Clause 2.—(ANNUAL PAYMENT FOR THE QUEEN'S CIVIL LIST.) (Hansard, 22 July 1952)

§ Mr. Douglas Houghton (Sowerby)
I wonder whether the Chancellor will clear up the question of Income Tax liability on the Civil List. The right hon. Gentle- 416 man said on 9th July that he would, if asked, be prepared to throw additional light on the Income Tax and other taxation of the Civil List and other payments to members of the Royal Family. Since this may be the last occasion on which we may be discussing the Civil List for many years to come—which I am sure is the profound hope of hon. Members on both sides of the Committee—it would be useful if the Chancellor could clear up some points for the purpose of the record. In Clause 2 (1) there is a provision to pay to the Queen's Civil List the yearly sum of £475,000.
The question I ask the right hon. Gentleman is whether any Income Tax and other taxation falls upon the Civil List. The right hon. Gentleman the Member for Blackburn. West (Mr. Assheton) said: Income Tax is not payable by the Crown itself … The Chancellor said: The Sovereign naturally, except when her or his private landed estates are governed by the Act of 1862, is free from tax …[OFFICIAL REPORT. 9th July, 1952; Vol. 503, c. 1342–1430.] I should like the right hon. Gentleman to explain whether the Civil List is in fact free from tax and what statutory authority exists for it if exemption is granted.
I have conducted some researches into this matter. The only light I have seen thrown upon it was an article in the "Financial Times" of 11th June, 1952. entitled "The Civil List." It said: At present no income tax is payable on the Civil List. This has a curious origin. In 1907, the Treasury tried to make King Edward VII pay the cost of visits of foreign royalties. The King refused. But in 1911 George V agreed to do so in return for an agreement that the Civil List should be tax-free. This was a vital concession. I have looked at the Civil List Act of 1910 and have failed to find any reference to this agreement. I have studied closely all the provisions of the Income Tax Act, 1952, and have failed to find any reference there to this arrangement. The circumstances in which the Civil List becomes tax free, as the right hon. Gentleman says it is, are a little curious. When the Chancellor referred in his remarks to the Act of 1862, he said that except when her or his private landed estates are governed by the Act of 1862, the Civil List is free of tax.
417 I find that the Act of 1862 deals only with the landed and other estates of the Crown owned in his or her private capacity, but I also find in Section 9 of that Act another curious thing. Apparently, taxation levied on the private estates of the Crown, which is provided for in Section 8 of the Crown Private Estates Act, 1862, has to be paid under Section 9 of the same Act out of the Privy Purse.
Does that mean that out of the Privy Purse which is provided for in the Civil List, taxes are paid on the private estates of the Crown, because under Section 9 of the 1862 Act it rather seems as if that were so. It says: … all taxes, rates, duties, assessments, impositions, rents and other annual payments, fines, and other outgoings which shall from time to time be charged and chargeable upon … such private estates, shall be paid and discharged out of the Privy Purse of Her Majesty. … The obligation is placed upon those responsible for the administration of the Privy Purse to pay these taxes out of any monies in his or their hands applicable for the use of Her Majesty or her heirs or successors.
There are two points which I am sure the right hon. Gentleman will be able to answer. He is very fully equipped with the answers to all these mysteries and doubts about the matter, and his reference only a few moments ago to some ancient laws gives me confidence that he will be able to supply the answers. The two points are these. Is the Civil List tax free, and, if so, what is the statutory authority for that? Does the Civil List bear the taxation levied upon the private estates of the Crown.
I have other questions to ask later, and I am sure that right hon. and hon. Members opposite will acknowledge that I am discharging a public duty in asking for explanations on matters upon which the public are singularly ill-informed and upon which I am sure it is fit and proper that the fullest possible information should be given. I shall make no apology in a moment or two in seeking to catch your eye, Sir Charles, in order to ask a few more questions about the Income Tax law concerning other members of the Royal Family, but at the moment I confine myself to Clause 2 which deals with the Civil List.

§ Mr. E. Fernyhough (Jarrow)
I want to deal with the money which is to go to the Duke of Cornwall. I believe that if a plebiscite were taken in this country on whether or not the Duke should receive this amount, there would be an overwhelming majority against it. I do not believe that such a plebiscite would reveal any hatred or animosity, but a proper sense of values.
When we think that £10,000 a year is being provided for a child not yet four years old, and that that sum will become £30,000 a year when he reaches the age of 18, it is beyond all common sense and reason. It would not have the backing of the vast majority of the people of this country. What could a boy of that tender age want which will cost anything like that amount of money? Someone has suggested teaching staffs, but large numbers of teachers employed at National Union of Teachers' rates would not absorb that amount. I cannot understand what kind of education the young Prince is going to receive, or what kind of life he is going to live up to the age of 18, that will require that amount of money.
Her Majesty's Government ought to give some recognition to what the ordinary people are thinking about this particular matter. There can be no doubt that a large volume of opinion considers that this is carrying the thing to extremes, and I should like the Chancellor to give some idea of the expenditure which would be incurred on behalf of this young child while he is being brought up. If it can be justified with a reasonable explanation, I think it would be accepted by the people, most of whom do not accept that there is such an explanation because they do not believe it is possible to spend this money for the next 13 years. I wonder whether the Chancellor could give some explanation which would remove our doubts and fears. We are entitled to it. I do not think it is asking too much, in view of the amount of money we are being asked to vote tonight, to be given more details and information.

§ Sir Herbert Williams (Croydon, East)
I think there is some misapprehension about this. I was a member of the Select Committee, and if this sub-paragraph was not in the Bill the Duke of Cornwall would get £90,000 a year. But Parliament is not voting anything to him. 419 Unless the law of inheritance is amended he is entitled to the whole of the revenue, and we are discussing what shall be done with that revenue. By this Act, and with the consent of his trustee, we are taking away from him eight-ninths of that which he would get if the subsection were not in the Bill.
I wish the hon. Gentleman the Member for Jarrow (Mr. Fernyhough) had taken the trouble to read the Report of the Select Committee.

§ Mr. Fernyhough
I did.

§ Sir H. Williams
If he did, he did not remember much of it, because he will have seen that we are not spending the £10,000 but building up a capital sum, as happened in the case of many of his predecessors, which can be used when he reaches his majority for the purchase of a house and equipment to set up his own establishment. If the hon. Gentleman will read the Report of the Select Committee he will see that it refers to a moderate capital sum, though whether it is moderate is open to argument. That is the purpose. The money is not likely to be used for his maintenance during the intervening period, but for the purposes set out in the Report, which it is obvious a great many hon. Gentlemen have not taken the trouble to read.

§ Mr. Emrys Hughes
I should like, first of all, to support the request made by my hon. Friend the Member for Sowerby (Mr. Houghton) that we should have more information on whether Income Tax and Supertax are payable on the money that goes to the Civil List. I should also like to know why the Royal Family should not pay Income Tax just as much as anybody else. Hon. Members may think that an irreverent and indecent question, but I think that when the finances of the country are so serious as they are, a Monarch should set a magnificent example of self-sacrifice to the country and should agree to pay his or her share of Income Tax and Supertax in the same way as any other member of the community.
Surely this is a democratic age, and it is one of the privileges of every citizen in this country that he should pay towards the revenue of the country.
420 Millions of people will wonder: "If I am called upon to fill up my Income Tax form, why should not the Monarch have the same delightful and exhilarating experience?"
When we hear so much about the need to garner all the money that we can, I do not understand why the Royal Family should not also help. I am sure that they would be prepared to do so handsomely, generously and magnificently, and would give a lead in helping to secure the solvency of this nation. I hope the Chancellor will say, "Now that this point has been brought to my attention I am prepared to agree to this in the interest of the nation."
I fail to understand why there was some disapproval of the point made by my hon. Friend the Member for Sowerby. Everybody knows that he has been perfectly consistent in this matter. Right throughout the Finance Bill, over and over again, with his long experience of the Inland Revenue, he was meticulously careful that every loophole for tax evasion should be closed. He is only pursuing the same policy and saying that there should be no tax evasion by anybody in this country, and in this matter the Head of the State should pay tax just the same as anybody else.
The case against this Clause is beyond doubt. I would point out to the Chancellor that this is something in the nature of a wage claim. This week we have been discussing wage claims, and only yesterday the Minister of Labour said from the Dispatch Box, "It is my duty, in the precarious state of the national finance, to say that these wage claims of these shop assistants should be referred back." If that is so, I think the Minister of Labour should have been in his place today and should have said to the Chancellor of the Exchequer, "Look here, how am I going to be able to tell these shop assistants that they must be content with—"

§ The Chairman
I think that is going beyond Clause 2.

§ Mr. Hughes
I agree, Sir Charles, but I am quite sure that the million shop assistants will not. However, in spite of getting very little support either from the former Chancellor or the present Chancellor, I want to persist in this demand for economy at the present time. We are 421 on the scaffold. The trap door is open, and we cannot afford to have any luxuries.
If the Chancellor of the Exchequer is going to say: "Yes, we must vote everything that has been given in the past, according to precedent and tradition," we submit, as ordinary individual Members of this House, keen about protecting the financial resources of the nation and to secure the most meticulous economy and to save us from the spiral of inflation, that here is a splendid opportunity for the Chancellor to show that he is interested in safeguarding every penny, even when it affects the very highest traditions of the State.
The hon. Member for Bridgeton (Mr. Carmichael) and myself were criticised because we argued that the £475,000 should be reduced to £250,000, and we still hold to that opinion. We do not believe that we are ungenerous people in saying that £250,000 a year—

§ The Chairman
There is an Amendment on the Order Paper to that effect which I did not call, so the hon. Member cannot discuss it now.

§ Mr. John Rodgers (Sevenoaks)
Is it in order for an hon. Member of this House to indulge in tedious repetition? The whole of this speech was made in the debate on 9th July.

§ The Chairman
I am quite able to deal with tedious repetition.

§ Mr. Hughes
And if the hon. Member does not like it he can write to his bishop about it. I am quite sure that when the bishop reads the report of my arguments in this speech he will agree that they were not nearly so tedious as the correspondence that was sent to him on the previous occasion. I pass from the fact that some of these arguments were adduced on the Committee stage. I leave out the question whether it should be £250,000 or £475,000. I merely address my remarks to the argument that £475,000 is too much and that £250,000 would be a more reasonable ceiling. I have finished.

§ The Chairman
I have already told the hon. Member that that is a point that cannot be discussed. I have not selected the Amendment. If he persists in dis- 422 cussing this he will have to resume his seat.

§ Mr. Hughes
I would not persist in any way in attempting to contravene your decision, Sir Charles. My argument is that at the present time, in the present state of the nation's finances, there is a strong public opinion in this country that this amount is excessive and that in view of that and in view of the fact that none of our Amendments have been called, not even the Prime Minister's Amendment, we are justified in voting against what we consider an excessive sum.

§ Mr. R. A. Butler
The hon. Member for Sowerby (Mr. Houghton) raised the first point on this Clause. He asked two specific questions: Is the Civil List tax free, and is the taxation on the private estates of the Crown paid from the Privy Purse? The answer is as follows. I gave the initial part in the debate of 9th July in column 1430, and I would expand it a certain extent, but not very much, as I understand he is going to speak later, when I will answer about the tax liability of other members of the Royal Family in order that he will not feel disappointed.
The position of the Sovereign is as follows. The Sovereign is not liable to tax unless expressly made liable by Statute. In the case of a male Sovereign the immunity extends to his wife's income, but it does not extend to the Consort of the present Queen. Therefore, when he comes to discuss other members of the Royal Family, I will discuss the position of the Duke of Edinburgh if he so desires. I think that he is quite right in saying that we must do all we possibly can to make all information available to the Committee.
The hon. Member then referred to the Crown Private Estates Act, 1862, under which Income Tax and Surtax is payable on the annual value of the private estates. Therefore, the answer on the question about the private estates is that tax is paid from the Privy Purse, and not the Civil List. No tax is payable by the Sovereign on the Civil List, but the salaries and pensions from the Civil List are taxed in the hands of the recipients. That, I think, is the main answer to his question. If I may, I will reserve comment on matters relating to other members of the Royal Family until he speaks later on.

§ Mr. Houghton
Could the Chancellor clear up this point for the Committee? When he says the taxation on the private estates of the Sovereign are paid from the Privy Purse, does that mean that the Privy Purse is Class 1? Is it not out of the £110,000? Is the Privy Purse part of the Civil List, or is there another, very privy, Privy Purse?

§ Mr. Butler
Technically, the hon. Gentleman is right. When I used the expression "Civil List," it includes the Classes attached to the Bill, and to the Report of the Select Committee. The tax is paid from private sources of the Royal Family, and not from the Civil List itself; but, as I have said, I will come to the other members of the Royal Family when he puts his points.
The hon. Member for Jarrow (Mr. Fernyhough) referred to decisions made about the Duchy of Cornwall, and said that if a poll was taken the result would be that it was thought unfair that the Duke of Cornwall should have so much for his minority. I think my hon. Friend the Member for Croydon, East (Sir H. Williams) has given him the answer; because, if he refers back to history, he will see that never, during the minority of a Duke, and never in the case of the Duchy of Cornwall, has so stiff a bargain been made in favour of the Exchequer. No less than £1,380,000 is to accrue to the Exchequer during the minority of the Duke. That is a direct advantage to the Exchequer, and as the Select Committee made clear, it more or less balances, to within a few thousands, the Contingency Margin set up under the Civil List Report.

§ Mr. Hugh Gaitskell (Leeds, South)
Could the Chancellor tell the Committee when was the last occasion that the revenues of the Duchy of Cornwall went to a minor?

§ Mr. Butler
I would be glad to give particulars of the arrangements come to in 1936–37, which were in favour of a hypothetical minor Duke.

§ Mr. Gaitskell
Yes, but when was the last actual case of a minor?

§ Mr. Butler
I have not particulars of that actual case, but I can obtain them before this debate concludes.

§ Mr. Gaitskell
It was a very long time ago.

§ Mr. Butler
Yes, a very long time. In the case of a hypothetical minor Duke, the 1936 provision would have granted him £504,000 during a minority. This arrangement provides the Duke of Cornwall with £240,000 only during a minority. In view of the history of the revenues of the Duchy of Cornwall, I think that this is a very attractive arrangement for the Exchequer. It is a much more favourable arrangement than the Exchequer has ever had before, so far as I am aware.
11.0 p.m.
The hon. Member for Jarrow then asked on what sort of thing would the Duke, his trustees or parents, spend this money during his minority. First, I take the view—as I am sure my right hon. and hon. Friends do; and probably several hon. Members opposite—that it is right that a portion of the revenues of the Duchy, which are by historical tradition the property of the Duke of Cornwall, should pass to the Duke himself, and when the proportion is so small as this I think it forms an extremely fair arrangement from the point of view of the Exchequer.
On what would this money be spent? I think it is reasonable for the Heir to the Throne that a portion of the revenues from his own property should accrue to him, in view of the fact that in the future there will be many expenses in which he will be involved, and it is reasonable that this sum should accrue to him considering that no less than £1,380,000 is to accrue to the Exchequer. At the age of 18 he is to get £30,000 a year, and that he will spend on the Household, because at the age of 18 it is usual for members of the Royal Family to begin their duties, and although it is not a majority by age it is the age at which duties devolve upon the Heir to the Throne. I do not think he will find it difficult to spend that sum in view of the public business in which he will be involved.
So we are left with the question of how he will spend the money up to the age of 18. There will be his education and various other expenses connected with his youth, and expenses incurred by his guardians. There will be expenses during his minority which will not be great at his present young age, but which will 425 grow as his education becomes more and more important and involved. Those are the expenses for which this sum has been laid aside, and I hope that what I have said will provide a general answer to the points made by the hon. Member.
That leaves the points raised by the hon. Member for South Ayrshire (Mr. Emrys Hughes), and in answer to him I would say that we did debate his point of view before. I do not think it would have been possible to have maintained the Monarchy in the tradition that we—and I am sure the great majority of the Committee—think is desirable on a sum less than has been laid down in the Report of the Select Committee. Great trouble was taken by that Committee, and I am afraid that at this stage it would not only be unwise but ungenerous not to pursue the matter through and to allot the sum decreed by the Select Committee and approved by the House and Committee in Resolutions for the purposes of the Royal Family.

§ Mr. I. O. Thomas (The Wrekin)
The right hon. Gentleman mentioned the need for a sum accruing from the income of £9,000 a year up to the age of 18 and £30,000 a year for the last three years of his minority in order, for one thing, that a sum should be available, presumably as a capital sum, when the Heir to the Throne attains his majority. Surely it could be made clear—because I think it is the position—that when the Heir to the Throne does attain his majority he will have separate provision made for him as the Heir to the Throne? Is that so, or does that income cease when he attains his majority?

§ Mr. Butler
On attaining his majority the revenues of the Duchy of Cornwall go to the Heir to the Throne.

§ Mr. Thomas
I take it, then, that the total of £90,000 a year will go to the Heir to the Throne when he becomes the Prince of Wales. [HON. MEMBERS: "No."] If not, when he becomes 21 years of age? That means that he receives at the age of 21 the total revenues of the Duchy of Cornwall, amounting to £90,000 a year. Does the Chancellor of the Exchequer try to argue that in those circumstances, when he attains his majority and is guaranteed an annual income of £90,000, there is need for this 426 special provision to enable a capital sum to accrue?

§ Mr. James Carmichael (Glasgow, Bridgeton)
This Parliament is regarded as probably the most democratic in the world. I have been more than amazed at the way the Chancellor of the Exchequer has thrown out figures tonight to prevent impoverishment of the poor Duke of Cornwall. We are talking of these figures some 24 hours after the Ministry of Labour told us of the serious financial position of the country, and the strongest argument submitted this evening has been that of tradition. Surely, if there is to be expansion, or improvement, of democratic government there is bound to be some change in the general social outlook of the people at the top of the social scale.
We are preparing to give a boy of three years old anything from £10,000 to £12,000 a year. The whole reason for this Bill is to find revenue for the Royal Family. I say that the responsibility of the special Committee was to examine all the financial resources associated with the Duchy of Cornwall and the Duchy of Lancaster, and to examine the Consolidated Fund.
I am satisfied that not a Member of this Committee could in detail examine the revenues and clearly explain how this money is allocated, because we have discovered tonight from the hon. Member for Croydon, East (Sir H. Williams), who is supposed to be an authority on the rules and procedure of the House, that this Bill was framed not so much to give £10,000 a year to the Duke of Cornwall, but to take a whole lot of money away from him. How delightful to put it that way. The House is the only body which can frame Bills and introduce Acts to the statute book.

§ Sir H. Williams
If subsection (2) of this Clause were left out the whole of the revenue from the Duchy of Cornwall would go to the boy.

§ Mr. Carmichael
I am not responsible for framing this Bill, but the Civil List Committee, of which the hon. Member was an eminent member. Therefore, I say that it was the duty of the Committee to frame a Bill which did not contain a Clause which would give nine-tenths of the revenue to the Exchequer for a 427 period, and one-tenth to the Duke of Cornwall. It was the duty of this Committee to frame a Bill to ensure, first, that the Members of the Royal Family had a reasonable income; but not to permit them to get an income from the Consolidated Fund and then leave us guessing as to where the rest of the money was going. The money comes out of the Duchy of Cornwall; nine-tenths of it goes into the Consolidated Fund and one-tenth goes to the Duke of Cornwall.
I am in good company here, because an Amendment was put down by my right hon. Friends seeking the deletion of paragraph (a), and if I am any judge they did that because they felt it was unnecessary at this time to make that grant to the Duke of Cornwall. It is not for me to challenge the Ruling of the Chair or the procedure to be followed, but it is amazing to me that although we are in Committee we are not allowed to discuss an Amendment on the Order Paper.

§ The Chairman
The hon. Gentleman should not say that.

§ Mr. Carmichael
If I have said anything out of order, I regret it, but I think everybody is bound to admit that it is a strange thing that we should be in Committee and yet not able to discuss Amendments. That is the only point I want to make on that.
What I am disturbed about is that this youngster of three years is getting £10,000 at least of income without anything said about where it comes from. The Chancellor says that the Royal Family made a hard bargain. [HON. MEMBERS: "No."] It could not be a bargain without the other side being associated with it; therefore it was a hard bargain. The Chancellor apparently feels that he has achieved something. When my right hon. Friend the former Chancellor asked when a minor of the Royal Family was formerly granted any sum from the Duchy of Cornwall, this Chancellor cannot tell us. He says that at some other stage, perhaps at the Report stage, he will be able to give us some information. The fact of the matter is that it is quite clear that we have no knowledge about when money was taken from this Fund before for a minor of the Royal Family.

§ Mr. Ralph Assheton (Blackburn, West)
I suggest that in the cases of Edward VIII, Edward VII and George IV there was a minority of the Duchy of Cornwall.

§ Mr. Carmichael
Well, I do not want to touch on the delicate subject of Edward VIII tonight. Edward VII is going back a fairly long while; it goes back to a period before many Members in this Committee had arrived on this planet—and I do not mean the hon. Member for Croydon, East (Sir H. Williams). Therefore, I say sincerely that the general view of the country will be that there is something wrong with the framing of statutes which make it possible for the child of a person who is already getting £475,000 per annum—the father is apparently insignificant in this business, because he only gets £30,000—to get anything in the region of £10,000 a year. If the only justification given for that is historical tradition, then I say that is to fail to understand the mood of the people of the time.
11.15 p.m.
We are moving on to a higher and broader form of Government, and, until some stock is taken of these incomes, I tell the Government that they are failing to recognise the people's mood. My last word is about the "Sunday Pictorial," one of our great publications. [Interruption.] There is nothing wrong in that surely? When they first raised the issue the "Sunday Pictorial" criticised those who challenged the Government, and the second week they demanded a Gallup poll, which clearly stated that those who were critical of the Government's attitude on this Bill were right.

§ Mr. F. M. Bennett (Reading, North)
Would the hon. Gentleman care to tell the Committee that, out of a circulation of approximately four million, only 2,500 replied in the affirmative in this so-called Gallup poll?

§ Mr. Carmichael
I say in this case the majority of the people supported the line criticising the Government. It was not their desire to operate some miserable means test on members of the Royal. Family; it was a taking of stock of the people's mood in the present situation. I think they were perfectly right in the attitude they adopted.

§ Mr. Richard Stokes (Ipswich)
I am not going to follow my hon. Friend into the views of the "Sunday Pictorial," but I was not terribly impressed by the result. I want to make quite sure that the Chancellor of the Exchequer knows what our position is. It was made perfectly clear in the Select Committee, in our Resolution at another stage of the Bill, and again today in the Amendment on the Order Paper, which you, Sir Charles, decided not to call. I am not complaining about your decision.
I, for one, rather like the idea that the financial responsibilities for the child should be with the mother, until he grows up. There is a good deal to be said for that, from the purely personal point of view. But the majority are against us, and obviously we are not going to get any amendment on this point at the Report stage. The Chancellor of the Exchequer will appreciate that the Clause is not satisfactory to us; on the other hand, we do not object to the great majority of the Clauses, as some of my hon. Friends do. That being so, we do not propose to divide the House, but if there is a Division I suggest to my hon. Friends that they should abstain from voting.