HC Deb 17 June 1953 vol 516 cc1131-40

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

Mr. Gaitskell

I think we should have some explanation from the Government on this Clause. As I understand it, its intention is to alter the law governing the Excess Profits Tax refunds. It will be recalled that under the arrangements made in connection with those refunds any firm receiving money as a result of the refunds had first to satisfy the Commissioners of Inland Revenue that they were going to use that money for certain particular purposes. To put it briefly, they had to satisfy them that they were going to spend the money on capital equipment and not on dividends, bonus issues or anything like that.

I think that we all agree that that was a very necessary and desirable condition. We have spent a good deal of time discussing the need to encourage investment. In fact, most of yesterday was spent on one method of doing that. The condition which applies under the present law to the refund of Excess Profits Tax is, of course, similarly a method of encouraging investment. Why, therefore, do the Government propose to change the law at this moment? I shall not say any more at this stage, but we shall need a very full explanation before we accept that a change of this kind is justified.

Mr. Maudling

I am glad to give the right hon. Gentleman the reason which the Government have for producing this Clause. It was provided fairly early during the war-time legislation that 20 per cent. of all Excess Profits Tax paid at the rate of 100 per cent. should be repaid after the war, subject to conditions to be determined by Parliament at that time. The conditions were duly determined in the Finance (No. 2) Act, 1945. They were, broadly speaking, that the refund should be applied to development or re-equipment of trade or business concerns.

It was important to have some adequate form of administration of these refunds and to provide some form of supervision of the very large sums of money involved, to ensure that the refunds were properly applied and to make sure that the undertakings were properly carried out. For that purpose there was provided an advisory panel and a referee who were to make sure that this matter was properly conducted. One of the important tasks was to define development and re-equipment. That was done by the panel and I think we all agree that it was done very satisfactorily.

The panel had also to watch the use of these refunds and to report to the Treasury any case in which either there was a breach of the undertaking or, the refund having taken place, the business was then wound up within a period of five years. The advisory panel have done their work extremely well. It is a fact that although the total amount of the refunds amount to £263 million the amount which the panel had to report to the Treasury as being proper to be recalled by the Treasury out of these refunds, because the undertaking had been breached or because there had been a permanent discontinuance of the business within five years, is only £100,000. That is less than 05 per cent. of the total sum involved.

When the provisions were made it was recognised that they were not to continue permanently. The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) said at the time: We are dealing with a transitional state of affairs and with a change-over from war to peace. We all hope that all the arrangements we are discussing now will terminate within a reasonable time. … I shall be quite prepared so long as I hold my present office to look reasonably at these matters, but it is difficult at this stage to say just how long it will be necessary to get the turnover. There is no intention to linger on indefinitely."— [OFFICIAL REPORT, 28th November, 1945; Vol. 416, c. 1454.] A certain amount of these refunds is still outstanding—I think some £10 million compared with the total of £263 million —in cases where the complexity of the Excess Profits Tax is such that it has not been possible to make some final adjustment. But in the great majority of cases where refund is still outstanding, the firms in question have, in fact, been re-equipping and developing all the time, and could properly apply the refunds they receive against money expended in the interim on re-development and re-equipment.

The advisory panel, which was appointed by the right hon. Gentleman's predecessor to supervise this matter, and which conducted the whole thing very efficiently, recommended, in their last annual report, that the time had come to terminate the present arrangements and to wind up the panel. Their recommendation was that the taxpayer should be released from undertakings already given and that a few payments of refund should be made up to that date. The Government have considered the recommendations and, in all the circumstances —since it was never intended to be an indefinite procedure—they think that the recommendations should be accepted. Their acceptance is framed in the Clause now before the Committee.

Mr. E. Fletcher

I should like to ask the hon. Gentleman one or two questions arising out of his speech. If I understand him correctly, he said the total amount of the Excess Profits Tax post-war refund which had been agreed was £263 million. I think he gave the figure of 05 per cent. of the total in respect of which the advisory panel had to make inquiries. There is, nevertheless, still a sum of £10 million outstanding. I was not clear whether that figure remained to be agreed or whether it was still in dispute. I rather gathered from what the hon. Gentleman said that there is still £10 million worth of post-war credit in respect of which undertakings given have not been implemented.

Mr. Maudling

There is about £10 million still to be refunded almost all in cases where the final assessment of Excess Profits Tax has not been possible owing to dispute or for technical reasons.

Mr. Fletcher

I appreciate that. What I wish to obtain is the figure in respect of which undertakings have not yet been given. As the Economic Secretary realises, every payment of post-war refund is conditional on an undertaking being given. There are no doubt a number of cases in which for one reason or another it has not been possible for a company to give an undertaking.

Mr. Maudling

As the refund cannot be made without an undertaking, the amount in respect of each undertaking which has not been given is a sum of money which cannot be recovered.

Mr. Fletcher

That is precisely the point. We have £10 million in abeyance. If I understand what the hon. Gentleman said, as he is bringing the work of the advisory panel to an end, it will no longer be necessary for any undertaking to be given as regards this £10 million. Is this £10 million to be paid out?

Mr. James Callaghan (Cardiff, South-East)

No.

Mr. Fletcher

I was trying to elicit information from the Government. After I have received the views of the Government we shall then have the views of my hon. Friend.

I always find that when we are getting near the end of the Finance Bill, it becomes more, rather than less, ambiguous as we go on. The Economic Secretary is, by stages, doing something to clear up misconceptions which have arisen in the minds of some of my hon. Friends as to what the Clause means. We all want to get it clear. I think we have now reached the stage where we agree that there is about £10 million due to various companies in respect of postwar credits and in respect of which, if the administrative machinery laid down by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) still stood, there would be the normal provision of supervision by the advisory panel, and efforts would be taken to see that proper undertakings were given and carried out before this £10 million of public money was disbursed. It is now intended to abandon that machinery and disperse the panel.

The question asked by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell)—which I do not think was dealt with by the Economic Secretary— was why is it now decided to wind up this machinery? Why not wait another year?

11.30 p.m.

Mr. Maudling

I thought I had explained that it was because the advisory panel themselves recommended it.

Mr. Fletcher

That may be so, but this is the first we have heard about it. If I remember rightly, the Financial Secretary did not elaborate about this Clause in moving the Second Reading debate. I have had occasion before now to complain about the way in which the Financial Secretary, in moving the Second Reading of a not particularly simple Bill, was careful to select some Clauses for explanation and pass over others in complete silence. What is even more significant is the fact that one of the longest explanations he gave us—about the compelling necessity for having a Clause to revise the Excess Profits Levy—has now been admitted by him to have been all wrong, because he has had to move to delete it.

Mr. Boyd-Carpenter indicated dissent——

Mr. Fletcher

It is no use the hon. Gentleman shaking his head. It is our duty to understand what this Bill means as we go along. The Economic Secretary now tells us, for the first time, that this advisory panel has recommended its dispersal. Did the advisory panel say that a provision to that effect should be put into the Finance Bill this year? We are now asked to dispense with this £10 million of public money. On previous occasions, when we have tried to suggest very desirable remissions of taxation for the benefit of deserving sections of the community—whether of the Scilly Isles or elsewhere—we have been told that concessions could not be made because it would cost a certain amount of public money. Here, £10 million is involved. All we are concerned to see is that the elementary precautions devised by my right hon. Friend the Member for Bishop Auckland, a few years ago, should not be needlessly dispensed with without adequate protection.

Mr. Gaitskell

I was rather puzzled by the reply of the Economic Secretary. He may say, "There is only £10 million left; does it really matter?" but £10 million is quite a substantial sum of money. The argument that this is such a small amount of money does not appeal to me a great deal.

Mr. Maudling

The question is not whether the £10 million shall be repaid, but whether it shall be repaid only if an undertaking is given.

Mr. Gaitskell

I do not think I said anything to the contrary. The fact is that, as a result of what the Government propose to do, there will be nothing to prevent the companies concerned from disbursing the whole of that £10 million in dividends or in some other way which is not going to help productive industry. It is proposed that this safeguarding condition shall not be laid down. The only explanation is that the advisory panel have sent a report to the Government saying that they think it is time the whole thing was wound up.

I ask the Economic Secretary whether that report has been published. As he knows very well—I am not sure whether this is out of order; I rather fancy it is— it is certainly contrary to the conventions of the House for a Minister to refer to a document of that kind when it has not been published and made available to hon. Members. There is a very good reason for that. How can we judge the arguments of the advisory panel if we cannot read their report?

Would the Economic Secretary tell us straight away whether this report is available? If it is it is a different matter, but we cannot accept the argument just because an advisory panel has produced a document—which none of us has seen —saying that they think it is about time that this machinery was discontinued. How do we know whether the advisory panel has considered the broader arguments with which, of course, the Economic Secretary, and we, are familiar. We have had a most inadequate account, and I hope we shall have further explanation. If we do not, I shall strongly advise my hon. Friends to divide against it.

Mr. E. Fletcher

May I ask your ruling, Mr. Hopkin Morris, on whether the document to which the Economic Secretary has referred, namely, the report of the advisory panel, ought not, under the rules of the House, to be laid on the Table? It is a document which has been referred to in an important speech by a Minister. I do not think that anyone on this side of the Committee has seen it. May I ask whether we are not entitled to see this document before we proceed?

The Deputy-Chairman (Mr. Hopkin Morris)

I know nothing of any document. I did not hear the beginning of the hon. Gentleman's speech, but I understood that he paraphrased what the document said.

Mr. Jay

On a point of order. May we at least have an answer on the question of fact, from the Economic Secre-

tary, on whether the document has been published?

The Deputy-Chairman

That is not a point of order.

Mr. Jay

My point of order was whether sufficient time might not be allowed before the debate ends for the Economic Secretary, who is willing to do so, to answer.

Mr. Maudling

My right hon. Friend receives advice from many quarters. When the advisory panel has recommended that something should be done it has not, so far as I know, been published, nor is it incumbent upon my right hon. Friend to publish in detail the advice which he receives from any source.

Mr. R. A. Butler

There have been reports in the past from this body, and so far they have not been published. I will undertake on a future occasion to investigate whether they can, or should, be published. I believe there have been six reports, and none has been published. I will look into the matter and report at a later stage.

Mr. Gaitskell

I do not want to carry the matter further in discusion now, but I feel that the explanation we have had is inadequate. I hope the Chancellor of the Exchequer will think over the matter before the Report stage.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 177; Noes, 139.

Division No. 192.] AYES [11.40 p.m.
Aitken, W. T. Brooman-White, R. C Fletcher-Cooke, C.
Allan, R. A. (Paddington, S.) Buchan-Hepburn, Rt. Hon. P. G. T. Fort, R.
Alport, C. J. M. Bullard, D. G. Foster, John
Amery, Julian (Preston, N.) Burden, F. F. A. Galbraith, T. G. D. (Hillhead)
Amory, Heathcoat (Tiverton) Butcher, Sir Herbert Garner-Evans, E. H.
Ashton, H. (Chelmsford) Butler, Rt. Hon. R. A. (Saffron Walden) Graham, Sir Fergus
Assheton, Rt. Hon. R. (Blackburn, W.) Campbell, Sir David Grimston, Hon. John (St. Albans)
Astor, Hon. J. J. Carr, Robert Grimston, Sir Robert (Westbury)
Baldock, Lt.-Cmdr. J. M. Cary, Sir Robert Harden, J. R. E.
Banks, Col. C. Channon, H. Hare, Hon. J. H.
Barlow, Sir John Churchill, Rt. Hon. Sir Winston Harris, Frederic (Croydon, N.)
Baxter, A. B. Clarke, Col. Ralph (East Grinstead) Harvey, Air Cdre. A. V. (Macclesfield)
Beach, Maj. Hicks Cole, Norman Heald, Sir Lionel
Beamish, Maj. Tufton Colegate, W. A. Heath, Edward
Bell, Philip (Bolton, E.) Cooper-Key, E. M. Higgs, J. M. C.
Bennett, William (Woodside) Craddock, Beresford (Spelthorne) Hill, Dr. Charles (Luton)
Birch, Nigel Crookshank, Capt. Rt. Hon. H. F. C. Hill, Mrs. E. (Wythenshawe)
Bishop, F. P. Crosthwaite-Eyre, Col. O. E. Hirst, Geoffrey
Black, C. W. Crouch, R. F. Holland-Martin, C. J
Boothby, Sir R. J. G. Davidson, Viscountess Hollis, M. C.
Bossom, Sir A. C. Deedes, W. F. Holmes, Sir Stanley (Harwich)
Bowen, E. R. Digby, S. Wingfield Hope, Lord John
Boyd-Carpenter, J. A. Doughty, C J. A. Hornsby-Smith, Miss M. P.
Boyle, Sir Edward Fell, A. Horobin, I. M.
Braithwaite, Sir Albert (Harrow, W.) Finlay, Graeme Howard, Gerald (Cambridgeshire)
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.) Fisher, Nigel Howard, Hon. Greville (St. Ives)
Brooke, Henry (Hampstead) Fleetwood-Hesketh, R. F. Hudson, Sir Austin (Lewisham, N.)
Hudson, W. R. A. (Hull, N.) Nicholls, Harmar Simon, J. E. S. (Middlesbrough, W.)
Hulbert, Wing. Cdr. N. J. Nicolson, Nigel (Bournemouth, E.) Soames, Capt. C.
Hutchinson, Sir Geoffrey (Ilford, N.) Nield, Basil (Chester) Stevens, G. P.
Hylton-Foster, H. B. H. Nugent, G. R. H. Steward, W. A. (Woolwich, W.)
Jenkins, Robert (Dulwich) Nutting, Anthony Stoddart-Scott, Col. M.
Johnson, Eric (Blackley) Oakshott, H. D. Strauss, Henry (Norwich, S.)
Kaberry, D. O'Niell, Phelim (Co. Antrim, N.) Studholme, H. G.
Keeling, Sir Edward Ormsby-Gore, Hon. W. D. Summers, G. S.
Kerr, H. W. Orr, Capt. L. P. S. Taylor, William (Bradford, N.)
Law, Rt. Hon. R. K. Orr-Ewing, Charles Ian (Hendon, N.) Thomas, Leslie (Canterbury)
Legge-Bourke, Maj. E. A. H. Orr-Ewing, Sir Ian (Weston-super-Mare) Thompson, Kenneth (Walton)
Legh, Hon. Peter (Petersfield) Osborne, C. Thompson, Lt.-Cdr. R. (Croydon, W.)
Lindsay, Martin Partridge, E. Touche, Sir Gordon
Linstead, Sir H. N. Perkins, W. R. D. Tunner, H. F. L.
Lloyd, Maj. Sir Guy (Renfrew, E.) Peyton, J. W. W. Turton, R. H.
Lockwood, Lt.-Col. J. C. Pilkington, Capt. R. A. Vans, W. M. F.
Longden, Gilbert Pitman, I. J. Vaughan-Morgan, J. K.
Low, A. R. W. Powell, J. Enoch Wakefield, Edward (Derbyshire, W.)
Lucas, Sir Jocelyn (Portsmouth, S.) Price, Henry (Lewisham, W.) Wakefield, Sir Wavell (St. Marylebone)
McCallum, Major D. Prior-Palmer, Brig, O. L. Ward, Hon. George (Worcester)
Macdonald, Sir Peter Profumo, J. D. Ward, Miss I. (Tynemouth)
Macleod, Rt. Hon. lain (Enfield, W.) Rayner, Brig. R. Waterhouse, Capt. Rt. Hon. C.
Macmillan, Rt. Hon. Harold (Bromley) Redmayne, M. Webbe, Sir H. (London & Westminster)
Macpherson, Niall (Dumfries) Renton, D. L. M. Wellwood, W.
Maitland, Comdr. J. F. W. (Horncastle) Roberts, Peter (Heeley) Williams, Sir Herbert (Croydon, E.)
Manningham-Buller, Sir R. E. Roper, Sir Harold Williams, Paul (Sunderland, S.)
Marples, A. E. Ropner, Col. Sir Leonard Wills, G.
Maude, Angus Russell, R. S. Wilson, Geoffrey (Truro)
Maudling, R. Ryder, Capt. R. E. D. Wood, Hon. R.
Maydon, Lt. Comdr. S. L. C. Salter, Rt. Hon. Sir Arthur York, C.
Mellor, Sir John Sandys, Rt. Hon. D.
Molson, A. H. E. Scott, R. Donald TELLERS FOR THE AYES:
Nabarro, G. D. N. Scott-Miller, Cmdr. R. Major Conant and Mr. Vosper.
NOES
Allen, Arthur (Bosworth) Hall, John T. (Gateshead, W.) Reid, Thomas (Swindon)
Awbery, S. S. Hargreaves, A. Rhodes, H.
Bacon, Miss Alice Hayman, F. H. Robens, Rt. Hon. A.
Bartley, P. Hobson, C. R. Roberts, Albert (Normanton)
Bence, C. R. Holman, P. Roberts, Goronwy (Caernarvon)
Beswick, F. Hudson, James (Ealing, N.) Robinson, Kenneth (St. Pancras, N.)
Bing, G. H. C. Hughes, Cledwyn (Anglesey) Ross, William
Blackburn, F. Hughes, Emrys (S. Ayrshire) Shackleton, E. A. A.
Blenkinsop, A. Hughes, Hector (Aberdeen, N.) Shawcross, Rt. Hon. Sir Hartley
Boardman, H. Jay, Rt. Hon. D. P. T. Shurmer, P. L. E.
Bottomley, Rt. Hon. A. G Jenkins, R. H. (Stechford) Silverman, Julius (Erdington)
Bowden, H. W. Johnson, James (Rugby) Simmons, C. J. (Brierley Hill)
Bowles, F. G. Jones, David (Hartlepool) Skeffington, A. M.
Brockway, A. F. Jones, Jack (Rotherham) Slater, J. (Durham, Sedgefield)
Brown, Rt. Hon. George (Belper) Keenan, W. Sorensen, R. W.
Burke, W. A. Kenyon, C. Soskice, Rt. Hon. Sir Frank
Callaghan, L. J. King, Dr. H. M Sparks, J. A.
Champion, A. J. MacColl, J. E. Stewart, Michael (Fulham, E.)
Collick, P. H. Mclnnes, J. Strauss, Rt. Hon. George (Vauxhall)
Corbet, Mrs. Freda MacMillan, M. K. (Western Isles) Summerskill, Rt. Hon. E.
Cullen, Mrs. A. MacPherson, Malcolm (Stirling) Taylor, Bernard (Mansfield)
Dalton, Rt. Hon. H. Manuel, A. C. Taylor, Rt. Hon. Robert (Morpeth)
Davies, Ernest (Enfield, E.) Marquand, Rt. Hon. H. A. Thomas, David (Aberdare)
Davies, Harold (Leek) Mason, Roy Thomas, George (Cardiff)
Davies, Stephen (Merthyr) Mayhew, C. P. Thomas, Iorwerth (Rhondda, W.)
de Freitas, Geoffrey Mikardo, Ian Thomas, Ivor Owen (Wrekin)
Deer, G. Mitchison, G. R. Thornton, E.
Delargy, H. J. Moody, A. S. Usborne, H. C.
Driberg, T. E. N. Morley, R. Wallace, H. W.
Ede, Rt. Hon. J. C. Mulley, F. W. Webb, Rt. Hon. M. (Bradford, C.)
Edelman, M. Murray, J. D. Wells, William (Walsall)
Edwards, Rt. Hon. John (Brighouse) Nally, W. West, D. G.
Evans, Stanley (Wednesbury) Neal, Harold (Bolsover) Wheeldon, W. E.
Fernyhough, E. Noel-Baker, Rt. Hon. P. J White, Mrs. Eirene (E. Flint)
Finch, H. J. Orbach, M. White, Henry (Derbyshire, N.E.)
Fletcher, Eric (Islington, E.) Oswald, T. Whiteley, Rt. Hon. W.
Follick, M. Paling, Rt. Hon. W. (Dearne Valley) Wigg, George
Fraser, Thomas (Hamilton) Paling, Will T. (Dewsbury) Willey, F, T.
Freeman, John (Watford) Palmer, A. M. F. Williams, Rev. Llywelyn (Abertillery)
Gaitskell, Rt. Hon. H. T. N. Pargiter, G. A. Williams, Ronald (Wigan)
Gibson, C. W. Parker, J. Wilson, Rt. Hon. Harold (Huyton)
Gordon-Walker, Rt. Hon. P. C. Peart, T. F. Winterbottom, Richard (Brightside)
Greenwood, Anthony (Rossendale) Plummer, Sir Leslie Wyatt, W. L.
Grey, C. F. Popplewell, E. Yates, V. F.
Griffiths, Rt. Hon. James (Llanelly) Price, Joseph T. (Westhoughton) Younger, Rt. Hon. K.
Hale, Leslie Price, Philips (Gloucestershire, W.)
Hall, Rt. Hon. Glenvil (Colne Valley) Proctor, W. T. TELLERS FOR THE NOES:
Mr. Royle and Mr. Horace Holmes.

Question put, and agreed to.

Clause ordered to stand part of the Bill.