New Clause.—(AMENDMENT OF S. 20 OF INCOME TAX ACT, 1952.)

HC Deb 08 July 1953 vol 517 cc1253-93

Section twenty of the Income Tax Act, 1952, shall read as if there were included after subsection (4) thereof the following subsection: (5) If the surveyor shall after a statement has been delivered under subsection (4) of this section by a notice served on the person who has delivered the statement so require such person shall within the time limited by the notice swear and deliver to the surveyor an affidavit that to the best of the knowledge information and belief of such person after due and proper inquiry made by him all amounts by which the gross amount of any profits, gains or income, as the case may be, returned by such person in the statement have been reduced, being the amounts of any expenditure incurred by such person or anyone in his employment, or, in the case of a limited company, any director, officer or servant of such company in the provision of entertainment or in travelling by any means or in the provision of transport or the means of transport or as living expenses for himself or any other person of any character were

1. (a) in the case of a person chargeable under Schedule D in respect of the profits or gains of a trade profession or vocation disbursements or expenses wholly and exclusively laid out or expended for the purposes of such trade profession or vocation, and
2. (b) in the case of a person chargeable under Schedule E in respect of the income from an office or employment expenses incurred wholly exclusively and necessarily in the performance of the duties of the said office or employment.

In the case of a limited company, such affidavit shall be jointly sworn by the secretary of the company and one director and any person failing without reasonable excuse to comply with any such notice so served on him by the surveyor shall be liable to be proceeded against and punished as provided for in subsection (3) of section twenty-five of this Act."—[Sir F. Soskice.]

Brought up, and read the First time.

3.40 p.m.

Sir Frank Soskice (Sheffield, Neepsend)

I beg to move, "That the Clause be read a Second time."

This Clause again raises the subject of entertainment expenses and similar expenses claimed by taxpayers as deductions in making their Income Tax and Surtax returns. As the House will know, this subject was raised in a proposed new Clause in almost identical terms which we put down for the Committee stage of the Bill and which was then discussed. This Clause goes beyond that Clause in scope, in that it includes, in addition to entertainment expenses, living and transport expenses.

The House may ask why my right hon. and hon. Friends and I have thought it necessary to revert so soon to this subject and I would answer that at the outset. We feel strongly that the debate on this most important topic was left in a very unsatisfactory state. We did not get an answer from either of the Ministers who replied in Committee to the proposals that we put forward. From the Financial Secretary we had a speech which was courteous, helpful and painstaking, but that was followed by a speech from the Chancellor about which I can only say that it was the sort of speech he generally makes.

I sought to deploy the arguments in favour of the proposal when I moved the original Clause, and as I imagine hon. Members interested in this topic will have had the opportunity of reading the debate in the OFFICIAL REPORT, I do not propose to repeat those arguments. We thought the debate was left in a state which was completely unsatisfactory for this reason. The Financial Secretary and the Chancellor both recognised that there was a serious problem. I need only refer to what the Chancellor said. He said that it certainly was an abuse, but that he thought it was an exaggeration to call it a widespread abuse.

He went on to say that he was in daily contact with the Inland Revenue. He knew that there were difficulties in this respect and that the Revenue were anxious to see that there was no further abuse. I do not mind whether it is called a widespread abuse or not. The fact that there is an admitted abuse in the matter of claiming expenses of this sort surely means that there is a serious problem to investigate.

When I moved the original Clause I founded myself on the evidence of my own impressions, contacts and conversations, and now I am able to add the evidence of the Financial Secretary and the Chancellor of the Exchequer himself, both of whom agree that there is an abuse, and that it is an abuse which the Inland Revenue are anxious to check. They do not want it described as a widespread abuse, but quite obviously, without beating about the bush we are faced with a serious abuse which it is our duty, I submit, as hon. Members of this House, to do whatever we can to check and to stop.

It was in that mind that we put down the original Clause and that we now put down this proposed new Clause. I would explain at once that the reason for the difference between this Clause and the original Clause was that the Chancellor, having admitted that this abuse existed and that it was a matter with which the Inland Revenue were concerned, asked himself whether he should accept our proposal. He said: Now we come to the positive issue—shall we or shall we not accept the new Clause? I think that the weakness of the new Clause is precisely this: if new inquisitorial powers are necessary, why limit their scope to this sole purpose of entertainment expenses?"—[OFFICIAL REPORT, 23rd June, 1952; Vol. 516. c. 1847.] 3.45 p.m. The Chancellor, unfortunately, was unable to be present during the early part of the debate and, therefore, did not hear the reason why we had limited ourselves in that way when formulating the Clause. It was because we thought it necessary to begin on a narrow front. If our proposal was accepted and was workable it would be easy to extend the front and to take in other forms of expenses. But we started modestly in the hope that the Government would be able to consider the serious proposals we put forward. If they considered it a wise thing to do the Government themselves could then extend the Clause.

Not having heard the reason the Chancellor rejected the Clause out of hand because he thought it concerned too narrow an aspect of the problem. But that is easily cured by extending the Clause to cover not only entertainment expenses, which many hon. Members may think constitute the major abuse, to include living expenses. I should have thought that anyone would know from periodical experience that there is considerable abuse in the use of transport—the provision of cars and travelling on what purports to be the firm's business when, in point of fact, it is not at all—on trips and jaunts abroad which are said to be chargeable against business profits, but which are directed entirely to different things and which render them wholly unjustifiable as expenses to be set against profits.

We have, therefore, got over the first and only difficulty raised by the Chancellor when he spoke under the disadvantage of not knowing the full arguments deployed. The Financial Secretary, as I have said, made a careful and painstaking speech. He had full knowledge of the arguments and he has, obviously, given careful consideration to them. In his answer, which may be considered the important answer, he said that there was already at the disposal of the Inland Revenue a considerable measure of power. They could act under the provisions of Section 31 of the Income Tax Act, 1952, or simply disallow a claim for expenses and put the taxpayer to the necessity of proving the expense by appeal to the Special Commissioners. There was already sufficient power, he said, and there was no adequate reason for taking the additional powers which we proposed in the Clause.

I submit that the complete answer to that particular argument is that, on the admission of the Financial Secretary and the Chancellor, the abuse still exists. Supposing the Financial Secretary had been able to tell us that, although it has existed in large measure in past years, it was rapidly becoming much less in size, and that it was hoped by the use of existing powers or methods fairly soon to reduce it to quite negligible proportions, I should have thought that he might quite logically have said that it was unnecessary to seek further powers for the Inland Revenue; but he was not able to assure us of that.

I ask him now if he can give us, apart from general adjectives, some indication of the scope of the abuse. Is it dwindling or is it growing? There is considerable disquiet on the part of many people that, far from dwindling, it is still considerable in extent, and certainly not growing less than it has been. The previous Government also had this problem before them, and we took steps to try to tackle it. We put a Clause into, I think, the 1947 Finance Bill dealing with this kind of trouble—the provision of various amenities not chargeable against expenses for directors and highly-paid executive by companies. Obviously, that aim has not borne fruition. Maybe, it has achieved a certain extent, but it has not entirely achieved its purpose.

Equally, the previous Government took steps to try to increase the staff available to deal with this particular kind of inquiry designed to ascertain whether the expenses were really properly chargeable or whether they were fraudulently charged against profits. That, no doubt, had a certain amount of effect, but still we find ourselves in 1953, on the admission of the two Ministers who have spoken, faced with this abuse, and the Financial Secretary says that we do not need any further powers.

I respectfully submit that I was perfectly justified in saying, in view of that answer, which was the only answer we have had from the Government Front Bench, that the debate was left in an unsatisfactory state, that it is our bounden duty to revert to the subject, and that the Government should give further consideration to it. If they are able to give us any batter answer, they should give it this afternoon; otherwise, they should seriously consider either accepting this proposal or some other which they think is better.

The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) also addressed himself to this particular Clause last time, and he put his finger on what might well be said to be the serious objection that can be brought against it. He said that a person who is minded to defraud the Revenue in this way will not hesitate to put his name to an affidavit. I quite accept that that is a very serious criticism of the Clause. In making the opening speech in support of the Clause during the Committee stage, I sought to persuade the Committee that there was that point of view and that criticism to be made against it, but that, nevertheless, the Clause had advantages which outweighed that criticism, and I put the case on that point in this way.

I said that it is all very well saying that the taxpayer had to sign a declaration, but that the mere signing of a declaration might be regarded by taxpayers who are dishonestly minded as an ordinary routine matter which does not bring them up with a jerk and which they take in their stride, but it is a very different thing—and I put this to the noble Lord, who may agree or disagree with me, though this is the answer to him—once a man has made his return, and made it in the knowledge that he has fraudulently and criminally purported to have incurred expenses against profits which he knew perfectly well could not be justified for a second if there was an investigation, the situation becomes very different.

It is a very different thing if a man makes a return in the knowledge that he can be called upon by an inspector to sign an affidavit swearing that those expenses were legitimate. I hope the House will bear in mind that taxpayers who, I imagine, would be asked to sign that affidavit, knowing that, by being asked to do so, they were obviously suspected, might have sent in the return and might have forgotten all about it. Suppose, then, that such a man received a formal request asking him to sign an affidavit declaring the expenses as legitimate, he would find himself in an alarming situation.

I see the noble Lord's point, but I put it to him and to the House that it would very much alarm the dishonest person who had made a fraudulent return of that sort if, coming to realise, in fact, that he was suspected, that something had gone wrong, he was then called upon, as it were, to sink himself deeper in the mire by putting his name to an affidavit in the knowledge that, if he did swear a false and perjured affidavit, he would render himself liable to criminal proceedings, which might result in his being sent to prison. I put it to the House—maybe the House will not agree, and it is obviously a matter of opinion either way—that what I have suggested has something in it, and that we advance this Clause in an attempt to bring the House to a discussion of this matter.

I make this suggestion. Maybe it is not the right suggestion; at any rate, it is, we hope, a contribution, and we hope that the Financial Secretary, if he is to deal with the matter, as I hope he will, will agree, in the first place, that we have made out that there is a problem; in the second place, that we have demonstrated by pointing to the existence of the problem that the Financial Secretary does not give an adequate answer when he says that no further powers are needed, because the answer is shown to be inadequate by reason of the fact that the existing powers have not availed to stop that mischief; and, thirdly, I hope the House will agree that we have put down on the Order Paper a Clause which, at any rate, requires serious thought for the reasons I have given.

It is an alarming thing that a man may be called upon to bind himself by signing an affidavit in the knowledge that, if anybody does investigate the matter, he will obviously be exposed as a person who is defrauding the Revenue, with all the consequences which that will involve. I would add that the new Clause is extremely simple as a piece of mechanism. It is not inquisitorial, and it does not involve giving any further power than exist under Section 31. We made that suggestion last year, and the Government rejected it. It does not go further in the direction of enabling any public official to search into private records and accounts. It is not something which would weigh in any way upon the honest taxpayer, and which would be used against him.

The person who is not suspected would not have to sign the affidavit. The innocent, and the vast body of taxpayers, would not even notice it and would not feel that any inconvenience had been put upon them, but, when the Inland Revenue feel that they have to deal with a person who is a rascal and a fraud, it would put in their hands a simple mechanism which does not involve any administrative difficulties and complications. He would be in the embarrassing and frightening position of having to withdraw the claim for expenses, thereby convicting himself of a degree of dishonesty, or swearing the affidavit in the knowledge that he was thereby placing himself in what might turn out to be a really dangerous situation.

There is something in that argument. I ask the Financial Secretary to consider the matter again to see whether, having heard the further arguments—the objections which the Chancellor raised to the scope of the Clause being now removed—he can accept it or undertake to put something better in its place.

4.0 p.m.

Viscount Hinchingbrooke (Dorset, South)

We had a fairly lighthearted discussion about this new Clause the other evening during the Committee stage, and some charges, perhaps not very earnestly intended, were levelled against me by the right hon. Member for Leeds, South (Mr. Gaitskell), to which I will refer in a moment. But I think that the discussion this afternoon is probably intended by the right hon. and learned Member for Neepsend (Sir F. Soskice) to be in serious vein, and, therefore, I intend to follow him in that spirit.

Of course, if we wanted to make fun, we could point to the extraordinarily abstruse wording of the Clause, to the fact that it opens with a conditional tense, that the main substantive is in line 5, that the main verb is in line 14 and the object in lines 17 and 22. It is not easy reading, and I doubt if there are many hon. Members who on reading it will fully understand what it is all about. In a way, that illustrates the theme on which I want to speak for a short while this afternoon.

Here is a case of indulging in such abstruseness of legislation that it becomes almost incomprehensible to the layman, and, indeed, quite incomprehensible to the victim. Perhaps that is the object of some Socialist legislation, that they should pursue their victims with weapons which they are incapable of comprehending so that they will be more easily apprehended. The right hon. and learned Gentleman is nothing if not persistent in this matter. His Clause in the Committee was in very much the same terms. It was turned down by the Committee then, and I am a little surprised that, the principle having been turned down by the Committee, it should be brought up again.

Sir F. Soskice

Is the noble Lord now endeavouring to give us a specimen of his serious or his humorous contribution?

Viscount Hinchingbrooke

A little passing humour before I carry out my intention of being serious on the point.

I am a little surprised that the Clause should be brought up again in face of the Committee's clear decision only a week or two ago. But the Clause and the intentions of the right hon. and learned Gentleman and of his hon. Friends behind him clearly demonstrate the attitude of reforming zeal of the Labour Party, their puritanical drive towards absolute goodness in the individual. They have been trying for years past, and are even trying today, after having been defeated in the country, to make people good by statute. The more I think of it, the more convinced I am that we have seen nothing like it in this country since the time of Oliver Cromwell.

Right hon. and hon. Members opposite are trying to close loopholes in the law. I was accused the other night by the right hon. Member for Leeds, South of not wishing to do so, and the atmosphere he sought to generate was that we on this side of the House are in favour of people defeating the law. Our attitude in this matter is exactly on all fours with that of the learned judge who correctly said, and for all time, that a man or a woman is entitled to arrange his or her financial affairs so as to attract the least possible taxation. There is nothing whatever offensive or immoral in that attitude.

We on this side of the House, particularly in view of the stress that has resulted from six years of Socialist legislation, are more anxious than ever before to stand upon that line. The right hon. and learned Gentleman thinks that by this Clause he will defeat the purposes of individuals—directors of companies, secretaries and commercial men and women—who are trying to earn their living and to make profits for their concerns, and who, at the same time, incur some entertainment expenses. The right hon. and learned Gentleman wants to make sure that at no time shall they get away with too much luxury living or pursue any part of their business in circumstances of enjoyment, which the Socialist theory and practice think are objectionable.

I believe that when legislation is taken to those lengths, and the lengths to which this Clause would like to take it this afternoon, it not only produces profound distress among the people proceeded against, which may result in lower productivity for their concerns, and thus for the country, but it also has a terrible effect upon their natures. Once one breaks through the average natural code of conduct and morality of the ordinary commercially-minded man and woman, they lose respect for the law and for the prosecutors of the law, and when they begin to lose respect for them, they will proceed to every sort and kind of device that they know how to work up in order to defeat them.

Mr. G. R. Mitchison (Kettering)rose—

Viscount Hinchingbrooke

No, I cannot give way to the hon. and learned Gentleman.

The more one closes the loopholes in the law, which has become an ass, and a complete ass as this one would, the more people will be turned away from their normal healthy occupations in search of devices and techniques in order to overcome it. They will tend to have no respect whatever for the Commissioner of Inland Revenue, and they will resort to every device they can think of to defeat him, and ways of doing this, which, before the war, would have seemed to them to be quite disagreeable and not to be suggested for one moment, will come into their minds and be accepted and used.

Mr. Mitchison

May I now ask the noble Lord to give way?

Viscount Hinchingbrooke

No, I cannot give way. We were asked to be serious, and I intend to be. If hon. Members do not like me in an amusing vein, they can stomach me in a serious vein.

The right hon. and learned Gentleman is up against very clever people who are always one jump ahead of the Inland Revenue. The more they are chased year by year by legislation of a Socialist character in the Finance Bill, the more they will be encouraged to rush into all avenues and labyrinths into which they would never have thought of going before. It is not a case of closing loopholes in the law; it is a case of reversing the trend of the law and of bringing it back to the general level, to the accepted code and conduct of business morality in the world.

Mr. Mitchison

I am much obliged to the noble Lord for giving way. I wonder whether I followed his argument aright. Does it mean that he has no particular objection to a man who makes, and who is obliged to make, a false declaration, but that he regards it as monstrous and iniquitous supervision if he is called upon to swear to it?

Viscount Hinchingbrooke

I do not see any point in repeating that. I do not believe that people who indulge in this sort of practice, and who were driven to it by the kind of legislation which we have had for the last six years, are the sort of people who will cavil at swearing an affidavit before the surveyor of taxes. Once they have got that degree of disrespect for the law, they will go to further lengths in disrespect of the law.

Everybody recognises today that some of these practices are going on. Why are they going on? Why has history shown that every time a Government assumes forms of bureaucratic tyranny the people respond in their disrespect for the law, and engage in all sorts of practices that lower the level of morality of the whole nation? It has happened in countries that have been conquered and misruled, and it will happen in this country if we continue to be misruled in this way.

Therefore, my plea with my hon. Friend who may reply to the debate on the proposed new Clause is this: recognise that the law in this matter has become an ass and reject the Clause moved by the right hon. and learned Gentleman. Go further than that next year, if the Government will be so good, and repeal the inquisitorial Sections of the Socialist Finance Acts of 1947 and 1948.

Sir Richard Acland (Gravesend)

I join with my colleagues in the House in believing that we have heard an extraordinary statement of business and political morality which is very typical of the mind of very large sections of the Conservative Party. I wish I could have the reflection just to consider how I could bring home to the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) the enormity of what he is saying.

He is saying that the business community, with its important backing, has a code of what the noble Lord calls "morality," by which certain things should be done. If the community respect the businessman's idea of his own businessman's code of what ought to be, so that, in the words of the noble Lord, the businessmen are allowed to make profits for their concerns in agreeable circumstances, then the businessman will play ball even though that may mean, incidentally, that the community cannot raise enough money in taxation to tackle, for example, slum schools in which fellow human beings of the businessman are not given fair opportunities for life.

For all manner of social purposes taxation needs to be increased, but if this taxation presses upon what the business community conceive to be the proper code of conduct that ought to be allowed to them, then, in the noble Lord's opinion, they are entitled to dodge, to twist and turn and to apply all manner of devices, including, as the noble Lord's opposition to the proposed new Clause shows, the device of entering up their expenses as, shall we say, £250, when, in fact, the expenses under the particular item were only £50. It is the opinion of the noble Lord that they ought to be allowed to get away with that if, according to their business code, they would not have enough means of enjoyment.

Viscount Hinchingbrooke

I said that we should repeal the Acts which resulted in this position.

Sir R. Acland

In other words, if the business community are not able to enjoy themselves as they think they ought to be allowed to enjoy themselves, the community ought either to repeal the taxation which is necessary to tackle such a problem as slum schools, or they ought to open to the business community such avenues for dodging taxation as will make it perfectly easy for the business community to dodge; or else, if we do not open ways for the business community to dodge, we should not take any action at all to see that they do not dodge.

I am sorry not to be able to bring home to the noble Lord more clearly than I have done on the spur of the moment the real meaning of what he is saying. It appears to me a quite intolerable conception of the relation between the community, the business community and the immense number of tasks which the modern community has to perform. Following speakers may be able more sharply to show what I feel so intensely about what has been said. I am not able to express it as sharply as I would like.

4.15 p.m.

I should like to come back to the detailed discussion which was opened by my right hon. and learned Friend, in moving the proposed Clause, of the arguments which were raised in the very full speech which the Financial Secretary made when this matter was discussed during the Committee stage. I particularly want to draw the attention of the Financial Secretary to his own speech, where he was saying what conditions there would have to be for a successful proposal of this nature. He said that it would have to be shown that this particular proposal, in fact, will make a substantial contribution towards dealing with those abuses."—[OFFICIAL REPORT. 23rd June, 1953; Vol. 516, c. 1837.] In my view, the word in that sentence which goes just a little bit far is "substantial."

I invite the Financial Secretary to say whether it would not be equally important to make a modest but noticeable contribution to dealing with the abuse. If there is an abuse, which I think the Financial Secretary and his hon. Friends, other than the noble Lord and perhaps one or two others, admit, and if a proposal will make, not a substantial but a noticeable contribution, towards eliminating it, the proposal ought to be adopted.

My argument is that the new Clause would do exactly that. When we were discussing a somewhat similar proposal moved by my hon. Friend the Member for Sowerby (Mr. Houghton) I said that what most of us do, when an issue of right or wrong is in front of us, is to be silently influenced by our opinion of what might happen to us if we did wrong. I instanced the case of a railway ticket, and said that all of us would agree that people who travel on railway trains ought to pay their fares but that for many of us the decisive question whether to pay or not to pay was influenced to some extent by the presence of a ticket collector.

In the same way I ask what happens to those of us who fill up Income Tax forms. The filling up is immediately influenced by what we think might happen to us if we did something wrong. I am not concerned with either of the two extremes: scrupulous and purely mechanical honesty in filling up of Income Tax forms by one who will not be affected one way or the other way by this new Clause; and the resolutely fraudulent person—this is one point on which I agree with the noble Lord—who, in filling up an Income Tax form, will not be very much affected by the proposed Clause either.

I am concerned with those among us who are just a trifle slap-happy in filling up the parts of the Income Tax forms which deal with the expenses account. Here it is relevant to ask what is to happen to the man who makes a mild exaggeration in his expenses? There are two alternatives. Under the present arrangements the worst that can happen is that he gets a letter from the Income Tax authorities disallowing a certain item in his return. When he gets that disallowance all that he has to do is to decide whether he is really in a strong position to argue or whether he should accept the disallowance. Nothing adverse really happens, nothing that in any way hurts happens to the slap-happy filler-up of Income Tax forms if he puts against a certain item of expenditure the figure of £200 when the figure of £100 would have to be more accurate.

Mr. Arthur Colegate (Burton)

I am not clear whether the hon. Baronet has in mind Members of Parliament. Are they, in future, to swear an affidavit about their expenditure on Parliamentary service?

Sir R. Acland

I do not think that they should be or that they are at present in a different position under the law. Indeed, it would be fantastic to make a differentiation.

The contrast under this proposed new Clause is that the man who enters up a figure of £250 in expenses, when £50 would have been the more honest figure if he had thought a bit hard about it before putting pen to paper, can receive in due course a request from the Income Tax authorities to put that statement into an affidavit. That seems to me to be, not an intolerable threat of prosecution hanging over his head, but certainly something which, at the time when he is filling up an Income Tax form, will call his attention to the need for really careful accuracy and will lead him not to put into his declaration of expenses any figure which he believes he could not substantiate in an affidavit, with all that that means, if called upon to do so.

I do not say that this new Clause will revolutionise the present state of affairs, but I say that it will make not necessarily a substantial but a modest and noticeable contribution, and I hope that the Financial Secretary to the Treasury will accept this slight alteration in his own criterion of judgment in these affairs.

Sir William Darling (Edinburgh, South)

This new Clause is to me, at any rate, a very unpleasant and nauseating proposal. The fact that it is in the name of the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) and that the noble Baronet the Member for Gravesend (Sir R. Acland) has supported it makes it even more repugnant. I can think of nothing more nauseating—and I can think of no other word—because it shows, and the hon. Member for Sowerby (Mr. Houghton) will support me, complete lack of respect for the efficiency and competence of Inland Revenue officials. It may be that the hon. Baronet and other hon. Members opposite have fewer contacts with these officials than some of us and that may account for the innocent way in which they so often speak of the practices of the Inland Revenue.

The Inland Revenue official who handles this business is called the surveyor or inspector, and those words mean something. If, in my capacity as trader, merchant or Member of Parliament I submit my expenses on a particular enterprise it is that official's business to inspect or survey the expenses. He is entitled to say that they are improper or excessive and, if I may inform you, Mr. Speaker, he does say so with very great frequency.

I hasten to remind the noble Baronet not to attempt, in his present state of Puritanical innocence, the suggested frauds that he is contemplating. I advise him to leave them to the hard-faced men who are more experienced in them. The whole question of expenses is a mania, an obsession and a phobia of hon. and right hon. Members opposite. They think that their fellow-creatures are doing a little better than they are, and so they have this elaborate machinery to investigate and to see that they do not get away with anything.

Expenses are the tool of one's trade. No one willingly incurs the expense and trouble of entertaining someone to dinner. Nobody with any experience, who does it for the purpose of promoting business, entertains anybody to dinner with a great degree of pleasure. I would sooner have a business conversation with the hon. Member for Gravesend over a bare office table for half an hour than have the doubtful pleasure of spending more than one and a half hours over dinner and have him share half a bottle of Burgundy before he could understand what I was talking about.

This new Clause is born of simplicity and ignorance joined with envy on the part of hon. Members opposite. They think that somebody is getting away with something. I have the support of the Chancellor of the Exchequer, and, I hope, of the hon. Member for Sowerby, when I assure the House that the taxation organisation of this country is no doubt the most efficient in the world.

Once, in conversation with me, Lord Waverley said that he was sent to France in 1917–18 as an official of the Treasury to advise the French on how to raise money to conduct the war. He found that the French were impressed not by the gallantry of British troops but by the gallantry of the British taxpayer. While the French were willing to put thousands more men in the field they did not think that they had an efficient organisation which would enable them to emulate the British and have a taxation system in effective and universal use in the field.

It is a mark of the unreality of the world in which hon. Members opposite live that they think that we are people who are not adequately taxed. If they thought that we were adequately taxed they could not bring forward a preposterous idea like this. Persons like myself—and I look upon myself as an average person, of distinction—will not be deterred if this new Clause is carried into law. I should feel that it was a challenge to the nimbleness of my wits and to my skill. As my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) said, one is always a step ahead of the tax collector. This Clause would encourage me to acquire even an additional nimbleness.

Mr. Frank Bowles (Nuneaton)

Does the hon. Member mean that if this Clause were embodied in the Finance Bill this year and became the law he might not get away with what he is getting away with now?

Sir W. Darling

The suggestion is that I am getting away with something. It shows how deeply ingrained in the minds of hon. Members opposite is the idea that somebody is doing a little better than they are, that they are a little keener and are getting their hands on something. A mixture of the police State and the Puritan is the context.

I am not getting away with anything. I have never got away with anything. I have not even tried. But if I were asked to sign an affidavit I should not hesitate. I should say that I am entitled to put before the inspector that the expenses were lawfully and properly expended for the purpose of promoting my business, and if he thinks that they were improper it is his business and duty to tell me so. I may disagree but he, unless I appeal, has the last word. The country is very well looked after in this matter.

4.30 p.m.

I suppose you are aware, Mr. Speaker, though some hon. and right hon. Gentlemen may not be, that chartered accountants are in a specially privileged position. I happen to be the director of one or two companies. As a director I am not entitled to any expenses for attending the meetings of the companies. I travel at my own expense. If the meeting is in Edinburgh I have to go there. If it is in Taunton or London I have to go there. No expenses are allowed to a director travelling to undertake his duties as director of a company.

But there are two exceptions. The right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) must be aware of one of them. The directors of a public company who are entitled to have their expenses paid when attending the meetings of the company are lawyers and chartered accountants. These two henchmen of the Inland Revenue are so clearly recognised in their eyes that they are placed in this peculiarly privileged position.

This special pleading is being put forward by the Opposition. Excessive expenses are a restrictive practice. They add to the costs of business. Are hon. and right hon. Gentlemen opposite prepared to attack other restrictive practices in the same way? Let them take the mote out of their own eye before they look for the beam in that of their brethren. I hope that that remark is sufficiently theological to appeal to the hon. Member for Gravesend.

This is a very much misunderstood subject. I should like the hon. Member for Sowerby to tell some of his friends. He is fully informed in this matter. I happen to be connected with a company which runs a canteen. The 1,500 employees who use the canteen pay 8d. or 10d. for their meal. If I choose to have a meal in the canteen I have to pay 4s. 8d. There are advantages in being a mere proletarian. There are many disadvantages in conducting business on the higher level.

It is not wise for the Opposition to behave in this fashion. What is wrong with the country is that it has too few persons of ability. Many people have acquired positions of importance by luck. Removing them from the category, it is persons of ability that we want in increasing numbers. That is the only way in which a population of 50 million will be able to survive in this difficult world. This persecution of persons of ability, persons who show marked and obvious signs of success, is a foolish way which, if persisted in, will be detrimental to the best interests of us all.

Mr. Frederick Mulley (Sheffield, Park)

I am strongly tempted to follow the hon. Member for Edinburgh, South (Sir W. Darling) in all the various facets of this subject, but I will confine myself to two. The fact that the hon. Member finds entertaining people so unpleasant is surely an argument for discouraging people from having entertainment expenses. That would give him a more pleasant time.

Sir W. Darling

I may find it unpleasant but I do not want to sign an affidavit about it.

Mr. Mulley

That may or may not be the case, but the hon. Gentleman put his finger on the heart of the problem. He referred to what he had been told by Lord Waverley about the French admiration for our taxation system. The French rightly admire our ability and willingness to pay taxes; but if the expenses aspect of taxation gets out of hand it is likely that our own taxation standards will follow those of the French, with dire consequences.

Before we go further we ought to clear up the judicial heresies of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke). He said that a learned judge had said that any person is entitled to arrange his financial affairs so as to attract the smallest amount of taxation. With that no one will cavil; but this is not a court of law. We are not here to interpret the law. Our function is to make and amend the law. If we feel that there is something wrong with the law it is up to us to try to put it right.

As the noble Lord is clearly interested in legalistic aspects, I commend to him the rule of law formulated by Professor Dicey. The great point about the rule of law is that in this country we should all be equal before the law. I submit that it is equally important that we should all be equal before the tax gatherer—before the Inland Revenue. Our great complaint in the matter of expenses is that there are great discrepancies in the administration of the same law. It is purely to try to put right those discrepancies that we submit this new Clause.

Mr. Gerald Nabarro (Kidderminster)

Will the hon. Gentleman tell us exactly what is wrong with the existing law which is to be found in Section 31 of the Income Tax Act, 1952? That is a long and complex Section. Will he tell us exactly what is wrong with the state of the law?

Mr. Mulley

The hon. Gentleman must allow me two or three minutes before I develop my main case. I hope to convince him before I conclude. I certainly think that there is something wrong, at any rate in the mind of the public it appears so, as between the expenses that certain taxpayers are allowed to claim and the inability of other taxpayers to claim similar expenses. For the benefit of the hon. Member for Kidderminster (Mr. Nabarro) I would say that this arises because of the distinction between Schedule D and Schedule E.

I should like to illustrate the point by a comment made by the noble Lord on a previous occasion about the desirability of persons conducting their business in agreeable surroundings. We agree that that should be done wherever possible. The position in law is that it is possible for two businessmen to meet in a convivial atmosphere at the expense of their company and the Inland Revenue. But it is not possible for two steelworkers who happen to meet at nine o'clock at night on the way to the night shift to discuss over a glass of beer, either at the expense of the company or the Inland Revenue, how to conduct the important operation of making steel. They can make no such charge for conducting their business in a convivial atmosphere. That is the point I am trying to make. There is a lack of equality between different classes of taxpayer before the Inland Revenue.

Mr. Colegate

The hon. Member must recognise that very large sums are spent by trade union officials and others such as steelworkers. I constantly see them coming up to conferences in London and elsewhere, and I am certain that their expenses are set off against income.

Mr. Mulley

The hon. Gentleman is trying to introduce another red herring. I was not talking about people going to conferences. My hon. Friend the Member for Sowerby (Mr. Houghton) gave a long explanation of subsistence allowances yesterday. I am sorry that the hon. Member was not here at the time.

I am talking about people discussing their work of making steel. There is no provision for them to do that in convivial surroundings. The expenses which they often voluntarily incur for this purpose must be borne out of their own pockets and not out of the pockets of the company or the Inland Revenue.

Viscount Hinchingbrooke

I am on the side of the miners, being also unable to take part in any business discussions and to charge entertainment expenses.

Mr. Mulley

The noble Lord seems, at any rate, to be changing his views a little, so this debate has served some purpose even if we do not get any further.

The hon. Member for Kidderminster asked what is wrong with the present law, and I will tell him shortly. It is that under Schedule D all one needs to do is to show that the expenses are wholly and exclusively laid out or expended, whereas under Schedule E, which applies to Members of Parliament—this will interest the hon. Member for Burton (Mr. Colegate) who expressed some apprehension on this point—expenses must not only be shown to have been wholly and exclusively incurred but necessarily incurred as well.

Mr. Nabarro

Surely Section 31 of the Income Tax Act, 1952, applies with equal force both to Schedule D and Schedule E?

Mr. Mulley

I think the hon. Gentleman will appreciate that there is that important difference between Schedule D and Schedule E. However, it would be out of order in discussing this important Clause to roam over the whole Income Tax Act, 1952.

We may be asked why, instead of moving the new Clause, we do not move to amend the law relating to Schedule D and Schedule E. The answer is that we cannot. Under the Standing Orders of this House no one except a Minister of the Crown is able to put forward any Amendment which might possibly incur a charge or raise the taxation responsibility of any person. Therefore, it is quite impossible for us to approach the matter from that angle.

Really, despite all the dust that this battle has thrown up, the suggestion that we are making is very simple. We are not, as the hon. Member for Edinburgh, South (Sir W. Darling) thought, throwing doubt on the efficiency of the Inland Revenue. We are providing them with just one additional simple weapon to use.

Sir W. Darling

They have got plenty.

Mr. Mulley

The hon. Gentleman seems to think they have too many already, but there is some doubt whether or not they have all the powers that they require to deal with this point. That is what we are doing, because as an Opposition that is all we can do. If we wanted to change the law it would mean that some people would pay more tax than they have to pay, and that would be out of order.

We on this side of the House, including my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice), take a much higher view of the ethics of business than hon. Members opposite. We do not think that the great majority of people with expense accounts are defrauding the Revenue; nor do we think that a great body of people who do have excessive expense accounts would be prepared to sign affidavits in respect of false figures. We believe that the morality of businessmen is as high as that of any other section of the community.

It is surprising that we on this side of the House have had to defend the business and managerial classes on two consecutive days. Yesterday we had to defend them on a Clause about earned income relief, when it was suggested that these people were not working as hard as they should because they had to pay too much tax. We resented that suggestion being applied to all people in the category of those entitled to have expense accounts, although, no doubt, some of that sort of thing does exist.

Much more important, I think, is that there should appear to be an equality before the Inland Revenue in the same way as we demand equality of persons before the law. As Members of Parliament, we should not want to put ourselves in any special position compared with the ordinary citizen from the point of view of taxation. There is undoubtedly in the minds of all people who are subject to P.A.Y.E. the feeling that they are in a much inferior position in this respect compared with those who have expense accounts. Consequently, we are bound, in fairness, and in order to sustain the very high standard of Income Tax honesty in this country, to try to ensure not only that people are equal before the law but that they are thought to be so, which is very important.

4.45 p.m.

The other point of some substance that the noble Lord raised relates to the evils of high taxation. Undoubtedly, it is true that the higher the taxation, the greater the incentive to evade or avoid that taxation. But surely the noble Lord would not suggest that a privileged few, because of their occupations, should be able to avoid high taxation and in that way make the taxation even higher for those who have no means of avoiding it. We may argue about the merits of taxation; we may differ in our views about the advantages or otherwise of a high rate of taxation, but that does not arise in this case.

It may be that if Income Tax was a quarter its present rate the need for this Clause or for expense accounts would be much less, but the noble Lord should realise that in the year 1953 even his own Government can hold out no hope of reducing taxation to that extent. High taxation, for good or ill, is likely to be with us for some time, no matter which party is in power. Consequently we have to be ready to face this situation.

Our contention is that whether high taxation is good or bad, it should be equally borne according to the law of the land. That is all that we are putting forward in this new Clause. It is a very reasonable proposal and it does not need to give rise to all the suggestions of horror on the benches opposite. As my right hon. Friend said, in moving the new Clause, we are not directing any wholesale condemnation on managerial or business people who happen to have expense accounts. We say that there are abuses, and that in the interests of all it is desirable that the maximum possible means of putting them right should be at the disposal of the Inland Revenue. Therefore, I say that this proposal contains an incentive effect.

I quoted to the House yesterday what an American told me about the efficiency of British managerial and business people. He said, "Your lower ranks and the middle hierarchy are very good and efficient on the whole, but they are working hard for one purpose only, and that is to attain the status of an expense account. When they acquire that status they spend far too much time"—I think the hon. Member for Edinburgh, South will agree with this—"entertaining each other, with the result that their efficiency and drive are very largely dissipated."

I think that to amend the law relating to expense accounts would remove the misery which is experienced by some people, according to the hon. Member for Edinburgh, South, and it would also have the advantage of increasing the return to the Inland Revenue. It would have the additional advantage of making the Income Tax law appear fairer to all those who have to pay tax, and it might well have some advantages in promoting greater efficiency and incentive among managerial and business classes.

I therefore commend the new Clause to the Financial Secretary. I ask him not to claim to be tied down by this particular legalistic form, for I am sure he realises as well as we do that we are bound to put our proposal in this form because of Standing Orders. I trust that if he thinks there is some substance in this argument he will give some undertaking about the future.

Mr. Douglas Houghton (Sowerby)

Hon. Members opposite have been behaving as if they were in the dock. Their speeches are a mixture of a defence of their innocence and confessions of their guilt. We have also had from the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) a distressing description of the psychology of the criminal, and from the hon. Member for Edinburgh, South (Sir W. Darling) we had the distressing suggestion that if this Clause were passed it would turn him from an honest man into an artful dodger.

Sir W. Darling

It would sharpen my already nimble wits.

Mr. Houghton

The hon. Gentleman says, on the assertion that he made a little while ago, that his nimble wits have been used so far not to cheat the Inland Revenue, but he says, "I cannot be accountable for my actions if you pass this Clause." The whole country had better gather round this trial of the hon. Members opposite, to act as a grand jury and give its verdict upon their fiscal and personal morality.

Hon. Members opposite are doing themselves an injustice. The truth is that although there are abuses of the Income Tax law which we, on these benches, quite sincerely describe as widespread, they are not universal. This proposal merely seeks to protect the majority of the honest taxpayers from the depredations of the dishonest—or, shall we say, the less conscientious—taxpayers. It has nothing to do with the doctrine of trying to make people good by statute. The Income Tax Acts have been trying for 100 years to make people honest by statute, because there are many Sections in the present Act which were there from the very beginning and which impose penalties for those who do not conform to the requirements of the Income Tax law.

Nor has this Clause anything to do with the doctrine of the right of the citizen so to arrange his affairs as to attract the smallest amount of taxation. This new Clause does not rule out any concession already given; it does not bring into taxable liability anything which is already outside it, and it does not alter the law of taxation. All it does is to strengthen the hands of the Inland Revenue authorities in calling for certain information.

In passing, I might say, to my hon. Friend the Member for Sheffield, Park (Mr. Mulley), that the Americans have nothing to teach us about direct taxation. We can modestly claim that our system of direct taxation is the most efficient in the world. There are many countries in which no system of Income Tax could be introduced, because it would not work. There are other countries where there are systems of Income Tax which do not work, and there are still other countries, including the United States, where the systems of Income Tax do not work as well as they should. But that does not mean that when we have preened ourselves with having the best Income Tax system in the world we should not try to make it better, more efficient, and more of an example for the rest of the world.

There is another important thing which should be said, and I say it to the noble Lord the Member for Dorset, South. In this country we have taxation by general consent, and we have an Income Tax by general consent. Were there any widespread resistance to the Income Tax we have it would cease to work. It is because the great majority of our taxpayers are honest and straighforward that we are able to propose the imposition of even further penalties or further exactions upon those who may wish to cheat the rest, or evade their responsibilities in some way or other.

The crux of this new Clause is simply to try to tighten up, under existing circumstances, a tendency for those in a position to do so to secure tax-free payments, tax-free amenities or tax-free services, where they can get them.

Sir W. Darling

Which are legal.

Mr. Houghton

Which, if they concern expenditure incurred wholly and exclusively in the pursuance of one's trade, are properly deductible from profits for taxation purposes.

The real problem is that on the margin of this expenditure, which is a very vast expenditure in total, there is this desire of a number of people to secure these tax-free amenities and services for private or semi-private purposes. That is what we are after. Under present conditions, those who are wholly dependent on cash remuneration are clearly at the mercy of the Inland Revenue and have to pay their full due on their remuneration, bonuses and other cash payments, but among those people who are directors of companies, directors in control of companies, or in other positions where they have control over expenditure, there is the temptation to use what services are at their disposal for private as well as business reasons.

That temptation springs from the fact that we have what hon. Members opposite would no doubt call the "unholy trinity" of high taxation, high prices and high profits. I do not know whether they would denounce the last of these, but they are frequently denouncing the first. I throw out a challenge to those hon. Members opposite who talk loosely about reducing taxation, or regard the evils of high taxation as merely a temporary phase and a legacy from Socialist Governments, which Her Majesty's present Government are in rapid course of clearing up. The whole of the proceeds from Income Tax in this financial year will go to meet the cost of defence. That is a measure of the defence programme. While defence is swallowing up the whole proceeds from Income Tax there can obviously be no suggestion of reducing the level of taxation.

The Chancellor of the Exchequer (Mr. R. A. Butler)

On a point of order. Is it in order to discuss, on this new Clause, the whole level of taxation? If so, the debate may go on for ever, and we shall not finish the business today.

Mr. Deputy-Speaker (Sir Charles MacAndrew)

I thought the hon. Member was going rather wide of the mark, but I thought he was also coming to an end.

Mr. Houghton

I was merely dealing with points raised by hon. Members opposite in the earlier part of the debate, in the course of which all these matters were referred to. I shall certainly cut my remarks short in the interests of business. I understand that we have said we will co-operate in bringing the business to an end at the expected time, and I have no desire to make any difficulties about doing so, but it seems desirable that, after listening to the speeches we have had earlier in this debate, some of the points made by hon. Members opposite should be answered.

I was dealing with the purpose of this Clause and I had pointed out that it does not alter the level of taxation. It merely deals with the power of the Inland Revenue to call for information. I know that some hon. Members think that the Inland Revenue work under a text which might be taken from "Antony and Cleopatra": Thou shalt be whipp'd with wire, and stew'd in brine. Smarting in ling'ring pickle. The truth is that the Inland Revenue have not yet got the powers necessary to secure the proper observance of the Income Tax laws.

The hon. Member for Kidderminster (Mr. Nabarro) has asked, on two occasions, what is wrong with Section 31 of the Income Tax Act, 1952. What is wrong with it is that it is not readily at the disposal of the local inspector of taxes. He has to get the authority of the Board of Inland Revenue before he can exercise the powers provided in it.

Mr. Nabarro

Is the hon. Member suggesting that the local inspectors of taxes are showing some deficiency in executing their duties and in not observing the requirements of the existing statute? Is he maligning his own profession?

5.0 p.m.

Mr. Houghton

The hon. Member must not misrepresent what I have said in that way. What I am saying is that those powers were reserved to the Commissioners of Inland Revenue. When that is done it is quite clear that the intention is to use them with great circumspection and moderation. A year ago I sought, during the Committee stage of the Finance Bill, to have these powers put into the hands of local inspectors of taxes, but the Chancellor of the Exchequer considered that unnecessary. The weakness of Section 31, therefore, is that the powers can be used only when a submission has been made to the Commissioners of Inland Revenue and a decision taken to use them.

Mr. Colegate

The hon. Gentleman has said what I have found myself—that the inspectors use these powers with circumspection and moderation. Is he arguing that if we accept the new Clause and alter Section 31, they would not use their powers with circumspection?

Mr. Houghton

What I am saying is that the new Clause puts additional strength into the powers which the Inland Revenue already have. It takes this simple form—of calling for information rendered in the traditional, solemn way of an affidavit. The new Clause does not give the Inland Revenue power to call for any more information than that for which they already have power to call. What it does is to introduce this new note of gravity and solemnity into the method of rendering this information when called upon to do so by the Inland Revenue.

It is a very narrow point when one comes to look at it in the text of the powers of the Inland Revenue, but, for a variety of reasons, we have had to concentrate on this method of bringing to the attention of the House some of the defects in existing arrangements and the need to strengthen them. In their heart of hearts, hon. Members opposite know that on the fringe of this vast expenditure on travelling, entertainment and amenities of various kinds, there is the use for private and semi-private purposes of some of the services available. It is an evasion of Income Tax if they are not regarded as part of the cash remuneration of the recipient and taxed in the normal way.

If they are not taxed in the normal way it is possible, by this device, to have a standard of living higher than that of another member of the community who is on the same level of cash payment. That point is obvious to us all. This Clause seeks to strengthen the hands of the Inland Revenue in sorting out that type of expenditure from that which is legitimately incurred solely and exclusively in the pursuance of business. There is nothing revolutionary about it. It would be a salutary thing to many people if they were required to render information in this way. It would bring their minds to the seriousness of what they are doing and, in my opinion, for what it is worth, it would lead to a straightening out of many abuses which now exist and would establish a more satisfactory relationship between the Inland Revenue and the taxpayer in this field.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)

The House will recall that last night the Chancellor of the Exchequer accepted a suggestion from the benches opposite that discussion on the Bill should be adjourned at a point which enabled this Clause to be taken first today. The House will also recall that assurances were given that that course would not prevent us from concluding the business at a reasonable time. Now that we have had about one and a half hour's debate on the new Clause, I hope that the House may be prepared to come to a conclusion upon it.

I express that hope with all the more confidence when I recall that substantially this topic was discussed during the Committee stage, in a debate which, as reported, occupies some 31 columns of HANSARD; and that it was also discussed in Committee last year. I think I can, therefore, say that on those occasions and today it has been exhaustively if not exhaustingly discussed. That is so much so that the problem which faces any of us who take part in the debate is to think of something new to say. Even the right hon. and learned Member for Sheffield, Neepsend (Sir F. Soskice), for all his great forensic abilities, did not appear to me wholly to get over the difficulty.

As he told us, this new Clause differs only from that discussed in Committee by reason of the fact that the affidavit procedure prescribed in it is made to apply not, as in the Committee version, solely to expenses in connection with entertainment, but is broadened to cover expenses incurred in connection with travel, living, and so on. Indeed, the right hon. and learned Gentleman confided to us that this new version was evolved largely to meet a point raised by the Chancellor of the Exchequer in his speech on the last occasion. The right hon. and learned Gentleman made it perfectly clear, as did those who followed him in the debate, that the widening of the Clause was designed for that purpose, that they themselves do not care very much about the widening and that all they are really concerned about is the original entertainments point.

As I said on the last occasion—and I do not want to weary the House by repeating it—we can, I hope, start on the basis that where it is proposed to arm the executive with additional powers those powers should not be granted unless a perfectly clear case can be made out to show that they are really necessary. We are in this rather unusual position: Her Majesty's Opposition are pressing upon Her Majesty's Government additional powers which Her Majesty's Government, with becoming coyness, are seeking to reject. This expression of confidence in the skill and ability with which these powers would be used, if conferred, which is implicit in this proposal, is very touching, and I appreciate it deeply, but, on the other hand, it makes it extremely difficult, as a normal constitutional proposition, for this House to insist upon arming the responsible Government of the day with powers which that Government, in the exercise of their responsibility, do not think they need.

It seems to me that if the right hon. and learned Gentleman is to succeed in his cause in those unusual circumstances—that those powers should be forced upon us—it is up to him to establish all three of the following propositions. The first is that there is substantial abuse. I do not know what the case for the Opposition is on that point. During the Committee stage the right hon. and learned Gentleman went out of his way to say that he did not think there was widespread abuse. His hon. Friend the Member for Sowerby (Mr. Houghton) took another view. As I said on the last occasion, while it is not part of my argument that abuses in this sphere, as in other spheres of taxation, do not exist, there is no reason to assume, as some hon. Members appear to have assumed, that the abuse is widespread or large. Further, there is absolutely no evidence that it is increasing—and there I reply to the hon. Baronet the Member for Gravesend (Sir R. Acland).

The second proposition which it seems to me the Opposition must establish is that an alteration not of substantive law but of the legal machinery of enforcement is required to better the position. A good deal of what was said, let me hasten to add not by the right hon. and learned Gentleman but by some of his hon. Friends, was quite immaterial to this rather narrow issue of the legal machinery of enforcement. Its relevance, as I understood it, was much more to the general law as to whether entertainment or travelling expenses should be admissible in any circumstances.

That was the argument. I must point out to those who consciously or subconsciously adopted that attitude that anybody with any experience in this field knows that, in practice, it is necessary for a certain amount of expenditure to be incurred in this direction if further business is to be obtained. Indeed, the Government themselves, by the existence of the Government Hospitality Fund, recognise that that exists, and, indeed, the scope of that need as shown by the size of the provision made in successive Estimates was, perhaps, even more fully appreciated by the former Administration than it is by the present one. Therefore, I think that we can start on the basis that certain expenses of this kind as a matter of substantive law are, and obviously must be, admissible, and a good deal of the indignation this subject appears capable of perennially generating as to what is really the basic law is really beside the point.

The third proposition which, it seems to me, must be established to justify forcing these powers upon us is that it must be shown that such abuses as exist cannot be dealt with reasonably by ordinary administrative means. With great respect to the argument that has been adduced—and I say in all sincerity that no man puts either a good or a bad case better than the right hon. and learned Gentleman—it does not seem to me that any of those three elementary propositions has been established. It seems to me quite clear that there has been great exaggeration as to the scale of the abuses that exist. It has not, I believe, been demonstrated that what is needed to deal with those that do exist is a tightening up of procedure of this nature. Nor has it been made out, I submit to the House, that such abuses as exist—and I shall say a word about that in a moment—cannot be tackled in another way.

I would hasten to disillusion the hon. Member for Gravesend on one or two points. I was interested in his analysis of the motives which actuate him when he is completing his Income Tax returns. I found them very interesting, but I must point out that the existing law is not quite so simple in this matter as he seems to think, and that if a taxpayer were to include in his return, falsely and fraudulently, a misleading item he would not by any manner of means be able just to apologise and get away with it. The hon. Baronet is under an illusion if he thinks the law is anything like as clumsy in that respect.

I do not want to recapitulate the summary of the existing law that was given during the Committee stage, but it is a fact that a claim can be disallowed by the inspector and that the taxpayer then has the onus of either accepting the disallowance or appealing to the Commissioners. If he appeals to the Commissioners the onus is on him to make out a claim, and documents can be produced, and, as a final safeguard, there is, as one of my hon. Friends very rightly pointed out, the inquisitorial provision of Section 31 of the Income Tax Act. These, taken together, are considerable legal powers, and no argument that I have heard has demonstrated that those legal powers are inadequate.

There are other ways of dealing with this matter, and I thought that in Committee the hon. Member for Sowerby (Mr. Houghton) was right when he indicated that one of the ways in which the situation could be handled was the way in which it was being tackled, that is, by making more adequate provision for Revenue staffs. I thought the hon. Member was talking very good sense on that subject, a subject on which, as the House knows, he has an authority denied to most of us. Of course, the real safeguard against abuses, if one wants to be realistic about this, is not piling up one legal sanction upon another: it is the good sense, knowledge of their job and application to their duties of the devoted staffs of the Board of Inland Revenue. That is a much more realistic way of approaching this matter.

5.15 p.m.

Simply as an indication of the fact that, whatever hon. Members may say, we are not complacent about this matter I would recall to the House what was pointed out yesterday by my hon. Friend the Member for Altrincham and Sale (Mr. Enroll), that to clarify the position in this respect the Board of Inland Revenue have evolved a new form, I think No. P 11 (D), the purpose of which is to make quite clear to the people concerned the precise legal position of the duties imposed upon them. That is an indication, it seems to me, of the right way to proceed in these matters. I would hasten to say that we are proceeding in this way not only because we are not complacent in the matter, but because we are not alarmists either.

As I have said, there is no evidence that abuses of this sort are growing. Indeed, there has been no evidence adduced to prove that at all. Frankly, I would say, with respect, that what we have heard to day is largely repetition of gossip. I am advised that there is no evidence of an increase of this sort. That is a very material consideration, because I would say at once that my right hon. Friend has not the faintest intention of conniving in any breaches of the law.

I must deal with one argument that the right hon. and learned Gentleman the Member for Neepsend put. It seemed to me that in this he was falling far below his usual standard of persuasive eloquence. He referred to the fact that I had said at this Box during the Committee stage that there were some abuses, and he said that because there were some abuses that, apparently, was an overwhelming argument for the strengthening of the legal powers. I would remind the right hon. and learned Gentleman and the House that neither in the Income Tax law, nor, indeed, in the criminal law, is 100 per cent. protection against abuse or crime possible.

The penalties for housebreaking are severe and heavy. Housebreaking, nevertheless, occurs. On the right hon. and learned Gentleman's logic, that being so hon. Members ought to be clamouring for an increase in the penalties and in the powers of the police for the apprehension of housebreakers. It is the most fallacious of all arguments to say that because abuses occur, crimes are committed, the law is inadequate. Because in an imperfect world the law on the criminal, civil and revenue sides is from time to time breached, that is no argument that the law itself is inadequate.

I want to say one other thing. I agree very much with what was said by one hon. Member as to the high standard of probity of the average taxpayer in this country. I thought the atmosphere which one or two hon. Members were trying to create, of a sort in which the widespread popping of illegitimate corks was heard on every hand, was a wildly fantastic picture. The British taxpayer, I should have thought—and I must not enter into national comparisons—compared, in his very proper approach to his liability to tax, favourably with those of any other country in the world.

Mr. Mitchison

Will the hon. Gentleman allow me to point out that the instance given by his hon. Friend the Member for Edinburgh, South (Sir W. Darling) was Burgundy, and that it does not pop?

Mr. Boyd-Carpenter

Is the hon. and learned Gentleman unaware of the existence of sparkling Burgundy?

Mr. Mitchison

They do not drink it in Edinburgh.

Mr. Boyd-Carpenter

I must not be led into a dissertation upon the merits of that agreeable and stimulating beverage, but I think it is important from the point of view not so much of this House but of people outside that the impression should not be allowed to get about that there are widespread abuses of this kind. The repercussions of such a wholly fallacious suggestion are, I think, obvious to every hon. Member, and I think it is necessary for us to have this matter in proportion.

As I have said, and I gladly repeat, my right hon. Friend undertook in Committee—and I repeat the undertaking now—that he would never hesitate to-come to the House for additional powers once he was satisfied that such additional powers were really required to deal with abuses. We are not satisfied that these powers are required. I urge upon hon. Members, from their own point of view, that it is perhaps a little undesirable to press so hard and continuously upon us to accept these powers, after this matter has been discussed in Committee this year, in Committee last year and here again and after every argument has been weighed and considered.

If hon. and right hon. Gentlemen opposite insist in pressing upon us powers which my right hon. Friend, in the exercise of his responsibilities to this House for the collection of taxes, does not regard as necessary, then I must say that many people will begin to think that what began as a genuine and sincere attempt to arm the Executive with powers against abuses has degenerated to raising a little prejudice by suggesting, as was done during the course of the debate, that certain sections of the community are allowed to get away with it because an idle and complacent Government will not intervene to stop them.

It is my right hon. Friend who has the responsibility for the collection of taxes, and if he fails in this duty the House can and should call him to account. The fact that he does not feel that those important duties require him to be armed with these additional powers ought to convince reasonable people that it is wrong to force them upon him.

Mr. Douglas Jay (Battersea, North)

I agree that we should come shortly to a conclusion about the new Clause, though I am bound to add that the conclusion which we think the House should come to is not that recommended by the Financial Secretary. Also, if this debate has been prolonged it has been partly by the speeches—some of them rather curious—and interventions of hon. Members opposite. I think that the speeches of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) and of the hon. Member for Edinburgh, South (Sir W. Darling) have proved the necessity for some such measure as we are proposing this afternoon.

The noble Lord in his speech described himself as lighthearted, but I rather thought he was light-headed at times. Both he and the Financial Secretary failed to address themselves to the serious point which is now at issue. It seems to us that the serious point is that there is nothing more vital and more precious in our financial system than the solidity of the tax structure and the general belief in the community that that structure is fair and efficient in respect of all concerned. There have been references to other countries, which I will not follow, but the widespread character of the belief in the fairness of the tax system is something which it is very easy to destroy and very difficult to build up again. We have that belief in a large measure in this country at the present time.

But there are beginning to arise certain doubts and a certain uneasiness on this issue of expenses. In our view, if we are to maintain the integrity of the whole system it is vital to remove those doubts by giving further powers to the Inland Revenue, as we suggest. The real difficulty is that all those who pay Income Tax under P.A.Y.E. are compelled, without question and without argument, to pay the full amount, whatever it is. It also appears to some people—and this is not a matter of prejudice, I would say to the Financial Secretary; it is the duty of the House to see that the taxes are fairly imposed—that those who happen to come under Schedule D are able to obtain in one way or another more favourable treatment. It is not possible, in my view, when one is asked a question at a political meeting, a trade union meeting or elsewhere as to whether Government and Parliament have done everything possible to stop these practices, to answer with complete honesty that they are on a negligible scale and that everything we can do to stop them has so far been done.

We have been challenged to produce evidence on a material scale that those who pay taxes under Schedule D are able to obtain this favourable treatment. In the nature of the case the Financial Secretary must know it is impossible to produce concrete evidence in this House as to facts, figures and names. I can only say from what I hear from people who are concerned with this kind of thing—from accountants, tax experts and others—that in several fields, particularly in the fields of entertainment, business, motor cars and some other ways there are undoubtedly opportunities for escaping or evading taxes which are not open to those paying tax in other categories. Since the Financial Secretary challenges us for evidence I will mention one individual case without names which rather surprised me and caused me uneasiness when I first came across it.

This was a case not strictly of a businessman but of a professional man who was earning an income of nearly five figures. He was allowed by the Inland Revenue, under normal rules, to enjoy one-third of the whole of that income of nearly five figures entirely tax free on the grounds of his supposed professional expenses. An income of several thousands a year tax free, even though that is recognised by the Inland Revenue, does not appear fair to the ordinary taxpayer under P.A.Y.E. It is hard to estimate how general such a practice as this is, but the case I have in mind was the general practice in the profession concerned.

Mr. Colegate

I only want to get this point clear. The right hon. Gentleman said that the Inland Revenue had allowed this man to have one-third of his income free of tax. Surely if the Inland Revenue allowed that there would be no unfairness, inquisitorial powers and affidavits. Surely where the Inland Revenue thinks that it is right there cannot be any abuse going on. There could only be abuse if they did not allow it.

Mr. Jay

Our case is—and I thought my hon. Friend the Member for Sowerby (Mr. Houghton) explained it very fully— that the Inland Revenue have not in our view sufficient powers to take steps where they have reason to suspect that there are abuses.

Mr. Colegate

But have they any reason to suspect it in this case when they allowed it?

Mr. Jay

Surely the hon. Member can understand that if the Inland Revenue, as we believe, have not sufficient powers to deal with certain matters it is not possible for them to take action, and we are entitled to ask if their powers are sufficient for that purpose. That is the case made by my right hon. and learned Friend, and I think that the hon. Member must be able to follow that line of argument.

5.30 p.m.

However, if there are some cases—let us assume for the moment that there are—we find ourselves in an exceedingly undesirable position in which the wage earners as a whole may begin to feel that the Income Tax system is not being imposed as fairly as it might. Surely the real objection to tax evasion is that it is unfair to the honest taxpayer. The great majority of taxpayers are honest about the matter, and there are very many expenses, business and professional, which are genuine. The difficulty simply arises from the fact that there is a small

minority of cases in which they are not so legitimate. Our proposal is simply to ensure that action can be taken in that small minority of cases.

The Financial Secretary asks why it was, and what case had been made out to show that the proposal would make any difference to the existing situation. If it would make no difference, if it would have no effect in bringing these abuses to an end, I do not understand why hon. Gentlemen opposite oppose it so passionately. If it really has no substance and no effect, there is no reason for all this consternation and opposition to it. When all is said and done, it is simply a proposal that those who have already made certain affirmations to the Inland Revenue should be asked to swear that what they have already said is true. I should have thought that the very least that could be said of such a proposal was that it is harmless. If we have established the case, as I think we have, that some of these abuses exist, that at best this new Clause would place in the hands of the Inland Revenue a useful weapon, and that at the very worst it could do not harm to anyone, the House should support the new Clause.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 219: Noes, 254.

Division No. 217.	AYES	[5.33 p.m.
Acland, Sir Richard	Carmichael, J.	Foot, M. M.
Albu, A. H.	Castle, Mrs. B. A.	Forman, J. C.
Allen, Arthur (Bosworth)	Clunie, J.	Fraser, Thomas (Hamilton)
Allen, Scholefield (Crewe)	Coldrick, W.	Freeman, John (Watford)
Anderson, Alexander (Motherwell)	Collick, P. H.	Gaitskell, Rt. Hon. H. T. N
Anderson, Frank (Whitehaven)	Corbet, Mrs. Freda	Gibson, C. W.
Attlee, Rt. Hon. C. R.	Cove, W. G.	Glanville, James
Awbery, S. S.	Craddock, George (Bradford, S.)	Gordon-Walker, Rt. Hon. p. C.
Bacon, Miss Alice	Crosland, C. A. R.	Greenwood, Anthony (Rossendale)
Barnes, Rt. Hon. A. J.	Crossman, R. H. S.	Grey, C. F.
Bartley, P.	Cullen, Mrs. A.	Griffiths, Rt. Hon. James (Llanelly)
Bellenger, Rt. Hon. F. J	Daines, P.	Griffiths, William (Exchange)
Bence, C. R.	Dalton, Rt. Hon. H.	Hale, Leslie
Benn, Hon. Wedgwood	Darling, George (Hillsborough)	Hall, Rt. Hon. Glenvil (Colne Valley)
Benson, G.	Davies, Ernest (Enfield, E.)	Hall, John T. (Gateshead, W.)
Beswick, F.	Davies, Harold (Leek)	Hamilton, W. W
Bing, G. H. C.	Davies, Stephen (Merthyr)	Hannan, W.
Blackburn, F.	de Freitas, Geoffrey	Hargreaves, A.
Blenkinsop, A.	Deer, G.	Harrison, J. (Nottingham, E.)
Blyton, W. R.	Delargy, H. J.	Hastings, S.
Boardman, H.	Dodds, N. N.	Hayman, F. H.
Bottomley, Rt. Hon. A. G.	Donnelly, D. L	Healey, Denis (Leeds, S. E.)
Bowden, H. W.	Driberg, T. E. N.	Henderson, Rt. Hon. A. (Rowley Regis)
Bowles, F. G.	Dugdale, Rt. Hon. John (W. Bromwich)	Herbison, Miss M.
Braddock, Mrs. Elizabeth	Ede, Rt. Hon. J. C.	Hewitson, Capt. M.
Brockway, A. F.	Edelman, M.	Hobson, C. R.
Brook, Dryden (Halifax)	Edwards, Rt. Hon. John (Brighouse)	Holman, P.
Broughton, Dr. A. D. D	Evans, Albert (Islington, S. W.)	Holmes, Horace (Hemsworth)
Brown, Thomas (Ince)	Evans, Stanley (Wednesbury)	Houghton, Douglas
Burke, W. A.	Fernyhough, E.	Hoy, J. H.
Burton, Miss F. E.	Fletcher, Eric (Islington, E.)	Hubbard, T. F.
Butler, Herbert (Hackney, S.)	Follick, M.	Hudson, James (Ealing, N.)
Hughes, Emrys (S. Ayrshire)	Morley, R.	Steele, T.
Hughes Hector, (Aberdeen, N.)	Morrison, Rt. Hon. H. (Lewisham, S.)	Stewart, Michael (Fulham, E.)
Hynd, H. (Accrington)	Moyle, A.	Stokes, Rt. Hon. R. R.
Irvine, A. J. (Edge Hill)	Mulley, F. W.	Strachey, Rt. Hon. J.
Irving, W. J. (Wood Green)	Nally, W.	Strauss, Rt. Hon. George (Vauxhall)
Isaacs, Rt. Hon. G. A.	Neal, Harold (Bolsover)	Stross, Dr. Barnett
Janner, B.	Noel-Baker, Rt. Hon. P. J.	Summerskill, Rt. Hon. E.
Jay, Rt. Hon. D. P. T.	Oliver, G. H.	Swingler, S. T.
Jeger, George (Goole)	Orbach, M.	Sylvester, G. O.
Jeger, Dr. Santo (St. Pancras, S.)	Oswald, T.	Taylor, Bernard (Mansfield)
Johnson, James (Rugby)	Padley, W. E.	Taylor, Rt. Hon. Robert (Morpeth)
Jones, David (Hartlepool)	Palmer, A. M. F.	Thomas, Ivor Owen (Wrekin)
Jones, Frederick Elwyn (West Ham, S.)	Panned, Charles	Thomson, George (Dundee, E.)
Jones, Jack (Rotherham)	Pargiter, G. A.	Thornton, E.
Keenan, W.	Parker, J.	Timmons, J.
Key, Rt. Hon. C. W	Peart, T. F.	Tomney, F.
King, Dr. H. M.	Plummer, Sir Leslie	Turner-Samuels, M
Kinlay, J.	Popplewell, E.	Ungoed-Thomas, Sir Lynn
Lee, Miss Jennie (Cannock)	Price, Joseph T. (Westhoughton)	Usborne, H. C.
Lever, Leslie (Ardwick)	Proctor, W. T.	Viant, S. P.
Lewis, Arthur	Pryde, D. J.	Wallace, H. W.
Lindgren, G. S.	Pursey, Cmdr. H.	Weitzman, D.
Lipton, Lt.-Col. M.	Rankin, John	Wells, Percy (Faversham)
Logan, D. G.	Reid, Thomas (Swindon)	Wells, William (Walsall)
McGhee, H. G.	Reid, William (Camlachie)	Wheatley, Rt. Hon. John
McGovern, J.	Rhodes, H.	Wheeldon, W. E.
McInnes, J.	Richards, R.	White, Henry (Derbyshire, N. E.)
McKay, John (Wallsend)	Robens, Rt. Hon. A.	Whiteley, Rt. Hon. W.
McLeavy, F.	Robinson, Kenneth (St. Pancras, N.)	Wigg, George
MacPherson, Malcolm (Stirling)	Ross, William	Willey, F. T.
Mallalieu, J. P. W. (Huddersfield, E.)	Royle, C.	Williams, Rt. Hon. Thomas (Don V'll'y)
Mann, Mrs. Jean	Shackleton, E. A. A.	Williams, W. R. (Droylsden)
Manuel, A. C.	Shinwell, Rt. Hon. E.	Williams, W. T. (Hammersmith, S.)
Marquand, Rt. Hon. H. A.	Short, E. W.	Wilson, Rt. Hon. Harold (Huyton)
Mason, Roy	Silverman, Sydney (Nelson)	Winterbottom, Richard (Brightside)
Mayhew, C. P.	Simmons, C. J. (Brierley Hill)	Woodburn, Rt. Hon. A.
Messer, Sir F.	Skeffington, A. M.	Wyatt, W. L.
Mikardo, Ian	Slater, Mrs. H. (Stoke-on-Trent)	Yates, V. F.
Mitchison, G. R	Slater, J. (Durham, Sedgefield)	Younger, Rt. Hon. K
Monslow, W.	Sorensen, R. W.
Moody, A. S.	Soskice, Rt. Hon. Sir Frank	TELLERS FOR THE AYES:
Morgan, Dr. H. B. W.	Sparks, J. A.	Mr. Wilkins and
		Mr. John Taylor.
NOES
Aitken, W. T.	Channon, H.	Graham, Sir Fergus
Allan, R. A. (Paddington, S.)	Clarke, Col. Ralph (East Grinstead)	Gridley, Sir Arnold
Alport, C. J. M.	Clyde, Rt. Hon. J. L.	Grimond, J.
Amery, Julian (Preston, N.)	Colegate, W. A.	Grimston, Hon. John (St. Albans)
Amory, Heathcoat (Tiverton)	Conant, Maj. R. J. E.	Grimston, Sir Robert (Westbury)
Anstruther-Gray, Major W. J.	Cooper, Sqn. Ldr. Albert	Hall, John (Wycombe)
Ashton, H. (Chelmsford)	Cooper-Key, E. M.	Harden, J. R. E.
Assheton, Rt. Hon. R. (Blackburn, W.)	Craddock, Beresford (Spelthorne)	Hare, Hon. J. H.
Astor, Hon. J. J,	Crosthwaite-Eyre, Col. O. E.	Harris, Fredric (Croydon, N.)
Baldock, Lt.-Cmdr. J. M.	Crouch, R. F.	Harrison, Col. J. H. (Eye)
Baldwin, A. E.	Crowder, Sir John (Finchley)	Harvey, Air Cdre. A. V. (Macclesfield)
Banks, Col. C.	Crowder, Petre (Ruislip—Northwood)	Harvey, Ian (Harrow, E.)
Barber, Anthony	Cuthbert, W. N.	Harvie-Watt, Sir George
Baxter, A. B.	Darling, Sir William (Edinburgh, S.)	Hay, John
Beamish, Maj. Tufton	Deedes, W. F.	Heald, Sir Lionel
Bell, Ronald (Bucks, S.)	Digby, S. Wingfield	Heath, Edward
Bennett, F. M. (Reading, N.)	Dodds-Parker, A. D.	Henderson, John (Cathcart)
Bennett, William (Woodside)	Donaldson, Cmdr. C. E. McA.	Higgs, J. M. C.
Bevins, J. R. (Toxteth)	Doughty, C. J. A.	Hill, Dr. Charles (Luton)
Birch, Nigel	Douglas-Hamilton, Lord Malcolm	Hill, Mrs. E. (Wythenshawe)
Bishop, F. P.	Drayson, G. B.	Hinchingbrooke, Viscount
Boothby, Sir R J. G	Duncan, Capt. J. A. L.	Hirst, Geoffrey
Bowen, E. R.	Duthie, W. S.	Holland-Martin, C. J.
Boyd-Carpenter, J. A.	Eccles, Rt. Hon. Sir D. M.	Holmes, Sir Stanley (Harwich)
Boyle, Sir Edward	Elliot, Rt. Hon. W. E.	Holt, A. F.
Braine, B. R.	Fell, A.	Hope, Lord John
Braithwaite, Sir Albert (Harrow, W.)	Finlay, Graeme	Hornsby-Smith, Miss M. P.
Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)	Fisher, Nigel	Horobin, I. M.
Bromley-Davenport, Lt.-Col. W. H.	Fleetwood-Hesketh, R. F.	Horsbrugh, Rt. Hon. Florence
Brooke, Henry (Hampstead)	Fletcher-Cooke, C.	Howard, Hon. Greville (St Ives)
Brooman-White, R. C.	Ford, Mrs. Patricia	Hudson, W. R. A. (Hull, N.)
Browne, Jack (Govan)	Fort, R.	Hulbert, Wing Cdr. N. J.
Buchan-Hepburn, Rt. Hon. P. G. T.	Fraser, Sir Ian (Morecambe & Lonsdale)	Hutchinson, Sir Geoffrey (Ilford, N.)
Bullus, Wing Commander E. E.	Galbraith, Rt. Hon. T. D. (Pollok)	Hutchison, Lt.-Com. Clark (E'b'rgh, W.)
Burden, F. F. A.	Galbraith, T. G. D. (Hillhead)	Hyde, Lt.-Col. H. M.
Butcher, Sir Herbert	George, Rt. Hon. Maj. G. Lloyd	Hylton-Foster, H. B. H.
Butler, Rt. Hon. R. A. (Saffron Walden)	Godber, J. B.	Jenkins, Robert (Dulwich)
Campbell, Sir David	Gomme-Duncan, Col. A	Johnson, Eric (Btackley)
Carr, Robert	Gough, G. F. H.	Johnson, Howard (Kemptown)
Cary, Sir Robert	Gower, H. R.	Jones, A. (Hall Green)

Joynson-Hicks, Hon L. W	Nabarro, G. D. N	Speir, R. M.
Kaberry, D.	Neave, A. M. S.	Spens, Sir Patrick (Kensington, S.)
Kerr, H. W.	Nicholls, Harmar	Stanley, Capt. Hon. Richard
Lambton, Viscount	Nicholson, Godfrey (Farnham)	Steward, W. A. (Woolwich, W.)
Lancaster, Col. C. G	Nicolson, Nigel (Bournemouth, E.)	Stewart, Henderson (Fife, E.)
Langford-Holt J., A.	Nield, Basil (Chester)	Stoddart-Scott, Col. M.
Law, Rt. Hon. R. K	Noble, Cmdr. A. H. P.	Storey, S.
Leather, E. H. C.	Nugent, G. R. H	Strauss, Henry (Norwich, S.)
Legge-Bourke, Maj. E. A. H.	Oakshott, H. D.	Stuart, Rt. Hon. James (Moray)
Legh, Hon. Peter (Petersfield)	Odey, G. W.	Studholme, H. G.
Lennox-Boyd, Rt. Hon. A. T.	O'Neill, Phelim (Co. Antrim, N.)	Summers, G. S.
Linstead, Sir H. N.	Orr, Capt. L. P. S.	Sutcliffe, Sir Harold
Lloyd, Maj. Sir Guy (Renfrew, E.)	Orr-Ewing, Charles Ian (Hendon, N.)	Taylor, Charles (Eastbourne)
Lloyd, Rt. Hon. Selwyn (Wirral)	Orr-Ewing, Sir Ian (Weston-super-Mare)	Taylor, William (Bradford, N.)
Lockwood, Lt.-Col. J. C	Osborne, C.	Thomas, Leslie (Canterbury)
Longden, Gilbert	Partridge, E.	Thomas, P. J. M. (Conway)
Low, A. R. W.	Peake, Rt. Hon. O.	Thompson, Kenneth (Walton)
Lucas, Sir Jocelyn (Portsmouth, S.)	Peto, Brig. C. H. M	Thorneycroft, Rt. Hn. Peter (Monmouth)
Lucas, P. B. (Brentford)	Peyton, J. W. W.	Thornton-Kemsley, Col. C. N
Lucas-Tooth, Sir Hugh	Pitt, Miss E. M.	Tilney, John
Lyttelton, Rt. Hon. O.	Powell, J. Enoch	Touche, Sir Gordon
McAdden, S. J.	Price, Henry (Lewisham, W.)	Turner, H. F. L.
McCallum, Major D.	Prior-Palmer, Brig. O. L.	Turton, R. H.
McCorquodale, Rt. Hon. M. S	Profumo, J. D.	Vane, W. M. F.
Mackeson, Brig. H. R.	Raikes, Sir Victor	Vaughan-Morgan, J K
McKibbin, A. J.	Rayner, Brig. R.	Vosper, D. F.
Mackie, J. H. (Galloway)	Redmayne, M.	Wade, D. W.
Maclay, Rt. Hon. John	Rees-Davies, W. R	Wakefield, Edward (Derbyshire, W.)
Maclean, Fitzroy	Remnant, Hon. P.	Wakefield, Sir Wavell (St. Marylebone)
Macleod, Rt. Hon. Iain (Enfield, W.)	Renton, D. L. M.	Walker-Smith, D. C.
MacLeod, John (Ross and Cromarty)	Roberts, Peter (Heeley)	Ward, Hon. George (Worcester)
Macpherson Niall (Dumfries)	Robinson, Roland (Blackpool, S.)	Ward, Miss I. (Tynemouth)
Maitland, Patrick (Lanark)	Rodgers, John (Sevenoaks)	Waterhouse, Capt. Rt. Hon. C.
Manningham-Buller, Sir R. E.	Ropner, Col. Sir Leonard	Webbe, Sir H. (London & Westminster)
Markham, Major Sir Frank	Russell, R. S.	Wellwood, W.
Marlowe, A. A. H.	Ryder, Capt. R. E. D.	Williams, Gerald (Tonbridge)
Marples, A. E.	Salter, Rt. Hon. Sir Arthur	Williams, Sir Herbert (Croydon, E.)
Marshall, Sir Sidney (Sutton)	Scott, R. Donald	Williams, Paul (Sunderland, S.)
Maude, Angus	Scott-Miller, Cmdr. R.	Williams, R. Dudley (Exeter)
Maudling, R.	Shepherd, William	Wills, G.
Maydon, Lt.-Comdr. S. L. C	Simon, J. E. S. (Middlesbrough, W.)	Wilson, Geoffrey (Truro)
Medlicott, Brig. F.	Smithers, Peter (Winchester)	Wood, Hon. R.
Molson, A. H. E.	Smithers, Sir Waldron (Orpington)
Monckton, Rt. Hon. Sir Walter	Smyth, Brig. J. G. (Norwood)	TELLERS FOR THE NOES:
Morrison, John (Salisbury)	Snadden, W. McN.	Sir Cedric Drewe and
Mott-Radclyffe, C. E.	Spearman, A. C. M.	Mr. Richard Thompson.