Commons Sitting of 10 June 1947

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  FELIXSTOWE PIER BILL

    LONDON COUNTY COUNCIL (GENERAL POWERS) BILL
    LONDON COUNTY COUNCIL (MONEY) BILL.
    Read the Third time, and passed.

    LONDON PASSENGER TRANSPORT BOARD BILL (King's Consent signified).
    Bill read the Third time, and passed.
ORAL ANSWERS TO QUESTIONS
  TOWN AND COUNTRY PLANNING

    Protected Buildings (Lists)
    Mr. Keelingasked the Minister of Town and Country Planning whether he expects to publish before the Summer Recess any of the lists of buildings of historic or architectural interest to be protected under Sections 42 and 43 of the Town and Country Planning Act, 1944.
    The Minister of Town and Country Planning (Mr. Silkin): It will not be practicable to publish any of the lists before the Summer Recess, but I hope to do so in the early autumn.

    Bankside Power Station
    Sir Arthur Salterasked the Minister of Town and Country Planning whether he has received authoritative expert evidence as to the elimination of sulphur fumes from the proposed oil-fired Bank-side generating station; and whether he will publish his evidence.
    Mr. Skeffington-Lodgeasked the Minister of Town, and Country Planning (1) what steps he is taking to satisfy himself that no noise and sulphur or other noxious fumes will be given out by the proposed electricity generating station on Bankside;
    (2) what reports he has received on the possibility of eliminating sulphur and other noxious fumes emanating from oil-fired electricity generating stations; and if he will make a statement thereon.
    Mr. Silkin: I am satisfied from the advice I have received that sulphur and other noxious fumes can be eliminated. In order to ensure that the design of the plant to be installed is satisfactory, a pilot gas-washing plant is to be constructed, and, when the results of this are available, the Electricity Commissioners will consult with my right hon. Friends, the Ministers of Health and of Works. I shall keep in touch with these discussions. As regards noise, the Electricity Commissioners imposed a condition in giving their formal consent that the undertakers shall provide efficient methods for ensuring the avoidance of noise, and I have no reason to think that any difficulty will arise.
    Sir A. Salter: May I ask the Minister whether he will ensure that no action compromising a final decision is taken until the public have had an opportunity of considering the expert evidence which he says is now before him?
    Mr. Silkin: But the decision has been given. I am required to give a decision as the result of the public inquiry which was held, and I have given it.
    Sir A. Salter: Will the Minister see that the public have the evidence so that other expert opinion can express itself?
    Mr. Silkin: I cannot give any undertaking to publish the advice which I have received.
    Mr. Skeffington-Lodge: Was not the decision to go ahead made conditional on the Minister being satisfied that sulphur and other noxious fumes could specifically be eliminated?
    Mr. Silkin: Well, I am satisfied.
    Mr. Bossom: Is the Minister aware that there is no plant in the world that is using this low-grade oil fuel which does not give

    843
    off noxious fumes; is he further aware that, when Sir Christopher Wren built St. Paul's Cathedral, he made great efforts to get good stones there; and is the Minister going to wreck St. Paul's Cathedral by not preventing these fumes from coming across the river?
    Mr. Silkin: I am satisfied that these fumes will in no way wreck St Paul's Cathedral.
    Mr. Hobson: Will the fumes from the Bankside power station be subject to the Public Health Act, and, if the answer is in the affirmative, is the Minister aware that, as long as steps are taken to mitigate the nuisance, that Act is being complied with?
    Mr. Silkin: Of course, they are subject to the Public Health Act.
    Mr. Wilson Harris: Is the Minister aware that it was stated in another place that it will take six months to prove whether the noxious fumes can be eliminated or not? is that experiment to be carried out, and will the main enterprise be held up until it is carried out?
    Mr. Silkin: I am satisfied, as a result of the advice I have received, that sulphur fumes can be eliminated.
    Mr. Keeling: Has the Minister investigated the suggestion that the extra cost of burning oil, together with the cost of eliminating the sulphur fumes, would far exceed the cost of bringing mains from a point downstream, where the power station would be unobjectionable?
    Mr. Silkin: No, I have not, and it is not my business. All I had to do was to consider a specific application, which I did.
    Mr. Speaker: We have already had one Adjournment Debate on this matter, and we cannot debate it all again at Question time.

    Redevelopment Areas, Birmingham
    Mr. Yatesasked the Minister of Town and Country Planning when he will be in a position to confirm the order enabling the Birmingham City Council to acquire the properties necessary for the redevelopment of Ladywood and other redevelopment areas in the city of Birmingham.
    Mr. Silkin: I hope, to be in, a, position to issue, my decision on this proposal very shortly.
    Mr. Yates: Will the Minister regard this as a matter of urgency in view of the fact that the application has been in front of the city council for nearly 18 months?
    Mr. Silkin: I am very well aware of that, but I have been held up by seven legal decisions.
    Mr. Shurmer: Is the Minister aware that there are five redevelopment areas in Birmingham, and that thousands of people in those areas are living under inhuman conditions simply because landowners will not take action with regard to rotten property pending the Minister's decision, and will he speed up the matter?

  NATIONAL INSURANCE

    Scheme (Operation)
    Mr. Stanley Prescottasked the Minister of National Insurance when it is anticipated the National Insurance scheme will come into full operation.
    The Minister of National Insurance (Mr. James Griffiths): I would refer the hon. Member to reply given by my right hon. Friend the Prime Minister to the hon. Member for West Willesden (Mr. Viant) yesterday.
    Mr. Prescott: While desiring that this scheme should be brought into operation at the earliest possible moment, will the right hon. Gentleman first assure himself that the necessary adequate administration is in existence, and that there will be no fiasco as occurred in connection with old age pensioners?
    Mr. Griffiths: There was no fiasco with regard to them. It is because we are very anxious to put the scheme into operation, and to make as certain as we can that we shall have adequate administration, that we have fixed the date of 5th July, 1948.
    Mr. Prescott: Is it not a fact that there is still a fiasco in regard to Old Age Pensions?
    Mr. Griffiths: No, Sir.

    Dominions (Reciprocal Arrangements)
    Mr. Charles Smithasked the Minister of National Insurance what steps have been taken by His Majesty's

    845
    Government to make reciprocal arrangements with the Dominions with a view to ensuring that elderly persons are not disqualified from pensions in this country on the ground that they have been resident in the Dominions.
    Mr. J. Griffiths: A preparatory conference of officials, representing the Governments of the United Kingdom, Canada, Australia, New Zealand, South Africa, Eire and Southern Rhodesia, with an observer from Burma, sat in London last month to examine the principles on which reciprocity in the field of social insurance might be based. I am glad to say that the conference was able to frame a unanimous report. This will be submitted to the Governments concerned, and will, I hope, provide a basis for the consideration, in due course, of agreements for reciprocity between individual countries whose social service schemes have the necessary common ground for such arrangements.
    Mr. Smith: Will the Minister take every possible step to ensure that any arangement made in this way will be retrospective?
    Mr. Griffiths: The report has to be considered by all the Governments concerned. I am certain my hon. Friend will agree that we ought to study this report, and that I cannot make any definite promise until agreement has been arrived at by all the Governments.
    Mr. Hector Hughes: Can the Minister say whether that agreement applies to persons who become entitled to a pension in this country, and then go to the Dominions?
    Mr. Griffiths: The whole purpose of this agreement will be to ensure that people who move between these countries will be able, in a way yet to be settled, to take their pension rights with them.

  OLD AGE PENSIONS
  Sir Robert Youngasked the Minister of National Insurance what arrears of pension are due to pensioner No. 53035372, now continuation book No. 05458402; and if, owing to the need of the pensioner, he will cause early payment to be made.
  Mr. J. Griffiths: Arrears of pension amounting to 7 10s. 0d. were due to this pensioner; and payment was made by postal draft on 5th June.

  EMPLOYMENT

    Opencast Coalmining (Workers' Allowances)
    Sir R. Youngasked the Minister of Labour whether an unemployed man sent by the employment exchange from one county to another to work producing opencast coal is entitled to a free railway voucher and allowed any lodging allowance; and, if not, on what conditions such assistance to get to work in a place far removed from his home is temporarily advanced.
    The Minister of Labour (Mr. Isaacs): Opencast coalmining is carried out by the building and civil engineering industry, whose working rules govern the payment of lodging allowances and travelling expenses. Apart from the contractors own key men, payment of allowances and expenses, which would in any case be made by the contractor and not by my Department, would depend on whether an award in respect of a particular contract had been made by the industry's own conciliation board. A worker wishing to proceed to a job which does not entitle him to the payment of his fare by the employer could obtain a railway warrant from a local office of my Department on an undertaking to refund the cost later.

    Building Trade Trainees
    Mr. Prescottasked the Minister of Labour if his attention has been directed to strikes among bricklayers on local authority building sites, arising from the employment of trainees; and what steps his Department have taken in this matter.
    Mr. Isaacs: I am aware that in one area bricklayers on a local authority building site withdrew their labour on account of the employment of trainees. The action was taken against the advice of their trade union, and I am informed that the majority of the men concerned have now returned to work.
    Mr. Prescott: Presumably, the right hon. Gentleman is referring to the case of Bolton. If that is so, is he aware that

    847
    in that case the bricklayers alleged that the trainees were insufficiently trained, and that they had to undo much of their work and rebuild it, and, in these circumstances, would he consider investigating the training given to these men?
    Mr. Isaacs: No, Sir. This is the first time that I have heard of the information given by the hon. Gentleman. All my experience has gone to prove that the trainees are doing exceptionally good work.
    Sir Waldron Smithers: Will the Minister introduce at once, especially in the building trade, a system of payment by results.
    Mr. Isaacs: That is another question.

    Cotton Spinning Industry
    Lieut.-Colonel Bromley-Davenportasked the Minister of Labour (1) whether, in view of the importance of getting the maximum advantage from new equipment, he will ensure that effective steps are taken at the earliest opportunity to initiate a system whereby impartial work-load assessments for the cotton-spinning industry can be arrived at;
    (2) whether he is aware that one of the greatest difficulties in arriving at agreement for wage levels in the cotton-spinning industry is the absence of any independent system of assessment of the aggregate work-load for optimum production and fair working conditions; and what action he proposes to take in the matter.
    Mr. Isaacs: The Report of the Ever-shed Commission, which covers both wages arrangements wages arranements and methods of organisation or work, is at present the subject of discussion between the two sides of the cotton spinning industry. I am aware that the subject of work load assessment has been raised in the course of these discussions which, I understand, are being resumed today. I am sure that due regard will be paid to this and related questions, but they are matters that should be settled by agreement between the two sides of the industry.

    Disabled Men (Sedentary Work)
    Mr. Bramallasked the Minister of Labour if he will take steps to increase the compulsory percentage of disabled men to be employed for those establishments with a high proportion of sedentary work.
    Mr. Isaacs: The Act does not empower me to fix a special percentage above the standard rate for an establishment, but only for a trade or industry, or a branch or part of a trade or industry, or a class of employer. But I have the question of an increase, either general or particular, in the quota obligation of employers under constant review, and an increase will be made if circumstances require it.
    Mr. Bramall: Will my right hon. Friend bear in mind that there is very considerable unemployment among disabled men, and that it appears to them to be very ridiculous that there should be only the same obligation on an organisation which does purely office work as there is on a factory?
    Mr. Isaacs: I am not sure that that is a very material point, but, of course, I am bound by the Act, which provides the way in which special percentages shall apply.
    Mr. William Shepherd: Is the Minister satisfied that all employers are fully aware of their liabilities in the matter, and is he also satisfied with the machinery that exists at the present time?
    Mr. Isaacs: I am not entirely satisfied that all employers are fully cognisant of their responsibilities, but the majority of them are playing the game. On the advice of our Advisory Council, we are taking steps to make a very extensive inquiry to find out whether employers do know, and, if they do, whether they are playing the game.

    Disallowed Unemployment Benefit, Lanarkshire
    Mr. Timmonsasked the Minister of Labour if he is aware that large numbers of Lanarkshire girls are losing their unemployment benefit by refusing to leave home and go to England to work; and what steps he proposes to take to put a stop to this practice.
    Mr. Isaacs: Employment is shortly becoming available to women as key workers in a factory in Lanarkshire to be opened there as part of the scheme for providing employment in that development area. In order to give this employment to local unemployed women, a number of them were asked to go to Yorkshire, for a limited period, to train as weavers. Twenty of them refused to accept this offer, and unemployment benefit was dis-

    849
    allowed. Decisions on claims for benefit are given by the independent statutory authorities appointed under the Unemployment Insurance Acts, and neither I nor my right hon. Friend the Minister of National Insurance is able to interfere in any way with their decisions.
    Mr. Timmons: Does the Minister consider that £2 15s. a week, which has been offered to these girls to live in Leeds and to pay for their board and their hostel accommodation, is an adequate amount for any girl to maintain herself on a decent standard; and is he further aware that there is a strong feeling in Lanarkshire that these girls are subject to direction, which does not apply in other parts of the country?
    Mr. Isaacs: It is not for me, on this question, to express an opinion on the rate of wages. All I can say is that 60 of the women who were offered employment accepted it. We shall not get the factories in this development area staffed with local unemployed unless they are prepared to take a little trouble to train themselves for the job.
    Mr. Gallacher: Would the Minister say what possible justification there can be for refusing unemployment benefit to girls because they will not leave their own country and cross the Border into England?
    Mr. Isaacs. I never knew that it was a hardship for Scottish nationals to come to England.
    Mr. Wilson Harris: Does the right hon. Gentleman's answer mean that men or women might be compelled to go from Devon to Northumberland to work, and would lose their unemployment benefit if they refused to do so?
    Mr. Isaacs: No, Sir, this is a question of training people for work in their local area. If they refuse to take the work available to them, it is my duty to report them to the statutory authorities. There My responsibility as to benefit rests.
    Mr. Timmons: In view of the very unsatisfactory nature of the reply, I beg to give notice that I propose to raise the matter on the Adjournment

    Smithfield Clerks and Salesmen (Dismissals)
    Mr. Boyd-Carpenterasked the Minister of Labour whether he has con-
    850
    sidered representations made, to him by the Smithfield Guild of Clerks and Salesmen with reference to the proposed dismissal by the London Wholesale Meat Supply Association, Limited, of all men of 65 years of age and over; and whether, in view of the national manpower position, he will indicate his Department's attitude.
    Mr. Isaacs: Yes, Sir. I have already made it clear that in view of the general shortage of manpower, I deprecate the discharge of efficient workers for no other reason than that they have reached a particular age. The Government's appeal to the older men to stay at work carries with it an appeal to employers to keep them at work where possible. The circumstances of individual cases vary greatly, however, and I could not express an opinion on the merits of particular cases.
    Mr. Boyd-Carpenter: Will the right hon. Gentleman convey a very clear expression of his own Department's opinion to the Ministry of Food who, so far, have refused to help in this dispute at all?
    Mr. Isaacs: I hope that to whoever this opinion applies, they will take notice of it.
    Mr. George Wallace: Has my right hon. Friend also received representations from the Transport and General Workers Union, which is the most effective organisation in a case of this sort?
    Mr. Isaacs: I cannot recall any representations from that body.

    Cost-of-Living Advisory Committee (Final Report)
    Mr. Osborneasked the Minister of Labour how many meetings have been held by the Cost-of-Living Advisory Committee; when the final report will be ready; and whether the Government propose to take immediate action on it.
    Mr. Isaacs: The Cost-of-Living Advisory Committee has held six meetings, and a technical committee appointed to prepare a detailed plan for the new index has held eleven meetings. I am unable to say when a final report by the latter committee will be available for approval by the Advisory Committee. I cannot say what action the Government will take until the report has been received
    Mr. Osborne: In view of the importance of this matter, will the Minister give an assurance that when the report is ready it will be published with the record of the evidence?
    Mr. Isaacs: I could not give such an undertaking at present, but, knowing how interested the House and the country are in this matter, I will give a full and detailed statement and will publish some information on Thursday, when there is a Question down on this matter.

    Epileptics
    Mr. Bowdenasked the Minister of Labour if he is aware that there are numbers of epileptics registered as unemployed in the United Kingdom; that many are unable to obtain employment because of their disability; and if he will consider ways of getting these people to work in the open air under medical supervision.
    Mr. Isaacs: The latest available figures indicate that about 1,350 epileptics are now registered as unemployed. The problem of finding suitable employment for epileptics has recently been the subject of special study in my Department, in conjunction with the medical authorities. There are many occupations, including some in the open air, which are suitable for them. Every effort is being made to place the less severely disabled of them in such jobs with sympathetic employers, and some of the more severe cases have already been placed in employment under sheltered conditions.

    Whitsun Bank Holiday
    Mr. William Shepherdasked the Minister of Labour whether, in view of the shortening of working hours and the urgent need for production, he will consider taking steps to dispense with the Whitsun Bank Holiday next year.
    Mr. Isaacs: No, Sir.

  SCOTLAND

    Juvenile Delinquency
    Mr. Hector Hughesasked the Secretary of State for Scotland how many remand homes for boys and girls there are in Scotland; where are they situated; how many boys and girls, respectively, each
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    has accommodated yearly during the last 10 years and for what periods; what records he has of the success of the treatment and after careers of the boys and girls treated in these remand homes; and if he will make a statement on this manner of dealing with juvenile delinquents in Scotland.
    The Secretary of State for Scotland (Mr. Westwood): Information as to the number and situation of remand homes is published in the relevant report of the Scottish Advisory Council on the Treatment and Rehabilitation of Offenders, of which I have sent my hon. and learned Friend a copy; and I am circulating in the OFFICIAL REPORT a table showing the total number of admissions to these homes during the past 10 years. Separate figures for each home and information as to the length of stay and subsequent career of each individual case are not available. As regards the last part of the Question, I am in general agreement with the views expressed in the Report of the Advisory Committee.
    Mr. Hughes: As the whole purpose of these schemes is to assist boys and girls from delinquency to good citizenship, will the Secretary of State say what he is doing to help them in providing constructive employment, which is badly needed at present?
    Mr. Westwood: I have already indicated that I am giving consideration to the Report of the Advisory Committee with a view to doing everything possible to help these boys and girls.
    Mr. Hughes: Are there no schemes in existence for the after care of these young people?
    Following is the table:

    Year.

    Children.

    Young Persons

    Total.

    M.

    F.

    M.

    F.

    1937

    414

    35

    832

    119

    1,400

    1938

    317

    24

    772

    118

    1,231

    1939

    387

    17

    739

    80

    1,223

    1940

    708

    30

    974

    122

    1,834

    1941

    749

    48

    1.134

    160

    2,091

    1942

    833

    71

    1,247

    177

    2,328

    1943

    845

    68

    1,309

    195

    2,417

    1944

    712

    72

    1,432

    196

    2,412

    1945

    790

    62

    1,498

    205

    2,555

    1946

    708

    40

    1.332

    154

    2,234

    Agricultural Land, Musselburgh
    Sir William Darlingasked the Secretary of State for Scotland if he is aware that an area of some 20 acres near Musselburgh, described locally as the Eye of Scotland, is being considered for housing or other public purposes; and what steps he intends to take generally to prevent first-class agricultural land from being sterilised in this fashion.
    Mr. Westwood: I am at present considering a compulsory purchase order in respect of a site of some 27 acres which has been submitted to me by Mussel-burgh Town Council for confirmation, and hope to be able to announce my decision shortly. I can assure the hon. Member that before approving the use of any land for housing or other public purposes, I invariably give the fullest consideration to the needs of agriculture, and that agricultural land is not so used 'unless I am satisfied that there is no suitable alternative site available.
    Sir W. Darling: Is the Secretary of State aware that this is an important horticultural area for the City of Edinburgh, and will he give an assurance that he will be reluctant to give his consent to any less useful exploitation of that territory?
    Mr. Westwood: I am certainly aware that in this area we have some of the very finest agricultural land in Scotland or elsewhere. It is my duty not only as the Minister of Housing, but as the Minister of Agriculture for Scotland, to see that the land of Scotland is used to the best advantage.
    Mr. Kirkwood: Does not the Secretary of State think the time has now arrived when we should take over the whole of the land in Scotland?

    Secondary Education
    Mr. Gallacherasked the Secretary of State for Scotland if he is aware that the omnibus or multilateral school has been recommended by the Scottish Advisory Council on Secondary Education as the best form of secondary education; and if he will take steps to ensure that in future all new Scottish secondary schools conform to this type.
    Mr. Westwood: I am aware that the Advisory Council in their report on secondary education have expressed a pre-
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    ference for the omnibus type of school, wherever practicable, although they recognise that its adoption may not be in the best interests of every area. Until consideration of the report has been completed, I am not in a position to say to what extent the Council's recommendation will be adopted.
    Mr. Gallacher: Will the Minister ensure that the officers in his Department give the closest attention to this question, as many of those who are interested in education consider that it is very important from the point of view of the further development of education in Scotland?
    Mr. Westwood: I can assure the hon. Gentleman that not only are the officers of my Department giving this matter their closest attention, but because of my own experience and as the Minister responsible, I am giving it my personal attention.
    Mr. Henry Strauss: Could not these schools be given less ridiculous and clearer names?

    Scholl Leaving Certificates
    Mr. Gallacherasked the Secretary of State for Scotland if he has taken note of the criticisms made of the Scottish Higher Leaving Examination by the Scottish Advisory Council on Education; and if he will take steps now to abolish this barrier to educational progress and substitute the recommended alternative of a fourth year Leaving Certificate based on teachers' estimates and corrected by a standardised test.
    Mr. Westwood: The recommendations made by the Advisory Council on Education in Scotland in their report on secondary education, including those which relate to the Senior Leaving Certificate Examination, are still under consideration. As they involve very important issues, some of which necessitate consultation between the Scottish Education Department and other examining bodies, it will be some time before I am in a position to make a statement on the subject.
    Mr. Gallacher: Is the Secretary of State aware that I have known quite brilliant students with a very good record who have been affected so much by this particular form of examination because of their, nervous temperament, that they came out very badly in the examination?
    Mr. Westwood: I am aware that these things can happen in connection with examinations.

    Herrings (Quick Freezing Factories)
    Mr. Boothbyasked the Secretary of State for Scotland what steps are being taken to provide facilities for the quick freezing of herrings during the summer and autumn fishings.
    Mr. Westwood: Three factories for quick freezing of herrings will be in operation in 1947; one in Zetland and one at Fraser-burgh during the summer fishing season, and one at Great Yarmouth during the autumn fishing season.
    Mr. Boothby: Can the right hon. Gentleman give any indication of the capacity of these factories? Are they to be experimental, or will they be provided on an adequate scale?
    Mr. Westwood: Without notice, I could not give an indication of the capacity of these factories.
    Mr. Boothby: I beg to give notice that shall raise the matter on the Adjournment.
    Mr. J. J. Robertson: May I ask whether these factorie—
    Mr. Speaker: The hon. Member said he would raise the matter on the Adjournment and, therefore, no other supplementary question may be asked.

    Small Dwellings
    Mr. Rankinasked the Secretary of State for Scotland how many Scottish local authorities have plans which have been approved for small-size dwellings.
    Mr. Westwood: Out of 69.500 houses for which tenders had been approved up to 4th June, go were of two-apartments. 14 were of one-apartment and 69 single apartments were contained in two hostels. The number of local authorities involved was seven.
    Mr. Bossom: Could the Minister state how many different groups of architects examine these drawings before they are approved?
    Mr. Westwood: I could not say without notice, and even then it might not be worth the time spent upon it. The object is to build houses for the people.
    Mr. Rankin: Are the small-size dwellings designed specifically to meet the needs of the elderly people?
    Mr. Westwood: Not necessarily only the elderly people. The recommendations of the Advisory Committee on Housing in Scotland referred to single persons, who themselves may not be elderly.
    Mr. Bossom: Is the Minister aware that the desire is to build houses and not to waste time by letting several groups of the same type of men examine the same drawings?
    Mr. Westwood: There is little waste of time so far as Scotland is concerned.

    Industry and Employment (White Paper)
    Mr. William Rossasked the Secretary of State for Scotland if it is his intention to make the White Paper on Industry and Employment in Scotland an annual publication.
    Mr. Westwood: If I find that there is any widespread desire for an annual White Paper of this kind, I shall consider what action might be taken in this direction.
    Mr. Ross: Is the Secretary of State aware that there is a real public demand for such a publication, and that it is very desirable that we should have an authoritative statement annually of Scotland's economic recovery under a Labour Government?
    Mr. Westwood: I have already indicated that, if there is a widespread desire, I shall consider what can be done in the way of an annual publication. It could not follow exactly on the same lines as the White Paper, in view of the fact that much of it is historical, giving the background of exactly what is being done at the present time.
    Colonel Gommc-Duncan: In view of what the hon. Member for Kilmarnock (Mr. Ross) has just remarked, would the right hon. Gentleman say whether there are any signs of recovery in Scotland under a Labour Government?
    Mr. Westwood: Yes, Sir, there is adequate evidence that as a result of plans we are laying, Scotland is going to benefit from the Labour Administration.

    Science Students (Grants)
    Mr. Gilzeanasked the Secretary of State for Scotland if he is prepared to extend for another year the grants given for the past three years to honours students in physics and radio, attending Scottish universities, and so enable them to complete their course and to graduate.
    Mr. Westwood: No, Sir. State bursaries in science were introduced during the war to equip selected students for technical work in the Forces or in responsible civilian employment, and not necessarily to enable the holders to obtain degrees. The normal period of tenure has throughout the scheme been three years or less. The awarding of these bursaries ceased in 1945, but existing holders were allowed to complete the State bursary course. Since then I have, through the Education Authority Bursaries (Scotland) Regulations, 1947, introduced a new scheme of financial assistance for university and other students. In these circumstances it would be a misuse of the scheme of State bursaries in science to extend existing bursaries in order to enable the holders to spend an additional year at the university. Those of them who wish to do so, and can obtain deferment of call-up for military service, can apply to the appropriate education authority for financial assistance.
    Mr. Gilzean: Does the Secretary of State realise that these young men are not simply spending an extra year at the universities, and that the course they have in part done is an honours course, and unless completed is useless? Consequently, is he not prepared to do something to meet their circumstances having regard to the fact that most of these young men are refused school bursaries of considerable amounts because they were offered State grants?
    Mr. Westwood: I have already pointed out that, to meet these and similar cases, I have, through the Education Authority Bursaries (Scotland) Regulations, 1947, made it possible for them to get, through the local education authorities, the financial assistance they so desire.

    Grazings, Crown Lands
    Mr. Niall Macphersonasked the Secretary of State for Scotland why it is not the invariable practice to put grazings on Crown lands up for public auction rather than to put them out for tender.
    Mr. Westwood: Grazings on Crown land under the charge of the Commissioners of Crown Lands are generally let with neighbouring Crown farms. In exceptional cases where it is necessary to let such grazings separately, the method of letting adopted varies in accordance with the circumstances of the particular case, including the extent of the grazing and the custom of the locality. If the hon. Member has a particular case in mind and will let me have particulars of it, I will have further inquiries made,

  DISABLED EX-SERVICEMEN (SURGICAL SHOES)
  Mr. Lipsonasked the Minister of Pensions if he is aware that surgical shoes ordered by a disabled ex-Serviceman, of whose name he has been informed, through his Department on 12th October, 1946, have not yet been received; and, as this is causing financial and other hardship, if he will arrange for them to be delivered without further delay.
  The Parliamentary Secretary to the Ministry of Pensions (Mr. Blenkinsop): I am pleased to say that, in the case to which the hon. Member refers, the contractors have promised to despatch the shoes today.
  Mr. Lipson: While thanking my hon. Friend for that reply, may I ask him if he will take steps to see that these disabled men get their shoes, because at the present time men in this position are unable to work?
  Mr. Blenkinsop: We are very much concerned with this whole position, and I am glad to say that the step we have already taken has cut down delays considerably. We are aware of the trouble that still arises, and we are trying to deal with it as rapidly as possible.

  PRISONERS OF WAR

    Landworkers (Protective Clothing)
    Mr. Digbyasked the Secretary of State for War why German prisoners of war working on the land are not issued with ground sheets or gas capes so that they can continue work during rain like other landworkers.
    The Secretary of State for War (Mr. Bellenger): The supply of ground sheets and gas capes is insufficient to provide prisoners of war with them. Prisoners of war have, in any case, greatcoats, and in each Command there is held a pool of protective clothing which may be issued to men engaged in special tasks which make its use necessary.
    Mr. Digy: Is the Secretary of State aware that in my constituency these men are discontinuing work during rain; that that is most unsatisfactory for the farmers who pay for their services, and that a large number of gas capes have recently been disposed of as Government surplus stock?
    Mr. Bellenger: Some may have been, having been declared surplus, probably, by the Service Departments; but not a large number, as far as I know. I have consulted my right hon. Friend the Minister of Agriculture to see if we could help to alleviate the situation, but I am afraid I cannot help any more.
    Major Cecil Poole: Is my right hon. Friend aware that there are still many British agricultural workers who cannot get these capes? Would it not be much better to look after our own agricultural workers before we worry about the prisoners of war?
    Mr. Driberg: Is my right hon. Friend await that the prisoners at Camp 18, which is an officers' camp, are, in fact, issued with gas capes? If it is possible to issue them at one camp, why not issue them at others, so far as the supplies go?
    Mr. Bellenger: As I have said in my answer, there is a pool of protective clothing held in each Command. That probably accounts for those prisoners having gas capes.
    Air-Commodore Harvey: Will the right hon. Gentleman have a search made of the maintenance units in order to see what supplies exist and then sort them out?
    Mr. Bellenger: Yes, Sir, I am quite prepared to scrape together what I can.

    Repatriation
    Mr. Stokesasked the Secretary of State for War whether arrangements have now been made to place German prisoners
    860
    captured in the Channel Islands in their right category for repatriation, in accordance with the promise made in July, 1944, to the prisoners of war by the right hon. Member for Woodford (Mr. Churchill).
    Mr. Bellenger: The Germans in the Channel Islands after July, 1944, were in the position of a beleaguered garrison; they did not surrender until the final capitulation of the German armed forces, and cannot be regarded as prisoners, of war until they actually came under British control. They are, therefore, correctly placed in the same group for repatriation as others captured during May, 1945.
    Mr. Stokes: Has my right hon. Friend studied the wireless declaration of the right hon. Member for Woodford? Because in that declaration he made the position perfectly clear, and if my right hon. Friend carries out what he intended all these people would be in category 19 instead of 29.
    Mr. Bellenger: No, Sir, I have not personally studied in detail the speeches of the right hon. Member for Woodford' (Mr. Churchill)—
    Mr. Stokes: That was the promise.
    Mr. Bellenger: We have made an exhaustive search in the War Office to trace what the right hon. Gentleman did say in this connection, but it does not confirm what my hon. Friend has said.
    Mr. Stokes: Would my right hon. Friend bear in mind that while the right hon. Gentleman was Minister of Defence he was not Secretary of State for War; that the declaration was made over the wireless; and that my right hon. Friend will find the record not in the War Office, but in the B.B.C.?
    Mr. Bellenger: Well, we cannot find the record anywhere, not even with the right hon. Member himself.
    Mr. Stokes: I will send it to my right hon. Friend.
    Mr. Driberg: Has my right hon. Friend asked the B.B.C. for the record? Because it is generally known among these prisoners that there was some such promise, which they claim has been dishonoured.
    Mr. Bellener: We have made an exhaustive examination, even going to the private secretary of the right hon. Member for Woodford, and nobody seems to know anything about it except my hon. Friend the Member for Ipswich (Mr. Stokes).
    Mr. Driberg: Ask the B.B.C.

  BRITISH ARMY

    G.S.C. Records, Edinburgh (Removal)
    Mr. Willisasked the Secretary of State for War when the G.S.C. Records are to be removed from Edinburgh.
    Mr. Bellenger: The date is not yet settled, Sir.
    Mr. Willis: Is my right hon. Friend aware that the workers involved understand that the date is 31st July, and that according to what was said by representatives of his Department it would not be until the end of the year? As this is likely to cause hardship and inconvenience, will he consider it again?
    Mr. Bellenger: Yes, Sir we shall certainly take the staff fully into our confidence as soon as the date has been definitely setled.

    Handkerchiefs
    Mr. Jannerasked the Secretary of State for War why men now being called up to the Army under the National Service Acts are not issued with handkerchiefs; and, as they have to hand in any surplus coupons to the authorities prior to joining up, if he will arrange for the issuing of handkerchiefs together with other articles of Service clothing.
    Mr. Bellenger: No, Sir. Handkerchiefs have never been supplied to soldiers from military sources, and there would appear to be no reason why National Service men should be treated differently in this respect from other soldiers. Ever since clothing rationing was introduced commanding officers have been empowered to issue coupon-equivalent certificates to soldiers to enable them to buy their own handkerchiefs from civilian retailers.
    Mr. Janner: Is my right hon. Friend aware that the information is not given to the soldiers, that they have not the opportunity of obtaining the necessary
    862
    coupons for handkerchiefs, that all their coupons are taken from them when they join the Army, and that consequently, great hardship is being caused to a great number of people?
    Mr. Bellenger: I should be very much surprised if soldiers joining the Army do give up all their coupons. After all, I have a son myself.

    Civilian Belts
    Mr. Viantasked the Secretary of State for War if he is aware that the regimental sergeant-major attached to H.Q. Company Corps, 2nd H.L.I., B.F.I.G., has recently taken away the civilian belts, purchased and owned by the men of the company, and when asked for their return said he intended to burn them; and if he will take such disciplinary action as will ensure financial compensation to all those who had their belts taken from them and destroyed.
    Mr. Bellenger: I am having inquiries made about this and will write to my hon. Friend.

    Requisitioned Property (Release)
    Mr. Granville Sharpasked the Secretary of State for War how many of the 404,000 acres held by his Department on 31st December, 1946, under Defence Regulation 51 and the 1,290,836 acres then held under Defence Regulation 52 have now been released; and what further releases will be made by 30th June, 1947.
    Mr. Bellenger: Up to date information about the amount of land held by my Department under Defence Regulation 51 is not readily available within the War Office. A return from all home Commands is due early next month. When it has been received I will send the information to my hon. Friend. On 31st May training rights under Defence Regulation 52 were held over 855,465 acres. Of this area 229,200 acres have been approved for release, and I hope that the greater part will be released during this month.
    Mr. G. Sharpasked the Secretary of State for War how many inexpensive flats and small houses were held by his Department on 30th April, 1947; and how many of these he estimates will be de-requisitioned by 30th June, 1947.
    Mr. Bellenger: At 30th April, 1947, my Department held 69 inexpensive flats and

    863
    196 small houses. I estimate that of these, some 40 flats and 60 small houses will be derequisitioned by 30th June, 1947.
    Mr. Orr-Ewing: What does the right hon. Gentleman mean by "inexpensive flats"? Does that term include flats that would come under the Rent Restrictions Acts if derequisitioned?
    Mr. Bellenger: The term was used by my hon. Friend in his Question, and I have given him the answer. Perhaps, it would be possible for all three of us to study and define it.
    Mr. Oliver Stanley: In order to answer the Question, the right hon. Gentleman must have known what the Question meant. Could he not confide that to us?
    Mr. Bellenger: Certainly, if a Question is put down I will give a detailed answer.
    Mr. Sharp: Is my right hon. Friend aware that the term was originally used by his Department when submitting evidence to a Select Committee of this House?
    Mr. Swinglerasked the Secretary of State for War what is the size of the area of Cannock Chase at present requisitioned by his Department; for what purposes it is being used; and when he proposes to derequisition it.
    Mr. Bellenger: At present an area of 485 acres known as Teddesley Park is being used under Defence Regulation 52 for general infantry training purposes. This area will be required also for training Territorial Army units, and a proposal to use it permanently will shortly be considered by the Inter-Departmental Committee on Service Land Requirements.
    Mr. Swingler: Is the Secretary of State aware that this area constitutes a great natural amenity for thousands of people in the West Midlands; that previously it has always been accessible to the public in peacetime; and that there is very serious opposition to any proposal that it should be taken over as military training ground?
    Mr. Bellenger: Yes, Sir, I am in complete sympathy with my hon. Friend and his constituents. It may perhaps comfort him and them to know that the training rights which we shall want will he so small that we shall interfere with the publics very little, if at all.

  NATIONAL FINANCE

    Dollar Expenditure (Essential Foodstuffs)
    Mrs. Castleasked the Chancellor of the Exchequer if he will give an assurance that he will not try to effect savings in dollar expenditure by cuts in imports of essential foods, or by refusal to buy increased quantities where these become available.
    The Chancellor of the Exchequer (Mr. Dalton): No, Sir. I cannot give an assurance in such general terms.
    Mrs. Castle: Is my right hon. Friend aware that, if we are to make a success of the production drive, it is very important to maintain and, where possible, to improve our supplies of essential foods; and will he at least give an assurance that every form of luxury dollar expenditure will be ruthlessly pruned before basic food purchases are cut?
    Mr. Dalton: I hope the hon. Lady will set an example by stopping smoking.
    Mr. Michael Foot: In view of the supreme importance of this subject, will the Chancellor consider arrangements for a Debate in this House on the various items of dollar expenditure, so that we may compare one with another, before he considers making cuts in dollar expenditure on food?
    Mr. Dalton: In this House, that is a matter upon which a Question should be addressed to my right hon. Friend the Lord President of the Council.
    Mr. Foot: Is it not possible for the Chancellor to make any representations to the Lord President of the Council?
    Mr. Wyatt: Would my right hon. Friend give an assurance that when he is considering any saving of dollar expenditure which may be necessary he will use all his influence to see that the first cuts are on our troops overseas and not on food for our homes?
    Sir Waldron Smithers: Why did not the Chancellor answer this Question by saying: "We are up against it. Work or want"?

    Alleged Budget Leakage (Inquiry)
    Lieut.Commander Gurney Braithwaiteasked the Chancellor of the Exchequer whether he has now completed

    865
    his inquiry into the alleged Budget leakage.
    Mr. Dalton: Yes, Sir. In view of these allegations, the Chairman of the Stock Exchange, at my request, set up a Committee of Inquiry, which reported unanimously that there is no evidence that purchases of shares were made by any person on the strength of prior knowledge of the contents of the Budget. This conclusion is supported by the information which I have received from the Government Departments concerned. I should like to thank the Chairman of the Stock Exchange' and his colleagues for their co-operation in this matter. In the light of their report, I have decided that there is no case for any further formal investigation.
    As regards the increase in the Tobacco Duty, arrangements were made, in accordance with long standing practice, for retailers to have notice of the change soon after 5 p.m. on the evening of Budget Day, that is to say, two hours after the Stock Exchange had closed. Since I did not announce this increase until nearly the end of my Budget Speech, some retailers knew of the increase before the announcement in this House could have reached them, but they were not thereby enabled to make any improper use of this information.
    Lieut.-Commander Braithwaite: May I ask the right hon. Gentleman two supplementary questions arising out of the result of his full inquiry, which he was good enough to make at my request, and which I am sure will allay the disquiet which undoubtedly existed at the time? First, did the inquiry cover share dealings on the provincial stock exchanges which are not under the jurisdiction of London? Secondly, did he follow up the evidence, backed by the names and addresses of credible witnesses, which I supplied to him through the learned Solicitor-General, which appeared to indicate an official indiscretion which disclosed the repeal of the Artificial Silk Duty one week prior to the Budget Statement?
    Mr. Dalton: Sir, I have been anxious that this matter should be fully probed, in view of the statements which were made in the House. The report of the Stock Exchange Committee is quite comprehensive. In reply to the first supplementary question, the conclusion is, as I
    866
    have already stated, that there is no evidence that purchases of shares were made by any person—I emphasise, by anybody—on the strength of prior knowledge.
    With regard to the second matter, it appears that there was—how shall I say?—some gossip which may arise at any time as to why certain persons were being moved from one post to another in the country. But I am satisfied on the report of the Chairman of the Stock Exchange Committee, and from many inquiries through the Customs and Excise Department, that it could have been no more than gossip—gossip which may very well have founded itself upon the very frank statement which I made last year in the course of the Debates in this House, that I was very anxious to see the repeal of the excise on artificial silk. Indeed, I went perhaps rather further than it is usual for Chancellors of the Exchequer to go, in saying that I should be disappointed if it was not possible for it to be repealed this year. This was a very flat statement, made quite sincerely, in response to pressure which I was sorry then to have to resist; and it is not at all surprising that this point should have been picked up and passed about in the course of conversation But, Sir, having said this much I hope that the hon. and gallant Gentleman will now see proper to withdraw the statement he made on 17th April:
    "There has been undoubtedly a Budget leakage."— [OF FICTAL REPORT, I 7th April, 1947; Vol. 436, c. 428.]
    In my view, the inquiries that have taken place have shown that there was no Budget leakage. In view of that, and in view of the hon. and gallant Gentleman's acceptance, as I understand it, of the report of the Chairman of the Stock Exchange Committee, I hope the hon. and gallant Gentleman will now see it right to withdraw this rather flat-footed statement, which he made prior to the inquiry?
    Lieut.-Commander Braithwaite: I do not know whether I can put this in an interrogatory form, when I am asked to make a withdrawal. In view of the full inquiry which the right hon. Gentleman has made, is he aware that I am satisfied that no improper conduct took place?
    Air-Commodore Harvey: If the right hon. Gentleman is in office next year, will

    867
    he try to time his speech so that this House gets the information before outside sources?

    Exchange Control Act (Operation)
    Mr. Bossomasked the Chancellor of the Exchequer when the Exchange Control Act will come into operation; and when the Order will be made authorising the switching between dollar securities.
    Mr. Dalton: I hope in August, both for the Act and for switching.
    Mr. Bossom: Is it a fact that today switching can be made between dollar securities?
    Mr. Dalton: No, Sir, not in an absolute sense. I have answered Questions on this subject before. Perhaps if there is any particular case in which the hon. Gentleman is interested he will communicate with me. We cannot grant complete and unrestricted powers at present.
    Mr. Bossom: Would the Minister say whether it is possible today to switch between American and Canadian dollar securities?
    Mr. Dalton: No, Sir, it is not possible.

    Pound Sterling (European Countries)
    Mr. Bossomasked the Chancellor of the Exchequer the price at which the British £ can be bought in the banks of the countries of Europe.
    Mr. Dalton: If the hon. Member will let me know what particular countries he has in mind, I shall be glad to give him this information.
    Mr. Bossom: Can the Chancellor tell me what can be obtained for the English £ in Belgium, for example?
    Mr. Dalton: The hon. Member's Question is in very general terms, and the reply I have given is, I think, a reasonable one. If he will put down a Question in regard to any particular country in which he is interested, I will try to give him the information.
    Mr. Bossom: Is the Chancellor aware that I have just given a particular case?
    Mr. Dalton: Perhaps the hon. Member will put down a Question.

    Foreign Exchange Allowance
    Mr. Jannerasked the Chancellor of the Exchequer whether he will give an assurance that he will give ample notice in advance of any intention to reduce the £75 foreign exchange allowance for persons going abroad, in view of the fact, that in present circumstances, it is necessary for people to plan journeys overseas many months in advance.
    Mr. Dalton: Yes, Sir, so far as possible.

  HOUSE OF COMMONS (LATE NIGHT TRANSPORT)
  Mr. Mellishasked the Financial Secretary to the Treasury whether he will make a statement on the operation of the late night transport scheme for Members and others.
  The Financial Secretary to the Treasury (Mr. Glenvil Hall): Yes, Sir. Returns for the period up to 10th May show that on average, the number of Members using the buses was no more than 34, or about three per bus, and their fares have contributed only £45 towards the £394, which represents their share of the cost. The number of staff using the buses averaged £27. It was felt by the Government that, in these circumstances, continuance of the service could not be justified. The question whether any alternative facilities should be provided for the staff is now under consideration.
  Mr. Mellish: When will the Financial Secretary be in a position to let us know when this alternative scheme will be available, as there are still a number of Members, particularly on this side of the House, who require this alternative transport in the early morning?
  Mr. Glenvil Hall: I am sorry that I am not in a position to give that information. I am unable to state a date, but we are doing our best to see whether an alternative form of service is possible.
  Mr. Lipson: Is not the best way to deal with this problem to abolish late Sittings?
  Lieut. - Commander Braithwaiteasked the Financial Secretary to the Treasury between what dates the special late omnibus service for hon. Members and staff of this House was operated; whether any financial loss was thereby sustained; and, if so, how much.
  Mr. Glenvil Hall: The service was in operation between 17th March and 23rd May. Up to 10th May, the latest date for which figures are available, the excess of costs over receipts, was £750 13s. ld., of which £348 8s. 4d. was due to conveyance of Members.
  Lieut.-Commander Braithwaite: May I ask whether this loss falls upon the taxpayer, and, if not, by whom it will be borne; and, secondly, whether these vehicles will now be transferred to the service of the noble Lords in another place, who, I understand, are now sitting inordinately late?
  Mr. Glenvil Hall: The answer to the first question is that we have agreed to a Supplementary Estimate to meet this, and it will be a matter for discussion when we come to consider the Estimates next time.
  Lieut.-Commander Braithwaite: When this service was originally under consideration, did not the Financial Secretary say it existed on the basis that cost would fall on the taxpayer?
  Mr. Glenvil Hall: Yes, Sir, but I did say that we were working completely in the dark, that the service was an experimental one, and that we were basing the fares on what had been given to us as a reasonable basis, which would mean that Members would pay their proper share towards the costs.
  Mr. Osborne: If the Government's economic planning turns out to be an equally bad failure will they similarly review it?

  MINISTERS' LETTERS (SIGNATURE)
  Mr. Dribergasked the Financial Secretary to the Treasury if he is aware that, in recent weeks, an increasing number of letters from Ministers to Members of Parliament have been signed by Ministers' private secretaries; and if he will give instructions that all letters to Members of Parliament are to be signed personally by Ministers or parliamentary secretaries, or, in the case of minor or routine matters, at least by parliamentary private secretaries.
  Mr. Glenvil Hall: I would refer to the answer given to my hon. Friend the Member for Gravesend (Mr. Allighan) on 8th October last.
  Mr. Driberg: Is my right hon. Friend aware that I cannot possibly remember a rather secondary answer which goes back as far as that? Will he say what that answer is?
  Mr. Glenvil Hall: The previous answer was that Ministers responsible for Departments must be left to deal with the letters which come to them and are answered on their behalf as they think fit.
  Mr. Driberg: Is my right hon. Friend aware that the Foreign Office, the Air Ministry and the Ministry of Labour set a very good example in this matter, and if Ministers who are as busy as the Foreign Secretary, the Minister of State, the Secretary of State for Air, and the Minister of Labour can sign their own letters, why cannot some of the others?
  Mr. Eden: Will the Financial Secretary bear in mind that it has been a longstanding tradition of this House that Members are entitled to replies from Ministers?
  Mr. Glenvil Hall: That is so, and I hope that Departments will be reminded of this well-established practice by these questions and answers.
  Mr. Rankin: As original communications are not always returned with the replies, can that matter also be looked into?
  Mr. Glenvil Hall
  Mr. Gallacher: Is the right hon. Gentleman aware that some time ago, in connection with an alien, I had a letter from the Home Office, signed by the Parliamentary Private Secretary, and that when he went to the police with it, they refused to recognise it because they did not know who the Parliamentary Private Secretary was?

  TRADE AND COMMERCE

    U.S. Motor Cars (Importation)
    Mr. Boyd-Carpenterasked the President of the Board of Trade how many licences for the importation of Packard motor cars from the U.S.A. have been granted since 1st January, 1945; and how many of these vehicles have actually been imported and at what total cost in dollars.
    The Parliamentary Secretary to the Board of Trade (Mr. Belcher): The number of licences granted for the import of

    871
    cars from the U.S.A. from 1st January, 1945, to the end of April, 1947, was 346. It is not known how many of these were of the make referred to by the hon. Member. The total number of cars imported from the U.S.A. under the licences granted was 88. Foreign exchange was made available in respect of a small proportion only of the cars licensed, the others being licensed as gifts. The sterling equivalent of the exchange so authorised was £9,722.
    Mr. Boyd-Carpenter: Cam the Parliamentary Secretary tell the House why finance was made available in any case?
    Mr. Belcher: If the question is asked of me in respect of any particular case, I will do my best to give the answer.

    Clothing Coupons
    Mr. Bramallasked the President of the Board of Trade when he proposes to issue supplementary clothing coupons to men and women released from the services after 1st January, 1946, in the same way as an issue has already been made to those released before that date.
    Mr. George Porterasked the President of the Board of Trade if he is now in a position to state when the supplementary coupons will be issued to Service ranks discharged since January, 1946.
    Mr. Belcher: I would refer my hon. Friends to the reply given on 5th June last to a similar Question by my hon. Friend, the Member for Bolton (Mr. J. Lewis).

    Industrial Organisation (Member's Letter)
    Mr. Geoffrey Cooperasked the President of the Board of Trade when the honourable Member for Middlesbrough, West, may expect a reply to his letter of 25th April dealing with the need for the reorganisation and revitalising of the regional organisation for industry.
    Mr. Belcher: A reply was sent to my hon. Friend on 5th June.
    Mr. Cooper: While thanking my hon. Friend for his reply, which I received only yesterday after waiting six weeks, may I ask if he realises that I have been actively pursing this matter for nearly a year; and can he now give me an undertaking that publication will be made of the proposals for the regional organisation
    872
    of industry, so that they may be more widely appreciated throughout the country?
    Mr. Belcher: My hon. Friend has been making a large number of suggestions over a long period, and he must realise that it is necessary to go into them carefully before any decision is taken.
    Mr. Cooper: I beg to give notice that in view of the unsatisfactory nature of the reply, I shall raise the matter on the Adjournment.

    U.S. Woollen Imports (Tariff)
    Mr. Osborneasked the President of the Board of Trade what representations have been made to the U.S. Government against the proposed tariff increase on woollen imports; and' whether he will make a statement on this subject.
    Mr. Harold Wilson (Secretary for Over seas Trade): His Majesty's Government have been following closely the proposal now before the United States Congress for the levy, in certain circumstances, of a fee on imports of wool. It remains to be seen whether it will become law in its present form; but I have seen published statements of members of the U.S. Administration to the effect that the latter is opposed to the enactment of the legislation in its present form as inconsistent with the objects of the International Trade Conference now proceeding at Geneva. We have not made any formal representations to the United States Government on this subject; but they are fully aware, from discussions at the Geneva Conference, of our views and of those of the Dominions.
    Mr. Osborne: Will the Parliamentary Secretary make it clear to certain American people that we cannot continue to import from them unless they are prepared to take some of our goods in return, which is a lesson they do not seem to have learnt?

    Works of Art (Import Licences)
    Mr. Benn Levyasked the President of the Board of Trade whether he is aware that contemporary works of art can be brought into this country only under import licence; that such licence is in fact rarely granted and, consequently, seldom applied for; and whether he will, take steps to remove this virtual embargo
    Mr. Belcher: Works of art may be imported only under licence, and import licences are, in general, granted only against an undertaking to re-export all the imports within a reasonable period. For balance of payments reasons, it is not at present possible to modify this policy.
    Mr. Levy: Will my hon. Friend explain what is the logic which prevents the importation of pictures at negligible cost primarily from soft currency areas, but allows the importation of moving pictures from hard currency areas to the tune of nearly £20,000,000?
    Mr. Belcher: That seems to be getting rather a long way from the original Question, and raises an issue of general policy for which I am not responsible. I would point out that there is a nondiscriminatory obligation on our part which makes it difficult for us to licence importation of works of art coming from soft currency areas.
    Mr. Levy: Is my hon. Friend aware that I was not suggesting there should be discriminatory importation, but that, if there were completely non-discriminatory importation, the drain on our resources would be negligible—perhaps a mere £20,000 or £30,000?
    Mr. Eden: Can the Parliamentary Secretary tell us what is the estimated saving? Surely, it is undesirable to prevent works of art moving about the world?
    Mr. Belcher: We do not stop works of art moving about the world if they are imported to this country and subsequently exported. I should have thought it was obvious that in our present currency circumstances it is essential, however much we value works of art, to carry out our obligation of buying food for our people
    Mr. Wyatt: Will the Parliamentary Secretary explain why it is all right in certain circumstances to import American motor cars, but wrong to import works of art?
    Mr. Levy: Will my hon. Friend at least give an undertaking that he will recon-
    874
    sider this matter and make a further statement to the House?
    Mr. Belcher: The matter is not one for general consideration, but for consideration of each case on its merits.
    Mr. Levy: In view of the unsatisfactory nature of the reply, I am very sorry that I must raise the matter again on the Adjournment.

QUESTIONS TO MINISTERS
The following Question stood on the Order Paper:
MR. GALLACHER,—TO ask the Parliamentary Secretary to the Admiralty, if he will promise an early statement on the future of Rosyth naval base and on the proposal for a graving dock on the Clyde estuary, capable of berthing and servicing the biggest Clyde-built ships.
Mr. Gallacher: I want to put a point to you, Sir, in connection with Question No. 80. For three years some of us have been trying to get an answer from the Admiralty about the future of the Rosyth Naval Base and the Clyde Estuary, with- out any result. In desperation, I put the Question down to the Prime Minister, in the hope of getting a satisfactory answer, but I now see that it has been transferred to the Admiralty. Cannot we get this Question answered by the Prime Minister?
Mr. Speaker: If the hon. Member will notice when Questions to the Admiralty come on early in the week, perhaps he might put his Question to them then.
Mr. Gallacher: It has been hopeless to do that with the Admiralty, and I want the Prime Minister to answer the Question.
Colonel Gomme-Duncan: I would also like to point out, Mr. Speaker, that it has been impossible to get a satisfactory answer out of the Admiralty at all. This Question was put to the Prime Minister in the hope that he would give judgment on the subject.
Mr. Speaker: It has never been the custom of this House that in Departmental matters the Prime Minister should be called in. The Question always has to go to the Department which is immediately concerned.

POLES (DEPORTATION ORDERS)
The Secretary of State for the Home Department (Mr. Ede): On Thursday last my right hon. Friend the Lord President of the Council undertook that the Government would consider whether a full statement could usefully be made on the removal to the British zone of Germany of some members of the Polish Armed Forces who are unwilling either to return to Poland or to join the Resettlement Corps. As the responsibility for deportation orders rests on the Home Secretary, and as it appeared that there were various misapprehensions about the Home Secretary's powers, it is appropriate that T should make this statement.
My hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) stated that
"a deportation order to send a man to a particular country cannot be made without the man's consent unless it is his own country "[OFFICIAL REPORT, 5th June, 1947; Vol. 438, c. 387.]
The right hon. Member for Warwick and Leamington (Mr. Eden) suggested that a deportation order could not be made without the authority of a court. Both these suggestions are mistaken. As regards aliens who are convicted of offences, the Aliens Order, 1920, made tinder the Aliens Restriction Acts, 1914, and 1919, provides that the court may recommend deportation, but the decision whether -or not to give effect to such recommendation has to be taken by the Home Secretary. Moreover, deportation is not limited to cases where aliens are convicted of offences. The Aliens Order places on the Home Secretary a general responsibility to make a deportation order against an alien in any case where he "deems it to be conducive to the public good." Therefore, the responsibility for making a deportation order is fairly and squarely that of the Home Secretary alone. He need not accept the recommendation of the court and he is empowered to make an order when no court makes a recommendation if he "deems it to be conducive to the public good."
The effect of a deportation order is expulsion from the United Kingdom, and before an alien can be expelled from the United Kingdom, there is a practical necessity of ascertaining that some other country is prepared to admit him. If some country is prepared to admit him, the
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alien can be placed on a ship sailing to that country, and whether the alien is or is not a national of that country there is no requirement in law that his prior consent must be obtained. The Poles in question have been given the option of returning to Poland. As my right hon. Friend the Secretary of State for Foreign Affairs has repeatedly indicated, His Majesty's Government are anxious to give the fullest facilities for Poles to return to their own country and to aid in the reconstruction of that country, but it is not the policy of the Government to force them to return to Poland against their will.
It would, however, be entirely wrong to allow members of the Polish Forces to think that because they are unwilling to return to Poland they can continue indefinitely to be paid and maintained in this country as members of those Forces. The process of demobilising the Polish Forces cannot be held up, and the alternative offered to those members who are unwilling to return to Poland is that they should join the Resettlement Corps, with a view either to being found suitable employments in this country or to emigrating if they prefer and can find, or be found, opportunities for settlement overseas. If a man will not accept either of these offers, His Majesty's Government cannot be expected to retain any responsibility for him or to allow him to remain in this country, and, as I pointed out in the discussion on the Polish Resettlement Bill, the only possible course is to send such a man elsewhere and to make it clear to him that he can no longer look to us for help.
Accordingly, by arrangements made with the Control authorities in Germany the 105 men to whom the Secretary of State for War referred were taken to a demobilisation camp in the British zone, demobilised from the Polish Armed Forces, provided with civilian clothes, given a small sum of money, and told that they can expect no further help from the British authorities.
Out of some 136,000 men who have so far been offered the alternatives of return to Poland or enrolment in the Resettlement Corps, about 5,000, or 3·7 per cent. of the total, have so far failed to accept one or other of the alternatives. As regards many of the 5,000, it may be that their failure is still due to misapprehensions which every effort is being made to

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remove, and it is expected that if it is brought home to them that there can be no further delay, the great majority of them will make their choice. The recent announcement of the Polish Government to the effect that those who enlist in the Corps may still return to Poland, should remove the last excuse for reluctance to rejoin the Corps on the part of those who are still not sure whether they will wish at a later date to go back to their own country. No greater disservice can be done to those men who are still hesitating than to encourage them to think that there is still room for further procrastination.
Professor Savory: Would it not be possible to send to these camps to talk to these men, the Under-Secretary, with his engaging smile and charming manners, to put the case before them with all simplicity, because there is misundertanding, as I see from the innumerable letters I receive every day?
Mr. Ede: Various people have gone from time to time to these camps The problem is that a great many of the men cannot understand English, and that my hon. Friend the Under-Secretary cannot speak Polish.
Mr. Sydney Silverman: May I ask my right hon. Friend three Questions? First, whether he is aware that I am interested chiefly in the application of these powers not to members of the Polish Armed Forces, but to stateless and other persons of long residence in this country? Secondly, whether he claims as Home Secretary that he has the right to deport aliens to a particular country without their consent, that country not being their own? Thirdly, whether he claims that the British Control Commission controlling the British zone in Germany, which, after all, is under the control of, and responsible to, the Foreign Secretary of this country, is really a foreign Government in the sense of this deportation Order?
Mr. Ede: So far as the first question is concerned, I am well aware that my hon. Friend takes a very close interest in this subject over a very wide field, and he has on occasion been of assistance to me in representations which he has made with regard to particular individuals. As regards the second question, I claim that I have the right to deport an alien if I am acting within the terms of the Aliens
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Order, 1920, whether that alien consents or not, to any country which is willing to accept him.
Mr. S. Silverman: A particular country?
Mr. Ede: I think that I have answered the question which the hon. Member put to me. As regards the third question, the British Control Commission is the body which has the right to say who shall and who shall not enter Germany at the present time. When I get their consent to the admission of these aliens, I consider that I am within the powers granted to me by Parliament in sending the aliens there.
Mr. Boyd-Carpenter: Will the Home Secretary clear up one matter which the Secretary of State for War would not deal with last week, in reference to the 105 men who have already been sent to Germany? Are these men entitled now to proceed to any other country which will take them, or must they stay in Germany for the rest of their natural lives?
Mr. Ede: No, Sir. They are at liberty, so far as we are concerned, to proceed to any other country into which they can gain entry,
Mr. Skeffington-Lodge: Has the Home Secretary fully considered the unwisdom of letting loose in Germany in present conditions these obviously disgruntled men?
Mr. Ede: I have to consider how I am to maintain discipline in these forces when all other sanctions have vanished. I am glad to say that 23 of these men, when they actually saw the deportation order, said, "Very well, we will now make up our minds." I am hopeful that that example will be followed by a large number of others, now that they know we intend to carry out the pledges which I gave to this House when I asked it to give me the Polish Resettlement Bill.
Major Legge-Bourke: Can the Home Secretary give an assurance to the House that before the 105 men were deported it was made clear to them that, if they refused to become members of the Polish Resettlement Corps or, alternatively, refused to go to Poland, they would be deported?
Mr. Ede: Yes, Sir. It was made quite clear to them, and all these men have

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had a very long time in which to make up their minds—as long as nine months in some cases—and I hope that it will be in the recollection of the House that the hon. Member for Cheltenham (Mr. Lipson), as long ago as February last, read out the form in which this issue is presented to the men.
Mr. Stokes: Is my right hon. Friend satisfied that each one of them understands that the Resettlement Corps is neither a military nor a quasi-military organisation, because letters coming in dearly show that they do not know? Secondly, with regard to the Home Secretary's right to deport people against their will to a particular country, does he still maintain that he has that right if the person concerned has reasonable cause to believe, though quite unfairly, he or she will be put to death on arrival?
Mr. Ede: With regard to the second part of the question, I have maintained the policy, if representation is made to me that the person I propose to deport will be persecuted for either religious or political reasons, of declining to deport that person, and I am at the present time maintaining in this country some notorious criminals because they suggest that their political or religious views, if any, will not be acceptable in their native country. As regards the first part of the question, every effort has been made to bring home to these men that this is not a military or quasi-military organisation. But I want to be frank with the House. I sometimes fear, as I said in answer to a supplementary question by the hon. Member for Queen's University of Belfast (Professor Savory), that on occasion our wishes are not accurately conveyed to the Polish speaking members of this Force, and I am considering ways and means whereby I can be sure that they shall be made fully aware of the exact conditions in their own language.
Major Tufton Beamish: Will the Home Secretary say under what considerations he was acting in selecting these 105 men, from the 5,000, for deportation?
Mr. Ede: I did not select them. The Secretary of State for War, who is responsible for the Polish Resettlement Corps, brought to my notice the names of a certain number of people. I carefully
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examined their records and what they had done, and where I deemed the cases to be suitable I made a deportation order. The effect of that, in some cases, was, as I have said, they then made their election between the two alternatives we proposed to them.
Mr. H. Hynd: In view of the fact that all previous pledges on these matters have been very fairly fulfilled by the generous conditions of the Polish Resettlement Corps, would it not now be desirable give them a clear alternative of joining the Resettlement Corps or going back to Poland; and in view of the feeling that has been aroused in Poland on this matter, would it not also be desirable for the Government to consult with the Polish Government on this matter?
Mr. Ede: That alternative has been very clearly put to these people. I can only hope that what has happened just recently will make these men feel that this country is serious in this matter, after the very generous treatment that has been extended to them.
Captain Crookshank: Can the Home Secretary say at what stage, if any, these men were told that they were likely to be sent to Germany, in view of the obvious repugnance of us all that anyone should be deported to that country against whom they fought?
Mr. Ede: When the deportation orders were read to them they were then told to which country they were going.
Mr. Janner: Is the Home Secretary aware that in some of these cases his colleague the Secretary of State for War has informed individuals that they will be allowed to emigrate to another country, and told that this would take place early this year; and is he prepared in those cases to refrain from taking any further steps to have them deported?
Mr. Ede: No, Sir. There may be special cases which may be the subject of some special consideration, but, generally speaking, the way for a member of the Polish forces to emigrate is for him to join the Resettlement Corps, and he will then be given every facility to get into touch with the country to which he desires to go.
Mr. Orr-Ewing: Can the right hon. Gentleman say whether, in the cases of the

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men deported, they still retain their old Polish passports, or are they considered stateless persons?
Mr. Ede: I would like notice of that Question.
Mr. S. Silverman: Is my right hon. Friend aware that his answer to my second Question about the extent of his powers goes far beyond what has been claimed en his behalf in the courts by the Law Officers of the Crown; and whether he appreciates that, if he abides by that, it is within his power, without the intervention of any court or any power of control, to deport anybody of any nationality of any citizenship or of no citizenship at all to Germany, merely by reason of the fact not that there is an independent Government there ready to take them, but because he can make arrangements with another Department to send them.
Mr. Ede: I prefer not to discuss this matter on the basis of hypothesis, but on the issue of practical cases of individuals whose fate may be concerned.
Mr. Wilson Harris: Is the right hon. Gentleman aware of the general satisfaction at his clear and common-sense handling of this question?
Mrs. Leah Manning: In view of the fact that many of these difficulties arise through the misrepresentations by officers of this Corps, and particularly highly placed officers, would it not be well to accept the well intentioned suggestion of the hon. Member for Queen's University (Professor Savory)? There are many good reliable interpreters who could be used for this purpose and we desire above everything else that the position should be made abundantly clear to these men.
Mr. Ede: My trouble is that this question is bedevilled by the extremists on both sides, and I have no doubt that my right hon. Friend the Secretary of State for War, who has heard the questions and answers on this subject, will realise that it is the desire of the House that effective steps should be taken to make these people acquainted with this problem in their own language by reliable speakers of their own race.
Major Legge-Bourke: I should like to ask one other question, which is about the British Control Commission. Can the Home Secretary give us an assurance that, before these men were deported, it was understood that they would not just be thrown upon the distressed population of Germany, that there would be a job for them, and that they were serving some useful purpose in Germany?
Mr. Ede: No, Sir, I could not say that any negotiations went as far as that.
Sir A. Salter: There is just one question on administrative detail which I should like to ask. When these men knew definitely that they were being deported, did they still know that they had a chance to choose the Polish Resettlement Corps?
Mr. Ede: Yes, Sir. Up to the moment when they are actually placed on the ship any man can say, "I will now choose either A or B of the alternatives which are offered."
Major Beamish: On a point of Order. As there still seem to be some aspects of this matter which are not entirely satisfactory, I beg to give notice that I still hope to raise it on the Adjournment at the earliest possible moment.

ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee.
  [Major MILNER in the Chair]

  FINANCE BILL

    CLAUSE 1.—(Hydrocarbon oils.)
    3.55 p.m.
    Mr. Orr-Ewing: I beg to move, in page 1 line 16, to leave out "fuel oils or any gas oils," and to insert:
    "heavy hydrocarbon oils, other than lubricating oils."
    The object of this and the next two Amendments in my name is perfectly clear and simple. It is to remove the existing penny a gallon tax on kerosene just as the tax was removed from other heavier oils in this year's Budget. To make the picture clear, I should say that kerosene consists of two types of oil popularly known as vapourising oil and paraffin burning oil. Therefore, they have two different fields of activity. The history of this matter is shortly and simply that a tax was imposed in 1933 with one specific object—in order to discourage the use of these oils and encourage the use of coal. In this year's Budget, however, the tax was removed from the heavier oil classes immediately before this oil class, with exactly the reverse intention. It was removed from these heavier oils in order to encourage their use and to remove certain burdens on the coal supply, which obviously could not carry the load.
    I should like to show what the size of the tax is and its scope. The consumption of kerosene in this country is approximately 1,400,000 tons a year, and that is divided into about 750,000 tons of vapourising oil, which is the oil used in engines and tractors, and 630,000 tons in burning oil, with a total yield of tax of some £1,600,000. Though this sum is comparatively small, I feel conscious that one has to consider a request to remove a tax, even if it provides only £1,600,000, very carefully indeed in these days. Unless there is sound reasoning behind the request I do not think that it will be acceded to. I claim there is a very sound reason behind this claim.
    The section of the community most affected by the existing tax is the agricultural community. About 50 per cent.
    884
    of all kerosene used is used in agriculture. That is to say the direct effect of the tax on agriculture amounts to something like £860,000. That is about 96 per cent. of the vapourising oil used in agricultural tractors and engines. About 6 per cent. of the burning oil is used for domestic purposes, for incubators and so on. Some 35 per cent. of kerosene is used for domestic heating, lighting and cooking. As much as 75 per cent. of the burning oil is used for domestic purposes such as for lamps, stoves and cookers. Even in this domestic field the incidence of the tax is felt almost entirely by the agricultural community, or, at least, by the rural community. It is felt by those who have no other means of performing these types of service. Therefore, it is fair to claim that this is almost a discriminatory tax in its objective. It is felt by one specific section of the community, and that section not by any means over-blessed with the good things of life, compared with other sections of the community.
    It seems to me, as a matter of principle, that it is not right to add to the cost of producing food when the cost of the food to the consumer is already heavily subsidised by the community. Though the additional cost is only some £1,500,000, yet, as a matter of principle, whether it be large or small, it surely cannot be decided on that consideration alone but must be regarded in relation to the cost of food and its effect on maintaining that cost of production at a certain level or below. Otherwise, why not go further and add a heavier tax so as to have an enormous surplus at the end of the year which the Chancellor can then pay out from the other pocket in order to keep the cost of food down?
    4.0 p.m.
    I would also ask the Chancellor to consider the comparative picture provided by the situation of those in the rural districts and those in mining areas. A great deal has been done and is planned, so we are assured by the Chancellor, to encourage the miner and the miner's wife. A great deal is being done by means of the supply of food and the old established practice of providing fuel for the miner's home, but it does not seem to me to be a very good thing to keep a tax on the means of heating and lighting rural houses while at the same time continuing to

    885
    supply free coal in the mining villages. I do not think that that comparison is a very happy one, and it is not a point that we want to rub in, but it means that extensive differences exist between one section of the community and another.
    The tax on diesel oil was removed in the Budget, but the diesel oil tractor used in agriculture is almost entirely confined to large farms. During the Debate on the Budget Resolution I made an interruption which rather implied that there were no petrol engine tractors in use in this country at all, and that they nearly all used diesel or vaporising oil. The actual figures taken from the January, 1946, return of agricultural machinery show that there were 182,500 tractors burning vaporising oil, 16,500 burning petrol and 12,500 burning diesel oil. Those numbers have gone up in each case with the estimated number of tractors, now increased by 20,000. This does show that the overwhelming majority of tractors in this country burn vaporising oil. Therefore, if this tax is maintained, it hits at the smaller farmer every time and not at the bigger one. The small farmer is the man whom we want to encourage. He sets the standard, and it is on his standard very largely that the prices of food produced in this country are based.
    Incidentally, the fact that diesel oil and fuel oil are free of tax is of assistance to the man who owns a large house and can put in oil-powered central heating. At the same time, the tax is maintained on the man who wants to burn one small paraffin stove. Such a person often cannot obtain alternative services of electricity and gas, and, so far as I know, electricity and gas for the city dwellers are not taxed. I would ask the Chancellor to consider this. If, in 1933, agriculture in this country had been as highly mechanised as it is today, would this tax on the fuel used in agricultural tractors ever have been imposed? Our view is that no Chancellor would have dared to take that step. I urge the Chancellor to look at this matter very carefully and to give way on it. This is the first ball in the first over of what may be a very long match, and I hope he will play it very nicely, because my attitude towards some of the things he says in ensuing days will be governed very largely by his sympathetic approach to the difficulties of the agricultural industry. It
    886
    may seem a small point to him, but I can assure him that he would be giving very great encouragement to those concerned if he would give way on this matter.
    Mrs. Leah Manning: I rise to support this Amendment very briefly. I was not quite sure whether the Chancellor wanted to obtain income from this tax or to prevent the use of more oil than was necessary so that he could have more for conversion purposes. I am assuming that the latter is his real intention. Quite apart from the need of this oil in the agricultural industry, the needs of cottage homes and rural areas for oil represent an inflexible demand. It is not one that can change because the oil is made more expensive. Like another Amendment which appears later on the Order Paper with regard to gas and electric cookers, this concerns something which people must have. Whether we make it more expensive and so raise the cost of living and discriminate against people who live in villages and small cottages, or whether we just help them a little by removing this tax, they will still use the same amount of oil.
    If a cottage is not supplied with electricity or gas there is only one way in which it can be lighted, in which food can be cooked or in which the place can be warmed. In winter time it is also very often necessary in these cottages to put a small light in a bathroom or something of that kind in order to prevent burst mains. This oil is obviously necessary and, as I have said, it represents an absolutely inflexible demand. For that reason I hope that the Chancellor will soften his heart for once and give us what the Amendment asks.
    The chancellor of the Exchequer (Mr. Dalton): The first ball in this timeless test having been bowled, I am anxious not to disappoint the hon. Member for Weston-super-Mare (Mr. Orr-Ewing) or my hon. Friend the Member for Epping (Mrs. Manning) who is an old associate of mine in propaganda in rural as well as in urban areas. [HON. MEMBERS: "Old?"] The description "old associate" might be true of a very young person. We were boy and girl together. A very good case has been made for this Amendment and it was, of course, debated on an earlier occasion. I hope that I did not give the

    887
    impression, even then, that I was adopting an inflexible attitude. We are now at the beginning of the Committee stage in which a number of proposals will be made to me not to fortify but to attenuate the revenue, and if I accept this one, then, although I hope I shall obtain the goodwill of the hon. Gentleman—he half promised me that he would not give me any more trouble in those circumstances—at the same time, it does mean that to that extent I must be a little less eager to accept later proposals. This will cost £1,500,000 of revenue a year. At the same time, as I have said, the case for the proposal is undoubtedly strong.
    The agricultural countryside is in need of all the help we can give it. It has passed through floods and troubles on an exceptional and grievous scale, and it is the great dollar saver in these critical days through which we are now passing. Therefore, on behalf of His Majesty's Government and, I think, of all sections of the Committee this afternoon, I am anxious to do all I can within the bounds of the Finance Bill to help the agricultural and rural community in general. It is a fact that in regions which are remote from electricity and gas supplies kerosene is an indispensable element for lighting and cooking, and I should be very sorry to impose even this relatively small sum—relatively small in relation to the total, but relatively small is substantial to the poor man—or to do anything to resist the alleviation proposed in this Amendment. There are also considerations regarding agricultural tractors and so on, and I understand that such tractors make use of kerosene to a considerable extent.
    So, on the clear understanding that if I accept the Amendment I shall be less able to accept later Amendments involving further inroads on the revenue; and, on the part of the hon. Gentleman who moved the Amendment, that he will keep quiet later on; and further, that I shall retain the good will of the hon. Lady on all issues which may arise, I am glad to accept the Amendment, in principle. I shall have to ask the hon. Gentleman to be willing to withdraw it in this form because it will need a little readjustment. I give an undertaking to move on the Report stage an Amendment giving effect to this principle, to operate from 1st September.
    Captain Crookshank: Before my hon. Friend asks leave to-withdraw the Amendment, which I am sure he will do in view of the Chancellor's undertaking, I would like to say that we are all very grateful to him for the very wise attitude he has taken. As the tax stands, although the aggregate amount involved may not be very large compared with the total expenditure, and though the actual cost to any particular individual is not very great, the fact remains that, on the burning-oil side of this matter, this tax is a tax upon an amenity. We are all anxious to try to improve the amenities of the countryside. Lack of electricity and gas is a very serious lack of amenity, and it would be very unfortunate to tax those who are unable to get the amenities which we want to give to everybody. On the motive-oil side, it is the small farmer who will he most affected, because of the kind of tractors which they use. The continuation of this tax would have the unfortunate effect that the more the farmer uses his tractor in order to cultivate better his land and gel the maximum production, the more tax he will have to pay. Therefore this is a direct, though perhaps not a very great, tax upon production. I am sure that all of us who sit for agricultural areas or who are interested in the future of agriculture will be most grateful for the forthcoming attitude of the Chancellor of the Exchequer, for which my hon. Friends and I deeply thank him.
    Mr. Orr-Ewing: I also desire to express my gratitude to the Chancellor of the Exchequer for what he has done and for the encouraging way in which he has met the Committee. I would like to make only one personal proviso which is that I cannot promise to keep absolutely quiet. I have another matter in prospect, relating to dustbins. In view of the undertaking given by the Chancellor of the Exchequer, I beg to ask leave to withdraw the Amendment
    Amendment, by leave, withdrawn.
    Clause ordered to stand part of the Bill.
    Clause 2 ordered to stand part of the Bill.

    CLAUSE 3.—(Tobacco.)
    4.15 p.m.
    Mr. David Eccles: I beg to move in page 3, to leave out lines 9 to 12.

    889
    The Clause to which this Amendment is moved increases the tobacco duties by 50 per cent. As the Clause is drafted, the increase is laid upon foreign tobacco, and upon any tobacco we may grow in the Empire or in the United Kingdom, at the same rate of increase. My hon. Friends and I wish to give the Chancellor an opportunity to tell us exactly why he will not give to Empire tobacco a margin of preference that would be sure to stimulate a big increase in supply. The effect of the Amendment would be to leave the preferential rate of duty—the Imperial rate of duty—where it was before the Budget and would give a large preference of something like 19s. per lb. of tobacco.
    The background of our argument is not in dispute. We all agree that the problem of finding dollars blots out all other problems. That was the Chancellor's own phrase at Margate. No one would deny that the purchase of American tobacco is a large item in our account to the United States, or that if we could increase the supply of sterling area tobacco we could correspondingly reduce our demand for American tobacco. I think no one will deny that the preference rate established by the Bill of is. 6½d. per lb.—the difference between 54s. 10d. on foreign tobacco and 53s. 3½d. on Empire tobacco—is a very small encouragement to the extension of tobacco growing in the Empire. This margin of 1s. 6½d. comes to us from happier days when the preferential duty was an ad valorem duty of 25 per cent. and when the rate of duty on foreign tobacco was under 10s. per lb. I do not doubt that in those prewar days, when costs of production were much lower than they now are, a preference of 1s. 6½d. per lb. was of real assistance. We have to ask ourselves whether that preference is of real assistance in a postwar condition.
    I am sure the Chancellor will tell us that he cannot accept the Amendment because His Majesty's Government are bound by the terms of the Anglo-American Trade Agreement of 1938 and by various other agreements as well, and that we have ourselves said under that agreement that we would not increase the preferential margin from 1s.6½d. Our financial and economic situation in 1947 is not the same as it was in 1938. Now, our basic standard of life is in danger and we are fighting for our meagre rations with ammunition that is rapidly
    890
    running out. The dollar loans are soon to be exhausted. They were given us expressly for the purpose of providing a breathing space during which we could readjust our economy from the status of debtor to that of creditor and from all the dislocations of the war. Is there any chance that we can make that readjustment in postwar British trade if the substitution of sterling imports for dollar imports is ruled out? The Government know very well that this would make it impossible, if that were so, for us to balance our account. Why are the Government financing a large expansion of groundnuts in East Africa if it is not to increase the supply of edible fats from the sterling area? That must mean that we shall import less fats from North America.
    If the Government can put a scheme of that kind for edible fats into operation by subsidies, why cannot they operate a similar scheme by a method of preference or by some other method, for tobacco? The Americans are not so simple as to think there is any real difference between supplanting imports of fats which we previously got from them by imports from Africa under the scheme that we know of, and a scheme for encouraging future expansion of tobacco by Imperial preference. The agreement of 1938 stands in the way. It may be denounced at six months' notice. I assume that it could be modified in any way, if the parties to it were willing to make such a modification. Why do not His Majesty's Government lay a case in Washington for a modification of this agreement with regard to our supplies of tobacco? The Americans are business men. They know quite well that they have no chance of being repaid all the dollars we have borrowed unless we bring our exports and imports into balance. As lenders, they must want us to take the practical steps which would achieve this equilibrium. I am quite certain that if the Americans were in the position of His Majesty's Government they would not hesitate to act on the lines of our Amendment.
    Take the case of wool. The Americans have the equivalent of an empire. They have a union of 49 States that stretches from one ocean to another. When they desire to reduce the imports of wool coming from the sterling area into that union and to assure to the producers of wool inside the United States a greater

    891
    proportion of the home market, do they hesitate to use the tariff weapon? Not at all. They bring a Bill into Congress which will put up the duty on wool. If they were in our position they would do the same thing now with tobacco. The fact is that our good friends in America are good business men, and His Majesty's Government would be more respected in Washington if they would talk like good business men as well.
    I hope that the Chancellor or the Financial Secretary when replying will not again bring forward an argument we heard upon the Report stage of the Budget Resolution to the effect that, because we are now buying all the tobacco which the Empire produces, there is no point in raising the preference. That is merely a cowardly get-out from the rather difficult proposal of going to Washington and laying a case for a revision. The Chancellor was once a professional economist. He must have had, at any rate, a textbook acquaintance with the laws of supply and demand. There is no doubt at all in the matter of agricultural crops that, if it is desired to stimulate a further supply, one sure way is to guarantee the market for a considerable period ahead and give a good price. Plantations take a long time and much money to grow to fruition, and if we mean to expand the supply of Empire tobacco in the national interest it is not too soon to begin now.
    The purpose of my Amendment is to ask the Chancellor whether he means to use the Budget a; a constructive instrument for changing the pattern of British imports and exports. It is one of the few instruments open to the Government. As far as one can see, their only remedy when they find that it is not possible for us to behave in the way we did before the war, when we bought whatever we liked in the United States, is to tell us to tighten our belts and consume less. There is a more attractive alternative. That is to make arrangements for supplies from other sources. The purpose of this Amendment is to draw the Government on this subject. Have they or have they not any longterm plans for tobacco?
    The Chancellor could quite rightly argue that it would be wrong to stimulate the expansion of tobacco growing in the British Empire if the shortage was a purely temporary phenomenon. But
    892
    that is not so. There are two shortages. There is the shortage of dollars. Does anybody think we are going to have as many dollars as we want in the next 10 or 15 years? The second shortage is that occasioned by the desire of the British people to smoke like chimneys. Is that likely to disappear? The answer is, clearly not. This problem of supplying tobacco to this island, which on the best showing can only grow a very small proportion of its tobacco itself, is a longterm one. I know that the Chancellor cannot accept this Amendment, but I hope he will tell us exactly what he proposes to do. I hope he will tell us in terms which will lead the public clearly to understand that he does not intend simply to sit still because he is bound by all these different agreements made with America a long time ago.
    Mr. Dalton: As the hon. Member for Chippenham (Mr. Eccles) has forecast, I cannot accept this Amendment, but I will seek to respond to his invitation to say something on the Government's attitude towards the question of tobacco supplies. It is worthwhile to re-assert—I do not think it is useless to re-assert it because it is important that it should be known—that, as was said in the Debate on the Budget Resolution, we are now buying up all the Empire tobacco which is in the market. I must add that some of it is rather highly priced. I do not quite know why the price has risen so steeply on some of these Empire tobaccos in the last month or two. We must reserve our right if prices rise unconscionably, to cease our present practice of buying all that is available. The smokers of this country must not be exploited, even by parts of the British Commonwealth. None the less, up to date the undertaking remains that we will purchase whatever is available from the Empire supplies.
    By what undertakings are we bound in this matter? The original preference for Empire tobacco was introduced in 1919. I will not go over the intermediate years. In 1938 there was a trade agreement with the United States of America providing that this preference would be reduced from 2s. o½d. a lb at which the preference then stood, to 1s. 6½d. a lb., that is to say, by 6d. a lb. That was entered into in 1938 when the right hon. Member for West Bristol (Mr. Stanley) was the President of the Board of Trade and was therefore, departmentally responsible for it. I make

    893
    no criticism of what was done in those conditions. I merely emphasise that it was done as long ago as 1938 and that the right hon. Gentleman was responsible and can throw on this any further light which it might he useful to throw
    That undertaking given in 1938 to the United States Government could not, in fact, be brought into effect until 1943. It was given effect to in the Finance Act, 1943, when the right hon. Member for the Scottish Universities (Sir J. Anderson) was Chancellor and when I was President of the Board of Trade. It was provided in that Finance Act that the preference should be reduced to 1s. 6½d. a lb., at which it now stands. I find difficulty at this moment in altering that figure having regard, in the first place, to the undertaking given in 1938, and. in the second place, to the fact that there are now proceeding at Geneva discussions which, although their course may till now not have been wholly smooth, we are none the less obliged to try to bring to a successful conclusion. Only time will determine whether anything will come out of these discussions at Geneva, but we are immersed in them. The Government are committed to do their best with them, and this would not be an appropriate moment at which suddenly to go into reverse on this matter.
    4.30 p.m.
    Therefore, apart from the undertaking of 1938, in the light of the discussions now proceeding, we must let these go a little further before we could accept the Amendment or do anything else which might seem to throw doubt on our hopes that, as a result of the discussions at Geneva it may be possible to break down a number of the barriers which have been erected against British exports in a number of markets, not only in the United States, but throughout the world. So I say that this is not an opportune moment to vary the preference, particularly as I have repeated the undertaking that we will buy any Empire tobacco available in the market at the current prices, though we hope these will not rise any further.
    This Amendment also covers the case of home-grown tobacco—[An HON. MEMBER: "That will be moved separately."] In that case I will reserve what I have to say on home-grown tobacco. As far as Empire tobacco is concerned, I hope this Amendment will not be insisted on.
    894
    I do not of course rule out; on a long view, some change in the preferential arrangements, but I say that this is not an appropriate moment, for the reasons I have given, to press the matter.
    Mr. Oliver Stanley: I am sure my hon. Friend is not surprised that the Chancellor of the Exchequer is not able to accept his Amendment, but I think he has done the Committee a service in giving us an opportunity of discussing, even shortly, a most important point. As the Chancellor has said, I was President of the Board of Trade at the time the Anglo-American Trade Treaty was signed, and as such, of course, I still have a great interest in what was my child. If the previous negotiations were long and difficult—if I remember aright, they lasted even longer than the regulation nine months—when they came to an end I thought they produced a very good baby. But babies, however attractive at birth, tend as the years go by to grow out of their clothes, and that is what has happened to the baby of 1938, because many of the provisions which were entered into then, and which could be defended with perfectly obvious arguments, and which were entered into for perfectly obvious advantages, have now become, under the new world conditions, completely out of date. I remember, with regard to the reduction in preference that at that time, after a considerable number of years during which the tobacco manufacturers in this country had encountered a considerable sales resistance amongst smokers here to Empire tobacco, that had been largely overcome, and it was felt that it was quite safe to reduce the preference by that amount without prejudicing the possibility of the sale of Empire tobacco. But, of course, no one at that time could have anticipated, and certainly did not anticipate, the enormous figure to which the duty on tobacco has now had to be raised, and the trifling percentage, therefore, that the fixed preference now represents in the total price.
    Having said that as a defence—if defence were needed—of the provisions made in 1938 under wholly different circumstances, I want to say a word about the future. I understand the right hon. Gentleman feeling a certain reluctance in discussing at this moment the possibility of alteration—which, I imagine, could

    895
    only be made following a denunciation—in the agreement with America, although it is pertinent to ask whether it is not possible for us to do a little something in tobacco when it appears that the United States are doing a very great deal in wool. We on this side are prepared to accept that for the time being, but it raises this important question: in view of that problem which, as my hon. Friend says, quite rightly is clearly a long-term problem, and the difficulty of buying as much American tobacco as is necessary to satisfy the needs of smokers in this country, what long-term steps are we taking to increase the supply from the Colonies? I have recollections that at the time I was at the Colonial Office certain investigations were made into the possibility of increasing largely the growing of tobacco, particularly in Northern Rhodesia and Nyasaland. I admit that those who were considering the problem at that time had not fully foreseen the gravity of the problem of the American exchange, and, in those circumstances, the report which I received as to the possibility of a long-term expansion of tobacco growing in those areas was not very encouraging. That seems to me now to be completely altered.
    There seems a case for the same kind of action in those territories with regard to tobacco that has been taken—and all of us hope taken with success—in East Africa with regard to groundnuts. If it is not possible for the Chancellor to say anything more at the moment about this method of preference as a means of increasing tobacco growing within the Empire, we should like an assurance from him that the possibility of a really large-scale increase with the same kind of Government assistance that has been given to the groundnuts scheme, is being considered, and that there is nothing in any agreement which would stand in the way of a development of that kind if it were found, for other reasons, to be practicable and economically desirable. It seems to me that it is only on those lines that we can hope to find some relief for the smoker in this country, and those who, like myself, have listened to the Chancellor's appeal, may find a release from the sacrifices which he has imposed upon us.
    Mr. W. J. Brown: It is a little unfortunate from one point of view that we are to deal with these two Amendments separately. One Amendment re-
    896
    lates to Empire tobacco, another one relates to home tobacco, and the Chancellor must give a great deal of attention to American tobacco. These three really form part of a total picture which it might have been desirable to discuss as a whole, and it is difficult to do that when we are taking the two Amendments separately. So I may find some difficulty in keeping in Order, though I will do my best.
    I think the Chancellor makes an unanswerable case that he cannot accept this Amendment at the present time. In view of what is happening at Geneva, I do not think it would have been possible for him to give any other reply, but I beg him to look at this from the point of view of the ordinary man in the street who, believe me, is much concerned with this problem of adequate supplies of tobacco at a reasonable price. We have now reached the stage in country districts where the poor farm labourer has to go in and order a pint of beer and one cigarette. He does not like that, and the rest of us do not like that, but what burdens his mind is that he sees no end, at least no early end, to that situation. The hon. Member for Chippenham (Mr. Eccles) is quite right in saying that the popular apprehension is that many years will elapse before oar dollar situation will be such that we car buy American tobacco with the same careless freedom that we could have done 10 or 15 years ago. But while the man in the street recognises that to be true, believe me he is not content that he should go on paying 3s. 4d. for 20 Players for the next 10 or 15 years.
    This is a political factor of substantial importance. It really is a considerable element in the public mind. What I would wish to have, if possible, is a statement from the Chancellor indicating what his conspectus is for the years to come. What is his broad conspectus either by the development of Imperial tobacco or of home grown tobacco, or the making of more dollars available for the purchase of American tobacco—
    The Temporary Chairman (Mr. Bowles): The hon. Member ought to make his speech on the Motion, "That the Clause stand part of the Bill." He must not go into the question of American grown tobacco now.
    Mr. Brown: That is part of our difficulty. We want a long-term conspectus. If it is impossible for the Chancellor to

    897
    give it to us now, perhaps he can arrange to do so when we come to the Motion, "That the Clause stand part of the Bill."
    Mr. Marlowe: I found the answer of the Chancellor rather unsatisfactory because he did not really give us any picture of what he envisaged for the future. He dealt only with the present difficulties in regard to a preference on Empire tobacco. He did not give us any idea of the way his mind is moving in the matter. He may be bound by certain immediate difficulties concerned with Geneva, but the Committee is entitled to know what is in the Chancellor's mind for the future. His answer really boils down to two points. He said, first, that we were taking all the available Empire tobacco, in spite of the fact that my hon. Friend the Member for Chippenham (Mr. Eccles) had forestalled that answer and had invited the Chancellor to resist the temptation of making it again, as he has done before, because it is a bad point. It is really deliberately evading the point at issue. It is perfectly true that we are taking all the available supplies, but that is not the point. The point is that as soon as a wide margin of preference is given it increases the supplies available. That is the point with which the Chancellor did not deal.
    I understand that it is stated in a reliable paper dealing with East Africa and Rhodesia:
    "What we should like to see would be a really substantial preference on Empire tobacco. … Southern Rhodesia, which now supplies this country with one-twentieth of her annual consumption, could double her output in three or four years, and treble it in ten or less, without lowering the quality, if she were granted guaranteed markets and her reasonable requirements in fertilisers and a few other lines."
    The preference for which this Amendment asks would give a guaranteed market, and according to that authority, would vastly increase output and make a great deal more available in future. To say that we are taking all that is available at the moment, is not an answer to the principle underlying the Amendment.
    The right hon. Gentleman's other defence against the Amendment was to say, "I am bound by agreements made with America." That again is not really a satisfactory answer, because while it is profoundly true that these agreements are
    898
    in existence, the Chancellor is not prevented from approaching the Americans again at any time and saying, "We made this bargain in 1938, but it is quite inappropriate to the present circumstances, and we want it amended." Merely to say, "I am bound by an agreement," when it is open to him to amend that agreement, is not a satisfactory answer. I would like to know if the Chancellor intends to approach the Americans about it and to say, "We are put in this most unfortunate position because of a change of circumstances since 1938, and we want this 1938 agreement altered." The amount of the Preference was, I think, 2s. 0½d. and was then reduced to 1s. 6½d. in 1943, since when the amount has remained static while the price has increased. The fact that the figure remains static is continually reducing the percentage, with the result that, as my hon. Friend the Member for Chippenham said, what was a 25 per cent. duty in origin is now in the region of about 3 per cent., so that the reduction over a period of years has been from 25 per cent. to 3 per cent. What does the right hon. Gentleman envisage in the future?
    4.45 p.m.
    It is for these reasons that I found his answer unsatisfactory. I believe that wt shall do both ourselves and the Empire the most good possible by creating as much trade as we can. I do not see that the Chancellor is entirely powerless because conversations are now going on at Geneva. That does not prevent the Americans from taking a tough line in Congress. They do not say, "We cannot introduce a wool tariff because conversations are going on in Geneva." I hope that the Chancellor will think himself entitled to take as tough a line, and not feel himself precluded from putting forward proposals merely because of what America might think.
    Colonel Ponsonby: I am glad that Empire preference is agreed to on both sides of the Committee. I happen to be Chairman of the Empire Tobacco Producers' Federation, and I know a little about this subject. I only rise to emphasise what has been said about the necessity for a long-term policy. Hon. Members will be aware that under the Ottawa Agreement a period of 10 years was given during which the preference was to run. That gave great encouragement to tobacco

    899
    growers, because tobacco growers are to a great extent different from other growers. I am not at all certain that one could compare the groundnuts proposition with an enormous scheme for tobacco growing. Tobacco growers have to plan a long time ahead and to spend considerable capital. In 1938 the amount required in Rhodesia for buildings, that is tobacco barns, grading sheds, etc., quite apart from the value of the land, was approximately £2,000 for a small tobacco plantation. Not only that, but a great deal of skill is necessary for the growing of tobacco. I would impress on the Chancellor, and it applies also to the President of the Board of Trade, that it is essential, when they have made their plans, and when the Geneva conversations are out of the way, that if they are to ask the Empire to produce a considerable amount of tobacco, they should give a good long guarantee; the producers concerned will then be able to settle down and work their schemes out properly. A long-term policy is very necessary, and I beg the Chancellor to look well into the future when he makes his plans.
    Mr. Richard Adams: This might be a convenient moment for me to raise with the Chancellor a point which I raised on the Budget Resolutions, namely, the advisability of a Purchase Tax on tobacco to meet this and other objections. It will be apparent that the Chancellor is in some difficulty in view of the 1938 agreement and the discussions now going on at Geneva. It seems to me that the imposition of a Purchase Tax could, in the short term, have the same effect as what is suggested from the other side of the Committee.
    Mr. W. J. Brown: On a point of Order, Mr. Bowles. Is it in Order for us to discuss a Purchase Tax whatever its merits, on this Amendment?
    The Temporary Chairman: I was listening to the hon. Member and I thought he was going too far. I had intended to stop him in a few seconds' time.
    Mr. Adams: The same effect as that suggested in the Amendment would be gained, and preference would be given to Empire tobacco, by the introduction of an adjusted Purchase Tax.
    The, Temporary Chairman: I am afraid the hon. Gentleman is not in Order.
    Squadron-Leader Donner: Like other hon. Members, I thought the Chancellor's answer to my hon. Friend the Member for Chippenham (Mr. Eccles) was very disappointing. It is always possible to make out a case for doing nothing. That is the type of case which the Chancellor made out. He went out of his way to mention the difficulty of Geneva. Surely, what are taking place at Geneva are discussions to remove what are known as trade restrictions. If the Chancellor thought it worth while to reduce the duty on Empire tobacco, or to abolish it, he would not be doing anything that would go against the trend of the Geneva discussions. Of course, it could be argued that by doing that he would be increasing Imperial Preference. That would be true but at the same time he would be reducing, or abolishing, an existing duty. Hon. Members on this side have pleaded for the longterm stimulation of tobacco growing. If the Chancellor is not yet willing to give an undertaking that he is prepared to treat tobacco as the Government are prepared to treat the problem of groundnuts, there would seem to be little reason why he should not turn his mind to the subject of reducing, or abolishing, the duty on Empire tobacco. There is little reason why tentative feelers should not be put out in Washington in order to reach a business arrangement.
    Sir Stanley Reed: I wish to make two brief points which seem to me to be rather important. We all agreed with the hon. Member for Chippenham. (Mr. Eccles) when he asked the Chancellor to frame a long-term policy. If that long-term policy is to be directed to a large expansion of tobacco growing in the Empire, on the assumption that this country will continue to smoke tobacco at the present rate, I think it needs very careful consideration. It is my firm conviction that if the increase in duty which the Chancellor has imposed does not lead to a reduction in the consumption of tobacco, some other measure must be adopted for some years in order to reduce consumption.
    The other point is that we all realise the seriousness of the dollar position. We often find it assumed that we have unlimited sterling resources. The Chan-

    901
    cellor is under no illusions on that subject. We have only to look at what has taken place in the attitude of two of the countries to whom we have very heavy sterling obligations, to realise that we shall have to watch with jealous care how we draw on our sterling resources as well as how we draw on our dollar resources. This is one of my greatest fianancial anxieties. I know from experience the nature of these difficulties. I endorse fully the request for a long-term policy. I conclude with this little caveat, that the Chancellor should be chary of embarking upon a long-term policy leading to a large increase in tobacco production in the Empire and in the sterling area, on the assumption that there will be an easy market for the whole of the increased production.
    Mr. Eccles: I hope that the discussion has been useful and that it has brought the attention of the Committee to the need for a long-term policy. In view of what the Chancellor has said about the negotiations in Geneva and his anxiety that the Government should not be embarrassed, though I assure him that if the negotiations fail we shall come back to this point, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. Eccles: I beg to move, in page 3, line 13, to leave out Subsection (2).
    The effect of this Amendment would be to omit from the increase in duty tobacco grown in the United Kingdom. When I made some remarks on this point during the Debate on the Report stage of the Budget Resolutions, the Solicitor-General did not seem to think it was possible to have any cultivation of tobacco on a successful scale in this country. At that time hon. Members were not very well informed on the matter, but subsequently there has been correspondence in "The Times" which has shown that there are plenty of enterprising cultivators in this country who would like to make a start. If accepted, the Amendment would give a preferential rate over imported foreign tobacco of 19s. a lb. It may be that hon. Members do not know that the average cost of producing one lb. of tobacco in the United States is something round 2s. 6d., or even a little less. Therefore, if anything like a margin of 19s. a lb. were to be given, I submit that the culti-
    902
    vation of tobacco would be taken up in this country. I do not know whether it could be done on a large scale, but the point is that we are in very grave danger of not getting enough tobacco from all sources.
    The time has come to use the Budget as an instrument for replanning our imports and exports. One of the ways in which that can be done is to give financial inducement to people to cultivate in this island various products which we have been accustomed to get from abroad for many years. I should like to see a Government experiment in growing tobacco in this country. When the last experiment took place, the price of tobacco was something under 1s. a lb. It is a very different story now. I think that it is worth reopening the whole idea of cultivating tobacco here. It is for that reason that I move this Amendment. I would like to know whether the Chancellor has looked up the matter and is a little better informed than the Solicitor-General was when he spoke some weeks ago.
    5.0 p.m.
    Mr. Dalton: I have made every effort to bring myself up to date on this matter, but I maintain the view—I forget whether it was I who said it or whether it was my right hon. Friend the Financial Secretary—that it would be at this time a waste of valuable British land, labour and materials to attempt to grow tobacco on any scale in this country. No additional incentive should be given to such a waste of our natural resources. The facts are that there has been correspondence in the Press, particularly in "The Times," about a certain farm at Church Crook-ham, in Hampshire, on which, from time to time, small quantities of tobacco—and I do not speak of its quality—have been grown. This is the only agricultural estate on which there is any evidence that any farmer has been, shall I say, hardy enough to seek to grow this most unnatural crop. This is not the climate for growing tobacco.
    I have here full details—I will not weary the Committee with them all—of the total amount of home-grown tobacco, the Excise Duty paid upon it, and the area devoted to it over a period of years right up to date. The total of home grown tobacco is trivial and the quality has been poor. Apart from the Church

    903
    Crookham experiment, which has always been on a small and diminishing scale, there are particulars of only very few licences—of course, there must be a licence under the existing law—for tobacco growing in the past 10 years, and if I may very briefly summarise them, the figures are as follow. In 1937, apart from Church Crookham, one-quarter of an acre was planted and 276 lbs. of tobacco were produced, mostly found unfit for cure. In 1940 a quarter of a perch was covered and the crop was destroyed. In 1941 there were three small patches of land devoted to this crop. On the first the crop was destroyed, on the second the experiment was abandoned, and on the third the crop failed. So we go on until 1944, when a quarter of an acre was licensed for growing tobacco and all the plants died, so that there was no crop. In 1946, one perch was licensed, on which two lbs. of tobacco were grown.
    This is really a piece of nonsense. The United Kingdom is not a place in which to try to grow tobacco, and I am quite sure that whatever our palates may be—and tastes vary in these matters—there is no future for tobacco growing in the United Kingdom. Our land is too valuable and should be used for other purposes, and I should be the last to wish to humbug any farmer in this country into believing that he was doing other, than an act of folly in seeking to grow tobacco in this land. For these reasons, I must oppose the Amendment.
    Mr. Eccles: In view of the dismal story with which the Chancellor has entertained the Committee, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Kirkwood: I rise to speak on this Motion in order to give the Chancellor an opportunity to make a statement on the Amendment in the names of the hon. Member for West Fife (Mr. Gallacher) and myself which was not called. This Amendment was to insert the words:
    "except in the case of old age pensioners, cripples and long-term hospital cases for whom the duties of excise at the full rates specified in the First Schedule to this Act shall not apply,"
    904
    I have written to the Chancellor on this question, and others of my colleagues have also written, and there is considerable feeling in every part of the House, and all over the country, in favour of freeing the old age pensioners and the individuals we mention here from the tax. On the Chancellor's own estimate—he said this in my hearing in the House—the pound today is only worth 12s. 9d. Now it is well down to 9s. 6d. When it is remembered that old age pensioners are in receipt of only 26s. a week, it means that 3s. 6d. is deducted from that sum to enable them to have a smoke. The old age pensioners, and the cripples who are in the hospitals, have no great, powerful organisations to defend them and put up a case. If any one of us has any outstanding ability, either mental or physical, it was not given to us for our own aggrandisement; it was given to us in order that we might defend those who are not able to defend themselves. That is the situation here, and I am sure that I am within my rights in asking the Chancellor, therefore, to make the fullest possible concession to this highly-deserving section of the population.
    Lieut.-Commander Gurney Braithwaite: I would like to associate myself with the observations of the hon. Member for Dumbarton Burghs (Mr. Kirkwood). This is a suitable opportunity for the right hon. Gentleman to bring us up to date in regard to his intentions in this matter. Earlier in our proceedings today, the Chancellor was unkind enough to describe some observations of mine as "flat-footed"; I am not sure whether that was intended as a term of abuse or as a tribute to a steadfast attitude. Be that as it may, I think the Committee would be disappointed if, at this stage, we were to leave this Clause without the right hon. Gentleman declaring his intentions to us. The hon. Member for Dumbarton Burghs delivered himself of what I thought was an optimistic remark about the purchasing value of the pound; I should put it a good deal lower; and when the hon. Gentleman brings himself up to date, we shall doubtless see him appearing on the platform of the British Housewives' League in protest against the collapse in our standard of living—a collapse which the Attorney-General tells us does not exist. I am very pleased to enlist such a valuable recruit to this point of view.

    905
    This question underlines and emphasises one feature of the tobacco tax, and I submit, with great respect to the right hon. Gentleman, that where it is necessary to contract a particular section of the community out of the operation of a tax, that in itself is evidence of a clumsy tax; it means that a tax has been imposed which will not run smoothly over the whole field. Where special arrangements have to be made to raise the standard of living against particular tax, the chief object of that tax is, of course, being defeated. I hope the right hon. Gentleman may be able to deal with the old age pensioners and those who are in hospital—disabled ex-Servicemen particularly—who are likely to remain there for a considerable period of time, on somewhat the same lines as were followed in regard to the Forces during hostilities, and indeed, if I may go a little further, the Navy—which for some time has enjoyed tobacco duty free.
    I mention that because the argument may be adduced—it is the sort of argument the Treasury would adduce—that if a special ration is given at, let us say, the pre-Budget price, or indeed a duty-free ration, there is the danger of creating some form of black market, in that the nonsmoker will receive an allocation and may seek to dispose of it in some way which would evade the main purpose, which is to benefit the old age pensioner. I think the right hon. Gentleman will agree that, broadly speaking, these concessions worked quite well during the war. The special issue of cigarettes to the Forces at pre-1941 Budget prices, which ran until the other day, was a success. I am not saying it was not abused in individual cases; it would be remarkable if it had not been; but by and large the boys played fair, and I think the old age pensioners would do the same thing.
    The right hon. Gentleman may get up and say, as I think the hon. Lady the Member for Epping (Mrs. Manning) or somebody else said earlier on, that a number of these old ladies never smoked and never will, and giving them cigarettes would open the door to some kind of abuse. Let us take the risk of that; the benefit to the whole body would be very great. I hope the right hon. Gentleman will say that he has something of this kind in mind. It maybe too early for the machinery to have been perfected; it will I know be difficult to work out the administrative machinery, and to open the
    906
    door wider, and include the wounded and war casualties in hospitals, would incur further administrative difficulties. We are, however, anxious to see that justice is done, and I hope the Chancellor will make a statement at this stage.
    Mr. Tom Brown: I rise to support the plea that the Chancellor should do something for the old people in particular. I think it is true to say that, since the presentation of the Budget, public opinion has been roused, as it often is roused when there is a hardship inflicted upon a certain section of the community. The old people have had some concessions given to them by the present Government, but those concessions are going to be more than swallowed up by the increased price which they have to pay for their tobacco. In addition to that—and I am now pleading for the Chancellor to take the widest possible view on this point—they have to meet the increased cost of living which has gone up tremendously, in particular, in regard to four or five commodities which they are compelled to purchase in order to maintain themselves in some degree of comfort. Fuel and light have gone up by 55 per cent., clothing has gone up by 64 per cent., and food 22 per cent over 1939 prices; and one could go on to give a number of commodities which are necessary in order to make life comfortable to some degree.
    I would remind the Chancellor that, in 1939, the price of tobacco to the old age pensioner was a modest 1s. per ounce. Today, even the commonest type of tobacco, at the present price and without any concession, will cost 3s. 8d. to 3s. 9½d. per ounce. I think the Chancellor ought to have regard to the great hardship that will be experienced by the old people. I am not afraid, that, if a concession is made, and it is administratively possible to make it, any of the old people of this country will abuse it. I have sufficient faith and confidence in the old people to think that, if they are given a concession by the Chancellor to help them to enjoy the eventide of their lives they will not abuse it.
    The next point I want to make, and it is indicated in the Amendment which has not been called, is in regard to crippled people I have in my constituency, and I represent a mining Division, a number of very seriously injured miners. I have

    907
    in mind now one man who has been on his back for eight and a half years, and who enjoys his pipe of tobacco, which is the only solace and consolation he is given in his days of suffering. I know many others who are experiencing the same affliction. The most remarkable thing about these men, whom I have visited personally, is that not one of them has complained about the Budget in general, but a few have complained about the heavy taxation upon tobacco. I plead with the Chancellor, who gave us a promise in the Debate on the Budget that he would ask his Department seriously to consider the matter, to make a statement, which I hope will include some concession to the old age pensioners and the crippled people.
    Mr. Dalton: Perhaps it would be for the convenience of the Committee, and might short-circuit some Debate, if I made a statement on this matter at this stage. I have been asked to explain two quite separate matters. The first concerns what I will call the long-term programme of the use of our Commonwealth resources for the production of tobacco. We have given an example of our desire that the undeveloped resources of the Commonwealth should be developed further than they have been hitherto, by the groundnuts scheme, and this is only the first shot in the campaign for the more intensive development of the resources of the Colonial territories in order to raise the standard of living of the people in them, and, at the same time, to increase supplies of necessary goods for ourselves. In that scheme, tobacco would have a place, but not too emphatic a place, as compared with more genuine needs.
    5.15 p.m.
    "Food before fags" must still be one of the mottos of our economic development, and, although we would not exclude the possibility of further plans by which we would get additional tobacco supplies from various parts of the Empire, I am more interested in getting something with which to feed the poultry in this country, and in getting more eggs and bacon. We must have priorities in this matter. Subject to that, we are going ahead, and, in due course, from time to time, proposals will be put before the House of Commons by the Government for stimulating the production of all
    908
    necessities in our Colonial territories. Within that limitation, tobacco has its place, but not a very prominent place. Southern Rhodesia can grow tobacco and maize, but I would sooner see it grow more maize than more tobacco. I hope that will be regarded as a perfectly frank statement of our views towards the development of the Colonial Empire.
    With regard to the question of the old age pensioners in particular, I have given constant thought to this matter since the Budget was first presented and debated, and I have been very much helped by the Minister of National Insurance, who is the authority on the administration of pensions, and the Postmaster-General, who also comes into the matter, because the Post Office is bound to be involved. Let no one think that it is easy It is quite easy to say that the administrative difficulties can be brushed away, but, of course, that is not so. Nor is it desirable merely to multiply the staffs in Government Departments. We do not want one half of the community to become engaged in administering the affairs of the other half. We want them to get on with production. I ask the Committee to believe that, when we have been devoting our attention, with our advisers, to considering what we can do in this matter, it has not been at all an easy problem. Nor must it be regarded as a precedent. Nothing done in this regard must be regarded as in any way setting a precedent. The general rule must be that the taxes shall fall on all who are subject to them, and that indirect taxes shall fall upon those who continue to buy the products concerned; and we cannot have, as a general rule, groups of persons segregated from others in regard to the incidence of indirect taxes. With regard to direct taxes, that is another matter, and we have Income Tax levelled on certain income levels and various adjustments to meet certain circumstances
    I want to give a warning. I must not be led, from what I say about tobacco for old people, into a general creation of chaos in the whole field of indirect taxation. This is a very exceptional and quite special case. I repeat that I am confident that this tobacco tax is right, and I hope that, if there is a challenge on it now, it will be defeated by an overwhelming majority. I have been astonished to see how the majority of the people have

    909
    taken it. Most people have clearly understood that we are experiencing a shortage of dollars, and that food matters more than "smokes." That has been accepted as a commonsense judgment in a difficult time. People have responded in terms of their consumption. I would like to take this opportunity of informing the Committee that, whereas I made an appeal for a 25 per cent. cut in the total consumption of tobacco in the country, so far, the people have done better than that, and have cut it to below 75 per cent. of the pre-Budget figure. In the first few weeks there was a sudden drop. People may have stocked up beforehand on the strength of rumours which may have preceded the Budget statement. Immediately after the statement, sales fell to barely 50 per cent. of what they had been in the preceding weeks. Nearly two months have passed since the Budget, and during that period there has been a slight upward movement, although we are still below 75 per cent.
    Mr. Stanley: How much below?
    Mr. Dalton: We are now, perhaps, running at some 70 per cent., but it varies from one part of the country to another. I repeat on this occasion my appeal to all patriotic men and women to continue to control their lust in this respect, and to continue to check their inclination to smoke. So far, we have done pretty well.
    I was praised by the "Daily Express" this morning. It said that I had done my duty with regard to this tax. I thank Lord Beaverbrook; I greet him over a long distance. I know not where he may be. My hon. Friend the Member for Ince (Mr. T. Brown) and other hon. Members have appealed to me to state what can be done primarily with regard to the old age pensioners. I have considered this matter with my colleagues, and I can only inform the Committee that, on the Report stage, I will put down a new Clause dealing with it. There is no advantage in putting it down before that stage because it will have to be discussed and go through the ordinary procedure of the House, but, if the House approves, it shall form part of this Finance Bill. Broadly speaking, there shall be a new Clause which shall give power to make regulations to exempt old age pensioners from the payment of the increased duty in respect of certain
    910
    quantities consumed. There will be the danger, of course, that the thing will be misused, and we must try, as far as possible, to prevent that. It is not only a question of whether the old people would misuse it—indeed, we hope that in the vast majority of cases there would be no such danger—but there is some danger that younger people might try to exploit the old people, and we must take what precautions we can against that.
    I want to be excused at this stage from going into more detail, because we shall have an opportunity of debating the Clause later on. I will say no more now than that I propose to ask the Committee to give me power to make regulations to enable this thing to be done. It will apply primarily to old age pensioners, but, of course, when a concession is given in respect of one section of the community, pressure is at once exerted to have it extended to others. I can give no undertaking at all, except in regard to old age pensioners, because there would be much difficulty in extending it beyond them, much as we might sympathise with the claims of other sections. If the thing is to be held within the bounds of administrative efficiency, we must draw a very definite line. I choose my words with care when I say that, at this stage, I do not commit myself to extend this concession beyond the old age pensioners, but, when the Clause is on the Order Paper, we shall have an opportunity of considering whether any further extension is, on balance, desirable.
    It would give me great satisfaction if I could devise a scheme which would be fair in its application would give this benefit to the old people, and would yet not be subject to abuse in its practical application. I assure the Committee that I have considered the matter with considerable intensity. Quite properly, my officials have brought to my notice the various difficulties which will have to be overcome. There is an old rule which Ministers do well to bear in mind, that it is the duty of their officials to present all the difficulties to them, and, then, if the Minister still wants to do the thing, he should say to them, "You have most clearly explained what the difficulties are; will you now apply your experience and intelligence to the making of proposals to overcome the difficulties which you have so clearly put forward." That is what

    911
    my hon. Friends and I have done in this instance, and I hope the outcome will not be unsatisfactory.
    Air-Commodore Harvey: As one who gave up smoking on Budget day, I welcome the Chancellor's statement about what he is going to do for the old age pensioners. While I can foresee his difficulties in dealing with other claims which are, perhaps, equally good, or even better, I ask him to bear in mind the case of the Service or ex-Service men who have been severely wounded in the war, such as those who were badly burned while serving in the Royal Air Force. In my own constituency there is a home, Lyme Green, for such men who are paralysed and are employed repairing watches and clocks. They smoke a lot, and a very strong case could be put forward on their behalf for a similar concession. The numbers of severely injured ex-Service men are not very great; in fact, they are, fortunately, comparatively small. I wish to put in a plea for these men, and I hope that the Chancellor will bear in mind the possibility of a similar concession for the war blinded and the very severely wounded men when he is discussing the matter with his colleagues.
    Mr. McKie: I do not think that anybody on this side of the Committee will get much satisfaction from what the Chancellor has said with regard to tobacco from the Empire. If I may say so without offence, the right hon. Gentleman was studiously vague. He said it was the intention of the Government to initiate a scheme of Imperial preference—
    Mr. Dalton: I distinctly put it wider than that. I talked about the broad problem of the productive resources of the Empire.
    5.30 p.m.
    Mr. McKie: I thank the right hon. Gentleman for reminding me of that, because I should like to think that that was so. Even so, I am afraid that I must adhere to my first remark that I do not think that anybody on this side of the Committee can be satisfied with what the right hon. Gentleman said on the Fore of the development of the tobacco resources of the British Commonwealth of Nations. Of course, it is no doubt an advance to get the party opposite to make a state-
    912
    ment such as that, and, so far as it goes, I thank the right hon. Gentleman for it. I quite agree that it is much more necessary to have—I think I am quoting his words accurately—"food rather than fags." I hope the right hon. Gentleman will impress upon his colleagues the necescity of that, and will see that we get more ample supplies of food in the future, no matter what happens to our "fags," than we have received in the past. I think that that is all you will allow me to say on that, Mr. Bowles. I say it for the benefit of hon. Members opposite. This is exempted Business, and we may stay all night on it.
    With regard to the second part of the right hon. Gentleman's speech, I wish to join with my hon. Friends behind me in thanking him for having gone so far as he has with regard to old age pensioners. I can hardly support what he said about the way in which the country has received the imposition of this tobacco tax. Re said he was very much impressed with the mild amount of criticism which he had met in the country generally. Hon. Members opposite should not live in a fool's paradise with regard to the way in which the country has received the imposition of this tax. I thought the hon. Member for Dumbarton Burghs (Mr. Kirkwood), although he spoke in very moderate language, was impressed with the seriousness of the situation, but perhaps he had prior information from the Chancellor, because I understand they have been in correspondence on the question of this mild concession to the old age pensioners.
    Another hon. Member lifted the curtain a little further and said that he fully realised the potential dangers of this tax. The hon. Gentleman also seemed to be aware of the potential gravity of the addition of the Clause to the Bill from the political point of view, and I wholeheartedly sympathise, having no responsibility for it. Certainly, it would be churlish of hon. Members on this side of the Committee to allow the Chancellor's statement concerning the small concession he is prepared to make for old age pensioners to go without a small vote of thanks. I hope it will not be felt that I am animated by any political motive when I express the wish that the scope of this concession to old age pensioners will he extended to many more people in the country who are very nearly as hardly pressed.

    913
    Despite the allowances to which the hon. Member for Ince (Mr. T. Brown) referred, the increased amount of money available will be almost completely swallowed up. I am not a smoker myself, but I understand that the small pipe of tobacco or, to use the Chancellor's delightful colloquialism, the "fag," has become an almost indispensable necessity for the vast majority of citizens, both men and women. I hope that if the right hon. Gentleman occupies his present position in a year's time, he will be able to do something more generous for larger sections of the community than he has done so far.
    Mr. W. D. Griffiths: I am sure the Committee will have heard the Chancellor's announcement with great pleasure. We appreciate the difficulties involved. When the hon. and gallant Member for Macclesfield (Air-Commodore Harvey) spoke of the disabled ex-Service men, I am sure that, like myself, the Committee felt that there too, was a class of person to whom we would like to see a concession granted; but, as the Chancellor has said, once we start making concessions there are no limits to the cases that can be made out for various sections of the community. For that reason, I must express the view which I have had since I first heard the Budget statement, that it would have been infinitely better, despite the colossal administrative difficulties, to have produced a rationing system. Despite the clamour of the Housewives' League, we maintain that on the question of food we must ensure a fair distribution. In the case of tobacco, that is precisely what is not being applied. The workers of all grades are entitled to say, "Here is a Government, which has always based its policy on fair shares for all, in this instance practising a policy which is diametrically opposed to that." If we are to give concessions to the old age pensioners and the disabled ex-Service men, what about the agricultural workers, the poorly-paid shop assistants, and the whole range of lower income limits? Bearing in mind the difficulties faced by the Chancellor and his colleagues, a rationing scheme would have been infinitely better.
    Air-Commodore Harvey: Surely the hon. Gentleman does not place in the same category as the ex-Service man who is wounded for life, the agricultural worker who has got his health?
    Mr. Griffiths: During the war the Government saw fit to direct all of us into some form of national service. The agricultural worker had to play his part, as did the men in the Forces. In any case, they are both in the lower wage groups, and should be treated similarly.
    Mr. Butcher: The Chancellor is having an easy ride in connection with the Tobacco Duty. He has stated the importance of conserving dollars, and the Committee have been most interested in the way in which he has dealt with the question of "food before fags." It would appear that food, not only for poultry but for human beings, is becoming one of the major preoccupations of the people. It is interesting to examine the Chancellor's determination to economise in the expenditure of dollars by means of one of the three alternatives which are available to him. First, there is the appeal which he has made. I suggest that the appeals to which the people will now respond are becoming very limited. The people have been appealed to over a very long period. Then there is the possibility of rationing, which was referred to by the hon. Member for Moss Side (Mr. W. D. Griffiths), and with which I entirely associate myself. It was the policy of the former Administration that there should be fair shares for all, and I believe that if rationing of tobacco can be maintained in parts of the Continent and rationing of sweetstuffs for children can be operated in this country, there is no reason why, given the will and the determination, tobacco should not also be rationed in this country. The Chancellor has not relied upon either of those two methods of reducing the consumption of tobacco. He has chosen the easiest way, by imposing an increase in price on those who are least able to bear the increase. Let us realise what we are doing in this Committee. We are not penalising the wealthy man; he can continue smoking as much as he likes, and it will not make any difference to him.
    Major Bruce: Will the hon. Member make his position quite clear? Is he suggesting that there should be, in fact, a rationing scheme for tobacco, or is he prepared to support the Chancellor? A rationing scheme would increase the number of civil servants.
    Mr. Dalton: "Hordes of officials."
    Mr. Butcher: I was associating myself with the remarks of the hon. Member for Moss Side (Mr. W. D. Griffiths), and I must leave hon. Members opposite to compose their differences without bringing me in as a referee. The Chancellor has chosen the naked way of putting up the price, so that the only people who will suffer are the people with the lowest incomes. So far as the Chancellor has mitigated hardship in assisting the old age pensioners, we are grateful to him. How wise and true it was to say that there are difficulties about this which were presented to him by his Department. There are difficulties.
    Mr. Michael Foot: There are.
    Mr. Butcher: I quite agree. The hon. Gentleman had a better education than many of us on this side of the House, and so, perhaps, he will refrain from sneers at those who did not have that advantage. There are difficulties, and they are great. The Chancellor has explained them. Nevertheless, he is good in this matter to the old age pensioners. If these difficulties are to be overcome for the old age pensioners, I am sure they can be overcome for the disabled ex-Service men as well. It is difficult to exempt classes from this kind of indirect taxation, but once we have decided to exempt a class, then we must examine all other classes to see whether they have a just claim for exemption. I say to the Chancellor of the Exchequer that no section of the community has a greater claim for exemption in this matter than the ex-Service men, and the men of the Merchant Navy, who were, perhaps, disabled in bringing this commodity into the country during the period of war.
    Mr. Gordon-Walker: If I sound a discordant note, I am sorry. But I must say that I am sorry that the Chancellor has decided to assist the old age pensioners in this particular way. It seems to me that the argument used in favour of this method is based on a piece of completely false logic. It is not a question of this tobacco tax being unfair or of its being a clumsy tax, as the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) said. The true logic of the argument in favour of helping the old age pensioners is that, in the circumstances of this tax, the pen-
    916
    sions of the old age pensioners are not great enough. That is the logic of the position. If that is so and I agree with it—then the fair and proper way of dealing with this is to calculate what this concession is worth in cash, and to add that extra cash on to the old age pensions. By this means we should avoid all these complicated administrative difficulties. It would not involve an extra civil servant, whereas the Chancellor's scheme will involve extra civil servants.
    Once we make the concession in one case, it is inevitable that other claims will be urged. We have heard of a good many today—just as good cases; absolutely as good. By this method of the Chancellor's we shall create as much unfairness as we remove, and we shall increase the administrative and technical difficulties. We increase also the temptation for the black market, which is a thing that has to be watched carefully at the moment. There are dangers of the black market, etc., spreading in this country at the moment.
    Moreover, to admit that there is a case for a concession in one instance invites the suggestion that there is an equally good case for exemption in others. The old age pensioners have just as good a case for concessions in regard to other taxed goods as they have in regard to tobacco. I am sorry to sound this discordant note, and, perhaps, too late; but even if I am to be only one by myself, I must say that I am sorry that the Chancellor of the Exchequer has decided to go about this in this manner, which will cause many difficulties, grievances and injustices, instead of doing it in the straightforward and fair way of making an addition of the amount of the tax-equivalent of this proposed concession to the pensions of the old age pensioners.
    5.45 p.m.
    Mr. Ronald Chamberlain: I have a great deal of sympathy with what my hon. Friend the Member for Smethwick (Mr. Gordon-Walker) has just said. In fact, had the Chancellor not announced this concession, I was going to propose to him that he should make a concession outside the scope of the Bill. I mention that only in passing, because I think there is a lot in what has already been said by my hon. Friend, and that the proposal he has made would, if adopted, avoid a great deal of administrative difficulty. But what I really want to do now is to ask my right hon. Friend

    917
    it he will go a little further in explaining what is his intention. I am well aware that he does not want now to disclose all that is in his mind, but I think one point should be made clear. There was in the previous Debate on this subject some question with regard to women old age pensioners, and I think that my hon. Friend the Member for Epping (Mrs. Manning) suggested that, in general, they do not want a tobacco or cigarette concession. That is probably true. But, at the same time, there is a large number, some in my own constituency, who do, quite rightly and legitimately, enjoy their cigarettes; and all I want my right hon. Friend to say, if he can at this stage, is whether or not his intention is merely to give this concession to male old age pensioners. I would ask him in making the concession to bear in mind and make provision for the women old age pensioners.
    Mr. Dalton: There will be no sex disqualification imposed.
    Mr. Stanley: Equal smokes.
    Mr. Gallacher: It has been said that this concession will be unfair to other categories and will raise protests. I quite agree with that, but that is not an argument against concession. What we are discussing now is the Finance Bill, arid if we do not do something about this in the Finance Bill the full tax will be borne by the old age pensioners; they may not be able to get a concession, and the old folks will thus lose. We have to find the best means of getting the fullest measure of relief that we can for them. If we can get it for others besides, all well and good. I was disappointed that an Amendment on the Order Paper in my name and those of my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) and of the hon. Member for the Isle of Wight (Sir P. Macdonald) was not called. It was in favour of the old age pensioners, and of cripples and longterm hospital cases, as well. It was a great relief to me when I heard that the Chancellor of the Exchequer had decided to make this concession. It is a very good concession, taking everything into account, and the Chancellor deserves high marks for it, and I hope he will get them.
    At the same time, if, between now and the Report stage, we can persuade him to bring in the long-term hospital cases and cripples as well, we shall make the
    918
    concession better. We have cases of people lying in hospital, month after month, year after year. I remember visiting a hospital where there was a lad abed who had been lying there three years. The nurse brought him tea in the afternoon and the consolation of a smoke. If we consider those unfortunate people lying in hospital month after month, and, as in the case of some of the miners, for as long as a year or more, we shall wish to extend the concession to them. I know that the Chancellor of the Exchequer, who carries a song in his own heart, would like to put a song into the hearts of those suffering people, and so I hope that, before the Report stage, he will try to bring some of those people in.
    Mr. R. Adams: I was a little surprised to hear the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) acting as a recruiting officer for the Housewives' League, because I was assured that it had no political allegiance; but I think that the hon. Member for Galloway (Mr. McKie) talked about "lifting the curtain," so perhaps he was lifting the curtain in this particular matter.
    Lieut.-Commander Braithwaite: I was merely predicting that the hon. Member for Dumbarton Burghs (Mr. Kirkwood) might be appearing on the platform of this strongly non-party organisation.
    Mr. Adams: I did understand the hon. and gallant Gentleman to say that he was encouraging him to do so. My purpose in getting up was to refer to some of the difficulties in connection with the tobacco problem. Like many other hon. Members, I welcome the concession which the Chancellor has made to the old age pensioners; but from the short Debate which has followed his announcement, I think it will be apparent that there are many difficulties in the way. It was pointed out that there would be administrative difficulties; and I think the Chancellor himself indicated that he had not yet found a final scheme for assisting these people.
    Mr. Dalton: I said we would overcome the difficulties.
    Mr. Adams: At any rate, my right hon. Friend did refer to the fact that he had experienced some difficulties in finding a suitable scheme. It will have been noted that the moment he sat down other hon.

    919
    Members got up and suggested other classes who ought to be brought in. It seems to me that if classes are excluded from legislation in that way, it is asking for people immediately to suggest other classes for exclusion also. We have heard pleas for disabled ex-Service men, cripples and people who have been in hospital for a long time. They are all very good cases, and it seems difficult for the Chancellor to say: "I will grant it for old age pensioners but no one else."
    That brings me to the point I wish to make, namely, the proper use of the Purchase Tax as a way out. It is a bad thing for the Chancellor to have to raise form of taxation, and then to say, "I will exclude a certain class because I do not think they can afford to come in." Surely, the taxation has to be adjusted in such a way that everybody can bear it fairly? My objection to the increased Tobacco Duty is that it does not bear fairly on all classes of the population. It has been made only too clear that it bears too heavily on the old age pensioners, and it could be argued quite consistently that the increased Duty bears far more heavily on the working class man earning, say, £4 or £5 a week than it does on really well-to-do people. The hon. Member for Holland with Boston (Mr. Butcher) made the point—quite rightly, in my view—that a man earning £2,000 or £3,000 a year will not have his smoking affected one iota by this increased Tobacco Duty. If we want all sections of the population to make an equal sacrifice, then I suggest we should spread the burden of taxation fairly and equally over all sections of the population. That is just what the Purchase Tax will enable us to do—
    The Temporary Chairman: The hon. Member has again referred to Purchase Tax. This Clause is nothing to do with Purchase Tax.
    Mr. Adams: I thought I was in Order in pointing that out as an alternative to the present proposed Tobacco Duty. I was pointing out its unfairness in certain respects, and suggesting the use of Purchase Tax as an alternative. It would be possible to reduce the proposed rate of Import Duty, and to exclude Empire tobacco entirely from the Purchase Tax. In passing, I would remind hon. Members
    920
    that the old age pensioners and the poorer working men tend to smoke the cheaper tobacco and the Empire tobaccos; and, therefore, if my suggestion were adopted, the price of tobacco to them would not be quite as high as it is at present. The standard brands could bear some proportion of Purchase Tax, while the more expensive tobaccos, cigarettes and cigars could bear a high rate of Purchase Tax. My suggestion would equate the burden that has to be borne in order to cut down our dollar expenditure, and would spread it more fairly over all sections of the population. In addition, it would meet the practical objections to the Chancellor's suggestion for helping the old age pensioners. I hope the Chancellor will at least give some consideration to the suggestion I have made between now and the Report stage.
    Captain Crookshank: May I come back to Clause 3 for a change, the Question being that it should stand part? For some little time we have been discussing a Clause which will be introduced later on, and within the framework of which the Chancellor has pointed out he will make some concession to old age pensioners. The appropriate votes of thanks to him have been moved, seconded and supported from all quarters of the Committee, and I am very glad to associate myself with the desire of the right hon. Gentleman to ease the burden of the old age pensioners. Having said that, I should now like, for one brief moment, to look at Clause 3, because it is a bad Clause. All this talk of concessions would not be necessary if it were not for the Clause itself. What the Clause does—and do let us remember this; although it is, of course, done on Budget day, this is the final authority for doing it—is to increase the existing Tobacco Duty by 50 per cent.
    In his Budget Speech the Chancellor said that he hoped that as a result of this savage increase in taxation the dollar expenditure might be reduced by some 30 million dollars, but only if consumption went down 25 per cent., and that if that happened he would get £75 million extra revenue. Of course, if it did not he would get more revenue, but it all depends upon the result of the right hon. Gentleman's appeal. We were wondering what effect it has had so far. He has just told us that while at that time the drop in con-

    921
    sumption—I suppose he meant in purchases—was 50 per cent. or so—possibly because there may have been considerable stocks in private hands; and I think that is more than likely, because as far as I know, that always happens about Budget time—since then the purchases have risen, and reached something like 70 per cent. Well, we have gone only two months, and we cannot really deduce anything from those figures.
    Today, we are left to decide, not the question whether if there is this Duty there should be some concession for old age pensioners. That is not the question we are discussing at all. We shall discuss that later on when we get a new Clause. Hon. Members on both sides of the Committee, including myself, put forward that proposition at an earlier stage, and the Chancellor has conceded it. But that is quite another matter from the question which arises at the moment, whether or not this Committee accepts the proposition of the Chancellor that this enormous increase in taxation should be put upon merely one section of the indirect taxpayers. If the right hon. Gentleman had wanted to raise revenue on a large scale—which he might have been well advised to do, when taking into consideration the general financial situation and the inflationary pressure from which we are suffering—if he had decided to impose increases in taxation over the whole range of indirect taxation, that would have been
    one thing. But to single out the smokers and nobody else for this very heavy duty—and that not because it was a good or a bad financial policy, but because as a result of it he hoped to save 30 million dollars—is a proposition which we on this side of the Committee do not accept. We think it is a foolish thing to have done.
    We cannot see that the Chancellor has any guarantee—except the result of his appeal—that he will save any dollars at all. If consumption rises still further, he will go on paying out dollars. He may even have to pay out more dollars this year, in the end, than last year. Therefore, we think the whole plan of raising the Tobacco Duty in this way in this Budget is misconceived. Because that is the question—and not this extraneous matter at all—when considering whether or not this Clause should stand part of the Bill, and because we think the approach which the right hon. Gentleman has made is wrong, we shall vote against this Clause.
    Mr. James Callaghan: Surely, the right hon. and gallant Gentleman is not going to resume his seat without saying what he would do instead?
    Captain Crookshank: Yes he is, and he. has done so.
    Question put, "That the Clause stand part of the Bill."
    The Committee divided: Ayes, 233; Noes, 89.

    Division No. 241.]

    AYES.

    [5.59 p.m.

    Adams, Richard (Balham)

    Brooks, T. J. (Rothwell)

    Driberg, T. E. N.

    Adams, W T. (Hammersmith, South)

    Brown, George (Belper)

    Dumpleton, C. W.

    Allen, A C (Bosworth)

    Brown, T. J. (Ince)

    Ede, Rt. Hon J. C

    Allighan, Garry

    Brown, W. J. (Rugby)

    Edelman, M

    Alpass, J H.

    Bruce, Maj. D. W. T

    Edwards, Rt. Hon. Sir C. (Bedwellty)

    Anderson, A. (Motherwell)

    Buchanan, G.

    Evans, S. N. (Wednesbury)

    Anderson, F. (Whitehaven)

    Burke, W. A.

    Ewart, R.

    Attewell, H. C.

    Butler, H. W. (Hackney. S.)

    Fernyhough, E

    Austin, H. Lewis

    Callaghan, James

    Follick, M.

    Ayles, W. H.

    Castle, Mrs. B. A.

    Foot, M. M.

    Ayrton Gould, Mrs B

    Chamberlain, R. A.

    Forman, J. C.

    Bacon, Miss A.

    Champion, A. J.

    Gallacher, W.

    Balfour, A.

    Chater, D

    Ganley, Mrs. C. S

    Barstow, P. G

    Chetwynd, G. R.

    Gibson, C. W.

    Barton, C,

    Cluse, W. S.

    Gilzean, A.

    Battley, J. R.

    Cocks, F. S

    Glanville, J. E. (Consett)

    Bechervaise, A. E

    Coldrick, W.

    Goodrich, H. E.

    Belcher, J. W.

    Colman, Miss G. M

    Gordon-Walker, P C

    Benson, G.

    Comyns, Dr. L.

    Grey, C. F.

    Berry, H.

    Cook, T. F.

    Grierson, E.

    Beswick, F

    Cooper, Wing-Comdr G

    Griffiths, Rt. Hon. (Llanelly)

    Bing, G. H. C

    Corlett, Dr. J.

    Guest, Dr. L. Haden

    Blackburn, A. R

    Cove, W. G.

    Gunter, R. J

    Blyton, W. R.

    Grossman, R. H. S.

    Guy, W. H

    Bowden, Flg.-Offr. H. W.

    Daggar, G

    Haire, John E. (Wycombe)

    Braddock, Mrs. E. M. (L'pl, Exch'ge)

    Daines, P.

    Hale, Leslie

    Braddock, T. (Mitcham)

    Dalton, Rt. Hon. H.

    Hall, W. G.

    Bramall, E. A.

    Dodds, N. N.

    Hardy, E. A

    Brook, D. (Halifax)

    Donovan, T

    Harrison, J

    Hastings, Dr. Somerville

    Mitchison, G. R.

    Silverman, J. (Erdington)

    Haworth, J.

    Monslow, W.

    Simmons, C J.

    Herbison, Miss M

    Montague, F.

    Skeffington-Lodge, T. C.

    Hicks, G.

    Morley, R.

    Snow, Capt. J. W.

    Hobson, C. R.

    Morris, Lt.-Col. H. (Sheffield, C)

    Soskice, Maj. Sir F.

    Holmes, H. E. (Hemsworth)

    Morris, P. (Swansea, W.)

    Stamford, W.

    House, G.

    Morris, Hopkin (Carmarthen)

    Strauss, G. R. (Lambeth, N.)

    Hoy, J

    Morrison, Rt. Hon. H. (Lewisham, E.)

    Stubbs, A. E.

    Hudson, J. H. (Ealing, W.)

    Mort, D. L.

    Summerskill, Dr. Edith

    Hughes, H. D. (W'lverh'pton, W.)

    Moyle, A

    Symonds, A. L.

    Hynd, H. (Hackney, C.)

    Murray, J D

    Taylor, H. B. (Mansfield)

    Irving, W. J

    Nally, W.

    Taylor, R. J. (Morpeth)

    Janner, B.

    Naylor, T. E.

    Taylor, Dr. S. (Barnet)

    Jay, D. P. T.

    Neal, H. (Claycross)

    Thomas, George (Cardiff)

    Jeger, Dr. S. W. (.St Pancras, S. E.)

    Nichol, Mrs M. E. (Bradford, N.)

    Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)

    John, W.

    Nicholls, H. R. (Stratford)

    Thurtle, Ernest

    Jones, D. T. (Hartlepools)

    Noel-Buxton, Lady

    Timmons, J.

    Jones, Elwyn (Plaistow)

    Oldfield, W. H

    Titterington, M. F.

    Jones, P. Asterley (Hitchin)

    Paget, R. T.

    Tolley, L.

    Key, C. W.

    Paling, Will T. (Dewsbury)

    Usborne, Henry

    Kinley, J.

    Palmer, A. M. F

    Vernon, Maj. W. F

    Kirby, B. V.

    Pargiter, G. A.

    Viant, S. P.

    Kirkwpod, D

    Parkin, B. T.

    Wadsworth, G.

    Lang, G

    Paton, J. (Norwich)

    Walkden, E.

    Lavers, S.

    Peart, Capt. T. F.

    Wallace, G. D. (Chislehurst)

    Lee, Miss J. (Cannock)

    Poole, Major Cecil (Lichfield)

    Wallace, H. W. (Walthamstow, E.)

    Levy, B. W

    Popplewell, E.

    Watson, W. M.

    Lewis, J. (Bolton)

    Porter, E. (Warrington)

    Webb, M. (Bradford, C.)

    Lipton, Lt.-Col. M.

    Porter, G. (Leeds)

    Wells, P. L. (Faversham)

    Logan, D. G.

    Pritt, D. N.

    Wells, W. T. (Walsall)

    Longden, F.

    Proctor, W. T.

    West, D. G.

    Lyne, A. W.

    Pryde, D. J.

    Westwood, Rt. Hon. J.

    McAllister, G.

    Pursey, Cmdr. H

    White, H. (Derbyshire, N. E.)

    McEntee, V. La T

    Randall, H. E.

    Whiteley, Rt. Hon. W.

    McGhee, H. G

    Ranger, J.

    Wigg, Col. G. E.

    Mack, J. D.

    Rankin, J.

    Wilcock, Group-Capt. C. A. B.

    McKay, J (Wallsend)

    Rees-Williams, D R

    Willey, F. T. (Sunderland)

    Mackay, R. W. G (Hull, N.W.)

    Reeves, J.

    Willey, O. G. (Cleveland)

    McKinlay, A. S.

    Rhodes, H.

    Williams, D. J. (Neath)

    McLeavy, F.

    Richards, R

    Williams, J. L. (Kelvingrove)

    Macpherson, T. (Romford)

    Roberts, Goronwy (Caernarvonshire)

    Williams, W. R. (Heston)

    Mainwaring, W. H.

    Roberts, W. (Cumberland, N.)

    Williamson, T.

    Mallalieu, J. P. W.

    Robertson, J. J. (Berwick).

    Willis, E.

    Mann, Mrs. J.

    Rogers, G. H. R.

    Wills, Mrs. E. A

    Manning, Mrs. L. (Epping)

    Ross, William (Kilmarnock)

    Woods, G. S.

    Martin, J. H.

    Sargood, R.

    Yates, V. F.

    Medland, H. M

    Segal, Dr. S.

    Mellish, R. J.

    Shackleton, E. A. A

    TELLERS FOR THE AVES:

    Middleton, Mrs. L.

    Sharp, Granville

    Mr. Joseph Henderson and

    Millington, Wing-Comdr E. R

    Shurmer, P.

    Mr. Hannan.

    NOES.

    Astor, Hon. M

    George, Maj Rt. Hn. G. Lloyd (P'ke)

    Morris-Jones, Sir H.

    Barlow, Sir J.

    Gomme-Duncan, Col. A

    Morrison, Maj. J. G. (Salisbury)

    Baxter, A. B.

    Gridley, Sir A

    Morrison, Rt. Hon. W. S. (Cirencester)

    Birch, Nigel

    Grimston, R. V.

    Mott-Radclyffe, Maj. C. E.

    Boothby, R

    Hare, Hon. J. H. (Woodbridge)

    Neven-Spence, Sir B.

    Bower, N.

    Harvey, Air-Comdre A V

    Noble, Comdr. A. H. P

    Boyd-Carpenter, J. A.

    Head, Brig. A. H.

    Peake, Rt. Hon. 0.

    Bracken, Rt. Hon, Brendan

    Headlam, Lieut.-Col. Rt. Hon. Sir C

    Peto, Brig. C. H. M

    Braithwaite, Lt.-Comdr. J. G.

    Hinchingbrooke, Viscount

    Poole, 0. B. S. (Oswestry)

    Bromley-Davenport, Lt.-Col W

    Hudson, Rt. Hon R. S. (Southport)

    Prescott, Stanley

    Buchan-Hopburn, P. G. T.

    Hutchison, Lt.-Cm, Clark (E'b'rgh W.)

    Raikes, H. V.

    Bullock, Capt. M

    Jarvis, Sir J.

    Ramsay, Maj. S

    Butcher, H. W.

    Jeffreys, General Sir G.

    Ross, Sir R. D. (Londonderry)

    Challen, C.

    Lancaster, Col. C. G.

    Savory, Prof. D. L.

    Channon, H

    Law, Rt. Hon. R. K.

    Scott, Lord W.

    Clarke, Col. R. S

    Lennox-Boyd, A. T.

    Smith, E. P (Ashford)

    Conant, Maj. R. J. E

    Lindsay, M. (Solihull)

    Snadden, W. M.

    Cooper-Key, E. M

    Lyttelton, Rt. Hon. 0

    Stanley, Rt. Hon. 0.

    Crookshank, Capt. Rt. Hon H F C

    MacAndrew, Col. Sir C

    Stewart, J. Henderson (Fife, E.)

    Cuthbert, W. N.

    McCallum, Maj. D.

    Stuart, Rt. Hon. J. (Moray)

    Darling, Sir W. Y.

    Macdonald, Sir P. (I. of Wight)

    Sutcliffe, H.

    Davidson, Viscountess

    Mackeson, Brig. H. R.

    Thornton-Kemsley, C. N.

    Dower, Lt.-Col. A. V. G. (Penrith)

    McKie, J. H. (Galloway)

    White, Sir D. (Fareham)

    Dugdale, Maj. Sir T (Richmond)

    Maclay, Hon. J. S

    White, J. B. (Canterbury)

    Duthie, W. S.

    MacLeod, J.

    Williams, Gerald (Tonbridge)

    Eccles, D. M.

    Macmillan, Rt. Hon. Harold (Bromley)

    Willoughby de Eresby, Lord

    Eden, Rt. Hon A.

    Macpherson, Maj. N, (Dumfries)

    York, C.

    Elliot, Rt. Hon. Walter

    Marlowe, A. A. H.

    Foster, J. G. (Northwich)

    Marples, A. E.

    TELLERS FOR THE NOES

    Fraser, H. C. P. (Stone)

    Marshall, S. H (Sutton)

    Mr. Drewe and Mr Studholme

    Fraser, Sir I, (Lonsdale)

    Mellor, Sir J

    Question put, and agreed to.

    Clause ordered to stand part of the Bill.

    CLAUSE 4.—(Repeal and reduction of certain artificial silk duties and allowances.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Wadsworth: The reason for my rising to speak on this Clause is to direct the Committee's attention to the large number of items upon which Import Duties are levied. It is not unusual for members of my party to speak on imports, for the time has gone when hon. Members, in any part of the House look upon the fiscal problem of tariffs or Free Trade in the absolute colours of black and white. I would ask the Chancellor to re-examine the whole question of Import Duties, for, out of the whole revenue of £3,400 million, only £21 million was raised in the last financial year on all Import Duties when levied for productive purposes under tariff legislation.
    Lieut.-Commander Braithwaite: On a point of Order. Is the hon. Member in Order in pursuing the question of Import Duties on a Clause which deals solely with excise matters?
    The Chairman (Major Milner): No, the hon. Member is not in Order in raising this matter now.
    Mr. Wadsworth: In that case, I will ask the Chancellor of the Exchequer to re-examine the question of the thousands of articles on which there is an Import Duty.
    Clause ordered to stand part of the Bill.

    CLAUSE 5.—(Duty free use of sugar, etc.)
    Motion made, and Question proposed, That the Clause stand part of the Bill."
    Viscount Hinchingbrooke: I do not know whether the Financial Secretary intends to speak at this stage, but, if not, perhaps this will give him the opportunity, because I think the Committee will be interested to know what is the meaning of this short Clause. It says that it is to make a certain class of sugar free of import duty At first sight, it would appear that whereas the housewife is desperately anxious to get more sugar for jam making and everybody desires to see a greater and freer import of sugar for human consumption, this
    926
    Clause has nothing to say on that subject whatever, and allows certain manufacturers to get sugar for unspecified purposes. I would like to know what those purposes are what is the meaning of the words, "protection of the revenue"? How is the revenue protected if sugar comes into this country free of tax for use by manufacturers, and what is the meaning of the words, "giving of security"? Has it anything to do with defence? Is the sugar to be processed for the manufacturing of arms? The Committee will be interested to have some more explanation of this Clause.
    Mr. Nigel Birch: There are one or two odder things than those to which my noble Friend has just drawn attention. The Commissioners may authorise any person "carrying on any art or manufacture" to receive sugar, etc. What is the precise form of the art? Is it the icing of cakes? This is a mysterious Clause, and more explanation is required of what it is wanted for, and why.
    The Financial Secretary to the Treasury (Mr. Glenvil Hall): This is a very short Clause, and I thought we might have got it without any discussion, because its meaning is plain on the face of it. The Clause seeks to authorise the receipt, by certain manufacturers, of sugar, duty-free, which is used by them for making certain articles—
    Mr. Birch: What articles?
    Mr. Hall: Perhaps I can make my own speech in my own way. Citric acid is one, oxalic acid is another and the new drug which we discussed last night, penicillin, is a third. They are made from glucose, molasses, and sugar in one form or another. For some time—I think since 1897—the Commissioners of Customs and Excise have permitted, in an extra-statutory way, the use duty tree of sugar, molasses, and glucose by chemical manufacturers, and certain other manufacturers. We are now regularising a situation which has prevailed for over 50 years. This Clause makes no change in what has been the regular practice, and I hope it will be accepted by the Committee
    6.15 p.m.
    Lieut.-Commander Braithwaite: The Committee will be grateful to the right hon. Gentleman for enlightening us to that extent, but I think we would like a little

    927
    more information as we want to make sure what the Government wish to get by this Clause. The mysterious phrase, "carrying on any art or manufacture," still remains a little obscure. The right hon. Gentleman mentioned the manufacture of citric acid, oxalic acid and penicillin. I should have thought that the matter might have been a little clearer if a Schedule had told us what is covered by this Clause. I do not know whether the list of articles which the right hon. Gentleman quoted was merely an example, or was comprehensive, but if there are others we should be glad to know what they are. Just how art comes into all this is a little mysterious.
    Mr. Glenvil Hall: I am not an expert in these matters, but I believe that certain chemicals or liquids which are used for cleaning pictures are made from one or other of these sugars. We wanted to make the Clause as wide as possible, and that is why the word "art" has been inserted. Certain liquids are used for artistic purposes. There is nothing sinister here about the use of the word "art."
    Mr. McKie. I am surprised that the Financial Secretary should be surprised about our desire for a little more information about this Clause. He described it as an innocent Clause, but as the Debate has proceeded it has been amply illustrated that it is not so simple as it at first appears. The right hon. Gentleman was pressed very hard to tell us what this Clause seeks to do. I join with my hon. Friends in wishing to see every encouragement given to the processing of citric and oxalic acids and penicillin, and the cleaning of pictures. The right hon. Gentleman said that the Government wanted to make the fullest use of this Clause, that it was drafted with that idea. Without wishing to take the gilt off the ginger bread, or pour cold water on what he said, I suggest that if he had really wanted to put this Clause to the widest possible use he would not have included the words,
    "other than the production of food or drink for human consumption."
    The housewives of this country will read his words tomorrow, or perhaps hear them over the wireless this evening. This is just the kind of Clause that may well get two or three minutes' time when "In Parliament today" is broadcast tonight.
    928
    It is very desirable that housewives should be informed about what the right hon. Gentleman has said in seeking to exclude them directly from participation in any benefits which will flow to other sections of the community, particularly those in the realm of medicine, by the inclusion of this Clause in the Bill. We know perfectly well that there is one use to which sugar might be put, but for the inclusion of these words:
    "other than the production of food or drink for human consumption,"
    and that is for the preservation of fruit. The right hon. Gentleman knows how the housewives of this country have suffered, and will continue to suffer, by not having proper supplies of sugar for the preservation of fruit, and particularly the wild fruits of this country. A golden opportunity is missed by the inclusion of these words which directly exclude from benefit those who are producing food or drink for human consumption. If there is to he a Division against adding this Clause to the Bill, I hope that the hon. Member for Buckrose (Mr. Wadsworth), who spoke on a previous Clause, will go into the Lobby with me in order to protest against not making available a wider and more free use of sugar than is envisaged in this Clause for not only the housewives but the consuming public.
    Sir Frank Sanderson: I would ask the Financial Secretary to give a reply to the following point which I think this Clause is primarily drawn up to cover: Molasses are imported into this country in large quantities and they contain a high percentage of sugar. They are used primarily for two purposes—one in the process of distilling, and the other in the manufacture of cattle feedingstuffs. I understand that it is the wish of the Chancellor of the Exchequer that the sugar content in molasses shall be free of duty. I think that I am right in saying that the two illustrations I have given cover the principal commodity upon which the right hon. Gentleman desires by this Clause to free the sugar content from duty, though there are others to which the Financial Secretary has referred.
    Mr. Baldwin: Could we have an indication of the extent of this duty? It would seem that a straight forward way to deal with this would be to make the manufacturers pay the duty and

    929
    allow them to charge a little extra for the products which they are turning out. All these little rebates give an avenue for a black market, and I think the straight way would be to increase the cost of the product to cover the duty. If in the carrying on of any art or manufacture a particular chemical is required, those concerned should pay duty for the chemical. I do not see why they should be given any greater preference than the farmer who uses molasses for making silage for the cattle they feed. I would like to know whether it would be possible to exclude all rebate on sugar and molasses.
    Clause ordered to stand part of the Bill.
    Clauses 6, 7 and 8 ordered to stand part of the Bill.

    CLAUSE 9.—(Income Tax for 1947–48.)
    Mr. Glenvil Hall: I beg to move in page 7, line 33, after the first "of," to insert:
    "Section thirty of the Finance Act, 1946, and of."
    I think the Committee is familiar with the point which lies behind this Amendment. We had in Committee of Ways and Means—first in Committee and then on Report stage last night—a Resolution which authorises the inclusion of this Amendment. It inserts in Clause 9 a provision to enable P.A.Y.E. to be applied to the Forces. The original Resolution in Committee of Ways and Means unfortunately overlooked the fact that until this year the Armed Forces of the Crown did not come into the P.A.Y.E. machinery as did other people who paid Schedule E. By this Amendment we are putting that into the Clause, in order to make from 6th April this year members of the Armed Forces, both men and women, subject to what is now the usual P.A.Y.E. arrangements.
    Amendment agreed to.
    Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
    Lieut.-Commander Braithwaite: This is the Clause which imposes the standard rate of Income Tax for the current year. It would be a pity to pass it without comment. Although I have no doubt that the Chancellor, or the Financial Secretary, in reply, will tell us that there are comforting words in Clause 10—dealing with
    930
    alteration of certain reliefs—I think that in the second full year of peace it is a calamitous thing that the standard rate of Income Tax should still be running at 9s. in the pound. When we recall that it was at the blackest moment of the war, when we were standing alone, that the late Sir Kingsley Wood raised it to 10s., I think that we should have gone further on the road towards the relief of the basic rate of this very serious burden. I should like some elucidation of Subsection (2), concerning the provisions relating to transport or electricity. But my main purpose in rising was to make my protest, and I am sure that of other hon. Members, that the standard rate of Income Tax should still be 9s. in the pound.
    Mr. Dalton: I do not think that we can very usefully go into a detailed Debate on the standard rate, but perhaps I may make an observation or two about it. But for me it would still be 10s. in the pound. I inherited the 10s. standard, and in my first autumn interim Budget I took a shilling off and reduced it to 9s. Hope springs eternal in all breasts—even in the breast of the hon. and gallant Gentleman and those of many others—and I should be very disappointed if we could not get a reduction in due course. I think mat it is in Order at this stage—I do not think that I am anticipating the next Clause—when I say that, having to choose between the alternative needs of giving help to industry, and having made an initial reduction from 10s. to 9s. in the pound in my first Budget, afterwards, both in the Debate of last year and in this Debate, it seemed better to proceed by way of improvement in the various allowances, both the total exemptions of the earned income relief and the allowances for children and the dependant allowances, than to have a further flat cut in the standard rate.
    We have, in other words, to try to take first things first in regard to reliefs to the different sections of the community. That does not, of course, mean that we are at the end of our works of mercy, and I hope it may yet be part of my destiny to reduce the standard rate still further. I must not commit myself and I must be careful to allow no Budget leakages in regard to next year. I shall be disappointed, however, if my time at the Ex-

    931
    chequer comes to an end with the standard rate of Income Tax 9s. in the £. I do not think I can add more today.
    6.30 p.m.
    Captain Crookshank: The right hon. Gentleman was asked by my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) to say something about Subsection (2) of this Clause.
    Mr. Dalton: It was to be dealt with by my right hon. Friend the Financial Secretary to the Treasury.
    Captain Crookshank: I did not realise we would have two Ministers running together on this matter, particularly as the right hon. Gentleman did not stand up.
    Mr. Dalton: He did not stand up in competition with the right hon. and gallant Gentleman, but my right hon. Friend will be glad to say a word on that if it is the wish of the right hon. and gallant Gentleman and his Friends.
    Captain Crookshank: That is the point. My hon. and gallant Friend asked for this information.
    Mr. Dalton: As only one of his points.
    Captain Crookshank: But the right hon. Gentleman the Financial Secretary to the Treasury never got up.
    Mr. Dalton: The right hon. and gallant Member was too quick.
    Captain Crookshank: I quite agree, but I understood the Chancellor was going to answer the questions himself. I only want to make one comment on what the Chancellor has said. I am rather shocked in this Committee to hear the ironical cheers with which any reference to a reduction in the standard rate of Income Tax is greeted. The Chancellor said in all seriousness that he hoped without committing himself to make a further reduction. I see no reason why that should be greeted with ironical cheers by his supporters, because there is no question about it that one of the great measures of assistance which he could give to trade, industry and business generally in this country would be so to arrange financial matters and the expenditure for which he is responsible as to make it possible to have a reduction in that standard rate.
    932
    The right hon. Gentleman said just now, as if it were a trump card in his game, that he had reduced the standard rate from 10s., where it had been when he took office, to 9s. That is quite true. He has done that, but if he succeeded in doing that he has also succeeded in presenting through this Finance Bill to the Commons an expenditure which is far larger than last year.
    Mr. Dalton: We cannot go into that now.
    Captain Crookshank: I agree we cannot discuss that now, but the fact does remain.
    Mr. Alpass: On a point of Order. Is it in Order to refer to expenditure on this Clause?
    Captain Crookshank: I have done so, and I am prepared to justify the statement I have made at any time if it is in Order to do so. I made the point without going any further now, but the fact still remains that if expenditure was brought down to a reasonable level it would be far more easy to secure—[HON. MEMBERS: "Order."] It is perfectly in Order to make a general statement like that. I am not specifying how it should be done. I did so on the Second Reading of the Finance Bill and the Chancellor himself has referred to it in previous speeches. All I am saying now is that if the Chancellor gave as much attention to that side of his business as he does to some others, and cut down expenditure, it would be possible to envisage far sooner a reduction in the present rate of Income Tax. While in present circumstances we appreciate the difficulties in which the Chancellor of the Exchequer is, my hon. and gallant Friend the Member for Holderness is quite right in protesting at the continuance of this high rate of taxation now that the war is well over. That was the only point which I wanted to emphasise, as well as protesting at the way in which any references to a reduction in the standard rate of Income Tax are received by the Chancellor's own supporters. Having said that and having given the right hon. Gentleman the Financial Secretary time to wind himself up to get up to reply to the question which was put to him, I will now sit down.
    Mr. Glenvil Hall: I am sorry indeed that I did not get up sooner, because the

    933
    last thing that I want to do is to engender heat in this Committee. So far we have got on extremely amicably, and I am hopeful therefore that we shall make excellent progress and shall rise a little earlier tonight than has been expected. I would not for a moment do anything which would cause any ill feeling or a prolongation of our discussion. The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) asked me if I would indicate why these words are included in Subsection (2):
    "Subject to the provisions of any Act of the present Session relating to transport or electricity…."
    The answer is we have been dealing during this present Session with two Bills, one concerned with electricity and one with transport. Under those Bills certain payments are to be made during the final period before the transfer of the undertakings from their present ownership to a new board or authority. Strictly legally, those payments will not be dividends or interest, and we have in both Bills inserted provisions which lay it down that notwithstanding that they will not notionally or legally be dividends or interest in the hands of the recipient, the Inland Revenue authorities are to assume that they are. Really, of course, they will be income in the hands of the recipients, and the mere fact that the money is not coming out of profits made by the concerns should not mean that the recipients should escape paying Income Tax and possibly Surtax on them. Therefore, in both those enactments we have inserted provisions—and they are not unfamiliar to some hon. and right hon. Members opposite who took part in the proceedings in Standing Committee upstairs—in this particular form of words.
    Mr. Marlowe: I am at a loss to understand the right hon. Gentleman's explanation. I suppose they are money made in virtue of those Bills, but the right hon. Gentleman said that legally and notionally they are not income but are to be treated as income. I do not think that is what he meant. What I think he meant was that they are legally income, and notionally are to be treated as such. The right hon. Gentleman did not explain what moneys these are. Are these compensation payments made in respect of the taking over of these undertakings, or are they, in fact, interest and dividend receipts? What are these sums of money
    934
    to which the right hon. Gentleman referred, for I am quite at a loss to know what sums he was talking about? I am sure we ought to know because it seems to me that this Subsection may very well be related to the subsequent Clauses 4 to 18 dealing with compensation. Are they sums of money of a similar kind, and will he explain what sums they are?
    Mr. Glenvil Hall: I thought I had briefly indicated what these moneys are. The Electricity Bill is going through this House at the present time, and in another place there is the Transport Bill. The financial arrangements of both Bills are fairly complicated, and I should be completely out of Order if I attempted to explain them now. A date is being fixed for the transfer of the assets from their present ownership to either the new electricity authority or the Transport Board, and as part of the winding-up and in order to pay off finally and completely under the provisions of those Bills, certain payments are being made. Some of these will come out of the profits which have legitimately been made and some will not. I think I should be out of Order if I went into a detailed explanation of the Measures in question, but under the law as it now stands the payments concerned are not strictly income in the sense defined by our Income Tax law. They are to be paid out of the profits of these undertakings for the settlement of the final period, and although in the hands of the recipients they are not profits strictly speaking, notionally they are to be treated as if they were profits and will remain subject to Income Tax and Surtax. Reference here is to the provisions in both those Bills which do what I have just tried to explain.
    6.45 p.m.
    Captain Crookshank: The right hon. Gentleman has so telescoped what he wanted to say that he has made it far from clear, and I hope that he can tell us a little more about this. After all, we have to deal with this Bill, and if it contains references to other enactments I cannot believe that it is out of Order to refer to them, at least sufficiently to make it clear what we are doing here. Unless the right hon. Gentleman tells us a little more about what particular payments he has in mind I am afraid that many hon. Mem-

    935
    bers who were not on the committees which dealt with the Bills to which he has referred will have not the slightest idea of what he is talking about. We are trying to make out what this Bill does. The Financial Secretary to the Treasury spoke of the transfer of assets which were paid under the other two Bills, and by which the holders of something or other were being paid off. He said that some of that money came out of profits but was not income. That string of words, which I took down, does not mean anything very much to me. Is the right hon. Gentleman talking about compensation payments? We know that under these Bills certain compensation will be paid, but I take it that that is not being treated as income. If, then, it has nothing to do with compensation, I am still not clear what payments are referred to. Is it a question of something which would correspond to a dividend which would be paid on a certain day if it were not for the fact that the transfer is to take place before that day? If that is so, why does the problem arise at all? I think that the right hon. Gentleman really must give us some further explanation. I hesitate to press him because it is obviously a very technical and complicated matter, but in dealing with this Clause we are entitled to know exactly what kind of money we have to decide about. I cannot believe that it would be out of Order to refer to the other enactments, but if it is, Major Milner, I hope that you will stretch the rules of Order sufficiently to allow enough allusion to them to enable us to understand what is being done here.
    Mr. Dalton: I will, if I may, endeavour to clarify the position without trespasing upon the Rules of Order on the one hand, and without becoming too complicated on the other. The two enactments concerned, one of which is now in another place and the other of which is moving towards another place, relate to the reorganisation of the transport service and of the electricity service. Provisions with regard to taxation would be out of place in those Measures. Since all these Bills are moving forward together, it is necessary to make any such provisions as may fall to be made in this present Finance Bill. The point is that there is a period prior to the date of transfer of the assets—the vesting date as we call it—at which certain, payments are
    936
    due to be made. I do not think that it would be reasonable for me to be expected to go into great detail as to what those payments are, but there are provisions, for example, to prevent excessive payments of dividends, as we judge it to be, in this final period, and so on. There are certain payments due to be made both under the Transport Bill and the Electricity Bill in this limited period before the vesting date. The purpose of this Clause is to provide that those payments, which are essentially of the character of dividends or interest—though it should be made clear that they are of an exceptional character in so far as they are being made in this exceptional period lying between the enactment of the Measure and the vesting date—shall be regarded as income for the purposes of Income Tax assessment. I hope that I have succeeded in making clear the general meaning of this provision. I do not think it would be proper for me to go into an elaborate disquisition on the terms of the other two Bills. We merely desire to save for Income Tax assessment certain payments made in the period between the enactment of those Measures and the vesting dates. I hope that that explanation may be sufficient to enable the Committee to come to a conclusion.
    Captain Crookshank: We will study what the two right hon. Gentlemen have said and, if necessary, will raise the matter again later on, but I do not quite understand why there should be any doubt about the position.
    Mr. Dalton: There is nothing we desire to conceal. It is all perfectly above board, and if there is any doubt perhaps we could have a further discussion on the Report stage. Should the right hon. and gallant Gentleman care to communicate with me or with my right hon. Friend as to the points upon which he would like further elucidation we should be only too glad to seek to give it.
    Clause, as amended, ordered to stand part of the Bill.

    CLAUSE 10.—(Alteration of certain reliefs.)
    Sir Peter Bennett: I beg to move, in page 8, line 1, to leave out from "pounds," to the end of line 5.

    937
    This Amendment deals with a deserving class of persons who are not numerous or powerful, but whose difficulties come to the notice of many of us from time to time. I am referring to that body of elderly people, mainly widows and spinsters, who have been provided for under trusts in which they hold a life interest. Incomes in these cases are not large, and we feel that these people have been badly hit during the last few years. They have suffered from the cheap money policy, and as has been shown by letters to the Press, and many of them have been very adversely affected by the transfers which have taken place, or which will take place in connection with the nationalisation schemes. With a reduced income they have to face the very heavy increase in the cost of living which we know is likely to occur. They cannot touch their capital, and some cases of acute hardship have come to the notice of Members of Parliament.
    In this Budget they are to be further hit by the Legacy Duties. Of course, if the legacy is from a husband or a parent, this is not serious, but a great many of these persons have been provided for by brothers and other relatives. The kind of case I have in mind is that of the elderly sister who has looked after her father and mother and brought up the family, and is then left a small income at the end of her life. If their income is less than £500 a year when they reach an advanced age, such people benefit by being granted an earned income allowance. To that extent they receive further income. This Amendment, coupled with a later one with which it is allied, seeks to give them a little increased income by fixing the old age relief at one-quarter instead of one-sixth. That is only a small amount, but it will increase the income for a class which is really deserving of consideration. I hope the Chancellor will be able to make this small concession. It will not cost much, but it will relieve much hardship.
    Mr. Dalton: I always listen with great attention to the hon. Member for Edgbaston (Sir P. Bennett) because he always states the case with clarity, moderation and persuasiveness, but in this case he is asking for something which would not be reasonable at this stage in the life of this Parliament. To accept what he is asking for would be to put the fraction for age relief in advance of the fraction for the
    938
    general earned income relief. Hitherto in the history of this age relief, which was first introduced in 1925, it has always moved exactly in accordance with the earned income relief. The earned income relief moved down during the war, and it has moved up again since. It was increased to one-fifth in the period immediately before the war and during the war it was lowered to one-tenth. In each case the age relief followed it. In my last two Budgets, when I have been able to propose improvements in the earned income relief, I have always made a corresponding proposal with regard to age relief to keep the two the same. I think that is the right way to do it.
    Here, again, I must not let hope run into prophecy, but I would like very much, not this year but, if things go well, another year, to do something more about the earned income relief. We are now proposing to go back to one-sixth. We are also proposing that the age relief should go back to one-sixth. It now stands at one-eighth. Before last year it stood at one-tenth. In the age relief we are deeming investment income to be earned income for this purpose within a ceiling of £500 a year. The purpose is clear. It is to assist elderly people who have saved money and are living on their savings to have the same alleviation as if they were still earning. It means that, up to £500 a year, an old person is entitled to treat income from investment as it would be treated for tax purposes if it were income from earning. That is right and proper.
    I do not think we should get these two fractions out of line with one another. Although I am sympathetic to the case, I do not believe we should give elderly persons living on investments such preferential treatment as this Amendment envisages. I hope the hon. Gentleman will not press the Amendment on this occasion. I am entirely sympathetic to the idea of gradually raising the earned income relief. I have given an earnest in doing it twice in my last two Budgets, and I hope we are not at the end of the story. I would like to go further as financial circumstances permit in the future. We cannot, however, broadly speaking, give a preference in the age relief in respect of investments as is sought by the Amendment.
    Mr. Marlowe: If the Chancellor of the Exchequer will permit me to say so, that

    939
    was a really departmental answer. What he is ally saying is that there is an ancient custom that the age relief and the earned income relief should march in step.
    Mr. Dalton: It is more than that.
    Mr. Marlowe: When that system was initiated, there was a sound principle for it. The situation has now changed because the people who are earning are able to earn more in many cases than they did before. The object of this Amendment is to meet the case of the unfortunate person who is not only unable to earn more by reason of age, but has also had his or her income reduced because of the heavier taxation. Various Bills, such as the Transport Bill, are going through the House. Such Bills are having a serious effect on the income of many people who are living on income from investments and are beyond the age of earning, or have no hope of earning. This Amendment would meet just those cases. I hope the Chancellor of the Exchequer will not think he is bound by that old precedent of the age relief and earned income relief marching together, and will realise that the time has come for an alteration.
    Mr. Heathcoat Amory: I support the Amendment. The Chancellor of the Exchequer, in his reply, has not done justice to the needs of this section of the community. If any section of the community is having a very difficult time at present, it is the old people. They are hit hard by the rising level of prices and they cannot do much about it. Other people can perhaps adjust their mode of living to the higher prices, but even if these old people are able to work, there is little place in the labour market for the over 65's. It is rather tragic that people who have made every effort to provide for their old age and to make sure that they do not become a burden to their relatives or the State should find themselves robbed of the results of their thrift. I hope the Chancellor of the Exchequer will reconsider this and see whether he cannot do something to afford a really deserved relief to a hard-pressed section of the community.
    Mr. Baldwin: I rise to support the Amendment. There is no doubt that, in view of the decrease in value of the pound, a great deal of hardship has beep caused to people with a limited income They
    940
    cannot earn extra money and have to live on a fixed income. Such people are being hard hit by the Transport Bill, which is reducing their income. This Amendment would give some assistance to them.
    Amendment negatived.
    Mr. I. J. Pitman: I beg to move, in page 8, line 6, after "words," to insert:
    "'seven hundred and fifty pound were substituted for the words 'five hundred pounds,' the words."
    This Amendment does not go contrary to the point which the Chancellor of the Exchequer made in relation to the last Amendment, because in this the rate of the fraction remains the same. It is just that the ceiling after which the relief shall cease to operate shall he raised from £500 to £750. In this connection I think the Committee would like to understand a little more about the old age relief, and I will try to explain it, because the wording is apt to cause confusion.
    Mr. Wadsworth: On a point of Order, Major Milner. Is not the sentence in which the words "five hundred pounds" appear an explanatory one? Is it in Order to discuss it?
    The Chairman: Yes, I think it is in Order to discuss it.
    Mr. Pitman: The point in question is that the relief which is given is to treat the income of old people as if it was earned income whether it is a pension income or an investment income. The ceiling for that is at present £500. The ceiling for earned income is £1,500. The figures are rather confusing, because we are not comparing like with like. For earned income the relief is one-sixth up to £250, which gives one £1,500 For old age relief it is one-sixth up to £83 6s. 8d., giving a total of £500. The basis for comparison is either £250 with £83 6s. 8d. or £1,500 with £500. Whereas these old people get the same fraction—I would like the Chancellor to bear that in mind—those who get their income from investments get only one-third of the relief, but if their income is from pensions they get the whole £1,500. That is one of the things which is particularly unfair about the present old age relief and about which I ask the Chancellor to make an amende for what I regard as past deficiencies in that respect.

    941
    7.0 p.m.
    The right hon. Gentleman has told me in answer to a question that this would cost £3 million. I think there is some error and that that is more than he would find it to be, because we are only talking about one-sixth of what is probably a low rate of Income Tax—three shillings in the pound. We are only talking about 6d. in the pound. The relief is up to £500. After that, you go on taking that off your income. You begin to pay at first 3s., and then 6s., and finally 9s. in the pound. If I am wrong about that, I still think it would be a relief to people who have saved their money and put it away as a pension for their retirement. These people should be treated on the same footing as those who have come into some compulsory or voluntary contributory scheme and who get the money in regular pension form. There is this added anomaly which I would like the Committee to realise. If the money is taken in pension, the limit is £1,500. If it is taken as income from accumulated, personal investments, then it is only £500. We are asking, not that the Chancellor should go up to the whole £1,500, but only up to £750, which is half way to the £1,500.
    Hon. Members may say that it is all very well to benefit people who have put their money away in their working life for their retirement, but that the Amendment would also benefit people who had inherited wealth of some kind, people between the £500 and £750 limits, and who could probably take care of themselves. On that point I would say this: do not let us assume that all money that is handed down is unearned. Take the case of a daughter who has looked after her father and mother for years, probably at a very great sacrifice to herself. She reaches old age with a legacy which her father and mother have left to her on their death. If anybody in the world has earned that money, it is that woman. There will be innumerable cases in this class in which the money has been earned and well earned, and is as much deserved as in the case of men who have put aside year by year sums of money which they have invested to serve as pension.
    Finally, there is the double point which my hon. Friend the Member for Edgbaston (Sir P. Bennett) has made. First of all, the investments on which many of
    942
    these people have relied for their future livelihood have had their income value reduced by nationalisation schemes and by the cheap money policy, which has hit that type of person particularly badly. Secondly, there is the undoubted fact that although this relief of £500 was worth something when it started—I think the Chancellor said the date was 1924—it is certainly not worth that amount now. For all those reasons, I ask the Chancellor to consider giving way on this point of benefiting a very worthy class of the British community.
    Mr. Dalton: This, again, is not a proposal which one would wish in principle to repel. When particular improvements can be made is largely a question of priorities. This year it is not appropriate to make this concession. We have worked out the cost of it very carefully. I have had it carefully checked. It would cost £3 million in a full year and it would benefit a group of 70,000 people—rather a small number. I was surprised, when the figure was given to me, that the numbers were so small. That is on the average. This is a small group of people over a certain age between £500 and £750. It is a clearly but narrowly defined group between those income limits.
    I do not think, now that I am being asked to give money away in various directions—I have already made two concessions this afternoon, and no doubt other demands will be coming—that this matter can stand very high. As I suggested on the last Amendment, it is not as though nothing was being done for these people. On the contrary; both last year and this year we have assisted them by the improvement in the earned income relief. They are not left without any assistance. The earned income relief was at first only one-tenth. We brought it up to one-eighth last year, and I am now bringing it up to one-sixth, without raising the ceiling of £500, it is true, for the age relief. Subject to that, we are certainly lifting it. In those circumstances it would be well to postpone this proposition until next year. When next year comes, we do not know what the conditions may be. I repeat that I do not refuse this as a matter of principle. I merely think that the particular moment is not expedient for making a further alleviation of £3 million a year to this group, in view of the many other claims

    943
    that we have upon us at the present moment. I hope the hon. Gentleman will not press his Amendment and will let us think about it at a later date.
    Mr. Assheton: I was very glad to hear the Chancellor of the Exchequer say that he did not in any way suggest that this Amendment should not be accepted as a matter of principle, and that it is something which he is prepared to look at upon another occasion. It would clearly meet a need which is felt. My hon. Friends have already pointed out to the Committee the hardships from which the smaller income groups are now suffering. They include people who derive their income from investments. They are suffering from a pincer movement of cheaper money and nationalisation on the one hand, which reduces their income, and of higher taxation and higher prices, which make their burden much more severe, on the other The Amendment puts forward a suggestion to reduce the taxation. The Chancellor has told us that he has already done something to relieve the burden on this section of the community. There are 70,000 people in it. The Chancellor of the Exchequer said that that is not a great number, but I suggest that they are 70,000 of the worthiest citizens of the country. They are people who have, by saving in past years, managed to build up a small capital on which they are able to live in their later years, without in any way becoming a burden on the community. I am, therefore, glad to support the Amendment which my hon. Friend moved, and I am glad to hear that the Chancellor is not unfavourably disposed towards it in principle.
    Sir P. Bennett: The Chancellor has twice suggested that he has made concessions, with the inference that the particular classes to which we have been referring are better off. I think that all these concessions mean is that they are less worse off than they would have been. What has happened to them? We all know about the Measures that have gone through, the change in values, and the increased cost of living. They are worse off year by year, in spite of the Chancellor's concessions, and I would not like it to go forth that the Chancellor, by these concessions, is doing something to make their lives easy, when all he has
    944
    done has been to make their lives a little less hard. Their lives become harder as each year goes by, in the net result, and it is the net result that counts.
    Amendment negatived.
    7.15 p.m.
    Mr. Osborne: I beg to move, in page 8, line 6, to leave out "one-sixth," and to insert "one-half."
    The Chancellor has just refused an appeal for £3 million. I am not asking for chickenfeed from him, but for a concession that will cost hundreds of millions of pounds. The Chancellor has claimed more than once, while I have been listening to him, that he is doing a bit each year—from one-tenth to one-eighth, and then to one-sixth. My complaint is that he does too little and does it too late. I suggest to the Committee that the earned income allowance should be increased to one-half, and the maximum relief should be increased from £250 to £500.
    The problem before this country at the present time is one of getting more production. Almost every weekend, senior Members of the Government are making appeals to the working men of the country to increase production. They have large posters on the walls saying "We work or want." The Leader of the House said the other day that we must either export or die, and he made an appeal, saying that in the next six weeks output was vital. I feel that taxation is the greatest hindrance to production which there is in this country, and I ask the Chancellor to consider doing something bold and to take away this hindrance. The Chancellor is like Old Mother Hubbard, who was so careful to keep her accounts squared that her cupboard was bare. I would rather see the Chancellor's account unsquared and his cupboard full, and the only way to do that, in my opinion, is to give a greater incentive to the men who really do the work.
    I can illustrate the effect of the Amendment by the case of a single man who, at the present time, is earning £300 a year. Under the Chancellor's proposals, he will be paying £36 15s. in tax. The one thing which the Chancellor and the Leader of the House want more and more is extra production. Supposing that man works harder, as we want him to do, and that he earns £500 a year. Under the Chancellor's proposals, he must pay

    945
    £111 18s., so that, out of an extra earning of £200 a year, he has to pay £75 in extra tax. There are plenty of representatives of the trade unions on the Benches opposite. I challenge them to deny the fact that the average trade unionist will not put in extra work to earn an extra £200 a y ear if he has to pay £75 of it away in taxation. I wait for that to be denied. I say to the Chancellor that his old-fashioned, Victorian desire to balance his Budget is reacting upon production, and I would much rather see the whole of our accounts for two years unbalanced and production increased rather than go on in this miserable, half-starved way as we are doing at the present time.
    Our present position is no advertisement for Socialism. I have just come back from America. Over there, taxation does not start at the same level as in this country; it is smaller in extent, and there is an incentive for men who will work. I put it to the Chancellor that he himself is the greatest hindrance to the achievement of the policy for which his colleagues are appealing. If he were to accept the Amendment, the man who is today earning £300 a year would pay little or no tax. If he worked harder and earned £500 a year, he would then pay £36 15s.; that is, he would pay £30 15s. more in tax out of his extra earnings of £200 a year. We are much more likely to get the output we need under that system than we are under the Chancellor's old-fashioned, Gladstonian taxation ideas. Somehow the economic pump has got to be primed. Men will not work because taxation takes so much of their earnings—
    Mr. George Thomas: They are working. Does the hon. Member suggest that the working people are not pulling their weight at the present time?
    Mr. Osborne: I do not suggest it; I know it. [HON. MEMBERS: "Oh."] If the hon. Member likes to go to the Minister of Labour and ask him whether the 35-hour working week asked for by the Railway Clerks' Union is a fair one or not, I will stand by the reply of the Minister. Socialist Members on the other side honestly believe that men would work harder for the State than for private enterprise. That is the very basis of Socialist philosophy, but experience has shown that they will not do so, and that we have to give them extra monetary rewards. We
    946
    have to put the profit motive back into the working man's mind. We ought not to tax overtime, but encourage men to work overtime. Therefore, I plead very hard with the Chancellor to consider this case. I know he will not give way, but I do not think that even he would deny that the suggestions made about this Amendment are sound. May I make this last point? With this reduction in taxation, the right hon. Gentleman should appeal to his colleague the.President of the Board of Trade to stop the export drive in consumer goods at the present time, and leave the goods in the shops for men and women to buy. Unless we do so, we shall not get the production we need. At the present time, under the Chancellor's scheme of taxation, all that the working men and women are doing—and I invite hon. Members to deny this—is buying the only thing they can buy, and that is time off—half-a-day for this, and a day for that. The absenteeism figures—
    Mr. G. Thomas: Look at the miners.
    Mr. Osborne: We will look at them.
    The Chairman: I hope the hon. Member will keep to the Amendment.
    Mr. Osborne: I would like to repeat to the Chancellor that if he would reconsider his decision and increase the earned income allowance from one-sixth to one-half, and increase the maximum from £250 to £500, he would get an immense increase in output, which in my opinion would compensate for the adjustment in two years
    Mr. Dalton: This is a completely wild and fantastic proposal. I cannot believe that any serious person on the Front Opposition Bench would give it support, nor even the most Bolshevik-minded members in any section. It would cost £350 million, and would, therefore, completely unbalance this year's Budget. The hon. Member for Louth (Mr. Osborne) said that he wanted the Budget unbalanced, but that was not the general judgment of the House. The criticism to which I was subjected when I budgeted for a prospective surplus of £270 million was that I ought to have made it a much higher figure, because some hon. and right hon. Gentlemen opposite said that a lot of this surplus was not genuine. I do not accept that, but I do not intend to go

    947
    over the arguments now. This proposal would be the most inflationary folly that could be conceived—putting into circulation £350 million. I know the hon. Member has a very dim thought about how to get production, but the proposal is totally irresponsible finance, and is not the kind of thing to which the Government could give consideration for a moment. Never in the history of our national finance, from Gladstone—since he has been mentioned—down to myself, have we ever had an earned income relief of more than one-fifth. In the palmy prewar days it was one-fifth, with a ceiling of £300. I hope, despite the present position, to do rather better than that before we are through Today we have an earned income allowance of one-sixth, with a ceiling of £250. To suggest an allowance of one-half is completely mad and completely out of scale in the eyes of any prudent or reasonable person, and is based on the idea that nobody is producing very much now, which has already been repelled from this side of the Committee. Years later, when we have got over our difficulties, something of this sort might be looked at—
    Mr. Osborne: The Chancellor says that my proposal is fantastic and that it is mad; yet his own Party, at their Conference, have advocated that the Budget should be unbalanced—
    Mr. Dalton: No.
    Mr. Osborne: —when necessary. Therefore, if I am mad I am in jolly bad company for once.
    Mr. Dalton: I am sure the hon. Gentleman is in bad company, but he really must not misrepresent, I am sure quite innocently, what all thoughtful students on these Benches and in the Labour Party outside say, that we should aim at balancing the Budget, over a period of years. All sorts of other people who are not particularly political—economists, students of finance—accept that we should aim at balancing the Budget over a term of years, having a deficit in some years and a surplus in others, according to whether financial conditions justify one or the other; that we should budget for a deficit if there is a tendency towards deflation, and for a surplus if there is a tendency towards inflation. At the present time there is a tendency towards inflation.
    948
    The point is often made from the benches opposite. That means that this is a good year for a good surplus, as I said in my Budget speech. There is an inflationary tendency at present, but we may well face a time when there will be a deflationary phase. Then we shall be looking about for all sorts of excellent reasons for putting more purchasing power into circulation. In such a time, although a jump from one-sixth to one-half would be too quick in relation to other sorts of tax adjustments, it would be a time when it would be quite proper to put more money into circulation by making reliefs in Income Tax, etc. This is not the time. I have gone some distance towards assisting Income Tax payers—particularly those who are hard pressed—in the way of earned income relief, child allowances, and dependent relatives' allowances. These are three points on which I thought that something could and should be done urgently. I have had to balance this with other tax adjustments which have been designed to hold the inflationary pressure in check by obtaining revenue from other sources. I say that this proposal is not only widely out of scale, but is quite lunatic in scope and erroneous in direction. I hope the hon. Member will wait until a better day.
    Mr. Osborne: May I make this point again to the Chancellor? If he says that it is wise, over a period of years, to balance the Budget, to have a deficit in some years and a surplus in others, why, because it happens to be this year, is it proposed that we should have a surplus?
    The Chairman: That really does not arise directly out of the Amendment.
    Mr. Osborne: There is one other point I should like to make. The Chancellor, in reply to my suggestion, has made certain arguments which I think I am entitled to refute. He said that this proposal would release extra money for spending, and would be inflationary. The fallacy behind the Chancellor's argument is that he cannot conceive that we can get out of an inflationary spiral by increasing the goods and services available. All he thinks about is the monetary question. There is the other side, and I appeal to him to get rid of his old fashioned ideas and to look more at the production aspect.
    Mr. Spence: I ask the Chancellor what the Government intend to do, other than move along the lines indicated in this Amendment, to get out of the vicious circle in which we are at the moment. The problem is one of getting the economy of the country balanced. The first step required is to get consumer goods into the shops to stimulate production We cannot get that additional production without some stimulus. I suggest that in a reduction in P.A.Y.E. and an increase in the earned income allowance lies the first step to the required upward stride in the output per man and woman. We are faced with the great manpower crisis in industry. We want more men and women in industry. This Amendment would have the effect of encouraging married women to go back to work, whereas the Clause as it stands works in a contrary way. Take the case of a man earning £6 a week, whose wife thinks she will go back to work, and who earns £4. She finds that 30s. of the £4 goes in tax.
    Mr. Dalton: The hon. Member will remember that in the Finance Act last year we provided, apart from all the other reliefs, a relief of £110 for married women engaged in industry? That was a relief over and above all the reliefs to which she was entitled by reason of her being a married woman, and having a joint assessment with her husband, earned income relief, etc.
    Mr. Spence: Although that relief is £110, it does not relieve the whole weight. If this suggestion were accepted, it would help to get back into industry many people who will not return under present conditions. The Amendment would mean a cut in revenue, but it would also mean a cutting of the knot which is strangling production.
    7.30 p.m.
    Mr. Gerald Williams: I wish to express my amazement at the Chancellor's extravagant language about the lunacy of this Amendment. That must be some reflection on the Chair. This Amendment was put down in the ordinary way and it was selected by the Chair. I was also surprised that the Chancellor seemed to think that it is bad business to lose £350 million this year with a chance of making £500 million next
    950
    year. He did not tell us whether he would make £500 million, but there is a very good chance. However, I would be satisfied if he met us half way and gave us a quarter instead of a half. Private enterprise will not work without an incentive and unless the Chancellor gives us the incentive, he will not get the production.
    Mr. Assheton: Most hon. Members, and certainly all those on this side, are bound to have some sympathy with this Amendment. The Chancellor condemned it in very harsh terms. He used the phrase, "totally irresponsible, lunatic finance," which I shall find very convenient when we come to Clause 49. I think the Chancellor was unduly harsh. My hon. Friend the Member for Louth (Mr. Osborne) was expressing the yearning of all workers to pay less tax on what they earn. That is a very reasonable sentiment. We have all felt this extraordinarily oppressive taxation during the war years, and we hoped that when the war was over we would get much more substantial reliefs from taxation than we have been allowed so far. The Chancellor told us that this proposal would cost £350 million. In view of that, I must confess, that I do not feel myself in a position to support the Amendment in the Division Lobby. Nor would this be exactly the way in which I would distribute £350 million amongst the various classes of taxpayers, if there was £350 million to distribute. I hope the Committee will appreciate the very deep feeling of the people in the country about the high rate of taxation. I am sure that the Chancellor understands it. He was certainly going rather too far in trouncing the hon. Member for Louth in such harsh terms. I hope that next time the Chancellor makes reference to an Amendment proposed from this side, he will use rather more moderate language.
    Amendment negatived.
    Mr. Wadsworth: I beg to move, in page 8, line 20, to leave out "sixty," and to insert "seventy-five."
    I hope that the Chancellor will deal more favourably with this Amendment, which will not cost the large amount of money mentioned on the last Amendment. I am appealing on behalf of a section of the community which we should encourage. No doubt the Chancellor has

    951
    carefully watched the advance of the birth rate figures during the last two years. We should give encouragement in the form of taxation relief to young parents. I do not think it will be doubted that the cost of bringing up children makes life a little difficult for young parents Hon. Members who have children will know the price of shoes, clothes and the other things which are necessary for their welfare. Before the war, the relief for the first child was £60. Under this Bill a similar relief is proposed. I suggest that that is not sufficient in view of the cost of living. I do not know what amount of money is involved, but I am certain that we cannot do too much, on the one hand, to encourage the birth rate to increase and, on the other, to alleviate the problems and difficulties of young parents
    Mr. Glenvil Hall: I am sorry, but I must ask the Committee to resist this Amendment. The £60 to which my right hon. Friend has now increased this allowance is the highest figure which has ever been granted. It makes the allowance equivalent to what it was before the war. That does not mean that in happier times some Chancellor of the Exchequer might not think it well worth while to increase the figure above £60 I only say that what my right hon Friend is doing in more difficult times than 1938–39 is to make the allowance equivalent to that which was given in the last prewar year. Also, we must remember that since that time family allowances have been instituted. It is our view that the increase of £10 this year, plus the fact that family allowances are now being paid, is not unreasonable.
    Mr. Wadsworth: I hope it is realised that the family allowance is taken into consideration when taxing a man's income. Many people believe that the whole of the family allowance is tax free. That allowance is taxed.
    Mr. Glenvil Hall: That is true It is also true that, although family allowances are subject to tax, in most working class households where there are a large number of children the man has to earn a fairly considerable sum before he begins to pay Income Tax at all. Therefore, in most working class households—and it is the working class household which I am sure my hon. Friend desires to help by this Amendment—the man gets the
    952
    benefit of the family allowances and he does not, as some others do, pay tax upon them. The hon. Member asked what the cost would be. In a full year the cost would he approximately £15 million. That may not seem large, but it is a fairly considerable sum which my right hon. Friend at this juncture cannot afford to lose.
    Amendment negatived.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Howard: I had an Amendment down to this Clause which presumably was not selected, and I therefore want to say a few words on the question of the earned income relief in support of the case for extending the range of the relief rather than for increasing the rate. An Amendment was discussed on the Budget Resolutions in exactly similar terms to the one which has not been selected, and I think it met with a great deal of support from all quarters of the House. It is particularly because of the manner in which the Chancellor dealt with that Amendment that I wish to remind the Financial Secretary of what was said on that occasion. The Chancellor said:
    "There may be a few million pounds to give away by the time we reach the Committee stage of the Finance Bill, and, if I feel it reasonable, I may be able to bring forward a suggestion."—[OFFICIAL REPORT, 23rd April, 1947; Vol. 436, c. 1094.]
    That was a definite indication that if the Chancellor felt it reasonable, presumably dealing with the earned income allowance, he would bring forward a suggestion. I am therefore rather disappointed that the Chancellor has not so far brought forward any an suggestion for improving the provisions he has made in the Finance Bill by giving up a very small proportion of taxation.
    The argument in favour of extending the range of the earned income allowance rather than the rate is in two parts. The first one, which will of course appeal to the Chancellor in his capacity of collector of revenue, is that it is much less expensive. He himself said on a previous occasion that this small increase in the range would cost but £4 million, while the slight variation in the rate which he himself indicated he thought was preferable would cost £40 million. I was rather surprised when I heard the Chancellor of the Exchequer saying that he thought that a

    953
    relief of taxation which would cost £40 million was preferable to one which would only cost £4 million, but he did say so, and the only point of difference on principle between us was whether it was better to deal with the rate or the range. I want to argue that there is a very strong case for extending the range, particularly in view of the fact that the Chancellor did not find it possible to make any alteration in the standard rate of tax this year.
    7.45 p.m.
    I do not think that either he or the Financial Secretary would disagree with the view that probably there could have been no finer incentive in the whole of the Budget than a reduction in the standard rate of tax. It would have had a psychological effect over the whole country which would have been far in excess of that of any one, two or three individually selected reliefs. He stated, however, that he found it impossible to afford the revenue which would have been required to make any substantial reduction in the standard rate of tax, and he also reminded the House at that time that there was a moral obligation on any Chancellor to increase the earned income allowance at the earliest possible moment, having regard to the circumstances in which the alterations were made by one of his predecessors. Everyone would agree that, having regard to what was said when the adverse alterations in this particular relief were brought into effect, there is no doubt that returning this relief must be a prior charge on any revenue which the Chancellor can forego.
    The fact that he was not able to make any reduction in the rate does, I submit, make it even more important that he should make some gesture as to the desirability of extending the range over which taxation reliefs are given rather than the rates for particular classes. The particular range which I have in mind, the upper range of the carried income relief class, is a particularly important one for two reasons. The persons affected are persons who can probably bring forth a greater hardship claim than almost any other section of the community, and from the far more important point of view of the good of the community as a whole, they probably embrace a larger number of individuals who can indirectly affect the productive capacity of this country than any other range of taxation. Within
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    the higher earned income relief groups are included the key men of our production drive. Their actual production with their own hands at a particular machine may not be directly noticeable, because in some cases they will not be working on machines, but their indirect effect through the leadership which they can give if they are encouraged will, in relation to the economic stability of this country, be second only to the lead which the Government can give. They are, I believe the most important group to whom we have to look today.
    On a previous occasion I mentioned particular groups which covered not merely the managerial class in industry, but professors in universities; and just as the managerial class in productive industry are the people to whom we must look for immediate results, the professors, whether engaged in training the young or in research work, are the people to whom we must look for results in the years to come. This group would also embrace the higher range of civil servants, probably the most overworked class in this country today, and those particular ranges outside industry, in the educational field and in the civil service field, have probably felt the increased cost of living and of taxation more than any other group, because their remuneration has not been improved, as the cost of living has increased, to anything like the same extent. I do not think the Financial Secretary would disagree with that. They have increased costs to bear, but they have had nothing like the increases in income which have been received—and rightly received—by many other classes of the community. In fact, as a result of taxation, they have had definitely less. However, they have not only as great personal responsibility hut, from the point of view of the future of the country, they have possibly the greatest responsibility of anyone in the country outside the Government. I hope, in view of what the Chancellor said in dealing with this matter, both in the Bill and on the Budget Resolutions, that the Financial Secretary will be able to give some suggestion that at a later stage he will be able to introduce some relief.
    This plea is not brought forward at the request of any pressure groups. It is brought forward because I honestly believe relief in this direction can have

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    a finer effect in helping to get us through our economic crisis than relief in any other direction. In so far as my constituents are concerned, there is only one individual I know of who would be directly affected by this. I have not asked his advice about it, but I cannot believe that he would be prepared to come down to this Committee and say that it would make his work of less value to the country if he received rather better earned income relief. The only member of my constituency whom I happen to know personally who comes within this range is the Financial Secretary to the Treasury, and I think he would feel great diffidence in supporting my point of view because he might feel that he had to declare a personal interest in it. However, with his responsibility for looking after the whole of the Civil Service, of deputising on many occasions for the Chancellor, can he really say that he would not work 25 hours a day instead of 24, as he does now, if he had this extra little incentive added?
    Mr. Glenvil Hall: The Committee has listened with great interest to the speech of the hon. Member for St. George's Division of Westminster (Mr. Howard). It is a theme which I know is very dear to his heart. On several occasions he has discussed the point which he has just put before us with such lucidity, and I am afraid he has given me a difficult task in replying, because it is a question of opinion as to whether one should widen the range or raise the percentage. Those in the lower ranges of income, of course, would much prefer to have the percentage as high as possible because it means greater relief for them. Those whose salaries run into the £1,500 to £2,000 ranges would, of course, prefer that the maximum allowance should be higher than it is sometimes, because it means that they do not get the full benefit of the higher percentage as some of them would like to do.
    The highest that the percentage has ever been is one-fifth, I think, in 1931 when tax stood at 5s. in the £ and the maximum of the earned income relief was £300. My right hon. Friend is getting very near to what has been an "all-time high" to use an Americanism; that is; he is fixing it this year at £250 and the percentage at one-sixth. So as far as this year is concerned, he has gone some way to meeting
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    the point of view put forward by the hon. Gentleman. When this relief began in 1920, it was one-tenth with a maximum of £200, and we have moved a long way from that—
    Mr. Howard: The standard rate was not quite so high.
    Mr. Glenvil Hall: The standard rate was not anything like as high, and one-tenth at that time with a maximum of £200 would mean relief on salaries up to £2,000. I admit straight away that the standard rate makes a difference, and when one bandies about these percentages and figures, one has to remember what the standard rate was in any year. All I will lo now is to content myself with reminding the Committee that my right hon. Friend has gone some way towards meeting the point of view put up by the hon. Gentleman and I, with him, live in hope that, as thy financial situation improves and other Budgets come along, my right hon. Friend may find himself able to do even better than he has done this year.
    Clause ordered to stand part of the Bill.

    CLAUSE 11.—(Repayment of post-war credits.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Commander Noble: I rise only to ask for information on a point which arises in regard to the payment of postwar credits, that is the case of a person who reaches the age of entitlement but dies before drawing his credit. At present the beneficiaries under his will cannot receive these credits until they themselves reach the age of entitlement, although the person who has died has himself reached that age. I feel that the deceased may have budgeted in his will for these credits to further the education of his family, or perhaps to support his widow, and that these people may have anticipated these sums coming to them and that, therefore, it would be fair for them to receive the money without having to wait until they themselves reach the age of entitlement.
    I fully realise that the concession to pay old people this money first was an attempt to try to ensure that the most needy were served first, but I feel that because the deceased had reached that age and was entitled to the money, he

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    should be able to leave it to his dependants. I hope very much, therefore, that the Financial Secretary will be able to give us some assurance that this matter is still being considered. I hope also that he may be able to tell us how many people fall into the category to which I have just referred, how much it would cost to pay out these groups, and also how many in this category to which I have just referred would be widows and how much it would cost to pay them.
    Mr. Callaghan: I rise to support what the hon. and gallant Member for Chelsea (Commander Noble) has said. I imagine that when the original decision was taken to make this concession available to old age pensioners, it was not only because, as the hon. and gallant Gentleman said, they are the most deserving section of the community, but also for administrative reasons. They are a section who can be fairly easily segregated, to whom can be applied fairly simple tests, and therefore the Inland Revenue machine can manage to deal with them. However, they are not wholly the most needy section of the community. The benefits fall not only upon the just but upon the unjust, not only upon the poor but upon the rich, not only upon Labour supporters but upon supporters of the party opposite. I hope that when the Leader of the Opposition drew his postwar credit, and draws it again this year, being over the age of 65, he did a patriotic thing and invested it in a National Savings certificate.
    As I say, the benefits fall both upon the just and upon the unjust, but in supporting the hon. and gallant Member for Chelsea I want to make this point, that a group of people who can be just as easily identified, and whose need is frequently much greater, is that of the dependants of a deceased taxpayer of any age Take, for example, the young married man who has been married for four, five or 10 years and, in the early part of his life, has children. He dies and leaves a widow and a young family. They need the postwar credit much more than do some of the categories I have just been enumerating, who have used their postwar credits to invest in National Savings certificates.
    It is that class of person for whom I would ask further consideration. They can be easily identified. A death certificate is the simplest thing to produce, and
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    costs very little. The administrative machine could deal with them very simply. I do not think it will be possible to deal with them in advance of, or even at the same time as, the old age pensioners, who will be dealt with this year, because the machinery is already under way. But we have now finished with the old age pensioners in this legislation, and if my right hon. Friend the Chancellor has to look round for further callers, I would put them high on the list. I hope that he will give some concession to that type of case.
    8.0 p.m.
    Mr. Birch: Although I do not wish to pursue the point raised by the hon. Member for South Cardiff (Mr. Callaghan), I would point out that his identification of the Opposition with the unjust shows that he is a very small satellite in the Shinwell-Shawcross axis. I wish to raise the point, which I raised last year and which is more topical now, of sex equality. Under this Clause, a woman gets a postwar credit at the age of 60, whereas a man only gets it at the ago. of 65. In my opinion, that is indefensible. The postwar credit is a debt which is owed by the State, and the only reason why it is paid out to old people first is because otherwise, they might die without getting the benefit. It is particularly ridiculous to discriminate in favour of women, because, as is well known, the expectation of life of a man is shorter than that of a woman. I raise this point in order to give the Financial Secretary the chance to do better than he did last year when his defence was that women do not work at the coal face. Of course they do not, but what of it? As far as I can see, it has no reference to this particular problem.
    The matter is topical. I gather from the Press that tomorrow the right hon. Gentleman the Chancellor of the Exchequer is to make a statement on the subject of equal pay. We do not know what he will say, and it would be out of Order to discuss it now, but I think it is a 500 to one chance that he will say, "In principle, we agree to equal pay, but there are certain administrative difficulties." There is no logical reason for discrimination between the sexes in this particular case and there are no administrative difficulties. I hope that the right hon. Gentleman the Financial

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    Secretary, if only from the point of view of a dialectical exercise, will get up and explain his point of view rather better than he did last year.
    Mr. West: I wish to support the appeals which have been made for the reconsideration of this matter. Although my hon. Friend the Member for South Cardiff (Mr. Callaghan) said that the benefits of this Clause fall on the just and the unjust, the disadvantages of its application, in fact, fall on the just. The reason why that is so is because the conditions precedent to the payment of a postwar credit are not only that the beneficiary shall have attained the age of 65, but also that an application in writing shall have been sent in. Therefore, if having attained the age of 65, but not having sent in a written application because he believes the post-war credit is, indeed, an investment in national security he subsequently dies, then payment is not made to his estate. I suggest that that is unfair, and that, generally speaking, the type of person who does not send in his written application in due time is either the infirm or the illiterate, or the person who believes that the postwar credit is the reserve upon which call can be made for payment of his funeral expenses.
    Those of us who live in mining valleys know how very careful and keen the older people are to make provision for their funeral expenses. There are many who believe that the postwar credit, if untouched, will be available for the payment of them, whereas, indeed, it is found that because written application has not been made it is not available for that purpose. I know of a case in my own constituency where that belief existed in the mind of an old age pensioner. He believed that he had an investment in national security. When he died, his widow thought the same thing. She was able to find the money for the funeral expenses from other sources. She, who would herself have been entitled to receive payment of the postwar credit had she sent in her written application, also died without having done so, and her daughter who had borne the burden of maintaining her parents was unable to cash the postwar credit with which to pay the funeral expenses of her mother. I suggest that this technicality, depriving the old people of their right of payment of postwar credits, merely because they fail to send in a written
    960
    application after having attained the age of 65, is iniquitous and unjust. I hope that the Financial Secretary will give an assurance that this matter will be reconsidered so that the injustice may be removed.
    Lieut.-Commander Braithwaite: I think that the Debate which has taken place so far shows that there is considerable unanimity in the Committee in the desire to tidy up the matter of postwar credits a good deal more. The Amendments which, Mr. Beaumont, you have not been able to call and which stood in the names of my hon. Friend the Member for Leominster (Mr. Baldwin) and my hon. and gallant Friend the Member for Chelsea (Commander Noble) had as their object to focus attention on what is, perhaps, the most urgent of these problems, the position of the beneficiary. I find myself in accord with the hon. Member for South Cardiff (Mr. Callaghan)—which is unusual for me—in the observations which he made just now. I think he is perfectly correct when he says that the death of the head of the family often creates need among the surviving children. It seems to me that there is every case for the postwar credit being paid to those to whom it has been willed, provided, of course, that the deceased person was just reaching the age of entitlement.
    Mr. Callaghan: I was suggesting that it should be paid whatever the age of the deceased person. I do not want it to be paid only in the case of a man who has reached the age of 65, because a man of that age is not likely to have a young family. My point was that the number of such men who would die at an early age would be so small that it would not cost very much, and that they would be easily identifiable.
    Lieut.-Commander Braithwaite: I was not referring so much to the age as to the need. The Amendments in the name of my hon. Friends which were not called had as their object to bring out that point. One of them proposed to make it possible that, where a person died before reaching the age of entitlement, the beneficiary under the will should be able to claim the postwar credit.
    The Deputy-Chairman (Mr. Hubert Beaumont): The hon. and gallant Gentleman cannot refer to an Amendment which has not been selected.
    Lieut.-Commander Braithwaite: Am I not entitled, Mr. Beaumont, on the Motion, "That the Clause stand part of the Bill," to say that I think that suggestion would be a good one?
    The Deputy-Chairman: The hon. and gallant Gentleman is referring to an Amendment which has not been called and which has nothing whatever to do with the Clause.
    Lieut.-Commander Braithwaite: If I may, I would like to put the general case to the Minister in the hope that he will bear those points in mind.
    The Deputy-Chairman: The hon. and gallant Gentleman has gone a little too far. He may refer only to what is actually in the Clause.
    Lieut.-Commander Braithwaite: Am I not entitled on the Committee stage, Mr. Beaumont, to discuss what we hoped might have been in the Clause?
    The Deputy-Chairman: The hon. Member must confine his remarks to what is contained in the Clause, when speaking on the Question, That the Clause stand part of the Bill."
    Lieut.-Commander Braithwaite: I shall have to retrace my steps. I hope that the whole question of postwar credits will be considered during next year, because I am sure that the points which have been made by hon. Members indicate that there are anomalies. I would like to make one further point which has not been referred to in any Amendment. When a person dies and leaves the whole of his money to his wife, who mw be a good deal younger than himself, it greatly assists in the administration of the estate if the matter can be cleared up and the money distributed. I stressed that point a year ago when there was a Debate on this matter, and the response from the Government was not then unsympathetic. I hope the Chancellor will bear in mind the various points that have been put to him on this question.
    Mr. Alpass: I can understand that the Chancellor may have some objection to paying out postwar credits as hon. Members have suggested, because many of the recipients may have very good means. Their estates may be large, and the amount of the postwar credits they receive may be small compared with their
    962
    income in other directions. Perhaps the Chancellor would consider the suggestion that postwar credits should be paid out immediately when the value of the deceased's estate does not exceed £2,000, which is the figure up to which it has been decided estates shall be free from duty. The reason is that the people who would benefit would be in great need, and very often the deceased persons would have provided in their wills that the postwar credits should be used to compensate the beneficiaries for having looked after them in their illness. I think there is very strong ground for paying out postwar credits when the value of the estate does not exceed £2,000.
    Mr. Baldwin: Although we are not allowed to discuss the Amendment standing in my name, I trust the Financial Secretary has looked at it and will pay due regard to it. This matter was raised on 18th March, and the reply of the Chancellor of the Exchequer was:
    "This matter is governed by Section 26 of the Finance Act, 1946, and not by Regulation."
    In reply to a supplementary question, the right hon. Gentleman said:
    "An opportunity will soon come for debating the merits of the matter, but … this is not a matter which can be handled by regulations."—[OFFICIAL REPORT, 18th March, 1947; Vol. 435, c. 191.]
    This is the first time that I have ever agreed with the hon. Member for Thorn-bury (Mr. Alpass). The point which he made is one which I had intended to raise, and it can easily be met by the Chancellor of the Exchequer. It is the lower range of wealth which is most affected by inability to draw postwar credits. I commend to the Chancellor the suggestion that postwar credits should be paid out in cases where the estates do not exceed £2,000, whether they involve people of 65 years of age or 20 years of age. I have come across cases of great hardship. A daughter has attended to her father and has sacrificed her life for that purpose; the father has died, the daughter has been left to pay the funeral expenses, and because the father died six months before attaining the age of 65, it has not been possible to draw the postwar credits. It is very unfair. The State has no moral right to retain that money until the woman attains the age of 60. If the Chancellor cannot go as far as that, I suggest that in

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    all cases where a person is entitled to a postwar credit and dies before the age of entitlement, if the postwar credit is not paid it should accumulate interest at the rate of three per cent. until it is paid. I hope the Chancellor will indicate that he has listened to these views with sympathy.
    8.15 p.m.
    Mr. George Wallace: I wish to add my voice in support of those hon. Members who have spoken on this general principle. While supporting wholeheartedly the suggestion that postwar credits should be paid to old people, I think the time has arrived when we must give careful consideration to the question of payment in cases of extreme hardship. I do not think anybody would disagree that widows should receive their postwar credits. I have a case at the moment, about which I wrote to my right hon. Friend, concerning a widow who is in receipt of public assistance. She had to borrow money to pay the funeral expenses. I took it up with my right hon. Friend who, as usual, gave an extremely sympathetic reply. I have been informed that £7 11s. is due for Income Tax, and that it will come out of the postwar credit. I hope that will not be done. So far as widows are concerned, it should be easy to indicate where the line should be drawn. There is no difficulty in defining hardship in the case of a worker.
    I would like to mention another case, that of a bed-ridden worker who has had to give up his work because of extreme bad health. He is dependent on his wife. The wife is working hard, and she told me that her husband's only solace in life is tobacco. She is paying the increased price for tobacco and she is willing to do it, but she cannot understand why, while making that sacrifice for the sake of the nation, she cannot get the postwar credits due to her husband. We must give careful and sympathetic attention to this matter. I know that administrative difficulties will arise, but these obstacles must be overcome. I appreciate the point made by my hon. Friend the Member for South Cardiff (Mr. Callaghan) that people regard postwar credits as cashable. It is only natural that when, owing to extreme hardship and financial difficulty, they try to find some-
    964
    thing on which to raise some cash, they genuinely regard these certificates as being in the nature of postal orders which they can cash at the post office. Somehow or other we must find ways and means of assisting these people whose cases have been quoted in all parts of the Committee. I do not think anyone has spoken against the proposal so far, and I hope my right hon. Friend will take due note of it.
    Air-Commodore Harvey: I support the plea of my hon. and gallant Friend the Member for Chelsea (Commander Noble). One can understand the difficulties of the Government in agreeing to pay out postwar credits in bulk. Obviously, they will have to be paid out over a considerable period. But my hon. and gallant Friend's main point concerned those people who attain the age of 65. If a man is ill and is unable to fill in the necessary form, when he dies his widow is not able to receive the money until she reaches the qualifying age. This is iniquitous, and I am sure the Financial Secretary will agree that this is due to an oversight. He should be only too anxious to put it right. I feel that this amount should be part of an individual's estate, and that it should be paid off regardless of class, whether the person concerned is a working man or anyone else. This is a debt of honour of the Government, and sooner or later this money must be paid back. I beg the Financial Secretary to meet this point, because it is wrong that things should continue as they are now. I believe he will meet it.
    Mr. Glenvil Hall: I think that, perhaps, it would not come amiss if I reminded the Committee of the history of these postwar credits, and of what some of us have said and thought about them in previous years. As the Committee know, these credits were instituted by the late Sir Kingsley Wood and at the end of the war, when they ceased, they amounted to no less than £800 million, which is a colossal sum, and one which no Chancellor of the Exchequer at the present time could liberate. That would be a most dangerous thing to do, and would certainly mean inflation if nothing else did. I think everybody realizes that for some few years that must be so. May I say in passing that it is a common misapprehension on the part of quite a lot of people that they will have to wait until they are 60

    965
    if they are women, or 65 if they are men, before they draw their postwar credits. That is, of course, not so. It is hoped that everybody will have been paid out long before many of them reach the age of 60 or 65.
    I was one of those—and I think I have said it in the House—who believed it was a pity that these postwar credits were ever instituted. During the war, I think, most of us—such was the spirit of sacrifice engendered in the nation—were quite willing to pay extra taxation and not to have postwar credits coming to us at some time in the future then unforeseen. But they were instituted, and the nation has to honour its bond. My right hon. Friend was pressed in all quarters of the Committee not to pay out these postwar credits to all and sundry, but to make a start with the old folk. Speaker after speaker said, "We do not mind about the rest, but we do think that the old people, who may not live to enjoy them unless they are paid back soon, should have their postwar credits now." In the end my right hon. Friend gave in to that pressure; the postwar credits for the three years 1941–42, 1942–43, and 1943–44 were paid-out last year, to women when they reached the age of 60 and to men when they reached the age of 65.
    From that time onwards the number of letters from Members of Parliament has been prodigious. Hon. Members in all parts of the Committee have written on behalf of their constituents claiming that the postwar credits should be paid on the grounds of hardship, and we have in this Debate tonight heard from many Members in all quarters of the Committee cases of hardship, in which, on grounds of sympathy, the payment, undoubtedly, should be made. It is quite impossible to know where hardship begins, and who should be paid and who should not be paid. It would be quite impossible for the Inland Revenue to judge what stage hardship has to reach before the postwar credit should be paid out; and, therefore, it is quite impossible for us to take that yardstick or criterion, sympathetic, as we are to many of these cases, and desirous as we are of helping as soon as possible by paying out the postwar credits to people of that kind.
    Then, too, it has been put to us that it makes it very difficult for executors to
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    wind up estates because, unless the beneficiary had claimed his postwar credit and was over 65, if a man, or 60, if a woman, and he also had claimed, the amount cannot be paid over. We have indicated more than once in Debate and at Question Time that that is no real difficulty. What happens is, that under the will of a deceased person entitled to a postwar credit this will go to whoever is entitled under the will to that postwar credit; and if that has to be divided between several beneficiaries—whose title to payment, of course, will depend upon when their turns come—the Inland Revenue is quite willing, and does weekly, divide the amount in the proportion as laid down under the will. Therefore, there is no real hardship there, and there is no reason why in those cases the money should be paid out on the grounds that if it is not, it will lead to difficulties and prevent a final winding-up of an estate.
    The present cost, even for old people—and they number only about 1,750,000—is considerable. Last year we paid out £58 million, and this year it will be £70 million. It is true it comes below the line, but, nevertheless, it is a fairly large sum to put into circulation even for this limited class of beneficiaries. If we did extend the categories, and take in people on the grounds of hardship, supposing we could distinguish what real hardship is, or because a person has to pay the funeral costs of someone who dies and has not the money by him, or for one reason or another—and we get a variety of reasons in the letters that come from Members of Parliament—there is no knowing how large the cost would be in the end. Therefore, my right hon. Friend, with the utmost good will in the world, has to draw the line somewhere, for reasons of cost and for reasons of definition; and because the machine, of course, cannot be strained beyond a certain limit. The Inland Revenue has been working at enormous pressure. It is very short staffed; in many cases it is working in quite inadequate buildings and has what I think is very poor equipment. Yet despite that, it is struggling with P.A.Y.E., with Income Tax, with these postwar credits, and with all sorts of various pieces of work which fall to it at the present time.
    Finally, on the question which was put to me by the hon. and gallant Gentleman

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    the Member for Chelsea (Commander Noble), who was backed up by speakers on this side of the Committee and by his hon. and gallant Friend the Member for Macclesfield (Air-Commodore Harvey), it is true in the case where an individual dies, that unless he has signed his form before he dies, he cannot get the postwar credit which may be due to him, although he had at that time attained the requisite age. But the Inland Revenue is doing something that, I think, will commend itself to the Committee. It is true that, unless application is made by the person entitled, nothing can be done for the beneficiaries after the person has died, unless they happen to be of the prescribed ages themselves; but if he has put in his application, and it has been signed, notwithstanding the fact that he may die without receiving the money, the Inland Revenue pays out to the beneficiaries whatever their age. I think that will commend itself to the Committee.
    Commander Noble: There may be a case of a man who dies entitled to postwar credit over the age before this form comes into being.
    8.30 p.m.
    Mr. Glenvil Hall: That is quite true, and if that is so his beneficiaries cannot get it unless they are of the prescribed age or over. I must remind the Committee that what we are trying to do here is to help old people who otherwise might not live to enjoy this money. Therefore, it would be unfair to other younger people if we paid postwar credits to the sons and daughters or near relatives of people who happened to die. It is the age of the beneficiaries that matters, and not the age of the person who has died, because that would not fulfil the original intention when this concession was given.
    Now let me outline the method of payment of the final instalments which are provided for in this Clause. Application must be made to the tax office. Unfortunately, tax offices are quite unable to search out the recipients to let them know that postwar credits are due to them. The initiative must come from the individual himself; he must apply; and we hope that the forms will be in the post offices by the end of August. Those forms should be filled in, by the beneficiaries, and the sooner the better, because once
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    they are filled in and signed, the money would then go, if they were to die, to those entitled to have it under their wills. That will do away with one grievance which, as I say, is very real.
    Mr. Alpass: How will the people know when the forms are available?
    Mr. Glenvil Hall: Notice will be given over the wireless and in the Press that the forms are available. I undertake now to see that that is done. What we do not want people to do is to write in to the tax offices because they need the money. That only makes work for the tax offices and helps nobody; certainly not the individual who does the writing, because it costs a 2½d. stamp, and until the notice is given over the wireless and in the Press there is nothing which anyone can tell these people which would be of any use to them.
    Major Haughton: The right hon. Gentleman has made it very clear to us that the intention of the Treasury is so-and-so. Surely, it would be possible for the Treasury to cut through some of this red tape, and to get at the thing we all want to get at?
    Mr. Glenvil Hall: We do try to simplify it as much as we can. By common consent, I think, these forms are fairly simple. All the beneficiary has to do is to go to the post office, get a form, fill it in and send it to the tax office, and in due course he will get his postwar credit; he then receives a cheque which he will be able to cash, we hope with the minimum of trouble, and what he does with the money is his own affair. However, I should like to feel that many people will put it into National Savings, because if they do that they may obviate tax deductions later on.
    There is one change in the form this year, which makes it different from last year's form. Last year, the applicant could put on either his national registration number or his old age pension number, as he pleased. This year we are asking them all to put on their national registration numbers, because it is simpler for the Inland Revenue authorities to trace their ages by that means. We hope to have paid out most of this money by Christmas but if any local Inland Revenue office has not paid out the money by 25th December, and hon. Members get complaints from their constituents, I

    969
    hope they will tell them that this is a big job; it covers nearly two million people, the tax offices are greatly understaffed, and these people will get their cheques if only they wait patiently. I think I have covered most of the points that have been raised—
    Mr. Birch: What about equality of the sexes?
    Mr. Glenvil Hall: There was one point raised by my hon. Friend the Member for Thornbury (Mr. Alpass), who asked if, in addition to the categories covered, people who died leaving estates of less than £2,000 might be included. I do not think he realises the immense amount of inquiry and work that that would entail, because the Inland Revenue authorities do not know with that exactitude how much a particular individual has left, and it would be very difficult to find these things out. We do not want to make this too complicated, or to throw more work than we need do on the Inland Revenue authorities. I think I have now covered most of the points—
    Mr. Birch: Would the right hon. Gentleman deal with the equality of the sexes?
    Mr. Glenvil Hall: I will answer that, although, if I may say so, the hon. Member put the question, to me in his usual aggressive way. I think it has already been answered—
    Mr. Birch: But it has been answered so badly.
    Mr. Glenvil Hall:—and it occurred to me that it would only be wasting the time of the Committee by answering it again. The reason women were taken at 60 and men at 65 was because in the early days, as the Committee will remember, we anchored this to the old age pension. A woman gets her pension and her book at 60, and we could tell her age by that, but the man does not get it till 65. That was the real reason. If the hon. Member wants to equalise the sexes, I do not know whether he would take the women up to 65 and not pay any woman out now at 60, or whether he would bring the men down to the age of 60.
    Mr. Birch: Pay both at 62½.
    Mr. Glenvil Hall: We began by paying out the women at 60 and the men at 65. In this Finance Bill we are now wiping out
    970
    those ages completely by making a final payment to them all. Perhaps next year or the year after—it depends how the country proceeds under the beneficent rule of a Labour Government—or as we move down the years, my right hon. Friend the Chancellor will be paying out to women of 50 and men of 55; I do not know, but I look forward to that time with some pleasure, because presently my own turn will come.
    Mr. Linstead: Has the right hon. Gentleman had any actuarial investigation which would enable him to give a figure of what it would cost annually, over the next year or two, if repayment of postwar credits were made from the deceased to everybody to whom they were owed? Is a large sum of money annually needed to cover it?
    Mr. Glenvil Hall: I speak now, of course, subject to correction, but I think I am right in saying that it would be almost impossible to make that calculation, because such a number of variable factors would have to be taken into consideration: We should have to prophesy at what ages people would die, how many there would be, the extent to which they were entitled to postwar credits, and the possible amount. I think it would be very difficult to calculate that, and any attempt to do so would be a mere estimate only.
    Mr. Linstead: Surely, that sort of calculation is being made every day in Government actuarial offices?
    Mr. Stanley: I rise only to deal with one point in the reply of the right hon. Gentleman. I do not think he gave a satisfactory answer to the point that was raised by my hon. Friend the Member for Leominster (Mr. Baldwin), by the hon. Member for Thornbury (Mr. Alpass) and by the hon. Member for South Cardiff (Mr. Callaghan).
    Mr. Gallacher: Let this side speak for itself.
    Mr. Stanley: Certainly, no one would ever presume to speak for the hon. Member for West Fife (Mr. Gallacher). Indeed, it is not only a question of not presuming; he would not have an opportunity, because the hon. Member is always speaking for himself. It seemed to me that those hon. Members to whom I have referred put a serious point to the right

    971
    hon. Gentleman, and one which merits serious consideration. Nobody in any part of the Committee suggests that there should be a great extension of the repayment of postwar credits at this time. Everybody accepts the Government's argument that that would be inflationary to the highest degree. All we want to know is wheher it is not possible to extend the repayment to cover certain other limited cases of hardship. The selection of the old age pensioners for the first repayment was on the ground that because of their age they would suffer a pecuniary hardship unless they were paid out soon. We say that there may be other far more limited cases where hardship requires some early repayment to be made. I accept the right hon. Gentleman's statement that the duty cannot be put on the Chancellor of the Exchequer and the Inland Revenue Department to make payments wherever hardship exists. There could not possibly be a roving commission of that kind. The question is whether there is some limited and quite specific case where hardship is almost bound to exist and where limited payments might be justified. It seems to me that the case of the man who dies leaving an estate under £2,000 is perfectly specific, is bound to be limited, and is a case where hardship will almost certainly arise. I think that that case deserves more serious consideration, and certainly a more serious answer than was given by the Financial Secretary.
    I cannot accept the Financial Secretary's first argument that it would be impossible to increase the strain on the Inland Revenue Department. How can that argument be used in view of Clauses 14 to 18, which I should have thought double the work of the Inland Revenue for very little purpose? I stand aghast at his effrontery. Nor can I accept the argument that it would be impossible to find out the number of cases of this kind. Surely, some return has to be made of these estates to satisfy the Inland Revenue Department that they do not exceed £2,000, and that, therefore, no duty is payable on them. I am not pressing for acceptance of this idea now, but it would seem that this is a case where we might have some assurance from the right hon. Gentleman that serious consideration will be given, and that some attempt will
    972
    be made to find out what it would cost. If the cost is not prohibitive, then the possibility of it being introduced at some future date might be admitted. If that can be done, we might be able, at not too great a cost, to meet some cases of very real hardship.
    Mr. Baldwin: There is one question which has not been answered. I asked whether the right hon. Gentleman did not think it fair to add interest to postwar credits, at the Post Office rate of interest, where payment would normally have been made except for the hazard of death. It seems unfair that the State should hold money for an indefinite period of years without paying any interest.
    8.45 p.m.
    Sir William Darling: In supporting my hon. Friend the Member for Leominster (Mr. Baldwin) in his question, may I add a further question? Would it be possible for the Chancellor of the Exchequer to consider a commutation policy whereby, if I were willing to do so, I could, instead of taking the £65 later, take £25 now and be done with it? That suggestion is in accordance with assurance practice, where there is what is called a paid-up policy. If that suggestion were adopted, it would give an indication of the public's confidence in His Majesty's Government.
    Mr. Dalton: I am sorry that I was not present earlier, but this was due to the fact that I was getting some light refreshment to carry me on for a long time to come. I shall be very happy to read tomorrow all the suggestions which have been made as to the next stage in repayments. We have now concluded the first stage, and I think we have had the country and the House with us in giving first preference to the old people. The question now arises: who next, and in what order? We must ask for a reasonable minimum of administrative complexity. The right hon. Gentleman the Member for West Bristol (Mr. Stanley) was perfectly right. We cannot go picking and choosing on some ill-defined basis of hardship, with every Member pushing his own cases. That would cause endless correspondence, and so on. I cannot give any indication that I can go further this year. I am having to watch inflationary pressure pretty closely and, if anything, I may have erred on the side

    973
    of giving too much rather than too little, from that point of view.
    I was anxious to close the category of repayment to old people, and that we have done. I cannot promise anything more this year, and, indeed, I must resist this proposal for an extension this year; but in planning what we shall do next year, I will take into account any suggestions made. I offer this thought without any commitment. There is something to be said, having paid off the credits of all the old people—and any person reaching the age of 65, if male, or 60, if female, will automatically become entitled to all five years; that will run on—at first sight, at any rate, for relating future payments to the age of the credits, and beginning by making a repayment of the credits, accruing to whomever they may accrue, in the first year in preference to later years.
    I am throwing that into the pool of thought in our discussions for next year. It will be administratively simple, and everyone entitled to something will get something in the first year. It is the simplest plan of all, because all the credits are stamped with the year of issue. They are not stamped with the age of the person who is entitled to the credit, and that is the snag underlying the suggestion. When we first made provision for the first three years of credits for the old people, the Inland Revenue Department had to guess what the amounts would be, and we found, as I explained, that we were badly out, and that more than twice as much was held by the old people as we had supposed—£56 million as against £26 million. The age of the beneficiary is not stated on the postwar credit certificate, and, as I have said, it is easier to take the age of the credit, and that is the plan to which I should have a certain attraction. Certainly, we will consider other proposals, including the last and most hopeful proposal made from north of the Border, that instead of waiting for the full credit of £65, the hon. Member for South Edinburgh (Sir W. Darling) should be able to take £25 down now.
    Sir W. Darling: I would take it tonight.
    Mr. Dalton: I will give that very careful consideration.
    Clause ordered to stand part of the Bill.

    CLAUSE 12.—(Continuance of allowance for repairs.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Viscount Hinchingbrooke: It might be thought that because I have an Amendment down to omit this Clause, I am in favour of withdrawing a very useful allowance operating to the benefit of small landlords and tenants who are entitled to it. I assure the Committee that that is not the case. If hon. Members will look at the Order Paper, they will see that I have put down an alternative Clause. I cannot now formally move it for technical reasons, but I can refer to it in the course of what I have to say. I would remind hon. Members that this history goes back to the Finance Act, 1918, where, in the famous Schedule A, in Paragraph 7, there is set out for the first time in Income Tax law the statutory allowances which are given for repairs of house property. Paragraph 7, which I will not quote in full, states:
    "Where the tax is charged on annual value estimated otherwise than by relation to profit then the following provisions shall have effect:

    (a)…..

    (b) In the case of assessment upon any house or building the amount of the assessment shall for the purposes of collection be reduced—

    (i) where the owner is the occupier. … by a sum equal to one-sixth part of that amount.

    (ii) where the tenant is the occupier. … by a sum not exceeding one-sixth part of the amount as may be necessary to reduce it to the amount of rent payable by him."

    That enactment went on until the end of the first world war, and the subsequent period of inflation, such as that which we are now going through—
    Mr. Dalton: It was much worse then.
    Viscount Hinchingbrooke: I am a little nervous of that remark, because it may mean that the Chancellor does not intend to look with a friendly eye on my new Clause. Then came the Finance Act, 1923, Section 28 of which amended Schedule A in one important respect. It excluded the one-sixth to which I have referred, and put in what was called an authorised reduction. Previously, it was one-sixth. The 1923 Act substituted an authorised reduction which varied the amount of the allowance

    975
    according to the size of the property. It reads:
    "(3) The authorised reduction.. shall be:

    (a) Where the amount of the assessment does not exceed forty pounds.

    A sum equal to one-fourth part of the amount of the assessment.

    (b) Where the amount of the assessment exceeds forty pounds but does not exceed one hundred pounds.

    A sum equal to one-fifth part of the amount of the assessment.

    (c) Where the amount of the assessment exceeds one hundred pounds.

    Twenty pounds, together with a sum equal to one-sixth part of the amount by which the assessment exceeds one hundred pounds."

    That has ruled until today. Clause 12 of this Bill seeks to perpetuate that situation. I suggest that just as there was a period of inflation after the first world war—and in the Finance Act, 1923, it was recognised that the former allowance was insufficient—so the same situation prevails now. Small property owners and tenants are finding it increasingly difficult today to get their holdings repaired, and to pay for them out of the amount of the allowances. What do these allowances amount to? In the case of the under £40 assessment, it is £10; in the case of the £40 to £100 assessment, it is £8 to £20; in the case of the over £100 assessment it is £20, plus the one-sixth to which I have referred. I am not tied to the actual words of the Clause I wish to move later, but it makes an attempt to improve all round on the scale. The assessment should be £45 instead of £40, and on that there should be an allowance of £15. On the £45 to £120 assessment, there should be an allowance of £11 to £30. On the over £120 assessment there should be an allowance of £30, plus one-fifth instead of one-sixth as before.
    What was fair in 1923 is really not fair today. It is true that house owners and tenants who had the right to put in for these repair allowances can make a maintenance claim, under paragraph 8, which follows the paragraph in Schedule A to which I have referred. The point is that in these days when there are so many complex forms for people to fill in, and send to Government Departments, anything that can be done to alleviate the burden on small people ought to be done. What have we done in our own case? We have said that the first £100 of our
    salary shall go in automatically for expenses. We have recognised that it is not worth the trouble of estimating expenses up to £100. The Finance Act, 1923, does the same thing. It gives the allowance which is clear of the maintenance claim, and a person has to prove repair expenses above that allowance if he wants to get it.
    The Deputy-Chairman: The noble Lord cannot deal with personal incomes. That would be out of Order.
    Viscount Hinchingbrooke: I was talking about the maintenance claim for house property repairs. I used the income of Members of Parliament by way of illustration.
    The Deputy-Chairman: So long as it is an illustration, it is in Order.
    Viscount Hinchingbrooke: I have passed from it, and I hope hon. Members see the analogy between the two. I am trying to save people the trouble of putting in a maintenance claim, just as we ourselves are saved the trouble of putting in an expenses claim. We have suffered some diminution in the value of money since 1923, and I believe that the time has come to improve the house repairing allowance for all owners of property and all tenants who have the right to make the claim.
    Mr. Callaghan: The noble Lord has mentioned two categories, the case of the owner-occupier and the case of property which is let. I should have thought that there was not much case for doing what he wants to do for the owner-occupier, because the assessment itself has not been increased since 1935 or 1936. Had the assessment been increased, there might have been some case for arguing as the noble Lord did, but he will know that in the provinces the owner-occupier usually occupies a house which is assessed at something far below its annual value. I can recall cases where houses that could be let for £80 or £100 per annum were assessed at an annual value of £20 or £25. It follows automatically that the repairs allowance which is based on the allowances is so much lower. If they were assessed at £100, they would be getting a much higher repairs allowance. Where properties are let and the annual value more frequently is represented by the assessment it is about eight years

    977
    since any substantial repairs were done to a number of these properties. That means that they ought to be repaired now, and should have been repaired some time ago. It also means that for eight years owners have been drawing the repairs allowance which they have not expended. He cannot have it both ways. If they have not done the repairs, they have not expended the repairs allowance which is automatically given under the assessment. In those cases, it means that many people have drawn up to twice at least the annual value of the property in repairs allowance which has not been spent, and which is a reserve which they could have accumulated over that period. For those reasons, I would say that the noble Lord's case falls short, and is not a very strong one.
    9.0 p.m.
    Mr. Glenvil Hall: This Clause which the noble Lord seeks to delete in its entirety continues, as he said, the present scale of allowances for repairs under Schedule A. I think that he gave to the Committee the scale which is laid down, and which we seek to continue. It was first introduced in 1923–24 in substitution for a previous uniform scale of one-sixth, and, as the hon. and learned Member for East Leicester (Mr. Donovan) said, even that was not the beginning of the story. The Finance Act, 1923, laid down a scale over a period of five years, and since then it has been renewed for varying periods, the last occasion being, I think, in 1942 when it was renewed for five years. It, therefore, comes to an end now, unless we make provision in this Act for its continuance, and we are doing that for an indefinite period—that is until Parliament otherwise determines.
    As the hon. Member for South Cardiff (Mr. Callaghan) sail, the people have been getting this allowance automatically, and through no fault of their own the great majority of them, because of the fact that few if any repairs have been possible during the war, have been getting it for at least seven years, and they have had no repairs to set off against it. It is true that possibly when they come to do their repairs, the cost of them will be very heavy, and we must not forget that; but I think it would be true to say that in the old days the scale, such as it was, did on the whole err on the generous side—people took it and quite a lot of them did not do much in the way of repairs for the allow-
    978
    ance which they got. I would remind the noble Lord and the Committee that where an owner could show that, over an average period of five years, the amount expended was greater than the scale allowance to which he was entitled and which he got, he could put in a maintenance claim and get it.
    I cannot deal with the new Clause which the noble Lord hopes to move when we reach that part of the proceedings, but I would say to him and to the Committee that my right hon. Friend cannot accept the deletion of this Clause now, although he realises, as I think the Committee realises, that this is a matter that has to be looked at at some time, as it may well be that these allowances do not fit the situation today. We are 20 years on from the time when they were elaborated, and many values have changed, but we cannot spare the time to go into that now. It is quite impossible for my right hon. Friend to accept this Amendment to delete this Clause. Further than that, at this juncture, I will not go, because much the same ground will undoubtedly be covered when we come to deal with the noble Lord's Clause which will be taken later in the proceedings of the Finance Bill.
    The Deputy-Chairman: If the right hon. Gentleman desires he can deal with the points contained in the new Clause which have been referred to by the noble Lord.
    Viscount Hinchingbrooke: The Clause may not be called later.
    Mr. Glenvil Hall: In that case, if you are intimating, Mr. Beaumont, that it is not your intention, or the intention of Major Milner to call this new Clause when we reach that stage, all I can say is that my right hon. Friend cannot accept it even if it is called and we resist the proposal to delete this Clause. We want to retain the present position at any rate for some time until Parliament may look at this.
    Viscount Hinchingbrooke: I appreciate the right hon. Gentleman resisting my proposal to leave out this Clause as it only appeared on the Order Paper this morning and for that I apologise. He was good enough to say that this whole matter would have to be looked into some time, and can I take it that "some time" will be between now and the Report stage?
    Mr. Dalton Mr. Dalton indicated dissent.
    Viscount Hinchingbrooke: Then before next year will it be possible to have a departmental committee sitting on the subject and looking into it? If I could have the Chancellor's assurance that this matter will be considered between now and next year, I should be willing to withdraw.
    Mr. Dalton: I will give that assurance with pleasure. Ever since I held my present office I have always given instructions that these matters which are raised during the course of a Debate should be a matter of careful inquiry during the ensuing year, and often we have been able to accept something which has been put up before us. Without any commitment to accept I will give a commitment to examine this between now and next year.
    Clause ordered to stand part of the Bill.

    CLAUSE 13.—(Relief from balancing charges for certain cotton spinning concerns.)
    Mr. Stanley Prescott: I beg to move in page 9, line 33, after "spinner" to insert:
    "or
    (ii) any cotton spinner or cotton spinning Concern affected by the arrangements sells machinery or plant and replaces such machinery or plant by improved machinery or plant ordered in such a manner as to satisfy the conditions requisite for the making of a re-equipment grant."
    This Amendment has been put down in order to try further to assist the Government's proposals for the regrouping and the re-equipment of the spinning section of the textile industry. It will be within the recollection of the Committee that on 30th April the President of the Board of Trade announced the basis upon which the Government were prepared to make a grant to the spinning section of the cotton industry if mills were regrouped and there was a certain amount of re-equipment. It was proposed that under certain circumstances the Government would make a grant of 25 per cent. The two main essentials were that some units in the spinning section would regroup themselves and carry out a very large proportion of re-equipment. The whole idea behind the scheme was that the industry would modernise itself and make itself more capable of competing under present conditions.
    980
    The Chancellor of the Exchequer in his Budget Speech referred to this matter and in particular to the Clause which we are now considering. He said on 15th April:
    "I propose to reduce to half the standard rate the Income Tax charged when, as a result of such amalgamation, machinery or plant is sold for more than its written down value."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, C. 77.]
    As I understand it, this Clause is intended to carry out the statement which the right hon. Gentleman made during his Budget speech. Before turning to the actual details of the Clause I think I should refer to the announcement of the President of the Board of Trade on 30th April, to which I have already briefly referred, and in Which he announced the procedure which would have to be followed by units in the spinning side of the textile industry in order to avail themselves of the Government's proposals and obtain the Government grant. There were set out the main basis that the industry would have to follow, namely, regroupment of units, modernization and so on, and then also this paragraph appeared referring back to the Chancellor's statement:
    "The Chancellor of the Exchequer announced in Parliament on 15th April his intention of reducing to half the standard rate the Income Tax charged when, as a result of the formation of approved amalgamations, machinery or plant is sold for more than its written down value. The procedure for dealing with applications for approval, for the purpose of obtaining this concession, will be assimilated as far as possible to the procedure outlined above.—[OFFICIAL REPORT, 30th April, 1947; Vol. 436, C. 253.]
    The Chancellor and I will be in entire agreement I am sure on this, that it is essential that there should be some reorganisation of the spinning side of the textile industry and some degree of modernisation. Tonight I am dealing with this particular Clause which affects the financial arrangements and adjustments when amalgamations which the Government desire take place. Clause 13 permits a reduction of tax when a balancing charge takes place due to an amalgamation between certain units in the spinning side of the industry. The criticism of my friends and I in regard to this Clause is that it does not go far enough and we want to extend its provisions. If my reading of the Clause is right a reduction in tax and the concession which that means can only be obtained if the sale of machinery is between the units

    981
    which are forming the amalgamation. If I am wrong in that, I would ask the Chancellor of the Exchequer to correct me here and now.
    Mr. Dalton Mr. Dalton indicated assent.
    Mr. Prescott: I understand then that I am correct. The concession which we propose would be in the interests of industry, of Lancashire and of the nation. It is agreed on all sides of the House that a great deal of money has to be spent on the textile industry, and I think it will also be agreed that the financing, re-equipment and modernisation of the industry will tax the ingenuity of Lancashire and its industrialists.
    My submission to the Committee is that it may happen that when an amalgamation is taking place it may be desirable that old machinery like spindles and so forth should be sold quite outside the ambit of the amalgamation in the interests of the efficiency of the new set up. In other words, such machinery should be got rid of and should be replaced by new and most up-to-date equipment. This Amendment is designed to affect this and if such sales take place the owners of the machinery will be entitled to obtain a concession which is otherwise denied to them under the terms of this Clause. Neither I nor my hon. Friends advocate the sale wholesale overseas of our textile machinery. That is a matter for very tine consideration to determine to what extent it is desirable. I want the Chancellor to appreciate this that we believe that charity begins at home. We must look after our own industry in Lancashire first, and this Amendment is designed to that effect. I think it cannot be denied that in some of these new groups which will be formed it would be in the interests of the group and of the industry to get rid of some of the old plant and machinery and re place it with new plant and new machinery. There is a differentiation whether the sales are effected in this country or overseas, but we say that there can be no detrimental effect on the re-grouping, because under the Amendment which I am moving that old machinery must be replaced by new machinery in order to obtain the benefit of the concession. Before anything at all can be done in this matter a certificate of the Board of Trade through the Cotton Board will have to be obtained approving the whole scheme.
    982
    9.15 p.m.
    Therefore, I do not think there can be any risk in this Amendment. There is no question of denuding the mills of Lancashire by selling capital assets overseas. The desire is to further the modernisation of the mills and we suggest to the Chancellor of the Exchequer that that desirable process will be furthered if the concession is granted. This is a rather important Amendment. If it is accepted it will considerably further the ambitions of the right hon. Gentleman and the President of the Board of Trade in regard to the Lancashire cotton industry. I regret to say that although I have done my best in the highways and byways, I have not been able to obtain any estimate of what would be the cost of the additional concessions which I am now proposing. Certain it is that it would be nowhere near the magnitude of the sum that has been suggested. It would be very small indeed. The Amendment would be of great assistance and would give much greater flexibility in the formation of amalgamations. It would not be abused, because the matter would be under the Cotton Control Board and the President of the Board of Trade. There are many other aspects of the matter on which I would like to speak, but I conclude by saying that I hope the right hon. Gentleman will see his way to accept the Amendment. It is a bona fide Amendment which will have the effect of revivifying the spinning section of the textile industry.
    Mr. Walter Fletcher: I support the Amendment, and in doing so would say how difficult it is to add very much to the extremely clear, cogent and well-informed argument which has just been put forward by my hon. Friend the Member for Darwen (Mr. Prescott). Certain things must be added. I believe that the omission from the Clause as drafted of provisions similar to those of the Amendment goes back to the period after the last war, when large quantities of cotton textile machinery were exported overseas from Lancashire and were not replaced by new or by any other machinery. That was a great blow to the Lancashire textile industry. Here, as has been pointed out, we are safeguarded in every possible way against it. In the Amendment we try to make clear and bind down everything, so that although sale to third parties is not precluded under the reorganisation scheme, new machinery has

    983
    to take its place. If any argument is to be based upon the old, out-worn idea that this will do harm to the Lancashire cotton industry, it cannot carry any weight.
    If the Amendment is not accepted, it must be clear to the Committee that a sort of congestion, a sort of spindle constipation will be created, in the industry, which will be extremely dangerous. If various groups argue among themselves as to the best way to carry out this highly desirable and Government-impelled amalgamation because they cannot find businesses capable of and fit for amalgamation, they will be frustrated in their desire to do exactly what the Chancellor and the President of the Board of Trade wish them to do. I am aware that there are many overseas buyers who might wish to buy this machinery. We are thinking in terms of an export grant. Failure to accept the Amendment will tend to stop the export drive in this type of cotton machinery. Textile machinery is sold competitively all over the world. Some countries which are backward in textiles will undoubtedly wish to buy this machinery. If it is laid down absolutely hard and fast that this machinery can be sold only in a very restricted area, it might well have an influence upon the factors which make amalgamation possible.
    I urge upon the Chancellor, for the reasons which have been put forward, the very cogent ones that we have heard already, the he would give great satisfaction to everybody in Lancashire, as well as those who are moving the Amendment, it he would not only say that he will look at it—which presupposes that he has not already looked at it—but that he will go a little further and, in contradistinction to his treatment of my hon. Friend the Member for Louth (Mr. Osborne)—whom the Chancellor slew with his mouth—will get up and say that he welcomes the Amendment. We hope he will say that he realises that it is constructive and that it still gives full power for the Minister to step in, should there be any abuse. If he will do that, he will have returned from the meal which was so necessary to him with considerable post-prandial satisfaction.
    Mr. Dalton: I think all Members from Lancashire will agree that the Government have done a very great deal already towards helping the cotton industry to
    984
    modernise itself, and to get back on to what we hope will be a firm foothold for the future. The Amendment only illustrates that the more you do, the more people ask you to do in addition. The President of the Board of Trade and I have had many consultations on this matter. We are both most anxious to assist Lancashire to help itself, particularly in the spinning section, where the chief weakness at present lies. If we can get the spinning section into better and more up-to-date units, much else will follow.
    First of all, there was a proposal for a 25 per cent. grant in aid of the cost of re-equipping the spindle section. It was a very exceptional grant. We made no such offer to any other industry. My own hesitation in agreeing to the proposal was lest I should be pressed by every other industry to do the same for them, which I should not be prepared to do. Lancashire was singled cut for exceptional help by the Government We proposed this 25 per cent, subsidy, and this is to be granted the Committee will appreciate, in aid of the cost of new machinery, in groups or concerns that control more than 500,000 spindles. It is limited to groups of that large size. I thought I had done pretty well for the cotton industry at the expense of the taxpayers.
    Then, representations were made—I make no complaint about this, I merely relate it to the Committee, so that hon. Members can get this matter in its proper setting—that there were a number of small groups or concerns which were having difficulty. They were unwilling, or unable, to come together in large aggregations, so as to become eligible for the 25 per cent. subsidy unless some further assistance was given. Therefore, I agreed with my right hon. and learned Friend the President of the Board of Trade that there should be further assistance given, as is proposed in this Clause, and that we should provide that, as an incident of amalgamation—and I emphasise that—and not merely with a view to assisting modernisation generally, but in order that larger groups shall be formed, we should give this relief with regard to the balancing charge, where machinery had been sold for more than its written-down value, and that the balancing charge should be reduced to one-half of the standard rate. That was the second concession, the first being the provision in regard to amalgamations. I think the

    985
    Government have done pretty well with these two concessions to the spinning section of the Lancashire cotton industry. The hon. Member for Darwen (Mr. Prescott) and I used to discuss this matter in the last Parliament, and both of us are agreed that the Lancashire spinning section wants a bit of "bucking up," and we agreed that we were on common ground there.
    Mr. Prescott: It depends what the right hon. Gentleman means by "bucking up."
    Mr. Dalton: Well, I think we can guess. We have given two leads in assistance to Lancashire, and, really, if I thought I could take the advice of the hon. Member, I would do so, but I will not say that I will consider it. I think we have already gone far enough, and we are now being asked to add a third inducement, which is not limited to large groups, nor even limited to the written-down value of plant incidental to amalgamation. We are now being asked to go into the whole wide field of modernisation generally, and, although the cotton industry needs modernisation, there are a good many other sections of industry which need it. If I conceded this Amendment, I should be led into the much wider field of extensive modernisation everywhere. I do not think that it is reasonable that that should happen. It would be reasonable for every other section of industry to ask me why I should do any less for them than I have done for the cotton industry, and I think that this is where we must draw a line. We have made two very substantial commitments. There is no additional finance in this worth speaking of. It is not that this Amendment would cost us much more directly, but it is widening the field in such a fashion that I should not be able consistently to resist claims for the subsidisation of modernisation everywhere throughout the whole range of industry. That we are not prepared to do. For that reason, I suggest that the hon. Member should reflect that this has been a good Government to the cotton industry, that it has done more for it than any other Government, that it has put up more ideas and more money, and that he should feel grateful for all that, and not press his Amendment.
    Mr. Prescott: The Government certainly have done one thing for the cotton indus-
    986
    try which no other Government ever did. They stopped it completely, because they could not provide the coal and could not provide the power to run the mills. I concede that point entirely. I do not think that anyone could have moved this Amendment in a more friendly spirit than I have done. I agree that in the last Parliament I have met the right hon. Gentleman in his room and have talked over matters with him. The right hon. Gentleman talked Socialism to me, and I talked commonsense to him. Let me assure him that I shall never reveal anything he said to me in confidence. I moved this Amendment in a very friendly way, but I do not think the Chancellor's reply was couched in such terms as it might have been, in view of my speech and that of my hon. Friend the Member for Bury (Mr. W. Fletcher). I believe that, if the Amendment were accepted, it would further help in amalgamations, and that is why it was moved. The right hon. Gentleman has said that it would open the door to the general modernisation of industry. Certainly it would, I entirely agree that it would further and facilitate modernisation, but the basis behind it is that it would help amalgamation and regrouping within the industry.
    9.30 p.m.
    I have one advantage which the Chancellor has not had, in that I have discussed this Amendment with people who are prominent in the industry, and who know the industry, and I am assured that it would be of benefit in forming these regroupings if this concession was given. I am assured that the Clause as drafted is too hidebound and watertight and that sufficient elasticity is not given. The Chancellor has said that the amount of money involved here is very small indeed. He refuses this Amendment admittedly on the question of principle; that can be the only reason for refusing it. I say to the Chancellor that the Government's proposals have not been entirely acceptable in Lancashire. The President of the Board of Trade and the Parliamentary Secretary who is here would support me when I say that there has been a good spirit in Lancashire, and a good attempt has been made to help the Government and further their desires for the industry. Indeed, the only direct negative came from a trade union, not from the employers' side at all, but we need not deal

    987
    with that. In saying that he will not even look at this point—it will not cost any money but it is refused on a matter of principle—I do not feel that the Chancellor is being entirely helpful or co-operative, and I do not think that that is the right way to approach this matter.
    I am convinced that the Amendment would give a degree of elasticity in regrouping the spinning section of the industry which would be of great benefit. These matters cannot be tied down entirely and absolutely by saying that regrouping must take place this way, and that it shall not take place that way. If this facility was given, it would give elasticity and it would also further modernisation. It would also possibly bring in foreign currency, which we desire, and it would be of great benefit to the industry. I very much regret the stand which the Chancellor has taken in replying. It is rather reminiscent of an observation which the Foreign Secretary made in the foreign affairs Debate which was very unpopular in Lancashire. He said, among other things, that the Lancashire cotton industry and Lancashire people had a stubborn mentality, that there was a stubborn mentality to progress. That is not a fortunate tone to use about Lancashire, and I do not feel disposed to withdraw the Amendment.
    Mr. Raikes: I confess I have listened with a certain sadness to the Chancellor. He said he had done a lot of good for the cotton industry. Surely, if that were so he would have thought that this might have been a case to do just a little bit more. Upon what did the right hon. Gentleman base his refusal? He said, "If I broaden this basis any further I shall have pressure brought upon me from other industries." That would have been a stronger argument had he not already said that he had treated the cotton industry rather as a special case. If the cotton industry was being treated as a special case in this instance the argument about pressure would not appear to be a strong one. This concession would cost very little money, and it would not make the matter into a special case; it is already a special case at the present time. It would to a certain degree encourage spinners, who will certainly incur a good deal of rather heavy expenditure in modernising their
    988
    plant, to sell machinery and modernise it. That is, perhaps, a small thing. To the Chancellor and to hon. Members opposite I say, why not make the best of it? We on this side are trying to co-operate, and I suggest that we should be given a little bit more encouragement than merely the reply, "I have done a certain amount and that is quite enough."
    Mr. W. Fletcher: I think the Chancellor has tried, quite wrongly, to argue a large and wide question of principle on this rather narrow Clause which is really permissive and which, in certain circumstances, will allow certain things to be done. That is twisting the thing round entirely. He knows full well that the President of the Board of Trade has full powers to stop this being expanded in any direction whatever. As long as the Government retain these full powers, it is really nonsensical for the Chancellor to argue that a large question of principle is involved. I cannot understand why on this Amendment, which covers certain circumstances which are not imaginary but real, he should fly an enormous balloon to carry the question out of the area to which it properly belongs—that of practical negotiations which have the impulse of the Government behind them.
    This is not a policy which will help. Lancashire is doing its best in every way and it is not right that the people should be slanged by two senior Members of the Government and told that they are obstinate, stubborn and not coming into line. It is obvious to everybody with a knowledge of the facts that that is not the case. I would like the Chancellor to deflate himself in this matter considerably. I promise to try to set an example myself. I beg him to look at this, not in the grandiose light which he, somewhat naturally, with his normal ebullience, has thrown upon it, but as a practical contribution on which he or the President of the Board of Trade can keep his finger the whole time in order to allow the policy which they have initiated to be carried out.
    Mr. Assheton: We have had a most interesting exposition of this case by the hon. Member for Darwen (Mr. Prescott), well supported by my hon. Friend the Member for Bury (Mr. W. Fletcher) and my hon. Friend the Member for Wavertree (Mr. Raikes). The Chancellor has

    989
    made only one substantial argument in opposition to this Amendment, and I urge the Committee not to pay too much attention to it. The Chancellor has told us that it would not cost a substantial amount. He does not oppose it on that ground, but merely because he is frightened of the repercussions. The right hon. Gentleman has been Chancellor of the Exchequer for quite a long time. It seems a very long time to us on this side of the Committee. I dare say that even the Chancellor himself is beginning to feel that it has been quite a long time. I suggest that he has held office long enough now to be able to stand up to reper-
    cussions. Every single project which comes before the Treasury has repercussions written all round it by everybody in the Treasury. That is quite proper. This is an occasion when the Chancellor could stand up quite easily to the repercussions. He has already admitted that he has given special treatment to the cotton industry. I hope very much that hon. Members will take this matter to a Division.
    Question put, "That those words be inserted."
    The Committee divided: Ayes, 109; Noes, 268.

    Division No. 242.]

    AYES.

    [9.40 p.m

    Amory, D Heathcoat

    Grimston, R. V.

    Orr-Ewing, I. L

    Assheton, Rt. Hon. R

    Hannon, Sir P. (Moseley)

    Pitman, I. J.

    Astor, Hon. M.

    Harvey, Air-Comdre A. V

    Ponsonby, Col. C. E

    Baldwin, A. E

    Haughton, S. G.

    Poole, O. B. S. (Oswestry)

    Barlow, Sir J

    Headlam, Lieut.-Col. Rt. Hon. Sir C.

    Prescott, Stanley

    Baxter, A. B

    Hinchingbrooke, Viscount

    Price-White, Lt.-Col. D

    Bennett, Sir P

    Hope, Lord J.

    Prior-Palmer, Brig. O

    Birch, Nigel

    Howard, Hon. A

    Raikes, H. V.

    Bossom, A. C

    Hudson, Rt. Hon R. S. (Southport)

    Roberts, H. (Handsworth)

    Bower, N.

    Hutchison, Lt.-Cm. Clark (E'b'rgh W.)

    Ropner, Col. L

    Braithwaite, Lt.-Comdr J U

    Jarvis, Sir J.

    Ross, Sir R. D. (Londonderry)

    Bromley-Davenport, Lt.-Col. W

    Keeling, E. H.

    Sanderson, Sir F.

    Buchan-Hepburn, P. G. T

    Kerr, Sir J. Graham

    Scott, Lord W.

    Butcher, H. W

    Lambert, Hon. G.

    Shephard, S. (Newark)

    Carson, E.

    Lancaster, Col. C. G.

    Shepherd, W. S. (Bucklow)

    Challen, C.

    Legge-Bourke, Maj. E. A. H.

    Smithers, Sir W

    Clarke, Col. R. S

    Linstead, H. N.

    Snadden, W. M.

    Conant, Maj. R, J. E.

    Low, Brig. A. R W

    Spearman, A. C. M

    Crookshank, Capt. Rt. Hon. H. F. C.

    Lucas, Major Sir J.

    Spence, H. R.

    Crosthwaite-Eyre, Col O E

    Lucas-Tooth, Sir H.

    Stanley, Rt. Hon. O.

    Cuthbert, W. N.

    Maclay, Hon. J. S.

    Strauss, H. G. (English Universities)

    Davidson, Viscountess

    Macpherson, Maj. N. (Dumfries)

    Stuart, Rt. Hon. J. (Moray)

    Digby, S. W.

    Maitland, Comdr. J W.

    Sutcliffe, H.

    Dodds-Parker, A. D

    Marlowe, A. A. H

    Taylor, C. S. (Eastbourne)

    Donner, Sqn.-Ldr. P W.

    Marples, A. E.

    Thomas, J. P. L. (Hereford)

    Dower, Lt.-Col. A. V G. (Penrith)

    Marsden, Capt. A.

    Thorneycroft, G. E. P (Monmouth)

    Dower, E. L. G. (Caithness)

    Marshall, D (Bodmin)

    Thorp, Lt.-Col. R.A.F

    Drayson, G. B.

    Marshall, S. H. (Sutton)

    Vane, W. M. F

    Drewe, C.

    Maude, J. C.

    Walker-Smith, D.

    Dugdale, Maj. Sir (Richmond)

    Mellor, Sir J

    Wheatley, Colonel M. J

    Eooles, D. M.

    Molson, A. H E.

    While, Sir D. (Fareham)

    Fletcher, W (Bury)

    Morris-Jones, Sir H.

    Winterton, Rt. Hon Earl

    Fraser, H C. P. (Stone)

    Morrison, Maj. J. G. (Salisbury)

    York, C.

    Fraser, Sir I. (Lonsdale)

    Neven-Spence, Sir B.

    Fyfe, Rt. Hon. Sir D. P. M

    Nicholson, G.

    TELLERS FOR THE AYES:

    Gage, C

    Noble, Comdr, A H P

    Mr. Studholme and

    Gammans, L. D.

    Nutting, Anthony

    Major Ramsay.

    Gridley, Sir A.

    O'Neill, Rt. Hon. Sir H

    NOES.

    Adams, Richard (Balham)

    Belcher, J. W.

    Bruce, Maj. D. W T

    Adams, W T. (Hammersmith, South)

    Benson, G.

    Buchanan, G.

    Allen, A. C. (Bosworth)

    Berry, H.

    Burke, W. A.

    Alpass, J. H.

    Beswick, F.

    Butler, H. W. (Hackney S)

    Anderson, A. (Motherwell)

    Bing, G. H. C

    Callaghan, James

    Attewell, H. C.

    Binns, J.

    Castle, Mrs. B. A.

    Attlee, Rt. Hon. C. R

    Blenkinsop, A

    Champion, A. J

    Austin, H. Lewis

    Blyton, W. R

    Chetwynd, G. R

    Ayrton Gould, Mrs. B.

    Bowden, Flg.-Offr. H. W.

    Cobb, F. A.

    Bacon, Miss A

    Bowles, F. G. (Nuneaton)

    Cocks, F. S

    Baird J.

    Braddock, Mrs. E. M. (L'pl, Exch'ge)

    Coldrick, W.

    Balfour, A.

    Braddock, T. (Mitcham)

    Collindridge, F

    Barnes, Rt. Hon A. J.

    Bramall, E. A.

    Collins, V. J

    Barstow, P. G.

    Brook, D. (Halifax)

    Colman, Miss G. M

    Barton, C.

    Brooks, T. J. (Rothwell)

    Comyns, Dr. L.

    Battley, J. R

    Brown, George (Belper)

    Cooper, Wing-Comdr. G.

    Bechervaise, A E

    Brown, T. J. (Ince)

    Corbet, Mrs. F. K (Camberwell, N.W.)

    Corlett, Dr. J

    Hughes, H. D. (W'lverh'pton, W.)

    Rooms, A.

    Cove, W. G.

    Hutchinson, H. L. (Rusholme)

    Roberts, Emrys (Merioneth)

    Crawley, A.

    Hynd, H. (Hackney, C.)

    Roberts, Goronwy (Caernarvonshire)

    Crossman, R. H. S

    Irving, W. J.

    Roberts, W (Cumberland, N.)

    Daggar, G.

    Janner, B.

    Robertson, J. J. (Berwick)

    Dalton, Rt. Hon H.

    Jay, D. P. T

    Rogers, G. H. R.

    Davies, Edward (Burslem)

    Jeger, G. (Winchesters

    Ross, William (Kilmarnock)

    Davies, Ernest (Enfield)

    Jeger, Dr. S. W (St Pancras, S.E.)

    Royle, C.

    Davies, Harold (Leek)

    John, W

    Sargood, R

    Davies, Hadyn (St. Pancras, S.W.)

    Jones, D. T. (Hartlepools)

    Segal, Dr. S.

    Deer, G.

    Jones, Elwyn (Plaistow)

    Shackleton, E. A. A

    de Freitas, Geoffrey

    Jones, J. H. (Bolton)

    Sharp, Granville

    Delargy, H. J.

    Jones, P. Asterley (Hitchin)

    Shawcross, C. N (Widnes)

    Diamond, J.

    Keenan, W.

    Shinwell, Rt. Hon. E

    Dobbie, W.

    Kinley, J.

    Shurmer, P.

    Dodds, N. N.

    Kirby, B. V.

    Simmons, C. J.

    Donovan, T.

    Kirkwood, D.

    Smith, H. N. (Nottingham, S.)

    Dugdale, J. (W. Bromwich)

    Lang, G.

    Solley, L. J

    Dumpleton, C. W.

    Lipton, Lt.-Col. M

    Soskice, Maj. Sir F

    Durbin, E. F. M

    Logan, D. G.

    Sparks, J. A.

    Dye, S.

    Longden, F.

    Stamford, W

    Ede, Rt. Hon. J. C.

    Lyne, A. W.

    Steele, T.

    Edelman, M.

    McAdam, W

    Stewart, Michael (Fulham, E.)

    Edwards, N. (Caerphilly)

    McEntee, V. La T

    Edwards, W. J. (Whitechapel)

    McGhee, H. G.

    Stross, Dr. B.

    Evans, S. N. (Wednesbury)

    Mackay, R. W. G. (Hull, N.W.)

    Stubbs, A. E.

    Ewart, R.

    McKinlay, A. S.

    Summerskill, Dr Edits

    Fernyhaugh, E

    Maclean, N. (Govan)

    Swingler, S.

    Follicle, M.

    McLeavy, F.

    Sylvester, G O

    Foot, M. M

    Macpherson, T. (Romford)

    Symonds, A L.

    Forman, J. C.

    Mallalieu, J. P. W.

    Taylor, H. B. (Mansfield)

    Fraser, T. (Hamilton)

    Maninng, Mrs. L. (Epping)

    Taylor, R. J. (Morpeth)

    Freeman, Maj. J. (Watford)

    Medland, H. M.

    Taylor, Dr. S. (Barnet)

    Freeman, Peter (Newport)

    Mellish, R. J.

    Thomas, Ivor (Keighley)

    Gaitskell, H. T. N.

    Middleton, Mrs. L.

    Thomas, I. O. (Wrekin)

    Gallacher, W.

    Millington, Wing-Comdr. E R

    Thomas, George (Cardiff)

    Ganley, Mrs. C. S.

    Mitchison, G. R.

    Thurtle, Ernest

    George, Lady M. Lloyd (Anglesey)

    Morgan, Dr. H. B

    Timmons, J.

    Gibbins, J.

    Morley, R.

    Titterington, M. F

    Gibson, C. W.

    Morris, Lt.-Col H. (Sheffield, C.)

    Tolley, L.

    Gilzean, A

    Morris, P. (Swansea, W.)

    Tomlinson, Rt. Hon G

    Glanville, J. E. (Consett)

    Morris, Hopkin (Carmarthen)

    Ungoed-Thomas, L.

    Gooch, E. G

    Mort, D. L.

    Usborne, Henry

    Goodrich, H. E.

    Murray, J. D

    Vernon, Maj. W. F.

    Gordon-Walker, P. C.

    Naylor, T. E.

    Viant, S. P.

    Greenwood, Rt. Hon A (Wakefield)

    Neal, H. (Claycross)

    Wadsworth, G

    Greenwood, A. W. J (Heywood)

    Nichol. Mrs M. E. (Bradford, N.)

    Walkden, E.

    Grenfell, D. R

    Nicholls, H. R. (Stratford)

    Wallace, G. D. (Chislehurst)

    Grey, C. F.

    Noel-Baker, Rt. Hon. P. J (Derby)

    Wallace, H. W. (Walthamstow, E.)

    Grierson, E.

    Noel-Buxton, Lady

    Warbey, W. N.

    Griffiths, D (Rother Valley)

    Oldfield, W. H.

    Watson, W. M.

    Griffiths, Rt. Hon. J. (Llanelly)

    Paget, R. T.

    Webb, M. (Bradford, C.)

    Griffiths, W. D. (Moss Side)

    Paling, Rt. Hon. Wilfred (Wentworth)

    Weitzman, D.

    Guest, Dr. L. Haden

    Paling, Will T. (Dewsbury)

    Wefts, W. T. (Walsall)

    Gunter, R. J

    Palmer, A. M. F.

    West, D. G.

    Guy, W. H

    Pargiter, G A.

    White, H. (Derbyshire, N.E.)

    Haire, John E (Wycombe)

    Parker, J

    Whiteley, Rt. Hon. W.

    Hale, Leslie

    Parkin, B. T.

    Wigg, Col. G. E.

    Hall, W. G.

    Paton, J. (Norwich)

    Wilcock, Group-Capt. C. A. B

    Hamilton, Lieut.-Col. R

    Pearson, A.

    Willey, F. T. (Sunderland)

    Hannan, W. (Maryhill)

    Peart, Capt. T. F.

    Williams, D. J. (Neath)

    Hardy, E. A.

    Plaits-Mills, J. F. F.

    Williams, J. L. (Ketvingrove)

    Harrison, J.

    Poole, Major Cecil (Lichfield)

    Williams, Rt. Hon. T (Don Valley)

    Hastings, Dr. Somervill

    Popplewell, E.

    Williams, W. R. (Heston)

    Haworth, J.

    Porter, G. (Leeds)

    Willis, E.

    Henderson, A. (Kingswinford)

    Proctor, W. T

    Wills, Mrs. E. A

    Herbison, Miss M.

    Pryde, D. J

    Woods, G. S.

    Hewitson, Capt. M

    Pursey, Cmdr. H

    Wyatt, W.

    Hobson, C R

    Randall, H E

    Yates, V. F.

    Holman, P

    Ranger, J.

    Young, Sir R (Newton)

    Holmes, H E. (Hemsworth)

    Rees-Williams, D. R

    House, G.

    Reid, T (Swindon)

    TELLERS FOR THE NOES:

    Hoy, J

    Rhodes, H.

    Mr. Joseph Henderson and

    Hudson, J H (Ealing, W)

    Richards, R

    Mr. Dairies.

    Resolution agreed to.

    Mr. W. Fletcher: I beg to move, in page 9, line 41, after "cotton," to insert:
    "or of staple rayon fibre less than three inches long."
    Referring to what the Chancellor of the Exchequer in breezy terms reminiscent of Margate, called the "jolly good report"
    992
    of the working party, I would like to point out that this Clause attempts to do what the working party obviously desired. The working party said:
    "We have left one subject of major importance to the end—the relations between the cotton industry and the rayon industry.

    993
    It is implicit in all that we have said that we regard this as vitally affecting the future of both. There must be a close link between the two."
    It goes on:
    "As pointed out in Chapter IX, scientific advance has created a new integrating force for all the textile industries. We consider that a new outlook is necessary on the relations between them. This matter is of such wide national importance that we recommend that the Government should call an early conference between representatives of the rayon industry and all the textile industries to consider their future relations."
    Without going as far as that, this Amendment attempts to bring into line the parts of the textile industry where the spinning of rayon and cotton are equally affected. The Chancellor has been a very good friend to the rayon industry. In the Budget last year, he gave them a very good leg-up, and, in contradistinction to other textile targets, which he and other Members of the Government aim at so frequently, he has singled out the rayon industry for praise for its initiative. I think, therefore, he will appear in a rather different rôle in regard to this Amendment from that in which he appeared a quarter of an hour ago in connection with the previous Amendment. There can be no doubt that, for amalgamation purposes, in regard to machinery that can spin both cotton and rayon, it is absolutely necessary to accept this Amendment. Without labouring the point any more, because I am certain that he has been well instructed on it, we look forward in a very few minutes to his ready acceptance of this Amendment as an amende honorable, as he was saying just now, and hope that he will accept it as being a helpful and constructive one, emanating though it does from the source on which, so far, he has not cast a very favourable eye.
    Mr. Dalton: I thought I made a most friendly speech on the last Amendment. In fact, I was quite surprised, after what I said, that it was taken to a Division. However, I am anxious not to be less friendly now, although there is one difference. I think there is a good case for this Amendment. I tried to put in a friendly way why I thought there was not a good case for the last one I am advised that the scope over which this Amendment would operate would not, in fact, be as large as a casual reading of the text would suggest, because the concerns engaged in both cotton and rayon spinning could enter into these schemes
    994
    without this Amendment being accepted. Nevertheless, there are some cases in which this Amendment would operate and, in my view, would operate beneficially. Therefore, although I cannot bind myself without examination to the exact words, I can give an undertaking that we will put down an Amendment on Report which will give effect to the hon. Gentleman's intention.
    Mr. Prescott: While thanking the right hon. Gentleman for his helpful speech, may I point out that there are a few mills which spin rayon fibre entirely and exclusively? It is in respect of those that we desire this Amendment.
    Mr. W. Fletcher: I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Prescott: May I ask, Major Milner, whether it is your intention to call the Amendment standing in my name, in page 10, line 11, to add Subsection (3)?
    The Chairman (Major Milner): No, I am afraid it is out of Order.
    Mr. Prescott: While not questioning your Ruling, Major Milner, may I respectfully mention that this Amendment is taken almost verbatim from the Finance Act, 1941, into which Act it was inserted without discussion. While not questioning your Ruling, may I respectfully ask, if it was in Order to insert it in the Finance Act, 1941, must it not be in Order to discuss it in relation to this Bill?
    The Chairman: I am afraid I had not the honour of occupying my present position in 1941. Then the case may have been quite different from the present one.
    Clause ordered to stand part of the Bill.

    CLAUSE 14.—(Premiums, etc., paid for benefit of directors and employees.)
    Captain Crookshank: I beg to move, in page 10, line 14, to leave out "a body corporate," and to insert "an employer."
    This does not appear to be an important Amendment, but as we are entering into a new Section of the Bill, I would like to know whether it would be to the

    995
    convenience of the Committee if we had a general discussion on the next five Clauses and take a somewhat wider view of the issues raised by those Clauses. I do not know if you would consider that that would be a feasible course Major Milner.
    Mr. Dalton: If that is agreeable to you, Major Milner, and to the Committee, I think it might be helpful. There are a number of common aspects of these Clauses, and it may be that we can clarify the matter better as a result of a general discussion. We might see how we get on. We need not now be exact as to what conclusions we might reach, but I think a general discussion would be useful.
    The Chairman: I am of course largely in the hands of the Committee. Did I understand the right hon. and gallant Gentleman to refer to other Clauses?
    Captain Crookshank: I refer to Clauses 14 to, 18. They constitute a group.
    The Chairman: I understand it is proposed that the discussion should take place on the Amendment which the right hon. and gallant Gentleman has just moved?
    Captain Crookshank: Yes, Major Milner. I do not propose to take up much of the time of 'the Committee, but there are a few general observations I would like to make. The reason for this group of Clauses, as I understand it, is that there has been discovered a mischief. I have tried to find out, and I think I have found out, what the mischief is, but I do not propose to say what it is, because I know that in these matters the Treasury are always very careful as to how much information should be given in public and how much should not. If the Chancellor likes to explain it, that is his affair, but I do not propose to say further than that we on this side of the Committee are aware of the sort of mischief with which these Clauses are intended to deal. Of course, we are also in agreement that any flagrant evasions of taxation must obviously be dealt with, not only in the interest of the Exchequer but also out of common fairness to the honest taxpayer.
    10.0 p.m.
    Having been so long at the Treasury myself, I know that that particular argu-
    996
    ment is always acceptable to this Committee. We are on common ground there. But the point at issue now is whether, granted that there is a mischief, this group of Clauses is a kind of group which should be introduced into a Finance Bill; and on that we find, having considered them as best we could—and they are in very complicated language, and even the Solicitor-General must admit that they are not very easy reading—we find that they go rather too wide, and that, while they may very well deal with the problem with which the Chancellor set out to deal, they will also, undoubtedly, if they are carried in this form, cause an enormous amount of trouble, bother, and, in many cases, real hardship. But I was putting trouble and bother from the administrative point of view as a first argument.
    It is quite certain that, when we come into the sphere of trust funds, annuities, benefits, and all that group of payments, the law is difficult and obscure. Sometimes tax is raised on one form of benefit, on another form of contribution, and in different ways on the income. The first suggestion, therefore, that I would put to the right hon. Gentleman is, that the whole matter ought to be investigated. Some form of committee could easily be set up to look into this complex business. I am strengthened in that suggestion in that it was the conclusion that my right hon. and hon. Friends came to some time ago, as a suggestion we ought to put to the Chancellor of the Exchequer. But remembering what he said on the last Amendment but one, and his own colloquialism, "a jolly good working party" for the cotton industry, it is interesting to find that the jolly good chairman of that jolly good working party, Sir George Schuster, wrote on these very lines id "The Times" yesterday. In view of the encomium the right hon. Gentleman has already passed tonight on our former colleague, I hope he will have considered very carefully Sir George Schuster's letter dated 6th June in yesterday's "Times" making an urgent plea that the Chancellor of the Exchequer should appoint a Committee
    "to review all the arrangements for taxing the provision of funds for pensions and other forms of compensation on retirement or loss a office. The law on these matters has become intolerably complex."

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    That is the preliminary proposal we should like to put to the right hon. Gentleman, and, sc far as I know, there is no particular reason why that should not be adopted. At the same time, it would be possible for him to safeguard the position he wants to with regard to tax evasion. There have been to my own knowledge in the past Chancellors who have said, "We have discovered a leak, and we intend to stop it up. Everybody is at risk who is acting in that way." Then, subsequently, legislation was passed to deal with it. So, from the point of view of evasion, he would not be necessarily any worse off through the delay imposed by a thorough investigation of the whole matter. That is the first submission I put to the right hon. Gentleman.
    Now—briefly, because many of my hon. Friends want to speak on this matter, and have far more knowledge of the details than I have—I want to make clear that this is a matter of very great importance. It was rather passed off, I think, at the earlier stages as if it were something quite different, and that evasions by directors of public companies, and they and only they, were affected by what is now in the Bill. Of course, that is not true. It may be that they are the cases that the right hon. Gentleman has in mind, but as the Clauses are drafted they cover a very much wider field, because they cover not only directors but every employee—so far as I know right down to the charwoman, who may come within their ambit.
    Mrs. Braddock: What about the charwomen?
    Captain Crookshank: I am sorry if the hon. Lady does mind, but, of course, the function of a charwoman is not a directorial function in a public company. There is a sort of hierarchy. As drafted, it means every employee. Moreover, in Clause 18, which is the definition Clause, retirements or other benefits which are covered by the Bill involve a very large scope of possible benefits, because that Clause says:
    "'retirement or other benefit,' means any pension, annuity, lump sum, gratuity or other like benefit given or to be given on retirement, or in anticipation of retirement or, in connection with past service, after retirement, or given or to be given on or in anticipation of or in connection with any change in the nature of the service of the person in question …"
    That is a very wide matter, with an exception, of course. Therefore, before hon.
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    Members pass these Clauses, let them be quite certain what it is they risk: it is every kind of retirement or other benefit, in the very widest sense of the word, which may come the way of any director or any employee of any body corporate. In order to catch what might be quite a small section of evil doers this vast net has been spread. It is so vast that in many ways it looks to us as if it will make life, or these particular arrangements in life, almost intolerable for the honest man. It is quite true that any schemes which may be approved by the Inland Revenue will be exempt from the scope of this matter, but payments which are not under any approved scheme will be penalised in different ways, generally speaking by making any premiums paid for them, whether real or notional, additions to the taxable income of the beneficiary. Now, because taxation goes so low down, there may be caught by these notional premiums a number of people who in years past, if such a scheme had been introduced, would never have been affected one way or the other. All schemes will be exempt if approved. That means that every scheme, presumably, which is devised, or which already exists, will be sent forward for approval; and, of course, there are vast numbers of schemes.
    When we were discussing an Amendment to Clause 11 the Chancellor was saying how today the Inland Revenue were working at enormous pressure, and that they could not begin to look at the proposal which was then under discussion. If the Inland Revenue are already working at this enormous pressure, it seems to me that if they are to have sent to them for vetting purposes every kind of scheme which may come within these Clauses, their position will be well-nigh intolerable. But apart from the position of the Inland Revenue, what will be intolerable will be the long delay which is bound to elapse, in those circumstances, between approval or disapproval; and that will mean uncertainty to a great number of people who are possible beneficiaries, and general chaos all round. I am sure that is the last thing anybody would want to happen. It seems to me an extraordinary thing to set up this enormous machine in order to catch what is, presumably, only a very small number of people. That is the general objection that I would make to the whole proposal. It is quite true that when we

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    come to the proposals of the actual Clauses some of the results, whether they were intended or not, are quite fantastic.
    I think the Chancellor will find that in the course of this Debate he will have brought to his notice instances which could never have been envisaged when these Clauses were drafted. For example, the whole question of any casual payments becomes very unsatisfactory, and very difficult to define. A case which I have in mind is that of a man given a pension under a regular pension fund scheme, to whom the company say, on his retirement, because he has performed some especially good work during the war: "We should like to give you a little more on your pension—say an extra £300 or £400—in view of the fact that you stayed on and worked so hard during the war." Under the existing law, which will not be altered by this, that original pension, and the additions to it, will naturally be subject to tax in the ordinary way, but it appears more than likely, from the legal advice given in this particular case, that the additional pension, because it is something extra, comes within this definition, and will have to be treated in a special way, the special way being that after taxation has been paid, it is taxed over again under these Clauses.
    That does not seem to us to be the intention. If hon. Members care to look at Sir George Schuster's letter, they will see that he translates what would happen under this Bill to the well-known case of the Lord Chancellor, although the Bill as drawn does not affect anyone except employees of a body corporate. We all know that the Lord Chancellor receives a fixed pension of £5,000 a year on ceasing office. He receives that pension if he has held that office for only one, two or three years. If he were an employee or a director of a corporate body, he would have, under these circumstances, a calculation made on what was the notional premium required to provide that pension and he would be taxed on that as well. It brings about the most fantastic results when there are any alterations here or there. I do not want to go into that further, because it has been published in the Press and anyone can read it.
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    I cannot believe that the Chancellor of the Exchequer, or those who drafted this Clause, had any idea of the wide ramifications inherent in it. It is a bit like the matter we have discussed on other legislation, where it was much easier to take very wide powers in order to deal with one problem. The Solicitor-General will be familiar with that, as it has been raised several times in his presence. I think that is what has happened here, and that very wide powers have been taken to deal with a comparatively small problem. Now that people have looked at the result of the wording of this Clause, they have found that every sort of payment of every sort of person, whose honesty no one has ever suspected, whose motives no one has ever thought anything but honest, are liable to be caught, and caught to the great detriment of his financial position. There are many cases where it has been found, as the result of the calculations necessary under this Clause, that in the last years before retirement, people will have to find taxation payments higher than the income they receive. They will be paying to the State more than they are receiving at work. No one is likely to do that, and in order to get out of the mess, people will wish to retire from their body corporate, depriving it of their services—which will be a pity no doubt—because the Bill has made a charge which is so heavy that they cannot pay it. That cannot be the intention of the right hon. Gentleman.
    10.15 p.m.
    I hope the right hon. Gentleman will be prepared to reconsider and recast these Clauses. We ourselves have been helpful in these matters in the past, and we have had a shot at drafting an Amendment which has not been selected by the Chair. The Amendment to Clause 14, page 10, line 13, was devised as one way, at least, of dealing with this problem. It is largely founded on some legislation which has been passed, or is being passed, through the Canadian Parliament to deal with this problem, as a result of an investigation which took place in that Dominion on this group of subjects. Therefore, it is an Amendment of decent parentage. I hope the right hon. Gentleman will look at the whole matter again, and take note of some of the more extraordinary cases which will be brought to his notice during the Debate. Instead of a corporate body, this

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    should apply to all employers, because if it is right in one case it ought to be right in all others.
    The Chairman: I am afraid I had not appreciated the wide ramifications of this matter, and it would be more satisfactory if we had a wide Debate on the Question that the Clause stand part rather than a Debate on an introductory Amendment.
    Mr. Stanley: We have a very large number of detailed Amendments to Clause 14, which would have to be moved before we came to the Motion that the Clause stand part of the Bill. We do not know what answer the Chancellor may make to the general case which has been put, but it may well be that if he were prepared to promise reconsideration, or make some offer of that kind, some of these details would become unnecessary. It would be a great pity if we had to discuss details first, before we got from the Chancellor an answer on the main principles which are involved in this matter.
    Mr. Dalton: As these Clauses hang together, I thought we might have a brief general discussion. I assumed that Members on the other side, who have studied this matter, and perhaps some of my hon. Friends on this side, would have something to say, and I thought that the Solicitor-General or myself would make some observations on the points raised. I thought I might be able to give an undertaking that if we could get the Clauses in this form now, we would be prepared to study the matter. I do not think we could wish for any extra Parliamentary machinery to be set up, but I thought we should be glad to study the matter with Members opposite and perhaps some of my hon. Friends, and bring forward, on the Report stage, Clauses in a recast and amended form, if a case could be shown. The only alternative to this course would be to go laboriously through Amendment after Amendment which, apart from taking up a lot of time, would be tedious and unprofitable. I am not trying to force anything through in a final form, but we are anxious to stop this serious leakage. I am advised that it ought to be stopped, but it may well be that we have not arrived at the simplest and most effective way of doing it. As to that, we are prepared to consult between now and the Report stage. I am sure we do not want
    1002
    a late Sitting tonight—I was assuming not —and if we could avoid a detailed discussion, Amendment by Amendment, and get these Clauses tonight, on the undertaking I have given, I think a brief general discussion would be helpful.
    The Chairman: I understand it was desired that there should be something in the nature of a Second Reading discussion, and that then it would be quite open to right hon. Members or hon. Members to put down detailed Amendments on the Report stage if they were not satisfied.
    Colonel Crosthwaite-Eyre: Is it to be understood that all the Amendments on the Order Paper will be considered before the Report stage? There are a great number of detailed points and is it to be understood that these are to be considered and reported upon by the Report stage when the view of the Government on the whole matter would be ascertained?
    The Chancellor The Chancellor indicated assent.
    The Chairman: The Amendment in Clause 14, page 10, line 14 has already been moved and I propose to put the question. I understand the Amendment will then be withdrawn by leave and I will put the question that the Clause stand part of the Bill.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Stanley: I think that something has gone a little wrong. We want to hear the Chancellor of the Exchequer's statement before we can agree not to move the detailed Amendments to this Clause. We were hoping that discussion would be taken on the Amendment, and in the light of that we could then decide whether it was necessary to move the other Amendments. We certainly would not agree now to withdraw all the Amendments to Clause 14 before we have even heard the Chancellor of the Exchequer.
    The Chairman: I am sorry, but it is not the usual practice of this House to have a discussion extending over five Clauses on one comparatively minor Amendment. I understood that the proposal of the right hon. and gallant

    1003
    Member for Gainsborough (Captain Crookshank) was that there should be something in the nature of a Second Reading discussion and that the Chancellor of the Exchequer, after right hon. Members and hon. Members who desire to do so have spoken, should give some assurance, and if on the Report stage the result of that assurance was not satisfactory to the right hon. and gallant Member and his friends it would be open to them to put down Amendments again. The Amendment which was before the House has been withdrawn, and I now put the Question, "That the Clause stand part of the Bill."
    Mr. Stanley: Am I to understand that none of the other Amendments to Clause 14 have been selected?
    The Chairman: I am sorry, but I have put the Question, "That the Clause stand part of the Bill."
    Mr. Stanley: That is not the result which we wish, and not the result for which we have asked. We hoped to have a general discussion on the first Amendment, and we hoped that in the light of the Chancellor's statement, it would be unnecessary for us to move any of these other Amendments. What we certainly have not asked for is, that this Amendment—for some reason which I do not understand—should not now be selected by the Chair. If we are dissatisfied with the answer of the Chancellor of the Exchequer at the end, we should find that our opportunity of moving this Amendment in detail would have been thrown away.
    Mr. Dalton: I think that we are in danger of so long discussing procedure as to lose sight of the direction in which we want to go. I thought that it would meet the general convenience if those hon. Members, of whom there are a number who have studied this, would explain their criticisms of and their general objections to the Clause as drafted. I thought that then either my hon. and learned Friend or I would make a reply in the light of those speeches. Then we should be able I hope, if this reply is satisfactory—because there is nothing essentially controversial in this Clause—to have a consultation between the ordinary Members of the House and representatives of the Government with a view to seeing whether before we reach the Report stage
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    we could put down and redraft the Clauses in the light of such discussion. I think that was the intention. What particular peg we hang this discussion on does not matter much. Even some of my own Amendments fall under this arrangement, but I do not object to that.
    Mr. Stanley: I prefer the discussion to hang on the peg of the first Amendment.
    The Chairman: I understood that the right hon. Gentleman and his friends on the Opposition side of the House asked for this general discussion. When the Chancellor agreed, I took the action I did, and I certainly could not have agreed had I appreciated that it was desired to have a discussion extending over five Clauses based on one small Amendment on one Clause. I am sorry, but I think it will work out all right. The question now before the Committee is, "That the Clause stand part of the Bill."
    Mr. Eccles: Now that we are to discuss these five Clauses together, I should like briefly to give our general objections to the Clauses. I want to start by saying something which will repeat what my right hon. Friend has just said, namely, that we on this side are as much concerned as the Chancellor to catch those who are evading tax. There is, therefore, no question of political principle. There are a certain number of transactions which have taken place and which undoubtedly will have the effect of evading tax. These we should like to see stopped by a reasonable Amendment in the Finance Bill. Our complaint about these Clauses is that they are unfair and that they have strayed over a much wider field beyond that of the evaders.
    First, I would point out to the Committee that these Clauses affect the pensions and lump sum benefits of a certain number of people who have been singled out because they are servants of corporate bodies. Anyone who is a civil servant, a servant of a local authority, of a single master, or of a partnership, escapes. It is not really fair to single out a certain type of pensioner who is enjoying some remuneration at the end of his service and leave a whole lot of other people who are also enjoying remuneration of one kind or another. It is unfair to a certain section of the people. I am no lawyer, but I understand that the legal grounds on

    1005
    which this Clause can be defended derive from the law in relation to annuities. I put it to the Committee that the law is a bad law and that many times we have put down Amendments to previous Finance Bills to try to get it amended.
    10.30 p.m.
    It is clear that if an ordinary citizen wants to take out an annuity which is not terminable, he has to pay tax twice. First of all, he pays tax on his income, and then when that sum is paid, he has a sum of money left. He may want to pay part of that money as a lump sum in order to receive £100 a year when he reaches the age of 60. He is taxed on that £100 a year when it comes in. He may die after receiving the first £100, the result, of course, is that he has paid much more in tax, since he paid tax on his income from which he saved money to put the capital sum down. The law as it stands is bad in relation to annuities for which there is no capital payment. A person is taxed twice. I understand that the position of the Government in inserting this Clause was that they wanted to make members of corporate bodies pay tax twice in the same way that anyone does who buys an ordinary annuity. Their justification is an extension of what I consider to be bad law.
    In order to show the Committee how it will work out in relation to the employees of ordinary business firms, I would like to give one or two examples. Supposing a man is killed at his work and has not been covered by any approved scheme. It may be only a small firm, and it may not have enough money for an approved scheme. The directors may say that they would like to do something for the widow, and they may decide to give the widow a pension of £150 a year for life. Under this Clause, the following effect takes place. Supposing the widow is aged 40, they have to calculate what is her expectations of life. They have to find a capital sum which that £150 a year represents over her life. It may well be £7,000. Having decided that is the notional value of £150 a year for the rest of her life, they have to discover what would be the annual premiums spread over six years in order to obtain this sum of £7,000. It would be more or less £1,000 a year for six years. This widow, under the Clause, would have to pay ordinary Income Tax on £1,000 a year
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    for the first six years in which she received £150. The result would be that she would have a minus quantity for six years. That is the effect of carrying out, under this Clause, a bad principle of law which obtains in relation to annuities.
    It does not end there. It is more absurd than that. The ordinary practice of a company, if it does what I have suggested, and gives the widow of a man in its service who has been killed at his work a purely voluntary pension of £150, is to say, "We will give the pension until you remarry." That is the ordinary practice, as the Solicitor-General knows. Therefore, under this Clause, the calculation has to be made of what is the expectation of time before that widow remarries in order that they may know the capital sum as represented by the £150 a year. Is the Government going to look at this widow aged 40, and say, "This year, next year, some time never"? That is what has to happen under this Clause. It is manifestly absurd that such a calculation should have to be made.
    Suppose that there is the sort of man quoted by the right hon. and gallant Member for Gainsborough (Captain Crookshank), who retires in 1953 and is given a pension voluntarily, where the company has not paid into any scheme for, say, £150. What happens is that in his case, too, a calculation has to be made of the capital value of that £150 for the remainder of his life, and he has to pay on that sum Income Tax for six years. Suppose that he dies a year after he retires? Then, under this Clause, his estate becomes liable to Income Tax on the whole of the six years' premiums representing a capital sum of whatever his expectation of life was at the time he retired. That is manifestly absurd. I cannot think that the Chancellor of the Exchequer really meant things of that sort to come about. I am sure the Chancellor will say that none of these things will fall upon pensions which are paid out under an approved scheme: that Is to say, a scheme which has been taken to the Commissioners, and has been approved. If we were to discuss these Amendments one by one on these Clauses, I would warn the learned Solicitor-General that I have 24 valid questions to ask him regarding these schemes and how they are to be approved. However, I will not go into that.

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    I will only say that a big company which has an approved scheme will always find the odd case which is not covered under its scheme. The companies want to make provision for those extraordinary accidents which occur. In the case of a small man employing half a dozen men —perhaps prosperous although small—it may not be worth his while to have a scheme approved by the Commissioners. Four or five of his employees may be changing fairly often. It may be that one or two of the old ones go on. He may want to do something for the old ones, but it is not worth his while to have a scheme. But if he does have a scheme, every time benefit is given in the future it will be taxed twice, in the sense that the income of the employee will have added to it the notional premiums which the company would have paid to assure the pension, whatever that may be, if it had gone to an insurance company or if it had had one of these approved schemes.
    I could talk on this matter for a long time, but I do not intend to keep the Committee very long. I think this thing is absurd. The Chancellor's intention is to catch certain forms of evasion. I think that big lump sum payments to some official or director of a company at the time he retires ought to be taxed. Such payments should be caught and dealt with. But this Clause catches a quite unknown number of people, and there is no reason why they should be caught. If the Chancellor insists on this, it will be quite unfair not to bring in the Civil Service and local government; it will be unfair not to bring in the Lord Chancellor and all the other dignitaries who get pensions. We know that could be shown to be quite absurd. It is also absurd in regard to these small sums. I am sure that the Chancellor of the Exchequer has received evidence from serious people connected with business that this will upset their businesses, and will put upon their clerical staffs an immense amount of extra work. I do not know exactly what part of the Inland Revenue Department will be dealing with this matter, but we know what the conditions are like in certain parts of that service. Every scheme will have to be brought to them to be approved, and there will be a mounting up of work which, I am sure, will not be worth while.
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    From all the questions I was going to ask the Government I will put just one. It is highly important that employees of British companies who do their service abroad should not be brought in under this Clause. When a man goes abroad, say to Venezuela or to some other place where the climate is not very good, it is customary to give him an undertaking that when he retires after service with some British company, and comes back to the United Kingdom, he will have a lump sum and a pension, and will be able to make a home in England when he comes back. Many men and their families would not go abroad if they did not know that was waiting for them when they came back. There is nothing that we can see in this Clause which enables the employee who is not resident in the United Kingdom to escape tax. I am sure it is the Government's intention not to bring in those people, but I ask that question because, particularly interested as we all are in the development of oils and minerals in foreign countries and in the British Empire, if the Government do not deal with this matter, they will be injuring our prospects very much. I hope that on that point we can get an assurance tonight.
    The main thing I want to put to the Chancellor of the Exchequer is that these Clauses are all right in intention, but their effect is really unfair, and we should like to see them most carefully redrafted, and, if time permits, evidence taken from those people who are really interested in, and understand, these pension schemes, and who will co-operate in catching the people who ought to be caught and see that those who are perfectly innocent and honest are not penalised under the same legislation.
    Mr. Callaghan: There is a great deal of what was said by the right hon. and gallant Member for Gainsborough (Captain Crookshank) and the hon. Member for Chippenham (Mr. Eccles) with which I would agree. I am not sure that we have not to some extent brought this upon ourselves. We said that we were going to subject these Clauses, when produced, to very critical examination in order to make certain. I imagine that the critical examination should be confined to what is proper and reasonable. These Clauses have been drawn in such a way that they really do make great confusion of a very

    1009
    complicated subject. One of the difficulties is that just as there is, under the Income Tax law, no definition of what is income, so there is no definition of what constitutes superannuation, and in consequence we are faced with this hotchpotch of Clauses which are designed to deal with a very real evil, but which catch or might catch, quite simple, homely people in their ambit.
    To give a simple example, I would hazard the view that it is not clear from this Clause as drawn whether the clerk who is given three months' salary in lieu of notice is liable to tax in respect of that payment. It is quite possible to construe the Clause so that he would be so liable, though it is the long-established practice that he is not. There is quite another reason, apart from the pension, which does make something like this necessary, and that is the effect of two decisions in two cases, one in 1932 and the other in 1941, which have had the effect of making the capital sum paid for these purposes taxable neither in hands of the donor nor in the hands of the recipient, and it is clearly desirable to draft some legislation to catch cases of that sort. But we are going wider than that.
    I fear that the complications of trying to administer this Clause will be exceedingly difficult. The hon. Member for Chippenham stated that he had 24 valid questions to ask. What I would like to say is that I counted 23 different types of cases, but then I found that it was time for tea, so I left it; but I have no doubt that there are many more, and I hope the Chancellor will say that he will reconsider this Clause to see if anything can be done. What is happening here is the same thing as is happening elsewhere in the field of Income Tax. It is becoming so complicated that we are suffering from a degeneration—a fatty degeneration—and Income Tax is now beginning to suffer that fate which overtook the Window Tax, and various other taxes, and we are having to use this extremely intricate machinery to catch a fairly small form of evasion because of the complications into which modern life is getting us. There is the question of double taxation. As I understand it, the Chancellor said that the case for doing this varies from the tax on annuities. He did not, I think, carry it far enough. It is also true of sums saved voluntarily in the form of life in-
    1010
    surance. If one contracts a policy which is due to mature in thirty years' time, and which one then invests, one is liable to taxation on the income which accrues. It is a liability for anybody who saves money and then puts that money into an investment from which income is drawn.
    10.45 p.m.
    Sir Hugh Lucas-Tooth: May I interrupt the hon. Member? I think that it does not apply with so much weight to the person drawing an income from an investment as to the annuitant, whose income is being used up.
    Mr. Callghan: I agree, and that is a strong case for relieving the annuitant. It is a well-tried practice that the man who saves money and then converts his savings into a capital sum is taxed on it. He pays tax in the course of saving his money, and he pays tax later on when the money provides an income; but I do not think there is a more onerous burden of double taxation imposed on any of these people than on the person who voluntarily indulges in life insurance. There is one type of case in which I think it operates in a particularly hard way. Let us think of the company which makes an agreement with a manager and undertakes to pay a pension after fifteen years. This man is to be assessed on the amount paid for him year by year. Supposing the firm becomes insolvent after ten years. The man has, in effect, paid tax on the proportion they have put away on his behalf for ten years. There is no provision in this Clause for repaying him for something which he has never had and something which he is never going to get. That seems to be an obvious deficiency that ought to be put right, and there are many others which I could quote. Sufficient has been said to show that the whole of the Committee is agreed that there is a case here to be met, and that we do want legislation of this sort. This looks like blossoming into a first-class "racket". I am not sure whether it is Parliamentary or not for me to use such an expression. On the other hand, these Clauses as drawn cover both the just and the unjust, and will cause a lot of inconvenience to the just and to the Inland Revenue Department, and I hope my right hon. Friend, whose drafting I am sure it is not, will reconsider the matter and will let us have fresh Clauses on the Report stage.
    Colonel Crosthwaite-Eyre: The hon. Member for South Cardiff (Mr. Callaghan) made his final point that these Clauses covered the just and the unjust, and his argument was, in brief, that for this reason of possible injustice these Clauses should be reviewed. With this I agree. I do think the Chancellor of the Exchequer, or whoever is going to answer the Debate, should as his first argument, since his advisers have through him made the case, tell the Committee what is the extent of the evasions these Clauses are going to cover. We on this side of the Committee so far have had no indication whatsoever whether this loophole is large or whether it is small. We have no idea whether these Clauses, which are penal in their nature, are intended to remedy some grave defect in the social structure of taxation, or whether they are just some piece of Socialist legislation designed to appeal to hon. Members on the Government Benches.
    In so far as it may be the former, we are more than ready to support the Chancellor, but we do feel that we should have some information as to the extent he thinks this is a grave matter. He says, and I think I quote him rightly, that there are a number of Surtax paws evading tax by obtaining benefits, often in retirement, and not being taxed. He said, if I remember rightly, earlier and within the last half-hour, that that was the advice of those responsible for this legislation. I think he ought to come out and tell the Committee the total sum involved. Only then can this Committee have any idea of the gravity of the issue. We have been dealing with this matter purely theoretically as to whether this is a grave matter or not. If it is grave, we on this side will be more than ready to co-operate in stopping it, and if it is not, it is then merely another measure propounded, not for the benefit of the body politic, but merely to satisfy the class hatred of hon. Members opposite. Until we know which is the issue, it is impossible for the Committee to judge it. This is something which the advisers of the Government have stated is used by unscrupulous people to the disadvantage of the State.—[interruption.] We on this side of the Committee do not qualify for a first-class return ticket to Moscow.
    1012
    If these Clauses are designed to stop a loophole, why is it that they are designed so that they prohibit any ex gratia payment to a servant of a company who, through misadventure, may not be able to complete his term of office? If a man, say, the secretary of a company, falls ill, this Clause prohibits him from being pensioned off; because that would merely result in the back payment of tax on an assessment of six years, plus demands on whatever he may receive in future. This would render the recipient insolvent. Why has the Chancellor of the Exchequer drafted that Clause so that any payment made to a man dispossessed of his job shall be taxed? Supposing the Minister of Fuel and Power takes over an electricity company and dispenses with a director. That director is entitled to certain payments. It has nothing to do with him that he has been sacked. But that individual will be taxed on what he will receive for loss of compensation under this Bill. Therefore, he will not only lose his job, but he will be taxed in a penal manner, which will put him in such a position that he will have to pay to the Chancellor of the Exchequer more than he can possibly receive from the Ministry of Fuel and Power as compensation. That seems to me so illogical that I cannot believe that even the Chancellor of the Exchequer is willing to defend it.
    I would put this further point. He has made it a condition that all directors and all employees are to be considered under this scheme. But, surely, he knows that that is an impossible requirement, that in no firm is it possible to compare all directors and all employees. One has to take a reasonably comparative view between directors as a class and employees as a class. To try and set down as a standard that all employees and all directors shall be taken in a group is impossible, and to put that down as one of the conditions which he demands under Clause 14 is merely going to mean that no scheme whatever can come within the terms of the Finance Bill.
    He has further said that the Income Tax Commissioners may withdraw their approval, but at no stage has he made any way in which people can appeal against their decisions. One of the things I believe is that the strength of the Treasury lies in the elasticity of the Finance Acts. I have on various occa-

    1013
    sions had the necessity of appealing to the Treasury. The one thing I have always found is that in the Finance Acts they have always a margin in which they can make allowance for common sense. These Clauses leave no such allowance whatever for common sense. They make it a matter of fact, a matter in which every word of the Clauses is bound to be rigidly adhered to. I would also like to ask the Chancellor of the Echequer whether in these Clauses he could not permit some kind of an appeal; could not he make it possible for anyone who disagrees with the Income Tax Commissioners in a direction to have an appeal to special Commissioners? I would like anyone to have the right within 30 days, or whatever period it might be, to appeal.
    11.0 p.m.
    I say to the Chancellor of the Exchequer, that no matter how he drafts this Clause, he can never hope, in justice, to make a watertight definition. The more he strives to make it watertight, the more difficult he is going to make it for an honest employer to carry out his duties towards his employee. I suggest to him that if he wishes to fulfil the intention of what he is trying to do, he will make it far less watertight. He will give far more discretion to the Commissioners of Income Tax and far more discretion of appeal to the Special Commissioners. He will do what the Treasury always strive to do— to make all regulations of this kind such that whilst the evil cannot escape, anyone with an honest case can be certain of getting a just decision. If I may say so, I have taken part—this is personal —in a recent case with the Treasury. It was a permissive case in which the Treasury could make directions or not as they liked. The whole case depended on whether the Treasury in their discretion made an order or not. That, so far as I was concerned, resulted in an equitable decision.
    I suggest to the Committee that this penal Clause, if passed in its present form, gives the Treasury no discretion, but forces the Treasury to make penal legislation designed to stop the rabbit-hole when they are trying to catch the badger. That will not work. If they will frame this Clause again to give some discretion to the Treasury, and to allow appeal, and to make permissive directions and, above all, to encourage industry to make provi-
    1014
    sion for those people who fall by the roadside, and for whom they wish to provide, then indeed not only will they have stopped the abuse to which they refer, but they will have done something to aid industry as a whole. As these Clauses stand, they are impossible. We are hoping they may revise them, because both sides of the Committee are equally keen to stop abuse and yet maintain the right of industry to provide for the individual.
    The Solicitor-General (Sir Frank Soskice): On all sides I believe we are agreed on the necessity of some legislation. The right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) indicated from his own experience that it would not always be in the public interest to state exactly what are dimensions of the evil against which it is desired to legislate. If I may adopt what he says, I will content myself by saying simply that there is an evil and it certainly does require some action. I believe that on both sides we are agreed about that.
    The question the Committee desired to debate is whether we have really gone about it in the right way and whether we have cast our net too wide. My right hon. Friend has given an assurance, and I think it may be of assistance to the Committee in considering what further course is to be taken between now and Report, if I indicate the broad outlines, the sort of lines on which we have endeavoured to tackle this problem. May I, therefore, state the general law of the position as I see it? Supposing there were no excepted approved superannuation schemes and funds under the 1921 and 1922 Acts. I shall say a little more about them in a moment. But leaving them out of account, and considering what would be the law apart from that, I think it would be this.
    Suppose we have an employer and an employee, and that the employer makes a contribution to a fund, or an insurance company, or to any other similar institution, with a view to procuring what we have called, in general terms, a retirement benefit for his employee; and suppose that the employee also makes an equivalent, proportionate contribution towards the fund himself: the employer's contribution would be allowable for a reduction, being regarded as a trade ex-

    1015
    pense. The employee's contribution would be in this position: if the employee, as a result of the joint contributions, obtained an absolute right to receive and enjoy a retirement benefit in whatever form, it may be that the employer's contribution would form part of the remuneration that the employee received, that is to say, what the employer in fact contributed on behalf of the employee would be regarded as part of the employee's remuneration; and the result of that would be that it would be taxed as all the rest of his remuneration. In other words, as the law stands, disregarding excepted approved superannuation schemes, the employee would have to pay tax upon the employer's contribution. That is the position from which we start.
    Starting from that general position, one finds that the law has excepted from that principle certain schemes of funds. First, there is Section 32 of the Finance Act, 1921, and that excepts approved superannuation funds; and superannuation funds which come within the scope of that Section of that Act work out in this way. The employee, in that particular case, does not have to pay tax upon the contribution made on his behalf. That is what happens with regard to those particular funds. Funds which are approved for the purpose of the 1921 Act, for the purpose of that Section, are funds with regard to which, speaking in general terms, it can be said that their main object is to provide a real pension—not a lump sum, but a pension. They may provide a subsidiary lump sum, but their primary object must be to provide a pension. When they do not do that, they will not be approved under Section 32 of the 1921 Act. But if they are approved, as I have said, the employer and the employees are allowed relief from tax in respect of their contributions.
    Then there is Section 31 of the Finance Act, 1922, which does very much the same thing with regard to statutory superannuation schemes. If hon. Members will conceive in a sort of group the excepted approved schemes and funds in these cases, relief is given, amongst other forms of relief, in respect of the contributions of the employer and the employee.
    Major Haughton: Am I not right in saying that the Commissioners have the
    1016
    absolute right within their discretion to turn down the schemes that the hon. and learned Gentleman is discussing?
    The Solicitor-General: Certainly, under Section 32 of the 1921 Act the Commissioners have a discretion as to what schemes they will approve; and that, in point of fact, is what we have reintroduced in another form in the Clauses we are discussing. We have got that machinery. We have tried to introduce that machinery.
    Colonel Crosthwaite-Eyre: The Solicitor-General says the Government are reintroducing the machinery. How far retrospectively can that machinery be introduced? If the Commissioners make an order, how far retrospectively can that order be made?
    The Solicitor-General: I will come to that point later. The position with which one starts is by taking Clause 14. What does Clause 14 do? It is designed to achieve a limited object, to prevent an abuse of this kind. Supposing there is an employee who has not got an absolute right to retirement benefits, and supposing that right is contingent. Supposing he does not obtain an indefensible claim to retirement payment which is made to some third party, he does not have to pay a tax on the employer's contributions.
    I hope I have made that clear, because that is crucial to the understanding of Clause 14. If a man obtains an indefensible right to the retirement benefits, he has to pay tax on his employer's contribution. I am not talking now about approved schemes. If he obtains only a contingent right, he does not have to pay tax on the employer's contribution. Therefore, the first abuse which we want to come to is the abuse which takes advantage of that circumstance, because it is not difficult to conceive a scheme in which the employee does not have to pay tax on the employer's contribution. It is simple to arrange and formulate a scheme in which the employee's right to the retirement benefit is only a contingent right. I can assure hon. Members that that device has been adopted and is being adopted. Therefore, we want to stop it.
    How do we seek to stop it? In the first place, if hon. Members will look at Clause 14, the first thing we say with regard to any statutory pension scheme—

    1017
    that is to say, a scheme within Section 31 of the Finance Act, 1922—is that this Clause does not apply. May I compendiously refer to that as an approved scheme? Under Clause 14, there is no obligation at all with regard to an approved scheme, but the Clause goes on to say that it shall not have an obligation with regard to a great many more schemes, and to any scheme which the Commissioners approve. Hon. Members will see that under Subsection (2, c) any scheme which the Commissioners approve will also be taken out of the scope of Clause 14. That is Subsection (2, d) which excepts certain existing schemes, which thus come out of the ambit of Clause 14. By so doing we effect the object which we have in mind.
    Therefore, we take out everything which can be said to be a genuine superannuation fund or scheme. When I use the term "genuine," I want to use a non-controversial term. What I mean to infer is that any real superannuation fund —that is, a fund which is really designed to provide pensions—is taken out of the ambit of Clause 14 altogether. It is either a statutory one or it is an approved one, or one which the Commissioners are given the power, under this Clause, to approve. They can write it out of the picture altogether. So we are left only with those schemes with regard to which it can be stated that, for one reason or another, they have some deleterious characteristic in them whereby they cannot be approved. They are not really genuine pension schemes. It is only with regard to those that Clause 14 operates. With regard to them it says that we must not rely upon the device to make a claim to retirement benefit a contingent claim whether that device has been adopted or not. The employee has to pay tax on the employers contribution to the fund or the insurance company, whichever it may be. That is all Clause 14 does.
    May I turn to Clause 15 and review it, and Clauses 16 and 17, in that same way? Clause 15 deals with schemes which can be made to be approved schemes, or approvable schemes, in that same way as Clause 14 does; so we are left only with those schemes which have something objectionable about them. With regard to them, Clause 15 says that position must be treated as if an employee has received a notional contribution, as
    1018
    if an employer has made a contribution on his behalf, so that he has to be charged tax on the basis that he is receiving an advantage on which his employer has made a contribution, very much in the same position as the employee or director contemplated in Clause 14. Clause 16 deals with a particular type of director, that part-time director or controlling director, to use a general description, and it says, in regard to that type of director, that he is to be treated, in effect, as if he were not an employee of the company, which he really is not. He is more or less in a position of a proprietor or partner. He is treated not as an employee, but as being in the position of an ordinary citizen making an investment out of his own money, and, therefore, he is treated, when given some form of gratuity or any other payment, as if he has received an emolument, and, therefore, he pays tax on it during that year. A private individual who buys an annuity of £1,000 will have to pay tax on £1,000 when he earns it, and when he takes it out of his bank he will have to pay tax on the annuity. Here, again, the part-time director is to be treated as if he were an ordinary citizen buying an annuity.
    11.15 p.m.
    Colonel Crosthwaite-Eyre: The hon. and learned Gentleman said part-time or controlling director, which I presume refers to the definition in Clause 18. In view of modern industrial organisation, how can he say a director is part-time if he holds only five per cent. of any company?
    The Solicitor-General: I am endeavouring to give the general principles on which we base this Clause. We try to draw a distinction between the two. Clause 17 gathers up those cases which have not been brought into the three earlier Clauses. This Clause deals with directors who are not part-time or controlling directors, but again are in the position of persons within Clause 15. They are treated as if, during the previous six years, a notional payment had been made on their behalf to buy an annuity. The next clause is simply a definitions Clause. That is the general framework which we have endeavoured to put in these Clauses. It is not easy to understand, but I have done my best to explain it, so that hon. Members can

    1019
    consider the Clauses later on in the course of the Debate, or between now and the Report stage.
    Major Haughton: I think we are debating this matter in a helpful atmosphere. In the first place, I think it most helpful that we are given enough latitude to debate these Clauses together. In the second place, it is most helpful that the Chancellor of the Exchequer said he would reconsider this matter after having heard the speeches made from different parts of the Committee.
    The hon. Member for South Cardiff (Mr. Callaghan), in his very pertinent remarks, said that we are dealing with a very complex subject. We are dealing really with two very simple main issues. The two main things at which the Revenue are aiming under this Clause are lump-sum payments and annuities purchased by companies. These are two perfectly simple things. There is nothing wrong in them. There could be wrong in lump-sum payments, if there was any evasion, but when we come to annuities it is a question of the complexity of the law. It is a question of the "out-of-dateness"—if that is grammatical—of the law concerning annuities. There is not a lawyer in the Committee at present who would not agree with me that the lay, concerning these things is very tricky, and that the Clauses as drafted in this Bill are intended to keep within the framework of a very antiquated and very tricky law, whereas we know that in other countries, such as Canada and South Africa, these things have been subjected to commissions to straighten them out, so that the law concerning annuities and Income Tax matters shall be easy, simple and more readily understood. There is no question at all that these Clauses are striving to keep within a difficult law. The learned Solicitor-General quoted Clause 15 and he said that Clause 15 is entirely reasonable. As a lawyer, of course, he was striving to keep within it.
    At this late hour, I do not want to weary the Committee with examples. The hon. Member for South Cardiff said he had worked out 23 examples before tea, and then he got weary. I got weary when I worked out three, but, if I may show what I regard as the absurdity of Clause 15, I will quote just one example. This is an example I worked out in connection
    1020
    with Clause 15. Suppose that a company agrees to pay its managing director, instead of a salary of £5,000 a year, until he retires, £4,000 a year until he retires, and £2,000 a year afterwards. The managing director will pay tax at full rates on all the money received under this agreement.
    There can be no question whatever of evading tax, and it is difficult to see what on earth it can have to do with the Revenue authorities if the company chooses to pay him in this fashion. Under Clause 15, however, in future, the managing director would have to pay tax until he retired not only on his income of £4,000 a year, but, in addition, on the equivalent of the premium he would have had to pay to an insurance company to provide him with the £2,000 which he will receive from the company as fully taxable income after he retires. That is all I have to say at this stage. The Chancellor of the Exchequer has been good enough to say he will reconsider these matters. I have no doubt he will be good enough to consider the cases we have formulated. I would say, before I sit down, that I think it is more reasonable to frame a law within which reasonable taxation can be applied than to formulate Clauses in the Finance Bill in order to keep within the bounds of an antiquated and disjointed law.
    Mr. Donovan: If the Government are going to re-consider these Clauses, may I put to them a point which I think merits consideration. It is a development of the point which was put, in the first place, by the hon. Member for Chippenham (Mr. Eccles) in relation to foreign employees of British concerns. In order to put my point, I must keep away, as far as possible, from the language of these Clauses. I will, therefore, put it in the form of a simple illustration. A British company is carrying on business in India and in various other parts of the world. The business is controlled from this country. It is therefore resident in this country, and pays tax on the whole of its profits, wherever they are made. It, therefore, pays on its Indian profits. Due to developments in India, the company decides to close its Indian branch and to do no more business in that country. It has some thousands of Indian natives in its employment in India. In order to preserve its good name, the company decides that it cannot dismiss those employees

    1021
    without some reward, and that it must give them something in the nature of compensation for the loss of their employment. It does so.
    What is to happen now is that under Clause 17, using broad language, the amount which each employee gets is to be divided into six, and then, to use the language of the Clause, that amount shall be deemed for all the purposes of the Income Tax Acts to be income of his for each of these six years, and assessable to tax under Schedule E. That will not worry the Indian natives, or imperil the settlement, because Indians cannot be assessed for Income Tax; but since 1944, the company can, because it is the company's duty under P.A.Y.E. regulations to deduct the tax. If these words are to be given their literal meaning, we get the anomaly that the native is not liable for tax on earning a wage, but he is liable for tax on this particular sum. I know that this result is not intended. These words are too wide in their drafting. What is really meant is that, provided the employee has an office or employment with that British company, under Schedule E that particular sum shall be deemed to be income from that source. I merely ask whether the Government will consider this point and introduce some limiting words on the Report stage.
    Mr. Oliver Poole: It happens that I spend a considerable part of every day dealing with insurance matters of this sort. Let me say straight away that I would hesitate, because I know the complexity of these matters, to express any expert knowledge of them. I was very interested in the remarks of the hon. Member for South Cardiff (Mr. Callaghan), and I think that if he and I, with our expert knowledge of Inland Revenue matters got together, we could produce a number of anomalies which would surprise not only ourselves, but the right hon. Gentleman. I do not wish to go over the question of the necessity for reconsidering these Clauses; nor, in fact, to add to the instances of complexities. There are, indeed, very great complexities. What I am concerned about at the moment is the assurance which the right hon. Gentleman is going to give at the end of our discussion. I rather gather from the remarks he made, and from the remark, of the Solicitor-General—whom I would like to congratulate on his explanation of
    1022
    these complicated Clauses, for though they are extremely difficult, I was able to follow him quite easily—that the Chancellor of the Exchequer is going to say, "I will reconsider the Clause and do something between now and the Report stage." I think it is unlikely that he could, in fact, in that short time redraft these Clauses in such a way as to meet the problem, and I suggest that, for two reasons, he will have difficulty in doing so.
    The first is that there has been since the war an enormous increase in the demand for this type of insurance, and because of that, naturally, all the insurance companies are thinking out new ways of meeting the demand, not to evade taxation, but to meet the general demand. It would be a very great pity if at this stage ill-devised Clauses were put into this Finance Bill which might do irredeemable harm to the general practice of insurance at this time. It is a most complicated matter. Many companies have schemes they are bringing out—a vast variety of schemes—and I do not believe that it can be done overnight. The second point which I want to put to the Chancellor for his consideration is very difficult at the moment. I admit that as taxation has risen, more and more loopholes have been found. So long as taxation is kept at its present high rate, it is absolutely inevitable that people will continue to look for ways round it. We might consider it honest or dishonest, however we feel according to the circumstances, but do not let us waste time discussing that. Let us admit that it is so.
    What is, in fact, happening is that certain regulations and laws have been passed and new methods have been found, leaks have been noticed, more legislation and more regulations have been brought in and passed, and a complicated device has been built up. These Clauses, which are extremely complicated, add further complexities, and I suggest to the Chancellor that what is really needed is that the whole thing should be gone into most carefully. I suggest that for two reasons. The first is the complexity of the position —I know of my own personal experience how complicated it is—and the second is the position in the insurance world at this moment, when there is a great demand for this type of insurance. Even if it means bringing in something on the Report

    1023
    stage, I ask the Chancellor to undertake that in the near future there will be a really full inquiry into this very important and complicated matter.
    11.30 p.m.
    Mr. Collins: I want to put a small point on Clause 14. I think I can illustrate my point best by quoting an actual example I have in mind. I have knowledge of a superannuation scheme which has been approved by the Commissioners of Inland Revenue. It has the usual features of pension, time, age and so on, and under this scheme the firm pays some 80 per cent. of the contributions and the employees 20 per cent But it has one unusual feature in that if an employee leaves the firm—perhaps a girl gets married—he or she has the option, of continuing at his or her own cost, or of commuting. It may take the form of a dowry. The person can still draw it out, the sum varying according to the number of years he or she has been in the superannuation scheme. I may be wrong, but according to my reading of the Clause the Commissioners of Inland Revenue shall not be able in future to approve schemes where payments are commuted. In other words, it would appear that such schemes—schemes which I have emphasised have already been approved by the Commissioners of Inland Revenue—would contain what the Solicitor-General called "deleterious characteristics." It would appear to me that such characteristics would not normally be undesirable. We want the young people to go into these schemes, but it might well be that they would be "put off" if they were told they could not commute in this way. It might be subject to abuse, but I do not think it would be deleterious in the sense in which I have put it, and I hope, therefore, that the Chancellor will look at cases of this sort.
    Sir P. Bennett: I should like to follow the remarks which we have just heard. The hon. Member for Taunton (Mr. Collins) is correct in the views he has expressed. For the last 25 years or more, I have tried to wrestle with these pensions schemes for employees, and I think the question of the girls is a very difficult one. We could not get our girls to join a pension scheme if we told them that the only hope they had of ever getting any-
    1024
    thing was that they should work until they were 60 or 65 years of age and then have a pension. Of course, many of them do not expect to stay in the company's employment for that period. They expect to marry, and when they leave to get married they expect a small marriage dowry to take with them.
    I rose particularly to ask the Chancellor, in considering this matter, to give a little thought to those who are trying to run these schemes; the people who are worrying about, and working on, these schemes. We have been re-organising our scheme. Values of money have altered, and there are many other facts which have to be borne in mind, but, with all one does, one can always find the hard case which needs special payments. One cannot get out of that, and what with men remarrying, and young widows and old widows, the thing is full of headaches. It is one of the most difficult problems. We try to cover everything we can, but we always find that there are cases wanting special assistance, or ex gratia payments, or something of that sort. We who run these schemes are not doing it for what we can get out of them, although we do get the good will and loyalty and support of the workers. I am sure the Chancellor would not wish that that should be taken away, and I ask him please not to make us say, "We wish we lived in the days of our grandfathers when there was no need to worry about these things."
    Mr. Dalton: I think perhaps it would be helpful if I gave some explanations, although all I wish to say at this stage of the Debate, without making technical observations, is that we have had an excellent series of contributions from various parts of the Committee. I will not name any one particular contribution more than another, because hon. Members have shown a very great knowledge of this very difficult question. I agree with the hon. Member for Edgbaston (Sir P. Bennett) that this can be all headaches, and I agree with the hon. Member for Oswestry (Mr. Poole) who shows much knowledge of this matter, and who did not think we should be able to arrive very quickly at a perfect and final solution. I am sure he is right. But between now and the Report stage, in the light of what has been said, those who advise me in conjunction with members of that Committee who have

    1025
    contributions to make—we can arrange that machinery of consultation very easily —can assist, at any rate, in preparing what I hope will be a distinct improvement both from the point of view of intelligibility, and perhaps even prosaic elegance, of those Clauses as they now stand. When dealing with these gaps in the law through which evasion operates, it may well be possible to make a fairly good job this year; but none the less a good deal will be thrown forward on future years, and for the Clauses next year to carry the process a little further.
    I agree with the hon. Member for Oswestry that we shall not get finality, but there is general agreement that there is an abuse to be dealt with. The extent to which it may grow and extend is a matter of speculation, but if we do not stop it up now it may get worse. I will most happily discuss it with those who have spoken, between now and the Report stage, and I am very anxious that any hon. Member making useful contributions tonight should co-operate in giving us this year improved Clauses aiming at this object we have in common. I do not know whether I can usefully say anything more at the moment, but I repeat the agreement we reached at the beginning of these discussions. I will not move any of my Amendments on the Order Paper, but will reserve my thoughts for later on, and if we could now get the Clauses subject to these arrangements, we would put down amended Clauses for the Report stage. We shall see that at that time they are not unduly galloped through and that a reasonable time is allowed for examining them.
    Mr. Stanley: I think I can say, on behalf of my hon. Friends, that we are very grateful to the Chancellor of the Exchequer for the suggestion he make. He was quite right in saying that there is nothing fundamentally controversial about the Clauses. All of us want flagrant evasions to be stopped and no sound scheme to be interfered with, or the administration clogged. The fact is that in the pursuit of the evader those responsible for the drafting of the Clauses have overlooked to some extent the damage they do to the innocent, and it is the desire on all sides to see that put right.
    The Chancellor of the Exchequer has offered, between now and the Report
    1026
    stage, consultations with Members on all sides who are interested, and no doubt with bodies and experts outside who can bring special knowledge and experience to hear and advise some common form. I had intended to make a point in support of my hon. Friend the Member for Oswestry (Mr. Poole), who I think made a most valuable contribution, but the Chancellor of the Exchequer has already agreed with the hon. Gentleman and there is no need, therefore, for me to press the point. As I understand it, our object between now and the Report stage—a comparatively short period—is not to try to restate the whole law upon these matters in such a form that it will be able to stand unchanged, for years. All of us realise that in a matter of such complexity, we could not hope in the few weeks available to attain that object. What I understand we shall set out to do is to try to find, between now and the Report stage, some scheme which will stop the flagrant abuses which are now taking place, but will not interfere with the great mass of schemes—and the large quantities of those exceptions which have to be catered for under any scheme—under the present system. Having done that, having tried to devise an interim shield for the Chancellor of the Exchequer, thereafter consideration shall be given to the wider aspects of the question which have been raised.
    I should like to suggest to the Chancellor for his consideration that when we come to that wider consideration, it might be the moment for setting up some committee to which all who have a special knowledge or experience can go. In that way it may be found easier to see all the pitfalls from the start, and to devise a final and complete scheme. I do not press that now; I only throw out the suggestion. We on this side will co-operate most wholeheartedly in the Chancellor's efforts between now and Report, and I certainly shall advise my hon. Friends —and I am sure they will agree—not to press any of their detailed Amendments —which may be found during our discussions to be wholly relevant—at this stage.
    11.45 p.m.
    Mr. Gallacher: I have listened to a lot of nonsense tonight, and I would like to say one or two words. I would like to speak from a class point of view, even though it does annoy the

    1027
    hon. and gallant Member for New Forest (Colonel Crosthwaite-Eyre), who said something about my travelling to Moscow. I would be out of Order if I told him where he should go. The hon. and gallant Member was all for protecting the just. The right hon. Gentleman the Member for West Bristol (Mr. Stanley) is all for saving the innocent.
    Mr. Stanley: We were not either of us referring to the hon. Member.
    Mr. Gallacher: I quite understand that. I quite understand what my category is in the eyes of hon. Members on the other side. Others of them seemed to desire to express their generosity towards the workers in the sense that they want to give them all kinds of gratuities and annuities and lump sums. The right hon. and gallant Member for Gainsborough (Captain Crookshank) was concerned about the man who had given great service in the war and had got a lump sum or something of that sort; he was concerned that that should not be taxed. With all their generosity, and their desire for justice, and their anxiety to protect the innocent, the marvel to me is how the Labour Party had to come into existence. It is obvious that there is no real meaning at the back of these expressions. Their only desire is to find, if they can, some way of protecting still those who are getting lump sums and who do not deserve them. An hon. Member referred to a man getting £4,000 instead of £5,000 a year, with £2,000 when he retires, who will have to pay taxation on the insurance premium. The simple answer is to let him take his £5,000 a year, and pay his Income Tax, and do without the £2,000 when he retires—save up for when he retires. That is the answer the workers have always had to give. To listen to Members on the other side, one would think that the workers of this country—or the widows of the workers of this country who were killed—
    The Chairman: The hon. Member will please confine himself to the matters before the Committee.
    Mr. Gallacher: I beg pardon, Major Milner. The hon. Member for Chippenham (Mr. Eccles) gave us an instance of a widow of a man who had been killed and
    1028
    stated that she had been granted so much a year by his firm. But where are these wonderful firms that have given the workers such money?
    Hon. Members: All over the country.
    Mr. Gallacher: I have had experience of that "all over the country". I will take a case in point. An hon. Member on this side has talked of native labour in India, which was given compensation when the business was closed down, by a firm in this country to keep up its reputation. Where in the name of God do you hear of anything like that? Can you show me a textile mill in Lancashire where, when 't was closed down, the workers were given compensation, to keep up the prestige of the firm? Can you show me a shipyard in this country which, when it was closed down, to keep up its prestige paid its workers compensation? It is just a lot of nonsense. I hope the Chancellor of the Exchequer, between now and the Report stage, is careful he does not leave any gaps which enable the artful dodgers to slip through. They will do him if they can.
    Clause ordered to stand part of the Bill.
    Clauses 15 to 17 agreed to.

    CLAUSE 18.—(Supplementary provisions as to retirement or other benefits and application to unincorporated societies, etc.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Colonel Crosthwaite-Eyre: There is one question I would like to ask. Can the Chancellor of the Exchequer, or anyone on the Front Bench opposite, say something about the definition of the whole-time director?
    Mr. Dalton: It is all going to be looked at by agreement reached between the two sides of the Committee.
    Clause ordered to stand part of the Bill.
    To report Progress; and ask leave to sit again.—[Mr. Michael Stewart.]
    Committee report Progress; to sit again Tomorrow.

  COMPANIES [MONEY]
  Resolution reported.
  "That, for the purposes or any Act of the present Session to amend the law relating to companies and unit trusts and to dealing in securities, and to bring the law of bankruptcy and the law relating to the registration of business names into conformity in certain respects with the law relating to companies as so amended, t is expedient to authorise—

  (a) the payment out of moneys provided by Parliament of any expenses incurred by the Board of Trade by virtue of the Act; and

  (b) the payment into the Exchequer of any fees payable or fines imposed by virtue of the Act.'

ORTHOPAEDIC HOSPITALS, SOUTH WALES
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Michael Stewart.]
11.55 p.m.
Mr. George Thomas: I wish to raise a subject of major importance to the people of South Wales, and it is one which I believe reveals a story of human tragedy. This is a subject which was brought to my notice by the distressed parents who brought their five-years-old son to my office in the constituency which I have the honour to represent. The mother's story is best told in her own words, as she wrote it to me and, subsequently, on my advice, to this House:
"Will you help me in any way you possibly can concerning my tittle boy, Roger, aged five years. He has infantile paralysis down the right side, and has been attending the Prince of Wales Hospital at City Lodge, Cardiff, for three and a half years, waiting for attention, and on the urgent list since Christmas. When I make inquiries I am told he must wait his turn, but, in all fairness, I think, I have waited patiently enough."
The lady goes on to other domestic details that hon. Members of this House would find distressing. I did what any other hon. Member would do.. I made approaches to the only orthopaedic hospital there is in South Wales, and I found that this little patient is due to have an operation for elongation of the tendon Achilles. That operation is considered by surgeons necessary in order to assist the boy to walk properly.
Unfortunately, there is such an enormous demand for beds for in-patients that this child of this constituent of mine is but one of 121 cases that have been listed
1030
by the surgeons as of supreme urgency. The total number of patients approved for admission to this single orthopaedic hospital in South Wales exceeds 1,250, and this number, I am assured, has been artificially restricted by the surgeons of the hospital, who, realising the extreme difficulty in arranging admission, have fore-borne from recommending indoor treatment when there is any reasonable alternative. There is a bed capacity only of 134 in the hospital, which is supposed to meet the needs of a population of 2,000,000 people.
Before the war, it was customary to refer to South Wales as a distressed area. It would be equally true and equally apt to call it a neglected area. My hon. Friend who is going to reply to this Debate will be aware that we are in our present sorry position in South Wales because the voluntary hospital system failed miserably to meet the needs of our people. We had no planning whatsoever in other days to meet the health needs of our community. I do not want to saddle His Majesty's Government with the responsibility for the complete and utter neglect of previous Governments so far 'as the health administration in South Wales is concerned. But the Ministry of Works—and I am glad the Parliamentary Secretary is here to reply to this statement tonight—can by no means congratulate itself upon what it has done for South Wales since it has had the opportunity, from July, 1945.
In August, 1945, the Welsh Board of Health, recognising the priority of need to create an adequate orthopaedic service, invited the Prince of Wales Orthopaedic Hospital Committee to take over the ex-American Army Hospital at Rhyd Lafar. This is a hospital on the outskirts of Cardiff, which could have provided by now the Prince of Wales with an extra 350 beds. The Committee, naturally, accepted that offer with alacrity, and they have submitted a scheme to the Ministry of Works for its consideration and for its action. The scheme was submitted, if my information be correct, to the Ministry of Works on 24th July, 1946. The scheme has been approved by the Welsh Board of Health, and has been regarded by them as one of the highest priority. The tragedy of this is that the children who are so crippled are receiving no adequate treatment whatsoever. The waiting list at this hospital is growing all the time, and there is a deep concern on the part

1031
of the health administrators at the apparent lack of sense of urgency by the Ministry of Works. That is a concern which is shared, so I am informed, by all responsible medical authorities in South Wales.
Over 550 of the patients waiting admission to the Prince of Wales' Orthopaedic Hospital in Cardiff are children, and in a very great many cases the very nature of their disability prevents them from attending ordinary schools. This hospital is recognised by the Ministry of Education as a school hospital, and seven full-time school teachers are employed to teach these children, who are receiving medical treatment. The tragedy is that at the present time the greater part of those 550 children are not only losing the attention of which they stand in urgent need, but are suffering as far as their education is concerned. Some of these children will inevitably be handicapped throughout their life, but it is doubly unfortunate, I suggest to the House, that their mental development should be retarded, thus diminishing their already small chance of becoming useful citizens. The Ministry of Works needs to be reminded that there are some matters which must have a priority. There are some matters which deserve, by the very nature of their urgency, a sense of which appears to be lacking in this Department, to have immediate attention. There is never any use trying to find somebody to blame. What there is use in doing is to find somebody to probe, and I believe I have found somebody to probe. I think I have also found somebody who needs to be probed. Far be it from me to lay any blame, but I want to suggest that the Ministry of Works is not living up to its name as far as the hospitals of South Wales are concerned.
This is a human problem, and we cannot afford the apparently lethargic indifference or Chinese fatalism which says, "Do not do today what we can do tomorrow." I hope that when my hon. Friend replies to me, he will be able to give us substantial hope that this hospital, which I pass every week-end when I go home from my constituency, will not be allowed to rot any longer and that the 60 building operatives who are now in the building who are part of the mobile labour force and who are living in this hospital while engaged on the renovation of the camp, will be allowed to remain there
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after 30th June in order to put the hospital right and improve these amenities so as to give these children the opportunity to receive fair treatment.
Mr. James Callaghan: Before my hon. Friend resumes his seat, can he tell us what Happened after July, 1946? Has the Ministry of Works not made any answer to the suggestion to take the hospital over?
Mr. Thomas: I am very grateful to my hon. Friend the Member for South Cardiff (Mr. Callaghan) for drawing my attention to that matter. My information from the medical people interested is that they have had nothing since July, 1946. I would quote a letter I have received, dated loth May:
"Since early in 1946 we have been waiting for the Minister of Works to complete this work, but the main contract has not yet been commenced and the number of patients clamouring for admission steadily increases, and the position becomes more and more intolerable."
12.6 a.m.
The Parliamentary Secretary to the Ministry of Works (Mr. Durbin): I would like to begin by assuring the House and my hon. Friend that the Ministry of Works is not composed of hard-hearted men and women who wish to oppose the development of orthopaedic hospitals or indeed, of any kind of hospitals in any part of the country. I am sure my hon. Friend will be aware that all over the country we are faced by the acute human tragedy that the shortage of hospital accommodation everywhere brings to the notice of hon. Members. But I am sure my hon. Friend realises it is no part of the responsibility of my Ministry to decide what hospitals should be built or where they are to be built, or the order in which they are to be built. If that were the responsibility of the Ministry of Works, I would, in fact, be discharging the duties of the Ministry of Health, and what applies to hospitals in the field of health would apply in the field of education and elsewhere. The decisions as to the order in which these buildings are to be put up must rest with the Ministers responsible for providing the services.
It may be asked where the Ministry of Works comes into this story at all, and why is it that I am appearing to answer the case that has been presented by my hon. Friend. The responsibility of the Ministry of Works in regard to this case

1033
is of two sorts. First of all, we have to offer advice to the Department concerned with getting the building up, on purely technical problems, of a legal, planning and constructional character; and then it is our responsibility, when these difficulties are cleared out of the way, to get the building done. Unfortunately, in the case of this proposed hospital at Rhyd Lafar, the difficulties in the first place, as a building proposition, are very great and formidable. The camp or American hospital was a war-time construction and is composed largely of Nissen type substandard hutments. They are, to put it mildly, most unsatisfactory and unsuitable buildings for hospital accommodation.
Mr. G. Thomas: Is the Parliamentary Secretary not aware that the Welsh Department of the Ministry of Health have accepted this place as suitable? They want only minor alterations, if my information is correct.
Mr. Durbin: I am afraid my hon. Friend's information is not quite correct on this point. It wants substantial and costly works, alterations which will absorb sums of money running into six figures, and it is an extremely uneconomic kind of building, expensive at the beginning, and expensive in subsequent maintenance. Nevertheless, this is not regarded by the Minister of Works as a crippling objection. The second range of difficulties arises over the fact that the Ministry of Town and Country Planning do not feel able to give clearance over any long number of years for the continuation of this type of building on this particular piece of land, so that the combination of these two makes this, as a building proposition, not wholly satisfactory.
Finally, and in a sense most serious of all, through the very site, there is to be driven, in a reasonable period of time, a main arterial road. My information is that this will subtract some considerable fraction, amounting to a third of the total land and accommodation available. For all these reasons, therefore, there was considerable difficulty in arriving at a view as to the desirability of this piece of construction in the interests of the country as a whole, and I need hardly remind
1034
hon. Members and certainly not the hon. Member for Central Cardiff (Mr. G. Thomas), that there is a great scarcity of building labour and of building materials in South Wales as a whole, and that not a man and not a brick, and not a piece of timber, can be diverted to any project, however urgent, without taking away from buildings whose priorities have been considered higher in the previous decisions that have been taken by responsible Ministries. These are the difficulties.
I have two conclusions to offer. First I would not seek to deny that there has been considerable delay in this particular case. I must, however, offer a word of explanation of why that delay has taken place. Of course, if one goes to any regional office of any Ministry in these difficult transitional times, picks out a single case and looks at the dates upon it, one can construct a story that looks as though it were one of unnecessary confusion and delay. But that is an unfair way of judging the course of administration and the pace at which decisions have been taken, because it is the burden on the office as a whole that must be considered before the time taken to arrive at any single decision can rightly be judged. It is common knowledge that certain sections of our office in the Welsh region have burdens so great—for reasons which are so many, and so obvious, that I do not need to mention them—that some delay in a particular case is quite inevitable in view of the pressure, particularly upon the technical staff.
My second conclusion is that, despite these difficulties, despite these scarcities and despite the burden that rests upon our regional office, we are proposing to continue with this scheme. The work is in hand. Clearances are being sought, the legal business is being discharged, the project is included in our future building programme for that part of the country, and we hope to be able to give a starting date towards the end of the summer, or during the course of October.
Mr. Thomas: May I thank the Parliamentary Secretary very much?
Question put, and agreed'to.
Adjourned accordingly at a Quarter-past Twelve o'Clock