, nor indeed is it necessary, for me to make a lengthy speech in moving the Second Reading of the Bill now before us. The House has seen in the Bill that was withdrawn last week the full provisions which would have been submitted to them for their approval had the circumstances of the Session been normal. We should have had a Finance Bill of ordinary dimensions, covering not only the whole of the proposals which I outlined in my Budget speech but a variety of minor and miscellaneous provisions which it was not necessary to describe in that statement. In view of the early Dissolution, we have thought that it would only be right, and indeed would only be practicable, to ask the present Parliament to pass, in these closing weeks, those few provisions which are absolutely essential to the ordinary management of our financial affairs through the summer months.
    This does not mean, of course, that we attach little importance to those provisions of the earlier Bill which have now

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    disappeared for the time being. Some of them, such as the tax exemption for Service gratuities, to which the Government and all parties are pledged, will in due course become essential, and all of them are, in the opinion of this Government, desirable. Perhaps by way of further illustration I may refer to the six Clauses which appeared in the previous Bill to give the necessary legislative sanction to the agreement on double taxation which we have concluded with the United States of America, and which we hope to conclude with the Dominions and other foreign Governments. The agreement with the United States received a very general welcome, and I am sure that it would be the wish of Parliament to pass the necessary legislation at an early date. I have proceeded on the assumption that a further Finance Bill will be necessary in the Autumn in any event.
    As regards the actual provisions included in the present Bill, we have, in the first place, to reimpose the tax which forms the main prop of our fiscal system, the Income Tax, together with the Surtax, which is properly to be regarded as part of the Income Tax. This is done in standard form in Clauses 3 and 4. Since, under the Provisional Collection of Taxes Act, the Resolution imposing these taxes ceases to be valid if a Dissolution takes place before they have been confirmed by legislation, it is absolutely essential that these Clauses should be passed into law before the Dissolution. We have also to reimpose one other tax, the hops duty, which is the subject of Clause 1. It will be remembered that I mentioned this matter in my Budget speech. A Customs duty of £4 per cwt. on imported hops was first imposed for a period of four years in1925, in order to give some protection to the market for English hops. It has since then been renewed each time when it expired. There is a preferential rate of two-thirds of the full rate on Empire hops. The duty involves consequential duties on hop oil and other preparations made from hops. The Customs Duty on imported beer and the Customs and Excise drawbacks on beer exported, include an additional amount in consequence of the duty on imported hops. The necessary consequential provisions on these matters are included in the Clause.
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    Here again, because the present authority lapses in the middle of August, immediate legislation is necessary. During the war the imports affected by this duty have been very small indeed. It is uncertain to what extent they may return to a more normal level in the next four years. The matter has been the subject of discussion with my right hon. Friend the Minister of Agriculture, and with the interests concerned, and all are agreed in recommending that it would be undesirable at the present time to introduce any change in a policy which has shown beneficial results. I therefore recommend that the duty should be continued, as provided in the Clause.
    There is one provision which involves a relief to the taxpayer, that which is included in Clause 5. In my Budget statement I made a proposal, which I explained at some length, for a further extension of the measures which we took last year to lighten the burden of Excess Profits Tax on small businesses. I will not weary the House by repetition of what I said in my Budget statement, but it will be remember that what I proposed was a general relief for all businesses whose profit standard falls short of £12,000. The relief is modelled on one which was applied to National Defence Contribution, and involves an addition to all standards below £12,000 of one-tenth of the amount by which the particular standard falls short of that figure. This gives a relief which is highest, of course, in the case of very small businesses, and which dwindles to nothing as the existing standard approaches £12,000. It does not affect in any way any business where the existing standard already amounts to £12,000 or more. This is, of course, a comparatively small matter but it has been recognised in all quarters of the House that the Excess Profits Tax continuing year to year must have a harmful effect on the growth of small and young enterprises. The proposal which I made in the Budget was generally welcomed, and it seemed to me desirable, that, in a matter of this kind, there should be no uncertainty in the minds of those affected. I have no doubt that the House will be ready to enact these provisions as one of the urgent measures to be included in this Emergency Bill. As this is an entirely new departure there could be no feeling of certainty, notwithstanding what I said

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    in my Budget Speech, until the proposals had actually taken shape in legislation.
    Clause 2 concerns questions of procedure in connection with Purchase Tax on utility goods, which I mentioned in the Budget. It amends Section 19 of the Finance Act, 1942, which empowered the Treasury, by Order, to give relief in respect of Purchase Tax on utility goods. The Board of Trade are already using other statutory marks which do not come within the definition of a utility mark, and they may find it necessary to introduce further such marks in the future. In order to bring the operation of the Purchase Tax provisions into line with this development—an excellent development, I think—of the system of statutory marks, it is desirable to substitute for the legislation of 1942 a general provision to include any marks the use of which the Board of Trade have power to regulate. It is, of course, still the case that any Treasury Order relating to Purchase Tax which might be made in this connection would, under general provisions already on the Statute Book, have to be approved by Resolution of the House of Commons.
    Finally, the Bill includes, in Clause 6, provisions in standard form fixing the National Debt charge for the present year at the figure of £465,000,000, which I mentioned in my Budget speech. This Clause also includes powers which have been given in every year since 1933 to borrow to meet certain contractual sinking funds. This completes my explanation of the provisions contained in this Bill. It only remains for me to commend the Bill to the House, and to repeat the hope, expressed last week by the Leader of the House, that Parliament would be willing, in present circumstances, to give it a speedy passage into law.
    2.31 p.m.
    Mr. Pethick-Lawrence: I do not anticipate that the wish expressed in the last few words of the Chancellor of the Exchequer's statement will be frustrated. It is in no one's interest to hold up the Finance Bill of the year, and in view of the early Dissolution I feel sure we shall all be willing to carry the Bill through all its stages in this House, and I have no doubt that in another place the Bill will receive equally speedy treatment. The Chancellor divided his remarks into two parts, one dealing
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    with the omissions from the larger Bill and the other with the provisions of this Bill itself. With regard to the omissions, I feel quite sure that whatever Parliament is elected after the Dissolution will be glad to ratify the remission of taxation on the war gratuities, and also to ratify the arrangements with regard to double taxation that have formed part of an agreement between this country and the United States.
    There is, however, another omission from the Bill to which I do not think the Chancellor made any reference. That is the change in motor taxation. When I spoke on the day following the Budget Statement I said that, provided the announcement which the Chancellor had made was an agreed solution, I, for my part, would support it, and I thought that it would be supported by the House. Since that Debate, I have learned that the proposals of the Chancellor in that respect are by no means agreed upon by the interested parties as a whole. In fact, as I understand it, the trade itself is divided, and it is very doubtful whether the main object of changing the form of motor taxation, namely, the desire to promote the British export trade, would be very much aided if the proposals which the Chancellor of the Exchequer laid before us in his Budget speech were, in fact, to become law. I am a child in these matters, and I do not profess to be able to form a complete judgment, but it has been represented to me that there are other forms of change, involving perhaps an increased duty on petrol and removing at any rate some part of the duty from the capacity of the engine, whether it be measured as at present or by cubic capacity, as in the Chancellor's proposal, which might have a better effect in promoting the export trade than the changes contained in the Chancellor's proposals.
    Obviously we cannot decide that on the present occasion. The Chancellor will, I presume, continue to look at this matter, and if it should prove to be the case, that he is in the same office after the Election, he will then consider whether he can make a somewhat larger change that might have the effect of stimulating the British export trade. As it is at present, the British export market has certainly been adversely affected by the precise form of motor taxation. Motor exports may in the future be a considerable source of revenue, and if there be a way of pro-

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    viding the same amount of revenue from motorists to the Exchequer and yet giving the means by which the export of motors will bring in a substantial export surplus, then an investigation of any proposal of that kind ought not to be neglected. I hope that the Chancellor of the Exchequer will keep his eye on that, and that his officials will look into various methods of improving the situation.
    That concludes my remarks with regard to the omissions. With regard to the parts that are still in the Bill, not very much need be said. Clause 2, as I understood it from the Chancellor, is a fairly simple one, though it deals with a rather technical matter, and I do not suppose that the House will take any exception to that. I dealt, on the last occasion, with the question of Excess Profits Tax. I said, and repeat, that I do not think there will be any opposition in my Party to the slight remission of burdens on the small people affected by the Chancellor's proposals. The tax in its existing form has pressed very heavily on small businesses, and the alleviations which Clause 5 will effect will be welcome to a very large number of small people. I think that none of my hon. friends will take any exception to the Chancellor's proposals.
    In Clause 6 we have the amount fixed for the servicing of the National Debt. It is a heavily mounting figure, and I am afraid it will be a long time before it comes down again. But we must needs foot the bill. No one in any part of the House stands for repudiation of any kind, certainly no one on this side of the House, and I imagine no one on the Government Benches. Therefore; unfortunate as it may be, the money has got to be found. We shall certainly offer no opposition to finding it. That concludes my remarks on this Measure and I hope, with the Chancellor, that it will not be necessary to take a very long time over its discussion.
    2.40 p.m.
    Lieut.-Colonel Sir Assheton Pownall: Like my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence)—if I may still call him my right hon. Friend—I welcome the abridged version of the Finance Bill which has been introduced by the Chancellor this afternoon. I want to speak upon it, however, from a rather special
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    angle. I happen to have been for many years a Member of the Public Accounts Committee, and for the last three years I have been in the chair of that Committee. I am not now speaking on behalf of the Committee, but I am speaking with a fairly wide experience of its work in these last years. We have, of course, the head of every Department in the State before the Committee from time to time, and I want to pay a very warm tribute to the Treasury for the help they have given, not only to the Committee but to the nation as a whole, in regard to the very difficult problems that have confronted us.
    There arises from time to time need for urgent decisions by the Treasury. If they are matters which concern the Public Accounts Committee, that Committee is always consulted and is asked its views before any changes are made in the existing Treasury practice. That is a very considerable Parliamentary safeguard on the Service Departments.
    The Treasury also set up, at the beginning of the war, an Inter-Services Committee, with a Treasury officer as chairman, and this has done a great deal to co-ordinate our great Service Departments. Otherwise you might easily have Departments clamouring for, say, an area of land for an aerodrome or for manoeuvres—many possibilities leap to the eye—or competing for man-power, or for essential armaments of war. The Inter-Services Department has been of the greatest value. These things are not generally known to the public: if they were, there would be fewer complaints about Treasury control. Broadly, I should say, contract prices have been kept at a reasonable level. There has been an occasional slip-up, and those slips very often get into the Press; but, broadly, the Treasury control and the Departmental control have been reasonably exercised throughout the war. Some firms are rather liable to take the line, "It does not matter how much we charge; it will be taken off us in the form of Excess Profits Tax." The Committee have set their faces firmly against any such procedure, because it would lead to gross waste. We regard the Public Accounts Committee, not as a wicket-keeper but as a long stop, in cases where excessive profits have been taken.
    Another thing about which the Treasury have been most helpful, is the

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    question of inflation. Those of us who were in the House immediately after the last war remember how prices rocketed when the war ended. The cost-of-living figure went up not by one-third, as it has done in this war, but nearly three times. Subsidies, though not to the same extent as at present, were in existence after the last war. But this time keeping prices fairly stable has been of the greatest value in stopping inflation. I am often asked what is to happen in connection with the immense war debt accumulated in the last six years. The answer is much simpler than most people realise. I have turned up the Budget of 1919. The debt charge then, outside the fixed debt, was £330,000,000, and inside the fixed debt my recollection is that it was £30,000,000 in interest and sinking fund on the "pre-last war" debt. That is a total of £360,000,000. The House has heard that the interest charge on debt now is £465,000,000 as against £360,000,000 then. Our national income, as shown by the very interesting figures circulated with the Budget each year, is roughly double what it was after the last war. The figure then was roughly £4,000,000,000 and it is now £8,000,000,000. The percentage charge after the last war—and the percentage is the fairest way to calculate—was roughly nine per cent. of the national income; now it is six per cent. It is one-third less, although we borrowed these very large sums. The reason is quite simple. The Chancellor mentioned in his last speech that the charge was something over two per cent. I remember, in 1919,sums being borrowed at five per cent. Our borrowing rate has been about a third of what it was then, and it is that which has enabled us to treble our National Debt and, at the same time, to have an interest charge appreciably less in proportion than that of many years ago. That gives us hope for the future.
    I have been talking in millions, but now I will give a simple illustration; because, unless one gives simple illustrations, people find it hard to realise the extent of the problems of finance. A man of great wealth, who has some £2,500 to invest, if he puts it out at 3 per cent. will find the annual interest not enough to pay for his daily copy of the "Daily Telegraph." If any man of great wealth among my hon. Friends opposite wants to invest money, he will have to invest
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    more than £1,600 in order to have a penny a day to buy the "Daily Herald." That gives some idea of the very severe taxation which this country has gladly taken upon itself to win the war and the measure of taxation, which we hope before very long will be appreciably lightened. I hope that if a fresh Budget is introduced later, we shall find that the man of good will who introduced the Budget a few weeks ago, will be the person to introduce it.
    2.48 p.m.
    Sir Herbert Williams: I am sorry to be in disagreement with my hon. and gallant Friend the Member for East Lewisham (Sir A. Pownall), but I think he is much too optimistic about the burden of National Debt. The national income in 1918 was not £4,000,000,000, but about £5,500,000,000. The debt charge in this Bill does not show the true debt charge, because the Chancellor in this year is paying interest on only half the borrowings for the year. If he ceases borrowing at the end of this year, his debt charge next year will be up about £25,000,000 on this year. Also, Chancellors pay virtually no interest at all on Savings Certificates, so a great deal of the National Debt is being concealed, and is becoming a new capital charge. We shall find that we have ahead of us a much bigger burden; even worse, we have the immense burden of £3,000,000,000 of sterling indebtedness to India, to Egypt, I think, to all sorts of countries, as my hon. Friend here reminds me. That will involve, in due course, capital payments to people abroad, the money for which we shall have to raise in this country either by taxation or by further borrowing.
    I hope we shall not run away with the idea that this burden is going to be easy. It is going to be an oppressive burden that will hamper our lives in a great many respects for many years to come. I would ask the Chancellor also to remember the immense floating debt. I agree that the Treasury have been exceedingly skilful in borrowing cheaply, despite the destructive efforts of the hon. Member for Ipswich (Mr. Stokes), but I am quite satisfied that there is a good deal of floating debt, at very low rates of interest, which the Chancellor may find himself compelled, later on, to convert to higher rates.
    Sir A. Pownall: If my hon. Friend will allow me, may I say that the position as

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    regards the floating debt was also very serious after the last war? I happened then to be serving on a Committee which was dealing with the possibility of a capital levy on war taxes and the then Chancellor, Mr. Austen Chamberlain, told us how very anxious he was about the very large amount of floating debt in 1920.
    Sir H. Williams: I quite agree; and it is about twice as, much now as it was in 1920. That is what is worrying me. It is not going to be easy, and I think it is a great mistake to let the people think otherwise. They will have to carry, in debt charges, heavier burdens than were borne after the last war, and nobody will be in favour of repudiation, because the owning of the debt is now so widespread. Every person in this Chamber is about £20,000,000,000 richer than the State, because all the State has is the power to tax us—and it will be just as well to bear this in mind at the General Election.
    Mr. Ivor Thomas: Will the hon. gentleman not agree that that may be considerably altered by the result of the Election?
    Sir H. Williams: I agree that, if the other side win, it will be about £40,000,000,000, and it is one of the arguments in favour of keeping them out. Not many hon. Members will remember the occasion when the present First Lord of the Treasury introduced this hops tax. The present Prime Minister, in those days, was not so devoted to the principle of Imperial Preference as he now is, and, in introducing the hops tax, he expressed the hope that there would be no undue controversy, because those who thought that hops were food were in favour of food taxes, and those who did not think so did not believe in taxes on food, and, therefore, both would be satisfied. It is as well to remember the ingenuity with which the present Prime Minister commended this tax to the House 20 years ago.
    The next Clause in the Bill provides that inferior goods should be exempt from Purchase Tax. I do not like this very much. I think the Chancellor has inherited it from the right hon. Gentleman who was the President of the Board of Trade and who designed what are called "utility" goods. If you make utility
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    goods, they do not pay Purchase Tax. If they are designed by any of the innumerable professors at the Board of Trade—unless, in the meantime, these return to the London School of Economics—they are exempt from Purchase Tax. I had a suit made some little time ago, which was of the utility variety, so I suppose—I do not like the suit—that, as a result of the Bill passed some time ago, it was not taxable. I have another suit in process of construction, and, as it was not designed by the Board of Trade, I have to pay twice as much for it. I do not see why we should encourage the purchase of inferior goods by discriminatory taxation, and I ask the Chancellor to look into the principle involved.
    I think we are all agreed on the merits of Clause 5. Excess Profits Tax has been exceptionally burdensome. All the businesses started in a small way just before the war were growing, as was reasonably to be expected, but those people will find nearly the whole of their profits swept away by the Excess Profits Tax. The result will be that they will be unable to make even a very small provision for the expenses which they will have to incur as soon as the demand for munitions diminishes to a substantial extent, and they have to start peace-time production. I am quite satisfied that this is a real headache to many small firms. This concession will do a great deal to promote employment at a time when the provision of employment will not be so easy. I am certain that this Bill ought to go through. In the autumn, when the Chancellor brings forward a much more pretentious Bill, those hon. Members who are sitting opposite will be more chastened than they are at present, and, as a result of the lessons learned from the General Election, will be able to devote more consideration to these problems than they can give at present.
    2.56 p.m.
    Mr. Craven-Ellis: While I appreciate the importance of getting this Bill through as urgently as possible, I would ask the House to take note of one or two points in connection with it. Clause 6 provides for the annual charge for the National Debt. I think it is as well to bear in mind that this charge is just about half the amount of the Budget total of 1938. It is an indication of the kind of burdensome taxation which we

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    shall have to face when this war is over. I cannot but ask whether this country will be in a position to meet these charges without having to suffer very great hardship. I go back, for the purpose of a zero line, to 1938. At that time, the amount of national and local taxation represented 24 percent. of the national income. Taxation is now reasonably high, and I have seen nothing suggested by the Chancellor—in fact, I am disappointed in the Chancellor's statement—which offers any prospect of decreased taxation. Unless we can maintain the national income at between £8,000,000,000 and £9,000,000,000 a year, I cannot see any prospect of the period of reconstruction being kept within a reasonably short time.
    Therefore, I ask the House to consider very carefully the request of the Government for perpetual Votes of Credit, because these mean, every time, an increase of taxation. I raised this matter the other day in a Question. I asked the Chancellor what was the explanation of the Treasury Bill rate being 100 per cent. to-day in excess of what it was in 1936. The Chancellor, probably, was not free to give an explanation, but the fact remains that it is this kind of charge which is responsible for adding considerably to the permanent annual charge for the National Debt. I ask the Chancellor whether it is possible for the charge in respect of the Treasury Bill rate to be reduced.
    The right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) referred to motor taxation. I feel that the proposal put before this House a few weeks ago is not a solution of this problem. I gather from the information I receive that there never will be agreement within the industry on the basis of motor taxation. I am informed that the reason is that there are two or three very large industries manufacturing cars, and the formula which we have used for motor taxation has suited their purpose, and these great concerns have now become such a powerful vested interest that the Chancellor's hands are tied. Having regard to the position within the trade, it is the responsibility of this House to decide what is to be the method of taxation. We must decide on a formula that will enable that industry to expand, on a basis which will give us an increased home trade, as well as a motor car which will be serviceable
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    and useful in any world market. If we wait for the trade to arrive at an agreement, I am afraid we shall lose our trade as far as export is concerned.
    Finally, my hon. Friend the Member for South Croydon (Sir H. Williams) referred to the overseas debt of £3,000,000,000. I do not take the gloomy view he has taken of that matter because, as long as we are not forced to accept the Bretton Woods proposal, that overseas debt can be converted into short term loans of 1½ per cent. to 2½ per cent. and can be used within the sterling area for the purposes of expanding export trade. That amount of money which is now owing to India and other countries represents generally what the Ottawa Agreement set out to do, and that was to provide a volume of international money. The amount of international money which the £3,000,000,000 or £4,000,000,000 represents is something very considerably higher than it was ever expected could be carried, at the time of the Ottawa Agreement.
    Sir H. Williams: Supposing a gentleman in India wants £50,000,000 worth of goods from this country and is going to finance it out of credit, somebody has to find the £50,000,000.
    Mr. Craven-Ellis: I agree, but the £50,000,000 to which my hon. Friend refers would come from the profits arising out of the turnover in industry which it is possible for this £3,000,000,000 to bring about. At the present time, to take the course to which my hon. Friend has referred, the £3,000,000,000 becomes an absolute dead weight, and if we are forced to accept the Bretton Woods proposal, the position will be that this country will have to create very heavy loans in the United States of America. That would be disastrous not only to British trade, but to world trade. On that point I ask the House to be very careful in deciding what we do with regard to the Bretton Woods proposal when it comes forward. I strongly advise that we should remain on the sterling standard. It is the only basis on which we can carry out our international trade, and hope to make the liability into an asset to our country and to the sterling area.
    3.4 p.m.
    Mr. Ernest Bevin: I want to express my regret that the question of motor taxation has been

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    dropped. Any Government that may be elected must face the problem of this very important trade in the reconstruction period, and I agree with the hon. Member for Southampton (Mr. Craven-Ellis), that this matter has been prejudiced by the very favoured position of one or two groups in the motor-car industry. I ask the House why we should perpetuate the misery of any artisan or member of the lower-paid middle class having to ride in a car with his knees in his mouth. If he were my weight, he could not get under some of the cars. When I entered the Government, I happened to come in as Minister of Labour, and I found that the Treasury had all motor cars graded, and I was allowed a Morris 10. I said to the then Chancellor that if I could not get a bigger car, I would ask him to purchase a shoe-horn to enable me to get into it. The business of this miserably-designed car, which has enabled certain of the groups to contribute millions to charity, has prejudiced British industry. I carefully estimated that if this thing were revised and put on a proper basis, as I have submitted to the Chancellor over and over again, nearly another 500,000 people would be permanently employed in the motor-car industry of this country. My suggestions have always included a block tax.
    I admit that, with the revenue as it is—and I make a present of this point to the Chancellor, as I have always done—and with the war debt and the cost of the war, the right hon. Gentleman cannot in totality reduce the revenue. But it is a question of adjusting or revising, in order to achieve the greatest object. Therefore, I have taken the view that the one thing to aim at is a greater measure of standardisation. In the United States of America you can roll sheets 12 months on end without changing the roll. In this country you cannot roll more than a week because of the idiosyncrasies of the motor-car manufacturers. The result is that the cost of a motor car in the United States of America, per pound weight—at three times the wages—is 9d. a lb. on 1938 prices. In this country it is 1s. 4d. That is private enterprise in Britain.
    Sir Irving Albery: The same year?
    Mr. Bevin: The same year, 1938.
    Mr. Craven-Ellis: It is private enterprise in America, of course.
    Mr. Bevin: Yes, but it is private enterprise with a difference.
    Sir H. Williams: It is restricted by the State.
    Mr. Bevin: It is restricted by the State in this country. It has been designed in order to meet certain types of motor-car manufacture. We have given the McKenna Duties of 33⅓ per cent. which, in my opinion, is all they need. If anyone cannot manufacture within the 33⅓ per cent. duty, then he is inefficient. But to that we add a motor-car tax which has been far worse than the 33⅓ per cent. It has resulted in the manufacture of a car that we cannot export, and they have openly said to me when I have discussed it with them, "If we go in for the export trade, we endanger the home market." I claim that the motor-car industry has to make its contribution to the 50 per cent. increase in exports like every other industry in this country. That will not be disputed by anybody.
    My suggestion to them has been, over and over again, that they should agree to one tax up to 14.9 horse power. Whether it is measured in cubic feet capacity or in some other way, it would produce the same result. The result would be that, in this country, you would still have the home market but you would get a family car. Why do we make a car in this country in which only two people of normal size can ride on the back seat? [An Hon. Member: "Normal."] I was very careful to say normal. I think I am a man with a big future, but in any case I want a good family car in which the family can drive comfortably, and which would be better for driving, better for safety, and better for manipulation. Secondly, why have we always laid down that in working men's houses, such as Ministry of Health housing estates, you must not have a garage? Why should this class distinction be drawn, that I can have a garage at my house, but, if I live on a housing estate, I must not have a garage unless I put it up surreptitiously?
    Sir H. Williams: That is a municipal stipulation.
    Mr. Bevin: Yes, but it was laid down by this House under the last Government by the party opposite, when they passed

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    the Housing Acts which restricted the municipalities from doing the decent thing.
    When you get beyond the 14.9 you reach the bigger car of the export trade, and I would jump straight to the 26 h.p. or the 30 h.p. I do not believe that going up one horse power at a time is advantageous to the British motor car industry, and I do not think that one millionaire is sufficient compensation for the loss of the export trade. May I put another side? When we entered the war we found that the management of the motor-car trade was one of the most disastrous in the country. Will my friends from Birmingham admit to me that the pressure of cut prices drove the drop-forging trade almost to disaster? When this war broke out, the motor-car manufacturers, by playing off one little drop-forging maker against the other, in spite of the profits they were making, made it almost impossible for us to find the drop-forgings for the aircraft industry.
    There is nothing that is a more natural concomitant of defence than the motor-car industry. It is almost bound up with the need that arises if we get into trouble, yet I suggest that that industry never once considered what I call real national service, and its contribution to the State. All they were concerned about was this enormous profit over small cars. If the matter cannot be dealt with in this Bill, then I quite agree with my hon. Friend the Member for Southampton that it ought not to be left to them any longer. We ought to take the whole motor-car industry right from the component, the drop-forging, through to the car itself, and lay down a system of taxation and organisation so that not only have you a profitable export trade, a decent home market but, in addition, you have, as a result of your commercial enterprise, a good line of defence if you get into trouble.
    One last word about Bretton Woods. I have never been finally convinced about Bretton Woods. I take the line, and my Party takes the line, that, neither directly nor indirectly, will we again be anchored to gold in any circumstances. The export trade of this country carried about 1,750,000people. There are over 14,000,000 people employed in the home trade. I shall never be a party to any international agreement which, either as a result of the fluctuation of exchange,
    582
    speculation, or international action of that kind—which is not always of the highest moral standard—would prevent me from insulating the home market from the violent repercussions which will break down the home price level when these wide fluctuations take place on the international price level. However, I will join with anyone in finding a rational basis for an international price level, properly organised, provided it does not reflect itself in depressing the standard of life on the home market. As yet, neither the Chancellor nor Lord Keynes has ever been able to persuade me that there are sufficient safeguards in the Bretton Woods proposals to achieve that object.
    3.17 p.m.
    Captain Gammans: I do not want to follow the right hon. Gentleman the Member for Central Wands worth (Mr. E. Bevin) into a discussion on Bretton Woods. I have never been able to see that the Bretton Woods proposals in themselves would do very much to increase the volume of international trade; to me they seem rather like taking a man who is on his way to the bankruptcy court into a "pub" and giving him a drink and a "pep" talk, instead of taking him straight to the court.
    I would like to deal with a point raised by one or two speakers in this Debate in regard to motor-car duties. I do not know that I altogether agree with my right hon. Friend that a country must necessarily have a motor-car trade before it can build up a munitions industry.
    Mr. Bevin: I did not say that.
    Captain Gammans: That was certainly not the case with regard to Germany. Also, I do not go all the way with him in his denunciation of the motor car manufacturers, because I know for certain that at least two of them are bitterly opposed to the amended proposals which the Chancellor of the Exchequer brought forward a little time ago. However, the point I want to make is this. I am very glad that in this Finance Bill the Chancellor of the Exchequer has omitted the original proposals to substitute a cubic capacity tax for the old horse-power tax because, in fact, it was the horse-power tax under another name.
    I do not think anybody could have been quite happy about the motor car trade even before the war. We were producing

    583
    a car which was inferior, in many ways, to the American car, and for what we were getting for our money it was immeasurably more expensive. As the right hon. Gentleman pointed out, one of the great points of difference between this country and the United States was that, over there, many more of the artisan section of the community were able to afford a motor car than was possible in this country, and one only had to see them outside the big works in Pittsburg, or Detroit, or elsewhere, to realise what a very large percentage of the American working men went to work in a motor car instead of, as over here, in a public vehicle. I, for one, do not want to accept a standard of inferiority in that respect as compared with the United States. I sincerely hope that after this war a motor car will not be regarded as a luxury to a small section of the community to be used on Saturday afternoons, but will be available to the community as a whole. Even before the war that was not possible, and after the war, if we keep the horse-power tax in any shape or form, I am sure that that end will not be attained.
    For 25 years the British motor industry has suffered two handicaps under the horse-power tax. First, it has meant a multiplicity of models. Many of the bigger manufacturers, before the war, turned out seven or eight models, and only two or three days ago, I saw that they proposed to continue in that way. That is absolutely fantastic. [An HON. MEMBER: "Why?"] There is no mystery about it. What they were trying to do was to make a motor car which was not based on sound principles of engineering, but was designed to dodge the Chancellor of the Exchequer. In other words, we allowed a purely arbitrary thing like taxation to determine our engineering policy, which is as unsound and illogical as the old window tax. The second handicap from which the trade has suffered is that it was necessary for us to make a special model for export.
    When I was in the West Indies, about this time last year, I asked, in every island I visited, what were the prospects of an increase in the number of motor cars after the war from this country, even with the Imperial preference which the West Indies give us. One of their importers took me along to his garage and showed me two cars, one of 12 horse-
    584
    power, a British car, and the other of 30 horse-power, of American make. He said, "Both are the same price, so which would you have?" If you had to choose, there was no question about which you would have. One was a proper motor car, designed to meet conditions which prevail in that part of the world, with hills and not particularly good roads; the other a little bucket affair designed merely to dodge the Chancellor of the Exchequer in this country. That is the condition which prevailed before the war, and if we perpetuate the horse-power tax after the war in any shape or form that condition will continue. I thought the Chancellor made a fair offer to the motor industry. He said, "I have to get a certain amount of money from you, and I do not much mind how I get it." But he also said, "If we are to change our basis of taxation I hope it will be in a way which will increase our export trade in motor cars." I want to tell my right hon. Friend that he will not attain that end if he perpetuates the horse-power tax in any shape or form. What are the alternatives? I believe—
    Mr. Speaker: I am afraid I did not realise in the early part of this discussion what implications would be involved, but I must now point out that it is out of Order to discuss motor taxation in full detail because it is a matter which is not dealt with by the Bill and therefore not relevant in detail.
    Captain Gammans: Then may I conclude by saying that I am glad that my right hon. Friend has excluded his original proposals from this Bill. I hope that between now and the time when the new Bill comes along in the autumn he will reconsider the whole question of devising a car tax, which will assist the export trade.
    3.25 p.m.
    The Financial Secretary to the Treasury (Mr. Peake): I think I should reply briefly to one or two points which have been raised in this Debate although I understand, Mr. Speaker, that the Ruling you have just given prevents me from replying to the major part of this afternoon's discussion. First, I should like to thank my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) for his speech, and for his statement that the Government's

    585
    pledges in regard to war gratuities being exempted from tax will, in his view, undoubtedly be honoured by any Government which is returned at the General Election. I should also like to thank him for accepting the Clause in regard to the alteration in the Excess Profits Tax standard for small traders. I am sure that my right hon. Friend is right in saying that E.P.T. does bear very hardly upon the small and growing businesses which we need so badly in this country at the present time. I should also like to thank my hon. and gallant Friend the Member for East Lewisham (Sir A. Pownall)—no, I will not thank him because he is no longer in his place, but he did pay a tribute to the Treasury. My hon. Friend the Member for South Croydon (Sir H. Williams) has also gone, I see, and I think I had better leave him out of the picture, too.
    Mr. A. Bevan: Why should we be denied the nice things which the right hon. Gentleman intended to say about him?
    Mr. Peake: Very well then, I will make my observations. My hon. Friend fell into an error in assuming that the sterling debts overseas, commonly described as sterling balances, were an addition to the gross figure of the National Debt. They are, of course, largely included in the National Debt, and do not then form an additional liability. My hon. Friend then went on to take some exception to the Clause in the Bill which deals with the extension of utility marks by the Board of Trade. I would only point out that this Clause does not in any way weaken the control of this House over changes in the rates of Purchase Tax. In the course of the last few weeks quite a number of Motions for affirmative Resolutions have appeared on the Order Paper in my name, relating to such things as mattresses containing steel springs and aluminium hollowware, and I can assure my hon. Friend that similar Motions will continue to appear on the Order Paper, whoever the next Financial Secretary to the Treasury may be.
    My right hon. Friend who spoke from the Front Opposition Bench and who is, I think, the Member for Central Wandsworth (Mr. Bevin)—I am not sure because I have rarely heard him described by reference to his constituency—touched
    586
    on the Bretton Woods Agreement. We have been careful on all sides of the House, hitherto, to avoid a full-dress Debate upon Bretton Woods. No doubt that is a subject which will be raised early in the new Parliament. However, we have taken note of what he has said and my only word would be one of advice to hon. Members generally to keep off this topic on the public platform during the Election, because it is one which lends itself to a good deal of misunderstanding. There is, as my right hon. Friend the Chancellor said, very little in the Bill; there is nothing which is controversial, as I think is shown by the fact that all the speeches which have been made upon it have been devoted to a subject to which you, Mr. Speaker, have forbidden me to reply.
    Question put, and agreed to.
    Bill accordingly read a Second time.
    Bill committed to a Committee of the Whole House, for To-morrow.—[Mr. Cary.]

    INCOME TAX BILL
    As amended, considered.
    CLAUSE 3.—(Balancing allowances and balancing charges.)
    3.30 p.m.
    Sir Arnold Gridley: I beg to move, in page 5, line 32, at end, insert:
    "(6) Notwithstanding anything in the preceding provisions of this Section no balancing allowance or balancing charge shall be made to or on any person by reason of the sale or transfer of the relevant interest in any building or structure if such sale or transfer is made as part of or in connection with a transaction which involves the sale or transfer of the trade or undertaking for the purposes of which such building or structure is being used or of any part of that trade or undertaking which is capable of being carried on as a going concern and either—

    (a) the trade or undertaking the whole or part of winch is sold or transferred is a statutory undertaking within the meaning of Sub-section (7) of Section thirteen of the Town and Country Planning Act, 1944, and either—

    (i) the sale or transfer is made to a purchaser or transferee who has power under provisions enacted or authorised by Parliament to acquire compulsorily the trade or undertaking or part thereof; or

    (ii) the deed or other instrument of transfer is approved by a Government Department in the United Kingdom; or

    (b) the sale or transfer is made by one company with limited liability to another such company and either—

    587

    (i) one of the companies owns not less than 90 per cent. of the issued share capital of the other company either directly or through another company or other companies with limited liability, or

    (ii) not less than 90 per cent. of the issued share capital of each of the companies is owned by a third company with limited liability either directly or through another company or other companies with limited liability."

    I wish to ask your guidance, Mr. Speaker, on whether, while I am addressing my remarks to this Amendment, it would be in Order to refer at the same time to an Amendment in my name to Clause 14 which is in precisely the same terms.
    Mr. Speaker: I have decided not to call the second Amendment, so I think the hon. Member might refer to it.
    Sir A. Gridley: The House will remember that during the Committee stage I submitted an Amendment which was on somewhat similar lines to the one we are now considering but which I recognise was, in the circumstances, probably too widely drawn. I tried to make a case for such a proposal, narrowed down to the cases of public utility undertakings purchasable under Statute and to other sales which might take place on prescribed terms. The Chancellor of the Exchequer was good enough to say then that he thought there was a special case relating to this type of undertaking, and while I agree that he in no way committed himself he did promise to look into the matter again. I had hoped in the intervening period to see Amendments put upon the Order Paper or to have an opportunity, which has recently been afforded me, of a short discussion on this particular point.
    I do not know what view the Chancellor will take to-day upon these Amendments, but in justification of them I must point out that there is a very large number of electricity supply undertakings which, but for the war, would probably, ere now, have been purchased by local authorities. Their purchase by agreement has been deferred, but the purchase rights remain and may still be exercisable after the war. The undertakings are purchasable on terms prescribed by Parliament, which decided that they must be sold on the then value, and the then value immediately after the war, or whenever the permission
    588
    to revive these purchase powers is granted, may show a large or small capital appreciation—one cannot say until the valuations are made. But I do not think it is right that a balancing charge should apply, as it may unless this Amendment is accepted, in the case of undertakings which are saleable under terms prescribed by Parliament.
    Then there is this point, upon which I venture respectfully to suggest that very few Members are really well informed. There is no industry of which I have experience, in which the capital expenditure bears so high a proportion to the annual turnover, as the industry of electricity supply. If an undertaking has laid out £1,000,000 in capital expenditure it is fortunate if the total gross income which it obtains from consumers as a result of that expenditure is more than between £150,000 and £200,000 a year. In other words, it takes five or six years' annual income to equal the capital expenditure. Therefore, a balancing charge in the case of an undertaking whose capital bears such a very high relation to the annual income is much more serious than in the case of more normal businesses. Income Tax at 10s. in the £, as it is to-day, is also a very much more serious matter for undertakings that would be sold, perhaps, during the next two or three years than it was in the case of undertakings which were purchasable when Income Tax was only 5s. or 6s. 6d. in the £.
    We do not know what legislation will be brought before Parliament in the near future dealing with this industry. We all know that, splendidly as electricity undertakings have performed their duties, there are possibilities of improvement in organisation in various ways. I think it is generally agreed that far too many separate undertakings are operating today, and that in the near future steps should be taken to reduce that number by combinations or groupings. Human nature being what it is, we should all agree, I think, that that can be done more rapidly and much more pleasantly by voluntary agreements than by compulsion, and I do not want this House to take any steps in this Bill which will frustrate the objectives which many of us with experience in these matters are keeping rightly in view, and that is combinations by voluntary means.
    There is another point which I would ask the House to note. If a sale is con-

    589
    templated the undertaking which is selling its property can adopt one of two methods. It can sell its shares for shares in the purchasing undertaking or it can take cash. If a balancing charge is to apply then I think a share deal will result, and there will be one unfortunate consequence of that. It will mean that the selling company which exchanges its shares for shares in the purchasing company will still remain in existence; it will have a corpus; it will have to present annual accounts and have them audited; and we shall thus be perpetuating a large number of concerns which ought to be wound up. That is a point which I think the Chancellor will have to meet. There may be great injustice to municipalities if they are called upon to part with their undertakings, because they have not a share capital construction as companies have, and if they are called upon to sell, they will, presumably, part with their assets for cash, and they may attract a balancing charge, which I think would be an injustice.
    This is, I agree, a very complicated Amendment. It is by no means an easy one to explain and perhaps I myself do not really understand it as thoroughly as I ought to. But I have given the Treasury four or five days in which to consider these Amendments, which I sent to them before they appeared on the Order Paper, and I hope the Chancellor, with his experts, has been able to consider the statements which I have presented for their consideration, and that to-day I shall hear that he is prepared to accept these Amendments, which deal both with buildings and plant and machinery, and, if not, that he will hold out some hope that in the near future, possibly by another Bill, he will be prepared to meet what is admittedly a difficult situation.
    Mr. David Eccles: I beg to second the Amendment.
    I confess that I have only seen this Amendment to-day, but the point that strikes me in connection with it is this. If two companies have a share capital like the two great cable companies which have so recently amalgamated, no balancing charge can arise, but a utility undertaking, in the terms of the Statute governing that undertaking, must, when its assets are transferred, sell as an undertaking. Then a balancing charge is
    590
    attracted, and it is really not fair to make this distinction against a concern which has not share capital. Anyone interested in bringing electricity to the rural areas must hope for amalgamations as soon as they can be carried out, and it is certain that if a large financial obstacle is placed in the way, such amalgamations will be less likely in the near future.
    3.45 p.m.
    The Chancellor of the Exchequer (Sir John Anderson): The subject-matter of this Amendment is complicated and technical, but I shall endeavour to put the case as it appears to me as simply as possible. As I understand it there are two quite separate issues, both of which, as my hon. Friend the Member for Stockport (Sir A. Gridley) said, were raised in Committee. They were raised in Committee at comparatively short notice, and I said that I would consider the remarks of my hon. Friend to see whether, on more mature consideration, I thought there was a case for some alteration in the scheme of this Bill in regard to the two really separate matters that were raised. The first matter concerns transactions between associated concerns and the case that was put to me was that such transactions should not be treated on exactly the same footing as transactions by way of sale of plant or machinery between concerns which were quite separate. I think my hon. Friend will recognise that the Amendment which I have on the Paper does go a very long way to meet the case that was put forward; in fact, I think it is somewhat more favourable, in one respect at any rate, than his own proposal, because it deals with, all cases where there is a majority interest, and not merely with cases where there is a 90 per cent. or greater interest, as is proposed in the Amendment. I do not think I need say anything more about that part of my hon. Friend's proposition.
    The other part of his proposal raises a question which I said I would look into. The question is this. Do the circumstances of compulsory acquisition of assets create a case for exceptional treatment as compared with voluntary acquisition? That, briefly, is the substance of the matter. I have considered my hon. Friend's representations, I hope he will believe, very carefully and sympathetically. I am sorry to say that I cannot see that a case has

    591
    been made out for the exceptional treatment for which he asks; in other words, I cannot regard compulsory acquisition as creating a situation calling for different treatment from that which would be given, according to the scheme of the Bill, to precisely the same transaction carried out on a voluntary basis.
    My hon. Friend naturally devoted his remarks in the main to the position of electricity undertakings; although the Amendment would cover every form of compulsory acquisition. What is the position in regard to those electricity undertakings, to which I propose to devote my remarks? Those undertakings have been allowed to engage in business under a licence, an essential provision of which was that they were under the liability of being taken over compulsorily in certain specified circumstances. There is nothing in the law governing compulsory acquisition from which it could be inferred that such a provision as we are proposing now to introduce could properly be regarded as a breach of a statutory undertaking or a statutory understanding. Nothing of the kind. That is what I was looking for, and I found nothing of the kind. I can see only a transaction the financial effect of which is exactly the same as would be the case with a similar transaction voluntarily entered into. If we accept that the purpose of this Bill is to write off capital expenditure incurred in earning profits—and inasmuch as the rate at which the expenditure is written off must inevitably be more or less arbitrary, it is an empirical rate—we have, therefore, to introduce, in order to avoid inequalities and injustices, the conception of a balancing charge, or a balancing allowance, the two being co-relative, for the purpose of correcting, in the light of ascertained facts, the operation of the empirical allowance which is given year by year after the initial allowance. That is the purpose of it.
    If that principle is accepted, it seems to me that it is applicable in just the same way to the case of compulsory acquisition as to the case of voluntary acquisition. After all, it may be bad luck—I will not seek to deny it—that transactions may come along in the near future in respect of assets which have perhaps temporarily an enhanced value and that enhanced value on realisation will attract taxation; but it may at other times be the other wav round, and assets may be aquired
    592
    compulsorily at a rate considerably below the written down value—because the current market value is the basis—and in that case, of course, there would rightly be a balancing allowance. If the point were pressed, I think one would be justified in asking oneself, why should an undertaking, which from its very inception was subject to the liability of compulsory acquisition, be put in a position when it goes out of business—when the contingency contemplated at the outset actually arises—to go away with a substantial profit due to an enhancement in values without making its due contribution in the way of taxation according to the general scheme of the Bill? Therefore, for these reasons, which I hope I have explained adequately, I do not feel it is possible, at any rate as I am at present advised, to accept this proposal, and I hope my hon. Friend will not press it.
    As regards the point made by my hon. Friend the Member for Stockport, the point about the purchase of shares as an alternative to the purchase of assets, I am not quite sure I followed him. I was under the impression that where an electricity undertaking is acquired by a public authority, the transaction has to take the form of an acquisition of the assets. That, I think, is not really relevant to the case I am seeking to make against the Amendment, and I do not propose to pursue the matter further.
    Mr. Ede: I agree generally with the proposition that the Chancellor of the Exchequer has advanced, but I would point out to him that the matter is exceedingly complicated by the exact point in time that we have reached with regard to the development of the electricity supply industry. Under the principal Act which governs this matter, where a local authority allowed its Order to be developed by a company, the purchase rights mature 45 years after the date on which the transfers took place. That means that during the war there have matured all the Orders that were granted between 1895 and 1900, or thereabouts. That period was a very active time in the promotion of these Orders, with the result that a very large number of them have matured during the war, and a considerable number will mature during the next few years. The matter is already terribly complicated owing to the fact that the House, in 1888, decided that this service should be originated and conducted on a

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    parochial basis. Since that time there have been so many readjustments of local government boundaries, and the development of electricity has gone so much beyond the confines of mere parish boundaries, that the problem of compulsory purchase is now very complicated.
    I speak with some feeling on the matter because an authority of which I was chairman, the London and Home Counties Joint Electricity Board, carried through more compulsory purchases, I believe,—the number was six—in the period immediately before the war than any other undertaking in the country, and, therefore, I have had some experience in the witness chair and elsewhere of having to deal with the complications that existed before the war. I tremble to think how any witness is to be able to give reasonably truthful answers on the whole of the detailed propositions that will be put to him in the near future when he will be confronted with the old complications, plus the complications of postponement of purchase, plus the complications that are dealt with in the Amendment. I was hoping that we might have had some indication from the Chancellor of the Exchequer that when the electricity supply industry comes up for consideration, as it must do in the very near future, the whole of these complications will be borne in mind when the legislation is discussed, including the kind of complications with which the hon. Member for Stockport (Sir A. Gridley) is dealing in the Amendment. I think the hon. Member, in depicting the serious plight of the municipalities, went a little beyond what could really be based upon this Amendment; personally, I am not nearly so frightened about what will be the effect upon municipal management as he appeared to be. But the whole subject has become so complicated that this additional complication is only an added reason for some early settlement being reached as to what the future organisation of the electricity supply industry is to be.
    Sir A. Gridley: I am bound to say that I am bitterly disappointed the Chancellor has shown no inclination to meet me in this matter. I am reinforced in my remarks because I have support from my right hon. Friend the Member for South Shields (Mr. Ede) who, I know, has had
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    many years' experience in assisting in the management of an important section of the industry in and around this great Metropolis. If we are to allow this Clause to go through—
    Mr. Speaker: The hon. Member may not make a speech in withdrawing the Amendment.
    Sir A. Gridley: I was about to beg to ask leave to withdraw the Amendment, but I am not unhopeful that the Chancellor will think again about this matter, and, if he does, I think he will see that there would be some advantage in what I am trying to secure.
    Amendment, by leave, withdrawn.
    CLAUSE 8.—(Definition of "industrial building or structure.")
    Mr. Hynd: I beg to move, in page 11, line 44, after "structure," insert:
    "used for the purpose of the repair of motor vehicles; or."
    The general principle, with the details of which this Amendment deals, was discussed on a much wider basis on the Committee stage, but as far as the motor repair trade is concerned, I think some further consideration ought to be given to the proposition. On the Committee stage the Chancellor informed us that the general basis of the concession in Part I is in line with the derating arrangements. That is an arbitrary line. I believe the purpose of the concession is to encourage the development of the industries concerned for the purpose of enabling them to make up for lost time and get into their stride after the war. In the motor repair trade, the repair shops, which are an essential part of the trade, are not given the same concession as is applied to the repair shops of the big industrial concerns. I think no one will deny that during the war the motor trade repair works have played a considerable part, and that, compared with other industries, they are in no less need of all the encouragement that can be given to enable them to get on with the tremendous amount of post-war work. I do not propose to argue the case at any length, because the general principle was fairly well discussed, and I think it is understood by the whole House. I hope the Chancellor will give some consideration to this section of the trade in the application of the concession.
    Mr. Deputy-Speaker (Mr. Charles Williams): As there is no seconder, I call on the right hon. Gentleman who is to move the next Amendment.
    4.0 p.m.
    The Financial Secretary to the Treasury (Mr. Peake): I beg to move, in page 11, line 45, after" at," insert "or in connection with the working of."
    This is little more than a drafting Amendment to meet a point raised by my hon. Friend the Member for Chippenham (Mr. Eccles) in Committee. I do not think the House will require an explanation of a matter which is extremely technical in its character.
    Amendment agreed to.
    CLAUSE 21.—(Expenditure on alterations to buildings in connection with the installation of machinery or plant.)
    The Attorney-General (Sir David Maxwell Fyfe): I beg to move, in page 24, line 3, leave out "in connection with," and insert "incidental to."
    The object of this and the next Amendment—in line 4, leave out from "trade," to "the" in line 6—is to redefine the scope of the Chancellor's new provision, now Clause 21, which enables certain building alterations to rank for allowance as though they were part of the plant or machinery in connection with the installation. We discussed the matter and the examples are well known to the House. The sort of example that we had in mind was air-conditioning plant and the putting-in of double windows in order to have the plant in a proper situation.
    Sir John Mellor: I thank the Attorney-General for these Amendments, especially the second, but I should like him to explain the distinction between the expressions "in connection with" and "incidental to." It seems to me a rather fine distinction and I am not quite sure how it will work out in practice.
    The Attorney-General: "In connection with" has a wider connotation. "Incidental to" denotes rather than connotes an ancillary process dependent on another. It is not too narrow. That is the general distinction, and the example that I gave is a good one of something which is really incidental, that is, putting in a refrigerating plant, and where you have to have a certain type of window. It is easier for a tribunal or for
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    anyone who has to consider the matter to determine that something is incidental, whereas the words "in connection with" have a wider connotation, and my right hon. Friend did not feel that he could go as far as that. I think it will cover, as it is designed to cover, all the examples that were quoted and generally approved as being necessary in this connection.
    Amendment agreed to.
    Further Amendment made: In page 24, line 4, leave out from "trade", to "the", in line 6.—[The Attorney-General.]
    CLAUSE 25.—(Expenditure to which Part III applies.)
    4.5 p.m.
    Mr. Peake: I beg to move, in page 26, line 3, after "building," insert:
    "where the whole of the building was."
    The object of this and the following Amendment is to make it clear that, if an office of a mine or oil well is part of a building or structure the rest of which qualifies for allowance, and the office part represents not more than a tenth of the whole, it will not be excluded from allowance under Part III of the Bill.
    Mr. Eccles: I thank my right hon. Friend for these Amendments, but I should like to ask what happens if an office has a welfare room, though it was not constructed originally for that purpose. Would an apportionment be made?
    Mr. Peake: I should rather think that the test for tax purposes is the user of the premises and not the purpose for which they were constructed, but I should hesitate to lay down the law on a point of that character.
    Amendment agreed to.
    Further Amendment made: In page 26, line 4, at end, insert:
    "(vii) any expenditure on so much of a building or structure as was constructed for use as an office, unless the capital expenditure on the construction of the part of the building or structure constructed for use as an office was not more than one-tenth of the capital expenditure incurred on the construction of the whole of the building or structure."—[Mr. Peake.]
    CLAUSE 30.—(Regulations.)
    Amendments made: In page 30, line 34, after "potential," insert "future."
    In line 34, leave out "the purposes of any such provision," and insert "any of those purposes."—[Sir J. Anderson.]
    CLAUSE 43.—(Interpretation of Part V, etc.)
    Amendment made: In page 42, line 37, after "Provided," insert. "that."—[The Attorney-General.]
    CLAUSE 49.—(Valuation.)
    Amendment made: In page 46, line 4, after the second "the," insert "net."—[The Attorney-General.]
    CLAUSE 55.—(Manner of charging tax and granting of allowances in case of traders.)
    Mr. Peake: I beg to move, in page 48, line 45, at end, insert:
    "(2) If, in the case of a trade which consists of or includes the working of a mine, oil well or other source of mineral deposits—

    (a) a balancing allowance falls to be made under Part I of this Act for the last year of assessment during which the trade is carried on;

    (b) the event giving rise to the allowance is the mine, oil well or other source ceasing, to be worked or the coming to an end of a foreign concession;

    (c) the allowance is in respect of expenditure on a building or structure which was constructed for occupation by, or for the welfare of, persons employed at, or in connection with the working of, the mine, oil well or other source; and

    (d) full effect cannot be given to the allowance because of an insufficiency of profits or gains for the said year of assessment,

    the person entitled to the allowance may claim that the balance of the allowance may be given for the last preceding year of assessment, and so on for other preceding years, so however that no allowance shall be given by virtue of this subsection for any year earlier than the fifth year before the first mentioned year of assessment."
    This Amendment meets a point raised by my hon. Friend the Member for Chippenham (Mr. Eccles) in Committee, and it provides that balancing allowances in certain cases where a mine or oil well comes to an end may be spread back over the six years preceding the conclusion of operations at the mine or well in question.
    Amendment agreed to.
    CLAUSE 59.—(Special provisions as to certain sales.)
    Amendments made: In page 52, line 31, leave out
    "provisions of the next succeeding Sub-section," and insert:
    "succeeding provisions of this Section."
    In line 39, at beginning, insert:
    "subject to the provisions of the next succeeding Sub-section."—[Sir J. Anderson.)
    Mr. Peake: I beg to move, in page 53, line 5, at end, insert:
    "Provided also that where the sale is one to which paragraph (a) of Sub-section (1) of this Section applies and took place before the appointed day and the seller acquired the machinery or plant on or after the sixth day of April, nineteen hundred and forty-four, paragraph (a) of this Sub-section shall not apply."
    This and the following Amendment provide that in the case of transactions between associated companies balancing charges shall not be made in respect of what are in fact simply book transactions—transfers from one pocket of the concern to another.
    Amendment agreed to.
    Further Amendment made: In page 53, line 16, at end, insert:
    "(4) Where the sale is one to which paragraph (a) of Sub-section (1) of this Section applies and paragraph (b) of that Sub-section does not apply, and the parties to the sale by notice in writing to the surveyor so elect, the following provisions shall have effect:

    (a) Sub-section (2) of this Section shall have effect as if for the reference to the price which the property would have fetched if sold in the open market there were substituted a reference to that price or to the sum hereinafter mentioned, whichever is the lower;

    (b) paragraph (b) of Sub-section (3) shall not apply; and

    (c) notwithstanding anything in the preceding provisions of this Section, such balancing charge, if any, shall be made on the buyer on any event occurring after the date of the sale as would have fallen to be made on the seller if the seller had continued to own the property and had done all such things and been allowed all such allowances or deductions in connection therewith as were done by or allowed to the buyer.

    The said sum is—

    (i) in the case of an industrial building or structure, the residue of the expenditure on the construction of that building or structure immediately before the sale, computed in accordance with the provisions of Section four of this Act;

    (ii) in the case of machinery or plant, the amount of the expenditure on the provision thereof still unallowed immediately before the sale, computed in accordance with the provisions of Section nineteen of this Act;

    (iii) in the case of assets representing the expenditure to which Part III of this Act applies, the residue of the expenditure attributable to those assets immediately before the sale computed in accordance with the provisions of the said Part III; and

    (iv) in the case of patent rights, the amount of any capital expenditure on the acquisition thereof remaining unallowed computed in accordance with the provisions of Section thirty-six of this Act:

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    Provided that in computing the said sum in the case of any buildings, machinery or plant, any sums provisionally allowed under Sub-section (2) of Section nineteen of the Finance Act, 1941 (which relates to exceptional depreciation allowances) shall be left out of account."—[Mr. Peake.]
    CLAUSE 68.—(Other provisions as to interpretation.)
    Amendments made: In page 59, line 8, after the second "farm," insert "or forestry."
    In line 11, after the second "farm," insert "or forestry."—[Sir J. Anderson.]
    Motion made, and Question proposed, "That the Bill be now read the Third time."
    4.13 p.m.
    Mr. Eccles: I should like to thank the Chancellor for this Bill, which will be a very useful one. I am specially familiar with the parts dealing with agriculture and mining, and both of those sections will be of real help. I should like to ask my right hon. Friend whether under Clause 30, when the Regulations are made and the rules laid down which will govern the treatment of the mining industry, representatives of the industry will be given the fullest possible chance to discuss with his advisers what those Regulations shall be. It will be very hard to make Regulations which will fit every kind of mine. I am sure that the representatives of the industry, if they are given a chance to discuss them, will do so with pleasure and with profit to the Treasury.
    4.14 p.m.
    Mr. Pethick-Lawrence: I am very glad that in the massacre of the innocents this ewe lamb has escaped the general slaughter. I think that the Chancellor's concessions, which will not probably cost a great deal in terms of to-day's figures, will be of some benefit to the further enlargement of industry. I hope they will have a substantial effect in that direction. We shall watch the results with anticipation. We on this side wish the Bill well and hope that, when it comes into operation, it will promote prosperity and will prove as useful as its authors hope it will be.
    4.15 p.m.
    Sir J. Anderson: In regard to the point raised by my hon. Friend the Member for
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    Chippenham (Mr. Eccles), I readily undertake that there shall be consultations with those concerned before the Regulations under Clause 30 come into effect. I am grateful to my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) for his observations on this Bill, which has been described, not, I think, quite accurately, as a modest attempt to do something for industry. I thought, and I still think, that it was rather an ambitious attempt. It broke new ground, and I think it will be really helpful to industry, not merely by what it contains, but as an encouragement by indicating that it is the desire of the Government, in a regime of inevitably heavy taxation, to pay due regard to the effect of taxation upon productive industry. I am grateful to hon. Members in all quarters of the House for the manner in which they have facilitated the passage of the Bill.
    Question put, and agreed to.
    Bill accordingly read the Third time, and passed.

    DISTRIBUTION OF INDUSTRY BILL
    As amended (in the Standing Committee), considered.
    NEW CLAUSE.—(Buildings erected under ss. 1 and 5 to comply with planning schemes.)
    The Board of Trade shall not erect any building or carry out any work in pursuance of Section one or five of this Act so as to contravene the provisions of any scheme in force under the Town and Country Planning Act, 1932, the Town and Country Planning (Scotland) Act, 1932, or any enactment repealed by either of those Acts or by any enactment thereby repealed.—[Mr. Lyttelton.]
    Brought up, and read the First time.
    4.17 p.m.
    The President of the Board of Trade (Mr. Lyttelton): I beg to move, "That the Clause be read a Second time."
    This new Clause is introduced to carry out the undertaking given by my predecessor in Standing Committee during the Debate on an Amendment in the name of the hon. Member for Stone (Sir J. Lamb).
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.
    CLAUSE 9.—(Supplementary provisions relating to s. 8.)
    Mr. Lyttelton: I beg to move, in page 6, line 3, leave out "or extension of an industrial building."
    This and the next two Amendments are consequential on the deletion of the original Clause 9.
    Amendment agreed to.
    Further Amendments made:
    In page 6, line 17, leave out "or extension."
    In line 22, leave out "or extended."—[Mr. Lyttelton.]
    CLAUSE 14.—(Interpretation.)
    Mr. Lyttelton: I beg to move, in page 8, leave out lines 24 and 25.
    This Amendment is also consequential on the deletion of the original Clause 9.
    Amendment agreed to.

    FIRST SCHEDULE.—(Development Areas.)
    The following Amendments stood upon the Order Paper:
    In page 10, line 8, after "Lanark," insert "Linlithgow."
    In page 10, leave out lines 22 to 25.—[Mr. Mathers.]
    Mr. Mathers: May I ask whether you are proposing, Mr. Deputy-Speaker, to call the Amendments in my name?
    Mr. Deputy-Speaker (Mr. Charles Williams): It is not proposed to call these Amendments, because they would extend the scope of the Bill.
    Motion made, and Question proposed, "That the Bill be now read the Third time."—[Mr. Lyttelton.]
    4.19 p.m.
    Mr. Dalton: I would not like this Bill to pass to another place without saying a word or two on it, since I, when sitting on that side of the House, originally introduced it. Broadly speaking, the Bill has been well received by the House and, although we have in Committee upstairs eliminated one Clause, I regard what remains as being of the greatest importance and of the greatest immediate value to large sections of the community—those 6,000,000 people who live in the Development Areas as scheduled in the Bill. Had this Bill not gone forward before Parliament was dis-
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    solved, I should have regarded it as a great disaster for these industrial communities. I trust that it will now be possible for my right hon. Friend, who has come back after a short absence to the Board of Trade, and who is, therefore, so well acquainted with all the arrangements which have been made there, to allow certain plans to go forward as an administrative matter, even perhaps, in the midst of the strife of coming events. He will find those plans there, and my right hon. and gallant Friend the Parliamentary Secretary is very well acquainted with them. I hope also that he will enable certain industrial developments, for which plans had been made and which had been held up pending the obtaining of these legal powers, to go forward rapidly. They are plans with regard to factory development, trading estate development, and the like, and I trust that we shall be able to hear soon from my right hon. Friend or through other channels of publicity of progress being made in those directions.
    With regard to the Clause that has been dropped, the matter with which it dealt is not, in my mind, immediate. The fears that were felt in some quarters of the House as to the rapid and drastic application of Clause 9 were, in my view, unfounded. There was no immediate danger to any of the areas who thought that they might be restricted under the Clause. However that may be, I think it was a good bargain to get rid of opposition to the rest of the Bill by postponing consideration of that other matter until after the Election. We shall then be able to look at it with a freshness which will be enhanced by the fact that the composition of the House will be different, and, we hope, beneficially changed. We shall be able to consider it in that new setting. I thank my immediate successor at the Board of Trade and my right hon. and gallant Friend, who shared with me for over three years the burden and heat of long days and nights, for the assistance they have given in putting this Measure through. If this were the last Measure which was embarked upon by that great coalition Government, which has now been dissolved into its component parts, it would be no bad Parliamentary ending for that joint venture.
    4.24 p.m.
    Lieut.-Commander Bell: I would ask for that indulgence which the

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    House customarily shows to those addressing it for the first time and which is more especially needed in my own case as one who is taking part in Debate within such a short interval of being introduced into the House, but apart from the rate at which we in this House live, or perhaps I should say die, in these days, I am particularly anxious to have this opportunity to speak upon a Measure which is not only a Measure of great national importance, but one which closely affects the constituency which I represent and, indeed, the whole area in which it is situated. We in those areas, which were originally called "Depressed" Areas, then "Special" Areas and now "Development" Areas, are beginning to feel a little depressed again, because we have been promised this Bill for a long time and we were looking forward to great things from it. We were very grateful when this Bill was introduced, because it seemed at last that we were to get some of that treatment to which we had been looking forward. We are still grateful for the Bill as it emerges on Third Reading, but we are grateful rather in the manner in which people are grateful for very small mercies. I agree with the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) when he says we had made a good bargain, and I want to thank the Government for dropping Clause 9 and saving the Bill. The mere fact that it has been saved at a time when so many have been lost will itself be accepted by the people in the Development Areas as a proof that the Government mean business this time.
    I must, however, in a small measure join issue with the right hon. Gentleman, because there is an element of time in this matter. It is true that the actual implementation of the Clause which has been dropped would not have taken place for some considerable time, but there is an advance effect of which we in South Wales and Monmouthshire have had some experience. The knowledge that a certain Measure is coming into effect influences conduct in advance, and we have had cases of people who have said, "We will come to your area if we have to, but if we have not to, we are going to London." These people, I am afraid, may now start making arrangements for going to London or a similar area. That is a detriment from which we suffer immediately, or, at
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    any rate, will suffer in the near future, from the transformation which this Bill has undergone. At the same time, we are grateful to the Government for pressing the Bill forward, and I certainly agree that, had that contentious Clause not been dropped, we should not have had the Bill by the end of this Session. I am far from blaming those people who have felt it necessary to oppose the Bill, because the Clause which has been dropped was rather drastic in its scope, and, had I been a Member for an area not included in the Schedule as a Development Area, I should have felt it my duty to examine it very closely before it was put on the Statute Book.
    We in the Development Areas do not wish to enjoy any prosperity at the expense of any other parts of the country. We are asking the Government for a Measure which will break the vicious circle that is caused by the cumulative effect of success, on the one hand, and failure, on the other. That is all we want. We do not want to deprive other areas of the development and growth of their native industries to which they are fully entitled, and it is not in any such selfish attitude that we shall at a later date press the House for further measures. There are certain enabling Clauses in the Bill which will be of great value if the Minister uses them, as I hope he will, with vigour and imagination. One of the greatest difficulties we have in those areas in persuading industrialists to establish industries in them is the difficulty of obtaining houses for key workers. That is a serious practical difficulty at the moment, and I hope my right hon. Friend will give it his early and sympathetic attention. If the Board of Trade use the powers which are left in the Bill to the best advantage, there is much that can be done for the benefit of those areas in the period between now and when it will be possible to take further measures, because those powers are very useful, though they are of a rather miscellaneous character.
    Apart from that, there is little left in the Bill that is not familiar to us. There is, of course, the familiar non-controversial measure of milking the Treasury, which I notice usually survives all party controversy, and I am far from regretting that any money should come to the Development Areas out of the Bill. But I should be sorry if a policy of casual grants and loans were to take the place

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    of a coherent policy of distribution of industry. It would be very dangerous to the national interest if we were to go ahead with a policy of miscellaneous powers and casual grants and loans without the other side which has now been dropped. That would result either in the job not being done thoroughly, or else in the expense being formidable, and we would have in those areas a number of industries established by Government assistance which would have got into the habit of waiting with their mouths open for more and more to be put in from the Treasury, and that is certainly not what we want.
    I have made these points with the sole intention of drawing the attention of my right hon. Friend to the fact that we shall be coming back to him later. We have been promised a Distribution of Industries Bill and we are now given something which is called a Distribution of Industries Bill, but I very much wish that the Title of this Bill had been changed. I hope I am not out of Order in saying so. I wish the Title of the Bill had been changed by the Committee because it puts us in a very bad tactical position for the future. We have, apparently, got what we asked for, but in actual fact this Bill is no more a Distribution of Industries Bill than it is a Matrimonial Causes Act or something of that kind. It is simply an Industries Facilities Bill, and it has not even touched the fringe of distributing industry in one way or the other. So I assure my right hon. Friend that we shall be worrying him about this matter again. If he is in the same position in the new Parliament, as I hope and am sure he will be, and if I am in the same place in the new Parliament, as I may perhaps be forgiven for hoping I shall be, I can assure my right hon. Friend that I shall be importuning him very early indeed in the Session with requests for a further dispensation which will not merely palliate the long-standing ills of these areas, but will give back to them that independent vitality to which they have been strangers for so long.
    4.32 p.m.
    Mr. Colegate: It is a great privilege to have the opportunity of congratulating the hon. and gallant Member for Newport (Lieut.-Commander Bell) on his very able speech. I feel that
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    not merely is he to be congratulated, but his constituency is to be congratulated on having someone who shows such ability to plead its cause and necessities in this House. I hope he will come back here, and then I am sure we shall listen to any case that he cares to put forward on the lines that he has advocated. I welcome the Bill in the rather altered form in which we are now asked to pass it. I was very glad that the original Clause 9 was dropped, because it was a matter which was far too controversial to be threshed out in the limited time which was available if we were to get the Bill at all.
    Mr. Deputy-Speaker (Mr. Charles Williams): The hon. Member cannot discuss, on the Third Reading of the Bill, a Clause which has been dropped. I think he should abstain from discussing it.
    Mr. Colegate: I was not proposing to discuss the Clause, but surely it is in Order on the Third Reading to welcome the fact that the Clause has been dropped.
    Mr. Deputy-Speaker: The hon. Member cannot on the Third Reading discuss anything that is not in the Bill. If he mentions the omission it will have to be with great discretion.
    Mr. Silverman: If the hon. Member is entitled on Third Reading to congratulate the Government on dropping the Clause, will I be entitled later to regret that they have dropped it?
    Mr. Deputy-Speaker: That is where the matter of discretion would have to come in, but I really thing we had better not argue about it.
    Mr. Colegate: I have no more to say about it except that I really was glad that the Clause had not been proceeded with. What I wish to refer to in particular is my regret that owing to the shortness of time we have not been able to discuss the First Schedule as fully as we would have liked, because that Schedule raises large questions of principle as well as of the inclusion of particular areas which appeal to hon. Members on both sides of the House. I understand how that was, but I would point out that owing to the fact that the Schedule confines the best part of the Bill, with the exception of what is now Clause 8, to the Development Areas one of the most useful Clauses is of very limited application. I refer to Clause 5.

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    In my opinion, Clause 5 is most valuable because of the power which it gives to the Board of Trade to deal with derelict areas, which to many of us mean areas where there are tip heaps, some of them dating back generations. I believe this is the first time that any Government have taken the responsibility of dealing with those tip heaps. There may be under the Town and Country Planning Act certain powers with regard to planning, but this is a Clause which gives the Board of Trade the power and the money to do it. In many of these areas it is impossible for local authorities—sometimes small local authorities—to face the expense of removing thousands of tons of earth and finding a place to put that earth when it has been removed, which is not always easy. I did appeal to my right hon. Friend to deal with this matter, and he pointed out that it could have been dealt with in a very simple way by leaving out the word "development" in line 2 of Clause 5, but I understand that would have been out of Order because it would have raised the question of further expenditure, and therefore the Bill would have had to be re-committed.
    If in a few weeks' time my right hon. Friend is still in the position he occupies now I will ask him to add one Clause to the Bill to deal with this subject. It raises wide feeling in large industrial areas, and I think there would be plenty of support if Clause 5 were put in another form so that it would be applicable to any industrial area where it is necessary to remove tip heaps. I would say in connection with the inclusion of certain areas under Schedule 1 that it would have been desirable, had we had time, to thresh it out in order to try to get a principle upon which to settle whether or not an area should be included in that Schedule. That has not been done. The First Schedule simply consists of the old distressed areas. I think I am right in saying that no new areas have been included, but in certain small areas there is as acute distress and as great a need for the application of the first part of this Bill as there is in the areas which have been actually scheduled. There, again, we must hope that we may come back to see whether we cannot do something further in that respect.
    Mr. Deputy-Speaker: The hon. Member is again trying to insert something into the Bill. He cannot do it now.
    Mr. Colegate: I was indicating in a very simple way some of the points which arise on the First Schedule, particularly the question of principle. Perhaps I have wandered a little, and if so I am sorry. I was on the principle of the matter, and that, I think, I am entitled to discuss.
    One other point is that there is in this Bill a very valuable provision by which houses for managers and key workers can be provided. As the hon. and gallant Member for Newport said, that is a vital matter, because if industries are transferred from one place to another one of the first things to do is to provide managerial houses and to start what are commonly called staff houses and key workers' houses. Local authorities have no power to do that, but under the Bill the Board of Trade have the power to do so. We must hope that in the future there will be provision for that kind of thing in all areas. Having said that, I am bound to say that I welcome this Bill. I believe a good deal of work can be done under it, and I am certain my right hon. Friend will do it, and that those in industrial areas can look forward with confidence to getting a fresh start after the war.
    4.40 p.m.
    Mr. Silverman: Ever since I have been a Member of this House discussion has continually been directed to the distribution of industry and to the absence of industry in certain parts of the country. The discussion has always been directed to inducing the Government to take powers to control and to direct industry, to enable the community as such to have some say in where industries shall go and who shall be employed. At last we have a Bill that does something about it, and to that extent we are all satisfied to welcome it and to give it a Third Reading.
    There are in the Bill things which limit its usefulness. I say nothing about those things which are not so limited, but there is a Schedule, and the effect of the Schedule is to take away from the Government powers which at long last it is, in principle, admitted the Government should have. Nobody denies that the Government ought to have powers to say to industry, "You shall not go where you like. It shall not be left to you to take such risks as you think proper. It is not a matter which can safely be left to the private initiative of commercial or indus-

    609
    trial undertakings. It is a matter in which the community as a community has an interest, because the community pays for the mistakes that are made, and the risks that are taken are not taken by the industrial and commercial undertakings in their own affairs but are taken with the community's wealth, property and welfare." During the 10 years I have been a Member of the House of Commons we have had to fight to persuade the Government that they ought to take a share in these matters, and at long last, on the eve of the Dissolution of this Parliament, we have a Bill which concedes the principle—a principle advanced by a Government who propose to go to the country and ask for a mandate not to interfere at all, but to leave all these things to the private judgment of selfish persons and concerns with only their own interests to consider. [Laughter.] I do not know why the hon. Gentleman laughs, but from what I heard of his speech I should have thought he would have agreed with me.
    Mr. Colegate: With much of what the hon. Member has said, I agree, but it is useless to try to prejudice the initiative of anybody by calling it selfish.
    Mr. Silverman: I am not seeking to prejudice anybody in saying that a private company look after their own affairs. It is not a charge against them. What else can they do? It is no good the hon. Member shaking his head. The duty of a board of directors is to their company and to the shareholders.
    Mr. Deputy-Speaker: I am sorry to interrupt the hon. Member, but I must point out that the Bill has nothing to do with the duty of a board of directors.
    Mr. Silverman: If I have transgressed, it was only in reply to an interruption which I gave way to hear, and which was allowed. I repeat that the Bill concedes a principle for which we have contended in this House for many years, which that side of the House have always contested and which, from all announcements, they propose to contest in the coming General Election. I suppose that is why we have a Schedule which makes it necessary for an area to fall into a very devastated and derelict condition before it gets the benefit of these powers. I now see that the Minister shakes his head. He ought to know—unless I am greatly mistaken—that the Schedule con-
    610
    tains a list of areas, and that every one of them was either a special area within the meaning of the last Act passed by Parliament on the subject, or is so closely adjacent to a special area as to be part of the general area and to share its fate.
    I, therefore, repeat that the Schedule consists of areas which have been allowed to fall into the worst possible condition, and that it is only in those areas that the powers which the House is now giving to the Government may be exercised. I know there is a Clause which allowed the Minister to add other areas to the Schedule, but he is not to be allowed to use his own unfettered discretion in the matter. He has to add areas which are like the areas already in the Schedule. [An HON. MEMBER: "No."] Yes, when he is satisfied that unemployment in any area has reached a particular stage or a bad stage.
    Mr. Lyttelton: I do not want to interrupt the hon. Member unnecessarily, but the adding of areas to the Schedule depends upon the danger of unemployment being foreseen by His Majesty's Government. I think the hon. Member was not doing full justice to the words in the Bill, because he was speaking of the areas in the Schedule having reached a state of devastation or unemployment which would warrant their being added to the Schedule, but that is not the case. It is within the discretion of the President of the Board of Trade to add them to the Schedule if he anticipates—and I think the word is correctly used in the Schedule—that there is danger of unemployment.
    Mr. Silverman: I am very grateful to the Minister, but I do not know that his intervention alters, or need alter, anything that I said.
    Mr. Lyttelton: It does.
    Mr. Silverman: I think not. Certainly the Minister has power to add other areas to the Schedule if he anticipates certain dangers, and he has power to do so before the dangers eventuate. If there is a danger which has not yet become a fact he can put an area into the Schedule. I quite recognise that, and it is perfectly true; but what is the danger? If things reach such a pass that the Minister is satisfied that unless he puts an area into the Schedule there is a danger, which means more than a possibility, of that

    611
    area too falling into the same kind of devastated condition as those special areas always were in up to the outbreak of war, he can act. That is exactly what I say. It is only within the ambit of devastated areas of that kind that the Minister has any power to add areas to the Schedule, where are included now only areas which were special areas within the meaning of the Special Areas Act. That is a very limited power. It is a grudging, half-hearted concession by people unwilling to make the concession, who are convinced against their will and who remain of the same opinion, and therefore do as little as they can and then go to the country and pour scorn on the very principle which, half-heartedly, reluctantly and to a small degree, they have had to concede.
    Mr. Henderson Stewart: It is the late Minister's Schedule.
    Mr. Silverman: It is all very well to say that it was my right hon. Friend's Schedule. We all know the facts, which are that my right hon. Friend was a Member of the Coalition Government and had to speak for the Government, including its most reactionary Members. He could not put in anything he wanted. It was a Government Bill, introduced by him because he was the Minister in charge of a great Department.
    Mr. Henderson Stewart: He did not report any opposition.
    Mr. Silverman: Did the hon. Member expect him to report any opposition? Is it the business of a Member of a Coalition Government to report dissensions in the Cabinet?
    Mr. Deputy-Speaker: These remarks are not in Order upon a Third Reading Debate.
    Mr. Silverman: They would not be in Order anyhow, and the hon. Member knew that very well when be made his intervention. He hoped I did not. Here we have a Bill which concedes reluctantly and in very small degree a principle which was forced upon the Government, which they were no longer able to resist but upon which they do as little as they are able to do. I suppose we shall have our remedy later, but I do urge hon. Members opposite, in their campaign in the coming weeks, to remember the Bill
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    on which they hope to get a unanimous Third Reading to-day, and not to be too enthusiastic about the danger of the community interfering in its own affairs.
    4.56 p.m.
    Mr. Erskine-Hill: I do not want to add too much, to what has been said already, but the fact that the Bill will pass its Third Reading today says a great deal for the good sense of the House of Commons as a whole, as well as of the Ministers and ex-Ministers of his Majesty's Government. The whole sense of the House is that we should do something practical for those areas which have been depressed in past years. The difficulty of the Government was to give some practical help to those areas without at the same time tending to cause uncertainties which result in businesses in other parts of the country not going forward in the way which they and every Member of this House would like. The Government have acted wisely in the Bill.
    There is one point I wish to make. When we were dealing during the Committee stage with the Schedule the Minister made certain promises to me to consider the position of various local authorities. I referred him to the instance of Leith. He would do well, as would whatever Minister is in power, to reconsider that Schedule very carefully at a future date. If it were not for that promise, one might transgress the Rules of the House by pointing out the claims of various places to be included in the Schedule; but having that promise I feel certain that the President of the Board of Trade, whom I hope we shall see in his place some months from now, will carry it out. I congratulate him. If it had not been for his pertinacity and that of his colleagues, the Bill would not have come forward now. I hope the House will wholeheartedly respond to the Minister's request for a Third Reading.
    4.58 p.m.
    Mr. Mathers: If the hon. and learned Member who has just spoken had had me for one of his colleagues on the Standing Committee, I would have been able to prove to him that the Bill does not go far enough in certain directions. You were good enough to explain, Mr. Deputy-Speaker, why the Amendments which I put down for the Report stage were not in Order, because conditions have changed between the Com-

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    mittee stage and the Report stage. The Amendments would have been in Order on the Committee stage although not in Order on the Report stage. Therefore I am brought to the point of making some observations, hoping very much to be able to keep in Order and not transgress the rule about discussing Amendments on Third Reading. I would like to get some indication from the Minister as to how he can meet the position in my constituency which is left cut through in the middle by the provisions in the Schedule, and how that position is to be met by the local authorities involved.
    Clause 6 gives the Minister opportunities of dealing with the Schedule by taking into consideration from time to time the question of altering it. Sub-section (2) goes on to say that where at any time it appears to the Board of Trade that there is likely to be a special danger of unemployment, certain things can be done, but, as I see it, that special danger can be proved by the fact that unemployment had taken place already in the years before the war. That kind of representation can very well be made by the local authorities, the county council and the burgh councils in my constituency. It can be shown that there had been a greater measure of unemployment in the portion that is left out than in the area of my constituency which is scheduled. That would seem to me to be prima facie proof of the fact that there was, when peace conditions return, a special danger of unemployment that would entitle the whole of the county to be brought within the Schedule.
    I wish to know from the Minister what kind of representations are necessary, and when he will be willing to receive the representations that may be made to him in order to get him to implement the powers that are given to him in Clause 6. He will be helping greatly people who are very much concerned about the failure of this Bill to deal with the northern part of my constituency if he can show how quickly and easily the representations can be made, and if he will give an undertaking that on having sound and sensible representations made to him he will give effect to them, and bring within the Schedule of this Bill the whole of the county, instead of only part of it. Representations have already been made along those lines.
    Mr. Deputy-Speaker: I have been fairly patient in this matter. The hon. Member is quite entitled to say that part of his constituency ought not to appear in the Bill. If he wishes to do that he can do so, but he must not say that part of his constituency which is outside the Bill must come in. I know that under Clause 6, as amended, it is possible for other areas to be brought in, but that aspect must not be developed too far.
    Mr. Woodburn: On a point of Order. Would it be possible to argue that one might regret that only part was in the Bill?
    Mr. Deputy-Speaker: I have tried to explain that the hon. Member is rather over-emphasising the part he wanted included in the Bill. I hope he will not develop that point.
    Mr. Mathers: It seems to me that to regret that only a part is in would perhaps be inviting the Minister to take that part out, and I have no wish to do that. I want to have the Bill so for as it goes. It is simply that I want it to go further. The point I was desirous of putting to the Minister concerns many representations that have been made by the local authorities, by trade unions and others to the Board of Trade. I wish to know if these will be considered now in the light of the passing of this Bill, more particularly owing to the fact that upstairs in Committee many Amendments were slaughtered, and I feel that I must not complain that in that slaughter of innocents my twin ewe lambs, because my Amendments were twins, should also be slaughtered. Will the Minister take into account the representations that have already been made, in order to enable him to judge as to whether parts of my own constituency should be added under the Schedule?
    5.5 p.m.
    Miss Ward: As a Member for one of the special areas I wish to take this opportunity to say how glad I am that this Bill, though amended, is to reach the Statute Book, and to congratulate my right hon. Friend very warmly on that achievement. I was rather interested in the point made by the hon. Member for Nelson and Colne (Mr. Silverman), because he was at some pains to explain that the deficiencies in the Bill

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    were due to the restrictions which possibly had been placed upon the late President of the Board of Trade by the rest of the Members of the Government. I would prefer to put it the other way round and say, on this occasion, that it was a joint measure of co-operation of all the political parties to make a contribution to the special areas problem.
    Mr. Silverman: Would the hon. Lady?
    Mr. Deputy-Speaker: I do not think we need discuss now what happened in the Cabinet of another Government. There will soon be an occasion for that.
    Mr. Silverman: My question was not on that point. I was only going to ask the hon. Lady whether she would not concede that the principle of this Bill is the principle of Government or communal restriction and control of the flow and placing of industry, and whether that is not in conflict with any view that these questions could be decided by private enterprise?
    Miss Ward: I had no intention of transgressing the rules of the House and entering into a political argument on this occasion. I am looking forward, in the General Election, to arguing in my own area about what my own Party has been able to do, because I am glad to be able to say that private enterprise has played a very large part during the war—
    Mr. Deputy-Speaker: Here I must interrupt the hon. Lady as this matter is really not in the Bill.
    5.8 p.m.
    Mr. Lyttelton: I will not detain the House for more than a few minutes. I had and still have several pleasant duties to perform. My first duty was to have been to congratulate my predecessor at the Board of Trade on having got this Bill, but after listening to the speech of the hon. Member for Nelson and Colne (Mr. Silverman), who I do not think has read the Bill—
    Mr. Silverman: The right hon. Gentleman has given way because he has more manners than some Members. I am sure he would not wish to persist in a remark which, whatever its jocular appeal, would do me an injustice. I never take part in the discussion of a Bill which I have not
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    read. My intelligence may be limited, but I have read the Bill.
    Mr. Lyttelton: I certainly apologise to the hon. Member. I might put my remarks in another form and suggest that he re-reads the Bill. I hope that will meet his point in a courteous manner. After listening to the speech of the hon. Member I realise that the late President of the Board of Trade is not to be congratulated at all, but in spite of that I shall congratulate him. I should next like to congratulate the hon. and gallant Member for Newport (Lieut.-Commander Bell) for a most interesting and able maiden speech. We shall hope to hear him often, particularly on these industrial questions. In describing the Bill as "small mercies" he anticipated some of the remarks of the hon. Member for Nelson and Colne, who has the habit of looking gift horses in the mouth and then saving that they have no teeth.
    As far as the special areas are concerned, this Bill is a very positive one. I must say about the points that the hon. and gallant Member for Newport raised that as far as the Development Areas are concerned these positive matters in the Bill will help them, and I do not regard the mercies as small. I would like to thank right hon. Gentlemen and hon. Gentlemen in all parts of the House for the constructive work they did on the Bill in the Standing Committee upstairs, and the expedition with which the late stages of the Bill were taken. It has been improved in very important respects. For example, the obligation of the Board of Trade to consult with local authorities about the operation of Clause 6 has been added to the Bill, and is part of it, and has not taken the form of a mere administrative pledge. Then there was another matter about which hon. Members advanced considerable anxieties, that was, the provision under which the building of factories of more than 3,000 sq. ft. involved notification to the Board of Trade. That has been altered to 10,000 sq. ft., and I think that many of the anxieties which hon. Members expressed about this particular matter have been thereby allayed.
    The Government want the Bill as a matter of urgency. It has from the beginning been the subject of very close discussion between my predecessor and myself, and I must repudiate any suggestion that I am insincere, which was

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    the suggestion of the hon. Member for Nelson and Colne.
    Mr. Silverman: On a point of Order. I did not accuse anybody of being insincere. I do not think it is in Order to suggest that I did.
    Mr. Lyttelton: My definition of "insincerity" may be different from that of the hon. Member.
    Mr. Silverman: The right hon. Gentleman must not impute words and put them in my mouth.
    Mr. Deputy-Speaker: We might all keep to that rule.
    Mr. Lyttelton: If the hon. Member made any suggestion of that kind I assure him that I am entirely sincere in my support for this Measure. My name was on the original Bill, and any idea that these proposals, which have my whole-hearted support, are other than perfectly constructive ones, I must deny. The matter is urgent. At this moment industry is in a very fluid condition. Industrialists are now thinking more closely about the location of new plants, the extension of their existing undertakings, and all other forms of extension which the partial change from war production to peace production entails. Furthermore, the Board of Trade, under schemes framed by my predecessor, have many plans on paper, so to speak, for building new plants and for developing trading estates, and the positive powers which this Bill gives are necessary if these paper plans are to take form, as quickly as possible. If we were not to get the Bill these plans would remain on paper, and would not be realised.
    With regard to the Schedule, which went very quickly through the Committee, I would like to be able to give some reassurances to the hon. Member for Linlithgow (Mr. Mathers). During the Committee stage I gave a pledge that I would at once look at any Amendments which had been proposed, with the hon. Members who had proposed them, to see if a case—which I again emphasise is not, under Clause 6, a case in which devastation has occurred or in which unemployment has begun to be rife, but is a case in which, in the opinion of the Board of Trade, there is a danger of such unemployment arising—
    Mr. Woodburn: In regard to the constituency of my hon. Friend the Member for Linlithgow (Mr. Mathers) and my own, the railway line is the border. The part South of the railway line is to be developed, but quite conceivably, in order to benefit the part South of the railway line, it might be more convenient to put something just over the line—on the wrong side of the line—for development purposes. I hope that in such development common sense will rule, not just the letter of the law.
    Mr. Lyttelton: The point I am making is that it is open to hon. Members, as soon as this Measure becomes law, to make representations to the Board of Trade in the ordinary way—the doors are always open—to see if a case can be made out that there is a special danger of unemployment, whether from the causes mentioned by my hon. Friend or from other causes. Then there is everything to impel the Board of Trade, subject to the approval of Parliament, to add those areas to the Schedule. We did not, as my hon. Friend the Member for The Wrekin (Mr. Colegate) mentioned, have a very long discussion on the Schedules, because it is clear that it could have gone on almost interminably. But, in order to allay anxieties which hon. Members felt, I gave a most specific pledge, which I now reiterate, that I am prepared, as soon as the Bill becomes law, to enter into discussions with any hon. Member, to ascertain whether there are any special dangers in areas with which they are concerned. As the transition from war to peace production proceeds, we shall get a much better idea of what further areas, if any, should be added to the Schedule. I hope that that assurance will allay anxieties.
    I think that this Bill is a useful, and in no way vexatious, instrument for carrying out a purpose which I believe is common to all parties. It is a weapon which can be used against unemployment, by bringing about diversification and by trying to balance industries in the various areas, so that when one is slack and another is active the slackness does not fall upon a particular part of the country. It will, I believe, preserve some of the social capital, as it has been called, which might otherwise be lost. Lastly—and perhaps I speak more with the voice of the Minister of Production in this matter—it tends to disperse those vital in-

    619
    dustries which are necessary for the waging of war and the sustenance of our population during war, rather than concentrating them in one place. I think that is another reason why the Measure will be extremely useful and beneficial to the nation as a whole.
    Question put, and agreed to.
    Bill accordingly read the Third time, and passed.

    EDUCATION (SCOTLAND) BILL
    As amended (in the Standing Committee), considered.
    CLAUSE 29.—(Attendance at junior colleges.)
    5.18 p.m.
    The Joint Under-Secretary of State for Scotland (Commander Galbraith): I beg to move, in page 19, line 20, leave out from beginning, to "is," in line 22, and insert:
    "If a pupil satisfies the education authority that any religious observance or any part of the instruction at a junior college which the pupil is required to attend."
    During the Committee stage representations were made from each side of the House to the effect that this Clause, as it stands, does not give sufficient protection in respect of religious beliefs. An undertaking was given that the Clause would be examined anew and that, if possible, a form of words would be inserted to meet the apprehensions which had been voiced. The Amendment contains the new form of words. The effect is simply that, if a pupil satisfies the education authority that any religious observance or any part of the instruction at a junior college is contrary to his religious belief or likely to give offence to his religious feeling, he shall be permitted to withdraw from such observance or instruction. I believe that that will fully meet the apprehensions which were expressed, and will give full protection to religious beliefs.
    Captain McEwen: The merit of this Amendment lies in the words "or any part of the instruction." As the original Amendment was down in my name, and as the hon. Member for Greenock (Mr. McNeil), who is also interested in the point, is unavoidably absent, I would like to tender my thanks to my hon. and gallant Friend—
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    whom we are delighted to see making his bow at the Box—for having so promptly come forward with a revised version of this Sub-section, to meet a difficulty which, he knows was a real one.
    Amendment agreed to.
    Further Amendments made:
    In page 19, line 23, leave out "and."
    In line 24, after "shall," insert:
    "permit the pupil to withdraw from such observance or instruction and shall."—[Commander Galbraith.]
    SIXTH SCHEDULE.—(Enactments repealed.)
    Commander Galbraith: I beg to move, in page 82, line 48, column 3, leave out "three."
    This Amendment is consequential on the dropping of Clauses 46 and 47 from the original Bill. Those Clauses dealt with the abolition of school management committees. In consequence of the Clauses being dropped, the school management committees remain, and, therefore certain Amendments are required. There was no time to make them during the Committee Stage.
    Amendment agreed to.
    Further Amendments made:
    In page 83, line 9, column 3, leave out:
    "in Sub-section (5) the words 'or a school management committee under Section three of the Education (Scotland) Act, 1918.' "
    In line 15, column 3, leave out:
    "and paragraph (iv) of the proviso,"—[Commander Galbraith.]
    Motion made, and Question proposed, "That the Bill be now read the Third time."
    5.23 p.m.
    Mr. Westwood: Before we pass on this Bill to another place, for, I hope, the same speedy consideration as has been given it by both the Scottish Grand Committee and this House to-day, I think a tribute ought to be paid to the negotiating ability and work of the ex-Secretary of State for Scotland, my right hon. Friend the Member for West Stirling (Mr. T. Johnston). But for that genial way of his and for his undoubted ability in overcoming obstacles, it would have been impossible, with a Bill of this magnitude, to have achieved so much common ground. There

    621
    was a common desire among the people of Scotland that, notwithstanding its rather controversial administrative Clauses, we should at least get the Bill, even in the limited time at the disposal of the House. That common desire was reflected in the Scottish Grand Committee. There are people who say that the machinery of Parliament is slow and cumbrous, and that if you want difficulties you will find them in superabundance when Scotsmen get together to discuss Scottish problems in Scottish Grand Committee. But I think we have taught not merely England but the world a lesson as to how speedily we can do things when there is a common desire to get them done. In an hour and a half we were able to pass the 92 Clauses of the Bill and the Schedules.
    Mr. McIntyre: Shame.
    Mr. Westwood: I will leave somebody else to deal with the "Shame": I am proud of the achievements of the Committee in getting something on which we shall be able to build a real education system for Scotland. This Bill does not give everything that we want. I can deal only with the subject-matter of the Bill before the House, but it is a fair day's march towards an educational system which will provide equality of opportunity in accordance with the aptitude and the ability of our children in Scotland, provided always that the Regulations that are to be made under the Bill will give us the educational structure. The Bill is not an educational structure, it is merely the foundation on which it is possible to build the new educational structure for Scotland. The Bill contains many improvements on the existing Education Acts. Some of those Acts have optional Sections, and many of those options have now been turned into duties of the education authorities. It is the duty of the education authorities, under this Bill, to provide books and requisites for education, such as spectacles for those with limited sight, to enable the children to benefit by the educational opportunities that are provided.
    Success will depend upon the Regulations and upon the new Code provided for in the Bill. Unless these Regulations are well framed, unless there is a keen desire on the part of those who have to direct the administrative work of the local
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    authorities, the Bill may be merely some black hieroglyphics on paper and of no use whatever to Scotland. It is not the Act of Parliament that gives us the things that are effective, it is the will that operates the Act of Parliament, and the will of the administrators. There must be an adequate supply of teachers. Clauses49 and 50 make it possible not merely to get an adequate supply of teachers, but to get teachers trained to deal with the new problems. The Regulations must also provide for proper accommodation. Without teachers and without proper school buildings, it will be impossible to get the best results.
    There must be the will and the desire among parents in Scotland to make a success of this Bill when it becomes an Act. There must be a determination on the part of the local authorities of Scotland, because the Bill places the responsibility for Scotland's educational progress not only upon the Secretary of State for Scotland but also upon the local education authorities. They must act with determination if we are to make a success of the Measure.
    Finally, all these things can be of no real avail unless there is the proper oil for the machinery. It is more than possible that the local authorities may find the new burdens to be placed upon them almost too heavy to bear, and, consequently, if we are to make a real success of the Bill, not only will we require all those things to which I have referred, but further financial assistance from the Treasury. I have very much pleasure—real pleasure, because I can now see embodied in the Bill some of the ideals for which I have fought for almost 30 years—in supporting this Bill, and in hoping sincerely that it will become an Act before this Parliament goes out of existence.
    5.31 p.m.
    Lieut.-Commander Hutchison: I have taken a very close interest in this Bill ever since the original version appeared before the end of last Session. I think it has been a very great relief to all Scots hon. Members that we have been able to save this Bill and to ensure its passing into law before the Dissolution, because it would have been a terrible misfortune if all the work done upon it at the Scottish Office, and the consultations with local authorities, had been wasted. The Bill is very important indeed to the future of Scottish education.

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    I think the proceedings in the Standing Committee on Scottish Bills showed a very good example of the remarkable degree of co-operation that can be achieved among Scottish hon. Members of all parties in an emergency, but I should not like to take this unduly rapid procedure as being a good precedent. Unfortunately, a very great many important parts of the Bill were not discussed in any detail whatever, although many of us would have liked to make suggestions in regard to certain Clauses. For that reason, as the right hon. Member for Stirling and Falkirk (Mr. Westwood) has said, the Bill is imperfect in some ways, but, nevertheless, it does mark a very useful advance on the present education arrangements.
    For my own part, there are two points on which I would like to comment. The first is the Amendment to Clause 2 which strengthens the provisions in regard to technical education. This is, I think, a matter of the greatest importance, because I understand that Scotland has been rather lagging behind England in recent years in regard to technical education. Secondly there is the Amendment made to the original Clause 53 to ensure that the increase of salary for teachers was antedated as from 1st April of this year. This is very satisfactory, for it brings a measure of justice to a profession which is very hard pressed and which is not always fully appreciated in the country. I trust that the Bill will speedily pass into law in another place before the end of the present Parliament.
    5.34 p.m.
    Mr. Thomas Fraser: I want to express the greatest regret that we had to pass this Measure with the speed with which we have passed it. It is all right to pat ourselves on the back and say we have done a wonderful job of work in putting through 93 Clauses in one morning, but we could only do that by what, I think, is a shameful sacrifice of democratic rights. There were many Amendments on the Order Paper put forward by hon. Members from all sides of the House, and great bodies of opinion outside—important bodies of opinion, too—thought the Bill could be considerably improved in the Scottish Grand Committee, and I agree that it could have been improved, but it would seem that the Tories have insisted upon having an early election—
    Lieut.-Commander Hutchison: The Labour Party walked out.
    Mr. Fraser: The hon. and gallant Member says the Labour Party walked out. Well, that is something we can argue another time.
    Mr. Westwood: It is not true.
    Mr. Fraser: The Labour Party, I believe, wanted to remain—
    Mr. Deputy-Speaker (Colonel Sir Charles MacAndrew): I do not think we can discuss that matter.
    Mr. Fraser: I think it is most regrettable that the hastening of the election has necessitated these sacrifices of our democratic rights, because it has meant that, if we wanted anything at all in the shape of a new Education Act for Scotland we had to withhold any criticism of the Bill as printed. It was stated clearly on Second Reading that, on this side, we would make a fight over the payment of fees. We thought that the payment of fees in local authority schools in Scotland ought to be completely abolished, but we could not insist on arguing that matter in Committee. If we had gone into arguments on it, we could not have had the Bill. There are other matters, such as the exemption of school children, on which we felt very strongly indeed, as was fully indicated by hon. Members on this side during the Second Reading Debate, but we had no opportunity of putting our opinions in the Committee. If we had insisted on making our views known in Committee we could not have had the Bill, and I very much regret that, in order to get this Bill through all its stages, we had to make that great sacrifice, which is what it was.
    I hope it will not be taken as a precedent, and I hope, too, that we will not go out and say that we have a right to claim some pride for ourselves for passing this Bill in such a speedy fashion. There are other countries in which they put Bills through even more speedily, but we do not agree that their system of Government is a good one. We think it is good Parliamentary practice to have full opportunities for Debate in Committee, and, indeed, at all stages of the passage of legislation, and I feel all hon. Members will agree that it must be a matter of regret that we have had to push this Bill through Committee in the way we have.
    5.38 p.m.
    Major McCallum: I do not want to argue here with the hon. Member for Hamilton (Mr. Fraser) as to who caused the General Election. I do know that my right hon. Friend the Member for West Stirling (Mr. Johnston) and my right hon. Friend the Member for Stirling and Falkirk (Mr. Westwood) were both very keen, with all of us, to get this Bill, or some Measure to improve Scottish education, on the Statute Book, but I would suggest, with all respect to the hon. Member for Hamilton, that we are not going to serve the cause of Scottish education very much by accusing either Socialists or Tories of delaying the Bill or preventing a proper discussion of it. The point is that we had to get the Bill through as it stood or not have it at all. I represent a constituency where they would have been quite prepared to do without it, and I have said so all along, but, in order to fall in with the majority of hon. Members on all sides, I am very glad that we did attain that measure of co-operation and succeeded in getting it through.
    The right hon. Member for Falkirk expressed views in which I should like to join in his appreciation of the work done by the former Secretary of State. I am sure all hon. Members on this side will agree about the tremendous amount of work the right hon. Gentleman did and the great interest which he took in the matter. I would also like to include in this tribute the right hon. Gentleman the Member for Stirling and Falkirk, who also put in a tremendous amount of work. I know, as he has said, that the Bill will be fulfilling some of the ideals for which he has worked for so many years, and I therefore pay my tribute to both the right hon. Gentlemen for the work they have done.
    I want to ask the Minister who replies for some assurances. In Clause 27 we define what is to be a walking distance for children, and we have brought it down from three miles to a maximum of two miles. I imagine that everyone interested in the education of children is very glad to see that reduction, but it does mean a very considerable addition to the cost of transport in some localities. In a widespread area such as my constituency this question of transport is one of very great importance and difficulty, and it is a
    626
    source of ever-increasing cost to the ratepayers. Again, there are the questions of school meals, and of a standard salary for teachers, both of which mean additional expenditure. In a county such as Argyllshire, which has a very poor rateable value, it may be, as the right hon. Gentleman the Member for Stirling and Falkirk said, that we shall have to come to the Scottish Office and ask for very considerable assistance towards meeting these additional expenses. I am told by my own authority that we do get some considerable assistance from the block grant for purely educational purposes, but I believe it is argued by the Scottish Office that transport is not a purely educational matter and, therefore, does not qualify for grants. I would like to have an assurance from the Lord Advocate that, when these extra expenses are incurred in these difficult areas, and they become an unwarranted burden on the local finances, the local authority may go to the Scottish Office or the Treasury with some confidence that they will be given some measure of financial assistance in addition to that for purely educational purposes. I would like to say that I welcome the Bill and hope that it will become an Act before this Parliament comes to an end.
    5.44 p.m.
    Mr. Kenneth Lindsay: I, like other hon. Members, wish to say that I think the Secretary of State and the Under-Secretary have worked very hard, but I do not think they have achieved what has been said this afternoon. There has been a disgraceful and incomplete discussion of a great Scottish Measure. For five years we have had many Bills before this House. So little does somebody care—who it is I do not know—about Scottish education that this Bill has come right at the very end, after we had been pressing and pressing and asking, as the hon. Member for West Fife (Mr. Gallacher), with good humour, has asked time after time, when the Bill was coming. At any rate, it has come just before the Election. But I will not go into that, as I am not concerned with it. I am concerned with the fact that we have got to this pass. My right hon. Friend the late Under-Secretary of State for Scotland was obviously speaking in a good humoured way when he talked of the rapid passage of scores of Clauses, and it is as well to preserve a sense

    627
    of humour at this time. But do not make any mistake about it—it is a very bad thing for a Bill to go through without a detailed discussion. We spent 16 solid days on the English Bill and we improved it.
    I gave my views on this Bill on Second Reading and I am not going to repeat them, but I would ask why this has happened. Why was it that my right hon. Friend, who worked hard enough, could not get decisions in Scotland? Why were not decisions arrived at? What is there at the moment which is preventing agreements between local authorities and the Department in Scotland? We arrived at agreements on difficult questions with the right hon. Gentleman the Minister of Education in England. The question of Part III authorities was very difficult, as was the religious question. I do not think that the present Minister of Labour has greater shrewdness and negotiating power than the late Secretary of State for Scotland. The whole basis of this thing is wrong. We ought to have a strong central drive by the senior partner in Edinburgh. Look at the revelations we had from the right hon. Gentleman the other day about authorities which have not even a director of education and education committees which are snubbed by county councils. What had the right hon. and gallant Gentleman the Member for Kelvingrove (Lieut.-Colonel Elliot) and the right hon. Gentleman the Member for Caithness (Sir A. Sinclair) and the rest of them been doing as Secretaries of State for Scotland all those years? I can perhaps say now with greater freedom that I have tried to study the question during the last 11 years and have been trying to get at the bottom of it, to find out why there is this educational weakness. There will have to be a revival of education in Scotland, and I had hoped that it was going to be discussed during the Committee stage. The Debates on the English Bill were read throughout the world, because they threw new light on the subject.
    I do not believe that the finance of this Bill is sound and I do not believe that the finance of Scottish education is sound. I doubt whether certain local education authorities can put through these large measures and whether we shall get junior colleges during the next five years. Un-
    628
    less some radical steps are taken in order to get teachers, I do not see the school-leaving age being raised. Perhaps it is well that a Bill which has not had proper discussion should go on to the Statute Book, and that some further discussion should take place in the next Parliament. There will have to be further discussion on education, but administration has yet to be thought out. We had one day of real discussion in the Standing Committee on Scottish Bills and we unearthed in the very first Clause a great dispute about what was meant by secondary education. We unearthed later that Scotland was unable to deal with certain types of voluntary authorities. If these two things could be brought to light in one morning we might have unearthed more things with further debate. I make my protest, but I hope that my hon. and gallant Friend who has been many years on a local education authority will not take this as any criticism either of himself or of his chief. There seems to be some obstinacy or something still prevailing which prevents the getting of that agreement which is the only basis for an improvement in Scottish education.
    5.51 p.m.
    Mr. Woodburn: It is true to say that Scotland and Scottish Members suffer from a certain sense of frustration in not having been able to discuss Scottish education. There was a very interesting discussion on the English Bill, and if the English people required many days in which to discuss English education, half a day in which to discuss Scottish education does not satisfy Scottish Members. I had a dual capacity in connection with this Bill, having had something to do with the struggle to get agreement in Scotland, and happening to be chairman of a committee of our party which considered the Bill. There is no question at all that nobody could have achieved more than the late Secretary of State in getting what agreement he did in Scotland. If he failed it was not through any lack of initiative or tact on his part, but because, in certain parts of the Bill, we were up against a fundamental disagreement between town and county, on the one hand, and between certain counties and other counties. It would be impossible to get an agreed Measure on these matters of administration. In the final result, it was a question

    629
    of either sacrificing the Bill or throwing out certain Clauses and leaving them until further time was available for discussion.
    When we talk about a sense of time and a sense of frustration, we have also to keep our sense of proportion. When we regard the Bill as it is now being passed and the Bill as it would have been if we had spent longer time on it in Committee, we must admit that the overwhelming part of it is as it would have been had it gone through all stages with full discussion. Therefore, we had better welcome the Bill and do something about it later on rather than not have the Bill and be left hoping to get a Bill later.
    We have one regret, and that is, that we did not make a clean sweep of fees in Scotland. That came up as a very difficult problem. In certain towns there are traditional schools where there is no population around them. But the tradition amounts to something. I am sure that no Scottish Member wants to do away with, for example, the tradition of the Royal High School, Edinburgh, or of the High School in Glasgow or of various other schools. It "gives pupils a kick" to feel proud of their school and their school tradition. In my own area, Dollar Academy has a long tradition, and I am sure that people all over the world would regret it if its tradition were swept away by a general abolition of fees. On the other hand, my hon. Friends feel that we have spoilt the ship for a "ha-porth of tar." When the Bill goes through there will only be 18 or 20 schools in the whole of Scotland charging fees, and I think some other method could have been found of selecting pupils for these schools.
    I do not think it is right for pupils to go into the traditional school merely because their parents are prepared to pay the fees. A father who may be a book-maker or in some anti-social sphere of life may be able to put his son into one of these schools, whereas somebody who is doing a good job of work in some reputable industry is debarred by the fees. The test ought, to be selection by merit. Here we come up against the problem that the teachers and the educationists object to that on the ground that it would mean creaming the top of the scholars away from the ordinary schools and putting them into a central school. That is true, but my reply is that teachers do not object to the substrata being taken
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    off and put into special schools. Bursaries and other things are, at the moment, creamed off to some degree. I think that of the two evils that is the lesser.
    I suggest to the Ministers present to-day that when the time comes—if it happens to be they who are in charge, and naturally I hope it is not—they should give serious consideration to some other method of selecting pupils for these traditional schools in Scotland and make a final and clean sweep of this fee-paying business, and make education a matter of merit, of the aptitude and the ability of the child to assimilate education rather than one of the mere ability of the parent to pay for the privilege. The matter is left in the hands of the local authorities, who have power under the Bill to abolish fees. Fife have already done it and other areas can do it, and as soon as circumstances permit and a proper method is adopted, fee-paying should be abolished and Scottish education made free. I know it is said that England has no fee-paying schools, but that is a piece of humbug, because the great majority of fee-paying schools are outside the education authorities. We have not abolished fees in Scotland, but we have nearly done it, and I hope that at no great distance of time it will be done away with entirely.
    5.59 p.m.
    Mr. Henderson Stewart: I am glad the hon. Member for East Stirling (Mr. Woodburn) has addressed the House on the Bill because, as he said himself, he occupied in the last Government and in respect of this Measure a somewhat important position in that he was Parliamentary Private Secretary to the Secretary of State for Scotland. The remarks which the hon. Gentleman has made are, therefore, to be treated with some care by the House. With regard to the last subject he raised, I think he will agree with me that the criticism he himself has offered, and which he indicated to the House was the view of his party, was not the view of his right hon. Friend. The late Secretary of State for Scotland told us here in this House, and many of us outside, that he did not agree with the criticism of fees and that he took a different view. I am not going to argue that now, but I think I am right in saying that the late Under-Secretary shared that opinion.

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    I do not press that point, but I rather think I am right—
    Mr. Woodburn rose—
    Mr. Stewart: May I finish my argument? I will give way in a moment. The point I am trying to make is this. I do not wish to go into the pros and cons of fee-paying, but I want to record that this is not a matter upon which there is really a party view. This is a very difficult technical matter, and it is one for much further and closer examination than we have yet had.
    Mr. Woodburn: My right hon. Friend the former Secretary of State did not express his own views in regard to whether fees should be abolished or not. His view, which was also that of the Under-Secretary, as I understood, was that the matter should be left to the local authority, and should not be imposed as a policy from Parliament.
    Mr. Stewart: That of course is quite true. In other words, the right hon. Gentleman was saying, "I do not object to fees so much, and I am willing to leave it to the local authorities to decide." That was what I was saying. With regard to the matter raised earlier by the hon. Gentleman, I think on all sides we regretted that our Committee stage had to be so curtailed because, as the hon. Member for Kilmarnock (Mr. Lindsay) said, even in the one day's Debate we had, a great many things were revealed which some of us did not know, and undoubtedly, had the Debate gone on for the half dozen or more days that were expected, we should have learned a great deal about Scottish education, and might, perhaps, have greatly improved the Measure. However, I think we ought to be clear about this and fair about it. The Bill was delayed in its presentation to the House, I should say, almost entirely because of the Clauses proposed to be inserted, dealing with the machinery of administration. It was that part of the Bill which held it up from presentation to this House. The great remaining mass of the Bill, indeed that which remains with us now, was not seriously contested by anybody in Scotland. Minor points, I agree, such as fees, little points here and there were argued, but in substance all the rest of the Bill could have been presented to this House six months or a year ago and
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    would have won general acceptance, and, of course, have been considered with great care in the Committee. So the only reflection I have to make upon the work of my right hon. Friends the late Secretary of State and the Under-Secretary—to both of whom I pay my warmest tributes because I know what they have done—is that for the sake of obtaining these administrative Clauses they held up this Bill, and I am sorry it was so. I think it would have been better if, instead of inserting these Clauses at all, we had produced the educational Clauses much earlier—
    Mr. Westwood: The fact is that neither of us had the slightest idea that this Parliament would have been ending before 5th July. Consequently, as we were willing to go on until November if necessary, in order to get in these points, we were of opinion then that there would have been full time to discuss these particular problems. It is true that the administrative machinery in operation to-day satisfies no one, and that is the reason why there was a possibility of a committee of inquiry to deal with the whole problem of educational administration as it affects Scotland.
    Mr. Stewart: I am sure my right hon. Friend is right and I accept what he has said, but I am entitled to express the opinion which I have expressed to the House as to the wisdom of the course taken. Nevertheless we have not lost everything, because the question of administration has just been postponed and one day it must be faced. One day we must examine the matter in Scotland, and this House. We will have to review the whole problem of local administration and it will be a very interesting discussion when it comes.
    I have two other points to make. The first is a point which I made on Second Reading, and which I feel is of the utmost importance. We have here a Bill which gives large powers and holds out considerable hopes; but this is not education. This Bill does not begin to be education. This is only the foundation, as the right hon. Gentleman has said. Unless we can get, first, well-trained teachers, much better-trained teachers than there are now, and schools much better equipped than they are now, and much more numerous and the real enthusiasm of Scotland behind

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    it, we shall not get education at all under the Bill. Therefore, do not let Parliament or the Scottish people think we have solved the problem this afternoon. It is not so. We have only taken the first tentative step, the only step which Parliament could take; the rest remains with the Department, the teachers and Scottish public opinion.
    And this leads me to the last reflection I would like to offer to the House. We have paid our tributes, as we ought to have done, to the ex-Secretary of State and his Under-Secretary. They deserve those tributes. But I am sure we would all desire to pay a tribute to the Scottish Education Department itself and its officials. As a member of the Advisory Council, like my hon. Friend opposite, I have been able in these last two or three years to see inside the doors of the Scottish Education Department, and to watch what the officials do. A Measure of this kind is very largely the product of years of work by these officials gathering material, sifting, examining, collating and ultimately presenting it in a series of draft Clauses to whoever is the Secretary of State. That is long, tedious but vital work and that work is done by the civil servants in the Education Department in Scotland. No tribute from this House can be too great for the work these men have done. Therefore, in extending our congratulations to the two right hon. Gentlemen, I feel sure that all of us would desire to include the great work that the civil servants have done.
    6.7 p.m.
    Captain W. T. Shaw: I am probably alone in thinking that this Bill has been improved by its losses. A Scottish proverb says, "Little said is soonest mended," and I take the view that the Clauses taken out of this Bill have really been for the benefit of Scottish education. I dare say that some other system will have to be found, but I do not think it will be possible to find a better system than that suggested in the Bill presented in this House. I do not think one can find anything in the Bill which indicated what the special qualifications would have been, and I expect we would have had a lot of flaws in electing members for educational purposes. We should have had first-class members and second-class members. There would have been a tendency in the county council to say,
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    "These people have been elected for education; leave it to them," and they would probably have been people who simply talked about education, with no children of their own, or very little experience of bringing up children. I am very pleased indeed that that part of the Bill has been dropped. On Second Reading I tried to catch Mr. Speaker's eye because the then Secretary of State for Scotland indicated that the constituency I represent was very penurious in the matter of education. He seemed to think, as probably many Socialists think, that the way to ensure success is to spend a great deal of money, but that is not so. I venture to say that the academic attainments of the children in the County of Angus will match and probably surpass those of the children in Kirkintilloch or West Stirling. They are not to be measured by the amount of money spent, and people in Angus get the worth of their money, for they know the value of money. Teachers say that it is far better to teach the children of Angus for a lesser sum than children in other constituencies who are so dull. The educational attainments of the children of Angus compare very favourably with those in many constituencies in Glasgow, or probably Kilmarnock.
    6.10 p.m.
    Mr. McIntyre: I meant to confine my remarks very particularly to two points, but unfortunately the hon. Member for that constituency whose name I cannot remember which is on the South bank of the River Forth has goaded me into saying something else. He suggested that we should be proud of the passage of this Bill. He suggested that it is due to some peculiar electioneering troubles in this Metropolis, but I would like to remind him and other Scottish Members that they have in their hands an easy way of getting rid of electioneering troubles for which they personally are, no doubt, not responsible. The suggestion that full agreement on such a Measure is of itself a great thing is surely a very extraordinary idea. The most classic example of full agreement in the biological world that I know of was the case of the Gadarene swine—there was not one exception to the rule.
    I come now to the two matters on which I would like an assurance from whoever is to reply to this Debate. I am not satisfied with the assurance I have so

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    far received on the subject of the size of classes. Will it be definite that teachers and materials will first be used in order to reduce the size of classes and not to put into operation the junior colleges? Because it is quite useless either to raise the school age or to establish junior colleges unless classes are of a reasonable size. I should also like to know the views of the Government on the question of early specialisation brought up on an Amendment to Clause 1. That Amendment was defeated, but I would like to know whether it is the intention of the Government to make early specialisation compulsory or whether they are going to leave it open to the children for some time after they enter secondary schools.
    6.14 p.m.
    The Lord Advocate (Mr. J. S. C. Reid): I should like to begin by expressing the indebtedness, which, I am sure, Scottish Members in all parts of the House feel, to my right hon. Friends the Members for West Stirling (Mr. T. Johnston) and for Stirling and Falkirk (Mr. Westwood) for the great efforts they put forth in the preparation of this Bill. They were good enough to take me into their consultations from time to time and, therefore, I speak from personal knowledge of the immense amount of work done and the careful consideration which was given to all manner of suggestions. Several hon. Members who, perhaps, did not have the opportunity to realise these matters, have complained about the delay in bringing forward this Bill. Indeed, it was suggested that that delay was chiefly because of difficulties about devising suitable machinery Clauses. That certainly is not so. There has been a host of substantial Amendments to other parts of the Bill, introduced between the first and the second editions. Indeed it would have been impossible, it would have been wrong, to rush this Bill through the Scottish Grand Committee if that earlier process of sifting had not taken place. But I can say, with complete assurance, that every suggestion made at any stage of the preparation of this Bill by any Member or any outside organisation of any standing at all was most carefully examined. It is highly desirable that in the preparation of our Bills that examination should take place. I agree that it could not take the place of examination in the Grand Com-
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    mittee, and should not do so, but that examination in this case was so thorough that I think we can rest assured that further examination in Grand Committee would not have resulted in very substantial Amendments, other than substantial Amendments with regard to the machinery Clauses.
    I know that my hon. Friend the Member for Kilmarnock (Mr. K. Lindsay) dislikes a great deal of this Bill, and would have liked extensive alterations. But in that matter he is completely out of sympathy with the mood of Scotland. I think that in no quarter of the Committee was there any substantial desire for extensive alteration of these other Clauses. Although it certainly was unfortunate that we had to rush this Bill—and I do not object to that description—the result has not been disastrous. It has lost us very little, because of the extensive preparations which took place before the Bill reached the Committee stage. We had narrowed the issues a great deal, although it is true that there was one substantial issue which we had not got rid of, namely, the fee-paying issue.
    It is true that Members were deprived of any opportunity of expanding their point of view, and I am sure that in order to save time to-day they have not quite expressed to those who are unaware of the contents of this Bill, just how far this Measure goes in the direction they desire. I am sure that it was only to save time that they omitted that, but it is right that I should put on record the great change which takes places under this Bill. This Bill lays it down that it is the duty of every local authority to ensure adequate provision for free primary and secondary education in public schools. That, I am sure, is not fully recognised in Scotland. Not only are boys and girls entitled to the fullest education of which they are capable of taking advantage, but if they want to go into a free, non-paying school, they have the right to go there. I should have thought that that would have met, at least nine-tenths of any criticism, the rest being more theoretical than practical. Therefore, I do not think that any hon. Members have been deprived of any opportunity at all except, if I may say so in a friendly spirit, the opportunity of airing their theories.

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    I agree with my right hon. Friend the Member for Stirling and Falkirk that this Bill does not get to the heart of our educational problems. Those problems are not machinery problems at all; they are human problems which can be solved only by the co-operation, in the right spirit, of those whose duty it is to take part in this enterprise—and I use the word, "enterprise," deliberately. There are the local authorities and their officers; there are the teachers and the parents, and the children themselves—do not let us forget them.
    Mr. Henderson Stewart: And the Scottish Office.
    The Lord Advocate: Unless we can get co-operation among all those who are interested, we shall get nowhere, but if we can get that co-operation I believe that this Bill gives the tools with which the job can be tackled. I will not say, "finished," because we shall never finish the job of education, and it would be a bad thing if we ever thought that we had. My hon. Friend the Member for East Fife (Mr. Stewart) interjected a reference to the Scottish Office. It is quite clear that, contrary to what certain hon. Members would like, the Scottish Office has deliberately kept in the background here. It has said that education if it is to be a real thing must be conducted on the spot by the people who have responsibility, and who know they have, and are capable and willing to carry it out. The Scottish Office does not want to direct practical education from St. Andrew's House. It wants to give local people the tools to do it, and so far as it can, to leave everything else to them. I think that is the right line of approach.
    One or two points were raised, with which I wish to deal briefly. With regard to the question of increased expense of transport, I can give my hon. and gallant Friend the Member for Argyll (Major McCallum) this assurance—that the matter is being kept closely in view in the preparation of the new grant regulations. The question of small classes or the raising of the school-leaving age in the new junior colleges was also raised. I can give no specific assurance at this moment, because all this has to be worked out as a practical proposition, and the results may be slightly different indifferent areas, but obviously a reduction in the size of
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    classes is the primary object of any educational policy. Every one of us agrees that there is nothing more important than the reduction of the size of classes to a manageable size. We are under a statutory obligation to pursue the raising of the school-leaving age to 15 at the earliest possible moment, and these two matters must have extremely high priority. But that is not to say that we are not going to get on with other matters as fast as our resources will allow. The question of teachers and buildings and other things have to be gone into, and I cannot now give an assurance about the speed at which it will be found possible to do what is required.
    Mr. Westwood: Would it not be possible, as I am sure it would, for the Lord Advocate to give us an assurance that the regulations in this Bill will lay it down that, in any new building, the classrooms must be of such size as to provide for no more than 40 pupils?
    The Lord Advocate: The right hon. Gentleman knows that that has been under contemplation. I cannot give an absolute assurance, but, obviously, if that is the main object of our policy, it would be an act of stupidity, unless there is a special case, to build any classrooms which would be too large for the numbers we intend to put into them. That point will be kept in mind.
    Mr. Henderson Stewart: I am a little disturbed about the right hon. and learned Gentleman's statement about priorities. I hope that does not represent a cooling off with regard to the position of junior colleges, to which many of us in Scotland attach the highest value.
    The Lord Advocate: I deliberately said that I was not going to put them in any special order. It is true that junior colleges are extremely important and valuable, or rather, that we expect they will be, but I think I am expressing the views of Members in all parts of the House, and those who were in the Grand Committee, when I say that Members as a whole have tended to put in the highest priority the reduction of the size of classes and the raising of the school-leaving age to 15. I am not, however, in the least ruling out the development of junior colleges. That must proceed alongside the other matters. In conclusion, I commend this Bill to the House as one

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    which takes not only a step but a great step forward in providing adequate machinery for the development of education in Scotland. I agree that there may easily be questions of finance to be considered as we go along. I have never shut my eyes to the likelihood that in the immediate post-war years, all manner of questions of local finance may have to be considered and solved by whoever occupies the position of Secretary of State for Scotland. That may well be so, but it is too early yet to foresee exactly what might happen. Apart from that, I believe this Bill gives us a great deal of useful material for working out the progress of Scottish education, and that Scottish Members, in co-operating throughout in the preparation of this Measure, have performed a very real service to our country.
    Question put, and agreed to.
    Bill accordingly read the Third time, and passed.

    LIABILITIES (WAR-TIME ADJUSTMENT) (SCOTLAND) BILL [Lords]
    Considered in Committee.
    [MR. CHARLES WILLIAMS in the Chair]

    LIABILITIES (WAR-TIME ADJUSTMENT) (SCOTLAND) BILL [Lords]

      CLAUSE 1.—(Application for adjustment of debtor's affairs.)
      6.28 p.m.
      Mr. Neil Maclean: I beg to move, in page 1, line 11, after "incurred", insert:
      "or that his assets are worth preserving and that an adjustment on the part of his creditors whether by reducing or postponing payment of their debts or otherwise compromising the same will be of ultimate advantage to themselves as well as to the applicant."
      I hope the Lord Advocate will be able to accept some of these Amendments on the Order Paper, because I am of opinion that they will not merely clarify some parts of the Bill, but will also bring within its scope a larger number of people than it at present sets out to include. The purpose of this Amendment is to prevent a debtor company from being put into an awkward situation whereby it is likely to lose not merely moneys, but also property, and machinery within such property, through being in debt. We must bear in mind that this Bill ought to have been brought in three years ago,
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      following the English Bill of a similar nature. Since then there has been, to my knowledge, at least one company which has suffered grievously because of the delay on part of the Scottish Office in following up the English Act with this Measure.
      The Lord Advocate (Mr. J. S. C. Reid): I do not think the hon. Member quite realises how wide the terms of the Bill are already, and I suggest to him that the objects of this Amendment are already met by Clause 3 of the Bill, and in particular by Sub-section 2 (e and f). Those paragraphs provide:
      (e) for postponing the payment of the debts or any of them for such period as the court thinks fit;
      (f) for postponing the realisation for such period as the court thinks fit of property which it would be unreasonable to realise immediately owing to its temporary depreciation in value or for any other sufficient cause.
      It seems to me that those provisions which allow very great elasticity for delaying the realisation or postponing the debts, really meet the point, which is a very real one, that the hon. Member has in mind. My only reason for being unable to accept the Amendment is that the hon. Member's objects are already adequately met.
      Mr. Maclean: Does the Lord Advocate mean that the case about which he and I have already had discussions on the Floor of the House will be brought within the scope of the provisions which he read to the Committee?
      The Lord Advocate: No, because they would not have been brought within the scope of the Amendment. We have had all this out twice before in the House, and I did not intend to go into the matter again. I expressed my view clearly on the last occasion. There is nothing in the Bill which would have appealed to the hon. Gentleman's friends as being valuable to them, and I do not think there is anything in his Amendment which would avail them in any way. On the last occasion I said that in my view the circumstances of the case did not come within the scope of the Bill. It was possible for the hon. Gentleman's friends to apply for relief under the Bill, but they would not have got anything that made it worth their while under the principles of the Bill.
      Mr. Maclean: Am I to take it, then, that this Bill does not apply to certain companies which, because of war circumstances, have been placed in a very difficult position already, and that there is no possibility of that particular firm being able to get out of its difficulties by an amending Act which will take other companies out of their difficulties? The Lord Advocate will remember that in the Debate when the other Bill was introduced less than a year ago, the feeling of the House was so strongly against him that one hon. Member, who had been a Minister, declared that if he were to bring in a Bill of Indemnification and explain the reason for its being brought in with regard to this company, it would be carried by a majority of Members, because they would be sympathetic to the company. The Lord Advocate now brings forward a Bill which does not fit the purpose at all, after leaving the whole matter, as it affects Scottish firms, till almost four years after an Act was passed to give security to English firms. The whole matter is disgusting.
      The Lord Advocate: If the hon. Member wants to reopen the matter, I must ask the Committees indulgence for a few minutes. The facts of the case which the hon. Member has in mind are as follow. The hon. Member's friends—
      Mr. Maclean: They are not my friends. It is merely a firm in my constituency to whom I wish justice to be done.
      The Lord Advocate: Three of the hon. Member's constituents came up to the House of Lords. Two of them failed on the merits of the case, and the third might have had a case if, not this Bill, but another Measure altogether—the Courts (Emergency Powers) Act—had been brought up to date. I say they might have had a case, because it is by no means certain that they would have had one. Let us assume for a moment that they would have had a case—a big assumption. Then, all that they lost by reason of not having this Act to fall back upon was the costs which they were required to pay for their unsuccessful appeal. That appeal covered a multitude of other things as well as this point. That is by the way. They have suffered no other prejudice of other sort or kind financially, apart from the order to pay costs. If that order is still out against
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      them, they are entitled to consider this new Bill and, if they think it worth their while, to ask for a scheme or arrangement with their creditors in order that those costs may be brought into the general picture. But from what I know of the case, I should not have thought it was likely to pay them to take that line, although they are free to do so. They must say whether they want to come in or not.
      Mr. Maclean: Am I to understand that firms which have not been protected up to now, and will not be protected until this Bill becomes an Act, may in some cases not come within the protection afforded by the Bill, although under the war circumstances mentioned in the Bill they had suffered damage, either financially or in other ways? Am I to take it that these firms still remain outside the Bill?
      The Lord Advocate: I cannot make it plainer to the hon. Member. Everybody is entitled to come in if he wants to do so and is affected by war circumstances in the manner provided in Clause 1, but it may not pay a person to come in because he may not get any very great advantage out of coming in. It is for him to consider whether or not he will get an advantage.
      Amendment negatived.
      The Chairman: I ought to tell the hon. Member for Govan (Mr. Maclean) that the next Amendment in his name—in page 1, line 26—if he wishes to move it, will come in Clause 3, page 4, line 36.
      Clause ordered to stand part of the Bill.
      Clause 2 ordered to stand part of the Bill.
      CLAUSE 3 (Provisions of schemes.)
      Mr. Maclean: I beg to move, in page 4, line 36, at the end, insert:
      "(c) in the case of a private company within the meaning of the Companies Act, 1929, for the settlement of debts by the issue of shares and/or debentures in such company or for the reorganisation of the capital structure of such company in order to provide shares or debentures in satisfaction in whole or in part of such debts."
      The Lord Advocate: This Amendment, which refers to private companies, suggests that there are circumstances where it would be proper that the creditors of the company should take payment either by way of an issue of debentures or by way of a further issue of shares. So far

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      as debentures are concerned, the matter is already covered by the terms of the Clause, because under Sub-section (2, c) the granting of security is included in the methods of drawing up a scheme, and a debenture is nothing but a security. So far as shares are concerned, the matter is a little bit different. If all the parties agree that a further issue of shares to the creditors is a proper way of clearing up the matter, they are free to agree to that as the Bill stands, but we do not think it would be desirable to allow a further issue of shares to be forced upon an unwilling private company. It would be extremely embarrassing if a scheme of that sort had to be drawn up, particularly in view of the fact that there are very often in private companies severe restrictions about the entry of new shareholders without the consent of the directors. Therefore, I think the matter ought to remain as it now stands in the Bill. Debentures may be issued by agreement, or under a scheme which is prepared failing an agreement. So far as shares are concerned, they ought only to be issued by general agreement and ought not to be forced upon an unwilling company.
      Amendment negatived.
      Clause ordered to stand part of the Bill.
      Clause 4 ordered to stand part of the Bill.
      CLAUSE 5.—(Protection and vesting orders.)
      The Lord Advocate: I beg to move, in page 6, line 2, after "any," insert "civil."
      It has been suggested to us that the existing terms of the Clause are rather wide and that the words "any proceedings" might include proceedings in the nature of criminal proceedings where a penalty is called for. There is no intention to protect people from proceedings of that kind, and accordingly, I am moving to insert the word "civil" to make clear the object of the provision.
      Amendment agreed to.
      The Lord Advocate: I beg to move, in page 6, line 3, after "property," insert "in respect of any provable debt."
      Under the Clause it might be thought that a protection order operated so as to protect the debtor against debts subsequently incurred after the order. We
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      do not think that is right. The protection order ought to be a standstill order for anything that has occurred before its date, but if the debtor incurs other obligations afterwards, the law should take its ordinary course.
      Amendment agreed to.
      Clause, as amended, ordered to stand part of the Bill.
      Clauses 6 to 12 ordered to stand part of the Bill.
      CLAUSE 13.—(Appointment and remuneration of trustees.)
      The Lord Advocate: I beg to move, in page 10, line 23, at the end, insert:
      (2) There shall be paid to any such trustee such remuneration and expenses as the Treasury may determine and such remuneration and expenses shall be defrayed out of moneys provided by Parliament.
      This is a Privilege Amendment.
      Mr. Maclean: This Amendment is not on the Order Paper.
      The Chairman: It is not on the Order Paper. It is a Privilege Amendment, and is already in the Bill.
      Amendment agreed to.
      Clause, as amended, ordered to stand part of the Bill.
      Clauses 14 to 18 ordered to stand part of the Bill.
      CLAUSE 19.—(Exemption from stamp duties and court dues.)
      The Lord Advocate: I beg to move, in page 12, line 1, to insert:
      "(1) Where a protection or vesting order is made, or an adjustment scheme is approved, under this Act—

      (a) every deed, conveyance, assignation or other instrument relating solely to property which was the property of the debtor at the date of the protection order or of the approval of the scheme and which, after the execution of the instrument, is or remains his property or the property of a trustee appointed under the order or for the purposes of the scheme;

      (b) every writ, order, certificate, affidavit, bond or other instrument required for the purposes of the liabilities adjustment proceedings;

      shall be exempt from stamp duties."
      This also is a Privilege Amendment.
      Amendment agreed to.
      Clause, as amended, ordered to stand part of the Bill.
      Remaining Clauses ordered to stand part of the Bill.
      NEW CLAUSE.—(Proceedings to take place in camera.)
      The proceedings in any application under this Act shall take place in camera and all diligence or execution at the instance of any creditor shall be suspended and sisted on the presentation of a petition to the court.—[Mr. Maclean.]
      Brought up, and read the First time.
      Mr. Maclean: I beg to move, "That the Clause be read a Second time."
      The Lord Advocate: There are two points on this Clause. The first is that proceedings should take place in camera, and the second is a provision with regard to diligence or execution being suspended. With regard to proceedings being in camera, we do not think we can accept that. There are arguments on both sides but what influences us is this. We are depending, under the terms of the Bill, on the debtor giving a full and true account of his liabilities. As long as everything is to come out ultimately into the open, it is unlikely that debtors will attempt to leave out part of their liabilities. They will gain no great advantage if they do so, and they may cause a great deal of trouble. If proceedings are in camera, there is a certain temptation not to be too candid, and it is really for that reason that we think it would be undesirable that these proceedings should take place behind closed doors. With regard to suspending, diligence, I think the matter is almost covered already, because, under Clause 17 if any creditor tries to exercise his rights against a debtor, who might plead the terms of this new Bill but has not yet done so, he can be stopped and, under Clause 5, once the debtor has come into court and asked for protection he can also ask for a protection Order, which would stop the kind of thing the hon. Member has in mind. We think we have covered the whole ground that the hon. Member has in view, and this half of the Clause is unnecessary while the other half might lead to abuse.
      Motion and Clause, by leave, withdrawn.
      Bill reported, with Amendments; as amended, considered.—[King's Consent signified.]
      6.50 p.m.
      Motion made, and Question proposed, "That the Bill be now read the Third time."
      Mr. Woodburn: The Bill provides for the setting up of an honest broker to negotiate and settle between the two parties, the assumption being that the debtor will always be the person who is in difficulties. Is there anything in the Bill to cover the point when the creditor is in difficulties? Both parties might be "broke," and it might be rather more difficult if both have suffered from the war.
      The Lord Advocate: There is no specific provision to that effect but what we intend, and I think what we provide, is that the broad equities of the situation will be considered. In the first place, the duty of the official appointed is to try to get agreement. Plainly, at that stage the equities on all sides must be considered. If that fails, the trustee has to prepare a scheme. Again, it is his duty to consider the equities. I do not think there is any serious risk of embarrassment in the way the hon. Member suggests.
      Question put, and agreed to.
      Bill accordingly read the Third time, and passed.

    CAMPS BILL [Lords]
    Considered in Committee.
    [Mr. CHARLES WILLIAMS in the Chair]
    6.52 p.m.
    Clauses 1 and 2 ordered to stand part of the Bill.
    Bill reported, without Amendment.
    Motion made, and Question proposed, "That the Bill be now read the Third time."
    The Parliamentary Secretary to the Ministry of Education (Mrs. Cazalet Keir): My right hon. Friend explained on the Second Reading the object of the Bill and why it was necessary. As Members on all sides have welcomed it, I do not think it is necessary to do more now than say I hope it will receive its Third Reading.
    Question put, and agreed to.
    Bill accordingly read the Third time, and passed, without Amendment.

    NAVY, ARMY AND AIR EXPENDITURE, 1943
    Resolutions reported:

    "I, Whereas it appears by the Navy Services Appropriation Account for the year ended the 31st day of March, 1944, that, as shown in the Schedule hereunto appended, the total surpluses and deficits on Navy Votes for that year are as follows:

    Total Surpluses, namely:

    £

    s.

    d.

    £

    s.

    d.

    Surpluses of actual as compared with estimated receipts (Votes 2–6 and 8–16)

    33,072,113

    13

    3

    Total Deficits, namely:

    Deficiencies of actual as compared with estimated receipts (Votes 1 and 7)

    39,883,473

    12

    10

    Excesses of actual over estimated gross expenditure

    683,750,591

    9

    0

    723,634,065

    1

    10

    Net Deficit (charged to the Vote of Credit)

    £690,561,951

    8

    7

    And whereas the Lords Commissioners of His Majesty's Treasury have temporarily authorised the application of surplus receipts realised under Votes 2 to 6 and 8 to 16 towards making good the deficit in receipts under Votes 1 and 7."

    1. "That the application of such surpluses be sanctioned."

    [For details of Schedule, see Official Report, 1st June, 1945; Vol 411, c. 560–564.]

    "II. Whereas it appears by the Army Services Appropriation Account for the year ended the 31st day of March, 1944, that, as shown in the Schedule hereunto appended, the total surpluses and deficits on Army Votes for that year are as follows:

    Total Surpluses, namely:

    £

    s.

    d.

    £

    s.

    d.

    Surpluses of actual as compared with estimated receipts (Votes 2–15)

    18,939,450

    14

    1

    Total Deficits, namely:

    Deficiencies of actual as compared with estimated receipts (Vote 1)

    25,790,946

    16

    7

    Excesses of actual over estimated gross expenditure

    947,451,024

    18

    2

    973,241,971

    14

    9

    Net Deficit (charged to the Vote of Credit)

    £954,302,521

    0

    8

    And whereas the Lords Commissioners of His Majesty's Treasury have temporarily authorised the application of surplus receipts realised under Votes 2 to 15 towards making good the deficit in receipts under Vote 1."

    2. "That the application of such surpluses be sanctioned."

    [For details of Schedule, see Official Report, 1st June, 1945; Vol. 411, c. 560–564.]

    "III. Whereas it appears by the Air Services Appropriation Account for the year ended the 31st day of March, 1944, that, as shown in the Schedule hereunto appended, the total surpluses and deficits on Air Votes for that year are as follows:

    Total Surpluses, namely:

    £

    s.

    d.

    £

    s.

    d.

    Surpluses of actual as compared with estimated receipts (Votes 2–11)

    100,825,385

    11

    7

    Total Deficits, namely:

    Deficiencies of actual as compared with estimated receipts (Vote 1)

    117,185,389

    7

    6

    Excesses of actual over estimated gross expenditure

    483,173,914

    6

    6

    600,359,303

    14

    0

    Net Deficit (charged to the Vote of Credit)

    £499,533,918

    2

    5

    And whereas the Lords Commissioners of His Majesty's Treasury have temporarily authorised the application of surplus receipts realised under Votes 2 to 11 towards making good the deficit in receipts under Vote 1,"

    3. "That the application of such surpluses be sanctioned."

    [For details of Schedule, see Official Report, 1st June, 1945; Vol 411, c. 560–564.]

    Resolutions agreed to.

    PURCHASE TAX (CHARGES) (UTILITY MATTRESSES)
    6.55 p.m.
    The Financial Secretary to the Treasury (Mr. Peake): I beg to move,
    "That the Purchase Tax (Charges) (No. 2) Order, 1945, dated 15th May 1945, made by the Treasury under Section 20 of the Finance (No. 2) Act, 1940, a copy of which Order was presented on 29th May, be approved."
    By the Purchase Tax (Exemption) (No. 1) Order, 1943, bedding and certain other articles of a utility nature to which certain marks are affixed are exempted from Purchase Tax. During the war only mattresses of a utility character have been manufactured, but now the manufacture is being resumed of mattresses containing interior springs. These articles, which perhaps are not entirely of a luxury character but are halfway between a luxury and a necessity, should, it is proposed, bear Purchase Tax at the basic but not at the luxury rate, the basic rate being 33⅓ per cent. The Board of Trade have fixed maximum prices for these articles, and hon. Members who can afford them, and indeed other people, will be able in future to sleep on these mattresses containing interior springs and have the satisfaction of reflecting during their slumbers that they have made some contribution towards the revenue of the country.
    Captain McEwen: My right hon. Friend, I think, mentioned some other articles of bedding besides mattresses. Are they included
    650
    in the Order, or will it apply solely to spring mattresses?
    Mr. Peake: It applies only to mattresses. They are the only new articles in respect of which a provision of this kind is required.
    Question put, and agreed to.

    DEBTS CLEARING OFFICES
    6.58 p.m.
    Mr. Summers (Secretary, Department of Overseas Trade): I beg to move,
    "That the Clearing Office (Turkey) (Amendment) Order, 1945, dated 15th May, 1945, made by the Treasury under Sections 1 and 3 of the Debts Clearing Offices and Import Restrictions Act, 1934, a copy of which Order was presented on 18th May, be approved."
    The Clearing Office Order dated 15th May arises from an agreement made in 1945, the terms of which were made public in Cmd. Paper 6632. The object of this Order is to remove the obligation which was placed on exporters to make their funds available to the Clearing House under the terms of the principal Order, which they have had to do since 1936.
    Question put, and agreed to.
    ADJOURNMENT
    Resolved: "That this House do now adjourn."—[Commander Agnew.]
    Adjourned accordingly at One Minute to Seven o'Clock.