HC Deb 17 June 1953 vol 516 cc1007-13
Mr. E. Fletcher

I beg to move, in page 20, line 25, to leave out from "payment," to the end of line 28.

We have had several debates in recent years, when considering Finance Bills, on the subject of relief of authors and others who derive their income from payments which accrue unevenly at occasional periods, unlike most members of the community whose income is derived fairly evenly over the years. It was first recognised about nine years ago by Lord Waverley, when he was Chancellor of the Exchequer, that there was a case for giving preferential treatment to authors in respect of lump sum payments made to them for copyright, because otherwise a person who spent perhaps two or three years writing a book and then received a large sum of money for it would have to pay tax on that sum in respect of his income for one year, which was unfair and unreasonable. The principle was conceded that he should be entitled to spread it over a period of two years and, in some cases, three years.

When the present Chancellor of the Exchequer sat on these benches and the Labour Government were in office, he sought to extend the relief to authors by making it applicable not only to lump sum payments, but also to other payments in the nature of royalties. The matter was carried a stage further last year when my hon. Friend the Member for Aston (Mr. Wyatt) moved an Amendment designed to carry out that intention. We on these benches are particularly glad to find that this year the Chancellor has succeeded in devising a form of words to give effect to what was generally felt on both sides of the Committee to be a very desirable change in the law.

My object in moving this Amendment is chiefly to inquire of the Chancellor why it is necessary to limit the relief for copyright royalties by including the last four lines of the Clause. As I read them, the result—if those words are retained—will be to exclude from the benefits of this relief payments which authors receive two years or more after the first publication of the work in question. As far as I have been able to trace, nothing was said in our debates last year, or on any previous occasion, which seems to justify such a limitation of the relief. On the contrary, all the arguments used by my hon. Friend the Member for Aston and by my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice), who supported him, go to justify the principle that all payments of this kind should be entitled to the same relief.

If I may give the Chancellor an illustration of the kind of hardship I foresee will arise unless this Amendment is conceded, it will indicate the point I am trying to put. It by no means always follows that an author derives the maximum benefit by way of royalties from a work in the first year or first two years after its publication. There is very often what might be called delayed action in the public appreciation of a work, whether it be a work of art, a scientific work, or a best seller. It applies perhaps even more in the case of books which are published both here and elsewhere—for example, in the United States of America. It might well happen that a book is published here and not published in America until after an interval of two years or more and it might be that when it is published abroad the income derived from the overseas publication and circulation is very substantial.

It is not clear to me why there is any argument in equity which makes it necessary for the Chancellor to limit the relief to payments received to two years after first publication. I would have hoped that the Chancellor—who we know is sympathetic to the special case of authors —if he is not prepared to accept the Amendment now, would give us an assurance that he will look at this matter with a view to seeing if he is prepared to extend the benefit of this Clause in the way I have suggested.

Mr. Mitchison

I should like to add one or two words of support to my hon. Friend the Member for Islington, East (Mr. E. Fletcher). I happened to be able to give an instance which was rather near home of the difference that the inclusion or omission of these words would have made.

Take the case, which has been adumbrated, of a book published in this country, which does quite well in this country, and is then taken up by some enterprising publishers in the United States and becomes a book of the month or something of that sort there. The results from the point of view of the country are that it becomes an invisible dollar export of some appreciable value but, from the point of view of the author or authoress, the amount of benefit is one he or she wants to be protected by this Clause. So far as I can see, the moral and—if I may use a rather painful word—cultural claim in that kind of case is just as strong as it is in the case of a book that succeeds immediately and has wide flares of publicity and circulation which always seem to come to detective stories and other literature of a particular popular kind.

I am quite certain that the Committee on previous occasions had a general feeling that authors and other artists—using the word in its broadest sense—tend to be rather badly hit by our taxation system. It would be a long story to go into it, but I believe they have always had the general sympathy of hon. Members on both sides of the Committee. I believe also that they have always had the personal sympathy of the Chancellor so far as he could give it consistent with his public office and duties. I hope that when he is looking at this Amendment he will consider it in that sympathetic light.

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

I am obliged to the hon. Member for Islington, East (Mr. E. Fletcher) for referring to my interest in this matter both from that side of the Committee and from this. I was unable to do anything about this last year, but on this occasion I was able to extend the relief given under Section 471 of the Income Tax Act, 1952. As the Committee will remember, the provisions of Section 471 of the Act allow spreading. An author who has spent more than a year on a work and who sells an interest in the copyright for a lump sum may claim that the lump sum be spread for tax purposes.

In this case I was able to extend that concession with a view to applying it to the royalties on a work. But it was only the extension of a concession which already related to authors which enabled me to include authors in my Budget statement. I should have liked to do more, but as the Committee will readily observe. there are other professional and even creative types who would like to have been included in this concession. It was only because I found there was already a concession for authors that I was able to arrange that authors should have this further concession—which, incidentally, they and many others richly deserve—in this year's Budget.

Under the circumstances, I therefore applied the terms of the concession which dealt with a lump sum to the position of royalties and adapted the device in Section 471 of the Act. Under those circumstances I would rather not go further because I have already managed to find a small concession for authors. If the Committee will be patient for a moment I will explain how, if we did go further. it might not redound to the complete satisfaction of the authors.

The second reason is that all these matters are under consideration by the Royal Commission and there was a strong case before I made a concession for authors this year for telling them that they must await, with some others not dissimilarly placed, the findings of the Royal Commission. I decided if I could to extend the provision of Section 471 to authors, but I felt that if I went any further I should get into a wider sphere. I think the best thing hon. Members can do is to accept the concession so far as it goes for authors this year and not press me any further with regard to authors as such. I devoutly hope the Royal Commission will report before next year and then we can see what we can do in this direction. I do not give any undertaking, but we will see what we can do in the light of the findings of the Royal Commission.

The Committee will remember that under the provisions of Section 471 the spread goes back and forth, and if we accepted this Amendment it would in some circumstances operate to the disadvantage rather than to the advantage of the taxpayer. Any claim to spread relief in respect of the copyright of any work would have to apply to royalties receivable after as well as before the end of the two-year period. This spread back to royalties receivable after the two-year period might in some cases have the effect of increasing the total tax liability with the result that the relief obtainable by the spread of the first two year's reliefs under the Clause as it stands would be reduced.

With that further consideration in mind, much as my heart is with the point of view already expressed by hon. Members, I think it would be advisable to accept the concession in so far as it has gone; to feel thankful that this year we have been able to go so far, and meanwhile to await the report of the Royal Commission.

5.15 p.m.

Mr. John Strachey (Dundee, West)

I must disclose an interest as this year's acting chairman of the management committee of the Authors' Society. We naturally have discussed this matter a great deal. I should say to my hon. Friend the Member for Islington, East (Mr. E. Fletcher) that, much as we are in sympathy with this Amendment, I think the Chancellor is probably right in saying that this year we should be content with the concession he has made. It is described as a small concession, but it is a useful one, as it extends a concession made to authors some time ago, but which was so very narrowly drawn that it was of little benefit to them. The extension of that concession will mean, at any rate in one particular set of cases, that authors will receive an appreciable benefit. I am sorry to say that I think the Chancellor has made out his case for leaving the matter as it is for this year. I think the Committee should thank him for the concession he has already made

Mr. E. Fletcher

In view of the Chancellor's statement, which I am sure we appreciate, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

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

Mr. Grimond

The Chancellor of the Exchequer has been a champion of authors and indeed has continued his championship from one side of the Committee to the other, unlike some people in like circumstances who have not been so keen to continue the fight when their position has changed. I think there is great force in what he said on the subject.

There are certain concessions to authors under the Income Tax Act of 1952 and it is convenient to extend them within the framework of that Act. There are many other people in some ways analogous to authors who may have a very short life and who may produce one work of art or a series of performances which extend over a short period and which may not be easy to repeat.

I still feel that we cannot be entirely satisfied with what has been done this year and under this particular provision of the 1952 Act. I hope the Chancellor will await the report of the Royal Commission and when it has reported will consider the position of such people whose income may be concentrated within a very narrow compass and that some provision will be made for spreading their liabilities to tax a little further. Many of these people are put in a very difficult position in their attempts to put aside anything to compensate for the lean years.

Mr. Woodrow Wyatt (Birmingham. Aston)

I should like to thank the Chancellor for being able this year to persuade himself that he was right when he was out of office and incorrect last year when he was in office and rejected an Amendment which would have done exactly this last year. At one period, he and I almost took turns in putting down this Amendment, but it was only because of the immense skill of my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) that we were actually able to have a debate in the Committee last year for the first time. It was possible then to debate it only because of the ingenuity of my right hon. and learned Friend in drafting the requisite Amendment.

It should be pointed out that this is not only a matter which affects authors, although the Society of Authors have taken the leading part, I think, in gaining this concession. It also affects artists, composers, playrights and any person who produces a work of art which may earn royalties. We are all very pleased that the Chancellor has been able to do as much as he has done this year and we thank him for that.

Mr. R. A. Butler

The hon. Member for Aston (Mr. Wyatt) is more than kind. This applies to authors of dramatic, musical or artistic works in the same way as it applies to authors of literary works. In reply to the hon. Member for Orkney and Shetland (Mr. Grimond), I would say that there are other classes. I have mentioned them myself. I think that they have shown great reticence in not begrudging this small extension of a concession. Subject to that, it gives one pleasure to be consistent even if one may have allowed a lapse of one year. To that extent I think that we might accept this Clause and wish the authors well on behalf of the whole Committee and not one section.

Question put, and agreed to.

Clause ordered to stand part of the Bill.