Clause 23.—(CONSULAR OFFICERS AND EMPLOYEES.) (Hansard, 24 June 1954)

§ Mr. Hugh Dalton (Bishop Auckland)
This is surely a Clause for the consideration of which we should have here a representative of the Foreign Secretary. It concerns matters relating to consular officers whether at home or abroad. Surely one of the very numerous 645 Ministers now attached to the Foreign Office could spare time to come to help the Financial Secretary to explain it? I do not know whether it would be reasonable to have an appropriate interval to enable one of them to arrive. Would you think that would be reasonable, Mr. Thomas? Would you think it reasonable to adjourn the debate for a short period? Should I be in order in proposing that?

§ Mr. M. Follick (Loughborough)
We should be better off for it.

Hon. Members
Move it.

§ Mr. Dalton
I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

§ The Temporary Chairman
The right hon. Gentleman is, of course, within the rules of order, but I hardly think I can accept the Motion at this stage. I am very sorry, but I cannot accept it.

§ Mr. E. Fletcher
Before you give a definite Ruling. Mr. Thomas, I would point out that one of the considerations that inevitably arises on this Clause is the very important one of reciprocity, The Committee cannot be expected to grant these concessions for consular officers from overseas and foreign countries unless we are assured that our consular officers overseas receive reciprocal rights. I was very anxious to ask the Foreign Secretary or one of his assistants about the precise position of a number of our consular officers in European countries and in some American countries where, I gather, difficulties have arisen. I hardly think it is fair to the Committee to expect it to go on dealing with the Clause unless we know that there is somebody on the Treasury Bench fully equipped with all the detailed information. I should have thought that the Foreign Secretary or one of his deputies alone could have dealt with this important subject.

§ The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)
I do not think the Committee will find any great difficulty in the discussion of this Clause, which, of course, relates only to the taxation aspect of consular conventions and not to the other very interesting and important aspects with which, naturally, the Foreign Secretary is concerned. The 646 purpose of the Clause is simply to provide a means of giving effect to taxation provisions in existing and future consular conventions. The layout of the Clause is, I think, quite simple, and is, certainly as compared with the Clauses the Committee has just been discussing most agreeably clear.
The first thing it does, in subsection (1), is to exempt the overseas income of consular officers or of consular employees from Income Tax—

§ Mr. Roy Jenkins
On a point of order. I understand that we are debating the Question, "That the Clause stand part of the Bill." I understood that the right hon. Gentleman was merely, at this stage, seeking to advance arguments why he could deal with the matter, and not seeking to deal with the substance of the matter. There are several points I wish to make.

§ The Temporary Chairman
The right hon. Gentleman is dealing with the Question that I have proposed, which is, That the Clause stand part of the Bill."

§ Mr. Boyd-Carpenter
I think that is quite clear. The Motion to report Progress was not accepted. The Question is, "That the Clause stand part of the Bill," and I was seeking to address my observations to it, and, no doubt, it would be for the convenience of the Committee if I explained the Clause, as I was trying to do.
It seeks to enable us to exempt the overseas income of those consular officers and employees subject, as hon. Members will see in subsection (1), to their not being citizens of the United Kingdom and Colonies, to their not being engaged in any trade or employment in the United Kingdom, and to their not being ordinarily resident in the United Kingdom immediately before they take up their consular offices. I think the reasons for those three limitations are pretty obvious and do not require labouring. It is, of course, the fact that, apart from this Clause, such income would be liable to United Kingdom tax.
The other provision of the Clause is much smaller in scope and is embodied in subsection (2). The Committee will, no doubt, recall that by previous legislation now embodied in Section 462 of the Income Tax Act, 1952, which is a consolidating Statute, the official salaries in 647 general of consular officers and employees are exempt from United Kingdom tax, but Section 462, as it stands, does not permit that exemption to be given in the case of any British subject. It therefore goes wider in restricting the exemption than the consular conventions, which, in general. refer to nationals of the receiving State. What is therefore proposed in subsection (2) of the Clause is to say that, while it will not be possible for citizens of the United Kingdom and Colonies to obtain this exemption, other British subjects, and citizens of the Republic of Ireland, shall be permitted this exemption in appropriate cases. That is to say, the category to whom this concession cannot be given is narrowed to that of citizens of the United Kingdom and Colonies.

§ Mr. Follick
If a British subject is a consul for another country in this country, as. I believe, the Principality of Monaco has appointed a British subject as its consul in Brighton, how does he stand?

§ Mr. Boyd-Carpenter
It depends whether the hon. Member is using the term "British subject" in the precise sense. If the gentleman who has the honour of being appointed to represent the Principality of Monaco is a citizen of the United Kingdom and Colonies, he would not get the exemption. The hon. Member will appreciate the reason for this. There would clearly be possibilities of such a state of affairs being abused.
What we aim at doing is to bring Section 462 of the Income Tax Act into line with the consular conventions, which lay down that the only category of person to whom this cannot be given is nationals of the receiving State. The equivalent in our law to nationals of the receiving State, is, quite clearly, citizens of the United Kingdom and Colonies.
An hon. Member opposite asked whether these concessions are, and will be. on a reciprocal basis. The answer is. of course, "Yes." Our intentions in that respect are made particularly clear if hon. Members look at the terms of the Clause and see the machinery provided. The application of the concession will be effected by Order in Council in a particular case. It will be possible for that Order in Council to confer smaller, though not larger, privileges than are 648 provided in the Clause. The object of this is that if in any particular case a foreign Power does not give to our consuls privileges equivalent to the full privileges which can be given by the Clause, we can then, by the terms of the Order in Council, limit the privileges conferred on that country's nationals here in order to maintain reciprocity. The Order in Council has to be laid before Parliament and is subject to the negative procedure. Therefore, it will be possible for hon. Members who have any doubts whether reciprocity is being observed to raise such a question on the Order in Council.
It is intended, if so requested, to apply Orders in Council under the Clause in the case both of the small number of existing conventions where its application has not yet arisen and to any future conventions which may be concluded.
I need not waste time by pointing out the importance to this country of the conclusion of consular conventions. The services which consuls can render in particular to trade and traders are more important to this country, perhaps, than to any other country. The increasing complexity of international trade makes consular assistance increasingly important. It is for that reason that we seek as opportunity offers to conclude these consular conventions, in which these tax provisions, although they may play a relatively minor part, are necessary.

§ Mr. John Edwards (Brighouse and Spenborough)
Can the right hon. Gentleman give any instances of the likely application of the Clause in the near future?

§ Mr. Boyd-Carpenter
The simplest thing would be to indicate the States with which we already have consular conventions. I would rather not speculate about the future, because in the event of anything going wrong in a particular case that might give rise to embarrassment. Conventions have been concluded with the United States, Norway, Sweden, France, Mexico and Greece. These conventions are published in Command Papers whose numbers I can give if so desired.

§ Mr. Roy Jenkins
A disadvantage of the right hon. Gentleman's dealing with the points at issue in the Clause so early in the debate is that one must necessarily 649 put questions to him after, instead of before, his speech. The point which I want to raise particularly concerns the exact category of people who will be dealt with under subsection (2) of the Clause.
I think I am right in understanding the right hon. Gentleman to say that Section 462 of the Income Tax Act, 1952, already extends this exemption from United Kingdom taxation on the emoluments of the consular office to all people who are not British subjects. Under the provisions that we are now asked to pass into law, the exemption will be confined to those who are citizens of the United Kingdom and Colonies. Therefore, the category that we are dealing with are persons who are British subjects, but not citizens of the United Kingdom and Colonies, who hold consular appointments in the United Kingdom.
From a brief perusal of the relevant Sections of the 1952 Act, it appears that High Commissioners and people on their staffs and Agents of the Colonies and of Commonwealth countries are dealt with under Section 461. I am not sure whether they are, therefore, involved, or whether we are dealing with what, I should have thought, was an extremely limited category of persons—that is, persons who are British subjects but not subjects of the United Kingdom and Colonies who are holding consular appointments: that is to say, not appointments relating to the Governments of countries from which they came, but consular appointments on behalf of other Governments in the United Kingdom. If I am correct in my supposition, can the Financial Secretary give any idea of how many of these gentlemen there are?

§ Mr. Boyd-Carpenter
The hon. Member is perfectly right in his supposition. We are not here concerned with representatives in this country of other members of the Commonwealth. We are concerned with foreign consular establishments which may see fit to employ British subjects other than citizens of the United Kingdom and Colonies.
An obvious theoretical example would be if a Norwegian consul employed an Irishman as a consular employee. There must be extraordinarily few of these people. I cannot quote any existing case within the comparatively limited sphere of the existing conventions. The object of this 650 provision, as the hon. Member will appreciate, is to enable us, where necessary, to make the provision which the general wording of consular conventions generally demands of us, as and when the case arises. I do not know of any existing case at the moment that will benefit from this concession.