HC Deb 08 July 1953 vol 517 cc1337-53
Mr. Gaitskell

I beg to move, in page 9, line 27, to leave out subsection (2).

We now come to a matter of rather greater substance than the points that we have been discussing in the last half hour. We come back again to the question of initial allowances. We make no apology to the House for raising the matter once more. It is true that during the Committee stage we had a very useful debate and there was, as a result of the debate, considerable clarification about the nature of the initial allowances, about what they could do and what they could not do, but I did not think that the Government reply on that occasion was at all satisfactory. It did not seem to me that the arguments put forward by the Financial Secretary and the Chancellor met the case that we were arguing.

In a sense, what the Financial Secretary had to say was in direct conflict with what his own back benchers were saying. He said that we could not have an increase in the initial allowances to 40 per cent. because it would cost too much and would be a heavy burden on the Exchequer, and he gave figures, which were afterwards added to by the Chancellor, to substantiate that case. On the other hand, the chief argument of his supporters was that the initial allowances were really of no particular value to industry at all, that they brought nothing into industry and would not stimulate industry to undertake more investment, and that it would be far more desirable to have reductions in the tax on undistributed profits. Both cannot be right.

Either the initial allowances mean something to industry, in which case they certainly cost the Treasury something in a sense to which I shall refer in a moment, or they are of no value to industry, in which case no real cost is imposed on the Exchequer. The truth of the matter—on this we had some discussion started by a very able speech from my hon. Friend the Member for Gloucestershire, South (Mr. Crosland)—is that the initial allowances may be regarded as a loan by the Government which is, nevertheless, a continuing loan so long as the rate of initial allowance continues, and there is, therefore, always a certain amount of money outstanding which is not given up wholly and for all time by the Exchequer, as would be the case with a reduction in the tax on undistributed profits.

There always remains owing to the Exchequer a sum of money which, if the initial allowances were brought to an end, would have to be repaid, and would be repaid in the course of the next few years, subject to the point to which I drew attention during our Committee stage debates that the firms in question would not have to repay the money which was, so to speak, owing to the Treasury if they made losses and thus had no profits out of which to repay it. That is what both the advantage to the firms and the cost to the Exchequer really amount to.

It is arguable that the firms do not get a great deal of benefit out of what is purely a loan, but the fact remains that they do not, so long as the initial allowances continue, have to pay them back, and I think that an interest-free loan which continues indefinitely, is something which most firms would certainly regard as worth having. But, from our point of view, there are essential arguments in favour of the initial allowances as a method of stimulating investment. These are, first, that they are paid only as a consequence of expenditure on plant and machinery and it can, therefore, be taken as certain that such expenditure must take place before the Treasury make whatever concession is involved; and, second, that they go to all firms, whether they are new or old. In that respect, as in the previous respect, they seem to us to have a distinct advantage over a tax concession on undistributed profits which has been so vigorously demanded from the back benches opposite.

There is another difference between these two methods of attempting to stimulate investment which we must bring out. There is no reason for disguising it. In a sense, it follows from what I said earlier, that when the Treasury make a concession on the taxing of undistributed profits there is not only the possibility that the money, or part of it, may be used for increased dividends and thus lead to an increase in consumption. There is also the fact that, even if the whole of it is saved, even if the consequences of the Government giving up £10 million, £20 million, £30 million, £40 million or whatever it may be, is exactly paralleled by a rise in the amount of undistributed profits left to the firms, nevertheless the firms are better off to that extent for they have a net gain in their assets, whereas in the case of the initial allowances that is obviously not so and they have a liability, although admittedly it is not likely to be a very serious one so long as the initial allowances continue, eventually to repay the money to the Exchequer.

From our point of view, interested as we are in a more equitable distribution of wealth and anxious to produce what seems to us to be a more socially just state of affairs, we frankly prefer the initial allowances, other things being equal, because the consequence is that we get the investment but not the increase in private fortunes. In fact, we get Government investment taking place in the industry. To be frank, that is one of our reasons for preferring initial allowances, and I have little doubt that it is the main reason why the back benchers opposite so much prefer a reduction in the tax on undistributed profits.

I want now to say a word or two about the consequences to the Budget. The Financial Secretary rested his case almost wholly on the cost to the Treasury which the increase in the rate of initial allowances would entail. The only other argument that he put forward was, simply, that initial allowances were not the only way to stimulate investment. As I feel he will agree, that is not really an argument which we can accept as justifying a refusal to consider our proposal. Why is it that we make so little of the argument that the cost to the Treasury is substantial? It is not that we deny that there would be a loss to the Revenue in the strict sense of the word, for that is fully conceded and follows from what I said earlier, so long as the initial allowances continue.

We say, however, that where the initial allowances are granted and the Revenue loses so much in consequence, there is an exactly corresponding increase in the undistributed profits of the companies. There is, in other words, a corresponding increase in corporate savings. If, therefore, as a result of the increase in the initial allowance the Budget surplus is smaller and the amount of Government savings is correspondingly reduced, that is offset by an increase in company or corporate saving. Therefore, there is no need to fear on that ground alone any inflationary consequences. It is of a different order, for that reason, from the straight-forward taxation concession, even if it be on undistributed profits, which may involve an increase in dividends; so we do not think that the Government need have anxieties on that score.

8.0 p.m.

The Financial Secretary seems to feel that although there might be something in this argument, that it is relevant to talk about matters of inflation and deflation when making up one's mind on what the Budget surplus should be, we cannot really ignore the surplus being smaller. The Chancellor of the Exchequer said much the same thing. I cannot take that argument very seriously. If it is said that what we need is a higher rate of investment—and I think that we are all agreed on that—and that initial allowances will do something to stimulate that investment, the mere fact that there is to be a smaller surplus and that it does not look so well, even if there are to be no inflationary consequences, is an argument which cannot be taken seriously. It is merely giving way to irrational judgments which I do not think arise to any extent today and are of negligible importance compared with the real consequences of the higher investment which we seek.

It is, of course, true that more investment in itself involves, in a sense, additional inflationary pressure. That I have always conceded, but, after all, the whole basis of this Budget was the need for additional pressure of that kind. The only question is whether the pressure was to come at the consumer or at the investment end. I do not want to go over all that ground again, but I think that it is far more desirable that it should come at the investment end. If the Financial Secretary and the Chancellor really feel that a rise in investment is too dangerous in present circumstances, that the physical resources are all fully occupied, and that we cannot afford to allow any increase of orders falling upon the engineering and other similar industries, that is, of course, a new situation, but I would say to him that, if that is so, the right course for the Government to pursue is not to hold back investment but to reduce consumption in order to offset the increase in expenditure on equipment. Moreover, if that is their point of view, it is a complete indictment of their Budgetary policy.

I do not know what the Financial Secretary is going to say about it, but I hope he will deal with that point and give us at least a more satisfactory and convincing answer than he did during the Committee stage. That is the reason why we have raised this matter again, and we attach very great importance to it. Obviously, higher investment, as we all know, is of major importance in determining the increase in productivity which we all desire, and everything should be done to encourage it. Here is something which can be done, we think, without danger, and we believe that it is the most effective way of producing that additional investment. Therefore, we ask the Government to reconsider this matter and accept this very simple Amendment, which would do nothing but good for British industry.

Mr. Crosland

As my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) has pointed out, this is the second time in the course of the debate on the Finance Bill that this particular issue has been raised. We have raised it again not only, as he said, because we think that its intrinsic importance is great, but because we think that the case for what we suggest is very much stronger now than even it was a few weeks ago.

The reason why I suggest that it is very much stronger lies in the figures of the movement of labour published by the Ministry of Labour yesterday. These figures, which hon. Members will have seen in today's newspapers, give an extremely disturbing picture of what is happening in the country today. They show that professional, financial and miscellaneous services, during May, gained 16,000 workers, the distributive trades 7,000, the transport industries 3,000, food, drink and tobacco 11,000; and against these gains the losses were in precisely those industries which ought not to be losing but gaining, namely, the engineering industry which lost 6,000 workers and the metal manufacturing industries which lost 4,000 workers.

In view of what we all say about encouraging investment and the engineering sector and the like, it is a terrible state of affairs that during May the engineering and metal industries, between them, lost 10,000 workers, while these other industries gained a considerable number more than they had. In our view, therefore, the case for initial allowances for investment in capital goods generally is even stronger now than when we first put it forward three or four weeks ago.

The whole purpose of this Amendment is to reverse the tendency which I have described. The reason why, in our view, it is right that we should do so by doubling the suggested rate of initial allowances on plant and machinery and not by one of the other methods suggested by the other side, by reducing taxation on profits and the like, is the essential one that a concession granted to industry in the form of an initial allowance is tied to the capital expenditure which we want to encourage, whereas any concession granted to industry in the form of a general reduction in profits taxation is not tied to actual capital expenditure, and some part of it or, indeed, the whole part of it in unusual cases, may be distributed in higher dividends and not by increasing capital expenditure, which we wish to encourage.

It is because initial allowances are tied to investment, whereas other forms of removing the burden on taxation of profits are not, that we on this side of the House so much prefer them. That is presumably why hon. Members opposite like them a great deal less. It is, I think, an important point and links up with the point which my right hon. Friend stressed, which is that according to the method chosen of relieving industry of its alleged financial burden there will follow certain effects on distribution of income and distribution of wealth.

One obvious difference between granting the concession in the form of initial allowances and in the form of reduced profits tax is the difference in terms of their effect on share values. Any general reduction in profits taxation will lead to a general increase in share values, as we have seen on more than one occasion over the last few years, and the response of the Stock Exchange is the perfectly reasonable one that if industry's financial resources are increased, everyone hopes—and it is a perfectly natural thing to hope—that this will be accompanied, sooner or later, by higher dividends.

A concession to industry granted in the form of higher initial allowances will not have this effect, at any rate in the short run, because in the short run this concession can only be used for purposes of capital expenditure and cannot possibly be used in order to raise dividends. So we say that one concession will increase share values and the other will not. That is why we prefer the initial allowance method and hon. Members opposite prefer a general remission on Profits Tax.

From this side we suggest that a larger rate of initial allowance must be regarded as an alternative to a reduction in the taxation of profits. This notion that the two were to be regarded as alternative was rather pooh-poohed by hon. Gentlemen opposite during the Committee stage. They got up one after the other, adopting the rather patronising attitude which some hon. Members opposite who are businessmen adopt if anyone who is not in the business world ventures to speak on such subjects.

They said that it was nothing but an interest-free loan and, therefore, naturally falls to be repaid, so that over the period of the loan as a whole the company is no better off. It gains during the early years but loses to the same extent during the later years so, taking a long period of years, they argued that the company getting it was no better off. I suggested, and I still think, that to use the analogy of the interest-free loan gives a false impression of what initial allowances are like.

If one is thinking in terms of one machine which attracts the initial allowance, it must be true that the 20 per cent. initial allowance in the first year comes to be repaid in later years. But capital expenditure does not normally consist in buying one machine only, and a second machine to replace it once the effective life of the first has expired. For any firm of any size capital expenditure is a more or less continuous process, going on year after year.

Provided that that is so, there are always machines attracting the initial allowance, so that at any given moment in the life of a company, provided initial allowances are not withdrawn or reduced, there is some of this loan outstanding. In other words, the company is drawing more in initial allowances than it is repaying towards the end of the life of the older machines. So long as there is some of this loan outstanding, where capital expenditure is more or less a continuous process, the effect is that the firm is paying less in profits taxation than it would otherwise be paying.

The proof of this, as the Chancellor was kind enough to give these figures in response to a request from me on the Committee stage, is that however long a period is taken, initial allowances represent a net cost to the Exchequer, and the obverse of the net cost to the Exchequer is naturally the fact that industry as a whole is paying less in taxation than it would be otherwise. So we see from this that initial allowances are not to be dismissed as an interest-free loan which is invariably repaid; they are to be considered as a serious alternative to what we always hear demanded from the other side of the House, namely, a flat reduction in the taxation of profits.

I conclude by reiterating that they are an alternative which we on this side of the House much prefer, because they cannot be frittered away or dissipated merely in the form of higher dividend payments. The concession to industry is only attracted by the firm to the exact extent that it spends money on plant and machinery, and it is, therefore, an admirable way of encouraging investment in this country, whereas most of the other ways have defects. In view of the serious position shown by the movement of labour out of the capital goods sector of industry into the consumer goods sector of industry, we suggest that there is a strong case for the Government accepting our Amendment.

8.15 p.m.

Mr. Boyd-Carpenter

As the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) has said, this is one of the major parts of the proposals of my right hon. Friend, and it is also one which was discussed at considerable length in several aspects during our debates in Committee. Therefore, like the right hon. Gentleman, I shall not seek to weary the House by going over all that ground again.

It is certainly not necessary for the right hon. Gentleman to persuade us that the restoration of initial allowances is a desirable thing. After all, we are doing that. Indeed, here is one of those rather entertaining paradoxes which arise in public life, that the recommendation that we should pay even greater attention to initial allowances comes from the right hon. Gentleman, to whom it fell to withdraw them in 1951, and it is urged upon a Government which is taking the step of restoring them. The only point between us is the extent of that restoration. The Amendment would double from 20 per cent. to 40 per cent. the rate applicable to plant and machinery. Therefore, I say at once that what we are concerned with here is not a great clash of principle but some real difference of emphasis.

As he has said more than once, the right hon. Gentleman would attach greater relative reliance to the initial allowance, to the detriment of, and instead of, other methods. We regard it as one of the instruments in the economic armoury of my right hon. Friend, but we do not give to it quite so much importance or allot to its use quite so much money as the right hon. Gentleman. The fact that we are restoring the allowances, however, shows much more clearly than anything I could say that we appreciate the important part which we expect they will play in the stimulation of investment.

So far as the cost is concerned, I shall address myself to one or two of the observations made by the right hon. Gentleman. Leaving aside for the moment his important point, to which I shall come back, that from a budgetary point of view we could ignore the apparent loss of revenue, or all but ignore it, it might be helpful to have the figures in mind. The cost of the initial allowance at 20 per cent. on plant and machinery, as it stands in the Clause at the moment, will be £76 million in a full year and £50 million in 1954–55. The effect, in substance, of the proposal to double it would be almost mathematically exactly to double that cost.

That is why I ventured to say in Committee that the question of the cost and of our preference for using other instruments also to stimulate economic recovery were interlocked, because it is a matter of simple calculation that if my right hon. Friend had not decided to make money available, both for the reduction of the standard rate of Income Tax and for the abolition of the Excess Profits Levy, clearly he would have had more funds available which he could have used, had he desired to do so, for the purpose of restoring the initial allowance at a higher rate.

That is a good illustration of what I was saying a moment ago, that the difference between us is one of emphasis. The right hon. Gentleman and his hon. Friend the Member for Gloucestershire, South (Mr. Crosland) would like to concentrate their effort very largely upon the direct stimulation of investment by a higher rate of initial allowance on plant and machinery.

We, on the other hand, while using that instrument, and by reducing the burden of direct taxation upon companies—the Excess Profits Levy, of course, is entirely on companies, and a substantial element in the Income Tax relief is also going to companies—from the point of view that we do not believe that investment can be stimulated simply in vacuo, believe that it is necessary to create conditions in which reasonable expectations of being able to earn and retain a reasonable profit have also to be created.

That is to say, we do not accept the view, which is implicit in a great deal of what is said by hon. and right hon. Members opposite, that it is both possible and right to make concessions to industry provided only that in no circumstances do we make concessions to the owners of industry. We do not believe that we can so isolate the company from the owner of the company and that unless some relief is also given in the burden of taxation upon profits, we shall not see that restoration of industrial and economic activity which it is our desire to see. That is where, to a considerable extent, we on this side differ from the right hon. Gentleman.

I come, then, to the right hon. Gentleman's extremely interesting and impressive argument, whose effect was largely that from the budgetary point of view we could disregard the loss of revenue involved in the initial allowances. It is, of course, clear—I am not concerned to argue the contrary—that the transfer of savings which these allowances effect is a matter which clearly would have to be taken into account by any Chancellor of the Exchequer in the framing of his Budget.

I go this far with the right hon. Gentleman: that the knowledge that investment was being encouraged in this way and savings increased in industry would undoubtedly make a Chancellor of the Exchequer inclined to feel that from a strictly budgetary point of view he need go for a smaller surplus. I am not concerned to argue that. I would, however, suggest to the right hon. Gentleman that he carried his argument a little too far when he suggested that one could completely disregard this loss of revenue and could accept, not only a smaller surplus, but a surplus smaller by the exact amount of additional allowance conceded.

Mr. Gaitskell

The Financial Secretary has stated my argument correctly, subject to one qualification. That is, that the granting of the additional initial allowances leads to no increase in dividends. If it does lead to any increase in dividends, there is an exactly offsetting increase in corporate saving to the loss in public saving—it is, in fact, the same figure. Therefore, from the point of view of the economic effects of the Budget, there is no ill consequence whatever. I am not denying that the influence of the additional investment—the actual expenditure on plant and machinery—has economic consequences. Perhaps the hon. Gentleman can come to that argument, which I dealt with at the end of my speech.

Mr. Boyd-Carpenter

The right hon. Gentleman will, I think, concede that although it may be a desirable thing, it has an inflationary effect. Therefore, a Chancellor of the Exchequer, framing his Budget proposals in these circumstances, would also have to take that into account in deciding on the size of the surplus which he would wish to see. That it might be to some extent a countervailing factor—

Mr. Gaitskell

Is the Financial Secretary suggesting, then, that the reason the Government will not accept our proposal is that they do not want to have any more investment?

Mr. Boyd-Carpenter

No. The right hon. Gentleman has no right to jump to that conclusion from what I have said. We were discussing the matter on a slightly academic plane. The very fact that my right hon. Friend is restoring these allowances is a perfectly clear indication of what he and the Government wish to do in this direction. The right hon. Gentleman knows that perfectly well.

The right hon. Gentleman, however, was carrying his argument a little too far. First, as I understand it, he is assuming that there will be in such circumstances a Budget surplus. I do not think he would carry his argument to the point of saying that we could disregard these allowances to the point of running into a Budget deficit. That is a qualification which one has to bear in mind in the forgoing of the very substantial sums of revenue over a good many years—I shall give the figures presently—which are implicit in this proposal.

Nor is the right hon. Gentleman giving full weight from the budgetary, and, therefore, to some extent from the economic, point of view to the consideration that the revenue forgone would involve additional Government borrowing and, of course, the payment of the interest on that Government borrowing, which is a subject on which the right hon. Member for Battersea, North (Mr. Jay) is particularly sensitive. Therefore, I am inclined to think that there is no direct conflict of principle between the right hon. Gentleman and ourselves, but that, here again, there is a difference of emphasis.

We would not go as far as the right hon. Gentleman in saying that one could from a budgetary point of view wholly disregard this loss of revenue, although I am equally ready to concede that one need not, perhaps, treat it as a complete diminution of the surplus which otherwise would be necessary. There is also the psychological question, to which my right hon. Friend the Chancellor of the Exchequer referred in the previous debate and to which the right hon. Gentleman referred this afternoon. That argument is a factor that has to be considered.

I have given the short-term figures and I promised to give the longer-term cost figures. Any figure for the future must depend on a number of assumption, and these figures depend upon three assumptions: that the annual expenditure qualifying for the allowance remains constant, that its pattern as between different items remains constant, and that the rates of tax are unchanged. On that assumption, the cumulative cost rises after 10 years to £435 million and then continues to rise to a figure of about £675 million, at which it begins to become steady.

That is the position on the present rates. The proposal involved in the Amendment would go a great deal further. It would not precisely double the cost, but the figure would be very nearly doubled, both at the 10-year stage and at the final point. Therefore, we are concerned with very large figures, not, of course, in this year's financial proposals which are not affected at all, but over the long term. That is why I suggest that my right hon. Friend is right to bear definitely in mind the substantial effect upon revenues over some years, notwithstanding the qualifications which we have been discussing which are involved in the proposals that the right hon. Gentleman has put forward.

We feel, therefore, that although there is much in what the right hon. Gentleman says as to the value of these allowances—that we accept, and we are restoring them—it is wise not to involve ourselves

at this stage in the additional commitments which restoring the plant and machinery rate to 40 per cent. would involve. We have to bear in mind the other changes which we have made, which will result in reduced revenue, and which, although the right hon. Gentleman may not approve of them, have, during our prolonged debates, been approved both by the House and in Committee, and which are now in the Bill.

While I should be the last to suggest that there is not a good deal of force in the right hon. Gentleman's argument, and while I certainly do not accept the suggestion that these allowances are either valuless to industry or without cost to the Exchequer, I think that the moderate and central line between the two extremes which my right hon. Friend has adopted—the line of restoring the allowances and at the same time giving direct relief through the Income Tax concession and through the E.P.L.—is the right way to secure the objective which we all desire: a steady flow of investment into British industry and a prosperous and healthy condition of that industry.

Question put, "That the words proposed to be left out stand part of the Bill."

The House divided: Ayes, 228; Noes, 204.

Division No. 219.] AYES [8.30 p.m.
Aitken, W. T. Butler, Rt. Hon. R. A. (Saffron Walden) Galbraith, T. G. D. (Hillhead)
Allan, R. A. (Paddington, S.) Campbell, Sir David George, Rt. Hon. Maj. G. Lloyd
Alport, C. J. M. Carr, Robert Godber, J. B.
Amory, Julian (Preston, N.) Cary, Sir Robert Gomme-Duncan, Col. A
Amory, Heathcoat (Tiverton) Clarke, Col. Ralph (East Grinstead) Gough, C. F. H.
Anstruther-Gray, Major W. J. Clarke, Brig. Terence (Portsmouth, W.) Graham, Sir Fergus
Ashton, H. (Chelmsford) Clyde, Rt. Hon. J. L. Gridley, Sir Arnold
Assheton, Rt. Hon. R. (Blackburn, W.) Colegate, W. A. Grimston, Hon. John (St. Albans)
Astor, Hon. J. J. Conant, Maj. R. J. E. Grimston, Sir Robert (Westbury)
Baldock, Lt.-Cmdr. J. M. Cooper, Sqn. Ldr. Albert Hall, John (Wycombe)
Baldwin, A. E. Cooper-Key, E. M. Hare, Hon. J. H.
Banks, Col. C. Craddock, Beresford (Spelthorne) Harris, Frederic (Croydon, N.)
Barber, Anthony Crosthwaite-Eyre, Col. O. E. Harrison, Col. J. H. (Eye)
Baxter, A. B. Crouch, R. F. Harvey, Air Cdre. A. V. (Macclesfield)
Bell, Ronald (Bucks, S.) Crowder, Sir John (Finchley) Harvey, Ian (Harrow, E.)
Bennett, F. M. (Reading, N.) Darling, Sir William (Edinburgh, S.) Harvie-Watt, Sir George
Bennett, William (Woodside) Deedes, W. F. Heath, Edward
Bevins, J. R. (Toxteth) Digby, S. Wingfield Henderson, John (Cathcart)
Birch, Nigel Dodds-Parker, A. D. Higgs, J. M. C.
Bishop, F. P. Donaldson, Cmdr. C. E. McA. Hill, Dr. Charles (Luton)
Boothby, Sir R. J. G. Doughty, C. J. A. Hill, Mrs. E. (Wythenshawe)
Bowen, E. R. Douglas-Hamilton, Lord Malcolm Hinchingbrooke, Viscount
Boyd-Carpenter, J. A. Drayson, G. B. Hirst, Geoffrey
Boyle, Sir Edward Drewe, Sir C. Holland-Martin, C. J.
Braine, B. R. Duncan, Capt. J. A. L. Holmes, Sir Stanley (Harwich)
Braithwaite, Sir Albert (Harrow, W.) Elliot, Rt. Hon. W. E. Hope, Lord John
Braithwaite, Lt.-Cdr. G. (Bristol, N. W.) Fell, A. Hornsby-Smith, Miss M. P.
Bromley-Davenport, Lt.-Col. W. H. Finlay, Graeme Howard, Hon. Greville (St. Ives)
Brooke, Henry (Hampstead) Fisher, Nigel Hudson, W. R. A. (Hull, N.)
Browne, Jack (Govan) Fleetwood-Hesketh, R. F. Hulbert, Wing Cdr. N. J.
Buchan-Hepburn, Rt. Hon. P. G. T Fletcher-Cooke, C. Hutchinson, Sir Geoffrey (Ilford, N.)
Bullard, D. G. Ford, Mrs. Patricia Hutchison, Lt.-Com. Clark (E'b'rgh, W.)
Bullus, Wing Commander E. E. Fraser, Sir Ian (Morecambe & Lonsdale) Hylton-Foster, H B. H
Butcher, Sir Herbert Galbraith, Rt. Hon. T. D. (Pollok) Jenkins, Robert (Dulwich)
Johnson, Eric (Blackley) Nabarro, G. D. N. Speir, R. M.
Johnson, Howard (Kemptown) Neave, A. M. S. Spens, Sir Patrick (Kensington, S.)
Jones, A. (Hall Green) Nicholls, Harmar Stanley, Capt. Hon. Richard
Joynson-Hicks, Hon. L. W. Nicholson, Godfrey (Farnham) Steward, W. A. (Woolwich, W.)
Kerr, H. W. Nicolson, Nigel (Bournemouth, E.) Stewart, Henderson (Fife, E.)
Lambton, Viscount Nield, Basil (Chester) Strauss, Henry (Norwich, S.)
Lancaster, Col. C. G Noble, Cmdr. A. H. P. Summers, G. S.
Langford-Holt, J. A. Nugent, G. R. H. Sutcliffe, Sir Harold
Law, Rt. Hon. R. K. Oakshott, H. D. Taylor, Charles (Eastbourne)
Leather, E. H C. O'Neill, Phelim (Co. Antrim, N.) Taylor, William (Bradford, N.)
Legge-Bourke, Maj. E. A. H Orr-Ewing, Charles Ian (Hendon, N.) Teeling, W.
Legh, Hon. Peter (Petersfield) Osborne, C. Thomas, Rt. Hon. J. P. L. (Hereford)
Lennox-Boyd, Rt. Hon. A. T. Partridge, E. Thomas, Leslie (Canterbury)
Lindsay, Martin Peto, Brig. C. H. M. Thomas, P. J. M. (Conway)
Linstead, Sir H. N. Pilkington, Capt. R. A. Thompson, Kenneth (Walton)
Lloyd, Maj. Sir Guy (Renfrew, E.) Pitman, I. J. Thompson, Lt.-Cdr. R. (Croydon, W.)
Lloyd, Rt. Hon. Selwyn (Wirral) Pitt, Miss E. M. Thorneycroft, Rt. Hn. Peter (Monmouth)
Lockwood, Lt.-Col. J. C. Powell, J. Enoch Thornton-Kemsley, Col. C. N.
Low, A. R W. Price, Henry (Lewisham, W.) Tilney, John
Lucas, Sir Jocelyn (Portsmouth, S.) Prior-Palmer, Brig. O. L Touche, Sir Gordon
Lucas, P. S. (Brentford) Profumo, J. D. Turner, H. F. L.
Lucas-Tooth, Sir Hugh Raikes, Sir Victor Turton, R. H.
McAdden, S. J. Rayner, Brig. R. Vane, W. M. F.
McCallum, Major D. Redmayne, M. Vaughan-Morgan, J. K.
McCorquodale, Rt. Hon. M. S. Rees-Davies, W. R. Vosper, D. F.
Mackeson, Brig. H. R. Remnant, Hon. P. Wade, D. W.
McKibbin, A. J. Renton, D. L. M. Wakefield, Edward (Derbyshire, W.)
Mackie, J. H. (Galloway) Roberts, Peter (Heeley) Wakefield, Sir Wavell (St. Marylebone)
Maclay, Rt. Hon. John Robinson, Roland (Blackpool, S.) Walker-Smith, D. C.
MacLeod, John (Ross and Cromarty) Rodgers, John (Sevenoaks) Ward, Hon. George (Worcester)
Macpherson, Niall (Dumfries) Ropner, Col. Sir Leonard Ward, Miss I. (Tynemouth)
Maitland, Patrick (Lanark) Russell, R. S. Waterhouse, Capt. Rt. Hon. C.
Manningham-Buller, Sir R. E. Ryder, Capt. R. E. D. Webbe, Sir H. (London & Westminster)
Markham, Major Sir Frank Salter, Rt. Hon. Sir Arthur Wellwood, W.
Marlowe, A. A. H. Scott, R. Donald Williams, Gerald (Tonbridge)
Marshall, Sir Sidney (Sutton) Scott-Miller, Cmdr. R Williams, Sir Herbert (Croydon, E.)
Maude, Angus Shepherd, William Williams, Paul (Sunderland, S.)
Maudling, R. Simon, J. E. S. (Middlesbrough, W.) Williams, R. Dudley (Exeter)
Maydon, Lt.-Comdr. S. L. C. Smithers, Peter (Winchester) Wilson, Geoffrey (Truro)
Medlicott, Brig. F. Smithers, Sir Waldron (Orpington) Wood, Hon. R.
Mellor, Sir John Smyth, Brig. J. G. (Norwood)
Monckton, Rt. Hon. Sir Walter Snadden, W. McN. TELLERS FOR THE AYES:
Morrison, John (Salisbury) Spearman, A. C. M. Mr. Studholme and Mr. Wills.
NOES
Albu, A. H. Cove, W. G. Harrison, J. (Nottingham, E.)
Allen, Arthur (Bosworth) Craddock, George (Bradford, S.) Hastings, S.
Allen, Scholefield (Crewe) Crosland, C. A. R. Hayman, F. H.
Anderson, Alexander (Motherwell) Crossman, R. H. S. Healey, Denis (Leeds, S E.)
Anderson, Frank (Whitehaven) Cullen, Mrs. A. Henderson, Rt. Hon. A. (Rowley Regis)
Attlee, Rt. Hon. C. R. Daines, P. Herbison, Miss M.
Awbery, S. S. Dalton, Rt. Hon. H. Hewitson, Capt. M.
Bacon, Miss Alice Darling, George (Hillsborough) Hobson, C. R.
Baird, J. Davies, Ernest (Enfield, E.) Holman, P.
Balfour, A. Davies, Harold (Leek) Houghton, Douglas
Barnes, Rt. Hon. A. J. Davies, Stephen (Merthyr) Hoy, J. H.
Bartley, P. de Freitas, Geoffrey Hubbard, T. F.
Bellenger, Rt. Hon. F. J. Deer, G. Hudson, James (Ealing, N.)
Bence, C. R. Delargy, H. J. Hughes, Emrys (S. Ayrshire)
Benn, Hon. Wedgwood Dodds, N. N. Hughes, Hector (Aberdeen, N.)
Benson, G. Dugdale, Rt. Hon. John (W. Bromwich) Irvine, A. J. (Edge Hill)
Beswick, F. Ede, Rt. Hon. J. C. Irving, W. J. (Wood Green)
Bing, G. H. C. Edelman, M. Janner, B.
Blackburn, F. Edwards, Rt. Hon. John (Brighouse) Jay, Rt. Hon. D. P. T.
Blyton, W. R. Edwards, W. J. (Stepney) Jeger, George (Goole)
Boardman, H. Evans, Albert (Islington, S. W.) Jeger, Dr. Santo (St. Pancras, S.)
Bottomley, Rt. Hon. A. G. Evans, Edward (Lowestoft) Johnson, James (Rugby)
Bowden, H. W. Evans, Stanley (Wednesbury) Jones, David (Hartlepool)
Bowles, F. G. Fernyhough, E. Jones, Frederick Elwyn (West Ham, S.)
Braddock, Mrs. Elizabeth Fletcher, Eric (Islington, E.) Jones, Jack (Rotherham)
Brockway, A. F. Follick, M. Keenan, W.
Brook, Dryden (Halifax) Foot, M. M. Key, Rt. Hon. C. W.
Broughton, Dr. A. D. D. Forman, J. C. King, Dr. H. M.
Brown, Rt. Hon. George (Belper) Gaitskell, Rt. Hon. H. T. N. Kinley, J.
Brown, Thomas (Ince) Gibson, C. W. Lee, Miss Jennie (Cannock)
Burke, W. A. Glanville, James Lever, Leslie (Ardwick)
Burton, Miss F. E. Gordon-Walker, Rt. Hon. P. C. Lewis, Arthur
Butler, Herbert (Hackney, S.) Grey, C. F. Lindgren, G. S
Carmichael, J. Griffiths, Rt. Hon. James (Llanelly) Lipton, Lt.-Col. M
Castle, Mrs. B. A. Griffiths, William (Exchange) Logan, D. G
Clunie, J. Hall, John T. (Gateshead, W.) MacColl. J. E.
Coldrick, W. Hamilton, W. W. McGovern, J.
Collick, P. H. Hannan, W. McInnes, J.
Corbet, Mrs. Freda Hargreaves, A. McKay, John (Wallsend)
McLeavy, F. Proctor, W. T. Taylor, Rt. Hon. Robert (Morpeth)
MacPherson, Malcolm (Stirling) Pryde, D. J. Thomas, Ivor Owen (Wrekin)
Mann, Mrs. Jean Pursey, Cmdr. H. Thomson, George (Dundee, E.)
Manuel, A C. Rankin, John Thornton, E.
Marquand, Rt. Hon. H. A Reeves, J. Timmons, J.
Mason, Roy Reid, Thomas (Swindon) Tomney, F.
Mayhew, C. P. Reid, William (Camlachie) Turner-Samuels, M.
Messer, Sir F. Rhodes, H. Ungoed-Thomas, Sir Lynn
Mikardo, Ian Richards, R. Viant, S. P.
Mitchison, G. R. Robens, Rt. Hon. A. Wallace, H. W.
Moody, A. S. Robinson, Kenneth (St. Pancras, N.) Wells, Percy (Faversham)
Morgan, Dr. H. B. W. Ross, William Wells, William (Walsall)
Morley, R. Royle, C. Wheatley, Rt. Hon. John
Morrison, Rt. Hon. H. (Lewisham, S.) Shackleton, E. A. A. Wheeldon, W. E.
Moyle, A. Short. E. W. White, Henry (Derbyshire, N. E.)
Mulley, F. W. Simmons, C. J. (Brierley Hill) Whiteley, Rt. Hon. W.
Nally, W. Skeffington, A. M. Wigg, George
Neal, Harold (Bolsover) Slater, Mrs. H. (Stoke-on-Trent) Wilcock, Group Capt. C. A. B.
Noel-Baker, Rt. Hon. P. J. Slater, J. (Durham, Sedgefield) Wilkins, W. A.
Oliver, G. H. Smith, Ellis (Stoke, S.) Willey, F. T.
Orbach, M. Snow, J. W. Williams, Rt. Hon. Thomas (Don V'll'y)
Oswald, T. Sorensen, R. W. Williams, W. R. (Droylsden)
Padley, W. E. Soskice, Rt. Hon. Sir Frank Williams, W. T. (Hammersmith, S.)
Paget, R. T. Sparks, J. A. Winterbottom, Ian (Nottingham, C.)
Palmer, A. M. F. Steele, T. Woodburn, Rt. Hon. A.
Pannell, Charles Stewart, Michael (Fulham, E.) Wyatt, W. L.
Parker, J. Stross, Dr. Barnett Yates, V. F.
Peart, T. F. Summerskill, Rt. Hon. E.
Popplewell, E. Sylvester, G. O. TELLERS FOR THE NOES:
Price, Joseph T. (Westhoughton) Taylor, Bernard (Mansfield) Mr. Holmes and Mr. John Taylor.

Question put, and agreed to.