Mr. Ivor ThomasI beg to move, in page 35, line 23, to leave out "allowances," and to insert:
reasonable allowances in respect of expenses properly incurred in the performance of the duties of any office.We had an interesting discussion in the Committee about the allowances claimed in business. The discussion opened my eyes to a great many practices of which I was not aware, in my innocence. In the light of that discussion we have felt it desirable to alter the definition of "allowances" in order to make it clear that these are only reasonable allowances in respect of expenses properly incurred in respect of the duties of an office. We were told about £60 being claimed for one night in Lisbon, and so on——
§ The Attorney-GeneralFor one night?
Mr. ThomasYes, for one night for two persons in Lisbon, not in Brighton. We have therefore felt it desirable to make it clear in the Bill that any allowances paid must be properly returned. I think that will be readily accepted by the House, and I need only say that whatever allowances are paid will be examined by Income Tax inspectors from their own point of view. They do not necessarily accept the word of the claimant. This will be a double safeguard to ensure that allowances paid are wholly, necessarily and exclusively incurred in the performance of the duties of an office.
§ Captain Crookshank (Gainsborough)The Amendment raises a point which keeps coming up in these Bills. I would like the Minister to have these words considered again. I understand, although I was not there, that there was an interesting discussion in the Committee on the matter. We had what was no doubt a similar discussion during the proceedings on the Coal Bill. The question of allowances came up, indeed, only yesterday, on an Amendment sent down from another place on the subject, and oddly enough, the words which we inserted in the Coal Bill contained a reference to "remuneration or allowances." Under the definition in the Bill we are now considering, remuneration is the same as allowances.
§ Captain CrookshankWhat else does it include? Salaries?
§ Mr. Thomas indicated assent.
§ Captain CrookshankI want these words to be looked at by the draftsmen again with a view to some kind of concerted arrangement being come to for all these Bills. It will be far more satisfactory. The Minister may not know that his colleague the Minister of Town and Country Planning is examining this problem. Last Friday he said that he would very gladly look at the whole matter again. The Minister of Fuel and Power had to look at the same matter as recently as yesterday in connection with his Bill. I hope the Minister will look at the matter again in connection with the Bill we are discussing. There is a growing feeling that allowances as such are undesirable. The Attorney-General knows more than I do about Income Tax law but I think that, generally speaking, allowances are tax free, as opposed to salary. That is bad.
On the other hand, there is every reason to hold the view that reasonable expenses, as such, should be allowed. Reasonable expenses properly incurred are not the same as allowances. That is where I object to these words. From what the Minister said, they appear to include expenses, but allowances are not expenses. They are a global figure out of which expenses may come. They are not necessarily the same figure as the different items of expenses added together. Ministers must be aware that there can be travelling allowance, subsistence allowance, entertainment allowance, or whatever it might be, of £200 or £300, or whatever the figure might be. If one kept a detailed account and added up the actual items they would not necessarily come up to the figure of the allowance. That is the point which I make. I think the Public Accounts Committee are agreed that if expenses are incurred, they should be refunded. That is not the same thing as an allowance, because of the gap that might exist between the two, a difference which inures, of course, to the advantage of whoever draws the allowance. There is a further point that the Air Transport Advisory Council are to be paid, under Clause 36, and the Schedule, by remuneration. As the Bill now stands, the members of the Council are to have an annual salary but, under 626 an Amendment which we shall reach later, they are to have remuneration instead of annual salary. I think that means that there is to be no salary but merely an allowance. [An HON. MEMBER: "No.''] It is not at all clear.
Mr. ThomasThey will receive a salary and an allowance in respect of expenses properly incurred in the performance of duties. The Amendment will restore the original form of the words.
§ Captain CrookshankI do not wish to anticipate another discussion, but the Amendment does not appear to do anything of the kind. If we take out "annual salary" and insert "remuneration" that does not appear to me to cover the point. There is no reason to suppose that "remuneration" means "annual salary."
§ 5.30 p.m.
§ Captain CrookshankThis is the definition Clause, and it is important that it should mean what the Minister wants it to mean. I am asking the Government to insert these words now and to examine the whole matter later on, in the light of other Bills, with the object of arriving at some sort of codified form of words to be inserted into other Bills and so avoid all this discussion, in which I have taken part about seven times in the last few months. It is very wearisome to me and for everybody else. Just as we have codified recently the whole question of Orders in Council, Prayers and negative Resolutions, so I hope the Government will set their advisers and experts to this problem and determine exactly what is wanted. The definition should be so clear that everybody will know exactly what is involved, bearing in mind the great reluctance of the House to give any tax-free emoluments at any time to anybody. While the House is ready to pay reasonable expenses incurred it is not prepared—I am speaking for Members on all sides, as is evidenced from reports of Committees upstairs—to see, under the guise of allowances, more money than expenses going to individuals who will thus have some more or less tax-free income. While I do not object to the Amendment, I hope the Government will give a pledge to look at the matter, and, if necessary, make 627 further Amendments in the Bill at a later stage.
§ Mr. Sydney Silverman (Nelson and Colne)I do not know what bearing this point may have on this Bill, but I want to comment on the general question involved. The Government will be well advised, in the definition Clause, to make a very clear definition between what they regard as allowances and what they regard as remuneration I am speaking from a different point of view from that of the right hon. and gallant Gentleman opposite, though I say so without any intention to depreciate the importance of the argument he advanced. I speak as one who has been, several times, a Member of a Select Committee of this House, requested by the House to consider whether the holder of a particular office was or was not disqualified from election to this House. We have been compelled—I think it is fair to say—most reluctantly on several occasions to hold that a man was, in fact, disqualified although he held an office in which he discharged public services with no real benefit to himself, and in circumstances which did not make him amenable more than other people to the Executive, but which, nevertheless, technically, because the Act under which he was appointed talks about remuneration, made him the holder of an office of profit under the Crown. It would be improper on this occasion, and I do not want to, to embark on a discussion on the general principle, but on all these occasions the Government ought to make up their mind whether the payment involved is to be only a reimbursement of out-of-pocket expenses involved in the discharge of a public duty, or whether what is involved is payment for services rendered, because the two things are different in quality and legal effect It is wrong for a definition Clause to use a phrase like "remuneration or expenses" which blurs the distinction between two quite different things. I do not know what the importance of this may be to this Bill, hut the general principle involved is one to which the Government might well give attention both on this Bill and on other Bills where the point may arise.
§ Air-Commodore Harvey (Macclesfield)Does the Parliamentary Secretary intend that the officials or the executives of the 628 corporations will be given a lump sum in the form of an expenses account for the year, or will they have to put in an expenses sheet after each trip? If a director travels on behalf of the corporation to North Africa, will he come back and put in his expenses sheet in detail as it is done in business these days?
§ Mr. Bowles (Nuneaton)May I ask the Attorney-General whether if a Member of Parliament took an office, perhaps as a secretary or a pilot in any of these corporations, that Member of Parliament would in his opinion be regarded as disqualified along the lines mentioned by the hon. Member for Nelson and Colne (Mr. Silverman)? I might be offered a job as general secretary to the B.S.A.A., which would be nice. Would I lose my seat——
§ Captain CrookshankNice for whom?
§ Mr. BowlesIt might not be nice for the House if I were not here. Can the Attorney-General give us some indication on this point? Hon. Members on all sides of the House are interested in aviation, and some of them might be offered a small managerial job or a job as a director in one of the corporations. In view of what has been said, would they lose their seats in the House?
§ Sir W. WakefieldI wish to put one question to the Attorney-General. I support the right hon. and gallant Member for Gainsborough (Captain Crookshank) in his request for a clearer definition of this whole question. We all know that sometimes there is a flat rate of allowance for people going away on duty. Frequently that allowance is inadequate for the expenses incurred, but if people are fortunate enough in being able to stay with somebody, and do not incur those expenses, nevertheless, they put in that allowance and, quite rightly, make out of it. But frequently, because there is a Hat rate of allowance people are badly out of pocket, and I think that is unsatisfactory. What we want to know is whether the actual expenses incurred will be the reimbursements permitted. What are the exact definitions of an allowance and art expense? It seems to me the whole question of the definition of an allowance and of an expense is being muddled up and confused. There ought to be a much clearer statement whether an allowance means an exact reimbursement of an expense, or is a flat rate to cover approxi- 629 mately what a person might spend, whether or not he does so.
§ The Attorney-GeneralTo deal first with the short point raised by the hon. Member for Nuneaton (Mr. Bowles) on the question of the holding of an office of profit, in my view an appointment as a pilot or any other appointment under the boards of the corporations would not constitute the holding of an office of profit under the Crown. These appointments are not made by the Crown, or by a Minister on behalf of the Crown, but quite independently by the corporations concerned. The position in the case of members of the Board appointed by the Minister is entirely different. We may have some discussion on that on a later Amendment. But on the specific case put to me, it can be answered quite confidently that if the hon. Member were offered a position of this kind he would be free to take it, and still give us the benefit of his services.
§ Mr. Lennox-BoydWe have an Amendment on the Order Paper to leave out paragraph 4 of the First Schedule. It was in order to elicit this point that we put that down. There is now no need to move it.
§ The Attorney-GeneralThere is no doubt whatever that under the Statute of Queen Anne members of the Boards would be disqualified. May I come to the more general points raised by the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) and the hon. Member for Nelson and Colne (Mr. Silverman). I have listened with great sympathy to the views expressed by the right hon. and gallant Gentleman, and we shall certainly look at the wording of the Clause again, in order to bring it into line with other Bills which are being considered by the House dealing with similar matters. It is, of course, most important and desirable that when we are dealing with similar matters in different Bills we should seek to use exactly the same language. We will, therefore, look at it from that point of view.
So far as the definition of "remuneration" is concerned, I have no doubt that, as the Clause stands with the present Amendment, the term "remuneration"—which is, of course, an exceedingly wide term—includes annual salary. It includes also the question of allowances. "Allowance" is a descriptive term sometimes 630 used to cover particular items of expenditure, and sometimes to cover the case where a fair estimate is made in advance of the probable total of items of expense which, taken one by one, would he admissible for Income Tax purposes. It is a global estimate in advance of what it is thought the expenditure is likely fairly to amount to. I say "fairly" because it is a fair estimate from the point of view of the Income Tax authorities, and they only accept it and pass it without further examination if they come to the conclusion that it is a fair estimate.
However, it is perfectly true, as was said—and it is a matter which gives all of us a great deal of concern, by no means only in relation to these public corporations—that sometimes the practice of making global allowances in this way is used to escape taxation which ought properly to be paid. Large allowances are paid which are really intended to be remuneration for services rendered, and small salaries are paid. Taxation is paid on the salary and is escaped on the allowance. That is one of the reasons why in this Amendment we have provided that only such allowances as have been approved by the Treasury may be paid in these cases, because that will provide not the only safeguard, but an additional safeguard to make sure that if these corporations in particular cases—this is a matter of internal management for them—decide to make global allowances, they shall be allowances which merely represent a fair estimate of the itemised expenditure. Sometimes, of course, the allowance may, as it turns out, be a little more than the total sum of the itemised expenditure, if one examined it all and vouched for every particular item and added it up at the end; sometimes, as the hon. Member for St. Marylebone (Sir W, Wakefield) has quite rightly pointed out, it may turn out that the global allowance fixed is much less than the itemised expenditure which has actually been incurred by the person in receipt of the allowance. If in such a case the term of his employment is that he is to be paid his salary plus a fixed allowance, then I am afraid he would have to accept the fixed allowance as full reimbursement for the larger expenditure which, in fact, he had incurred. It is a matter of contract between him and his employers in a particular case.
However, the purpose of the Clause, as at present amended, is to make sure 631 that it these corporations follow the practice which is so common in ordinary commercial life of paying allowances rather than insisting that every single item for taxicab fares, for letters, and so on, should be separately vouched; if they follow that practice, the allowances which in fact they pay shall be such as satisfy the Treasury, and as pass the Income Tax authorities, and as represent not payment for services rendered but merely a fair estimate in advance of the probable items of expenditure which, if separately itemised, would be allowable for Income Tax purposes.
§ Mr. S. SilvermanThen my right hon. and learned Friend would no doubt agree that, in that case, the phrasing of the Bill ought clearly to indicate that? I remember one very famous case before the Select Committee where it was quite clearly shown on the evidence that the man involved actually lost money by the public service that he rendered; that he lost far more in wages than he received in allowances; and yet the fact that the Act under which he rendered his service described the payment as remuneration compelled us to hold—fantastic as we believed it to be—that he was holding an office of profit under the Crown.
§ 5.45 p.m.
§ The Attorney-GeneralThe words used in the Statute of Queen Anne are, I think, those words which my hon. Friend has just used—"office of profit"—and I would not be prepared to say now, off the book, even in the case quoted by my hon. Friend, that if what he was paid was not termed an allowance but expenses, and he was paid the actual expenses that he incurred, even that might not constitute a profit for the purposes of the Act of Anne. I do not think that we would escape the difficulty merely by using in this Bill the word "expenses" rather than the word "allowances." I think this is a matter which we have to consider, as indeed we have undertaken to consider it, in relation to all these questions affecting offices of profit with a view, later on—I must not make any pronouncement as to possible legislation—to considering whether we can do something to alter the present exceedingly unsatisfactory state of law about the offices of profit.
§ Amendment agreed to.