Clause 1.—(PROVISION FOR FURTHER REVENUE PAYMENTS TO COLLIERY CONCERNS AND SUBSIDIARIES.) (Hansard, 1 November 1949)

§ The Minister of Fuel and Power (Mr. Gaitskell)
I beg to move, in page 3, line 1, to leave out from "deduction," to the end of line 5, and to insert: the aggregate of—

(a) an amount which bears to the amount of the deduction the same proportion that the amount of income tax ultimately borne by the concern or subsidiary for the income tax year the beginning of which falls within the year in respect of which the excess arises bears to the amount which its total income for income tax purposes for that income 286 tax year would be if it were computed without regard to any relief or deduction in respect of profits tax; and

(b) an amount which bears to the amount of the deduction the same proportion that the amount of profits tax ultimately borne by the concern or subsidiary (as determined in accordance with rules laid down by the regulations) in respect of the aggregate (as so determined) of its profits which are attributable to the year in respect of which the excess arises bears to that aggregate."

This Amendment deals with the taxation problem that may arise as a result of the Bill. The Bill provides that where revenue payments exceed the interest due, the excess is to be recovered by deduction from the capital compensation payment. Revenue payments are, of course, subject to Profits Tax and Income Tax and clearly this must be allowed for in calculating the amount to be repaid. We should not wish the companies to pay tax on more than they ultimately retain.
However, the correct drafting required to achieve this object has not been easy, and that is the reason for this Amendment. In the original draft it was provided that from the excess payment there should be deducted a fraction of that extra payment corresponding to the Profits Tax and Income Tax paid on the income of the company as assessable for Income Tax purposes. But the draft in that form did not allow for the difference which necessarily arises in calculating the amount of profits for Profits Tax purposes as contrasted with the amount of income for Income Tax purposes. In particular, it did not take into account the difference that necessarily arises in the accounting periods, because whereas the Income Tax year ends on 5th April the Profits Tax year may end on any date according to the accounting period of the company in question.
Therefore, in the Amendment the process of calculating what is to be deducted from the excess payment, before this in turn is deducted from the capital compensation due, is divided into two parts, one dealing with Income Tax and the other with Profits Tax. The Income Tax provision, paragraph (a), defines clearly the year that is to be taken into account as the one ending on 5th April whose beginning falls within the calendar year in which the revenue payments are made. That is straightforward. The second provision dealing with Profits Tax leaves the actual details to be settled by regulation, 287 because it has been found impossible, with justice to the companies concerned, to provide a sufficiently general formula in the Bill itself to cover every possible case. Hence the arrangement under which regulations will be made providing for the various different cases which will arise under the Bill.

§ Mr. Brendan Bracken (Bournemouth)
It would be an insult to the memory of Midshipman Easy to compare him with the present Government, because Midshipman Easy had both a brain and a spine; but in one respect the Government resemble Midshipman Easy—they suffer from an excess of zeal, particularly in legislation. I agree with the Minister that it is difficult to ask Parliamentary draftsmen to be quite certain of what they put down on paper. They have had a tremendously difficult time. I cannot say that we are all very grateful to them, but I think we thoroughly understand their difficulties. Improvements were required both in the verbiage of this Bill and indeed in its construction.
I am very glad that the Minister has proposed this innocuous but very useful Amendment so far as it affects shareholders and companies. We shall offer no opposition whatever. It appears to me that on this occasion coal is less controversial than the New Forest.

§ Mr. Peter Roberts (Sheffield, Ecclesall)
I wish to ask the Minister some questions. In subsection (5) he takes very wide powers. That provision states: The Minister shall have power … to make regulations making such provision supplementary to or consequential on the foregoing provisions of this section.… I should like to know the Minister's intentions. He will realise that the very first consequence of this Bill will be that the valuation proceedings will tend to slow down. As a result, he must make some regulations. I want to know what is in his mind in taking this power to himself. Obviously he would not take powers as wide as this without having something in mind. I should like to know whether he proposes to take powers by these regulations to remedy the slowness—

§ The Deputy-Chairman (Mr. Bowles)
I am sorry to interrupt, but I must point out that subsection (5) only gives the Minister power to make regulations arising from the provisions of the four previous subsections. I feel that the hon. Member's remarks are not in Order or relevant to this subsection. As a lawyer, I think that even if the Minister did make regulations along the line which the hon. Gentleman would like, a court might soon find them ultra vires.

§ Mr. Roberts
I have not made any suggestions for remedies or any recommendations, and I understand that the New Clauses standing in my name are out of Order.

§ The Deputy-Chairman
Yes.

§ Mr. Roberts
I have not actually mentioned them, and I would be out of Order in so doing, but I think I am entitled, the Minister having these powers to make regulations consequential upon this Clause, to ask what sort of regulations he intends to make.

§ The Deputy-Chairman
That is all right, so long as the hon. Gentleman keeps to that point.

§ Mr. Roberts
I have not mentioned any Amendment which may be out of Order, but I hope the Minister will take cognisance of them, anyway. What I am putting to the right hon. Gentleman is this. As a consequence of passing this Bill, he will, I am quite certain, have to make regulations under this subsection, and all I am hoping to see is that these regulations will be effective. There are three dangers in front of us as the result of passing this Bill, which dangers were not there before. The first is that the Minister will have to make some kind of payment for a compensation unit. Is he bearing that in mind, and what are his reactions to it? Secondly, the Minister must make regulations in order to hurry up the valuation board.

§ The Deputy-Chairman
Of course, as the hon. Gentleman is aware that is wrong.

§ Mr. Roberts
With respect, Mr. Bowles, I was not aware that it was wrong. I want to know what are the regulations which the Minister intends to make. Is he going to look upon this problem as if it did not exist, or is he going to realise 289 that it does exist? Does the right hon. Gentleman know that King's Counsel are being engaged at vast fees for the distant future? The Minister may not realise it, though I hope he does. I hope this matter is not being kept away from him in some way, but that he will realise what is going on. I hope he realises that National Coal Board officials are being taken away from their task of producing coal to go in for inspections and making reports and valuations, and that this may go on for years. I am quite certain—

§ The Deputy-Chairman
Has the hon. Gentleman finished?

§ Mr. Roberts
No.

§ The Deputy-Chairman
Then he must not go on along these lines, because, quite frankly, if he had read Clause 1 he would have seen that it deals with interim payments of interest, and has nothing to do with the question whether the valuation board is taking a long time or whether King's Counsel may be engaged. The hon. Gentleman must confine his remarks to matters that logically arise from subsections (1) to (4).

§ Mr. Roberts
On a point of Order. Under these provisions, interest is being paid where it was not paid before. As a consequence of that interest being paid, the shareholders are for the time being satisfied, but we were told before that the procedure was slow because the Minister wished to hurry up the compensation. The Financial Secretary told us that they were not paying the compensation because they wanted to hurry up the process. Now, we are paying compensation, and I am asking—I hope rightly—what is to be the result of the payment, when the very fact of these payments being made will lead to the consequence that there are bound to be—

§ The Deputy-Chairman
I think that is a very good point to make, but it does not arise here. I see the argument of the hon. Gentleman, and I see that it has some force, if I may express an opinion, but it does not come within the scope of this Bill. I am afraid that the hon. Gentleman must confine himself more strictly to the point.

§ Mr. Roberts
I will say no more on the subject, except that I hope I have made my point and that the Minister will realise the force of it.

§ Mr. Gallacher (Fife, West)
I would like the Committee to reject this Clause, which I think is very undesirable and one that nobody in this Committee should be prepared to support. The hon. and gallant Member for Pollok (Commander Galbraith) will be aware of the fact that it was a common practice in Scotland to provide "subs." for hard-up workers. By the word "subs." subsidies were meant, but it was always the practice of the better type of trade unionists to oppose them. This is going back to the very bad old days of "subs." for the workers who could not last out the week. If a worker could not last out the week, he went to his boss and got five or six bob.
The provisions of this Clause are to have effect in respect of 1949 "and subsequent years." Is there any hon. Member who will support that? When we received the original Bill, two years was the limit. The job had to be done in two years. Now we have a provision covering subsequent years. I want once again to direct attention to the fact that conditions change very radically and sometimes very rapidly. If I am permitted to draw an illustration from the previous Debate, I would point out that we had a situation this evening in this Chamber in which hon. Members on this side were supporting enclosure and the Tory aristocrats on the other side were opposing it. Let hon. Members consider that. A complete turn of the wheel often takes a long time, but we may sometimes have a turn of the wheel in a short time. It may be that, if the colliery owners have not finished their settlement by 1950 or 1951, we may come to a decision not to give them any compensation at all and bring in another Bill to withdraw the provisions of the previous one, and yet all the time they will be getting "subs." and we should have no way of making them pay back the "subs." if we decided to stop paying the compensation.
Therefore, I ask the Minister not to carry this Clause through, but to agree to make the change. If we make a concession to him, will he make a concession to us? If we agree to another "sub." for this year, will he agree not to give them any further "subs.," and, if they do not finish by 1949, to scrap the lot and pay them no more, which is the very best 291 thing that could happen? That is why I propose the rejection of this Clause, unless the Minister is prepared to confine its provisions to 1949 only, instead of continuing to give "subs." to coalowners for subsequent years.

§ Colonel Clarke (East Grinstead)
I ask the Minister to enlarge upon the regulations which are referred to in line 31, in subsection (5). I know this is a complicated subject and that this Bill has taken some drafting, but I cannot quite envisage what is and what is not covered by this omnibus phraseology of subsection (5). Later on, it becomes more particular and defines certain things which may be legislated for by regulations. It seems to me that the first part of subsection (5) is simply designed as a safeguard in case something goes wrong. I do not think that is really very desirable.
As the Minister knows, I dislike regulations unless they are absolutely necessary. I feel that if legislation is worth enacting, it should be put in the Bill which we discuss here and not brought in later by regulations which never get properly discussed. Therefore, I hope he will explain to the Committee why this is put in. It looks to me a little like one of those safeguards that draftsmen and civil servants are rather apt to insert in order to save their face in case they have forgotten something and which get filed away and about which nobody thinks for a long time, until a case is brought, when it is found that a provision of this sort is in the Act and prevents real justice from being done or satisfaction being obtained.

§ Mr. Gaitskell
I must try to avoid getting out of Order, but I am sure, Mr. Bowles, you will appreciate that I must say something on what the hon. Member for Ecclesall (Mr. P. Roberts) said. I think I am safe in repeating what you yourself said—that these regulations in subsection (5) are, of course, to provide for the recovery of over-payments and have nothing whatever to do with alterations in the compensation procedure, and could not be used to make any alterations of that kind. The hon. Member for Ecclesall will appreciate that if I were to go further than that, I should at once put myself out of Order. But if he wishes 292 to discuss the matter further with us we shall be happy to do so.
I think that the hon. Member is under a misapprehension about the present position. Perhaps I can best describe the regulations that we shall make under subsection (5) by referring him and the hon. and gallant Member for East Grinstead (Colonel Clarke) to the regulations which we have already made under Section 22 of the 1946 Act which, in effect, relate to procedure for settling the timing and the way in which compensation moneys are to be paid. In this case, of course, they would relate to the way in which the recovery of over-payments is to be secured, and how precisely the amount is to be estimated. I have already given the Committee one instance in connection with the Income Tax and Profits Tax arrangement, and I do not think I can add anything to that. I know that both the hon. Member for Ecclesall and his hon. and gallant Friend are familiar with the regulations made, and these will be similar. That is really all there is about it.
As regards the point raised by the hon. Member for West Fife (Mr. Gallacher), I would again point out to him that this Bill does not provide for any compensation to coalowners; all it does is give them a little on account. If I am not mistaken, the hon. Member for West Fife voted for this Bill in an earlier stage. I do not think he voted against the compensation Clauses of the original Bill in Committee, and I suggest to him that he would be quite safe, therefore, to continue as he did then and let the Bill go through.

§ Mr. Gallacher
I supported the Bill against the party opposite. I had a proposition for compensation different from that in the Bill, but it was not accepted. Therefore, I had to support the Bill even though it contained the burden of compensation. However, if at any time I have the opportunity of throwing off that burden, I will certainly do so. In the meantime, I should like the Minister to tell us how many years are involved by the phrase "subsequent years."

§ Mr. Bracken
It is rather awkward getting involved in this comradely argument, but I must say to the hon. Member for West Fife (Mr. Gallacher) that he is likely to be classified as a Trotskyite or 293 a deviationist. M. Maisky used to boast to me that Russia always fulfilled her word, and always paid interest on her bonds, but here we have a Trotskyite and a deviationist asking the Minister to break the Communist first commandment. Tito's fate is nothing like what will be the fate of the hon. Member for West Fife.

§ Mr. Gallacher
The undertaking which the Minister gave, and which I supported, was proposed for two years, by the end of which time the shareholders had to finish their wrangling. They have not finished, and I am against giving them any more.

§ Mr. Bracken
Whatever methods are used to convict the Trotskyite, the hon. Member for West Fife will never go quietly, whether drugged or beaten up. I look forward to his defence when the Day of Judgment comes.
So far as we are concerned, we cannot pretend fully to understand the Minister's explanation. We make no complaint about that because, in point of fact, he has been skating on very thin ice. If I may say so, Mr. Bowles, we really got the best advice we can possibly get from yourself as a friend of the Committee rather than as the headmaster, so to speak. You have given us an indication of what is not in Order, and, generally speaking, we can allow the Committee to pass on to other business by saying that, in so far as we understand it, we accept the Minister's explanation and your Ruling.