HC Deb 19 June 1950 vol 476 cc967-87

Motion made, and Question proposed, "That the Clause stand part of the Bill."

8.30 p.m.

Mr. Manningham-Buller

This is a very important and very novel Clause. I think I understand it, but I am sure my hon. Friend the Member for Edinburgh, South (Sir W. Darling) will help me to press the right hon. and learned Gentleman to elucidate it if I have gone wrong. As I understand it, at the present time the position, apart from this Clause, is as follows: that where a tenant for life and remainder men agree to divide the capital of a trust between them no legal liability falls upon the trustees for payment of any Estate Duty should the death of the life tenant occur, within five years after the division.

I think that is the legal position, although I understand that a practice has grown up whereby, as a matter of convenience, in certain cases where this division has taken place trustees have sought to get information from the authorities as to the extent to which liability might arise for Estate Duty in the event of the life tenant dying within five years of the transfer. I emphasise the point that at present there is, as I understand it, no legal liability upon the trustees in those circumstances to pay any of the duty.

The effect of this Clause, as I understand it—the right hon. and learned Gentleman will correct me if I am wrong—is to cast an entirely new, novel and onerous obligation upon trustees, of a settlement. If by agreement between them the life tenant and the remainder men agree that the trust should be brought to an end and the capital divided between them—an agreement which might be reached without having to obtain the consent of the trustees; that might depend upon the terms of the settlement—then under this Clause, notwithstanding that agreement and that division, the trustees will be liable, and personally liable, for any Death Duty that may arise if the life tenant dies within five years of the transfer.

The Committee will see that under subsection (1) of this very long Clause, it is said: whatever the nature of the property in which the interest subsisted the following persons shall be accountable for any estate duty payable on the death by virtue of that section (in addition to any persons accountable therefor apart from this section) that is to say—

  1. (a) if the settlement under which the interest subsisted is in existence at the death. the trustees for the time being of that settlement; and
  2. (b) if it is not, the persons who were the last trustees of that settlement and the personal representatives of any such person who died before the deceased."
It follows that where the life tenant and the remainder men agree to terminate the trust and the trust is terminated, then under this Clause a personal liability will be, or may be, cast upon the trustees of that settlement when the settlement has ceased, or, if one of those trustees has died, upon his personal representatives, and the liability met from his estate.

That broadly speaking—I hope not too broadly—is, as I understand it, the effect of this Clause, and I think the Committee should consider the question: Why should this additional novel liability be placed upon trustees? If a man has acquired a considerable amount of money and not made it the subject of a settlement, he can hand it over to his son, and if the father dies within five years the son will have to pay Estate Duty on the amount so handed over. In that case there is no liability on any third person such as a trustee. Where there is a settlement and the father hands over to his son his interest in the settlement and dies within five years, the son will be liable, but this Clause makes the trustees liable, too.

Why should the Revenue have this additional security in cases where there is a settlement? Why should they be able to recover from the trustees, even after the trust is determined, when they have already got the same security as they would have had had it been a free transfer of free money from a father to a son? I think that a very heavy burden is cast upon the right hon. and learned Gentleman in seeking to justify the inclusion of this Clause in the Bill. I ask him what possible justification is there for making the trustee also personally liable in the case where the money is the subject of the settlement.

Is it his desire to discourage people from creating settlements? The effect, of course, will be to give the Revenue a special hold over property Which may never become subject to duty, and a hold which they never would have had if the trust had not been set up. I must say that if this new Clause is passed, trustees of such settlements will be placed in an extremely onerous and difficult situation.

What it means is this: Although the trust may be terminated, their liability as trustees will not end with the termination of the trust but will continue for a further five years, not because there is any liability for Estate Duty on the part of the trust, not because at the time the trust is terminated there is any sum owing in Estate Duty, but merely because of the possibility that within five years the transferor may die and a liability may arise. The expense of keeping that trust on foot will presumably fall on the beneficiaries, not in their interests but solely for the benefit of the Revenue, and not to meet a liability that has arisen but to meet a liability that may never arise.

I emphasise again that the sole effect is to make the trustee liable. Provision is made in the Clause for the obtaining of a certificate by the trustees of the amount which the Revenue may say will be due should the death occur within five years, but the process of obtaining such a certificate does mean considerable expense, and when a certificate is obtained it does not by any means follow that the amount retained by the trustees to meet the liability shown on the certificate will be sufficient should the death occur. I appreciate that this machinery in regard to the certificate is an effort to gild the pill, but I come back to this point, and I ask the right hon. and learned Gentleman to state quite clearly for what reason he is seeking to place this additional, onerous burden on trustees—a burden, of course, which he cannot place on the shoulders of any one other than the donee where the gift is free money and the money is not subject to a trust.

Power is given by subsection (4) to give the trustees a lien on property to meet this possible obligation. That cannot be to the advantage, I should have thought, in many cases, of the beneficiary of the trust, and I must say that I think that the trustees here, if this Clause takes effect, are being placed in a most difficult position because they will have this personal obligation. It may not be so easy to reconcile this personal obligation with the terms and conditions of the trust. It may be very difficult indeed for a trustee to refuse to give effect to the instructions to the person entitled to the proceeds of the trust. It puts him in a very difficult position to refuse that on the ground that he must retain for five years trust property so as to avoid any personal obligation for duty falling upon his shoulders in the event of the life-tenant dying within that period.

I have endeavoured to explain my objections to this long Clause. I think they are valid ones. I shall be interested to hear what the right hon. and learned Gentleman has to say about it. The best thing he can say, which I hope he will say, is that on reconsideration this Clause will not stand part of the Bill.

The Solicitor-General

The object of this Clause is simply and solely to put an end to a state of uncertainty in which trustees find themselves today. It is not to put a fresh and unjustifiable burden on them. What it does is to say exactly where they stand and what their liability is. Under Section 43 of the Finance Act, 1940, there is liability to Estate Duty on any sums advanced out of a settled fund within five years immediately preceding the life tenant's death, whether or not a benefit is reserved to a life tenant, and on any sum outside that five years if there is a benefit for the life tenant. If that is so, there is always doubt whether liability will arise, because it is not known when the life tenant is going to die, whether the five years will lapse, or whether a benefit will be reserved.

It has always been the practice of the Estate Duty Office to agree with the trustees what shall be the sum set aside to meet a prospective liability. It was thought that this practice was justified, land it came within the provisions of Section 8 (4) of the Finance Act, 1894. It is not a clearly worded Section, nor are any of the Sections in that Act

Sir W. Darling

Oh.

The Solicitor-General

I am certain that I shall have the agreement of the hon. Member if he sees some of the Sections. It is a very difficult Act to construe. That being the position, it was thought desirable, there being doubt as to whether the position is lawfully justified, to put the matter beyond doubt. We have therefore devised this scheme which, broadly speaking, represents the existing arrangements, although it departs in some respects to allow the trustees to know exactly where they stand in these matters and what is their liability.

We are talking of settled property within the hands of trustees. Therefore, the trustees have it in their power, either by creating the necessary indemnity, or by setting money out of the fund, to see that they are adequately provided to pay any Estate Duty that becomes due in the event of the life tenant dying within five years, or there being a reserved benefit. As I have said, they can do it by asking for an indemnity or by setting aside the necessary sums. Subsection (4) gives them the necessary lien to enable them to do that.

Mr. Manningham-Buller

Does the right hon. and learned Gentleman say that Subsection (1) does not create a new liability?

8.45 p.m.

The Solicitor-General

It is impossible to answer that question without knowing whether the existing arrangements were justified by Section 8 of the Finance Act, 1894, or not. The question whether the existing arrangement is justifiable or not depends upon three words used in that section—"at any time"; and, without looking at it, it is impossible to say to what time that refers. I will say at once that the liability imposed is to some extent enlarged in comparison with what was thought to be their liability under the Act of 1894 but, at the same time, certain specific protection is given. In the first place, they are given the right to claim a lien. That is specifically declared in subsection (4).

Secondly, there is this procedure by certificate which, in fact, will be quite simple. After all, these things are done already by arrangement between the Estate Duty office and the trustees and there is no reason why there should be any difficulty at all about obtaining the certificate which will represent, broadly speaking, a continuation of the existing practice. I do not think it should place any extra burden on the trustees. When they obtain the certificate they are excused from any further payment beyond the payment for which the certificate provides.

Subsection (2) deals with a very special category of cases, namely, where the trustee, with the consent of the life tenant, advances money to a minor and it is in consequence, under the existing law, impossible for him to make the necessary provisions. Hon. Members will see that if the amount advanced is no more than one-half the presumptive share of the minor, then the trustee is excused in respect of payment of the Estate Duty in excess. There is, therefore, a slightly enlarged liability for which there is compensation in the protection specifically included in the Clause.

Subsections (5) and (6) deal with special cases of settled land—land settled under the Settled Land Act, under the terms of which, as hon. Members who are concerned with this sort of thing will know, the land is vested in the life tenant and not in the trustee, except in the case of infants who cannot hold land. It is vested in the life tenant himself and, therefore, the trustee has to be given special protection. Subsections (5) and (6) give him special protection enabling him to put, as it were, a kind of stop upon the proceedings where the land is not exactly vested in the trustee himself.

What we are trying to do is to make quite certain where a trustee stands with regard to liability for Estate Duty under Section 43. It is an extremely technical matter and, broadly speaking, I hope that trustees will see that it is to their advantage to know exactly what is the measure of their liability instead of the whole thing being left in doubt, as it is at the moment, dependent upon arrangements which are, shall I say, somewhat loosely made between trustees and the Estate Duty office under the provisions of Section 8 of the Act of 1894, there being considerable uncertainty as to whether those provisions do validate arrangements. I hope the Committee will agree that this is a proper Clause

Sir Patrick Spens (Kensington, South)

I must confess that I do not like this Clause. In the first place, it resolves the doubt as to there being a personal liability of the trustee in the circumstances referred to by the right hon. and learned Gentleman. Once and for all it resolves the doubt and imposes a personal liability for which, as far as my recollection goes, there is as yet no judicial decision. The first thing is, therefore, that the Inland Revenue have, by legislation, decided that doubtful matter in their favour. The second point is to give statutory authority to what has been quite customary in the past—arrangements with regard to giving an agreement as to what property should be held up by trustees in order to protect themselves against any potential claim of personal liability of the Revenue against them.

In subsection (3) the point which worries me is that the certificate is only as to the agreed amount. Having obtained an agreed amount, trustees will retain property of that agreed amount at the time the certificate is given, but it does not follow, if they allow the remainder of the estate to be distributed, that that property will be of the value of that amount when the claim is made against them by the Revenue. They will have a personal liability imposed upon them for making good any deficiency as regards the difference between the value of the property at the time of the certificate and its value when they have to pay the bill to the Revenue.

The third point is that this will hold up the distribution of trustees' estates, which is a very important matter. If the Committee will look at subsection (1, b), they will find that if a settlement is come to under it, it falls upon the personal representative of the last trustee—not on the last surviving trustee but on the trustee who happened to be the last trustee of the settlement. An obligation is imposed upon his estate in respect of this liability.

We are very much inclined in this Committee to discuss settlement questions as if they affected only rich people who could afford legal advice, but this proposal will apply to small estates in exactly the same way as to the richest estate in the land. We shall find that the ordinary executor in the small estate may, perfectly innocently and with no knowledge of any liability, allow the life tenant to remain, and when the life tenant dies and Death Duties become collectable, the wretched executor, or the executors of that executor, may be told that the Revenue have a claim against them.

I ask the Solicitor-General to reconsider the Clause. Is it really necessary? Why is it being enacted at all? For years we have gone on without any case going to any court, so far as I know. Arrangements have been made perfectly adequately. Now every case is being decided in favour of the Revenue and against the beneficiaries.

Mr. Boyd-Carpenter (Kingston-upon-Thames)

I hope that the Solicitor-General will pay attention to the appeals which have been made to him. As he rightly said, the proposed new Clause puts an end to uncertainty, but I think it does so in the wrong way. It gives legal authority for the bluff which the Estate Duty office have successfully carried on for 50 years. I do not think that it is right to give legal authority to a bluff of that sort and I am certain that this proposal clarifies the matter completely in the wrong way.

I should be grateful if the Solicitor-General would tell us what other cases there are in which trustees who have shown no negligence are held personally liable. He must have precedents. I do not know, but it seems to me that the right hon. and learned Gentleman is introducing not only a new principle into our law but a new terror into the office of trustee. I must confess a personal interest because I happen to have the misfortune, for misfortune it is, to be a trustee of a small trust. It is a serious thing to impose this personal liability. It makes the office of trustee even more disagreeable and unremunerative than it is, and will make it more difficult to find people who are prepared to undertake these duties. It is not a small thing to put this personal liability upon trustees who have conducted their affairs without any negligence of any sort of kind.

There is a real difficulty, which was put to me by my hon. and learned Friend the Member for Kensington, South (Sir P. Spens). Let us suppose that a certificate under subsection (3) is obtained and let us suppose property adequate to amount to that value is retained. Suppose the value of the property dropped in the interval; suppose the trustees—here we might say they were being negligent—put the money into the security known as "Daltons" and the value, therefore, fell catastrophically. Where will they be at the end of it? They have retained what appeared at the time to be enough assets to meet the duty as set out in the certificate. At the end they have not enough money to meet it. I assume that under the Clause they are then personally liable.

It seems completely wrong that trustees should be made personally liable. I cannot see the public purpose behind this. After all, the rights against the remainder men, the rights against the persons who have actually got the property, remain, and it is the normal principle of taxation law that where someone has obtained the property he is liable to pay the tax upon it. Why is an exception made in this case? It seems to me that the reason is merely that the Estate Duty office are now trying, as much out of amour propre as anything else, to get legal authority for the attitude which they have adopted during past years; but it is quite a different thing for the Committee to say that this quite new principle should be introduced into our taxation law.

My final point, which is of very great importance, is the inevitable delay imposed in the winding-up of estates. The Solicitor-General knows perfectly well that expense is inevitably connected with the winding-up of estates—the professional fees have to be paid, and so on—and it seems grossly unfair to the beneficiaries that estates should have to be kept in being for no other purpose than to provide an additional security for the Revenue. That is very unfair to beneficiaries who, as has already been pointed out, may be people of quite small means. Yet that is the inevitable consequence of the Clause. I hope that the Solicitor-General will appreciate the weight of feeling that there is in the Committee against this provision and that the conciliatory atmosphere which prevailed in the Committee in the earlier part of the day has not been wholly dissipated by now.

Sir W. Darling

I am determined that the Debate shall not be exclusively made up of contributions by distinguished legal gentlemen, even if it imposes upon the Committee frequent speeches from me. I want to put an actual case to the Solicitor-General. I suggest that the Clause is a Clause for the extinction of trustees. Trustees are humble people who are asked by old folk to help in administering their estates, and it is an obligation which my hon. Friend the Member for Kings-ton-upon-Thames (Mr. Boyd-Carpenter), like myself, has probably undertaken frequently, more out of kindness of heart than because of any possible advantage accruing to him. This provision will place such trustees in a position of extreme difficulty.

I want to state a case which bears relevance to the facts of the situation and ask the Solicitor-General how he would deal with it. There was a man of 75 years of age who had £20,000. He had a niece in Australia and a nephew in Africa, neither of whom he had ever seen. He decided to give £5,000 to his niece and £5,000 to his nephew during his lifetime. He then told his trustees that he had done this. With the remaining £10,000 he went to a very good Scottish insurance company and bought a life annuity which ceased on his death. Can the Solicitor-General tell me what the position of the trustees is when he dies within three years without means because he drew the annuity a month before his decease and spent it by living up to the hilt—a very wise thing to do these days?

The sum of £5,000 is in Kenya with, I regret to say, a nephew who has never seen his uncle and probably does not respect him very highly, and he has told the trustees that he is not prepared—he probably put it more bluntly, for we know what language is like in East Africa—to make any restitution of the £5,000 which his uncle gave him. The niece in Australia foolishly invested the money in a boarding house. Boarding houses are very difficult things out of which to earn a living, and she cannot restore any part of the £5,000.

The trustees are two elderly men whom the deceased met on the golf course. He said, "Will you be trustees of mine?" and they accepted the trusteeship. I shall write to these two gentlemen tonight when I hear the remarks of the Solicitor-General and warn them what is the position. Three years ago he died, that is, two years before the expiry of the five years. These two gentlemen, who this afternoon have taken their quiet whiskey at the 19th hole, are not aware of this bombshell which will descend upon them.

9.0 p.m.

I add my support as a practical man, as a common man and as an ordinary man, in the interests of trustees. This means the death of trustees, this means that no one will undertake that kindly, generous act that tens of thousands of persons have done for their fellow citizens without reward in years gone by. Where will the business go? To the banks, the large monopolies to whom hon. and right hon. Gentlemen opposite object. Where will trustee business go to under Clause 35 if it is carried? It will tend to go to those persons who have big money and who can indemnify themselves and stand up to their responsibilities.

This Clause, if passed in its present form, will make trustees, small, decent people, involve themselves not only in kindness but in trouble. It will place business with the Public Trustee and the banks—in which I have an interest—or with insurance companies—in which I have an interest—or with large firms of lawyers who have elaborate staffs to conduct this type of business. Is that democratic procedure? Do hon. Gentlemen behind the Chancellor stand for that? Is that what is to be interpreted out of this people's Budget—this new liability laid upon decent people whose only crime is that they are trying to do a good turn to people not able to look after themselves? That is as I understand the Clause, and my hon. and learned Friend give legal point and direction to my simple views. I ask the Chancellor to reconsider this Clause. As the Solicitor-General told us, we have done without it since 1894 and we can do without it a little longer.

The Solicitor-General

One hon. Member opposite asks, what is the object behind this Clause? It is not to try to bluff as the hon. Member for Kingston-Upon-Thames (Mr. Boyd-Carpenter), I thought rather offensively and quite unnecessarily said—[HON. MEMBERS: "No."] There is uncertainty about the present position. Trustees do not know where they stand and are anxious to; know, and the Law Society is also anxious that this matter should be cleared up. We are not trying to make good any bluff. All we are trying to do is to accede to that desire on the part of trustees and the Law Society and to the desire which the Estate Duty office also has to know exactly how everybody stands in this matter.

Mr. Selwyn Lloyd

The right hon. Gentleman is not suggesting, is he, that the Law Society wanted this cleared up in this particular way?

The Solicitor-General

No, I did not say anything of the sort. What I said was that they wanted the matter cleared up. They were anxious that there should be legislation which would make it perfectly clear how trustees stand in this matter. That is all we are doing and there is no sinister scheme to impose some extra burden on trustees, as has been implied. On the contrary, the desire is to make; perfectly clear what is unclear at the; moment. As to the question whether this Clause is on the right lines, we certainly: think that in its broad outline it is. It makes clear that when trustees have settled property to deal with, and when it is desired to take money out of the settlement—with the result that there may be a liability under Section 43 of the Act—they shall in their own interests make the necessary provision, either by obtaining an indemnity or by setting aside funds.

Sir Ian Fraser (Morecambe and Lonsdale)

If the trustee obtains an indemnity, does that indemnify him and release him from responsibility? If not, what does it mean?

The Solicitor-General

If he obtains an indemnity from the beneficiaries who are entitled to the estate, which enables him to make certain that they get from the beneficiaries the necessary amount to pay any Estate Duty which may—

Sir I. Fraser

Then is the trustee thereafter free?

The Solicitor-General

Of course he is. He obtains under an indemnity the necessary sum which he requires to pay the Estate Duty; then he is obviously free. That is what trustees do now and that is what they will continue to do.

The Committee must remember that one is dealing here with settled property, that is to say, property in the hands of the trustees; and it is in their hands to procure for themselves the necessary indemnity and thereby the necessary protection, to enable them to discharge any Estate Duty which may become incident as the result of a death within five years or the reservation of a benefit. They are in the position, therefore, of having the settled funds in their hands, to see to it that the necessary amount of money is available to pay Estate Duty.

The only exception to that position is this. In the first place, if with the consent of the life tenant, or without his consent in the exercise of a power, they advance money to an infant, special protection is given under subsection (2) to the extent of a half presumptive share of the infant, that being, so I am told, the almost invariable form of a power to advance money to an infant. It relates to half his presumptive share. Therefore, that protection is given in that case when, by virtue of the nature of the infant's interests, they cannot keep aside money.

The other case is where one is dealing with settled land which in the case of adults, in cases other than lands that are settled lands of infants, is vested in the life tenant. In that case the trustee also requires some special protection because he has not the land in his own protection as he has in the case of other settled lands. Therefore, subsections (5) and (6) give him the necessary protection in the case of settled land and the position of the trustee is perfectly clear.

Hon. Members opposite have raised various points. More than one hon. Member has referred to the question of the personal representatives of a trustee. We should like to think over that point. Having listened to the argument, we are quite convinced that in general the Clause is on the right lines, but we shall consider what has been said—as, indeed, we always do—particularly with regard to that point. I do not wish to bind myself, however, in any way to make a change. We just want to consider whether we feel, in view of the arguments that have been adduced, whether we ought to make a change.

I am bound to say, having listened to the arguments, that we still think that in general the Clause is on the right lines. It makes the position of trustees clear. It does not really make their position difficult. They have it in their power to protect themselves by setting aside funds and by obtaining indemnities, as they sometimes do now. They have it in their power to do that, and they will continue to have that in their power. They are given protection where they want it. The certificate procedure, in fact, continues and represents the existing practice with regard to agreement with the Estate Duty office of the prospective amount of liability which may fall to be paid under Section 43 of the Act. That is continued and is given statutory effect by the terms of the Clause.

I hope that when hon. Members consider the matter a little more closely they will agree that, bearing in mind that one is dealing with settled property, which is within their hands, the clause does not really put any undue burden upon trustees. On the contrary, it tells them where they stand. Many trustees have felt considerable doubt as to what their powers and liabilities are; they will now have that doubt resolved. I hope that with that explanation the Committee will agree that the Clause is satisfactory as it stands, subject to this: that on consideration of the arguments, and particularly the argument with regard to the liability of personal representatives of the last trustee, we may be able to put down some Amendments, but I give no undertaking with regard to that. I hope that in the light of what I have said, the Committee will feel able to approve the Clause.

Sir D. Maxwell Fyfe

I do not think it will be unfair to take up the right hon. and learned Gentleman from this position: that he is disposed to keep the framework and practically all the teeth of the Clause, but is only prepared to make Amendments in inconsiderable detail. The difficulty that we feel is, first as my hon. Friend the Member for Kingston - upon - Thames (Mr. Boyd-Carpenter), has said, in the origin of the Clause. This applies only where, as the right hon. and learned Gentleman said, one is dealing with settled property; but where the tenant for life and the remainder men, being entitled to the whole beneficial interest, divide between them the amount of capital probably in proportion to their interests in it, then the position is that the tenant for life dies within the five years and in the ordinary way one would expect the remainder man to be responsible for the Death Duties in the same way as if there was not any settlement at all. I have tried to put the position broadly and I hope, to make it comprehensible.

The right hon. and learned Gentleman rather animadverted against my hon. Friend the Member for Kingston-upon-Thames for his remarks as to the origin of the Clause. I do not think it would be wrong to say—and this is as I understand the matter—that the Estate Duty office have certainly fostered the theory that the trustees would be liable for the duties in the circumstances I have mentioned. Again I do not think it would be wrong to say that that view is not shared by, I should say a majority, but, in order to be entirely reasonable, a large proportion, of practitioners in this field. What has happened is that because that view has been fostered the Estate Duty office has suggested that the trustees should keep a portion of the property in hand in order to meet any possible liability, and if that is done, if they keep a proportion of that property in hand, they have said there will not be any oppressive liabilities for the trustees. I think that is a fair presentation of the practice.

There is a very strong point made by my hon. and learned Friend the Member for Kensington, South (Sir P. Spens) that that practice has worked perfectly well and without any trouble for some 55 years. That is the first position, and I do not think that it is really an answer for the right hon. and learned Gentleman to say that certain bodies have been pressing for legislation because, of course, people only press for legislation intending at the same time that it is legislation that they like and one has to discount that matter.

I will summarise in eight points, which I hope will be clear, the objections we have to this Clause. In the first place, we say that there is no reason at all for differentiating between the case of a man who gives free capital to his son and the case of a man who releases his life interest under a settlement in the circumstances which I have described. As I say, in the former case it is quite clear that the son would be liable for the Duty and I cannot see any reason for making the trustees also liable in this case. The second point is that what is sought to be done here is to take advantage of the existence of the trust by giving the Revenue a special hold over property and—this is the point—it is property which may never become liable to the Duty if the five years period runs out. So why should one in this case give the Revenue that special hold?

9.15 p.m.

The third point is that the Clause involves an interference with the right of an individual to deal with his property during his life as he thinks fit on the ground that there may be a possible liability after his death. If once we are to get that principle of interference with personal property where are we going to stop? The fourth point, and this is important, and I am sure that the Chancellor will think it important because he has been telling us of his own great effort to search out and check administrative extravagance in every way, is that whatever else this Clause does it must inevitably involve a great deal of administrative trouble and expense at a time when trouble and expense both in Government Departments and among the public should be cut down.

The fifth point deals with what the right hon. and learned Gentleman has suggested with regard to the amelioration of the position of trustees. But really that is illusory because when the trustees become personally liable for the amount shown by the certificate there is still the possibility of depreciation, the possibility of another Chancellor of the Exchequer coming. The right hon. and learned Gentleman has pledged himself not to do anything more in the nature of a capital levy, but another Chancellor might take that course, and the trustees would be put in a corresponding difficulty. There are also the ordinary difficulties of inflation and fluctuations of that kind to which we are so accustomed. The sixth point is that this Clause imposes upon trustees a greater liability to the Revenue than they have to their own beneficiaries. I do not think it is a proper position to interfere with the duties of the trustees in relation to the fund which relate to what he has to do at the end of a trust period, and which would apart from this provision, have come to an end by the property going home in the ordinary way.

The last and not the least important point was again one made by my hon. and learned Friend the Member for Kensington, South, who has such great experience in these matters, that this will cause hardship not only on large estates but will have those effects and cause trouble in small estates, as he explained. These are serious points and practical ones. The right hon. and learned Gentleman has told us that in principle we can look for no help from him on the main points. Unless we can have a very different reception from that I see no alternative than to advise my hon. Friends to vote against this Clause.

Sir H. Williams

I am not clear about all this. The Solicitor-General indicated

that he might think again. It is always a good idea when learned counsel thinks again. I want to make sure, on the assumption that this Clause will not be defeated in a few minutes, that when we reach the Report stage, unless the necessary Amendments are put down, an Amendment to delete the Clause will be put down. I am a trustee in only one case. I am no clearer now than when we started although I have had the benefit of the best legal advice, free, from both sides. If I had paid for it I do not think I should have been any the wiser; I am certainly no wiser now. It is clear that the Government do not propose to nationalise the land for the time being or they would not have made reference to the Settled Land Act, 1925.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 298; Noes, 284.

Division No. 31] AYES [9.22 p.m.
Acland, Sir Richard Cook, T. F. Freeman, Peter (Newport)
Adams, Richard Cooper, G (Middlesbrough, W) Gaitskell, Rt. Hon H T N
Albu, A. H Cooper, J. (Deptford) Ganley, Mrs. C. S.
Allen, A. C. (Bosworth) Corbet, Mrs. F. K. (Peckham) George, Lady M. Lloyd
Anderson, F. (Whitehaven) Cove, W. G. Gibson, C. W.
Attlee, Rt. Hon. C. R. Craddock, George (Bradford, S.) Gilzean, A.
Awbery, S. S. Crawley, A. Glanville, J. E. (Consett)
Ayles, W. H. Cripps, Rt. Hon. Sir S Gooch, E. G.
Bacon, Miss A Crosland, C. A. R. Gordon-Walker, Rt. Hon. P. C
Baird, J. Crossman, R. H. S Greenwood, A. W. J. (Rossendale)
Balfour, A. Cullen, Mrs. A. Greenwood, Rt. Hn. Arthur (Wakefield)
Barnes, Rt. Hon A J Daggar, G. Grenfell, D. R.
Bartley, P. Daines, P. Grey, C. F.
Bellenger, Rt. Hon F J Dalton, Rt. Hon. H. Griffiths, D. (Rother Valley)
Benson, G. Darling, G. (Hillsboro') Griffiths, Rt. Hon. J. (Llanelly)
Beswick, F. Davies, A. Edward (Stoke, N.) Griffiths, W. D. (Exchange)
Bevan, Rt. Hon. A. (Ebbw Vale) Davies, Ernest (Enfield, E.) Gunter, R. J.
Bing, G. H. C. Davies, Harold (Leek) Hale, J. (Rochdale)
Blackburn, A. R. Davies, R. J. (Westhoughton) Hale, Leslie (Oldham, W.)
Blenkinsop, A. Davies, S, 0. (Merthyr) Hall, J. (Gateshead, W.)
Blyton, W. R. de Freitas, Geoffrey Hal), Rt. Hn. W. Glenvil (Colne V'll'y)
Boardman, H. Deer, G. Hamilton, W. W.
Booth, A. Delargy, H. J. Hannan, W.
Bottomley, A. G. Diamond, J. Hardman, D. R.
Bowden, H. W. Dodds, N. N. Hardy, E A.
Bowles, F. G. (Nuneaton) Donnelly, D. Hargreaves, A.
Braddock, Mrs. E. M. Donovan, T. N. Harrison, J.
Brockway, A. Fernner Driberg, T. E. N. Hastings, Dr. Somerville
Brook, D. (Halifax) Dugdale, Rt. Hon. J. (W. Bromwich) Hayman, F. H.
Brooks, T. J. (Normanton) Dye, S. Henderson, Rt. Hon. A. (Rowley Regis)
Broughton, Dr. A. D. D. Ede, Rt. Hon. J. C. Herbison, Miss M.
Brown, George (Belper) Edelman, M. Hewitson, Capt. M
Brown, T. J. (lnce) Edwards, John (Brighouse) Hobson, C. R
Burke, W. A. Edwards, Rt. Hon. N. (Caerphilly) Holman, P.
Burton, Miss E. Edwards, W. J. (Stepney) Holmes, H. E. (Hemsworth)
Butler, H. W. (Hackney, S.) Evans, Albert (Islington, S. W.) Houghton, Douglas
Evans, E. (Lowestoft) Hoy, J.
Callaghan, James Evans, S. N. (Wednesbury) Hubbard, T
Carmichael, James Ewart, R. Hudson, J. H. (Ealing, N.)
Castle, Mrs. B. A. Fernyhough, E. Hughes, Emrys (S. Ayr)
Champion, A. J. Field, Capt. W. J. Hughes, Hector (Aberdeen, N.)
Chetwynd, G. R Finch, H. J. Hughes, Moelwyn (Islington, N.)
Clunie, J. Fletcher, E. G. M. (Islington, E.) Hynd, H. (Accrington)
Cocks, F. S. Follick, M. Hynd, J. B. (Attercliffe)
Coldrick, W. Foot, M. M. Irvine, A. J. (Edge Hill)
Collick, P Forman, J. C. Irving, W. J. (Wood Green)
Collindridge, F. Freeman, J. (Watford) Janner, B.
Jay, D. P. T. Morris, P. (Swansea, W.) Strachey, Rt. Hon. J,
Jeger, G. (Goole) Mort, D. L. Strauss, Rt. Hon. G. R. (Vauxhall)
Jeger, Dr. S. W. (St. Pancras, S.) Moyle, A. Stross, Dr. B.
Jenkins, R. H. Mulley, F. W. Sylvester, G. 0.
Johnson, James (Rugby) Murray, J. D. Taylor, H. B. (Mansfield)
Johnston, Douglas (Paisley) Nally, W. Taylor, R. J. (Morpeth)
Jones, D. T. (Hartlepool) Neal, H. Thomas, D. E. (Aberdare)
Jones, Frederick Elwyn (West Ham, S.) Noel-Baker, Rt. Hon. P. J Thomas, George (Cardiff)
Jones, Jack (Rotherham) Oldfield, W. H. Thomas, I. 0. (Wrekin)
Jones, William Elwyn (Conway) Oliver, G. H Thomas, I. R. (Rhondda, W.)
Keenan, W Orbach, M. Thorneycroft, Harry (Clayton)
Kenyon, C Padley, W. E. Thurtle, Ernest
Key, Rt. Hon. 0. W Paling, Rt. Hon. Wilfred (Dearne V'Hy) Timmons, J.
King, H. M. Paling, Will T. (Dewsbury) Tomlinson, Rt. Hon. G
Kinghorn, Sqn.-Ldr E Pannell, T. C. Tomney, F.
Kinley, J. Pargiter, G. A. Turner-Samuels, M
Lee, F. (Newton) Parker, J. Usborne, Henry
Lee, Miss J. (Cannock) Paton, J. Vernon, Maj. W. F
Lever, L. M. (Ardwick) Pearl, T. F. Viant, S. P.
Lever, N. H. (Cheetham) Poole, Cecil Wade, D. W.
Lewis, A. W. J. (West Ham, N.) Popplewell, E. Wallace, H. W
Lewis, J. (Bolton, W.) Price, M. Philips (Gloucestershire, W.) Watkins, T. E.
Lindgren, G. S. Proctor, W. T. Webb, Rt. Hon. M. (Bradford. C.)
Lipton, Lt.-Col. M. Pryde, D. J. Weitzman, D.
Logan, D. G. Pursey, Comdr. H. Wells, P. L. (Faversham)
Longden, F. (Small Heath) Rankin, J. Wells, W. T. (Walsall)
MacColl, J. E. Rees, Mrs. D West, D. G.
McGhee, H. G. Reeves, J. Wheatley, Rt. Hn. John (Edinb'gh, E.)
McGovern, J Reid, T. (Swindon) White, Mrs. E. (E. Flint)
Mclnnes, J. Reid, W. (Camlachie) White, H. (Derbyshire, N. E. I
Mack, J. D Richards, R Whiteley, Rt. Hon. W.
McKay, J. (Wallsend) Robens, A. Wigg, George
Mackay, R. W. G. (Reading, N.) Roberts, Emrys (Merioneth) Wilcock, Group-Capt. C. A. B
McLeavy, F. Roberts, Goronwy (Caernarvonshire) Wilkes, L.
MacMillan, M. K. (Western Isles) Robertson, J. J. (Berwick) Wilkins, W. A.
McNeil, Rt. Hon. H. Robinson, Kenneth (St. Pancras, N.) Willey, F. T (Sunderland)
MacPherson, Malcolm (Stirling) Rogers, G. H. R. (Kensington, N.) Willey, O. G'. (Cleveland)
Mainwaring, W. H. Ross, William (Kilmarnock) Williams, D. J. (Neath)
Mallalieu, E. L. (Brigg) Royle, C. Williams, Ronald (Wigan)
Mallalieu, J. P. W. (Hudderfield E.) Shackleton, E. A. A. Williams, Rt. Hon. T, (Don Valley)
Mann, Mrs. J. Shawcross, Rt. Hon. Sir H Williams, W. T. (Hammersmith, S.)
Manuel, A. C. Shinwell, Rt. Hon. E. Wilson, Rt. Hon. J. H. (Huyton)
Marquand, Rt. Hon. H. A. Shurmer, P. L. E. Winterbottom, I. (Nottingham, C.)
Mathers, Rt. Hon. George Silverman, J. (Erdington) Winterbottom, R. E. (erightside)
Mellish, R. J. Silverman, S. S. (Nelson) Wise, Major F. J.
Messer, F. Simmons, C J. Woodburn, Rt. Hon. A
Middleton, Mrs. L. Slater, J. Woods, Rev. G S
Mikardo, lan Smith, Ellis (Stoke, S.) Wyatt, W L.
Mitchison, G. R. Snow, J. W. Yates, V. F.
Moeran, E. W Sorensen, R. W. Younger, Hon. Kenneth
Monslow, W. Soskice, Rt. Hon. Sir F.
Moody, A. S. Steele, T. TELLERS FOR THE AYES:
Morgan, Dr. H. B Stewart, Michael (Fulham, E.) Mr. Pearson and Mr. Sparke.
Morley, R. Stokes, Rt. Hon. R R
NOES
Aitken, W. T. Bracken, Rt. Hon. Brendan Croslhwaite-Eyre, Col O E
Alport, C. J. M. Braine, B. Crouch, R. F.
Amery, J. (Preston, N.) Braithwaite, Lt.-Comdr. J. G. Crowder, F. P. (Ruislip-Northwood)
Amory, D. Heathcoat (Tiverton) Bromley-Davenport, Lt.-Col. W Crowder, Capt. John F. E. (Finchley).
Arbuthnot, John Brooke, H. (Hampstead) Cundiff, F. W.
Ashton, H. (Chelmsford) Browne, J. N. (Govan) Cuthbert, W. N.
Assheton, Rt. Hon. R. (Blackburn, W.) Buchan-Hepburn, P. G. T. Darling, Sir W. Y. (Edinburgh, S.)
Astor, Hon. M. Bullock, Capt. M. Davidson, Viscountess
Baldock, J. M. Bullus, Wing-Commander E. E. Davies, Rt. Hn. Clement (Montgomery)
Baldwin, A. £. Burden, Squadron Leader F. A. Davies, Nigel (Epping)
Banks, Col. C. Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n) de Chair, S.
Baxter, A. B. Carr, L. R. (Mitcham) Deedes, W F.
Beamish, Maj. T. V. H. Carson, Hon. E. Digby, S. Wingfield
Bell, R. M. Channon, H. Dodds-Parker, A. D.
Bennett, Sir P. (Edgbaston) Clarke, Col. R. S. (East Grinstead) Donner, P. W.
Bennett, R. F. B. (Gosport) Clarke, Brig. T. H. (Portsmouth, W.) Douglas-Hamilton, Lord M
Bennett, W. G. (Woodeide) Clyde, J. L. Drayson, G. B
Bevins, J. R. (Liverpool, Toxteth) Colegate, A. Drewe, C
Birch, Nigel Conant, Maj. R. J. E. Dugdale, Maj. Sir T. (Richmond)
Black, C. W. Cooper, A. E. (Ilford, S.) Duncan, Capt. J. A. L.
Boles, Lt.-Col. D. C. (Wells) Cooper-Key, E. M. Dunglass, Lord
Boothby, R. Corbett, Lieut.-Col. U. (Ludlow) Duthie, W. S.
Bossom, A. C. Craddock, G. B. (Spelthome) Eccles, D. M.
Bowen, R Cranborne, Viscount Eden, Rt. Hon. A.
Bower, N. Crookshank, Capt. Rt. Hon. H. F. C Elliot, Lieut.-Col. Rt. Hon. Walter
Boyd-Carpenter, J A Cross, Rt. Hon. Sir R. Erroll, F. J
Fisher, Nigel Lloyd, Maj. Guy (Renfrew, E.) Robinson, J Roland (Blackpool, S.)
Fletcher, W. (Bury) Lloyd, Selwyn (Wirral) Robson-Brown, W. (Ether)
Fort, R. Lockwood, Lt.-Col. J. C Rodgers, J. (Sevenoaks)
Foster, J. G. Longden, G. J. M (Herts S. W.) Roper, Sir H.
Fraser, Hon. H C. P. (Stone) Low, A. R. W Ropner, Col. L.
Fraser, Sir I. (Lonsdale) Lucas, Major Sir J. (Portsmouth. S.) Ross, Sir R. D. (Londonderry)
Fyfe, Rt. Hon. Sir D. P. M. Lucas, P. B. (Brentford) Russell, R. S.
Gage, C. H Lucas-Tooth, Sir H Ryder, Capt. R. E. D
Galbraith, Cmdr T D (Pollok) Lyttelton, Rt. Hon 0 Sandys, Rt Hon. 0
Gammans, L. D McAdden, S. J. Savory, Prof. D L
Garner-Evans, E H (Denbigh) McAllister, G. Scott, Donald
Glyn, Sir R. McCorquodale, Rt. Hon. M. S. Shepherd, W S. (Cheadle)
Granville, E. (Eye) Macdonald, A. J. F. (Roxburgh) Smiles, Lt.-Col. Sir W.
Gridley, Sir A. Macdonald, Sir P. (I. of Wight) Smith, E. Martin (Grantham)
Grimston, Hon. J. (St. Albans) Mackeson, Brig. H. R. Smithers, Peter H. B. (Winchester)
Grimston, R. V. (Westbury) McKibbin, A Smithers, Sir W. (Orpington)
Harden, R. E. McKie, J. H. (Galloway) Smyth, Brig. J. G. (Norwood)
Hare, Hon. J. H. (Woodbridge) Maclay, Hon. J. S Snadden, W. McN.
Harris, F. W. (Croydon, N.) Maclean, F H. R. Soames, Capt. C.
Harris, R. R. (Heston) MacLeod, lain (Enfield, W.) Spearman, A. C. M.
Harvey, Air-Codre. A. V. (Macclesfield) MacLeod, John (Ross and Cromarty) Spence, H. R. (Aberdeenshire, W.)
Harvey, I. (Harrow, E.) Macmillan, Rt. Hon. Harold (Bromley) Spans, Sir P. (Kensington, S.)
Hay, John Macpherson, N. (Dumfries) Stanley, Capt. Hon. R, (N. Fylde)
Head, Brig. A. H Maitland, Comdr. J. W Stevens, G. P.
Heald, L. F. Manningham-Buller, R E Steward, w. A. (woolwich, W)
Heath, Col. E. R. Marlowe, A. A H. Stewart, J. Henderson (Fife, E.)
Henderson, John (Catheart) Marples, A. E. Stoddart-Scott, Col. M.
Hicks-Beach, Mai. W. W. Marshall, D. (Bodmin) storey, S.
Higgs, J. M. C. Marshall, S. H. (Sutton) Strauss, Henry (Norwich, S)
Hin, Mrs. E. (Wythenshawe) Maude, A. E. U (Ealing, S) Studholme, H. G.
Hill, Dr. C. (Luton) Maudling, R. Summers, G. S
Hinchingbrooke, Viscount Medlicott, Brigadier F Sutcliffe, H.
Hirst, Geoffrey Mellor, Sir J
Hogg, Hon. Q. Molson, A. H. E. Taylor, c s. (Eastbourne)
Hollis, M. C. Moore, Lt.-Col. Sir T. Taylor, W J. (Bradford, N.)
Holmes, Sir J Stanley (Harwich) Morris, R- Hopkin (Carmarthen) Teeling, William
Hope, Lord J Morrison, Maj J. G. (Salisbury) Thomas, J. P. L. (Hereford)
Hopkinson, H. L. D'A. Morrison, Rt. Hon. W. S (Cirencester) Thompson, K. P. (Walton)
Hornsby-Smith, Mitt P Molt-Radclyffe, C E Thompson, R. H. M. (Croydon, W)
Horsbrugh, Mils F. Nabarro, G Thoraeycroft, G. E. P. (Monmouth)
Howard, G R. (St. Ives) Nicholls, H. Thornton-Kemsley, C N
Howard, S. G. (Cambridgeshire) Nicholson, G Tilney, John
Hudson, Sir Austin (Lewitham, N.) Nield, B. (Chester) Touche, G. C
Hudson, Rt. Hon. R. S. (Southport) Noble, Comdr A H [...] Turton, R. H.
Hudson, W. R. A. (Hull, N) Nugent, G R H Tweedsmuir, Lady
Hulbert, Wing-Cdr. N. J Nutting, Anthony Vane, W. M. F
Hurd, A. R Oakshott, H. D Vaughan-Morgan, J K
Hutchinson, Geoffrey (llford, N.) Odey, G. W. Vesper, D. F.
Hutchison, Lt.-Com. Clark (E'b'rgh W) O'Neill, Rt. Hon. Sir H Wakefield, E. B. (Derbyshire, W.)
Hyde, H. M. Ormsby-Gore, Hon. W. D Wakefield, Sir W. W. (St. Marylebone)
Hylton-Foster, H. B. Orr, Capt. L. P. S. Walker-Smith, D. C.
Jeffreys, General Sir G Orr-Ewing, Charles Ian (Hendon, NO Ward, Hon. G. R. (Worcester)
Jennings, R Orr-Ewing, Ian L (Weston-super-Mare) Ward, Miss I. (Tynemouth)
Johnson, Howard S. (Kemptown) Osborne, C Waterhouse, Capt C
Jones, A. (Hall Green) Perkins, W. R. D Watkinson, H.
Joynson-Hicks, Hon. L W Peto, Brig. C. H M Watt, Sir G. S. Harvie
Kaberry, D. Pickthorn, K Webbe, Sir H. (London)
Kerr, H. W. (Cambridge) Pitman, I J Wheatley, Major M. J. (Poole)
Kingsmill, Lt.-Col. W H Powell, J Enoch White, J. Baker (Canterbury)
Lambert, Hon. G Prescott, Stanley Williams, C. (Torquay)
Lancaster, Col. C. G Price, H A. (Lewisham, W) Williams, Gerald (Tonbridge)
Langford-Holt, J. Prior-Palmer, Brig. O Williams, Sir H G. (Croydon, E.)
Law, Rt. Hon. R. K Profumo, J. D Wills, G.
Leather, E. H. C. Raikes, H. V Wilson, Geoffrey (Truro)
Legge-Bourke, Maj. E. A H Rayner, Brig. R Winterton, Rt. Hon. Earl
Lennox-Boyd, A. T Redmayne, M. Wood, Hon. R
Lindsay, Martin Remnant, Hon. P York, C
Linstead, H N Renton, D. L. M
Llewellyn, D. Roberts, P. G. (Heeley) TELLERS FOR THE NOES:
Lloyd, Rt Hon. G (King's Norton) Robertson, Sir D (Caithness) Sir Arthur Young and
Mr. T. G. D. Galbraith.

Question put, and agreed to.