§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. Crosland
I gather, Mr. Bowles, that you are not selecting the Amendment standing in the name of my hon. Friend the Member for Stechford (Mr. Roy Jenkins) and my hon. Friend the Member for Edmonton (Mr. Albu), to leave out subsection (3) of this Clause. That being so, I should like to raise a question on that subsection.
It is clear from the fact that no exception is made of the British Broadcasting Corporation and other statutory undertakers of that sort on the early Clauses that they are subject to the levy. This is the subsection which enables a proper assessment of their profits to be made for the purposes of the levy. Therefore, I am taking the opportunity of asking why the B.B.C. and the other statutory undertakers mentioned, should be subject to the levy.
The position at present is that the B.B.C. and other bodies are not subject to profits taxation. That being the case, why should they be subject to the Excess Profits Levy? On the face of it, it seems a curiously contradictory situation that they should be exempt from tax on ordinary profits year in and year out and then the Government impose what was originally intended to be a re-armament levy, and, ironically enough, make the B.B.C. subject to it. At first sight it is clearly the most ironical and contradictory situation one could imagine.
I imagine that the main reason why it was the decision of past Governments not to subject the B.B.C. to the Profits Tax is that one cannot speak of the B.B.C. as having made a profit in the ordinary sense of the word. Nor can one speak of the B.B.C. as having made excess profits in the ordinary sense of the term. After all, if there are excess profits that are to be taxed under this new levy these extra profits will be due to a rise in the demand 973 for the products of a particular industry or firm. That rise in demand will be reflected in higher prices or higher output or both. In consequence, profits will rise, and those additional profits are to be subject to the levy.
That situation cannot arise in the case of the B.B.C. or statutory undertakers of that kind because the profits of the B.B.C. are not a function of the demand of consumers. They are, in fact, the function of a decision of the Government, namely, a decision about the distribution of the revenue from wireless and television licences, and so on, between the Government and the Corporation.
It is quite true, of course, that profits from "The Listener" and other B.B.C. publications come into a separate category; but, by and large, it is true to say that the profits of the B.B.C. do not depend upon market forces, public demand, or upon the consumers. They depend upon the fiat of the Government when they decide how to distribute licence revenue between themselves and the Corporation.
That being so, one cannot talk about the income of the B.B.C. as though it were profits in the ordinary, normal, everyday economic sense of the term. They are not profits in that sense. The income of the B.B.C. is decided by a pre-determined administrative decision and not by the ordinary workings of consumer demand. All this was recognised in the case of Profits Tax, because presumably it was for this, among other reasons, that the Corporation and other statutory undertakers mentioned in this Clause were exempted from Profits Tax. If it was recognised in the case of Profits Tax that the B.B.C. are not in the position of the ordinary undertaking, why is it not recognised in the case of E.P.L., the more so because if there is one body in the country whose excess profits, if any. are patently not a fortuitous result of the re-armament drive surely that body is the B.B.C.?
Nobody could possibly pretend that theirs would be a case of profiteering from the arms drive. The whole position is preposterous from that point of view. In view of the fact that the Chancellor of the Exchequer was sympathetic to the idea of restricting this levy to re-armaments profits, but said it was impracticable, it is strange that he did not choose 974 the practical opportunity of exempting statutory undertakers of this sort, and the B.B.C. in particular; because one can clearly say that any excess over standard income is patently not due to re-armament in the case of the B.B.C. Nobody could say, to use the Chancellor's own phrase, that the B.B.C. are one of the merchants of death.
In view of the fact that the profits are due to administrative decision by the Government and any excess profits made cannot be conceivably related to the effect of the re-armament programme, it seems to me there would be a very strong case for exempting the B.B.C. I should like the Government to explain why a public Corporation like this, who are exempt from the Profits Tax, should be subject to E.P.L. The B.B.C. have had something of a reprieve from the Government from some of the wilder notions of the wilder back benchers opposite. One would have thought that since the Government seem to have the interests of the B.B.C. at heart they would not only have rejected those wilder notions but would have exempted the B.B.C. from this Excess Profits Levy.
§ Mr. Boyd-Carpenter
The subsection of this Clause to which the hon. Member for Gloucestershire, South (Mr. Crosland) confined his remarks does not impose the levy upon the B.B.C. The B.B.C. are a body corporate and the tax is therefore imposed upon them under the general charging provisions of Clause 31. I do not know how far in the circumstances you, Mr. Bowles, will permit me to reply to the question whether or not the B.B.C. should be subject to this levy. The right hon. Gentleman the Member for Battersea, North (Mr. Jay) managed to make such replies on a great many occasions in the past.
§ The Temporary Chairman (Mr. Frank Bowles)
The Chairman decided not to select this Amendment. Therefore, I think he imagined that there could be adequate discussion of the point on the Question that the Clause stand part of the Bill. But do not let us go back to Clause 31.
§ Mr. Boyd-Carpenter
Had the Amendment in the name of the hon. Member for Stechford (Mr. Roy Jenkins) been accepted, its effect would not have been to exempt the B.B.C. from the Excess 975 Profits Levy but to deprive the B.B.C. of the opportunity of having a profits standard under the Bill. What this subsection does, in dealing both with the B.B.C. and certain other statutory undertakings which, not being subject to Profits Tax during standard years have no profits standard, is to proceed to deprive them of that disadvantage by giving them a profits standard.
That is the purpose of this subsection. In that event, if the Amendment had had the good fortune to be selected the last person to desire that it should be pressed to a Division would be the hon. Member for Gloucestershire, South, because he wants the B.B.C. to be treated better whereas the Amendment would have treated the B.B.C. worse.
The hon. Member for Gloucestershire, South was not quite right in what he said. It is true that last year the B.B.C. were exempted from Profits Tax, but other bodies concerned, namely, road transport undertakings, were not so exempted. The only body concerned with this subsection which is at present exempted from Profits Tax is the B.B.C. The others previously so exempted were made liable under last year's Finance Bill.
§ Mr. Boyd-Carpenter
It is not for me to explain the reasons why the B.B.C. were exempted. I think one very reasonable factor that must have been considered at the time was that the whole future of the B.B.C. was obviously shortly to be under review, and it may well be that the Government of the day thought it an appropriate moment to leave the taxation position of the B.B.C. out of consideration.
It is, of course, a fact that the B.B.C. were subject to the war-time Excess Profits Tax. Therefore, I do not think it is possible—as the hon. Gentleman the Member for Gloucestershire, South suggested—to elevate the B.B.C. into the position where the Profits Tax or the Excess Profits Levy was an intolerable imposition. It was, in fact, done under a war-time tax and it does seem reasonable that this tax should be universal.
I do not suppose, Mr. Bowles, that you will allow me to go very far into that 976 argument; but it is not entirely accurate to say that the B.B.C. are immune from the economic effects of the re-armament programme; nor, indeed, are certain of its activities—such as the production of "The Listener"—activities which do not compete with other activities which are so subject to tax. I think that in so far as it competes it would be very unfair to its competitors to give it an exemption which other companies do not have. I agree that it does not go over the whole of the field, but it does go over its publishing activities which, as I think the hon. Gentleman knows, are nowadays on a very substantial scale.
We thought it right, under this Bill, to do what was done during the late war and subject the B.B.C. to the same tax which was being imposed upon other companies. In so doing we did not fail to notice the point to which the hon. Gentleman has referred—the exemption of the B.B.C. from Profits Tax last year—but we did feel that the exemption in that case was probably due to the very special circumstances to which I referred a moment or so ago.
By passing Clause 31 the Committee has agreed to the imposition of the tax, and what this subsection does is to take care of the difficulty which would have arisen both for the B.B.C. and certain other statutory undertakings, in that they would not otherwise have had a profits standard on which to rely. It is for that reason that these words are put into this Bill.
§ Mr. Crosland
I appreciate the points which have been made by the Financial Secretary—in particular, the point about the deletion of this subsection, which would have the effect he says—but would not he agree that in the particular case of the B.B.C., owing to the division of the licence revenue between the Corporation and the Government, it would be possible to alter the chargeable profits in the future in a most haphazard way, if it were decided that there should be a different distribution of the licence revenue.
I wonder if the hon. Gentleman would agree that during the period of operation of the Excess Profits Levy it is clearly important that the Government should not change the present distribution between the two bodies, otherwise it will increase or diminish the profits of the B.B.C. in a quite fortuitous manner.
§ Mr. Boyd-Carpenter
There is obviously a lot in what the hon. Gentleman has said, but I think he put it a little too high, because the tax liability in relation to the Excess Profits Levy depends not only on the amount of licence revenue but on the operating costs of the Corporation itself. We have no wish to treat the B.B.C. unfairly, but it is the essence of this case that we should wish to treat them as we treat everyone else.
§ Clause ordered to stand part of the Bill.