§ Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."1117
§ Mr. Assheton
It was somewhat of a surprise to many of us that the Chancellor should have used this particular form of taxation in his Budget, because the writer of an article in the "Economist" was good enough to remind us last weekend of what the Chancellor had said in an earlier period with regard to a tax of this nature. The quotation which I am about to read to the House is from "The Principles of Public Finance," by H. Dalton, M.A., D.Sc. (Econ.). If the Chancellor were here, he might tell us that he has learned a lot since he wrote that book, and I hope he has, but on this matter I would have been rather happy if he had been here to explain exactly what has brought about this metamorphosis. Talking of the Corporation Profits Tax, which was a tax of this kind, the learned doctor said in this book:This tax was a bad tax … For it discriminated against a particular class of property-owners, namely, the ordinary shareholders in joint stock companies, as compared with all other classes, including debenture holders and the holders of gilt-edged securities. It was, therefore, in effect, a tax on risk-bearing, and tended to divert the flow of capital from risky to comparatively safe investments. But, in view of the need that risks should be taken and the reluctance of many investors to take them, this was a harmful diversion.What has brought about this metamorphosis? The Chancellor is more interested in the less risky investments than he was in those days, but perhaps the duties of Chancellor weigh heavily upon him, If so, we can understand the change.
I want to put before the House, if I may, some criticism, not of the tax, but of the grounds on which the Chancellor sought to justify it in his Budget. This is a tax on distributed profits. But, one should remember, it is not on profits distributed above the present level. The Chancellor justified it in his Budget speech by telling us that too much has been distributed in the past twelve months, and that increased dividends are the clearest indication in our national economy of an inflationary element. It is to that point that I draw the attention of the House. I draw attention, first, to the seventh Table of National Income and Expenditure, which gives some figures showing the distribution of the net product of enterprise, and also to another Table which is to be found in the same number of the "Economist" as that to which I have referred. This takes a sample of 2,040 1118 companies, and shows this interesting result. It shows that, whereas, in 1945, the amount of industrial companies' profits paid up in quoted dividends was 53.5 per cent., in 1946, which was the year to which the Chancellor refers, it was 53.2 per cent. That, I submit, does not really confirm the suggestion which the Chancellor makes that there has been an increase of distribution of the sort of thing which he is trying to check. There was also an interesting table in "The Times," leading one to the same conclusion that, whereas in 1945, 24.7 per cent profits were put to free reserve, in 1946 it was 25.6 per cent. I do not think the argument which has been put before us, justifies the conclusion to which the Chancellor has come.
§ Major Bruce (Portsmouth, North)
Before the right hon. Gentleman leaves that point, may I ask a question about the number of companies selected by the "Economist"? He said, I think, it was about 2,000. Is that the total of limited companies who had in fact published their accounts?
§ Mr. Assheton
I am afraid I do not quite get the hon. and gallant Gentleman's point. If he thinks that this is an unfair sample, I would say that it was a sample not produced for the purpose of producing this table.
§ 8.15 p.m.
§ Mr. Assheton
I shall be glad to hear the results of the hon. and gallant Gentleman's sampling. I hope it will be as extensive as those I have produced, because unless it is extensive, there will be no particular point in the information. If he is going to show to the House that great increases have been made, I am sure we shall all be interested to hear the samples he quotes. But the Chancellor has to be guided by the general run of what has been done—and I am making a case, which I do not think will be seriously disputed, that the tendency has been to increase the amount put to reserve in the last year, rather than the contrary.
May I now touch on the general merits of this tax? The first observation which I, or I suggest anyone studying the tax, would make is this. Here without doubt is an additional tax on enterprise. Not 1119 only is it that, but it is an extremely unfair measure in its incidence, as all Members of the House will recognise if they will be good enough to follow me in what I am about to say. The way in which a company's capital is arranged varies from one company to another. One may have a large preference capital with a small ordinary capital. On the other hand, a company may have a very small preference capital and a very large ordinary capital. As this tax works out, the company with a small equity capital will give its shareholders a very heavy burden, compared with that company which has an exactly opposite capital setup. I do not know if I have made my case clear. Let us go a little farther. Take a company with, let us say, £1,000,000 of capital of which £800,000 is in 5 per cent. preference stock, with the balance of £200,000 as ordinary stock. Let us imagine that that company earns £50,000 in a year and let us assume, as we must, that the 5 per cent. interest on the £800,000 would take £40,000 out of the £50,000. That would leave £10,000 for the ordinary shareholders. A substantial increase in taxation has the effect of increasing the burden on the ordinary shareholders far more steeply, than in the case of the company which has £200,000 preference shares and £800,000 ordinary shares. I want the House to understand what this means. It means that the tax bears much more heavily on one particular kind of capital set-up than on another. There is no justice or fairness in that. It cannot be right that such a tax should bear with much greater severity on one type of capital organisation than on another.
I would make one other observation. The Chancellor of the Exchequer no doubt wants to persuade the directors of companies to plough as much back into their businesses as possible. That is a laudable intention. I very much doubt whether this tax will have that effect. True, the additional 7½ per cent. on top of the 5 per cent., is put on distributed profits, but, on the other hand, if the management of companies are seeking, as they may well do, to maintain their dividends at the levels to which the shareholders have become accustomed, there will be a tendency to draw from that part of their profits which would otherwise be placed to reserves, instead of add- 1120 ing to the reserves. I think that is a very serious objection. There are a good many points which I know other members on this side of the House want to put. I will not trespass longer on the time of the House except to say that this is a thoroughly bad tax. We do not think it is to the advantage to the production of the country that it should be subjected, at this time, to the additional impost upon enterprise, and we on this side intend to divide the House against it.
§ Major Bruce (Portsmouth, North)
The argument of the Opposition in regard to the Profits Tax which has been addressed to us so far, has been concerned with the fact that the new Profits Tax is going to have a killing effect upon initiative within the realms of private enterprise. It was said during the earlier Debate, and I was wondering why it was not treated with greater emphasis this afternoon by the right hon. Gentleman the Member for the City of London (Mr. Assheton), although, of course, it may well be that more speeches may come from the other side of the House to reiterate that point. I would like to draw attention to one or two rather more authoritative remarks which have come from those quarters of the City Press which appear to have a very large influence in this particular. The "Stock Exchange Gazette" of 19th April last, in an editorial, stated:although Mr. Dalton's proposals are definitely anti-investor, the market received them philosophically, and responded with buoyancy in equities, with the exception, of course, of tobacco shares.The "Investor's Chronicle," which represents that broad class of rentier in this country, also on the 19th of April, in the "Stockbroker's Notebook," by Austin Friars, wrote—
§ Major Bruce
I do not suppose so. It said this:The effect of the measure will be that it will require larger gross earnings to pay a given sum in dividends than it would to put the same sum to reserve. It remains to be seen whether this will have very much effect upon companies' dividend policy, but, except in marginal cases, I should doubt that it would.It seems that responsible financial opinion in the City of London has already answered the right hon. Gentleman and Members of the Opposition on the point of buoyancy and confidence.
1121 I would also like to point out that the tendency has been in the case of certain companies, whose records I have been able to examine in the limited period at my disposal, to increase dividends. I was much struck on reading the figures produced by the right hon. Gentleman opposite from the "Economist," and I therefore decided to have a sample check from the files of "The Times." In the time at my disposal, I could only go back to 14th April, and I have the figures for several companies here, but I very much doubt whether I can give the exact number of companies whose figures I have examined. The first thing I noted was that, of the companies whose results were recorded in the financial columns of "The Times" since 14th April last, I could not find one whose dividend was less than it was last year. That is the first point.
§ Mr. W. Fletcher
The report of a company of which I am chairman appeared in that period. The company has paid no dividend for the past three years, nor is there one in prospect, but that was probably overlooked by the hon. and gallant Member.
§ Major Bruce
I refrain from using the point that the hon. Gentleman has just made against himself. All I can say is that, of the large number of companies whose results I was examining in the files of "The Times," I could not find one case where there had been a diminution in the dividend last year as compared with the previous year. On the other hand, I did find a number of companies which had increased their dividends, and I decided to give the House my broad view as to the tendencies being adopted. The figures I shall disclose will not show anything very sensational, such as those produced by the hon. Member for Eton and Slough (Mr. Benn Levy), but they are an indication of the way in which dividend policy is moving.
For example, the Churchill Machine Tool Company maintains a steady dividend of 30 per cent., which is the same as last year, and I doubt whether the Chancellor has any cause for complaint there. On the other hand, Frederick Lawrence, Limited, the furniture people, increased their dividend from 15 per cent. in 1946 to 30 per cent. in 1947—a 20 per cent. increase. Harrods paid 14 per cent. in 1946 and 20 per cent. in 1947, an increase of six per cent. British Lead Mills 1122 paid 30 per cent. in 1946, and maintained their ordinary dividend steadily at a nice and reasonable 30 per cent. this year. The Blythe Colour Works, whose results I could not find for 1946, declared a dividend this year of 80 per cent., and I take it that that is considered to be perfectly reasonable. The William Blythe Company, chemical manufacturers, paid 20 per cent. in 1946 and 30 per cent. in 1947, an increase of 10 per cent. Of course, there are many others which, I could quote. There is Messrs. Hoovers, who paid 30 per cent. in 1946 and 40 per cent. this year, an increase of 10 per cent., which will no doubt impress the housewife, and the Lewis Investment Trust, the chairman of which, as is well known, is Lord Woolton, on whose political position I make. no comment, and which increased its dividends from 15 per cent. in 1946 to 20 per cent. in 1947—a mere modest increase of five per cent.
I think that, from the figures I have quoted, it is quite obvious that the trend in dividend distribution is upwards. It is equally clear from the quotations I have already given to the House that the responsible Stock Exchange and investment opinion in the City of London does not think that the dividend policy of these companies, except in marginal instances, is going to be affected. The query which I have in mind, therefore, is whether this tax of 12½ per cent. is, in fact, large enough, I am bound to say that, in a good number of the reports of company meetings which I have read, chairman after chairman pronounced very solemnly, as chairmen always do, upon the Government's nationalisation policy, from which would follow a grave homily of the dangers of inflation. After having pronounced this grave homily on the danger to the nation, they would proceed to add to the inflationary position by declaring an increased dividend for distribution among their shareholders.
§ Mr. Stanley
Did the hon. and gallant Gentleman inquire any further; and can he say what were the comparative amounts placed to reserve by each of the companies whose dividends he read out?
§ Major Bruce
No, I am not able to say that. I am not able to go into any further detail. But I will tell the right hon. and gallant Gentleman that, during the interim period which elapses between now and the Finance Bill, if he will approach 1123 me at a later stage, I will have the particulars for him. It seems to me quite clear that this tax may have to be reconsidered, with a view, possibly, to increasing it slightly, and I do not see any particular reason why it should not be done. Hon. Members opposite have been clamouring for a wages policy, but have always neglected for commit themselves too far on the question of a profits policy. It may well be—
§ Mr. Stanley
I do not want to interrupt the hon. and gallant Gentleman, but would he say which Members on this side of the House have been clamouring for a wages policy? If he reads the speeches made during the economic situation Debate, he will see that it was disclaimed by everybody on this side.
§ Major Bruce
I am very pleased to hear that from the right hon. Gentleman. I withdraw the remark and fully accept what the right hon. Gentleman has just said on behalf of his party. I was under the impression—I readily admit my error—that the party opposite were so doing. If they were not, I withdraw it, and I accept their denial. I would ask the Chancellor to reconsider this whole tax question, and, after taking note of the responsible financial opinions I have quoted, to make further inquiries between now and the introduction of the Finance Bill, with a view to seeing whether it might not be advisable to increase the Profits Tax beyond 12½ per cent. I am quite satisfied that a case could be made out for it, and that the interests of the community would not suffer thereby. So far as this particular Resolution is concerned, I entirely support it.
§ 8.30 p.m.
§ Sir Stanley Holmes (Harwich)
In the main, I wish to make some inquiries and to get elucidation from the Chancellor with regard to certain points, which we can possibly discuss more fully on the Finance Bill. The first question I want to ask the right hon. Gentleman is with regard to preference share dividends. After hearing the Chancellor speak on the Budget, I came to the conclusion that the extra 7½ per cent. to be charged on the Profits Tax on dividend distributions would not apply to preference share dividends. He said that these increased dividends were a case of paying more money 1124 for no work at all. One assumed that this would only apply to what one called equity shares ordinary shares or deferred shares. But I have learned that a number of financial writers in last Sunday's Press said that the dividend paid on preference shares would also be liable to the extra 7½ per cent. I do not know whether any official announcement has yet been made with regard to that. If it has not, I can only say that, if the extra 7½ per cent. were imposed on dividends paid on preference shares, it would be a complete imposition, because, in the first place, there have been no increased dividends on preference shares, and the, Chancellor has based his complaint en increased dividends.
The Chancellor has said that the extra 7½ per cent. is going to be a fine or a penalty, whichever one likes to call it, on increased dividends. But, as I have just said, there have been no increased dividends on preference shares, unless, of course, it was a participating preference share, in which case the participating part would reasonably come in for the extra tax. Furthermore, while directors of companies are able to refuse to pay any dividend on an ordinary share, following the Chancellor's expressed desire that profits should be placed to reserve for the purpose of being ploughed back into business, company directors have no right whatever to withhold the fixed dividend on preference shares, whether it be four, five or six per cent. There is an obligation on their part to pay. If, therefore, it is true that companies are going to be penalised by having to pay an extra Profits Tax of 7½ per cent. on preference shares, I say that it is a gross imposition, and most unreasonable.
May I ask two questions which I previously asked in my speech last week, and to which I have had no reply either from the Financial Secretary or from the Chancellor? The first was, Will a dividend paid by a wholly owned subsidiary to its parent company be subject to the extra 7½ per cent.? A wholly-owned subsidiary company, let us say, pays a dividend of £75.000 to its parent company. The parent company, perhaps, has one or two other small subsidiaries which make no profit at all. The parent company pays the £75.000 paid to it by the wholly-owned subsidiary to its shareholders. Is there going to be double taxation? Has the 1125 extra 7½ per cent. to be paid on the dividends paid by the wholly-owned subsidiary to the parent company, and then, when the parent company distributes that £75,000 to the individual shareholders, has the 7½ per cent. tax to be paid once more?
Excess Profits Tax ended on 31st December. According to the White Paper, the extra Profits Tax commences on 1st January. If a company's year ended on 31st March, 1947, it is liable to pay 60 per cent. E.P.T. up to the 31st December, namely, three-quarters of the year. If that Excess Profits Tax exceeds its Profits Tax, it pays no Profits Tax to that date. On 1st January, it commences to pay Profits Tax only. But a difficulty appears to arise with regard to this extra 7½ per cent. on dividends. Will the extra 7½ per cent. be paid on one-quarter of the total dividends paid on equity shares for that year ended 31st March, 1947?
The next thing I want to point out is that the Chancellor has been endeavouring for nearly two years to persuade industry to plough back as much as possible of its profits into its business, and to distribute as little as possible. The extraordinary effect of this Budget, with its new provisions with regard to Profits Tax and to bonus shares, is that if a company pays out every penny of its profits in dividends, it is going to pay less to the Chancellor than if it permanently puts back the whole of its profits into capital. I will give the House an illustration. A company makes £50,000 in one year. The directors decide that they will not pay anything in dividends, but that they will merely leave that £50,000 in "carry forward." They pay to the Treasury 5 per cent. Profits Tax. A second company decides to distribute the whole of the £50,000; that company pays to the Treasury 12½ per cent. But another company says, "We have made £50,000; we want that as permanent capital in our business, we shall not put it into 'carry forward' because it could be used either by ourselves or by future directors by way of dividends and paid out again. We are going to put it back into the company permanently. We are going to give it to the shareholders in the form of shares, and no one can ever touch it again." That company has to pay 5 per cent. Profits Tax and 10 per cent. on the bonus element, or, in other words, 15 per cent.
So we have this result of this Budget: If a company has £50,000 in profits and 1126 decides not to pay a dividend, it pays only five per cent. If it decides to pay the whole of the £50,000 in dividends, it pays 12½ per cent.; but if it decides, in accordance with that which the Chancellor has been advocating for nearly two years, to plough back that £50,000 into the business, it has to pay 15 per cent.
§ Sir S. Holmes
I do not want an answer from the back benches opposite. I want it from the Chancellor himself. I have stated the effect of the present Budget in this respect and I ask him to explain why the company which is endeavouring most to follow his wishes, is to be the most penalised—
§ Mr. Beswick (Uxbridge)
I feel that, in one or two respects, the proposed Profits Tax could be improved. I can see something in the argument that one company which has carried on a reasonable profits policy and is paying out three per cent. or five per cent. per annum, ought not to be taxed equally with the company which is paying out 20 per cent., 30 per cent., or 200 per cent. or 300 per cent. as some have been doing. I also think it might have been possible to make this into a fairer instrument, and to have made some differentiation between the company which is performing a useful function in our social economy, and certain companies which, possibly, are not so usefully occupied as far as the production programme is concerned. Thirdly, I think the tax could have been improved in regard to the figure of 12½ per cent. I am not one of those who, having left 80 per cent. of our economy to private enterprise, immediately try to discourage that enterprise. Obviously, we should give them a fair chance. Those companies which are producing a good article at a fair price, and are paying the workers a fair wage, should obviously be encouraged. But at this moment we are asking the workers to work harder, and to forgo wage increases.
§ 8.45 p.m.
§ Mr. Beswick
Yes. It would seem to me in line with that policy if we also take effective steps to see that there is a limitation of profits. I do not think this tax 1127 of 12½ per cent. goes far enough to limit these profits. I have been surprised by the lack of energy with which the Opposition have attacked this Profits Tax. The reason why they have displayed such lack of energy is because, in my view, they were expecting a heavier Profits Tax. I think there was some reason for reducing the 60 per cent. E.P.T., but I do not think there was any reason for reducing it down to 12½ per cent.
§ Mr. Beswick
It is not E.P.T., but the effect as far as distribution of profits is concerned is roughly the same.
§ Mr. Beswick
The effect as tar as the distribution of money in the way of profits is concerned is the same.
§ Mr. Beswick
I suggest that there should be an additional tax, of something in the neighbourhood of 20 or 30 per cent., on all profits above five per cent.
§ Mr. Beswick
That would be assessed. If there is a proposed distribution of profits in the shape of dividends above 5 per cent., then there should be an increase of tax on that distribution.
§ Mr. Boothby
Does the hon. Member make no distinction whatsoever between a developing company—a mining company for example—and an established company like Courtaulds? Will he make them limit their profits to 5 per cent.?
§ Mr. Beswick
I would not make any differentiation, except in so far as certain companies would, as I said, be treated favourably. There would be a number of companies treated favourably, in so far as it is designed to encourage the capitalisation of those industries. It may well be rough justice on some of the other companies, but at the same time—and this is my point—there is rough justice at the present time as far as wages are concerned. We are asking workers to forgo wages—
§ Mr. Beswick
I am making it on the authority of a person who can read, and who can speak with other people. I will explain what I mean. I think the House will agree that at the present time we should adopt the principle of equal pay for equal work, for example.
§ Mr. Beswick
Oh no. Bearing in mind Government policy, we are not at this time going ahead as we should with that particular policy of equal pay for equal work.
Mr. Deputy - Speaker (Mr. Hubert Beaumont)
The hon. Member is now going very wide of the Resolution under discussion.
§ Mr. Beswick
My general point is, that there is rough justice at the present time as far as the wages policy is concerned, that there are certain classes of workers who are entitled to wage increases, but who are not getting them. My proposal is, that there should be an increase in this 12½ per cent. Profits Tax in order that we may go to the workers and demand an equal sacrifice from them with a clearer conscience than it is possible to go to them with at the moment.
§ Mr. Eccles
In a moment I will turn to this question of rough justice, in which I am very interested. First I want to ask two questions about the Resolution. I am glad to see a reference to amendments in the computation of losses and profits for the purpose of the tax. Does that mean that we are to have only one method of calculation in future, both for the Profits Tax and Income Tax? I hope that is what that means, because up to date, it has been tiresome to make two calculations. I hope we may be told what this change in computation means, and I hope it means there is to be one single computation. Secondly, is it intended that the tax should apply to all dividends paid out of profits as after 1st January, 1946, or to dividends paid after 1st January last?
Now I turn to the hon. and gallant Member for North Portsmouth (Major Bruce) and to the hon. Member for Uxbridge (Mr. Beswick), who discussed the principle of this tax. The hon. and 1129 gallant Member for North Portsmouth said that the Stock Exchange had risen on the Chancellor's Budget, and that that showed that there was nothing much wrong with the tax. I can only tell him that if there had not been a Profits Tax at all, the rise would have been much greater. I much regret to say that this rise is due to the inflation that is about. I consider it a thoroughly unhealthy thing that there should be so much money about, particularly money which is coming out of gilt-edged securities. When it overbalances the bad effect upon business of a tax like this, it is a very bad mark for the Chancellor.
§ Major Bruce
Would the hon. Member not agree that the inflationary process which, he says, exists, is due to so much profit having been distributed during the year?
§ Mr. Eccles
The inflation, as was well put by my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson), has been inflation of capital. That has never penetrated to the hon. and gallant Member. I would be out of Order if I went into the causes of the present inflationary situation, but hon. Members must realise that, if we have a tax which penalises companies, and it has no effect upon the Stock Exchange, the rise would have bean much steeper without the tax, and that must be proof, even to them, that there is far more money about than there ought to be.
I leave the effect upon the market to come to the tax itself. I have always been in favour of some mans of encouraging, through the Budget, the ploughing back of profits. Therefore, I think, the question we want to ask is whether this particular tax is going to help production and employment. Or is it going to hinder production and employment? That is not a question which hon. Gentlemen opposite ask. They look at this thing from the point of view of cutting up the cake into slices which they think are just.
§ Mr. Eccles
That is precisely what has been said—that wages have been kept steady, but that profits have risen, and, therefore, as the profits appear to them to be growing, they want to curb them.
§ Mr. Beswick
What I was asking for was an increase of productive effort on the part of the workers, which is more likely to be forthcoming if the results are not drawn off in the shape of profits.
§ Mr. Eccles
I am afraid the tax will not have the effect which the hon. Gentleman thinks. I much regret that I do not think that this tax will cause money to be ploughed back. It is not the way to improve the assets behind the worker, which is what we should like to see—tools, machinery, buildings renewed. On the contrary, I am afraid that this is very much like the tobacco tax, and that just as smokers will go on smoking, dividends will go on being paid. The Chancellor will get some revenue, but I am not looking at the revenue point of view, but at efficiency of production; and from that point of view this is not a good tax. As my right hon. Friend the Member for the City of London (Mr. Assheton) said, the Chancellor of the Exchequer knows that it is a bad tax, unless he has changed his mind. The right hon. Gentleman, in his book which we have all read, has said that a tax which falls upon the ordinary shareholder is a bad tax, because it really falls on those who take the risks.
§ Mr. Dalton
I had not forgotten, when making my Budget speech, or in preparing my Budget, what I had written, and I was not recanting it, although, as circumstances change, the emphasis in one's opinions alters. I said with regard to an increased Profits Tax, that:Whatever may be said about it generally"—and I had in mind what I had said about it "generally" in a book written some time ago, which is why I use these words—it has a special justification, in these days of cheap money, in order to do justice as between one section and another of those who receive income from investments."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, C. 85.]It was in the days of dear money when I wrote that little book, but these are days of cheap money, and the situation has quite altered.
§ Mr. Eccles
I accept what the Chancellor says, but it does not dispose of the essence of his original argument, namely, that it is a bad thing to favour the prior charge holder against the man who takes 1131 the risks. The effect of this tax is to discriminate in favour of the prior charge holder. Debenture and preference interests were always considered to be the first charge on a business, but I have no doubt that the first charge now is continuity of employment. That view is held by many modern businessmen. By far the best way of arranging the capital structure, so that continuity of employment can be achieved, is to have the capital in ordinary shares, because the ordinary shareholder can then take the knock in bad times, and it is easier to continue employing people and keep up the rates of wages. If you push capital into priority holders, you make it more difficult to carry out a stable wage policy in a business in good and bad times. Although this may be a sop to Socialist politics, it is actually an old-fashioned blow to the stability of earnings and employment in the country.
There is another bad effect. It increases the propensity to register companies outside this country. It is of great importance to the United Kingdom, when we are trying to get on our feet again, and when we have lowered our chances of doing business in places like India, and must therefore start again in Africa, if we are not to go down the drain, that as many of the companies as possible should register in this country and be managed from this country. That will not happen if there is a discriminatory tax on the ordinary shareholders in this country.
I do not know what the plans are, but hon. Members are well aware that we have to disperse our munitions production throughout the Empire. It is necessary to do so from the strategic angle. Would it not be much better if these companies were registered here? But who will do that when he knows that the profits which he earns in this country, if he distributes any of them, are to be subject to a discriminatory tax of this kind on the ordinary shareholders, which they would not suffer if the company were registered in South Africa, Canada, or some other part of the Empire? That is one effect of this sort of taxation.
One can make as many speeches as one likes in favour of the justice of saying that the shareholder is a man who does not deserve to get any more now, but 1132 let us not forget the economic results of taking that view. I fear they are much worse than, and very different from, what hon. Members opposite have thought. The incidence of the tax as between one kind of company and another will be unjust, but that is a minor point, in my view, compared with the general point that we are hitting the kind of capitalist whom we ought still to want, given the social background of the present day. Take, for instance, the small business. In many small businesses there is one man who is a sleeping partner and has £10,000 in preference shares, and there is another man who is the active man, and he takes, not a very high salary, but has the ordinary shares, and he relies upon the dividend on the ordinary shares to give him the incentive and reward.
§ Major Bruce
The hon. Member knows that in the small companies to which he is referring, it is the policy, where a director does have a large ordinary shareholding, subject to the limitation which the hon. Member has given, for him to draw the bulk of his remuneration by a salary or a fee. This business about a director drawing a dividend is not, in fact, in accordance with modern practice.
§ Mr. Eccles
The hon. and gallant Member does not know what he is talking about. He has only to consider the small engineering companies, and I suggest that he has a talk with the hon. Member for East Middlesbrough (Mr. A. Edwards), and he will find that what he said about modern practice is not true. I have many times tried to think how companies could be got to plough back money, and I have thought also of a differential rate of Income Tax between what is capital in the company and what is paid out. I have come to the conclusion that far the better way of doing it is to increase greatly the allowances for scrapping plant, renewing it, and rebuilding it—all those allowances that are paid When a company does something with the money.
§ Mr. Scollan (Renfrew, Western)
What sort of safeguard could the Government have that the money kept for that purpose would be used for that purpose?
§ Mr. Eccles
The point I am making is that if the inducement is given in the form of allowances on capital actually spent in depreciation, wear and tear, and so on, 1133 the Government have a very good control in that it pays out when the company does something. What may happen in this case is that a company will keep the money in Gilt-Edged or in the bank, and not do anything with it. That will not help anybody, except the Chancellor and the Gilt-Edged market. I cannot help thinking that the tax has something to do with helping the Gilt-Edged market. That is the difference between this side of the House and hon. Members opposite. We both want to have the money ploughed back. We both want to see the assets behind the workers improved. The other side of the House wish to do it by penalisation, and we wish to do it by giving an incentive.
§ Mr. Mitchison (Kettering)
I should have thought that the general case for this tax at the moment was so obvious that hon. Members opposite would have found some difficulty in opposing it. As I understand it, it is not penalising anyone to make him pay his fair share of taxation, and if there is a class in the community, which owing to the general financial position and the economic circumstances of the time, has a rather large share of the national income, I would not call it penalty but justice that that class should pay a proper share of taxation. In my view, this Profits Tax is well calculated to touch a particular class of gains and a particular class of person who are at the moment appropriate for taxation in that sense. I ought to say to the House that I have this amount of personal interest in the matter—that I have been a director of public companies for many years, and I am at the moment chairman of several of them. [An HON. MEMBER: "Come over here."] In answer to that invitation, I think that I may properly say that on this side of the House we are a representative slice of the whole nation and not merely of one part of it.
Some hon. Members opposite have been expressing doubt as to the practical effect of this taxation. I can give them my own personal experience. After the Chancellor's Budget speech, I went back to the affairs of a particular company, and I then and there reduced, in collaboration with my fellow directors, the rate of dividend which we propose to pay, as an act of ordinary prudence. So I may say in answer to the hon. Member for Chippenham (Mr. Eccles) that at any rate the 1134 Chancellor's speech did have some practical effect. The appropriateness of this tax at the moment lies in the fact that the ordinary shareholder has been, by and large, getting the benefits of what I must not call inflation, but may properly call inflationary pressure. On the figures given by the right hon. Member for the City of London (Mr. Assheton), the proportion of profits retained to profits distributed in dividends has not varied much since last year, but both the total profits and the average rates of dividend have gone up considerably. So the figures he gave were perfectly reconcilable with the observations which were made by my hon. and gallant Friend the Member for North Portsmouth (Major Bruce) in this connection. Within the structure of the company it is, of course, the ordinary shareholder who gets the benefit of that increase in profit as against the preference shareholder or the debenture holder and it is to the accretion of that benefit, not in the main due to any personal effort of the ordinary shareholder but to his investment position, that this tax is in my opinion very properly applied.
It is all very well to talk about encouraging enterprise but one has to bear in mind that this tax is going to be borne in the first place by the companies, and in the second place by the ordinary shareholder. As far as the company is concerned it clearly will not have that effect and as far as the ordinary shareholder is concerned it is surely a hopeless idealisation, or should I say it is a hopelessly out of date view of his position, to suppose that he is really contributing anything in the way of enterprise in the conduct of the business, or indeed that he has very much to do with it. The people who have to pay these taxes are those who, because of their investments and because of the economic circumstances of the time, have had the benefit of a general increase in dividends. It is only right and proper that these people should pay their share and to talk of penalising them is wholly fantastic.
I am not going into all the points raised by the hon. Member for Chippenham. If he will excuse me, it would take rather a long time to do so, but I will agree on two things. Matters would be very much simpler, if all companies had one class of shareholder, and theoretically there is a great deal to be said for it. After all, what we are taxing here is a company and how it is borne is a matter of the history 1135 and the structure of the corporate body. To discuss that seems irrelevant, and I think the hon. Member really answered himself when later on in his speech he dissociated himself from his right hon. Friend the Member for the City of London (Mr. Assheton) as to the unfairness of this matter between companies constructed in one way and companies constructed in another. As to the question as to what is the right tax to be borne by companies, having regard to the increased distribution of company dividends due to the general economic circumstances of the times, it seems to me right and proper that a tax of this sort should be put on, and further, having regard to what I might term the unconvenanted benefit which the ordinary shareholder has had because of the average structure of the company, I say this is a correct tax on him.
I should like to associate myself with what has been said from this side of the House on the question of wages and dividends. We are, in fact, calling on the people of this country to do more work by way of an additional contribution to the national income. It seems only right and obvious that the call should be accompanied at the same time with every possible step that we can take to put reasonable limits on the distribution of dividends, and to ensure that the wealth created by the efforts of the workers is put back into the business as capital and not spread about among the community at this moment by way of increased dividend. It is because excessive distribution of dividends at the moment increases the gap between the quantity of goods available and the amount of money normally in circulation that I think it ought to be restrained by taxation, and I regard this tax as appropriate for that salutary public purpose.
§ 9.15 p.m.
§ Mr. W. Fletcher
The hon. and learned Member for Kettering (Mr. Mitchison), as an example of the hereditary principle of directorships, sits rightly on the other side of the House.
§ Mr. Mitchison
If the hon. Gentleman will allow me for one moment I would say by way of personal observation that I am an example both of that principle and of the opposite non-hereditary principle, although I am not quite certain of the relevance of that to this Debate.
§ Mr. Fletcher
I can see no reason to withdraw the considerable compliment I paid the hon. Gentleman. After all, there is no disgrace in following in one's father's footsteps.
I should like to consider the incidence of this tax, first of all, on enterprise itself, and then, afterwards, on the shareholder. I shall take it in that order purposely because I believe that the major ill-effect of this tax is certainly on the spirit of enterprise without which the Chancellor would not have very much revenue to draw on from any source. There is a tendency on the other side of the House to think in terms of industry rather than of trade—to think inside this island rather than over a much greater area. I should like to point out that at the present moment, when we are all engaged in what I think is a very real endeavour in an export drive, that does mean in effect the selling of our goods throughout the world.
To carry that out properly it is essential, if they are to be sold in areas not under our control, that subsidiary companies should be formed in foreign countries. The incidence of taxation and the discrimination made against companies not registered in the country is very great, and it is absolutely essential that companies should be registered in those countries. That renders them liable to taxation. In turn that means that in areas where the Chancellor's efforts—which we all applaud—to bring about reciprocal arrangements to get rid of dual taxation have not been successful, the company and, eventually, the shareholder in this country in these great distributive and also creative organisations—because they are the organisations which have created throughout the world many of the great industries such as rubber growing, tin getting and the production of other raw materials—have to bear perfectly enormous burdens by the time the dividends become liable to taxation in this country.
I have made a small calculation, and I hope its accuracy is equal to that of the hon. and gallant Gentleman the Member for North Portsmouth (Major Bruce) who spoke recently. I am not very ambitious, but I hope my accuracy is as high as that. My calculation concerns what happens to anybody who has a company registered in Indo-China. By 1137 the time the taxation 'there and in France—which comes into the matter too—has been taken into account, plus the taxation here, the amount that comes into this country is about 22 per cent. It is a very serious thing for directors of companies to have to take a five to one risk on behalf of their shareholders. If on top of that the Government are going to increase the distributive tax as they are under this Clause, then the moment must come when the director has two courses open to him. The first is not to do business in those countries, which is a very grave thing for him to contemplate, since that is the best means of distributing in foreign countries goods we produce here. If he shuts down, it will mean that goods produced in this country under the production drive will not be sold in those areas. Either he has to do that, or he has to find other means, such as registering his companies outside these islands. That is the general pattern of distributive trade and the getting of commodities throughout the world. If the camel's back is to be loaded with whole bundles more straw, as under this Resolution, the time will soon come when the Chancellor will find he will get less revenue from this source than he was getting before, and obviously he wants to avoid that situation. Those who are engaged in the selling of these goods and the getting of these commodities, as I think the Chancellor and his henchmen will admit, are among the greatest getters of dollars at the present time, and if they are not to have some consideration shown to them, the Chancellor will find that the getting of dollars will fall off. The easy assumption that dividends have all gone up is not borne out by the facts.
I would put forward a plea for those who have worked, and are still continuing to work, in territories that have been overrun by the enemy, in the Far East particularly, in Malaya, Hong Kong, and other places. They have still in those places very large financial claims against the Government which the Government have not yet seen fit to discuss or examine. Most of them are in a very poor state financially. The large majority of them have not paid a dividend for a very long time. They have adopted as their patron saint, in their efforts, the Chancellor's own patron saint, Baron Munchausen, famous not only for his taste for fancy rather than fact—that is possibly the Chancellor's reason for selecting him 1138 —but also for pulling himself out of his difficulties by his own bootstraps. These particular industries have rehabilitated themselves by their own efforts, without much assistance, financial or otherwise, from the Government. They find themselves in the position that they have, with the greatest difficulty, got going again, in a large number of territories throughout the world, businesses which were completely crippled. Nobody knows this better than the Chancellor, who, during the war, as Minister of Economic Warfare, had to follow these matters very closely. They are making a major contribution at the present time to the vital business of getting dollars. Malaya produced 1,500,000 tons of rubber last year, which was largely sold for dollars, and produced a very handsome crop for the Chancellor. Yet the majority of these companies have not been in a position to pay their preference or ordinary dividend for a very long time.
In due course they will start from zero again, and the finger of scorn will he pointed to them, as it is to anybody who increases a dividend, for doing something rather disgraceful in increasing their dividends. It is not really a very great increase from zero up to 10, 15 or 20 per cent. after five years of enemy occupation. This tax will be particularly unfair and hard on those companies. What will they do? They will take the course, which they have to take in many cases, in considering the interests of their shareholders, and that is, first of all, the prudent course of ploughing back and making reserves. In trades and industries' which have not got great machinery, reserves to meet the many rainy days to which we are subject are nevertheless of very great value, but they will be penalised by the Chancellor. The next thing they will do will be to conform to the new pattern of trade and industry throughout the world, which is to establish themselves as entities and as companies in those parts of the British Empire in which the incidence of taxation is less unfairly loaded against them.
§ Mr. Fletcher
Perhaps the hon. Member thinks that that is clever. We must consider all the facts and not just the fancies. I appeal to the Chancellor to give very careful consideration to those companies which have been very heavily hit in occu- 1139 pied areas, and which have come up to a higher rate of dividend from a lower one. If he does not listen to some plea of that sort, I think it will be found that real enterprise—and I do not mean the mock enterprise suggested by hon. Members opposite—will be seriously injured. I have said before, and I will repeat it again, that one will not kill the real spirit of enterprise, but one will export it. We shall find that the chief export of this country will be of those people who have a dynamo of energy, people who do things, and want to progress. We shall find that they will go to countries where their efforts are more appreciated, and where they build up, throughout the world, by persistence and energy. We have done that in years gone by because there has been encouragement from the Government of the time, and there are other parts of the Empire where these people are wanted. There we shall find ourselves assisting in the building up of these countries. I warn the Chancellor that if he goes too far in punishing the real enterprise—not the mock enterprise—he is going to suffer most. As he represents the finance of this country, I ask him seriously to consider this plea on behalf of those who are recovering from the great injuries of the war in order that their lot may be made less difficult and onerous.
§ The Solicitor-General
A number of speeches have been made for and against this tax, and I will try to give such answers as I am able. First of all, what is the case for this tax, putting it very generally? The first argument is simply that the revenue has to come from somewhere and I would ask hon. Members opposite if it is more desirable to place the incidence of the tax which we have placed on dividends, on earned profits. Hon. Members opposite have spoken in favour of an increase in earned income allowances. That, I should have thought, would have afforded a powerful incentive to initiative. Hon. Members opposite now appear to ask that this tax, instead of being placed on dividends, should be placed on earned income. Surely hon. Members opposite do not seriously say that, and I would ask what is the case of hon. Members opposite against this tax? They say that it will discourage enterprise. This can be put in a slightly different way, as it was by the hon. Member for Chippenham (Mr. Eccles). He said it was a tax on the ordinary shareholder and dis- 1140 criminated unfairly in favour of the fixed charge, that is to say, the preference shareholder. There is very little in that argument. It was adduced to make it understood that this tax acts against enterprise. Can it be said that the ordinary shareholder takes any risk—any real risk—and shows any initiative? That point was put by my hon. and learned Friend the Member for Kettering (Mr. Mitchison) who pointed out that the ordinary shareholder did neither of those things, and it is miles away from the fact to say that, in a large public concern, with a large number of ordinary shareholders, it is they who supply the brains and the drive for that company. Somebody said, "What about the small company?" In some small companies one has ordinary shareholders who are active partners in the concern, but in a great many of such companies one finds that the partner who really does the work is remunerated by way of a salary.
§ 9.30 p.m.
§ The Solicitor-General
I have a number of points to cover and I want to deal with them. May I make this point, and then I will give way? It is not a true picture at all to say that because we are imposing a burden upon the ordinary shareholder, we are penalising enterprise. In modern, large-scale industry it is not correct, I put it to the House, to say that if we put a tax upon the ordinary shareholder, we are putting a tax upon those persons who carry the company forward. It just is not the case at all.
§ Mr. Pitman
The learned Solicitor-General was saying that, in small companies, it was usual for the director, who was the shareholder, to take the profits out in salaries rather than in dividends, hut he ought to know that there are provisions in regard to director-controlled companies which definitely prohibit that.
§ The Solicitor-General
I said that, generally speaking—I do not want to exaggerate, but it is so in a large number of cases—if we are looking at the small private company, the small company carried on by two persons, we often find that a large part of the remuneration for those who drive the company, goes out in the form of salaries. I do not say that it is the universal practice, but it is often the case, and, in so far as it goes 1141 on, it is the answer to the point about the undesirability of taxing the ordinary shareholder. The main answer, of course, is that the ordinary shareholder of a large-scale public company is a person who buys his shares by going to the Stock Exchange and putting down his £200 or £300, and who never goes anywhere near the company and knows nothing at all about it, except what he reads it the general Press. Let us take the case of the ordinary shareholder in Imperial Chemical Industries. The ordinary shareholder puts down £300 or £500 to buy shares in that company. It is perfectly ludicrous to say to the House that that person, in any real sense of the word, supplies the drive to that gigantic concern. It is not the case at all.
I would also like to put this point. It it is said that by means of this tax on the ordinary shareholder, we should give an unfair preference to the preference share-holder, the question arises how we are to exact the tax from the preference shareholder. It just will not work, and, if it is suggested that we should remove this tax, inasmuch as we have to find this revenue from somewhere, we shall have to say how we are going to find it. We have to look at the only possible alternative, which is earned income, which I am sure hon. Gentlemen opposite will agree would not be the proper subject for a tax of this sort. The tax is valuable also from a revenue-bearing point of view. The net revenue which it will bring in will be £20 million. The total amount it will produce will be £36 million, but, inasmuch as the tax ranks as a deduction for Income Tax purposes, the net revenue from it will be £20 million, and no alternative has been suggested to it.
It is said that it is an undesirable tax because it discriminates between one section of the community and another. In point of fact, one of the principal justifications of the tax, and one of which the Chancellor made use in his Budget Statement, was that it is fair, in that it does balance the position as between the ordinary shareholder, who hitherto has not borne any burden, and the rentier, who lives by a fixed dividend. The cheap money policy has resulted in the rentier who seeks to invest in Government securities, and so on, getting less from his investments. Hitherto, no burden has been placed on the ordinary shareholder. Therefore, if one looks to the justice of 1142 the case, inasmuch as one has to find revenue from somewhere, it is just that one should resort to that class of taxpayer, who, in respect of that investment, has not hitherto been called upon to pay. It is also true, if one looks at the general justice of it, as my hon. and learned Friend the Member for Kettering (Mr. Mitchison) said, that the ordinary shareholder has benefited from what, I think, he described as the inflationary pressure. The ordinary shareholder who has hitherto got off scot free, and who has benefited to a certain extent from the general financial situation, is now the obvious source from which to get the revenue which must be found from somewhere.
This tax has been described as penal, and as a punishment of persons who have done something which is, ex hypothesi, wrong. It is nothing of the sort. It has a very salutary and necessary purpose. It is necessary that, in so far as possible in present day circumstances, one should encourage the ploughing back of money into industry. That is something which has been said over and over again, and I apologise to the House for repeating it. It is necessary for that to be done in order to re-equip industrial undertakings, to extend their capital assets, and to improve and bring them up to date. A thing one must remember is—
§ Mr. Gallacher
Will the hon. and learned Solicitor-General kindly explain this about the ploughing back of money into industry? If industry does that, the next year they will expect bigger profits. Do they then plough back their bigger profits, and the next year, again, get bigger profits still? Is it not the case that the ploughing back will destroy capitalism, just as will this tax which the Chancellor is proposing?
§ The Solicitor-General
Ploughing back will produce bigger output, which is what this nation must have. That is its main object. In succeeding years, there will be a ploughing back. That is equally desirable, particularly at the present time.
Then it was said that this tax would drive enterprise, abroad. The Excess Profits Tax did not, and other taxes did not. There are some persons who are not primarily motivated by the amount of money they can make out of an enterprise; there are people who have a love for this country, and will stay here. As past taxes have not driven people out of the country, 1143 there is not the slightest reason to suppose that this tax, which is not a heavy tax, will suddenly start driving enterprise abroad. This tax does not impose any new burden, except in the case where profits are distributed. If a company does not distribute its profits, the tax will still remain at 5 per cent. as it has always been.
Not only is that the case, but, hitherto, the National Defence Contribution has been payable by partnerships and firms at the rate of 4 per cent. What my right hon. Friend the Chancellor has done is to relieve partnerships and firms from paying that 4 per cent. Indeed, there have been criticisms from hon. Friends behind me who have said that the tax is not high enough. We have, in point of fact, taken it off the shoulders of some taxpayers. In so far as companies who pursue a wise policy of increasing their reserves and expanding their capital assets are concerned, no extra burden whatsoever will be placed upon their shoulders. No company need pay a penny more in respect of this tax. They can go on paying their 5 per cent. as before. That is a most important aspect of this tax, which should be remembered.
I want to deal with certain specific points which were made. Reference was made to the position as between ordinary and preference shareholders. If a company thinks that the ordinary shareholders are unfairly dealt with, there is nothing to prevent the company altering its capital structure so as to alter the rights to dividend as between the ordinary shareholders and the preference shareholders, by going through the usual process as applied by law. They can decrease the rights of preference shareholders, and they can increase the rights in relation to the ordinary shareholders.
§ Mr. Birch
I wish the Solicitor-General would enlarge upon that point. Does he mean that if ordinary shareholders now think that, as a result of the taxation now imposed, they are getting an unfair deal, they can ask for the preference dividend to be reduced from 6 per cent. to 3 per cent.? Is that what the hon. and learned Gentleman is really saying?
§ The Solicitor-General
If the hon. Gentleman had listened, he would realise that I said nothing of the kind. A company can do it, if it takes the necessary steps.
§ The Solicitor-General
Precisely what I have said, and I do not intend to repeat it. It is so obvious. If the hon. Gentleman wishes to misunderstand me, he may.
§ The Solicitor-General
No, I am afraid I cannot give way again. Certain specific questions were asked which I wish to answer. Reference was made to the alteration of the system of computation of profits in the terms of the Resolution relating to it, and I will endeavour to give an explanation. Hitherto, the National Defence Contributions, or Profits Tax, however one describes it, has been an alternative to Excess Profits Tax. As Excess Profits Tax has gone, certain additional allowances can be made against national defence contributions which could not be made before. There are various allowances provided for, for example, under the Income Tax Act, 1945, and under Part IV of the Finance Act, 1944, which relates to expenditure on scientific research, which can now be made available. There are various other allowances under other Acts. For example, under Section 29 of the Finance Act, 1946, certain allowances are available for purposes of money expended on technical education. They can be made available as allowances for the purpose of Profits Tax. That is what is referred to by the words in the Financial Resolution which deal with the computation of profits. The tax will apply to all shareholders; that is to say, it will include not merely preference shareholders but deferred shareholders and ordinary shareholders, but it will not include debenture holders. It will not be applicable in relation to the amount of profits paid out by way of interest due on debentures.
I pass to certain questions which were asked by the hon. Member for Harwich (Sir S. Holmes). He seems to misunderstand the position, judging by the picture he sought to draw by way of contrast between three companies, each of which made £50,000, one of which paid it out in the form of profits and, therefore became liable to 12½ per cent. tax, one of which kept it as a reserve, used it for the purpose of capital extension and had 1145 to pay 5 per cent., and the other company which wanted permanently to keep it and had to pay not merely the 5 per cent. but the 10 per cent. bonus issue tax. What he completely failed to realise—and what, after all, is crucial when one is considering it—is that that tax is paid once and for all if a bonus issue is made. It is not made each year. If the company is making a bonus issue, to pay, say, a 10 per cent. tax in respect of that bonus issue, it would be paid in the year in respect of which it made the bonus issue, once and for all. It is not a permanent tax of 15 per cent., as the hon. Member seemed to think. He then asked various questions, to which I will endeavour to give answers. One question was: what was the basis, in the case of the higher rate, in so far as parent and subsidiary companies are concerned? He wanted to know: is the tax charged twice? Is it charged once upon the profits of the subsidiary, and again upon those of the parent company?
I will answer that question in this way. As hon. Members probably know, under the existing law a parent company, resident in the United Kingdom, which owns not less than 75 per cent. of the ordinary share capital of a subsidiary company which is also resident in the United Kingdom, can elect to have the profits or losses of the subsidiary treated, for Profits Tax purposes, as the profits of the parent company. When it does make that election, the higher rate chargeable on distributed profits—that is to say, the 12½ per cent.—will not apply to dividends paid by the subsidiary to the parent company. In other words, the parent and the subsidiary are treated as a single group of companies. That being so, the charge of 12½ per cent. rate applies only to distributions to persons outside the group; that is to say, distributions by the parent company and distributions by the subsidiary company to any shareholders who are not in the group.
Of course, cases may arise where no election is made; where the parent company does not elect to exercise the option that it has. In that case, the subsidiary will be charged at the higher rate on its total dividend distribution, including distributions to the parent company, and the dividends received by the parent company from the subsidiary will not be charged to Profits Tax, again in the 1146 hands of the parent company, and the charge at the higher rate on the parent company will not apply to part of its distributed profits apportionable to profits so received. In other words, generally speaking the parent and the subsidiary are looked at as a single group, and the tax is charged accordingly on the group.
§ Mr. Pitman
I know my hon. Friend the Member for Harwich (Sir S. Holmes) did not raise this point, but it is a similar question. What about Investment Trusts, which would not come under the provisions for opting which the learned Solicitor-General has described? How is it proposed that they should be treated?
§ The Solicitor-General
They differ in character, and in the course of this speech it would be impossible to deal with the variations of different alternative situations which may arise. I ask the hon. Member to raise the question again in the course of the discussions on the Finance Bill if he so wishes. Then the matter will be elucidated by the terms of the relevant Clause, if the terms are intelligible, which all of them are not. Another point about which the hon. Member for Harwich asked was, what would happen with regard to dividends with a company whose chargeable accounting period overlaps the end of 1946; a company, say, whose chargeable accounting period ends in March, 1947. In that case, since the period falls partly before and partly after the end of 1946, the higher rate will he levied on a proportion of the distributions for that period corresponding to the part of the period falling in the first quarter of 1947; that is, in the case of a chargeable accounting period for the 12 months to 31st March, 1947—in the particular case which he instanced, of one quarter of the distributions for the period.
That is the general rule. I should make a qualification in order that the position may be clearer. It is possible, in view of the announcement of the higher rate to operate from 1st January, that there might be a tendency in the case of some companies now declaring dividends for 1946, or for periods falling partly in 1946, to increase the dividends for those periods in the hope that they could escape, or partially escape, the 12½ per cent. rate of tax. With regard to these companies, and in order to discourage that sort of tendency, it is proposed to provide in the 1147 Finance Bill that any increase in the dividend over such period over the figure of the previous year will be treated, for the purpose of the 12½ per cent. rate, as related to the period in which the dividend is declared, and not to that in respect of which it is expressed to be declared. A dividend which is not expressed to relate to any accounting period, or is expressed to relate to a period which ended more than six months before the date of declaration, will be treated as relating to the accounting period in which it is declared, so that a dividend declared in 1947 will not escape the higher rate of tax by being declared as a dividend for, say, 1945.
That is a technical explanation to satisfy the curiosity of the hon. Gentleman who raised the question. I want to deal with the speech of the right hon. Gentleman the Member for the City of London (Mr. Assheton). He quoted certain figures as being destructive of the case for this tax. He quoted from the "Economist" and from "The Times," and he obviously had gone to a great deal of trouble to extract the figures and make a comparison. The comparison, I thought, was one which argued strongly in favour of the imposition of this tax. What were the figures he extracted? He took two years, 1945 and 1946 and he took a sample of 240 companies.
§ The Solicitor-General
I thought the right hon. Gentleman said 240. However, I am obliged to him—2,000. The conclusion which appeared to result, and on which he based his argument, was that 53 per cent. of the profits paid out in fallen dividends, contrasted in the same two years with the percentage of profits placed to reserves, was something like half. But the percentage was not 53 per cent.; in the case of 1945, it was 24 per cent., and in 1946, 25 per cent. I ask the House, if that is the position, and if these companies that paid out any form of dividends were placing only half the amount of their earnings to reserve, what stronger argument could one have for some discouragement of that sort of thing? That is the very object which this tax is designed to achieve.
§ Mr. Assheton
I have not, unfortunately, with me the copy of the "Economist" from which I quoted the figures. I have 1148 just sent it upstairs to the Official Reporters who asked to be allowed to see the quotation I made from the Chancellor's book. But the figures were designed to show just this: that, whereas the Chancellor complained that companies had been distributing more and putting less to reserve last year, since he gave his warning, as he called it, in fact that was not the case, and that the proportion distributed by way of dividends had fallen slightly, and the proportion used for reserves had risen slightly.
§ The Solicitor-General
Of course, I realise that. I know the right hon. Gentleman wanted to say that, but, unfortunately for him, he brought out figures which conclusively destroyed his case. What he wanted to say was that there was no increase, but what he did show was that the profits distributed were far too much, and far greater than the amount placed to reserves. If that was so, what stronger argument could there be for this tax?
§ Mr. Assheton
If it is a large amount, and he is saying it is far too much, does the hon. and learned Gentleman say that 25 per cent. for reserves is too little?
§ The Solicitor-General
I am very anxious not to overstate or exaggerate in the heat of discussion. If I used the words "far too much" they are subject to qualification. But what it does prove is that the amount distributed in the form of dividends was larger than the amount placed to reserves. I put that before the House—if these figures are correct—as an argument for saying that the object of this tax is extremely necessary, and the right hon. Gentleman, in his argument, has unwittingly assisted our case very materially.
§ Sir Arthur Salter (Oxford University)
Does the Solicitor-General really mean that in any period, and whatever the situation of a company may be, it is always wrong that there should be considerably less allotted to reserve than is paid by way of dividends?
§ The Solicitor-General
I did not make any such sweeping statement. I want to conclude on this note. The case for this tax is threefold. First, the revenue has got to come from somewhere. That is the first point in its favour, and it is almost the strongest point in its favour. Second, it is necessary to secure that money is ploughed back into enterprises. 1149 That is a point of the greatest possible importance. Third, by way of general justification, this is a fair tax, in that it is an impositon on those who have not really borne their fair share as investors in the investing market, when their position is considered vis-à-vis the rentiers who live on the dividends of Government bonds, which are less as the result of the Government's cheap money policy. For these reasons, I ask the House to say that this Resolution is obviously necessary, and to approve it.
§ Mr. Boothby
I do not know what it is, but there is something about the speeches of the Solicitor-General which leaves me with the impression that I am Alice and that I have passed through the looking-glass. Except for the rather hot tip he gave us on tax evasion during his opening remarks, I did not deduce very much from what he said. I am not sure that there was a great deal in his hot tip, because I doubt whether any court of law would permit a company to reshuffle its shares, as he suggested, for the sole purpose of avoiding this tax. I really think it is too hot even for the present Government.
I found this Debate a little depressing. I watched hon. Members opposite laughing and jeering for a long time at the private enterprise system, and I could not help reflecting that they are depending on this system to the extent of 80 per cent. to get them and us through. They are doing a great deal to kill it, and not least by this tax. They are not merely driving out, companies, but are driving out a great number of enterprising young men and women in this country. That is even more serious. At the same time, they are driving inexorably, steadily and with ever-increasing speed into the greatest economic crisis this country has ever had to face. We shall get right into the middle of that in about 12 months time, and I wonder what we shall think of the Profits Tax then.
The Chancellor said, in his Budget speech, that he was not satisfied with the large increase in distributed profits and share dividends. I think it is only fair to ask him what is the evidence for that. We have never been given it. I do not think it has been at all excessive during the past 18 months. Before the Chancellor makes a sweeping statement of that character he ought to give some evidence, 1150 and even name some of the companies which have incurred his special dissatisfaction. If some companies—there are always a few black sheep—have made what the Chancellor considers to be excessive dividend distributions, that is no reason for imposing a tax upon all dividend distributions and upon all companies, whether the dividends are reasonable or unreasonable, whether they are What the Chancellor considers to be excessive, or whether they are fair. This tax falls upon the distributed dividends of all companies, those which have offended and those which have not. Far more serious than that, it falls wholly—no hon. Member opposite has been able to deny this—on the equity holding, and, therefore, on the man who takes the risk. That is the iniquitous part of this tax. I say that it is an insensate and quite unnecessary attack upon private enterprise, as such, in this country at a moment when private enterprise is more needed than it has ever been needed before.
I want to give the right hon. Gentleman one example, following upon what my hon. Friend the Member for Bury (Mr. W. Fletcher) has said. Take, as an example, a mining company or a rubber plantation company. For six years, at least, they are in the process of development. The money has been invested, but they are in process of development, and during that period nobody expects any dividend or interest of any sort. The risk is taken. In many cases it is a very big risk, and in very many cases it results in a total loss of the capital invested; but under the present proposals of the Chancellor, when these developing companies at last reach the production stage, they are immediately to be mulcted of an additional 12½ per cent. of tax, although during six years, and perhaps even ten years, during the process of development, the shareholders have not received a single penny. They have taken the risk and when, finally, the first dividends begin to be declared, the full force of the tax of 12½ per cent. falls upon them.
§ Mr. Scollan
When the hon. Gentleman tells us about the risks taken by developing companies, is if not a fact that the losses of developing companies have been 1151 entirely due to blind and stupid competition?
§ Mr. Boothby
That is an absolutely crazy statement. If we had not had those developing companies, we would never have got anywhere.
§ Mr. Boothby
The failure may be due to the fact that there is no coal, or none of whatever mineral the company is seeking to mine. It has frequently happened in the past that companies have been floated and the particular metal they have been floated to exploit has not in fact proved anything like up to expectation, and in some cases has never been there at all. Do hon. Members opposite deny there is a risk involved in this particular type of company? The thing is not tenable. How can one compare these companies with the solid, established industrial companies of this country which have been paying dividends for years and years, and placing large amounts to reserve? Why should these two classes of companies be treated in exactly the same category? If the Chancellor will not remove this tax altogether, which I think he should do, why should he not differentiate between the developing and risk-bearing companies and the established companies. That is what I ask, and that is what the Government have not answered. If the Chancellor wants to make a distinction between incomes from property and incomes from work, I suggest that he ought to take the advice which I gave him an hour or two ago, and make a differentiation between the taxation on earned and unearned incomes. That is the sensible and the honest way of setting about this, and I would add to that what one of my hon. Friends has suggested, an increase in the allowances on capital actually spent in the re-equipment of industry in this country.
This is a rotten tax, which violates every valid economic principle. No one has denounced it more in the past than the Chancellor of the Exchequer. It reminds me of the original N.D.C. tax, introduced by Mr. Chamberlain, over which the right hon. Member for Bournemouth (Mr. Brendan Bracken) and I had such fun, and which was eventually withdrawn. I hope that the same fate awaits this particular proposal. My hon. Friend was looking for a past quotation, and I have 1152 one here which has already been quoted by my right hon. Friend, which is a scathing condemnation of this tax by the Chancellor, in words far better chosen than I could hope to employ. I will not repeat it because it will already have appeared in HANSARD, and I hope that it will be read, marked, learned and inwardly digested by hon. Members opposite. I would say with the "Economist," that the Opposition would be well advised to put their confidence in Dr. Dalton rather than in the Chancellor of the Exchequer, and give notice that they will repeal this piece of class malice at the earliest possible moment.
§ Mr. I. J. Pitman
I would like to ask one or two questions of the Solicitor-General and if possible of the Chancellor of the Exchequer. First, in regard to companies which have considerable arrears of dividends, they seem to present a very special problem. Ex hypothesi these are companies which have not distributed in the past. There are a number of companies in this country which have suffered as a result of the war. The ordinary shareholders of these companies, when they come to pay the arrears of dividends to the preference shareholders, will be, unless there is some special provision, penalised, for not only have they suffered in the war owing to non-distribution of dividends but they will have to bear the tax on the accumulated distribution to the preference shareholders, and they will get a very heavy additional penalty. It is an iniquitous situation, and one which ought to be put right.
I would like to ask also about co-partnership schemes. There are a number of firms in this country who issue shares to their staffs, which are usually of the equity character. Is it intended that the workpeople of these firms should be taxed 12½ per cent. not only on the distribution on their own shares but on the dividends and on all prior shares? That is a question on which I think we want an answer. In the same way, there is the question of the distribution of bonuses for staff. Lots of companies do so, and the company with which I am connected divides its profits and pays a bonus to the staff out of profits. The wording of the Chancellor of the Exchequer in his speech is that it is proposed to increase the tax to 12½ per cent., or from 1s. to 2s. 6d. in the pound on distributed profits. I would like to know 1153 whether the bonus distribution to staff out of profits will have to pay this additional tax of 12½ per cent. I have asked a question about the Investment Trust companies. It is important to know whether they will have to pay not only through the companies under this head but through the companies from which they derive their income.
Finally, I should like to ask two questions. One, a question of fairness and one, a question of intelligence. As far as the question of fairness is concerned, hon. Members opposite have clearly misunderstood our point of view. The degree of taxation proposed will depend entirely on what the structure of the company is, as to the incidence of this tax, because do not let us say that we are taxing a company. We cannot tax a company—only shareholders who own that company in predetermined shares. A company has shares and it depends on the way in which those shares are distributed, and on what they are called how we arrive at what the tax is to be. Is it fair that Company A with exactly the same capital employed, should pay more taxes than Company B, which has exactly the same capital but called by different names? Company A let us suppose has its preference shares, its preferred ordinary shares and a few deferred ordinary shares, while Company B has a debenture issue and possibly a note issue and a bank overdraft. In the case of Company A the few deferred shareholders may be paying over 100 per cent. tax because they are paying tax on the dividends distributed not only to them but to the other and prior classes of shareholder as well, whereas Company B, which happens to have a different structure, will pay no taxes at all on its main capitalisation and 12½ per cent. on the small distribution of the ordinary shares.
There is one principle of taxation to which this House throughout the ages has attached great importance and that is that taxes should fall with equal incidence and fairness on everybody and undoubtedly that is the cause of the damning criticism which the Chancellor had in mind in his famous book, for which extra paper has been allotted. This tax violates the principle of common fairness in taxation because it is undoubtedly a tax on the deferred shareholders always, and not on the priority shareholder. Consequently, it varies in its degree of incidence because of something which is purely fortuitous, 1154 namely the type of structure of that company.
Now I come to the question of intelligence. Really, this is not an intelligent tax at all. It was said from the benches opposite that the purpose of this tax is to leave more profits in the companies for future development, to be ploughed back into the business, and yet it is on the very amount to be left in the business that the tax will fall. It is true that it is calculated on the profit which is distributed but what is being taxed in fact is the undistributed profit of the companies. The tax will have the very opposite effect to that intended and it is the height of folly to base a tax deliberately on what something is "called." Here we have the learned Solicitor-General coming to this House and saying that a company can rename its shares so as to escape this tax.
§ Mr. Pitman
May I give the House a case in point? Take the case of a company with redeemable preference shares. That company can say to its redeemable preference shareholders, "We are paying 12½ per cent. on the distribution both to our equity shareholders and to you. That makes the equity shareholders suffer a very considerable burden—shall we say a 150 per cent. tax. But if we pay off your preference shares and call them notes instead, then we shall not have to pay that tax. Your security will be definitely greater by reason of the fact that the tax will not be levied on the company, and we shall have bigger undistributed profits for the equity shareholders." If that is intelligence where are we to look for guidance? Obviously, not to the benches opposite.
The whole scheme is clearly wrong in principle and I should like to ask the Chancellor of the Exchequer this question. He has formed this National Investment Council and he has dilated to this House on the importance of being advised by this important body, which has a great part to play, as he has told us, in the investment structure of this country. Did he in point of fact consult them on this very important investment matter before he raised it? If so, what were their views and has he followed them? I think the House has a right to expect that if there is a body to which he attaches importance 1155 he should consult it in an important issue of this kind, and let the House know what are the results of that consultation.
There is one final question I should like to ask. Why has the Chancellor changed his mind? Why is it that in his book he saw how perfectly' idiotic a tax of this kind was, whereas now he introduces it in his Budget? I think there can be only one answer—that he is playing on the drum of class hatred, that he is looking over his shoulder and finds it a popular thing to do if only he can pretend that dividends are something which are wholly immoral
§ He, the great Chancellor, is introducing some things which are unpopular to the Left wing extremists, but here he can show them that he is of the right and correct faith because there is something filthy and despicable about dividends.
§ The Parliamentary Secretary to the Treasury (Mr. William Whiteley) rose in his place, and claimed to move, "That the Question be now put."
§ Question put, "That the Question be now put."
§ The House divided: Ayes, 256; Noes, 114.1157
|Division No. 138.]||AYES.||[10.17 p.m.|
|Adams, W. T. (Hammersmith, South)||Ede, Rt. Hon. J. C.||Lang, G.|
|Alpass, J. H.||Edwards, A. (Middlesbrough, E.)||Lee, F. (Hulme)|
|Anderson, A. (Motherwell)||Edwards, N. (Caerphilly)||Lee, Miss J. (Cannock)|
|Anderson, F. (Whitehaven)||Evans, John (Ogmore)||Leslie, J. R.|
|Austin, H. Lewis||Evans, S. N. (Wednesbury)||Lever, N. H|
|Awbery, S. S.||Fairhurst, F.||Lewis, T. (Southampton)|
|Ayles, W. H.||Farthing, W. J.||Lipton, Lt.-Col. M.|
|Bacon, Miss A.||Fletcher, E. G. M. (Islington, E.)||Logan, D. G.|
|Baird, J.||Foot, M. M.||Longden, F.|
|Balfour, A.||Forman, J. C.||Lyne, A. W.|
|Barnes, Rt. Hon. A. J.||Foster, W. (Wigan)||McAdam, W|
|Barstow., P. G.||Fraser, T. (Hamilton)||McAllister, G.|
|Barton, C.||Freeman, Peter (Newport)||McGhee, H. G|
|Battley, J. R.||Gaitskell, H. T. N||Mack, J. D.|
|Bechervaise, A. E.||Gallacher, W||McKay, J. (Wallsend)|
|Ballenger, Rt. Hon. F. J.||Gibbins, J.||Mackay, R. W. G. (Hull, N. W.)|
|Benson, G.||Gibson, C. W||McKinlay, A. S.|
|Beswick, F.||Gilzean, A.||Maclean, N. (Govan)|
|Bing, G. H. C.||Gooch, E. G.||McLeavy, F.|
|Binns, J.||Goodrich, H. E.||MacMillan, M. K. (Western Isles)|
|Blyton, W. R.||Gordon-Walker, P. C.||Macpherson, T. (Romford)|
|Boardman, H.||Greenwood, A W. J. (Heywood)||Mainwaring, W. H.|
|Bowden, Flg.-Offr. H. W.||Grenfell, D. R.||Mallalieu, J. P. W.|
|Braddock, Mrs. E. M. (L'pl, Exch'ge)||Griffiths, D. (Rother Valley)||Mann, Mrs. J.|
|Braddock, T. (Mitcham)||Griffiths, W. D. (Moss Side)||Marquand, H. A.|
|Bramall, Major E. A.||Gunter, R. J.||Middleton, Mrs. L.|
|Brook, D. (Halifax)||Guy, W. H.||Mikardo, Ian.|
|Brooks, T. J. (Rothwell)||Haire, John E. (Wycombe)||Mitchison, G. R.|
|Brown, George (Belper)||Hale Leslie||Monslow, W.|
|Brown, T. J. (Ince)||Hall, W. G||Moody, A. S.|
|Bruce, Maj D. W. T.||Hannan, W. (Maryhill)||Morgan, Dr. H. B|
|Buchanan, G.||Hardy, E. A.||Morley, R.|
|Burden, T. W.||Harrison, J||Morris, P. (Swansea, W)|
|Burke, W. A.||Henderson, A. (Kingswinford)||Mort, D. L.|
|Butler, H. W. (Hackney, S.)||Henderson, Joseph (Ardwick)||Murray, J. D|
|Callaghan, James||Herbison, Miss M.||Nally, W.|
|Carmichael, James||Hobson, C R||Neal, H. (Claycross)|
|Champion, A. J.||Holman, P.||Nicholls, H. R. (Stratford)|
|Chetwynd, G. R||Holmes, H. E (Hemsworth)||Noel-Baker, Rt. Hon P J. (Derby)|
|Cobb, F A.||House, G.||Oldfield, W. H.|
|Cocks, F. S.||Hoy, J||Paget, R. T.|
|Collindridge, F.||Hubbard, T.||Paling, Rt. Hon. Wilfred (Wentworth)|
|Collins, V. J.||Hughes, Hector (Aberdeen, N.)||Paling, Will T. (Dewsbury)|
|Corbet, Mrs. F. K. (Camb'well, N.W.)||Hynd, H. (Hackney, C.)||Palmer, A. M. F.|
|Corvedale, Viscount||Hynd, J. B. (Attercliffe)||Pargiter, G. A.|
|Crawley, A.||Irving, W. J.||Parker, J.|
|Daines, P.||Janner, B.||Paton, Mrs. F. (Rushcliffe)|
|Dalton, Rt. Hon. H||Jay, D. P. T.||Paton, J. (Norwich),|
|Davies, Edward (Burslem)||Jeger, G. (Winchester)||Platts-Mills, J. F. F.|
|Davies, Ernest (Enfield)||Jeger, Dr. S. W (St Pancras, S.E.)||Poole, Major Cecil (Lichfield)|
|Davies, Harold (Leek)||John, W.||Porter, E. (Warrington)|
|Davies, S. O. (Merthyr)||Jones, Rt. Hon. A. C. (Shipley)||Porter, G. (Leeds)|
|Deer, G.||Jores, Elwyn (Plaistow)||Price, M. Philips|
|Delargy, H. J||Jones, J. H. (Bolton)||Proctor, W. T|
|Diamond, J.||Jones, P. Asterley (Hitchin)||Pryde, D. J.|
|Dobbie, W.||Keenan, W||Pursey, Cmdr. H|
|Dodds, N. N.||Kenyon, C.||Randall, H. E.|
|Driberg, T. E. N.||Key, C. W.||Ranger, J.|
|Dugdale, J. (W. Bromwich)||Kinghorn, Sqn.-Ldr. E||Reid, T. (Swindon)|
|Dumpleton, C. W.||Kinley, J.||Rhodes, H.|
|Durbin, E. F. M||Kirkwood, D||Richards, R.|
|Ridealgh, Mrs. M.||Stewart, Michael (Fulham, E.)||Wallace, G. D. (Chielehurst)|
|Roberts, Goronwy (Caernarvonshire)||Strauss, G. R. (Lambeth)||Wallace, H. W. (Walthamstow, E.)|
|Rogers, G. H. R.||Stross, Dr. B.||Watkins, T. E.|
|Ross, William (Kilmarnock)||Stubbs, A. E.||Webb, M. (Bradford, C.)|
|Royle, C.||Summerskill, Dr. Edith||Weitzman, D.|
|Sargood, R.||Swingler, S.||Wells, P. L (Faversham)|
|Scollan, T.||Sylvester, G. O.||Wells, W. T. (Walsall)|
|Scott-Elliot, W.||Symonds, A. L.||West, D. G.|
|Shackleton, Wing-Cdr. E. A. A.||Taylor, H. B. (Mansfield)||White, C. F. (Derbyshire, W.)|
|Sharp, Granville||Taylor, R. J. (Morpeth)||White, H. (Derbyshire, N.E.)|
|Shawcross, C. N. (Widnes)||Taylor, Dr. S. (Barnet)||Whiteley, Rt. Hon. W.|
|Shawcross, Rt. Hn. Sir H. (St. Helens)||Thomas, D. E. (Aberdare)||Wilkes, L|
|Shurmer, P.||Thomas, I. O. (Wrekin)||Wilkins, W. A.|
|Silverman, J. (Erdington)||Thomson. Rt. Hn. G. R. (Ed'b'gh, E.)||Willey, F. T. (Sunderland)|
|Simmons, C. J||Thorneycroft, Harry (Clayton)||Willey, O. G. (Cleveland)|
|Skeffington, A. M||Thurtle, E.||Williams, D. J. (Neath)|
|Skinnard, F. W||Timmons, J||Williams, J. L. (Kelvingrove)|
|Smith, Ellis (Stoke)||Titterington, M. F.||Williams, W. R. (Heston)|
|Smith, S. H. (Hull, S.W.)||Tolley, L.||Wills, Mrs. E. A.|
|Soskice, Maj. Sir F.||Tomlinson, Rt. Hon. G||Wise, Major F. J|
|Sparks, J. A.||Ungoed-Thomas, L.||Woodburn, A.|
|Spearman, A. C. M||Vernon, Maj. W. F.||Wyatt, W.|
|Stamford, W.||Viant, S. P.||Younger, Hon. Kenneth|
|Steele, T.||Walkden, E|
|Stephen, C.||Walker, G. H.||TELLERS FOR THE AYE:|
|Mr. Pearson and Mr. Snow|
|Agnew, Cmdr. P. G.||Gridley, Sir A.||Morrison, Maj. J. G. (Salisbury)|
|Amory, D. Heathcoat||Grimston, R. V.||Neven-Spence, Sir B.|
|Assheton, Rt. Hon. R.||Hannon, Sir P. (Moseley)||Noble, Comdr. A. H. P|
|Astor, Hon. M.||Harvey, Air-Comdre, A. V.||Orr-Ewing, I. L.|
|Baldwin, A. E.||Head, Brig. A. H.||Peake, Rt. Hon. O.|
|Barlow, Sir J.||Headlam, Lieut.-Col. Rt. Hon. Sir C||Pickthorn, K.|
|Beechman, N. A||Henderson, John (Cathcart)||Pitman, I. J.|
|Birch, Nigel||Hinchingbrooke, Viscount||Ponsonby, Col. C. E.|
|Boothby, R.||Hegg, Hon. Q.||Poole, O. B. S. (Oswestry)|
|Bower, N.||Hollis, M. C.||Prior-Palmer, Brig. O.|
|Boyd-Carpenter, J. A.||Holmes, Sir J. Stanley (Harwich)||Ramsay, Maj. S|
|Braithwaite, Lt.-Comdr. J. G.||Hope, Lord J.||Renton, D.|
|Buchan-Hepburn, P. G. T.||Howard, Hon. A.||Roberts, H. (Handsworth)|
|Bullock, Capt. M||Hurd, A.||Robinson, Wing-Comdr. Roland|
|Carson, E.||Hutchison, Lt.-Cm. Clark (E'b'rgh W.)||Ropner, Col. L.|
|Challen, C.||Hutchison, Col. J. R. (Glasgow. C.)||Ross, Sir R. D. (Londonderry)|
|Channon, H.||Jennings, R||Salter, Rt. Hon. Sir J. A.|
|Clarke, Col. R. S.||Joynson-Hicks, Hon. L. W.||Scott, Lord W.|
|Clifton-Brown, Lt.-Col. G||Keeling, E. H.||Shepherd, W. S. (Bucklow)|
|Conant, Maj. R. J. E.||Lambert, Hon. G.||Smiles, Lt.-Col. Sir W.|
|Cooper-Key, E. M.||Lancaster, Col. C. G||Spence, -H. R.|
|Corbett, Lieut.-Col. U. (Ludlow)||Langford-Holt, J.||Stanley, Rt. Hon. O.|
|Crookshank, Capt. Rt. Hon. H. F. C.||Linstead, H. N.||Stoddart-Scott, Col. M.|
|Crosthwaite-Eyre, Col. O. E||Low, Brig. A. R. W||Strauss H. G. (English Universitles)|
|Cuthbert, W. N.||Lucas, Major Sir J.||Stuart Rt. Hon. J. (Moray)|
|De la Bère, R.||Lucas-Tooth, Sir H.||Taylor, C. S. (Eastbourne)|
|Dodds-Parker, A. D.||McCallum, Maj. D.||Thomas. J. P. L. (Hereford)|
|Dower, E. L. G. (Caithness)||Macdonald, Sir P. (I. of Wight)||Vane, W. M. F.|
|Drayson, G. B.||Mackeson, Brig. H. R.||Wadsworth, G.|
|Drewe, C.||McKie, J H. (Galloway)||Walker-Smith, D|
|Dugdale, Maj. Sir T. (Richmond)||MacLeod, J.||Ward, Hon. G. R.|
|Eccles, D. M.||Macpherson, Maj. N. (Dumfries)||Wheatley, Colonel M. J|
|Elliot, Rt. Hon. Walter||Maitland, Comdr. J. W||Williams, C. (Torquay)|
|Fletcher, W. (Bury)||Marlowe, A. A. H||Willoughby de Eresby, Lord|
|Foster, J. C. (Northwich)||Marples, A. E.||York, C.|
|Fraser, Maj. H. C. P. (Stone)||Marshall, D. (Bodmin)||Young, Sir A S. L. (Partick)|
|Fyfe, Rt. Hon. Sir D. P. M||Mellish, R. J.|
|Galbraith, Cmdr. T. D.||Mellor, Sir J||TELLERS FOR THE NOES:|
|Gomme-Duncan, Col. A. G.||Moore. Lt.-Col. Sir T||Mr. Studholme and Lieut.-Colonel Thorp.|
§ Question put accordingly, "That this House doth agree with the Committee in the said Resolution."1158
§ The House divided: Ayes, 254; Noes, 115.1161
|Division No. 139.]||AYES||[10.28 p.m.|
|Adams, W. T. (Hammersmith, South)||Barnes, Rt. Hon. A. J||Binns, J.|
|Alpass, J H.||Barstow, P. G.||Blyton, W. R.|
|Anderson, A. (Motherwell)||Barton, C.||Boardman, H.|
|Anderson, F. (Whitehaven)||Battley, J. R.||Bowden, Flg.-Offr. H. W.|
|Austin, H. Lewis||Bechervaise, A. E.||Braddock, Mrs. E. M. (L'pl, Exch'ge)|
|Awbery, S. S.||Ballenger, Rt. Hon F. J.||Braddock, T. (Mitcham)|
|Ayles, W. H.||Benson, G.||Bramall, E. A.|
|Bacon, Miss A.||Beswick, F.||Brook, D. (Halifax)|
|Baird. J.||Bing, G H. C.||Brooks, T. J. (Rothwell)|
|Brown, George (Belper)||Irving, W. J.||Richards, R.|
|Brown, T. J. (Ince)||Janner, B.||Ridealgh, Mrs. M.|
|Bruce, Maj. D. W. T.||Jay, D. P. T.||Roberts, Goronwy (Caernarvonshire)|
|Buchanan, G.||Jager, G. (Winchester)||Rogers, G. H. R.|
|Burden, T. W.||Jager, Dr. S. W. (St. Pancras, S.E.)||Ross, William (Kilmarnock)|
|Burke, W. A.||John, W.||Royle, C.|
|Butler, H. W. (Hackney, S.)||Jones, Rt. Hon. A. C. (Shipley)||Sargood, R|
|Callaghan, James||Jones, Elwyn (Plaistow)||Scollan, T.|
|Carmichael, James||Jones, J. H. (Bolton)||Scott-Elliot, W.|
|Champion, A. J.||Jones, P. Asterley (Hitchin)||Shackleton, E. A. A.|
|Chetwynd, G. R.||Keenan, W||Sharp, Granville|
|Cobb, F. A.||Kenyon, C.||Shawoross, C. N. (Widnes)|
|Cocks, F. S.||Key, C. W.||Shawcross, Rt. Hn. Sir H. (St. Helens)|
|Collindridge, P.||Kinghorn, Sqn.-Ldr. E.||Shurmer, P.|
|Collins, V. J||Kinley, J.||Silverman, J. (Erdington)|
|Corbet, Mrs. F. K (Camb'well, N.W.)||Kirkwood, D||Simmons, C J.|
|Crawley, A.||Lang, G.||Skeffington, A. M.|
|Daines, P.||Lee, F. (Hulme)||Skinnard, F. W.|
|Dalton, Rt. Hon. H.||Lee, Miss J. (Cannock)||Smith, Ellis (Stoke)|
|Davies, Edward (Burslem)||Leslie, J. R.||Smith, S. H. (Hull, S.W.)|
|Davies, Ernest (Enfield)||Lever, N. H.||Soskice, Maj. Sir F|
|Davies, Harold (Leek)||Lewis, T. (Southampton)||Sparks, J. A.|
|Davies, S. O. (Merthyr)||Lipton, Lt.-Col. M.||Stamford, W.|
|Deer, G.||Logan, D. G.||Steele, T.|
|DeWray, H. J.||Longden, F.||Stephen, C.|
|Diamond, J.||Lyne, A. W.||Stewart, Michael (Fulham, E.)|
|Dobbie, W.||McAdam, W.||Strauss, G. R. (Lambeth, N.)|
|Dodds, N. N.||McAllister, G.||Strom, Dr. B.|
|Driberg, T. E. N.||McGhee, H. G.||Stubbs, A. E.|
|Dugdale, J. (W. Bromwich)||Mack, J. D.||Summerskill, Dr. Edith|
|Dumpleton, C. W.||McKay, J. (Wallsend)||Swingler, S.|
|Durbin, E. F. M.||Mackay, R. W. G. (Hull, N.W.)||Sylvester, G. O.|
|Ede, Rt. Hon. J. C.||McKinlay, A. S.||Symonds, A. L.|
|Edwards, A. (Middlesbrough, E.)||Maclean, N (Govan)||Taylor, H. B. (Mansfield)|
|Edwards, N. (Caerphilly)||McLeavy, F||Taylor, R. J. (Morpeth)|
|Evans, John (Ogmore)||MacMillan, M. K. (Western Isles)||Taylor, Dr. S. (Barnet)|
|Evans, S. N. (Wednesbury)||Macpherson, T. (Romford)||Thomas, D. E. (Aberdare)|
|Fairhurst, F.||Mainwaring, W. H.||Thomas, I. O. (Wrekin)|
|Farthing, W. J.||Manahan, J. P. W.||Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)|
|Fletcher, E. G. M. (Islington, E.)||Mann, Mrs. J.||Thorneycroft, Harry (Clayton)|
|Foot, M. M.||Marquand, H. A.||Thurtle, E.|
|Forman, J. C.||Middleton, Mrs. L.||Timmons, J.|
|Foster, W. (Wigan)||Mikardo, Ian||Titterington, M. F.|
|Fraser, T. (Hamilton)||Mitchisan, G. R.||Tolley, L.|
|Freeman, Peter (Newport)||Monslow, W.||Tomlinson, Rt. Hon. G.|
|Gaitskell, H. T. N.||Moody, A. S.||Ungoed-Thomas, L.|
|Gallacher, W.||Morgan, Dr. H. B.||Vernon, Maj. W. F.|
|Gibbins, J.||Marley, R.||Viant, S. P.|
|Gibson, C. W.||Morris, P. (Swansea, W.)||Walkden, E.|
|Gilzean, A.||Mart, D. L.||Walker, G. H.|
|Coach, E. G.||Murray, J. D.||Wallace, G. D. (Chislehurst)|
|Goodrich, H. E.||Nally, W.||Wallace, H. W. (Walthamstow, E.)|
|Gordon-Walker, P. C.||Neal, H. (Clayoross)||Watkins, T. E.|
|Greenwood, A. W. J. (Heywood)||Nicholls, H. R. (Stratford)||Webb, M (Bradford, C.)|
|Grenfell, D. R.||Noel-Baker, Rt. Hon. P. J. (Derby)||Weitzman, D.|
|Griffiths, D. (Rother Valley)||Oldfield, W. H.||Wells, P. L. (Faversham)|
|Griffiths, W. D. (Moss Side)||Paget, R. T.||Wells, W. T (Walsall)|
|Gunter, R. J.||Paling, Rt. Hon. Wilfred (Wentworth)||West, D. G.|
|Guy, W. H.||Paling, Will T. (Dewsbury)||White, C. F (Derbyshire, W.)|
|Haire, John E. (Wycombe)||Palmer, A. M. F.||White, H. (Derbyshire, N.E.)|
|Hale, Leslie||Pargiter, G. A.||Whiteley, Rt. Hon. W.|
|Hall, W. G.||Parker, J.||Wigg, Col. C. E.|
|Hannan, W. (Maryhill)||Paton, Mrs. F. (Rushcliffe)||Wilkes, L.|
|Hardy, E. A.||Paton, J. (Norwich)||Wilkins, W. A.|
|Harrison, J.||Platte-Mills, J. F. E.||Willey, F. T. (Sunderland)|
|Henderson, A. (Kingswinford)||Poole, Major Cecil (Lichfield)||Willey, O. G. (Cleveland)|
|Henderson, Joseph (Ardwick)||Porter, E. (Warrington)||Williams, D. J. (Reath)|
|Herbison, Miss M.||Porter, G. (Leeds)||Williams, J. L. (Kelvingrove)|
|Hobson, C. R.||Price, M. Philips||Williams, W. R. (Heston)|
|Holman, P.||Procter, W. T.||Wills, Mrs. E. A.|
|Holmes, H. E. (Hemsworth)||Pryde, D. J.||Wise, Major F. J|
|House, G.||Pursey, Cmdr. H.||Woodburn, A.|
|Hoy, J.||Randall, H. E.||Wyatt, W.|
|Hubbard, T.||Ranger, J||Younger, Hon. Kenneth|
|Hughes, Hector (Aberdeen, N.)||Rankin, J|
|Hynd, H. (Hackney, C.)||Reid, T. (Swindon)||TELLERS FOR THE AYES:|
|Hynd, J. B. (Attercliffe)||Rhodes, H.||Mr. Pearson and Mr. Snow.|
|Amory, D. Heathcoat||Birch, Nigel||Bullock, Capt. M.|
|Assheton, Rt. Hon. R.||Boothby, R.||Carson, E.|
|Astor, Hon. M.||Bower, N.||Challen, C.|
|Baldwin, A. E.||Boyd-Carpenter, J. A.||Channon, H.|
|Barlow, Sir J.||Braithwaite, Lt.-Comdr. J. G.||Clarke, Col. R. S.|
|Bee[...]man, N. A.||Buchan-Hepburn, P. G. T.||Clifton-Brown, Lt.-Col. G.|
|Conant, Maj. R. J. E.||Hutchison, Lt.-Cm. Clark (E' b'rgh, W.)||Prior-Palmer, Brig. O.|
|Cooper-Key, E. M.||Hutchison, Col. J. R. (Glasgow, C.)||Renton,-D.|
|Corbett, Lieut.-Col. U. (Ludlow)||Jennings, R.||Roberts, H. (Handsworth)|
|Crookshank, Capt. Rt. Hon. H. F. C||Joynson-Hicks, Hon. L. W.||Roberts, Maj. P. G. (Ecclesall)|
|Crosthwaite-Eyre, Col. O. E.||Keeling, E. H.||Robinson, Wing-Comdr. Roland|
|Cuthbert, W. N.||Lambert, Hon. G.||Ropner, Cal. L.|
|De la Bère, R.||Lancaster, Col. C. G.||Ross, Sir R. D. (Londonderry)|
|Dodds-Parker, A. D.||Langford-Holt, J.||Salter, Rt. Hon. Sir J A|
|Dower, E. L. G. (Caithness)||Linstead, H. N.||Scott, Lord W.|
|Drayson, G. B.||Low, Brig. A. R. W.||Shepherd, W. S. (Bucklow)|
|Drewe, C.||Lucas, Major Sir J.||Smiles, Lt.-Col. Sir W|
|Dugdale, Maj. Sir T. (Richmond)||Lucas-Tooth, Sir H.||Spence, H. R.|
|Eccles, D. M.||McCallum, Maj. D.||Stanley, Rt. Hon. O.|
|Elliot, Rt. Hon. Walter||Macdonald, Sir P. (I. of Wight)||Stoddart-Soott, Col. M.|
|Fletcher, W. (Bury)||Mackeson, Brig. H. R.||Strauss, H. G. (English Universities)|
|Foster, J. G. (Northwich)||McKie, J. H (Galloway)||Stuart, Rt. Hon. J. (Moray)|
|Fraser, H. C. P. (Stone)||MacLeod, J||Studholme, H. G.|
|Fyfe, Rt. Hon. Sir D. P. M||Macpherson, Maj. N (Dumfries)||Taylor, C. S. (Eastbourne)|
|Galbraith, Cmdr, T. D||Maitland, Comdr. J. W.||Thomas, J. P. L. (Hereford)|
|Gomme-Duncan, Col. A.||Marlowe, A. A. H.||Thorp, Lt.-Col. R. A. F.|
|Gridley, Sir A.||Mercies, A. E.||Vane, W. M. F.|
|Grimston, R. V.||Marshall, D. (Bodmin)||Wadsworth, G.|
|Hannon, Sir P. (Moseley)||Medlicott, F.||Walker-Smith, D.|
|Harvey, Air-Comdre. A. V.||Mellor, Sir J.||Ward, Hon. G. R.|
|Head, Brig. A. H.||Moore, Lt.-Col. Sir T.||Wheatley, Colonel M. J.|
|Headlam, Lieut.-Col. Rt. Hon. Sir C||Morrison, Mai. J. G. (Salisbury)||Williams, C. (Torquay)|
|Henderson, John (Cathcart)||Neven-Spence, Sir B.||Willoughby de Eresby, Lard|
|Hinchingbrooke, Viscount||Noble, Comdr. A. H. P.||York, C.|
|Hogg, Hon. Q.||Orr-Ewing, I. L.||Young, Sir A. S. L. (Partick)|
|Hollis, M. C.||Peake, Rt. Hon. O.|
|Holmes, Sir J. Stanley (Harwich)||Pickthorn, K.||TELLERS FOR THE NOES:|
|Hope, Lord J||Pitman, I. J.||Major Ramsay andCommander Agnew.|
|Howard, Hon. A.||Ponsonby, Col. C. E.|
|Hurd, A||Poole, O. B. S. (Oswestry)|
Eighteenth Resolution read a Second time.