Commons Sitting of 21 June 1948

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  SOUTH LANCASHIRE TRANSPORT BILL [Lords]
  Read the Third time, and passed, with out Amendment.
  PEABODY DONATION FUND BILL [Lords]
  Read a Second time, and committed.
ORAL ANSWERS TO QUESTIONS
  MINISTRY OF SUPPLY

    Lead and Steel Allocations
    Mr. Turtonasked the Minister of Supply (1) what proportion of the total consumption of lead in this country in 1938 was used for building and water supply, for cable manufacture and for battery manufacture respectively; and what are the respective proportions allocated for these purposes at the present time;
    (2) what was the proportion of iron and steel production devoted in 1938 to the manufacture of pipes for water supplies; and what proportion of iron and steel production is allocated at the present time for this purpose.
    The Minister of Supply (Mr. G. R. Strauss): Full statistics are not available for 1938, but I will circulate in the OFFICIAL REPORT a table giving estimates of consumption of lead and steel by these industries in that year. I cannot give the hon. Member the proportion allocated at the present time, as it is contrary to the policy of the Government to give the allocations of materials to particular industries.
    Mr. Turton: Can the right hon. Gentleman say what degree of priority in allocation is given to rural water supplies?
    Mr. Strauss: Allocation is made according to the needs and demands of firms, but the hon. Member will appreciate that there are many substitutes, besides lead and steel, for making water pipes.
    Mr. Baldwin: Would not the right hon. Gentleman agree that it would be better to keep the steel in England for water supplies, rather than to send it to Holland so that we can get their strawberries?
    Sir Waldron Smithers: Is not all this secrecy simply to cover up the blunders of the Government?
    Following is the table:

    Proportion of total production.

    Per cent.

    Lead sheet and pipe for building and water supply

    40

    Lead for cables

    25

    Lead for batteries

    10

    Steel for water pipes

    3

    Conveyor Belting
    Mr. De la Bèreasked the Minister of Supply whether he will make a statement as regards the redundant supplies of conveyor belting which the Government are purchasing from the U.S.A. for the re-equipment of the mines and which is at the present time being stored as surplus to requirements; and whether he will consider utilising at home the high quality conveyor belting manufactured by one of the largest manufacturing concerns in the country who are at the present time finding difficulty in disposing of their output overseas.
    Mr. G. R. Strauss: If the hon. Member is referring to the purchases made by the National Coal Board, I would refer him to the reply given on 3rd June by my hon. Friend the Economic Secretary to the Treasury to the hon. Member for Sutton Coldfield (Sir J. Mellor). There is now no restriction on the supply of belting to home users.
    Mr. De la Bère: The right hon. Gentleman has not answered the Question. Is it not a fact that we have spent an enormous sum in dollars on conveyor belting which is not really required, and which could be produced at home? The right hon. Gentleman has not answered my Question; he has answered something entirely different?
    Mr. Strauss: I have done nothing of the sort. The belting which has been bought will be used and, meanwhile, it is in stock.
    Mr. De la Bère: Why should we buy an enormous quantity of belting which is not required? Why waste dollars? Why behave in this way?

    Link Tracking (Disposal Prices)
    Brigadier Raynerasked the Minister of Supply whether he is aware that, in connection with the derequisitioning of Bolt Head airfield, although some of the landowners and farmers concerned were offered many hundreds of rolls of Army link tracking due for salvage, for use as fencing in lieu of the original bank fences destroyed, this tracking was subsequently all sold at a price not more than 25s. per roll to a firm in London and that the farmers who seek to purchase what is still left on the airfield are being asked £4 10s. a roll; and whether he will make an inquiry into this matter.
    Mr. G. R. Strauss: This material was originally offered to local farmers at 40s. and 50s. a roll, but they did not accept the offer. It was therefore sold to a number of purchasers at prices ranging from 40s. to 60s. a roll; none has been sold at 25s. a roll. There is no control over the price at which the material may be offered for re-sale.
    Brigadier Rayner: Would the right hon. Gentleman make further inquiries? Does he realise that I have taken a certain amount of trouble to trace the progress of this tracking? My information is that it was not offered to the farmers who were responsible for that piece of ground, but that it was sold to Iron and Steel Disposal, Limited, Park Lane, London, at 25s. a roll, and that it is now being offered by the Square Grip Reinforcement Co., Bristol, at £4 10s. a roll?
    Mr. Strauss: I have made further inquiries. None of it has been sold under 40s. a roll. It has been sold between that price and 60s. There is no control over the re-sale price.
    Major Legge-Bourke: Have the other purchasers mentioned in the original answer included farmers in other districts, in view of the great shortage of the stouter types of wire netting?
    Mr. Strauss: I do not know exactly who the other purchasers were; there was a large number.
    Major Legge-Bourke: Would the right hon. Gentleman make some inquiries?
    Brigadier Rayner: If the tracking has been sold at prices ranging from 40s. to 60s. a roll, and is now being sold to farmers at £4 10s., is not that profiteering?
    Mr. Strauss: That is profiteering by the industrialists or merchants who bought the rolls. If the hon. and gallant Member is suggesting that I should impose further controls to stop this profiteering, I will consider it.
    Mr. Warbey: In pursuance of the Government's policy of limitation of prices and profits, will my right hon. Friend consider the desirability, when disposing of future supplies, of laying down conditions to limit the amount of profit which may be made?
    Mr. Strauss: We do that in respect of a whole range of commodities, but if we extended it to other types of commodities, such as this, then the control organisation would be so cumbersome that it would not be worth while.
    Sir W. Smithers: That is so now.

    Salvage Collection Vehicles
    Mr. Sutcliffeasked the Minister of Supply if he is aware that instructions recently given by his Department have resulted in drastic curtailment in the production of refuse and salvage collection vehicles for the home market; and if he will give higher priority to local authorities for delivery of these vehicles.
    Mr. G. R. Strauss: No, Sir. Arrangements have recently been made to enable many more of these vehicles to be produced this year than would otherwise have been possible. Distribution is left to the industry.
    Mr. Sutcliffe: Is the Minister aware that in some cases these vehicles were ordered as long ago as May, 1947, and that they are not due for delivery until next March? Is he further aware that they are required particularly by the small authorities, who operate only one or two vehicles, especially in view of the salvage campaign?
    Mr. Strauss: I appreciate that point. We have recently taken steps to increase the number of these vehicles which are being produced.

    Bicycle Spare Parts
    Mr. Geoffrey Cooperasked the Minister of Supply if he is aware of the acute shortage of bicycle chains and similar spare parts for bicycles; and if he will take steps to ensure a greater supply being made available especially for industrial districts such as Tees-side, where bicycles are essential for industrial workers who are engaged on shift work to reach their work, often at times when regular public transport services are not available and at considerable distances from their homes.
    Mr. G. R. Strauss: Owing to the large number of bicycles and spares now being exported, some shortage at home is unavoidable, but supplies of both spares and chains are improving. A revised scheme of distribution of chains for replacement purposes has recently been introduced, and special attention has been paid to the needs of industrial areas.
    Mr. Cooper: While appreciating my right hon. Friend's reply, may I ask whether it implies that he will see that areas where there is a three-shift system being worked, upon seven days per week, will get special supplies of these spare parts?
    Mr. Strauss: I will bear that point in mind.

    Machinery Imports (Licence Applications)
    Mr. Cooperasked the Minister of Supply what is the average time taken by the section of his Department which acts as the production authority and gives advice on essentiality to the Board of Trade, on matters affecting the licensing of imports of essential machinery and components, for notifying their decisions to the Board of Trade, especially where urgent decisions are required by industrialists wishing to manufacture in this country for export.
    Mr. G. R. Strauss: The average time taken by my Department in advising the Board of Trade on applications for licences to import machinery is 14 days,
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    but exceptional cases requiring detailed consultation with other Departments may take longer.
    Mr. Cooper: Does my right hon. Friend realise that the delay is very much in excess of 14 days in some cases, and that industrialists have been told by the Board of Trade that his own Department is to blame? Will he look into the rather lengthy procedure which is required in some cases in order to see whether it can be smoothed out?
    Mr. Strauss: I would like to shorten the time if possible, but my right hon. Friend will realise that long and careful inquiries have sometimes to be made before an import licence is granted in respect of machinery to make sure that the machinery is not produced in this country or will not be so produced in the near future.
    Mr. Cooper: Is it not possible that some of the decisions are made by people who do not understand particular industries?

  MINISTRY OF WORKS

    Buildings, Filton
    Air-Commodore Harveyasked the Minister of Works what priority has been given to buildings being erected at Filton, where the maintenance of B.O.A.C.'s aircraft is to be carried out.
    The Minister of Works (Mr. Key): W.B.A. priority for labour and materials was granted for these buildings on 5th February, 1948.
    Air-Commodore Harvey: Is that the highest priority which can be given? Is the Minister aware that while his Department has been considering this matter, dollars at the rate of £500,000 a year are being spent to maintain aeroplanes in Canada?
    Mr. Key: W.B.A. priority is the highest priority for materials, but there has been no difficulty about materials on this job at all.

    Car Racing Tracks, Stamford Bridge
    Mr. Skinnardasked the Minister of Works what licences were issued for materials for making special tracks for midget car racing at Stamford Bridge.
    Mr. Key: No licences for materials were issued for this work.
    Mr. Skinnardasked the Minister of Works how many building trade workers were employed in making special tracks for midget-car racing at Stamford Bridge.
    Mr. Key: I am informed that a maximum of nine building trade workers were employed in making the special tracks.
    Mr. Skinnard: Are the building trade workers mentioned by my right hon. Friend actually on the staff of the Stamford Bridge arena?
    Mr. Key: That I do not know.

    Richmond Park Camp
    Mr. Boyd-Carpenterasked the Minister of Works the value of the work done to Richmond Park Camp in connection with its use by competitors in the Olympic Games.
    Mr. Key: The work carried out at Richmond Park for the benefit of the Olympic Committee was originally estimated to cost £35,000. It is possible that the figure will be exceeded, but final costs are not yet available.

    Building Licensing Scheme (New Limit)
    Mr. Chetwyndasked the Minister of Works whether he can now make any further statement about the licensing of building work and particularly upon the amount of work that can be done without the necessity for applying for a licence.
    Mr. Key: Yes, Sir. Although economic conditions do not permit of any substantial relaxation of the building licensing scheme, I have today made an order providing that a sum of not more than £100 may be spent on any one property in the twelve months starting on 1st July without applying for a building licence. The position will be kept under review and should the new arrangement be found to prejudice the progress of urgent work it will have to be reconsidered.
    Mr. Chetwynd: Is my right hon. Friend satisfied that at this moment there are adequate building materials to meet this concession? Is he further satisfied that the concession will not result in a drain of manpower from essential house-building?
    Mr. Key: Any materials normally in short supply would need a W.B.A. certificate for their priority. We need therefore fear no shortage of supply of materials. So far as labour is concerned, the present situation is that ordinary decorating labour is in good supply.
    Mr. Collins: While congratulating the Minister upon the concession, which will be welcomed everywhere, may I ask him what effect it will have upon the licensing powers of local authorities who are at present working on a monthly quota?
    Mr. Key: Local authorities will be asked to take into account the amount of work below £100 which they licensed in the previous period and to make allowance for that in the licences they issue in the succeeding period.
    Mr. George Hicks: While congratulating my right hon. Friend upon what he has done in this matter in raising the figure from to £10, to £100; may I ask whether he is aware that the labour chiefly required will be decorating labour and not general building labour.
    Mr. Key: Yes, Sir. Decorating labour is not in short supply at the moment.
    Mr. Vane: While regretting that the right hon. Gentleman has taken so long to give this concession, may I ask whether he confirms the fact that £100 does not include any element of the cost of the owner's own labour, as was the case with the original £10?
    Mr. Key: So far as the owner is concerned, his labour will not be taken into account, but the volunteer labour of anybody else will have to be accounted for.

    Woodhall Aerodrome
    Commander Maitlandasked the Minister of Works how many men are employed by his and other Government Departments at Woodhall Aerodrome; and how many of these men are employed permanently and how many on a temporary basis.
    Mr. Key: My Department has 21 men directly employed at this airfield, of whom 13 will be discharged shortly. A Ministry of Works contractor is also working on one of the sites. I am not aware that any other Government Department has men employed there.

  GERMANY

    Air Accident, Gatow (Compensation)
    Mr. Thomas Reidasked the Secretary of State for Foreign Affairs if the Soviet Government still refuse to pay compensation in connection with the loss of life caused by their plane in the recent accident at Gatow, Berlin.
    The Minister of State (Mr. McNeil): The Soviet Government have so far refused to pay compensation. We shall continue to press our claims.
    Mr. Reid: May I ask whether the Minister is convinced that the Soviet Government are morally and lawfully responsible for the payment of damages for this incident?
    Mr. McNeil: Inquiry showed that they are legally responsible for compensation.

    Gold Restitution
    Mr. Platts-Millsasked the Secretary of State for Foreign Affairs to which Reparation Agency the 101.6 kilos of fine gold acquired by Spain from Germany during the war has now been restored.
    Mr. McNeil: The Spanish Government has now agreed in principle to restore this gold. The Reparation Agency concerned is the Tripartite Commission for the Restitution of Monetary Gold, which consists of British, French and United States Commissioners. The next step is for the Commission to indicate to the Spanish Government how and when they wish the gold restored. I anticipate that they will do this in the near future.
    Mr. Platts-Mills: Will the Minister of State say whether it ought eventually to go to the Inter-Allied Reparations Agency and whether the Tripartite Commission will eventually direct that course?
    Mr. McNeil: The Tripartite Commission is a competent body, and the list of States who are entitled to compensation of this kind and from this quarter has already been published and is known.

    Agrarian Reform
    Mr. Vaneasked the Secretary of State for Foreign Affairs what opinion the Bizonal Economic Council at Frankfurt has expressed on the differing proposals
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    for expropriation of agricultural land in the British and U.S.A. zones.
    Mr. McNeil: On 28th April, 1948, the subject of agrarian reform was debated in the Economic Council. It was recognised that the matter was one for each State to decide, but a resolution was passed that the Director for Food, Agriculture and Forestry should be instructed to submit recommendations to the Economic Council as to how the implementation of agrarian reform in general could best be co-ordinated between the Laender Departments and the Department for Food, Agriculture and Forestry in Frankfurt. These recommendations have not yet been submitted.

    British Civilians (Penal Code)
    Mr. Marloweasked the Secretary of State for Foreign Affairs (1) whether he is aware that British civilians in the British zone of Germany are punishable by Control Commission courts for offences unknown to the English law, including those contained in Ordinance No. 1 originally drawn up by S.H.A.E.F. and then intended only to apply to the German populace; that there is no right of appeal to any court in this country; and whether he will now overhaul the penal code applicable to such British subjects;
    (2) whether he is aware of the growing discontent of British civilians in the British zone of Germany at being subject to a criminal code created by proclamation; and whether he will order that such British subjects shall only be tried before Control Commission courts for offences contained in the Common Law or Statute Law of this country.
    Mr. McNeil: These officials, it is true, are subject to Military Government Ordinances, which make certain things offences in Germany which are not offences in the United Kingdom. The economic conditions of Germany and the necessity to control a black market render it necessary for transactions to be prohibited in Germany which can be permitted in the United Kingdom. Similarly, different measures of currency control pertain to the two countries. Discussions have been proceeding in Germany with a view to simplification and the Staff side

    927
    of the zonal Whitley Committee has been fully consulted. I hope that a final decision will be reached before very long.
    On the subject of a right of appeal, I would refer the hon. Member to the reply given by my right hon. Friend to his Question on 24th March.
    Mr. Marlowe: Would the right hon. Gentleman consider sending out a commission of inquiry into this matter, because the present situation is somewhat unsatisfactory, and it is undesirable that British subjects in a British-controlled area should be under the jurisdiction of a law which is not recognised in this country?
    Mr. McNeil: I doubt very much whether there are any facts which could be uncovered that are not already in our possession. However, if the hon. and learned Member would talk or write to me on this subject of a special inquiry, I will engage that my right hon. Friend shall consider it.

    Ruhr (Six-Power Agreement)
    Mr. M. Philips Priceasked the Secretary of State for Foreign Affairs whether he will consider discussions with the six Powers who took part in the London Agreement on Western Germany with a view to defining more clearly the proposals for the international control of the Ruhr industries and the rôle of the German directors in those industries.
    Mr. Ronald Chamberlainasked the Secretary of State for Foreign Affairs whether he has considered the reservations in the matter of control of the Ruhr industries made by the French National Assembly in approving the Six-Power Agreement; and whether it is his intention to re-convene the conference of the six Powers to give further consideration to this matter.
    Mr. McNeil: The French Government has now informed His Majesty's Government of their acceptance of the recommendations of the London talks on Germany and have drawn our attention to the reservations made by the French National Assembly. The question of re-convening the conference does not arise. Further discussions concerning the Ruhr will be carried out in accordance with Article 12 of the agreement.
    Mr. Philips Price: Are we to understand from that, that conversations will shortly commence on this issue?
    Mr. McNeil: As I understand it—I am not sure what my hon. Friend means by "conversations"—the French Government have instructed their Military Government to proceed with the next step which was contemplated in the recommendation. Further conversations will take place as provided for in Article 12 relating to these precise issues of the Ruhr.
    Mr. Chamberlain: Does my right hon. Friend agree that serious and important considerations are involved here, and that whereas a great number of us believe that international supervision is good, the international management for which the French have now asked is a horse of a different colour?
    Mr. Warbey: Will my right hon. Friend take into account not only the French observations on the Ruhr but also the Assembly's suggestion that there should be a renewed attempt to reach Four-Power Agreement on the unification of Germany, and will my right hon. Friend suggest to his right hon. Friend that renewed efforts should be made in this direction?

    Road Communications, Berlin
    Mr. Eric Fletcherasked the Secretary of State for Foreign Affairs whether he will make a statement on the virtual breakdown of road communications between Western Germany and the British sector of Berlin.
    Mr. McNeil: On 18th June the Soviet authorities announced that in consequence of currency reform in the Western zones of occupation, entry into the Soviet zone for all types of animal-drawn or motor vehicles or for pedestrians from the Western zones, including traffic on the autobahn Helmstedt to Berlin, was prohibited. Traffic from Berlin to the Western zones along the autobahn was not affected by the new regulations. Such traffic has however been subjected to delays as a result of the closing for repairs by the Soviet transport authorities on 15th June of the Hohenwarthe bridge on the autobahn. An alternative route has been provided involving a detour of some 15 miles and the passage of the river by a ferry.
    Mr. Fletcher: Would the Minister agree that any prolonged interference with normal communications with Berlin would be quite unjustifiable?
    Mr. McNeil: I should agree, of course, that any prolonged interference was quite a different subject.

  CORFU CHANNEL INCIDENT (HAGUE COURT HEARING)
  Mr. T. Reidasked the Secretary of State for Foreign Affairs if he has any further statement to make about the outrage committed in Corfu Channel when the lives of British sailors were lost owing to the placing of mines in the Channel in times of peace.
  Mr. McNeil: The Albanian Government have submitted their counter memorial to the International Court within the stipulated time limit. I have nothing further to add to my right hon. Friend's reply to the hon. and gallant Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) on 7th April.
  Lieut.-Colonel Sir Thomas Moore: Are we to understand that Albania is to get away with this savage act without punishment? Is this the measure of our national degradation?
  Mr. McNeil: The Albanian Government are following the procedure laid down in the Court to which we, from the beginning, have been anxious that the dispute should be submitted.
  Brigadier Rayner: In view of the barbarous murder of British nationals, will the Minister say whether it is still proposed to make a new trade agreement with Russia?
  Mr. McNeil: I was asked about the incident in the Corfu Channel on which we have frequently and pointedly expressed ourselves. That would not give rise to the question which the hon. and gallant Member has just put to me.
  Mr. Eden: Can the right hon. Gentleman tell us exactly where we are—I cannot recollect—as a result of the Albanian reply? What is the next step?
  Mr. McNeil: The next step is that the Court shall consider the counter memorial
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  lodged by the Albanian Government. I am sorry that I cannot tell the House much about the counter memorial. It runs to 150 pages. We have just newly received it, and it is in process of being translated.
  Mr. Piratin: On a point of Order. As the Minister has said that this matter is sub judice, may I ask why some of these observations have been permitted in reference to this matter?
  Mr. Speaker: How was I to know that the matter was sub judice. I heard it just now from the Minister himself. I do not know everything in advance.
  Mr. Ronald Chamberlain: Is it possible for the subsequent proceedings of the court to be accelerated in view of the criticism which was recently made by the Foreign Secretary?
  Mr. McNeil: The next action rests with us; that is, the reply. We are proceeding with that as fast as we can. We must lodge it before 2nd August. The House can be assured that we shall easily conform to that date.

  GERMANY AND AUSTRIA (SOVIET CITIZENS)
  Major Tufton Beamishasked the Secretary of State for Foreign Affairs how many Soviet citizens have arrived in the British zones of Germany and Austria, shown separately, en route for Palestine since 1st January; what form of assistance is given to these people; and what has been the approximate cost of such assistance.
  Mr. McNeil: I am advised that our authorities have no record of any Soviet citizens having entered the British zones of Germany and Austria or left en route for Palestine during this period. The remainder of the Question does not therefore arise.
  Major Beamish: Will the Minister of State look further into this? Is he aware that numbers of Zionists wearing Communist badges have arrived recently from the Soviet Union en route for Palestine, and does he think it right that these people should be partly maintained at the cost of the British taxpayers?
  Mr. McNeil: I will, of course, be glad to look at any details which the hon. and gallant Gentleman has to submit, but we have no records bearing out his innuendoes.

  ANGLO-BURMESE TREATY
  Mr. Gammansasked the Secretary of State for Foreign Affairs (1) if the Naval, Military and Air Force Mission which the Government of Burma agreed to receive under the provisions of the Burma Treaty of October, 1947, has been appointed; and how many officers have actually arrived in Burma; and
  (2) what progress has been made with the conclusion of a commercial agreement between Great Britain and Burma, as laid down in the Treaty concluded between the two countries in October, 1947.
  Major Beamishasked the Secretary of State for Foreign Affairs whether he will make a statement on the extent to which the military, financial and economic clauses of the Anglo-Burmese Treaty have been and will be carried out.
  Mr. Blackburnasked the Secretary of State for Foreign Affairs what was the result of his conversation with the Burmese Ambassador on 15th June; and if he will give an assurance that the Treaty between Burma and this country is still operative.
  Mr. McNeil: On the general attitude of His Majesty's Government towards the Treaty and my right hon. Friend's conversation with the Burmese Ambassador, I have nothing to add to the statements which my right hon. Friend made in the House on 17th June.
  The British Service Mission has been in Burma since the transfer of power on 4th January, 1948. It consists at present of 96 Military, two Naval and seven Air Force officers. No difficulties have arisen as regards the implementation of the Defence Agreement. Nor have any special questions arisen as regards the financial articles of the Treaty. The negotiation of a Commercial Treaty is under consideration.
  Mr. Gammans: Is it not a fact that the Burmese Government have expropriated
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  the assets of the Irrawaddy Flotilla Company and a number of British teak companies without giving any indication whether or not they are going to pay compensation; and will the right hon. Gentleman say what steps he is taking to protect over £100 million worth of British assets in Burma?
  Mr. McNeil: In regard to those things which the Burmese Government have nationalised or socialised, we have made it plain from the beginning that the Burmese Government must be able to meet in an acceptable currency the legitimate claims of British subjects for their property in that country.
  Mr. Blackburn: Has the Minister of State any assurance to give on the subject of the Karens and the Chins who fought for us during the war, when so many people in Burma did not? Are they quite safe at the moment?

  CZECHOSLOVAKIA (BRITISH PRESS CORRESPONDENTS)
  Major Beamishasked the Secretary of State for Foreign Affairs whether he is aware that three British Press correspondents have recently been refused permission to remain in Czechoslovakia; what form of protest was made by the British Ambassador; and what reply has been received from the Czechoslovak Government.
  Mr. A. R. W. Lowasked the Secretary of State for Foreign Affairs if he will make a statement about the withdrawal by the Czechoslovak Government of the visa issued to Mr. Alec Lawrenson, correspondent of the "Daily Telegraph" in Prague, whereby he was forced to leave Czechoslovakia; and what measures His Majesty's Ambassador has taken in this connection.
  Mr. McNeil: I regret to inform the House that three British newspaper correspondents, Mr. Alec Collett of the "Daily Telegraph," Mr. Karl Robson of the "News Chronicle," and Mr. Alex Lawrenson of the "Daily Telegraph," have recently been refused permission to stay in Czechoslovakia. Mr. Patrick Smith, the B.B.C. correspondent, has also been refused an entry visa. The reasons given by the Czechoslovak authorities for

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  Mr. Collett's expulsion were that his presence might "be a threat to public peace, order, or the safety of the State." In the cases both of Mr. Robson and Mr. Lawrenson the reasons alleged were "interference with the police" on behalf of Mr. Collett's fiancée, now Mrs. Collett, who was detained by the Czech police when attempting to leave Prague airport with him but was released and allowed to proceed after some discussion.
  His Majesty's Ambassador in Prague has protested both verbally and in writing to the Czechoslovak authorities about the treatment of Mr. Robson and Mr. Lawrenson on the grounds that the charges alleged against them were not sufficiently precise or sufficiently weighty to justify their expulsion. A reply on Mr. Robson's case which merely repeats and amplifies the charges made against him has been received from the Czechoslovak Government. No reply has yet been received about Mr. Lawrenson.
  This inexplicably severe action by the Czechoslovak Government is all the more deplorable in view of the close and friendly Press relations which we have hitherto enjoyed with Czechoslovakia.
  Major Beamish: Is the Minister of State aware that the real reason for the exclusion of these people is the wish of the Czech Government to conceal the truth of the situation from the outside world? Has he contrasted this action on the part of the Communists of Czechoslovakia with our own broadmindedness in providing considerable quantities of newsprint for the Czech Foreign Office English language weekly published in London, which carries out violent attacks on His Majesty's Government?
  Mr. Low: Will the Minister of State expand his answer a little further? Is it not his opinion that it is the considered policy of the Czechoslovak Government to exclude correspondents who understand that particular part of the world? Is there not further proof that that is so in the fact that Mr. Christopher Buckley, who has experience of reporting elections in Hungary and Poland, has been refused permission to enter Czechoslovakia at this time?
  Mr. McNeil: I can only repeat that in the matters which I have been asked to examine there could be no suggestion of
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  unprofessional or unworthy behaviour on the part of these journalists. I greatly deplore this action and I hope that it may be rescinded.
  Mr. Julius Silverman: Can the Minister of State say how many British correspondents remain in Czechoslovakia?
  Mr. McNeil: Not without notice.
  Mr. Chetwynd: Is there anything in the records of these journalists to show that any of them have expressed anti-democratic views?
  Mr. McNeil: On the contrary; Mr. Robson, who has been prevented from re-entering, was expelled, to his great credit, by both Hitler and Franco.
  Major Beamish: Will the Minister of State look again at the fact that we are providing considerable quantities of newsprint from our own very short supplies for this paper known as the "New Central European Observer," and will he consider cutting off its supplies.
  Mr. McNeil: Without agreeing to the deductions which the hon. and gallant Gentleman has made, certainly I will look at the supplies.

  SUEZ CANAL COMPANY (BOARD)
  Mr. Platts-Millsasked the Secretary of State for Foreign Affairs why the name of a British citizen was not submitted by the British Government-nominated directors of the Suez Canal Company in connection with the vacancy recently due to be filled on the Board of that company.
  Mr. McNeil: I am not clear to what vacancy the hon. Member is referring. If he has in mind the vacancy recently filled by Mr. Tuck, formerly United States Ambassador at Cairo, I must point out that under the Suez Canal Company's constitution the nomination is made by the president, who is a Frenchman.
  Mr. Platts-Mills: Is it not right that under the constitution the administrators may make nominations? Is it not right, for example, that last year the president himself was replaced on the nomination of the administrators? Is there no Englishman who can do this job on the Suez Canal Company? Is this part of the price we have to pay for the Americans giving us a little charity?
  Mr. McNeil: May I be permitted to say that the hon. Gentleman is, of course, completely misinformed? There are three separate methods of membership, and this country has its legitimate and proper representation on the Board. This was not a nomination arising under our interest.

  WORLD FOOD SITUATION (RUSSIA)
  Mr. Emrys Hughesasked the Secretary of State for Foreign Affairs whether he will consider giving Russia an invitation to join with us and other nations to contribute to a world food plan to put an end to hunger and poverty.
  Mr. McNeil: His Majesty's Government, as a member of the Food and Agriculture Organisation of the United Nations, are already co-operating in international plans for increase and improvement in the production and distribution of food. His Majesty's Government welcome the co-operation of any nation in the work of the Food and Agriculture Organisation, as the specialised agency of the United Nations which has been created for this purpose. So far the Soviet Union to our regret has not sought to become a member of the Organisation.
  Mr. Emrys Hughes: Is the Minister aware that the recently retired director of the Food and Agriculture Organisation has made a broadcast appeal urging the Government to send an invitation to Russia on these lines, and that he believes it would be successful and justified? Will not the Government reconsider their attitude?
  Mr. McNeil: I am quite aware of the statement made by Sir John Boyd Orr, but my hon. Friend must not overlook this simple fact that, as a member of the United Nations and as a member of the Social and Economic Council, member- ship of any specialised agency is available to Soviet Russia by their picking up a telephone.
  Lieut.-Colonel Sir Thomas Moore: Arising out of the original answer, may we assume, then, that the other dictatorship, Spain, will also be allowed to become
  936
  a member under the terms of the right hon. Gentleman's reply?
  Mr. McNeil: My reply referred to membership of the United Nations.
  Sir T. Moore: The right hon. Gentleman said "any nation."
  Sir W. Smithers: How can one play tennis with a man who will not send the ball back?
  Mr. Emrys Hughes: Would not the Minister agree that the prospect of the world shortage is too serious for these diplomatic niceties and technicalities, and that it is for the Socialist Government to take the initiative in this matter?
  Mr. McNeil: I greatly resent the imputation that we are sheltering behind diplomatic niceties. My right hon. Friend, on the instructions of this Government, moved a resolution dealing with this subject at the first meeting of the Assembly in London.

  FOOD SUPPLIES

    Airways Catering Scale
    Air-Commodore Harveyasked the Minister of Food what extra rations, over and above the normal catering allowance, is allowed to British European Airways for meals served in the air.
    The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill): With permission I will publish the information, which is rather long, in the OFFICIAL REPORT. The hon. Member will notice that a new scale of allowances for flights outside the United Kingdom has just come into operation.
    Air-Commodore Harvey: Will the hon. Lady say when this new scale came into operation, and is she aware that at the moment British European Airways are at a complete disadvantage compared with the continental lines? How can she expect this nationalised industry ever to make its way when it operates against severe competition?
    Dr. Summerskill: The new scale comes into operation this week.
    Following is the information:

    937

    AIRWAYS CATERING SCALE.

    ALLOWANCE TO PLANES IN FLIGHT OUTSIDE THE UNITED KINGDOM.

    Commodity

    Allowance to B.E.A. prior to 20th June, 1948.

    New scale of allowances from 20th June, 1948.

    Normal Catering Allowance

    Main Meal

    Breakfast "A".*

    Breakfast "B".*

    Breakfast

    Main Meal

    Subsidiary

    Column 1

    Column 2

    Column 3

    Column 4

    Column 5

    Column 6

    Column 7

    Column 8

    Butter

    …

    …

    …

    …

    ⅓ oz. per meal

    …

    …

    …

    …

    ½ oz.

    ½ oz.

    ½ oz.

    2/7 oz.

    Cooking Fat and Margarine

    …

    ½ oz. per meal

    …

    …

    …

    …

    ¾ oz.

    ¾ oz.

    ¾ oz.

    Liquid Milk

    …

    …

    …

    Normal catering allowance. Subject to a minimum of 6 pints per 100 meals.

    1/10 pint

    1/10 pint

    1/10 pint

    10½ pints per 100 beverages or 7 pints per 100 breakfasts, main meals and hot beverages.

    Sugar

    …

    …

    …

    …

    ¾ oz. per meal

    …

    …

    …

    …

    1¼ oz.

    1¼ oz.

    1¼ oz.

    ⅛ oz. per meal

    ⅛ oz. per hot beverage

    Meat

    …

    …

    …

    …

    3·7d. per main meal

    …

    …

    …

    3·7d.

    —

    —

    6/7d.

    Bacon

    …

    …

    …

    …

    ½ oz. per main meal or breakfast

    …

    …

    1¼ oz.

    —

    ½ oz.

    1/7 oz.

    1/14 oz.

    1/20 oz.

    Canned Milk

    …

    …

    …

    Normal catering allowance

    …

    …

    …

    —

    —

    —

    —

    —

    —

    Points

    …

    …

    …

    …

    Normal catering allowance

    …

    …

    …

    13/84

    13/84

    13/84

    13/84

    13/42

    13/84

    Cheese

    …

    …

    …

    …

    —

    1/14 oz.

    —

    —

    3/56 oz. per mea

    Dried Egg

    …

    …

    …

    —

    ¼ oz.

    —

    —

    2 oz. per 150 meals

    Preserves

    …

    …

    …

    —

    ¼ oz.

    ¼ oz.

    ¼ oz.

    1/7 oz.

    Shell Eggs

    …

    …

    …

    —

    —

    2

    1½

    Beverages, subsidiary and tea meals served in flight.

    Normal catering scale

    …

    …

    …

    Normal catering scale

    * Either Breakfast "A" or Breakfast "B" to be chosen as permanent scale.

    Bread Rationing
    Mr. Keelingasked the Minister of Food whether he will now cancel the regulation which counts bread as a course at a meal.
    Dr. Summerskill: I am afraid I cannot add to the reply which I gave to the hon. Member for Louth (Mr. Osborne) on 12th May.
    Mr. Keeling: Is the Parliamentary Secretary aware that there are very few restaurants, except of course, the House of Commons Dining Room, where this regulation is enforced, and if the Minister thinks it inexpedient to enforce it why does she think it necessary to retain it?
    Dr. Summerskill: In reply to the first part of the hon. Member's supplementary question, nobody ever offers me bread in a restaurant. We are prepared to annul the order when we abolish bread rationing.
    Mr. J. S. C. Reid: Could the hon. Lady say what is the estimated saving in bread by this regulation or whether this is another of those psychological regulations?
    Dr. Summerskill: That is determined by the waste of bread on the plates.
    Captain Marsden: Is the hon. Lady aware that in this House of Commons we are not bound by any regulations and that anything done in the way of rationing is done voluntarily?
    Dr. Summerskill: No, the hon. and gallant Gentleman is wrong, and if I find that he infringes the food regulations in the Dining Room, I am afraid we shall have to take action.

    Stored Potatoes (Wastage)
    Mr. Collinsasked the Minister of Food what is the average annual wastage of potatoes due to deterioration in store in the years 1941–45, expressed in terms of tonnage or as a percentage of the total crop, and in the year 1947–48.
    Dr. Summerskill: We estimate wastage in clamps and other stores on farms at 8.3 per cent. of the crop in 1941–45 and 5.9 per cent. in 1947–48.
    Mr. Collins: Is my hon. Friend aware that these figures are supporting evidence
    940
    for the view held by farmers and distributors that the wastage in the last season was less than at any time within living memory?
    Dr. Summerskill: Yes, Sir, and I think this is the answer to those hon. Members who have alleged that my Department has not conducted its affairs on businesslike lines.

    New Potatoes
    Mr. Collinsasked the Minister of Food if he is aware that the heavy loadings of new potatoes are creating difficulties in the markets; and if he will permit of payments to growers at prices below the guaranteed minimum.
    Dr. Summerskill: There is less evidence of markets now being over-supplied, the pressure to load having eased. I cannot contemplate reducing the growers' prices which were fixed to encourage a large acreage and early lifting, particularly when licensed merchants have a large measure of control over the quantity coming to the markets.
    Mr. Collins: In view of the fact that my hon. Friend cannot contemplate reducing the minimum prices, is there any other method whereby the overloading and subsequent holding up of supplies can be avoided, because that is what is happening now?
    Dr. Summerskill: No, I think that at the moment we are satisfied with the loading, and to reduce the price at this stage would be a breach of faith.

  CIVIL SERVICE (COMMUNISTS AND FASCISTS)
  Mr. Platts-Millsasked the Prime Minister whether he is aware that a deputation representing the staff side of the Whitley Council for the Air Department has been officially informed that all work at Air Ministry Headquarters must be regarded as vital to the security of the State; that the Civil Service Clerical Association has been officially informed that it has been decided to extend this principle to all Air Ministry establishments; and why this extension of the purge of the Civil Service was not first notified to this House.
  The Prime Minister (Mr. Attlee): I am aware that my right hon. Friend has ruled that all employment in the Air Ministry Headquarters establishment must be regarded as employment in connection with work the nature of which is vital to the security of the State. My right hon. Friend informs me that the statement in the second part of the Question is inaccurate. The position of Air Ministry outstations is still under consideration. I cannot accept the view that the action taken by my right hon. Friend constitutes any extension of the policy announced to the House on 15th March.
  Mr. Platts-Mills: Does my right hon. Friend say that, when he first announced to the House on 15th March the introduction of this instalment of the American way of life, the House was expected to understand that the lowest clerk or lift attendant in the Air Ministry, who has no possible contact with high grade secrets, might be exposed to victimisation?
  Mr. Ronald Chamberlain: Does not the Prime Minister agree that we are on the slippery slope and that personal liberty is being menaced, for on 15th March he talked about employment where important secret matters have to be covered, but now, in his instructions to the Advisory Committee, he talks about employment in connection with work vital to the security of the State, which is very much wider?
  The Prime Minister: I do not agree that there is any slippery slope in this matter. This is a matter in which every Minister must judge whether or not a certain person should be employed in a particular position. The general line which is laid down is the security of the State. That is a question for Ministers to judge, and I do not regard it as the slippery slope for democracy to defend itself against insidious attempts to overturn it.
  Mr. J. Langford-Holt: Will the right hon. Gentleman tell the House how top secret documents reach the top floor of the Air Ministry; do they go by lift or do they walk up?
  Mr. W. Griffiths: Can the Prime Minister confirm or deny the reports in some of this morning's newspapers that the witch hunt is to be extended to local government service and to the Armed Forces?

  EUROPEAN RECOVERY PROGRAMME
  Mr. Wyattasked the Secretary of State for Foreign Affairs whether he will give an assurance that the terms of the proposed bi-lateral pact between Britain and the U.S.A., in connection with Marshall Aid will be debated in this House before the pact is finally concluded.
  Mr. McNeil: I would refer my hon. Friend to the answer given by my right hon. Friend on 16th June to the hon. Member for Bexley (Mr. Bramall).
  Mr. Wyatt: Could my right hon. Friend say whether the statement made by his right hon. Friend means that this Debate will take place when the terms of the pact can still be varied or at a time when they can no longer be varied?
  Mr. McNeil: I should hesitate to add to my right hon. Friend's reply, but I should not have thought there was any ambiguity in its meaning.

  INDUSTRY AND COMMERCE
  Brigadier Raynerasked the Prime Minister whether his attention has been called to the result of the recent nationwide poll in Australia in which the people of that country refused to renew the wartime powers of the Federal Government to regulate commerce and industry; and whether he will make arrangements for a similar poll to be taken in Great Britain in the near future.
  The Prime Minister: No, Sir. As I understand it, this poll related to a proposal to transfer permanently to the Federal Government certain powers handed over to it by the State Governments as an emergency measure. It has no relevance to our non-federal system of Government.
  Brigadier Rayner: Does not the right hon. Gentleman consider that the people of this country might have made up their minds regarding the weaknesses and evils of Government control of commerce and industry rather more quickly than did the Australian people? Would it not be in the national interests to find out as quickly as possible whether that is so?
  The Prime Minister: No, Sir. I do not believe in Government by plebiscite.

  AGRICULTURE

    Labour, Bedfordshire
    Mr. Skeffington-Lodgeasked the Minister of Agriculture (1) how many British workers are employed under the Bedfordshire Agricultural Executive Committee at the nearest convenient date; and how does this figure compare with that for a year ago;
    (2) how many prisoners of war, Poles and European voluntary workers are employed under the Bedfordshire Agricultural Executive Committee at the nearest convenient date; and how does the total of these three categories compare with the number of foreigners thus engaged a year ago.
    The Minister of Agriculture and Fisheries (Mr. Thomas Williams): As the answer contains a number of figures, I am circulating it in the OFFICIAL REPORT.
    Following is the reply:
    The table below sets out the number of British and foreign agricultural workers under the control of the Bedfordshire Agricultural Executive Committee at the end of May, 1947, and at the same date this year.

    Nationality

    At 31st May, 1947.

    At 31st May, 1948.

    British (including Women's Land Army).

    537

    505

    Polish

    33

    92

    European Volunteer Workers.

    —

    77

    German civilians

    —

    174

    German prisoners of war

    1,934

    —

    Total

    2,504

    848

    The figures for German prisoners of war represent the total working strength available to the committee. The figures for British workers exclude seasonal workers (e.g. persons attending Volunteer Agricultural Camps, Service personnel, etc.) for whom work is arranged by the committee but who are not actually in the committee's employ.

    Vegetable Research Station (Site)
    Mr. Collinsasked the Minister of Agriculture when he anticipates that suitable land will be acquired for the operation of the National Vegetable
    944
    Research Station; and if he is ratified that sufficient funds have been allocated both for capital expenditure and running costs.
    Mr. T. Williams: The governing body of the Vegetable Research Station are actively seeking a suitable site, but I cannot forecast how soon one will be found. Such funds as prove necessary for capital and maintenance expenditure will be provided.
    Mr. Collins: Can my right hon. Friend say whether this research station will eventually be set up in a central part of England, or must it be in an already established horticultural centre?
    Mr. Williams: It will certainly have to be located in a centre where the soil and all other considerations are suitable for research.
    Mr. Tolley: Is it the intention of my right hon. Friend at a later date to publish a report on the activities of this organisation?

    Barbed Wire
    Mr. T. J. Brooksasked the Minister of Agriculture if he is aware of the great inconvenience caused to farmers through the serious shortage of barbed wire for fencing purposes; and if he will take steps to remedy this shortage.
    Mr. T. Williams: I would refer my hon. Friend to the reply I gave to the hon. Member for Bedford (Mr. Skeffington-Lodge) on 10th May. I would be glad to take up any specific case with my right hon. Friend the Minister of Supply if I am given full particulars.
    Mr. Brooks: Is not the Minister aware that tradesmen cannot get any of this barbed wire? Does he realise the great inconvenience thereby caused to farmers and the strain placed upon them in protecting their crops? Will the Minister make further inquiries to satisfy himself of this difficulty, and take what steps he can to help the farming community?
    Mr. Williams: I am aware that there has been a shortage but the output of late has improved considerably. If my hon. Friend will bring any particular case to my notice, I will gladly hand it over to the Ministry of Supply.
    Mr. T. Reid: May I ask my right hon. Friend when the huge dumps of barbed

    945
    wire now existing beside the railway line between Swindon and London can be disposed of?
    Mr. Williams: I am afraid that is not my responsibility.

    Live Poultry Sales (Regulation)
    Mr. Baldwinasked the Minister of Agriculture if he is aware that the Live Poultry (Regulation of Sales Exhibitions and Movements) (No. 2) Order, 1948, prohibits the sale at a market or fair of any number less than 50 of fowls, geese and ducks by a breeder or rearer; that this order prejudices the small producers; and whether he will consider waiving a restrictive minimum.
    Mr. T. Williams: The new order reduces, as far as is yet possible, interference with the supply of birds from breeders and rearers to ordinary poultry keepers, but it is still necessary, in order to guard against disease, to prevent the gathering together of small numbers of birds from large numbers of holdings. It would not be advisable to consider any further relaxation until we are sure that this one does not increase risks.
    Mr. Baldwin: Is the Minister aware that, until these minimum figures are reduced, it will be quite impossible for markets to operate, since they operate generally for the small rather than the big producers?
    Mr. Williams: Yes, Sir, but the hon. Member will be aware of the great dangers of fowl pest which have been facing us. Until we know that that has been pretty well stamped out, it would be unwise to invite further trouble for ourselves
    Mr. Turton: Does the Minister realise that this new regulation encourages a black market in poultry and will he restore the former position as soon as he is able to do so?
    Mr. Williams: I will look into that.

    Land Reclamation (Machinery)
    Earl Wintertonasked the Minister of Agriculture if he is aware that agricultural executive committees engaged in schemes of land reclamation are finding great difficulty in obtaining bulldozers, tractors and agricultural machinery and
    946
    vehicles of all kinds required for this work owing to the fact that so many of the vehicles and machines in question are being exported; and if he will take steps to remedy this situation.
    Mr. T. Williams: No, Sir. I know that supplies of certain classes of agricultural machinery, particularly crawler tractors, fall short of total needs, but I have not heard that any county agricultural executive committee is held up on land reclamation schemes for want of the necessary equipment. I should willingly look into any case of which I am given particulars.
    Earl Winterton: Would the right hon. Gentleman say when the Government will produce the statement—which they are under an obligation to produce by July—for the Food and Agriculture Organisation of the United Nations on the subject of the requirements for tractors and all agricultural machinery in this country, and what this country is prepared to export? When will this paper, which has to be produced by July, be ready?
    Mr. Williams: I am not sure of the particular paper to which the noble Lord refers. What I can inform him and the House, however, is that the output of agricultural machinery in this country is now double what it was last year
    Earl Winterton: Surely the right hon. Gentleman is aware that the Government spokesman in another place—although I cannot quote his actual words—admitted that the Government were under an obligation to produce such a paper and said that it would be produced shortly.
    Mr. Williams: It the paper is on the way, I will let the noble Lord know when it is likely to be published.
    Earl Winterton: Surely the right hon. Gentleman does not wish to regard this matter lightly. It affects a very important organisation of the United Nations, and the Government, as has been plainly admitted by their spokesman, are under an obligation to produce this paper.
    Mr. Williams: I can assure the noble Lord that I do not treat this matter lightly. If we are under an obligation to produce a White Paper for the Food and Agriculture Organisation, then that White Paper will be produced.

    County Committees' Accounts
    Mr. Vaneasked the Minister of Agriculture for what reasons he will not publish the farm accounts of each C.A.E.C. separately.
    Mr. T. Williams: It would be invidious and misleading to publish farm accounts of C.A.E.C.'s separately without detailed statements of local conditions and circumstances, which vary widely as between county and county. The expenditure of time and manpower on the compilation and publication of 61 such statements would not in my view be justified. As I have already announced, however, it has been decided to publish, on a departmental basis for all committees, trading accounts for the current and succeeding financial years.
    Mr. Vane: Is the right hon. Gentleman aware that his reply is most unconvincing and can he explain how he will produce a bulk account if he has not, first, put the 61 separate accounts together? How does he expect us to understand that less time and manpower will be entailed in producing a bulk account than in producing the 61 accounts separately?
    Mr. Williams: As the hon. Member has been informed, the differences between county and county are so abnormal that obnoxious comparisons would be made between one county and another. The hon. Member must be aware that land taken over by various county agricultural committees from common lands, land set apart for building and all the uneconomic pieces of land that were taken over, would be subject to treatment if accounts were provided county by county.
    Mr. Dye: May I address this point to my right hon. Friend? Bearing in mind that most members of the executive committees are now nominated by their respective organisations, how can these organisations judge the respective merits of their nominees if they have no report of the work that they do when they are on the executive committees?
    Viscount Hinchingbrooke: Why it is worse to publish the accounts of independent agricultural executive committees than to publish the accounts of independent commercial businesses, some of whom may be doing well and others badly?
    Mr. Williams: By the same rule, as the noble Lord is aware, the Coal Board will not publish accounts for every colliery or, indeed, for every company because, as hon. Members may or may not be aware, collieries vary. Counties vary and parishes vary—[An HON. MEMBER: "Ministers vary."] Because of those facts I am not prepared to publish the accounts county by county.
    Captain Crookshank: How is it that the accounts of 61 counties would be misleading whereas aggregate accounts of the whole lot would not be misleading?
    Mr. Williams: I think the right hon. and gallant Gentleman can answer the question himself as easily as I can answer it. He must know that county by county there are very wide variations, but so long as the House of Commons and the nation know the full content of farming operations by county agricultural executive committees, I think that is all they are entitled to know.
    Mr. De la Bère: Tell us the awful truth.
    Mr. Skeffington-Lodge: Would it not be an excellent thing to encourage healthy rivalry between the counties and is not this Government there to do that sort of thing?
    Sir Stanley Reed: Will the right hon. Gentleman recognise that the absence of the accounts leads to fantastic estimates as to the expenditure incurred and reacts on the authority and prestige of county agricultural executive committees?
    Mr. Williams: I do not think so.
    Mr. Godfrey Nicholson: Does the right hon. Gentleman think that all agricultural knowledge is concentrated within the four walls of his Ministry? Is he not aware that those in agriculture know the difference between counties and can make the necessary allowances?
    Mr. Vane: In view of the most timid and completely unsatisfactory answer of the right hon. Gentleman, I beg to give notice that I will raise the matter again at the earliest opportunity.

    Marketing
    Mr. Price-Whiteasked the Minister of Agriculture when a national board for the marketing of agricultural, horticultural and market gardening produce was

    949
    established; how many members of such board have been appointed and when; and what are the general and special duties of the board.
    Mr. T. Williams: I am not aware that any such board has been established.
    Mr. Price-White: Is the right hon. Gentleman aware that a number of market gardeners in the North Wales area were entirely confused as to the standard prices at which to market their produce, that they made inquiries and were informed that such a board had been set up, but that only one member had been appointed? Will he make clear, to market gardeners in particular, what prices should be charged?
    Mr. Williams: The hon. Gentleman asked about a central marketing board. I know of no such board having been appointed.
    Mrs. Leah Manning: Might this be the board appointed about nine months ago, under the chairmanship of the hon. Lady the Parliamentary Secretary to the Ministry of Food, about which we have heard nothing since?
    Mr. Williams: It might be possible that the Welsh horticulturalists were thinking of the Fruit and Vegetable (Marketing and Distribution) Organisation set up by the Minister of Food, the Secretary of State for Scotland and the Minister of Agriculture several months ago. That is the only organisation of this kind of which I am aware.
    Mrs. Manning: In that case, is it possible that we shall have some information about that board, which was set up nine months ago?
    Mr. Williams: Perhaps the hon. Lady will put a Question down to the Minister of Food.

    Crop Acreages
    Mr. Harold Daviesasked the Minister of Agriculture if the wheat and potatoes acreages of last year will be maintained or increased for 1948.
    Mr. T. Williams: Pending the results of the 4th June agricultural census, which will not became available until August, I am expecting that the 1948 wheat acreage in the United Kingdom will be roughly 2,300,000 acres compared
    950
    with 2,163,000 acres last year, and the potato acreage 1,460,000 acres, compared with 1,330,000 acres last year. Both crops, therefore, promise an increase over 1947, and the expected potato acreage in 1948 will, if it is realised, be a record.
    Mr. Davies: Have any cropping directions been given to the farmers?
    Mr. Williams: No, Sir.
    Mr. Harold Daviesasked the Minister of Agriculture the estimated total acreage of all crops for 1948, as compared with 1947.
    Mr. T. Williams: Pending the results of the 4th June agricultural census, which will not become available until August, I am expecting that the total crop in the United Kingdom will increase by at least a quarter of a million acres, and perhaps nearly half a million acres, compared with last year.
    Mr. Davies: Can my right hon. Friend give the specific acreage for the grain and root crops separately?
    Mr. Williams: The increase in the grain crops between this year and last was 300,000 to 350,000 acres; in the case of roots, including potatoes, it was 100,000 acres, and, in the case of linseed, it was some 60,000 acres.
    Mr. Davies: Does my right hon. Friend envisage any expansion in livestock production as a result?
    Mr. Williams: Yes, Sir. During the last 12 months the number of breeding sows has increased by no less than 60 per cent. and the number of poultry under one year of age by 95 per cent.

    Attested Herds
    Mr. Philips Priceasked the Minister of Agriculture whether he is aware that there are many farmers in Gloucestershire whose dairy herds have passed the tuberculin test but are unable to get a licence for an attested herd because of some small defects in their buildings which have no real bearing on the production of tubercular-free milk; and whether he will take steps to remedy this situation.
    Mr. T. Williams: I know of no applications in Gloucestershire for certificates of attestation under the Tuberculosis

    951
    (Attested Herds) Scheme which are held up on account of defects in buildings. Such defects are seldom of any significance so far as attestation is concerned.
    Mr. Philips Price: If I send my right hon. Friend particulars of a case in which a farmer has been refused a T.T. licence because of the height of the building, would he consider it? In view of the unsatisfactory state of affairs, will he also hurry up the time when the whole of these regulations come under his Department and are not left to the local authorities?
    Mr. Williams: If my hon. Friend will give me full particulars of the case he has in mind, I will gladly have them looked into.

    Feedingstuffs Rations
    Mr. Vaneasked the Minister of Agriculture if in view of the increased supplies of maize and cereals becoming available, he will now revise the feedingstuff rationing scheme so that new entrants can develop pig and poultry production to meet consumers' needs more adequately.
    Mr. W. J. Brownasked the Minister of Agriculture when he expects to be able to get away from the 1939 basis of allotting rations for pigs and poultry, since this basis is now out of date.
    Mr. T. Williams: I am not yet in a position to add to the statement I made on 25th March.
    Major Legge-Bourke: Would the right hon. Gentleman bear in mind that there are a great many agricultural workers and farmers who are considerably disturbed by the remark of the Minister of Agriculture for Eire to the effect that Eire can flood this country with eggs and agricultural produce? Will the right hon. Gentleman do everything in his power to ensure that sufficient feedingstuffs are made available in this country—
    Mr. Speaker: This Question only deals with the increased supply of maize and other cereals, and not a bargain with Eire.
    Mr. Vane: Are we going to increase the supplies in the near future, because the 1939 basis is entirely out of date?
    Mr. Williams: I can only tell the hon. Member once again that the matter is under active consideration.

    Horses (Import and Export)
    Mr. T. J. Brooksasked the Minister of Agriculture if he is satisfied that the £25 minimum price for horses sold for export is a sufficient safeguard for the animals, in view of the high prices offered by slaughterers on the Continent; how many horses were slaughtered in this country during the past six months; and how many have been imported from Ireland for this purpose.
    Mr. T. Williams: Yes, Sir. I am satisfied that the order has achieved its purpose of stopping the export of aged horses for slaughter. I have no information of the number of other horses slaughtered in this country or imported from Ireland for slaughter.
    Mr. Brooks: Is the Minister aware that there is a shortage of horses for service on farms, where they would probably earn very much more than by being exported? Is he also aware that there is a suspicion that £25 only is being paid for slaughtering?
    Mr. Williams: That may be so, but I understand that of the horses exported during the last four months—something like 2,000—the majority have cost £50 or more, and that figure seems beyond the price which would be paid merely for slaughter.

    Ploughshares
    Mr. Douglas Marshallasked the Minister of Agriculture if he is aware of the acute shortage of ploughshares in Cornwall; and what action he proposes to take to remedy this position.
    Mr. T. Williams: No, Sir, I am not aware that farmers in Cornwall are having any special difficulty in meeting their present needs. Production of ploughshares in this country, including the more popular types of share for imported ploughs, has increased very considerably since last autumn. Supplies should be sufficient for current use, although not yet sufficient to allow dealers to build up stocks.
    Mr. Marshall: Has the Minister received the letter which I sent him with regard to this shortage, and if he has received it, surely he must be aware of the shortage?
    Mr. Williams: I have already informed the hon. Member that I am not aware of any shortage of ploughshares in Cornwall at this moment.
    Mr. Marshall: Would the Minister answer my first supplementary question as to whether he has received a letter in which I informed him in detail about this matter?
    Mr. Williams: Yes. Because of the letter which the hon. Member sent to me, I had investigations made before I replied to this Question today.
    Lieut.-Commander Gurney Braithwaite: Would the Minister examine the situation in this respect in the East Riding of Yorkshire?
    Mr. Williams: Certainly, if the hon. and gallant Member will give me particulars.
    Mr. Turton: Will the right hon. Gentleman give an increased allocation of steel so that dealers may build up stocks?
    Mr. Williams: I can assure the hon. Member that if there is a shortage, it is not due to want of steel.

  LONDON DOCKS STRIKE
  Mr. Eden(by Private Notice) asked the Minister of Labour whether he has any statement to make on the strike at the London Docks.
  The Parliamentary Secretary to the Ministry of Labour (Mr. Ness Edwards): As my right hon. Friend is at the International Labour Conference, I have been asked to reply. Since my right hon. Friend's statement of Thursday last, the strike has spread and now involves nearly 19,000 workers out of the total labour force of 27,000. I would ask to be excused from making any detailed statement today as a meeting has been called by the trade union for tomorrow morning in a further endeavour to secure an immediate resumption of work. I would not wish to say anything that might hamper the union in their efforts. I must, however, emphasise that this stoppage, if continued, will endanger the maintenance of essential food supplies and involve the public in quite unnecessary hardship. Moreover, by delaying the turn-round of shipping, this stoppage is already seriously impeding our export drive. The Government trust, therefore,
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  that the men will respond to the advice of their accredited trade union leaders and return to work forthwith.
  Mr. Eden: Can the right hon. Gentle man tell us what is the position about the food supplies in these ships? Presumably there are perishable food supplies in them. Are the Government satisfied that this further delay will not result in the loss of a large part of these food supplies? We would like to be assured on that point for a start.
  Mr. Ness Edwards: I am sure that the right hon. Gentleman and the House will agree that this is a matter which must be uppermost in our minds. We are watching the matter very carefully—[An HON. MEMBER: "Why not do something?"]—and what we do must be for the purpose of getting the maximum food supply for our people.
  Mr. Eden: I think that the question I asked the right hon. Gentleman was an eminently reasonable one. I really must ask whether the Government are satisfied that this further delay is not prejudicing these food supplies. I want an assurance that, by agreeing to this extension, the Government are satisfied that they will not lose any food in the ships.
  Mr. Ness Edwards: We have considered this matter in great detail this morning and we are satisfied that the step we are taking today is the correct step in the circumstances. We are assured that by this delay we are not endangering the rations of our people.
  Mr. Eden: I am sorry to press the right hon. Gentleman, but can he not answer simply? What I am concerned with is not the long-term rationing position, but the position of the perishable goods which there must be in these ships. Are the Government convinced that there is no danger of these perishable goods being lost on account of this further delay? Surely the right hon. Gentleman can answer "Yes" or "No"?
  Mr. Ness Edwards: Whatever decision is forced upon us tomorrow, we are satisfied that we can afford this delay of one day in dealing with the situation.
  Sir W. Smithers: Answer the question.
  Mr. Edwards: I have to answer this question having regard hot only to what

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  is said in this House but to the way in which the position must be handled outside. I do not want to say anything that can be translated into a threat, but I wish to assure the House that the Government will take all the steps that are necessary to see that unnecessary hardship is not caused to the people.
  Mr. Henry Strauss: Can the right hon. Gentleman confirm the fact that this strike is being led by shop stewards belonging to the union to which he referred?
  Mr. Ness Edwards: I would rather not make a statement about that today. The position is delicate enough. I hope that between now and tomorrow morning wiser counsels will prevail and we shall have a report to make.
  Mr. Molson: With regard to the food supplies in these ships, when the right hon. Gentleman says that the Government can afford the delay, are we to understand that no food will become uneatable as a result of this delay?
  Mr. Ness Edwards: I cannot make that promise because we cannot tell what is the condition of the food until the hatches are opened. The anticipation is that the matter will be all right until tomorrow. That is the best advice we have had, and I can only give that advice to the House.
  Mr. Eden: We were assured last Thursday, if I remember aright, that there was no anxiety that the food would perish in the interval as a result of no further discussion and no further action taking place over the week-end. I want to be assured that the same holds good now and that we shall not have a statement made subsequently by the Government that we have lost a large quantity of foodstuffs.
  Mr. Ness Edwards: I can give an assurance that large quantities of foodstuffs will not be wasted.
  Mr. Eden: We shall wish to put a further Question on this matter tomorrow.
  Mr. Platts-Mills: Is the Parliamentary Secretary aware, as everyone on this side of the House knows to be the case, that these men do not go on strike unless there is some very serious issue to provoke them? If the Government are so anxious
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  to see that this strike is stopped, will they use their influence to do the one thing which the strikers are demanding, namely, to bring about the withdrawal of the punishment which these men say is vindictive and penal?
  Mr. Gammans: The right hon. Gentleman talks about the delicacy of the situation. What is the delicacy which prevents the Government from condemning a strike which is contrary to the agreement legally entered into, and which if persisted in, will destroy the whole of the trade union organisation in this country?
  Mr. Ness Edwards: I have not been asked to express any opinion on the merits of the matter, but I say quite frankly that these men ought not to be on strike in these circumstances.
  Mr. Beverley Baxter: In connection with the statement that the union are to meet tomorrow morning, might I ask why they are not meeting this afternoon or at midnight tonight? What is the meaning of this leisurely pace with which they are dealing with this grave crisis?
  Mr. Ness Edwards: The men who are handling this situation have had a lifetime's experience of handling industrial disputes, and we must be guided by their wisdom in these matters.
  Mr. Henderson Stewart: Would it be a proper interpretation of the right hon. Gentleman's statement to say that if this strike is not over by tomorrow, a large-scale loss of food will follow?
  Mr. Ness Edwards: I did not imply anything of the kind. I shall be in a position tomorrow, I hope, to make a definite statement to the House on the steps which the Government deem it necessary to take.
  Vice-Admiral Taylor: Are the House and the country to understand that the Government are taking no action at all to safeguard the food and to prevent it from going bad?
  Mr. Ness Edwards: No, Sir.
  Sir W. Smithers: Can the right hon. Gentleman say to what extent this strike is due to Communist leaders and will he, as a first step—he must know who they are—arrest the Communist leaders?

BUSINESS OF THE HOUSE
Mr. Eden: Can the Leader of the House tell us whether there are any changes of Business for this week?
The Lord President of the Council (Mr. Herbert Morrison): It is proposed to ask the House to consider the draft National Insurance Regulations tomorrow (Tuesday). It was announced in the Business statement that we hoped there would be an opportunity of taking the Regulations this week.

ORDERS OF THE DAY
  FINANCE (No. 2) BILL
  As amended, considered.
  FINANCE (No. 2) BILL

    NEW CLAUSE.—(Limitation of liability of trustees.)
    (1) Where—

    (a) on a claim against a trustee for the recovery of contribution, not being contribution in respect of which the trustee could have given notice under subsection (4) of section fifty-five of this Act, or

    (b) on a claim against a tenant for life for the recovery of contribution,

    the trustee or tenant for life shows to the satisfaction of the Special Commissioners that his rights of indemnification out of the trust estate are, otherwise than by negligence or default on his part, insufficient to provide for his reimbursement, the Special Commissioners may give such directions for the limitation or release of his liability as appear just and equitable
    (2) Where a person who has paid any contribution proves to the satisfaction of the Special Commissioners that by reason of directions under the last foregoing subsection he is deprived of the right to recover any amount in respect thereof, the Special Commissioners shall repay that amount to him—[The Solicitor-General.]
    Brought up, and read the First time.
    3.40 p.m.
    The Solicitor - General (Sir Frank Soskice): I beg to move, "That the Clause be read a Second time."
    This Clause is designed to meet a point that was put during the Committee stage by the hon. Member for Chippenham (Mr. Eccles) with regard to the liability of trustees. Trustees who are made liable to pay a proportion of the Contribution when the contributor has recourse to them, require protection in the event of their not being able to reimburse themselves out of the estate which is under their control, provided always that their failure so to do is not attributable to their own neglect or default. This proposed new Clause provides, if they can show there are insufficient assets owing to no fault of their own, that they are excused from payment of a proportionate amount of the Contribution which the contributor has called upon them to recoup. Subsection (2) provides that when the contributor himself has paid the Contribution and cannot recoup himself by having recourse against the trustees, because the trustee's liability has been limited under the first part of the Clause, he can ask

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    to be recouped a proportionate amount of the Contribution which he pays himself. The new Clause does provide the necessary protection for trustees.
    Mr. I. J. Pitman: I am grateful for this new Clause so far as I understand it, but I do not understand whether or not it includes—and I mentioned a case recently in the Committee stage—a trust in which there may be literally no capital whatever. That might not be through the fault, or lack of fault, of the trustees. It might be the last year of copyrights under the will of an author who leaves his royalties which were thus expiring. The Solicitor-General will appreciate that on the last year there would be absolutely no capital in that trust, although there might be a very considerable income indeed. I should like to know whether this new Clause covers the case in which there is, in truth, income, but not any capital?
    3.45 p.m.
    Secondly, I wish to speak to the Amendment which is down in my name, which, I understand, is not selected, after "reimbursement," to insert:
    "or a diminution of rights to capital in the trust not of the beneficiary assessed to contribution on the income from the trust but only of some other individual."
    I wish to ask the Solicitor-General to go a little further in this respect and cover those cases in which the incidence of this tax falls neither on the rich tenant for life nor on the rich residuary of a trust. As the result of a letter that I wrote to "The Times," I have had a specific instance of a case in which the tax is likely to fall on those on whom the Minister certainly would not have intended that the tax should fall. The case is of a man who is earning a very considerable income at the Bar, and who married a widow who had four sons. The widow has a life interest in the estate of her late husband, and the residuary interest of that trust passes on her death to the children. The second husband has a considerable earned income, in fact I believe he is doing extremely well, but he has very little if any investment income. The effect of the Clause, as I understand it, will be that he will be assessed for the Contribution on his wife's investment income, which is the payment of a life interest to her under her late husband's trust.
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    The next step is for the present husband to require the trustees to pay that Contribution, rather than pay it himself. If that happens, those who will, in point of fact, pay the Contribution will not be the wife, because she will continue to draw her life interest under her late husband's will, and certainly not the present husband, but the four children of the first husband. That is a specific case in point, and it raises a fundamental issue. I take it that the Minister and hon. Members opposite intend that the Special Contribution shall fall in relation to the ability to pay. For the purposes of convenience the ability of payment is assumed to lie with the enjoyment of income rather than the holding of capital. What we really want to know is whether that administrative method is to be based on ability to pay in terms of income, or ability to pay in terms of capital?
    In this case, under a trust, the ability to pay is based on the income of the widow from that trust but, in point of fact, the ability to pay any capital has nothing whatever to do with the present husband or the widow who has since married that husband, but to do with those four children. The purpose of my Amendment was to make it quite clear that the Contribution should fall on those who have (a) the ability to pay, and (b) the capital ability to pay, and not on anybody else. I should like the Solicitor-General to devote himself to that point. It is a point of great fundamental principle in this Bill. We ask him to make clear, not only the full scope of his Clause, but whether he can meet us, at any rate in principle.
    Mr. Oliver Stanley: It is a measure of the depths to which we have been reduced by this particular part of the Budget that I gather that we are expected to express gratitude to the Government for this proposed new Clause. What, in fact, does it effect? It effects this, as I understand it. If I, as a trustee, have served upon me a notice by my cestui qui trust that I am to pay the Contribution out of the trust fund, and if there is not enough money in the trust fund to pay the Contribution, then the Treasury, very kindly, will consider whether or not they will let me off paying out of my money the Contribution which is not levied on me, in which I have no interest whatsoever, and

    961
    under which, in ordinary circumstances, I would have no legal liability at all. I do not know if that is the position—it is put, I am afraid, in very crude and almost unintelligible terms—but if so, what is the justification for leaving this to the discretion of the Treasury?
    What possible justification is there for not laying down by statute that, in those circumstances, I, as a trustee, should not be liable for any more than is available out of trust funds for which I am responsible? Why should it be left to the Treasury to decide in their goodness, in so far as they possess any, whether or not I should have to pay out of my own pocket in order to make good the Contribution due from my cestui qui trust when my trust fund is not competent for it? I might have been prepared to express a modified form of gratitude at least to the Government for putting right a wrong which ought never to have been included in the Bill if this new Clause had taken the definite form of exclusion from liability. I cannot see any reason—it certainly has not been given by the Solicitor-General—why a matter which, in equity, is so clear, should be left to the goodwill and discretion of the Treasury. Before we accept this new Clause I should like from the right hon. and learned Gentleman some explanation of what appears to me to be a quite inexplicable mistake.
    Mr. Charles Williams: I should like a little information on a point which we raised earlier. Does this Clause do anything to prevent any burden falling on charitable trusts? Originally, charitable trusts had to pay in the event of the levy falling on an individual who, when he died, arranged that his capital should go to a charitable trust. I instanced the case of Bristol Orphanage, because I hoped that that might appeal to the Chancellor of the Exchequer as it is somewhere in the neighbourhood which he represents. We did not get any further with that point at that stage of the Bill. Do I understand that it is possible, and in some cases inevitable, that charitable institutions will have to bear a considerable weight of taxation?
    Mr. McKie: I very much hope that the Financial Secretary will respond to the appeal made by my right hon. Friend the Member for West Bristol (Mr. Stanley). I do not think that it would
    962
    be at all right to add this Clause to the Bill without some further light being shed upon many of the points of detail already raised. If we on this side of the House so desired, we could prolong the Debate for a considerable period by raising many other points which no doubt my hon. Friends have in mind. I join with my right hon. Friend in expressing our thanks—I presume that is the right word—to the right hon. and learned Gentleman for having been good enough to include this new Clause on Report owing to our diligent efforts when the Bill was in Committee in pointing out the many traps into which trustees would fall and the difficult problems which they would face if the Bill was not amended. Despite the fact that we are thankful for that, in my opinion, and in the opinion of many of my hon. Friends who are particularly well able to speak on financial matters, this new Clause does not go far enough. So far we have not had a sufficient explanation from the Solicitor-General. I join with what was said by my hon. Friend the Member for Torquay (Mr. C. Williams). We ought to have a reply on that point. No doubt my hon. Friend has many specific cases in mind.
    The reason why I rose was to point out the great hardships which may arise in the cases of trustees responsible for the administration of estates which are almost entirely composed of landed settlements. I feel sure that on further reflection the right hon. and learned Gentleman will agree that we should have more details of how this Clause will affect trustees of estates where the money comes almost entirely from landed sources of revenue. There is no doubt that even before the iniquitous financial legislation—the word "iniquitous" is not too strong—introduced by the present Socialist administration, trustees were continually being made to suffer. I always like to be fair, and I would say that in the period between the two wars impositions were made upon trustees—I am glad to see the hon. Member for Forest of Dean (Mr. Philips Price) paying attention—of landed estates, and trust funds which dated back perhaps 50, 60 or 70 years, were continually being confronted with the problem of how to carry on, especially owing to the changing values of money and, indeed, the inflationary process which we had even after the first world war. I suggest, Mr. Speaker—and no doubt you will agree

    963
    with me—that on many occasions they have had to make advances. Many estates in land are now almost insolvent owing to the increased burdens put upon them—
    Mr. Speaker: Perhaps the hon. Gentleman will not talk of taxation generally, but will now proceed to address himself to the new Clause.
    Mr. McKie: With great respect, Sir, I was not going to presume further upon your patience by discussing taxation generally. I was merely pointing out the great hardships which may rest on trustees of landed estates in spite of this new Clause. We ought to have further information about how they will be affected. I do not think that the right hon. and learned Gentleman has satisfied us, and I hope that he will see fit to respond to the appeal of my right hon. Friend.
    Mr. Hollis: There is one point on which we must have some clarification. Suppose that there was a husband who had an earned income and a wife who enjoyed an investment income through a trust. Neither would have to pay if they were not husband and wife, but their joint income would be sufficient to make a payment necessary. In that event, the payment would be made not by the wife who, by definition, possesses no capital nor by the husband, but by the children. They would be the beneficiaries of the trust. Let us suppose that there were four children. It might be that the income they hoped to receive would be nowhere sufficient to make them liable if they were receiving that income at the moment. Those unfortunate children would be taxed in an arbitrary way because of a fortuitous combination of circumstances and parents.
    A constituent of mine wrote to me in some distress because his position was that he had enjoyed an earned income and his wife enjoyed a certain investment income. Unfortunately, his wife died in January of this year and her capital was left to their children. He was afraid that under this Bill as it stood then, though he possessed no capital worth talking about, he would have to pay the levy on the capital which, through his wife, he had enjoyed during a portion of the year. Fortunately, I was able to reassure him that by Clause 57 (6) that was not the case. Subsection (6) says:
    964
    "Where of a husband and wife one died during the year 1947–48, the provisions of this Part of this Act shall apply to the survivor as if during that year they had not been married."
    Suppose, however, that the situation had not been precisely as it was in that case, but had been that his wife enjoyed an investment income in trust and did not die. In that case, he would certainly have been liable to pay a capital levy despite the fact that he did not possess any capital. That would be bad enough if this was a case of "once for all," as the Chancellor has said, but, if it is merely the first stage of greater things to come, as clearly must be the case from the recent calamitous appointment of the new Chancellor of the Duchy of Lancaster, we are entitled to know where we are.
    4.0 p.m.
    Sir H. Lucas-Tooth: I should like to know whether the words "rights of indemnification out of the trust estate" are sufficient to cover a case where the trustee estate is, in fact, a foreign trust, and where it is insufficient by reason of the fact that the foreign law forbids the trustees to sell the estate. Are those words wide enough to cover that case?
    The Solicitor-General: If I may, I will take the points which have been put, as I remember them, seriatim. The hon. Member for Bath (Mr. Pitman) raised the question of a widow who had a life interest in the income of a trust the corpus of which went to her children on her death. That instance does not arise under this Clause at all. The Clause is intended to limit the liability of trustees, and the question which the hon. Gentleman has raised is how far it would be right that liability for the Contribution should ultimately fall upon the corpus which goes to the children. Although it does not arise on this Clause, I would say to the hon. Gentleman that the Contribution being, in effect, a charge on capital via income, it is not unreasonable that the children who will ultimately inherit the corpus and enjoy the capital should bear the burden of the tax. That does not arise on this Clause, which deals with the liability of trustees.
    Mr. Hollis: The right hon. and learned Gentleman is missing the whole point. Suppose the wife was going to leave the money to one child, it would be fair that

    965
    the child should pay what the wife pays, but, supposing there were four children, none of them might have sufficient investment income to pay the liability.
    The Solicitor-General: The answer to that is in Clause 56, which applies different rules as to the equitable distribution as between the persons interested in the corpus of the estate and the burden of the tax. The ordinary Chancery rules, which have been worked out to provide for fair distribution as between various persons interested in the corpus of the estate, will be applicable and, in the case just instanced, there will be fair distribution, having regard to the point I have just mentioned.
    Mr. Pitman rose—
    The Solicitor-General: This does not arise on this point at all. It arises on an Amendment which has not been called, and on which the argument which has been adduced would arise. I gave a brief answer to an argument which is irrelevant to the new Clause, and perhaps I should not have done so, but, having done that, there is no reason now for my being drawn into a long discussion of the matter.
    Mr. Pitman: On a point of Order. I inquired at the Table, and I understood that the Amendment was not being called but that it would be in Order to discuss the matter on this new Clause. I hope I have not been guilty of raising a point which is out of Order, and I should have thought that, if I was in Order in raising it, the Solicitor-General would be in Order in replying and that I would also be in Order in attempting to follow up that reply.
    Mr. Speaker: I think that is the normal procedure. If the matter had been out of Order in my opinion, I would have stopped the hon. Gentleman, but, the matter having been raised, he is entitled to receive a reply.
    The Solicitor-General: I have replied.
    Mr. Pitman: Would the right hon. and learned Gentleman give way to me? What we have been arguing is the case of four people, each with £200 a year, who are to be taxed, regardless of the fact that they will be relatively poor. This is not a case of people with big capital
    966
    or big incomes; but of four children who have not got either big income or big capital investment.
    The Solicitor-General: I still do not think that this point arises under this Clause, and I said earlier, when we were discussing questions of this sort, that Clause 56 applies to the case which has just been put. Where we have various interests, an elaborate code based upon the provisions of the Finance Act, 1894, designed to bring about a fair distribution of the burdens of tax, will be brought into play. That code of rules, which has been formulated as the result of a great many Chancery decisions, will be brought into operation. It would be a long business to indicate its precise application in any particular set of circumstances, because the rules vary according to the interests concerned.
    Mr. Pitman: The Solicitor-General has still not seen the point. These are provisions to equalise the burden of payment amongst people who have to pay. We raise the point that these people ought not to be paying at all.
    The Solicitor-General: I answered that by saying that, ultimately, the charge should fall upon the capital via the income, and I have explained that there are rules to see that it shall be apportioned out equitably between the various interests concerned.
    The point raised by the right hon. Member for West Bristol (Mr. Stanley) was that this should not be a matter of discretion. The term used is "may give such directions." The different sets of circumstances which would have to come into consideration make it very difficult to operate a Clause like this unless we leave some measure of discretion. There is a right of appeal against an order made by the Special Commissioners, and we think that is the best way to deal with the matter, when considering all sorts of different circumstances which might be alleged as being the reason why the estates are insufficient, and we think it wise to leave a certain amount of discretion in the hands of the Special Commissioners to enable them to do justice in each case. If the trustees feel aggrieved by the order, there is a right of appeal, and we think that is the most effective way of bringing about a fair result.

    967
    What has to be considered is whether the deficiency of the estate, if there is a deficiency, is due or is not due to any neglect on the part of the trustees. That being ascertained, the question arises whether directions should be given or not. If directions are given, this Bill provides that there shall be a right of appeal on points of law to the High Court ultimately, and we feel that that is the best way of dealing with a problem which can be difficult to solve in particular circumstances. That is my answer to the question which the right hon. Gentleman asked.
    Mr. Stanley: I do not understand the answer of the learned Solicitor-General, because as I read the new Clause if it is proved that this has arisen by negligence or default, the discretion of the Special Commissioners does not come into it at all. If there has been negligence, they cannot exercise their discretion; they can only do it where there has been no negligence, and, if there has been no negligence of the estate, there should be no discretion, but a plain duty to exempt.
    The Solicitor-General: If there is a case made that there is insufficient to meet the liability, unless there has been neglect on the part of the trustees there is discretion as to the precise form of the order to be made in particular circumstances in order to do justice. That is what the Clause provides, and, in the event of a trustee feeling that he is aggrieved, there is a right of appeal. We think that is the best way of making sure that the trustees are safeguarded and in order to prevent them having to pay out of their pockets any amount in respect of the deficiency.
    With regard to the question raised by the hon. Member for Torquay (Mr. C. Williams), the charitable trustees are not individuals within the meaning of Clause 46. Therefore, they would not be persons who are liable to pay Contribution at all. Charitable trustees are not liable for Contribution, for the reason that they do not come within the meaning of the word used in Clause 46—"individuals."
    Mr. C. Williams rose—
    The Solicitor-General: I really cannot keep on giving way. I gave a specific answer to the question.
    Mr. C. Williams: But that was not the question. The point was not that they
    968
    were liable to the original tax. It was that if the person who is drawing the income is liable to the tax, that tax has to be paid out of the fund and if ultimately that fund goes to the charity, there will be less money. I want to know whether such people are covered. I have never for a minute put the point which the right hon. and learned Gentleman suggested—that they would be liable to tax—because that was obvious to me weeks ago. I want to know whether ultimately the funds which should accrue to them will be diminished by a certain amount?
    The Solicitor-General: May I revert from what I have just been saying to the answer which I gave to the right hon. Member for West Bristol? He made the point about discretion. My answer was that there was discretion to make an appropriate order in the event of the necessary conditions being disclosed. If, after my answer has been considered, it is felt that that is unsatisfactory from the point of view of trustees, and if you would be prepared to accept it, Mr. Speaker, we would willingly move a manuscript Amendment to substitute the word "shall" for the word "may" if that would meet the point which the right hon. Gentleman has in mind. I think it would entirely meet the point.
    Mr. Stanley: I am in a difficulty. Of course, we on this side of the House are grateful to the right hon. and learned Gentleman for his suggestion, but it is very difficult to decide straightaway. I am sure the suggestion goes some of the way, but I doubt if it goes all of the way, because it still keeps the discretion
    "as appear just and equitable."
    I wonder whether the best thing would be to move to postpone the discussion of this Clause until the end of the Bill, which would give us an opportunity of having a talk with the right hon. and learned Gentleman.
    The Solicitor-General: I see the right hon. Gentleman's point, but I really do not think it would be necessary to alter the succeeding words. If one substitutes the word "shall" for "may," then once the necessary conditions are shown to exist it is obligatory upon the Special Comissioners to make a direction. They have got to do so. What is the obligation which is placed upon them? They

    969
    are bound to make a direction which is just and equitable in the circumstances. If they do that, and if the trustee still feels aggrieved, there is a right of appeal. I suggest that once they are bound to make an order, they are bound to bring their minds to the problem and make such an order as they think just and equitable in the circumstances. I think my proposal would meet the point if Mr. Speaker would accept a manuscript Amendment in the terms which I have suggested.
    Mr. Assheton: We are naturally grateful to the right hon. and learned Gentleman for his suggestion, but we are not quite satisfied that it would fully meet the point. I should have thought that it would be a great advantage to postpone discussion of this Clause, at any rate until the end of the Clauses, so that we could be sure that we shall get the matter right. This is a rather hurried suggestion. It had occurred to me that the word "shall" might have been substituted for the word "may." I whispered it to my right hon. Friend the Member for West Bristol (Mr. Stanley) after he had spoken, and he pointed out to me that even if that were done it would not, in his opinion, give complete exemption to the trustees from any possible liability in any circumstances. We want to ensure that no personal liability shall fall upon any trustee if he has not got the funds to meet it. That seems a fairly easy sort of thing to put into legal phraseology, and I should have thought that if between now and the end of the Clauses the right hon. and learned Gentleman really tried, he would have been able to get a very short Clause to give effect to that point.
    We are not quite certain that the words as they would appear if the Solicitor-General's suggestion were adopted,
    "shall give such directions for the limitation or release of his liability as appear just and equitable,"
    go far enough. We want to make quite certain that no liability can fall upon a trustee if he has not got the money to meet it. I am sure the Government want to give that effect if they possibly can, and I think it would be convenient if we had a little more time to consider the exact wording. I was requested by my right hon. Friend the Member for West
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    Bristol to ask what appeal there is to be. To whom is the appeal to be made?
    4.15 p.m.
    Perhaps I may say a few words on the points raised by a number of my hon. Friends. The hon. Member for Torquay (Mr. C. Williams) made the point that this Contribution would fall upon a charity which had a reversionary interest to a trust fund, and I think he was trying to protect a charity from losing part of the reversionary interest. The reply which the right hon. and learned Gentleman gave did not entirely meet that point. We want to know if a charitable fund may, through the effect of this Special Contribution, ultimately suffer in its capital value. As we read the Bill now, it will so suffer. I want to be sure that the Government do not intend that, and that they will put in some words to meet the situation.
    My hon. Friends the Members for Bath (Mr. Pitman) and Devizes (Mr. Hollis) raised a point which is very important, that the result of the working of this Contribution will be that certain persons will have to pay a Contribution when, in fact, they may have a very small income indeed. Although the Solicitor-General pointed out that this was not wholly relevant to the Clause, a certain amount of discussion was allowed on it. Therefore, it is right that we should press the point. It seems grossly unfair that owing to the way in which a fund comes to be distributed, a very substantial tax may be made upon an income which may be only £100 or £200 a year. The Solicitor-General pointed to the elaborate code which had been built up in assessing these matters with regard to Estate Duty. Of course, there is a most elaborate code, but is it a just or satisfactory code? There are many circumstances in which it works grossly inequitably.
    Take the case, for example, of a man who has a very small capital. Say he has a capital of £5,000, and happens to become the tenant for life, even for a few months, of a large capital fund, the whole of that £5,000 has to bear a very heavy rate of Estate Duty. Perhaps all he has to leave to his wife and children may be the £5,000 less Estate Duty of 50 per cent. or 60 per cent., whereas the Estate Duty on the 5,000 would be a very

    971
    small percentage. There are numerous cases where the rules work most inequitably. To import this code into this legislation is no defence to what the right hon. and learned Gentleman is doing.
    Mr. Selwyn Lloyd: I would like to appeal to the Government to reconsider this matter. The words
    "otherwise than by negligence or default on his part"
    seem to be extremely wide. They mean that if there is a scintilla of evidence of negligence in the matter, or the slightest default, then the Commissioners have no discretion whatsoever over the release of any liability. I suggest that it would be very much better if those words were omitted so that the Clause reads:
    "… the Special Commissioners shall give such directions for the limitation or release of his liability as appear just and equitable, taking into account any negligence or default."
    The Clause is not properly drawn, and that is an additional reason for taking back the Clause and reconsidering it.
    Lieut.-Commander Gurney Braithwaite: The right hon. and learned Gentleman, when he was moving the Clause at the commencement of the Debate, said it was designed to meet points of difficulty raised by my hon. Friend the Member for Chippenham (Mr. Eccles) during the Committee stage. I think the discussions, as they have gone so far, show that, however excellent the Government's intentions may have been, the drafting of the Clause does not achieve the object which I think they themselves, and certainly those of us on this side, had in view. I would, therefore, suggest in all good temper to the right hon. Gentleman that he is still making very heavy weather of what is a fairly simple matter.
    We have established, I think effectively, in the speeches which preceded mine, that where there is no capacity to pay, this Contribution should not be levied. The right hon. Gentleman, in meeting us, rested himself with considerable confidence on the machinery of appeal. We still feel that the main objection has not been met. What is required is not an appeal to the Commission, but an appeal from the Commission. I do not feel the right hon. Gentleman dealt effectively with that point. My hon. Friends still feel in some difficulty as to what he meant. Is
    972
    there, in fact, apparatus by which these trustees can appeal from the decision of the Commission? It does not appear in Clause 59, to which the right hon. and learned Gentleman refers, nor can we find in the Bill any such machinery. We feel it should be inserted before we part from this Clause.
    May I deal with one further point? In the Chancellor's words, this Special Contribution was levied upon those who would have the capacity to pay. He used that phrase more than once. This Debate has shown that it will be levied on people who have not the capacity to pay. The Chancellor inferred that it was a crime to be rich. It is now to be a crime to be poor, under this apparatus. I would suggest too that although the machinery of appeal may be provided, the machinery of appeal is not something which can easily be achieved by people of all circumstances. Appeals are apt to be expensive. Honourable, learned and distinguished counsel very often have to be employed, opinions have to be obtained and all the rest of it, and those entrusted with slender resources will thus have a very unfair additional burden imposed upon them. I add my voice, for what it is worth, to those of my hon. Friends who have suggested that this Clause should be taken back and looked at again. We could take it later in the Report stage, when these difficulties have been smoothed out to the satisfaction of all.
    The Solicitor-General: On the question of appeal, there is an Amendment on the Order Paper which I hope will be selected, in page 47, line 1, after "Act," to insert
    "or section (Limitation of liability of trustees) or section (Relief where capital subject to death duties) thereof."
    It provides for an appeal, as in the case of Surtax and other taxes, to the Special Commissioners and through them to the courts on a point of law. This is provided by this Amendment put down later to Clause 59, and in due course it will be moved by the Government. It gives a right of appeal against an order made by the Special Commissioners in respect of which the trustees feel they have a grievance under the new Clause and it incorporates the provisions which provide that if an appeal goes to the Special Commissioners, and it is desired to go further on a point of law, that further appeal lies to the courts on a point of law and on a

    973
    point of law only. That is the normal course of appeal under the Income Tax Act.
    With regard to the general plea that the Clause should be taken back, that is one to which I feel we should not be asked to accede. We have said, if "otherwise than by negligence or default" the trustees find themselves with insufficient funds in their hands, they can ask for this measure of relief which the Commissioners shall give them. The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) said it might be very hard in the case of small estates, and that the trustees should not be burdened with the business of appealing to the courts. It is for that reason that we have left in the Clause this slight measure of elasticity in the words:
    "as appear just and equitable."
    We have provided that there must be an order made—there being that obligation which cannot be removed, provided the necessary conditions are shown to exist to make an order—and that the Special Commissioners shall make one which is fair and reasonable in the circumstances. In this endeavour to try to reach finality in the matter, we think these words assist the position rather than the reverse. We feel we have adequately met the position. It can be said, of course, that questions arise where there is the slightest possible degree of negligence, but these things must be construed by the courts reasonably and I do not think any difficulty should arise. We feel we have adequately protected the position of trustees.
    Mr. Stanley: I have looked at the Amendment to which the Solicitor-General referred, and it is quite clearly an appeal to the Special Commissioners. How can one appeal to the Special Commissioners from the decision of the Special Commissioners?
    The Solicitor-General: If the right hon. Gentleman will turn to page 47 of the Bill he will see, in the first place, that under Subsection (4), when the Amendment has been made, there will be an appeal to the Special Commissioners.
    Mr. Stanley: What of an appeal from the Special Commissioners?
    The Solicitor-General: If the right hon. Gentleman looks at Subsection (7) of the same page he will see that the provisions
    974
    of Section 149 of the Income Tax Act of 1918 apply, with the necessary modifications in the case of any appeal to the Special Commissioners, and Section 149 provides that an appeal lies from the Special Commissioners to the courts on a point of law.
    Mr. Assheton: By leave of the House, may I rise to point out that this does not meet the position where there is not a point of law at all? What we find here is that the Special Commissioners will make a determination which they think is just or equitable. It may be that no question of law will arise at all, and in that case there will be no appeal from them whatever.
    Captain Crookshank: We seem to be getting a little confused. I am sure the right hon. and learned Gentleman did not intend to mislead us, but in his argument he was not addressing himself to the real point which we have in mind. It is a question of where there is no money, not where an argument as to a point of law arises. I understood from him earlier, quite distinctly, that there was a right of appeal, but as we look at this Clause we see that appeals are either to the Special Commissioners or, in this particular case, to the High Court on a point of law.
    The right hon. and learned Gentleman is prepared to move an Amendment, but I think it really would be very much more convenient if the Government were prepared to accept a Motion, which I think is in Order, as we have not yet taken any decisions on the Second Reading of this Clause, that further consideration of this Clause be postponed until just before the discussions on the Schedule of the Bill—that is to say, in all likelihood, sometime tomorrow. That would give time for the right hon. and learned Gentleman to put down his Amendment so we could see it on the Order Paper tomorrow, and it might be that if we had some suggestions to make we could also put them on the Order Paper tomorrow in the form of the relevant Amendment. I understand it is perfectly in Order to make that Motion and I hope, therefore, the Government will accede to our request.
    I beg to move, "That further consideration of the Clause be postponed until the consideration of the Clauses in the Bill has been completed."
    4.30 p.m.
    The Solicitor-General: I do not want to be obstinate about the matter, but I think that hon. Gentlemen opposite are making rather heavy weather about it. Let me deal first with the matter of appeals. The ordinary procedure will apply which applies now in the case of Income Tax appeals. There is an appeal from the Special Commissioners who, when making the direction, are, in effect, revenue officers. An appeal lies from them as it does in all these Income Tax matters. May I have the attention of the right hon. Gentleman?
    Mr. Stanley: On a point of Order. I do not in the least want to curtail the argument of the right hon. and learned Gentleman, who is making an interesting argument, provided that we are entitled ourselves to follow him. However, I understand that on this Motion nothing is in Order except discussion of the question of postponement.
    Mr. Speaker: I am afraid we cannot go into the merits of the new Clause or an Amendment of it, on this Motion. This is a question whether we do or do not postpone discussion.
    The Solicitor-General: With respect, I would say we should not postpone the discussion, and in support of that, although I do not want to go into the merits of the new Clause, I do submit that the points which have been made by hon. Gentlemen opposite are already covered by the Clause as it stands. Without dealing with the matter in detail, I can say there is an answer to the question of appeals. The rest of the Clause does what we think is necessary for the purpose adequately of safeguarding trustees. For that reason I would respectfully
    submit that the Motion should not be carried, because there is no point in further discussing the Clause, which has already been discussed to some considerable extent and because the Clause does, in point of fact, achieve the object we have set out to reach. For these reasons I would respectfully submit that the House should come to a decision now.
    Mr. Stanley: I hope that even now, the Government will accept the Motion to postpone. It cannot make any difference to them if we pass the Clause now or some time tomorrow. I would point out that the right hon. and learned Gentleman himself—and I am grateful to him for it—says he will propose an alteration of the Clause in the form of a manuscrip Amendment. We have not really had time to consider whether that does meet the point we are making. My own feeling at the moment is that it does not meet that point. However, I think our point can be met easily and within the desire of the Government, by some further minor alteration. In these circumstances, and if, as I believe, both sides of the House are anxious to get just the same thing, and if we are merely differing about the wording which will obtain what we all desire, it would seem to be convenient to postpone the discussion until tomorrow. That would give opportunity for thinking the matter over, and possibly for discussing it between ourselves, and that may easily result tomorrow in the putting down of an agreed Amendment.
    Question put, "That further consideration of the proposed Clause be postponed until the consideration on the Clauses of the Bill has been completed."
    The House divided: Ayes, 102; Noes, 204.

    Division No. 229.]

    AYES.

    [4.34 p.m.

    Agnew, Cmdr. P. G.

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

    Hare, Hon. J. H. (Woodbridge)

    Amory, D. Heathcoat

    Cuthbert, W. N.

    Harvey, Air-Comdre. A. V.

    Anderson, Rt. Hn. Sir J. (Scot. Univ.)

    Darling, Sir W. Y.

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

    Assheton, Rt. Hon. R.

    Davies, Rt. Hn. Clement (Montgomery)

    Hinchingbrooke, Viscount

    Baldwin, A. E.

    Dodds-Parker, A. D.

    Hollis, M. C.

    Beamish, Maj. T. V. H.

    Donner, P. W.

    Holmes, Sir J. Stanley (Harwich)

    Bennett, Sir P.

    Drayson, G. B.

    Howard, Hon. A.

    Birch, Nigel

    Drewe, C.

    Jeffreys, General Sir G.

    Boles, Lt.-Col. D. C. (Wells)

    Duthie, W. S.

    Keeling, E. H.

    Bowen, R.

    Eccles, D. M.

    Kendall, W. D.

    Boyd-Carpenter, J. A.

    Eden, Rt. Hon. A.

    Kingsmill, Lt.-Col. W. H.

    Braithwaite, Lt.-Comdr. J. G.

    Elliot, Lieut.-Col. Rt. Hon. Walter

    Lambert, Hon. G.

    Buchan-Hepburn, P. G. T.

    Fletcher, W. (Bury)

    Lancaster, Col. C. G.

    Butcher, H. W.

    Fraser H. C. P. (Stone)

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

    Byers, Frank

    Fraser, Sir I. (Lonsdale)

    Linstead, H. N.

    Challen, C.

    Galbraith, Cmdr. T. D.

    Lloyd, Selwyn (Wirral)

    Clarke, Col. R. S.

    Gammans, L. D.

    Lucas-Tooth, Sir H.

    Conant, Maj. R. J. E.

    Grimston, R. V.

    Macdonald, Sir P. (I. of Wight)

    McKie, J. H. (Galloway)

    Pitman, I. J.

    Stewart, J. Henderson (Fife E.)

    Maclay, Hon. J. S.

    Poole, O. B. S. (Oswestry)

    Strauss, H. G. (English Universities)

    Macpherson, N. (Dumfries)

    Price-White, Lt.-Col. D.

    Studholme, H. G.

    Maitland, Comdr. J. W.

    Prior-Palmer, Brig. O.

    Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

    Marlowe, A. A. H.

    Ramsay, Maj. S.

    Thorneycroft, G. E. P. (Monmouth)

    Marsden, Capt. A.

    Rayner, Brig. R.

    Thornton-Kemsley, C. N.

    Marshall, D. (Bodmin)

    Reed, Sir S. (Aylesbury)

    Turton, R. H.

    Mellor, Sir J.

    Reid, Rt. Hon. J. S. C. (Hillhead)

    Vane, W. M. F.

    Molson, A. H. E.

    Roberts, P. G. (Ecclesall)

    Ward, Hon. G. R.

    Morris, Hopkin (Carmarthen)

    Ropner, Col. L.

    Watt, Sir G. S. Harvie

    Morrison, Rt. Hon. W. S. (Cir'cester)

    Ross, Sir R. D. (Londonderry)

    Webbe, Sir H. (Abbey)

    Neven-Spence, Sir B.

    Sanderson, Sir F.

    Wheatley, Colonel M. J. (Dorset, E.)

    Nicholson, G.

    Savory, Prof. D. L.

    Williams, C. (Torquay)

    Noble, Comdr. A. H. P.

    Smith, E. P. (Ashford)

    Winterton, Rt. Hon. Earl

    O'Neill, Rt. Hon. Sir H.

    Smithers, Sir W.

    Orr-Ewing, I. L.

    Spearman, A. C. M.

    TELLERS FOR THE AYES:

    Pickthorn, K.

    Stanley, Rt. Hon. O.

    Sir Arthur Young and

    Brigadier Makeson.

    NOES.

    Adams, W. T. (Hammersmith, South)

    Fraser, T. (Hamilton)

    Murray J. D.

    Allen, A. C. (Bosworth)

    Ganley, Mrs. C. S.

    Neal, H. (Clay Cross)

    Alpass, J. H.

    Glanville, J. E. (Consett)

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

    Austin, H. Lewis

    Goodrich, H. E.

    Noel-Baker, Capt. F. E. (Brentford)

    Ayles, W. H.

    Gordon-Walker, P. C.

    Noel-Buxton, Lady

    Ayrton Gould, Mrs. B.

    Greenwood, A. W. J. (Heywood)

    Oliver, G. H.

    Bacon, Miss A.

    Grenfell, D. R.

    Orbach, M.

    Balfour, A.

    Grey, C. F.

    Parkin, B. T.

    Barstow, P. G.

    Griffiths, D. (Rother Valley)

    Paton, Mrs. F. (Rushcliffe)

    Barton, C.

    Griffiths, W. D. (Moss Side)

    Peart, T. F.

    Battley, J. R.

    Gunter, R. J.

    Piratin, P.

    Bechervaise, A. E.

    Guy, W. H.

    Poole, Cecil (Lichfield)

    Belcher, J. W.

    Hall, Rt. Hon. Glenvil

    Popplewell, E.

    Benson, G.

    Hamilton, Lieut.-Col. R.

    Porter, E. (Warrington)

    Berry, H.

    Hannan, W. (Maryhill)

    Porter, G. (Leeds)

    Beswick, F.

    Hardy, E. A.

    Price, M. Philips

    Bing, G. H. C.

    Harrison, J.

    Proctor, W. T.

    Binns, J.

    Henderson, Joseph (Ardwick)

    Pursey, Comdr H.

    Blackburn, A. R.

    Herbison, Miss M.

    Randall, H. E.

    Bottomley, A. G.

    Holman, P.

    Ranger, J.

    Bowles, F. G. (Nuneaton)

    Holmes, H. E. (Hemsworth)

    Reeves, J.

    Braddock, T. (Mitcham)

    Horabin, T. L.

    Reid, T. (Swindon)

    Bramall, E. A.

    House, G.

    Rhodes, H.

    Brooks, T. J. (Rothwell)

    Hoy, J.

    Ridealgh, Mrs. M.

    Brown, T. J. (Ince)

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

    Roberts, Goronwy (Caernarvonshire)

    Bruce, Maj. D. W. T.

    Hughes, Emrys (S. Ayr)

    Rogers, G. H. R.

    Burden, T. W.

    Hughes, Hector (Aberdeen, N.)

    Ross, William (Kilmarnock)

    Castle, Mrs. B. A.

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

    Scott-Elliott, W.

    Chamberlain, R. A.

    Hynd, H. (Hackney, C.)

    Segal, Dr. S.

    Champion, A. J.

    Hynd, J. B. (Attercliffe)

    Shackleton, E. A. A.

    Chater, D.

    Irvine, A. J. (Liverpool)

    Sharp, Granville

    Chetwynd, G. R.

    Irving, W. J. (Tottenham, N.)

    Shurmer, P.

    Cluse, W. S.

    Jay, D. P. T.

    Silverman, J. (Erdington)

    Cobb, F. A.

    Jeger, G. (Winchester)

    Silverman, S. S. (Nelson)

    Cocks, F. S.

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

    Simmons, C. J.

    Collins, V. J.

    Jones, D. T. (Hartlepools)

    Skinnard, F. W.

    Colman, Miss G. M.

    Jones, Elwyn (Plaistow)

    Snow, J. W.

    Comyns, Dr. L.

    Keenan, W.

    Sorensen, R. W.

    Cooper, Wing-Comdr. G.

    Key, Rt. Hon. C. W.

    Soskice, Rt. Hon. Sir Frank

    Cove, W. G.

    Kinley, J.

    Sparks, J. A.

    Cripps, Rt. Hon. Sir S.

    Kirby, B. V.

    Steele, T.

    Daggar, G.

    Lang, G.

    Stross, Dr. B.

    Daines, P.

    Lawson, Rt. Hon. J. J.

    Stubbs, A. E.

    Davies, Ernest (Enfield)

    Leonard, W.

    Summerskill, Dr Edith

    Davies, Harold (Leek)

    Levy, B. W.

    Sylvester, G. O.

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

    Lipton, Lt.-Col. M.

    Symonds, A. L.

    Deer, G.

    Longden, F.

    Taylor, H. B. (Mansfield)

    de Freitas, Geoffrey

    Lyne, A. W.

    Taylor, R. J. (Morpeth)

    Dodds, N. N.

    McEntee, V. La T.

    Taylor, Dr. S. (Barnet)

    Donovan, T.

    McGhee, H. G.

    Thomas, D. E. (Aberdare)

    Driberg, T. E. N.

    McGovern, J.

    Thomas, George (Cardiff)

    Dugdale, J. (W. Bromwich)

    Mack, J. D.

    Thorneycroft, Harry (Clayton)

    Dumpleton, C. W.

    McKay, J. (Wallsend)

    Thurtle, Ernest

    Dye, S.

    McLeavy, F.

    Tolley, L.

    Ede, Rt. Hon. J. C.

    Mallalieu, E. L. (Brigg)

    Tomlinson, Rt. Hon. G.

    Edelman, M.

    Mallalieu, J. P. W. (Huddersfield)

    Vernon, Maj. W. F.

    Edwards, John (Blackburn)

    Mann, Mrs. J.

    Viant, S. P.

    Evans, Albert (Islington, W.)

    Manning, C. (Camberwell, N.)

    Walker, G. H.

    Evans, E. (Lowestoft)

    Manning, Mrs. L. (Epping)

    Wallace, G. D. (Chislehurst)

    Evans, S. N. (Wednesbury)

    Marquand, H. A.

    Warbey, W. N.

    Ewart, R.

    Mathers, Rt. Hon. George

    Wells, P. L. (Faversham)

    Fernyhough, E.

    Middleton, Mrs. L.

    West, D. G.

    Field, Capt. W. J.

    Moody, A. S.

    White, C. F. (Derbyshire, W.)

    Foot, M. M.

    Moyle, A.

    Whiteley, Rt. Hon. W.

    978

    979

    Wilkins, W. A.

    Wills, Mrs. E. A.

    Younger, Hon. Kenneth

    Willey, F. T. (Sunderland)

    Woodburn, Rt. Hon. A.

    Zilliacus, K.

    Williams, J. L. (Kelvingrove)

    Woods, G. S.

    Williams, R. W. (Wigan)

    Wyatt, W.

    TELLERS FOR THE NOES:

    Williams, W. R. (Heston)

    Yates, V. F.

    Mr. Pearson and

    Mr. Richard Adams.

    Question put, and agreed to.

    Mr. Speaker: I am afraid that this is a rather unusual procedure. Possibly, I am to blame for not putting the Question in another form and in such a way that the Government would have voted "Aye" and the Opposition "No." As it is, I have to declare that the Clause has been read a Second time.
    The Solicitor-General: I beg to move, as an Amendment to the proposed Clause, in Subsection (1, b) to leave out "may" and to insert "shall."
    Viscount Hinchingbrooke: I think that we should have another go at the Solicitor-General on this matter. On the question of appeal he says that there is appeal from the Special Commissioners to the Courts on a point of law, and that that is safeguarded by the Amendment which is later to be moved by the Government—in Clause 59, page 47, line 1, after "Act," insert:
    "or section (Limitation of liability of trustees) or section (Relief where capital subject to death duties) thereof."
    I think that there is no ambiguity on that point. We understand the machinery by which the Solicitor-General hopes to engage the courts on this question on points of law, but that does not satisfy hon. Members on this side. We are not only interested in a point of law, but in the interpretation of the Clause under discussion, and the kind of question likely to arise may not deal exclusively with a point of law. For example, where
    "The trustee or tenant for life shows to the satisfaction of the Special Commissioners that his rights of indemnification out of the trust estate are, … insufficient to provide for his reimbursement …"
    there is the qualification:
    "otherwise than by negligence or default on his part."
    Some interpretation may be required of that part of the Clause. In the Clause if amended
    "the special Commissioners shall give such directions for the limitation of release of his liability as appear just and equitable."
    That is a question of what they determine is just and equitable, and we feel strongly that the right hon. Gentleman should amend his proposed Amendment in page
    980
    47, line 1, so that the points in which we are interested shall be fully safeguarded.
    4.45 p.m.
    Sir H. Lucas-Tooth: I am not certain that the Government have not gone quite a long way to meet us. I think, however, that there are matters which need to be cleared up in regard to the new Clause. If we alter the word "may" to "shall," we make it mandatory on the Commissioners to make an order. On the other hand, that is again qualified by the word "appear" later in the Subsection. An order has to be such as appears just and equitable. If it so appears to the Commissioners, we have not got any further, because they are to make the order, and they are to have complete discretion as the order will only require to go to the length that appears to them to be just and equitable. If the word "appear" means appears generally—that is to say, that the order is in fact to be just and equitable—I think that the Government have met us. I would like to see a further consequential Amendment moved to the one which the Government have now moved, not only to substitute the word "shall" for "may," but to substitute the word "are" for "appear." That means that the Commissioners shall be required to give such directions for limitation or release of his liability as are just and equitable. If the Government would go to that length, that would meet our point.
    There is another point in connection with the appeal to which the Solicitor-General has referred. The appeal may be under one of two heads. It may be in respect of the question of negligence or default on the part of the trustees, or it may be on the question of whether the directions given by the Commissioners are just and equitable. I think there can be an appeal under both of those heads, but I am not certain whether that is so, as the Clause is now drafted. It would go some way to allay our fears, if the Government would give an assurance that there would be a right of appeal in both of those matters.
    Mr. E. P. Smith: I endorse what has been said by the hon. Member

    981
    for South Hendon (Sir H. Lucas-Tooth). It seems to me that the word "may" is of necessity a vague word, and that it is right that it should be followed by the equally vague word "appear." If we put in a definite word, like "shall," I have no doubt that the word which follows it should be "are" instead of "appear."
    The Solicitor-General: I hope that I can satisfy hon. Members opposite with regard to the point which they have raised. This procedure by way of appeal is the common procedure adopted in the Income Tax Acts. It is procedure to which recourse is had for deciding all matters on questions relating to Income Tax and Surtax. The procedure is as follows. In the first place, we have a special appeal to the Special Commissioners, sitting as an appellate body—the Appeal Commissioners. That is the ordinary procedure which any person aggrieved against Surtax assessment follows. From the Special Commissioners, he has an appeal under Section 149 of the Income Tax Act, 1918, to the High Court.
    As I have pointed out, that has been adopted for the purpose of this appeal also, so that it is on all fours with the normal procedure by way of appeals. How then, does it work? The noble Lord the Member for Dorset, Southern (Viscount Hinchingbrooke) said that we might want to raise, by way of appeal, the interpretation to be put upon a certain part of the Clause. Now, that is a point of law. The question what the Clause means is a point of law, and is a matter which could be litigated right up to the High Court on appeal on a point of law. One could not litigate purely on a question of fact on an appeal of that sort. That, again, is common form. The reason that cannot be done is because this form of procedure has been devised in order to deal particularly with these finance and Income Tax matters. The Special Commissioners have great experience in hearing appeals relating to this kind of matter, and the policy of the legislature, therefore, has been to leave questions of fact to them so that, in the interests of the Income Tax payer, there can be some kind of finality to their decision. That is what we have done.
    With regard to what the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) said, the particular object of doing that is so that
    982
    the taxpayer should not—unless the matter is of very great importance and he wants to litigate it in the High Court, or even higher—be harassed with perpetual appeals. The legislature already does in regard to Surtax what we are doing in this new Clause. The Special Commissioners, sitting in their appellate capacity—a tribunal possessing the necessary special experience to deal with this class of appeal—will deal with appeals under this new Clause.
    Then it has been said: "You really have not given us anything by substituting the word 'shall' for the word 'may,' since you have left in the words as appear just and equitable.'" It is perfectly true that those words give the Special Commissioners a discretion; but the discretion must be a discretion which is judicially exercised; it cannot be capriciously exercised. If it is exercised capriciously, and not on judicial principles—that is to say, upon a fair consideration of all relevant circumstances it can be appealed against. There is frequently an appeal in the event of it being said that discretion has not been judicially exercised. That again is common form, and, as a result of experience of this class of litigation over a great many years, it has been found by those responsible that that is the most convenient and effective way of deciding this particular kind of case.
    It has been thought—I submit rightly—that when dealing with these financial matters it is in the interests of the taxpayer, who does not want to be harassed with endless expensive appeals, that it should be left, generally speaking, to the wisdom and discretion of a tribunal specially qualified to deal with that class of case. I do submit that, in choosing that kind of procedure to dispose of the sort of points that will arise under this new Clause, we have safeguarded in the best possible way the interest of the taxpayer and the trustee himself: we have given him a tribunal specially qualified to deal with this class of question; we have given him a right of appeal on a point of law from the Special Commissioners sitting in their appellate capacity; we have not confronted him with the vista of endless appeals, but given him the sort of procedure likely to produce a just result, and a result which will not bring in its train endless further proceedings. I hope the House will agree that that is the best way of going about it.

    983
    The hon. Member for South Hendon (Sir H. Lucas-Tooth) asked whether there would be an appeal to the Special Commissioners, not only on the question whether the order was just and equitable, and whether they had judicially exercised their discretion, and so on, but also on the question whether there was negligence or default. Well, there would be an appeal on both; both matters would be subject to appeal to the Special Commissioners, and then, if any question of law arose, it would go to the High Court. I hope the House will agree that we have adequately safeguarded the position of trustees.
    Mr. Stanley: The right hon. and learned Gentleman has now convinced me that the manuscript Amendment which he has proposed does not meet my point, because he has made it quite clear that, although it is mandatory to make the order, the form which the order will take is to be left to the discretion of the Special Commissioners, although they are to exercise their discretion, as he says, judicially. Frankly, I cannot see, nor I think can my hon. Friends, why in this matter there should be any discretion at all. The simple case is this. The trustee is called upon to pay £5,000; there is available in the trust £5,000; all we want to see is that the trustee, who has no personal interest in this whatsoever, shall not himself, unless negligence or default be shown, be made liable for more money than there is in the trust. That seems to be a simple and a right decision.
    Why is there any need for the use of discretion by the Special Commissioners, even if that discretion is used with wisdom, judicially and judiciously, and subject to any number of appeals on questions of law or of fact? Why cannot we lay down definitely what I am sure both sides of the House would agree is right?—namely, that a trustee cannot be made responsible for more money than there is in the trust out of which this contribution may be paid. Because the manuscript Amendment which the right hon. and learned Gentleman proposes does not lay down that simple and just proposition, I cannot regard it as any satisfactory solution to the difficulties in which we find ourselves this afternoon.
    Amendment to the proposed Clause agreed to.
    Motion made, and Question proposed, "That the Clause, as amended, be added to the Bill."
    Mr. Pitman: I should like to press the Solicitor-General for an answer to the question where the point I made is to be met if it is not to be met in this new Clause. To a certain extent I think he did not give complete attention to the point, because it was in his mind that the Amendment standing in my name and that of my hon. Friend the Member for Devizes (Mr. Hollis)—in line 8, after "reimbursement" to insert:
    "or a diminution of rights to capital in the trust not of the beneficiary assessed to contribution on the income from the trust but only of some other individual,"
    which although not called was to be spoken on—was out of Order. The point I want to make is this. Hon. Members opposite, and the Chancellor of the Exchequer himself, have made it clear to the nation at large that this Special Contribution is payable under only two conditions: first, where there is considerable income, of at least £2,000; and secondly, where there is considerable capital.
    In the case, not only of the tour children which I have mentioned, but also that mentioned by my hon. Friend the Member for Torquay (Mr. C. Williams), of the residuary interest to the Bristol Infirmary, the incidence of the levy will not be on people who have either big incomes or capital, but on somebody completely different. In the case of the children that is because of a completely irrelevant consideration, the remarriage of their mother. Let us suppose the income in that trust was £500 a year. There is a widow with £500 a year life interest, the estate to pass to the children of the first husband who left that money. Now, merely because of the double accident of a second marriage by the widow and because the man to whom she is secondly married happens to have a large earned income, the levy will be levied on four children who between them have a divided interest in £500 a year, which is a very small sum indeed.
    Hon. Members opposite can have it only one way or the other. Either they are taxing in accordance with the principle of large income and large capital, which is what they purport to have said, in which case they must at some time introduce an Amendment to cover the specific cases

    985
    which have been put from our side of the House; or they must admit that what they have told the nation is a complete falsification of their true aims and objectives. I prefer to believe that they intend to stick to their principles, and if so, I hope they will tell me at what time and how they are going to meet this particular anomaly of principle.
    5.0 p.m.
    The Solicitor-General: The case which has been put is where a barrister with a large income marries a widow with a life interest of £500 a year. I take it that the total income of the ménage is as to £500, investment income, the remainder being the earned income of the barrister. The result of that would be that the first £250 goes free and the next £250, making up the total of £500, will be charged at 2s. in the £, working out at The corpus which produces the £500 will go to the four children, and the £25 will be paid out of that corpus. I really do not think it can be said to produce a very harsh result if that very modest sum has to be paid by way of contribution. I really do not think that the hon. Member for Bath (Mr. Pitman) has made out a case of any real hardship, having regard to the incidence of this tax. It is a charge on capital via income, and if the sum is payable by the husband and he exercises his recourse against the trustees, all he asks for is this very modest sum by way of contribution, which can be raised out of the capital that goes to the four children.
    Mr. Pitman: The Solicitor-General has to some extent misinterpreted me. The point applies equally to the residuary legatee, which may be a charity. The tax falls not on the person who enjoys the big income and theoretically has the enjoyment of the capital, but on the residuary legatees. I might just as well have chosen a figure of £5,000. This is a question of principle, and the Solicitor-General cannot slide out of it merely by saying that this is a very small baby. If he is violating the canons and general principles of taxation in a small way, he is also violating them in a big way. It is up to him to tell us what he really intends to do; whether he intends to tax the Bristol Infirmary and all residuary legatees, or whether he intends to tax only the people with big incomes and big capital.
    The Solicitor-General: I do not think I can add very much more to what I have said. It is a tax which ultimately will be a charge on capital through the income in respect of which the contribution is first imposed. The £25 will have to be paid in all probability out of the corpus. It might be that the wife or the husband in that case would not have recourse against the trustees—it is a smallish sum. If a charity did pay—and it is an unlikely situation [HON. MEMBERS: "No."]—a sum in respect of a person possessing more than £2,000 by way of income which brought his investment income above £250, then the contributor could have recourse against the trustees for recoupment of the payment.
    Mr. C. Williams: The Solicitor-General has now admitted that this tax might well fall on the capital which goes to the Bristol Orphanage or to a church. It means that if a person leaves a life interest in a large capital sum, the income of which is subject to this tax, and the amount cannot be paid out of the income, the trustees have to pay. The trust fund may have been entirely and absolutely for some charitable institution, or for some uncharitable institution like Socialist Party funds, and this tax will have to be paid at the full rate. It means that by deliberate mishandling of this tax, charities are to be taxed, and the Chancellor of the Exchequer knows it, which is probably the reason why he has been away from this Debate.
    Captain Crookshank: I think we shall have to agree to this Clause, as amended, in so far as it is some mitigation of the previous position. I suppose that the Solicitor-General realises, like everyone else, that it is not too easy to get trustees to act at all, and that every time we put something in legislation which makes it more difficult for trustees, it makes it even more difficult to get trustees to act. In this case, even with the Amendment, trustees are being put to a personal risk. The Solicitor-General has not answered the point put to him by my right hon. Friend the Member for West Bristol (Mr. Stanley), that under this Clause it is possible for a claim of £5,000 to be made on a trust possessing only £4,000, the trustees therefore being liable for the balance of £1,000. The Solicitor-General

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    has not denied that possibility. It is obvious he has had instructions from the Chancellor of the Exchequer to refuse our request and that he has not been told the reasons why.
    I hope that by the time we reach the Third Reading of this Bill someone in the Treasury will be able to tell us why this is being done, and why it has not been possible to make it clear in the Bill that trustees shall not be called upon to make up any deficiencies where the required amount of money to be raised is not in the trust fund. I hope that even now, the Solicitor-General will be able to give us some explanation for this most extraordinary course. Let him bear in mind that every time he does something of this nature he is making it more and more difficult to get trustees to undertake the work of trusteeship. He will agree that if that sort of voluntary assistance were to dry up, it will make it a most complicated and difficult matter to administer every kind of undertaking and estate. I hope that he will think again before he does anything like this in the future—that, is should he be in the position to do so.
    Clause, as amended, added to the Bill.

    NEW CLAUSE.—(Forfeiture for breach of certain conditions.)
    (1) If under any enactment of practice whereby—

    (a) goods liable to customs duty are allowed to be delivered without payment of duty on condition that they will not be sold or will be re-exported or upon any other like condition; or

    (b) the amount of customs duty payable on any goods depends on their being imported on any such condition;

    any goods are allowed to be delivered without payment of duty or on payment of duty calculated in accordance with the enactment or practice, and the condition is not fulfilled, the goods shall be forfeited.
    (2) The provisions of this section shall apply whether or not any undertaking or security has been given for the fulfilment of the condition or for the payment of the duty payable apart from the condition, and the forfeiture of any goods under this section shall not affect any liability of any person who has given any such undertaking or security.—[The Solicitor-General.]
    Brought up, and read the First time.
    The Solicitor-General: I beg to move, "That the Clause be read a Second time."
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    This Clause provides that in certain circumstances goods which are imported, and which are liable to Customs Duty, may be forfeited. The circumstances, as they appear in the Clause, are that a condition that they will not be sold or will be re-exported or any similar condition has been broken. The object of the Clause is as follows. It is to put an end to a rather undesirable form of dealing which can only be described as black market dealing. I will give an example of the sort of thing that has happened. Under the internationally recognised system to which we in this country have given legislative effect, by Section 10 of the Finance Act, 1938, a car can be brought to this country without payment of duty on the production of a triptyque, issued by a recognised motoring association, which guarantees payment of Duty and tax if the vehicle is not re-exported. That is a familiar type of transaction, and a tourist or anyone else who brings a car into the country on that understanding is expected, in due course, to take it out again.
    What has happened is that that permission, which is applicable not only to the bringing in of cars but to a variety of other goods, has been abused. We have had the case of a car being brought into the country on the condition that it shall be subsequently taken out, being allowed in without payment of duty, and then being sold here at an exorbitant price, with the result that the State has been deprived of Customs Duty. That is a form of black market dealing which has occurred—I do not want to exaggerate—to a not inconsiderable extent, and it is now felt to be necessary that there should be some drastic way of stopping that sort of thing. The Clause provides that when goods are brought in in these circumstances, subject to a condition of that sort, and that condition is broken the goods may be forfeited. In the case I have instanced the car would be forfeited to the State, so that those who have engaged in the transaction would suffer a loss.
    I will quote a case of the sort of thing that has happened. Two cars, at a total cost, c.i.f., of £1,400, were brought into the country and were sold within a few days—notwithstanding the conditions contained in the triptyque—for about £5,900. That is obviously a proceeding

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    which no Member in any part of the House would seek to justify for a moment. I believe the House will agree that it is necessary that that kind of thing should be stopped by drastic methods. Various things may be said against the Clause. It may be asked, "What about the innocent purchaser?" but, generally, he is not so innocent as all that. He knows, when he buys a car of that sort, where it comes from. He has not bought it from a recognised distributor, or in any of the available markets. If he takes a chance in buying the car it cannot be said that he has been harshly dealt with if he has suffered loss as a result. He does not buy the car at the ordinary price. He buys it at an extremely excessive price. If he does that he has been put on his guard and knows there is something unsavoury about the transaction. The Clause is designed to guard against that kind of business; it is an anti-black market Clause. It is not confined to cars. It is confined generally to goods which are brought in subject to the condition I have described, which condition is thereafter broken. The Clause seeks to combat what is a very much too prevalent abuse.
    5.15 p.m.
    Mr. Stanley: I am not entirely happy about the effects of this Clause, or the reasons for the penalty it prescribes. We all want to stop black market offences, but it is not sufficient argument in favour of a Clause of this kind just to say that black market offences have occurred and we must all stop them. We have to be convinced that the provisions of the Clause are effective and necessary to stop that black market. I cannot see why the penalty of forfeiture is particularly likely to put an end to the black market. I should have thought that the penalty upon the guilty person could have been made just as severe by making him liable to a fine up to the value of the article in respect of which he has offended. That would be the same, as far as he was concerned, as forfeiting the article.
    The provision of a fine, as opposed to forfeiture, would make certain that no penalty could fall on the person who was innocent. The right hon. and learned Gentleman airily dismissed the possibility that a wholly innocent person might buy something, in breach of an undertaking,
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    of which he was wholly ignorant. In that case, the penalty inflicted by the Clause would fall wholly on the buyer. If the black marketeer is a man of straw, as he may well be, the buyer would have no remedy. He would pay his £5,000 or more, as in the case quoted by the right hon. and learned Gentleman, and the cars would be taken away, but he would be the only person who had to suffer. We have had no justification for this Clause.
    The Solicitor-General cited the case of two cars. I presume that in that case the purchaser was not an innocent purchaser. Has he any evidence of that? If he says, "In all cases where this has happened the purchaser has not been innocent," we must assume that in the case he quoted he has evidence that the purchaser was not innocent. Is that so? Could he reply? He cannot because he knows quite well that his wild extravagant statement is quite insupportable. One can quite well imagine circumstances where a wholly innocent party, who would not dream for one moment of taking part in a shady transaction, may be asked to buy something and it excites no suspicion at all. He may enter into the transaction in perfect good faith and suddenly find himself, with no warning at all, subject to forfeiture of the article which he has bought.
    We want some assurance that the innocent person in a position of that kind is safeguarded. It may be that further penalties have to be imposed upon the man who is responsible for this improper transaction, but surely it should be possible to include in these cases some safeguard for the wholly innocent purchaser who can prove he had, and could have had, no suspicion of the transaction, and who finds himself quite unexpectedly and undeservedly involved in a very heavy loss. I should like to ask the hon. Gentleman who is holding the fort in the absence of his right hon. Friend, whether it would not be possible to insert in this Clause some such provision to protect the wholly innocent purchaser on whom otherwise a grave injustice might be done.
    Mr. Benson: There is an old saying, caveat emptor—let the buyer beware. In the case of motor cars, if the position is taken up that only the guilty seller who has broken the terms that were imposed on the importation, shall suffer,

    991
    we are, in fact, in nine cases out of ten, making it impossible for the Government to take any action whatever. Motor cars—and I think it is motor cars which the Government have mostly in mind—are brought in by the importer not as a commercial transaction, but for his use during his temporary stay. If it is possible for the importer to sell his car at a handsome profit and then go back, the only person the Government can get at is the purchaser of the car. The importer or seller has gone back to the country of origin and is outside the long arm of the Government. If it is only the importer who may be dealt with, in effect it means that the Government shall have no recourse against anybody in the event of a breach of contract and, therefore, a breach of the law in a case of this kind.
    Sir John Mellor: Would it not be perfectly possible for the Government to require that a deposit or guarantee be given by the importer before the car is admitted to this country?
    Mr. Benson: Of course it would, and it would be equally possible for the French Government, which has an exactly similar arrangement with regard to the importation of privileges, to demand a similar deposit from every tourist who goes to France and takes his car with him. What the hon. Member for Sutton Coldfield (Sir J. Mellor) would do by that move is to put a considerable inconvenience on every innocent tourist who brings a car here. I do not think there will be many cases. Quite frankly, it seems to be that any other method leaves the Government without recourse or remedy, except for the alternative proposed by the hon. Member for Sutton Coldfield, which means putting an intolerable burden upon people who go about their tourist business decently.
    Mr. David Eccles: Surely it is an extraordinary argument which the hon. Member for Chesterfield (Mr. Benson) has put before the House. He says that if the Government cannot have recourse against the guilty party they should have recourse against the non-guilty party. [HON. MEMBERS: "No."] That is precisely what the hon. Member said.
    Mr. Benson: What I did say was that here is a case where the buyer must
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    beware. Those who purchase a foreign motor car must understand that it is up to them to scrutinise very carefully where it came from and also whether it may be purchased.
    Mr. Eccles: The real point is not the car business. As many hon. Members know, members of the Diplomatic Corps, who have privileges in importing things through their status, occasionally sell them. I want to ask whether this Clause, which is most unsatisfactory in its present form, means that there is a widespread abuse of this kind of thing through diplomatic privilege. I do not believe there is in London, but there is in other countries. In my experience there has not been in London a large amount of importation free of duty under diplomatic privilege, but if hon. Members go to some of the smaller capitals of Europe they will find it is absolutely rife. It has never been rife at the Court of St. James's, and I want to know if this Clause put down in this way, is not rather insulting to the Diplomatic Corps in London.
    Is it not a fact that there are many other goods coming in, because if not motorcars, what are the other goods? The Solicitor-General has told us that motorcars were not the only goods. The only other things I could think of would be things brought into this country under diplomatic privilege. I cannot see any other class of goods at the moment. Of course, it is a delicate matter to have recourse against a foreign diplomat accredited here. Therefore, I suppose the Government say, "We cannot touch these people. We will try to warn them off this particular kind of racket by getting at the people who ultimately buy these goods." That is not justice.
    If there is widespread abuse—I doubt if there is great abuse—it could be cured quite properly by bringing the attention of the heads of missions, who in this city behave extremely honourably, to this matter and so make it quite unnecessary to have this Clause. If there is a big abuse we ought to go for the people who are really the guilty parties—the people who make the money out of it. Let us assume it is not an article which can be very easily identified as having been brought in from abroad. Anyone can see what a foreign motor car is and that it must come from abroad, but what about

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    a necklace or something of considerable value where the duty would be a large part of the purchase price over here? How is any buyer to know, and yet if it can be traced back the goods are likely to be seized and confiscated? I support my right hon. Friend in urging that we ought not to pass this Clause unless there is some provision whereby the people who purchase of goods of the type which it is sought to seize shall be protected.
    5.30 p.m.
    Sir Peter Bennett: Like my right hon. Friend the Member for West Bristol (Mr. Stanley) I am concerned at the possibility of an innocent man being penalised under the proposed new Clause. I am made to feel that way by the remarks of the Solicitor-General, who does not appear to have been as closely in touch with second-hand values as some of us. He suggested that if a man asked an exorbitant price for an article there must be something fishy about it. Nearly every secondhand car changing hands today would come into that category. Arrangements have been made by the industry under which people sign a guarantee, backed by a heavy penalty, that they will not dispose of new vehicles. At a time when 75 per cent. of car manufacturers go abroad, the price of second-hand vehicles is high.
    I see the possibility that a man may be shown a motor car and may buy it in perfect good faith that it has been used for the purpose allowed under an agreement and that now it is possible for the vendor to dispose of it. Not everyone understands all the rules and regulations made by the trade, or can distinguish a motorcar with a foreign name and manufacture from one which may have been made here by a company with the same name. I am in favour of doing everything we can to stop the man who sells the motor car under those conditions from getting away with it, and the man who, in collusion with him, buys the car. I fear, however, that people will innocently get themselves involved in this matter without any bad intention.
    We ought to have a safeguard for the innocent man. I agree with the hon. Member for Chesterfield (Mr. Benson) that we do not want to interfere with the ordinary export of touring cars to the Continent under the system which has worked so well for many years. That would mean
    994
    that every one would be penalised in the same way. There should be some protection for the innocent man who might easily be deceived by a plausible rogue in the secondhand market and left with one of these cars.
    Mr. Walter Fletcher: I would point out that the system of bank guarantee worked well when the tourist traffic was on a considerably greater scale than it is now, and when cars passing from one country to another did not have to go through a complicated ceremony. That system had the merit that the effects of any abuse of the guarantee fell upon the person who abused it and not, as in this case, upon someone who may be an innocent party. The Solicitor-General produced the case of two motor cars costing £1,400, and sold at the exorbitant figure of £5,000. If those were American cars I can tell him that 5,000 is the market value and is not ex-orbitant. He seems to have mistaken the symptoms in this case. It would not be the car sold at a high price but the car sold at a low price which would be suspect. The Solicitor-General ought to get his case up a little better before he brings it to the House. The new Clause would fasten the penalty where it should not lie. There is nothing easier, on the other hand, than to get a bank guarantee, as has been done for many years. It would not impede traffic and would definitely fasten the penalty on the sinner and upon no one else.
    Lieut.-Commander Braithwaite: It is obvious that there is something mysterious about the proposed new Clause, which does much to enlarge the frontiers of confiscation. The Solicitor-General says that it is intended to apply to the black market. It is remarkable how the black market flourishes like a green bay tree under Socialist government. I ask the Economic Secretary why, if this is a really serious abuse, such a provision was not inserted in the original Bill. What has happened since the Committee stage a fortnight ago? Why, on Report, do we find this new, heavily penal proposal?
    My right hon. Friend the Member for West Bristol (Mr. Stanley) invited the Solicitor-General to give us examples of where persons had been found guilty of these offences, but the right hon. and

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    learned Gentleman was unable to do so. I understand that he has since been to the source of inspiration under the Gallery. [HON. MEMBERS: "No."] Well, if he has not, it merely enforces my point. Are there any cases? When did they take place? Why is this new Clause being produced only at this moment? The Solicitor-General has gone on record with a dictum, which is very strange coming from a Law Officer of the Crown, more worthy of Mr. Justice Stareleigh in the celebrated case of Bardell v. Pickwick. The right hon. and learned Gentleman told us that the innocent person is not generally innocent.
    The Solicitor-General: I intended to say "the so-called innocent purchaser."
    Commander Braithwaite: I wrote down what the Solicitor-General said but I did not hear the "so-called." If it was inserted, I hope that he will see that it appears in the record tomorrow. If "so-called," by whom is it so called? Is it merely so-called by the Law Officers of the Crown, or by the Customs officials, or by whom? Here, and not for the first time during the lifetime of the present Government, we have, as we have had over and over again in previous Bills, a provision by which a person is assumed to be guilty. It is almost becoming common form for the British citizen to be assumed guilty. I think that principle is inherent in the administration of Socialism. No longer are persons innocent until they are proved guilty. When a Law Officer of the Crown says, "so-called innocent persons," it is time that some protest was made from this side of the House. One argument has already been knocked out of the Solicitor-General's case, about motor cars changing hands at what he calls excessive prices. The hon. Member for Chesterfield (Mr. Benson) said "let the buyer beware," only he said it in Latin.
    Mr. Benson: I translated it for the hon. and gallant Member.
    Lieut.-Commander Braithwaite: The buyer can still beware. This purpose can be carried out without this very heavy, confiscatory proposal, which may hit people who are entirely innocent. The House ought not to pass this very wide Clause until we have heard from the Law
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    Officer what examples he has in mind and what has happened since the Committee stage to cause this proposed new Clause to be put upon the Paper.
    Mr. Peter Roberts: I want to put one point to the Solicitor-General with regard to what I am afraid is going to be bad legislation. We must not focus our minds too much on motor cars. We have had mention of jewellery, and there is also clothing which cannot be registered in any way. A person who comes into this country and sells these things must go out again. Surely there could be some method of checking these people when they go out? They would have the money on them. Is this Clause designed entirely to get at the Diplomatic Service? I do not think that is so. Why cannot the Government check the people when they go out of the country and put the onus on them by making them pay the money?
    The Economic Secretary to the Treasury (Mr. Douglas Jay): The hon. Member for Chippenham (Mr. Eccles) asked whether this difficulty had arisen mainly on account of the Diplomatic Corps. I can assure him that that is not the case. It is not the Diplomatic Corps which we have in mind; it is mainly people coming into this country, particularly tourists from abroad, who are the source of the trouble. He also asked whether anything other than motor cars was involved. Other articles are involved. Fur coats have unfortunately led to this practice, and also jewellery. The main question of the right hon. Member for West Bristol (Mr. Stanley) was: Why should we proceed in these cases against the party who might be innocent instead of the guilty party? The short and simple answer is that given by my hon. Friend the Member for Chesterfield (Mr. Benson), that unfortunately in most cases the guilty party is out of the country by the time the facts are known.
    Therefore we adopt a solution—evidently the right hon. Gentleman did not realise this—which has been adopted in the case of smuggled goods for generations. In the case of smuggled goods it has always been the law of this country that forfeiture was applied against the holder of the goods. We are making no change whatever in the law in this respect. The reason for this provision is

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    that we cannot get at the guilty party and because the holder of the goods is in the majority of cases not innocent—
    Mr. W. Fletcher rose—
    Mr. Jay: Perhaps I may just finish. That has been the case for many generations in regard to smuggled goods, and really there is no difference in principle between these and smuggled goods—
    Mr. W. Fletcher rose—
    Mr. Jay: May I please finish this very brief speech.
    Several hon. Members asked why there should not be some provision to remit the penalty in the case of the innocent party. There is such provision under the present law. There is power for the Commissioners to remit the penalty in cases where they are satisfied that the holders of the goods are innocent. That has also been the case for all smuggled goods ever since the Inland Revenue Act of 1890, and we are simply following the same procedure. The flights of fancy of the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) about what happens under Socialist Governments and so on, even if they were relevant, were in this case beside the point. What we are doing here is exactly what every Government has done in regard to smuggled goods of all kinds ever since 1890.
    Mr. W. Fletcher: The essence of smuggled goods is that they are brought in by concealment. The essence of this is that the goods are not concealed. This relates to motor cars brought in by tourists, and fur coats which cannot be put in one's waistcoat pocket. Why should they suddenly be classified as smuggled goods? It is no use talking about what was done in the case of smuggled goods in the past because that bears no analogy to what is happening now. These goods are brought in openly and those goods were concealed.
    Mr. Jay: In principle the situation is exactly the same. These are goods brought into the country on a certain condition, and that condition has been broken.
    Lieut.-Commander Braithwaite: Will the hon. Gentleman answer my question why this Clause is only now, on the Report
    998
    stage, being introduced if this has been going on for so long?
    Mr. Jay: Mainly because the evidence of this type of transaction has been steadily accumulating and we came to the conclusion that it was time to introduce it.
    Lieut.-Commander Braithwaite: During the last fortnight?
    5.45 p.m.
    Air-Commodore Harvey: The Government are making extremely heavy weather about this. Obviously these articles are not smuggled into the country. I should have thought that when an individual brings a car into the country his passport could be endorsed to that effect. When he left the country and his passport was examined it would be seen that he had brought a car into the country. He has to have a passport to get out of the country. That is a simpler way of getting round these difficulties than the one which the Government proposes. We want to encourage tourists to come to this country and do not want to create unnecessary difficulties, and this endorsing of their passports would be a simple matter. I do not believe it is beyond the Government's powers to think of something of that sort, and I suggest they look into it again.
    Major Legge-Bourke: I should like to ask the Chancellor to reconsider this Clause. When the Economic Secretary replied, he overlooked one category which might very easily be affected by the Clause—those who bring in furniture including antique furniture and objets d'art. I have several constituents who have brought in furniture from European countries during the war, and I imagine that they have been allowed to bring them in duty free, although many of the items may have been subject to duty in the ordinary way if brought in commercially. Those people might die in the fairly near future and their executors might sell the furniture. Will they be liable under this Clause? It seems to me that the breaking of the law might be quite unintentional. The executors might not know of the existence of this Clause.
    I hope it will be realised that this Clause may react very unfairly on those who are not fully aware of its terms. It

    999
    may be contravened quite unintentionally and the confiscation may react most unfairly. It may concern some valuable heirloom—something with more sentimental value than anything else. We must think of other things besides motorcars, and I hope we shall realise that the goods I have mentioned are certainly not smuggled but are brought in quite openly. I am certain that offences arising under this Clause might arise quite unintentionally. The idea of confiscation is completely abhorrent.
    This Clause rather reeks of the Russell Vick Report on petrol. It seems to be assuming people guilty and letting them prove their innocence if they are lucky to be given the opportunity. I described that as tyranny and I will describe it as tyranny again today. If we in this country once let go of that old principle on which we have always worked—that the individual is innocent until he is proved guilty by the prosecution—we shall never cease to regret it. I therefore hope that the Chancellor will reconsider this Clause.
    Mr. C. Williams: There is one point which has not been mentioned in connection with this Clause. Surely this can be checked by means of the existing currency regulations? This is concerned not with small transactions but transactions on a considerable scale—£500 or £1,000 and so on—and it seems that we could check it under the currency regulations or, if we cannot under the present regulations, it must be so close to them that it should be quite easy to do so. Some of my hon. Friends think it is possible to do that, and I ask the Government if there is any real necessity for the Clause from that point of view alone.
    The hon. Member for Chesterfield (Mr. Benson) gave the House a good warning—let the buyer beware. I agree that in making any form of bargain the purchaser ought to be careful, but it is not really necessary to remind the ordinary person of this at the present time because too many of them realise how badly bitten they were by the bad pup they bought at the last General Election, so that his advice is really out of date unless he is one of the people who think they were bitten by the present Front Bench.
    1000
    I am not really concerned about the buyer having to be beware, but I am deeply concerned as to why this Clause should be brought forward now. The hon. Gentleman said the Government had been accumulating evidence. Surely this ought not to be brought forward a fortnight or so after we have dealt with the Committee stage of the Finance Bill? It seems to me perfectly monstrous that on the Report stage, a Clause dealing with such a comparatively simple matter should be brought forward. It should have gone into the main body of the Bill. I see that the Chancellor is looking unhappy; I have no doubt he realises his error, and I am glad of that, because it is gross negligence on the part of the Government not to have brought this in at an earlier stage. It is unfair to every hon. Member that we should have to deal with odd Clauses flung at us now, for some comparatively simple thing. This stage ought to be held for more important Clauses, and the Government should prepare their Finance Bill properly.
    I was rather horrified, being of Cornish extraction, to hear the hon. Gentleman compare those who deal in this underhand way with honest smugglers. There is a risk about smuggling, and from my West Country background I say that this kind of little deal, under various diplomatic or other privileges, ought not to be compared with another form of evasion, which of course I should not dream of approving except for Cornwall. The Government have the full sympathy of the House on every side in trying to do away with this kind of thing, because we all realise that any one who indulges in it is hitting every other taxpayer in the country.
    We do not want to help these people, we want to stop them, but if there is anything which is certain in this world from the time when the hanging penalty for stealing was suspended, it is that an excessively higher penalty has never stopped the worst type of criminal. In these circumstances, to impose a penalty of confiscation, although it may rejoice the hearts of the type of individuals sitting on the Government Bench today, is not British, it does not appeal to the sentiment of the country, and it would be much better if the Government gave a reasonable sentence, and still better if they put a little time into organising their views before bringing them to this House.
    Mr. Godfrey Nicholson: I do not know if my ancestors were smugglers or not, but I rather suspect that some of the ancestors of the hon. Member for Torquay (Mr. C. Williams) were wreckers.
    Mr. C. Williams: No.
    Mr. Nicholson: The Clause refers to goods brought in "on condition that they will not be sold." Can one assume that the condition would be enshrined in a document? If that condition is enshrined in a document, nothing is more simple than that the existence of that document should be enshrined in the passport. Will the Chancellor say if it is a written or an implied condition?
    The Chancellor of the Exchequer (Sir Stafford Cripps): I do not think it would in all cases be a written condition. As regards motor cars, it is on the triptyque which is the international document granted for the introduction of a motor car into any of the European countries but that, unfortunately, does not stop people engaging in this practice.
    Mr. Nicholson: Cannot that be enshrined in the passport when the individual leaves the country? Could they not be asked what has happened to that document?
    Sir S. Cripps: One is anxious not to make things too difficult for tourists coming into this country. These inquisitions on everybody are very difficult. In 99 per cent. of cases it would be quite unnecessary. People do not do this sort of thing because they are decent people, especially when they have had warning and know that they have been given a privilege on condition that they have undertaken an obligation. We do not expect them to disobey the obligation but, unfortunately, in some cases they do. The only way to deal with those people is to deal with the goods which are being converted to a use other than that for which entry was permitted. They are not the same as smuggled goods.
    Mr. Nicholson: They are not smuggled goods.
    Captain Crookshank: Before the Chancellor sits down, can he explain why this has only come forward at this late stage? In my experience of many Finance Bills it is unusual for a Government to put down new Clauses on new subjects on
    1002
    Report. Of course they put down Clauses of clarification on points which have arisen during the Debate, but this is a bolt from the blue. If the right hon. and learned Gentleman can explain how this has happened, it will help, and if he can promise us that it will not happen again, it will be even better.
    Sir S. Cripps: My hon. Friend has explained how it has arisen. This practice has been developing rather rapidly. Perhaps it is the weather and the time of year which causes things of this kind to happen. It has developed to the extent that we felt it essential to take this step, so we took the earliest opportunity of doing it.
    Captain Crookshank: Does that mean that there have been a tremendous number of cases during the last two or three weeks?
    Sir S. Cripps: No, it means that there has been evidence of accumulation of these cases which we felt must be dealt with now.
    Mr. Donner: The Chancellor now says there has been an accumulation of cases. The Solicitor-General and the Economic Secretary both talked about accumulating evidence, but no Member of His Majesty's Government has yet told us how many cases there have been, in fact, during the last year of persons entering this country with a car and an ordinary international carnet who have subsequently left, having sold that car in this country. The Solicitor-General based his case on a black marketeer. He said that this new penalty must be imposed because of black marketeers. The Economic Secretary took quite a different line. He said, in answer to a question put to him by one of my hon. Friends, that we were dealing with the casual tourist. The casual tourist is not a black marketeer, and the matter ought to be cleared up.
    If it is the black marketeer, why should the Government insist upon the inclusion of this Clause without any consideration having been given to the suggestions made by hon. Members on this side of the House in regard to marking passports? The Chancellor said that would be too heavy an imposition upon tourists, but surely it is no imposition upon anybody if a special mark is made on a man's passport to the effect that he entered the country with a car?
    Mr. E. P. Smith: Suppose some of these goods which the Chancellor is anxious to deal with under this Clause were to get into a genuine public sale, as they might quite easily do. Somebody buys them by public auction and pays for them, yet they are tainted goods. What is the position in a case like that where the purchaser must quite clearly be innocent?
    Hon. Members: Answer.
    Sir S. Cripps: I was just about to answer, if I might be allowed to get up. In answer to the hon. Member for Ashford
    (Mr. E. P. Smith), the position would be that, however the goods were sold, they would be subject to forfeit unless the Customs, under the authority they possess under the Act, held that it was a case in which they should not be forfeited. In cases where there was a perfectly bona fide purchaser, probably, in general practice, they would not hold that the goods should be forfeited.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 227; Noes, 97.

    Division No. 230.]

    AYES

    [6.2 p.m.

    Acland, Sir Richard

    Donovan, T.

    Leslie, J. R.

    Adams, Richard (Balham)

    Driberg, T. E. N.

    Levy, B. W.

    Allen, A. C. (Bosworth)

    Dumpleton, C. W.

    Lewis, J. (Bolton)

    Alpass, J. H.

    Dye, S.

    Lipson, D. L.

    Attewell, H. C.

    Ede, Rt. Hon J. C.

    Lipton, Lt.-Col. M.

    Austin, H. Lewis

    Edelman, M.

    Longden, F.

    Ayles, W. H.

    Edwards, John (Blackburn)

    Lyne, A. W.

    Bacon, Miss A.

    Edwards, N. (Caerphilly)

    McEntee, V. La T.

    Balfour, A.

    Edwards, W. J. (Whitechapel)

    McGhee, H. G.

    Barnes, Rt. Hon A. J.

    Evans, Albert (Islington, W.)

    McGovern, J.

    Barstow, P. G.

    Evans, E. (Lowestoft)

    Mack, J. D.

    Barton, C.

    Evans, S. N. (Wednesbury)

    McKay, J. (Wallsend)

    Battley, J. R.

    Ewart, R.

    McLeavy, F.

    Bechervaise, A. E.

    Fairhurst, F.

    Macpherson, T. (Romford)

    Belcher, J. W.

    Fernyhough, E.

    Mallalieu, E. L. (Brigg)

    Benson, G.

    Field, Capt. W. J.

    Mallalieu, J. P. W. (Huddersfield)

    Berry, H.

    Foot, M. M.

    Mann, Mrs. J.

    Beswick, F.

    Fraser, T. (Hamilton)

    Manning, Mrs. L. (Epping)

    Bevan, Rt. Hon. A. (Ebbw Vale)

    Ganley, Mrs. C. S.

    Marquand, H. A.

    Bing, G. H. C.

    Glanville, J. E. (Consell)

    Mathers, Rt. Hon. George

    Binns, J.

    Goodrich, H. E.

    Mellish, R. J.

    Blenkinsop, A.

    Gordon-Walker, P. C.

    Messer, F.

    Blyton, W. R.

    Grenfell, D. R.

    Middleton, Mrs. L.

    Bowden, Flg. Offr. H. W.

    Grey, C. F.

    Mitchison, G. R.

    Bowen, R.

    Griffiths, D. (Rother Valley)

    Moody, A. S.

    Bowles, F. G. (Nuneaton)

    Griffiths, W. D. (Moss Side)

    Morley, R.

    Braddock, T. (Mitcham)

    Gunter, R. J.

    Morris, Hopkin (Carmarthen)

    Bramall, E. A.

    Guy, W. H.

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

    Brooks, T. J. (Rothwell)

    Hale, Leslie

    Moyle, A.

    Brown, T. J. (Ince)

    Hall, Rt. Hon. Glenvil

    Murray, J. D.

    Bruce, Maj. D. W. T.

    Hamilton, Lieut.-Col. R.

    Neal, H. (Claycross)

    Buchanan, Rt. Hon. G.

    Hardy, E. A.

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

    Burden, T. W.

    Harrison, J.

    Noel-Buxton, Lady

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

    Herbison, Miss M.

    Oliver, G. H.

    Byers, Frank

    Hicks, G.

    Orbach, M.

    Callaghan, James

    Holman, P.

    Parkin, B. T.

    Castle, Mrs. B. A.

    Holmes, H. E. (Hemsworth)

    Paton, Mrs F. (Rushcliffe)

    Chamberlain, R. A.

    Horabin, T. L.

    Pearson, A.

    Champion, A. J.

    House, G.

    Peart, T. F.

    Chater, D.

    Hoy, J.

    Popplewell, E.

    Chetwynd, G. R.

    Hughes, Emrys (S. Ayr)

    Porter, E. (Warrington)

    Cluse, W. S.

    Hughes, Hector (Aberdeen, N.)

    Porter, G. (Leeds)

    Cobb, F. A.

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

    Price, M. Philips

    Cocks, F. S.

    Hynd, H. (Hackney, C.)

    Proctor, W. T.

    Collins, V. J.

    Hynd, J. B. (Attercliffe)

    Pursey, Cmdr. H.

    Colman, Miss G. M.

    Irvine, A. J. (Liverpool)

    Randall, H. E.

    Comyns, Dr. L.

    Irving, W. J. (Tottenham, N.)

    Ranger, J.

    Cooper, Wing-Comdr. G.

    Jay, D. P. T.

    Reeves, J.

    Corbet, Mrs. F. K. (Camb'well, N.W.)

    Jeger, G. (Winchester)

    Reid, T. (Swindon)

    Cove, W. G.

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

    Rhodes, H.

    Cripps, Rt. Hon. Sir S.

    Jones, D. T. (Hartlepool)

    Ridealgh, Mrs. M.

    Daggar, G.

    Jones, Elwyn (Plaistow)

    Roberts, Emrys (Merioneth)

    Daines, P.

    Jones, P. Asterley (Hitchin)

    Roberts, Goronwy (Caernarvonshire)

    Davies, Rt. Hn. Clement (Montgomery)

    Keenan, W.

    Rogers, G. H. R.

    Davies, Ernest (Enfield)

    Kendall, W. D.

    Ross, William (Kilmarnock)

    Davies, Harold (Leek)

    Key, C. W.

    Royle, C.

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

    Kinley, J.

    Scott-Elliot, W.

    Deer, G.

    Kirby, B. V.

    Shackleton, E. A. A.

    de Freitas, Geoffrey

    Lang, G.

    Sharp, Granville

    Dodds, N. N.

    Lawson, Rt. Hon J. J.

    Shawcross, C. N. (Widnes)

    Shurmer, P.

    Thomas, D. E. (Aberdare)

    White, C. F. (Derbyshire W.)

    Silverman, S. S. (Nelson)

    Thomas, George (Cardiff)

    Wilkins, W. A.

    Simmons, C. J.

    Thorneycroft, Harry (Clayton)

    Willey, F. T. (Sunderland)

    Skeffington-Lodge, T. C.

    Thurtle, Ernest

    Williams, J. L. (Kelvingrove)

    Skinnard, F. W.

    Tolley, L.

    Williams, R. W. (Wigan)

    Smith, C. (Colchester)

    Tomlinson, Rt Hon G.

    Williams, W. R. (Heston)

    Snow, J. W.

    Turner-Samuels, M.

    Wills, Mrs E. A.

    Solley, L. J.

    Ungoed-Thomas, L.

    Woods, G. S.

    Sorensen, R. W.

    Vernon, Maj. W. F.

    Wyatt, W.

    Soskice, Sir Frank

    Viant, S. P.

    Yates, V. F.

    Sparks, J. A.

    Walker, G. H.

    Young, Sir R. (Newton)

    Steele, T.

    Wallace, G. D. (Chislehurst)

    Younger, Hon Kenneth

    Stubbs, A. E.

    Warbey, W. N.

    Zilliacus, K.

    Sylvester, G. O.

    Weitzman, D.

    Symonds, A. L.

    Wells, P. L. (Faversham)

    TELLERS FOR THE AYES:

    Taylor, H. B. (Mansfield)

    West, D. G.

    Mr. Joseph Henderson and

    Taylor, R. J. (Morpeth)

    Wheatley, Rt. Hn. J. T. (Edinb'gh E.)

    Mr. Hannan.

    NOES.

    Agnew, Cmdr. P. G.

    Grimston, R. V.

    Neven-Spence, Sir B.

    Amory, D. Heathcoat

    Hare, Hon. J. H. (Woodbridge)

    Nicholson, G.

    Assheton, Rt. Hon. R.

    Harvey, Air-Cmdre. A. V.

    Orr-Ewing, I. L.

    Astor, Hon. M.

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

    Peto, Brig. C. H. M.

    Baldwin, A. E.

    Hinchingbrooke, Viscount

    Pickthorn, K.

    Beamish, Maj T. V. H.

    Hollis, M. C.

    Pitman, I. J.

    Birch, Nigel

    Holmes, Sir J. Stanley (Harwich)

    Ponsonby, Col C. E.

    Boles, Lt.-Col D. C. (Wells)

    Hope, Lord J.

    Poole, O. B. S. (Oswestry)

    Boyd-Carpenter, J. A.

    Howard, Hon. A.

    Price-White, Lt-.Col. D.

    Braithwaite, Lt.-Comdr. J. G.

    Jeffreys, General Sir G.

    Reed, Sir S. (Aylesbury)

    Buchan-Hepburn, P. G. T.

    Keeling, E. H.

    Reid, Rt. Hon. J. S. C. (Hillhead)

    Bullock, Capt. M.

    Kerr, Sir J. Graham

    Roberts, P. G. (Ecclesall)

    Butcher, H. W.

    Lambert, Hon. G.

    Robinson, Roland

    Challen, C.

    Lancaster, Col. C. G.

    Ropner, Col. L.

    Clarke, Col R. S.

    Langford-Holt, J.

    Ross, Sir R. D. (Londonderry)

    Cooper-Key, E. M.

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

    Savory, Prof. D. L.

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

    Linstead, H. N.

    Smith, E. P. (Ashford)

    Crowder, Capt. John E.

    Lloyd, Selwyn (Wirral)

    Smithers, Sir W.

    Darling, Sir W. Y.

    Low, A. R. W.

    Spearman, A. C. M.

    De la Bère, R.

    Lucas, Major Sir J.

    Stanley, Rt. Hon. O.

    Dodds-Parker, A. D.

    Lucas-Tooth, Sir H.

    Strauss, H. G. (English Universities)

    Donner, P. W.

    McCorquodale, Rt. Hon M. S.

    Sutcliffe, H.

    Drayson, G. B.

    Macdonald, Sir P. (I. of Wight)

    Taylor, Vice-Adm E. A (P'dd't'n. S.)

    Drewe, C.

    Mackeson, Brig. H. R.

    Thornton-Kemsley, C. N.

    Duthie, W. S.

    McKie, J. H. (Galloway)

    Vane, W. M. F.

    Eccles, D. M.

    Maclay, Hon. J. S.

    Ward, Hon. G. R.

    Eden, Rt. Hon. A.

    Macpherson, N. (Dumfries)

    Watt, Sir G. S. Harvie

    Elliot, Lieut.-Col. Rt. Hon W.

    Maitland, Comdr. J. W.

    Webbe, Sir H. (Abbey)

    Fletcher, W. (Bury)

    Marlowe, A. A. H.

    Wheatley, Colonel M. J. (Dorset, E.)

    Fraser, H. C. P. (Stone)

    Marsden, Capt. A.

    Williams, C. (Torquay)

    Fraser, Sir I. (Lonsdale)

    Marshall, D. (Bodmin)

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

    Marshall, S. H. (Sutton)

    TELLERS FOR THE NOES:

    Galbraith, Cmdr. T. D.

    Mellor, Sir J.

    Major Conant and

    Gammans, L. D.

    Molson, A. H. E.

    Major Ramsay.

    Question put, and agreed to.

    Clause read a Second time, and added to the Bill.

    NEW CLAUSE.—(Relief where capital subject to death duties.)
    (1) Where, either before or after an assessment to contribution is made, but in any case before such an assessment has become final, application is made to the Special Commissioners for relief under this section, and the Special Commissioners are satisfied—

    (a) that in consequence of a death occurring before the end of the year 1947–48 death duties became payable in respect of any assets, and

    (b) that investment income affecting, whether directly or indirectly, the amount of any contribution arose from the assets, and

    (c) that the amount of that income exceeded what it would have been if all death duties payable in consequence of the death had been paid immediately on the occurrence of the death or other event whereby the duties became payable,

    1006
    the amount of the said income shall in ascertaining aggregate investment income for the purposes of this Part of this Act be treated as reduced by such amount as the Special Commissioners may determine to be appropriate to offset the excess.
    (2) In this section the expression "death duties," means estate duty, succession duty or legacy duty.—[The Solicitor-General.]
    Brought up, and read the First time
    The Solicitor-General: I beg to move, "That the Clause be read a Second time."
    This Clause is designed to give relief from liability to Contribution in the following circumstances. Let us imagine a case where, before the end of the year 1947–48, a death took place and, in consequence, Death Duties—Estate Duty—became payable in respect of the passing on of the estate after the death. It may

    1007
    be for one reason or another that the Death Duties are not paid for a considerable time after the death has taken place. For example, on that part of the estate which consists of real estate, Death Duties will not be paid until a year after death. In the case of duty in regard to personal estate, probate will not have been granted and the result will be that the Estate Duty may not be paid for a considerable time after the death takes place. But the trustees will earmark a certain of the corpus of the estate in order that in due course when the amount of the Estate Duty is ascertained and becomes payable they can release that portion of the estate they have earmarked and, having released it, can pay the Estate Duty out of that part. In the meantime the part of the estate they have earmarked will be producing income and that income, but for the Clause we now seek to introduce, would attract liability to Contribution as it would be investment income.
    We do not think it fair that there should be a liability to Contribution in respect of income which arises from a part of the estate which has been earmarked as already belonging to the Government in a sense in that in due course it will have to be released and paid over. What we seek to do in this Clause is to see that the amount of Contribution which is payable shall be reduced by the amount attributable to the income arising from that part of the estate so earmarked. In other words, we say that the trustees have set aside a part of the estate as ultimately to be paid to the Government and the income that arises until that part is paid over shall not attract Contribution. The conditions which the Clause envisages are that there is a death before the end of the year 1947–48 resulting in Death Duties being payable, and that investment income arises from the estate which is left and which is more than it would be if Death Duties were paid at the moment when the death takes place. We give the Special Commissioners power to reduce the Contribution by writing off that part which is attributable to that part of the estate.
    Mr. Turton: Is not this Clause rather narrow in its effect? It is restricted in paragraph (a) to the case of a death which occurs before the end of the financial year 1947–48. I should
    1008
    have thought that cases under Subsection (7) of Clause 47 where the individual dies before the final assessment is made, should be allowable before the same sort of relief is given by this Clause. I cannot see how the right hon. and learned Gentleman can distinguish between the cases of the man who dies before 5th April, and the man who dies between 6th April and the date of the final assessment. It depends on the personal representatives, who have to collect the income and to pay Death Duties out of the capital and income. In that case I should think it would have been fair to allow them to have deducted from the income that notional part of the income represented by payment of Death Duties as in the case of the new Clause. I am sorry the right hon. and learned Gentleman has restricted it so unduly in paragraph (a) and I hope he will reconsider the matter and perhaps enlarge the provisions, either here or in another place.
    6.15 p.m.
    Mr. Pitman: While welcoming this new Clause, we regret that it is so limited. To a certain extent the Solicitor-General has misled the House in assuming that all trusts must pay out the whole of their income. In most cases it is a discretionary figure which is paid out and may bear no relation whatever to the income of the year in question. If he is prepared to meet an anomaly in the special type of case covered by this new Clause, why will the right hon. Gentleman not meet it in other related cases? He must recognise that in the case he is citing, the Inland Revenue will collect interest from the estate between the date of death and the date of probate and payment. The income to which these people are entitled is the difference between the return on the earmarked investments and the interest charged by the Inland Revenue on the arrears of Death Duties that have not been paid.
    Moreover this new Clause clearly is an admission by the Solicitor-General of a principle which ought to be applied widely, if at all. The correct method of applying that principle is to allow the trustees, where they have made a distribution in excess of what is the strict income for the year in question, to be chargeable only on that income and not on the higher income they may have distributed by reason of arrears

    1009
    in the past, or in anticipation of the future. The clear intention of the Bill is that the Contribution should be levied on the capital and not on the income for that year. Clearly no question of payment of income which has accumulated in the past ought to create the presumption that there is additional capital, because there is no such additional capital. It really represents income of a previous year, and not income of the greater amount of capital which is wrongly supposed to exist by reason of the larger payment.
    The Solicitor-General: The hon. Member for Thirsk and Malton (Mr. Turton) suggested that we should move the date of death so as to include a death occuring after 1947–48. That would not have any effect because it is only the income of 1947–48 which attracts Contribution. All we can deal with in this Clause is income which arises during that year from the earmarked part of the estate. Ex hypothesi we must assume that death has taken place before the end of that year, or there will be no income from the earmarked portion of the estate which attracts Contribution. In reply to the hon. Member for Bath (Mr. Pitman), there are ample provisions in Clause 60 for writing back, as it were, income paid in 1947–48 which is properly attributable to an earlier year—for example, accumulated arrears on preference dividends and so on. We cannot go further than we have done in Clause 60 to deal with the kind of thing which the hon. Member has in mind.
    Clause read a Second time, and added to the Bill.

    NEW CLAUSE.—(Nationalisation Stock as satisfaction for special contribution.)
    (1) An individual by whom contribution is payable shall be able to discharge such payment or part thereof by offering nationalisation stock, and such stock shall be deemed to be valued at par for the purposes of such payment.

    (2) For the purposes of this section, nationalisation stock shall include any stocks issued in pursuance of the Coal Industry Nationalisation Act, 1946, the Transport Act, 1947, the Electricity Act, 1947, or any Gas Act passed in 1948.—[Mr. P. Roberts.]

    Brought up, and read the First time.
    Mr. P. Roberts: I beg to move, "That the Clause be read a Second time."
    The effect of this new Clause, if it is put into the Bill, will be, briefly, that a
    1010
    person who has to pay a contribution under the special levy will be able to tender to the Treasury nationalisation stock, and that that stock shall be accepted as payment at par value. The House will recollect that in the nationalisation Measures which the House has passed it has been the intention of the Government, repeatedly expressed, to pay out to stockholders stock which should be valued at par, depending upon the conditions of interest and the dates of repayment. That happened in the Transport Act under Section 89 (2) and the Fifth Schedule. The doubt has been expressed from time to time from this side of the House, and it has been strongly rebutted by the Government, that there was some question of unfairness in the making up of these figures. The Financial Secretary to the Treasury has given an assurance that under the Gas Bill, which is now going through Parliament, and which may become an Act during this year, that these stocks will be issued at par.
    He said in the course of the Committee stage—I refer to c. 713—that he could give an assurance that there would be a reasonable rate of interest and a reasonable date for the stock. He repeated that assurance on the Report stage—c. 2213—when he said that he could not for a moment accept the assumption that the stock would sink to a discount. If that is the intention of the Government we are not far apart on this matter. I am suggesting to the House that what the Government issued at par should be taken back by them at the same rate of value.
    There are three suggestions in relation to this new Clause which should commend it to the Government. First, it is a simple Clause; it is not a complicated Measure which has to be put into effect. Secondly, it is certainly a just one, whereby people having been paid out at one figure should be allowed to pay stock back to the Government at that figure. Thirdly, it will be an easy provision to work. Admittedly the Clause as it is now drafted would allow someone who had no part in nationalisation stocks before the vesting date to buy stock now in order to pay it back. That would no doubt have the effect of pushing the stock up to par very rapidly. The Government might say that this provision should apply only to people who had nationalisa-

    1011
    tion stock at the vesting date If the Government were to advance that argument I should be prepared to consider it.
    The principle is quite clear. If this Clause is not put into the Bill what will be the effect of the Bill upon someone who before the vesting date had transport stock which was compulsorily taken away from him and he was given transport stock in its place? He had no control over that; his stock was compulsorily taken away from him by the Government. Now comes the Special Contribution, which he has compulsorily to pay. It may be that his transport stock is all he has got; he may have a large holding and nothing else. He will be forced to sell it compulsorily. It has been issued by the Government at one rate. Transport stock at present stands at 96¾ so that such a person would have to lose 3 per cent. discount on the transaction, in which he had no wish to participate. He will have been forced by the Government to participate in both cases. All I am asking is that we should have a fair arrangement in this matter and that we should, as far as possible, accede to the wishes of the Government.
    During the Report stage of the Gas Bill the Financial Secretary to the Treasury stated, in c. 2216, that the price paid to transport stockholders was fair. If so, surely it is fair that holders of transport stock should be allowed to hand it back to the Government. At the moment it is standing at roughly a 3 per cent. discount. That means that from the vesting date until now the stock has fallen in total by approximately £30 million. It has been alleged from this side of the House that the Government have made that amount of £30 million by issuing a stock which was not in fact at par when it was issued. The answer by the Government has always been, "You have no need to sell. You can hold on and if you do so you will at some time get par. You will certainly do so when it is redeemed." But that does not apply in the case I am posing, the case of someone who has to sell stock to pay the Special Contribution, and who is definitely faced with a loss.
    I recommend to the Chancellor of the Exchequer the point that if he accepts this suggestion it will really be anti-inflationary; it will take out of circulation
    1012
    a certain amount of stock and put it into the hands of the Government. I have always maintained that the Special Contribution is an inflationary measure. I know the Chancellor of the Exchequer and the Financial Secretary to the Treasury have argued against that view on many occasions. Here is a case in which the money will come directly out of the revenue pool instead of having to go into it. For that reason this Clause should commend itself to the Government.
    I admit that the wording of the Clause as it stands may not be the best possible. It may be that the Government can think out a better form of words. I am not arguing for a specific form of words; I am arguing the principle. I hope that the Government will state that they are prepared to stand by their promise—that where they issued something at par they will take it back at par, presuming that conditions are relatively the same. I believe that electricity stock has gone to par today or yesterday. So far so good, but that does not apply to transport stock. I am not asking for something whereby stockholders will be able to say, "Government securities as a whole have gone down and we can bolster up that argument, so to speak," although there are reasons why that might be considered by the Government. I am saying that where a stock has been issued at a specific date, and the general trend of Government securities has been more or less constant, it should be taken back at the rate at which it was issued.
    Mr. Nigel Birch: I beg to second the Motion.
    In supporting the arguments of my hon. Friend the Member for Ecclesall (Mr. P. Roberts), who so ably moved this Motion, I think it is important to realise that we are thinking about those holders of nationalisation stocks who are subject to the Special Contribution. They will in any case suffer because they are being assessed on incomes which in general they do not now enjoy. That is to say their incomes have been lowered by these nationalisation Measures, but they are being assessed on incomes which they now have not got, for the purpose of this Special Contribution. Therefore, they have already suffered one injustice. We feel it to be wrong that they should suffer a second one.

    1013
    Clearly there is no question of the Government giving a long-term guarantee that they will be prepared to buy back such stocks as they issue, at par. That would obviously amount to altering the dates of issue of securities; it would be wrong and is not asked for. The reason I support this new Clause is that it tests the sincerity of the Government because they have said that this levy is "once only." If that is so, if it is once only, all we are asking is that over a very short period, a period which is highly relevant, someone should in fact get what the Government said they had given them, that is, fair compensation. My hon. Friend made a very strong point when he drew attention to the fact that holders of this stock may well be forced to sell and may well be forced to take less than what the Government themselves have said was a fair price.
    My hon. Friend also raised the question of the difficulty that may arise because the holders are not all original holders of transport and other stock. There are perfectly good precedents for stock tenable at par being used for the payment of Death Duties. It would be perfectly reasonable in short-term—only once"—cases like this to make that condition apply, because it could be only once. It does not alter the conditions of the issue in any real degree. I would say that if this is not accepted an injustice is being done. On this whole matter it does seem that the attitude of the Government is, "We want to be fair, but really it is a case of heads I win and tails you lose," because that is how the thing is working out in all these holdings. Therefore, I hope that, for their own reputation, or such as they have left, the Government will accept this Clause.
    6.30 p.m.
    Mr. Jay: The hon. Member for Flint (Mr. Birch) sought to support this Motion by arguing that holders of nationalised stock may be receiving a lower income today from their stock than before nationalisation. I think he fell into the error of forgetting that this is a charge on capital and not on income.
    Mr. Birch: Oh.
    Mr. Jay: Well, we take income as the measure of the assessment on what should be paid out of capital. Therefore, the fact that the income may be less, in return
    1014
    for which the holder has a higher valued security, is really quite irrelevant. We certainly cannot accept this Motion. There might be arguments for making a capital levy, particularly if it is a very large one, payable in securities if all securities were included. I have heard respectable arguments for that type of operation, but, whatever merits it might have, it certainly would not be anti-inflationary. I cannot accept that argument. If we leave cash in the hands of the public, rather than securities, that surely must be inflationary rather than anti-inflationary. What we could not possibly do is to select, arbitrarily, one small group of securities and say that those, and those alone, could be used in payment of tax. It is not even a question of all Government securities but of one very small group of Government securities. Even more objectionable would it be to adopt that device in the from which the hon. Member proposes, and to select a small number of already existing securities.
    Mr. P. Roberts: The Economic Secretary talks about a small number. These have been given out compulsorily by the Government. Otherwise people have taken them up of their own free will, but these are the ones the Government have forced upon them.
    Mr. Jay: That is quite irrelevant. Some of the holders would have bought them on the Stock Exchange since the original issue and would not have had them compulsorily handed to them at all. The application of this special privilege to these securities would enhance their value. It would give a special bonus to the contributor who happens to hold those securities, both because he might have to pay less and because the attraction of that privilege would tend to raise the price of the securities, and he has therefore an extended profit, when very likely he was not the original holder of the securities at all. I am sure, therefore, that whatever plan is adopted this would be almost the worst one of them all.
    There would be a slightly stronger case for saying that certain securities should be issued in the first instance with the provision that they could be used in payment of tax. That was done at certain times during the first war. Hon. Members will recall that the Colwyn Report in 1927 came to the conclusion that that was a

    1015
    bad principle and that, though in the stress of war there might be something to be said for it, it was a practice which ought never to be repeated. We entirely agree with that conclusion.
    Mr. Assheton: I hope I can persuade the right hon. and learned Gentleman to think about this again. The case put by the hon. Member for Ecclesall (Mr. P. Roberts) and the hon. Member for Flint (Mr. Birch) was a very strong one. I do not think that the Economic Secretary has done justice to it. In the first place we on this side of the House complained, I think with some justice, that stock that was issued to the holders of railway companies was issued at a price below par, and immediately dealt in below par, and it has never been possible to sell the stock at par. It is now more than 3 discount. I am happy to say that such a bad experience has not been suffered by the holders of electricity stock, which is at par. In fact, I think that today it has just risen above. Holders of railway stock have never been able on any occasion to get par for their stock and the full compensation which the Government considered to be just and adequate, and which we thought unjust and inadequate.
    What this Clause seeks to do is to enable the holders of that stock—and my hon. Friend will be quite willing to limit it to the original holders—to be entitled to hand in this nationalised stock to the Revenue in payment of the Special Contribution. There is certainly simplicity and justice in that. I could not take the point which the Economic Secretary made in answer to the suggestion made by my hon. Friend the Member for Flint that the holders of this railway stock received a larger income last year than they are receiving from transport stock this year. The holder of L.M.S. ordinary stock last year received a dividend of 4 per cent. or 5 per cent. He received I think less than 30 per cent, of his capital value for his stock, and he is going to get an income of a quarter or a fifth of last year. Yet his capital is to be based on the basis of the income he received last year, because in his return on which this Special Contribution is to be based the income will be shown which he received from the railway company when he was receiving the much higher rate. When the calcula-
    1016
    tion is made, it is based on the income received last year. The man may have received £100 last year from the railway stock and this year is to receive only £20. His capital depends on what it is worth now, and the income of £100 he received last year is no measure whatever of the capital. Yet the hon. Gentleman argued just now that since it is capital with which we are concerned and not income, it was a good reason for refusing to accept this new Clause. I do not know whether he has any further development to that argument, but as he put it, it did not seem to me to carry us anywhere at all.
    I do not think that there is anything objectionable in allowing a stock which is now standing at a small discount to be used for this purpose at par. The hon. Gentleman seemed to suggest that the stock might rise some considerable degree in consequence of this new advantage. Of course, it would not rise above par if the proposal were accepted, because the par value is the value at which it could be surrendered. If it rose above par, people would not surrender it, any more than people now surrender Victory Bonds which were frequently used in the past in payment of Death Duties. This is a fair and reasonable demand. If the Government are right in saying that they gave fair compensation to railway stockholders, let them take back that stock in payment of their debt. If what they issued was not good value for money, let them explain to the country why they issued stock which was not of proper value.
    Lieut.-Commander Braithwaite: There were two interesting points in the speech of the Economic Secretary. He said that this argument regarding loss of income did not apply and that this was a levy on capital. How often have the Government hopped from one position to another on this matter. During the long Committee stage, at one point this Special Contribution was a levy on income; at another it was a levy on capital. For the purpose of resisting this reasonable new Clause, the hon. Gentleman has taken to what I would call the capital leg of his argument. He said that it would be the worst possible plan to suggest that the Government's stocks issued at 100 are worth that price. That is a remark which, surely, will not go unnoticed in financial circles. Then he entirely by-passed the remark of

    1017
    my hon. Friend the Member for Ecclesall (Mr. P. Roberts), who said that he realised that there might be difficulties owing to stock changing hands and that he was quite prepared for that, because it could be confined to the original holders at the time of issue. That would get past one of the main objections of the hon. Gentleman.
    There is a perfect precedent for this suggestion. Victory Bonds have been mentioned by my right hon. Friend the Member for the City of London (Mr. Assheton). At one time Victory Bonds stood at a discount infinitely more severe than that of these nationalisation stocks. At the time when the late Mr. Horatio Bottomley got into trouble with his Victory Clubs, in the year 1920 or 1922, Victory Bonds stood in the vicinity of 77 and could then be surrendered for Death Duty purposes at par. In due course, under the wise administration of Mr. Neville Chamberlain they climbed, crossed par, and now stand at a premium, as they have done for many years. But during the time when they stood at a discount, the fact that Victory Bonds were available for surrender at par for Death Duty purposes acted as a stimulus to them. They were heavily bought by people for that purpose.
    The Government are losing a great opportunity here. This is a great chance to introduce an atmosphere of cheer into the depressed and declining market of nationalisation stocks—this sombre picture which one sees. Surely, to accept this most reasonable suggestion would act as a spur to the nationalisation stocks. We understand that the Government have other stocks to issue in time. What a good thing it would be, as a method of stimulating the market, if they accepted this suggestion. For whatever reason the Clause is resisted by the Government, one would like to see a little more consistency. I have not the slightest doubt that we shall find, as we go through this Report stage, that the Economic Secretary or the Chancellor already has a brief at hand to deal with some later question and that he will say, "But this is not a levy on capital at all. This deals with income and the hon. Member opposite is quite wrong in adducing those arguments." Let the Government make up their minds on which leg they intend to stand. I suggest that the acceptance of this new Clause
    1018
    would not only be administratively workable but valuable to them in their future financial transactions.
    6.45 p.m.
    Mr. McKie: I hope that even at this late stage the Economic Secretary or the Chancellor of the Exchequer will think again and see the wisdom of this reasonable and moderate proposal. I hope that this Debate will be fully reported in the Press, because those affected, and indeed the investing public as a whole, will take their action on this matter as an earnest of the Government's good faith for the future. It was evident when the Transport Bill was going through its various stages in this House that the outside public was seriously disturbed as to the intentions of the Government with regard to this matter. Their point of view was most carefully made during the Committee stage of that Bill upstairs. I am sorry that the Bill was not taken on the Floor of the House. Their point of view was very much reinforced in Debate when that Measure came to be considered on Report. What has happened since to the Transport Stock has only confirmed our worst fears.
    That was why, when the Gas Bill was considered upstairs in Committee and when it came back to this House for the Report stage, we made even more strenuous efforts to safeguard the investing public. I am glad that one of my hon. Friends stressed the point that the holders of Transport Stock would be the most heavily hit if our reasonable proposal that the surrender at par value of these stocks as part of the Special Contribution is not agreed to by the Government. The Economic Secretary avoided answering that argument. I was pleased to hear my right hon. Friend the Member for the City of London (Mr. Assheton) quoting the unfortunate position of the holders of L.M.S. ordinary stocks. I would supplement his remarks by pointing out that there are many in this country who have large holdings in the L.M.S. preference issues. The old 4 per cent. preference issue of that railway company had a capital of something like £118 million invested in it. Then there was a more junior stock issued by that company which, I think, always paid the full rate of interest. There were large numbers of holders of that stock, many of them quite small personages. The larger issue of £118 million was

    1019
    taken over at 85 and the holders had, perforce, to receive 3 per cent. on the depreciated value of the original issue.
    That, by itself, is clear confirmation of what was said by my right hon. Friend the Member for the City of London, but there was the junior issue which was taken over at 62. Holders of that stock suffered a diminution of 40 per cent. on their capital and 60 per cent. on their income. Allowing even for the more fortunate holders of other railway issues who had their capital taken over at a higher figure, there have been some very heavy losers indeed. The point has been made repeatedly that never once has the new Transport Stock stood at par value. It has always been at 3 per cent. discount. Over and over again the Government have assured us—and through us the investing public—that they desired to see a fair deal in this matter. We pressed them to give a fair deal when the various Bills were going through this House, and we have never been able to obtain any concession. If the Chancellor of the Exchequer wishes to live up to his words—and I know he is a man of the highest rectitude—here is a golden opportunity for him to make a small concession which will enable large numbers of people to meet their obligations in a fair way.
    It would be all very well for the right hon. and learned Gentleman to say that these, after all, are small investors, and they will get other sources of revenue which will bring up their income, so that he cannot accept the plea on behalf of the
    spinster or widow. I am speaking about many people whose income may be over £2,000, but who have only small capital holdings which they hope to hand over to those who come after them. Perhaps the Chancellor thinks that this is a wrong principle, but surely he would not wish that these people, who have only small capital reserves, should be penalised by having to hand them over? They may all be in Transport Stock, and, if so, they will be the heaviest losers. I hope he will be able to accept the new Clause on behalf of these people, but, if he remains obdurate, I hope my hon. and right hon. Friends will take this matter into the Division Lobby, when I will certainly give the new Clause my vote.
    Mr. P. Roberts: With the leave of the House, may I say that I am particularly disappointed that the Government will not accept the new Clause, as it mentions any Gas Act that may be passed in 1948. Just about the time that this Gas Stock will come out, will be the time when people are paying this Contribution. They will find that, when the Gas Stock is at a discount, the Government will not be prepared to accept it. This shows that the Government are not prepared to stand by their bond, and I hope my hon. and right hon. Friends will go into the Lobby in support of the new Clause.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 104; Noes, 223.

    Division No. 231.]

    AYES.

    [6.53 p.m.

    Amory, D. Heathcoat

    Duthie, W. S.

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

    Assheton, Rt. Hon. R.

    Eccles, D. M.

    Lennox-Boyd, A. T.

    Astor, Hon. M.

    Eden, Rt. Hon. A.

    Lipson, D. L.

    Baldwin, A. E.

    Elliot, Lieut.-Col. Rt. Hon. W.

    Lloyd, Selwyn (Wirral)

    Bennett, Sir P.

    Fletcher, W. (Bury)

    Low, A. R. W.

    Birch, Nigel

    Fraser, H. C. P. (Stone)

    Lucas, Major Sir J.

    Boles, Lt.-Col. D. C. (Wells)

    Fraser, Sir I. (Lonsdale)

    Lucas-Tooth, Sir H.

    Bower, N.

    Galbraith, Cmdr T. D.

    McCorquodale, Rt. Hon. M. S.

    Boyd-Carpenter, J. A.

    Gammans, L. D.

    Macdonald, Sir P. (I. of Wight)

    Braithwaite, Lt.-Comdr J. G.

    Grimston, R. V.

    Mackeson, Brig. H. R.

    Butcher, H. W.

    Hannon, Sir P. (Moseley)

    McKie, J. H. (Galloway)

    Byers, Frank

    Hare, Hon. J. H. (Woodbridge)

    Maclay, Hon. J. S.

    Challen, C.

    Harvey, Air-Cmdre. A. V.

    Macpherson, N. (Dumfries)

    Clarke, Col. R. S.

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

    Maitland, Comdr. J. W.

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

    Hogg, Hon. Q.

    Marlowe, A. A. H.

    Crowder, Capt. John E.

    Hollis, M. C.

    Marshall, D. (Bodmin)

    Darling, Sir W. Y.

    Holmes, Sir J. Stanley (Harwich)

    Mellor, Sir J.

    Davies, Rt. Hn. Clement (Montgomery)

    Howard, Hon. A.

    Molson, A. H. E.

    De la Bère, R.

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

    Morris, Hopkin (Carmarthen)

    Digby, S. W.

    Jeffreys, General Sir G.

    Neven-Spence, Sir B.

    Dodds-Parker, A. D.

    Keeling, E. H.

    Nicholson, G.

    Donner, P. W.

    Kendall, W. D.

    Noble, Comdr. A. H. P.

    Grayson, G. B.

    Kerr, Sir J. Graham

    O'Neill, Rt. Hon. Sir H.

    Drewe, C.

    Lambert, Hon G.

    Orr-Ewing, I. L.

    Duncan, Rt. Hn. Sir A. (City of Lond)

    Langford-Holt, J.

    Peto, Brig. C. H. M.

    Pickthorn, K.

    Ross, Sir R. D. (Londonderry)

    Vane, W. M. F.

    Pitman, I. J.

    Savory, Prof. D. L.

    Ward, Hon. G. R.

    Poole, O. B. S. (Oswestry)

    Shepherd, W. S. (Bucklow)

    Watt, Sir G. S. Harvie

    Price-White, Lt-.Col. D.

    Smith, E. P. (Ashford)

    Webbe, Sir H. (Abbey)

    Ramsay, Maj. S.

    Spearman, A. C. M.

    Wheatley, Colonel M. J. (Dorset, E.)

    Rayner, Brig. R.

    Stanley, Rt. Hon. O.

    White, J. B. (Canterbury)

    Reid, Rt. Hon. J. S. C. (Hillhead)

    Strauss, H. G. (English Universities)

    Williams, C. (Torquay)

    Roberts, P. G. (Ecclesall)

    Studholme, H. G.

    Robertson, Sir D. (Streatham)

    Sutcliffe, H.

    TELLERS FOR THE AYES:

    Robinson, Roland

    Thornton-Kemsley, C. N.

    Commander Agnew and

    Ropner, Col. L.

    Turton, R. H.

    Major Conant.

    NOES.

    Adams, Richard (Balham)

    Fairhurst, F.

    Moody, A. S.

    Adams, W. T. (Hammersmith, South)

    Fernyhough, E.

    Morley, R.

    Allen, A. C. (Bosworth)

    Follick, M.

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

    Alpass, J. H.

    Foot, M. M.

    Moyle, A.

    Attewell, H. C.

    Fraser, T. (Hamilton)

    Murray, J. D.

    Attlee, Rt. Hon. C. R.

    Ganley, Mrs. C. S.

    Neal, H. (Claycross)

    Austin, H. Lewis

    Glanville, J. E. (Consett)

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

    Ayles, W. H.

    Goodrich, H. E.

    Noel-Buxton, Lady

    Ayrton Gould, Mrs. B.

    Gordon-Walker, P. C.

    Palmer, A. M. F.

    Balfour, A.

    Grenfell, D. R.

    Parkin, B. T.

    Barstow, P. G.

    Grey, C. F.

    Paton, Mrs. F. (Rushcliffe)

    Barton, C.

    Griffiths, W. D. (Moss Side)

    Pearson, A.

    Battley, J. R.

    Gunter, R. J.

    Peart, T. F.

    Bechervaise, A. E.

    Guy, W. H.

    Popplewell, E.

    Belcher, J. W.

    Hale, Leslie

    Porter, E. (Warrington)

    Benson, G.

    Hall, Rt. Hon. Glenvil

    Porter, G. (Leeds)

    Berry, H.

    Hamilton, Lieut.-Col. R.

    Price, M. Philips

    Beswick, F.

    Hardy, E. A.

    Pritt, D. N.

    Bing, G. H. C.

    Harrison, J.

    Proctor, W. T.

    Blenkinsop, A.

    Herbison, Miss M.

    Pursey, Cmdr. H.

    Blyton, W. R.

    Hicks, G.

    Randall, H. E.

    Bowden, Flg. Offr. H. W.

    Hobson, C. R.

    Ranger, J.

    Bowles, F. G. (Nuneaton)

    Holman, P.

    Rees-Williams, D. R.

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

    Holmes, H. E. (Hemsworth)

    Reeves, J.

    Braddock, T. (Mitcham)

    Horabin, T. L.

    Reid, T. (Swindon)

    Bramall, E. A.

    House, G.

    Ridealgh, Mrs. M.

    Brooks, T. J. (Rothwell)

    Hoy, J.

    Roberts, Emrys (Merioneth)

    Brown, George (Belper)

    Hughes, Hector (Aberdeen, N.)

    Roberts, Goronwy (Caernarvonshire)

    Brown, T. J. (Ince)

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

    Rogers, G. H. R.

    Bruce, Maj. D. W. T.

    Hynd, H. (Hackney, C.)

    Ross, William (Kilmarnock)

    Buchanan, Rt. Hon. G.

    Hynd, J. B. (Attercliffe)

    Royle, C.

    Burden, T. W.

    Irvine, A. J. (Liverpool)

    Scott-Elliot, W.

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

    Jay, D. P. T.

    Shackleton, E. A. A.

    Callaghan, James

    Jeger, G. (Winchester)

    Sharp, Granville

    Castle, Mrs. B. A.

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

    Silverman, J. (Erdington)

    Champion, A. J.

    Jones, D. T. (Hartlepool)

    Simmons, C. J.

    Chater, D.

    Jones, Elwyn (Plaistow)

    Skeffington-Lodge, T. C.

    Chetwynd, G. R.

    Jones, J. H. (Bolton)

    Skinnard, F. W.

    Cluse, W. S.

    Jones, P. Asterley (Hitchin)

    Smith, C. (Colchester)

    Cobb, F. A.

    Keenan, W.

    Snow, J. W.

    Cocks, F. S.

    Key, C. W.

    Solley, L. J.

    Collins, V. J.

    Kinley, J.

    Sorensen, R. W.

    Colman, Miss G. M.

    Kirby, B. V.

    Soskice, Sir Frank

    Comyns, Dr. L.

    Lang, G.

    Sparks, J. A.

    Cooper, Wing-Comdr. G.

    Lawson, Rt. Hon J. J.

    Steele, T.

    Corbet, Mrs. F. K. (Camb'well, N.W.)

    Lee, F. (Hulme)

    Stewart, Michael (Fulham, E.)

    Cove, W. G.

    Leslie, J. R.

    Stross, Dr. B.

    Cripps, Rt. Hon. Sir S.

    Lewis, J. (Bolton)

    Stubbs, A. E.

    Daggar, G.

    Lindgren, G. S.

    Summerskill, Dr. Edith

    Daines, P.

    Lipton, Lt.-Col. M.

    Sylvester, G. O.

    Dalton, Rt. Hon. H.

    Longden, F.

    Symonds, A. L.

    Davies, Ernest (Enfield)

    Lynn, A. W.

    Taylor, H. B. (Mansfield)

    Davies, Harold (Leek)

    McEntee, V. La T.

    Taylor, R. J. (Morpeth)

    Davies, R. J. (Westhoughton)

    McGhee, H. G.

    Taylor, Dr. S. (Barnet)

    Deer, G.

    McGovern, J.

    Thomas, D. E. (Aberdare)

    de Freitas, Geoffrey

    Mack, J. D.

    Thomas, George (Cardiff)

    Delargy, H. J.

    McKay, J. (Wallsend)

    Thurtle, Ernest

    Dodds, N. N.

    McLeavy, F.

    Tolley, L.

    Driberg, T. E. N.

    Macpherson, T. (Romford)

    Turner-Samuels, M.

    Dumpleton, C. W.

    Mallalieu, E. L. (Brigg)

    Ungoed-Thomas, L.

    Dye, S.

    Mallalieu, J. P. W. (Huddersfield)

    Viant, S. P.

    Ede, Rt. Hon. J. C.

    Mann, Mrs. J.

    Walker, G. H.

    Edelman, M.

    Manning, Mrs. L. (Epping)

    Wallace, G. D. (Chislehurst)

    Edwards, John (Blackburn)

    Mathers, Rt. Hon. George

    Warbey, W. N.

    Edwards, N. (Caerphilly)

    Mellish, R. J.

    Watkins, T. E.

    Edwards, W. J. (Whitechapel)

    Messer, F.

    Weitzman, D.

    Evans, Albert (Islington, W.)

    Middleton, Mrs. L.

    Wells, P. L. (Faversham)

    Evans, E. (Lowestoft)

    Mikardo Ian

    West, D. G.

    Evans, S. N. (Wednesbury)

    Mitchison, G. R.

    Wheatley, Rt. Hn. J. T. (Edinb'gh, E.)

    Ewart, R.

    Monslow, W.

    White C. F. (Derbyshire, W.)

    1022

    1023

    Whiteley, Rt. Hon. W.

    Williams, W. R. (Heston)

    Zilliacus, K.

    Wilcock, Group-Capt C. A. B.

    Wills, Mrs. E. A.

    Wilkins, W. A.

    Woods, G. S.

    TELLERS FOR THE NOES:

    Willey, F. T. (Sunderland)

    Wyatt, W.

    Mr. Joseph Henderson and

    Williams, J. L. (Kelvingrove)

    Yates, V. F.

    Mr. Hannan.

    Williams, R. W. (Wigan)

    Young, Sir R. (Newton)

    NEW CLAUSE.—(Refund of Special Contribution in certain cases.)
    (1) There shall be ascertained and recorded as respects every person who has paid contribution under this Act in respect of investment income consisting of income from agricultural land the amount of contribution which would have been payable by such person if the aggregate investment income of that person had been limited to the amount of the investment income received by him by way of income from agricultural land.
    (2) The procedure for the ascertainment and recording of the said amount shall be such as may be prescribed by regulations made by statutory instrument by the Commissioners of Inland Revenue
    (3) The amount of contribution so ascertained and recorded as aforesaid shall if the conditions contained in the next succeeding subsection are satisfied be repaid in accordance with the provisions of that subsection.
    (4) No repayment of contribution under this section shall be made to any person unless he shall have expended the amount of contribution so ascertained and recorded upon works in respect of which such person would be entitled to an allowance under section thirty-three of the Income Tax Act, 1945, and unless the proposal for carrying out such works shall first have been submitted to and approved by the county agricultural executive committee for the county or counties within which the said agricultural land is situate and such works shall have been completed to the satisfaction of such committee.
    Provided that expenditure as aforesaid to the extent of a part only of the contribution so ascertained and recorded shall operate to authorise the payment of a corresponding part of the contribution so ascertained and recorded.
    (5) In this section "agricultural land" has the same meaning as in Part IV of the Income Tax Act, 1945.—[Mr. Vane.]
    Brought up, and read the First time.
    Mr. Vane: I beg to move, "That the Clause be read a Second time."
    The certain cases referred to in the title of this new Clause are not obscure anomalies but relate to the very important case of agriculture. The object of the new Clause is not to reverse the decision which was taken in Committee but rather to repair some of the damage which is bound to result from that decision. It always seems strange to me that if any industry should be expected to bear its
    1024
    part of this Contribution direct, the Chancellor should have chosen the agricultural industry for that unfortunate role, and particularly that part of the agricultural industry which has the task of providing and maintaining fixed equipment, which includes the bulk of the improvements to buildings and drainage which we hope to see carried out over the next few years. To say the least of it, this choice has had a most disheartening effect in the countryside, and it is particularly surprising seeing that it comes at a time when the Government's declared agricultural policy is one of expansion.
    Nor at the moment is capital flowing into agriculture in very great quantities. As evidence of that, we have recently seen the Hill Farming Act reach the statute book, and again the Government have a scheme by which certain financial assistance is given towards the carrying out of drainage works. To balance this assistance, the Minister of Agriculture—who, I see is not present again despite the fact that an important Amendment is being discussed—has imposed on this branch of the industry certain special responsibilities and heavy commitments. Now, at the same time as the Minister of Agriculture is saying encouraging things, the Chancellor of the Exchequer comes along and gives the industry as big a kick as he can. It is very strange. If someone kicks in that way it is bound to leave a bruise. The bruise left on the industry will be in the form of poor and out of date buildings.
    Even if His Majesty's Ministers today look on the agricultural industry in two ways, at least the country looks on it in one way. It wants to see the expansion programme furthered and not held up. My hon. Friends and I are sure that we can offer a solution for this difficulty, and we have put the solution in this proposed new Clause. We claim that it is simple. We do not claim that it is an entirely new idea, and I think I am right in saying that something similar was included in the old E.P.T. regulations. What we propose is this. The special levy should

    1025
    be assessed on agricultural property and paid in the same way as on other property; but instead of it just floating away over the surface of the sea of inflation, we suggest that it should be held in what for want of a better word I should like to call a suspense account. Naturally no interest shall be charged.
    It may be represented that when a taxpayer draws his income from several sources it is not easy to show how much of this special levy which he is going to pay is derived from agricultural and how much from other property. To simplify the matter, we have suggested that where a taxpayer enjoys income from several sources, the lower rate of special levy which he pays shall be deemed to have been paid in respect of the agricultural property. For instance, if he has an income of £3,000, and £1,000 is in respect of agricultural property and £2,000 from investments, we would calculate the special levy on the first £1,000, as being in respect of the agricultural property. That amount would be paid into the suspense account and the rest into the general account. The taxpayer would be able at a later date to recover such sum as he had paid in respect of his agricultural property but only up to the value of improvements carried out on his property provided such works had been done with the consent and to the entire approval of the county agricultural executive committee.
    In this Clause we have not put down any time limit, because in the present circumstances, when material and labour are scarce, it is not easy to say how long a period would be fair. At best, I would suggest three years, but surely it is very easy to include a provision in a later Finance Bill. There is nothing that can be complained of in this proposal, because where no improvements are carried out there will be no repayment. Repayment will only be made against certified improvements.
    I do not think that the total sum involved is very large. I have asked the Chancellor on a previous occasion to suggest the sum that he expects to gain from his levy on Schedule A in respect of agricultural property, and he says that it is not easy to assess the figure I have done my best to assess it; I do not think it will be more than £2 million or £3 million, which is something like the Purchase Tax on one of the miscellaneous
    1026
    articles which he has found it quite easy to waive on second thoughts. I do not think it is a larger sum than that. Yet if I may borrow an expression from the Parliamentary Secretary to the Ministry of Food, this levy assessed in the way proposed in the Bill will have a serious psychological effect.
    It is not only the £2 million or £3 million which are going to be drawn from the industry which we have to consider; the discouraging effect will be much greater and much money which might be spent on improvement over the next few years will not be so spent. Therefore, I do sincerely hope that the Chancellor will adopt this plan. I am sure human nature being what it is, that it will be a great stimulus to new improvements. At the lowest, it will do simple justice to a valuable industry which has enough difficulty in front of it, and it is possible that this may be one of those rare instances where good may come out of evil.
    Mr. Baldwin: I beg to second the Motion.
    This proposed new Clause is the result of suggestions which were made in the Committee stage. During that stage a comment was made that the Minister of Agriculture was not present to take part in the Debate. I cannot help thinking that if the Minister were here today, instead of my having to second this Clause, the Minister would have done so. I am sure that the Minister realises the tremendous amount of harm which will be done by the Special Contribution to his endeavours to increase food production. If the Chancellor of the Exchequer has not already consulted with his colleague the Minister of Agriculture, I suggest that he should do so.
    The Minister of Agriculture is out to increase the production of food, and he has introduced legislation; for instance, there are the Hill Farming and Agriculture Acts, both of which envisage a considerable expenditure on capital improvements. Where is the money to come from if the Chancellor takes away what may amount to some £2 million or £3 million which would have been available for this capital expenditure? Sooner or later this country must face the fact that increased production from our land is vital. In order to get that increased production of food it is essential that there should be a large expenditure of capital.

    1027
    Those who have to do with agricultural estates know that position; and I may say I am not speaking from something I have got out of a book, for I am responsible for the management of something like eight to nine thousand acres consisting mainly of two of the old agricultural estates which have passed down from generation to generation and which have not been reinforced by a lot of industrial money, as some estates have been reinforced. The result is that these estates, because of the neglect which has been shown towards agriculture during the last 70 or 80 years, as a result of the industrial era, have been forced to allow their buildings, housing and drainage to fall into neglect. I think it would be fair to say that at least 50 per cent. of the buildings and houses on these estates want levelling to the ground and rebuilding economically.
    The question is, where is the money to come from? It may be suggested that the estate owners could borrow money from the corporations which make money available, but many estates have already borrowed money under those corporations and they hesitate further to increase their annual charges. I am afraid, therefore, that unless the Chancellor of the Exchequer accepts our suggestion, and if he imposes this Special Contribution, the money will not be available and we shall have great difficulty as agents in getting our principals to spend the money on necessary improvements. I suggest to the Chancellor that if he wants to make sure that the money is spent in the right way he could do nothing better than to earmark it for the building of farm-workers' cottages. If £3 million were to be taken from the agricultural industry and yet paid back to the industry for the building of cottages, something like 2,000 farm-workers' houses could be built with the money which is otherwise to be taken away. Another point on which expenditure could be incurred is drainage, and here again this money would be extremely useful if spent on draining the land.
    There is a precedent in the way in which the Excess Profits Tax is taken out of industry and is paid back to the extent of 20 per cent. when capital expenditure has been completed. I suggest to the Chancellor that he might well collect this money, pay it into a suspense account
    1028
    and repay it on approved schemes which would first have to be accepted by the county agricultural committees before any payment was made. I know the Chancellor of the Exchequer has done something in this Budget which helps landowners, and that is allowing the expenditure of 1947 on maintenance to be counted instead of using the five year average. That is extremely helpful, but it is not a concession only to agriculture for there are just the same allowances in industry and it is really nothing very much more than industry gets. I think the Chancellor could quite well agree to this new Clause and thereby do a tremendous amount of good to the agricultural industry.
    The Financial Secretary to the Treasury (Mr. Glenvil Hall): As I understand it, the proposal here is that when the Special Contribution is to be levied on a landowner owning agricultural land, the amount of the levy applicable to the agricultural land should be segregated and that it should then, when it is paid, be placed either notionally or actually through a special fund and earmarked for return to the land-owner in full, if later on he can get from the county agricultural executive committee a certificate to say that he had spent it on purposes which come within Section 33 of the Income Tax Act, 1945. That section relates to:
    "Capital expenditure on the construction of farm houses, farm or forestry buildings, cottages, fences or other works."
    This would not be expenditure which could be included in a maintenance claim. Therefore, it would not be "improvements" in the ordinary sense of the term, but very largely a case of new buildings and capital expenditure.
    The hon. Member for Westmorland (Mr. Vane) used the word "improvement," but it will be capital expenditure, not work in the sense of the ordinary maintenance and repairs claim. It will be definitely capital expenditure on buildings—probably the complete rebuilding of farms and things of that kind. This Clause means that the whole of such expenditure would be subsidised by the State, so far as the individual concerned qualified under this Clause. That being so, it is asking us to do more than we are able to do. Other industries could also make the same claim. I am not complaining—I admire the way in which certain hon.

    1029
    Members on every occasion press, and very properly press, the claims of agriculture. I am simply saying that, if we did this for agriculture, there would immediately be a demand for similar treatment from other industries, who think they are just as important. It would, indeed, be very difficult logically to refuse to grant such a claim.
    It would make the incidence of this Contribution very unequal. I think hon. Members opposite will agree that it will be, on the whole, the larger landowners who will pay the Special Contribution. As a result of the new Clause, the levy would have to be segregated, so far as its incidence on the land was concerned. That being so, it would appear that only very large landowners would benefit if the Clause were accepted.
    Mr. Vane: May I ask one question? The Financial Secretary has said that if this Clause were accepted other industries would press their claims for the same thing. I wonder if he could tell us one other single industry where the working capital is to be made the subject of this levy.
    Captain Crookshank: Stumped.
    Mr. Glenvil Hall: Not a bit. When we were discussing the incidence of this Special Contribution on the landowner who owns agricultural land, a deputation came to the Treasury to press those points in the Schedule A maintenance claims which in the past have been based on the five-year period up to the year on which the assessment is made. They put this point to us at the Treasury: during the war years it had been very difficult for expenditure of this kind to be made and, as a lot of money had been spent on rehabilitation and repair work in 1947, it would be fair to allow that year to be taken as the basis of a maintenance claim for the purposes of assessment to the Special Levy.
    My right hon. and learned Friend considered the point, and agreed, but he saw at once that, if we gave it to the agricultural landowner, we should have to give it to the rest of industry. Those who read Clause 61 will see that, whilst we have made the concession very properly to the landowner, we have had to extend it to other industries. Therefore, it is true that, if we did this, and made a
    1030
    special concession, there would be others who derive their income from industry who think that they, too, should have their investment income from some particular industrial source segregated and classified in this way and put into a suspense fund and repaid to them. Therefore, I am sorry, but I must ask the House to reject this Clause.
    Mr. Turton: I do not quite follow the logic of the Financial Secretary's reply. He tried to explain to my hon. Friend the Member for Westmorland (Mr. Vane) which other industries were treated in the same way as agriculture, and at the end of his speech, having looked at Clause 61, apparently found that no other industry is treated in the same way. Under the Income Tax Act, 1945—the right hon. Gentleman will correct me if I am wrong—any improvement by industry can be put into the suspense account, and industry gets relief on that suspense account in respect of repairs that have been deferred owing to the shortages in wartime. This new Clause is to put agriculture on exactly the same basis with those other industries It says that it is not getting the full benefit of the Act of 1945, and that, therefore, agriculture, when we have the capital levy, should have the benefit of a suspense account.
    Mr. Glenvil Hall: I would remind the hon. Gentleman that agriculture does get it. It gets a rebate of Income Tax at the rate of 10 per cent. for 10 years; that drawback does help when there are capital disbursements of this kind.
    Mr. Turton: There is a rebate of a tenth of the amount of the improvements actually carried out, yet no rebate for improvements that have had to be deferred owing to shortages. Now we are asking that there should be the same relief in agriculture as there is to industry, the deferred rate for the purposes of this capital levy, not a tenth of the improvement, but the relief in respect of those improvements that cannot be carried out today through shortages.
    I am alarmed at the idea that the Government seem to have that this would be subsidising agriculture to some extent. I thought that the object of this Government—as it is our object—was to produce more food. The only justification for this Clause—and it is a great justification—is that it would mean that more food

    1031
    would be produced for the people of this country. If land cannot be drained because the money for the drainage is going into the pocket of the Chancellor of the Exchequer, the people of England will lose food. This new Clause is designed to secure that, although the money that ought to be going for the production of food shall go temporarily into the pocket of the Chancellor of the Exchequer, when the improvements have been effected, that money shall come out to enable food to be produced. I hope the Chancellor will reconsider the Clause.
    Mr. Hollis: The case has been so cogently argued by my hon. Friends that I do not think I need to take the House through the whole argument again. However, we must ask the Financial Secretary to answer the question put to him. He has not yet answered it, and it is very unsatisfactory to have to end Debates without having answers to questions. The central fact he did not attempt to dispute is, that it is highly desirable and meritorious that agriculture should be supported. The whole question is whether agriculture would by this new Clause be unduly favoured or whether it would not. The basis of the Financial Secretary's case was that in this Clause agriculture would be—as he put it—subsidised by the State; that is to say, it would be put in a favourable position over against industry.
    When my hon. Friend the Member for Westmorland (Mr. Vane) asked the Financial Secretary to give an instance of another industry in which working capital has to pay this Special Contribution, the right hon. Gentleman got up and denied that he was stumped altogether and then went on to read the House a lecture on a quite different question, the question of maintenance, which has nothing whatever to do with this case. Therefore, I must beg the Financial Secretary or the Chancellor himself to give the House the answer to this question. I do not want to be offensive, but it is almost an insult to the House to be asked to give up the Clause until we are given a clear answer to the question my hon. Friend put.
    Mr. Scott-Elliot: In the interests of agriculture generally and of hill farming, in particular, I do ask my right hon. Friend to have another look
    1032
    at this matter. I must say I am profoundly disappointed at the reply we had from the Financial Secretary, who seemed to me to confuse maintenance claims and improvements. I voted advisedly against a proposal that was put forward in Committee from the benches opposite to free landowners from the Special Contribution. I entirely disagreed with that, but I am inclined now to support this Clause. We must have more food in this country, and if we are to have more food we have to have a lot more capital expended.
    I should like to dig a little more deeply into this, particularly from the point of view of hill farming. I am just back from a three weeks' tour of the Highlands of Scotland, and I have been looking into this question there. It is the owner-occupiers who are putting in big, valuable improvement schemes but they get out of this Special Contribution completely owing to the fact, as I understand the matter, that they are owner-occupiers. But the people who have not put in claims are those who are letting their farms. These people have probably less money and it is in their interests that this Clause is being moved. The Financial Secretary said, that it would be difficult to refuse the claims of other industries. When he was asked specifically by the hon. Member for Westmorland (Mr. Vane) to name another industry, he did not answer. I challenge him to produce another industry in this case. There is no other industry. I agree with the hon. Member for Devizes (Mr. Hollis) that we simply cannot accept this reply, and unless some other and better answer can be given, I do feel that we ought to press this new Clause upon the Chancellor of the Exchequer.
    Lieut.-Commander Braithwaite: I hope the House will not be too vehement in its denunciation of the Financial Secretary, because I feel that he has been sent into battle at a rather difficult moment. I do not agree that he was stumped. I thought he hit his own wicket. The hon. Member for Accrington (Mr. Scott-Elliot) in his courageous remarks—I hope they will not have any deleterious consequences for him—has underlined and emphasised the importance of this new Clause. I hope the House is not going to be very intolerant of the Financial Secretary because—and I say this in no offensive sense at all.—

    1033
    he is entirely the wrong Minister to have made that speech. If this proposal of the Government has any serious impact upon agriculture and food production, the Minister to come here to tell us so is the Minister of Agriculture who is conspicuously absent. He ought to have come to us, and explained that this new Clause, which seeks to deal entirely with a practical problem, was misconceived.
    7.30 p.m.
    Both the Minister of Agriculture and his Parliamentary Secretary are absent from this Debate. We can draw only one conclusion from that. They know perfectly well that the Special Contribution will have a harmful effect on agriculture and upon the production of food supplies at this time. The Minister of Agriculture knows that in his Act of last year certain assurances were given. Agriculture was to be stabilised. There were to be assured markets, stable prices, and all the rest of it. He knows perfectly well that this proposal of the Chancellor of the Exchequer in the Finance Bill is the first damaging blow which has been struck at agriculture. He knows perfectly well that many of these landowners, as a result of this, will be unable to carry out proper repairs and maintenance, and, by being unable to do so, may be declared by officials to be inefficient, and dispossessed. This is a most important point and the Financial Secretary did not refer to that aspect of the matter. I am sure that the Minister of Agriculture, if he were here, would agree. The Financial Secretary said that this would only catch the large landowner. Is not that rather soap-box language on a serious matter of this kind? Does it really matter whether the landowner is large or small, if agricultural production is affected, which is what we on these benches believe will happen?
    Surely, it is important for the Governrnent to have another look at this matter. If the Financial Secretary or the Chancellor will not listen to us, perhaps they will listen to the hon. Member for Accrington (Mr. Scott-Elliot) who made such an eloquent plea just now, and who certainly would be the last hon. Member to do so on any grounds of sympathy for the landowners, or anything of that sort. He said that there must be capital if agriculture is to be developed, and that this proposal was striking a blow at it. He has no sympathy for one class or another. He
    1034
    deals with this matter on practical lines, and so do we. We feel that a case has been made out for the re-examination of this problem in its amended form. On this new Clause we do not take up the same position as on the Committee stage. We have to shift our ground, as one often does in the House of Commons. Here is a modified proposal that certain works and repairs on farms shall be exempt from Special Contribution by certificates from the county agricultural executive committees—the very people who are trying to get more food production.
    Sir S. Cripps: I think that the arguments on which hon. Members opposite have proceeded are on a false basis. There is no question of taxing the agricultural industry as an industry. That, as we all admit, is excluded [An HON. MEMBER: Is it?"] Agriculture as an industry is excluded from taxation under this Bill. The taxation which is being dealt with here is the taxation on the capital investment in land, which may be agricultural land in one case, urban land in another case, forest land in a third case, and so on—but it is land. The suggestion which is made is not that some tax should be removed from the agricultural industry, but that certain individuals who happen to have an income derived from land which is used for agriculture should themselves be relieved of the tax. There is no conceivable justification for that as between different individuals.
    Even if one were contemplating such a thing, this would be a very unfortunate way of doing it. A person getting £250 a year out of rents would get nothing; a person whose income was £500 a year out of rents, would get £25 put in a reserve account, which seems hardly worth while; the person getting £1,000 a year out of rents would get £125 a year put in a reserve account. Only the people getting very large sums indeed from rents—and there are very few cases in this country—would in fact get any benefit at all from that income. No one could face up to such proposition, however desirable it may be thought to be in the case of these large landowners—and no one is blaming them for being large, because it is a question of how their money is invested—because clearly such a provision would deprive the small person who is, perhaps, even harder up, of the same sort of advantage.
    Mr. Baldwin: Can the right hon. Gentleman say, if these sums are so individual or small, what the total amount is that he is taking out of the industry?
    Sir S. Cripps: I cannot. It is quite impossible because it is not isolated from other investments. All investments are taken together, and, therefore, we cannot say under the suggestion made here that it is isolated and given a certain tax value. If it is mixed up with other investments, it is quite impossible to say what the taxation which would fall to this would be. Hon. Members have asked whether there are any other industries that bear a similar tax. The answer is that this tax is not on industry in any way. It is not on industry in the case of agriculture. It is on investment. Every business carries some tax on the investment in the business. If the argument is that this deprives agriculture of the opportunity of investing fresh moneys by virtue of savings in investment in land, that is exactly the same as regards the shareholders of any other business in the country. There is absolutely no distinction whatever so far as that is concerned.
    Mr. Vane: Can the right hon. Gentleman say what other industry there is where what he calls investment, is subject to a Minister giving directions that certain additional money can be spent on certain works, similar to the powers which the Minister of Agriculture has taken under the recent Act?
    Sir S. Cripps: The Fishery Board is a case, obviously. The Cotton Board, the steel industry, and a number of them are subject to controls and directions where all sorts of provisions can be made as regards prices. Price, after all, is a very important form of control, and the prices of a great many articles in this country today can be regulated and are, in fact, being regulated. That is a very important factor in control and an important factor in agricultural control as well. Therefore, there is no possible difference between this and other industries, and it would be quite inequitable to pick out this particular form of investment and give it preference, especially if we are picking out substantially those people who have very large investments in that form of property and not many other people who have smaller investments in that form of property. For those reasons, I find it
    1036
    quite impossible to accept the proposed new Clause.
    Captain Crookshank: I do not know what hon. Members will think of the rather plausible argument which the right hon. and learned Gentleman has put up in the absence of his colleague, the Minister of Agriculture, but it seems to me, and I think we all agree, that the tax as devised is not a tax on industry. We all recognise that. It is a tax on investment, but we are talking about agricultural land and investment in agricultural land, and, in spite of the final remark of the right hon. Gentleman there are liens that exist through legislation upon the use of the income for developing agricultural land: we are talking about something rather different from the case of other industries and other forms of investment.
    As my hon. Friends have pointed out, and as the hon. Member for Accrington (Mr. Scott-Elliot) has pointed out, if we take the story right through as we have seen it in this Parliament, we have had the need for more food and the Minister bringing in the Agriculture Act in order to ensure the production of more food. Under that Act good husbandry and good estate management come under controls which they have never had before, with the consequent necessity for those who have investments in land to use as much money as they can for developing their properties. Then this Special Contribution comes along and it must retard that process. It is there, really, that my hon. Friends and I join issue with the Minister of Agriculture, but he is not here to speak for himself. I am sure that he is on our side and that the Secretary of State for Scotland is on our side, but they are not here. I cannot put words into their mouths, but I am sure they would agree with my hon. Friend that this is a bad proposal. I think the right hon. and learned Gentleman thinks it too, because the arguments which he has put forward, which were anticipated by his right hon. Friend, never really said that this proposal was in itself inherently bad.
    The Chancellor and the Financial Secretary rode off on three separate propositions. The first argument, of course, was the old one of giving a dog a bad name; calling it a preferential subsidy for agriculture which no one else would get; saying that if something of this kind were conceded in the case of agricultural invest-

    1037
    ment income it would be very unfair as between agriculture and other industries and as between one kind of owner of agricultural land and another; that the incidence would be unequal. I am afraid that is a criticism which can be made about the whole of this proposal; it is extremely unequal, and in many cases, as it will be worked out, will be found to be extremely unfair as between one individual and another, as between one beneficiary under a trust and another, and so on. I do not intend to re-open the whole thing; but anyone who has any hopes that it will be equal all round will have those hopes very much falsified.
    There was the first argument, that it was a subsidy; a nasty, horrid thing. The second argument was that it would accentuate the inequality of incidence. Well, I do not think that it can be accentuated, because it already exists. The third argument was that if this were done for agriculture, other industries would at once put in a claim. The fact of the matter is, they have not; there is no other proposed new Clause dealing with any other industry; no other industry has suggested it would be damnified in the same way as the agricultural industry has suggested it will be damnified by this proposal.
    I take it that, now that the right hon. and learned Gentleman has spoken, under our procedure on the Report stage of this Bill, there is no other occasion upon which this can be discussed. It certainly cannot be introduced in another place. This is the last opportunity that the right hon. and learned Gentleman has of doing what we consider the right thing, of helping and not retarding—and this is so important—the improvements which are required today on many agricultural estates, and which the Agriculture Act itself was designed to bring about. The Financial Secretary gave a list of some things. I think the reason he produced that list was to try to make out that this would allow not every kind of capital development to be approved by the agricultural executive committees, which is the proposal in this new Clause, but only certain things—farmhouses, and this, that and the other.
    Well, if it is not the whole field which can be approved because of the reference to Section 33 of the Income Tax Act, 1945, it is certainly a sufficiently important
    1038
    field; and for the Chancellor to say that if our new Clause were accepted some people, only a few people, would get a large benefit, but in the majority of cases it would be only small sums which would be put into the suspense account for this purpose—£25, £50, £100, £150, and so on—all I can say is that in these days every little helps. When one remembers the terrible exactions which the Chancellor will raise in the Finance Bill as a whole, any small assistance—and he admits there would be a lot of small assistance, even if there were some large assistance also under this new Clause—would certainly be welcomed.
    It seems to me that the Chancellor has hardened his heart and is not going to help any way in this matter. I am surprised that he has not listened to the very cogent arguments which my hon. Friends and his hon. Friend the Member for Accrington put in support of this Clause. Of course, the drafting may not be absolutely correct; but the Chancellor did not take that point; he realised what we were trying to get at, and he said that what we were trying to get at was a bad thing. Well, we think his decision is a bad thing for the agricultural industry. I see that the Home Secretary has just arrived; an agricultural Minister has turned up at last, for he sometimes talks for agriculture—in Northern Ireland, at least. I do not know whether he endorses my views or not; I suspect he knows nothing about it.
    We obviously have no chance of taking the matter further; but this is one very big argument which we shall constantly employ: however much the Minister of Agriculture and the Government go round telling the agricultural world that they have been its saviours, here is one occasion on which the Chancellor could have done a great deal to remove from the agricultural industry the disadvantages which will come from this year's Finance Bill, but he has refused to take the opportunity.
    7.45 p.m.
    Major Legge-Bourke: I had not intended intervening in this Debate, but I must say a few words on what the Chancellor said regarding the effect that this levy would have on investment and not on industry. He said it would affect all industries equally because it was a levy on investment. I would point out

    1039
    that there is a great difference between agricultural investment and investment in land concerning other industries. I am really amazed that the Chancellor should have adduced the arguments he did adduce, because I know that occasionally he visits rural areas. I should have thought he realised that there is, or should be, a partnership between the landowner and the tenant where agriculture is concerned, and that there is no industry in greater need of capital re-equipment than the agricultural industry.
    If, as the Financial Secretary said, the really large landowners will be most affected, it is equally true to say that there are no estates which require capital re-equipment more than the big estates, for
    the simple reason that those estates suffered from Death Duties to a far greater extent than every other type of estate. I should have thought that if the Chancellor were really at one with the Minister of Agriculture when the Agriculture Act was passed he should be prepared to accept this new Clause. I can only suppose that it is all part of what I suspected this levy was orginally—a political plan—in other words, that the Chancellor is being led by the nose by the Minister of Health and is determined, that at no price shall houses be built in rural areas by private enterprise.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 86; Noes, 234.

    Division No. 232.]

    AYES.

    [7.49 p.m.

    Agnew, Cmdr. P. G.

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

    Ponsonby, Col. C. E.

    Baldwin, A. E.

    Hinchingbrooke, Viscount

    Poole, O. B. S. (Oswestry)

    Bennett, Sir P.

    Hollis, M. C.

    Price-White, Lt.-Col. D.

    Boles, Lt.-Col. D. C. (Wells)

    Holmes, Sir J. Stanley (Harwich)

    Prior-Palmer, Brig. O.

    Bowen, R.

    Howard, Hon. A.

    Rayner, Brig. R.

    Bower, N.

    Hulbert, Wing-Cdr. N. J.

    Robertson, Sir D. (Streatham)

    Boyd-Carpenter, J. A.

    Jeffreys, General Sir G.

    Robinson, Roland

    Braithwaite, Lt.-Comdr. J. G.

    Kendall, W. D.

    Ropner, Col. L.

    Byers, Frank

    Lambert, Hon. G.

    Ross, Sir R. D. (Londonderry)

    Challen, C.

    Langford-Holt, J.

    Savory, Prof. D. L.

    Clarke, Col. R. S.

    Legge-Bourke, Maj. E. A H.

    Shepherd, W. S. (Bucklow)

    Conant, Maj. R. J. E.

    Lloyd, Selwyn (Wirral)

    Smith, E. P. (Ashford)

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

    Lucas-Tooth, Sir H.

    Spearman, A. C. M.

    Darling, Sir W. Y.

    McCorquodale, Rt. Hon. M. S.

    Stanley, Rt. Hon. O.

    De la Bère, R.

    Macdonald, Sir P. (I. of Wight)

    Sutcliffe, H.

    Digby, S. W.

    Mackeson, Brig. H. R.

    Thomas, J. P. L. (Hereford)

    Dodds-Parker, A. D.

    McKie, J. H. (Galloway)

    Thornton-Kemsley, C. N.

    Drayson, G. B.

    Maclay, Hon. J. S.

    Turton, R. H.

    Drewe, C.

    Macpherson, N. (Dumfries)

    Vane, W. M. F.

    Duncan, Rt. Hn. Sir A. (City of Lond)

    Maitland, Comdr. J. W.

    Walker-Smith, D.

    Duthie, W. S.

    Marshall, D. (Bodmin)

    Ward, Hon. G. R.

    Eccles, D. M.

    Medlicott, Brigadier F.

    Watt, Sir G. S. Harvie

    Elliot, Lieut.-Col. Rt. Hon Walter

    Mellor, Sir J.

    Webbe, Sir H. (Abbey)

    Foster, J. G. (Northwich)

    Matson, A. H. E.

    Wheatley, Colonel M. J. (Dorset, E.)

    Fraser H. C. P. (Stone)

    Morris, Hopkin (Carmarthen)

    White, J. B. (Canterbury)

    Fraser, Sir I. (Lonsdale)

    Noble, Comdr. A. H. P.

    Williams, C. (Torquay)

    Gammans, L. D.

    O'Neill, Rt. Hon. Sir H.

    Glyn, Sir R.

    Orr-Ewing, I. L.

    TELLERS FOR THE AYES:

    Grimston, R. V.

    Peto, Brig C. H. M.

    Mr. Studholme and

    Hannon, Sir P. (Moseley)

    Pitman, I. J.

    Major Ramsay

    NOES.

    Adams, Richard (Balham)

    Bowles, F. G. (Nuneaton)

    Colman, Miss G. M.

    Adams, W. T. (Hammersmith South)

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

    Cooper, Wing-Comdr. G.

    Alexander, Rt. Hon. A. V.

    Bramall, E. A.

    Corbet, Mrs. F. K. (Camb'well, N.W.)

    Allen, A. C. (Bosworth)

    Brooks, T. J. (Rothwell)

    Cove, W. G.

    Alpass, J. H.

    Brown, George (Belper)

    Cripps, Rt. Hon. Sir S.

    Attewell, H. C.

    Brown, T. J. (Ince)

    Daggar, G.

    Austin, H. Lewis

    Bruce, Maj. D. W. T.

    Daines, P.

    Arles, W. H.

    Buchanan, Rt. Hon. G.

    Davies, Harold (Leek)

    Ayrton Gould, Mrs B.

    Burden, T. W.

    Davies, R. J. (Westhoughton)

    Balfour, A.

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

    Deer, G.

    Barstow, P. G.

    Callaghan, James

    de Freitas Geoffrey

    Barton, C.

    Castle, Mrs. B. A.

    Delargy, H. J.

    Battley, J. R.

    Champion, A. J.

    Diamond, J.

    Bechervaise, A. E.

    Chater, D.

    Dobbie, W.

    Benson, G.

    Chetwynd, G. R.

    Dodds, N. N.

    Berry, H.

    Cluse, W. S.

    Donovan, T.

    Berwick, F.

    Cobb, F. A.

    Driberg, T. E. N.

    Blackburn, A. R.

    Cocks, F. S.

    Dumpleton, C. W.

    Blenkinsop, A.

    Coldrick, W.

    Ede, Rt. Hon. J. C.

    Blyton, W. R.

    Collins, V. J.

    Edelman, M.

    Edwards, N. (Caerphilly)

    Longden, F.

    Shawcross, Rt. Fin Sir H. (St Helens)

    Edwards, W. J. (Whitechapel)

    Lyme, A. W.

    Shurmer, P.

    Evans, Albert (Islington, W.)

    McEntee, V. La T.

    Silverman, J. (Erdington)

    Evans, E. (Lowestoft)

    McGhee, H. G.

    Simmons, C. J.

    Evans, S. N. (Wednesbury)

    McGovern, J.

    Skeffington, A. M.

    Ewart, R.

    Mack, J. D.

    Skeffington-Lodge, T. C.

    Fairhurst, F.

    McKay, J. (Wallsend)

    Skinnard, F. W.

    Fletcher, E. G. M. (Islington, E.)

    McLeavy, F.

    Smith, C. (Colchester)

    Follick, M.

    Macpherson, T. (Romford)

    Snow, J. W.

    Foot, M. M.

    Mallalieu, E. L. (Brigg)

    Sorensen, R. W.

    Fuser, T. (Hamilton)

    Mallalieu, J. P. W. (Huddersfield)

    Soskice, Rt. Hon. Sir Frank

    Ganley, Mrs. C. S.

    Mann, Mrs. J.

    Sparks, J. A.

    Gibbing, J.

    Manning, Mrs. L. (Epping)

    Steele, T.

    Gibson, C. W.

    Marquand, H. A.

    Stross, Dr. B.

    Glanville, J. E. (Consent)

    Mathers, Rt. Hon. George

    Stubbs, A. E.

    Grenfell, D. R.

    Mellish, R. J.

    Sylvester, G. O.

    Grey, C. F.

    Messer, F.

    Symonds, A. L.

    Griffiths, W. D. (Moss Side)

    Middleton, Mrs. L.

    Taylor, R. J. (Morpeth)

    Guest, Dr, L. Haden

    Mikardo, Ian

    Taylor, Dr. S. (Barnet)

    Gunter, R. J.

    Mitchison, G. R.

    Thomas, D. E. (Aberdare)

    Guy, W. H.

    Monslow, W.

    Thomas, George (Cardiff)

    Hale, Leslie

    Moody, A. S.

    Thomas, I. O. (Wrekin)

    Hall, Rt. Hon. Glenvil

    Morgan, Dr. H. B.

    Thurtle, Ernest

    Hamilton, Lieut.-Col. R.

    Morley, R.

    Tolley, L.

    Hannan, W. (Maryhill)

    Moyle, A.

    Turner-Samuels, M.

    Hardy, E. A.

    Murray, J. D.

    Ungoed-Thomas, L.

    Harrison, J.

    Neal, H. (Clay Cross)

    Viant, S. P.

    Henderson, Joseph (Ardwick)

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

    Walkden, E.

    Herbison, Miss M.

    Noel-Buxton, Lady

    Walker, G. H.

    Hicks, G.

    O'Brien, T.

    Wallace, G. D. (Chislehurst)

    Holman, P.

    Oldfield, W. H.

    Warbey, W. N.

    Holmes, H. E. (Hemsworth)

    Palmer, A. M. F.

    Watkins, T. E.

    Horabin, T. L.

    Pargiter, G. A.

    Weitzman, D.

    House, G.

    Parkin, B. T.

    Wells, P. L. (Faversham)

    Hoy, J.

    Paton, Mrs. F. (Rushcliffe)

    Wells, W. T. (Walsall)

    Hughes, Emrys (S. Ayr)

    Pearson, A.

    West, D. G.

    Hughes, Hector (Aberdeen, N.)

    Peart, T. F.

    Wheatley, Rt. Hn. John (Edinb'gh, E.)

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

    Platts-Mills, J. F. F.

    White, C. F. (Derbyshire, W.)

    Hynd, H. (Hackney, C.)

    Porter, E. (Warrington)

    Whiteley, Rt. Hon. W.

    Hynd, J. B. (Attercliffe)

    Porter, G. (Leeds)

    Wilkins, W. A.

    Irvine, A. J. (Liverpool)

    Pries, M. Philips

    Willey, F. T. (Sunderland)

    Jay, D. P. T.

    Proctor, W. T.

    Williams, J. L. (Kelvingrove)

    Jeger, C. (Winchester)

    Pursey, Comdr. H.

    Williams, R. W. (Wigan)

    Jones, D. T. (Hartlepool)

    Randall, H. E.

    Williams, Rt. Hon. T. (Don Valley)

    Jones, Elwyn (Plaistow)

    Ranger, J.

    Williams, W. R. (Heston)

    Jones, J. H. (Bolton)

    Rees-Williams, D. R.

    Willis, E.

    Wills, Mrs. E. A.

    Jones, P. Asterley (Hitchin)

    Reeves, J.

    Wilmot, Rt. Hon. J.

    Keenan, W.

    Reid, T. (Swindon)

    Woodburn, Rt. Hon. A.

    Key, Rt. Hon. C. W.

    Rhodes, H.

    Woods, G. S.

    Kinley, J.

    Ridealgh, Mrs. M.

    Wyatt, W.

    Kirby, B. V.

    Robens, A.

    Yates, V. F.

    Lang, G.

    Roberts, Emrys (Merioneth)

    Young, Sir R. (Newton)

    Lawson, Rt. Hon. J. J.

    Roberts, Goronwy (Caernarvonshire)

    Younger, Hon. Kenneth

    Lee, F. (Hulme)

    Rogers, G. H. R.

    Zilliacus, K.

    Leslie, J. R.

    Ross, William (Kilmarnock)

    Lewis, J. (Bolton)

    Royle, C.

    TELLERS FOR THE NOES:

    Lindgren, G. S.

    Segal, Dr. S.

    Mr. Collindridge and

    Lipson, D. L.

    Shackleton, E. A. A.

    Mr. Popplewell.

    Lipton, Lt.-Col. M.

    Sharp, Granville

    Mr. E. P. Smith: On a point of Order. When Mr. Speaker put the Question, the hon. Member for South Ayrshire (Mr. Emrys Hughes) shouted "Aye" in an unmistakable voice, which was also heard by by hon. Friend the Member for South Edinburgh (Sir W. Darling), but in spite of that protest he wandered into the Lobby against the Clause. May I ask, therefore, that his Vote be not recorded?
    Sir William Darling: I confirm what my hon. Friend the Member for Ashford (Mr. E. P. Smith) has said. I was astonished, because I know that the hon. Member for South Ayrshire
    1042
    is not usually a "yesman," not to hear him say "No."
    Mr. Deputy-Speaker (Mr. Hubert Beaumont): That is not a point of Order. It would be a point of Order had the hon. Member for Ashford raised it before the Vote was recorded, but the Vote having been recorded, nothing can be done.
    Mr. E. P. Smith: Is it your Ruling, Mr. Deputy-Speaker, that the moment a figure is seen disappearing into the opposite Lobby the point of Order should be raised?
    Mr. Deputy-Speaker: There is an opportunity before the Vote is declared for the protest to be made. That opportunity was not seized, and therefore whatever the hon. Member did cannot now be rectified.

    NEW CLAUSE.—(Exemption of certain income from Profits Tax.)
    Paragraph 7 of the Fourth Schedule to the Finance Act, 1937, as amended by section thirty-two of the Finance Act, 1947, shall have effect as if there were added to the exceptions set out in sub-paragraph (1) thereof the following further exception—
    "(d) income received by way of rents the recoverable amount of which is restricted by the Rent and Mortgage Interest Restrictions Acts, 1920 and 1939."—[Sir J. Mellor.]
    Brought up, and read the First time.
    8.0 p.m.
    Sir J. Mellor: I beg to move, "That the Clause be read a Second time."
    I acknowledge that I have some private interest in this matter. The purpose of this Clause is to exclude from the scope of the Profits Tax income from rents which are restricted under the rent Acts. In my submission, the incidence of the Profits Tax is unfair upon the very small profits it is possible for people to make from restricted rents, and the imposition of it is inconsistent with the frequent declarations which have been made on behalf of the Government with regard to the purposes of the Profits Tax. It is instructive to look for a moment at one or two of these declarations. The former Chancellor of the Exchequer on 15th April 1947, in making his Budget statement, dealt with his proposal to increase from 5 per cent. to 12½ per cent. the Profits Tax on distributed profits, and said:
    "The case for this increase of tax is threefold. In the first place, I must collect, as I indicated last year, some additional Revenue to replace, at least in part, the loss of Excess Profits Tax."
    I am sure it will be generally agreed that at no time did profits from restricted rents ever come within the scope of the Excess Profits Tax. The right hon. Gentleman proceeded:
    "The second argument I have already given. Distributed profits have been too high and too inflationary."
    I am sure it will be recognised that profits from restricted rents have never been sufficient to be inflationary in any sense
    1044
    whatever. Then the right hon. Gentleman said:
    "In the third place, this increase of Profits Tax does rough justice within the broad field of investment income"—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 84.]
    When anyone talks about doing rough justice he is really apologising for doing a great many injustices. The former Chancellor, later, in his second Budget proposals, said, on 12th November, 1947:
    "… profits as a whole are still running at a very high level. I therefore propose to double the Profits Tax.…"—[OFFICIAL REPORT, 12th November, 1947; Vol. 444, c. 401]
    which he did. Again, the whole emphasis was that Profits Tax was to be imposed on profits because they were running at a high level. The present Chancellor, a fortnight later, speaking on the Second Reading of the Finance Bill, on 25th November last, said:
    "So far as the non-inflationary effect of charging a double tax upon the undistributed profits is concerned, there seem to have been several different views expressed. But one thing is certain, that at least an extra 7½ per cent. of those profits will not be able to be spent on any capital improvement, because that will be taken away by taxation. …"—[OFFICIAL REPORT, 25th November, 1947; Vol.444, c. 1914.]
    Surely, the Government do not wish to stop money being spent on the capital improvement of property of the type with which we are concerned in this Clause for any financial reasons. It is true that they restrict and control such capital improvements but they say they do it because of the shortage of labour and materials. If they were available the Government should be the first to welcome money being spent on capital improvement, so that the homes of our people might be brought back into a more habitable and happy condition.
    The Ridley Committee's Report, with the support of two of its members, the present Ministers of Pensions and Works, made it clear that a revision of legislation affecting rent restriction was urgent. We are still awaiting that revision. The Government have said many times that they cannot give time for it, but it seems rather intolerable that, while we are awaiting that legislation, the owners of properties who are suffering from these restrictions should be hit again by the Profits Tax. I know the Solicitor-General will not find it difficult to point to many

    1045
    other kinds of restricted income from one source or another which are also subject to Profits Tax, but it is a very poor argument to say that a wrong cannot be righted because many other wrongs will remain unrighted. We are faced with a mass of anomalies, but here is a wrong which can easily be righted. It is quite inappropriate that Profits Tax, in present conditions and at present rates, should be applied to income from restricted rents.
    Mr. Gammans: I beg to second the Motion.
    Like my hon. Friend the Member for Sutton Goldfield (Sir J. Mellor), I wish to declare a small personal interest in this matter. It is not easy to defend the Profits Tax when the Government realise the necessity for encouraging enterprise in industry and attracting new capital to it, but I suggest that in the case of property it is easy to make out a special case for exemption from Profits Tax altogether. I but I suggest that in the case of property, should be completely exempt. I hope no one will pretend that it has been possible for a property owner or property company to make inflated profits. That removes one of the justifications which the Chancellor put forward for the tax. There are two very clear reasons why a property company could not make very inflated profits. In London and other bombed cities a vast amount of property was destroyed during the war, and income from it lost. For a year after Munich and at the beginning of the war there was difficulty in letting a lot of property in London, except at reduced rents. Also, there has been no additional property income.
    On the other hand, there has been a great addition to expenses. Everything connected with property has increased—such as repairs, coal and wages. I therefore suggest that it is reasonable to regard income from property as being in a very special category, and it is on that that I base this claim. There would be no administrative difficulty whatever, and for the reasons which my hon. Friend and I have advanced I sincerely hope that the Government will be able to accept this very reasonable new Clause.
    The Solicitor-General: I feel that the arguments that have been advanced are based upon a misconception. We are
    1046
    discussing whether a particular category of investment income should be excluded from the scope of Profits Tax, which, as the House knows, is the successor of the National Defence Contribution. In the case of the National Defence Contribution the position was, generally speaking, that investment income was not liable to tax. Certain types were liable, but, broadly speaking, investment income was not within the scope of that contribution at all.
    The history of the matter is that the Finance Act, 1947, which reconstituted the National Defence Contribution into the Profits Tax, altered the tax in a material respect and brought within the scope all investment income, broadly speaking. The only investment income excluded was franked income, that is to say, investment income which has already borne tax. The new tax, as it took shape under the 1947 Act as the Profits Tax, was one not only upon trade receipts, but one which was intended to include investment income.
    The proposal before the House is that we should select one particular category of investment income and, as I understand it, select it solely because it is subject to a limitation, and exclude it from the scope of the tax. It seemed to me that the hon. Member for Sutton Cold-field (Sir J. Mellor), who moved the Second Reading of the Clause, really gave the answer to his own argument. What possible justification is there for selecting that form of limited investment return and not equally excluding all the other categories that there are? Take the case of a company which, instead of investing its reserves in property which produces a rent subject to the Rent Restriction Acts, invests it in gilt-edged securities or in any fixed-income bearing securities. That company would have just as good a claim for saying that its fixed income arising from this fixed-return security should equally be excluded from the scope of the tax. The only way in which, as I conceive it, that argument could be put forward is to say that from the scope of investment income which is within the Profits Tax all income which is fixed in amount should be excluded.
    Mr. Gammans: Is there not all the difference in the world between income from a reserve fund and the total income

    1047
    of a company? The right hon. and learned Gentleman referred only to the interest on a reserve fund, but in this case the total income of the company is affected and is restricted.
    The Solicitor-General: The proposal is simply to exclude income when it forms investment income. It would add income arising from property subject to the Rent Restriction Acts to the exclusions which appear in paragraph 7 of the Fourth Schedule to the 1937 Act. The proposal is simply to differentiate in the case of a particular sort of investment income. Suppose that were done. Generally speaking, I think it would be correct to say that a company invests its reserves in one sort or another of fixed-income securities, for example, gilt-edged. If this proposal were accepted every company which has adopted what is after all a prudent and conservative course in selecting that kind of investment for its reserves could equally say that its reserves should be excluded, and it would have a grievance if some sort of preference were given to property subject to the Rent Restrictions Acts.
    Sir J. Mellor: Section 32 of the Finance Act, 1947, to which the right hon. and learned Gentleman is referring, provides that income received from investments,
    "or other property,"
    shall be included in the Profits Tax except—and then there are three paragraphs of exceptions. I was proposing to add another exception, referring only to income from the other property
    8.15 p.m.
    The Solicitor-General: Section 32 brings in income from investments and other property as distinct from income of a trading character and from trade receipts. It adds income from, as it were, static investments and static property to trading receipts and income already within the scope of the National Defence Contribution. What the hon. Gentleman desires is to exclude from that new category an income simply of a particular type, namely, rent which is subject to the Rent Restrictions Acts.
    I do not really think I can add any further argument to that which the hon. Gentleman himself envisaged, that there is no case for distinguishing between this
    1048
    kind of income and all the other types of investment income which are selected by prudent companies in deciding what they will do with their reserves. They would have a very great grievance I should think if one selected this particular sort of income. The only case made for the proposal is that the income is subjected to a limit, but so are any gilt-edged security, various sorts of mortgages, and many of the more certain and conservative forms of investment. The more conservative it is, in the sense that it is gilt-edged, the more one finds that the return is subject to an upper limit.
    I feel that no case can be made out for accepting the proposed new Clause. It would mean that, one would have radically to recast the Profits Tax, and to accept the principle that because there was an upper limit to an investment it should be outside the scope of the Profits Tax.
    Question, "That the Clause be read a Second time," put, and negatived.

    NEW CLAUSE.—(Development Charges.)
    Subsection (1) of section fourteen of the Income Tax Act, 1945, shall be amended by the insertion after paragraph (b) thereof of the following proviso—
    Provided that there shall not be included in expenditure referred to in paragraph (a) of this subsection any capital sum payable to the Central Land Board by way of development charge under section sixty-nine of the Town and Country Planning Act, 1947, in respect of the permission to undertake such construction.—[Sir P. Bennett.]
    Brought up, and read the First time.
    Sir P. Bennett: I beg to move, "That the Clause be read a Second time."
    The point which arises relates to the Town and Country Planning Act. Industry generally is very concerned about that Act on one or two points. One is the question of the development charge and the taxation arising from it. Many manufacturing processes require specialised buildings. Alterations to processes carried out in many manufacturing industries call for alterations to buildings. One cannot handle certain manufacturing processes without making very considerable alterations in the structure of buildings, possibly pulling down and re-building. It is necessary to remain up to date. It is no use suggesting that this is done for any other reason than sheer necessity. We are all

    1049
    urged to keep our manufacturing processes up-to-date in order to compete with the foreigner. I believe that certain parts of the country depend upon large home markets and have to be constantly altering and developing their processes. It will be agreed that constant changes are necessary if we are to keep up-to-date and to keep our costs down.
    Under the present law, new buildings, with very slight exceptions, carry the possibility of an additional development charge. It is clear that development charge has to be paid on a building which has not an unlimited life. Further there is the possibility of development charge being levied even without any new building. If an existing building is put to a new purpose, a new development charge can be levied upon it. We have seen businesses develop. We have seen residences turned into factories. We have seen factories extended from warehouses and offices altered and turned into factories. All that is subject to a development charge theoretically. If a light industry changes to a heavy industry, the Act says it is a different class of industry and there is a liability to a charge.
    Section 14 of the Income Tax Act, 1945, regards industrial sites as having permanent value. That is, they are not appropriate subjects for depreciation allowances. That may be true of a site used for its present purpose and its present purpose only, but it is certainly not true of the cases which I have been outlining where the development charges for a particular permission to use those buildings for a specific purpose are on the site. In Committee the answer was made that development charges are attached to sites and not to buildings, I have been trying to show that in this respect that is not the case and that the development charge attaches to the building and not the site and is altered and increased when the building is modified. I am aware that at the present time few assessments are likely to take place, but this is a matter which should receive the attention of the Solicitor-General and the Chancellor of the Exchequer because we feel that it can be dealt with now before anomalies develop and before trouble and difficulty arise.
    Mr. Pitman: I beg to second the Motion.
    The Solicitor-General: As the hon. Gentleman the Member for Edgbaston (Sir P. Bennett) knows, prima facie the development charge is part of the cost of the land. May I put the answer which I would make to his argument in this way? The Income Tax Act, 1945, as was stated when it was introduced by the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson), had the object of assisting toward the cost of various types of industrial building and various other kinds of industrial expenditure. It was to provide for allowances against the cost of the buildings, when one is talking about buildings, and it was not—and it was expressly so provided in the Act—designed to assist towards the purchase of the land. The question really is: In its nature, is the development charge part of the cost of the land or part of the cost of the buildings? If it is part of the cost of the land, unless one throws overboard the policy on which the Income Tax Act, 1945, was based, this new Clause cannot be accepted. I submit there can be no question, when one looks at the nature of the development charge, that it is only part of the cost of acquiring the land.
    What happens is this. The person who desires to acquire the land, now that the 1947 Town and Country Planning Act has been passed, really pays to the previous owner of the land the value of the land in its existing use condition; that is to say, the value that the land bears when it can only be used for the existing purpose for which it is used. He has to pay to the Central Land Board a development charge which is the charge attributable to the increase in the value of the land—the increase in the value of the land and nothing else—by reason of the fact that the permission for the new development has been granted. Supposing there had not been the 1947 Act, the person who bought the land would have paid to the previous owner a sum precisely equivalent to the present price which he pays to the owner and the development charge. Instead of paying separately to the owner and the Land Board for the land, he would have paid it all to the previous owner. Under the new Act he pays that proportion of the price which is attributable to the increased value of the land in connection with the

    1051
    building permission being granted, to the Land Board, and he pays to the owner himself the value of the land for its existing use purposes. Viewed in that light, surely it cannot be said that the development charge is anything else than part of the price of the land?
    If I am right so far in my argument, my next step is to submit to the House that unless one discards the policy on which the 1945 Income Tax Act was based it would be quite impossible to accept the Clause. Why should it in present-day circumstances be discarded for that purpose and not for other purposes? It is not argued that the principles upon which the 1945 Act was based are in general outmoded and that they have no sort of very useful purpose and should be reconsidered in toto. It is still conceded, if I understand the hon. Gentleman's argument, that the 1945 Act provides the proper relief, but in this one respect it is sought to alter it and it is sought to provide that the industrialist shall have part of the price of the land which he gets available for purposes of the allowances under the Act, whereas before he could not have done so. No case has been made out for that. The charge varies according to the increase in the value of the land and that is provided for by Section 70 of the 1947 Act. In assessing it, the Land Board has to have regard to the increase in the value of the lands, the emphasis always being on the land.
    If I am right in these steps in my argument, I hope the hon. Gentleman will agree with me that there is no case for the Clause. He is seeking to have for an industrialist what an industrialist did not have before the 1947 Act was passed. Before that Act was passed, he would not have got allowances for the proportion of the price which he paid for the land which is now represented by the development charge, and there has been no change which would justify a claim being put forward now for him to have that proportion of the price of the land written off in terms of the 1945 Act.
    Mr. Stanley: This is, of course, a very complicated subject. As I take it, a great deal turns on whether we are to regard this development charge as inevitably and always part of the cost of the land, or in certain circumstances, which have been detailed by my hon. Friend the
    1052
    Member for Edgbaston (Sir P. Bennett), as really part of the cost of the buildings which as such could be written off as the buildings are written off. To prove his contention, the right hon. and learned Gentleman took one case, that of somebody buying land in order to erect industrial buildings on it. Is it not perfectly possible for an industrial company which already owns the land to incur a development charge without buying one foot more land than it had before? If that is so, and I believe it to be the case, how can we say in that case that the development charge attaches to the land? It does not. There has been no change whatsoever in the amount of land which the industrial company owns. What has happened is that the industrial company has put up a new building on the land, and therefore the development charge in that case quite clearly attaches to the building.
    8.30 p.m.
    However, that development charge is, in a way, as subject to decay as is the building which it covers, because as soon as the building requires either alteration or rebuilding, new application has to be made and a development charge may have to be paid. Therefore it is only right that the industrialist should be able to depreciate the development charge as he depreciates the building which it covers, so that when the necessity for a new building arises and, therefore, the possibility of a new development charge, he will be allowed to write off both of them. I think it is the case that it is possible to have a development case arising without the purchase of a single foot of extra land. In that case I submit that the development charge attaches not to the site but to the building, that the development charge is not permanent in character—that is to say, it does not frank for ever any building of whatsoever character is upon that site, but merely franks that particular building which in course of time will decay—and that, therefore, what is asked for in this Amendment is reasonable. It is no good going back to the provisions of the 1945 Finance Act which was passed before, and in ignorance of, the rather foolish provisions of the Town and Country Planning Act.
    Mr. Henry Strauss: I hope that the Solicitor-General will give some reply to the speech

    1053
    just made by my right hon. Friend the Member for West Bristol (Mr. Stanley). The right hon. and learned Gentleman gave one example when he talked of the purchase of land, meaning a site, but he knows perfectly well that the development charge is made either when land is developed or where there is a change of use of the land within the meaning of the appropriate Section of the Town and Country Planning Act. Land for this purpose, in accordance with the general rule of English law, includes the buildings upon it. I think unwittingly the right hon. and learned Gentleman has given a slightly false impression, when he contrasts the site with the building. Land includes both under the provisions of the Act, and the development charge can be incurred not merely where a man owns land and buildings and builds something more, but also when he simply devotes that land, including the building, to a new use. For that reason, and for the others given by my right hon. Friend, I hope that the Solicitor-General will expand his reply.
    The Solicitor-General: May I answer both the right hon. Gentleman and the hon. and learned Gentleman who, I think, made the same point? If the owner of land wants to carry out fresh building on the land and, therefore, has to ask for fresh permission to develop of course a development charge may accrue. May I just correct that in a point of detail which does not go against the principle? It is the case that under the Town and Country Planning (Development Charge Exemption) Regulations, 1948, a certain amount of rebuilding within a 10 per cent. limit is permitted, but that does not affect the principle of the argument. The answer to the principle of the argument is that when the owner himself gets development permission he thereby increases the value of his own land. For example, supposing he wanted to sell the land with the new building on it, he would get a bigger price for the land itself.
    Mr. Pitman: Why?
    The Solicitor-General: Because there is no development charge. A development charge is only made so as to be equivalent to any increase in the value of the land. It is not obligatory. The Board is not bound to charge it and, when it does so, under the provisions of Section 70 (2) of
    1054
    the Act it must have regard to the increase in the value of the land itself which accrues from the development permission being given. In other words, if the result of giving development permission is not to increase the value of the land itself, there is no development charge. If there is a development charge, it means that the value of the land itself has been increased proportionately and, if that is so, notionally at any rate the owner of the land possesses land which is worth more after the development permission has been granted than it was before. Supposing he wanted to sell it, he could get a larger price for it.
    Mr. Stanley: If it is the case that because of the building on it, the value of the land increases, will not that increased value begin to fall, and continue to fall, as the building itself begins to waste, and by the time that the building requires rebuilding or has to be scrapped altogether, will not the increased value of the land disappear?—[HON. MEMBERS: "No."] I would prefer to have the opinion of the Law Officer on a rather complicated point of this kind.
    The Solicitor-General: It depends more on the type of the land than the building but, as I say, in assessing the development charge one has to take that kind of consideration into account, and it is only if there is an increase in the value of the land itself that a charge is made.
    Mr. H. Strauss: The Solicitor-General says, "the land itself," but does not he agree that in law what he calls "the land itself" includes the building on it? It is an increased value in the land plus building.
    The Solicitor-General indicated dissent.
    Mr. Strauss: Yes.
    Sir Peter Macdonald: Is it not a fact?
    Question, "That the Clause be read a Second time" put, and negatived.

    NEW CLAUSE.—(Income tax allowances after transfer of road transport undertakings to British Transport Commission.)
    Where under the provisions of Part III of the Transport Act, 1947, an undertaking or part thereof has been transferred to the British Transport Commission and the person from whom the undertaking was transferred carries

    1055
    on any other trade or sets up or commences any new trade or any vocation, he shall be entitled to claim that in computing income tax payable in respect of any such other trade, new trade or vocation any relief, deduction or allowance which could have been allowed if he had continued to carry on the transferred undertaking shall be allowed to him.—[Mr. P. Roberts.]
    Brought up, and read the First time.
    Mr. P. Roberts: I beg to move, "That the Clause be read a Second time."
    We had a preliminary discussion on this topic on the Committee stage, and it is fair to say that the Solicitor-General and Members of the Government at that time did not appreciate fully the force of the argument put from this side of the Committee. We hope that this new Clause will give them an opportunity to reconsider what was said then, and to accept it. As the Bill stands, where a road haulier who was carrying on business before the vesting date and had other business which he was carrying on also, when the Commission take over his trucks or wagons he is paid for them a capital sum. If that capital sum is greater than the written off value as allowed under wear and tear allowances, then that extra amount of money is taken back by the Treasury and is to be charged to Income Tax.
    The first point we want to make quite clear is that this is a case where the Government have stepped in and have forced a compulsory transfer of the assets. In other words, if this man could continue to carry on, no doubt these wagons or lorries would have gone on running for a number of years and, at the end of the time, they would have been written off completely by wear and tear allowances and there would have been no Income Tax payable at the end. If he elected to sell those wagons or lorries to some other contractor, and, so to speak, cashed in on his capital, then of course he has to face this extra Income Tax liability, but that is an election which he will take voluntarily. The point is here that the Government have come in and forced this compulsory sale upon him.
    I said I thought there was some misunderstanding before. On this point I would like to refer to what the learned Solicitor-General said when arguing this question on the Committee stage of the Finance Bill. In trying to argue that this
    1056
    was an ordinary normal transaction, he said:
    "In the case where compensation is paid for the particular asset which is taken over, a balancing charge remains, as a matter of logical necessity, to be paid by the enterprise whose asset is bought out; in other words, it is an ordinary sale.''—[OFFICIAL REPORT. 2nd June,1948 Vol. 451, c. 1166.]
    This is not an ordinary sale. If it were we should not be pressing this new Clause. This is an extraordinary sale, a compulsory sale. The Treasury are stepping in to take this extra amount of Income Tax because of the passing of the Transport Act and for no other reason. We think it unfair that a man compulsorily bought out should have to pay tax which otherwise he would not have to pay.
    In Section 18 of the Income Tax Act, 1945, the principle is clearly set out that even if a trader sells his assets and receives more for them than the written down value, he is not liable to Income Tax on the surplus if he re-invests that money in other assets. He can carry on trading. That is a perfectly reasonable principle which we suggest should be brought in here, so that where a man who has been told to stop his business he should be able to re-invest the money he gets back in other business and thereby elude the tax.
    The argument might be put that he is going into an entirely different kind of business, but that is not his fault as he has been compulsorily stopped from continuing his business. Although the Government want people to produce more, such a man may be prevented from doing so because half his capital will be taken away and he cannot re-invest it in the normal way. This will have a bad effect on enterprising hauliers and others deprived under the Transport Act from carrying on business and from entering other businesses. I do not think it is the intention of the Government that those people should be stopped from entering other businesses.
    The proposed new Clause says:
    "carries on any other trade or sets up or commences any new trade or any vocation,"
    I appreciate that that is a very wide provision and I hope that if the Government do not like those words they will be prepared to offer some other words, so long as the principle is accepted, so that a man

    1057
    carrying on some other business may reinvest his capital in that business. The Treasury will not lose in the long run, because they will get the wear and tear allowance as the years go by, and if in the end there is a surplus that will be subject to tax in the normal way. In the Committee stage it was suggested from this side that the Treasury were getting something which otherwise they would not get. In reply the Solicitor-General did not appreciate the argument and he said:
    "The Treasury does not gain."—[OFFICIAL REPORT, 2nd June, 1948; Vol. 451, C. 1162.]
    Of course the Treasury gains, and must gain. If the Act nationalising transport had not been passed the Treasury would not get anything from this, but the assets would have continued in the hands of these people and the allowances would be written off. Now, because of that Act, the Treasury scoop in the money en passant so to speak. I hope the Government will consider the principle behind this proposed new Clause.
    8.45 p.m.
    Mr. Eccles: I beg to second the Motion.
    This is by no means a new idea. When the 1945 Income Tax Act was going through the House some of us back benchers, who at that time sat on the benches opposite, warned my right hon. Friend the Member for Scottish Universities (Sir J. Anderson), who was then Chancellor of the Exchequer, that this would very likely occur. We have brought this before the House on more than one occasion since then, and now we have an actual example of how a compulsory sale would cause hardship to a certain class of people who have to cease engaging in a business in which they were engaged. We only put this forward because of the compulsion element. This particular charge will be payable, not in the ordinary course of business, but owing to an Act of Parliament which has nationalised certain sections of industry. In justice I feel that this Clause should be accepted. I stress that this is not something of which we have suddenly thought, but something we foresaw in 1945.
    The Paymaster-General (Mr. Marquand): It is true that under the present law a trader may carry losses forward to set off against profits from the same business for six years, but if he carries on two businesses and wishes to set off losses
    1058
    incurred in one business against profits of the other he may do it for one year only. There is no provision for carrying forward losses on another business for any later years than the current Income Tax year, or the year of assessment. There are good reasons for this. The one year set off for several businesses carried on by the same person is justified on the grounds that the Income Tax falls on his income for the year, and in fixing the amount of the aggregate tax it is reasonable that losses should be set off against profits. The six years may be justified by the argument that losses should be made good out of profits and six years is fixed because after a time profit and loss shades off into capital account.
    The fact that termination of the business comes about by nationalisation does not seem to afford any good ground for departing from the one year rule. It is only in one year that the trader can set off losses on business A against profits on business B. Although I have listened with care to what the hon. Members for Ecclesall (Mr. P. Roberts) and Chippenham (Mr. Eccles) have had to say, they have not convinced me that the mere fact of nationalisation should make us introduce a new rule as to the way these things are decided. Therefore, I fear that I cannot accept the new Clause.
    Lieut.-Commander Braithwaite: I hope that that is not all that the Government have to say about this Clause. The Paymaster-General has not addressed himself to the main, and I think, lucid argument put forward by my hon. Friend the Member for Ecclesall (Mr. P. Roberts) and endorsed by my hon. Friend the Member for Chippenham (Mr. Eccles). The point is very simple. It is that here for the first time is the man whose business is compulsorily wound up through no volition of his own; it is brought about by a Statute of this House. Does not that create an entirely new set of circumstances?
    The Paymaster-General said he did not feel that nationalisation was a reason for changing the existing one-year rule, but does not nationalisation introduce an entirely new set of circumstances? The six years arrangement, as the Paymaster-General has explained, deals with a series of years, etc. Here we are considering

    1059
    the case of a man who, following the passing of the Transport Act, 1947, finds himself taken over on 1st January, 1948, or probably at a later date if he is a road haulier. He might be taken over at a date which falls just on one side or the other of the financial year, which begins in April. We are entitled to rather more explanation why the Government feel that they cannot meet my hon. Friend in this entirely new set of circumstances.
    Mr. P. Roberts: With the leave of the House, I would like to put a question. Have I understood the Paymaster-General aright in thinking that he said that as the law is at present these people can, in fact, carry over their balancing charge for one year in any event, that a surplus may be used for writing off maintenance charges for one year on the other business if such a person has invested in another business? Perhaps I have not made myself clear. I will try again. If such persons have put the money they have received from the Transport Commission into their other business, will they be allowed to write off
    maintenance charges on that other business for one year? I rather understood that to be what the Minister said. I do not take that to be the position. The Paymaster-General says that in the same business one can write off allowances for six years, but if one changes one's business that can only be done for one year. Does that one year provision apply to a haulier who is taken over and who reinvests the money in another business?
    Mr. Marquand: When he was carrying on two businesses at the same time he might set off a loss in one against a profit made in another for the current Income Tax period. That does not mean that after nationalisation such a person can then proceed to set off against some business which he subsequently carries on losses incurred in the business which he was carrying on and which is now defunct so far as he is concerned.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 87; Noes, 236.

    Division No. 233.]

    AYES.

    [8.53 p.m.

    Agnew, Cmdr. P. G.

    Hollis, M. C.

    Ponsonby, Col. C. E.

    Bennett, Sir P.

    Holmes, Sir J. Stanley (Harwich)

    Poole, O. B. S. (Oswestry)

    Boles, Lt.-Col. D. C. (Wells)

    Howard, Hon. A.

    Price-White, Lt.-Col. D.

    Bowen, R.

    Jeffreys, General Sir G.

    Rayner, Brig. R.

    Bower, N.

    Kendall, W. D.

    Roberts, P. G. (Ecclesall)

    Boyd-Carpenter, J. A.

    Kerr, Sir J. Graham

    Ropner, Col. L.

    Braithwaite, Lt.-Comdr J. G.

    Langford-Holt, J.

    Ross, Sir R. D. (Londonderry)

    Buchan-Hepburn, P. G. T.

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

    Savory, Prof. D. L.

    Challen, C.

    Lipson, D. L.

    Shepherd, W. S. (Bucklow)

    Channon, H.

    Lloyd, Selwyn (Wirral)

    Smith, E. P. (Ashford)

    Clarke, Col. R. S.

    Low, A. R. W.

    Smithers, Sir W.

    Conant, Maj. R. J. E.

    Lucas-Tooth, Sir H.

    Spearman, A. C. M.

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

    McCorquodale, Rt. Hon. M. S.

    Stanley, Rt. Hon. O.

    Cuthbert, W. N.

    Macdonald, Sir P. (I. of Wight)

    Strauss, H. G. (English Universities)

    Digby, S. W.

    Maclay, Hon. J. S.

    Studholme, H. G.

    Dodds-Parker, A. D.

    Macpherson, N. (Dumfries)

    Sutcliffe, H.

    Drayson, G. B.

    Maitland, Comdr. J. W.

    Taylor, C. S. (Eastbourne)

    Drewe, C.

    Marshall, D. (Bodmin)

    Thornton-Kemsley, C. N.

    Duncan, Rt. Hn. Sir A. (City of Lond)

    Medlicott, Brigadier F.

    Turton, R. H.

    Duthie, W. S.

    Mellor, Sir J.

    Vane, W. M. F.

    Eccles, D. M.

    Molson, A. H. E.

    Wakefield, Sir W. W.

    Fletcher, W. (Bury)

    Morris, Hopkin (Carmarthen)

    Walker-Smith, D.

    Fraser, H. C. P. (Stone)

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

    Ward, Hon. G. R.

    Fraser, Sir I. (Lonsdale)

    Nicholson, G.

    Watt, Sir G. S. Harvie

    Glyn, Sir R.

    Noble, Comdr. A. H. P.

    Wheatley, Colonel M. J. (Dorset, E.)

    Grimston, R. V.

    O'Neill, Rt. Hon. Sir H.

    White, J. B. (Canterbury)

    Hannon, Sir P. (Moseley)

    Orr-Ewing, I. L.

    Young, Sir A. S. L. (Partick)

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

    Peto, Brig. C. H. M.

    Hinchingbrooke, Viscount

    Pickthorn, K.

    TELLERS FOR THE AYES:

    Hogg, Hon. Q.

    Pitman, I. J.

    Major Ramsay.

    and Brigadier Mackeson.

    NOES.

    Adams, Richard (Balham)

    Baird, J.

    Blackburn, A. R.

    Adams, W. T. (Hammersmith, South)

    Balfour, A.

    Blenkinsop, A.

    Allen, A. C. (Bosworth)

    Barstow, P. G.

    Blyton, W. R.

    Alpass, J. H.

    Barton, C.

    Bowles, F. G. (Nuneaton)

    Attewell, H. C.

    Battley, J. R.

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

    Austin, H. Lewis

    Bechervaise, A. E.

    Brooks, T. J. (Rothwell)

    Ayles, W. H.

    Bellenger, Rt. Hon. F. J.

    Brown, George (Belper)

    Ayrton Gould, Mrs. B.

    Benson, G.

    Brown, T. J. (Ince)

    Bacon, Miss A.

    Berry, H.

    Bruce, Maj. D. W. T.

    Buchanan, Rt. Hon. G.

    Hughes, Emrys (S. Ayr)

    Ridealgh, Mrs. M.

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

    Hughes, Hector (Aberdeen, N.)

    Robens, A.

    Byers, Frank

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

    Roberts, Emrys (Merioneth)

    Callaghan, James

    Hynd, H. (Hackney, C.)

    Roberts, Goronwy (Caernarvonshire)

    Castle, Mrs. B. A.

    Hynd, J. B. (Attercliffe)

    Rogers, G. H. R.

    Champion, A. J.

    Irvine, A. J. (Liverpool, Edge Hill)

    Ross, William (Kilmarnock)

    Chater, D.

    Irving, W. J. (Tottenham, N.)

    Royle, C.

    Chetwynd, G. R.

    Jay, D. P. T.

    Scott-Elliot, W.

    Cobb, F. A.

    Jeger, G. (Winchester)

    Segal, Dr. S.

    Cocks, F. S.

    Jones, D. T. (Hartlepool)

    Shackleton, E. A. A.

    Coldrick, W.

    Jones, P. Asterley (Hitchin)

    Sharp, Granville

    Collindridge, F.

    Keenan, W.

    Shawcross, C. N. (Widnes)

    Collins, V. J.

    Key, C. W.

    Shawcross, Rt. Hn. Sir H. (St. Helene)

    Colman, Miss G. M.

    Kinley, J.

    Shurmer, P.

    Cooper, Wing-Comdr. G.

    Kirby, B. V.

    Silverman, J. (Erdington)

    Corbet, Mrs. F. K. (Camb'well, N. W.)

    Lang, G.

    Simmons, C. J.

    Cove, W. G.

    Lawson, Rt. Hon. J. J.

    Skeffington, A. M.

    Cripps, Rt. Hon. Sir S.

    Lee, F. (Hulme)

    Skeffington-Lodge, T. C.

    Daggar, G.

    Leslie, J. R.

    Skinnard, F. W.

    Daines, P.

    Lewis, J. (Bolton)

    Smith, C. (Colchester)

    Davies, Rt. Hn. Clement (Montgomery)

    Lindgren, G. S.

    Smith, Ellis (Stoke)

    Davies, Harold (Leek)

    Lipton, Lt.-Col. M.

    Sorensen, R. W.

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

    Longden, F.

    Soskice, Sir Frank

    Davies, R. J. (Westhoughton)

    Lyne, A. W.

    Sparks, J. A.

    Deer, G.

    McEntee, V. La T.

    Steele, T.

    Delargy, H. J.

    McGhee, H. G.

    Stross, Dr. B.

    Diamond, J.

    McGovern, J.

    Stubbs, A. E.

    Dobbie, W.

    Mack, J. D.

    Sylvester, G. O.

    Dodds, N. N.

    McKay, J. (Wallsend)

    Symonds, A. L.

    Donovan, T.

    McLeavy, F.

    Taylor, R. J. (Morpeth)

    Driberg, T. E. N.

    Macpherson, T. (Romford)

    Thomas, D. E. (Aberdare)

    Dumpleton, C. W.

    Mallalieu, J. P. W. (Huddersfield)

    Thomas, George (Cardiff)

    Dye, S.

    Mann, Mrs. J.

    Thomas, I. O. (Wrekin)

    Ede, Rt. Hon. J. C.

    Manning, C. (Camberwell, N.)

    Thurtle, Ernest

    Edwards, N. (Caerphilly)

    Marquand, H. A.

    Tolley, L.

    Edwards, W. J. (Whitechapel)

    Mathers, Rt. Hon. George

    Turner-Samuels, M.

    Evans, E. (Lowestoft)

    Mellish, R. J.

    Ungoed-Thomas, L.

    Evans, S. N. (Wednesbury)

    Messer, F.

    Viant, S. P.

    Ewart, R.

    Middleton, Mrs. L.

    Wadsworth, G.

    Farthing, W. J.

    Mikardo, Ian

    Walkden, E.

    Fernyhough, E.

    Mitchison, G. R.

    Walker, G. H.

    Fletcher, E. G. M. (Islington, E.)

    Moody, A. S.

    Warbey, W. N.

    Follick, M.

    Morgan, Dr. H. B.

    Watkins, T. E.

    Foot, M. M.

    Morley, R.

    Weitzman, D.

    Fraser, T. (Hamilton)

    Moyle, A.

    Wells, P. L. (Faversham)

    Freeman, J. (Watford)

    Murray, J. D.

    Wells, W. T. (Walsall)

    Ganley, Mrs. C. S.

    Nally, W.

    West, D. G.

    Gibbins, J.

    Neal, H. (Claycross)

    Wheatley, Rt. Hn. J. T. (Edinb'gh, E.)

    Gibson, C. W.

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

    White, C. F. (Derbyshire, W.)

    Glanville, J. E. (Consett)

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

    Whiteley, Rt. Hon. W.

    Grenfell, D. R.

    Noel-Buxton, Lady

    Wigg, George

    Grey, C. F.

    O'Brien, T.

    Wilkins, W. A.

    Griffiths, W. D. (Moss Side)

    Oldfield, W. H.

    Willey, F. T. (Sunderland)

    Guest, Dr. L. Haden

    Oliver, G. H.

    Williams, J. L. (Kelvingrove)

    Gunter, R. J.

    Palmer, A. M. F.

    Williams, R. W. (Wigan)

    Guy, W. H.

    Parkin, B. T.

    Williams, Rt. Hon. T. (Don Valley)

    Haire, John E. (Wycombe)

    Paton, Mrs. F. (Rushcliffe)

    Williams, W. R. (Heston)

    Hale, Leslie

    Pearson, A.

    Wilmot, Rt. Hon. J.

    Hall, Rt. Hon. Glenvil

    Peart, T. F.

    Woodburn, Rt. Hon. A.

    Hamilton, Lieut.-Col. R.

    Platts-Mills, J. F. P.

    Woods, G. S.

    Hannan, W. (Maryhill)

    Popplewell, E.

    Wyatt, W.

    Hardy, E. A.

    Porter, E. (Warrington)

    Willis, E.

    Harrison, J.

    Porter, G. (Leeds)

    Wills, Mrs. E. A.

    Haworth, J.

    Price, M. Philips

    Yates, V. F.

    Henderson, Joseph (Ardwick)

    Proctor, W. T.

    Young, Sir R. (Newton)

    Herbison, Miss M.

    Pursey, Cmdr. H.

    Younger, Hon. Kenneth

    Holman, P.

    Randall, H. E.

    Zilliacus, K.

    Holmes, H. E. (Hemsworth)

    Ranger, J.

    Horabin, T. L.

    Rees-Williams, D. R.

    TELLERS FOR THE NOES:

    House, G.

    Reeves, J.

    Mr. Snow and

    Hoy, J.

    Reid, T. (Swindon)

    Mr. George Wallace.

    NEW CLAUSE.—(Superannuation Funds.)
    Proviso (b) to subsection (1) of section thirty-two of the Finance Act, 1921, shall be amended by substituting for the words therein appearing the following:
    "(b) after the fifth day of April, nineteen hundred and forty-nine, no allowance shall be given under section thirty-two of the Income Tax Act, 1918, in respect of any
    1062
    payment for which allowance is made under this section.—[Sir P. Bennett.]
    Brought up, and read the First time.
    9.0 p.m.
    Sir P. Bennett: I beg to move, "That the Clause be read a Second time."
    This is a suggestion which we hoped to bring forward during the Committee

    1063
    stage, but, quite rightly, it was ruled out of Order by the Chair. The proposal has now been modified. It deals with the question of contributions by employees to pension funds which have already been approved by the Commissioners. Two types of contribution are treated differently. Contributions to the old age section of a fund are deducted from the gross wages as though they were expenses. This means that the amount of the earned income allowance is reduced where the earnings are less than £2,000 a year. The taxable income is reduced and, as a result, an allowance of 9s., 6s. 9d. or 3s. is given, according to the rate at which the employee is liable for tax. The contributions are also allowed for Surtax purposes.
    On the other hand, contributions to the widows and dependents section of a fund are treated as though they were premiums on a life insurance under Section 32 of the Income Tax Act of 1918. After the amount of tax has been calculated on the income before deducting these contributions, an allowance is made. That allowance is one-half of the standard rate if the income is under £1,000, three-quarters of the standard rate if the income is between £1,000 and £2,000, and the full amount if the income is over £2,000. No allowance is made for Surtax. For administrative convenience, it would be most helpful if widows pension contributions were treated on exactly the same basis as the old age pension contribution. In the overwhelming majority of cases, the change would benefit the taxpayer. However, under our original proposal, there was a chance that a small number of taxpayers might have been called upon to pay slightly larger charges if they were paying on the 3s. limit. For that reason, it was impossible to deal with this matter in Committee.
    We have overcome the difficulty by suggestion that the change might be postponed until next year. Hon. Members might ask why, if that is the case, it should be brought forward now? The answer is that it affects the coding of the employees. These codes are made at the beginning of the year, and, if this is to be considered for next year, the code would have to be worked out before that. Therefore, we put it forward now because the time of the year when the Income Tax officers are hardest
    1064
    pressed would not be the appropriate time to bring forward a proposal like this.
    Mr. Pitman: I beg to second the Motion.
    The Solicitor-General: As I understand it, the only case which has been made in support of this new Clause is that it would be rather easier for those who have to work out the proportions of payments made to pensions funds if the suggestion made in the new Clause was adopted. The answer I would make would be that it would, in fact, result in a very large number of employees in the lower income categories losing a substantial part of the relief which they get under the Income Tax Act, 1918, as the law at present stands.
    The proposal is that the compulsory contributions paid by an employee to a widows' and orphans' pension fund approved by the Commissioners under Section 32 of the 1921 Finance Act, instead of ranking, as they at present do, for relief under the 1918 Act, should rank for relief under the alternative system of relief, namely, Section 32 of the 1921 Act. The effect of that would be that, instead of relief being worked out as at present under the 1918 Act—and I will remind the House in a few moments how it is so worked out—the payment made by the employee would be treated as an expense, and, therefore, deductable from his income returned for the purposes of assessment under Schedule E. That would mean that the lower income category employees would be the losers. It is perfectly true that the higher paid employees would gain on the arithmetic to a certain extent, but we feel that mere grounds of administrative convenience are not a sufficient reason for depriving the lower paid employees of a relief which hitherto they have enjoyed since the 1918 Act came into force.
    The House knows that, under the 1918 Act, the figures are as follow. If the total income does not exceed £1,000, relief is given at one-half of the standard rate which with the present standard rate of tax at 9s. in the £ is 4s. 6d. in the £ If the total income is between £1,000 and £2,000, relief is given at 6s. 9d. in the £ that is to say, three-quarters of the present standard rate of tax at 9s. in the £. If the income exceeds £2,000, relief is given at the full standard rate of 9s. in the £. The way it would

    1065
    work out is as follows. In the case of employees whose liability to tax is only at the lower rate, that is to say, at the 3s. rate of Income Tax—which in point of fact if it is scaled down by deducting the earned income allowance, works out at 2s. 5d. in the £—in the case of an employee whose salary was low enough to make him liable to no more than 2s. 5d. in the £ the contrasting position would be this.
    If he gets his relief under the 1918 Act he would be getting relief by way of repayment of tax at the rate of 4s. 6d. in the £ In other words, he would be getting a substantial measure of relief. If, however, the new Clause were accepted and the alternative system which is provided for under Section 32 of the 1921 Act were adopted, he would simply be allowed to treat his contribution to the pension fund as a deduction—that is to say, as an expense. Accordingly, it being only an expense for the purpose of his return under Schedule E, he would get no more than 2s. 5d. in the £ in that case his relief would drop from 4s. 6d. to 2s. 5d.
    The question is whether administrative convenience affords a sufficient justification for taking away that measure of relief from the group of employees who can least afford to lose it. They are the lowest paid, and to them a loss of that sort is a matter of importance. We feel that no case can be made out merely on the ground of administrative convenience for depriving them of that advantage. In point of fact, so I am told, the degree of administrative inconvenience involved in separating out the proportion of the contribution which is attributable to the widows' and orphans' pension fund from the rest of the contribution which is made by the employee, is comparatively slight. In certain cases where there is a variable contribution it is more difficult to work out arithmetically, but, generally speaking, according to the Inland Revenue, at any rate, there has been comparatively little inconvenience experienced in separating out the contributions.
    For that reason, having regard to the fact that it is only administrative inconvenience which is urged, and that in any case unless it was very great it would seem to be inadequate as a reason for depriving the lower-paid employees of the advantage which they at present have, we
    1066
    think the new Clause ought not to be accepted. I would add that in any case, so I am informed and so our experience is, the degree of inconvenience is comparatively slight, except in one very specialised case where there is a variable relation between the amount of the contribution that goes to the widows' and orphans' fund and the rest. For those reasons, I hope the House will agree that this new Clause ought not to be accepted.
    Captain Crookshank: This is a very difficult and technical point, and I am sure the House is much obliged to the Solicitor-General for his lucid description of it. There are probably very few of us who were master of it before he spoke, and there are probably not many more who are now. As I listened to my hon. Friend the Member for Edgbaston (Sir P. Bennett) moving the new Clause, I thought it sounded as if there were some anomaly which ought to be looked at. As he put the case it seemed very strange, if the fund was for old aged pensioners and also for widows and orphans, that they should be treated differently. In view of what the right hon. and learned Gentleman has said, it does not look as if this is the right way of dealing with it. It adds to the argument, which has often been put forward, that it is about time that the Income Tax laws and reliefs were looked at again, and I hope that is one of the ambitions of the present Chancellor.
    Sir S. Cripps indicated assent.
    Captain Crookshank: In view of what the right hon. and learned Gentleman has said, I should not be inclined to press this point tonight. However, I would like him to look at it between now and the next Finance Bill, to see whether in fact there ought not to be some smoothing over, provided that the smoothing over is not done to the disadvantage of any of these pensioners or potential pensioners. Perhaps my hon. Friend has performed a useful service by raising this point. It is rather a change to find a spokesman for the Government complaining against a new Clause or an Amendment on the ground that the only reason for it is administrative inconvenience, because the argument is generally put the other way. It is generally the defence of the Government that they cannot do a certain thing because of administrative inconvenience. This time they say the

    1067
    argument is coming from our side. I hope this question can be looked at, but I should not advise my hon. Friends to press the Clause.
    9.15 p.m.
    Mr. Oliver Poole: I agree that the Solicitor-General has made a point in that this is a matter purely of administrative convenience, but his argument sounded as if we would be depriving the people concerned of a very material amount. As he rightly says, it affects only those people who receive a comparatively small income and contribute towards these particular schemes. I have some slight experience of administering these schemes, and as he knows premiums are generally based on 5 per cent. of the employees' salary. Five per cent. of £300 a year and 4d. to 5d. in the pound difference in the rebate is an extremely small amount.
    I think it right that the impression should not be left that if this new Clause were to be accepted, the House would be letting in for a serious reduction those employees who deserve the most benefit from the schemes. I also think the Solicitor-General is not quite right in overriding the grounds of administrative inconvenience. There are some quite considerable administrative difficulties in this case. The point I wanted to make, however, is that I do not think we should leave the House feeling that if this Clause were accepted, the loss would have been other than very small indeed to each individual employee. I do not think the House should be left to believe that if this Clause were accepted the poorer section of the community would have been heavy losers. That is quite untrue.
    Question, "That the Clause be read a Second time," put, and negatived.

    NEW CLAUSE.—(Rebate of duty for flying clubs.)
    (1) As and from the first day of October, nineteen hundred and forty-eight from the customs duty imposed by Section two of the Finance Act, 1928, there shall be allowed a rebate of ninepence per gallon in respect of any light oils which are used as fuel for flying machines employed in flying club activities within the United Kingdom.

    (2) For the purposes of this Section a flying club shall be taken to mean a body of persons certified by the Secretary of State for Air to have come together for the purpose of learning to pilot or improving their proficiency in
    1068
    piloting flying machines, bearing the expenses thus incurred themselves, the flying machines being used solely for these purposes and not for the carriage of passengers or goods for hire or reward or for any other purposes other than those specified.—[Sir P. Macdonald.]

    Brought up, and read the First time.
    Sir Peter Macdonald: I beg to move, "That the Clause be read a Second time."
    The purpose of this Clause is to remove the tax on light fuel oils for flying clubs. I have great hopes it will be accepted for more than one reason. In the first place, at an earlier stage of the Bill an Amendment was put down with similar intention which had a much wider scope and it was rejected on the grounds that it went too far and was impossible to administer. In his reply on that occasion the Financial Secretary to the Treasury held out great hopes for the flying clubs. He said that if there were any case to be made at all, there was one for the flying clubs. I maintain that that is substantially true, not only because of the injustice of the tax but because of the importance of the part which flying clubs play in our national defence.
    I remember long before the last war battling in this House against the Governments of the day on behalf of the flying clubs. I saw the clubs grow up almost from childhood, and at the beginning of this war there were many clubs in this country with about 2,000 small aircraft, and several thousand people in humble circumstances who were trained or were being trained as pilots in these clubs. I maintain that if it had not been for the training received by these young men—bank clerks, civil servants, and industrialists, those people in humble circumstances who had their Saturday afternoons off and spent that time training themselves to be pilots—and if it had not been for these clubs we should never have won the Battle of Britain.
    I had the job at the beginning of the war of forming a fighter squadron of the Royal Air Force. We had to recruit first from the Regular pilots of the Royal Air Force to form the nucleus of the squadron. They came chiefly—or very largely—from the Auxiliary Air Force and from people trained in the flying clubs, people who were keen, and who had trained themselves to fly. There are many people who

    1069
    think that the first battle the Royal Air Force fought in the war was the Battle of Britain. It was not. The first real battle the Royal Air Force had to fight was the Battle of Dunkirk, where a great many of our Regular Royal Air Force pilots were lost. When we came to the Battle of Britain, although we had had time to train some pilots, the fact remained that a great many of the pilots who fought in that battle were men who were recruited from the flying clubs of Britain and the Auxiliary Air Force.
    Of course, when the war broke out the clubs disappeared. The aircraft were requisitioned by the Royal Air Force, and those which were not requisitioned rusted on the ground, with the result that when the war ended the flying clubs had to start from scratch, without aircraft, with no nucleus, except of those people who were prepared to start again and to pay for their training. That is the situation today. Many clubs have sprung up, and there is great enthusiasm among the young people. However, it is a very costly business indeed for a young man who wants to train himself to fly today. This 9d. a gallon on petrol costs 5s. an hour in flying training, and the young man learning to fly has to bear it himself unless the club can bear it for him.
    Therefore, I hope on the grounds of equity, on the grounds of strategy, and on every possible ground, the Chancellor will meet this Clause sympathetically. In the war as Minister of Aircraft Production he met those young people who were trained in the old flying clubs; he knows them, and he knows their merits; and he knows how unfortunately the flying clubs are placed today. Therefore, I hope he will accept this new Clause.
    Mr. George Ward: I beg to second the Motion.
    After the Debate on 7th June the Association of British Aero Clubs, which is the national association of the flying clubs in this country, was so encouraged by what the Financial Secretary said on that occasion that they wrote a letter to him in these terms:
    "During the Debate on the light oils tax in the House of Commons yesterday you were good enough to hold out some hope of positive assistance for the flying clubs, having regard to the strength of their case. Because the plight of the clubs is progressively worsening, the need for such help is a matter of urgency. Of all affected by the tax, the
    1070
    clubs are, without question, the least able to stand the strain, and that has been endorsed by all sections of the House. … We would, therefore, ask that this possibility should be examined as an immediate step, apart from other measures which may be contemplated."
    We have great hopes, like the Association of Aero Clubs, that in the intervening period the Chancellor has been able to examine this matter, and is prepared to give this concession.
    One of the main arguments advanced on that occasion by the Financial Secretary was that the tax did not add appreciably to the operating costs of the various users concerned; but that is certainly not true of the flying clubs, because in their case this tax accounts for no less than 5s. an hour of the flying costs, which is a considerable burden for pilots flying light aircraft. It is no valid argument to say that because a concession to flying clubs might open the door to demands from other people, the concession cannot be granted. After all, these are surely matters which should be considered on their own merits. For example, the Chancellor has been prepared to grant certain concessions in regard to Purchase Tax, and if that argument does not apply in that instance there is no reason why it should apply in this.
    This is no party point, nor would the granting of this concession benefit only a limited section of the community. On the contrary, I would remind those hon. Members who may still be tempted to look upon flying clubs as institutions established solely for the use and benefit of a small rather wealthy section of the community, that before the war among the most enthusiastic, best run and flourishing of all the flying clubs in the country was one started and run by London bus drivers and conductors, who derived great enjoyment and benefit from the club. When the Civil Air Guard was formed in 1938, the financial arrangements allowed people to fly for as little as 2s. 6d. to 10s. an hour, and the response to that scheme was so enormous that it proved beyond doubt that club flying appealed to a very large section of the public, provided the costs were kept sufficiently low. At present, however, it is quite impossible for any club to charge less than £2 10s. to £3 an hour, which limits the people who can use these clubs to a very small number indeed. Of these charges, 5s. an

    1071
    hour is attributable to this petrol tax alone.
    If the Chancellor grants this concession it would have three effects: first, it would show that the Government are prepared to do what they can to help these clubs; secondly, it would encourage many clubs to keep going, who otherwise would certainly have to disappear, and are already doing so; and thirdly, it would make club flying available to a very much larger number of people than at present. Club flying is not, I must emphasise, just a hobby for a few enthusiasts. It is at once a healthy recreation of absorbing interest, and a useful and economical method of building up a large reserve of potential air crews in case of emergency. That point has already been very well dealt with by my hon. and gallant Friend, but I must re-emphasise it; I think the potential air crew aspect was amply proved before the war, when the flying clubs more than justified the financial assistance then given to them by the Government.
    9.30 p.m.
    I believe that there is a greater need for flying club facilities today than ever there has been before. Many young men have come out of the Royal Air Force where they learned to fly, and they would like to keep up flying in their spare time. At the moment, they cannot possibly do so because it is much too expensive. There are others who did not get the opportunity in the Royal Air Force of learning to fly and they would like to learn now. Again, the door is closed to them. I believe that the country, and not only the men but the women as well, are more airminded today than ever before, as a result of their friends and relations having fought in the Royal Air Force during the war.
    Flying produces a comradeship which is stronger, I believe, than that produced by any other activity that I know of. Young men and women who take up flying at flying clubs are linked by a common interest and they find that the club also provides a social life and many social activities which are highly valuable and beneficial to them. It would be a great pity if these clubs had to disappear because they could not keep going in
    1072
    face of financial difficulty. If the Government will grant this small concession tonight I feel sure that the clubs will be encouraged to keep going. It will be a practical proof that the Government are prepared to help them.
    Sir S. Cripps: I think this matter was freely discussed on the Committee stage. I do not think anybody doubts the obvious desirability of encouraging flying among the young men of this country or denies the very good work indeed which has been done by the flying clubs, especially in the period which preceded the war. It is to that general agreement that the hon. Gentleman who moved the Clause referred when he spoke of what the Financial Secretary had said during the Committee stage. That is agreed by all of us, but it does not mean therefore that one should use a tax of this kind in order to give a subsidy to a particular type of user of the material. In fact, I venture to suggest that it is a thoroughly bad principle to use taxes of this nature in order to subsidise particular industries, activities or whatever it may be. If those activities deserve and require a subsidy, that should be given in an open fashion in order to encourage those activities.
    Sir P. Macdonald: Will the right hon. and learned Gentleman give us an assurance that in lieu of a tax concession, he will help flying clubs in some other way?
    Sir S. Cripps: That is a matter for the Minister of Civil Aviation. I can say this: I have always been very sympathetic to the flying clubs and I am no less sympathetic now than I have always been.
    Mr. Ward: Surely rowing clubs receive a subsidy by paying no Purchase Tax on their boats?
    Sir S. Cripps: I am afraid that that is not quite an analogy, because Purchase Tax is fixed at different rates upon different articles. The petrol tax is not fixed at different rates on different users of petrol, which would be inequitable. That has never been done, and we certainly cannot start doing that now.
    Mr. Eccles: Was it not fair practice for the old age pensioners to receive cheap cigarettes?
    Sir S. Cripps: That is certainly a very extreme case which some people thought

    1073
    was not good practice, but the sympathy in their hearts persuaded them that in those circumstances it was desirable though it was not good practice. I cannot think that the statement of the hon. Member for Worcester (Mr. Ward) that this was going to save the flying clubs was anything but a slight exaggeration. He referred to the figures of £2 10s. and £3 an hour which would be charged but I cannot feel that a reduction of the figure as he suggested would make so vital a difference to the flying clubs. I quite appreciate that every little helps and that they would no doubt be very glad to get a remission—
    Mr. Ward: They would at least feel that the Government were doing something to help them. At the moment they feel that nobody is doing anything to help them.
    Sir S. Cripps: I have said that the person to help them is not the Chancellor of the Exchequer with the petrol tax but the Minister of Civil Aviation, if he feels that is the right way to proceed. I therefore very much regret that, however great our sympathy and our desire that these clubs should flourish and provide training and enjoyment for the people who resort to them, we cannot assist them in this way.
    Mr. E. P. Smith: I do not think any hon. Member in any part of the House can have been very satisfied with what has fallen from the right hon. and learned Gentleman the Chancellor of the Exchequer. He reminded me rather of the days when I was a small boy and went eel-bobbing. When one went eel-bobbing, one put one's mop of worms into the river and, when one caught an eel, one threw it over one's shoulder, it fell on the bank and then one tried to catch it I do not think anybody has succeeded tonight in catching the right hon. and learned Gentleman. If the wording of this Clause is inadequate and the safeguards which it provides are inadequate, I trust that on consideration some form of words may be found to give effect to the intention behind the Clause. I speak for the South-East corner of Kent where we had flying clubs in prewar days and learned their value. Indeed; we saw their value with our own eyes during the terrific days of Dunkirk and the Battle of Britain in 1940.
    I have had put into my hands a little journal or magazine or newspaper called
    1074
    "Forward," which has upon its front page an article written by the hon. Member for South Ayrshire (Mr Emrys Hughes). As far as I have been able to scan that article—and I have only done so quite briefly—it seems that he argues regretfully but cogently in favour of the possibility of a future war. I do not share that point of view—certainly by no means in the immediate future—but obviously people of wide experience like himself think of it as a possibility. That being the case, every assistance and every support ought to be given to these flying clubs. For those of us who do not believe in the inevitability of another war, I would still say that air-mindedness is as vital a thing for peace under modern conditions as it is for war. If the new Clause verbally does not meet with the approval of the right hon. and learned Gentleman, I trust he may give it further consideration, and see whether it is not possible to give assistance to these clubs in some such direction.
    Captain Crookshank: I do not know whether my hon. Friends mean to divide the House on this Clause or not, but I think the Chancellor's reply was somewhat disappointing because their object was to ask the Government to give some sort of encouragement to this deserving movement. While the right hon. and learned Gentleman expressed his approval of what the clubs did, he was shy about any help being offered to them. He merely said that if help was given, this was not the way to do it, that it was the job of the Minister of Civil Aviation. He, of course, has only been there a few days and has apparently not made any application to the Chancellor and, therefore, there is no help obtainable at present.
    It may well be that this is not the ideal way of helping the flying clubs. I personally am not sufficiently up in details to know, but it is the only way in which we on this side of the House can put it forward because we can only do it by a reduction of expenditure. It is impossible for us to move that a grant should be paid to these clubs—or a subsidy, as the right hon. and learned Gentleman seemed to imply was possible—because we cannot come forward with proposals for extra taxation. Therefore, this is the only way in which we can call attention

    1075
    to the matter, and we are sorry that the right hon. and learned Gentleman has not been more forthcoming because we feel that these flying clubs have a great part to play and should be encouraged as far as possible by everybody who has the interests of flying and youth at heart.
    Mr. Emrys Hughes: I should not have intervened in this Debate but for the remarks of the hon. Member for Ashford (Mr. E. P. Smith). However, I certainly see the cogency of the argument that, if there is to be another war, flying clubs need to be encouraged. It rather surprised me to hear the Chancellor of the Exchequer putting his point
    of view when, apparently, the purpose of the addresses which are being given to the organisations interested in these flying clubs is stated definitely to be preparation for a war against our potential enemy which appears to be Soviet Russia, and I fail to understand—
    Mr. Speaker: Foreign affairs and flying clubs are different subjects. The hon. Member had better stick to flying clubs and not introduce Soviet Russia in this Debate.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 98; Noes, 244.

    Division No. 234.]

    AYES.

    [9.43 p.m.

    Agnew, Cmdr. P. G.

    Hollis, M. C.

    Ponsonby, Col. C. E.

    Baldwin, A. E.

    Holmes, Sir J. Stanley (Harwich)

    Poole, O. B. S. (Oswestry)

    Bennett, Sir P.

    Howard, Hon. A.

    Rayner, Brig. R.

    Boles, Lt.-Col. D. C. (Wells)

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

    Roberts, Emrys (Merioneth)

    Bowen, R.

    Jeffreys, General Sir G.

    Roberts, P. G. (Ecclesall)

    Bower, N.

    Kendall, W. D.

    Ropner, Col. L.

    Boyd-Carpenter, J. A.

    Kerr, Sir J. Graham

    Ross, Sir R. D. (Londonderry)

    Braithwaite, Lt.-Comdr. J. G.

    Lambert, Hon. G.

    Savory, Prof. D. L.

    Buchan-Hepburn, P. G. T.

    Langford-Holt, J.

    Shepherd, W. S. (Bucklow)

    Bullock, Capt. M.

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

    Smith, E. P. (Ashford)

    Byers, Frank

    Lipson, D. L.

    Smithers, Sir W.

    Challen, C.

    Lloyd, Selwyn (Wirral)

    Spearman, A. C. M.

    Channon, H.

    Lucas, Major Sir J.

    Stanley, Rt. Hon. O.

    Clarke, Col. R. S.

    Lucas-Tooth, Sir H.

    Strauss, H. G. (English Universities)

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

    McCorquodale, Rt. Hon. M. S.

    Studholme, H. G.

    Crowder, Capt. John E.

    Macdonald, Sir P. (I. of Wight)

    Sutcliffe, H.

    Cuthbert, W. N.

    Mackeson, Brig. H. R.

    Taylor, C. S. (Eastbourne)

    Davies, Rt. Hn. Clement (Montgomery)

    McKie, J. H. (Galloway)

    Thornton-Kemsley, C. N.

    Rigby, S. W.

    Maclay, Hon. J. S.

    Turton, R. H.

    Dodds-Parker, A. D.

    Macpherson, N. (Dumfries)

    Vane, W. M. F.

    Drayson, G. B.

    Maitland, Comdr. J. W.

    Wadsworth, G.

    Drewe, C.

    Marples, A. E.

    Wakefield, Sir W. W.

    Eccles, D. M.

    Marshall, D. (Bodmin)

    Walker-Smith, D.

    Elliot, Lieut.-Col. Rt. Hon. Walter

    Mellor, Sir J.

    Ward, Hon. G. R.

    Fletcher, W. (Bury)

    Molson, A. H. E.

    Watt, Sir G. S. Harvie

    Fraser H. C. P. (Stone)

    Morris, Hopkin (Carmarthen)

    Webbe, Sir H. (Abbey)

    Fraser, Sir I. (Lansdale)

    Morrison, Rt. Hon. W. S. (Cir'cester)

    Wheatley, Colonel M. J. (Dorset, E.)

    Glyn, Sir R.

    Never-Spence, Sir B.

    White, J. B. (Canterbury)

    Granville, E. (Eye)

    Nicholson, G.

    Williams, C. (Torquay)

    Grimston, R. V.

    Noble, Comdr. A. H. P.

    Young, Sir A. S. L. (Partick)

    Hannon, Sir P. (Moseley)

    O'Neill, Rt. Hon. Sir H.

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

    Orr-Ewing, I. L.

    TELLERS FOR THE AYES:

    Hinchingbrooke, Viscount

    Pickthorn, K.

    Major Conant and

    Hogg, Hon. Q.

    Pitman, I. J.

    Major Ramsay.

    NOES.

    Adams, Richard (Balham)

    Benson, G.

    Champion, A. J.

    Adams, W. T. (Hammersmith, South)

    Berry, H.

    Chetwynd, G. R.

    Alexander, Rt. Hon. A. V.

    Blackburn, A. R.

    Cluse, W. S.

    Allen, A. C. (Bosworth)

    Blenkinsop, A.

    Cobb, F. A.

    Alpass, J. H.

    Blyton, W. R.

    Cocks, F. S.

    Attewell, H. C.

    Bowles, F. G. (Nuneaton)

    Coldrick, W.

    Austin, H. Lewis

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

    Collindridge, F.

    Awbery, S. S.

    Braddock, T. (Mitcham)

    Collins, V. J.

    Ayles, W. H.

    Bramall, E. A.

    Colman, Miss G. M.

    Ayrton Gould, Mrs. B.

    Brooks, T. J. (Rothwell)

    Cooper, Wing-Comdr. G.

    Bacon, Miss A.

    Brown, George (Belper)

    Corbet, Mrs. F. K. (Camb'well, N.W.)

    Baird, J.

    Brawn, T. J. (Ince)

    Cove, W. G.

    Balfour, A.

    Bruce, Maj. D. W. T.

    Crawley, A.

    Barstow, P. G.

    Buchanan, Rt. Hon. G.

    Cripps, Rt. Hon. Sir S.

    Barton, C.

    Burden, T. W.

    Daggar, G.

    Battley, J. R.

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

    Daines, P.

    Bechervaise, A. E.

    Callaghan, James

    Davies, Harold (Leek)

    Bellenger, Rt. Hon. F. J.

    Castle, Mrs. B. A.

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

    Davies, R. J. (Westhoughton)

    Key, Rt. Hon. C. W.

    Roberts, Goronwy (Caernarvonshire)

    Deer, G.

    Kinley, J.

    Rogers, G. H. R.

    Delargy, H. J.

    Kirby, B. V.

    Ross, William (Kilmarnock)

    Diamond, J.

    Lang, G.

    Royle, C.

    Dobbie, W.

    Lawson, Rt. Hon. J. J.

    Scott-Elliott, W.

    Dodds, N. N.

    Lee, F. (Hulme)

    Segal, Dr. S.

    Donovan, T.

    Leslie, J. R.

    Sharp, Granville

    Driberg, T. E. N.

    Lewis, J. (Bolton)

    Shawcross, C. N. (Widnes)

    Dugdale, J. (W. Bromwich)

    Lindgren, G. S.

    Shawcross, Rt. Hn. Sir H. (St Helens)

    Dye, S.

    Lipton, Lt.-Col. M.

    Shurmer, P.

    Ede, Rt. Hon. J. C.

    Longdon, F.

    Silverman, J. (Erdington)

    Edwards, N. (Caerphilly)

    Lyres, A. W.

    Silverman, S. S. (Nelson)

    Edwards, W. J. (Whitechapel)

    McEntee, V. La T.

    Simmons, C. J.

    Evans, E. (Lowestoft)

    McGhee, H. G.

    Skeffington, A. M.

    Evans, S. N. (Wednesbury)

    McGovern, J.

    Skeffington-Lodge, T. C.

    Ewart, R.

    Mack, J. D.

    Skinnard, F. W.

    Fairhurst, F.

    McKay, J. (Wallsend)

    Smith, C. (Colchester)

    Farthing, W. J.

    McLeavy, F.

    Smith, Ellis (Stoke)

    Fernyhough, E.

    Macpherson, T. (Romford)

    Sorensen, R. W.

    Fletcher, E. G. M. (Islington, E.)

    Mallalieu, E. L. (Brigg)

    Soskice, Rt. Hon. Sir Frank

    Follick, M.

    Mallalieu, J. P. W. (Huddersfield)

    Sparks, J. A.

    Foot, M. M.

    Mann, Mrs. J.

    Steele, T.

    Fraser, T. (Hamilton)

    Manning, Mrs. L. (Epping)

    Stross, Dr. B.

    Freeman, J. (Watford)

    Marquand, H. A.

    Stubbs, A. E.

    Ganley, Mrs. C. S.

    Mathers, Rt. Hon. George

    Sylvester, G. O.

    Gibbers, J.

    Mellish, R. J.

    Taylor, R. J. (Morpeth)

    Gibson, C. W.

    Messer, F.

    Thomas, D. E. (Aberdare)

    Glanville, J. E. (Consett)

    Middleton, Mrs. L.

    Thomas, George (Cardiff)

    Grenfell, D. R.

    Mikardo, Ian

    Thomas, I. O. (Wrekin)

    Grey, C. F.

    Mitchison, G. R.

    Thurtle, Ernest

    Griffiths, D. (Rather Valley)

    Monslow, W.

    Tolley, L.

    Griffiths, W. D. (Moss Side)

    Moody, A. S.

    Turner-Samuels, M.

    Guest, Dr. L. Haden

    Morgan, Dr. H. B.

    Ungoed-Thomas, L.

    Gunter, R. J.

    Morley, R.

    Viant, S. P.

    Guy, W. H.

    Moyle, A.

    Walker, G. H.

    Haire, John E. (Wycombe)

    Murray J. D.

    Warbey, W. N.

    Hale, Leslie

    Nally, W.

    Watkins, T. E.

    Hall, Rt. Hon. Glenvil

    Neal, H. (Clay Cross)

    Weitzman, D.

    Hamilton, Lieut.-Col. R.

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

    Wells, P. L. (Faversham)

    Hannan, W. (Maryhill)

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

    Wells, W. T. (Walsall)

    Hardy, E. A.

    Noel-Buxton, Lady

    West, D. G.

    Harrison, J.

    O'Brien, T.

    Wheatley, Rt. Hn. John (Edinb'gh, E.)

    Haworth, J.

    Oldfield, W. H.

    White, C. F. (Derbyshire, W.)

    Henderson, Joseph (Ardwick)

    Oliver, G. H.

    Whiteley, Rt. Hon. W.

    Herbison, Miss M.

    Palmer, A. M. F.

    Wigg, George

    Holman, P.

    Parkin, B. T.

    Wilkins, W. A.

    Holmes, H. E. (Hemsworth)

    Paton, Mrs. F. (Rushcliffe)

    Willey, F. T. (Sunderland)

    Horabin, T. L.

    Pearson, A.

    Williams, J. L. (Kelvingrove)

    House, G.

    Peart, T. F.

    Williams, R. W. (Wigan)

    Hoy, J.

    Plaits-Mills, J. F. F.

    Williams, W. R. (Heston)

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

    Popplewell, E.

    Willis, E.

    Hughes, Emrys (S. Ayr)

    Porter, E. (Warrington)

    Wills, Mrs. E. A.

    Hughes, Hector (Aberdeen, N.)

    Porter, G. (Leeds)

    Wilmot, Rt. Hon. J.

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

    Price, M. Philips

    Woodburn, Rt. Hon. A.

    Hynd, H. (Hackney, C.)

    Proctor, W. T.

    Woods, G. S.

    Hynd, J. B. (Attercliffe)

    Pursey, Comdr. H.

    Wyatt, W.

    Irvine, A. J. (Liverpool)

    Randall, H. E.

    Yates, V. F.

    Irving, W. J. (Tottenham, N.)

    Ranger, J.

    Young, Sir R. (Newton)

    Janner, B.

    Rankin, J.

    Younger, Hon. Kenneth

    Jay, D. P. T.

    Rees-Williams, D. R.

    Zilliacus, K.

    Jeger, G. (Winchester)

    Reeves, J.

    Jones, D. T. (Hartlepools)

    Reid, T. (Swindon)

    TELLERS FOR THE NOES:

    Jones, J. H. (Bolton)

    Rhodes, H.

    Mr. Snow and

    Jones, P. Asterley (Hitchin)

    Ridealgh, Mrs. M.

    Mr. George Wallace.

    Keenan, W.

    Robens, A.

    Question put, and agreed to.

    NEW CLAUSE.—(Exemption from Profits Tax for certain professions.)
    The carrying on of a profession by an individual or by individuals whether in partnership or as whole-time service directors of a body corporate, the business of which consists solely in providing such professional services, shall not be deemed to be the carrying on of a trade or business to which Part IV of the Finance Act, 1947, applies if the profits of the profession are dependent wholly or mainly on his or their personal qualifications:
    Provided that for the purpose of this section the expression "profession" does not include
    1078
    any business consisting wholly or mainly in the making of contracts on behalf of other persons or the giving to other persons of advice of a commercial nature in connection with the making of contracts.—[Mr. N. Macpherson.]
    Brought up, and read the First time.
    Mr. Niall Macpherson: I beg to move, "That the Clause be read a Second time."
    The Chancellor will have recognised the parentage of this Clause. He will realise that with an addition which is a part of

    1079
    the first sentence it reproduces Section 19 (3) of the Finance Act, 1937. The addition is:
    "or as whole-time service directors of a body corporate, the business of which consists solely in providing such professional services, …"
    The object of this Clause is to put professional consultants on the same footing whether they practise as individuals, whether they are in partnerships or whether they have incorporated themselves. At present partnerships and individuals do not pay Profits Tax, but professional men who are doing exactly the same work as are individuals or individuals working in partnership, nevertheless have to pay Profits Tax. I do not pretend that the numbers involved are large. In any one profession which has been brought to my attention they do not exceed 5 per cent. Even so, I wish to represent to the House that there is no reason why professional men, merely because they have incorporated themselves as directors of a company, should be penalised to the extent of something like 25 per cent. of their salaries, because that is what it amounts to if one first makes a deduction for the £2,500 allowance.
    The fact of their incorporating themselves gives them an advantage—I hope that the right hon. and learned Gentleman will not use this argument—in limited liability. That of course is not likely to be of much use to them and was probably not the reason why they incorporated themselves in the first place. In all cases it is a question of people whose capital is rather their personal skill and their professional reputation than any funds they possess.
    I would give the House a few examples of how this actually works. In the case of four whole-time service directors, holding all the shares of the company, and each drawing a salary of £3,000, each would then pay nearly £600 in Profits Tax. Suppose, as happened in another case I know, there are four whole-time directors holding all the shares, and four directors who are not shareholders in the company. The non-shareholders can draw any salary they like without paying Profits Tax on it. Take a third case, where there are three co-directors. A, who is the founder of the firm and built it up owns 80 per cent. of the shares: B, and C
    1080
    own 10 per cent. each. Of course, they get £2,500 exemption, and that may be shared equally in which case it would work out at £833 each. But it is surely likely in a case of that kind that the man who has founded and built up the firm will pay the salaries in full of his co-partners and bear the whole burden of the profits plus the tax on his own salary, which is written back then into profits.
    Take another anomaly. If one man turns himself into a company his exemption is £2,500, but if there are 16 equal shareholders, all working directors, each drawing a salary, say, of £1,000, the exemption is only £2,500. In other words, their exemption is only £156 each. The whole thing bristles with anomalies as soon as it is regarded from the point of view of professional men joining together whose capital is their own personal skill. They are not producing anything except advice and yet on their fees, because that is what it amounts to, this Profits Tax is still applicable, merely because they have incorporated themselves into a limited liability company. I submit that the only fair way is to bring all the cases of professional men in this position into line together, as professional men, rather than to line them up along with the large industrial companies to which this Profits Tax was originally intended to apply.
    Sir Stanley Holmes: I beg to second the Motion.
    I can do so without any personal interest, because, although I have been a member of a profession for over 40 years, I have always been in partnership and therefore will not be affected in any way by this proposal. My hon. Friend has said that this applies to very few people in any of the professions, and that is quite true. In my experience the main reason why members of firms have turned themselves into a limited company has been in order to provide an income for the widow of the head of the firm or one of the important members. A widow is not qualified to be a member of a partnership, but she can become a shareholder if the partnership is turned into a private company.
    10.0 p.m.
    Mr. Pitman: I should like to support the Motion. I think that hon. Members will remember how in a previous Budget Debate we tried to get an exemption for

    1081
    small partners from Surtax on their undistributed profits. It was made clear that the difficulties in that situation were confined, because of stock and other matters, to traders, but that they would not arise in the case of professional men. I would, therefore, make it clear that this new Clause excludes traders and also, under the terms of our wording which has been taken from the Act of 1937, professional men such as members of the Stock Exchange or even partners in Lloyds. I imagine that the proviso excludes them. Therefore, the new Clause covers only a very limited class of professional men who are professional men in the narrowest sense of the word. I have particularly in mind those professional men who are consultants to businesses up and down the country, and who advise on efficient management and Organisation and Methods within industry.
    In the past, I understand that the Government have encouraged those partnerships—because really they are partnerships—to form themselves into limited companies in order that they may have this advantage in regard to Surtax which the ordinary company has but which is denied to the trading partnership. They form themselves into a limited liability company so that, when they do not distribute the whole of their profits and retain part in the business for the next year when there may be a loss, they do not have to pay Surtax on the undistributed part of their profits. We are most anxious that the principle which applies to Surtax should equally be applicable to Profits Tax.
    The exemption which has been given for Special Contribution under the Tenth Schedule should apply equally to Profits Tax. These companies are formed largely at the request, and certainly with the approval, of the Inland Revenue Department. Having formed themselves in that way, it is very hard that they should be hit for Profits Tax only because they are set up as a company rather than as partners. The whole purpose of this new Clause is to give them this benefit which, I think, the Government intend that they shall have.
    The Solicitor-General: I hope that the House will reject this new Clause. The position before 1947 was that the National Defence Contribution, which was the predecessor of Profits Tax, fell upon
    1082
    individuals and partnerships, but those individuals who could be said to be carrying on a profession were excluded from the scope of the tax. This new Clause proposes that not only individuals and partnerships which are carrying on a profession, but also companies which render professional services, should now be excluded from the Profits Tax. I would observe in passing that part of the new Clause is unnecessary because, since 1947, Profits Tax has not applied to individuals or partnerships. It only falls upon companies, so, in any case, that point of the new Clause is otiose.
    Is there really any case at all for selecting companies which render the service of providing professional services from the ordinary run of companies which are included in those liable to Profits Tax? I can see no reason whatever. As I appreciated the arguments of the hon. Gentleman who moved the new Clause, it really was a criticism of the arrangements with regard to treating remuneration of directors, other than whole-time service directors, as a deduction far the purpose of assessing the Profits Tax. The hon. Gentleman said that, for one reason or another, he did not think these particular provisions had worked out well, but that they had produced anomalies. Whether they do or not, they produce precisely the same anomaly when we are talking about the company which renders professional services as when we are talking about the ordinary trading company.
    Let us take two persons who carry on in partnership an ordinary trading undertaking. When they convert that trading undertaking into a company, why should they be any worse off than two persons who carry on a profession and turn it into a company? The equities are exactly the same, and there is no reason why we should prefer those who run a professional service to those who run a trading service, who have an equally good case, if they have any case at all, for being excluded from the Profits Tax. The Profits Tax is designed to cover all companies, and it covers all their trading income, and, with certain exceptions, all their investment income. There are no exemptions. It is now sought to make an exception solely in the case of companies which run a professional service.
    Once one accepts the conception of a tax which is designed to impose a tax

    1083
    upon companies, there cannot be, for the reasons advanced in the course of the Debate, any discrimination as between companies which render professional services and companies which carry on a trading undertaking. After all, the reason was explained by the Chancellor of the Duchy of Lancaster in April, 1947, when he recast the National Defence Contribution into the Profits Tax and excluded individuals and partnerships from its scope. He said that the Surtax fell upon the earnings of partners and individuals, but did not fall upon the undistributed income of companies. That was the reason why he excluded partnerships and individuals from the scope of the tax.
    Mr. N. Macpherson: The main difference is in the ambit of Profits Tax. In the case such as that which I mentioned, there is no purpose at all, and it is not indeed the practice, to build up reserves or to have undistributed profits. That is one of the main differences.
    The Solicitor-General: I cannot see that that makes any difference at all. That is simply a matter for domestic arrangement in the company concerned. There are some companies, members of which render professional services, which might think it desirable to build up reserves; it is a matter for themselves. The reserves, if any, are not liable to Surtax, while the earnings accumulated by individuals and partnerships are, and that is why they are taken outside the scope of the tax. All companies, so far as this matter is concerned, stand on the same footing, and, for these reasons, I hope the House will reject the new Clause.
    Question put, and negatived.

    CLAUSE 14.—(Bookmakers' licence duty.)
    Mr. Glenvil Hall: I beg to move, in page 8, line 29, column 4, to leave out "quarter" and to insert "eighth."
    This Amendment gives effect to an undertaking which I gave on behalf of my right hon. and learned Friend during the Committee stage of this Clause. One of my hon. Friends pointed out that it was rather unfair to the bookmakers if, supposing nine races were being run, the charge were for ten. I undertook to make an alteration so that the licence duty would be one-eighth for every additional race instead of one-quarter.
    Amendment agreed to.
    Further Amendments made:
    In page 8, line 32, column 4, leave out "two races," and insert "race."
    In line 34, column 4, leave out from "eight," to end of line 43.—[Mr. Glenvil Hall.]
    Mr. Glenvil Hall: I beg to move, in page 9, line 17, to leave out "or are."
    The purpose of this Amendment is to correct a grammatical mistake in the Bill as drafted.
    Amendment agreed to.

    CLAUSE 16.—(Relief for rural entertainments.)
    Mr. Glenvil Hall: I beg to move in page 10, line 15, after the second "a," to insert:
    "borough, urban district or."
    This, with the next Amendment, in line 17, carries out an undertaking given by my right hon. and learned Friend to consider sympathetically, in the light of what was said on the Committee stage, whether he could extend the rural parishes entertainments duty concession to urban as well as to rural districts and whether he could allow halls which hold more than 200 people to be included within its provisions.
    Mr. Pitman: I do not think the right hon. Gentleman is now dealing with the right Amendment.
    Mr. Glenvil Hall: Yes, this is the right Amendment. We are coming to the other Amendment a little later on. I am dealing with them together, although the Amendment which I am now moving deals with the words "borough, urban district or." As I was saying, we are willing to extend the concession to include not only rural districts but boroughs and urban districts where the other conditions are satisfied.
    Mr. C. Williams: I think we should thank the Financial Secretary for what he has done to meet the wishes of the Committee on an earlier stage of the Bill. I am sure there are many people who welcome the fact that he has met us on this occasion, although one cannot help wishing that he had given a rather clearer explanation of what he is actually doing. However, perhaps it will come out all right in the end.
    Mr. Stanley: On a point of drafting, why is it necessary to put in the words, as proposed in the second Amendment:
    "being a borough, urban district or parish"?
    Why should not the provision read:
    "… held in a building in a borough, urban district or rural parish within the meaning of the Local Government Act, 1933, with a population not exceeding 2,000 …"?
    Why is it necessary to duplicate the words?
    10.15 p.m.
    Mr. Glenvil Hall: The draftsmen looked at this and advised us that the Amendments which are on the Order Paper in the name of my right hon. and learned Friend are necessary to make the matter clear.
    Mr. Stanley: But I am asking the right hon. Gentleman why.
    Mr. Glenvil Hall: For clarity.
    Mr. Stanley: In that case, I will ask the right hon. Gentleman why it is clearer that way than the other way.
    Captain Crookshank: Stumped again.
    Amendment agreed to.
    Mr. Glenvil Hall: I beg to move, in page 10, line 17, after "1933,"to insert: "being a borough, urban district or parish."
    Captain Crookshank: Having had time to reflect, perhaps the right hon. Gentleman can now tell us why the words have to be inserted.
    Mr. Glenvil Hall: As the right hon. Gentleman knows only too well, in matters of drafting of this kind, we rely on the experts and the Parliamentary draftsmen, and my right hon. and learned Friend has been advised that these words should be inserted in order to meet what I know hon. Members in all parts of the House desire should be the situation. I cannot say more than that.
    Mr. Stanley: I think this is rather unusual. It seems to be extremely clumsy drafting. I am quite prepared to be told that the draftsmen know best, but I think I am entitled to be told why it is that the draftsmen have accepted this particular form. To be told that the practice of Ministers is to accept from the draftsmen whatever they choose to put up as a drafted Amendment without even asking what it means, or why they do it, is asking people who served in previous administrations to believe a great deal. It
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    may, of course, be true of the present administration, but, if so, I think we should put an end to what is an undesirable precedent and should return to an age when Ministers even had the effrontery to ask the draftsmen what their new Amendments meant.
    Mr. Hollis: I wonder if the Financial Secretary would explain what he is now asking the House to pass. He is asking the House to pass:
    "in a building in a borough, urban district or rural parish ‖ being a borough, urban district or parish."
    What could that possibly mean? Could the right hon. Gentleman tell us?
    Mr. Glenvil Hall: The hon. Member for Devizes (Mr. Hollis) should read on. It is:
    "Being a borough, urban district or parish with a population not exceeding two thousand.…"
    Mr. Hollis: That makes no difference. What I said was perfectly true. A "borough, urban district or rural parish" must be a "borough, urban district or parish."
    Mr. C. Williams: I would like to say that I cannot explain to my constituents what the right hon. Gentleman means.
    Mr. Speaker: Has not the 'hon. Member already spoken?
    Mr. Williams: I spoke on an earlier Amendment and I would not in any circumstances wish to speak twice on the same Amendment, but what is disagreeable to me is the complete and absolute failure of the Financial Secretary to explain what these Amendments are trying to do. As Members of Parliament we are expected to be able to explain these complicated details, if necessary, but how in the world are we to do so when the representative of the Government gets up time after time and says he knows nothing whatever about it and relies entirely on the draftsmen? This really would have not have passed on another occasion. If the right hon. Gentleman had been in opposition he would have made a lot of trouble about this kind of thing.—[HON. MEMBERS: "He would have tried to."] Well, he would have tried to. I feel sure it is not right that we should allow a thing of this sort to go by without protest. The right hon. Gentleman may now have discovered what the Bill and the Amend-

    1087
    ment means and, if so, I shall be only too delighted to hear. As I know I shall not be able to speak twice, if by any chance his explanation is clear, I would like to thank him in advance.
    Mr. Selwyn Lloyd: I understand that this Amendment is a consequential Amendment. The first time the words appear the Subsection will read,
    "borough, urban district or rural parish."
    As the words will appear the second time the Subsection will read,
    "being a borough, urban district or parish."
    So apparently it is a rural parish the first time and a urban parish the second. Is this really consequential? What does it mean?
    Mr. J. H. Hare: As one who represents a rural constituency, as opposed to my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd)—
    Mr. Selwyn Lloyd: My hon. Friend is mistaken. I represent a county constituency.
    Mr. Hare: I must apologise to my hon. and learned Friend. I was under the impression his constituency was urban rather than rural. However, I should for the sake of my own constituents, like to press the point put forward by my right hon. Friend the Member for West Bristol (Mr. Stanley), because this is a matter which affects every single rural area, as far as I know. We should like to know exactly what the right hon. Gentleman intends to put into the Bill. We have been watching this thing with great interest, ever since, in response to speeches made from these Benches, pledges were given that this matter would be considered by the Chancellor. We do want some clear indication as to where we stand, and we should be extremely grateful if the Financial Secretary could tell us at this juncture exactly where we stand.
    Mr. E. P. Smith: I hope hon. Members on this side of the House will think again about some of the things they have been saying. These Amendments concern largely a suggestion which I personally put forward to the Chancellor of the Exchequer. I have in my constituency something like 100 village halls, and I can think of only three of them which will contain 200 persons or less. The majority of them—
    Mr. Stanley: We are not talking about that. My hon. Friend is thinking of a later Amendment.
    Mr. Smith: Then I am a little out of Order.
    Sir Hugh Lucas-Tooth: Perhaps, I can come to the rescue of the right hon. Gentleman, though I am afraid I may land him in further difficulty. The Clause as now drafted reads:
    "a rural parish … with a population not exceeding two thousand."
    Before the words "rural parish" we are to insert "borough, urban district or." Thus the Subsection will read:
    "borough, urban district or rural parish.'
    Hon. Members: Parish.
    Sir H. Lucas-Tooth: I am speaking of the first insertion. The ordinary construction of these words, I think, is governed by the words
    "parish not exceeding two thousand."
    I see the right hon. Gentleman nodding, and, therefore, I have in fact explained the reason for the first Amendment. But there is a discrepancy remaining which has been pointed out by some of my hon. Friends. In the first case we find the words "rural parish" and in the second we find only the word "parish." Applying the argument which the right hon. Gentleman has just accepted from me we find that the new words are to be,
    "being a borough, urban district or parish"
    In other words, it is only an urban parish which is covered by the second Amendment, because it is only an urban district or parish. If the logic of my argument, which has been accepted by the right hon. Gentleman, applies in the first case it must apply also in the second as well, and, therefore, to make the thing perfectly clear we must retain the word "rural" in the second Amendment as well. For that reason I do ask the Government if they would accept a manuscript Amendment from me in order that the matter may be made perfectly clear.
    Mr. Glenvil Hall: I do not know how much time we are going to waste—[HON. MEMBERS: "Oh."] I have already, I think, given an adequate reply to the points which have been raised. The drafting is so plain that it appears to me that hon. Members opposite are not asking for information so much as having a little fun and games after their

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    evening meal. What the hon. Member for South Hendon (Sir H. Lucas-Tooth) has said is the plain meaning which the words convey. The first insertion of these words governs the building, and the second insertion governs the population. The reason why we do not want to put in "rural" again is because the word "parish" connotes rural. [HON. MEMBERS: "No."] Oh, yes, it does.
    Mr. Birch: Then why alter it?
    Mr. Glenvil Hall: We are not altering it.
    Mr. Birch: You are.
    Mr. Glenvil Hall: At the request of hon. Members opposite as well as of hon. Members on this side of the House, we are enlarging the scope of this concession; we are including certain urban districts with the rural parishes and the words which we have put down make the meaning clear. I can do no more than assure hon. Members that that is so. We have looked at this, and these words are necessary. I hope, therefore, that the House will now agree to the Amendment.
    Amendment agreed to.
    Mr. Glenvil Hall: I beg to move, in page lo, line 20, to leave out "two," and to insert "four."
    Mr. Eccles: We are grateful to the Chancellor for putting down this Amendment, but I do not think that it will cover all the cases we had in mind. I have been looking at a parish hall in the large village of Cricklade in my constituency; I suppose that in the past somebody must have given a large sum of money to have it built. There is a very fine village hall; the population of the village is, I think, 1,400, and the hall, if it were filled, would certainly take half the population. Now, it never is filled, but it seems very hard that it should be excluded because somebody happened to build an extra fine hall there. During the war, it came in very handy when there were R.A.F. camps near by, and dances could be held in the hall. Normally speaking we should never be able to fill that hall. Could not the Treasury exercise a discretion in a case like that, where the hall is not normally used for more than the 400, and allow the tax rebate to operate?
    Mr. E. P. Smith: I do not know whether I am in Order in trying to repeat
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    the speech which I began on a previous Amendment. I welcome the alteration of 200 to 400. I have in my division something like 100 village halls, and only three of them are capable of taking 200 or less, the others being considerably bigger. Therefore, I welcome the addition from 200 to 400. On the other hand, as my hon. Friend the Member for Chippenham (Mr. Eccles) has said, there are peculiar cases, and I think the Leader of the Liberal Party gave an instance in his own division of a hall which would hold 800 persons, in a village with a population of only 800. There are exceptional cases for which some concession might conceivably be made; but, generally speaking, we who live in the country and understand the countryside and the problems of these village halls welcome this increase from 200 to 400.
    10.30 p.m.
    Captain Crookshank: I hope the promise which the Chancellor gave with regard to this Clause during the Committee stage will be kept. He said on this particular point of the seating that he hoped to deal with it on Report. I did suggest 300 or 350 was a better figure than 200, and in so far as he has advanced that and made it 400 I am glad. But earlier on we did raise some other points and the right hon. Gentleman said that he hoped we would let this run this year in order to have it looked at next year. I hope the Financial Secretary will indicate that that is intended because I do see some difficulties even now. The figure has been placed at 400 seating capacity, but it is necessary to look at the words in regard to this.
    I think the words "cannot be provided in the building" may cause some difficulty. Seating cannot be provided perhaps for a variety of reasons. It cannot be provided perhaps because the place is not big enough to hold more than 400 persons; or perhaps not more than 400 seats are available for a place which is big enough for them. Or perhaps there is not seating capacity for more than 400 people because there is not money to buy more than 400 seats. These are difficulties which may arise. While we agree that this is an improvement on the previous figure it may bring rather nasty administrative difficulties. Will the Financial Secretary tell us that arrangements will be made for any complaints received during the next twelve months

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    to be collated with a view to amendment being made next year?
    Mr. Glenvil Hall: Yes. My right hon. Friend will watch this during the year and see what, if any, amendment may be necessary next time. There are difficulties. The Clause has been tightly drawn deliberately because we felt that seating capacity might be construed as almost anything. Seats can be packed down aisles and so on. The hall has to seat normally—
    Captain Crookshank: It does not say that.
    Mr. Glenvil Hall: That is the construction which we hope will be put upon it. But we will have to watch it during the year and, if abuses arise, the matter will have to be dealt with in succeeding Finance Bills. I am sorry that he had to make the limit 400, but we took into account halls which only had seats for 400 people, but were capable of holding a good many more. All sorts of anomalies and abuses in such cases might arise. If we had proceeded too far, we might even have found cinema proprietors taking large halls in semi-rural areas, where the density of population is not more than that stated in the Clause, and people coming from the towns to see films in that area, the proprietor of the cinema thereby avoiding payment of Entertainments Duty at the full rate. I think that we have in this Clause made a beginning in helping rural areas to deal with entertainment of this kind. We will watch the matter during the coming year to see what develops.
    Mr. Edgar Granville: May I ask the Financial Secretary whether, in the light of experience, average attendance will be considered as the best way to deal with this question. There may be in a village a large hall which will seat 600 or 700 people, but only 100 may perhaps attend on an average.
    Amendment agreed to.
    Consequential Amendments made.
    Further Amendment made: In page 10, line 37, at end, insert:
    "Provided that—

    (a) in England, this subsection shall have effect in relation to any borough or urban district as if for the reference to the first day of May, nineteen hundred and forty-eight, there were substituted a reference to
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    the first day of August, nineteen hundred and forty-eight: and

    (b) as respects entertainments held, whether in England or in Scotland, before the said first day of August, paragraph (b) of subsection (1) of this section shall have effect and be deemed always to have had effect as if for the words "four hundred persons," there were substituted the words 'two hundred persons'."—[Sir S. Cripps.]

    CLAUSE 18.—(Amendment as to unladen weight of goods vehicles.)
    Mr. Challen: I beg to move, in page 12, line 22, at end, to insert:
    "(d) if the receptacle is used for carrying inflammable liquids and is not permanently attached to the vehicle provided that such vehicle is from time to time used without such receptacle in the ordinary course of business."
    The object of this Amendment is to bring into line the practice of the distribution of petrol by motor lorries carrying receptacles, with those vehicles already provided for in the Clause. Its object is also to clarify the position with regard to vehicles used by distributors of petrol for taking spirit to small garages in outlying parts of the country. It is my information that, owing to shortage of tankers, and for reasons of economy, there has grown up the practice of ordinary lorries being used. There is fastened on to the lorries a large petrol tank; a tank occupying about half the space of the lorry, while the rest of the space is used for carrying cans and other articles. The tank is loaded empty and is filled up after it has been put in position and the tank is taken off again when the work is done. The lorry is then used for ordinary purposes.
    The object of this Clause is to clarify the position under Section 7 of the Finance Act of 1937. Where a receptacle is lifted on or off the van, the weight of the receptacle will not be taken into account in arriving at the basis of taxation of the vehicle. Where the vehicle has a receptacle specially constructed or adapted for the carrying of livestock, that is not taken into account and we claim that unless something is done to make the position clear in so far as the petrol distributor is concerned, there will be not only an anomaly—a most obvious anomaly—but there will be a hardship and these people should be given the advantage which this Section intends to give to those who operate similar receptacles. I do ask the right hon. and learned Gentleman to

    1093
    accept this Amendment because this would be only producing a very fair and equitable result.
    Mr. Orr-Ewing: I beg to second the Amendment.
    It is a point of some substance, but the difficulty is really easily overcome without enlarging the scope of the meaning of the Clause, if this Amendment is accepted. If it were not for the fact that these tankers were carrying petrol, or for that matter, paraffin, it might be possible to have smaller tanks and they would not come under the meaning of this Clause as it stands in the Bill. But, as these tanks are emptied by taps, while the receptacles are still on the vehicle, there appears to be some uncertainty. It is not clear whether such vehicles come under the Clause or not and I do believe that the Clause, as it stands, makes clear the position only for some of this class of user. It is a simple Amendment and I hope the Minister will see his way to accept it.
    The Parliamentary Secretary to the Ministry of Transport (Mr. James Callaghan): As the hon. Gentlemen who moved and seconded this Amendment have said, this is of the existing arrangements. We have no desire to be restrictive on it. I had not had the advantage of hearing this particular case put until I heard the hon. Gentleman the Member for Hampstead (Mr. Challen), but my interpretation of what he said would be—and I speak subject to his correction and subject to further consideration—that most certainly the type of case he has in mind is covered by the original Clause as it stands which does not need any amplification in this way. I understood him to say that any additional body which is added to the vehicle and is not part of the vehicle, and is, from time to time, taken off the vehicle as well as being put on the vehicle, and from which liquids are drawn, would be covered by Clause 18 as it stands at the moment. In those circumstances I think I must ask the House to reject the Amendment if the hon. Gentleman is not satisfied with the explanation, but I think he will be.
    Question put, and negatived.
    Further consideration of the Bill, as amended, adjourned.—[Mr. Popplewell.]
    Bill, as amended, to be further considered Tomorrow.

  GAS (SPECIAL ORDERS)
  Resolved:
  "That the Draft or the Special Order proposed to be made by the Minister of Fuel and Power under the Gas Undertakings Acts, 1920 to 1934, on the application of the Mayor, Aldermen and Burgesses of the Borough of Wigan, which was presented on 31st May and published, be approved."
  Resolved:
  "That the Draft of the Special Order proposed to be made by the Minister of Fuel and Power under the Gas Undertakings Acts, 1920 to 1934, on the application of the Mayor, Aldermen and Burgesses of the Borough of St. Helens, which was presented on 31st May and published, be approved."—[Mr. Robens.]

  PARALYSED AND LIMBLESS EX-SERVICE MEN
  Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Popplewell.]
  10.43 p.m.
  Lieut.-Colonel Lipton: I feel that it is hardly necessary to offer any apology for raising one or two matters in connection with the treatment of paraplegic and limbless ex-Service men. This is not the least important of the many beneficial activities being carried out at the moment by the Ministry of Pensions. The remarks I have to make fall into three categories. The first is experimental research, the second is restorative work, and the third can best be summed up under the heading of after-care services.
  Under the heading of experimental research there is in existence a useful and important body known as the Standing Advisory Committee on Artificial Limbs. What some of us would like to know is a little more about the activities of this committee, and the extent of the contribution they are making towards alleviating and improving the lot of limbless ex-Service men in this country. There is in existence, of course, at Roehampton an experimental workshop where a lot of useful work is being carried out. Without, in any way depreciating the value of the work that is already being done, I feel, however, that more money could be devoted to this particular activity.
  What I. should like to know, and what I hope the Parliamentary Secretary to the Ministry of Pensions will be able to amplify in the course of his remarks, is

  1095
  whether his Ministry is devoting sufficient energy to research in respect of paraplegia and limbless problems. No one can say that the importance of research in these fields can be over-emphasised. It has become all the more important in view of the imminent inception of the National Health Service. A number of members are concerned about the possible effect of the introduction of the National Health Service upon the research or the development of experimental research so far as these ex-Service men are concerned.
  Is the Ministry getting particulars of the very interesting developments that are already taking place in other countries? For example, in Germany for many years they have been using what are called "suction sockets." In this type of limb an artificial leg is held to the natural stump by suction instead of the rather complicated and irksome strapping and suspension which is the usual method at the present moment. The suction socket does represent in my view, and in the view of other people more competent to judge, a very considerable improvement which will add very substantially to the comfort and convenience of these ex-Service men who have to make use of artificial limbs. In America, too, I understand that enormous sums are being devoted to research. While at the Foreign Office level, or as between the two Treasuries, there may be difficulties, or indeed coolness at the present time, I hope that the interchange of ideas between those who are doing research in this country and in America is proceeding apace and that we are taking full advantage of the improvements that are being effected in America so that our own ex-Service men in this country are not left behind in obtaining any benefits or advantages that may be devised to ease the burden of disablement.
  Reference has been made in this House and elsewhere to a page-turning device which would be a boon to limbless men who want to read. Reference has also been made on occasions to improved chairs and beds which would also add considerably to their comfort and convenience. Members of the public who saw the recent film "The Best Years of our Lives" were probably very much impressed by the proficiency which a limbless person in that film showed in the
  1096
  use of an artificial arm and gadgets. Are those gadgets available to the ordinary ex-Service men in this country or was the performance indicated in the film to which I refer something exceptional and out of the ordinary and, therefore, not available to the limbless men in this country?
  Another field in which it appears that greater research is required is the possibility of marriage, so far as paraplegic ex-Service men are concerned. In this regard I was particularly struck by an article which appeared in a recent issue of "The Cord," which is a journal of the paraplegic branch of the British Legion—a journal which devotes itself specifically to the problems of the paraplegic patient. In a recent issue an article was written in which one of these men asked whether a paraplegic could ever hope to have children. He asks: "I have heard it is possible but once again, I do not know. Who can tell me? All these things are very real problems even if they are not talked about openly. Until I have got satisfactory answers to them, I cannot persuade myself that I have made a success of living at home."
  The next point to which I want to refer is the question of restorative work. To what extent is training afforded, while the limbless or paraplegic are in hospital, in the use of suitable artificial equipment and in the development and training of such faculties which remain to him? It is true that occupational therapy of a kind is carried out in the Ministry of Pensions Hospitals, but there is reason to believe that this occupational therapy is an inadequate substitute for practical vocational training. I have read of one case in which a man complained that after three years in hospital he came back home completely untrained for any kind of job. He says he spent hours making rugs, doing needlework, trying to learn to draw, and to stuff dogs and rabbits, and after all that particular form of occupational therapy, it took him nine months longer to get work simply because he had no training. It may be that a typewriter or a telephone switchboard would be far more useful as a form of occupational training while the patient is in hospital than the devices which I have just mentioned. The Ministry could do more than in the past, I think, by giving occupational training in the hospitals themselves. Now, after some three years of peace, fairly adequate ideas should have

  1097
  been formed about the kind of jobs men can do with artificial limbs or in a wheeled chair.
  My third point is the absolute necessity for a really efficient after-care service after the patient has left hospital. It must be readily admitted that treatment in such case; as these does not end at the hospital gates. Home visitors ought to be visiting these men regularly, especially those who are home-bound, unable to leave their homes, or those who, because of physical infirmities, are unemployable. The homes of men of this kind ought to be fitted with suitable gadgets and their lives made as comfortable as possible. In this respect, welfare officers working in association with the regional officers of the Ministry of Pensions and with voluntary bodies like the British Legion or the British Limbless Ex-Servicemen's Association, could, I think, provide amenities and comforts, and what is not less important, up-to-date advice as to the facilities available to these men under the new social security schemes that are now about to be introduced. I should like to know to what extent pensioners are encouraged to take interest in home handicrafts or the homework scheme of the Disabled Persons Employment Corporation. In this connection I am of the opinion that they should be allowed to earn as much as they possibly can without jeopardising their supplementary allowances. It may be that refresher and rehabilitation courses should be arranged from time to time for these men, in association with the Ministry of Labour, in order to make their lives a little less dreary.
  The House has welcomed the recent announcement that the use of cars would be placed freely at the disposal of badly disabled men. I do not know whether my hon. Friend is able to add anything tonight to what the Financial Secretary said on this subject Even if the free cars are not immediately available, improvements could be effected in the three-wheeled motor-propelled vehicle that is available, but which does not provide adequate protection for the user if the weather is inclement. I should like to know, too, what opportunities are afforded to these men for convalescent treatment or change and relaxation. It is not only the men themselves who need a little change and relaxation from time to time, but their wives and families, who
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  have to do so much in administering to their daily needs. It has been alleged that in a number of cases there has been delay in supplying these men with their appliances, or in repairing those appliances when they get cut of order. Stump socks are said to be in short supply, and this is an additional source of inconvenience. I hope that the Ministry of Pensions is getting sufficient priorities in regard to materials and so forth to enable it to provide the standard of service which the ordinary disabled man ought to have.
  It is of vital importance that the fullest possible opportunity should be afforded to these men to lead as normal lives as they possibly can, and to become self-supporting and self-respecting members of the community. The general public does not always realise how great the needs of these men are. Suitable beds, surgical matresses, a self-lifting pole which some of them need, syringes, rubber sheets—a thousand and one things are essential to their creature comforts. Nursing equipment, sterilising apparatus, bed linen and pillows—there are quite a number of things which cannot be met from the ordinary domestic coupon issue, and which are real problems to the paraplegic cases. No doubt the Ministry does useful work, but I should like to be satisfied that everything possible is done in this regard.
  Then, again, everything possible in the provision of suitable housing accommodation must occupy a very high place among the priorities. The movement of these men about the house ought to be simplified by fixing handrails, enlarging doorways, substituting ramps for short flights of steps, better types of folding indoor chairs, suitable types of furniture—I should like to hear from my hon. Friend what, if anything, is being done in that respect. In a number of these cases the men have no relative to rely on—they may be elderly, or may have lost their relatives. Are any facilities being provided by way of residential hostels for suitable cases where there is no near relative capable of looking after them? I do not want my remarks to be construed as being unduly critical of the Ministry of Pensions which, under its present Minister, has earned the very high respect of those of us who are interested in this problem. Nevertheless, I hope my hon. Friend will take advantage of this opportunity to let the public

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  know exactly what is being done for these cases, and what hopes there are in the immediate future of the benefits and advantages already in operation being extended so as to make the lives of these very deserving men as comfortable, happy and normal as they can possibly be made
  11.1 p.m.
  Sir Wavell Wakefield: Very briefly, I want to draw the attention of the Parliamentary Secretary to one matter which is causing great concern among medical practitioners, and that is the policy of his Department of not placing contracts with certain firms who have led in research in the development of implements and equipment for ex-Service people. This policy will mean the closing down of these firms, to the grave detriment of these numerous people. I take this opportunity to ask the Parliamentary Secretary to look very carefully into this point, which is causing grave anxiety among my constituents, particularly bearing in mind the effect which it will have upon ex-Service people.
  11.3 p.m.
  The Parliamentary Secretary to the Ministry of Pensions (Mr. Blenkinsop): May I first thank my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton) for raising this matter tonight. I am afraid we in our Department feel—and perhaps it is to our credit—that very rarely do we have the opportunity of saving anything about the work which we are doing today. We are all very conscious of the fact that whatever we may do in the way of money allowances and benefits, and however generously we may try to administer our Department, the work that we do on that side counts for very little as against the importance of the positive health-giving side of our activities in trying to restore these particular groups of ex-Service men to ordinary healthy life. Therefore, I am glad that my hon. and gallant Friend has raised these matters.
  First of all, I should like to say something about the work that is being done for the paraplegic in this country. Our ex-Service paraplegic cases constitute a small group. Some 600 men and women from this last war are suffering from this very terrible spinal disease, and 200 of those are still in hospital. It is rather interesting to know that out of the re-
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  mainder—some 440–70 per cent. are in full and regular employment, in spite of the very terrible nature of this disease, which in the past, was regarded as being more or less incurable. We regard it as some tribute to the work which we are doing that that progress has been made. Men and women who suffer from this disease today can be assured that they are not out of contact with ordinary life as they certainly were in the past.
  My hon. and gallant Friend has raised the question of research. On this side of our work, both as regards the paraplegic and the limbless cases, we feel that we are leading the world. It is a broad claim, but I think we can say that, particularly in the paraplegic field, we have shown the world the way in which new treatment can be developed. I think that even our American friends have paid us the tribute of taking the advice of one of our chief consultants in this country in the new work that they are developing over there. We have the closest contact with the United States in this problem and in the problem of the amputee. They know the work that we are doing, and we are in daily contact with the work that they are doing in America. Our doctors have been over in the United States very recently, and in return we have had visits from American doctors and those concerned with these problems, trying to keep in the closest possible touch.
  My hon. and gallant Friend raised the question of treatment and after-care. With regard to the paraplegic, the bulk of our treatment work is done at the very modern and well-equipped hospital we have at Stoke Mandeville and two auxiliary centres which we use, one down at Eastbourne and one at the Star and Garter Home, both of which are placed at our disposal through private benevolence. We use the Eastbourne home largely to give the man who has been in hospital a break, and anyone who went there would say it was hard to believe that such excellent conditions could exist. We are very proud indeed of the work which is being done both at Eastbourne and at the Star and Garter, and particularly of the exceptional work which is being done at Stoke Mandeville.
  In addition, we are busy with the building of a new hostel at Osterley Park, which will provide in some cases a per-

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  manent home, but more frequently a temporary home, for paraplegic cases who are undergoing training in practical jobs in many of the factories in that area. With the help of the Ministry of Labour we have secured the co-operation of firms in that part of London, and we can ensure that men, and indeed in some cases women, who are disabled paraplegic cases will be able to secure a steady and regular job at factories in that area, and have at the same time accommodation specially adapted for their use and the medical attention which they need.
  I am very hopeful that the new hostel will be available for them by the end of this year. I have indicated that we are doing a good deal on that side of the work. I would like to quote one particular case of which we are rather proud—it is not altogether exceptional—the case of a lieutenant from the Army who is both a paraplegic case and also has suffered a severe lung wound. He came into the Stoke Mandeville Hospital in a very critical condition, and indeed, many felt that there was very little hope for him. Largely due, I think, to the treatment which can now be provided, he recovered a great deal, started a correspondence course in law, and passed his preliminary examination. He went from there, in the chair we provided for him, to Lincoln College, Oxford. He became honorary secretary of the Law Society of his college, and passed his law final last year. Since September he has been in the employment in the legal branch of a large commercial firm. I believe that is now regarded as a typical case. There is no reason why those suffering from this terrible disease should regard themselves as cut off from regular and full employment.
  Let me turn briefly to the very important question of the limbless and the work we are doing through the Standing Joint Committee. My hon. and gallant Friend has raised the question of what work is being done by the Committee. He asked whether we were spending enough money, or whether we had cut down in research work. The Cohen Committee, which was set up in 1945, paid tribute to the quality of the limbs which are issued by the Ministry. They pointed out
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  that the limb issued was a good one, as good as, and in most cases a material improvement on, anything available in any other country in the world. I believe if that was true in 1945, it is far more true today. There is no justification for any complaint about workmanship or anything else. The Standing Committee which was set up following the Cohen Committee, made various recommendations on improvements in limbs, and very many of those recommendations have been carried out including very important research work on the problem my hon. and gallant Friend mentioned, the question of the suction socket. I believe that it may be possible before very long to get rid of all this wretched harness that prevents the amputee feeling he can ever live an ordinary life. I believe that it should be possible in the near future to get rid of that drawback, and to have a limb that looks very like an ordinary limb. So far as the question of the firms supplying the Ministry is concerned, I cannot say anything tonight, but my right hon. Friend will be making an announcement very shortly about it.
  I should like to emphasise that we have in this Ministry, in the hospitals dealing with both the paraplegic and the limbless, an excellent service that, as I say, leads the world; but we are conscious that there is a very great deal to be done, and we are always anxious to try to help on that work.
  Let me give finally the instance of a limbless man who was a labourer before the war. He lost two arms and a leg, and is now being trained in secretarial work. He has been fitted with two arms, and he is actually doing typewriting work and secretarial work, and he tells us that he is writing much better now than he wrote before the war, before he received his injuries. These things are possible now, and I can assure my hon. and gallant Friend that, very conscious as we are of the work we have done, we are still more conscious of the amount of work that remains for us to do.
  Adjourned accordingly at Twelve Minutes past Eleven o'Clock.