§ The Temporary Chairman (Mr. Diamond)
The first three Amendments on the Order Paper relating to this Clause, namely, two in line 40 and one in line 43, are not selected.
§ Mr. Manningham-Buller
I beg to move, in page 23, line 46, after "resident" to insert:otherwise than as a result of being compulsorily wound up.At long last we have reached the point which the Leader of the House, quite early last night, thought we might reach at about a quarter to twelve; although I think that if he had listened to all these discussions he would not think that any of them have been unfruitful or, indeed, unduly prolonged. We now come to a Clause just as important as Clause 28, 2172 and it falls to my lot to move the first Amendment to it. I do not propose to take very long about that.
The Committee will see that by subsection (1) of the Clause it is provided that… all transactions … which result or may result, directly or indirctly, in the avoidance of liability to income tax or the profits tax shall be unlawful, that is to say—(a) for a body corporate resident in the United Kingdom to cease to be so resident.So it is now going to become, under this Finance Bill, unlawful for a company resident in the United Kingdom to cease to be so resident, if the result may be an avoidance of liability to Income Tax or the Profits Tax.
There is no doubt, I suppose, about it that if a company is wound up compulsorily it will cease to exist, and that, if it ceases to exist it will cease to reside. If it was a company which was existing in the United Kingdom, then it will cease to reside in the United Kingdom, and if that ceasing to reside means that Income Tax may be avoided then a serious criminal offence will have been committed. The Committee will see that by subsection (2) it is provided thatAny person who, whether within or outside the United Kingdom, does or is a party to the doing of any act which to his knowledge amounts to or results in, or forms part of a series of acts which together amount to or result in, or will amount to or result in, something which is unlawful under subsection (1) of this section shall be guilty of an offence ….Anyone petitioning for the compulsory winding up of a limited company will appreciate that, if he is successful, that company will cease to exist and so will cease to reside in the United Kingdom, and that—to carry on with this Clause—it will mean an action for avoiding Income Tax. And so, under the strict interpretation of the Clause, it would follow that anyone petitioning for the compulsory winding up of a limited company after this Clause becomes law—if it does become law—will be liable to imprisonment for two years or to a fine of £10,000.
It may be Socialist policy to discourage the compulsory winding up of companies which are insolvent. If so, the penalties imposed should be adequate for the purpose. But really, this does indicate the nonsensical state into which this provision will bring the ordinary law of 2173 the land. Not only will the petitioning creditor run the grave risk of these penalties, because the result of winding up a company compulsorily will be to bring about an avoidance of liability to Income Tax, but also the director of the company is presumed to be guilty unless he has proved that the winding up was done without his consent or connivance. If a director of a company did not oppose the compulsory winding up it will be very difficult for him to prove that the winding up was not done with his consent or connivance. Thus he will become liable to the heavy penalties.
I suggest that as this is not the sort of thing anyone wants to see happening, and to secure that this fantastic result will not ensue from Socialist legislation we have put down this Amendment. I am sure that, after his dealing so valiantly and for so long with all the other legal complexities with which we have just dealt, the Committee will regret that it should not have the assistance of the learned Attorney-General upon this matter, but, no doubt, the Chancellor of the Exchequer or the Financial Secretary will be able to confirm that one of the curious consequences under this Clause of the compulsory winding up of a limited company may be to render the petitioning creditor as well as the directors of the company liable to incarceration for two years or to a fine of £10,000.
§ Mr. Jay
The hon. and learned Member for Northants, South (Mr. Manningham-Buller), is concerned that we, inadvertently perhaps, by this Clause impose very heavy penalties on anybody who compulsorily winds up a company. His argument is that it is illegal under this Clause—without the consent of the Treasury, of course—for any resident in the United Kingdom to cease to be so resident. If a company, he argues, is compulsorily wound up it will cease to exist and, therefore, cease to be resident in the United Kingdom, and will, therefore, transgress the law.
I think, however, that the hon. and learned Member is under a misapprehension in supposing that if a company is compulsorily wound up it ceases to exist. The fact is that if a company is compulsorily wound up it passes into the hands of the liquidator. It changes its 2174 form, but it does not cease to exist Indeed, one of the practical, as opposed to the formal, objections to this Amendment is that conceivably liquidation might be used as a form of evasion of this Clause—even, conceivably, compulsory liquidation.
The second objection to the Amendment is, in our view, that it is really unnecessary. I am advised that if a company ceased to exist in the full and proper sense it would not be held to have ceased to be resident in the United Kingdom. Nevertheless, although that is the advice given to me on the ground that the present drafting of the Clause is argued to be justified, I must say, speaking purely from the commonsense point of view, that it does strike me as being a slightly odd argument.
What we intend to do here—and we are not arguing the main issue of the Clause on this Amendment—is to prevent a company resident in the United Kingdom from ceasing to be resident without consent. We obviously do not wish to make it illegal for a company to cease to exist. That, I believe with the hon. and learned Gentleman, would be absurd. Therefore, although we cannot accept his Amendment, I am prepared to look into it again before the Report stage—because, at least, some doubt has been thrown upon the existing form of the Clause—to make quite certain that it is not open to that objection.
§ Mr. Manningham-Buller
I am glad that the hon. Gentleman says he will look into this again. In view of his assurance that he will do so, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. Lyttelton
I beg to move, in page 24, line 3, after "transferred," to insert:otherwise than in the ordinary course of business of that body corporate.I wonder, Mr. Diamond, whether we could take into consideration with this Amendment our Amendment to page 24, line 26, at the end, to insert:and(iii) without prejudice to the power of the Treasury to give consent under proviso (ii) to any other transactions, that consent shall not be withheld from any transaction or transactions falling within any of the paragraphs of this subsectionIf we could discuss the Amendments together it would enable me to go fairly wide, although I shall be as careful as I can not to get out of order; but I think that I could cover a good deal of ground. The whole Clause is, to our minds, pernicious. It is well nigh unamendable, like Clause 28. However, these Amendments would do something to take the inflammation out of the Clause and I shall do my best to deal with the matter on that basis. I am not going into much detail, because I am anxious to ascertain the Government's attitude and I do not wish to go into the minutiae of this question until I see how things are shaping.
- (a) if the main purpose of the transaction is either the better development of the trade or business or part of the trade
2175 or business or to comply with the directions or expressed wishes of any overseas government or authority, or
- (b) if as a result of the transaction a trade or business or part of a trade or business is transferred to another country, the greater part of the assets of that trade or business or that part of the trade or business is situated in that country."
I propose to deal with this Clause mainly under two headings—first of all, the deterrents to those outside who might wish to come inside Great Britain to carry on their business or to domicile their companies here; and, secondly, deterrents to those who are inside Great Britain now and who wish to build up assets outside or carry on and expand their businesses overseas. This Clause is the worst type of Socialist isolationism; of course, isolationism and Socialism always go together. There was a time when London was regarded as the trading and financial centre of the world, when people came here of their own free will and in large numbers to make use of the facilities which London provided.
It is as well to remind ourselves what those facilities were. There was the Stock Exchange, the largest market in international securities in the world. I say, with a proper sense of responsibility, that the Stock Exchange is as necessary a raw material to industry as coal. There is, I know, a tendency among hon. Members opposite to regard the Stock Exchange and all other forms of exchange as a type of casino. In fact, the Stock Exchange is as necessary a raw material as coal for the rapid expansion of industry. There are banking, insurance and shipping facilities and there are, above all, the free markets which the Socialists do 2176 not like—they believe in bulk buying—like Mincing Lane, the Metal Exchange, the Rubber Exchange, the Baltic Exchange and the Liverpool Cotton Exchange.
Another thing which is often forgotten is what is known as the London Arbitration Terms of Contract. Many international contracts contain a reference to these terms so that if there is any dispute between the buyer and seller it can be settled under the London Arbitration Terms. Besides all these things thousands of standard contracts for commodities, even where formal exchanges do not exist, are used all over the world—commodities as different as mica, isinglass, quebracho, etc.
I suppose that all of us have sometimes been awakened at night in London to hear the deep hoot of the shipping in the river, and sometimes we may have caught a whiff of coffee being liquored in Mincing Lane. These are reminders of the romance of our international trade which is flowing all over the world. I would remind the Committee that these services are very small labour users—and this in a country which is very short of labour and where there are many more jobs to do than there are hands to do them with.
Services of this kind are a most desirable form of invisible export because they bring to the country returns altogether out of relation to the amount of people who are employed in providing the services. Just as Paris has for some centuries exported, at practically no cost, gaiety, chic and the can-can, so does London provide a great number of invisible exports at small labour cost. All these services are strangled by this Clause, because it is a warning to foreign companies not to get within the ring fence of the Socialist State.
We can learn from this Clause exactly what the Socialists think are the necessary penalties if people wish to leave. They assess the fine at £10,000 plus two months involuntary stay in one of His Majesty's penitentiaries. That is what they regard as the necessary deterrent to keep people here once they are here. We are very seldom given a glimpse in actual money terms of the value at which they assess the State which they built up. It is also curious to think of the irony of having a tourist drive in an effort to 2177 get tourists here at the same time as every means is taken to drive away companies who wish to domicile themselves in London. We used to attract overseas companies by every means possible, and much of our greatness as a mercantile trading nation is because industrial companies from overseas wished to be domiciled in London in order to cover European markets and to make use of the free facilities which our capital city provided.
I have picked out three companies—Vauxhall Motors, Ford and Monsanto Chemicals—which have come here to carry on business in our own country and to do export business because of the facilities of the free market which London provides in all these different ways. The Clause is strongly deterrent to any country, for example, the United States taking an interest in or establishing enterprises and companies here with predominantly British capital, because once in the ring fence of the Socialist State one cannot get out except at the Treasury's discretion. The world is far too dynamic for anybody to wish to come into a market which depends upon the discretion of a Government whose ideology is different from that of the immigrant and when the penalties for trying to get out may lead the immigrant to Wandsworth or Parkhurst or Maidstone or other prisons administered by the Leader of the House.
I say with the utmost sincerity and earnestness that this Clause is poison to an international centre like London, and that it is in the interests of everybody to see that the entrepreneur business and the invisible exports, which use so little labour, are built up. These are bad enough reasons on broad grounds for opposing this Clause—[Laughter.] It is perhaps excusable when we have reached a point which the Leader of the House expected to reach 18 hours ago, that I should be guilty of an occasional slip of the tongue. If I do, I hope that my reasoning does not go with it. I should have said that those are good enough reasons for opposing the Clause on these grounds.
Even worse, I think, is our own ability, which is struck at by this Clause, to build up our own assets overseas. I would remind the Committee that the effects of the Clause are to render unlawful transactions directly or indirectly 2178 leading to avoidance of Profits Tax or Income Tax. According to the Clause, itshall be unlawful … for a body corporate resident in the United Kingdom to cease to be so resident; or(b) for the trade or business or any part of the trade or business of a body corporate so resident to be transferred from that body corporate to a person not so resident; or(c) for a body corporate so resident to cause or permit a body corporate not so resident over which it has control to create or issue any shares or debentures.The last subsection is of a much more limited application.
It is not an uncommon complaint of Socialists that in the last 100 years in exploiting resources overseas—perhaps minerals—we have also exploited the population; we often hear that said. I am far from thinking that it is true, except in a very limited number of cases. I do not think that the general condemnation could be borne out. But if we are to avoid falling into what Socialists regard as this particular form of capitalist exploitation, what are the types of measures which we should have thought were appropriate to prevent such exploitation taking place?
The first, I should have thought, would have been to allow nationals of the territory which is being developed to participate in the capital and in working their resources. It is made unlawful by the Clause for a British company to do so except with the Treasury's consent—I must put in that proviso all through. I should have thought that the next thing was to establish offices in these territories, to get local directors on to the boards, and to make the overseas subsidiaries representative of local interests. But that becomes unlawful under the Clause. Finally, I should have thought that what was, perhaps, the most desirable of all these measures to prevent the charge of exploiting overseas territory would be to raise, whenever appropriate, local capital to help exploitation.
This is very familiar to me in the course of my own business, and the policy which I pursue, with the support of my co-directors, has always been to try to establish a business overseas until it has come to a point where the risks attending capital have been very much reduced; this is the policy which we pursued in Australia and are now pursuing in India. We try to bring the business to a point 2179 where the risks can be very easily focused and at that moment—and not for altruistic reasons, but for sound commercial reasons—we try to bring in the local capital so that the people of the territory have an interest to buy our locally produced goods rather than take imports.
That is a perfectly sound piece of commercial policy, and all hon. Members who have studied the retail trade will know that it is very important when retailing in a big capital city that the nationals of that particular country should have as far as possible a participation on the capital, because that binds them towards the retail business and prevents xenophobia in the retail trade spreading.
If more specific instances are wanted, I should like to give the Committee one example because it concerns one of the very greatest businesses which has been established in this country: The British American Tobacco Company. Their Vice-Chairman recently pointed out that the growth of his company over the last 49 years, with all the services and profits which that company has brought to London, has taken place precisely by the processes which the Government now seek to prevent. It has registered this steady growth largely through the consistent policy of incorporating subsidiaries in overseas territories to take over and carry on the business of the parent company.
The subsidiaries carry on this business under the management of local directors in sympathy with local sentiment and in touch with the local capital markets and unhampered by the discriminatory tax legislation that many developing countries may impose upon purely foreign companies. The Vice-Chairman used these words:This has undoubtedly proved to be the right policy politically and economically.I should have thought that it was a policy which is on the whole in accordance with the sentiments of hon. Members on the benches opposite. Yet these prohibitions apply, even although the avoidance of liability to Income Tax or Profits Tax is only indirect or incidental. It means that if the Clause was unamended, in future no overseas branch could be converted into a company formed under the local laws except with the discretion of the Treasury.
2180 It is not in my opinion a sufficient defence of the Clause to say that the Treasury will always act in a sensible manner, because after reading the Bill it is clear that they are not doing so. Anybody who has had long experience of Government Departments—this is not a criticism of Government Departments—knows that many things which are desirable in the ordinary course of commerce do not commend themselves particularly to the Treasury with their rather Olympic point of view on ordinary transactions.
The second part of the Amendment is designed to differentiate between two obviously different cases. I do not know whether in this I am expressing the sentiments of the Chancellor—I think, in fact, that I am. I have no sympathy whatever with the company that has the bulk of its business in the United Kingdom transferring its head office to the Bahamas, Luxembourg or somewhere else, and any Clause designed to catch such a transaction will, of course, have our support.
But there is a wide difference between such a migration, or flitting, and the company the most of whose business is overseas and which may wish to transfer for many reasons, including that of taxation, its head office to where the main operation of the company is carried on. We have seen this happen with Treasury consent in the case of Rhodesia. Some mining companies have transferred their business there because the bulk of their operations are carried on in Rhodesia.
The whole Clause is typical of what I have already described as the Sowerby, or "sourpuss," mentality. Any damage is accepted to trade for the sake of catching a few evading sprats. The Committee have not often been reminded by a Government spokesman that the evasion of tax in many cases is fraudulent and that it is a considerable deterrent to be convicted of fraud. "Evasion" is one of those genteel words which we nowadays often hear.
In many cases, the evasion—I see the Attorney-General frowning—would be better expressed by saying "fraud against the Inland Revenue." In many things that is considered to be a considerable deterrent without adding all this mumble-jumble on top of it. The mentality of the Government over this taxation is like this. If burglary is prevalent in Muddlecombe-under-Dyke, in Blankshire, 2181 then the right way to deal with the burglary is to give the police in Blank-shire the right to enter any citizen's house in Blankshire without a search warrant. That is absolutely the wrong way to look at it.
Here is another instance of where the greatest possible damage will be done to our trading interests in order to catch a few rascals who want to get through the Treasury net. The thing is far too wide, and, as I said before, our task in the Committee would be very much easier if we could just disregard all the liberties of citizens, disregard all legitimate business, catch everybody and then see who we let out—the converse operation of saying, "If you want to get out on your own, £10,000 and two years in one of His Majesty's prisons."
The Inland Revenue motto—and they have again moved in on the Clause in a way which is unpardonable and, in my opinion, cannot be accepted by the Committee—is, "There is more rejoicing in Somerset House over one evader that is made to repent than over the 999 just persons who pay their taxes." I beg the Chancellor to reconsider the Clause, which I think is one of the most pernicious which I have seen as fit to be written into la statute. I hope that the Chancellor would not like to go down on record as the man who invented the Socialist penitentiary, with a fine of £10,000 and a couple of years' imprisonment for anyone who attempts to get over his latest electrified fence.
§ Mr. Eccles
I hope that the Committee will allow me to make two separate submissions. I should first like to add some general remarks to what my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has said. Then I should like to address myself particularly to the words of the Amendment in my name, in line 3.
This Clause is the brother or sister of Clause 28 in this respect, that both are children of oppressive taxation. We have another example of one evil breeding another. A trading country like ours which cannot possibly earn its own living without selling and rendering services overseas cannot raise, by its domestic policy, its costs and prices, far out of line with the rest of the world without courting devaluation. We have been through that experience in the last five 2182 years. We have seen that if we get out of step with world prices the £ has to be devalued.
In the same way, if we have a taxation system in this country which is far more burdensome than the taxation systems in other countries where limited liability enterprise is carried on, the result is that business facilities in the United Kingdom lose their status. We suffer, as it were, a devaluation in the trading facilities we can offer, with the result that there is an all-round loss of earning power to this country. Of course, it does not happen suddenly. People do not suddenly take their money away from here, nor do they suddenly stop putting it here; but once the credit of a country is impugned and the world sees that it is no longer in the first class, then little by little deterioration sets in in that country's financial and business position.
This Clause is, therefore, a confession of despair that under Socialism the United Kingdom cannot provide attractions for business equal to those that can now be found in the Dominions and in the industrial nations of Europe and the New World. I take it as a sign of decay. We are acting like a miser who, feeling that his best days are over, bolts his door and hugs his possessions to himself and says, "I will not trade any more; I will keep what I have got." There is no possible end to that other than poverty and decay.
I ask the Committee to notice a most interesting parallel. Whenever a great nation begins to slip from the front rank in wealth and power one finds an agitation, ending with a law, to prevent its national art treasures from being exported. Let us look round Europe and see where in the old days the great free markets in the finest works of art were—Italy, Spain and the rest. In all those countries there are now laws preventing the export of works of art. They have all reached the miser stage of saying, "Our best days are over. Let us shut the door and keep what we have got." They have slipped out of the front line. I maintain that precisely the same sort of process is obvious in this Clause.
I ask the party opposite what sort of a chance they think the people of Great Britain have of earning their bread and their raw materials in—I was about to say a century—at all events a decade 2183 when the prices of those raw materials are steadily improving relative to manufactures, if we cease to be a first-class international trading nation. We cannot live by taking in each other's washing; it is an absurd doctrine.
Yet one feels that the Government must have made up their mind that the chances of maintaining and improving the standard of life in this country are better if we put a ring fence round ourselves and keep absolute control over everybody, and drop like a ton of bricks on anyone who here or there makes the slightest attempt to move out against the Government's wishes. One feels they regard that as offering a better chance than if we continued, as could be done even under the mild Socialism such as I understand to be the doctrine of the right wing of the Labour Party, to be a first-class international country trading freely all over the world, and offering these enormous advantages to other countries at the price of not discriminating against them and not putting them under difficulties that would be peculiar to this country.
If we lose a company which controls the mining of minerals in the Commonwealth by that company deciding to move its head office from London to Australia or Rhodesia, we lose not only the tax revenue on that part of its profits which are not remitted to shareholders residing in this country. In that respect, once it becomes resident, say in Australia, the Chancellor gets no tax on the retained profits in Australia, whereas while it was resident in this country he received tax in respect of the whole of its profits.
The loss is far worse than that, because when the directors of that company are in London they have only to walk a hundred yards to get to their bank, another hundred yards to get to their insurance company, there are shipping companies all round them, and they have strong reasons for marketing their product through a British firm. Apart from all the commissions which are earned for this country on the ancillary services performed because the company is resident in London, we should surely be very careful not to do anything which puts out of our sphere of influence supplies of raw materials. It is much easier to get the agency of a mine's output and so 2184 retain, as it were, priority for British industry in respect of those raw materials if the whole business is concentrated here in England. With the outlook for raw material supplies in the world today this kind of Clause is suicidal. It could not be more dangerous.
I feel about the Clause as I felt about Clause 28: I do not think it can be amended in any way which would make it possible for me, at all events, to agree to it. My right hon. Friend said that we realise that there have been companies who have run off to Luxembourg or some place where there is a very low taxation system but which has nothing whatever to do with their business, simply to evade tax, and that if we could frame some Clause which struck only at those people and nobody else—the person who flagrantly goes abroad for that purpose—we ought to look at it. But we ought to be most careful even there. It is well worth while allowing a few people to misbehave even in that respect rather than endanger that great complex of credit and international status on which we so much depend.
That leads me to say that we must have from the Chancellor some estimate of what he thinks he may lose in revenue if this Clause is not placed on the Statute Book, because I fancy the calculations have been made on some very poor assumptions. I will not venture at this point to discuss the question of what would be the probable loss if the worst came to the worst and all likely companies emigrated. First, I should like to hear the Government's answer and perhaps have another opportunity to speak later.
Paragraph (b) of the Amendment in the name of my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) says roughly that one of the reasons which will count in obtaining permission to emigrate will be if the company is going to the country where its main operations are carried on. I quite understand that; of course, that is to catch the gentlemen who run to Luxembourg, but it is not quite wide enough, and for this reason.
It has been found that where there is a group of subsidiary companies in the African Colonies—Uganda, Kenya, Tanganyika and Northern Rhodesia, let 2185 us say—it may be very inconvenient to have a head office for each one in each of the territories. On the other hand, it may be highly convenient to manage them from Southern Rhodesia—and this is a case which has actually occurred several times. There are several other cases where it is highly convenient to have a head office in one of the West Indies and to manage branches or subsidiaries on other islands.
As the Amendment is drafted, I am afraid it is a little too narrow to bring this point into this Clause, and I commend that to the notice of the Committee. Obviously, we shall deal with this again on the Report stage. It is a point which affects some very nourishing companies which, were I to give the details, I am sure the Committee would see are absolutely genuine in their operations.
I will turn to my Amendment, which we are to discuss at the same time. It is in line 3, page 24, where, after "transferred," I ask the Committee to insert the wordsotherwise than in the ordinary course of business of that body corporate.The subsection reads that it shall be unlawfulfor the trade or business or any part of the trade or business of a body corporate so resident to be transferred from that body corporate to a person not so resident.What is meant by,trade or business or any part of the trade or business of a body corporate"?We feel that the Government cannot be aiming at ordinary business transactions.
I should like to give one or two examples of what I think may happen if this Clause is not amended. It seems to me that selling a part of one's business might include things like this—to give a rather absurd example and then one which is more substantial. Supposing a brewer in the United Kingdom, whose business is to sell beer, sells a case of beer to a hotel in South Africa, and then the hotel in South Africa markets the beer. The beer in bottle is an asset of the brewer in the United Kingdom. He has sold some of it to someone else in South Africa, who then does the business of distribution. It is not very clear whether even such an absurd case as that would be considered as part of his business.
Much more serious cases are these. First of all, there is the question of 2186 whether the sale of mining leases is part of the business of the company. In London there are great mining financial houses which have brought millions and millions of pounds into this country by opening up mineral deposits in distant parts of the world. The way in which they have done it is that they have acquired the concession to look for and mine minerals over some wide area, let us say the area for which Mr. Cecil Rhodes obtained a concession and which was then vested in the British South Africa Company.
They let prospectors go out with their little mining kit to scratch around in various areas of the concession to see if they can strike a mineral, and one day one of the prospectors comes along and says, "Yes, I have found something at such and such a place. Will you, the British company, give me a right to carry out exploitation of that mineral a stage further and see whether we can develop that mine or not?" The sale of the mineral rights in respect of that promising area which the prospector has found is the way in which mines begin, and it is the ordinary business of these mining houses in London to sell such mineral rights. I think we need an assurance that that sort of business does not fall within paragraph (b).
The parallel business, of course, is the selling of patents, where we have a company registered in this country with a number of patents. Foreigners come along and say, "We should like to have your patent; we will put up a factory in our country and we will give you royalties." That is very common, but surely under the Clause these people would not be able to sell a patent any more than the mining company would be able to sell a mineral right, without getting the permission of the Treasury. I suggest that that will not do, because this sort of thing goes on all the time in very small packets and it would be absurd to bring it within the Clause.
Perhaps I may turn for a moment to Clause 33, which gives power to the Government to revise the price at which the transaction was carried out in the ordinary course of business if they consider that the British company has sold too cheaply to the ovrseas company, or, alternatively, bought something too dear from overseas. 2187 In other words, if anyone has tried to dodge tax by selling part of his business at a phoney price, then in the next Clause there is power for the Government to revise that price.
Taking that power together with the arguments which I have previously advanced, there cannot be much to be said against our Amendment. It would very much restore the confidence of these companies in London, many of whom have quite deliberately stayed here although their operations are overseas. I think they stayed partly from sentiment. There is still a great preference for people who have always done their business in the United Kingdom—as have their fathers—to stay here. Hon. Gentlemen opposite need not think that everyone is trying to get out of this country. It takes a Socialist Government to push them out. On the whole, everybody wants to stay here. It would restore the confidence of these people if this Amendment were accepted.
§ Mr. Colegate
I share the fears of my hon. and right hon. Friends about the effect of this Clause. To anyone actively engaged in the sort of businesses referred to, it is almost fantastic to think that the Treasury should have produced a Clause of this kind. I should like to illustrate how subsection after subsection of this Clause interferes with a legitimate business which is of great advantage to this country because it is situated here. The business I have in mind is in London. It is mainly a holding company owning stores in the West Indies, in Capetown, and in Wellington, New Zealand, and also certain other businesses.
It does not merely own these businesses and sit here to receive the profits. It does what is very common in these cases. It runs a buying department. It buys goods all over this country and in London it buys what are known as fashion goods. It has at its disposal the financial resources to feed the overseas concerns with the goods, hardware, fashion goods, and whatever else it may be. But in the ordinary course of its business it constantly has to consider such questions as whether it would be wise to buy lumber not through London but through its Jamaican concern, or whether it should buy other goods in South Africa or New 2188 Zealand, even if the goods bought in New Zealand may be destined for the West Indies.
That is not unique. That is a common type of business which goes on in London in a great many different forms. Each of these businesses has to consider from day to day and week to week where they should situate each piece of their business. This firm has its buying department in London, but it has recently transferred—and no doubt in future it will transfer other sections—part of its buying department to different places in the Dominions. It may also bring back to London other pieces of business which are at present conducted in Jamaica or in Wellington, New Zealand.
In addition, it must constantly consider that, for nationalistic reasons, it is wise to raise capital from the subsidiary companies in the countries where they are situated. To do otherwise is to fly in the face of the nationalistic sentiment which has spread not only over the Empire but over the whole of the world. Nothing could create a more disastrous impression abroad than that businesses in London, with a dog-in-the-manger policy, were trying to prevent any of the local inhabitants where they had branches participating in the profits of the business carried on with those places.
Subsection after subsection of this Clause interferes with those business operations which I have described. They would be cured to some extent if the Amendment of my hon. Friend the Member for Chippenham (Mr. Eccles) were accepted by the Government. I cannot help feeling, though I may be wrong, that the Chancellor started out with a perfectly legitimate desire to stop the people who had been referred to who, for what I should call fraudulent reasons, want to take a business to Luxembourg or some other place with the only object of defrauding the Revenue. In trying to spread the net wide he seems to have caught more than three-quarters of the mercantile and financial businesses situated in the City of London. I appeal to him to consider this Amendment and the whole Clause with a view to seeing that the main mercantile businesses are adequately safeguarded from any imputation of fraud upon the Revenue.
§ 6.15 p.m.
§ Mr. Gaitskell
The criticisms which have been levelled against this Clause in the debate on the two Amendments we are now considering can be divided into two classes. First, there is the more general criticism which the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) put forward, which really condemned the whole Clause root and branch, because the right hon. Gentleman said that he thought it would have very grave effects on the economic health of the country; that we should suffer serious economic loss; and that the various advantages which the City of London brings to the nation would cease to be advantages.
The second line of criticism was developed from instances where legitimate transactions would be caught by the Clause and it was said, therefore, there would be a great deal of interference with legitimate business. I appreciate that the two lines of criticism obviously join up, but there is a broad distinction of that kind. Both the hon. Member for Burton (Mr. Colegate) and the hon. Member for Chippenham (Mr. Eccles) gave a number of examples. I should like to answer both these lines of criticism.
I will begin with the more general type. It is natural that the Opposition should concentrate—it is their duty, after all—on what they regard as the weaknesses of the Clause, but I do not think that they paid enough attention to the circumstances in which the Government decided that it was necessary to introduce this provision. I must remind the Committee of what those circumstances were. The fact was that over a period of at least a year there was a growing tendency for companies to migrate to avoid paying taxation.
§ Mr. Gaitskell
Whether it was excessive or not is a matter of opinion. There is no doubt about their motives. It is true that some of those companies had good reasons for migrating. I do not question that. Others had less good reasons.
The fact is, however, that there was a growing tendency, for the purpose of avoiding taxation, to transfer the control and management of these companies abroad. These were largely companies who operated to a considerable extent overseas and who, thereby, could escape 2190 Profits Tax and Income Tax on undistributed profits. Income Tax, was paid on the dividends distributed to the United Kingdom shareholders, but otherwise they escaped tax.
I was asked how much I thought was at stake here. It is impossible to say; I cannot answer that question precisely. I can only say that, if we take companies operating overseas, the maximum amount which the Revenue might lose if they all moved abroad would certainly be over £100 million of tax, which is quite a serious sum. I am not suggesting, of course, that we have lost anything like that, but there has been a serious drift, involving a loss to the Revenue, I should say, of several millions, which might have become many millions a year.
That was the circumstance with which we were confronted. It was not a question of fraud, or of what has been called the Luxembourg case, though there may be some of these instances as well. All this was perfectly legitimate under the existing law, but we were warned that it would go further. It is true that the British Overseas Mining Association warned us that, unless the Profits Tax was reduced, there would inevitably be an increase in the number of companies migrating, and the question was what we were to do in those circumstances.
I could understand the hon. Member for Chippenham saying that this is the child of high taxation if he were also to say, "I will vote against the increase in the Profits Tax to 50 per cent." If hon. Members were to take that line and were to say, "We will not re-arm," or, "We will smash the social services," or what have you, that would be legitimate, but if they are saying, as they have been throughout this debate, "You should allow this and that here and there," and yet they make no serious proposal for large reductions in taxation, they avoid this problem of what to do in these circumstances.
Are they going to allow these companies to migrate and avoid tax? Is that fair to other companies, which do not migrate? What is their attitude going to be? These are serious issues, which could not be ignored by any Chancellor of the Exchequer to whatever party he belongs. We considered the matter, and we decided that we would have to take action about it.
2191 I should say straight away that, in making this decision, we took into account the fact that this was not, of course, the first time that there had been restraint placed upon the migration of companies. There was a perfectly clear Defence Regulation during the war, but what is more important is that that was, to a considerable extent, at any rate, replaced by the Exchange Control Act, under which there are quite severe restrictions placed upon companies moving, at any rate, outside the sterling area. The use of the Exchange Control Act would not have been appropriate. We could have risked it, but I do not think it would have been appropriate when our real motive was to prevent the loss of tax.
§ Mr. Colegate
Has not the Exchange Control Act always been regarded as a temporary Measure, to be removed as soon as possible?
§ Mr. Gaitskell
I could not agree with the hon. Member there. I do not think that, when it went through the House, it was so described. It is not for me to say whether we shall be able to dispense with exchange control, but I think that most hon. Members expect it to go on for some considerable time. It is worth while mentioning that, because hon. Members are saying that this Clause will have the most disastrous consequences, when, to some extent, it is already upon the Statute Book in the Exchange Control Act, the consequences of which I do not think have been disastrous.
I do not think it is necessary for me to explain the Clause in any great detail at this stage. Hon. Members have read it, and they know the four points on which, in the subsection, the restrictions are imposed. At a later stage, we can discuss the reasons why these particular restrictions have had to be imposed.
I should like to turn now to the rather wider issue of just how this Clause can be administered. If the Opposition were right in saying that it will have the most disastrous effects and will prevent companies from allowing local interests to have shares in subsidiaries—which is a very fair and reasonable point—and if it will hamper, trade excessively, that would have been a most important consideration. It is not our intention that it should operate in that way. We have to balance these things, and we have on the one 2192 side the fact that a serious amount of tax was being lost and that more was likely to be lost.
We cannot draw the line which the right hon. Gentleman, the hon. Member for Chippenham and also the hon. Member for Burton tried to draw between the so-called Luxembourg companies and the others. There is no exact dividing line there. There are, after all, some companies with more reason to move abroad than others. I grant that, but there is no point at which we can say "This is in some way or other fraudulent, but that is not." It is a question of balancing one thing against another.
On the other hand, we do not want to impose unnecessary restrictions or hamper trade and commerce or clutter up the Treasury with a great deal of unnecessary work, and we do not believe that it is necessary. During the Second Reading debate, I said that, as far as the administration is concerned, I had it in mind to set up an advisory tribunal, consisting of persons whose experience is such as to give confidence to the business community that there will be an independent examination before permission is in any case refused, and the way in which we expect that that administration will work is something like this.
First of all, if there is obviously no difficulty about the case, the Revenue would report on it and permission would be granted at once. If they held it up, it would go to the advisory panel or tribunal, and it would be for them to consider all the circumstances and advise me whether they thought that the company should be allowed to go, or whether they thought that, on balance, it should not be allowed to go. I emphasised that, because I must repeat, as I said on second Reading, that we do not intend to administer the Clause solely because of Revenue considerations. We take into account the desirability of encouraging local interests in concerns overseas and so on.
May I also say that we have no intention whatever of allowing this to interfere with development in the Colonial Territories? The point has been raised again, and I make no apology for repeating that in the administration of this Clause there is no doubt at all that development in the colonial territories must loom large in any considerations of public policy. I have no doubt at all 2193 that the advisory panel would take them into account, and I, as Chancellor, certainly would do so as well. I would say frankly, that, normally, if there was no question of tax avoidance and no such motive, colonial development would be a decisive consideration in making up our minds whether to allow the migration or not.
§ Mr. Donner (Basingstoke)
Has the right hon. Gentleman in mind the desirability of making any difference between the ordinary company which desires to migrate to the Colonies and the purely mining company which is dealing with a wasting asset, and which therefore, quite naturally thinks that it ought not to be taxed like a company not operating wasting assets?
§ Mr. Gaitskell
I do not think the hon. Member will expect an answer to such specific questions. I am trying to show the kind of consideration which we would take into account in making up our minds.
§ Mr. Julian Amery (Preston, North)
Can the Chancellor say whether what he said just now about the importance in developing Colonial Territories would apply equally to the development of the sovereign nations of the Commonwealth?
§ Mr. Gaitskell
Yes, I would certainly say that, too.
The second line of criticism is related to the anxiety about the interference which will take place with particular transactions of a genuine commercial character. The last thing in the world that we want is to get the Treasury cluttered up with people seeking permission for all kinds of unobjectionable transactions, and I can understand that hon. Members opposite, in putting down these Amendments, have been anxious to try to exclude from the Clause things which they think may be regarded as harmless.
Perhaps I may at this point say a word or two about the Amendments before the Committee. I think it is understood that we are having a rather wide debate, following the speech of the right hon. Gentleman the Member for Aldershot on the Amendment standing in the name of the hon. Member for Chippenham. He asked me a number of questions as to how, precisely, the Clause as it now stands would affect the case of, for example, mining leases being transferred, and he gave one or two other frivolous examples 2194 which I think he himself realised were not intended to be caught at all.
On that, I want to say that the transfers which we have it in mind to catch by this are not transfers of individual assets—still less, of course, stock in trade or anything of that kind—but the transfer of parts of the trade or business which really are going concerns. In this connection, I would be prepared to add, if it were thought suitable on the Report stage, a proviso making it clear that a mere transfer of assets which did not materially alter the trade or business carried on by the company should not be covered by the subsection. I am anxious to try to reassure not only hon. Members in this Committee regarding our intentions, but, of course, persons outside. We want to be in a position to prevent tax avoidance, and to do it with as little interference and damage to legitimate business as possible.
Then, as I said, the hon. Member mentioned mining leases. I think, therefore, if I were to put in a proviso of that kind it would probably exclude them. At any rate, I would normally think they should be excluded by the Clause, particularly if we make the Amendment I have suggested. But I cannot accept the Amendment as it stands because it is, of course, tremendously wide. What precisely the ordinary course of business of the body corporate is, we cannot say, but it would leave them open to do almost anything. That really is going much too wide.
§ Mr. Lyttelton
In the ordinary course of business it is a short term of art commonly used about bankers' advances. It is not an undefinable phrase.
§ Mr. Gaitskell
I am afraid that for this purpose we should be letting out a lot of people whom even hon. Members opposite would not wish to let out.
The Amendment in the name of the hon. and learned Member for Wirral (Mr. Selwyn Lloyd), to which the right hon. Gentleman spoke, again suggests that we should exclude transactions where the main purpose is the development of the trade or business, transactions where the main purpose is to comply with the directions of an overseas Government or authority or where the greater part of the assets is situated in 2195 an overseas territory. I do not think that the first part of paragraph (a) will do. It is far too vague. Almost anything could be covered by transactions where the main purpose is the better development of the trade or business. That is one of the considerations which would be borne in mind when a case came up to the Treasury for decision.
The second part of paragraph (a), concerning the attitude of an overseas Government or authority would, again, obviously be very important. But, frankly, I would not think it wise to put that into the Bill. To do so would be rather to invite some overseas Government or authority to do things which all of us might not wish to happen. I cannot accept paragraph (b) of the hon. and learned Member's Amendment, because it is precisely the companies with overseas resources, with United Kingdom shareholders, which are the ones tending to migrate and which we are trying at any rate to control so that they do not avoid tax unless there are very strong grounds indeed for allowing them to do so.
On the other hand, I do not want to have a lot of unnecessary applications made to us, and it may be advisable—and I put this to the Committee—that we should introduce into this Clause an arrangement like that which we have under the Exchange Control Act, under which the Treasury has power to exempt particular classes of transactions from the operation of the Clause or the subsection, whichever it is.
I have it in mind, therefore, to draft before the Report stage an Amendment which would confer some dispensing power of this kind. Until we have some experience, I cannot lay down precisely at this stage the kind of transactions which we might exclude altogether, but there is no doubt about it that in the case of the Exchange Control Act, that power has been a great convenience both for the Treasury and the Bank of England and also for the trading community generally. I think it would also be useful here, but I will give a few examples of the kind of thing I have in mind, without at this stage committing myself to the particular list which we might introduce under such a dispensation.
2196 I think this is a case which we could, perhaps, deal with—the case of a company which was coming to the United Kingdom from abroad. The right hon. Gentleman made a good deal of play with the deterrent effect the Clause would have on companies coming here. I think that is a fair point, and I do not see why we should not say, as we do in the case of some foreign investment today, "If you come here from abroad to set up a business with substantial foreign capital, we are prepared to exempt such companies," Again, I must guard myself; I am not making promises, but merely giving the Committee an idea of the kind of thing we have in mind. I should certainly want to discuss it more fully with the Inland Revenue.
It might also be that we could give authority under the dispensation for the issue of shares by an overseas company for the establishment of a new business where there was no danger of any monkey business such as the issuing of shares and the paying back of the capital immediately afterwards to avoid tax. I dare say there may be quite a number of other cases. Reference has already been made to the case of the subsidiary companies wishing to interest local inhabitants in their affairs and issuing shares to them, and so on. It may be that we could exempt the parent company from obtaining Treasury permission for the issue by the subsidiary of additional shares to it for cash as part of a programme for development. That, I think, is certainly something which could be considered.
§ Mr. Gaitskell
One would, of course, have to safeguard oneself against the danger which paragraph (c) of subsection (1) is designed to prevent, namely, the avoidance of tax by capital repayment. That paragraph is the corresponding measure to Clause 27 of this Bill in so far as the United Kingdom is concerned. I do not think, therefore, that hon. Members opposite need feel quite such great anxiety about the consequences of this Clause as at first sight they seemed to feel. I realise that the Clause was drafted very widely, but we had to draft it very widely.
We are, however, prepared to make some amendments. I have referred to one or two—one, at any rate—which I suggested might be made to meet the 2197 point of the hon. Member for Chippenham, and by this dispensing power, to which I attach a great deal of importance, I think we shall go a very long way towards meeting the criticisms which have been advanced.
I would also remind the Committee of the way in which we intend to administer this Clause. A tribunal will be appointed to advise me in the matter so that there may be a feeling and a realisation that what we are out to do is not to prevent capital development or to discourage invisible exports—far from it—but to prevent tax avoidance.
I beg the Committee to realise that at this time when, after all, we are having to carry heavier burdens, when we have the defence programme to carry out, and when, as the hon. Member for Chippenham said, the terms of trade are turning against us, the Government cannot tolerate or allow the avoidance of tax by migration in wholly unjustifiable circumstances. For that reason we say we must have this control. We want to exercise it in a reasonable and sensible manner. That is really the case for the Clause as a whole—though I must not go too far in that direction, Sir Charles—and I think it is the case for approving the main points in the first subsection.
§ Mr. Selwyn Lloyd
As so many of my hon. Friends wish to speak on this Amendment I will only take a few minutes, but I must point out to the Chancellor that I think there is a fundamental difference of opinion between the two sides of the Committee on this matter. I firmly believe that if the Chancellor wants to keep people in this country he must not try to imprison them here. He must make them stay because of the additional facilities and advantages they get. He must endeavour to make the terms of their personal existence here sufficiently attractive to make them desire to stay.
So far as the Clause itself is concerned, it was such a shocking Clause that it is not altogether surprising that the Chancellor should have put forward some amelioration. But I think he has put the Committee in some difficulty, because I understand that the Report stage of the Bill is to take place the week after next. I gathered that, assuming the Committee stage concludes this week, the intention of the Government was to have the Report stage the week 2198 after next. The alterations which the right hon. Gentleman has put forward are very considerable. They will have to be scrutinised very carefully. One has to take a good deal of advice on this matter and I should have thought it was only fair to let us have at least one week to see them, to scrutinise them and to consider them before the right hon. Gentleman seeks to put them in the Bill.
That brings us straight against the time-able and I think we have legitimate grounds for complaints. To this Clause drafted many weeks ago, the right hon. Gentleman is seeking to put forward substantial changes, and this is the first intimation of these changes. In view of the serious practical difficulty it would be much better if he dropped the Clause altogether. He has indicated that he is going to incorporate in the Clause a proviso to permit the transfer of certain assets, in particular mining leases, and a proviso to exempt certain classes of transactions and to consider Government exemption with regard to companies coming into the United Kingdom.
§ Mr. Gaitskell
That is one of the dispensations I thought might be made in the Amendment I proposed giving the Treasury power to make dispensations.
§ Mr. Lloyd
I thought the Chancellor intended to write those dispensations into the Clause. I seriously assure him that if he wants to avoid the very injurious effect this Clause will have on people considering coming into this country from overseas it would be very much better to put those into the Clause and make it mandatory upon the Treasury to give these people permission to come as a sort of exempted class. Next, there is the category where authority might be given for the issue of shares by overseas companies to establish new business and new development and there is the question of the issue of shares for cash for capital development.
We should look very closely at what the Chancellor proposes to put before us. One does not wish to seem disobliging or ungrateful. They are concessions to some extent, but they do not satisfy me personally nor do they satisfy my hon. Friends. This is an evil and pernicious Clause which will do great damage in the long run to the standard of life of the people, of this country.
§ 6.45 p.m.
§ Mr. Maclay (Renfrew, West)
One of the disturbing things about this debate was the laughter that came when my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) suggested it was right to take this Clause out of the Bill. I wonder if hon. Members opposite realise that after the many hours during which we have sat, there has been a high standard of debate all through. We have been studying matters of vital economic importance to the nation.
§ Mr. Maclay
The hon. Member for Kirkdale (Mr. Keenan), who, I know, thinks seriously about the nation, is really quite wrong. It is not a question of any section. We have not the slightest opportunity of maintaining full employment if we lose our position as the great centre of world trade.
§ Mr. Keenan
That is not the point at all. The point that not merely amuses some of us but disgusts us is that for two nights and a day we have had discussions of proposals for protecting property and finance. All that has been asked for by hon. and right hon. Members opposite is concession after concession to allow a greater volume of profit to be retained.
§ Mr. Maclay
This is a fundamental matter. Surely the whole object of this debate, and particularly of this Clause that affects the whole prosperity of our country, has nothing to do with property itself. Our object is to get industry moving and to keep it moving and, in the difficult years that lie ahead, to see that Britain remains the centre of world trade. Anyway, I do not think that we can carry this argument any further.
To come to the Clause, the point I want to raise is that the Chancellor has clearly realised, as my hon. and learned Friend the Member for Wirral said, that some alteration was necessary in this Clause. The Chancellor also spoke to a certain extent of the intentions of the Government about how the Clause was to operate. We have had "intentions" too often in the last six years. Intentions are not good enough. To a certain extent damage has already been done by this Clause, just as the threat of nationalisation did serious damage to insurance companies all over the world.
2200 I have had distressing talks with people abroad who are now writing us off as a centre of world operations, and this Clause has played a great part in encouraging that attitude. It is going to be extremely difficult for the Chancellor, when he has worked out his concessions, to make up the ground lost all over the world by this Clause among people who are thinking of foreign investments and of their implications.
Ever since the war one of the major worries and studies of the United Nations experts and everybody else interested in rebuilding the world economy, has been to try and get a climate for foreign investment. A report on the fair treatment of foreign investments was prepared by a chamber of commerce with which I am connected and it was submitted to the United Nations and all member nations. The whole purpose was to try and create an atmosphere where foreign investments, both Government and private, can flow.
I am grateful that it has been made clear by the Chancellor that it is not intended to stop people coming in or to put difficulties in their way, but the fact that our own people are to be restricted in this way will have an effect on foreign nations. Of all the Governments in the world ours is the one which should be giving the greatest possible example of encouraging free deployment of goods, people, material and everything else. Britain stands to gain more by freedom than any other nation and if we do not have other nations giving us full freedom of investment and operations then we are going down and no plan in the world can sustain us. That is really the substance of the case against this Clause.
There was another horrifying thing the Chancellor said. That was about the Exchange Control Act. He implied that he looked upon it as a modern, permanent feature. He qualified that slightly because he said, "in the foreseeable future." But one of his predecessors, I am certain it was the Minister of Local Government and Planning, said quite flatly from those benches that he considered the Exchange Control Act a permanent feature of British policy under Socialism. If ever there was a counsel of dispair, that is it.
2201 It is tragic that this kind of message should go out to the world from any Government of Britain. Are we to live with an Exchange Control Act, with this kind of legislation creeping in—for good reasons, I agree? I agree with the Chancellor that we must stop tax evasion by some means—[HON. MEMBERS: "Oh!"] Wait—but if the methods that have to be used to stop it will deter others and set a bad example, it can do infinitely more damage than tax evasion. I agree with my hon. Friends that we must take that risk.
Further, the Chancellor said it was a growing tendency, that the figures so far as incalculable, they may be small or they may be great. Surely in Britain we can take some risks in a matter like this. How did we build up this nation? We took risks. We are getting more and more restricted. We are frightened to cooperate with foreign Governments. We went into E.P.U. with great hesitancy and reluctance and created a bad atmosphere on the Continent. I know that some of the reasons why the Government were careful were good, but the fact remains that created an impression all over the Continent that we were more concerned with maintaining full employment at home than with anything else. Worse than that, that we believed we could maintain it by our own actions. They knew it was impossible. They realised that we were following the path of those countries which forbade the export of their art treasures.
§ Mr. Higgs
The reasons why this Clause has been put before the Committee shook me to the core, and I wonder that it ever reached the Bill. One matter that has surprised me in the two Budget debates in which I have now participated has been the way in which this Government have found themselves compelled, when they come up against a specific and easily definable evil practice that they wish to stop, to cast their net far and wide. Then, when we came to discuss the Clause drawn for that purpose, when we ask questions about the kinds of transaction that will be caught and those that will not be caught, what is intended to be caught and what is intended to be let through, we find that the Treasury give us practically no help at all.
I tried last year, on the Committee and the Report stages of the Budget, to get 2202 some help both from the economic team and the legal team on the Government Front Bench about the intention and the classes of case which would be caught in the restrictive covenant Clause of that Finance Bill. Nobody had the faintest idea what sort of transaction would be caught by that Clause, except the two specific cases which, for entirely domestic political reasons, they wanted to catch. In other words, they wanted to hold their supporters together.
This year we have a Clause which is drawn as widely as may be, a Clause which, as has already been shown by my hon. and right hon. Friends, wilt prohibit many transactions which the right hon. Gentleman has himself admitted would be directly desirable. Not until the Committee stage did he begin to confess that his net might catch a good deal that it was never intended to catch. Then, when we get to this stage, the right hon. Gentleman begins to show signs of thinking again, with the consequences which have been mentioned. The thing will be upon us before we have time to give proper deliberation to it. That is the first thing which shocks me about the outlook of right hon. Gentlemen opposite when dealing with matters of this kind.
The next thing which I regard as evil about this Clause—here I think I can claim that both the Amendments to which we are now talking deal specifically with this point—is that we are quite accustomed in this country to regard as legitimate play the game between taxpayer and tax collector. We have long accepted the fact that the tax collector—I use the expression in its broadest sense as the Treasury—has a great many advantages not ordinarily enjoyed in the game. For instance, once a year the tax collector can come down to the House of Commons and, because of the majority it has, make a change in the rules of the game. That is a great convenience when one is playing a game. From time to time we have had suggestions that we should change the rules retrospectively in order to disallow a goal that has quite legitimately been secured against one.
§ Mr. Houghton
If the hon. Gentleman will allow me to interrupt, may I put it to him that tax gathering is not a game? Tax gathering consists of gathering the Revenue which is vital to the machinery and government of the nation and to its 2203 wellbeing. So why talk about it as if it were a game with rules?
§ Mr. Higgs
I do not think that either tax gathering or tax paying is any fun. I took this analogy of sport because, as a rule, amongst British people one finds the sense of justice most apparent. It was for that reason I chose the analogy of sport. If the hon. Member who has strong views on these matters I know, will follow me a little further, he will see my point.
What is happening in this Clause is that not only should the tax gatherer's team apparently be given the right to change the rules every year, but now it seems to have the right to appoint the referee as well. That is going very far. If the Clause goes through as drafted its effect will be that when one wants to make a move in the game or, to leave that analogy, enter into a change in one's commercial dealings, one goes along to the Treasury and says, "If I do this, I shall have to pay less tax. Will you decide whether it is fair that I should do this or not?"
It has been an ancient part of our English law that no person should be allowed to be in a position in which there shall be a conflict between his pocket and his duty. To take the simplest instance, no trustee may have any dealings in his trust estate. If this Clause is passed as it is, we shall be asking the Treasury to decide whether what is a good move on the part of a concern which has interests here and overseas is proper, and the Treasury will lose if it says "yes" and will gain if it says "no."
I regard that principle, which goes to the root of this Clause, as being evil. That is why I speak in support of the two Amendments. I welcome the words of the right hon. Gentleman which maybe, in the end, will go a little further towards making the task of the Treasury easier when coming to a decision. After all, the Treasury themselves have this thrust upon them, and theirs will be the unenviable task, if they do have to make the decision. So any Amendment to this Clause which seeks to find the cases in which they have no choice and those in which they have to exercise a discretion, and any help that we can get from the 2204 Treasury Bench as to the sort of rules that will be exercised in applying the discretion, anything that can be laid down in advance, anything which will tell us how this Clause will work, will improve it.
For those reasons, I earnestly support these two Amendments which will not only go some little way towards removing an inevitable evil in this Clause if it remains in the Bill in any form, but will also, I believe, help to allay some of the apprehensions of my hon. Friends who have spoken from the commercial angle—apprehensions which may have very disastrous consequences for the economy of the country.
§ 7.0 p.m.
§ Mr. John Arbuthnot (Kent, Dover)
In his speech just now the Chancellor told us that the motive which prompted the putting of this Clause into the Bill was that a number of companies were migrating, and he went on to say that they were largely companies operating overseas. The income which he is therefore proposing to tax by preventing them from migrating arises largely outside this country, so that it seems a little questionable whether everybody who is taxed in this way on income which arises outside the country will feel that it is a fair tax to which they are subjected here, in addition to the tax they pay in the area in which they mainly operate. The Clause says, in effect: "Now that we have got you here we are going to tie you down in order that we may pluck you full well, and so that there will not be very much left for you for distribution to the owners of the business and the people who built it up."
The Chancellor has made a few concessions—although I must say I thought they were thoroughly inadequate. His concession to exempt new companies from the operations of the Clause seems to be comparatively valueless, because if in the Clause the Chancellor says "Now that we have got you here we are going to tie you down and pluck you thoroughly," what will he say in a few years' time to the new companies which have come to this country and registered here, relying on being exempted from the provisions of this Clause? Will he then say to them exactly what he is saying now to the companies which came to this country in years gone by because it was 2205 a centre from which they could work effectively? I think that they will have very great hestitation in coming to this country because of this Clause, and because of the fact that similar provisions may apply to them if we still have a Socialist Chancellor of the Exchequer in a few years' time.
The Chancellor also suggested that it was not his intention to operate the Clause in such a way as to prevent local interests from participating in enterprises in their own countries. There are various classes of case which the Chancellor says he would exempt from this Clause by the way in which he would administer it. If these exemptions are made by administrative methods, it seems to me that Parliament is abrogating its proper duties to the executive. If exemptions are to be made—although I, personally, should like to see the Clause wiped out altogether—Parliament should say definitely what those exemptions are, and there should be no giving away to the Executive of the proper functions of Parliament.
For the moment I should like to deal with the Amendment in page 24, line 26, which seems to me to be particularly important. I instance one type of case in which it would operate, and in drawing attention to this particular type of case it is only right that I should declare my interest and say that I have a certain amount of experience of it. I have in mind the case of companies, the majority of whose assets are in India, which also have assets in other countries. If the majority of a company's assets are in India, that company is regarded as being resident in India for Indian tax purposes and pays Indian tax on its world income.
Take, for example, a company that has the majority of its assets in India, has some property in Ceylon, and is registered in and run from this country. Between India and Ceylon, reciprocal relief is granted to the extent of one-half of the lower of those two countries' charges for Income Tax. Between Ceylon and the United Kingdom there is double taxation relief. So far as India is concerned, unilateral relief is granted whereby three-quarters of the United Kingdom tax or the Indian tax, whichever is the lower, is deducted from the United Kingdom taxes payable, and 2206 the balance of unrelieved tax is allowed as a deduction from profits in arriving at the United Kingdom taxable profits.
The effect of all these three factors is that for every £100 a company in that position earns in Ceylon it pays Ceylon tax of £34, Indian tax of £46 and United Kingdom tax of £37, making a total payment of £117 in taxation for every £100 earned. That is the type of case which this Amendment would cover effectively. It would allow such a company to take action, which would seem to be only fair, to avoid having to pay £117 per cent. in taxation, which it might have to pay at the present moment.
§ Mr. Maudling
I think it is now pretty generally agreed that the original draft of this Clause was far too wide. The moment it appeared it gave rise to a storm of protest from people who were in a position to know what its effect would be, and I doubt whether the Treasury at the time could be included among those people who knew what the effects of the Clause would be. Certainly, it now appears that that storm of public protest and the number of representations the Treasury must have received from people with experience of these matters have borne some fruit, because the Chancellor, has, in effect, admitted that the Clause is far too wide and that many exceptions may be made.
This afternoon the right hon. Gentleman enumerated so many exceptions that it almost seemed that we were reaching a position where the exceptions outnumbered the inclusions, which is perhaps not a very surprising situation when we consider the argument advanced by my hon. Friend the Member for Bromsgrove (Mr. Higgs), that it is the normal practice of this Government to try to deal with small specific abuses by creating wide blanket prohibitions. This is the natural result of pursuing that particular line of policy and adopting that attitude.
I want particularly to stress to the Chancellor the importance of including these concessions in the Bill. It is of no use whatsoever, from the point of view of British businesses operating overseas, merely to say that the Treasury shall have the power by regulation to make dispensations. I appeal to him to regard this as a point of cardinal importance, because there is no doubt that British companies operating overseas at the moment are 2207 having to face the growing difficulty of economic nationalism, or parochialism, or regionalism, or whatever you call it, both inside and outside the Commonwealth.
That is a very real and very growing danger which must be faced, and it is because of this danger that many wise companies have always taken the precaution of ensuring that the control and management of their subsidiaries operating overseas should be exercised by the nationals of the country in which they are operating. In other words, the subsidiary of the British company operating in Australia, for example, should be controlled by the Australians. Our competitors in that country cannot then point the finger and say that the company is merely a puppet manipulated by the men in London.
Wise companies in the past have been careful to ensure that so far as possible control and management should be exercised where each subsidiary operating company is located. The whole effect of that policy will be spoilt by this Clause. People abroad will say that this is a façade, that it is pure nonsense and that control resides in London.
If control did not reside in London, this Clause would be meaningless. This Clause pre-supposes that a British company has the power to cause people in Australia to do something and to permit or refuse them doing things normally done in the operation of their business. Where is the control? Is it there or here? If the control is not here, the Chancellor's Clause, in my submission, is meaningless, and if the control is not there, and it is proved to people living in these countries abroad by this Bill that control in fact resides in this country a great deal of the good done by years of policy-building by British companies will be undone. The Chancellor must include these things in the Bill itself if these concessions are to be of any real value.
§ Mr. S. N. Evans
At a time when taxation is almost of a penal character this question of tax evasion is of great importance. I do not think that anything upsets people quite so much as thinking that the other chap is getting away with something. Therefore, to me it seems quite right that everything should be done to prevent tax evasion.
§ Mr. Eccles
The Chancellor has made clear that this is not a Clause designed at evasion. He says that the migration that has been going on is quite legal. It is not a Clause to catch the tax dodger but to prevent something going abroad, according to its legal rights, simply in order to hold up revenue here.
§ Mr. Evans
I think that it is aimed at somebody who has done very well out of this country over a long period of years and who now, seeing that we have a struggle to get by quite comfortably—although I do not share that view—and may not succeed, is deserting the ship. [HON. MEMBERS: "No."] Oh, yes. He is going abroad for the purpose of escaping taxation which he will have to pay if he stays in this country. We all know that is the reason why this legislation is contemplated.
§ 7.15 p.m.
§ Mr. Arbuthnot
The Chancellor said that this Clause was aimed largely at companies which operate overseas. It is not a question of companies which have done well in this country but of companies operating overseas.
§ Mr. Evans
The point is that they are controlled here. Because they are controlled here, they pay taxes here. If they carry their headquarters abroad, they are hoping that they will pay less taxation. I support everything that the Chancellor is doing to get at these people, but I think that we ought to be careful not to use a steam hammer to crack a nut.
I think that the loss of invisible exports to this country are not sufficiently understood. I take the view that we shall never be able to make enough motor cars or weave enough cloth or hew enough coal to enable us to pay for all that we have to import if we are to feed and clothe our people and furnish our industries adequately. These invisible exports—banking, shipping, insurance, marketing services, no less than-income from investments—are enormously important to the living standards of even the poorest of our people, and it is important that we should all thoroughly understand that.
It is also important that we recognise that the people of this country must have their carrot in whatever strata of society they are, and that people who invest 2209 money abroad and run great risks, and who often lose money, must not be denied a moderate return when they succeed, especially having regard to the fact that their efforts when successful play a tremendous part in maintaining the living standards of our people. I say this because I think that it ought to be emphasised.
In 1938, we imported about £900 million worth of goods a year, mainly as raw materials. We paid £600 million for them by the export of our motor cars, textiles, coal and engineering products, but £300 million of that £900 million worth of imports were paid for by invisible exports. They were and remain of immense importance. Let me quote this one illustration which I may have given the Committee on previous occasions, but which will be none the worse for that.
The effect of these invisible exports is, I think, well exemplified by the case of the Argentine railways. They were a British investment, built up over the years, which we had to get rid of to help pay our war debts. We sold them for £150 million, if I recall the sum aright. Assuming the return on that £150 million investment at 5 per cent., that meant a yearly income of £7½ million from that investment, but we did not take that £7½ million. We said to the Argentine, "We will have £7½ million of beef, hides and maize." So year after year there came into this country £7½ million of beef, hides and maize without any British miner hewing a hundredweight of coal, a textile worker weaving a yard of cloth or a motor car engineer helping to build one motor car.
This came in without any effort on the part of the British working people. Of course, it is the absence of this income and of these things which came in as a kind of rent which is making our problem so terribly grievous today, hence the demand all the time for higher and higher output. We have to replace this income which we received from invisible exports which have gone.
I would say to the Chancellor: by all means take care of these people who seek to go abroad to escape taxation commitments in this country. I know the character of the Chancellor—I hope this does not sound too patronising 2210 —that he has great ability and also great courage, and I am sure that he will not be deterred from doing what he thinks to be right because there may not be in all quarters a thorough understanding of the importance of invisible exports.
§ Mr. Remnant (Wokingham)
I do not want to interfere in the slight difference of opinion between the hon. Member for Wednesbury (Mr. S. N. Evans) and the Chancellor of the Exchequer, but I take it that they agree that the Clause is right from every angle. If what they mean is that they regret such firms having come to this country as those named by my right hon. Friend the Member for Aldershot (Mr. Lyttelton), they regret Vauxhalls having come. Fords of Dagenham, Hoover and other firms of that sort, who have brought employment to this country as well as foreign capital and foreign ingenuity. If a Clause of this sort had been in operation 10, 20 or 30 years ago none of those firms would have come here and given employment.
The Chancellor quite quietly and with a sense of calm says that he proposes to give power to the Treasury to exempt firms, but surely it is for this Committee to decide what it should do instead of making another abhorent type of delegated legislation. Does the right hon. Gentleman really imagine, if he gives the Treasury power to exempt, that an American, Canadian or Australian firm that wants to come here will go cap in hand to the Treasury and say, "Please, will you exempt me from Clause 32 so that I can come into your country?"
If the Treasury do exempt such a firm from the Clause and give permission to start in this country, are they prepared to tell such people that they can take their capital out at any time they like? If they are not prepared to go that far, then they may as well give up any hope of foreign capital coming to this country. I am perfectly well aware that there is full employment here and that we do not need foreign money at present, but let us look a little further ahead. The time may well come, which ever Government or which ever party is in power, when the Government of the day may be thankful for help from such sources, not only in this country but also in the Dominions.
If I might use phraseology which is current in another popular centre today, 2211 nothing that the Chancellor has yet said prevents me from thinking that if this Clause had a pedigree it would be written down as born from spite out of bad temper. Although we understand perfectly what has given rise to both those feelings, let us be extremely careful that in trying to correct those faults, if faults they be, that we do not do a great deal more damage.
I want to put one particular aspect of the matter to the Chancellor, a subject which was touched on by my hon. Friend the Member for Dover (Mr. John Arbuthnot). I will be perfectly frank about it, because I am interested in it. Let us think of a tea company which is a sterling company and registered in this country, though operating in North-East India. Under the Indian income tax rules, where the greater part of the revenue arises in that country, it is for Indian purposes resident there. For the purposes of United Kingdom tax, because it is registered in this country, that company is also classed as being resident here. It appears to be the case of the body corporate having two legal homes, and it apparently is for the Treasury to decide to which home it may go.
Under this Clause, which makes it illegalfor the trade or business or any part of the trade or business of a body corporate so resident to be transferred from that body corporate to a person not so resident;I take it that the company would be in order if it sold more tea in Calcutta than at the London auctions, though it would be opposed to the policy designed by the Minister of Food, but that is another matter. What this company is not allowed to do under this Clause is to sell one of its tea gardens to an Indian, a person who is not resident in this country. That garden can be uneconomic and making a loss, but according to this Bill the company will not be allowed to sell it without Treasury consent.
I have one more point to make. Recently we have seen examples of the way some of the unwise actions of this Government are copied elsewhere. Do not let us give a further example which might well be copied to the disadvantage of the people of this country. There can be no doubt in my mind that the Chancellor of the Exchequer, by his 2212 speech on this Clause, punctured it so effectively that it will not hold water at all. He would be much better to wipe it out and start all over again.
§ Sir Harold Webbe (Cities of London and Westminster)
I intend to take only a very few minutes. I am sure there is no need for me, even if I could, to add to the admirable and complete case which has been made out by my right hon. Friend the Member for Aldershot (Mr. Lyttelton) and by my hon. Friend the Member for Renfrew, West (Mr. Maclay), as well as that which has been made out with peculiar force and for peculiar reasons by the hon. Member for Wednesbury (Mr. S. N. Evans). Indeed, there is only one other thing I want to say.
I am sure I need not tell the Chancellor, because he must be better informed than I am, through his many contacts in the City, that there is nothing which has been proposed by the Government for very many years which has caused so much genuine alarm and despondency in the City of London and in the great trading centres connected with it than this proposal. There can be no doubt that both in this country and in America, too, the proposal the Chancellor has made has caused an almost complete hold up in many plans for development which were in contemplation.
I want to bring the Chancellor down to a very much simpler point. He has been good enough to indicate to us the way in which he proposes that this Clause can be administered. I am afraid he is taking a much too optimistic view of its practical workability. He has been asked to exempt from the operations of this Clause transactions which take place in the ordinary course of a company's business. He says that that is too wide a definition.
As a matter of fact that phrase, "the ordinary course of business." is one thoroughly well understood, which the courts are constantly interpreting. I do not believe that the term is too wide, but unless the Chancellor is prepared to make a much more general exemption than he has indicated, then I am quite certain that, not only will the Treasury be completely cluttered up with applications, but the deterrent effect on development will be very much greater than he has imagined.
2213 7.30 p.m.
Might I, very briefly, give an example of what "normal development in the ordinary course of business" means by quoting the facts in connection with a company in which I must declare my interest? This company, before the war and most dramatically since the war, has developed a very large world-wide business. It manufactures a product which it is now selling all over the world in no fewer than 59 countries, practically every country outside the Iron Curtain. It has developed a business several times as large as it had in the total field before the war.
"The normal course of development" means that manufacturers of goods in this country have sold them directly overseas through the ordinary distributors. When any particular market showed signs of being permanent and substantial they moved a stage forward and sold through representative agents. There came a point when, in many countries—for instance, Switzerland, South Africa, Australia and Belgium—the market reached such a size and importance that the proper approach to it was to form in those countries sales companies to undertake the selling part of the ordinary process of distribution.
The effect of all this has been to transfer from this country some of the profit which would have accrued to the British company direct if they had retained the complete cycle of operations in their own hands. Whether that would have been regarded by the Treasury as the purpose of the development or not is, for the moment, immaterial to my argument.
The next stage has been that in certain countries, for political and local reasons, it is found desirable to develop the sales companies into organisations not only to sell the goods but to import the parts of the goods and assemble them. That stage has already been reached in three European countries and one other. The final stage is where, for local reasons and possibly because of local import restrictions, the company has to manufacture its product actually in the countries in which it desires to sell. That has happened over the years to the organisation to which I have referred. At every stage of that development there is undoubtedly a transfer of tax from this country.
§ Sir H. Webbe
Whether the purpose of "a development" is to avoid taxation by transferring the taxable profit abroad is the very point on which the Treasury are to be consulted. I am certain that the Financial Secretary and the Chancellor would tell me that all the developments I have outlined are normal and desirable developments with which they would not seek to interfere and that the Treasury would automatically and, without any special dispensation, agree with developments of that kind. The net result of the development of the particular company was that last year the Treasury had about 10 times as much in tax as before the war. That was the result of the great development of overseas trade through the various stages.
At what point in the consideration of a development will the Treasury give consent? I do not know whether any hon. Members in this Committee have tried to get the answer to a hypothetical question. They would never get it, I think quite properly. Therefore, Treasury consent will not be sought until the scheme of development can be presented complete in such a form that the Treasury can study it in all its details. The process of development and the working out of details of a development of that kind is a long and expensive business.
When it was considered desirable to create and afterwards to increase the size of the subsidiary company in Australia, consideration had to be given to the three alternatives: to create or develop a sales company; to create or develop an assembly company; to create or develop a manufacturing company. Investigation of those alternatives not only occupied considerable time but involved considerable expense. What company can undertake the heavy preliminary work and expenditure in examining a matter of that kind before they submit it to the Treasury, with the risk that in the end the Treasury may take an adverse view?
I suggest that it is essential for the Chancellor to find some much more general form of exemption which will enable businesses desiring to extend in a normal, reasonable and ordinary manner to go ahead with their expansion without the fear that Treasury consent may not be available. Unless some simplification of that kind can be devised, I am sure that the Treasury will be cluttered up with 2215 many thousands of cases and that the scheme will not work.
§ Mr. Jay
As this is a very important Clause and a number of hon. Members have spoken on it, perhaps I might now make a brief reply.
First of all, it is complained against us that we have proposed some modification of the original plan and it is suggested that it should have been made public at an earlier stage. Surely it is right for us to take account of the public comments made in this Committee and in the expert and other Press, and to representations made by industrial bodies. The Federation of British Industries made detailed and full representations on the matter to us. The Attorney-General and I had a long conversation on the subject with highly qualified representatives of the F.B.I. If we had taken no account of any of these representations we should surely have been accused of unreasonable obstinacy.
The anxieties expressed by the hon. Member for Renfrew, West (Mr. Maclay), are perfectly genuine and are shared by a considerable number of people beside himself. I fully agree with what the hon. Gentleman said, and with what was said by my hon. Friend thè Member for Wednesbury (Mr. S. N. Evans) about the importance of international business and of invisible exports for this country. Of course, invisible exports, in our position in international banking, shipping and trade, are absolutely vital to our economic position and to our standard of living. I would suggest to those hon. Gentlemen that it is just the very importance of that international business which proves that their genuine anxieties are considerably exaggerated.
We have for more than 10 years had a very full exchange control system in force in this country which, as far as the principle of the argument goes, bears many similarities to the proposal before us now. That system affects our international trade and commerce at all sorts of points and thousands of transactions which are taking place have to have the permission of the Exchange Control. It is in the last 10 years, particularly in the last three or five years, that there has been a tremendous development in our exports, and of our invisible exports in the last two or three years. That seems 2216 to show that these fears are greatly exaggerated. Very many of the things which have been said today could have been said—I remember that they were said—in 1946 when the Exchange Control Act was passing through the House.
§ Mr. Maclay
Will the hon. Gentleman watch very closely the developments in Holland where many things which used to happen in this country are beginning to take place? He will find that it is very disturbing there.
§ Mr. Jay
I shall be very glad to do so.
The Opposition neglect one very essential moral basis for the Clause. The shareholders in the companies which will be affected by the control are very largely persons resident in the United Kingdom, and persons resident in the United Kingdom will all get the benefit of the very expensive re-armament programme which we are now financing to strengthen our defences. Surely it would be unreasonable that these persons, while claiming that benefit, should contract out of making a fair contribution through taxation to the cost of the programme.
The hon. and learned Member for Wirral (Mr. Selwyn Lloyd) suggested that the right solution to the problem—I assume he shares our general objectives—was not to imprison people here but to induce them to stay here, but neither he nor any other hon. Member opposite seemed to be facing the facts of the situation. There was no doubt about it that companies were proposing on a growing scale to migrate from this country in order to evade Profits Tax and, to some extent, Income Tax. As my right hon. Friend said, the memorandum from the Overseas Mining Association itself said that unless taxation was reduced this movement was likely to continue. Surely it is not for that body or any individual taxpayer but for this House to decide what the level of taxation shall be.
It may be that the Opposition would be entitled to argue that that is so in principle and that if they were responsible at this moment there would be a lower level of direct taxation, but the remarkable fact is that the Opposition have refrained on this Bill from voting against the increase in the distributed Profits Tax and the increase in Income Tax. Therefore, they are committed by this action to the present level of direct taxation in 2217 this country. [HON. MEMBERS: "No!"] On the evidence of the votes on this Bill in the last few days, how can they claim to be really facing the problem?
The threat of tax evasion is there, and we have brought forward the only practical measure with all due safeguards to restrain it, and if hon. Members who have accepted the level of taxation—[HON. MEMBERS: "NO."]—continue to oppose this provision despite the safeguards, it is not surprising that many people in the country will comment that they claim in theory to be opposed to tax evasion but do not seem to oppose it in practice.
§ 7.45 p.m.
§ Mr. Lyttelton
The speech which the hon. Gentleman has just made is very much below the occasion and is unworthy of him. He attempted to meet none of the points raised. First of all, he talked about paying lip service to the importance of invisible exports, pooh-poohed the idea that the Clause would affect our invisible exports and pointed to the increase which had taken place in the last few years. That was largely as a result of the rise in the freight market which largely escapes the mysteries of the Clause. He was merely making a dialectical point in which there was very little substance.
He went on to argue—I could hardly follow it—that a shareholder resident in the United Kingdom could not contract out of his tax obligations. I have still to learn how, if dividends are remitted to him here, he can escape tax because the domicile of the company is in some place other than London.
§ Mr. Lyttelton
That is another matter. The hon. Member said "Income Tax." Perhaps that was a slip of the tongue. I remain completely unconvinced and I am also rather resentful of the attitude which the Government have taken up over the Amendment. With the permission of the Chair, the debate has gone far wider than the Amendment might have warranted but all we have got out of the Treasury is the proposal to set up another advisory committee. This is like the use of protective colouring by an animal when it is driven into a difficult place. The animal here will be throwing off a slough of committees hoping by that means to protect itself.
2218 Every hon. Member of the Committee who is engaged in business knows that the operations of the famous Capital Issues Committee works in the most unsatisfactory and wayward manner that one could ever imagine. One of the minor reasons why companies do not like to come to London is that they have to go to this body, which appears to be worked on the advice of one of Hitler's astrologers, to raise new capital. Now we shall have a situation where another Committee will advise the Treasury when a transaction is permissible and whether it would escape the mischief of the Clause. That gets us absolutely nowhere.
When the Chancellor was speaking, I made the mistake of thinking that he was about to write into the statute a definite dispensation for transactions which he thought were quite legitimate, but apparently I was mistaken. He expressed it a little obscurely, and later he said that all that was to be done was that the Treasury would convey to the new committee the sort of cases which they thought this expert committee might advise upon in the future. This matter is far more serious than the Government have made out. I remain completely unconvinced by the paltry and partial measure which the Government propose to undo the evils of this tax. I assure the Government that for every pound which they lose by tax evasion under the Clause they will lose 25s. or 30s. by loss of trade.
The last remarks of the Financial Secretary represented a typical piece of the New College, Winchester, type of argument, which is that because somebody did not vote against a certain form of taxation he must accept the present level of taxation and that we were, therefore, committed to these payments. That is an absurd argument and I am surprised that he put it forward. Expert bodies concerned with this matter believe that very serious consequences will flow from these provisions. We shall, of course, look with great attention at anything which the Chancellor chooses to introduce between now and the Report stage, but from what he has said so far I do not think he is likely to satisfy us, and so we shall have to carry on the debate on minor points to see if we can make the Clause less vicious.
I only want, in conclusion, to read one paragraph from a memorandum by the B.O.M.A.: 2219If this important branch of the national economy is to be preserved, the remedies must be immediate and drastic, for under present conditions the inducement for existing companies to emigrate and for new companies to be set up overseas is very strong indeed. Merely to prohibit the emigration of mining companies would be no permanent solution and would certainly preclude the possibility of re-establishing London in its leading position in overseas mining.The Chancellor, on this particular point, has said that he would give the expert committee instructions that certain dispensations might be extended to overseas companies who contemplated coming to London, but I can tell him straightaway that that will not do at all. The main reason at present why overseas companies will not wish to establish themselves in London are things like the C.I.C. and the new committee, and, incidentally, the existence of the Socialist Government, with always more and more regulations
§ which make it unable to move in any direction without Treasury permission, and being taxed if the Commissioners deem a particular transaction to be this, that and the other.
§ The Government are gradually tying up all these things so that we will just not get the establishment in London of companies now working overseas. We shall gradually decline as an international market and all that that means to our invisible exports, to which the Financial Secretary has merely paid lip service in stating none of the measures which are necessary to preserve it.
§ Several Hon. Members rose—
§ Mr. R. J. Taylor rose in his place and claimed to move, "That the Question be now put."
§ The Committee divided: Ayes, 294; Noes, 287.2223
|Division No. 127.]||AYES||[7.56 p.m.|
|Acland, Sir Richard||Crawley, A.||Hale, Joseph (Rochdale)|
|Adams, Richard||Crosland, C. A. R.||Hale, Leslie (Oldham, W.)|
|Albu, A. H.||Crossman, R. H. S.||Hall, Rt. Hon. Glenvil (Colne Valley)|
|Allen, Arthur (Bosworth)||Cullen, Mrs. A.||Hall, John (Gateshead, W.)|
|Allen, Scholefield (Crewe)||Daines, P.||Hamilton, W. W.|
|Anderson, Alexander (Motherwell)||Dalton, Rt. Hon. H.||Hannan, W.|
|Anderson, Frank (Whitehaven)||Darling, George (Hillsborough)||Hardman, D. R.|
|Awbery, S. S.||Davies, A. Edward (Stoke, N.)||Hardy, E. A.|
|Ayles, W. H.||Davies, Harold (Leek)||Hargreaves, A.|
|Bacon, Miss Alice||de Freitas, Geoffrey||Hastings, S.|
|Baird, J.||Deer, G.||Hayman, F. H.|
|Balfour, A.||Delargy, H. J.||Henderson, Rt. Hon. Arthur (Tipton)|
|Barnes, Rt. Hon. A. J.||Dodds, N. N.||Herbison, Miss M.|
|Bartley, P.||Donnelly, D.||Hewitson, Capt. M.|
|Bellenger, Rt. Hon. F. J.||Driberg, T. E. N.||Hobson, C. R.|
|Bonn, Wedgwood||Dugdale, Rt. Hon. John (W. Bromwich)||Holman, P.|
|Benson, G.||Dye, S.||Holmes, Horace (Hemsworth)|
|Beswick, F.||Ede, Rt. Hon. J. C.||Houghton, D.|
|Bevan, Rt. Hon. A. (Ebbw Vale)||Edelman, M.||Hoy, J.|
|Bing, G. H. C.||Edwards, John (Brighouse)||Hubbard, T.|
|Blenkinsop, A.||Edwards, Rt. Hon. Ness (Caerphilly)||Hudson, James (Ealing, N.)|
|Blyton, W. R.||Edwards, W. J. (Stepney)||Hughes, Emrys (S. Ayrshire)|
|Boardman, H.||Evans, Albert (Islington, S. W.)||Hughes, Hector (Aberdeen, N.)|
|Booth, A.||Evans, Edward (Lowestoft)||Hughes, Moelwyn (Islington, N.)|
|Bottomley, A. G.||Evans, Stanley (Wednesbury)||Hynd, H. (Accrington)|
|Bowles, F. G. (Nuneaton)||Ewart, R.||Hynd, J. B. (Attercliffe)|
|Braddock, Mrs. Elizabeth||Field, Capt. W. J.||Irvine, A. J. (Edge Hill)|
|Brooks, T. J. (Normanton)||Finch, H. J.||Irving, W. J. (Wood Green)|
|Broughton, Dr. A. D. D.||Fletcher, Eric (Islington, E.)||Isaacs, Rt. Hon. G. A.|
|Brown, Rt. Hon. George (Belper)||Follick, M.||Janner, B|
|Brown, Thomas (Ince)||Foot, M. M.||Jay, D. P. T.|
|Burke, W. A.||Forman, J. C.||Jeger, George (Goole)|
|Burton, Miss E.||Fraser, Thomas (Hamilton)||Jeger, Dr. Santo (St. Pancras, S.)|
|Butler, Herbert (Hackney, S.)||Freeman, John (Watford)||Jenkins, R. H.|
|Callaghan, L. J.||Freeman, Peter (Newport)||Johnson, James (Rugby)|
|Carmichael, J.||Gaitskell, Rt. Hon. H. T. N.||Johnston, Douglas (Paisley)|
|Castle, Mrs. B. A.||Ganley, Mrs. C. S.||Jones, David (Hartlepool)|
|Champion, A. J.||Gibson, C. W.||Jones, Frederick Elwyn (West Ham, S.)|
|Chetwynd, G. R.||Gilzean, A.||Jones, Jack (Rotherham)|
|Clunie, J.||Gooch, E. G.||Jones, William Elwyn (Conway)|
|Cocks, F. S.||Granville, Edgar (Eye)||Keenan, W.|
|Coldrick, W.||Greenwood, Anthony (Rossendale)||Kenyan, C.|
|Collindridge, F.||Greenwood, Rt. Hon. Arthur (Wakefield)||Key, Rt. Hon. C. W.|
|Cook, T. F.||Grenfell, D. R.||King, Dr. H. M.|
|Cooper, Geoffrey (Middlesbrough, W.)||Grey, C. F.||Kinghorn, Sqn. Ldr. E.|
|Cooper, John (Deptford)||Griffiths, David (Rother Valley)||Kinley, J.|
|Corbet, Mrs. Freda (Peckham)||Griffiths, Rt. Hon. James (Llanelly)||Kirkwood, Rt. Hon. D.|
|Cove, W. G.||Griffiths, William (Exchange)||Lang, Gordon|
|Craddock, George (Bradford, S.)||Gunter, R. J.||Lee, Miss Jennie (Cannock)|
|Lever, Harold (Cheetham)||Paget, R. T.||Taylor, Bernard (Mansfield)|
|Lever, Leslie (Ardwick)||Paling, Rt. Hon. Wilfred (Dearne V'lly)||Taylor, Robert (Morpeth)|
|Lewis, Arthur (West Ham, N.)||Paling, Will T. (Dewsbury)||Thomas, David (Aberdare)|
|Lewis, John (Bolton, W.)||Pannell, T. C.||Thomas, George (Cardiff)|
|Lindgren, G. S.||Pargiter, G. A.||Thomas, Iorwerth (Rhondda, W.)|
|Lipton, Lt.-Col. M.||Parker, J.||Thomas, Ivor Owen (Wrekin)|
|Logan, D. G.||Paton, J.||Thorneycroft, Harry (Clayton)|
|Longden, Fred (Small Heath)||Pearson, A.||Thurtle, Ernest|
|McAllister, G.||Pooie, C.||Timmons, J.|
|MacColl, J. E.||Popplewell, E.||Tomney, F.|
|McGhee, H. G.||Porter, G.||Turner-Samuels, M.|
|McGovern, J.||Price, Philips (Gloucestershire, W.)||Ungoed-Thomas, Sir Lynn|
|McInnes, J.||Proctor, W. T.||Usborne, H.|
|Mack, J. D.||Pryde, D. J.||Vernon, W. F.|
|McKay, John (Wallsend)||Pursey, Cmdr. H.||Viant, S. P.|
|Mackay, R. W. G. (Reading, N.)||Rankin, J.||Wallace, H. W.|
|McLeavy, F.||Rees, Mrs. D.||Watkins, T. E.|
|MacMillan, Malcolm (Western Isles)||Reeves, J.||Webb, Rt. Hon. M. (Bradford, C.)|
|McNeil, Rt. Hon. H.||Reid, Thomas (Swindon)||Weitzman, D.|
|MacPherson, Malcolm (Stirling)||Reid, William (Camlachie)||Wells, Percy (Faversham)|
|Mainwaring, W. H.||Rhodes, H.||Wells, William (Walsall)|
|Mallalieu, E. L. (Brigg)||Richards, R.||West, D. G.|
|Mallalieu, J. P. W. (Huddersfield, E.)||Robens, Rt. Hon. A.||Wheatley, Rt. Hon. John (Edinb'gh E.)|
|Mann, Mrs. Jean||Roberts, Goronwy (Caernarvonshire)||White, Mrs. Eirene (E. Flint)|
|Manuel, A. C.||Robertson, J. J. (Berwick)||White, Henry (Derbyshire, N. E.)|
|Marquand, Rt. Hon. H. A.||Rogers, George (Kensington, N.)||Wigg, G.|
|Mathers, Rt. Hon. G.||Ross, William||Wilcock, Group Capt. C. A. B.|
|Mellish, R. J.||Royle, C.||Wilkes, L.|
|Messer, F.||Shackleton, E. A. A.||Wilkins, W. A.|
|Middleton, Mrs. L.||Shawcross, Rt. Hon. Sir Hartley||Willey, Frederick (Sunderland)|
|Mikardo, Ian.||Shinwell, Rt. Hon. E.||Willey, Octavius (Cleveland)|
|Mitchison, G. R.||Shurmer, P. L. E.||Williams, David (Neath)|
|Moeran, E. W.||Silverman, Julius (Erdington)||Williams, Rev. Llywelyn (Abertillery)|
|Monslow, W.||Silverman, Sydney (Nelson)||Williams, Ronald (Wigan)|
|Moody, A. S.||Simmons, C. J.||Williams, Rt. Hon. Thomas (Don V'lly)|
|Morgan, Dr. H. B.||Slater, J.||Williams, W. T. (Hammersmith, S.)|
|Morley, R.||Smith, Ellis (Stoke, S.)||Wilson, Rt. Hon. Harold (Huyton)|
|Morris, Percy (Swansea, W.)||Smith, Norman (Nottingham, S.)||Winterbottom, Ian (Nottingham, C.)|
|Mort, D. L.||Snow, J. W.||Winterbottom, Richard (Brightside)|
|Moyle, A.||Sorensen, R. W.||Wise, F. J.|
|Mulley, F. W.||Soskice, Rt. Hon. Sir Frank||Woodburn, Rt. Hon. A.|
|Murray, J. D.||Sparks, J. A.||Woods, Rev. G. S|
|Nally, W.||Steele, T.||Wyatt, W. L.|
|Neal, Harold (Bolsover)||Stewart, Michael (Fulham, E.)||Yates, V. F.|
|Noel-Baker, Rt. Hon. P. J||Stokes, Rt. Hon. R. R.||Younger, Rt. Hon. K.|
|O'Brien, T.||Strachey, Rt. Hon. J.|
|Oldfield, W. H||Strauss, Rt. Hon. George (Vauxhall)||TELLERS FOR THE AYES:|
|Oliver, G. H.||Stross, Dr. Barnett||Mr. Bowden and|
|Orbach, M.||Summerskill, Rt. Hon. Edith||Mr. Kenneth Robinson.|
|Padley, W. E.||Sylvester, G. O.|
|Aitken, W. T.||Bromley-Davenport, Lt.-Col. W.||de Chair, Somerset|
|Alport, C. J. M.||Brooke, Henry (Hampstead)||De la Bère, R.|
|Amery, Julian (Preston, N.)||Browne, Jack (Govan)||Deedes, W. F.|
|Amory, Heathcoat (Tiverton)||Buchan-Hepburn, P. G. T.||Digby, S. Wingfield|
|Arbuthnot, John||Bullock, Capt. M.||Dodds-Parker, A. D.|
|Ashton, H. (Chelmsford)||Bullus, Wing Commander E. E.||Donner, P. W.|
|Assheton, Rt. Hon. R. (Blackburn, W.)||Burden, F. A.||Douglas-Hamilton, Lord Malcolm|
|Astor, Hon. M. L.||Butcher, H. W.||Drayson, G. B.|
|Baker, P. A. D.||Carr, Robert (Mitcham)||Drewe, C.|
|Baldock, Lt.-Cmdr. J. M.||Carson, Hon. E.||Dugdale, Maj. Sir Thomas (Richmond)|
|Baldwin, A. E.||Channon, H.||Duncan, Capt. J. A. L.|
|Banks, Col. C.||Churchill, Rt. Hon. W. S.||Dunglass, Lord|
|Baxter, A. B.||Clarke, Col. Ralph (East Grinstead)||Duthie, W. S.|
|Beamish, Maj. Tufton||Clarke, Brig. Terence (Portsmouth, W.)||Eccles, D. M.|
|Bell, R. M.||Clyde, J. L.||Elliot, Rt. Hon. W. E.|
|Bennett, Sir Peter (Edgbaston)||Colegate, A.||Erroll, F. J.|
|Bennett, Dr. Reginald (Gosport)||Conant, Maj. R. J. E.||Fisher, Nigel|
|Bennett, W. G. (Woodside)||Cooper, Sqn. Ldr. Albert (Ilford, S.)||Fort, R.|
|Bevins, J. R. (Liverpool, Toxteth)||Cooper-Key, E. M.||Foster, John|
|Birch, Nigel||Corbett, Lt.-Col. Uvedale (Ludlow)||Fraser, Hon. Hugh (Stone)|
|Bishop, F. P.||Craddock, Beresford (Spelthorne)||Fraser, Sir I. (Morecambe & Lonsdale)|
|Black, C. W.||Cranborne, Viscount||Fyfe, Rt. Hon. Sir David Maxwell|
|Boles, Lt.-Col. D. C. (Wells)||Crookshank, Capt. Rt. Hon. H. F. C.||Gage, C. H.|
|Boothby, R.||Crosthwaite-Eyre, Col. O. E.||Galbraith, Cmdr. T. D. (Pollok)|
|Bossom, A. C.||Crouch, R. F.||Galbraith, T. G. D. (Hillhead)|
|Bowen, E. R. (Cardigan)||Crowder, Capt. John (Finchley)||Gammans, L. D.|
|Boyd-Carpenter, J. A.||Crowder, Petre (Ruislip—Northwood)||Garner-Evans, E. H. (Denbigh)|
|Boyle, Sir Edward||Cundiff, F. W.||Gates, Maj. E. E.|
|Bracken, Rt. Hon. B.||Cuthbert, W. N.||George, Lady Megan Lloyd|
|Braine, B. R.||Darling, Sir William (Edinburgh, S.)||Glyn, Sir Ralph|
|Braithwaite, Sir Albert (Harrow, W.)||Davidson, Viscountess||Gomme-Duncan, Col. A.|
|Braithwaite, Lt.-Cr. G. (Bristol, N. W.)||Davies, Nigel (Epping)||Gridley, Sir Arnold|
|Grimond, J.||Lyttelton, Rt. Hon. O.||Roper, Sir Harold|
|Grimston, Hon. John (St. Albans)||McCorquodale, Rt. Hon. M. S||Ropner, Col. L|
|Grimston, Robert (Westbury)||Macdonald, A. J. F. (Roxburgh)||Russell, R. S.|
|Harden, J. R. E.||Macdonald, Sir Peter (I. of Wight)||Ryder, Capt. R. E. D.|
|Hare, Hon. J. H. (Woodbridge)||Mackeson, Brig. H. R||Salter, Rt. Hon. Sir Arthur|
|Harris, Frederic (Croydon, N.)||McKibbin, A.||Sandys, Rt. Hon. D.|
|Harris, Reader (Heston)||McKie, J. H. (Galloway)||Savory, Prof. D. L.|
|Harvey, Air Codre. A. V. (Macclesfield)||Maclay, Hon. John||Scott, Donald|
|Harvey, Ian (Harrow, E.)||Maclean, Fitzroy||Shepherd, William|
|Harvie-Watt, Sir George||MacLeod, Iain (Enfield, W.)||Smithers, Peter (Winchester)|
|Hay, John||MacLeod, John (Ross and Cromarty)||Smyth, Brig. J. G. (Norwood)|
|Head, Brig. A. H.||Macpherson, Major Niall (Dumfries)||Snadden, W. McN|
|Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert||Maitland, Cmdr. J. W.||Soames, Capt. C.|
|Heald, Lionel||Manningham-Buller, R. E.||Spearman, A. C. M.|
|Heath, Edward||Marlowe, A. A. H.||Spence, H. R. (Aberdeenshire, W.)|
|Henderson, John (Cathcart)||Marples, A. E.||Spens, Sir Patrick (Kensington, S.)|
|Hicks-Beach, Maj. W. W.||Marshall, Douglas (Bodmin)||Stanley, Capt. Hon. Richard (N Fylde)|
|Higgs, J. M. C.||Marshall, Sidney (Sutton)||Stevens, G. P.|
|Hill, Mrs. E. (Wythenshawe)||Maude, Angus (Ealing, S.)||Steward, W. A. (Woolwich, W.)|
|Hinchlngbrooke, Viscount||Maude, John (Exeter)||Stewart, Henderson (Fife, E.)|
|Hirst, Geoffrey||Maudling, R.||Stoddart-Scott, Col. M.|
|Hollis, M. C.||Medlicott, Brig. F.||Storey, S.|
|Holmes, Sir Stanley (Harwich)||Mellor, Sir John||Strauss, Henry (Norwich, S.)|
|Hope, Lord John||Molson, A. H. E.||Stuart, Rt. Hon. James (Moray)|
|Hopkinson, Henry||Monckton, Sir Waller||Studholme, H. G.|
|Hornsby-Smith, Miss P.||Moore, Lt.-Col. Sir Thomas||Summers, G. S.|
|Horsbrugh, Rt. Hon. Florence||Morris, Hopkin (Carmarthen)||Sutcliffe, H.|
|Howard, Gerald (Cambridgeshire)||Morrison, John (Salisbury)||Taylor, Charles (Eastbourne)|
|Howard, Greville (St. Ives)||Morrison, Rt. Hon. W. S. (Cirencester)||Taylor, William (Bradford, N.)|
|Hudson, Sir Austin (Lewisham, N.)||Mott-Radolyffe, C. E.||Teeling, W.|
|Hudson, Rt. Hon. Robert (Southport)||Nabarro, G.||Teevan, T. L.|
|Hudson, W. R. A. (Hull, N.)||Nicholls, Harmar||Thomas, J. P. L. (Hereford)|
|Hurd, A. R.||Nicholson, G.||Thompson, Kenneth Pugh (Walton)|
|Hutchinson, Geoffrey (Ilford, N.)||Nield, Basil (Chester)||Thompson, Lt.-Cmdr. R. (Croydon, W.)|
|Hutchison, Lt.-Cmdr. Clark (E'b'rgh W.)||Noble, Comdr. A. H. P.||Thorneycroft, Peter (Monmouth)|
|Hutchison, Colonel James (Glasgow)||Nugent, G. R. H.||Thornton-Kemsley, Col. C. N.|
|Hyde, Lt.-Col. H. M||Nutting, Anthony||Thorp, Brig. R. A. F.|
|Hylton-Foster, H. B.||Oakshott, H. D.||Tilney, John|
|Jeffreys, General Sir George||Odey, G. W.||Turner, H. F. L.|
|Jennings, R.||O'Neill, Rt. Hon. Sir Hugh||Turton, R. H.|
|Johnson, Howard (Kemptown)||Ormsby-Gore, Hon. W. D.||Tweedsmuir, Lady|
|Jones, A. (Hall Green)||Orr, Capt. L. P. S.||Vane, W. M. F.|
|Joynson-Hicks, Hon. L. W.||Orr-Ewing, Charles Ian (Hendon, N.)||Vaughan-Morgan, J. K.|
|Kaberry, D.||Orr-Ewing, Ian L. (Weston-super-Mare)||Wakefield, Edward (Derbyshire, W.)|
|Kerr, H. W. (Cambridge)||Osborne, C.||Wakefield, Sir Wavell (Marylebone)|
|Kingsmill, Lt.-Col. W. H.||Peake, Rt. Hon. O.||Walker-Smith, D. C.|
|Lambert, Hon. G.||Perkins, W. R. D||Ward, Hon. George (Worcester)|
|Lancaster, Col. C. G.||Peto, Brig. C. H. M.||Ward, Miss I. (Tynemouth)|
|Langford-Holt, J.||Pickthorn, K.||Waterhouse, Capt. Rt. Hon. C.|
|Law, Rt. Hon. R. K||Pitman, I. J.||Watkinson, H.|
|Leather, E. H. C.||Powell, J. Enoch||Webbe, Sir H. (London & Westminster)|
|Legge-Bourke, Maj. E. A. H.||Price, Henry (Lewisham, W.)||White, Baker (Canterbury)|
|Lennox-Boyd, A. T.||Prior-Palmer, Brig. O.||Williams, Charles (Torquay)|
|Lindsay, Martin||Profumo, J. D.||Williams, Gerald (Tonbridge)|
|Linstead, H. N.||Raikes, H. V.||Williams, Sir Herbert (Croydon, E.)|
|Llewellyn, D.||Rayner, Brig. R.||Wills, G.|
|Lloyd, Rt. Hn. Geoffrey (King's Norton)||Redmayne, M.||Wilson, Geoffrey (Truro)|
|Lloyd, Maj. Guy (Renfrew, E.)||Remnant, Hon. P.||Winterton, Rt. Hon. Earl|
|Lloyd, Selwyn (Wirral)||Ronton, D. L. M.||Wood, Hon. R.|
|Lockwood, Lt.-Col. J. C.||Roberts, Emrys (Merioneth)||York, C.|
|Longden, Gilbert (Herts, S. W.)||Roberts, Maj. Peter (Heeley)|
|Low, A. R. W.||Robertson, Sir David (Caithness)||TELLERS FOR THE NOES:|
|Lucas, Sir Jocelyn (Portsmouth, S.)||Robinson, Roland (Blackpool, S.)||Major Wheatley and Mr. Vosper.|
|Lucas, P. B. (Brentford)||Robson-Brown, W.|
|Lucas-Tooth, Sir Hugh||Rodgers, John (Sevenoaks)|
§ 8.0 p.m.
§ Mr. Eccles
I should like to ask leave to withdraw the Amendment in view of the Chancellor's undertaking to put into this part of the Clause words which go a long way, we hope, to carry out our intentions.
§ Question, "That those words be there inserted," put accordingly, and negatived.2224
§ Mr. Eccles
I beg to move, in page 24, line 5, to leave out paragraph (c).
This paragraph defines one of these classes of transactions that shall be unlawful. It says that itshall be unlawful ….(c) for a body corporate so resident to cause or permit a body corporate not so resident over which it has control to create or issue any shares or debentures;without the consent of the Treasury. This restriction goes against the whole trend of modern finance, that is to say, of associating the overseas company in the financial 2225 structure of a business where the control is still operated from the United Kingdom.
I begin by reminding the Committee how reactionary this paragraph is. I have always taken a great interest in the development or rather the lack of development of the Spanish empire in South America. It is clear to anyone who studies that history that one of the main causes why industry and commerce never flourished in South America as it did in North America was the absurd way in which the King of Spain demanded to have the right to give a permit for every kind of new business or business extension in the Spanish Colonies. I do not doubt that the reason why our kinsmen in North America got on so much better than the Spanish did in South America was that they had to ask no Government's leave to get on with their business.
The Labour Government here is reverting to the practice of the kings of Spain. They may be sure that the same consequences will follow. I hope now to describe those consequences. On a previous Amendment, my hon. Friend the Member for Barnet (Mr. Maudling) gave the Committee a very lucid description of how, after a time, we have evolved a typcial British compromise in the structure of business overseas. He reminded the Committee that there are very often companies which are subsidiaries of United Kingdom companies, but the control and management of which are effectively exercised in the country of operation.
We do not want to say too much about this system. It is one of the worst features of this Clause that it makes us drag out into the light of day the very sensible compromise whereby the British have got the best of both worlds. We do, in fact, still control a large number of companies operating overseas though from the nationalistic point of view of those companies they have their own locals as directors, they own a large part of the capital, their titles are expressed in the language of the country and they look local. This is a system which suits both parties. It suits the country concerned to have that sort of company operating and it suits us to continue to have a big stake in those overseas concerns.
In Committee on the Coal Industry Nationalisation Act we raised the question of concerns such as coal bunkering 2226 stations, oil depots and merchanting businesses which belonged to colliery groups in this country which were operating overseas, and were highly important to British interests. We frequently said at the time, that those companies should remain under the influence of this country.
Fuel being a strategic material, many countries have for some time past insisted that where fuel is imported on to their territory and stored it shall be through a company in which the majority of the capital is owned locally. I apologise to the Committee for not having looked up the list of the countries who insist upon that provision. It is very extensive, but countries such as Egypt and Spain spring to my mind, although there are many others.
This is obviously a delicate business. We have only to see what is happening in Persia to realise that the partnership between a highly industrialised country like ourselves and an under-developed country like Persia is a delicate matter, but we have to make this partnership work and we have to realise that the local susceptibilities of the people in the overseas countries must be taken into consideration. What does this extraordinary paragraph say? It says that in the case of the sort of company which I have been describing to the Committee, that company may not create or issue any shares or debentures without the leave of His Majesty's Treasury.
If we can, let us put ourselves in the position of a foreign Government which, perhaps, has its fuel supply depots in the hands of subsidiaries—Cory Brothers or Shell or whoever it may be. The population is growing; let us assume that they want to build new oil tanks or a new wharf or something of that kind. They are not allowed to raise the money except with the permission of a foreign State-that is, the British Government. Is that likely to promote good business relationships between the two countries?
There is a great tide of economic nationalism flowing in the world. It is referred to in Asia as a revolution. Surely we should be on the side of the revolution. [HON. MEMBERS: "Oh."] It is we on this side of the Committee who are on the side of the revolution now. This is a ridiculous and reactionary Clause which attempts to reintroduce colonial 2227 exploitation, controlled by the United Kingdom, over enterprises in other peoples' territories. It is an extraordinary thing—and if it were not so late in the day I would dilate on it further—that the Labour Party should have produced such a reactionary Measure.
Apart from the fundamental issue, which is the international politics of this paragraph, hon. Members will surely be anxious about the strict financial consequences. To help to finance re-armament, the Chancellor of the Exchequer has taken the decision to run down our favourable balance of overseas trade this year. That means that, deliberately, we shall not have any capital to leave abroad in investments. That is an extremely serious thing at a time when all these companies are, like our own companies, affected by rising prices and, therefore, are in need of more working capital.
No doubt we have to run down our balance of trade—and I am not quarrelling with the decision for the moment—but the fact is that for the purpose of financing our own re-armament we are quite deliberately reducing our ability to help these people. It must, therefore, be in the highest interests of the United Kingdom that we should borrow locally as much of the additional working capital as we can to meet the needs of these companies. I do not know whether it is because of the length of time during which the debate has continued, but I must say that all these propositions seem so obvious that I cannot understand how the paragraph could ever have been inserted in the Bill.
These local directors have perhaps for many years been running the whole business locally, on the loosest of loose strings with London, under one of those arrangements which my right hon. Friend the Member for Aldershot (Mr. Lyttelton) described when he was talking about the British American Tobacco Company—a company whose success, I suppose, gives pride and pleasure to every one of us. Is it likely to help these people if they have to get a certificate from Whitehall every time they want to raise money locally?
How do the Government think that the Clause will operate? I gathered from the Chancellor's first intervention on this question that he was thinking of setting 2228 up a sort of advisory body which I suppose would be an overseas Capital Issues Committee. As my right hon. Friend has said, that simply will not do. It is only a mask for the same thing, and the foreigner would say, "We do not really care whether the decision is made by a Treasury official or by a committee appointed by the Chancellor of the Exchequer." As far as the foreigner is concerned, it will be a case of London dominating him; that is what he will say, and even if he did not say it we must bear in mind that this operation would take time. Submissions have to be made to these people and it may be months before they are able to study all the facts and give permission for a particular issue of debentures or shares.
That is not the way business is done. When one suddenly gets an Offer of money in a foreign centre one has to close with it or lose the offer, for people who have capital to invest will say, "We have some alternative suggestions and, as you cannot make up your mind, we shall put our money somewhere else." Apart from the politics of this question, if we erect this great sort of steeplechase track around which companies have to go before they can obtain permission to borrow—not our money, but the money of local people in another country—then the position is absurd.
I do not want to sit down without frankly admitting to the Committee that it is possible for a transaction to take place in the form of an issue of debentures or ordinary shares in an overseas country which will reduce liability to tax in this country. It is not use blinking the fact that in certain cases it is possible to make a transaction of that kind. But I venture to say—and one cannot be certain—that the overwhelming probability is that the number and effect of those transactions which avoid tax is nothing compared with the great and general damage which we do here to what I again submit is the flowing tide of economic revolution or nationalism in the world.
If we do not accommodate ourselves to this great change in the relationship between the British capitalist and overseas resources—and here I agree with the hon. Member for Wednesbury (Mr. S. N. Evans)—I do not think we shall be able to earn a full supply of food and raw materials for this country. This is one 2229 of the most profitable ways of putting British brains and experience to work, and I cannot believe that the Treasury consulted either the Foreign Office or the Office for Commonwealth Relations before they wrote in this Clause.
I think it is wrong to quote from distinguished Dominion nationals who have made pronouncements on paragraph (c). It is a little unfair, for they cannot make another statement after that. But I have heard most distinguished people, who happened to be in London at a conference the other day, comment that they thought this would damage our business relations with the Dominions.
The hon. Member for Renfrew, West (Mr. Maclay), spoke the truth when he said that a lot of damage had already been done. That is the trouble. If we once threaten people and let them see the red light, they do not wait to be hurt: they begin to run. We could improve the position if we deleted this provision. I hope that the Government will look at this matter in the broadest sense. Let them think much wider and further than the two or three transactions which avoided tax, and which have been brought to their notice. Let them think of the whole future of the partnership between this highly populated industrial country and the under-developed territories overseas.
§ Mr. Colegate
The case for deleting this provision has been put very clearly by my hon. Friend, particularly in relation to its effect and operation in foreign countries. I wish to speak on its effect in the Dominions. The Dominions will feel this even more than the foreign countries. Rightly, the Dominions are extremely sensitive about their position. They do not feel in the least inferior to us. They are equal partners. In matters of this kind, we must be even more careful with the Dominions than we have to be with foreign nations.
I should like to outline the way in which this will operate. A great many companies are built up in the Dominions in this way. There is not a very great permanent export of British capital, but by means of a British company's credit—by means of an overdraft and acceptance credits—a company is built up. The time comes when that company issues capital locally, with perhaps some small 2230 British participation, and that money or credit, comes back to London. The overdraft is paid off, and the Dominion subsidiary is working satisfactorily. The local people have been interested, there is local capital and, if the organisers have any sense at all, there is a majority of local directors.
At the same time, an invaluable trade connection has been preserved. It is almost certain that a great deal of the buying and mercantile business of these subsidiary companies will come to London where we—or, at least, the Chancellor—will get a very heavy rake off in one form or another. I cannot help feeling that the omission of this provision would be an excellent move. It would be reported all over the world, especially in the Dominions. It would tend to make good some of the damage which has been done. Perhaps I am too optimistic, but I think that it would fit in with what I felt that the Chancellor was trying to do when he promised concessions on this Clause.
We shall be even more dependent in the future than we have been in the past on maintaining our trade connections with the Dominion. We shall be dependent upon them for essential raw materials and we shall depend very much on the fact that, whether there is an actual legal preference or not, we still have a great fund of good will as a result of which we shall get preference in the trade. But it is one thing to rely on that and it is another to have one's own permanent subsidiary company, even if one has only a small holding. One is able to work together with the subsidiary.
On two or three occasions in the last year I have had the pleasure of entertaining here overseas directors of subsidiary companies. They were immensely interested in our procedure in the House and in our way of life. Although one does not wish to exploit that, one must remember that it is on this kind of thing, on these sometimes invisible bonds, that the strength of the British Commonwealth has been built up.
§ Mr. Grimond
There has been a tendency in all the financial legislation of this sort in recent years to devise an instrument which has widespread effects on legitimate transactions when they are 2231 used to deal with some question of evasion which may, in its scope, be comparatively small. It seems to me that this is one more instance of an attempt to cut off one's nose to spite one's face. One may do a great deal of damage to perfectly legitimate trade for the sake of catching out the few cases which we all agree may be deliberately designed to evade taxation. The words "tax evasion" are very vague. A man may be evading taxation in the ordinary language of today although he is doing something which is perfectly legitimate and within the law which, in the long run, may do this country considerable good.
I take it that the intention of the Government is to catch only the body which deliberately sets out to evade its responsibilities to the country at a difficult time when the country is forced to raise great sums of money for re-armament, principally, and for other purposes as well. But in the setting of the rearmament programme, we have to think what will be the secondary effects of catching out a certain number of people who may be trying to evade their responsibilities. Is the game worth the candle?
I agree that the moral effect is important. It is important that large-scale evasion should not exist. It has a moral effect in the country. But will even the moral effect, far less the financial effect, justify the possible damage which this will do? We depended a great deal on the confidence which the world has in us as a centre of a free market—a free capital market—and on our attitude to the countries we have developed. We have always raised capital in foreign countries and put capital into them, and the reason why I think we have been successful, both from the point of view of the ordinary people here and from that of the ordinary people in the foreign countries, is that, on the whole, we play fair.
We have not tried to bring undue influence, particularly Government influence, to bear on the affairs of these foreign countries. This is a matter of importance to everyone in this country. It is not only of importance to the City of London. As has been said by the hon. Member for Wednesbury (Mr. S. N. Evans), the invisible trade of this country is of the greatest importance to the standard of life of everyone. The standard of the whole country has depended a 2232 great deal on our conduct of foreign trade and foreign finance.
This subsection has been likened by my hon. Friend the Member for Chippenham (Mr. Eccles) to a return to the ways of the Spanish Empire. I put another consideration to the Financial Secretary. It used to be a powerful argument of the Left in this country that the capitalist system led inevitably to conflict between large groups of capital and that that conflict might, in the end, even lead to war. One of the great benefits which some of us believed might happen through planning, especially on an international scale, was that we should break up those conflicts and antagonisms between large economic groups and, by that means, we should get greater confidence and prosperity in the world. But now, when so many States are planning their own economies, experience does not seem to me to bear that out.
So far from the era of individual nations each planning their own economies leading to sweeping away all barriers to international trade, it is doing just the opposite. So far from each planned economy taking account of the difficulties of other countries in the world, and trying to do its best for the wealth and happiness of the whole world, they are doing very much what old capitalist private business was accused of doing. They are trying to export their troubles and make someone else bear their burdens. We see it in our relations with Denmark and the Argentine, and in the campaign against the Schuman Plan. In that campaign it was argued that the standard of living in this country was threatened. We did not hear so much about the standard of living of the French or German workers.
I ask the Financial Secretary to take these things into account. Are we really helping the standard of living of the workers of the Dominions or of foreign countries, where we may have subsidiary firms, if these are not allowed to raise more capital in those countries, exploit their resources and so add to their wealth? Can we really say that we are in this matter moved by anything except mere considerations of our own wealth? Cannot we consider the matter in a wider setting? If we consider the case only from the national point of view, is that really consistent with building up the Atlantic 2233 Pact and the great alliance for democracy and freedom and higher living standards throughout the world?
§ Mr. Hollis
It is a very great pleasure indeed not only to follow, but entirely to agree with, the hon. Member for Orkney and Shetland (Mr. Grimond). The paragraph in the Bill which has given rise to this debate makes me feel very old. I can remember, as short a time ago as my early boyhood, when one of the main points which Socialist propagandists used against the stupid capitalist imperialists was that they were foolish to imagine that the exceptionally privileged position of the British capitalist would last for ever. On the contrary, they said, that it was not to be expected that the other nations of other Continents would be willing to use tools and machines for the rest of time solely for the benefit of British capital, and that we must make up our minds to the fact that these other peoples would insist upon using those things for their own advantage.
That is what we were told in the prophecies of the Socialists of our boyhood, and, of all their prophecies—every other was proved wrong—this one was the only one in which they were proved right. Of course, they ought to be right about one, but, when they were right about one and when they might have stuck to the one on which they were right what happened? A few weeks ago, at Strasbourg, I heard a brilliant speech from M. Reynaud, the French statesman, in which he said that the one successful advance of nationalisation in the post-war world was the nationalisation of Socialism. That is perfectly true.
This fantastically reactionary paragraph, which the party of the Brontosaurus insists on inserting in the Bill, is just as unworkable in practice as it is deficient in morals. I agree, of course, that there is a certain problem concerning a few people who, in raising capital, may escape liability to taxation. Even from the point of view of the collection of taxation, to suggest that this paragraph would be to the advantage of the Government is fantastic. It is true that there are ways of curing every problem. It is one way of curing a cold in the head to cut off the man's head, but it is not a very good way to cure a cold in the head.
2234 It is perfectly obvious that, if hon. Gentlemen opposite insist on pushing through this paragraph in the hope of laying by the heels one or two people who are trying to evade taxation, they will, in fact, obviously be putting this body corporate which is resident in the United Kingdom and carrying on business abroad in such a position that it is fantastic to imagine that, in the modern world, it would be able to enjoy any prosperity and make its contribution to the nation's taxation in the long run.
I am not advocating, any more than my hon. Friend the Member for Chippenham (Mr. Eccles), that British capital should make a panic flight from those parts of the world in which it has played a very useful part in the past, where it is still playing that part today and where it will continue if allowed to do so in the future. But British capital must have flexibility of manoeuvre if it is to be forbidden by Acts of Parliament and without licence of the British Government, which is under suspicion throughout the nationalist movements in other countries, to come to any terms with the incipient nationalism of those other countries. The British company is, under this Clause, to be placed in a position where it will not indeed be able to earn the tax revenue which the Chancellor is so anxious about.
§ Mr. Jay
The hon. Member for Chippenham (Mr. Eccles), in introducing the Amendment, spoke of the importance of the development of overseas subsidiaries, local contacts and methods of extending British trade. I fully agree with that. Clearly, it is important that business of that kind should develop, and that there should be overseas subsidiaries of United Kingdom companies, and, indeed, that those subsidiaries should raise capital in the countries where they are operating. This subsection is not designed to stop any of these things happening. What this subsection is designed to do, and what it will be so administered as to do, is to prevent those subsidiaries being misused as an instrument of tax evasion by United Kingdom companies, and, therefore, United Kingdom shareholders.
I agree with a great deal of what the hon. Member for Chippenham said about the advantages of this class of business, although I thought he lapsed into extravagance when he talked about colonial exploitation in the Empire and things of that 2235 kind. Hon. Members opposite are really not facing the facts of the problem if they suggest, as the hon. Member for Orkney and Shetland (Mr. Grimond), did, and I am sure he believes it to be the case, that this is simply a case of a few possible minor evasions of the Clause.
The fact is that, if we were to pass this Clause without this subsection—that is to say, if we were to apply the control on the United Kingdom company transferring its management abroad and leave it completely free to raise capital from subsidiaries in this way—it is very doubtful whether the Clause will be worth passing at all. It would, indeed—and I think the hon. Member for Chippenham admitted this—drive a carriage and horses right through the Clause, since it would be possible for the United Kingdom company with sufficient resources from their existing subsidiaries, or by forming new subsidiaries in some overseas countries, where there was little or no Income Tax and Profits Tax, to make an issue—for instance a bonus issue of preference shares, or debentures to the parent company—and then, by immediate repayment of that capital, to hand back what were profits earned on a large scale, but without any taxation at all.
This is no figment of the imagination of the Inland Revenue. These cases were actually occurring. Indeed, one of the cases which as I indicated roughly in my speech on Second Reading—most led us to the conclusion that we must take action in this matter was that of a large and well-known British company which was forming a subsidiary in, as a matter of fact, a British Colony where there is no Income Tax or Profits Tax, with a view to a transaction of precisely that kind.
§ Mr. H. Fraser
The hon. Gentleman's argument really amounts to this, that he would not have allowed Cabot to sail from these ports on the grounds that he would not have been subject to tax.
§ Mr. Pitman
The hon. Gentleman is talking about profit balances which have been properly made in, say, New Zealand and which are capitalised and continue to belong to the parent company. I do not see how that is in any way an evasion of tax of any kind whatever. If the Financial Secretary will turn to Clause 33 he will see that it is impossible for the New Zealand company to have made 2236 these profits other than fairly and in accordance with what the Chancellor himself would agree to if he were there. Therefore, those must be the genuine profits of the New Zealand company, and, as such, I do not see how their capitalisation and issue to the people who own the business is in any way an offence.
§ Mr. Jay
That does not affect the issue. They may be quite genuine profits, but, as a result of a transaction such as I have described, quite a large number of profits hitherto accruing to the United Kingdom company and stockholders bearing Income Tax and Profits Tax could be made to bear neither of those taxes through their being made available to the parent company in a non-taxable form.
I wanted to make it quite clear to the hon. Member for Orkney and Shetland that this is not a figment of the imagination of the Inland Revenue, but that cases have actually occurred, and that it would have been possible for other companies in the same position, had this continued, to carry out transactions of that kind.
§ Sir J. Mellor
When the hon. Gentleman was referring to subsidiaries he was referring to wholly owned subsidiaries. We contemplate the case where there would be independent shareholders in the overseas company. Surely, in that case, the parent company would have a duty to permit any financial transactions which were beneficial to them, and, surely, it would be quite immoral to require the parent company to refrain from entering into a transaction which was for the benefit of the minority shareholders overseas.
§ Mr. Jay
But in the normal case of a device of this kind one would expect the subsidiary to be wholly owned.
The hon. Member for Chippenham put a perfectly reasonable point, that this Clause, in order that it should operate in the only way in which we believe this difficulty can be met, would, of course, require the United Kingdom parent company to get permission from the British Government in order that the subsidiary might raise capital in the overseas country. He spoke of London domination—I think that was his phrase—and suggested that this might give rise to political difficulties. I think that is exaggerated. He told us he had been talking to various persons interested in this.
2237 8.45 p.m.
I happened to discuss this particular aspect of the problem a week or two ago with a director of one of our largest parent companies with subsidiaries abroad, and he, very naturally from his point of view, put to me the inconvenience of this arrangement. But when I asked him whether in any case his board sitting in London would not require their subsidiary overseas to refer a question of this kind to them in London, he admitted that, in fact, they would. Therefore, as far as London domination is concerned, it is no doubt there already in many cases of this kind owing to the financial structure of the company.
This subsection does not interpose regulations between the United Kingdom and the overseas country, whichever it may be; but merely interposes them between the United Kingdom parent company in London or elsewhere in this country, and the British Government here. Therefore, when one takes account of that fact, I think it is clear that those anxieties are considerably exaggerated. I do not think it can be contested that this loophole does exist, that it would be a serious gap in the Clause, and that, provided the whole Clause is administered as my right hon. Friend undertook that it should be, simply to stop flagrant cases of tax evasion, and, of course, to give consent to all genuine cases for the raising of new capital for business reasons, we are perfectly justified and, indeed, in order to protect the Revenue, in duty bound, to include this subsection in the Clause.
§ Sir A. Salter
I was, of course, glad to hear from the Financial Secretary that this part of the Clause was not designed to interfere with the operations of the companies operating overseas and to prevent the association of British with local capital. But, of course, what matters is not what was intended so much as what will be the effect of such a provision. I am not concerned to deny that there are cases of avoidance of tax, and that the Treasury is entitled to find some safeguards against such avoidance. But, of course, it is not desirable to diminish or abolish the avoidance of tax on a kind of earnings by a provision which will abolish the earnings themselves. Really the kind of earnings with which we are concerned tonight, as I will venture to 2238 argue in a moment or two, are fragile and precarious.
As I look at this Clause as a whole, I have an impression that there is an extraordinary inversion of values; that what should be a subsidiary interest is elevated over what should be a major interest of a country. The Chancellor of the Exchequer really has three functions. He is master of the collecting machinery for taxation—of the Inland Revenue—he is also concerned with the financial policy of the country and, in recent years, he is further concerned with the economic strategy and policy of the country. It is perfectly clear that this Clause has been drafted and pressed upon his attention by the department which I mentioned first. But surely as regards policy, that function should be regarded as subordinate to the other two greater functions and duties of the Chancellor of the Exchequer.
It happens that over the last 20 years, though I have not, as many of my hon. Friends have been, been responsible for the administration of overseas companies of this kind and seen the difficulties and problems from the point of view of those managing the companies, I have seen some problems from the complementary point of view of an official adviser, sometimes advising an overseas Eastern country, sometimes British authorities in relation to overseas investments, sometimes international banks and sometimes a Commonwealth country.
I have had occasion frequently to study the difficult, dangerous and increasingly delicate conditions under which the companies we now have in mind have to develop or indeed maintain the business they established under less unfavourable conditions. It happens that during the last year I have been brought into consultation with some of the leading authorities both in America and in this country with regard to possible forms of foreign investment of this kind. One of the most important problems of those with whom I consulted was to utilise the experience of great capital countries which had been responsible for the development of so many enterprises in countries which are now determined much more than before to manage their own affairs and are increasingly sensitive about external capitalism.
2239 Everyone I consulted was concerned with the question of how to associate capital from what were previously the great capital exporting countries with local capital so as not to give those in the country where the enterprise was being developed the impression that the control was from an outside capital exporting country which they would regard as an exploiting country.
In the extremely difficult conditions of the present world where local sensitivity is so great and so much greater than it was, it is very desirable that the association of a British company of the kind we have in mind should be enabled to be subtle, flexible and, so far as there is anything like a control from this country, as far as possible invisible.
When I think of a provision like this which requires every operation which, if it is not to be unlawful and subject to penalty, to be subject to specific and prior Treasury consent, I am appalled at the prospects in the development and maintenance of business of that kind. I should like to remind the Committee of the way in which this Clause is framed. It says:(1) Subject to the provisions of this subsection,"—and the most relevant one is the provision that the Treasury may give specific consent—this Clause provides thatall transactions of the following classes … shall be unlawful ….It says "All shall be unlawful" not "If they are designed to avoid tax." Then comes the provision that it shall be unlawful(c) for a body corporate so resident to cause or permit a body corporate not so resident over which it has control to create or issue any shares or debentures; …That is to say, one of the most promising ways in which we can continue the association with great and profitable enterprises overseas is to be gravely jeopardised by a provision of this kind which makes the most promising form of association unlawful except with specific Treasury consent. This is really to invert the order of priorities of the duties for which the Chancellor of the Exchequer is responsible.
The Treasury ought first to try to form and follow a policy which will encourage 2240 the development of enterprises of this kind. Then, as a secondary matter, the Treasury should see if there is any way in which, without destroying or substantially impairing the profits upon which they seek to levy taxes, they can deal with the specific danger of tax avoidance, without impeding the effort of the bulk of these great companies upon which the prosperity of this country has depended and may depend in the future. I think their prospects will be endangered by the Clause if this Amendment which I now support is not passed.
§ Mr. Boyd-Carpenter
I have always regarded my hon. Friend the Member for Devizes (Mr. Hollis) as being endowed with prophetic gifts. He certainly gave an exhibition of that this evening when he gave in advance a most accurate description of the mentality which dominated the speech of the Financial Secretary—narrow, old-fashioned, economic nationalism of about the date and of about the character of the late Lord North; indeed, the attitude of Lord North, that he could not possibly risk tax evasion in the Port of Boston on imported tea, regardless of the consequences to British rule in North America, was precisely the attitude which the Financial Secretary has displayed today.
§ Mr. Butcher
My hon. Friend will remember that Lord North had a very successful record in the Division Lobbies.
§ Mr. Boyd-Carpenter
Lord North, of course, had at his disposal less patronage than the Patronage Secretary has today, but no doubt he had other methods for securing obedience to disagreeable policies. However, Mr. Touche, if I proceed to discuss that more fully, you will rule me out of order. Quite clearly the hon. Gentleman was far more concerned lest one or two companies succeeded in reducing their tax liability than with all the infinitely complicated repercussions of this proposal upon the fabric of our foreign commerce and trade. My hon. Friend was quite right when he described the narrow, old-fashioned, economic nationalism which appears to dominate what courtesy demands I should describe as the thinking of the Financial Secretary.
Because the whole characteristic in recent years of the financial and commercial, as well as of the administrative and political policy of this country, has 2241 been the decentralisation of control, the deliberate building up throughout the Empire of units which, as rapidly as possible, were given increasing degrees of responsibility for their own affairs. That has been the theme, economic and political, of our history over the last 50 years or more.
Yet we come back now in 1951 to the Financial Secretary, terrified apparently above all things of tax evasion, solemnly now providing that subsidiary companies, whether in the Empire or in foreign countries, shall find themselves controlled in a vital feature of the conduct of their affairs not merely by companies in this country but ultimately—and from their point of view it is far more significant and serious—by the British Treasury.
I do not think the hon. Gentleman appreciates sufficiently the natural reaction in both Empire and foreign countries to any suggestion that economic organisations vital to the prosperity of those countries should, however indirectly, be controlled by the British Government from Whitehall. I do not think the Financial Secretary can have appreciated that. I wonder whether he consulted the Foreign Secretary. I know, of course, that the Foreign Secretaryship is now held on a part-time basis, and that perhaps the Foreign Secretary, with all his responsibilities for the Festival of Britain, Government publicity, and so on—
§ 9.0 p.m.
§ Mr. Boyd-Carpenter
I appreciate that the Foreign Secretary may not have had time, with all those responsibilities, to concern himself with these sorts of matters. None the less, I should like to know whether the Treasury, in bringing forward these proposals, did consult the Foreign Office, and, for that matter, the Commonwealth Relations and Colonial Offices, as to the reactions and repercussions of this proposal in countries outside this country.
Has the Financial Secretary, either through those Departments or through his own inquiries, considered the possible repercussions and reactions? Has he considered the possibility of retaliatory action by foreign countries who will resent, as I have tried to suggest, the control of important factors in their economic life 2242 by the British Treasury? Has that been considered? If it has been considered, has it been weighed carefully against the possibilities of tax evasion in the way I have mentioned?
It seems to me that, all through this Bill, the Financial Secretary has been obsessed by this fear of tax evasion, which to him has mattered so much more than anything else. That has been the approach throughout this Bill, and is, of course, the cause of what I am bound to say I regard as the worst paragraph in the worst Clause of the worst Bill that even this Government have produced.
§ Mr. Pitman
I am very glad indeed to follow my hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), because he has outlined what my right hon. Friend the Member for Ormskirk (Sir A. Salter) also underlined, namely, the horrific aspect of paragraph (c). I think there is common agreement that it is only because of the alleged tax—shall I use the word "diminution," which is in the Bill, rather than "evasion" or "avoidance"?—that there is any suggestion of putting this paragraph in at all.
I think that my right hon. Friend was too generous to the Financial Secretary in thinking that there might even be the possibility of tax reduction in cases under paragraph (c). I would submit that this issue of tax reduction is a figment of the Socialist Party, and is based very largely on the fact that at Winchester they seem to teach Thucydides much better than they taught bookkeeping.
The Financial Secretary chose his own terms, and I refer him to the fact that in the case of, say, this New Zealand company. Clause 28 prevents any transaction which might have a tax-reducing effect. Clause 33, to which we are coming, will prevent any normal current transaction having any such effect, and the profit balances which are in the New Zealand company can be there only as a result of perfectly straightforward, profitable trading in accordance with the wishes and expressed approval of the Chancellor of the Exchequer himself. The Financial Secretary says in some airy way that in that connection, by some bonus issue, it is possible to avoid tax. I see the Financial Secretary signifying that my right hon. Friend gave certain semblance to that view, but I maintain that he has 2243 not considered the fact that Clauses 28 and 33 cut off altogether any possibility of evasion in such a case.
Let us take simple figures. Such an overseas company has an original capital of £100 and an accumulated profit balance of £100. Supposing that is issued as a bonus issue to the parent company. We then have exactly the same position before that bonus issue as we have after it, namely, that the parent company owns £200 of capital invested in the business abroad. Moreover, it is invested now in an undistributable fashion whereas before it was definitely distributable.
Let us make these shares redeemable preference shares, if the Committee wish. Having made that free bonus issue of shares, that does not alter the situation or the tax position in the slightest. What the company has done is to pay £100 worth of cash. It has moved £100 of cash from one side of the globe to the other side of the globe which could have been moved as easily by any other means and which is in the accounts of the parent company and its subsidiary.
If the Financial Secretary is trying to make as the justification for the inclusion of this Clause the supposition that there is tax evasion of that kind, for goodness sake let him make his case to the Committee, so that we can understand it. He is keeping his case undisclosed like the old thimble rigging man. If there is the possibility of tax evasion, then let him bring it out to prove his case. Since this is of the essense of this horrific subsection, it is surely up to him to make his case and to produce the evidence that there has been tax evasion in these cases, and let the Committee look at it. I submit that in fact he will find himself to be wholly without justifying evidence and to have been misled.
§ Mr. Jennings
The Committee ought to be grateful to the hon. Member for Chippenham (Mr. Eccles) for bringing forward this Amendment. I have had a great deal of experience, extending over many years, of the financing of companies abroad for the direct help of companies in this country. I would like to give the Committee an example. I know a bridge building company in this country which make bridges for almost every country in the world. They have 2244 to have, in various parts of the world, erecting companies—local people and local organisations to erect the bridges in those countries. They often had to send out not only controlled shares but shareholdings in order to start these erecting companies. Without these erecting companies they would not have got the bridges properly erected. This meant hundreds of thousands of pounds worth of work to this bridge building company in this country.
I can give another example. A particular class of machinery is made in this country. The company send these machines to countries in various parts of the world, and in each country they have a selling side and form a small company in order to get selling agents and build up a selling organisation. I must tell the Financial Secretary that to put this subsection into the Bill is playing with fire. We do a tremendous amount of trade with other countries from this country by the very fact that we may have an interest in a company in another country. I have seen this built up over a period of 30 years. Vast orders come to our manufacturing companies here simply because we have had some financial tie-up in a particular country to which our products are going.
I could give many instances where, if this restriction is made, it will almost certainly do untold harm to our trade here. The Financial Secretary cannot have any idea of the vastness of this problem, or, indeed, how industry works here and throughout the world. If the Financial Secretary knew the problem he was playing with he would know that it is dangerous. I would ask him to eradicate that restriction and allow a free flow of trade throughout the world, otherwise a very damaging blow will be struck at our own manufacturers.
My hon. Friend the Member for Chippenham said that unless we get a free flow of trade and our industrialists are allowed to build up some organisation in a foreign country or in the Empire, then we are going to do irreparable harm to our own trade. It will not do for the Financial Secretary to be content with the explanation which he has given us, for it does not explain the situation. This is a damaging Clause, and the Amendment ought to be accepted in the interests of full employment in this land.
§ Sir J. Mellor
I should like to carry a little further this question of subsidiary companies which are not wholly earning, because when I put a question to the Financial Secretary, when he was good enough to give way he replied by saying that normally the shareholders were resident in this country. I think he is a long way out. A very large number of these subsidiary companies will have minority shareholders resident in overseas countries. That is a thing which we ought to encourage. What better way can businesses overseas obtain goodwill in overseas territories than by getting their shares widely held in overseas countries.
I feel that in such cases, where there are such shareholders this Clause will defeat any attempt by the parent company to arrange for the shares of a subsidiary to be widely distributed in overseas countries. Not only do I think it is most desirable that it should be arranged for shares to be held in that way, but I think that when an appreciable proportion of the shares are so held for the parent company to refrain from carrying through a capital transaction, which would be beneficial for those minority shareholders, would be contrary to all principles of proper company management.
A parent company ought not to arrange things solely from the point of view of the majority. It should have full regard to the rights of the minority shareholders overseas, and, therefore, if His Majesty's Government are to step in and stop what it is normally proper to do in the interests of overseas minority shareholders, then His Majesty's Government will be putting the company in an awkward position and will go far to damage British credit overseas. Instead of the minority shareholders overseas knowing, as they do at present, that they will get fair, just and generous treatment from parent companies in this country, they will realise that, however much that company may desire to trade, it is being prevented by His Majesty's Government. That is not going to be good for British goodwill, trade or British credit.
§ 9.15 p.m.
§ Mr. Frederic Harris
I would remind the Government, with regard to what has just been said by my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor), that a short while ago the 2246 Colonial Secretary was saying, in connection with the Overseas Development Corporation, that as companies became established overseas it was the intention to let the minority shareholders come in quite strongly on the overseas investments.
The Financial Secretary said that he had been talking to a director of a business who told him that it was natural for a subsidiary company abroad to consult its parent company for permission to increase its capital. That may be true in some instances, but it does not apply generally. In companies of which I know something it is common for a subsidiary controlled by the parent company in this country to be given power to increase its capital as far as it may seem necessary to do so, and without consultation with the parent company, as long as a reasonable proportion of control is maintained, such as in regard to preference capital needed for the financing of the business. If the justification for the present proposal which the Financial Secretary has tried to put across to us is based on advice which the so called "director" gave him, I would suggest that the advice is utter nonsense.
My hon. Friend the Member for Chippenham (Mr. Eccles) has done a very great service to us all by raising this matter tonight. It seems extraordinarily short-sighted for the Government not to see what they are gradually being led into here. The Financial Secretary has tried to justify the proposal entirely on the ground of preventing tax evasion, yet he has not given us any reasons for believing that there is tax evasion. My hon. Friend the Member for Bath (Mr. Pitman) clearly asked the Financial Secretary to prove that there is tax evasion.
It would benefit all our people for us to develop companies abroad which have the ability to make good profits on colonial or Dominion territories where taxation is extremely low, by comparison. Such progress must benefit the people of this country. The Financial Secretary ought to start thinking a little bit for himself on these matters.
I really despair about some of the advice that must be coming to members-of the Government lately. If it comes solely from the Treasury, surely the Colonial Secretary and heads of other Departments ought to be consulted about the-results of following such advice. The 2247 only justification that has been advanced by the Financial Secretary tonight has been the possibility of tax evasion, but he has not given us one case of the possibility of tax evasion.
§ Mr. Harris
I can understand, after 30 hours, that the Financial Secretary should be a bit dim in his outlook. [HON. MEMBERS: "Oh."] I say that quite definitely. Other hon. Members are also a bit dim, after 30 hours debate. Nobody is suggesting that the Financial Secretary should give us the names of companies who may be guilty of tax evasion. I asked for instances where these provisions could apply, for a hypothetical case which the Government could suggest where tax evasion might take place in these circumstances. [Interruption.] Hon. Members opposite ought not to shout their heads off merely because they are taking no interest in the debate. Many of us on this side of the Committee are interested in this on behalf of the Dominions and the Colonies. My hon. Friend the Member for Chippenham has raised a matter of deep concern to the Colonies. [An HON. MEMBER: "So what?"] An hon. Member shouts "So what?" An inter-
§ jection like that displays the utter ignorance of the person who makes it.
§ The Colonies today are marching with the times and they are becoming more and more self-supporting. If the Financial Secretary thinks that they will abide by a Clause such as this and come cap in hand to the Government here for permission when they wish to increase their own capital, it is about time he got better advice and thought again. It is an extremely retrograde step. He is miles behind the times.
§ The Financial Secretary has tried to justify the Clause only by suggesting possible cases of tax evasion, but he has given us no reasonable facts to satisfy us that tax evasion would take place under the circumstances which he has tried to indicate to us. I sincerely hope that my hon. Friends will strongly support my hon. Friend the Member for Chippenham. In so doing we shall be rendering a great service to all who may eventually be effected by the Measure.
§ Several Hon. Members rose—
§ Mr. R. J. Taylor rose in his place and claimed to move, "That the Question be now put."
§ Question put, "That the Question be now put."
§ The Committee divided: Ayes, 301; Noes, 281.2251
|Division No. 128.]||AYES||[9.23 p.m.|
|Acland, Sir Richard||Brown, Rt. Hon. George (Belper)||Dodds, N. N.|
|Adams, Richard||Brown, Thomas (lnce)||Donnelly, D.|
|Albu, A. H.||Burke, W. A.||Driberg, T. E. N.|
|Allen, Arthur (Bosworth)||Burton, Miss E.||Dugdale, Rt. Hon. John (W. Bromwich)|
|Allen, Scholefield (Crwe)||Butlet, Herbert (Hackney, S.)||Dye, S.|
|Anderson, Alexander (Motherwell)||Callaghan, L. J.||Ede, Rt. Hon. J. C.|
|Anderson, Frank (Whitehaven)||Carmichael, J.||Edelman, M.|
|Awbery, S. S.||Castle, Mrs. B. A.||Edwards, John (Brighouse)|
|Ayles, W. H.||Champion, A. J.||Edwards, Rt. Hon. Ness (Caerphilly)|
|Bacon, Miss Alice||Chetwynd, G. R.||Edwards, W. J. (Stepney)|
|Baird, J.||Clunie, J.||Evans, Albert (Islington, S. W.)|
|Balfour, A.||Cooks, F. S.||Evans, Edward (Lowestoft)|
|Barnes, Rt. Hon. A. J.||Coldrick, W.||Evans, Stanley (Wednasbury)|
|Bartley, P.||Collick, P.||Ewart, R.|
|Bellinger, Rt. Hon. F. J.||Collindridge, F.||Field, Capt. W. J.|
|Benn, Wedgwood||Cook, T. F.||Finch, H. J.|
|Benson, G.||Cooper, Geoffrey (Middlesbrough, W.)||Fletcher, Eric (Islington, E.)|
|Beswick, F.||Cooper, John (Deptford)||Follick, M.|
|Bevan, Rt. Hon. A. (Ebbw Vale)||Corbet, Mrs. Freda (Peckham)||Foot, M. M.|
|Bing, G. H. C.||Cove, W. G.||Forman, J. C.|
|Blenkinsop, A.||Crawley, A.||Fraser, Thomas (Hamilton)|
|Blyton, W. R.||Cresland, C. A. R.||Freeman, John (Watford)|
|Boardman, H.||Crossman, R. H. S.||Freeman, Peter (Newport)|
|Booth, A.||Cullen, Mrs. A.||Gaitskell, Rt. Hon. H. T. N.|
|Bottomley, A. G.||Daines, P.||Ganley, Mrs. C. S.|
|Bowden, H. W.||Dalton, Rt. Hon. H.||George, Lady Megan Lloyd|
|Bowen, E. R. (Cardigan)||Darling, George (Hillsborough)||Gibson, C. W.|
|Bowles, F. G. (Nuneaton)||Davies, A. Edward (Stoke, N.)||Gilzean, A.|
|Braddock, Mrs. Elizabeth||Davies, Harold (Leek)||Glanville, James (Consett)|
|Brook, Dryden (Halifax)||de Freitas, Geoffrey||Gooch, E. G.|
|Brooks, T. J. (Normanton)||Deer, G.||Granville, Edgar (Eye)|
|Broughton, Dr. A. D. D.||Delargy, H. J.||Greenwood, Anthony (Rossendale)|
|Greenwood, Rt. Hn. Arthur (Wakefield)||McInnes, J.||Shinwell, Rt. Hon. E.|
|Grenfell, D. R.||Mack, J. D.||Shurmer, P. L. E.|
|Grey, C. F.||McKay, John (Wallsend)||Silverman, Julius (Erdington)|
|Griffiths, David (Rother Valley)||Mackay, R. W. G. (Reading, N.)||Silverman, Sydney (Nelson)|
|Griffiths, Rt. Hon. James (Llanelly)||McLeavy, F.||Simmons, C. J.|
|Griffiths, William (Exchange)||MacMillan, Malcolm (Western Isles)||Slater, J.|
|Grimond, J.||McNeil, Rt. Hon. H.||Smith, Ellis (Stoke, S.)|
|Gunter, R. J.||MacPherson, Malcolm (Stirling)||Smith, Norman (Nottingham, S.)|
|Hale, Joseph (Rochdale)||Mainwaring, W. H.||Snow, J. W.|
|Hale, Leslie (Oldham, W.)||Mallalieu, E. L. (Brigg)||Sorensen, R. W.|
|Hall, Rt. Hon. Glenvil (Coins Valley)||Mallalieu, J. P. W. (Huddersfield, E.)||Soskice, Rt. Hon. Sir Frank|
|Hall, John (Gateshead, W.)||Mann, Mrs. Jean||Steele, T.|
|Hamilton, W. W.||Manuel, A. C.||Stewart, Michael (Fulham, E.)|
|Hannan, W.||Marquand, Rt. Hon. H. A.||Stokes, Rt. Hon. R. R.|
|Hardman, D. R.||Mathers, Rt. Hon. G.||Strachey, Rt. Hon. J.|
|Hardy, E. A.||Mellish, R. J||Strauss, Rt. Hon. George (Vauxhall)|
|Hargreaves, A.||Messer, F.||Stross, Dr. Barnett|
|Hastings, S.||Middleton, Mrs. L.||Summerskill, Rt. Hon. Edith|
|Hayman, F. H.||Mikardo, Ian.||Sylvester, G. O.|
|Henderson, Rt. Hon. Arthur (Tipton)||Mitchison, G. R.||Taylor, Bernard (Mansfield)|
|Herbison, Miss M.||Moeran, E. W.||Taylor, Robert (Morpeth)|
|Hewitson, Capt. M.||Monslow, W.||Thomas, David (Aberdare)|
|Hobson, C. R.||Moody, A. S.||Thomas, George (Cardiff)|
|Holman, P.||Morgan, Dr. H. B.||Thomas, Iorwerth (Rhondda, W.)|
|Holmes, Horace (Hemsworth)||Morley, R.||Thomas, Ivor Owen (Wrekin)|
|Houghton, D.||Morris, Percy (Swansea, W.)||Thorneycroft, Harry (Clayton)|
|Hoy, J.||Mort, D. L.||Thurtle, Ernest|
|Hubbard, T.||Moyte, A.||Timmons, J.|
|Hudson, James (Ealing, N.)||Mulley, F. W.||Tomney, F.|
|Hughes, Emrys (S. Ayrshire)||Murray, J. D.||Turner-Samuels, M.|
|Hughes, Hector (Aberdeen, N.)||Nally, W.||Ungoed-Thomas, Sir Lynn|
|Hughes, Moelwyn (Islington, N.)||Neal, Harold (Bolsover)||Usborne, H.|
|Hynd, H. (Accrington)||Noel-Baker, Rt. Hon. P. J.||Vernon, W. F.|
|Hynd, J. B. (Attercliffe)||O'Brien, T.||Viant, S. P.|
|Irvine, A. J. (Edge Hill)||Oldfield, W. H.||Wade, D. W.|
|Irving, W. J. (Wood Green)||Oliver, G. H.||Wallace, H. W.|
|Isaacs, Rt. Hon. G. A.||Orbach, M.||Watkins, T. E.|
|Janner, B.||Padley, W. E.||Webb, Rt. Hon. M. (Bradford, C.)|
|Jay, D. P. T.||Paget, R. T.||Weitzman, D.|
|Jeger, George (Goole)||Paling, Rt. Hon. W. (Dearne Valley)||Wells, Percy (Faversham)|
|Jeger, Dr. Santo (St. Pancras, S.)||Paling, Will T. (Dewsbury)||Wells, William (Walsall)|
|Jenkins, R. H.||Pannell, T. C.||West, D. G.|
|Johnson, James (Rugby)||Pargiter, G. A.||Wheatley, Rt. Hon. John (Edinb'gh E.)|
|Johnston, Douglas (Palsley)||Parker, J.||White, Mrs. Eirene (E. Flint)|
|Jones, David (Hartlepool)||Paton, J.||White, Henry (Derbyshire, N. E.)|
|Jones, Frederick Elwyn (W. Ham, S.)||Poole, C.||Whiteley, Rt. Hon. W.|
|Jones, Jack (Rotherham)||Popplewell, E.||Wigg, G.|
|Jones, William Elwyn (Conway)||Porter, G.||Wilcock, Group Capt. C. A. B.|
|Keenan, W.||Price, Philips (Gloucestershire, W.)||Wilkes, L.|
|Kenyon, C.||Proctor, W. T.||Wilkins, W. A.|
|Key, Rt. Hon. C. W.||Pryde, D. J.||Willey, Frederick (Sunderland)|
|King, Dr. H. M.||Pursey, Cmdr. H.||Willey, Octavius (Cleveland)|
|Kinghorn, Sqn. Ldr. E.||Rankin, J.||Williams, David (Neath)|
|Kinley, J.||Rees, Mrs. D.||Williams, Rev. Llywelyn (Abertillery)|
|Lang, Gordon||Reeves, J.||Williams, Ronald (Wigan)|
|Lee, Miss Jennie (Cannock)||Reid, Thomas (Swindon)||Williams, Rt. Hon. Thomas (Don V'lly)|
|Lever, Harold (Cheetham)||Reid, William (Camlachie)||Williams, W. T. (Hammersmith, S.)|
|Lever, Leslie (Ardwick)||Rhodes, H.||Wilson, Rt. Hon. Harold (Huyton)|
|Lewis, Arthur (West Ham, N.)||Richards, R.||Winterbottom, Ian (Nottingham, C.)|
|Lewis, John (Bolton, W.)||Robens, Rt. Hon. A.||Winterbottom, Richard (Brightside)|
|Lindgren, G. S.||Roberts, Emrys (Merioneth)||Wise, F. J.|
|Lipton, Lt.-Col. M.||Roberts, Goronwy (Caernarvonshire)||Woodburn, Rt. Hon. A.|
|Logan, D. G.||Robertson, J. J. (Berwick)||Woods, Rev. G. S.|
|Longden, Fred (Small Heath)||Robinson, Kenneth (St. Pancras, N.)||Wyatt, W. L.|
|McAllister, G.||Rogers, George (Kensington, N.)||Yates, V. F.|
|MacColl, J. E.||Ross, William||Younger, Rt. Hon. K.|
|Macdonald, A. J. F. (Roxburgh)||Royle, C.|
|McGhee, H. G.||Shackleton, E. A. A.||TELLERS FOR THE AYES:|
|McGovern, J.||Shawcross, Rt. Hon. Sir Hartley||Mr. Pearson and Mr. Sparks|
|Aitken, W. T.||Baxter, A. B.||Bossom, A. C.|
|Alport, C. J. M.||Beamish, Maj. Tufton||Boyd Carpenter, J. A.|
|Amery, Julian (Preston, N.)||Bell, R. M.||Boyle, Sir Edward|
|Amory, Heathcoat (Tiverton)||Bennett, Sir Peter (Edgbaston)||Bracken, Rt. Hon. B.|
|Arbuthnot, John||Bennett, Dr. Reginald (Gosport)||Braine, B. R.|
|Ashton, H. (Chelmsford)||Bennett, Willam (Woodside)||Braithwaite, Sir Albert (Harrow, W.)|
|Assheton, Rt. Hon. R. (Blackburn. W.)||Bevins, J. R. (Liverpool, Toxteth)||Braithwaite, Lt.-Cr G. (Bristol, N. W.)|
|Astor, Hon. M. L.||Birch, Nigel||Bromley-Davenport, Lt.-Col. W.|
|Baker, P. A. D.||Bishop, F. P.||Brooke, Henry (Hampstead)|
|Baldock, Lt.-Cmdr. J. M.||Black, C. W.||Browne, Jack (Govan)|
|Baldwin, A. E.||Boles, Lt.-Col. D. C. (Wells)||Buchan-Hepburn, P. G. T.|
|Banks, Col. C.||Boothby, R.||Bullock, Capt. M.|
|Bullus, Wing Commander E. E.||Howard, Gerald (Cambridgeshire)||Perkins, W. R. D.|
|Burden, F. A.||Howard, Greville (St. Ives)||Peto, Brig. C. H. M.|
|Butcher, H. W.||Hudson, Sir Austin (Lewisham, N.)||Pickthorn, K.|
|Carr, Robert (Mitcham)||Hudson, Rt. Hon. Robert (Southport)||Pitman, I. J.|
|Carson, Hon. E.||Hudson, W. R. A. (Hull, N.)||Powell, J. Enoch|
|Channon, H.||Hurd, A. R.||Price, Henry (Lewisham, W.)|
|Churchill, Rt. Hon. W. S.||Hutchinson, Geoffrey (Ilford, N.)||Prior-Palmer, Brig. O.|
|Clarke, Col. Ralph (East Grinstead)||Hutchison, Lt.-Com. Clark (E'b'rgh W.)||Profumo, J. D.|
|Clarke, Brig. Terence (Portsmouth, W.)||Hutchison, Col. James (Glasgow)||Raikes, H. V.|
|Clyde, J. L.||Hyde, Lt.-Col. H. M.||Rayner, Brig. R.|
|Colegate, A.||Hylton-Foster, H. B.||Redmayne, M.|
|Conant, Maj. R. J. E.||Jeffreys, General Sir George||Remnant, Hon. P.|
|Cooper, Sqn. Ldr. Albert (Ilford, S.)||Jennings, R.||Renton, D. L. M.|
|Cooper-Key, E. M.||Johnson, Howard (Kemptown)||Roberts, Maj. Peter (Heeley)|
|Corbett, Lt.-Col. Uvedale (Ludlow)||Jones, A. (Hall Green)||Robertson, Sir David (Caithness)|
|Craddock, Beresford (Spelthorne)||Joynson-Hicks, Hon. L. W.||Robinson, Roland (Blackpool, S.)|
|Cranborne, Viscount||Kaberry, D.||Robson-Brown, W.|
|Crookshank, Capt. Rt. Hon. H. F. C.||Kerr, H. W. (Cambridge)||Rodgers, John (Sevenoaks)|
|Crosthwaite-Eyre, Col. O. E.||Kingsmill, Lt.-Col. W. H.||Roper, Sir Harold|
|Crouch, R. F.||Lambert, Hon. G.||Ropner, Col. L.|
|Crowder, Capt. John (Finchley)||Lancaster, Col. C. G.||Russell, R. S.|
|Crowder, Petre (Ruislip—Northwood)||Langford-Holt, J.||Ryder, Capt. R. E. D.|
|Cundiff, F. W.||Law, Rt. Hon. R. K.||Salter, Rt. Hon. Sir Arthur|
|Cuthbert, W. N.||Leather, E. H. C.||Sandys, Rt. Hon. D.|
|Darling, Sir William (Edinburgh, S.)||Legge-Bourke, Maj. E. A. H||Savory, Prof. D. L.|
|Davidson, Viscountess||Lennox-Boyd, A. T.||Scott, Donald|
|Davies, Nigel (Epping)||Lindsay, Martin||Shepherd, William|
|de Chair, Somerset||Linstead, H. N.||Smithers, Peter (Winchester)|
|De la Bère, R.||Llewellyn, D.||Smyth, Brig. J. G. (Norwood)|
|Deedes, W. F.||Lloyd, Rt. Hn. Geoffrey (King's N'rt'n)||Snadden, W. McN.|
|Digby, S. Wingfield||Lloyd, Maj. Guy (Renfrew, E.)||Soames, Capt. C.|
|Dodds-Parker, A. D||Lloyd, Selwyn (Wirral)||Spearman, A. C. M.|
|Donner, P. W.||Lockwood, Lt.-Col. J. C.||Spence, H. R. (Aberdeenshire, W.)|
|Douglas-Hamilton, Lord Malcolm||Longden, Gilbert (Herts, S. W.)||Spens, Sir Patrick (Kensington, S.)|
|Drayson, G. B.||Low, A. R. W.||Stanley, Capt. Hon. Richard (N. Fylde)|
|Dugdale, Maj. Sir Thomas (Richmond)||Lucas, Sir Jocelyn (Portsmouth, S.)||Stevens, G. P.|
|Duncan, Capt. J. A. L.||Lucas, P. B. (Brentford)||Steward, W. A. (Woolwich, W.)|
|Dunglass, Lord||Lucas-Tooth, Sir Hugh||Stewart, Henderson (Fife, E.)|
|Duthie, W. S.||Lyttelton, Rt. Hon. O.||Stoddart-Scott, Col. M.|
|Eccles, D. M.||McCorquodale, Rt. Hon. M. S.||Storey, S.|
|Elliot, Rt. Hon. W. E.||Macdonald, Sir Peter (I. of Wight)||Strauss, Henry (Norwich, S.)|
|Erroll, F. J.||Mackeson, Brig. H. R.||Stuart, Rt. Hon. James (Moray)|
|Fisher, Nigel||McKibbin, A.||Studholme, H. G.|
|Fort, R.||McKie, J. H. (Galloway)||Summers, G. S.|
|Foster, John||Maclay, Hon. John||Sutcliffe, H.|
|Fraser, Hon. Hugh (Stone)||Maclean, Fitzroy||Taylor, Charles (Eastbourne)|
|Fraser, Sir Ian (Morecambe & Lonsdale)||MacLeod, Iain (Enfield, W.)||Taylor, William (Bradford, N.)|
|Fyfe, Rt. Hon. Sir David Maxwell||MacLeod, John (Ross and Cromarty)||Teeling, W.|
|Gage, C. H.||Macpherson, Major Niall (Dumfries)||Teevan, T. L.|
|Galbraith, Cmdr. T. D. (Pollok)||Maitland, Cmdr. J. W.||Thomas, J. P. L. (Hereford)|
|Galbraith, T. G. D. (Hillhead)||Manningham-Buller, R. E.||Thompson, Kenneth Pugh (Walton)|
|Gammans, L. D.||Marlowe, A. A. H.||Thompson, Lt.-Cmdr. R. (Croydon, W.)|
|Garner-Evans, E. H. (Denbigh)||Marples, A. E.||Thorneycroft, Peter (Monmouth)|
|Gates, Maj. E. E.||Marshall, Douglas (Bodmin)||Thornton-Kemsley, Col. C. N.|
|Glyn, Sir Ralph||Marshall, Sidney (Sutton)||Thorp, Brig. R. A. F.|
|Gomme-Duncan, Col. A.||Maude, Angus (Ealing S.)||Tilney, John|
|Gridley, Sir Arnold||Maude, John (Exeter)||Turner, H. F. L.|
|Grimston, Hon. John (St. Albans)||Maudling, R.||Turton, R. H.|
|Grimston, Robert (Westbury)||Medlicott, Brig. F.||Tweedsmuir, Lady|
|Harden, J. R. E.||Mellor, Sir John||Vane, W. M. F.|
|Hare, Hon. J. H. (Woodbridge)||Molson, A. H. E.||Vaughan-Morgan, J. K.|
|Harris, Frederic (Croydon, N.)||Monckton, Sir Walter||Wakefield, Edward (Derbyshire, W.)|
|Harris, Reader (Heston)||Moore, Lt.-Col. Sir Thomas||Wakefield, Sir Wavell (Marylebone)|
|Harvey, Air Cdre, A. V. (Macclesfield)||Morris, Hopkin (Carmarthen)||Walker-Smith, D. C.|
|Harvey, Ian (Harrow, E.)||Morrison, John (Salisbury)||Ward, Hon. George (Worcester)|
|Harvie-Watt, Sir George||Morrison, Rt. Hon. W. S. (Cirencester)||Ward, Miss I. (Tynemouth)|
|Hay, John||Mott-Radclyffe, C. E.||Waterhouse, Capt. Rt. Hon. C.|
|Head, Brig. A. H.||Nabarro, G.||Watkinson, H.|
|Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert||Nicholls, Harmar||Webbe, Sir H. (London & Westminster)|
|Heald, Lionel||Nicholson, G.||Wheatley, Maj. M. J. (Poole)|
|Heath, Edward||Nield, Basil (Chester)||White, Baker (Canterbury)|
|Henderson, John (Cathcart)||Noble, Cmdr. A. H. P.||Williams, Charles (Torquay)|
|Hicks-Beach, Maj. W. W.||Nugent, G. R. H.||Williams, Gerald (Tonbridge)|
|Higgs, J. M. C.||Nutting, Anthony||Williams, Sir Herbert (Croydon, E.)|
|Hill, Mrs. E. (Wythenshawe)||Oakshott, H. D.||Wills, G.|
|Hinchingbrooke, Viscount||Odey, G. W.||Wilson, Geoffrey (Truro)|
|Hirst, Geoffrey||O'Neill, Rt. Hon. Sir Hugh||Winterton, Rt. Hon. Earl|
|Hollis, M. C.||Ormsby-Gore, Hon. W. D.||Wood, Hon. R.|
|Holmes, Sir Stanley (Harwich)||Orr, Capt. L. P. S.||York, C.|
|Hope, Lord John||Orr-Ewing, Charles Ian (Hendon, N.)|
|Hopkinson, Henry||Orr-Ewing, Ian L. (Weston-super-Mare)||TELLERS FOR THE NOES:|
|Hornsby-Smith, Miss P.||Osborne, C.||Mr. Drewe and Mr. Vosper|
|Horsbrugh, Rt. Hon. Florence||Peake, Rt. Hon. O.|
§ Question put, accordingly, "That the words proposed to be left out stand part of the Clause."2254
§ The Committee divided: Ayes, 294; Noes, 285.2257
|Division No. 129.]||AYES||[9.36 p.m.|
|Acland, Sir Richard||Finch, H. J.||MacColl J. E.|
|Adams, Richard||Fletcher, Eric (Islington, E.)||McGhee, H. G.|
|Albu, A. H.||Follick, M.||McGovern, J.|
|Allen, Arthur (Bosworth)||Foot, M. M.||McInnes, J.|
|Allen, Scholefield (Crewe)||Forman, J. C.||Mack, J. D.|
|Anderson, Alexander (Motherwell)||Fraser, Thomas (Hamilton)||McKay, John (Wallsend)|
|Anderson, Frank (Whitehaven)||Freeman, John (Watford)||Mackay, R. W. G. (Reading, N.)|
|Awbery, S. S.||Freeman, Peter (Newport)||McLeavy, F.|
|Ayles, W. H.||Gaitskell, Rt. Hon. H. T. N.||MacMillan, Malcolm (Western Isles)|
|Bacon, Miss Alice||Ganrey, Mrs. C. S.||McNeil, Rt. Hon. H.|
|Baird, J||Gibson, C. W.||MacPherson, Malcolm (Stirling)|
|Balfour, A.||Gilzean, A.||Mainwaring, W. H.|
|Barnes, Rt. Hon. A.J.||Glanville, James (Consett)||Mallalieu, E. L. (Brigg)|
|Bartley, P.||Gooch, E. G.||Mallalieu, J. P. W. (Huddersfield. E.)|
|Bellenger, Rt. Hon. F. J.||Greenwood, Anthony (Rossendale)||Mann, Mrs. Jean|
|Bonn, Wedgwood||Greenwood, Rt. Hn. Arthur (Wakefield)||Manuel, A. C.|
|Benson, G.||Grenfell, D. R.||Marquand, Rt. Hon. H. A.|
|Beswick, F.||Grey, C. F.||Mathers, Rt. Hon. G.|
|Bevan, Rt. Hon. A. (Ebbw Vale)||Griffiths, David (Rother Valley)||Mellish, R. J.|
|Bins, G. H. C.||Griffiths, Rt. Hon. James (Llanelly)||Messer, F.|
|Blenkinsop, A.||Griffiths, William (Exchange)||Middleton, Mrs. L.|
|Blyton, W. R.||Gunter, R. J.||Mikardo, Ian.|
|Boardman, H.||Hale, Joseph (Rochdale)||Mitchison. G. R.|
|Booth, A.||Hale, Leslie (Oldham, W.)||Moeran, E. W.|
|Bottomley, A. G||Hall, Rt. Hon. Glenvil (Colne Valley)||Monslow, W.|
|Bowden, H. W.||Hall, John (Gateshead, W.)||Moody, A. S.|
|Bowles, F. G. (Nuneaton)||Hamilton, W. W.||Morgan, Dr. H. B.|
|Braddock, Mrs. Elizabeth||Hannan, W.||Morley, R.|
|Brook, Dryden (Halifax)||Hardman, D. R.||Morris, Percy (Swansea, W.)|
|Brooks, T. J. (Normanton)||Hardy, E. A.||Mort, D. L.|
|Broughton, Dr. A. D. D.||Hargreaves, A.||Moyle, A.|
|Brown, Rt. Hon. George (Belper)||Hastings, S.||Mulley, F. W.|
|Brown, Thomas (Ince)||Hayman, F. H.||Murray, J. D.|
|Burke, W. A.||Henderson, Rt. Hon. Arthur (Tipton)||Nally, W.|
|Burton, Miss E.||Herbison, Miss M.||Neal, Harold (Bolsover)|
|Butler, Herbert (Hackney, S.)||Hewitson, Capt. M.||Noel-Baker, Rt. Hon. P. J.|
|Callaghan, L. J.||Hobson, C. R.||O'Brien, T.|
|Carmichael, J.||Holman, P.||Oldfield, W. H.|
|Castle, Mrs. B. A.||Holmes, Horace (Hemsworth)||Oliver, G. H.|
|Champion, A. J.||Houghton, D.||Orbach, M.|
|Chetwynd, G. R.||Hoy, J.||Padley, W. E.|
|Clunie, J.||Hubbard, T.||Paget, R. T.|
|Cocks, F. S.||Hudson, James (Ealing, N.)||Paling, Rt. Hon. W. (Dearne Valley)|
|Coldrick, W.||Hughes, Emrys (S. Ayrshire)||Paling, Will T. (Dewsbury)|
|Collick, P.||Hughes, Hector (Aberdeen, N.)||Pannell, T. C.|
|Collindridge, F.||Hughes, Moelwyn (Islington, N.)||Pargiter, G. A.|
|Cook, T. F.||Hynd, H. (Accrington)||Parker, J.|
|Cooper, Geoffrey (Middlesbrough, W.)||Hynd, J. B. (Attercliffe)||Paton, J.|
|Cooper, John (Deptford)||Irvine, A. J. (Edge Hill)||Poole, C.|
|Corbet, Mrs. Freda (Peekham)||Irving, W. J. (Wood Green)||Popplewell, E.|
|Cove, W. G.||Isaacs, Rt. Hon. G. A.||Porter, G.|
|Craddock, George (Bradford, S.)||Janner, B.||Price, Philips (Gloucestershire, W.)|
|Crawley, A.||Jay, D. P. T.||Proctor, W. T.|
|Crosland, C. A. R.||Jeger, George (Goole)||Pryde, D. J.|
|Crossman, R. H. S.||Jeger, Dr. Santo (St. Pancras. S.)||Pursey, Cmdr. H.|
|Cullen, Mrs. A.||Jenkins, R. H.||Rankin, J.|
|Daines, P.||Johnson, James (Rugby)||Rees, Mrs. D.|
|Dalton, Rt. Hon. H.||Johnston, Douglas (Paisley)||Reeves, J.|
|Darting, George (Hillsborough)||Jones, David (Hartlepool)||Reid, Thomas (Swindon)|
|Davies, A. Edward (Stoke, N.)||Jones, Frederick Elwyn (W. Ham, S.)||Reid, William (Camlachie)|
|Davies, Harold (Leek)||Jones, Jack (Rotherham)||Rhodes, H.|
|de Freitas, Geoffrey||Jones, William Elwyn (Conway)||Richards, R.|
|Doer, G.||Keenan, W.||Robens, Rt. Hon. A.|
|Delargy, H. J.||Kenyon, C.||Roberts, Goronwy (Caernarvonshire)|
|Dodds, N. N.||Key, Rt. Hon. C. W.||Robertson, J. J. (Berwick)|
|Donnelly, D.||King, Dr. H. M.||Robinson, Kenneth (SI. Pancras, N.)|
|Driberg, T. E. N.||Kinghorn, Sqn. Ldr. E.||Rogers, George (Kensington, N.)|
|Dugdale, Rt.Hon. John (W. Bromwich)||Kinley, J.||Ross, William|
|Dye, S.||Lang, Gordon||Royle, C.|
|Ede, Rt. Hon. J. C.||Lee, Miss Jennie (Cannock)||Shackleton, E. A. A.|
|Edelman, M.||Lever, Harold (Cheetham)||Shawcross, Rt. Hon. Sir Hartley|
|Edwards, John (Brighouse)||Lever, Leslie (Ardwick)||Shinwell, Rt. Hon. E|
|Edwards, Rt. Hon. Ness (Caerphilly)||Lewis, Arthur (West Ham, N.)||Shurmer, P. L. E.|
|Edwards, W. J. (Stepney)||Lewis, John (Bolton, W.)||Silverman, Julius (Erdington)|
|Evans, Albert (Islington, S. W.)||Lindgren, G. S.||Silverman, Sydney (Nelson)|
|Evans, Edward (Lowestoft)||Lipton, Lt.-Col. M.||Simmons, C. J.|
|Evans, Stanley (Wednesbury)||Logan, D. G.||Slater, J.|
|Ewart, R.||Longden, Fred (Small Heath)||Smith, Ellis (Stoke, S.)|
|Field, Capt. W. J.||McAllister, G.||Smith, Norman (Nottingham, S.)|
|Snow, J. W.||Tomney, F.||Wilkins, W. A.|
|Sorensen, R. W.||Turner-Samuels, M.||Willey, Frederick (Sunderland)|
|Soskice, Rt. Hon. Sir Frank||Ungoed-Thomas, Sir Lynn||Willey, Octavius (Cleveland)|
|Steele, T.||Usborne, H.||Williams, David (Neath)|
|Stewart, Michael (Fulham, E.)||Vernon, W. F.||Williams, Rev. Llywelyn (Abertillery)|
|Stokes, Rt. Hon. R. R.||Viant, S. P.||Williams, Ronald (Wigan)|
|Strachey, Rt. Hon. J.||Wallace, H. W.||Williams, Rt. Hon. Thomas (Don V'lly)|
|Strauss, Rt. Hon. George (Vauxhall)||Watkins, T. E.||Williams, W. T. (Hammersmith, S.)|
|Stross, Dr. Barnett||Webb, Rt. Hon. M. (Bradford, C.)||Wilson, Rt. Hon. Harold (Huyton)|
|Summerskill, Rt. Hon. Edith||Weitzman, D.||Winterbottom, Ian (Nottingham, C.)|
|Sylvester, G. O.||Wells, Percy (Faversham)||Winterbottom, Richard (Brightside)|
|Taylor, Bernard (Mansfield)||Wells, William (Walsall)||Wise, F. J.|
|Taylor, Robert (Morpeth)||West, D. G.||Woodburn, Rt. Hon. A.|
|Thomas, David (Aberdare)||Wheatley, Rt. Hon. John (Edinb'gh E.)||Woods, Rev. G. S.|
|Thomas, George (Cardiff)||White, Mrs. Eirene (E. Flint)||Wyatt, W. L.|
|Thomas, Iorwerth (Rhondda, W.)||White, Henry (Derbyshire, N. E.)||Yates, V. F.|
|Thomas, Ivor Owen (Wrekin)||Whiteley, Rt. Hon. W.||Younger, Rt. Hon. K.|
|Thorneycroft, Harry (Clayton)||Wigg, G.|
|Thurtle, Ernest||Wilcock, Group Capt. C. A. B.||TELLERS FOR THE AYES:|
|Timmons, J.||Wilkes, L.||Mr. Pearson and Mr. Sparks.|
|Aitken, W. T.||Davidson, Viscountess||Howard, Grevlle (St. Ives)|
|Alport, C. J. M.||Davies, Nigel (Epping)||Hudson, Sir Austin (Lewisham, N.)|
|Amery, Julian (Preston, N.)||de Chair, Somerset||Hudson, Rt. Hon. Robert (Southport)|
|Amory, Heathcoat (Tiverton)||De la Bère, R.||Hudson, W. R. A. (Hull, N.)|
|Arbuthnot, John||Deedes, W. F.||Hurd, A. R.|
|Athton, H. (Chelmsford)||Digby, S. Wingfield||Hutchinson, Geoffrey (Ilford, N.)|
|Assheton, Rt. Hon. R. (Blackburn, W.)||Dodds-Parker, A. D.||Hutchison, Lt.-Com. Clark (E'b'rgh W.)|
|Astor, Hon. M. L.||Donner, P. W.||Hutchison, Col. James (Glasgow)|
|Baker, P. A. D.||Douglas-Hamilton, Lord Malcolm||Hyde, Lt.-Col. H. M.|
|Baldock, Lt.-Cmdr. J. M.||Drayson, G. B.||Hylton-Foster, H. B.|
|Baldwin, A. E.||Drewe, C.||Jeffreys, General Sir George|
|Banks, Col. C.||Dugdale, Maj. Sir Thomas (Richmond)||Jennings, R.|
|Baxter, A. B.||Duncan, Capt. J. A. L.||Johnson, Howard (Kemptown)|
|Beamish, Maj. Tufton||Dunglass, Lord||Jones, A. (Hall Green)|
|Bell, R. M.||Duthie, W. S.||Joynson-Hicks, Hon. L. W.|
|Bennett, Sir Peter (Edgbaston)||Eccles, D. M.||Kaberry, D.|
|Bennett, Dr. Reginald (Gosport)||Elliot, Rt. Hon. W. E.||Kerr, H. W. (Cambridge)|
|Bennett, William (Woodside)||Erroll, F. J.||Kingsmill, Lt.-Col. W. H.|
|Bavins, J. R. (Liverpool, Toxtath)||Fisher, Nigel||Lambert, Hon. G.|
|Birch, Nigel||Fort, R.||Lancaster, Col. C. G.|
|Bishop, F. P.||Foster, John||Langford-Holt, J.|
|Black, C. W.||Fraser, Hon. Hugh (Stone)||Law, Rt. Hon. R. K.|
|Boles, Lt.-Col. D. C. (Wells)||Fraser, Sir Ian (Morecambe & Lonsdale)||Leather, E. H. C.|
|Boothby, R.||Fyfe, Rt. Hon. Sir David Maxwell||Legge-Bourke, Maj. E. A. H.|
|Bossom, A. C.||Gage, C. H.||Lennox-Boyd, A. T.|
|Bowen, E. R. (Cardigan)||Galbraith. Cmdr. T. D. (Pollok)||Lindsay, Martin|
|Boyd-Carpenter, J. A.||Galbraith, T. G. D. (Hillhead)||Linstead, H. N.|
|Boyle, Sir Edward||Gammans, L. D.||Llewellyn, D.|
|Bracken, Rt. Hon. B.||Garner-Evans, E. H. (Denbigh)||Lloyd, Rt. Hn. Geoffrey (King's N'rt'n)|
|Braine, B. R.||Gates, Maj. E. E.||Lloyd, Maj. Guy (Renfrew, E.)|
|Braithwaite, Sir Albert (Harrow, W.)||Glyn, Sir Ralph||Lloyd, Selwyn (Wirral)|
|Braithwaite, Lt.-Cr. G. (Bristol, N. W.)||Gomme-Duncan, Col. A.||Lockwood, Lt.-Col. J. C.|
|Bromley-Davenport, Lt.-Col. W.||Granville, Edgar (Eye)||Longden, Gilbert (Herts, S. W.)|
|Brooke, Henry (Hampstead)||Gridley, Sir Arnold||Low, A. R. W.|
|Browne, Jack (Govan)||Grimond, J.||Lucas, Sir Jocelyn (Portsmouth, S.)|
|Buchan-Hepburn, P. G. T.||Grimston, Hon. John (St. Albans)||Lucas, P. B. (Brentford)|
|Bullock, Capt. M.||Grimston, Robert (Westbury)||Lucas-Tooth, Sir Hugh|
|Bullus, Wing Commander E. E.||Harden, J. R. E.||Lyttelton, Rt. Hon. O.|
|Burden, F. A.||Hare, Hon. J. H. (Woodbridge)||McCorquodale, Rt. Hon. M. S.|
|Butcher, H. W.||Harris, Fredarie (Croydon, N.)||Macdonald, Sir Peter (I. of Wight)|
|Carr, Robert (Mitcham)||Harris, Reader (Heston)||Mackeson, Brig. H. R.|
|Carson, Hon. E.||Harvey, Air Cdre. A. V. (Macclesfield)||McKibbin, A.|
|Channon, H.||Harvey, Ian (Harrow, E.)||McKie, J. H. (Galloway)|
|Churchill, Rt. Hon. W. S.||Harvie-Watt, Sir George||Maclay, Hon. John|
|Clarke, Col. Ralph (East Grinstead)||Hay, John||Maclean, Fitzroy|
|Clarke, Brig. Terence (Portsmouth, W.)||Head, Brig. A. H.||MacLeod, Iain (Enfield, W.)|
|Clyde, J. L.||Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert||MacLeod, John (Ross and Cromarty)|
|Colegate, A.||Heald, Lionel||Macpherson, Major Niall (Dumfries)|
|Cooper, Sqn. Ldr. Albert (Ilford, S.)||Henderson, John (Cathcarf)||Maitland, Cmdr. J. W.|
|Cooper-Key, E. M.||Hicks-Beach, Maj. W. W.||Manningham-Buller, R. E.|
|Corbett, Lt.-Col. Uvedale (Ludlow)||Higgs, J. M. C.||Marlowe, A. A. H.|
|Craddock, Beresford (Spelthorne)||Hill, Mrs. E. (Wythenshawe)||Marples, A. E.|
|Cranborne, Viscount||Hinchingbrooke, Viscount||Marshall, Douglas (Bodmin)|
|Crookshank, Capt. Rt. Hon. H. F. C.||Hirst, Geoffrey||Marshall, Sidney (Sutton)|
|Crosthwaite-Eyre, Col. O. E.||Hollis, M. C.||Maude, Angus (Ealing S.)|
|Crouch, R. F.||Holmes, Sir Stanley (Harwich)||Maude, John (Exeter)|
|Crowder, Capt. John (Finchley)||Hope, Lord John||Maudling, R.|
|Crowder, Petre (Ruislip—Northwood)||Hopkinson, Henry||Medlicott, Brig. F.|
|Cundiff, F. W||Hornsby-Smith, Miss P.||Mellor, Sir John|
|Cuthbert, W. N.||Horsbrugh, Rt. Hon. Florence||Molson, A. H. E.|
|Darling, Sir William (Edinburgh, S.)||Howard, Gerald (Cambridgeshire)||Monckton, Sir Walter|
|Moore, Lt.-Col. Sir Thomas||Roberts, Maj. Peter (Heeley)||Teevan, T. L.|
|Morris, Hopkin (Carmarthen)||Robertson, Sir David (Caithness)||Thomas, J. P. L. (Hereford)|
|Morrison, John (Salisbury)||Robinson, Roland (Blackpool, S.)||Thompson, Kenneth Pugh (Walton)|
|Morrison, Rt. Hon. W. S. (Cirencester)||Robsorn-Brown, W.||Thompson, Lt.-Cmdr. R. (Croydon, W.)|
|Mott-Radclyfle, C. E.||Rodgers, John (Sevenoaks)||Thorneycroft, Peter (Monmouth)|
|Nabarro, G.||Roper, Sir Harold||Thornton-Kemsley, Col. C. N.|
|Nicholls, Harmar||Ropner, Col. L.||Thorp, Brig. R. A. F.|
|Nicholson, G.||Russell, R. S.||Tilney, John|
|Nield, Basil (Chester)||Ryder, Capt. R. E. D.||Turner, H. F. L.|
|Noble, Cmdr. A. H. P.||Salter, Rt. Hon. Sir Arthur||Turton, R. H.|
|Nugent, G. R. H.||Sandys, Rt. Hon. D.||Tweedsmuir, Lady|
|Nutting, Anthony||Savory, Prof. D. L.||Vane, W. M. F.|
|Oakshott, H. D.||Scott, Donald||Vaughan-Morgan, J. K.|
|Odey, G. W.||Shepherd, William||Vosper, D. F.|
|O'Neill, Rt. Hon. Sir Hugh||Smithers, Peter (Winchester)||Wakefield, Edward (Derbyshire, W.)|
|Ormshy-Gore, Hon. W. D.||Smyth, Brig. J. G. (Norwood)||Wakefield, Sir Wavell (Marylebone)|
|Orr, Capt. L. P. S.||Snadden, W. McN.||Walker-Smith, D. C.|
|Orr-Ewing, Charles Ian (Handon, N.)||Soames, Capt. G.||Ward, Hon. George (Worcester)|
|Orr-Ewing, Ian L. (Weston-super-Mare)||Spearman, A. C. M.||Ward, Miss I. (Tynemouth)|
|Osborno, C.||Spence, H. R. (Aberdeenshire, W.)||Waterhouse, Capt. Rt. Hon. C.|
|Peake, Rt. Hon. O.||Spens, Sir Patrick (Kensington, S.)||Watkinson, H.|
|Perkins, W. R. D||Stanley, Capt. Hon. Richard (N. Fylde)||Webbe, Sir H. (London & Westminster)|
|Peto, Brig. C. H. M.||Stevens, G. P.||Wheatley, Maj. M. J. (Poole)|
|Pickthorn, K.||Steward, W. A. (Woolwich, W.)||White, Baker (Canterbury)|
|Pitman, I. J.||Stewart, Henderson (Fife, E.)||Williams, Charles (Torquay)|
|Powell, J. Enoch||Stoddart-Scott, Col. M.||Williams, Gerald (Tonbridge)|
|Price, Henry (Lewisham, W.)||Storey, S.||Williams, Sir Herbert (Croydon, E.)|
|Prior-Palmer, Brig. O||Strauss, Henry (Norwich, S.)||Wills, G.|
|Profumo, J. D.||Stuart, Rt. Hon. James (Moray)||Wilson, Geoffrey (Truro)|
|Raikes, H. V.||Studholme, H. G.||Winterton, Rt. Hon. Earl|
|Rayner, Brig. R.||Summers, G. S.||Wood, Hon. R.|
|Rodmayne, M.||Sutcliffe, H.||York, C.|
|Remnant, Hon. P.||Taylor, Charles (Eastbourne)|
|Renton, D. L. M.||Taylor, William (Bradford, N.)||TELLERS FOR THE NOES:|
|Roberts, Emrys (Merioneth)||Teeling, W.||Major Conant and Major Wheatley|
§ To report Progress; and ask leave to sit again.—[Mr. Popplewell.]2258
§ Committee report Progress; to sit again Tomorrow.