Commons Sitting of 28 June 1951

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS

  GYPSIES
  Mr. Doddsasked the Minister of Health if he is aware that many gypsies were not included in the recent census and what action he proposes to take to deal with this omission.
  The Minister of Health (Mr. Marquand): No, Sir. My information is to the contrary. Special arrangements were made as regards people not in a settled place of residence.
  Mr. Dodds: If I give my right hon. Friend details of gypsy communities that were not even visited for census purposes, will it assist in persuading the Minister that Governmental action is desirable in this minority problem?
  Mr. Marquand: I shall be glad to have that information. Special instructions were given to the enumerators to visit the gypsy encampments.
  Mr. Doddsasked the Minister of Health if he is aware that a large percentage of gypsy children are without birth registration; and what action he proposes to take to deal with this problem.
  Mr. Marquand: No, Sir.
  Mr. Dodds: If I give my right hon. Friend evidence that many gypsy children are not registered, will he look into the matter in view of the importance of every person having a birth certificate?
  Mr. Marquand: Yes, Sir.

  LUNG CARCINOMA
  Dr. Barnett Strossasked the Minister of Health whether he has noted recent evidence from American and British
  1550
  research, showing the alarming increase in carcinoma of the lung and its association with heavy smoking of cigarettes; and what steps he is taking to publicise these findings, especially among young people.
  Mr. Marquand: I have noted the results so far reached by research into this subject. These are being considered by the Standing Cancer and Radiotherapy Advisory Committee.
  Dr. Stross: Is my right hon. Friend aware that the result of the research is very disturbing? Is he satisfied that it is reasonably correct? When ultimate consideration has been given, will he do what he can to publicise it, in view of the fact that so little publicity can be given in certain quarters?
  Mr. Marquand: I am satisfied that the results published recently are rather alarming and that is why I have asked the Committee to look into it.
  Sir Hugh Lucas-Tooth: Does the right hon. Gentleman accept all the implications in this Question?
  Mr. Marquand: I do not know what implications there may be, but I asked this Committee—which is associated in this matter with the Medical Research Council—to consider the evidence of this research.
  Dr. Strossasked the Minister of Health whether he can give the figures for deaths from carcinoma of the lung for the years 1940 and 1949 both for males and females.
  Mr. Marquand: Deaths recorded as due to carcinoma of the lung were 2,121 males and 694 females in 1940 and 3,720 males and 807 females in 1949.
  Dr. Stross: As these figures show almost a doubling in five years of deaths from carcinoma of the lung, and in view of the implications of the answer given to the previous Question, does my right hon. Friend agree that, as the total number is now approaching double that of deaths from pulmonary tuberculosis, something ought to be done about this matter?
  Mr. Marquand: I agree that something ought to be done and treatment is being carried out all the time on victims of this

  1551
  disease. I also agree, as I have already said, that further research and study are urgently necessary.
  Mr. Somerville Hastings: Are there not many other factors which should come under consideration, such as, for instance, the increased use of petrol by road traffic?
  Mr. Marquand: I am sure that all factors will be taken into consideration by the Committee

  NATIONAL HEALTH SERVICE

    Hospitals, Essex
    Mr. Nigel Daviesasked the Minister of Health in view of the fact that it is expected to be several years before a hospital is built in the new town of Harlow, what steps are being taken to ensure the opening of additional wards in Haymeads Hospital, Bishops Stortford and St. Margaret's Hospital, Epping, to meet the needs of the new town.
    Mr. Marquand: The regional board hope there will be another 30 beds available by the end of the year at St. Margaret's Hospital. Efforts are being made to recruit additional nurses, on which the opening of other wards there and in the group which includes Haymeads Hospital depends.
    Mr. Davies: Is the right hon. Gentleman aware that the population of the new town of Harlow will reach at least 10,000 long before the new hospital is provided? Will the action he has mentioned be adequate to cope with the population?
    Mr. Marquand: I am well aware that it will take some time to build a new hospital. Meanwhile, 200 additional beds could be provided now if the nurses were available.

    Hearing Aids
    Lieut.-Commander R. H. Thompsonasked the Minister of Health what is the number of persons awaiting the issue of Medresco hearing aids in the borough of Croydon at the latest convenient date.
    Mr. Marquand: I regret that the information could not be obtained without disproportionate labour.
    Lieut.-Commander Thompson: Can the right hon. Gentleman give an assurance that the supply of these appliances will be speeded up, because my information is that the number of applicants is rapidly increasing?
    Mr. Marquand: I was able to give some figures a week or two ago which showed that, month by month, there is a steady increase in the number of appliances provided.
    Major Guy Lloyd: Can the right hon. Gentleman say, roughly, how long a person has to wait for one of these appliances? My information is that it is a very long time.
    Mr. Marquand: I should hesitate to give an estimate, even roughly.
    Mr. Donnellyasked the Minister of Health what steps he is taking to enable people in the counties of Pembroke, Cardigan and Carmarthen, who are in need of hearing aids, to be examined and fitted without having to travel to Swansea.
    Mr. Marquand: I am informed that arrangements have already been made for patients to be examined at Carmarthen and Aberystwyth, and that the regional hospital board are considering the possibility of starting sub-centres there for the distribution of aids.
    Mr. Donnelly: Is my right hon. Friend aware that, in the last week or two, old people have had to make long journeys, involving something like 160 miles on a round trip, in order to receive their hearing aids? Will he look into the matter again and have the arrangements speeded up?
    Mr. Marquand: I have looked into the matter since my hon. Friend put his Question down, and I think he would agree that, if we establish a centre at Carmarthen, it should greatly reduce this delay.
    Mr. H. Hynd: Can my hon. Friend say what the position in regard to hearing aids would have been if the Opposition had been successful in the election?

    Child's Death, Bradford
    Mr. Peter Thorneycroftasked the Minister of Health whether he is yet in a position to make a statement on the inquiry into the circumstances leading to the

    1553
    death of five year old Eileen Cunliffe of Bradford.
    Mr. Marquand: There has been a special committee of inquiry on this case and their report has been before the hospital management committee. It is right that the whole matter should now go before the regional hospital board, at their meeting in the middle of next month, and while I am anxious to make as early a statement as possible about this unhappy case I think I should wait till after that meeting.
    Mr. Thorneycroft: Does the right hon. Gentleman appreciate the very grave concern caused by this case, in which this grievously injured child was taken from hospital to hospital and not admitted? Would he press on with this matter? Surely he would agree that the inability of the National Health Service to accept really urgent cases would be a very serious matter.
    Mr. Marquand: Yes, Sir. The concern of all involved was brought to my attention at once by the hon. Member for the constituency in which the child lived. There was no avoidable delay in making inquiries. I was unable to carry out the preliminary inquiry until certain material witnesses had been found. They were away on holiday, and as soon as they came back we got on with the inquiry.
    Mr. Frank McLeavy: As the Parliamentary representative for the constituency in which this child lived, and as I put down a Question immediately after this occurrence and agreed to defer it until 26th July, in order to allow the regional hospital board to report fully to the Ministry, will my right hon. Friend be able to give a full answer on 26th July?
    Mr. Marquand: The board will meet on 12th July. I should certainly be able to make a statement by the 26th.
    Colonel Stoddart-Scott: Is the right hon. Gentleman aware that this child was taken to three hospitals, all of which had accommodation and could have admitted the child, but was turned away? Will he ensure that until the regional hospital board meet there will be no chance of a recurrence of an incident of this kind?
    Mr. Marquand: I am aware of those facts, and I regard them very seriously.

    Leeds Hospital Committee (Estimates)
    Mr. Kaberryasked the Minister of Health how the reduction made by him of £1,100,000 in the annual estimates of the Leeds Regional Hospital Board has been apportioned as between administration and medical and hospital services; how many officers and servants have been dismissed or by what total amount establishments have been reduced; and what has been the overall effect on the bed accommodation within the region.
    Mr. Marquand: The Regional Hospital Board have recast their estimates in such a way that direct comparison between the three heads of those originally made and those now presented to me would be misleading. I will write to the hon. Member explaining in detail what has been done. So far, I have only partial information of consequential reductions in staff, and I have received no proposals for closing beds.
    Colonel Stoddart-Scott: Does the right hon. Gentleman realise that the Leeds Regional Hospital Board have housed themselves in the largest and most luxurious hotel in Harrogate, and that they keep gardeners, grow plants and show them at horticultural exhibitions? Will he see that there is a cut in this gross extravagance before there is any cut in hospital beds?
    Mr. Marquand: That is another question.

    Doctors
    Mr. Awberyasked the Minister of Health what were the terms of the offer to increase the remuneration of doctors under the National Health Scheme; what were the conditions attached to this offer; and if he will give an assurance that in the event of a refusal by the medical profession he will send the case to arbitration.
    Mr. Marquand: I will send my hon. Friend a copy of the letter addressed to the British Medical Association. As regards the last part of the Question, I will consider this issue if it arises.
    Mr. Awbery: Is my right hon. Friend aware that it has been reported that the offer made to the medical fraternity was refused, because the condition attached

    1555
    to it was that they should save on their drug bills? If that is not so, will he contradict it? If he cannot come to an agreement with the Association, will he refer the matter to arbitration on similar lines to arbitration in industrial disputes?
    Mr. Marquand: I think that my hon. Friend is somewhat misinformed. I invited the General Practices Committee to join a working party with certain suggested terms of reference. I have not yet received any reply to that invitation, which is now being considered by the general body of doctors.
    Dr. Hill: Was not one of the suggestions made in the correspondence and exchanges to which the Minister has referred that part, or all, of the additional remuneration should come through savings in prescribing?
    Mr. Marquand: One of the items which it was suggested that the working party should consider was how far there could be some saving on the drug bill.
    Commander Maitland: In view of the interest in this matter and the fact that all hon. Members have doctors in their constituencies, could not this letter be circulated in the OFFICIAL REPORT?
    Mr. Marquand: Yes, Sir. I have no objection to that.
    Mr. Awbery: Is it not correct that an offer of£2 million was made on condition that this amount was saved by cutting the use of expensive drugs?
    Mr. Marquand: No, Sir, it is not.
    Mr. Wakefieldasked the Minister of Health what arrangements have been made to protect doctors serving in the Territorial Forces against loss of practice in the event of their being called up for service.
    Mr. Marquand: I am discussing the matter with the British Medical Association.
    Mr. Wakefield: Will the Minister expedite the completion of arrangements of the nature suggested, because there is a good deal of uncertainty amongst doctors already attached to the Territorial Forces? There may be some reluctance to get new doctors, in view of the present uncertainty.
    Mr. Marquand: Yes, Sir. I will certainly do all I can to expedite that, but I am still waiting for a reply to an invitation to have a discussion.

    Domiciliary Confinements (Analgesia)
    Mr. P. Thorneycroftasked the Minister of Health the number of domiciliary confinements attended by midwives in the Wolverhampton County Borough during 1950 and the number of cases in which gas and air analgesia was administered; and whether he will take steps to ensure that more than five gas and air machines are made available in this county borough.
    Mr. Marquand: The numbers are respectively 1,485 and 473. I am looking into the question of the number of gas and air machines provided.
    Mr. Thorneycroft: Would the right hon. Gentleman agree that for only 473 mothers to have this assistance, out of a total of 1,485, is not a very good record for a great county borough? Will he ask Wolverhampton to see whether they cannot do a little bit better in this matter?
    Mr. Marquand: The percentage is lower than the national average percentage, and, as I have said, I am looking into the reasons for that.
    Sir Herbert Williams: Can the right hon. Gentleman say how many of the people who advise him on this subject have ever had a baby themselves?
    Dr. Stross: Could my right hon. Friend tell the House whether he has any information from this area as to other and alternative methods of anæsthesia that are now used? Does he agree that gas and air machines are not necessarily the best types?
    Mr. Marquand: I should like to have notice of both those questions.
    Mr. P. Thorneycroftasked the Minister of Health whether his attention has been called to the fact that in Burtonon-Trent only 5 per cent. of the women attended in domiciliary confinements by midwives in the public service during 1950 had gas and air analgesia administered to them; and whether he will cause inquiries to be made as to the factors which have led to this state of affairs.
    Mr. Marquand: Yes, Sir; and I am looking into the matter.
    Mr. Thorneycroft: Will the Minister also look back over the record of Burton-on-Trent, which has always been one of the worst in the matter of administering analgesia? Will he bear in mind the suggestion of the hon. Gentleman behind him that he should inquire whether pethidine or any other form is being used, and report on both these cases within the next month?
    Mr. Marquand: I am arranging for a special inquiry to be made immediately.

    St. Thomas's Hospital (Rebuilding)
    Sir Waldron Smithersasked the Minister of Health when it is proposed to repair and rebuild the bomb-damaged portions of St. Thomas's Hospital.
    Mr. Marquand: Repairs have been in progress continuously since the hospital was damaged. Reconstruction will take place as rapidly as building and other difficulties permit.
    Sir W. Smithers: Would it not have been much better, instead of pandering to Morrison's vanity, to have rebuilt St. Thomas's Hospital, instead of putting up a "Vanity Fun Fair "? Answer that one.
    Earl Winterton: In view of the fact that the site of this hospital is situated in the very centre of London, and is a very historical spot, has not its present state a very bad effect on our prestige, since foreign visitors go by it? Is it not monstrous that, six years after the end of the war, this work is not finished? Will the Minister personally look into it?
    Mr. Marquand: Yes, Sir. We have the plans in front of us, and they are being studied at the moment. I think that the start of the reconstruction will not be very far distant.

    Chemists (Payment)
    Sir H. Williamsasked the Minister of Health the reason for the delays on the part of his Department in making payments in connection with the National Health Scheme; and, in particular, why on 31st March of this year the sum of £1,170,000 was owing to a firm the name of which has been sent to him.
    Sir Jocelyn Lucasasked the Minister of Health what is now the average delay in making the final payments to chemists; and whether this is still increasing.
    Mr. Marquand: Final payments are delayed because the pricing of prescriptions is in arrears, but all chemists receive advances each month and supplementary payments whenever these are justified. The approximate average delay in authorising final payments is nine months. The speed of pricing is steadily increasing, and I hope that it will shortly keep pace with current work.
    Sir H. Williams: Would the Minister answer my Question—why £1,170.000 was due to a particular firm?
    Mr. Marquand: I do not know how much was due to any particular firm.
    Sir H. Williams: Having regard to the fact that I communicated the name of the firm to the right hon. Gentleman, and that the figures were contained in the annual report of that company, surely his Department could have taken the trouble to check them up?
    Mr. Marquand: Yes, Sir, but these payments are made locally on a regional basis, and there is no reason why I should seek to find out how much is due to one particular firm.
    Dr. King: Is my right hon. Friend willing to meet representatives of the chemists to discuss their problems with him, especially ways of speeding up the check-up?
    Mr. Marquand: Consultations are continually going on with their representatives on this matter, and a significant improvement has already been achieved.
    Mr. Summers: Are the pricing offices still taking between four and a half and five weeks to price four weeks' prescriptions?
    Mr. Marquand: Yes, Sir, I think that is about accurate. [Laughter.] I do not see much sense in laughing at this. There has been an enormous quantity of prescriptions to be priced, and it has been difficult to get expert staff. Additional staff has been taken on, and has now been trained, and we are at the point at which we can almost overcome these arrears.

    1559
    Meanwhile, no injustice is done to anybody, as substantial advances are made. I do not think that anybody is worse off.
    Major Tufton Beamish: What rate of interest is paid to the chemists who are having to wait so long for their money?

    Dentures
    Mr. Garner-Evansasked the Minister of Health how many dentures were authorised for National Health patients in the four weeks prior to 10th April, 1951; and how many were so authorised in the four weeks subsequent to a charge being imposed.
    Mr. Marquand: The figures are 222,023 and 209,514 respectively, but the latter figure includes many cases where the contract between dentist and patient was made before the charge took effect.

    Hospitals (Overcrowding)
    Sir W. Smithersasked the Minister of Health what steps he is taking to mitigate the overcrowding of the hospitals and the pressure of work on general practitioners, which is resulting in a decline in the quality and status of general practice.
    Mr. Marquand: I do not accept the suggestion in the second part of the Question. Hospital and specialist services, including out-patient services, are being extended as resources allow. I have done what is possible to discourage unnecessary demands on general practitioners.
    Sir W. Smithers: Is the Minister aware that his answer is so feeble that I cannot find words to put a supplementary?

    Chronic Sick, Birmingham (Treatment)
    Mr. Yatesasked the Minister of Health how many hospital beds are available in Birmingham for chronic sick persons; if he will state the number of patients at present awaiting admission: and what steps are being taken to overcome the existing shortage of beds.
    Mr. Marquand: There are 1,595 beds and a waiting list of 188. A new unit of 20 beds will be opened shortly. The regional hospital board are seeking to recruit more nurses and thus make more beds available.
    Mr. Yates: Is the Minister aware that considerable anxiety is being experienced
    1560
    at the length of time which people are having to wait before they can be admitted to hospital? Is he satisfied that the regional hospital boards could not consider an improvement in this position?
    Mr. Marquand: Yes, Sir. I am satisfied that the regional boards are considering the matter. Here again, as in so many cases, we have improved on the conditions which we found when we established the Health Service.

    Mental Hospital Patients (Maintenance)
    Mr. Woodasked the Minister of Health what charge can be made under his regulations on a dependant for the maintenance of a patient in a mental hospital.
    Mr. Marquand: None, Sir, unless there were an agreement between the parties for special accommodation under Section 4 or Section 5 of the National Health Service Act, 1946.
    Mr. Wood: If I send the right hon. Gentleman details of a case in which a charge has been made, would he be kind enough to look into it?
    Mr. Marquand: Yes, Sir.

  IDENTITY CARDS
  Lieut.-Colonel Liptonasked the Minister of Health whether he will designate the persons who are entitled to demand the production of identity cards and the relevant statutory authority in each case.
  Mr. Marquand: By Section 6 (4) of the National Registration Act, 1939, and regulations made thereunder, the following persons are authorised to demand production of an identity card:
  a police officer in uniform;
  a member of the Armed Forces in uniform on duty if he has reason to suspect that the person concerned is a deserter or absentee from the Forces or an escaped prisoner of war.
  a National Registration Officer,
  Food Executive Officers are National Registration Officers. In addition, under Defence Regulation 60 CC, a Post Office official may require production of the card as a condition of doing business on a

  1561
  matter in which evidence of identity is material, e.g., withdrawal from a savings bank account.
  Lieut.-Colonel Lipton: Is the Minister aware that the most unhealthy and confusing extension—by the persons he has designated, and others—of the original purpose of identity cards, has aroused public antagonism and serious doubts in the most responsible quarters? Has not the time arrived when there should be a complete review, if not abolition, of this system?
  Mr. Marquand: I am responsible solely for the work of the Registrar-General, who keeps the register. I am not in any way responsible for the way in which any of these people who are entitled to demand an identity card may use their powers.
  Mr. Hector Hughes: Will the Minister in dealing with this matter, take care to see that the powers of the police are not unduly limited or impaired in the discharge of the arduous duties which they carry out with such care, skill and judgment?
  Mr. Marquand: Questions relating to the police should be addressed to my right hon. Friend the Home Secretary.
  Mr. Jennings: Will the Minister please consult his colleagues and draw their attention to the grave apprehensions about this matter that have been expressed in the country?
  Hon. Members: Nonsense.

  EMPLOYMENT

    Dock Industry (Report)
    Mr. J. R. Bevinsasked the Minister of Labour whether His Majesty's Government accept the findings of the Leggett Committee on unofficial dock strikes.
    The Minister of Labour (Mr. Robens): As I informed the hon. Member on 5th June, this is under discussion with representatives of the industry, and I must conclude these discussions before reaching a decision.
    Mr. Bevins: As the right hon. Gentleman seems to be so reluctant to commit His Majesty's Government one way or the other on this Report, will he give an assurance to the House that he will make
    1562
    an interim statement on the progress of the negotiations before the House rises for the Summer Recess?
    Mr. Robens: I am perfectly certain that neither the hon. Member nor the House will expect me to arrive at a decision before I have had an opportunity of considering the views of the organisations primarily concerned.
    Mr. P. Thorneycroft: Now that the restrictive practices in the dock industry so often denied to exist are now openly acknowledged in this Report, will the right hon. Gentleman consider publishing a full list of these practices to facilitate discussion with both sides of the industry, with a view to seeing that they are removed?
    Mr. Robens: It is not necessary for me to produce a list of restrictive practices to facilitate discussion. There is good will all round, and I want to maintain it.
    Mr. Osborne: Does the Minister intend To carry out the disciplinary measures recommended in the Report against the minority of men causing trouble in the docks? If so, can he take action quickly, so that further trouble will not occur?
    Mr. Robens: I shall make a statement to the House as soon as I have concluded all the discussions.
    Mr. Bevinsasked the Minister of Labour whether arising out of the Leggett Report he is conferring with interested parties on Merseyside.
    Mr. Robens: Though this Report deals only with London, some of its recommendations may affect other ports. My consultations are accordingly with the National bodies which cover the whole country, including Merseyside.
    Mr. McCorquodale: In view of the great interest in this matter, which has been stimulated by this sincere and admirable Report, will the right hon. Gentleman expedite his inquiries so that the House may have an early opportunity of discussing it?
    Mr. Robens: I am sure the right hon. Gentleman will appreciate from the actions I have already taken that I am always anxious to expedite these matters, but what we want is a satisfactory conclusion, and I am sure that if he leaves it with me it will turn out all right.
    Mr. Keenan: Will my right hon. Friend see that all the ports who have an interest in the matter are consulted. so that if there is a change all those interested in it can put forward their points of view?
    Mr. Robens: That is why, although this is a London Report, I am asking national bodies to discuss it.

    Ex-Officers
    Lieut.-Colonel Sir Thomas Mooreasked the Minister of Labour how many ex-officers of 50 years of age and over have been placed in suitable employment during the three months ended 31st March.
    Mr. Robens: Statistics of placings by age groups are not available. For the three months ended 16th April, 1951, 129 ex-Regular officers were placed in employment through the Appointments Offices.
    Sir T. Moore: Would the right hon. Gentleman say how this figure corresponds with the total number of such officers on the Ministry's books, and what prospects there are of the entire number of ex-officers being absorbed into industry?
    Mr. Robens: We are making a very special effort to place them all because we recognise the problems in relation to ex-officers. I am not able to say, offhand, what the proportion is, but the hon. and gallant Gentleman can rest assured that everything we can do to place them will be done.
    Air Commodore Harvey: Will the Minister go into this matter in rather more detail? In view of the widespread shortage of personnel in industry and in Government Departments, will he try to follow up the assurances given by his right hon. Friend to the House two years ago?
    Mr. Robens: I am anxious to settle this problem, and the hon. and gallant Gentleman can rest assured that I will do everything I can to get these people placed.

    Re-armament Programme (Labour Force)
    Sir T. Mooreasked the Minister of Labour, in view of the need of addi-
    1564
    tional labour for the successful completion of the re-armament programme, what steps he proposes to take, in conjunction with the trades unions, to ensure that dilutees are given adequate opportunities to establish themselves as craftsmen in their respective trades.
    Mr. Robens: I have discussed with the National Joint Advisory Council the measures necessary for ensuring that the re-armament programme is not held up through shortages of skilled labour. These include arrangements for training and up-grading. The terms and conditions of employment are, however, a matter for each industry to settle in accordance with its individual circumstances.
    Sir T. Moore: Has the right hon. Gentleman overcome the opposition among certain trade unions—
    Mr. Ellis Smith: What trade unions?
    Sir T. Moore: —to absorbing these dilutees, about which I have written to the right hon. Gentleman and his predecessor on several occasions?
    Mr. Robens: I should not like the House to think from the hon. and gallant Gentleman's supplementary that the trade unions are not co-operating wholeheartedly with us. They are co-operating with us very well indeed. There might be isolated cases here and there, and I shall clear those up as they are brought to my notice.
    Mr. Pannell: Will my right hon. Friend bear in mind that at the outbreak of the last war the trade unions forsook practices which they had cherished for 100 years, and that they are not encouraged to enter into further agreements of this sort because of the fear of what would happen to existing agreements if the gentlemen opposite—the traditional enemies of the trade unions—ever got back to power?
    Mr. Robens: There is no doubt that the craft unions especially have given up a lot of their practices. It must always be remembered that their practices are borne of their experiences of the 1920's and 1930's, but I am sure they will continue to co-operate with us in the direction we want.

    Statutory Instrument No. 1305
    Mr. Boyd-Carpenterasked the Minister of Labour if he is yet in a position to state his intentions as to the continuance in force of Statutory Instrument 1305 of 1940.
    Mr. Robens: No, Sir. My discussions with industry are not yet complete.
    Mr. Boyd-Carpenter: In view of the fact that, according to reports, a draft of the new order is being discussed with both sides of industry, is it not time that an indication of what is in the Government's mind was given to this House?
    Mr. Robens: It is right, I agree, that the House should have the order as quickly as possible. What I have already done is to circulate some principles to be incorporated in an order. They are being discussed now, and I am hoping that before the House rises for the Summer Recess I shall be able to present something to it.
    Mr. Henry Strauss: Since the topics dealt with in this Order are difficult, important and controversial, will the Minister bear in mind that it may possibly be better to embody the results of his consideration in legislation which can be discussed by this House rather than in a new Order?
    Mr. Robens: That may very well be, but I am sure the hon. and learned Gentleman will agree that I must really discuss this matter thoroughly with the employers and the trade unions, and, to some extent, take their advice on it.
    Sir H. Williams: Are not the general public the senior partners in this matter? They are more numerous than all the members of the employers' organisations or the trade unions.
    Mr. Robens: The general public are, of course, greatly involved. These discussions are ranging over the livelihood of 23,500,000 people working in industry, and they are the general public.

    Stornoway
    Mr. Malcolm MacMillanasked the Minister of Labour what was the number of registered unemployed at Stornoway Employment Exchange in February and in May of this year; whether he is aware of considerable under-employment in the area and widespread unemployment
    1566
    among persons, not able to qualify for unemployment insurance benefit, by reason of the nature of their normal occupation as weaver out-workers; and what steps are being taken to provide employment in the area.
    Mr. Robens: One thousand four hundred and eighty-two persons were registered at the Stornoway Employment Exchange as unemployed in February and 1,329 in May of this year. About 200 workers employed in local mills are on four days a week. I am not able to estimate the extent to which self-employed persons may not be fully occupied. Efforts are being made continuously by all concerned to improve the employment position in the Highlands and Islands, including Stornoway, and I am grateful to my hon. Friend for his work as Chairman of the Highlands and Islands Advisory Panel.
    Colonel Gomme-Duncan: Can the right hon. Gentleman say to what extent this unemployment results from the enormours Purchase Tax on Harris tweed?
    Mr. Robens: No, I am not able to answer that question. I understand that the matter was debated here on Tuesday, when the House came to a decision.
    Mr. MacMillan: Is my right hon. Friend aware that in spite of all the efforts being made this is still by far the heaviest percentage of unemployment in Great Britain, and would he not agree that if unemployment nationally were on the same scale, a programme of public works would be speeded up in order to mop it up? Will he also take into consideration the important point that Purchase Tax is making it impossible to sell the products of this home industry?
    Mr. Robens: I would not disagree at all that the unemployment position of the area referred to is much higher than the general average, but my Department is co-operating with the Scottish Office and the Board of Trade in a review of the efforts being made to increase employment in the Highlands and Islands, and I will do all I possibly can to help.
    Mr. John McLeod: Is the Minister aware that many of the people concerned in this matter are out-workers, that very little record is kept of them, and that, therefore, it is very difficult for him to make an estimate of unemployment there?
    Mr. Robens: That is exactly what I said. It is difficult to say precisely what out-workers are doing.
    Lord Malcolm Douglas-Hamilton: Will the Minister bear in mind that transport charges affect conditions in the Highlands almost more than any other single factor?
    Mr. Robens: That is matter which should be addressed to my right hon. Friend the Minister of Transport.
    Sir William Darling: Is the Minister a ware of the success which has attended the efforts of the hon. Member for Caithness and Sutherland (Sir D. Robertson) regarding the reopening of a colliery which had been closed at Broro, and which has resulted in raising the tonnage of coal in the area from 40 to 200?
    Mr. Robens: I congratulate the hon. Gentleman on what he has personally achieved, and I am glad I was able to help in some way when I was at the Ministry of Fuel and Power.
    Mr. P. Thorneycroft: Will the right hon. Gentleman give an undertaking that if, in fact, a question is addressed to the Minister of Transport it will be accepted and answered?

    Industrial Safety
    Mr. Jannerasked the Minister of Labour whether, in view of the fact that many accidents in factories would not happen if operatives used the safety devices provided, he will suggest to local authorities that exhibitions on the lines of the Industrial Safety Exhibition, in Birmingham, should be held by towns in industrial localities.
    Mr. Robens: I am very pleased with the efforts made in Birmingham in showing how the various safety devices can help to prevent accidents, and I would like to congratulate the Birmingham and District Industrial Safety Group on their exhibition. Exhibitions of this nature would seem to be a matter for industry rather than local authorities, but the co-operation of my officers is freely available at all times.
    Mr. Janner: While thanking my right hon. Friend for his reply, may I ask whether he is aware that the chief Inspector of Factories emphasised in his recent report that this was an extremely
    1568
    important matter? Could he encourage, by some means or other, the establishment of further industrial safety exhibitions throughout the country?
    Mr. Robens: Yes, Sir, I am glad to be able to do something on those lines. In fact, the Chairman of the Birmingham and District Industrial Safety Group is His Majesty's Superintendent of Factories for that area.
    Mr. Harmar Nicholls: Would the Minister bear in mind the necessity of increasing the establishment of factory inspectors to prevent accidents in factories and consider making their working conditions really effective?
    Mr. Robens: I am most anxious that the complement of factory inspectors should be adequate to meet their statutory obligations, but it is a little embarrassing from time to time when hon. Gentlemen opposite are wanting us to slash the Civil Service.
    Mr. Nabarro: Is the Minister aware that for over 15 years conscientious endeavours have been made to increase the number of safety committees in factories and that we have still not achieved success? Will he consider introducing legislation to provide for a safety committee in every factory employing more than a certain number of people?
    Mr. Robens: I always understood that the Opposition prefer the voluntary method to direction.

    Blind Persons (Guide Dogs)
    Mr. Hastingsasked the Minister of Labour whether he will give consideration to the desirability of providing guide dogs to the registered blind who are engaged in occupations such as piano tuning, which involve constant travelling, in some cases over considerable distances.
    Mr. Robens: I have power under Section 15 of the Disabled Persons (Employment) Act to assist in the provision of facilities for employment where a severely disabled person would be unlikely otherwise to be able to take up or keep employment. According to my information, guide dogs cannot be considered as essential in this respect although I recognise that some blind persons achieve a greater measure of independence by having them.
    Mr. Hastings: Can my right hon. Friend say whether any careful examination has been made by his Department of the efficiency of these dogs?
    Mr. Robens: Yes, Sir. There was a working party on the employment of blind—[Laughter.] This is a very serious matter to the blind; it is not a matter for laughter. There was a working party on the employment of blind persons. They heard evidence from the Guide Dogs Association and submitted a report in which they indicated that while blind persons have benefited in this way it would be wrong to suggest it is essential for a blind man to possess a dog before he can go out to work. The figures of blind persons who are working bear that out; about 10,400 blind persons are in employment, another 1,000 are in training for employment and in 1948 only about 140 had guide dogs.
    Mr. Hastings: Is my right hon. Friend aware that many blind persons who have to travel meet with accidents which might have been prevented had guide dogs been provided?
    Mr. Robens: As I indicated in my original answer, where it is essential for a guide dog to be provided we shall do all in our power to do so.
    Mr. Eden: So that there is no misunderstanding of his answer, will the right hon. Gentleman not agree that the service rendered by these guide dogs and the training of these dogs are very remarkable humanitarian achievements?
    Mr. Robens: That is perfectly true, but the Act only enables me to provide a dog where the disabled person otherwise would not be likely to obtain or to keep employment.
    Mr. John Lewis: Will my right hon. Friend agree that in a case of newly blind it might be advisable to make facilities available for them to have guide dogs for a time?
    Mr. Robens: I am sure that all of us are sympathetic towards this problem and the House may rest assured that I shall do all I can to help blind persons.
    Mr. Vosper: Is the Minister aware that a debate on this subject took place in the House last night?
    Mr. Robens: Yes. I have already read the debate.

    Furnaces, Scotland (Closing)
    Mr. William Reidasked the Minister of Labour how many men are out of employment as a result of closing the furnaces in Blochairn, Motherwell, Bellshill, Clyde Bridge and Glengarnock.
    Mr. Robens: I regret that as this Question only appeared on the Order Paper yesterday, there has not been sufficient time to obtain the information. However, I am having inquiries made and will write to my hon. Friend.
    Mr. Reid: Is my right hon. Friend aware that five furnaces have been closed at Blochairn and only one each at Mother-well, Bellshill, Clyde Bridge and Glengarnock? Will he use his influence with his right hon. Friend the Minister of Supply with a view of getting a fair share of available material sent to Blochairn?
    Mr. Robens: In these matters of employment and the withholding of materials in any way whatsoever we keep in close contact with the Departments concerned and we shall continue to do that.

  EDUCATION

    Women Teachers
    Sir T. Mooreasked the Minister of Education what is his short-term policy to overcome the present shortage of trained women teachers.
    The Parliamentary Secretary to the Ministry of Education (Mr. Hardman): As a result of the measures taken since the end of the war recruitment of women teachers to the profession already exceeds wastage by some 2,500 a year. Further additional training college places have been made available for this autumn, and in order to secure suitable candidates for them my Department, with the co-operation of all concerned, has ensured a widespread distribution of information and advice about teaching as a career among young people at school and those who have left school.
    Sir T. Moore: Does the Minister think that with existing staff he will be able to maintain the present school-leaving age? Further, when will he be able to dispense with non-graduate teachers?
    Mr. Hardman: The second part of that supplementary question does not

    1571
    arise from the hon. and gallant Gentleman's original Question. The answer to the first part of his supplementary is in the affirmative.
    Mr. Chetwynd: How many vacancies for women exist in the training colleges for the coming year?
    Mr. Hardman: On 1st June there were 1,000 vacancies for women students to be admitted to training colleges in the autumn at the opening of the next academic year, or 200 fewer than on 1st May. Further vacancies are being taken up at the present time day by day.
    Mr. George Thomas: In view of the alarming figure that my hon. Friend has just given, what has he done to encourage secondary school students to enter training colleges this year?
    Mr. Hardman: I stated that we were doing everything we could to spread information and to suggest to young people that they should take up teaching as a career. There will be a review of the procedure and publicity in the early autumn.
    Mr. James Johnson: Will my hon. Friend think of sending a personal letter, couched in his own language, to all those married teachers who have left the profession, asking them to go back, perhaps only in a temporary capacity, to help us out in these difficult times?
    Mr. Hardman: I am not sure that my own prose or verse would help in this matter, but I assure my hon. Friend that the local authorities are constantly doing their very best to suggest to married women teachers who leave the profession that they should come back.
    Mr. Harold Davies: Has my hon. Friend considered the possibility of encouraging married uncertificated and supplementary teachers to come back to the profession to teach in the infants' schools? Does he not also consider that it would help if the salaries of these teachers, some of whom have 20 years' experience, were made commensurate with their experience?
    Mr. Hardman: All these matters are being taken into account.
    Several Hon. Members rose—
    Mr. Speaker: Apparently every ex-teacher in the House wishes to ask a supplementary question. We shall never get through Questions in this way.

    School, Caernarvonshire (Playing Fields)
    Mr. Goronwy Robertsasked the Minister of Education if he is aware that after 1st January, 1952, the 300 pupils of Botwnnog Grammar School, Caernarvonshire, will be without playing fields; and what action he will take to remedy this.
    Mr. Hardman: My right hon. Friend is aware that the local education authority's tenancy of these playing fields is being terminated by the owners next January. Last week he approved in principle the authority's proposal to buy the fields.
    Air Commodore Harvey: When considering this matter will the Minister also consider the rights of children in Battersea Park?

    School Doctors, Durham (Union Membership)
    Mr. Hollisasked the Minister of Education whether he has received from the Durham County Council assurances that membership of a trade union will not be required of applicants for posts as school medical officers.
    Mr. Hardman: No, Sir. The assurance which the Durham County Council gave my right hon. Friend related to a direction issued by him under Section 68 of the Education Act, 1944, in regard to teaching posts at the disposal of the authority. The authority are, however, aware of my right hon. Friend's general attitude in the matter, and I understand that they still have the question under consideration.
    Mr. Hollis: The hon. Gentleman says the question is under consideration. Are the authorities asking this question of medical officers, or are they not?
    Mr. Hardman: As far as we are concerned, we have had a letter from the British Medical Association concerning four posts of assistant school medical officer which are shortly to be filled and the letter is now being considered by us.
    Mr. Arthur Lewis: Is it not a fact that any local councillor on an education

    1573
    committee is entitled to ask any question that he thinks is useful to ascertain whether an applicant is capable of the job? If he thinks that being a member of a trade union is a criterion for the job is he not entitled to ask the question?
    Mr. Boyd-Carpenter: Will the hon. Gentleman now answer my hon. Friend's question, whether or not applicants are at present having this question directed to them?
    Mr. Hardman: We understand that they are not.
    Dr. Hill: Is the Parliamentary Secretary aware that in respect of the appointments in question, this issue is being raised and the question is being asked by the Durham County Council? May I ask him whether his attitude differs in the two cases of teachers and school medical officers?
    Mr. Hardman: As far as we understand the position today, the county authority is considering its attitude in this matter to all its employees, whatever their professional category may be. Naturally, it is not our business to start interfering until we have some information which will be a cause for any action or a reason for taking no action.

    Deaf Children (Treatment)
    Mr. Watkinsonasked the Minister of Education how many pre-school clinics for deaf children are in operation; and whether there are sufficient to meet the need.
    Mr. Hardman: Treatment for deafness in school children is given at ear, nose and throat clinics, of which there were in England and Wales last December 157 directly provided by local education authorities, and 205 provided under arrangements made by such authorities with regional hospital boards. I have no evidence that the provision of such clinics is inadequate.

    Capital Investment Programme
    Mr. Hollisasked the Minister of Education whether he will make a statement on the proposed expenditure on education, as a result of the recent review of civil investment.
    Commander Maitlandasked the Minister of Education what alterations
    1574
    will be necessary in the planned programme of capital investment in education in the light of the recent reductions in the national investment programme: and if he will make a statement.
    Mr. Hardman: The investment approved for education in 1951 is £53 million, and in 1952, £57.5 million. The programme to meet the increase in the school roll and for the movement of population to new housing estates and new towns will continue as planned. It will. however, not be possible to increase certain other parts of the programme at the rate previously contemplated.
    Commander Maitland: Does the latter part of the reply mean that the Government are to hold back on developing technological education, which they will have to do in the very near future?
    Mr. Hardman: The effect of the defence programme will be delay in increased provision for technical education, but as far as the projects approved for 1951–52 are concerned it should not affect the present programme.
    Mr. Hollis: Are the figures and projects set out in the Education Report which we are expecting to receive very shortly?
    Mr. Hardman: Yes, Sir.
    Mr. G. Thomas: Would my hon. Friend place in the Library a list of those parts of the education service which are to be limited as a result of this statement?
    Mr. Hardman: I can give the main headings immediately: technical education, which I have already mentioned; school meals service; special schools; minor improvements to existing schools.
    Mr. Ralph Morley: In what way will the school meals service be restricted? Does my hon. Friend's answer mean that there will be an additional charge for school meals, or does it mean that the service of the meals will be restricted?
    Mr. Hardman: That is an entirely different question.
    Mr. W. T. Williams: Would my hon. Friend give more information about restrictions on special schools? Is he not aware that there are not enough special schools already, and that spastic children are having almost no education of any kind?
    Mr. Hardman: There have been considerable increases in provision for special school children. I have simply suggested, in answer to a supplementary question, what are the main headings which will be affected by the defence programme.
    Mr. G. Thomas: I do not know whether I am in order, since I did not ask the original Question, but if I am, I beg to give notice that in view of the nature of my hon. Friend's reply I shall raise this matter on the Adjournment at the earliest opportunity.

    Infant Classes (Size)
    Dr. Kingasked the Minister of Education the number of infant classes for the summer term with over 50 children in them.
    Mr. Hardman: I regret that this information is not available. Local education authorities are asked to submit returns of class sizes once a year in January. The analysis of the figures for January, 1951, is not yet complete.
    Dr. King: As this number is increasing and as no child can receive adequate individual education in a class of 50, and as all classes over 40 are illegal, will my hon. Friend do what he can to speed up the provision of infant teachers?
    Mr. Hardman: I certainly will.

    Training Colleges (Students' Grants)
    Dr. Kingasked the Minister of Education what steps he is taking to improve the grants to students at training colleges.
    Mr. Hardman: From next autumn the income scale used for calculating students' contributions towards the cost of training will be brought into line with that used for State scholarships. As a result of this change a majority of students, instead of as hitherto a minority, will in future contribute nothing to the cost of their term-time board, and most of those who do contribute will pay up to £20–£30 less than at present. Tuition is already free for all recognised students.
    Dr. King: Is my hon. Friend aware that this answer will give satisfaction not only to students but to local education
    1576
    authorities throughout the country? Will he now turn his attention to filling the training colleges?

    Schoolboy (Bicycle)
    Brigadier Medlicottasked the Minister of Education if his attention has been drawn to the case in which the education committee of a county council has provided a bicycle for the use of a schoolboy whose bad behaviour has made it undesirable for him to travel in the school omnibus; and if he will take action to prevent or discourage local education authorities from this waste of public money.
    Mr. Hardman: No, Sir. I have, however, been making inquiries and am writing to the hon. and gallant Member about this case, which presents certain unusual and difficult features not disclosed in the newspaper reports.
    Brigadier Medlicott: Does the Minister not recall, though perhaps not necessarily from his own experience, that a bicycle for a small boy was at one time a mark of good conduct or for some praise-worthy achievement? What are we coming to when public money is spent in rewarding and even encouraging bad behaviour?
    Mr. Hardman: When the hon. and gallant Gentleman has received the facts which I shall send him he will discover that there are very good reasons indeed why this provision has been made, and he will deplore certain newspaper comments upon the case. The reason why the details are not being given now is that this is an extremely personal matter and, if given, would be detrimental to the boy.
    Earl Winterton: Would the hon. Gentleman consider, in the case of this antisocial child, whether there is not a danger of his breaking his neck if he rides a bicycle? Would he consider whether it would not be better to provide him with a tricycle or a pram? Will the hon. Gentleman give serious consideration to that?
    Brigadier Clarke: Will the Minister consider the provision of a bicycle for the right hon. Member for Ebbw Vale (Mr. Bevan)?
    Mr. Hardman: It has been suggested that tricycles and prams should be provided. We will see that they are supplied under educational provision for those hon. Members opposite who have asked the questions.

  NEW INDUSTRIES, ABERDEEN
  Mr. Hector Hughesasked the President of the Board of Trade what new industries he contemplates starting in the City of Aberdeen; where they will be located; and how many persons of each sex, respectively, they will employ.
  The Secretary for Overseas Trade (Mr. Bottomley): We are aware of the needs of the City of Aberdeen and everything possible will be done to interest industrialists in the facilities available in this area, particularly if they are prepared to employ men. But my hon. and learned Friend will understand that new building must for the present be restricted to projects meeting essential needs.
  Mr. Hughes: Is the Minister aware that new industries were authoritatively promised to Aberdeen recently and that there is plenty of accommodation available? Is he aware that they are badly needed and that there is unemployment, particularly in the shipbuilding and agricultural industries? Will he see that this promise is implemented as soon as possible?
  Mr. Bottomley: Thanks to post-war Labour Governments 28 new industrial projects have been licensed for the city. The figures for unemployed have gone down from 3,020 in January of this year to 1,640 today.
  Lady Tweedsmuir: Will the Minister assure us that as far as existing industries in the City of Aberdeen are concerned he will do everything he can to ensure that their allocations of scarce raw materials are honoured, because there is very considerable short-time working? One factory has been closed altogether.

  METALS (ALLOCATION SCHEME)
  The following Question stood upon the Order Paper:
  Mr. DRIBERG,—TO ask the Chancellor of the Exchequer whether he will make
  1578
  a statement on the steps being taken by His Majesty's Government to control the distribution of scarce metals, with particular reference to the defence programme and important civil needs.
  The Chancellor of the Exchequer (Mr. Gaitskell): With your permission, Mr. Speaker, I should like to answer Question No. 67.
  Mr. Churchill: On a point of order. If Questions are to be selected which have not been reached in the ordinary course might not some consideration be given to Question No. 45, addressed to the Prime Minister?
  [Mr. HOLLIS,—To ask the Prime Minister, whether the speech of the Minister of Supply at Margate on 21st June, to the effect that drastic action would be taken against the Iron and Steel Federation if the Federation refused to the Iron and Steel Corporation effective control of purchase of iron ore abroad, represented the policy of the Government.]
  Mr. Speaker: No. hon. Gentleman or right hon. Gentleman has a right to ask that any Question should be answered. The initiative comes entirely from the Minister, who asks my permission. That is the only initiative which can be taken.
  Mr. Churchill: May I ask whether the Prime Minister will not take the initiative in answering Question No. 45?
  Mr. Speaker: That would not be the Prime Minister taking the initiative. In that case, the initiative would have come from the other side.
  Mr. Gaitskell: The answer to Question No. 67 is as follows: Yes, Sir. The Government have been considering whether further steps are necessary to ensure that the distribution of steel and of non-ferrous metals is carried out in accordance with national requirements.
  In the case of steel, though production is not likely to be seriously below last year's record level, demand is rising. This year's total requirements, including those of defence, are likely to exceed available supplies. The extent of the gap will vary according to the type of steel, and is not likely to exceed 10 per cent. on the average. But if defence requirements and those of the most important

  1579
  civilian users are to be met in full the shortage will be somewhat greater for other users. Sheet steel and tinplate are already subject to allocation; in the circumstances the Government have decided that full allocation schemes must now be prepared for all other types of steel.
  As regards non-ferrous metals, there is, as the House knows, a serious shortage of copper and zinc. The use of these metals and their alloys for inessential purposes was prohibited some months ago and an informal control over distribution established. The Government have now decided that in the case of copper, zinc and their alloys, arrangements for the closer control of distribution are also necessary and should be prepared.
  Although a good deal of work has already been done on the planning of these allocation schemes, it will be some time before they can come into full and effective operation. Meanwhile, it is necessary to ensure that vital defence orders and the most essential civilian and export production should not be held up for lack of materials. This will be done by the use of a symbol to be applied to special defence orders so that they may be identified and given appropriate priority by the suppliers of materials.
  Somewhat similar arrangements will be made for the most important civilian orders; the sponsoring Departments will be able to claim, in a strictly limited number of cases, preferential treatment by applying a symbol to the order so that difficulties caused by a lack of comparatively small quantities of these raw materials can be quickly overcome. I must emphasise that these schemes for safeguarding the most important civilian production can be operated successfully only if the special assistance to be provided under them is restricted to a limited number of orders.
  I am circulating in the OFFICIAL REPORT a fuller statement giving more of the technical details involved in these arrangements.
  Mr. Driberg: Can my right hon. Friend say whether, under the interim arrangements which he has just announced, some of the smaller firms engaged in important export work, which are now having very
  1580
  great difficulty in getting the steel they need, will be able to get that steel almost immediately?
  Mr. Gaitskell: If they can make out a sufficiently strong case to the sponsoring Department.
  Mr. Edelman: Will my right hon. Friend say what action he will take, pending the introduction of the allocation scheme, to prevent hoarding? Secondly, has he already made contracts for imported ores for 1952 in order to maintain full production, and did he have the full co-operation of the Iron and Steel Federation in that matter?
  Mr. Gaitskell: So far as the first supplementary question is concerned, the arrangements for allocations will, of course, take into account the stocks of the firms concerned and there should not, therefore, be the same incentive to hoard now that we have announced that allocation schemes will be brought into operation. My hon. Friend's second supplementary question is a very much wider one and I do not think I can very well answer it arising out of this Question.
  Mr. R. S. Hudson: May we assume that this scheme will be worked out with the fullest consultation, in the real sense of the word, with industry and that industry will not be presented with a fait accompli and asked to comment.
  Mr. Gaitskell: Yes, certainly; and I may say that industry was consulted before this statement was made.
  Mrs. Jean Mann: Is my right hon. Friend aware that the Coatbridge Tin Plate Company are closing down next week: that they have received no allocation whatever; and that there is a prospect that 200 men will be unemployed? As I have already sent particulars to the Ministry of Supply, will he look into the case of this firm?
  Mr. Gaitskell: My hon. Friend was quite right to send those particulars to my right hon. Friend and I have no doubt that he will look into the matter.
  Mr. David Eccles: Is the Chancellor of the Exchequer satisfied that when putting in their requirements for various weapons the Service Departments are not asking for too much steel? Will he not consider the experience of the war when

  1581
  the Minister of Production did very useful work in paring those requirements? Is the Minister of Materials to have any such power?
  Mr. Gaitskell: It will not be for my right hon. Friend the Minister of Materials, I think, because the responsibility for steel rests upon the Minister of Supply.
  Mr. Eccles: But the Minister of Supply is responsible for the supply of steel, is he not?
  Mr. Gaitskell: Yes. To a certain extent the Allocation Committee screens all these requirements, of course.
  Following is the statement:
  The Government have decided on three measures to control the use of scarce metals.
  First, allocation schemes are being prepared for iron and steel (other than sheet steel and tinplate which are already subject to allocation) for introduction as soon as possible and corresponding measures to regulate the distribution of the more important of the scarce non-ferrous metals will also be worked out.
  Secondly, since it will take some time to get these schemes introduced and working effectively, the following interim measures will be brought into operation so as to safeguard the defence programme meanwhile. These are:

  (a) A "Defence Order" symbol which can be applied, by Government decision, to orders for specialised defence equipment or work. The contracts to which this symbol is applied will be distinguished by the letters D.O., the quotation of which, with the contract number, will entitle the contractor or sub-contractor to get steel (including alloy-steel, but excluding sheet steel and tinplate which are already allocated) and certain nonferrous metals, which at this stage will be limited to copper, zinc and their alloys. Contractors will be notified in writing of contracts to which the D.O. rating will apply and will be asked to pass on to their subcontractors and component suppliers the appropriate contract numbers and D.O. symbols which should be used to identify these orders to the materials supplier.

  (b) So that demands supported by a D.O. symbol are not unduly concentrated on particular suppliers, the Minister of Supply proposes to arrange, through his Steel Rearmament Panel and the Non-Ferrous Metals Federation, for suppliers to set aside a proportion of their output for these special orders. This proportion will not in general be large, except in the case of alloy-steels, and the consequent reduction in supplies for other purposes should be distributed fairly among all customers (including those who have D.O. contracts), in the light of the importance of the civil work which they are doing.

  Thirdly, not only the defence programme, but various categories of civilian production
  1582
  must be safeguarded while the allocation schemes are being worked out. These categories include dollar and sterling area exports and the fuel and power programmes, which remain as important as ever they were. Proposals are, therefore, being worked out whereby sponsoring Departments will be able to claim preferential treatment for specific orders for goods for which iron, steel (other than those already allocated) and copper, zinc and their alloys are required, subject to a strict limit on the amount qualifying for such preferential treatment in any particular period. This scheme, for which a special symbol, "P.T." indicating "Preferential Treatment," will also be used, will enable Departments to deal with particularly difficult obstacles to important production caused by lack of comparatively small amounts of raw material.
  Finally, it must be emphasised that the interim measures for civilian production are intended to apply only to a small number of cases of particular importance or difficulty. Over the rest of the wide field of metal-using industries the Government must meanwhile continue to look to industry—both manufacturers and material suppliers—to do their best to make sufficient material available for those purposes which in the light of the general guidance given by the Government are known to be important. In cases of special difficulty or of doubt about the degree of importance of an order, reference could be made to the production Department.

  MOUNTVIEW TELEPHONE EXCHANGE
  The following Question stood upon the Order Paper:
  Mr. GAMMANS,—TO ask the Minister of Works if he will arrange to stop the pile-driver on the extension to the Mount-view Exchange from working on Sundays, in view of the annoyance caused to surrounding residents.
  The Minister of Works (Mr. George Brown): With permission, Sir, I will answer Question No. 81 and I should like to take the opportunity thus afforded—
  Sir H. Williams: On a point of order. As the right hon. Gentleman asked for permission, may I ask whose permission has to be accorded?
  Mr. Speaker: Certainly. I think if the hon. Member had been here at the end of Questions yesterday he would have heard me give my permission then. After all, this is an act of courtesy to the Opposition. That is why the right hon. Gentleman is doing it.
  Mr. Churchill: On a point of order. Because a Minister has failed in his duty to be in attendance on the House for the

  1583
  answering of a particular Question, is that any reason why he should have the privilege of giving that answer after the end of Question time on another day?
  Mr. Speaker: I should have thought that otherwise the right hon. Gentleman would have made a personal statement. I understand that the right hon. Gentleman wishes to apologise to the House. Surely we are gentlemen here, and we shall accept it.
  Mr. Churchill: This was represented to us as the answer to a Question, but, Sir, of course, if the hon. Gentleman intends to make a personal statement and tender an apology for what I have no doubt was an unintended lapse, quite a different position is before the House.
  Mr. Brown: I was, of course, just about to say that, but it was difficult to make myself heard above the noise. I apologise to you, Sir, to the hon. Member for Hornsey (Mr. Gammans) and to the House for my failure to be in my place when this Question was called yesterday.
  Mr Churchill: The right hon. Gentleman is making a personal statement.
  Mr. Brown: It was necessary on one Sunday to carry out piling work on the sire of the Mountview Exchange extension to prevent possible subsidence. The work has now been done, and no further Sunday working is contemplated. I welcome this opportunity of expressing my regret for the annoyance caused to residents in the neighbourhood of the site.
  Sir H. Williams: On a point of order. How is it that a Question which was down yesterday and was not answered could appear on the Order Paper today, having regard to the Rules about the time of notice that has to be given?
  Mr. Speaker: I told the hon. Member for Hornsey (Mr. Gammans) that I would give special permission. After all, I was trying to protect an hon. Member who, I thought, had been—not badly—but unfairly treated. Surely I can adjust matters a little bit like that.
  Mr. Gammans: May I ask the right hon. Gentleman the Minister of Works if he will accept from me—and I hope I speak for the whole House—our acceptance of his graceful apology?

  PERSIA (ANGLO-IRANIAN OIL COMPANY)
  Mr. Eden: May I ask the Secretary of State for Foreign Affairs a Question of which, I regret to say, I have not been able to give him private notice? May I ask whether he has seen the statement put out by the United States Embassy at Teheran, that the Persian Premier has invited President Truman to mediate in the oil dispute, and whether he has received any information on that subject up to the time being?
  The Secretary of State for Foreign Affairs (Mr. Herbert Morrison): As the right hon. Gentleman says, I have received no private notice of this Question in the ordinary sense of the term, though I was given an indication that such a Question might be put. I have seen a newspaper report which appears—I cannot be sure about this—on the face of it to have come from or to have emanated from the American Embassy in Teheran. It may be so, but I have no official information, and in the circumstances I think it would be unwise for me to say anything until I get official confirmation.
  Mr. Eden: Can the right hon. Gentleman assure us—I have no doubt that he can—that in all aspects of this question the Government and the Government of the United States are in the closest possible contact?
  Mr. Morrison: Oh, yes—the closest consultation all the way through.

BUSINESS OF THE HOUSE
Mr. Eden: Could the Leader of the House tell us the business for next week?
The Secretary of State for the Home Department (Mr. Ede): Yes, Sir.
Sir H. Williams: Has the right hon. Gentleman had notice of this Question?
Mr. Ede: I have not, but I expected the Question.
The business for next week will be as follows:
MONDAY, 2ND JULY—Conclusion of the Report stage of the Finance Bill.
TUESDAY, 3RD JULY—Third Reading of the Finance Bill until about 7.30 p.m.;

1585
Committee and remaining stages of the Festival of Britain (Additional Loans) Bill;
Motions to approve the Draft House of Commons (Redistribution of Seats) (Oldham and Ashton-under-Lyne) Order; and the several Draft Civil Defence Regulations which are on the Paper.
WEDNESDAY, 4TH JULY—Consideration of a Motion for an Address to His Majesty relating to the gift of a Mace to the Parliament of the Commonwealth of Australia and of a Speaker's Chair to the Parliament of New Zealand. The proposal to make these gifts to mark the historic anniversaries was announced to the House on 6th April last;
Committee stage of the Telephone Bill;
Second Reading of the Dangerous Drugs Bill [Lords], which is a consolidation measure;
Motion to approve the District Probate Registries Order.
THURSDAY, 5TH JULY—Supply (18th allotted Day);—Committee;
Debate on the Argentine Meat Agreement until 7 o'clock;
Afterwards debate on the the Hants. and Dorset Bus Company Dispute.
FRIDAY, 6TH JULY—Second Reading of the Forestry Bill [Lords].
Mr. Churchill: Would the Leader of the House bear in mind that we shall require to have a discussion on the present position of the steel industry in the light of the speech which was delivered by the Minister of Supply a few days ago, and also in view of various facts which have arisen in connection with the Steel Corporation and the Steel Federation? We shall require to have a debate on that, though not to disturb the business of the week in front of us. We shall also require to have a debate on the question of the new rifle, the 280 rifle, some time or another. Perhaps these matters may be discussed through the usual channels.
Mr. Ede: Yes, Sir, I think that probably that would be the best way to arrange it, but I should have thought that both subjects might have been dealt with on Supply Days.
Mr. Churchill: Oh, no.
Mr. Boyd-Carpenter: Can the right hon. Gentleman give us any indication as
1586
to when it is intended to introduce the Measure, forecast in the King's Speech as one of the principal Measures of the Session, to carry out and make permanent some parts of the Supplies and Services legislation due to expire on 10th December?
Mr. Ede: The hon. Gentleman can always live in hope of seeing it.
Mr. Churchill: I hope that our silence after the right hon. Gentleman's reply to my last question will not be understood to mean that we are in the slightest degree assenting to his suggestion that both those debates I mentioned should take place on Supply Days, because, possibly, steel may become the subject of a Vote of Censure.
Mr. Anthony Greenwood: Could my right hon. Friend say whether it would be possible in the near future to make time available for a debate on the Report of the Committee on Cruelty to Wild Animals? It seems to me that it may require a good deal of public discussion.
Mr. Ede: There is no possibility of that in the near future. The Report was published only yesterday or the day before, I believe, and I should think that hon. Members will want a little time to study it.
Mr. Braine: In view of the nationwide concern at the continuing rise in the cost of living, and of the report published today that the T.U.C. may press the Government to hold an inquiry into ways and means of curbing the rising cost of living, is the right hon. Gentleman prepared to give time for a discussion on the Motion in the name of my hon. Friend the Member for Louth (Mr. Osborne) and of my name, and of the names of several hon. Members?
[That this House regrets that owing to the continued rise in the cost of living since July, 1945, the real purchasing power of the pound has fallen from 20s. to 15s. 6d., thus causing increasing hardship to all sections of the community, especially low paid wage-earners, pensioners and others with small fixed incomes, and undermining the stability of the National Savings Movement; and further deplores the Government's failure to combat this by effecting economies in national expenditure, by reducing Purchase Tax and by taking all necessary steps to check the rise in prices.]
Mr. Ede: No, I do not think that that would be the best way to do it.
Mr. Osborne: Further to that reply, is the right hon. Gentleman aware that in the last three months there have been 40 increases in utility prices permitted by the Government, and that the question of the increasing cost of living is concerning people in the country more than anything except the fear of war? Will he not give us a day to discuss a problem that is causing people almost more trouble than anything else?
Mr. Ede: There are other ways of getting time for it.
Mrs. Middleton: Is my right hon. Friend able to inform the House when we shall be having a debate on the Beveridge Committee's Report on the B.B.C.?
Mr. Ede: No, Sir, but a day for that before the Recess is reserved.

ORDERS OF THE DAY

  FINANCE BILL
  As amended, considered.
  3.48 p.m.
  Mr. Speaker: I am calling the first new Clause on the Order Paper, but possibly it may be for the convenience of hon. Members to discuss at the same time the new Clause proposing a rebate of duty on light hydrocarbon oils used for industrial purposes, standing in the names of the right hon. Member for Aldershot (Mr. Lyttelton) and the right hon. Member for King's Norton (Mr. Geoffrey Lloyd). I believe that they go together I am not sure.
  Captain Crookshank: Yes, Mr. Speaker. May I say that I am sure everybody is sorry that my right hon. Friend the Member for Aldershot (Mr. Lyttelton) is unable to be here because of illness. It may very well be convenient to discuss the two new Clauses together, provided that we can reserve our right to divide on our Clause at the appropriate moment.
  Mr. Speaker: Certainly, I shall see to that. I may inform the House at once that I am selecting the next new Clause after that of the right hon. Member for Aldershot (Mr. Lyttelton) in the name of the hon. and gallant Member for Macclesfield (Air Commodore Harvey)—(Rebate of duty on light hydrocarbon oils used in aircraft or for bench-testing).
  Captain Crookshank: Perhaps that raises a rather separate point, Mr. Speaker?
  Mr. Speaker: Yes, exactly.

  FINANCE BILL

    New Clause.—(EXTENSION OF DRAWBACKS OF HYDROCARBON OIL DUTIES.)
    (1) The Treasury may by order direct as respects articles of any class or description specified in the order that, subject to the provisions of the order, drawback shall be allowed under subsection (6) of section two of the Finance Act, 1928 (which as extended by the Finance Act, 1950, relates to drawback of the customs and excise duties on hydrocarbon oils), in respect of hydrocarbon oil (or goods containing it) used as a material, solvent, preservative or finish in the manufacture or preparation of the articles, and thereupon the enactments relating to drawback of the said duties shall have effect, subject to the provisions of the order and of this section, as if any reference in the said subsection (6) to an article in which

    1589
    there is contained any hydrocarbon oil used as an ingredient in the manufacture or preparation thereof included a reference to an article of the class or description specified in the order.
    (2) An order made under this section as respects articles of any class or description—

    (a) may provide for drawback to he allowed in respect of hydrocarbon oil (or goods containing it) used as a material, solvent, preservative or finish in the manufacture or preparation not directly of articles of that class or description but of articles incorporated in them; and

    (b) may provide that the quantity of hydrocarbon oil as respects duty on which drawback is to be allowed shall be determined by reference to average quantities or otherwise;

    but no drawback of excise duty shall he allowed by virtue of this section on oil used in a refinery in such circumstances that an allowance is payable in respect thereof under subsection (4) of section eight of the Finance (No. 2) Act, 1945.
    (3) The power of the Treasury to make orders under this section shall be exercisable by statutory instrument, which shall be subject to annulment by reolution of the Commons House of Parliament, and any order made by the Treasury under this section may he varied or revoked by a subsequent order made by them.
    (4) The power of the Commissioners to make regulations under section three of the Finance Act. 1928, and section two of the Finance Act, 1950. with respect to the duties on hydrocarbon oils and the drawbacks of those duties shall include power to make provision for regulating the allowance and payment of drawback by virtue of this section and for making it subject to such conditions as they think fit to impose for the protection of the revenue.—[Mr. Jay.]
    Brought up, and read the First time.
    The Financial Secretary to the Treasury (Mr. Douglas Jay): I beg to move, "That the Clause be read a Second time."
    I should like first to associate the Government with the right hon. and gallant Member for Gainsborough (Captain Crookshank), in saying that we regret the absence of the right hon. Member for Aldershot (Mr. Lyttelton). We hope that he will soon be back.
    This Clause carries out an undertaking which I gave on the Committee stage to see whether we could not give a concession in the case of industrial light oils used in the export of manufactured goods. As the House will remember, the present law is that where light hydrocarbon oils which have borne tax are used in the manufacture of goods exported, a drawback may be paid if the oil is physically present in the exported goods. What we propose to
    1590
    do is to widen the present provision for drawback in such a way that a similar drawback may be paid where the oil is not an actual physical ingredient of the exported goods but is, in the words of the Clause,
    "used as a material, solvent, preservative or finish in the manufacture…"
    of the goods. The other Clause which I understand we are also now discussing seeks to give a rebate or complete exemption of tax for all light oils used in manufacture. In our view, for reasons which I gave in Committee and in previous debates in this House, that is not practicable.
    The first reason for that view is, of course, that it would arouse very great administrative difficulties if we attempted to give an exemption for industrial oils whether or not the resulting manufactured goods were exported. If they are exported, they pass through the Customs organisation of the port and, therefore, the job of checking and control is reasonably easy. Second, a general exemption for all light oils used in manufacture would cost a large sum—about £20 million in a full year—and, if that were to be made up, it would be necessary to throw a much heavier burden by way of tax on the road user.
    Mr. Geoffrey Lloyd: It would be only in the region of about £4 million if it were not complete exemption but if it were simply effected on the extra increase in this year's Budget.
    Mr. Jay: I think that is right. With regard to the complete exemption of industrial oils, I think that it is generally agreed that the petrol used in ordinary commercial transport is, in a sense, part of the general production costs of manufactured goods. Therefore, it would be rather hard to distinguish between oils used in the physical process of manufacture and those used in the transfer, for instance, of components from one factory to another.
    What we propose in the new Clause that stands in the name of my right hon. Friend is to grant a drawback in cases where the oil is used, although not present in a physical form, in the exported goods. An example of that, which we have discussed before, is rubber gloves, which require oil for their manufacture. The main

    1591
    difficulty which has deterred us from introducing this extension of drawback before was that the circumstances differed so much from one type of product to another that we always doubted whether any concession was administratively possible.
    The method which we now suggest is that the Treasury should have power to determine, trade by trade, whether the sort of drawback covered by the Clause would be justified, and the basis on which it should be calculated. The Clause, therefore, provides that the drawback should be granted by Order, subject to annulment by this House. I may, perhaps, add that the trades, with many of which, of course, we have already been in consultation, if they wish to make proposals or discuss this matter with the Customs should communicate with the Commissioners of Customs and Excise in Finsbury Square. I hope that this concession, so far as it goes, will meet with general satisfaction, and I commend it to the House.
    Mr. Geoffrey Lloyd: I can say at once that we are glad that the Chancellor of the Exchequer has moved this new Clause in order to give effect to the concession that he announced in Committee. We are however, disappointed that he has not gone further and made a point of exempting the users of these light oils in industry as a whole, as we proposed in Committee, and which is the effect of our later new Clause, at any rate to the extent of not putting on the extra Petrol Duty proposed in this year's Budget. I would remind the House that it would very notably reduce the figure that it would cost the Chancellor of the Exchequer from the point of view of revenue, as the Financial Secretary admitted when I made an interjection during his remarks.
    I do not propose to traverse again the arguments that we used in Committee about the importance of the industrial development which is hindered by this high rate of duty on these oils used as an industrial material, but I should like to draw attention to what is going on in other countries. The Financial Secretary and the Chancellor are always very free in making comparisons with regard to the price of petrol in other countries when it happens to suit their argument. May I point out to the House that in the
    1592
    United States, for example, there is a rebate ranging from 90 per cent. to 100 per cent. in respect of the tax on these light oils used in industry as compared with their use in road transport. In Canada there is almost 100 per cent. rebate for industrial oil, as also in Australia, South Africa, Eire, Holland, Denmark and Norway; and lesser rebates in several other countries.
    The effect is that nearly every industrial country in the world gives this kind of rebate which the Chancellor is refusing to industry in this country. It is not a matter of our being in the company of several industrial countries which do what the Chancellor is refusing to do as compared with several industrial countries which do something different; we are, in fact, practically the only industrial country in the world in which this rebate is refused. It would seem that some of the arguments which we made in Committee are accepted as being very valid in almost every other industrial country, but here the Chancellor refuses to acknowledge them.
    The Financial Secretary said this afternoon that one of the reasons the Chancellor did not feel able to do so was because of the administrative difficulties. That is a matter to which we must give careful attention, because we have very high administrative standards in this country and we have the experience of several industrial conventions with regard to labour matters which we are fulfilling to the letter and which some other countries are not fulfilling to the same extent.
    I admit the force of the argument that there may be still some countries which have not the same high standard of administration as we have in a matter of this kind. What I do not think it is valid for the Chancellor to contest is that in all the countries I have read out, and in all the well-conducted and well-administered countries of the world, there is not one of those countries that is not capable of a fair and equitable administration of this rebate. I do not believe that can be substantiated.
    In Committee the Financial Secretary said that he was not satisfied from the information available that these rebates could be administered with fairness. It does not look as if he has complete

    1593
    knowledge on the subject. I should have thought that with regard to the United States, Sweden and Switzerland, and even in respect of France and some of the other countries I have mentioned, that on the general level of their financial administration they are administering this rebate in a practical way.
    I suggest that it is not enough for the Treasury to produce this point and to suggest that no one else is likely to administer it fairly. I suggest that the Chancellor ought to inquire in detail into the methods of administration of this rebate in all the other big industrial countries with a view to making sure that it is possible to administer the rebate fairly in this country.
    4.0 p.m.
    Mr. Ellis Smith: Would the right hon. Gentleman name the document from which he is quoting?
    Mr. Lloyd: This is the document issued by the Industrial Light Oils Committee, which I think has made a serious study of the matter. I can let the hon. Member have a copy, or give him the information, if he is interested.
    I suggest that the Government are not really making a very strong case on this matter of administration. If I may bring it down to an even finer point, the Financial Secretary went so far as to say that one of the difficulties was mainly that there is so little real distinction between these light oils and petrol used in ordinary commercial road transport. We have to remember that there is not only a partial exemption, but an exemption for the heavier oils used in industry, which include kerosene used in farm tractors, diesel oil and derv which are used in road transport to a very considerable extent.
    What is the great difficulty which arises in regard to petrol used for industrial purposes because petrol is also used for commercial road transport, whereas, apparently, the difficulty has been successfully overcome by the Treasury when it was a question of giving a larger rebate for diesel oil used not only in industry but also, as everyone knows, in commercial road transport for lorry purposes? With that I shall conclude my case, because I do
    1594
    not believe that the Chancellor or the Treasury have an answer to that point
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(EXEMPTIONS FROM ESTATE DUTY IN CONNECTION WITH PRESERVATION OF LAND FOR PUBLIC BENEFIT.)
    (1) Section thirty-one of the Finance Act, 1937, and section thirty-one of the Finance Act, 1949 (which sections exempt from estate duty in certain circumstances land given to the National Trust and maintenance funds given with land so exempted, and are hereafter in this section respectively called "the 1937 section" and "the 1949 section"), shall in the case of property given to the National Trust be extended as follows:

    (a) any exemption from estate duty conferred by the 1937 section in relation to an estate or interest in land given by any person to the Trust shall be granted also, and to the like extent, to any objects ordinarily kept at the time of the gift in a building forming part of the land, and given by him with that estate or interest with a view to their preservation or use in the building, and where objects so given are exempted by virtue of this paragraph the 1949 section shall apply as if they formed part of the building;

    (b) where a person gives to the Trust any objects ordinarily kept at the time of the gift in a building which is then inalienably vested in the Trust, and he does so with a view to the objects' preservation or use in the building, then (subject to paragraph (d) of this subsection) the 1937 section and the 1949 section shall apply in the case of the objects so given as if the property comprised in the gift had been an estate or interest in land, except that any condition as to the Trust's interest being held by it inalienably for the public benefit shall not apply;

    (c) where a person gives property to the Trust as a source of income for the upkeep—

    (i) of any land which is at the time of the gift inalienably vested in the Trust; or

    (ii) of any objects which are then vested in the Trust and ordinarily kept in a building forming part of any such land, having been given to the Trust with a view to their preservation or use in that building;

    and he gave or joined in giving to the Trust its estate or interest in that land or those objects, as the case may be, then (subject to paragraph (d) of this subsection) the 1937 section shall apply in the case of any of the property so given, whether an estate or interest in land or not, as it applies to an estate or interest in land, except that any condition as to the Trust's interest being held by it inalienably for the public benefit shall not apply;

    1595

    (d) paragraph (b) and sub-paragraph (ii) of paragraph (c) of this subsection shall not apply in the case of any objects unless the gift of the objects or property in respect of which exemption is claimed by virtue of that paragraph is made by a person who also gave or joined in giving to the Trust its estate or interest in the building in which the objects are ordinarily kept at the time of the said gift.

    (2) Where, with a view to the preservation of a house or other building for the public benefit, a person gives or has given an estate or interest in the building to, or to trustees for, a Government department, a local authority or any other body not established or conducted for profit, and the Treasury (whether before or after the time of the gift) direct that the gift should be treated as falling within this subsection, then the 1937 section and the 1949 section, together with the foregoing subsection of this section, shall apply in relation to the building and any grounds given with it and specified in the direction, as if references to the National Trust were references to that department, authority or body or to those trustees, as the case may be, and as if their estate or interest in the building and any such grounds were inalienably vested in them.
    In the two next following subsections, any reference to a building includes any grounds specified or to be specified in a direction under this subsection relating to the building.
    (3) The Treasury shall not give a direction under the foregoing subsection in the case of any building unless in their opinion—

    (a) the building is one for the preservation of which special steps should be taken by reason of its outstanding historic or architectural interest and the cost of preserving it; and

    (b) the department, authority or body in question is an appropriate one to he responsible for the building's preservation;

    and before giving any such direction the Treasury may require such undertakings to be entered into as they think appropriate for securing the preservation of the building and reasonable access thereto for the public (including undertakings restricting the use or disposal of the building).
    (4) Any undertakings entered into as aforesaid may be varied from time to time by agreement between the Treasury and the person bound by the undertakings, and the Treasury may require further undertakings to be entered into as a condition for agreeing to any such variation or consenting to anything for which their consent is required by any undertaking; and the obligations imposed by any such undertaking shall be enforceable for the public benefit by injunction (or, in Scotland, by interdict or by petition under section ninety-one of the Court of Session Act, 1868), and any purported disposition of a building in contravention thereof be void, as if the obligations had been imposed by Act of Parliament.
    (5) For the purposes of this section, except in so far as the context otherwise requires.—

    (a) the expression "gift" includes devise awl bequest and the expression "give" shall
    1596
    he construed accordingly, and in relation to a devise or bequest any reference to the time of the gift shall he construed as a reference to the time of the testator's death;

    (b) the expression "vested" means indefeasibly vested, and a building or land shall be deemed to be inalienably vested in the National Trust if an estate or interest therein is vested in the Trust (whether in possession or not) and has been so dealt with as to be held by the Trust inalienably:

    (c) any reference to giving objects shall he construed as a reference to giving the whole or a limited interest in the objects, and any reference to objects being vested in the National Trust shall be construed accordingly;

    (d) the expression "National Trust" means the National Trust for Places of Historic Interest or Natural Beauty or, in relation to Scotland, the National Trust for Scotland for Places of Historic Interest or Natural Beauty;

    (e) the expression "local authority" means the Common Council of the City of London or a local authority within the meaning of the Local Government Act, 1933, the London Government Act, 1939. or the Local Government (Scotland) Act, 1947.

    (6) An object shall not be deemed for the purposes of paragraph (a) of subsection (1) of this section to be given with an estate or interest in land if either is subject to an interest or power of appointment created by the gift of it to which the other is not subject:
    Provided that, where the object is given subject to one or more life interests created by the gift of it to which the estate or interest is not subject, but which (if it were so subject) would fall within subsection (2) of the 1937 section, then the said paragraph (a) shall apply in relation to the object as it would apply if the estate or interest had also been given subject to that life interest or those life interests.
    (7) Where the property given by any person as a source of income for the upkeep of any land or objects is in the opinion of the Commissioners more than enough to provide (with a reasonable margin) for the upkeep of the land or objects out of the income of the property, so much only as is in their opinion enough for that purpose shall be deemed for the purposes of paragraph (c) of subsection (1) of this section to be given as a source of income for the upkeep of the land or objects, and in determining what is enough for that purpose the Commissioners shall have regard to any other property given by the same or any other person as a source of income for the upkeep of the land or objects or any part thereof (with or without any other land or objects).
    (8) This section applies to duty leviable on or with reference to any death occurring after the commencement of this Act but in relation to duty so leviable shall apply to gifts made before as well as after that commencement.—[Mr. Gaitskell.]
    Brought up. and read the First time.
    The Chancellor of the Exchequer (Mr. Gaitskell): I beg to move, "That the Clause be read a Second time."
    The House will recall that during the Committee stage of the Bill we discussed the present Clause 30, which provides that exemptions from Estate Duty of land, including houses, and maintenance funds given to the National Trust be extended to similar properties given to Government Departments, local authorities and universities and also provides that the contents of houses given in this way should similarly be exempted.
    I think it will be agreed that there was a general welcome for this Clause, but a number of hon. Members proposed an extension of the list of objects which were to have the benefit indirectly of the exemption from Estate Duty. I then proposed to the Committee that we should drop the idea of having a specific list of bodies but allow the Treasury to examine whether it was satisfied that this was the best way to secure the preservation of these historic places.
    The new Clause carries out this undertaking and hon. Members will see that we have drawn it pretty widely and, instead of the list, we have used the words,
    "Government department, a local authority or any other body not established or conducted for profit."
    We have, of course, also made it plain that the purpose of these exemptions is simply to preserve these houses for the benefit of the nation by laying down the considerations which the Treasury have to bear in mind when giving exemptions from Estate Duty.
    I think the only other point I need mention is that we have taken the opportunity in this new Clause to make one other small change of which I believe the House will approve. It is that we shall no longer make it a condition when exemption from Death Duty is claimed in respect of a house and contents that the claim for exemption must be made at the same time. They must be made by the same person but it need not be at the same time as for the house.
    Mr. Henry Strauss: As the right hon. Gentleman has said, the moving of this new Clause is a sequel to our debate on 12th June and the Chancellor of the Exchequer has fully carried out the promise he then made to the Committee.
    1598
    I think the new Clause falls under two heads, and I wish to say a word about each. The first concerns the National Trust. Since on the last occasion I was moving an Amendment dealing with the second subject and not with the National Trust, perhaps I may be allowed to say a word as a member of the Executive Committee of the National Trust, and I think the only one who is able to speak here this afternoon. My hon. Friend the Member for Twickenham (Mr. Keeling) is unfortunately away and my other colleague on the Executive Committee of the National Trust, the hon. Member for St. Pancras, North (Mr. Kenneth Robinson), might feel somewhat embarrassed in speaking in this debate.
    On behalf of the National Trust, I wish to thank the Chancellor of the Exchequer for this Clause. It increases to a small, but to a useful, extent the benefits already enjoyed by the National Trust. I think that will be welcomed in all quarters of the House. There is nothing in which British creative genius has been shown more than in the best of our country houses and their grounds, and anything which helps to preserve them is to be welcomed. On a recent Bank Holiday I happened to visit Montacute in Somerset and saw what a pleasure that great house and those grounds could give not only to the people of Somerset, but to people from all parts of the country. I wish, therefore, to thank the right hon. Gentleman for the part of the new Clause which concerns the National Trust.
    As the right hon. Gentleman stated, the remainder of the new Clause extends the provisions in order to meet an Amendment that I moved in Committee and an Amendment moved by my right hon. Friend the Member for Horsham (Earl Winterton).
    The Clause is a little complicated, perhaps necessarily so. Although there may be a general desire to save these valuable properties, there may be points upon which there is difference between the two sides of the House, but, so far as there can be general agreement, it is to be welcomed. I express the hope to the Chancellor that the Treasury will watch sympathetically the working of this Clause and that, in so far as the working reveals the need for further amendment and extension, that amendment and extension will be forthcoming whatever Government are in power.
    Mr. Hayman: Reference has been made to the National Trust, and I see in the new Clause that the Chancellor may require an undertaking that whatever is handed to the Trust will be properly looked after. I wish to draw attention to one case where I think the National Trust has been at fault and that is where cliff lands have been handed over and they have allowed agriculture to destroy a great deal of the very distinctive cliff flora. That applies to Cornwall. I hope that the regulations will be so drawn as to secure that the National Trust does fulfil the trust reposed in it.
    Mr. Hollis: I do not want to cast a shadow over the proceedings, especially on this rare occasion when my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss) is agreeing with the Government. I certainly join in welcoming the Clause. I remain unrepentant in my opinion that we cannot solve this problem until we do something on the lines of the French system of direct exemption, but here is the proposed new Clause and we want to make the best of it.
    I want to be quite clear about what the occupier of a beautiful house should now do if he is to prove himself a good citizen. If he wishes to get off Income Tax, the only way is by turning his house into business premises and managing it on a commercial basis with a view to the realisation of profits. On the other hand, if he wants to get off Death Duties, his only course is to hand his house over to some body which is not established or conducted for profit. He is in the dilemma whether it is the act of a good citizen to use his house so that it will make money or so that it will not make money. The Chancellor distinguishes between people who make profits and those who do not. I must say that it reminds me of the young lady in one of Saki's stories who knew the difference between right and wrong but could never remember which was which. It is very important that these people should know which it is their duty to do.
    There is a point not merely of linguistic but of practical importance in the proposed new Clause. In subsection (7), the condition is laid down, quite properly, that we cannot get exemption from Death Duties for an unlimited sum of money handed over with a house but only for a
    1600
    reasonable sum of money that will cover the upkeep of the house. Suppose the occupier hands over the house with what, at the moment, is a reasonable sum of money to keep the house going. Later, owing to inflation or some interference with our domestic economy, that sum of money becomes insufficient.
    What can the National Trust do in order to keep up the house? Are the Trust allowed to indulge in any activity which earns enough to keep up the house? The property is inalienable. They cannot get rid of it. They cannot make a profit. How can they keep the house up? I understand—and I hope that the Chancellor will tell me whether I am right or wrong in this—that although the Trust cannot be a profit-making body in the sense that they cannot distribute dividends, they can undertake activities which will help in the upkeep of a house.
    I understand that they can make money out of one house and apply it to the upkeep of another house. If that is true, it makes things rather easier. If I am wrong, and the National Trust cannot undertake activities which will bring even sixpence into their coffers, it will be very difficult for them because they have many houses where it is impossible to make much money, even if they were allowed to do so.
    This plan of handing property over to the National Trust is admirable, but for reasons such as I have outlined not many occupiers have taken advantage of it. I welcome the proposed new Clause. I realise that there has to be some reservation if we are to deal with the problem in this way. I reserve my own opinion as to the need for dealing with it eventually in a different way. Let us make the best of this plan while we are about it. I should be grateful if the Chancellor would make it clear what activities the Trust would be allowed to indulge in to raise money, if the money handed over in connection with any property proves to be insufficient in the way I have described.
    4.15 p.m.
    Mr. I. J. Pitman: I should like to raise a drafting point containing a matter of general principle to which I should be glad if the Chancellor of the Exchequer would give his attention at a later stage. It is in subsection (2) of the proposed Clause, where we see the words:
    "not established or conducted for profit."

    1601
    Strictly speaking, every undertaking of that kind must make a profit, particularly if, before that, it has made a deficit. The real issue for the companies and corporations which the Chancellor has in mind is surely the distribution of profits. I should like the right hon. Gentleman to consider this point in connection with this Bill, and certainly in connection with future uses of those words. I know that it is now established, but do not let us establish and continue anything which, in essence, is wrong.
    Major Tufton Beamish: There are two formalities which I want to mention in connection with the proposed new Clause, which I welcome and which, generally speaking, achieves the broad objective which the Chancellor of the Exchequer had in mind. I certainly think it covers the point raised by the noble Lord the Member for Horsham (Earl Winterton) during the earlier debate.
    I see there is an Amendment on the Order Paper for the deletion of the word "outstanding." The inclusion of this word is in some way a limitation of the broad terms of the Clause and may, in future years, provide the Treasury with an excuse for not carrying out the intentions of the Clause. I should be glad to have an assurance from the Chancellor of the Exchequer that this is not so and that the Clause contains no such loophole. I am sure that his intentions are pure but he could underline them by an assurance on the point which I have raised.
    It is not at all clear why trusts, other than the National Trust, get relief from Estate Duty only in respect of houses or other buildings, whereas the National Trust get relief on all property. I may be wrong in thinking that that is the case, but in several places in the proposed Clause the word "building" is used. Unless the word "building" is clearly defined, as it could be by the addition of a paragraph (f) in subsection (5), there may be a grave limitation in the carrying out of a laudable intention.
    For example, the Sussex Archaeological Society, in which I am interested, has a number of very historic properties in my constituency, including Lewes Castle and Keep. They also look after the Long Man of Wilmington, a colossal figure carved in the Downs that does everything except vote for me. By no stretch of the imagination could the Long Man of
    1602
    Wilmington be described as a "building." The use of this word appears to be a definite limitation of the proposed Clause.
    Mr. Gaitskell: Both the hon. Membet for Devizes (Mr. Hollis) and the hon. Member for Bath (Mr. Pitman) referred to the meaning of the words
    "established or continued for profit."
    It is really a matter of definition. I am assured that the normal meaning of the words is the carrying on of business for the purpose of distributing profits. I do not think that either hon. Member need have any anxiety as to the body he had in mind being ruled out by the proposed Clause.
    As to the point made by the hon. and gallant Member for Lewes (Major Beamish), on the phrase:
    "outstanding historical or architectural interest,"
    I would say that those words were used in connection with the Gowers Committee's Report and we took them into the Clause. It is a good phrase, indicating broadly the kind of property we have in mind.
    On the second point he raised, about the National Trust, of course the Trust is concerned with land, apart from buildings, whereas the main purpose of the Gowers Committee's Report was to ensure the preservation of historic houses. That is probably the explanation which the hon. and gallant Member is seeking. [An HON. MEMBER: "Houses and grounds."] Yes, and grounds.
    Major Beamish: Would that definition include the site of an historic building if the building were partly or almost wholly destroyed?
    Mr. Gaitskell: I should not like, without taking legal advice, to be quite sure about that, but I would point out that there is nothing to prevent the National Trust from accepting gifts of that kind.
    Captain Crookshank: We approve the Clause and support it with pleasure. We are grateful to the Government for having looked at the matter again and having improved on their first effort. We understand that this does not mean that the Government have now finished with the suggestions in the Gowers Report and that they are under consideration by the Government, as we were told at an earlier

    1603
    stage, and that the Government will see what can be done in that direction. The Clause deals with the limited field of extending something which already exists up to a point.
    Mr. Gaitskell Mr. Gaitskell indicated assent.
    Captain Crookshank: I see that the right hon. Gentleman is nodding his head and I think I can take that as an admission of the case. We have reason to be satisfied, particularly if he takes the advice of my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss), and watches how the Clause operates when it becomes law.
    With regard to what was said by my hon. and gallant Friend the Member for Lewes (Major Beamish) about the definition of:
    "…outstanding historic or architectural interest."
    I take it that that means three different things; not "outstanding historic" but "outstanding" or "historic" or "architectural" interest. I can imagine some things which might be outstanding but not of historic or architectural interest—
    Mr. Speaker: The right hon. and gallant Gentleman cannot anticipate an Amendment which will be called as soon as the Clause is read a Second time.
    Captain Crookshank: I beg your pardon, Mr. Speaker. I certainly did not want to say anything in anticipation. I apologise; I thought from what my hon. and gallant Friend said that the Amendment would not be called. As to the Clause itself, we are grateful to the right hon. Gentleman and have much pleasure in doing our part in putting it on the Statute Book.
    Question put, and agreed to.
    Clause read a Second time.
    Mr. Mathers: I beg to move, as an Amendment to the proposed Clause, in subsection (3, a) to leave out "outstanding."
    Perhaps it would be for the convenience of the House to consider at the same time my Amendment in subsection (3, a), after "architectural," to insert "or æsthetic."
    I can certainly join other hon. Members in thanking the Chancellor of the Exchequer for the wider terms which are used
    1604
    in the Clause. I am seeking to make them wider still, not in an antiquarian interest but in the interest of live human problems of the present day. The Chancellor received representations earlier that there should be an opportunity for bringing, for example, churches into the terms of the Clause, and that has been done by the reference made to bodies which are not profit making.
    The reason which prompts me to bring forward my Amendments is that one of the greatest benefactions practised at the present time in regard at least to the Church of Scotland by members and friends of that Church is to leave houses to it to be used for what can definitely be described as a public purpose, as eventide homes for aged people. It is so that difficulties may not be placed in the way of people who are willing to leave their houses for that purpose that I seek to broaden the terms of the conditions which cover the granting of this exemption.
    The Chancellor would be completely safeguarded in this matter by the fact that the powers for dealing with it are entirely in the hands of the Treasury and that he does not need to bind himself closely by using words like:
    "…outstanding historic or architectural interest…"
    There might be buildings of some historic interest but not of outstanding historic interest, and therefore I believe that the word "outstanding" is unduly restrictive from the historic point of view and I seek to delete it; but I seek to give my right hon. Friend another description which would allow consideration to be given to the bequeathing of a house for the purpose, for example, that I have indicated by inserting the term "aesthetic." That would broaden the basis of this provision and would allow a real need to be reasonably met.
    The position is safeguarded even beyond what the Treasury can do, because those who have houses left to them to be used for a non-profit making purpose have to take into account whether they can afford to accept the gifts that are offered to them. I know of cases in which the National Trust has found itself unable to accept buildings bequeathed to it because of the expense

    1605
    of their maintenance and because they were not of sufficient historic or architectural interest to cause the Trust to accept the financial responsibility of maintaining them in perpetuity. The same applies to a body like a Church; it cannot afford to take on responsibilities for buildings unless it believes that it can run the buildings for the purpose for which they are intended and maintain them properly.
    In accepting the Amendments, the Chancellor would be taking nothing away from his own powers but would be acting reasonably and helpfully to the bodies that I have indicated.
    Mr. Gaitskell: As my right hon. Friend the Member for West Lothian (Mr. Mathers) has said, the final decision in these matters must rest with the Treasury, as it does in the Clause. What we are really discussing is the kind of guidance that we should give to the Treasury on this. I believe that we should retain "outstanding." because of its use in connection with the Gowers Report and because I do not want to give the impression to anybody that we can just exempt from Death Duty houses which are really of no very great importance. It is clear that we must restrict ourselves in a matter of this kind to buildings which are of some historic or architectural significance.
    I ask my right hon. Friend not to press his first Amendment, but I will accept his second Amendment, as I am anxious to meet him and as I feel that there is something in adding "or aesthetic." I cannot for the moment think of many instances where a house has aesthetic interest but no architectural interest, but I am not an expert in these matters, and it might be so.
    Amendment negatived.
    Amendment made to the proposed Clause: In subsection (3, a) after "architectural," insert "or aesthetic."—[Mr. Mathers.]
    Clause, as amended, added to the Bill.

    New Clause.—(REDUCTION OF MATCH DUTIES.)
    (1) In lieu of the duties of customs and excise charged on matches under section seven of the Finance Act, 1949, there shall be charged on matches imported into the United Kingdom duties of customs, and on matches manufactured in the
    1606
    United Kingdom duties of excise, at the following rates, that is to say—

    Rate of customs duty

    Rate of excise duty

    s.

    d.

    s.

    d.

    (a) for every 10,000 matches in containers in which there are not more than 30matches

    19

    11

    19

    2

    (b) for every 7,200 matches in containers in which there are more than 30 matches

    14

    5

    13

    9

    and so in proportion for any less number of matches.
    (2) This section shall have effect from the first day of August, nineteen hundred and fifty-one. —[Mr. Jay.]
    Brought up, and read the First time.
    4.30 p.m.
    Mr. Jay: I beg to move, "That the Clause be read a Second time."
    The Clause is intended to give greater flexibility to the Government in exercising price control over matches without having to legislate too frequently to make alterations in the duties. At the moment, the inter-relation of rapid movements of costs in match manufacture, the price control and the form of the duty, present rather awkward practical difficulties. Indeed, if costs tend to rise, and unless one can alter the number of matches in a box, the price of a box must be altered, and, in practice, it cannot be altered by less than ½d.
    Thus, one might be placed in the awkward situation of having to raise the price excessively and give excessive profits to the manufacturers in order to get out of a situation in which, otherwise, they were not able to cover their costs. The obvious solution to that difficulty from the price control point of view is, of course. to alter the number of matches in the box. That, however, in the existing state of the law as to the duty is, unfortunately, not possible. The existing duty is charged according to the size of the container—that is to say, the matchbox—and the size of the container is defined according to the number of matches in the box.
    Our new proposal gets away from the old scales and substitutes two new scales, which are related to the number of matches; that is to say, the tax becomes a tax per match and not a tax per container. That makes it possible to alter the number of matches in the box without having to alter the structure of the duty, and gives us the necessary flexibility. I may say that the effective rate of duty

    1607
    per match is not altered by this change. which leaves the duty per match neither higher nor lower, but just where it was. All that is altered is the form in which the duty is levied.
    Mr. David Eccles: I think that we have a right to complain about the sidenote to this proposed new Clause, where we read the words "Reduction of match duties." Any pipe smoker who heard that would instinctively, when feeling in his pocket for his matches, silently thank the Chancellor for doing a little something, but it is, of course, a complete swindle. As the Financial Secretary has just told the House, the duty per match remains the same. The fact is that the object of this new Clause is to prepare the way for a new price order. The box of matches will cost 2d., and the duty per match will be the same, but there will not be so many matches in the box. Well, that is putting up the price of matches in a very round-about way.
    I do not think that my hon. Friends complain about the statement that the cost of manufacturing a match has gone up. After all, it consists of wood and sulphur, two raw materials which have been notoriously mishandled by the Government—which is no doubt one of the reasons why we had the debate yesterday. It is serious when the costs of something which goes into every house go up. I ask the Government whether they have in mind bringing forward a new price order. If so, what will be the reduction in the number of matches from 50, which is the usual number for 2d.? How many shall we get for 2d. when this new Clause becomes law?
    Mr. Jay: With the leave of the House, perhaps I might answer the hon. Gentleman's questions. First, he asked whether it was intended to bring forward a new price control order. That, of course, is entirely for the Board of Trade and not for ourselves or the Customs and Excise. All we are doing here is altering the form of the duty so that it is easier to make price control changes if it is desired to do so. Secondly, he asked why the words "reduction of match duties" were used in the margin. I agree that the phrase is used in a somewhat Gilbertian sense. It is, however, true in this sense, that if the old tax had remained in force and the
    1608
    number of matches in the box had been reduced from 50 to, say, 48, or whatever it might be, the tax per match would have gone up. Under our new proposal, if that happens the tax per match will remain the same, and in the opinion of some of those concerned that can be described as a reduction.
    Captain Crookshank: I do not think we can let that go quite so easily. It is rather awkward when a new proposal like this is put on the Order Paper for the first time the day before the Report stage begins. We have not really had full time to make any private inquiries, and we have had to rely upon what the Financial Secretary has just told us. I would call his attention, and that of the draftsmen, to the fact that, whatever else this is, it is not, as my hon. Friend has said, a reduction of match duties. The Financial Secretary says, "Oh, that is a question of drafting, because you could not alter the various differentiations about containers without using those words."
    If he would look at the 1949 Act. which he is now amending—and would in 1951 carry on the same drafting procedure—he would know that the normal practice in dealing with a Customs and Excise Duty of this kind is to put it into a Schedule and not into a Clause at all. There would be an introductory Clause, which would be very much on the lines of what happened in 1949. In 1949, when they changed the Match Duties they had a Clause, the sidenote to which was merely, "Matches," without saying what was going to happen; then they had a Schedule, described as
    "MATCHES (RATES OF DUTY)…RATES OF CUSTOMS DUTIES…RATES OF EXCISE."
    If the hon. Gentleman had only done that, he would have avoided all this trouble, and he would not have to try to defend what, on the face of it, seems to be indefensible. However, at this stage we have no option but to let this new Clause be added to the Bill. If the result is to be a drastic one on the price of matches, and if that has to come before the House in the form of an order. I take it that that will be the best occasion upon which to protest.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(EXTENSION OF RELIEF FOR WIVES DRAWING RETIREMENT PENSIONS.)
    The proviso to subsection (2) of section twenty-seven of the Finance Act, 1946 (which, amongst other things, prevents certain pensions payable under the National Insurance Act from being treated as earned income for the purposes of the increased personal allowance by reference to the wife's earned income provided for by subsection (2) of section eighteen of the Finance Act, 1920) shall not apply to any payment by way of retirement pension under the National Insurance Act (as defined in the said section twenty-seven), being a pension payable to the wife by virtue of her own insurance.—[Mr. Jay.]
    Brought up. and read the First time.
    Mr. Jay: I beg to move, "That the Clause be read a Second time."
    As the Clause appears on the Order Paper there is a misprint, some lines having been misplaced. I apologise, although I am not sure that I am responsible. It will be put right in the final form.
    We propose here to extend what is known as the wives' special earned income relief.
    There is another new Clause in the name of the hon. Member for Ealing. South (Mr. Angus Maude) on page 1678 of the Order Paper—(Income tax on married women's retirement pensions)—which really relates to the same point as we are now discussing. Indeed, although I apologise for having put down this new Clause at this very late stage, the reason was that we considered the Clause in the name of the hon. Member for Ealing, South, and came to the conclusion that we wished to go some way to meet him; since this is the Report stage the most satisfactory way to do that appeared to us to be to put down a new Clause in what seemed to be the right form to give effect to our desire.
    The House will recall that when the wife's special earned income relief was raised to £110 by the Finance Act, 1946. it was decided that that should not extend to a retirement pension even though the recipient of the retirement pension receives the ordinary earned income relief of one-fifth. The arguments for not extending the special relief were, namely, that the object of the increase was to induce married women either to go to work
    1610
    in industry or to remain at work. Obviously, that would not be done in the case of somebody who was ex-hypothesi retired. My hon. Friend the Member for Sowerby (Mr. Houghton) argued at the time that there was a strong case for making an extension at least in the case of those drawing State retirement pensions which they had earned by virtue of their own contributions.
    I put the case on the other side, I remember, on the grounds that I have just mentioned. However, representations have been made to us by my hon. Friend and others, and we re-examined the point and came to the conclusion that there were two particularly cogent reasons for the rather limited concession which we are making here. The first is that, by the long practice of the Inland Revenue, ordinary pensions paid by private employers under private superannuation schemes to married women or anybody else are considered, for tax purposes to be deferred pay. Therefore, married women receiving such pensions get the advantage of the special relief.
    It seems to us exceedingly anomalous that this relief should go to a salaried married woman who has contributed to some private scheme and probably has a higher pension than the National Insurance retirement pension and that it should be refused to a woman who has worked, perhaps in the cotton or wool industry, and has contributed throughout her working life towards the State retirement pension. The second cogent reason is that, under the existing arrangements, it is possible for the income of a wife who has been working and who retires to fall from whatever it has been in the form of wages to the present 26s. per week or, as it will be, 30s. per week and then for her to pay increased tax on the lower income.
    4.45 p.m.
    We examined the cost, which happily amounts only to about £750,000, which is a good deal less than the cost of some of the other suggested changes in the Income Tax allowances which we have discussed in the last week or two. We came to the conclusion that this concession was justified in the case of those who had earned their retirement pension by their contributions. We do not think that we would be justified in going so far as is suggested in the new Clause of the hon. Member for Ealing, South, which would have extended this concession to chil-

    1611
    dren's allowances as well as to the retirement pension.
    Mr. Angus Maude: It is not often that one comes prepared for a tug-of-war with the Treasury and finds that the Treasury team has overnight swung round and tagged itself on at the back end of one's own rope. While I hope that we shall be spared the disconcerting result of falling all in a heap together owing to the lack of opposition, I should like, on behalf of those 20 or so of my hon. Friends who put their names to my new Clause, to say how grateful we are to the Financial Secretary for looking again at this matter.
    I believe that the hon. Member for Sowerby (Mr. Houghton), supported by my hon. Friend the Member for Chippenham (Mr. Eccles), raised this matter some two years ago, when the Government were not in so conciliatory a mood. I do not propose to speculate at any length on how it should come about that an anomaly which was not remedied two years ago comes to be looked at with a more kindly eye this year when the exigencies of the Revenue are supposed to be greater. It cannot be pure coincidence—indeed, the Financial Secretary suggested that it was not—that it is being done so soon after the tabling of the new Clause which I and my hon. Friends have on the Order Paper.
    I should like to explain that the Clause in my name was deliberately drafted widely for the purposes of debate, but there is no doubt that the point we were primarily seeking to secure is that which is covered by the Government's new Clause, and we welcome it very much. It seems remarkable to me that the size of this anomaly appears not to have been recognised by anybody at the time when the proviso was originally inserted into the Finance Act, 1946. I have looked over the debates on that occasion and I cannot see that the point was raised by anyone on either side of the House.
    I am sure that many hon. Members on both sides of the House must have received a fairly considerable number of complaints about this matter from constituents, because the hardship which is caused at a time of life when financial hardship bears most heavily is fairly considerable. As the Financial Secretary has said, it may come about that a married woman who is able, while working, to
    1612
    earn as much as £137 10s. a year free of tax, under the provisions of the Act, and who retires at the age of 60 and begins to draw a retirement pension earned in respect of her own contribution may, if her husband is still working, find that their joint income falls by the amount of the difference between £2 16s. a week and 26s. a week while the amount of tax increases, in many cases fairly sharply. There are cases where the husband earns an income where the tax may rise by £16 or £20 a year, which at that time of life is a fairly considerable figure.
    The other anomaly was that the married woman wage earner found herself in an extremely unfavourable position vis-à-vis the married woman covered by some superannuation scheme, such as exists in Government services and certain industries and professions. The sum total of this has been that an anomaly which affects not perhaps many people, affects those few people extremely hard, and we felt it desirable to draw this point to the attention of the Government. We are extremely pleased that the Government have seen fit to make this concession, which I am sure will be widely welcomed both in the House and in the country.
    Mr. Robert Carr: I welcome this Clause particularly because, with my hon. Friend the Member for Ealing, South (Mr. Angus Maude) and other hon. Members, I feel some pride of parentage for it. Like my hon. Friend, I am rather surprised at the new god-parents which have sprung up overnight. We brought our Clause forward as a result of practical cases which arose in our constituencies, and I feel quite certain that as a result of my knowledge of those practical cases this Clause will give real help to a number of people at a time of life when help is needed and when they tend to suffer hardship.
    Therefore, it gives me great pleasure that the Government have seized on this idea and have put it in a practical form. I think that the limitation which they have put on it is reasonable and, as my hon. Friend said, it achieves the main purpose we had in mind in putting down our Clause in the first place.
    Lieut.-Commander Gurney Braithwaite: It is a truism that life is full of surprises, some pleasant and some otherwise, and the appearance of

    1613
    this new Clause on the Order Paper today has given satisfaction to all of us. I am not quite sure what is the procedural position if the Clause is read a Second time in the form in which it now appears. The Financial Secretary told us that there has been something in the nature of a printer's error. At present it commences with a bracket before the word "which," and I wonder whether, to put us in order, there ought not to be some manuscript Amendment making quite clear the real wording of the Clause. However, I imagine it is a matter which can be easily adjusted.
    We all congratulate my hon. Friend the Member for Ealing, South (Mr. Angus Maude) and those associated with him who have described themselves as parents. However, there are also some grandparents present because, a new Clause was moved on Report stage, two years ago, by the hon. Member for Sowerby (Mr. Houghton), seconded by my hon. Friend the Member for Chippenham (Mr. Eccles), in what some of us thought was at that time an all-party operation.
    Sir Stafford Cripps hardened his heart two years ago and I think this demonstrates the value of discussions which are sometimes regarded as irksome if they go on for hours at a time. It is an encouragement to Private Members to find that their efforts of even two years ago bear fruit in due course, due to the infusion of new blood from hon. Members behind them and the greater energy which a General Election brings with it.
    Back benchers of all parties can derive great encouragement from this incident, though not from the grammar or the drafting of the clause. I hope the Government are not weary of well-doing in this matter, although I hope they are weary of ill-drafting. I should have been much happier had the Clause in the name of my hon. Friend been inserted, because its meaning is clear, it is easily operated and it goes a little further. We would like to see the Clause incorporated in the Bill if it could be done by some slight manuscript Amendment to make the wording clearer.
    Mr. Deputy-Speaker: I think the Clause is all right. The hon. Gentleman moved it in the correct form.
    Mrs. Castle: I want to thank the Chancellor for the concession he has made on this important point. I am glad it has been recognised on both sides of the House that special credit is due to my hon. Friend the Member for Sowerby (Mr. Houghton) who took the initiative in this matter two years ago and who, with the help of many of us on this side of the House, has conducted a sustained battle on this matter ever since. I am glad that the pressure which we on this side of the House have had to bring has brought this to fruition this afternoon. Any of us who represent constituencies in which there are large numbers of married women workers have been gravely concerned about this rankling injustice to the married women under the present procedure.
    Since the new National Insurance scheme was brought into operation, I have felt that there has been a kind of conspiracy between the Ministry of National Insurance and the Treasury to discourage married women from insuring in their own right. Their contributions have always seemed to produce quite inadequate benefit. When they insured in their own right, largely to get a retirement pension on reaching the age of 60 —in many cases before their own husbands retired—they have, after all their years of hard work and contributions, found themselves up against this incomprehensible Income Tax arrangement.
    That arrangement has led to such cases as one brought to my attention in Blackburn where a married woman, who had been doing part-time work and insuring in her own right, but had not been earning much more than her pension, found when she came to draw it that the benefit was snatched away by an increase in the Income Tax payments of her husband. Two very vexed and irate people came to see me. I had to admit that the situation was such that one would be obliged, if it continued, to say to the married woman, "It just is not worth your while to insure in your own right."
    One of the reasons which may have encouraged the Government to make this change is an appreciation of the fact that if in this re-armament situation we are to ask married women to come back into industry in increasing numbers, we must help to make the insurance provisions and

    1615
    the Income Tax provisions for married women more encouraging. Therefore I welcome this change, and I congratulate my hon. Friend the Member for Sowerby on the fruition of his long battle.
    Mr. Douglas Houghton: I rise only two make two or three short points. This new Clause will be warmly welcomed by all right hon. and hon. Gentlemen in the House who represent textile constituencies, because there we have large numbers of married women who have qualified for the retirement pension in their own right. There is no doubt that a continuance of the old arrangement would have given rise to a good deal of annoyance.
    5.0 p.m.
    Under the present arrangement it is possible for a married woman, earning, say, the equivalent of the retirement pension in a part-time job, to find that she and her husband have to pay £14 more in Income Tax on exactly the same total joint income. That is the extent of the anomaly in the existing arangements.
    I have details of a case where the joint income can fall by £60 on transfer from employment to retirement pension and notwithstanding a fall in the joint income by £60 there is a rise in the Income Tax charged on that joint income of £17 1s. Clearly, that is an indefensible state of affairs, and I shall not detain the House now by analysing the situation which existed when it was introduced in 1946, but perhaps I may be permitted to say that I drew the attention of the then Chancellor of the Exchequer to this anomaly at that time.
    A further thing about the Clause which, I am sure, will not be lost on hon. and right hon. Gentlemen opposite is that in effect it will be retrospective to 6th April last. I assume that this is one of the occasions upon which the Opposition will not object to retrospective legislation. The advantage of the Clause will, I presume, be applied to Income Tax liability for the current financial year which began on 6th April last.
    I welcome the Clause, and I am sure that my right hon. Friend the Chancellor of the Exchequer is to be commended for this improvement. Notwithstanding the advice that he gave me a little while ago to take my troubles to the Millard Tucker Committee, which I
    1616
    have done, I am glad that at least they will be relieved of any necessity to pay attention to this particular anomaly, although there will be others for them to consider during the course of their deliberations.
    Miss Irene Ward: The satisfaction which has been expressed on both sides of the House at the Chancellor's decision to give this improvement indicates that on occasions it is essential for grievances to be raised in the House of Commons from year to year. I should, of course, be out of order to develop that argument but I hope I may be allowed to say that it would be worth while for the Chair sometimes to have regard to that aspect of the situation.
    I should like to ask the Financial Secretary if he will take special pains to draw the attention of the Inland Revenue officials in every area to the concession which has been made, because, as has been rightly pointed out by, I think, my hon. Friend the Member for Ealing, South (Mr. Angus Maude), it is relatively a small concession; and it may well be that in areas where married women are not so numerous in employment as in the constituency represented by the hon. Lady the Member for Blackburn, East (Mrs. Castle), it is important that attention should be drawn to this concession. I should like special directions to go to the officials in the regions so that they may look out for cases in which previous applications have been refused and where those affected will now be able to have the advantage of the new concession. I should be grateful if the hon. Gentleman would pay special attention to this request.
    Mr. Pitman: I think that the success of my hon. Friends the Members for Ealing, South (Mr. Angus Maude), and Mitcham (Mr. Carr) goes much further than their success in the Clause, because it means a return of government by principle of justice in the Treasury, which has been singularly lacking in regard to anomalies of this kind. It goes still further, because it means that in the hon. Member for Sowerby (Mr. Houghton) and the hon. Lady the Member for Blackburn, East (Mrs. Castle) we now have people on the other side of the House who will stand up, even if they will not put their names on the Order Paper, for matters of principle and justice.

    1617
    It is all very well for the hon. Member for Sowerby to say that he remembers bringing this specific anomaly to the attention of the Chancellor of the Exchequer of that day and that nothing happened about it. We on this side have spent all our time in bringing anomalies to the attention of the Chancellor of the Exchequer, and since there was no government by principle within the Treasury at all under its then masters, we got absolutely nowhere.
    I remember raising in the House the case of a man who went back from retirement pension to work—there were women in the same position, I should like the hon. Member for Blackburn, East. to know—whose taxation was actually more as a result of working than the amount of salary for his job. My hon. Friend the Member for Chippenham (Mr. Eccles) and I introduced an Amendment to deal with the marginal cases of that kind, so that nobody should pay more in taxation than the amount he was earning. The hon. Member for Sowerby will know that although that was a major issue of principle, we got absolutely no response whatever. I should like the House to recognise now that we are at last getting a return to government by principle, and we particularly welcome the support from the other side in such matters.
    Captain Crookshank: Perhaps we may soon be able to leave the Clause, which has caused so much satisfaction to everybody and a lot of congratulations. The person who really ought to be congratulated is the Financial Secretary to the Treasury, because it is exceedingly rare that a Financial Secretary is ever allowed to make a concession at all. This is really a red letter day in the life of Financial Secretaries and ex-Financial Secretaries of the Treasury, and I congratulate the hon. Gentleman on having had such a happy outcome of his deliberations.
    We are delighted that this Amendment should have been accepted. The fact that the Clause has a little black star against it means that it was put down on the Order Paper only last night, whereas the Clause of my hon. Friend the Member for Ealing, South (Mr. Angus Maude) and my other hon. Friends has been on the Paper for some time. It is entirely due to them—it has nothing at all to do with the hon. Member for Sowerby (Mr. Houghton) that the Clause has come up
    1618
    for discussion this year. If anybody on the Government side had wanted to have it discussed, they could have put down a new Clause. They did not do so. It was my hon. Friend who did that, and it is to him that our thanks—and, much more important, the thanks of those who are to be relieved as a result of the Clause —should go.
    The Financial Secretary said that the hon. Member for Sowerby moved a somewhat similar Clause two years ago, and the hon. Lady the Member for Blackburn, East (Mrs. Castle) talked about all the pressure exercised on her side of the House in this matter. Needless to say, we have no evidence of that pressure and there is no sign of it. When the Clause of two years ago was put down, where was the hon. Lady or any other Labour Member? It was my hon. Friend the Member for Chippenham (Mr. Eccles) who seconded the Clause on that occasion, and it was the hon. Gentleman who refused it on what he called the "classical justification" based on something pronounced in 1897. That is what happened two years ago.
    Mr. Jay: The right hon. and gallant Member may also like to be reminded that the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) said that he was entirely convinced by my arguments.
    Captain Crookshank: Then he must be feeling very uncomfortable today, because the Financial Secretary has produced exactly the opposite arguments.
    I only want to make it quite clear that this improvement has nothing whatever to do with the hon. Lady the Member for Blackburn, East, or anybody connected with the Labour Party. It is all very well getting up in the House and telling us that pressure is being exercised somewhere else. We should like in these tax remissions to see a great deal more pressure being exercised and having results but we really cannot accept it from the hon. Lady or from anybody else on the Benches opposite, for on this occasion the Clause was put down by my hon. Friends and by nobody else. It has been accepted by the Government, and this is a very great success for a Member who has so recently joined this assembly.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(AMENDMENT OF RATE OF STAMP DUTIES ON CONVEYANCE OF PROPERTY BOUGHT FOR OCCUPATION OF PURCHASER.)
    (1) The increases in stamp duties charged by Part VI of the Finance Act, 1947, by reference to the heading "Conveyance or Transfer on Sale" in the First Schedule to the Stamp Act, 1891, shall not apply in any case where the conveyance or transfer is made or agreed to be made to an individual who purchases the property for the purpose of occupying the same himself and the consideration therefor does not exceed four thousand five hundred pounds.
    (2) This section shall come into operation on the first day of August, nineteen hundred and fifty-one.—[Mr. Black.]
    Brought up, and read the First time.
    Mr. Black: I beg to move, "That the Clause be read a Second time."
    Hon. Members may remember that last year certain of my hon. Friends and I moved an Amendment which was very much wider in scope than the Amendment which I am moving on this occasion. Last year we moved an Amendment, the effect of which would have been to reduce, in most cases to halve, the Stamp Duties payable on all transactions involving conveyances and transfers. It will be remembered that on that occasion the Government rejected the Amendment, on the ground that the cost of the concession would be in the neighbourhood of 612 millions. On this occasion the Amendment is taking a much more modest form, which would cost very much less in terms of revenue. I hope therefore it may be met with a more favourable response than was the case a year ago.
    Hon. Members will bear in mind that this proposal would reduce the Stamp Duty on conveyances in the limited range of cases where two conditions can be fulfilled. First is the condition that the house which is the subject of the transaction is being purchased for the occupation of the purchaser, investment transactions being entirely excluded from this proposal. The second is that the relief would apply only where the house is being purchased for a consideration not exceeding £4,500. It may be asked why the line has been drawn at that particular figure. My answer would be that it was desired to bring within the scope of the Amendment houses of the type which, before the war, sold for up to £1,500.
    1620
    So it is quite clear that this Amendment relates only to small houses being purchased for occupation by persons of moderate means; and, if one bears in mind that the selling price today of houses with vacant possession is, in most cases, treble the pre-war figure, we arrive at the figure of £4,500, by trebling the pre-war figure of £1,500.
    It will be within the recollection of hon. Members that the Stamp Duty on transactions of this character was doubled by Section 52 of the Finance Act, 1947. The then Chancellor of the Exchequer, now the Minister of Local Government and Planning, gave as his reason for doubling the Stamp Duties on that occasion the rather unusual explanation that they had not been increased for some 27 years, and therefore it was high time that they should be increased. That may possibly impress some hon. Members as being a rather unusual and altogether inadequate reason for having doubled the Stamp Duties on that occasion. But that was what, in fact, was done.
    I would point out that the incidence on the purchasers of small houses is very much greater than the mere doubling of the Stamp Duty would, on the face of it, appear to suggest. I have already pointed out that houses with vacant possession are selling for about treble the pre-war price, so that doubling the Stamp Duty means that the purchaser of a house today has to pay six times the amount of Stamp Duty that would have been payable on the purchase of the same house in 1939. That is a very serious disability indeed in the case of those families compelled today to purchase their homes because there are no houses and no flats available for letting for their occupation.
    5.15 p.m.
    May I draw the attention of the House to the enormous increase which has taken place in the cost of buying a house today, compared with the cost involved in prewar days? Let me assume again the case to which I have already referred of a house which, in 1939, was selling for £1,500, and where the purchaser finances his purchase by means of a building society mortgage of, say, 80 per cent. of the purchase price, or £1,200.
    In those days the Stamp Duty and the legal costs involved in the transaction amounted to approximately only £40. Taking the same house

    1621
    today, selling for £4,500, and assuming again an 80 per cent. mortgage which gives a figure of £3,600, the Stamp Duty and the legal charges involved amount to approximately £161. So that to purchase the same house today as before the war involves, in costs and expenses, a total figure which is more than four times greater than the pre-war cost of Stamp Duty and legal fees.
    If the Government accept this new Clause the expenses of purchase in the case which I have taken as an illustration would be reduced by about £50, a very worth-while concession and one which would be highly appreciated by families who are compelled today to buy their houses as the only means of solving their grim and difficult housing problem. I would make the point, which I think should be made, that Stamp Duty is paid by the purchaser, and not by the vendor. The purchaser, who is already having to pay an inflated price for the property, is hit and penalised again by the high rate of Stamp Duty.
    If anybody has to pay a high fee in consideration of the transaction taking place surely it should be the vendor. He is the person who, in terms of justice, ought to pay much more than the unfortunate purchaser. But, by long established custom, it is the purchaser who pays, and he is penalised by the unfavourable market in which he is having to purchase his home.
    Apart from the more narrow side to this question, with which I hope I have dealt adequately, I would suggest to the House that there are three social consequences which follow from the present high Stamp Duty, and which are adverse to what I believe to be the policy of the Government. First, there is the point that this excessive Stamp Duty discourages home ownership.
    I am not being controversial, nor suggesting anything which will not be agreed by hon. Members on both sides of the House, when I say that we all believe home purchase to be something beneficial to the community, and therefore to be encouraged by the State. I will draw the attention of hon. Members opposite to the fact that the manifesto on which they fought the last General Election contains the interesting statement that "Labour moves towards a property owning democracy, while others talk about it."
    1622
    I hope we shall be moving further today towards that property owning democracy by the support which will be given by hon. Members opposite, as well as by hon. Members on this side of the House, to the Amendment which we are now considering.
    Second, the difficulties and expenses involved in house purchase strike at the mobility of labour. This, I suggest, is a point well worthy of consideration by the Government and by the Treasury. At the present time it is very necessary that it should be possible, so far as can be arranged, for labour to be mobile, so that it can be moved into areas in which employment directly connected with the rearmament effort is available.
    The heavy Stamp Duties, such as are at the moment imposed on the purchasers of houses, will reduce very much the willingness of a man, who may own a home in one district and who would have to purchase a home in another if he moved there, to make a change which in the national interest it might be necessary that he should make. These high Stamp Duties unquestionably strike at the mobility of labour.
    The third and last point I want to make is that these high Stamp Duties restrict the free purchase and sale of houses and, therefore, directly limit the amount of Stamp Duty which the Treasury receives. If the Stamp Duties on this type of transaction were reduced, as the new Clause seeks to reduce them, it is certain that part of the cost of the concession would be met by the increased number of transactions which would take place if a lower level of Stamp Duty were in force. For these reasons, I urge that a more favourable consideration should be given on this occasion to this very limited and modest Clause than was given to the larger new Clause of last year.
    Mr. Frederic Harris: I beg to second the Motion.
    My hon. Friend the Member for Wimbledon (Mr. Black) has pretty well covered every aspect of a subject which is worthy of the consideration of the Government. Last year it was discussed at some considerable length, and if we are to encourage the buying of property by would-be occupiers some reduction will have to be made in the Stamp Duty, which at the moment falls so heavily upon them.

    1623
    My hon. Friend has instanced the fact that on the smaller sized houses the amount is six times what it was before the war because of the incidence of high prices for houses today compared with pre-war prices. There is something wrong somewhere if the effect of such high costs is going to fall solely on the purchasers of these dwellings. I hope, after the powerful arguments of my hon. Friend and so quickly after the last concession, that the Government will meet us with a further concession in Stamp Duty on house purchase, which would be a right and proper one.
    Mr. Sydney Silverman: I rise to add a word or two by way of support to this new Clause. The hon. Member for Wimbledon (Mr. Black) has covered the ground comprehensively and convincingly, and if I take up the time of the House for a minute or two it is because I think it worth while to show that there is no party point involved in this at all, and that the point that is being made is one that many on this side of the House would like to see the Government deal with sympathetically.
    I should like to add a word or two in support of the arguments used. First of all I should like to say a word on the Chancellor's justification for the doubling of this duty in 1947. The reason that he gave then—and it was quoted this afternoon—was that as these duties had not been increased for a long time they ought to be increased. That by itself is not the fallacious argument that it sounds, because it is related to the fact that where other things go up in price there is sometimes a case for different commodities to go up in proportion to them.
    In this case it was a wholly fallacious argument, because the Stamp Duty is a proportion of the purchase price. Therefore, the mere fact that the purchase price goes up forces the Stamp Duty up too, so that it would not be the case that the amount collected in Stamp Duty had not risen in proportion—and precisely in proportion—to the rise in the cost of the article. Thus, when the weight of duty was doubled we were not bringing the Stamp Duty up in relation to the increase in the cost, but we were doubling it in relation to the increase in the cost.
    1624
    I was a little surprised that the House accepted that argument at that time.
    But since 1947 the trend in property, and particularly in small and medium class property, has continued to be on the increase. The amounts that are now collected by the Exchequer in Stamp Duty from people of very small means indeed, seeking to get some security for themselves and their families in very modest class of dwelling-house, is out of all reason and very difficult to justify.
    I do not want to say anything about the three reasons founded on social policy that the hon. Member for Wimbledon gave. I think that the last was not very sound, because the case for this Clause stands on its own merits without regard to any of the implications of a general social policy that the hon. Member commented on, and it might be very well left to stand on its own merits and footing. I beg my hon. Friend to bear in mind that this will be a very just and reasonable concession and certainly a by no means unpopular one. The cost of it cannot be so large a sum that the Government cannot afford to do a measure of justice to quite a deserving class of small property owners or would-be property owners.
    I have one final word to say. I gather that the hon. Member for Wimbledon was drawing from his own professional experience in what he said this afternoon. Perhaps I may be allowed to say that my own view is determined by my professional experience acting in similar matters in another field, and the amount that these people pay in Stamp Duty on a quite modest class of property is a material and substantial handicap to the acquisition of house property for one's own occupation.
    Mr. Bell: I rise to support the new Clause, which I am glad has been supported by the hon. Member for Nelson and Come (Mr. S. Silverman). There was a similar Amendment on the Order Paper last year, which I then supported. I thought that the increase in the Stamp Duty introduced by the Act of 1947 was not only based upon fallacious reasoning but, as the hon. Member for Nelson and Colne has quite rightly pointed out, on a misconceived object, because the Chancellor in introducing the increase did not apply it to the lowest

    1625
    price of house that is to say, a house costing not more than £500.
    Mr. Bellenger: The higher Stamp Duty was only doubled above £1,500.
    Mr. Bell: I have not got the statute before me, but if the right hon. Gentle- man says so, I will accept it. I must confess that I am looking at the speech I made last year on the subject and I see that I said £500 then. I think I did look it up on that occasion. Whatever it is, it would not affect the principle of my argument. I think that it was £500, and presumably the reason for that exemption was that it would cover the smallest class of dwelling house. The fact is that it does nothing of the kind. The only sort of house which can be bought for £500 is one bought for investment with a protected tenant installed in it. One cannot buy a house with vacant possession for £500 nowadays.
    5.30 p.m.
    We have the extraordinary position that if one is buying a modest dwelling as an investment, one pays a specially favourable rate of Stamp Duty upon it. If one is buying the house to live in it, one pays a very much higher rate of Stamp Duty. A fair comparison would be that a house which cost £3,000 with vacant possession would cost about £800 with a protected tenant installed in it. Therefore, a man buying that house as an investment would pay £8 in Stamp Duty on the deal, but if he were buying the same house to live in it, he would pay £60 in Stamp Duty, because one pays a higher rate for vacant possession.
    I submit to the Economic Secretary that that alone ought to convince him that he should accept this new Clause. The position is that if two men buy houses of a similar type, the man who buys one for investment will pay about one-quarter of the Stamp Duty paid by the man who buys one in which to live, because of the premium which vacant possession puts on a house nowadays. That ought to be reflected in our taxation legislation, so that the man who buys a house to live in it should not have to pay a very much higher rate of Stamp Duty.
    In passing, I would say that I am sorry that the new Clause does not propose that there should be no duty upon mort- gages for small houses. The payment of
    1626
    duty on mortgages for small houses is a blemish upon our present legislation. Nowadays people pay about £4,000 for houses which, before the war, would have cost perhaps £1,000. Not only do they pay duty on £4,000 instead of on £1,000, but they pay at double the rate. What is worse, whereas before the war perhaps they could have paid the £1,000, nowadays they have to raise £3,000 on mortgage and the State raises a Stamp Duty on that accordingly.
    I have always thought that mortgages on small dwelling-houses should not be taxed by the State. It is the very worst way of encouraging home ownership. I throw out that suggestion in the hope that it may be the seed which will grow and bear fruit on Treasury ground. I hope that the Minister will accept the present proposal, even though it does not go as far as I should like.
    The Economic Secretary to the Treasury (Mr. John Edwards): The case for this new Clause has been argued very cogently. Nevertheless, I must resist it, and I shall try to show to the House why it would be a mistake to adopt it. I think that it is true to say that, whenever the rate of duty on conveyances of property has been increased, there has been a change in the limits applying to the different grades. When Mr. Lloyd George in 1910 increased the then existing duty from 10s. to £l, an exception was made for cases which did not exceed £500. In 1947, when the duty was doubled, exception was made for cases where the amount or value of the consideration did not exceed £1,500.
    I would point out to the hon. Member for Wimbledon (Mr. Black) that this figure of £1,500 is not a pre-war figure. It is a 1947 figure. The present position is that the normal rates of duty—
    Mr. S. Silverman: Is my hon. Friend suggesting that in 1947 there was dwelling-house property to be bought in this country at £1,500?
    Mr. Edwards: I did not imply any such thing. I was merely talking about a matter of fact. This is what happened when the rates of duty were altered. At present, the rates of duty are at 10s. where the consideration does not exceed £500: £1 per cent. where the consideration exceeds £500 but does not exceed 1,500; at different rates ranging from £1

    1627
    to £2 where the consideration exceeds £1,500 but does not exceed £1,950; and then £2 per cent. thereafter.
    Mr. F. Harris: Would the hon. Gentleman explain how this figure of £1,500 would be arrived at? What would be the basis on which it was decided to draw the line at £1,500?
    Mr. Edwards: I think that at the time the then Chancellor of the Exchequer made it plain that he thought that, in circumstances where he was doubling the duty, it would be wrong not to allow the lower rate of duty to apply over a bigger field, in view of what had happened over the years. That is the view which the hon. Member for Wimbledon put forward himself.
    Mr. Bell: Surely it is correct to say that the 1947 Act did not reduce the rate of Stamp Duty over any range of property. It merely left unchanged the Stamp Duty on the ranges below £1,500. Therefore, the hon. Gentleman would not be right in saying that the Chancellor wanted to extend it over a wider range.
    Mr. Edwards: I have not suggested that. I said that when the duty was altered, the lower rates applied over a bigger field. The rates of duty were doubled on the bigger sums, but the amounts attracting the £1 duty were altered because of the change in the circumstances.
    The present proposal is perfectly plain in this respect in that it seeks to restore the old rate of £1 per cent. where the consideration falls between £1,500 and £4,500. My difficulty arises when we deal with the qualification—namely, when we are concerned with whether the purchaser is buying the property for his own use. I do not think that this proposition is self-evident. The hon. Member for Wimbledon advanced three social reasons why it would be a good thing to adopt his proposal. I do not propose to follow him in what he said about those three social reasons, because the mere assertion of them does not prove the point.
    I submit that, however valid those reasons may be, there are still three considerations to be taken into account. We have to consider the cost of doing this. We have to consider how practical it is administratively, and whether in fact it
    1628
    could be done by the authorities. Thirdly, we have to ask whether it would do what the hon. Gentleman wants, and help the purchasers of this type of property. The cost of putting into operation this new Clause would be about £2,500,000 in a full year.
    On the question of the administrative practicability of this proposal, it seems to me that there are very great difficulties involved. I think that it is agreed that the hon. Gentleman is really concerned to help the person of moderate means, although in fact his proposal would not enable us to deal with the person of more than moderate means who happened to be buying house property within this range.
    Also, I think the House will agree that it would be most difficult to discriminate between the genuine case of purchase for owner occupation, and the case where a person's intention changed, with the possibility of withdrawing the relief in the latter case. This would be to put upon the authorities an administrative burden which, I do not think, could be carried, and it would also place them in the position of having to take decisions which it is not in our interests to ask them to take.
    I submit that there is an important point of principle here—namely, that the Stamp Duty on an instrument, affecting as it does the instrument's legal validity, ought to be ascertainable from the facts in the instrument, and we ought not, therefore, to superimpose a complicated system of relief on to an otherwise straightforward matter. Moreover, on the third point, I would take leave to doubt whether we could be sure that a reduction of the kind here proposed would necessarily accrue to the advantage of the purchaser of house property. In the present state of the house property market, no one could be sure that it would accrue to the purchaser.
    Mr. S. Silverman: It is precisely because we have got a state of market in which the vendor is already enabled to get the highest possible price, because of the small number of properties on the market, and that he is already getting a maximum price determined by the market conditions, that there is no room for the argument that, if the Stamp Duty paid by the vendor were less, the vendor would get more.
    Mr. Edwards: That may be so in some cases, but it does not necessarily follow. When a person who is selling house property knows that the purchaser is to be relieved of a certain amount of duty, the reduction may not in some instances—I do not say necessarily will not—accrue to the purchaser. In any event, I hope I have shown that it is administratively quite impossible, and that the cost is certainly beyond us. And I submit to the House that we should be doing a great disservice if we were to try to mix up with this Stamp Duty on legal instruments the kind of relief considerations, however valid they may be, which have been advanced.
    Mr. Silverman: May I ask my hon Friend a question on the one point of administrative difficulty? Under the law at present, we sometimes subsidise the purchasers or repairers of property in which they live, and we provide a condition that, if they sell within 20 years, the subsidy is repayable. Why cannot some such provision be made in this case?
    Mr. Assheton: I am sure that both sides of the House will be very disappointed at the reply which we have just received from the Economic Secretary. I thought the case put by my hon. Friend the Member for Wimbledon (Mr. Black) was very fairly put, and I thought he had convinced hon. Members on both sides, because it was supported so ably by the hon. Member for Nelson and Colne (Mr. S. Silverman), who added weight to the arguments already put forward.
    I thought that the point made by my hon. Friend the Member for Wimbledon with regard to the cost of buying a house was very impressive. He quoted a figure of £161 as being the present total cost of legal expenses and Stamp Duty in transferring quite a small house. That really is a shocking state of affairs, and I draw the attention of the House to the fact that Government securities can be exchanged and purchased without any Stamp Duty, and yet the purchase of property, which surely is just as much a social benefit as the investment of money in Government securities, is taxed very heavily indeed.
    The duty used to be 1 per cent.; at one time before the war it was 10s. Along came the right hon. Gentleman the present Minister of Local Government and
    1630
    Planning, and doubled it in 1947. He made use of the fallacious argument that it had not been raised for 27 years, and that, therefore, it was a good thing to double it. As the hon. Member for Nelson and Colne pointed out, the value of house property had increased to double or more, and therefore the duty was already doubled, so that what the right hon. Gentleman did was to multiply it by four times, which was a great mistake.
    5.45 p.m.
    As the Economic Secretary pointed out, an exception was made for houses under the value of £1,500, but what kind of a house can be purchased today, with vacant possession, for £1,500? They are very few, and very bad. Most of the houses on the market now are only obtainable at much higher figures, and the unfortunate people who buy them are obliged to pay the 2 per cent. duty.
    Three arguments were put forward by the Economic Secretary to justify his refusal to accept the new Clause. The first was that it would cost £2½ million. In view of the size of this Budget, and of the very strong line which the Government have taken so far in regard to concessions, I do not consider that that argument is overwhelming.
    The second reason was that it was not practicable, and the hon. Gentleman asked how they could discriminate or be sure who was going to occupy the house. I know the sort of arguments which are likely to be in the brief which the hon. Gentleman has received. The Inland Revenue are very clever in providing Financial Secretaries and Economic Secretaries with adequate briefs on such subjects, but if the Chancellor of the Exchequer were to say to the people in the Inland Revenue "Work out a plan to make this possible," we should find that by next week it could quite easily be done. Therefore, I do not think that that argument will convince the House.
    The third argument was that, perhaps, it would not help the purchaser, after all. I do not think it is worth wasting any time on that. It did not convince a single hon. Member, and I am quite certain that it is totally fallacious. Therefore, I hope that the House will decide to accept the new Clause. I hope my hon. Friend will press it to a Division, and I am very glad to think that the hon. Member for Nelson and Colne will go into the Lobby with us.
    Mr. Charles Williams: I should like to say a word in support of the new Clause, because this happens to be a matter in which for a very long time I have taken a considerable interest in trying to spread in every possible way, and, if possible, with the assistance of all Governments, the ownership of houses.
    The Economic Secretary was in complete contrast to the hon. Member for Nelson and Colne (Mr. S. Silverman), and was unsympathetic in every way to this proposal. I really do not think that either his second or third arguments have any bearing upon this matter, but I should like to draw attention to the fact that the hon. Gentleman quoted only two precedents concerning the changing of the rate. One change took place when Mr. Lloyd George was Chancellor of the Exchequer, and the other took place under the Chancellor of 1947. The hon. Gentleman could not have chosen two worse Chancellors, or two less sympathetic to small people. He could not have chosen people who did less to increase the ownership of property in every way.
    For this reason. I hope that at any rate one or two hon. Gentlemen opposite, who protest so loudly that they are in favour of the ownership of houses by those who live in them, will come into the Lobby on this occasion, which gives them a chance to do something in support of what most people believe in—the reduction of unnecessarily severe burdens on those who are trying to buy their own homes.
    Mr. Daines: should like to add a word or two to this discussion. If, as I assume, the Opposition press this matter to a Division, I shall vote against the new Clause, but having said that, I want to put some arguments.
    The Economic Secretary has been provided with an extremely bad brief; the whole thing is really scandalous. To get a decent three-bedroomed house—I do not know what my hon. Friend lives in—we now have to pay from £2,500 to £3,500. What does that mean? It means that, in respect of Stamp Duties, there is an expense of somewhere about £70, to which we can add £25 for the lawyers, and another £75 for the estate agents. The Economic Secretary actually tried to deploy the argument that, if one of these figures were reduced by £30 to £40, it
    1632
    would not benefit the purchaser. What sheer and utter nonsense.
    Mr. J. Edwards: I did not say that. I said it need not necessarily accrue to the purchaser.
    Mr. Daines: With all respect, suppose I purchase a house from a vendor and we bargain and finally settle on the price. First, I know that the agent is going to take his pick from the vendor. Then I know what I have to pay the lawyer. Is the Economic Secretary actually trying to tell me that I do not know the difference between £50 and £75, and that if I have to pay only £25 it does not benefit me? I realise that there are some real economists penetrating into the Treasury, but that argument is really a little bit too much for us to swallow.
    Let us take the other argument deployed—the difficulty of identification if the concession is made on the question of the owner-occupier. Surely, that has been in operation for years. It can easily be tied up so that, if necessary, it is recoverable. We get the same provision under the Small Dwellings (Acquisition) Act where the position is safeguarded. I hope the Government will forgive me for having a minor revolt over this, but I have recently bought another house myself, and know what I am talking about. [An HON. MEMBER: "The hon. Gentleman is speaking from experience."] Why not?
    The trouble is that the hon. Member for Wimbledon (Mr. Black), who moved the Amendment, is interested in property. I am not saying that his action is not above board—it probably is—but I have been a victim of the operations of many professional gentlemen, though, of course, not necessarily those in this House. For goodness sake, if we have to spin an argument, let us get a better brief next time. If not, the Government will strain my loyalty too much, and I shall not know into which Lobby I am going.
    Captain Duncan: I really think that the speech of the hon. Member for East Ham, North (Mr. Daines), should have more attention. He said that if the Opposition were going to take this new Clause to a Division he would vote against it, though the whole of his speech was a violent criticism of the Government. I think the House and the country should pay some attention to that.
    Mr. Daines: I grant the hon. and gallant Gentleman's point, but I think it is safe to say that in a debate this week on Tshekedi Khama 85 per cent. of the Opposition went into the Lobby to vote against something in which they believed, and 85 per cent. of the Government's sup-
    porters went into the Lobby to vote for something in which they disbelieved.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 272: Noes, 295.

    Division No. 153.]

    AYES

    [5.52 p.m

    Aitken, W. T.

    Eden, Rt. Hon. A

    Lloyd, Selwyn (Wirral)

    Alport, C. J. M.

    Erroll, F. J.

    Lockwood, Lt.-Col. J. C.

    Amery, Julian (Preston, N.)

    Fletcher, Walter (Bury)

    Longden, Gilbert (Herts, S.W.)

    Amory, Heathcoat (Tiverton)

    Fort, R.

    Low, A. R. W.

    Arbuthnot, John

    Foster, John

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Ashton, H. (Chelmsford)

    Fraser, Hon. Hugh (Stone)

    Lucas, P. B, (Brentford)

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

    Fyfe, Rt. Hon. Sir David Maxwell

    Lucas-Tooth, Sir Hugh

    Astor, Hon. M. L.

    Gage, C. H.

    McAdden, S. J.

    Baldock, Lt.-Cmdr. J. M

    Galbraith, Cmdr. T. D. (Pollok)

    McCorquodale, Rt. Hon. M. S.

    Baldwin, A. E.

    Galbraith, T. G. O (Hillhead)

    Macdonald, Sir Peter (I. of Wight)

    Banks, Col. C.

    Gammans. L. D.

    Mackeson, Brig. H. R.

    Baxter, A. B.

    Garner-Evans, E. H (Denbigh)

    McKibbin, A.

    Beamish, Maj. Tufton

    Gates, Maj. E. E.

    McKie, J. H. (Galloway)

    Bell, R. M

    George, Lady Megan Lloyd

    Maclay, Hon. John

    Bennett, Sir Peter (Edgbaston)

    Glyn, Sir Ralph

    Maclean, Fitzroy

    Bennett, Dr. Reginald (Gosport)

    Gridley, Sir Arnold

    MacLeod, Iain(Enfield, W.)

    Bevins, J. R (Liverpool, Toxteth)

    Grimond, J.

    MacLeod, John (Ross and Cromarty)

    Birch, Nigel

    Grimston, Hon. John (St. Albans)

    Macmillan, Rt. Hon. Harold (Bromley)

    Bishop, F. P.

    Grimston, Robert (Westbury)

    Maitland, Comdr. J. W.

    Black, C. W.

    Hare, Hon. J. H. (Woodbridge)

    Manningham-Buller, R. E.

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

    Harris, Frederic (Croydon, N.)

    Marlowe, A. A. H

    Bossom, A. C.

    Harris, Reader (Heston)

    Marples, A. E.

    Boyd-Carpenter, J. A.

    Harvey, Air-Codre. A. V (Macclesfield)

    Marshall, Douglas (Bodmin)

    Boyle, Sir Edward

    Harvey, Ian (Harrow, E.)

    Marshall, Sidney (Sutton)

    Bracken, Rt. Hon. B

    Harvie-Watt, Sir George

    Maude, Angus (Ealing, S.)

    Braine, B. R.

    Hay, John

    Maude, John (Exeter)

    Braithwaite, Sir Albert (Harrow, W.)

    Head, Brig. A. H

    Maudling, R

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

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

    Mellor, Sir John

    Bromley-Davenport, Lt.-Col. W.

    Heald, Lionel

    Molson. A. H. E

    Brooke, Henry (Hampstead)

    Henderson, John (Cathcart)

    Moore, Lt.-Col. Sir Thomas

    Browne, Jack (Govan)

    Hicks-Beach, Maj W W

    Morris, Hopkin (Carmarthen)

    Buchan-Hepburn, P. G. T.

    Higgs, J. M. C.

    Morrison, John (Salisbury)

    Bullus, Wing Commander E. E.

    Hill, Dr. Charles (Luton)

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

    Burden, F. A.

    Hill, Mrs. E. (Wythenshawe)

    Mott-Radclyffe, C E

    Butcher, H. W.

    Hinchingbrooke, Viscount

    Nabarro, G

    Butler, Rt. Hn. R. A. (Saffron Walden)

    Hirst, Geoffrey

    Nicholls, Harmar

    Carr, Robert (Mitcham)

    Hollis, M. C.

    Nicholson, G.

    Carson Hon. E.

    Holmes, Sir Stanley (Harwich)

    Noble, Cmdr. A. H. P

    Channon, H.

    Hope, Lord John

    Nugent, G. R. H

    Churchill, Rt. Hon. W. S.

    Hopkinson, Henry

    Nutting, Anthony

    Clarke, Col. Ralph (East Grinstead)

    Hornsby-Smith, Miss P.

    Oakshott, H. D

    Clarke, Brig. Terence (Portsmouth, W.)

    Horsbrugh, Rt. Hon. Florence

    Odey, G. W

    Clyde, J. L.

    Howard. Gerald (Cambridgeshire)

    Ormsby-Gore, Hon W. D

    Conant, Maj. R. J. E.

    Howard, Greville (St. Ives)

    Orr, Capt. L. P. S

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

    Hudson. Sir Austin (Lewisham, N.)

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

    Cooper-Key, E. M.

    Hudson, Rt. Hon. Robert (Southport)

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

    Corbett, Lt.-Col. Uvedale (Ludlow)

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

    Osborne, C.

    Craddock, Beresford (Spelthorne)

    Hulbert, Wing Cmdr. N. J.

    Peake, Rt Hon. O.

    Cranborne, Viscount

    Hurd, A. R.

    Perkins, W. R. D.

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

    Hutchinson, Geoffrey (llford, N.)

    Peto, Brig. C. H. M

    Crosthwaite-Eyre, Col. O. E.

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

    Pickthorn, K.

    Crouch, R. F.

    Hutchison, Col. James (Glasgow)

    Pitman, I. J.

    Crowder, Capt. John (Finchley)

    Hylton-Foster, H. B.

    Powell, J. Enoch

    Crowder, Petre (Ruislip— Northwood)

    Jeffreys, General Sir George

    Price, Henry (Lewisham, W)

    Cundiff, F. W.

    Jennings, R.

    Prior-Palmer, Brig O

    Cuthbert, W. N.

    Johnson, Howard (Kemptown)

    Profumo, J. D.

    Darling, Sir William (Edinburgh, S)

    Jones, A. (Hall Green)

    Raikes, H. V.

    Davies, Nigel (Epping)

    Joynson-Hicks, Hon. L. W.

    Rayner, Brig. R

    de Chair, Somerset

    Kaberry, D.

    Redmayne, M.

    De la Bère, R.

    Kerr, H. W. (Cambridge)

    Remnant, Hon. P.

    Deedes, W. F.

    Lambert, Hon. G

    Renton, D. L. M.

    Dodds-Parker, A. D.

    Lancaster, Col. C. G

    Roberts, Emrys (Merioneth)

    Donner, P. W.

    Langford-Holt, J.

    Roberts, Maj. Peter (Heeley)

    Douglas-Hamilton, Lord Malcolm

    Law, Rt. Hon. R. K

    Robertson, Sir David (Caithness.)

    Drayson, G. B.

    Leather, E. H. C.

    Robinson, Roland (Blackpool, S.)

    Drewe, C.

    Legge-Bourke, Maj. E. A H

    Robson-Brown, W

    Dugdale, Maj. Sir Thomas (Richmond)

    Lennox-Boyd, A. T.

    Rodgers, John (Sevenoaks)

    Duncan, Capt- J. A. L.

    Lindsay, Martin

    Roper, Sir Harold

    Dunglaes, Lord

    Linstead, H. N.

    Russell, R. S.

    Outhie, W. S.

    Lloyd, Rt. Hn. Geoffrey (King's Norton)

    Ryder, Capt. R. E. D.

    Eooles, D. M.

    Lloyd, Maj. Guy (Renfrew, E.)

    Salter, Rt. Hon. Sir Arthor

    Sandys, Rt. Hon. D.

    Summers, G. S.

    Wakefield, Edward (Derbyshire, W.)

    Savory, Prof. D. L

    Sutcliffe, H

    Wakefield, Sir Wavell (Marylebone)

    Scott, Donald

    Taylor, Charles (Eastbourne)

    Walker-Smith, D. C.

    Shepherd, William

    Taylor, William (Bradford, N)

    Ward, Hon. George (Worcester)

    Smiles, Lt.-Col. Sir Walter

    Teeling, W.

    Ward, Miss I. (Tynemouth)

    Smithers, Peter (Winchester)

    Teevan, T. L.

    Waterhouse, Capt. Rt. Hon. C

    Smithers, Sir Waldron (Orpington)

    Thomas, J. P. L. (Hereford)

    Watkinson, H.

    Smyth, Brig. J. G. (Norwood)

    Thompson, Kenneth Pugh (Walton)

    Webbe, Sir H. (London & Westminster)

    Snadden, W. McN.

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

    Wheatley, Maj. M. J. (Poole)

    Soames, Capt. C.

    Thorneycroft, Peter (Monmouth)

    White, Baker (Canterbury)

    Spearman, A. C. M.

    Thornton-Kemsley, Col. C. N.

    Williams, Charles (Torquay)

    Spence, H. R. (Aberdeenshire, W.)

    Thorp, Brig. R. A. F

    Williams, Gerald (Tonbridge)

    Spens, Sir Patrick (Kensington, S.)

    Tilney, John

    Williams, Sir Herbert (Croydon, E.)

    Stanley, Capt. Hon. Richard (N Fylde)

    Touche, G. C.

    Wills, G.

    Stevens, G. P.

    Turner, H. F. L

    Wilson, Geoffrey (Truro)

    Steward, W. A. Woolwich, W)

    Turton, R. H.

    Wood, Hon. R.

    Stewart, Henderson (Fife, E.)

    Tweedsmuir, Lady

    York, C.

    Stoddart-Scott, Col. M.

    Vane, W. M. F.

    Storey, S.

    Vaughan-Morgan, J. K.

    TELLERS FOR THE AYES:

    Strauss, Henry (Norwich, S.)

    Vosper, D. F.

    Mr. Studholme and Mr. Digby.

    Stuart, Rt. Hon James (Moray)

    Wade, D. W

    NOES

    Acland, Sir Richard

    Davies, Ernest (Enfield, E.)

    Houghton, D.

    Adams, Richard

    Davies, Harold (Leek)

    Hoy, J.

    Albu, A. H.

    Davies, Stephen (Merthyr)

    Hubbard, T.

    Allen, Arthur (Bosworth)

    de Freitas, Geoffrey

    Hudson, James (Ealing, N.)

    Allen, Scholefield (Crewe)

    Deer, G.

    Hughes, Emrys (S. Ayrshire)

    Anderson, Alexander (Motherwell)

    Delargy, H. J.

    Hughes, Hector (Aberdeen, N.)

    Anderson, Frank (Whitehaven)

    Diamond, J.

    Hughes, Moelwyn (Islington, N)

    Attlee, Rt. Hon. C. R.

    Dodds, N. N.

    Hynd, H. (Accrington)

    Awbery, S. S.

    Donnelly, D.

    Hynd, J. B. (Attercliffe)

    Ayles, W H.

    Driberg, T. E. N.

    Irvine, A. J. (Edge Hill)

    Bacon, Miss Alice

    Dugdale, Rt. Hon John (W. Bromwich)

    Irving, W. J. (Wood Green)

    Baird, J.

    Ede, Rt. Hon. J. C.

    Isaacs, Rt. Hon. G A

    Balfour, A,

    Edelman, M.

    Janner, B.

    Barnes, Rt. Hon. A. J

    Edwards, John (Brighouse)

    Jay, D. P. T.

    Bartley, P.

    Edwards, Rt. Hon. Ness (Caerphilly)

    Jeger, George (Goole)

    Bellenger, Rt. Hon. F. J

    Edwards, W. J. (Stepney)

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

    Benn, Wedgwood

    Evans, Albert (Islington, S.W.)

    Jenkins, R. H.

    Benson, G.

    Evans, Edward (Lowestoft)

    Johnson, James (Rugby)

    Beswick, F.

    Evans, Stanley (Wednesbury)

    Johnston, Douglas (Paisley)

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

    Ewart, R.

    Jones, David (Hartlepool)

    Bing, G. H. C.

    Fernyhough, E.

    Jones, Frederick Elwyn (West Ham, S.)

    Blenkinsop, A

    Field, Capt. W. J.

    Jones, Jack (Rotherham)

    Blyton, W. R

    Finch, H. J.

    Jones, William Elwyn (Conway)

    Boardman, H.

    Fletcher, Eric (Islington, E.)

    Keenan, W.

    Booth, A.

    Follick, M.

    Kenyon, C.

    Bottomley, A. G.

    Foot, M. M.

    Key, Rt. Hon. C. W

    Bowden, H. W.

    Fraser, Thomas (Hamilton)

    King, Dr. H. M.

    Bowles, F. G. (Nuneaton)

    Freeman, John (Watford)

    Kinghorn, Sqn. Ldr. E

    Braddock, Mrs. Elizabeth

    Freeman, Peter (Newport)

    Kinley, J.

    Brook, Dryden (Halifax)

    Gaitskell, Rt. Hon. H. T. N.

    Lang, Gordon

    Brooks, T. J. (Normanton)

    Ganley, Mrs. C. S.

    Lee, Miss Jennie (Cannock)

    Broughton, Dr. A. D. D.

    Gibson, C. W.

    Lever, Harold (Cheetham)

    Brown, Rt. Hon. George (Belper)

    Gilzean, A.

    Lever, Leslie (Ardwick)

    Brown, Thomas (Ince)

    Glanville, James (Consett)

    Lewis, Arthur (West Ham, N.)

    Burke, W. A.

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

    Lewis, John (Bolton, W.)

    Burton, Miss E.

    Granville, Edgar (Eye)

    Lindgren, G. S.

    Butler, Herbert (Hackney, S)

    Greenwood, Anthony (Rossendale)

    Lipton, Lt.-Col M

    Callaghan, L. J.

    Greenwood, Rt. Hn. Arthur (Wakefield)

    Logan, D. G

    Carmichael, J.

    Grenfell, Rt. Hon. D. R.

    Longden, Fred (Small Heath)

    Castle, Mrs. B. A.

    Grey, C. F.

    McAllister, G.

    Champion, A. J.

    Griffiths, David (Rother Valley)

    MacColl, J. E.

    Chetwynd, G. R.

    Griffiths, Rt. Hon. James (Lianelly)

    McGhee, H. G

    Clunis, J.

    Griffiths, William (Exchange)

    McGovern, J.

    Cocks, F. S.

    Gunter, R. J.

    Mclnnes, J.

    Coldrick, W

    Haire, John E. (Wycombe)

    Mack, J. D.

    Collick, P.

    Hale, Joseph (Rochdale)

    McKay, John (Wallsend)

    Collindridge, F.

    Hale, Leslie (Oldham, W.)

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

    Cook, T. F.

    Hall, Rt. Hon. Glenvil (Coins Valley)

    McLeavy, F.

    Cooper, Geoffrey (Middlesbrough, W.)

    Hall, John (Gateshead, W.)

    MacMilian, Malcolm (Western Isles)

    Cooper, John (Deptford)

    Hamilton, W. W.

    McNeil, Rt. Hon. H

    Cove, W. G.

    Hardman, D. R.

    MacPherson, Malcolm (Stirling)

    Craddock, George (Bradford, S)

    Hardy, E. A.

    Mainwaring, W. H.

    Crawley, A.

    Hargreaves, A.

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

    Crosland, C. A. R

    Hastings, S.

    Mann, Mrs. Jean

    Crossman, R. H. S

    Hayman, F. H.

    Manuel, A. C.

    Cullen, Mrs. A.

    Henderson, Rt. Hon. Arthur (Tipton)

    Marquand, Rt. Hon. H. A

    Daines, P.

    Hewitson, Capt. M.

    Mathers, Rt. Hon. G

    Daiton, Rt. Hon. H.

    Hobson, C. R.

    Mayhew, C. P

    Darling, George (Hillsborough)

    Holman, P.

    Mellish, R. J.

    Davies, A. Edward (Stoke, N.)

    Holmes, Horace (Hemsworth)

    Messer, F.

    1636

    1637

    Middleton, Mrs. L

    Rees, Mrs. D.

    Thurtle, Ernest

    Mikardo, Ian.

    Reeves, J.

    Timmons, J.

    Mitchison, G. R

    Reid, Thomas (Swindon)

    Tomney, F.

    Moeran, E. W

    Reid, William (Camlachie)

    Turner-Samuels, M

    Mortslow, W.

    Rhodes, H.

    Usborne, H.

    Moody, A. S.

    Richards, R

    Vernon, W. F

    Morgan, Dr. H. B.

    Robens, Rt. Hon. A.

    Viant, S. P.

    Morley, R.

    Roberts, Goronwy (Caernarvonshire)

    Wallace, H. W

    Morris, Percy (Swansea, W)

    Robertson, J. J. (Berwick)

    Watkins, T. E.

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

    Robinson, Kenneth (St. Pancras, N)

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

    Mort, D. L.

    Rogers, George (Kensington, N.)

    Weitzman, D.

    Moyle, A.

    Ross, William

    Wells, Percy (Faversham)

    Mulley, F. W

    Royle, C.

    Wells, William (Walsall)

    Murray, J. D

    Shackleton, E. A. A.

    West, D. G.

    Natly, W.

    Shinwell, Rt. Hon. E.

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

    Heal, Harold (Bolsover)

    Silverman, Julius (Erdington)

    White, Mrs. Eirene (E. Flint)

    Noel-Baker, Rt. Hon P J

    Silverman, Sydney (Nelson)

    White, Henry (Derbyshire, N.E.)

    O'Brien, T.

    Simmons, C. J.

    Whiteley, Rt. Hon. W.

    Oldfield, W. H.

    Slater, J,

    Wigg, G.

    Oliver, G. H

    Smith, Ellis (Stoke, S.)

    Wilcock, Group Capt, C. A. B

    Orbach, M.

    Smith, Norman (Nottingham. S)

    Wilkes, L.

    Padley, W. E

    Snow, J. W.

    Willey, Frederick (Sunderland)

    Paget, R. T.

    Sorensen, R. W.

    Willey, Octavius (Cleveland)

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

    Soskice, Rt. Hon. Sir Frank

    Williams, David (Neath)

    Paling, Will T. (Dewsbury)

    Sparks, J. A.

    Williams, Rev. Llywelyn (Abertillery)

    Pannell, T. C.

    Steele, T.

    Williams, Ronald (Wigan)

    Pargiter, G. A

    Stewart, Michael (Fulham, E.)

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

    Parker J

    Strachey, Rt. Hon. J.

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

    Paton, J.

    Strauss, Rt. Hon. George (Vauxha)

    Wilson, Rt. Hon. Harold (Huyton)

    Pearson, A

    Stross, Dr. Barnett

    Winterbottom, Ian (Nottingham, C.)

    Peart, T. F.

    Summerskiil, Rt. Hon. Edith

    Winterbottom, 'Richard (Brightside)

    Popplewell, E

    Sylvester, G. O.

    Wise, F. J.

    Porter, G.

    Taylor, Bernard (Mansfield)

    Woodburn, Rt. Hon. A.

    Price, Joseph T. (Westhoughton)

    Taylor, Robert (Morpeth)

    Woods, Rev. G. S

    Price, Philips (Gloucestershire, W)

    Thomas, David (Aberdare)

    Wyatt, W. L.

    Proctor, W. T.

    Thomas, George (Cardiff)

    Yates, V. F

    Pryde, D. J.

    Thomas, lorwerth (Rhondda, W)

    Younger, Rt. Hon. K

    Pursey, Cmdr. H

    Thomas, Ivor Owen (Wrekin)

    Rankin, J.

    Thorneycroft, Harry (Clayton)

    TELLERS FOR THE NOES:

    Mr. Hannan and Mr. Wilkins.

    New Clause.—(ALLOWANCE FOR REMOVAL EXPENSES.)
    If an individual proves that, in the case of a year of assessment, he has been compelled to change his residence in order to pursue his employment, he shall be entitled to charge as an expense not liable to income-tax such sum, not exceeding fifty pounds, as he may be able to show that he spent on that removal.—[Mr. Hollis]
    Brought up, and read the First time.
    6.0 p.m.
    Mr. Hollis: I beg to move, "That the Clause be read a Second time."
    The arguments in favour of this Clause can be put in a very few sentences and the House need not be detained long on consideration of a point on which I hope the Government will be able to give us satisfaction. I think it is generally understood that there is a small anomaly here at present. As we all know, a person is allowed an Income Tax allowance in respect of expenses necessarily arising out of his business; but he is not entitled to an allowance in respect of expenditure on moving from one business to another business if he happens to change his occupation or to change the firm with
    1638
    which he is working. If he is still working with the same firm and in the course of that work moves from one place to another, it is not impossible for him to have an allowance in respect of his business; but it seems he cannot have an allowance in respect of moving from one business to another.
    That is quite obviously a small anomaly which in the interest of general justice should be cleared up at any time, and at this particular time there is a special national interest involved in clearing it up. It has been impossible for me to discover what would be the cost of making this small concession because nobody can know, or at any rate it is not possible for anybody to tell me, what removal expenses are at present allowed or disallowed.
    As the House knows, one cannot receive an Income Tax allowance for a daily journey between the place where one lives and the place where one works, for reasons that we all appreciate. But moving from one place to another is quite a different matter. What the immediate cost of this small concession would be it is impossible to know, but it could not

    1639
    be very great. If one looks at the general economic welfare of the country, so far from the concession costing the country anything it would be to the economic benefit of the country.
    One of the most difficult problems now facing us with re-armament and the need for increased productivity is that we must have a certain re-distribution of labour so as to ensure that not only has everybody a job but that everybody has a job which it is most in the public interest that he or she should be performing. To get that re-distribution it is obviously necessary that it should be made as easy as possible for people to move from one job to another and therefore, if necessary, from one town to another.
    My hon. Friend the Member for Wimbledon (Mr. Black), in discussing the last proposed new Clause, very properly urged as one argument in its favour that the relaxation of Stamp Duties would make the transfer of labour easier than it is at present. So would this small relaxation in Income Tax regulations to allow people to claim expenses when they are definitely moving to follow some other occupation. We are not asking that they should have an Income Tax allowance when they are moving house unnecessarily or for their own pleasure.
    Mr. Mellish: How is one to prove the difference between moving for pleasure and moving for business?
    Mr. Hollis: That is not a great matter. We need not delay the House over that because if a man claimed an allowance he would have to fill in a form and say why he was claiming.
    Mr. Mellish: More forms.
    Mr. Hollis: I do not think we need spend any time on that point. There should be no difficulty about it. I hold no special brief for the particular wording of this Clause. If the Government are willing to say they will look into the principle and they ask us to change the wording, naturally I shall be willing to meet them on that point.
    Sir Woven Wakefield: I beg to second the Motion.
    There seems to me to be an anomaly here which ought to be put right and an injustice which it would be a good thing if the Government removed. It is a well
    1640
    known fact that when a person is changing his place of residence in order to continue his employment or to obtain fresh employment he may have part or even the whole of his expenses paid by the firm. If only one-half of those removal expenses are paid by his firm, it seems only reasonable that the other half should be allowed as a charge against his income and he should be able to reimburse himself for this very necessary expense incurred in carrying on his trade or employment. It seems to me that there is no new principle here involved, but that it is just an extension of a reasonable expense charge.
    Two years ago I addressed a number of Questions to the various Service Ministers on the great cost and expense incurred by personnel when they moved from one station to another. I pointed out how the allowances granted to them by the various Service Departments were inadequate to meet their legitimate removal expenses, and I quoted examples of how civil servants were granted extra expenses to meet various instances which I quoted, and which members of the Services were not allowed. This is a special example which would be properly covered in this proposed new Clause.
    I have two daughters, one married to a naval officer and the other to an Army officer, and they are frequently being moved about. I know from personal experience that they have to dip into their pockets to pay the necessary removal expenses, and so have all their brother officers. I suggest that they and other people in trade and industry who legitimately incur this necessary travelling expense should be allowed to claim against their income, up to this sum of £50. They should be allowed their expenses in moving from one residence to another in order to carry on their business or to discharge their duty. If these people have an expense over and above the amount allowed to them by the Government or by their firm which they can show was properly and legitimately incurred, I hope the Government will give sympathetic consideration to this reasonable request.
    I cannot see that there would be any administrative difficulty. It is easy for a person to give complete evidence of his employment or of the requirement to go from one place to another, and by receipts and so on to show the exact cost to him-

    1641
    self and his family. I hope the Government will favourably consider what I regard as a very reasonable suggestion contained in this proposed new Clause.
    Mr. John Edwards: I think we would all agree that enforced removal involving financial hardship is one of those unpleasant things that happen. I myself have had experience of moving and having my expenses paid, and experience also of moving and not having my expenses paid. I am sure we all feel that that kind of incident is one of the things which we would like to avoid if we could.
    At the risk of being thought repetitive, I must, however, resist this new Clause, and resist it again on grounds of principle. The right hon. Member for Leeds, North (Mr. Peake) will be familiar with the argument that it is very important in this tax field to have deductions claimed on expenses which are wholly, exclusively and necessarily involved in the performance of the duties or the employment, and that successive Financial Secretaries and Chancellors have said that we should be faced with great difficulty if we were to alter the rule and cover, not only the expenditure involved in the performance of the duty, but the expenditure incurred by putting oneself in a position to perform the duty.
    6.15 p.m.
    This is a fundamental distinction which has been drawn, I think, by very many people who have spoken on behalf of the Treasury from this Box. It is not just trying to avoid the problem by stating the principle. If this new Clause were adopted, we should be adopting a new principle. One will have noticed that the hon. Member for St. Marylebone (Sir W. Wakefield) inadvertently referred to travelling expenses, and this Clause relates to removal expenses. I can understand him doing so because I, at any rate, would not wish to defend the position in which a person who is lucky enough to get a house to move to can get an allowance while a person who cannot do so and has to travel daily cannot get travelling expenses. Frankly, if the one were granted. I should feel obliged to grant the other.
    In any event, I do not quite know who would decide whether a person was compelled to change his residence. Are we to include those people who move when their firms move, and to exclude those
    1642
    persons who are declared redundant and have to live somewhere else in order to find a job? Are we to include the people who move when their firms move because it is advantageous for them to do so, and exclude people who feel that they must better themselves by going somewhere else? There is a whole host of real difficulties, quite apart from the point of principle.
    The real point is that we would not know how to resist very many other claims were we to adopt the new principle. There may be a case for adopting a new principle. It may be right at the end of the day for us to have some form of words which cover not only expenses arising out of and in the course of a person's employment but also expenses incurred in order to put one in a position to perform the employment but it would not be wise to adopt such a new principle on a new Clause of this kind.
    For those reasons, while I appreciate, and indeed have myself incurred, the financial hardship involved in this kind of case, I do not think it would be right for us to adopt the new Clause and so depart from the principle which has been followed for a long time and which to my knowledge—and I think the right hon. Member for Leeds, North, and the right hon. and gallant Member for Gains-borough (Captain Crookshank) will confirm this—has never been departed from except in the very exceptional case of travelling expenses occasioned by the war. Except for this we have never at any time departed from this rule which is a cardinal principle in our Income Tax law. If we are to depart from it, let us do so recognising that a new principle is necessary; but not for a particular case which would only lead to a lot of other cases arising of the same order.
    Lieut.-Commander Gurney Braithwaite: I am afraid it is becoming apparent that the Economic Secretary is today appearing in the role of the refuser of all requests. Of course, it is always diverting to see a Socialist resting himself confidently upon precedents of the bad old days, but I suggest to the Economic Secretary that, quite apart from any ideological arguments, there has been a considerable change in the circumstances in which people move their homes since the days when former Chan-

    1643
    cellors took the stand of which the hon. Gentleman has spoken.
    May I get rid of one argument which appeared in the form of an interjection when the hon. Member for Bermondsey (Mr. Mellish) rather facetiously asked how one was to know whether a move was made for occupational purposes or employment purposes, and then made another interjection to suggest that this would mean another form? With great respect. I suggest that that necessity does not arise. The Income Tax form in its present complexity allows for the claiming of various allowances which can be set off against Income Tax, as I am sure the hon. Member for Bermondsey is fully aware. This case is not very different from that of repairs or renewals to a house, nor is the inspector in any difficulty in the case where the necessary evidence has to be produced before the allowance is granted. In the case of the painting of a house, a receipted bill has to be sent in, and so on. Often it takes time to get the allowance, but I suggest that the machinery is not incapable of dealing with these matters.
    The cost of moving a house has risen very sharply, like the cost of everything else. The Economic Secretary quite fairly put before the House the parallel of travelling expenses—the expenses involved in travelling to work. It is my misfortune that a very excellent new Clause on that subject has not found favour with you, Mr. Deputy-Speaker, and has not been selected. It would have allowed a season ticket as a travelling expense, and I think there is much to be said for that point of view, although, of course, it cannot be argued now. Perhaps the Chancellor might think along those lines during the forthcoming 12 months. I suggest that this is not a party argument at all. In the times in which we live a man no longer lives where he chooses; he lives where he can, frequently at a considerable and inconvenient distance from his work. Moving a house is undoubtedly a very great financial burden.
    The new Clause, of course, deals with a matter which goes further than the individual. It concerns the family—the movement of the wife and children and the furniture; and if it is a move of a considerable distance the person concerned would be lucky to keep the cost
    1644
    within the limit of £50 put down by my hon. Friend. It would be difficult to keep it within that limit if it were a move by road for any considerable distance. There are cases within my knowledge—and I am sure I am not alone in this, for I imagine that many hon. Members have heard people make his sort of remark—in which people have said, "We cannot afford to take a holiday this year because we have had to move house." That has been said to me over and over again, and when things reach that stage the arguments of the past require a good deal of reconsideration.
    I realise that the Economic Secretary has been sent here to refuse to accept the new Clause and is not in a position to give way, however persuasive the arguments. His chief is not here; he is alone, or nearly alone, on the burning deck—accompanied only by two representatives of the usual channels who cannot take part in the debate. I realise the difficulties, but I submit that the arguments which he has deployed are not incapable of solution. I think it would be quite possible to decide whether, in the phrase of the hon. Member for Bermondsey, the move was a genuine one—whether it was for purposes of employment or not. Moreover, this very modest sum of £50 is not at all an unreasonable figure.
    As to who is to decide—who decides all other matters? This House decides the principle and others, like the hon. Member for Sowerby (Mr. Houghton) in his former incarnation, decide the working of the apparatus.
    Mr. John McKay: Supposing a man who had to move to another residence was not earning enough money to pay Income Tax at all, would he get nothing under the new Clause?
    Lieut.-Commander Braithwaite: That is not an unfair interruption, but when, in the Finance Bill, one is discussing Income Tax allowances—then one is discussing Income Tax allowances. That is where we are at the moment, and Mr. Deputy-Speaker would rule me out of order if I went on to deal with other matters. There are other ways of compensating people who do not come within the Income Tax provisions.
    Mr. McKay: No provision is made here.
    Lieut.-Commander Braithwaite: The new Clause deals with Income Tax allowances, and we are trying to deal with that subject. The decision as to the rightness of the claim must rest with the officials at the Economic Secretary's disposal, and I am sure that if this House laid down the principle, it could be worked out in detail. The Economic Secretary said he did not think the time had come to make this alteration of principle. That is how he is instructed this afternoon. I understand from my hon. Friends who moved and seconded the new Clause that, having deployed the arguments, they do not intend to take up the time of the House in a Division. But this is a matter to which the Government, or their successors—whoever brings in the Budget of 1952—should give careful thought during the forthcoming 12 months, because I am quite certain that here is a case which has much to recommend it in equity, quite apart from anything else.
    Mr. Houghton: If I may say so, the mover and seconder of the new Clause have themselves not given to it the careful thought which they suggested the Economic Secretary should give. If hon. Gentlemen opposite will reflect on the purpose and consequences of the Clause, they will surely see that it is wrong in principle and bad from the point of view of administration.
    The principles of Rule 9 of Schedule E have stood for 100 years—that the expense must be wholly, necessarily and exclusively incurred in the performance of the office. That has stood for 100 years and no Chancellor has permitted the slightest departure from that principle, with the sole exception of the departure referred to by my hon. Friend—the wartime concession for travelling expenses to and from work for those who had to move their residence owing to causes connected with the war.
    Once this principle is relaxed the doors are opened to many other claims. There is this claim and also that contained in the new Clause on the Order Paper in the name of the hon. and gallant Member for Bristol North-West (Lieut.-Commander Braithwaite), concerning the cost of season tickets. There are many other expenses which could be claimed if this House went outside the narrow principle which has been sustained for 100 years.
    1646
    The Royal Commission has now begun its work, and I have no doubt that it will have to give consideration to many representations dealing with expense allowances as a set-off against Income Tax; and I am sure the House would be well advised, if I may humbly say so, to await the more thorough examination of all the implications of any departure from this long-standing principle before it takes upon itself the responsibility of giving assent to a new principle of this kind.
    If the new Clause were put into operation, one of the first effects would be to relieve many employers of the expense which they now incur in refunding the removal expenses of their employees. The concession would not be a benefit to the taxpayer himself; it would be of benefit to the employer, who would be relieved of some part of the payment which he now makes to his employee when removal expenses are incurred in connection with his employment with that firm.
    Another point of great importance in connection with administration is this. Who is to decide what is a reasonable expense incurred in this direction? Suppose a person who has worked in Liverpool decides to take up a new appointment in London. It may be that in taking up the new appointment he considerably improves his financial position. He may take a new appointment at twice his previous salary and he may transfer to London. But he may decide that he wants to live in Brighton. Are the Income Tax authorities to be in no position to check the claim which he may make against the Inland Revenue by his own decision to live not in London but in Brighton?
    Then, as my hon. Friend said, if a person is moved and cannot find a house in his new station, is he to be allowed to claim as an alternative to removal expenses the cost of travelling to and from his old residence and the new station? Or, if it is too far for daily travel, is he to be allowed to claim the cost of week-end or periodical visits to his home from his new station? Do hon. Members not see how wide the scope of claims against Income Tax liability would become with these changes?
    6.30 p.m.
    Sir W. Wakefield: It is not suggested for one moment that a man should be able, under this new Clause, to claim for travelling expenses to and from his

    1647
    work, any more than he can now. But if he moves his place of residence from the North of England to, say, London, cannot find a house in London and has to live in Brighton, the suggestion is that up to £50 shall be allowed to him for his removal expenses from the North of England to Brighton, and that finishes the thing. I cannot see that there is in our suggestion anything in any way contrary to the principles the Economic Secretary has laid down, and when the hon. Gentleman has stated, because he would be entitled only to claim expenses wholly and exclusively incurred in the discharge of his duties.
    Mr. Houghton: I know from personal experience how one claim leads to another. A person transferred who could not move his home but who would get an Income Tax set-off if he could, would certainly then claim, as an alternative to the allowance for removal of residence, some relief for his expenses of daily travel, or periodical travel if his home was too far away to permit of daily travel.
    I should detain the House for too long if I were to pursue the difficulties and complexities of the administration of such a proposal as this, quite apart from what would be involved in the departure from principle. If hon. Members will, from their knowledge of administration and their practical experience of these things, reflect on the consequences which would follow from accepting this new Clause, they would realise that it would be quite impossible to administer it fairly to both the Revenue and the taxpayer.
    Mr. Pitman: I think that the hon. Member for Sowerby (Mr. Houghton) was misled by the Economic Secretary into thinking that the conditions of Rule 9 came into this at all, because I think I am right in saying that Rule 9 deals with expenses exclusively incurred in work. The expense dealt with in this new Clause, on the other hand, is not incurred in the daily work but in the acceptance of the post, and there are within the new Clause necessary limitations.
    My hon. Friend has said that he is perfectly prepared to make the move one of at least 50 miles, or any alteration that covers any important issue of principle. Under Rule 9 we suppose that a man places himself within a reasonable distance of his work, but the housing
    1648
    situation now is such that he just cannot do that. The purpose of this proposal is not to create a difficult precedent for Rule 9; it is based on a principle standing entirely on its own feet. I hope that the Economic Secretary will consider it on that basis.
    Mr. Hollis: I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(RELIEFS FROM PROFITS TAX WHEN FRANKED INVESTMENT INCOME NOT EXCEEDED.)
    Section thirty of the Finance Act, 1947 (which imposes a charge to profits tax and grants relief in respect of certain profits not distributed) shall be amended by adding the following subsection:
    "(5) Notwithstanding anything in subsection (2) of this section, where in the case of any trade or business the gross relevant distributions to proprietors (as defined in the subsequent provisions of this Part of this Act) for any chargeable accounting period do not exceed the franked investment income for that period, relief for non-distribution shall be allowed upon the whole of the profits chargeable to profits tax."—[Sir J. Mellor.]
    Brought up, and read the First time.
    Sir John Mellor: I beg to move, "That the Clause be now read a Second time."
    I think I should say that I have some private interest to disclose in this matter. This proposal is a very simple one. It is that, where dividends are covered or more than covered by franked investment income, the remaining income of the company shall be treated as undistributed. In other words, the company should be permitted, if it chooses, to pay its dividends out of the franked investment income if it is sufficient. So far as I can see, in all possible circumstances the company would so choose if it were permitted to do so, but under the law as it stands that, I should have thought, very reasonable right is not permitted, because the Finance Act, 1947, apportions dividends out of franked and unfranked income. That denies to a company the right to elect how it shall distribute its profits. We say that the company should have the right to elect.
    The franked investment income of the company has already paid 50 per cent. Profits Tax. Why should 50 per cent. Profits Tax be paid again on any portion

    1649
    of that franked investment income? Why should more than 10 per cent. tax be paid on any of the undistributed profits? Three years ago I moved a new Clause identical with this, and the present Attorney-General—the Solicitor-General as he then was—resisting the proposal, said, in column 1795 of the daily edition of the OFFICIAL REPORT:
    "It seems to me the obvious thing that when there are two categories of income, franked and non-franked, one assumes, what is the likely state, that when a company distributes any part of its profits it distributes proportionately out of all sources of income—a proportion of its franked income and a proportion of its non-franked income."
    The right hon. and learned Gentleman used the expression "one assumes, what is the likely state." I should have thought it was not only an unlikely state but an impossible state that any company would choose so to distribute its profits as to increase the burden of taxation upon it. The right hon. and learned Gentleman continued:
    "In deciding what distribution charges to pay, we take a proportion of the gross relevant distribution and convert it into a common relevant distribution and, therefore, have a distribution subject to the charge, and eliminate from it a fair proportion representative of the amount attributable to its franked investment income."—[OFFICIAL REPORT, 7th June, 1948; Vol. 451, c. 179–6.]
    I have no doubt that the right hon. and learned Gentleman will explain quite simply what that means. I am afraid it is beyond me. At any rate one thing is clear. It is much less advantageous to the company, and is also extraordinarily complicated and confusing. Yet it is that extraordinary method of calculation which the right hon. and learned Gentleman described as a likely state for the company to prefer. I should have thought that any company which preferred that ought to be in a mad-house. Why should not we deal with this matter in the perfectly simple and reasonable way I have suggested?
    I think that we have even stronger grounds now than we had to ask for this three years ago, because since 1948 the distributed Profits Tax has been doubled. I am asking this, first of all as a matter of justice, and also as a matter of convenience. It would be far simpler to let the company do what it would do in all other circumstances, if it were not prevented by the express terms of the 1947 Act, and decide when paying its dividends
    1650
    which part of its income it will make payment from. The company would normally elect to pay out of the franked investment income, and then the distributed rate of Profits Tax would attach once only. I hope that the Government will give a more favourable answer to this suggestion than they did three years ago.
    Mr. G. P. Stevens: I beg to second the Motion.
    I listened with great interest to the remarks of the hon. Member for Sutton Coldfield (Sir J. Mellor), and I have read with equal care and interest the remarks of the Solicitor-General, as he then was, when he rejected a similar Clause three years ago on the Committee stage of the Finance (No. 2) Bill. I, personally, am very much struck by an important underlying difference in principle. The Solicitor-General rejected the Clause on that occasion because he said it could not possibly be fair to the Revenue. I think that it is important that we in this House should always be fair to the Revenue, but as I listened to the hon. Baronet it struck me that we must also be fair to the taxpayer, and it seems to me that Section 30 of the Finance Act, 1947, as at present operated, is far from fair to the taxpayer.
    It is certainly not a principle of taxation in this country that in general income which has already borne tax at the full standard rate, whether Income Tax or Profits Tax, should suffer taxation again; yet undoubtedly that is what is happening in this particular case. The hon. Baronet referred a few years ago to the way in which the net relevant distribution is calculated, and said that the principles are defined in an extremely complicated way. That is very true, and I do not pretend to understand them fully myself, but I hope to give some simple illustrations which show the double taxation effect which exists at the present moment.
    A company has a trading profit of £20,000 and a franked investment income, which means income in the shape of dividends, either ordinary dividends or preference dividends, which have, in fact, borne Profits Tax at the full rate of £5,000, a total of £25,000. That company distributes a dividend on £5,000, and, under the existing law, the double taxation effect brings out what seems to me to be the grossly unfair result that Profits Tax, not at the full rate but at an

    1651
    effective rate of about 40 per cent., is payable on four-fifths of the £5,000 franked investment income.
    The right hon. and learned Gentleman will, I am quite sure, be able to check the arithmetic in that case, and, similarly, the arithmetic in another example where trading profits are again £20,000 and the franked investment income £10,000, a total of £30,000, and the whole of the franked investment income is distributed as dividend. Here we find, under the existing taxation law, approximately 40 per cent. is payable on three-quarters of that sum, namely, £6,666 on £10,000 of income which has already borne Profits Tax at the full rate. I cannot believe that justice is served in that way.
    I support this Clause most strongly on two grounds: first, that there is at present a substantial amount of income which is double-taxed or taxed at the full rate and consequently at far more than a non-distributed rate, and second, there is the point which the hon. Baronet made so strongly three years ago and made again this afternoon, that if this new Clause is accepted there will be, for obvious reasons, a strong inclination on the part of boards of directors to restrict their distribution to franked investment income; in other words, a kind of voluntary dividend limitation which, I should have thought, would have the strongest possible appeal to the Chancellor of the Exchequer.
    6.45 p.m.
    The Attorney-General(Sir Frank Soskice): We have considered this new Clause again, but we feel there is really no reason to depart from the attitude which we adopted when it was discussed some two years ago. May I try to restate the argument in this form? It is common ground between us that one has to try to be fair both to the taxpayer and to the Revenue. A company, of course, has different sources of income. It has its ordinary income which it earns and this other income, which is called franked investment income because it has borne tax in the hands of some other company. Faced with this situation of a company having this dual stream of income, one has to be fair both to the taxpayer and to the Revenue in working out how we are to apportion the distribution of these two streams of income.
    1652
    The hon. Baronet proposes that it should be regarded as coming out of the franked investment income. That is what he wants when he says that the company should be allowed to choose from which source it should be regarded as coming. On that principle, it can be said with an equal measure of justice for the Revenue that they should be entitled to claim that the whole of the distribution should come out of the earned income and the franked investment income should not be taken into account at all. Those are the opposite extremes.
    The hon. Baronet's proposal is the one most in favour of a company and the alternative view is the one that is most in favour of the Revenue. What the Profits Tax legislation has sought to do is to work out a compromise between these two extreme views. Both the views I have mentioned would be unfair. The hon. Baronet's view is unfair to the Revenue and the other view is unfair to the taxpayer.
    The obvious compromise is the one in fact adopted under the Profits Tax scheme. As the hon. Baronet has pointed out, the scheme which is adopted is one under which the distribution is considered as coming rateably from two sources of income. We apportion it to each source of that income and consider it, therefore, as flowing in a rateable proportion from each source. That means that the company does get that measure of relief which is fair upon the compromise view, and neither the taxpayers nor the Revenue have it in their power to say, "You are to consider this distribution as coming solely from one or the other." The compromise is to consider it as coming rateably from the two.
    Having carefully considered the Clause and the arguments used before and repeated again today, we do not see that there can be any ground, or any reason in justice, for departing from the view we previously held. If we do depart from that view, how far is it to go? If one says to a company that it is to have it entirely at its own discretion as to what source of income is to be treated as producing the distribution, the company can go on to say, "We would like to treat that source as the source of earned income before 1947 and pay no tax on it at all."

    1653
    Once we say that a company is to be entitled to say at its own discretion where it is to treat the distribution as coming from, the result is to put the Revenue in a wholly unfair and disadvantageous position. I hope that the House will agree that this Clause ought not to be accepted, because it proposes a departure from a compromise which, I think, is fair to both sides.
    Mr. Stevens: Will the Attorney-General say whether he thinks it is fair that income which has already been taxed at the full rate of Profits Tax should again be taxed in the hands of the recipient at a rate approaching the standard rate, thus bearing tax twice?
    The Attorney-General: It is not as if that were a fact. It is not as if a particular distributed pound could be traced to a particular pound of investment income. The whole amount which has been distributed is divided on a purely notional basis and in proportion. No single pound can be said to have borne tax twice.
    Sir J. Mellor: Could the Attorney-General give another example of this extraordinary treatment of the affairs of a company by statute?
    The Attorney-General: That question assumes the premise that this is extraordinary treatment. The whole basis of my argument was to show that this was a perfectly reasonable compromise.
    Sir J. Mellor: Is there any similar treatment?
    Question put, and negatived.

    New Clause.—(REMITTANCE OF ESTATE DUTY IN THE CASE OF DEATH ON ACTIVE SERVICE.)
    (1) Where estate duty becomes or has become payable on property passing on the death of persons, being persons to whom this section applies, who die from wounds inflicted, accidents occurring, or disease contracted while on active service outside Great Britain against an enemy or on service outside Great Britain which is of a warlike nature or which, in the opinion of the Treasury, otherwise involves the same risks as active service, the whole of the estate duty payable upon all such property shall be remitted or, in case the duty has been paid, repaid.
    (2) The persons to whom this section applies are the members of His Majesty's Forces who are subject either to the Naval Discipline Act or to military law, whether as officers, noncommissioned officers, or soldiers, under Part V of the Army Act. or of the Air Force Act.
    (3) This section shall apply in the case of any persons dying from any such causes afore-said arising after the twenty-fourth day of June, nineteen hundred and fifty.
    (4) This section shall apply whether or not on any such death any property passes to the widow or lineal descendants or lineal ancestors or brothers or sisters of the deceased.—[Mr. Pickthorn.]
    Brought up, and read the First time.
    Mr. Pickthorn: I beg to move, "That the Clause be read a Second time."
    There is a very large speech to be made on the question raised by this new Clause, but I do not propose to make a large speech, rather to put the short points as shortly as I am able. I shall begin by explaining the law to the Chancellor of the Exchequer and his friends, not that I hope to instruct them because that would be arrogant and might turn out futile: but because if I explain what I take the law to mean, they can correct me if they think I am wrong, and then our debate will not proceed upon false assumptions.
    As the law stands, no doubt it goes back to traditions which my learning does not reach: statutorily it goes back to the Stamp Act, 1815, and the Finance Act, 1894. As the law stands, in dealing with what are called common soldiers, which means, roughly speaking, sergeants and persons of lower rank than that, they are exempt from Estate Duty, in war or not, wherever they die, and whether it is in time of peace or war, or cold war, or what not. I do not use the term "common soldier" in any offensive way but technically.
    Since 1914, all soldiers, including officers, who die anywhere on active service or what the Treasury regards as similar service pass on the first £5,000 of whatever estate they may have to close relatives without paying Estate Duty, unless it suits the estate better to opt for the Quick Succession Allowance. I think I am right in stating that is the position of the law as it now stands.
    Secondly, I will try to indicate very briefly what the new Clause does. Leaving out the words, which are more or less unnecessary in common conversation but are necessary for drafting, the new Clause provides as follows:
    "Where Estate Duty has become payable on property passing on death while on active

    1655
    service, it shall be remitted, and this shall have effect as from the beginning of the Korean operations."
    That is what the law would be if the new Clause I am moving were accepted, for officers as well as for "common soldiers."
    I propose to give shortly the arguments in favour of that change of the law. As a rule, when I am submitting a proposal In this House I try to see the arguments against it as seen by hon. Members on the other side: often successfully, but I cannot see what in this case are the arguments against this Clause. A man is killed fighting for his country; and he is more likely to be killed, even in these days of conscription he has a considerable amount of control over the way in which he serves when his country is at war or in a condition approaching war, as at present; and he is more at risk of death according to the method of his choosing. It is a fact that as the service is one in which death is more probable, the more likely, is a man to be taxed by this Duty if he is an officer, and not if he is of any other rank. I cannot see that there can be any possible justice in that.
    The case is stronger even than that looks; because—I would not for a moment start any competition about the comparative merits or degrees of courage between officers and other ranks, nobody who has ever served would be fool enough to start any such kind of meaningless competition—but, if we look at the simple arithmetical statistics, it is certainly true that officers run a much bigger risk of being killed than do other ranks. I could give figures, but I will not weary the House with them; I will admit that my figures are not exhaustive or exact, but I think the effect quite clear, for all the Services, and very, very striking for the Royal Air Force, very striking for the Army, if not as striking for the Navy.
    Officers run, on the figures, a much higher risk of being killed in battle or something regarded as of the same nature as battle than other ranks do. It seems slightly absurd that those who assume for our country the greatest risk to their lives, thereby bring upon their families the greatest risk to their property. Again, I would not for a moment try to commensurate life and property when a family loses a son and has to pay x thousand pounds of Estate Duty, these two things
    1656
    are not the same sort of thing, nor can they be added to each other.
    But here we are in this sublunary world, where it has been proverbial for ages that the two greatest certainties are also the two greatest evils—death and taxes. It is very hard that these persons who take upon themselves the highest risk of death in the interests of their country should also be those who will be the heaviest hit by taxation. That seems to me the general argument, and I could elaborate it a good deal. There is a variety of sentimental considerations of the proper sort of sentiment which could be put, but I do not propose to put it now. There are also some minor arguments, as, for instance, that the law as it stands sometimes tends to discourage a man from seeking promotion to commissioned rank where he might be more useful. That is a very tiny argument and I do not lay any weight upon it.
    I have put my main point, and I was not challenged from the Treasury Bench, so I hope that I was right in indicating what the law is and what the law would be if this new Clause were passed. I should add in parenthesis that I am not wedded to the wording of the new Clause. I am quite prepared to admit that it might be better worded, and in some ways might need to be constricted.
    The last thing I have to say is to try to persuade the House that this is the opportune time for dealing with this matter. I have not looked further back into it than my own memory takes me, but my recollection is that this question was raised in very much the same form 10 years ago by my hon. and gallant Friend the Member for Peters-field (Sir G. Jeffreys). We got a great deal of sympathy and support, but we did not get anything more on that occasion in 1941.
    7.0 p.m.
    What is the difficulty about persuading the Treasury, when one raises this question, that it is an opportune time? It is difficult because the Treasury gets you with both barrels. When it is a time of war, we are "all in it together"—the current sentimentality is to pretend that we are all running equal risks—the Treasury want money more urgently than ever, and as more officers are being killed than usual it is a peculiarly inopportune time to make the proposal; and, in time of peace, they get you by saying: "There

    1657
    are lots more things to get on with, old boy. Why do you come bothering us with this?"
    This unique year 1951 has ennobled the present Foreign Secretary, and it is precisely 100 years after 1851. It has the third uniqueness that we are not at peace and we are not at war. Officers are being killed by His Majesty's enemies, if that be not an excessively Blimpish way to describe those who are not in full accord and communion with the United Nations. We have never, or almost, been in precisely this situation before, and perhaps are never likely to be so again.
    There was an old tale in Rome which I am sure the Wykehamists present will remember, how when a chasm opened in the Forum, the State was seen by that omen to be in danger, and the Oracle told the people to cast into the chasm whatever they had that was most valuable. The women threw in their jewels. the men threw in all but their arms, and so on, but still the chasm remained open and the barbarians came nearer to the Capitol. This went on until a Roman, whose name I am ashamed to say I have forgotten, said: "The valour of the young is the greatest value for this nation." He mounted his horse and leapt into the chasm, which thereupon closed upon him, the barbarians were repelled and Rome was saved.
    The Treasury say that when our young men are thrown, by their own choice, into the chasm their families' property must be thrown in too. That is a little hard. I find it difficult to believe that this is the ground upon which civilisation can found that salvation which I hope that nobody now takes for granted in 1951, as he might have taken it, for granted in 1851.
    Mr. G.R. Howard(St. Ives): I beg to second the motion.
    The hardship to which the mover of the Motion has referred is very much wider than may be realised by hon. Members. I want to put three points. I should like to ask the Chancellor of the Exchequer to consider not only active service abroad but active service at home. All that has been said about people who volunteer to go abroad can be applied equally in modern war to those who volunteer at home. In many cases they give up very good jobs in order to do so.
    1658
    and therefore they undergo considerable hardship.
    I speak as many other hon. Members could in this House, from personal experience in my own family, not in one war but in two. This is not, and never should be, a political question. It is nothing but a human tragedy which involves the families of the men and women and especially those who go out and risk their lives as volunteers, before they are called, to serve their country when needed. Their death very often entails a forced sale of property in some form or other, which is grossly unfair to the person who has given all he has to give for his country. I hope that the Chancellor will bear these points in mind when he replies. If men and women are prepared to give their lives in time of war, making the greatest sacrifice they can, their country should at least reward their dependents afterwards.
    General Sir George Jeffreys: It is a fact, as my hon. Friend the Member for Carlton (Mr. Pickthorn) has said, that I once proposed a new Clause to this effect during the last war. I should like very briefly to add my voice in support of the protest against a tax on the estates of those who give their lives for their country. It has always seemed to me one of the meanest things that an ungrateful Parliament can inflict on the families of those who fight and die for their country. I remember in the last war reading an announcement in a newspaper of the death in action of the bearer of a noble name. It was headed:
    "Duke Killed. Heavy Death Duties."
    There was no acknowledgment of the service of the deceased or of his devotion to duty. I suppose that had no news value. It was just "Heavy death duties." Those duties would have been far heavier if the death had occurred now, when the duty on large estates amounts to very little short of confiscation. What a tribute from our modern civilisation that one who gave his life for his country should have his home broken up—that is what very often happens—and his family gravely embarrassed as the result of his sacrifice.
    I ask the House to consider these effects on a widow, even if her deceased husband had only a moderate estate. Heavy Death Duties are none the less

    1659
    exacted, and even the amounts of insurances for children's education do not escape. After fining her heavily—that is what it amounts to—for the loss of her husband, they give her a miserable pittance of perhaps one hundred and fifty depreciated pounds per annum, and possibly a small amount—I think it is £30 a year—for each child of school age.
    My hon. Friend the Member for Carlton has reminded the House that the private soldier and the junior noncommissioned officer are exempt from this duty. I am very glad that it is so, but why should not officers, warrant officers and senior non-commissioned officers be exempt, too? Nowadays it does not follow that the private soldier is a poor man. I believe there was one case in the recent war of a private soldier being killed who was very near to being a millionaire. It is perfectly possible under present conditions for a private soldier to have money. I do not suggest for one moment that he should be taxed or that his family should suffer, but I do suggest that it is wrong for the nation to fine the families of those who give their lives for their country.
    I remember in France in the first war —my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) may also remember him—a very talented officer who used to draw for the entertainment of his brother officers what he called "fancy portraits." I remember that one of his fancy portraits was entitled "Portrait of an Inland Revenue official studying a casualty list." The Inland Revenue official's face bore a broad smile as he contemplated a casualty list which he thought would bring a large amount of duty to the Revenue. I do not suggest for one moment that that is the fact, but that is the way in which it is apt to be regarded, and it was not without some sense of grim humour that the officer drew that portrait.
    These gallant officers are not afraid of their foes or of losing their lives, but they are rightly afraid of the effect of this iniquitous duty on the families and homes of those who give their lives for their country. I hope very much that the Chancellor will see his way to accept the Clause, which is a reasonable one in every way and will remove a cruel injustice which has continued far too long.
    Mr. Gage: We ought all to be grateful to my hon. Friend the Member for Carlton (Mr. Pickthorn) for raising this very important matter. Although I have had an experience longer than I care to admit of anomalies raised by Statutes, I confess that this is one of the most extraordinary anomalies I have ever come across, and I did not know about it until my hon. Friend raised it.
    I can imagine the Treasury making out a case for saying that all soldiers killed on active service should pay their Estate Duty like anyone else, and I can also see a case being made out, as suggested by my hon. Friends, for no Estate Duty having to be paid by any soldiers killed on active service—and I entirely agree with that—but I cannot imagine a case being made out for the present system whereby a wealthy lance-sergeant pays no Estate Duty while a poor sergeant does. That is a most extraordinary situation.
    It was a very long time ago that the line was drawn just above the rank of lance-sergeant, to say that if a man is a lance-sergeant or below he shall not pay Estate Duty if he is killed, no matter how wealthy or how poor he is, but that if he happens to be immediately above that rank—for instance, a battery sergeant major—although he may not be very well off, he must pay Estate Duty. Can anyone uphold a system like that? Whatever view the Chancellor takes about the Amendment, he must agree that the present system is wrong.
    I feel, with my hon. Friends, that a very strong case has been made that all who are killed on active service should be exempt from Estate Duty. As my hon. Friend the Member for St. Ives (Mr. Howard) said, we have all experienced in our own lives the great tragedy of people who are close to us and have very small estates being killed on active service and of the wretchedness and despair caused to a widow through duty having to be paid on the estate. Everyone in this country feels that we owe a great debt to those who are killed on active service. Now we have an opportunity to repay these men in a material way. We readily express sympathy, but how rarely have the unfortunate relatives of those who are killed in active service ever received any material aid? This is a case in which material aid can be given, and I hope it will be.
    7.15 p.m.
    Mr. Boyd-Carpenter: I had hoped that the Chancellor of the Exchequer would have risen by now to indicate at least sympathy with the purpose of the Clause. I hope the fact that he has not so far intervened does not mean that he has closed his mind to a point of view about which many of us feel extremely strongly.
    I want to add one point to what seems to be the overwhelming case made out by my hon. Friends. The House will remember that in the late war a considerable number of bearers of ancient names and inheritors of, at any rate formerly, great estates died in the service of this country. It was an fantastic anomaly that it was the acceptance by them of the higher responsibilities and, perhaps, the greater dangers of accepting His Majesty's Commission that alone exposed their estates to Estate Duty. Had those people—the names of many of them must be in the minds of some of us at the moment—consulted rather the interests of their families than the interests of public duty, they would have refused to accept promotion above the rank of lance-sergeant.
    Nobody can possibly justify the retention of this anomaly. I agree entirely with my hon. Friend the Member for Belfast, South (Mr. Gage), that it might be arguable—though it would be wrong to do so—that Estate Duty should be charged upon the estates of all killed in action, but it cannot be right to maintain this curious differentiation based on wholly out-of-date considerations between officers and senior N.C.Os. on the one hand and the rest of the N.C.Os. and other ranks on the other hand. That cannot be right and it cannot be defensible.
    I hope the Chancellor of the Exchequer will not say that, because this is an ancient anomaly—which, of course, it is—he will not remedy it. It is an ancient anomaly and he is entitled to attack his and our predecessors for not having righted it, but one can accept that argument only on the basis that the Chancellor is prepared to do himself and his Government the credit of putting this right now.
    I want to put another point to the Chancellor. In the very nature of the case, the people whom this provision affects were fit young men, having in the
    1662
    ordinary way a longish expectation of life, and it is therefore a very peculiar and special disaster that their death in action imposes on their families and on the remains of their estates. It is a peculiar injustice. The very fact that they were fit enough to do this work brings down the burden of Estate Duty upon their estates, while others who for one reason or another were not fitted to it did not bring down this additional misfortune on their families. Whatever may have been the faults of our predecessors in not putting this right earlier, I hope that for those reasons and even at this late hour the Chancellor will say that the present anomaly is utterly wrong and that he will put it right here and now.
    Mr. Gaitskell: The only reason why I did not rise earlier was that I saw the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) rising, and I thought that he would like to speak before me.
    Mr. Boyd-Carpenter: I hope that on other occasions the right hon. Gentleman will remember that.
    Mr. Gaitskell: The account which the hon. Member for Carlton (Mr. Pickthom) gave of the law on the subject was very accurate, and I wish to add only one thing to what he said. It is true that under the 1815 Stamp Act there is provision that those who are slain or die in the service of His Majesty are exempt from Estate Duty, if they are "common seamen, marines, or soldiers." The position of the higher ranks is governed, as he rightly said, by a series of Acts beginning in 1894 and ending in 1924. He referred to the complete exemption on the first £5,000 of the estate which applies to them. Unless I heard him wrongly, I do not think he made quite plain to the House the fact that for estates above that level there were also substantial reductions in the Duty which has to be paid.
    Mr. Pickthorn: On the expectation of life?
    Mr. Gaitskell: Yes, because that Is of considerable importance. This is what Parliament decided in the past, and we should take notice of it. The relief depends on the expectation of life at the time of death, and it is greatest for those who are youngest, the very persons to whom the hon. Member referred.

    1663
    For example, at the age of 22 the relief amounts to over 70 per cent. of the duty, at the age of 35 to over 60 per cent., and at the age of 46 to over 50 per cent. These are substantial reductions, which Parliament decided upon after considerable discussion, and they do not exactly fit in with the picture which some hon. Members seem to have of the present situation.
    Mr. Pickthorn: If the Chancellor will permit me to say so, these are, of course, substantial figures which he quoted but they are different from 100 per cent. Forty per cent. is different from 100 per cent., so is even 60 per cent. My whole argument was directed and fairly directed, to the injustice involved in there being any Estate Duty upon this class of case.
    Mr. Gaitskell: The remarks I made were not in reference to the hon. Member's speech. There were a number of other speeches which seemed to be based on perhaps a misapprehension. At all events, they gave me the impression that the hon. Members who made them did not appreciate that, as I repeat, substantial relief was already given under the existing legislation.
    The benefits of the proposed new Clause would, of course, go to the dependants of those who were killed, and in view of what I have said it is clear that they will be greatest in the case of the largest estates and in the case of the widows of those who died at rather earlier ages. Those are the people who would benefit particularly by the Clause. All of us would subscribe to what has been said about the valour, courage, and qualities of the officers who have been killed on behalf of their country. There is really no division of opinion on that. But, if I may say so, death is a tragedy for those who survive, whether it be death on the field of battle or death in other circumstances.
    For my part I do not think that one can really say that there is a greater hardship to those who remain when the man who has died had been killed in battle, than when he has died under more normal conditions at home. The difference is essentially that of the courage, valour and qualities of the person killed, and not one of the situation of the surviving relatives.
    Mr. Pickthorn: The difference is surely this—I agree that we all owe God a death; no one can escape that, not even the poor; that is true enough—the difference is that the person killed in battle has voluntarily assumed a greater risk than the person who dies in a normal way, and the person who dies in a normal way has not done so.
    Mr. Gaitskell: I was trying to distinguish between—on the one hand—the hardship that might exist among the relatives or the effect on their feelings, to which reference has been made, and—on the other hand—the actual circumstances in which a man met his death. One can argue that a soldier killed in action is a braver man, and that we should give exemption from duty to his estate; but it cannot be argued that for his widow the tragedy is greater because he has been killed in battle. That is the point I was making, and I think that it is a legitimate one to make.
    The question arises whether one can reasonably draw the line differently from where it is now drawn. I would willingly agree that the Stamp Act, 1815, which provides for the complete exemption of those in—broadly speaking—the ranks below the rank of sergeant is perhaps somewhat anomalous. On the other hand, that does not necessarily mean that there is a good argument for exempting completely all persons in the higher ranks.
    The question immediately arises of whether there should be complete exemption from Death Duties so far as people killed on active service are concerned. But it must be remembered that all too frequently there is brought to mind in this House the case of miners, who from time to time unfortunately are killed in explosions and other accidents in the pits. One has to bear in mind also the seamen, because the accident rate is high, or relative to other occupations is high, in merchant shipping. I do not think that one can draw the line suggested and say that everyone killed on active service should automatically be entitled to complete exemption, whereas, in the case of others, the full duty has to be paid.
    That is the view which has always been taken by my predecessors, and I think it is relevant to draw attention to that. The last occasion on which this subject was debated was not in 1941 but in 1944. It was debated on three occasions during

    1665
    the war, in 1940, 1941 and 1944. On that occasion Sir John Anderson, who was then Chancellor of the Exchequer, said:
    "If you leave out of account, as I believe you must, the sharp contrast between the position of the common soldier and the position of the officer, I believe that the treatment given under the existing law to the estate of the deceased officer is as fair as it could possibly be made."
    I dare say that the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), who was then Financial Secretary to the Treasury, will recall his own remarks on that occasion. He said:
    "I am quite certain that if I had been"—
    here during the Chancellor's statement—
    "I should have heard him say that the logical remedy for this anomaly—I know he regards it as an anomaly—would be to repeal the exemption of the common soldier."—[OFFICIAL REPORT, 15th June, 1944; Vol. 400. c. 2257–88 and 2262.]
    I can understand that. I think it is a reasonable point of view to adopt. It is a question of whether in practice it is worth while.
    Mr. Assheton: Read on.
    Mr. Gaitskell: I have not the rest of the quotation here, but I should be surprised if as Financial Secretary, in turning down the proposal on that occasion, the right hon. Gentleman departed from the lead given by his then chief.
    It is one thing to say that it is anomalous, but it is another to say that the way to put it right is by giving all officers, and the higher non-commissioned officers, complete exemption, instead of the partial exemption which they receive. I should myself say that it is far more logical to repeal the provisions of the Stamp Act, 1815, but I do not think that in practice that would make a great deal of difference. The fact remains that there are not many persons in the ranks—there are some, I admit—who are likely to leave large fortunes. For the others, there is, in any case, exemption under the 1924 legislation—complete exemption if those concerned leave £5,000, and, as I have explained, substantial exemptions if they leave rather more than that.
    Therefore, although I do not differ from hon. Members opposite in any way in my estimate of the qualities of those for whom they have been speaking, I cannot see that we should do well to alter what Parliament has in the past decided in this
    1666
    matter. I think that the present arrangement works quite well in practice. A line has to be drawn somewhere. The officers concerned have already been given considerable exemptions in the past, and I think that we should leave the matter there.
    Mr. Assheton: Since the Chancellor referred to me, I should like to say a few words on this matter. I remember very well the circumstances in 1944, towards the end of the war. I, for one, was very troubled about this matter at the time. I remember the discussions that took place both with Sir John Anderson and with the officers of the board of Inland Revenue. It should be borne in mind that at that time the war was drawing to an end. There had been a great many occasions on which duty had been levied in respect of men killed in the war. It was a peculiarly inappropriate moment to make a change.
    7.30 p.m.
    Now I do think we have an opportunity to reconsider it. There is a rather calmer atmosphere, and the question of the revenue in itself is, perhaps, of less consequence. The Chancellor admitted that this anomaly in the difference between the duty payable on the estates of officers and the duty not payable on the estates of men was really indefensible. I am sure the whole House agrees with that. I hope we shall not adopt the suggestion that the remission of duty for those who are not officers should be swept away in order to remove this anomaly. I should like the House to come to a conclusion in the other direction. I think that, whatever we may have done in the past, however long we have endured this form of tax, this form of tax is odious.
    I should like to illustrate the point to the Chancellor of the Exchequer with two cases that were brought to my notice at the time when I was at the Treasury. There was one family of which both sons were killed in the first war, and there were three boys in the next generation; two of them were killed, one was left alive, but with only one leg. In that case a great and gallant family was impoverished, and I think that a great injustice was done, and a great error of policy exemplified.
    There was another case which came to my notice of a Scotsman who had been

    1667
    in a distinguished Scottish regiment. During the last war he served in the Home Guard. He was unfortunately killed in the Home Guard. It so happened that he was not considered an officer, and, therefore, his estate was exempt from duty, after considerable discussion. It also happened that he was a very rich man. His estate escaped duty. Alas, however, within a very few months, his only son, to whom the estate went, was killed in Palestine, and so the Inland Revenue got their money all the same.
    Death is very arbitrary. The Chancellor of the Exchequer says that if a young man is killed at the age of 22 a relief is given in the amount of duty that has to be paid—a 70 per cent. relief in duty. But if that young man had not been killed he and his family would have been able to enjoy the whole of that money for, perhaps, another 40 or 50 years. The fact that a relief of 70 per cent. of tax is given does not appeal to that family as being justice.
    I think we have to look at this matter in a different way. I think we have got to make an exception—an exception altogether—in the case of those who are killed fighting for their country. I support the Clause. and I hope that all those
    on this side of the House and many also on the other side of the House will join my hon. Friend the Member for Carlton (Mr. Pickthorn) in the Lobby, if he wishes to divide.
    Lieut. - Colonel Bromley - Davenport: I shall not keep the House more than a minute, but there is one point I want to make, and it is this. The Chancellor mentioned that there was relief from Estate Duty for persons killed on active service. The point I want to make is this. Suppose that such a person had not gone on active service; suppose he had stayed at home: he could then have lived, say, to the age of 50 or 60, and he would have then been able to make over his property. The point is that he cannot do this when he goes out on active service and gets killed. He has got no time to do it. So I think that talking of relief from Estate Duty does not give a true picture of the situation, when one bears in mind that other and larger relief can be obtained by one who does not go on active service.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes. 260; Noes, 289.

    Division No. 154]

    AYES

    [7.35 p.m.

    Aitken, W. T.

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

    Eccles, D. M.

    Alport, C. J. M.

    Carr Robert (Mitcham)

    Elliot, Rt. Hon. W. E

    Amery, Julian (Preston, N.)

    Carson, Hon. E.

    Erroll, F. J.

    Amory, Heathcoat (Tiverton)

    Channon, H.

    Fisher, Nigel

    Arbuthnot, John

    Churchill, Rt. Hon. W. S.

    Fletcher, Walter (Bury)

    Ashton, H. (Chelmsford)

    Clarke, Col. Ralph (East Grinstead)

    Fort, R

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

    Clarke, Brig. Terence (Portsmouth, W.)

    Foster, John

    Astor, Hon. M. L.

    Clyde, J. L.

    Fraser, Hon. Hugh (Stone)

    Baldock, Lt.-Cmdr. J. M

    Conant, Maj. R. J. E.

    Fyfe, Rt. Hon. Sir David Maxweli

    Baldwin, A. E.

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

    Gage, C. H.

    Banks, Col. C

    Cooper-Key, E. M.

    Galbraith, Cmdr. T. D (Pollok)

    Baxter, A. B.

    Corbett, Lt.-Col. Uvedale (Ludlow)

    Galbraith, T. G. D. (Hillhead)

    Beamish, Maj. Tufton

    Craddock, Beresford (Spelthorne)

    Gammans, L. D.

    Bell, R. M.

    Cranborne, Viscount

    Garner-Evans, E. H (Denbigh)

    Bennett, Sir Peter (Edgbaston)

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

    Gates, Maj. E. E.

    Bennett, Dr. Reginald (Gosport)

    Crosthwaite-Eyre, Col. O. E.

    Glyn, Sir Ralph

    Bennett, William (Woodside)

    Crouch, R. F.

    Gridley, Sir Arnold

    Bevins, J. R. (Liverpool, Texteth)

    Crowder, Capt. John (Finchley)

    Grimston, Hon. John (St. Albans)

    Birch, Nigel

    Crowder, Petre (Ruislip—Northwood)

    Grimston, Robert (Westbury)

    Bishop, F. P.

    Cundiff, F. W.

    Hare, Hon. J. H. (Woodbridge)

    Black, C. W

    Darling, Sir William (Edinburgh, S)

    Harris, Frederic (Croydon, N.)

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

    Davies, Nigel (Epping)

    Harris, Reader (Heston)

    Boyd-Carpenter, J. A.

    de Chair, Somerset

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

    Boyle, Sir Edward

    De la Bère, R.

    Harvey, Ian (Harrow, E.)

    Bracken, Rt. Hon. B.

    Deedes, W. F.

    Harvie-Watt, Sir George

    Braine, B. R

    Digby, S. Wingfield

    Hay, John

    Braithwaite, Sir Albert (Harrow, W.)

    Dodds-Parker, A. D

    Head, Brig. A. H.

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

    Donner, P. W.

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

    Bromley-Davenport, Lt.-Col. W

    Douglas-Hamilton, Lord Malcolm

    Heald, Lionel

    Brooke, Henry (Hampstead)

    Drayson, G. B.

    Hicks-Beach, Maj. W. W

    Browne, Jack (Govan)

    Drewe, C.

    Higgs, J. M. C.

    Buchan-Hepburn, P. G. T.

    Dugdale, Maj. Sir T. (Richmond)

    Hill, Dr. Charles (Luton)

    Bullus, Wing Commander E. E

    Duncan, Capt. J. A. L.

    Hill, Mrs. E. (Wythenshawe)

    Burden, F. A.

    Dunglass, Lord

    Hinchingbrooke, Viscount

    Butcher, H. W.

    Duthie, W. S.

    Hirst, Geoffrey

    Hollis, M. C.

    Marlowe, A. A. H

    Scott, Donald

    Holmes, Sir Stanley (Harwich)

    Marples, A. E.

    Shepherd, William

    Hope, Lord John

    Marshall, Douglas (Bodmin)

    Smiles, Lt.-Col. Sir Walter

    Hopkinson, Henry

    Marshall, Sidney (Sutton)

    Smithers, Peter (Winchester)

    Hornsby-Smith, Miss P.

    Maude, Angus (Ealing, S.)

    Smyth, Brig. J. G. (Norwood)

    Horsbrugh, Rt. Hon. Florence

    Maude, John (Exeter)

    Snadden, W. McN,

    Howard, Gerald (Cambridgeshire)

    Maudling, R.

    Soames, Capt. C.

    Howard, Greville (St. Ives)

    Mellor, Sir John

    Spearman, A. C. M.

    Hudson, Sir Austin (Lewisham, N.)

    Molson, A. H. E.

    Spence, H. R. (Aberdeenshire, W.)

    Hudson, Rt. Hon. Robert (Southport)

    Monckton, Sir Walter

    Spens, Sir Patrick (Kensington, S.)

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

    Moore, Lt.-Col. Sir Thomas

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

    Hulbert, Wing Cmdr. N. J.

    Morrison, John (Salisbury)

    Stevens, G. P.

    Hurd, A. R.

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

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

    Hutchinson, Geoffrey (llford, N.)

    Mott-Radclyffe, C. E.

    Stoddart-Scott, Col. M.

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

    Nabarro, G.

    Storey, S.

    Hutchison, Col. James (Glasgow)

    Nicholls, Harmar

    Strauss, Henry (Norwich, S)

    Hylton-Faster, H. B.

    Noble, Cmdr. A. H. P

    Stuart, Rt. Hon. James (Moray)

    Jeffreys, General Sir George

    Nugent, G. R. H.

    Summers, G. S.

    Jennings, R.

    Nutting, Anthony

    Sutcliffe, H.

    Johnson. Howard (Kemptown)

    Oakshott H. D.

    Taylor, Charles (Eastbourne)

    Jones, A. (Hall Green)

    Odey, G W.

    Taylor, William (Bradford, N)

    Jeynson-Hicks, Hon. L. W.

    O'Neill, Rt. Hon. Sir Hugh

    Teevan, T. L.

    Kaberry, D.

    Ormsby-Gore, Hon. W. D.

    Thomas, J. P. L. (Hereford)

    Kerr, H. W. (Cambridge)

    Orr, Capt. L. P. S.

    Thompson, Kenneth Pugh (Walton)

    Lambert, Hon. G.

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

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

    Lancaster, Col. C. G.

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

    Thorneycroft, Peter (Monmouth)

    Langford-Holt, J.

    Osborne, C.

    Thornton-Kemsley, Col. C N.

    Law, Rt. Hon. R. K.

    Peake, Rt. Hon. O

    Thorp, Brig. R. A. F

    Leather, E. H. C.

    Perkins, W. R. D.

    Tilney, John

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

    Peto, Brig. C. H. M

    Touche, G. C.

    Lennox-Boyd, A. T.

    Pickthorn, K.

    Turner, H. F. L.

    Lindsay, Martin

    Pitman, I. J.

    Turton, R. H.

    Linstead, H. N.

    Powell, J. Enoch

    Vane, W. M. F.

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

    Price, Henry (Lewisham, W)

    vaughan-morgan, J K

    Lloyd, Maj. Guy (Renfrew, E.)

    Prior-Palmer, Brig. O

    Vosper, D. F.

    Lloyd, Selwyn (Wirral)

    Profumo, J. D.

    Wakefield, Edward (Derbyshire, W.)

    Lockwood, Lt.-Col. J. C.

    Raikes, H. V.

    Walker-Smith D. C.

    Longden, Gilbert (Herts, S.W.)

    Rayner, Brig. R.

    Ward, Hon. George (Worcester)

    Low, A. R. W.

    Redmayne, M.

    Ward, Miss I. (Tynernouth)

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Remnant, Hon. P

    Waterhouse, Capt. Rt. Hon. C

    Lucas, P. B. (Brentford)

    Renton, D. L. M.

    Watkinson, H

    Lucas-Tooth, Sir Hugh

    Roberts, Maj. Peter (Heeley)

    White, Baker (Canterbury)

    McAdden, S. J.

    Robertson, Sir David (Caithness)

    Williams, Charles (Torquay)

    McCorquodale, Rt. Hon. M. S

    Robinson, Roland (Blackpool, S.)

    Williams, Gerald (Tonbridge)

    Mackeson, Brig. H. R.

    Robson-Brown, W.

    Williams, Sir Herbert (Croydon, E)

    McKie, J. H. (Galloway)

    Rodgers, John (Sevenoaks)

    Wills, G

    Maclay, Hon. John

    Roper, Sir Harold

    Wilson, Geoffrey (Truro)

    Maclean, Fitzroy

    Russell, R. S.

    Wood, Hon. R.

    MacLeod, Iain (Enfield, W.)

    Ryder, Capt. R. E. D.

    York, C.

    MacLeod, John (Ross and Cromarty)

    Salter, Rt. Hon. Sir Arthur

    Maitland, Cmdr. J. W.

    Sandys, Rt. Hon D.

    TELLERS FOR THE AYES:

    Manningham-Buller, R. E

    Savory, Prof. D. L.

    Mr. Studholme and

    Major Wheatley.

    NOES

    Acland, Sir Richard

    Brook, Dryden (Halifax)

    Daines, P.

    Adams, Richard

    Brooks, T. J. (Normanton)

    Dalton, Rt. Hon. H.

    Albu, A. H.

    Broughton, Dr. A. D. D.

    Darling, George (Hillsborough)

    Allen, Arthur (Bosworth)

    Brown, Rt. Hon, George (Belper)

    Davies, A. Edward (Stoke, N.)

    Allen, Scholefield (Crewe)

    Brown, Thomas (Ince)

    Davies, Ernest (Enfield, E.)

    Anderson, Alexander (Motherwell)

    Burke, W. A

    Davies, Harold (Leek)

    Anderson, Frank (Whitehaven)

    Burton, Miss E.

    Davies, Stephen (Merthyr)

    Attlee, Rt. Hon. C. R.

    Butler, Herbert (Hackney, S.)

    de Freitas, Geoffrey

    Awbery, S. S.

    Callaghan, L. J

    Deer, G.

    Ayles, W. H.

    Carmichael, J.

    Delargy, H. J

    Baird, J.

    Castle, Mrs. B. A

    Diamond, J.

    Balfour, A.

    Champion, A. J.

    Dodds, N. N.

    Barnes, Rt. Hon. A. J.

    Chetwynd, G. R

    Donnelly, D.

    Bartley, P.

    Clunie, J.

    Driberg, T. E. N.

    Bellenger, Rt. Hon. F. J.

    Cooks, F. S.

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

    Benn, Wedgwood

    Coldrick, W.

    Ede, Rt. Hon. J. C.

    Benson, G.

    Collick, P.

    Edelman, M.

    Beswick, F.

    Collindridge, F

    Edwards, John (Brighouse)

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

    Cook, T. F.

    Edwards, Rt. Hon. Ness (Caerphilly)

    Bing, G. H. C.

    Cooper, Geoffrey (Middlesbrough, W.)

    Edwards. W. J. (Stepney)

    Blenkinsop, A.

    Cooper, John (Deptford)

    Evans, Albert (Islington, S.W.)

    Blyton, W. R.

    Cove, W. G.

    Evans, Edward (Lowesloft)

    Boardman, H.

    Craddock, George (Bradford, S.)

    Evans, Stanley (Wednesbury)

    Booth, A.

    Crawley, A.

    Ewart, R.

    Bottomley, A. G.

    Crosland, C. A. R.

    Fernyhough, E.

    Bowles, F. G. (Nuneaton)

    Crossman, R. H. S

    Field, Capt W J

    Braddock, Mrs. Elizabeth

    Cullen, Mrs. A.

    Finch, H. J.

    1670

    1671

    Fletcher, Eric (Islington, E.)

    Lewis, John (Bolton, W.)

    Roberts, Emrys (Merioneth)

    Follick, M.

    Lindgren, G. S

    Roberts, Goronwy (Caernarvonshire)

    Foot, M. M

    Lipton, Lt.-Col. M

    Robertson, J. J. (Berwick)

    Fraser, Thomas (Hamilton)

    Logan, D. G.

    Rogers, George (Kensington, N)

    Freeman, John (Watford)

    Longden, Fred (Small Heath)

    Ross, William

    Freeman, Peter (Newport)

    McAllister, G.

    Royle, C.

    Gaitskell, Rt. Hon. H. T. N

    MacColl, J. E.

    Shackleton, E. A. A.

    Ganley, Mrs. C. S.

    McGhee, H. G.

    Shinwell, Rt. Hon. E.

    George, Lady Megan Lloyd

    McGovern, J.

    Silverman, Julius (Erdington)

    Gibson, C. W.

    Mclnnes, J.

    Silverman, Sydney (Nelson)

    Gilzean, A.

    Mack, J. D.

    Simmons, C. J.

    Glanville, James (Consett)

    McKay, John (Wallsend)

    Slater, J.

    Gordon-Walker, Rt. Hon P. C

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

    Smith, Ellis (Stoke, S.)

    Granville, Edgar (Eye)

    McLeavy, F.

    Smith, Norman (Nottingham, S.)

    Greenwood, Anthony (Rossendale)

    MacMillan, Malcolm (Western Isles)

    Snow, J. W.

    Greenwood, Rt. Hn. Arthur (Wakefield)

    McNeil, Rt. Hon. H.

    Sorensen, R. W

    Grenfell, Rt. Hon. D. R.

    MacPherson, Malcolm (Stirling)

    Soskice, Rt. Hon. Sir Frank

    Grey, C. F.

    Mainwaring, W. H.

    Sparks, J. A.

    Griffiths, David (Rother Valley)

    Mallalieu, E. L. (Brigg)

    Steele, T.

    Griffiths, Rt. Hon. James (Llanelly)

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

    Strauss, Rt. Hon. George (Vauxhall)

    Griffiths, William (Exchange)

    Mann, Mrs. Jean

    Stross, Dr. Barnett

    Gunter, R. J.

    Manuel, A. C.

    Sylvester, G. O.

    Haire, John E. (Wycombe)

    Mathers, Rt. Hon. G

    Taylor, Bernard (Mansfield)

    Hale, Joseph (Rochdale)

    Mayhew, C. P.

    Taylor, Robert (Morpeth)

    Hale, Leslie (Oldham, W.)

    Mellish, R. J.

    Thomas, David (Aberdare)

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Messer, F.

    Thomas, George (Cardiff)

    Hall, John (Gateshead, W.)

    Middleton, Mrs. L

    Thomas, Iorwerth (Rhondda, W)

    Hamilton, W. W

    Mikardo, Ian.

    Thomas, Ivor Owen (Wrekin)

    Hannan, W.

    Mitchison, G. R.

    Thorneycroft, Harry (Clayton)

    Hardy, E. A.

    Moeran, E. W.

    Timmons, J.

    Hargreaves, A

    Monslow, W.

    Tomney, F.

    Hastings, S.

    Moody, A. S.

    Turner-Samuels, M

    Hayman, F. H

    Morgan, Dr. H. B.

    Ungoed-Thomas, Sir Lynn

    Henderson, Rt. Hn. Arthur (Tipton)

    Morley, R.

    Usborne, H.

    Hobson, C. R.

    Morris, Percy (Swansea, W.)

    Vernon, W. F

    Holman, P.

    Mort, D. L.

    Viant, S. P.

    Holmes, Horace (Hemsworth)

    Moyle, A.

    Wade, D. W.

    Houghton, D

    Mulley, F. W.

    Wallace, H. W.

    Hey, J.

    Murray, J. D.

    Watkins, T. E.

    Hubbard, T

    Nally, W.

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

    Hudson, James (Ealing, N.)

    Neal, Harold (Bolsover)

    Weitzman, D.

    Hughes, Emrys (S. Ayrshire)

    Noel-Baker, Rt. Hon. P. J

    Wells, Percy (Faversham)

    Hughes, Hector (Aberdeen, N.)

    O'Brien, T.

    Wells, William (Walsall)

    Hughes, Moelwyn (Islington, N.)

    Oldfield, W H.

    West, D. G

    Hynd, H. (Accrington)

    Oliver, G. H.

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

    Hynd, J. B. (Attercliffe)

    Orbach, M.

    While, Mrs. Eirene (E. Flint)

    Irvine, A. J. (Edge Hill)

    Padley, W. E.

    While, Henry (Derbyshire, N.E.)

    Irving, W. J. (Wood Green)

    Paget R. T

    Whiteley, Rt. Hon. W

    Isaacs, Rt. Hon G A.

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

    Wilcock, Group Capt C A B

    Janner, B.

    Paling, Will T. (Dewsbury)

    Wilkes, L.

    Jay, D. P. T.

    Pannell, T. C.

    Wilkins, W. A

    Jeger, George (Goole)

    Pargiter, G A

    Willey, Frederick (Sunderland)

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

    Parker, J.

    Willey, Octavius (Cleveland)

    Jenkins, R. H.

    Paton, J.

    Williams, David (Neath)

    Johnson, James (Rugby)

    Pearson, A.

    Williams, Rev. Llywelyn (Abertillery)

    Johnston, Douglas (Paisley)

    Peart, T. F.

    Williams, Ronald (Wigan)

    Jones, David (Hartlepool)

    Popplewell, E.

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

    Jones, Frederick Elwyn (W. Ham, S)

    Porter, G.

    Williams, W. T. (Hammersmith, S)

    Jones, Jack (Rotherham)

    Price, Joseph T. (Westhoughton)

    Wilson, Rt. Hon. Harold (Huyton)

    Jones, William Elwyn (Conway)

    Price, Philips (Gloucestershire, W.)

    Winterbottom, Ian (Nottingham, C.)

    Keenan, W.

    Proctor, W. T.

    Winterbottom, Richard (Brightside)

    Kenyon, C.

    Pryde, D. J

    Wise, F. J.

    Key, Rt. Hon. C. W

    Pursey, Cmdr. H

    Woodburn, Rt. Hon A

    King, Dr. H. M.

    Rankin, J.

    Woods, Rev. G. S

    Kinghorn, Sqn. Ldr. E

    Rees, Mrs. D.

    Yates, V. F.

    Kinley, J.

    Reeves, J

    Younger, Rt. Hon K

    Kirkwood, Rt. Hon D

    Reid, Thomas (Swindon)

    Lang, Gordon

    Reid, William (Camlachie)

    TELLERS FOR THE NOES

    Lee, Miss Jennie (Cannock)

    Rhodes, H.

    Mr. Bowden and

    Lever, Leslie (Ardwick)

    Richards. R

    Mr. Kenneth Robinson

    Lewis, Arthur (West Ham, N.)

    Robens, Rt. Hon. A.

    New Clause.—(AMENDMENT OF S. 55 OF FINANCE ACT, 1940.)
    Section fifty-five of the Finance Act, 1940 (which deals with the valuation for estate duty of shares and debentures of certain companies), shall be amended by the addition at the end of subsection (1) of the said section fifty-five, of the words "unless the personal representatives of the deceased elect that the value shall
    1672
    be estimated in accordance with the provisions of the said subsection (5) of section seven of the Finance Act, 1894, provided that no greater amount of estate duty shall be payable by any person or company by reason of anything contained in this section than would be payable under the law relating to estate duty apart from this section."—[Mr. Birch.]
    Brought up, and read the First time.
    7.45 p.m.
    Mr. Nigel Birch: I beg to move, "That the Clause be read a Second time."
    I must apologise for the fact that the drafting of the Clause is a little clumsy, but it has been difficult to get it in order owing to the fact that there is a danger of imposing a charge. However, after trying for some time it is in order at last.
    Its object is to alter Section 55 of the Finance Act, 1940, which, I would say in passing, is rather like several of the Clauses we have had in this Finance Bill. That is to say, it is one of the Mr. Bloodsucker Taxgatherer Clauses, obviously devised by the Department of Inland Revenue to catch tax evasion, but devised without proper regard to what would be the ultimate consequences of such a provision. Those ultimate consequences are injustice to individuals and damage to the industrial structure of our country.
    When Clause 55 was brought in in 1940 it was hardly debated at all on the Committee stage of the Finance Bill. It was a good illustration of what happens when we do not have an Opposition. There was also another overriding reason—it was debated during the week of Dunkirk. Its effect was to alter the basis of assessment for Death Duties for one-man businesses or businesses controlled by one man.
    Previously the valuation of such businesses for Death Duties had been determined by the Finance Act, 1894, under which such a one-man business was valued at the notional price it would be likely to fetch in the open market, and Death Duties were paid accordingly. Under the 1940 Act that basis was altered and such businesses were valued at the net value of the assets. The Clause we seek to move gives the option to the representatives of the deceased owner of a one-man business either to be assessed under the Act of 1894 or under the Act of 1940. We had to give the option or the Clause would not have been in order.
    The reason why I have moved this Clause is that under the Act of 1940 a substantial injustice takes place. Particularly today, with rapidly rising prices for machinery, buildings, land, etc., if a business is valued on its assets the value is very high indeed. It is far higher than its value if sold in the open market as a going concern, and much greater than
    1674
    the value of such a business if it had been a public company whose shares were dealt in on the Stock Exchange.
    The reason for that is because the assets are valued in paper £s and the paper £. depreciating very rapidly, puts the price of the assets up in terms of those paper £s. It has been one of the principal claims to glory of the Government that, owing to the immense increase in Profits Tax, the rise in the physical value of the assets is not translated into a rise in the value of the business or in the value of its shares if dealt in on the Stock Exchange; because if we take the average Stock Exchange prices, it will be found that they have gone up by only a very small amount in proportion to the value of the rise in the physical assets in terms of paper £s. So if someone has their money in a public company whose shares are dealt in on the Stock Exchange, they are assessed for Death Duties at a far lower rate than if they own a small one-man business. That seems to me in principle wrong, and very wrong for the Socialist Party in particular.
    The Socialists have given up many of their most cherished beliefs—there is only that old William Jennings Bryan, in the shape of the right hon. Member for Ebbw Vale (Mr. A. Bevan), who believes in the old silly stuff—but the one thing they have never given up for a moment is the plenary inspiration of the Stock Exchange. We have been told again and again that the price of a share on the Stock Exchange represents the absolute true value of that holding.
    It is worth remembering that if, for the purpose of nationalisation, the shares in those companies that were nationalised had been valued on the basis on which these assets are now being valued, the compensation paid would have been at least two, and possibly three, four, or five times as much. We pointed out that the assets were worth much more, but we were told that that was ridiculous; there was the Stock Exchange value, and the Government could not do anything about it.
    I will give an example which has been sent to us of the sort of way in which this works out. This illustration is of a one-man company, of which the chairman is 80 years old. He owns the business, but is rather old to do very much about it. It is reckoned that on an asset basis,

    1675
    if the assets are valued, the business works out at about £3 a share and with the number of shares that he holds—that is to say, his holdings on an assets basis—it would be worth about £23,400.
    But—and this is the point—the company is not at the moment doing particularly well. Last year it made a loss, and owing to the fact that it is now running actually at a loss, the shares would not be worth anything like £3 each. It is reckoned that on a fairly generous assessment they might be worth something like 25s. a share. If one values them at 25s. a share, which is what they are worth if the business is sold, the value works out, on the number of shares this man holds, at £9,750. Therefore the real value of the business, if it is sold, is £9,750. but the value, as it is assessed, is £23,400. Given the fact that the man bas certain other assets, the effect of all this would be that the death duties would be 25 per cent. in excess of the market value of the shares; whereas, of course. if the company had been a public company, dealt in on the Stock Exchange, such things would not have happened at all.
    It is impossible at the present rate of tax for anybody to save against Death Duties at their present rates. The effect of the extra twist which this Section of the 1940 Act gives is that it is impossible for one-man family businesses—it is worth remembering that they still account for a very large part of the country's industry—to go on in the family. That is to say, any family is bound to sell the business or to bring it up and to sell the assets because it cannot conceivably put up, out of any profits or savings it might make, the inflated Death Duties with which it is charged.
    It seems to us that this is an injustice and a bad anomaly, because the Government should not frame their taxation in such a way that they favour the large and discriminate against the small. In America, of course, taxation has gone much further than we have in discriminating between large and small companies, and taxation on large companies is considerably larger than taxation upon small companies. Here we have an instance where the taxation is far higher upon the small company than upon the large company. The effect of
    1676
    it gets worse every time the value of the pound goes down and taxation goes up. It was bad when it was brought in and was not discussed. It is far worse now, and I think the time has come when something should be done about it.
    Sir W. Wakefield: I beg to second the Motion.
    I wish to support the new Clause which has been put forward so clearly by my hon. Friend the Member for Flint, West (Mr. Birch). I sit on the Executive Committee of the National Union of Manufacturers, which is composed mainly of small and medium manufacturers, and, of course, amongst its members there are many with the kind of family businesses to which reference has been made.
    There is a great and growing anxiety in these family businesses of the effect that Death Duties will have upon them because of the provisions of Section 55 of the 1940 Act, the effects of which have been so concisely and clearly described by my hon. Friend. There are many examples of very great hardship being caused by reason of the valuation of assets rather than of shares as between a willing buyer and a willing seller. The result is that the owners and principal shareholders of these family businesses are now, at a time when they ought to be concentrating to the full on increasing production and making their businesses more efficient, extremely anxious and worried about what is happening.
    It is quite possible for an owner of a business, and for his widow and family, today to be left absolutely penniless. It is in fact possible, under the 1940 Act, for a business to be valued by the Inland Revenue and then, in order to raise the necessary money to pay Death Duties to the State, it has to be sold and there is indeed insufficient money to pay the Death Duties and to leave anything over for the family.
    I have with me a letter from a most well-known firm of solicitors, in which the writer says:
    "I have in the office several cases which are being dealt with under Section 55 of the Finance Act, 1940… In one case in which I am concerned, the deceased never had control, and is only brought into Section 55 by the very technical reason that for a short time within the three years before his death he had more than 50 per cent. of the income of the company. In this case the results are fantastic. Valuing the shares by reference to

    1677
    the value of the assets of the company, they come out at more than three times the actual price which could be obtained for the shares, with the result that so far as I can see the whole of the estate will be absorbed by the Death Duties, and the Executors will still owe "—
    a sum of money—
    "for Death Duties."
    Under Section 55 of the 1940 Act, therefore, there is a personal liability on executors, which is a very serious position indeed. That is one example of the effects of the 1940 Act, which, I am sure, were never intended when the Act was passed.
    I have also an article in the "Financial Times" of 7th September of last year, in which an example is given of shares in a private company being valued as between a willing buyer and a willing seller, at £2 10s.; but under the provisions of the 1940 Act and the necessity to value the assets, these shares were calculated to be £8 5s. each. That gives rather less than a 2 per cent. yield basis for non-marketable shares in a private company. It is quite fantastic.
    8.0 p.m.
    These examples are not just specially selected, but are indicative of the sort of thing which is happening throughout the country. It means the breaking up of these small family businesses and I sincerely believe that irreparable harm is being done to the national economy. I suggest that the Treasury should give the most sympathetic consideration to this Clause, which is merely a return to the position as it was before.
    As my hon. Friend pointed out, when nationalisation takes place the Stock Exchange value is taken as a fair basis, and very often assets are worth two, three, four and five times the value of the shares quoted on the Stock Exchange. It seems only right that these private businesses should be assessed and valued on the same basis as the big public companies; that is to say, that the shares should be assessed at a value as between willing buyer and willing seller. If that were done many of the anomalies and grave difficulties with which we are faced at the present time would disappear.
    There are several reasons why these private companies assessed for Death Duties in this way are hit more hardly
    1678
    than are people owning shares in public companies. I could give examples which show that there is likely to be a wide difference between the asset value of shares and their realisable value in these private companies, the serious effects of which we are now discussing, when, on account of death, shares have to be realised. If any part of the surplus represents appreciation of trading stock. such part on realisation or liquidation attracts Income Tax and will automatically be apportioned among the shareholders for Surtax purposes. These two taxes may amount to 19s. 6d. in the £. If, therefore, Estate Duty is paid on the value of stock, tax on the surplus may greatly exceed 100 per cent. Again, if any part of the surplus arises from assets subject to wear and tear allowances, balancing charges for Income Tax will on realisation be attracted.
    A third point is that any part of the surplus representing profits accumulated since January, 1947, will, on liquidation, attract Profits Tax distribution charge up to, I suppose, 50 per cent. All these matters are very serious to these small private and family businesses. If the proposals and suggestions in this new Clause are carried out, many of the injustices and anomalies which now exist and cause such anxiety to our manufacturers will be removed, and I hope the Treasury will give most sincere and sympathetic consideration to it.
    Lieut.-Commander Baldock: I believe there is in industry a field for all kinds of business administration and management; ranging today from, in certain cases, the State control of nationalised industry—for example, in the case of the mines—through the large public companies to the smaller public companies and private companies, down to partnerships and even single-owned companies. If we on this side of the House are prepared to accept the principle of nationalisation and State-run industries in certain cases, then there should be a change of heart on the part of the Government in their attitude towards privately-run concerns. That would seem to be only an equitable thing to ask.
    In Leicestershire, in the hosiery and textile industries, there are a great many family businesses which have sprung up, because skilled workers have been able

    1679
    to raise a small amount of capital and acquire one or two machines. They have been able to build up from that into what are, in many cases, very satisfactory and efficient concerns. The ability to be able to climb that ladder is a most important thing in the general morale of industry. So long as it is known that people can step out from larger concerns and start up on their own, and ascend that ladder, there is bound to be greater enthusiasm and enterprise, as well as the possibility for varieties of managements, according to the type of business, the locality and the enterprise concerned.
    I think also that the manual workers employed by the various concerns have their opinions about the different sorts of managements with which they wish to work. It is not everybody who wishes to work in a nationalised industry; indeed. judging by the reports of certain union leaders it is a diminishing number of people who wish to do so. It is not everyone who wishes to work in the largest kind of public company. Many people prefer the small concerns, where there is the intimate human relationship between the owner or the family running the business and the people who work in it. I would even venture to say that the majority of workers prefer that relationship, if they can have the other things as well.
    Another point is that a great number of these businesses are owned by one man, or by a family, because the owners have in the past ploughed back the profits into the concern, and have not gone to the banks or borrowed money from the public. It is a poor reward for people who have consistently ploughed their profits back into the enterprise to find themselves treated in this discriminatory way when it comes to the payment of Estate Duty. Many of these businesses are the craft type of business which we all know is particularly difficult to maintain in these days. They are businesses which have been handed down in the family for perhaps five or six or more generations; and many of the people who work in them have been employed in the business for as long.
    There may be only one or two firms in the whole country which specialise in a particular craft-made article, and it is only when something of that particular
    1680
    pattern is sought for that it is realised how hard it is to obtain. I believe these types of firms are inevitably broken up if the Estate Duty falling on them compels the family owner to relinquish the business. I think that type of highly skilled craft business ought to be considered.
    If there is to be a differentiation of treatment between the family concern and the public company, as there is now, or between the man who owns a business and the man whose money is invested in a number of public companies whose shares are quoted on the Stock Exchange; and if we accept the principle of a differentiation between earned income and unearned income—which is accepted in our tax law—surely it would be reasonable to expect the same kind of bias in favour of people who earn their savings and put them back into their businesses.
    But exactly the reverse is the case. Whereas if a man earns an income he receives tax discrimination in his favour as compared with the person whose money is invested, the income from which is unearned; the man who puts his money back into his company is discriminated against as compared with the man who invests his money in companies which he may never have set eyes on or with which he has never had any connection at all. Surely that is anomalous. If this type of craft industry, the small industry which is the ladder by which people can work their way up and by which, through enterprise and ambition, they can further their achievements, is crushed out of existence as a result of this process, there will be a great gap in the enterprise of this country in a few years time.
    Mr. John Edwards: It is, of course, true that the general criterion of valuation of property passing on death is that contained in the old Act of 1894; namely, the market value at the date of death. But this test was found to be unsatisfactory in the valuation of shares and debentures in a privately-owned company. The hon. Member for Flint, West (Mr. Birch), said something rather scathing about Socialists nowadays, but it was not the Socialists who found this to be a defect. I think that the right hon. and gallant Gentleman the Member for Gains-borough (Captain Crookshank) was at the Treasury at the time when, in 1940, the

    1681
    Government thought it necessary to take these steps to strengthen the legal defences against avoidance of tax. I speak from memory, but I think that that is the substance of what Sir Donald Somervell said at that time.
    While I admit that circumstances may change to some extent, I think that the factors which weighed with the Government in 1940 are still not irrelevant. The privately-controlled company is in a somewhat different position from the public company. Generally speaking, the market price of shares depends on a dividend record. The privately-controlled company, instead of paying dividends, applies its income to high remuneration or places the profits to reserve or, indeed, it may so fetter the shares of the company with restrictions as to make them virtually unmarketable in the ordinary way.
    Mr. Birch: Surely, the whole point is that they are unmarketable. When the Inland Revenue assess the value of the company as a going concern, the fact that they have paid extra high salaries is all taken into account.
    Mr. Edwards: That is the whole point. Market value, as the hon. Gentleman talked of it, will not actually affect the true value having regard to the real assets of the company. That was why the Government in 1940 thought it right to enact in Section 55 of the Finance Act a proposal to supersede the Finance Act of 1930, which they held to be defective, and to provide what was said at the time to be a more realistic basis of valuation in the case of shares and debentures in such companies.
    The general aim and effect of the assets basis of valuation where a privately-controlled company is concerned is to get the same Estate Duty as if the deceased had carried on the business on his own account. It must be incumbent upon those who seek a change—those who seek to go back to the pre-1940 position—to demonstrate that in some way there is hardship on the people concerned with the companies that are caught by Section 55 that would not apply to the person running a business on his own account. If the position were in general as described by hon. Members in the examples they have given, then I should agree that this would be a matter of great moment. I think the cases they have given are exceptions, and I do not think they are generally representative of the
    1682
    whole field of the companies with which we are concerned.
    8.15 p.m.
    The hon. Gentleman who seconded the Motion reminded us of his connection with the National Union of Manufacturers. Of course, they have made great complaint about this. As the Chancellor has pointed out, I think as late as 6th February this year, these allegations have not so far been supported by evidence. However, because the statements continue to be made, my right hon. Friend thought it right that the Inland Revenue authorities should themselves make an investigation into this matter, and a sample investigation has been carried out. Perhaps I may give the House the main outlines of it, because it has a real bearing on the arguments advanced.
    Shortly, the investigation threw up cases which applied over the whole field and would seem to indicate that there are about 100 cases a year which can be regarded as hardship cases, using that word in a particular way, namely, to describe any cases in which the Estate Duty on the total assets exceeded the non-trading assets so that some part of the duty would have to be found out of the business. I use the word "hardship" in that rather technical sense in which the inquiry has been conducted, and the report that we have been given shows that, in 60 per cent. of the cases, less than 25 per cent. of the business assets were required to pay the duty, and in only 17 per cent. would the duty swallow more than 50 per cent. of the business assets. Since the National Union of Manufacturers has been mentioned, I should say that only 19 per cent. were manufacturing concerns.
    Mr. Selwyn Lloyd: When the hon. Gentleman says that in so many cases the duty has to be paid out of the business assets, surely it is impossible to value the consequences of that without knowing something of other circumstances?
    Mr. Edwards: I entirely agree, and perhaps it is wrong to try to summarise when the full report is what hon. Members want to study, but perhaps I may say in passing that it is the intention of my right hon. Friend that this report shall be published as a White Paper, and we shall be able to study it in more detail.

    1683
    All the same, I thought it would be worth while giving these outline figures, because that is the only way in which I could deal with the individual cases which have been quoted. We found only one case where a business had to be closed down because of this, and it was the case of a stockbroker. The general conclusion was that the investigation had failed to produce any evidence that manufacturing businesses were being broken up by Estate Duty. That is not to say that such cases could not occur; I have no doubt they could, but I think they would be exceptional. Nor has the investigation produced any body of evidence to suggest that Estate Duty, even if it does not close down a business, is a leading factor in squeezing out the family from control. There is no evidence which shows that.
    Air Commodore Harvey: Can the hon. Gentleman tell us how many firms were selected and how the inquiry was conducted and what was the method used?
    Mr. Edwards: I assure the hon. and gallant Gentleman that it was a representative sample inquiry for the whole field which is covered by Section 55. It is not taken over the whole field, but I think it is a big enough sample from which to draw conclusions. I am saying that the investigation which the Board of Inland Revenue carried out has failed to bring out cases of special relief for family needs.
    No one else has produced any evidence; the National Union of Manufacturers have not produced any evidence, and no hon. Member who has made a statement on this matter has produced any evidence which can be regarded as evidence of this state of affairs. The conclusion at which we have arrived is that it is too early to consider any special relief for this class of person, and we are consequently entitled to take our stand on the very good reasons which led the 1940 Government to remedy what they thought at the time were defects in the law.
    Lieut.-Colonel Sir Walter Smiles: I wish to ask the hon. Gentleman whether he has made any inquiries in Northern Ireland, because there we have a tremendous lot of private companies. I
    1684
    suggest to him that he get in touch with the Ministry of Commerce in Northern Ireland and ask for some evidence from them. Only last month a complaint was made to me about a business in Lurgan which had passed from the grandfather to the father and then to the son, and which was closing down for want of capital. It was a linen business. There is a fear, I believe, that the whole of the flax-spinning side of the linen business may be getting away from private hands and into public companies.
    These one-man companies are suffering very badly. I discussed this matter with one of the ex-Finance Ministers of Northern Ireland the other day, and he was emphatic on this point of private companies. As I say, one of the suggestions I would make to the Chancellor of the Exchequer is that he should ask for evidence from Northern Ireland. As we all know, these small businesses are valued at Stock Exchange valuation, which is very different from the valuation which the Income Tax authorities make of a private business. I can think of one business of which I was an employee —I was never a director of it—which had a capital of £1 million. It had liquid assets of £1 million, and paid a dividend of 7 to 8 per cent. The Stock Exchange value of its shares was 22s., just above par value. If a shareholder with, say, £20,000 worth of shares in a private company dies, the whole of those liquid assets would naturally be taken into consideration.
    Mr. J. Edwards: Is the hon. and gallant Gentleman talking about a company the securities of which are actually quoted on the Stock Exchange?
    Sir W. Smiles: Yes.
    Mr. Edwards: In that case, it is excluded from the operation of this Clause.
    Sir W. Smiles: Exactly. That is the example I put. If the man had under £20,000 of these shares, the valuation would be approximately just over £20,000, but if he held the same value of shares in his own business, it might come to twice or three times as much. That is why I think the private company or one-man business will suffer compared with the man with the same amount of capital who holds it in a public company. On the one hand, it is a private company

    1685
    and the man is running the business himself, and, on the other, it is a public company in which the man holds shares.
    I believe that this Estate Duty will put private companies out of business. I could name a whole lot of such companies in Northern Ireland which have been turned into public companies during the last four or five years. I think the family business should be encouraged, and that it is a great pity that the great cartels and public companies should shallow up everything in this land of ours.
    Air Commodore Harvey: I think the Minister dealt with this matter very fairly. His Department have gone to some trouble to look into the matter, but I hope they will go into even more detail, because I believe this country will thrive when we have a larger number of small businesses to support the bigger industries. I have recently come into contact with large firms engaged on the re-armament programme who, because they are unable to cope with the work on hand owing to difficulties connected with the transfer of labour and the housing problem, are having to turn to the small companies to help them out. The workmanship of these small companies is excellent, and frequently their prices are lower than it would cost the bigger companies to do the jobs for themselves.
    I deprecate the large companies or banks taking over the small concerns for one reason or another. Where one has the family all putting their backs into it, I think great results can be achieved. I ask the Chancellor to go into this matter in great detail. I think there has already been investigation of it in Northern Ireland. In the textile industry in Macclesfield, in my own constituency, we have many men who started off literally in a backyard shed and built up very fine businesses, perhaps employing between 40 and 60 men. They know every man who works in the business intimately and great results are achieved. They go abroad and secure orders, and they are exporting. I hope they will be given such treatment as will enable that type of business to thrive.
    Sir Edward Boyle: I wish to express agreement with my hon. Friend the Member for St. Marylebone (Sir W. Wakefield). If those responsible for Section 55 of the
    1686
    Finance Act, 1940, had realised what was going to happen in years to come as a result of that Section they might well have been surprised. This Section was designed originally to deal with what one might call old-fashioned tax-evasion, against which remedies had to be found —the case of a man turning his own assets into a private company. But we have now reached a position where that. Section bears most hardly on some perfectly genuine family businesses.
    I want to be fair about this. I shall read the promised report with great interest when it appears. But ever since the issue of the Kinsey Report, I have, been suspicious of such investigations, because one sometimes finds that a great, deal of evidence has been built up on a rather small number of cases. But in any event, it ought to be possible to devise a system whereby the true tax-evader can be brought to book without harming the legitimate man who wants to pass on his business. We have surely reached an absurd situation when the duty payable on the assets of even a limited number of companies is greater than the total realisable market value of their shares.
    I should also like to meet the point of the Economic Secretary, when he suggested that the present position does not penalise the director of a private company as against the man who is in business on his own account. Surely the point is this. The private company director often wants a member of his family to be associated with the business, so that it can be handed on. We should do all we can to foster the traditional private company which is passed on from father to son, particularly as the general structure of such a company, where the profits are regularly ploughed back, is surely a useful deterrent against inflation.
    I hope, therefore, it will be possible to find some means whereby the tax-evader can be punished, without the traditional bona fide director of a small company whose shares are not quoted on the Stock Exchange being penalised as well.
    Mr. Eccles: I should like to support what my hon. Friend the Member for Handsworth (Sir E. Boyle) has just said. We shall, of course, read with great interest this report. I was one of those who put a Question to the Chancellor on this point some time ago. I fully admit that

    1687
    the engineering industry with which I was in touch did not produce any evidence.
    I began to consider why they did not and I came to the conclusion that the shadow of Death Duty hangs over these companies before the man dies. The damage is done not so much at the moment when the Treasury have investigated the business—that is when the shares of the company pass on death—but it is done before that because the man says to himself, "I have to provide against this taxation and I had better turn my small company into a public company." One sees constantly in the newspapers prospectuses of the issue of shares which are nothing more nor less than the anticipation of Death Duty.
    8.30 p.m.
    I put this to the right hon. Gentleman: we are short of savings. There are a great many new projects for which money is urgently required in this country to be put up in such a way that it is not inflationary. That is to say, we do not want to try to finance more investments than the genuine new savings can take care of; but, of course, if the proprietor of a private business comes to the City of London and says, "I am willing to sell my shares. I have a long record of profits. I will sell them on a 6½ per cent. basis,"or whatever it is, they look very attractive. This is an established business which is coming to the new investor and saying, "Will you give me some of your money?" The institutions, the insurance companies, the investment trusts and private people subscribe to these issues.
    I do not think that at the present stage of our finances that is in the interests of the country. It would be better if these people kept the capital of their companies in the locker and did not come to the City of London and say to the new investor, "Will you take some of my capital?" I have experienced this in a business associated with my family. It has only been done in order to turn some shares which were quite unmarketable into War Loan or something of that kind which we could put on one side in order to pay the Chancellor when a death occurred.
    That is not in the interests of the country today. We do not want to put into a liquid form capital which is well placed and which is doing its job pro-
    1688
    ducing goods. Though we shall read with great interest the right hon. Gentleman's sample, I am bound to say that if it deals only with the cases at the point of death. I think it will have missed the really important damage which Death Duties are doing to private companies.
    Mr. Emrys Hughes: These arguments from the Opposition are too much for my credulity. The argument lying behind this new Clause suggests that the party opposite is the party of the small business man. There is nothing further from the truth. For example, one of the largest businesses in the City of Glasgow is run by Lord Woolton, and Lord Woolton is a pioneer of great business wiping out the small man.
    Hon. Members know quite well that the development of modern industry is safeguarding the interests not of the small man but of the big trusts and cartels, as was said by the hon. and gallant Member for Down, North (Sir W. Smiles), wiping out the small man. The people responsible for this are the people whose interests are expressed by hon. Members opposite throughout these debates on this Finance Bill. The cartels and big trusts are represented formidably on the other side of the House. The suggestion that the party opposite stand for the preservation of the small business against the cartel and the trust is so much humbug and hypocrisy.
    Mr. Selwyn Lloyd: The hon. Member for Ayrshire, South (Mr. Emrys Hughes), has made one of his characteristic interventions. I would ask him to consider this proposition upon its merits. We realise that that will involve him in mental processes with which he is not familiar. I ask him to consider the arguments for and against this proposition without talking so much about humbug and hypocrisy. Not even he, if he were to examine this proposition, could dispute that it would benefit the small business. Therefore, if it benefits the small business why does he not support the new Clause?
    The Economic Secretary will admit that if this new Clause were accepted it would benefit the small business. I do not think there has been any dispute about it, but I gather that the Economic Secretary says there is no particular

    1689
    reason why in the present circumstances we should try to help the small business in this way. The evidence which his Department has gained is not sufficient to convince the Government that there is a case for helping the small business in this way. I gather that that is the burden of his argument, but I do not think anybody in any quarter of the House could possibly dispute that this proposition would assist small businesses. I hope that we have the hon. Member for South Ayrshire with us so far—that this would benefit small businesses.
    I very much agree with what was said by my hon. Friend the Member for Handsworth (Sir E. Boyle), that this is a very good example of the fact that if we give a blank cheque to stop tax evasion or tax avoidance very often we catch a whole set of circumstances and conditions which we were not seeking to catch when the provision was originally brought in. One can conceive of circumstances in which a very easy method of tax avoidance would be to turn property into a private company. The property would remain very much in the same form, and it might be fairly easily realisable. Unless there is a provision of this sort it may be that substantial revenue would be lost. But, in fact, this blank cheque hits more people than was intended. We have a strong supporter of the small business with us in the hon. Member for South Ayrshire, and I hope that in all quarters we can start with the proposition which I have indicated.
    What is the effect of this provision as it stands? As some hon. Members opposite have come into the Chamber since the debate began, I think it is necessary to state the case again. Under present circumstances, if someone who owns a business dies, that business is valued on the asset basis and not on the market value of the shares. In fact, the shares may be quite unmarketable. There may be no one who wants to buy shares in that business. It may be that the holding which is to be sold is only a 51 per cent. holding, and no one may want to become a part-owner in the business. If these shares are quite unmarketable the estate has to find the Death Duty from some other source, or else it has to dispose of the shares for what they will fetch—and I will give a practical example from my own constituency of what that would mean.
    1690
    A man told me the other day that he considered that his business was worth so much on the asset basis but that if he died and there was a sale the amount it would realise would be something like a quarter of what he considered to be the asset value of his business. Hon. Members opposite must not be so disingenuous about this matter; there is case after case of this kind. I could give another example from my personal knowledge—and I know the facts and circumstances—where on an asset basis the business is worth so much but if one came to try to sell the shares one would get very much less for them. Anybody who has any knowledge of small businesses knows that that is a fact.
    Mr. Booth: If that is the case, how is it that at present—and it is happening every week—companies with privately held capital are putting their shares on the Stock Exchange and those shares are being bought at a very heavy premium?
    Hon. Members: They are not small companies.
    Mr. Selwyn Lloyd: There are two answers to that. In some cases, of course, as my hon. Friends have said, they are not small companies. In other cases that is being done because the proprietors of those businesses realise that Section 55 is in existence and are seeking to avoid its consequences for the future. They are parting with their ownership of the business to members of the general public arranging for their shares to be dealt in upon what the hon. Member for Bolton, East (Mr. Booth), no doubt thinks is that pernicious institution, the Stock Exchange. They are doing that because of the threat of the Death Duty which is hanging over their businesses.
    I think it is a thoroughly bad thing for people who have built up a business to be forced to divest themselves of the ownership, to spread the ownership among a whole lot of other people who will have only an investment interest in the concern. Every time we talk about people who hold shares in public companies we are told by hon. Members opposite that they are only members of the investment classes, that they are not the true owners, that they are only the rentier class who should be treated exactly the same as people who hold Government stock. In

    1691
    this Clause we are sticking up for those who own their own businesses. We think that if there has been a business built up in one generation, it is a very good thing that it should be handed over to the next generation if that can be done.
    Mr. Emrys Hughes: The hon. and learned Gentleman does not believe that.
    Mr. Selwyn Lloyd: If the hon. Member really thinks that, then he is capable of thinking anything at all.
    I think I am right in saying that 80 per cent. of the business and industry of this country is still in the hands of small people. Personally, I would do everything possible to sustain the small businesses. I have moved year after year Amendments to increase the abatement of Profits Tax in respect of small businesses because I think that diversification of business and great diffusion of ownership are thoroughly healthy. I should like everybody to own his own business. Unfortunately, that simply is not possible, but I want to see as many as possible owning their own businesses, and running them, and passing them on to their families.
    Mr. Emrys Hughes: Who bought up all the small newspapers?
    Mr. Lloyd: Just because we have some aggregation of ownership is no reason why we should seek to make it easier for there to be more aggregation of ownership. The hon. Member for Ayrshire, South, is coming out as a defender of the small man. What about nationalisation? What about State monopolies? I do not like monopolies of any sort, whether State monopolies or otherwise.
    Mr. Emrys Hughes: What about Lord Woolton?
    Mr. Lloyd: I do not want to enter into a debate wider than that on this Clause, but I am delighted to find that even the hon. Member is showing some glimmer of sense on this question of the small businesses, and I am glad to feel that we shall have his support on this matter.
    Coming back to the Clause, however, I do really ask the Chancellor of the Exchequer to appreciate this fact, that it is the shadow of the coming danger and the coming risk of Death Duty which are influencing these smaller companies. It really does mean that if one owns a busi-
    1692
    ness or has a controlling interest in a business that can be upset by the early demise of a senior partner, one cannot take certain risks, one cannot go in for certain developments, for all the time one has to remember this threat, and save every penny of loose cash in the family to keep the business in existence when the death occurs. I ask the Chancellor to remember that this is having a bad effect in many cases. We shall look with interest at this report which is to come. I am glad to think that the Government are sufficiently interested to have had this inquiry made. I should like to know very much more about the methods of the inquiry, and I hope that we shall have an opportunity at no distant date of discussing this matter again.
    Mr. John Lewis: I have listened with great interest to what has been said from the benches opposite. There are certain factors that must be recognised in this matter. Every day one has evidence of small businesses, family businesses, applying to the Stock Exchange Committee for the issue of prospectuses with the object of converting the businesses into public companies, with the further object of getting quotations so as to turn their equities into cash to provide for Death Duty. Whether that is a good thing or a bad thing is, I maintain, a matter for debate.
    In certain circumstances people do it in order to line their pockets. There are certain people who do that sort of thing even when there is no question whatsoever of there being any necessity to provide for Death Duty. There are certain people who go to get quotations for their shares and to turn their private companies into public companies, with the object of cashing in and of putting the money into their pockets. There are, on the other hand, those who have a strong sense of public duty and do not do that sort of thing, and whose main object is to turn their equities into cash to provide for the payment of Death Duty.
    As I see it, it does have an inflationary effect in this sense, that whereas a private business may be showing 10 per cent., or 15 per cent, or 20 per cent., by the process of conversion into stock which is negotiable, perhaps on a 61 per cent. or a 7 per cent. basis, there is a much larger value placed on that business, and there is more money being

    1693
    subscribed for the shares. In that sense, I think it has an inflationary tendency.
    8.45 p.m.
    I, in common with hon. Members opposite, welcome this report which is to come, and I shall be interested to see what it says about this matter. There is obviously a case for consideration. I agree that in this particular matter there should be very careful consideration given to this question, because there is no doubt whatever that in certain circumstances people are being forced to turn their shares into negotiable instruments in order to cash in and provide for Death Duties. I shall not go further, except to say that I hope that this report, which we are anticipating will be out very shortly, will in fact deal with this question and suggest some means of overcoming a difficulty which I think is recognised on both sides of the House.
    Mr. Walter Fletcher: The hon. Member for Bolton, West (Mr. J. Lewis) speaks with some authority on this subject, having, I believe, gone through this particular process not so long ago, in the same way as I was compelled to do a good many years ago with a family business of the fourth generation[Interruption.] The hon. Member for Ayrshire, South (Mr. Emrys Hughes) once told me that I had a fatal fascination, for him.
    Mr. Emrys Hughes: I admire the hon. Gentleman more in his rôle of a typical small business man.
    Mr. Fletcher: I think that the hon. Gentleman's eyesight must be failing. The type of business for which I wish to make a plea is in trade rather than in industry. There are a whole series of businesses which depend on goodwill value. Goodwill in nearly every case, whether in trade or industry, is most difficult to assess. In trade goodwill is inevitably created by honest and competent dealing over a good many years, which the man who wishes to buy tries first of all to assess, because he knows that he will then be going to a business which will treat him well.
    In the distributive trade there is very often only goodwill, handed on from father to son who have learnt the technical side of the industry, and many of these businesses are far too small to get near the Stock Exchange—businesses of anything from £10,000 to £50,000,
    1694
    which are vitally affected by the Clause which we are discussing. In the aggregate they contain in them a greater fund of real technical knowledge and skill, which has made them the entrepôt centre of the world, than the big businesses. In the aggregate they formed the markets and the means by which our export trade has been developed overseas. Our merchant adventurers have been drawn from exactly that type of business.
    It must not be thought that it is the big business which is primarily most important. If we go into any commodity dealing market we will find that the average amount of capital involved in the firms who know exactly what the manufacturers want and where to get it is very small indeed. The Chancellor of the Exchequer knows what I am talking about, for a very good reason. The East India business generally was developed by exactly that type of firm. He knows that insurance was built up by the small men originally, and it is extremely important that these small businesses who are compelled by the force of Death Duties to look to the future should be preserved.
    I hope, therefore, that when we have seen and read this report, special consideration will be given to the small firm which is outside the categories of those which can provide for Death Duties by the method of floating themselves off. I hope that he will regard with some seriousness this plea for people who are not easily defended because they are too small—no reports of their annual activities ever appear in public at all but who are in the aggregate the seat of an enormous amount of knowledge and "know-how." They are the people to whom lip-service is sometimes paid but to whom the more practical tribute which we suggest would be even more welcome.
    Captain Crookshank: Everyone who has sacrificed their dinner to listen to this debate will have been interested in the case which has been put up. My hon. Friend the Member for Flint, West (Mr. Birch) pointed out that it would be very difficult to get a Clause in order. It was only after several years that he was able to raise the issue in the form in which he wanted to raise it.
    It is quite obvious, as the Economic Secretary pointed out, that in 1940 legislation was introduced and directed to dealing with what for some years past had

    1695
    been the problem of the avoidance of Death Duties. I am quite sure that at the time in 1940, when the Finance Bill was being discussed by the then Parliament, there were other pre-occupations which certainly did not allow of detailed debate as was the case with subsequent Finance Bills.
    The fact that this question has not been discussable for one reason or another since makes it all the more important that the Chancellor of the Exchequer and his advisers should take a note of what has been said today. We all appreciate that there has been a sample investigation into a number of cases—a private Gallup Poll. We all have our views as to the value of Gallup Polls, and we can all have our views as to the value of sample investigations. The interesting point is that the Government had it at all, and evidently they must have thought that there was something in the grievances which have been expressed to them through different channels.
    The Economic Secretary said that they had found no evidence of companies going bankrupt—I think that is the term to use in this case—because of having to find Death Duty money. He said they had only found one case of a business being closed down, but I wonder when the Treasury were doing their sample investigation whether they in turn asked for any evidence from outside people about the matter. When a sample is being taken, the cases which we had in mind might be in that part of the area not within the zone of the sample. It does not follow that they do not exist.
    My hon. Friend the Member for Chippenham (Mr. Eccles) put his finger on to one of the difficulties of the sample problem, when he said that much of the damage was done to smaller businesses before deaths had occurred owing to the action they had to take in the common interests of all concerned in anticipation of Death Duties. That is a thing which possibly would not appear in a sample of cases.
    The Government have accepted our point of view that there is a problem to be looked at. It is a fact that the smaller or medium-sized manufacturers in this country are responsible for something like two-thirds of the country's production. We all know from the experience of the
    1696
    war and of increased production then how much depends on the smaller businesses and smaller firms. Now that we are moving into a period of re-armament, it is very important to see that our reserves of industrial productive power are not in any way endangered by tax legislation devised for other purposes.
    Having had this interesting discussion, I feel that if they had not previously been opened, the eyes of Ministers are now being opened to this problem and their successors in the next 12 months will have an opportunity of looking at it again. Having had the debate. I do not think it necessary to carry it any further tonight. We have shown to the satisfaction of anyone who has heard the discussion that there is a problem; that the 1940 Act, which was very properly designed to deal with the avoidance of Death Duties may have too wide a scope. Hitherto, avoidance Clauses have had to be further extended because of loopholes which have been found from year to year. Here we have the same thing the other way round, with the net going too wide, and we must see that in future it does not continue if the result is to hamper the development and the trade of our small companies and the small businesses.
    Question put, and negatived.

    New Clause.—(TAX DUE ON PROFITS UNREMITTABLE BY REASON OF EXCHANGE RESTRICTIONS.)
    Section forty-one of the Finance Act, 1950, shall be repealed and replaced by the following:
    "(1) Where, as respects any tax carrying interest under section eight of the Finance (No. 2) Act, 1947—

    (a) the tax is in respect of profits or income arising in a country outside the United Kingdom; and

    (b) it is impossible by reason of the necessary foreign exchange not being available, for the profits or income to be remitted to the United Kingdom, or

    (c) the Commissioners of Inland Revenue are satisfied, having regard to the rate of exchange available, that it is reasonable that the profits should not be remitted for the time being to the United Kingdom,

    the Commissioners of Inland Revenue shall allow the tax to remain uncollected.
    (2) Interest on the said tax shall, subject to the provisions of subsection (3) of this section, cease to run under the said section eight as from the date on which subsection

    1697
    (1) of this section applies and, if the said date is not later than three months from the time when the tax became due and payable, the interest thereon under the said section eight in respect of the period before the said date shall he remitted.
    (3) Where, under subsection (2) of this section, interest has ceased to run on any tax and thereafter subsection (1) of this section ceases to apply in whole or in part and demand is made by the collector or other proper officer for payment of all or any of that tax, interest under the said section eight shall again begin to run from the date of the demand in respect of the amount demanded:
    Provided that where all or any part of the amount demanded is paid not later than three months from the date of the demand, the interest under the said section eight on the amount so paid running from the date of the demand shall be remitted.
    (4) This section shall apply in relation to all assessments made whether before or after the passing of this Act, and, in relation to any assessment made before the passing of this Act, shall be deemed always to have had effect."—[Mr. Eccles.]
    Brought up, and read the First time.
    Mr. Eccles: I beg to move, "That the Clause be read a Second time."
    The tax to which the proposed new Clause relates is in respect of either income or profits arising in countries outside the United Kingdom, in cases where, through no fault of the taxpayer, that money cannot be converted into sterling. A fairly simple principle is behind this proposal. It is the question whether a man ought to have to pay tax on income until he has got that money in his own hands.
    We have argued this case for many years running. Last year we got a small concession from the Government, and it was embodied in Section 41 of the Finance Act, 1950. I will put it shortly to save time. The effect of last year's change was that no taxpayer is asked to pay his tax on foreign money which he cannot remit, or to pay any interest while he is waiting until he can remit it, provided that two conditions are fulfilled. The first is that the failure to remit results from an action of a foreign Government, and the second condition is that the Commissioners are of the opinion, even where the first condition is fulfilled and the foreign Government has clamped with an exchange control with the result that the man cannot get his money out, that it will not hurt him to pay out of some other income which he possesses.
    1698
    My hon. Friends on this side of the House made it clear a year ago that we did not think that those two conditions were fair or would work out well in practice. Nevertheless, we accepted the concession, for we would have a year and would see what happened. We have had the year, and we think we are amply justified by results in the objections that we put forward last year. That is why I am moving the new Clause, which is intended to be in substitution for Section 41 of last year's Finance Act.
    These are the changes, put briefly, which are made by our proposed Clause. We seek to omit the restricting words
    "as the result of action of the [foreign] government,"
    etc. Of course, the foreign Government is the main offender, but in the great majority of cases the reason the taxpayer cannot bring his money to this country is that the foreign Government have some exchange control which prohibits the transfer of profits.
    9.0 p.m.
    If that is the case, the only remedy is in the hands of His Majesty's Government. It is for His Majesty's Government to go to the other party and say, "You, by your exchange control, are keeping British money in the Argentine," or Spain, or wherever it is, "and we desire to negotiate with you a trade and payments agreement under which provisions are made for this kind of transfer to be permitted." A private person cannot make such an agreement with a foreign Government, and, if the Treasury fail to make that kind of agreement, the onus is on the Treasury, and it is then unjust for the Treasury to say to the British taxpayer, "Although we have failed to make this agreement with the foreign Government—and it is our business to do that—none theless you must pay the tax although you have not the money with which to pay it." From that point of view, I ask the House to say that this is a very grave injustice, because exchange controls are intergovernmental business.
    All the same, we find that there are cases where transfer is impossible. There may be a nominal free market in the currency concerned, but when we go to buy sterling there may be no sterling to buy. That is regrettable, but it happens. We feel that it is, therefore, not fair to

    1699
    include the normal man who is prevented because of exchange control from transferring money and to exclude the man who happens to be dealing in a country where they have no exchange control—they may not have civil servants capable of working one—and there is no sterling to buy even if one wishes to do so.
    The second change we make is to insert subsection (1, c) to cover the case where it is possible to transfer the foreign currency but only at a blackmail rate. There are countries which establish a number of different rates and which sometimes say to the British owner of their own currency, "If you accept an absolutely knock-out rate you can get the money out." It is very hard if the Treasury assess the liability to tax upon the official rate when the wretched man can only get his money out at a rate far below that and when, just because he can get the money out at that rate, the Commissioners say, "You can make the transfer and therefore you must pay the tax."
    I want to put to the right hon. Gentleman a point which has not been made in previous debates. It relates to a case where a man owns a deposit in a foreign country, which he may have received by way of profits or income, and it is blocked. The Treasury say, "You are liable to tax at the official rate supposing you can transfer it." What really is the value of a foreign currency which one cannot transfer? I do not think it has any value at all in sterling. As long as money is blocked in a certain country and it is impossible to bring it into one's own country, it is highly arbitrary to fix a sterling value for it, because by the time one may be allowed to transfer the money the rate may have altered altogether.
    There are big changes in rates of exchange, and that is one of the reasons the present law is grossly unfair. We have seen it in the case of the Argentine, which is one of the chief offenders in this respect. A man may have earned £10,000 in a foreign country in 1947 and may not have been allowed to bring it out until now. It may be that the exchange rates have changed and that the £10,000 is now worth only £5,000. It is very unjust that such a man should have to pay tax on the £10,000. That is the kind of thing that happens under the present law.
    1700
    Our third change—an important one in my judgment—is to omit paragraph (c) of Section 41. If I may be allowed to read that paragraph, it says that the Commissioners can postpone the payment of the tax if
    "… having regard to the matters aforesaid and to all the other circumstances of the case it is reasonable that the tax should for the time being remain uncollected."
    How have the Commissioners interpreted that? They have said that the meaning of "having regard to … all the other circumstances of the case "is having regard to how much income or reserves the company may have outside that which is blocked in the foreign country. We get cases where companies have large liabilities in respect of frozen profits in the Argentine and a certain amount of income from another country, and they are made to pay tax out of the other income simply because they have some cash.
    We made it clear a year ago on this side of the House that we do not believe that is a sound principle. It should not depend upon whether or not a company has any other source of income that the Commissioners say the company must pay tax on money which they cannot collect. Sometimes that works very hardly. I will give only an imaginary case because it is rather hard on companies to give actual cases if they are in negotiation with the Governments concerned. For example, the House will know that many companies started as pastoral companies in the Argentine and, after a while, found that conditions there were not very satisfactory and they decided to have a branch in, say, Australia. Quite a number of companies are in that position. Whatever profits they make in the Argentine are blocked and cannot be transferred. If they are struggling in Australia to build up meat production, needing every penny they can get to expand their operations in that country, whatever income they may get from Australia has not only to bear the tax on their profits in Australia but out of that income they must also pay the tax on their Argentine business. That is having a bad effect on expansion in places where this House wants companies to expand.
    I know the stock Treasury objection to a Clause of the type I am speaking to. It is that it would encourage firms

    1701
    to leave money abroad and thereby avoid tax. There is nothing in that objection, because under our Clause the Commissioners can only agree that the tax remains uncollected if the company or person can show that they have tried all the available means of transferring the money. In 99 cases out of 100 the obstacle to transferring the money will be the exchange control in the foreign country.
    Who knows about exchange controls? The Treasury know more about them than anyone else, and I do not think anyone could bluff the Treasury that he was unable to get money through an exchange control when it was quite simple to do so. Therefore, I think the matter is in the hands of the Government. The Attorney-General objected last year that the result of what we believe to be a just provision would be that all sorts of people would leave their money abroad and not bring it home. That objection does not flatter the Treasury, who are perfectly capable of knowing whether there is an opportunity for a man to bring his money home or not.
    I would not mind a little pressure put upon the Treasury to be a bit tougher with some foreign Governments in their arrangements about clearing agreements, and so on. If the Treasury knew that they would collect some tax if they made a good agreement, I am not at all sure that they would not go to it with a little more enthusiasm than they sometimes do. I think they are very good and able, and I must even confess that I have made a clearing agreement myself with the Government in the old days. A little inducement does no one any harm, and I should like to see it that way round. I should like to see more pressure to free the exchanges. Therefore, I am not in the least afraid of the consequences of doing justice to those who cannot transfer their money or those who might be tempted to hold their money abroad a little longer.
    My final word is this. We really must reverse the trend in this Bill, which is to penalise British people doing business overseas. That simply will not do. We have had one Clause after another which will make it less attractive to conduct foreign business from the United Kingdom than from another capital city in the world. That cannot but do harm to our country.
    Here is just one more of so many instances we have had where the result of
    1702
    the present law must be to make those who are going to launch out abroad say, "I do not think I will go into the difficult areas of the world. I will not go into the places where exchange is difficult. I will stick to the old-established markets." That is not in the interests of a country like ours, which has to pay for its imports somehow, wherever they come from. Any goods we can sell anywhere, and for which we finally get paid, assist us to buy our food and raw materials. We cannot be choosey about the markets in which we sell—we have to sell all over the world.
    The kind of Clause that we have put down is merely a stimulant to people to launch out and not to be afraid to take risks. If that were agreed by the Chancellor as being the effect of the Clause. I would hope that he would accept it.
    Mr. Studholme: I beg to second the Motion so ably and comprehensively moved by my hon. Friend the Member for Chippenham (Mr. Eccles). I do not propose to cover the ground which he has covered, because I am not a financial expert, and I only wish to give by way of illustration the very unfair effect upon companies and individuals of the present law with regard to profits unremitted by reason of exchange restrictions. I must declare a personal interest, because I happen to be a director of a small private company which operates in the Argentine.
    Since 1947, it has been quite impossible for us to get any money over to this country on account of profits, income, capital or anything else— not a penny—because of the Argentine exchange restrictions. Nevertheless, until this year we have been obliged to pay many thousands of pounds, in spite of annual protests, in Income Tax and Profits Tax on the profits arising to us in the Argentine, which we cannot get over to this country, however hard we try.
    We have had to pay taxes out of income on which the company has already paid tax in this country. The directors very prudently put that income aside in order to pay out of it the very modest office expenses which we incur in the year, and to enable them, as they hoped, to be able to continue to pay a small dividend to the shareholders in this country. What sticks in my throat is that we have been asked to pay tax, out of

    1703
    money which has already once been taxed in this country, to meet taxes on income and profits arising in another country, which we cannot get over to this country through no fault of our own. I can honestly say that I feel very bitter about it.
    9.15 p.m.
    Every year we protested before making this payment. Last year I wrote to the Financial Secretary, and I received a very polite but quite unsympathetic reply. Obviously he was merely quoting what he had been told by the Treasury. This year, after I had written to the Chancellor, I received an intimation from the Revenue that they had kindly consented to hold in abeyance any further demand. I imagine the reason was because I had pointed out to them that if we paid the full amount of tax which they demanded we should have nothing left in this country to meet our very modest office expenses for the next year or two.
    We have paid no dividend at all for the last two years, nor have the directors received any remuneration for some time. The fact that we have paid no dividend has been a considerable hardship to at least one old lady of over 80, who is dependent partly on this income from the Argentine. I know that some Members opposite consider that people of the rentier class are the lowest form of life—
    Mr. Kirkwood: No they do not.
    Mr. Studhohne: I am glad to hear the right hon. Gentleman say that. These unfortunate people have, owing to saving and forethought and enterprise of their forebears, had this money invested, and are drawing a little remuneration from it. I know that the Chancellor would say that the Revenue only presses for payment where the taxpayer can reasonably be expected to pay, but the question is what is reasonable. It is a matter of opinion, and what may appear to the Revenue to be reasonable may appear most unreasonable to those people. I maintain that no company or individual should have to pay any tax on income abroad which they cannot get into this country through no fault of their own.
    The fair thing would be to adopt the practice allowed, I believe, during the
    1704
    war. The Chancellor should earmark money in the Argentine, or whatever other country it might be, against such time as those funds are remitted to this country. When they are remitted, by all means let him take an amount of money which will pay the outstanding tax. But to have to pay tax at a rate of exchange far more advantageous than any rate of exchange at which we shall ever be able to get money over, so far as I can see, and out of money which has already paid tax in this country, is a monstrous thing. I hope the Chancellor will consider favourably this new Clause.
    Mr. David Renton: I must confess to having drafted the exchange control law, back in 1944, of a territory under British control which, so far as I know, is still the law of that territory. I must also confess that when we brought that law into operation, I gave full warning as a lawyer that I did not think the law could be administered effectively. Within a few months it was shown quite clearly that it could not be.
    I recollect clearly that there was no provision whatever, although this was a territory under British control—I do not think I ought to mention the name of it, but I am willing to give it to the Chancellor if he wishes—made for dealing with profits accruing within that territory to British subjects who would have to pay tax on them. I mention this just as a personal experience, in order to confirm the statements made by my hon. Friend the Member for Chippenham (Mr. Eccles) about the unsatisfactory state of affairs in other countries.
    It appears to me that when a British company in this country is made to pay tax upon profits which are unremittable, it is no better conduct on the part of the Treasury than asking that company to pay a tax on bad debts. It seems to me that in principle it is quite indistinguishable. We know that the Treasury makes allowance in certain cases for bad debts. We know that if the debts turn out to be permanently bad debts, in the case of businesses of professional men, eventually no tax is payable. In common justice, it is just as wrong for the Treasury to try to extract tax on these unremittable profits as it would be for them to extract tax on bad debts.
    Mr. W. Fletcher: My conscience is, fortunately, clear of the terrible burden which the hon. Member for Huntingdon (Mr. Renton) must have at present, because I have not been concerned with the drafting of any of these nefarious snares. I support my hon. Friend the Member for Chippenham (Mr. Eccles) wholeheartedly, because I believe that the new pattern of trade and development in an increasing number of territories is that those who are asked to put money into development are more or less warned from the word "go" that for a very long time, owing to the bad financial situation of a great many of these territories, there will be no chance at all of a reasonable remission.
    The development has got to be a longterm one. Nearly all these countries are exactly the territories which hon. Gentlemen opposite talk about so glibly and so frequently when they refer to raising the standard of living in the poorer territories. The very fact that they are the poorer territories in many cases enforces on their Governments the need to make exchange control regulations that have exactly the harsh effect which those who have spoken on this new Clause have mentioned. If there really is a desire for this country to play its rôle in the development of the backward areas, then something of the nature mentioned in this Clause must be set in action fairly soon.
    I think that my hon. Friend the Member for Chippenham may be a little optimistic in thinking that he is likely to get much help from the Treasury, where they could help. The Chancellor knows perfectly well what happened about the taxe de solidarityéin France, where the legal position was 100 per cent. complicated under the Act but the Treasury never raised a single finger to help, and those concerned had to fight it out not with the consent but almost with the opposition of the Treasury.
    It is all the more necessary that we should have a Clause of this sort to assist these companies, established in territories which have already made evil and wicked exchange laws, or made variable rates, which is really a form of Government blackmail. The Government should realise that in the extension of development in which we ought still to be playing a role, something must be done for these companies which, inevitably, when
    1706
    they come to consider this vital work of development must ask, "Shall we do it under this scheme which we know is a good one, but under which for years we will not be allowed to remit; or shall we go to another territory, where perhaps the need is nothing like so great?" The long-term implications of world development under this Clause and under the general policy of the Government should really be taken into consideration by the Chancellor.
    Mr. Gaitskell: The subject raised by the hon. Member for Chippenham (Mr. Eccles) in this new Clause was pretty fully discussed last year and, as he reminded the House, as a result of discusions then, a new Clause was inserted into the Finance Bill of last year which I certainly could not describe as a small concession, but which it seems to me made a very material difference to the situation. The concession made then did allow the Inland Revenue, if, in the circumstances, they regarded it as reasonable to do so, to suspend the payment of tax, and therefore, of course, the payment of interest as well, if, owing to the action of the Government of the country concerned, it was impossible to remit the profits.
    The hon. Member for Tavistock (Mr. Studholme) referred to the case of a small company with which he was connected, and said that, after writing to me, the Inland Revenue had told him that they would not collect for the moment. I can assure him that that is due to the new Clause which was introduced last year, which gave them power to do this. If I may say so, it was not because of any personal intervention by myself.
    Mr. Studholme: If we had to pay the amount of money demanded from us, we should not have had anything left at the bank.
    Mr. Gaitskell: That was a very strong case for doing what the Inland Revenue were enabled to do by the new Clause introduced last year.
    The proposal in the new Clause goes very much wider than this. I need not repeat the explanation given very clearly by the hon. Member for Chippenham, but the essential point is that it gives the Inland Revenue no option. Automatically, if the remittances are impossible for any reason, then the tax need not be paid.

    1707
    This is the heart of the matter, and I cannot accede to the proposition which hon. Members opposite have put forward that in all circumstances if it is impossible to remit the money—and we shall have to make the decision whether it is or not—the Inland Revenue should not be paid.
    Even in the case of a large company operating no doubt all over the world, and with very large resources, doing extremely well, paying very large dividends to its shareholders, with plenty of money and no difficulty in regard to sterling, nevertheless the Inland Revenue may not collect the tax. That puts the tax collector behind the shareholder, and last of all in the queue. [HON. MEMBERS: "No.") Yes. There is nothing to prevent the company concerned from paying dividends in full, taking into account the profits and ignoring the fact that they are blocked for the moment elsewhere.
    What the hon. Member is asking us is that the Inland Revenue may not be paid. in spite of that fact. That is clearly involved in this proposition, and what we say is that the Inland Revenue should have discretion. We recognise that there are cases, such as that which the hon. Member for Tavistock mentioned, in which it is obviously inappropriate that the tax should be collected because the cash in sterling is not available, and that is exactly what happens at the moment, but we do not see why, taking the other extreme, where no hardship is involved and there is no difficulty for the company concerned, the tax should not be taken.
    That is the principal point at stake. We think there should be this discretion which was introduced last year, instead of an automatic letting-off of the tax involved. In any case, it is not by any means so simple to be satisfied whether the foreign exchange is or is not available, and whether it is impossible to remit. The hon. Member for Chippenham spoke as if it were a question of all being blocked or none, but he will agree that it is very often the case that a foreign Government allots a particular quota to a particular country, and it is a question whether the company or other claimants get quick enough into the queue to get their share of the quota. I think it would be extremely difficult if a particular company wanted, for one reason or another, to avoid being taxed, to prove that it was because it was
    1708
    late in the queue and could not get its share of the quota, which therefore made it impossible for it to remit.
    As for the alternative proposition, it is that the tax should not be collected where the Inland Revenue considered that the exchange rate was unsatisfactory. I really think that that would be very difficult to operate. I should not have thought that it was at all easy for the Inland Revenue to say whether or not it was the right moment to remit. That, surely, should be left to the company.
    9.30 p.m.
    There are one or two other points which the hon. Member for Chippenham raised to which I should like to refer. He mentioned the difficulty which would arise if the profits were taxed at a particular exchange rate and then could only be remitted later at a much worse rate. Of course, the rate at which the profits are taxed is the same as that at which the profits are estimated in the profit and loss accounts of the company. By and large, of course, the Inland Revenue would simply follow the trading practice. But if that should happen, then, of course, the company has the right to put the loss against the profits of the next year or later years, as the case may be. Therefore, it is not quite the position that the hon. Member seemed to suggest. The Clause also proposes that the repayment of interest should be applied retrospectively. That, of course, is a proposition which I could not accept.
    I do not feel that any serious evidence has been put forward this year to show that the system introduced last year is not working pretty reasonably. In those circumstances, I cannot see that we have yet any grounds for believing that a further change in the law is necessary. I would add, however, that this is no doubt one of the subjects which the Royal Commission on Taxation will be looking into. It was referred to briefly in the Tucker Report, but they indicated that the questions raised with them were more proper for the Royal Commission than for themselves to decide.
    Mr. Assheton: I think the House listened with great interest to the case made by my hon. Friend the Member for Chippenham (Mr. Eccles). It is not always very easy for those of us not closely concerned with this sort of problem to understand matters of exchange control. They

    1709
    are very confusing even to those who study them, and to those who do not they are almost impossible to understand. But I think it emerged from the speech of my hon. Friend the Member for Chippenham, which was so well supported by the speech of my hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher), that there appears to be a clear case of injustice.
    What the Revenue are seeking to do is to impose a tax on an income which has not been received. That seems plainly contrary to commonsense. I do not profess to know a great deal about foreign exchange control, but I will, with permission, give an illustration to the House. Supposing one has some rents to collect. When they are collected, one pays tax on them. But if one is unable to collect the rents, then the Revenue remit the tax on the grounds that the income has not been received. They do not say that one has an income from another source, and that therefore one can quite well pay the tax on the rents not received. It seems to me that the case made from this side is quite clear, and if my hon. Friend seeks to divide the House on this Clause, I shall be happy to go into the Lobby with him.
    Mr. Pitman: I think there is one point on which the Chancellor has either been misled by his Department or on which he is unwittingly misleading the House, and that is on the question of book-keeping. As I understood him—and I listened carefully to his speech—one of his chief reasons for rejecting this Clause is that he says it would be possible for a company to distribute a full dividend although it was, in point of fact, making much of its profits overseas, on which it would not be paying tax.
    Mr. Gaitskell: I did not say "much of its profits." I said it would be possible for the company to distribute a full dividend, taking into account the profits earned overseas, because it has plenty of cash.
    Mr. Pitman: That was the point I had in mind, because in that particular case the directors would be culpable if they did not set aside a provision in the accounts for the contingent of tax. Any auditor would definitely insist that such a provision should be made. So if that really is the substance of the Chancellor's
    1710
    objection, I hope he will consider it and see that the Treasury consider it.
    Mr. F. Harris: I listened very carefully to the Chancellor and I wish that the Chancellor, the Financial Secretary and the Treasury could address their arguments with more firmness to the points raised. It seems to me blatantly unfair for the Government to take the line that when money is not able to be transferred they can nevertheless take taxation as they so desire, merely because a company has additional profits from which the Treasury may draw additional taxation.
    If one follows that argument through, a company which in the past may have transferred its profits fairly regularly into this country and is therefore well placed as far as funds are concerned, is liable to pay tax on profits that cannot be transferred at present and it has that liability merely because it has the money; whereas a company which is not in a position to pay the tax and which the tax might break if it had to pay it, is in a different position. It seems to me a case of one law for the rich and one for the poor, and it seems an extraordinary argument to pursue.
    My hon. Friend the Member for Bath (Mr. Pitman) has brought forward the obvious fact of bookkeeping as far as profits are concerned. It must have seemed strange to anybody who listened to the Chancellor and his arguments that he should put forward the suggestion that a company may go on paying dividends based on profits that are not transferred. That seems an extraordinary action for any company director to take, and I do not think that when he put it to the House the Chancellor himself believed in that suggestion for one moment.
    I suggest, therefore, that it is a great pity that the Chancellor and the Treasury cannot address their arguments more seriously to the facts put forward. Anybody who heard one of my hon. Friends who produced his own individual case must have been impressed by the seriousness of the position which arises in other countries relative to our own.
    Lieut.-Commander Braithwaite: I thought that the Chancellor's reply was somewhat parochial or insular because, after all, this problem arose out of what is surely a typical post-war development all over the world. These exchange

    1711
    restrictions are an irritating form of economic nationalism of which this country itself has not been guiltless. I should like to hear the right hon. Gentleman say that, although he has expressed the view that this year he is not prepared to alter the internal machinery for the collection of this taxation, he proposes at high governmental level to conduct negotiations with countries where these balances are locked.
    I think it was my hon. Friend the Member for Chippenham (Mr. Eccles), who made the point, when moving the Clause, that a private company is in a much more difficult position in obtaining its money than would be His Majesty's Government. When we have representatives in the Argentine, for instance—where the Economic Secretary to the Treasury was the other day—one would think that
    would be a particularly good opportunity to discuss this sort of difficulty. After all, it is an international difficulty and if these balances could be transferred, knowing that on arrival in this country they would be available for taxation it seems to me that, while not everyone would be happy —because that is never the case where taxation is concerned—one of the chief difficulties of this problem would have been solved.
    May I say, in conclusion, what a great delight it was to us on this side of the House to hear a speech from my hon. Friend the Member for Tavistock (Mr. Studholme), who is usually associated with other and disciplinary activities?
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 263; Noes, 290.

    Division No 155.]

    Ayes

    [9.40 p.m

    Aitken, W. T.

    Crosthwaite-Eyre, Col. O. E.

    Hill, Dr. Charles (Luton)

    Alport, C. J. M.

    Crouch, R. F.

    Hill, Mrs. E. (Wythenshawe)

    Amery, Julian (Preston, N.)

    Crowder, Capt. John (Finchley)

    Hinchingbrooke, Viscount

    Amory, Heathcoat (Tiverton)

    Crowder Petre (Ruislip—Northwoood)

    Hirst, Geoffrey

    Arbuthnot, John

    Cundiff, F. W.

    Hollis, M. C.

    Ashton, H. (Chelmsford)

    Darling, Sir William (Edinburgh, S)

    Holmes, Sir Stanley (Harwich)

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

    Davies, Nigel (Epping)

    Hope, Lord John

    Astor, Hon. M. L.

    de Chair, Somerset

    Hopkinson, Henry

    Baldock, Lt.-Cmdr J M

    De la Bére, R.

    Hornsby-Smith, Miss P

    Baldwin, A. E.

    Deedes, W. F.

    Horsbrugh, Rt. Hon. Florence

    Banks, Col. C

    Digby, S. Wingfield

    Howard, Gerald (Cambridgeshire)

    Baxter. A B

    Dodds-Parker, A. D

    Howard, Greville (St. Ives)

    Beamish, Maj. Tufton

    Donner, P. W.

    Hudson, Sir Austin (Lewisham, N.)

    Bell, R. M.

    Douglas-Hamilton Lord Malcolm

    Hudson, Rt. Hon. Robert (Southport)

    Bennett, Sir Peter (Edgbaston)

    Drayson, G. B.

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

    Bennett, Dr. Reginald (Gosport)

    Drewe, C.

    Hulbert, Wing Cmdr. N. J.

    Bennett, William (Woodside)

    Dugdale Maj. Sir Thomas (Richmond)

    Hurd, A. R.

    Bevins, J. R. (Liverpool, Toxteth)

    Duncan, Capt J. A. L.

    Hutchinson, Geoffrey (llford, N.)

    Birch, Nigel

    Dunglass, Lord

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

    Bishop. F. P.

    Duthie, W. S.

    Hutchison, Col. James (Glasgow)

    Black, C. W.

    Eccles, D. M.

    Hylton-Foster, H. B.

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

    Errol. F. J.

    Jeffreys, General Sir George

    Bossom.A. C.

    Fisher, Nigel

    Jennings, R.

    Boyd-Carpenter, J. A

    Fletcher, Walter (Bury)

    Johnson, Howard (Kemptown)

    Boyle, Sir Edward

    Fort, R.

    Jones, A. (Hall Green)

    Bracken, Rt. Hon B

    Foster, John

    Joynson-Hicks, Hon. L. W.

    Braine, B. R.

    Fraser, Hon. Hugh (Stone)

    Kaberry, D.

    Braithwaite, Sir Albert (Harrow, W)

    Fyfe, Rt. Hon. Sir David Maxwell

    Kerr, H. W. (Cambridge)

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

    Gage, C. H.

    Kingsmill, Lt.-Col. W. H

    Bromley-Davenport, Lt.-Col. W

    Galbraith, Cmdr. T. D. (Pollok)

    Lambert, Hon G

    Brooke, Henry (Hampstead)

    Galbraith, T. G. D. (Hillhead)

    Lancaster, Col. C. G

    Browne, Jack (Govan)

    Gammam, L. D.

    Langford-Holt, J.

    Buchan-Hepburn, P. G. T

    Garner-Evans, E. H. (Denbigh)

    Law, Rt. Hon. R. K.

    Bullus, Wing Commander E E

    Gates, Maj. E. E.

    Leather, E. H. C.

    Burden, F. A.

    Glyn, Sir Ralph

    Legge-Bourke, Maj. E. A. H

    Butcher, H. W.

    Gridley, Sir Arncld

    Lennox-Boyd, A. T.

    Butler, Rt. Hn. R. A. (Saffron Walden)

    Grimston, Hon. John (St. Albans)

    Lindsay, Martin

    Carr, Robert (Mitcham)

    Grimston, Robert (Westbury)

    Linstead, H N.

    Carson, Hon. E.

    Hare, Hon. J. H. (Woodbridge)

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

    Channon, H.

    Harris, Frederic (Croydon, N.)

    Lloyd, Maj. Guy (Renfrew, E.)

    Clarke, Col. Ralph (East Grinstead)

    Harris, Reader (Heston)

    Lloyd, Selwyn (Wirral)

    Clarke, Brig. Terence (Portsmouth, W.)

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

    Lockwood. Lt.-Col. J. C.

    Clyde, J. L.

    Harvey, Ian (Harrow, E.)

    Longden, Gilbert (Herts, S.W.)

    Conant, Maj. R. J. E.

    Harvie-Watt, Sir George

    Low, A. R. W.

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

    Hay, John

    Lucas, Sir Jocelyn (Portsmouth. S.)

    Cooper-Key, E. M.

    Head, Brig. A. H.

    Lucas, P. B. (Brentford)

    Corbett, Lt.-Col. Uvedale (Ludlow)

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

    Lucas-Tooth, Sir Hugh

    Craddock, Beresford (Spelthorne)

    Heald, Lionel

    McAdden, S. J.

    Cranborne, Viscount

    Hicks-Beach, Maj. W W

    McCorquodale, Rt. Hon. M. S.

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

    Higgs, J M C

    Macdonald, Sir Peter (I. of Wight)

    Mackeson, Brig. H. R.

    Peto, Brig C. H M

    Stuart, Rt. Hon. James (Meray)

    McKibbin, A.

    Pickthorn, K.

    Summers, G. S

    McKie, J. H. (Galloway)

    Pitman, I. J.

    Sutcliffe, H.

    Maclay, Hon. John

    Powell, J. Enoch

    Taylor, Charles (Eastbourne)

    Maclean, Fitzroy

    Price, Henry (Lewisham, W)

    Taylor, William (Bradford, N.)

    MacLeod, Iain (Enfield, W.)

    Prior-Palmer, Brig, O.

    Teevan, T. L.

    MacLeod, John (Ross and Cromarty)

    Profumo, J. D.

    Thomas, J. P. L. (Hereford)

    Maitland, Cmdr. J. W.

    Raikes, H. V.

    Thompson, Kenneth Pugh (Walton)

    Manningham-Buller, R. E

    Rayner, Brig. R.

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

    Marlowe, A. A. H

    Redmayne, M.

    Thorneycroft, Peter (Monmouth)

    Marples, A. E.

    Remnant, Hon. P.

    Thornton-Kemsley, Col. C. N.

    Marshall, Douglas (Bodmin)

    Renton, D. L. M.

    Thorp, Brig. R. A. F.

    Marshall, Sidney (Sutton)

    Roberts, Maj. Peter (Heeley)

    Tilney, John

    Maude, Angus (Ealing, S.)

    Robertson, Sir David (Caithness)

    Touche, G. C.

    Maude, John (Exeter)

    Robinson, Roland (Blackpool, S)

    Turner, H. F. L

    Maudling, R.

    Robson-Brown, W.

    Turton, R. H.

    Mellor, Sir John

    Rodgers, John (Sevenoaks)

    Tweedsmuir, Lady

    Molson, A H. E

    Roper, Sir Harold

    Vane, W. M. F.

    Monckton, Sir Walter

    Russell, R. S.

    Vaughan-Morgan. J. K.

    Meore, Lt -Col. Sir Thomas

    Ryder, Capt. R. E. D.

    Wakefield, Edward (Derbyshire, W)

    Morrison, John (Salisbury)

    Salter, Rt. Hon. Sir Arthur

    Walker-Smith, D. C.

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

    Sandys, Rt. Hon. D.

    Ward, Hon. George (Worcester)

    Mott-Radclyffe, C. E

    Savory, Prof. D. L.

    Ward, Miss I. (Tynemouth)

    Nabarro, G

    Scott, Donald

    Waterhouse, Capt. Rt Hon C

    Nicholls, Harmar

    Shepherd, William

    Watkinson, H.

    Nicholson, G.

    Smiles, U.-Col. Sir Walter

    Webbe, Sir H. (London)

    Noble, Cmdr. A. H. P.

    Smithers, Peter (Winchester)

    Wheatley, Maj. M. J. (Poole)

    Nugent. G. R. H.

    Smyth, Brig. J. G (Norwood)

    White, Baker (Canterbury)

    Nutting, Anthony

    Snadden, W. McN.

    Williams, Charles (Torquay)

    Oakshott, H. D.

    Soames, Capt. C.

    Williams, Gerald (Tonbridge)

    Odey, G. W.

    Spearman, A. C. M.

    Williams, Sir Herbert (Croydon, E)

    O'Neill, Rt. Hon. Sir Hugh

    Spence, H. R. (Aberdeenshire, W)

    Wills, G.

    Ormsby-Gore. Hon. W. D

    Spens, Sir Patrick (Kensington, S.)

    Wilson, Geoffrey (Truro)

    Orr, Capt. L. P. S.

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

    Wood, Hon R

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

    Stevens, G. P.

    York, C

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

    Steward, W. A. (Woolwich. W)

    Osborne, C.

    Stoddart-Scott, Col. M.

    TELLERS FOR THE AYES:

    Peake, Rt. Hon O

    Storey, S.

    Mr. Studholme and Mr. Vosper.

    Perkins, W. R. D.

    Strauss, Henry (Norwich, S)

    NOES

    Acland, Sir Richard

    Cocks, F. S.

    Foot, M. M.

    Adams, Richard

    Coldrick, W.

    Fraser, Thomas (Hamilton)

    Albu, A. H

    Collick, P.

    Freeman, John (Watford)

    Allen, Arthur (Bosworth)

    Collindridge, F.

    Freeman, Peter (Newport)

    Allen, Scholefield (Crewe)

    Cook, T. F.

    Gaitskell, Rt. Hon. H. T. N.

    Anderson, Alexander (Motherwell)

    Cooper, Geoffrey (Middlesbrough, W.)

    Ganley, Mrs. C. S.

    Anderson, Frank (Whitehaven)

    Cooper, John (Deptford)

    George, Lady Megan Lloyd

    Attlee, Rt. Hon. C R

    Cove, W. G.

    Gibson, C. W.

    Awbery, S. S.

    Craddock, George (Bradford, S)

    Gilzean, A.

    Ayles, W. H.

    Crawley, A.

    Glanville, James (Consett)

    Baird, J.

    Crosland, C. A. R.

    Gordon-Walker, Rt. Hon. P C.

    Balfour, A.

    Crossman, R. H. S

    Granville, Edgar (Eye)

    Barnes, Rt. Hon A. J

    Cullen, Mrs. A.

    Greenwood, Anthony (Rossendale)

    Bartley, P.

    Daines, P.

    Greenwood, Rt. Hon. Arthur (Wakefield)

    Bellenger, Rt. Hon. F. J.

    Dalton, Rt. Hon. H.

    Grenfell, Rt. Hon. D. R.

    Bonn, Wedgwood

    Darling, George (Willsborough)

    Grey, C. F.

    Benson, G.

    Davies, A. Edward (Stoke, N.)

    Griffiths, David (Rother Valley)

    Beswick, F.

    Davies, Ernest (Enfield, E.)

    Griffiths, Rt. Hon. James (Llanelly)

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

    Davies, Harold (Leek)

    Griffiths, W. (Manchester Exchange)

    Bing, G. H. C

    Davies, Stephen (Merthyr)

    Gunter, R. J.

    Blenkinsop, A.

    de Freitas, Geoffrey

    Haire, John E. (Wycombe)

    Blyton, W. R.

    Deer, G.

    Hale, Joseph (Rochdale)

    Boardman, H

    Delargy, H. J.

    Hale, Leslie (Oldham, W.)

    Booth, A.

    Diamond, J.

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Bottomley, A. G.

    Dodds, N. N.

    Hall, John (Gateshead, W.)

    Bowden, H. W.

    Donnelly, D.

    Hamilton, W. W.

    Bowles, F. G. (Nuneaton)

    Driberg, T. E. N.

    Hannan, W.

    Braddock, Mrs. Elizabeth

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

    Hardy, E. A.

    Brock, Dryden (Halifax)

    Ede, Rt. Hon. J. C.

    Hargreaves, A.

    Brocks, T. J. (Normanton)

    Edelman, M.

    Hastings, S.

    Broughton, Dr. A. D. D

    Edwards, John (Brighouse)

    Hayman, F. H.

    Brown, Rt. Hon. George (Belper)

    Edwards, Rt. Hon. Ness (Caerphilly)

    Henderson, Rt. Hon. A. (Rowley Regis)

    Brown, Thomas (lnce)

    Edwards, W J. (Stepney)

    Hobson, C. R

    Burke, W. A.

    Evans, Albert (Islington, S.W)

    Holman, P.

    Burton, Miss E.

    Evans, Edward (Lowestoft)

    Holmes, Horace (Hemsworth)

    Butler, Herbert (Hackney, S.)

    Evans, Stanley (Wednesbury)

    Houghton, D.

    Callaghan, L. J.

    Ewart, R.

    Hoy, J.

    Carmichael, J.

    Fernyhough, E.

    Hubbard, T.

    Castle, Mrs. B. A

    Field, Capt. W J

    Hudson, James (Ealing, N.)

    Champion, A. J

    Finch, H. J.

    Hughes, Emrys (S. Ayrshire)

    Chetwynd, G R

    Fletcher. Eric (Islington, E)

    Hughes, Hector (Aberdeen, N.)

    Clunie, J.

    Follick, M.

    Hughes, Mcelwyn (Islington, N.)

    1714

    1715

    Hynd, H. (Accrington)

    Moeran, E. W.

    Snow, J. W.

    Hynd, J. B. (Attercliffe)

    Monslow, W.

    Sorensen, R. W.

    Irvine, A. J. (Edge Hill)

    Moody, A. S.

    Soskice, Rt. Hon. Sir Frame

    Irving, W. J. (Wood Green)

    Morgan, Dr. H. B

    Steele, T.

    Isaacs, Rt. Hon. G. A.

    Morley, R.

    Strauss, Rt. Hon. George (Vauxhall)

    Janner, B.

    Morris, Percy (Swansea, W.)

    Stross, Dr. Barnett

    Jay, D. P. T.

    Mort, D. L.

    Summerskill, Rt. Hon. Edith

    Jeger, George (Goole)

    Moyle, A.

    Sylvester. G. O

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

    Mulley, F. W.

    Taylor, Bernard (Mansfield)

    Jenkins, R. H.

    Murray, J. D.

    Taylor, Robert (Morpeth)

    Johnson, Jamas (Rugby)

    Nally, W.

    Thomas, David (Aberdare)

    Johnston, Douglas (Paisley)

    Neal, Harold (Bolsover)

    Thomas, George (Cardiff)

    Jones, David (Hartlepool)

    Noel-Baker, Rt. Hon. P. J.

    Thomas, Iorwerth (Rhondda, W.)

    Jones, Frederick Elwyn (West Ham, S.)

    O'Brien, T.

    Thomas, Ivor Owen (Wrekin)

    Jones, Jack (Rotherham)

    Oldfteld, W. H.

    Thorneyeroft, Harry (Clayton)

    Jones, William Elwyn (Conway)

    Oliver, G. H.

    Thurtle, Ernest

    Keenan, W

    Orbach, M.

    Timmons, J.

    Kenyon, C.

    Padley, W. E

    Tomney, F.

    Key, Rt. Hon. C. W

    Paget, R. T.

    Turner-Samuels, M.

    King, Dr. H. M.

    Paling, Rt. Hon. W. (Dearne Valley)

    Ungoed-Thomas, Sir Lynn

    Kinghorn, Sqn Ldr E

    Paling, Will T. (Dewsbury)

    Usborne, H.

    Kinley, J.

    Pannell, T. C.

    Vernon, W. F.

    Kirkwood, Rt. Hon. D

    Pargiter, G. A

    Viant, S. P.

    Lang, Gordon

    Parker, J.

    Wallace, H. W

    Lee, Miss Jennie (Cannock)

    Paton, J.

    Watkins, T. E.

    Lever, Harold (Cheetham)

    Peart, T. F

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

    Lever, Leslie (Ardwick)

    Popplewell, E

    Weitzman, D.

    Lewis, Arthur (West Ham, N)

    Porter, G.

    Wells, Percy (Faversham)

    Lewis, John (Bolton, W.)

    Price, Joseph T. (Westhoughton)

    Wells, William (Walsall)

    Lindgren, G. S.

    Price, Philips (Gloucestershire. W.)

    West, D. G.

    Lipton, Lt.-Col. M

    Proctor, W. T

    White, Mrs. Eirene (E. Flint)

    Logan, D. G.

    Pryde, D. J.

    White, Henry (Derbyshire, N E)

    Longden, Fred (Small Heath)

    Pursey, Cmdr. H

    Whiteley, Rt. Hon. W.

    McAllister, G.

    Rankin, J.

    Wigg, G.

    MacColl, J. E.

    Rees, Mrs. D.

    Wilcock, Group Capt. C. A. B

    McGhee, H. G.

    Reeves, J.

    Wilkes, t.

    McGovern, J.

    Reid, Thomas (Swindon)

    Wilkins, W. A.

    Mclnnes J

    Reid, William (Camlachie)

    Willey, Frederick (Sunderland)

    Mack, J. D.

    Rhodes, H.

    Willey, Octavius (Cleveland)

    McKay, John (Wallsend)

    Richards, R.

    Williams, David (Neath)

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

    Robens, Rt. Hon. A

    Williams, Rev. Llywelyn (Abertillery)

    McLeavy, F.

    Roberts, Emrys (Merioneth)

    Williams, Ronald (Wigan)

    MacMillan, Malcolm (Western Isles)

    Roberts, Goronwy (Caernarvonshire)

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

    McNeil, Rt. Hon. H.

    Robertson, J. J. (Berwick)

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

    MacPherson, Malcolm (Stirling)

    Robinson, Kenneth (St. Pancras, N)

    Wilson, Rt. Hon. Harold (Huyton)

    Mainwaring, W. H.

    Rogers, George (Kensington, N.)

    Winterbottom, Ian (Nottingham, C.)

    Mallalieu, J. P. W (Huddersfield E)

    Ross, William

    Winterbottom, Richard (Brightside)

    Mann, Mrs. Jean

    Royle, C.

    Wise, F. J.

    Manuel, A. C.

    Shackleton, E. A. A.

    Woodburn, Rt. Hon A

    Mathers, Rt. Hon G

    Shinwell, Rt. Hon. E.

    Woods, Rev. G S

    Mayhew, C. P

    Silverman, Julius (Erdington)

    Yates, V. F.

    Mellish, R. J.

    Silverman, Sydney (Nelson)

    Younger, Rt. Hon K

    Messer, F.

    Simmons, C. J.

    Middleton, Mrs. L

    Slater, J.

    TELLERS FOR THE NOES:

    Mikardo, Ian.

    Smith, Ellis (Stoke, S.)

    Mr. Pearson and Mr. Sparks.

    Mitchison, G. R

    Smith, Norman (Nottingham. S.)

    New Clause.—(UNILATERAL RELIEF.)
    (1) The proviso to subsection (2) of section thirty-six of the Finance Act, 1950 (which limits the relief granted in this country in respect of tax payable under the law of any territory outside in the United Kingdom), shall be deemed never to have had effect.
    (2) The words "where the country is within the Commonwealth Territories" included in paragraph 4 of the Sixth Schedule to the Finance Act, 1950 (which restricts unilateral relief in respect of indirect taxation other than in Commonwealth Territories), shall be deemed never to have had effect.—[Mr. Eccles.]
    Brought up, and read the First time.
    Mr. Eccles: I beg to move, "That the Clause be read a Second time."
    The purpose of this Clause is the same as that of the last Clause; that is to say, we are trying here to help British over-
    1716
    seas business. We firmly believe that if our overseas companies are penalised in comparison with the overseas subsidiaries of America, Canadian, French, Dutch or Swiss companies it is a bad thing for this country.
    The Treasury and the Chancellor—and full tribute should be paid to them for this— have tried to make bilateral double taxation agreements with the countries with whom we have the most trade, under which arrangements are made not only for relief of taxation by each Government in respect of profits earned by the nationals of the other in that Government's own territory but for other matters also, such as the transfer of property.
    A year ago it was decided, following recommendations from this side of the

    1717
    House, that a measure of unilateral relief should be granted in respect of all those countries with whom the Treasury had so far failed to make a double taxation agreement. We welcomed the proviso to Section 36 (2) of the Finance Act, 1950, which is referred to in this Clause, because it went some way. Under that proviso the Treasury agreed to give credits in relief of United Kingdom taxation up to a maximum of three quarters of the total of the U.K. tax in the case of income arising from a company operating in the Commonwealth and a maximum of a half of our United Kingdom tax in other cases.
    We never really saw even last year why there should have been that distinction of three-quarters in respect of Commonwealth income and a half only in respect of foreign companies. This is not a question of Imperial Preference or anything like it. It is simply that when profits have been taxed to the full rate in the country where they were earned it does seem most unreasonable to tax them again in the United Kingdom. Therefore, if we are going to give relief we ought to give the same relief in respect of all countries, and, as we put it in our new Clause, we ought to give it up to the full limit, and not only partially.
    The Government said, when we pressed this point last year, that they wanted to keep something in hand in order that they could bargain with overseas countries with whom they had not yet made bilateral agreements to enter into such negotiations. We always wondered on this side of the House whether that bargaining counter was worth anything or not. I hope that the Government will now admit that in fact it does not amount to anything. Not only has it not, so far as I know, enabled them to negotiate any further double taxation agreements that they could not have got without it, but we have the experience of the United States.
    The United States have given the same relief as we are asking for in our Clause for many years, and it has not in any way embarrassed their negotiations for more comprehensive double taxation agreements with other countries. I believe it is true that they have negotiated or are negotiating more treaties with non-Commonwealth countries than we are ourselves, and that in spite of the fact that they have this handicap of having given unilateral relief up to the full
    1718
    amount. Therefore, I do not think that the Treasury should bring forward that argument again.
    I know that this is rather an expensive Clause, and I ask the Chancellor to tell us what it will cost. I think that the existing relief costs £9½ million. Therefore, I am asking for a further £3 million or £4 million more to come. The position is quite serious, and there are two countries in particular where we need to give unilateral relief if we are to maintain our trade, and those are India and Pakistan. It has not been possible to sign a double taxation agreement with these two Governments. I do not in the least complain of that; I have no idea what are the obstacles.
    What I do feel is that in the case of both these countries they have not very much income arising in this country which belongs either to the Pakistanis or to the Indians. There may be some rich Indians over here, but not many. If a country has not got a large income arising in the United Kingdom there is no real element of a double taxation agreement. They are not going to get the benefit; it is the British citizens who earn large sums of money in India and Pakistan, and it is British citizens who are now being penalised in trading there in comparison with American citizens. I feel that both sides of the House would wish our trade with India and Pakistan to be expanded and not wish a taxation obstacle to stand between us, and furthering our business there. I commend that to the House.
    One further point is that the Clause would extend the unilateral relief provisions so that foreign taxes paid by an overseas company may be taken into account by United Kingdom recipients of dividends from that company in claiming tax relief in this country. We think that is wise, because at present legislation allows this only where the overseas tax has been paid to a Commonwealth country or where there is a double taxation agreement in force. There does not seem to be any justification for that distinction.
    The Chancellor will refuse this Clause on Revenue grounds. I ask him to think of it on trade grounds. It is really more important to extend our trade than to bother about collecting a few million pounds—it may be £1 million or £2 million. We could do far more trade than that and bring raw materials and food

    1719
    to this country. As in the case of the last Clause, this is a matter of life or death to many.
    Mr. Pitman: I have great pleasure in seconding the Motion.
    I would like to put this plea not only on the grounds of trade and encouragement of trade, but on the grounds of encouragement of world collaboration. I happen to have been for many years treasurer of the International Chamber of Commerce, and it was within that Chamber that the initiative for this mutual arrangement between various nations first started. It was from a desire for world unity and world government within the circles of businessmen throughout the-world that this idea of reciprocal relief first started. I am very pleased indeed to pay to the British Treasury the greatest possible credit for the way in which they have taken up that idea, fostered it and given one of the best examples of true collaboration between nations in this respect.
    10.0 p.m.
    What do we really mean by the brotherhood of mankind operating through world government? Do we not really mean that it should be a respect for principle and a regard of brother for brother on a basis of some form of goodwill, and not limited to what I believe the insurance companies call a knock-for-knock basis, namely, "We will do it only if you will do it back to us." That is a very poor expression of what is a real fundamental ethic underlying, this particular principle.
    Mr. Remnant: I support the new Clause moved by my hon. Friend the Member for Chippenham (Mr. Eccles). I must declare an interest in it since I am concerned with the growing of tea in India. That provides an excellent case, because as I see it it is one of equity and justice for the people whose capital from this country is being utilised in overseas or risk-bearing enterprises, where the risk is nicely balanced by those who are prepared to put their capital into it and stand a loss if their judgment is wrong.
    I should like to pay a tribute to the way in which the Treasury have taken steps to get a mutual taxation agreement wish the Governments concerned. What is happening in the case of companies who have risked their capital overseas, have
    1720
    made a success of it and have brought the profits back is that they are being penalised for their enterprise in going overseas and making a success of it by the greatly increased amount of taxation they are called upon to pay as between the two countries.
    The Chancellor of the Exchequer has very rightly referred to the fact that taxation on companies in this country will roughly be two-thirds if this Finance Bill is enacted. What is, in fact, happening to companies operating in India, such as the one I am concerned with, is that they have been paying considerably more than 70 per cent. there. My hon. Friend the Member for Dover (Mr. John Arbuthnot) brought up another case, where a sterling company operating in India and Ceylon would be liable to tax at the rate of £117 for each £100 of profit made.
    Then there is the social side which concerns the amenities, conditions and standard of living of the workers employed by the company. They may get better and better but be still far from what we who are concerned with these things would like them to be. If we take into account that risk-bearing capital must get some reward, then what, in fact, we are doing is allowing a smaller amount of money to be left in those countries to improve the welfare and social conditions of the workers concerned. I believe that this question has at least the sympathy of the right hon. Gentleman, and I hope he will extend his sympathy into practical acceptance of the new Clause.
    Mr. W. Fletcher: I support the proposed new Clause for the reason that I have a very small personal interest in the matter. Since the splitting of India and Pakistan the whole question of jute marketing has undergone an enormous change and an opportunity now exists for people from this country to reorganise and to compete on a much better basis over the whole jute industry.
    In considering whether to enter that trade—I would remind the Chancellor that considerable dollar earnings have and still can result—the question whether people have the goods or the capital to undertake it resides entirely in the point of taxation. The Chancellor will one day wake up and find, from the diminishing revenue, that the power of collecting foreign currencies and establishing over-

    1721
    seas assets, which has been of enormous advantage to this country, has been brought to nought by the short-sighted policy of trying to get in the maximum amount, badly as the Treasury need it, without taking into account the innumerable cases in which the people responsible for enterprises have found the dice loaded just that amount against them and have had to abandon the enterprises which they otherwise would have undertaken.
    Mr. Gaitskell: This new Clause, like the one before it, is designed to carry much further a concession which was made last year. The present situation is that relief is allowed up to three-quarters of the United Kingdom Income Tax and Profits Tax to which the taxpayer is liable in the case of the Commonwealth and one half in the case of foreign countries. The proposed new Clause is intended to increase those fractions to the full 100 per cent.
    The hon. Member for Chippenham (Mr. Eccles) said he expected that I would resist the proposal mainly on the grounds of cost, but that is not the main reason I am opposing it. It is true that it would cost us directly about £5 million, but the double taxation agreements which are intended to produce the same results for the United Kingdom taxpayer would also involve us in similar cost. The trouble about the proposed new Clause is that it would involve us in that loss of revenue without our obtaining anything in return for it by way of double taxation agreements. It is far more on the ground that it would weaken our position that I am resisting the proposal.
    The hon. Member seemed to be rather sceptical about that argument, but I assure him that it is absolutely vital to the Inland Revenue who are negotiating these agreements. If we throw away in advance of negotiations the most important concession that we would have made, and which the other side want us to make, we shall not be in a very strong position to induce them to do anything in return. They will say that they have nothing more to get out of the British Government, which would have already done all that they wanted. Countries who are interested, as most of these countries are who are still negotiating agreements, are particularly concerned to get
    1722
    free entry and the encouragement of as much British capital to be invested in their areas as they can. The granting of full relief certainly encourages that, and precisely for that reason it is giving away in advance our most important card.
    Captain Crookshank: Will the right hon. Gentleman expand that report and say with how many countries we are at the moment negotiating. The relative importance of the countries is from the trade point of view.
    Mr. Gaitskell: I was about to give the House some account of the position. That is the argument, and I find it a very convincing one. It has been of material assistance to us in the negotiations that have taken place in recent years, and my impression is that it has been a handicap to certain other countries, where unilateral relief in full is granted, that they have not had this card to play.
    Since last year double taxation agreements have been made with France, Ceylon, Norway and various Colonies; agreement has now been reached at the official level with Finland; negotiations are about to be resumed with Belgium; draft agreements have been sent to Germany and Switzerland; Greece and Austria have indicated their willingness to discuss double taxation agreements; and the four East African Colonies have agreed in principle to agreements. Very considerable progress has therefore been made in solving the problem in a way which I am sure is far more for the benefit of the country; that is, by means of reciprocal bilateral agreements and not by the granting of unilateral relief.
    Mr. Remnant: Do I take it that there has been no resumption of negotiations with India?
    Mr. Gaitskell: I was just about to deal with that. We have recently had discussions with India, but I am sorry to say that so far we have not been able to reach agreement with her. Both sides are at the moment considering the position, and I can only tell the House that we shall persevere in our endeavours to get a fair agreement. I am also sorry to say that we have not made progress with the Argentine, Brazil and Venezuela, but I am sure the House will agree that there has been a good deal of progress on the whole. There remain outstanding a number of important negotiations in which

    1723
    this matter will be of substantial importance.
    There is only one other thing I can say on the subject, and that is that the extent of the difference made by granting the full unilateral relief, particularly so far as businesses in Commonwealth countries are concerned, can very easily be exaggerated. The three-quarters relief which is granted at the moment reduces very substantially any net burden there may be from double taxation, and when one remembers that on top of that any net burden that remains can be treated as a cost for the purpose of United Kingdom tax, one can see that the extent of it is very small. Roughly, the position is that on the average—depending on the amount of profits distributed—60 per cent. is taken in tax in the United Kingdom, and that in the case of the Commonwealth in present circumstances it would be fair to say that not much more than 63 per cent. in total is paid. Therefore, the difference is not a large one in those cases. I readily admit that it is larger in the case of foreign countries.
    What we feel about it is this. We naturally wish to secure freedom for the companies and individuals concerned from the burden of double taxation, but the burden is not nearly as heavy in present circumstances, and with the concesssions we made last year, as might be supposed. On the other hand, the advantage of having this margin in the negotiations is, I can assure the House, a very important one and it would be a great mistake to give it away at this stage.
    Mr. John Arbuthnot: The Chancellor said that any burden which a company had in respect of taxation in the
    Commonwealth was treated as cost for United Kingdom tax purposes. I must here declare an interest in this matter. Does the Chancellor's statement indicate that he is prepared to allow as a cost Indian tax on profits earned in Ceylon? So far that has not been allowed as an offset against United Kingdom tax.
    10.15 p.m.
    Mr. Gaitskell: The hon. Gentleman has been good enough to write to me about that case, and I would prefer to reply to him in writing, because it is a complicated and special one.
    Question put, and negatived.
    Mr. Speaker: I promised to safeguard the new Clause dealing with hydrocarbon oils standing in the name of the right hon. Member for Aldershot (Mr. Lyttelton) and the right hon. Member for King's Norton (Mr. Geoffrey Lloyd). Do they wish to move it?

    New Clause.—(REBATE OF DUTY ON LIGHT HYDROCARBON OILS USED FOR INDUSTRIAL PURPOSES.)
    The Treasury may by order direct that a rebate of 41—d. a gallon shall be allowed in respect of the duty on light hydrocarbon oils imposed under section two of the Finance Act, 1928 (as amended by subsequent enactments), in the case of—

    (a)any white spirit; and

    (b)any light oils, other than white spirit, which are not used as fuel in mechanically propelled vehicles constructed or adapted for use on roads.

    Brought up, and read the First time.
    Mr. Geoffrey Lloyd: I beg to move, "That the Clause be read a Second time."
    Question put.
    The House divided: Ayes, 266 Noes, 282.

    Division No. 156.]

    AYES

    [10.18 p.m

    Aitken, W. T.

    Birch, Nigel

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

    Alport, C. J. M.

    Bishop, F. P.

    Carr, Robert (Mitcham)

    Amery, Julian (Preston, N.)

    Black, C. W.

    Carson, Hon. E.

    Amory, Heathcoat (Tiverton)

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

    Channon, H.

    Arbuthnot, John

    Bossom, A. C.

    Churchill, Rt. Hon. W. S.

    Ashton, H. (Chelmsford)

    Boyd-Carpenter, J. A.

    Clarke, Col. Ralph (East Grinstead)

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

    Boyle, Sir Edward

    Clarke, Brig. Terence (Portsmouth, W.)

    Astor, Hon. M. L.

    Bracken, Rt. Hon. B

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

    Baldock, Lt.-Cmdr J. M.

    Braine, B. R.

    Cooper-Key, E. M.

    Baldwin, A. E.

    Braithwaite, Sir Albert (Harrow, W.)

    Corbett, Lt.-Col. Uvedale (Ludlow)

    Banks, Col. C

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

    Craddock, Beresford (Spelthorne)

    Baxter, A. B.

    Bromley-Davenport, Lt.-Col. W

    Cranbome, Viscount

    Beamish, Maj. Tufton

    Brooke, Henry (Hampstead)

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

    Bell, R. M.

    Browne, Jack (Govan)

    Crosthwaite-Eyre, Col. O. E.

    Bennett, Sir Peter (Edgbaston)

    Buchan-Hepburn, P. G. T.

    Crouch, R. F.

    Bennett, Dr. Reginald (Gosport)

    Bullus, Wing Commander E. E.

    Crowder, Capt. John (Finchley)

    Bennett, William (Woodside)

    Burden, F. A.

    Crowder Petre (Ruistip—Northwood)

    Bevim, J. R. (Liverpool, Texteth)

    Butcher, H. W.

    Cundiff, F. W.

    Darling, Sir William (Edinburgh, S.)

    Kerr, H. W. (Cambridge)

    Redmayne, M.

    Davies, Nigel (Epping)

    Kingsmill, Lt.-Col. W. H

    Remnant, Hon. P

    de Chair, Somerset

    Lambert, Hon. G.

    Renton, D. L. M.

    De la Bére, R.

    Lancaster, Col. C. G

    Roberts, Emrys (Merioneth)

    Deedes, W. F.

    Langford-Holt, J.

    Roberts, Maj. Peter (Heeley)

    Digby, S. Wingfield

    Law, Rt. Hon. R. K

    Robertson, Sir David (Caithness)

    Dodds-Parker, A. D.

    Leather, E. H. C.

    Robinson, Roland (Blackpool, S.)

    Donner, P. W

    Legge-Bourke, Maj. E. A M

    Robson-Brown, W.

    Douglas-Hamilton, Lord Malcolm

    Lennox-Boyd, A. T.

    Rodgers, John (Sevenoaks)

    Drayson, G. B.

    Lindsay, Martin

    Roper, Sir Harold

    Drewe, C.

    Linstead, H. N.

    Russell, R. S.

    Dugdale, Maj. Sir T. (Richmond)

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

    Ryder, Capt. R. E. D.

    Duncan, Capt. J. A. L.

    Lloyd, Maj. Guy (Renfrew, E.)

    Salter, Rt. Hon. Sir Arthur

    Dunglass, Lord

    Lloyd, Selwyn (Wirral)

    Sandys, Rt. Hon. D

    Duthie, W. S.

    Lockwood, Lt.-Col. J. C.

    Savory, Prof. D. L.

    Eccles, D. M.

    Longden, Gilbert (Herts, S.W.)

    Scott, Donald

    Erroll, F. J.

    Low, A. R. W.

    Shepherd, William

    Fisher, Nigel

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Smiles, Lt.-Col. Sir Walter

    Fletcher, Walter (Bury)

    Lucas, P. B. (Brentford)

    Smithers, Peter (Winchester)

    Fort, R

    Lucas-Tooth, Sir Hugh

    Smyth, Brig. J. G. (Norwood)

    Foster, John

    McAdden, S. J.

    Snadden, W. McN.

    Fraser, Hon. Hugh (Stone)

    McCorquodale, Rt. Hon. M. S.

    Soames, Capt. C.

    Fyfe, Rt. Hon. Sir David Maxwell

    Macdonald, A. J. F. (Roxburgh)

    Spearman, A. C. M.

    Gage, C. H.

    Macdonald, Sir Peter (I. of Wight)

    Spence, H. R. (Aberdeenshire, W.)

    Galbraith, Cmdr. T. D. (Pollok)

    Mackeson, Brig. H. R.

    Spens, Sir Patrick (Kensington, S.)

    Galbraith, T. G. D. (Hillhead)

    McKibbin, A.

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

    Gammans, L. D.

    McKie, J. H (Galloway)

    Stevens, G. P.

    Garner-Evans, E. H. (Denbign)

    Maclay, Hon. John

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

    Gates, Maj. E. E.

    Maclean, Fitzroy

    Stoddart-Scolt, Col. M.

    George, Lady Megan Lloyd

    MacLeod, Iain(Enfield, W.)

    Storey, S.

    Granville, Edgar (Eye)

    MacLeod, John (Ross and Cromarty)

    Strauss, Henry (Norwich, S.)

    Gridley, Sir Arnold

    Maitland, Cmdr. J. W.

    Stuart, Rt. Hon. James (Moray)

    Grimston, Hon. John (St. Albans)

    Manningham-Buller, R. E.

    Studholme, H, G.

    Grimston, Robert (Westbury)

    Marlowe, A. A. H.

    Summers, G. S

    Hare, Hon. J. H. (Woodbridge)

    Marples, A. E.

    Sutcliffe, H.

    Harris, Frederic (Croydon, N.)

    Marshall, Douglas (Bodmin)

    Taylor, Charles (Eastbourne)

    Harris, Reader (Heston)

    Marshall, Sidney (Sutton)

    Taylor, William (Bradford, N.)

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

    Maude, Angus (Ealing, S.)

    Teevan, T. L.

    Harvey, Ian (Harrow, E.)

    Maude, John (Exeter)

    Thomas, J. P. L. (Hereford)

    Harvie-Watt, Sir George

    Maudling, R,

    Thompson, Kenneth Pugh (Walton)

    Hay, John

    Mellor, Sir John

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

    Head, Brig. A. H.

    Molson, A. H. E.

    Thorneycroft, Peter (Monmouth)

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

    Monckton, Sir Walter

    Thornton-Kemsley, Col. C. N.

    Heald, Lionel

    Moore, Lt.-Col. Sir Thomas

    Thorp, Brig. R A. F

    Hicks-Beach, Maj. W. W

    Morrison, John (Salisbury)

    Tilney, John

    Higgs, J. M. C.

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

    Touche, G. C.

    Hill, Dr Charles (Luton)

    Mott-Radclyffe, C. E.

    Turner, H. F. L

    Hill, Mrs. E. (Wythenshawe)

    Nabarro, G.

    Turton, R. H.

    Hinchingbrooke, Viscount

    Nicholls Harmar

    Tweedsmuir, Lady

    Hirst, Geoffrey

    Nicholson, G.

    Vane, W. M. F.

    Hollis, M. C

    Noble, Cmdr. A. H. P

    Vaugham-Morgan, J. K

    Holmes, Sir Stanley (Harwich)

    Nugent, G. R. H.

    Wade, D. W.

    Hope, Lord John

    Nutting, Anthony

    Wakefield, Edward (Derbyshire, W)

    Hopkinson, Henry

    Oakshott, H. D.

    Walker-Smith, D. C.

    Hornsby-Smith, Miss P.

    Odey, G. W

    Ward, Hon. George (Worcester)

    Horsbrugh, Rt. Hon. Florence

    O'Neill, Rt. Hon. Sir Hugh

    Ward, Miss I. (Tynemouth)

    Howard, Gerald (Cambridgeshire)

    Ormsby-Gore, Hon. W. D.

    Waterhouse, Capt. Rt. Hon. C

    Howard, Greville (St. Ives)

    Orr, Capt. L. P. S.

    Watkinson, H.

    Hudson, Sir Austin (Lewisham, N.)

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

    Webbe, Sir H. (London & Westminster)

    Hudson, Rt. Hon. Robert (Southport)

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

    Wheatley, Maj. M. J. (Poole)

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

    Osborne, C.

    White, Baker (Canterbury)

    Hulbert, Wing Cmdr. N, J.

    Peake, Rt. Hon. O.

    Williams, Charles (Torquay)

    Hurd, A. R.

    Perkins, W. R. D.

    Williams, Gerald (Tonbridge)

    Hutchinson, Geoffrey (llford, N.)

    Peto, Brig. C. H. M.

    Williams, Sir Herbert (Croydon, E)

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

    Pickthorn, K.

    Wills, G.

    Hutchison, Col. James (Glasgow)

    Pitman, I. J.

    Wilson, Geoffrey (Truro)

    Hylton-Foster, H. B

    Powell, J. Enoch

    Wood, Hon. R.

    Jennings, R.

    Price, Henry (Lewisham, W)

    York, C.

    Johnson, Howard (Kemptown)

    Prior-Palmer, Brig. O

    Jones, A (Hall Green)

    Profumo, J. D.

    TELLERS FOR THE AYES:

    Jeynson-Hicks, Hon. L. W

    Raikes, H. V.

    Major Conant and Mr. Vosper.

    Kaberry, D

    Rayner, Brig. R

    NOES

    Acland, Sir Richard

    Balfour, A.

    Blyton, W. R.

    Adams, Richard

    Barnes, Rt. Hon. A. J

    Boardman, H.

    Albu, A. H.

    Bartley, P.

    Booth, A.

    Allen, Arthur (Bosworth)

    Bellenger, Rt. Hon. F J

    Bottomley, A. G

    Allen, Scholefield (Crewe)

    Benn, Wedgwood

    Bowden, H. W.

    Anderson, Frank (Whitehaven)

    Benson, G.

    Bowles, F. G. (Nuneaton)

    Attlee, Rt. Hon C. R

    Beswick, F.

    Braddock, Mrs. Elizabeth

    Awbery, S. S.

    Bevan, Rt. Hon. A (Ebbw Vale)

    Brook, Dryden (Halifax)

    Ayles, W. H.

    Bing, G. H. C.

    Brooks, T. J. (Normanton)

    Baird, J.

    Blenkinsop, A.

    Broughton, Dr. A. D. D

    1726

    1727

    Brawn, Rt. Hon. George (Belper)

    Holmes, Horace (Hemsworth)

    Parker, J.

    Brown, Thomas (Ince)

    Houghton, D.

    Paton, J.

    Burke, W. A.

    Hoy, J.

    Pearson, A.

    Burton, Miss E.

    Hubbard, T.

    Peart, T. F.

    Butler, Herbert (Hackney, S)

    Hudson, James (Ealling, N.)

    Porter, G.

    Callaghan, L. J.

    Hughes, Emrys (S. Ayrshire)

    Price, Joseph T. (Westhoughton)

    Carmichael, J.

    Hughes, Hector (Aberdeen, N.)

    Price, Philips (Gloucestershire, W)

    Castle, Mrs. B. A

    Hughes, Moelwyn (Islington, N.)

    Proctor, W. T.

    Champion, A. J.

    Hynd, H. (Accrington)

    Pryde, D. J.

    Chetwynd, G. R

    Hynd, J. B. (Attercliffe)

    Pursey, Cmdr H

    Clunie, J.

    Irvine, A J (Edge Hill)

    Rankin, J.

    Cocks, F. S.

    Irving, W. J. (Wood Green)

    Rees, Mrs. D.

    Coldrick, W

    Isaacs, Rt. Hon. G. A.

    Reeves, J.

    Collick, P.

    Janner, B.

    Reid, Thomas (Swindon)

    Collindridge, F

    Jay, D. P. T.

    Reid, William (Camlachie)

    Cook, T. F.

    Jeger, George (Goole)

    Rhodes, H.

    Cooper, Geoffrey (Middlesbrough, W)

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

    Richards, R.

    Cooper, John (Deptford)

    Jenkins, R. H.

    Robens, Rt. Hon. A.

    Cove, W. G.

    Johnson, James (Rugby)

    Roberts, Goronwy (Caernarvonshire)

    Craddock, George (Bradford, S)

    Jones, David (Hartlepool)

    Robertson, J. J. (Berwick)

    Crawley, A.

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

    Robinson, Kenneth (St. Pancras, N.)

    Crosland, C. A. R

    Jones, Jack (Rotherham)

    Rogers, George (Kensington, N.)

    Crossman, R. H. S

    Jones, William Elwyn (Conway)

    Ross, William

    Cullen, Mrs. A

    Keenan, W.

    Royle, C

    Daines, P.

    Kenyon, C.

    Shackleton, E. A. A

    Dalton, Rt. Hon. H.

    King, Dr. H. M.

    Silverman, Julius (Erdington)

    Darling, George (Hillsborough)

    Kinghorn, Sqn. Ldr. E

    Silverman, Sydney (Nelson)

    Davies, A. Edward (Stoke, N.)

    Kinley, J.

    Simmons, C. J.

    Davies, Ernest (Enfield, E.)

    Lang, Gordon

    Slater, J.

    Davies, Harold (Leek)

    Lee, Miss Jennie (Cannock)

    Smith, Ellis (Stoke, S.)

    Davies, Stephen (Merthyr)

    Lever, Harold (Cheetham)

    Smith, Norman (Nottingham, S)

    da Freitas, Geoffrey

    Lever, Leslie (Ardwick)

    Snow, J. W.

    Deer, G.

    Lewis, Arthur (West Ham, N }

    Sorensen, R. W.

    Delargy, H. J

    Lewis, John (Bolton, W.)

    Soskice, Rt. Hon Sir Frank

    Diamond, J.

    Lindgren, G. S.

    Strauss, Rt. Hon. George (Vauxhall)

    Dodds, N. N.

    Lipton, Lt.-Col. M

    Stross, Dr. Barnett

    Donnelly, D.

    Logan, D. G.

    Summersklll, Rt Hon. Edith

    Driberg, T. E. N

    Longden, Fred (Small Heath)

    Sylvester, G.O

    Dugdale, Rt. Hon. J (W Bromwich)

    McAllister, G.

    Taylor, Bernard (Mansfield)

    Ede, Rt. Hon. J. C.

    MacColl, J. E.

    Taylor, Robert (Morpeth)

    Edelman, M.

    McGhee, H. G

    Thomas, David (Aberdare)

    Edwards, John (Brighouse)

    McGovern, J.

    Thomas, George (Cardiff)

    Edwards, Rt. Hon. Ness (Caerphilly)

    Mclnnes, J

    Thomas, Iorworth (Rhondda, W)

    Edwards, W. J. (Stepney)

    Mack, J. D.

    Thomas, Ivor Owen (Wrekin)

    Evans Albert (Islington, S W)

    McKay, John (Wallsend)

    Thorneycroft, Harry (Clayton)

    Evans, Edward (Lowestoft)

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

    Thurtle, Ernest

    Evans, Stanley (Wednesbury)

    McLeavy, F.

    Timmons, J.

    Ewart, R.

    MacMillan, Malcolm (Western Isles)

    Tomney, F.

    Fernyhough, E.

    McNeil, Rt. Hon. H.

    Turner-Samuels, M.

    Field, Capt. W. J

    MacPherson, Malcolm (Stirling)

    Ungoed-Thomas, Sir Lynn

    Finch, H. J.

    Mainwaring, W. H,

    Usborne, H.

    Fletcher, Eric (Islington, E)

    Mallalieu, E. L. (Brigg)

    Vernon, W. F

    Follick, M.

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

    Viant, S. P.

    Foot. M M

    Mann, Mrs. Jean

    Wallace, H. W

    Fraser, Thomas (Hamilton)

    Manuel, A. C.

    Watkins, T. E.

    Freeman, John (Watford)

    Mathers, Rt. Hon G

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

    Freeman, Peter (Newport)

    Mayhew, C. P

    Weitzman, D.

    Gaitskell, Rt. Hon. H. T. N

    Mellish, R. J.

    Wells, Percy (Faversham)

    Ganley, Mrs. C S

    Messer, F.

    Wells, William (Walsall)

    Gibson, C. W.

    Middleton, Mrs. L

    West, D. G.

    Gilzean, A.

    Mikardo, Ian.

    White, Mrs. Eirene (E Flint)

    Glanville. James (Consett)

    Mitchison, G. R.

    White, Henry (Derbyshire, N.E.)

    Gordon-Walker, Rt. Hon. P. C

    Moeran, E. W.

    Whiteley, Rt. Hon. W

    Greenwood, Anthony(Rossendale))

    Monslow, W.

    Wigg, G.

    Greenwood, Rt. Hn. Arthur (Wakefield)

    Moody, A. S.

    Wilcock, Group Capt C. A. B

    Grenfell, Rt. Hon. D. R.

    Morgan, Dr. H B

    Wilkes, L

    Grey, C F.

    Morley, R

    Wilkins, W. A.

    Griffiths, David (Rother Valley)

    Morris, Percy (Swansea, W.)

    Willey, Frederick (Sunderland)

    Griffiths, Rt. Hon. James (Llanelly)

    Mort, D. L.

    Willey, Octavius (Cleveland)

    Griffiths, William (Exchange)

    Moyle, A.

    Williams, David (Neath)

    Gunter, R. J.

    Mulley, F. W

    Williams, Rev. Ltywelyn (Abertillery)

    Haire John E (Wycombe)

    Murray, J. D

    Williams,Ronald (Wigan)

    Hale, Joseph (Rochdale)

    Nally, W.

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

    Hale, Leslie (Oldham, W.)

    Neal, Harold (Bolsover)

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

    Hall Rt Hon. Glenvil (Colne Valley)

    Noel-Baker, Rt. Hon. P. J

    Wilson, Rt. Hon. Harold (Huyton)

    Hall, John (Gateshead, W.)

    O'Brien, T.

    Winterbottom, Ian (Nottingham, C.)

    Hamilton, W. W

    Oldfield, W. H

    Winterbottom, Richard (Brightside)

    Hannan, W

    Oliver, G. H.

    Wise, F. J.

    Hardy, E. A

    Orbach, M.

    Woodburn, Rt. Hon A

    Hargreaves, A

    Padley, W. E.

    Woods, Rev. G. S.

    Hastings, S

    Paget R. T.

    Yates, V. F.

    Hayman, F H.

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

    Younger, Rt. Hon K

    Henderson, Rt. Hn. Arthur (Tipton)

    Paling, Will T. (dewsbury)

    Hobson, C. R.

    Pannell, T. C.

    TELLERS FOR THE NOES:

    Holman, P.

    Pargiter. G. A

    Mr. Popplewell and Mr. Sparks.

    New Clause.—(REBATE OF DUTY ON LIGHT HYDROCARBON OILS USED IN AIRCRAFT OR FOR BENCH-TESTING.)
    The Treasury may by order direct that a rebate of 4½d. a gallon shall be allowed in respect of the duty on light hydrocarbon oils imposed under section two of the Finance Act, 1928 (as amended by subsequent enactments), in the case of any light oils used in any aircraft or used in connection with the construction or testing of any engine intended to be fitted in an aircraft or motor vehicle.—[Air Commodore Harvey.]
    Brought up, and read the First time.
    Air Commodore Harvey: I beg to move, "That the Clause be read a Second time."
    On 5th June we had an Amendment on the Order Paper dealing with this matter. It was not called, but we did have a short debate on the Motion, "That the Clause stand part of the Bill," to which the Financial Secretary replied. His reply was not in great detail and it certainly was not a satisfactory answer. He said, in reply to two speeches made on this subject, that he had considered the case of civil aviation very carefully in relation to this tax, both last year and this year. I wonder how carefully the Financial Secretary really did consider this matter. I gained the impression that he had not gone into it in any real detail at all.
    He pointed out that he had already given an increase in the grant to flying clubs where the need appeared to be particularly great. The need for flying clubs is no greater than that of private owners of aircraft. What is the difference between a man who flies with a flying club to keep himself in practice, and the man or woman who flies an aeroplane privately? This country requires air pilots at this time and they may require them desperately in the future. I should have thought the Government would have gone to great lengths to ensure that people helped themselves in this manner, instead of putting handicaps and hindrances in their way.
    I do not think the Government realise that aeroplanes, "off the peg," are considerably cheaper, and are easier to obtain, than motor cars. A two-seater, serviceable aeroplane can be bought today for about £100, or a four-seater for about £250. Indeed, the two things which remain low in price under this Govern-
    1730
    ment are aeroplanes and champagne. The prices have come down. It is an extraordinary thing, but that is so. When we last debated this matter the Financial Secretary said:
    "…we do not think it would be justifiable to single out what is, after all, only one form of transport in competition with other forms of transport."—[OFFICIAL REPORT, 5th June, 1951; Vol. 488, c. 894.]
    Here I must declare an interest in civil aviation. What the Financial Secretary entirely overlooked was that the nationalised air corporations have a distinct advantage over the privately-operated companies. Admittedly, they pay their tax to the Government, but we in this House vote moneys to make up their losses, whereas the privately-owned companies, operating sometimes in competition, not only with the nationalised corporations, but foreign companies as well, have to pay the full tax when operating in this country. That is anything but fair.
    Ever since the aviation industry was nationalised the Government have set out to squeeze the smaller firms out of business. Time and again we have been given assurances, both here and in another place, that they were out to give them a fair deal, but nothing of the kind has happened. It is a gradual squeeze, but I consider that these companies will out-live the Government. They have shown great courage and great fortitude against every conceivable difficulty, and the time will come when they will be given the opportunity to show the country and the world what they can do. This is discrimination of the worst sort in favour of the nationalised industries.
    10.30 p.m.
    The aircraft industry is in the process of converting its aircraft from piston engines to turbo-jets, which fly on heavy hydrocarbon oils which do not attract this duty. It may well be that in one or two years we shall have piston-engined aircraft and turbo-jet aircraft flying on the same route, one paying tax and the other escaping it. Surely that is wrong and ought to be adjusted. More than likely there will be a shortage of heavy hydrocarbon oils as more jets come into being. The Minister said it was difficult to differentiate one form of transport from another, but he has given these exceptions in the fishing industry. There is no real

    1731
    difficulty in isolating the aviation industry as a whole, in my opinion.
    Britain is still leading in the technical field in jet engines—I do not say in airframes, but we are certainly still in the lead in engines, and the manufacturers in this country have made a great contribution. They have given the Americans quite a lot, and I believe we have had very little repayment for it. This has been done, with the assistance of the Ministry of Supply, mainly by free enterprise, and to achieve this, thousands of hours of testing had to be carried out in engine testing beds.
    Why should a company or individual have to pay petrol tax on engine testing for endurance tests in engine sheds or airfields? It does not make sense at all. The industry exported something like £35 million worth of aircraft and parts in the last few years, much of it to hard currency countries, and brought in a large amount of revenue by invisible exports in the form of licences and patents. Surely it should be encouraged to continue this work.
    Last year the industry used something like 52,000 tons of aviation spirit. I do not see that it would cost the Government a great deal to free the industry from the burden of this 4½d. a gallon of new increase. Of these 52,000 tons, 60 per cent. is used on bench testing, and little actually in the air. We must concentrate on quality. We cannot hope to compete with the Americans or the Russians in numbers. We want quality goods, and there is a great opportunity now for the aviation industry to take a real lead. I beg the Government to give this matter their further consideration and see what can be done to give it this encouragement.
    Mr. Charles Ian Orr-Ewing: I beg to second the Motion.
    I support this Clause particularly on the score that we need a growing number of private owners with light and ultra-light aircraft. These people may form a very valuable reserve to this country at a future date. They are not people with large incomes, but young people who want to fly, and we should do everything possible to encourage them. We may have an emergency which would call for them, just as we had
    1732
    a Dunkirk, when it was the little boats and the little people who helped us out.
    We have been told by the Government that in the re-armament programme, the air has been given priority for the defence of this country. This is a point of small cost, but I would ask the Chancellor of the Exchequer to try to lift the burden and encourage these young men to fly and make it cheaper for them to do so.
    Mr. George Ward: I ask the Government to accept this proposed Clause if on no other grounds than those of ordinary common justice. At present, the charter companies are carrying the whole burden of aviation tax. If the costs of the nationalised corporations are heavy owing to this tax on petrol their losses are met out of the taxpayers' pockets. But the charter companies have no such remedy. They have to run their concerns on a commercial basis, and they feel very strongly that they should be exempted from this tax in order to run their businesses and expand them when possible.
    Similarly, as was pointed out by my hon. Friend the Member for Hendon, North (Mr. C. I. Orr-Ewing), this tax falls very unfairly on private owners. If the Financial Secretary will look at this matter again I think he will find that there is definitely unfairness here which ought to be put right.
    Surgeon Lieut.-Commander Bennett: I, also, support this new Clause. It appears to me that the tax on petrol and light hydrocarbon oils has been primarily brought in to soak the motorist. I fail to see why it should be necessary to make aviation suffer in the same way. It seems to me that before the war America, which notably did not tax its aviation petrol, went right ahead and took the civil aviation markets of the world. Here, we are now imposing year by year greater penalties on aviation. The whole picture seems to be the very reverse of progress.
    One of the things which are so incongruous seems to be that the tax applies only to certain parts of various routes. An airline flying from a foreign country, say, to the north of England pays tax only on the parts of its route that are in England. The part that is not in England is tax free. The part of the route in England pays two and a half

    1733
    times the amount of tax that it did even in 1949. That seems an utterly incongruous position.
    The corporations stand to be hit heavily in their accounting, if not in ultimate fact, and particularly British European Airways. I have estimated that whatever their trading results may be, something like £200,000 in the current year will be lost by them purely in paying this tax alone; and although the taxpayer may pay it back to them it would seem to be wiser not to take the tax from the corporations in the first place. As for the miserable private operators, against whom there is this feud on the part of the Government, they are to be left to die. Furthermore, the industry which has caught up with very much of the United States' lead recently, is now being hit in a very left-handed way as a reward for its efforts.
    When we consider that bench testing and test flying of engines is taxed as if it were a case of pleasure motoring, it seems that there is something very wrong. What is the Chancellor's bias against the piston engine? Why should he have it in for piston engines and not for jets? Why should one be penalised and the other not? It is progressive to be making jet engines, but we cannot do without piston engines. Why cannot they be encouraged rather than discouraged?
    The whole burden on the industry may seem a minor matter when compared with the vaster expenditures which are being made today. The difficulties of the industry may seem small compared with some of the other difficulties in this Socialist era, but surely the principle of this matter is important. Here we have a tax which is absolutely capricious in its application. It has about as much method as the landings of a grasshopper, or should I say a locust. It is so inequitable and incongruous that it should be removed.
    Lieut.-Colonel Sir Thomas Moore: I should like to give one concrete example of what was so well put by my hon. and gallant Friend. I do not apologise for giving the direct example of Prestwick Airport. There we have an airfield at which two undertakings are running side by side—a nationalised air industry and a charter company. They
    1734
    both operate from the same airport, using the same airfield and operating from the same sheds. The nationalised industry has the whole force of the British taxpayer behind it. I believe that £8 million was placed at the disposal of British European Airways to meet possible losses, while the charter company, Scottish Aviation, Ltd., has to bear the total cost of everything it incurs in testing on the bench, as well as in flying.
    Mr. Manuel: The hon. and gallant Member's argument is unfair. I am sure that he realises that Scottish Aviation, Ltd., could not have operated unless £1 million, or more, of the taxpayers' money had been spent on the airport.
    Sir T. Moore: I am sorry that I have once more to expose the futility of the hon. Member's argument. As he knows, or ought to know, this charter company was started long before the war. It was started and operated long before nationalisation was thought of, thank goodness. It trained Battle of Britain pilots who won the war for us in the initial stages. Afterwards, when the war started, the Government poured money, to the extent, I believe, of about £2 million, into the place, for the benefit of the country.
    But that does not detract from my argument regarding two flying industries, one nationalised and supported by the taxpayer, and the other having to bear its every cost, both operating from the same aerodrome. The charter company has to test its own machines on its own benches, and to pay the cost. Surely this is a concrete example which should appeal to the commonsense and intelligence of hon. Gentlemen opposite, and enable them to meet the request which has been made.
    Mr. Jay: This Clause refers to the tax upon hydrocarbon oils, rather than to Scottish aviation. I should like to assure hon. Members that the tax is paid equally by publicly-owned and privately-owned aircraft companies. The hon. and gallant Member for Macclesfield (Air Commodore Harvey) is an enthusiast for air transport, and always puts his case persuasively; but he did not persuade me tonight that the arguments which I put forward during the Committee stage were inadequate.

    1735
    First of all, we ought to be clear, as the hon. and gallant Member for Gosport and Fareham (Surgeon Lieut.-Commander Bennett) said, that petrol used in aircraft when flying outside this country is exempt from tax. That is not an anomaly. That is part of the whole structure of Customs and Excise by which an excise tax is remitted on goods exported, and upon operations outside the United Kingdom.
    There are two reasons why we do not think it would be right to charge a different tax on petrol when used in aircraft. The first is an administrative argument that if, in any way or in any respect, one has petrol or light oils of any kind available in the country which have not borne tax, the risk of abuse and evasion, and the need for policing, and so forth, is bound to occur. The hon. and gallant Member for Macclesfield, I think, said that we had done this in the case of the fishing industry, and that we could, therefore, clearly do it in a similar way in the case of aviation. That is a rather unfortunate example, because it was not this Government which gave the concession to the fishing industry, but the right hon. Gentleman the Leader of the Opposition, who, when introducing it, said most explicitly that in giving that remission it must not be used as an argument for its extension in other directions.
    Mr. Geoffrey Lloyd: What year?
    Mr. Jay: 1928.
    10.45 p.m.
    Air Commodore Harvey: When my -right hon. Friend made that concession aviation was in its infancy. Is it realised that the fuel used in modern aircraft is of a high octane value and is most unsuitable for motor cars? The hon. Gentleman's argument does not really stand up.
    Mr. Jay: The right hon. Gentleman said that the concession should not be extended to anything else, and it is, therefore, irrelevant to the argument to say that the industry was in its infancy when the concession was introduced.
    The hon. and gallant Member for Gosport and Fareham (Surgeon Lieut.-Commander Bennett) said this was really a tax on road traffic and should not be extended to other things. That, again, is a fallacy. This is not, and never has been,
    1736
    a tax on road transport. It is a tax on light hydrocarbon oils, and again, when the Leader of the Opposition introduced the tax, he made that quite explicit, and every Government since has adhered to that doctrine about the tax. So that argument is not a forceful one.
    The reason why we should not accept this Clause is that, basically, there is no case for giving exemption from the tax to one form of internal transport in this country. Aviation is a form of transport which we all want to see encouraged and fostered, and we are glad to see it thriving, whether it is publicly owned or privately owned. But there is no case for giving a large competitive advantage to a form of transport which is in competition with other forms of transport in this country. The hon. and gallant Gentleman pointed out that aircraft are one of the things which are lower in price today than they were some years ago, which shows that aviation is an increasingly effective and an increasingly expanding form of transport in competition with others, and that strengthens the argument against giving a discriminatory remission in its favour.
    Air Commodore Harvey: I am sure that the hon. Gentleman does not want to misrepresent what I said. I said that certain types of aircraft were very cheap because they are war disposal items and are flown for one year, at the end of which most people are not able to afford the renewal cost of the air certificate. Will the hon. Gentleman address himself to the argument which I put about the testing of engines on the bench, which are not transport engines?
    Mr. Jay: I was coming to that. First, I should like to answer the remark made by the hon. and gallant Gentleman about not giving that careful consideration which we said on the Committee stage we had done. I can assure the hon. and gallant Gentleman that there was no subject in connection with the Finance Bill on which we spent more hours in discussion, both this year and last, than this question of the petrol tax for civil aviation. We debated it with the Customs and Excise and also with the Ministry of Civil Aviation, as my hon. Friend the Parliamentary Secretary will confirm. The hon. and gallant Gentleman may not agree with conclusions reached, but we went into it

    1737
    very thoroughly and at considerable length.
    Finally, there is the question of fuel for bench testing aircraft engines. There again, the bench testing of engines is, of course, only one operation of the kind that goes on in engineering factories. There is bench testing of other engines, such as motor engines, agricultural tractor engines and engines for sea-going craft of one kind or other. It does not seem to us to be possible to discriminate in that way between one operation and another which may very well be going on in the same fashion. We do not think that a case has been made out for the new Clause, and we ask the House to reject it.
    Mr. Geoffrey Lloyd: This is the third time in which an ill-considered comparison by the Chancellor or the Financial Secretary to petrol prices in this country, because of their tax, with those abroad, have come as a boomerang; because, here again, with this example, we are able to inform them that in many other countries aviation spirit has a rebate which it does not enjoy in Britain. That is so notably in the United States, Canada, and New Zealand. In endeavouring to rebut the speech of my hon. and gallant Friend who moved the Clause, he said that both the charter companies and the Corporations equally paid this tax. Of course, it is true that they pay it equally in the first instance; but the extra expenses which fall upon the charter companies are paid, and fall permanently upon them, whereas the extra expenses falling on the Corporations are paid for by the taxpayer.
    Last year, the Financial Secretary himself put this point much better than I could, when he said that it was not particularly sensible that the Government should raise money with one hand from the Corporations, and then pay it back with the other by way of a subsidy.
    Mr. Jay: I made that argument so I could reply to it.
    Mr. Lloyd: I agree, but I was very decently trying to draw a veil over the reply which he made because I thought it not particularly good. But, if he wishes, I will quote:
    1738
    "On the other hand, I think that if we were to give an exemption, particularly in the instance of civil aviation, it would be said that we were, by the back door, as it were, subsidising a publicly-owned industry while privately-owned industries were being asked to, pay a higher price."—[OFFICIAL REPotrr, 14th June, 1950; Vol. 476, c. 417.]
    The hon. Gentleman could say that the proposal came from this side of the House, and that it would be weak of us to condemn our own proposal; and, for that reason, I did not go into it further. I did not wish to be unfair to him. I think that the House will recollect that, in the discussion which we have had on various aspects of the petrol tax, one of the anxieties in the minds of those on this side has been that we are in danger of unduly hindering the development of a whole series of activities like the ownership of motor cars in popular hands. The 40 million cars in the United States, compared with the comparatively small number here is one example. I suggest that although the numbers are rather small, and we are dealing here with something not so developed as the motor car, yet the air sense of the country is extremely important.
    The Government are in danger, by this heavy tax on private flying, of hindering a development in flying which we do not want to happen. I want to be quite fair to the Government, and point out that they have made an acceptance in principle, by giving the drawback for the flying clubs. That is important, and helpful, but it does not completely meet the point; it is a considerable facility for the clubs, but that kind of flying is entirely based on an hour's, or one-and-a-half hours', or even only half-an-hour's flying at the week-end. It excludes the more extended types of flight, which must be useful in the broader sense.
    Briefly, to put the matter in perspective I would remind the House that before the war there were between 600 and 700 privately owned aircraft in this country. Many of them were requisitioned immediately on the outbreak of the war for war purposes, showing that they had a considerable value when we came to that unfortunate crisis. After the war we got down to 141. The number gradually crept up to over 300; and now, since this rather heavy petrol tax, it has gone back to 259. That is the number for this country, with a population of 50 million.

    1739
    In Australia the number is about the same, but the population is 7,500,000; in Canada the number is over 700 among a population slightly larger than Australia's; and in the United States it is approximately 15,000, compared with our 259. All this is just a little reminder to the House of the different scale on which the whole thing is proceeding in the up-to-date and prosperous nations of the world. In the United States there is one privately-owned aircraft for every 10,000 of the population, whereas we have one privately-owned aircraft for nearly every 200,000 of the population. I therefore hope that the Government will really consider that we should have a concession on this point, and for the reasons I have given.
    Unless this drawback or rebate is given we shall have accumulated a great number of anomalies in this matter. For example,
    a B.O.A.C. Constellation flying to Filton pays the tax; a Constellation flying to Dublin does not pay the tax. A piston engine using petrol pays the tax; a jet aircraft using paraffin does not. B.E.A. does not, in fact, despite what the Financial Secretary said, pay tax, and charter companies do. Private fliers in the clubs do not pay tax; private fliers outside the clubs do pay tax. Petrol used as a result of the Chancellor's concession earlier today for industrial processes for export goods does not pay tax; petrol used for bench testing aero-engines for export does pay tax. It is a perfect nest and bundle of anomalies, and I hope that my hon. and gallant Friend will press his Motion to a Division.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes. 262; Noes, 278.

    Division No. 157.]

    AYES

    [10.58 p.m.

    Aitken, W. T.

    Crouch, R. F.

    Hinchingbrooke, Viscount

    Alport, C. J. M.

    Crowder, Capt. John (Finchley)

    Hirst, Geoffrey

    Amery, Julian (Preston, N.)

    Crowder, Petre (Ruislip—Northwood)

    Hollis, M. C.

    Amory, Heathcoat (Tiverton)

    Cundiff, F. W.

    Hope, Lord John

    Arbuthnot, John

    Darling, Sir William (Edinburgh, S.)

    Hopkinson, Henry

    Ashton, H. (Chelmsford)

    Davies, Nigel (Epping)

    Hornsby-Smith, Miss P

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

    de Chair, Somerset

    Horsbrugh, Rt. Hon. Florence

    Astor, Hon. M. L.

    De la Bére, R.

    Howard, Gerald (Cambridgeshire)

    Baldock, Lt.-Cmdr. J. M

    Deedes, W. F.

    Howard, Greville (St. Ives)

    Baldwin, A. E.

    Doods-Parker, A. D.

    Hudson, Sir Austin (Lewisham, N.)

    Banks, Col. C.

    Donner, P. W.

    Hudson, Rt. Hon. Robert (Southport)

    Baxter, A. B.

    Douglas-Hamilton, Lord Malcolm

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

    Beamish, Maj, Tufton

    Drayson, G. B.

    Hulbert, Wing Cmdr. N. J.

    Bell R. M

    Drewe, C.

    Hurd, A. R.

    Bennett, Dr. Reginald (Gosport)

    Dugdale, Maj. Sir Thomas (Richmond)

    Hutchinson, Geoffrey (llford, N.)

    Bennett, William (Woodside)

    Duncan, Capt. J. A. L.

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

    Bevins, J. R. (Liverpool, Toxteth)

    Dunglass, Lord

    Hutchison, Col. James (Glasgow)

    Birch, Nigel

    Duthie, W. S.

    Hylton-Foster, H. B.

    Bishop, F. P.

    Eccles, D. M.

    Jennings, R.

    Black, C. W.

    Erroll, F. J.

    Johnson, Howard (Kemptown)

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

    Fisher, Nigel

    Jones, A. (Hall Green)

    Bossom, A. C.

    Fletcher, Walter (Bury)

    Joynson-Hicks, Hon. L. W

    Boyd-Carpenter, J. A.

    Fort, R.

    Kaberry, D.

    Boyle, Sir Edward

    Foster, John

    Kerr, H. W (Cambridge)

    Bracken, Rt. Hon. B.

    Fraser, Hon. Hugh (Stone)

    Kingsmill, Lt.-Col. W. H

    Braine, B. R.

    Fyfe, Rt. Hon. Sir David Maxwell

    Lambert, Hon. G.

    Braithwaite, Sir Albert (Harrow, W.)

    Gage, C. H.

    Lancaster, Col C G

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

    Galbraith, Cmdr. T. D. (Pollok)

    Langford-Holt, J.

    Bromley-Davenport, Lt.-Col. W.

    Gammans, L. D.

    Law, Rt. Hon. R. K

    Brooke, Henry (Hampstead)

    Garner-Evans, E. H. (Denbigh)

    Leather, E. H. C.

    Browne, Jack (Govan)

    Gates, Maj. E. E.

    Legge-Bourke. Mai. E. A. H

    Buchan-Hepburn, P. G. T.

    George, Lady Megan Lloyd

    Lennox-Boyd, A. T

    Bullus, Wing Commander E. E.

    Gridley, Sir Arnold

    Lindsay, Martin

    Burden, F. A.

    Grimston, Hon. John (St. Albans)

    Linstead, H. N.

    Butcher, H. W.

    Grimston, Robert (Westbury)

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

    Butler, Rt. Hn. R. A. (Saffron Walden)

    Hare, Hon. J. H. (Woodbridge)

    Lloyd, Maj. Guy (Renfrew, E.)

    Carr, Robert (Mitcham)

    Harris, Frederic (Croydon, N)

    Lloyd, Selwyn (Wirral)

    Carson, Hon. E.

    Harris, Reader (Heston)

    Lockwood, Lt.-Col. J. C.

    Channon, H.

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

    Longden, Gilbert (Herts, S.W.)

    Churchill, Rt. Hon. W. S.

    Harvey, Ian (Harrow, E.)

    Low, A. R. W.

    Clarke, Col. Ralph (East Grinslead)

    Harvie-Watt, Sir George

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Clarke, Brig. Terence (Portsmouth, W.)

    Hay, John

    Lucas, P. B. (Brentford)

    Cooper, Sqn. Ldr Albert (llford, S)

    Head, Brig. A. H.

    Lucas-Tooth, Sir Hugh

    Cooper-Key, E. M.

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

    McAdden, S. J.

    Corbett, Lt.-Col. Uvedale (Ludlow)

    Heald, Lionel

    McCorquodale, Rt. Hon. M. S.

    Craddock, Beresford (Spelthorne)

    Hicks-Beach, Maj. W. W

    Macdonald, A. J. F. (Roxburgh)

    Cranborne, Viscount

    Higgs, J. M. C

    Macdonald, Sir Peter (I. of Wight)

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

    Hill, Dr. Charles (Luton)

    Mackeson, Brig. H. R.

    Crosthwaite-Eyre, Col. O. E.

    Hill, Mrs. E. (Wythenshawe)

    McKibbin, A.

    McKie, J. H. (Galloway)

    Powell, J. Enoch

    Sutcliffe, H.

    Maclay, Hon. John

    Price, Henry (Lewisham, W.)

    Taylor, Charles (Eastbourne)

    Maclean, Fitzroy

    Prior-Palmer, Brig O

    Taylor, William (Bradford, N.)

    MacLeod, Iain(Enfield, W.)

    Profumo, J. D.

    Teeling, W.

    MacLeod, John (Ross and Cromarty)

    Raikes, H. V.

    Teevan, T. L.

    Maitland, Cmdr. J. W.

    Rayner, Brig. R

    Thomas, J. P. L. (Hereford)

    Manningham-Buller, R. E.

    Redmayne, M.

    Thompson, Kenneth Pugh (Walton)

    Marlowe, A. A. H.

    Remnant, Hon. P.

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

    Marples, A. E.

    Renton, D. L. M.

    Thorneycroft, Peter (Monmouth)

    Marshall, Douglas (Bodmin)

    Roberts, Emrys (Merioneth)

    Thornton-Kemsley, Col. C. N.

    Marshall, Sidney (Sutton)

    Roberts, Maj. Peter (Heeley)

    Thorp, Brigadier R. A. F

    Maude, Angus (Ealing, S.)

    Robertson, Sir David (Caithness)

    Tilney, John

    Maude, John (Exeter)

    Robinson, Roland (Blackpool, S.)

    Touche, G. C.

    Maudling, R.

    Robson-Brown, W.

    Turner, H. F. L.

    Mellor, Sir John

    Rodgers, John (Sevenoaks)

    Turton, R. H.

    Molson, A. H. E

    Roper, Sir Harold

    Tweedsmuir, Lady

    Monckton, Sir Walter

    Russell, R. S.

    Vane W. M. F

    Moore, Lt.-Col. Sir Thomas

    Ryder, Capt. R. E. D.

    Vaughan-Morgan, J. K.

    Morrison, John (Salisbury)

    Salter, Rt. Hon. Sir Arthur

    Vosper, D. F.

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

    Wade, D. W.

    Mott-Radclyffe, C. E.

    Sandys, Rt. Hon, D.

    Wakefield, Edward (Derbyshire, W)

    Nabarro, G.

    Scott, Donald

    Walker-Smith D C

    Nicholls, Harmar

    Shepherd, William

    Ward, Hon. George (Worcester)

    Nicholson, G.

    Smiles, Lt.-Col. Sir Walter

    Ward, Miss I. (Tynemouth)

    Noble, Cmdr. A. H. P

    Smithers, Peter (Winchester)

    Waterhouse, Capt, Rt. Hon. C

    Nugent. G. R. H.

    Smyth, Brig. J. G. (Norwood)

    Waterhouse, Capt, Rt. Hon.C

    Nutting, Anthony

    Snadden, W. McN.

    Watkinson, H.

    Oakshott, H. D.

    Soames, Capt. C.

    Webbe, Sir H. (London)

    Odey, G. W.

    Spearman, A. C. M.

    Wheatley, Maj. M. J. (Poole)

    O'Neill, Rt. Hon. Sir Hugh

    Spence, H. R. (Aberdeenshire, W.)

    White, Baker (Canterbury)

    Ormsby-Gore, Hon. W. D.

    Spens, Sir Patrick (Kensington, S.)

    Williams, Charles (Torquay)

    Orr, Capt. L. P. S.

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

    Williams, Gerald (Tonbridge)

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

    Stevens, G. P.

    Williams, Sir Herbert (Croydon, E.)

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

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

    Wills, G.

    Osborne, C.

    Stoddart-Scott, Col. M

    Wilson. Geoffrey (Truro)

    Peaks, Rt. Hon. O.

    Storey, S.

    Wood, Hon R.

    Perkins, W. R. D.

    Strauss, Henry (Norwich, S.)

    York, C.

    Peto, Brig. C. H. M

    Stuart, Rt. Hon. James (Moray)

    TELLERS FOR THE AYES:

    Pickthorn, K.

    Studholme, H. G.

    Major Conant and Mr. Digby

    Pitman, I. J.

    Summers, G. S

    NOES

    Acland, Sir Richard

    Coldrick, W.

    Foot, M. M.

    Adams, Richard

    Collick, P.

    Fraser, Thomas (Hamilton)

    Albu, A. H.

    Collindridge, F.

    Freeman, John (Watford)

    Allen, Arthur (Bosworth)

    Cook, T. F.

    Freeman, Peter (Newport)

    Allen, Scholefield (Crewe)

    Cooper, Geoffrey (Middlesbrough, W.)

    Gaitskell, Rt. Hon. H. T. N.

    Anderson, Frank (Whitehaven)

    Cooper, John (Deptford)

    Ganley, Mrs. C. S.

    Attlee, Rt. Hon. C. R

    Cove, W. G.

    Gibson, C. W.

    Awbery, S. S.

    Craddock, George (Bradford, S)

    Gilzean, A.

    Ayles, W. H.

    Crawley, A.

    Glanville, James (Consett)

    Baird, J.

    Crosland, C. A. R

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

    Balfour, A.

    Crossman, R. H. S

    Granville, Edgar (Eye)

    Barnes, Rt. Hon. A. J

    Cullen, Mrs. A

    Greenwood, Anthony (Rossendale)

    Bartley, P.

    Daines, P.

    Greenwood, Rt. Hon. Arthur (Wakefield)

    Bellenger, Rt. Hon. F. J

    Dalton, Rt. Hon. H.

    Grenfell, Rt. Hon. D. R.

    Benn, Wedgwood

    Darling, George (Hillsborough)

    Grey, C. F.

    Benson, G.

    Davies, A. Edward (Stoke, N)

    Griffiths, David (Rother Valley)

    Beswick, F.

    Davies, Ernest (Enfield, E.)

    Griffiths, Rt. Hon. James (Llanelly)

    Bevan, Rt. Hon. A (Ebbw Vale)

    Davies, Harold (Leek)

    Griffiths, W. (Manchester Exchange)

    Bing, G. H. C.

    Davies, Stephen (Merthyr)

    Gunter, R. J.

    Blenkinsop, A.

    de Freitas, Geoffrey

    Haire, John E. (Wycombe)

    Blyton, W. R.

    Deer, G.

    Hale, Joseph (Rochdale)

    Boardman, H.

    Delargy, H. J

    Hale, Leslie (Oldham, W.)

    Booth, A.

    Diamond, J.

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Bottomley, A. G

    Dodds, N. N.

    Hall, John (Gateshead, W.)

    Bowden, H. W.

    Donnelly, D.

    Hamilton, W. W.

    Bowles, F. G. (Nuneaton)

    Driberg, T. E. N.

    Hargreaves, A

    Braddock, Mrs. Elizabeth

    Dugdale, Rt. Hon. John (W Bromwich)

    Hastings, S.

    Brook, Dryden (Halifax)

    Ede, Rt. Hon. J. C.

    Hayman, F. H.

    Brooks, T. J. (Normanton)

    Edelman, M.

    Henderson. Rt. Hon A. (Rowley Regis)

    Broughton, Dr. A. D. D.

    Edwards, John (Brighouse)

    Hobson, C. R

    Brown, Rt. Hon. George (Belper)

    Edwards, Rt. Hon. Ness (Caerphilly)

    Holman, P.

    Brown, Thomas (Ince)

    Edwards, W. J. (Stepney)

    Holmes, Horace (Hemsworth)

    Burke, W. A.

    Evans. Albert (Islington. S W)

    Houghton, D

    Burton, Miss E.

    Evans, Edward (Lowestoft)

    Hoy, J.

    Butler, Herbert (Hackney, S)

    Evans, Stanley (Wednesbury)

    Hubbard, T.

    Carmichael, J.

    Ewart, R.

    Hudson, James (Ealing, N.)

    Castle. Mrs. B. A

    Fernyhough, E

    Hughes, Emrys (S. Ayrshire)

    Champion, A. J.

    Field, Capt. W J

    Hughes, Hector (Aberdeen, N.)

    Chetwynd, G. R

    Finch, H. J.

    Hynd, H. (Accrington)

    Clunie, J.

    Fletcher, Eric (Islington L)

    Hynd, J. B. (Attercliffe)

    Cocks, F. S.

    Follick, M

    Irvine, A. J. (Edge Hill)

    1742

    1743

    Irving, W. J. (Wood Green)

    Moody, A. S

    Sorensen, R. W

    Isaacs, Rt. Hon. G. A.

    Morgan, Dr. H. B

    Soskice, Rt. Hon. Sir Frank

    Janner, B.

    Morley, R.

    Sparks, J. A.

    Jay, D. P. T.

    Morris, Percy (Swansea, W.)

    Strauss, Rt. Hon. George (Vauxhall)

    Jeger, George (Goole)

    Mort, D. L.

    Stross, Dr. Barnett

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

    Moyle, A.

    Summerskill, Rt. Hon. Edith

    Jenkins, R. H.

    Mulley, F. W.

    Sylvester, G. O.

    Johnson, James (Rugby)

    Murray, J. D.

    Taylor, Bernard (Mansfield)

    Jones, David (Hartlepool)

    Nally, W.

    Taylor, Robert (Morpeth)

    Jones, Frederick Elwyn (West Ham, S.)

    Neal, Harold (Bolsever)

    Thomas, David (Aberdare)

    Jones, Jack (Rotherham)

    Noel-Baker, Rt. Hon. P. J.

    Thomas, George (Cardiff)

    Jones, William Elwyn (Conway)

    O'Brien, T.

    Thomas, Iorwerth (Rhondda, W.)

    Keenan, W

    Oldfield, W. H.

    Thomas, Ivor Owen (Wrekin)

    Kenyon, C.

    Oliver, G. H.

    Thorneycroft, Harry (Clayton)

    Key, Rt. Hon. C. W.

    Orbach, M.

    Thurtle, Ernest

    Kinghorn, Sqn. Ldr E

    Padley, W. E

    Timmons, J.

    Kinley, J.

    Paget, R. T.

    Tomney, F.

    Lang, Gordon

    Paling, Rt. Hon W. (Dearne Valley

    Turner-Samuels, M.

    Lee, Miss Jennie (Cannock)

    Paling, Will T (Dewsbury)

    Ungoed-Thomas, Sir Lynn

    Lever, Harold (Cheetham)

    Pannell, T. C.

    Usborne, H.

    Lever, Leslie (Ardwick)

    Pargiter, G. A

    Vernon W F

    Lewis, Arthur (West Ham, N.)

    Parker, J.

    Viant, S. P.

    Lewis, John (Belton, W.)

    Paton, J

    Wallace. H. W

    Lindgren, G. S.

    Pearson, A.

    Watkins, T. E

    Lipton, Lt.-Col. M.

    Peart, T F

    Webb Rt. Hon M (Bradford C)

    Logan, D. G.

    Popplewell E

    Weitzman D.

    Longden, Fred (Small Heath)

    Porter, G.

    McAllister, G.

    Price, Joseph T. (Westhoughton)

    Wells, William (Walsall)

    MacColl, J. E.

    Price, Philips (Gloucestershire, W)

    West D G.

    McGhee, H. G.

    Proctor, W. T.

    White Mrs. Eirene (E. Flint)

    McGovern, J.

    Pryde, D. J.

    White, Henry (Derbyshire, N.E)

    McInnes, J.

    Pursey, Cmdr. H

    Whiteley, Rt. Hon. W

    Mack, J. D.

    Rankin, J.

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

    Rees, Mrs. D.

    Wigg, G

    McLeavy, F.

    Reeves, J.

    Wilkes, L

    MacMillan, Malcolm (Western Isles)

    Reid, Thomas (Swindon)

    Willey, Frederick (Sunderland)

    McNeil, Rt. Hon. H.

    Rhodes, H.

    Willey, Octavius (Cleveland)

    MacPherson, Malcolm (Stirling)

    Richards, R.

    Williams, David (Neath)

    Mainwaring, W. H.

    Robens, Rt. Hon. A.

    Williams, Rev. Llywelyn (Adertillery)

    Mallalieu, E. L. (Brigg)

    Roberts, Goronwy (Caernarvonshire)

    Williams, Ronald (Wigan)

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

    Robertson, J. J. (Berwick)

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

    Mann, Mrs. Jean

    Robinson, Kenneth (St. Pancras, N)

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

    Manuel, A. C.

    Rogers, George (Kensington, N.)

    Wilson, Rt. Hon. Harold (Huyton)

    Marquand, Rt. Hon. H. A.

    Ross, William

    Winterbottom, Ian (Nottingham, C.)

    Mathers, Rt. Hon. G.

    Shackleton, E. A. A.

    Winterbottom, Richard (Brightside)

    Mayhew C P

    Shinwell, Rt. Hon. E.

    Wise, F. J.

    Mellish, R, J

    Silverman, Julius (Erdington)

    Woodburn, Rt. Hon A

    Messer, F.

    Silverman, Sydney (Nelson)

    Wyatt, W. L

    Middleton, Mrs. L

    Simmons, C. J

    Yates, V. F

    Mikardo, Ian.

    Slater, J.

    Younger, Rt Hon K

    Mitchison, G. R

    Smith, Ellis (Stoke, S.)

    Moeran, E. W

    Smith, Norman (Nottingham, S.)

    TELLERS FOR THE NOES:

    Monslow, W.

    Snow, J. W.

    Mr. Wilkins and Mr. Royle

    Question put, and agreed to.

    New Clause.—(ANNUAL ALLOWANCES, &C., FOR OVERSEAS MINERAL RIGHTS.)
    Subsections (3), (4) and (5) of section twenty-two of the Finance Act, 1949, shall cease to have effect.—[Sir E. Boyle.]
    Brought up, and read the First time.
    Sir E Boyle: I beg to move, "That the Clause be read a Second time."
    This new Clause is based on that section of the Millard Tucker Report on the Taxation of Trading Profits which deals with the effects of our present tax structure on mining concerns. Hon. Gentlemen who have read the Report may recall that paragraph 238 says that the profits of a mining company are not properly computed for purposes of taxation unless the company receives an allowance based on the full amount expended on the acquisition of the mineral rights.
    1744
    The purpose of this Clause is to bring the law into harmony with that recommendation. Until the Finance Act, 1949, no allowance of this kind was given to any United Kingdom mining concern. The concession made in the 1949 Act came as the result of the Report of a Departmental Committee which had been set up in 1948 by the then Chancellor of the Exchequer, Sir Stafford Cripps. It was not a Committee with broad terms of reference over the whole field; it considered only the purely practical point of whether United Kingdom concerns were not handicapped by the absence from our tax system of any allowance for capital expenditure on the acquisition of overseas mineral resources.
    It was the purpose of Section 22 of that Finance Act to relieve United Kingdom concerns from the disability of

    1745
    having to compete with concerns in foreign countries whose tax system did permit such an allowance. While that section was certainly a very valuable concession, it had one weakness, namely, the provisions of subsections (3), (4) and (5). It is these provisions that we are now seeking to annul.
    I am not a lawyer, and hon. and learned Gentlemen must forgive me if I speak in the only language I know. The upshot of these three long and learned sub-sections was simply that the allowances which could be claimed under Section 22 might never exceed what was paid by the first United Kingdom purchaser of the rights in question. Thus under that Section as it now stands, the company now working the minerals may only be able to secure allowances on part of its total expenditure.
    This is, of course, inconsistent with the recommendation of the Millard Tucker Report, which says that a mining company should receive an allowance based on the full amount that it has expended in the course of acquiring the minerals. When the Millard Tucker Committee were taking evidence, there was considerable feeling that the present system gives inadequate relief and would continue to do so until these three subsections were done away with. As I said earlier in the debates on the Finance Bill, the present tax system only makes contact with existing mines; but it is the funds from existing mines that has to finance not only new mines which are successful but also the empty prospects.
    The burden on the mining industry at present is very heavy. I do not know how much this concession would cost the Treasury, but I cannot believe it would amount to a great deal; nor can I see how this concession would run counter to the general financial policy of the Chancellor of the Exchequer. Therefore, I ask hon. and learned Gentlemen opposite to give very serious consideration to this new Clause.
    Mr. Hugh Fraser: I beg to second the Motion.
    The last time I spoke on this question I talked for some 25 minutes, and I should be prepared to do so again, because to see that our mines throughout the British Commonwealth and Empire are given the maximum possible support
    1746
    and that they can compete with foreign mining companies is of vital importance.
    The principle enunciated by my hon. Friend is of great importance. There is a famous law known as Boyle's Law regarding the expansion of gases. If this Clause were adopted it might well have a similar effect on the expansion of our mineral resources. The points made by my hon. Friends are extremely cogent. If you, Mr. Deputy Speaker, and I, and the Leader of the House, were prospecting in Africa and fell upon a mine, and you proceeded to sell the rights of that mine to the Leader of the House, and he then proceeded to sell the rights to me, I should not be able in my claim for allowances to charge the full cost I had paid to the Leader of the House, but would only be able to recoup from the Treasury the amount for which you originally sold the mine to the Leader of the House. I think the Attorney-General will agree that that is a simple explanation of the matter.
    11.15 p.m.
    The point at issue is this. If mines which in the past have been ill-run, perhaps, or for some reason or other have failed, come into the possession of new companies which may undertake the running of those mines, these companies will not gain what they should according to the Millard Tucker Report, which is relief for all the capital sums expended by them. Supposing that you and the Leader of the House and a Frenchman were exploring in Africa and fell upon this mine, and you sold your rights to the Leader of the House and he sold them in turn to the Frenchman, and I bought them from the Frenchman, I should be able to reclaim the whole cost, because owing to a ridiculous anomaly of the law one is not able to reclaim from a person subject to Income Tax.
    Following from that there arises the argument that a mining company may become involved in double taxation. Supposing a company deals in the sale and purchase of mining leases as its business, then it will pay Income Tax on those transactions in the normal way, and when the third party comes along who buys a lease on second issue from a mining house, it will not be permitted to regain its full expenditure from the Treasury.

    1747
    I have tried to use homely analogies to explain to the House what is at issue. Unless concessions of this sort are made, there is a great danger that throughout the world our mining companies will not be able to make the progress they should. American and other companies will obtain the raw materials, and we shall sink again into the position of not having our own materials but of having to go cap in hand to America to ask for more.
    The Attorney-General(Sir Frank Soskice): It is true, as both hon. Members have said, that the Millard Tucker Committee did make a recommendation with regard to the allowance of expenses on the acquisition of mineral rights, but the Committee coupled with their recommendation the question whether a charge should not be made on the seller from whom the company in question acquired its rights, and the two problems cannot be considered in isolation.
    The difficulty is one of long standing. Prior to 1949 there was no allowance available in respect of the acquisition of foreign mineral rights. There never has been, and is not now, any right to depreciation allowance in respect of the acquisition of mineral rights here. That situation was altered by Section 22 of the Finance Act, 1949, which gave the right to a depreciation, or depletion, allowance in respect of expenditure on the acquisition of foreign rights, but the total amount of depletion allowance was limited to the amount which the first United Kingdom purchaser expended.
    The new Clause would seek to extend to the second and third United Kingdom purchasers the right to depletion allowance on the whole expenditure which they incurred in the acquisition of the right from the first United Kingdom purchaser. If that course were accepted without imposing a charge on the first United Kingdom purchaser, there would be a serious loss of revenue to the Treasury.
    I can illustrate by an example how that loss might arise. Suppose a company buys foreign rights for £100,000 and spends £200,000 in getting the mineral properties from the concession they acquire, the cost of the total source of income which that mineral property represents would be £300,000. Suppose it produces in its life minerals to the
    1748
    value of £1 million. The Treasury would obtain tax upon £700,000, that is to say, the £1 million written down by £300,000 of depletion allowance.
    But let us assume that the first United Kingdom purchaser does not exploit the minerals and sells the rights to a second United Kingdom purchaser for £200,000, and the second purchaser spends £200,000 in getting the minerals out of the earth. If the second purchaser were allowed depletion allowance to the full extent of his expenditure, the result would be that the Treasury would obtain tax on £600,000, that is to say, £1 million less two lots of £200,000, although it only cost £300,000 to bring into being that source of income.—[HON. MEMBERS: "Hear, hear."] That would be the result. I hope that hon. Members do not mean by "Hear, hear" that they applaud the Treasury losing £100,000.
    These figures, which were perhaps more confusing than I intended them to be, indicate that unless we impose a charge on seller's rights, the Treasury stand to lose considerably. The same problem arises in connection with depreciation allowances on premiums of leases and on all payments which are made for acquiring sources of income. It is a problem of old standing, which was first considered by the Royal Commission of 1920. That was the problem which the Millard Tucker Committee had in mind when they said an allowance could not be made without imposing a charge on the seller.
    Sir E. Boyle: I followed the right hon. and learned Gentleman's calculations, but I think he was looking at the matter from rather a short-term point of view. It may be that there is a short-term loss to the Treasury, but if this £100,000 is used to finance new successful ventures, surely in the long run the Treasury will receive new revenue from these ventures, which will recoup them.
    The Attorney-General: That is rather an extravagant view of the situation because the loss would be continuous and repeated, and would never be recouped at all. That is what has always prevented the Legislature from granting, for example, depletion allowances in respect of the acquisition of mineral rights in this country. That is why the 1945 Act did not grant any right to depletion allow-

    1749
    antes in respect of mineral resources in this country.
    I simply said that the Millard Tucker Committee did not make the recommendation, as the hon. Gentleman rather implied mistakenly, without coupling it with the reference to the problem of making a corresponding charge. What they said was that it was not within their terms of reference to try and work out a system whereby a charge could be imposed on the seller, and they said they thought it would be appropriate for the Royal Commission to deal with that particular matter amongst the others that they would take into account.
    Our feeling is the same. We feel that we could not possibly accept the proposal as it stands for the reason which I have given, that it would involve an enormous loss to the Treasury annually, increasingly and repeatedly. Therefore, it could not possibly be accepted unless we had some kind of machinery for imposing a charge on the seller so as to prevent the loss from accruing. We would prefer to leave the matter over because we have no doubt that, as the Millard Tucker Committee thought, this is the kind of problem with which the Royal Commission on Income Tax will deal. I hope the House will agree that the Clause as it stands, for the reason which I have given, could not possibly be accepted, and will agree that the appropriate course is to see what solution the Royal Commission propose to this problem.
    Mr. Eccles: I think that argument does not hold water because it assumes that the only buyer of these mineral rights is another United Kingdom company. Therefore, the Treasury are right in saying that if the parent company cannot find anyone who will exploit the mine except a United Kingdom company, of course it will lose some tax if a charge is not made on it for the profit on the sale. But what will happen is that a United Kingdom company says that it is too expensive to pay this tax and, therefore, the mine is sold to a non-resident company. That is the danger of the present position—not that the Treasury is going to lose tax; because it is not going to get any at all.
    Let the right hon. and learned Gentleman consider a case of an old company with a charter, such as the British South
    1750
    Africa Company; after 50 years they part with some concession or other at a large price. Who is going to take that on in this country if somebody resident in Rhodesia can be found who will take it on instead? That is the problem. It is not a tax problem. It is a problem of where we are going to develop the Empire from.
    Captain Crookshank: I do not think that having raised the point my hon. Friend would want to pursue it any further now in the light of the reply—a very lucid reply, if I may respectfully say so—given by the right hon. and learned Gentleman. I followed his mathematics, and if I could I am sure everybody else managed to do so. But it does show that by moving this Clause my hon. Friends have raised a matter of real importance, as the Government have agreed. Therefore, to that extent I think they should feel some satisfaction at having put down this Clause.
    The only other comment I would make is this. The right hon. and learned Gentleman said this was a matter raised in the Millard Tucker Report and that therefore the only thing to do now is to await the Report of the Royal Commission. There is no likelihood of the Royal Commission reporting on the Millard Tucker Report in the very near future, unless it is going to report by sections. That would not be in the nature of a Royal Commission on Income Tax, owing to the complexity of the problems with which they have to deal with.
    11.30 p.m.
    On the other hand, as my hon. Friend the Member for Chippenham (Mr. Eccles) has pointed out, it is a matter of great urgency and national importance that it should be made as easy as possible for British undertakings to exploit—using that word in the best sense of the term—the production of minerals and especially scarce minerals all over the world. Therefore, it may not be possible for the matter to be held over long enough for the Royal Commission to have reported. Consequently, there is no particular point in pressing the matter this year in this form, and I hope that the Government, and their successor, within the next 12 months, will keep the matter well in mind so that something may possibly be done before next year, not necessarily on the lines of this Clause, to deal with

    1751
    the substance of what my hon. Friends have drawn to the attention of the House.
    As the Government have accepted the fact that there is a problem and, in addition to that, the further fact that it is an urgent problem, and that it ought to be considered within the next 12 months, in the hope of finding some provisional settlement ahead of the Royal Commission, I hope that my hon. Friends will not press the matter.
    Sir E. Boyle: In view of what the Attorney-General has said, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.
    Further consideration of the Bill, as amended, adjourned.—[Mr. Royle.]
    Bill, as amended, to be further considered Tomorrow.

    Sir Hartley Shawcross discharged from the Committee of Privileges and the Solicitor-General added.—[Mr. R. I. Taylor.]

  HOSPITAL ACCOMMODATION, WOKING
  Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Royle.]
  11.32 p.m.
  Mr. Watkinson: I make no apology for detaining the House at this late hour, because the matter which I want to raise is one which has now run for some 12 months and I have exhausted, I think, every other possible means of trying to get some satisfaction in this matter for my constituents. It is one which concerns the out-patients' accommodation at the Victoria Hospital in Woking. It is a hospital which serves a population of far more than 50,000 people. But for the war, the hospital would have been rebuilt. A complete rebuilding scheme existed, but could not be carried out because of the war. After the war, plans for extending the outpatients' accommodation were nullified by the taking over of the hospital by the South-West Metropolitan Regional Hospital Board.
  1752
  The first point which I wish to make is the need for much greater out-patients' accommodation for the people of Woking in the place where it is convenient, and where it is possible for them to make proper use of it. Even as long ago as 1948, the latest year for which figures are available, nearly 6,000 out-patients used the hospital, more than 6,000 X-ray cases were dealt with, more than 12,000 casualty attendances were dealt with, and more than 21,000 physiotherapy cases, a total of more than 25,000 cases during the year.
  This hospital is, therefore, meeting a large and definite need. Now let us see the kind of accommodation which is available to deal with far more than 25,000 people a year. The size of the out-patients' consulting room is 15 feet by 12 feet, not very palatial accommodation. The waiting room is 15 feet by 15 feet. The X-ray department, which is housed in the old mortuary, is in a dangerous condition, because as there are high-tension cables trailing about the place it is likely that there will be a serious accident one day. The casualty room is only 15 feet by 12 feet, and all casualty cases have to be carried through the waiting room—an unpleasant spectacle for those who happen to be there, especially as the unpleasantness is added to because the groans of the unfortunate casualties can be heard by those in the waiting room. That sort of thing is not good enough for a large and growing area which depends on this hospital for these particular services.
  I think the fair thing to do is to quote a letter from one of the doctors who uses the hospital, which he wrote to me when he learned that this matter was to come up in the House. It sums it up very much better than I am able to. He writes:
  "On most occasions, the out-patients are hopelessly overcrowded and in this one room "—
  that is, this one out-patients' room 15 feet by 12 feet—
  "patients are dealt with for surgical, medical, gynaecological, ophthalmic, ear, nose and throat, dental, tuberculosis, V.D., skin and diseases of children."
  I think my constituents are deserving of rather better accommodation than that.
  It may be said that other accommodation is gradually reducing the load on this

  1753
  hospital. If that should be one of the arguments of the Parliamentary Secretary, perhaps he will bear in mind that in 1950 over 2,000 T.B. refill clinics have been held, and for 1951 the latest figure I have been able to get which cover the first five months of the year, show that 700 more people have used the consulting out-patients' clinics, so that the numbers using the clinics are going up all the time. I would remind the Parliamentary Secretary that the Sheerwater estate will bring another 5,000 people into Woking and place a further load on this hospital.
  May I mention again the next possible alternative that may be put forward? It may be said that in St. Peter's Hospital, which lies roughly midway between Woking and Chertsey, we have a large modern hospital, which can provide alternative facilities. In that connection may I quote a letter from another doctor—I have had a large number of letters on this question—which shows that it is a perfectly genuine case arising from the need of the inhabitants. This letter, referring to St. Peter's, Chertsey, as a possible alternative, said:
  "St. Peter's is quite the most inaccessible place I know, whilst, on the other hand, Woking Victoria Hospital is very well situated for out-patients."
  I hope the solution will not be that the unfortunate people of Woking who have to have out-patients' treatment, are to have to make the difficult journey to St. Peter's, which will be a long way to go, with poor facilities for catching buses.
  In that connection I should like to quote another letter from another constituent of mine, who says:
  "From actual experience I know the value of St. Peter's Hospital to this community, but I also know the hardships entailed by outpatients and their friends having to traverse the distance either for treatments or for visitations. In the winter months, it is very hard on out-patients who, after treatment at St. Peter's, have to wait often as much as 30 minutes on the main road waiting for a bus to return to their homes. No bus shelters there, and in the wet cold weather one can vision the discomfort and the risks involved."
  I do not think a case can be put forward for St. Peter's, Chertsey, as an alternative to Woking Victoria Hospital.
  It may be said that in these days of financial stringency and because of the financial cuts which are to be imposed on the regional boards, this is an impossible thing. The case I want to make
  1754
  is that for over 12 months nobody has denied that something must be done to provide greater out-patients' accommodation. If I may, I should like to give a statement by the Parliamentary Secretary himself, when he said, on 7th June last year, that he recognised the need to provide additional facilities as soon as possible. Then the former Minister of Health, the right hon. Member for Ebbw Vale (Mr. Bevan) said on 25th July last year that the regional board originally planned to increase the out-patients' department at the Woking Victoria Hospital.
  I could go on quoting from the file of 70 letters which I have had from various people, from the Minister down to the Chairman of the South-West Metropolitan Regional Board, and so on. The Chairman has written several letters to me; on 7th November last year, he said that the case would be considered oil the 22nd of that month. After that, he said it was still being considered and, on 16th January last, and 22nd January, he stated that a decision would be reached on 9th February this year. Then the present Minister of Health wrote to him and said that the Board—that is, the Hospital Board—agreed that the scheme should be given priority over other work in the group
  After all these promises, what can the people of Woking do to get the necessary accommodation for reasonable out-patient treatment? I do not think that the Parliamentary Secretary will deny that the need is there. The accommodation is greatly overcrowded; and at this point, let me say that I am in no way reflecting on the standard of the medical treatment given. One of my own children has been treated there, and from my experience I can say that the doctors there do their utmost to give the very best possible facilities. But they are greatly hampered by this very serious lack of accommodation
  Let us presuppose that the need is not going to be questioned, and that St. Peter's is not the possible alternative. Are there others? I say quite plainly that if it is suggested that the easiest and cheapest way out is to do away with some of the present bed accommodation in order to take additional out-patients. then that is an unacceptable solution. The bed accommodation is extremely

  1755
  limited and, incidentally, both the ex-Minister of Health and the present Parliamentary Secretary—probably very rightly—declined to come to Woking to look at the hospital. But, none the less. they doubtlessly have all the facts to hand.
  The layout is that there is the old hospital on the one side, and Riverside House on the other; and if the suggestion is made that Riverside House should be used for a sort of out-patients' accommodation, then that is entirely unacceptable; and that is the view, not only of myself, but of those intimately associated with the problem. We are desperately short of bed accommodation, and it would be a completely wrong thing if the number of beds was cut down. The land is there; the gardens of Riverside House are levelled, and ready for some sort of temporary accommodation which, I suggest to the House, would be all that one could expect in these hard times.
  Nobody, so far as I know, asks for any elaborate scheme; even that kind of scheme considered if the hospital had continued under private ownership. We merely ask for increased accommodation to deal with this desperate and pressing problem, and I do hope that, after 12 months' delay, and the passing of some 70 letters on this subject between myself and various people, something can be done to meet this need.
  I hope that something can be done to provide the people of Woking with out-patient accommodation where they can be treated by their own doctors, thereby keeping that continuity between doctor and patient which I believe to be so important. Woking has given up hope of a large general hospital, which its size and position in Surrey warrants; but it would be denied a very elementary right if it were denied greater out-patient accommodation to meet this very urgent need.
  11.45 p.m.
  The Parliamentary Secretary to the Ministry of Health (Mr. Blenkinsop): Let me commence by saying that no one would contest for a moment the need for a new out-patients' department at Woking, which the hon. Member for Woking (Mr. Watkinson) has very persuasively argued tonight.
  Mr. Watkinson: Persuasively enough. I hope.
  Mr. Blenkinsop: There is, however, no need for him to do so, because we are agreed, and the South-West Metropolitan Regional Hospital Board are agreed, not only that it is desirable but that there is a need that must be met. The whole question raised here is really one of priorities; and it is an illustration of the very many individual cases where difficult decisions must be come to at the present time when priorities have to be decided upon by a regional board, which possibly has a wider view over a wider area than can be expected from more local opinion.
  I find it a little difficult at one and same moment to meet the argument of many hon. Members in the House who say that the Ministry itself should not interfere with the decisions that are taken by our agents in the hospital field in determining priorities or, indeed, in the general conduct of the hospital work, and this type of complaint in which it is argued that a regional board has made a wrong decision on priorities, and that we should step in to alter the order of priorities in favour of a particular locality.
  Mr. Watkinson: Let me remind the Parliamentary Secretary that as long ago as 6th July, 1950, the then Minister of Health told me that regional boards allocated capital expenditure according to the relative urgency of local needs. My point is that this is a case of great urgency.
  Mr. Blenkinsop: They have to take account, as I say, of the needs over the whole of their regions in allocating their limited resources. We should all be very happy indeed—and I am sure the regional boards would be very happy—if, instead of having to make this choice, they were able to go ahead with the whole of the list that I have here of the schemes that they are anxious to develop at the earliest possible moment; but they must make selections because of the limitations that we have to accept responsibility for, and which we have to impose on regional hospital boards for reasons we all understand, and which I think are accepted in the House. Having accepted that limitation upon the resources that are available, the duty falls upon the regional hospital boards to determine the priorities for themselves, in the long and important list

  1757
  of projects, as to which they feel ought to go forward within the sums of money available.
  Sir Hugh Lucas-Tooth: Is it not a fact that all capital projects have to be referred to the Minister for approval? Will the hon. Gentleman say whether this particular project has been referred to him or not?
  Mr. Blenkinsop: There is no doubt that these schemes are all approved in the sense that they are agreed with the Ministry; but it is, nevertheless, true that because of the limitations of the resources that are available, and because of the extra limitations that have had to be imposed, and which we had hoped would not have been necessary, they have to make revisions of this list as to what are their priorities at any particular time. I want to ask the hon. Member for Woking, if he had the unpleasant duty to perform of deciding between these priorities, which of the urgent schemes would he have preferred?
  Mr. Watkinson: The hon. Gentleman accepts, does he not, that as long ago as 12 months the Minister of Health took the view that this should have had very high priority?
  Mr. Blenkinsop: Yes. We still do, but the regional board felt that there are schemes that have to be given even higher priority than this out-patients' scheme at Woking. Nearly all of them are schemes for increasing tuberculosis accommodation, which, I am sure, the hon. Member would agree, as would we all, is what we regard nationally as one of our greatest priorities. We have asked, in line with the pressure in the House, that the regional boards should give the most urgent consideration to these needs in any extension of accommodation that they can provide within our limited capital resources.
  I have details here of schemes for adaptations designed to provide 25 additional T.B. beds at one centre, the improvement of equipment for T.B. at another centre, equipment to provide an additional 25 beds within this actual hospital group, two schemes for chest clinics—again for T.B.—and, finally, further improvements at Godalming to provide for 40 extra beds, the first stage of a larger scheme of accommodation which will provide, altogether, 100 extra T.B. beds. All these are schemes which
  1758
  have been given additional priority by the regional board. Outside that, there is only one scheme of very great priority and that is for the adaptation of two observation wards for mental cases, which is certainly regarded by everyone in that area as being of the very first priority.
  I do not think that the hon. Member himself, if he were asked to carry out this rather distasteful job of settling priorities, would say that this particular scheme—which he and all of us are anxious to see proceed—could take precedence over these others. Yet that is the sort of problem that faces the regional board, and it is made more acute by the limitations placed upon development in the hospital field through the capital restrictions that we are having to face.
  Therefore, I have to say that I cannot regard the decision of the regional board on this scheme as being in any way unreasonable; but that does not mean that this scheme has been lost. The regional board, with our approval, do still regard it as an essential need for that hospital, and whatever temporary arrangements may be made to meet the problems of this immediate year, that need is still existing. We would all hope—although I still cannot give any pledge—that this will be regarded as one of the first priorities to be fulfilled next year. I am not pledging the board—it would be wrong for me to do so—but the board did very much hope that it would have been possible to bring the scheme into operation this year. Because of the stark realities of the position they have to defer it, but they hope, and I hope, that there will be a deferment only till next year.
  In the meantime, we must take action for the immediate intervening period until the full scheme can go forward next year. The proposal for that temporary period only is one which the hon. Member for Woking said he regarded as unacceptable. I hope he will not regard it as unacceptable—on the understanding that it is not a permanent proposal in place of the new out-patients' department, but one to meet the need in the intervening period until that department comes along.
  For that purpose alone I think the proposal is a reasonable one—that Riverside House should be used for extending outpatient facilities, and that the consequent temporary loss of eight beds should be made up in other hospitals. I accept that

  1759
  that will not be so convenient, but, nevertheless, the arrangement seems a reasonable alternative for a temporary period, and undoubtedly, at the end of this time, it will be possible to go forward with the new out-patients' unit, which we all agree is so necessary.
  I would like to emphasize the very great difficulty that we are in with this type of case. It is perfectly natural and right for hon. Gentlemen to make sure that the needs of their constituents are brought to our attention, but I think they will accept, at the same time, that the regional board have the duty to try and sort out from among a whole host of very desirable plans those which, on a regional basis, they regard as most urgent. We must, as the Ministry, accept the responsibility of placing that duty on them. I am sorry that we have had to do so, but they certainly cannot escape it.
  Mr. Watkinson: May I get one thing clear? If the temporary extra accommodation for out-patients is based on Riverside House for 12 months or to the end of this year, is it really hoped, after these long delays and postponements, that the new accommodation, even of a temporary nature, can be tackled in next year's building programme.
  Mr. Blenkinsop: That is certainly the common desire of the board and ourselves. There may be more serious events, which would, naturally, put an end to our hopes and expectations, but I hope they will not arise, and that it will be possible to go forward as suggested.
  It may appear from the timetable given by the hon. Gentleman, relating to the
  1760
  consideration that the board have given these proposals, that they have not adopted a particularly sympathetic attitude. I do not think the board can be blamed in any way for the position they have taken up. They have all along wanted the scheme to go forward, and they have tried to find less costly alternatives. All these schemes have had to be discussed with the management committee, who, I think, would agree that the board, during these past four or five months, have tried to agree on some means of meeting the difficulties. It would be fair to say that the management committee themselves, faced with the regional position as I see it, would have accepted the unhappy but necessary step of going forward on the basis I suggest.
  On behalf of the regional board I can say that they have no wish to offend local opinion. They recognise the anxiety of people locally, but they also have to carry out their own duties. I hope with that assurance on the way in which the scheme will work out the hon. Gentleman will agree, not merely that the Ministry have taken the closest interest in it, but that the regional board have adopted, on the whole, a sympathetic attitude, even although they have not been able to meet all the desires of the local people.
  Mr. Watkinson: I hope that it will be possible for the plan as now announced to be carried out. If these things could have been made plainer to the people of Woking I am sure there would not have been these difficulties.
  Adjourned accordingly at One Minute to Twelve o'Clock.