§ Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Wills.]
§ 11.24 p.m.
§ Mr. Edward Short (Newcastle-upon-Tyne, Central)
On 26th October last year I wrote to the Chancellor of the Exchequer about the failure of the Commissioners of Customs and Excise to grant exemption from Entertainments Duty to the Newcastle Amateur Operatic Society's production, "Showboat." This society is one of the biggest of its kind in the country, and all its officials and members are absolutely financially disinterested. Neither producer nor musical director, nor the ballet mistress or any other person receives remuneration of any kind, although it provides almost 12 months' training in singing and voice production and stage deportment, among other arts, to upwards of 150 people, in addition to providing a delightful entertainment to about 10,000 persons each year. All its surplus profits are given to charity, after allowing for a modest working capital and the allocation of an annual amount retained by the society for the specific object of endowing a scholarship in dramatic art.
It seems almost incredible that the Commissioners could find no way of affording relief to such a first-rate society as this, especially when we hear of exemption being granted to such performances as Ralph Lynn's farce, "The Ex Mrs. Y" and such abortions as "A Street Car Named Desire." We hoped for exemption on the ground that the society was partly educational. Notice 88, to which the letter referred, permits relief to a performance of music, whether vocal or instrumental, which is provided by a society not conducted for profit and 1894 whose aims and activities are partly educational.
Our society in Newcastle is certainly not conducted for profit, and its aims are certainly partly educational. So evidently we part company on whether or not its activities are partly educational. The Commissioners evidently cannot consider "Showboat" as partly educational, but they have no difficulty whatever in so designating the rather stuffy Victorianism of Gilbert and Sullivan. I suggest to the right hon. Gentleman that this is perhaps an appropriate time of the year to reconsider this completely out-of-date definition of "partly educational." The present situation is truly Gilbertian in more ways than one.
That loophole being effectively blocked by this antiquated definition, we next considered exemption on amateur grounds. Here also we failed to qualify because one or two musicians are paid by the society. I have pointed out to the Chancellor and the society's treasurer has pointed out to the Commissioners that in this matter the society had no option whatever; the musicians bad to be employed as one of the terms of hiring the theatre. In his letter to me on 23rd November the right hon. Gentleman referred to Notice 92. I have obtained a copy of that notice, which deals with exemptions under this heading, "Amateur exemption." My copy is dated July, 1948, and so far as I can see it makes no mention whatever of musicians. In defining an amateur entertainment it says:For the purpose of this exemption an entertainment is not deemed to be an amateur one if any payment is made or reward given for the appearance of any of the performers whose words or actions constitute the entertainment, or any part of it, or for any person's services in connection with the entertainment as instructor, producer manager, or conductor or in any advisory capacity.1895 There is no mention there of any musician. In view of this paragraph, I ask the right hon. Gentleman to explain why the payment of a musician is allowed to invalidate a claim for exemption.
Finally, there remains the possibility of exemption under Section 6 (4) of the Finance Act, 1924, the charity exemption. I raised this point in my letter to the Chancellor, and the only reply I got was that presumably the societyis unable to comply with the conditions for exemption on grounds of charity described in the enclosed Notice No. 96.I suggest to the right hon. Gentleman that the exemption could have been and should have been given on grounds of charity. I ask him to look into this matter and see that a refund is made.
The facts in regard to the charity exemption are as follows: Notice 96 states that a society will be granted exemption for the first time if the total donations to charity from the previous five entertainments are not less than one-fifth of the total receipts. It goes on to say that if a society does not qualify under that paragraph it will be treated like a society applying for the first time, and the procedure in paragraph 3 would be followed.
Paragraph 3 states that if the society can give a guarantee that it will give the whole of the net proceeds to charity and that the proceeds will amount to not less than one-fifth of the gross receipts, exemption will be given. That seemed to me to mean that exemption would be granted if the entertainment had been promoted by the society of a permanent character solely or partly for charity—and we clearly qualify so far— and if the whole of the proceeds are devoted to charity, provided such proceeds are not less than one-fifth of the gross sum.
The figures are as follows: Our gross receipts this year were £3,110. One-fifth of that is £622. We have given £105 to the Newcastle "Evening Chronicle" Sunshine Fund; £52 10s. to the Percy Hedley School for Spastics and £52 10s. to the North of England Council of the British Empire Cancer Campaign. That is a total of £210 given to charity. But we had to pay £424 in Entertainments 1896 Duty. If we had not had to pay that sum, there would have been available £634 for charity, which is more than one-fifth of the gross receipts.
A long correspondence has passed between the society and the Commissioners. I raised it with the Chancellor in October, and I invite the Minister now to have this matter properly investigated. If I am correct, I ask him to arrange for a refund of £424 to this excellent society so that it can be distributed among local charities.
§ 11.33 p.m.
Mr. P. Hartley (Chester-le-Street)
I have had a similar experience regarding an amateur society at Chester-le-Street. We have claimed an exemption from tax and have been told that no payment must be made to a member of an orchestra. Obviously that it impossible because the societies could not otherwise obtain orchestras and no member of an orchestra would be allowed by their trade union to accept such an engagement.
The society has been in existence for 50 years and has presented all the Gilbert and Sullivan operas and many musical comedies. Despite all the difficulties, it has struggled along for that period. This is a difficulty which cannot be reconciled easily. On two occasions the society was granted exemption—in 1947 and 1948. Since then it has not been given exemption on shows of a similar nature. This society is not as large as that to which my hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Short) referred, but its financial position, in pounds, shillings and pence, is just as difficult. In November, after preparing for 12 months, the society put on a show over which it lost £172. The members made contributions and organised social activities to reduce the loss to £141. The society had to meet a payment of £155 Entertainments Duty. This sort of thing goes on year after year.
We ought to appreciate the determination and courage of people who continue these societies in these circumstances. I want to add my plea to the Financial Secretary to give this matter earnest consideration. There is not a big cost involved. In another debate I was told that the estimated cost was £10,000. That is nothing for the country as a whole, but it would give great satisfaction to 1897 operatic societies in towns like Chester-le-Street if our plea could be acted upon.
§ 11.37 p.m.
§ The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)
I cannot follow the hon. Member for Chester-le-Street (Mr. Bartley) in his concluding sentences which, as far as I understand them, suggest an alteration of the law. As the House is aware, we cannot discuss that on an Adjournment Motion. All I can deal with is the points raised by the hon. Member for Newcastle-upon-Tyne, Central (Mr. Short) about the administration of the law.
If the House is to understand this particular case, it is essential that we should have clearly in mind what the law is. These societies can obtain exemption from Entertainments Duty if they qualify or satisfy the Commissioners under three different heads—the charitable exemption, which dates from Section 5 of the Finance (New Duties) Act, 1916, and Section 6 (4) of the Finance Act, 1924; the Amateur exemption, which rests on Section 10 of the Finance Act, 1949, and the partly-educational exemption, which rests on Section 8 of the Finance Act, 1946.
The position about the existing law is that to obtain exemption these societies must satisfy the Commissioners that they come within the conditions laid down in one or other of those Sections. The case which the hon. Member for Newcastle-upon-Tyne, Central has been indefatigable in pursuing relates to a production in October by the Newcastle Society of "Showboat." To secure exemption that production would have had to come within one or other of the provisions I have mentioned. There is first the charitable one, to which the hon. Member referred this evening, although he will recall that in his correspondence with my right hon. Friend and myself he put the main emphasis on the partly-educational provision.
The short answer to the charitable provision, in its application to this case, is that the society, having had experience of this matter, and having had exemption under one head or another in previous years, did not itself think that this production came within the charitable exemption. It made no application for exemption on that ground. Nor did the hon. Gentleman do so in his letters of 1898 26th October and 23rd November. The immediate answer to him is that at the time nobody concerned with the society thought that this exemption provision applied and the application required by the statute was not made.
As regards the amateur exemption, the hon. Gentleman has himself given the reason why that is not applicable under the existing law. The orchestra, or part of it, was paid, as he said, and it is clear to anyone looking at Section 10 of the Finance Act, 1949, that if the orchestra, which of course takes part in the performance, is paid, the production cannot qualify for the amateur exemption.
Indeed, the hon. Gentleman, who I know has taken considerable interest in the subject, will recall that the point was raised during the proceedings on the Finance Act during the current year or the preceding year and was debated at some considerable length. I notice that the hon. Member for Chester-le-Street, recalls that that was so. It is, therefore, abundantly clear that under the existing law the amateur exemption does not apply to this case.
§ Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)
The difficulty is related to the booking of the hall by the society. There is no other suitable hall available. It is not a question of the society engaging the orchestra. The orchestra is tied up with the letting of the hall. If the society booked the hall and the orchestra did not play, the society would still have to pay for the orchestra.
§ Mr. Boyd-Carpenter
I appreciate that. The point has been made very clear by the society. I am afraid, however, that it does not make any difference. The Section does not say that the payment of the orchestra can be ignored because in the theatre used it is impossible to avoid employing it. That may be a perfectly good reason why the society should employ the orchestra—I do not know— but what is abundantly clear is that under the existing law it does not make any difference. Discussing the matter on the basis of the existing law, it is clear beyond argument that the amateur exemption does not apply.
Then we come to the partly educational exemption. That was the ground on which at the time both the society and the 1899 hon. Member for Newcastle-upon-Tyne, Central based their claim for exemption. I should particularly like to say a word or two about it, because it seemed to me that the hon. Gentleman did not completely understand the principles on which the exemption is operated under the present provision.
The partly educational exemption relates not to one performance being deemed to be partly educational, but to the activities of the society being so treated. One way of ascertaining whether the activities of the society concerned are of that character is the general run of their productions over a period.
To put it another way, a society does not necessarily lose that exemption because it introduces and performs one work of a wholly frivolous nature. That may account for one of the examples which the hon. Gentleman gave.
Prior to 1946 that exemption did rest on the individual performance, and there fell upon the Commissioners of Custom and Excise, as a result of certain advice which had been obtained, the very difficult task of looking at each performance and deciding whether it came within the partly educational category. That did not work, and the right hon. Member for Bishop Auckland (Mr. Dalton) introduced the present proposal under which one bases the decision not on one production, but on the general character of the society as manifested in particular by the run of productions which it provides. That is the provision which governs this case.
To go into a little detail about the society, it was formed in 1948, and exemption was given under this provision for its first two productions, "Merrie England" and "Tom Jones." Those were productions in the first two years. In 1951 it had a production of music from Carmen in concert form. I do not recall the facts, but no application was made for that production. Later in 1951 the society produced "The Vagabond King." Exemption was given, and I think it is only fair to point out that the Customs and Excise warned the society that to continue with musical comedies of that character might result in the productions no longer being treated as partly educational. Notwithstanding, "New Moon" was produced the following year, and a similar warning in rather 1900 more emphatic terms was given, and notwithstanding that "Show Boat" was selected in 1953.
The production in succession of three musical comedies did, of course, make it somewhat more difficult to continue the exemptions which had previously been given on partly educational grounds to the society, and it did not seem possible to continue the exemption.
§ Mr. Boyd-Carpenter
I do not think that in the ordinary sense of the term a production of a musical comedy, however entertaining and however well produced, can necessarily be treated as partly educational.
§ Mr. Boyd-Carpenter
The right hon. Gentleman has already heard that this society apparently does not feel able to produce Gilbert and Sullivan.
§ Mr. Boyd-Carpenter
I believe a number of others do, and I think exemption has been given. It is, of course, to some extent a matter of judgment. Gilbert and Sullivan is definitely more than an ordinary musical comedy. It is something in the nature of an English classic, and I would not have any difficulty in differentiating between a Gilbert and Sullivan opera and a musical comedy of the character I have mentioned. It is a fact—and there is no unusual view taken in this case, because musical comedies generally have been treated, where productions have followed year after year, as not bringing the society organising them within the partly educational exemption.
§ Mr. Boyd-Carpenter
I do not think it is a very harsh ruling. The Commissioners have to interpret the Statute as laid down by Parliament. The hon. Gentleman says it is partly educational to attend a musical comedy, but I doubt whether if he took his family to a musical comedy he could seriously claim that it was a partly educational activity for them in the ordinary common-sense way.
§ Mr. Boyd-Carpenter
I know the point the hon. Gentleman has in mind. But you cannot argue, and I do not think it is sound at law on this Section, that any supposed educational effect on the performers can be treated as partly educational for this purpose. It must surely relate to the audience. It is the audience, after all, who are called upon to pay the Entertainments Duty, and the possibility that those taking part in the performance may be partly educated as a result is not sufficient to come within the provisions of the Section. The production itself must be such as to be partly educational from the point of view of the audience.
The hon. Member for Chester-le-Street will forgive me if I deal rather more briefly with the case with which he is interested and on which lie has written to me. It is substantially a case of the same kind as the one in which the Member for Newcastle-upon-Tyne, Central is interested. The Chester-le-Street society equally made no application on charitable grounds. It evidently took the view that it was not eligible. As far as the amateur exemption is concerned, I imagine that it had precisely the same difficulty as the Newcastle society—that is to say, the orchestra, or some of its members, are paid.
Therefore, we come to the partly educational exemption. In this case, the position is substantially similar to that of the Newcastle society. It is a very much older society, as the hon. Member for Chester-le-Street knows. Like many others, it ceased operations during the war and resumed its operations in 1947. On its resumption of operations after the war, it was granted exemption under the partly educational provision in respect of its first two productions, but since 1947 it has continued to produce musical comedies and has, therefore, not toad the advantages of this exemption for a good many years. Its case, therefore, is somewhat similar to that of the Newcastle society, except that its record since the war is entirely one of musical comedies whereas, as I have indicated, in the case of the Newcastle society in the earlier post-war years, some of its productions were of another character.
1902 We therefore come to the position that, whatever hon. Members may think as to the existing law—and that is a matter which this House has discussed before and may well discuss again—we are here concerned simply with the action of the Commissioners of Customs and Excise in the application of the law as it is at present laid down by Parliament. I have indicated to the best of my ability the three grounds on which application can be made and the considerations which can be brought forward in order to discharge the onus on the applicants of satisfying the Commissioners that they come within one or other of these categories.
It seems to me perfectly clear that the Commissioners could come to no other decision in these two cases than the one to which they came. That decision conveys no reflection of any sort or kind upon the societies in question. They are both, as I understand, most admirable enterprising and efficient bodies. The Newcastle society carries on its operations on a very large scale. As the hon. Member for Newcastle-upon-Tyne, Central pointed out, the last production brought in gross takings in excess of £3,000 in a week—takings, I suppose, of which many professional touring companies would be proud. There is no conceivable reflection on either of these societies, and therefore, though the hon. Gentleman went properly out of his way to say what a good society the Newcastle society was, that is not really material to this matter.
The Commissioners are concerned in an application for exemption not with the broad over-all merits of the Society, and not, indeed, whether, as in this case, it gives a great deal of pleasure to many people by its admirable productions, but whether—and this is the narrower point —it comes within the provisions laid down by Parliament in respect of which alone the Commissioners have power to grant exemption.
§ The Question having been proposed after Ten o'Clock, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at Six Minutes to Twelve o'Clock.