§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. Houghton
May I now continue my questions to the Chancellor of the Exchequer? It is quite accidental that I find myself in the company of my hon. Friends the Members for South Ayrshire (Mr. Emrys Hughes) and Bridgeton (Mr. Carmichael) on this matter, because I do not share their desire for a threadbare Monarchy. But I do want to get to the bottom of this question of Income Tax law on allowances paid to other members of the Royal Family.
Clause 3 says there shall be paid to the Duke of Edinburgh, during his life, the yearly sum of £40,000. In the Report of the Select Committee on the Civil List that yearly sum is described as an annuity. I make no point of that; it may be that for Income Tax purposes there is no difference between a yearly sum and an annuity. But I would refer to what both the Chancellor of the Ex- 430 chequer and the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) have said.
The right hon. Member for Blackburn, West said:Income Tax is not payable by the Crown itself, but it is not generally known that Income Tax is payable by other members of the Royal Family, although the Inland Revenue make allowances for expenses, just as they make allowances for other people's expenses.The Chancellor expressed himself in a slightly different way, when he said:… other members of the Royal Family work under a system of allowances for expenses which is defined under the Income Tax law as recently consolidated."—[OFFICIAL REPORT, 9th July, 1952; Vol. 503, c. 1342–1430.]I assume that the Consort of Her Majesty the Queen is not engaged in a trade or profession but that he holds an office and that he holds an office of profit. Were he not to do so I cannot see that he would be liable to Income Tax at all. But we are assured that he and other members of the Royal Family are liable to tax on their allowances.
In the article which I quoted from the "Financial Times" of 11th June, reference is made to Her Majesty Queen Mary who receives £70,000 a year which, the "Financial Times" said, was subject to Income Tax and Surtax, except that the Treasurycan and does relieve from tax the appropriate expenses element.I assume, therefore, that not only the Duke of Edinburgh but Her Majesty Queen Mary and His Royal Highness the Duke of Gloucester—all of those members of the Royal Family—hold an office and that they hold an office of profit and that it is only on that basis that they are liable to Income Tax.
That means that they are liable to Income Tax under Schedule E. If they are liable to the rules of Schedule E, then the expenses which may be deducted from their income for the purpose of arriving at net Income Tax liability must be wholly, exclusively and necessarily incurred in the performance of their office.
I have an Amendment on the Order Paper which would have had the effect of making the allowance to the Duke of Edinburgh under this Clause entirely free of Income Tax and Surtax. That Amendment has been misunderstood in some 431 quarters. I have received a number of letters asking me whether in addition to this large sum of £40,000 a year I am proposing that the Duke of Edinburgh should be entirely relieved from taxation on this amount. Actually, the purpose of the Amendment—
§ Mr. Houghton
No, Sir Charles. That is my difficulty. I do not know whether I can put this in any other way. I will chance my arm to this extent and say that I do not believe that that Amendment would have made any real difference to the Income Tax liability of the Duke of Edinburgh. I say that because I am sure that on any basis upon which the taxpayer can claim a set-off of expenses from Income Tax liability, the Duke of Edinburgh will be able to claim by far the larger proportion of his total allowances as an expense for Income Tax purposes.
He can claim, surely, that were he not the Consort of Her Majesty, he would be a lieutenant-commander in the Navy and that all he would have would be a pair of flannel bags, an evening dress, an odd uniform or two, a squash racket and perhaps a siphon of soda water. He could say, "My standard of living would indeed be modest", as we know it would be for any naval officer of that rank. But because he has become the Consort of Her Majesty the Queen he has to wear a lot of clothes and change them frequently. He has to travel about the country and to live a life which I am sure as a private citizen or as a lieutenant-commander he would neither choose for himself nor be able to afford. [HON. MEMBERS: "He is a commander.] I am sure there is not enough difference between the emoluments of a lieutenant-commander and those of a commander to make all that difference to one's standard of life.
I am also sure that on this occasion the Chancellor of the Exchequer will not be inhibited by the customary tradition which precludes Ministers from discussing the private affairs of individual taxpayers. Here we are discussing the annual allowance to be paid to the Duke of Edinburgh. It is surely pertinent to this discussion to know whether in fact or in prospect the bulk of this allowance will be allowed as expenses, and therefore whether no Income Tax or Surtax will 432 be payable upon it. I have no knowledge whatever of the matter, but I hazard the opinion that of the £40,000 the Duke would be able to claim £38,000 as expenses, and would thus pay tax on only the remaining £2,000.
I hope he will be indebted to me for making out his claim for expenses, and if he is in any difficulty he may be able to quote my remarks in support of his claim. But, in fact, he will not have any difficulty in making such a claim because it is obvious that this allowance is going to be almost wholly expended in the performance of his duties and on the necessary expenses incurred in the discharge of those duties.
Obviously the Committee will not take my word for it, and that is why I am seeking to encourage the Chancellor to be quite candid with the Committee and to say, if not what the position is, what the position may be, and what the practice of the Inland Revenue is in connection with cases of this kind. I am not asking this in any hostile spirit, but I think it would be a pity if the public got the impression that this sum of money is subject to the normal Income Tax and Surtax and is thereby reduced to the comparatively small amount of £4,000 or £5,000 by the present level of taxation.
I think it would be better in arriving at allowances for the expenses of such offices to fix a sum necessary for the purpose and to disregard the element of taxation altogether. That would be the most satisfactory way of doing it, but since my Amendment which had that object has not been selected, I think the Chancellor should tell the Committee whether my surmise is correct or not.
§ Mr. Emrys Hughes
My objection is rather more fundamental. I believe that £40,000 a year is too much to pay to the Duke of Edinburgh, and I do not say this out of any disrespect for the Duke personally. But how does one assess the value of a duke? We used to talk about the Marxian theory of value and the theory of labour hours. I do not know how it is possible to assess the Duke of Edinburgh according to the Marxian theory of value, but I do suggest that when this Government took office we had a very definite opinion given by the Prime Minister concerning Cabinet Ministers.
433 The Prime Minister thought it necessary to announce that the Members of the Cabinet should reduce their salaries by £1,000 a year. We now find that the Duke of Edinburgh is to receive as much as 10 Cabinet Ministers. Perhaps I am not assessing the relative values of Cabinet Ministers, but if we take that standard it is not possible to argue that £40,000 is a reasonable sum. I understand that the Archbishop of Canterbury receives £8,000 a year, but I do not think the services rendered to the nation by the Duke of Edinburgh will be five times more valuable than those given by the Archbishop.
§ 11.30 p.m.
I do not wish, even remotely, to mention the Dean of Canterbury. I want to find out what particular yardstick one applies in assessing the Duke at £40,000. It is not good enough to look back in the history books to see what was paid to the husband of Queen Victoria, but we should make an attempt to have a more moderate estimate and allowance. The Duke of Edinburgh will be paid more than the members of the National Coal Board, the central executive of our largest industry. If people asked me why I voted in favour of this £40,000, I should not be able to give a satisfactory answer.
According to this Clause, the sum is to be paid to the Duke during his life, and at the beginning of a new reign we have to take into account all kinds of exigencies. It may be that Her Majesty may predecease the Duke, and he will have a widower's pension of £40,000 a year. Members might ask whether the Duke does not require this large sum for the expenses of his office.
The Committee might consider this a little more closely. Presumably he will live with Her Majesty in one of the Palaces already paid for. So he will have no rent to pay. If we read the Report of the Select Committee we find that to make the Civil List look a little less in recent years such things as electric light, coal and fuel are transferred to the Ministry of Works. The telephone bill comes into another Vote. Therefore, I want to know how the Duke can spend £40,000 a year. I presume the Chancellor of the 434 Exchequer hopes he might invest it in Government stock, at 3½ or 4 per cent.
Perhaps the Duke will read reports of what happened here yesterday and invest the money with the brewers. If an income of £40,000 is granted to him, and he has no bills or rent to pay, then he must invest it, and thus become a capitalist on a big scale. His interests would be those of the Stock Exchange, those of the person who has money invested in breweries, distilleries and all the private enterprise that we on this side want to wipe out. So I say that at the beginning of a new reign we are entitled to ask for this matter to be examined carefully, because there is a watertight case for paying moderate salaries, and this sum, which works out at £769 a week, will sound fantastic to the great majority of people in this country, and cannot be justified except by the hoary old traditional arguments in which the Conservative Party believes because it has a vested interest in it.
Mr. I. O. Thomas
It is remarkable that there has been hardly any contribution to this debate from any hon. Member opposite except from the Government Front Bench. Presumably the Government supporters agree with the Measure under discussion. Yet I think that when criticisms are levelled by the Opposition against proposals put forward by the Government, the Government supporters have a duty to their own electorate to give some reason for their support of such proposals.
§ Sir H. Williams
When a matter was raised which concerned a back bench Member, I spoke. We are now debating Income Tax and Surtax assessment, and that is a proper subject for my right hon. Friend the Chancellor of the Exchequer.
I was not thinking particularly of the hon. Member for Croydon East (Sir H. Williams) as representing the whole of the Government back benchers. I certainly realise that he is a very important Member of the party opposite, but I do not think that even in his valuation of his own importance he has reached the stage of thinking that he speaks for the whole of the Government supporters. He has certain colleagues who, I think, are able to make some reasonable contribution to a debate on an important matter of this kind.
435 I wish to declare my amazement, which I think is shared generally on this side of the Committee and, indeed, in the country as a whole, that no word has come from the Government supporters in explanation of their support of this proposal that vast sums of public money should go to one person at the rate of £40,000 a year, representing a weekly sums which is more than the total annual income of hundreds of thousands of people who work for their living every day of their working lives.
It is astounding that when we have a Measure involving the payment of £40,000 a year to one person, hon. Members opposite have absolutely nothing to say, although they are apparently so exemplary in their duty in fastening attention on the financial reports of every public authority, as we have seen in today's debate on the future of the British Transport Commission. That is Tory democracy in action.
§ Mr. R. A. Butler
I do not think the hon. Member for The Wrekin (Mr. I. O. Thomas) need excite himself too much. The Select Committee was composed of practically equal numbers on both sides of the House.
The right hon. Gentleman appears to be repeating the point he has made on earlier stages of the Bill, that that matter has been fully discussed by a Select Committee. Even if that is so, surely when the Report of a Select Committee comes before the House and this Bill, which is drafted on the basis of that Report, comes before the House, it is the duty of the House to examine and debate it before it comes to a final decision?
§ Mr. Butler
The hon. Gentleman is now answering a point I was not intending to make, so he is one ahead of me in the discussion. I was simply going to say that not only did my right hon. and hon. Friends take part in the work of the Select Committee, but they took part on the two previous occasions when the Civil List was discussed; and tonight again my right hon. Friend the Member for Blackburn, West (Mr. Ralph Assheton) and my hon. Friend the Member for Croydon, East (Sir H. Williams) have both taken part in the debate. If 436 others have not taken part it may be that many of the arguments have been fully canvassed and they have no further contribution to make. Anyway, in their loyalty to the duties of the House and to the Royal Family hon. Members on this side are second to none, and I do not want to impart any animosity between one side or another. If there has been any criticism put forward, even by the most violent critics, it has been put forward in the best possible spirit, and so our debates should continue.
Now I come to the arguments of the hon. Member for Sowerby (Mr. Houghton). The position is, taking the Duke of Edinburgh first, there is only the special exemption in the case of his own income, which I shall describe in a minute. But he is not taxable in respect of his wife's income, and, as the hon. Gentleman is a great expert, no doubt he will wish to folow up the ramifications of this subject.
In the case of other members of the Royal Family, which includes the Duke of Edinburgh, there is no exemption from tax, but allowances for expenses are made under Rule 10 of Schedule E of the Income Tax Act of 1918, now consolidated into Rule 8 of the Ninth Schedule of the Income Tax Act of 1952, the glory of consolidation being to Her Majesty's present Government.
I am not going to stand here as Chancellor and discuss the private accounts of any citizen of this country, whether a member of the Royal Family or not. In fact, one of the most historic traditions of the Inland Revenue is that I could not if I wanted to, because these matters are kept within the bosom of the Inland Revenue. Very right it is, because it would be an impossible system to run otherwise. All I can say is that the hon. Gentleman, who is an expert on these matters, was perfectly right in assuming that a large proportion of the money allowed to the Duke would naturally rank as expenses in view of the nature of his task, and I think we had better leave the matter at that. He was perfectly right in his general assumption. I cannot give him the answer. I do not know the actual details. I imagine he is not quite right in the final figures he came to. That, in general, is the answer to the hon. Gentleman's observations, which I confirm.
437 Now we come to the speech of the hon. Member for South Ayrshire (Mr. Emrys Hughes), who again took part in our debate on this matter. He raised two main points. First, this sum would continue after the death of the Queen, which, I am sure, we all hope will be a very long deferred contingency. But, in looking ahead, as we have to, in framing the report and the Bill, we have to consider that matter. He is quite right in saying this is allowed to the Duke for life. I really think that is reasonable. The argument in favour of the Duke having this sum after the death of Her Majesty would he even stronger than his having it before, because it would be necessary for his household to be maintained to the same extent after her death.
The hon. Member also raised the question whether this sum was not too much for the Duke of Edinburgh during his life. It is very difficult to give the Committee details of the whole expenditure of the Duke; and I do not like discussing the affairs of other people. But I can assure hon. Members that when we were taking evidence we tried to assess some of the expenditure he would have to make, and it did come to quite a large sum. He has to conduct a Household, with its staff expenses. He is a separate personality; and whereas Her Majesty's Privy Purse is now only £60,000, the Act of 1937 fixed His Majesty's Privy Purse at £110,000. The main difference, leaving aside the £17,000 which Her Majesty has very graciously made available from savings, is due to the fact that the Duke is now regarded as a separate entity.
It may appear peculiar to some hon. Members that there is need for a separate Household; not in the personal, domestic sense, of course, but in the public sense. We should not underestimate the duties which the Duke has to carry out; there is the considerable expense of travel, and the maintenance of his position; such matters as subscriptions, the amount of which quite surprised members of the Select Committee when receiving evidence. I am perfectly satisfied that this sum will be spent in his public duties and on his maintenance, and on his Household, without waste. I do not say that the sum should be larger, but I do say that it is a sum reasonable and suitable for the position of the Duke.
438 The hon. Member for South Ayrshire also made remarks about the Duke's establishment in relation to other dignitaries, whether religious or the National Coal Board. I suggest that I had better not enter into a discussion on that, nor to answer the remarks of the hon. Member for Ealing, North (Mr. J. Hudson) about the soda water.
§ Mr. James Hudson (Ealing, North)
I am not so interested in that as in the £40,000 which is now considered to be practically tax free—[HON. MEMBERS: "No."] Well, subject to arrangements which will enable him to enjoy the greater part of the £40,000 so that it will be equivalent to an income of £1 million odd a year.
§ Mr. Butler
In so far as this sum is allocated and spent in regard to expenses, that contention would not hold water. The hon. Member had better consult with his hon. Friend the Member for Sowerby and become instructed on these matters. I think that I have answered the main points raised by hon. Members, and I hope that we may now have this. Clause.
§ Mr. T. O'Brien (Nottingham, North-West)
After the personal expenses of £40,000 proposed to be allocated to the Duke, has he not to pay salaries to his immediate staff? People who, in business, we should call executives? Has he not to do that, apart from paying the domestic staff; and is it not a fact that the salaries which he pays, if increased to what would be a "commercial" rate, the allowance would have to be greater?
§ Mr. Butler
I used the expression that the Duke had to maintain his Household, and the hon. Member is correct in interpreting as he does.
§ Mr. Fernyhough
This is a loosely worded Clause, which has no qualifications at all. I know that what I am about to say may be thought to be indecent, but I am one of those people who do not believe in angels. Whether they are royal persons or road sweepers, people are all liable occasionally to go off the rails, or to go wrong. What disturbs me is that the possibility may arise—though I hope it will not—because the Duke is a human being, that the domestic felicity may go wrong. [Interruption.] I 439 know; I said this might hurt hon. Members. But it has happened before. Look into history. It is no good hon. Members defending their Kings, Queens and Dukes as if they were angels; they are ordinary human beings, with the vices and virtues of human beings, and we have the right to say so.
§ Mr. L. M. Lever (Manchester, Ardwick)
On a point of order. When we are discussing the question of emoluments, why should we assume the vices of the people whom we are discussing? Why should not we appreciate their virtues rather than other parts of them?
§ The Chairman
I think that it is possible to imagine all sorts of things about people and it is rather wrong in the circumstances.
§ Mr. Fernyhough
I would be failing in my duty if I were to support the allocation of the sum of £40,000 to one individual for life, irrespective of what might happen. I was not sent here to agree to things like that, and I do not think hon. Members should be so thin-skinned about these things and pretend that they can never happen. They should not be offended if somebody says that they might happen. It is something that could arise, and I think I am free to say so in the House. Hon. Members should be free to speak their minds without being howled at by a lot of hooligans—[Interruption.]—or people who should know better. I hope that the occasion will not arise when I shall be able to say, "I told you so," but nevertheless there is that possibility.
§ Clause ordered to stand part of the Bill.
§ Clauses 4 and 5 ordered to stand part of the Bill.