NEW CLAUSE.—(Outlay by rural craftsmen.) (Hansard, 29 November 1945)

§ Squadron-Leader Sir Gifford Fox (Henley)
I beg to move, "That the Clause be read a Second time."
I move this new Clause in the hope that steps can be taken to include agricultural repair trades such as the village blacksmith in the Income Tax concessions given in Section 33 of the Income Tax Act, 1945. Under that Act concessions are made to farmers for the erection of up-to-date buildings. The large farmer, farming 2,000 or 3,000 acres, obviously erects new repair shops to repair and keep going his machinery on the mechanised farm, but the small farmer will not have those facilities. He will want to go to the village blacksmith, the village repairer, or the small agricultural engineer, to repair his machinery. Those small blacksmiths and agricultural repairers will not be entitled to these concessions if they put up buildings for the repair of machinery. They arc entitled to the concessions only when they erect new buildings for the production of new machinery.
I ask the Chancellor to give sympathetic consideration to this anomaly and to help the small blacksmith and the agricultural engineer to have modern workshops and to keep up to date in the change-over from old-fashioned farming to the mechanised farming of today. These small people are finding it very difficult to change from putting shoes on horses and 1642 the other trades they carried on, to the scientific repair of machinery, which is more important than ever, now that we have not got dollars to spare and are not able to buy all the spare parts that we would like for the agricultural machinery. The cogs have to be repaired. We cannot get new ones. This is a good way of helping the foreign exchange situation. It is quite easy for a man to be taught welding and other forms of repairing machinery by attending short courses and being brought up to date. I appeal to the Chancellor to try to help these small agricultural repairers.

§ The Solicitor-General
I can only speak to the Clause as it appears upon the Paper. It is that the allowance should be available in respect of the construction of shops. "Shops," I take it, is not only limited to the blacksmith type of shop, but includes shops in which things are sold. If that is so, no doubt the hon. and gallant Gentleman who moved the Clause realises that it does not come within Section 33 of the Income Tax Act of 1945. He is perfectly right about that.
Before I deal with the new Clause, which I must ask the Committee to reject, I want to say that a shop, if it was opened for the purpose of constructive creation, that is to say the making of machines and so on, would come within the purview of Section I of the Act and would be entitled to the initial allowance and the annual allowance which are applicable to an industrial building under the terms of Sections I and 2 of the Income Tax Act, 1945. Therefore, some of the shops which the mover has in mind, namely, those which can fairly be said to be engaged in productive creation would, in any event, qualify for what is admittedly the lesser allowance envisaged under those Sections. They would not, as the hon. and gallant Member says, qualify for the larger allowance which is provided by Section 33, because that is limited to shops or buildings for the purpose of agriculture and husbandry.
What is really the substantial reason for rejecting the proposed new Clause, in so far as it relates to shops for the purpose of selling things? After all, the wording of the Clause is wide, and covers all shops.

§ Captain Crookshank
I am quite sure that the Solicitor-General understands that 1643 "shops," in the sense of retail distribution, was not what my hon. and gallant Friend had in mind, to judge from the context of his speech. He meant what are called repair shops. The hon. and learned Member need not, therefore, trouble himself to argue that case. We can accept it that "shops" in the retail sense is not intended.

§ The Solicitor-General
I am much obliged to the right hon. and gallant Gentleman for his intervention, but I can only speak, as I said at the outset, to the Clause as it stands on the Paper. If it were accepted and eventually became part of the Act, it would have to be construed in the ordinary acceptation of "shops."

§ Captain Crookshank
I think this is the first time that the Solicitor-General has taken any part in Debates on a Finance Bill. It is very often that an Amendment is put down by an hon. Member who knows perfectly well that it may not be drafted in proper legal form. It is only if the intention behind an Amendment is accepted that the Government's draftsmen can be asked to put it into the right form.

§ The Solicitor-General
I entirely accept what the right hon. and gallant Gentleman says. I will therefore deal with the proposal on the footing that what the mover had in mind was the sort of repair shop which he mentioned in his opening speech. Those shops do, by the wording of Section 8 of the Act, also fall within the exclusion. Admittedly, if repair shops are to be brought into the terms of the Act, an Amendment, not in the form proposed, but in some other form and with the appropriate wording, would be necessary.
What is the substantial reason for rejecting the proposed new Clause? It is that the Act of 1945, which came into force in June this year, was carefully drafted to promote and to deal with what could fairly be said to be productive industry, and it was specifically drawn to exclude what the hon. and gallant Member who proposed the Clause had in mind. It was framed as it was in pursuance of the policy announced by the then Chancellor of the Exchequer on the Second Reading of the Bill, and I will quote from what he said on that occasion. He said: Let me, at this stage, say quite frankly that I know there will be some disappointment 1644 that the new allowances for buildings are to be confined in general to buildings used in productive industry and that, for example, offices and hotels are excluded; but I made it quite clear in my Budget speech of last year that my proposals would be deliberately framed in this way, in order to benefit productive and creative industry. The reasons that have led me to make this dinstinction will, I think, commend themselves to the House. I propose to the House that we should, as an Act of conscious policy, deliberately weight the scales in favour of those forms of capital investment which are most necessary to the industrial strength of the community. It is productive or creative industry that provides in the main industrial employment and is the foundation of our national prosperity."—[OFFICIAL REPORT, 14th March, 1945; Vol. 409, c.258.] That was a deliberate and conscious expression of policy, and on that policy the Act was framed to cover productive industry and nothing else. That appears from the conditions as they are set out under Section 8 of the Act. I submit, that since June, 1945, to the present there has been no sufficiently marked change to make it desirable to depart from the policy of the Act, based as it was on the opinion expressed by the then Chancellor. What the hon. and gallant Gentleman proposes is that there should be a departure from the principles embodied in that Act in the way of including retail shops when they were specifically excluded, and I submit that no case has been made out for now departing so soon after the Bill became law from the principle upon which it was framed.

§ Captain Crookshank
We will not take this to a Division. My hon. and gallant Friend wished to make the point, which is an important one for agricultural constituencies. The word "shop" is perhaps, unfortunate, because he did not, and I did not, intend it to have the meaning implied to it. There are up and down this country a number of small people who do repairs of the nature referred to, and the blacksmith is a very good instance. With the coming of machinery on the vastly increased scale on the land it naturally follows that a great deal of the work hitherto done out of the country necessarily falls to be done here. The various county councils and rural community councils have done great work in recent years training men for that purpose. In my opinion, because of this new equipment which has come on to the land, there has been some slight change since June, 1945. It is true that the Act of this year directed attention to what it 1645 called creative and productive industries, but it is also quite true that there has been a considerable change in our external asset position during the last few months.
A good deal of the agricultural machinery is American in origin, and it is probable that it will not be possible owing to the dollar position to get all the spare parts readily. Therefore, the corresponding spare parts could be and should be made in this country. If the small rural industries could be developed—and it will be necessary to do this—it will be advantageous to have them equipped to make the necessary spare parts. It was in order to call the Government's attention to that new phase of the question that the Clause was put down. I am certain, having called the attention of those who are mostly responsible, the agricultural Ministers, rather than the Solicior-General, will take the hint which we have put before them, and no doubt, during the period in which the Chancellor is going to do his thinking, some thought maybe given to this question. I hope my hon. and gallant Friend will not trouble the House with a Division.