Commons Sitting of 15 June 1954

Preamble
The House—after the Adjournment on 4th June, 1954, for the Whitsun Recess—met at Half-past Two o'Clock.
PRAYERS
[Mr. SPEAKER in the Chair]
DEATH OF A MEMBER
Mr. Speaker:I regret to have to inform the House of the death of the Right Honourable Arthur Greenwood, C.H., Member for Wakefield, and I desire on behalf of the House to express our sense of the loss we have sustained, and our sympathy with the relatives of the right honourable Member.
PRIVATE BUSINESS
  WALSALL CORPORATION BILL
  Read the Third time, and passed.
  LONDON COUNTY COUNCIL (GENERAL POWERS) BILL [Lords]
  As amended, considered; to be read the Third time.
  COVENTRY CORPORATION BILL [Lords]
  To be read a Second time upon Thursday.

  HARTLEPOOL PORT AND HARBOUR COMMISSION BILL
  ROYAL WAREHOUSEMEN CLERKS AND DRAPERS' SCHOOLS BILL [Lords]
  TEES CONSERVANCY (DEPOSIT OF DREDGED MATERIAL) BILL [Lords]
  Read a Second time, and committed.

  EDINBURGH CORPORATION ORDER CONFIRMATION BILL
  Read a Second time; to be considered Tomorrow.
ORAL ANSWERS TO QUESTIONS
  SCOTLAND

    Sentenced Youths (Representations)
    Mr. Rankinasked the Secretary of State for Scotland if he has now decided on the terms of his reply to the deputation of hon. Members who waited on him in regard to reviewing the prison sentences imposed on four Scottish youths at Edinburgh last October.
    Mr. G. M. Thomsonasked the Secretary of State for Scotland what representations he has received regarding a reduction of the sentences passed in the conspiracy trial at Edinburgh at the end of last year; and what answer he has made.
    The Secretary of State for Scotland (Mr. James Stuart):In addition to the representations from hon. Members, to which the hon. Member for Tradeston (Mr. Rankin) refers, I have received about 120 letters, mainly from private individuals. I will communicate with the hon. Members concerned and reply to the other representations at an early date.
    Mr. Rankin:While appreciating the difficulties of pursuing this matter in the House of Commons because the Royal Prerogative is involved, may I ask the Secretary of State, even at this late date, that he will take a very kindly view of this business, so that we may hope for the release of these youths before the expiration of their sentences?
    Mr. Stuart:I am grateful to the hon. Member for the way in which he has couched his question. I do assure him that I have given a great deal of thought to the matter and have taken all factors into account. I have given an undertaking that I will communicate with him and others at a very early date. That I will do.

    Hospital Beds
    Mr. Carmichaelasked the Secretary of State for Scotland the percentage of private hospital beds unoccupied in the West of Scotland Region; and what action he intends to take to reduce the

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    waiting lists for beds under the National Health Service Acts.
    Mr. J. Stuart:About one quarter of the beds for private patients in the western region were unoccupied, on the average, during the latest period for which figures are available. This represents about 100 beds scattered over 33 hospitals. It is the constant object of hospital authorities to reduce waiting lists by making more efficient use of existing facilities, and by adding to these facilities so far as available resources permit.
    Mr. Carmichael:Does the Secretary of State not realise that it is ordinary public opinion that one can get a private bed by paying the money, and that that is not the spirit of the National Health Service? Will he do something to eliminate the system by which people can get private beds when they are able to pay the money?
    Mr. Stuart:Provision exists for these private beds to be used by non-paying patients who are in urgent need. I do not think that 100 beds vacant in 33 hospitals is a large number. There are always gaps, whether for paying or nonpaying patients, between the discharge of one patient and the admission of another, so that a certain number of beds must be empty.
    Sir H. Williams:Will the Secretary of State examine the methods that are adopted at the Manor House Hospital, Hampstead?
    Mr. Carmichael:That has nothing to do with the Question.
    Mr. McGovern:Do not a considerable number of medical men state openly that there are hospital consultants who have private practices, and that when people go to them specially, even for minor ailments, and although there are serious cases waiting for admission to hospital, they are able to get those patients into hospital, because many of the beds are reserved for the private consultants? Will the Secretary of State not consider this racket that is going on in Glasgow?
    Mr. Stuart:I will bear in mind what the hon. Gentleman has said, but, as I have said, provision exists to use vacant beds to deal with emergency cases.

    Potato Harvest (School Children)
    Mr. Carmichaelasked the Secretary of State for Scotland what preparations he is undertaking to discontinue the employment of young school children for potato harvesting.
    Mr. J. Stuart:As I indicated in my reply on 2nd February to a similar Question by the hon. Member, we are seeking to ensure that the fullest use is made of all adult labour available.
    Mr. Carmichael:Is the Minister aware that there are farmers in Scotland who have the necessary machinery and equipment which do not require the employment of child labour? When does the right hon. Gentleman intend to abolish this constitutional kidnapping of poor children, because not a single Member of this House would allow one of his own children to harvest potatoes?
    Mr. Stuart:It is very good exercise.
    Mr. Carmichael:You never did it.
    Mr. Stuart:That is where the hon. Gentleman is wrong. I have done it, and I regard it as good exercise. If I were younger, it would be good for me now.
    Mr. Woodburn:Can the right hon. Gentleman say what progress has been made in finding a machine suitable for dealing with the clay soils of Scotland and for doing this job?
    Mr. Stuart:Progress is being made, and there is no doubt that eventually machinery will be the solution to the matter. To take Glasgow alone, only 2,000 children were required this year as against 3,350 in 1949, which shows a drop of 40 per cent.

    Oil Depot, Stannergate (Planning Appeal)
    Mr. G. M. Thomsonasked the Secretary of State for Scotland if he will publish the report by Sir John Handford regarding planning permission for an oil depot at Stannergate, Dundee; and when he expects to announce his decision concerning this report.
    Mr. J. Stuart:No Sir. It would be contrary to established practice to publish reports of this kind. I hope to announce my decision on the planning appeal very shortly.
    Mr. Thomson:Is the Minister aware that this matter was the subject of an inquiry that is of the very greatest importance to Dundee, and that it affects the future of the shipbuilding industry and also the fire safety of many of my constituents? Would the Minister not agree that in these circumstances the people have a right to know the factors that will lead to the final decision at which he will arrive?
    Mr. Stuart:I agree with the hon. Gentleman as to the importance of the matter. Indeed, it is so important that it affects a number of other Departments. Fire risks, and so on, are involved, but I will give an answer very soon.

    Civil Defence
    Mr. Emrys Hughesasked the Secretary of State for Scotland what special Civil Defence exercises he proposes to organise in Scotland for the purpose of instructing the civil population as to what should be done in the event of a hydrogen bomb attack.
    Mr. J. Stuart:I do not propose to advise local authorities to base their Civil Defence exercises on new assumptions until we have completed the review of our plans, which, as my right hon. and learned Friend the Secretary of State for the Home Department has informed the House, is now in progress.
    Mr. Hughes:Is it not time that the Secretary of State woke up on this matter? Is he aware that these exercises and precautions are taking place in such cities as New York, San Francisco and Stockholm? As we are supposed to be in so much danger, is he not going to do anything about it until the bombs drop?
    Mr. Stuart:An experimental mobile column is actually carrying out exercises this month at Greenock, Dunbarton and Aberdeen. Therefore, we are taking active steps.
    Lieut.-Colonel Liptonasked the Secretary of State for Scotland how many volunteers have been enrolled for Civil Defence in Scotland; and how far the figure is below requirements.
    Mr. J. Stuart:Approximately 38,000 volunteers have been enrolled towards a peace-time establishment of some 80,000.
    Lieut.-Colonel Lipton:Is the Minister aware that this poor response would be vastly improved were he to inject into the Home Secretary a greater sense of urgency and realism? Would the right hon. Gentleman give the House an assurance that he is not meekly following in the steps of the "Old Pretender" in the Home Office?
    Mr. Stuart:Perhaps the Home Secretary will want to inject that into me beccause, in Scotland, it is my responsibility.

    Teachers (Representations)
    Mr. Hamiltonasked the Secretary of State for Scotland whether he is aware that teachers' organisations have recently been advocating strike action to draw attention to their grievances; and what steps he proposes to take in the immediate future to allay their fears and redress their grievances.
    Mr. J. Stuart:I am aware from Press reports that the Educational Institute of Scotland held a plebiscite to ascertain whether their members would support strike action and that a large majority of those who voted were against any such action. As the Institute know, I am prepared to meet their representatives to discuss any subjects which they may wish to raise.
    Mr. Hamilton:Does the Minister not agree that the strike weapon is a perfectly legitimate one for the men to threaten to use, and can he recall any action in the past when they have been provoked to this extent? Would he not agree that their grievances must be quite considerable when they send out a plebiscite to all their members, even though the majority of them may be strongly opposed to using this weapon?
    Mr. Stuart:I am aware of these facts, but, as I say, I am also prepared to meet the Institute if they wish to discuss any of the points.
    Mr. Hamiltonasked the Secretary of State for Scotland what consultations he intends to have with representatives of the Educational Institute of Scotland between now and the Second Reading of the Teachers' Superannuation Bill in order to keep informed of their views on the subject.
    Mr. J. Stuart:I have no reason to suppose that the views of the Institute on the Bill are changing, but, as they were told last March, I am prepared to meet them if there are any points which they desire to discuss with me.
    Mr. Hamilton:Is the Minister aware that we are all very glad to know that he realises that the teachers' views on this Bill have not changed? What they are interested in is whether his views have changed.
    Mr. Stuart:My views are as stated on 20th May by my right hon. Friend the Leader of the House.

    Schools (Black List)
    Mr. Hamiltonasked the Secretary of State for Scotland whether he will consider the drawing up of a black list of schools comparable to that in existence in England and Wales.
    Mr. J. Stuart:Adequate information about schools which need to be improved or replaced is already available.
    Mr. Hamilton:Would the Minister not agree that the black list of schools in England and Wales has been of some use in measuring progress in school building, and that circulars might serve a similar useful purpose in Scotland?
    Mr. Stuart:I am advised that the English "black list," as it is called, is out of date. The Select Committee on Estimates, 1952–53, reported that it had no recommendations to make in this connection as the evidence showed that the present system was working well.
    Mr. Hamilton:Would the right hon. Gentleman consent to sending me a list of those schools which if there were a black list would be on it?

    Harvest Workers
    Major Anstruther-Grayasked the Secretary of State for Scotland what steps he is taking, in conjunction with other Departments, to ensure that a sufficient number of additional harvest workers will be available, either of Service personnel, European voluntary workers or other helpers; what are his estimated figures under each category; and how they compare with last year.
    Mr. J. Stuart:The same steps are being taken as last year, when an adequate force representing 5,650 man-weeks of work was provided, mainly through the Scottish Harvesting Scheme and the Seasonal Labour Scheme. I hope to recruit sufficient workers this year to give about 5,000 man-weeks, the number of grain harvest workers being slightly reduced.

    Herring Processing, Lerwick
    Mr. Grimondasked the Secretary of State for Scotland if he will take steps to provide for more adequate liaison between the authorities responsible for the marketing and processing of herring in Scotland and the factories of Herring Bye-Products Limited and other processors of herring.
    Mr. J. Stuart:Arrangements for liaison with herring processors are a matter for the Herring Industry Board, and I am assured that they are adequate.
    Mr. Grimond:Is the Secretary of State aware that the closing of the Port of Lerwick seems to have been a tragic muddle? The Herring Industry Board was apparently not aware that by Saturday the factories could have taken more herring, and the curers, too, might have taken West Side herring. The arrangements are unsatisfactory, and should be reviewed.
    Mr. Stuart:As I say, it is a matter for the Board, but the fact is, I am informed, that the herring at the bottom of the pits have to be cleared to stop further deterioration. For that reason the factory said that it could not take them.
    Mr. Hector Hughes:Does the right hon. Gentleman remember that I have frequently asked him to provide effective liaison between the producer and the transporter of fish from the north of Scotland to the large consuming centres of the south? Has he done anything about it, and what is he going to do about it?
    Mr. Stuart:That is a completely different question.
    Mr. Grimondasked the Secretary of State for Scotland why the port of Lerwick was closed for the landing of herring on 29th May when the factories

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    could have taken 1,000 crans; and if he is aware that the factory ship has been idle since 30th May.
    Mr. J. Stuart:The Herring Industry Board closed the port of Lerwick on Thursday, 27th May, because the Bressay factory and factory ship could not have taken more herring without impeding the processing of herring they already had. The following week curing started and catches fell off, so that the factory ship was no longer required, and she has been moved to Peterhead.
    Mr. Grimond:Is the Secretary of State aware that he is quite misinformed? I am told by the manager of the factory that he could have taken 1,000 crans between the factory and the factory ship on 29th May. He told the Herring Industry Board that he could probably take more herring, but was never asked to do so.
    Mr. Stuart:I have given the House the information in my possession. I am told that it would have meant the deterioration of herring in the pits.

    Students (Non-Vocational Courses)
    Mr. G. M. Thomsonasked the Secretary of State for Scotland if he will give details of the decline in the number of students enrolling in non-vocational courses and in part-time adult educational courses during 1953; and what he proposes to do to arrest this trend.
    Mr. J. Stuart:The number of students in such classes is estimated to have declined from some 140,000 in 1951–52 to 104,000 in 1952–53. The decline occurred almost entirely among persons over 21 and was most marked in classes in country dancing, needlecraft and handicrafts. Although the need for economy in public expenditure made it necessary to ask education authorities in 1952 to seek some savings in the provision of such classes, it was suggested to them that this should be secured from increased income from fees rather than by curtailment of facilities.
    Mr. Thomson:As these figures show a decline in the number of adult education students, may I ask why that is not shown in the Report which the right hon. Gentleman presented to Parliament only
    1716
    a few weeks ago? It was in the last Report and it is in the English Report. Will the right hon. Gentleman tell us if it has been omitted because it shows a decline which he wishes to conceal?
    Mr. Stuart:I can assure the hon. Member that I am not trying to conceal it. I am glad to say that the decline is most marked in those fields which would probably be generally considered in the educational sphere as not the most important, but I will certainly give the hon. Member any further information I can get.
    Mr. Woodburn:While it may be that the number of students in needlework classes has decreased—and I hope that the Secretary of State is not depreciating the value of needlework in the homes—is it not the fact that the Minister is covering up some decrease in the number of students in classes essential to the community? In Edinburgh the number is down by over 5,000, and I am sure they are not all needlework pupils.
    Mr. Stuart:I would not say that they were all confined to that. There are also country dancing, handicraft and such like.

    House Purchase Deposits
    Mr. Rankinasked the Secretary of State for Scotland what steps he is taking to ensure that his scheme for reducing the initial deposits required from those who purchase houses in Scotland will not adversely affect the housing plans and programmes of local authorities.
    Mr. J. Stuart:None, Sir. While local authorities must continue to build houses to let to the extent necessary in their districts, it is highly desirable in the Government's view to encourage private ownership, whether by the erection of new houses or the acquisition of existing ones.
    Mr. Rankin:That is all very well, but the weekly cost of this particular scheme—
    Mr. Speaker:Is the hon. Member asking a question?
    Mr. Rankin:Is the Secretary of State not aware that the weekly cost of this scheme will place it beyond the scope of the great mass of workers in Scotland,

    1717
    and that their organisations are troubled about it? What steps is he taking to ensure that the ordinary building of houses to let will not be affected by this particular scheme?
    Mr. Stuart:If the hon. Member is correct in his assumption that this scheme will not help the poorer sections of the community he will have nothing to worry about, because the ordinary building of houses to let will continue.

  MINISTRY OF DEFENCE

    Exercise "Liontrek"
    Captain Kerbyasked the Parliamentary Secretary to the Ministry of Defence the purpose of the combined Army-Royal Air Force exercise, operation "Liontrek," held in the Fife area of Scottish Command on 14th-15th May; and if he will consider bringing into being again the Special Operations Executive.
    Mr. Fernyhoughasked the Parliamentary Secretary to the Ministry of Defence if he is aware of the public concern over the experiences to which Service men who took part in the Royal Air Force exercise in Fife on 14th and 15th May were subjected; what was the purpose of such an exercise involving cruelty; and if he will make a statement.
    The Parliamentary Secretary to the Ministry of Defence (Mr. Nigel Birch):The object of exercise "Liontrek" and of many similar exercises is to train Service men in evading capture, in escaping after capture, and in conduct during captivity. No cruelty was involved. It is not considered that there is any need for a special operations executive under present conditions.
    Captain Kerby:I thank my hon. Friend for his reply. May I ask how many of the 164 parachutists dropped in this operation actually reached their objectives?
    Mr. Birch:I understand that over 100 of them were captured.
    Mr. Fernyhough:When in his reply the hon. Gentleman said that there was no cruelty involved, does he mean to say that bleeding shins are not cruelty—and bruised wrists and all the other evidence
    1718
    available in the newspaper? [Interruption. ] If, of course, the hon. Gentleman is going to deny what the newspapers say, can we take that as a further example of the unreliability of capitalist newspapers?
    Mr. Birch:I have gone into this case with some care, and there is no reason to suppose that there was any cruelty. I think that the newspapers were misled by the fact that the interrogators had on their side some soldiers who gave some very fine histrionic performances indicating that they were being tortured.

    N.A.T.O. Countries (Defence Expenditure)
    Mr. Swinglerasked the Parliamentary Secretary to the Ministry of Defence the latest date on which the member countries of the North Atlantic Council jointly reviewed their defence burdens; and what were the instructions given to the British representative on that occasion.
    Mr. Birch:Last December. It would not be in the public interest to answer the second part of the hon. Member's question.
    Mr. Swingler:Is it not a fact that there has been no review of defence expenditure in N.A.T.O. since the Chancellor of the Exchequer gave his injunction to the hon. Gentleman to seek some relief from this country's heavy defence burden? Will he therefore make some move towards getting a reduction on defence expenditure in the North Atlantic Treaty Organisation so that this country may get some relief from what is the heaviest defence expenditure of N.A.T.O. countries in Europe?
    Mr. Birch:As the hon. Member knows, the review is a continuous process and will, of course, go through all its stages in the present year.

  BRITISH ARMY

    Murdered Soldiers, Egypt
    Mr. Chetwyndasked the Secretary of State for War for a statement on the circumstances of the murder in Egypt of Private Smelt, Royal Electrical and Mechanical Engineers, whose home was in Stockton-on-Tees.
    The Secretary of State for War (Mr. Antony Head):Full investigation into this case is still going on. As soon as I have the report, I will write to the hon. Member.
    Mr. Chetwynd:Can the Secretary of State say whether he is receiving the fullest co-operation from the Egyptian authorities in tracing the perpetrators of this outrage?
    Mr. Head:Yes, Sir. The strongest representations about this case have been made by Her Majesty's Ambassador in Cairo, but that, I think, is a separate thing from the inquiry we are also making in the Zone.
    Mr. Mikardoasked the Secretary of State for War, in view of the murder of Private J. Vaux at Ismailia on 30th May, with the connivance of an Egyptian driver employed by Navy, Army and Air Force Institutes, what steps he is now taking to ensure that the Army and ancillary services do not recruit hostile persons for their service.
    Mr. Head:Every possible precaution is taken by carefully screening Egyptian civil labour employed by the Army and by ancillary services such as N.A.A.F.I. This particular man had been employed almost continually since 1946. A most careful inquiry into the incident is now being held. I do not want to say any more until I have seen the report.
    Mr. Mikardoasked the Secretary of State for War what escort was provided for the lorry on which Private J. Vaux was murdered at Ismailia on 30th May.
    Mr. Head:Private Vaux was himself acting as escort to the Egyptian driver of this lorry. He was armed and was travelling in convoy with another vehicle, which carried another armed British soldier.
    Mr. Mikardo:Can the right hon. Gentleman tell the House what happened to the other vehicle and how it came about that this Egyptian driver was able to drive his vehicle off route without any assistance from the other vehicle in the convoy?
    Mr. Head:The other vehicle was in front. This vehicle was following and the Egyptian driver turned off. We are trying to find out why, in those circumstances, it was impossible for an armed guard to stop him. It was a straight road and he turned off it to the right. I am really worried and upset about the incident, but I would rather not say more until we have had a full inquiry.
    Mr. Mikardo:I thank the right hon. Gentleman for the trouble he has taken. May I ask him to let us have the results of this inquiry as soon as possible?
    Mr. Head indicated assent.

    U.S.A. "Flashburn" (British Observers)
    Major Anstruther-Grayasked the Secretary of State for War whether he has now received a full report from the British observers at the recent United States "Flashburn" manoeuvres; and what steps he proposes to impart the lessons of this training operation to officers at regimental and battalion level.
    Mr. Head:I have received two British reports which are being studied in the War Office and the schools concerned. An article will be published in the British Army Annual next month. When the full American report has been received and studied, the lessons learnt will be disseminated.

  TRADE AND COMMERCE

    British Lion Film Corporation
    Sir W. Smithersasked the President of the Board of Trade, in view of the loss to date of £2,600,000 on the activities of the National Film Finance Corporation, if he will give an assurance that Her Majesty's Government will now refrain from entering into business activities.
    The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss):No, Sir. The activities of the National Film Finance Corporation will continue to be governed by the Cinematograph Film Production (Special Loans) Acts, 1949 to 1954.
    Sir W. Smithers:Is my hon. and learned Friend aware that the nationalised industries have caused heavy losses to the

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    taxpayer and to the consumer? Would he, as soon as possible, return all business to businessmen?
    Mr. Strauss:My hon. Friend will realise that his Question is not about nationalised industries.
    Mr. Gaitskell:Is it not the case that a large part of the loss was sustained originally by British Lion before the Corporation really began operations, and that the activities of the Corporation have enabled some extremely successful British films to be produced?
    Mr. Strauss:The answer to the last part of the right hon. Gentleman's question is "Yes." It is quite true that a large part of the loss on British Lion was made at the very beginning, or before the beginning, of the operation of the Corporation.
    Mr. Swinglerasked the President of the Board of Trade what consultations he has had with the unions representing cinematograph workers about maintaining the level of British film production since the announcement of the decision to liquidate the British Lion Film Corporation.
    Mr. H. Strauss:None, Sir, since the decision of the National Film Finance Corporation to appoint a receiver and manager, to which I assume that the hon. Member is referring.
    Mr. Swingler:In view of the concern in the industry about a possible decline in production after August, can the hon. and learned Gentleman give a firm assurance that action is being taken to maintain the level of film production when the present production schedules come to an end?
    Mr. Strauss:I would refer the hon. Member to the statement that I made in answer to a Question and supplementary questions on 1st June. The National Film Finance Corporation does not see any reason for thinking that there will necessarily be any loss of production.

    East-West Trade
    Mr. Swinglerasked the President of the Board of Trade if he is now in
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    a position to make a statement on the negotiations for a major relaxation of strategic controls on East-West trade.
    The Minister of State, Board of Trade (Mr. Heathcoat Amory):No, Sir, not yet.
    Mr. Swingler:In view of the many months during which the negotiations have been going on, can the right hon. Gentleman say when he expects to be able to take any action on the policy advocated by the Prime Minister?
    Mr. Amory:I think it was at the end of March when my right hon. Friend said that he thought these investigations would take two or three months. I can only say that so far the work is fairly well up to timetable.

    Oranges and Grapefruit
    Mr. Dudley Williamsasked the President of the Board of Trade what information he has to indicate to what extent it will be possible for the West Indian Colonial Territories to supply this country with oranges and grapefruit during the current year, between 1st April and 30th September, in substitution for the proposed imports of such fruit from the United States of America which are now being held up by his Department as a result of protests from colonial growers of citrus fruit.
    Mr. Amory:The United Kingdom's total imports of oranges and grapefruit are below their pre-war level, although these fruits are admitted freely from the British West Indies under open general licence. As to imports from the United States of America, coming under the Mutual Security Act, the necessary import licences have been issued and imports are taking place.
    Mr. Dudley Williamsasked the President of the Board of Trade to what extent Colonial Territories have supplied oranges and grapefruit to this country during the period 1st April to 30th September in each of the last four years.
    Mr. Amory:Since the answer contains a table of figures, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.
    Following is the answer:

    IMPORTS OF ORANGES AND GRAPEFRUIT

    April to September

    April to September

    1950

    1951

    1952

    1953

    1950

    1951

    1952

    1953

    cwts.

    cwts.

    cwts.

    cwts.

    £'000

    £'000

    £'000

    £'000

    Grapefruit:

    Fresh or raw:

    Colonial territories

    …

    33,524

    2,908

    —

    56,375

    74

    2

    —

    97

    Total World

    301,910

    397,404

    245,991

    437,710

    828

    1,272

    938

    1,203

    Preserved:

    Colonial territories

    …

    —

    18,058

    18,544

    7,845

    —

    67

    88

    41

    Total World

    3,442

    18,058

    22,574

    10,462

    11

    67

    114

    44

    Oranges:

    Fresh or raw:

    Colonial territories

    …

    4,691

    184

    41,547

    23,304

    13

    1

    119

    58

    Total World

    2,424,943

    3,104,062

    2,542,913

    3,194,267

    7,076

    8,141

    7,581

    7,388

    Preserved:

    Colonial territories

    …

    255

    4,584

    16

    0

    1

    24

    0

    0

    Total World

    22,062

    130,074

    53,701

    2,836

    123

    805

    337

    13

  NATIONAL FINANCE

    Dividends
    Mr. Jayasked the Chancellor of the Exchequer whether he will make an estimate of the level of dividends in the first few months of 1954, compared with the same months of 1953; and whether he is satisfied that the restraint, for which he has asked, is being observed.
    Sir W. Smithers:On a point of order, Mr. Speaker. Before this Question is answered, may I ask if the Chancellor of the Exchequer has inquired whether the right hon. Member for Battersea, North (Mr. Jay) was among those who voted for a 50 per cent. increase in the House of Commons dividends?
    Mr. Speaker:That is not a point of order. It has nothing to do with the Question either.
    The Chancellor of the Exchequer (Mr. R. A. Butler):The shareholders' gross return on invested capital for the first five months of 1954 was about 6 per cent. compared with about 5.4 per cent. for the same period last year. In reply to the
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    second part of the Question, I would refer the right hon. Gentleman to the reply which my right hon. Friend the Economic Secretary gave to the hon. Member for Stechford (Mr. Roy Jenkins) on 1st June.
    Mr. Jay:In view of the very marked increase in dividends, does the Chancellor of the Exchequer think that he is justified in delaying any longer the increase in old-age pensions that he promised?
    Mr. Butler:I have already made some observations on the very important matter of old-age pensions, which I will not repeat this afternoon, but I do not see that the two matters are as closely connected as the right hon. Gentleman makes out.

    Tax Allowances (Directors' Expenses)
    Mr. Jayasked the Chancellor of the Exchequer, in view of the Financial Secretary's letter of 6th May to the President of the Institute of Directors, whether, in the treatment for tax purposes of directors' expenses allowances, he will continue to back the Inland Revenue in taking every step necessary to prevent tax evasion.
    Mr. R. A. Butler:The answer is "Yes, Sir." On the subject of my right hon. Friend's letter to the President of the Institute of Directors, I would refer the right hon. Gentleman to the answer given to his supplementary question on 17th May.
    Mr. Jay:Are we to understand that the Chancellor entirely reaffirms the assurance which he gave on the subject a year ago, and, if so, will he remain in the House and listen to the answers given by the Financial Secretary to some further Questions a little lower down the Paper?
    Mr. Butler:It is always a great pleasure for me to listen to anything that the Financial Secretary may have to say, and I shall certainly do my best to listen.
    Sir H. Williams:May I ask whether this inquisition is also applied to Members of Parliament in respect of their free trips abroad at the expense of this or other Governments or institutions?
    Mr. Butler:I think Members of Parliament can look after themselves.
    Sir H. Williams:Will my right hon. Friend answer the question?
    Mr. Houghtonasked the Financial Secretary to the Treasury (1) whether the complaint from the Institute of Directors concerning the Income Tax questionnaire in respect of which an official apology was subsequently made, disclosed the name and address of the taxpayer to whom the questionnaire was alleged to have been sent; and what steps were taken to confirm the facts alleged before the letter of apology was sent;
    (2)if he will examine the files, evidence and facts relating to the alleged issue of the form of Income Tax questionnaire in respect of which the recent apology was made by the Board of Inland Revenue, in the light of further evidence submitted to him by the hon. Member for Sowerby, and make a further statement.
    (3)whether he is aware that the Income Tax questionnaire which was the subject of the recent apology by the Board of Inland Revenue was handed to a company secretary as a guide to the range of information which might be asked for by the Inland Revenue, and was never at any time issued with a
    1726
    demand for its completion; and whether he will take steps to ensure that in future the Board of Inland Revenue does not apologise before ascertaining the full facts.
    The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter):The Institute of Directors did not, in the first instance, say which of its members had received the questionnaire of which it complained. A complaint had, however, previously been received from an hon. Member that a questionnaire in identical terms had been handed to a secretary of a company whose name was supplied. The Institute of Directors has since informed me that their complaint related to a questionnaire given to the same company secretary.
    I have studied the letter which the hon. Member has sent me. My information, however, is that it was not made clear to the company that the questionnaire did not require to be completed. Nor would the questionnaire have served any useful purpose if it was not intended to indicate the information which the Revenue required in the particular case. The last part of the hon. Member's third Question does not therefore arise.
    Mr. Houghton:Does not the right hon. Gentleman's reply show how unwise it always is for apologies to be made before the facts have been fully investigated? Does he dispute the statement I have made that this questionnaire was given as an aide-mémoire on the range of questions which might be asked, and was not in fact handed to the officer of the company concerned with a request that it should be completed?
    Mr. Boyd-Carpenter:I am not concerned to argue with the hon. Member as to the particular intention—[HON. MEMBERS: "Oh!"]—wait for it—of the official who handed over the questionnaire, but, as my answer has made clear, it was not explained to the company secretary to whom it was handed that it was being handed to him by way of light entertainment. On the contrary, he was under the impression—a very human impression, it may be—that it was handed to him in order that he should complete it. That is what I have said in my answer. In those circumstances, and in view of the terms of the questionnaire, I am bound to say that I thought it right and proper that an apology should be

    1727
    tendered. I do not share the hon. Member's belief that it is a sign either of weakness or lack of confidence to apologise on occasions when one finds that a mistake has been made.
    Mr. Jay:In that case, in view of the facts now revealed and the assurance which has just been given by the Chancellor, would it not be better for the Financial Secretary to apologise to the Inland Revenue?
    Mr. Boyd-Carpenter:As the right hon. Gentleman knows, I have the highest regard for the Inland Revenue. It is because of that high regard that I think it proper, as does the Board of Inland Revenue, to express regret on the very rare occasions when its actions appear to be excessive. So far as the general issue is concerned, the right hon. Gentleman has been told on three occasions that it has nothing whatever to do with this particular case.

    £ Sterling (Convertibility)
    Mr. Gaitskellasked the Chancellor of the Exchequer whether he will state the policy of Her Majesty's Government on the convertibility of the £ sterling.
    Mr. R. A. Butler:The policy of Her Majesty's Government on the convertibility of sterling remains as stated in the Communiqué of the Commonwealth Economic Conference of 1952.
    Mr. Gaitskell:Has not the Chancellor seen during the last few weeks that a number of rumours have been put about in the Press suggesting that Her Majesty's Government do contemplate some early further step in this direction? May we take it that the Government do not intend to take any further steps towards convertibility in the near future?
    Mr. Butler:The convertibility of the £ sterling is a most desirable objective towards which it would be our wish to work as best we can, but the conditions remain as I stated them, namely: an improved and continuing success in the internal policies of the sterling area countries, which has been most marked in recent months; the prospect of other trading countries adopting policies in trade conducive to trade expansion, which is not going as fast as I would wish; and the provision of adequate support funds from
    1728
    the International Monetary Fund or otherwise, and that is a matter which is constantly under discussion. Those three conditions remain, and, as far as I can see, we are making very nice progress, but we shall remain throughout as sensible as the right hon. Gentleman would wish.
    Mr. Gaitskell:May we take it that the second condition includes some further steps by the United States' Government to allow freer imports into America?
    Mr. Butler:The situation is not confined solely to the introduction of freer imports. It is summed up in the general phrase "good creditor policies," and we would naturally wish to see good creditor policies adopted.
    Viscount Hinchingbrooke:Will my right hon. Friend be prepared to entertain the idea that in advance of convertibility the travel allowance might be moderately increased?
    Mr. Butler:It is true that the sterling area reserves have risen considerably in recent months, but I do not think that the situation is such that relaxations are any easier. When I can make relaxations I will naturally do so, but I do not wish to create an unduly optimistic view in this country or anywhere else.
    Mr. Albu:Does the right hon. Gentleman not think it is dangerous to take any steps in this direction based on what many people think are temporary factors, and particularly those in the terms of trade, and is it not very misleading to allow what I suppose are rather inspired statements to appear in the Press encouraging people in other countries to think that we are going to do things that we do not intend to do?
    Mr. Butler:Many of the statements in the Press are not inspired by me at all, including one which appeared on Sunday and which gave my views on convertibility which I was most interested to read. Furthermore, some statements made by many of my more distinguished friends abroad do not necessarily represent my views. I am a believer in moving towards the freeing of the £ sterling, and I shall do so when I think it is a safe and sure operation.

    Palace of Westminster (Salaries and Wages)
    Mr. Lewisasked the Chancellor of the Exchequer how many of the staff employed in the Palace of Westminster, for which his Department have financial responsibility, have not received any in crease in their wage or salary since 1946.
    Mr. R. A. Butler:I assume that the hon. Member's Question refers to staff whose salaries and wages are borne on the House of Commons Vote. General control of the personal remuneration of House of Commons staff is vested in the House of Commons Offices Commission. I understand that all full-time staff have received an increase in salary or wage since 1946.

    Iron and Steel Companies (Sale of Shares)
    Mr. Roy Jenkinsasked the Chancellor of the Exchequer what steps the Iron and Steel Realisation Agency is taking to ensure that the ordinary shares of Stewart and Lloyds do not follow the two previous issues made by the Agency in being quoted at a discount almost immediately after their issue to the public.
    Mr. R. A. Butler:The hon. Member will not expect me to add anything to the particulars about application and underwriting arrangements which will be in the offer for sale, a copy of which I am arranging to have sent to him as soon as it is available.
    Mr. Jenkins:Does the Chancellor not agree that the experience of the two previous companies which were offered for sale to the public was extremely unfortunate, and if this third one follows the same course it would be much better to abandon this unfortunate attempt altogether?
    Mr. Butler:I should have thought, on the contrary, that while there have been ups and downs, the general operations have gone remarkably smoothly, and 1 have every expectation that they will continue to do so. The authorities cannot do more than make sure that the original offer for sale, of which I am sending a copy to the hon. Member, is on the right lines. We cannot necessarily control things after that, nor do we desire to do so.

    National Income and Expenditure
    Mr. Rentonasked the Financial Secretary to the Treasury what percentage of the national income was spent by the Central Government in each of the last five financial years; and what percentage of the estimated national income is likely to be spent during the current financial year.
    Mr. Boyd-Carpenter:As the answer contains a table of figures, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Renton:Can my right hon. Friend say whether the proportion of the national income which is being spent by the Government is going down at present?
    Mr. Boyd-Carpenter:If my hon. and learned Friend studies the figures he will get a fairer impression than if I give him a resumé now.
    Following is the answer:
    Figures for financial years are not available. Figures for the last five calendar years are:

    per cent.

    1949

    …

    …

    …

    32·0

    1950

    …

    …

    …

    28·7

    1951

    …

    …

    …

    31·1

    1952

    …

    …

    …

    32·3

    1953

    …

    …

    …

    31·2

    The percentage for 1954 will probably be about the same as, or slightly less than, that for 1953.
    Central Government expenditure is taken as including all subsidies, grants and other transfer payments to persons, local authorities, the National Insurance Funds and other sections of the community, but as excluding payments by the National Insurance Funds.

    Civil Service (Salaries)
    Mr. Lewisasked the Financial Secretary to the Treasury the number of persons, for whom the Treasury have financial responsibility, other than Members of Parliament, who have not received any increase in their salaries, wages, allowances or pensions since 1946.
    Mr. Boyd-Carpenter:I do not know what the hon. Member means by "persons for whom the Treasury has financial responsibility." So far, however, as whole-time civil servants are concerned, so far as I know the answer is "None, Sir."

    TATE GALLERY (STAFF RESIGNATIONS)
    Mr. E. Fletcherasked the Chancellor of the Exchequer whether he will order an inquiry into the administration of the Tate Gallery, in view of the resignation of Mr. Le Roux, the Senior Deputy Keeper, following on the fact that 11 members of the senior staff have left during recent years.
    Mr. R. A. Butler:No, Sir. The trustees are responsible for the administration of the Gallery and the present trustees enjoy the full confidence of Her Majesty's Government. The trustees have stated in their Report of February last that they intended to take steps to bring about necessary improvements in "all matters connected with routine administration and procedure."
    Mr. Fletcher:Is it not a fact that since the resignation of Mr. Le Roux another senior member of the staff of the Tate Gallery has resigned? Is it not also a fact that during the last few years staff relations at the Tate have been very unusual and most unhappy? In view of recent maladministration in the Tate, is it not very desirable, to allay public opinion in the world of art, that there should be an independent inquiry into the affairs of the Tate Gallery?
    Mr. Butler:I have naturally considered every possibility, but I must repeat that I have absolute confidence, and so have Her Majesty's Government, in the present board of trustees. I must, therefore, leave the administration of the Gallery to them. As regards the statement made by the hon. Member that another member of the staff has resigned, I was not aware of it, but I will of course make inquiries into what he has said. Otherwise, I believe that the House would be well advised to leave the administration of the Gallery in a powerful and responsible body of trustees.

    N.A.T.O. COUNTRIES (HYDROGEN BOMB ATTACKS)
    Mr. T. Reidasked the Prime Minister what plans have been made by the North Atlantic Treaty Organisation Powers to provide for alternative administration in any allied country or countries where the area of the central government
    1732
    was devastated by atom and hydrogen bombs launched in a sudden and treacherous Pearl Harbour style of attack which paralysed the central government.
    The Prime Minister (Sir Winston Churchill):Many more problems have arisen from the creation of the hydrogen bomb than have yet been effectively solved by the N.A.T.O. Powers or by the Union of Soviet Socialist Republics. All aspects of these problems are under constant and intense study by the Departments concerned and by the Chiefs of Staff, and they are one of the main preoccupations of Her Majesty's Government. The same is no doubt true of all the other members of N.A.T.O. The actual precautions against such an emergency are of course the responsibility of national governments, but this does not mean that the collective thought of N.A.T.O. is not also devoted to them.

    SOUTH-EAST ASIA (FIVE-POWER STAFF TALKS)
    Mr. A. Hendersonasked the Prime Minister whether he will make a statement on the progress of the five-Power staff talks in Washington.
    Mr. Donnellyasked the Prime Minister what progress has been made in the military talks on South-East Asia.
    Sir R. Aclandasked the Prime Minister whether he will now make a statement about the outcome of discussions with representatives of the United States of America and other countries about military plans for the defence of South-East Asia.
    Mr. Harold Daviesasked the Prime Minister if he can now make a statement to the House on the progress of the military talks on South-East Asia.
    The Prime Minister:The five-Power military talks in Washington ended on Friday, 11th June. The results of the studies undertaken by the staffs are now being considered by Her Majesty's Government. Details of their content and nature cannot be disclosed.
    Mr. Henderson:Can the Prime Minister say whether the political implications of these South-East Asian problems are to be considered in the same way as the military implications are being considered

    1733
    in Washington? Is not there a strong case for establishing a political staff agency which could examine all these political implications and might well minimise the risk of misunderstandings such as those which followed the hasty and short visit of Mr. Dulles to London and Paris a few weeks ago?
    The Prime Minister:I apologise to the House; I ought to have said that, with its permission, I was giving the answer to Questions Nos. 46, 48, 51 and 53 together. I do not desire, particularly, to add to what I have just said.
    Mr. Henderson:I am not asking about the military talks in Washington; I am asking the Prime Minister whether the political implications of these problems are to be collectively considered in the same way as the military implications. Would not the Prime Minister favour the setting up of a political staff agency to deal with these matters?
    The Prime Minister:I think that the Governments, the Foreign Secretaries, and even the Prime Ministers of these different countries are all a kind of international staff agency upon these subjects.
    Mr. Donnelly:In view of the political implications of these military talks, cannot the right hon. Gentleman at some future date—as soon as he has considered the matter—make some sort of statement giving us the maximum information possible, compatible with security?
    The Prime Minister:I think that the next Question which I have to answer will show that there are some possibilities of that.
    Sir R. Acland:Does the Prime Minister recall that the Entente Cordiale was almost entirely a matter of technical staff discussions between generals, with no formal commitments entered into, and yet, by 3rd August, 1914, it had committed us to war? Is not it very dangerous to allow these discussions amongst generals to run on without getting the political implications quite clear?
    The Prime Minister:That is going back a long way. My recollection is that very close military preparations were arranged between Britain and France. But the real reason that decided us on
    1734
    going to war was the outrageous invasion of Belgium.
    Mr. Harold Davies:Can the right hon. Gentleman say whether the technical report was presented to the Government as a series of conclusions? Secondly, does the right hon. Gentleman agree that there can be no true security pact in South-East Asia unless we get the willing co-operation of the Commonwealth, which in this case means, primarily, the co-operation of India.
    The Prime Minister:Nothing has been more remarkable—and, I think I may say, successful—in the Foreign Secretary's conduct of these difficult negotiations than the way in which he has brought India and the Colombo Powers into the general discussions.
    The following Question stood upon the Order Paper—
    MR. WYATT:To ask the Prime Minister whether he will make a statement on the Geneva Conference and on the military staff talks at Washington.
    Mr. Wyatt:On a point of order. I think, Mr. Speaker, there has been some misunderstanding about Question No. 50. I understand that the Prime Minister did not include the answer to it in his general omnibus answer.
    The Prime Minister:That is so. I did not.
    Mr. Speaker:That was my impression.
    The Prime Minister:I would refer the hon. Member to the replies which I have just given. I should add, however, that I propose to make a statement at the end of Questions which will have bearing on the hon. Member's Question and on several of those to which I have already replied.
    Mr. Wyatt:I raised the point of order only because of the evident anxiety I saw in the face of the right hon. Gentleman and of the Minister of State because the Question had been passed over.
    The Prime Minister:Not so much anxiety as a desire to treat the hon. Member with all possible consideration.

    INDO-CHINA (GENEVA CONFERENCE)
    Mr. Donnellyasked the Prime Minister whether he will make a statement on the Geneva Conference.
    Mr. Harold Daviesasked the Prime Minister if he will make a statement on the progress of the Geneva Conference.
    The Prime Minister:The views of Her Majesty's Government on the present stage of the discussions at Geneva on Indo-China were set forth in the speech which my right hon. Friend the Foreign Secretary made to the Conference on 10th June. I am arranging for the text of that speech to be circulated in the OFFICIAL REPORT together with that of his further speech on 11th June on the question of Korea. I understand that the main outstanding points of difference described in those speeches are still unfortunately unresolved. Since negotiations are proceeding at Geneva the House will, I am sure, not wish me to comment further upon the situation. I am glad to say that my right hon. Friend hopes to be able to make a full statement to the House on Tuesday next.
    Mr. Donnelly:Will the right hon. Gentleman bear in mind that in view of the difficulties in France it may be better not to break off the Conference altogether but to postpone as much as possible any decision about the Conference itself until a new Government in France has been formed?
    The Prime Minister:I am sure that that has been engaging the Foreign Secretary's mind to the full. On the other hand, one cannot really say that local political difficulties in any particular country should necessarily entail the definite prolongation of discussions with probable consequent arrest of other decisions.
    Mr. Davies:Whatever may be said, will both the Prime Minister and the Foreign Secretary endeavour to keep alive this Geneva Conference because, according to responsible opinion, it appears that the Indians have said that the breakdown of the Conference is not entirely due to Communist intransigence but that it is six of one and half a dozen of the other?
    Mr. Bellenger:Does the Prime Minister's statement, that the Foreign
    1736
    Secretary is coming to this House to make a statement next week, mean that the Foreign Secretary is leaving Geneva, or is coming back on a temporary visit and returning after he has made his statement?
    The Prime Minister:I cannot forecast exactly the uncertain course of the future, but the Foreign Secretary hopes to be and has every expectation of being in his place on Tuesday next, and of being able to make a full statement about what has happened up to date at Geneva on that occasion.
    The following are the texts of the Foreign Secretary's speeches:

    INDO-CHINA
    Statement by the Rt. Hon. Anthony Eden, M.P. 10th June, 1954.
    The last two days of public discussion have certainly clarified our differences. I fear that they have also deepened them. I say this with infinite regret, but it is our stern duty to face realities. As a result of the progress we have admittedly made on questions of procedure, our work now seems to me to fall into three main chapters. Let us see where we are in each.
    We are agreed that the cessation of hostilities should be simultaneous, and we have also accepted that its examination should begin with Vietnam. Representatives of the two commands are now meeting. We are all glad of this. We hope that we may now learn the outcome of their discussions.
    Next comes the issue of supervision. We are all agreed that some form of international supervision is necessary. We are not agreed as to how to make it effective and impartial.
    Let us first consider the membership of the International Commission. I have stated the proposals of Her Majesty's Government on this. We do not think any the worse of them because they have been ignored by certain delegations. We stand by them. I repeat that I have proposed this group of five Asian Powers because they are truly impartial. I am convinced that a group of four powers, two supporting the views of either side, can only lead to deadlock. My reason for refusing to accept such a proposal is not ideological. It is simply that it wouldn't work.
    As to the working of such a commission as we propose, it will clearly be the desire of the impartial powers, if they be chosen, to try to reach agreement among themselves on every issue that comes before them. But if they fail to do so, they must have the right to decide by a majority. There can be no power of veto. May I remind our critics on this point that to insist on unanimity is to declare that you have no confidence in impartiality. The International Commission must therefore be truly impartial, and must have the power to decide by majority. We for our part are firmly convinced that the representation of

    1737
    India and Pakistan, Ceylon, Burma and Indonesia would form a just and impartial commission.
    Now what of the relations of this International Commission with the mixed committees representative of the two commands? There is no dispute that the latter could do useful work in Vietnam. On the other hand, it has been admitted that even with the best will in the world the two sides cannot be expected after eight years of war to agree on every point. The warning of the representative of the State of Vietnam about the experiences of 1946 should not be forgotten by the Conference.
    No one therefore attempts to deny that there will be differences, and they may well be frequent. How are they to be resolved? This is surely where the International Commission will have its part to play. No doubt it will always seek to reconcile these differences. But it will not always succeed. In the event of failure the International Commission must have the authority to decide. There is no other way.
    The Conference has a clear choice, and we should face it. Either we can set up a commission which is as impartial as we can make it, and give it the necessary authority and the power to take its decisions by a majority if need be, each of us trusting in its good faith. Or we can at each phase interpose a veto, as some delegations have proposed. According to them, this veto might first be used in the mixed committees themselves. It could next be used in the International Commission. It might even be used once again if in the last resort a question was referred to representatives of this Conference. This issue of effective and impartial international supervision seems to me to be crucial. I am sorry to have to record that after the debate of the last two days we are in my judgment further apart than ever upon it.
    I come now to the third of the main issues which I wish to discuss—the future of Laos and Cambodia. There is no dispute that it is our duty to examine measures to restore peace in Laos and Cambodia, as in Vietnam. There is dispute as to what those measures should be. Reference has been made here to the existence of "resistance armies" in Laos and Cambodia, and to the fact that there are "two belligerent sides" in all three States—Vietnam, Laos and Cambodia. This does not accord with the information which we have from our representatives on the spot. I think it my duty to give this in all good faith to the conference.
    Laos was first invaded by regular Viet Minh forces in April, 1953. These forces came from northern Vietnam. They advanced to within twelve miles of the capital before they were defeated and driven back to the frontier area in North Eastern Laos, where they have since remained. In December, 1953, a further invasion took place. Regular Viet Minh troops advanced from the Vietnam border into central Laos. They were again driven back. But there are still many Viet Minh troops in the border areas of Laos. These are regular battalions belonging to Viet Minh divisions with their headquarters in Vietnam. Some of
    1738
    them have heavy weapons, including artillery and anti-aircraft guns. These regular Viet Minh units cannot be described as resistance movements.
    On 17th April, 1953, the Laotian Government formally notified Her Majesty's Government and other friendly governments of the violation of their frontiers by the Viet Minh. On 25th December the Laotian Prime Minister appealed to world opinion against renewed aggression by "regular units of the Viet Minh corps of battle."
    Cambodia was invaded in April, 1954. This was on the eve of this Conference, and several weeks after we had agreed in Berlin to meet here to discuss the restoration of peace in Indo-China. Once again the invaders were regular Viet Minh troops who crossed the border from Vietnam. They did not come to fight the French. These foreign invaders have in fact merely terrorised and battened on the people of Cambodia. They hold no centre of any importance. On 23rd April of this year, a formal protest by the Cambodian Government against Viet Minh invasion was delivered to the Secretary General of the United Nations.
    The Laotian and Cambodian delegates have already told us the history of the "resistance movements" in their countries. No one denies that there have been such movements in the past. But with unimportant exceptions, the former members of these movements have now rallied to the support of the legitimate governments of Laos and Cambodia. Armed resistance now derives overwhelmingly from the Viet Minh. It is only since this conference was announced that even Communist spokesmen have pretended anything else.
    Viet Minh aggression is not the only factor that distinguishes the problems of Laos and Cambodia from those of Vietnam. In race, religion, language and culture, the peoples of these two countries are fundamentally different from those of Vietnam. The Viet Minh invaders not only crossed a political boundary. They crossed the frontier that divides the two great cultures of Asia—the Indian and the Chinese. The Viet Minh delegate attempted to excuse this action by saying that there were Vietnamese minorities in Laos and Cambodia. That is true. But it no more justifies Viet Minh invasion of Laos and Cambodia than it justified Hitler's invasion of Czechoslovakia. It is also true that in recent years the three different peoples of Indo-China were united under French rule. That is no reason why they should now be united against their wishes under the rule of the Viet Minh.
    To sum up, I repeat that there are now three chapters to our work. Military talks between representatives of the two commands are proceeding. As I have said, we await a report upon these. In respect however to the arrangements for supervision, and the future of Laos and Cambodia, the divergences are at present wide and deep. Unless we can narrow them now without further delay, we shall have failed in our task. We have exhausted every expedient of procedure which we could devise to assist us in our work. We all know now what the differences are. We have no choice but to resolve them or to admit our

    1739
    failure. For our part, the United Kingdom Delegation is still willing to attempt to resolve them, here or in restricted session, or by any other method which our colleagues may prefer. But if the positions remain as they are today, then it is our clear duty to say so to the world, and to admit that we have failed.

    KOREA
    Statement by the Rt. Hon. Anthony Eden, M.P. 11th June, 1954.
    I am in complete agreement with all that has been said today by my Commonwealth colleagues from Canada and New Zealand. The debate on the Korean question at this conference has thrown into relief two fundamental issues.
    The first is the question of the authority of the United Nations. The United Nations enshrine the principle of collective security, and provide the machinery by which alone it can be safeguarded. The League of Nations failed because it could not act upon its principles. The United Nations have shown in Korea that they can successfully defend the victim against the aggressor. Even before the attack of June, 1950, the United Nations had long been dealing with the problem of Korea. Now, since an armistice has been concluded under their authority, the United Nations are more closely concerned than ever with the peaceful solution of the Korean question. It has been said in this room that this conference has nothing to do with the United Nations. I cannot accept that. It is only by carrying out the principles and purposes of the charter of the United Nations that this conference can fulfil its mandate of finding a peaceful settlement in Korea. It has also been said here that the United Nations have lost their moral authority and their competence to deal with the Korean problem impartially. The delegation of the United Kingdom rejects this contention. We can never agree that, by taking up arms to fulfil their obligations and resist aggression, the United Nations have thereby forfeited their rights and duties as the supreme international organisation. On the contrary, we believe that they have strengthened their authority.
    The second vital issue is the question of free all-Korean elections. We all say that we agree that Korea should be unified and that this unity should be brought about by means of free elections throughout the country. We do not agree on the methods and procedures for holding the elections. This is not a superficial difference. It is a difference of principle, and we have faced it before—most recently over Germany at Berlin. On our side we maintain that the elections must be a truly free expression of the will of the Korean people. To ensure this, genuinely impartial and effective international supervision of the elections is indispensable. We have proposed that this supervision should be carried out under the auspices of the United Nations, as the most appropriate body. The members of supervisory commission could, if desired, be chosen from nations which did not take part in the Korean war. But, in any event, it is essential that the supervisory commission should be truly impartial. It must also be so
    1740
    composed that it can take effective decisions, and it must command the authority to carry them out.
    Other proposals have been put forward which are incompatible with these principles. These proposals provide that all foreign forces should first be withdrawn, leaving a vacuum in which the two Koreas would remain confronted, unreconciled and without mediation. They contemplate that a mixed commission should be established, composed equally of representatives of these two antagonists. This commission would act only on the basis of decisions taken unanimously. Yet it is to have responsibility not only for preparing and holding the elections but also for promoting the economic and cultural unity of the two parts of the country. The effect of this proposal would be to give a veto to the Communist North Korean minority. It is not in dispute that differences are bound to emerge between North and South Korea. If a mixed commission which could not work effectively is to have the main responsibility, must not the result be either that elections would never be held, or that they would not be free?
    On 22nd May, the representative of the Peoples' Republic of China put forward a proposal for a neutral nations supervisory commission. This was to assist the proposed all-Korean commission in preparing and holding elections. But this suggestion leaves unaltered the functions and responsibilities of the all-Korean commission, and it is to these that we object so strongly. Moreover, this supervisory commission is to be of the same type as that which, in our judgment, has proved unsatisfactory in supervising the armistice in Korea. That experience has convinced us that any commission composed of members, one half of whom are committed to certain positions in advance, is bound to lead to deadlock. Unless we can all agree, as we have hitherto failed to do, upon a genuinely impartial commission, with effective powers there seems no hope of progress on this issue.
    On 5th June the representative of the Soviet Union asked us to consider a draft proposal of five points on which we might reach agreement in principle, leaving methods and procedures for later discussion and the representative of the Democratic People's Republic of Korea has just endorsed that proposal. But would this really help us, when we now know that it is just on the question of methods of application that the divergence of view between us is so sharp? The careful analysis of the five points of the Soviet proposal that has been made today by the representatives of Canada and New Zealand has shown beyond any doubt that this is so. I will not go over the same ground again, but I must emphasise that the second of these five points embodies the proposal for an all-Korean commission on which I see no prospect of agreement here.
    Therefore, as it seems to me, two issues are now clearly before us: the authority of the United Nations, and the principle of free elections. Unfortunately no real progress has been made to bridge our differences over either of them. We have to acknowledge candidly the position in which the conference thus finds itself. The delegation of the United

    1741
    Kingdom takes its stand firmly on the two principles which we consider essential to a solution of the Korean problem. While we are ready to explore every possible means of reaching agreement, there must be some sign that agreement is possible. If no way can be found of resolving the differences of these two main issues, then we shall have to admit that this conference has not been able to complete its task. It is our view, as members of the United Nations, that it would then be right to report back to that organisation upon the position we have reached. This would ensure that, while the existing military armistice in any event remained in force, the search for a political settlement in Korea could be resumed whenever the right moment came.

    BRITAIN AND CHINA (DIPLOMATIC MISSIONS)
    Mr. Donnellyasked the Prime Minister whether he is now in a position to make a further statement about the exchange of diplomatic missions between Britain and China.
    The Prime Minister:No, Sir. I hope, however, that a statement may be made shortly.

  LOCAL GOVERNMENT

    Cement Works, New Bilton
    Mr. J. Johnsonasked the Minister of Housing and Local Government the date of his investigation into the effect of the emission of dust from the Rugby Portland Cement works at New Bilton, Rugby; and what amount of atmospheric pollution was found.
    The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Ernest Marples):My right hon. Friend's Inspector last inspected the works on 8th June of this year and has reported that conditions were satisfactory.

    Development Plans (Local Objections)
    Mr. N. Nicolsonasked the Minister of Housing and Local Government under what circumstances it is his practice to appoint a committee of inquiry to hear local objections to the detailed implementation of a development plan to which he has already given his general approval.
    Mr. Marples:The detailed implementation of an approved development plan is a matter for the local planning authority.
    1742
    My right hon. Friend cannot envisage any circumstances in which he would appoint a committee of inquiry as suggested by my hon. Friend.
    Mr. Nicolson:Would my hon. Friend not agree that the detail of these development plans become known to the small owners of land or property only at the moment when they are implemented? Would it not be fairer to give them a chance to make their protests when the plans come to be implemented?
    Mr. Marples:Any person can make a protest about any development plan be-for it is approved. If my hon. Friend has any particular case that he thinks has not been dealt with justly and will write to me about it, I will consider it carefully.

  MINISTRY OF WORKS

    Avebury (Excavations)
    Mr. Parkerasked the Minister of Works when it is proposed to resume the excavations at Avebury which were interrupted by the war in 1939.
    The Parliamentary Secretary to the Ministry of Works (Mr. J. R. Bevins):The excavations which took place at Avebury before the war were carried out with private funds. This important prehistoric site came under my Department's care during the war. At present all funds available for excavations have to be devoted to emergency work on sites threatened by building or other development. Avebury is not so threatened, and my right hon. Friend regrets there is no prospect of excavations there in the immediate future.

    Dr. Oppenheimer
    Mr. H. Hyndasked the Minister of Works if he will invite Dr. Oppenheimer, whose services as atomic scientist are not required by the United States Government, to put his knowledge at the disposal of this country.
    Mr. Bevins:My information is that the United States Atomic Energy Commission has not yet decided whether to extend Dr. Oppenheimer's appointment as a consultant. Apart therefore from any other considerations, the Question is at the present time a hypothetical one.
    Mr. Hynd:As the inquiry in America gave a very favourable report on this gentleman, and as scientists of his stature are not too numerous, will the suggestion be borne in mind?

    Slaughterhouses
    Mr. Rentonasked the Minister of Works what reduction in the staff of his Department will be made when his Department ceases to be responsible for slaughterhouses controlled by the Ministry of Food.
    Mr. Bevins:My right hon. Friend will presently cease to be responsible for the maintenance of 330 slaughterhouses. This is only a fraction of the building maintenance programme, but as the volume of work falls the staff of my Department is being reduced.

  EMPLOYMENT

    Catering Wages Commission (Report)
    Mr. Lewisasked the Minister of Labour if he has considered the Tenth Annual Report for 1953 of the Catering Wages Commission, appointed under the Catering Wages Act, 1943; and what action he proposes to take in connection with it.
    The Parliamentary Secretary to the Ministry of Labour and National Service (Mr. Harold Watkinson):Yes, Sir. My right hon. and learned Friend is in communication with the Commission and has sought its advice as to the lines on which it could best help by a preliminary inquiry into the issues involved.
    Mr. Lewis:While thanking the Parliamentary Secretary for that reply, may I ask if he will also consider approaching the hoteliers and their organisation and the trade unions concerned particularly with regard to the unlicensed residential establishment side of the industry? In 11 years there has not yet been set up an appropriate wages board, and there is need in that instance to get something done.
    Mr. Watkinson:I am aware of the point the hon. Member makes, and we shall certainly consider it.

    South Wales Foundries
    Mr. P. Morrisasked the Minister of Labour if he is aware of the increasing short time working and threatened unemployment in the foundry trade in South Wales; and what steps are being taken to prevent further deterioration in the position.
    Mr. Watkinson:I am aware that, as a result largely of a decline in orders, a certain amount of short time is being worked in foundries in South Wales. I am glad to note, however, that there has been substantial improvement in recent weeks in one of the foundries mainly affected. I can assure the hon. Member that my Department will do everything possible to find suitable employment for any workers who become redundant, and that the employment position in South Wales will continue to be most carefully watched in consultation with the other Departments concerned.
    Mr. Morris:Is the hon. Gentleman aware that the constant fear of redundancy is the cause of this Question and that if he can persuade the Minister and the Minister for Welsh Affairs to make known the recommendations of the Lloyd Committee fears of this kind may be alleviated, at least in part?
    Mr. Watkinson:I will certainly bring that to the notice of my right hon. and learned Friend.

    ORDNANCE SURVEY MAPS (PILGRIMS' WAY)
    Mr. N. Nicolsonasked the Minister of Agriculture whether he will retain the name Pilgrims' Way in future editions of ordnance survey maps.
    The Minister of Agriculture and Fisheries (Sir Thomas Dugdale):Yes, Sir.
    Mr. Nicolson:Is my right hon. Friend aware that his answer, which contradicts the report which has been made, will give great satisfaction to pedestrians and other members of the public?

    CRICHEL DOWN INQUIRY (REPORT)
    Mr. Crouchasked the Minister of Agriculture if he will now make a statement on the Crichel Down inquiry and issue a White Paper.
    Sir T. Dugdale:With permission, I will make a statement after Questions.
    At the end of Questions—
    Sir T. Dugdale:Sir Andrew Clark's Report on the Crichel Down Inquiry is published today and is now available in the Vote Office.
    Sir Andrew Clark states in Conclusion 25 of his Report that
    "there was no trace in this case of anything in the nature of bribery, corruption or personal dishonesty."
    The Inquiry has thus achieved my main purpose, which was to deal with any rumours and suggestions of this kind.
    The Report contains criticisms of the actions and conduct of the Agricultural Land Commission and of a number of individuals. So far as those criticised are persons—and most of them are—for whose conduct I am answerable as a Minister of the Crown, the responsibility rests with me. That responsibility I wholly accept.
    I have naturally given to those who are criticised an opportunity of making to me such observations as they wished on those parts of the Report which referred to them. Having considered the observations and explanations I have received, I must in fairness say that I have formed a less unfavourable view of many of the actions taken by those concerned than appears in the Report.
    Mistakes and errors of judgment were made which those concerned regret as much as I do; and steps are being taken, so far as possible to see that these do not happen again. In view of the nature of the errors themselves and of the public way in which they have been exposed, I am satisfied that no further action by me in relation to them is necessary. I consider that the Agricultural Land Commission are fulfilling a useful function.
    In view of the circumstances of this particular case, and in view of Sir Andrew Clark's statement in his Report that Commander Marten was fully justified in pressing for an inquiry, the Government
    1746
    have decided to reimburse Commander Marten for reasonable costs incurred in being represented at the Inquiry.
    I will make a statement, on behalf of the Government, on the general policy relating to the disposal of land purchased compulsorily for public purposes as soon as a debate can be arranged.
    The Government are most grateful to Sir Andrew Clark for his valuable services in conducting the Inquiry, without fee.
    Mr. T. Williams:In view of the fact that Commander Marten had neither a legal nor a moral right to dictate to the right hon. Gentleman as to what he should do with land purchased by the Government for Government purposes, why should we now be called upon to bear the cost of an inquiry which need not have taken place?
    Sir T. Dugdale:I must ask the right hon. Gentleman to wait and read the Report in detail. I will certainly deal with that point during the course of the debate, when we hold it in the House.
    Mr. Williams:I hope the right hon. Gentleman will be able to assure the House that the cost will not be too great. Further, in view of the last paragraph of his statement, and in view of some very offensive observations made against members of the Civil Service and members of the Land Commission, does not the right hon. Gentleman agree that Sir Andrew Clark has been very dear even at the price which he was paid?
    Sir T. Dugdale:By "reasonable costs" I mean costs on a party and party basis, as in litigation.
    Mr. Crouch:Did I hear my right hon. Friend aright that no steps are being taken against these civil servants who were so foolish during the transfer of this land from one Department to another? Is he going to let them hold their appointments—men who wrote letters which in the Inquiry were proved to be incorrect and untrue? What is to happen about the ownership of the land? Does the Minister intend to proceed with the expenditure of £35,000 of public money on equipment? Finally, may we expect a debate on this issue next week?
    Sir T. Dugdale:Answering the first part of my hon. Friend's question. I think

    1747
    these are matters more suitable for discussion during the debate. Although it was excluded from the scope of the Inquiry, I am sure the House would naturally wish to know what is the position about the future of the land. The present position at Crichel Down is that the Commissioners of Crown Lands have entered into a binding agreement with a tenant who is in occupation and has the right to continue to farm the land and have the necessary buildings provided. Unless, therefore, the tenancy agreement is surrendered, it is impracticable to sell the land back to the successors of the three former owners. The Government have therefore decided that the land cannot be sold back to them. [HON. MEMBERS: "Robbery.] The question of a debate is one for my right hon. Friend the Lord Privy Seal.
    Mr. Grimond:Surely the Minister would agree that the least which can be done for Commander Marten is to pay his expenses? Is the Minister satisfied that that will reimburse him or any other owners of land who have been dispossessed? When he talks of mistakes, is it not the case that this Inquiry showed a deliberate course of action by his Department over a number of years? Is he satisfied that no further steps are needed to prevent it from happening again?
    Sir T. Dugdale:I think we must await the debate to get all these questions brought out in speeches. It is not a suitable matter to be dealt with by question and answer.

    GOUGH BARRACKS, ARMAGH (THEFT OF ARMS)
    Sir D. Savory (by Private Notice)asked the Secretary of State for War whether he has a statement to make on the raid carried out on Saturday, 12th June, at 2.30 p.m., at the Gough Barracks, Armagh.
    Mr. Head:Yes, Sir. On 12th June about 300 small arms were stolen from these barracks by an armed party. The General Officer Commanding has ordered an immediate court of inquiry and I would rather not make further comment until I have seen the findings.
    Mr. Logan:Is it a fact that an ordinary civilian walked in and held up a barracks?
    Mr. Head:No, Sir. That is not a fact.
    Mr. Shinwell:Can we at least be assured by the right hon. Gentleman that precautions are now being taken—I repeat, now being taken—in order to prevent a recurrence?
    Mr. Head:Yes, Sir. Precautions have already been taken by all concerned.

    THE PRIME MINISTER AND FOREIGN SECRETARY (VISIT TO UNITED STATES)
    The Prime Minister:With your permission, Mr. Speaker, I will now make a short statement.
    Some weeks ago the President of the United States invited the Foreign Secretary and myself to spend a week-end as his guests in Washington. The invitation was cordially accepted and it has been arranged for the visit to take place during the week-end beginning 25th June.
    Mr. Attlee:I am sure the House will welcome that statement and will wish the right hon. Gentleman and the Foreign Secretary a successful trip. May I also express the hope that these talks may lead on to the further talks for which the House expressed its desire a few weeks ago?

MR. ARTHUR GREENWOOD (TRIBUTES)
The Prime Minister (Sir Winston Churchill):Sir, the House of Commons is obliged to restrict the occasions when it pays formal tributes on the demise of its Members.
It will, I feel sure, be thought fitting by all parties that Arthur Greenwood's death should be marked by our salute of respect and regard. He served 32 years in this House. His patriotism, his unselfishness and his personal charm made him a man of whom it may be said that in the wide circle of his acquaintances few there were who were not his friends.
My right hon. Friend the Leader of the Opposition—for Arthur Greenwood was our common colleague—can speak with greater knowledge than I can of his outstanding services to the Labour Party,

1749
to social progress and, in particular, to the Workers' Educational Association.
When I was called upon to form the National Government in 1940, Arthur Greenwood, as Deputy Leader of the Labour Party, was an important figure. He was for more than two years a member of the War Cabinet. He shared our counsels and decisions through 1940 and 1941, which included our period of mortal peril. Later in the war, when he became leader of what I must call the formal Opposition of those days, he helped the conduct of affairs with wholehearted integrity, with all his experience and ability and without ever a thought for himself.
To his widow, his daughter and his son who sits among us today, we send out our deep sympathy and record our respect and thanks.
Mr. C. R. Attlee:I desire on behalf of all of us on this side of the House to pay tribute to a very dear friend and close colleague for many years. I can recall Arthur Greenwood before the First World War taking part in a conference on social affairs, and showing at that time an interest in young people which never left him. Then he entered this House in 1922 and he soon made his mark. He served in both the first and second Labour Governments. He lost his seat in 1931, but returned after a very short period, and thereafter continued a Member until his death.
We on this side remember during those years the unselfish and devoted service that he gave to our party, particularly in the field of research. During that time he became possessed of a very wide experience in and knowledge of all social affairs. In 1935 he became Deputy Leader of the Labour Party, and I was in very close companionship with him during those difficult years before the Second World War. No one could have had a more loyal colleague. Everyone will recall the famous speech that he made at the critical time of August, 1939, when he declared the unalterable resolve of the Labour Party to do its utmost to support the cause of freedom in the world.
Later he became a member of the Prime Minister's wartime administration, where he gave most valuable counsel. In particular, he was in charge of the plan of reconstruction, as, indeed, he had
1750
worked on reconstruction at the time of the First World War. It was largely through him that the proposals for the Beveridge Committee were made. Then in the Labour Government he was charged with a general supervision of social policy, and his monument will remain in the social legislation of that period, legislation which, I think, gave expression to a broad feeling in this country besides being in consonance with the views of the party.
He brought to his work great diligence, great knowledge, unselfishness and great personal charm. I have heard from many people in different walks of life to whom he was particularly ready to give help telling me how kind he was. Perhaps there was never anybody in our movement who so widely earned the deep affection of all the members. In the last few months his failing health had taken him away for some time, but his work will remain and he will always be a fragrant memory to all of us.
Mr. Clement Davies:A great number of us would like to pay tribute to the memory of Arthur Greenwood and do it individually and personally, for we had for him a warm and abiding affection. He gave himself completely to the cause in which he believed and, concerning the rightness of the principles of that cause, he never had a shadow of a doubt. His party and its members owe him an incalculable debt.
I was fortunate in his friendship, and I shall always retain cherished memories of our particularly close association during those anxious weeks, days and hours that preceded 3rd September, 1939. He was a man of high honour and a good companion, always courteous and always considerate. I never heard from him an expression of a mean thought. He was incapable of meanness either in thought or in action.
I shall always think of Arthur Greenwood in the words of the Psalmist:
"He that walketh uprightly, and worketh righteousness, and speaketh the truth in his heart. He that backbiteth not with his tongue, nor doeth evil to his neighbour, nor taketh up a reproach against his neighbour."
We sympathise deeply and sincerely with his family, and particularly with Mrs. Greenwood, who for 50 years has been his devoted partner and who has earned the respect and affection of us all.

ORDERS OF THE DAY

  FINANCE BILL
  [Progress, 26th May]
  Considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]

  FINANCE BILL

    Clause 13.—(CHARGE OF INCOME TAX FOR 1954–55.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    3.48 p.m.
    Mr. Roy Jenkins:On this Motion we have the only opportunity during the Committee stage to consider the general principle of direct taxation as it will apply in the forthcoming year. This, of course, raises important and general questions, and I am sure that the Committee will not wish to part with this Clause without considering them in some detail. I was somewhat surprised that there was only one Amendment to this Clause on the Order Paper, that standing in the name of the hon. Member for Orkney and Shetland (Mr. Grimond), and that we did not have any Amendments from hon. Members on the Government back benches seeking a straight reduction in this year's rate of Income Tax. That is in contrast to what we have had in previous years.
    It has been a general feature of our debates during the Committee stage of the Finance Bill to have Amendments moved from the back benches opposite seeking a reduction in the standard rate of Income Tax and using those Amendments as a peg upon which to base a general attack upon the whole level of direct taxation. I am sorry, for the sake of an interesting debate, that we have not had that this year.
    In 1952, for instance, when the Government had been in office about a year, we had a good deal of that type of talk from the other side of the Committee. On the Committee stage an Amendment to reduce the rate by 6d. was moved by the hon. and gallant Member for South Angus (Captain Duncan), whom I am glad to see in his place. Today, of course, he might say that he has now had the reduction of 6d. for which he asked then, but I think that he and many of his hon. Friends will agree that in fact what they wanted was a good deal more than a
    1752
    simple, straightforward once-for-all reduction by 6d.
    Captain J. A. L. Duncan:The hon. Member must realise that there are times for doing things and times for not doing things. We did it at the right time, and if he waits until next year we may do it again.
    4.0 p.m.
    Mr. Jenkins:I am sure that his Chief Whip would certainly agree with the hon. and gallant Member, whether I do or not. In the 1952 debate on the Finance Bill we had an extremely strong statement from the right hon. Member for Blackburn, West (Mr. Assheton). He certainly expressed the view that there would be a very substantial reduction in the direct rate coming along in the not-too-distant future. He said that he earnestly hoped that before the Government reached the end of their allotted span—and he had no idea how long that span would be—Income Tax would be reduced to 7s. 6d. in the £. However optimistic a view the right hon. Gentleman takes about his party's chances, he must agree that we are at least moving along towards the end of that allotted span, and I should have thought that he might have expressed disappointment in some Amendment on the Order Paper at the fact that there is no further move towards 7s. 6d. this year.
    In 1952, too, at the Conservative Party Conference, some extremely strong views were expressed upon this question of the general rate. The hon. Member for Dover (Mr. Arbuthnot), whom I also see in his place, moved a resolution or an amendment at that conference which sounded very like a vote of censure on the Chancellor of the Exchequer. He put the view quite strongly that in 1952—let alone the present time, when apparently we have made great economic progress—a cut of 2s. in the standard rate was perfectly possible. He was supported in that debate by the former Member for Haltemprice, who is now Lord Coleraine, and also by the hon. Member for Farnham (Mr. Nicholson). The hon. Member for Solihull (Mr. M. Lindsay) also took part and wrote extremely strong letters in the Press. That was when the present Government and the present Chancellor were in office.
    Whilst my right hon. Friends were in office, of course, the campaign on this front was even stronger. If one looks

    1753
    back to the 1951 debate on this part of the Finance Bill, one finds that the right hon. Gentleman who is now Secretary of State for the Colonies, who is always in the forefront when it is a question of using rather exaggerated language, had some very sweeping things to say about the rate of Income Tax which we then had to bear. He said:
    "It is hard nowadays to get lawyers to take briefs, to get doctors to take out appendices, for directors to take on new commitments, managers to take new responsibilities, or anyone else to make any effort at all."—[OFFICIAL REPORT, 6th June, 1951; Vol. 488, c. 1154.]
    I can only imagine that all these hon. and right hon. Gentlemen whom I have mentioned as having taken a very strong line on this issue in previous years have been converted and have changed their minds as a result of various specific statements on this issue and the relationship of incentive to a high level of Income Tax which were made in the recent interim report of the Royal Commission on the Taxation of Profits and Income.
    I imagine that they have all read this Report, coming from an impartial and august body, and having read it they have decided that they were wrong in the past and so would not trouble us this year with any Amendments. As my right hon. Friend the Member for Battersea, North (Mr. Jay) reminded us to some extent on the Second Reading of this Bill, this intermediate Report, which was unanimous on this matter and accepted by all members of the Royal Commission, constituted a very direct and complete refutation of what we have been hearing for years past from hon. Members opposite, because the Commission said quite clearly and distinctly that the relationship between incentive and direct taxation, which we had been told existed, did not in fact exist in anything like that form.
    I should like to remind the Committee of the specific statement on this point which was made by the Royal Commission. It said:
    "We are led therefore by all the evidence we have received to the conclusion that, so far as wages are concerned,"—
    I shall come to other forms of income in a moment—
    "the economic effects of the tax system and its influence on work and output are much less important than some of the witnesses have supposed.… We see no evidence that the
    1754
    higher income earners are specially affected by disincentive. …"
    That, it will be agreed, is in direct contradiction to the premises upon which have been based most of the arguments from the opposite side of the Committee for many years past.
    I hope that if hon. Members opposite take part in the debate they will tell us what they think about that statement by the Royal Commission, whether they accept it and if they do not accept it, why they disagree with it, and what impartial evidence they have to set against that which the Royal Commission received and which made them come to an entirely different conclusion. Unless hon. Members opposite do that, it will be clear, as we have long suspected might be the case, that their attitude on this question of direct taxation is based far more on prejudice and party dogma than upon any appraisal of the facts. I hope, therefore, that we may have that position cleared up.
    What is the position of myself and my hon. Friends on this question of direct taxation? We certainly do not like a high level of taxation, direct or indirect, for its own sake. It would be a great mistake indeed for any hon. Member to run away with the idea that we do, but we recognise that there are financial burdens which have to be met by any Chancellor at the present time and that much of the case which has been made against direct taxation in the past is grossly exaggerated. We believe that it is no good deploying an often exaggerated case against direct taxation unless it is clearly stated by what alternative and less objectionable means the revenue which is necessary can be raised.
    As an example of this exaggerated case against direct taxation, I should like the Committee to consider one proposition which is advanced a good deal in business circles and of which no doubt we shall hear something this afternoon. It is the view that, if investment in the private sector of industry is somewhat disappointing at the present time, it is largely because the level of direct taxation—I refer to Surtax as well as to Income Tax—is such as to discourage those who are in highly responsible managerial positions in industry from taking the risks involved in a high level of investment.

    1755
    I have no doubt that that point of view is accepted by hon. Gentlemen on the Government side of the Committee. It was certainly put forward the other night in a broadcast discussion in which my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) took part—not, I hasten to assure the Committee, put forward by my hon. Friend—by Mr. S. P. Chambers, who at one stage certainly had a great deal of experience in the work of the Inland Revenue when he was an official of the Inland Revenue, and who is now the deputy chairman of Imperial Chemical Industries. He was arguing very strongly that, in considering the whole question of the level of investment in private industry, it was not sufficient to consider the level of company taxation but also the level of Surtax bearing upon the individuals in their individual capacity who were taking decisions not to go ahead with investment.
    I find it very difficult to accept that point of view. If it were accepted it would be an extremely worrying thing for both sides of this Committee. Let me consider first of all whether that point of view is likely to be correct. It is probably common ground between us that large companies make up the biggest slice of British industry—although the small companies play a large and important part—and that most of the people who are now taking the entrepreneur decisions are salaried managers or directors and not people who have the traditional private incentive in the sense that they themselves own a very large part of the equity.
    I find it difficult to believe that people in that position, when deciding whether or not to go ahead with an investment for which there is a good economic case and which the Chancellor of the Exchequer would be anxious to accept, are held back not by taxation upon the company but by the fact that they themselves have to pay a certain amount of taxation when they get their monthly pay packet. That is a very far-fetched argument, and I should like to hear the views of Members opposite upon it.
    Suppose it were accepted as being the case; what does it mean? It means that it is impossible to have, as we have tried and as the Chancellor of the Exchequer
    1756
    is still trying to have, a situation in which a very large part of industry is privately owned and subject to private decisions, accompanied by a high level of redistributive taxation and by a high degree of Government expenditure upon defence and welfare services, which account for the bulk of Government expenditure.
    It means that one would have to make a definite choice between settling down to a low and disappointing level of investment in the private sector of industry and making a firm decision to abandon the present degree of redistributive taxation and the present degree of welfare services. The Chancellor and some of his hon. Friends would find themselves in a dilemma when they had to make that difficult choice. Therefore it is foolish for hon. Members opposite and for leaders of industry to argue too strongly that we cannot get the degree of investment in private industry which this country must have without going back to a level of taxation which everybody who seriously considers the position knows is quite impossible at the present time without bringing about a very difficult situation.
    My right hon. Friend the Member for Bishop Auckland (Mr. Dalton) and others have reminded the Committee during the debates on this Finance Bill that in the past year and in some respects for a number of years, we have had a high and fairly satisfactory level of investment in the nationalised industries. There might be argument about the level of investment in certain nationalised industries, but I do not suppose that anyone could argue that the level of investment in the national electricity industry has not been fully adequate in recent years. Some people might say that it was a good deal too adequate. After all, salaried officials like Lord Citrine are just as subject to the disincentive effect of a high rate of Surtax as anybody in private industry.
    If it is argued that private industry cannot do its job because its managers pay a high rate of Income Tax and are so discouraged that they sit in their offices unable to think of investments or to summon up the will-power to make investments even if they can think of them, why is it that in the nationalised industries, and particularly in the British Electricity Authority, we have a rate of

    1757
    investment which might almost be considered excessive? Hon. Members who support the Government might well apply themselves to dealing with that point.
    We ought on this Clause to have some statement from the Chancellor of the Exchequer of his views on the general principle which underlies the amount of the Budget which he meets from direct taxation and the amount which he meets from indirect taxation. I do not suppose that he is any worse a sinner in this respect than some of his predecessors, but I think there is very little principle and a good deal that is haphazard in deciding how much is to be raised in direct and how much in indirect taxation. Perhaps it is more important that the right hon. Gentleman should face this problem than that my right hon. Friends who preceded him should have done so, because in the right hon. Gentleman's three Finance Bills he has very substantially altered the balance away from direct and towards indirect taxation. I do not know the exact figures, but there can be no doubt that over the three years during which the present Chancellor has been in charge of the Treasury the percentage of the Budget raised in indirect taxation has increased substantially. In making this very important change, the right hon. Gentleman should give some indication of the principles which are guiding him, how far he would like to see this development continue, whether he wishes to push it further, and what arguments are actuating him in making this very important division between the levels of direct and indirect taxation.
    Speaking for myself, and probably for some of my hon. Friends, I do not think that the present direct taxation structure is perfect. The Royal Commission torpedoed many of the general arguments which we have heard so frequently in the past from Government supporters, and it put forward a great number of interesting and constructive proposals, some of which come from the majority Report and some from the minority Report. I hope that the Chancellor will consider this matter really carefully. The point of general principle underlying the proposals for change put forward from both sides of the Commission which commands my support, and I think that of most hon.
    1758
    Gentlemen on this side of the Committee, is that the family man at almost all rates of Income Tax is over-taxed as compared with the single individual. We would welcome proposals which corrected it.
    I think it is also important that we should bear in mind that proposals designed to correct that position, which as I said, applies at all income ranges, should be compensated for in the sense that if the middle or small Surtax payer with a number of children is helped, it should be done, not at the expense of the community as a whole, which would have been the difficulty of the Amendment of the hon. Member for Orkney and Shetland, had it been called, but at the expense of the single individual in that particular taxation range. In other words, if that redistribution could be carried out it should be redistribution between different individuals, according to their family responsibilities, in particular ranges of income and should not be used as a sort of back-door to carry out redistribution between different income groups.
    Many of us would welcome the remission of taxation in respect of small Income Tax payers at the bottom end of the scale. A great number of individuals in this country pay a small amount of tax, and without doubt the administrative cost of getting that tax from them is very substantial. One would prefer to see remission of taxation directed towards relieving increasing numbers of those people from the burden of Income Tax altogether rather than remissions in the general direction in which the Chancellor has proceeded in previous years.
    Mr. Ralph Assheton:The Committee always enjoys listening to the speeches of the hon. Member for Stechford (Mr. Roy Jenkins). His argument is always close, and his presentation always most agreeable.
    I listened to the discussion he referred to which took place on the wireless between the hon. Member for Gloucestershire, South (Mr. Crosland) and Mr. Paul Chambers. I very seldom have the pleasure of listening to debates on the wireless because we are almost always here when they take place, but as I say, I was able to listen to that one and I found it a most interesting discussion.
    Before I come to my main points, I should like to interject one suggestion in answer to the point which the hon. Mem-

    1759
    ber for Stechford has just made. He asked why it was that those in control of nationalised industries were so much more ready to invest, than those in charge of private industry. Mr. Chambers had suggested that high taxation was a disincentive which had an effect even on the salaried employees of large businesses. I suggest an additional reason.
    I would put for the consideration of the hon. Member for Stechford the suggestion that the nationalised industries have the great advantage of being able to obtain their money with very little trouble and with the interest guaranteed by the Treasury. That makes a tremendous difference to one's approach to investment, if one is thinking about investing money for industry.
    Mr. Roy Jenkins:Obviously that makes a very substantial difference in the case of obtaining money as between public and private industry, but I am not clear why it should make a difference between the two sectors of industry when in both cases the money is available and in one case the decision is to go ahead and in the other it is not.
    4.15 p.m.
    Mr. Assheton:I heard the argument which the hon. Member for Gloucestershire, South put forward so well, and I heard the reply of Mr. Chambers. I believe the difference of opinion there is a matter of psychology. I find it difficult to explain to hon. Members opposite exactly what is the underlying cause; it is a psychological cause, not easy to put into words. But the fact that one has not to pay a high rate of interest and has no difficulty in finding the money makes a tremendous difference from the point of view of a businessman.
    I do not wish to make a speech dealing in detail with current rates of Income Tax and Surtax. I have often expressed my views on this matter, and I should like to tell the hon. Member for Stechford that I have not changed them in the least. I still think that the current rates of Income Tax and Surtax are much too high for the true well-being of this community, and I shall continue to think so.
    I should, however, like to give some reasons apart from the reason of incentive, to which perhaps more attention has been given than need have been. Incentive is a very important point, but not
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    the only one. My objections to high taxation go a great deal wider than the question of incentive. There was a time when the sole object of taxation was to raise revenue to meet the expenditure of the State. It is a long time since we passed that stage.
    Taxes are now raised for a variety of reasons. The principal other reason, which has for a long time been regarded by many people as a sound one, is to redistribute income and shift wealth from the richer members of the community to the poorer ones. There are other reasons in connection with tariffs, protection, etc.
    The redistributive system began with the Lloyd George Budget of 1909, and it has gone on pretty steadily ever since. I wish to ask the Committee to examine today how far that has gone, and what it has led us to. I suggest to the Committee, and this is a substantial objection of mine to high taxation, that it has led not so much to a redistribution of wealth but to a redistribution of power from the Individual to the State. That is the most important effect of this high level of taxation. At all events, that is the consequence of what we have done, whether or not it was the design.
    Socialism, as it was conceived by its earlier prophets, was a doctrine—I hope I am not doing the party any injustice—which looked to a good society, a society in which men would have better relations with one another and a more kindly feeling towards their fellows. Very wide discrepancies of wealth were thought to be inimical to such a society, and redistribution of wealth was looked upon as one of the means of achieving that end.
    Of course, the high ideals of Socialism were somewhat weakened by the doctrines of Karl Marx, based so much on envy, which I know most hon. Gentlemen opposite would entirely repudiate. Nevertheless, I think it is not unfair to say that society has become more materialistic, and its object, and the object of politicians, has become much more that of seeking after personal consumption for the individual. That seems to me to have descended not so much from a high Socialist ideal but from the utilitarian concepts of the 19th Century.
    Much will be said about the question of incentive and disincentive. I still profoundly declare, in spite of all that the

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    hon. Member for Stechford has said, that the current level of taxation is a great disincentive to effort. I do not claim that all taxation is a disincentive to effort, but the current level certainly is.
    I wish to make two points. One is that taxation on incomes as we have it now is not chiefly a transfer of wealth from the rich to the poor but is largely a question of the State taking people's incomes and spending their money for them on the broad assumption that the gentleman in Whitehall knows best. The figures conclusively prove that. One has only to look at the Blue Books showing the Inland Revenue figures. It will be found that the transfer brought about by taxation is a horizontal transfer, an oblique transfer, not one from the top to the bottom. That is the way in which this great increase of power has come into the hands of the State at the expense of the individual. That is a situation which may appeal to hon. Members opposite, but which does not appeal so much to hon. Members on this side of the Committee.
    The other point I wish to make is that personal incomes are much more severely treated than incomes of corporate bodies or business organisations. I think that this is an important point. Corporate bodies enjoy extraordinary preference over real people, especially in the field of taxation. The income of corporate bodies is not charged to tax progressively—thank goodness. It would be a disaster for the country if that were so. But that is a great difference, and what is more, the expenses of corporate bodies are set off against their gross incomes before their taxable income is arrived at. Those are two tremendous differences between the treatment of corporate bodies and individuals.
    M. Bertrand de Jouvenal wrote an interesting book called, "The Ethics of Redistribution." I dare say that many hon. Members have read it; I am sure that the Chancellor has; and I wish to give one illustration from it. He said:
    "It is quite incomprehensible that a breeder of dogs for the race track should be allowed his costs, depreciation, etc., while the father of a family is not. It is as if the lawmakers sympathised more with the purpose of the former, which is to sell dogs for the track, than with the purposes of the latter which gives men to society—incidentally for soldiering and tax-paying."
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    I recommend those who wish to pursue that thought further to read his book, which will repay study.
    Now may I come back to my second point, that redistribution of wealth by taxation is really a redistribution of power and not of income from the rich to the poor? In the last 40 years the fraction of the national income passing through the hands of the taxpayer has increased enormously. It is about 40 per cent. now, or even more. That is something which it seems to me it is the duty of Parliament to check, and if possible to reverse. Parliament was originally the taxpayers' front against the Executive and that front has been sadly broken. The State was very clever in breaking it by driving a wedge between different sections of taxpayers and by subjecting one section of the taxpayers to progressive taxation. That was a very cunning move.
    When greater demands for taxation came along in the period of the two wars, that progressive taxation went even further. At the end of the war the State kept a tremendous amount of the taxation which it had got into its net. Nearly all of this gain, certainly practically all the gains from the wealthier section of the community, were retained and, so far from diminishing its expenditure since the end of the war, the State has increased it.
    In consequence, all the time there has been a tremendous destruction of private incomes, a tremendous destruction of independent means and of the efforts of individuals. All the time more and more power has been put into the hands of the officials and managers—more and more power for them and less and less power for the individual. A new ruling class has grown up, both in industry and in the service of the State, and some of the expenditure which the private individual has to bear himself can be indulged in by them at the expense of the office or organisation to which they belong.
    Today I make a plea to the Chancellor for the ordinary taxpayer, poor "John Citizen," who gets a home together and who somehow manages to keep it together; who brings children into the world and even finds some money to help to educate them to become a more valuable part of the community; who pays

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    for his own luxuries out of his own pocket. I plead for him for the professional man, and for those with fixed incomes who are so hard pressed both by taxation and by the tremendous fall in the value of money.
    For those people a reduction of taxation is the only hope, and I was glad to note that the hon. Member for Stechford bears them in mind and that he gave some hope that his party feels sympathetically towards them. At present many men, even by the hardest work, cannot increase their incomes enough to offset the continual decline in the value of money. However hard they work, they cannot catch up with it. That is a very serious situation.
    I plead, therefore, for the more capable and more industrious people, the people whose ability is being recognised less and less as time goes on. I plead for the skilled craftsmen and tradesmen who see the difference between themselves and those who have little skill being constantly diminished. Above all, I plead that the taxpayers should be allowed to keep a larger share of their incomes and certainly that there should be less for the State to spend.
    As we know to our cost, the State is a very careless spender. Theory may tell us one thing, but practice reveals another. I do not want to cut all taxation ruthlessly as the leading article in "The Times" today seemed to think. That is not my idea. I want to see expenditure examined carefully and more money spent by those who earn it and not so much by the State. Of course, I wish to keep up expenditure and to keep up employment and investment. One wishes the money to be used, but one also wishes to avoid all the money being channelled through the State.
    Of the very vast income—over £4,000 million—which the State machine wrings out of the taxpayer, by far the greater part comes from people of very modest means. One has only to look at the figures to see that. As I say, the transfer of income is not a transfer from the top to the bottom so much as a transfer horizontally, which is just a transfer of power from the individual to the State.
    We on this side of the Committee, and I believe most citizens in this country, wish to see the power of the State diminished. We certainly do not want to see
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    it increased. The power of the State has been increasing for many years, and to my mind, and I believe in the view of all hon. Members on this side of the Committee, it is time that it was diminished.
    4.30 p.m.
    Mr. Ellis Smith:While not agreeing altogether with the right hon. Member for Blackburn, West (Mr. Assheton), may I say that he has presented a reasoned case which deserves consideration. I wish he had attributed the responsibility for the present situation to some source, but that he did not do.
    I wish to protest as strongly as I can against Income Tax at 9s. in the £ being imposed on highly-skilled craftsmen and, at the same time, to plead for increased allowances for the purchase of tools, and technical books. Pending consideration of this second problem by responsible Ministers, I ask that Income Tax at 9s. in the £ should not be levied on highly-skilled craftsmen.
    I have made a careful analysis of the Finance Bill. In it there are many concessions and allowances, but none for the highly-skilled craftsmen who have inherited a wealth of knowledge as a legacy from their forefathers and who have devoted their lives to industry. For years I have tried to get the facts on record, but no one has taken any notice. Today, they will go on record and unless notice is taken further action will be taken within the next few years.
    I have here a letter dated 17th May, 1954, from the Minister of Labour, which enclosed a document which read:
    "Statement showing relative level of rates of wages for adult male workers in certain occupations. Level of wages expressed as percentage rates at July, 1914, equals 100."
    That statement shows that the figure at present for fitters and turners is 375. It is upon the rate for those men that the rates for the highly-skilled craftsmen are determined. Other figures are: labourers, 549; agricultural workers, 667; local authority workers, 480.
    The statement does not include all those relatively well placed people whose standard of living continued to improve while that of the men for whom I am speaking fell as low as the employers dared to let it between 1930 and 1933. Other figures are for bricklayers in the

    1765
    building industry, 441, and for labourers, 578; railway service, 394-441; and porters, 650.
    I wish that I had an opportunity to place the whole of the evidence on record, but I do not wish to detain the Committee for too long. These are the bare facts. If anyone doubts what I have said I invite him to look at the reply which I received from the Minister of Labour.
    "The Times" has been very good on this issue. In a leading article some time ago it set out certain main principles, the first being that the workers want the social value of their job appreciated. Their earnings should be a recognition of their relative place in life. It said that there should be a social appreciation of a person's contribution. There has been a shameful disparagement of manual labour in this country during the past 50 years, and that includes the highly-skilled craftsmen who must combine all the needs of so-called brain work with skilled manual work.
    An investigation was carried out some time ago by the Western Electric Company. It was found that dissatisfaction about wages was not concerned only with the absolute amount of the wage, but with the apparent unfairness in the relative payments made. Skilled craftsmen are indignant about basic rates of wages, relative payments and their lowering status. The employers have been appealed to over 40 years to do something about it, but they have ignored the appeals. Therefore, we are forced to ask the Government to make concessions so that the skilled craftsmen who have proved by their record to be as patriotic as anyone in the country should be granted recognition.
    I propose to give facts about their worsened position. I quote from the "Institute of Statistics Bulletin" for April, 1951, at page 111. It states:
    "Wages of skilled and unskilled workers. Time rate of unskilled as percentage of skilled."
    This shows that in 1880 the figure for engineering was 60 and in 1930 it was 71.2; in 1940, it was 77.2 and, in 1950, it was 84.7. In 1914, the general engineering worker received 66 per cent. of the craftsman's rate. In 1950, he received 84 per cent. In Britain there is a difference of 16 per cent.; in America, 55
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    per cent. and in the Soviet Union, 80 per cent. Those were the figures in 1949 and I understand that today in the United States the difference is much greater in favour of the craftsman.
    I propose to produce evidence later to indicate that unless the country pays heed to the case which is being stated today we shall be in a very serious position within a few years. The relative worsening in the position of our highly-skilled craftsmen and their treatment over 40 years is a national scandal. About 40 per cent. of the highly-skilled pattern-makers, the most highly-skilled craftsmen in the country, receive only £8 2s. 3d. for a full week's work of 44 hours.
    This is how we started our relative worsening position. In two world wars we have been super patriotic. We have sunk our identity and our interests for the good of the country. The process started in 1914 and we have continued to slip backwards.
    The Temporary Chairman (Mr. James H. Hoy):I would call attention to the fact that Clause 13 deals with the standard rate of Income Tax of 9s. in the £. I cannot follow the hon. Gentleman's argument.
    Mr. Smith:I can understand that. When I started my speech Sir Charles was in the Chair and he understood that the 9s. in the £ is being paid by highly-skilled craftsmen. I am stating the case as a protest and I am trying to show that the rate should not apply to them. I am trying to convince the Chancellor that the 9s. rate should not be applied. The Clause has a bearing upon highly-skilled craftsmen whose position is worse relatively than that of anyone in the country.
    During the First World War our position deteriorated. During the two world wars wages never caught up with increases in the cost of living. Therefore, we suffered in two ways. I married in 1922 and within six months I lost 25s. a week because of the attacks made upon the engineering industry. The highly-skilled craftsmen suffered relatively more than others.
    We were told that we were engaged in an unsheltered occupation. We have heard the story so often—that to meet foreign competition—and as a realist I accept this part of it—it was necessary for us to

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    have a wholesale reduction in wages and earnings and to have worse conditions while most other relatively placed people carried on just the same and at our expense. In 1923, those of us who were engaged in key industries, in unsheltered trades, suffered a 38½ per cent. reduction in our wages while in most other industries they suffered reductions of 21 per cent. and 23 per cent. While our wages, earnings and status went down, those of people engaged in some other walks of life went up.
    During the past few years a large number of Anglo-American productivity reports have been published. We welcome them although those of us who have had to face foreign competition in our lives have become a little sickened of them because these reports come mainly from people who have never been engaged directly in industry. Nevertheless, they have made a contribution and to that extent we welcome them.
    Never has there been one word in those reports about the vital question which I am discussing today. Britain's economic position is being maintained at the expense of our highly-skilled craftsmen. Britain's exports are being subsidised by paying the skilled craftsmen at least £2 a week too little and relatively less than they are receiving in many other industrial countries. People may say, "You are dealing only with wages or flat rates." That is true, but in addition we are considering the Finance Bill, which proposes to continue the application of Income Tax at 9s. in the £. There are millions of skilled craftsmen on the flat rate. Indeed, 40 per cent. of the most highly-skilled men are receiving £8 2s. 3d. a week.
    Mr. Arthur Holt:When the hon. Member talks about £8 a week, is he not taking about minimum rates, not earnings?
    The Temporary Chairman:This Clause deals with a standard rate of Income Tax at 9s. in the £ and the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) would be quite out of order in following that line.
    Mr. Smith:The hon. Member for Bolton, West (Mr. Holt) is entitled to a reply, because within narrow limits the point is in order.
    The Temporary Chairman:The hon. Member must not be tempted; the question was out of order.
    4.45 p.m.
    Mr. Smith:For years we were asked to accept payment by results. We did. We were also told, "Your prices will never be cut." But they were cut in 1931, and that cut has never been restored. They have been cut by Pay-as-You-Earn. with Income Tax at 9s. in the £.
    I make the charge that the administration of Income Tax is most unfair to skilled craftsmen. Every penny in their pay packets is known and they are taxed on it. It is a simple administrative question of making a calculation. Compare that with the administrative difficulties which come out in the Royal Commission's Report. Compare it with the position of a well-known man in this country who has been able to save thousands of pounds because he has retired on three occasions.
    It is time these facts were stated, because if it were not for the industries of the kind about which I speak, the economic position of this country, serious as it is today, would be much worse. It would be worse if these people did not give of their best.
    Except for the men at the coal face or the drivers of express trains, few people make the same contribution to our economic needs as the men in the engineering industry. For years we were told, "The sky is the limit, if only you will exert yourselves." But we had a cut in rates in 1931 which has never been restored and Income Tax at 9s. in the £ is still being applied. I make no apology for speaking on this subject today. This tax should not be applied to those engaged in industry of the kind about which I speak.
    "The Times Review of Industry." March, 1954, Table 4, confirms all I have said. It also states:
    "For other skilled occupations, such as builders and engineering craftsmen, real wages may now be somewhat less than before the war."
    What a terrible situation we have reached when the real wages of highly-skilled craftsmen, the very backbone of the country, are now somewhat less than they were before the war. That is said by the authoritative "The Times Review of Industry."

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    This is the thanks we have for increased output, for increased exports, for the wage restraint of years. This is the thanks for our part in two world wars. At present, 40 per cent. of the most highly-skilled men do not receive a penny more than £8 4s.
    Who are these highly-skilled craftsmen? When they were boys they devoted years, three or four nights a week cycling in all weathers to secondary schools in order to develop themselves technically, equipping themselves mathematically and geometrically to enable them to read drawings and make calculations quickly, to use their hands at the same time—a combination of brain and manual work together with ingenuity and adaptability. They give of their best in a way that few people do. Most people, who never take off their coats, do not give as much.
    We must retain the good will of these men and unless something is done by the Government through the concessions which I suggest, that good will must inevitably be affected because of the way in which these men have been treated. Consider our record in two world wars, our contribution towards technical progress and towards exports. None of us would be living if it were not for our export trade. Consider our contribution towards increased output and experimentation. I say that the 40 years' treatment of the highly-skilled engineering craftsmen in this country is a national scandal.
    We pride ourselves on having the most highly-skilled people in the world. Our forefathers migrated to America and other countries. They were looked upon as the cream of the skilled men of the world. In America standards have gone up and up while in this country the craftsmen who manufacture the motor cars cannot afford to ride in them. They cannot afford to use the other products which they produce. They see well-paid, well-fed and well-dressed people who, relatively, make no contribution worth mentioning. For these people the standard of living has gone up. They are well paid and get three weeks' holiday a year. The highly-skilled craftsmen receive only £8 4s. flat rate—millions of them do not receive a penny more—and receive only two weeks' holiday a year.
    I hope the case I have presented will be considered. Some may be inclined to
    1770
    smile at it, but the smile will be taken off their faces in a few years' time unless some action is taken. I hope this case will also be read outside this Committee by the employers, to whom we have been trying to put it during the last 40 years. Because they have taken no heed, we now have to ask the Government to consider it, and that is why I have made this plea.
    Mr. J. Grimond:The debate has revealed the many difficulties of our situation without illuminating the way out of them. The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) in effect has pointed out that today taxation is not paid only by the idle rich but principally by the hard-working man of skill, while the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) has said that we are bearing a monstrous degree of taxation, a degree which no other country in the world has to bear. But the right hon. Gentleman himself could not suggest any way out.
    The Chancellor of the Exchequer is of the same party as the right hon. Gentleman, but after three years of a Conservative Government, there has been no significant reduction in taxation. [HON. MEMBERS: "Yes."] Well, I will give hon. Gentlemen opposite that; there has been a reduction, but not nearly as large as the right hon. Gentleman would like. Against that, there are pleas made from all sides of the House for higher pensions and for expenditure of money in various ways. Undoubtedly, the country is between the devil of high expenditure and the deep sea of taxation.
    Personally, I agree with the findings of the Royal Commission and with what has been said earlier in the debate, that the disincentive effect of high taxation has been in one way exaggerated. I do not think that the man in his office or the labourer at his job works any less hard because taxation goes up or down a little. I think that is unlikely. I think we are too modest about the amount of work and energy of the people of this country, and my impression is that visitors to this country are much impressed by the amount of work that we do.
    I do feel, however, that the present rate of taxation does not leave much margin for savings and particularly for mobile savings. Most of the savings are done by companies, and are available only to

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    the company concerned. Further, I think that the rate of tax is a deterrent to young people who might be prepared to take risks. If they need capital they cannot get it and the rewards are not worth the dangers of failure.
    Mr. Cyril Osborne:A disincentive, surely?
    Mr. Grimond:Yes, I think it is. In that way there is some disincentive effect, but it will take some time to show itself. This is a country which has to depend more on its own enterprise and on striking out into new methods if it is to support anything like its present population, and therefore this is a matter which will have to be more seriously reviewed and on a wider basis than that adopted by the Royal Commission.
    I feel that the way out of the whole difficulty must lie in greater encouragement to effort and enterprise. This year there has been no further differentiation in taxation between earned and unearned incomes. I know that differentiation is very difficult, but it is a matter to which the Treasury ought to apply their minds again now, in order to see whether we could not award some relief to earned income even at the expense of extra taxation of unearned income. I should like to look, too, at the question of encouraging companies which are prepared to enter into some kind of profit-sharing scheme. The developments in Imperial Chemical Industries are very significant. I do not wish to overstate the argument. I know that some variation in schemes is required from company to company, but if a remission of taxation can be worked out to give encouragement to companies which initiate profit-earning schemes, I believe that the whole country would gain.
    It has been remarked that there is an Amendment on the Order Paper to this Clause in my name, but you, Mr. Hoy, will be relieved to hear that I am not going to make the speech which I have prepared, partly because it would be out of order, and partly because I want to keep it for a later occasion in connection with another Amendment, which it will suit very well. I should like to say, however, that the intention of the Amendment was to do something to help the family man, because in my view we do penalise the family unduly in this coun-
    1772
    try. I am a family man myself. I am proud of it. I think people ought to marry and breed. People in this country should deplore the fact that a man can write to the "Manchester Guardian" signing himself "Happy Bachelor" and say:
    "Love and procreation bring us to the brink of bankruptcy."
    Nowadays, a family of children is treated as a luxury, and as a somewhat disreputable luxury at that. It is important that the skilled workman, the middle classes, the professional people particularly, should be encouraged to produce children, because they are a great reservoir of skill and ability in this country. We should encourage them not only to have children and bring them up and provide for them, but to make a substantial contribution towards their education.
    It has been pointed out by the hon. Member for Stechford (Mr. Roy Jenkins) that my Amendment is only half of the recommendation by the Royal Commission. With his usual acumen he noted that had I tried to give effect to the whole recommendation it would have been out of order. What I should like to see, however, is some help for the family at the expense of the bachelor, as the Commission recommend. At present, a man who has a family of five and is earning £2,600 a year has only £1,825 left on which to support the five people, while a bachelor, having the same income, would have about £1,600 on which to support himself. To support a wife or even one child costs more than £200 a year as anyone will know who has tried. It would be much cheaper to keep a mistress. If that is what the Chancellor wants, let him say so frankly.
    In that Surtax level of income, the discrepancy is particularly large. It is much more acute than is the case lower down. At an earned income level of £500 the ratio between the single man, the married man without children and the married man with two children is 100 to 57 to 2, according to the Report of the Royal Commission. At the level of £3,000 a year, the ratio between the single man, the married man without children and the married man with two children is 100 to 96 to 90. Obviously, the ratio decreases steeply, and far too steeply, in respect of these higher levels. Surtax payers who are family men are relatively much worse

    1773
    off than Income Tax payers at lower levels.
    But it may be said that, in any case, people who pay Surtax are rich as compared with many other people, and that is certainly true, but I think that £2,000 a year today is not a fortune. It is what a decent, unflamboyant fairly sober member of the middle classes like a Financial Secretary might expect to earn. It is fair that we should vary the burden of taxation within the Surtax rates without feeling that we are being overgenerous to the wealthy. I want to see the bachelor taxed more heavily, and I think there is a very strong case for assisting the family man by staggering the levels at which Surtax starts.
    It is on these two points of redistribution in favour of the family man and redistribution to allow more earning to remain in the pockets of people who are prepared to give their skill and energy that I should like the Chancellor to look at this Clause again.
    5.0 p.m.
    Mr. Osborne:I had rather hoped to make a long speech, but I have been instructed to "make it snappy."
    Mr. Ellis Smith:Where does this new technique come from?
    Mr. Osborne:This Clause, which imposes Income Tax at 9s. in the £ and Surtax at 10s. in the £—19s. in the top ranges—cannot be looked at in isolation. It can only be looked at in the background of inflation and the narrowed wage and salary differentials. If it is taken in isolation, a case cannot be made against it, but, if taken with those two important considerations, a very strong case can be made. I hope I shall be able to make it on behalf of the skilled man, the man who takes responsibility, the professional man, and the middle classes generally.
    May I make one other preliminary remark without offence? I much prefer the straightforward approach from the working man's point of view to the effect that this has on earnings, than the Balliol approach we had from the hon. Member for Stechford (Mr. Roy Jenkins). That smacked too much of the high school and the senior boy.
    Clause 13 is obviously the most important Clause in the whole Bill. The Com-
    1774
    mittee may not realise that last year Income Tax raised £1,863 million, or 42 per cent. of our total revenue. We are tempted to regard the present rates as normal, but I would remind the Committee that they are not normal. They were imposed in 1940, when we were living in a siege economy and all sorts of restrictions were imposed. Most of those restrictions have been withdrawn, but this one has remained. In the 1914–18 war and after Income Tax never rose to more than 6s. in the £ as against 9s. today and Surtax never rose to more than 6s. in the £ and only applied to incomes of over £30,000 a year, whereas the limit today is reached at £15,000 a year and purchasing power is perhaps 25 per cent. of what it was in 1919.
    The first point which the Committee should have clearly in mind is that the present rate is abnormally and excessively high and would have been regarded by Mr. Lloyd George in 1909 as indecently savage. The most important point the Committee has to bear in mind is that, whereas, since 1909, the counterpart of this Clause in previous Finance Bills has been regarded as an instrument of social justice for the redistribution of wealth between the rich and the poor, today it has to be judged from a quite different standpoint. Sir Stafford Cripps told us many times that little more could be done by mere redistribution of wealth and that if we were to raise the standard of living of the ordinary people of this country it could only be done by increasing national productivity.
    Mr. Austen Albu:Would the hon. Member—
    Mr. Osborne:Please allow me to make my speech.
    Despite what the Royal Commission on the Taxation of Profits and Income has said—and this will not be the first Royal Commission whose conclusions have been proved wrong by subsequent events—the Committee should look at this penal tax from the point of view of its economic consequences and disincentives. I agree with the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) that this tax, taken in conjunction with the narrow wage differentials and inflation, is the biggest hindrance to greater national productivity in our whole economy. I

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    believe that the Finance Bill has to be judged purely from this point of view.
    On a matter of small detail, I ask the Chancellor if it is possible—if not in this Finance Bill, in the future—to produce some regulations whereby overtime and extra productivity shall not be punished by savage taxation, but that men may get overtime payment free of tax. I know that there are innumerable difficulties and I do not pretend to have a clue of how to solve them, but I ask the Treasury, whose job it is to solve financial problems, to look at this question. Despite what the hon. Member for Stechford said about the matter, if he were inside a works, either running the works or working in them at the bench, he would know full well that if men have to pay 9s. in the £ on overtime they are much less likely to do overtime than if they did not have to pay it. I believe that P.A.Y.E. is a great disincentive and I would like the rate of tax to be altered so that men would not have to pay taxation on overtime.
    Mr. Douglas Jay:The hon. Member is making a very interesting speech. Would he tell us what he thinks about the appendix in the Report of the Royal Commission? That is not based on any theorising from Balliol, or anywhere else, but on a number of questions addressed to actual workers and comes to a different conclusion on the subject of incentives. It would be interesting to know the hon. Member's views on that.
    Mr. Osborne:That is the reason I did not give way before, and I apologise, but that would take me from the point I want to make to the Committee and would take far too long.
    I will give some facts. Take the question of wage differentials now and in the 1930's. Hon. Members are interested in the railway unions. In 1934, the basic rate, with no overtime and no night duty, was, for a porter 40s.; for a top signalman, 70s. and, for an express driver, 90s. The wage differential was 125 per cent. Today, for the porter the rate is 124s. 6d., for the top signalman, 155s. 6d., and, for the express driver, 178s. 6d. The differential between the porter and the express driver has been reduced from 125 percent. to 43 per cent. That is not the way to
    1776
    encourage a man to take the risk and the strain of being an express driver.
    In the engineering industry the position is infinitely worse. My plea is that the man at the top, if he is earning more, should not be subject to the tax we are about to impose. The Committee may be surprised by the figures I am now about to give. I was surprised when they were given me by the engineering industry. The basic minimum wage for a 54-hour week in 1914 was, for a skilled man, 36s., for an unskilled man, 20s. 6d. and the differential was 80 per cent Today, for a 44-hour week, the basic minimum wage for a skilled man is 144s. 10d. and, for an unskilled man, 124s. 6d. and the differential is 16 per cent. It is absurd that we do not pay our skilled people more money.
    In the light of these facts I plead that the tax on their earnings under this Clause should be reduced. It is no good to say that this is not part of the argument, it is vital to the argument. It may be objected, as it was from the Liberal bench, that the figures quoted were the basic minimum rates.
    Mr. Holt:On a point of order. May I draw attention to the fact that while all this argument is based on the payment of tax at the rate of 9s. in the £, not even a single man starts to pay that rate of tax until his income reaches £612 a year, nearly £12 a week? All this argument is based on earnings of £8 or £9 a week.
    The Temporary Chairman:I tried to draw the attention of the Committee to the fact that this Clause deals with the standard rate of tax of 9s. in the £. I thought that the hon. Gentleman was using it as an example.
    Mr. Ellis Smith:Further to that point of order. If the hon. Gentleman who asked the question was better informed, he would know that earnings and overtime would bring the skilled craftsman within the taxation group.
    Mr. Osborne:I think that the intervention from the Liberal bench was most illiberal. This is vital to the whole concept of whether the taxation which we are imposing under Clause 13 is justified or not. I am trying to look at it from its economic consequences, of how it affects our productivity, and not from the point of view of its social justification. If the Liberal bench are not aware of it, I would

    1777
    point out that Clause 13 also imposes taxation which starts at less than 9s. in the £. Apparently, the Liberal bench are as bad as Balliol.
    I will try to show how this Clause affects the skilled man for whom I am making a plea. I am advised that in 1914 the earnings of a skilled man in the engineering industry amounted to 43s. a week and those of an unskilled man to 24s. a week, which showed a differential of 79 per cent.
    Mr. Roy Jenkins:On a point of order. As I am unable to see the hon. Member for Louth (Mr. Osborne), Mr. Hoy, could we have the blinds drawn?
    Mr. Osborne:That is a typical sixth form schoolboy's trick. It is not even worthy of Balliol. I wish I could have the hon. Gentleman on a factory floor for two years. We might then make a man of him.
    Compared with those figures for 1914, the skilled man today earns 226s. a week—that brings the matter into the range which even the Liberals understand—and the unskilled man earns 178s. 6d. a week. The differential is down to 26 per cent.
    Mr. William Ross:As I am now able to see the hon. Gentleman, Mr. Hoy, could we have the blinds drawn up again?
    Mr. Osborne:This is the first time that I have been given the slightest glimpse of humanity on the part of the hon. Member for Kilmarnock (Mr. Ross). Bitterness and hatred have previously been his hallmark.
    The Temporary Chairman:May I ask the hon. Gentleman to come back once again to the Clause? The discussion is getting a little wide, and the reference to Balliol, I believe, even affects the Financial Secretary to the Treasury, who, I am sure, does not wish to be drawn into the argument.
    5.15 p.m.
    Mr. Osborne:There are Balliol men and Balliol men.
    Under Clause 13, the single engineer earning 226s. a week pays 7s. in the £ on his top earnings. It is not the men who sweep the floors in our factories who will help us regain our position in the export market. The people who will do this are our technical men, our skilled men and
    1778
    our managerial classes. What we are saying to them under this Clause is, "If you dare to work harder, dare to do better, we will punish you by taxing your earnings." That is not the way to encourage them to do more.
    The purchasing power of the £ today is only 8s. compared with what it was in 1935. Therefore the skilled engineer and the top railway men have not only had their wage differential narrowed, but what they receive purchases only 40 per cent. of what it did, and of that the Chancellor under this Clause is taking too big a slice. My plea is that there ought to be a considerable reduction in taxation.
    My last word will not, perhaps, get so much agreement from some hon. Members opposite. I now want to speak for the men who are paying Surtax. Under this Clause, Surtax still commences at £2,000 a year, the same as in 1935, but, as the purchasing power of the £ is down to only 8s., we are, on 1935 values, beginning to charge Surtax at an equivalent of £800, which I think is preposterous. If, on the other hand, the commencing level for Surtax were started on 1935 values at £2000 it would mean that Surtax would only begin to be charged today on an income of £5,000 a year.
    It is no use ignoring the fact that this country needs all the managerial skill, all the technical skill and all that the middle-class can give to our industrial organisations. If we tax our middle-class out of existence, not only will they suffer, but the old-age pensioners and the lowest income groups will also suffer, and suffer, perhaps, proportionately more.
    I ask my right hon. Friend the Chancellor to re-examine the Surtax Clause as it affects the middle-classes, the professional man and the technician, and, to support my plea, I propose to give the Committee three brief extracts. One is from the Registrar-General's Occupational Mortality Supplement which was issued quite recently. Commenting on this report on 5th June, the "Economist" used the heading, "Mediocrity is Safer." What an extraordinary thing for a country to have to admit. The "Economist" went on to say:
    "The improvement in standards of living, which used to be the reward of success, is no

    1779
    longer sufficient to counteract the strain of more responsible work.… Today men in the top 'white collar' occupations, loosely classified as the professional classes, and those doing skilled manual work, may expect to die younger than their somewhat less skilled colleagues."
    If the strain of their job is shortening their lives, then I suggest that we ought not to take their earnings from them while they are alive.
    The other aid which I want to quote comes from the "New Fabian Essays," and was written by the hon. Member for Gloucestershire, South (Mr. Crosland). This, again, is to do with productivity and taxation. The hon. Member wrote:
    "The dominant reason—indeed, the outstanding feature of the whole American scene—is the extraordinary productive achievement of U.S. capitalism.… Trade unionists are at one with business men in believing that mass-production private capitalism offers the world's best answer to poverty and unrest."
    I agree with him. The reason is that in America, as I know from experience, they pay their managerial class much more highly than we do and tax them infinitely less. [Interruption. ] They tax them infinitely less.
    The final support to my plea to the Chancellor comes from an article by George Schwartz in the "Sunday Times," of 13th June. He says:
    "What this country needs is a four-day working week and no questions on the other days by the Inland Revenue or by anyone else. In these circumstances, the result could not be measured, but I am confident it would lead to a notable, if not spectacular, increase in the national product."
    We all know that men of all grades are doing secondary jobs, on the rewards of which they pay no Income Tax. I reason again with the Chancellor that if taxation were not so high the temptation to do those extra jobs and dodge taxation would not be so great. For all those reasons, and for many others which I should have liked to adduce, I hope that between now and next year we shall have a considerable reduction both in Income Tax and Surtax.
    Mr. Albu:The hon. Member for Louth (Mr. Osborne) spoke of an inhibition against his taking a great deal of time. I well remember that two or three years ago there were occasions when we were in a similar position, but so much
    1780
    nonsense was talked from these benches by hon. Members opposite that some of us revolted and made the speeches we had intended to make.
    I do not intend to follow the hon. Gentleman very far, but rather to refer to the interesting and very sincere speech of my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith). We know the very strong feelings he has about the condition of skilled workers in this country and about the narrowing in differentials which has taken place in recent years. I agree that this is a very serious issue indeed, but I am not sure that it can best be dealt with by taxation. It is a matter which we have to deal with through our trade unions, and on which we have to get agreement in the trade unions.
    Mr. Ellis Smith:The trade unions have been negotiating for 40 years and the position has continued to worsen.
    Mr. Albu:We are both members of unions which are members of the Confederation, and my hon. Friend will know that it is not as easy as all that.
    The truth is that the amount of taxation paid by family men on the levels of wages referred to by my hon. Friend is not very great. That is, of course, no argument for saying that they should not have the very much higher wages which would bring them into the higher ranges of taxation. To some extent the situation has worsened, due partly to the change in the value of money which has brought out of the exemption limit a large number of people whose real standard of living or earnings are not really higher than before the war.
    As paragraph 8 of the Minority Report of the Royal Commission points out:
    "In the first place, the starting point of liability is at a much lower level of real income than before the war. In the second place, the rise in taxation has been proportionately much greater in the lower categories of income taxpayers (broadly the £300-£1,000 range) than on those higher up the income scale."
    It is precisely those in that £300-£1,000 range who are the skilled technicians. Although it was never the intention, they have, relatively, suffered most.
    I am more concerned with what happens to people in this income range when they have the responsibilities of married

    1781
    life and children. The Royal Commission points out, again in the Minority Report, that the tax burden would be greater on a family man than on those married but without children, and greater on married couples without children than on single persons.
    What has struck me in recent years has been the narrowing of wage levels, not only between unskilled and skilled workers but between young persons and adults and how that affects those who have children still at school. My own view is that young people are earning much too much relatively to those men and women with responsibilities in life. One does not like to draw tendentious conclusions, but I am sure that juvenile delinquency, and so on, is, in some way, connected with the very high earnings of young people, and especially young men before going into the Services.
    Under the present taxation system, a man earning £7 or £8 a week may marry a girl earning £6. At first they will have a gross joint income of £13 or £14. As soon as they get a couple of children and the wife has to stop earning, the income will drop to £7 or £8, plus a family allowance of 8s. 6d. The net result is that the overall standard of living of that family drops very substantially indeed and they are frequently in great difficulties. I am sure that, whatever else we do, we must do something about those families.
    It is the men with those families and in that income range who are to some extent the backbone of the country—the technicians, the skilled men. They are the rising young men of the country. They have done their National Service, completed their craft training. Then, when getting to a responsible position and doing highly-skilled work, they will find themselves at their very lowest standard of living—
    Mr. Ralph Morley:What argument is my hon. Friend trying to adduce? If the salary of a married man with two children falls to £7 or £8 a week he does not blame Income Tax at all, so what does the argument lead to?
    5.30 p.m.
    Mr. Albu:I was not referring only to that. If my hon. Friend had heard the beginning of my speech I referred to the income range between £300 and £1,000.
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    Had my hon. Friend read the Royal Commission Report he would know that those signing the Minority Report drew most attention to those people. I would say to my hon. Friend that the matter has now become even more important because of the unanimous decision of the House, now reluctantly accepted by the Government, to introduce a system of equal pay for teachers and the public service. This makes it even more important to give greater relief to the family man with one or two children.
    I hope that hon. Members have studied the recommendations on pages 74 and 75 of the Minority Report which suggest, first of all, that there should be a minimum earned income relief of £120 which would greatly help the class of persons to whom my hon. Friend referred, and that the children's allowance should be increased. The result would be that there would be a rather slight increase in taxation at certain levels for single persons or married persons without children, with a consequent relief to those with one or more children. It seems to me that if there are to be changes in the Income Tax system, this is the way in which they should be made.
    We should endeavour to restore the levels of income which have disappeared through the change in the value of money since the war, and we should endeavour to give greater relief to those who, in my opinion, are in most need of it—the married men with two children. I am reminded that I should have said "with at least two children." I was not thinking of mass production cases.
    The right hon. Member for Blackburn, West (Mr. Assheton) made a very interesting philosophical speech, and we are always very interested in his views. One of the things he referred to was the advantage today which the corporate bodies have over personal units, individuals and families. To an extent, I agree with him. I do not think, however, that he can carry his argument too far, for reasons which I will give in a moment, but I do agree with his reference to the problems of depreciation of the household and the necessity to give greater relief to those who are doing their job by raising families and so on. Unfortunately. the Income Tax authorities. I believe, hold that a depreciation allowance cannot be granted on a body; I

    1783
    hope my hon. Friend the Member for Sowerby (Mr. Houghton) will correct me if I am wrong.
    I know that in America the ladies who appear so frequently in colourful garb, or with no garb, on the pages of glossy newspapers, and who earn their livings by showing off the fashions that are produced in the model houses, did try to get from the Income Tax authorities a depreciation allowance on the only assets which they possessed, but they were unable to do so.
    When I was in the United States last year there was a very interesting row going on between the airlines and the trade unions of the air hostesses because the airlines decided that by the age of 33 the assets of these ladies to their employers were completely wasted and that they were unemployable.
    The Deputy-Chairman (Sir Rhys Hopkin Morris):I do not want to interrupt the hon. Member in his very interesting argument, but this Clause appears to me to be concerned with the standard rate of Income Tax.
    Mr. Albu:Yes, Sir Rhys. I was rather drawn into this argument by the remarks of the right hon. Member for Blackburn, West who referred to what he thought was the unfair discrimination between the rates of taxation applicable to corporate bodies and the rates of taxation paid by other bodies or personal units. I do not know whether the right hon. Gentleman was pressing the case, but it would not really be possible to equate forms of taxation. Whether we like it or not, the corporate bodies today carry out a large part of our commercial and industrial activities.
    I think the right hon. Gentleman forgot that one of the reasons for our present high level of taxation is outside our own control, and that is our very high defence burden which we do not normally expect to have. But even if that were no longer necessary, we should still have the high level of welfare services and, let us say frankly, the redistributory effect of taxation which we consider is so necessary.
    The right hon. Gentleman used two expressions when he referred to the present taxation system. He said that it was an oblique, and then he said that it
    1784
    was a horizontal transfer. I think the right hon. Gentleman must agree that our Income Tax and Surtax constitutes a very progressive form of taxation which effects a very considerable transfer from rich to poor. But, as my hon. Friend the Member for Stechford (Mr. Roy Jenkins) pointed out, the actions of this Government have, to some extent, increased the proportion of indirect to direct taxation and it is, therefore, regressive. To that extent, as one increases indirect taxation, especially on necessities which the mass of the people consume, and reduces direct taxation, the transfer will be oblique or horizontal.
    Certainly, we on these benches are not in favour of that situation. But even so, if there is some transfer which is horizontal or oblique, is it necessarily a bad thing? It is not a question of the State undertaking everything for the individual, but there are many things which the individual cannot undertake for himself. An insurance scheme is a form of horizontal transfer, and some of the purposes of our taxation are really insurance purposes. The intention is that the whole community shall contribute towards assisting and protecting those who may be in pecuniary need. It seems to me that that form of horizontal transfer is well understood and accepted by our people as a whole. Therefore, I think that one can carry this argument too far.
    I should like to pay a tribute to the Royal Commission for having had the very good sense to use the Social Survey when it made its study of the effects of Pay-As-You-Earn. We as politicians are apt to think that we know everything from what our constituents tell us, that all our hunches are correct and that our views must inevitably be right. I do not hold that view. My experience is that one generally gets letters from a very small number of the people who are most affected, and that it is very difficult to know what is the general view on a complicated matter like taxation. One can get a lot of misleading opinions, such as those expressed by the hon. Member for Louth, who made an attack on my hon. Friend the Member for Stechford because he happened to have been at Balliol. I do not know why he should be attacked for that.
    Mr. Osborne:Because he has been nowhere else.
    Mr. Albu:The hon. Member for Louth has been in his own factory for many years, and, after all, no one is so small minded as a small businessman who is concerned only with the small number of people in his own business life. If one wants to get a false impression of these matters one should ask the small businessman.
    Mr. Osborne:However small he may be, he knows how this taxation affects—
    The Deputy-Chairman:I do not know how this argument can apply to this Clause.
    Mr. Osborne:It relates to the effect of taxation on the employees of a small business. Whether a business employs 10,000 people or only 100, the effect of taxation under this Clause on their overtime earnings is considerable, and persons who have spent their lives with men who are affected by this taxation should know a little more than the Balliol boys who, I suggest, know nothing about it at all.
    The Deputy-Chairman:The Clause deals with a narrower subject than that. It deals with the standard rate of Income Tax.
    Mr. Albu:I return to the subject of P.A.Y.E., which is the system by which Income Tax is paid by a very large proportion of taxpayers. The opinion of the large sample questioned by the Social Survey is a far better test—especially when one remembers that the questions were scientifically devised and the whole project was carried out by a body with very great experience of this matter—than opinions expressed by individuals without any statistical method of checking results. As the hon. Member knows, I have spent most of my life in industry—mostly in small businesses—and I know how easy it is to get quite the wrong impression of what most people think about this subject.
    The Social Survey showed quite clearly that P.A.Y.E. is not the disincentive among workers in industry that it is generally considered to be. It may be so in its application to high levels of overtime earnings, as my hon. Friend the Member for Stoke-on-Trent, South said, but, taken as a whole, the answers
    1786
    showed that it is not a disincentive, preventing ordinary industrial workers from doing their best and working overtime. Now that the party opposite is in office and is responsible for our economy, I ask hon. Members opposite, who have made speeches against P.A.Y.E. time and time again, why they should not be proud of the effects of our economy.
    It is true that since the Conservative Party has been in office it has not gone very much further than the position we achieved when we were in power, but in spite of the level of taxation, P.A.Y.E. and all the disincentives which are supposed to exist, we have never been so industrially expansive and prosperous as we were in 1950. Hon. Members opposite go round the country making speech after speech claiming for themselves the credit, the honour and the glory for putting the country in a situation where our balance of payments position is improving and our industrial production rising. Most of us think that it has not risen fast enough, but to argue that the level of Income Tax has been a disincentive is to be completely blind to the economic history of this country since the beginning of the century.
    If it comes to a question of incentives and innovation, I think that more innovation is taking place today than has taken place at any time since the beginning of the First World War. It is no good hon. Members opposite, particularly the right hon. Member for Blackburn, West going on in their doctrinaire way, saying that this system cannot work. The hon. Member for Blackburn, West did not stress that argument so much today; he drew back and relied on the sociological argument that the State was becoming too powerful because it was spending too much money, and the ordinary people were therefore becoming serfs, or were not able to do things in their own way.
    The people could not spend their own money on the Defence Services, or on many other things for which the Government have to be responsible today. There is no doubt that the people want their money spent on social and welfare services. I see no sign that the proportion of the national revenue being spent by the State is growing to an unreasonable extent. As our standard of living and productivity rises everybody will have more money to spend. We do not want

    1787
    a society in which the State does all the spending and takes all the decisions, but we must be realistic.
    To say that we cannot continue in a situation roughly similar to what we have had since the war is to fly in the face of all the facts which right hon. and hon. Members opposite will stress during the next 12 months.
    5.45 p.m.
    Mr. Geoffrey Stevens:I am sure that hon. Members on this side of the Committee found very agreeable the glowing tributes which have been paid by the hon. Member for Edmonton (Mr. Albu) in relation to the wise policies pursued by the Chancellor of the Exchequer in the last 3¼ years, which, despite the tremendous difficulties to which he referred, have enabled Industrial production, exports, and productivity in almost everything except coal to rise to record levels. It was very pleasant to hear the hon. Member say that, and it is a tribute which my right hon. Friend will gladly accept.
    This has been a very useful debate, not least because of the extent of the agreement among hon. Members on both sides of the Committee—by the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), by my hon. Friend the Member for Louth (Mr. Osborne), and by the hon. Member for Edmonton—that in the last 15 or 20 years differentials have shrunk far more than they should have done, and now represent a serious problem which requires immediate investigation and remedy. I agree that a differential form of taxation is probably not the best way of dealing with the difficulty.
    The hon. Member for Edmonton also raised the question of the difficulties in which families found themselves today, and that is another very difficult problem. I am sure that he has read the majority recommendations of the Second Report of the Royal Commission. It very often happens that these reports are received so shortly before the Budget statement of a Chancellor that, to whichever party he belongs, he is able to say, "I have not had time to consider the recommendations of this Commission; therefore, I have been unable to incorporate any of them—even should I agree with them—in my Budget this year."
    1788
    This Report has been published in very good time for April, 1955, and I hope that my right hon. Friend, between now and then, will be able to consider its recommendations, including the question of differentials with regard to both earned income and families, which has received support from both sides of the Committee.
    The hon. Member for Stechford (Mr. Roy Jenkins) said that many Tories—I do not think he said all of them—expressed a demand for reduced taxation, based on prejudice and party dogma. As he was saying that I could not help thinking of a little paragraph which I read in "The Times" this morning. It is headed: "Need For Shipbuilding Tax Relief," and it says:
    "Immediate alleviation of the tax burden on British shipbuilding, so that the industry could meet foreign competition, was urged by Mr. Tom Yates, general secretary of the National Union of Seamen, in his report to the union's annual meeting in London yesterday."
    I do not know whether Mr. Yates is a subscribing member to the Tory Party, or whether he is basing his demand for reduced taxation on prejudice and party dogma, but whatever the reason may be, I am in full agreement with what he has said.
    The hon. Member for Stechford also said something which I have often heard from him previously, and certainly from friends of his in Socialist propaganda, that in these days directors of public limited companies have not the direct interest in dividends which they used to have 40 or 50 years ago, because share capital is so much more widely spread that they are, in fact, salaried directors and are not dependent upon the rate of dividend which is paid.
    That is a great misapprehension of the situation. A board of directors is today just as interested in a wise and good financial record as was its predecessor 40 or 50 years ago, even though directors are not so directly interested in the rate of dividend payable to themselves as they used to be. Although their method of remuneration has changed their interest remains exactly what it always was.
    My objection to a high level of taxation in peacetime is based upon four things. First, it has been claimed in the past that a high rate of Income Tax mops up excess purchasing power and, therefore, has a deflationary effect, but

    1789
    if we have too high a level of Income Tax for too long in peace time the effect must undoubtedly be inflation and not deflation. A very simple example will serve to illustrate what I mean. A limited company may normally have replaced a piece of plant or machinery out of its reserves—profits ploughed back into the business.
    Quite obviously, the higher the rate of Income Tax the greater the proportion of profits that will be ploughed back to meet the cost of new plant and machinery. Conversely, the lower the rate of direct taxation the lower the selling price will be. That is a broad truth, and it is an obvious truth that too high taxation for too long in peace time is inflationary and leads to higher selling prices.
    Secondly, I object to a high rate of taxation for too long in peace time because it reduces the ability of limited companies to plough back profits to reserve, which capital thus saved is the plant and equipment of the future. Without it our industry cannot compete in the markets of the world.
    Thirdly, it reduces the possibility of personal saving. That has been referred to in the debate, but there is one thing which strikes me of immense importance that has not been referred to, and that is the effect upon the marginal liver. There must always be a great preponderance of marginal livers, and the marginal liver is not now the source from which the country can normally obtain its savings. These personal savings will come more in future from the highly paid executive.
    In industry and business today one finds case after case—I do in my professional life—of directors deliberately asking for a reduced salary, which obviously will reduce their ability to save, in return for a "top hat" pension scheme, a pension scheme they cannot possibly provide out of their own savings. That that principle is not offensive to hon. and right hon. Gentlemen opposite is shown by the new Clause (Approval of retirement benefit schemes) put down by a very powerful body of hon. Members opposite, which would extend the principle even further.
    As things are at present, with such a high rate of taxation, I see nothing whatever wrong in their seeking to make provision for their old age by means of these pension schemes, but, as I have said, the
    1790
    very fact that they enter into these arrangements will further reduce the individual ability to save, and, therefore, they are a bad thing.
    Much has been said today about disincentives. I think that where some hon. Members who have read the Second Report of the Royal Commission make a mistake is in exaggerating what the Report says. That Report does not say that the Commissioners found evidence that there was no disincentive in high tax deductions through P.A.Y.E. The Commissioners suggested that the disincentive effect had been exaggerated. It is perfectly clear that there is a disincentive effect, and there is not the slightest doubt that it exists in all income groups.
    My fifth objection to high taxation is this. We have been told more than once in recent years that group savings have taken the place of individual savings. The necessity for national savings is not denied. I say again what I have said several times before to this Committee, that group savings by Budget surpluses or pensions schemes are no substitute whatever for personal savings. Thrift is an individual virtue, and if corporate thrift only is possible we shall lose a potent source of our national character. Those are five great objections to a high rate of taxation. If they are referred to as prejudice and dogma, I do not mind a bit. They seem to me rather powerful.
    I am glad that so far anyhow in this debate there has not been a repetition of the Socialist propaganda that there was after my right hon. Friend took 6d. off the standard rate of Income Tax a year ago last April. The "Daily Herald" and the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), and his buddy, the right hon. Gentleman the Member for Battersea, North (Mr. Jay), said at great length that that was a concession to the wealthy. They said that as the wealthy had paid more tax in the past they would get the most benefit from the reduction in the standard rate of Income Tax, and so on. No suggestion of that kind has been made in this debate. No suggestion has been made that a reduction in the standard rate would not be a good thing for everybody. I am glad of that.
    Some hon. Member opposite has said that it is all very well for us on this side of the Committee to say we must have a

    1791
    lower rate of Income Tax, but that we ought to say how we should achieve it. That was fair enough. There are two ways, or there is a combination of two ways, in which that can be done, first by a reduction in Government expenditure and, secondly, by an increase in the national product.
    So far as the first is concerned, the outlook is gloomy. The defence bill remains heavy, and, as far as I can see, is likely to remain heavy for a considerable time. The National Insurance funds are rapidly running into debt. Nevertheless, my right hon. Friend the Member for Blackburn, West (Mr. Assheton) made a very wise suggestion of an inquiry to see if the system of control over Departmental expenditure could be improved. I hope that the Chancellor of the Exchequer is considering it, and will let us know whether he has formed any view on it.
    I come to the other way, of increasing the national product. We have heard something today about that. I spend a good deal of my professional life in advising directors how so to organise not only their own affairs but also those of their companies as to ensure that the incidence of taxation shall fall upon them and their businesses as lightly as possible. That puts guineas into my pocket. I am always grateful to anyone who puts guineas in my pockets. However, giving that advice is a futile waste of labour, for it does not produce anything in any shape or form.
    Mr. Douglas Houghton:Why do it then?
    Mr. Stevens:Because somebody has to, because, as the hon. Gentleman should know, as he usually manifests some knowledge of these things, the taxation laws are so complicated today that the ordinary director cannot possibly understand them. Unless he consults his taxation advisers he may take financial decisions that may lose his company literally hundreds of thousands of pounds. The hon. Member will agree that somebody ought to keep those directors advised.
    Mr. Houghton:It is not, of course, that lack of understanding among his clients with which the hon. Gentleman is dealing. He is a creator of avoiding devices. That is his trade. It has become one of the biggest professions in the country.
    Mr. Stevens:That is such a gratuitously offensive remark that I will treat it with the contempt that it deserves. I shall allow my profession to speak for itself.
    There is not the slightest doubt that directors and even the members of the Inland Revenue Staff Federation spend a good deal of time today in trying so to organise their affairs that the incidence of tax shall be as light as possible. If they spent more time in directing their industrial affairs as distinct from their tax affairs the national product would rise rapidly. I say that taxation has been too high for too long in peace time, and that if it is not lowered soon savings will diminish, enthusiasm will run down, and the standards of living of all will fall.
    6.0 p.m.
    Mr. Anthony Crosland:We have had a rather unusual debate in that the speeches which might properly be described as rather academic and theoretical have come entirely from the other side of the Committee, such as the speech of the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), which was extremely interesting but very philosophical in tone, and referred to Marx, the Utilitarians, de Jouvenel, and other distinguished writers. Now the hon. Gentleman the Member for Langstone (Mr. Stevens) has read us a lecture on the subject of taxation that seems to me wholly academic and theoretical, listing five reasons why taxation is supposed to lead to a decline in savings and an increase in inflation. The whole thing rang extremely hollow to me, and it did not convince the Opposition. I do not believe that it carried even all hon. Members opposite.
    We have also listened to references by the hon. Member for Louth (Mr. Osborne) to Balliol men. Why he should have Balliol on the brain is not clear. Some 45 hon. Members opposite, including seven Members of the Cabinet, went to Balliol, and about three of my hon. Friends did so. If the hon. Member shares the antipathy which I certainly have for Balliol—
    The Deputy-Chairman:I do not think that Balliol comes within the scope of our present debate.
    Mr. Crosland:I am sorry, Sir Rhys. I was merely taking up the reference made from the benches opposite. You have stopped me from saying that when I was at Oxford we referred to Balliol as "Bloody Balliol" and that I have had no reason to change my mind since.
    The discussion on this Clause provides the only occasion during the proceedings on the Finance Bill when the Committee can turn its attention to the standard rate of Income Tax, which is the most important single item in our whole taxation system. It is right for us to have a full and thorough debate on the subject, and I am only sorry that we have not had more contributions from hon. Members opposite. In view of what they have been saying during the last few years and the promises about taxation made in "The Right Road for Britain," it is extraordinary that we have had so few and such comparatively moderate criticisms of the present level of taxation from hon. Members opposite.
    I doubt whether most hon. Members opposite realise that the weight of taxation three years after the Conservative Government came into office is almost exactly the same as it was the year before it came to power. It is true that in one or two of his Budgets the Chancellor has reduced taxation, and, in particular, the standard rate by 6d., but the reductions were only reductions of the increases in taxation which were imposed in 1951 to cover the specific burden of rearmament. At the moment our taxation—in particular, the standard rate—stands exactly where it stood when the late Sir Stafford Cripps ceased to be Chancellor.
    Looking at the figures of net changes in taxation over the last few years, and concentrating on the standard rate, one finds a steady decline in taxation until the last Budget of Sir Stafford Cripps and then a substantial increase in order to pay for the 1951 rearmament programme. The increase was about £380 million. Then there were reductions of £55 million in the present Chancellor's first Budget and £288 million in his second Budget. In the present Budget there is virtually nothing.
    The feature of our whole taxation picture at the moment is that the level and burden of taxation has just about got back to where Sir Stafford Cripps left it. All the reductions in taxation about which
    1794
    there was so much propaganda during the first two years of the present Government's life have been nothing more than a mere countering of the increases imposed to pay for the rearmament programme.
    Turning one's attention to income taxation in particular, it is interesting to note—this is mainly due to the figure at which the standard rate now stands—that Income Tax is now collecting a far larger sum of money than it was when the Labour Government left office. In view of this, it is surprising that we have had only some three or four speeches from hon. Members opposite. I very much hope that hon. Members opposite have not been prevented by the Whips from speaking. It would be a disgrace if at the most important part of our Budget discussions hon. Members opposite were prevented from speaking by the Whips. It would be an intolerable abrogation of the functions of the Committee if the Whips went round the back benches and prevented hon. Members from making any genuine contributions which they have to make. I hope that hon. Members opposite will feel it their duty to give us the benefit of their views. Over and above the four speeches which we have so far had, there is a good deal to be said in putting forward the Conservative view which the Opposition would like to hear.
    Mr. Stevens:Would the hon. Gentleman indicate how it would have been possible for more of my hon. Friends to have spoken so far in view of the fact that hon. Members on this side of the Committee have spoken in turn with hon. Members opposite?
    Mr. Crosland:My complaint so far is only about the length of the speeches from hon. Members opposite. Those speeches have been considerably shorter than the speeches from the Opposition. But I was also alarmed by the fact that, when the hon. Member for Langstone rose, no other hon. Members opposite stood up. I hope that we shall hear more of his hon. Friends.
    In the light of what I have said, it is curious that we have not had more protests from hon. Members opposite about the present standard rate of Income Tax. My hon. Friend the Member for Stechford (Mr. Roy Jenkins) quoted statements

    1795
    which were made two or three years ago by hon. Members opposite. They were saying that the standard rate must quickly be reduced to 7s. 6d. There were speeches at the Conservative Party Conference a year or two ago demanding a 2s. reduction. The implication of "The Right Road for Britain" was that as soon as the country got a Conservative Government there would be large reductions in the standard rate.
    Where are those reductions? The position today after three Conservative Budgets is the same as it was when Sir Stafford Cripps was Chancellor, and yet all we have had is four quiet, moderate speeches from the back benches opposite. There has been no sign of revolt, no amendment, and no fire. It has been left to the Opposition to keep the debate going. It is left to the Opposition to ensure that the Committee has a proper discussion of the standard rate, for there has been little help from hon. Members opposite.
    Miss Irene Ward:We are enjoying the conversion of hon. Members opposite.
    Mr. Crosland:There is still time for the hon. Lady to speak. She listens to our Finance Bill debates, but in recent years we have not heard her speak in them. I cannot believe that the Whips have frightened her, of all people.
    The hon. Lady's intervention reminds me to take up a point made by the hon. Member for Langstone. I think he was rather out of order in making it because we are considering not corporate saving but the standard rate of Income Tax. He twitted the Opposition by quoting a trade union leader who asked for a tax reduction for shipbuilding. The Opposition are alive to the fact that certain industries may require an alleviation of their burden of taxation. Indeed, we have put down an Amendment asking that investment allowances should be doubled on machinery for shipbuilding. Consequently, our attitude is consistent with that of the trade union leader.
    The Conservatives appear to have been substantially converted to our point of view now in that even this level of taxation, although it produces difficulties, does not appear to be quite so ruinous as they thought four years ago.
    1796
    Nevertheless one or two arguments have been used by hon. Members opposite which need a little more attention.
    There has been a lot of discussion about personal incentives and incentives to effort. The hon. Member for Langstone very reasonably quoted from memory and stated that he thought that what the Royal Commission said was merely that the effects of P.A.Y.E. on the incentive to work had been exaggerated and not that they were nonexistent. This is not just a question of what a lot of Balliol men said. The hon. Member for Louth, who has just come in was not present when I analysed his dislike of Balliol and showed that he ought to have a dislike of his own Front Bench and not the Opposition.
    The Royal Commission on Taxation was quite specific about this. It said that, from the replies received from industrial consultants, it was clear that those consultants had no evidence to show that P.A.Y.E. had any significant effect on absenteeism or extra effort. The Royal Commission concluded that the marginal tax rates seemed to have little significance in affecting the behaviour of workers. We may disagree as to whether that conclusion is right or wrong, but there is no doubt that that is the considered view of the Royal Commission.
    I want to turn, not so much to the question of incentives on personal effort, but to the effect of taxation on investment. This has been raised by hon. Members who have spoken from the other side of the Committee. We are all agreed that if it can be shown that our present system of taxation is having a serious effect on the level of investment, then that is an extremely powerful argument against it. But that cannot be true of personal taxation. We are not here discussing corporate taxation or whether we ought to have a higher or a lower investment allowance, but the present standard rate of Income Tax as it affects the person and not the corporation. [HON. MEMBERS: "No."] I am not denying that it does affect corporations, but what I am saying is that our discussion this afternoon has, in fact, revolved round the standard rate on personal incomes, and that is the aspect of it that I want to take up.
    It was said by the hon. Member for Louth and, I think, by the right hon.

    1797
    Gentleman the Member for Blackburn. West that Income Tax and Surtax at their present level on persons had a bad effect on investment. In that connection the hon. Member for Louth accepts the point of view put by Mr. S. P. Chambers in a broadcast which he made last week.
    It is extremely hard to see how in an ordinary, large public company the rate of Surtax which members of the board of directors pay can have any effect whatsoever on the decisions which they take about the level of capital expenditure. The hon. Member for Langstone said quite rightly—I agree with him—that in these large public companies where most of the directors and the higher executives are being paid a salary—that even in such a company these directors and higher salaried executives will be concerned with the profit of the company and its financial strength. I entirely accept that. I am certain they are, but that does not show that the level of Surtax which they themselves pay as persons will have, or could possibly have, any effect on the decisions that they take in the future about capital programmes. For myself, I am quite unable to see how that is so.
    I want to mention another objection to this argument which is more fundamental and which has not been mentioned this afternoon. The object of our discussion is, as we are agreed on both sides of the Committee, to increase investment. The suggestion has been made by hon. Members opposite that we can do so by cutting the standard rate of Income Tax and increasing the incentives of business executives. But is that going to increase investment? Surely the first effect of the cutting of the standard rate of Income Tax is going to be an increase, not in investment or in savings, but in personal spending.
    Mr. Osborne:Not necessarily.
    Mr. Crosland:Perhaps the hon. Member will interrupt when I have finished this part of my argument. The greater part of any reduction in personal taxation—I do not say all of it, but the greater part of it—is going to increase consumption and public spending. Everyone knows this. The Chancellor knows it, and that is why he has not reduced the standard rate of Income Tax this year, and he is absolutely right. It is inevitable
    1798
    that the effect of a large reduction in Income Tax and Surtax is going to result in an increase in personal consumption, and it is impossible to imagine that as a result there will be an increase in investment, and for the perfectly simple reason that the resources will not be there.
    Today we have something like full employment. If we have a reduction in taxation and there is in consequence a large increase in personal spending, because we have full employment of our resources there will not be the additional resources available for a large increase in investment. So my submission about this policy is based not merely on the fact that the incentives point is not justified, but because it is a self-defeating one. That is not a matter of theory. We had evidence of it in last year's Budget. Last year substantial decreases in personal taxation were given and were justified by the Chancellor largely because they were going to help a higher investment. But what happened?
    The Chancellor of the Exchequer (Mr. R. A. Butler):They would lead to a higher production.
    6.15 p.m.
    Mr. Crosland:I certainly was not distorting anything that the right hon. Gentleman said. He did say he hoped that these reductions would lead to higher production generally, but the higher production that he wanted was mainly higher investment. [HON. MEMBERS: "Oh."] Certainly. I imagine that that was what was in his mind. We have got the higher production, but we did not get it in the form of higher investment, and it is perfectly clear that if we are going to seek higher investment merely by reducing taxation, we shall get greater consumption; but we will not get higher investment by such a policy.
    The last point I want to put concerns the reason why our views on taxation differ from those held by Members on the other side. This has been mentioned again and again year after year in these debates, and it is that we cannot divorce the present level of taxation from the question of the equality of incomes that we want. The right hon. Member for Blackburn, West, in an extremely thoughtful speech, made one point which I could not follow when he said that the high level of taxation which we have had

    1799
    in recent years gave us what he called a horizontal redistribution of income but no vertical redistribution. That is to say, that it did not substantially redistribute income from the rich to the poor.
    I cannot see why he should say this, because there is no evidence in the figures that it does not have this effect. All the figures that we can get show a substantial redistribution from rich to poor. If we take the obvious guide—it is not a perfect one, but it is fairly good—to the distribution of the income, namely the proportions of wages compared with the proportion of property incomes. After taxation, we find that wages before the war were about 39 per cent. of the total of personal incomes but today are 48 per cent. We find that property incomes before the war were about 34 per cent. but now are only 25 per cent. This is a very substantial redistribution in income.
    What this amounts to is that 10 per cent, of the total of personal incomes has been redistributed from property incomes to wages. These figures are after taxation and it must have something to do with the taxation structure which we have had since the war. I think it is hard to argue, as the right hon. Gentleman did, that the present taxation system had no effect whatsoever on distribution of incomes. It would be inconceivable if the present Surtax rates had no effect on distributing income from rich to poor.
    Mr. Assheton:I know the hon. Member does not wish to misrepresent what I say, but if he looks in HANSARD tomorrow at what I said he will see that my argument was that, whereas previously redistribution through taxation was mainly from the personal incomes of the rich to the poor, under the present high level of taxation it is chiefly transferring incomes horizontally. If he will look at Table 56 of the Report of the Commissioners of Inland Revenue he will see an awful lot of evidence there to show that that is right.
    Mr. Crosland:I am sorry if I misunderstood the right hon. Gentleman, but after he spoke I took some trouble about this matter. I went outside and looked up the National Income White Papers, and I still stick to my conclusion that the vertical redistribution is much greater than what the right hon. Gentle-
    1800
    man calls the horizontal. He is quite right in drawing attention to what we so often ignore in these debates, the fact that there is a horizontal redistribution as well, but I think the vertical one is a good deal larger and there cannot be any doubt that if we did what most hon. Members opposite would like us to do, namely, take 2s. 6d. off the standard rate of Income Tax straight away, the effect on the distribution of income would be very large indeed.
    If we took the matter further and went back to the kind of tax structure we had before the war, we would go back to the distribution of income that we had before the war. So we must emphasise that our attitude to taxation on this side of the Committee is not that it is merely a revenue raising device but it is also a device which gives us the distribution of incomes which we want.
    I should like to close as I began by saying that I hope that we have not heard the end of this debate from hon. Members opposite. This is a major matter, and they went to the country three years ago making really elaborate, forthright promises of large reductions of personal taxation. All that they have done after three Budgets by the present Chancellor of the Exchequer is to get us back to where we were in 1950 under Sir Stafford Cripps. It is really a major betrayal of the electorate, and before we pass from this Clause we ought to have some more explanation of it.
    Mr. R. A. Butler:We have had a very satisfactory debate on this important Clause which, as my hon. Friend the Member for Louth (Mr. Osborne) says, raises about 43 per cent. of our revenue. I differ with the hon. Member for Gloucestershire, South (Mr. Crosland). I think that it would be in the general interest of the Committee to bring the debate in due course to an end. I do not ask anything unreasonable, but we have a very important Clause to follow upon which hon. Members wish to speak, and anybody who studies the Order Paper will realise that we have a lot of very heavy work before us. I hope, and I am sure that the Committee hope, to conduct the debate on the Finance Bill in such a way as to give everybody an opportunity to express their opinion, and try not to sit too late. If that is the case, we must practise moderation,

    1801
    otherwise we shall never end and we shall be forced into very late sittings and difficulties.
    This debate has been described, quite rightly, as important and the level of speeches has indicated that. I suppose that the hon. Member for Stechford (Mr. Roy Jenkins) who opened the debate will be no longer on speaking terms with his heavenly twin, the hon. Member for Gloucestershire, South. I will leave the Balliol row to be settled between them. I was brought up at another completely different institution, and though I should not like to call any Oxford college by the unparliamentary epithet used by the hon. Member for Gloucestershire, South, I would treat all Oxford colleges with a degree of contempt.
    The first point raised by the hon. Member for Stechford relates to indirect and direct taxation. The only valuable service that I can render in a debate of this kind is to answer the debate and not come here with a prearranged speech. The hon. Member, supported by several other hon. Members, notably the hon. Member for Edmonton (Mr. Albu), more of whose speech I heard than he imagined, for I would not miss it if I could help it, raised the question of the level of direct and indirect taxation under this Government as compared with the previous Administration. I have had the figures taken out rapidly. It happens that the indirect taxation proposals for 1954–55 amount to 42 per cent. of the total tax revenue and direct taxation to 58 per cent., the figures being £1,776 million and £2,467 million respectively. The proportions in fact are exactly the same as in the 1951–52 Budget of the right hon. Member for Leeds, South (Mr. Gaitskell), when the proportion of indirect taxation was 42 per cent. and of direct taxation 58 per cent.
    If there is anything sinister imagined in my proposals, with regard to the shifting of the balance between direct and indirect taxation, the figures indicate no substantial change. There was a change in the 1952–53 Budget, when indirect taxation was 41 per cent. and direct taxation 59 per cent., but it was back in the receipts for 1953–54 to the levels of 42 per cent. and 58 per cent., respectively.
    1802
    Although that answers any sinister innuendoes by the hon. Member for Stechford and removes the matter from an area of very lively controversy, I do not think that there is very much in the point. Direct and indirect taxation mix and intermingle so much in the daily life of the people and, as pointed out by the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) direct taxation has such a bearing on the skilled workers and many sections of the working population, that there is not much in it nowadays as a class matter. However, in so far as there are finance and taxation purists in the Committee, they may be glad to feel that I have preserved the balance which they regard as utterly moral, coming from the stable of the right hon. Member for Leeds, South.
    The next point of any substance is the controversy between Mr. Chambers and the hon. Member for Gloucestershire, South. Indeed, how fortunate we are in this Committee to have the hon. Member for Gloucestershire, South alone and not to have to listen to Mr. Chambers as well. As I see it, the position in the controversy is that some views have been put forward by Mr. Chambers and to some extent supported by my right hon. Friend the Member for Blackburn, West (Mr. Assheton) in what I agree was a very thoughtful speech which was widely followed in the Committee. I notice that when he made a reference to Karl Marx the right hon. Member for Dundee, West (Mr. Strachey) looked somewhat uncomfortable.
    Mr. John Strachey:At that moment I hoped to take part in the debate.
    6.30 p.m.
    Mr. Butler:I should be very sorry it any words of mine should make the right hon. Gentleman rise to his feet.
    This controversy evidently centres round the question whether if one relieves the rates of taxation upon the person one will obtain more investment in industry. That brings me back to the hon. Member for Stechford, who started very sensibly by saying that he did not like high taxation for its own sake. In all this controversy as to whether taxation has this or that effect, strange to relate, although I occupy the high post of Chancellor of the Exchequer, I regard taxation as a necessary evil, but an evil. To say

    1803
    that it has strange moral virtues, as the hon. Member for Gloucestershire, South tried to make out, is really an exaggeration.
    I could, of course, enter into this discussion as to whether the release of more spending power in the Budget would have led to an improvement in the economy. Frankly, I do not think that it would, although, in answer to the hon. Member's question about resources, I do not think that we are working fully up to our resources yet, that is there is not at the moment a danger of any severity of inflation returning. Therefore, had there been money to spare, I do not think that it would have been immoral to reduce taxation, whether one looks at it from the point of view of the economy or one looks at it in any other way.
    The answer to all hon. Members who have taken part in the debate is that, to use the words of the hon. Member for Stechford, we are carrying such very heavy burdens that it would not have been possible to balance the Budget, with the consequent flow of confidence which has followed from the last Budget—however dull it may have been—as evinced in foreign interest and foreign confidence in our affairs, if I had reduced Income Tax further in the Budget from the level of 9s.
    The hon. Member for Stechford says that I have not achieved very much because I have only got things back to the level at which Sir Stafford Cripps held them. The figures are very similar, but the hon. Member must remember at the same time—and we on this side of the Committee take some pride in this—that we are carrying a defence burden without precedent in the history of the country—a figure of £1,455 million which is extremely hard to hold at that level. It is a figure which we are examining, as I promised in my Budget speech, but which must be regarded as one of considerable importance in view of the news that we receive from foreign parts. It must cast over all our minds not necessarily a feeling of gloom but of the undoubted difficulties that there are in the world, and of the vital interest to this country to remain strong and armed and play her part in peace.
    Not only is this burden much greater than my revered predecessor, Sir Stafford
    1804
    Cripps, carried, but there are the social services which have actually increased in cost by no less than £60 million in the last financial year. We are carrying these burdens as well as maintaining one of the highest levels of employment that the country has enjoyed, and one of the highest levels of production that the country has ever reached. These are not bad achievements, and I am not at all ashamed that at the moment I have imposed on the country the burdens which it is my duty to impose. That, in short, is the answer to the hon. Member for Gloucestershire, South and his reference to the general achievement which stands to our credit over these three years.
    My right hon. Friend the Member for Blackburn, West mentioned a book by Mr. de Jouvenel. I have read the majority of his books, but not that one. Had I a little more leisure—which, unfortunately, is not my opportunity at the moment—I would turn to that book. The point made by my right hon. Friend was that Mr. de Jouvenel feels that we should devote more help and care to man in society than to the machine or to the corporation. That I agree with.
    That was the point put by the hon. Member for Orkney and Shetland (Mr. Grimond). He showed great reticence in not insisting on making a speech on children's allowances. He said that he would make it later and, therefore, I shall not refer to it until later. But this point leads me to the Royal Commission on Taxation, which, when it went into the matter on which the hon. Member touched in his speech, coupled with the recommendation that the Surtax exemption limit of a married man with dependent children should be raised, a recommendation that the exemption limit for a single person should be lowered.
    The hon. Member very rightly said that he only put down one limb of an Amendment which otherwise would have followed the recommendation of the Royal Commission. I thought that he was a little hard on the efforts we have made for married people. We have made a considerable advance in helping married people. For example, the married man's allowance in 1954–55 is £210 compared with £190 in 1951–52. Children allowances are £85 compared with £70 in 1951–52. That indicates that we have

    1805
    tried, even in this three-year period, to move towards helping the family man. I will not follow the hon. Member into his disquisitions on love, family life, bankruptcy, mistresses and so forth, but leave that to him. His ideas are rather too liberal to suit me. We can say that we have made a great effort towards helping the family man, and that is indicated by the figures I have been able to give.
    The other main point which has been raised on the subject of the Royal Commission related to the various proposals—not only major proposals but minor proposals—in the Report. At the moment I cannot, in discussing this Income Tax Clause, add anything to what I said on the subject in my Budget remarks. Those were very carefully weighed submissions by the Royal Commission. One thing which strikes one when reading the Report is that they hang together. If we isolate one, as the hon. Member was frank enough to admit, we lose the value of the recommendations. Therefore I am afraid we must leave them, not with any promise that they will be implemented next year, but with the promise that they will be carefully studied and, if things go better for us and we are able to reduce expenditure, they will come before the judges as candidates for consideration. Naturally I do not agree with all the details, but they make a contribution to our thoughts on this matter of personal reliefs.
    The other big issue raised was the question of incentives for the skilled worker. This was raised by the hon. Member for Stoke-on-Trent, South and my hon. Friend the Member for Louth. One would think, when listening to the speeches, that very little had been done to give inducements to those who are at work, so I thought it would not be out of order if I reminded the Committee of some remarks I made when introducing the 1952 Budget. I said:
    "I am convinced that the present weight of direct taxation, particularly on the lower and middle income groups, acts as a very positive discouragement to extra efforts."
    I went on to say that I would make proposals:
    "designed to lighten the burden of the tax, particularly on extra earnings, and thus to encourage people when they put in longer hours overtime or earn more by harder work."
    The Committee will remember that the effect of these proposals was very definitely to raise the levels at which
    1806
    single men, married men, skilled men—men in all ranks and in all rates of Income Tax—were taxed, very substantially. I used this expression:
    "The change in the reduced rates structure will mean that the standard rate will not now become payable until earnings reach £13 Is. a week for the single man; £15 6s. for the married man without children; £17 8s. for the married with one child; and £19 10s. a week for the married man with two children."—[OFFICIAL REPORT, 11th March, 1952; Vol. 497, c. 1302–3.]
    That is a full explanation of the effect of the Budget of 1952 on those who earn and do the skilled work of our country.
    I often think it is a great pity in our controversies, however much we differ from one another, if we automatically forget the benefits we have had, and I pass on as a bequest to my successors that they must not be disheartened because they do not hear a word of gratitude later on when they have given tax reliefs. I would ask the hon. Member for Stoke-on-Trent, South and my hon. Friend the Member for Louth to remember some of the reliefs given over the years in the lower rates and higher rates. The burden of Income Tax on industry was also reduced by £45 million last year. That is the answer to the hon. Member for Gloucestershire, South when he said that we were only discussing personal matters; we must remember that Income Tax covers the burden on industry as well.
    With these observations, I hope the Committee may soon come to a decision on this Clause. I conclude as I began by saying that it really is quite an achievement for the country to carry the burdens it does. Despite our overseas expenditure and the part we play in so many parts of the world, the social service benefits, of direct advantage to the people of this country—which we intend to maintain—and the housing programme, we are able to keep afloat and more than afloat, to increase the reserves and the confidence of our people in our affairs. Let us be thankful for small mercies. In answer to my hon. Friend the Member for Langstone (Mr. Stevens), who always plays an important part in our debates, I say that we shall continue to prune and control expenditure. Only in that way shall we have a prospect next year for the further benefits of relief which the Committee wants.
    Mr. Strachey:First I assure the Chancellor that nothing he said has brought me to my feet. He seemed to add very little to this debate. Once again he took a bad bat to the bowling and really did not tackle the essence of the question which the Committee has been considering. Among hon. Members opposite, I thought that the right hon. Member for Blackburn, West (Mr. Assheton) really did deal with the essence of the matter, because he took up the question of whether taxation was merely a matter of raising revenue or whether it was a matter of redistribution of income and the modification of the pattern of income distribution throughout the community. That is what really matters when we are considering Income Tax and Surtax.
    The Chancellor made it clear in only a passing reference to the subject that for him taxation was merely a matter of raising revenue to meet expenses with which we had to deal. But, of course, taxation at this level cannot possibly be considered merely as that. As hon. Members on this side of the Committee and the right hon. Member for Blackburn, West recognise, it has a profound effect on the whole working of the economy—as we think for good, and as the right hon. Member thought for bad—by modifying the distribution of the national income.
    The main point I want to take up is the new argument introduced by the right hon. Member, which I thought a new and curious one, that today the effect of heavy direct taxation by way of Income Tax at this rate and Surtax was not to redistribute income as between the rich and the poor, but to redistribute income as between private individuals on the one hand and the State on the other. Putting it rather crudely, that is, I think, the essence of the right hon. Gentleman's argument. When we come to think of it, however, surely that is an untenable argument because it only looks at the taxation side of the transaction.
    The State does, of course, raise this vast sum of money, but it does not then just sit on it; it expends it again—the whole of it, as the Chancellor is only too well aware. Broadly speaking it expends it as the Chancellor intimated, on defence and the social services regarded as a whole; practically the whole of State expenditure comes under those two headings.
    1808
    Therefore, when it is expended in that way, indirectly perhaps in the case of defence expenditure, and quite directly in respect of social service expenditure, it becomes private income once again. Therefore, there is a redistribution which in the last resort must be between individuals. It cannot be redistribution from individuals as a whole, on the one hand, to the State, as an abstraction, on the other. The State is merely the agency which redistributes the money between different individuals.
    I thought that the right hon. Member for Blackburn, West showed he realised that, because at a later stage in his speech he talked about this income being channelled through the State. That expression is a correct one; the State is merely a channel. Therefore we must face the issue whether the redistribution which is being effected, surely undeniably, between rich and poor by taxation at this rate and of this character is a good thing or not. That is surely the real gravamen of the difference of opinion between us on the different sides of the Committee.
    It is quite true, as the Chancellor said, that he cannot reduce taxation unless he cuts defence expenditure or social services expenditure. But that is only a practical expression of the fact that this rate of taxation is necessary if we are to modify appreciably the capita distribution of the national income.
    Sir Robert Boothby:Supposing that the Chancellor could cut expenditure on defence and social services, would the right hon. Gentleman still hold that taxation should be maintained at the present level in order to effect a redistribution of income?
    6.45 p.m.
    Mr. Strachey:If we could cut defence expenditure we should all be in a better position, and we should all be in favour of that, if it could be done with safety. Whether the resultant saving should be used to reduce taxation or improve the social services is a different matter which would have to be looked at very closely. Indeed, it might well be that the best use for it would be to increase old-age pensions and not reduce taxation at all. Therefore, we cannot for one moment regard taxation as an unmitigated evil, as the Chancellor expressed it. It is simply an instrument which affects the redistribution of the national income.

    1809
    My hon. Friend the Member for Gloucestershire, South (Mr. Crosland) gave us very interesting figures to the extent to which income has been redistributed, largely by this means. It is not as great a redistribution of income as many people suppose; it represents only about 10 per cent. taken from property-type income and 10 per cent. added to the wages and salaries type of income. But there has been that amount and degree of redistribution. I agree with the right hon. Member for Blackburn, West that taxation is a somewhat clumsy instrument for doing this, but under the present economic system, the capitalistic system, as it has developed in this country, I do not know of another way in which to do it.
    The pattern of the distribution of the national income which results naturally, unless the State interferes by taxation or some other means is to an extreme degree inequitable, as we knew in the 1930s, and produces not only, as the Chancellor seems to think, moral objections—of course we have moral objections—but also profound economic disequilibrium. This pattern of distribution of income is intimately bound up with economic stagnation, with slumps and mass unemployment. That is the evil.
    More important, I think, than the moral evils, is the profound economic evil. If the economy becomes as lopsided as that it works unjustly; indeed, it does not really work at all. We get the phenomena of the '30s. Unless some force majeure, whether taxation or some other method, were used to modify the distribution of the national income, we should go back to the economic conditions of the '30s. It might be said that this modification could be effected by other means—by raising the rate of wages, by extremely aggressive trade union action. There are other methods—
    The Deputy-Chairman:I do not know whether the other methods would come under this Clause.
    Mr. Strachey:We are debating whether this level of taxation should be maintained or not, Sir Rhys. I believe that it must be because these other methods, which I only glanced at, seem to me to be, in practice, impracticable. But I
    1810
    submit, both to the Chancellor and to the right hon. Member for Blackburn, West, that some method for modifying the pattern of the distribution of the national income from what it would be if it were natural under the capitalistic system of the country, is absolutely indispensable in order to make the economy work, not only justly but at all.
    That, in different words, is what a good many Members have said. I am sure that that expresses the real difference of opinion between us. It is, perhaps, not expressed in practice this year because the Chancellor has to raise this amount of money and he cannot get out of meeting this expenditure. Behind that, however, there is a much more profound difference of economic theory, which was well brought out by the right hon. Member for Blackburn, West in his speech. We should argue it out because it is the most important economic issue which arises on the Finance Bill this year.
    Mr. Houghton:I would not ignore the Chancellor's appeal to the Committee to allow us to pass on to another Clause, but I have sat through the whole debate this afternoon, and there are one or two things which have not been fully dealt with so far upon which I wish to comment. The Chancellor was quite right to remind his hon. Friends behind him of the tragic outlay of resources on defence expenditure.
    There was scarcely a mention of that in the speeches made earlier in the debate. Yet practically the whole of the yield of revenue from what is dealt with in this Clause has to be devoted to defence—£1,400 million this year out of a total yield of the standard rate of Income Tax of probably £1,600 million. Some of the speeches made from the benches opposite are surely unrealistic unless that is taken into account. What has befallen this country since the end of the war is something that none of us expected—having to bear this defence burden in 1954 after the successful end of war operations in 1945.
    After the war, taking advantage of this high rate of taxation for war purposes, the Labour Government decided—in my view rightly—to utilise some of the revenue, already being collected, for the expansion of social provisions and social services; which seemed to be the unanimous desire of the British people, if the

    1811
    reception of the Beveridge Report was anything to go by. But now, unhappily, having undertaken the expansion of expenditure on social provisions and social services of one kind or another, education and the rest—the benefits of which we all see around us today, and none of which the party opposite dare destroy in present circumstances—we have to accommodate within our economy both that expenditure and this heavy and unexpected burden for defence.
    It seemed to me therefore that it was futile for the right hon. Member for Blackburn, West (Mr. Assheton) in his reflections and lamentations, and for the hon. Member for Louth (Mr. Osborne) in his speech, to speak as if substantial reductions in the level of taxation were now possible, or could be possible in the foreseeable future. There was also another fallacy, I think, both in the speech of the hon. Member and those of other hon. Members, that it would be a wholly good thing for the nation and for the strength of our economy if a substantial reduction in taxation could be made in present circumstances.
    That I believe to be a very arguable proposition, because, as my hon. Friend for Gloucestershire, South (Mr. Crosland) pointed out, everything would depend, in present circumstances, upon how the money was spent. It could not possibly be accepted by hon. Members on this side of the Committee that a reduction in taxation, irrespective of the uses to which the money would be put, could be regarded as a wholly good thing.
    The speech of the hon. Member for Langstone (Mr. Stevens) brought me to my feet in an interruption, and in his absence I wish to apologise to him if anything I said was personally offensive to him. But it seems to me to be a remarkable confession from an hon. Member to make that he is largely occupied in his professional work in advising persons and corporate bodies on ways and means of lightening the tax burden upon them. It is to this that I wish to refer, because I know that many hon. Gentlemen opposite hold the view that it is the high level of taxation itself, the standard rate of 9s. in the £, coupled with Surtax, which is largely responsible for the difficulties and controversies
    1812
    which now exist in regard to directors' expenses allowances.
    I do not deny that the high rate of taxation is a stimulus to the search for tax-free remuneration, tax-free facilities and tax-free amenities. It undoubtedly is, but I think that probably the main cause of much of this expenditure is not taxation, but the prosperity of industry—the lavish level of expenditure which industry can bear in present circumstances in providing facilities and amenities for their executives and directors.
    In the Finance Act, 1948, the House introduced into the Income Tax Act a whole series of Sections to bring within the scope of taxation the money value of many of the benefits in kind being excessively enjoyed by those in a position to obtain them. In recent days and weeks we have seen some of the unhappy consequences of the difficult job which the Income Tax Act imposes upon Inland Revenue officials who are called on to seek for the tax on expenses and other allowances which give personal benefit to the taxpayer.
    As an illustration of the length to which this kind of thing has gone, I see in the "Accountant" for 12th June an example of a company director who is paid 5s. 9d. a week, and the whole of his other living costs and expenses come out of his company. At the standard rate of 9s. in the £ the Inland Revenue has assessed the personal benefits in kind at £2,500 a year. The adviser of this taxpayer says, "How can my client pay this tax when he receives only 5s. 9d. a week? The company say they will pay him no more. He has no financial resources out of which to pay. He is not allowed to trade his amenities and facilities for cash, and therefore he is a poverty stricken taxpayer on whom an unjust charge is to be made which he has not the resources to meet."
    If that is an example of the sort of thing which is happening at present, it shows that Part VI of the Act of 1952 was necessary and that facilities of this kind are rightly brought into charge at the standard rate, or at any rate to which the taxpayer is liable.
    Mr. Frederic Harris:Would the hon. Member agree that works canteens are likewise a great subsidy for the workers who enjoy the facilities thus provided.
    Mr. Houghton:I fully agree, but I think that the hon. Member for Croydon, North (Mr. Harris) would also agree that there is a great difference between the welfare services of a works canteen and the level of personal benefit of the taxpayer whose case I have quoted.
    I am bound to say to the Chancellor that recent events have caused widespread concern among officers of the Inland Revenue. They feel that their position has been weakened, and I hope that the right hon. Gentleman will do his best to repair that situation. This House has given these officials a very unpleasant task—
    The Deputy-Chairman:I do not think that that comes within the ambit of this Clause which deals with the standard rate of Income Tax.
    7.0 p.m.
    Mr. Houghton:I am fully aware of the bearing which the standard rate of Income Tax at 9s. in the £ has upon this matter. I have already acknowledged that it is an important factor, though probably it is not the sole reason for some of the things which arise. It may be that if the standard rate of tax could be reduced, much of this work would be unnecessary. But since it is at 9s. in the £, and this Clause proposes to continue it at that rate, I think that the Committee must accept the fact that this unpleasant work must continue to be done. I think that the Inland Revenue officers are entitled to the support of the Committee and of the Chancellor in the discharge of the task laid upon them.
    If this is one of the consequences of the high level of taxation, then it must be faced, just as are other consequences of the high level of taxation.
    If the standard rate of Income Tax is levied on those workers, salary earners, who have no access to expenses allowances and have no amenities and facilities provided in kind and who must pay up to the hilt on all their income, it is not fair if others in higher positions of greater responsibility and power who have closer access to the means of providing themselves with these benefits escape a substantial amount of taxation under this Clause. I am sure that the Committee would not approve of that.
    1814
    If the Committee agree with me about this, then it is necessary for hon. and right hon. Members opposite, whose glee when they hear an apology being given by the Inland Revenue is only too noticeable, to give backing to the Chancellor which he in turn should give to those officers who have to carry out the will of Parliament and who do so in some cases under very trying circumstances indeed. They are fully entitled to the support of all here who are in a position of legislative responsibility.
    Mr. Hugh Dalton:I do not know whether the Chancellor will get this Clause without a Division. That mainly depends upon the state of mind of those on his side of the Committee, some of whom have criticised the continuance of this high rate of Income Tax. In the event of a Division, we shall have to reserve our liberty as to what we shall do, but, whether or not this debate ends in a Division, we have had a very interesting discussion. I am sure that the Chancellor does not grudge the time which has been spent upon it, because this is one of the central issues which must be confronted each year by the Committee.
    Income Tax is a central feature of our public finance. Mr. Gladstone lost an election once because he promised to repeal it. The electors were against that and returned a Conservative Administration, as the Chancellor will remember. Ever since that date no such promise has been repeated, but we have had many debates on the general assumption that, in some shape or other, the tax would continue.
    The question is whether or not the standard rate should be 9s. in the £. I should like to recall that the Chancellor after three years of Conservative Government has now just got the standard rate down—or last year he brought the standard rate down and he is retaining it unchanged this year—to the level to which I brought it down at the end of the war after less than three months of peace and Labour rule. I reduced it by ls. at one go—he has never done a big thing like that yet—but I also adjusted the Surtax.
    The hon. Member for Langstone (Mr. Stevens) is not present, but I should like to say in reply to the point he made in a

    1815
    very interesting and suggestive speech, that this year none of my right hon. or hon. Friends have spoken of the evil consequences of a reduction in the standard rate uncompensated by a readjustment of the tax rates on the larger incomes. The reason why we have not developed that theme this year is because the Chancellor has made no proposal to change the standard rate.
    If he had made a proposal to reduce the standard rate, we should certainly have deployed once more the argument that, unless the cut in the standard rate was modified by some readjustment of the tax upon the higher incomes, it would be inequitable and, as we said last year, it would give the greatest advantages to those who least needed them. However, it has not been necessary to use that argument this year. That does not mean that we take back anything of what we said last year.
    Broadly, the question that it is worth while to consider is whether the standard rate now standing where it stood at the end of my first post-war Budget—and where it remained through my other Budgets and all the Budgets of Sir Stafford Cripps up to the point when my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) put 6d. on the standard rate—if it were possible to make further reductions in taxation, it would be desirable to do it by a further reduction in the standard rate below 9s. Here let me, from another angle, re-emphasise the point which I was making just now.
    Although my right hon. Friend put 6d. on the standard rate he took great care, being sensitive to equity, to make sure that that increase did not fall upon the poorer classes of Income Tax-payers at that time. He did this by increasing the allowances both for single and for married persons. As a result of this, although he put up the standard rate by 6d., he reduced the Income Tax, by small amounts, for the majority of Income Taxpayers at that time—at any rate, for a very substantial proportion of them, and for all the poorer people then liable to pay tax.
    This again illustrates the fact that, in the interests of equity, the movement of the standard rate, either up or down, should not stand alone, but should be
    1816
    compensated or supported by other movements in other elements in the tax system. We should consider whether, if it were possible to make further reductions in taxation, it would be desirable to do it by a further reduction in the standard rate below 9s. It is very doubtful, as things are and as they have been shown to be since the war—sometimes rather in conflict with our anticipations; and I will illustrate what I mean by that in a moment—whether we should contemplate a further reduction in the standard rate at this time as being desirable, even if there were some reduction possible in total taxation.
    When I reduced Income Tax by 1s. I did so because I believed, as I clearly stated in my Budget speech, that it would have a very valuable incentive effect at the close of the hard years of war. In that opinion I was supported by practically all circles of political thought. The reduction in the standard rate, especially combined with the readjustment in the Surtax rate which I made, was welcomed by the supporters of the Government at that time and it was not resisted, although the readjustments in the Surtax were, by the Conservative Party. There was a general chorus of approval in the Press for making the sharp cut in the standard rate in the belief that it would be an incentive, a tonic and a stimulus to all sections of our people, tired, though triumphant, after war.
    Perhaps we were wrong. Some evidence has come to hand lately to suggest that perhaps we were wrong, all of us, in over-estimating this incentive element. There are two kinds of evidence that have come to light, and they have both been referred to already. One is the evidence which has shown itself over the years that, in spite of the high taxation, both under our Government and under the successor Government which now sits in the seats of responsibility, nonetheless production has prospered, or did until 1951. With the exception of one year of Conservative rule, out of all the years since the war, on the whole production has prospered, and there may have been special reasons why it did not in that year.
    Viscount Hinchingbrooke rose—
    Mr. Dalton:These are facts. They cannot be denied, even by the noble Lord.

    1817
    In spite of this high taxation production has gone ahead. People have worked well, and for a few years at least it seemed that investment also was proceeding on a satisfactory scale. There were doubts about that later.
    Apart from this empirical evidence, there is now the very important Report of the Royal Commission, which has been referred to several times today. I wish to refer to it once more and to begin by drawing attention to what a formidable and variegated body this Royal Commission was—indeed still is, for it is now at work on its next interim Report. The chairman is a very distinguished legal personality, with a fair, lucid and constructive legal mind. He was appointed by the present Chancellor after some differences of opinion had revealed themselves as to who would be a suitable chairman to bring to these difficult studies a mind completely fresh, untrammelled and unhandicapped by any past public declarations of firm opinion.
    In consequence of this, the present chairman, Lord Radcliffe, was chosen. He has discharged his task with great distinction. He has been assisted not only by a number of academic figures—there are a few of them on the Commission—but also by a number of other very able people, such as Sir Geoffrey Heyworth, whom, I suppose, everybody would put in the first rank of industrialists at this time, and some other very able legal authorities, including Mr. Millard Tucker, whose reports on other kindred matters are of much assistance to us and a great stimulus to thought. In other words, it is a Royal Commission which deserves collectively to be taken very seriously. Indeed, the Chancellor has told us that he will most carefully consider what the Royal Commission has advised and recommended.
    I am not going to quote from the Report or to repeat what has already been said. I merely wish once more to put upon record that the Royal Commission has very largely disposed, by its judgments and by the evidence which it has collected through a specially contrived social survey, of the argument that, at this time—I do not speak of what may have been the case immediately after the war, for that was an exceptional psychological moment—there is any serious disincentive effect in heavy taxation upon
    1818
    either large income earners or upon wage earners under P.A.Y.E. That is a very important consideration which, it seems to me, must be borne in mind by all Chancellors of the Exchequer in future.
    I am, therefore, led to think—and I offer this thought to the Chancellor as he will be considering these matters in the months before his next Budget—that there are certainly two matters which ought to take precedence, if tax reductions are in question, over any further reduction in the standard rate at this time.
    One is the matter, which has been much discussed, of finding a stimulus to investment in the private sector. The public sector is doing very well. If all the private capitalists would copy Lord Citrine, and take a dose of whatever tonic he takes, and then go ahead with big, imaginative, constructive schemes such as he puts forward for the British Electricity Authority, we should have a livelier private sector and be able to dispense with a lot of the special financial inducements which now have to be given in the form of investment allowances and the like, to get these people to play up and do their stuff.
    Not wishing to be thought to be dealing with this grave subject too lightly, I seriously suggest to the Chancellor that there is great value in the type of arrangement—I do not tie myself now to the particular details which the Chancellor has put in his Finance Bill; we shall discuss investment allowances later—whereby tax relief is tied to a specific beneficial act of investment, not letting the thing merely drift into the possibility that, if one reduces the standard rate of Income Tax, some people will save part of what they gain and that out of what they save some investment be made by private capitalists. As President Roosevelt used to say, these questions are altogether "too iffy"; there are too many "ifs" about them. However, when we take the investment allowance type of arrangement, that at any rate makes sure that a reduction in the burden of taxation on industrialists will lead to a specific addition to real investment. I therefore suggest that in his reflections on the future the Chancellor should prefer an extension of this kind of arrangement to a reduction in the standard rate.

    1819
    I now turn to the other matter which is much in our minds, particularly if we are considering the broad question of the distribution of income. The earned income relief has been steadily increased through successive Budgets by successive Chancellors. When the war ended it was a relief of only one-tenth. It is now some awkward fraction between one-fifth and one-quarter.
    The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter):It is two-ninths.
    7.15 p.m.
    Mr. Dalton:That is an awkward fraction. I argued last year that we should rationalise it at a quarter, but the Chancellor would not do that.
    Those of us who have held the office of Chancellor of the Exchequer have from time to time attached importance—this has generally gone through as a non-controversial proposal—to increasing the earned income relief. But there is now another very valuable and interesting suggestion in the Royal Commission's Report. I am not going to expound it in detail because it will be familiar to all hon. Members who have read that very interesting Report. I hope that the Report is being, and will be, widely read, not only in the House of Commons but also throughout the country.
    This is the proposal for what can be called, for short, a minimum earned income relief. This appears to me to be well argued in the Report. It also coincides with an idea which was put forward last year by my right hon. Friend the Member for Battersea, North, who deserves a prize for having been the first hon. Member to think of it or at any rate, to expound such an idea in our debates. When he suggested it last year, it was hinted that it might not be very practical. It was said that administrative difficulties would appear, and so forth. However, my right hon. Friend is now greatly supported and the idea is much reinforced by the very careful and favourable study which has been made of the proposal in the Royal Commission's Report. Therefore, I hope that this will be one of the ideas which may find a place in the next Budget.
    1820
    The difficulty about the earned income relief as we have hitherto known it is that, if one increases the relief, it is rather like reducing the standard rate. It is, arithmetically, equivalent to reducing the standard rate over a certain range of earned income, subject to a ceiling. The difficulty has been that one has caused the rain to fall upon both the just and the unjust and that one does not discriminate at all as to need. We have found that, if we make a further increase in the earned income relief as we have known it up till now, that is bound to be reflected right up the scale to the point at which one fixes the ceiling. I am not arguing that the ceiling should remain always where it is now—that is another matter—but, if there is a ceiling, up to that ceiling of earned income one increases the benefit in proportion to the total earned income which receives the benefit of the relief.
    The beauty of the other plan, recommended by the Royal Commission is that one can give a benefit to the lower groups of income earners but is not compelled to extend this benefit right up the line. For these and other reasons, the proposal is well worthy of consideration and introduction into the right hon. Gentleman's next Budget.
    I have only one other thing to say, and my right hon. Friend the Member for Dundee, West (Mr. Strachey) has already said part of it very effectively. This is by way of comment on what the Chancellor said. The Chancellor did not say very much, but one of the things that he said was that he regarded taxation as a necessary evil. That is an old gag. We have heard it before. I think somebody said it 150 years ago, or even 250 years ago.
    However, the point which my right hon. and hon. Friends have been anxious to emphasise, and which my right hon. Friend the Member for Dundee, West, brought out, is that if one has a society, which in its structure is a very unequal society, in which few are much richer than the average and the great majority are poorer, and some of them much poorer, than the average, then taxation ceases to be an evil at all, if it is combined with proper social expenditure in such a way as to narrow from both ends the gap between the richest and the poorest people in the society.
    If we had a different kind of society, and in some parts of the world they have

    1821
    made experiments in such alternatives. we might not need, as my right hon. Friend has said, to correct its inherent inequalities by so carefully developed a system of progressive taxation as we have now got, combined with schemes of social expenditure and provision for those whose need is greatest. It is a rather superficial old saw which says that taxation is a necessary evil. If the proceeds are well spent, it need not be an evil at all.
    Indeed, the net effect of collecting taxation according to a just and well-considered plan and of expending it upon good social purposes, in addition to the necessary expenditure on defence, the combined effect of raising revenue in a just and effective manner and expending it in a just and effective manner is a change from an intolerable situation to one which has, within itself, great hopes for the future of our people. Such are the hopes which we on this side of the Committee entertain.
    For this reason, we do not accept the slightly superficial view of taxation which has been put forward by the Chancellor of the Exchequer this afternoon.
    Question put, and agreed to.
    Clause ordered to stand part of the Bill.

    Clause 14.—(FURTHER PROVISION FOR REPAYMENT OF POST-WAR CREDITS.)
    Mr. Eric Fletcher:I beg to move, in page 8, line 8, to leave out "or become bankrupt."
    I venture to suggest that it may be convenient if, at the same time as we deal with this Amendment, we could deal with the consequential Amendment to page 8, line 20, to leave out from the beginning to "and," in line 21.
    The Temporary Chairman:If that meets the convenience of the Committee, we will take the two Amendments together.
    7.30 p.m.
    Mr. Fletcher:I am much obliged, Mr. Hoy, because that would enable me to explain the object of both these Amendments a little more fully than would have been the case if I had been required to make two separate speeches, one in respect of each Amendment.
    In our consideration of the Finance Bill, we are now approaching the interest-
    1822
    ing topic of making further provision for the repayment of post-war credits, a subject on which there has been very considerable complaint from these benches for a long time past. Most of us here think that, if the Chancellor has now decided that he can make a start in making further provision for the repayment of post-war credits, there are other ways in which he might relieve a great many deserving classes of the community rather than in the way which he has selected in this Clause.
    The whole question of post-war credits is a somewhat complicated subject, but I will try to explain to the Committee the precise object of the Amendment. As matters stand at present, post-war credits are repaid only to the persons who are actually entitled to receive them, provided that they have attained a particular age and also provided that those persons make personal application for the repayment of any post-war credit to which they are entitled. Due provision is contained in the original Act dealing with post-war credits to prevent the person entitled to the credit from assigning it to someone else, and to prevent it being negotiated by the person entitled to it to someone else.
    Provision is also made that, if that person should die without having reached the age at which he would have been entitled to claim his post-war credit, the amount of the credit shall not fall into his estate for purposes of Estate Duty, but is kept quite outside the remainder of his estate. Owing to death having taken place below the required age, the right to claim passes to the beneficiary under the will, but that beneficiary is not in a position to claim the post-war credit until the beneficiary attains the age of either 65 or 60. The result of that has been that, in a great many cases in which death has occurred below the age limit of 65, the time for the payment of the post-war credit has been postponed more than once, resulting in great hardship being caused.
    In his Budget, the Chancellor announced that he was proposing to make a start in dealing with the volume of complaints which have come from people in very necessitous circumstances who are entitled to post-war credits, but have been unable to cash them. I think the Chancellor has made a very niggardly beginning, and, even then, has done it in the

    1823
    wrong way. I am not quarrelling with the fact that he is now enabling people who are beneficiaries to receive payment without waiting until the age of 65, but what I am objecting to, and what seems to me to be quite wrong in principle, is that the Chancellor should single out, as a favoured class who are to get the benefit of post-war credits, people who have become bankrupt and their creditors. That seems to me to be entirely wrong in principle.
    There are all sorts of other deserving classes of the community, some of them in very distressing circumstances, who have these post-war credits at the bank but are not allowed by the Chancellor to touch them, and yet, when he comes to make an attempt to remedy this state of affairs, he selects as the object of his niggardly generosity, as I regard it, bankrupts and their creditors. I find it very difficult to understand on what principle that can be justified.
    It is desirable that the Committee should understand how the matter works out as provided in this Clause and in relation to the Amendment I am moving. The words which I am proposing to leave out are "or become bankrupt," and the effect will be that, if these words are eliminated, the concession which the Chancellor is giving to bankrupts and their creditors would, presumably, allow him to have an amount of money which would become available for some other, and as I think far more deserving, classes of person entitled to post-war credits.
    I can quite well appreciate that the Chancellor may have found himself in some difficulty on the question of what is to happen to the post-war credit of a person who becomes bankrupt. The general rule is that the only person who is entitled to apply for payment of the post-war credit is the person who is entitled to receive it. What happens when that person goes bankrupt? Let us suppose that a person goes bankrupt over the age of 60. We have to consider separately the cases of people who go bankrupt over the age of 65 and those who go bankrupt under the age of 65, or, in the case of a woman, over and under the age of 60. Fortunately, as compared with men, there are not a great number of women traders who go bankrupt either over or under the age of 60,
    1824
    so I am sure that the Committee will approve if, for the purpose of this argument, I confine myself by way of illustration to men and treat the age as being 65.
    Let us take a case of a person who, at 64 years, goes bankrupt. If, not having gone bankrupt, he had lived another year he would have been entitled to apply for his post-war credits and to receive them. In the case I am giving he becomes insolvent and a receiving order in bankruptcy is made against him a year before he attains 65 years.
    What happens to the post-war credit? Here one must refer to Section 67 of the Finance Act, 1941, which has to be read in conjunction with the Bankruptcy Act. His claim to the post-war credit lapses first because he has not attained the age of 65, and secondly because he has gone bankrupt. It is therefore common ground between us that the effect of his bankruptcy is to deprive him, as an individual, of his claim to his post-war credit on his 65th birthday.
    What happens today? The Financial Secretary will correct me if I am wrong but, as I read Section 7 of the Finance Act, 1941, the bankrupt's right would pass to a trustee in bankruptcy. It is, however, by no means clear from either subsection (1) or (4) of Section 7 of the Finance Act, 1941, that the trustee in bankruptcy would have any claim for the post-war credit on the original owner claiming on attaining his 65th birthday. As I understand it, the trustee would have no right at all. I do not think that it can be said that there passes to a trustee in bankruptcy either by assignment or by operation of law, the claim to something which can only be claimed by the original individual who would have been entitled to it if and when he became 65 years of age.
    What do the Government propose in the Clause? They propose, and I am now reading the opening words of Clause 14 and omitting the irrelevant words relating to persons dying under 65:
    "Where a man or woman who has…become bankrupt would, but for that, be entitled on making the proper application under section twenty-six of the Finance Act, 1946…to payment of a post-war credit to which that section applies then…the person for the time being having the title to the credit shall be entitled to receive the payment."

    1825
    I presume that in framing that part of the Section the draftsman assumed that but for the bankruptcy the person who would be entitled to the credit would have been either the individual himself or his trustee in bankruptcy, but it is not clear which.
    Nor is it made any clearer when one turns to the definitions in subsection (5), but I am prepared to assume, for the purpose of this argument, that the trustee in bankruptcy, when the original owner becomes 65, would be entitled to claim the post-war credit and that the object of this part of the Bill is to give the trustee in bankruptcy the right to claim the postwar credit, notwithstanding the fact that the original owner had become bankrupt before attaining the age of 65.
    I am afraid that it has been necessary to state the matter in some detail. In passing may I, without criticism of the Financial Secretary, suggest that neither in his opening of the Second Reading Debate nor in the Chancellor's Budget speech was there a single word of reference to this matter. As far as I know there has not been a single explanation from any Government spokesman as to what is really meant by this particular part. I therefore thought it well, in all humility, and subject to correction, to say what I understand the effects to be.
    I do not think that this is a sensible provision. I do not think that it is sensible for the Government to accelerate payments of post-war credits to trustees in bankruptcy and to creditors of bankrupts when there are very many deserving people anxious to cash these.
    Hon. Friends of mine have a number of Amendments on the Order Paper in the form of new Clauses which ask, for example, that the age limits of 65 and 60 should be reduced each year—to 64 and 59, 63 and 58 and so on. We think that a start should be made in repaying the post-war credits. If that method does not appeal to the Government we suggest that they should make repayable the whole of the post-war credits in respect of the first year, 1940–41, and pay off those.
    At any rate we think that they should approach this matter in justice and equity either by paying pari passu all post-war credits of a given year, or by reducing the age limits, or by having regard to the needs of particular classes of applicants.
    1826
    This proposal of the Government flies in the face of those sensible principles which a rational Government might have adopted.
    I am not suggesting that there is anything necessarily reprehensible in a status of a bankrupt. In our commercial life there was a time when bankruptcy in itself, was almost thought of as a privilege. It did not necessarily connote anything dishonourable or disreputable. But surely it is stretching imagination very far to select bankrupts and their creditors as the class to benefit over all other classes from further provision with regard to post-war credits.
    I have every sympathy with the creditors of a bankrupt, but I do not think that it can be said in ordinary terms that persons give credit to a trader because he may happen to have some post-war credits. It would be entirely far-fetched to suggest that anyone in the trading community has given credit to a trader on the strength of the fact that he may happen to have some post-war credits which he may one day enjoy if he reaches a particular age.
    If, owing to the trader's misfortunes, he has gone bankrupt, surely his creditors are not entitled to say, "We relied on the fact that this man would get his post-war credits." That has only to be stated to show what arrant nonsense it would be. I can therefore see no justification for being particularly tender or merciful towards the creditors as a class of a bankrupt who would have enjoyed a post-war credit had he lived to a particular age.
    I think that this is a most unfortunate feature of this very important Clause which deals with post-war credits. If, as I hope, the Government are going to make further provision for meeting the needs of those who are entitled to postwar credits I can think of many classes who deserve that benefit in priority to bankrupts and their credits.
    Mr. Boyd-Carpenter:The Amendment seeks to delete from the Clause one comparatively small—in terms of money, very small—provision in it, and one which is, in a sense, distinct and separate from the main purpose of the Clause. The hon. Member for Islington East (Mr. E. Fletcher) is quite right in saying that this provision has not previously been

    1827
    discussed in our debates, no doubt because although it raises an interesting point, as the hon. Gentleman has succeeded in doing, it is not in terms of money at all substantial.
    I cannot give the Committee a precise figure, but the cost of this provision is very small, and for that reason it is not necessary to consider it, as I think the hon. Gentleman was inclined to do, by way of alternative uses of the money involved. The money involved is so small that I cannot say that if this were not done it would be possible to make any substantial provision in any other direction. The money is being dealt with in this way largely because it seems that there exists, as I shall explain in a moment, a rather curious anomaly on this point.
    It seems, therefore, right to deal with this anomaly in the course of a Clause which, as I think hon. Members will agree, deals with one of the major anomalies in the existing post-war credit system—that is to say, the anomaly by which the accident of death before reaching the qualifying age can deprive a family indefinitely of the benefit of their post-war credit. To some considerable extent, this is a Clause for the abatement of anomalies, and this is a comparatively small and outlying portion of that abatement.
    I would not quarrel with anything that the hon. Gentleman said as to the effect of the present law. As I understand, under the present law a bankrupt's right to his post-war credit vests in his trustee in bankruptcy. As a consequence, when he reaches a qualifying age of 65, or in the case of a woman 60, he or she cannot claim their credits; they are no longer vested in them. Nor when the original holder of the credit reaches that age can the trustee in bankruptcy, because under Section 26 (1, b) of the Finance Act, 1946. for such a claim to be made the credit has to be held by the person holding it for his own use. A trustee in bankruptcy, of course, does not hold it for his own use.
    Consequently, under the present law the position is that a post-war credit will never be paid unless there is on the one hand a general repayment of all outstanding credits by an order made under
    1828
    the original Act, or unless the bankruptcy is itself annulled on payment of 20s. in the £.
    For practical purposes, therefore, we have a position which it seems to me is somewhat anomalous under which the fact of bankruptcy prevents the payment to anybody of a post-war credit otherwise payable. The effect of the Clause is to get rid of that anomaly, and, of course, the effect of the Amendment would be to preserve it. Therefore, there being no dispute on the facts of the matter and on the effect of the Amendment, we can now discuss the matter on the merits—that is to say, to use the hon. Member's phrase, whether this is a sensible thing to do.
    Mr. E. Fletcher:I did not want by silence to appear to accept the view of the right hon. Gentleman that this was an anomaly. For all I know, it might have been intended originally that bankruptcy should deprive an individual and his creditors of post-war credits. I do not know, but I do not think the right hon. Gentleman should accept the assumption that this is an anomaly. He is changing the law. He says he is correcting an anomaly, but I am not sure.
    7.45 p.m.
    Mr. Boyd-Carpenter:I do not think I should quarrel with the hon. Gentleman about that. I think I said that in my view it is in an anomaly. The hon. Gentleman is perfectly entitled to his view that a credit otherwise payable should not be payable by reason of the bankruptcy of the original holder. I say that in our view this is an anomaly, and I was proceeding to discuss the question which then arises as to whether we should correct what, in our view, is an anomaly, or, it may be in other views, a perfectly justifiable state of affairs.
    The effect, as I say—and I would repeat it for the sake of clarity—is that the hon. Gentleman's Amendment would preserve the existing law under which bankruptcy is a bar to the payment of the credit on the original holder attaining the age of 65, and would also remain a bar to payment under the provisions of this Clause—that is to say, to people who claim from someone now dead who, had he lived, would now have reached the age of 65. An extreme example of what happened in one case is that a man who

    1829
    reached the age of 65, omitted as some people do on reaching that age to claim payment of his credit, subsequently became bankrupt and now cannot claim. That is an example from practice.
    It seems to us—and this is a matter of judgment for hon. Members—that the mere fact of bankruptcy should not act as an all but permanent bar on the payment of the credit. It is a fact—and here again I agree with the hon. Gentleman in his interpretation of the provision—that the benefit of payment of credit in these cases will normally accrue to the creditors. It seems to me that that is perfectly fair. Indeed, it is a fact that from time to time when a post-war credit is paid in the ordinary way to a person who has not gone bankrupt, that person properly uses that money to pay off his creditors. That is a perfectly proper and normal use of the money. I do not really see why we should cause some detriment to the creditors of someone who has gone bankrupt, by holding up indefinitely the payment of the credit.
    It is not a question, as I see it, of making a special acceleration of payment to creditors of the bankrupt, as the hon. Gentleman suggested. He based his argument on the ground that payment should not be accelerated in these cases when there are other people with as good or better claims to acceleration. All that it does is to provide that where the credit would in the normal way, but for the fact of bankruptcy, be paid either to a living man, or in respect of the estate of a deceased one, it should continue to be paid notwithstanding the bankruptcy.
    Therefore, I would rather put it, not that we are accelerating payment to the creditors, but that we are cutting out the deceleration. This is largely a matter of the way in which one looks at it, but I am inclined to think that the way I look at it is the fair way. At any rate, this is a matter which in a very limited number of cases will accrue to the benefit of creditors of a bankrupt estate, that is to say of people who have lent money which they see little chance, at any rate at present, of getting repaid in full. There may be many reasons for giving credit to somebody who becomes bankrupt. They are not generally disreputable reasons; at any rate, I do not think that we can assume that they are such disreputable reasons that we are entitled
    1830
    to discriminate against such persons in the repayment of post-war credits.
    It seems to me that this is one of those small but aggravating anomalies which have grown up inside our system of post-war credits, and that we should put it right. The amount of money involved is so small that there is no necessity for hon. Members to search their consciences and weigh the need to do this against the need to do many other attractive things which we should all like to do in the field of post-war credits if funds were available. This is a small matter in terms of money, but it carries out the major purpose of the Clause, which is the ratification of what seems to us to be an anomaly which can and does indefinitely delay the payment of a credit which would otherwise be paid when the qualifying age is reached.
    Mr. Hugh Gaitskell:Will the Financial Secretary make it plain that under the Clause a bankrupt, or the trustee in bankruptcy acting for him, will not be able to get the post-war credit except when the bankrupt person reaches the age of 65 or 60, as the case may be, or, being deceased, would have reached the age of 65 or 60?
    Mr. Boyd-Carpenter:I can certainly give that assurance. The bar which bankruptcy has previously caused to operate ceases, but no extra or additional privilege is given.
    Sir Frank Soskice:It seemed to me that the Financial Secretary did not deal with the real point which was made by my hon. Friend the Member for Islington, East (Mr. E. Fletcher), who began by pointing out that the Chancellor's proposals in this matter, where a great human need calls for treatment, are negative. My hon. Friend went on to say that in those circumstances the Chancellor had approached the question in a most unsatisfactory and inadequate fashion.
    The Financial Secretary said that the proposal relating to bankruptcy is designed to cure an anomaly, and he pointed out that under the existing statutory provisions—because, as it were, of an accident in drafting—payment may be indefinitely postponed in the case of a taxpayer who becomes bankrupt. The Financial Secretary said that the object of the provision, which had not been fore-

    1831
    shadowed in the Chancellor's Budget statement, or in any other document, so far as I am aware, is simply and solely to remove that drafting anomaly.
    Mr. Boyd-Carpenter:I really do not know whether this anomaly was created by an error in draftsmanship. I should not like it to be thought that I attributed any blame in that respect to my predecessors. It simply appears to us that an anomaly has grown up.
    Sir F. Soskice:I do not wish to attribute blame in a matter of drafting intricate Clauses of this sort. I should not blame anybody for a drafting slip, if there is one, but the Financial Secretary has said that an anomaly exists and that under the present provisions payment may be indefinitely postponed in the case of a taxpayers who goes bankrupt.
    Let it be conceded that it is desirable to provide that instead of being indefinitely postponed the tax credit certificates shall become payable in the event of a bankruptcy. The question we wish to ask is why, in that case, should it be paid to the trustee in bankruptcy for the benefit of the creditors? I am quite aware that only a small amount of money is involved, but the Chancellor had an opportunity, which he has used to some extent in this Clause, to come to the aid of small taxpayers who would feel it a very great help to be able to put their hands on their post-war credits. The amount of money involved may amount to anything between £50 and £100, and the receipt of that sum would make a considerable difference to many persons who stand in need.
    Let us now assume that a taxpayer goes bankrupt, a trustee is appointed, and the amount due to the creditors is something between £250 and £1,000. The suggestion of my hon. Friend is that the very fact that the taxpayer has gone bankrupt indicates that his family is in considerable need. That family could very well do with some aid, even the modest amount of £75 or £100. In those circumstances we think that it is unreasonable to transfer that amount for division among the creditors of the taxpayer, and that it would have been infinitely preferable to provide that it should go to the relief of the taxpayer's family, in one form or another.
    1832
    It cannot be said that any great point of principle is involved. We believe that this is an example of some degree of thoughtlessness and, possibly, even heartlessness in the preparation of the Bill. We think that the matter would have been very much more satisfactorily dealt with on the lines we suggest. I do not know whether my hon. Friend desires to divide the Committee. Personally, as no great principle is involved, I rather hope that he will not. But we think it right to emphasise the point. It is a distinct and definite defect in the drafting of the Clause, and I hope that the Parliamentary Secretary and the Chancellor will be able to see their way to amend the provision at a later stage.
    8.0 p.m.
    Mr. E. Fletcher:I am quite prepared to accept the suggestion of my right hon. and learned Friend that this is not a matter upon which it would be desirable or convenient to divide the Committee, but I hope that neither the Chancellor nor the Financial Secretary will draw any false conclusions from that statement. There was one singular omission in what the Financial Secretary said, and I think it right that I should draw attention to it, if only to enable the Government to reconsider the matter between now and the Report stage.
    Has the Financial Secretary really considered the administrative inconveniences that will flow from this proposal if the Amendment is not accepted? When the right hon. Gentleman was speaking we had an exchange of views whether or not there was an anomaly in the existing procedure. He took the view that he was seeking to correct an anomaly; I took the view that he was seeking to change the law, and I said that it may very well have been intended from the outset that if a person went bankrupt he should lose the right to claim his post-war credits. The more I reflect on it the more I think that that very probably is the true explanation.
    Either it was intended that a person, on going bankrupt before 65, should lose his post-war credit, or it was not. If it was intended he should lose it I do not think anybody could very well complain. He certainly could not; his creditors could not; I do not think the trustee in bankruptcy could complain.

    1833
    What, however, will be the administrative consequences if the Amendment is not accepted? In future, in the case of every trader who goes bankrupt, the whole of the mechanism of the administration of his estate in bankruptcy will either have to be kept in being, perhaps at great expense, for a number of years until the date when the bankrupt attains the age of 65, or else the apparatus of the bankruptcy, the distributing of the assets among the creditors, will have to be left in suspense; or, if it is not, new steps will have to be taken when he becomes 65.
    Let us take the case of a trader aged 45 and entitled to a total of £300 or £400 of post-war credits. Let us assume that in a year or two the assets are distributed among his creditors. In the ordinary way the responsibility of the trustee in bankruptcy is to wind up the administration as soon as possible, collect the assets, pay whatever fees are payable, decide what dividend can be paid among the creditors, and distribute that diviend. Under the law as it stood the postwar credits would be forgotten, but by this change in the law what will happen in 20 years' time, when that bankrupt trader becomes 65?
    Is the whole of the apparatus of the administration of his estate in bankruptcy, which has long been forgotten, to be brought alive again, for a comparatively small sum that creditors, after a long interval, may be entitled to? Is that intended? Or is it intended that the postwar credit should be assigned to some of the creditors?
    If that is intended is it really to be supposed that some creditors will be satisfied with such an assignment, while other creditors are entitled to a cash distribution? I suggest to the right hon. Gentleman that by what he calls removing an anomaly he may be laying up in store not only for himself but for a great many trustees in bankruptcy a great many complicated and quite unnecessary troubles.
    Mr. Boyd-Carpenter:It would be discourteous not to say a word in reply to the hon. Gentleman. His main point in the speech he has just made is the possibility of difficulty arising in the administration of bankrupt estates. It is, of
    1834
    course, possible to imagine an extreme case in which the bringing of a post-war credit might involve some delay, but I think that, if one looks at it broadly, one sees that it is very unlikely, except in very exceptional cases, that administrative difficulties of that sort will arise, and certainly they are not likely to arise sufficiently frequently as to counterbalance any administrative advantage of bringing in this additional asset.
    The right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice), who is not in his place at the moment—I am glad to observe he was not in his place earlier when his colleague was called in question—asked, why not give the post-war credit to the bankrupt? As he knows far better than I do, under the operation of the ordinary law it vests in the trustee in bankruptcy. I should have thought it would have been unusual and very difficult to have justified a departure from normal bankruptcy law and to have transferred this asset from the place to which it would normally go, the trustee in bankruptcy, to the family.
    I have listened most carefully to what has been said, but it seems to me that the case for righting what I regard even more strongly as an anomaly still stands, and although I have listened with great care to the arguments to the contrary I think we are right, as I judge it, to put this right.
    Mr. W. T. Proctor:I think my hon. Friend the Member for Islington, East (Mr. E. Fletcher) and my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) have made a very substantial case, and I am sorry to hear what appears to be the last word on the matter from the Financial Secretary. He says the Clause will remove an anomaly, but I think it will create more than it will remove. Generally speaking, the procedure in the past was based on need. I do not think any substantial case has been made out to show that the creditors of bankrupts are the most needy people.
    I think the Government could have been better employed than in removing the principle that these credits cannot be transferred from those on whose behalf they have been created, especially when the principle is removed to enable them to be paid to the creditors of bankrupts.

    1835
    The right hon. Gentleman says only a small amount of money is involved, but he has been unable to give us any estimate whatever of what the amount is. That shows that the matter has not been dealt with with the care we have learned to expect from the Treasury.
    I hope that this is not the last word on the subject, and that, after examining what my hon. and my right hon. and learned Friends have said, the right hon. Gentleman will review it and produce some different proposal later. We are not to divide now, but I hope that my hon. and right hon. Friends will consider raising the matter again.
    Mr. Cyril Bence:I understood the Financial Secretary to say that the post-war credit would be vested in the trustee in bankruptcy. Is that correct?
    Mr. Boyd-Carpenter:Under the normal operation of our bankruptcy law the post-war credit is vested in the trustee in bankruptcy.
    Mr. Bence:I thought I heard aright. Should I be right in assuming that if that trustee lives to 65 the post-war credit would be paid out but that if he died at 45 the new trustee appointed would have to wait until he was 65?
    Mr. Boyd-Carpenter:I do not think the hon. Gentleman was in his place when I made my earlier speech, when I explained that under the existing law the post-war credit is vested in the trustee in bankruptcy; but the trustee does not hold it for his own use, and, therefore, under Section 26 of the Finance Act, 1946, it is not payable to him at any time, regardless of how old or young he may be.
    Amendment negatived.
    8.15 p.m.
    Mr. Houghton:I beg to move, in page 9, line 10, to leave out "ninth day of August," and to insert "thirty-first day of December."
    This Amendment would postpone the earliest date upon which repayment of post-war credits under this Clause can begin. Under the Clause the date upon which repayment can begin is 9th August. The Amendment proposes to postpone that date until the end of December. It does not interfere with the date in July
    1836
    after which steps preparatory to repayment may be undertaken by the Inland Revenue Department.
    No Member of this Committee wishes to delay the repayment of post-war credits. In my speech on the Budget, and again on Second Reading of the Bill, I expressed the view that the Chancellor had not gone far enough, and that he had chosen the last and the cheapest of all the ways of beginning to repay post-war credits.
    At the same time, post-war credits do not repay themselves. Someone has to do the work. The purpose of the Amendment is to give those who have to do the work more time in which to do it. The date, 9th August, has not been fixed by reference to the state of work in the Inland Revenue but presumably by reference to the date by which this Bill may be expected to become law. That date takes no account of the difficulties of those who have to do the work.
    There is no doubt that immediately after 9th August a great many beneficiaries under the Clause will begin to look for repayment. Many of the beneficiaries are not in urgent need of the money. We must bear in mind that the original holders are in all cases dead. There will be varying degrees of need among next-of-kin and legatees. Many of the beneficiaries, however, will be widows who will need the money, and all Members of the Committee will feel a special sympathy for them. None will wish to delay the work, which is considerable, if it can be avoided, but it is estimated that there will be half-a-million cases which is, on average, 800 cases for each local tax office throughout the country. There will be some difficult, intricate and possibly contentious questions to settle. The work will take a lot of time and effort
    Some weeks ago, soon after the Finance Bill was published, it came to my notice that instructions had been issued by the Inland Revenue that all current work in all local tax offices was to be advanced to prepare the way for this extra load of work which would have to be done. It was said that if and where necessary the staff should be put on overtime.
    No consultation took place between the Inland Revenue and the recognised and representative staff association concerned.

    1837
    Nobody was consulted as to how long this overtime would last, how many people would be expected to do it and what special difficulties might arise in asking staff to do overtime during the summer months in order to fulfil the promise held out by this Clause that repayment of postwar credits would begin on 9th August.
    The failure of the Administration to take the normal, elementary step of consulting representatives of the staff was brought to the notice of representatives of the Inland Revenue a little later. There seemed to be a surprising ignorance at Somerset House as to who would authorise this overtime and why, and yet, in reply to a Question which I asked him on 20th May, the Financial Secretary stated that it will cost between £80,000 and £100,000 between now and the autumn to undertake this extra load of work in order to begin the repayment of post-war credits on 9th August.
    In putting down this Amendment, I made it known to the Chairman of the Board of Inland Revenue that I intended to do so and I expressed grave concern that there should have been this lamentable failure to consult the staff on how the work will be done. Presumably, without asking anybody whether it could be done, the Chancellor stuck a date in the Bill—9th August—and hoped for the best.
    Mr. Boyd-Carpenter:On a point of order. I should like your guidance, Sir Charles. As I understand him, the hon. Member is making an attack on the administrative arrangements concerning consultation with the staff in a certain Department of State. I do not seek to object to this, but I should like your guidance as to whether I shall be permitted to reply, in due course, or whether that would be regarded as out of order.
    The Chairman (Sir Charles MacAndrew):The Amendment deals only with a change of date. I do not think the question of the administration enters into it.
    Mr. E. Fletcher:I take it that in supporting or speaking to the Amendment we are entitled to deal with the entire question of whether or not it ought to be possible for the Chancellor and his Department to fulfil their obligation in the Bill of paying post-war credits from 9th August or whether that date should be postponed. This is a very important
    1838
    decision for the Committee to reach, and in considering it we shall have to examine on both sides whether it is administratively possible to fulfil this obligation, and, if it is not administratively possible, whose fault that is.
    Mr. Boyd-Carpenter:May I raise a further point for your guidance, Sir Charles, leaving aside that made by the hon. Member for Islington, East (Mr. E. Fletcher)? I should like to know whether I shall be permitted to reply to the allegations made about non-consultation prior to this Amendment being put down.
    The Chairman:No. The Amendment simply alters the date and although hon. Members may touch on the question of the adminstration, it would be out of order to go into that in great detail.
    Mr. Gaitskell:Surely the whole point arises from the administrative difficulties. The purpose of the Amendment is to alter the date. I am sure nobody regrets the necessity for moving it more than does my hon. Friend the Member for Sowerby (Mr. Houghton). The whole purpose of the Amendment is to alter the date because my hon. Friend believes that it is administratively difficult, if not impracticable, to carry out the repayment of post-war credits on the basis of the date in the Bill. I should have thought that it was perfectly reasonable for my hon. Friend to refer to questions of consultation which, after all, are relevant to the administrative practicability of carrying out this scheme.
    The Chairman:The Amendment deals with the future. I do not think hon. Members can go at great length into what happened in the past, because that does not arise under the Amendment.
    Mr. Houghton:I will pass on from the point of non-consultation to deal with the administrative difficulties connected with the proposal to begin repayment on 9th August. This Amendment proposes to postpone the earliest date at which repayment may begin. Why do I propose this postponement? I do so because of the administrative difficulties in fulfilling the terms of the Clause. I am describing the conditions leading up to the problem which I put before the Committee.
    It would, I think, be unsatisfactory if I were to bring to the Committee prob-

    1839
    lems of administration which could be suitably discussed between the Board of Inland Revenue and the staff representatives, had there not been failure to carry out the normal machinery of consultation. It is that failure to which I have referred and it is because of that failure that it is necessary for me to bring this matter before the Committee at all. If things go on as they are, I am bound to say that administrative obstacles will exist to fulfilling the purpose of the Clause to begin the repayment of post-war credits on 9th August.
    I want to explain what those obstacles are. As my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said, no one regrets more than I that I have to bring this criticism forward and to explain the difficulties to the Committee. Usually, I am as good a champion of the Board of Inland Revenue as most folk and certainly much better than the Financial Secretary, who has recently got the Board of Inland Revenue in the mood of apologising too much and too soon for something which has never happened. The right hon. Gentleman cannot jump forward as a champion of the Board of Inland Revenue. I am that—and one of the privileges of a champion is to criticise, which is what I am doing.
    The Chairman:The criticism may be all right, but ought it not to be kept for a Supply Day?
    Mr. Houghton:I am trying to explain to the Committee why I am moving the Amendment to postpone the date. There is only one reason for moving it and that is the difficulty of getting the work done in time. Surely I am entitled to say that that is a good reason to move the Amendment. I have no other reason whatever. I do not want to deprive any of the beneficiaries of their post-war credits for a minute beyond 9th August. There is only one reason for postponing the date and that is the difficulty of getting the work done.
    What steps have the Inland Revenue taken to get the work done? They have put the staff on overtime. The overtime now imposed upon the staff during the summer months is an intolerable imposition upon them, and is an unwarrantable requisition of their private time without their consent and without consultation for
    1840
    the sole purpose of satisfying the intentions of the Chancellor under this Bill. No one is going to say that the Civil Service, and especially in the Inland Revenue, does not recognise its obligations to fulfil the reasonable hopes and expectations of the Chancellor and of the Committee in matters of this kind.
    Mr. E. Fletcher:Would my hon. Friend tell us whether in the Inland Revenue Department the staff is compelled to work overtime on this matter, and, if so, whether this overtime is the work of the office or whether it is the kind of overtime that is worked at home?
    Mr. Houghton:The answer to the latter part of the question is that this work is in addition to the work at home and can be performed at the office.
    The answer to the first part is that there is a tradition—I call it a legend—that in the public service the Administration has the right to require the staff to perform overtime as a matter of the conditions of service and, if necessary, as a matter of discipline. I challenge that, but it is not necessary to pursue it in a debate on this Amendment.
    I was drawing the attention of the Committee to the fact that every year since 1945 recoding has been necessary wholly or in part under the budgetary proposals. And much of the work already done has been done on overtime, so that overtime is a regular, annual experience with the staffs of the Inland Revenue, but that overtime has been usually confined to the weeks or months in the spring of the year immediately following the Finance Bill and in order to complete the recoding for the early pay weeks in June.
    But this overtime during the summer is not only overtime in the summer months, but it comes on top of the extra hours which the staff have been working for the last 14 years. It comes at a time when the staff is naturally reluctant to undertake this additional work in its own time in the holiday period in order to get the repayments started by 9th August.
    There could have been some discussion whether additional staff would help. There could have been some discussion whether the overtime should be concentrated in the early part to get the work done more conveniently or some other

    1841
    arrangements made which might have been suitable to get this job done. But the Inland Revenue Staff Federation, now in session at St. Anne's, is giving serious consideration to whether it should call upon its members to stop overtime at the end of July or before unless, by then, the Administration has approached the staff representatives for a review of the whole of the overtime worked between now and October.
    It will be apparent now to the Committee why this date, 9th August, has special significance in connection with the present attitude of the recognised Federation. An additional aggravation which the Financial Secretary must know about, but which he completely ignored in the reply to the Question I asked him on 20th May, is the fact that we have 3,000 officers in the Inland Revenue—most of the people who will be doing this work—who are now taking a special taxation study course lasting a year at their own expense and in their own time. They are paying £6 a head and doing 10 hours of study of Income Tax each week in their private time, week in and week out, from October to this November. This overtime is now being imposed upon officers who are undertaking this work in the interests of efficiency and of the public service.
    I would ask any hon. Member in the Committee whether he knows anywhere else, either in the public service or in private industry, where 3,000 of the staff are taking a tuition course to become more competent in their job, paying for it themselves and doing it in their own time? It is at that very moment that the Inland Revenue impose this overtime, which comes at a critical time in this course because the examinations are due to be taken in November. This step has been taken without a single word of consultation and without any consideration being given to the study undertaken.
    Dr. H. Morgan:Shocking.
    Mr. Houghton:The result is that we are now having to consider postponing the examination, and extending the course at a great deal of inconvenience and expense all round merely because this overtime has been imposed upon us in this way. If the staff turn out to be in the intransigent mood in which I left
    1842
    them this morning, then the Inland Revenue and the Chancellor will have to reconsider the programme on this job.
    I wish also to refer to the fact that for 14 years this staff, in common with other staffs in the public service, have been working in London seven hours a week longer than pre-war hours and getting paid for only three and half hours of it, and in the Provinces one and a half hours longer than the pre-war hours. That has been going on since the war without a break so that, although the amount of overtime to which the Financial Secretary referred and which may be bandied about in any discussion on this matter appears comparatively small in working hours, when added to the fact that these people are already working an additional seven hours in London and one-and-a-half hours in other centres, we find that the staff is working a 50½ hours week.
    So far this summer, they would be indoors anyhow, but if they are to be indoors they would rather be indoors at home than in a fusty tax office. Is it reasonable, in the interests of trustees of charities and the like, that this job should be undertaken in this unsatisfactory way?
    If this were an isolated instance—and the Committee will appreciate the feelings of the staff—there would be nothing to be said about it, but the curse of the Inland Revenue for 25 years has been under-staffing and overtime. Before the war, in my representative capacity I had to plead for a four-week rate of overtime in August of each year. We had to ask for a week's rest after each four weeks overtime had been worked.
    8.30 p.m.
    The Chairman:Has the hon. Member finished or is he concluding? This is really going beyond the Amendment.
    Mr. Houghton:I am trying to prove my case that the Chancellor cannot stick to 9th August and ignore these factors.
    The Chairman:I would remind the hon. Member that the debate should be confined to the Bill and not to criticism of the administration. The hon. Member is really going beyond the Amendment now.
    Mr. Houghton:Well, let me drop the criticism.
    Mr. Glenvil Hall:Subsection (6) is extremely wide and deals almost exclusively with administration, and not only future administration but what has happened in the past and what may be happening now. It gives legal sanction to anything that might have been put down before 9th August and certainly before the final passing of the Bill. I put it to you, with respect, Sir Charles, that much if not all of what my hon. Friend the Member for Sowerby (Mr. Houghton) has said is in order in view of the very wide terms of the subsection.
    The Chairman:We are not discussing the whole subsection, but only the Amendment to alter "ninth day of August" to "thirty-first day of December."
    Mr. Houghton:Being a forgiving sort of fellow I am quite ready to spare the administration any further criticism, but I submit that I am entitled to explain the staff arrangements and the impediment to the fulfilling of the terms of this Clause. That is why I suggest that further time should be given to the staff to complete this work before public clamour for repayment begins.
    I merely want to add that they are a long-suffering race of public servants and that they are in a really ugly mood at the moment. They are, first of all, gravely offended at what has been happening recently in matters to which reference has been made at Question time. They are concerned about this further impudent assumption that they will work further overtime without being asked, that it is to be voluntary where possible but compulsory where it is not. I ask the Financial Secretary, whose special responsibility it is, to take note of what I am saying, because I am going back to the conference tonight.
    The conference will be in session tomorrow and the next day and will be considering a resolution with regard to the cessation of overtime. If overtime ceases then, clearly, the purpose of this Clause cannot be fulfilled. I say with full sense of responsibility that this is an unprecedented situation in my long experience of staff affairs in the Civil Service. It is unprecedented that we should be contemplating such a grave step.
    1844
    I ask the Financial Secretary to regard this seriously and to consider whether he can give an assurance that these matters will be fully attended to and gone into with a view to coming to an amicable and agreeable arrangement by which the work can be carried out, either by the suspension of other work or relaxation in some other direction. I ask the Financial Secretary to do something to ensure the accomplishment of the task which has been imposed upon these people in such grave circumstances. If he can do that it will greatly help to relieve the tension which exists. If, however, he is going to be indifferent, as I felt he was by the reply he gave to my Question on 20th May, he must not expect the response of the staff to come up to the expectations of the Chancellor. Indeed, he must expect more trouble than that.
    Civil servants, like engineers, mine workers and others, claim to have some control over their private time and will not yield it up to the employer without agreement, without consultation and without some indication of good will and understanding of what is being asked of them. I am quite sure that nowhere else but in the public service could this sort of thing ever happen. That is because, in the public service, there has been no stay-in strike, no going slow and, so far, no ban on overtime. There has been none of those actions adopted by stronger trade unions in the industrial field when they encounter grievances of this kind to which a remedy does not appear to be forthcoming.
    I greatly regret having to make this speech, but I am sure the Committee will understand that I do so only under the impelling responsibility which comes from contact with all the thousands of men and women directly concerned who, at this moment, are feeling very discontented. It all arises on this Clause because of the work which this Clause imposes upon them. It arises more so on account of the date of 9th August, which comes immediately after the August Bank Holiday. From then on the public will be saying, "What about these post-war credits? We are waiting for the money. What is holding you up? I am gravely in need." Widows will say, "If only I could have my post-war credit I could go straight away for a little holiday. I have not had one for years."

    1845
    The most moving appeals will be received by Income Tax officers up and down the country shortly after 9th August, asking for repayment of long awaited post-war credits. If there is to be any delay the public will suffer and, if the public suffers, the responsibility will rest on the right hon. Gentleman.
    Mr. Proctor:My hon. Friend the Member for Sowerby (Mr. Houghton) has succeeded in bringing a homely atmosphere into the House of Commons. I thought I was back in a trade union branch meeting when I listened to his case. I congratulate him upon being able to ventilate the grievances of his members in such a splendid way. In anything I say I have no wish to defend the apparent ineptitude and inefficiency of Her Majesty's Government in this matter. But I am bound to point out that in the last moving passage of his speech my hon. Friend completely contradicted the Amendment he has on the Paper. He spoke of the needs of the widows and those who would be receiving these credits and said that moving appeals would be going in by 9th August—
    Mr. W. R. Williams:Can we have the situation made clear? Is my hon. Friend supporting the Amendment or not?
    The Chairman:It is my business to call hon. Members who catch my eye, whether they speak in favour of or against Amendment.
    Mr. Proctor:I am grateful to my hon. Friend for his intervention, but I will make my intention clear as I go along. The last phrase used by the mover of the Amendment in my opinion contradicted the Amendment because the needs of the widows and others who receive benefit under this Clause will be just as great on 9th August whether we change the date in the Clause to 31st December or not.
    The House of Commons must find some other remedy, if there is a grievance in this Department, than that of postponing the date. I say that because my constituents, who are anxious to receive what benefits will come to them under this Clause, will want them on the date promised. I shall want some much more substantial reasons than the inefficiency of the Government in making adminis-
    1846
    trative arrangements or arrangements for joint consultation before I support the date of 31st December, instead of that proposed in the Bill.
    I am alarmed at the intimation of the spirit moving in trade union circles which was given by my hon. Friend the Member for Sowerby, especially the indication that there is same form of guerrilla action anticipated in the Department. I suggest to my hon. Friend that in all these matters public opinion is an important factor and if what he has intimated concerned the collection side rather than the paying side there would be rather more support for that action.
    I submit that the House of Commons cannot agree to postpone the date from 9th August to 31st December, as is proposed in the Amendment, on the grounds of administrative difficulty unless it can be proved to us that the matter cannot be dealt with in any other way. So far as the situation revealed here is concerned, I hope that the Financial Secretary will be able to indicate to us that he can deal with this matter in a more efficient manner than it has apparently been dealt with up to the present. I say, in the interests of those who are to receive this benefit, people who in many cases are sadly in need, as all of us are aware from letters in our postbags from people in difficulty, that we cannot agree to the postponement of the date on the grounds of the administrative inefficiency of Her Majesty's Government.
    Mr. W. R. Williams:I should make it quite clear to my hon. Friend the Member for Eccles (Mr. Proctor) that I had no desire to try to intervene to prevent him from putting any particular point of view, although I may differ from him in what I have to say. I thought, mistakenly, that you, Sir Charles, might have been intending to call upon a Member to second the Amendment before calling upon any dissentients to it. That was my only reason for raising a point of order. I wish to explain that to you, Sir Charles, and to my hon. Friend.
    There is no need for me to go into any great detail about this Amendment. My hon. Friend the Member for Sowerby (Mr. Houghton) has covered the ground very fully and adequately. He introduced one or two arguments about which I had difficulty in following him all the way,

    1847
    but I think he has done a service in giving an airing to a matter which is of great importance and substance to the whole of the Civil Service and is not confined to the Inland Revenue Staff Federation.
    None of us wants to delay the payment of post-war credits. I have from time to time, as other hon. Members have done, received complaints from some constituent or other and remitted them to the Financial Secretary or the Chancellor direct. Therefore it would be quite inconsistent for us to delay the payment of any benefits which may accrue from the Budget statement by the Chancellor. We should, however, give this question of non-consultation on important issues an airing in the House because a large number of people in the Civil Service, as I know from my knowledge of it, feel that the Government sometimes consult everybody in regard to pending legislation except the people who have to give effect to the legislation when it is enacted.
    I have had a long connection with the Post Office, and I know, for instance, that it seemed strange that everybody used to be consulted by the Postmaster-General and the Administration in former days except the staff organisation representing the men and women who had to carry out some of the impositions placed upon them by statute. I remember that in regard to the paying of pensions everybody used to be consulted as to how they should be paid, etc., but not the postal staff who actually had to do the work of paying them.
    8.45 p.m.
    As a trade union official connected with the Union of Post Office Workers, I have argued times without number that at some stage the Chancellor of the Exchequer or the Postmaster-General should consult the staff before inserting a particular date in Bills similar to this. I would ask the Financial Secretary if the Inland Revenue Staff Federation was asked if 9th August was a reasonable date having regard to the amount of preliminary work to be undertaken. If it is not a reasonable date under those circumstances it should not have been included in the Bill.
    Not only are the staff affected if an unreasonable date is included in a Bill, but the Service is brought into disrepute. If the Civil Service staff cannot rise to the
    1848
    occasion, if, as has been suggested by my hon. Friend, the work will take longer than was thought at the beginning, the blame automatically falls on the Civil Service staff; although, had they been consulted, they could have proved to the Chancellor that such was likely to be the case. Did the Financial Secretary or the Chancellor take the reasonable precaution of consulting the civil servants concerned on this occasion? Had this matter been connected with the mines or the railways I feel sure that there would have been such consultation, and I see no reason why it should not take place in this instance.
    For some reason or other we seem to think that we can take advantage of the Civil Service staff because they are directly employed by the Government. But people working in the Civil Service have as much right to say how they are to work as have people in other industries. The House and the country is fortunate in its Civil Service. Were it not for the fact that our civil servants are willing as well as efficient a large amount of the legislation going through the House would not proceed as efficiently and smoothly as it does.
    Why should we go out of our way to make difficulties for this friendly, efficient, willing and loyal staff? It is not a question of calling them from all the corners of the earth in order that consultation may take place, because there is a Whitley Council and there is no reason why the matter should not have been discussed. If the Financial Secretary says that there has been such discussion the whole of my case falls, but up to now he has not suggested that the information given by my hon. Friend is incorrect.
    There comes a time when the imposition of too much overtime leads to inefficiency, and that is a matter which is worthy of consideration by the Financial Secretary and the Chancellor. A proportionately increased amount of efficiency is not obtained by multiplying overtime. If overtime is imposed at a most disadvantageous period so far as the staff is concerned it does not need much imagination to appreciate what effect that will have upon the work. I do not suppose my hon. Friend wishes the Committee to regard what he has said as anything more than a strong protest. But I should not like to be in his position of having to go to his conference tomorrow if the Financial Secretary does not now say how

    1849
    sorry he is that he has been so lax about dealing with this matter in a reasonable way.
    If the right hon. Gentleman will come to the penitent's stool this evening and say, "We have erred in our ways and we shall try to make amends as from tonight," that would be a message which my hon. Friend would be very pleased to carry to his conference. Who knows but that as a result of the message which he would be carrying to them we might be able to get the work done satisfactorily and expeditiously?
    I want to take advantage of this opportunity to do something which I have been dying to do in my other capacity for many years and that is to tell the Committee not to impose unreasonable, unnecessary hardships on the Civil Service. It is all very well to have the sniggering that goes on sometimes about working overtime. It may be that it is sometimes easier to work overtime on physical manual work than on some other kinds of work.
    Mr. Charles Pannell:Does my hon. Friend know any form of manual work that does not require a degree of brain applied to it?
    Mr. Williams:My hon. Friend knows me well enough to know that I should be the last to suggest that. I am surprised that such an evil thought should have come into his mind.
    There are many hon. and right hon. Friends of mine who might find that after seven or eight hours of trying to decide some of these intricate problems of law they had had quite enough for the day. If they have already had a number of hours a week imposed upon them to meet a situation of emergency there might be still more reason for complaint about this additional overtime.
    I can well imagine how the staff federation would feel. Here, they have gone out of their way to try to make themselves more efficient in their work. They are paying to be educated by private tutors in their own time to make them greater authorities on Income Tax. Yet at the very time when they have arranged to do that in the interests of their own Department, the Treasury come along and say, "You had better cancel all that and make it ineffective. We have already decided that you should do over-
    1850
    time as from a certain date so that our commitments to the House of Commons may be carried out, although we did not consult you." That is my protest.
    Overtime may be good in its way. It is a way of dealing with emergency. It is not the usual thing; it is something to deal with an emergency. Today there is no emergency except the one created by the Chancellor and the Financial Secretary who should have consulted these people. Then perhaps the right date would have been inserted in the Bill.
    Mr. F. H. Hayman:I had not intended to intervene, but the moving speeches of my hon. Friend the Member for Sowerby (Mr. Houghton) and my hon. Friend the Member for Droylsden (Mr. W. R. Williams) have been such as to remind me of the days I spent in local government service and of the extravagant overtime which local authorities often expected from their servants. I speak with deep feeling because I have suffered from the fact that overtime has been necessary because of understaffing in offices. Understaffing has existed in local government and undoubtedly in the Civil Service too, because of the silly criticism of newspapers and of people who ought to know better.
    Posts in local government and the Civil Service are responsible jobs carrying a high degree of responsibility. I support the Amendment and I even wish that my hon. Friends might press it to a Division. I agree with my hon. Friend the Member for Eccles (Mr. Proctor) that there are many thousands—perhaps tens of thousands—who want these post-war credits. Perhaps later in our proceedings I might make some comments about that.
    However, let us in this Committee be perfectly sane in the requests that we make to the Civil Service for overtime. I must admit that a few years ago when I got to know of the amount of overtime that was demanded in the offices of the Inland Revenue I was shocked. I hope that the protest which has been made tonight will lead the Chancellor to ensure that the Inland Revenue staffs are adequately manned and that no unreasonable demands in the way of overtime are made upon them.
    Mr. Boyd-Carpenter:The Amendment gives rise to the first of the many discussions about post-war credits in which I have taken part in which delay in the payment of the credits is suggested. All the other discussions have rather emphatically been in the other direction.
    I agree with the hon. Member for Sowerby (Mr. Houghton) when he says that these are payments which no one would wish to delay. I appreciate that his intention in moving the Amendment is, very properly, to bring forward the interests and well being of the staffs concerned, on whom we and all Governments depend for the carrying out of policies of this sort. It is quite proper that in our consideration of this proposal we should continue to give full weight to the strain which is likely to be imposed upon them in carrying out the wishes of the Committee and the House.
    However, I join issue with the hon. Member in his desire to go much wider into questions, many of which, I understand, go back a good many years, affecting staff relations in the case of certain sections of the Inland Revenue staff. I join issue with him not because on an appropriate occasion, I should not be happy to debate the questions with him. The questions involve matters going back many years, but if we were to discuss them, I think it would be possible to make it clear that a good deal of what he said was somewhat ex parte and that there are other aspects of the matter.
    Be that as it may, no one is concerned to dispute that the staff of the Inland Revenue, as, indeed, most other branches of the public service, have borne a very heavy strain during the years of war and the years of difficulty, for one reason or another, which followed the war. It is proper that we should appreciate that Government staffs generally have borne, and discharged most willingly and with a very high sense of public responsibility very heavy and onerous duties over a good many recent years.
    It is right that we should say that. I fully agree with the hon. Member that it is very proper that we in this Committee should put on record our appreciation of and gratitude for the fine and devoted public work which all Governments have been able to command from their staff. I agree fully with him in saying that this country has the inestimable advantage of the finest public service in the world.
    1852
    I have strayed somewhat—in doing so, I think I have followed the example of one or two hon. Members who preceded me—from the rather narrower issue which is posed by the Amendment. The Amendment poses the issue whether it is necessary, out of concern for the staffs, to substitute 31st December for 9th August in subsection (6), which would have the effect that no payment authorised by the Clause could be made before the end of this year.
    9.0 p.m.
    The hon. Member for Sowerby mentioned the Question which he asked me on 20th May, and in reply to which I Rave him the facts. As to the facts, I understand that there is no dispute between us. The payment of post-war credits, as I then told him, will involve between £80,000 and £100,000 in overtime, and that overtime will be worked over a period of months in the latter part of this year. I thought the hon. Member for Sowerby, who has a considerable knowledge of the subject, appeared to overlook the fact that the working of special overtime as the result of changes made in the Budget is not an innovation which my right hon. Friend the Chancellor has thought up for the first time.
    The amount of overtime required in respect of the payment of post-war credits will be rather less than the amount of overtime required as the result of Income Tax changes in the Budgets of 1952 and 1953. I have no doubt, though I have not indulged in any research further back, that changes in taxation for which right hon. Gentlemen opposite were responsible had somewhat similar consequences in respect of overtime.
    It is important, if we are to look at this matter with a proper sense of proportion that we should appreciate that the overtime with which we are concerned in this Clause is actually somewhat less than that which was required by the changes in Income Tax made in the two previous Budgets, as well as those in a number of others.
    Mr. Houghton:May I remind the right hon. Gentleman that I said that this overtime would come in the holiday period and would impose a rather longer endeavour, than was the case last year, the year before or the year before that? The overtime worked previously generally ended by the middle of June.
    Mr. Boyd-Carpenter:The hon. Gentleman must give me credit for that; I was coming to that aspect of the matter. We shall get on more quickly if he will allow me to put my case in my own way. The hon. Gentleman made a very long speech, he was not interrupted, and he must allow me to make my speech in my own way.
    It is true that the timing may well be more inconvenient, but the amount of it, which the hon. Gentleman described as an intolerable interference with the lives of the people concerned, is less than that which was required in the two previous years. Some of it comes at a somewhat more inconvenient time, but it also has a compensating advantage in the fact that it will be rather more widely spread, which means that it will be more convenient and more capable of arrangement, having regard to the position of individual members of the staff. That is a factor to which the hon. Gentleman gave insufficient weight.
    Equally, not all of it will fall within the holiday period, at least, if the hon. Gentleman and I construe the holiday period as meaning the same thing. It will be spread over a number of months in the latter part of this year. That, I think, puts the matter in proportion, and I need only deal with the hon. Gentleman's reiterated charge that no consultation has taken place about the arrangements for this overtime.
    That is really not the case. Consultation took place as early as the day after Budget day, when the Chief Inspector met the Staff Side of his branch, and further consultation took place between a Senior Principal Inspector and members of the Staff Side on 26th April. Therefore, it is not true to say that consultation did not take place. Of course, it is quite natural to say that discussions of the right sort and with the right people did not take place, and that is a matter which we can argue about on another occasion, but, in fairness to the Board of Inland Revenue, and in view of what the hon. Gentleman said about the absence of consultation, it is right that I should say that.
    Let us come to what is proposed by the Amendment. It is proposed to prevent any payment before 31st December, and I put that in this way for this reason. As it stands, the Clause does not say that every payment shall take place on
    1854
    9th August; it provides that that will be the first date. It is true that once that date has been passed the natural eagerness—to which the hon. Member for Eccles (Mr. Proctor) referred in what I thought were very moving terms—of many people to be paid will cause them to want payment without undue delay. Nevertheless, it is important to realise that we are here concerned only with the date before which payments may not be paid.
    It is proposed that the claim forms shall be available in both tax offices and Post Offices early in July. I speak here only from memory, but my recollection is that the date at present is 5th July. Some of the cases in respect of which claims will be made will be quite simple. The simplest case of all, as I explained to the House on Second Reading, is that in which the beneficiaries of the person who has died have had new post-war credit certificates issued to them in their own names.
    There is there very little administratively to do when the claim is put in, and there is no doubt that, in the normal way, some of those claims will be ready for payment on or shortly after 9th August. It really seems quite unreasonable that we should have, as we shall then have, claims ready for payment but be forbidden by this House to pay them. I think it is unreasonable to do that. I do not think that public opinion outside would regard it as being reasonable of us to impose such a prohibition.
    Other cases will be more difficult; they will involve more work and will take longer. I do not want to say anything which will be construed outside as meaning necessarily that it will be possible to deal with very large numbers in the first few days, but some claims—particularly post-war credits of the character to which I have referred—will be ready for payment very soon after 9th August. It seems to me that the reasonable thing is to make the payments then, but this Amendment would forbid that.
    Let me come to what I think is really the substance of the hon. Gentleman's complaint. The working of overtime, of course, affects different members of staffs in different ways. I think the hon. Gentleman will agree with me that some will frankly welcome the opportunity of the extra earnings. Others will no doubt be put to some inconvenience by having

    1855
    to work late. We must certainly give full weight to the needs and convenience of those public-spirited members of the staff who are engaged in taking the course to which the hon. Member referred. I agree with him that it is a most admirable thing that they should volunteer to fit themselves in this way even better for the work which they do.
    We must take account of that. That is why, on 20th May, in reply to the Parliamentary Question to which the hon. Gentleman referred, I said:
    "Consultation about detailed arrangements for overtime working will take place locally in accordance with the usual practice, and account will be taken as far as possible of the personal circumstances of individual officers."—[OFFICIAL REPORT, 20th May, 1954; Vol. 527, c. 137.]
    I said that on 20th May and I meant it.
    It is the intention of the Board of Inland Revenue—subject, of course, to the necessary service which all public servants have to render to the public—to try to arrange the working of this overtime so that, as far as possible, it is done by those who welcome the opportunities to work overtime; where it cannot be so worked, to arrange the work so as to cause as little inconvenience as possible to the staffs concerned. That is the intention. It is intended to deal with this in a perfectly human and perfectly sensible manner. That to me seems a much more reasonable way to proceed than to suggest, as this Amendment does, that we should prevent any payments taking place before the end of this year.
    I hope that with good will and good sense in the working out of individual arrangements locally—and I hope and believe that the hon. Gentleman will lend his own considerable influence to seeing that that proper and happy state of affairs develops—the staffs of the Inland Revenue will be able to discharge this task in the same public spirited way in which they have discharged other and much heavier ones that successive Governments have put upon them. I do not believe that the right thing to do in these circumstances is to abandon the attempt to pay these post-war credits as soon as they can be paid.
    I think the hon. Member for Eccles (Mr. Proctor) was quite right in saying that there will be many people in humble circumstances who will be looking
    1856
    forward anxiously to the payment of these credits. Certainly, the letters which I have received from a number of hon. Members indicate that there are quite a lot of cases in which a considerable relief will be given by the early payment of these credits.
    Balancing that very real and human consideration against the equally real and human consideration of the need to treat these staffs as well as we can treat them, and the need to handle this difficult question of overtime in a human, practical and reasonable manner, I would suggest that the right thing to do is to allow such payments as can be made on and after 9th August to be made, but, at the same time, we should all try to operate the system so that it does not place any undue and excessive strain upon the devoted and efficient staffs whose duty it is to carry out the decisions of Parliament.
    Mr. Glenvil Hall:I am sure the Committee has listened to what the right hon. Gentleman has said with a great deal of interest, particularly those who have been here throughout this debate and heard the almost impassioned speech of my hon. Friend the Member for Sowerby (Mr. Houghton). There is not the slightest doubt that he was moved by a real sense of urgency, both by what he felt would be the situation later this year and by the undoubted sense of grievance that unfortunately exists among some of the members of the union to which he belongs and to which he has given such devoted service.
    Here in this Clause we are doing something which I am sure hon. Members in all parts of the Committee devoutly wish to be done. I am one of those who took some small part in passing the Finance Act, 1946, when the then Parliament decided to pay postwar credits to men at the age of 65 and to women at the age of 60. That is eight years ago, and it is high time that we made a move to see that some others begin to get post-war credits. Here we are doing something quite small but extremely useful. If this Clause is accepted, we are going to pay to the beneficiaries of those who have died the post-war credits which would have gone to them had they lived.
    The only question which divides the Committee now is whether we should insert 9th August or 31st December as

    1857
    the date at which payments shall begin, and my hon. Friend made it quite clear that he is all for 9th August, other things being equal. His fear is that the staffs of the Inland Revenue Department who have to deal with this matter will find it an impossible task, and therefore will be blamed, and, that, incidentally, Members of Parliament will get far more correspondence than they want from those who have sent in their forms and find that their claims are not being speedily met.
    The right hon. Gentleman, although he was forthcoming in what he said just now, did not altogether allay the feeling that exists, certainly on this side of the Committee, that everythig will be done to see that these claims are expeditiously met once this date is put into the Bill.
    9.15 p.m.
    I should like briefly to refer to that part of his speech which purported to be a reply to my hon. Friend's allegation that the Civil Service staffs concerned had not been consulted in this matter. The right hon. Gentleman indicated that they had been consulted on 6th April—the day after the Budget was introduced—and again on 26th April. The latter date was some time after the Bill had been prepared and published, because the date shown on it is 14th April, which is 12 days before the second consultation he mentioned took place. By that time the Government had not only made up their minds what they were going to do, but had put it into words in the Bill then available to all hon. Members in the Vote Office.
    I know that the right hon. Gentleman did not make his Second Reading speech until 3rd May, when he made it clear that steps were already being taken to prepare for the payment of these post-war credits almost immediately after the Bill was likely to become law, early in August. He also at the same time indicated that not only would the work have been begun but that many of the payments would be ready, and would be made immediately after 9th August. Does not that rather contradict what he now says, namely, that most of the overtime to be worked will take place not during the summer but during the autumn and latter months of the year?
    My hon. Friend's grievance is that during the summer months these staffs are going to be employed when they ought,
    1858
    like other people, to be expecting a holiday. Not only will they have to do their ordinary work, but overtime as well. The right hon. Gentleman countered this suggestion by saying that most of the work will be done in the autumn. But, that is not what he said in his Second Reading speech, and we should like to know which of his statements is correct.
    Mr. Boyd-Carpenter:I do not think that the right hon. Gentleman completely understood me. All I said was that while I agree that some of this work will come within the normal holiday period, the rest of it will not, and some would have come in the preparatory stage, early in July.
    Mr. Glenvil Hall:I accept what the Financial Secretary says, but it is clear that overtime will have to be worked. The point is that in a well organised State it is time that something was done to prevent this constant overtime work on the part of certain sections of the Civil Service. Year by year they find themselves, for months on end, engaged in work which keeps them long after other people have gone home and are enjoying a leisurely evening. The work is not of a mechanical kind; much of it is very complex. That fact ought to be considered, and the Government should now be seeking ways and means of preventing this periodic overtime.
    On that ground alone my hon. Friend did right to move his Amendment in order to ventilate the matter. If members of the Civil Service have to work overtime month after month their work must eventually become slovenly. This means that there will be a sense of frustration among the staff, and it certainly means frustrated hopes on the part of those members of the public who are expecting payment but have to wait week after week for it. They will blame either the Civil Service or the House for the delay. If the Committee accepts the date in the Bill I hope that the right hon. Gentleman will make it quite clear, in any public announcements that are made, that although 9th August is the date inserted and payment will begin soon after that date in some cases, there must be unavoidable delay in others; and that being so, the Government hope that the public will realise the difficulties of the Civil Service in coping with this rush of work, and will make due allowance for it.

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    As my hon. Friend has said, many people in the Inland Revenue Department have engaged to take at their own expense a course in taxation not only to assist them to attain greater proficiency but to help their country. They ought therefore not to be suddenly called upon to work overtime when they have work of that kind to do. I appreciate the tribute paid by the right hon. Gentleman to the Civil Service, but I should like to see it eventuate in something more tangible. I hope that by next year the Government, if they are still in office, which I doubt, will have made some attempt to prevent a recurrence of the difficulties that undoubtedly will arise this year for an excellent body of individuals who serve the country well, and to prevent their being obliged, year after year, to work long hours on work which, if the Department were run more efficiently, need not devolve upon them in this way.
    I do not suppose that my hon. Friend will wish to carry this matter to a Division. Having ventilated his point of view and explained the feeling that we on these benches share about the matter he will probably be willing to withdraw his Amendment. But I hope that the Government will not take that as a sign of weakness. We on this side are anxious that payments should start at the earliest possible moment, and 9th August is about the earliest date at which they can be started; but I hope that the right hon. Gentleman will not think that means that we accept the present situation as one that cannot be helped, or one in which nothing can be done to prevent a reoccurrence.
    Mr. Houghton:It was not my intention to ask any Members to support the Amendment in the Lobby. I quite agree with the right hon. Gentleman that if the Department can begin to make repayments on 9th August there is no reason why it should not. However, the right hon. Gentleman will probably appreciate that if the number of people wanting repayment exceeds the number who can be repaid those who want repayment sometimes prevent progress from being made by too many calls, too many knocks at the door, to make inquiries about what is happening. It is desirable that when the work does begin it should not lose momentum, and that there should be a
    1860
    reasonable and reassuring flow of repayments so that those expecting them will not have to wait too long, at least where no unexpected difficulties arise.
    I cannot say, however, that I thought the right hon. Gentleman's reply was satisfactory. It was a typical Treasury speech. He did not seem to understand trade union consultation. He did not appreciate that there is a point of view on the trade union side that cannot be assuaged by references to patriotism or public spirit, or by patronising references to the work the staffs have done in the past. They believe they have certain rights, and they expect the Administration to recognise them.
    Every other body of workers would do the same. Railway drivers do not feel any differently about lodging turns because the public think they are a wonderful body of men and because the public is most grateful for the service they render at all sorts of inconvenient times. No; they believe that they have rights, and when the summer schedules of London Transport are announced, sometimes even after they have been agreed by the unions, they can cause disturbance among the workers. Everybody rushes round to see what the trouble is and how it can be put right.
    But not in the Civil Service. The indolence in the administration of the Civil Service is worthy of the most serious criticism. They do not think it matters. That is what is wrong with them: they do not think it matters. I am trying to impress upon the right hon. Gentleman that it does matter.
    The right hon. Gentleman now says that there was consultation. On 20th May, I asked him why no consultation took place with the staff side before the instructions to work overtime went out. Did the right hon. Gentleman then say that there had been consultation? No, he did not. He said:
    "The staff side has been kept informed of the need for extra duty."—[OFFICIAL REPORT. 20th May, 1954; Vol. 527, c. 137. ]
    That is all he said. Presumably, he was advised by the Inland Revenue before he answered the Question, and if he knew about consulation why did he not say so? The truth is that sometimes people do not know when they are consulting and when they are not, because they cannot observe the form of consultation. It is all too

    1861
    casual—dropping a word in the corridor instead of discussing the matter in a proper way. I deny emphatically that there was consultation within the meaning of the term, and I ought to know because I am secretary of the organisation concerned. Incidental references to overtime made to other staff representatives are not trade union consultation in the way in which I understand it.
    I do not wish to detain the Committee for long. I have had the opportunity, with difficulty I will admit, of stating this matter to the Committee. There is only one thing missing from the right hon. Gentleman's reply which I had hoped and expected he would include. It is this: I expected him to say, "If these troubles exist I will see that the Inland Revenue and the staff representatives get together and thrash them out." But he did not say a word to that effect. He has left the position just where it was, and that means, I regret to say, that the staff, now in conference, will not find the satisfaction and the reassurance from the right hon. Gentleman's statement which I was hoping to take back to them tomorrow.
    I will say no more about what they may decide to do in conference, but if, even now, the right hon. Gentleman will say that if these difficulties can be resolved at least an attempt should be made to do it; and if he will say that it will be his personal interest to ensure that the proper discussions take place and that the matter is placed fairly and squarely on the table to see what we can do over the remaining period of overtime this summer, I would accept that as an assurance that here will be a better feeling, more understanding and a more common sense approach to this matter.
    I will give the right hon. Gentleman that opportunity if he wishes to take it. He cannot ride off with this sort of explanation: "You are complaining about this overtime, but you have worked lots more in the past and we have had no trouble." That is what happens. We let it go one year, and another year the presumption is that there is no need for consultation.
    I impress upon the Committee the difference between overtime at an earlier stage of the year and overtime now. This is a problem of manpower in the Inland Revenue which needs serious consideration. We have homework, we have
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    student labour employed in the long vacations, we have all sorts of expediencies adopted to keep the numbers of the staff down because the Chancellor put a ceiling on the number on 1st October, 1951. That is not a sensible way of going about the staffing of a major revenue gathering Department.
    I hope that the Financial Secretary can now say that these troubles can be overcome and that he will take special and personal care to see that any reasonable accommodation which is possible is given so that this work may proceed without interruption.
    9.30 p.m.
    Mr. Boyd-Carpenter:I am glad to respond to the hon. Gentleman's invitation. All the elaborate, normal channels of consultation, with which he is perhaps more familiar than I am, remain fully open, and any point, either of a major or a minor character, which the staff wish to raise, and which they have the constitutional right to raise, can be raised. I shall be very happy if they do raise it, because the more discussion there is on any of these matters, on which rightly or wrongly feelings may be aroused, the better. Consultation can continue and my own view is that it would be a good thing if it did continue. If it does I shall certainly follow it closely.
    Mr. Houghton:I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Gaitskell:I am very glad that the Financial Secretary has accepted the proposal of my hon. Friend the Member for Sowerby (Mr. Houghton). I am sure that it will be well received by the Staff Federation and it will do something to assuage the strong feelings that appear to have been raised by their treatment at the hands of the Treasury.
    The fact that we have been discussing only two pairs of Amendments on this Clause should not be taken as evidence that there is no great interest in the Committee or in the country generally in what this Clause does. There are some 10 million people who hold post-war credits or, at any rate, bits of paper which entitle them to post-war credits under certain conditions and they may from time to

    1863
    time express considerable excitement and interest about the future of these post-war credits. Therefore, there is much concern at any proposals put forward by the Government to alter the circumstances and the conditions in which these credits are repaid.
    I think it is as well that we should remind ourselves of the background of the whole situation in which we now find ourselves, because only if we do that can we pass judgment on whether the Government's proposals are really adequate to meet the situation. As the Committee will be aware, the idea of post-war credits was first put forward by the late Sir Kingsley Wood in the 1941 Budget. He was excessively cautious in the actual words that were used. He said, for example, in his Budget speech that year that these credits will be brought in as some compensation for the reduction in earned income and personal allowances which he was making in his Budget. The actual words he used were these:
    "…the extra tax which any individual will pay by reason of the reduction in the personal allowances and earned income allowance will be offset after the war by a credit which will then be given in his favour in the Post Office Savings Bank."—[OFFICIAL REPORT, 7th April, 1941; Vol. 370, col. 1329.]
    It is of interest to notice that, in fact, no credits have ever been given in the form of deposits in the Post Office Savings Bank, and if we turn to the enactment itself it provides simply that there
    "…shall be credited to him"—
    that is the taxpayer—
    "on such date as may be fixed by the Treasury, being a date so soon as may be after the termination of hostilities in the present war."
    In other words, strictly speaking post-war credits do not exist as such. They are something which can be brought into existence at a certain date when the Treasury so desires.
    I thought it was not unreasonable in the immediate period after the war that there should have been very great care taken about the immediate repayment of the sums of money which were levied during the war. After all, there was in the world generally a certain state of inflation, as I think has always been the case after every major war. Nobody would deny that, to use the well-known
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    words of my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), there was for a time too much money chasing too few goods.
    It was, therefore, obviously highly undesirable that there should have been let loose upon the market a large flood of additional money in the form of postwar credits. Furthermore, had they been released at that date nobody would deny that the inclination on the part of those receiving them would probably have been to spend them, because the pent-up demand for goods of various kinds was very much in evidence. Therefore, their probably inflationary consequences cannot be denied.
    That being so, I think equally it was reasonable that the system of repayment which was introduced should be limited to those who had reached the age of 65 or 60, as the case may be. In general, I think that the country was prepared to accept that situation in the post-war period, but now we are faced with the situation that if we go on at the present rate of repayment—and the small concession made this year does not much affect the figures—it will take something like 40 years to repay the total amount which is still outstanding. I believe that it is about £600 million.
    I am sure that I take the Chancellor with me when I say I do not honestly feel that we can seriously contemplate that kind of period of repayments. It may not be legally wrong. As I said, Sir Kingsley Wood was very careful in the words he used and in the words which were put into the Act, but it would be morally indefensible and it would create a very bad impression so far as the public attitude to Government promises in matters of this kind is concerned. It may be already difficult, but it would make it quite impossible, if in future a Government wanted to contemplate such a thing, to introduce post-war credits in an emergency. In passing, I am not sure that I think it would be a very good thing to do so, but when one talks in terms of emergency situations it is just as well to preserve as much room for manoeuvre as possible.
    Therefore, my first point is that I do not think we can leave things as they are now. Secondly, we are faced today with a very different situation compared with

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    that which existed in the immediate postwar years. If one measures inflationary pressure, for example by the proportion between the volume of money and the national income, which is a device that the experts sometimes use, one finds that there has been a steady diminution in that direction. The proportion has been steadily falling ever since 1946 and has now reached approximately the same level as existed before the war.
    As we all know, there has also been a substantial fall in world prices for the past two years or so and there has been equally—and the two things are closely bound together—a rise in personal sayings. The Chancellor told us this afternoon, in his interesting speech on the standard rate of Income Tax, that he believes that there is some spare capacity available in the country. He did not use those words, but I think that was what he intended to convey. I suggest to him that all these factors lead to two conclusions, first, that the risk of excessive spending is considerably less than it was and, secondly, that there is much less danger that any credits which may be repaid will in fact be spent.
    That seems to justify examining once more whether some further steps cannot and should not be taken. I realise that it is difficult at this stage of the Bill for the Chancellor to make substantial alterations, but I think that, before parting with the Clause, we ought to hear from him some idea of his attitude to the problem generally and what he hopes he may be able to do. I suppose it is not essential to wait for next year's Budget in connection with the repayment of postwar credits, if he so decided, any more than the more urgent matter—in my view, I make that plain—of old-age pensions.
    I suggest to the right hon. Gentleman the following as some of the alternatives which could be considered. It has been proposed by the Trades Union Congress recently that there should be a gradual deduction in the age at which the credits are repaid. One possibility would clearly be to double the rate of repayment by reducing the age for repayment by one year every year. That would mean repaying just about twice as fast. Another suggestion which has been frequently made is that these credits in future should be repaid when the owner dies instead of waiting, as even now under the Bill we are considering until
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    he would have been 65. I realise that the initial impact of that would be heavy. All the same, I think that most people still feel there is something anomalous about the situation in which the credits are not repaid at death.
    I am bound to say for my part that if the Chancellor feels reasonably sure that there is excess capacity and he is prepared to take what admittedly would be some degree of risk—I fully recognise he must be the judge of that—there is a great deal to be said, certainly on administrative grounds, for repaying by reference to the taxes actually paid in the years in question. For instance, he could take the first year taxes, for 1941–42, and repay them as a whole. That would involve a fairly large sum of money—£100 million I think—and it would be impossible if one really believed that it would all be spent. That would be my view and it would be my view that to realise that amount of additional funds might be going too far. But I do not for a moment believe that these credits would all be spent.
    One has only to consider what the situation would be if the Government that originally introduced the scheme had decided to do it differently and had in fact decided to give people immediately after the war deposits in the Post Office Savings Bank with these post-war credits included in them. That would simply be an addition to the total of small savings now in existence. The effect they would have on consumption today would certainly be fairly marginal. We could probably fairly safely assume that only a fraction of what would be paid back, particularly if done in a certain form, would find its way into immediate consumption. I think the vast majority of people would take these post-war credits as a nest egg which they would add to their savings for drawing on certainly when there was an emergency, when there was hardship, but otherwise, very likely simply to be retained for some possible future use just like any other savings.
    9.45 p.m.
    A number of other suggestions have been made. It has been suggested that special arrangements should be made in cases of hardship. We must all be sympathetic to the number of instances which have come our way from constituencies of people who are really in serious need

    1867
    have substantial credits available but cannot use them, cannot sell them, nor make any use of them at all. I must say, however, from this Bench that there are certainly great difficulties about making any general provisions for repayment on grounds of hardship. It would be silly to say anything else. We were repeatedly pressed, when we were the Government, to do that, and there are great difficulties.
    I am not sure whether that quite applies to particular types of hardship. One case crosses my mind. It is proposed, both in the majority and minority Reports of the Royal Commission on Income Tax, that there should be a special tax allowance in future for 100 per cent. disablement. Probably it could be said that in that sort of case it would be administratively practicable to repay. We should, however, like to hear what the Government feel about this, whether they are completely adamant about any kind of repayment on grounds of hardship, or whether they would be prepared to go rather wider and repay at a more rapid rate.
    Not long ago, some of my hon. Friends made the interesting suggestion that if the Government so desired they could make these certificates negotiable by making it perfectly plain that they would be paid automatically either on death or at the age of 65 or 60 years. That is an interesting idea—[Interruption.]—I believe it was put forward in the House by two of my hon. Friends in a debate some time in 1953, but this is not a matter on which we wish to claim any particular party advantage. It is a suggestion which has been put forward, and we should like to hear the views of the Government upon it.
    My last point is to urge that the form of repayment should be looked at again. My own feeling is that in the case of rather larger amounts there is a good deal to be said for repaying them, not in cash but in some form of savings bond, savings certificate or savings deposit. The psychological effect of that would be quite considerable. Indeed, I do not see why there should not be, if the Government were prepared to repay perhaps the first year's credits, as I suggested, some special savings bond which might even draw a rather higher rate of interest so as to induce people to retain the credits
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    as far as possible, and not spend them. I certainly think there is a lot to be said for giving the savings movement a psychological boost which I think would undoubtedly arise from repayment in that form.
    It is obviously difficult if very small sums are being paid and might not be worth while if repayment is limited to £13 million, or whatever figure it is, a year. If we go beyond that, however, I urge direct conversion into small savings. I hope that the Government will listen to what is said in this debate. Many of my hon. Friends feel strongly on this subject and would like to see much more done. I hope that we shall not be given an entirely dusty answer but one which will encourage us and our constituents as well.
    Mr. R. A. Butler:In reply to the request of the right hon. Member for Leeds, South (Mr. Gaitskell), although I do not wish to traverse the details—I intended to ask the Financial Secretary to reply to the details of the debate—I wish to say, following what I said in my Budget speech, and following what the late Sir Kingsley Wood said when he introduced these credits, that the Government fully realise the immense responsibility there is on any Administration in having this question of post-war credits hanging over them, so to speak. It is a very serious matter, and gives one a great moral sense of responsibility when one has to consider what one can do best immediately and the undoubted anxiety that is present.
    The position has been before several Governments, and small steps have been taken prior to the step which I have taken in this Budget. The right hon. Gentleman referred to the position under this Budget and to the extent of the release we are making this time. In fact, it amounts to about £19 million in the first year and about £2 million thereafter. He also referred to my remarks about the extent to which we are using our resources. In that connection I should not be able to give any undertaking that in the near future we can, at any exceptional period of the year, undertake a further release of post-war credits. That does not mean that I have not listened to what he has said, but I thought it better to make that clear. Otherwise, false hopes might be raised. We must see through this

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    operation and then see through whatever future operation we can undertake.
    There are other classes of the community to be considered, as the right hon. Gentleman rightly says, and I certainly think that, for example, the claims of the old-age pensioners should come before any further step in considering the future of post-war credits. This is in direct answer to what the right hon. Gentleman said, because I thought he might like to know my mind on the matter.
    The right hon. Gentleman referred to the hardship question. I have read the paragraphs he mentioned. My right hon. Friend will deal in detail with the question of hardship which causes so many administrative difficulties that they are almost impossible for a Government to overcome. If we could find a solution which does not provide those difficulties we should not close out minds to it.
    After the speech of the hon. Member for Sowerby (Mr. Houghton) the administrative difficulties will have to be considered by the Government. I consider that his was a very serious intervention. I had knowledge of it. I was not in the Chamber all the time, but I heard what was going on.
    Mr. Gaitskell:I think the Chancellor will agree that what my hon. Friend the Member for Sowerby (Mr. Houghton) was concerned about was a particular date put into this Bill which, he believed, would give rise to grave difficulties. I am sure, however, that the right answer is that if it is possible on other grounds to repay the credits I am sure the Chancellor would not allow administrative difficulties to develop.
    Mr. Butler:No, but I was a little shocked by the speech of the former Financial Secretary, not because it was outrageous in any way, but because I was anxious that he should say what the right hon. Gentleman has said.
    Now it has been said by the right hon. Gentleman, and I take it that it covers his right hon. Friend, namely, that the Opposition does not wish the administrative difficulties to stand in the way. If that is so we are all united. I do not think that they should stand in the way, but the fact that the right hon. Gentleman has now stated that is, I think, a help to us all. We can get the speech of
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    the hon. Member for Sowerby in the right perspective and look into the points he raised. We must not allow administrative difficulties to stand in the way of the repayment of credits to many poor people who are looking forward to receiving them, and I welcome the remarks of the right hon. Gentleman.
    Mr. Glenvil Hall:Do I understand that something I said contradicts what my right hon. Friend has said? I hope that it does not.
    Mr. Butler:It would be impossible for the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall) ever to be disloyal either to one of his late colleagues or to a future colleague. In fact, he may even be the right hon. Gentleman's superior, in which case his words would carry even greater weight.
    But I seemed to notice an anxiety over the administrative problem in the speech of the right hon. Gentleman which, I thought, was slightly overdone. Although we wish to handle the devoted workers in the union concerned and the administrative difficulties in as human a manner as possible, it is essential, if Parliament decides that a release is to be made to people who deserve it, that we should be served with the utmost loyalty by the servants of the State who have to carry out this work at whatever time.
    Mr. Glenvil Hall:I do not disagree with what the right hon. Gentleman has said.
    Mr. Butler:Then we are all in sweet agreement upon this important matter. These statements from the right hon. Gentleman opposite are most valuable.
    The right hon. Gentleman then raised the question of whether we can use the methods of savings certificates. I considered this method before I decided on the £19 million release and, frankly, I would like to have done so. Fundamentally, I think it a good idea. Unfortunately, we cannot be sure that this money will not be spent if that method is adopted. I thought that the right hon. Gentleman was most reasonable in saying that he did not think that it applied so much to a smaller figure such as this as it might to a large figure.
    I would never exclude the system, but it must be remembered that when the Service release benefits were paid after the war—a precedent which was put

    1871
    before me—they were paid in the form of deposits in the Post Office Savings Bank. They amounted to £368 million and of this sum over 80 per cent. had been withdrawn in two years at a time when the rest of the savings movement was still showing a big surplus in new deposits over withdrawals.
    I had that example before me in deciding what I should do and, to be quite honest, it rather put me off; but I do not think that the scheme is killed. If we could at any time find any method of doing it to coincide with a period when the savings movement was in the right sort of state upon which to float such an operation, it would always be worth examining. However, I warn the right hon. Gentleman that there are considerable administrative difficulties. If we are handling anything like the total residue of post-war credits which would involve 8 to 10 million people, that in itself would create a big administrative problem that we should have to handle. It would fall some way between the problem of the small reliefs in this Budget and that of the larger reliefs in the post-war Service release benefit scheme.
    The right hon. Gentleman, in his observation on the Budget, referred to the possibility of a fair slice of post-war credits—perhaps the first one, by which I think he meant the first year—in the form of savings certificates. If it consisted of the first year then the sum would be about £100 million. That, I think, would be too big a release from the point of view of purchasing power at present, especially as I should find it difficult to do that particular sum by the savings certificate method.
    The long and the short of my short intervention on this matter, leaving my right hon. Friend to handle the many points which other hon. Members may wish to put, is that any Government of whatever complexion who have this liability, so to speak, on their shoulders will endeavour to meet it to the best of their ability. We have taken a small step on this occasion which I think is an indication of good faith. It would be difficult to use this method on a large scale unless there are signs of a need for the release of considerable purchasing power, which was the object of the authors of the original exercise.
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    At present, there is certainly no need for the release of a large amount of purchasing power; nor has the threatened American recession so developed as to make the release of a large amount of purchasing power so much a possibility as it might have seemed six months earlier. The news from America is that the recession is what is called "evening out" and we in the United Kingdom economy are riding the situation with our full employment, and the general standard of living is as well as or better than one could have hoped.
    Therefore, there is no occasion at the moment for a very large release of purchasing power, but I should like the right hon. Gentleman and the Committee to know that this is a subject which is ever before us and that, in so far as I have been able to traverse the argument of the right hon. Gentleman, I think he will have seen that the Government are intensely and intimately concerned with this question.
    Dr. Horace King:My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) and the Chancellor of the Exchequer opened the debate in a way which showed that they are possessed of the seriousness of the matter under discussion. I would only say about the remarks of the Chancellor when speaking of the debate we have just concluded that he missed half the point of that discussion, which was not that administrative difficulties among the Civil Service should prevent a piece of legislation from being carried out but that, if administrative difficulties did exist, full consultation with the Civil Service might induce a much better chance of coping with those difficulties.
    Any modern Chancellor of the Exchequer must have a keen sense of humour if he is to survive a Budget debate and a Finance Bill debate. I enjoyed the references by the right hon. Gentleman this afternoon to the fact that the people of this country fail to appreciate the benefits which he has already conferred upon them in previous Budgets. I think he under-estimates the memory of the British electorate. We shall endeavour to remind him of some of the redistribution of income which has taken place under previous Budgets whenever we are attacking the Government.

    1873
    10.0 p.m.
    But I certainly do not wish to attack this Clause. I sincerely welcome it in view of the contribution which it makes towards alleviating something which is rankling in the minds of the British people. It removes, at any rate, one injustice. Up to now it seemed possible not only that some people would never get their post-war credits back but also that their descendents would not get them back unless they managed to live to the appropriate age. While someone has been accused of visiting the sins of the fathers upon the children, it seemed that we were withholding the post-war credits of the fathers of this country from their children until the third and fourth generation. My right hon. Friend said that even now it will be nearly the end of this century before post-war credits are paid unless we do more than we are doing at the moment. But if it were not for the Clause it might be the end of the 21st or the 22nd century before all postwar credits were paid. Consequently, I sincerely congratulate the Chancellor upon removing one injustice.
    I am sure that the Committee will agree that what matters about post-war credits more than anything else is the sense of injustice in the community. I believe that it was crazy to have introduced the scheme in war-time. People were prepared to make any financial sacrifice during the war years, and, indeed, would have been ashamed if they had not been ready to do so when they remembered the physical sacrifices which were being made by our boys across the sea. I regard it as one of the unfortunate pieces of war-time legislation. We might call it "Kingsley Wood's Folly." It is now an incubus on the back of any Chancellor, and the sooner we get rid of it the better.
    Most people who are still waiting for their credit say that the Government are keeping from them their own money, on which no interest is paid, and that they cannot get it even if they need it severely and intensely. The sooner we pay out the post-war credits, the better it will be from the point of view of the happiness of the British people. I hope that my hon. Friend the Member for Itchen (Mr. Morley) will have an opportunity of speaking, because he has consistently pressed for the speeding up of the rate
    1874
    at which post-war credits are paid out, and I leave him to advocate that.
    I want to link what I have to say with what the Chancellor has just said. Most of us will agree with the Chancellor that there are people earlier in the queue of priorities than those who have vast sums of post-war credits still to be paid. There are the old-age pensioners and also the disabled ex-Service men about whom we have spoken in debates this year. I still think it ought to be possible to link the two together. If anyone should go to the head of the post-war credits queue it should be the people who intensely need their credits. There are the widows.
    I was interested in my right hon. Friend's suggestion that, having made a move in this Clause, we should go one further and say that when someone dies, his widow should automatically be able to claim his post-war credits. There are the sick, the disabled and the unemployed, and this irritation that must exist in the minds of widows, bereaved people, sick people and the unemployed, and the knowledge that somewhere there exists money which is theirs which the Government are withholding from them and which would be very useful to them at the moment, must add to the pain and suffering which they are enduring in the ordinary way.
    I do not believe that the technical difficulties ought to be regarded as insurmountable. I feel that the Treasury is a most skilful body and that no technical difficulties stand in its way when it is a question of extracting money from the British public. I am one of those whose annual nightmare is filling up my Income Tax form, and my whole experience has been that, no matter what source of income one has, there is some place on the form on which it can be shown, but, on the single occasion when I tried to extract from the Treasury an allowance in respect of the academic gown I was wearing, I went to tremendous and complicated explanations to the Treasury 20 years ago in order to establish that claim for my academic gown, and still the Treasury has not been able to meet it.
    I believe that if Members of the House of Commons, one the one hand, and Treasury experts, on the other, with the Whitley Council in the Civil Service, really got down to the problem, they could devise some scheme by which post-

    1875
    war credits could be paid at least to one category or another of the people whom I have mentioned.
    One the last occasion when we debated this matter, a number of alternative suggestions were made as to means by which we could speed up payments of post-war credits. The Chancellor has shown, by his intervention in the debate tonight, that his mind is not closed to any of them, and I would appeal to him to keep first in his mind those who need the post-war credits most. I ask hon. Members of the Committee to remember the questions which they are asked at political meetings. I am quite certain that, if Mass Observation were to analyse the questions that are asked of Members of Parliament at public meetings, it would be found that the question which has most often been asked—
    The Deputy-Chairman:This is a little remote from the provisions of this Clause.
    Dr. King:I was going to say that the question is "When do I get my post-war credit back?"
    The Deputy-Chairman:I am afraid that the hon. Member can only discuss the actual provisions in the Clause at this stage.
    Dr. King:In view of your Ruling, Sir Rhys, I can only say that I want to thank the Chancellor for what he has done in Clause 14 towards the repayment of post-war credits, and to express the hope that he will give earnest consideration to the pleas made in this debate for other payments, and especially to those in need
    Sir Ian Fraser:It may surprise hon. Members of the Committee to know that there are other holders of post-war credits than individual persons. It has been brought to my notice that St. Dunstan's for example, possesses some £10,000 worth of post-war credits, and I do not doubt that Dr. Barnardo's Homes, the British Legion and other charities also hold some of these credits. These credits arise when a testator leaves the residue of his estate to charity, and possibly unknown to him the residue includes his post-war credits.
    I put down a small Amendment which was not called. I make no complaint of that, because I suspect the reason to be the very good one that the Amendment
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    was not necessary, but I wish to ask the Financial Secretary to give an assurance that this is so. From what I have heard I think it probably that for the purpose of this Clause a charity is a person. If that be so, it will enable the charities to obtain their credits, which hitherto they have not been able to do. In the past a charity, not being able to attain the human age of 65, has never been able to get the credit. We have never made any complaint, but now that this modest release is being made it does not seem unreasonable to ask if it applies to the cases I have mentioned.
    On the general subject, I congratulate the Chancellor on taking this step to release some more of the credits. I appreciate his reason for choosing the particular limited cases included in the Clause, but I share with others in this Committee the view that the best way to deal with post-war credits over the next few years is to try to relate them to some form of hardship. That would give the persons holding them a choice. Those who did not need them would not need to call them; those who had some specific reason of hardship could call them.
    I am in favour of giving people the right to call their own rights as far as possible. I think that there are definable classes of the community, and definable occurrences which happen to individuals, which would make it possible to let out £10 or £20 million a year where it would be most needed. It is not for me to judge what any Chancellor could afford at any moment, but I suggest that my right hon. Friend—or any other Chancellor afterwards—deals with the matter in that way rather than to say, "we cannot deal with it at all on the ground of hardship."
    Mr. W. A. Burke:I wish to speak not on the general application of post-war credits, but on a specific point. I, too, had an Amendment on the Order Paper which was not called, and although I hope that that was because it is not necessary I would like to have the point cleared up.
    I refer to the case of a branch of the Old-Age Pensioners' Association. I had correspondence with the Treasury about it last year. I put down a Question and the reply was that when the Chancellor was framing his Budget he would consider the matter. The matter has so far

    1877
    been considered with regard to persons holding post-war credits which have been left to them.
    10.15 p.m.
    The case I have in mind is that of a man who used to attend concerts, which he apparently enjoyed very much, run by a branch of the Old-Age Pensioners' Association. He was 64 when he died in 1952 and he left three post-war credits. amount in all only to £30, to the local branch. Had he lived until he was 65 he could, of course, have cashed the credits himself. No one else is entitled to them. If they cannot be cashed by the secretary of this organisation. the Treasury will hold them for ever.
    What I want to know is this. If an old-age pensioner can be included in this Clause as
    "the person for the time being having the title to the credit"
    will this organisation be entitled to draw the credits which the man would have had on attaining 65 years of age? In other words, can a branch of the Old Age Pensioners' Association be regarded for the purposes of this Clause as a person? I hope that I shall have a favourable reply from the Financial Secretary.
    Mr. John Arbuthnot:Anyone who rises to speak at this time cannot do so without being deeply conscious of the fact that the Financial Secretary has been here since half-past three listening to the speeches that have been made and replying with the customary urbanity, good sense and good humour with which we normally associate him.
    I should like to take this opportunity of congratulating my right hon. Friend the Chancellor on this material step forward that he has taken in dealing with this vexed problem of post-war credits. because it is a problem which has exercised the minds of everybody and which we all meet on frequent occasions in our constituency. As I think my right hon. Friend knows, I should like him to go much further and make post-war credits negotiable. The suggestion that I have put forward on other occasions has been that they should bear the date on which the holder reaches the age of 60 or 65, whichever is applicable, and should then become negotiable.
    I gather that there may be objections to this suggestion—first of all, that the
    1878
    taxpayer would be getting less than he is entitled to because when the credits became negotiable they would have to be transferred at a discount. But the disadvantage that the holder of a post-war credit now has is that he cannot cash it, whereas under this proposal he would be able to turn that disadvantage into monetary terms and would be able to cash the post-war credit at a discount, which would seem to be reasonable.
    Another difficulty was put forward by my right hon. Friend the Chancellor when he said that it would prevent flexibility in the date of redemption if he wanted to pump more money into the economy—
    The Deputy-Chairman:It is not clear to me that the hon. Member's argument comes within the provisions of the Clause a sit now stands.
    Mr. Arbuthnot:I was really following the line of argument that was followed by previous speakers on the Question "That the Clause stand part of the Bill," and I was under the impression that the debate would be allowed to range sufficiently widely to enable me to do so.
    The Deputy-Chairman:I do not think the debate can go beyond the provisions of the Clause when we are dealing with the Question "That the Clause stand part of the Bill."
    Sir Richard Acland:Sir Rhys, the right hon. Member for Leeds, South (Mr. Gaitskell) was suggesting various alternative ways in which rather more might be released from post-war credits.
    The Deputy-Chairman:I did not hear the right hon. Gentleman's speech, but I think we are limited to what is in the Clause.
    Mr. Arbuthnot:In view of your Ruling, Sir Rhys, may I make a plea for the holders of post-war credits, many of whom are in great difficulties and who need their post-war credits as soon as they can be made available to them? Many people would not spend these post-war credits on objectionable things, but would use them for the promotion of trade, and would put them into industry. I make a plea for post-war credits to be made available as soon as possible to their holders.
    Mr. Morley:Like the Financial Secretary, I have been sitting here, with very

    1879
    brief intervals, since 3.30 p.m. in order to have an opportunity of making a contribution to this debate. I listened very carefully to what the Chancellor of the Exchequer said just now, with my usual admiration for the smoothness of his phrases and the eloquence of his language, but he did not seem to realise the great disappointment which exists amongst the people because he has given such meagre concessions in the field of post-war credits.
    It has already been said that Sir Kingsley Wood probably acted unwisely in initiating post-war credits. As my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said, it is not likely that any future Chancellor of the Exchequer would take a similar course in similar circumstances, but Sir Kingsley Wood did make a definite promise to the people. In his Budget speech on 7th April, 1941, he said:
    "… the extra tax which any individual will pay… will be offset after the war by a credit which will then be given in his favour in the Post Office Savings Bank."—[OFFICIAL REPORT, 7th April, 1941; Vol. 370, c. 1329.]
    Sir Kingsley Wood said "after the war." He did not say "many years after the war," or "after the war, when a certain advanced stage has been reached."
    The Deputy-Chairman:The hon. Member is taking his argument much wider than the provisions of the Clause.
    Mr. Morley:I was seeking to show that the provisions in the Clause do not represent the promise made by Sir Kingsley Wood when he introduced postwar credits in 1941. The total amount of post-war credits outstanding was £800 million. Of that, I understand that about £210 million has already been paid out, leaving some £;590 million still to be disbursed. That means that only about a quarter of the outstanding post-war credits has been distributed amongst the people who should have received them. Surely that is a serious breach of public faith? These post-war credits were definitely promised to be paid out after the war, but successive Chancellors have neglected to do so.
    My right hon. Friend the Member for Leeds, South suggested several ways in which this Clause might have been considerably improved. He suggested that instead of the meagre concession made
    1880
    under this Clause it might have been possible to introduce a scheme by which the eligible age for paying out post-war credits was reduced year by year, from 65 to 64, 63, 62, 61 and 60 years of age in the case of men and from 60 to 59, 58, 57, 56 and 55 in the case of women. That would have cost between £17 million and £18 million if it had appeared in the Clause. Surely, an expenditure of £17 million a year—
    The Deputy-Chairman:I do not think it is in order, in discussing this Question that the Clause stand part of the Bill to discuss alternative methods of dealing with it. Hon. Members may criticise the Clause, but not suggest alternative methods.
    Mr. Jay:Surely it is in order to discuss the arguments for and against this method of release as compared with other possible methods? It is a little difficult to assess the merits of this method unless we refer to the alternative methods. Moreover, I would observe, with respect, Sir Rhys, that that has been the way in which the debate has been conducted hitherto, and was followed by both my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) and the Chancellor of the Exchequer.
    The Deputy-Chairman:I do not want to restrict the debate, and it is in order to criticise the provisions of the Clause, but it cannot be in order to put forward suggestions of alternative methods at this stage.
    Sir R. Acland:Not only did my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) suggest alternative ways, but the Chancellor of the Exchequer at some length described his future intentions and the way in which he would deal with the various suggestions. He commented upon them, saying what they would cost, and so on. It seems a little hard if now we cannot say something about the merits of the different alternatives.
    The Deputy-Chairman:I am only pointing out what the position is. There may be 100 different ways of dealing with this problem, but on the Question that the Clause stand part of the Bill we cannot discuss the alternative ways.
    Mr. Morley:Perhaps I could put my point by saying that the concessions in the Clause are very meagre and will involve

    1881
    an expenditure of no great amount of money. An expenditure of £17 million a year for five or six years would not be very much in a national income of £14,000 million a year, and would not have any inflationary effect. As the Chancellor knows, we Members frequently receive letters from widows complaining that they are not able to draw their postwar credits. He knows that because the letters are forwarded to him or to the Financial Secretary. It would cost only about £30 million in the first year and £4 million in subsequent years to pay out post-war credits to poor widows.
    The Chancellor in this Chamber and on public platforms has frequently said, that awing to his skilful navigation, he has brought the ship of State out of tempestuous economic waters into calm and sunny seas. Although he has done that the ordinary citizens do not see that they are approaching the Fortunate Isles. One of the reasons they do not is the long delay in distributing a greater number of post-war credits. The point I am trying to make, with some difficulty because of your Ruling, Sir Rhys, is that post-war credits could have been given to a larger number of people and that the expenditure would not have affected to any substantial degree the national economy at the present time. They could have been given out to a larger number of people at an earlier age without our encountering any danger of any substantial measure of inflation.
    When the party opposite was in Opposition hon. Members belonging to it frequently criticised Chancellors of the Exchequer and Financial Secretaries in the two successive Labour Governments because they were not more generous in granting post-war credits. I remember that the hon. Member for Stratford-on-Avon (Mr. Profumo) said on one occasion that the failure to distribute postwar credits was the biggest swindle ever perpetrated on the people of this country by any Government of this country.
    10.30 p.m.
    On another occasion, the hon. Baronet the Member for Worcestershire, South (Sir R. De la Were) said that the non-distribution of post-war credits was "most unsatisfactory." I know that the hon. Baronet has used that phrase in connection with other matters, but on that occasion he used it with even more sonority and with greater emphasis than
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    usual. He evidently felt very deeply on the matter. I impress upon the Financial Secretary that there is a very strong feeling in the country on this matter, that there is a feeling that a promise has not been kept and that the payment of these post-war credits is the payment of a debt of honour.
    I was always under the impression that the party opposite was the party of gentlemen, unlike the somewhat rough proletarians on this side of the Committee. I was also under the impression that gentlemen always paid debts of honour first before they paid their debts to tradesmen. This is certainly a debt of honour, something promised to the people by the Chancellor of the Exchequer. This Clause is a quite meagre concession. It will not satisfy the people. I hope that it will not be necessary to wait for another Budget and that before very long we shall have far more substantial concessions for the repayment of post-war credits than are given in the Clause.
    Sir R. Acland:Two spokesmen from the benches opposite have congratulated the Chancellor and the Government on this Clause. Their speeches were in tune with speeches delivered by their leaders in the House of Commons and with leading articles on the subject in the Conservative Press. I should have thought that members of the Conservative Party would have dealt with the subject rather more in terms of apology than terms of congratulation, because the Conservative Party has promised time and again that these post-war credits would be repaid.
    My hon. Friend the Member for Southampton, Itchen (Mr. Morley) referred to the way in Which hon. Members opposite, when they were in Opposition, taunted us about failure to repay, in terms which suggested that as soon as a different Government came into power there would be no doubt about it. I remember the rotund and dark-brown sherry voice of the Minister of Food coming over the wireless in the 1952 Election, and saying, "As to post-war credits, you have not had any of them." As those words rolled forth I thought, "That is another 100 votes gone from every Labour candidate in every constituency," because of the implied promise on behalf of his party that when

    1883
    it was returned to power they would be repaid.
    Mr. Jay:Is not my hon. Friend referring to the Parliamentary Secretary to the Ministry of Food?
    Sir R. Acland:I am grateful for the correction.
    Furthermore, the promise was given most explicitly when post-war credits were mentioned for the first time by a Conservative Chancellor, the late Sir Kingsley Wood. I disagree with my right hon. Friend the Member for Leeds, South (Mr. Gaitskell). This is possibly another small split in the Labour Party. My right hon. Friend spoke as though the then Chancellor had dealt with this matter cautiously. As I read his speech, he dealt with it with a calculated recklessness which left him and his party no loophole for escape.
    Not only did he use the words already mentioned twice in this debate about the extra taxation he was demanding, but he went on to say:
    "In other words, the individual citizen will have to pay the tax in full, but that part of the extra tax to which I have referred, while complying with our vital war-time necessities will constitute some provision for post-war difficulties …"
    He did not mean those difficulties which would arise eight or 10 years after the war: he was referring, and was understood to be referring, to difficulties which would arise one or two years after it. He then proceeded to compare the post-war credits which he was initiating to war savings:
    "The post-war credit is, of course intended to be in addition to and not in substitution of voluntary savings, and not only should existing contributions to War Savings be maintained, but every effort should be made to increase those contributions as I think it is quite within our capacity to do. Indeed, by providing the small saver with the promise of a substantial nest-egg we may well increase rather than diminish his desire for adding to it."—[OFFICIAL REPORT, 7th April, 1941; Vol. 370, c. 1329–31.]
    There were on that occasion two hon. Members who spoke in rather more cautious terms. One was the then right hon. Member for East Ham, South (Mr. Barnes). He said:
    "The after-war liabilities which the Treasury are beginning to pile up are becoming very considerable. … We appear to be sliding into this policy of post-war commitments so easily and with such little thought that it
    1884
    is about time that some serious consideration were given to the problem of after-war repayment."
    I found to my surprise that that hon. Gentleman was followed by the present hon. Member for Gravesend, who was then hon. Member for Barnstaple. He said:
    "I desire to follow the last speaker in his remarks about the alarming effect of post-war commitments into which we are entering. I want to consider the matter not in terms of finance, which to me is always an unreal subject, but in terms of goods—concrete goods. Month by month we are giving to more and more people the right to expect that as soon as the war is over they will have the power to command goods of one kind or another, because after all purchasing power is nothing more or less than the right to command goods. Are we quite sure that at the end of this war we shall have available enough goods—I do not say finance, but goods—to satisfy simultaneously all these claims?"—[OFFICIAL REPORT, 7th April, 1941; Vol. 370, c. 1363–65.]
    Reading those words of mine today I am amazed at the cautionary attitude I then took. But I was hardly unable to move the then Chancellor, who, having a further 48 hours to consider the matter with his advisers, said, in his concluding speech:
    "The credits provided for in the Budget proposals will in effect form a relatively small element in the total situation, but will mean that the power of participating in post-war expenditure will be more fairly distributed than might otherwise be the case."
    He related the credits to the need for having some means of dealing with what he expected to be the situation of alarming post-war unemployment, and this shows how much reliance we can place on Conservative economics and on the calculations and advice offered by experts in the Treasury, because he went on to say:
    "I hope that the Committee will be assured that I am confident about these proposals and others that were mentioned. They have been the subject of very anxious and serious consideration. In regard to these Budget proposals I have had the advice from many people outside the Treasury, and they have been subject to the very careful examination by myself and my officers for some time now. They were put forward deliberately after a good deal of consideration not only to deal with immediate matters but with an eye to the future and to the position which we will have to face when the war is over."—[OFFICIAL REPORT, 9th April, 1941; Vol. 370, c. 1661–63.]
    With such a wealth of deliberate calculation and a promise of immediate repayment it amazes me that Conservative back benchers, front benchers and

    1885
    leader writers should be dealing with the matter in terms of congratulation rather than apology. This shows the remarkably different way in which we deal with property, on the one hand, and life on the other. In that same Budget in which Sir Kingsley Wood initiated post-war credits for life, for the individual, the human being who pays his taxes, he also initiated the proposal of a post-war 20 per cent. repayment of the E.P.T. which was then being paid by companies.
    The amazing fact is that the companies got all their money back—
    The Deputy-Chairman (Sir Rhys Hopkin Morris):The hon. Gentleman is going rather wide of the Cluase.
    Sir R. Acland:I am astonished that I am not allowed to conclude the obvious point on which I was engaged, that we make the assumption that where a promise of post-war repayment has been made to property that must be punctually observed whereas when equally definite promises have been made to make repayments to human beings they can be disregarded and treated as if they had never been made.
    I join with those who hope that if the Government survive another 12 months they will reconsider the moral obligations which they have assumed in so many different ways, and will make up their minds on a much more generous repayment to those who were induced to pay by the wild promises of the then Tory Chancellor.
    Mr. Percy Shurmer:I do not want my colleagues on this side of the Committee to think that I do not appreciate what they argue should be done. We should all like to see the repayment of more post-war credits to those in need; but as in the past I have suggested on one or two occasions that credits should be repaid to the dependants of those who died on the day they reached 65 or 60 years, as the case may be. I should like to take the opportunity to thank the Chancellor for what he has done to meet the point.
    I have been amazed that his action has received so little publicity. In order to avoid having to put down a Question later, I wish to ask him now whether he
    1886
    will give as much publicity as he can to this matter. The sum of £19 million is involved, and that is not an amount to be laughed at. I understand that the sums will be available as from August, and I hope that wide publicity will be given to the matter. I suggest that it would be appropriate to place an announcement in the post offices where widows go to draw their pensions, and that it would also be desirable to place it in Government Departments so that the change can be widely known.
    Mr. Hayman:I am not one of those who congratulate the Chancellor on the paltry concession which he has made. I should imagine from the tone of the Conservative Party conference last year that he will not receive the congratulations of that body at its next meeting. We have to consider the concession in relation to the details which the Chancellor gave when he put his Budget proposals before us.
    He said that there was still owing £564 million worth of post-war credits. He said we were repaying them at the rate of £17 million per annum, and that this year the concession would involve £19 million. But after this year the concession will be only worth £2 million a year, a paltry sum altogether, and surely it ought to have been possible for the Chancellor, in a year in which the country is doing as well as he says it is, to have made a much greater concession to these people.
    10.45 p.m.
    Attention has already been drawn in the debate to the millions of people who hold these post-war credits. In the main comparatively small sums are owing, and I hope that when this problem is tackled in the future it will be tackled from the point of view of dealing with hardship, particularly among the unemployed, the disabled and so on. It will mean a great deal of work for the Treasury. I hope that whatever is done in the future will be on a more generous scale, and that this paltry concession will not be taken as a standard.
    Mr. Proctor:I cannot congratulate the Government upon their approach to this subject, because I think it is timid and insufficient. Those with whom this Clause deals, namely, those who have gone bankrupt and those who are heirs, are

    1887
    too limited a class. I hope that when we come to deal with this problem in the future it will be dealt with upon the basis of need, because most of the cases which are referred to hon. Members arise from extreme poverty and need on the part of those claiming the repayment of their credits.
    There is one special problem I should like the Financial Secretary to the Treasury to consider. It could be dealt with in subsection (5). I am thinking of the question of repayment of the post-war credits to women qualifying for them because of their response to the national appeal to return to work in an industrial capacity to assist the nation in a time of need. They were informed by means of a circular that their claims, if they so desired, could be registered in their own names, but unless information was given to the Treasury within two months they would be registered in the names of their husbands.
    Many women now find that they qualify for post-war credits only when their husbands attain the age of 65 because these credits have been registered in their husbands' names and they themselves are unable to draw them. The Clause could give the Chancellor an opportunity to remedy that situation, thereby allowing the women who have earned these credits by their own efforts in the war to receive payment in their own right, instead of having to wait until their husbands attain the age of 65. It is especially hard in the case of those who are older than their husbands. I have such a case in mind, where a woman, instead of drawing at the age of 60 the credit she earned by her own work, will have to wait until she is 68 years old. I am sure that something can be done to remedy such an unfortunate state of affairs.
    Mr. Boyd-Carpenter:In reply to the last observation of the hon. Member for Eccles (Mr. Proctor) I am afraid that the provision that he has in mind is governed by the older Acts, and there is no proposal in this Clause to deal with it. It could not be dealt with administratively.
    This Clause has had a reasonably healthy welcome. Indeed, it has been subjected to that most agreeable form of criticism, that is, regarded as a step in
    1888
    the right direction, though a number of hon. Members would very naturally like to see more done. But, whatever may be said, one or two adjectives of an unkind character were used, such as, for example, "niggardly." This proposal does, of course, involve more than doubling the rate of repayment of post-war credits and what is, perhaps, even more satisfactory is that it ends that rather substantial anomaly and source of ill-feeling which arose when a post-war credit could not be paid to a family because that family was unfortunate enough to have lost members of it in succession, by death, before they reached the qualifying age.
    Mr. Hayman:I do not know if I have misunderstood the right hon. Gentleman, but did he say that this concession meant more than doubling the rate of repayment? Surely after this year the rate will be at only £2 million a year, whereas. in his Budget speech, the right hon. Gentleman the Chancellor said the rate of repayment generally was £17 million a year?
    Mr. Boyd-Carpenter:I hope that the hon. Gentleman will let me finish what I was saying.
    The rate of repayment is more than doubled. The figures are that repayment at the ages of 65 and 60 years costs the Treasury roughly £17 million a year; and this year, owing to the need to take up back cases, this Clause adds £19 million. What may happen in future years is outside our consideration of this clause, although a large part of the discussion within this Committee has been concerned with suggestions as to what might be done in future years. This concession does more than double the cost of repayment.
    Mr. Jay:Does the Financial Secretary mean that this Clause would mean an increase of £2 million in subsequent years?
    Mr. Boyd-Carpenter:There is no confusion; the figures are quite clear. This Clause adds £19 million to the current £17 million, which I have already explained to the Committee, and will add a further £2 million in subsequent years while the provisions remain as they are.
    I do not know, Sir Rhys, how far the Ruling which has been given will permit of my replying in detail to certain

    1889
    points raised by the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) and others, but if I incur your displeasure, I have no doubt that you will indicate it in the usual manner.
    The Deputy-Chairman:I can indicate it now. What is in the Clause is certainly subject to discussion; but there may be a hundred different ways of discussing this matter, and it would not be in order to discuss all of them.
    Mr. Boyd-Carpenter:Thank you, Sir Rhys.
    My right hon. Friend did give an undertaking that some of the points of detail would be dealt with and I will, subject to your Ruling, attempt to carry that out. One point which is certainly within the rules of order is that the amount of the credits outstanding, according to the right hon. Gentleman opposite, is about £580 million; but it may be of interest to him, and to the Committee if I say that the latest figure we have is £564 million. If we continue to repay them as at present, I think that sum will be repaid in slightly under the forty years to which he has referred.
    There have been various alternative methods suggested for accelerating repayment in due course. The right hon. Gentleman the Member for Leeds, South, suggested repayment on death; but that would cost £75 million in the first year, and some £5,500,000 yearly subsequently. The reduction of the qualifying age by one year would slightly more than double the present annual cost of £17 million. That is because as one gets into the lower age groups there are slightly more people in them.
    The repayment of credits in respect of 1941–42 would cost £104 million in the first year, and in later years would save about £3½ million. There is the obvious administrative difficulty that to adopt that method pays off completely practically no holders of post-war credits. The only ones completely paid off would be those of people who had credits only for that one year. That is not conclusive but is a factor which must be borne in mind. I do not think I shall be expected to add to what my right hon. Friend has said about the general intentions of the Government.
    The right hon. Member for Leeds, South referred, as did the hon. Member
    1890
    for Southampton, Test (Dr. King) and my hon. Friend the Member for Morecambe and Lonsdale (Sir I. Fraser), to the possibility of payment on grounds of hardship. That has appealed to successive Governments as an attractive method, and the right hon. Gentleman himself made a suggestion connected with a particular recommendation of the Royal Commission. The difficulty which so far has prevented anything being done on those lines is the complexity of the alternatives involved.
    One has to state a particular state of affairs and call it hardship. There is the obvious example of widowhood. It may not necessarily involve hardship—there are rich as well as poor widows. Or one tries to assess hardship objectively, in which case one is up against the difficulty of how to judge degrees of different types of hardship. That is most frightfully difficult to do fairly, and so far it has not been possible to find a means of assessing degrees of hardship.
    Dr. King:What the right hon. Gentleman said about widows may be true, but that would not apply so soundly to physical disability, for instance, or to a long period of unemployment.
    Mr. Boyd-Carpenter:Physical disability is a very terrible thing. Where it was accompanied by poverty the payment of a post-war credit would give great relief; where it was not accompanied by poverty one would be up against the same difficulty of justifying the picking out the person concerned from so many other people. It is a very real problem, which successive Governments have approached sympathetically and understandingly, but I do beg the Committee to understand that it is not at all as easy as it sounds.
    My hon. Friend the Member for Morecambe and Lonsdale hazarded the opinion that his Amendment had not been called because it was not necessary. It is not for me, Wing Commander Hulbert, to speculate on the reasons which cause you and your colleagues in the Chair to call or not to call any particular Amendment; but it is certainly the fact that, by coincidence, it does not appear to us to be necessary. I can assure my hon. Friend that it would add nothing to the Clause as drafted and that, in the circumstances he has in mind,

    1891
    charitable organisations would be entitled to payment of post-war credits.
    I am glad that I can give the same answer to the hon. Member for Burnley (Mr. Burke). He also had an Amendment which, by coincidence, was not called and which, also by coincidence, was not, in our judgment, necessary. In our opinion the association he mentioned would be a person within the meaning of the Clause and when the original owner would have been 65 years old the association would be entitled to payment.
    My hon. Friend the Member for Dover (Mr. Arbuthnot) sought to make an interesting argument on a proposal which I know he has very much at heart, and which he has pressed for some considerable time. That proposal is to date the post-war credits with the date on which the original holder would reach the qualifying age and to make them negotiable.
    I have no doubt that I shall incur your displeasure, Wing Commander Hulbert, if I enter into any more ample discussion on that point than my hon. Friend did, but one of the great difficulties behind his proposal is that it would create—as it would be intended to do—a kind of market in post-war credits, the price of which would no doubt be affected by the present provision as to the age at which repayment is made.
    It might make it very much more difficult for my right hon. Friend, in the future, to advance the date of payment if he knew that one of the effects would be to give a wholly uncovenanted benefit to speculators in post-war credits. It would also cause much more difficulty in circumstances in which it might be desirable to make larger releases. Therefore, although the proposal has obvious attractions, it is not possible to accept it.
    11.0 p.m.
    I agree with the hon. Member for Southampton, Itchen (Mr. Morley) that the subject arouses very deep feelings. I appreciate the irritation which many people feel—indeed, I feel it myself—on seeing a bit of paper bearing certain attractive figures upon it, which they cannot transmute into money which they might well need. It is for that reason that it seems to us the more satisfactory
    1892
    that my right hon. Friend has been able in some degree to meet this feeling by the advance embodied in the Clause. I should not like the hon. Gentleman to feel that I appreciate any less than he does the very natural and proper public feeling on this subject.
    The hon. Member for Sparkbrook (Mr. Shurmer) referred to the fact that from time to time he himself pressed the proposal embodied in the Clause, and he was perfectly entitled to make that point. I shall certainly follow up the point he made as to the desirability of ensuring that sufficient publicity is given to the arrangements for payment. I have no doubt that the discussions which have taken place in this Committee and in the House in the Second Reading debate will ensure that a considerable proportion of those entitled will know of this step. It is equally important, as the hon. Member for Sowerby (Mr. Houghton) said, not to raise public opinion to such a state of excitement that it resents the necessary time being taken for the making of the repayments. Subject to that, there is a great deal in the point made by the hon. Member for Sparkbrook, and I shall see that it is not forgotten.
    As I said at the beginning of my few remarks, the Clause has had a good reception both in this Committee and outside. It is satisfactory that, despite all the difficulties of the time, my right hon. Friend is able to make this advance. The credits that will be paid will no doubt give very useful assistance to many people who need them a great deal. I think it will be thoroughly satisfactory if the Committee is able to pass the Clause and enable this advance in the payment of post-war credits to go forward.
    Mr. Jay:I only want to ask the Financial Secretary one question. He has been almost entirely abandoned by his colleagues on the Front Bench—except for the Chancellor—and so far as I know he has had little, if any, food since 3.30 p.m. If he had had more assistance from the Solicitor-General and the Economic Secretary I might have felt tempted to ask rather more questions, because some are still unanswered, but my argument is based on my anxiety for the physical welfare of the right hon. Gentleman, and I shall, therefore, content myself with asking him a question which must be entirely in order.

    1893
    We have not really been told why the Government preferred this method of releasing further post-war credits to any of the possible alternatives. Was it the very simple fact that this proposal, after the first year, is much the cheapest from the point of view of the Treasury? The Chancellor has said that he regarded it as the best alternative, but did he, in fact, mean the cheapest from his point of view? If that was not the reason, can we be told what it was?
    Mr. Boyd-Carpenter:I cannot reply fully without going over the alternatives which the right hon. Member for Leeds, South posed, and to which my right hon. Friend replied and I have tried to reply. One of the great attractions of this method is that it secures that the almost indefensible anomaly—although the right hon. Gentleman used to defend it—of the short-lived family is got out of the way. It really is difficult to defend the misfortune falling on a family when, because successive holders of the credit do not attain the qualifying age, the credit is indefinitely held back. That is one aspect of the system which it was very difficult to justify and which gave rise to a great deal of the feeling to which hon. Members have referred.
    There is the smaller but not inconsiderable advantage that by making these credits definitely payable when the original holder would have reached the qualifying age had he lived we are able to deal with the anomaly in respect of charities. It therefore seemed to my right hon. Friend, after careful consideration, that, in the light of the amount of money he had available this year, this was the best of the innumerable alternative versions that, the right hon. Gentleman knows, have been put forward in the past, and, indeed, put forward in this debate. I do not think I can put the point more fully without indulging in repetition, which would be not only out of order, but tedious.
    Question put, and agreed to.
    Clause ordered to stand part of the Bill.
    Mr. Gaitskell:I beg to move, "That the Chairman do report Progress and ask leave to sit again."
    A moment or two ago my right hon. Friend the Member for Battersea, North (Mr. Jay) expressed his concern about
    1894
    the state of health of the Financial Secretary, and I, too, am very worried because he has not had any food for eight hours and has not been asleep for eight hours. I am also very much concerned about the Chancellor's health. He is looking very tired. I feel, therefore, that there is a good deal to be said for adjourning.
    It is more than an hour past our normal time for rising. We have made quite good progress. I dare say the Chancellor feels that two Clauses of a Finance Bill are not enough for him, but he will readily agree, I know, that we cannot measure progress simply by the number of Clauses dealt with. That is not a suitable criterion. The first of the two Clauses dealt with the standard rate of Income Tax. We had an excellent debate, as I think everybody agrees, on that subject. The second dealt with post-war credits, a matter of vital concern to the people of this country.
    I hope, therefore, that the Chancellor will feel that, in the circumstances, the day's work is sufficient, and that we can adjourn, and not try to embark on Clause 15 tonight. It is a highly complicated Clause, and it would be most unfair to impose on Ministers now the strain of replying to the very important Amendments that we shall move to the Clause.
    Mr. R. A. Butler:The right hon. Gentleman seems unduly concerned about the physical state of Her Majesty's Ministers. It had been my intention to sit up all night, I feel in such excellent form. It was only out of regard for the somewhat languid address of the right hon. Member for Bishop Auckland (Mr. Dalton) and the very abbreviated efforts, due obviously to a state of collapse, and the pallid utterances of hon. Gentlemen opposite, that it crossed my mind to rise tonight at all. However, I feel that Clause 15, although crystal clear to the Government, needs a little further study by the Opposition, and I think it may be well to give them extra time to study it, and to go away and do their homework in time for tomorrow.
    Seriously, though, we have a great deal of work before us. Some of the speeches today—I mention no names—were more suited to Second Reading than to Committee. One of them lasted three-quarters of an hour. There was no obstruction: it was interest. If, however, we go on at this pace we shall never get

    1895
    through our work. There are many Amendments proposed to Clause 15, and I want to make more progress than this because we have a time by which, according to tradition, we should finish our consideration of the Bill in Committee.
    We want to give time between the Committee and Report stages so that hon. Gentlemen can look at the Bill. Therefore we must hurry on with this stage, and I must warn the Committee we shall have to sit very late tomorrow. It may very well be all night, because we must make progress, through Clause 15 and onwards, although I guarantee we shall not get to the stage at which hon. Gentlemen opposite have not prepared their work. I should like to make progress tomorrow, and that is not unreasonable in view of the great importance of Clause 15. With that warning, I am only too glad to accept the Motion.
    Question put, and agreed to.
    Committee report progress; to sit again Tomorrow.

  FRUIT AND PLANTS (IMPORT DUTIES)
  Motion made, and Question proposed,
  That the Additional Import Duties (No. 2) Order, 1954 (S.I., 1954, No. 642), dated 14th May, 1954, a copy of which was laid before this House on 18th May, be approved.
  11.12 p.m.
  Mr. George Brown:Are we not going to have a Ministerial explanation about the extraordinary situation in which we are being invited to more than double the duty on a large range of items? There is no Minister here, either from the Ministry of Agriculture or the Board of Trade. I do not want to exhaust my right to speak before I have heard the explanation. Now that the Joint Parliamentary Secretary has arrived, perhaps we could have a statement on the Motion before we proceed to the debate.
  The Joint Parliamentary Secretary to the Ministry of Agriculture and Fisheries (Mr. G. R. H. Nugent):This Order, to increase the tariffs on cut flowers, and a certain range of nursery plants and certain fruits, continues the range of
  1896
  tariff revision, the greater part of which was approved by the House last December. The House then had a considerable debate on the principles involved, when it decided upon this upward revision of tariffs which took place at the same time as the quantitative restrictions, which had been the emergency arrangement existing in the years subsequent to the end of the war, were removed.
  In December, arrangements were not complete on this particular part of the Schedule, and for certain technical reasons as well in connection with G.A.T.T., these particular items were left to be dealt with subsequently. The broad effect is to revise the specific duties which existed pre-war to a more realistic level—not a revision which would bring them to the same money value as prewar, but nevertheless a revision to a level which will bring them, in our judgment, to an effective level and to a level which will give the growers a reasonable protection and stability without injuring the consumers' interests.
  It should not be thought that such produce as flowers and nursery stock are not of particular importance to the horticultural trade. Hon. and right hon. Members who are familiar with the horticultural business will recognise that for part of the year growers are producing vegetables and fruit and during the other part many of them are undertaking, as a complementary part of their business, the growing of flowers. Therefore, the production of flowers must be regarded as an essential part of the production of horticulture. It is on these grounds that we bring the Order before the House and ask for its approval.
  Mr. G. Brown rose—
  Mr. Deputy-Speaker (Sir Charles MacAndrew):I was under the impression that the right hon. Gentleman had already spoken.
  Mr. Brown:What I did was to ask whether a Minister was going to move the Motion. When the Minister arrived he moved it at the beginning of his speech.
  Mr. Deputy-Speaker:The Chancellor of the Exchequer nodded, and I proposed the Question.
  Mr. Brown:I could have moved to report Progress since we had no Minister

  1897
  present. I asked a question instead—at some length it is true—to provide time for a Minister to arrive. I did not attempt to argue my case or to continue my speech.
  Mr. Deputy-Speaker:If the right hon. Gentleman has the leave of the House, it is quite all right for him to speak.
  11.18 p.m.
  Mr. Brown:If I may, I will continue by leave of the House, having performed a useful function for everybody by intervening at the beginning, as quickly as I could think about it.
  We on this side do not propose to divide the House on the Order, but one reason why we were not willing to let it go on the nod without a speech from a Minister was that there seems to be some question here whether we are not chasing after increased tariffs now without any regard to the function which they perform. I have said before, both here and outside, that we on this side regard the horticultural section of the great agricultural industry as important as any other section. In so far as it produces crops which we must have, which our people need and which play a part in maintaining the life of our community, it is as entitled as any other section to the support without which horticulturists cannot do their job.
  I have said that, and I do not go back on it now. It is one thing to argue that for tomatoes, lettuce, strawberries, plums and cherries and things like that, but I am not at all sure that it is the same thing to argue it in the case of things which the grower is not bound to produce. When I see snowdrops, gypsophila, marguerites, marigolds and all sorts of other somewhat exotic plants are now being given—
  Mr. W. F. Deedes:The marigold is not an exotic plant.
  Mr. Brown:I mentioned the marigold in a general statement, bringing in others which I thought were exotic plants.
  The point is that these flowering shrubs, bushes and bulbs are hardly in the same class as other horticultural produce to which we have sought to attach tariffs, and the increase in tariffs proposed in this Order is extremely steep. The Joint Parliamentary Secretary said with some assurance that this was
  1898
  being done to protect our growers. It so happens that I have spent today with horticultural growers, and I found nothing of unanimity among these growers for this Order.
  I was visiting the small growers, not the larger ones in Surrey, and they said that as small growers raising their own plants they depended heavily on fulfilling some of their orders on being able to import. What is happening here is that a steeply increased tax is being put on which will be very much to the benefit of the large grower but which will hamper the trade of a large number of small ones. They were not at all pleased about this.
  Although as far as I can judge the Order does not act as the previous one did about the new tariff, we can see the size of the increase from the Board of Trade Journal of 22nd May. It is an increase which seems intended for the most part to bring the new tariff into line with the value of the incidence of the old tariff at pre-war prices. But the important factor which freight rates have on importations, which have gone up considerably, should be a continual protection and discouragement. So, it would appear that we are being invited to slap on for no very good reason a heavy tariff increase over a large range of nonessentials which growers do not have to grow.
  Could the Minister of State, Board of Trade, if he is to speak—and it is his Order—tell us how many of the items mentioned in the Order we produce in this country compared with the amount we imported last year, so that we can see the size of the production we are being asked to protect and the extent to which we are being asked to do it. I suspect that those figures will make the case for the Order look much weaker. It is so easy once the House has agreed to a general tariff Order, for which there are good reasons, to assume that one is free to increase the tariff on everything, making it costly and more difficult for the small merchant, and interfering, I should have thought slightly needlessly, with our trade with European nations. That ought not to be done lightly or freely. I suspect that we are doing it.
  The part of the Order relating to strawberries surprises me a little. I see that

  1899
  the only change being made is to put a tariff up from 1½d. a lb. to 4d. a lb. from 1st June to 9th June. No other change is made except to shorten the period by taking away the specific duty from 1st April to 1st June. There will be no specific duty before 1st June, though there used to be. There will be an increased duty for a period of eight days only and we revert to the old pre-war figure from then on. I am surprised at that. That does not seem to be giving the strawberry growers greater protection. If the argument for the rest of the increased duties is that the old rates are out of touch with present realities when measured in terms of selling prices, then that must also be true of strawberries.
  Since strawberry duties, if I am right, are not to be increased over the bulk of the year, I should have thought that here with a crop where we have a genuine growers' interest and something ought to be done, the growers could claim that the Government are not doing anything whereas over the rest of the field where the interest of the growers is altogether different we have smacked on a heavily increased duty.
  We shall not vote against the Order. I cannot say that we support it with any enthusiasm. I think that it is pointless and might even do some damage. Personally, I very much regret that we should have these rather steep increases in the duties on all these not very important but very delightful and desirable commodities introduced, so far as I can see. for no very real reason.
  11.26 p.m.
  Mr. David Renton:So far as plums are concerned, I welcome the proposed duty and the timing of it. With other hon. Members, I have stressed for several years that so that an import duty may be effective to protect the home crop it should come into operation well in advance of the home crop, and with plums it is a good thing to have introduced the tariff with effect from 1st July. The tariff of 16s. 9d. per cwt. works out at approximately 1½d. per lb. I should have thought that, even in a fairly prolific year such as this year promises to be, that would be about right for most of the period. However, one should issue the warning that for some of the early part of the period the foreigners
  1900
  will have little difficulty in climbing over that tariff; but that remains to be seen. It should be borne in mind that this looks as if it will be a very heavy plum year. Certainly the trees in my constituency are already beginning to look very heavily laden.
  I cannot raise any enthusiasm about the new tariffs on these exotic flowers, and I sincerely regret that there is not a much greatly improved protective tariff for potatoes, carrots and onions. The position is extraordinary. I trust that I am in order in talking about items which could have been included in the Order. The position is that there are still in the clamps large quantities of home-grown potatoes in very good condition. At the same time potatoes have been coming in in no better condition. Some of those imported recently are luxury potatoes but—
  Mr. Speaker:Perhaps the hon. and learned Gentleman will help me. I see nothing about potatoes in the Order.
  Mr. Renton:No, Sir. There is no mention of potatoes, as I said, but I submit that as the Order amends the consolidating Order it is in order for me to discuss the way in which the amendment has been, and might have been, carried out.
  Mr. Speaker:Debate on an amending Order is confined strictly to what the amending Order does. It is not in order to refer back to the other Order.
  Mr. Renton:If you please. In that case, I will not pursue the point I was about to make.
  11.30 p.m.
  Mr. Frederick Willey:As the Minister of State, Board of Trade, is going to reply, perhaps I could briefly put three points to him. First of all, I should like the right hon. Gentleman to explain how some of the provisions of the Order can be justified on the grounds that they provide protection. What possible protection do the new provisions provide for strawberries? It is common ground that this Order can only be justified this year as providing a protective tariff, but what earthly protection has been afforded to the British strawberry growers by this provision from the 1st to the 9th June?

  1901
  The second point I want to put to the right hon. Gentleman—and the Parliamentary Secretary did not deal with this —is that last year we had a No. 3 Order and a considerable point was made that there had not been proper consultation with the trade. I think it is incumbent upon the Government to explain whether there has been free and proper consultation with the trade this year, because when the last Order was laid the retail and distributive trades generally complained, first of all, that the Order went beyond the strict protective purpose of the Order; and, secondly, they bitterly complained that the President of the Board of Trade had not honoured his pledges to the trade. I hope on this occasion we shall have an assurance that there has been full and proper consultation. We know that the Minister is very sympathetic to all questions of consultation.
  Finally, can the Minister give any indication of the Government's policy towards the Import Duties Advisory Committee. Do they intend to rely upon the Committee or not? That subject is relevant to these import duties, and if the Minister can, within the rules of order, inform the House of the Government's attitude on this matter, I am sure we should all be obliged to him.
  11.33 p.m.
  Major H. Legge-Bourke:Very briefly, I should like to congratulate the Government on introducing this Order and to touch on one or two of the points mentioned by my hon. and learned Friend the Member for Huntingdon (Mr. Renton) and the right hon. Gentleman the Member for Belper (Mr. G. Brown). I endorse what the right hon. Gentleman said about the date, and I am quite certain that there will be a big plum crop this year and that this Order will go some way to protecting the home grower from what one hopes will not be quite as big a problem as he had two years ago.
  The commodity which particularly interests my constituents is strawberries, and my own feeling is that nothing will ever give the growers of strawberries the protection they had when this Government first came into power, because then they found it necessary for an unfortunate reason virtually to reduce imports to nothing. The trouble with that was that
  1902
  sooner or later we found ourselves in danger of losing markets for our manufactured goods.
  There is no doubt that both these tariffs will to some extent be an improvement on last year, though they will not give the protection that the growers had when imports were cut so substantially a few years ago. I think the growers accept the fact that the consequence of cutting imports completely is apt to be so damaging to our national economy that we growers simply cannot afford to put that argument forward.
  There is no doubt about it we shall find as these strawberry tariffs work out that they do not give really adequate protection to our home growers. That is my own feeling, although I think that what is happening in this Order will result in an improvement on the state of affairs which we had last year. My feeling is that it all comes back to this everlasting question, how much longer are we to suffer under the terrible conditions which G.A.T.T. imposes on us? Or are we going to face it, and ask for the Treaty to be revised or abolished?
  On the strawberry issue, to which I think I had better, for the sake of order, return, I would call attention to the pulp aspect. Pulp strawberries are not, unfortunately, included in this Order, but we ought to face the fact that a great many of our strawberry growers are not going to get much protection simply because we propose to protect fresh strawberries. The great criticism which the growers in my constituency will have is that, while welcoming the rules about fresh strawberries, there is nothing about pulp strawberries.
  I must say that I thought the right hon. Gentleman the Member for Belper used a most astonishing argument on the subject of flowers. His view seems to be that there is something slightly wrong about growers wishing to produce flowers on vegetable or fruit land; or that, anyway, they should grow them completely at their own risk, despite the fact—and I emphasise this—that they have to pay the minimum wages to their workers. They are bound, as are other growers, to pay what the State as a whole considers to be a fair wage, and if we are going to tell them that because their land grows flowers they must not do it because roses

  1903
  are not so important as, say, strawberries, it does seem to me that we are seeing once again a perfect example of something which we on this side of the House so often criticise, namely, that fantastic belief that the man in Whitehall knows best.
  The right hon. Gentleman went on to say that the cost of transport has gone up and, therefore, the cost of transport is some more protection to these growers than existed in the past. But does not that argument apply to flowers and vegetables, as well as to fruit? It is, I think, a very dangerous argument for the right hon. Gentleman to have used, because what he implies is that these increases in tariffs are not necessary since the protection is obtained through increased transport costs. But the increased transport costs have not protected fruit or vegetable growers, and I am pretty certain that they have not protected the florist, or rather the "floriculturist," if there is such a word.
  Probably the people who are growing on the land know what their land will grow best, and they probably know how to run their holdings as efficiently as they can. It seems to me that hon. Members should not suddenly criticise these people who are trying to earn an honest living by producing things which the British public wants; these people should be allowed to do so.
  I hope that when the Minister comes to reply he will support me in what I have said, rather than that he should support the right hon. Gentleman the Member for Belper, because we in this House ought to encourage a bit of enterprise, and something which gives pleasure to other people; and there are few things which give pleasure, in a little way, more than flowers—be they exotic, or be they marigolds.
  11.40 p.m.
  Mr. E. G. Gooch:I do not agree with the observations of the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) with regard to the attitude of hon. Members on this side to the Order now under discussion. It is not by any means our desire to say that people shall not derive pleasure from the growing of flowers. While I do not agree with it completely, I think that
  1904
  generally speaking, the criticism offered to the Order is legitimate.
  A few months ago the House gave approval to several Orders of this kind. I supported them then, and I see no occasion now to depart from that course in regard to this present Order. The big and valuable horticultural industry is entitled to practical encouragement from the State, and whilst I do not altogether like the method of protection embodied in the Order, I concede that, in the absence of other proposals, they will be helpful to the British grower. Nor do I think that the methods will be harmful to the British housewife. Nevertheless, it is interesting to note that, whilst the Government are creating conditions of instability in agriculture, they are prepared to make concessions towards a more stabilised market for the horticultural grower.
  I should like to see the horticultural industry make more progress than hitherto towards putting its own house in order. I wish to assist both the producer and the consumer, and I think that that can be done by clearing up the present wasteful and costly system of marketing and distribution which creates unrealistic local shortages and surpluses and calls upon the housewife to pay more than she should for the goods.
  Whilst I am concerned to see that the horticultural industry gets fair play and that the grower is properly rewarded, I am also concerned to see that the 150,000 workpeople in this industry get their share of the additional income accruing to the grower. Yesterday was a black day for farm and horticultural workers. The Agricultural Wages Board refused to give even 6d. increase on the national minimum wage. The independent members on the Board could have adjudicated on the case before them, but I am afraid that the independent members were influenced by considerations outside the Board.
  Mr. Speaker:I think that the hon. Member is going far beyond the Order. He is introducing the whole question of agricultural wages, which is surely not covered by this Order.
  Mr. Gooch:I am saying I support the Order on various grounds. One is that I think that the grower is entitled to the protection of the Order. Further, I think

  1905
  that the industry makes a real contribution to the welfare of the State. Thirdly, I want the industry to be able to pay a good wage to the people for whom I speak. I merely point out, with great respect, that the hopes of those people for improved wages and working conditions in the agricultural and horticultural industries were dashed to the ground yesterday by the action of the Agricultural Wages Board.
  I support the State helping farming and horticulture industries to enable them to prosper and to serve national needs, but the prosperity circle in the horticultural industry should include the men who do the work in it. I hope that the operation of the Order will stabilise the market, benefit the grower, and provide the workers with a further opportunity of pressing for a reasonable reward for their labour.
  11.45 p.m.
  Mr. James Hudson:The hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) expressed some views on the effect of the protection of the industry in which he is interested, and seemed to be having second thoughts about the value of the protection that had been given. I should have liked to encourage him to continue those second thoughts, and if it had not been so late I should have done my best to pursue that argument. But it is late, and I shall desist.
  The hon. and gallant Gentleman, however, seemed to go very much astray in his remarks about the fantastic belief that Whitehall always knows best. What does this Order do if it does not indicate that Whitehall does know best what prices should be charged for strawberries, plums and a whole series of plants, including the innocent holly and mistletoe? Whitehall is making clear, in the form of an Order presented to the House, that it knows best what prices should be charged. consistent with protection.
  Mr. Renton:The hon. Member should be told that these prices are not fixed or suggested by gentlemen in Whitehall. It is true that they take some part in arriving at a decision, but that decision is taken mainly upon the advice of various people who are not civil servants.
  Mr. Hudson:The gentlemen throughout the country give their advice, which
  1906
  is all considered, but the gentlemen in Whitehall—either those who sit on the Front Bench or their advisers in various offices—know a great deal about the matter. In view of the developments we have made in protection by means of various Orders in the last few years, the argument that it is fantastic to believe that Whitehall knows best is without any weight.
  Major Legge-Bourke:What the gentlemen in Whitehall can never know best is what grows best on the land of the man who owns the holding.
  Mr. Hudson:The hon. and gallant Gentleman persists in that view, but the encouragement given to the man who works on the smallholding is finally represented by a certain weight of taxation or tariffs which are imposed in order to help him. Whitehall imagines that it knows precisely what weight the industry and its commodities can bear.
  It is at that point that I want to put my point of view, as representing the consumers. The Board of Trade Journal announces that the consumer interests were carefully consulted about all matters which affected them in the various tariffs mentioned in this Order, and the Minister repeated that statement tonight. It may be so, but I did not hear very much from the consumer interests about the nature of the consultations. I should like to know who were actually brought in.
  It may be that a number of important people in the organisations dealing with retail trade were consulted, and their views taken into account. However, I wonder whether the organisations of the women Who buy the strawberries have been consulted. I mean such organisations as that the party opposite used to pay so much attention to when prices were considered when that party was in Opposition—the Housewives' League. Has that organisation been consulted? To what extent have the women been consulted who belong to the Co-operative Guilds associated with a great organisation with 10 million members?
  To what extent were they consulted about the price of strawberries in the first week of June? In that week we had more rain than sunshine, and I do not know how many homegrown strawberries could have been expected to have been on the

  1907
  market that week, but this Order provides for a tariff of 4d. lb. on imported strawberries. Perhaps the strawberries covered by that tariff are strawberries grown in pots under glass, or cloches in the fields, and are so expensive that, apart from the few most fortunate people, few could be expected to buy them, but I do not know why the tariff should be 4d. instead of l½d. a lb. as it used to be. When the English strawberries come on the market, what will be the protective price then? According to the Order, 6d. lb. for the whole strawberry season.
  I agree with my hon. Friend that the men who grow strawberries and who pay wages for assistants with their work must have encouragement, but I feel that the general rise in the price of strawberries has discouraged the demand for them among the poorer elements of the population to such an extent that that price, and the protective element, have not been of any assistance to the producers in the long run. It has certainly been of none to the women buyers.
  Consider another case, that of bulbs. I am very interested in that. The hon. Gentleman said that work on bulb production in the winter and spring complemented other horticultural production the year round, and that the total horticultural production in the horticultural counties had increased because of bulb production. I admit that is the case, but part of that process is to get people in increasing numbers to buy bulbs. It is one of the interesting things that has happened in London in recent years that more and more people are planting snowdrops, crocuses, hyacinths and daffodils in window boxes and small gardens. Perhaps this is a wasteful process in London where people tend to buy every year or every alternate year, but if that is so it is bad policy to make bulbs expensive for it is doing nothing but harm to the producer by making it impossible for large numbers of people to purchase them. So I criticise this Order because the prices laid down will ultimately stand against the interests of the grower and the consumer.
  Damsons are a fruit very much sought after by the wise housewife who knows their value as a preserve in September and October. It has been said that the higher price under this Order will be equivalent
  1908
  to l½d. a lb, but it will be much more like 2d. a lb. by the time the fruit reaches the consumer. That ought not to be. It is bad policy to discourage the additional sale of damsons. Mirabelles are also mentioned in the Order and are subject to an additional 2d. a lb. import duty. In any Lorraine town you can be served with this fruit very cheaply, and there is no reason why this fruit should not be available cheaply to British housewives. It would encourage the French without doing any damage to the British producer who does not cultivate this fruit to any great extent.
  The more one looks at this Order the more suspicious one becomes of it, and the more objectionable it appears, and although we do not intend to divide on it, some of the points I have raised deserve more attention from the Government than they have given them hitherto
  12 midnight.
  Mr. C. J. M. Alport:The hon. Member for Ealing, North (Mr. J. Hudson) has forgotten the advantage that comes to the consumer from being able to obtain at a reasonable price an adequate quantity of fresh British-grown fruit. I am sure that that is something for which the consumers in the towns would be prepared to pay the small additional prices which are implicit in this Order. I welcome the measures which are being taken under the Order to provide some reasonable security for horticulture. That part of the agricultural industry was not included in the security and stability which was provided by the 1947 Act. It deserves as well of the British public as any other part of the agricultural industry as far as both growers and workers are concerned.
  This is perhaps a belated but nevertheless welcome measure to give a reasonable deal to many of those who try to provide the highest quality horticultural production for the large urban populations of this country. Representing a constituency which produces the best strawberries in the country and at the same time the best roses, I am particularly concerned to see that the growers of both have a very proper mention in one of the Schedules attached to the Order. The strawberry and rose growers in my constituency will be very glad of the provisions of the Order.
  12.2 a.m.
  The Minister of State, Board of Trade (Mr. Heathcoat Amory):Last November the Government issued a White Paper describing proposals for increased duties on certain horticultural products. Subsequently a short debate took place on 10th December on the Additional Duties (No. 3) Order, 1953, which gave effect to those increases. The House approved that Order with general agreement. At that time it was stated that the examination of other applications in the same field was still proceeding. This Order gives effect to the changes in Duty in respect of most of those other applications that were still under consideration at that time.
  There are one or two still under examination, for instance in relation to bulbs and dead poultry. Bulbs do not come under this Order, but the Order is really parallel with the one which we debated on 10th December. It deals with a further range of horticultural products according to the same principles. It represents another step in substituting a tariff for quantitative restrictions and affording our own horticultural industry a moderate and fair rate of protection in the light of today's price level. A moderate tariff may be more favourable to the consumer than a strict quantitative restriction by quota.
  I do not think that hon. Members will want me to go into the general argument for adopting the course which we have taken, but I should like to answer one or two points which have been made about the details of the Order. The Order deals with fresh plums and strawberries and with flowers, foliage and nursery stock. It increases duties on some items and it removes specific duties on others, leaving them subject to the general ad valorem duty of 10 per cent. It simplifies the tariff structure in a good many cases in relation to flowers and nursery stock.
  Mr. J. Hudson:It may be that I am wrong, but the Order states that, with regard to hyacinths, narcissi and tulips, from 1st December to the last day of February they will be 2s. 10d. a lb.
  Mr. Amory:That is for flowers and not bulbs. In the last Order we dealt with strawberries from 10th June to 31st July and a new duty of 6d. a lb. was
  1910
  fixed for that period. At that time, for technical reasons concerned with our agreements under G.A.T.T., we could not deal with the period 1st June to 9th June, and under this new Order we are merely dealing with the limited period, and there the duty is 4d. a lb. Therefore, the position is that for strawberries from 1st June to 9th June the duty will be 4d. a lb.: from 10th June to 31st July it will be 6d. and for the rest of the year it will be 10 per cent. ad valorem.
  Mr. Willey:I appreciate the reasons for the changes, but I would ask what protection that offers to the growers of that in this country.
  Mr. Amory:It has afforded that protection already, because it came into effect in May.
  Mr. Willey:But in practice?
  Mr. Amory:I should have thought the increase from 1½d. a lb. or 10 per cent. ad valorem duty, whichever is the lower, to 4d. a lb. is something of a protection.
  Mr. Wiley:But surely strawberries during these particular few days are sold at high luxury prices?
  Mr. Amory:This year, I agree. But the Board of Trade are not responsible for the weather, and the season is late, and only a few strawberries will come along in the first period. The important period is from 10th June to 31st July which was covered in the previous Order.
  I now come to trees, plants and flowers. Flower production is an integral part of the horticultural industry and complementary to food production. It does enable staff to be employed the whole year round, and I do not think the changes proposed are likely to lead to a significant expansion of that section of the industry to the detriment of food production. We cannot look on flower production as an unimportant part of the industry. Applications were put forward by the National Farmers' Union in the case of trees and plants; for flowers, it was supported by the British Flowers Association which represents not only the growers but distributors, and, in the case of nursery stocks, by the Horticultural Trades Association.

  1911
  In respect of the increased rates of duty, the right hon. Gentleman the Member for Belper (Mr. G. Brown), compared the set-out of this Order unfavourably with the last Order in that matter. But he was confusing it with the White Paper. Order No. 3 of 1953 was set out very much as this one. It is true that the specific rates which have been increased have in general been raised by 2¼ times their previous level, but it is true also that prices have in general risen since the war by more than that. Consequently the ad valorem incidence of the new rates are in general below the pre-war level. Higher freight and transport charges have been taken into consideration in these figures. It must be conceded that in all the circumstances those increases are not out of the way. Really, they are quite moderate.
  The opportunity has been taken to simplify the tariff structure a good deal in the process of getting out this Order. I should have been sorry to have been pressed to comment in detail, because some of these names are very alarming lo one who is not an horticulturist. I might have pronounced them but I certainly could not have elucidated the characteristics of them.
  The right hon. Gentleman the Member for Belper asked about the proportions of home-produced trees, plants and flowers. The quotas which we have had since the war have been fairly strict and they allowed only very limited amounts of imports. Something like 90 per cent. represents the proportion of home-grown produce. It may be that, as a result of the substitution of this tariff for the severe quantitative restrictions, the proportion of imports may go up a little but not to a significant extent.
  I assure hon. Gentlemen that the fullest consultation has taken place. When the applications were received they were advertised. Representations were invited, a number were received and the observations of the applicants were invited. Then, in every case where they were desired, consultations took place with those who had made the representations. To give
  1912
  an idea of the scale, I would mention the names of a few of the organisations consulted. They included the Fruit and Vegetable Trade Association of Importers, Distributors and Salesmen, the Retail Fruit Trade Federation Ltd., the Parliamentary Committee of the Cooperative Union Ltd., the Fruit and Vegetable Trade Association of Importers, Distributors and Salesmen, and, on the question of nursery stock, the National Union of Manufacturers and the British Flower Industry Association which represents distributors as well as producers.
  We have taken very great trouble over this matter and an immense amount of time has been spent on it. We have had no complaint that we have not entered into adequate consultation. I hope that there is no ground for anybody to feel that there has not been full consultation.
  The hon. Member for Sunderland, North (Mr. F. Willey) asked about our future plans for the Import Duty Advisory Committee. I must not go into that question at any length but I can say that we have the future under consideration and at the moment we do not envisage any immediate change in our present plans.
  I should like to emphasise that in the case of the previous Order every care was taken to make sure that we invited every possible representation from every possible interest, both for and against, and that has been done with this Order to an even greater extent. As a result of the representations, we have in fact changed the proposals in a number of cases. The changes have been suggested as the result of careful consideration after every possible step to investigate the matter had been taken, and I believe that the proposals will commend themselves to the House as being reasonable, wise, moderate and fair to the interests both of the industries and of the nation at large.
  Question put, and agreed to.
  Resolved,
  That the Additional Import Duties (No. 2) Order, 1954 (S.I., 1954, No. 642), dated 14th May, 1954, a copy of which was laid before this House on 18th May, be approved.

  HELICOPTERS
  Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Vosper. ]
  12.16 a.m.
  Mr. Norman Dodds:The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation, who is to reply to the debate, has been good enough to state that he would like 15 minutes to reply as he has got much to say, so I will condense my speech in the hope that the country will get the maximum amount of information on this subject of helicopters.
  Britain made a good start with helicopters, and in 1939 the British helicopter E.W.6 was the first to fly with passengers. B.E.A. operated the world's first regular helicopter passenger and night mail service. That was not so long ago, but the early kick-off with helicopters does not seem to have been maintained, and in the meantime we have lost very considerably in the lead.
  In the United States, companies using helicopters for flying with permanent mail services are making them commercial successes. Belgium with its Sabena airlines is running the first international passenger service, and the American armed services, largely because of the operations in Korea, have made developments which will be of great value to the manufacturers in America. But in this country we seem to be making a special feature of talking of the lack of the necessary helicopters and the lack of official and public support.
  Many people would like to know how long this is going to go on, because if we are to wait for the perfect helicopter we will have to wait a long time. It is well-known that in research and design our manufacturers are second to none, but with development of route flying and so on experience is not going to be obtained by waiting to get the perfect helicopter.
  I do not think there is anyone who can believe that this is possible purely through private enterprise alone, and what is needed is a lot of governmental support for the necessary research work. A few days ago one authority said quite plainly that Britain lags behind in the
  1914
  helicopter race. That was stated on 1st April by Lord Douglas, who is chairman of British European Airways. He made it quite plain that we are lagging very far behind and that America was going so far forward that it looks as if before long we shall be looking to America for helicopters if we are to keep in the race at all.
  In answer to a Question put in this House some months ago, it was stated that 47 local authorities were especially interested in helicopter air passenger services, and that business concerns are planning to have flat roofs for helicopter services for their businesses. Even the Co-operative movement has produced a plan for the Bristol Co-operative Society estimating to cost £1½ million, which includes a project for a flat roof, which it is expected will be ready in three and a half to four years. The Belgian Sabena lines are well equipped in this respect, and in Brussels there is a rota station.
  There are many towns in this country and businesses, too, who are wondering when a decision is to be made about a site in London. Surely if Brussels can nave one, then London can have one. I do not think that is too much to ask. I would ask for a decision on schemes like those for Charing Cross Station or Waterloo Station, or even the suggestion I made, namely, Cannon Street Station, for that is an area where there are not so many people residing.
  It seems to me that one of the difficulties is that there is not enough development and route flying experience. On the 17th May last the hon. Member for Kidderminster (Mr. Nabarro) put this Question to the Minister of Supply:
  "Would my right hon. Friend bear in mind very valuable flying data in connection with helicopters has been obtained from the S.51 Services operated by B.E.A.C."
  Then the hon. Gentleman comes to routes, and he asks:
  "Why has there been an cessation in the last 12 months of those experimental flights? Could we not continue with the S.55, for instance, as a preliminary to the machine mentioned in the Question?"—[OFFICIAL REPORT, 17th May, 1954; Vol. 527, col. 1686.]
  The machine mentioned in the Question is the S.56 which, according to the reports which I have received, will be in operation probably years before any other which can accommodate 30 or 40 passengers.

  1915
  There are many Government departments which are interested in helicopters; the Air Ministry, the War Office, the Admiralty, Transport and Civil Aviation, Supply, the Post Office, the Colonial Office, and the Treasury; and there were Questions put to the Minister of Supply on 31st May about inter-Departmental committees. The Minister disposed of the subject very quickly by saying that he did not think we should get any more helicopters by setting up a Departmental committee. Later, he gave the names of the Departments represented on an inter-Departmental committee, and did state that within recent months it had met on three occasions.
  But there are two Departments which should be on the committee and are not; one is the Post Office, and the other is certainly the Colonial Office. The latter seems to be fighting shy of aviation development in the Colonies. The Minister of Supply has raised some important queries, but I cannot condense everything into 15 minutes tonight; I must leave them to another occasion, or else seek to get answers by letter.
  There is an authority, Sir Ben Lockspeiser, Secretary to the Committee of the Privy Council for Scientific and Industrial Research, and he has commented very forcibly on the development of airfields in Britain. He forecasts that future airfields will be built well away from big towns, and have fast and regular helicopter services to London and other large cities. Sir Ben has said that before long the helicopter pilot will be as common as the engine driver. Now, that raises a big question. There is a lot of work to be done, and done very quickly if we are to have the pilots visualised by this expert.
  Those people in this country who are interested in helicopter development ask what is to happen about the training of helicopter pilots who will be required very soon in civil and Service forces. Nobody who knows anything about this subject doubts but that there will be big civil "airbus" helicopters, probably on the pattern of the Fairey Rotodyne, and that fixed wing aircraft will be out of date for distances up to 300 miles.
  The next thing is whether, in view of what Sir Ben Lockspeiser has said, the
  1916
  plan for Gatwick aerodrome is really sensible. The Government White Paper has stated that the principal use of that airfield will be short hauls to and from the Channel Islands and the near continental resorts and, therefore, I do ask, "Should we not be thinking more of assistance to helicopter development and less of developing Gatwick"?
  The American Air Transport forecasts 6 million helicopter passengers by 1960. Many people would like to know our forecast—or is it believed that once again the Americans are talking big? We need fleets of simple, cheap, two-seater trainers to produce a large number of helicopter pilots. What is being done? Are the Government prepared to help by introducing helicopter flying clubs before some of the smaller airfields are closed down and it becomes too late?
  This week-end I received a report from America stating that there is a mass production of small helicopters as simple to operate as motor cars. They are expected to be in production before the end of this year, and it is estimated that the cost will be less than £2,000 each. They will carry two passengers and travel 300 miles on 22 gallons of petrol at 90 miles per hour. What is our position?
  Again, many of the general public are very deeply disturbed in regard to the private enterprise of Mr. John Murray. It was said by the Minister who is to reply tonight that Mr. Murray asked for permission for a tethered flight. Is that so? Did he ask that it should not rise more than 10 feet? If it passes the first test, will Mr. Murray get an airworthiness certificate? Mr. Murray and many others would like an answer to these questions.
  Some years ago I hired a helicopter to go to Dartford. For a long time I was in negotiation with the Ministry of Civil Aviation and I was staggered by the yardstick they used for third-party insurance. It is felt that the view in this regard is unrealistic. Even in some official circles the feeling seems to be that if one of these single-engined machines "conks out" it will fall like a stone. I have seen what happens when at various heights the engine has been deliberately shut off. Those knowing anything about helicopters know quite well that there is little risk of damage on landing. Time after time they come

  1917
  down quite easily. There can also be a control to allow them to land.
  I congratulate the Admiralty. It is the bright spot in a very black cloud. It is the enterprising Department. I wish that some of its enthusiasm and enterprise could be acquired by some of the other Departments. On the other hand, on 8th June we had a reply from the War Office. Never was there a more stick-in-the-mud answer.
  The United States report that in Korea the helicopter pilots flew over 500,000 hours and evacuated 16,000 casualties, in many cases from forward-lying positions. From some of our own men the testimony is that the helicopter is a great morale booster.
  Then there is the Post Office. In Chicago the Post Office has run a helicopter service and in three years their six machines have made 160,000 landings and take-offs without accident; in 40,000 cases the landings and take-offs have been on top of the Central Post Office which is 240 ft. from the street. I suggest that our Post Office when worried about mailbag robberies might think of using this as a secure means of dealing with the mails.
  The Colonial Office is about the worst of the lot. Its answer to a Question asked on 2nd June, 1954, is really shocking in the extreme. I feel that I shall have to look for another Adjournment Motion to deal with all the aspects of the answer to that Question. Therefore, in the hope that we shall really hear something good tonight from the Parliamentary Secretary I shall close with these words: Many people believe—and I agree with them—that, given the necessary confidence and Governmental support, and given time, the helicopter can become a great national asset for this island of ours. In spite of all the difficulties connected with this problem I hope that the Parliamentary Secretary, tonight, will be able to mark another milestone on the long road to success.
  12.31 a.m.
  The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. John Profumo):I know that my colleagues will want to join with me in congratulating the hon. Member for Dartford (Mr. Dodds) on having packed so much enthusiastic advice into such a remarkably short space of time.
  1918
  It would be impossible for me to reply to all the charges he has made, but it is right to say that his main concern is whether or not this country is lagging behind in helicopter development. That is the concern of us all.
  To start with, I should like to dispose of some of the arguments which are not directly my own responsibility. With regard to the Ministry of Supply angle in the development of the helicopter, we have a very proud record, and one which is progressing solidly. As my right hon. Friend the Minister of Supply said the other day, the amount being spent by the Government on this development was doubled in 1952; it was doubled again in 1953, and it is going to be doubled again this year, when it is likely to reach the sum of more than £2½ million. There is no short cut, or cheap way of developing any new means of transport.
  In regard to the Inter-Departmental Helicopter Committee, there are numerous Departments other than those which the hon. Gentleman has mentioned which have user interests. There are the Home Office, the Ministry of Agriculture, the Scottish Office, and so on, and practical considerations rule out all these Departments joining in all the deliberations as to requirements. But I can assure the hon. Gentleman that my own Department keeps the closest contact with all potential users.
  The hon. Gentleman was interested in the Post Office, thinking that it might be able to assist more than any other in pioneering helicopter services. The Post Office has always taken a great part in this work, but there are essential requirements about the use of helicopters for Post Office service, such as the acceleration of mail at reasonable cost and a high standard of regularity under all weather conditions, and the experiments which have so far been carried out with available helicopters have not been able to satisfy those conditions. The matter is constantly being reconsidered in the light of developments both here and overseas, and the Post Office will be very quick to consider using this type of aircraft as soon as there is a reasonable prospect of the essential requirements being met.
  I now come to the operations which are directly the responsibility of my right hon. Friend. While I welcome the

  1919
  enthusiasm and interest which this matter commands not only in this House but all over the country, I would point out that it must be our job to temper this with realism. The helicopter is still a very new and untried form of transport. The true helicopter era cannot really begin until these machines can operate at fares which the traffic can command, and can operate in and out of city centres for which the helicopter is primarily required as a means of transport. For these requirements we must have large twin-engined helicopters.
  Nevertheless, although single-engined helicopters must be limited to routes which offer a reasonable chance of forced landing without endangering the general public in the event of an engine failure, the Government have constantly been determined to take every opportunity of gaining such experience as will directly assist long-term development. We certainly do not expect British European Airways should bear the exceedingly heavy cost of experimental services where passenger revenue will not anything like meet operating expenditure, and it is for this reason that the Government bear 88 per cent. of the annual cost of the helicopter experimental unit which is operated by British European Airways.
  As the next logical step in our development programme, a step that has been carefully thought out and is the result of logical progress, we now propose to authorise British European Airways to purchase immediately two S55 machines which, although American in design, will be manufactured in this country. As soon as these helicopters have obtained a British certificate of airworthiness our intention is to start an experimental scheduled passenger service between London Airport and the centre of London itself.
  Fortunately, the River Thames provides a natural approach lane into the heart of the Metropolis without undue risk to the population, and the Sikorsky 55, unlike any existing British helicopter, is designed to carry floats without any undue loss of payload. British European Airways considers floats are a necessary precaution against possible forced landings in the river.
  1920
  This service should yield very valuable experience indeed in the operation into the centre of a large city and also into a busy international airport. Furthermore, it will, of course, test the public reaction to noise, which, we all appreciate, is a most serious factor to be taken into consideration in the development of helicopter services in the centre of cities.
  Meanwhile, the production of and experiments with British helicopters will continue with the utmost urgency. The Minister of Supply has already placed development contracts with three British firms of manufacturers, Bristols, Faireys and Percivals.
  To facilitate the projected operation to which I have referred, and so that any helicopter can operate into or across London without permission on each occasion, my right hon. Friend intends forthwith, in accordance with his powers. to give an exemption to helicopters, which will permit them to operate freely over London except over a defined central area, for which permission will still be needed. However, helicopters will not require permission to fly even across central London if they keep to the River Thames. Details will be published tomorrow morning in an official exemption to the Air Navigation Order, 1949.
  There remains the problem of an air-stop. I am glad to announce that with the extremely valuable and forthcoming co-operation of the London County Council we have come to an arrangement whereby a site on the South Bank, adjacent to County Hall, will be made available to my Department for any helicopter, civil or military, that wants to come into the centre of London in the immediate future. As from tomorrow such operators will no longer have to obtain prior permission before using this airstop. They will have only to inform my Department the day before the proposed flight is to take place, and we shall arrange for the necessary facilities to be made available. This or some similar arrangement will continue during the period through which we must go before we can obtain the necessary operating experience of the requirements and behaviour of twin-engined helicopters to enable us to decide the location and characteristics of a permanent airstop for London.

  1921
  As I have said before, the Government cannot contemplate the very considerable expenditure which must be involved in the construction of a permanent air stop until we can be certain what is required in the general interests of all concerned. The arrangements to which I have referred will be quite adequate to enable B.E.A.'s experimental helicopter service carrying fare-paying passengers to operate to and from central London. When the service to and from London Airport begins this site will be open regularly like an ordinary aerodrome. Should this site, which will be used immediately, be required during this interim period by the L.C.C. for building or other purposes we will undertake to find another suitable area to serve central London so that the progress of helicopter operations shall not be impaired.
  I hope hon. Gentlemen will feel that this is a step forward which has been planned well in advance, and that further steps such as have been referred to by the hon. Member for Dartford, particularly the training of pilots, are really well under consideration. There are certain schemes being discussed. With regard to the suggestion about using helicopters in the form of flying clubs, we have to remember that they are extremely expensive machines to operate. That is something which can only come about as experience develops and costs are brought down.
  The hon. Member raised the question of Mr. Murray who applied to use and fly his home-made helicopter. I yield to no one in my admiration of enterprise, and private enterprise. As soon as we appreciated that Mr. Murray was not seeking a certificate of airworthiness, he was given the permission for which he asked. It has been inferred that we insisted that the aircraft should be tethered and that he wanted to make a free flight. That is totally incorrect. Mr. Murray himself referred to a tethered
  1922
  flight, and in so doing I presume he had in mind the established practice governing initial helicopter tests, not only here but in the United States. No further request whatsoever has been made to us, but if Mr. Murray wishes later to carry out other tests we shall certainly consider in consultation with the Air Registration Board any application which he may make.
  There were many other points raised by the hon. Gentleman. They ranged too widely for me to comment on them all, but there was one final point I wanted to bring out with regard to certain criticism of helicopters used by the Army. I feel that the criticism that the Army is not interested is completely unjustified. We have to remember that the Army owns no aircraft at all. It is not even responsible for ordering them. Responsibility for providing all aircraft, including helicopters, for the support of the Army rests with the Air Ministry. For instance, in Malaya the Army is supported by R.A.F. machines. That does not mean the Army is not keenly interested. It is indeed. But this problem boils down to one of priorities in relation to what can be afforded against the background of the overall requirements of the two Services for all types of aircraft.
  I thank the hon. Gentleman again for the enthusiasm which he constantly shows over this matter, and for the opportunity to answer some of his questions. We shall never be 10th to consider anything in public or by private correspondence which he has to offer in the way of advice and help in a problem in which we are all concerned, not only for the future of transportation in this country, but something which is bound to be a valuable export in the future.
  Question put, and agreed to.
  Adjourned accordingly at a Quarter to One o'Clock.