HC Deb 20 May 1952 vol 501 cc402-31
Mr. Stevens

I beg to move, in page 35, line 41, to leave out from "corporate," to the end of line 2, in page 36, and to insert: Provided that a body corporate shall be deemed to carry on in the United Kingdom a trade or business the management and control of which is conducted by it in the United Kingdom, but the profits or losses of such a trade or business shall for the purposes of the excess profits levy be exclusive of profits or losses which are allocable to a permanent establishment of the corporate body outside the United Kingdom. Regulations shall be made by the Commissioners for the purpose of defining a permanent establishment and the principle on which profits or losses are allocable to a permanent establishment and in the making of the regulations the Commissioners shall follow the principles embodied in the generality of the arrangements which have been made with the governments of territories outside the United Kingdom for the avoidance of double taxation and the prevention of fiscal evasion. The Chancellor, a few minutes ago in the discussion on Clause 31, said that he did not feel it would be possible to exclude from the operation of the Excess Profits Levy the whole of the profits earned by companies operating overseas because it would be unfair to the exporting industries. I must admit that, while the need for savings in order to re-equip the exporting industries at home is very great and urgent, none the less, it cannot be as great as is the need for saving to develop those industries which, incorporated in this country, are developing, exploiting and obtaining raw materials in the Colonies and elsewhere overseas.

These industries, which are incorporated in this country but which operate overseas, have in recent years suffered from severe handicaps of one sort and another. We had a statement after Question time today from my right hon. Friend the Foreign Secretary which indicated one way in which these overseas businesses can suffer very severely. That was a type of handicap over which Her Majesty's Government can have only indirect control or influence—a diplomatic influence—but, in recent years, the Government of this country have quite deliberately placed handicaps upon businesses operating overseas.

I recall very clearly what is known as the "Ring Fence Clause," which was introduced into the last Finance Bill by the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell). There is a new Clause on the Order Paper, which stands in the names of some of my hon. Friends and myself, to eliminate that "Ring Fence Clause" in order to give these companies a chance. It seems to me very clear that the financial policy of the Government should not be designed to handicap companies operating overseas, but to assist them.

The Chancellor has now partly met the point of this Amendment by his own Amendment to Clause 37, page 44, line 13, but I should like to ask him one rather important question concerning the wording of that Amendment, which refers to a company which: … carries on the whole, or substantially the whole, of its trade or business through a permanent establishment situated in territory outside the United Kingdom. What is meant by that rather loose phrase—" the whole or substantially the whole"? Is 70 per cent. substantial, or 90 per cent. or 95 per cent.? It would be interesting to hear.

I feel very definitely that companies operating overseas are in a very special category altogether, and they want every possible help that we can give them in every conceivable way. The Chancellor has gone a long way to meet us already, but I hope that, between now and the Report stage, if not sooner, he will be able to go the whole way and exclude altogether from the operation of the Excess Profits Levy profits quite clearly earned overseas.

Mr. John Arbuthnot (Dover)

In supporting this Amendment, I think it right that I should declare an interest and say that I am concerned with companies that operate overseas. I should like to say "thank you" to the Chancellor for the concession he has made in reducing the Excess Profits Levy to 10 per cent. in the case of overseas companies. He went on to say that that meant that there would be a maximum taxation of 60 per cent. on the undistributed profits of companies operating overseas.

I do not think that is quite accurate because, whilst the taxation may operate in that way in this country, it does not take into account that many of these companies operating overseas have to bear taxation in the countries where their operations are carried out, without reciprocal relief, while paying taxation in this country.

The purpose of this levy has been described as a moral purpose because it embodies a principle which we in this country feel is right. We feel that a section of the community should not be making profits out of the re-armament industry at a time when the rest of the community is undergoing stress and suffering. It is not practicable to isolate the re-armament industries in this country, but the fact remains that the majority of businesses working overseas make comparatively little of their profits from re-armament.

For example, there are vast enterprises in the Empire which are producing food. The fact that our food production should be increasing overseas is surely not a matter concerned with re-armament. Furthermore, it is certainly desirable from our point of view that those companies should increase their profits, because that makes a contribution to the balance of payments. Therefore, it seems to me that rather than damp down increases in these profits and provide deterrents we should exempt companies operating overseas from this Excess Profits Levy.

I should also like to draw the attention of the Committee to the effect that an Excess Profits Levy upon companies operating overseas will have upon Governments in the countries in which those companies carry on their operations. These Governments will see that companies which substantially are earning their income in their territory are being prevented from ploughing back profits into the business and so increasing the prosperity of the countries where the profits are earned. That, naturally is bound to create a feeling of resentment among the Governments concerned. Therefore, I feel that is a salient point which the Chancellor of the Exchequer should hear in mind.

I hope very much that the Chancellor will find it practicable to exempt from this levy those companies which carry on the major part of their business overseas.

Mr. Crosland

This is another of those Amendments for which a good deal of sympathy will be felt on both sides of the Committee. I do not think anybody on this side would tend to under-rate the importance of developing overseas supplies of food and raw material. It is becoming obvious that without great developments, particularly within the confines of the British Commonwealth, we have very little chance of solving balance of payments problems. Secondly, and this is much more fundamental in the long term, if we do not concentrate upon the development of primary products the whole balance of world economy will be completely out of order.

At the moment, food and raw material production is lagging very seriously behind industrial output. I think there is general sympathy for the case of these companies, but when an Amendment is moved virtually to exclude from the Excess Profits Levy the overseas portion of such companies, I think that the Committee must remember the two major concessions which have already been made to companies in this position.

In the last few days the Chancellor has announced, first, that the over-riding maximum of these companies is to be reduced to 10 per cent. This is a concession which will affect a great number of such companies. Secondly, there is this very important output concession—so called—which will also bring a very substantial relief to many, if not most, of these companies. Therefore, we are discussing this Amendment, not against the original text of the Bill, as it was a fortnight ago, but in the light of these two very important concessions which the Chancellor has already made.

My feeling is that to go further than the Chancellor has already gone to help those overseas companies which fall into this category would be discriminating much too far in their favour. After all, we are now landed with this tax. Many hon. Members on both sides of the Committee have argued against it, but they have been unsuccessful in their submissions. We have been landed with the tax and we have to make the best of it.

The only justification for it was the one which the Chancellor tried to put—that on general moral grounds we should try as far as possible to isolate re-armament profits. If there is one set of companies more than another whose additional profits over the standard period is due to re-armament, it is that of the raw material companies overseas. If one takes the case of rubber, copper, or tin, all these companies have had the benefit of this fantastic increase in the price of raw materials—until a few months ago—and also of a very large increase in output. These have led to an enormous increase in their profits as a direct result of world re-armament following the Korean war.

So the profits in the case of these companies are much more obviously re-armament profits than in the case of most British industrial companies which are producing goods in this country. That being so, and considering the concessions which have been made, I think it would be rather unseemly, since this is to be a re-armament levy, to press any further for discrimination in favour of these companies.

I think the Committee should take the view that we have made a sensible concession to them and that it is making complete nonsense of the whole tax to exempt them altogether from a levy which will hit every British company which has made profits higher than the standard profits in the standard period. I should think that the position is very much better left where the Chancellor left it after making his two concessions.

Mr. Horobin

I wish to speak only for a moment or two on this very important Amendment, and to make four points. I should like, first, to answer the point which has just been made by the hon. Member for Gloucestershire, South (Mr. Crosland). Accepting for the sake of argument all that he says, the fundamental weakness of his argument is that, if it be true that these particular companies which are raising raw materials in foreign parts of the world or in the Colonies ought to have that money taken from them, there is a completely un-answerable case that it should be spent, not on the taxpayers of this country, but on those of the country from which the goods are raised. We have seen quite enough of the appalling effect of that argument in Abadan. The one argument of any moral validity which was raised against the Anglo-Iranian Company was that the enormous sums which were raised out of oil by the British Treasury were spent in England instead of in Persia.

I submit that there is great force in the argument that we should be very careful how much further we go with this dangerous process of using moneys raised out of high prices, and in countries where the standard of living is much lower than ours, for the benefit of the British Exchequer instead of the exchequer of Malaya, Lagos or Rhodesia.

Mr. Crosland

Will the hon. Gentleman admit, in fairness, that he is putting the argument in a most extreme form? To quite a substantial extent, if this money is not taken out of the companies by taxation, it will go to the British part of the companies in the form of higher dividends.

10.15 p.m.

Mr. Horobin

On the contrary. What it will do is to go towards keeping some of the rubber plantations going and towards speeding up work on the tin mines of Ipoh, of which I have bitter memories, and so on. The hon. Gentleman should see what has been done in Northern Rhodesia with monies ploughed back by some of these copper companies. Better living standards were introduced than Africans have ever known before, with better housing conditions than some in this country. I need not pursue that, however. That is the first point I want to put to the Committee.

The second point is this. It is extremely dangerous to increase the pressure on these countries to flee from this country. Let me take copper as an example. About half of these Rhodesian copper companies fled this country while the going was good and will not be affected by E.P.L. at all. Certain others, in which the Americans, incidentally, are large shareholders—and they will put considerable pressure on these companies to do the same—are still domiciled in this country and will be charged heavily through E.P.L. although all their income comes from Rhodesia.

Similar cases can be advanced, although those I have mentioned are perhaps the most striking. It is extremely undesirable that we should increase the pressure on companies which are operating overseas to leave this country if they possibly can. I need not develop the argument at great length, but it obviously has financial and other disadvantages to this country.

Thirdly, I hope hon. Members on both sides of the Committee will bear in mind that, while the Chancellor of the Exchequer has made very genuine concessions for which we are grateful, in particular to mineral companies, and so on. and to the rubber companies of Malaya, only about one-sixth of the capital value of the remaining ordinary shares overseas are in those fields. All kinds of commercial and industrial activities, tea plantations and so on, do not come within the special reliefs which he has given, and their case can be met only by some overall relief such as we are suggesting.

For my last point I revert to the case of copper, although it applies to other minerals, which form one of the most considerable of our remaining investments abroad. We are very grateful for what the Chancellor has done, but we must not exaggerate it. In this, as in other fields, he has tried to make the best of a very, very bad tax. I have done my best to estimate what the effect will be on one particular and very large company of this kind, unless something such as we suggest is added to the Bill.

It turns out that the over-riding maximum at 10 per cent., and the improvement in the standards allowed to companies of this kind, appear in this case, at the first glance, to work out much the same and to reduce what would have been an E.P.L. liability of about £1,500,000 to about £1 million. Nobody will sneeze at that, but it still remains true in the case of that vast company, as far as we can estimate it, that instead of having about £2 million a year to put back into development, they will now have about £1 million.

For all those reasons, I suggest that the Chancellor of the Exchequer should consider whether, in this vitally important matter, he ought not to be prepared, if it is at all possible, to go further and to exempt altogether from this special temporary tax monies raised by overseas, and particularly by Dominions' companies. They have been helped in the way the Chancellor has said, but they will be liable to very heavy taxes which will hinder development, and cause them to try to leave the country—if they have not already changed their domicile—which will lead to the danger of the self-governing countries taking action on their own account.

For all these reasons, I hope very much that in this vital field the Chancellor will see his way to accept the Amendment, at any rate in principle.

The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. R. Maudling)

This Amendment has been moved in very persuasive terms. I do not think there can be any disagreement on this side of the Committee about the importance of doing everything possible to help British enterprises operating overseas, but I do not think, for reasons I should like to explain, that that should lead the Committee to accept this Amendment, which goes to the full length of exempting altogether the overseas operations of U.K. domiciled countries. My right hon. Friend has already made very substantial concessions indeed to those companies, and I think—and I hope that the Committee will agree—that it would take very powerful arguments indeed to sustain a case for total exemption from E.P.L. of overseas companies.

The Amendment has been supported on, think, three main grounds. First it has been argued that these companies that draw profits from overseas operations do not draw extra profits as a result of re-armament. I do not think that that argument in the last analysis can be sus- tained. It is not merely a question of the metal-producing companies overseas to which the hon. Gentleman the Member for Gloucestershire, South (Mr. Crosland) referred, although, of course, that is an important point. It is not only companies whose products go immediately into armament factories, but it is the whole range of companies operating abroad, like the whole range of companies operating in this country, that will participate in the general inflation of demand that will arise from the injection of the extra armament expenditure into the economy, not only of this country but of the whole Western world.

I think, therefore, that the reasons which my right hon. Friend advanced on the previous Clause hold good in the case of these overseas companies, and that it is really not possible to sustain an argument that overseas companies do not attain extra profits as a result of re-armament.

The second argument that has been cited is the very great importance of many of these overseas companies to our balance of payments, and that also is a weighty argument, but it is not, in my submission, an argument for giving to those companies wholly exceptional treatment, for there are many other companies that contribute equally to our balance of payments—shipping companies and exporting companies in this country, and banks, and insurance and merchant houses that contribute to our invisible exports. These other enterprises also make their contribution to our balance of payments, and I do not think it would be right to single out overseas operating companies for special, exceptional treatment, which we are not able to accord to those other companies and other enterprises making an equal contribution to the solution of our balance of payments problem.

The third argument—I think, in many ways, the most compelling—is the effect this extended tax on companies operating abroad will have upon opinion in those overseas countries—this additional taxation coming on top of the record of very heavy taxation imposed by previous Governments. It was with that point particularly in mind that my right hon. Friend introduced the concessions he has already introduced and referred to, which will very substantially help these overseas companies, and I would ask my hon. Friend the Member for Oldham, East (Mr. Horobin) to study those concessions in detail, for I think he will find that, in fact, the benefit derived, for example by the copper company to which he referred, for those concessions will be more substantial than he has recognised.

There is, for example, the special concession of the 1949-1950 standard to companies in Malaya, and the very extensive concessions to mining and other industries overseas which go a long way towards meeting the needs of the metal-producing companies; and, finally, there is the important concession of the special over-riding maximum of 10 per cent. in the case of these overseas companies.

I can assure my hon. Friend that the total effect of these various concessions will be to reduce the burden upon the companies which they have in mind very substantially indeed. My right hon. Friend has gone a long way already in meeting the point that is contained in this Amendment, and, for the reasons which I have tried to lay before the Committee, he does not feel that he can go to the full extent of total exemption. Therefore, I ask the Committee not to accept the Amendment.

Mr. Stevens

Would the hon. Gentleman be good enough to explain to the Committee what is meant by the word "substantial" in the text of the Amendment?

Mr. Maudling

I should not like to try to explain to my hon. Friend, who is an accountant by profession, and whose entire life is spent in interpreting all these phrases, what is exactly meant by the word "substantial." I think that it varies from case to case; but I would say that a "substantial part" means a very large part.

Mr. Robert Boothby (Aberdeenshire, East)

The effect of all this is going to be to drive companies out of London to domicile themselves overseas. That is going to be done to an increasing extent. It is, in fact, being done to the maximum extent to which companies can get permission through the Treasury. I imagine that the Government must have realised that. It will certainly, I think, prevent new companies, especially new companies financed by foreign exchange, from setting up in the City of London again with the idea of operating overseas. That again, I think, must have occurred to the Government.

That is the inevitable process and, as I happen to think that it is not altogether an undesirable process, I do not myself mind very much, but I think that before we go ahead with this we ought to be quite clear what we are doing. We are driving these particular companies who are operating overseas out of the City of London, and we are driving them out for ever.

Mr. Stevens

Despite the inability of the Parliamentary Secretary to the Ministry of Civil Aviation to tell me what the simple English word "substantial" means, I have been impressed by the arguments he has advanced as to why he cannot advise his right hon. Friend the Chancellor of the Exchequer to accept this Amendment. I therefore beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Dalton

I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

We have made a very substantial progress today. Earlier this evening the Chancellor of the Exchequer told us that we were well ahead of schedule. I think that the Amendment which is about to be debated is exceedingly important and, in view of the progress made, I think it would be better if it could be taken at the opening of another day's proceedings, because the Amendment goes right to the root of the argument to which the Chancellor of the Exchequer was addressing himself in his recent speech, namely, whether this levy should be firmly linked to rearmament.

If I may repeat, for the benefit of the right hon. Gentleman, in a sentence, what I have been saying, I was asking leave to report Progress because we have made extremely good progress, as the right hon. Gentleman himself said a little earlier. The next Amendment is of very great importance in relation to this whole debate, because it raises very definitely the question of the link between this levy and re-armament; and this is a matter which ought to be debated at an early stage of our proceedings, I submit, on another day rather than now. In view, therefore, of the admirable progress we have made and the general good will which has been shown in all parts of the Committee, I hope that the Chancellor will now agree that we should now report Progress and resume at this point, not tomorrow when other matters are under discussion, but on Thursday.

10.30 p.m.

Mr. R. A. Butler

I sympathise with the manner in which the right hon. Gentleman has put this forward, but I do not feel that his arguments on the Amendment are valid. I had hoped simply to reach the end of Clause 32 in the remaining time, of which we have a little, but not on any account, in view of the circumstances of our earlier exchanges, to venture on to territory about which there are starred Amendments.

In view of the point of view put forward earlier we pay some attention to what the Opposition have said on this matter, and I was simply proposing to go to the end of Clause 32 and then move to report Progress myself. That would mean that I would not in any case go beyond the hour of transport. If we are delayed I would not in any case keep the Committee late tonight because that would be unreasonable. I was simply proposing to use the extra time now. I think that would be best, because the Committee must realise that we have a great deal of detail still to get through on this Bill and if we do not use all the available time it simply means that time has to be added on to the next Sitting, which makes us later then.

If we were able to get this remaining portion of Clause 32 I think we could make better progress on the next stage the day after tomorrow. That would still leave time for hon. Members to examine the starred Amendments and to examine the progress we have made hitherto. I do not advise, the Committee to get further behindhand on this Bill because if we do it will only mean that we are put to physical inconvenience by cramming this right up against the end of the period before the Recess, and it may mean more than one all-night Sitting; whereas if we proceed in an orderly way and use all the available time we could avoid the inconvenience which late hours mean to hon. Members. Therefore, on the understanding that the Government will move to report Progress before it is too late to catch transport, I should be very grateful if the Committee could continue and make some progress in the remaining time.

Mr. Gaitskell

I find the Chancellor's argument very unconvincing. Earlier today we had a discussion on whether we should proceed at all, and the announcement that he made completely justified the stand we took on that point. We are in great difficulty in discussing the next Amendment, for example. It is a very important Amendment. Reference to it has already been made in our earlier discussions, and I know that hon. Members opposite are keenly interested in it, too; they have already said so. We want to study what effect the Chancellor's announcement has on the argument.

We are, if I may so put it, at the nub of the whole problem. The Chancellor defends the levy precisely on this point. Indeed, he has justified it on the basis of the changes that are to be made. Well, we want to have a look at those changes and it is very difficult for us to discuss this now. I am bound to tell the Chancellor that there is really no hope whatever of finishing this Clause by 11.30 p.m. We have this Amendment; then there is an Amendment in the name of the hon. Member for Oldham, East (Mr. Horobin)—in page 36, line 27. Then we have a series of Amendments which I understand are to be taken together—

The Chairman

The second Amendment to which the right hon. Gentleman has referred has not been selected.

Mr. Gaitskell

Then there are the Amendments which I understand you are selecting, Sir Charles, in the name of the hon. and learned Member for Kensington (Sir P. Spens).

Sir P. Spens

I think that that group of Amendments will take about seven minutes.

Mr. Gaitskell

Judging from previous experience, that is a very optimistic statement. I must point out to the right hon. Gentleman that if he feels that we have made slow progress it certainly is not the fault of hon. Members on this side of the Committee. Most of the Amendments have been put down by hon. Members opposite, and a good deal—I should say probably the greater part—of the speaking has been done by hon. Members opposite.

Mr. R. A. Butler

I did not say that we had made slow progress. I was not in a mood for taunting hon. Members opposite. I said that there was a great deal in front of us, and not that we had made slow progress.

Mr. Gaitskell

The right hon. Gentleman might have said that he was not in a position to taunt hon. Members on this side of the Committee—never mind about not being in the mood. I really feel that it is unreasonable for us to proceed this evening on this important Amendment, in the light of what the Chancellor has said on the Question that Clause 31 stand part. I must assure him that there is no hope of getting beyond that Amendment tonight, and he will really gain very little as a result of continuing.

The right hon. Gentleman spoke about the possibility of all-night Sittings. Frankly, one hour this evening will not make very much difference one way or the other as to whether there are to be all-night Sittings on Thursday or next week. I feel that we really must press him to adjourn the debate this evening.

Mr. E. Fletcher

I should like to reinforce the remarks of my right hon. Friends the Members for Bishop Auckland (Mr. Dalton) and Leeds, South (Mr. Gaitskell). I feel strongly that it will not be possible in the time available between now and the normal hour when transport leaves to deal even with this Amendment, let alone to finish Clause 32, which is one of the matters which the Chancellor of the Exchequer indicated at an earlier stage.

This Amendment is very considerably affected by the announcement which the Chancellor made yesterday and the series of Amendments which he put on the Order Paper this morning. I am sure it will be appreciated that it would be quite unfair and unreasonable to expect the Committee to assess the effect which the new proposals of the Chancellor will have on companies whether engaged in re-armament or not. I therefore think it would be in accordance with the spirit of the announcement which the Chancellor made earlier this afternoon if he would allow this Amendment to be moved at our next Sitting.

The Chancellor said that he had put down over-night a large series of very complicated Amendments dealing with E.P.L. The position is this. Here is this very long and complicated series of 75 Amendments dealing with the whole system of E.P.L. It will be appreciated, particularly in view of the discussion that we have had on Clause 31 and the preliminary discussion on Clause 32, that here in this next Amendment—in page 36, line 23, to insert paragraph (a)—we are, as my right hon. Friend has so truly said, at the hub of the matter.

We are getting down to the real kernel of the debate—the question whether E.P.L. can be limited to the purpose for which it was originally designed, namely, to check the surplus profits that arise from the defence programme, or whether it is to extend over the whole field, with distressing results to all those other industrial companies, with which hon. Members in all parts of the Committee are familiar, whose recent profits are due in no way to rearmament but to efforts of various kinds arising from thrift, industry and the export trade.

I am anxious, in fairness to the Committee, to try to work out what will be the effect on these companies of the various new alternatives with which the Chancellor is now presenting us in his Amendments. This really is a vitally important matter. The object of the Chancellor's concessions yesterday was to try to reduce the injury which will be caused to our economic system by E.P.L. The Chancellor admits that there must be a great number of substantial modifications. His original proposals have gone some way, but no one can pretend that they have gone far enough.

One of the difficulties about E.P.L. is that one is dealing with a whole range of companies engaged in multifarious activities, and E.P.L. or any other new tax designed for a special purpose will, unless limited and confined as closely as possible to the precise purpose for which it owes its origin and genesis, do irreparable harm to the industry of the country.

I am not an economist, and I certainly have not had time since 11 o'clock this morning to work out the effect of the 75 Amendments. My hon. Friends the Members for Stechford (Mr. Roy Jenkins) and Gloucestershire, South (Mr. Crosland), have been working intensely since before breakfast time.

Mr. Ede (South Shields)

What time do they have breakfast?

Mr. Fletcher

Speaking not only for myself, but also for many hon. Members on both sides of the Committee, I am sure that we are all anxious to understand the precise effect and significance of the 75 Amendments. I intend, as soon as I have time, to devote myself to trying to understand them. I believe it is the duty of all hon. Members to make a serious effort to do so. I am sure you would agree, Sir Charles, that at a first casual reading the Amendments would fog a great many people, unless they were trained economists.

There are also a number of other people in the country who will express their views, and we shall get reports in the financial and other newspapers which specialise in matters of this kind, and all these considerations, reports and suggestions will be of very considerable benefit to the Committee.

If the Committee so decides, after we have had a Division on the Motion, I am quite prepared to move my Amendment this evening, and I know that my hon. Friends will do their best, if that were the Committee's decision, to try to deal adequately with it tonight, but I do not feel that I could do full justice to the proposals which I desire to lay before the Committee for limiting the ill-effects of E.P.L.

After all, that is the wish of the Chancellor and the hon. Gentlemen opposite who have taken up so much of the time today in discussing the various Amendments they have put down. Their whole object—a very worthy one—has been to place a limit on the injurious effects of E.P.L. We are all agreed that it would be much better to fortify the Revenue, as the Chancellor says, by getting more from Profits Tax. We are all concerned to see how we can restrict the ill-effects of E.P.L. The ideal would be to scrap it altogether. It may be that, before we are through with this Budget, we shall get to that point.

I am beginning to understand why the Budget was introduced so early this year; I am beginning to realise that it was in order that the Government might introduce two or three subsequent Budgets; so that the Chancellor might have plenty of time in which to change his mind. I am living in hope that there will be further changes of mind on the part of the Chancellor. He is a reasonable man who believes, as we on this side believe, that the essence of our Parliamentary institutions is that we learn from one another and take advantage of suggestions from all parts of the Committee.

10.45 p.m.

Perhaps I might say here that I observe that most of the amendments to E.P.L. have come from Government supporters. One of the most significant differences between our discussions this year and last is that when my hon. Friends and myself were back-benchers of the Labour Government, we were almost inhibited from speaking because of our desire to get Government business through. But the present Government back-benchers seem anxious to prevent the Government getting its business concluded; at times, it has almost appeared that they were trying to talk out the Bill.

But that is not a reason why we on this side should be penalised in being asked at this time of night, at great personal embarrassment, to present as best we can, difficult, abstruse, and complicated arguments to the Committee. We are asked to take into full consideration the import and significance of 75 new Amendments which appeared on the Order Paper at about breakfast time today. The House did not rise until about 1.45 a.m. today, and I feel the Chancellor is asking too much of the Committee.

I am most anxious not to delay the proceedings, because the Chancellor wishes to be reasonable; but there is no chance of his getting either the Clause or the Amendment tonight, and I would appeal to him to make a virtue out of necessity and do the right thing now so that hon. Members can go home and discuss afresh this most complex matter when we meet again on Thursday.

Mr. R. A. Butler

What the hon. Gentleman is suggesting is a compromise. I suggest that it would be better if he would move his Amendment and, as it is, in his view, a very important one, we could then devote all the time from breakfast onwards to reading his arguments. I must congratulate him on his staying power, for it was he who kept us late last night. I think that he should give the opportunity of a little more matter for us to digest this evening; for, if we do not, we shall get only further behind. Let him put his case, and I will then give the undertaking that we shall not let the Committee sit later than 11.30. If we can come to a conclusion, all the better, but I see no valid argument in saying that this Amendment affects the Amendments just put down.

Mr. Gaitskell

Does the right hon. Gentleman mean that if my hon. Friend moves his Amendment, then, when he has finished, the Chancellor will move to report Progress? I understood that the right hon. Gentleman's argument was, in the main, that he wished to read tomorrow what is said tonight.

Mr. Butler

What I said was that we would not keep the Committee beyond 11.30 and if the hon. Gentleman is going to speak for 40 minutes that will nicely occupy our time until we adjourn. As he has already delivered his speech once in the course of the debate on this Motion, I do not think we can anticipate his going on for so long. All I ask is that we shall have the benefit of his speech repeated to us again, then hon. Members who feel passionately on this subject can support him and we should not be kept beyond 11.30, when I shall move to report Progress.

Mr. Roy Jenkins

I am very disappointed that the Chancellor was not able to accept our Motion to report Progress before we start on this Amendment. I understood the right hon. Gentleman to say earlier that one of the reasons why these Amendments were put down at such very short notice was that we had made rather quicker progress than he had anticipated we should make, and thus we were rather ahead of his estimate for the Bill to this stage. That being so, and in view of the reasonable atmosphere which has prevailed, I would have thought that the right hon. Gentleman would have been happy to give way and to leave the matter here until another day.

This is a very important issue and one on which I should have thought many of his hon. Friends would have felt bound to make speeches of very considerable length, particularly in view of the fact that this Amendment exactly meets the point which they have put forward on previous occasions. I do not know whether they are going to go into the Lobby against the Government, but if they do they will want to speak at some length explaining why they are doing it, and if not they will want to speak at length to explain the contradiction between the views they held earlier and the action they propose taking on the Amendment.

I do not see how we can possibly clear this Amendment away without a great number of speeches, some of them of some length from Members on the other side of the Committee. I would have thought, in view of the way in which this Bill has gone generally this year, that the Chancellor would be very willing to make a concession to us and leave the matter at this point. As my hon. Friend the Member for Islington, East (Mr. E. Fletcher) said just now, there has been a marked contrast between the smoothness with which we have made progress on the Finance Bill this year, and the way progress was made in previous years. The Chancellor has managed to keep up with his time-table without using the Closure once, which is very different from previous years and it has been done with a great number of speeches from the back benches opposite.

During the debates on the Finance Bill in previous years supporters of the Labour Government had to impose upon themselves a vow of silence in order that three, four, five and six Members from the Opposition could speak. Nothing of the sort has happened this year and progress has been very smooth indeed in spite of the number of speeches from hon. Members opposite. We want to start afresh with this new Amendment, which is of very great importance, and I would have thought that the Chancellor would have met us on this point.

Mr. Hale

I would not have intervened but for one or two observations which need some comment. It was said that it was my hon. Friend the Member for Islington, East (Mr. E. Fletcher), who kept the House last night. It is right that we should consider what happened last night, because it is relevant to the position of the Committee tonight.

The Chairman

Order. I think that under Standing Order No. 25 it would be out of order to discuss what happened last night. We must confine ourselves to the Motion to report Progress.

Mr. Hale

I am much obliged Sir Charles, but the reason we are moving to report Progress is that there is some doubt whether the members of the Committee can stand the strain of determining business night after night at hours which make it impossible for people to get home at all. When an important Division was taken last night there were 44 hon. Members from both sides of the House who took part, and it does not make for the good name or reputation of the House that an important decision should be taken in circumstances like that. Let me say this, as an attack has been made on my hon. Friend, that there was no time wasted last night, and a decision was taken.

The Chairman

Order. I thought I had made myself clear. It is out of order to discuss on the present Motion what happened last night.

Mr. Hale

The suggestion made to the Committee is that we should spend about 34 minutes in initiating a discussion on what we regard as an important matter, one which raises the whole question of the Excess Profits Levy and the circumstances to which the Chancellor referred to it in his Budget speech. It is important that this matter should be fully considered. HANSARD has gone to press for today, and whatever is said tonight will not be available for any hon. Gentleman to consider tomorrow morning. In carrying on our debates after midnight the difficulty has always been that we have not the information and references available in print next morning if we want to take further part in the discussions, and we shall not know what my hon. Friend has said in moving the Amendment unless we remain to listen to his speech, which will deal with a matter no one expected to be taken before tomorrow.

It is all very well for the Chancellor to say he wishes to hear my hon. Friend, and I am reminded that what my hon. Friend may have to say will be available on Thursday morning. But tomorrow we have business of the greatest possible importance on which we all wish to concentrate our attention, and which will make great demands of hon. Gentlemen. I have grave doubts whether the system of going on to midnight or one o'clock in the morning does not put a far greater strain on Members who live a long distance from the House than the unavoidable necessity of having an all-night Sitting to get on with the business of the House.

It has to be remembered that hon. Gentlemen who live a long way from the House, as many hon. Gentlemen who sit on this side do, are put to a great strain, and night after night we have hon. Gentlemen sleeping in the Library or about the precincts or unable to get any sleep at all. I do suggest to the Chancellor that it seems to me it would be gracious of him to say that people could get buses to get home because we have an important debate tomorrow, in which there are many important matters to be discussed.

The problem is serious for everyone, because we have 75 new Amendments of a highly complicated nature to consider, and it would be virtually impossible for us to do that and take a full part in tomorrow's debate. If we could get home and have a night's rest I personally should be grateful. I hope that the right hon. Gentleman will consider the matter, and say that, in the light of the circumstances, to take up these few minutes at great inconvenience is not worth while.

11.0 p.m.

Mr. Crosland

This Motion has provided an opportunity for us to ventilate a very important matter which has not sufficiently been the subject of comment since the commencement of the Committee stage. It is the very different behaviour of the Government back benchers this year by comparison with previous years. It was known in the past, during the Labour Administration, that various hon. Members on the Government side had their doubts about various sections of the Finance Bill as presented by their own Government, but at least those hon. Members had the decency, such was their loyalty to the principle of Government administration and speed of Government business, to sit in sullen silence. In contrast, this year we have had the most loquacious and continuous spate of oratory from hon. Members opposite.

I should like to point out to the Chancellor and the Leader of the House that if there is any worry about the speed at which the Committee stage is proceeding, then they have the simplest possible remedy in their own hands, which is to appeal to their own back benchers to cut down their speeches by about one-third. They could then get the Finance Bill through at any speed they wanted.

My hon. Friend the Member for Islington, East (Mr. E. Fletcher) referred to the fact that he and a number of other hon. Members on both sides of the Committee got up early this morning, before six o'clock, and perhaps snatched a late breakfast, about half-past eleven, and worked virtually without food for the whole of the day to study these Amendments. Hon. Members on both sides now have only one thought in their minds—to go back and settle down with wet towels around their heads to study the 75 new Amendments for the rest of the night. I venture to suggest that no other thought animates any hon. Member on either side of the Committee.

The real argument for reporting Progress is exactly the same as that which was put to the Chancellor of the Exchequer at half-past three—that we could not continue to discuss the Bill until we had all digested the 75 new Amendments tabled this morning. The Chancellor's reply was that we could discuss Clauses 31 and 32 without digesting the 75 Amendments properly. We took him at his word and we did not Divide—[Horn. MEMBERS: "Yes."] I apologise; we did divide.

Mr. Sidney Marshall (Sutton and Cheam)

The hon. Member was not here.

Mr. Crosland

In any event, we gave the Chancellor's suggestion a most serious trial on Clause 31, and any hon. Member—and this includes about one-fifth of the hon. Members present now—who sat through the bulk of the discussion on Clause 31 must surely feel that our debates, well-informed and interesting though they were, were very much hampered and inhibited by the fact that hon. Members on both sides of the Committee had not fully grasped the implication of the 75 new Amendments.

Amendments were moved from the other side of the Committee which seemed nonsense in view of the Amendments tabled this morning by the Chancellor of the Exchequer. I should have thought that the experience of our debates on Clause 31, and as far as we have gone on Clause 32, was to support completely my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) when he said that we could go on no further with Clause 32 until all of us had several hours more in which to study the very complicated new Amendments. After all, the Chancellor explained them verbally only two hours ago. That was the first verbal explanation of the new Amendments which we have had from the right hon. Gentleman.

Indeed, the Chancellor has himself proved the argument, because he intervened when one of his hon. Friends began talking about cricket. When the hon. Member for St. Marylebone (Sir W. Wakefield) was delivering rather a bad-tempered diatribe against his own Front Bench, the Chancellor twice intervened, saying, "It is no good talking like that. Do you not realise that these 75 Amendments cover the point?" Of course, the hon. Member for St. Marylebone, like most hon. Members, did not realise any such thing. I am certain that he, too, was up before 6.30 a.m., snatching a breakfast not before 11.30, but still he had not time to study and fully digest these Amendments on an empty stomach.

Finally, I come to the Amendment of my hon. Friend the Member for Islington, East, which, judging by earlier speeches, will have a great deal of support from hon. Members opposite. Nobody can say this Amendment does not raise the entire principle of the Excess Profits Levy. This was admitted in all sorts of speeches from the back benches opposite today. We cannot be asked to debate this Amendment now, nor can the hon. Gentleman himself, with all his ingenuity and quickness of wit, be asked in fairness to do so. He went to bed at 2.30 a.m. and was up at 5 a.m. He cannot, in fairness, be asked to put forward well-informed views on the Excess Profits Levy when the levy is a completely different tax today from what it was last night.

Air Commodore A. V. Harvey (Macclesfield)

Will the hon. Member for Islington, East (Mr. E. Fletcher) tell us, himself, what time he did get up this morning?

Hon. Members


Mr. E. Fletcher

If it is a matter of any interest to the Committee, I was up at 7.30 this morning.

Mr. Crosland

I am sorry to hear my hon. Friend say that. I imputed to him the same degree of early morning and early matinal enthusiam I have myself. Tomorrow morning, I shall make sure he is up with me at 6 o'clock sharp and I shall look forward to breakfasting with him at 10.30 a.m.

I must insist that we cannot be asked to discuss the principle of a tax, which is a completely different tax today from what it was this time last night. The Chancellor admits this. In these circumstances, I ask him to consider this Motion very seriously and, if I may make a suggestion to him, if he is in any doubt or worry as to how long is being taken by particular clauses from the rest of the Committee stage, the answer is in the hands of the backbenchers opposite. They can facilitate business by talking slightly less. There is a good deal of tedious repetition from the benches opposite. I make no reflection at all upon the Chair because it is very hard for the Chair, when there is such repetition, to know when it gets beyond a certain stage.

The Chairman

It is not really quite so hard as all that.

Mr. Crosland

I am sorry you should have taken that view, Sir Charles. In a curious way, I had convinced myself I was addressing a few arguments at once pithy and different from each other.

The Chancellor, who has shown such a good spirit, has been amiable and generally in a co-operative frame of mind. May I ask him to consider that if the arguments addressed to him this afternoon were right the same arguments are still right tonight?

Mr. Jay

May I appeal to the Chancellor, in his spirit of sweet reasonableness, to be more co-operative? It is 11.10 p.m. and he has undertaken not to go on beyond 11.30 p.m. If he insists on proceeding now, he is surely being obstinate for the sake of being obstinate. He cannot expect a high degree of cooperation from this side of the Committee if he does not show a degree of cooperation and reasonableness himself.

The whole course of the debate has shown the complete validity of the contention we advanced this afternoon. If only hon. Members would look at this Amendment which is to be moved next they would see the arguments they were advancing were really of no substance. I think that the Chancellor has put us in an exceedingly difficult position. We have gone on with the debate as best we can and I do feel that, for all the reasons advanced from this side, it would be showing some degree of helpfulness and co-operation if he would at least consent now to accept our Motion.

Mr. R. A. Butler

I think that we had better exercise a little common sense in this matter. Hon. and right hon. Members opposite have wasted 40 minutes of Parliamentary time, and the points they have raised have, frankly, not been up to the level of our previous debate. If we have a vote on this we shall simply take up the remainder of the time until 11.30 p.m.; so I think that the commonsense thing to do would be for the hon. Member for Islington, East (Mr. E. Fletcher) to move his Amendment and make his speech on it, and then we could adjourn after that. If that is agreeable, we can at least get the benefit of his advice before we go to bed.

Mr. Ede

The Chancellor has been completely spoiled by my right hon. Friends by the way they have conducted the debates on this Finance Bill. I ask him—and no one knows the situation better than he does—to compare it with what happened last year on the Finance Bill when, as he knows, day after day when we sought to find out exactly what the views of the Opposition were with regard to the progress that might be made during any given day they absolutely declined to give us any indication at all.

As one who was Leader of the House at that time, faced with the grave difficulties into which that put the Government—and I think this is the first time my right hon. Friends have asked the Government to give us any concession with regard to time—I have been astounded when my right hon. Friends have told me at a fairly early stage in the evening how far the Government expected to get at night, and I have been amazed at their self-sacrifice in falling in with the views of the right hon. Gentleman.

In view of the whole of the argument today, it would be a very gracious concession on his part if he would agree that this Motion might be carried, so that there should be some recognition shown of the way in which my right hon. Friends have endeavoured to meet the Government and not to promote any factitious opposition to this Measure—although in view of the encouragement we have had from hon. Members opposite it would often have been very tempting and justifiable to do so.

Mr. Butler

I am only too delighted to tell the right hon. Gentleman that a good spirit has been shown on this Bill, and I thought I was only responding to the suggestion made by the hon. Member for Islington, East (Mr. E. Fletcher) himself that he should be allowed to make his speech. I think that is quite reasonable. It would save wasting time by prancing through the Division Lobbies. I think it would be better if he were allowed to make his speech in response to the spirit of what the right hon. Gentleman has said.

11.15 p.m.

Mr. Dalton

Having regard to the way in which the right hon. Gentleman has moved towards our position, and on the clear understanding that at 11.30 we adjourn, and that a considerable part of this important debate will therefore be in the newspapers on Friday morning—following an important discussion on transport—I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

Mr. E. Fletcher

I beg to move, in page 36, line 23, at the end, to insert: (a) any body corporate satisfies the Special Commissioners that any profits earned in any accounting period in excess of the standard profits are not attributable directly or indirectly to rearmament. First, may I, as a matter of form, indicate the framework of the Amendment to explain how it fits into the scheme of Clause 32? Clause 32, which is the second Clause of Part V, dealing with the Excess Profits Levy, has a marginal or shoulder note that clearly and succinctly indicates the subject with which it is dealing. The shoulder note reads: "Scope of the excess profits levy."

The purpose of this Amendment is to indicate a method, which I hope will appeal to a great many hon. Members opposite, of how the scope of the Excess Profits Levy can be modified to give precision to the original objective enunciated when the levy was first proposed and to secure that what will be admittedly the injurious effects of the levy, unless it is seriously mitigated, can in fact be mitigated in a sensible, practical, and statesmanlike way, and in a way which need not and will not produce any administrative difficulty or administrative inconvenience.

It is common ground that there must be inevitably some considerable limitations on the scope of the levy. The vitally important part of this Amendment is to indicate how the scope of this levy can be reduced. Subsection (4) already recognises the principle that there must be some considerable limitation—considerable is the right word, and I see the Financial Secretary, who is a master of language, looking at me as though he agrees. Therefore, I would say that subsection (4) in itself recognises the principle that there must be considerable limitations on the scope of the levy. For example, it says in terms: This Part of this Act does not apply to a trade or business carried on by a body corporate ordinarily resident in the United Kingdom … and then there are three paragraphs following.

My Amendment is designed to introduce, before we come to the three paragraphs in the Clause as it stands, a new paragraph, and one which should be introduced as the first of the paragraphs in this subsection, because it seems to me to transcend in importance the three paragraphs which the Chancellor has himself selected as being proper limitations on the scope of Clause 32.

Perhaps I may explain the significance of my Amendment. My suggestion is that we should state in this subsection plainly and categorically that the Excess Profits Levy should not apply to any body corporate which can satisfy the Special Commissioners that any profits earned in any accounting period in excess of the standard profits are not attributable directly or indirectly to re-armament. It will be observed that the whole intention of this Amendment is to exempt from E.P.L. those companies whose profits in 1952 or any subsequent year are higher than the profits for whatever are the standard years.

I cannot pretend to be able to give many examples or illustrations showing how that would work out, because it must depend upon the nature of these standard years or alternative standards which are ultimately going to be adopted by the Committee. At the moment we are only in the stage of having had the Chancellor's suggestion, and it does not follow that the Committee will agree with him. So far, on the whole, the Committee has tended to agree with the suggestion of the Chancellor, but it would not be right to assume that that will necessarily continue to be so. We may agree with the Chancellor, and we may not. Let us assume that we shall. We shall then be able to work out and see how these 70–odd Amendments will affect this Amendment.

It may be said that one ought not to have selected the Special Commissioners. It may be said that one ought not to have put the onus on the company desiring exemption, but I have deliberately sought to provide that the only companies that can obtain the benefit of this exemption from E.P.L. are those who can discharge the very formidable burden of establishing that their excess profits are not attributable directly or indirectly to re-armament.

Nobody could pretend that that will be an easy burden to discharge. It follows quite properly that the only companies who will be able to avail themselves of the concession which I hope the Chancellor will make are those who can demonstrably prove to an independent and recognised body of considerable reputation that their extra profits do not result in any way from the defence programme. That is the doctrine which the Amendment is designed to secure.

I can imagine that, if the Amendment is accepted, there may be companies who will feel that the burden of trying to establish that is too onerous for them to attempt, and they may prefer not to attempt it. But that does not in the slightest degree deter support for the Amendment, because other companies can show beyond possibility of doubt that they are entitled to relief. They are companies, to take only one illustration, who are only now beginning to reap the rewards of the effort, enterprise and initiative which they have shown during the last few years.

I am glad to see here the Minister of State for Economic Affairs and the President of the Board of Trade. I am convinced that this is a matter which will appeal to both of these distinguished Ministers who are so anxious to secure the best possible results for our trade and industry.

It may be that this matter is primarily concerned with the collection of Revenue, but the Minister of State for Economic Affairs and, to an even greater degree, the President of the Board of Trade have wider interests to consider. They do not have to look at the matter from the more narrowly restricted view-point of the tax-collector. They have the interests of the commercial community at heart in their day to day contacts with all kinds of manufacturers, industrialists and companies of every kind, all of whom, I have not the slightest doubt, have in the last few days been making representations to them about the crippling effects that the E.P.L. will have on their current activities and their future prospects in the home market or in the export market unless there is this kind of relief.

The Amendment aims at the drawing of a clear dividing line between companies who are admittedly making huge fortuitous profits out of the re-armament programme and the others. I have always supported the re-armament programme. There is no dispute between the President of the Board of Trade and myself on this. He knows that I have always been a supporter of the re-armament programme introduced by the late Government and continued in a reduced degree and at a more leisurely rate by the present Government.

11.30 p.m.

I hear the great clock striking; not that I want to cut my remarks short in any way; but I had hoped to conclude within a reasonable time. Now I am in some difficulty, because I find that it will still take me a few more minutes to come to an end. I am only too conscious of the fact that the Chancellor is anxious to leave at 11.30. If I was free to express personal opinions, I should prefer to find my remarks interrupted at this stage, but 1 can conclude more quickly—

Mr. Gaitskell

If I may interject, could I suggest that my hon. Friend might catch your eye, Sir Charles, again on Thursday? If he re-reads the 75 Amendments, and there are points he wishes to make, perhaps he will have that opportunity.

The Chairman

The hon. Gentleman will doubtless be able to speak again.

Mr. Fletcher

I will then, Sir Charles, break off now, having moved my Amendment.

Mr. R. A. Butler

I will make no further comment, Sir Charles, but ask leave to move, "That the Chairman do report Progress, and ask leave to sit again."

Question put, and agreed to.

Committee report Progress; to sit again Tomorrow.