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 enquiry 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 of any character, were
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.
§ Sir F. Soskice
I beg to move, "That the Clause be read a Second time."
This Clause seeks to include a new subsection in Section 20 of the Income Tax Act, 1952. It deals with a subject which, I put it to the Committee, is really of the greatest importance—the question of preventing abuse in the matter of charging entertainment expenses as an expense against profits.
I want to make one or two preliminary observations. On each side of the Committee there are very acute differences of opinion as to the proper level of Income Tax and the right way in which to extend it. Those are perfectly natural and legitimate subjects of difference. I feel sure, however, that there is one thing on which all Members of the Committee are agreed. Whatever the rate of tax, however the tax is charged, and to whatever purpose the proceeds of a tax are applied, everyone would agree that the law with regard to the exaction of tax should be enforced and that any abuse in which an individual citizen may indulge at the expense of his fellow taxpayers should 1807 be repressed in every possible, reasonable manner. There are obviously lengths to which we, in this democratic country, could not think of going, but it is our duty as a Committee, when we are faced with an abuse, to cast about to see whether there are proper and not excessive means to combat it.
My second observation is that it is sometimes said that the complaint about abuse in relation to expenses is a kind of canard which is used for political purposes. I ask the Committee to believe me when I say that we are not moving this new Clause for that purpose; nor do I want it to be thought that I am suggesting that there is a great body of taxpayers who habitually indulge in shocking abuses of the existing tax laws That would be very much of an overstatement. But I do say that there is a small minority of taxpayers—I am afraid I cannot give evidence as to the exact number, but I think we are all conscious of it from our ordinary conversations and reading—who habitually abuse the provisions with regard to expenses at the expense of their fellow taxpayers.
In this new Clause we aim at a very small part of the abuse—that part which consists in illegitimately charging against profits certain entertainment expenses. On that topic I would say that some expenses of an entertainment character are perfectly properly charged, and the courts have so said it. Anybody who has had experience of particular classes of business and other activities must realise that it is a necessary incident in the carrying on of those activities that one has to expend a certain amount in entertainment. With regard to the persons who have to incur that type of expense I have nothing to say, and this new Clause does not deal with them.
There is a second category of expense which I somewhat distinguish, because it is on the borderline. Those who charge that type of expense against their Income Tax return are somewhat stretching the bow in their own favour, and sometimes they step over the line of probity into the area of illegitimate deduction. The persons I am dealing with are none of those. I am referring to the people who habitually, day in and day out, charge expenses which they know they have not the slightest legal or moral justification to 1808 claim as expenses necessarily or reasonably incurred by them in the conduct of their business.
With regard to that category of person, I feel sure that the whole Committee will agree that we should take action, if we can properly and reasonably do so. We may disagree as to the proportion of taxpayers indulging in that kind of abuse and the extent to which they do so, but I am sure I can appeal to the experience of every Member of this Committee not, perhaps, to produce concrete evidence of particular cases, but at any rate to draw upon his own experience and recollection, to say that he has the strong impression that there is a very considerable volume of abuse in that direction. It is a matter which certainly gives my hon. Friends very great concern, and I feel sure that it gives equal concern to hon. Gentlemen opposite.
Those are the premises from which I start. It is not my purpose to try to retail instances. Probably all of us could do so. They are very often founded upon rumour, and, in retailing them one may be doing a considerable injustice to individuals or groups of individuals. There may be a perfectly good answer which is not apparent on the surface, and it may appear at first sight that the abuse must exist and that it cannot be gainsaid. Therefore, I do not wish to retail instances. But I put it to the Committee that the body of evidence that one accumulates from one's ordinary contacts and conversations is so strong as to make it obvious that there is very considerable abuse which ought to be repressed.
That is the problem, and the question then arises as to what are the right steps to take to repress it. I and my right hon. and hon. Friends who have put our names to the Clause have done so primarily to draw the attention of the Committee to the problem and to invite the Committee's judgment upon it. The remedy which we suggest in the Clause may be inappropriate, but I commend it to the Committee for certain reasons which I shall elaborate. It may be that there are good answers to the suggestion, but we shall have achieved our purpose if we engage the Committee upon a serious and earnest discussion upon what we think is the real, serious social problem.
I invite the Committee to consider the method that we have adopted for the 1809 purpose of the new Clause. We propose that the surveyor should be entitled to ask any person whom he suspects to swear an affidavit that the proportion of his expenses which consist of entertainment expenses have been legitimately incurred. Hon. Members may say that that does not seem to achieve a great deal, but when one looks into it more closely there are a number of reasons to commend the suggestion. To begin with, if we are trying to deal with the abuse, we must try at all costs to avoid saddling the enormous majority of perfectly respectable and honest taxpayers with a lot of inconvenience and trouble with which they ought not to be saddled. The remedy that we seek should be a remedy which will not weigh heavily upon those who are conscientious in their tax returns.
Also, any remedy that we devise must be one which we can feel may, at any rate, have some effect. The only remedy which would be certain to achieve its object would, I suppose, be some kind of completely violent system of inquisitorial examination of everybody's books, documents and papers, coupled with some form of cross-examination. That obviously goes much too far and I do not suggest it. What I do suggest has something to commend it.
I would again remind the Committee that the type of individual with which I am trying to deal is the one who has charged against his profits large sums which he knows in his heart of hearts cannot conceivably be justified and which are absolutely dishonest and thoroughly corrupt and fraudulent. I would seek through the medium of the proposed Clause to put it within the power of the surveyor to call upon that person to swear that of the amount by which his gross receipts have been reduced in order to bring down the net receipts the deduction which represents entertainment expenses consists of expenses legitimately incurred.
It may well be said that a fraudulent person of that kind will not mind putting his name to an affidavit. That is an argument which one must obviously consider and to which one must give weight, but I suggest that there is less in that argument than might at first sight appear. There is something formal and frightening about putting one's name to an affidavit. If a man knows perfectly well 1810 that he has been guilty of a course of conduct which, should it be investigated, he will not be able to justify, and if he is being asked to swear on oath an affidavit that that conduct was legitimate when he knows he cannot possibly say that it was legitimate, and if he, therefore, knows that the consequences of swearing a false affidavit are that he may be prosecuted for perjury, he may well hesitate before putting his name to it.
Therefore, I claim that the merit of this suggestion—I do not say that it is necessarily perfect, indeed, I would repeat that it is far from a perfect suggestion—is that it is an attempt to contribute to the solution of this problem. What I seek to do, therefore, is to hold over the heads of persons who are minded to indulge in that type of abuse some fear—the fear that they may be called upon either to withdraw their claim, in itself an admission of guilt, or to go further and commit themselves to the extent of swearing an affidavit and, therefore, rendering themselves liable to prosecution for perjury should there be an investigation and should it be brought to light that what they have done is wholly against the law.
The Financial Secretary may well say to me that already under Section 20 (2) the return has to be verified by a declaration, and I quite agree that that is a point again to be considered; but I do draw a distinction between making a general declaration, which one does at the foot of an Income Tax return, itself if it is not true rendering one liable to penalties, and which, I suppose, a large number of people come to regard as something which is mere routine and pay less attention to for that reason—and being called upon by a surveyor, who obviously by so calling upon one is indicating that he is suspicious about one, to file an affidavit and swear that the expenses incurred are legitimate.
I would put this to the Financial Secretary and ask him very seriously to consider it. I hope that other hon. Members of the Committee will also consider and weigh this argument: that if it becomes generally known, as it would if this were part of the law of the land, that if one is minded to defraud the Revenue, one may find oneself in an extremely awkward position, either of 1811 having to go further and by making this formal deposition render oneself liable to proceedings for perjury or withdraw one's claim in respect of expenses, thereby admitting guilt to the surveyor or anyone else who may be concerned—if it becomes known that this is a situation in which these fraudulent people may find themselves, I put it to the Committee that will be a very considerable inducement to these persons to refrain at any rate from the grosser types of conduct upon which some of them embark at the moment.
That is the case for this Clause. The case, if I may shortly summarise it, is this. There is an obvious abuse. We ought to find if we possibly can a remedy for that abuse. That remedy should not be one which weighs heavily on the innocent, but one which can be used in a discriminatory way against those who are guilty. It can be used simply without there having to be a great deal of administrative fuss and bother before the machinery can be set into operation. It does not involve placing a great many powers in the hands of the surveyor which he already has not got.
Supposing that an affidavit is sworn and it is then thought that an investigation is desirable, and perhaps the police are engaged on an investigation, it is not then within the province of the inspector to take the necessary criminal proceedings. That would fall within the jurisdiction of the regular authorities dealing with crime in this country. For these reasons, I commend this Clause as a contribution to thought on this matter and no more. I hope that hon. Members will criticise it and will be able to suggest alternatives. I commend it as simple and as likely, at any rate, to have effect in the case of those minded to commit the grosser abuses, and I commend it as an attempt to remedy what undoubtedly is an abuse which we certainly ought to try to tackle. At this stage of our discussions we as a Committee are really in honour bound to take this problem into consideration, to see whether there is anything we can do to try at any rate to alleviate the worst features of the present existing abuse.
§ Mr. Houghton
I support my right hon. and learned Friend. The Committee is in the customary dilemma, when 1812 trying to equip the Revenue to fight against evasion and abuse and unlawful operations, of doing that without, at the same time, imposing on the honest taxpayer conditions and requirements he may find at least irksome and may even resent. That is always the problem in trying to provide an armoury for the Revenue to deal with evading taxpayers.
As my right hon. and learned Friend has pointed out, there are two sets of expenses, expenses which are charges against the profits of a business or profession, which are assessable under Schedule D, and the expenses incurred by an employee, or anyone holding an office or employment, and that may be claimed against assessment under Schedule E.
The Committee is familiar with the important difference in the conditions of the two allowances. In the case of expenses incurred under Schedule D, they must be, as paragraph (a) of the proposed new Clause says,…wholly and exclusively laid out or expended for the purposes of such trade profession or vocation.The word "necessarily" does not appear in the conditions attaching to allowable expenses against the profits of a business, but when we come to Schedule E, as stated in paragraph (b) of the proposed new Clause, we see that the expenses must be incurred… wholly exclusively and necessarily in the performance of the duties of the said office or employment.In practice, the word "necessarily" as a condition of the allowance of expenses under Schedule E, means that the concession is much more tightly drawn in the case of persons holding offices and employments than it is in the case of expenses set against business profits. No business man has to prove to the inspector of taxes that the expense which he charges against his profits was necessarily expended. All he has to prove is that it was exclusively expended in the course of trade or vocation, and I should say that there are more cases which have dealt with allowable expenses under Schedule E than there have been in connection with allowable expenses against business profits.
We cannot, by Amendment of the Finance Bill, import the word "necessarily" into the conditions under which expenses may be charged against business 1813 profits. We could move to delete the word "necessarily" from the conditions of allowable expenses under Schedule E, but that would be misunderstood even though there was an attempt in moving such an Amendment to give equality of treatment as between those who pay under Schedule E and those who are assessed under Schedule D. So we are left with the attempt in this new Clause to tighten up existing conditions.
The Committee must realise that there is a great deal of abuse of expenses allowances. Sometimes, I admit, under Schedule E but much more frequently under Schedule D for the simple reason that claims for expenses under Schedule E come in for more closer scrutiny and pass through a finer sieve than expenses claimed as an admissible deduction against taxable profits, because of the word, "necessarily," which can be applied literally, when business people, including Members of Parliament or anyone who holds public office or is employed, must prove that the expenditure was not only wholly and exclusively incurred but necessarily incurred for the purposes of that office.
Cases taken to the courts have shown that the expenses of getting to one's work is not an expense wholly, exclusively and necessarily incurred for the performance of that office. It is an expense incurred to enable a man to get to his office or to put him in a position to perform the office, but not for the performance of the office. All these points have to be taken into consideration when we come to consider admissible deductions under Schedule E.
There is another safeguard under Schedule E, and that is that there is an employer who can be referred to. There is someone who is responsible for the conditions of service of such a person and, if necessary, the Inland Revenue can ask the employer some questions about the expenses which are said to be necessarily incurred for the performance of the office of the employee. In the case of a business and a director, especially of a private limited company, there is a complete absence of that kind of check.
Earlier in the debate we were hearing about the virtues of the family business. I will not enter into that particular argument at the moment. It must be said, if we are to be honest, that the private limited company offers much greater 1814 scope of this kind for abuse than does the public limited liability company for the very obvious reason that in the private limited company the control and shares are usually held in a very small circle. There is an absence of formality in directors' meetings and in meetings of shareholders. It is all in the family, and many things can be done by those in charge of the private limited companies which would have to pass closer scrutiny in the case of the public company.
We all know of things that people have "on the firm" and here we come to some of them. There are gardeners, household decorations, chauffeurs, the running of private cars and entertainment on a lavish scale. I say, in passing, that there will be no health in British commercial life so long as entertainment is subsidised as heavily as it is out of taxation. If those who wish to give hospitality had to bear the whole cost of it and were not allowed to charge it against their taxable profits for the purpose of Income Tax assessments, I think there would be a great deal less of it.
We all know of cases where luncheon parties, drinks all round and that kind of thing are on the firm, and sometimes it can be argued quite legitimately that that expense is necessarily incurred in the course of business or of trade, but in others it is nothing of the sort. Large numbers of staff can have their lunch daily on the firm. Whether it is ever described in their conditions of service one never knows, but all these abuses are commonly known.
Not long ago a friend of mine undertook what he said was a reliable census of the private cars running about one of our provincial towns. He told me that the majority of them were owned and run by businesses, though at week-ends one would not have believed it, because of the freedom with which private cars can be used on business expenses or their running and maintenance expenses charged against the firm.
It is not pleasant to have to mention these abuses, but we should be less than fair to the majority of honest taxpayers, especially those workers who pay on every penny they earn and cannot escape any tax. Their overtime, their production 1815 bonuses, are all taxed before they receive them and so they cannot fiddle about with them. They are not even given time to pay, which is another advantage that all taxpayers under Schedule D have.
They do not suffer deductions from their pay packets every week. They can postpone payment. They can wait for a second demand note and still go on owing it. They can await a third demand note and still go on owing it. It is not until three months have gone by, and the tax is over £1,000, that the provisions of the Income Tax Act come into operation under which they are charged interest on their unpaid tax. Indeed, some people find it advantageous to pay interest on unpaid tax because they have more profitable uses for the money which would otherwise go to the collector of taxes.
All these things are known to anyone who has anything to do with the Inland Revenue or with the machinery of taxation. They are known to accountants, they are known to business men, because they exchange confidences about these things. They are certainly known to the general public, because they are repeatedly told that the rich pay at 19s. or 19s. 6d. in the £ and the ordinary taxpayer, walking along the street asks, "How does he do it if he is only getting 6d. in the £ out of his large income?" The explanation is plain. He is not doing it out of his own income; he is doing it out of funds provided for him or out of moneys chargeable against the firm.
This new Clause is permissive and selective. It enables the surveyor of taxes —to use his traditional title—to single out, either on suspicions aroused or on a sample check over a specific field of business or vocation. It enables him to press for the closer examination, if not of the expenses allowance, of the conscience of the taxpayer by the taxpayer himself, who will then have to make an affidavit which, as my right hon. and learned Friend says, is more impressive and more solemn a declaration than a simple signature. It would cause the taxpayer to search his mind thoroughly to see whether he was doing something which he ought not to do, in which case he would have the opportunity of disclosing it under very favourable conditions.
1816 As the Committee knows, the Inland Revenue does not believe in making criminals of criminals; what it believes in is making the "blighters" pay. If one looks at the annual report of the Commissioners of Inland Revenue, it will be seen that there are about 11 prosecutions a year and yet the amount recovered in penalties alone was over £4 million last year. This shows that there are financial terms upon which taxpayers who make a voluntary disclosure of a misdemeanour or failure or neglect can settle the matter with the Inland Revenue by payment of the tax lost coupled with varying degrees of penalties according to the degree of failure or neglect or misdemeanour.
If the Financial Secretary says he does not want this new Clause and that he can manage without it, I think he has to satisfy the Comiimittee that these abuses do not exist to the extent to which I am sure all hon. Members of the Committee really know them to exist. He will have to assure the Committee that he will either employ some other weapon, or in some other way tighten up the machinery. We do know that the tax inspectorate of the Inland Revenue is very much understaffed at present. It has much leeway to make up from the war years when, quite properly, many relexations of procedure and investigation were introduced, In the present circumstances it is not possible for the Inland Revenue to apply the close examination to these claims for expenses accounts submitted by firms and businesses as they used to before the war.
The manpower of the Inland Revenue is now being strengthened and it will be in a better position to do the job in a little time than it is now. I am bound to admit that that alone would bring about a very significant improvement in the present position. But the Financial Secretary will realise that even though all the manpower required were available the surveyors of tax lack the power at present to call for the kind of declaration or information which is necessary for them finally to satisfy themselves about the assessment of these people. The power to call for books and records, but no other documents, was provided in the Finance Act, 1942, but that can be exercised only by authority of the Board of Inland Revenue.
It is true that Section 27 of the 1951 Act is bringing to light a great many 1817 cases where, owing to the accumulation of capital sums, there may be some explanation needed of where the money came from and a little more about the condition of their investment. Very many cases arising from that will, I am sure, produce very substantial amounts, but on the expenses problem there is nothing like the power which this new Clause would give the surveyor in his hands at present. I think he needs that, not only for use, but as a warning to those who might be disposed to play fast and loose with their bookkeeping and the handling of their affairs for tax purposes.
I do not think I have overstated the case. When one lives one's official and working life so much among officers of the Inland Revenue one is bound to become impressed with the sort of thing they feel they need to deal more effectively with tax avoidance and the abuses of expenses allowances. I hope that the Financial Secretary will give serious consideration to this matter. There is nothing vindictive in this proposal. There is no desire to do injustice to any taxpayer or to make life any harder for the honest and straightforward taxpayer, but it makes workers very restless—indeed, taxpayers generally are restless—when they see obvious signs of the machine of taxation not doing its job as fully and effectively as it should. There are many signs of that at present. I think the Financial Secretary owes it as a duty to taxpayers of Britain to tighten up the regulations for taxation under Schedules D and E.
§ Viscount Hinchingbrooke (Dorset, South)
I shall not occupy the Committee for more than a moment, and I cannot pretend to use the legal language of the right hon. and learned Member for Neepsend (Sir F. Soskice) in these matters or to have the professional experience of the hon. Member for Sowerby (Mr. Houghton). I speak only as an ordinary member of this Finance Committee. I notice again the desire of the party opposite to curtail the opportunity of business men to make profits for their concerns in agreeable circumstances. I notice the constant efforts they make in trying to close loopholes in the law so as to make the law more disagreeable and horrible for everybody I for my part hold the opposite view.
1818 I admit that there are unfair discriminations and distinctions at the present time between the business world and what I would call the professional world —and I say nothing about the House of Commons, on which subject the hon. Member touched lightly, for we can leave that to another occasion. There is no doubt at all that the business world in modern times is able to claim, legitimately or, as the right hon. and learned Gentleman said, occasionally illegitimately, entertainment expenses when the professional world cannot do so, and I agree that in paragraphs (a) and (b) of the new Clause the distinction is made almost explicitly by omitting the word "necessarily"—"necessarily" laid out or expended in the case of the business world.
Whereas hon. Members opposite want to confine the opportunities of business men earning their living in circumstances of enjoyment, I, on the other hand, want to leave them as they are and to open opportunities for men and women in the professional world also to earn their livelihood in circumstances of enjoyment.
It seems to me that on those general grounds the new Clause is indefensible. It is also as naive an attempt as I have seen emanate from the Front Bench of the Opposition in this Parliament. I am astonished that the right hon. and learned Gentleman, with all his legal experience and training, should have attempted to do it. He talked about producing something which was frightening or formidable for the persons he is trying to get at. He talked about threatening with prosecution for perjury and he spoke of there being men who, in their heart of hearts, knew they were doing something wrong.
Are these men who, in their heart of hearts, know they are doing something wrong, going to go back before the surveyor and sign an affidavit saying that the expenses which they have laid out have been genuinely and exclusively and wholly in the performance of their duties as members of the firm? Of course not. Take the member of any business. He may leave his office and go out to entertain somebody to lunch or dinner at a hotel. Has he to go back to the firm forthwith to sign an affidavit saying that he has entertained somebody who is connected with the firm? How will he be able to do so? The thing is ludicrous.
§ 10.30 p.m.
§ Sir F. Soskice
It rather seems to me that if the noble Lord had managed to read to the end of the Clause he would have seen that if the individual whom he has just been describing declines to sign an affidavit he renders himself liable to penalties set out at the end of the Clause.
§ Viscount Hinchingbrooke
It is not a question of declining to sign an affidavit. Such a man who has laid out expenditure falsely and in the wrong interest will be the sort of man who is only too willing to sign such an affidavit.
§ Sir F. Soskice
A moment ago the noble Lord said that a person of that sort would not sign an affidavit. I then said that if he did not be would be punished. Now he says that he would be only too willing to sign it. I again said that if he signed an affidavit falsely and was found out he would again be punished, and this time sent to prison.
§ Viscount Hinchingbrooke
That begs the whole question. The right hon. and learned Gentleman would never be able to prove that such a man had entertained anybody falsely because he would be completely free to go out on behalf of his firm and entertain whomsoever the firm thought fit. There might even be connivance and collusion in the entertainment. He might be supported by members of the firm in signing a false affidavit. Really the whole administrative system which the right hon. and learned Gentleman postulates in this ridiculous Clause would break down. If the right hon. and learned Gentleman and his hon. Friends want to curtail expenditure falsely incurred, I suggest that they really ought to think up something more clever than this naive and ridiculous device which they put forward.
§ Mr. Albu
We on this side of the Committee welcome the speech of the noble Lord, except, of course, for his attack on my hon. Friend for the length of his speech. I do not think the noble Lord would have made the attack had he been here during the early stages, because he would have known that the length of the speeches made by hon. Members opposite was responsible for the time at which we are now considering the Clause.
1820 The noble Lord who, I believe, has no business experience, has a romantic view of the business man upon whom he looks as a licensed pirate, and whom he rather admires in his romantic way. He feels that this glorious activity of going out and spending a lot of money in enjoying oneself in business—and in this he was strongly supported by the hon. Member for Kidderminster (Mr. Nabarro), who has a good deal of business experience—is a wonderful fairy tale existence.
But, of course, the truth is that it is an existence which is only carried on in this way by defrauding the Revenue and robbing the rest of the community, who are consumers, of the taxes which they have to pay, and no amount of romanticising in the matter can change that fact.
What is rather extraordinary to me is not so much that no hon. Member opposite, other than the noble Lord, got up to defend the present evasions of tax or very strongly to attack the Clause—I did not really expect that—but that, quite obviously, some hon. Members opposite —not all, because I watched their faces very carefully, and some of them looked very embarrassed indeed while the noble Lord was speaking—enjoy the system under which some people are able to defraud the Revenue.
My hon. Friend pointed out the great difficulties encountered by the Inland Revenue authorities in dealing with this very difficult matter of entertainment. I think that my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice), unlike the noble Lord, has devised a very ingenious method of trying to put a very considerable increase of moral pressure—backed in the end, of course, by the force of the law if they are found guilty of perjury—on those gentlemen who exceed their rightful allowances.
There is not a shadow of doubt that the very jeers that came from the hon. Member for Kidderminster and some of his hon. Friends make us realise that there is not one of them who does not know that this evasion takes place. It takes place in absolutely gross conditions, and it is no good our appealing to the workers of this country to produce more, to raise output and increase exports, if they can see with their own eyes, and 1821 very often in the very buildings in which they work, this sort of thing going on. This is not a question whether a business man should entertain another business man to lunch in order to discuss a matter of business; it is a question of the standard at which that entertainment takes place, and that, it seems to me, is a matter to which we must devote our attention.
§ Mr. Frederic Harris (Croydon, North)
Would the hon. Gentleman also suggest what the business man should have for lunch?
§ Mr. Albu
The hon. Gentleman evidently feels this rather deeply. It is quite interesting to those of us on this side to notice the attitude of some hon. Members opposite. It would be invidious to draw distinctions, but I think we know the hon. Members opposite whom we would expect to oppose this new Clause, and we also know the hon. Members opposite whom we would have hoped would have supported it.
There is nothing in the Clause which attacks the rights of the individual, which increases taxation or even anything that would interfere with legitimate business. It is an attempt to close what is at present an absolutely disgusting loophole in the present method of raising taxation, and which operates absolutely unjustly between those taxpayers who are able to maintain their standard of living very largely out of this very system of entertainment and those taxpayers whose taxes are taken from them before they get their income.
It is no good hon. Members opposite jeering and laughing about this. I know of no issue among ordinary workers and ordinary people on which there is stronger feeling when we come to questions of taxation than this one. I am not at all sure that it is not the one thing in this country that is bringing our whole tax system into disrepute and contempt. We in this country are proud of the fact that we pay our taxes, and that this is not a country in which people seriously try to evade payment of taxation. On the whole, we have a just tax system, but this is one part of the system—one of the most important parts—where there is really a conspicuous expenditure out of tax relief, and that the ordinary people will not bear.
1822 I hope that hon. Gentlemen who have been laughing at this new Clause will think the matter over really seriously, because, if they do not accept the Clause, the time will come when they will have to accept something very much more severe.
§ Mr. Boyd-Carpenter
Our experience last year, at any rate, demonstrated that this is a topic which is capable of producing a certain amount of heat in this Committee, but I hope that, having had this debate so far, we may be able to come to an appreciation of the narrowness of the point which is raised by this new Clause, which, indeed, was made abundantly clear by the right hon. and learned Gentleman who moved it.
May I say at once that I fully accept the proposition with which he prefaced his observations—the proposition that the law should be enforced and that abuses should be repressed. No one on either side of the Committee would dispute the validity of that proposition, no matter what the level of taxation might be. Let me add, too, that hon. Members on both sides will obviously treat with respect the observations on this subject from the right hon. and learned Gentleman opposite, who had the grim experience of considerable responsibility for enforcing taxation law for a good many years during the period when taxation was higher than, perhaps, it has ever been in any country in time of peace. Therefore, obviously, and I say this with great sincerity, the views of the right hon. and learned Gentleman will certainly command respect.
The point with which we are concerned here is really a very narrow one. We are not, as perhaps one might have understood from the speech of the hon. Member for Sowerby (Mr. Houghton), concerned with the general law as to expenses and allowances; we are not even concerned here with the substantive law with respect to what is or is not liable as expenses by way of entertainment. What we are concerned with, as I understand, is the proposed piece of machinery for the better enforcement of the existing law. That is a very narrow point, which, if I may say with respect, need not be capable of producing excessive heat.
1823 We are solely concerned with the machinery for the enforcement of the law which this Committee lays down, particularly in the Finance Bill. I do not propose to be led away by one or two observations which have been raised, in broad polemical and even exciting discussions, of what is permissible within the existing law.
The point to which I should address myself is whether or not it is necessary to add this proposed piece of machinery to our law for the enforcement of taxation in this one particular aspect, which has been singled out—the aspect of expenses of entertainment. I think the Committee would agree to this proposition; that it is wrong to give to the executive Government of the day additional powers unless and until the Committee is satisfied that there is a genuine need for them.
That is certainly the view some of us have expressed from the other side of the Committee, and it is certainly a view which should commend itself to the Committee. Whether the Government seeks additional powers or. as in this case, the Opposition seeks to thrust further powers upon the Government, the onus of proof is on those who say that those powers are necessary. I am not concerned to argue with the right hon. and learned Gentleman the exact deterrent effect of the signature of an affidavit on a person who, ex hypothesi, is inclined to indulge in tax evasion. That is a difficult question, depending on a correct estimate of the mentality of such an individual. I am not concerned to dispute that it may in certain cases be something of a deterrent. I do not think, with respect to the hon. Member for Sowerby, that it begins to conclude the matter.
I think there was a flaw in his argument when he said that abuses existed and we must, therefore, necessarily accept this proposal. There seems to be a hiatus in his logic there, because surely it is necessary, to establish the proposition he sought to establish, not merely to show that abuses exist on a substantial enough scale to justify special legislation on a particular point, but that this particular proposal in fact will make a substantial contribution towards dealing with those abuses. That is the proper way that this Committee should look at the matter.
1824 In view of what has been said, and the implication in the new Clause of the inadequacy of. the existing machinery, it might be possible for the Committee to consider what are the existing provisions. In respect of these expenses, as in respect of others, the normal procedure in the vast majority of cases works perfectly satisfactorily. The taxpayer produces to the inspector of taxes in his claim such supporting evidence as he may wish. There is discussion and, in the vast majority of cases, the matter is satisfactorily settled in that way. But if the inspector has the slightest doubt about the bona fides of the claim for allowances, and doubts whether sufficient evidence has been produced to justify it, he has a perfectly simple remedy. He can disallow the claim.
If the inspector does so, the taxpayer has two alternatives. He can accept the disallowance, in which case no further question arises—he has failed to establish the claim and no possible abuse can arise —or, possibly, he can appeal to the Commissioners. At that appeal the onus is upon him to establish the validity of his claim. Evidence can be tendered on oath and documents can be produced. The essence of the matter is that it is up to him in those circumstances to prove his claim. If inadequate material is produced, no doubt the claim will fail.
That seems to be a considerable safeguard. But as the right hon. and learned Gentleman will be well aware, in the very rare cases where real suspicion arises that there is considerable concealment or false claim there remains the provision, with which the right hon. and learned Gentleman is only too familiar, in Section 31 (1) of the Income Tax Act, 1952, under which the books and documents can be called for and inquiry can take place. I do not think that any difficulty can arise about that. The point which this new Clause poses is whether all that machinery is inadequate and whether further machinery is required.
When, last year, we discussed this matter at considerable length in the small hours of the night on a new Clause moved by the hon. Member for Edmonton (Mr. Albu), I undertook, in indicating that we did not feel that we needed these powers, that my right hon. Friend would watch the position carefully and that he would 1825 not hesitate to ask for additional powers if he was satisfied that they were required. The position in that respect remains as it then was. We have watched the matter very closely and we are not convinced that it is necessary to strengthen the machinery of the law in this respect. That is not to say that abuses cannot take place. It is, however, to say that we do not think that the remedy for such abuses is further legal machinery such as this.
The real way in which proper care is kept over public revenues is the devoted and skilled work of the staff of the Inland Revenue. The hon. Member for Sowerby was getting quite close to one of the considerations that affect this matter when he referred to problems of staffing that arise from time to time. But once one accepts that the real enforcement of the law depends upon staffing and the work of the Inland Revenue the case for improving the legal machinery is, naturally, proportionately diminished.
I can, however, say, as I said last year, that we have not the slightest intention of winking at or conniving at abuses in this or any other direction. It seems to me a little disproportionate to focus the argument as to alleged abuses solely on this particular set of allowances which are, financially and relatively, a small part of the Income Tax administration and law. But the point comes back to whether, in order to carry out our duties it is necessary to be armed with these further powers.
When this new Clause was put on the Order Paper we considered as a result of last year's discussion the state of the administration and of the law in this respect. We came to the conclusion that the discharge of our duty to Parliament for the collection of the revenue did not require further powers of this sort. The hon. Member for Sowerby, speaking on behalf of whom I am not quite certain, said he thought that additional powers were needed; but that is not the view of my right hon. Friend, who is responsible to Parliament for the operations of the Inland Revenue authorities, and this is the view after full inquiry.
If widespread abuses take place, then this House is entitled to call my right hon. Friend to account, and if, on consideration, he finds that he needs no such 1826 additional powers, it would be a little unreasonable to force those powers upon him. I assure hon. Members that we shall never fail to seek such additional powers, should they be called for; nor to take the most drastic powers should abuses demand that they be given. But, it would be a little less than fair for us to allow these powers to be forced upon us if we do not feel that it is right to thrust them upon the executive.
I have no quarrel with the tone or content of the speeches which have been made, but we do not feel that there is need for these powers and, therefore, we ought not to seek to take them. I am grateful for the suggestion that such powers should be sought; the answer is we do not require them and, therefore, cannot accept them.
§ Sir F. Soskice
The Financial Secretary has made a most careful and courteous reply; but may I put it to him that the answer to the main burden of his argument that the powers are not needed is that the abuse exists and, furthermore, is extremely widespread?
§ Mr. Boyd-Carpenter
First, I do not concede that the abuse is widespread. That it exists I am not concerned to dispute, but the right hon. and learned Gentleman has not applied his mind, if I may say so, to the fact that if the abuse does exist the strengthening of the law in this one particular form for one abuse is not the right way to deal with it; it is our opinion that it is not.
§ Mr. Mitchison
If Edward Gibbon had ever been a member of this House—as, indeed, I believe he was—and had had to deal with our present system of taxation, he might have dealt with this particular point in language somewhat similar to that which the Financial Secretary has just employed. But what would he have put in afterwards? I listened carefully to the Financial Secretary, and I found that he went through the whole of his speech without dealing with the one point which I believe every hon. Member in the Committee wanted him to deal with, namely, what is the extent of the abuses which, in answer to a question from my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice), he finally admitted did exist? That is the question we should all like to have answered.
1827 As for the whole of the Treasury Ministers keeping their eye on this matter, all I can say is that no doubt they have many eyes, for there are so many matters that they keep an eye on; but whether their eye has been as active and vigorous in this matter as the ordinary common optic of the man in the street is what rather puzzles me.
Surely, if there were no such abuse, if it did not amount to a serious matter, we should have had by now, either from the Treasury Bench or from the benches behind, what we want to hear, if they have the courage to make it—a definite and positive denial that there is widespread abuse in this matter. For a Minister of the Crown to get up and admit that abuses exist, to say that this particular method of dealing with them may be inadequate, and to fail completely to promise to find a better one, or to do anything whatever about the matter, seems to me to be an admission of incapacity on this particular point which one rarely finds in such open and obvious form.
It is quite obvious that, having regard to the rules of this Committee, the powers of the Opposition to make suggestions about expenses and the like are very limited. We cannot, under the rules of order, make suggestions to limit expenses, for by so doing we may increase taxation, and, therefore, the only Clauses we can put down on this matter are bound to be of a somewhat limited type. Frankly, I wish it were in our power to go further into the matter. I should be glad to do it, and when the Labour Government were in power we did do quite a lot. We might, perhaps, have done more, but we did quite a lot in the proper direction, that is to say, to limit and define more accurately the expenses that ought to be allowed.
I agree that we are not on that now, but are on this question: is an affidavit for this purpose of any practical value? If it is of any practical value I agree with those who have said it is not by itself enough. I entirely agree with that. If there is an abuse—and we have had an admission that there is some, at any rate—and if this remedy is of some value, is the Committee to turn it down because it does not do the whole thing, going to turn it down because under the ordinary 1828 rules of procedure we cannot suggest any more from these benches?
I have heard some remarkable things about affidavits tonight. We all know the story of the man in the City who made a point of never reading affidavits before signing them. No doubt it is not true, but, after all, an affidavit is a solemn declaration sworn to by the man who makes it. It is not on the same footing as merely signing a form or anything of that sort, and whether before or after the lunch which the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) was talking about, I should have thought that any responsible citizen would have had enough decency and enough conscience to consider what he was doing when swearing to a declaration of this sort. Not without reason is the penalty for false swearing in these matters of this kind the penalty for perjury. I think that we in this Committee ought to be slow to make a mock of this kind of matter.
What, it seems to me, we ought to consider is not merely whether or not this is a complete or the best remedy; not merely the extent of the abuse; but what several of my hon. Friends have already said; we must have some regard at any rate to the position and the opinion of the ordinary man in the street whose vote, after all, sent anyone in this Committee to his place. It is perfectly clear what he thinks about it. I think that in this instance he has done what he often does, and has been right.
What he thinks is, that there is widespread abuse of the whole system of expenses and deductions. What he thinks is that he pays Income Tax—I agree that he often exaggerates the amount which he pays—but he is right on one point, that when he pays there is no deduction of this kind open to him. He goes into the centre of large towns and sees expenditure on a scale which he thinks is incompatible with its being personal expenditure paid out of income.
We do not mind what kind of dinner anyone has, within reason. What we do insist on, so far as this Clause, and these precautions, go, is that a person should not have it at the expense of other taxpayers. We are told that the country has only just been saved from a financial 1829 crisis. I think there is a lot of nonsense about that, but it is said frequently by hon. Gentlemen opposite. We are told that expenditure on this, that and the other must be cut, and after they have more or less cut the throat of teaching, and probably of the Minister of Education in the process, when it comes to what may well be a widespread abuse we are to recognise its existence and do nothing about it.
I say to the Chancellor of the Exchequer, and to other right hon. Gentlemen on the Front Bench opposite, that if they do not think that this Clause is adequate, it is for them to find something which does more, and does it better. If they think that the abuse is not widespread they have not merely to convince us, but the ordinary man in the street who has no right to make these deductions from the Income Tax which he pays. It is that man, and his wife, whom they have to convince that there is no such abuse as we believe to exist. They have to convince him, also, that it does not make an appreciable hole in the revenue which is as unfair to other taxpayers as it is inconsistent with proper economy in the running of the country.
§ Hon. Members: Divide.
§ Mr. Gaitskell
I must say to hon. Members opposite that if they do not behave hon. Members on this side of the Committee will continue the discussion much longer. I am surprised that hon. Members opposite have not taken a closer interest in the proceedings. This is a matter of the greatest importance, I would have thought, to everyone in the Committee and in the country. I had not intended to speak at this stage, and I do not want it to be assumed because I am speaking now that others who have contributions which they wish to make should not make them.
There are certain things which must be said after the speech of the Financial Secretary. There is no doubt that there is a serious problem here. I had no doubt about it when I was Chancellor of the Exchequer. I wish I had been able to do more about it during the year of my Chancellorship. I had begun to investigate the problem, and in the Finance Bill of 1951 we introduced a number of measures against tax evasion, though, unfortunately, not one dealing effectively with this problem.
1830 There is a problem for two reasons. It cannot be denied that the position of different taxpayers is very different when it comes to claiming entertainment expenses. Even the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) admitted that though, with gay abandon, he suggested that the solution was to let everyone claim expenses freely on the same basis. That is no doubt an attractive proposition to him. He believes that we, in seeking to close loopholes in the law, were making life disagreeable for everyone. One can see that his idea of an agreeable life is running through loopholes in the law wherever he can.
That is a point of view, but I do not know whether his constituents in Dorset, South with whom he had a little trouble recently, will take quite the same view as the noble Lord does on that point. The fact is that however attractive the picture may be of allowing everyone to run through loopholes in the law, that is not possible because there are a large number of people who would not and could not benefit even if Schedules D and E were dealt with on the same basis.
I think it is a serious problem because it is well known that it is a serious abuse. It is well known all over the country that quite a large number of people do, in fact, manage to increase their real income substantially at the expense of the Exchequer—in other words, by not paying tax as they should. That is deeply resented by, I would say, millions of people who have no opportunity, even if they wanted to do so, of evading taxation in this way, whose tax is deducted week by week in the ordinary way and who see other people getting away with it.
I was very surprised when the Financial Secretary appeared to deny that there was anything more than an abuse here and there—occasional abuses was I think about as far as he would go. I think there is widespread abuse and I am surprised that the Government are not taking the matter far more seriously.
There is another consequence of this. The Chancellor, I think, is still in favour of a policy of wage restraint and attaches some importance to that. We would not wish to go into that question in detail, but I submit to him that failure to deal with this particular abuse is one of the 1831 things that has got to be borne in mind. When people see extravagant living which they know cannot be out of income but guess, probably correctly, that if it is not out of capital—which is a different matter, although in my view also a serious matter —but really out of expenses, it will not make them very well disposed towards a policy of wage restraint. If the Chancellor is serious about this it will not do to pooh-pooh the existence of this abuse and say that there is really nothing to worry about at all.
It is not easy to find a solution; we are very well aware of that. It is particularly difficult for the Opposition to draft an Amendment or new Clause within the rules of order to deal with this matter. I think that my right hon. and learned Friend is to be congratulated in having put forward what is at least a serious proposition. It has been said that it will not make any substantial difference—the powers already exist—but I think my right hon. and learned Friend has given the answer to the Financial Secretary there. If the powers already exist, why does the abuse exist to the extent that it does?
The Financial Secretary may take the view that this would make no difference, but I would venture to differ from him on that. A really significant effect of this new Clause would be the deterrent effect it would have on persons who seek to evade taxation in this way. Even if it is true that the Clause is not perfect and would not be as effective as we think, if the abuse exists—and some abuse exists —it is up to the Government to tackle the matter in whatever way they think proper.
So far, we have had from the Government very little sign that they appreciate the seriousness of the problem. I have been shocked at the attitude of hon. Gentlemen opposite. Perhaps I should not have been shocked or, at any rate, I should not have been surprised, because it was reminiscent of their attitude throughout the 1951 Finance Bill. Hour after hour they did their best to prevent the carrying through of a Bill containing so many measures to prevent tax evasion. We can see the same sort of thing coming up again tonight. While they may feel it is a matter of no importance and that the business man may 1832 spend what he likes, I can assure them the country does not feel in the least like that.
If the Government think that is the way to gain popular support they are riding for a very heavy fall indeed. I hope that they have a better answer than the one they have already given. If we cannot get the matter more seriously considered we shall have no option but to divide the Committee.
§ Mr. R. A. Butler
I would not have risen in this debate but for the speech of the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell). I hope that we may shortly take this matter to a Division, because our consciences are clear. We do not accept the statement that he has made.
The position about the Clause is that it was debated for 37 columns of HANSARD on 28th May last year, and we are repeating this year almost exactly the same debate as last year. As far as I am concerned, if the Chair allows it I am ready to repeat the same debate next year, and to give the same arguments there on the same subject.
I do not deny the seriousness of the subject. The right hon. Gentleman said that there were people on this side of the Committee who want to run loopholes through the law. That is quite untrue.
§ Mr. Gaitskell
I only want to assure the right hon. Gentleman, who was not here when the noble Lord the Member for Dorset, South (Viscount Hinching-brooke) made his speech, that he used precisely the words I quoted.
§ Mr. Butler
I am not the keeper of the conscience of the right hon. Gentleman opposite or my hon. Friend on this side, but I know enough about the noble Lord to know he respects the law quite as much as the right hon. Gentleman opposite, and that his career, although it may have apparent ideosyncrasies, is just as honourable in respect of the law as any hon. Gentleman on the other side. I would certainly stand by my noble Friend on a matter of the law or public morality at any time of the day or night.
The next observation of the right hon. Gentleman was that there was serious abuse—widespread abuse—and that millions of people were concerned about the evasion of taxation in this respect, 1833 I really do not know upon what evidence the right hon. Gentleman bases this ex-cathedra statement. It is a dangerous thing to put about to the British public even at this time of night, when our debates are still reported, that there is widespread abuse in this direction. After all, I should be in a position to know something about it. I will confess that this is a perfectly serious matter and that there is abuse, but to say it is widespread abuse is an exaggeration, and I beseech the right hon. Gentleman not to carry this into the realm of wage restraint.
We really have too serious a problem in the interests of production, the export trade and economic policy to give the impression—and I appeal to the hon. Member for Sowerby (Mr. Houghton), too —that the Inland Revenue and their officials are allowing widespread abuse to exist. I deny it. I do not think that any Chancellor—even the right hon. Gentleman, with all his experience and ability—would be able to know exactly what happens every day under the control of the Inland Revenue, but I do know that I am the Minister responsible to the House of Commons, and I know from my contact with the Revenue, which is almost daily, that there has been difficulty in this respect. I know that the Revenue are anxious to see that there is no further abuse.
The question therefore arises whether the powers which we have are sufficient. The right hon. Gentleman apparently felt that the case put forward by the Government was not put seriously enough by the Financial Secretary, but I thought that my hon. Friend's speech was one of the most competent I have heard recently. It put the case absolutely clearly, it put clearly the powers we have and the defects in the new Clause, it put the whole problem; and my hon. Friend gave the assurance that the Government intend to see that we use our powers in the best possible way and to deal with the abuse.
If the right hon. Gentleman wants a further assurance from me—and this is not because the case put by the Financial Secretary was deficient, because I do not think it was—then, if I can lend my authority as Chancellor of the Exchequer, I will say that this matter has come to my attention, that there are cases of 1834 abuse, and that in so far as there are cases of abuse I propose that they shall be dealt with rigorously by the Revenue. I say that to reassure the right hon. Gentleman and those in the ranks of organised labour elsewhere and to show that we are not taking this lightly and that we are following up our statement of last year that the Government are watching the situation.
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? We believe that if we are to demand new powers, they should be wider than this and should deal with all other kinds of expenses which likewise operate to diminish assessable income. Why move a Clause of this sort simply to deal with entertainment expenses?
I must say frankly to the Committee that I believe this Clause, and Clauses like it, moved year after year, are moved because they present to the public a very agreeable picture that rich capitalists are indulging in entertainment expenses while a dull Conservative Chancellor of the Exchequer and the Revenue do nothing whatever about it. That is why they are moved. They are moved to give an agreeable political atmosphere to the actions of the right hon. Gentleman and his hon. Friends, and, frankly, this Government will not rise to that sort of thing.
We are just as much against evasion of the law and a false use of entertainment expenses as right hon. and hon. Gentlemen opposite, and I give this pledge to the public as well as to the Committee: if there is abuse it will certainly be followed up by the Revenue. I would remind the right hon. Gentleman of what the Financial Secretary said—and this is a technical point—that Section 31 (1) of the Income Tax Act, 1952, would extend in cases of suspected fraud or wilful default to the need to produce, for inspection by a Revenue officer, all business books, accounts and documents containing information about trading transactions. That will cover any entertainment expenses abuse and would also cover the other abuses to which I have referred.
1835 I give this to the Committee to show that we are as honourable as all hon. Members who have taken part in this debate. We are perfectly ready and, indeed, determined to use those powers if they are necessary. I hope, in view of that, that the right hon. Gentleman and the right hon. and learned Member for
§ Neepsend (Sir F. Soskice) will realise that we are as sincere as they are, that we do not wish to see abuse and that we have the powers to deal with it.
§ Question put, "That the Clause be read a Second time."
§ The Committee divided: Ayes, 164; Noes, 189.1837
|Division No. 198.]||AYES||[11.20 p.m.|
|Acland, Sir Richard||Hall, John T. (Gateshead, W.)||Reid, Thomas (Swindon)|
|Albu, A. H.||Hannan, W.||Rhodes, H.|
|Allen, Scholefield (Crewe)||Hargreaves, A.||Roberts, Albert (Normanton)|
|Awbery, S. S.||Harrison, J. (Nottingham, E.)||Roberts, Goronwy (Caernarvon)|
|Baird, J.||Hayman, F. H.||Robinson, Kenneth (St. Pancras, N.)|
|Bartley, P.||Henderson, Rt. Hon. A. (Rowley Regis)||Rogers, George (Kensington, N.)|
|Bellenger, Rt. Hon. F. J.||Hobson, C. R.||Royle, C.|
|Benn, Hon. Wedgwood||Holman, P.||Shackleton, E. A. A.|
|Beswick, F.||Houghton, Douglas||Shawcross, Rt. Hon. Sir Hartley|
|Bing, G. H. C.||Hudson, James (Ealing, N.)||Short, E. W.|
|Blackburn, F.||Irvine, A. J. (Edge Hill)||Shurmer, P. L. E.|
|Blenkinsop, A.||Jay, Rt. Hon. D. P. T.||Silverman, Julius (Erdington)|
|Blyton, W. R.||Jenkins, R. H. (Stechford)||Simmons, C. J. (Brierley Hill)|
|Boardman, H.||Johnson, James (Rugby)||Skeffington, A. M.|
|Bowles, F. G.||Jones, David (Hartlepool)||Slater, Mrs. H. (Stoke-on-Trent)|
|Braddock, Mrs. Elizabeth||Jones, Jack (Rotherham)||Slater, J. (Durham, Sedgefield)|
|Brockway, A. F.||Jones, T. W. (Merioneth)||Smith, Ellis (Stoke, S.)|
|Broughton, Dr. A. D. D.||Keenan, W.||Snow, J. W.|
|Brown, Thomas (Ince)||Kenyon, C.||Sorensen, R. W.|
|Burke, W. A.||King, Dr. H. M.||Soskice, Rt. Hon. Sir Frank|
|Callaghan, L. J.||Lee, Frederick (Newton)||Sparks, J. A.|
|Champion, A. J.||Lever, Leslie (Ardwick)||Stewart, Michael (Fulham, E.)|
|Coldrick, W.||Lewis, Arthur||Strauss, Rt. Hon. George (Vauxhall)|
|Corbet, Mrs. Freda||MacColl, J. E.||Stress, Dr. Barnett|
|Craddock, George (Bradford, S.)||McGhee, H. G.||Sylvester, G. O.|
|Crosland, C. A. R.||Mallalieu, E. L. (Brigg)||Taylor, Bernard (Mansfield)|
|Crossman, R. H. S.||Mallalieu, J. P. W. (Huddersfield, E.)||Taylor, John (West Lothian)|
|Dalton, Rt. Hon. H.||Mason, Roy||Taylor, Rt. Hon. Robert (Morpeth)|
|Davies, Ernest (Enfield, E.)||Mayhew, C. P||Thomas, David (Aberdare)|
|Davies, Stephen (Merthyr)||Mikardo, Ian||Thomas, George (Cardiff)|
|Delargy, H. J.||Mitchison, G. R.||Thomas, lorwerth (Rhondda, W.)|
|Dodds, N. N.||Monslow, W.||Thornton, E.|
|Donnelly, D. L.||Moody, A. S.||Tomney, F.|
|Ede, Rt. Hon. J. C.||Morgan, Dr. H. B. W.||Ungoed-Thomas, Sir Lynn|
|Edelman, M.||Morley, R.||Usborne, H. C.|
|Edwards, Rt. Hon. John (Brighouse)||Morris, Percy (Swansea, W.)||Weitzman, D.|
|Edwards, W. J. (Stepney)||Moyle, A.||Wells, William (Watsall)|
|Evans, Albert (Islington, S.W.)||Mulley, F. W.||West, D. G.|
|Evans, Stanley (Wednesbury)||Murray, J. D.||Wheeldon, W. E.|
|Fernyhough, E.||Nally, W.||While, Henry (Derbyshire, N.E.)|
|Fienburgh, W.||Neal, Harold (Bolsover)||Whiteley, Rt. Hon. W.|
|Finch, H. J.||Noel-Baker, Rl. Hon. P. J.||Wigg, George|
|Fletcher, Eric (Islington, E.)||Oliver, G. H.||Wilcock, Group Capt. C. A. B.|
|Foot, M. M.||Orbach, M.||Willey, F. T.|
|Fraser, Thomas (Hamilton)||Padley, W. E.||Williams, Rev. Llywelyn (Abertillery)|
|Freeman, Peter (Newport)||Paling, Rt. Hon. W. (Dearne Valley)||Williams, Ronald (Wigan)|
|Gaitskell, Rt. Hon. H. T. N.||Paling, Will T. (Dewsbury)||Williams, W. R. (Droylsden)|
|Gibson C. W.||Palmer, A. M. F.||Winterbottom, Ian (Nottingham, C.)|
|Glanville, James||Pannell, Charles||Winterbottom, Richard (Brightside)|
|Gordon-Walker, Rt. Hon. P. C.||Pargiter, G. A.||Wyatt, W. L.|
|Greenwood, Anthony (Rossendale)||Parker, J.||Yates, V. F.|
|Grenfell, Rt. Hon. D. R.||Pearson, A.||Younger, Rt. Hon. K.|
|Grey, C. F.||Peart, T. F.|
|Griffiths, Rt. Hon. James (Llanelly)||Price, Joseph T. (Westhoughton)||TELLERS FOR THE AYES:|
|Hale, Leslie||Price, Phillips (Gloucestershire, W.)||Mr. Popplewell and Mr. Wilkins.|
|Hall, Rt. Hon. Glenvil (Colne Valley)||Proctor, W. T.|
|Aitken, W. T.||Barlow, Sir John||Boyle, Sir Edward|
|Allan, R. A. (Paddington, S.)||Baxter, A. B.||Braithwaile, Sir Albert (Harrow, W.)|
|Alport C. J. M.||Beach, Maj. Hicks||Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)|
|Arbuthnot, John||Bell, Philip (Bolton, E.)||Bromley-Davenport, Lt.-Col. W. H.|
|Ashton, H. (Chelmsford)||Bennett, F. M. (Reading, N.)||Brooke, Henry (Hampstead)|
|Assheton, Rt. Hon. R. (Blackburn, W.)||Birch, Nigel||Buchan-Hepburn, Rt. Hon. P. G. T.|
|Baldock, Lt.-Cmdr. J. M.||Black, C. W.||Bullard, D. G.|
|Baldwin, A. E.||Bossom, Sir A. C.||Bullus, Wing Commander E. E.|
|Banks Col. C.||Bowen, E. R.||Burden, F. F. A.|
|Barber, Anthony||Boyd-Carpenter, J. A.||Butler, Rt. Hon. R. A. (Saffron Walden)|
|Campbell, Sir David||Hudson, W. R. A. (Hull, N.)||Price, Henry (Lwisham, W.)|
|Carr, Robert||Hulbert, Wing. Cdr. N. J.||Profumo, J. D.|
|Cary, Sir Robert||Hurd, A. R.||Raikes, Sir Victor|
|Channon, H.||Hutchinson, Sir Geoffrey (Ilford, N.)||Rayner, Brig. R.|
|Clarke, Col. Ralph (East Grinstead)||Hyiton-Foster, H. B. H.||Redmayne, M.|
|Clarke, Brig. Terence (Portsmouth, W.)||Jenkins, Robert (Dulwich)||Rees-Davies, W. R.|
|Cole, Norman||Johnson, Eric (Blackley)||Renton, D. L. M.|
|Conant, Maj. R. J. E.||Johnson, Howard (Kemptown)||Roberts, Peter (Heeley)|
|Craddock, Beresford (Spelthorne)||Joynson-Hicks, Hon. L. W.||Robinson, Roland (Blackpool, S.)|
|Crookshank, Capt. Rt. Hon. H. F. C.||Kaberry, D.||Roper, Sir Harold|
|Crosthwaite-Eyre, Col. O. E.||Keeling, Sir Edward||Ropner, Col. Sir Leonard|
|Crouch, R. F.||Kerr, H. W.||Russell, R. S.|
|Crowder, Petre (Ruislip—Northwood)||Lambert, Hon. G.||Ryder, Capt. R. E. D.|
|Deedes, W. F.||Lancaster, Col. C. G.||Salter, Rt Hon. Sir Arthur|
|Digby, S. Wingfield||Law, Rt. Hon. R. K.||Sandys, Rt. Hon. D.|
|Dodds-Parker, A. D.||Legge-Bourke, Maj. E. A. H.||Scott, R. Donald|
|Donner, Sir P. W.||Legh, Hon. Peter (Petersfield)||Scott-Miller, Cmdr. R.|
|Erroll, F. J.||Linstead, Sir H. N.||Simon, J. E. S. (Middlesbrough, W.)|
|Fell, A.||Lockwood, Lt.-Col. J. C.||Smithers, Sir Waldron (Orpington)|
|Finlay, Graeme||Low, A. R. W.||Soames, Capt. C.|
|Fisher, Nigel||Lucas, Sir Jocelyn (Portsmouth, S.)||Spearman, A. C. M.|
|Fleetwood-Hesketh, R. F.||Lucas-Tooth, Sir Hugh||Stevens, G. P.|
|Fletcher-Cooke, C.||Macdonald, Sir Peter||Steward, W. A. (Woolwich, W.)|
|Ford, Mrs. Patricia||Mackie, J. H. (Galloway)||Stoddart-Scott, Col. M.|
|Foster, John||Maclean, Fitzroy||Strauss, Henry (Norwich, S.)|
|Fraser, Hon. Hugh (Stone)||Maoleod, Rt. Hon. Lain (Enfield, W.)||Studholme H. G|
|Fraser, Sir Ian (Morecambe & Lonsdale)||Maitland, Comdr. J. F. W. (Horncastle)||Summers G. S.|
|George, Rt. Hon Maj. G. Lloyd||Manningham-Buller, Sir R. E.||Sutclife, Sir Harold|
|Gough, C. F. H.||Markham Major Sir S. F.||Taylor Charles (Eastbourne)|
|Gower, H. R.||Marlowe, A. A. H.||Taylor, William (Bradford, N.)|
|Graham Sir Fergus||Marples, A. E.||Thomas, Leslie (Canterbury)|
|Grimond, J.||Marshall, Douglas (Bodmin)||Thompson, Lt.-Cdr. R. (Croydon, W.)|
|Grimston, Hon John (St. Albans)||Maude, Angus||Turner, H. F. L.|
|Gromston, Sir Robert (Westbury)||Maudling, R.||Turton, R. H.|
|Hall, John (Wycombe)||Maydon, Lt.-Comdr. S. L. C.||Vane, W. M. F.|
|Harden,J. R. E.||Medlicott, Brig. F.||Vaughan-Morgan, J. K.|
|Hare, Hon. J. H.||Mellor, Sir John||Wakefield, Edward (Derbyshire, W.)|
|Harri. Fredric (Croydon, N.)||Molson, A.H. E.||Wakefield, Sir Wavell (St. Marylebone)|
|Ha son Col. J. H. (Eye)||Nabarro, G. D. N.||Ward, Hon. George (Worcester)|
|Harvey Air Cdre A. V. (Macclesfield)|
|Harvey Ian (Harrow, E.)||Nicholson, Godfrey (Farnham)||Ward, Miss I. (Tynemouth)|
|Hay John||Nicolson, Nigel (Bournamouth, E.)||Waterhouse, Capt. Rt. Hon. C.|
|Heal'd Sir Lionel||Nield, Basil (Chester)||Webbe, Sir H. (London & Westminster)|
|Heath, Edward||Nutting, Anthony||Williams, Gerald (Tonbridge)|
|Higgs, J. M. C.||Oakshott, H. D.||Williams, Sir Herbert (Croydon, E.)|
|Hill, Dr. Charles (Luton)||O'Neill, Phelim (Co. Antrim, N.)||Williams, Paul (Sunderland, S.)|
|Hill, Mrs. E. (Wythenshawe)||Ormsby-Gore, Hon. W. D.||Williams, R. Dudley (Exeter)|
|Hinchingbrooke, Viscount||Osborne, C.||Wills, G.|
|Hirst, Geoffrey||Partridge, E.||Wilson, Geoffrey (Truro)|
|Holland-Martin, C. J.||Perkins, W. R. D.||Wood, Hon. R.|
|Hornsby-Smith, Miss M. P.||Peto, Brig. C. H. M.||York, C.|
|Horobin, I. M.||Pickthorn, K. W. M.|
|Howard, Gerald (Cambridgeshire)||Pilkington, Capt. R. A.||TELLERS FOR THE NOES:|
|Howard, Hon. Greville (St. Ives)||Pitman, I. J.||Sir Herbert Butcher and|
|Hudson, Sir Austin (Lewisham, N.)||Powell, J. Enoch||Sir Cedric Drewe.|