Commons Sitting of 18 June 1951

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  BAPTIST AND CONGREGATIONAL TRUSTS BILL [Lords]
    ROYAL ALBERT HALL BILL [Lords]
    Read the Third time, and passed, without Amendment.
ORAL ANSWERS TO QUESTIONS

  MRS. MONICA FELTON (VISIT TO KOREA)
  Mr. Nigel Fisherasked the Attorney-General whether he is aware of the recent visit of Mrs. Monica Felton to North Korea and of her statement since her return to this country; and whether he has considered prosecuting her on a charge of treason for consorting with the enemy abroad and for spreading enemy propaganda at home.
  Mr. C. S. Taylorasked the Attorney-General whether he has now received a report from the Director of Public Prosecutions about Mrs. Monica Felton; and
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  whether he proposes to institute proceedings against her for treason.
  The Attorney-General (Sir Frank Soskice): I have not yet received the Director of Public Prosecutions' report, and inquiries are still being made. In these circumstances, I am not yet in a position to make a statement.
  Mr. Fisher: While appreciating that, may I ask the right hon. and learned Gentleman whether he would agree that, quite apart from Mrs. Felton, this case raises important considerations of principle as to what may be permitted to a British subject in relation to an enemy State? Is is not high time that we had a ruling on what is and what is not permissible?
  The Attorney-General: This is obviously a very important case, and I prefer not to discuss it until I have all the facts before me.
  Mr. Sydney Silverman: Will my right hon. and learned Friend reassure the House that he will not allow his great office or the great provisions of our criminal law to be prostituted for political purposes or turned into an engine for the suppression of liberty?
  The Attorney-General: I hope that in this House we never consider a matter of this sort on party lines. I always keep my office absolutely independent of any political consideration at all, and I shall do my level best to do so.
  Mr. Taylor: When the Attorney-General receives the report from the Director of Public Prosecutions will he

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  consider putting a copy of the report in the Library for the benefit of hon. Members?
  The Attorney-General: No, Sir. That is a report which is made confidentially to me.
  Several Hon. Members—
  Mr. Speaker: It would be a great mistake to carry on, and I do not propose to call any more hon. Members.
  Mr. Garner-Evansasked the Secretary of State for Foreign Affairs what facilities were afforded by his Department to enable Mrs. Monica Felton, chairman of the Stevenage Development Corporation, to visit North Korea.
  Mr. Fisherasked the Secretary of State for Foreign Affairs whether his attention has been drawn to the recent visit of Mrs. Monica Felton, the chairman of the Stevenage Development Corporation, to the enemy forces in North Korea; why he franked her passport for this purpose; and whether he will ensure that no such visit is permitted in future.
  The Minister of State (Mr. Younger): No facilities were granted for Mrs. Felton's journey. Her passport was renewed on 2nd February, 1951, in the normal way. It was not valid for travel to China or Korea.
  Mr. Garner-Evans: Can the right hon. Gentleman assure the House that as a result of scares of this nature his Department will not for one moment suffer any infringement of the good Liberal principle of laisser passer?
  Mr. Younger: We are certainly very interested in free travel for all bona-fide purposes.
  Mr. Fisher: Should not a passport endorsement be required for a British subject to travel to visit an enemy State with whom we are actually engaged in war? Surely an inquiry ought to be made before a British subject travels in this way.
  Mr. Younger: The hon. Gentleman no doubt appreciates that that would involve an inquiry about every person leaving this country. There was no indication that Mrs. Felton was going to China and Korea. Her passport was not made valid for that.
  Mr. S. Silverman: The right hon. Gentleman says that her passport was not made valid for that purpose. Is he intending to imply that it is illegal for any British subject to go anywhere in the world unless the Foreign Secretary endorses his or her passport to that effect?
  Mr. Younger: No, Sir, but I think I am right in saying that the passport is a request to foreign Governments to give certain facilities to the holder. If the passport is not valid for a particular country, then the Foreign Secretary cannot be said to have made that request in respect of that individual; but that does not stop the person going.

  JUSTICES OF THE PEACE (SOLICITORS)
  Lieut.-Colonel Liptonasked the Attorney-General why solicitors who are justices of the peace are forbidden to print the initials J.P., after their names on their notepaper.
  The Attorney-General: I am not aware that solicitors are forbidden to print the initials J.P. after their names on notepaper. I assume, however, that the hon. and gallant Member is referring to the practice of my noble and learned Friend the Lord Chancellor and his predecessors in office to discourage the use of these initials on business notepaper. Where a case of this kind is brought to the notice of the Lord Chancellor, my noble and learned Friend causes a letter to be sent to the justice concerned explaining that in his opinion the use of the letters on firms' notepaper is undesirable as it may lead to the suspicion that the office of justice of the peace is being made use of to further the professional interests of the person concerned.
  Lieut.-Colonel Lipton: Can my right hon. and learned Friend say whether a similar letter is addressed to company directors who advertise the fact that they are J.P.s when issuing prospectuses for new shares, or whether a similar expression of view is conveyed to local party political leaders who invariably use the initials J.P. after their names in connection with their local political activities?
  The Attorney-General: The Question asked about solicitors, and what the hon. and gallant Gentleman has just put to me does not arise out of that Question.
  Lieut.-Colonel Lipton: Can my right hon. and learned Friend say whether it is only solicitors who are subject to this form of advice?

  PET ANIMAL FEEDINGSTUFFS
  Mr. H. A. Priceasked the Minister of Food, with regard to the tins of cat food shown him by the hon. Member for Lewisham West, the numbers of such tins, respectively, purchased, sold and still held by his Department; what price was paid and what price obtained by his Department; what net profit or loss was made on the transaction; what was the source of supply; and why this purchase was made.
  The Minister of Food (Mr. Maurice Webb): This cat food is entirely in the hands of the private trade; none has at any time been bought or sold by my Department, and, therefore, I can give no answer to the questions put to me.
  Mr. Kenneth Thompsonasked the Minister of Food if he will take steps, if necessary in consultation with other Ministers, to ensure sufficient supplies of feedingstuffs for pet animals, in view of the periodic shortages of such feedingstuffs which at present occur.
  Mr. Webb: With a few exceptions, feedingstuffs for pet animals are not controlled, and the trade is free to satisfy the demand. I do not think that there is any general shortage.
  Mr. Thompson: Is the Minister aware that one of the largest dog biscuit factories was held up for nearly a week because it took that long for some small machinery parts to be carried a distance of 15 miles on British Railways?
  Mr. Webb: I do not deal with machinery parts.

  FOOD SUPPLIES

    Pigs
    Brigadier Raynerasked the Minister of Food with regard to the recent agreement to take 90 per cent. of the exportable surplus of pigs from Eire, how many pigs he expects to receive in the next two years, respectively.
    Mr. Webb: It is not yet possible to make an estimate. This agreement is
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    designed to give the producers in Eire the sort of guarantee they require to develop their production. It will have no immediate result, but in due course it should provide a useful addition to our supplies. I think we cannot measure the prospects with any precision until some time next year.
    Colonel Gomme-Duncan: In view of the right hon. Gentleman's statement that this arrangement is to give producers in Eire a guarantee of their future prospects of trade, would he consider giving the same guarantee to home producers in the matter of feedingstuffs, which they cannot get?
    Mr. Webb: That is another question, but, in fact, those guarantees have been given.
    Mr. Drayson: How does the Minister define "exportable surplus"? Surplus after what? After other countries have been considered?
    Mr. Webb: If the hon. Gentleman would read the agreement he would find that that has been defined.
    Mr. Dyeasked the Minister of Food whether he is satisfied that the bacon factories at Ipswich and Elmswell, Suffolk, are being used to their fullest capacity the whole year round; and what recent steps he has taken to encourage farmers in Norfolk and Suffolk to produce the most suitable type of bacon pig to supply these factories.
    Mr. Webb: No. Sir. No bacon factories in this country are working to full capacity all the year round. There are not yet enough pigs available. We pay a quality premium for pigs of the most suitable type and, in a few months' time, we shall begin to introduce a system of grading for bacon pigs.
    Mr. Dye: Is it not somewhat undesirable to send pigs to bacon factories in other parts of the country when those in the area are not working to full capacity? Does not that result in the loss of weight and worse bacon for the people?
    Mr. Webb: This is one of our most urgent difficulties, but we have to weigh the loss of weight against other difficulties arising out of our inability to supply bacon in other parts of the country. On balance, I think that the scheme works very well.

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    The improvement mentioned in the last part of my answer will, I think, lead to a general increase in the overall supply of bacon.
    Mr. Joynson-Hicks: Can the right hon. Gentleman say when he is introducing this grading system, and if there is to be any further announcement about it?
    Mr. Webb: It will be introduced in due course; just when, I cannot say.
    Mr. Dye: Would it not be better to transport the bacon after it has been cured rather than send the live pigs long distances to the consuming areas?
    Mr. Webb: It would be if it were as easy as all that. There are complicated problems of labour and matters of that kind which we have to work out and resolve, and, on balance, this is the best way of doing it now.
    Mr. Nabarro: Muddle, muddle.
    Mr. Dyeasked the Minister of Food what action he proposes to take with regard to the representations made concerning the loss of weight of fat pigs produced in Norfolk due to their long journey to the slaughterhouses.
    Mr. Webb: There is an allowance on all pigs transported more than 50 miles to cover what the trade calls "shrinkage." The scale of allowances has been agreed in consultation with the Agricultural Departments and the National Farmers' Unions.
    Mr. Dye: Is my right hon. Friend not aware that this is not altogether satisfactory owing to the fact that some of the pigs are not killed for a long time after they leave the farms? Cannot he get over that difficulty?
    Mr. Webb: As I have already said, I am aware of the difficulties. At the moment, it is not possible for us to get over that difficulty in quite the way that is suggested. We are anxious to get over it, and any co-operation that we can have we shall be glad to have.
    Mr. Turton: Will the right hon. Gentleman consider getting rid of these complaints by re-constituting the pigs marketing board?

    Bottled Fruit (Imports)
    Mrs. Castleasked the Minister of Food whether he is aware that bottles of imported fruit are being sold at prices which, in some cases, are more than double the controlled price of imported canned fruit of similar weight and quality; and if he will therefore control the price of imported bottled fruit.
    Mr. Webb: I know that this privately imported bottled fruit is expensive. The quantities coming in are, however, relatively small, and I do not think that price control would be justified. It would only stop the trade altogether and take these extras off the market. I see no point in using the instruments of price control to reduce the total supplies of food coming into this country. We should only be justified in controlling this admittedly expensive luxury import if scarce currencies were involved or if there was a risk that imports of canned fruit of the same kihds would be prejudiced.
    Mrs. Castle: Is my right hon. Friend aware that a 20 oz. bottle of imported fruit salad is retailing at 5s. 9d., compared with Is. 6d. for a 20 oz. tin of imported fruit salad? If the price control which he has successfully operated in the case of canned goods is not preventing their import would it not be a good thing to consider, at any rate, price control of these excessively priced bottled fruits?
    Mr. Webb: I am fully aware of all those facts. I have gone into the matter with great care. The only result of interference by price control would be to stop the goods coming in altogether, and I see no advantage in that.
    Mrs. Castle: Will my right hon. Friend explain why price control has not stopped imports of canned goods?

    Sugar
    Mr. Geoffrey Cooperasked the Minister of Food on what basis it was decided to pay £10 a ton more for supplies of sugar from foreign sources than the prices paid to our own colonies, including Jamaica.
    Mr. Webb: We have agreed to purchase the whole of the exportable surplus of sugar from Commonwealth countries up to the end of next year. This year's price was agreed, as giving a reasonable

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    return to producers, with Commonwealth representatives last December. Commonwealth supplies, however, are not sufficient to cover all our commitments and we therefore have to buy foreign sugar at the open market price, which at present is above the Commonwealth price. But our arrangements with Commonwealth producers are based on longterm guarantees, which give them security against falls in price, other than such as could be justified by a fall in production costs.
    Mr. Cooper: Is my right hon. Friend aware that recent information indicates that the disparity between the prices is as much as from £22 to £25 a ton? Can he justify the policy of cutting the price paid for Commonwealth grown sugar and then making contributions from the Colonial Development and Welfare Fund and, at the same time, paying high prices to Cuba?
    Mr. Webb: I am rather surprised that that question should come from this side of the House. [HON. MEMBERS: "The right hon. Gentleman is learning."] The whole point of these guarantees is to give long-term security to the producers; but they cannot have it both ways: they cannot have the world price when the world price is high and have a guaranteed price when the world price is down. The whole point is to give a long-term security on which they can base their long-term programmes of production.
    Mr. Cooper: Will my right hon. Friend agree that the intention is to make the Colonies as far as possible self-supporting?

    Lard
    Brigadier Raynerasked the Minister of Food if he will arrange to distribute lard fairly and proportionately between all grocery shops in areas when lard is available.
    Mr. Webb: Yes, Sir.

    Carcase Meat
    Mr. Stewardasked the Minister of Food how far the five shiploads of beef which have arrived in this country under the new agreement with the Argentine is store stale and dirty: if it was known to his negotiators at the time of making the agreement that some 60,000 tons was lying in the stores of the Argentine plants
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    and was likely to be in bad condition; why it was agreed to pay top prices for inferior meat; and what representations have been made to the Argentine Government to recover part of the cost.
    Mr. Webb: We knew that the Argentine packers had some meat in store at the time the latest agreement was made; but there was no reason to suppose that the meat was unsatisfactory. Shipments received so far, contrary to recent misleading statements, have been generally satisfactory. The quantity found to be slightly out of condition has been very small indeed. If allowances can justifiably be claimed, claims will be made in accordance with normal commercial practice.
    Mr. Steward: Is not this a typical example of how absurd it is for the Government to go on trying to buy meat for this country? How much better it would be for all concerned, including the Ministry of Food, if the right hon. Gentleman allowed the trade to do the job.
    Mr. Speaker: That does not arise out of this Question.
    Mr. Webb: If I may answer the hon. Gentleman, his Question assumes that all meat coming to this country is always unsatisfactory, which is a very extraordinary assumption. As an example of condition, I can tell the hon. Gentleman that out of 6,000 beef quarters pitched at Smithfield during the week ending 9th June only two were found to be unsatisfactory.
    Mr. Thornton-Kemsley: Has the Argentine Mixed Negotiating Commission authority to adjust the price if the meat has deteriorated appreciably owing to store staleness?
    Mr. Webb: That is a wider question. I should like to have notice of it to give a considered answer.
    Mr. Turton: Has all this meat gone into circulation?
    Mr. Webb: Some has gone into circulation, some into stock.
    Mr. Crouchasked the Minister of Food if he is now in a position to make a statement on the Government's long-term policy for home-produced meat.
    Mr. Webb: No, Sir. Decisions on policy cannot be taken until consultations with interested organisations have been completed.
    Mr. Crouch: Is the right hon. Gentleman aware that it is at least three years from the time the calf is born before we get beef from it; is he not aware that the longer this decision is delayed the longer shall we have to remain on the present very meagre ration?
    Mr. Webb: I cannot follow the hon. Member into those biological facts. This is a very complicated problem and we are anxious that whatever is done should be done on sound lines. We are in close contact with every section of the industry and we have now received the views of, I think, almost every section. We feel that it would be desirable to have a second meeting with most of them and in due course we shall arrive at our conclusion, but I would deprecate an early decision.
    Mr. Geoffrey Wilson: In arriving at a long-term policy, will the right hon. Gentleman bear in mind the special considerations that appertain to dual-purpose breeds of cattle, such as the South Devon, and see that any regulations which are made do not discourage the development of such breeds in the areas where they are customary?
    Colonel Gomme-Duncan: Although the right hon. Gentleman says this is a very complicated matter in the long term, is it not rather extraordinary that since 1945 we have had no long-term policy of home beef production? How long must we wait?

    Canned Meat Prices
    Mr. Thornton-Kemsleyasked the Minister of Food if he is aware that the decision made last summer to allow the import of canned meats under licence is of little value in practice because of the substantial increase in the world price of meat since the maximum prices for imported canned meats were laid down in Statutory Rules and Orders, 1949, No. 782; what representations he has received from importers; and what reply he has made.
    Mr. Webb: The facts do not support the hon. Member's suggestion. The average monthly arrivals of privately
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    imported canned meats during the first quarter of 1951 were noticeably higher—about 25 per cent.—than in the last quarter of 1950. Importers have, however, made representations to me for increased prices for certain lines of canned meat, and I am considering them.
    Mr. Thornton-Kemsley: It was to the "certain lines" that my Question was directed. Does the Minister agree that these "certain lines" are good food, which would be welcomed by the people of this country, but that they cannot be imported and sold within the price limits which were fixed by the Ministry in 1949?
    Mr. Webb: Perhaps the hon. Gentleman would await the outcome of the consideration of these special lines.
    Mr. Mitchison: What is the maximum price of "certain lines" in a can?
    Sir Waldron Smithers: When will the Minister realise that the increase of food prices all over the world is entirely due to bulk purchasing, and the validity of the principle that if we restrict consumption we restrict output?
    Mr. Speaker: That question goes far wider than the Question.

    Russian Crab Meat
    Mr. Gammansasked the Minister of Food what steps he took to satisfy himself that the crab meat ordered from the Union of Soviet Socialist Republics and now on sale in this country was fit for human consumption; what quantities have been purchased or contracted for, and if he will make a statement on the position generally.
    Mr. Edelmanasked the Minister of Food whether he has yet received a report on the Russian crab meat which was allegedly responsible for four cases of food poisoning in Coventry; and what action he proposes to take.
    Mr. Boyd-Carpenterasked the Minister of Food whether he has considered the statement of the Medical Officer of Health for Coventry, a copy of which has been sent to him, that a number of cases of illness were due to the consumption of Russian crab meat; and what action he proposes to take.
    Mr. Webb: I have seen Press reports about cases of food poisoning alleged to have been caused by the consumption of Russian crab meat. The quantity covered by the last contract for this commodity was about 800 tons, all of which has been released. On arrival in this country the goods were examined in the usual way and found to be in sound and perfect condition. No complaints have been received in my Department about this or previous shipments, of which there have been several. Indeed, this tinned crab is most popular and is eagerly bought up when available.
    Arising out of the present incident, the Public Health Laboratory Service examined the remainder of the food in the can that was thought to have been the cause of these cases of illness, but as this examination did not take place until some time after the can had been opened, the results were inconclusive. An examination of 20 unopened cans of the same batch showed, however, that they were all perfectly sound. In the light of this report I feel that hon. Members and the public can be reassured about the quality of this product, and the efficiency of the routine tests which are made.
    Mr. Gammans: The Minister used the word "alleged." Was it not the Medical Office of Health of Coventry who condemned those tins? Would the right hon. Gentleman say what is the quantity of crab meat of that consignment which has been ordered and brought into the country?
    Mr. Webb: I see that the Medical Officer of Health of Coventry said only this morning, as reported in the Daily Mail:
    "People can go ahead and eat the meat. Risk of food poisoning is small."
    If he himself arrived at that conclusion, who am I to interfere with what he said?
    Mr. Edelman: Is my right hon. Friend aware that the hon. Member for Hornsey (Mr. Gammans) is ill-informed on the subject, and that the Medical Officer of Health for Coventry has stated that the remaining quantities of crab meat in Coventry can be released for human consumption? Is it not also the fact that the incidence of food poisoning from Russian imported food is no higher than from similar foods imported from more friendly sources?
    Mr. Webb: I think we should all deprecate the intrusion of prejudice into a discussion of this matter. There is a risk of poisoning from all prepared foods, particularly tinned foods, and merely because this particular food comes from Russia should not lead us into exaggerated views of the consequences. This is a most palatable commodity; we are very glad to have it; it is good crab, well packed, and the trade will take every ounce of it that we can get into this country.
    Mr. Boyd-Carpenter: In view of this incident, is the right hon. Gentleman arranging for a special and additional check to be made on any future consignment that his Department may decide to import?
    Mr. Webb: We shall carry out all the routine checks that are made from time to time.
    Mr. Boothby: Will the right hon. Gentleman make it perfectly plain to the Russians that in future we shall take no more of their very doubtful crab until they are prepared to take an equal quantity of our doubtless herring?

    Argentine Apples
    Mr. Russellasked the Minister of Food what quantity of apples was envisaged under the item of fresh and industrialised fruits in Schedule No. 1 of the Anglo-Argentine Agreement of 27th June, 1949; and, in view of the danger of imports of these apples in the early months of the year forestalling imports from Australia and New Zealand, whether the Governments of the two Dominions were consulted before this item was included.
    Mr. Webb: This item covers all fruits, and there is no specific figure for apples. Australia and New Zealand were not consulted about it, but I do not think that there is any real risk of imports of apples from these countries being affected. This year, in fact, because of the lateness of the Southern Dominion crop and the New Zealand water-front strike, Argentine apples have been welcome, and have been in very good demand.

    Overseas Visitors (Ration Cards)
    Mr. Russellasked the Minister of Food what steps have been taken to make it known to his own Department as well

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    as to the general public at which food office overseas visitors must attend in order to obtain ration cards.
    Mr. Webb: Overseas visitors can obtain ration cards from any local food office, either by post or in person, if they present their passports or travel permits. This information is given in a leaflet handed to them when they arrive in this country. But if the hon. Member has in mind any particular difficulty, and will let me have details, I will gladly look into it. We are anxious to do all we can to make arrangements easy for our visitors, but not all the plans submitted to me are found practicable on examination.
    Mr. Russell: Is the Minister aware that an Australian visitor recently went to the Grosvenor Gardens Food Office to obtain a ration card and was sent from there to the Piccadilly Food Office, where he was then told to go back to Grosvenor Gardens? Does he not think that that is a very unsatisfactory way to treat overseas visitors?
    Mr. Webb: That is precisely the kind of case of which I should like detailed evidence, which I will certainly look into.
    Mr. Russellasked the Minister of Food if he will arrange to issue ration cards to overseas visitors at their ports of disembarkation or at airports instead of making them attend at a food office.
    Mr. Webb: As this proposal would probably cause delay at the ports, I do not think it would be an improvement on our present arrangements which are well-established and generally speaking quite convenient to all concerned.
    Mr. Russell: Is it not a fact that most Empire and foreign countries who have rationing adopt a system of issuing cards on arrival; and could not the same system be adopted over here?
    Mr. Webb: On the evidence available to me it looks as though our system is, on the whole, quite acceptable and efficient, although there are little irritations here and there. We are not tied to it. and if we can improve it by all means let us do so. I should be glad to consult with the hon. Gentleman about any means of improvement.

    Eggs
    Mr. De la Bèreasked the Minister of Food what further steps he is taking to augment the supplies of eggs this year
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    to meet the greater increased demand occasioned by the continued shortage of meat.
    Mr. Webb: I would refer the hon. Member to the second part of the reply given to the hon. Member for Cornwall. North (Sir H. Roper) on 11th June.
    Mr. De la Bère: Is not the egg supply to some 50 million people throughout the country all-important; is it not a fact that the allocation for 1951 is very much less than it was in 1950; and why is it that the Government go on discouraging the home egg producer? There is no excuse. It is thoroughly unsatisfactory.
    Mr. Webb: We are not discouraging the home producer. We are about to bring up the price of home-produced eggs to 6s. a dozen. What we are trying to aim at is to get a balance of supply over the whole year, with the co-operation of the farming interests, who are very anxious indeed to work with us. The price now is going up, and we hope to supply many more home-produced eggs in winter than has ever before been the case.
    Mr. De la Bère: It is getting worse and worse.
    Mr. Nabarro: Is it not a fact that the present short-fall in production during the peak period as compared with last year is a direct result of the thoroughly uneconomic price of 4s. 3½d. a dozen. whereas the lowest economic price is considered to be 4s. 9d. a dozen?
    Mr. Webb: That is certainly not the case.
    Mr. Nabarro: Ask the farmers.
    Mr. Fortasked the Minister of Food why the period between 1st February and 2nd May, 1951, was chosen for the oil sealing and cold storing of eggs.
    Mr. Webb: Because eggs produced in the spring are of the best quality and therefore most suitable for storage and because they are more plentiful then than at any other time of the year.
    Mr. Fort: Is the right hon. Gentleman aware that there was no surplus of eggs during this period this year, and could he not have made proper arrangements so that the eggs reached the market instead of being put into store?
    Mr. Webb: That is one of the difficulties of organising in advance for the imponderable factors, which are conditioned by the climate and all sorts of other uncontrollable things. In the case of making arrangements for oil dipping, it is a long and complicated process which we had to set in motion well in advance of the flush period on certain assumptions. These assumptions have not been realised, and, therefore, we were quite right to go ahead at that time.
    Mr. W. Robson-Brown: Is the right hon. Gentleman aware that if the backyard poultry keeper is given adequate food he will take care of the egg problem for himself?

    Tea Ration
    Mr. Ralph Morleyasked the Minister of Food when he hopes to be able to announce an increase in the tea ration.
    Mr. Webb: There is no immediate prospect of an increase, as I have said repeatedly; but as soon as tea supplies improve I shall make an announcement.
    Mr. Morley: Can the right hon. Gentleman say what effort he is making to get a bigger increase in the supply of tea for this country so that the ration may be increased?
    Mr. Webb: Every possible effort.
    Mr. Drayson: Can the right hon. Gentleman hold out any hope of an increased tea ration for old-aged pensioners?
    Mr. Webb: Not beyond what we have already done.

    Milk Deliveries, Norfolk
    Mr. Dyeasked the Minister of Food what action he proposes to take to ensure that certain villages and schools in Norfolk which have recently been short of milk will be adequately supplied.
    Mr. Webb: The delivery of milk to the two villages which my hon. Friend no doubt has in mind has already been resumed. My officers are now helping the local education authority to secure an early resumption of deliveries to a number of small isolated schools in the area whose former distributor has recently stopped supplies. Deliveries are starting
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    again today to 12 of these schools. I will inform my hon. Friend when arrangements for delivery to the remaining eight schools have been completed.
    Mr. Dye: Will the officers of the Department stay there until this problem has been solved?
    Mr. Webb: We are doing our best to put it right. I think that the evidence which I have given should reassure my hon. Friend that I am not without sympathy towards his request.
    Mr. Baldwin: Is the Minister aware that this complaint is not confined to Norfolk but is general throughout the country, and is because the margin allowed to dealers is not sufficient to enable them to deliver to isolated consumers?
    Mr. Webb: I do not agree that it is general. There are places where it is a problem, and if I am given evidence of these local problems I shall be glad to look into it.

    Strawberry Pulp
    Surgeon Lieut.-Commander Bennettasked the Minister of Food what is to be his policy this year on the importation of strawberry pulp.
    Mr. Webb: I do not contemplate any change in the present arrangements, under which this trade is in private hands.
    Surgeon Lieut.-Commander Bennett: Has the right hon. Gentleman made any move to make the importation of this pulp a little later in view of the fact that the strawberry season this year is several weeks later than usual?
    Mr. Webb: We are ready to see what private enterprise can do in this matter.

    BEER PRICES
    Dr. Kingasked the Minister of Food if he is aware that beer has recently increased in price although there has been no increase in taxation on beer; and whether, since brewers are already making large profits, he will introduce legislation to control the price of beer.
    Mr. J. Hallasked the Minister of Food if he is aware that a co-operative brewery on the North-East coast, without raising prices, has given a rebate of £196,000 to

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    its customers and declared a profit of £200,000 on the last six months' period; and if he will introduce legislation to compel brewers either to increase the strength of beer or lower the price.
    Mr. Webb: I understand that many brewers have increased the retail price of beer as a result of increases in costs. But I do not think that it would help to impose control. I know that a Co-operative brewery in the North-East is trading successfully, but the conditions of its trade differ in some respects from those of other breweries.
    Dr. King: Is my right hon. Friend aware that last year the average dividend of ordinary shares of the leading brewers in the country was 19½ per cent., among them being Bass 25 per cent., Guinness 28 per cent., Younger's 30 per cent., and Strong's 85 per cent.? Is he also aware that, despite these profits, the bulk of the new increase is going not to the licensed victuallers but to the brewers; and does he not think that the Government ought to stand up to the brewers on this question?
    Mr. Webb: Dividends are, of course, a matter for the Chancellor of the Exchequer and are not my responsibility. All I would say in general answer to those submissions is that, if the Co-operative breweries are such a good idea, why not go ahead and develop them and beat the brewers at their own game?
    Mr. Hall: Will my right hon. Friend consult with the Chancellor of the Exchequer with a view to controlling the actions of private brewers who waited until after the Budget statement before they raised their prices?
    Mr. Webb: I am in constant consultation with my right hon. Friend.
    Mr. H. A. Price: Is it not a fact that a reduction of a penny a pint on beer would completely wipe out the profits of the brewers?
    Mr. James Hudson: What does my right hon. Friend mean when he says that he has no responsibility? Is it not through the permission of his Department that the brewers are provided with the raw materials out of which these profits can be made?
    Mr. Webb: My hon. Friend must be slightly intoxicated. I did not say that I
    20
    had no responsibility. I have a responsibility for supplies to the brewery trade. What I said was that I have no responsibility for the taxation of dividends. That is the responsibility of the Chancellor of the Exchequer.

  TRANSPORT

    Railway Police
    Mr. David Rentonasked the Minister of Transport whether he is aware that, apart from London Transport and dock police, the railway police are the only police force in the United Kingdom which are not controlled either by a democratically-elected local authority or by a Minister answerable to Parliament; and whether he will introduce legislation to secure that the railway police will in future be controlled in one or the other of those ways.
    The Minister of Transport (Mr. Barnes): No, Sir. Railway police are not the only police force of this kind. There are similar police forces for docks and harbours. In the special circumstances in which they are employed these police forces serve a necessary and useful purpose, and have been in existence for over 100 years. The control of police forces generally by a Minister or by local authorities is of a strictly limited character, and, in fact, the police are always ultimately responsible to the courts for the enforcement of the law, which is clearly proper. In the circumstances, therefore, I have no reason to think that legislation on the lines suggested is necessary.
    Mr. Renton: Is the Minister aware that the railway police are the second largest force in the country and have powers and responsibilities as great as the ordinary police? Does he not agree that both the public and the members of the railway police are anxious to see their status regularised by democratic control?
    Mr. Barnes: I agree that they are the largest police force of this character in the country, but I am not aware that the public are uneasy about the form of control. This has existed for a long time and there has been very little difficulty. I do not see any necessity for any change at present, but the matter is always open to review if public opinion were to change.
    Major Sir David Maxwell Fyfe: Will the right hon. Gentleman look at this matter from a point of view which I suggest is quite reasonable? If a Minister could answer for matters of importance, not of day to day administration, in the same way as the Home Secretary answers for matters of importance concerning local authority police forces to which, of course, he makes a certain grant, I am sure that that would calm some of the apprehensions that have been expressed.
    Mr. Barnes: The fact that I have answered this Question today indicates that I appreciate that circumstances may arise when it is necessary to make a statement. I will look at the matter which the right hon. and learned Gentleman has put to me, and I observe particularly that he did not wish to bring in day to day matters of management.
    Mr. Henry Hopkinson: Is it not a fact that these officers attend the same schools and colleges, pass the same Civil Service examinations as officers of other forces and police forces, and are awarded the Police Medal, but, because they are not under the Home Office or any other Ministry, are still, after two years, being paid less than the members of other police forces in the country as they do not enjoy the benefits of the Oaksey award?
    Mr. Barnes: That appears to me to raise issues other than that which is involved in this Question.
    Mr. Mitchison: Has the Home Secretary any responsibility whatever for local authority police?
    Mr. Barnes: That is a question that my hon. and learned Friend should put to the Home Secretary.
    Mr. Renton: Is the right hon. Gentleman aware that the only reason why this Question was on the Order Paper today was because the Prime Minister was willing to answer it, and I could not get a Question down to the right hon. Gentleman?
    Mr. Barnes: The hon. Gentleman has succeeded, and I do not know what his difficulty is now.
    Mr. John Hynd: As these policemen are mainly responsible for the operations of railway employees, is the Minister
    22
    aware that no complaints about them by railway employees have been received in the last three years?
    Mr. Barnes: I am aware of that, and also that there have been no complaints from the general public.

    Transferred Undertakings (Compensation)
    Mr. Rentonasked the Minister of Transport whether he is aware that no costs are awarded to the successful claimant after an award has been made in accordance with the Second Schedule of the Transferred Undertakings (Compensation to Employees) Regulations, 1950; and whether he will take the necessary steps to ensure that provision is made for the costs of the award to be granted to the successful claimant at the discretion of the Tribunal.
    Mr. Barnes: I am aware that no costs are awarded to either side in employees' compensation appeals decided by boards of referees. I have no power under the Transport Act to ensure that provision is made for the award of costs in these cases.
    Mr. Renton: Is the right hon. Gentleman aware that, bearing in mind that these appeals consist mainly in the fixing of monetary awards, the effect of these awards, if the appeal is successful, can be to a great extent nullified by the paying of the costs of the proceedings? In the interests of justice will he not make some such provision as I have suggested?
    Mr. Barnes: The procedure is kept as simple as possible. The hon. Gentleman ought to appreciate that if this power were given it might cut both ways and be very onerous on claimants who have costs awarded against them. There are more cases dismissed than proved.
    Lieut.-Colonel Sir Thomas Mooreasked the Minister of Transport whether full compensation has yet been paid to the owners of road haulier businesses which have been taken over by the Road Services Commission: or to what extent payment is in arrears.
    Mr. Barnes: The British Transport Commission inform me that payment of compensation to the former owners of road haulage businesses acquired by them is not in arrear. In accordance with the

    23
    provisions of the Transport Act, provisional ascertainments of compensation had at 31st May been completed in 2,323 out of the 2,709 cases of firms compulsorily acquired, and payments on account totalling £26 million or approximately 90 per cent. as provided in the Act, had been made. In the 386 cases outstanding at that date, of which 148 were transferred in May, it had not been possible by that time to calculate the compensation payable, as the necessary accounts and other particulars required from the transferors were not available or had only recently been supplied.
    The final settlement of compensation depends in each case on the two parties reaching agreement, on the basis of established principles. Differing interpretations placed on certain of the compensation provisions of the Transport Act can be finally resolved only by the Transport Arbitration Tribunal or by the Court of Appeal. As far as lies within the Commission's control, they have assured me that they are taking all possible steps to expedite final settlement in every case.
    Mr. Boothby: On a point of order. Has the House any protection against answers of extraordinary length like this being given?
    Mr. Speaker: I am afraid that the House has no protection against long answers. I am trying my best to get through Questions, but we have had some very long answers this afternoon. Cannot long answers be put into HANSARD? These are answers which really do spoil Question Time.
    Sir T. Moore: I do not wish to put an interminably long supplementary question, Sir. The only point that arises out of that very long and complicated answer is: What does the word "arrear" mean? The right hon. Gentleman said "not in arrear." Why cannot all these transactions be carried out on a businesslike basis and compensation paid in three months?

    Cattle Grids Act
    Captain Duncanasked the Minister of Transport if he can now announce the date for the coming into operation of the Highways (Provision of Cattle Grids) Act.
    Mr. Barnes: This Act came into full operation on 10th May, 1951.

    Road Accidents
    Sir T. Mooreasked the Minister of Transport what recent assessment he has made as to the respective causes of accidents on the roads.
    Mr. Barnes: Police reports on all road accidents involving personal injury or death are analysed by my Department each month. The latest available monthly analysis shows that in April, 1951, 89 per cent. of the accidents were considered by the police to have been caused primarily by human error, 4 per cent. by vehicle defects, 2¼ per cent. by animals, ½ per cent. by weather conditions and ¾ per cent. by road defects
    Sir T. Moore: In view of that very interesting analysis, can the right hon. Gentleman say if he has any additional plans for dealing with these various causes, especially the first, which would seem to be utterly dependent on some form of education?
    Mr. Barnes: The problem of road accidents is very complex. The 89 per cent. is still further dissected and analysed as far as possible, and these matters are dealt with in our propaganda and educational work.
    Mr. Peter Thorneycroft: Would the right hon. Gentleman agree that, when he stated that only three-quarters of one per cent. of road defects constituted a primary cause of accidents, it was an entire misrepresentation, and that figures of that kind, while they are of some limited use, are almost valueless when seeking to assess the cause of accidents?
    Mr. Barnes: It is very difficult to argue that an analysis of this description is useless. I rather fancy that the hon. Member's point is that if we had a more modernised road system we would reduce accidents. In that I agree with him, but this is concerned with the technical defects of our roads, and not their efficiency, which I think is his major concern.
    Mr. Poole: Could the right hon. Gentleman say how many accidents were due to too many C licence vehicles being on the roads?

    Ocean-Going Shipping (Emergency Control)
    Brigadier Raynerasked the Minister of Transport whether he has received the report issued after the recent meeting of the North Atlantic Planning Board for Ocean Shipping and approved by the North Atlantic Council Deputies, in which is included an outline plan for the mobilisation of ocean-going shipping in a single pool in time of war or war-time emergency; and whether he will make a statement.
    Mr. Barnes: Yes, Sir. As has already been announced, the North Atlantic Planning Board for Ocean Shipping has prepared a plan for determining the employment of ocean-going merchant shipping on a world-wide basis in time of war or war-time emergency. The main features of the plan are that each participating Government should take all the ocean-going ships of its own flag under its control and place them in a central pool for allocation to employment by an international organisation of a civilian character to be named the Defence Shipping Authority.
    This Authority would be responsible for providing shipping to meet both the military and civil needs of the co-operating nations. Each Government would be responsible for the operation of the ships under its control and would ensure that they carried out the tasks allotted to them by the Defence Shipping Authority. The day-to-day work of the Authority would be carried out by two branches, one in London and one in Washington, on which all participating Governments would have the right to be represented. The London branch would deal primarily with the shipping and the demands for shipping services of the Eastern Hemisphere and similarly the Washington branch for the Western Hemisphere.
    Brigadier Rayner: As it is rather difficult to assimilate at once all the facts we have been given, would the right hon. Gentleman assure the House that under no circumstances will British merchant shipping be handed over to an international authority? Will he remind himself of the very useful object lesson in 1945 when, Dutch shipping having been handed over to the Allied Fleet, the Dutch Government were not allowed to use it to send
    26
    reinforcements to the Dutch East Indies? Will he also remember that this island, more than any other country, depends on its merchant ships for its survival? Could we have an assurance from the right hon. Gentleman on this point?
    Mr. Barnes: As I listened to the observations of the hon. and gallant Gentleman, I quite understood how difficult it is for him to understand the statement that I have made. I suggest that he should read it carefully, and if there is any further information that he requires I shall be happy to supply him with it. This follows exactly the same principle as applied in the last war. While the British merchant fleet, with others, will go into this international and Allied pool for shipping purposes, nevertheless, I hope he will notice that one of the main branches is in London, with headquarters in the Ministry of Transport.
    Commander Noble: The Minister said. that countries should put their shipping at the disposal of this Authority. How about the countries that have interests in the world outside the North Atlantic Treaty Organisation?
    Mr. Barnes: Does the hon. and gallant Gentleman mean friendly nations?
    Commander Noble: Commonwealth countries.
    Mr. Barnes: Friendly and Commonwealth nations are being kept informed. They are being given all the necessary information and will be brought into this organisation later.
    Mr. Eden: Does the right hon. Gentleman realise that this raises very big issues indeed and that it does not necessarily follow that war-time arrangements are the best suited to the situation? We shall have to make comments on this and maybe have a debate at an early date.
    Mr. Barnes: Certainly, but I might say that there are slight alterations in the scheme based on the experience of the last war. The point that I was emphasising was that the system of control, half of which is centred in this country, is in no way modified by this arrangement.
    Mr. Eden: Is it not still true that our contribution will far exceed that of any other nation in this respect?
    Mr. Barnes: Yes, except that of America. I suppose that is why the division is on this basis but, as I have pointed out. there is no departure from the division of responsibility which prevailed in the last war.

    Railway Goods Traffic
    Mr. Osborneasked the Minister of Transport how much goods traffic was carried by the British Railways for the first six months of 1935, 1936, 1937 and 1938; and how many people were employed by British Railways in these years.
    Mr. Barnes: As the answer involves a number of figures I will, with permission. circulate it in the OFFICIAL REPORT.
    Mr. Osborne: Why it is that the railways were not able to carry the traffic this year without having to interfere with passenger transport when, pre-war, they could do that with less staff and carry more traffic?
    Mr. Barnes: I would ask the hon. Gentleman to look at the figures.
    Mr. Poole: Is it not also rather an abuse of Question time for an hon. Member to put down a Question asking for information which was freely available if he cared to take the time to look for it?
    Following is the answer:
    Figures of freight train traffic are compiled on a four weekly basis. It is not possible to furnish statistics for the exact periods asked for but they are available for the first 24 weeks of each of the years in question. As regards the number of staff employed on railways, figures are available for a particular week in March in each of the years.
    Freight train traffic carried on the standard gauge railways of Great Britain:

    24 weeks to:

    Tons

    15 June, 1935

    …

    …

    …

    125,621,068

    13 June, 1936

    …

    …

    …

    130,975,435

    12 June, 1937

    …

    …

    …

    138,340,397

    11 June, 1938

    …

    …

    …

    130,135,93

    Persons employed by the railway companies of Great Britain (excluding staffs of ancillary businesses and of London Passenger Transport Board):

    Week ended:

    Number

    9 March, 1935

    …

    …

    532,421

    7 March, 1936

    …

    …

    538,134

    13 March, 1937

    …

    …

    549,912

    12 March, 1938

    …

    …

    556,978

    Close comparison would not be possible between the total figures of staff employed by the individual railway companies in the pre-war years and those employed today by British
    28
    Railways, as there have been changes in organisation and conditions of employment and also an alteration in the method of computation.

    Transport Commission Report
    Mr. Reader Harrisasked the Minister of Transport when the Report of the British Transport Commission for the year 1950 will be available.
    Mr. Barnes: The Commission hopes that the Report will be available in the early part of July.

    Troopship "Empire Orwell" (Conditions)
    Dr. Kingasked the Minister of Transport if he will inquire into the complaints made by returning Service men and their families about bad conditions on the troopship "Empire Orwell" which recently arrived in Southampton from the Far East.
    Mr. Barnes: I have already made inquiries and have ascertained that the complaints about the messing arrangements were made during the early part of the voyage. They were at once dealt with, and a committee of third-class passengers was set up by the military officer in charge of the troops on board to report any further complaints to him. No further complaints were, however, received.
    Dr. King: Is my right hon. Friend aware that the food conditions of third-class passengers are grossly inadequate, especially for children? Is it not also a fact, as his previous answer shows, that third-class passengers on these troopships, which mean soldiers below the rank of sergeant, are not allowed to see their wives and children on the voyage unless they can produce a medical certificate?
    Mr. Barnes: The food scales are based on the Service scales. The matter of soldiers seeing their wives is a point of Service discipline.

    Air Station, Leeming (Runways)
    Mr. Turtonasked the Minister of Transport whether be is aware of the danger to vehicles travelling on the Great North Road and Gatesby Lane arising from the proximity of the runways on Leeming Royal Air Force station; and what action he proposes to take to prevent further accidents.
    Mr. Barnes: I would refer the hon. Member to the reply given him by my right hon. and learned Friend the Secretary of State for Air, on 13th June.

  FESTIVAL OF BRITAIN

    South Bank Exhibition (Car Parks)
    Lieut.-Colonel Liptonasked the Minister of Transport whether he will release for other purposes the inadequately-used car parks for visitors to the South Bank Exhibition.
    Mr. Barnes: Less use than was anticipated has so far been made of the car parks provided in connection with the Festival, and after discussion between the London County Council, the Metropolitan Police and my Department, it has been decided to close some of them, at any rate for the time being. The use of the parks may increase during the holiday months.
    Lieut.-Colonel Lipton: Would it not be a useful alternative to allow some of these car parks to be used as playgrounds during the holiday months? Alternatively. would it not help to meet some of the outlay if the parking fee of 2s. were reduced and coaches were allowed to park there, rather than have to go to Clapham Common?

    Omnibuses (Standing)
    Mr. Boyd-Carpenterasked the Minister of Transport whether, in view of the additional pressure of traffic during the Festival of Britain, he will modify his Regulations which restrict standing in omnibuses.
    Mr. Barnes: The present order, which is permissive and not mandatory, allows eight standing passengers. Since August, 1949, the number in London has been restricted to five by the London Transport Executive in agreement with the Transport and General Workers' Union, in view, mainly, of the increased delivery of new vehicles. There is no indication as yet that the present bus services are inadequate to convey the additional traffic arising from the Festival of Britain.
    Mr. Boyd-Carpenter: Is the right hon. Gentleman aware of the very long queues which are left every evening at bus stops, particularly in central London? If he is
    30
    not aware of this fact, will he become informed of it and take some action?
    Mr. Barnes: If that is the case, yes, Sir.

  GERMANY (CONTROL COMMISSION)
  Miss Irene Wardasked the Secretary of State for Foreign Affairs whether, in view of the important world part women have to play in maintaining peace, he will give an assurance that he will not without affording an opportunity for discussion in this House accept the proposal for the abolition of the women's section of the office of the British High Commissioner in Germany.
  Mr. Younger: It is necessary to make very considerable reductions this year in the strength of the Control Commission, which is being reorganised more on the lines of an Embassy. Accordingly, my right hon. Friend has decided that it is not possible to retain a women's affairs section in the Commission, though one senior officer of the section will remain until next spring.
  Miss Ward: Will the right hon. Gentleman bear in mind that all Governments economise on women, and that it is the opinion of many of us that if more women were associated with government there would be less risk of war?

  FOREIGN SERVICE (MR. GUY BURGESS)
  Mr. Duncan Sandysasked the Secretary of State for Foreign Affairs what positions in the public service were held by Mr. Guy Burgess in the last five years and during what periods; and whether the Government was aware of his associations with Communist circles.
  Mr. Younger: On 5th June, 1944, Mr. Burgess joined the News Department of the Foreign Office where he remained until December, 1946, when he was appointed an Assistant Private Secretary to my right hon. Friend the Secretary of State for Scotland, who was then Minister of State. In November, 1948, he was transferred to the Far Eastern Department of the Foreign Office and on 7th August, 1950, he was appointed to His Majesty's Embassy in Washington with

  31
  the temporary and local rank of Second Secretary. The Government were not aware of Mr. Burgess having associations with Communist circles of a kind which throw doubt on his reliability.
  Mr. Sandys: Were the Foreign Office not aware of the strongly expressed Communist sympathies of Mr. Burgess when he was given the very confidential appointment as personal assistant to the Minister of State? Were they not aware of those Communist sympathies when they decided to put him on the permanent establishment in 1947?
  Mr. Younger: I have already said in my answer that the Government were not aware of any associations with Communism or any Communist views which were thought to affect the reliability of Mr. Burgess. The right hon. Gentleman must appreciate that in speaking of "strong Communist views" he is using a phrase which is very vague and is liable to be misinterpreted.
  Mr. Sandys: May I ask whether the information now available to the Foreign Office about Mr. Burgess was available to them at the time when his appointment was made or whether they have subsequently acquired information about this gentleman's views which, if they had had it at the time, would have precluded them from appointing him to this position?
  Mr. Younger: I am not prepared to make any statements about very recent inquiries, but before these recent events Mr. Burgess was subjected to a security check.
  Mr. Pickthorn: Can the right hon. Gentleman say whether the Foreign Office, when it appoints persons with university or similar degrees, always consults those academic authorities who know most about the person so appointed?
  Mr. Younger: I think that under the modern system which has been adopted since the war general inquiries of many kinds are made, not only about people's academic attainments but also about their general character, and no doubt the sources which the hon. Member has mentioned are among those from which inquiries are made.
  Mr. Somerset de Chair: Is it not a fact that the Government themselves recently instituted a purge of people with Com-
  32
  munist affiliations who were holding positions of a confidential nature in the Government service? If so, how is it that Mr. Burgess escaped that scrutiny? Are we to understand that nobody in the Foreign Service was subjected to the scrutiny?
  Mr. Younger: It would not be correct to assume that. As I stated in a previous answer, a security check was made on Mr. Burgess some time ago and it was negative in its result.
  Brigadier Head: When Mr. Burgess was taken on as a permanent member of the Foreign Office staff, was he again screened before he entered this confidential employment?
  Mr. Younger: I do not think so. Frankly, I do not see why he should have been. That does not seem to me to have been a particularly appropriate moment. He had already been in the Foreign Service and other forms of Government employment some time before that. His establishment did not give him an any more confidential position than he had before, and I do not think that a check was made at that time.
  Mr. Godfrey Nicholson: Is the right hon. Gentleman prepared to leave the House and the country with the impression that there may be other members of the Foreign Service in similar confidential positions who hold views of the same nature that Mr. Burgess was known to hold at that time?
  Mr. Younger: No, Sir, I hope that the hon. Gentleman will not make any remark which is a general reflection on the Foreign Service or, indeed, upon the public service generally. We may not all take the same views of people's political views as the hon. Gentleman does.
  Hon. Members: Oh!
  Mr. Emrys Hughes: Has my right hon. Friend seen the statement in the American Press that some of the stiffest Notes to Russia, which were approved by the Opposition, were composed by Mr. Burgess?
  Mr. Eden: I should like to elucidate the right hon. Gentleman's last answer about political views. Has it not always been the assumption by us all that the Civil Service has no part in political views?
  Mr. Younger: That is absolutely correct. I should like to say that it is very dangerous to bandy about these general phrases as if any of them constitute a proper criterion for checking the views of civil servants and members of the public service. The phrase "Communist sympathies" has been used in a very inaccurate manner on many occasions.
  Mr. Eden: Then I cannot understand what the right hon. Gentleman's answer means.
  Mr. Younger: If I am right in remembering the answer to which the right hon. Gentleman is referring, I was saying that to use a phrase such as "the sympathies which Mr. Burgess was known to hold" was far too vague. We may have very different views about what people's sympathies or political views portend.
  Sir W. Smithers: What are the views of the right hon. Gentleman?
  Mr. Younger: I have known many people referred to as having Communist sympathies who held views which were normally Liberal.
  Mr. Sandys: Does the right hon. Gentleman, by his latest answer, imply that the highly Communistic views which have been widely expressed by Mr. Burgess could by any stretch of official tolerance be regarded as consistent with holding a position of confidence in a Minister's office?
  Mr. Younger: I do not know to what particular views the right hon. Gentleman is referring as he has not explained it to this House. To try to make this a little more precise, perhaps I might say that what the Prime Minister said when we were discussing this matter some three years ago, was that it was the policy of the Government that no one who is known to be a member of the Communist Party or to be associated with it in such a way as to raise legitimate doubts about his or her reliability is employed in connection with work the nature of which is vital to the security of the State. I think that is a very reasonable way of putting it and that it is about as precise as one could make the standard.

  ANTIGUA (SITUATION)
  Mr. Peter Smithers(by Private Notice) asked the Secretary of State for the Colonies whether he will make a state-
  34
  ment in regard to the situation in Antigua in view of the despatch of troops to that island to maintain order.
  The Secretary of State for the Colonies (Mr. James Griffiths): After stoppages of work during May, the Antigua Trade and Labour Union and the Employers' Federation agreed to a resumption of work pending the report of a Board of Inquiry set up by the Governor to inquire into the causes of the various disputes that have disrupted industrial relations in the Island this year, and to make such recommendations as they see fit. This Inquiry began on 11 th June. Work is now going on almost normally.
  Meanwhile, however, disorderly crowds gathered outside the courts during the preliminary hearings last week of two cases arising from the stoppages. Two policemen were injured and there was reason to fear that there might be further disorders at the final hearings. As a precaution two platoons of troops were flown to Antigua last Thursday. The cases have not yet been concluded and feeling is running high. There have, however, been no serious incidents since the troops arrived.
  The frequent recurrence of industrial disputes in Antigua during recent months has caused me much concern, and I had welcomed the agreement on a resumption of work and the appointment of an impartial Board of Inquiry. I am confident that all responsible persons in the Island will use all their influence to ensure that the prospects. of achieving an enduring settlement are not endangered in the meantime by disorder and intimidation.
  Mr. Smithers: Is the right hon. Gentleman aware that, quite apart from trade disputes, the vast majority of West Indians are loyal and law-abiding people who wish to live their lives in peace? Can he therefore assure the House that West Indian Governments will have his full support in taking any measures necessary to maintain the rule of law, because they look to us for that rule of law to be maintained?
  Mr. Griffiths: Yes, I am equally anxious to remove the root causes of these industrial disturbances and to improve industrial relationships. I hope that the Board of Inquiry will be allowed to complete its work, and then we shall study its findings with great care.
  Mr. Lennox-Boyd: Is the right hon. Gentleman aware that while it is recognised that labour problems play a part in disturbances in the West Indian Islands, there is a growing feeling among informed people that there is not enough concentration upon the simple problem of maintaining law and order? Will he therefore undertake to reconsider re-forming the West Indian Regiment?
  Mr. Griffiths: That is another matter. What I am disturbed about is that recently there have been large numbers of industrial disputes. I am anxious that we should improve in every possible way the means and the machinery by which these disputes can be settled. It was because the Governor thought that too that he set up this Board of Inquiry. I believe that it is best to try to get rid of the root causes.
  Mr. Eden: Did not the Governor himself draw attention to this serious situation, to the apparent lack of respect for law and order, and to the scores of people living in the island under a sense of fear? Are not his words worthy of receiving attention?
  Mr. Griffiths: They were receiving attention and that is why two platoons were flown to Antigua last Thursday.
  Colonel Gomme-Duncan: Can the Minister say from what garrison these troops were sent?
  Mr. Griffiths: Not without notice.
  Mr. Gammans: Can the Minister assure the House that the troops will not be removed from the island as long as there is any danger of a breakdown of law and order?
  Mr. Griffiths: That is a matter which I shall leave to the discretion and judgment of the Governor.
  Mr. Lennox-Boyd: In view of the fact that this is the second lamentable statement which the right hon. Gentleman has been forced by events to make, and in view of the widespread loyalty among the mass of the people in the West Indian islands to the British association, can he not look again into the question of reforming some of the loyal elements in the West Indian Regiment, which would play its part in maintaining law and order and not involve the right hon. Gentleman in these sudden alarms and excursions?
  Mr. Griffiths: I think I am entitled to ask for notice of that supplementary question about re-forming the West Indian Regiment. Perhaps the hon. Gentleman will put that down. At the same time, I think it would be dangerous to assume that because people strike they are being disloyal.
  Mr. Monslow: Is my right hon. Friend aware that a display of force is no solution for the settlement of industrial disputes?
  Mr. Smithers: While sympathising with the desire of the right hon. Gentleman to get to the bottom of industrial disputes, may I ask if he does not think that in some cases he has mistaken for an industrial dispute what was simply a plain riot and ought to have been dealt with accordingly?
  Mr. Griffiths: In this island there have been in recent months a large number of disputes, and for that reason a Board of Inquiry has been set up. I am anxious that there should be order everywhere while the Board of Inquiry is sitting. That is why these two platoons were flown in last week.

  NEW MEMBER SWORN
  Christopher Paget Mayhew, Esquire, for Woolwich, East.

QUESTION OF PRIVILEGE
3.45 p.m.
Mr. Poole: Mr. Speaker, with your permission I wish to bring to your notice a speech which is reported in the "Sutton Coldfield News" on Saturday last, 16th June, as having been made at Streetly, Staffordshire, by a Lady Mellor who is, I believe, the wife of the hon. Baronet the Member for Sutton Coldfield (Sir J. Mellor). I raise it only because I regard it as my duty to this House to do so. During her speech she is reported as having said this, amongst other things:
"The other day Major Milner (Deputy Speaker) made a ruling and though he was within his rights, Lady Mellor thought that in the present circumstances, it was a very deplorable one. He refused to permit certain amendments to the proposals to increase certain taxes to be discussed which normally would have been discussed. It seemed a particularly bad thing when a government with such a small majority was in power refused to admit full and free discussion."

37
I suggest that these words do three things. First, they criticise the Rulings of the Chairman of Ways and Means and characterise one of them as "very deplorable." Secondly, they allege that he refused to permit discussion of certain Amendments which would normally have been discussed, presumably, if someone else had been in the Chair. Thirdly—and this, Sir, is the most serious of them all—these words suggest that the Chairman of Ways and Means had been subjected to Government pressure in these matters and that, through him, the Government had been able to prevent full and free discussion.
Mr. Speaker, in this House we are all believers in the impartiality of the Chair. In fact, our continued existence as a Parliamentary democracy is conditioned by it; but I believe that it is equally important that people outside this House and beyond these shores shall believe in this also. Because this statement casts doubt on that belief, and suggests that the Chairman of Ways and Means was the creature of the Government on this occasion, I raise this matter with you, Sir, believing that these words constitute a breach of Privilege, and ask you if you will give your Ruling on the matter.
Mr. Speaker: Will the hon. Member bring the paper to the Table? The complaint of the hon. Member is of the type to which priority is given over the business of the day. Therefore, I must ask him to conclude with a Motion.
Mr. Poole: In view of that, Mr. Speaker, I beg to move, "That the matter of the complaint be referred to the Committee of Privileges."
Mr. Speaker Mr. Speaker proceeded to collect the voices—
Mr. Churchill: Do we understand, Sir, that you have ruled that this is a fit and proper matter for the Committee of Privileges?
Mr. Speaker: We have had some discussion about this. It is not necessary now to say there is a prima facie case. I implied that in my statement by asking the hon. Member to move a Motion, and therefore that is all my duty. Supposing I had been satisfied there was no prima facie case, then I should have interrupted the hon. Member. I think it would have
38
been happier if this procedure had been used in a certain case some time ago. I think that is the right way of dealing with these matters now.
Mr. Churchill: With great respect, Sir. when you got up we thought you were going to give a Ruling upon this matter. We listened with great attention. We were not clear what actually happened. You proposed the Question that the matter should be remitted to the Committee of Privileges and asked for "Ayes or "Noes" on that subject. Before it is committed to the Committee of Privileges, has the House no opportunity of discussing the matter, particularly in view of the fact that you have not given a Ruling that there is a prima facie case? Surely the House has a right to discuss it, and not merely a right to vote without discussion on a matter on which you have not given a Ruling?
Mr. Speaker: It is not necessary, and I do not have to rule that there is a prima facie case. That is implied by the fact that I asked the hon. Member to move his Motion. The Motion is debateable, and when I put the Question I looked to see whether any hon. Member was going to get up.
Mr. Eden: Would you enlighten us, Sir? I am sorry that I had no idea of this new procedure. [HON. MEMBERS: "Oh."] If the whole House was aware of it, except my right hon. Friend and myself, I apologise. I had understood the procedure was that your first pronouncement was to rule whether there was a prima facie case. You have told us this afternoon that that procedure is no longer necessary. Would you be good enough to tell us when the new arrangement came about, what it has arisen from, and why we are now to enjoy it, if "enjoy" is the right word?
Mr. Speaker: The arrangement came about this morning, when I discussed it with the Clerks. [HON. MEMBERS: "Oh."] After all, they are my advisers and their opinion is something I have to consider. This was discussed carefully and I am convinced and assured that merely uttering the words "prima facie case" might have a harmful effect. It might seem as if I had already judged the thing in advance, and therefore it is safer to leave it to the House, who can decide whether or not it goes to the Committee

39
of Privileges to be judged. This avoids the appearance that the case is tried twice over and that I may have prejudiced it by saying that there is a prima facie case.
Mr. Eden: It would not be for me to challenge the reasons for that decision, but would it not have been possible, in view of the fact that there was a case of this kind, for some information to have been given to us that what has been the procedure of the House, certainly ever since I have sat in it, was to be changed without our having any notification of the fact?
Mr. Speaker: I might have considered that, I admit, but I did not have very much time. After all, this case came to my notice only this morning.
Mr. Churchill: Do I understand that we are at liberty, Sir, to debate the Question which you put to us?
Mr. Speaker: The Motion is before the House and we are at liberty to debate it.
Several Hon. Members Several Hon. Members rose—
Mr. Bowles: I am quite sure, Mr. Speaker, that every hon. Member in the House not only heard you ask my hon. Friend the Member for Perry Barr (Mr. Poole) to move his Motion and heard him say it, but heard you then put the Question. It is about time that hon. Members listened when you, Sir, are on your feet. The Question was then put by you. Many hon. Members said "Aye." Then the Question was put for the "Noes." No hon. Member said "No." [Interruption.] The Motion was carried and, therefore, surely it cannot be debated.
Mr. Speaker: Actually, I never declared "The Ayes have it." To be frank, I did hear a murmur on my left, from which I thought that although Members were not saying anything loudly, there was some objection on my left.
Mr. Churchill: I understand we now have the right to debate the Motion that has been moved. With very great respect, I am sure that any misunderstanding—
Mr. Sydney Silverman: Further to that point of order—
Mr. Churchill: I am sure that any misunderstanding—
Mr. Speaker: Has the hon. Member a point of order?
Mr. Silverman: I think, Sir, that we all heard you say that you had not declared that the Ayes had it. Whether or not you had declared that the Ayes or the Noes had it, you had, I think, quite clearly collected the voices—[Interruption]—or were going to do so. That being so, is it in order to continue the discussion beyond that point?
Mr. Speaker: I can quite understand that there was some confusion. It was a new procedure, and Members did not understand it. It is only fair—it is a debatable Motion; that was not understood at the moment—to let it go on, and we can debate it.
Mr. Churchill: I will address myself to the Motion which has been moved from the opposite side of the House by the hon. Member who raised this issue. It seems to me that we should be very careful in not adopting and remitting to the Committee of Privileges any Motion that may be moved by any Member, irrespective of whether the Speaker has, after much careful consideration, decided that there is a prima facie case. If the prima facie case—security—is swept aside, there is not any single day in the week when a dozen cases of Privilege may not be raised and unfolded and when they will be automatically remitted to the unfortunate Committee of Privileges.
Mr. Poole Mr. Poole indicated dissent.
Mr. Churchill: The hon. Member shakes his head. He really had a great opportunity of putting his case, and I do not know why he should be disturbed because the answer has been made to him.
There ought not to be undue and ill-considered burdens thrown upon the Committee of Privileges. Hitherto, a kind of strainer has been employed by the fact that the Speaker of the House, with all the advice of the Clerks at the Table, has had an opportunity of saying whether there is a prima facie case or not. Now, we have got to a new procedure when any Member can get up and read out anything; it may be utterly untrue—I do not say that the present instance is untrue—it may be distorted or misreported; whatever it may be, any Member can

41
read it out and make his Motion that it be referred to the Committee of Privileges. Then all that happens is that it goes there, unless we debate it.
If that is so, a very great impediment to Government business might be introduced by this method and all kinds of questions might be raised to entrench upon debates and so forth, which would be injurious. Therefore, we ought to be very careful indeed in not accepting Motions—I am debating how we shall vote on this, because we shall have to vote on it—to refer matters to the Committee of Privileges which have not received the imprimatur and which have not been brought forward in the ordinary process through the chances of Business and of Ballot for Motions. That is the kind of procedure which seems to me of great importance before we decide how we are to vote in this matter, because that is what has to be settled.
There is one other aspect that we ought to consider. In this country free speech has long been privileged outside the special responsibilities of Members of Parliament and so forth, and there has been for many generations very free talk about all sorts of topics. One cannot say that the man or the woman in the street can be brought up violently and called to account because of expressing some opinion on something or other which is sub judice. [Interruption.] They are perfectly entitled to do that. They may say things that are deplorable—many deplorable things are said under free speech—but to say that these matters should immediately be cast upon our overburdened Committee of Privileges is, I think, most imprudent on the part of the House.
The question of the impartiality of the Chair is a very high and sacred one, and I am sure that if an attack or a series of attacks of an irresponsible character were made in the country, it would be a matter in which the House would feel it its duty to sustain and protect the Chair; but casual comment made by a person not in a representative position, and not a Member of this House—
Mr. Woodburn: On a point of order—
Mr. Churchill: Let me finish. I will not sit down unless I am ordered to do so. The right hon. Member uses the point of
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order as an abuse of the means of expressing—
Mr. Speaker: Does the right hon. Member for Clackmannan and East Stirling-shire (Mr. Woodburn), rise to a point of order?
Mr. Woodburn: I understood you to say that although it was not necessary for you to say those words, in the event of there not having been a prima facie case you would have ruled that there was not a prima facie case, and that protection exists. Am I to understand that before the Committee of Privileges can approach this matter in an impartial way, the whole business has to be debated in this House in a heated atmosphere and taken out of the judicial atmosphere?
Mr. Speaker: That is perfectly true. I said I could stop any frivolous Motion which was brought to my notice as a matter of Privilege, but this, of course, I do not regard as a frivolous one at all and I deliberately said that the complaint of the hon. Member is of the type to which priority is given over the business of the day and that, of course, puts it into a high priority.
Colonel Ropner: Are we to understand that the fact that you now propose to call on an hon. Member to move a Motion is in effect a statement by you that there is a prima facie case?
Mr. Speaker: Yes; "yes" is the answer.
Mr. Manuel: Mr. Speaker, I understood you to rule that you had collected the voices. Is there any precedent that, when a Motion is before the House, after the voices have been collected, the debate is continued?
Mr. Churchill: With great respect, I think the House should be a little careful before it remits to the Committee of Privileges—we have a Motion before us now and we are going to debate it and vote on it—matters of what might be unfortunate or irregular comment, but which are not committed by persons with any special Parliamentary responsibility. A lot of things have been said in my time, not only about the Chair and the behaviour of the Chairman of Committees and so forth, but I have heard full-blooded attacks on the whole Parliamentary system itself. If I thought that was a

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matter of breach of Privilege, would it not be a matter of breach of Privilege for a man to get up in Trafalgar Square and say, "The whole rotten business of Parliament and the House of Commons should be swept away and business conducted from Transport House"? There is no limit, and the House is really going to put itself in a position of extreme embarrassment and difficulty if it goes running all over the place trying to pick up chance utterances of persons who do not hold official or Parliamentary positions of any kind and saying they imply a reflection on the Chair.
What can we do by that? We are only attempting to muzzle—a thing we cannot do—the whole vast uncontrollable waves of expression of public opinion throughout the country, which is one of the great disadvantages and also the foundation of its strength and life. I hope that the House, will, by the vote it will give after the discussion is over, make it quite clear that it keeps a cool head in these matters and does not attempt to burden itself and its Committee of Privileges with running round all the street corners and villages of the country to see whether somebody has been overheard making some reflection upon some Ruling given by the Chairman of Committees. I trust we shall give a decided vote on that matter and that there will be a very full and decisive debate in this House.
The Secretary of State for the Home Department (Mr. Ede): I hope that such debate as takes place on this Motion may take place in an atmosphere of reasonable calm, because I think that we are likely, unless we are very careful, to do damage not merely to our procedure but to the efficacy of the use of the Committee of Privileges. As I understand the position, Mr. Speaker, it is that by giving priority to this Motion over the business of the day you have given the indication which hitherto, at any rate for a considerable number of years, has been given by saying there is a prima facie case.
During the current Session, we had a debate in which you did not give that Ruling and my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) then put a Motion on the Order Paper that a certain matter should be referred to the Committee of Privileges. Time was found for it, a discussion took place and
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the Motion was defeated, but no priority was accorded to the Motion on that particular occasion. Now, on this occasion, you have given priority before the business of the day to this Motion.
May I say, before we go any further, that of course the ordinary business of the House today is being conducted under some difficulties and some feeling of urgency, at any rate in some quarters, and a long discussion on this Motion today might involve us in very serious difficulties which I understood the great majority of Members of this House were anxious to avoid with regard to the regular business.
May I, therefore, make this suggestion to the House. I think the whole position has been rather sprung on us, but that is inevitable in a matter of this kind—and may I say I had no communication with you and I was as much taken by surprise by the actual course which was adopted as any other hon. Member, and quite clearly it would be wrong of me to attempt to influence the Chair in any way. I have no prior consultation with the Chair about matters of this kind and would never expect to have. Therefore, I suggest that it might be a good thing and in the best interests of the House if this Motion now before us were adjourned until, say, Thursday, when we could take it as the first business and the matter could then be discussed. It is quite possible that we might then be better able to find a way out of the difficulties which present themselves to us than if we proceeded now.
Privilege has been raised and as I understand, it having been once raised, the question of priority does not again arise. The suggestion I have made would, I hope, meet with the general convenience of the House, but at this stage I would not propose to move a Motion, unless there were an indication that there was fairly general agreement on those lines.
Sir Hugh O'Neill: May I ask whether the procedure which is being followed today means any change from the time-honoured Parliamentary practice under which it is for the Chair, and the Chair alone, to decide whether or not there is a prima facie case and that that is a condition precedent to any Motion to refer a matter to the Committee of Privileges?
Mr. Speaker: I did not quite hear what the right hon. Gentleman said.
Sir H. O'Neill: I asked you, Sir, whether the procedure which has taken place today implied any change in the time-honoured practice of this House under which it is for the Chair and the Chair alone to decide whether or not there is a prima facie case of Privilege, and that that decision by the Chair is a condition precedent to any Motion to refer the matter to the Committee of Privileges.
Mr. Speaker: Of course, I have ruled that there is a prima facie case because in asking the hon. Member to move a Motion I clearly indicated what I thought. As I said, I did not want to use those words; I thought it was better not to do so.
Sir Ian Fraser: On a point of order. Does it follow that if you did not think there was a prima facie case, you would refuse the hon. Member leave to move his Motion?
Mr. Speaker: Certainly; that is my remedy.
Mr. S. Silverman: I should like to say two things before we consider the proposal made by my right hon. Friend, to which I should have no objection at all and for which I should be prepared to vote. One is that it seems to me, with great respect, that the form which you, Sir, used in calling on my hon. Friend to move his Motion implied no change from what has been the practice of the House ever since this Standing Order was adopted. As I have always understood it, the only function of Mr. Speaker in these matters of Privilege is to decide whether or not the matter raised is of so important a character as to justify its being taken in priority to the other Business of the House.
The reason for that, as I have always understood, was the very reason which the Leader of the Opposition himself gave—because it is the only way in which the House of Commons can be protected in the conduct of its ordinary business from a wide variety of frivolous nonsense. It is quite true that there grew up the use of a form of words when the Chair gave its Ruling in that matter—the use of the phrase "a prima facie case." But the words "prima facie case" have a judicial connotation which does to some extent seem to prejudice the investigation of the matter that is being raised. I have
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always thought that the matter which I raised a few weeks ago was a little prejudiced and a little embarrassed by the variety of forms in which the Ruling of the Chair was then given.
I should have thought that the form you used today, Mr. Speaker, which exercises the function placed upon you by the Standing Order of deciding whether there shall be precedence or no precedence, as a very much better form than the old form of using these quasi-judicial phrases which only embarrass the issue.
The other thing I should like to say, with great deference to the right hon. Gentleman, who has been a Member of the House for so long, is that it seems to me that nothing could do greater harm to the House of Commons and to these questions of Privilege and the investigation of Privilege than if there grew up a habit of mind under which people decided whether or not to accept your Ruling on such a matter according to the way the particular point raised seemed to favour or tend to favour one side of the House rather than the other. I should have thought that the House would be well advised, even today, once you have said that this is a matter the character of which entitles it to precedence over the business of the day, to proceed to refer it to the Committee of Privileges without further debate, without a vote and without postponing it to any other occasion.
Mr. Eden: I think some of the difficulty in which we all find ourselves is due—I naturally say so without any wish to challenge what you, Sir, said at the beginning—to the novelty, so far as most of us are concerned, of the procedure which has been enunciated. I have been familiar for a great number of years, as have all older Members of this House, with the term "prima facie case" in connection with breach of Privilege. It may be, as the hon. Member for Nelson and Colne (Mr. S. Silverman) argues, that from a legal point of view that is not a very good phrase; that may be so; there may be other phrases we use which are not very good phrases but they become hallowed with time and custom. Had you, Mr. Speaker, got up and said, "This is a case in which I rule there is a prima facie case" we should all have understood

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where we were, and I doubt whether my right hon. Friend would have felt it necessary to challenge it—
Mr. Churchill: The Leader of the House should himself have moved.
Mr. Eden: I was coming to that. If you, Mr. Speaker, had done that—had got up and said "This is a prima facie case" the next step, as I well remember from the days when I had the responsibility which the right hon. Gentleman now discharges, would have been for the Leader of the House to get up—[Interruption.]—yes, certainly—and move that—
Mr. Ede: I am sorry to interrupt the right hon. Gentleman, but it may be remembered that, again during this Session, it was ruled on a previous occasion that the custom is for the Member who brings the matter to the notice of the House to move the Motion. I understand that has been the custom.
Mr. Eden: I am sorry. I have done it many times, no doubt always wrongly. It appears that what we have done in the past has been consistently wrong.
I suggest, with all respect, that if we are to plunge into a new procedure, even if only of nomenclature, it would have helped us a little if we could have had guidance that that was to happen. The right hon. Gentleman said that he knew nothing until you, Sir, took the course you did this afternoon. We too had no knowledge. I can only ask you what your judgment is, and whether you would rule that this is a prima facie case, in which case we have then to decide what our action shall be. I would suggest, with respect, that while of course we cannot discuss your Ruling, it would be possible for the House to receive a little guidance before we are asked to adopt what seems to be a new procedure in name and which seems to us to be nearly a new procedure in practice also.
Mr. Speaker: I am informed that the use of "prima facie" began in 1936; before then it was not stated.
Mr. Poole: I should like to say only a few words on this matter. My first point is that I raised this matter because I believed it to be a House of Commons issue which was of importance to the House, and for no other reason. I was
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not aware of the new procedure, otherwise I should not have sat down at the end of my statement and have had to be called by you, Mr. Speaker. I was expecting that a prima facie case would be ruled. or otherwise.
The Leader of the Opposition, for whom I have a great personal affection arising out of other days and times, did me less than justice in two respects today. First, he did not do me the courtesy of listening to anything I said. Secondly, he made reference to people running round, snooping and trying to ferret out things people said. I wish only to have it put on record that this speech was made in the constituency in which I live as a constituent of the hon. Member for Sutton Coldfield (Sir J. Mellor); it was made within a half-mile of my house; and it was published in the local paper which finds its way into my home. For that reason, and that reason alone, it came to my notice. I have too many other concerns at the moment than to worry about going around snooping on what people say; but I do feel that when the impartiality of the Chair is challenged it is a matter of sufficient importance, and it is the duty of any good House of Commons man to bring it to the notice of the House.
Mr. Churchill: For convenience, may I state the course which we on this side of the House propose to follow? You, Sir, have ruled that this is a prima facia case of a breach of Privilege which should be referred to the Committee of Privileges. If that decision on your part is the subject of a definite proposal from the Leader of the House, we shall not oppose it; but if there is any question about whether you have given a Ruling that it is a prima facia case or not, if it is left all vague and just to the judgment—no doubt the quite honest judgment—of the hon. Member for Perry Barr (Mr. Poole), and if there is no presentation by the Leader of the House, then we shall vote against it.
Mr. Ede: It is only by leave of the House that I may speak, since I have already spoken once on this Motion. I feel that the intimation which you, Sir, have given is an intimation that, had this occurred at any time prior to the advice tendered to you today, you would have ruled that there was a prima facia case in this instance. My suggestion to the

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House, in view of what the Leader of the Opposition has just said, is that we should accept the procedure today as an intimation of that view on your part, and that therefore we should allow this case to go to the Committee of Privileges for consideration.
I think I must say, to safeguard the rights of the House, that even where Mr. Speaker rules that a prima facia case has been made, it is still within the competence of the House—I do not suggest it is in this case, but it may be in some future case—to say that the matter is so trivial that we dismiss it straight away by defeating the Motion; or that it is so serious that we do not think it ought to go to the Committee of Privileges, but that the whole House should immediately take it into consideration. That would be an unusual course, but it is still within the competence of the House.
In accepting this Ruling today that there is a prima facia case, I suggest that this is one of the instances which should be investigated by the Committee of Privileges and a report thereon made to the House. I hope that the House will be prepared to accept the suggestion of the right hon. Gentleman that we should agree to that course without a Division—[HON. MEMBERS: "Move it."] It has already been moved that the matter be referred to the Committee of Privileges, in accordance with what has at any rate been the practice during this present House of Commons.
Mr. Speaker: If it would help the House, I am quite prepared to say definitely that I consider there is a prima facie case. But I would also suggest that this new Ruling of mine would not apply today, though I think it might be well worth discussing on some future occasion, because I believe that there are advantages in it rather than saying the two mysterious words "prima facie."
Mr. Churchill: With great respect, Sir, you have now definitely ruled that a prima facie case exists, and the Leader
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of the House has proposed that we should adjourn the debate upon this—[HON. MEMBERS: "No."]—until Thursday—
Mr. Ede: May I help the right hon. Gentleman—
Mr. Churchill: I beg your pardon; it is clear that unless the House by vote disagrees with the view you have given, the matter must now go to the Committee of Privileges; and it should go to the Committee of Privileges now and not be put off for another debate in this House. That is quite clear, and it would have been equally clear before if the former procedure on which we had worked had been made plain.
Earl Winterton: Quite apart from this particular case, I hope, Mr. Speaker, that you will consider rather carefully the suggestion you have just made that this House should discuss whether or not it is wise to stick to forms of procedure. Surely if that is to be done, the Committee of Privileges should be asked its opinion. No inconvenience has come to the Committee or, so far as I am aware, to this House from the former procedure which, though it has been in existence only since 1936, has—as is shown by what has been said by the Leaders on both sides of the House—hitherto met with the approval of the House.
I am not entitled to speak on behalf of the Committee of Privileges—in fact its proceedings are secret—but as a member of it I should feel slightly wounded if the whole procedure we have followed hitherto were to be altered without at least some discussion. I hope that if we do take any further action, a Motion will be put down so that we may discuss it.
Mr. Speaker: I think there is a great deal in what the noble Lord has said. I hope that the House will discuss the matter in the present case.
Question put. and agreed to.
Resolved:
"That the matter of the complaint be referred to the Committee of Privileges."

ORDERS OF THE DAY

  COAL INDUSTRY BILL
  Order for Third Reading read.
  4.25 p.m.
  The Minister of Fuel and Power (Mr. Philip Noel-Baker): I beg to move,
  "That the Order be discharged; that the Bill be re-committed to a Committee of whole House in respect of the Amendments in Clause 1, page 1, line 18, and page 2, lines 1 and 2, standing on the Notice Paper in the name of Mr. Noel-Baker."
  Mr. Brendan Bracken: We have stated our objections to this Bill. There is no virtue in repetition. Business of perhaps greater importance is before the House today, and so we shall say nothing more than that we think very little of this Bill. We are not going to take up the time of the House by repeating our arguments or encouraging verbosity.
  Question put, and agreed to.
  Bill immediately considered in Committee.
  [Colonel Sir CHARLES MACANDREW in the Chair]

  COAL INDUSTRY BILL

    Clause 7.—(EXTENSION OF POWER TO MAKE ADVANCES TO NATIONAL COAL BOARD, AND OF TEMPORARY BORROWING POWERS OF BOARD.)
    Mr. P. Noel-Baker: I beg to move, in page 1, line 18, at the end, to insert:
    "(b) the aggregate amount of the advances under this section in any financial year shall not exceed forty million pounds or such greater amount as may be specified for that year in an order made by the Minister.
    (2) The power of the Minister to make orders under the preceding subsection shall be exercisable by statutory instrument, and no such order shall be made unless a draft thereof has been laid before the Commons House of
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    Parliament and has been approved by resolution of that House.
    Any such order may be varied by a subsequent order made in like manner and subject to the like conditions."
    The last time we discussed this Bill in Committee, I undertook that I would consider arguments put forward by right hon. and hon. Gentlemen opposite and would see whether I could put down any Amendments. I have put down Amendments which I hope will be acceptable to all hon. Members.
    Mr. Bracken: I must say "ditto" to what I said before.
    Amendment agreed to.
    Mr. Noel-Baker: I beg to move, in page 2, line 1, after the first "the," to insert "first."
    Mr. Bracken: I must say "ditto" to what I said before.
    Amendment agreed to.
    Further Amendments made: In page 2, line 1, after "substituted," insert:
    "and in the second proviso thereto, so far as it relates to advances made during the financial year current at the commencement of this Act."
    In line 2, leave out "thereunder," and insert "under that section."—[Mr. Noel Baker.]
    Clause, as amended, ordered to stand part of the Bill.
    Bill reported, with Amendments; as amended (on re-committal) considered.
    Motion made, and Question proposed, "That the Bill be now read the Third time."
    Mr. Bracken: I think we can commemorate this as the shortest debate on a Coal Bill in the history of this House.
    Question put, and agreed to.
    Bill accordingly read the Third time, and passed.

FINANCE BILL
Considered in Committee. [Progress. 14th June.]
[Major MILNER in the Chair]

New Clause.—(AGGREGATION OF PROPERTY FOR PURPOSES OF DEATH DUTIES.)
Property which under a disposition not made by the deceased passes immediately on the death of the deceased to some person other than the wife or husband or a lineal ancestor or lineal descendant of the deceased shall not be aggregated with any other property for the purpose of death duties, but shall be an estate by itself, and death duties shall be levied at the proper graduated rate on the principal value thereof. Subsection (I) of section twelve of the Finance Act, 1900, is accordingly repealed.—[Mr. Tartan.]
Motion made, and Question proposed—[14th June]—" That the Clause be read a Second time."
Question again proposed.
4.31 p.m.
Mr. Erroll: When this Clause was discussed last week. the Attorney-General, who I am glad to see has just arrived, sought to refute the validity or the appropriateness of it by referring to a committee which sat in the year 1900 to deal with this very point. He said that the conclusions of the 1900 committee were valid then and that they were equally valid today. I submit that there is one very considerable difference between 1900 and 1951; that is that the rates of Death Duty are very much higher now, and what might appear to be a small injustice in 1900 has become a serious matter for aggrieved parties in 1951.
The Attorney-General also said that to accept the Clause would involve the reversal of an important principle, and he went on to enunciate that principle in the following terms:
"The whole conception is based on this; that the scale of duties should he apportioned by reference to the total aggregate value of the property which passes on death, being property in which the deceased had an interest."—[OFFICIAL REPORT, 14th June, 1951; Vol. 488, c. 2685.]
In the examples I am going to quote, which are somewhat similar to those quoted by my hon. Friend the Member for Thirsk and Malton (Mr. Turton), who moved the Clause, it will be seen that the life renters had no interest in the property as such. They never owned the property:
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they merely received the interest upon it. In a sense it was a windfall to them.
The unfairness of the present state of affairs is borne out by examples of the following sort. I have before me the case of an estate of some £24,000 which had already borne duty. It was left in trust for three persons for their respective lives. One of these three dies and the duty payable is some 26 per cent. instead of 4 per cent., simply because the deceased had left a large free estate which went elsewhere. This meant that the two remaining life renters suffered a severe diminution of income through no fault of their own and simply because the property in which they were interested came to be aggregated with a very much larger estate which was nothing to do with them, neither was it anything to do with the original owner of that estate.
I cannot believe that a principle which justifies this treatment is deserving of the name "principle" at all. It is a thoroughly bad principle and ought to be rescinded or modified. I can conceive the principle operating even more disastrously in the case, for example, of two people who each inherit the sum of £4,000, each subject to separate life rents. "A" gets it all, as the life renter has no other income. "B," however, only gets some £2,000 because the life renter in his case had an inheritance, and the effect of this gearing of the inheritance to the capital from which the life rent was obtained is to tax the capital at an altogether higher rate of Death Duty than was otherwise the case in the matter of "A." Beneficiary "B" suffers very considerably through no fault of his own and gets only half the property which the original owner intended he should have.
The position is further aggravated by the fact that if the original owner of the property were to arrange that his property should pass on his death straight on to the ultimate beneficiary, no duty would be leviable when any would-be life renter died; and such a person could be protected by placing an obligation on the ultimate beneficiary to secure certain income to the person who would otherwise have been a life renter.
I hope the Committee will see that here is no worthy principle, and I am sure that the learned committee of 1900 came to its easy and convenient decision because in those days no great measure of hardship was involved. Now, however, real

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hardship is caused in thoroughly deserving cases, and any solicitor's office which specialises in this type of business knows that there are cases of hardship and difficulty resulting from the rigid operation of what for convenience is called a principle.
I suggest that if the Attorney-General cannot accept our Clause this year, at any rate he should appoint a fresh committee so that we might have the views of a committee of 1951–52 instead of once more the views of a committee of over half a century ago. He should direct this committee to consider especially if it would be possible to give some measure of relief some breaking away from the rigidity of the principle—to small estates and to those who receive small inheritances and have small incomes, thus overcoming a difficulty which was outlined to me some five years ago that the loss to the Revenue would be so severe if a reversal of this principle were carried out in entirety. I hope, nevertheless, that now we have moved into a fresh week the Attorney-General will see his way to accepting our Clause.
Mr. Turton: Before we Dome to a decision I hope that the right hon. and learned Gentleman will give his views on the proposal made by my hon. Friend the Member for Altrincham and Sale (Mr. Erroll), and particularly the proposal that this Clause should apply to property up to £10,000 where the deceased has no disposable interest. That would not make large inroads on the Revenue but would remedy many of these cases of harsh injustice.
The Attorney-General (Sir Frank Soskice): I do not think I can add to what I said when we last discussed this matter. The hon. Member for Altrincham and Sale (Mr. Erroll) said the big difference between the present day and the days when this matter was previously considered was the difference in the rates of duty. That cuts both ways. The reason why the original Section in the 1894 Act was amended was that its effect was to give a wholly uncovenanted benefit to strangers to the family. The higher the graduated rates of tax the bigger the benefit such persons get. The change in rates is a stronger and not a weaker reason against the proposal which the hon. Gentleman makes.
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It is suggested that we should set up another committee, but I do not think reasons have been disclosed in the course of the debate which give rise to the necessity for the whole matter to be re-investigated. This proposal is a complete departure from the system of Death Duties which are not duties upon what a beneficiary receives. They are duties upon the aggregate estate that passes, and for those reasons I do not think I can depart from the view I expressed on the previous occasion.
Mr. Brendan Bracken: My right hon. Friend the Member for Aldershot (Mr. Lyttelton) is engaged in important public business elsewhere. If he were here, he would join with me in expressing sorrow for the learned Attorney-General—and, let me say by way of digression, that there ought to be a Bill introduced into this House, and it would have the approbation of all parties, to prevent cruelty to Attorneys-General, who are so grossly overworked.
If my right hon. Friend were here, he would join with me in expressing regret that the right hon. and learned Gentleman has not met the very important argument put forward by my hon. Friend the Member for Altrincham and Sale (Mr. Erroll). It is quite true that this matter has been discussed before, and, I believe, voted upon before, but we thought that the right hon. Gentleman would have an opportunity of re-considering it and that he would refer it to a committee. This is the first time in a long Parliamentary life when I have known a Minister to say he was unwilling to set up a new committee, and that is a new precedent.
One would have expected, on an issue like this, a contribution from the right hon. Member for Ebbw Vale (Mr. Bevan) who, I am sorry to see is wearing a bandage, which is evidently the result of some physical injury. I hope it was not due to a physical as well as verbal assault made upon the right hon. Gentleman by his colleague the Minister of Local Government and Planning.
Question put, and negatived.

New Clause.—(AMENDMENT OF FINANCE ACT. 1946.)
Section forty-six of the Finance Act, 1946 (which (inter alia) increased the size of estates on which no estate duty is payable) shall have

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effect and shall be deemed always to have had effect as if the following proviso were added thereto:—
"Provided that nothing in this section shall affect the relief given by subsection (2) of section five of the Finance Act, 1894 (which relates to settled property) so far as respects the payment of estate duty on the death of the surviving party of a marriage in cases where but for the passing of this Act estate duty would have been paid upon the death of the other party to the marriage."—[Major Hicks Beach.]
Brought up, and read the First time.
Major Hicks-Beach: I beg to move, "That the Clause be read a Second time."
This Clause seeks to do one very simple thing—to amend Section 46 of the Finance Act, 1946, to ensure that that Section carries out what I believe was the wish of Parliament at that time. That Section did a very admirable thing, and it had the full support of both sides of the House. It gave full exemption from Duty to all estates of under £2,000, but, under the present law of aggregation, which has been fully discussed on the previous new Clause, and also owing to the present position of the law in regard to the death of the surviving spouse under a settlement, that is not, in fact, what happens.
I do not propose to deal again with the aggregation point, which has been fully dealt with by the Committee, but I should like to explain what is the position on the death of a surviving spouse who has an interest in a settlement, whether created by a will or by actual settlement deeds. Where a man or woman settles property on his or her death on the wife or husband, as the case may be, for life and then to some other person, the duty is payable only once, on the death of the husband or wife.
I want to quote some examples to show how these two parts of the law work out in practice in one particular case, as far as Section 46 of the 1946 Act is concerned. This is a case which has actually arisen in practice, and I think the Attorney-General will be fully aware of the facts. The position was that Mrs. A. died, leaving £1,400. One would assume that her estate would be exempt from duty. She left it to her second husband for life, and then to her daughter by her first marriage. Duty was not payable on
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the death of Mrs. A., because the estate was under £2,000.
On the death of her second husband, it was found that he had estate worth £9,000, and this man was the stepfather of the daughter who was to receive her mother's £1,400. As Section 46 of the 1946 Act operates, the two sums have to be aggregated, so that this unfortunate lady, who was expecting to receive the £1,400, which had already been exempted on her mother's death, became liable for some £52 in Estate Duty.
4.45 p.m.
The curious thing is that if Mrs. A. had died worth £2,001 she would have been liable to only £1 in duty. In fact, the estate could have claimed the marginal relief and the liability for duty would have been only £1. In this particular case, this girl has been penalised because her mother left too little; that is what it would amount to. It is a curious thing, as I think the Attorney-General would agree, and a curious philosophy for any Government which penalises people if they leave too little money.
It may be said against me that when the maximum estate which was exempted from duty was limited to £100 this point was never raised. I entirely accept that, and I cannot understand why it was not raised. It may also be said against me that this is just a pure anomaly, and that under the complicated Estate Duty law anomalies are bound to exist. I entirely accept that, but, though they do exist, there is no reason at all why anomalies of this nature which are harming people should not be brought to the attention of the Government, nor can I see any reason why the appropriate Act should not be amended. I have set out to do this by means of this Clause. It is a small point, but it will help people with small estates, and, in my submission, it will be carrying out what was the intention of Parliament when it raised the exemption limit to £2,000.
Mr. Hylton-Foster: I do not wish to place upon the Attorney-General the burden of repeating his defence of the principle of aggregation which he put forward on the last new Clause. Having read what the right hon. and learned Gentleman said, and entirely accepting

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the principle that the duty cannot properly be regarded as a tax on acquisition, I notice that the right hon. and learned Gentleman said that there is no reason in principle why we should not on the right occasion debate something which constitutes a departure from the principle of the legislation. I would say with respect that, when we encounter a real injustice and anomaly, that is the case in which we are justified in making that departure.
If I rightly understand the law, what happens is that if the settled fund exceeds £2,000, even by £1, or even 10s., whatever the loss to the Revenue involved, nothing is to be paid on the death of the second spouse. If, on the other hand, the settled fund is less than £2,000, then, on the death of the second spouse, the beneficiary has got to pay the duty, and the amount of duty which he has to pay has nothing whatsoever to do with the amount of the fund which the beneficiary receives.
It has nothing whatever to do with the amount of the fund in the first instance, and it does seem to me to be an extraordinary thing that, if the country, through the medium of the Revenue, can afford to forgo the duty on an estate up to £2,000, then, in such circumstances, it should not be necessary, for the protection of the Revenue, to bring that estate back into liability for duty on the death of the second spouse. I ask the right hon. and learned Gentleman urgently if he will not regard this as a case of an exceptional anomaly which requires clearing up.
The Attorney-General: Certainly, the situation is an anomalous one, as both the hon. Gentlemen have said, but the anomaly does not spring from the altering of the exemption limit from £100 to £2,000. It has always existed, and the only way of curing that anomalous situation is to change the situation in a sense in which it will be far less favourable to the taxpayer than it is today.
May I indicate what I mean? It has always been the situation, and, when the limit was £100, it was so then as it is today, because that is the result which follows from the operation of the existing legislation. Let us take, as an example, an estate of £2,001, upon which, on the death
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of the first spouse, £1 in duty is paid. The way the legislation works is this. The £1 paid in duty franks upon the death of the second spouse a wholly disproportionate amount of duty which would otherwise be payable on the death of that second spouse. Supposing, as I have said, this estate of £2,001 upon which £1 duty has been paid passes on the death of the wife to the husband, and that the husband, the tenant for life, dies at a later period, the result of the existing legislation is that the £1 paid on the wife's death means that no duty is payable at all on the husband's death in relation to the whole of her estate.
Supposing the husband's estate is large enough to attract, say, a fairly high rate of duty, so that, on his death, his estate, when aggregated with the wife's estate, attracts duty at the rate of 50 per cent., the result of the payment of £1, and of £1 only, upon the death of the wife, means that no less than £1,000, that is to say, 50 per cent. of her estate, goes duty free on his death. Such a position, I think the whole Committee will agree, is one which is extremely difficult to defend. That situation has always existed, and it is a situation which has been much criticised in the past. Proposals have been made that it should be altered in the sense that the £1 duty payable on the wife's death should only frank £1 of duty on the husband's death.
There is an anomaly there, but that is the sensible way of curing it, and not to say, as hon. Members opposite want to say, that the uncovenanted benefit is to be made still larger, in other words, that the illogicality is to be made still more illogical. That would be the sensible way of doing it, and, obviously, it would be a change greatly to the disadvantage of the individual taxpayer. What hon. Members opposite are really saying is that here is a benefit which cannot be justified by any reasonably logical standards, and yet they want to make that benefit still larger than it is. We feel it would be going a great deal too far to do that. Any changes to be made should be something like commensurate with the scheme of the tax but this unreasonable benefit should not be increased as hon. Members opposite propose.
Therefore, while we are perfectly content to leave the legislation as it is—

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in other words, not to change it to the disadvantage of the taxpayer—we cannot see that there is any logical justification for giving the taxpayer a still greater advantage which cannot be fitted into any intelligible system of tax.
Major Hicks-Beach: I beg to ask leave to withdraw the Motion.
Motion and Clause. by leave. withdrawn.

New Clause.—(OFF-LICENCES, MINIMUM QUANTITY OF SPIRITS TO BE SOLD.)
(1) Notwithstanding anything in the First Schedule to the Finance (1909–10) Act, 1910, with respect to the minimum quantity of spirits which may in England he sold by a person holding the off-licence to be taken out by a retailer of spirits, a person holding such a licence, may sell any quantity of spirits equal to less than one reputed quart bottle.
(2) Section twenty-two of the Finance Act, 1933, is hereby repealed.—[Sir H. Williams.]
Brought up, and read the First time.
Sir Herbert Williams (Croydon, East): I beg to move, "That the Clause be read a Second time."
I understand that this new Clause is creating a certain amount of interest outside, both friendly and otherwise. I could not be here on Friday when the House were discussing monopolies, but had I been I might have been able to base a part of my speech on this Clause then, because the industry affected by the Clause is, up to a point, a State created monopoly.
Intoxicating liquor cannot be sold on any premises without a licence—and there are certain difficulties about that—nor off the premises without a licence. Therefore, it is a State monopoly. There is a conflict between those who sell "off" and those who sell "on." Having regard to this conflict, my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor) has also tabled a new Clause, to which I have attached my name, which seeks to give a countervailing concession to those who sell liquor on the premises. I hope that in due course the Chancellor will agree to accept both these Clauses.
It really is rather stupid that, because of an agitation in the past, if one goes to a grocer or to a wine and spirit merchant who has a licence to sell for consumption off the premises, one is compelled to buy
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more than one wants. I do not know whether, in the past, that was done in the interest of teetotallers. I remember their agitation on the subject of retail price maintenance, when they objected to what is called the "long pull," in other words, one must not have more beer than one pays for. The long pull was abolished, though I do not remember whether by Act of Parliament or through agitation. Recently, of course, the reverse has been true; manufacturers and wholesale distributors of whisky and gin have done all they can to prevent retailers charging above the published price.
The Chairman: I wonder if it would not be convenient to the Committee, having regard to what the hon. Gentleman has just said, if the two Clauses, that in his name and that in the name of the hon. Member for Sutton Coldfield (Sir J. Mellor), were discussed together.
Sir John Mellor: With respect, Major Milner, I would point out that the two Clauses deal with entirely different points. Quite frankly, I am not prepared to proceed with my new Clause, because I understood that it was to be called a good deal later. I was not even in the Chamber when my hon. Friend moved his new Clause. Had I known that was the suggestion, I would, of course, have taken a different course.
Sir H. Williams: I quite appreciate that what my hon. Friend says is quite correct. The two Clauses do represent two very different issues. What I said was that the Clause in the name of my hon. Friend the Member for Sutton Coldfield is a concession to those opposing this Clause, and it is only in that sense that I made reference to it.
I have no connection with this industry, except as a moderate consumer. It is perfectly true when I tell hon. Members that I have never had any interest in the licensed trade. It seems to me to be quite stupid that if somebody wants to buy a moderate quantity of liquor, he can only do so if they go into a pub. I personally have no hesitation about where I go, but there is a large number of people who like to consume alcohol who never go into a pub, and who, if they want to buy liquor, go to the grocer. A very valuable trade has developed in the sale of concentrated spirits in quarter bottles. A great many people like to

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have a drop of brandy in the house; they regard it as the universal remedy for all sorts of troubles. I think there is something to be said for that point of view; I have found it so on a large number of occasions.
There is a considerable number of people who drink very little alcoholic liquor indeed, but, as I say, who like to have a drop of brandly in the house. When I was a boy, "Three Star" brandy used to cost 5s. 6d. a bottle. It now costs two guineas, and the quarter-bottle costs 12s. That is a very substantial investment for anybody who just wants to have a drop of brandly in the house, and lots of those people do not like going to the pub to buy it.
5.0 p.m.
The publicans do not like this Clause very much because they think—and it is a legitimate point of view—that if it becomes part of the Bill they will lose a certain amount of trade. I believe that they are wrong. The people who buy their stuff in a bottle to take home because they want to have a drop of brandy in the house are not the people who, in the ordinary way, go into public houses. We have to accept that fact although the great mass of people and certainly the great mass of hon. Members have a drink in a pub, occasionally under political pressure. What is the use of pretending otherwise? I see an hon. Member opposite shaking his head. He must be unique.
If I want to go to a public house I go, and I remember the challenge made to Mr. L. S. Amery when he was standing at a by-election. His opponent said he had seen Mr. Amery coming out of every public house in Wolverhampton. Mr. Amery replied, "If my opponent had watched me carefully he would also have seen me enter every place of worship." I thought that was a very good retort. There is a great trade in miniature bottles at Christmas time. People try to buy a few small bottles. They do not want to buy a whole bottle of Benedictine which costs, I am told, £2 10s. and brandy at £2 2s.; but they like to have a little on their table on festive occasions. As the law now stands these people cannot do that if they go to the grocers, which is the normal source from which they buy for consumption in their homes.
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These people do not like being seen going into a public house. I think that is a false sense of pride, but it exists and we have to accept the fact. Why should these people who want a relatively small quantity of liquor be deprived of the opportunity of obtaining it? I remember the battle which took place, I think 18 years ago, when we carried the "half-bottle Amendment." Before that Amendment was carried one had to buy a whole bottle. Now one can buy a half-bottle. Having regard to the monstrous inflation now in being under the custody of hon. and right hon. Gentlemen opposite I think we ought to get a little lower in the alcoholic scale and permit people to buy smaller quantities than a half-bottle.
Is not this rather childish, quite apart from anything else? One goes to a shop full of bottles of all sorts and of all sizes and shapes and the man behind the counter says, "I am very sorry but an Act of Parliament says I cannot sell you the small bottle. You must have a lot of booze if you want any at all." This is childish, it is the legislation of a lunatic asylum. We should be more sensible. We all know about this liquor business and the agitation by teetotallers, brewers, publicans, and off-licence holders going back over many years. There is no reason why we should not behave as adults and not say to the moderate consumer, "You shall not buy liquor unless you buy twice what you need."
Lieut.-Colonel Sir Thomas Moore: Drink it all at once.
Sir H. Williams: This is not the economics of a sane Parliament, but of a lunatic asylum. [An HON. MEMBER: "A Tory Government."] Whether one can call the Government of 1933 a Tory Government or not I am not quite clear. It was certainly not as Tory as I should have liked. [Laughter.] I was bitterly opposed to the formation of the Ramsay MacDonald National Government. I did not like it any more than hon. Members opposite. It was a great disaster for this country that we did not have a Tory Government in 1931. However, I must not go into that, Major Milner. I am glad that your attention was diverted because I have been saying things that were out of order; but I have been provoked by the hilarity opposite.
I hope that the Chancellor of the Exchequer will agree to this new Clause.

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I have not the slightest doubt that he has been under counter-pressure from all directions. The characteristic of a great statesman is that he resists counter-pressure and I hope that the right hon. Gentleman will show himself to be a great statesman.
Lieut.-Colonel Lipton: This is one of the ultra rare occasions on which the hon. Member for Croydon, East (Sir H. Williams), has put before the Committee a point which deserves consideration. It is a little foolish that this hangover should still be in existence. I have consulted one or two of my publican friends in my constituency about this proposal. It is true that the publicans as a body are officially opposed to it but the publicans I consulted told me quite frankly, off the record, that it did not matter two pins to them whether this concession was made or not.
In those circumstances, and as this will be a great convenience to old maids living on their own in working class areas who want a drop of something and do not want to go into a public house for it, I hope that the representatives of the Treasury will be favourably disposed to what is, in all the circumstances, a reasonable suggestion.
Mr. J. Enoch Powell: I was glad to notice the careful wording of a written answer which the Financial Secretary gave on this subject just over a week ago. He said that representations had been made to his right hon. Friend the Chancellor of the Exchequer before he introduced the present Bill, but that he had not felt able to introduce the change into the Bill. Now he has an opportunity to make an alteration to this effect, and I trust that the cautious wording of that reply indicates that the mind of the Government is not closed on this subject.
My hon. Friend the Member for Croydon, East (Sir H. Williams), pointed out that in 1933 the minimum permitted quantity of spirit which could be sold under off-licence was reduced to a half-pint. Since 1933 there has been a great alteration in the circumstances, and particularly in the absolute and relative cost of spirit. I might perhaps illustrate that best by taking the case of brandy, which is perhaps the spirit of most public interest in this connection. The minimum
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quantity of brandy which can be bought at off-licence premises at present, namely, a half-pint, costs no less than £1 2s. 9d. Even a quarter-bottle is 11s. 9d. and the very popular flask, the typical small brandy flask which so many people like to have available in the household, costs 6s. 4d. The miniature to which my hon. Friend the Member for Croydon, East, referred, costs 3s. 6d.
I suggest that the modern range of prices shows that the limitation imposed in 1933 is now quite out of place and it is absurd that at off-licence premises it should be impossible to buy a less quantity of spirit than would cost £1 2s. 9d. I have heard it suggested that the public do not suffer any appreciable inconvenience from this limitation and so I made a certain number of investigations which led me to the opposite conclusion. I made inquiries in a number of off-licence premises in my constituency. In one, which I entered during the evening, I asked whether there was any demand at those premises for these smaller bottles which cannot be sold. I was told by the proprietor that that very evening he had turned away no fewer than three customers who had asked for these small flasks and whom he had had to tell to go to a public house.
In that case it so happened that the nearest public house was half-a-mile away thus the public are, by this limitation, placed under three separate disadvantages. In the first place, they cannot buy the small quantity of spirit which they need from their normal supplier. In the second place, they have to go to a public house, which may be at some distance and which in any case many people object to frequenting even for an off-sale. Finally, if they do not care to do that, they are obliged or are induced to spend more than they need, in many cases more than they can afford, in order to buy a half-bottle. It seems perfectly clear, therefore, that this limitation, this minimum laid down by the law, imposes some appreciable inconvenience and hardship upon the public; and it particularly imposes that hardship upon small householders who need only minute quantities for household purposes.
That brings me to the second aspect from which this proposal can be considered—that of the on-licence holder. It is absurd to suggest that the sales taking

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place on on-licence premises will suffer at all if the present law is altered. A person who drinks spirits in any quantity, does not buy it in a miniature bottle or small flask and go home with it. The demand for these small bottles is of a quite different type and comes from a different sort of customer from the demand for "drop" sales over the counter in on-licensed premises, which some people appear to apprehend might suffer. We are here catering for an entirely different demand, an entirely different class of purchaser.
We shall be removing what is really an absurd anomaly and an anomaly which the public certainly do not understand; and their failure to understand it affects prejudicially the off-licensee. One can go into Lyons in Oxford Street, into what is to all intents and purposes a normal grocer's shop, and can buy any of these small or miniature bottles of spirit. One can do that because there happens to be a licensed restaurant attached to these premises. Yet the part of the premises where the bottles are being sold is a perfectly ordinary grocer's shop, and the public, seeing the small bottles on sale there, are at a loss to understand why, when they go to their own grocer or to the off-licence premises round the corner, they are told that it is against the law for them to purchase these small bottles. It is an anomaly that the bottles should be sold in the off-sales department of a public house or the grocery departments attached to a licensed restaurant while they cannot be bought from purely off-licence premises.
While I believe that the on-licence trade would not in any way be affected by this alteration in the law, I suggest that the public stand to gain appreciably from it, and that a cause of grievance, which at present is legitimately felt by the holders of off-licences, would be removed. I hope, therefore, that the Government will agree to take a course which is unusual in that, while considerable advantages attach to it. it has no disadvantages for anyone.
5.15 p.m.
The Financial Secretary to the Treasury (Mr. Douglas Jay): The hon. Member for Croydon, East (Sir H. Williams) wishes to sweep away restrictions, and I must say that my personal bias in a case like this, where I think we might say that no
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very important national resources are at stake, is in favour of sweeping away restrictions and letting people do what they like. That was one reason why I defended the proposal which we discussed last week for allowing mobile shops to sell tobacco, although on that occasion the Opposition were in rather a restrictionist mood and opposed it.
Nevertheless, as the hon. Member himself said, there is a real conflict of interests here. It is, indeed, a historical controversy with rather a long background. The on-licensees can argue with some force that they have been given some sort of semi-monopoly by the State, in return for which they pay a licence fee; and they pay a larger licence fee than the off-licensee. I think that is the basis of their argument. They would, therefore, argue that if the degree of their privilege is to be diminished, then some reduction should be made in the fee which they pay. That is, indeed, I gather what the hon. Member for Sutton Coldfield (Sir J. Mellor) suggests in his new Clause later on the Order Paper, if I may refer to it.
This is a year in which, for obvious reasons, we could not give a special tax concession to holders of licences for selling alcoholic liquor. For those reasons, and in particular because there is no clear agreement about this—there is a considerable difference of opinion between the various interests concerned—we felt that, on the whole, the case had not been made out in present circumstances.
Commander Noble: Could the hon. Gentleman tell us what would be the cost involved?
Mr. Jay: It is impossible to estimate the cost because it is impossible to estimate the effect on consumption. Some people may argue that more alcohol would be consumed, while others may argue that less would be consumed. [HON. MEMBERS: "Why?"] It might be argued that less would be consumed on the grounds that at present people buy more than they wish to buy so that, if an alteration were made, consumption would be reduced.
That is, indeed, another of the aspects of this question upon which there is no agreement at the moment. It could be argued one way or the other as to what the effect on consumption was likely to

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be and, indeed, whether it would be a desirable effect or an undesirable effect. Therefore, while we do not say that we have very strong feelings on the subject. we have come to the conclusion that, so long as these differences of opinion exist, and so long as there is no clear agreement among the public as to what should be done, the case has not been made out.
Mr. Thornton-Kemsley: I make no excuse for continuing this short debate in view of the reply which has been given from the Treasury Bench and which, I think, has caused widespread disappointment. I should not be one to argue that our Scottish licensing laws are in all respects superior to those South of the Border, but in one respect at least they are very much superior to those which obtain in England, because in Scotland there has never been any restriction whatsoever on the sale of spirits by holders of off-licences. or what we usually call grocers' licences. I think it is true to say that bottles need not even be sealed.
Be that as it may, it is an absurd distinction which is made in England—even more absurd, I think, than was suggested by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), because I believe he said that the smallest bottle one can obtain from off-licence premises in this country is a half-bottle. That is not true; one can buy a quarter-bottle or a miniature, provided one also buys a full bottle of the same class of spirit at the same time.
It is an extraordinary thing. If we go back to the time when the half-bottle concession was originally made, then, as my hon. Friend the Member for Croydon, East (Sir H. Williams) pointed out, the rate of duty on spirits at the time of the Finance Act of 1933 was such as imposed a price of 12s. 6d. a bottle. Today—and I am speaking particularly of whisky—the tax alone amounts to 24s. 7d. a bottle and the retail price is 35s. a whole bottle and 18s. 3d. a half-bottle.
In theory the high prices should lead to such a limitation in the demand for whisky that there will be adequate supplies for all, but in practice the amount available on the home market is so limited that quotas are imposed by all who sell it. It is almost impossible to buy whisky
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unless one has established a quota by having been a customer before the war, or something like that.
There is a medicinal need for spirits, especially whisky. [HON. MEMBERS: "Hear hear."] I do not think one need argue that. It is agreed by everyone. Equally, I think it is agreed by everyone that, rightly or wrongly, a stigma is felt by some people who have to enter a public house to buy a small quantity of whisky, or any other spirit which they require for medicinal purposes. It is much easier to go to one's grocer and collect it or to have it delivered with the rations.
I do not think that the Financial Secretary did anything to defend the monopoly position of public houses. He referred to it frankly as a semi-monopoly. It seems to be an almost complete monopoly. The only defence was that, at some distant time in the past, something more—which he was not able to define—some element in the licence duty was paid in respect of their right to sell quarter and miniature bottles of spirits. Surely this cannot be a very valuable concession. Present arrangements seem to most of us here to be indefensible, hopelessly complicated, and extremely difficult to enforce. For those reasons, I ask the hon. Gentleman to have another look at this matter.
Lieut.-Commander Gurney Braithwaite: The Financial Secretary said a few minutes ago that the Government have no strong feeling on this matter. I think that we can fairly add that he produced no strong arguments against this new Clause. As I understood the hon. Gentleman, he leaned with comfort on the strong differences of opinion between those who hold on-licences and those who hold off-licences. But is that really the case?
I do not know what has been the experience of other hon. Members. We all have licensed victuallers in our constituencies and I have never found them to be backward in voicing grievances. I have never found them slow to make comments on Finance Bills. This new Clause has been on the Order Paper for a long time, and I have received not a single communication from any licensed victualler in opposition to it. It may be that other hon. Members have had a different experience,

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but I represent a fairly large urban division, and no opposition to this suggestion has come my way.
I wonder whether the Treasury have made any attempt to discuss this matter between the two representatives—the licensed victuallers and the grocers—to see if there really is this strong feeling which the Financial Secretary suggests. After all, here is one of the very few proposals with which the Government have to contend between now and the end of the Committee stage, which, as far as I can discover, will not cost the Revenue much at all. The hon. Gentleman did not adduce the argument that there would be a loss of revenue if he were to give this concession.
The arguments put forward from both sides of the Committee have not received the consideration which the Government might have given to them. I should have thought that the case had been made out by my hon. Friend the Member for Croydon, East (Sir H. Williams) and my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) that we have now moved into an era where the cost of alcohol is such that the half-bottle concession made in 1933 has largely ceased to benefit those who buy spirits from off-licences.
I can well remember a Somerset publican discussing with me three of his customers. He told me that A was no good to him because he used to go in and buy one half-pint of beer, get hold of the evening paper and take two hours to drink the half-pint, depriving anyone else of the use of the paper; and that B drank five quick pints, got quarrelsome, created trouble in the bar, and was no good. "My best customer," said the licensee, "is C, the teetotaller, who comes round to my back door, buys half a bottle of Scotch and gets out of it quickly." In this instance, C would be catered for by the acceptance of this Clause.
I am sure that my hon. Friends are right when they say that there are still people who think that there is some kind of stigma attached to going to a public house. I well remember my mother, who was a teetotaller, saying that she felt that she had lost social caste by going to the public house to get brandy for the Christmas pudding, because she was
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asked if she was going to drink it on the spot or take it home. Many people feel in that way. This is not a question confined to this side of the Committee. I was about to say that I do not think that the argument used by the Financial Secretary holds water: it does not hold alcohol. I suggest that the Government should have another look at this question before we reach the Report stage.
The Chairman: I hope that the Committee will assist the Chair to make progress. We have a great many new Clauses to dispose of, and I hope that perhaps we may come to a decision on this one now.
Sir T. Moore: The Financial Secretary advanced so few, if any, arguments as to why he should not accept this Clause that it is left to the rest of us who feel strongly on this question to see whether we can produce further arguments to cause him to change his opinion. I really cannot understand the attitude of the Financial Secretary. Why does he refuse the persuasive arguments of my hon. Friend the Member for Croydon, East (Sir H. Williams)? It is simply because he says there is a difference of opinion between off-licence holders and on-licence holders. There is no question of principle, no question of loss or gain to the Exchequer, but simply a difference of opinion between two sections of the trade.
My hon. Friend the Member for Croydon, East, made such a convincing case that there is nothing more to be said except that possibly he did not tell the whole story. It may be said that this is largely an academic discussion since many of us have long since failed to see the contents of these bottles, either big or small; but one day we will come back to the possibility, the capacity and the ability.
Therefore, I shall try to deal with this question from two angles which have not yet been mentioned. My hon. Friend asked that the restriction on off-licence holders should be removed so that they may sell small bottles. His argument convinced the Committee, and I should imagine that it convinced the Financial Secretary himself, if he had the courage to say so.
While I agree that this restriction should be removed from the off-licence

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holder, at the same time we must realise that it would create a certain amount of injustice to the on-licence holder, in view of the respective licence duties which each has to pay. The off-licence holder only pays up to a maximum of £50 a year. The on-licence holder has to pay anything up to one-half of the annual value of his premises. Obviously, that cannot be fair. Therefore, why not either increase the licence duty on the off-licence holder, who will get more profit if this new Clause is accepted—because he will get more trade and there is no reason why he should not pay for it—or, alternatively reduce the licence duty on the on-licence holder to compensate him for the trade he loses? I imagine that the latter suggestion would be of far greater value both to the general public and the trade.
5.30 p.m.
Every speech on this Clause, each from its own angle, has been convincing in its favour and the Financial Secretary has made, as I have said, no convincing statement whatsoever as to why he opposes it. So I would ask him and the Chancellor—they are both intelligent men—to think again, and to arrive, possibly, at a different conclusion.
Mr. John Lewis (Bolton, West): Neither the Chancellor nor the Financial Secretary—nor, indeed, any Member of the Opposition—presumes that any of us on this side of the Committee who feel very strongly on this matter intend to go into the Division Lobby against the Government. However, having listened to the arguments—and I speak not only for myself, but for many other hon. Members on this side of the Committee—I am bound to tell the Government and the Committee that we are convinced that this anomaly should not be allowed to remain.
It has seemed to me for a good many years to have been an absurdity. All I am asking the Chancellor and the Financial Secretary to do is to tax their ingenuity in this matter. I do not ask them to make a decision now, but I hope that they will examine the suggestion put forward about increasing the licence in one case so as to be able to reduce it in another, to compensate for any loss. Many of us sitting on these benches think something should be done about this matter. We are not going to vote against the Government—[HON. MEMBERS: "Oh."] Of course not. We are not pre-
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pared on an issue of this kind to bring down the best Government this country has ever had. We do ask that the Chancellor and the Financial Secretary should examine the position to see if anything can be done about it on Report stage.
Sir J. Mellor: The Financial Secretary said that if this concession were granted to the off-licence holders there would be a demand for a reduction of duty by the on-licence holders. That might well follow, and probably would, but what I want to make clear is this. I have on the Order Paper a new Clause—(Increased reduction of duty on publicans' licences.) I understand that we shall have an opportunity of debating it later on. The Financial Secretary rather implied that that was the object of my new Clause.
I should like to make it entirely clear that the demand of the on-licence holders for a reduction of duty rests on a far wider basis than that, on general grounds of equity and not merely upon the issue whether or not this concession now requested for off-licence holders is granted. I thought it desirable that I should clear that up now so that it may be appreciated that, when the time comes for my new Clause to be discussed, we shall not be concerned with the issue under discusion at the moment.
Sir H. Williams: I am in somewhat of a difficulty because, in order to facilitate the convenience of the Lord Privy Seal—or the Minister of Materials—I am paired all day, so that I cannot initiate a Division; but in view of what has been said, I think that the Chancellor and his colleagues should look at this matter again. I think the fears of the publicans are not really justified. This will be of advantage, as has been pointed out, to the old dears who like to have a supply of brandy in the house in case of illness, and so on.
Possibly on Report stage the Government may do something about it. I cannot take part in a Division, and it is not for me, therefore, to make any suggestion that there should be a Division on this; but having regard to the unanimous view about this matter in the Committee, I would say we should not divide now, in order that the Chancellor may have an opportunity of turning the matter over in his mind, and of consulting with his on-licence friends to see whether he cannot induce them to agree with what is

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obviously the desire of virtually the whole of the Committee.
Mr. Jay: It is quite a mistake to suppose that all the licensees do not oppose this proposal. We have in the past year discussed it with both sides of the trade and the on-licensees, so far from being indifferent to it, oppose it, and oppose it very strongly. Indeed, I should not like to say that there is no force in their argument, for precisely the reason which the hon. Member for Sutton Coldfield (Sir J. Mellor) gave just now, that they would contend that if there were to be some diminution in this advantage they should get an advantage by way of reduction of licence duty. I am not suggesting that that is the only reason that could be advanced in favour of the new Clause down in the name of the hon. Member for Sutton Coldfield, but clearly that is an argument that might be used as strengthening the argument put by the on-licensees.
Therefore, the fact is that we have a clear conflict of interest, and that is why we came to the conclusion we did. In the course of the next year I see no reason why we should not hold similar consultations again, and if there were to be any sort of agreement whereby the conflict would be diminished, then, of course, a different situation would certainly arise.
Mr. Mellish: I did not intend to intervene, but in view of the Financial Secretary's statement, I think that something else ought to be said from this side of the Committee. If my hon. Friend is going to wait for an agreement to be arrived at between the on-licensees and the off-licensees, then before he has finished waiting for it he will be a very old man. But this is common sense. If the on-licence people had their way they would not allow any off-licence people at all.
However, forgetting all the nonsense about the old girls who like a little nip and all the stuff about medicines, the position is simply that one can buy a half bottle but cannot buy any bottle smaller than a half. Did any of us ever hear anything so silly? It does not need any imagination to see that this is an anachronism that should be wiped out. I appeal to my hon. Friend to look at this matter again. Do not let us wait for the
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brewers to tell us what to do. Let us tell the brewers.
Captain Crookshank (Gainsborouah): The case for this new Clause is overwhelming, and the Government will have seen that there is support from all sides of the Committtee for the proposition that in these days, whatever may be the history of the business, it is perfectly ridiculous that a certain number of people cannot sell smaller bottles whereas other people can sell smaller bottles. If nobody could sell any small bottles, there might be something to be said for the other argument. One could argue that it was dangerous to allow people to buy spirits in those minute quantities, and all the rest of it. But whereas one class of licence holders can sell the smaller bottles, another class of licence holders cannot because of an accident of the law.
It seems to me that this is a matter to be looked at again. Of course, as the hon. Member for Bermondsey (Mr. Mellish) said, there is a conflict of interest between the on-licence holders and the off-licence holders, and some of the on-licence holders by this concession might lose some of their custom. It is part of the argument of my hon. Friend the Member for Croydon, East (Sir H. Williams) that there are some customers—a small number of people—who would not go to an on-licence holder simply because for one reason or another, they do not like to go to a public house. That may be very true, but it is not an argument for doing nothing.
If the argument of the on-license holder is that the publicans ought to be compensated, it may be that their compensation could be through a reduction of the duty. It may be that, as a consequence of the reduction, there would be a fractional increase In consumption, and if there were that increase in consumption the right hon. Gentleman would benefit, and so get back on the roundabouts what he lost on the swings.
I hope that, even though he cannot concede it today, there is still time before the Report stage for further investigation to be made, in view of the unanimous view which has been expressed. Nobody has said anything to the contrary. Not even the hon. Member for Ealing, North (Mr. J. Hudson), has turned up to defend his well-known point of view. Indeed, hon. Gentlemen who support him hold

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exactly the same opinion as ourselves. Probably the right answer is to look at the position of both on- and off-licence holders to see whether at the end of the day this sensible suggestion may not be adopted.
Sir H. Williams: I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(Repayment of tax to CARRY INTEREST.)
In any case where upon proper application being made it is shown that a sum falls to be repaid or refunded to any person under any of the provisions relating to income tax, surtax, profits tax or excess profits tax, interest at the rate of three per cent, per annum from the date of such application until the date when the said sum is repaid or refunded shall be paid to the claimant by the Commissioners of Inland Revenue:
Provided that—

(i) where any such sum is repaid or refunded within three months from the date upon which application therefor is made, no interest thereon shall be paid;

(ii) interest shall not be payable under this section unless the total amount due to be repaid or refunded pursuant to such application exceeds one thousands pounds.—[Mr. Black.]

Brought up, and read the First time.
Mr. Black: I beg to move, "That the Clause be read a Second time."
The object of this new Clause is to remedy an obvious injustice from which the taxpayer suffers in the existing state of the law, because at the present time in certain circumstances the taxpayer is required to pay interest on taxes which are outstanding, although he has no right to receive interest on repayments which may be due to him from the Inland Revenue. The theme of this new Clause is, "Fair do's for all," or "What is sauce for the goose is sauce for the gander."
The charging of interest on unpaid taxes is a comparatively new conception which has become embodied in the law in comparatively recent years. I think that hon. Members on all sides will agree that it is a manifest injustice for money owed to the Revenue to carry interest while money owed by the Revenue does not carry interest. Surely, in regard to any series of two-way transactions we can accept the
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principle that either the transactions carry interest both ways or they carry interest neither way.
The present position can be justified only on the altogether obnoxious principle that what would be morally indefensible in dealings between individuals can become morally right in dealings between the State and the individual citizen. That is a conception of equity and justice which I feel quite certain will not be defended on either side of the Committee. The whole purpose of this new Clause is to put the Inland Revenue and the taxpayer on a precisely equal footing in their dealings one with the other.
It may be asked whether there is any delay on the part of the Inland Revenue in dealing with repayment claims, and in that connection I wish to bring to the notice of the Chancellor and the Committee three cases only. These three cases are selected, not because they are exceptional but because they are typical. The extent of the grievance is obviously not confined to these three cases but extends to literally tens of thousands, if not hundreds of thousands of cases, throughout the country, where there is undue delay in making repayments to which taxpayers are entitled.
The first of the three cases concerns a charity. It is a very simple straightforward case of a charity which is entitled to receive repayment of tax on its income, several thousands of pounds being involved. I have here the letter written by the inspector of taxes to the firm of chartered accountants acting for the charity:
"I have received your letter of the 11th September, 1950, and am sorry it is not yet possible to make repayment. The delay is caused by the present volume of claims and correspondence. Claims are being examined in turn, and a receivable order in settlement of your claim will he sent as soon as possible."
5.45 p.m.
The second case concerns a farm in Surrey, in which a repayment of tax of no less than about £15,000 was involved. The farmer's accounts for the year ended September, 1948, were submitted to the inspector of taxes and a claim for repayment was made early in 1949, but the first repayment of tax was made about 18 months later, on 15th September, 1950, so that the farmer was out of interest on about £15,000 for a period of rather more than 18 months.

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The third and last case that I want to bring to the notice of the Committee is that of a business concern, a limited company. I want, if I may, to read the letter written to the company from a member of one of the leading firms of chartered accountants in the City of London who was endeavouring to obtain large repayments of tax due to the company. This is what the accountant writes:
"I have for some time now been considerably concerned with the position of the tax reclaims on the above company, and I think the time has come when I must ask for your instructions on this matter. The position is that there are a number of years' claims outstanding, up to and including 1945–46. Unfortunately, in spite of many reminders we were unable to get the inspector to deal with our letter of the 8th January, 1947, and in fact we did in one of our letters suggest that we might approach Somerset House for satisfaction. This did have the effect of getting the matter moving, and in August, 1947, we had an appointment with the inspector, when we found there was a great deal of further information which he wished to have before he could consider the matter closed. We went to the trouble of giving him all the information which he had asked for, much of which required research into our old file, during which we found that he had had the information on previous occasions. After some similar correspondence we finally, on the 8th April, 1948, sent him a very long letter indeed with all the further particulars which he required, together with an up-to-date statement of the 1945–46 and 1946–47 Schedule A assessments. In spite of numerous reminders, both by letter and telephone, we are still awaiting a reply to that letter of the 8th April, 1948."
It was about 15 months later, on 2nd June, 1949, when the accountant was writing:
"We understand that in the interim the inspector in charge of the case died, and the new inspector informs us that our case is far from being the oldest in the district, and that he is having extreme difficulties in the takeover owing to shortage of staff combined with the fact that all the cases were extremely far behind, but that he would do all that he possibly could to deal with it as soon as possible.
I may say that I have gone to the length of asking for a payment on account in order to do justice to my client without unduly pressing the inspector in his difficulty, and have even gone so far as to prepare a statement showing what I estimate to be the amount of repayment due to the company. I understand that at the moment of writing my letter of the 8th April, 1948. has not yet been taken up for attention."
I think that it will be agreed that these three examples out of tens or hundreds of thousands which could be given indicate a lamentable state of affairs, and a
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state of affairs which is a great injustice to the taxpayers concerned. All that I am submitting in the Clause is that the Revenue, in -cases of that kind, should be required to pay interest to the taxpayer on repayments which are overdue, on exactly the same terms and conditions as the taxpayer is liable to pay interest on taxes which he owes to the Revenue.
May I, in conclusion, because I promised to be as brief as possible, draw attention to the following characteristics of the present position? First, the speed with which the Inland Revenue refunds money is in inverse ratio to the speed with which the Inland Revenue collects it. If the office of an individual inspector of taxes becomes overworked as a result of under-staffing, or any other circumstance, it is never the collection of taxes which falls behind, but always the repayment of taxes which is allowed to get into arrears.
Mr. Douglas Houghton: The hon. Gentleman must not believe that.
Mr. Black: I submit to the Committee, with the utmost confidence, that more effort is put into collecting money due in 1951 than in making repayments due in 1948, 1949 and 1950. Second, it is not without significance that many of the Departments that deal with repayments of taxes have been moved away from the City of London to distant parts of the country, and, therefore, it may be pertinent to inquire, or to wonder, whether their removal from the place in which the majority of the persons making repayment claims carry on their businesses is not due to a desire to put them as far as possible away from the personal attention of members of the public who might otherwise be waiting on their doorsteps with a view to obtaining repayments of taxes long overdue to them.
As my third and final point, I submit to the Chancellor that the present system confers an advantage on delay, the use of money properly belonging to the taxpayer being retained to finance the operations of the Chancellor of the Exchequer. I do not think that any reasonable case can be advanced against this Clause. It seems to me to be the very essence and substance of justice to put the taxpayer in the same position—not a better position and not a worse position—as the Inland Revenue where there are transactions both ways between the parties.
The Chancellor of the Exchequer (Mr. Gaitskell): The hon. Member for Wimbledon (Mr. Black), in moving this Clause, based his argument, as I think he will agree, entirely on the apparent discrepancy between the provisions of the 1947 Finance Act, under which interest is charged where taxes are in arrear after three months from the payable date, and the position where taxes are due to be repaid by the Inland Revenue and there is no interest charge in that case on the Inland Revenue.
The hon. Member overlooked, however, one very important difference between the wording of the new Clause and the wording of the 1947 Finance Act. In the case of the 1947 Finance Act, interest has to be paid when the tax liability is finally settled; that is, after the arguments, after the negotiations and after any appeals that there may be. Not until then is interest charged; whereas in the case of the proposed Clause the hon. Gentleman argues that interest on repayments should be paid within three monthe of the date of the application for repayment. I think that I am right in saying that all the examples which he gave of delays were of delays before the question of how much should be repaid and whether it should be repaid at all was, or was not, finally settled.
Mr. Black: That is the fault of the Inland Revenue and not the fault of the taxpayer.
Mr. Gaitskell: Naturally that is the hon. Gentleman's claim. There is this important difference. It is one thing to say that interest shall be paid out from three months after the point when the final liability either way is settled and agreed by everyone concerned. There may be a case for that; but there would not be any need for it, because, so far as I know, there have not been any complaints against the Inland Revenue of not paying immediately a claim has been settled. The complaint is that it takes a very long time to get claims settled. We recognise that in the immediate postwar years there were delays—I will not deny that—but that is not an argument for making the Inland Revenue pay interest within three months of the date of application. We cannot accept that.
Nor can I accept the argument that the Inland Revenue take a long time in
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making up their minds about repayment, while they are tremendously quick in collecting taxes. I would hope in absolute terms they would spend more time on collecting taxes than in repayment; we should be in a bad way if they did not. All the same there is no doubt that there is considerable delay in collecting taxes and that occasionally taxpayers help in causing that delay, but we do not charge them interest until the liability is finally settled. I do not think that a case has been made for the Clause, and I am afraid that I cannot accept it.
Mr. Bell: Can the right hon. Gentleman assist me by explaining where in the Finance Act, 1947, the taxpayer is not under a liability to pay interest until the liability for tax is agreed by him? I think that the right hon. Gentleman said that in his speech. My impression was that the taxpayer could not disembarrass himself of any liability to pay interest by preventing a final determination being made until legal proceedings were started.
Mr. Gaitskell: The taxpayer has the right of appeal, and if he appeals interest is not charged until three months after the appeal has been settled.
Mr. John Hay: The Chancellor's argument in opposing this new Clause, which the hon. Member for Wimbledon (Mr. Black) has clearly explained, seemed to be based on the issue that, whereas when the Inland Revenue were claiming money from the taxpayer it was only when the account was finally settled that interest became payable, that consideration ought not to apply when the situation was the other way round; and that is, that when it was the Inland Revenue that owed money, the taxpayer should not be given the benefit of interest. That may be one way of looking at it.
I suggest that the right hon. Gentleman has forgotten that in the first case where the taxpayer owes the Inland Revenue money, on the final settlement interest is back-dated to the original time when the dispute arose, and that is what the hon. Member for Wimbledon had in mind when he put into the new Clause the time-limit of three months. I think that the right hon. Gentleman ought to have given us a little better explanation of what he thought of the principle involved here.

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It is all very well for him to say that the Clause as drafted does not meet with his approval, and to get away with it on a technicality of the sort that he put to the Committee, but I think that we ought to know his answer to the very important and cogent point which my hon. Friend put; namely, whether we are to have one law for the Inland Revenue and another law for the taxpayer? If, in fact, it is said that we are trying to set up an entirely new constitutional principle, we have to remember that these questions of repayment of taxes, whether by the Revenue or the taxpayer, arise only where there is a dispute about the amount of tax payable.
6.0 p.m.
I would say if such a dispute arises, it is only fair that when a case is finally determined, if one side is found to be in error then that side should be obliged to pay interest upon the amount outstanding, whether it be the Revenue or the taxpayer. The right hon. Gentleman should have dealt with that point. He might have said, for example, that whereas he could not entirely agree with the way the Clause is drafted, he appreciated that there was a substantial point in it and he was prepared to consider it.
May I put a final point to the right hon. Gentleman? My hon. Friend did not point out to the Committee—perhaps it was unnecessary, as this is on the Order Paper—that the Clause would apply only in cases where the amount owing by the Revenue was over £1,000. These are not cases of small amounts upon which interest would be claimed by the taxpayer; they are cases of larger payments where there is a substantial dispute. I suggest that the right hon. Gentleman ought to tell us that between now and the Report stage he will think about the matter once more, because what he has said does not deal with our argument, and I hope that my hon. Friends will not let the Chancellor get away with it.
Mr. Frederic Harris: I want to intervene for only a few moments, because my hon. Friend for Wimbledon (Mr. Black) put his case very clearly and it has not been answered by the Chancellor. The Chancellor said that the date of interest charged was from the time of the settlement. That was not true, even in the Special Contribution when the Revenue went straight
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back to 1st January, 1948, even though the assessments were not agreed for some considerable time after that. Indeed, some of them lasted for two years afterwards and when the dispute was over automatically the interest was dated from 1st January, 1948. That is a typical case where the Inland Revenue had the advantage in charging the interest.
I cannot imagine there is any hon. Member who has not been approached very frequently about tax problems and appeals, and in every case the decision always goes in favour of the Revenue from the point of view of the speed of the settlement. I do not disagree with the Chancellor that once the claim has been recognised, payment is pretty speedy. That is the experience of most of us in this Committee, but it generally takes a tremendous time to get to the date of settlement. Surely if the tax authorities were to be responsible for paying any interest on unpaid tax repayments due, the result would be a speeding up of the decisions.
I feel that this is a matter of principle and that the Chancellor has artfully put it on one side. He has not dealt with the point that was so clearly brought forward by my hon. Friend. What we are in some doubt about is that there might be something in this period of three months, or whatever period is suggested. We think that the Revenue and the taxpayer should be put on an equal footing. Surely, there can be no argument in reply to such a case. If the Chancellor were prepared to say that he concedes in all fairness that at a certain level or at a certain date interest on the same basis as is charged by the Revenue should be available to the taxpayer, then many of us on this side would consider that he was trying to meet the point of view which concerns so many of us. It is a matter very worthy of consideration.
I am beginning to think that we put ourselves very much in the hands of the Civil Service, who are taking full advantage of the laws that are created here and who are not being at all fair to the taxpayers as a whole. I am sure that many hon. Members must be finding it increasingly difficult, with the laws that are made in the House, to see that fair play is given to all their constituents.
I wish to support in the strongest possible manner the excellent case made by

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hon. Friend and those who have spoken on this matter. I ask the Chancellor to be good enough to recognise the principle here and, if it is not possible for him to deal with it at this stage, to express his willingness to consider it between now and the Report stage. We think that this interest should be paid at a certain given date. When the Chancellor tried to show that in many instances it was only from the date of settlement that interest was charged, I quoted the Special Contribution to him to prove that the statement was not an accurate one.
Mr. Houghton: I shall not detain the Committee more than a few minutes, but naturally I am very sensitive of criticism made about the Inland Revenue. The real remedy for this problem is not to keep the taxpayers waiting three months for their money. It is no particular satisfaction to the taxpayer to get interest on a large sum for which he is waiting. It is the money, not the interest, that he wants.
I regret as much as anyone that delays have occurred in particular cases. If I may say so, there are nothing like hundreds of thousands of cases of these large amounts. I believe that the total amount of tax repaid each year is in the neighbourhood of £42 million. It is quite obvious that there could not be hundreds of thousands of cases where the amount of tax to be paid exceeds £1,000.
The Inland Revenue have been going through many difficulties. The Department dealing with charity claims, for instance, was evacuated to Llandudno during the war and only a few months ago there was another major upheaval in it because it was moved to the neighbourhood of Liverpool. That is part of the Government's dispersal of staffs, which before the war were concentrated in London, and which, if they returned to it, would create a formidable risk to administration, in that they would be exposed to the danger of bombing in another war. [Interruption.] It may, of course, satisfy the desires of hon. Members opposite to know that anything to do with the Inland Revenue should be put as near the enemy as possible, so that when the guns went off they would be the first to be blown up. Hon. Members can have it that way if they like, but
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the business of the country must be carried on and the revenue must be collected.
I suggest that repayment claims should now be restored to the position of priority in Inland Revenue, which they had before the war. When there was a repayment claim of any amount which was subject to more than a three months' delay, there was a special investigation. The standards of work in the Inland Revenue are slowly being brought back to pre-war level, but there are shortages of skilled and experienced staff. The remedy is not to keep the people waiting, and there would not be the slightest reason why they should be kept waiting if the Department were better staffed and equipped to do its job.
Mr. Hay: Would not the hon. Gentleman agree that one of the quickest ways of bringing that about would be for the Inland Revenue to be obliged to pay interest on money outstanding?
Mr. Houghton: To be quite frank, I really do not think the payment of interest would worry the Inland Revenue. The important thing is that the standard of service should be brought up to the prewar level, and that is a process which the Department is now trying to achieve.
Mr. Oliver Lyttelton: I do not often find myself in agreement with the hon. Member for Sowerby (Mr. Houghton) but I agree with many of the things that he has said this afternoon about the Inland Revenue. Nevertheless, the Inland Revenue has become responsible for intolerable delays which are within the knowledge of every Member of the Committee. It is completely wrong that interest should not be paid on these amounts.
The Chancellor of the Exchequer has tried to ride off upon an extremely small debating point on something which is a matter of principle. I do not disagree with the hon. Member for Sowerby that the cure is to try to bring the Inland Revenue up to the standard which it had when he left it to come to this House. That is no doubt the desirable object which we all have in mind. While that objective is being attained, and while so much more work is being put on the Inland Revenue, it is only fair to ask that the lack of expedition which the

87
Inland Revenue displays should be met by the taxpayers getting interest on their money.
It is no argument to reply that what the taxpayer wants is his money. We all knew that before, but at least he should be entitled to have interest. I feel very
strongly that the answers which the Chancellor of the Exchequer has given are not good enough. I shall advise my hon. Friends to press the matter to a Division.
Question put, "That the Clause be read a Second time."
The Committee divided: Ayes. 264: Noes, 279.

Division No. 139.)

AYES

(6.13 p.m.

Aitken, W. T.

Eden, Rt. Hon. A

Lindsay, Martin

Alport, C. J. M.

Erroll, F. J.

Llewellyn, D.

Amery, Julian (Preston, N.)

Fisher, Nigel

Lloyd, Rt. Hon. G. (King's Norton)

Amory, Heathcoat (Tiverton)

Fletcher, Walter (Bury)

Lloyd, Selwyn (Wirral)

Arbuthnot, John

Fort, R

Lockwood, Lt.-Col. J. C.

Ashton, H. (Chelmsford)

Foster, John

Longden, Gilbert (Herts, S.W.)

Assheton, Rt. Hon. R. (Blackburn, W.)

Fraser, Hon. Hugh (Stone)

Low, A. R W.

Baker, P. A. D.

Fraser, Sir Ian (Morecambe & Lonsdale)

Lucas, P. B. (Brentford)

Baldock, It-Cmdr. J. M

Fyfe, Rt. Hon. Sir David Maxwell

Lucas-Tooth, Sir Hugh

Baldwin, A. E.

Gage, C. H.

Lyttelton, Rt. Hon. O

Banks, Col. C.

Galbraith, Cmdr. T. D. (Pollok)

McAdden, S. J.

Baxter, A. B.

Galbraith, T. G. D. (Hillhead)

McCorquodale, Rt. Hon. M S

Beamish, Maj. Tufton

Gammans, L D.

Mackeson, Brig. H. R.

Bell, R. M.

Garner-Evans, E. H (Denbigh)

McKie, J. H. (Galloway)

Bennett, Sir Peter (Edgbaston)

Gates, Maj. E. E.

Maclay, Hon. John

Bennett, Or. Reginald (Gosport)

Gomme-Duncan, Col. A

Maclean, Fitzroy

Bennett, William (Woodside)

Gridley, Sir Arnold

MacLeod, lain (Enfield, W.)

Bevins, J. R. (Liverpool, Toxteth)

Grimston, Hon. John (St. Albans)

MacLeod, John (Ross and Cromarty)

Birth, Nigel

Grimston, Robert (Westbury)

Macmillan, Rt. Hon. Harold (Bromley)

Bishop, F. P.

Hare, Hon. J. H. (Woodbridge)

Maitland, Cmdr. J. W.

Black, C. W.

Harris, Frederic (Croydon, N.)

Manningham-Buller, R. E

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

Harris, Reader (Heston)

Marlowe, A. A. H.

Boothby, R.

Harvey, Air Cdre. A. V. (Macclesfield)

Marples, A. E.

Bossom, A. C.

Harvey, Ian (Harrow, E.)

Marshall, Douglas (Bodmin)

Boyd-Carpenter, J. A

Harvie-Watt, Sir George

Maude, Angus (Ealing, S.)

Boyle, Sir Edward

Hay, John

Maude, John (Exeter)

Bracken, Rt. Hon. B

Head, Brig. A. H.

Maudling, R-

Braine, B. R.

Headlam, Lt.-Col. Rt. Hon. Sir Cuthbert

Medlicott, Brig. F

Braithwaite, Sir Albert (Harrow, W.)

Heald, Lionel

Meltor, Sir John

Braithwaite, Lt.-Cr. G. (Bristol, N.W.)

Heath, Edward

Molson, A. H. E.

Bromley-Davenport, Lt.-Col. W.

Henderson, John (Cathcart)

Monckton, Sir Walter

Brooke, Henry (Hampstead)

Hicks-Beach, Maj. W W.

Moore, Lt.-Col. Sir Thomas

Browne, Jack (Govan)

Higgs, J. M. C.

Morris, Hopkin (Carmarthen)

Buchan-Hepburn, P. G. T.

Hill, Dr. Charles (Luton)

Morrison, John (Salisbury)

Bullus, Wing Commander E E

Hill, Mrs. E. (Wythenshawe)

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

Burden, F. A.

Hinchingbrooke, Viscount

Mott-Radclyffe, C. E

Butcher, H. W.

Hirst, Geoffrey

Nabarro, G.

Carr, Robert (Miteham)

Hollis, M. C.

Nkholls, Harmar

Channon, H.

Holmes, Sir Stanley (Harwich)

Nicholson, G.

Churchill, Rt. Hon. W. S.

Hope, Lord John

Nield, Basil (Chester)

Clarke, Col. Ralph (East Grinstead)

Hornsby-Smith, Miss P.

Noble, Cmdr. A. H. P

Clarke, Brig. Terence (Portsmouth, W.)

Horsbrugh, Rt. Hon. Florence

Nugent, G. R. H.

Colegate, A.

Howard, Gerald (Cambridgeshire)

Nutting, Anthony

Conant, Maj. R. J. E.

Howard, Greville (St. Ives)

Oakshott, H. D

Cooper, Sqn. Ldr. Albert (llford, S.)

Hudson, Sir Austin (Lewisham, N.)

Oday, G. W.

Cooper-Key, E. M,

Hudson, Rt. Hon. Robert (Southport)

O'Neill, Rt. Hon. Sir Hugh

Corbett, Lt.-Col. Uvedale (Ludlow)

Hudson, W. R. A. (Hull, N.)

Ormsby-Gore, Hon. W. D.

Craddock, Beresford (Spelthorne)

Hulbert, Wing Cmdr N. J

Orr, Capt. L. P. S.

Cranborne, Viscount

Hurd, A. R.

Orr-Ewing, Ian L. (Weston-super-Mare)

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

Hutchinson, Geoffrey (llford, N.)

Osborne, C.

Crosthwaite-Eyre, Col. O. E.

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

Peake, Rt. Hon. O.

Crouch, R. F.

Hutchison, Col. James (Glasgow)

Perkins, W. R. D.

Crowder, Capt. John (Finchley)

Hyde, Lt.-Col. H. M.

Peto, Brig. C. H. M

Crowder, Petre (Ruislip—Northwood)

Hylton-Foster, H. B.

Pickthorn, K.

Cundiff, F. W.

Jeffreys, General Sir George

Pitman, I. J.

Darling, Sir William (Edinburgh, S.)

Jennings, R.

Powell, J. Enoch

Davidson, Viscountess

Johnson, Howard (Kemptown)

Price, Henry (Lewisham, W.)

Davies, Nigel (Epping)

Jones, A. (Hall Green)

Prior-Palmer, Brig. O

de Chair, Somerset

Joynson-Hicks, Hon. L. W.

Profumo, J. D

De la Bere, R.

Kaberry, D.

Raikes, H. V

Deedes, W. F.

Kerr, H. W. (Cambridge)

Rayner, Brig. R

Dormer, P. W.

Lambert, Hon. G.

Redmayne, M.

Drayson, G. B.

Lancaster, Col. C. G

Remnant, Hon P

Drewe, C.

Langford-Holt, J.

Renton, D. L. M.

Dugdale, Maj. Sir T. (Richmond)

Law, Rt. Hon. R. K.

Roberts, Maj. Peter (Heeley)

Duncan, Capt. J. A. L.

Leather, E. H. C.

Robertson, Sir David (Caithness)

Duthie, W. S.

Legge-Bourke, Maj. E. A. H

Robinson, Roland (Blackpool, S.)

Eccles, D. M.

Lennox-Boyd, A. T.

Robson-Brown, W

Rodgers, John (Sevenoaks)

Stoddart-Scott, Col. M.

Vaughan-Morgan, J K

Roper, Sir Harold

Storey, S.

Vosper, D. F.

Ropner, Col. L.

Stuart, Rt. Hon. James (Moray)

Wade, D. W.

Russell, R. S.

Summers, G. S

Wakefield, Edward (Derbyshire, W,

Ryder, Cap). R. E. D

Sutcliffe, H.

Wakefield, Sir Waved (Marylebone),

Salter, Rt. Hon. Sir Arthur

Taylor, Charles (Eastbourne)

Walker-Smith, D. C

Sandys, Rt. Hon. D

Taylor, William (Bradford, N.)

Ward, Hon. George (Worcester)

Savory, Prof. D. L

Teeling, W.

Ward, Miss I. (Tynemouth)

Scott, Donald

Teevan. T. L.

Waterhouse, Capt. Rt Hon. C

Shepherd, William

Thomas, J. P. L. (Hereford)

Watkinson, H.

Smiles, Lt.-Col. Sir Walter

Thompson, Kenneth Pugh (Walton)

Webbe, Sir H. (London & Westminster)

Smithers, Peter (Winchester)

Thompson, Lt.-Cmdr R. (Croydon, W.)

Wheatley, Maj. M. J. (Poole)

Smihers, Sir Waldron (Orpington)

Thorneyoroft, Peter (Monmouth)

Williams, Charles (Torquay)

Smyth, Brig. J. G. (Norwood)

Thornton-Kemsley, Col C N

Williams, Gerald (Tonbridge)

Soames, Capt. C.

Thorp, Brig. R. A. F.

Wills, G

Spearman, A, C. M.

Tilney, John

Wilson, Geoffrey (Truro)

Spens, Sir Patrick (Kensington, S.)

Touche, G. C.

Winterton, Rt. Hon Earl

Stanley, Capt. Hon. Richard (N. Fylde)

Turner, H. F. L.

Wood, Hon. R.

Stevens, G. P.

Turton, R. H.

York, C.

Steward, W. A. (Woolwich, W.)

Tweedsmuir, Lady

Stewart, Henderson (Fife, E.)

Vane. W M F.

TELLERS FOR THE AYES:

Mr. Studholme and Mr. Digby.

NOES

Adams, Richard

Deer, G

Hudson, James (Ealing, N.)

Albu, A. H.

Delargy, H. J

Hughes, Emrys (S. Ayrshire)

Allen, Arthur (Bosworth)

Diamond, J.

Hughes, Hector (Aberdeen, N.)

Allen, Scholefield (Crewe)

Dodds, N. N.

Hughes, Moelwyn (Islington, N I

Anderson, Alexander (Motherwell)

Driberg, T. E. N.

Hynd, J. B (Attercliffe)

Anderson, Frank (Whitehaven)

Dugdale, Rt Hon. J. (W. Bromwich)

Irvine, A. J. (Edge Hill)

Awbery, S. S.

Dye, S.

Irving, W. J. (Wood Green>

Ayles, W. H.

Ede, Rt. Hon. J. C.

Isaacs, Rt. Hon G. A

Bacon, Miss Alice

Edwards, John (Brighouse)

Janner, B.

Baird, J.

Edwards, Rt. Hon. Ness (Caerphilly)

Jay, D. P. T

Balfour, A.

Edwards, W. J. (Stepney)

Jeger, George (Goole)

Barnes, Rt. Hon A J

Evans, Albert (Islington, S.W.)

Jeger, Dr. Santo (St. Pancras. S)

Bartley, P.

Evans, Edward (Lowestoft)

Jenkins, R. H,

Belienger, Rl. Hon. P. J

Evans, Stanley (Wednesbury)

Johnston, Douglas (Paisley)

Benn, Wedgwood

Ewart, R.

Jones, David (Hartlepool)

Benson, G.

Femyhough, E.

Jones, Frederick Elwyn (W. Ham S)

Bevan, Rt. Hon. A (Ebbw Vale)

Field, Capt. W J

Jones, Jack (Rotherham)

Bing, G H. C.

Finch, H. J

Jones, William Elwyn (Conway)

Blenkinsop, A

Fletcher, Eric (Islington, E)

Keenan, W

Blyton, W. R

Follick, M.

Kenyon, C.

Boardman, H

Foot, M. M

Key, Rt. Hon. C W

Booth, A.

Forman, J. C.

King, Dr. H. M

Bottomley, A. G

Fraser, Thomas (Hamilton)

Kinley, J.

Bowden, H. W.

Freeman, John (Watford)

Lang, Gordon

Bowles, F. G. (Nuneaton)

Freeman, Peter (Newport)

Lee, Frederick (Newton)

Braddock, Mrs. Elizabeth

Gaitskell, Rt. Hon H. T. N

Lee, Miss Jennie (Cannock)

Brook, Dryden (Halifax)

Ganley, Mrs. C. S.

Lever, Harold (Cheetham)

Brooks, T. J. (Normanton)

George, Lady Megan Lloyd

Lever, Leslie (Ardwick)

Broughton, Dr. A. D. D.

Gibson, C. W.

Lewis, Arthur (West Ham, N

Brown, Rt. Hon. George (Belper)

Gilzean, A.

Lewis, John (Bolton, W.)

Brown, Thomas (Ince)

Gooch, E. G

Lindgren, G. S.

Burton, Miss E.

Gordon-Walker, Rt. Hon. P. C.

Logan, D. G.

Butler, Herbert (Hackney, S)

Greenwood, Anthony (Rossendale)

Longden, Fred (Small Heath)

Callaghan, L. J.

Greenwood, Rt. Hon. Arthur (Wakefield)

McAllister, G

Carmichael, J.

Grenfell, Rt. Hon. D. R.

MacColl, J. E

Castle, Mrs. B. A

Grey, C F

McGhee, H G.

Champion, A. J.

Griffiths, David (Rother Valley)

McGovern, J.

Chetwynd, G R

Griffiths, Rt. Hon James (Llanelly)

McInnie, J.

Clunie, J

Griffiths, William (Exchange)

Mack, J. D.

Cocks, F. S.

Grimond, J.

McKay, John (Wallsend)

Coldrick, W.

Gunter, R, J.

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

Collick, P.

Haire, John E. (Wycombe)

McLeavy, F.

Collindridge, F

Hale, Joseph (Rochdale)

MacMillan, Malcolm (Western Isles)

Cook, T. F.

Hale, Leslie (Oldham, W.)

McNeil, Rt. Hon. H.

Cooper, Geoffrey (Middlesbrough, W.)

Hall, Rt. Hon. Glenvil (Colne Valley)

MacPherson, Malcolm (Stirling)

Cooper, John (Deptford)

Hall, John (Gateshead. W.)

Mainwaring, W. H

Corbet, Mrs. Freda (Peckham)

Hamilton, W. W

Mallalieu, J. P. W (Huddersfield, E)

Cove, W. G.

Hardy, E. A

Mann, Mrs. Jean

Craddock, George (Bradford, S.)

Hargreaves, A

Manuel, A. C

Crosland, C. A. R.

Hastings, S.

Marquand, Rt. Hon H A

Grossman, R. H S

Hayman, F. H

Mathers, Rt. Hon G

Cullen, Mrs. A.

Henderson, Rt. Hn Arthur (Tipton)

Mayhew, C. P

Daines, P.

Harbison, Miss M.

Mellish, R. J

Dalton, Rt. Hon. H.

Hewitson, Capt. M.

Messer, F.

Darling, George (Hillsborough)

Hobson C. R.

Middleton, Mrs, L

Davies, A. Edward (Stoke, N.)

Holman, P.

Mikardo, Ian

Davies, Harold (Leek)

Holmes, Horace (Hemsworth)

Mitchison, G. R

Davies, Stephen (Merthyr)

Houghton, D

Moeran, E. W

de Freitas, Geoffrey

Hoy, J

Monslow, W

Moody, A. S.

Rhodes, H.

Ungoed-Thomas, Sir Lynn

Morgan, Dr. H. B

Richards, R.

Vernon, W. F.

Morley, R.

Roberts, Goronwy (Caernarvonshire)

Viant, S. P.

Morris, Percy (Swansea, W.)

Robertson, J. J. (Berwick)

Wallace, H. W.

Morrison, Rt. 'Hon. H. (Lewisham, S.)

Robinson, Kenneth (St. Pancras, N.)

Watkins, T. E.

Mori, D. L.

Rogers, George (Kensington, N.)

Webb, Rt. Hon. M. (Bradford, C.)

Moyle, A.

Royle, C.

Weitzman, D.

Mulley, F. W,

Shackleton, E. A. A.

Wells, Percy (Faversham)

Murray, J. D.

Shurmer, P. L. E.

Wells, William (Walsall)

Nally, W.

Silverman, Julius (Erdington)

West, D. G.

Neal, Harold (Bolsover)

Silverman, Sydney (Nelson)

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

Noel-Baker, Rt. Hon. P. J

Simmons, C. J.

White, Mrs. Eirene (E. Flint)

Oldfield, W. H.

Slater, J.

White, Henry (Derbyshire, N.E.)

Oliver, G. H.

Smith, Ellis (Stoke, S.)

Whiteley, Rt. Hon. W.

Orbach, M.

Smith, Norman (Nottingham, S.)

Wigg, G.

Padley, W. E.

Sorensen, R. W.

Wilcock, Group Capt. C. A. B

Paget R. T.

Soskice, Rt. Hon. Sir Frank

Wilkes, L.

Paling, Rt. Hon. Wilfred (Dearne V'lly)

Sparks, J. A.

Willey, Frederick (Sunderland)

Paling, Will T. (Dewsbury)

Steele, T.

Willey, Octavius (Cleveland)

Pannell, T, C.

Stewart, Michael (Fulham, E.)

Williams, David (Neath)

Pargiter, G. A

Strauss, Rt. Hon. George (Vauxhall)

Williams, Rev. Llywelyn (Abertillery)

Parker, J.

Stross, Dr. Barnett

Williams, Ronald (Wigan)

Pearson, A.

Summerskill, Rt. Hon. Edith

Williams, Rt. Mon. Thomas (Don V'lly)

Pearl, T. F.

Sylvester, G. O.

Williams, W. T. (Hammersmith, S.)

Poole, C.

Taylor, Bernard (Mansfield)

Wilson, Rt. Hon. Harold (Huyton)

Popplewell, E.

Taylor, Robert (Morpeth)

Winterbottom, Ian (Nottingham, C.)

Porter, G.

Thomas, David (Aberdare)

Winterbottom, Richard (Brightside)

Price, Philips (Gloucestershire, W.)

Thomas, George (Cardiff)

Wise, F. J.

Proctor, W. T.

Thomas, lorwerth (Rhondda, W.)

Woodburn, Rt. Hon A

Pryde, D. J.

Thomas, Ivor Owen (Wrekin)

Woods, Rev. G. S

Pursey, Cmdr. H

Thorneycroft, Harry (Clayton)

Wyatt, W. L.

Rankin, J.

Thurtle, Ernest

Yates, V. F.

Rees, Mrs. D.

Timmons, J.

Reeves, J.

Tomney, F.

TELLERS FOR THE NOES:

Reid, William (Camlachie)

Turner-Samuels, M.

Mr. Harmon and Mr. Wilkins.

New Clause.—(APPORTIONMENT OF LOSSES IN CONNECTION WITH TRADE CARRIED ON BY EXECUTORS OR TRUSTEES.)
(1) Where a loss is sustained in any trade, profession or vocation carried on by executors or trustees pursuant to the terms or provisions of a will of a deceased person, such loss, insofar as relief in respect thereof cannot be given to such executors or trustees under section thirty-four of the Income Tax Act, 1918, shall he apportioned amongst the persons to whom profits would have been properly payable if such had been made in the period in which the loss was sustained.
(2) Any such loss shall be apportioned among the said persons according to the rights and interests they would have had in any such profits.
(3) Any person to whom any part of such a loss has been apportioned as aforesaid shall be entitled to treat the amount thereof as a loss sustained by him in a trade, profession or vocation and to claim relief under section thirty-four of the Income Tax Act, 1918. accordingly.
(4) The provisions of Part III of the Finance Act, 1938, shall be applied with any necessary modifications.—[Mr. Heath.]
Brought up, and read the First time.
Mr. Edward Heath: I beg to move, "That the Clause be read a Second time."
The purpose of the Clause is to remove an anomaly arising from Part III of the Finance Act, 1938—which deals with
92
taxation and the administration of estates—when executors have to carry on a business under the terms of a will and the business then makes a loss. As a result of the anomaly considerable hardship is inflicted upon those who are affected. Their numbers may be comparatively small, but it is nevertheless a hardship on those individuals who are the beneficiaries under the will.
A testator may very often decree under his will that a family business shall be carried on. It may be that it has to be carried on for a limited or an unlimited time. It very often has to be carried on until one of his children reaches a certain age. Sometimes the executors have to carry on the business by sheer force of circumstances. They are directed to sell but are empowered to allow the business to continue until they can sell to the best advantage.
I will quote an example of this which has come to my knowledge. It concerns a farm which the executors had to sell. The local authority then decided to develop a housing estate on a position embodying the farm. As a result, the executors found that it was impossible to sell the farm, and at the same time the local authority had no desire to purchase the land until they were ready to develop it as a housing estate. It meant that the executors had no alternative but to carry

93
on the business, and in the process the business made considerable losses over a number of years. That was a situation which could not have been foreseen by the testator; it was beyond the control of the executors and it was no fault of the beneficiaries.
What is the position when a business of that kind, which is being run by an executor, makes profits? It is quite clear that the income is passed on from that estate to the beneficiaries and that, when received by the beneficiaries, it is grossed up for purposes of Income Tax and Surtax. The Inland Revenue, quite rightly, take all the taxation they can from the income of the estate which is passed on to the beneficiaries.
What is the position when the business makes losses? If the executors have another source of income the loss can be set off against that income, but it must he income in the name of the executors. In the case of a family business into which everything has been sunk, it may be that there is no other source of income against which the loss can be set off. In the normal course of business one has the ability to set off losses against profits over a six-year period but if, as in this case, consecutive losses are made there is no means of relief. Under the 1938 legislation the beneficiary cannot off-set the loss against the rest of his income, although he is taxed upon any income he receives from profits and the Inland Revenue take that. In other words, the Inland Revenue gain on the swings but are not prepared, in equity, to allow the beneficiaries to off-set on the roundabouts.
Let us turn to the position of a business run by trustees under a settled estate. Here also the income of the beneficiary is grossed up for taxation purposes, but I am advised that it is clear that if a loss is made the beneficiary, where he has an absolute interest, is allowed to offset the loss against any other source of income. Moreover, if a trustee of a settled estate is also a beneficiary the Inland Revenue are accustomed to grant him earned income relief. That is equitable and is a principle which should be extended to cases where a business run by executors makes a loss, so that the beneficiary may off-set the loss against the rest of his income. I hope the Government will be prepared to accept the Clause and so remove the anomaly.
Mr. Hylton-Foster: My hon. Friend the Member for Bexley (Mr. Heath) has done the Committee a great service in raising this matter. In order to emphasise what we believe to be an injustice, I want to recall to the Committee the circumstances in which Part III of the Finance Act, 1938, came into being. The matter is necessarily technical, and I do not seek to recall that history because I think I am specially qualified to do so. Nevertheless, I ask for the indulgence of the Committee, because I feel sure that the Committee will hold the view that time spent in removing a grievance or in avoiding the sense of it is time well spent.
If we do not recall the circumstances in which that part of the Act came into being, my hon. Friend's argument might be countered with the suggestion, "Well, the position of these residuary beneficiaries is like that of anybody else whose business is carried on for them. For instance, they are like a shareholder in a company who has the business carried on for him by the directors and receives dividends on his shares. He could not be heard to say that when the company suffered any loss he should be allowed to off-set that loss against the income which he had received in the form of dividends." For that reason, I want to emphasise the distinction between the shareholder on the one hand and the residuary legatee under the will on the other.
6.30 p.m.
The Committee will remember that a long time ago now, in 1921, there was a case about Dr. Barnardo's Homes. Someone made a will leaving the residue to the Homes and the administration was delayed for reasons that do not matter. The executors during the administration received income. It was from stocks and shares and tax was deducted at source. That income ultimately formed part of the amount paid over to the charity, whereupon the charity sought to get back the tax deducted from that income on payment to the executors.
The charity said they were entitled to do that under the relevant provision that yearly payments, applied solely to charitable purposes, were to be exempt. "Oh, no," said the Revenue, "You cannot have your money back because it was not your income until it was paid over to you. The

95
income is the income of the executors until the end of the administration for them to apply to the payment of debts and the purposes of the administration. It is certainly not the income of the residuary legatee until the residue has been ascertained."
The House of Lords thought the argument of the Revenue was right and the Revenue went away triumphant. After that there was another charity case where the decision went the same way and the Revenue triumphed again. Then in 1938 came the case of Corbett v. the Inland Revenue Commissioners, where the Revenue, brazen as usual—like Mr. Bloodsucker, the Inland Revenue official in the column of one of our more entertaining journalists—completely reversed their previous argument and tried to have it both ways. In that case the executors credited and paid over some of the income during the administration to a lady, a daughter of the testator. who had an interest in the residuary estate.
In due course, the Revenue contended that this income, having been paid over to her, should be part of the income of her husband liable to Surtax. That was considerable effrontery in view of their previous argument, and the Court of Appeal thought it was such and said, in more judicial terms, "Not on your life." So the Revenue came to the House and the House was induced to pass Part III of the 1938 Finance Act.
The position before that statute was that the income during the administration was the income of the executors only, and the executors only were subject to tax upon it. So the statute said that in future income to the beneficiaries should be deemed to be their income; in other words, if the executors are carrying on a business the profits of that business—although they are not in law and in fact, apart from the statute, the profits of the residuary legatees—shall now by virtue of that statute be deemed to be the profits of the residuary legatees.
Our case, which we ask the Government to consider sympathetically, is that it is real bloodsucker tactics to deem those profits which are not somebody's profits to be his profits and, at the same time, not to deem the losses arising from that business not to be his losses.
The Attorney-General: I do not think that reference to Part III of the Finance Act, 1938, advances this matter at all, because the whole object of that part of the Act was to avoid people escaping Surtax. What had been done before was that executors had prolonged administrations beyond the necessary period and had paid over the income to the beneficiary which, not being the income of the beneficiary, could not be grossed up for Surtax purposes. Part III of the Finance Act, 1938, made that income of the beneficiary income for Surtax purposes when it was paid over to them. Therefore, it did not advantage anybody to continue the administration beyond the necessary period to administer the estate with reasonable expedition.
So I do not think that has any analogy to the situation we are considering here. Equally, I would submit to the Committee that it does not carry the matter further to refer the fact that in the case of an executor beneficiary who earns income, the Inland Revenue do not refuse him earned income relief. It is somewhat in the nature of an extra-statutory concession which is allowed when in the same person there is an executor and a beneficiary who earns income. The hon. and learned Member for York (Mr. Hylton-Foster) referred to the case of a shareholder in a company. In doing so he has given the answer to his own argument and to the argument of the hon. Member for Bexley (Mr. Heath).
In the case of a company which makes losses the shareholder cannot seek to set the losses which the company makes as a loss against his other income. It is a loss which he has to bear in the sense that ultimately it reduces the capital value of his holding in the company, but nobody has ever suggested that a shareholder, in the event of a company making a loss at the end of its trading year, can seek to have some part of that loss apportioned to him in order that he can set it off against the balance of his income. That would be a wholly novel and untenable proposition, and it is really very much what is being suggested now. That is to say, when executors carry on an undertaking under the terms of a will and make a loss, the beneficiary is to be entitled to say, "Part of that loss I can use as a set-off against other income in order to obtain tax relief by so doing."

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Each of those propositions I should have thought had only to be stated to carry its own refutation. There cannot be any logic in either. The shareholder is not liable to make good the loss of a company. Equally the beneficiary cannot be called on to make good the loss of the executors out of his other income. If he could, it would be an altogether different situation. Supposing the executor made a loss and he could say to the beneficiary, "You must recoup the amount of this loss out of other income of your own"; then it would be reasonable that the beneficiary could say, "Equally, if you make a loss, I shall treat that part of the loss which on some fair apportionment is to be attributed to me as a loss which I can set off against my other income."
If the beneficiary had to make good the loss, it would be another matter. He should be entitled to set off the loss against other sources of his income—equally in the case of a shareholder. But inasmuch as they do not, this proposal has little to commend it.
Mr. John Foster: Surely the fallacy of the Attorney-General's argument is that a beneficiary is not like a shareholder. The Attorney-General kept on saying "the beneficiary shareholder."
The Attorney-General: No. I said "beneficiary" in one case or "the shareholder" in the other. I certainly have sought to draw an analogy for the purpose of this argument between the positions of the two.
Mr. Foster: I think that that is what I was saying. The fallacy is to use the two words interchangeably. In the case of a company, the shareholder has voluntarily become a member of the company. He has either subscribed for a share or has bought a share, and becomes a member of the company. I quite agree with the Attorney-General that in that case the shareholder could not be expected to set off the loss of the company against his other income.
But the case of an executor is quite different. The beneficiary has not chosen to become a member of a company, nor is a business carried on by an executor in the least like a company. The executor does this under the will of the person
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who is deceased, and in my view—and surely, I should have thought, the view of the Committee—it is like a partnership that the executors are carrying on for the benefit of the various beneficiaries. Just as one can set off the loss of a partnership against the other incomes of the individual partners, so, I should have thought, it was eminently just that in this case we should set off against the other income the loss which the executor bears for carrying on the business on behalf of the estate.
It must be remembered that the loss suffered by the executor can only be set off against the other income of the executor as executor. I think that the Attorney-General agrees with that. Therefore, it means that if there is, so to speak, a net loss—no loss against which to set it off—the executors will have to pay it out of the estate, thus diminishing the total amount inherited or acquired by the beneficiaries.
I do not agree with the Attorney-General that the fact that the executor cannot say to the beneficiaries "This loss ought to be borne by your other income; come and subscribe to it" makes any difference at all in the case of a partnership. When the partnership assets disappear because of a loss, the partnership may be wound up; and I should have thought that in this case it was an act of elementary justice to allow the loss to be set off against the income of the beneficiary, just as the profits, when they are in the hands of the beneficiaries, are assessable for Surtax.
Mr. Turner-Samuels: I should not have intervened had it not been that not only is the Clause without merit, but that it is positively mischievous. Some attempt has been made to show that there is an analogy between the cases sought to be covered by the Clause and the cases of a shareholder in a company, and also of a partnership. I rather agree with the hon. and learned Member for Northwich (Mr. J. Foster) that there is not a very close connection between what the Clause aims at and that of the case of a shareholder in a company. That, however, does not take the case for the new Clause one wit further.
Imagine what could happen under the Clause. Supposing a testator were to leave in his will to trustees or

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executors an utterly bankrupt business, which was in fact incurring a very serious loss. One of the beneficiaries under the will may very well be an individual who is concerned in a very good practice or business of his own. What we are being asked to do by those who are putting forward the Clause is this: They are saying that such a person who is carrying on a profession, a practice or a business, from which he is deriving a profit, should be able to set against that profit the loss that has been sustained in the bankrupt business that has been left by a testator and in which this person is simply a beneficiary. Can anyone imagine a more mischievous proposition?
6.45 p.m.
I ask anyone who supports the Clause to say whether that proposition is accurate, that a bankrupt or insolvent business may be left by an individual to someone who has had absolutely no part in its management or ownership; has put no money in it and has no responsibility whatever in connection with it, and yet, because he is a beneficiary in it under the will and the business has sustained a loss, he can set that against the profits of his own business. The proposition is too ludicrous to continue the debate upon it.
Mr. Maudling: Neither of the arguments we have heard from the other side have really disposed of the basic point made by my hon. Friends that there is here an undoubted injustice. One other reason why the analogy of the shareholder, which the Attorney-General introduced, is quite misleading that the income in this case is not the income of the beneficiary. It is deemed to be his income, as I understand it, by the Statute. If the Government take the action of deeming income to belong to someone, they should also deem losses to belong to someone. I have not yet heard any argument from the other side to dispose of what seems to me to be this simple basic principle.
Surely the more reasonable case to take is not that of a shareholder, but the example of a farm, to which one of my hon. Friends has referred in moving the Clause. If the beneficiary were carrying on the operation of farming in his own right, he would be entitled to set off his farming losses under the normal loss provisions
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of the Income Tax statutes. If the income under the administration is deemed to be his income and the profit, if a profit were made on the farm, were aggregated with his income, then surely any loss made on the farm should be deducted from his profit on the farm in accordance with the normal principles.
There are very great complexities about this matter. Equally, a very strong case on the grounds of justice has been advanced from this side, but it has not been answered by the reply of the Attorney-General.
Mr. Marlowe: I intervene only because the argument of the hon. and learned Member for Gloucester (Mr. Turner-Samuels) was founded on a complete misunderstanding of the present law in relation to taxes. He put forward the opinion that it would be a monstrous proposition that anybody should be allowed to set off the losses of a bankrupted business against the profits of a prosperous business.
Mr. Turner-Samuels: I can understand the hon. and learned Member putting words into my mouth to try to justify his case. What I was referring to, and referring to exclusively and advisedly, was a bankrupt business which had been left by a testator wholly or partly to a person who had no previous interest or responsibility in it whatever; and that, that business incurring a loss, the person was able to set that loss against the profit of his own business.
Mr. Marlowe: That is exactly the case. The accepted principle of taxation is that one may set off the loss of a bankrupted business against the profits of the prosperous one. All we are endeavouring to do in the Clause is to carry that principle logically to its conclusion where the businesses are carried on by an executor; it is only carrying on the old principle of taxation which already exists.
Mr. Turner-Samuels: If that were the law, there would be no need for the new Clause.
Mr. Marlowe: That is the accepted principle at present. We want it carried on when the businesses are conducted by the executors. The proposal would only carry on the same principle after the death of the operator of the business.

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The argument of the Attorney-General was, I think, founded on a completely fallacious premise. It was a quite ingenious argument to found it on some imaginary analogy with a company which had nothing whatever to do with the argument we are discussing.
I should like to put to the Attorney-General an entirely different case. Putting companies aside for a moment, suppose that the estate consists of two shops, one of which makes a profit of £100 and the other a loss of £100. The present position is that the tax has to be paid on the one which makes a profit, but there is no counter-balance in respect of the loss which is made on the other. The case I am putting forward is that the estate should be aggregated for that purpose and that the loss should be allowed to be set off.
That is a far straighter case than the one put forward by the right hon. and learned Gentleman. His proposition, founded on the analogy of the company, was misleading because this has really nothing to do with the company or the analogy of the shareholder to which he referred. One entirely accepts his contention that it would be unreasonable for a shareholder to set off against his ordinary income the losses of the company in which he is a shareholder; but that has nothing to do with the case at all. I ask the right hon. and learned Gentleman to apply his mind to the question of whether these two should not be set off against each other.
Mr. Heath: I naturally regret that the right hon. and learned Gentleman finds himself unable to accept the Clause. However, I hope that he will give attention to the rather weighty arguments put by my hon. and learned Friends and will appreciate the fallacy of the argument he has advanced. I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(AMENDMENT AS TO ALLOWANCE FOR REPAIRS.)
(1) Paragraph (1) (a) of Rule 7 of No. V in Schedule A (which fixes the sum by which the assessment on lands inclusive of the farmhouse and other buildings (if any) shall, for the purposes of collection, be reduced) shall have effect as though a sum equal to one-fourth part thereof were substituted for a sum equal to one-eighth part thereof.
(2) Paragraph (2) of Rule 7 of No. V in Schedule A (which relates to the allowance for repairs) shall have effect as though the words "one-fourth" were substituted for the words "one-eighth."
(3) Paragraph (1) of Rule 8 of No. V in Schedule A (which grants relief in certain cases in respect of the cost of maintenance, repairs, &c.) shall have effect as though the words "one-fourth" were substituted for the words "one-eighth."
(4) Subsection (3) of section twenty-eight of the Finance Act. 1923 (which amends paragraph (2) of Rule 7 of No. V in Schedule A) shall have effect as though the words "one-fourth" were substituted for the words "one-eighth."
(5) This section shall not have effect as respects income tax for the year 1951–52.—[Mr. Nugent.]
Brought up, and read the First time.
Mr. Nugent: I beg to move, "That the Clause be read a Second time."
Lieut.-Commander Braithwaite: On a point of order. Do I understand, Sir Charles, that there is to be no opportunity of discussing season tickets or post-war credits?
The Deputy-Chairman: The proposed new Clauses relating to those subjects have been passed over.
Mr. Nugent: The effect of this Clause is to increase the allowance for repairs upon houses and buildings. This would change the statutory limit under Rule 7 and Rule 8 from one-eighth to one-quarter. Everyone knows that the statutory level of one-eighth is quite fictitious today and that the cost of repairs is very much higher than that. The last reliable survey which was made shows that the actual cost of repairs and maintenance was more than two-thirds of the gross rents of the properties.
I am referring to the survey made by the Ministry of Agriculture and the C.L.A. in 1946. That shows how completely fictitious is that level of 12½ per cent. The broad picture is that these rents, and Schedule A with them, have moved relatively little since pre-war while the cost of building has risen by anything from two to three times. It is true that relief can be obtained by making a maintenance claim or, indeed, by including the amount in Schedule D computation where that is appropriate, but if, by any chance, the owner of the property overlooks that, his proper allowance goes by default.

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This Clause is directed to preventing that possible mistake occurring, which undoubtedly occurs from time to time. I am not asking that the allowance should be raised to a half or two-thirds. I am only asking that it should be raised to a quarter because I recognise that at present it might be said that, whereas building costs have risen so substantially, there might be an unpleasant danger in the future that Schedule A assessments might also rise and, if one lifted the statutory level too high, it might be wrong in the future. That is the reason why I am only asking for a very modest increase from one-eighth to one-quarter and I trust that the right hon and learned Gentleman will see fit to agree.
Mr. Vane: If the Economic Secretary accepts the fact that the statutory allowance for repairs should bear some relation to the average cost of repairs of such agricultural property I am sure he cannot do otherwise than agree that the present figure of one-eighth must be changed and, if he accepts that, he will then no doubt think that the figure proposed by my hon. Friend the Member for Guildford (Mr. Nugent) is really very modest. It may be better, on consideration, to put it a little higher still.
My hon. Friend has mentioned that the cost of repairs has risen out of all recognition over the last few years. I believe that if the Economic Secretary looks over the history of this matter he will find that it was fixed almost immediately after the First World War. At that time the figure of one-eighth probably had some reality, but today it has absolutely none. It is possible for the hon. Gentleman to reply that the maintenance claims provisions enable one who can say he has spent more than a certain average to recover the tax he has paid. But that would cause a great deal of extra work which, surely, the Inland Revenue would be glad to avoid.
Secondly, it would be giving a large advantage to the bigger property owner, whether an individual or a company, who has some sort of administration and can easily make this claim, which otherwise is not very easy. The vast majority of owners of single farms, with perhaps a cottage or two, do not employ a skilled land agent. I was once a member of the
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profession and I say that probably it is a pity that they do not do so because perhaps they could recover more tax to which they are entitled.
There are a great many who pay the tax on the net assessment and think it altogether too difficult to go through the motions of making these small claims. It would be a great deal simpler if this figure and not one-eighth was brought into present day values and I hope that the Economic Secretary will agree that the figure of one-quarter is extremely modest and fair.
Mr. Turton: There is only one argument I wish to put in addition to those advanced by my hon. Friends. At present the statutory allowance for cottages is in fact one-quarter. Therefore, if the Clause were accepted, the statutory repair allowance for cottages would be brought into line with land, agricultural buildings and agricultural houses. It is quite clear, surely, to hon. Members that the cost of repairing a cottage is no greater than the cost of repairing a farmhouse or farm building. If one puts a roof on the rate is exactly the same if it is a cow barn roof, the roof of a farmer's house, or the roof of a cottage, but we have the curious position that the allowance for the farmer's house and agricultural buildings is only 12 per cent., whereas for the agricultural cottage it is 25 per cent.
My hon. Friend the Member for Westmorland (Mr. Vane) said that this would particularly help the small owner. I think the Economic Secretary will find, if he examines the question, that whereas all large owners submit maintenance claims in respect of their property, of small owners who make claims, the fraction is less than 15 per cent., and that means that an injustice is being suffered by the small owner which is not suffered by the large owner.
I ask the Economic Secretary to look on the proposed Clause with approval and to accept it. It will cost the Treasury nothing; it merely means that a certain number of maintenance claims will not in future have to be made. It may cost a certain amount as some who do not now make claims will be allowed to do so, but it will also mean that some who do make claims now will not have to do so in the future.
7.0 p.m.
The Economic Secretary to the Treasury (Mr. John Edwards): The purpose of this Clause, as I understand it, is to increase the allowable deduction in respect of land, land for this purpose including farms and other buildings. One of the arguments of the hon. Member for Thirsk and Malton (Mr. Turton) was that it was desirable to bring the percentage allowed for land in respect of farms to the same point as that fixed for houses and buildings. I should have thought that that was on the whole not a good argument.
Mr. Turton: I quite agree. It was not the argument I addressed to the Committee. I said that the allowances for farm houses and agricultural buildings should be the same as that allowed for cottages.
Mr. Edwards: I am sorry, but with respect, the hon. Member was not saying that. [HON. MEMBERS: "He was."] No. The hon. Gentleman said that the allowance for land, which is defined to include farmhouses, should be the same as that for farm cottages. Is that correct?
Mr. Turton Mr. Turton indicated assent.
Mr. Edwards: Very well. I am saying that that is one good reason for not doing what this Clause proposes. It is perfectly true that there have been changes in costs, but when those allowances were laid down very careful consideration was given to the relative costs of the different types of property concerned.
One argument that I have against the acceptance of this Clause is precisely the fact that the broad relativity that has existed over the years would be upset. I should think that it would follow logically, if this Clause were accepted, that we should have to revise the other scales of allowances so as to keep this broad relativity, which I think it would be right to do.
More substantially, the case against this new Clause has already been made in some respects. Hon. Members opposite have pointed out that it is possible to make a maintenance claim and in effect for the taxpayer concerned to be allowed to deduct the whole of his expenditure on repair up to the amount of the Schedule A assessment, and in some cases also to set it off against other
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income if such expenditure exceeds the Schedule A assessment.
I cannot accept the view that it is reasonable to say that because people do not put in claims we should alter the scale of the allowance to meet that point. It is most unlikely that the average, or at any rate the good landlord fails to complete records of expenditure on which a maintenance claim can be based. Although I admit that there is some trouble in preparing such a claim I do not think that any hardship would be involved in leaving the statutory deduction as it is.
The cost, in terms of tax, which will be involved by accepting this Clause would, I am advised, be about £¼ million, that being the net figure after allowing for the fact that certain expenditure now relieved through the maintenance claim procedure would be relieved through the higher repairs allowance. Therefore, what hon. Members opposite are asking for is that apart from those landowners who at present spend above the figure of the repairs allowance but do not bother to make a maintenance claim the £1¼ million should go to people who have not incurred the expenditure which the higher allowance would purport to relieve, and who in my submission, have no equitable claim to relief.
The hon. Member for Guildford (Mr. Nugent) referred to this point, and said that he wanted, by the Clause, to correct the position which arose from those persons who had not put in claims not getting the relief. I think that the new Clause goes further than correcting that, because its effect would be that even if people did not go to the expense indicated by the new proposed level of allowance they would, nevertheless, get the benefit. I am sorry, but for these reasons I must resist the new Clause. It would be wrong to deal with one set of allowances without dealing with the whole of them. I believe that all landowners concerned have recourse, if they need it, to a maintenance claim which covers them completely in respect of their total outlay up to the total of their Schedule A assessment.
Colonel Clarke: I wish to ask the Economic Secretary a question. Supposing that the amount claimed was roughly the same, either under the allowance when increased to the higher figure suggested in the Clause or by way of a

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maintenance claim, would it not be more convenient from the point of view of the hon. Gentleman's own Ministry that the sum should be claimed as an allowance? It would be much simpler and would not involve the checking of maintenance claims afterwards. It would be a saving of staff for his Department and in the case of owner-occupiers I think that the increased rate would not mean very much difference. What we are suggesting would mean a saving of work in the hon. Gentleman's Department the benefit of which would in due course go to farmers. We are not really asking for anything; we are offering it.
Viscount Hinchingbrooke: My hon. Friend the Member for Guildford (Mr. Nugent) made a case for this new Clause on the general understanding that prices of repairs have risen substantially in the last few years. The Economic Secretary to the Treasury has said nothing to contradict that view. This one-eighth allowance, as I understand the matter, was arrived at in relation to the general level of costs at the time, 1918, in respect of the proportion which annually or over a quinquennial period it was necessary to spend on farm buildings and cottages, etc., out of the income derived from the profits made in that activity.
When we attempt to show that costs of repair have risen enormously, to an extent sufficient to justify this moderate allowance being granted, the Economic Secretary does nothing to deny it. Yet he tells us that £1,250,000 would be the cost to the Exchequer in granting this concession for which the Clause asks. Is that not the measure of the injustice done to small farmers today because of their inability, through circumstances or through misunderstanding of the Income Tax and Finance Acts, to fill in and send in a maintenance claim? Are they not being put, by the depreciation in the value of money, in a position far worse than that in which they were in 1918, when automatically, by this provision, they got their percentage deduction? Costs have risen, but they can only claim one-eighth unless they have the knowledge and understanding to put in a maintenance claim.
The denial of this Clause and the refusal to allow £1,250,000 to be held back from the Treasury is, rather unpleasantly,
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an indirect blow against the farming community. Is it not telling these small farmers that although costs have risen and though their cottages and houses cost much more to repair, all they can get, unless they have the resources to put in a maintenance claim, is the original one-eighth? The Economic Secretary has put up a very poor case, and if my hon. Friends wish to press this matter they will, although it concerns a small point, be well justified in taking it to a Division.
Mr. S. N. Evans: It is about time the farmers stopped feeling sorry for themselves. There are two things with which I have yet to catch up—a dead donkey and a satisfied farmer.
Mr. Baldwin: We have heard that many times.
Mr. Evans: I am not expecting to meet the farmer first.
This Clause is a classic example of how privilege feeds the appetite for privilege. The agricultural industry has never been so prosperous in its life but because it is served by the most formidable propaganda agency that this country has ever known we are faced time and time again with fresh demands.
I do not think that this Clause represents the true feeling of the farming community. The demand is that certain allowances shall be doubled and that demand is made against the background of a £4,700,000 re-armament programme, at a time when people have to tighten their belts, when austerity is the order and must be the order of the day. This demand comes against a background of an industry which, last year, earned over £300 million, despite the worst summer and autumn in living memory, as against the 1938 increment of £60 million—a five times increase in profits against a 40 per cent. increase in production.
I hope that the Economic Secretary will stick to his guns. I am becoming worried about these farming problems. When the farmers talk every chandelier in Whitehall shakes. The farmers are becoming a privileged section of the community and that is a bad thing. In January, I talked with about 350 farmers at Worcester. They came through a foot of snow to argue the economics of the industry. They are very well aware of the fact that demands have been made ahead of what the industry really needs.

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These farmers are very anxious to be partners in the national economy, not pensioners. They are very well aware that the dinner-jacketed political farmers' representatives in Whitehall are going too far. I ask those who represent them on the benches opposite, and outside, to realise that the nation is watching and beginning to get anxious about it. None of us wish to see agriculture go back to the depression of the years between the wars, but I am afraid that if unfair demands, such as are contained in this Clause, are persisted in there may well be a repercussion unpleasant to the industry.
We have all to tighten our belts. This is no time for any section of the community to be demanding privileges.
Mr. Baldwin: The hon. Member has got it all wrong; he does not understand the Clause.
Mr. Evans: I understand very well that the Clause asks that Income Tax allowances in certain directions should be automatically doubled. The next proposed new Clause is even more outrageous and I may have a word to say about that. Meanwhile, I hope the Economic Secretary will stand firm, because dismay would be caused by concessions of this character.
Mr. York: I do not think, Sir Charles, that you could have heard all that was said by the hon. Member for Wednesbury (Mr. S. N. Evans), because I have never in my life heard a more irrelevant speech. I know that the hon. Member has a bee in his bonnet about farmers, but this has not anything to do with that and he must wait until another occasion to make one of his well known "feather bedding" speeches. His remarks were just about as accurate as the remarks he made about the cost of production when he informed the country at large that it cost only £10 an acre to plant potatoes.
Mr. S. N. Evans: Let us get this right. If the hon. Gentleman will consult HANSARD he will find something different.
Mr. York: I had better not pursue that too far. I do not think the hon. Gentleman really understands what he is talking about half the time. Certainly he is very misinformed on a number of things. But I will ask him this straight
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question: has he ever read Rule 8 of Part V of the Income Tax Schedule?
7.15 p.m.
Mr. Evans: Yes, I have. I went to do so on Thursday night, and Mr. Mackenzie was kind enough to get it out and allow me to read it.
Mr. York: I will hand it to the hon. Gentleman this time because, having heard his speech, I never expected he would be able to answer "Yes." Why I think the hon. Gentleman is so inaccurate is because he is talking about the agriculture industry having allowances doubled. The whole point of this Clause is a question of administrative convenience. The mere fact that the Economic Secretary was only able to argue against the Clause that he thought the balance would be somewhere around a million and a quarter with a capital value of hundreds of millions of pounds meant that the alteration in the allowance is a very minor matter. I doubt whether it would be a million and a quarter. I do not believe it would be.
Mr. Glenvil Hall: Then why ask for it?
Mr. York: Because, and let us be clear about this, there would be no cost at all until at least 1953 at the earliest. The hon. Gentleman did not deal with the last line of the Clause which specifically lays down that there should be no allowance this year. As he will realise, the assessment is made on 1st January after the end of the financial year to which the assessment applies, and therefore the earliest date on which any possible relief could apply is in 1953. I know that it is not his own opinion, but that it is the combined wisdom or otherwise of the Treasury, and I know how astonishingly conservative is the Treasury about changes in administration.
Regarding the Schedule A allowance, if we maintain this wholly un-realistic allowance we retain in the hands of the Treasury money which ought to be spent on the modernisation of farm buildings and houses. That is a most substantial point. The second point is perhaps one which is more a question of justice than otherwise. The maintenance claim procedure is extremely slow and clumsy. The claims are based on a five-year average. If the hon. Gentleman has ever tried to

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work out maintenance claims—I doubt if he has, because it is not his line of business—he will realise that the repayment of tax coming back from the Treasury takes an extremely long time.
I give an example in the case of an estate with which I have been connected. Repayment of tax has at least been obtained from the Treasury five years after the allowance became due, and that is now-a-days a fairly common occurrence. These allowances are coming back after a very long delay owing to excess of work on the part of the Treasury.
Mr. Glenvil Hall: Does the hon. Gentleman suggest that the type of case he has quoted is normal? It must be most unusual.
Mr. York: It is not unusual. I wish it were. The right hon. Gentleman was at the Treasury himself, and no doubt he received complaints about these long delays.
Mr. Hall: I have made claims many times in my individual capacity, and I have never had the treatment the hon. Gentleman has now indicated is normal.
Mr. York: I certainly did not indicate that it was normal. I said that on occasions long delays take place. Most claims are at least two years in arrear. I do not think that the Economic Secretary could gainsay that. But this is only a detail to reinforce my argument. There is this long delay, this time lag. which takes money from the pockets of the people who ought to be modernising and keeps it in the Treasury, and that is a bad thing.
One should realise that on farms perhaps the most expensive item of repair and modernisation is the farmhouse itself owing to the fact that plumbing, for example, is a most fantastically expensive business today. Most farmhouses have a net annual value of £40 or under. Therefore, they are on a par with the cottages which attract an allowance of one-quarter, yet the farmhouse allowance is one-eighth. I hope that that point will sink in to the Treasury in years to come, and then perhaps they will take a rather more favourable view of this matter.
Mr. Pargiter: Does the hon. Gentleman suggest that farmhouses are rated in a way comparable to similar properties in urban areas?
Mr. York: The hon. Gentleman has not understood.
I do not know whether the Treasury realise it—they probably do—but, as a general rule, the small owner spends his money in considerable doses but at long intervals. Perhaps he spends £500 in one year, and he hopes that that will put the whole of the farm buildings into repair for a matter of 10 years. If the statutory allowance was increased it would help the owner to build up a small reserve to meet these big items of expenditure. That ought to be the view which the Treasury should take.
A most important point is that repairs and modernisation on an estate, either large or small, depend far more today upon the taxation position than they do upon the actual condition of the buildings. The fact that taxation is so high, and the complication attaching to obtaining the greatest advantage from the allowances which are given, means that people have primarily to concern themselves with the tax position rather than with the necessity of work of this kind. An increase in the allowance from 12½ per cent. to 25 per cent. would bring a stability—indeed, one might almost say a flexibility—into the management of land. From the point of view of good accounting, sound financial policy and good management, this Clause has much to commend it.
Even if the Treasury turn it down today, I hope that they will reconsider the matter in years to come. I know that Schedule A is a most clumsy weapon. The maintenance claim and all these allowances do not permit the sort of accounting in which any sensible man would ever think of indulging. We ought to put the whole of this business on to Schedule D. Then we should have a proper accounting system. But the Inland Revenue will not consider changing over to Schedule D—
The Deputy-Chairman: That hardly arises on this Clause.
Mr. York: I was coming to the end of my remarks. If that sensible suggestion cannot be adopted, at least the Treasury might make a gesture and bring their Schedule A rules and regulations somewhere within the realms of reality.
Mr. Joynson-Hicks: I do not understand the Treasury point of view on this question. The Economic

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Secretary would be well advised to reconsider this point. I tried to follow his speech with care. As I understood him, he argued first that this change would not make any financial difference, and that, under their maintenance claims people are already entitled to the benefit which would be given under the revised allowance. Secondly, he turned completely round and said that this would cost £1,250,000. I was totally unable to reconcile the two arguments.
The hon. Gentleman did not take into account the saving of money and time and trouble by the community who are responsible for the payment of this tax. We often hear arguments from the Treasury Bench that it is impossible to give consent to some proposal because it would be administratively inconvenient. Here we have made a proposal which would be administratively convenient. I had hoped that we should have a sympathetic reply on that account. In addition, this is a proposal which would be administratively convenient to the taxpayers, and it is about time that the Government took them into account.
The Government are always getting money out of them, but they do jolly little to make it any easier for them to pay. This is a proposal which would make it very much easier for people to pay. The time and the trouble, the consultation and the detail involved in the preparation of these maintenance claims is very great. If it was to cost the Treasury £1,250,000—which I do not believe would be the case—I am certain that the saving of time and trouble to the community would result in a very much greater financial saving. That in its turn would benefit the Treasury who would draw increased taxes upon the increased profit which would result from the increased savings of this section of the community. The Economic Secretary has been ill-advised, and I hope that he will reconsider the matter.
Captain Duncan: I think it is right that a Scottish Member should support his English colleagues on this question. It appeared to me that the hon. Member for Wednesbury (Mr. S. N. Evans) completely misunderstood this new Clause. This is not a case of dealing with the farmer. It is purely a question of land owning. The question of the farm arises only when the occupant
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is an owner-occupier and, as most owner-occupiers are small farmers, it is obvious that they are the very people whom we are trying to help, while at the same time helping the Treasury.
The Economic Secretary to the Treasury talked about a loss to the Treasury of £1,250,000. Quite frankly, I do not know from where he got that guess. He has expert advice, of course, but on this occasion I am not prepared to accept that figure. I do not believe there will be a loss at all. There certainly will be administrative convenience to the Treasury because of the reduction in the work on the maintenance claims, if there is this increase from one-eighth to one-quarter.
7.30 p.m.
The only possibility of a loss that I can foresee is if there are some landlords who, under the present circumstances in the country, are not spending one-quarter of their gross income on repairs on their estate or farm. The hon. Gentleman will be able to check that, because he has enormous resources from which to find out the actual cost of repairs to estates. There is the Central Land Owners' Association, the Department of Agriculture for Scotland and the Ministry of Agriculture here, all of them owning, running or managing estates, and most of them incurring losses. There is also the Forestry Commission, and there is the Crown, which owns land and farms in various parts of the country. There are all sorts of checks which the hon. Gentleman can make in order to see what are the actual costs of repairs.
My hon. Friend the Member for Ripon (Mr. York) spoke about the cost of plumbing. Let the Treasury look into the expense of providing and maintaining wire fencing, which is enormously increased to something like three times what it was a few years ago. In spite of the advice which the hon. Gentleman has received, it really is nonsense to talk about a loss of £1,250,000 to the Treasury. I do not believe that there would be any loss at all; on the other hand, it would be a convenience both to those who run small farms as owner-occupiers and to other people as owners of land, who would have less work to do on compiling maintenance claims, while it would be a convenience also to the Treasury, which would have less work in handling them.
Mr. Norman Smith: I think there is a certain amount of effrontery in the arguments advanced from the other side of the Committee. It is perfectly true that the cost of everything is going up, and we all know that, but these maintenance claims deal with what is actually spent, and that is the answer to the argument advanced from the other side.
That brings me to the argument of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), and the hon. Member for Chichester (Mr. Joynson-Hicks), both of whom alleged that there is trouble and difficulty involved in making a maintenance claim. I have been making one for years. There is nothing very difficult about it. I imagine that it is a job which any elementary schoolboy over the age of 14 could do. Indeed, what happened last week was that I was myself making a maintenance claim, and I took it to the accountant who does this sort of thing for me. The accountant said only last week—and I am not exaggerating" You have done all the work, Mr. Smith, and I think I ought to reduce the fee which I charge you." There was not much work in it.
The hon. Member for Ripon (Mr. York) spoke of the delay in getting the money. Apparently the Treasury put obstacles in the way. Well, it is their job to put obstacles in the way. It is their job to prevent the people who are making maintenance claims from cheating the Treasury. I therefore hope that my hon. Friend will reject these arguments.
Colonel Gomme-Duncan: Could we have it made clear that the hon. Gentleman thinks that the Treasury should put obstacles in the way of the taxpayer?
Mr. Smith: I think it is the job of the Treasury to put obstacles in the way of anybody who is making a maintenance claim exercising the cupidity which is part of human nature in order to cheat the Treasury.
Mr. Gerald Williams: The hon. Member for Nottingham, South (Mr. N. Smith), said that maintenance claims are very easy to make, and the Economic Secretary to the Treasury says they are some trouble. I should like to
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tell them both that, in the view of many hon. Members, they are a very great deal of trouble. They get extremely complicated, even in the case of a small estate. Every claim has to be checked and every bill ticked off, whether it is the ironmonger's or the builder's account. One may receive an account for £70 and have to check every item, sending the bill along with the claim for the inspector of taxes to see.
There is quite a lot of trouble and difficulty in addition to that. The payments for wages have to be divided, and there may be complications because a carpenter has perhaps worked only three-quarters of his time on estate maintenance and the rest of his time mowing the lawn. Such payments have to be divided up. Then there are the expenses involved in cottages in connection with electricity, water and so on, and all these things take a great deal of time and money. Again, if one cuts timber on one's estate, one has to make an estimate of how much one has used. One does not measure it up, of course, but it is quite difficult to get a fair reckoning of what might be used. A boy of 14 cannot do all these things. In addition, there is the question of the telephone account, postal expenses and so on.
The whole point is that it is costing the farmer and the landlord a great deal of time and trouble, and in many cases he has to pay a secretary, or, as in the case of the hon. Member opposite, an accountant, to do the work for him. Worse than that, these claims have to be dealt with at the receiving end, which is the Treasury, where they are causing a great deal of time and trouble as well. Our object is to eliminate time and trouble caused to both the taxpayer and the Treasury.
The Economic Secretary said that the concession would cost £1,250,000. I do not know how he made his calculation, or whether he has calculated what he might save, if this concession were granted, because many people who are perhaps spending up to three-eighths of their Schedule A value, if they could put in a claim for one-quarter and know that they could have it settled straight away, would very likely forgo the other small amount. The trouble, delay and inconvenience are probably not worth the extra £10 or £15 to them. I believe, therefore

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that the Chancellor might find that he would save himself an infinite amount of trouble, while also paying out claims which are just over the 25 per cent. figure. On those two grounds, I hope he will reconsider the matter.
Major Legge-Bourke: I would not have intervened in this debate but for the remarks of the hon. Member for Wednesbury (Mr. S. N. Evans), but before I deal with what he said, may I take up a matter with the Economic Secretary?
The hon. Gentleman talked about broad relativity, and I wondered where we were getting. He spoke of the broad relativity and relationship between one type of allowance and another which has existed for many years, and used that as an argument for saying that the Treasury were not going to consider this proposal for an increase because it would level it up with something which had always been above it.
I do not suppose that my hon. Friend who moved the Clause would have objected very strongly if the Economic Secretary had said that he was prepared to consider adjusting these allowances to the tune of a quarter and a little higher, provided that it was possible to maintain the same relationship. I do not suppose that he would have objected and he might have been prepared to withdraw the Clause on an assurance like that, but for the Economic Secretary to say he cannot possibly bring up these allowances to the level of others seems to me to be a very poor argument to advance.
The hon. Member for Wednesbury mentioned that he had been talking to farmers in Worcestershire and that many went many miles in the snow to hear him. I very nearly did myself, as I was near enough to attend, but unfortunately the snow was too deep. I ask the hon. Gentleman to consider very carefully some of the things which he goes about saying. Does he really believe that the line which he has been taking is in the interests of farmers as a whole? Does he really believe that this country can afford to do anything which is likely to discourage our farmers at the moment? Does he think we can afford to buy sufficient food from overseas if they fail us? Is he not prepared to give the farmers assured prices?
The Deputy-Chairman: I think the hon. and gallant Gentleman is out of order in asking those questions.
Major Legge-Bourke: With great respect, Sir Charles, the hon. Member for Wednesbury was allowed considerable latitude in developing his argument, and I was endeavouring not to go any further from the proposal before us than he did. I hope I may be allowed to try to deal with some of the points he raised.
The Deputy-Chairman: If the hon. and gallant Gentleman does that, it might encourage him to get out of order again.
Major Legge-Bourke: I naturally bow to your Ruling, Sir Charles, and I shall endeavour to keep my remarks confined as far as possible to the points of the Clause.
The hon. Member for Wednesbury objects to the idea of farmers being given any increase in this form of allowance, apparently on the assumption that, as a result, they will get more out of it. I do not accept that assumption; I think it quite possible that the Treasury may save by it. Even so, I should have thought that by far the most important thing was for us in this Committee to try to make the formalities to which farmers have to conform in order to present their accounts as easy and as simple as possible. This Clause is trying to encourage that it is trying to make it more simple for the farmer to get back something that he puts into his farm.
As several hon. Members have pointed out, this Clause is designed to help the small man in particular; and I should have thought the hon. Member for Wednesbury would have been one of the last who wished to discourage the small man from putting his farm in the best possible order. I believe that there are many small men today who would spend more on their farms if they thought that as a result they would not have to go through the rigmarole of form filling and application which makes life impossible for them. I know some who do not find figures as easy as does the hon. Member for Nottingham, South (Mr. N. Smith), who, after all, has a reputation which puts him in a very high category regarding

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social credit, and I very much doubt whether the farming community could possibly achieve his level.
Mr. N. Smith: They did in Alberta.
Major Legge-Bourke: I mean, so far as filling up forms and understanding figures are concerned.
Regarding what the hon. Member for Wednesbury said, I can only say that I should have thought that anything which this Committee could do to make it easier for the small farmer in particular—though I see no reason why we should not do it for the big one as well—to improve his methods and to try to keep his farm in first-class order would be preferable to listening time and again to the old argument of the town versus the country and trying to divide those two communities. We should try to let the people in the countryside know that we realise they have their difficulties just as we in the towns have ours.
7.45 p.m.
Mr. Baldwin: I am surprised that two hon. Members opposite have not contributed to this debate, because, although I do not want to taunt them to get on to their feet, I think they could have said more with regard to maintenance claims than any hon. Member who has spoken so far on this Clause. I refer, of course, to the hon. Member for Sowerby (Mr. Houghton) and to the hon. and gallant Member for King's Lynn (Major Wise). With regard to the hon. Member for Nottingham, South (Mr. N. Smith), all I can say is that if he knows of any boys of 14 years of age who can deal with maintenance claims, he can find ready employment for them in the offices of land agents or Inspectors of Taxes who would thus be relieved of a great deal of work in connection with these extremely difficult claims.
With regard to the remarks of the hon. Member for Wednesbury (Mr. S. N. Evans), I hope I shall have the chance of dealing with some of them on a later occasion. All I can say is that if he read Rule 8, as he said he did, he could not have learned much from it. Indeed, the speech that he made showed why he goes completely astray on agricultural subjects. Regarding what was said by the Economic Secretary, I think he completely
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"missed the boat." He said that the cost to the Treasury would be £1¼ million. If that is so, it means that the Treasury are getting £1¼ million to which they are not entitled. We are not asking for any concession, but merely for some relief for the small owner-occupiers who have not the time to make out their maintenance claims, and I hope the Economic Secretary will realise that.
Mr. Nugent: To my mind, the Economic Secretary has not done much to answer this debate, although I cannot blame him if he does not answer all aspects of it. The attack from behind took him by surprise, and I venture to think that he did not have a brief to justify his Government's agricultural policy. No doubt he will defer answering his hon. Friend the Member for Wednesbury (Mr. S. N. Evans) to a future occasion.
The reply given to us by the hon. Gentleman was an argument for abolishing the statutory maintenance claim altogether, and did not answer the argument put forward by hon. Members on this side for raising it to a realistic level. The amount he mentioned as being the probable cost to the Treasury if it were raised to such a level is, I believe, far more likely to be an underclaim by small owners than anything else. If he and his colleagues are prepared to accept responsibility, then we must leave it to them. I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(AMENDMENT OF DEFINITION OF "MAINTENANCE IN SCHEDULE A.)
The following paragraph shall be substituted for paragraph (2) of Rule 8 of No. V in Schedule A (which grants relief in certain cases in respect of the cost of maintenance, repairs, &c.):—
"(2) For the purposes of this rule the term 'maintenance' shall include

(a) the replacement of farmhouses, farm buildings, cottages, fences and other works where the replacement is necessary to maintain the existing rent;

(b) additions or improvements to farmhouses, farm buildings, or cottages, but only if no increased rent is payable in respect of the additions or improvements and in so far as they are made in order to comply with the provisions of any statute or the regulations or byelaws of a local authority;

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(c) those measures which are necessarily undertaken on or in relation to agricultural land in order to secure and maintain that land free from infestation by the pests specified in subsection (4) of section ninety-eight of the Agriculture Act, 1947."—[Mr. Nugent.]

Brought up, and read the First time.
Mr. Nugent: I beg to move, "That the Clause be read a Second time."
The effect of this Clause would be to allow the cost of pest destruction in a claim for maintenance under Rule 8 of No. V in Schedule A. The relief would be given in comparatively limited circumstances. Where land or woodland is being managed for commercial purposes, then, of course, the cost of pest destruction comes under the ordinary trading cost of the enterprise, but where land is waste land or scrub woodland under Schedule B, or amenity land, then pest destruction falls as a direct cost to the owner. It is to deal with that particular situation that this Clause has been put down. It is an unpretentious Clause, and has been drawn in very careful terms. It talks of pests and nothing else, whereas there might be a political significance if we put it down as vermin.
The principal pest with which we are concerned here is, of course, the rabbit. As the Economic Secretary will know, the rabbit has been a great pest to the growers of agricultural or horticultural crops in this country in the last year or two. Indeed, had it not been for the unfortunate circumstances of the meat shortage last Winter, which had the effect of raising the price of rabbits and thereby of giving extra incentive to the rabbit catchers, the pest would by this time have become very serious indeed.
Hon. Members will know that last year we were having conferences all over the country to consider ways and means of dealing with these rabbits. These pockets of land are particularly difficult to deal with because when one goes to the landowner to ask him if he will take the necessary measures for pest destruction he says he cannot afford it. If it were possible for him to make the cost of pest destruction a maintenance claim it would be easy to oblige him to take part in the general pest destruction campaign going on in his neighbourhood.
What it amounts to is that the more successful the Economic Secretary's
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ventures are in the Argentine in obtaining meat for us the more likely we are to have to cope with this very difficult rabbit problem. He, in particular, should have a special sympathy for the Clause, because if he has been as successful as he claims to have been then undoubtedly we shall have more trouble with these rabbits. Therefore, I hope he will look sympathetically at this Clause which is of real practical value within a limited field. It would do much to help the campaign for rabbit destruction and help the growing of food.
Mr. J. Edwards: As I understand it, it is paragraph (c) of the new Clause which really operates here, and I accept the definition of vermin given by the hon. Member for Guildford (Mr. Nugent). I think he and I are in agreement. The vermin to which the Section applies are rabbits, hares and other rodents, deer, foxes, moles and certain unprotected wild birds.
Earl Winterton: Foxes?
Mr. J. Edwards: As I think some hon. Members may know, this matter has been discussed recently between the Country Landowners' Association and the Board of Inland Revenue. Whilst it is recognised that the destruction of rabbits and so on is in the interest of food production, the practical difficulty is to draw the line in such a way as to admit necessary expenditure an owner is obliged to incur, either in response to notice under the Agricultural Act or in anticipation of it, or on the other side to disallow expenditure incurred purely in the exercise of sporting right.
It will be appreciated that the Clause sets no clear limit to the expenditure. On the other hand, it appears to the Board of Inland Revenue that reasonable expenditure on the destruction of pests can properly be regarded as expenditure on maintenance or management of the land, and that therefore it can be regarded and treated as admissible in the maintenance claim without express legislation.
Accordingly, the Board of Inland Revenue have written to the Country Landowners' Association saying that where an owner necessarily incurs expenditure on the destruction of rabbits or other vermin on his land, whether in

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response to a notice under Section 98 (1) of the Agriculture Act, 1947, or otherwise, the reasonable cost of such destruction, less any sums received from sales, may be admitted in a maintenance claim. I think this substantially meets the point made in the new Clause, and therefore I hope that the hon. Member will withdraw it.
Captain Duncan: Can that letter from the Board of Inland Revenue to the Country Landowners' Association be published so that it can be made available to those interested?
Mr. J. Edwards: I was very careful in the last part of what I have just been saying to give the precise form of words which of course will appear in the OFFICIAL REPORT.
Mr. Nugent: At first sight those words appear to meet our point of view. We naturally reserve our right to put down an Amendment at a later stage, if necessary, after we have had an opportunity to study those words. Meantime, I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(UNILATERAL RELIEF FOR DOUBLE TAXATION—CERTAIN PENSIONS PAID BY THE GOVERNMENT OF INDIA.)
Subsection (2) of section thirty-six of the Finance Act, 1950, shall have effect and shall be deemed to have had effect since the first day of April, nineteen hundred and fifty-one, as if it had contained a second proviso as follows:—
"but provided that any pension paid by the Government of India to former servants, civil and military of that Government or of His Majesty's shall be treated separately for this purpose and credit by way of unilateral relief shall he allowed to the full amount of the tax payable under the law of India in respect of such pension, and the amount of the credit to be allowed under this subsection, by way of unilateral relief in respect of other income shall take no account of tax paid in respect of such pensions nor of the tax payable in accordance with the Income Tax Acts in respect thereof."—[Mr. Low.]
Brought up, and read the First time.
Mr. A. R. W. Low: I beg to move, "That the Clause be read a Second time."
This Clause relates to Indian Service pensions. It seeks to amend Section 36
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of the Finance Act, 1950, which provided for unilateral relief in the case of double taxation within the British Commonwealth up to three-quarters of the British rate. But it seeks to amend it only with respect to a particular class of income, a class which in my opinion is easily definable and, for reasons I propose to give as shortly as I can, a class which merits separate and very special treatment. They are the class of pensions paid by the Government of India to former members of the Secretary of State for India Service and analogous services.
This House of Commons has already acknowledged that it has a very special responsibility for these men. The Committee will remember that the Prime Minister himself on 10th July, 1947, stated that responsibility in no uncertain terms. He said, during the debate on Second Reading of the Indian Independence Bill:
"It is, however, recognised that, among the liabilities to which I have referred above, …"
—he was referring to pension and provident fund liabilities—
"there is one category for which His Majesty's Government have a special responsibility, namely, towards Europeans who served in the Secretary of State's and analogous Services. We intend to invite the new authorities to negotiate, in due course, an agreement whereby a capital sum in sterling will be set aside to cover this liability."—[OFFICIAL REPORT, 10th July, 1947; Vol. 439, c. 2458.]
That agreement was negotiated a year later. During the course of discussion on that agreement a question was asked by my right hon. Friend the Member for Saffron Walden (Mr. R. A. Butler) as to what would happen in the event of the Government of India or the Government of Pakistan imposing tax upon these pensions. The then Chancellor of the Exchequer, Sir Stafford Cripps, replied to the effect that in that event, which did not seem to him likely at that moment, there would be discussions between the Governments. I understand some form of discussion has gone on, but the fact is that these pensions, since 28th February this year, have been subject to tax by the Government of India. They have not been made subject to tax by the Government of Pakistan, which pays something under one-third of the former pensions.
The effect of making these pensions subject to Indian tax is not very great to

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residents in this country, but it is in certain cases. Even under existing law it imposes a hardship. To show the Committee that this class of income requires special treatment—and I have already mentioned the responsibility of the House of Commons—I want to remind the Committee of the history of these pensions from the point of view of Income Tax. Both by Indian legislation, or ordinances under legislation, and by United Kingdom legislation until February this year these pensions have been specifically exempted from Indian, tax.
8.0 p.m.
So far as India is concerned, the exemption was stated, I think, in an Indian revenue notification under the Indian Income Tax Act, 1919. So far as this Parliament is concerned, the exemption is set out in no uncertain terms in Section 272 of the Government of India Act. 1935. It is there stated that these pensions should
"be exempt from all taxation imposed by or under any existing Indian law, or any law of the Federal or Provincial Legislature."
In fact, I think it might be said—and the Committee will probably agree—that these men who were at that time serving in the Indian Civil Service or other similar service or in the Indian Army were entitled to regard it as an almost implied condition of their service that when their pension became payable it should be paid without deduction of Indian Income Tax.
In face of all those things, the Indian Government have seen fit to change the law, from their point of view, and to impose tax upon these payments. It is no part of my duty or my case to criticise that action; it is a matter which, I have no doubt, is for negotiation between the two Governments. But we must remember, of course, that the Indian Government are a completely sovereign Government and have the right to impose taxation as they may see fit.
This decision to impose tax raises many problems. It raises many important points of principle with which I do not propose to deal in detail at the moment, but in order to satisfy the Committee and the Chancellor that this is a good Clause, or that the principle it seeks to establish is a good principle, I have to prove to the Committee that the case of these pensioners is a special one; and in order to do that I want to underline the broad
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principle which this action of the Government of India raises.
In my opinion, it raises the question of the moral responsibility of His Majesty's Government to see that all pensions paid to former members of the Secretary of State's service and analogous services are paid free of Indian tax—in fact, free of all tax, subject only to deduction of taxes imposed by the law of the land in which the pensioners reside. But, having said that, I do not want to pursue it except to say that if, as I hope, the Committee accept this Clause, I do not think it will entirely dispose of the hardship created for pensioners, certainly for those resident outside this country, by the recent decision of the Government of India.
May I now very shortly say a few words on the narrow point of what this Clause tries to do in the way of double taxation relief? It applies, of course, only to residents in this country. We must remember that many of these pensioners are no longer resident in this country; indeed many never have been resident here but came, perhaps, from Ireland or Jersey or Guernsey or places like that. What we seek to do for the resident in this country is to ensure that all Indian income paid under the new Indian Legislation, all that amount of tax may be allowed as a deduction from the British tax—the tax which has to be paid here—on the pension.
As the Chancellor and the Financial Secretary said in answer to questions, at the moment the amount of relief claimable under Section 36 of the Finance Act to which I have referred is in many cases sufficient to cover the amount of Indian tax payable. But that is not so in all cases; it is not so for example in the case of pensions of £500 or £600 a year paid to married men with children. In those cases the British tax relief, about which the Chancellor has been so proud, results in a lower overall rate of tax than the Indian rate of tax in force for the time being.
I shall not weary the Committee with details, for I think the Chancellor will have more accurate figures in his possession that I am ever likely to obtain. But in order that these people and others may benefit, we suggest that we should lift the limitation of three-quarters of the British rate of relief and allow them the full relief up to the

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maximum of the amount of British tax which has to be paid on this pension. That is what we seek to do in the Clause.
Most calculations which have been made of the amount of tax payable under Indian law are based upon the assumption that the Indian Government will tax those pensions as if they were the complete world's income of pensioners. That rule, I think, is in force and will remain until the end of July, but it is a purely transitional rule and the ordinary rule of Indian taxation is much more harsh. I think it is something like this—and perhaps the Chancellor will correct me if I am wrong: it is that the pensioner can have the option either of accepting a flat rate of 8s. in the £, which on pensions of under £1,000 is a very large rate, or of being taxed on the pension at the appropriate rate which would be charged on the whole of his world's income, after he has filled in many forms and proved to the Indian Revenue authorities exactly what is his whole world's income.
In those circumstances, this new Clause will be even more necessary than it is at the moment, and though I think it may be possible to say that in fact only £1 or £2 or £4 or, at the maximum £10, will be saved by any pensioner if the Clause is accepted, that is only on the basis of the rule in force at present, and if the harsher assessments are applied this Clause will save pensioners a much greater sum.
In any case, I think the Committee will agree that even £1, and certainly £10, less tax to pay means a great deal to all of us and particularly to people living on fixed incomes. To a certain extent this is a small point, and I am sure the Chancellor will agree that the Clause will cost the country comparatively little. But bound up with it is a great principle—the responsibility of the House and of His Majesty's Government towards these men who have served the Crown and the House and the country for many years in times of great difficulty, whose pensions and the security of whose pensions are so important to them, and who in many cases have retired on the basis that they would receive a pension of a certain amount but who now find that that amount has been reduced.
Mr. Gaitskell: I think it may be for the convenience of the Committee if I intervene immediately in order to indicate the Government's attitude on this important question. We have, of course, for some little time been giving consideration to the problem created by the tax imposed on pensioners by the Indian Government. Indeed, we have been considering it since the tax was imposed, and I should like to inform the Committee of our views.
As the hon. Member for Blackpool, North (Mr. Low) made clear, this Clause is designed to ensure that the pensioners of 'the Government of India, who at present are subject both to United Kingdom tax and to Indian tax, shall receive relief from their United Kingdom tax up to the extent of the full amount of United Kingdom tax paid and not, as the law now provides, up to the extent of three-quarters of it. The hon. Member referred to the legal position here. I do not think there is any disagreement between us, but perhaps I should make the position plain.
The legal immunity which was laid down in Section 272 of the Government of India Act, 1935, came to an end on the transfer of power in 1947. Therefore, legally there is no protection. Nevertheless, I can tell the Committee at once that the Government accept the fact that they have a moral obligation in this matter. I think that there can be no doubt that on the transfer of power it was generally accepted that these pensions would not be taxed, and I have little doubt that had we supposed at that time that they would have been taxed, the matter would have been raised and some Government undertaking would have been given. Although there is no legal obligation on us, we accept the moral obligation.
The Clause does not protect all these pensioners, as I think we should desire them to be protected. For example, it would not protect those who do not pay any United Kingdom tax and it would not protect to the fullest extent those whose Indian tax exceeds the whole of their United Kingdom tax. Therefore, I do not think that this is the best way of dealing with the matter. What we propose to do instead is to compensate the pensioners for the additional taxation in which they have become involved as the result of the decision of the Government of India to levy taxation upon them.

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We are working at present on a scheme of compensation, and its details and scope will be announced in due course. Perhaps I should say that in the meantime I cannot pledge the Government here and now, whatever the circumstances may be in the future, to pay compensation in every condition. I use these words of caution as I think that I am entitled to do at this stage in the proceedings. It is, however, our intention to see that justice is done.
We shall want to safeguard the interests of the United Kingdom Exchequer by various means. For example, I think that we can reasonably require that the taxpayer shall have taken all the steps open to him to minimise the amount of tax he is asked to pay by the Indian Government, and matters of that kind. But, as I say, we accept the moral obligation. We think that the best way is to pay compensation, and we are working on a scheme to do that. My estimate at the moment of the cost—it is considerably in excess of the cost envisaged in the Clause, but that is not a matter we can take into account—is about £40,000 a year. A more exact figure will be available, I hope, before long and, of course, I shall give the House full details of the arrangement when it is worked out.
Mr. Joynson-Hicks: There are two points which I should like to raise. First, the right hon. Gentleman made no reference to any geographical limitations. May we take it that the pensioners whom he is seeking to protect need not necessarily be resident in this country? Secondly, one of the most vital things for the pensioner is security. I appreciate that the right hon. Gentleman cannot adumbrate the details of his scheme, but can he give an assurance that the scheme he is going to put forward will provide for that security for the future—that it will be a permanent scheme so far as the pensioners are concerned?
Mr. Gaitskell: As regards the second question, we will do our best to do that subject to the necessary caution one has to have in these matters. As to the first point, I do not think, having examined the position, we can limit this compensation to persons resident in the United Kingdom. There will be questions of double taxation that may arise in relation to the countries where they are resident.
Sir Patrick Spens: May I say how grateful the pensioners concerned will be for the announcement made by the Chancellor of the Exchequer? I should like to make it quite clear that I am not myself one of those affected. I happen to be an ex-judge for whom, as with other ex-judges who are not members of the Indian Civil Service, the late Parliament made special provision at the end of 1948. Fortunately for us our pensions are paid by moneys supplied by Parliament, but nonetheless one's sympathies are with one's judicial colleagues and others who were in the Services. We are very glad that this action has been taken by the. Government.
8.15 p.m.
The Chancellor said that the change took place on the transfer of power. I do not think the legal position is strictly that. Under the Independence Act the existing law was. in fact, continued until the Constituent Assembly thought fit to alter it. All that has happened is exactly what one might expect, and that is that in the new constitution a provision similar to Section 272 of the India Act was not included.
Thereupon, legally all these pensions payable to persons resident outside India would automatically come within the existing taxation statutes of the Government of India. They are very much like ours. They have Commissioners of Inland Revenue, and, unless there are statutory exceptions provided, they would naturally have to apply the ordinary Indian taxation law to incomes received from India by those resident outside India. That is why I think the change took place in April of this year. But this method of safeguard proposed by the Government is very important. Nothing that we were able to suggest fully protected those receiving the smaller pensions and entitled to family allowances from this country. No provision could be made for a full set-off against what they had to pay in India. Nor could our suggestions protect those not resident here.
There is, of course, the final and more important point which must not be lost sight of. I understand that Indian Income Tax has hitherto been deducted as if the pensions were the sole income of the recipients. But Indian Income Tax law provides that deductions may be

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made with reference to the recipients' world income. In individual cases deductions may therefore be greatly increased. I understand that the Chancellor has generally and generously promised that compensation will be provided not only for those resident in this country, but also for those resident outside, to the amount of the deductions made, subject, of course, to them taking advantage of every means by which they can reduce the claim that they make on this country. That seems to me extremely fair, and I believe it will relieve a great deal of the anxiety of the pensioners concerned. I am only glad that the right hon. Gentleman has at last made this pronouncement in order to assuage those widespread anxieties.
Mr. Heathcoat Amory: The intimation the Chancellor of the Exchequer has given will, I am sure, be welcome to the whole Committee. We are delighted that the Government are to undertake the moral obligation to these people who have done so much in the past not only for this country, but for India and Pakistan, too. There is only one question I should like to put. Would the right hon. Gentleman tell the Committee the date on which the payment of this compensation will apply? Will it apply from the date on which Indian Income Tax was applied to these pensioners?
Colonel Gomme-Duncan: I also am very gratified to learn from the Chancellor that these people are to be given a fair deal. I should like to ask a question about progressive taxation on the part of the Indian Government, in the hope that the compensation the Chancellor has mentioned will cover progressive increases in taxation by the Indian Government if such be imposed, as there are signs that such will be the case. It may be that the right hon. Gentleman. cannot tell us immediately, but I hope that he will be able to do so at some later date.
The other point about which I am not too clear is about Indian incomes other than pensions—small investments which officers or civil servants may have in industry in India, which bring them in a little extra income on the Indian basis. It will be appreciated by the Chancellor,
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when he states that the Government have a moral duty in this matter, that the moral duty is based upon the contract, which every member of the Civil Service or the Armed Forces in India entered into when he began his job, that he should get a pension in full laid down for his particular service according to the particular grade he had reached at the time of his retirement.
Therefore, if the Indian income and other items make the tax levelled at a higher rate than the pension only, what will be the position? I assume that the extra civil income from industry or investment will not be counted in relieving the officer or other person of taxation upon the pension. The contract which was entered into has worried these people as much as anything. They say, quite rightly: "We entered into the service on certain terms, which were one of the reasons for our accepting the job in the Indian Army or Civil Service." I hope that in the details of the paper to be issued the Government will keep that point fully in mind. I think they will, from what the Chancellor has said about accepting moral responsibility for carrying out the contract.
Mr. Gaitskell: I should like to make it plain that the obligation I have accepted is limited to pensions. This is quite a separate matter from the other forms of Income Tax which are to be treated under the Double Taxation Agreement—or, rather, under the unilateral action which took place last year. We are still trying to conclude the Double Taxation Agreement, unfortunately not so far with success. When this applies,- it would apply in such a way as to repay to them the taxation which India has claimed, I think it is from April, when the Indian Government imposed the tax. I do not think I can say any more this evening about it.
Sir P. Spens: The point really is that up to date the pensions have, in fact, been taxed by the Indian Government as if they were the recipients' only income. The Government have the power to assess the rate of tax on the pension and other income, both Indian and other. If that is done, and the pension is taxed at the higher rate, does the promise of the Chancellor include the tax on the pension at whatever rate it is assessed in India?
Mr. Gaitskell: If the hon. and learned Gentleman will allow me time to think that one over, I will bear in mind what he has said. I would not like to commit myself about it now.
Mr. Low: Before I ask leave to withdraw this Motion, I wish to say how pleased I was to hear the Chancellor give in to the quite narrow principle of the Clause and also on the much proader principle of the moral obligation of His Majesty's Government. I was very glad, but there were many others besides myself who were not only glad but somewhat surprised, because it was only on 7th June that the Secretary of State for Commonwealth Relations, who ought to have known better, refused to accept that obligation.
The Chairman: The hon. Member ought not to widen the area of discussion.
Mr. Low: I was not trying to widen it. I was proposing to put the lid on it very quickly. I will leave that point, which shows why I was surprised, and I will advise the Committee that although it was quite possible for the Chancellor to make a concession, which we are very happy he did, on the broad general principle, it was not possible for any Member of the Committee to put down a new Clause going anything like so wide. Many of us have been mentioning this at Question time and we wanted another opportunity to raise it. I am glad that we shall now no longer need it. This was the only opportunity we had of raising the position of these unhappy pensioners, who will now be far less unhappy. I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(ALLOWANCE FOR DOMESTIC EXPENSES.)
There shall be added to Rule 3 (c) of the Rules applicable to Cases I and II of Schedule D, a second proviso, as follows:
"Provided also that where any such part is so used, sums may be deducted in respect of rates, and in respect of heating, lighting, cleaning and similar outlay in so far as those sums allowed have not been granted as a deduction in ascertaining the net annual value of the dwelling-house for the purposes of the assessment under Schedule A in respect of that house."—[Mr. G. P. Stevens.]
Brought up and read the First time.
Mr. G. P. Stevens (Portsmouth, Langstone): I beg to move, "That the Clause be read a Second time."
Rule 3 of the Rules applicable to Cases I and II of Schedule D, the Schedule under which professional profits and incomes are normally taxed, of the Income Tax Act, 1918, defines very largely by exclusion the profits or income against which is applied the appropriate rate of Income Tax. Rule 3 (c) expressly excludes the rent or annual value of any dwelling-house but it adds a proviso that where a part of that dwelling-house is used for professional purposes some part of the rent or the net annual value, not in any case exceeding two-thirds, shall be charged against the profits or income of the taxpayer.
Many people use their private houses or some part of them as business premises. Doctors use their living rooms as surgeries or waiting rooms. Those are rooms. which at other times are used as part of their normal dwelling-house. Barristers take home briefs and study them at weekends and in the evenings, and even accountants have been known to take home balance sheets and to produce reports, although whether they were on Festival Gardens or some more cheery item depended on the circumstances.
It is not only the rent or the net annual value which is involved; there is also heating, lighting and some proportion of rates and things of that kind. It is unfortunate that the Report of the Committee on the Taxation of Trading Profits, presided over by Mr. Millard Tucker, which was set up by Sir Stafford Cripps, was not in the hands of the Chancellor in time for him to incorporate any of its recommendations in his Budget. It may be a question of time in that instance but it is certainly a matter of fact that none of the Tucker recommendations was included in the Budget.
As a matter of practice, inspectors of taxes have interpreted Rule 3 (c) in a generous and broadminded spirit and have for a considerable time allowed some deduction for rates, lighting, heating and so on in respect of rooms so used, but it is a pity and a mistake that a general practice should not have the support of a Statute. The Clause merely puts on a statutory basis that which is already the general practice, and as that is so I have every hope that the Chancellor will accept it.
Mr. Gaitskell: It may again be for the convenience of the Committee if I intervene at an early stage. As the hon. Member for Langstone (Mr. Stevens) has pointed out, the Clause embodies one of the recommendations of the Tucker Committee and it really amounts to bringing under the statute what is already the practice of the Inland Revenue. That being so, we see no particular difficulty about the principle involved, though I am advised that the wording of the Clause is defective in certain respects.
That brings me to a rather more general point. As the hon. Member said, during my Budget statement I indicated that I had not had time to study the Tucker Committee's Report and recommendations in detail. The Report had only been published a few days before the Budget speech.
8.30 p.m.
Mr. Selwyn Lloyd: But the Report is dated 20th February.
Mr. Gaitskell: The Report was completed in February but it was not published until April. Although in theory I could have got hold of it in manuscript form, I was preoccupied with a number of other things at that time. Nor would it have been possible for anybody else to have seen it. I was going on to say that it would be quite out of the question in highly technical matters of this kind, of considerable importance to industry and commerce, for the Government to reach its conclusions without having fairly full consultations with the representatives of industry. Therefore, I said during my Budget speech that we must have these consultations and await the reactions of industry before reaching our final conclusions, so that it would not be possible for us this year to introduce legislation to implement the report of the Tucker Committee.
What I am saying at the moment applies not only to this Clause but also to the four or five or six other new Clauses based on recommendations of the Tucker Committee. Perhaps I could add, with your permission, Major Milner, that we are by no means unsympathetic to those other new Clauses. Indeed our first reaction to the recommendations which they embody is in the main favourable. That applies particularly not only to this Clause, but also to the one relating
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to the set-off of business losses against other income of the following year, and to the one immediately following dealing with the carry-back of losses on cessation.
I cannot, therefore, agree to bring changes into this Bill. We cannot pick and choose in this way, and I should not be prepared to do that until I had had consultations with industry. Nevertheless, I can say to the hon. Member that in respect of this Clause and the principles involved in most of the others based on the Tucker Report, it will simply be a question of time. Provided that consultations with industry yield no disagreement and that we all feel it is the right thing to do, it should be possible to introduce appropriate legislation next year.
Mr. Selwyn Lloyd: I am not sure that this is the proper time, or that it is the intention of the Chancellor or yourself, Major Milner, to have a lengthy and general debate on the Report of the Millard Tucker Committee. I do not think it would be the wish of the Committee that we should do that. Nevertheless, we cannot altogether permit the words of the Chancellor to go without comment.
I admit at once that the right hon. Gentleman has not made an unconciliatory speech with regard to this new Clause. and personally I should be quite happy if he would intimate that he would not rule out the question of retrospection as regards its benefits. The Government are willing to be retrospective when there is any benefit to the Inland Revenue. I should have thought that in this case they could be retrospective in regard to the interests of the taxpayer because, so far as this Clause is concerned, there need be no discussion with industry.
It is not a matter into which industry comes to any extent. It is a matter of general practice, of which I confess I was not aware, to my own personal disadvantage. I do not know whether the Attorney-General was aware of it. Before he came in there was a reference to people reading briefs at home late at night, consuming electricity and coal, and the extent to which they could get an allowance for that. Possibly if that could be made retrospective for a number of years, some of us could get considerable advantage. That would be unreasonable to ask. All that we could possibly ask

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him to do is to take into account the present year.
On the general matter, we have not had a very good deal so far as the Millard Tucker Report is concerned. Before the Clause was moved, I refreshed my memory with what Sir Stafford Cripps said in April, 1949, when he announced that he was setting up that Committee. He began by saying that his reason for setting it up was that he had received representations from many quarters about the difficulty which industrial companies were experiencing in financing the cost of replacement of old machinery, and so forth. Then he announced that he was introducing the initial allowances as a means of taking care of that for the interim period. It is quite fair, of course, to remind the present Chancellor of the Exchequer that he has abolished initial allowances.
Sir Stafford Cripps then went on to deal with the general question of calculating profits. He referred to the representations made to him by the F.B.I. Speaking of the initial allowances, he said:
"The proposal I have just described will, I hope, go far to meet the immediate needs of industry. But there is a number of other issues arising out of the present structure of taxation … which I think, requires further examination."
He went on to say:
"An inquiry covering the whole subject would be a very extensive undertaking indeed, and I propose, therefore, to make a start by taking the technical issues which arise in connection with the computation of taxable profits."
He thought that
"it would be convenient if, as a first step, these technical matters were examined by a small independent committee, whose terms of reference, in effect, would he to inquire into the method of computing trade profits."
Sir Stafford Cripps then said:
"I propose therefore to set up such a committee accordingly. It will not be part of this committee's functions to inquire into the general question of the incidence of tax upon industry, but its work will clear the ground for the comprehensive inquiry which, as I have indicated, I hope to set on foot at a later stage. The inquiry of the committee which I am now proposing to set up will necessarily take some time, and its results will not be available for consideration in connection with this year's Finance Bill."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2098.]
That was on 6th April, 1949.
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I do not think that anybody who welcomed that statement of Sir Stafford Cripps thought that the results of that Committee would not be available for consideration in connection with the Finance Bill of 1950 or, apparently, in connection with the Bill of 1951. What the Chancellor really has asked us to do is to wipe out of our minds or of our discussions on the Bill any of the recommendations of the Millard Tucker Committee. I do not think anybody who welcomed Sir Stafford Cripps' announce-met in 1949 realised that it meant a moratorium on these matters until 1952, which is what I understand from the right hon. Gentleman is really the position.
I cannot admit that that is satisfactory. The Report was signed, apparently, on 20th February, 1951. It would be interesting to know when it was that the Government decided to incorporate Clause 32 in the Bill, and I somehow feel that had there been the same desire for expedition in the matter of these reforms—they are admittedly overdue—as there was with regard to Clause 32, somehow or other the right hon. Gentleman would have contrived to get them within the terms of the present Bill.
However, the Chancellor tonight has made certain conciliatory statements. I welcome those. I hope that the right hon. Gentleman will not be in office—not he personally, but rather the Government—in order to put them into operation, but if by any misfortune to the nation he should still be in the same position when the next Finance Bill comes forward, I hope he will honour the obligations that he has indicated tonight.
Lieut.-Commander Braithwaite: The Committee would be wise to pin its hopes to the preamble of the right hon. Gentleman's recent utterance, which, in the language of the Book of Common Prayer, might be described as "comforting words." If we listened carefully to what he said, we realise that he has this matter at heart and will hand it over to his successor at an early date so that his pledge that the matter will be dealt with next year will he fulfilled.
There was one deduction I drew from his remarks which I hope he will be able to confirm. We have often complained in the past that Ministerial assurances

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are not written into a Bill and I think the Chancellor gave us a valid reason for delaying the matter, but may we take it that his speech will be carefully studied by his inspectorate, who will act from now onwards in the terms of that speech in dealing with such claims by persons affected by the intentions of the Clause? The Chancellor told us that all the Clause did was to give statutory effect to a practice already operating and, if that is so, the Chancellor's words can be taken as confirmation and I think we might take some comfort while awaiting the events of 1952.
Mr. Maudling: I am naurally disappointed that at this stage the Chancellor is not prepared to take action on these points, which seem straightforward. I am particularly interested in a later Clause which I cannot discuss now, because a constituent is particularly and very unfortunately affected by the present law and I was hoping to be able to put his case forward this evening; but apparently, because his case has been supported by a distinguished Committee it will not be possible for the Chancellor to consider it.
Surely there would be a disadvantage in regard to a number of these amendments to the tax. Would it not be better to incorporate them in a separate Income Bill? There seems to be much advantage in the idea of separating alterations in tax law of this kind from the main Finance Bill of the year and putting them into a Bill of their own. I should like the right hon. Gentleman before the next Finance Bill to consider a separate Bill of this kind.
Mr. Lytteiton: I think we have to examine the practical issues which the Chancellor's short speech raised. Certain new Clauses have been selected but, as I understood it, the Chancellor was giving us a preview of what he was going to say about them "I am going to do nothing until 1952." I regard that statement with some apprehension because, as my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) has shown, it was a little much to ask us to hold our hands on these very necessary reforms for about three years, which is what we are being asked to do. I do not know that I could go quite as far as he wishes.
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The trouble is that in this case the Treasury do not appear to have an opinion of their own about something about reforms which are long overdue, but they have to wait for the report of a particular committee—and I do not impute any particular blame to them—before they put right these things which are a mischief to the taxpayers. The Millard Tucker Report is presented at a time when the Chancellor is entitled to say it is impossible for him to put those reforms into the present statute. I would like him to go a little further than he has done and, although some hon. Friends may not move these individual new Clauses, I think that the task of the Chancellor will be too easy.
We all know that one of the forms of protective colouring that the Government animal assumes is to set up a Royal Commission and inform the chairman that he has to go into the subject very thoroughly. We all know what that means. The Chancellor says, "These are very complicated matters and I will set up a legal body and, when it reports, I will look at it." When it reports, unfortunately, it turns out that the report is presented about 10 days before he has to produce his Budget, and it is not good enough to accept that with complacency. I think he should go a little further. Perhaps the lines on which he can assure the Committee are those suggested by my hon. Friend the Member for Barnet (Mr. Maudling).
8.45 p.m.
If there is a hope of some of these reforms being introduced in the interim between now and the next Finance Bill I should pass from these Clauses with less apprehension. I might add that the idea that some of them require consultation with industry is ill-sustained. There are some Clauses, as hon. Members can see by reading them, which require no consultation with industry. They are concerned with relations between the Inland Revenue and the individual taxpayer.
If the right hon. Gentleman intends to ask us to hold our hands over these Clauses now he must first tell us whether he excludes the possibility of these reforms being effected before the next Finance Bill, and whether in particular he will say that in more precise terms about cases in which industry has not to be consulted,

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where the Clauses have the Chancellor's sympathy. At present the sympathy is, like butter, a little too thinly spread over the bread, and I have a sneaking idea that there will be some rather stale bits of crusts left for the taxpayer if we leave the matter where it is.
I am apprehensive about the matter because I think it makes the task of Chancellors who do not want to introduce difficult reforms too easy if they are to be waiting for reports of committees which by some strange coincidence always report to the Chancellor just too late for him to incorporate the necessary reforms in his Budget. I do not know which of these Clauses will be selected by you, Major Milner but unless we can get from the Chancellor something more than we have heard one or two of these new Clauses which you call will have to be moved and discussed. I am trying to help the Committee as much as I can.
Mr. Gaitskell: The right hon. Gentleman has asked me a number of questions. He will not of course expect me to give indications of whether advance legislation is possible. I cannot tonight express an opinion on a matter like that. I must say that these changes might after all have been made many years before now. They have not been made. We are in favour of at least some of them in principle. I repeat the assurance which I gave that we shall certainly see that they come into next year's Finance Bill. Whether it will be possible in any special case to do anything better than that I cannot say tonight.
I had hoped that my intervention would on the one hand have enabled the Committee to proceed a little faster—we have still a lot to get through—and at the same time; give Members opposite some assurance about our general intention towards the Clauses which they have put down. It is for you, Major Milner, to say how we shall conduct our proceedings, but I hope that what I have said will help to shorten the discussion on these particular matters.
Mr. Selwyn Lloyd: We are all naturally anxious to discuss as many of these matters as possible in as short a time as possible. It seems to me that the next new Clause which really deals with the recommendations of the Millard Tucker Committee is that at the bottom
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of page 1406, in the name of my hon. Friend the Member for Barnet (Mr. Maudling), my hon. Friend the Member for Portsmouth, Langstone (Mr. G. P. Stevens), and myself:
"Appeals in connection with claims under s. 34 of Income Tax Act, 1918."
The right hon. Gentleman has made a considered statement on the new Clause that we are discusing. If he would make a similar sort of conciliatory gesture with regard to the subsequent new Clause to which I have referred I think it would be unnecessary to take up the time of the Committee in discussing it. It follows the recommendations of the Millard Tucker Committee, and I am certain that if the right hon. Gentleman can now do as I suggest it will not be necessary for us to discuss that new Clause even if you, Major Milner, select it.
Mr. Gaitskell: We see no objection in principle to what is involved in it.
Mr. Stevens: I cannot refuse to respond to the appeal for speed from the Chancellor, even though his example has not been a conspicuous one. Therefore, I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.
The Chairman: I take it, having regard to the assurance that the Chancellor has given, that it is not proposed to move the "Millard Tucker" Clauses mentioned by the hon. and learned Member for Wirral (Mr. Selwyn Lloyd)?
Mr. Lyttelton: If it was possible to follow the line which the Chancellor has followed with regard to the Clause which has been withdrawn we shall make very good progress. I attach importance to getting specific assurances that the principles of these Clauses are not distasteful to the Chancellor, rather than to rely on the overall good will which he tries to permeate. I should like a rather more pointed description. If we could proceed by asking whether the Clause in the name of my hon. Friend the Member for Langstone (Mr. Stevens) relating to the set off of business losses against other income of the following year, is in general agreeable in principle to him, then it might not be necessary for my hon. Friend to move it and so take up the

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time of the Committee. But I should like to know whether there is anything on each of the Clauses which is likely to prevent the right hon. Gentleman from putting them into force.
Mr. Stevens: I should like to know whether or not it is the intention to discuss any further Millard Tucker recommendations?
The Chairman: I take it that, having regard to the assurance given by the Chancellor, the hon. Member for Barnet (Mr. Maudling) does not propose to move his new Clause relating to appeals in connection with claims under Section 34 of the Income Tax Act, 1918. The question arises now with regard to the Clause in the name of the hon. Member for Langstone (Mr. Stevens) regarding the set off of business losses against other income of the following year.
Mr. Lyttelton: You have said on that Clause, Major Milner, that you took it that it was the wish of the Committee that no more of the Millard Tucker Clauses should be moved. To that I have demurred. We could not possibly go so far as that. We should have to move them one by one. But if we could get a similar assurance from the Chancellor about the individual Clauses, I think it possible that some of my hon. Friends may not wish to move them; but we must go Clause by Clause.
The Chairman: The right hon. Gentleman would probably agree that the Clause may be moved formally.

New Clause.—(SET OFF OF BUSINESS LOSSES AGAINST OTHER INCOME OF THE FOLLOWING YEAR.)
Where in any year of assessment a person sustains a loss in any trade, profession or vocation carried on by him either solely or in partnership he may claim that such a loss, or such part thereof in respect of which no relief is claimed under any other provision of the Income Tax Acts may be carried forward and set off against his aggregate income from all sources for the next following year of assessment, and relief shall be given accordingly whether by repayment or otherwise.—[Mr. Stevens.]
Brought up, and read the First time.
Mr. Stevens: I beg to move, "That the Clause be read a Second time."
Mr. Gaitskell: We think a reasonable case has been made out for this proposal.
Mr. Selwyn Lloyd: I feel that my point about retrospection is very definitely of some importance in regard to this Clause, but I do not think we could pass it unless we get an undertaking from the Chancellor that this is to apply to this year. I see no reason at all why action upon this particular matter should be postponed for another year. If the right hon. Gentleman will give us some undertaking of this nature I shall be satisfied.
Question put, and negatived.

New Clause.—(ALLOWANCE FOR EXPENSES OF MINISTERS OF RELIGION.)
Rule 2 of the General Rules in the First Schedule to the Income Tax Act, 1918, shall have effect as if for sub-paragraph (a) of paragraph 1 of that Rule there were substituted the following:
"(a) any sums of money paid or expenses incurred by him wholly and exclusively for the purpose of the efficient performance of his duty as a clergyman or minister."—[Mr. H. Brooke.]
Brought up, and read the First time.
Mr. Henry Brooke: I beg to move, "That the Clause be read a Second time."
I think it would be helpful if I explained what is the existing wording so that I can endeavour to show how it needs revision. At present it states that a clergyman may claim as a deduction:
"any sums of money paid or expenses incurred by him wholly, exclusively. and necessarily in the performance of his duty as a clergyman or minister."
In my experience, inspectors of taxes endeavour to interpret those words generously towards the clergy. I make no criticism whatever of the administration of the law, but a situation has been reached where the clergy are advised in their own interests not to press any doubtful case to appeal, because the words are so rigid, restrictive and unfavourable to the special position of a clergyman that on appeal any case is almost certain to be determined against him.
He has to prove that expenditure is necessary in the performance of his duties. There are varying standards of performance of a clergyman's duties, just as I would submit to the Committee that there

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are varying standards of performance of the duties of a Member of Parliament. Some of us might find it a little awkward if we submitted a tax claim for expenditure which we considered necessary in the performance of our duties, and it was pointed out to us that some predecessor representing the same constituency had not thought it necessary to incur a similar expenditure, and therefore we could not prove a claim. In point of fact, I do not think that Members of Parliament are treated like that by the Revenue authorities, but clergymen are liable to be treated in that way.
If the law is not working appropriately to the special position of a clergyman, then I submit that we should look at the wording again. I noticed a case in "The Times" the other day of a clergyman who had had his car destroyed by a bomb. He was not able to get a new car. When he came to press his claim for car expenses, it was argued that the fact that he was now getting on without a car proved that the use of a car was unnecessary to him. Therefore, the claim was disallowed. Other examples like that can be quoted. I have a letter here from an inspector of taxes. I do not criticise the inspector, because I think he was interpreting the law correctly. He says:
"The use of a car in connection with activities such as youth meetings, conveyance of parishioners to hospital or other journeys which are carried out by a clergyman as a moral obligation and in the way in which, from the highest motives, he chooses to give his services to his parishioners, does not give rise to a necessary expense within the close wording of Rule 2."
In other words, if it is possible to prove that any clergyman or minister could avoid incurring an expenditure on which a claim is being made, then that expenditure is liable to be disallowed. I cannot think that this Committee wishes the clergy to be treated in that extremely rigid manner. It is to draw attention to that that I move this Motion.
Further, I ask the Committee to note the words in the present Rule 2:
"in the performance of his duty."
Again, that rule is rigidly applied. Suppose that a clergyman buys a devotional book which he proposes to read with his Bible classes. If he chose to claim for that, it would be allowed as an expense necessarily incurred in the performance of his duty. If, on the other
146
hand, he bought a book because he knew that he ought to possess and read it in order to keep up to date, freshen up his sermons and give additional assistance to his parishioners, that would have to be disallowed, because though he might have bought that book for the purpose of the better performance of his duties, he was not actually using it in church or employing it in the performance of his duties. Again, it strikes me that the present wording is too restrictive.
9.0 p.m.
Mr. Houghton: Surely, the hon. Gentleman will realise that the words of which he is now complaining are also in Rule 9 of Schedule E, applying to all other taxpayers assessed under the same Schedule?
Mr. Brooke: Yes, I am well aware that these words occur elsewhere in the Income Tax Acts. What I am submitting is that we cannot treat a clergyman as exactly on a par with an ordinary man who is employed under a contract of service and is taxed under Schedule E, because Schedule E is primarily intended for the man who is not his own master, but is given a job to do and has to carry out orders as a subordinate, in which case it is reasonable to say whether a particular item of expense is necessary or not. A clergyman, however, is to a very large extent his own master, and he has to decide how his duties are to be carried out.
It really is not for him to be at the mercy of a representative of the Revenue, who shall say whether a particular expenditure has been necessary in the performance of his duties or not. I am grateful to the hon. Member for his intervention, because that brings me to the main point which I wish to make. I hope that I have carried the Committee with me in endeavouring to prove that the present wording is not wholly satisfactory, and that there should be some revision.
The next question is how we are to provide that revision, and in my Clause I have suggested words which, I frankly admit, are based on the wording that at present exists for the purpose of Schedule D, covering the case of the professional man. A professional man is allowed to claim in respect of
"money wholly and exclusively laid out or expended for the purposes of the … profession or vocation."

147
It is customary to say that a clergyman has a vocation, but for Income Tax purposes his occupation is not treated as a vocation, and he is placed under the much stricter Schedule E words.
In moving this Clause, I am not basing it on the grounds of sympathy with the low pay of the clergy, or anything like that. Still less am I urging that the clergy should in any sense be placed in a privileged position. My case is that the present wording of Rule 2 is not appropriately applicable to the special position in which clergymen have to do their work, and I trust that the Committee will sympathise with me and will support me in the suggestion I make that we should re-word the terms of the Rule, not in order to widen the field to cover all sorts of otiose expenditure, but to provide for the kind of expenditure in which the clergyman who is doing his job is reasonably involved; that is to say, expenses wholly and exclusively incurred for the purpose of the efficient performance of his duties.
Air Commodore Harvey: I am sure that the Committee and most people in the country are indebted to my hon. Friend the Member for Hampstead (Mr. H. Brooke) for bringing forward his new Clause. I quite agree that the clergy should not be placed in a privileged position over the matter of taxation, but I would go just a little farther than my hon. Friend and ask the Committee to consider the situation in which the clergymen of this country are placed.
I suppose that the majority of them have been affected more than anybody else in the country by the increased cost of living. They have to maintain a certain social position, and very few of them have had increments in their annual stipends. Year after year this House has debated the Easter offerings for clergymen, but no concession has been made. Very few clergymen have motor cars, but I believe that those who have are better clergymen for having them inasmuch as the cars enable them in many cases to cover very large areas.
Without wishing to place them in a privileged position, I ask the Chancellor to view sympathetically what has been said on their behalf, and to see whether the law cannot be re-worded so as to enable the clergy to get this benefit. It would
148
not cost the Chancellor a great deal of money. I am sure that the Inland Revenue inspectors do their duty fairly, but they have to interpret the law as worded. As I have said, I hope some concession will be made in their case.
Mr. J. Edwards: I am sorry that I must resist this new Clause. It has been proposed from time to time that we should bring the Schedule E expenses rule in line with that of Schedule D for all tax purposes; but as has been pointed out in previous debates on the general topic, it is important to distinguish, on the one hand, between the person who is directing his own income-earning activities and who is subject to the specific provisions of Schedule D and is entitled to claim an allowance for the expenses which he lays out for the purpose of earning his profit, and, on the other hand, the holder of an office or appointment who performs particular duties within a definite area for a fixed remuneration.
I submit to the Committee that it would be absolutely impossible to widen the expenses rule for ministers of religion without, at the same time, giving rise to a whole crop of claims of varying degrees of merit on behalf of other Schedule E taxpayers. If a breach were made in favour of one class of Schedule E taxpayers in the main principle governing the rule of expenses, then there would be no ground on which a similar relaxation could be resisted for other groups of people, and I could foresee a whole host of claims arising. For example, in one of my previous occupations, that of a university tutor, I certainly could have made out a case on the same sort of ground as that made by the hon. Member for Hampstead (Mr. H. Brooke).
May I say to the hon. and gallant Member for Macclesfield (Air Commodore Harvey), that I was sorry he introduced the point about the economic circumstances of the clergy. His hon. Friend the Member for Hampstead was very careful to say that he was not going to base his claim on those grounds, for, agreeing as I do with him that many clergy are in most unfortunate circumstances at the present time, I should have thought the moral of that was to be drawn in a different field from that of Income Tax law. I would interpret it as a reproach to all those of us who belong to the Churches and who ought to bear

149
this responsibility. That is no argument to bring forward for an Amendment of Income Tax law.
Air Commodore Harvey: I think the hon. Gentleman really misinterprets what I said. I said that I did not think the clergy should be placed in a privileged position, and I merely pointed out that they were in a very difficult position financially. Anyhow, if I withdraw what I said, will the hon. Gentleman accept the Clause?
Mr. Edwards: A very convenient form of disputation, but there are, of course, still a few other arguments left. However, it should be appreciated that without any considerable departure from ordinary Income Tax principles, ministers of religion have been given a great number of concessions which are worth something in taxes. Let us take some of them. There are travelling expenses, including, I think, in almost every case the cost of maintaining and running a car, all or part of the pay of a servant whose employment is made necessary by the clergyman's parochial work, travelling expenses, the cost of replacing robes, Communion expenses where borne by the incumbent, a proportion of rent and rates, lighting, cleaning and heating and so on.
These are normal allowable deductions, which I am advised are in fact allowed in practice, and therefore it seems to me that the hon. Member for Hampstead is asking for rather special treatment. It may be true that the Board of Inland Revenue interpret the law strictly, but if they do they do not interpret the law in respect of clergymen in any different way from that in which they interpret it in respect of other taxpayers in precisely the same position under the law. Both the hon. Member for Hampstead and the hon. and gallant Member for Macclesfield have been at pains to say that they do not want to put the clergyman in a privileged position. I accept what they say, but I cannot accept that to do what they ask would be to do any other than put the clergyman in a privileged position; that is to say, the clergyman would be treated differently from other taxpayers in respect of a law of common application.
I cannot accept this Clause for those reasons, and I ask the Committee to reject it on the grounds that to accept it would be to create a privilege and a precedent
150
which would make it very difficult for those of us who have to try to collect the revenue under this particular Schedule.
Mr. Summers: I am very sorry that the Economic Secretary was unable to deal more sympathetically with this Clause. Both my hon. Friend the Member for Hampstead (Mr. H. Brooke), who moved the Clause, and the Economic Secretary, who opposed it, at any rate shared the view that it would not be desirable, they thought, to place ministers in any privileged position in this matter.
I want to record my dissent from that view for this reason. We are very prone, both in the House of Commons and elsewhere, to attribute many of the troubles from which our country and the world suffer to insufficient attention to spiritual matters. It would not be in order for me to develop that thought at this stage, but I claim that if there is substance in it it behoves us first of all to make quite certain that those who minister to the spiritual needs of the community are at any rate in no worse position than an objective study of their position might suggest they are.
I would go even further and say that we should give the benefit of the doubt at all times to such people, simply because this spiritual sphere in which they work is unique and others are not able to share it in the same way. That view may not commend itself to the Government at the present time, but, having regard to the broad principles to which I alluded earlier, we ought to make special provision for making certain they are not handicapped in fulfilling those vital duties. If they were relieved of some of the difficulties from which they now suffer, it might be that their work would benefit accordingly and our nation benefit at the same time.
9.15 p.m.
Mr. Boyd-Carpenter (Kingston-upon-Thames): I am very sorry that the Economic Secretary not only refuses to consider this new Clause but does it in so perfunctory a manner. I do not think it is an answer to this kind of new Clause merely to say, "If you accept it, you open the door to a whole crop of new claims." That is what the Economic Secretary argued, as I understood it: but it is not a very satisfactory argument.
It is in the nature of things that, when we are dealing with any tax in a highly

151
complex society such as ours, if we make a concession of this sort we thereby in some degree strengthen other claims for similar concessions. That, of course, is true, but it does not make an effective argument with which to reject a claim which is sound in itself, and I do not hold so low the efficiency of the Inland Revenue as to believe that if the Economic Secretary were to accept this proposition he would not be able to resist the others.
The real distinction between this class of taxpayer and taxpayers as a whole is to be found, I think, in the Economic Secretary's own words. He used the expression, "expenditure for the purpose of earning his own living." I suppose that in all occupations other than this occupation of a clergyman, the factor of earning one's living is a perfectly proper and major factor in the considerations which impel one in the practice of one's profession, but surely it can be accepted that in the case of a clergyman it ought not to be a factor in his choice of a vocation that he thereby earns his living. He ought to enter, and I am sure in the vast majority of cases he does enter, upon that occupation from a sense of vocation only; and, indeed, the present standard of remuneration is so low that a man who entered upon the occupation for any other reason than that of a sense of vocation would be a proper subject for treatment by a psychiatrist.
Mr. J. Edwards: The hon. Gentleman is basing his argument upon a misquotation of what I said. Perhaps I may make it plain to him that I did not use the phrase, "earning one's living." I said, "For the purpose of earning his profit." That is a distinction which is important when we consider the difference between Schedule E and Schedule D.
Mr. Boyd-Carpenter: I accept that the hon. Gentleman said, "for the purpose of earning his profit," and I think he will accept it from me that that does not alter my argument in the slightest. What is applicable to a person entering upon his occupation for the purpose of earning his living is, of course, equally applicable to one doing so for the purpose of earning a profit. I am sure that the hon. Gentleman will accept that, and I think it is regret-
152
table that a Minister from the Government Front Bench should, even in these days, introduce that consideration into a discussion of the affairs of this type of person, because I think one must accept that the overwhelming majority of clergymen of all denominations enter upon their occupation from the highest of motives. It is absolute nonsense to suggest that the financial remuneration they receive is a serious factor in their motives.
If one accepts that, then there is the distinction which the Economic Secretary was seeking between this class of case and the others which he desires, no doubt rightly, to be able to resist. We are here dealing with the case of a man who ought not to be concerned, and in general is not concerned, with the earning of profits or the earning of his living. We are here concerned with a man whose whole occupation is on a different basis, and if it is on a different basis surely that is a good reason for treating him for tax purposes on a different basis. Surely it is a good reason for saying that any such expenditure thereby incurred for the purpose of carrying out his duty as a clergyman, for the purpose of properly carrying out the immense responsibilities which he carries, should rank for tax purposes.
That, as I understand it, is the purpose, and indeed the effect of this Clause; and the Economic Secretary has not dealt with that argument at all. He has dealt with the case on that traditional and weakest of administrative arguments—the danger of opening a way for other concessions.
I hope the Committee will not part with this issue without insisting that the Government try to do something to assist this immensely important, as most of us think, and heavily tried, as most of us know, section of the community. I do not base a case purely on the economic position of the clergy, but one cannot altogether dismiss it from one's mind in discussing this issue. When all these factors are taken into account—the compassionate factor in regard to their present economic position, plus the real distinction of principle between their position and that of other sections of the cornmunity—I think that there is a case to answer and that the Economic Secretary has not even begun to answer it.
Mr. Maudling: I think that the Economic Secretary's argument was that it was impossible to apply the wider rule

153
of Schedule D to anyone receiving emoluments under Schedule E because that would open the door wide to further exceptions, and that the word "necessary" must therefore be applied to the expenses of clergymen as to the expenses of any other form of employment. It is quite a different thing to determine what is necessary expenditure in the case of clergymen as compared with other professions or employment.
Therefore, it is not so reasonable to ask the Inland Revenue or a court to determine the necessity of clergymen's expenses as it is to ask them to determine the necessity of expenses of people employed in the normal way. Moreover, is it riot a fact that on this question of introducing exceptions, Rule 10 of Schedule E is an exception to the general rule which is already applied by the Inland Revenue?
Mr. Brooke: I am grateful for the support which hon. Members have given to the Clause, and I think that the Committee are disappointed that the Government.
have not been more forthcoming. The argument that has been made has been based entirely on the new problems that may arise elsewhere if any alteration were made in the existing rule that applies to clergymen, and we have not, I suggest, had any effective reply to the case I originally made, and which hon. Members have embellished, that the rule does operate unfairly towards the clergy.
I trust that the Committee will continue to take notice of this matter. If I asked leave to withdraw the Clause—[HON. MEMBERS: "No."]—I gather that
my hon. Friends do not wish me to withdraw it, and I am very pleased indeed to hear that. I can, therefore, say once again that I am very sorry that what I am convinced is an injustice has not been recognised tonight.
Question put, "That the Clause be read a Second time."
The Committee divided: Ayes, 265; Noes, 290.

Division No. 140.]

AYES

[9.24 p.m

Aitken, W. T.

Cooper-Key, E. M.

Harris, Reader (Heston)

Alport, C. J. M.

Corbett, Lt.-Col. Uvedale (Ludlow)

Harvey, Air Cdre. A. V. (Macclesfield)

Amery, Julian (Preston, N.)

Craddock, Beresford (Spelthorne)

Harvey, Ian (Harrow, E.)

Amory, Heathcoat (Tiverton)

Cranborne, Viscount

Harvie-Watt, Sir George

Arbuthnot, John

Crosthwaite-Eyre, Col. O E.

Hay, John

Ashton, H. (Chelmsford)

Crouch, R. F.

Head, Brig. A. H.

Assheton, Rt. Hon. R. (Blackburn, W.)

Crowder, Capt. John (Finchley)

Head'lam, Lt.-Col. Rt. Hon Sir Cuthbert

Astor, Hon. M. L.

Crowder, Petre (Ruislip—Northwood)

Heald, Lionel

Baker, P. A. D.

Cundiff, F. W.

Heath, Edward

Bafdack, U.-Cmdr. J M

Cuthbert, W. N.

Hicks-Beach, Maj. W. W

Baldwin, A. E.

Darling, Sir William (Edinburgh, S)

Higgs, J. M. C.

Banks, Col. C.

Davidson, Viscountess

Hill, Dr. Charles (Luton)

Baxter, A. B.

Davies, Nigel (Epping)

Hill, Mrs. E. (Wythenshawe)

Beamish, Maj. Tufton

de Chair, Somerset

Hirst, Geoffrey

Bell, R. M.

De la Bere, R.

Hollis, M. C.

Bennett, Sir Peter (Edgbaston)

Deedes, W. F.

Holmes, Sir Stanley (Harwich)

Bennett, Dr. Reginald (Gosport)

Digby, S. Wingfield

Hope, Lord John

Bennett, William (Woodsids)

Dormer, P. W.

Hornsby-Smith, Miss P.

Bevins, J. R. (Liverpool, Toxteth)

Drayson, G B,

Horsbrugh, Rt. Hon. Florence

Birch, Nigel

Drewe, C.

Howard Gerald (Cambridgeshire)

Bishop, F. P.

Duncan, Capt. J. A. L.

Howard, Greville (St. Ives)

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

Dunglass, Lord

Hudson, Sir Austin (Lewisham, N.)

Boothby, R.

Duthie, W. S.

Hudson, Rt. Hon. Robert (Soulhport)

Bossom, A. C

Eccles, D. M.

Hudson, W. R. A. (Hull, N.)

Boyd-Carpenter, J, A.

Fisher, Nigel

Hulbert. Wing Cmdr. N J.

Boyle, Sir Edward

Fletcher, Walter (Bury)

Hurd, A. R,

Bracken, Rt. Hon B.

Fort, R

Hutchinson, Geoffrey (llford, N.)

Braine, B. R.

Foster, John

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

Braithwaite, Sir Albert (Harrow, W.)

Fraser, Hon. Hugh (Stone)

Hutchison, Col. James (Glasgow)

Braithwaite, Lt.-Cr. G. (Bristol, N W)

Fraser, Sir Ian (Morecambe & Lonsdale)

Hyde, Lt.-Col. H. M.

Bromley-Davenport, Lt.-Col W.

Gage, C. H.

Hylton-Foster, H. B.

Browne, Jack (Govan)

Galbraith, Cmdr T. D. (Pollok)

Jeffreys, General Sir George

Bullus, Wing Commander E E

Galbraith, T. G. D. (Hillhead)

Jennings, R.

Burden, F. A.

Gammans, L- D.

Johnson, Howard (Kemptown)

Butcher, H, W.

Garner-Evans, E, H. (Doneigh)

Jones, A. (Hall Green)

Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)

Gates, Maj. E. E.

Joynson-Hicks, Hon. L. W

Carr, Robert (Mitcham)

Gomme-Duncan, Col. A.

Kaberry, D.

Carson, Hon. E.

Granville, Edgar (Eye)

Kerr, H. W. (Cambridge)

Channon, H.

Gridley, Sir Arnold

Kingsmill, Lt.-Col. W. H.

Clarke, Col. Ralph (East Grinstead)

Grimond, J.

Lambert, Hon. G.

Clarke, Brig. Terence (Portsmouth, W.)

Grimston, Hon. John (St. Albans)

Lancaster, Col. C. G.

Colegate, A.

Grimston, Robert (Westbury)

Langford-Holt, J.

Conant, Maj R. J. E.

Hare, Hon. J. H. (Woodbridge)

Law, Rt. Hon. R. K.

Cooper, Sqn. Ldr. Albert (Word, S.)

Harris, Frederic (Croydon, N.)

Leather, E. H C

Legge-Bourke, Maj. E. A H

Nugent, G. R. H.

Steward, W. A. (Woolwich, W.)

Lennox-Boyd, A. T.

Nutting, Anthony

Stewart, Henderson (Fife, E.)

Lindsay, Martin

Oakshott, H. D.

Stoddart-Scott, Col. M.

Linstead, H, N.

Odey, G. W.

Storey, S.

Llewelyn, D.

O Neill, Rt. Hon. Sir Hugh

Studholme, H. G.

Lloyd, Rt. Hon. G. (King's Norton)

Ormsby-Gore, Hon. W. D

Sutcliffe, H.

Lloyd, Selwyn (Wirral)

Orr, Capt. L. P. S

Taylor, Charles (Eastbourne)

Lockwood, Lt.-Col. J. C.

Orr-Ewing, Charles Ian (Hendon, N.)

Taylor, William (Bradford, N.)

Longden, Gilbert (Herts, S.W.)

Orr-Ewing, Ian L. (Weston-super-Mare)

Tooling, W.

Low, A. R W.

Osborne, G.

Teevan, T. L.

Lucas, P. S. (Brentford)

Perkins, W. R. D.

Thomas, J. P. L. (Hereford)

Lucas-Tooth, Sir Hugh

Peto, Brig. C. H. M

Thompson, Kenneth Pugh (Walton)

McAdden, S. J.

Pickthorn, K.

Thompson, Lt.-Cmdr. R. (Croydon, W)

McCorquodale, Rt. Hon. M. S.

Pitman, I. J.

Thorneycroft, Peter (Monmouth)

Macdonald, A. J. F. (Roxburgh)

Powell, J. Enoch

Thornton-Kemsley, Col. C. N

Macdonald, Sir Pater (l. of Wight)

Price, Henry (Lewisham, W.)

Thorp, Brig. R. A. F.

Mackeson, Brig. H. R.

Prior-Palmer, Brig. O

Tilney, John

McKibbin, A.

Profumo, J. D.

Touche, G. C.

McKie, J. H. (Galloway)

Raikes, H. V.

Turner, H. F. L.

Maclay, Hon. John

Rayner, Brig. R.

Turton, R. H.

Maclean, Fitzroy

Redmayne, M.

Tweedsmuir, Lady

MacLeod, lam (Enfield, W.)

Remnant, Hon. P

Vane, W. M. F.

MacLeod, John (Ross and Cromarty)

Renton, D. L. M.

Vaughan-Morgan, J. K

Maemillan, At. Hon. Harold (Bromley)

Roberts, Emrys (Merioneth)

Vosper, D. F.

Macpherson, Major Niall (Dumfries)

Roberts, Maj. Peter (Heeley)

Wakefield, Edward (Derbyshire, W.)

Maitland, Cmdr. J. W.

Robertson, Sir David (Caithness)

Wakefield, Sir Wavell (Marylebone)

Manningham-Buller, R, E.

Robinson, Roland (Blackpool, S.)

Walker-Smith, D. C.

Marshall, Douglas (Bodmin)

Robson-Brown, W.

Ward, Hon. George (Worcester)

Marshall, Sidney (Sutton)

Rodgers, John (Sevenoaks)

Ward, Miss I. (Tynemouth)

Maude, Angus (Ealing, S.)

Roper, Sir Harold

Waterhouse, Capt. Rt. Hon. C

Maude, John (Exeter)

Ropner, Col L.

Watkinson, H.

Maudling, R.

Russell, R. S.

Webbe, Sir H. (London & Westminster)

Medlicott, Brig. F.

Ryder, Capt. R. E. D.

Wheatley, Maj. M. J. (Poole)

Mellor, Sir John

Salter, Rt. Hon. Sir Arthur

White, Baker (Canterbury)

Molson, A. H. E.

Sandys, Rt. Hon. D

Williams, Charles (Torquay)

Monckton, Sir Walter

Savory, Prof. D. L.

Williams, Gerald (Tonbridge)

Moore, Lt.-Col. Sir Thomas

Scott, Donald

Wills, G.

Morris, Hopkin (Carmarthen)

Shepherd, William

Wilson, Geoffrey (Truro)

Morrison, John (Salisbury)

Smiles, Lt.-Col. Sir Walter

Winterton, Rt. Hon Earl

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

Smithers, Peter (Winchester)

Wood, Hon. R.

Mott-Radclyffe, C. E.

Smilhers, Sir Waldron (Orpington)

York, C

Nabarro, G.

Smyth, Brig. J. G. (Norwood)

Nicholls, Harmar

Spearman, A. C. M.

TELLERS FOR THE AYES:

Nicholson, G.

Spans, Sir Patrick (Kensington, S.)

Mr. Henry Brooke and

Nield, Basil (Chester)

Stanley, Capt. Hon. Richard (N. Fylde)

Mr. Summers.

Noble, Cmdr. A H. P.

Stevens, G. P.

NOES

Acland, Sir Richard

Butler, Herbert (Hackney, S.)

Dugdale, Rt. Hon. J. (W. Bromwich)

Adams. Richard

Callaghan, L. J.

Dye, S.

Albu, A. H.

Carmichael, J.

Ede, Rt. Hon. J. C.

Allen, Arthur (Bosworth)

Castle, Mrs. B. A

Edwards, John (Brighouse)

Allen, Scholefield (Crewe)

Champion, A. J.

Edwards, Rt. Hon. Ness (Caerphilly)

Anderson, Alexander (Motherwell)

Chelwynd, G. R

Edwards, W. J. (Stepney)

Anderson, Frank (Whitehaven)

Clunie, J.

Evans, Albert (Islington, S.W.)

Awbery, S. S.

Cocks, F. S.

Evans, Edward (Lowestoft)

Ayles, W. H.

Coldrick, W

Evans, Stanley (Wednesbury)

Bacon, Miss Alice

Collick, P.

Ewart, R.

Baird, J.

Collindridge, F

Ferayhough, E

Balfour, A.

Cook, T. F.

Field, Capt. W J

Barnes, Rt. Hon. A. J.

Cooper, Geoffrey (Middlesbrough, W)

Finch, H. J.

Bartley, P.

Cooper, John (Deptford)

Fletcher, Eric (Islington, E.)

Bellenger, Rt. Hon. F. J

Corbet, Mrs. Freda (Peckham)

Follick, M.

Benn, Wedgwood

Cove, W. G.

Foot, M. M.

Benson, G.

Craddock, George (Bradford, S.)

Forman, J. C.

Beswick, F,

Crawley, A.

Fraser, Thomas (Hamilton)

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

Crosland, C. A. R

Freeman, John (Watford)

Bing, G. H, C

Grossman, R. H S

Freeman, Peter (Newport)

Blenkinsop, A.

Cullen, Mrs. A

Gaitskell, Rt. Hon. H. T N

Blyton, W. R.

Daines, P.

Ganley, Mrs. C. S.

Boardman, H

Dalton, Rt. Hon H.

George, Lady Megan Lloyd

Booth, A.

Darling, George (Hillsborough)

Gibson, C. W.

Bottomley, A. G

Davies, A. Edward (Stoke, N.)

Gilzean, A.

Bowden, H. W

Davies, Harold (Leek)

Gooch, E. G.

Bowles, F. G. (Nuneaton)

Davies, Stephen (Merthyr)

Gordon-Walker, Rt. Hon. P. C.

Braddock, Mrs. Elizabeth

do Freitas, Geoffrey

Greenwood, Anthony (Rossendale)

Brook, Dryden (Halifax)

Deer, G.

Greenwood, Rt Hit. Arthur (Wakefield)

Brooks, T. J. (Normanton)

Delargy, H. J

Grenfell, Rt. Hon. D R.

Broughton, Or. A. D. D.

Diamond, J.

Grey, C. F.

Brown, Rt. Hon. George (Belper)

Dodds, N. N.

Griffiths, David (Rother Valley)

Brown, Thomas (Ince)

Donnelly, D.

Griffiths, Rt. Hon. James (Lianelly)

Burton, Miss E.

Driberg, T. E. N

Griffiths, William (Exchange)

156

157

Gunter, R. J.

McLeavy, F.

Silverman, Sydney (Nelson)

Haire, John E. (Wycombe)

MacMillan, Malcolm (Western Islet)

Simmons, C. J.

Hale, Joseph (Rochdale)

McNeil, Rt. Hon. H.

Slater, J.

Hale, Leslie (Oldham, W.)

MacPherson, Malcolm (Stirling)

Smith, Ellis (Stoke, S.)

Hall, Rt. Hon. Glenvil (Coine Valley)

Mainwaring, W. H.

Smith, Norman (Nottingham, S)

Hall, John (Gateshead, W.)

Mallalieu, E. L. (Brigg)

Snow, J. W.

Hamilton, W W

Mallalieu, J. P. W. (Huddersfield, E.)

Sorensen, R. W

Hannan, W.

Mann, Mrs. Jean

Soskice, Rt. Hon Sir Frank

Hardy, E. A.

Manuel, A. C.

Steele, T.

Hargreaves, A

Marquand, Rt. Hon. H. A

Stewart, Michael (Fulham, E.)

Hastings, S.

Mathers, Rt. Hon. G

Strachey, Rt. Hon. J.

Hayman, F. H.

Mayhew, C P.

Strauss, Rt. Hon. George (Vauxhall)

Henderson, Rt. Hn. Arthur (Tipton)

Mellish, R. J.

Stross, Dr. Barnett

Herbison, Miss M.

Messer, F.

Summerskill, Rt. Hon. Edith

Hewitson, Capl. M

Middleton, Mrs. L

Sylvester, G. O.

Hobson, C. Ft

Mikardo, Ian.

Taylor, Bernard (Mansfield)

Holman, P.

Mitchison, G. R.

Taylor, Robert (Morpeth)

Holmes, Horace (Hemsworth)

Moeran, E. W.

Thomas, David (Aberdare)

Houghton, D

Monslow, W.

Thomas, George (Cardiff)

Hoy, J.

Moody, A. S.

Thomas, lorwerth (Rhondda, W)

Hudson, James (Ealing, N.)

Morgan, Dr. H. B

Thomas, Ivor Owen (Wrekin)

Hughes, Emrys (S. Ayrshire)

Morley, R.

Thorneycroft, Harry (Clayton)

Hughes, Hector (Aberdeen, N.)

Morris, Percy (Swansea, W.)

Thurtle, Ernest

Hughes, Moelwyn (Islington, N.)

Mort, D. L

Timmons, J.

Hynd, J. B. (Attercliffe)

Moyle, A.

Tomney, F.

Irvine, A. J. (Edge Hill)

Mulley, F. W.

Turner-Samuels, M

Irving, W. J. (Wood Green)

Murray, J. D.

Ungoed-Thomas, Sir Lynn

Isaacs, Rt. Hon. G. A.

Nally, W.

Usborne, H

Janner, B.

Neal, Harold (Bolsover)

Vernon, W. F

Jay, D. P. T.

Noel-Baker, Rt. Hon. P. J

Viant, S. P.

Jeger, George (Goole)

O'Brien, T.

Wade, D. W.

Jeger, Dr. Santo (St. Pancras, S.)

Oldfield, W. H

Wallace, H. W.

Jenkins, R. H.

Oliver, G. H.

Watkins, T. E.

Johnson, James (Rugby)

Orbach, M.

Webb, Rt. Hon. M. (Bradford, C)

Johnston, Douglas (Paisley)

Padley, W. E.

Weitzman, D.

Jones, David (Hartlepool)

Paget R. T.

Wells, Percy (Faversham)

Jones, Frederick Elwyn (W. Ham, S.)

Paling, Rt. Hon. Wilfred (Dearne V'lly)

Wells, William (Walsall)

Jones, Jack (Rotherham)

Paling, Will T. (Dewsbury)

West, D. G.

Jones, William Elwyn (Conway)

Pannell, T. C.

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

Keenan, W.

Pargiter, G. A.

White, Mrs Eirene (E. Flint)

Kenyon, C.

Parker, J.

White, Henry (Derbyshire, N.E.)

Key, Rt. Hon. C. W

Peart, T F

Whiteley, Rt. Hon W

King, Dr. H. M

Popplewell, E

Wigg, G.

Kinghorn, Sqn. Ldr. E.

Porter, G.

Wilcock, Group Capt CAB

Kinley, J.

Price, Philips (Gloucestershire. W)

Wilkes, L.

Lang, Gordon

Proctor, W. T

Wilkins, W. A.

Lee, Frederick '(Newton)

Pryde, D, J.

Willey, Frederick (Sunderland)

Lee, Miss Jennie (Cannock)

Pursey, Cmdr. H

Willey, Octavius (Cleveland)

Lever, Leslie (Ardwick)

Rankin, J.

Williams, David (Neath)

Lewis, Arthur (West Ham, N.)

Rees, Mrs. D.

Williams, Rev. Llywelyn (Abertillery)

Lewis, John (Bolton, W.)

Reeves, J.

Williams, Ronald (Wigan)

Lindgren, G. S.

Reid, William (Camlachie)

Williams, Rt. Hon. Thomas (Don V'lly)

Lipton, Lt.-Col. M.

Rhodes, H.

Williams, W. T. (Hammersmith, S.)

Logan, D. G.

Richards, R.

Wilson, Rt. Hon. Harold (Huyton)

Longden, Fred (Small Heath)

Roberts, Goronwy (Caernarvonshire)

Winterbottom, Ian (Nottingham, C.)

McAllister, C.

Robertson, J. J. (Berwick)

Winterbottom, Richard (Brightside)

MacColl, J. E.

Robinson, Kenneth (St. Pancras, N.)

Wise, F. J.

McGhee, H. G.

Rogers, George (Kensington, N.)

Woodburn, Rt. Hon A

McGovern, J.

Royle, C.

Woods, Rev. G S

McInnes, J.

Shackleton, E. A. A

Wyatt, W. C.

Mack, J. D.

Shawcross, Rt. Hon. Sir Hartley

Yates, V. F.

McKay, John (Wallsend)

Shurmer, P. L. E.

Younger, Rt. Hon. K

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

Silverman, Julius (Erdington)

TELLERS FOR THE NOES:

Mr. Pearson and Mr. Sparks.

New Clause.—(PRoms TAX—WHOLE TIME WORKING DIRECTOR.)
Sub-paragraph (c) of paragraph 13 of the Fourth Schedule to the Finance Act, 1937, as amended by paragraph 2 of Part III of the Eighth Schedule to the Finance Act, 1947 (which defines the expression "whole-time service director" for the purpose of the profits tax), shall be amended by the omission of the words "five per cent." and the insertion of the words "ten per cent."—[Colonel Hutchison.]
Brought up, and read the First time.
Colonel J. R. H. Hutchison: I beg to move, "That the Clause be read a Second time."
In order to prevent a company getting rid of its profits by passing them over in the form of remuneration to its directors, it is at present enacted that working directors are not allowed to own more than 5 per cent. of the shares in their company. We believe that that is too strict a limitation and that it has shown itself to be too strict.

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A man who owns 10 per cent. of the capital of the company, which is all that we ask for in the Clause, cannot in any way control the policy of the company, very little more, indeed, than can a man who owns 5 per cent. of its capital. It would mean an infinite amount of combination among other directors if they were to attempt to get control of the company's policy and so milk the profits in a way which the present Act intends shall be avoided. Consequently, we think that there is no really serious difference between a working director being allowed to own 10 per cent. of the capital and one allowed, as at present, to own only 5 per cent.
Surely it is desirable to encourage a man to have a reasonable financial interest in the concern in which he is working. That is the basis of the conception of profit sharing schemes, and I am not aware that the Government frown upon profit sharing as a method of interesting all classes of workers in the success of the concern with which they are identified. There are a number of quite small concerns, very often of a consultative capacity, in the case of which it would be easy for someone promoted from the ranks to hold 10 per cent. of the capital without becoming a very rich man. Concerns such as insurance brokers and market research specialists do not need a large capital, and an individual with a humble origin might easily hold 10 per cent. of the capital without in any way being a wealthy man.
We believe that the present Act is a deterrent against appointing as a director a man who already holds more than 5 per cent. of the capital, although the prosperity of the company might demand that he should be a director. That means that at present there is a deterrent against appointing as a director of the company in which he is working a man who has shown his quality and worth. If the man is a director, in the present situation there is a deterrent against his having a worthwhile holding in the company with which he is identified. We think that the present situation is wrong, and for the reasons which I have given we believe that it will be improved if the Clause is accepted.
Mr. Erroll: It must surely be agreed on all sides of the Committee that one of the most desirable methods of reaching the boardroom is by working one's way up from the bottom until one reaches a position in which one is invited to join the highest counsels of the company in which one has worked all one's life. In the case of very large companies it is not only possible, but often the fact, because there is no financial disincentive if an employee or a member of the staff is invited to join the board.
The difficulty arises, however, in the case of the smaller type of company, often the family concern. Here it is most desirable to encourage the promotion of the best type of executive to the board, and not to confine the direction of the company exclusively to members of the family who may hold large blocks of shares. Here the difficulty is that if an employee is promoted to the board and, because of his faith in the soundness of the company and its workpeople, he has already invested his savings in that company, the company will be penalised if by any chance he should own more than 5 per cent. of the share capital. if that happens, all his earnings are regarded as profit and are subject to a 50 per cent. Profits Tax. Not only is it hardly fair, but it is not in the best interests of the company concerned or of the country.
Our Clause seeks to alter that position by making it possible for the worthwhile, go-ahead employee to invest his savings in the company and then, when he becomes a member of the board, to be able to draw his salary from the company without penalising it through his own efficiency. As matters stand at present, he is compelled to invest his savings in other businesses when, surely, it would be far better, not only for himself but for his company and his country, if he could invest to a large extent in his own company, help his own organisation forward, and thus help the country even more.
Mr. J. Edwards: With many of the sentiments expressed by the hon. and gallant Member for Scotstoun (Colonel J. R. H. Hutchison) and the hon. Member for Altrincham and Sale (Mr. Erroll) we on this side of the Committee find ourselves in agreement. However, I do

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not think either hon. Gentleman has demonstrated that the limitation which they seek to alter really impedes the promotion of executives. Both hon. Gentlemen asserted this, but I do not think the case they made can stand unless it can genuinely be demonstrated, and I do not think any evidence has been adduced to that end.
May I remind the Committee that it seemed perfectly right to those who introduced the Finance Act in 1937 that 5 per cent. should be the figure for whole-time service directors? Although it was debated in 1949, that has stood. I know it will be said by hon. Gentlemen opposite that I always plead it is difficult to draw the line. That is traditionally what Treasury spokesmen say, and I could find just as many examples from the speeches of right hon. Gentlemen opposite when they spoke for the Treasury as hon. Gentlemen could find in my speeches during the course of this Committee stage. Nevertheless, I must put that point of view again.
What is the point of the present limitation? It is designed to exclude those directors who are virtually employees and have only a minor stake in the equity capital of the company. A dividing line has to be drawn, and the present 5 per cent. limit in general achieves the right result. It may be contended—it may, in fact, be the case—that here and there one could produce an isolated example of hardship, but a similar contention might very well be put forward if the limit were raised to 10 per cent.
Moreover, I think it will be agreed that a 10 per cent. limit would be much more likely to cover directors who are in essence part proprietors of the business. We are here concerned to exclude people who are essentially employees, not proprietors. To go from 5 to 10 per cent. would blur the distinction. Therefore, I ask the Committee to agree that we should stay at 5 per cent., which has stood the test of time. We must not blur the distinction which is laid down in the present law, but it would be blurred if we were to go to 10 per cent. I ask the Committee, therefore, not to accept the Clause.
9.45 p.m.
Colonel J. R. H. Hutchison: I found difficulty in the explanation of the purpose
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of the existing legislation when the Economic Secretary said that it was to exclude employees who were not directors or closely identified in the policy of the company. I should have thought that it was the opposite type he sought to exclude by the present legislation and that individuals of that kind presented no danger of milking the profits of the company and should, in fact, have been encouraged. I found it very difficult to follow his line of reasoning, and I should have thought that the legislation intended exactly the reverse.
The hon. Gentleman challenged me to do something which was extremely difficult; to prove to him that this provision was acting to the detriment of the individuals for whom my hon. Friend and I were pleading. Of course, one can only do that by giving examples, either actual or hypothetical. I ask the hon. Gentleman to consider the case of a company with a small capital, but nevertheless doing quite important business of the type I have already instanced—consultative companies—where there is not a great deal of capital in plant and material and with a capital of, say, £1,000. The Government are, in fact, excluding any director who holds more than £50 of capital in that concern, which is a ridiculously low figure.
I still think that the Clause is a move towards reason and equity. I cannot pretend that it is a problem of paramount importance as compared with many of the other Clauses that we have already considered, and have to consider, tonight, and I shall not press it to a Division for that reason. I hope that some of the later and more important concessions for which we are looking may be made all the more easy by my acting in this way. Therefore, I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(AMENDMENT OF FINANCE ACT, 1947, s. 33.)
Section thirty-three of the Finance Act, 1947, shall have effect as if there were substituted for the words "two thousand pounds," the words "three thousand pounds," and for the words "twelve thousand pounds," the words "eighteen thousand pounds," wherever they appear.—[Lieut.-Commander Braithwaite.]
Brought up, and read the First time.
Lieut.-Commander Braithwaite: I beg to move, "That the Clause be read a Second time."
This raises a matter which was discussed during the progress of the Finance Bill, 1949. Hon. Members who are interested will find at columns 1098 to 1112 of the OFFICIAL REPORT of 28th June of that year the debate which we had two years ago. On that occasion the right hon. and learned Gentleman, who was then Solicitor-General and has since been promoted to be senior Law Officer, told us that the costs of such a concession as was proposed would amount to £3,500,000. One imagines that that figure is maintained, roughly, in the present circumstances.
Hon. Members who study the history of this matter will find that under Section 33 of the Finance Act, 1947, profits below £2,000 per annum are exempt from Profits Tax and that in addition there are graduated rebates running from £2,000 to £12,000. The effect of the new Clause would be, first, to raise the exemption limits from £2,000 to £3,000 a year, and the graduated rebates would also rise to the range of from £3,000 to £18,000.
The objective is to help and encourage small businesses. I am sure that the right hon. Member for Colne Valley (Mr. Glenvil Hall), who used to be the Financial Secretary to the Treasury will from experience agree with me—
Mr. Glenvil Hall Mr. Glenvil Hall indicated dissent.
Lieut.-Commander Braithwaite: Do not let the right hon. Gentleman shake his head until he hears the proposition. I do not think he will disagree with the proposition that Income Tax reliefs are difficult to claim and that the Profits Tax seems a far more practicable field in which to give assistance to this type of business.
If the right hon. Gentleman disagrees—and I hope he does not I will call in aid another right hon. Gentleman, the right hon. Member for Huyton (Mr. Harold Wilson), who, as President of the Board of Trade, encouraged small manufacturers to become "merchant venturers," a phrase which naturally appealed to me as my constituency has always specialised in that type of person. He went on to say, in language which I am sure will commend itself to hon. Members on both sides of the Committee, and indeed to his successor, that they should
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be "merchant venturers" who will go forth to sell goods all over the world and develop new processes.
Those were the resounding words of the right hon. Gentleman, and I am sure we all agree that there is certainly need for new invention and the spirit of enterprise which our forefathers were so conspicuous in displaying. But, unlike the days of the original merchant venturers, the present rate of taxation makes it almost impossible to build up small industrial units today; it does, in fact, act as a discouragement—we discussed this earlier in the Bill—from risking capital in this way. My hon. and learned Friend and I, therefore, hold the view that this is a useful new Clause in helping that type of merchant venturer.
Mr. Selwyn Lloyd: I want to recommend this new Clause to the Committee with all the force I can command. The right hon. Gentleman disagreed with my hon. and gallant Friend and had literally to be forced to his feet to argue against the Clause in 1949. He will remember that occasion, when we had a long debate and there was no reply from the Government benches, for really they could not find any good reason to put forward against the Clause. Eventually, the right hon. Gentleman rose to his feet and, after saying he appreciated the force and substance of the case, said that really the Government could not afford it."
The position is different tonight because the Government this year propose to raise something like £66 million more in Profits Tax. We are simply asking by this new Clause for a rebate on a certain amount of that new money. The Chancellor has really conceded our case in principle because, in Clause 26, he has given a rebate to help a certain type of small business. I think the Economic Secretary will agree, and there is no need to quote the words of the Chancellor, that the rebate made in Clause 26 does help a certain type of director-controlled business. We say, as far as this new Clause is concerned, that it is equitable to extend some sort of concession to all types of small businesses.
We continually hear lip service to the idea that we want to encourage small businesses to develop. I do not know what the difference is between the horizontalists and the verticalists on the benches opposite, but I should have thought that whichever type one is that it was only fair to concede that a large

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sector of industry will remain with the smaller type of business and that those people definitely need some assistance at present if they are to do all the things that they have been exhorted to do.
The hon. Member for Edmonton (Mr. Albu), who I do not think is in the Committee now, has several times spoken with great frankness on this problem. I wish that Members opposite, who listen to his words of wisdom and other aspects of the argument, would pay some attention to what he has said about small businesses. He has said that he is not much in sympathy with the equity shareholder, the ordinary shareholder, in the large business. His argument, which I do not accept, is that the ordinary shareholder in a large company is not at great risk. Accepting that argument for a moment—as I say, I do not accept it—totally different considerations apply to the small company because whatever might be said about the large company I am certain that the ordinary shareholder in the small company is very much at risk; there is very much more chance of violent fluctuations in the fortunes of the smaller concern.
There are many small concerns which may not be director controlled and which may not be able to benefit from Clause 26. There may be companies which were originally one-man businesses but which have been formed into private companies, and which may find it necessary to pay out, possibly to the widow or relatives of the founder of the business, considerable sums by way of dividends. I am thinking of a certain small company about which I know, the policy of which has been to pay out the profits of the business by way of dividend so that various relatives of the people who originally founded the business can receive their share of the profits.
It would, of course, be possible, by a series of completely fictitious arrangements, to turn into directors people who really have no power to direct the business, etc. In the case of which I am thinking it has not been the policy to try to make use of some sort of tax avoiding device of that kind. That kind of company, where the bulk of the profits are distributed by way of dividend, receives no benefit from Clause 26. That sort of company would derive some benefit from this new Clause. It seems only equitable that if we are to make
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the Clause 26 type of concession the type of concession which this new Clause seeks should be made. That is a matter of equity as between the two types of small company.
To return from that ground to the main reason for putting forward this new Clause, I should have thought that on both sides of the Committee we wish to enable the small type of business to build up its resources, expand and take risks. Having regard to the change in the value of money from the time when the limit of £12,000 was fixed, I should have thought that there were strong grounds for suggesting the higher limit of £18,000.
I am certain that the Revenue would indirectly derive great benefit from the operation of a new Clause such as this. The money which would be preserved from the tax gatherer would be of great value to this kind of business and would encourage the taking of risks, the merchant adventuring of which my hon. and gallant Friend spoke, and in the long run would benefit the Revenue very much indeed. I am tired of hearing lip service given to the case of the smaller type of business, and I hope that tonight the Government will, in addition to the concession made in Clause 26, which is of limited scope, make the concession for which the new Clause asks, which is of much more general application.
10.0 p.m.
Mr. J. Edwards: As the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite), pointed out, we discussed this matter two years ago, when very much the same arguments were advanced by those who supported a new Clause then. I am afraid that this time I must advance very much the same arguments as were then advanced in resisting it.
I do not think I need follow the hon. and gallant Gentleman in his exposition of the intention of the Clause—although I am not sure that he was right at the end about what it would do—except to bring out plainly that the real point of the proposed Amendment of the Finance Act, 1947, is quite substantially to increase the Profits Tax-free income of the firms that would be concerned. I submit to the Committee that it would be wrong to do that in present circumstances. The existing limits are intended to provide relief in quite small cases. and

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at the very moment when it is necessary to increase the yield of revenue from Profits Tax it would be quite inappropriate, I submit. to make a substantial increase in the limit for exemption.
The hon. and learned Member for Wirral (Mr. Selwyn Lloyd) also referred to the changes in the value of money. As I have said earlier, if we start to talk about changes in the limits because of changes in the value of money, there would be no end to the claims which could be put forward. Precisely the same argument could be used for a substantial increase in the Income Tax personal allowances. Precisely the same argument could be used for a change in the Surtax exemption limit. The plain answer is that we could not in present circumstances afford the loss of revenue which would be involved if this principle were accepted.
I think it important to ask the Committee to bear in mind that at the time, when we are still asking workers to exercise moderation in their pay claims, it would be undesirable to allow any counter argument on the fact that companies, even the smaller companies, were being granted an increase in their Profits Tax income. I appreciate that the amount involved is not large but it would appear that for a particular category there had been and would be a reduction.
Mr. Selwyn Lloyd: Does not the hon. Gentleman realise that in this type of business the relations between employer and employee are such that I should say that in 95 per cent. of the cases the workers would realise that this sort of concession was directly to the benefit of the workers themselves?
Mr. Edwards: That might be so in a particular firm but that is not what I am saying. I am saying that in present circumstances, when rates of tax are going up, it would be very difficult for us to defend reducing the yield we are getting in this case by increasing the amount of Profits Tax-free income accrueing to the companies in question, although it might very well be that in the individual companies concerned it would be thoroughly understood.
It was in Clause 26 that we made a limited concession, which I think applies at any rate to some of the companies which would be covered by this new
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Clause. The hon. and learned Gentleman argues that we should go further and make this extra concession. The concession that we made in Clause 26 cost us about £4 million net. The present Clause would cost in a full year something like £4¾ million net. In the circumstances, when we are trying to get a larger amount of revenue, we cannot make this concession. Of course, in some circumstances—if trade were not booming, and the like—this is the kind of thing which might well commend it self. However, we certainly cannot accept it this time.
Mr. F. Harris: The Economic Secretary took the line that no concession could be given. He seems to have forgotten that small businesses are having a tricky time from a financial point of view. I am interested in that part of the new Clause which suggests that the limit on Profits Tax should be raised from £2,000 to £3,000. The task of laying out money for buying and holding stocks is becoming more and more trying. Surely, with difficulties mounting as they are, the Treasury will have to come to the position in due course of giving a concession. The type of concession suggested seems to be the most sound. It would enable the small companies to have sufficient finances to carry on business.
In the last six or eight months it has become obvious that more people are actually asking for money in advance for the goods which they supply to these concerns. As a result, the small businesses are finding it increasingly difficult to lay out money for stocks. Instead of allowing for payment on account, the suppliers are asking the smaller concerns to pay in advance.
The Economic Secretary's argument was based on the fact that no concession could be made because the workers would say that it was wrong to do so when the country needed more revenue. That is entirely the wrong outlook. The outlook should be that if the concerns are taxed as they are today, they will find it increasingly difficult to carry on. Some people might say that that statement is far-fetched, but in the last six months it has become most obvious that that is the situation. The provision of finance is becoming more difficult. The small concerns which pay out such a

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large amount in taxation need some relief to enable them to continue in business.
Confirmation of my argument can be found in the statistics which show the large number of bankruptcies which are taking place among the small concerns, where the position is far from easy. Talk about trade booms might apply to the larger concerns, but it does not apply so much to those businesses to which I refer. The position of some of the small concerns is very serious. Here we have an opportunity, by giving relief on Profits Tax, to help them. I do not know what the cost of giving relief on Profits Tax would be, but obviously it would be nothing like the £4,750,000 referred to by the Economic Secretary. If a concession were given by raising the Profits Tax limit from £2,000 to £3,000, it would provide immediate help and it would not cost anything like the figure suggested.
It appears that the argument of the Treasury is the same as that put forward two years ago, and which will be put forward again in the future. They say that they cannot grant concessions because the workers do not wish to see them made at a time when the country needs more money for defence. Surely, that is a most short-sighted attitude.
Mr. David Eccles: I want to take up the Economic Secretary on the question of provocation. He is getting £66 million more out of the Profits Tax, and we are asking for a rebate of 4 million. That would only be provocative if the Government said it was provocative. They are responsible for leading public opinion, and, if they were convinced that the rebate was worth it on its merits, it is quite wrong for them to say that it would be provocative. That is the negation of leadership, and it is the kind of thing which makes the re-armament programme extremely difficult. The Government will not explain the facts of industrial life to the people to whom they say they are responsible.
I want to put in a word for the small businesses in rural areas. We all agree that it would be a good thing if there was more diversification of industrial employment throughout the countryside. Anyone who represents a county division will know that it is becoming very hard to start a new business in a rural area,
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because the prospects of ever collecting sufficient cash with which to carry it through become harder and harder. In the interests of using our man power, and particularly our woman power—I am thinking of the daughters of farm workers, because there is generally a pool of female labour in rural areas—I think it would be right to make this concession, which would help these small businesses. Without a high birth-rate of new businesses, this country will not maintain its place, and, in my view, this £4 million would be a very good investment.
Mr. Walter Fletcher: The essence of the whole of this Finance Bill is that it has been keyed to the re-armament programme. It is perfectly clear, that, as the re-armament programme gets under way, it will seep through, as it always has done, to the smaller firms. Its first impact is on the big ones, but, eventually, when fully geared and working, it does suck in to its use the smaller firms. At that particular moment, the argument can be brought forward of the need of the smaller firms for extra relief to serve their businesses, which need will then make itself felt.
The higher cost of raw materials and higher wages costs mean that the need of these small firms for some help in order to keep running even at the normal speed is very much greater. They either have to go to the bank, which is not very desirable, or they must have some form of relief of taxation in order to build up their businesses. Even for the sake of the re-armament drive, which is the key to the whole of the Bill we are discussing, it would be wise if this particular concession were given at the present moment. Looking ahead, which may not be the usual practice of the Treasury Bench but which is very necessary, by the time that the re-armament programme has got through to the small firms many of them will not be there or will be in a crippled condition because this concession, and others like it, have not been given.
Mr. Lyttelton: I hope we have not heard the last word from the Treasury on this subject, because there are one or two more considerations which I should like to put before the Committee.
First of all, the small businesses are very seriously threatened already by Estate Duties. The general level of taxation and Estate Duties means that many

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proprietors of small businesses are obliged to sell out to big ones in order to find the money to pay the duties. All those with experience, as I have, of production in war-time know very well the contribution which the small industrial company can make to our industrial effort. They provide that flexibility which is above all necessary in the production of armaments, because it does not pay to introduce small modifications into great lines of production.
Hon. Members will no doubt remember that when the Ford Plant at Willow Run was completed and modifications had to be introduced into the Liberator aeroplane, they were taken away from the main plant and the modifications introduced elsewhere. We were able to avoid that sort of thing by the great flexibility of British industry in the existence of hundreds of small firms. I think that everybody who listened to the argument this evening will realise that they are really seriously threatened by the level of taxation. I believe that this concession would do something to revive the small business which has made such a large contribution in the past, and is capable of doing so in the future.
10.15 p.m.
I must say, in conclusion, that I am rather sorry that on this particular matter the old argument about provocation should again have been produced—that if we try to govern properly and to bring some of these small businesses into being, it will provoke somebody or other. I have far too high a regard for the worker of this country to believe that he will swallow such utter poppycock as that. These concessions are quite small in character and take place in businesses where the worker can see what is happening. I do not think they are provocative. I trust that the Treasury are going to have second thoughts about this and will give us a more sympathetic answer.
Lieut.-Commander Braithwaite: I was hoping that we should have heard one more word from the Economic Secretary, because I think it would be a pity if the debate on this Clause were concluded without one of his remarks being challenged. He said that the object of this Clause was to raise the limit of free income. With respect to the Economic Secretary, it does nothing of the kind.
Mr. J. Edwards: I said Profits Tax free income. In every case that I used the term "free income," I used the words "Profits Tax" in front of it.
Lieut.-Commander Braithwaite: With respect, the hon. Gentleman did not. That was the objection he gave. But, even if he did, he is still incorrect, because the new Clause also widens the rebate sphere from £3,000 to £18,000. What it is doing is to increase the rebate which, after all said and done, is really a different matter. When the hon. Gentleman says that this is a question of principle, we must remember that it is a principle embodied in the Socialist Government's own Income Tax law of 1947, so that there is nothing for him to get excited about in regard to that. It was enacted by the right hon. Gentleman the present Minister of Local Government and Planning with the approval of both sides of the House.
May I remind the Economic Secretary that these firms are not likely to be engaged on re-armament. It may be that they will be brought in later, but certainly not at the moment. I do not think he ought to use the argument that this is something which is going to give more profit to those who benefit from the rearmament programme. I think that argument was a little unworthy of him. I am sorry that the hon. Gentleman has introduced this note of gloom into the Committee after a day on which we have made such excellent progress, and when the Government have shown such a conciliatory attitude. I am sorry that he has reverted so late in the day, and I hope my hon. Friends will express their displeasure by voting against the Clause.
Air Commodore Harvey: I wish to put a point of view to the Committee which has not so far been mentioned. It is the availability of workers in the rearmament industry. I am told that already, long before the re-armament programme is under way, many firms are held up because they are unable to obtain workers, and that the necessity is probably going to arise for them to subcontract up to 50 per cent. of their work. This is having to be done by the small businesses employing 10 to 60 men who are carrying out the work with a few machine tools. Prices are steadily going up, and a firm with a capital of only

173
£5,000 or £6,000 finds that its outlay on new equipment has greatly increased in the last 12 months.
A leading industrialist said to me the other day that he was quite certain the right hon. Member for Ebbw Vale (Mr. Bevan) was right; that the re-armament programme would not proceed because of the difficulties of obtaining labour. A large factory cannot be dispersed if the houses are not available for the workers.
If right hon. Gentlemen opposite want the re-armament programme to succeed, they must encourage the small businesses. Therefore, I would ask them to give this matter additional consideration, if not tonight, at any rate between now and the Report stage.
Question put, "That the Clause be read a Second time."
The Committee divided: Ayes. 276: Noes, 293.

Division No. 141.]

AYES

[10.20 p.m.

Aitken, W. T.

Deedes, W. F.

Johnson. Howard (Kemptown)

Alport, C. J. M.

Digby, S. Wingfield

Jones, A. (Hall Green)

Amery, Julian (Preston, N.)

Donner, P. W.

Joynson-Hicks, Hon L. W

Amory, Heathcoat (Tiverton)

Drayson, G. B.

Kaberry, D.

Arbuthnot, John

Dugdale, Maj, Sir T. (Richmond)

Kerr, H. W. (Cambridge)

Ashton, H. (Chelmsford)

Duncan, Capt. J. A. L

Kingsmill, Lt.-Col. W. H

Assheton, Rt. Hon. R. (Blackburn, W.)

Dunglass, Lord

Lambert, Hon. G.

Astor, Hon. M. L.

Duthie, W. S.

Lancaster, Col. C. G

Baker, P. A. D.

Eccles, D. M.

Langford-Holt, J.

Baldock, Lt.-Cmdr. J. M

Eden, Rt. Hon. A.

Law, Rt. Hon. R. K.

Baldwin, A. E

Erroll, F. J.

Leather, E. H. C.

Banks, Col. C.

Fisher, Nigel

Legge-Bourke, Maj- E. A. H

Baxter, A. B.

Fletcher, Waiter (Bury)

Lennox-Boyd, A. T

Beamish, Maj. Tufton

Fort, R

Lindsay, Martin

Bell, R. M.

Foster, John

Linstead, H. N.

Bennett, Sir Peter (Edgbaston)

Fraser, Hon. Hugh (Stone)

Llewellyn, D.

Bennett, Dr. Reginald (Gosport)

Fraser, Sir Ian (Morecambe & Lonsdale)

Lloyd, Rt. Hon. G. (King's Norton)

Bennett, William (Woodside)

Fyfe, Rt. Hon. Sir David Maxwell

Lloyd, Selwyn (Wirral)

Bevins, J. R. (Liverpool, Toxteth)

Gage, C. H.

Lockwood, Lt.-Col. J. C.

Birch, Nigel

Galbraith, Cmdr. T. D. (Pollok)

Longden, Gilbert (Herts, S.W)

Bishop, F. P

Galbraith, T G. D. (Hillhead)

Low, A. R. W.

Black, C. W.

Gammans, L. D.

Lucas, P. B. (Brentford)

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

Garner-Evans, E H (Derbigh)

Lucas-Tooth, Sir Hugh

Boothby, R.

Gates, Maj. E E.

Lyttelton, Rt. Hon. O.

Bossom, A. C

Gomme-Duncan, Col. A

McAdden, S. J.

Boyd-Carpenter, J. A

Gridley, Sir Arnold

McCorquodale, Rt. Hon. M. S.

Boyle, Sir Edward

Grimston, Hon. John (St. Albans)

Macdonald, Sir Peter (I. of Wight)

Bracken, Rt. Hon. B.

Grimston, Robert (Westbury)

Mackeson, Brig H R.

Braine, B. R.

Hare, Hon. J. H. (Woodbridge)

McKibbin, A.

Braithwaite, Sir Albert (Harrow, W.)

Harris, Frederic (Croydon, N.)

McKie, J. H. (Galloway)

Braithwaite, Lt,-Cr. G, (Bristol, N.W.)

Harris, Reader (Heston)

Maclay, Hon. John

Bromley-Davenport, Lt.-Col. W

Harvey, Air Cdre. A. V. (Macclesfield)

Maclean, Fitzroy

Brooke, Henry (Hampstead)

Harvey, Ian (Harrow, E)

MacLeod, lain (Enfield, W.)

Browne, Jack (Govan)

Harvie-Watt, Sir George

MacLeod, John (Ross and Cromarty)

Buchan-Hepburn, P. G. T.

Hay, John

Macmillan, Rt. Hon. Harold (Bromley)

Bullus, Wing Commander E. E

Head, Brig. A. H

Macpherson, Major Niall (Dumfries)

Burden, F. A.

Headlam, Ll.-Col Rt. Hon Sir Cuthbert

Maitland, Cmdr. J. W.

Butcher, H. W.

Heald, Lionel

Manningham-Buller, R. E.

Butler, Rt. Hn. R A. (S'ffr'n Wld'n)

Heath, Edward

Marlowe, A. A. H.

Carr, Robert (Mitcham)

Hicks-Beach, Maj W. W

Marples, A. E.

Carson, Hon. E.

Higgs, J. M. C.

Marshall, Douglas (Bodmin)

Channon, H.

Hill, Dr Charles (Luton)

Marshall, Sidney (Sutton)

Churchill, Rt. Hon. W. S.

Hill, Mrs. E. (Wythenshawe)

Maude, Angus (Ealing, S)

Clarke, Col. Ralph (East Grinstead)

Hinchingbrooke, Viscount

Maudling, R.

Clarke, Brig. Terence (Portsmouth, W.)

Hirst, Geoffrey

Medlicott, Brig. F.

Colegate, A.

Hollis, M. C.

Mellor, Sir John

Conant, Maj. R. J. E.

Holmes, Sir Stanley (Harwich)

Molson, A. H. E.

Cooper, Son. Ldr. Albert (llford, S.)

Hope, Lord John

Monckton, Sir Walter

Cooper-Key, E. M.

Hornsby-Smith, Miss P.

Moore, Lt.-Col. Sir Thomas

Corbett, Lt.-Col. Uvedale (Ludlow)

Horsbrugh, Rt. Hon Florence

Morris, Hopkin (Carmarthen)

Craddock, Beresford (Spelthorne)

Howard, Gerald (Cambridgeshire)

Morrison, John (Salisbury)

Cranborne, Viscount

Howard, Greville (St. Ives)

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

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

Hudson, Sir Austin (Lewisham, N.)

Mott-Radclyffe, C. E.

Crosthwaite-Eyre, Col O. E.

Hudson, Rt. Hon. Robert (Southport)

Nabarro, G.

Crouch, R. F.

Hudson, W. R. A. (Hull, N.)

Nicholls, Harmar

Crowder, Capt. John (Finchley)

Hulbert, Wing Cmdr N. J.

Nicholson, G.

Crowder, Petre (Ruislip—Northwood)

Hurd, A, R

Nield, Basil (Chester)

Cundiff, F. W.

Hutchinson, Geoffrey (llford, N.)

Noble, Cmdr. A. H. P.

Cuthbert, W. N.

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

Nugent, G. R. H.

Darling, Sir William (Edinburgh, S)

Hutchison, Col. James (Glasgow)

Nutting, Anthony

Davidson, Viscountess

Hyde, Lt.-Col. H. M.

Oakshott, H. D

Davies, Nigel (Epping)

Hylton-Foster, H. B.

Odey, G. W.

de Chair, Somerset

Jeffreys, General Sir George

O'Neill, Rt. Hon. Sir Hugh

De la Bare, R.

Jennings, R.

Ormsby-Gore, Hon. W D

Orr, Capt. L. P. S.

Savory, Prof. D. L.

Tilney, John

Orr-Ewing, Charles Ian (Hendon, N.)

Scott, Donald

Touche, G. C.

Orr-Ewing, Ian L. (Weston-super-Mare)

Shepherd, William

Turner, H. F. L.

Osborne, C.

Smiles, Lt.-Col. Sir Waller

Turton, R. H.

Peake, Rt. Hon. O.

Smithers, Peter (Winchester)

Tweedsmuir, Lady

Perkins, W. R. D.

Smithers, Sir Waldron (Orpington)

Vane, W. M. F.

Peto, Brig, C. H. M

Smyth, Brig. J. G. (Norwood)

Vaughan-Morgan, J K

Pickthorn, K.

Soames, Capt. C

Vosper, D. F.

Pitman, I. J.

Spearman, A. C. M.

Wade, D. W.

Powell, J. Enoch

Spens, Sir Patrick (Kensington, S.)

Wakefield, Edward (Derbyshire, W.)

Price, 'Henry (Lewisham, W.)

Stanley, Capt. Hon. Richard (N. Fylde)

Wakefield, Sir Wavell (Marylebone)

Prior-Palmer, Brig. O.

Stevens, G. P.

Walker-Smith, D. C.

Profumo, J. D.

Steward, W. A. (Woolwich, W.)

Ward, Hon. George (Worcester)

Raikes, H. V.

Stewart, Henderson (Fife, E.)

Ward, Miss I. (Tynemouth)

Rayner, Brig. R

Stoddart-Scott, Col. M.

Waterhouse, Capt. Rt. Hon. C

Redmayne, M.

Storey, S.

Watkinson, H.

Remnant, Hon. P.

Stuart, Rt. Hon James (Moray)

Webbe, Sir H. (London & Westminster)

Renton, D. L. M.

Summers, G. S.

Wheatley, Maj. M. J. (Poole)

Roberts, Maj. Peter (Heeley)

Sutcliffe, H.

White, Baker (Canterbury)

Robertson, Sir David (Caithness)

Taylor, Charles (Eastbourne)

Williams, Charles (Torquay)

Robinson, Roland (Blackpool, S.)

Taylor, William (Bradford, N.)

Williams, Gerald (Tonbridge)

Robson-Brown, W.

Teeling, W.

Wills, G.

Rodgers, John (Sevenoaks)

Teevan, T. L

Wilson, Geoffrey (Truro)

Roper, Sir Harold

Thomas, J. P. L. (Hereford)

Winterton, Rt. Hon. Earl

Ropner, Col. L.

Thompson, Kenneth Pugh (Walton)

Wood, Hon. R.

Russell, R. S.

Thompson, Lt.-Cmdr. R. (Croydon, W.)

York, C.

Ryder, Capl. R. E. D.

Thorneycroft, Peter (Monmouth)

Salter, Rt. Hon. Sir Arthur

Thornton-Kemsley, Col. C. N

TELLERS FOR THE AYES:

Sandys, Rt. Hon. D.

Thorp, Brig. R. A. F.

Mr. Drewe and Mr. Studholme

NOES

Acland, Sir Richard

Crawley, A.

Griffiths, Rt, Hon James (Llanelly)

Adams, Richard

Crosland, C. A. R.

Griffiths, William (Exchange)

Albu, A. H.

Crossman, R. H. S

Grimond, J.

Alien, Arthur (Bosworth)

Cullen Mrs. A.

Gunter, R. J.

Allen, Scholefield (Crewe)

Daines, P.

Haire, John E. (Wycombe)

Anderson, Alexander (Motherwell)

Dalton, Rt. Hon. H.

Hale, Joseph (Rochdale)

Anderson, frank (Whitehaven)

Darling, George (Hillsborough)

Hale, Leslie (Oldham, W.)

Awbery, S. S.

Davies, A. Edward (Stoke, N.)

Hall, Rt Hon. Glenvil (Colne Valley)

Ayles, W. H.

Davies, Harold (Leek)

Hall, John (Gateshead, W)

Bacon, Miss Alice

Davies, Stephen (Merthyr)

Hamilton, W W

Baird, J.

de Freitas, Geoffrey

Hannan, W

Balfour, A.

Deer, G.

Hardy, E. A

Barnes, Rt. Hon. A. J.

Delargy, H. J

Hargreaves, A

Bartley, P.

Diamond, J.

Hastings, S.

Bellenger, Rt. Hon F J

Dodds, N. N.

Hayman, F. H

Bonn, Wedgwood

Donnelly, D.

Henderson, Rt. Hn Arthur (Tipton)

Benson, G.

Driberg, T. E. N.

Harbison, Miss M

Beswick, F.

Dugdale, Rt. Hon. J (W. Bromwich)

Hewitson, Capt. M.

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

Dye, S.

Hobson, C. R.

Bing, G. H. C.

Ede, Rt. Hon. J. C.

Holman, P.

Blenkinsop, A

Edelman, M.

Holmes, Horace (Hemsworth)

Blylon, W. R.

Edwards, John (Brighouse)

Houghton, D.

Board man, H.

Edwards, Rt. Hon. Ness (Caerphilly)

Hoy, J.

Booth, A.

Edwards, W. J. (Stepney)

Hudson, James (Ealing, N.)

Bottomley, A. G.

Evans, Albert (Islington, S.W.)

Hughes, Emrys (S. Ayrshire)

Bowden, H. W.

Evans, Edward (Lowestoft)

Hughes, Hector (Aberdeen, N.)

Bowles, F. G. (Nuneaton)

Evans, Stanley (Wednetbury)

Hynd, J. B. (Attercliffe)

Braddock, Mrs. Elizabeth

Ewart, R

Irvine, A. J. (Edge Hill)

Brook, Dryden (Halifax)

Fernyhough, E.

Irving, W. J. (Wood Green)

Brooks, T. J. (Nornunton)

Field, Capt. W J

Isaacs, Rt. Hon G. A.

Broughton, Dr. A. D. D.

Finch, H. J.

Janner, B.

Brown, Rt. Hon. George (Belper)

Fletcher, Erie (Islington, E)

Jay, D. P. T.

Brown, Thomas (Ince)

Follick, M.

Jeger, George (Goole)

Burke, W. A.

Foot, MM.

Jeger, Dr. Santo (SI. Pancras, S)

Butler, Herbert (Hackney, S)

Forman, J. C.

Jenkins, R. H.

Callaghan, L. J.

Fraser, Thomas (Hamilton)

Johnson, James (Rugby)

Carmichael, J.

Freeman, John (Watford)

Johnston, Douglas (Paisley)

Castle, Mrs. B. A

Freeman, Peter (Newport)

Jones, David (Hartlepool)

Champion, A. J.

Gaitskell, Rt. Hon. H. T N

Jones, Frederick Elwyn (W. Ham, S)

Chetwynd, G. R.

Ganley, Mrs C. S

Jones, Jack (Rotherham)

Clunie, J.

George, Lady Megan Lloyd

Jones, William Elwyn (Conway)

Cocks, F. S

Gibson, C. W.

Keenan, W.

Coldrick, W.

Gilzean, A.

Kenyon, C.

Collick, P.

Gooch, E. G.

Key, Rt. Hon C. W

Collindridge, F.

Gordon-Walker, Rt. Hon. P. C.

King, Dr. H. M.

Cook, T. F.

Granville, Edgar (Eye)

Kinghorn, Sqn. Ldr E

Cooper, Geoffrey (Middlesbrough, W.)

Greenwood, Anthony (Rossendale)

Kinley, J.

Cooper, John (Deptford)

Greenwood, Rt. Hn. Arthur (Wakefield)

Lang, Gordon

Corbet, Mrs. Freda (Peckham)

Grenfell, Rt. Hon. D. R.

Lee, Frederick (Newton)

Cove, W. G.

Grey, C. F.

Lee, Miss Jennie (Cannock)

Craddeck, George (Bradford, S.)

Griffiths, David (Rother Valley)

Lever, Leslie (Ardwick)

176

177

Lewis, Arthur (West Ham, N)

Orbach, M

Taylor, Robert (Morpeth)

Lewis, John (Bolton, W.)

Padley, W E.

Thomas, David (Aberdare)

Lindgren, G. S.

Paget R T.

Thomas, George (Cardiff)

Lipton, Lt.-Col. M.

Paling, Rt. Hon Wilfred (Dearne V'lly)

Thomas, lorwerth (Rhondda, W)

Logan, D. G.

Paling, Will T. (Dewsbury)

Thomas, Ivor Owen (Wrekin)

Longden, Fred (Small Heath)

Panned, T. C.

Thorneycroft, Harry (Clayton)

McAllister, G.

Pargiter, G A

Thurtle, Ernest

MacColl, J. E.

Parker, J.

Timmons, J.

Macdonald, A. J. F. (Roxburgh)

Pearson, A.

Tommy, F.

McGhee, H. G.

Peart, T. F.

Turner-Samuels, M

McGovern, J.

Porter, G.

Ungoed-Thomas, Sir Lynn

McInnes, J,

Price, Philips (Gloucestershire, W.)

Usborne, H.

Mack, J. D.

Proctor, W. T.

Vernon, W. F

McKay, John (Wallsend)

Pryde, D. J.

Viant, S P.

Mackay, R. W G (Reading, N)

Pursey, Cmdr. H

Wallace, H. W.

McLeavy, F.

Rankin, J.

Watkins, T E.

MacMillan, Malcolm (Western Isles)

Rees, Mrs. D.

Webb, Rt. Hon. M. (Bradford, C)

McNeil, Rt. Hon. H.

Reeves, J.

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)

Roberts, Emrys (Merioneth)

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

Mann, Mrs. Jean

Roberts, Goronwy (Caernarvonshire)

While, Mrs. Eirene (E. Flint)

Manuel, A. C

Robertson, J. J. (Berwick)

White Henry (Derbyshire, N E.)

Marquand, Rt. Hon. H A

Robinson, Kenneth (St. Pancras, N.)

Whiteley, Rt. Hon W

Mathers, Rt. Hon G

Rogers, George (Kensington, N.)

Wigg, G.

Mayhew, C. P

Royle, C

Wilcock, Group Capt C. A. B

Mellish, R. J.

Shackleton, E. A. A.

Wilkes, L.

Messer, F.

Shawcross, Rt. Hon. Sir Hartley

Willey, Frederick (Sunderland)

Middleton, Mrs. L

Shurmer, P. L. E.

Willey, Octavius (Cleveland)

Mikardo, Ian.

Silverman, Julius (Erdington)

Williams, David (Neath)

Mitchison, G. R

Silverman, Sydney (Nelson)

Williams, Rev. Llywelyn (Aberlillery)

Moeran, E. W

Simmons, C J

Williams, Ronald (Wigan)

Monslow, W.

Slater, J.

Williams, Rt. Hon. Thomas (Don V'lly)

Moody, A. S.

Smith, Ellis (Stoke, S.)

Williams, W T. (Hammersmith, S.)

Morgan, Dr. H B

Smith, Norman (Nottingham, S.)

Wilson, Rt. Hon. Harold (Huyton)

Morley, R.

Snow, J. W.

Winterbottom, Ian (Nottingham, C.)

Morris, Percy (Swansea, W)

Sorensen, R. W

Winterbottom, Richard (Brightside)

Mori, D. L.

Soskice, Rt. Hon. Sir Frank

Wise, F J.

Moyle, A.

Sparks, J. A

Woodburn, Rt Hon A.

Mulley, F. W.

Steele, T.

Woods, Rev. G S

Murray, J. D.

Stewart, Michael (Fulham, E.)

Wyatt. W. L.

Nally, W.

Strachey, Rt. Hon. J.

Yates, V. F.

Neal, Harold (Bolsover)

Strauss, Rt. Hon. George (Vauxhall)

Younger, Rt. Hon. K

Noel-Baker, Rt. Hon. P J

Stross, Dr. Barnett

O'Brien, T.

Summerskill, Rt. Hon. Edith

TELLERS FOR THE NOES:

Oldfield, W. H.

Sylvester, G. O.

Mr. Popplewell and Mr. Wilkins.

Oliver, G H

Taylor, Bernard (Mansfield)

Question put, and agreed to.

New Clause.—(PURCHASE TAX ADVISORY COMMITTEE.)
(1) For the purpose of giving advice and assistance to the Treasury in the exercise of their powers under section twenty-one of the Finance Act, 1948, there shall be constituted a committee to be called the Purchase Tax Advisory Committee consisting of a chairman and not less than ten or more than twenty other members to be appointed by the Treasury from persons who have industrial and commercial experience.
(2) Any body of persons representing any trade or industry or, at the discretion of the committee, any person may make application to the Purchase Tax Advisory Committee stating that the tax in respect of certain goods is having an injurious effect upon that industry or is against the national interest. The committee shall take the application into consideration and may make recommendations as they think fit, taking into account the effect of the tax on the industry making the application and on other industries that may be affected by any alteration and shall in particular consider the effect on the export trade.
(3) The members of the committee shall hold office for a period of three years and
178
shall he eligible for reappointment from time to time on the expiration of their term of office. If a member becomes, in the opinion of the Treasury, unfit to continue in office or incapable of performing his duties under this Act, the Treasury shall forthwith declare his office to be vacant and shall notify the fact in such manner as they think fit, and thereupon the office shall become vacant. Any member may at any time by notice in writing to the Treasury resign his office.
(4) The committee may make rules:—

(a) for regulating the proceedings, including the quorum, of the committee; and

(b) for authorising the delegation of any of the functions of the committee to a subcommittee consisting of members of the committee.

(5) The committee shall have power to take evidence on oath, and for that purpose to administer oaths.—[Mr. Peaked]
Brought up, and read the First time.
10.30 p.m.
Mr. Gaitskell: I should like to put a suggestion before the Committee. It seems to me it would be appropriate that

179
this Clause, which is the only one on the Order Paper which deals with Purchase Tax, and which is drawn fairly widely, should be considered immediately before our consideration of the Amendments to the Purchase Tax Schedule, as there will be a wide debate on it.
I therefore beg to move, "That consideration of the Clause be postponed till after the Fourth Schedule."
Mr. Lyttelton: This is a proposal we find difficult to resist and we do not propose to do so. There is something to be said for this whole question being discussed just before the Amendments to the Schedule, and we on this side have no objection.

New Clause.—(INTER-GROUP PAYMENTS.)
(1) Where a company in a group of companies makes a payment out of but not exceeding its profits after deducting capital allowances to another company in the group the payment shall be treated for income tax purposes as a business expense incurred by the paying company and as a business receipt by the receiving company provided that both companies are controlled in the United Kingdom for purposes of assessment to income tax.
(2) A group of companies for the purposes of this section shall be a group of companies within the meaning of the Companies Act, 1948.—[Sir P. Bennett.]
Brought up, and read the First time.
Sir Peter Bennett: I beg to move, "That the Clause be read a Second time."
This Clause is not of wide scope but it deals with a matter of great concern to a number of companies that have separate legal entities but operate in groups. It is well-known to the Revenue authorities, because many discussions have taken place on it. Under the existing law, losses incurred by one member of a group of companies cannot be set off against the profits of another. There is a large degree of common interests between the companies in a group and the rigidity of the legal conception makes matters unequal and unfair when it comes to levying taxes on profits. Those connected with groups of companies have expressed the view that the proposal contained in the Clause is practicable, and have pointed out that in the past there
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have been similar provisions for setting off E.P.T.
The proposed Clause would remove the present difficulties in regard to Income Tax. It is often difficult to see whether a transaction between two of these linked companies is really an independent transaction or a payment out of profits, but if both companies are registered and controlled in this country and operate within the scope of United Kingdom taxation, the Clause would have no undesirable effect whatever. What comes out of the taxable profits in one case would go into tax computations in another. To that extent it relieves the loss made in the other companies and that seems to us to be wholly proper. This is not a case of tax avoidance, but simply a rectification, and it reduces inequality in our tax practices.
The Attorney-General: We would not be opposed to the principle of this new Clause, though with a very slight qualification. The definition of grouping which the Clause embodies is taken from the Companies Act, 1948, and to that extent the Clause on the Order Paper departs to some extent from the Millard Tucker recommendation. It recommends that the group relationship should be determined according to whether there was a 90 per cent. community of interest. Subject to that one qualification, however, the Clause does carry out the purport of one of the recommendations of the Millard Tucker Committee and, as I have said, we do not oppose the principle at all.
For this Clause I again pray in aid what my right hon. Friend said earlier about considering some of the Clauses which carry into effect recommendations of that Committee. We would not wish at this stage to accept the new Clause, but we hope that the hon. Gentleman will agree to it being treated as the other Clauses dealing with the Millard Tucker recommendations have been treated, namely, in the terms of the announcement which my right hon. Friend made earlier when we began to consider these Clauses. Upon that understanding, I would ask the hon. Gentleman to consider asking the leave of the Committee to withdraw his Clause.
Colonel J. R. H. Hutchison: The right hon. and learned Gentleman talked about the definition of a group of companies. I should like to be clear about what he says.

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He says he prefers the definition used by the Millard Tucker Committee of 90 per cent. holding. For E.P.T. the definition of a group of companies is 90 per cent. holding irrespective of the residence of the companies concerned in the group. On the other hand, the Profits Tax definition is a 75 per cent. holding of a company, which must be resident in the United Kingdom. Is it the E.P.T. definition of a group of companies that the right hon. and learned Gentleman is seeking to use in connection with this Clause?
The Attorney-General: The definition which we suggest—and I say this subject to further consideration of the Clause and its actual working out—is the definition which would require a 90 per cent. community of interest. As the Clause at present provides, both companies are to be controlled in the United Kingdom for the purposes of assessment of Income Tax. In other words, the only difference between the Millard Tucker recommendation and the Clause relates to the quantum of community interest. That is to say, the Committee was taking 90 per cent. and the Clause assumes a majority as is provided by the Companies Act.
Colonel Hutchison: Yes, but E.P.T. with the 90 per cent. interest does not demand that all the companies shall be resident and controlled in the United Kingdom.
The Attorney-General: I am simply following the Clause, and the Clause says that both companies are controlled in the United Kingdom for Income Tax purposes.
Sir Ian Fraser: Can the learned Attorney tell us if it is an omission on his part, or whether he deliberately said "controlled" and omitted any reference to "resident"?
The Attorney General: I used the word "controlled" for purposes of Income Tax.
Sir I. Fraser: I am sorry, but perhaps I did not make myself quite clear. The learned Attorney states that he is now going to take what we might term the "90 per cent. company" controlled in this country. Does that mean that the subsidiary must also be resident here in the United Kingdom?
The Attorney-General: Resident in the sense that it is liable to British Income Tax; but we accept the principle of this Clause, and I think that what the hon. Gentleman is referring to is a matter which may require further consideration. It is a matter which may reasonably require that; but as I envisage it, two companies are both liable to United Kingdom taxation, with a 90 per cent. community of interest.
Colonel Hutchison: Yes, but now we have three different definitions; one for E.P.T., one for profits, and one for Income Tax.
Captain Crookshank: The right hon. and learned Gentleman says that the Government have agreed in principle with what is in the Clause as it stands. But according to the words put down, in comparison with his remarks, there is not yet complete agreement about the word "controlled" in this context. That, we assume, will be subject to further consideration by him, but also, that it will be subject to further consideration by the House.
The Attorney-General: So that there is no misunderstanding about this, let me make it perfectly clear that I am not promising anything for the Report stage. This is something for next year.
Captain Crookshank: I can understand that, but if we do not find agreement before then, it is for the House to decide. But we understand that the principle is accepted.
The Attorney-General: Yes.
Sir P. Bennett: I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(VALUATION OF STOCK TRANSFERRED BETWEEN RELATED COMPANIES.)
(1) Where a company at the balance sheet date holds stock which it has purchased from another member of the same group the last named company shall be entitled to a deduction in computing its profits for income tax purposes amounting to the difference between the value of the stock as appearing in the balance sheet of the first named company and the cost thereof to the last named company.
Provided that any deduction so permitted shall not exceed such proportion of the differ-

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ence as is represented by the proportion of ordinary share capital held in common.
(2) A group of companies shall for the purposes of this section be a group of companies within the meaning of the Companies Act, 1948.—[Sir P. Bennett.]
Brought up, and read the First time.
Sir P. Bennett: I beg to move, "That the Clause be read a Second time."
I do not know if the learned Attorney will wish to deal with this Clause in the same way, because this also deals with group company accounts, and concerns the selling of goods sold or processed from one member of the group to another, and unless the transfer price is a cost price. there is a profit by the company on transferring them. The extent to which these goods have not passed outside the group represents an unreal profit. As the law is today, the selling company is chargeable for any profit made, irrespective of whether the group as a whole can be said to have made any profit.
Modern company law requires the elimination of this profit from the consolidated accounts of the group, for the Companies Act, 1948, requires that a company's accounts shall comply in that manner. The profit made from the sale of goods from one branch to another cannot be included. It is true that if a group does not like the legal entities it can rearrange these matters so that the separate companies are not, legally, entities, but branches, but there are very often weighty reasons, and I know a good many of them, which make this very undesirable, such as local status and the position of the local directors.
10.45 p.m.
There are many advantages in keeping in being companies which are very often only branches. The Clause gives the allowance to the transferor company and it has been recommended that the allowance should always be made to the transferee company, that is the company to whom the stock has been sold. Either would be an acceptable measure of justice in the abstract, but we feel it is better that the allowance should be to the transferor; that is the original company because that company is less likely to be affected by trading abroad where the United Kingdom company when it trades abroad would be normally the basis of assessment for overseas tax.
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We feel that it would be better for the assessment to be made on the transferor rather than on the transferee. There are a number of other points over this, but I shall not weary the Committee. I merely suggest that the Attorney-General might look at this in the same way he has promised with the previous proposed Clause I have put forward, with a view to obtaining a statement from him.
The Attorney-General: The hon. Member for Edgbaston (Sir P. Bennett) did not argue it in very great detail and I apprehend that he does not expect from me a detailed reply. May I perhaps content myself by saying this. We do not oppose the principle of the relative paragraph—paragraph 297—of the Millard Tucker Report which deals with this particular topic. The hon. Member pointed out that he had deviated in his Clause in various respects from that recommendation. The respects in which he has deviated from the recommendation seem to us to raise not inconsiderable difficulties.
I shall not go into the difficulties beyond saying that we feel that we certainly could not accept his Clause. We accept the principle of the Millard Tucker recommendation in that paragraph to which I have referred, but the hon. Gentleman's method of putting that recommendation into effect as disclosed in the Clause is one we cannot accept. Perhaps, however, he will be content with the assurance I have given him with regard to the actual recommendation itself.
Mr. Maudling: Can the right hon. and learned Gentleman give an assurance that in giving further consideration to this point he will bear in mind the importance of using the Companies Act definition of a group? Otherwise, the effect might be to exclude subsidiary companies operating overseas. It might occur that the transfer of stock between company and company in a group will embrace deliberately subsidiary companies overseas. I think he will find that the drafting of my hon. Friend's Clause referring to the transferor rather than the transferee was designed with this particular point in mind about the importance of overseas subsidiary companies. It must raise a large number of complicated difficulties, but I hope the

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right hon. and learned Gentleman will keep an open mind on this matter.
The Attorney-General: I think we are discussing general principles rather than detailed application, but I must confess that when the hon. Member has in mind that overseas subsidiaries should be included he is leading us very much to the situation with which we have tried to deal in Clause 33 and one of the respects in which the Clause on the Order Paper departs from the Millard Tucker recommendations is that it includes overseas companies. That is one of the things which would raise great difficulties and I do not think we can see our way to accept that aspect of it.
Sir P. Bennett: In view of the statement of the right hon. and learned Gentleman in which he promised, as on the previous Clause, to study the matter—although I appreciate that we shall not get a result on the Report stage—I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(ACCEPTANCE OF WORKS OF ART IN SATISFACTION OF DEATH DUTY.)
(1) The Commissioners may, if they think fit, on the application of any person liable to pay estate duty or settlement estate duty on any property accept in satisfaction of the whole or any part of such duty such works of art as may be agreed upon between the Commissioners of Inland Revenue and that person.
(2) Where under the provisions of this section the Commissioners of Inland Revenue accept any works of art in satisfaction or part satisfaction of any duty, the works of art shall be disposed of in such manner as the Treasury may direct, and in particular, but without prejudice to the generality of the preceding provision, the Treasury may direct that all or any of such works of art shall be transferred to the appropriate department to be used in furnishing Government houses and embassies outside Great Britain.
(3) Where the Treasury have determined that any property accepted or to be accepted by the Commissioners under subsection (1) of this section is to be disposed of under subsection (2) of this section, they may direct that disposal thereof shall be effected by means of a transfer direct to the appropriate Department, instead of the property being transferred to the Commissioners.
(4) The Treasury shall lay before both Houses of Parliament as soon as may be after the end of each financial year a statement giving particulars of any transfers under subsection (2) of this section.
(5) In this section "works of art" means works of art, as defined by subsection (1) of section thirty-five of the Copyright Act, 1911, which have been declared by a committee of experts, appointed by the Chancellor of the Exchequer, to be suitable for the purposes set forth in subsection (2) of this section.—[Mr. Hamilton Kerr.]
Brought up, and read the First time.
Mr. Hamilton Kerr: I beg to move, "That the Clause be read a Second time."
This Clause aims to establish the principle that works of art of particular merit may be accepted in satisfaction of Death Duty. I had originally drafted a Clause which I thought was simple and concise which consisted of two or three lines, but I was told by my friends, "This will never do. It will not be understood by the Treasury." So I have now adopted the technique of shock therapy.
In this present century we have seen a great revival in the interest in works of art which our ancestors contributed to civilisation. We now see the State, in the Gowers Report, definitely accepting responsibility for certain houses to be scheduled as ancient monuments; and even such voluntary societies as the Georgian Group cast a vigilant eye on our old towns to see that vandalism does not destroy our ancient monuments. But this interest in works of art has not extended to our foreign embassies and Government houses.
In the old days, an Ambassador, or Governor, was considered to possess ample means, and, therefore, able to furnish his house with suitable works of art. But that situation no longer exists and we suffer a disadvantage in not having something equivalent to the French garde meuble, which gives the French splendid resources to draw upon.
I suggest that the Chancellor should appoint an advisory committee, composed of members of the Tate Gallery, the National Gallery and the Victoria and Albert Museum, and that those experts should be empowered to consider works of art such as pictures, furniture, silver, or glass, which private donors gave to the nation in satisfaction of Death Duty. This would establish a principle, already accepted in case of land, and I think that thereby we would be able to accumulate works of art, an equivalent of the French garde meuble which could give a picture of our way of life to those

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visitors who entered our embassies and Government houses.
Mr. Gaitskell: I have some sympathy for the hon. Member for Cambridge (Mr. Hamilton Kerr) but I do not think that what he proposes quite takes into account what is already done by way of modifications to Estate Duty in connection with works of art and I wish briefly to remind the Committee of the present position.
In the Finance Act of 1894 the Treasury were able to remit Death Duty in respect of pictures, prints and works of art bequeathed to national authorities or to universities or local authorities. Further by the Finance Act, 1930, as modified by the Finance Act, 1936, the Treasury will also exempt from Estate Duty works of art that have not been given or bequeathed to the bodies I have mentioned, but simply on condition that they were not sold but remained the property of the family concerned. Even when they were sold, the duty did not apply if the sale was to the National Gallery, or to one of the museums.
I think the hon. Member will probably agree that already a great deal has been done by way of remission of Estate Duty with the general idea of preserving for the nation these treasures of art with which we are all very much concerned. I do not feel that what is now proposed is necessary. If the Government wish to buy over and above whatever may have been bequeathed under the various Acts I have mentioned, there is nothing to prevent them doing so.
I feel it is a far better principle that we should retain under our Parliamentary control the expenditure of public money on works of art of this kind, rather than to accept them by way of remission of Death Duty, which would necessarily bring upon us the offer of a large and miscellaneous collection of works of art, many of which we should not be very enthusiastic about receiving.
Therefore, while I appreciate the sentiment behind this proposition, my own feeling is that it is really better to leave things as they are. We have done a great deal. We are doing one other thing in connection with the Gowers Report. We are providing that chattels may be taken over in one of these historic houses free of duty at the same time as the house
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itself. I think, therefore, that for this year at any rate we should leave the matter there.
Mr. Eccles: I have sympathy with what the Chancellor has just said, but he ought to go a bit further in providing money with which our museums can buy, and I think that is the reason why my hon. Friend has put down this Clause. He feels, rightly, that His Majesty's Government are stingy in the acquisition of works of art compared with many other Governments.
The Clause is open to certain objections which the Chancellor has put forward, but he ought to take it as a real sign that this side of the Committee would like to see the Government do a little more to buy some of the things that come on to the market. I hope, therefore, that the right hon. Gentleman will not fob us off with what has been done in the past, but find a little more money to prevent some of these very fine things from leaving the country by buying them ourselves.
Dr. Barnett Stross: If the Chancellor is to be persuaded, and I hope he is, that a little more money might be made available so that the best kinds of paintings, sculpture, glass, and so on, are to be made available to people through the great galleries of our country, will he bear in mind that at present there is considerable feeling outside the Metropolis and the great national collections about the assistance which is being given to them. None at all is given by way of direct assistance from the Treasury to the 700 or 800 galleries in the provinces.
The Treasury has felt itself—and still does—bound to assist our national collections. Apart from Cardiff, which is partly rate-aided, we are compelled to support ourselves through the rates or through private benefaction. This creates a great difficulty for us. It is true that we are able to get some things, not the most valuable, on loan in a way that was not possible until a few years ago. None the less, a great storehouse of art treasures comes on to the market. An agency which would consider the provincial galleries as well as the national collections and the embassies would be valuable, and therefore I lend my voice to urging this useful expenditure upon my right hon. Friend.
11.0 p.m.
Mr. Grimond: I should like to support what has just been said about the need, if we are to get more money for the buying of works of art, to assist the smaller provincial galleries. Many lesser pictures are seldom seen by the public at all. I do suggest, therefore, that in the National Gallery and in many other galleries there are many pictures which could be made available to the public and which could be made available without the Chancellor of the Exchequer having to spend any extra money at all—but if he has any money it might well be spent for these purposes.
Mr. Godfrey Nicholson: I think the Chancellor was on an easy wicket tonight because it was easy for him to shoot down the suggestions for dealing with this question. But unless the Government come forward with suggestions of their own a series of Private Members on a series of Finance Bills will make suggestions of their own—and I am afraid that they too will be merely shot down.
The problem is that this country is suffering a severe drain on its works of art. Big collections are being dispersed, many of them overseas and, in effect, the Government are doing very little about it. I should say that of all the great nations we claim the least interest in the preservation of the national artistic heritage. I therefore hope that we shall not indefinitely be content to allow Chancellors to reject all suggestions and make none of their own.
Mr. Charles Williams: I was delighted to hear the Chancellor go some way towards trying to keep the best of our works of art in this country. I would emphasise what has been stated by other hon. Members, that we need to encourage some of our works of art to go to smaller and more local galleries if possible. I would remind the right hon. Gentleman that in 1930 a Socialist Chancellor of the Exchequer brought in this most vital and most useful proviso—it was the only useful thing he did. The present Chancellor is the only one of three successive Chancellors who have not acted in this matter.
Let him, therefore, between now and the Report stage, readjust the Clause to bring about what I believe everyone in
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the Committee would like to see done and so do some good in his Finance Bill. His two predecessors having failed, he at any rate might do something to show that in this respect he has a real care for works of art—and show a much greater concern in this matter than the then Mr. Snowden did.
Mr. Walter Fletcher: I do not know whether I shall have to declare my interest in works of art as a producer, but I do not feel that those works of art will enable me to pay Death Duty on my estate. Nor are those works of art capable, I feel, of being "defined by subsection (1) of Section 35 of the Copyright Act 1911." I feel that if the Chancellor pursued a more enlightened policy it would be one of the most worthwhile things he could do because there would be made available to executors of estates a choice of works of art.
The plea that has been made for provincial museums has my full support and I would like to make a plea too for our overseas embassies. There is a greater interest in art than there has been for a long time past, but those who visit the overseas buildings of the Government look rather to what comes from this country than what is of the local style. If they are able to do that it will have considerable effect. I believe that the Chancellor has an opportunity here to do something a great deal more far-reaching than he appeared to realise, judging from his speech.
Sir William Darling: I hope that the Chancellor of the Exchequer will unbend in this matter. He has depicted himself as a stern, unbending young man. Would this not be an opportunity for him to show something of that admirable quality of subtleness?
I wish to support the views expressed by the hon. Gentleman the Member for Stoke-on-Trent, Central (Dr. Stross). There may be plenty of pictures travelling the galleries, but there are places which would welcome an opportunity of seeing these treasures. I do not think that London Members—particularly the Chancellor—perhaps appreciate how barren and sterile it is outside this overgrown city, where artistically life is often

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barren and barbarian. Here is a chance for the Chancellor to take away that stigma. It was the claim of the Socialist Party in the days of William Morris that it stood for sweetness and light and the delights of art. Today, we see nothing of that. I believe that the plea of the hon. Gentleman the Member for Stoke-on-Trent, Central, will go unanswered.
I believe this is a proposal which the Chancellor will have to support sooner or later. Some people will only be able to meet their commitments by payment in kind. The Scotsman may have to part with his breeks in order to pay Death Duty on his estate. This is an innovation, and I should like to see it on the Statute Book because I am sure many others will be compelled not only to give works of art but more essential parts of their property.
There is a chance here, too, as my hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher) said, to stimulate artists in a big way. In one's lifetime we are all patrons of the art or creators, and in death these may be disposed of in payment of the liability to the State. This is a lively and re-enter-prising opportunity, and the Chancellor has been singularly unyielding in any concession. I hope that this will appeal to him. It will cost him nothing. It is only canalizing certain methods of paying taxation. On a day in which he has been ungenerous I hope that he will grant this concession.
Sir I. Fraser: I am not in the least opposed to the use of public money for maintaining treasures of art in this country, and avoiding their leaving the country in periods of bad times, but it seems to me deplorable that speakers in all parts of the Committee have based what they have said on the assumption that the only way we can look forward to any work of art being bought, sold, or retained in this country is by the action of the Chancellor of the Exchequer. Let us hope that we are not forever banned from the possibility that we may once again be a prosperous country in which the individual may be able afford to sustain the arts.
Captain Crookshank: I do not think we need continue this very interesting discussion much longer. We have drifted
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away from the point of the Clause, which was that the Commissioners should be enabled to accept works of art in acceptance of Death Duty. That is different from the general argument that we ought to retain as much as we can of our national possessions in this country, because the fact remains that the larger number sold to foreign countries are sold by living people and not necessarily out of dead estates, I hope, therefore, that on the general artistic conception raised during the debate the Government and all of us will take further thought.
The Chancellor has already told us of the opportunities that exist for the State to acquire, after a death, some of the more valuable possessions—he has told us exactly what the position is about that—and it seems to go certainly some way, if not all the way, to achieve what my hon. Friend the Member for Cambridge (Mr. Hamilton Kerr) has spoken about. We ought also not to forget that, while it sounds admirable that we should keep as much as we can in this country, it is not much use unless the treasures are kept in the places where they have always been. The last thing we want is to clutter up museums, whether national or provincial, with a great mass of works of art which can never be seen at all, because of the lack of space to exhibit them.
While we also agree that our embassies and other public buildings abroad would be useful places in which to show the arts and crafts of our country, even there limits exist to the number of rooms in which these treasures can be exhibited. I hope, therefore, that the Government will take note of tonight's debate and the general desire of the Committee to see that somehow arrangements are made so that as much as possible can be kept in this country and not become, what unfortunately it is today, one of our great dollar earners.
Question put, and negatived.

New Clause.—(REDUCTION OF DUTY FOR HORSE RACING.)
In subsection (3) of section one of the Finance Act, 1935 (which provides for reduced rates of entertainments duty in the case of certain entertainments) for the words "other than the racing or trial of speed of animals," there shall, with effect from the fifth day of August, nineteen hundred and fifty-one, be

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substituted the words "including the racing or trial of speed of horses but not of other animals."
Brought up, and read the First time.
Captain Stanley: I beg to move, "That the Clause be read a Second time."
I ought to declare an interest. I come from a family not unconnected with racing and I myself have two horses. One, I am delighted to say, has been successful, and with the other I am hoping for better things. This Clause, rather like that on speedway racing, is non-party, for there are people on both sides of the Committee who like racing very much and people on both sides who dislike it. We have had the Financial Secretary telling us that betting does not come into it, and therefore I hope that everyone will be able to look at it in the proper light.
In connection with speedway racing we have already had a discussion about live entertainment, and I do not propose to go into that aspect of the matter, except to say that, if any hon. Member is in doubt, in this year's Grand National there were 36 starters and 11 jockeys fell at the first fence. I have never had that experience, but it must be a most unsatisfactory one. The Financial Secretary has been well briefed, and he has discovered that the skill of jockeys does matter in handicaps. I congratulate him on that. If he comes a bit further, he will find that jockeys are very important in all races.
In racing there are many people who back their favourite jockey; many will have a mixed double with Gordon Richards, or a jockey like him, so skill comes very largely into it. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) made a lot of fun about elephants on racecourses. He will be causing a great deal of anxiety to the Leader of the House if he should persuade the Jockey Club to let elephants race round Tattenham Corner just before the Derby.
11.15 p.m.
One of the most important points is that there is a racecourse in nearly every part of England and Scotland. Many of them are places where people can go for their picnics. and early closing day coincides with racing so that all can go.
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There are 71 courses, where all this happens, and everyone who goes and is successful has a good time. All over the country you have only to see a man selling newspapers and shouting the results and you will notice that many more people will buy a paper for that than if be were shouting news of something that has happened in this House.
Besides being a sport, racing is a great industry. No one who has been to a town like Epsom, Newmarket, or Middle-ham, and there are many others, can fail to realise what a great industry it is. A great many people are employed, and I think that they are among the most happily employed in any industry. This industry also makes a very great contributions to exports. The export of blood-stock over the last year amounted to £5 million.
There is associated with racing the idea that rich people own racecourses, and that all racecourses make a fantastic profit. The net profits of the 71 racecourses totalled £91,000 last year, and the extra tax which the Chancellor is putting on will mean roughly £100,000. I cannot believe that there is any other industry in this country which will have such a tax put on it that it cannot make a profit at all. The figures I have given are diminishing, so that the industry will show an even greater loss. Racecourses are not only owned by private shareholders; six are owned by local authorities. The biggest and most famous is probably that owned by the local authority which the Minister of Agriculture can tell us most about.
I should like to point out what it will mean if this extra burden outlined in the Finance Bill is put on. There are three different places for people to go to: on the course, where the charge is 4s. 6d. and they will have to pay an extra 3½d.; in the public enclosure, where the charge is 10s., and they will pay an extra 5d.; and in Tattersalls, where they pay 30s., and will have to pay an extra 1s. 8d.
Compare the terrific taxation put on race-courses with what is paid in football. Not that I can say anything against football as Blackpool is next to my constituency. Last year 34 million people attended League football matches, and they paid £700,000 in tax—an average of 5d. each. The 5,500,000 who went racing paid

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£1,626,000—an average of 5s. 10d. each in tax. It seems to me unfair that there should be such a difference. We have been told by the Financial Secretary that one of the first things that is looked into is how attendance has been affected. Over the last three years, attendances at racecourses have gone down from 10,200 in 1948 to 9,360 in 1949 and to 8,580 in 1950—a great drop, which, with extra taxation, will surely be greater still.
If the extra tax is not put on the public, it will have to be taken off the stake money of the owners. There are those hon. Members who will say that a man who wins £19,000 at the Derby could well have a bit cut off; but it is not the racecourse that pays the £19,000. The racecourse puts up only £4,000; the other owners put up the other £15,000. The owner who wins the Derby is probably a big owner with a string of horses: it is the small man with one or two horses who is the type of owner we want to encourage—the man Who goes in for races worth £300 or £400, who thinks it wonderful to win a race of £300. When he does there is 25 per cent. taken off that stake money. It costs between £600 and £700 a year to keep a horse, so that an owner with one horse has to be fairly successful to come out plus at the end. Anyone who knows anything about racing will agree it is important to have as many people owning horses as possible.
The Chancellor is on the look out for more money. Let me give him a hint about how he can make it out of racing. I do not know how the right hon. Gentleman the Leader of the House will take this suggestion, but he ought to do something about the Report of the Betting and Gambling Commission. If we could run racing as it is run in Ireland, the Chancellor would get more money, and so would racing. This is a point well worth looking into by the Chancellor and the Leader of the House. In Ireland, racing has been greatly improved, stake money has been increased and facilities for the comfort of the people who go racing have been improved. Nobody minds paying a 2½ per cent. tax on a winning bet if it is to improve racing.
I should also like to point out to the Chancellor the terrific interest there is in racing. That was brought out by the
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Royal Commission when they showed that over 50 per cent. of the adult population have a bet on the Derby.
The Chairman: I regret interrupting the hon. and gallant Gentleman, but he is far from the Clause, which deals with Entertainments Duty.
Captain Stanley: I am sorry if I went too far, Major Milner, but I got run away with.
I hope that when the whole question of the Entertainments Duty is gone into by the Chancellor he and his advisers will seek the advice of the Jockey Club, the National Hunt Club and others who are in a position to give advice and so help racing to prosper to the advantage of all those people who are engaged in it and those who get so much enjoyment from it.
Mr. Jay: I should like to express my gratitude to the hon. and gallant Gentleman the Member for North Fylde (Captain Stanley) for the expert confirmation he has given of the diffident view I expressed last week that horse racing is partly dependent on the skill of the jockey. This new Clause would put the Entertainments Duty on horse racing at a lower rate than that on other forms of racing, including speedway racing, just as the Amendment we discussed last week would have put the tax on speedway racing at a lower rate than on other forms of racing. In our view, there is no case made out at present for discriminating in either of the respects.
Some of the hon. and gallant Gentleman's arguments would confirm what I attempted to suggest last week, that if we were to take action on the lines suggested for speedway racing, other forms of entertainment could raise objections and put their own case forcibly. Indeed, when the hon. and gallant Gentleman spoke of attendances, he could have argued that, whereas speedway attendances were still a good deal larger than they were four or five years ago, attendances at horse racing are, if anything today, rather smaller.
For all these reasons we cannot ask the Committee to accept this Clause, but I am very glad to add to the assurance that I gave last week that we will review the whole structure of this tax in the future. In doing so, we will certainly take into

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account the arguments advanced by the hon. and gallant Gentleman.
Mr. McCorquodale: I do not wish in any way to bring this debate to an end, but I should like to make a few remarks on the racing situation, as I have the honour to represent Epsom in this House, a place to which we extend a very cordial welcome to many Members and to thousands of others, too, on Derby day. I am sure that my hon. and gallant Friend the Member for North Fylde (Captain Stanley) will agree with me when I say I am grateful to the Financial Secretary to the Treasury for the sympathetic tone, if not words, which he used just now. We hope that when the time comes to consider this tax he will give most sympathetic consideration to horse racing for one or two reasons, which I propose now to put before the Committee.
11.30 p.m.
Horse racing is the largest industry in Epsom, as my right hon. Friend the Leader of the House knows, and any injury to this great and very English sport would affect most grievously the area which I represent. I remember during the war that considerable discussion took place as to whether horse racing should continue during those anxious days. There was strong pressure by many people, especially from the hard-pressed transport side, that horse racing should be abandoned.
I do not think I am betraying any secret when I say that my Minister, the late Mr. Ernest Bevin, took a most firm and decided view on it. He insisted that the war workers needed something to think about outside their work and outside the war news, and he argued that horse racing helped to maintain high production throughout all those monotonous days during which men worked at the bench. Indeed, one can claim that horse racing was a great boost to industrial morale in those dark days, and I am glad to think that I was able to collaborate with my colleagues, from both sides of the House, in winning general agreement, in the national interest, that horse racing should continue in spite of all the difficulties.
The Chairman: Remarks must be related to the subject before the Committee.
Mr. McCorquodale: I am trying to show, Major Milner, that if this Clause is not carried, then this great industry, which we were able to keep even during the very difficult days of the war, will suffer hard times. It was most desirable during the war that we kept it going; how much more desirable must it be now.
There are many aspects to be considered; there is the export trade in bloodstock, the great tourist industry, and even the nationalised railways would all suffer very grievously if anything happened to horse racing. Indeed, there are no fewer than eighteen million people who are interested in Derby day, so far as the result is concerned, and they, also, would suffer.
Therefore, I do suggest that if horse racing suffered damage which might even bring it to a stop, the morale of a great section of the community would be grievously affected. Figures already show that attendances at horse racing meetings arc decreasing, and the profits are disappearing almost to vanishing point; and if nothing is done, then the goose which has been laying the golden egg of 5s. 10d. for every meeting, will weaken.
Horse racing is classed as a "dead" sport, despite the jockeys and the thoroughbreds, and I must say that I find this difficult to understand when remembering that a circus, with horses galloping round a ring with no jockeys, is classed as a "live" entertainment. It may be that the betting on horse racing causes it to be considered separately from the circus. But the betting at present is very similar to that on football matches. Football, as a game, does not benefit as a result of the betting on pools, nor does horse racing benefit because of the betting which takes place every time there is a meeting.
Therefore, in common fairness, I ask the Chancellor, in the public interest, as well as from the revenue collecting viewpoint, to treat this grand and very live British sport for what it is—a living entertainment for the people of this country, and to reduce the rate as asked for by my hon. Friend as soon as it possibly can be reduced.
Mr. W. T. Aitken: Like my hon. and gallant Friend the

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Member for North Fylde (Captain Stanley) I have no personal interest, but a constituency interest, in this debate. There is no place in the world where more people make their living, either directly or indirectly, out of horse racing, than the town of Newmarket. Many hon. Members have shown a deep and affectionate regard for this ancient sport, but how many realise the vast and varied activities which lie behind the 71 race meetings which take place in this country every year? Not only are there jockeys, owners, and breeders, but there are saddle and harness makers, veterinary surgeons, and so on, all concerned with, and in most of those cases, living on the prosperity of the racecourse.
I am sure that if the Minister of Agriculture were here he would certainly agree that horse racing is the very foundation of the whole bloodstock industry of this country, not only affecting horses but everything. Not only the knowledge, but the skill and years of experience which have gone into breeding horses, affect all kinds of other aspects of our bloodstock industry. I do not propose to detain the Committee very long because this argument is simple and unassailable.
Racing is important not only because it gives a good deal of entertainment, if not always profit, to millions of people in this country, but it gives a livelihood to thousands of others. What is more, it is a very important export industry. The figure quoted is £5 million a year. If one goes to the December sales at Newmarket, one will find the first question every foreign buyer asks of the horse is, "How much did it win?"
The stakes which are paid out for racing are paid out by the racing executives and this depends very much on the income from the course. This new tax especially will wipe out all the profit of racing. The concession we are asking, which is to compel the tax collector to consider racing a live sport as every other reasonable person in the country does already, will cost the Chancellor about £1 million. If one wants to see some racehorses going really cheap, if one wants to see some very big reduction in that £5 million of exports, the Chancellor has only to continue with his entirely illogical category of a non-live sport.
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This £5 million export of bloodstock is something which will be very seriously damaged if racing is not considered a live sport. That is the most important argument we can put forward at the present time. I should like to hear very much more about that because I am certain the losses on exports alone from the position which racing is in, as an organised sport. will be greater than the problematical revenue which the Chancellor is likely to obtain out of racing next year. The loss made will be greater than the gain to the Exchequer over this hoped-for revenue from the new tax and the position racing is in as a non-live sport.
Committee report Progress; to sit again Tomorrow.

MINERAL WORKINGS BILL
Order for consideration, as amended (in the Standing Committee) read.
11.39 p.m.
Mr. Deputy-Speaker (Major Milner):I have to call the attention of the House to the fact that Standing Committee "A", by inadvertence, omitted to leave out certain words in Clause 26 which were not covered by the Money Resolution. As a result, the Bill imposes a charge not covered by a Money Resolution. The Bill must therefore be recommitted to the former Committee in respect of Clause 26.
Bill recommitted to the former Committee in respect of Clause 26.—[Mr. R. J. Taylor.]

INDUSTRIAL DEVELOPMENT, NORTH-EAST ESSEX
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. R. J. Taylor.]
11.40 p.m.
Mr. Alport: My object in raising the question of industrial development in North-East Essex on the Adjournment is to ask the Government to clarify their policy in regard to the industrial expansion of that part of Essex in general and the Colchester area in

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particular. I will outline the position as far as we in Colchester see it. In 1946, the Local Industries Association produced their plan for the future industrial development, which they estimated that the population of our town would require as a result of its increase during the future 20 years, and they estimated that that number would be in the neighbourhood of 20,000 persons. They therefore naturally concluded that industry would expand to a proportionate extent.
At the same time, the Trades Council were very properly concerned to ensure that the volume of industrial activity in the area should be sufficiently adequate and diversified to prevent any substantial unemployment should the bad and difficult days we experienced in the past return, and made inquiries in regard to Government policy in this matter. Simultaneously, those representing the retail trade, while acknowledging that the prosperity of the town, and their trade in particular, were largely bound up with the fact that it is a centre as a market town for a large and highly developed countryside, were, and are, no less concerned that a proper degree of industrial expansion should take place in the future.
I should explain that we have at present in Colchester one large heavy engineering firm, two medium sized light engineering firms and several smaller firms concerned with printing, clothing, tool and building materials manufacture and shipbuilding, but that the bulk of our employment is bound up with the three engineering firms I have mentioned, If anything went wrong with one or more of those firms, the working people of Colchester would suffer very severely—and here I am speaking from practical experience on more than one occasion during the past 50 years.
The addition of one or more heavy engineering firms to those which already exist would be of great advantage to the firms themselves and to the workers of Colchester in general for it would make it much easier for us to recruit skilled workers from other parts of the country if those who came, say, from the North to Colchester for employment knew that there was alternative employment readily available should they wish to change their employment at any time. The House will readily recognise that when
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a worker moves with his family from one part of the country to another and takes on new employment he does not properly know the circumstances and likes to know that he can change at will to other employment on the spot without having to move his family to another area. It would, therefore, be in the interests of those heavy and light engineering firms if the volume of that type of industry in Colchester were increased.
Two new light industries would be of even more general value to us, particularly if they employed male and female labour. They would render Colchester less dependent for employment in the future on the three main factories and, in addition, would provide steady prospects of work for the young workers, particularly those belonging to the families who are coming in in increasing numbers to live in our midst.
I would add that the social and economic health of a community such as ours is promoted not by having a handful of large factories, however prosperous, employing great armies of workers, but by having a number of small ones producing a variety of different goods, and manned by as many different categories of skilled and unskilled workers as is possible. The types of factories which I have in mind are those connected with the production of food, clothing, household goods, light engineering and agricultural materials.
Such is the outline of our point of view. It is right that we in Colchester should wish to see our town maintain and increase its prosperity, that we should wish to see our workers enjoying prospects of secure employment, and that we should wish to see ahead of us a period of enterprise and economic expansion which the continuing vitality of our community after some 2,000 years seems to us amply to justify.
This point of view is not—I hope the House will give me credit for—purely a parochial one. Many of the workers for the new industries in Colchester would come from outside. Some, no doubt, would come from the London area; others would be soldiers who, at the end of their service, wished to settle among us; others still would come, as has been the case frequently in the past, from the East Midlands and from the north-east coast.

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I like to think that even if the numbers do come, taken against the great populations of London and the North as a whole, they would be comparatively few. These few, at any rate, would, in many cases, have the opportunity of leaving the bleak landscape of slum and slag heap to bring up their families and to work through their lives in a place where many of the qualities and kindly traditions of an older England are still maintained.
Before I turn to the apparent attitude of the Government in the matter, let me say that the expansion forecast of population which I mentioned earlier—some 22,000 in the next 20 years—is, if anything, an under-estimate. Let me give, as one indication of what is happening, the fact that between August, 1945, and May, 1951, the Colchester Council housed 1,361 families, yet between November, 1946, and May, 1951, our housing list increased by about 265, which indicates a natural flow of population into our area.
It seems to us—here I am asking for information from the Minister—to have been clear during the past five years that the Board of Trade has not only not been prepared to encourage new industries to come to Colchester but, by refusing permits for factory building, has actively discouraged them from doing so. Admittedly, a short time ago a firm of manufacturers succeeded in purchasing a factory building already in existence outside Colchester, but this has been an exception, and does not alter the conclusion to which the Council came after having discussions with the Eastern Regional Office of the Board of Trade and which the Council, in a recent statement, summed up by saying that the Board of Trade were not prepared to take active steps to encourage new industries in Colchester, and that in this attitude they were strongly supported by the Ministry of Labour.
To dispose straight away of the contention of the Ministry of Labour that the availability of employment in Colchester at present makes additional industry unnecessary, I think the House will agree that the same could be said of any town almost in the country. The fact that there are only 104 unemployed at present in Northampton and 100 in Blackburn and 101 in Bury should not
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preclude those areas from reasonable expectations of industrial expansion in the future. So far as our existing figures of unemployment are concerned, we are in excess of a number of towns elsewhere. Derby, for instance, with a population of 143,000 has 145 unemployed. Cambridge with 90,000 has 173, whereas Colchester with 58,000 has 222 unemployed.
I do not think, therefore, that that argument can be seriously advanced and maintained. I believe that the second argument is a fair one—that these new industries cannot come to Colchester because of the existing lack of housing accommodation. But, this is an argument which can be advanced against any town throughout the country which wished to see additional industry coming to it. I am not going to develop the housing policy argument and I am sure it would be out of place to do so. All that I wish to say is that I believe that the housing situation and problem can be overcome—and, I believe, quickly, and that we must plan our industry with a view to development in two, three or four years' time, by which time the housing situation will, we all hope, have eased considerably.
The third argument might be raised that the three existing firms to which I referred earlier could be expanded to find employment for a large number of additional workers. I have no doubt that these firms will expand. but the arrival of new industries of a light character in Colchester would help rather than hinder their labour problems. Here let me repeat once more that in a community of our character a number of small industrial units are far better than a dependence for employment and for wage packets week by week upon a limited number of large ones.
Our ideal is to spread employment amongst as many small industries as is possible, producing different things for a variety of markets at home and abroad. We have the impression, as the extract from the Council's minutes indicates, that the Board of Trade, aided and abetted by the Ministry of Labour and possibly, but not certainly—because there is not necessarily any co-ordination in these matters—with the agreement of the Ministry of Local Government and Planning, will not allow any industrial expansion in Colchester except where existing firms extend

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their activities or where factory buildings already existing can be occupied by new industries.
This has been borne out, as the Minister will know, by the refusal of the Board to allow permission to applicants to erect new factories recently when sites generally suitable for the purpose were being reserved for them. As a further confirmation may I read an extract from the opinion given by the Eastern Region of the Board of Trade when commenting on the town's development policy. It says:
"The Government's distribution of industry policy tends to regard Colchester as a neutral area' in which there is no present need for new industry to diversify the industrial structure or to reduce unemployment materially. While acquiescing in the reasonable extension of industry, no steps will be taken to encourage new or expanded industrial projects to establish themselves in the town."
Let me put these questions to the Minister. Is that a statement of the Government's policy in the matter and, if so, how long do the Government propose that this policy, this prohibition, shall last? If this is the only policy in the immediate future, in the next year or two, will the Government remember that nowadays it takes up to three years to build a factory and to bring it into production? Would they be prepared to modify this attitude within the next 18 months?
I admit that the changing fortunes of politics may make is necessary to put the question to another Government rather than theirs, but assuming that the present Government is in power at that time, and present policy is being followed, would they modify their attitude within the next 18 months? Finally, will the Board of Trade look more sympathetically at the projects for re-siting industries that are already in Colchester, where that re-siting is necessary and desirable from the town planning point of view?
Personally, I regard with great disquiet the tendency, for what I think are very often temporary and theoretical reasons, to prevent natural economic growth such as I have instanced. If a great new rolling mill needs to be started let us by all means put it in South Wales to help the unemployment problem, but that is surely no reason for throttling natural economic development elsewhere.
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The Army General Staff are always being accused of fighting the last war but one. There is a danger that the industrial planning staff, obsessed with pre-war problems, are trying to solve problems which time has already solved, and are not facing up to the possibility that new difficulties may arise in the future.
Natural economic development for Colchester must be of value to North-East Essex in general, and we believe also, to the future prosperity of the country as a whole. Let us not forget that the three substantial firms are themselves the result of family enterprise in their origin, that on these the employment and prosperity of Colchester at present largely depends, and that they would never have come into existence if the policies which the Board of Trade appear to be following at present had been accepted by the Government of 50 years ago.
11.57 p.m.
Sir Stanley Holmes: As the Member for the most north-easterly part of North-East Essex I am glad that my hon. Friend the Member for Colchester (Mr. Alport) has raised this matter tonight. But I want to point out to him and the House that Colchester is not the north-east land's end of Essex, and that beyond it there are other towns that are worthy of consideration. In particular, I want to refer to the attractive town of Clacton-on-Sea, a town so attractive that it attracted Mr. Butlin.
Clacton has a number of permanent residents, but it derives its living mainly from the visitors it receives during the short summer months, a period of about four months. It used to have a secondary industry. That was building, and for many years between the wars Clacton was always expanding. Unfortunately, house building disappeared during the war for one reason, and has not come back for another reason, only too well-known to all.
Therefore, the desirability, and, much more, the necessity for light industry at Clacton is apparent. I ask the Board of Trade to remember the position of Clacton. It is within easy distance by road of the docks and nearer still to the port of Harwich, and I hope that these facts will be taken into consideration in the future.
11.58 p.m.
The Secretary for Overseas Trade (Mr. Bottomley): The hon. Member for Colchester (Mr. Alport) has spoken in a more conciliatory tone tonight than appears to have been the case before, judging by the Press reports which I have had an opportunity to read. Perhaps that is because he has now had a chance of meeting some of the local industrialists and people who are reasonably well informed. At any rate, he has been able to present his case tonight in a manner which, if adopted previously, would have avoided his appearing in the Press as talking about the short-sighted policy of the Government and as using similar scathing terms. These resulted in headlines in the paper that did not fit the reports that followed. That is typical of the party he represents. They have never had a policy on this question, and for that reason there has been a free for all. Pre-war industrialists could build where they liked.
If we take 1938, when the finding of new employment was becoming an increasing need, there was 9.4 per cent. unemployment in North-East Essex. Today, unemployment in that area is 1 per cent.—less than the average for the whole country. Far from this Government being short-sighted, it has quite definitely a distribution-of-industry policy. Our job is not to move the people, but to take industry to the people. If there are large pockets of unemployment our endeavour is to take factories and employment there. If that policy had been followed in the inter-war years we should not have had the migration of the population from South Wales and the North, from which we are still suffering. Many men who might have been able to go to the pits are no longer there.
As a Government, we have looked at our resources and asked how we can best use them. On a recent visit to my constituency, where we are having a Dickens' festival, I was reminded of Micawber: income £20, expenditure, £19 19s. 6d., result, happiness; income £20, expenditure, £20 Os. 6d., result, misery. This Government is trying to divide the income we have in such a way that we can meet
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our requirements for schools, factories, rearmament, investment, and so on. North-East Essex is in a relatively healthy state and has a reasonably varied industry; engineering, textiles, food, printing, agriculture, chemicals and shipbuilding. Colchester is a great centre for the surrounding country; it has service industries and other kinds of employment that make it a lucky town in that respect.
May I say to the hon. Member for Harwich (Sir S. Holmes), that his plea for Clacton is justified. The Board of Trade really has anxieties about the position there and if it is possible to give assistance we shall do it. From that it is not to be inferred that we are not giving all we can to North-East Essex and Colchester. We are not discouraging industry from going there; there is no ban on industry going. The Board of Trade has never refused an industrial development certificate for Colchester. If a firm decides to build a new factory there, the Board of Trade will not object, although, of course, the firm has to get a building licence for which it has to pass particular tests. If a firm decides to buy an existing building, the Board of Trade will have no objections.
The position really is that the Board of Trade will not at this moment take active steps to steer industry there, but it will not stop industry going. We feel that it is not our job to steer new industry to these parts. I could mention several towns where the unemployment figures, not long ago, were 7 to 8 per cent. As a result of the policy of the Government in placing new industries, these figures are being rapidly reduced. I suggest to the hon. Gentleman who has raised this matter that he should do his best to convince his people, as the Town Clerk of Colchester has done in a very reasonable letter, that the policy being followed is a wise one. It does not hinder industrial development in North-East Essex, and I would particularly emphasise that the Board of Trade places no ban on new industry there, or in Colchester.
Adjourned accordingly at Six Minutes past Twelve o'Clock.