HC Deb 27 May 1952 vol 501 cc1189-200

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Donald Chapman (Birmingham, Northfield)

The Solicitor-General was rather generous earlier, when the hon. and learned Member for Kensington, South (Sir P. Spens) pointed out to him some flaws and possible disadvantages in Clause 59. I want to point out to him this afternoon, or to the Financial Secretary, some similar disadvantages which exist in Clause 61. They are, in my view, radical disadvantages, and I think the Financial Secretary will probably find, on reflection, that some Amendments ought to be introduced into the Clause at a later stage.

I am not speaking of a Clause which has any significance in the contest between the two parties in the House. This is a completely non-contentious Clause, and we ought to do our very best to get it into the best possible form for those people it is trying to help.

The Clause has quite a simple aim. It aims to exempt from Estate Duty the estates of soldiers, or members of certain auxiliary Services listed in the Twelfth Schedule—Members of the Women's Royal Naval Service, and dental practitioners working with the Forces, and so on—in the case of their death as the result of wounds or disease incurred on active service or on work of a warlike nature. It has, in other words, a very simple aim indeed, and I am sure that the whole of the Committee supports the principle which this Clause lays down.

However, there are some enormous disadvantages in the drafting. At the very beginning it states: Estate duty shall not be chargeable by reason of the death … of a person in whose case it is certified by the Admiralty, the Army Council, the Air Council or the Secretary of State that the deceased died from a wound… Let us see what that really involves. Here we are putting the clock back to a time beyond 1943 when legislation was specifically introduced to remedy a very real evil. As the Clause stands now it is entirely in the hands of the Secretary of State for War, in the case of a soldier, to make an absolutely final determination about the man's wound or as to whether the operation in which he received it was of a warlike nature. There is no check on his decision whatsoever. That is an entire reversal of the practice applied since 1943.

Since 1943 the decisions of the Minister can be challenged under provisions of the Pensions Appeal Tribunals Act of that year. That was provided in Section 1 (1). Subsection (3) of the same Section states, Where any claim in respect of the death of any person … is rejected by the Minister… as it can be, under this Clause of the Finance Bill— …the Minister shall notify the claimant of his decision,— in this case, of course, it would be the administrators of the estate— —specifying that it is made on that ground, and— and here are the main operative words— —thereupon an appeal shall lie to the Tribunal.… In other words, Parliament, in 1943, definitely laid it down that, in the case of pensions and of compensation arising from death or injury during war, the Minister's decision should not be binding. Under the present Clause the decision of the Secretary of State is to be final, and, as far as I can see, this Clause puts our procedure back to what it was before the 1943 Act.

I should imagine that the Financial Secretary would be willing to give an assurance that the possibility of appeals will be considered between now and the Report stage. It seems to me quite wrong, and that it would merely lead to endless difficulties, if the Secretary of State has to justify in the House of Commons every decision which he makes and which an hon. Member can challenge on behalf of a constituent. That seems to me quite wrong—and quite unjust, in the sense that a proper appeal procedure is not being complied with.

But that is not the total of the objections to the Clause as it stands. I refer the Financial Secretary to subsection (1, b), which says that exemption from Estate Duty will be allowed in respect of any of the specified persons on service …which in the opinion of the Treasury involved the same risks as service of a warlike nature. What does the Treasury know about this matter? We are leaving the Treasury, the most tight-fisted and mean Department of the Government, to make a decision involving the spending of money in compensation for wounds or death in war. That seems to me entirely wrong. In the first part of the Clause, it is the Secretary of State; and then the Treasury has to be brought in in cases of doubt; and again there is no appeal procedure. The Treasury, notorious in these matters, is being left with both the first word and the last word in the whole matter.

Let me go a little further, because the matter does not end even there. Throughout the whole of the pensions legislation that Parliament has passed there is specific provision in all comparable cases for compensation in some form for accidents occurring or disease being contracted during active service and also for diseases aggravated by such service. Now, however, aggravation is being excluded for the first time. Let us consider some examples of what can occur. Let us suppose that a man in the Forces contracts on service—active service—because of the privations of war an intestinal disorder —a stomach disorder—and dies of it. In that case, as the Clause stands, his estate will not pay duty.

Let us suppose that a man has some intestinal complaint with which he would have lived happily enough for the rest of his life and would not have died of, but for being called up, and suppose the privations of war aggravate that disease, and suppose he dies. Then this Clause, as it stands, specifically withdraws compensation from him, because the Secretary of State can say, "Oh, no, we cannot exempt this man's estate from Estate Duty because he had that disease before he joined the Army. He did not contract it on active service. That only aggravated a disease which existed before."

This will lead to an enormous amount of trouble for the Secretary of State, for, under this Clause, he will have to adopt a parsimonious attitude. So we shall get unfair comparisons as between man and man. We shall have a considerable amount of injustice because of the considerable difficulties of this Clause as it stands. I do not believe that we can do away with proper appeals procedure and I do not think that the Treasury should come into the matter at all. Neither do I believe that aggravation should be specifically excluded.

5.30 p.m.

I did not put down any Amendment on this matter because it is extremely difficult to do so—in the sense that if we are to provide some appeal machinery, just what could we do? Could we use the present appeals tribunal to go into the matter. I do not know. It would be asking a pensions body to deal with exemptions from Estate Duty. But at least they are qualified to judge similar matters and I should have thought that it might have been possible for them to deal with this matter.

In case the Financial Secretary has a a better system to appeals machinery I have not put down an Amendment, but I think that it is something which he should consider. In view of all that I have said about the very real drawbacks of the present Clause I think he should do something about them between now and the Report stage of the Bill.

Mr. E. Fletcher

I rise only for a moment because I entirely agree with what my hon. Friend the Member for Northfield (Mr. Chapman) has said. I would go further. Surely it is time the Government reconsidered the whole question of exemption of various people in time of war from liability to Estate Duty. The existing exemptions date from 1894, and perhaps much earlier. At any rate, they date from a time when there was a clear line of demarcation between sailors and soldiers serving overseas in time of war, and liable to death as a result of military operations, and others, and the principle was then introduced that they should be exempted from Estate Duty.

We are living in totally different conditions. If, unhappily, we become involved in war again, the risk to the civilians will be at least as great from warlike operations as will be the risk to people in the Army, Navy or Air Force. What, therefore, should be the basis today on which a line of demarcation can be drawn as between those who will be exempt from Estate Duty and those who will not?

I think the line drawn in this Clause is entirely unsatisfactory. It preserves the present exemptions for those in the Armed Forces of the Crown, and includes the W.R.N.S. and other women's Services Then there is a further class which is defined as those … subject to the law governing any of those forces by reason of association with or of accompanying any body of those forces … if, in the opinion of the Treasury, their service involved the same risks as service of a warlike nature. That is quite unsatisfactory. What about those in the Home Guard? What about those who are in all the other Civil Defence services? What about civilians who are not in any of the Civil Defence services but who are engaged in some kind of patriotic duty, exposing them to the same kind of risks to which those serving in the Armed Forces are exposed? Is it really satisfactory, under modern conditions, that the question of whether one person or another should have exemption from Estate Duty should depend upon some decision by the Treasury, based upon vague words in this Clause?

This does not seem to me to be satisfactory, and I think that it is also unsatisfactory, as my hon. Friend has said, that the final decisions on any such question should be left to the Treasury without any opportunity for appeal. I think that an even greater objection is that the class of exemption should be so narrowly confined as it is now. I do not propose to put down an Amendment on this matter at a later stage, but I think that this whole question should be reexamined. If it is right, as I think it is, that in time of war those who serve in the Armed Forces of the Crown should not have to pay Estate Duty, then, I think, for precisely the same reasons which govern that principle, that those who lose their lives in time of war, whether in civilian service or even as civilians exposed to warlike risks, should have the same exemption.

I find it difficult to see any logical basis on which this distinction should be still maintained. I agree that people who die in war-time from natural causes should, of course, still be subject to Estate Duty as if they died in peace-time. But suppose they are killed in an air-raid. On what basis should they be discriminated against in comparison with other people? I hope, therefore, that this question will be looked into at a later stage of the Bill.

Sir H. Williams

I have been very much impressed by what has been said and I see no reason why the Clause should not be made comprehensive. As it is, it is quite absurd. I think that if people are killed by enemy action their estates should all be treated alike with regard to exemption from Estate Duty. In the part of Croydon which I represent, I think that we had 3,000 civilian casualties under warlike conditions, as compared with some 60,000 in the whole of the country.

I do not suppose that any of those people would have exemption unless they were serving in the Forces in a noncommissioned rank, and I think that a case for making this comprehensive could be strongly made out. I hope that the Financial Secretary will look into this matter between now and Report stage, with a view to making, if not this year, at some time in the not too distant future, a concession.

Captain Charles Waterhouse (Leicester, South-East)

I want to emphasise the plea already made by hon. Members for this matter to be looked at again. After all, the incidence of Estate Duty is such that it may mean ruin for a family. If a member of a family gives his life for his country and, at the same time, his dependants lose his family estates, maybe, or his family possessions, or his family business, surely that ought not to be done merely at the decision of a Minister. Surely there ought to be an appeal to someone to adjudicate the rights and wrongs in a particular case.

My second point, which has been clearly put by the hon. Member for Northfield (Mr. Chapman), is that of the aggravation of a disease. What he said was very true. We all know friends of ours who had some complaint but who would have lived long lives had that complaint not been aggravated because of warlike conditions. Surely the exclusion from exemption of Estate Duty because of a complaint which had its origin before the war is completely wrong. One could mention many diseases which are aggravated in times of war and which lead to death.

We have to remember that before anyone joins one of the Services he has a medical examination. The doctors examine him, and say, "Yes, you are fit for service; your organs and your physical set-up are adequate for the strains of war." If those strains are so abnormal as to cause death, then, in my view, it is only right and proper that the person's estate should have the relief which the Clause proposes to give in the case of those whose death is directly the result of war risk.

Mr. James Hudson (Ealing, North)

Perhaps the Chancellor will have noted the human character of the appeal which has been made from all sides of the Committee. Leaving to the Treasury judgment on what is a more human question than usual is most unsatisfactory, especially when the Treasury will have to take into account the highly debateable issues which have been mentioned this afternoon, such as air-raids and death and damage in war. This will leave it open to the Treasury to give judgments in many things in which we should not wish them to do so if all human considerations were taken into account

In the Ministry of Pensions, their medical beds and the special appeals tribunals, the nation has a great body of experience to guide and assist it. I am not saying that this should be done purely by the Ministry of Pensions, but there is a method of helping the nation. It should not be left to the Treasury to make a final judgment upon these matters, and I hope the Government Front Bench will indicate that we shall be met upon this point.

Mr. Boyd-Carpenter

As the hon. Member for Northfield (Mr. Chapman) said, this is a non-contentious Clause. Indeed, in another place the representative of the party opposite went out of his way to welcome it. I ought perhaps to make clear to begin with its comparatively limited character. That limitation does not involve an unwillingness to consider the broader matters, with which I will deal in a moment, but it may bring the Committee back to appreciation of exactly what the Clause is if I say what it is aimed at doing.

It is aimed simply at removing the very old anomaly—in answer to the hon. Member for Islington, East (Mr. E. Fletcher), I think it dates from the Stamp Act, 1815—under which a discrimination was made inside the Armed Forces depending on the rank the man held at the time of his death. Speaking from memory, anyone below the rank of full sergeant or equivalent rank in the other Armed Forces of the Crown obtained complete exemption from Estate Duty if he died on active service, whereas those who held higher rank, such as senior N.C.O.s, warrant officers and commissioned officers, all paid duty, though on a modified scale. The purpose of the Clause is simply to remove that anomaly and to apply the same treatment to all members of the Armed Forces, regardless of rank, who die in action. That principle receives the general support of the Committee.

Before I deal with the precise points of the hon. Member for Northfield, I should like just to say a word in reply to the more general issue raised by my right hon. and gallant Friend the Member for Leicester, South-East (Captain Waterhouse), and the hon. Member for Islington, East. The question of Estate Duty with respect to civilians killed in wartime is a somewhat different question from this. To some extent it was dealt with during the last war under emergency legislation, and, no doubt, if a similar situation were to come upon us, it would be necessary to make some such provision. The urgency of this limited Clause is very closely connected with the fact that our Armed Forces in Korea and Malaya are in action and that people affected by it may be killed at any time.

I do not think that the broader question can be properly considered before the Report stage. I think I should be misleading the Committee if I gave any such undertaking. But from the point of view of consideration of what arrangements would have to be made in war in future, I think I can say we appreciate that it would be necessary to take some action in connection with civilians in time of war. I should like to correct the hon. Member for Islington, East on a small point of fact. The Home Guard are covered if death or injury arises in the course of duty.

Mr. Chapman

Why is that?

5.45 p.m.

Mr. Boyd-Carpenter

They are part of Armed Forces of the Crown when on duty.

With regard to the specific point by the hon. Member for Northfield about the grant of the certificate, that procedure has been followed since 1924 with respect to the limited exemption given to the higher ranks, and I understand that it has worked without any difficulty. I concede that there is some force on grounds of general principle in what has been said about this, and, although I cannot make a firm commitment, I can undertake on behalf of my right hon. Friend that we will look further at this aspect of the matter.

On principle, there is a good deal in what has been said, whereas against that in respect of the higher ranks it has apparently operated for the best part of 30 years without difficulty. Nevertheless, we are anxious—that is why we are bringing forward the Clause—to see that those who are killed in the service of the country do not have their estates exposed to the duty and it is in that spirit that we will look at that aspect of the matter.

The hon. Member for Northfield also criticised the provisions under subsection (1, b). I think he misapprehended their effect. The only case in which the opinion of the Treasury, which he appeared to hold very low, comes into the matter is as a further alternative opportunity of obtaining exemption, as it were. The exemption follows if the man is killed on active service against an enemy. As hon. Members are aware our Forces generally are at present on active service, and, therefore, the general exemption operates at the moment.

Paragraph (b) deals with the situation when we are in a state of normal peace, that is, where the Armed Forces are not generally on active service, but none the less they are covered by this exemption if they are on service of a warlike nature, such as frontier expeditions and other expeditions where hostilities of a kind are going on in remote quarters of the world or—this is a further alternative chance of exemption—where in the opinion of the Treasury some risks are involved on service of a warlike nature.

What is contemplated—it is very difficult to define it precisely in a statute—is a sort of situation where forces are in occupation of a territory where civil subversive activities, murder and that kind of thing, are going on. The real difficulty is to define that kind of situation in a statute. If we were to omit these words we should be depriving ourselves of the opportunity of giving this exemption in that rather difficult to define class of case.

Mr. Chapman

I appreciate the way in which the hon. Gentleman approaches this and everything he has said, but why the Treasury?

Mr. Boyd-Carpenter

It is a little difficult to put it into the hands of any other Department. If we put it into the hands of the Service Departments there is the risk of conflicting decisions in respect of the same area. This must come into the hands of a central Department.

Mr. Houghton

Could this not appropriately be dealt with by the Lord Privy Seal?

Mr. Boyd-Carpenter

All suggestions will be listened to, but on the whole I think this is reasonable. I can give an assurance that it is not our intention to administer this in an ungenerous spirit. If it were, we should not have brought the Clause forward at this time. I think this is the most practical way of doing it.

The point about aggravation which was raised is a very difficult one. Any hon. Member with experience of pensions procedure will know how difficult are the questions of aggravation. The pen- sions appeals tribunals have done wonderful work on that subject. However, most hon. Members are aware of the difficulties which arise. I cannot give a firm answer on that difficult question at this moment. I can say that what has been said this afternoon will be borne in mind and will be considered in the same sympathetic spirit as we intend approaching the whole question.

Sir H. Williams

I should like to refer to the question of people being killed in air-raids. My hon. Friend indicated that they would be dealt with by statutory instrument under the Defence Regulations, but the next time the bomb may come before the statutory instrument, and it might not be a bad idea to put the matter into legislative form before the bomb drops.

Mr. Boyd-Carpenter

That is a rather different matter, which will be dealt with under the emergency arrangements which have to be taken in the event of war. We are dealing here specifically with the Armed Forces who are engaged in various kinds of warfare in different parts of the world, while the civilian population here mercifully are not.

Mr. Chapman

I should like to express the thanks of the Committee to the hon. Gentleman for the way in which he has spoken on the various points which I raised. I accept what he said about the appeals system, and I am grateful that he is going to look into it. I am a little puzzled about the Treasury point. I should have thought it was a duty which would go to the Secretary of State for War. He is being given a lot of duties throughout this Clause, and this one seemed suitable to add to the others.

I must say the Financial Secretary was not very helpful on the question of aggravation. If he takes some of the specific cases that I have mentioned, can he tell us how he is going to differentiate between a man who would have had a long life with a disease if it had not been aggravated by active service, and a man who actually contracts the same disease during his period of active service? If there are to be grave abuses of this kind he is going to offend the feeling of the people of this country. They will feel that a real injustice is being done and that this minor concession should have been made. I again urge the hon. Gentleman to consider the examples that I have given and see if he cannot be more helpful on this point.

Clause ordered to stand part of the Bill.