Commons Sitting of 26 May 1954

Preamble
The House met at half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  LONDON COUNTY COUNCIL (MONEY) BILL
  Read the Third time, and passed.
ORAL ANSWERS TO QUESTIONS
  ROADS

    Pedestrian Crossings
    Mr. Pageasked the Minister of Transport and Civil Aviation (1) whether he will direct the issue of propaganda to predestrians advising them not to step on to a pedestrian crossing when a vehicle has passed the studs to be provided under the Pedestrian Crossing Regulations, 1954, Schedule 1, Part II, paragraph 8;
    (2) whether he will direct the issue of propaganda to drivers advising them of the speed above which they should not pass over the studs to be provided under Regulation 7 of the Pedestrian Crossing Regulations, 1954, Schedule 1, Part II, paragraph 8.
    The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Hugh Molson): The line of studs to which my hon. Friend refers will indicate the line, usually 45 feet from the edge of the zebra, beyond which no stopping or parking by vehicles will be allowed. It has no relevance to the speed of vehicles, and pedestrians must use their judgment as to when it is safe to cross if they see a vehicle approaching.
    Mr. Page: Does not my hon. Friend consider that this very beneficial area of clear vision may be turned to even greater advantage by its being recognised and publicised as a sort of special care area as well?
    Mr. Molson: I think it is obvious that motorists will regard it as necessary to slow down when they are approaching a pedestrian crossing. I am sure my hon. Friend will realise that the time in which a vehicle can pull up depends in part on the weight of the vehicle. Obviously, a heavily laden vehicle will take much longer to pull up than a light touring car. It also depends upon the surface of the road.
    Lieut.-Colonel Lipton: Is it still not going to be a battle of wits between the pedestrians and the driver of the lorry or other vehicle concerned?
    Mr. Molson: It is our hope that neither side will regard it as a battle, but as an opportunity for co-operation.
    Mr. Langford-Holt: Would my hon. Friend clarify the rights of pedestrians in this matter, and point out that pedestrians have no right until they have actually stepped on to the crossing—that, I think, being the legal position—because it is very confusing for motorists to see rows of pedestrians standing on the edge of the pavement expecting to be let across—waiting like maidens contemplating matrimony?
    Mr. Molson: We shall do all we can in the way of publicity before and after 1st July.
    Mr. Pageasked the Minister of Transport and Civil Aviation by what publicity he proposes to warn pedestrians that, as from 1st July, 1954, a controlled pedestrian crossing at the times of day when it is not controlled will afford them no protection.
    Mr. Molson: I think my hon. Friend is under a misapprehension. Controlled crossings, marked by studs, but not by stripes or beacons, will be of two kinds only, those controlled by a policeman in uniform and those controlled by lights. A pedestrian will know that he enjoys no protection when there is no policeman on duty or when the lights are not in operation. The point will be covered in our publicity, but it will, I think, be obvious enough.
    Mr. Page: Will my hon. Friend agree that after 1st July there may still be zebras marked that are controlled and yet give the pedestrian no protection? Will he not make that quite clear to the public?
    Mr. Molson: No, that is not the position. It is the duty of the highway authorities to remove the stripes before 1st July in cases where there will be a policeman on duty for more than 20 hours a week.
    Lieut.-Colonel Liptonasked the Minister of Transport and Civil Aviation what evidence is available that zebra crossings have reduced the number of accidents to pedestrians, compared with those areas where 300 urban authorities have not installed zebra crossings.
    Mr. Molson: No reliable conclusions can be drawn from such comparisons, but there is ample evidence that zebra crossings have helped to keep down pedestrian casualties generally.
    Lieut.-Colonel Lipton: How can the hon. Gentleman explain the fact that in those areas where there are no zebra crossings the accident rate is very much less than in those places where there are zebra crossings? As the number of persons killed or seriously injured on zebra crossings is higher this year than last, when will the hon. Gentleman reconsider this costly and complicated experiment?
    Mr. Molson: The value of zebra crossings is a matter of opinion. The Pedestrians' Association has obtained the views of 168 local authorities. Three of them agree with the hon. Member and 165 agree with me.
    Lieut.-Colonel Lipton: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter again.
    Air Commodore Harveyasked the Minister of Transport and Civil Aviation if he will reconsider his decision not to allow zebra crossings at the Redhouse Lane site and at the Newtown site at Disley, Cheshire, as it is considered locally that zebra crossings at both these points are necessary.
    Mr. Molson: As my hon. and gallant Friend knows from the letter which I sent him on 14th May, we shall be prepared to reconsider this matter if the development of a housing estate near the sites for the proposed crossings leads to an increase in pedestrian traffic across the road.
    Air Commodore Harvey: Will my hon. Friend bear in mind that there are a great number of new houses being built in this area? Will he also bear in mind what he said in answer to an earlier Question, regarding what 157 local authorities had told him, and when he is next in his constituency, will he have a look at this area which is just on the border of his constituency?
    Mr. Molson: I said in my original reply that we are prepared to reconsider the decision if it is shown that the development on the housing estate has produced a great increase in pedestrian traffic.

    New Road, Durham
    Mr. Greyasked the Minister of Transport and Civil Aviation if agreement has yet been reached on the question of the new road through Durham.
    The Minister of Transport and Civil Aviation (Mr. Alan Lennox-Boyd): This question has not yet been settled, but we now have the views of the county and the city councils on the traffic figures, and as soon as these have been considered in the light of a report to be made by the district valuer on the cost of acquiring the property involved, I hope that we shall be nearer finality.
    Mr. Follick: On a point of order. I wish to seek your advice, Mr. Speaker, in registering a protest. On Monday fairly early, I handed in a Question to the Table, and I think I was given an assurance, more or less, that it would come up today for answer by the Minister of Transport. It has appeared in the Leicester Press. I did not give it to the Press, so it must have been handed to the Table properly. Moreover, I heard outside the door that the Minister had received all the particulars about that Question. I should like to ask why it has not appeared on the Paper.
    Mr. Speaker: I do not know anything about that. I do not know whether the hon. Member handed in his Question in time. The last time for handing it in, if it was proposed for Wednesday, would have been before 2.30 on Monday. It seems to me probable that the hon. Member handed it in after 2.30, which would be the reason why it is not on the Paper. As for the Press, I have no knowledge or responsibility about that.
    Mr. Grey: As the answer to my Question was given so long ago, I have almost forgotten it. However, it seems to be the same as before. There has not been any progress in the matter at all. It has been under consideration such a long time. Is the right hon. Gentleman aware of the situation in Durham and of the increase in traffic and of the need for some satisfactory arrangements and for a new road? I understand he is to visit the North-East. Will he visit the city of Durham and see for himself the road congestion and the dangerous situation?
    Mr. Lennox-Boyd: I do know the situation very well. The trouble has been that the Durham City Council that used to be the planning authority favours a low level bridge and the county council that is now the planning authority favours a high level bridge. My duty has been to bring both sides together. I think they are nearer, and I hope to take action.
    Mr. P. Williams: Will my right hon. Friend say whether he is going to visit the North-East? If he is, will he meet the county councils and city councils?
    Mr. Lennox-Boyd: There is a Question on that point on the Order Paper.

  Glasgow—Stirling

    Construction Scheme
    Mr. Benceasked the Minister of Transport and Civil Aviation when he proposes to issue an invitation to the highway authorities concerned to discuss the construction scheme on the A.80 road, Glasgow to Stirling.
    Mr. Molson: The construction scheme has already been discussed with the highway authorities concerned, and the arrangements for this year will shortly be confirmed by the usual formal invitations.
    Mr. Bence: Can the hon. Gentleman assure me that he is extending an invitation to the county council of Dunbartonshire?
    Mr. Molson: Yes, Sir. It was in 1950 that we did not extend an invitation owing to financial difficulties that arose; but in view of the new, extended programme of road works we have extended an invitation to the county council of Dunbartonshire.

    Improvements, Dalmuir
    Mr. Benceasked the Minister of Transport and Civil Aviation what further steps have been taken to enable the Mountblow Road, Dalmuir, Clydebank, to be widened, and the existing railway bridge strengthened.
    Mr. Molson: A scheme for widening and strengthening the railway bridge has been provisionally agreed for approval this year, and the highway authority are preparing a formal application for grant.

    Filter Lights (Traffic Congestion)
    Mr. Ian Harveyasked the Minister of Transport and Civil Aviation whether he will take additional steps, by means of more warning signs, to draw the attention of motorists to the value of filter lights in accelerating the movement of traffic, particularly in crowded streets.
    Mr. Molson: I am anxious not to increase the number of road signs unless their advantage is clearly manifest. Except at a few of the most complicated junctions, I do not think motorists need special signs to indicate which lane they should choose, but if my hon. Friend has any particular cases in mind, I will be glad to examine them.
    Mr. Ian Harveyasked the Minister of Transport and Civil Aviation why omnibuses are permitted, particularly in London, to put down and take up passengers within 50 yards of traffic filter lights, thus interfering with the purpose of their installation.
    Mr. Molson: We think that bus stops should not normally be sited within 40 yards of traffic signals, whether or not fitted with filter lights. In exceptional cases, however, particularly in congested areas, the number of services, the road layout or the needs of passengers make this impracticable.
    Mr. Harvey: Will my hon. Friend draw this answer to the attention of the London Transport Executive?
    Mr. Molson: I am not sure that it is necessary to do that. The whole question of where bus stops should be sited is settled by the Stopping Places Advisory Committee, which contains representatives of all the authorities concerned—the

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    Ministry, the police, the London Transport Executive and licensing authority, as well as a representative of the unions.

    Capital Expenditure (Financing)
    Mr. Jannerasked the Minister of Transport and Civil Aviation (1) what estimate he has made of the amount of the backlog on new construction work necessary to bring the roads of this country up to present-day requirements, that has resulted from the cessation of such work during the war and financial stringency which has existed since the war; and whether, in view of the impracticability of dealing with this backlog out of annual revenue, he will set up without delay an expert examination into alternative means of financing such work by means of a road loan;
    (2) whether he has yet reached a decision as to the desirability of the final abolition of the Road Fund; and whether he will consider the desirability of introducing such legislation as is necessary to abolish the Road Fund, together with legislation which will provide for the establishment of a new National Highway Authority, which will, in collaboration with his Department, have authority to raise capital by way of loans for the construction of new modern highways in this country.
    Mr. Lennox-Boyd: I could not usefully attempt an estimate of the backlog to which the hon. Member refers. There is so much room for differences of opinion on this question that the answer is any-one's guess. I do not think that it is necessary to set on foot an examination into means of financing road work by means of a special loan. Whether such expenditure should be met out of revenue or by borrowing is a matter of budgetary policy. The recent recommendation of the Select Committee on Estimates about the Road Fund is being carefully considered, but a final decision has not yet been reached.
    Mr. Janner: Is the right hon. Gentleman aware that he will not get a fair share of the national resources which are available for this very important purpose? Is it not high time that some scheme was devised whereby this very vital necessity of getting the roads into proper order could be attended to? Does he not think
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    that, in the circumstances, he might consider the suggestions made in these two Questions, or some similar suggestion?
    Mr. Lennox-Boyd: In regard to the technical abolition of the Road Fund, my view was expressed by the Parliamentary Secretary on 15th February. There are other considerations involved, and we are looking into them. In regard to a loan, I can only repeat that it would have to be secured, serviced and eventually repaid, but, unless there are tolls, roads do not earn an identifiable revenue which may be collected. If added to capital expenditure and interest, it could only be serviced by increased taxation or equivalent economies. This is a matter of budgetary policy, which is too complicated and lengthy to deal with in a supplementary answer.
    Mr. Nicholson: Does not my right hon. Friend agree that the existence of the Road Fund leads to very misleading conclusions on the part of the public and that it would be an approach to reality if it were abolished as it is merely an anachronistic relic?
    Mr. Lennox-Boyd: Speaking personally, I am accused of not getting a large enough share of the Road Fund or of raiding it, and people do not like it when that happens, but there are other complications.
    Mr. Gibson: Is the right hon. Gentleman aware that he would have support from all quarters in the House if he put heavy pressure on the Chancellor to get a very much heavier capital allocation for expenditure on new roads?

    Schemes, Brecon
    Mr. Watkinsasked the Minister of Transport and Civil Aviation whether he will indicate the starting date for the commencement of the authorised schemes for improvement at the corner of Ship Street and of the erection of the footbridge alongside Llanfaes Bridge, Brecon.
    Mr. Molson: The improvement at the corner of Ship Street will be begun as soon as the acquisition of property has been completed, which, I hope, will only be a matter of weeks. Subject to delivery of the materials, which have been ordered, the work of erecting a footbridge alongside Llanfaes Bridge will be started in July.
    Mr. Watkins: May I ask the Minister to expedite this in order that the flow of traffic to the National Eisteddfod at Ystradgynlais will not be held up during the first week of August?
    Mr. Molson: Everything possible will be done to expedite the flow of traffic to this well-known spot.

    Built-up Areas (Speed Limits)
    Mr. Keenanasked the Minister of Transport and Civil Aviation on what grounds and for what reasons he has decided not to impose speed-limit restrictions in the areas where they are not likely to be observed by motorists.
    Mr. Chapmanasked the Minister of Transport and Civil Aviation whether persistent disregard of the 30 m.p.h. speed limit by motorists is sufficient in itself to persuade him to end the limit on any stretch of road.
    Mr. Lennox-Boyd: If the 30 m.p.h. speed limit is to command the willing acceptance of the community, its application must, in general, be limited to roads where the need for it is clearly demonstrable. Each case is, however, considered on its merits having regard to traffic and road conditions, the character of the district and the accident record.
    Mr. Keenan: Is the right hon. Gentleman aware that the reason for this Question is to ask an explanation from him, because last week his Parliamentary Secretary said:
    "We do not believe any useful purpose would be served by imposing a speed limit restriction in areas where it is not likely to be observed by motorists."—[OFFICIAL REPORT, 19th May, 1954; Vol. 527, c. 2076.]
    Is the Ministry to allow the motorist to dictate whether there will be speed limits or not by not observing the Regulations, because that is what is involved here?
    Mr. Lennox-Boyd: No, Sir. But I think we all agree that the concurrence of good citizens is very valuable in the enforcement of a law. We ought to be chary of doing things which good citizens think unreasonable. When the 20 m.p.h. speed limit did not work it was scrapped in 1930. I think it is important that we should be reluctant to impose a 30 m.p.h. limit where good citizens think it can properly be disregarded.
    Mr. Chapmanasked the Minister of Transport and Civil Aviation what local representations and evidence he has received for and against the imposition of a 30 m.p.h. speed limit on the stretch of Bristol Road South, Birmingham, between the Austin Motor Works and Rubery.
    Mr. Lennox-Boyd: I have received representations from the city council, the chief constable and groups of local residents and parents that the speed limit on this stretch of road should be reimposed. There has been no occasion for inviting representations in the opposite sense, but one or two local residents have supported the continuance of derestriction.
    Mr. Chapman: In view of the almost unanimous demand for the imposition of this speed limit, including a demand by representatives of about 18,000 workers in the factory next to the road, will the right hon. Gentleman receive a deputation so that we may discuss this matter further?
    Mr. Lennox-Boyd: I am quite prepared to receive a deputation led by the hon. Gentleman if he wishes, but we must bear in mind that to impose a speed limit for 24 hours day and night in order to help over the difficult period of shift working would also be unreasonable.
    Mr. Chapman: Is it not the case that a speed limit is imposed for 24 hours everywhere where one is imposed, and that it is to cope with the peak demand that a speed limit is most necessary?
    Mr. Lennox-Boyd: I will see the deputation.

    Inquiry, Newbury
    Mr. Hurdasked the Minister of Transport and Civil Aviation if he has reached a decision on the order for the regulation of traffic in the centre of Newbury following the inquiry which was held as long ago as 8th October last.
    Mr. Molson: Yes, Sir; the councils concerned have been informed, and I am also writing to my hon. Friend.
    Mr. Hurd: Will my hon. Friend say whether a delay of seven months in settling this quite small matter was due to a recognition in his Department that the only real solution to congestion in

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    Newbury is to have the completion of the by-pass which has long been projected?
    Mr. Molson: The delay has been due to the fact that it is an extremely complicated case which had to be very very carefully considered.

    North-East Region (Minister's Visit)
    Mr. Slaterasked the Minister of Transport and Civil Aviation when he proposes to receive the deputation of Labour Members of Parliament to discuss further the road schemes in the North-East.
    Mr. R. J. Taylorasked the Minister of Transport and Civil Aviation whether he has completed his re-examination of the proposed road schemes in Northumberland.
    Mr. D. Jonesasked the Minister of Transport and Civil Aviation whether he has yet replied to the letter of 6th May from the hon. Member for Sunderland, North asking him to receive a deputation of Northern Members of Parliament.
    Mr. Lennox-Boyd: I have re-examined these schemes, but I hope that the hon. Members interested will agree that any further meeting with them should wait for a visit which I propose to pay to the North-East in a few weeks' time. I have replied to the hon. Member for Sunderland, North (Mr. F. Willey) suggesting this.
    Mr. Slater: We were very grateful to the Minister for receiving the deputation, but is he aware that we understood that one of his chief officers was to pay a visit to the North-East and report back to the Minister, and that then we should have a further deputation before the Easter Recess? That has not taken place. Can the Minister state how it is that hon. Members from the North-East on this side of the House have to wait until they see it published in the Press to know that he is to visit the North-East, while hon. Members opposite who represent constituencies in the North-East have prior information about his visit? Why the discrimination?
    Mr. Lennox-Boyd: There is no discrimination in this matter at all. I do not think that it would be possible to find a
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    more senior officer from my Department to visit the North-East than the Minister himself.
    Mr. P. Williams: Is the Minister aware that, in spite of political differences between hon. Members on this side of the House and hon. Members opposite, we welcome his visit? Will he give an assurance that when he does come to the North-East he will see representatives of the county councils, county borough councils and city councils concerned?
    Mr. Lennox-Boyd: My visit is in the hands of the local authorities, but I shall do all I can in the limited time available.
    Mr. Taylor: Will Morpeth be one of the places which the right hon. Gentleman will visit, or will he restrict his visit to places south of the Tyne? If the right hon. Gentleman does come to Morpeth, will the right hon. Member for Morpeth (Mr. R. J. Taylor) have an opportunity to accompany him?
    Mr. Lennox-Boyd: I will do all I can on 18th June within the limited time available.
    Mr. Shinwell: Does the right hon. Gentleman realise that we from the North-East are doing him a great honour by asking him to come?
    Mr. H. Nicholls: Would it help the Minister if hon. Members representing constituencies in the North-East of England developed their arguments during the debate on the Motion to be discussed on Friday next?
    Mr. Lennox-Boyd: Yes, Sir, I think it would.
    Mr. F. Willey: Does the right hon. Gentleman appreciate that this is the second occasion on which this group of hon. Members have written to him and that he had not the courtesy to reply until a Question was put down on the Order Paper?
    Mr. Lennox-Boyd: That is not true. In addition to replying to the letter, I actually received a deputation of Labour Members and Conservative Members. The difficulty of not being able to receive them together added to my problems. I was not able to have them both together for reasons over which I have no control. I saw them separately, I have written to them, and I am now proposing to visit the North-East in a fortnight's time.
    Mr. Willey: Will the right hon. Gentleman answer the question, which was why he had not replied to either request until the matter had been put down on the Order Paper? I have his letter here.
    Mr. Lennox-Boyd: I do not think I can add to this except to say that I received a deputation and I am proposing to pay a visit. If I did the same in all other parts of the United Kingdom, I should be doing nothing else.
    Mr. Taylor: May I ask the Minister how he can give judgment in the case of the Northumberland roads unless he has been to Northumberland?
    Mr. Slater: Can the Minister state what part of the North-East he intends to visit? Do we understand that he proposes to visit just Tyneside? What about other parts of the area?
    Mr. Lennox-Boyd: I shall arrange this through the proper local authorities.

    Northern Members' Deputation
    Mr. Willeyasked the Minister of Transport and Civil Aviation whether he will make a statement on the discussions he had with the deputation of Northern Labour Members of Parliament on 8th April.
    Mr. Lennox-Boyd: At the meeting I agreed to make a further statement about the priority of the Tyne Tunnel scheme, which I did on 5th May. I also agreed to examine a number of road proposals mentioned by the deputation and to meet them again to discuss these.
    Mr. Willey: Does the right hon. Gentleman appreciate that we believe and hope that he is trying to help us in the North-East, but that we wish he would not do it in such a flat-footed way?

    TRANSPORT

      Public Relations Honorary Adviser
      Mr. Doddsasked the Minister of Transport and Civil Aviation on what date Mr. Fleetwood Pritchard was appointed by him; and what is the nature of his duties.
      Mr. Lennox-Boyd: I appointed Mr. Fleetwood Pritchard as part-time Honorary Adviser on Public Relations on 26th April, 1954. He is paying particular attention to the presentation of the revised Highway Code and kindred matters and to road safety generally.
      Mr. Dodds: Whilst wishing Mr. Fleetwood Pritchard every success in this important task, may I ask the right hon. Gentleman if he has a public relations officer for helicopters as well? If not, will he think of appointing one? Is he aware that such public relations work is badly needed?
      Mr. Lennox-Boyd: I do not know whether the hon. Member ought not to declare that he has a personal interest in filling such a post, but I can assure him that I am very fully aided in this very vital field.
      Mr. Ernest Davies: Why is it necessary to appoint someone in an honorary capacity in the Ministry of Transport? Are there not already within the Ministry people capable of handling the Minister's public relations? Why is it necessary to bring someone in?
      Mr. Lennox-Boyd: As I have pointed out before, there are many people who are ready to serve any Government in any voluntary capacity. Mr. Fleetwood Pritchard was Director of Public Relations at the Ministry of War Transport for four years and, since then, he has been closely related one way or another with transport matters. I believe that he has a very valuable contribution to make.

      Vehicle Licences (Service Men)
      Mr. Mitchisonasked the Minister of Transport and Civil Aviation whether he will meet the needs of men, who are on short leave from the overseas forces and want to use a motor vehicle or motor cycle which they have left at home, by the issue of free licences or fortnightly licences.
      Mr. Molson: My right hon. Friend has no power without fresh legislation to issue such licences free, and it is impracticable to issue them for periods as short as a fortnight. Under present arrangements it is, in fact, possible, by taking out and subsequently surrendering a quarterly or part-quarterly licence, to have a licence for a period of one calendar month.
      Mr. Mitchison: Would it not be possible to extend that to fortnightly licences? This charge comes rather heavy on Army pay. It is a small concession, it would not be much trouble and it would be a good deal of help to a young Service man who has left a motor-bike at home.
      Mr. Molson: It really would involve a very great deal of extra administrative work and expense, and the sum of money involved is so small that it is not worth while doing it. The monthly rates for a motor-cycle, to which the hon. and learned Member refers, vary from 1s. 8d. to 9s. 3d.
      Sir R. Acland: Is it not the case, under the arrangements which the hon. Gentleman has described, that if the one month happens to be the first of a quarter one can obtain a licence for three months and surrender the last two, but that it is inoperative if the month for which one wants the vehicle licensed happens to be the second or third month of the quarter? Could not the regulations be altered to make it possible for the arrangements to apply to the second and third months?
      Mr. Molson: I am under the impression that it is necessary to pay for only one month in all circumstances, but I will look into the matter.

      Buses (Running Costs)
      Mr. Gibsonasked the Minister of Transport and Civil Aviation the estimated cost per mile of buses run on diesel engines; what is the cost per mile of running trolley buses; and what is the cost per passenger mile in both cases.
      Mr. Lennox-Boyd: I am advised that it is impossible to make worth-while estimates except in relation to specific conditions.
      Mr. Gibson: Is the Minister aware that other people who are interested in this problem have made estimates which tend to show that buses powered by diesel engines will cost more per mile to run?
      Mr. Lennox-Boyd: That is certainly not the view of London Transport Executive. I have pointed out the difficulty of providing a worth-while figure because the cost of equipping a trolley bus route varies between £4,000 and
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      £12,000 per mile according to the nature of the route. That is why I was hesitant about giving a figure. The justification for this change depends upon considerations other than cost.
      Mr. Nabarro: Will my right hon. Friend bear in mind the public health aspect of this matter, notably the pollution of the atmosphere? Before a final decision is made, is it not possible to refer the whole problem to the Beaver Committee which is at present investigating pollution problems?
      Mr. Lennox-Boyd: There is a Question on the Order Paper on that subject.
      Mr. Beswick: Is the right hon. Gentleman aware that there is a good deal of interest in this matter apart from the public health aspect? There is the question of importation of fuel which one would have thought a good thing to avoid as far as possible. Would he see that the relevant data is made available to the public?
      Mr. Lennox-Boyd: I will look into the question of making the data available. I am satisfied that the Commission and the London Transport Executive have gone exhaustively into this matter and that it will be a worth-while contribution to the speeding up of traffic on our crowded streets.
      Mr. Ernest Davies: Is there any more pollution from diesel oil engines than there is from the consumption of coal which produces the electricity on which trolley buses run?
      Mr. Lennox-Boyd: I am told that the amount of benzypyrene generated through diesel oil exhausts is no greater than from petrol exhausts and under ideal conditions, might be considerably less.

      Diesel Engines (Fumes)
      Mr. Teelingasked the Minister of Transport and Civil Aviation if he is aware that there is evidence to suggest that diesel oil fumes may be a cause of cancer, and that research into this problem is being conducted by the Medical Research Council; and if he will give a general direction to the British Transport Commission to defer the substitution of all their trolley buses by diesel buses until such time as the Medical Research Council have made their report.
      Mr. Lennox-Boyd: I am not prepared to interfere in the Commission's commercial decisions except for reasons of over-riding national importance. So far as I am aware, no such reasons exist in this case.
      Mr. Teeling: Does my right hon. Friend realise that the present study that is being made may well take some time? It includes other Departments. The Ministry of Fuel and Power considers it is a very serious question and is looking into it. Does he realise how difficult it would be if in a year or two's time it were found that there is some cause for this complaint and he had finally to scrap the new organisation in regard to transport which he is likely to have on his hands by then?
      Mr. Lennox-Boyd: The number of vehicles involved is so small in relation to the total traffic in London that to hold up a commercial decision of this kind would be quite unjustifiable.
      Mr. H. Nicholls: Would my right hon. Friend bear in mind that it would be unwise from unfounded fears to prevent a very proper development? Research which has taken place in Birmingham has shown that there is less contamination coming from diesel fumes than from ordinary petrol fumes.
      Mr. K. Robinson: In order to allay public anxiety which is all too easily aroused, will the right hon. Gentleman make it quite clear that so far there is no evidence whatever of any association between diesel fumes and lung cancer?
      Mr. Lennox-Boyd: All fumes are bad for health, but I have no reason to think that diesel fumes are any worse than any other fumes.
      Mr. Nabarro: Has the attention of my right hon. Friend been directed to the recent statement in Bristol by the radiologist of Weston-super-Mare Hospital, which contains these significant words:
      "A review of the steady increase in cancer of the lung over the past 30 years showed that it almost exactly followed the curve of the change-over of public transport from petrol engines to diesel engines."
      In view of that statement, will my night hon. Friend take the advice of the Medical Research Council before an irrevocable decision is made in this matter?
      Mr. Lennox-Boyd: I think it would be a pity if a single quotation from a single person—however eminent—were to be taken as conclusive.
      Mr. Teeling: I beg to give notice to raise this matter again on the Adjournment as we cannot discuss it by means of Question and answer.

      Transport Units (Sale)
      Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation which sections of the British Transport Commission's existing road haulage undertaking are being formed into companies with a view to the sale of their shares in accordance with Section 5 of the Transport Act, 1953, for which his approval has been sought because they consist of more than 50 vehicles.
      Mr. Lennox-Boyd: My approval is not required for the formation of companies under Section 5 of the Transport Act, 1953, consisting of more than 50 vehicles.
      Mr. Davies: If companies are formed consisting of more than 50 vehicles, does not the Minister's authority have to be obtained? Is it not a fact that, having failed to dispose of the road haulage undertakings up to the present time—having sold less than 4,000 vehicles out of 34,000, compared with the 10,000 which he expected to sell by May—the Minister will have to resort to this means or else amend the Act?
      Mr. Lennox-Boyd: No, Sir. I am surprised that, after spending so many months over the Bill, the hon. Member did not know that the answer to his Question was "No" from the start.
      Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation in how many cases he has given his approval in accordance with Section 3 (3) of the Transport Act, 1953, for transport units offered for sale to include more than 50 vehicles.
      Mr. Lennox-Boyd: I have given approval under Section 3 (3) of the Transport Act, 1953, for the sale of one transport unit including more than 50 vehicles, and one with an aggregate unladen weight exceeding 200 tons.
      Mr. Davies: Will the Minister with-hold his consent if an offer is received from a gentleman by the name of Dawson who is supposed to be in the market for the purchase of the parcels organisation of the British Road Haulage Service, because it is clear that the British Road Haulage Service is at the present time more experienced in the operation of road haulage than this gentleman, who seems to know more about fish than anything else?
      Mr. Lennox-Boyd: I have answered the Question on the Paper. It would be quite improper for me to deal with any possible individual applications.

      Traffic Advisory Committee Report
      Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation what action he proposes to take on the Report for 1953 of the London and Home Counties Traffic Advisory Committee.
      Mr. Lennox-Boyd: The great majority of the Committee's specific recommendations either have been or are being implemented by Orders and Regulations under the London Traffic Act, 1924. The more general and far-reaching recommendations of the Report are receiving my active consideration.
      Mr. Davies: How does the Minister reconcile that answer with the statement in the Report that nothing has been done about the recommendations which the Committee has made with a view to relieving the traffic congestion in London?
      Mr. Lennox-Boyd: I reconcile it in this way. The vast majority of the recommendations have been carried out. The Chairman of the Committee came to me on the day of publication of the Report and apologised for certain interpretations which had been put upon it.
      Mr. H. Brooke: Will my right hon. Friend bear in mind particularly the view expressed by the Committee that the extension of restrictions on waiting to more and more streets renders absolutely essential the provision of extra parking space off the highway, for it will other-wise increasingly prejudice the good relations between the public and the police?
      Mr. Lennox-Boyd: I have that very much in mind.
      Mr. Davies: As one of the main recommendations of the Committee has been the construction of underground garages and the provision of more garage space in London, and as nothing has been done about it by the Minister, does the right hon. Gentleman still insist that he is carrying out the Committee's recommendations?
      Mr. Lennox-Boyd: Two major recommendations have so far not been implemented. One is the ring road, which would cost £88 million, and the other is the provision of underground parking accommodation, on which an immense amount of preliminary progress has been made.

      Driving Tests (Inquiry)
      Mr. Rentonasked the Minister of Transport and Civil Aviation whether he has now completed his inquiry into driving tests; and whether he will make a statement on the subject.
      Mr. Lennox-Boyd: At my request, my hon. Friend the Joint Parliamentary Secretary has investigated recent criticisms of the driving test. He has found that the Department receives only one complaint in writing for every 1,200 tests carried out and that the ratio is steadily decreasing. We are satisfied that the tests achieve their object of ensuring that, to pass them, candidates must be able to drive safely and with consideration for other road users and that they have a sound knowledge of the Highway Code. I have come to the conclusion that none of the recent criticisms warrants any change in the present system and that the driving test is essential to road safety. The driving examiners perform a difficult task with efficiency, courtesy and tact, and I should like to take this opportunity of expressing my complete confidence in them.
      Mr. Renton: Is my right hon. Friend aware that a constituent of mine, after failing his driving test for the sixth time, withdrew his support from Her Majesty's Government? Is my right hon. Friend aware that the statement which he has just made is a complete vindication of the officials who are doing an important but embarrassing task very zealously?
      Mr. Lennox-Boyd: I am grateful to my hon. and learned Friend for what he

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      has said. If the incident which he has quoted should become universal practice, I should have to look at the system again.

      Road Safety (Trams)
      Major Anstruther-Grayasked the Minister of Transport and Civil Aviation whether his attention has been drawn to a report of the Road Research Board to the effect that changing over from trams to buses results in a substantial reduction in accidents; and whether he will take action to hasten such a change-over, both in Scotland and England, in the interests of safety.
      Mr. Lennox-Boyd: The substitution of omnibuses for trams is, and must remain, a question for decision by the statutory undertakings concerned, who in reaching a decision must have regard to all the factors involved. I am naturally glad to note the view of the Road Research Board that the replacement of trams by buses in London has probably reduced the number of personal injury accidents in London by about 300 per year.
      Major Anstruther-Gray: Will my right hon. Friend take steps to bring the report to the notice of local authorities so that they may consider pressing on with the conversion from trams to buses?
      Mr. Lennox-Boyd: I will look into that suggestion.

      CANALS (ACCIDENTS)
      Mr. Dugdaleasked the Minister of Transport and Civil Aviation whether he is aware that 21 children between the ages of two and nine years of age have been drowned in canals in the Midlands since July, 1953; and if he will exercise his powers under Section 41 of the Railway and Canal Traffic Act, 1888, to appoint an inspector.
      Mr. Lennox-Boyd: I am very concerned about these accidents. The remedy lies in the hands of parents and in co-operation between canal and local authorities in relation to individual danger spots. While I do not think that the appointment of an inspector is the real answer, I will consider the matter and this suggestion further with the British Transport Commission.
      Mr. Dugdale: Will the right hon. Gentleman bear in mind that it is worth the very small expenditure which would be involved in the appointment of an inspector if it resulted in saving the life of even one child?
      Mr. Lennox-Boyd: The House would get a misleading impression if it were thought that the inspector would be someone to patrol the canal banks. An inspector would be appointed to inquire into a particular stretch of canal which was dangerous to the public, and into that alone.

      SHIPPING (OIL POLLUTION CONVENTION)
      Mr. George Craddockasked the Minister of Transport and Civil Aviation what machinery is envisaged for enforcing the recent international agreement concluded in London on the pollution of sea water.
      Mr. Lennox-Boyd: Responsibility for enforcement in relation to a ship will rest, under the Convention, upon the Government of the country in which the ship is registered. If any contracting State provides sufficient evidence of a breach of the Convention by a ship of another contracting country, the latter country is obliged to take proceedings against the ship. Ships will be required under the Convention to maintain an oil record book, with details of the discharge and disposal of oil residues and oily water, and this may be inspected by the appropriate authorities in the ports of countries which are parties to the Convention. The provisions of the Convention do not affect a Government's powers within its own territorial waters.
      Mr. Stokesasked the Minister of Transport and Civil Aviation whether, in view of the unsatisfactory conclusions of the recent international conference on oil pollution of the sea, he will now fix a date by which all tankers and all ships burning oil must be equipped with oil separators and sludge tanks as a condition precedent to entering any port in the United Kingdom.
      Mr. Lennox-Boyd: No, Sir. The right hon. Member should not assume that the results of the International Conference on Oil Pollution of the sea were unsatisfactory. I believe that the countries

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      represented will carry out the Resolutions and the Convention signed at the conference, which would be very much more effective than unilateral action of the kind suggested.
      Mr. Stokes: Yes, but is not the Minister aware that all this conference has done is to put off the evil day when the oil will arrive on our shores? Is he aware that what he said in answer to a previous Question does not convey any practical steps to stop its inevitable arrival? What does he mean to do about it? The current comes our way, and so will the oil unless he does something like this.
      Mr. Lennox-Boyd: I think that the right hon. Gentleman knows that 11; countries have signed the Convention subject to acceptance by their Governments, and the concessions provided for in the Convention, though not as valuable as total prohibition, are a large step forward on the road to sanity in this matter.
      Mr. Stokes: The Minister is not answering my point. Does he really consider that any findings of the conference will prevent the oil arriving on these shores? Any practical man knows that it will not and that the only way to do it is as envisaged in the context of my Question.
      Mr. Lennox-Boyd: As the right hon. Gentleman knows, the Convention covers a number of fields and, in the absence of total prohibition, there are other ways in which we can help in this matter, for example, by the provision of reception facilities in our ports, and we propose to push on with that and other requirements.
      Mr. Stokes: May I ask the Minister whether he is entirely satisfied that it is not mainly due to the selfishness of shipping interests that adequate equipment has not been supplied? That was my impression when I heard the debate.
      Mr. Lennox-Boyd: If the right hon. Gentleman has in mind British shipping, that would be singularly unjust. They have taken a lead in the matter, for which I think the civilised world owes them a debt of gratitude.
      Mr. Stokes: Nothing has been done about the matter at all.

      B.O.A.C. OPERATING FLEET
      Air Commodore Harveyasked the Minister of Transport and Civil Aviation the numbers and types of aircraft at present operating for British Overseas Airways Corporation; and what steps are being taken to supplement the fleet.
      The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. John Profumo): The operating fleet of B.O.A.C. consists at present of 22 Argonauts, nine Stratocruisers, 11 Constellations and four Yorks. To replace the Constellation which crashed at Singapore on 13th March the Corporation has been authorise to purchase a secondhand Constellation in America. In view of the grounding of the Comets, the Australian Government have been asked if they will approve the release by Quantas Empire Airways to B.O.A.C. of a number of Constellation 749s. In addition, B.O.A.C. proposes to bring back into service two York freighters and also, with the agreement of the purchasers, four Hermes aircraft.
      Air Commodore Harvey: I thank my hon. Friend for his very full reply and also our friends in Australia for their assistance; but the matter is still not clear. Will my hon. Friend say whether the aircraft to be obtained from Australia are being bought for dollars or for sterling?
      Mr. Profumo: The aircraft that we hope to get from Australia will be purchased for sterling as both Australia and the United Kingdom are in the sterling area.

      SUEZ CANAL (SHIPPING RESTRICTIONS)
      Mr. E. Johnsonasked the Secretary of State for Foreign Affairs (1) how many British ships have been interfered with by Egypt in their passage through the Suez Canal since the Security Council's Resolution in 1951, calling upon her to terminate her restrictions on international shipping and goods going through this canal; and how many of these ships have been carrying goods destined for Israel;
      (2) on how many occasions the Resolution of the Security Council of the United

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      Nations, passed on 1st September, 1951, and supported by Her Majesty's Government, has been defied by Egypt since that date.
      The Joint Under-Secretary of State for Foreign Affairs (Mr. Douglas Dodds-Parker): I have no reliable information about foreign ships, but I understand that few have been delayed or prevented from passing through the Canal since the Security Council's Resolution of 1st September, 1951. However, it is well known that certain cargoes for Israel are held to be contraband by the Egyptian authorities, and these are not now normally shipped through the Suez Canal. As my right hon. and learned Friend told the House on 25th January, only two British ships have been held up since the Security Council Resolution was adopted, and in neither case was the vessel concerned carrying goods destined for Israel.
      Mr. Johnson: Does not my hon. Friend think the time has come for more vigorous action than resolutions and representations for the purpose of enforcing the provisions of both the Canal Convention of 1888 and the Security Council Resolution of 1951 and also for protecting British ships?
      Mr. Dodds-Parker: Her Majesty's Government are taking all diplomatic action which is open to them. We are working through the United Nations. We think that this is the way to deal with the situation instead of dealing with it unilaterally.
      Mr. H. Morrison: Are we to understand that the policy of the Government is much the same as that of the Labour Government, which was loudly condemned by the Opposition at the time?
      Mr. Dodds-Parker: I should very much doubt that.

      ANGLO-PERSIAN OIL NEGOTIATIONS
      Mr. Grimondasked the Secretary of State for Foreign Affairs if he will make a further statement on the progress of the negotiations over Persian oil.
      Mr. Dodds-Parker: Discussions in Tehran have resulted in a full exchange of views between the parties concerned, and it is now necessary that the three
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      negotiators representing the eight oil companies should consult their principals. The consultations will take place here shortly, and it is contemplated that the negotiations in Tehran will be resumed as soon as possible thereafter.
      Mr. Grimond: Can the hon. Gentleman confirm that, on the whole, the negotiations are likely to prove successful and that there are no major outstanding points?
      Mr. Dodds-Parker: I am not prepared to make any forecast about the outcome of the negotiations at the moment. There has been a full exchange of views. I should like to add that the negotiations have taken place in a most cordial atmosphere. It is now for the oil companies to consult together on the difficult problems which are still outstanding.
      Mr. Stokes: Is the hon. Gentleman satisfied that all proper steps have been taken in these negotiations to preserve the rights of consumer interests? Reports would indicate that only vultures are gathered there. Where do the consumers come in?
      Mr. Dodds-Parker: That is certainly untrue. I should like to see that Question on the Order Paper.
      Mr. Erroll: Will my hon. Friend make certain that in the discussions full regard is paid to the need for proper compensation for the Anglo-Iranian Oil Company for loss of assets?
      Mr. Dodds-Parker: I should not like to comment on any details at this moment.
      Mr. Harold Davies: Will the hon. Gentleman make available to the House a White Paper on these discussions and negotiations when they come to some conclusion so that the House may have a short debate on the subject?
      Mr. Dodds-Parker: We will see about that in due course, but I cannot undertake anything like that at this stage.

      MIDDLE EAST (BRITISH BROADCASTS)
      Mr. Grimondasked the Secretary of State for Foreign Affairs what British programmes are available over the radio in the Middle East; and what plans have been made for television in this area.
      Mr. Dodds-Parker: The British Broadcasting Corporation's Eastern Services include transmissions for four hours a day in Arabic, one hour and 25 minutes a day in Persian and half an hour a day in Hebrew. The General Overseas Programme in English is broadcast to the world for 21 hours a day. The British Broadcasting Corporation also supply certain recorded programmes to local broadcasting stations in the area. My right hon. Friend the Secretary of State for War also maintains certain broadcasting stations in the area for the entertainment of Her Majesty's Forces.
      As for television, I understand that, at the British Trade Fair to be held in Bagdad this autumn, there is to be a display of British television equipment and receivers. There will be transmission of television programmes only during the period of the Fair. I am not aware of any other plans for television in the area.
      Mr. Grimond: While thanking the Minister for that answer. may I call attention to the fact that there is intensive broadcasting to these areas from other countries? Is there no prospect of any television in Britain's interest at all? Will he look into the matter and ensure that our broadcasts are maintained?
      Mr. Dodds-Parker: We will certainly look into the point raised in the second part of the hon. Gentleman's Question, but, on purely technical grounds, I think it most unlikely that there will be any television programme in that area from outside.

      GERMANY (OCCUPATION COSTS)
      Mr. E. Fletcherasked the Secretary of State for Foreign Affairs what will be the contribution of the Federal German Republic after 1st June to the occupation costs of the British troops in Germany.
      Mr. Dodds-Parker: The German Federal Government will provide occupation costs in June at the current rate of DM.600m. a month for all the occupying powers. The arrangements to be made for the period after 30th June are to be discussed shortly by the Allied High Commission with the Federal Government
      Mr. Fletcher: May we take it that there will be no reduction in the German contribution so long as the present arrangement exists in Germany?
      Mr. Dodds-Parker: This is a matter for discussion between the Allied High Commission and the German Federal Government. I have no reason to suppose that there will be any reduction.
      Lieut.-Colonel Lipton: Is the Minister aware that the occupation costs were originally fixed at 950 million marks a month, but that only 600 million marks a month have been paid since April, 1952?
      Mr. Dodds-Parker: That must mean that we are getting better value for our money.

      HYDROGEN BOMB TESTS, PACIFIC (REPRESENTATIONS)
      Mr. Beswickasked the Secretary of State for Foreign Affairs what representations have been made by the native inhabitants of Rongelap and Utirik islands, both trusteeship territories, to the United Nations about hydrogen bomb tests in the Pacific; what injuries have been sustained by these people; how far they were from the recent explosions; and what action was taken by Her Majesty's representative at the United Nations Trusteeship Council, with regard to these representations.
      Mr. Dodds-Parker: Her Majesty's Government have no responsibility in the matter except as members of the Trusteeship Council. We have no information other than that contained in the petition which was circulated in a United Nations Trusteeship Council document of 6 May, a copy of which has been placed in the Library.
      Mr. Beswick: Although having no wish to criticise the general administration of the United States authorities, to whom, indeed, the Marshallese people have paid a notable tribute, is the hon. Gentleman aware of reports in this country which say that ordinary people of Utirik, which is 511 miles away from the explosion, are now complaining of changes in their bloodstream, of their hair falling out and of nausea? Ought we not, having a responsibility on the Trusteeship Council, to be in possession of the full facts on this matter?
      Mr. Dodds-Parker: I think the distance is not 500 miles, but about 250 miles, according to the information I have, but I quite agree that it is far enough. We had better see if some reply or formal observations are made by the United States Government, and then we can proceed further.
      Mr. J. Dugdale: Is the hon. Gentleman aware that there are many British possessions scattered throughout the Pacific, and will he ask the United States Government to ensure that none of their hydrogen bomb tests takes place near any of them?
      Mr. Dodds-Parker: I think it most unlikely that they will.
      Mr. Beswick: Is the hon. Gentleman not aware that the United States have already made observations on this petition, and are we to understand that Her Majesty's representative on the Trusteeship Council took no further action in the matter?
      Mr. Dodds-Parker: They have made no formal observations as yet to the United Nations, where our representative sits.

      EMBASSY STAFFS (AIR TRAVEL)
      Air Commodore Harveyasked the Secretary of State for Foreign Affairs why members of British Embassy staffs have now to travel tourist class in aeroplanes when on duty.
      Mr. Dodds-Parker: This is an economy measure.
      Air Commodore Harvey: Is it not a false economy that Her Majesty's representatives to foreign countries have to sit in one part of the plane, while diplomats of second-rate nations sit in another? Why should we in this House travel first-class and expect diplomats from overseas to travel second-class?
      Mr. Dodds-Parker: Heads of Missions continue to use the normal air services, and so may others travelling on duty when the public interest so warrants. Whatever one does in a case like this, somebody will say it is extravagant, whereas, if it is the other way, they say it is being parsimonious. I think that
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      this is an equitable settlement in the circumstances.
      Mr. H. Morrison: Is the hon. Gentleman aware that some of us on the public service are quite content to travel tourist, and that it is not a bad thing in any public economy that members of the foreign service should travel tourist from time to time?
      Mr. Dodds-Parker: As far as I know, there is nothing wrong with British airlines tourist class.

    MINISTRY OF FOOD

      U.S.A. Canned Fruits
      Mr. Doddsasked the Minister of Food when the canned apricots and peaches, purchased under Section 550 of the Mutual Security Act, will be on sale in the shops; and what arrangements his Department is making with the trade to ensure that they will be sold to the public at a reasonable price.
      The Parliamentary Secretary to the Ministry of Food (Dr. Charles Hill): About September. Imported canned peaches and apricots are still subject to price control.
      Mr. Dodds: Is the hon. Gentleman aware that, the last time he answered a question on this subject, he said that this was practically a gift? When the hon. Gentleman states that the tinned fruit is still price controlled, is it not a fact that this large quantity of tinned fruit has been given for next to nothing, and will some further steps be taken to see that the public get some benefit from this bargain?
      Dr. Hill: The sterling expenditure involved is counted against the defence budget in this matter, and the prices which will be charged for the tinned fruit under existing price control will be those hitherto prevailing.
      Mr. N. Macpherson: Will my hon. Friend make quite certain that the opportunity is not taken to introduce foreign goods at the expense of Commonwealth goods in this matter? Will he maintain the price of foreign goods at a level not less than the price of Commonwealth goods?
      Dr. Hill: I will take note of my hon. Friend's point.

      Trichinosis Outbreak, Liverpool
      Mrs. Braddockasked the Minister of Food if he is aware that, in the outbreak of trichinosis in Liverpool recently, it was found to be impossible to trace the infected pig beyond the abattoir; and, in view of the serious infection which can be caused, what steps he is taking to have complete records of the movement of pigs available to medical officers of health responsible for tracing infections.
      Dr. Hill: The movement of pigs is subject to the provisions of the Movement of Animals (Records) Order, 1925, which requires records of movements to be kept in a prescribed form; this Order is enforced by the local authorities responsible under the Diseases of Animals Act, 1950, and the records should be available to medical officers and others when tracing infections.
      Mrs. Braddock: Is the Parliamentary Secretary aware that there was a very serious outbreak of trichinosis in Liverpool, that the whole of the health services were at work, and that the actual pig infected was traced? Is he also aware that, in view of the fact that records evidently were not kept up to date, it was impossible to find out from which farm the pig came, that it may be that that particular farm is still infected and that there is still infected pork coming from that farm? Will the hon. Gentleman see that the situation is cleared up as quickly as possible, in view of the fact that 11 per cent. of the population are bound to suffer from this disease at some time or another?
      Dr. Hill: I share the hon. Lady's concern at the outbreak in Liverpool. In only two of the 89 cases was the infection traced to pork, and, in those cases, it seems that difficulty was found in tracing the infected pig to the piggery. I am looking into these cases. In the remaining cases, as the hon. Lady will appreciate, the infection came from sausages, and it is extremely difficult in a large sausage factory to trace a carcase.
      Mr. Baldwin: Is my hon. Friend aware that the Movement of Animals Order is very effective in that it enables records to be kept of all animals from farm to farm and to the abattoir, but that it is impracticable to trace a carcase from the abattoir to the consumer?
      Dr. Hill: The Order permits, in the case of pigs going for pork, the tracing of the carcase to the piggery, and that is the position which the hon. Lady has in mind.

      NORTHERN NIGERIA (MEDICAL OFFICERS)
      Mr. Tilneyasked the Secretary of State for the Colonies how many vacancies for medical officers exist in Northern Nigeria; and what is the establishment for such officers.
      The Secretary of State for the Colonies (Mr. Oliver Lyttelton): The establishment of medical officers for the Northern Region of Nigeria is 91, and there are at present 25 vacancies.
      Mr. Tilney: Will my right hon. Friend bear in mind the importance of seconding not only specialists but also general practitioners, and will he also look into the matter of their salaries, as compared with those paid in this country?
      Mr. Lyttelton: We regard this matter as one of considerable concern, and we are doing our very best to try to get these vacancies filled.

      MAURITIUS (SUGAR CENTRAL BOARD)
      Mr. J. Johnsonasked the Secretary of State for the Colonies the composition of the Sugar Central Board of Mauritius; and at what date the accountant upon this Board was appointed.
      Mr. Lyttelton: The Board is composed of two representatives of the millers, two representatives of the larger planters, two representatives of the smaller planters, and a chairman appointed by the Governor. The present accountant to the Board was appointed on 11 th January, 1953.
      Mr. Johnson: Is the right hon. Gentleman aware of the long standing dissatisfaction of the planters in Mauritius? Will he think again about something I asked him two years ago, to send out an economist to inquire into the situation in the sugar industry?
      Mr. Lyttelton: I have received no representations about the dissatisfaction of the planters, but I will look into the matter.

BRITISH HONDURAS (POLITICAL SITUATION)
The following Questions stood upon the Order Paper:
Captain KERBY55. Captain KERBY: To ask the Secretary of State for the Colonies if he will make a statement on the situation in British Honduras.
Mr. ROYLE76. Mr. ROYLE: To ask the Secretary of State for the Colonies if he will make a statement on the position in British Honduras, following the elections of 28th April last.
At the end of Questions—
Mr. Lyttelton: With permission I should like to answer Questions Nos. 55 and 76.
The elections in British Honduras have resulted in the People's United Party winning eight out of nine seats. They polled 64 per cent. of the votes cast, which averaged just over 70 per cent. of the electorate. Since the election results became known, I have been in consultation with the Governor. The P.U.P. leaders have given him an assurance that they are prepared to co-operate fully in an endeavour to work the Constitution in a spirit of loyalty and good will. They are prepared to take the oath of allegiance freely and without reservation.
Her Majesty's Government have therefore decided that the P.U.P. should be given an opportunity to show that they are ready and able to shoulder the responsibilities entrusted to them by the electorate. Accordingly the plans for the reconstitution of the Governor's Executive Council will go ahead. The new Executive Council will consist of three ex-officio members, two nominated members, and four elected members. The
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Governor and his officers are, of course, ready to co-operate with the elected members and to offer them all assistance, within the framework of the Constitution.
I have asked the Governor to invite representatives of the unofficial members of the Executive Council to visit London later in the year for talks on the development and progress of the Colony. The P.U.P. leaders have accepted the invitation. Her Majesty's Government hope that all parties will now work together in the interest of the country's development.
Mr. Royle: May I congratulate the right hon. Gentleman on that statement, which must give great satisfaction not only to this House but to the whole population of British Honduras? Might I express a hope that we shall, by this course, avoid repetition of the position which took place in British Guiana?
Mr. Lyttelton: The hon. Member drags in British Guiana. May I remind him that that was after four or five months of the experiment. I hope that this experiment will result more successfully
Mr. J. Griffiths: Will the right hon. Gentleman convey to the People's United Party of British Honduras that we are very glad that they have accepted this position, that there is now what we hope will be an opportunity for the development of government in British Honduras, and that we shall all look forward to meeting the representatives of the party when they reach this country in August?
Mr. Peyton: Is my right hon. Friend aware that his own most generous and most patient attitude in this matter will be very widely appreciated? Is he further aware that the promises now made by the leaders of this party will be watched with the utmost concern—[HON. MEMBERS: "Why?"]—to see that the present favourable atmosphere is fully maintained?

CUSTOMS AND EXCISE (AMENDMENT)
Mr. Geoffrey Bing: I beg to move,
That leave be given to bring in a Bill to amend the Customs and Excise Act, 195a, so as to provide that beer shall not be offered for sale unless the original gravity thereof has been made known to the purchaser and the minimum quantity contained in any receptacle in which the beer is sold is declared; and for purposes connected therewith.
As hon. Members who are leaving the Chamber will realise, the principal ingredient of beer is water, but, contrary to the belief of some of the hon. Members who are going out, water is not the only ingredient. To make water into beer it is necessary to add to the water certain solids, which, for the purpose of this Motion, I need not particularise, and to allow these solids to ferment to a certain degree so as to produce at any rate a minimum quantity of alcohol.
The alcoholic strength of beer depends upon two things: first, on the original proportion of solids to water; and, secondly, on how far those solids have been allowed to ferment. If the solids are allowed completely to ferment, the beer has little or no taste. If, on the other hand, the fermentation of the solids is checked at an early stage the beer may have a very strong taste, have plenty of body, and yet contain far less alcohol than otherwise. Lager, which is quite alcoholic, is a typical example of this fact.
For those and other reasons, even the most experienced beer drinker has great difficulty in determining the original gravity of the beer he drinks. He has the right to know the gravity, because it is on the original gravity that tax is paid and the price is fixed. This gravity is measured in degrees. If the substance as sold has not an original gravity of 1016 degrees, or "16 degrees" as it is often described, it cannot be classed as beer. Any beer up to 30 degrees pays the same duty.
After that, on every degree increase of the original gravity of beer the brewer has to pay an additional duty of 6s. 7½d. per barrel of 36 gallons. It would appear that today many brewers have fallen into the very natural temptation of serving a very low gravity beer and charging a
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very high-gravity-beer price, and pocketing the difference, which should normally go to the Chancellor of the Exchequer. I should like to give the House one example.
The Chief Inspector of Weights and Measures in Northumberland reported in November, 1952, to his county council:
"The analyses carried out by the public analyst have shown that there exists a considerable variation in the original gravity of beers sold under the description 'Best Scotch.' Although there is no legal standard of compositional quality for beer, it has been found that so-called 'Best Scotch' marketed by some companies is, in fact, of lower gravity than the ordinary beer sold by other brewers.
Asked for his observations on the figures Obtained by the public analyst, a representative of one firm whose 'Best Scotch' beer was particularly low in original gravity, explained that his company could not produce beer as cheaply as the larger concerns, so lower gravity beer was marketed at the same price as the higher gravity beer sold by other companies. Money was saved on materials and less duty was payable."
Hull Corporation decided last year to request the Association of Municipal Corporations to make representations to the Government that the strength of beer must be declared. They did this after they had had a report from their city analyst, who said, among other things, that one particular brewer in Hull was selling two beers of identical composition at 1s. 3d. and 1s. 6d. a pint respectively.
The Chief Inspector of Weights and Measures in Kent reported in 1951 to his council that over the past two years the analyses of bitter beer in Kent showed that it varied in gravity between 29 degrees and 39 degrees, yet the price charged for all those beers was the same. In one case he found a mild beer of a gravity of 32½ degrees which was sold for 11d. a pint, while another mild beer, which had a gravity of only 29 degrees, was sold at a 1s. a pint.
The House will recall that in October, 1952, when I was speaking on the New Towns Bill I gave figures for the strength of five particular bottled beers. It is interesting to note that the general secretary of the Workingmen's Club and Institute Union had an independent check made by another analyst which confirmed the figures which I gave to the House. In an article which this general secretary wrote afterwards, he said:
"The saloon price of a half-pint bottle of beer which my analyses showed to have the

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highest original gravity was 10d., while the saloon-bar price of the beer which I showed had the lowest original gravity, was 11d."
He headed this article:
"Are you drinking water or beer?"
He might very appropriately have added,
"Avoid water. It is much more expensive."
One other aspect of the matter which will be particularly interesting to my hon. Friend the Member for Ealing, North (Mr. J. Hudson) is that the alcoholic strength of these low gravity beers is very low indeed. In fact, in a considerable number of cases beers now being sold by well-known brewers would come within the definition of "non-alcoholic drinks" as defined by the U.S. Volstead Act, as finally amended.
I hope the House realises what this means. We can have both prohibition and the public house. Thus we shall be able to ease the conscience of at least one Member supporting the Government who, I think I am right in saying, supported, at the same time, the Home Secretary's Licensing of New Towns Bill and the Band of Hope.
If the Bill which I am now proposing becomes law, no longer will it be possible for the teetotal brewer to be condemned, as he is at present, to anonymity. The label on the bottle or the notice hung up in the public-house will show which tied house has gone dry and which few still continue the old tradition of serving alcoholic drinks.
One final advantage of the proposed Bill would be that it would make impossible the continued use of the utiliser. Hon. Members will recall that this is a machine which filters the overspill and dregs left over in patrons' glasses and feeds them back again into the beer supplied to other customers.
I had an interesting letter from one publican who sent me his actual stock sheet, together with a letter which he had received from his brewers. They were complaining that while the retail value of the beer which he had sold was about £384, the actual cash which he had received was only £390. The implication was, of course, that he ought to have sold very much more, that he had failed to sell a sufficient quantity of his beer twice over. In a recent investigation in Bath, it appeared that 29 out of 156 licensed premises in the town were reselling overspill
410
and leavings in this way. This Bill, by making it necessary to declare the strength of each beer sold, would make it impossible legally to sell the mixture of beers produced from the utiliser.
The Bill does one other thing. It makes it necessary to declare the minimum quantity contained in any receptacle in which beer is sold. There is no reason why, if one buys a pint or a quart bottle of beer, it should not, in fact, contain a pint or a quart. If an hon. Member opposite is to oppose this Motion perhaps he will explain why it is that some brewers apparently object to selling half a pint of beer in a half-pint bottle. The only argument that I have ever seen put forward is that it is, technically speaking, difficult to put exactly half a pint of beer into a half-pint bottle.
I think I have got over that difficulty. I am proposing that this Bill should not make it an offence to put more than half a pint into a half-pint bottle. All that the brewer is being asked to do is not to put in less than half a pint. After all, every dairy in the country is under a legal obligation to put not less than half a pint or a pint of milk, as the case may be, into the bottle. It is surely not too much to ask the brewer, with all his great resources, to do what the country dairyman finds no difficulty in doing—give to the purchaser the amount of liquid for which he has paid.
I hope that the House will give me leave to bring in this Bill.
Mr. Anthony Marlowe: I rise to oppose the Motion which has, I agree, been most divertingly moved by the hon. and learned Member for Hornchurch (Mr. Bing). I do so because, although the hon. and learned Gentleman has dealt with the matter so amusingly, I think that it is really a subject which deserves more serious consideration.
I have informed the House before that I am sometimes professionally engaged in the interests of those in the brewing trade. I never know whether that is a declarable interest or not, but I think it better to make it plain. What the hon. and learned Gentleman is really doing is seeking leave to introduce a Bill under which discriminatory action could be taken against a particular section of the trading community.

411
There are many other liquids other than beer which are sold in bottles and concerning which there are statutory legal requirements, but none of the interests concerned in them is, by law, required to show on the label that those requirements are being fulfilled. Soft drinks, for example, are required to have a certain sugar content, but no one has suggested that that content should be certified on the label.
The hon. and learned Gentleman referred to milk. It is perfectly right to say that there has to be a certain minimum fat content in milk, but no one has suggested in regard to milk what the hon. and learned Gentleman suggests should be done in regard to beer, that the requirement should be certified on every bottle of milk sold.
What the hon. and learned Gentleman is, in fact, doing is discriminating against a particular trade, because, as is well known, he has an antagonism towards that trade. In fairness to the hon. and learned Gentleman, it must be said that he has never attempted to disguise that antagonism, and he has frequently explained to this House that what he does not like about the brewers is that he supposes that they subscribe to the Tory Party funds.
That may well be true. It only shows what sensible people the brewers are. I think it would be a sad day for this country if we started legislating against a particular section of the community merely on the ground that they subscribed to a certain political party. I certainly do not believe that hon. Members on this side of the House would ever subscribe to the idea that we should legislate against, say, the Co-operative movement or the trade union movement merely on the ground that they subscribe to the funds of the Labour Party.
I now turn to another aspect of this matter which I think will have a particular appeal to the hon. Member for Ealing, North (Mr. J. Hudson), to whom reference was made by the hon. and learned Member for Hornchurch. The hon. and learned Gentleman quite rightly referred to another difficulty with regard to his proposal. As I understand, there are technical difficulties in bottling which would make it almost impossible to have
412
regard to the regulations which he would like to have introduced.
I am advised that gravity is not necessarily an indication of the strength of the beer, but it is believed by the public to be so, and, as a result of what the hon. and learned Gentleman is suggesting, it might well be that we should get a gravity race between the brewers. They would all be stepping up the gravity of their beer and stating that fact on their labels. This would result in making the beer stronger and stronger, to the great disgust of the hon. Member for Ealing, North.
It need not be thought, I think, that the public interest is not properly safeguarded in this matter. The brewers are already under very close control by the Customs and Excise. It is not as though the law is being flouted; they are required to produce beer of a certain specific gravity, and merely to state the gravity on the labels will not alter its amount.
Brewers are more closely controlled than almost any other trade in the country. Anyone studying the Excise Acts will realise that Excise officers can call on a brewer at any time, and that impositions can be placed upon brewers which cannot be placed upon any other traders. A brewer can be fined £100 if he does not produce within one hour the books required by the Excise Officer. That is an imposition to which, I believe, no other trade is subjected. It seems to me most unfair that, in view of the burdens which brewers already have to carry, they should be asked to carry an additional burden.
The hon. and learned Gentleman dealt with the question of the measure to be contained in the pint or half-pint bottle. The hon. and learned Gentleman's Motion, if accepted, would have the effect of amending the Customs and Excise Acts which have, of course, nothing to do with weights and measures, which are dealt with in entirely different legislation.
The point is this. Although the right hon. and learned Gentleman said, quite rightly, that a pint of milk can easily be sold in a pint bottle, there are very different considerations to be taken into account in the question of the bottling of beer. Owing to the process of fermentation, which milk does not undergo, some of the beer is bound to be lost, with the

413
result, of course, that both the wholesaler and the retailer might find themselves subjected to a whole series of pettifogging prosecutions at a time when, as I say, the brewing trade is already having to bear burdens which others do not have to bear. I hope that the House will not agree to further burdens being placed on this already very closely regulated trade.
Having regard to the fact that, as everyone knows, a Bill introduced at this stage of the Session will have no opportunity whatsoever of reaching the Statute Book, it will probably be unnecessary to waste the time of the House by dividing on this matter, but I want to make clear the position in regard to the hon. and learned Gentleman's Motion in the hope that if ever he is fortunate enough in the Ballot to be able to introduce a Bill of this kind earlier in the Session the House will vote against it.
Mr. Michael Foot: On a point of order. Did you not rule, Mr. Speaker, on a previous occasion when the Ten Minute Rule was used by an hon. Member that it was improper for an hon. Member on the other side to get up on the pretext of opposing when not prepared to carry his opposition to a Division?
Mr. Speaker: I did express myself roughly in that sense. I did not say that it was improper, but it does seem to me that if an hon. Member rises to oppose a Bill he should oppose it. Otherwise, it seems to me to be wasting the time of the House.
Mr. F. J. Erroll: On a point of order. The point that my hon. and learned Friend was making was that the Bill should be opposed by the House as a whole.
Mr. Speaker: I was about to put the Question that leave be given to bring in this Bill, but it is a matter for the House to decide.
Mr. Sydney Silverman: Further to that point of order. The House would be quite unable to give a decision on the Motion proposed by my hon. and learned Friend the Member for Hornchurch (Mr. Bing) unless the hon. and learned Member for Hove (Mr. Marlowe), who invited the House to object to the introduction of the Bill, was prepared to test it in the Division Lobby. To speak against it and then to give consent by silence is an abuse of Parliamentary processes.
Mr. Godfrey Nicholson: Surely it is not wrong for a Member to make a speech in one sense and cast his vote in the contrary sense. In this particular case, it may be that in the course of his speech my hon. and learned Friend convinced himself that he was wrong.
Mr. James Hudson: On a point of order. There is no ground for hon. Members opposite using the lateness of the Session as a reason for dodging their obligations under the rules which you, Mr. Speaker, have laid down for their guidance. May I remind you that hon. Members opposite are to propose a measure kindred to this for Second Reading on 25th June. If they are honest and genuine enough to do that at so late a time why cannot hon. Members now be kept to the point at issue?
Mr. Speaker: That is not a point of order which arises here.
Mr. Marlowe: I can clear up this matter quite easily. There is no inconsistency here at all. I have made my speech in opposition and I am opposing. When you, Mr. Speaker, put the Question I propose to say, "No." Nothing could be more negative than that, but it very often depends on how often one says "No" what the consequence will be.
Question put, pursuant to Standing Order No. 12.
The House divided: Ayes, 182: Noes, 158.

Division No. 117.]

AYES

[3.53 p.m

Acland, Sir Richard

Bing, G. H. C.

Brook, Dryden (Halifax)

Allen, Arthur (Bosworth)

Blackburn, F.

Broughton, Dr. A. D. D.

Allen, Scholefield (Crewe)

Blenkinsop, A.

Brown, Rt. Hon. George (Belper)

Anderson, Frank (Whitehaven)

Blyton, W. R.

Brown, Thomas (Ince)

Awbery, S. S.

Boardman, H.

Carmichael, J.

Bacon, Miss Alice

Bowen, E. R.

Castle, Mrs. B. A.

Balfour, A.

Bowles, F. G.

Champion, A. J

Benson, G.

Braddock, Mrs. Elizabeth

Chapman, W. D.

Beswick, F.

Brockway, A. F.

Clunie, J.

Coldrick, W.

Jeger, George (Goole)

Roberts, Albert (Normanton)

Cove, W. G.

Jeger, Mrs. Lena

Roberts, Goronwy (Caernarvon)

Craddock, George (Bradford, S)

Jenkins, R. H. (Stechford)

Robinson, Kenneth (St. Pancras N.)

Crosland, C. A. R.

Johnson, James (Rugby)

Rogers, George (Kensington, N.)

Gullen, Mrs. A.

Jones, David (Hartlepool)

Ross, William

Daines, P.

Jones, Jack (Rotherham)

Shackleton, E. A. A.

Darling, George (Hillsborough)

Jones, T. W. (Merioneth)

Shinwell, Rt. Hon. E.

Davies, Rt. Hn. Clement (Montgomery)

Keenan, W.

Short, E. W.

Davies, Ernest (Enfield, E.)

Kenyon, C.

Shurmer, P. L. E.

Davies, Harold (Leek)

Key, Rt. Hon. C. W

Silverman, Julius (Erdington)

Deer G.

King, Dr. H. M.

Silverman, Sydney (Nelson)

Delargy H. J.

Lawson, G. M.

Simmons, C. J. (Brierley Hill)

Dodds N. N.

Lee, Frederick (Newton)

Skeffington, A. M.

Dugdale, Rt. Hon. John (W. Bromwich)

Lewis, Arthur

Slater, J. (Durham, Sedgfield)

Ede, Rt. Hon. J. C.

Lipton, Lt.-Col. M

Smith, Norman (Nottingham, S.)

Edwards, Rt. Hon. John (Brighouse)

Logan, D. G.

Snow, J. W.

Edwards, Rt. Hon. Ness (Caerphilly)

McGhee, H. G.

Sorensen, R. W.

Evans, Albert (Islington, S.W.)

McKay, John (Wallsend)

Sparks, J. A.

Evans, Stanley (Wednesbury)

McLeavy, F.

Stewart, Michael (Fulham, E.)

Fernyhough, E.

MacMillan, M. K. (Western Isles)

Stokes, Rt. Hon. R. R.

Fletcher, Eric (Islington, E.)

Mainwaring, W. H.

Stross, Dr. Barnett

Follick, M.

Marquand, Rt. Hon. H. A.

Sylvester, G. O.

Foot, M. M.

Messer, Sir F.

Taylor, Bernard (Mansfield)

Forman, J. C.

Mitchison, G. R.

Taylor, John (West Lothian)

Freeman, Peter (Newport)

Monslow, W.

Taylor, Rt. Hon. Robert (Morpeth)

Gaitskell, Rt. Hon. H. T. N

Moody, A. S.

Thomas, Iorwerth (Rhondda, W.)

Gibson, C. W.

Morrison, Rt. Hon. H. (Lewisham, S.)

Thomas, Ivor Owen (Wrekin)

Glanville, James

Mort, D. L.

Timmons, J.

Gooch, E. G.

Moyle, A.

Tomney, F.

Greenwood, Anthony (Rossendale)

Mulley, F. W.

Turner-Samuels, M.

Grenfell, Rt. Hon. D. R.

Nally, W.

Viant, S. P.

Grey, C. F.

Neal, Harold (Bolsover)

Wallace, H. W.

Griffiths, David (Rother Valley)

Noel-Baker, Rt. Hon. P. J

Warbey, W. N.

Griffiths, Rt. Hon. James (Llanelly)

Oldfield, W. H.

Wells, Percy (Faversham)

Grimond, J.

Oliver, G. H.

West, D. G.

Hale, Leslie

Orbach, M.

Wheeldon, W. E.

Hall, Rt. Hon. Glenvil (Colne Valley)

Oswald, T.

White, Mrs. Eirene (E. Flint)

Hall, John T. (Gateshead, W.)

Paget, R. T.

White, Henry (Derbyshire, N.E.)

Hannan, W.

Paling, Rt. Hon. W. (Dearne Valley)

Whiteley, Rt. Hon. W

Hargreaves, A

Paling, Will T. (Dewsbury)

Wilkins, W. A.

Hastings, S.

Palmer, A. M. F.

Willey, F. T.

Hayman, F. H.

Pannell, Charles

Williams, David (Neath)

Healey, Denis (Leeds, S.E.)

Parker, J.

Williams, Ronald (Wigan)

Henderson, Rt. Hon. A. (Rowley Regis)

Parkin, B. T

Williams, W. R. (Droylsden)

Holman, P.

Plummer, Sir Leslie

Willis, E. G.

Holmes, Horace

Porter, G.

Wilson, Rt. Hon. Harold (Huyton)

Holt, A. F.

Price, J. T. (Westhoughton)

Winterbottom, Richard (Brightside)

Hoy, J. H.

Price, Philips (Gloucestershire, W.)

Woodburn, Rt. Hon. A.

Hudson, James (Ealing, N.)

Proctor, W. T.

Wyatt, W. L.

Hughes, Emrys (S. Ayrshire)

Pryde, D. J.

Yates, V. F.

Irving, W. J. (Wood Green)

Reid, Thomas (Swindon)

Isaacs, Rt. Hon. G. A.

Reid, William (Camlachie)

TELLERS FOR THE AYES:

Jay, Rt. Hon. D. P T

Rhodes, H.

Mr. Elwyn Jones and Mr. Royle

NOES

Aitken, W. T.

Clyde, Rt. Hon. J. L.

Hare, Hon. J. H.

Anstruther-Gray, Major W. J.

Colegate, W. A.

Harris, Frederic (Croydon, N.)

Assheton, Rt. Hon. R. (Blackburn, W.)

Cooper-Key, E. M.

Harris, Reader (Heston)

Baldwin, A. E.

Craddock, Beresford (Spelthorne)

Harrison, Col. J. H. (Eye)

Banks, Col. C.

Crosthwaite-Eyre, Col. O. E.

Harvey, Air Cdre. A. V. (Macclesfield)

Baxter, A. B.

Crouch, R. F.

Harvey, Ian (Harrow, E.)

Beach, Maj. Hicks

Darling, Sir William (Edinburgh, S.)

Higgs, J. M. C.

Bennett, F. M. (Reading, N.)

Davidson, Viscountess

Hill, Dr. Charles (Luton)

Bennett, Dr. Reginald (Gosport)

Deedes W. F.

Hinchingbrooke, Viscount

Bevins, J. R. (Toxteth)

Digby S. Wingfield

Hirst, Geoffrey

Birch, Nigel

Donaldson, Cmdr. C. E. McA.

Horobin, I. M.

Bishop, F. P.

Drayson, G. B.

Horsbrugh, Rt. Hon. Florence

Boothby, Sir R. J. C.

Dugdale, Rt. Hon. Sir T. (Richmond)

Howard, Gerald (Cambridgeshire)

Bossom, Sir A. C.

Duncan, Capt. J. A. L.

Hudson, W. R. A. (Hull, N.)

Boyd-Carpenter, Rt. Hon. J. A

Duthie, W. S.

Hurd, A. R.

Boyle, Sir Edward

Eden, J. B. (Bournemouth, West)

Hylton-Foster, H. B. H.

Braine, B. R.

Elliot, Rt. Hon. W. E.

Jenkins, Robert (Dulwish)

Braithwaite, Sir Gurney

Fisher, Nigel

Jennings, Sir Roland

Bromley-Davenport, Lt.-Col. W. H

Fort, R.

Johnson, Eric (Blackley)

Brooke, Henry (Hampstead)

Fraser, Hon. Hugh (Stone)

Jones, A. (Hall Green)

Bullard, D. G.

Fraser, Sir Ian (Morecambe & Lonsdale)

Kaberry, D.

Bullus, Wing Commander E. E.

Galbraith, Rt. Hon. T. D. (Pollok)

Kerby, Capt. H. B.

Burden, F. F. A.

Gammans, L. D.

Kerr, H. W.

Butler, Rt. Hon. R. A. (Saffron Walden)

George, Rt. Hon Maj. G. Lloyd

Lambert, Hon. G.

Cary, Sir Robert

Glover, D.

Legge-Bourke, Maj. E. A. H

Channon, H.

Gough, C. F. H.

Lindsay, Martin

Clarke, Col. Ralph (East Grinstead)

Grimston, Sir Robert (Westbury)

Linstead, Sir H. N.

Clarke, Brig. Terence (Portsmouth, W.)

Harden, J. R. E.

Llewellyn, D. T

Lockwood, Lt.-Col. J. C

Odey, G. W.

Strauss, Henry (Norwich, S.)

Longden, Gilbert

O'Neill, Hon. Phelim (Co. Antrim, N.)

Studholme, H. G.

Lucas, P. B. (Brantford)

Orr, Capt. L. P. S.

Sutcliffe, Sir Harold

Lyttelton, Rt. Hon. O.

Page, R. G.

Taylor, Sir Charles (Eastbourne)

McCallum, Major D.

Peto, Brig. C. H. M

Taylor, William (Bradford, N.)

McCorquodale, Rt. Hon. M. S

Peyton, J. W. W

Thomas, Rt. Hon. J. P. L. (Hereford)

Macdonald, Sir Peter

Pitt, Miss E M.

Thornton-Kemsley, Col. C. N

Mackeson, Brig. Sir Harry

Raikes, Sir Victor

Turner, H. F. L.

Mackie, J. H. (Galloway)

Rayner, Brig R.

Vaughan-Morgan, J. K.

Macleod, Rt. Hon. Iain (Enfield, W.)

Remnant, Hon. P

Vosper, D. F.

MacLeod, John (Ross and Cromarty)

Renton, D. L. M.

Wakefield, Edward (Derbyshire, W.)

Macmillan, Rt. Hon. Harold (Bromley)

Roberts, Peter (Heeley)

Wakefield, Sir Wavell (St. Marylebone)

Macpherson, Niall (Dumfries)

Roper, Sir Harold

Wall, P. H. B.

Maitland, Comdr. J. F. W. (Horncastle)

Ropner, Col. Sir Leonard

Ward, Hon. George (Worcester)

Markham, Major Sir Frank

Russell, R. S.

Waterhouse, Capt. Rt. Hon. C.

Maude, Angus

Ryder, Capt. R. E. D.

Webbe, Sir H. (London & Westminster)

Maudling, R.

Schofield, Lt.-Col. W.

Wellwood, W.

Mellor, Sir John

Scott, R. Donald

Williams, Gerald (Tonbridge)

Moore, Sir Thomas

Snadden, W. McN.

Williams, Sir Herbert (Croydon, E.)

Morrison, John (Salisbury)

Soames, Capt. C.

Williams, Paul (Sunderland, S.)

Nabarro, G. D. N

Spearman, A. C. M.

Williams, R. Dudley (Exeter)

Neave, Airey

Speir, R. M.

Wood, Hon. R.

Nicholls, Harmar

Stanley, Capt. Hon. Richard

Nicholson, Godfrey (Farnham)

Stevens, Geoffrey

TELLERS FOR THE NOES:

Noble, Comdr. A H. P

Stewart, Henderson (Fife, E.)

Mr. Rodgers and Mr. Erroll.

Nugent, G. R. H.

Stoddart-Scott, Col. M.

Bill ordered to be brought in by Mr. Bing, Mr. R. J. Taylor, Mr. Delargy, Mr. Blyton, Commander Pursey, Mr. Shackleton, Mr. Snow and Mr. J. T. Hall.

CUSTOMS AND EXCISE (AMENDMENT) BILL
"to amend the Customs and Excise Act, 1952, so as to provide that beer shall
418
not be offered for sale unless the original gravity thereof has been made known to the purchaser and the minimum quantity contained in any receptacle in which the beer is sold is declared; and for purposes connected therewith," presented accordingly, and read the First time; to be read a Second time upon Friday, and to be printed. [Bill 123.]

ORDERS OF THE DAY

  FINANCE BILL
  [Progress, 25 th May]
  Considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]

  FINANCE BILL

    Clause 6.—(CHARGE OF TAX ON CESSATION OF REGISTRATION.)
    4.3 p.m.
    Mrs. Barbara Castle: I beg to move, in page 3, line 18, after "ceases," to insert:
    "(otherwise than by virtue of the powers conferred on the Commissioners by section twelve of the Finance Act, 1944)."
    I should like to say how glad I am that the Chancellor of the Exchequer agreed late last night that we should not try to deal with this Clause at that late hour. I am glad because I want to raise a point of some complexity and of some substance. I am glad that I did not have to try late last night to explain this matter to the Committee, in view of the barrage of inattention with which my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) had to contend when making a very informative and fascinating speech on the art of lithography.
    I want to make it quite clear at the outset that I welcome the ostensible purpose of Clause 6 as described to the House by the Financial Secretary on the Second Reading. I would ask the Financial Secretary to be kind enough to listen, because I want to point out to him something of which he may not be aware, judging from his Second Reading speech on Clause 6. He told us that the purpose which he had in mind in drafting this Clause was to deal with tax evasion. He said that a means of tax avoidance had only recently become apparent, and that the purpose of this Clause and of other Clauses in Part II of the Bill was to remedy defects in Purchase Tax law which—and here I quote because this is important—
    "in some cases permit ingeniously-minded people to evade the payment of the tax."
    Tax evasion, as he pointed out, has proved possible because under Purchase Tax law, when a manufacturer or wholesaler ceases to be registered, he ceases to be liable for tax on the stocks which he holds, and the Financial Secretary
    420
    pointed out that there are unscrupulous firms which find a very clever way of making a good deal of profit for themselves by ostensibly ceasing to manufacture by transferring their plant and materials to another firm or company, ceasing to be registered and so becoming possessors of large quantities of stocks on which tax is not payable. The Financial Secretary said:
    "Clause 6 (1) will prevent this."—[OFFICIAL, REPORT, 3rd May, 1954; Vol. 527, cc. 30–31.]
    I am not quarrelling with the purpose of the Clause as outlined by the Financial Secretary. Clearly, tax evasion of this kind could be stopped, and we support the Clause in so far as it does that. But I want to point out to the Financial Secretary that, as it stands, the Clause does a very great deal more than this. It also covers the man who does not want to be deregistered and is de-registered against his will for the administrative convenience of Customs and Excise. I therefore want to express to the Financial Secretary my confident belief that he will accept this Amendment because its purpose is to exempt from the operations of the Clause a man of this kind whose intentions obviously are not fraudulent in any way and who is being deregistered for the advantage of somebody else and not for his own advantage.
    I would point out that Customs and Excise are at present deregistering wholesalers on a considerable scale for their own administrative purposes. I raised this whole question of this sort of wholesaler in the House some two years ago, when I moved a Clause which attempted to give to a wholesaler a right to be registered if he so desired, because it was a tremendous trading advantage to him. Where the majority of wholesalers are registered, if an individual wholesaler is deregistered by Customs and Excise against his will, he may be put in a difficulty in obtaining supplies because the manufacturer to whom he goes for supplies may say to him, "Most of our customers are registered. They do not have to bother us with Purchase Tax law and we are not going to open special books for you."
    Two years ago I brought to the attention of the House cases which had arisen in my constituency where wholesalers were suffering serious trading

    421
    hardship because Customs and Excise had insisted on deregistering them against their will. The Financial Secretary replied to me then in a speech which seemed to put all of the point of view of Customs and Excise and none of the point of view of the trading needs of the wholesaler. He said, "If we made registration automatic we should need more staff to police the tax." He waved aside my representations, without showing any concern for the legitimate entitlement of a wholesaler to be able to pursue his business with reasonable advantage.
    At that time, I pointed out the serious drawbacks to the policy which Customs and Excise has been following in this increasing deregistration of wholesalers against their will. One of the obvious drawbacks is that it is desirable that the tax point should be as near the valuation point as possible, the valuation point being the price on the sale to a retailer. It is obvious that the more one moves the tax point back to the manufacturer further away from the price to the retailer, the more one raises the problem of uplift and the fixing of a notional wholesale price, and so on.
    Another serious drawback is that it puts the wholesaler who is denied registration at a serious competitive disadvantage. For example, if times become bad, the wholesaler who has been refused registration or has been deregistered and has had to buy his goods with the tax upon them already paid, may run into heavy weather. He has bought his goods with a certain level of tax already paid upon it, and then his competitors start cutting their selling price to the retailers.
    If they are registered, they have to pay Purchase Tax only at the point at which the selling price of the wholesaler to the retailer operates. They may not only be cutting their selling price but also, at the same time, reducing the amount of Purchase Tax payable. The unregistered or deregistered wholesaler cannot do that because the Purchase Tax has already been paid on a notional figure which may not be the market price obtaining during a period of depression. The whole of the process of deregistration is fraught with drawbacks to the wholesaler. It is based upon a very bad principle.
    The only way in which the Financial Secretary attempted to justify the policy
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    of Customs and Excise was on the grounds that enforcement would be more difficult and that it would require more staff if wholesalers got automatic registration. This afternoon we are facing a very different situation from that to which I referred two years ago. I was told that automatic entitlement to registration by a wholesaler was impossible administratively. However, in Clause 6 (1) we are facing the exact opposite of that situation.
    I am profoundly apprehensive that what Clause 6 will do, unless we amend it on the lines which I suggest, is to open the floodgates to wholesale deregistration by Customs and Excise and will give a tremendous stimulus to the process which has so far been held in reasonable check, with a reasonable balance perhaps being struck between the trading rights of the wholesaler and the adiministrative convenience of Customs and Excise.
    Customs and Excise is at present carrying out the process of deregistration under Section 12 of the 1944 Finance Act. Under that Act it is entitled to deregister a wholesaler if it is satisfied that the community will not lose money. To come to its estimate it has to assess the tax that it will get if it registers a wholesaler and he puts the tax on his sales, and compare it with the tax which it will get if it deregisters him and collects the tax from his suppliers instead. If it is satisfied that the deregistration of the wholesaler will not result in the State losing money, it can deregister him quite arbitrarily under that Section.
    4.15 p.m.
    I now turn to the point which arises under this Clause. At present, when Customs and Excise is doing its little sum in respect of the two amounts of tax, it is obviously taking into account the tax which it would lose on the wholesaler's stocks if it deregistered him. As the Financial Secretary pointed out, if it deregisters a wholesaler—this is what the Clause is altering—at present it collects no tax on his stocks. If the Clause goes through in its present form, Customs and Excise will be able to collect tax in future on the stocks of the man whom it deregisters against his will.
    If the stock-in-trade of a wholesaler is substantial, the loss of tax on deregistration at present is obviously a matter of some seriousness which Customs and

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    Excise has to take into account. At present, it thinks twice about deregistering wholesalers on a large scale. Unless we amend the Clause on the lines which I suggest, it will open wide the door to deregistrations on a very large scale. We all know that Customs and Excise would rather the manufacturer was registered, for it can then police him more easily, and it would rather that the tax was collected at that point. It will, therefore, be encouraged by the Clause.
    On Second Reading, the Financial Secretary said that the Government's only purpose in introducing the provision was to stop fraudulent firms from evading tax. I suggest that it is in keeping with that argument that the Financial Secretary should accept the Amendment and exempt from the operations of the Clause the wholesaler who is being deregistered against his will for the convenience of State apparatus.
    Unless the Financial Secretary is prepared to do that, I am afraid that the suspicious side of my nature, which is normally slumbering, will awake, and I shall be driven to the conclusion that his secret purpose is not to stop at tax evasion but to take from the wretched wholesaler the protection which the present system gives him against wide-scale and arbitrary deregistration. The Financial Secretary should read what he told us on that earlier occasion. The Amendment will help him to carry out the purpose which he then said he wanted to achieve.
    Mr. Hylton-Foster: I am very glad that the hon. Lady the Member for Blackburn, East (Mrs. Castle) has again raised this subject, because hon. Members on both sides of the Committee are somewhat anxious about the disastrous effects upon wholesalers of enforced deregistration or withholding of registration.
    Perhaps the hon. Lady was a little optimistic in supposing that any Chancellor of the Exchequer could accept the Amendment. She did not give any estimate of the cost to the Revenue. If we leave out the exercise of the powers under Section 12 of the Finance Act, 1944, to which the hon. Lady referred, I am not certain what other cases of ceasing to be registered exist. One could think of the trader whose takings from chargeable
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    sales fell below the minimum, and one could also think of manufacturers who carry out chargeable processes, whatever they may be. Otherwise, it is difficult to see what case there is.
    I think that the hon. Lady will have done great service to the public and this Committee if, by reason of putting down this Amendment, she does at last get from the Department, through my right hon. Friend, some explanation of what Customs and Excise deem to be its powers under this Section of the Act of Parliament. I am well aware that in saying this I am subject to the riposte, "Go to any competent lawyer and he will look at the Section of the Act of Parliament and tell you what the position is." But it does not work out like that.
    If an imaginary person looks at the Section of the Act he finds, in effect, the Section saying: it is to the public advantage to have Customs and Excise collecting its revenue cheaply—I pay tribute to the economic way in which it does that—and it would be more expensive for it, says the Section by implication, if it had to register more people than it has need to; and there is no point in registering a person if you are extorting in respect of his purchases as much as you would be extorting in respect of his sales. If you get as much out of him as you like on purchases you need not bother to register him if you cannot get more out of him by dealing with his sales.
    No other criterion is suggested. We are told that deregistration is going on to the tune of more than 6,600 a year and all kinds of grounds are now referred to—policing the revenue, change of address, etc. There is nothing in Section 12 of the Act to say that Parliament was proposing to give powers to the Department to deregister or withhold registration on criteria of that kind.
    I believe that if the hon. Lady extracts some explanation it will be of great assistance to all of us, in judging how to vote on this Amendment, if we can find out what these powers are really supposed to be. I do not know whether I am right—I hope I am—in saying that it is now conceded that the Commissioners do not regard a change of address as a ground. It is difficult to find how that can conceivably be a ground under the terms of the Section of the Act of 1944 for deregistering anybody.

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    Indeed, this will not be any the less important if this Clause is enacted in the law as it stands. I can only speculate as to what Amendments are to be called, but if subsection (2) is left as it now stands this will be imposing a tax on transactions which no one ever thought from the beginning would ever be taxed.
    It will catch the transaction in goods which are ultimately to be exported or ultimately to be sold to a registered person as stock and trading materials, and that is the kind of goods that everyone on every side was, I believe, led to suppose would be relieved of tax. If they are now to be caught especially to the disadvantage of the person deregistered under these powers, there is all the more reason to discover what these powers are supposed to be. I think we should then be better placed to judge the merits of the hon. Lady's Amendment and be able to shorten discussions on other stages of the Bill if the Chancellor or the Financial Secretary could find it convenient to indicate what these powers are.
    Mr. Leslie Hale: I have read the Clause with the greatest care, which involves the interest of my constituents, and I have completely failed to understand what it means. I have also read the appropriate section in the Finance Act (No. 2), 1940, and have tried to find enlightenment without success. I have tried to consider the Amendment and to understand what its effects would be.
    I am in rather a difficulty in discussing this matter, because I do not know whether what I shall be saying will be in order. It would, perhaps, be better if I adopted a scientific attitude and based my remarks on a working hypothesis, as the scientist does, in trying to find out what the Clause means by considering what the Financial Secretary, in his speech on Second Reading, indicated he thought it meant and my hon. Friend the Member for Blackburn, East (Mrs. Castle) has indicated she thinks it means.
    I propose, as a working hypothesis, also to consider whether the Amendment would carry out the intentions which my hon. Friend has so clearly expressed and desires to carry out. As a scientist, I work on the basic assumption that both these working hypothesis are almost certainly false and that time may well expose their falseness. Having put the position
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    clearly I should like to contribute one point of certitude which I have obtained in my research on this matter, and that is the answer to the question of what Mr. Gladstone said in 1865. I find that it is enshrined in the report of the committee which considered this question of Purchase Tax on stocks and reported to this House about 12 months ago. That was, I think, the Hutton Committee and I will enlighten the House in a moment.
    Being something of an individualist, I should like to say that I am very much in support of the hon. Lady's Amendment not merely because of her Amendment but because I am doubtful about the morals of this Clause. The Financial Secretary comes here and says that it is found that some ingenious people are evading the law. Therefore, steps are to be taken to stop it. Therefore, we will penalise all the people who are not ingenious and have not evaded the law and bring them into the ambit of some new punitive and almost penal provisions. That is the fact: I want to be fair in this matter. I am told that this debate has been conducted in a spirit of immense amity in my absence and I would not like to disturb that now. Let us, therefore, concede that views like that have been expressed by Chancellors on both sides of the House for a good many years.
    I am told that there was a time when the Financial Secretary, in my early day when I was learning the elements of politics, used to come here in Simonite robes of financial purity and lecture the House on questions of financial rectitude. I remember his speeches. They impressed me and I have been thinking over them. He has finally convinced me that what he said proves conclusively that what the Chancellor is now doing is fundamentally improper. It may be that in more enlightened decades a Chancellor will come to the House and tell the real truth of this matter, and say that tax evasion is now our largest industry and the Government propose to support it; but we have not got to that point yet.
    The Hutton Committee did consider this particular matter. It considered the whole question of how to face this problem of Purchase Tax on stocks which has always been an intractable problem and in which it quoted some very classic examples, things like refrigerators on which the tax one year was 33⅓ per cent.,

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    the next year nothing and then up to 100 per cent. and then down to nothing again. I promised that I would express Gladstone's remarks, which are extremely relevant. To quote from the report of the Committee:
    "We have been told that Mr. Gladstone, when Chancellor of the Exchequer, refused for a request for a rebate of duty on stocks of tea when the duty was reduced in 1865, with the words 'such a process is quite unknown to our usages.'"
    The implication of that is that we have always had complaints when the tax has gone down or up that it is a hardship on stocks.
    The Temporary Chairman (Wing Commander N. J. Hulbert): I must ask the hon. Gentleman to keep to the Amendment.
    4.30 p.m.
    Mr. Hale: The Amendment deals with the question of Purchase Tax on existing stocks. What my hon. Friend the Member for Blackburn, East suggests is that the deregistered people will have Purchase Tax put on to stocks which would not have borne Purchase Tax, that some of those stocks may have come from other sources, and that the deregistered people will suffer great hardship.
    The next paragraph in the Committee's report covers the matter with precision, because it points to exactly the principle I am putting. Successive Chancellors of the Exchequer have said, "There is only one way out of this. It may not be equitable or just, but it is practicable. One has to take the swings and roundabouts principle and say, 'When the tax goes up on something you are handling, you get the benefit, and when it goes down on something on which tax has been paid, you have to face a loss.' "Successive Chancellors have said, "You get it one way, you do not get it the other way, and that is all we can do." What is happening now is that the de-registered people are being hit both ways. The swings and roundabouts principle is being abandoned, and we are making selective legislation to deal with a limited class of case.
    So far as people who have the tax imposed are concerned, the Committee which considered this precise matter said:
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    "We take, by way of illustration, a tobacco manufacturer faced with the increase in duty in 1947. Because of the higher duty, he sold the tobacco he had in stock at a price correspondingly higher than it had cost him: but, provided he continued in his business of manufacturing tobacco, and on the same scale as before, he needed all the extra funds which he obtained in this way in order to pay the higher duty on his replacement stocks."
    That was the problem. That is the situation that these people have had to face.
    I have read the Clause carefully. I am not sure that the Amendment carries out my hon. Friend's intention, but she has made her intention abundantly clear. The Financial Secretary, in his speech on Second Reading, said this quite clearly, and used only a few words about it. He said he was dealing with the people who had put in extra stocks to get a benefit by deregistering and were using processes of deregistration by transfers to another associated company, and so on, to avoid their obligation.
    Very well; let that be done. But if, as the hon. Lady thinks, the provisions of the Clause include and penalise wholesalers who do not come within the ambit of the operations which the Financial Secretary has described, surely he ought to accept such an Amendment, however drafted, as would protect them from that exploitation and loss, particularly when on every representation they have made in the last 10 years on these fluctuations they have had the assurance that they do not get it one way but get it the other way and that that is all the Government can do for them.
    Mr. F. A. Burden: It has been evident on several occasions that hon. Members on this side are just as worried about this matter as are hon. Members opposite. I join my hon. and learned Friend the Member for York (Mr. Hylton-Foster) in thanking the hon. Lady the Member for Blackburn, East (Mrs. Castle) for giving us an opportunity to express our views this afternoon. We are anxious to elicit from my right hon. Friend the Chancellor of the Exchequer what powers the Commissioners of Customs and Excise are considered to have by Section 12 of the 1944 Act.
    The hon. Lady referred to the fear that the Clause, if accepted, would open the floodgates to wholesale deregistration. I assure my right hon. Friend that that is a sincere fear which is held, I would say,

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    by every wholesaler in the country. As far as I can see, the only power that was given under Section 12 of the 1944 Act was power to accept a person from registration when the tax on purchases would not be less than the tax on sales. Every time a wholesaler is to be registered, to ensure that that condition shall operate, his goods must be uplifted at the time of purchase so that there shall be no loss of revenue on sales.
    If one refers to the speech of the then Chancellor of the Exchequer, when Purchase Tax was introduced shortly after the beginning of the war in the Finance (No. 2) Act, 1940, it was evident that he regarded it as a tax only for the duration of the war. Section 12 of the 1944 Act, on the substance of which the deregistrations have taken place, was not discussed at any stage when it was introduced into the House of Commons; it was not given even the most cursory discussion or explanation. That might well be symptomatic of the view of Members of the House at that time—
    The Temporary Chairman: The hon. Member must not discuss the merits of the 1944 Act.
    Mr. Burden: The Clause is based upon, and is intended to extend, the terms of that Section of the Act, and I suggest that in those circumstances it is germane to the Clause and to the Amendment on the question of registration.
    The Temporary Chairman: The Committee is dealing with an Amendment to this year's Bill. While the hon. Member is in order in making a passing reference to the 1944 Act, he cannot discuss everything that happened 10 years ago.
    Mr. Burden: I leave that point by saying that it was not discussed at the time because it was considered that the end of the war would mean the end of the tax, and the end of the war was well in sight. That Section was intended as a relieving section, and this whole question has now arisen because it has been interpreted as a taxing section.
    I have had recently—and, I know, the hon. Lady has had—a considerable number of complaints, from both sides of the House, expressing the concern of firms and Members at the number of registrations that have been withdrawn
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    and cancelled. I have pursued this matter, as the hon. Lady the Member for Blackburn, East has pursued it, in an Adjournment debate on 18th March this year and also, before and since then, in Questions to my right hon. Friends the Chancellor of the Exchequer and the Financial Secretary.
    I have quoted cases in which withdrawals of registration were made for reasons other than those indicated in the Act. They were made for changes of address, to which my hon. and learned Friend has referred, for changes of legal status, and for other reasons. But where were these powers given by Parliament? I hope that, as my hon. and learned Friend and as the hon. Lady have asked, we shall have some enlightenment.
    As the hon. Lady has said, the Clause in its present form would open the floodgates for still greater deregistrations. Before the Committee agrees to accept the Clause, it would be well to state again the very grave circumstances and difficulties that come down upon wholesalers if the Clause is not amended.
    The Temporary Chairman: The hon. Member cannot discuss the whole Clause on this Amendment.
    Mr. Burden: Surely I am in order in pointing out what ill-effects will arise if the Amendment is not accepted. That is what I was proposing to do, because it is difficult to argue why an Amendment should be accepted—or that at least some undertaking should be given—if one cannot point out the grave consequences which follow if it is not accepted. That was what I was hoping to do.
    Where registration is taken away from a wholesaler he must pay Purchase Tax on his purchases, as is indicated in the Clause—unless there is some relief on the lines suggested by the hon. Lady—and, therefore, finds the finance for the tax on any stock of chargeable goods he may have on hand. If the rate of tax is reduced, or the tax withdrawn on any chargeable goods, he must immediately carry the entire loss of that tax, a contingent loss now imposed on retailers, and trade margins have to recognise this. But trade margins for wholesalers are very much smaller than they are for retailers, and therefore this tax will rest much more heavily upon the wholesalers than upon the retailers.
    The Temporary Chairman: Order. The hon. Member is directing his remarks to what will happen if the Clause is carried. I must ask him to direct his remarks to what will happen if the Amendment is carried.
    Mr. Burden: If the Amendment is carried, some relief will be given to manufacturers and they will not suffer the same financial loss as they do today, because it will ensure that the narrow terms as laid down in the 1940 Act for de-registering will then operate. Indeed, where manufacturers are uplifted at the moment on this basis they must pay a fixed rate of uplift, whereas with registered traders it is on a percentage basis.
    If it restricts deregistration the suggestion of the hon. Lady would arise because, if we maintain the registrations as they are today, the traders who are registered will continue to pay a percentage of Purchase Tax on their goods whatever the selling price may be; whereas, where they are deregistered, even if the traders have to sell their goods at a lower price, they must pay Purchase Tax on what is assessed to be a full and high wholesale value.
    There are many other points which relate to this matter, but my main point is the question of the withdrawal of registration, which has concerned my hon. and learned Friend seriously. In answer to a Question, the Financial Secretary informed me that in the year ended 31st December, 1953, 6,679 traders were deregistered. He added:
    "This figure includes the many cases where a registration is cancelled on a change of address or legal status and reissued."—[OFFICIAL REPORT, 1st April, 1954; Vol. 525, c. 2233.]
    But where are these powers to deregister on those terms? If we refer to the Grant Committee we find that a year ago there were 70,000 traders registered; so that in one year almost 10 per cent. of those registrations has been wiped out. Indeed, we find from statistics that there are just over 14,000 wholesalers and it is those people who are the butt of this attack. If we accept that some of them have been re-registered, it would appear that approximately a quarter of the wholesalers were de-registered during the year ended 31st December, 1953.
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    This is a serious matter, and the difficulties that it imposes have been made perfectly clear. In this connection, I want to refer to an answer given to me by the right hon. Gentleman in the Adjournment debate which I had on 18th March, because it is very apposite to this case about registrations. Referring to Her Majesty's Customs and Excise he said:
    "There is no question of personal convenience here, because it does not matter a rap to the officials concerned how many people are registered. The only question is the convenience to the public in regard to the size of staff."
    Now comes the essence of this, because it shows that the Financial Secretary realises the injustice of this matter—
    "For that reason, new registrations have not been granted to wholesalers"—
    The Temporary Chairman: Order. I must remind the hon. Member that this Amendment deals only with traders de-registered under the 1944 Act, and I must ask him to keep to that point.
    4.45 p.m.
    Mr. Burden: I am dealing specifically with the question of traders deregistered under the 1944 Act and so was the Financial Secretary. He went on to say:
    "'Special circumstances' means, for example, actual or potential export trade of some substance which makes it necessary for them to handle goods free of tax."
    This refers to the people who have been deregistered or sales to other registered manufacturers. The right hon. Gentleman went on to say that the matter had been complicated because, under the Act of 1940, everybody was exempted. He was replying to my point that this registration should not be removed. He went on:
    "If we did what my hon. Friend wants us to do, leaving that position unchanged, virtually anybody who happened to be in business in 1940 would have the advantages of registration,"
    Mark that, "advantages of registration." He continued:
    "while the new up-and-coming wholesalers would not get it, unless they satisfied such conditions as I indicated a moment ago. It is equally true that if, in fairness to the new wholesalers we deregistered the pre-1940 traders, we should cause great dislocation, because one of the consequences of de-registration is to impose a legal liability to pay tax on all the goods in stock."
    I suggest that this shows that, if this Clause is adopted, it will lead to great inequity, and I suggest that equity is one of the most important things in law.

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    With regard to the withdrawal of registrations, the right hon. Gentleman then said:
    "The third course is the one that has been followed under the present Administration and its predecessor—the choice of deregistration as and when a change takes place in the case of a trader whose circumstances would not justify a new registration."—[OFFICIAL REPORT, 18th March, 1954; Vol. 525, c. 743–5.]
    Now, who is the judge as to whether a registration is or is not justified? We have had no guidance on that point and I suggest that we should have some. I suggest also that a trader who is to be deregistered should have the right of appeal to a referee.
    The Chancellor of the Exchequer (Mr. R. A. Butler): That has nothing to do with the point of the Amendment.
    Mr. Burden: I am sorry. I shall endeavour to keep much closer to the point. One of the reasons, we were told, why the deregistrations were taking place was that there would be economy of administration.
    The Temporary Chairman: Order. The hon. Member must not discuss why the deregistrations took place.
    Mr. Burden: The people who have been deregistered have been deregistered because by deregistration it would be possible, we were told, to economise in the administration of the Customs and Excise Department. Therefore, I think we are justified in asking my right hon. Friend to tell us exactly what economies have been made. I understand that that branch of the service is undertaken—
    The Temporary Chairman: This Amendment is in very narrow limits, and deals with what happens to traders when they are deregistered.
    Mr. Burden: I leave that point.
    Mr. Anthony Greenwood: Surely, Wing Commander Hulbert, the hon. Gentleman is entitled to point out that unless the Chancellor of the Exchequer accepts the Amendment the hon. Gentleman will find it quite impossible to support the Clause in the Division Lobby later.
    Mr. Burden: My hon. and learned Friend the Member for York (Mr. Hylton- Foster) and the hon. Lady the Member for Blackburn, East have made it perfectly
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    clear that traders who are deregistered have had considerable difficulties imposed on them, and because of that I sincerely hope that, unless my right hon. Friend can show that there are very substantial reasons for the Clause as it is, he will not press again a Clause that extends deregistering.
    It is a very serious matter, and because of the hardship inflicted upon the de-registered traders, we are, I think, entitled to ask for a full explanation by my right hon. Friend. I ask him for an assurance that the powers that are given certainly will not be abused in future. I ask him to try to ensure in equity that the registered traders do not have great advantages over those traders it is proposed should be deregistered.
    Mr. Anthony Greenwood: We have heard two very forceful and anxious speeches from hon. Gentlemen opposite. We always listen to the hon. Member for Gillingham (Mr. Burden) on these themes with great interest, because he has had a long and intimate experience of retail trade.
    I think the Chancellor of the Exchequer really ought to take notice of what the hon. Member has said. One of the features of our debates on the Finance Bill every year is the anxiety and apprehension felt by hon. Gentlemen opposite. We on this side of the Committee find ourselves asking every year how much more anxious they will have to be before any action results from their anxiety.
    It is two years now since my hon. Friend the Member for Blackburn, East (Mrs. Castle) pressed this question of de-registration on the Chancellor of the Exchequer. During the two years the right hon. Gentleman has come some small way towards meeting my hon. Friend. If hon. Gentlemen opposite were even more anxious perhaps the Chancellor might be more amenable, and, this year, meet the case put so very well by my hon. Friend and backed up magnificently by the hon. Member for Gillingham.
    It appears quite clear from what hon. Members have said that traders may be deregistered in large numbers for administrative purposes only. The hon. Member for Gillingham reminded us that on a number of occasions he has brought instances of such deregistrations to the

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    notice of the Chancellor of the Exchequer. If the claim of the hon. Gentleman can be substantiated, as, no doubt, it can, then there can be no doubt that the situation is a very serious one indeed and fully justifies the somewhat colourful language used by my hon. Friend the Member for Blackburn, East.
    I think all of us should ask ourselves where this process will stop. Any additional uncertainty introduced into the world of trade at the present time cannot but do damage to the long-term interests of the country. Nobody in the Committee would wish to question the fact that the Commissioners of Customs and Excise are an admirable body of men, but I think it would be quite wrong if the Committee left too much to the discretion of a body of men who are, after all, civil servants.
    I hope that the Financial Secretary, who, I gather, in view of the absence of the Chancellor of the Exchequer, is to reply to the debate, will tell the Committee what are the powers in this respect of the Commissioners. In view of what the hon. Gentleman the Member for Gillingham has said, it seems to me that they are able to say,
    "I'll be Judge, I'll be jury."
    It would be quite indefensible if we allowed any section of the Civil Service to start taking powers unto itself that it could exercise for purely administrative reasons, and, apparently, quite remote from any decision the Committee may have taken. That I take to be the point of view of the hon. Gentleman the Member for Gillingham. It would be particularly indefensible if we placed upon the trading community an additional anxiety and burden of this kind merely for the convenience of officers of the State.
    It is worth pursuing a little the question of the number of registered traders who would be affected by the Amendment. We know from Appendix E of the Grant Report on Purchase Tax (Valuation) that there were at the time the Report was drawn up 10,800 manufacturing retailers registered; 36,000 other manufacturers; 14,300 wholesalers; and 6,700 manufacturers and processors registered under the Finance Act, 1946.
    The hon. Member for Gillingham gave some rather disturbing figures about the
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    number of deregistrations that have taken place since that time. I gather from him that since that time about 10 per cent. or over 6,000 of these registered traders have been deregistered, apparently by the arbitrary decision of the Commissioners of Customs and Excise. I hope that the Financial Secretary will be able to tell us in which of the categories described in the Grant Report those deregistrations have taken place and to what extent the number of wholesalers, which was then 14,300, has been reduced since the Grant Report was put before Parliament.
    The Financial Secretary told us on Second Reading that the purpose of the Clause, which we appreciate, is to prevent evasion of payment of Purchase Tax, but I think that if we are to take a step which many of us regard as being a retrograde step we ought to be told by the Financial Secretary to what extent evasions of the kind that the Clause is designed to remove were prevalent until the date to which he referred on Second Reading and what the loss was to the taxpayers. If the right hon. Gentleman cannot convince the Committee on that point I think it will be more than ever necessary to give the fullest support to the Amendment.
    The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): This debate has, as you yourself, Wing Commander Hulbert, from time to time have indicated, ranged rather wide. As, I think there is some misunderstanding on both sides of the Committee as to the effect of the Amendment it may be of assistance to the Committee if I say a word or two about it. As I said on Second Reading, and the hon. Lady the Member for Blackburn, East (Mrs. Castle) was good enough to quote what I said, the purpose of the Clause is to prevent a form of evasion, the means of effecting which have recently become known.
    5.0 p.m.
    It is a means of evasion which arises from the fact that, as we are now advised, on registration ceasing, stock in hand ceases to be liable to tax. The hon. Lady the Member for Blackburn, East made an admirably clear speech on a subject which, of its very nature, is not always particularly clear. She made it perfectly clear that the effect of her Amendment would be that where registration was withdrawn in the exercise of

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    powers under Section 12 of the Finance Act, 1944, such stocks as the trader might then have would be wholly free from tax.
    Bearing that in mind, we must address our minds to what the consequences of that would be.
    Mr. Eric Fletcher rose—
    Mr. Boyd-Carpenter: It would be extremely inconvenient at this stage if the hon. Member intervened. He knows that I give way frequently.
    The hon. Lady the Member for Blackburn, East said very fairly that she had no more wish to assist the evasion of tax than anybody else. Therefore, it is relevant to consider what effect the removal of this part of the Clause would have on the methods of preventing tax evasion. That is the nub of the argument on the Amendment. The Committee will appreciate that the holding of a Purchase Tax certificate with its consequence that the trader holds tax-free goods, quite clearly gives an opportunity for evasion to anybody who may be so disposed. The holding of any stock of goods which normally bear tax in a tax-free state offers opportunities to gentlemen or ladies who so desire to dispose of them through illicit channels to avoid tax.
    Therefore, one of the matters which, very properly, have concerned successive Governments and their servants in connection with the granting of a Purchase Tax certificate has been whether or not the applicant is the sort of person who can be safely entrusted with privileges which can be dangerous to the Revenue. What happens in the case of a person of that kind who has obtained a Purchase Tax certificate? The position now is that either the registration can be continued, which means that persons who have shown themselves to be prepared to abuse it are allowed to continue dealing in tax-free goods, or the registration is cancelled in exercise of the powers under Section 12 of the 1944 Act and the stock of goods immediately becomes tax-free.
    It is perfectly clear that in those circumstances, where a fraud is discovered, those who administer these provisions are placed in an awkward dilemma. Their duty is to protect the Revenue against abuse and fraud, and I am sure that the Committee support them in that duty. What are they to do in a case where a
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    registered trader is found to be disposing of goods without payment of tax? If they cancel his certificate and he has a large stock of goods they are presenting him with the advantage of having that stock of goods tax-free. Alternatively, they must go on supplying him with goods when, ex-hypothesi, he is prepared to continue the abuse.
    This is not a fiction of the imagination of either Ministers or officials. I have with me particulars of a number of cases where this precise dilemma has presented itself to those who have to administer these provisions.
    Mr. E. Fletcher: I wanted to intervene at a convenient point, and I now ask the right hon. Gentleman whether he is really saying that this dilemma has only just become apparent? Does he not know that it has always existed and that hitherto it has always been the case that where the Commissioners have decided to deregister they have known that one of the consequences was that the trader could dispose of stock in hand without Purchase Tax?
    Mr. Boyd-Carpenter: It has been generally believed by all concerned that deregistration would impose tax liability. It was believed that that was the law, and that is what it will be if the Committee accepts this Clause. After taking legal advice the Commissioners have taken the view, which it is difficult to controvert, that the consequences of de-registration is to free traders' stocks of liability to tax.
    The Clause as a whole tries to restore the position which was deemed until quite recently to exist. Everybody concerned took that view before.
    Mr. Fletcher: No.
    Mr. Boyd-Carpenter: That being so, we come to this dilemma. I ask the hon. Lady the Member for Blackburn, East whether it makes sense in cases where tax is being evaded by such expedients as false returns and where prosecution has successfully taken place, to go on entrusting the trader, found guilty by a competent court, with tax-free goods? Yet may we not feel that it would be wrong to deregister him if the consequences of deregistration is inevitably to present him with the advantage of all his stocks being made legally tax-free?
    Mrs. Castle: Is the right hon. Gentleman now trying to say that the bulk of deregistrations which have taken place under the Commissioners' powers under Section 12 of the 1944 Act have been deregistrations as a result of the wholesalers' abuse of the registration? Is it not a fact that cases of abuse are very occasional and the bulk of deregistrations were deregistrations made for the administrative convenience of the Customs and Excise, as the right hon. Gentleman admitted to me two years ago?
    Mr. Boyd-Carpenter: The hon. Lady knows perfectly well that the vast majority of traders, in this as in other spheres, are wholly honest and that a substantial majority of deregistrations have nothing whatever to do with any misconduct on the part of the traders concerned. They take place either on cessation or change of business.
    The hon. Lady, however, must face the fact that in cases where deregistration has to be effected, then, in order to prevent the defrauding of the Revenue by one or other of the methods that I have mentioned, deregistration almost invariably takes place under Section 12 of the 1944 Act. Therefore, if the Amendment were accepted we should place those responsible for the protection of the Revenue in a hopeless position
    Mr. Hale: The right hon. Gentleman has given us some important additional information. So far from the Revenue being defrauded, those responsible for the Revenue have been defrauding registered wholesalers for years, not with intent but because they did not understand the law themselves, with all their resources. They have been collecting Purchase Tax from unfortunate people who were not liable. The Committee is now being asked, not to make the law retrospective—because people apparently have acquiesced in this extortion and there is no threat yet of applications for reimbursement—but to make legal now what has been illegal. The right hon. Gentleman's almost ritualistic observations about the Revenue being defrauded seems singularly inappropriate when applied to transactions by which the Revenue has been enriched by unknown scores of thousands of pounds of illegal money.
    Mr. Boyd-Carpenter: I think the hon. Member is getting a little unduly excited.
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    If the Revenue has been enriched by large quantities of illegal money it was also during the term of office of his hon. Friends. [An HON. MEMBER: " "And before."] Yes, and before.
    The position, as I said on Second Reading, and as the hon. Member for Oldham, West (Mr. Hale) may recall, is that in general the provisions of Purchase Tax law which were enacted in the difficult summer of 1940 and the almost equally difficult summer of 1944 were obviously not so perfectly adjusted as they would have been in normal times. The pressure of events in a more competitive society into which our freer economy is moving, has revealed technical legal difficulties. This is not the only one. I do not think there is any need to get excited.
    I must bring the Committee back to the dilemma that, if we accepted the Amendment—while I am glad to say I believe our trading community to be generally honest—in the case of a comparatively limited number a trader, having obtained a certificate of registration, would either be in the position of having to be allowed to continue the use of the certificate which on these very assumptions he has abused, or be presented with a considerable tax-free benefit. The Committee must face that.
    Mr. Burden: On a point of information, which I believe to be a very important point, because no one would like it to go out that this House was in favour of people abusing their position as registered traders, is it not a fact that in the case of evasion there are very heavy penalties, which include three times the cost of the default or evasion and/or imprisonment? In addition, the Commissioners of Customs and Excise are empowered, where the integrity of a trader is questioned, to demand a surety in lieu of Purchase Tax.
    Mr. Boyd-Carpenter: My hon. Friend is quite right. The penalties are severe, but my hon. Friend must recall the words of Mrs. Beaton, "First, catch your hare," and also that it is one thing to impose massive fines and another thing to enforce their payment in the case of people with remarkably small means. The Committee must be realistic about this matter and not drift into a position in which it is said that it is quite all right to

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    acquiesce in the commission of fraud because in the long run a man can be hauled before the court and punished. That is not the way to safeguard the public revenues, and my hon. Friend knows it.
    There is this further consequence, which will be of some consolation to my hon. Friend. I must not incur the displeasure which your predecessor in the Chair indicated, Sir Charles, and go widely into registration policy, but I think I shall be in order if I indicate that there is one very clear connection between the matter we are discussing and the powers for carrying out the policy of registration. One of the reasons why it is necessary to be cautious in the grant of a Purchase Tax certificate is that, if we make the mistake of granting it to some dishonest person, we are faced with the difficulty I have frankly described to the Committee.
    Once we are in the position of knowing—as we shall be if the Committee is good enough to accept this Clause—that in case of fraud it is possible to cancel the certificate without presenting the trader concerned with a tax-free benefit, it becomes easier to be freer in the granting of registration because, in granting registration where otherwise we might hesitate, we would then not necessarily be running into this difficulty. One of the purposes which may be served by this Clause as it stands and which, if it were amended as the hon. Lady suggests, would not be served, is that it will be possible in this way to be a little easier in the grant of certificates than has been thought desirable under a series of Governments.
    Mrs. Castle rose—
    5.15 p.m.
    Mr. Boyd-Carpenter: I will give way in a moment, but I want to add something in this context which may interest her. This is material to the subject under discussion. At this moment discussions are taking place with some of the trade interests concerned with a view to seeing whether it will be possible to become a little easier in the grant or retention of Purchase Tax certificates than has been found possible in the past. It is, I think, clear that if we are to move in that direction without acting irresponsibly in relation to our duty to see that the Revenue is not defrauded, the
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    provisions of the Clause should be enacted so that the difficulties that I have described will not arise.
    I may be on the verge of order, Sir Charles, but I hope that I am on the inner rather than the outer verge. No one could have sat on either of the Front Benches in this Committee without realising the difficulties and friction which this whole question of Purchase Tax registration inevitably involves, and which it would inevitably involve whichever of the alternative policies were pursued. But, as I indicated in the Adjournment debate a few months ago, and further indicate now, we are trying to move to a somewhat freer position in this respect, and we are hopeful of doing so if the Committee gives us this Clause.
    Mrs. Castle: Is the right hon. Gentleman really telling the House that his Department and the Customs and Excise have now reversed the policy which he described to me two years ago as administratively desirable—that is, to decrease the number of tax points because of the need to police the law? Is he now saying that he wants this Clause to enable the Customs and Excise to register more wholesalers and not fewer?
    Mr. Boyd-Carpenter: The purpose of this Clause is the very converse of what the hon. Lady said in her speech when she said that it would open the floodgates to deregistration. The purpose lying behind our general attitude in this matter is not a reversal of the position, in the dramatic phrase of the hon. Lady, but an easing of the position and a somewhat freer grant of new certificates, coupled, as I indicated in the House a month or two ago, with a somewhat less restricted attitude on deregistration policy. As has been made clear, although my hon. Friend the Member for Gillingham (Mr. Burden) did not understand it, it is no longer the case that the mere change of address of an existing company automatically involves deregistration, as was the case for many years.
    Perhaps I have strayed a little from the subject of the debate, but I am not the only offender, Sir Charles, and there is at any rate a connection between the provisions of this Clause and the general questions of deregistration and registration which have been matters of very sincere and deep concern to us. I am

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    afraid that if we were to accept this Amendment it would inevitably restore the difficulty I have described of dealing with that small, but not altogether insignificant, minority who take advantage of the difficulties of policing the tax in order to evade it. I hope I have explained that, far from there being any justification for the use of the phrase—on both sides of the Committee— "opening the floodgates to deregistration," the effects are likely to lead in the opposite direction.
    Mr. Hugh Gaitskell: The Financial Secretary has thrown further light on the motives of the Government in introducing this Clause into the Bill. But he did not deal at all adequately with the point raised by my hon. Friend the Member for Blackburn, East (Mrs. Castle). Indeed at one or two points the right hon. Gentleman appeared to be in a self-contradictory position. On the one hand he based most of his argument on the illegal or criminal activities of certain traders, and the next moment he was at pains to impress upon the Committee how few there were of them, while nevertheless admitting that a large number of other people—apparently completely honest people—would be affected by this Clause.
    I make no apology for reverting to the purpose of the Amendment. This is a complicated business and it is not easy to keep completely in order, but I will do my best. As it stands, the Amendment intends to exempt from this Clause certain classes of persons who have been deregistered, that is, persons who are deregistered and cease to be registered under Section 12 of the 1944 Act.
    That Section relates to the powers of the Commissioners themselves to take people off the register, to deregister them or to refuse registration. It is, therefore, dealing with a class of person who, not of their own free will, but because of what the Commissioners decided, are deprived of the opportunity to behave in business as can registered persons, in other words, to hold tax-free goods.
    During his Second Reading speech the Financial Secretary gave as an illustration for this Clause the case of a firm which defrauded the Revenue by changing its name and transferring its
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    plant and material to some other firm and then, left with a stock of unfinished commodities, was able to dispose of that tax free. That is a situation which no one would defend. That clearly is a deliberate decision by the firm to deregister in order to avoid taxation and to make the profit which it will no doubt obtain as a result of being able to sell tax-free goods.
    It is a totally different situation from that of a firm which is deregistered by the Customs and where the initiative is on the side of the officials. The Financial Secretary says, "Oh yes, but these people who are deregistered by the Customs—or at any rate some of them—are very wicked. They have been breaking the law. They have been entrusted with power and freedom to hold tax-free goods and they have abused that trust and, therefore, it is only fair that when they are struck off the register they should not be allowed to make any gain out of it."
    That may be true of a limited number, but again it seems to me no argument whatever for penalising all the others who are deregistered, not because they are doing anything illegal, but because of conditions which are satisfied under Section 12 of the 1944 Act—in other words, that the Revenue does not lose any tax as a result of their being taken off the register. If the Financial Secretary says that it is not reasonable that a firm which has actually been convicted in a court of law of evading tax should be allowed to get away with it, I am disposed to agree with him. But that could be taken care of, surely, by limiting the application of this Clause to convicted persons.
    There is no reason why the net should catch all the innocent people as well. I find the argument of the Financial Secretary unconvincing.
    Mr. Boyd-Carpenter: Leaving aside the case of a convicted person, which I gather the right hon. Gentleman does not propose to defend, is his argument that in all other cases where deregistration is effected in the exercise of powers under Section 12 of the 1944 Act it should automatically give them exemption from tax?
    Mr. Gaitskell: That is the purpose of the Amendment, and I am saying that if these people were innocent and were

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    taken off the register merely because of the conditions laid down in Section 12 of the 1944 Act in the first place that might possibly involve them in considerable losses.
    There have been many complaints about this matter. The Financial Secretary is familiar with the trouble there has been in the trade about this matter. Now the intention is that they are to be deprived of what was admittedly the advantage—I concede that—of being able to dispose of stocks they held without payment of tax.
    Mr. Boyd-Carpenter: However large.
    Mr. Gaitskell: However large. That, of course, is necessarily involved, and I concede it at once.
    This is a matter of balance, however. Although it is our duty to assist the Government to strengthen the law against the wrongdoers, it is also our duty to protect those who do no wrong, and in our vigour to carry out the first of these principles we must not ignore the second. No one more than the Financial Secretary, when he was in Opposition, was more concerned with the second of these principles.
    There is a great deal in what was said by my hon. Friend about the opening of the floodgates, although that may have been a rather picturesque phrase. But it is clearly laid down in Section 12 of the 1944 Act that the decision whether or not to deregister turns on this arithmetical calculation, whether on balance the Revenue will lose or gain tax. There can be no doubt that as a result of the new Clause, if it is not amended, there will be a result from that arithmetic likely to be more favourable to the Revenue if deregistration is contemplated. Therefore, if they are carrying out the provision of Section 12 of the 1944 Act, it surely follows that there is real danger, with the sum coming out in this way, that a lot mroe people will, in fact, be deregistered.
    I confess that a lot of what the Financial Secretary said sounded very well, but it did not seem to me to relate at all to the 1944 Act, and we are left in an extremely difficult position. We do not know on what basis the Customs will operate. If we take the law as it stands we are driven to the conclusion that the result of this Clause, in its present
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    form and without the Amendment, will be to do harm to a lot of perfectly respectable and reasonable people. It may also not only do harm to them in the sense that they have to pay tax where they have not done so before; many more people also will be put in the position of being deprived of the benefit of registration. I remain quite unconvinced by the reply of the Financial Secretary to my hon. Friend, and I hope that she will continue to press this matter.
    Mr. Boyd-Carpenter: Perhaps it would be courteous for me to endeavour to reply to the two points made by the right hon. Gentleman. I understand that he is not prepared to argue the case of the convicted trader, but in the case of the innocent trader he thought it would be a good thing that deregistration should automatically carry with it tax immunity on stock, however large.
    Mr. Gaitskell: That is the case.
    Mr. Boyd-Carpenter: The right hon. Gentleman, of course, will be aware that, as was said by his hon. Friend the Member for Oldham, West (Mr. Hale) liability on stocks was thought to be the law and it was apparently not thought necessary by the previous Administration to alter what was thought to be the law.
    The second point made by the right hon. Gentleman is more important—the point about the effect on registration and deregistration. As I told the Committee, it is our view that the enactment of this Clause will make it safer and easier to grant registration more freely because, as I tried to explain, under the position as it will be under this Clause, if we register someone who turns out to be a rogue—
    Mr. Hale rose—
    Mr. Boyd-Carpenter: No, I must answer the points of the right hon. Gentleman.
    The position is that, under the existing law, if we register someone who turns out to be a rogue we are in the dilemma that we either have to present him with a tax-free benefit on the stocks or, alternatively, we have to continue the registration, thus enabling him to continue to get away with it.
    Mr. Gaitskell: Surely the third possibility is to prosecute him.
    5.30 p.m.
    Mr. Boyd-Carpenter: It may well be that in due course we shall be able to do so, but the right hon. Gentleman knows perfectly well that sometimes there is a considerable interval between the discovery of a fraud and the initiation of a prosecution.
    It is, in fact, easier to grant registration if we know that deregistration will not have these possibly embarrassing consequences to the Revenue, and it is, therefore, our intention to use the safer position—not, as the hon. Lady put it, to reverse the general policy which has been followed under Socialist Governments, but to be somewhat easier both in the granting of new registrations and, as a corollary, somewhat easier in the continuation of registrations which might otherwise be cancelled.
    It is for that purpose that discussions on these highly technical matters are taking place at the moment between some of the trade organisations concerned and the officials for whom I am responsible.
    Mr. Hale: The reason I asked the question was that the Financial Secretary, in answering an interjection, said that the position of the wholesalers, when this Clause was passed, would be what he and his predecessors in office had always thought it to be. If that is so, what is the change which now permits him to say that there will be an improvement in the registration position?
    Mr. Boyd-Carpenter: It has been ascertained in recent months that the position was not as it was thought to be, and that must have repercussions upon registration policy. I should have thought the hon. Member would follow that.
    Mr. E. Fletcher: I hope that my hon. Friend the Member for Blackburn, East (Mrs. Castle) will press the Amendment, because I regard the Financial Secretary's speech and his subsequent intervention as thoroughly unsatisfactory. The Financial Secretary must face the fact that either he has been singularly misinformed, which I am bound to say is rare, or that he has been less than frank with the Committee, which is also something which I hesitate to suggest.
    A great deal has emerged during this remarkable debate today and we have learned much more about the Govern-
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    ment's intentions under the Clause than was revealed by the Financial Secretary in his Second Reading speech. If we look again at what the right hon. Gentleman said on Second Reading, in the light of what has been said this afternoon, we find a totally different picture of the Government's real intentions in introducing the Clause. Those intentions would not have been disclosed had the Amendment not been put down.
    On Second Reading, the Financial Secretary recommended the Clause to the House on the ground that quite recently a particularly ingenious method of tax evasion had been discovered and that it was necessary to close the loophole. He said that one or two very ingenious people had discovered that, by closing down their business and perhaps forming a subsidiary or related company, they could escape liability to Purchase Tax on the whole of their stocks. He said that was a shocking thing to permit and, it having been discovered, the loophole must be closed; and it was closed on the Saturday before he spoke.
    But it has now been revealed that that was not the Financial Secretary's intention at all. He had a far more sinister intention. We all approved of what he said on Second Reading, for we are all in favour of stopping tax evasion, and if that had been the only reason it would have had our wholehearted support. The Amendment was put down because it seemed to us that, as the Clause stood, it would cause considerable hardship to honest traders. But what has been revealed this afternoon is that the Financial Secretary knew on Second Reading that the object of the Clause was not merely to stop tax evasion but was also to make it easier for the Commissioners of Customs and Excise to deregister persons under Section 12 of the Act of 1944.
    Mr. Boyd-Carpenter: I thought I had indicated that it was the very opposite. It was to make it easier to grant and to maintain registration.
    Mr. Fletcher: The object which the right hon. Gentleman now outlines is different from that which he gave on Second Reading. He is now saying that it is not merely to deal with tax evasion. I say

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    that it is to enable deregistration to be carried out more easily.
    The Financial Secretary says that his secondary object was to make it easier for the Commissioners to register people, because it would give them an additional power of deregistration. It is no use the right hon. Gentleman shaking his head. We must probe this matter, for it is not something which the Financial Secretary can laugh off. I am glad to see that he is explaining it to the Chancellor of the Exchequer, because if he does not explain it to the Chancellor, I propose to do so. With great respect, I would rather do it my own way.
    We have now seen that behind the Clause and behind the reasons which the Financial Secretary gave there was a secondary and hidden reason for the Clause, which I regard as a very sinister reason. It has been revealed during this debate. It is to enable the Customs to have freer agency in the use of their powers of deregistration under Section 12 of the 1944 Act. As my hon. Friends have pointed out, there has been considerable concern in the past about the powers which the Commissioners have used in deregistering certain wholesalers. That point has been mentioned by several hon. Members opposite, including the hon. Member for Gillingham (Mr. Burden) and the hon. and learned Member for York (Mr. Hylton-Foster).
    There is no doubt about this: a number of wholesalers, through no fault of their own, were deregistered for Purchase Tax purposes because it suited the administrative convenience of the Customs. I do not object to that. Until a certain date, it was not realised that deregistration enabled the trader who had been de-registered to sell his stock without liability to Purchase Tax. The Financial Secretary was courageous enough in his speech to say that he found himself in a dilemma.
    Now that it has been discovered that on deregistration the trader can sell his stock in hand without liability to Purchase Tax, what had previously been regarded as the Commissioner's powers of deregistration are circumscribed by the obvious sanction that if they are used the trader concerned will be able to sell his stock without paying Purchase Tax. Where the Financial Secretary was less
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    than frank was in suggesting by implication that this was something which had only just been realised. My information, which I have taken steps to verify, is quite to the contrary.
    It has been known to the Commissioners for two or three years at least that whenever they exercised their powers of deregistration under Section 12 of the 1944 Act, it enabled the trader, in law, to sell his stock without paying Purchase Tax. Whether all the traders who have been deregistered have been equally conscious of that fact is another matter. Some of them may have been left in ignorance.
    The Financial Secretary even admitted that for years the Treasury has been deliberately collecting much Purchase Tax to which it was not in law entitled, and that one of the objects in putting down this Clause was to remedy that defect of the law. I am not for the moment arguing whether that is a good or a bad thing to do, but if that is the object behind this Clause, then it is something which ought to have been explained on Second Reading, and ought not to be slipped into the Finance Bill under cover of an attempt to stop tax evasion, which we all support.
    Mr. Sydney Silverman: Is my hon. Friend saying that the Clause would be retroactive so as to legalise the collection of Purchase Tax which otherwise would have been illegal?
    Mr. Fletcher: That is another matter. It is a very interesting suggestion which my hon. Friend has made concerning the legal position regarding those traders who, without being compelled or without being liable to do so, paid the Purchase Tax. Whether they have the right to recover it is another matter, and it is perhaps a matter on which my hon. Friend can speculate.
    What I think we must get clear is that, if we have now discovered what is the real object of the Government in this matter, namely, to enable them to take powers to deregister without the consequence of enabling the trader to escape the Purchase Tax, that is a matter which should have been provided for in a Clause specially designed for that purpose. They ought to discriminate between the dishonest trader, who has been accused of some fraud, convicted and found guilty, and who ought properly to

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    be deregistered, and, in that case, ought not to be allowed to have his stock free of Purchase Tax, and all other cases, of which some of my hon. Friends have given a number of illustrations.
    There is no reason whatever why, under the cover of an attempt to stop tax evasion, bona fide genuine traders, who have been registered for a long time, and who, purely for reasons of administrative convenience, the Government now want to deregister, should be penalised in this way. That is just McCarthyism. It is trying to do by sinister, obscure administrative machinery something which the Government are not prepared to put in a straightforward manner in their legislation.
    I hope that my hon. Friends, and those on the Benches opposite who have listened to this argument—and many of them have supported it—will realise the overwhelming justice of this Amendment. The only way in which the Financial Secretary and the Chancellor can extricate themselves from the thoroughly dishonourable position in which they have placed the Committee is by accepting the Amendment, and, if they feel that they have a further problem to tackle, by dealing with it in a separate Clause.
    Mr. Douglas Jay: I think this has been a very valuable debate, and that it has revealed a very unsatisfactory state of affairs. In the first place, apparently, the Government have been illegally raising taxation for some years, and their only defence is that they did not know they were doing it. In the second place, we have now ascertained that the Financial Secretary had a purpose in this Clause which he did not reveal on Second Reading; that is to say, to make it easier to deregister traders.
    I think both sides of the Committee are anxious about the extent of de-registration. It is a complex matter, and it may be that the Amendment which we have proposed is not entirely satisfactory to the Government. I should like to ask the Chancellor, now that he has had time to read his brief, even if he has not listened to the whole of the debate, if, in order to meet the anxieties on both sides of the Committee, he will give an assurance that he will reconsider the
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    whole problem and recommend some solution to us on Report stage that will meet the point of view that we have put forward.
    If he can do that, I do not think it will be necessary to press the matter now, but, if the right hon. Gentleman is not able to undertake to reconsider the problem completely, I think I must advise my hon. Friends to press the matter to a Division.
    5.45 p.m.
    Mr. R. A. Butler: I am afraid that I cannot give any such undertaking to the right hon. Gentleman. The object of the Clause is as was stated by my right hon. Friend the Financial Secretary. Owing to very pressing business, I was obliged to leave the Chamber for half an hour, but I was aware of what my right hon. Friend has said, because he discussed it with me before he said it, and, in my experience, he usually says what he intends to say. Therefore, I must stand by the arguments which he used. The object of the Clause is as the Financial Secretary stated. Hon. Members opposite have said that they are behind the Government in seeking to stop tax evasion, and I think we must all support methods designed to that end.
    The hon. Member for Islington, East (Mr. E. Fletcher) talked about McCarthyism, which is a gross exaggeration and should not be accepted by the Committee.
    Mr. S. Silverman: A gross exaggeration of McCarthyism.
    Mr. Butler: I accept the correction of the hon. Member for Nelson and Colne (Mr. S. Silverman)—a gross exaggeration of McCarthyism.
    The right hon. Member for Battersea, North (Mr. Jay) referred to the fact that the Government have been drawing in taxation quite deliberately when they should not have done so. I cannot accept the extreme position which he describes. So far as there has been any difficulty, I think the right hon. Gentleman himself and his own Administration would have to take their share in the situation which arose in those circumstances. The only thing that we can do now is to ask the Committee to come to a decision on this matter.
    Mrs. Castle: I think none of us would blame the Chancellor for having to be

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    elsewhere while these matters are being discussed, and I am not blaming him for not having been here during the whole of the debate, though it really does make the right hon. Gentleman's comments in reply to the remarks of my right hon. Friend very unsatisfactory. The Chancellor said that he had seen the arguments of the Financial Secretary, but, of course, what he has not heard has been the demolition of those arguments by my hon. Friends on this side of the Committee, and the failure of the Financial Secretary to answer the points which we have put to him.
    Mr. Butler: I have not been able to hear every speech, but the hon. Lady's speech was so beautifully clear and comprehensive that, when I had heard it, I had heard all.
    Mrs. Castle: The Chancellor always misjudges my sex when he imagines that we are deflected from our purpose by casual compliments, and, of course, the Chancellor was quite wrong.
    There have been many points of great substance put by my hon. Friends in this debate which have not been answered by the Financial Secretary. I am sorry, but it really is quite impossible for me to accept the Financial Secretary's claim that one of his purposes in this Clause is to make the registration of wholesalers easier and enable the Commissioners to register more. If only the Financial Secretary could have seen the look of blank incredulity on the face of his hon. Friend the Member for Gillingham (Mr. Burden) when he was making those remarks, I think the right hon. Gentleman would have been really shocked.
    Those of us who have discussed this problem with the trade in preparation for this debate have found no evidence of any kind of such a practice as the Financial Secretary mentioned. The argument is entirely the other way. I am not making a party point on this matter, but the Financial Secretary should be aware that the danger is all the other way, as I explained in my speech. In view of the refusal of the Chancellor to try to meet the anxieties on both sides of the Committee between now and Report stage, I must press this Amendment to a Division.
    Sir Herbert Williams: I find the situation unintelligible. I have
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    read the Amendment several times, and I have read Section 12 of the Finance Act, 1944, and I am still not clear about it. I missed the speech by the hon. Lady because I was busy on the telephone to my constituency, but I think I have heard all the arguments in favour of the Amendment.
    It is clear that certain people have been getting away with money improperly, and that the Treasury has also been getting away with money improperly. This matter concerns both the payers of Purchase Tax and the collectors. Both have been charged with infamous conduct this afternoon. We have been told that the object of the Clause is to enable the registration of more people, but we do not know where we are.
    This is an issue that I do not understand, and which I think most hon. Members around me do not understand. There ought to be further investigation and explanation by the Chancellor of the Exchequer or the Financial Secretary. Usually I can understand the Financial Secretary, but I did not understand him today. I hope there will be further examination of this difficult problem, about which a great many traders are gravely perturbed.
    Mr. Burden: The hon. Lady has emulated Eve in a most attractive manner, but, so far as I am concerned, although she and her hon. Friend, in a very bland manner, suggested that I should go with them into the Division Lobby, she will be disappointed, in view of my right hon. Friend's categorical assurance that the Clause will be used for relief and not for additional taxation, and that very considerable care will be exercised in future in withdrawing registration from traders. I am very hopeful, as I know many of my hon. Friends are, that such care will be taken and that the undertakings given will be carried out. I am sure that my hon. Friends feel as I do on this matter, and will join me now in supporting the Government.
    Mr. S. Silverman: Will the hon. Member explain how he reconciles the confidence which he has just expressed with the declaration of the Government that they and previous Governments have for 10 years been collecting a lot of money to which they were not entitled, together

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    with the implication that they propose to retain it?
    Mr. Burden: There are occasionally difficulties of that sort. I find it far less difficult to support my right hon. Friend in this matter than the hon. Member for
    Nelson and Colne (Mr. S. Silverman) has sometimes found it in his own case to support his own leaders.
    Question put, "That those words be there inserted."
    The Committee divided: Ayes, 219; Noes, 233.

    Division No. 118.]

    AYES

    [5.52 p.m

    Acland, Sir Richard

    Hall, Rt. Hon. Glanvil (Colne Valley)

    Paling, Will T. (Dewsbury)

    Adams, Richard

    Hall, John T. (Gateshead, W.)

    Palmer, A. M. F.

    Allen, Scholefield (Crewe)

    Hamilton, W. W.

    Pannell, Charles

    Anderson, Frank (Whitehaven)

    Hannan, W.

    Pargiter, G. A.

    Awbery, S. S.

    Hargreaves, A.

    Parker, J.

    Bacon, Miss Alice

    Hastings, S.

    Parkin, B. T.

    Balfour, A.

    Hayman, F. H.

    Pearson, A.

    Bellenger, Rt. Hon. F. J

    Henderson, Rt. Hon, A. (Rowley Regis)

    Plummer, Sir Leslie

    Bence, C. R.

    Herbison, Miss M.

    Porter, G.

    Benson, G.

    Hewitson, Capt M.

    Price, J. T. (Westhoughton)

    Beswick, F.

    Holman, P.

    Proctor, W. T

    Bing, G. H. C

    Holmes, Horace

    Pryde, D. J

    Blackburn, F.

    Holt, A. F.

    Rankin, John

    Blenkinsop, A.

    Houghton, Douglas

    Reid, Thomas (Swindon)

    Blyton, W. R.

    Hoy, J. H.

    Reid, William (Camlachie)

    Boardman, H

    Hudson, James (Ealing, N.)

    Rhodes, H.

    Bowen, E. R.

    Hughes, Cledwyn (Anglesey)

    Roberts, Albert (Normanton)

    Bowles, F. G

    Hughes, Emrys (S. Ayrshire)

    Roberts, Goronwy (Caernarvon)

    Braddock, Mrs. Elizabeth

    Hughes, Hector (Aberdeen, N.)

    Robinson, Kenneth (St. Pancras, N.)

    Brockway, A. F.

    Irving, W. J. (Wood Green)

    Rogers, George (Kensington, N.)

    Brook, Dryden (Halifax)

    Isaacs, Rt. Hon. G. A.

    Ross, William

    Broughton, Dr. A. D. D.

    Janner, B.

    Royle, C.

    Brown, Thomas (Ince)

    Jay, Rt. Hon. D. P. T.

    Shackleton, E. A. A.

    Burke, V. A.

    Jeger, George (Goole)

    Shinwell, Rt. Hon. E.

    Carmichael, J.

    Jeger, Mrs. Lena

    Short, E. W.

    Castle, Mrs. B. A

    Jenkins, R. H. (Stechford)

    Shurmer, P. L. E.

    Champion, A. J.

    Johnson, James (Rugby)

    Silverman, Julius (Erdington)

    Chapman, W. D.

    Jones, David (Hartlepool)

    Silverman, Sydney (Nelson)

    Clunie, J.

    Jones, Frederick Elwyn (West Ham, S.)

    Simmons, C. J. (Brierley Hill)

    Coldrick, W.

    Jones, Jack (Rotherham)

    Skeffington, A. M.

    Collick, P. H.

    Jones, T. W. (Merioneth)

    Slater, Mrs. H. (Stoke-on-Trent)

    Corbet, Mrs. Freda

    Keenan, W.

    Slater, J. (Durham, Sedgefield)

    Cove, W. G.

    Kenyon, C.

    Smith, Ellis (Stoke, S.)

    Craddock, George (Bradford, S.)

    Key, Rt. Hon. C. W.

    Smith, Norman (Nottingham, S.)

    Crosland, C. A. R.

    Kinley, J.

    Snow, J. W.

    Crossman, R. H. S.

    Lawson, G. M.

    Sorensen, R. W.

    Cullen, Mrs. A.

    Lee, Frederick (Newton)

    Soskice, Rt. Hon. Sir Frank

    Daines, P.

    Lee, Miss Jennie (Cannock)

    Sparks, J. A.

    Dalton, Rt. Hon. H.

    Lewis, Arthur

    Stewart, Michael (Fulham, E.)

    Darling, George (Hillsborough)

    Logan, D. G.

    Stokes, Rt. Hon. R. R.

    Davies, Ernest (Enfield, E.)

    MacColl, J. E.

    Strachey, Rt. Hon. J.

    Davies, Harold (Leek)

    McGhee, H. G.

    Strauss, Rt. Hon. George (Vauxhall)

    Deer, G.

    McInnes, J.

    Stress, Dr. Barnett

    Delargy, H. J.

    McKay, John (Wallsend)

    Summerskill, Rt. Hon. E.

    Ede, Rt. Hon. J. C.

    McLeavy, F.

    Sylvester, G. O.

    Edwards, Rt. Hon. John (Brighouse)

    MacMillan, M. K. (Western Isles)

    Taylor, Bernard (Mansfield)

    Edwards, Rt. Hon. Ness (Caerphilly)

    Mainwaring, W. H.

    Taylor, John (West Lothian)

    Evans, Albert (Islington, S.W.)

    Mallalieu, E. L. (Brigg)

    Taylor, Rt. Hon. Robert (Morpeth)

    Evans, Stanley (Wednesbury)

    Mallalieu, P. P. W. (Huddersfield, E.)

    Thomas, Iorwerth (Rhondda, W.)

    Fernyhough, E.

    Mann, Mrs. Jean

    Thomas, Ivor Owen (Wrekin)

    Finch, H. J.

    Manuel, A. C.

    Timmons, J

    Fletcher, Eric (Islington, E.)

    Marquand, Rt. Hon. H. A.

    Tomney, F.

    Follick, M.

    Messer, Sir F.

    Turner-Samuels, M.

    Foot, M. M.

    Mikardo, Ian

    Ungoed-Thomas, Sir Lynn

    Forman, J. C.

    Mitchison, G. R.

    Viant, S. P.

    Fraser, Thomas (Hamilton)

    Monslow, W.

    Warbey, W. N.

    Freeman, Peter (Newport)

    Moody, A. S.

    Watkins, T. E.

    Gaitskell, Rt. Hon. H. T. N

    Morrison, Rt. Hon. H. (Lewisham, S.)

    Wells, Percy (Faversham)

    Gibson, C. W.

    Mort, D. L.

    Wells, William (Walsall)

    Glanville, James

    Moyle, A.

    West, D. G.

    Gooch, E. G.

    Mulley, F. W

    Wheeldon, W. E.

    Gordon-Walker, Rt. Hon. P. C.

    Nally, W.

    White, Mrs. Eirene (E. Flint)

    Greenwood, Anthony (Rossendale)

    Neal, Harold (Bolsover)

    White, Henry (Derbyshire N.E.)

    Grenfell, Rt. Hon. D. R.

    Noel-Baker, Rt. Hon P J

    Whiteley, Rt. Hon. W.

    Grey, C. F.

    Oldfield, W. H

    Wilcock, Group Capt. C. A. B

    Griffiths, David (Rother Valley)

    Oliver, G. H.

    Wilkins, W. A.

    Griffiths, Rt. Hon. James (Llanelly)

    Orbach, M.

    Willey, F. T.

    Griffiths, William (Exchange)

    Oswald, T.

    Williams, David (Neath)

    Grimond, J.

    Paget, R. T.

    Williams, Rev. Llywelyn (Abertillery)

    Hale, Leslie

    Paling, Rt. Hon. W. (Dearne Valley)

    Williams, Ronald (Wigan)

    Wiliams, Rt. Hon. Thomas (Don V'll'Y)

    Wilson, Rt. Hon. Harold (Huyton)

    Yates, V. F.

    Williams, W. R. (Droylsden)

    Winterbottom, Richard (Brightside)

    Williams, W. T. (Hammersmith, S.)

    Woodburn, Rt. Hon. A.

    TELLERS FOR THE AYES:

    Willis, E. G.

    Wyatt, W. L.

    Mr. Wallace and Mr. Arthur Allen.

    NOES

    Aitken, W. T.

    Gough, C. F. H.

    Noble, Comdr. A. H. P

    Allan, R. A. (Paddington, S.)

    Gower, H. R.

    Nugent, G. R. H.

    Alport, C. J. M.

    Graham, Sir Fergus

    Odey, G. W.

    Amery, Julian (Preston, N.)

    Grimston, Hon. John (St. Albans)

    O'Neill, Hon. Phelim (Co. Antrim, N.)

    Amory, Rt. Hon. Heathcoat (Tiverton)

    Grimston, Sir Robert (Westbury)

    Orr, Capt. L. P. S.

    Anstruther-Gray, Major W. J.

    Hall, John (Wycombe)

    Osborne, C.

    Arbuthnot, John

    Harden, J. R. E.

    Page, R. G.

    Assheton, Rt. Hon. R. (Blackburn, W.)

    Hare, Hon. J. H.

    Peake, Rt. Hon. O.

    Astor, Rt. Hon. J. J.

    Harris, Frederic (Croydon, N.)

    Peto, Brig. C. H. M.

    Baldock, Lt.-Cmdr. J. M.

    Harris, Reader (Heston)

    Peyton, J. W. W.

    Baldwin, A. E.

    Harvey, Air Cdre. A. V. (Macclesfield)

    Pilkington, Capt. R. A.

    Banks, Col. C.

    Harvey, Ian (Harrow, E.)

    Pitt, Miss E. M.

    Barber, Anthony

    Hay, John

    Price, Henry (Lewisham, W)

    Barlow, Sir John

    Heath, Edward

    Prior-Palmer, Brig O. L.

    Baxter, A. B.

    Higgs, J. M. C.

    Raikes, Sir Victor

    Beach, Maj. Hicks

    Hill, Dr. Charles (Luton)

    Rayner, Brig. R.

    Bell, Philip (Bolton, E.)

    Hinchingbrooke, Viscount

    Redmayne, M.

    Bennett, F. M. (Reading, N.)

    Hirst, Geoffrey

    Rees-Davies, W. R.

    Bennett, Dr. Reginald (Gosport)

    Holland-Martin, C. J.

    Remnant, Hon. P.

    Bevins, J. R. (Toxteth)

    Hopkinson, Rt. Hon. Henry

    Renton, D. L. M.

    Birch, Nigel

    Hornsby-Smith, Miss M. P.

    Roberts, Peter (Heeley)

    Bishop, F. P.

    Horobin, I. M.

    Robertson, Sir David

    Black, C. W.

    Horsbrugh, Rt. Hon. Florence

    Rodgers, John (Sevenoaks)

    Boothby, Sir R. J. G.

    Howard, Gerald (Cambridgeshire)

    Roper, Sir Harold

    Boyd-Carpenter, Rt. Hon. J. A.

    Hudson, W. R. A. (Hull, N.)

    Roper, Col. Sir Leonard

    Boyle, Sir Edward

    Hurd, A. R.

    Russell, R. S.

    Braine, B R.

    Hutchison, Sir Ian Clark (E'b'rgh, W.)

    Ryder, Capt. R. E. D.

    Braithwaite, Sir Albert (Harrow, W.)

    Hyde, Lt.-Col. H. M.

    Sandy's, Rt. Hon. D.

    Braithwaite, Sir Gurney

    Hylton-Foster, H. B. H.

    Savory, Prof. Sir Douglas

    Bromley-Davenport, Lt.-Col. W. H.

    Iremonger, T. L.

    Schofield, Lt.-Col. W.

    Brooke, Henry (Hampstead)

    Jenkins, Robert (Dulwich)

    Scott, R. Donald

    Browne, Jack (Govan)

    Jennings, Sir Roland

    Scott-Miller, Cmdr. R.

    Buchan-Hepburn, Rt. Hon. P. G. T.

    Johnson, Eric (Blackley)

    Shepherd, William

    Bullard, D. G.

    Jones, A. (Hall Green)

    Simon, J. E. S. (Middlesbrough, W.)

    Bullus, Wing Commander E. E.

    Joynson-Hicks, Hon. L. W

    Snadden, W. McN.

    Burden, F. F. A.

    Kaberry, D.

    Soames, Capt. C.

    Butcher, Sir Herbert

    Kerby, Capt. H. B.

    Spearman, A. C. M.

    Butler, Rt. Hon. R. A. (Saffron Walden)

    Kerr, H. W.

    Speir, R. M.

    Cary, Sir Robert

    Lambert, Hon. G.

    Stanley, Capt. Hon. Richard

    Channon, H.

    Lambton, Viscount

    Stevens, Geoffrey

    Clarke, Col. Ralph (East Grinstead)

    Langford-Holt, J. A.

    Stewart, Henderson (Fife, E.)

    Clarke, Brig. Terence (Portsmouth, W.)

    Leather, E. H. C.

    Stoddart-Scott, Col. M.

    Clyde, Rt. Hon. J. L.

    Legge-Bourke, Maj. E. A. H.

    Storey, S.

    Cole, Norman

    Lindsay, Martin

    Strauss, Henry (Norwich, S.)

    Conant, Maj. R. J. E.

    Linstead, Sir H. N.

    Sutcliffe, Sir Harold

    Cooper, Sqn. Ldr, Albert

    Llewellyn, D. T.

    Taylor, Sir Charles (Eastbourne)

    Cooper-Key, E. M.

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Taylor, William (Bradford, N.)

    Craddock, Beresford (Spelthorne)

    Lockwood, Lt.-Col. J. C.

    Teeling, W.

    Crookshank, Capt. Rt. Hon. H. F. C

    Longden, Gilbert

    Thomas, Rt. Hon. J. P. L. (Hereford)

    Crosthwaite-Eyre, Col. O. E.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Thomas, Leslie (Canterbury)

    Crouch, R. F.

    Lucas, P. B. (Brentford)

    Thomas, P. J. M. (Conway)

    Crowder, Sir John (Finchley)

    Lucas-Tooth, Sir Hugh

    Thompson, Lt.-Cdr. R. (Croydon, W.)

    Crowder, Petre (Ruislip—Northwood)

    Lyttelton, Rt. Hon. O.

    Thornton-Kemsley, Col. C. N.

    Darling, Sir William (Edinburgh, S.)

    McCallum, Major D.

    Tilney, John

    Davidson, Viscountess

    McCorquodale, Rt. Hon. M. S.

    Touche, Sir Gordon

    Deedes, W. F.

    Macdonald, Sir Peter

    Turner, H. F. L.

    Donaldson, Cmdr. C. E. McA

    Mackeson, Brig. Sir Harry

    Turton, R. H.

    Doughty, C. J. A.

    McKibbin, A. J.

    Tweedsmuir, Lady

    Drayson, G. B.

    Mackie, J. H. (Galloway)

    Vaughan-Morgan, J. K.

    Drewe, Sir C.

    Maclean, Fitzroy

    Vosper, D. F.

    Dugdale, Rt. Hon. Sir T. (Richmond)

    Macleod, Rt. Hon. Iain (Enfield, W.)

    Wakefield, Edward (Derbyshire, W.)

    Duncan, Capt. J. A. L.

    MacLeod, John (Ross and Cromarty)

    Wakefield, Sir Wavell (St. Marylebone)

    Duthie, W. S.

    Macpherson, Niall (Dumfries)

    Walker-Smith, D. C.

    Eden, J. B. (Bournemouth, West)

    Maitland, Comdr. J. F. W. (Horncastle)

    Wall, P. H. B.

    Elliot, Rt. Hon. W. E.

    Manningham-Buller, Sir R. E.

    Ward, Hon. George (Worcester)

    Erroll, F. J.

    Markham, Major Sir Frank

    Ward, Miss I. (Tynemouth)

    Finlay, Graeme

    Marshall, Douglas (Bodmin)

    Waterhouse, Capt. Rt. Hon. C.

    Fisher, Nigel

    Maude, Angus

    Watkinson, H. A.

    Fort, R.

    Maudling, R.

    Webbe, Sir H. (London & Westminster)

    Foster, John

    Maydon, Lt.-Comdr. S. L. C.

    Wellwood, W.

    Fraser, Hon. Hugh (Stone)

    Medlicott, Brig. F.

    Williams, Gerald (Tonbridge)

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Meller, Sir John

    Williams, Sir Herbert (Croydon, E)

    Galbraith, T. G. D. (Hillhead)

    Moore, Sir Thomas

    Williams, Paul (Sunderland, S.)

    Gammans, L. D.

    Morrison, John (Salisbury)

    Williams, R. Dudley (Exeter)

    Garner-Evans, E. H.

    Nabarro, G. D. N.

    Wills, G.

    George, Rt. Hon. Maj. G. Lloyd

    Neave, Airey

    Wood, Hon. R.

    Glover, D.

    Nicholls, Harmar

    Godber, J. B.

    Nicholson, Godfrey (Farnham)

    TELLERS FOR THE NOES:

    Mr. Studholme and Mr. Legh.

    Mr. Jay: I beg to move, in page 3, line 28, to leave out from "shall," to "be," in line 29.
    The previous debate showed, I think, that it is very desirable that we should examine this Clause carefully. The Chancellor yesterday rather implied that he disliked any discussions on this Bill at all, but I think that he is in a more accommodating mood today, no doubt in view of the heavy defeat of the Government on the question of beer earlier this afternoon and following their previous defeat on Monday.
    This Clause was introduced by the Financial Secretary as a measure against evasion. He explained then—and we have discussed it again this afternoon—that it has now been discovered that when a trader ceases to be registered, or, more literally, ceases to require to be registered, his stocks of goods are no longer subject to the tax and he can dispose of them tax free. Incidentally, we have had from the Financial Secretary this afternoon the interesting admission that deregistration, at any rate in quite a number of cases, is carried out with the main objective of preventing fraud. Nevertheless, the Financial Secretary told us that in the great majority of cases where deregistration occurs, its purpose does not imply any fraud or abuse on the part of the trader, but is done for the convenience of the Customs.
    If the great majority of traders in this case are perfectly honest and are in a sense the victims of the Administration, it is essential—though we all want to prevent tax evasion—that we should see that the interests of the honest majority of traders are protected. The Financial Secretary said on Second Reading that the purpose of subsection (2) of the Clause, an Amendment to which we are now considering, was to ensure that there was no resulting hardship because the taxpayer had insufficient time in which to pay the tax following deregistration, or, indeed, following the cessation or change of business which also might, as I understand, place the taxpayer in this situation.
    Therefore, to avoid that hardship, subsection (2) lays down that the Customs may defer the time at which tax has to be paid in a situation of this kind. But the subsection also contains these words:
    460
    "Payment of tax due by virtue of the foregoing subsection shall"—
    and these are the words to which we want to draw attention on this Amendment"—
    subject to any conditions the Commissioners may impose for the purpose of protecting the revenue …"
    Those words, which we here seek to omit from the Clause, would apparently legally enable the Commissioners of Customs and Excise to impose any conditions whatsoever which they choose to impose on the taxpayer before allowing him—though in the majority of cases he is honest and blameless—the benefit of this deferment from paying tax.
    The Clause does not even say that payment shall be subject to any reasonable conditions that the Commissioners may impose for the purpose of protecting the revenue. I wish to ask the Financial Secretary whether there is any good reason why we should not include the word "reasonable" in the Clause at some stage. Presumably, the Clause as drafted would enable the Commissioners to take a view, and to enforce a view, as to how the goods were to be sold, when they were to be sold, or in what form and to whom they were to be sold, and in other circumstances of that kind which one might care to mention.
    It is quite true, of course, that according to the Clause, all these conditions have to be imposed for the purpose of protecting the Revenue. It is, however, the Commissioners themselves who are the judges of whether or not the conditions which they impose do protect the Revenue. Therefore, that does not seem to me to be a very great safeguard.
    It is very difficult to see why the Government, if they had certain conditions in mind, could not have specified the actual conditions in the Clause. In fact, they do specify some conditions because the Clause says that the payment may
    "be deferred for such period as the Commissioners may allow having regard to the said purpose"
    of protecting the Revenue, and so on. As the Chancellor has included at least one precise condition in the Bill it is very hard to understand why he could not have specified the conditions he had in mind rather than put in this sweeping form of words:
    "… subject to any conditions the Commissioners may impose …"

    461
    You will recall, Sir Rhys, that in Opposition the Financial Secretary was always the greatest critic of giving sweeping powers to the bureaucracy, and enabling the Executive to override the subject without any remedy—and all the rest of it. He is now giving the widest possible power to the tax collector. It would have been quite possible to define them in the Bill.
    I know that one can always say, "That may be true but though the Bill enables the Customs and Excise to do almost anything it likes in this case, we all know that it is very reasonable and public-spirited and can be trusted never to abuse its powers." I fully agree that in all cases I have come across it has shown itself reasonable and public-spirited, but it is not our duty to pass bad laws and trust that they will be carried out properly.
    I do not think that we should say that it can all be left safely to the Customs and gaily pass the Clause in a thoroughly unsatisfactory form. It is our duty to see that the statutes are good and are carried out by a reasonable and public spirited Department as a whole. It seems to us that we should not this afternoon leave in the Bill sweeping and vague words of this kind.
    I should like the Financial Secretary to tell the Committee exactly what the objection is to leaving out these words. It would still be possible, as I understand the subsection, for the Commissioners to defer payment of tax
    "… for such period as the Commissioners may allow having regard to the said purpose and to the time when tax in respect of the goods might have been expected to become payable …"
    One would have thought that a reasonable enough safeguard without having this sweeping provision.
    6.15 p.m.
    Mr. E. Fletcher: Because of the extraordinary statement which we have had from the Financial Secretary on the last Amendment, this one is even more serious than I thought when it was put down.
    When this Clause was first commended to the House we were told that it was merely intended to stop tax evasion and to catch the crook. Even then the Financial Secretary said, "But you can still have reasonable safeguards. You must make provision to avoid hardship." Even in those circumstances the Financial
    462
    Secretary said it was right to prevent hardship to the crooks whom the Clause was designed to catch.
    We now know, on the Financial Secretary's admission, that that is not its only object. It is intended, also, to enable the Commissioners to deregister honest traders. It is against that background that we must decide whether the proposed safeguards against hardship are adequate. From that standpoint the criterion as to whether the safeguards are reasonable must be judged on a higher plane, and my right hon. Friend's remarks on the totally inadequate nature of the safeguards in the subsection become most important.
    What did the Financial Secretary say? He said:
    "Provision is made, therefore, in subsection (2) for the actual payment to be deferred subject to reasonable safeguards and, in particular, for account to be taken for this purpose of the general way and speech at which goods can be disposed of in the trade concerned."—[OFFICIAL REPORT, 3rd May, 1954; Vol. 527, c. 31.)
    There are no reasonable safeguards at all. Subsection (2) leaves everything to the arbitrary conditions which the Commissioners may think fit to impose.
    The Deputy-Chairman (Sir Rhys Hopkin Morris): It seems to me that all that this Amendment is concerned with is whether the conditions should be left to the Commissioners or not.
    Mr. E. Fletcher: Exactly, Sir Rhys. I am saying that they should not, because it deprives the taxpayer of any safeguard at all if it is left
    "… subject to any conditions the Commissioners may impose for the purpose of protecting the revenue …"
    It is proper to protect the Revenue. It is equally proper that the honest trader should not be penalised.
    Perhaps I may give an example. If a trader is deregistered either because he has been evading tax or for administrative convenience, his stock, which has been free of tax, will, at the moment of deregistration, become subject to tax. The Government therefore say that it is reasonable that he should have adequate time to pay. He should have adequate time to dispose of his stock either to a registered dealer or by exporting it.

    463
    One of our objections is that under this Clause the Commissioners are enabled to defer the time within which the Purchase Tax is payable. subject to any conditions which the Commissioners choose to impose. I should have thought that if a man sells his stock to a registered trader or exports it then, if he has already paid Purchase Tax because he has not been allowed enough deferred time the Government would have conceded that at least he was entitled to a refund.
    As it stands the Clause recognises that he is entitled to a remission to purchase duty if the goods are exported in a particular time. Why should not he be entitled to a refund of his purchase duty at any time if he exports the goods? If he exports the goods at any time no Purchase Tax is payable. Why should there be any conditions of that kind imposed by the Government?
    The Deputy-Chairman: I think that the argument of the hon. Member might very well arise on the Question, "That the Clause stand part of the Bill." It does not arise on this Amendment.
    Mr. Fletcher: I appreciate your Ruling, Sir Rhys. I thought this was part and parcel of the same objection and I did not wish to repeat the argument later. I appreciate, however, that it will be open to develop this then. I support my right hon. Friend. To me it seems a very sweeping provision that the Commissioners should be given complete carte blanche in this way. It is unreasonable, and inconsistent with what the Financial Secretary said.
    Mr. Douglas Houghton: I see that my name stands to this Amendment, which rather surprises me, because I am all in favour of protecting the Revenue. Let me also say that I do not easily lend my support to anti-bureaucracy Amendments, and that, although I hold no brief for the Customs and Excise, some rather hard things have been said about the Commissioners in this debate. On the opposite benches, they have been described as rogues and guilty of misconduct. An hon. Member on this side of the Committee said that they have been defrauding the taxpayer, and it seems to me that it is about time a word was said in their defence. If this had
    464
    been the Inland Revenue and not the Customs and Excise, I should have been more passionate in my defence.
    The Amendment proposes to leave out the words:
    "subject to any conditions the Commissioners may impose for the purpose of protecting the revenue."
    I think the Committee will agree that the Commissioners of Customs and Excise must be responsible for protecting the Revenue when they give time to pay under the provisions of this subsection. The question is whether written into the statute there shall be words which give them the power to impose any conditions for the protection of the Revenue.
    At present, I am very annoyed with the Chancellor of the Exchequer, because powers in the hands of the inspector of taxes not similarly written into the Act in terms, when exercised in a manner which brings forth a whiff of grapeshot from the Institute of Directors, immediately lead the Chancellor or the Financial Secretary to apologise and to let down the whole lot of inspectors with a bump.
    Mr. R. A. Butler: The hon. Gentleman has no right whatever to say that. He cannot point to a single public statement by me as Chancellor of the Exchequer where I have not stood squarely behind the Revenue. The sole occasion when my hon. Friend has apologised was when there was a reason to apologise and when, as everybody knows, in a particular case there was something which had gone a little too far. Please do not think that this Administration is not behind the very distinguished service which the hon. Member represents so ably.
    Mr. Houghton: I am very grateful to the right hon. Gentleman for that intervention. I should be out of order if I pursued the matter further. All I can say is that I had very good reason, in my own judgment, for the statement that I made, but this is not the moment to pursue it. In any event, what the Chancellor of the Exchequer said is great comfort indeed to a large body of men and women who have been anxious in recent days.
    To get back to the Amendment, what I think is important is that if powers of this sweeping nature are given to the

    465
    Customs and Excise Department, the Committee should stand behind the Department if it imposes any conditions for the protection of the Revenue. If the Committee does not really intend that the Commissioners shall have the power to impose any conditions for the protection of the Revenue, then I think that in the interests of both the Department and the taxpayer, we should be careful to say what we mean and what powers we intend them to have. That is why I think the Financial Secretary should tell the Committee just what is intended by the words which are sought by this Amendment to be omitted.
    I intend to keep an open mind on the matter until I hear what the Financial Secretary has to say, because it is easy to give Departments certain powers and taxpayers certain rights, and we have no idea what safeguards can be imposed when it comes to protecting the Revenue. Obviously, if people are going to hold taxable goods on which the tax is not to be paid in a lump sum but, as the subsection says,
    "Payment of tax due by virtue of the foregoing subsection shall … be deferred"
    because it is reasonable that tax shall not be collected while the goods are still in stock, and if the payment of the tax is to be deferred as laid down here and the Revenue is to be protected, the question is: what are the conditions which can reasonably be imposed by the Commissioners?
    The subsection says "any conditions." Do the Government really mean" any conditions "and are they prepared to stand by "any conditions"? I should much prefer that either we should substitute the word "reasonable" for the word "any," as suggested by my right hon. Friend, or the words should be left out altogether. But I do not feel desperately strongly about it as long as the Committee is clear what powers are to be given to the Department in this subsection.
    Mr. Boyd-Carpenter: The point raised in this Amendment is comparatively simple and straightforward, and I do not think it lends itself to the very complex arguments which arose on the previous one.
    Subsection (2) makes provision for the deferment of payment of tax after de-
    466
    registration and, as the Committee will see, it provides that tax may be deferred—leaving out the words which are sought to be left out—
    "for such period as the Commissioners may allow having regard to the said purpose. …"
    The point, and indeed the justification, for the words which it is sought to leave out is this. It is desired to give reasonable time to pay in all proper cases. But there may arise cases in which if, without safeguard, the power to defer payment is exercised, real risk of loss to the Revenue may arise, and it may, therefore, well be the case that if we had no power to impose safeguards it would not be possible to allow deferment of payment. It is to be able safely to defer payment that I suggest that it is necessary to have these words—that is to say, to allow the imposition of conditions for deferment.
    The hon. Member for Sowerby (Mr. Houghton) asked what sort of conditions were contemplated. Broadly, they are of two categories. One is the actual giving of security, and that is perhaps the most obvious and easy one. It might, however, be that there would be cases in which it would not be reasonable to ask for that as a condition, because the trader concerned might not have the cash available to do it. In those circumstances, it might be desirable to have some arrangement under which the trade undertook to notify the Customs of details of his stock fairly frequently so that a check could be kept to ensure that the stock was not being disposed of without payment of tax.
    All that is involved in these few words which we are discussing is the provision of a power to impose conditions to allow us to grant deferment of payment more easily than would be the case if these powers were not included. I hope I have made it clear to the Committee that the point of imposing conditions is that the Customs may be able to defer payment rather generally in these cases. I must say that if the Committee, in its wisdom, thought that these words should be taken out, it would be much more difficult for the Customs to defer payment as generously as they and we would wish.
    I therefore suggest to the Committee that these words are important, not least from the point of view of the traders concerned, and I hope that the Committee will agree to leave them in.
    6.30 p.m.
    Mrs. Castle: In a matter of this kind I should always expect to form a united front with my hon. Friend the Member for Sowerby (Mr. Houghton) because I am the daughter of an inspector of taxes. As such, I have a profound respect for the judgment and integrity of the Inland Revenue Department. I have never heard anything about the work of the Commissioners of Customs and Excise which has led me to believe that their standards are anything but equally high.
    I therefore agree with my hon. Friend that our purpose in putting down the Amendment is not merely to bait officials who cannot answer back. It is the duty of the Committee to protect officials who are doing a job of public importance on behalf of us all. It is also our duty, in discussing the Clause, to do our utmost to protect the honest trader—and during the course of our debate this afternoon it has been clear that the honest trader is in need of protection, because the Clause was originally introduced—
    The Deputy-Chairman: I do not think that that arises on the Amendment.
    Mrs. Castle: With respect, I think it does, Sir Rhys, because I am suggesting that these words remove from the trader a protection to which he is entitled.
    We have already had it made perfectly clear this afternoon that the Clause is not related purely to wholesalers who are being deregistered because they have been discovered in some undesirable or dishonest activity. It is recognised that subsection (2) covers honest as well as dishonest wholesalers—in fact, it covers predominantly honest wholesalers—who, for some reason or another, have been deregistered, a large number of them having been deregistered at the instigation of the Commissioners of Customs and Excise for purposes of administrative convenience.
    These traders are entitled to the consideration of the Committee in the handling of their affairs when they are compulsorily deregistered by the Customs and Excise. During Second Reading, the Financial Secretary told us that the Clause was designed to mitigate the hardship which may arise. If he is prepared to do that when we are discussing subsection (1), which is purely in terms of
    468
    dishonest traders, how much more should he be prepared to do it when we are discussing predominantly honest wholesalers.
    Despite what the Financial Secretary has said, I suggest that the words in the Clause are unreasonable. He has given us a couple of illustrations to interpret what these words could mean, but we must look at words as they are, not as they might be interpreted. Let us see what they say. The right to have payment of tax deferred shall be "subject to any conditions," however unreasonable those conditions may be, which are laid down by the Customs and Excise. Once we use the phrase "any conditions," we nullify the entire protection which it was intended to give to the trader under subsection (2).
    I think my hon. Friend the Member for Sowerby will agree that this is giving an unusually wide latitude to officials, who may then come under attack for having operated it. From that point of view, as well as from the point of view of protecting the trader, we ought to have words which are less wide, less open, and which do not completely nullify the intention which the Financial Secretary himself gave in introducing the Clause.
    Mr. Jay: May I put two brief questions which might enable us to avoid dividing the Committee on this issue? We have been told that there are two specific types of conditions which the Government seek to impose under the Clause. Why should those two types not be specified in the Bill, instead of asking the Committee to grant powers which, by virtue of the use of the word "any," clearly go far beyond the powers which the Financial Secretary says that he needs?
    Secondly, why does the Chancellor think it right under this subsection to give "any powers" to the Commissioners of Customs and Excise, whereas in the other case, concerning the Inland Revenue, he equally definitely took the view that the Inland Revenue had gone beyond the powers which in that case he thought it appropriate to exercise?
    Mr. Boyd-Carpenter: In reply to a direct question by the hon. Member for Sowerby (Mr. Houghton), I gave two

    469
    examples of the way in which the powers would generally require to be used. I did not say that in all conceivable circumstances they would necessarily be the only two ways, although they will generally be the normal ways. It would be difficult to design a form of words which could apply to every conceivable circumstance.
    The right hon. Member for Battersea, North (Mr. Jay) will realise that if we failed to design words to cover any conceivable circumstance, the consequence would not be a benefit to the trader but the reverse of a benefit, because it would not then be possible for the Commissioners to give him the deferment which, as the Clause is drafted, they will be able to give.
    Dealing with the right hon. Gentleman's second question, if it is in order, I suggest that he has the wrong end of the stick. The very fact that in an extreme, isolated case my right hon. Friend thinks that the action which has been taken by any Revenue Department has gone too far should surely be an assurance that my right hon. Friend will continue to exercise properly the powers which he is given in the Clause. I hope that the very example which the right hon. Gentleman has given will, out of his own mouth, reassure him.
    Question put, "That the words proposed to be left out stand part of the Clause."
    The Committee divided: Ayes, 221; Noes, 211.

    Division No. 119.]

    AYES

    [6.35 p.m.

    Allison, W. T.

    Doughty, C. J. A.

    Jones, A. (Hall Green)

    Alpert, C. J. M.

    Drayson, G. B.

    Kaberry, D.

    Amory, Rt. Hon. Heathcoat (Tiverton)

    Drewe, Sir C.

    Kerby, Capt. H. B.

    Anstruther-Gray, Major W. J.

    Dugdale, Rt. Hon. Sir T. (Richmond)

    Kerr, H. W.

    Arbuthnot, John

    Duncan, Capt. J. A. L.

    Lambert, Hon. G.

    Assheton, Rt. Hon. R. (Blackburn, W.)

    Duthie, W. S.

    Lambton, Viscount

    Astor, Hon. J. J.

    Elliot, Rt. Hon. W. E.

    Langford-Holt, J. A.

    Baldock, Lt.-Cmdr. J. M.

    Erroll, F. J.

    Leather, E. H. C.

    Baldwin, A. E.

    Finlay, Graeme

    Legge-Bourke, Maj. E. A. H.

    Banks, Col. C.

    Fisher, Nigel

    Legh, Hon. Peter (Petersfield)

    Barber, Anthony

    Fort, R.

    Lindsay, Martin

    Barlow, Sir John

    Foster, John

    Linstead, Sir H. N.

    Beach, Maj. Hicks

    Fraser, Hon. Hugh (Stone)

    Llewellyn, D. T

    Bell, Phillip (Bolton, E.)

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Bennett, F. M. (Reading, N.)

    Fife, Rt. Hon. Sir David Maxwell

    Lockwood, Lt.-Col. J. C.

    Bennett, Dr. Reginald (Gosport)

    Galbraith, T. G. D. (Hillhead)

    Longden, Gilbert

    Bevins, J. R. (Toxteth)

    Gammons, L. D.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Birch, Nigel

    Garner-Evans, E. H.

    Lucas, P. B. (Brentford)

    Bishop, F. P.

    George, Rt. Hon. Maj. G. Lloyd

    Lucas-Tooth, Sir Hugh

    Black, C. W.

    Glover, D.

    Lyttelton, Rt. Hon. O

    Boothby, Sir R. J. G.

    Godber, J. B.

    McCallum, Major D.

    Boyd-Carpenter, Rt. Hon. J. A.

    Gough, C. F. H.

    Macdonald, Sir Peter

    Boyle, Sir Edward

    Gower, H. R.

    McKibbin, A. J.

    Braine, B. R.

    Graham, Sir Fergus

    Mackie, J. H. (Galloway)

    Braithwaite, Sir Albert (Harrow, W.)

    Grimston, Hon. John (St. Albans)

    Maclean, Fitzroy

    Braithwaite, Sir Gurney

    Grimston, Sir Robert (Westbury)

    Macleod, Rt. Hon. Iain (Enfield, W.)

    Bromley-Davenport Lt.-Col. W. H.

    Harden, J. R. E.

    MacLeod, John (Ross and Cromarty)

    Browne, Jack (Govan)

    Hare, Hon. J. H.

    Maitland, Comdr. J. F. W. (Horncastle)

    Buchan-Hepburn, Rt. Hon. P. G. T.

    Harris, Frederick (Croydon, N.)

    Manningham-Buller, Sir R. E.

    Bullard, D. G.

    Harris, Reader (Heston)

    Markham, Major Sir Frank

    Bullus, Wing Commander E. E.

    Harrison, Col. J. H. (Eye)

    Marshall, Douglas (Bodmin)

    Burden, F. F. A.

    Harvey, Air Cdre A. V. (Macclesfield)

    Maude, Angus

    Butcher, Sir Herbert

    Harvey, Ian (Harrow, E.)

    Maudling, R.

    Butler, Rt. Hon. R. A. (Saffron Walden)

    Hay, John

    Maydon, Lt.-Comdr. S. L. C.

    Cary, Sir Robert

    Heath, Edward

    Medlicott, Brig. F.

    Channon, H.

    Higgs, J. M. C.

    Mellor, Sir John

    Clarke, Col. Ralph (East Grinstead)

    Hill, Dr. Charles (Luton)

    Moore, Sir Thomas

    Clarke, Brig. Terence (Portsmouth, W.)

    Hirst, Geoffrey

    Morrison, John (Salisbury)

    Clyde, Rt. Hon. J. L.

    Holland-Martin, C. J.

    Nabarro, G. D. N.

    Cole, Norman

    Hopkinson, Rt. Hon. Henry

    Neave, Airey

    Conant, Maj. R. J. E.

    Hornsby-Smith, Miss M. P.

    Nicholls, Harmar

    Cooper, Sqn. Ldr. Albert

    Horobin, I. M.

    Nicholson, Godfrey (Farnham)

    Cooper-Key, E. M.

    Horsbrugh, Rt. Hon. Florence

    Noble, Comdr. A. H. P.

    Craddock, Beresford (Spelthorne)

    Howard, Gerald (Cambridgeshire)

    Nugent, G. R. H.

    Crookshank, Capt. Rt. Hon. H. F. C.

    Hudson, W. R. A. (Hull, N.)

    Odey, G. W.

    Crosthwaite-Eyre, Col. O. E.

    Hurd, A. R.

    O'Neill, Hon. Phelim (Co. Antrim, N.)

    Crouch, R. F.

    Hutchison, Sir Ian Clark (E'b'rgh, W.)

    Ormsby-Gore, Hon. W. D.

    Crowder, Sir John (Finchley)

    Hyde, Lt.-Col. H. M.

    Orr, Capt. L. P. S.

    Crowder, Peke (Ruislip—Northwood)

    Hylton-Foster, H. B. H.

    Osborne, C.

    Darling, Sir William (Edinburgh, S.)

    Iremonger, T. L.

    Page, R. G.

    Davidson, Viscountess

    Jenkins, Robert (Dulwich)

    Peake, Rt. Hon. O.

    Deedes, W. F.

    Jennings, Sir Roland

    Peto, Brig. C. H. M.

    Donaldson, Cmdr. C. E. M.A.

    Johnson, Eric (Blackley)

    Peyton, J. W. W.

    Pitman, I. J.

    Soames, Capt. C.

    Tweedsmuir, Lady

    Pitt, Miss E. M.

    Spearman, A. C. M.

    Vaughan-Morgan, J. K.

    Price, Henry (Lewisham, W.)

    Speir, R. M.

    Vosper, D. F.

    Prior-Palmer, Brig. O. L.

    Stanley, Capt. Hon. Richard

    Wakefield, Edward (Derbyshire, W.)

    Raikes, Sir Victor

    Stevens, Geoffrey

    Wakefield, Sir Wavell (St. Marylebone)

    Rayner, Brig. R

    Stewart Henderson (Fife E.)

    Walker-Smith, D. C.

    Redmayne, M.

    Stoddart-Scott, Col. M.

    Wall. P. H. B.

    Remnant, Hon. P.

    Storey, S.

    Ward, Hon. George (Worcester)

    Robertson, Sir David

    Strauss, Henry (Norwich, S.)

    Ward, Miss I. (Tynemouth)

    Rodgers, John (Sevenoaks)

    Sutcliffe, Sir Harold

    Waterhouse, Capt. Rt. Hon. C.

    Roper, Sir Harold

    Taylor, Sir Charles (Eastbourne)

    Watkinson, H. A.

    Ropner, Col. Sir Leonard

    Taylor, William (Bradford, N.)

    Webbe, Sir H. (London & Westminster)

    Russell, R. S.

    Teeling, W.

    Wellwood, W.

    Ryder, Capt. R. E. D.

    Thomas, Rt. Hon. J. P. L. (Hereford)

    Williams, Gerald (Tonbridge)

    Sandys, Rt. Hon. D.

    Thomas, Leslie (Canterbury)

    Williams, Sir Herbert (Croydon, E.)

    Savory, Prof. Sir Douglas

    Thomas, P. J. M. (Conway)

    Williams, Paul (Sunderland, S.)

    Schofield, Lt.-Col. W.

    Thompson, Lt.-Cdr. R. (Croydon, W.)

    Williams, R. Dudley (Exeter)

    Scott, R. Donald

    Thornton-Kemsley, Col. C. N.

    Wood, Hon. R.

    Scott-Miller, Cmdr. R.

    Tilney, John

    Shepherd, William

    Touche, Sir Gordon

    TELLERS FOR THE AYES:

    Simon, J. E. S. (Middlesbrough, W.)

    Turner, H. F. L.

    Mr. Studholme and Mr. Wills.

    Snadden, W. McN.

    Turton, R. H.

    NOES

    Acland, Sir Richard

    Gibson, C. W.

    Manuel, A. C.

    Adams, Richard

    Glanville, James

    Marquand, Rt. Hon. H. A.

    Albu, A. H.

    Gooch, E. G.

    Messer, Sir F.

    Allen, Arthur (Bosworth)

    Gordon-Walker, Rt. Hon. P. C.

    Mikardo, Ian

    Allen, Scholefield (Crewe)

    Greenwood, Anthony (Rossendale)

    Mitchison, G. R

    Anderson, Frank (Whitehaven)

    Grenfell, Rt. Hon. D. R.

    Monslow, W.

    Attlee, Rt. Hon. C. R.

    Grey, C. F.

    Moody, A. S.

    Awbery, S. S.

    Griffiths, David (Rother Valley)

    Morrison, Rt. Hon. H. (Lewisham, S.)

    Bacon, Miss Alice

    Griffiths, Rt. Hon. James (Llanelly)

    Mort, D. L.

    Balfour, A.

    Griffiths, William (Exchange)

    Moyle, A.

    Bellenger, Rt. Hon. F. J.

    Grimond, J.

    Mulley, F. W.

    Bence, C. R.

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Nally, W.

    Benson, G.

    Hall, John T. (Gateshead, W.)

    Neal, Harold (Bolsover)

    Beswick, F.

    Hamilton, W. W.

    Noel-Baker, Rt. Hon. P. J

    Bing, G. H. C.

    Hannan, W.

    Oldfield, W. H.

    Blackburn, F.

    Hargreaves, A.

    Oliver, G. H.

    Blenkinsop, A.

    Hastings, S.

    Orbach, M.

    Blyton, W. R.

    Hayman, F. H.

    Oswald, T.

    Boardman, H.

    Henderson, Rt. Hon. A. (Rowley Regis)

    Paling, Rt. Hon. W. (Dearne Valley)

    Bowen, E. R.

    Herbison, Miss M.

    Paling, Will T. (Dewsbury)

    Braddock, Mrs. Elizabeth

    Hewitson, Capt. M.

    Palmer, A. M. F.

    Brockway, A. F.

    Holman, P.

    Pannell, Charles

    Brook, Dryden (Halifax)

    Holt, A. F.

    Parker, J.

    Broughton, Dr. A. D. D

    Houghton, Douglas

    Pearson, A.

    Burke, W. A.

    Hoy, J. H.

    Porter, G.

    Carmichael, J.

    Hudson, James (Ealing, N.)

    Price, J. T. (Westhoughton)

    Castle, Mrs. B. A.

    Hughes, Cledwyn (Anglesey)

    Proctor, W. T.

    Champion, A. J.

    Hughes, Emrys (S. Ayrshire)

    Pryde, D. J.

    Chapman, W. D.

    Hughes, Hector (Aberdeen, N.)

    Rankin, John

    Clunie, J.

    Irving, W. J. (Wood Green)

    Reid, Thomas (Swindon)

    Coldrick, W.

    Isaacs, Rt. Hon. G. A.

    Reid, William (Camlachie)

    Collick, P. H.

    Janner, B.

    Rhodes, H.

    Cove, W. G.

    Jay, Rt. Hon. D. P. T.

    Roberts, Albert (Normanton)

    Craddock, George (Bradford, S.)

    Jeger, George (Goole)

    Roberts, Goronwy (Caernarvon)

    Crosland, C. A. R.

    Jenkins, R. H. (Stechford)

    Robinson, Kenneth (St. Pancras, N.)

    Grossman, R. H. S.

    Johnson, James (Rugby)

    Rogers, George (Kensington, N.)

    Cullen, Mrs. A.

    Jones, David (Hartlepool)

    Ross, William

    Daines, P.

    Jones, Frederick Elwyn (West Ham, S.)

    Royle, C.

    Dalton, Rt. Hon. H.

    Jones, Jack (Rotherham)

    Shackleton, E. A. A.

    Darling, George (Hillsborough)

    Jones, T. W. (Merioneth)

    Shawcross, Rt. Hon. Sir Hartley

    Davies, Ernest (Enfield, E.)

    Keenan, W.

    Shinwell, Rt. Hon. E.

    Davies, Harold (Leek)

    Kenyon, C.

    Short, E. W.

    Deer, G.

    Key, Rt. Hon. C. W

    Shurmer, P. L. E.

    Delargy, H. J.

    Kinley, J.

    Silverman, Julius (Erdington)

    Dodds, N. N.

    Langford-Holt, J. A

    Silverman, Sydney (Nelson)

    Ede, Rt. Hon. J. C.

    Lawson, G. M.

    Simmons, C. J. (Brierley Hill)

    Edwards, Rt. Hon. John (Brighouse)

    Lee, Frederick (Newton)

    Skeffington, A. M.

    Edwards, Rt. Hon. Ness (Caerphilly)

    Lee, Miss Jennie (Cannock)

    Slater, Mrs. H. (Stoke-on-Trent)

    Evans, Albert (Islington, S.W.)

    Lewis, Arthur

    Slater, J. (Durham, Sedgefield)

    Evans, Stanley (Wednesbury)

    Logan, D. G.

    Smith, Ellis (Stoke, S.)

    Fernyhough, E.

    MacColl, J. E.

    Smith, Norman (Nottingham, S.)

    Finch, H. J.

    McGhee, H. G

    Snow, J. W.

    Fletcher, Eric (Islington, E.)

    McInnes, J.

    Sorensen, R. W.

    Follick, M.

    McKay, John (Wallsand)

    Soskice, Rt. Hon. Sir Frank

    Foot, M. M.

    McLeavey, F.

    Sparks, J. A.

    Forman, J. C.

    MacMillan, M. K. (Western Isles)

    Strachey, Rt. Han. J.

    Fraser, Thomas (Hamilton)

    Mainwaring, W. H.

    Strauss, Rt. Hon. George (Vauxhall)

    Freeman, Peter (Newport)

    Mallalieu, J. P. W. (Huddersfield, E.)

    Stross, Dr. Barnett

    Gaitskell, Rt. Hon. H. T. N.

    Mann. Mrs. Jean

    Summerskill, Rt. Hon. E.

    Sylvester, G. O.

    Wells, Percy (Faversham)

    Williams, Rev. Llywelyn (Abertillery)

    Taylor, Bernard (Mansfield)

    Wells, William (Walsall)

    Williams, Ronald (Wigan)

    Taylor, Rt. Hon. Robert (Morpeth)

    West, D. G.

    Williams, Rt. Hon. Thomas (Don V'll'y)

    Thomas, Iorwerth (Rhondda, W.)

    Wheeldon, W. E.

    Williams W. R. (Droylsden)

    Thomas, Ivor Owen (Wrekin)

    White, Mrs. Eirene (E. Flint)

    Williams, W. T. (Hammersmith, S.)

    Timmons, J.

    White, Henry (Derbyshire, N.E.)

    Willis, E. G.

    Tomney, F.

    Whiteley, Rt. Hon. W.

    Wilson, Rt. Hon. Harold (Huyton)

    Turner-Samuels, M.

    Wigg, George

    Winterbottom, Richard (Brightside)

    Ungoed-Thomas, Sir Lynn

    Wilcock, Group Capt. C. A. B.

    Woodburn, Rt. Hon. A.

    Viant, S. P.

    Wilkins, W. A.

    Yates, V. F.

    Warbey, W. N.

    Willey, F. T.

    Watkins, T. E.

    Williams, David (Neath)

    TELLERS FOR THE NOES:

    Mr. Holmes and Mr. John Taylor.

    Question put, and agreed to.

    Motion made, and Question proposed. "That the Clause stand part of the Bill."
    6.45 p.m.
    Mr. E. Fletcher: I think the Financial Secretary must be the first to agree that the Committee cannot possibly leave this Clause in its present state, having regard to the debates which have already taken place and the very unsatisfactory answers we have had from the Treasury Bench. There are certain Amendments which have not been selected and I take it, Sir Rhys, that it would be open to me in debating this Question, to indicate broadly the nature of the Amendments which I would have sought to have made in subsection (2).
    The Deputy-Chairman: The hon. Member can discuss them now only in so far as they relate to the words in the Clause.
    Mr. Fletcher: Unfortunately, the words are in the Clause and my objection to the Clause is that they are in the Clause because I would have preferred a number of words in the subsection to have been omitted.
    I am sure that the Financial Secretary is anxious to do what, on Second Reading, he said he wanted to do, namely, in subsection (2) provide reasonable safeguards for traders who will be adversely affected by subsection (1). May I, therefore, ask the Financial Secretary whether, between now and the Report stage, he would consider the following points, which seem to require consideration on subsection (2)? I will come back to subsection (1) in a moment. Some of them are more by way of drafting points than substantial points, but I think they are all points which need attention. I think they are all points deserving the Government's attention between now and the Report stage.
    The first point is this. We get some traders who are deregistered or cease to be required to be registered, and, as a
    474
    result, Purchase Tax becomes payable on their stocks subject to such provision for deferment as the Treasury may make. In some cases stocks will be exported. Purchase Tax may have already been paid because the time which the Commissioners allow may have not been long enough. As the Bill stands, it provides that, in the case of goods which have been exported and tax has been paid, if they were exported under the time limit prescribed by the Commissioners the Purchase Tax paid by the trader could be remitted. Why need there be any time limit in such a case as that? Why is it not reasonable, regardless of any time limit, if goods on which Purchase Tax is paid are exported, the trader should not automatically be entitled to have the Purchase Tax remitted?
    The second point is, I think, more a drafting point. Lines 31 and 32 provide that regard shall be had to the time when tax in respect of the goods might have been expected to become payable. Expected by whom? Expected by the trader, expected by the Commissioners or expected by a reasonable person? I have never seen the word "expected" used in that context in an Act of Parliament. It is not an intransitive, but a transitive, verb. It is no use saying that something is expected unless we say by whom it is expected; otherwise, it does not make sense.
    The third point of detail arises in line 30. Surely it is desirable to provide that when the Commissioners stipulate a time limit for the deferred payment of Purchase Tax, circumstances might arise in which it is reasonable that the time should be extended and further extended. Subsection (2) does not seem to be wide enough to give power to the Commissioners to extend the time.
    The major point which has emerged from our discussion on the Clauses arises on subsection (1). I must ask the Financial Secretary some direct questions

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    which, in justice to himself and to the Committee, I am sure he would wish to clear up before we pass from the Clause. On Second Reading, we all assumed that Clause 6 applied only to the tax evading trader who ceased by a voluntary act of his own to be registered. Today, we have learned that the Clause is intended also to apply to the trader whose registration is cancelled under the operation of Section 12 of the 1944 Act.
    Does the Financial Secretary still think that the assumption on which our discussions hitherto have been based—namely, that the Clause does apply to a trader whose registration has been cancelled—is correct? After all, the opening lines of the Clause say:
    "when a person ceases to be required to be registered …"
    It does not specifically say that when a person's registration is cancelled under Section 12 of the 1944 Act, Purchase Tax shall become payable. Therefore, to say the least, there is ambiguity. My hon. Friend the Member for Blackburn, East (Mrs. Castle) put down her Amendment to remove any possible doubt.
    The argument proceeded on the basis that unless that Amendment was accepted, the case of the deregistered trader would be caught by the Clause. My hon. Friend's Amendment has been rejected by the Committee. We must, therefore, apart from the question as to what is desirable, which we have debated, now consider whether, as it stands, the language of the Clause does cover the deregistered trader. If not, I should be delighted and, I suppose, the Financial Secretary would be correspondingly disappointed. If there is any ambiguity, I could be equally glad, because that would enable the registered trader to take advantage of the situation; because, as I contended earlier, if it is the question of the de-registered traders that the Government want to deal with, they should do it by a new Clause specifically addressed to that purpose and should not try to introduce it in this backstairs fashion. Perhaps the Financial Secretary will tell us.
    When the Financial Secretary made his Second Reading speech, was he aware of the object behind the Clause? We may leave aside for the moment whether that objective was achieved by the draftsman or not. If the right hon. Gentleman was
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    not aware that the intention was that the Clause should catch the 1944 Act, Section 12, class of case, that would be some personal justification to him for having so studiously refrained from mentioning this point to the House in his Second Reading speech.
    I want now to approach the second major question which arises on subsection (1). There has been considerable alarm among traders at the Government's process of deregistration. If the Clause is intended to cover the Section 12 class of case, we find ourselves in the position that since the Government discovered the legal position as they now state it to be—whether it was early this year, last year, or, as I am convinced, two or three years ago—it has obviously been difficult for the Commissioners to carry out their process of deregistration, to which so much objection is taken. From the moment when they knew that one of the consequences of deregistration was to enable the trader to have his stock free of Purchase Tax, there was a natural prohibition against their carrying out that unpopular deregistration. That sanction will disappear if the assumption on which we have been proceeding—that the Clause covers the 1944 Act—is correct.
    I hope we find, as a result of the researches which, I gather, are now going on, that the Government will be able to claim credit for the integrity of the intentions which the Financial Secretary expressed on Second Reading. I hope we shall find that, after all, the Clause is limited to the tax evasion class of case and that the Government will find it necessary to introduce a new Clause, which can be debated on its merits, to deal with the honest traders who otherwise would be affected so adversely by the Clause.
    Mrs. Castle: One thing which has emerged quite clearly from our debate is that the Financial Secretary made a misleading Second Reading speech on the Clause. It is thanks to the vigilance of the Opposition in the House that we have unearthed a good deal of information about the Clause, its purposes and effects which we would never have guessed from the Financial Secretary's beguilingly simple explanation on Second Reading.
    Far from simply closing a loophole in the enforcement of Purchase Tax. the

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    Clause will have far-reaching consequences in the trading world; and as we have found during our debates that subsection (1) and its application must be interpreted much more widely than the Financial Secretary was at first prepared to admit, we ought to examine very closely the operations of subsection (2). I am sorry that we have not gone into it in more detail, line by line, because it is full of phrases which, if we are not careful, lay the trader open to all kinds of disadvantages and difficulties.
    As my hon. Friend has emphasised, we must now all bear in mind something which may not have been so clear when subsection (2) was drafted, namely, that this procedure is to apply not to criminals but to a large number of honest traders who are to be put at grave trading disadvantage by action of the Commissioners of Customs and Excise taken against their will. Therefore, they are entitled to the fullest protection in the handling of their affairs following compulsory deregistration.
    7.0 p.m.
    My hon. Friend the Member for Islington, East (Mr. E. Fletcher) has given some examples to the right hon. Gentleman and I want to give another example of the possible working of this subsection to the disadvantage of an honest man who has been deregistered against his will. I am thinking particularly of the second half of subsection (2), which deals with the wholesaler who normally sells some of his goods to another registered person and who, therefore, is not in the normal way expected to pay tax on those sales. Under compulsory deregistration, the Commissioners of Customs and Excise may have levied that tax on his stock under this Clause, and the Clause says that he is entitled to a refund if, in the event, he sells that stock to another registered person.
    My example is that of a woollen merchant selling to a bespoke tailor who is registered. The tax is not levied on that sale but the Commissioners may have collected it as part of the deregistration process and, therefore, the merchant is entitled to a refund in due course. Yet the words in this subsection make it clear that the period during which the refund may be claimed shall be quite arbitrarily decided once again by the Commissioners. In effect, that is the same as
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    saying that they can make this man have an enforced sale of his goods at a time which suits them and not his business needs.
    Taking that example from the textile world, it is obvious that if there is a depression, and prices fall, the man may want to hold on to his stock and wait for a more favourable selling moment, while the Commissioners are quite entitled under this Clause to say, "It is all very well, but we cannot keep our books open indefinitely. If you want a refund you must stake your claim by the end of the month." That is a forced sale, or the equivalent of it.
    The Financial Secretary may look a bit scornful, as though we are straining the interpretation of the Clause, but it is possible for cases to arise which are quite insupportable. I can also give an example of where such a merchant dies and the business is being wound up and the stock gradually liquidated on behalf of his widow. Those operating on her behalf naturally want to get the best possible return for the stock in order to see that she is as comfortably off as possible, so they want the right to choose the moment when the stock shall be sold.
    Under subsection (2) as it is worded that right is denied to them and given to the Customs and Excise. However anxious they may be to operate fairly, all the pressure of their administrative convenience is on speed, so there is a direct conflict of interest there. I ask the Financial Secretary to remember that we now know that we are dealing with a Clause which is handling the affairs of honest traders. We are saying that the Customs and Excise may take away from them a right of registration which they have enjoyed, not because they have broken the law, not because they have tried to fiddle the tax, but simply because it suits those responsible for collecting the tax. So the affairs of this man are disorganised because of some arbitrary administrative decision, and his trading affairs will suffer as a consequence.
    In that situation, I ask the right hon. Gentleman to look again at subsection (2) before the Report stage, and to put himself in the place of that man who thinks he has done a good, honest day's work and is told that he cannot have a registration. He will begin to wonder whether he can buy stock and then, when

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    it comes to winding up his tax position under this Clause, he finds that the decision as to when the stock is sold, when the tax is levied, when refund can be claimed—all these are put out of protection, and without appeal, in the hands of the Commissioners of Customs and Excise. I suggest to the right hon. Gentleman that he owes it to the Committee and to the business community to look again at this Clause and to make quite sure that the procedure is such as we ought to employ in the case of honest men.
    Mr. Austen Albu: When this matter was debated the year before last I was not clear what it was all about. Since then, however, I have had a number of cases brought to my notice which make me see the extreme importance of the argument put forward by my hon. Friend. I regret that having been absent on other business of the House, I did not hear the debate on her Amendment to subsection (1), which I understand the Committee has rejected. However, bearing in mind one case brought to my notice, a serious one, I can see the dangerous trap this Clause might well be, especially subsection (2).
    The case is that of a man who buys a substantial wholesale business, who perhaps did not realise that he would not receive registration, and who lost it on acquiring that business. Whether he did so in ignorance or not does not seem to matter because, since somebody wanted to sell the business, presumably somebody was expected to buy. I presume that the object of the Financial Secretary is not that businesses should be ruined.
    Buying a business and losing a registration makes a considerable difference to the capital position. The business in the case I have in mind has substantial stocks and, therefore, the owner will be very much at the mercy of the Commissioners under this Clause. I suppose that they will act reasonably, but if the owner was financially tight, and they were to become impatient with him in the payment of the tax to which he is liable, this could be serious in the case of substantial stocks.
    It is sometimes the case that a man acquires a business in which the stock has been moving rather slowly, perhaps because the previous owner was very old
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    or not very active and energetic and the man who acquires the business wants some time to build it up and clear the stock. If I were in that man's position I should be rather anxious if, all the time that I was doing that, perhaps extending to two or three years, there was behind me pressure to get rid of stock or to acquire enough finances to pay off the very substantial tax that might be involved.
    I hope that when he replies to the debate the Financial Secretary will not under-estimate the anxiety of some traders on account of these provisions. We on this side of the Committee have no desire to impede the collection of revenue and to assist those who are trying to evade payment by any kind of tricks, but we feel that these provisions may make it extremely difficult for honest traders, who are not particularly well off financially, when they are trying to acquire capital for the business which they are undertaking.
    Mr. Boyd-Carpenter: If I follow the hon. Member for Edmonton (Mr. Albu) correctly, he is contemplating the case of a purchaser of a business which, as from the time of purchase, has become deregistered and, therefore, is concerned with tax liability on the stock. The hon. Member has raised a point of substance and importance, but he will be very considerably reassured if he studies the words in Clause 6 (2).
    Those provide that in coming to a decision as to the extent of time for which a tax can be deferred the Commissioners must have regard
    " … to the time when tax in respect of the goods might have been expected to become payable if the said person had continued to be required to be registered; …"
    If the purchaser had purchased the business and the business had continued to be registered he would have had to pay tax more or less for the same period of time as he would have to pay in the circumstances in which he purchased the business as having been deregistered. I hope that that gives the hon. Member some reassurance.
    Other points raised by the hon. Member for Islington, East and the hon. Lady the Member for Blackburn, East (Mrs. Castle) to some extent covered the same ground. The hon. Member for Islington, East asked what was largely a rhetorical

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    question, because if the answer was anything but what he expected it to be the debate on the first Amendment would have been a sheer waste of time. It is the fact that the Clause applies to stocks where registration ceases as a result of the operation of the Commissioners' powers under Section 12 of the 1944 Act.
    The hon. Member asked how that could be in view of the phraseology at the beginning of the Clause. The answer is a complex one that depends upon reading the Clause with Section 12 (2) of the 1944 Act. I do not know whether the Committee wants me to follow the chain of reasoning. It is legal, complex but I think comprehensible. The short answer is that the Clause does so apply.
    Mr. E. Fletcher: I was aware of what the answer would be, but it is desirable that the answer should be stated for the record at length because, as the right hon. Gentleman says, it is complicated and involved. No ordinary trader will understand it. Nobody who looks at the Clause will understand it. Our complaint is that if this matter is covered by Section 12 of the 1944 Act it should be abundantly clear and not be so involved that it requires all this research to find the answer.
    Mr. Boyd-Carpenter: I do not think it involves research in that sense and had the answer been otherwise we should have been wasting the time of the Committee on the first Amendment. A person to whom the Commissioners apply Section 12 of the 1944 Act is a person who ceases to be required to be registered within Clause 6. The answer lies in Section 12 (2) of the 1944 Act, which says that the trader
    "shall be treated for the purposes of the enactments relating to the tax, other than the provisions of subsection (2) of the said section twenty-three, as being a person not required by the said subsection (1) to be registered."
    The said subsection (1) is that under which persons are registered. I hope that that pellucidly clear explanation will satisfy the hon. Member.
    7.15 p.m.
    The hon. Member and his hon. Friend the Member for Blackburn, East referred to the observations that I made on Second Reading. It is no duty of anyone moving the Second Reading of a long
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    Bill such as this to describe all the variations and details of every Clause. Indeed, if he did so he would probably talk out the Second Reading. The whole object of the Committee stage is to discuss matters which, quite properly, are not dealt with on Second Reading. I see that the hon. Member for Islington, East who asked me a question about certain refunds has left his seat. I hope that he will pay me attention and that he is not like the lady who is mentioned in the Bible who would not stay for an answer, even though the right hon. Member for Battersea, North (Mr. Jay), to whom the hon. Member is speaking, no doubt has charms which would exceed anything that I might say.
    Mr. Jay: It was not a lady, it was Pontius Pilate.
    Mr. Boyd-Carpenter: I hesitate to compare the hon. Member for Islington, East with Pontius Pilate even though, of course, he was a lawyer.
    Mr. Hale: Pontius Pilate asked "What is truth?", which is something we are seeking here.
    Mr. Boyd-Carpenter: And if the hon. Member will listen he will hear it.
    The hon. Member for Islington, East inquired about the position in respect of certain refunds. There is here a balance of considerations. It is clear that there must be some limit and some end as to when these matters can be wound up. The hon. Member knows perfectly well that in tax legislation almost universally, and particularly perhaps on the Inland Revenue side, time limits are prescribed for common sense and practical reasons. He will notice, however, that in lines 36 and 37 there occur the words:
    "… or within any further period which they may allow, …"
    That is designed to deal with extremely hard cases which the hon. Member has in mind and enables extensions to be granted if circumstances justify it.
    The hon. Member also mentioned a grammatical point which I will consider. I have the greatest confidence in those who advise me on drafting, but it may be that the hon. Member has a point there. He also asked whether the Clause provided power to extend the time for deferment of payment of tax due. I am under the impression that there is power,

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    but I will gladly look into the matter before the next stage of the Bill. If the hon. Member takes a different point of view that in itself is a reason for examining it. I hope that the Committee will now be prepared to proceed to debating further Clauses.
    Mr. Jay: The Financial Secretary told us that on Second Reading he did not say more about some of these Clauses because he expected them to be very fully discussed in the Committee. That is a reason why we should not be unduly sketchy in our discussion of these Clauses this afternoon.
    There is one question put by my hon. Friend the Member for Islington, East (Mr. E. Fletcher) which the Financial Secretary did not seem to answer satisfactorily. That is why a trader who is deregistered and subsequently either exports the goods, or sells them to a registered trader should not be allowed to have the tax refunded at whatever time he exports or after whatever period he sells the goods. Let us be quite clear on exactly what is involved. Suppose we were dealing with the hon. Member for Edinburgh, South (Sir W. Darling), who is an experienced trader, I am sure the Committee would be very anxious to protect him from any oppression by the Financial Secretary—
    Sir William Darling: The hon. Member for Edinburgh, South is able to look after himself.
    Mr. Jay: I do not think the hon. Member is fully aware of where he stands under the law which we are discussing. Suppose the hon. Member were deregistered by the right hon. Gentleman and his officials on 1st January, I am sure that it would be purely for the convenience of the Customs and Excise and not any reflection on the hon. Member.
    Sir W. Darling: I am a Scottish trader and 1st January is a dies non for this purpose.
    Mr. Jay: That shows how necessary it is to discuss these matters fully. If he were deregistered in London it would be on 1st January, but suppose it happened on 2nd January. The Customs and Excise would say that he had two months in which to sell his goods to a registered
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    trader or to export them. If he sold them within two months he would have to pay the tax during the period, and the question is whether he would get it back. If he sells the goods within two months he is able to put in a claim for a refund. But if, through no fault of his own but no doubt for some perfectly good business reason, he takes three months and then exports them or sells them to a registered trader, although he has lost money on the transaction, just because he did not do it in time, he would be deprived of the facility of getting the refund.
    I can see no justification for that whatever. The Financial Secretary said that we have to wind up the transaction at some time. If the situation was that the tax which was due had not been paid and he was arguing that six months had gone by during which he had not been able to sell the goods, there would be some reason for the Financial Secretary to say, "We must wind up the affair some time or other."
    But that is not the situation. The Financial Secretary would have the money from the start, from 2nd January if not 1st January. The trader would have carried out a perfectly reasonable transaction and sold the goods but would lose this money. Why on earth, in those circumstances, should not the Government say that the tax should be refunded when the goods are exported or sold, at whatever time that may be?
    It is no answer to that for the Financial Secretary to say that according to the Bill the goods have either to be sold or exported within the period so allowed or within any further period which may be allowed. That does not seem to me to be substantially different. The trader may be given two months in which to carry out the transaction, and then the Customs and Excise may give him another month. But that is no comfort to the trader if, when he is able to sell the goods at a later period, it is beyond the total time he was allowed. I do not see why the Bill should not say in a perfectly straightforward manner that the tax should be refunded at the time when the goods are sold or exported. I do not think we have had a substantial answer, and I hope that if we do not get it from the Financial Secretary we shall perhaps get it from the hon. Member for Edinburgh. South.
    Sir W. Darling: The right hon. Member for Battersea, North (Mr. Jay) is anxious to give advice to the working classes but as I see it there is a justification for this Clause. If given an unlimited time the trader could have a stocktaking and as a result he would easily deal with these imposts thrown upon him by the Chancellor of the Exchequer. His new balance sheet would show that he was quite able to meet them. Consequently the Chancellor would put a time limit on these machinations.
    I do not like it; I like to be a free citizen, but it would be quite out of order for me to discuss the single tax theory—a tax whereby there would be no Income Tax, Surtax or Customs. That would be quite out of order, but, if we are to get the revenue I think the Chancellor is right in insisting on this Clause and having a time limit in it. It would be impossible for the Customs and Excise to conduct its duty if it did not have a time limit. In spite of the advice of the right hon. Member for Battersea, North, I shall support the Government on this Clause.
    Clause ordered to stand part of the Bill.

    Clause 7.—(REGISTRATION OF MANUFACTURERS MAKING GOODS TO BE LET OUT ON HIRE.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Geoffrey Stevens: I am a little puzzled about this Clause. It seems clearly directed to deal with manufacturers who make goods, not for sale but to be let out on hire. As I understand it the name of this tax is "Purchase Tax." I am puzzled that one can apply a tax called Purchase Tax to goods which are not in fact purchased.
    Perhaps the best example of the sort of thing at which this Clause is directed is that of radio and television manufacturers in a big way—I do not want to mention names—who make wireless receiving sets and, instead of selling them to the public, let them out on hire. Quite obviously if there is no sale there is no purchase and, if there is no purchase, how can Purchase Tax be properly applied? I am also puzzled because, as subsection (1) indicates, Purchase Tax was imposed
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    14 years ago. For 14 years these goods have been free of Purchase Tax and the manufacturers have let them out on hire to the public and been free from the necessity of registration.
    Why is something which has been right for 14 years suddenly discovered to be wrong? I am not in a position to know whether the manufacturers who make wireless and television receivers for sale to the general public have complained that their business is being undermined or undercut in some way. I should not have thought that was likely, but I am not in a position to say.
    I am puzzled to find that Purchase Tax can be applied to something which is not purchased and that some omission which has been perfectly satisfactory for 14 years should suddenly be found to be wrong. I shall be very grateful to the Financial Secretary if he can say a word or two in explanation of these points.
    Mr. Boyd-Carpenter: I gladly respond to the request of my hon. Friend the Member for Langstone (Mr. Stevens). The purpose of this Clause, as he has quite correctly diagnosed, is to secure that Purchase Tax is payable by a manufacturer of goods who, having manufactured them, does not sell them but hires, or rents, them out. My hon. Friend asks how Purchase Tax can be applied to this, inasmuch as there is. as a matter of definition, no purchase? "Purchase Tax" is not a term of art. It is a common expression used to describe this well-loved impost, and in fact there are other transactions where it can be said that it is appropriate.
    Under the existing law a rather curious position arises. If someone manufactures more than £500 worth of goods for sale he requires to be registered. If he manufactures both for sale and hire, provided that his sales limit exceeds £500, he also requires to be registered. But if he manufactures solely for hire, however large may be his manufacture, he does not require to be registered, and therefore his product is not exposed to tax.
    7.30 p.m.
    There is therefore a loophole in the law advantage of which is now being taken, in particular—as was referred to by my hon. Friend—by the radio and television trade. Indeed, it has gone so far as to have had attention drawn to it in a trade

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    paper last year. It is clear that so long as Purchase Tax endures it is unfair that a person who manufactures and sells to someone else, who then rents out, should find the apparatus attracting tax whereas a person who manufactures and rents directly should be wholly immune from tax. I think that is unfair, and that is also the view of the sections of the trade concerned with manufacture for sale.
    Mr. Jay: Can the Financial Secretary tell the Committee if this is another case where, contrary to the law, tax has been collected for some years past, or is it a case where the taxpayers did not discover that this loophole existed and that no tax has been collected?
    Mr. Boyd-Carpenter: The second alternative of the right hon. Gentleman is right. This is a case in which the loophole in the law had not been observed by those who might have gone through it until recently. No tax has been imposed, but the position now is that use is being made of this loophole. I think that the Committee will agree that this is inequitable as between those who manufacture for sale and those who manufacture for hire, and I suggest that it is reasonable and right to remedy it.
    That is also the answer to my hon. Friend's question about why it is necessary to do this 14 years after the tax was enacted. The position has only recently been discovered and taken advantage of.
    Mr. E. Fletcher: The Committee will welcome the explanation of the Financial Secretary. This is not a Clause on which we on this side of the Committee wish to spend much time. That is not because we have not examined it carefully to see if we could improve it. It is a Clause which we regard as thoroughly meritorious, and our only concern is to see that it is sufficiently widely drawn to close up the loophole to which the right hon. Gentleman has drawn attention. For that reason we put down an Amendment, which has not been called, by which we proposed to insert some words. But on reflection I came to the conclusion that it was not necessary to make the addition, and I assume that the right hon. Gentleman is of the same opinion.
    Mr. Boyd-Carpenter: If, without being out of order, I may refer to an Amend-
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    ment which has not been called I would say that I agree with the right hon. Gentleman.
    Sir W. Darling: May I take it that this will apply to sporting requisites? It may also apply to clothing and even to cars. I take it that these are covered by the Clause and that it does not refer only to radios.
    Mr. Boyd-Carpenter: No. It applies, as it is drafted, to all goods generally. I referred to radios because that happened to be the direction in which the problem has arisen.
    Clause ordered to stand part of the Bill.

    Clause 8.—(POWER TO IMPOSE CONDITIONS AS TO USE OF A CERTIFICATE OF REGISTRATION.)
    Mr. E. Fletcher: I beg to move, in page 5, line 6, after "registration," to insert:
    "and set out in any public notice issued by the Commissioners."
    The Temporary Chairman (Mr. George Thomas): I think that the hon. Member has moved the wrong Amendment. The Amendment called is in page 4, line 45, to leave out from "Act," to "but," in line 1, on page 5.
    Mr. Fletcher: With respect, Mr. Thomas, when your predecessor was in the Chair he intimated to me that he intended to call the second Amendment.
    The Temporary Chairman: That is different from what I was advised.
    Mr. Boyd-Carpenter: The matter is one for you, Mr. Thomas, and not for me, but my understanding squares with yours and not with that of the hon. Member for Islington, East (Mr. E. Fletcher).
    Mr. Hale: In the circumstances, would it not be better to call both Amendments to avoid any possibility of misunderstanding, and then the discussion would be in order?
    The Temporary Chairman: I think I had better abide by my first Ruling, which is to call the first Amendment, in page 4, line 45. That is as I have been advised.
    Mr. Jay: If that course is followed may we take it that if my hon. Friend wishes to do so he will be able to discuss the points he desired to make on the Question, "That the Clause stand part of the Bill"?
    The Temporary Chairman: Yes.
    Mr. Fletcher: I must accept your Ruling, Mr. Thomas.
    I beg to move, in page 4, line 45, to leave out from "Act" to "but," in line 1, on page 5.
    In doing so, I would preface my remarks by saying that I am afraid it will inevitably involve a rather longer debate on the Motion, "That the Clause stand part of the Bill" than would otherwise have been necessary.
    I think the Financial Secretary will agree that it is not only reasonable but necessary for us to spend a certain amount of time in discussing this Clause. During his Second Reading speech, the right hon. Gentleman apologised for the complexity of Clause 8, and although he gave some explanation, it was obvious that it was the kind of Clause which it would be more appropriate to discuss in Committee. Although this is a Clause of great complexity, we are a legislative Assembly and it is necessary that we should try to get this complicated and involved legislation—which affects so many traders—as clear and tidy as possible.
    According to the Financial Secretary, the object of Clause 8 is to provide that
    "… there may be done what has been assumed for some time might be done; that is to say, that a certificate of registration should be issued in respect of part of a business."
    This is a most curious situation because Purchase Tax has now been in existence for 14 years, and it is only now that the Government apparently take the view that under the present law it is not open to have a certificate of registration for part of a business. Hitherto they have acted on that assumption and they now desire to regularise their assumption. Not only that, but they also, by the most blatantly restrospective legislation I have ever seen, seek to validate all kinds of things, expresed in common language, which have been going on for the last 14 years.
    This would clearly seem to be something which merits the closest examina-
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    tion by this Committee, because obviously the legal problems which will result from this kind of legislation will be most involved unless we can get the matter straight. I am particularly delighted, as I am sure is the entire Committee, to know that we are to have the assistance of the Solicitor-General on this Clause.
    May I read what the Government seek to do in subsection (2)? The operative words are that if before the relevant date,
    "the Commissioners entered into any arrangement or agreement with him"—
    that is, the trader—
    "as to the cases in which he should make representations as being the holder of a certificate of registration, or imposed any requirement to the like effect under any practice established for the granting of certificates of registration, and the arrangement, agreement or requirement is in force at that date, subsection (1) of the said section fourteen shall apply as if that arrangement, agreement or requirement were a requirement imposed in exercise of the said power."
    May I give an example to indicate the kind of problem which may arise? There are two obvious cases. The first was given by the Financial Secretary and concerns the person who is partly a wholesaler and partly a manufacturer and who has to be registered as a manufacturer, but need not necessarily, looked at from his wholesaler's aspect, be appropriate for registration. It must be highly inconvenient for a trader, whether a limited company or otherwise, to be registered for one part of his business and not registered for another part of his business. It must be difficult for him to know exactly how the legal requirements in respect of Purchase Tax apply to him.
    In the ordinary way a person who is registered has certain rights. He can buy from another registered trader and, within the circle of registration, there is no obligation to pay tax. If for some purposes he is within and for some purposes he is without the registration, I should have thought there would be problems in knowing precisely what goods he can buy in his capacity as a registered dealer and what it is suggested that he should not buy.
    The way in which the Customs has sought to deal with this in practice in the last 14 years has been to qualify his licence in some way. I assume—and I hope the Solicitor-General will correct me if I am wrong—that it has now been

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    recognised that there has been no legal warrant for that at all. The Customs has assumed the power to do it and traders, as a matter of convenience to themselves, have also assumed that the Customs and Excise had the power to do it.
    The first question which arises on the Clause is whether it is intended by subsection (2) to give legal effect retrospectively to all the cases in which the Customs has endorsed the trader's certificate or has imposed some qualification as to the area in which he can deal as a registered trader and as to the area in which he cannot deal. Secondly, I should have thought that it was desirable to know what are these arrangements, agreements or requirements referred to in the Clause and what is meant by the words
    "any practice established for the granting of certificates of registration."
    Mr. Boyd-Carpenter: On a point of order. I do not want to interrupt the hon. Gentleman's argument in such a difficult matter, but I cannot see how his observations relate to the Amendment. I wonder whether it would be more convenient if we disposed of the Amendment aid took the debate on the Question, "That the Clause stand part of the Bill," as I thought the hon. Member intended. I do not make the point of order in an obstructive sense, but I think that what I suggest would be more convenient.
    The Temporary Chairman: I think the Minister is reasonable in that request. I have already indicated to the hon. Gentleman that we could discuss his second Amendment on the Question, "That the Clause stand part of the Bill."
    7.45 p.m.
    Mr. Fletcher: Perhaps I may come to that Amendment later.
    May I break off the argument which I was making and deal with the point concerning the words in line 45? The object of the Amendment is to delete the words
    "has been registered at all times since that date."
    It will be appreciated that in introducing this retrospective operation the Government seek to protect the position of certain people who have acted bona fide in the past. On Second Reading, the Financial Secretary said that
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    "the position of existing registrations is safeguarded by subsection (2), which provides that existing registrations shall not be affected in so far as this Clause regularises what has been done in their particular case; that is to say, it confirms the part registration but it will not enable registrations to be withdrawn in the case of a firm already registered. …"—(OFFICIAL REPORT, 3rd May, 1954; Vol. 527, c. 32.]
    I want to ask whether that undertaking is carried out by these words in subsection (2). It looks to me as if the subsection protects only a person who is both registered at the date of the passing of the Act and has also continued to be registered at all times subsequent to that date. We have heard in an earlier debate today that the Government have the power, under Section 12 of the 1944 Act, to de-register at any time. Let us, therefore, take the case of the trader who has been deregistered after the passing of this Measure—contrary to his will—and may have been reregistered subsequently.
    He will be a person who was registered at the date of the passing of the Measure but will have lost the benefit of that registration through no fault of his own. He may subsequently have been reregistered. Why should such a person lose the protection which I should have thought the Government intended to give by subsection (2)? It is the purpose of the Amendment to put that matter right.
    Mr. Boyd-Carpenter: The hon. Member is correct in describing the effect of the Amendment, which is to extend the protection of the subsection to the case of a trader who, having been previously registered, ceases to be registered and is subsequently reregistered. There is a good deal of force in what the hon. Member says as to the desirability, in those circumstances, of giving this protection to such a trader, and, if the Committee so wish, I will certainly recommend my hon. Friends to accept the Amendment.
    Mr. Fletcher: I am very much obliged.
    Amendment agreed to.
    Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
    Mr. E. Fletcher: May I resume the remarks which I was making when I was out of order in discussing the Amendment? Perhaps the Committee will allow me to pick up the thread.

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    The point which I was making was the desirability of making quite sure what the legal effect will be if the Clause is passed in this form. What really troubles me is whether or not this Clause is intended to have legal effect. In that context I should like to refer to some very curious observations in the Report of the Purchase Tax (Valuation) Committee, in paragraph 136 of which, dealing with this particular subject, they say:
    "It has, therefore, been found necessary, in order to prevent the administration of the tax from putting an intolerable handicap on the carrying on of distributive trading, to make a large number of agreements between the Department and associations of traders or individual traders under which the traders know what the amount of liability for tax will be at the time when chargeable purchases are made. … the agreements between the Department and traders give effect to different considerations in different cases; they are based on assumptions of varying soundness, and in many cases they are of a rough and ready description. All this seems to us to be inevitable, and the system of having such agreements, though they do not have, and in our opinion ought not to have, any legal force, is advantageous both to the Department and to traders and indeed is necessary."
    This is from the Grant Committee Report (Cmd. 8830), page 27. That Committee, set up by the Government to analyse the operation of the Purchase Tax, drew attention to the fact that the whole machinery of the Purchase Tax is so unworkable that it only operates at all because of some very vague agreements, as they are called, between traders and the Department "of a rough and ready description" which, according to the Grant Committee, do not have and ought not to have any legal force.
    I fear that that is what has been happening in the last 14 years. All kinds of customs and practices have grown up, and traders have been acting upon them. To take one case about which we have heard, one result has been that very large sums have been paid by traders to the Treasury for which there was no legal liability at all. I have not the slightest doubt that the result of our passing this Clause will be that a lot of traders will be tasking themselves, and asking their legal advisers, whether or not they have a right to reclaim from the Government those sums which have been paid without any legal obligation at all.
    It is no use our pretending that this is not a serious matter. It is a serious
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    matter when this legislative Chamber seeks to give retrospective legislative approval to vague arrangements which have grown up as a result of some practice established by the Government. I would not mind that if there was some way of finding out what these arrangements or practices are. May I take an illustration? The Committee will be aware that, for the practical convenience of everybody in the operation of Purchase Tax, the Customs issue a notice, and the notice which I had was called Notice No. 77, and that, presumably, was because it followed Notice No. 76.
    This notice comprises several pages of printed matter dealing with the Purchase Tax and setting out all the arrangements about payment, deposits, records, sales, relief, evidence, and so forth. The curious thing is that there is not a word in this document as to the arrangements which govern the operation of traders registered in regard to part of their business but not registered in regard to the other part.
    Let us take a case in the class with which we are now dealing—the case of a bespoke tailor who may be registered. He has his certificate endorsed with a condition limiting it to the business of bespoke tailoring, which means that he can buy cloth without paying Purchase Tax. He can make a suit, charge the customer the Purchase Tax when he sells the suit, and then pay the tax to the Treasury. If his certificate is so endorsed, it is not open to him to use the benefit of registration for other business.
    There is nothing whatever in the law as it now stands which gives any legal sanction to any person registered for any purpose who may refuse the benefit of a registration certificate for a particular purpose. He would have to observe the requirements if he so used it, but he would be entitled to do so. There may well be cases in which persons may so use it. There may be a number of people who may have entered into it some rough and ready arrangement with the Customs, but who may, nevertheless, now want to rely upon their strict legal rights.
    We are here dealing with a bunch of cases which, acording to the Government, and quite rightly, I think, are designed to prevent tax evasion, which is a legitimate object which we all support, but, in

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    doing so, we must protect the honest trader. I am concerned about the position of honest traders who have been carrying out the law as it has existed for years and as it is known today, and who are now to be told that, when this Bill is passed, they will be bound retrospectively by Clause 8, through this almost unintelligible subsection (2), which is expressed in the vaguest possible form, that retrospective validity has been given to any and all arrangements made with the Commissioners under a practice established with the granting of these certificates. This seems to me to be most undesirable and I hope the Committee will examine it very critically before we pass the Clause.
    Mr. Boyd-Carpenter: The hon. Member for Islington, East (Mr. E. Fletcher), through no fault of his own, divided his speech into two instalments, and we are now discussing the part of it which relates to this Clause.
    It is clear from his speech that he and the Committee understand fully the effect of this Clause. It is the fact that, for some time past and—without seeking to make a party point—going back before the time of this Administration, it has been the convenient practice to grant certificates of registration to traders who agree to exercise the rights given by these certificates in respect of certain parts of their businesses only.
    I say at once to the hon. Gentleman that, as I understand, and higher authority in matters of law will confirm it, there has been no legal basis for that very convenient practice. One of the purposes of this Clause is to put that thoroughly sensible practice on a proper legal basis, and what we are concerned with here is whether or not we should put that practice on a proper legal basis.
    I submit that this is a practice which ought to be followed. I do not want to go over again the arguments on the general Purchase Tax registration question which we had on an earlier Clause and in relation to an earlier Amendment. but it is the fact that one of the great difficulties in this context is to keep the granting of new registrations and the continuance of old ones on a fair basis as between different traders. In my submission, it would be quite wrong to grant a certificate to a large wholesale business
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    because, in respect of some small and ancillary manufacturing activity, it was necessary and proper that registration should be made, and that has been the practical view of the matter which has been taken for a good many years by different Administrations.
    8.0 p.m.
    The hon. Member appeared to be slightly shocked at what he described as "the retrospective provisions" of subsection (2). All that is done here is to deal with agreements freely and openly entered into by honest traders, and to put them on a proper legal basis. Nobody is being bound to do anything to which he has not in the past freely agreed, and I do not think, in the circumstances, that anybody is likely to object.
    I ask the Committee to contemplate what would happen if we did not pass this Clause. We should have a state of affairs which has worked in the past, but which has now been found to have an unsound basis. Subsection (2) says that once a trader has entered into an agreement in the belief that it was on a proper legal basis, it shall be on a proper and sound legal basis.
    The hon. Member referred to paragraph 136 of the Grant Report on Valuation with respect to agreements and arrangements entered into between traders and customers. I know what the Grant Committee said on the general question, but the hon. Gentleman will appreciate that those remarks were directed specifically to the question of uplift, which is quite a different question. It is perhaps straining the language of the Committee's Report to apply it without qualification to the totally different sphere of registration.
    Unlike some of the other matters with which we have to deal, this one is of reasonable simplicity. I put it to the Committee that it is much easier to be reasonably free with new registrations and continuing registrations if we are not prevented from granting a registration limited to a part of a trader's business.
    On occasions, it is difficult to know whether a registration should be granted or not. Anyone who has had to deal with these things knows that there are difficulties from many points of view. It is easier to grant a certificate in respect of that sphere of the business in which there is strong justification for doing so

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    than to find oneself extending it over a very wide sphere of the business in which quite different circumstances apply.
    I referred, on an earlier Amendment, to the somewhat freer attitude which we are adopting in this matter. The Clause is perhaps a little relevant to that, inasmuch as if we were to be prevented from carrying out the practice followed by other Governments of granting registrations to part of a business it would be much more difficult to adopt that freer attitude. These are the reasons which have led us, as we have been advised, to alter the law but not, as I understand it, to make any substantial change in the practice—the reasonable practice—which has been followed in the operation of this tax.
    We are not concerned here with anything which is likely to make any serious change in existing arrangements. This is to a considerable extent a proposal to restore the position to what it was believed to be. It is unlikely to have any disturbing effects. I suggest that it is a thoroughly sensible practice which has been tried out and found useful both to the traders and to the officials responsible for administering this tax. It has been tried out in experience and it would be a pity to bring it to a close because the legal position has now been discovered to be unsound. I hope that the Committee can now, with a good heart and conscience, give us the Clause.
    Mr. Hale: The Financial Secretary told us a few minutes ago that in his view the purpose of having a Committee stage was to permit elucidation of the discussion that took place on Second Reading, but what has happened this afternoon is something different. What has happened in every case on the last three Clauses, is that we have had from the Financial Secretary a totally different explanation of the Clauses from what he gave us on Second Reading.
    The explanation he gave us on this Clause on the Second Reading was a little shy and reserved. He introduced his observations with an apology, which is rather rare for him. He said:
    "I apologise for the complexity of Clause 8, which deals with registration for Purchase Tax. It permits what I am advised in strict law the present law does not in terms authorise, the issue of a Purchase Tax certificate of registration in respect of part of the business of a firm."—[OFFICIAL REPORT, 3rd May, 1954; Vol. 527, c. 31.]
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    We have now reached, during your absence from the Chair, Sir Rhys, what must be the most amazing position that has ever been reached on any Finance Bill, or in the history of this body or of any other body. Nobody is a more unreserved admirer of the Financial Secretary to the Treasury than I am. I admire his resilience, ebullience and elasticity, a well as his confidence when he is explaining that he is now about to say something which has not been said before, or to disclose some rather dark secret that has been concealed up to the last moment.
    Having lavished that praise on him let me say that I do not think that politics is his precise sphere but a wider, latitudinarian church in which it is unnecessary to come down to details. I am sure that he would then reach a deserved eminence. What has happened is that the Financial Secretary has said, "All we are talking about is an agreement"—the Clause actually says, "arrangement or agreement"—"freely negotiated between honest traders and honest commissioners."
    Up to 10 minutes ago he was telling us that the Commissioners of Customs and Excise had said to these poor, wretched traders, "Either you agree to this or you lose your registration." If you lose your registrations we shall illegally exact Purchase Tax from you on the whole of your stock, which we know we are not entitled to do." That is what the Financial Secretary calls a freely negotiated agreement, negotiated as a legal agreement.
    Now he says that we must accept his present explanation because he has full confidence in his advisers. In this House, one does not discuss the advisers. That is a tradition that has existed for centuries. In this respect, they are probably the same advisers who advised on the Finance Act, 1944, which we are now told is meaningless. The Financial Secretary said that it was late in the war when the 1944 Act was passed, and early in the war when the 1940 Act was passed, and obviously people were then preoccupied with more important matters.
    At that point there was an interjection from, I think, the hon. Member for Gillingham (Mr. Burden), who said that there was no discussion of the Clause in 1944. I do not know Whether there was, but if so, it was done in my absence

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    and I do not know whether the explanation was right or wrong.
    We are up against the fact that the Financial Secretary has said, in 1954, "I never understood the Clause until a few months ago. He was most explicit in addressing my hon. Friend the Member for Islington, East (Mr. E. Fletcher), and most emphatically repudiated that the Clause was understood a couple of years ago, as my hon. Friend had suggested when he said: "We have known about this for a long time." "No, no," said the Financial Secretary; "I deny that. Neither I nor my advisers understood this Clause until a few months ago." Then light suddenly came upon them unexpectedly, as it came to St. Paul. The candles were brought in.
    They decided that something had to be done. They had to introduce three new Clauses, one retrospective, politically, in certain circumstances, to provide the law which they thought had existed since 1944. On Second Reading, they provided three explanations of that, so that it would not all come at once. There seemed to be a feeling that had there been a disclosure all at once that these Clauses were meaningless, there might be some lack of confidence in the 1944 Act. Someone might well ask whether Purchase Tax had ever been legal up to this day.
    We are now called upon to discuss a Clause consisting of three subsections and which for difficulty of interpretation is, I would say, about as bad as any I have seen in a Finance Bill. My hon. Friend expressed delight at the presence of the Solicitor-General who, in due course, would be able to elucidate the Clause. In the circumstances, I do not blame the Solicitor-General for remaining seated for the time being. It seems to me that anyone who rose to speak on this matter, particularly with the precedent of the last two hours behind him, might be showing courage rather than discretion.
    The first subsection, as I understand, is tolerably clear. It says:
    "At the end of subsection (1) of section fourteen of the Finance Act, 1944 … there shall be added the words 'or that he shall make representations as being the holder of a certificate of registration only in such circumstances or as respects such classes of goods as the Commissioners may from time to time direct, or both of those requirements'."
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    I only want to say, on that, before we pass the Clause, that there was a time when Parliament was very gravely concerned about these things. There was a time when there was an Executive and a judiciary, and a Civil Service subservient to the Executive. It may well be, of course, that in a democracy one has to abandon a certain amount of democracy in the first month or two. But this is now 1954.
    Under this proposal the Commissioners can say, "Well, my lad, if you want this registration, you must sign on the dotted line there. If you argue, then you do not get it. You have the chance of writing to your Member of Parliament, and if your Member has the time he will look up the Finance Act, 1944, and the 1954 Finance Bill and the reports of the various Committees, and will try to master the subject and tender some advice. But by the time he does that, the registration will have gone."
    It places the matter completely in the power of the Commissioners who can say yea or nay to the wholesaler who has no appeal and who really has no status to argue it. The decision is made administratively, and this is a grave matter. I remember the latter stages of the war, when I was not in the Armed Forces, when we had the concentration of industry and when firms were amalgamated and people were thrown out of business. In those days it seemed a small thing because better people were losing their lives, and the hopes and aspirations of all were submerged in the common chaos. But there was a system by which one came to Whitehall and wandered round the corridors until one came to a certain room in which a gentleman was sitting at a desk—an honest and sincere gentleman, no doubt—who decided whether one was to be ruined or not.
    The whole job of this Committee is to examine these things and to say whether or not we can continue to trust the Executive with these almost unlimited powers. Having said that, we now find that it is proposed to make the extension retrospective. Subsection (2) states:
    "The power conferred by the foregoing subsection shall not be exercisable as respects a person who is a registered person at the date of the passing of this Act and has been registered at all times since that date, but if before that date the Commissioners entered into any arrangement or agreement with him as to the

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    cases in which he should make representations as being the holder of a certificate of registration, or imposed any requirement to the like effect under any practice established for the granting of certificates of registration, and the arrangement, agreement or requirement is in force at that date, subsection (1) of the said section fourteen shall apply as if that arrangement, agreement or requirement were a requirement imposed in exercise of the said power."
    8.15 p.m.
    The Financial Secretary may say, "What is the difference between an agreement and an arrangement, or an arrangement and a requirement?" I should have thought that a requirement was imperative in its meaning. If that is so, then it seems to me that the Financial Secretary's suggestion that it is a happy arrangement between little tradesmen, on the one side, and the Commissioners on the other, sitting in amity round a table with all the pleasure and mutual tolerance of an international conference is not quite putting it in its precise perspective.
    Then, of course, we get the reference to the double charge under Section 15 of the Finance Act, 1944. The Financial Secretary says that he understands it, or, at least, that his advisers understand it. Having applied his undoubted talents to this matter with vigilance, and so on, he is able to tell the Committee what it means. He says, of course, that this does not agree with the Sections of the 1944 Act in respect of which he has been administering Purchase Tax for three years. He did not understand those at all and always felt that they meant something which they did not mean.
    Now he says, "Have confidence in me because I know. Here is an explanation of the Clause. On the basis of that explanation, I am sure you will pass it. This is a useful addition to the powers of the Executive. It enables us to do things that we have been unable to do before." Then he adds a modest addendum to the effect that it also legalises what the Government have been doing for a long time.
    I do not want to delay the Committee. Indeed, I speak more in sorrow than in anger. But it is a deplorable pass to which we have come. I do not wonder that so many of the Financial Secretary's colleagues on the Front Bench and so many of his hon. Friends on the back benches who normally support him have
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    left the Chamber to hang their heads in shame while this debate takes place. I do not know what view my right hon. Friends will take on this Clause, but, so far as I personally am concerned, I feel that I have made my protest.
    Mr. Jay: For the sake of clarity, will the Financial Secretary, who is a lifelong critic of retrospective legislation, confirm that what he has done by this Clause means that all manner of things which the Customs and Excise Department has been doing illegally for years past are now, by this Bill, made legal, although they were not legal at the time that they were actually carried out?
    Mr. Boyd-Carpenter: Very nearly The position is that arrangements made without statutory sanction during this Government, and, of course, during the right hon. Gentleman's term of office, are now being given that statutory sanction.
    Mr. E. Fletcher: Will the Solicitor-General tell us whether payment of Purchase Tax due to be made under these illegal arrangements which are now being retrospectively validated is to be legalised and whether the effect of this Clause is to legalise and validate all payments of Purchase Tax that have been made in the past?
    Clause, as amended, ordered to stand part of the Bill.

    Clause 9.—(OPERATIONS AFFECTING TAX CLASSIFICATION TO BE TREATED AS PROCESSES OF MANUFACTURE.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Jay: I have two reasons for inviting the Solicitor-General to give a short explanation of this Clause. One is that the Financial Secretary has made his fair share of speeches this afternoon and someone else on the Government Front Bench should have a chance. The other is that, to me, as a layman, the explanation of this Clause would appear to be very largely a legal matter.
    In this case also the Financial Secretary gave a brief explanation on Second Reading, but to me that did not fully explain what the Clause implies. On Second Reading the Financial Secretary said:
    "Clause 9 deals with operations which bring goods not liable to tax into a taxable class or

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    change goods from one rate of tax to another. It follows logically from the somewhat similar, though limited, provisions with respect to vehicle chassis, which were enacted in Section 23 of the Finance Act, 1948."
    As Section 23 of the Finance Act, 1948, was introduced by the previous Government I am sure it is a very sound enactment, but in that Section I find no reference whatever to vehicle chassis. One immediately asks why the Financial Secretary introduced it like that in the Second Reading.
    What Section 23 of the Finance Act, 1948, actually says is that
    "… any treatment of goods which affects the get-up of the goods and which results in the goods becoming chargeable goods or becoming goods in respect of which tax is chargeable at a higher rate shall be deemed … to be the application of a process in the course of making the goods."
    And the term "get-up" is defined as
    "… marking, labelling, packing or any other treatment adopted for identifying goods or presenting goods to the user or consumer."
    What the Section therefore tells us in effect is that any change in the get-up"
    "… shall be deemed … to be the application of a process in the course of making the goods."
    Having got as far as that we return to the present Clause 9 where we find that Section 23 of the 1948 Act:
    "… shall apply in relation to any treatment of goods"
    here is a new form of words—
    "which affects the goods themselves as it applies in relation to a treatment which affects the get-up of the goods."
    I think that so far I carry the hon. and learned Gentleman with me. So far as I can see the total effect of the Section and the 1948 Act is that any treatment of the goods which affects the goods themselves shall be deemed to be the application of a process in the course of making the goods, and hence shall have certain effects for tax purposes.
    The ordinary man—the non lawyer—would have thought that the application of a process in the course of making the goods was treatment of goods which affects the goods themselves. Will the hon. and learned Gentleman tell the Committee what precisely is the distinction between these two forms of words? The Committee may then have some chance of understanding exactly what we are now doing.
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    Perhaps the Solicitor-General would also give an example of this operation with which we are concerned in this case described as
    "… any treatment of goods which affects the goods themselves …"
    On Second Reading the Financial Secretary spoke of the case of a ring which contained a jewel. The ring might be returned to the maker, one jewel removed—I take it after the tax had been charged—and a different and more valuable jewel inserted. It appears that, at the present time, tax can be avoided by that operation. I do not know whether the hon. and learned Gentleman can give us some other explanation of the type of thing he has in mind.
    The Financial Secretary also said, at the end of his remarks on Second Reading, that these new powers which are being taken under this Bill
    "… will be exercised in the same way as changes in the rate"—
    that is, the rate of tax—
    "and will be subject to the control of this House by the affirmative Resolution where the effect of a change is Ito impose tax."—[OFFICIAL REPORT, 3rd May, 1954; Vol. 527, c. 32-33.]
    Where any change has the effect of imposing a tax on some new class of goods there should obviously be an affirmative Resolution of this House, but will the hon. and learned Gentleman tell the Committee the precise sort of resolution which we may expect under these new powers? We are not here concerned, apparently, with an order which would impose a tax or raise the rate of tax on a certain definite class of goods, which is the normal Purchase Tax order with which we are familiar. This is apparently to be some new form of resolution which will presumably apply to certain specific operations such as the alteration of the form of jewellery contained in a ring or other ornament.
    What precisely are these resolutions which will come forward under the Clause is a little obscure. We shall be grateful if the hon. and learned Gentleman, after such consultations as he may find appropriate, can give us some answer to these questions.
    The Solicitor-General (Sir Reginald Manningham-Buller): I will certainly do my best to answer the right hon. Gentleman's questions. I think that in his observations he was dealing both with

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    Clause 9, which is now under consideration, and with Clause 10. For clarity it is desirable to keep the two separate. The instance which he gave of the stone in the ring being replaced is an instance appropriate to Clause 10, but not to Clause 9.
    I hope that he will not think that I am criticising him for dealing in part of his speech with the two Clauses at the same time, but for the purposes of clarity it is desirable to bear in mind that Clause 9 deals with operations which bring non-chargeable goods into the chargeable class, or chargeable goods into a class carrying a higher rate of tax. Clause 10 is meant to deal with cases where the rate of tax remains the same but a more expensive type of article is produced by the operation, or what is virtually a new article emerges from an operation on second-hand goods.
    8.30 p.m.
    Mr. Jay: Would the hon. and learned Gentleman not agree that the Financial Secretary's speech on the Second Reading appeared to bring the alteration of a ring under Clause 9? If he looks at column 32 of the OFFICIAL REPORT of that debate I think he will agree that that appears to be the case.
    The Solicitor-General: I have not got that particular passage with me. These three Clauses can be dealt with together, because they are all designed to prevent loopholes and tax avoidance in the future. From the point of view of explaining in detail how this provision should operate, I think it is desirable to try to keep the two things distinct, and I will confine my observations now to Clause 9.
    The right hon. Gentleman was quite right in his reference to Section 23 of the Finance Act, 1948, and, as he will remember, the problem which led to that Clause being inserted in the Bill was the fact that a wide range of medicines were exempted provided that they were marked with no proprietary brand name and the label was stuck on afterwards. They therefore passed the tax point without paying tax. That is what that Section was brought in to deal with. But while that Section was applied in terms to all classes of goods, as the right hon. Gentleman will sep, the only alterations to which it applied were alterations of the label or the get-up—that is to say, the appearance or description.
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    That Section did not include any alteration to the goods themselves, although, of course, if there is an alteration to the goods after they pass the tax point with the same object in mind as in the case of the bottle of medicine, there really is a stronger case than there is in the case of the bottle of medicine for treating that alteration as not affecting tax liability—that is to say, making the value of the article include the value of the alteration.
    The real purpose of Clause 9 is to extend Section 23 so as to make it apply not only to an alteration of the get-up of the goods or the addition of the label, but to an alteration of the treatment of the goods. The right hon. Gentleman, I am sure, will recognise that in the Purchase Tax field it is impossible in some cases to avoid rather arbitrary borderlines, and it is sometimes easy to move an article across the borderline either by a simple alteration or by an improvement, and an alteration or improvement which clearly is not in all cases a process of manufacture.
    One must recognise that there is scope for considerable tax avoidance by arranging that the goods pass the tax point in the state in which they attract the least tax, and then making an alteration which brings the goods into the more highly taxed class without paying the tax. To give the right hon. Gentleman a short illustration, let us take a 12-seater omnibus, which is wholly exempt. That can be easily converted into a chargeable vehicle by removing the distinguishing fittings of an omnibus. If that is done afterwards, we have a vehicle of a chargeable class but without any Purchase Tax being paid upon it.
    I have given that one illustration in the hope that I shall satisfy the right hon. Gentleman and his hon. Friends that this really is a necessary extension which flows from the provision made in the Finance Act, 1948, to prevent avoidance of Purchase Tax where avoidance would clearly be wrong.
    Mr. Jay: If it is true, as the hon. and learned Gentleman says, that Section 23 of the 1948 Act was mainly concerned with certain alterations connected with proprietary medicines, why did the Financial Secretary describe it as a provision with respect to vehicle chassis? We have had

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    so many different explanations this afternoon of what these provisions were intended to do that I feel bound to ask the hon. and learned Gentleman whether the Financial Secretary was in error in bringing in the question of vehicle chassis.
    The Solicitor-General: I am sure the right hon. Gentleman will not expect me to be cross-examined upon what my colleague has said. However, I do not object at all to being asked questions about it. The case of the vehicle chassis may well be another illustration of the same process of tax avoidance which this Clause is aimed at preventing. It is the case that Section 23 applied and does apply to all classes of goods but it was brought in primarily for medicines.
    The words are wide enough to apply to all classes of goods, and my hon. Friend probably referred to vehicle chassis merely as one class of goods which comes within the purview of that Section, although, as that Section now stands, that class of goods would not be affected by the Section unless one altered either the label on the chasis or the get-up of the chassis.
    Clause ordered to stand part of the Bill.

    Clause 10.—(POWER TO DEFINE THE DIFFERENCE BETWEEN PROCESSES OF MANUFACTURE AND REPAIRS, MAINTENANCE OR ALTERATIONS.)
    Mr. Harold Wilson: I beg to move, in page 5, line 35, at the end, to insert:
    Provided that no such order shall have effect as treating as a process of manufacture any alteration or addition to the goods which does not increase their value.
    This is a small, simple point, but it causes a certain amount of irritation, frustration and annoyance. The Financial Secretary has said that it has caused him a little irritation and annoyance in the past. I can best illustrate it by giving a specific case. An organisation in my constituency—it happened to be my divisional Labour Party, but that is irrelevant to the argument—was having a dance and had tickets printed for a certain night. I have no doubt that Purchase Tax was paid in the ordinary way upon the tickets as printed.
    For a reason which I cannot now recollect, it became necessary to hold the
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    dance on a different night. Perhaps the hall was not available; perhaps there was a municipal by-election. The tickets had been printed, and it would have been wasteful to have had new ones printed, and so the existing ones were printed over with the changed date.
    It is common practice, and has been for many years, and it is also in accordance with the law for Purchase Tax to be charged on the process of overprinting. I was asked to take the matter up. I wrote to the Financial Secretary, and he sent back a formal letter making it clear that what had been done was in accordance with the law, but he added that he himself had come across the same problem and that it seemed on the face of it to be absurd.
    I believe that in his case the problem had arisen through the activities of the Kingston - upon - Thames Conservative Association. This is obviously a matter which cuts across all political parties, and it almost certainly affects a number of other organisations of a non-political character. As long as Purchase Tax is what it is, I suppose it is reasonable that dance tickets should pay Purchase Tax because they are a form of stationery.
    The purpose of the Amendment is to deal with the irritation caused by the application of Purchase Tax to a process such as overprinting which does not add to the intrinsic value of the tickets, but merely corrects a mistake. It is not like adding a more expensive gem to a ring. There is no use of materials, unless one can take into account the infinitesimal amount of printers' ink used in the process. No new card or paper is used. It is purely a matter of the application of labour to the tickets. To most reasonable people, it seems wrong that Purchase Tax should have to be paid on such an operation.
    We have suggested—there may be a better method of dealing with the problem—that where an operation does not add to the value of the goods, no Purchase Tax should be paid on that operation. I know that a pedantic lawyer, if we had one in the House, or a theoretical Communist, if we had one in the Committee, could, of course, make out a case that these dance tickets had been increased in value by the overprinting.

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    He could argue that they had plainly become valueless by the fact of the hall not being available and that, by the process of overprinting, they have been changed from dud tickets into valuable ones. But I do not think that that argument can be sustained. The intrinsic value of the tickets has not altered.
    I am sure that the hon. and learned Gentleman will take into account the irritation which this sort of thing causes. I have had a number of other cases, which have nothing to do with my own division, brought to my notice. This is a very small point, and the revenue involved must be infinitesimal—certainly with regard to the printing of dance tickets. I hope that the Government will tell us, either that they can accept the Amend-men which seems to us to be an estimable one, or, if not, say that they will take the matter in hand and will provide a better way of doing what we want to do by introducing the appropriate Amendment on the Report stage.
    The Solicitor-General: The right hon. Member for Huyton (Mr. H. Wilson) has drawn attention to a problem which, I must confess, is a novel one to me. It may be that in my constituency we have always been fortunate enough to hold dances on the dates they have been advertised and not had to postpone them. Obviously, the excellence of the arrangements in my constituency cannot be equalled all through the country. I am certainly grateful to the right hon. Gentleman for drawing my attention to this particular point which I would say at first sight is one of some little difficulty.
    One is not unsympathetic, particularly in view of the way in which the right hon. Gentleman has put his argument. I must, however, disappoint him by saying that the Government cannot accept his Amendment to this Bill. I will endeavour to satisfy him that the effect of the acceptance of the Amendment would indeed be serious and would, I think, have a result which he would not like to see brought about. It would have effect in fields far wider than tickets for dances.
    First of all, this particular Clause is, again, intended to deal with tax avoidance. I covered part of the ground perhaps in answering the right hon. Gentleman on the previous Clause. Here, of course, we could get a process of manufacture which does produce a
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    more expensive type of vehicle while the rate of tax remains the same—where there is virtually a new vehicle emerging from an operation on second-hand goods. If we are producing a more expensive type of vehicle within the same tax rate, then, clearly, we are getting an increase of value, and so this Amendment would not affect that part of the operation of this Clause.
    Where we would get an adverse result, if this Amendment were accepted, is where we bring into existence what is really a new article by an operation on what one might call second-hand goods, and where the test of value may be extremely difficult to apply. I will give a simple illustration by way of jewellery. Let us take the case of a manufacturing jeweller who receives pieces of old jewellery to the value of £500. Suppose he takes parts of these old pieces of jewellery which he estimates to be worth £100 and then does work on them to the value of £20, so that the prima facie value, on his own estimate, would be £120. Of course, a great deal of new jewellery is made out of pieces of old jewellery.
    To take that instance, the value criterion would have to be defined so as to confine that criterion to the parts of the old goods actually incorporated in the new ones resulting from the process. That would be a complication. Even if one surmounted that complication, which would not be at all easy, further difficulties might well arise.
    8.45 p.m.
    The nominal value would then be £120, but suppose that that new piece of jewellery does not sell at all easily at £120 and the jeweller has to reduce his price and ultimately sells it at, say, £90. One might accept £90 as the open market value, but, if so, there does not seem to be any reason for waiving Purchase Tax on that £90, whereas by taking the test of value, which the right hon. Gentleman's Amendment would include, the fact that the article is sold at £90 when it is valued before sale at £120 would mean that no Purchase Tax would be payable.
    I hope I have made a rather complicated example, but, I think, a simple one, fairly clear to show the right hon. Gentleman that in taking that test of value in relation to the manufacture of

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    new articles from second-hand goods, one would be getting into a most difficult and complicated field and possibly opening the door to a fairly extensive form of tax avoidance. It is for that reason that we cannot accept the Amendment in this form.
    I should certainly like an opportunity of considering the case of the tickets for dance halls which have to be overprinted. Whether that might be regarded merely as an alteration, which is referred to in the Clause, and not as part of a process of manufacture of a dance ticket, is a matter on which I should not at present like to express a considered opinion.
    I hope the right hon. Gentleman will give me the opportunity of looking into that, and I hope I have made it clear that the acceptance of the Amendment would have a much wider effect than would appear from what he said and would lead to great difficulties in dealing with operations on what one might call second-hand articles and subjecting them to a process of conversion or adaptation which results in the production of a new article.
    Mr. H. Wilson: I am grateful to the hon. and learned Gentleman. I certainly would not like to get into any argument about whether the overprinting of dance tickets represents part of a manufacturing process or some subsequent treatment, although, if such an argument developed, I feel rather more fortified now that my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) has arrived.
    I am quite content with the Solicitor-General's assurance that he will look at this special problem. As I said, it is only a small one, but it is the kind of thing that causes a lot of needless irritation and it may well be not worth the trouble and expense of collecting the tax.
    I congratulate the hon. and learned Gentleman about the success of the organisation of dances in his constituency. Obviously, his party owns all the halls, which is not the case in my constituency. It is a sad reflection that the Financial Secretary has not been able to get the same degree of success in the organisation of dances or similar functions in his own constituency. When we put down this
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    Amendment we had no intention of raising all these complications about jewellers dealing with second-hand materials and, to use a phrase more commonly used in dealing with motor cars in Army circles, going in for the cannibalisation of small pieces of secondhand jewellery.
    I followed the complicated argument and I would have liked to pursue it further by asking what happens to all the material left over, and how it is valued for tax purposes. I am not satisfied that the law cannot be rigorously invoked even without the Amendment, but I do not want to make the task of the Solicitor-General more difficult by pressing an Amendment which, while designed to help those who have to reprint their dance tickets, might cause complications in the silverware and metalware jewellery industry.
    If the hon. and learned Gentleman can find a way round it, I hope he will put an Amendment on the Order Paper at a later stage, when we will support it from this side. In the circumstances, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Clause ordered to stand part of the Bill.

    Clause 11.—(TAX IN RESPECT OF UNFINISHED OR INCOMPLETE GOODS.)
    Mr. Jay: I beg to move, in page 6, line 26, to leave out subsection (5).
    This Amendment is moved mainly in order to elicit from the Government an explanation of the meaning and purport of the subsection. I must warn the Solicitor-General that he almost invariably gives explanations contrary to those we receive from the Financial Secretary, so we shall examine carefully what he says and put further questions to the Financial Secretary on the Report stage to see if he gives the same answer.
    This is a simple subsection and reads:
    "For the said purposes a vehicle designed to be mechanically propelled shall be deemed to be mechanically propelled, whether or not complete with an engine and other parts and accessories required for the purpose."
    I think the Committee will agree that this deserves brief examination. I have known occasions, for instance in General Election campaigns, when a vehicle designed to be mechanically propelled

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    unfortunately was not, in fact mechanically propelled because it was not complete with an accessory required for that purpose.
    I do not think it would have been any comfort to me, or to my assistants, on such occasions, to have sat down and deemed ourselves to be somewhere where we wanted to be but were not. Nor, I imagine, would the Whips on either side of the Committee accept the explanation that, although one was not in the Division Lobby at a certain time, nevertheless one deemed oneself to have been there. Therefore, we want an explanation of the rather extraordinary intellectual process envisaged in this subsection, and its effects for tax purposes.
    I suppose that the purpose is to prevent tax evasion and to ensure that some traders engaged in devious methods of making goods without parts, then getting them passed by Customs and Excise, and then adding the parts afterwards, do not entirely escape tax. But is the Solicitor-General quite sure that he has not covered too much by this provision.
    For instance, does the phrase, "a vehicle designed to be mechanically propelled" cover a vehicle which is capable of being mechanically propelled? I saw in the Strand yesterday what I should have called an ordinary pedal bicycle, but which was on that occasion being mechanically propelled because it had attached to it a small engine. Would the Customs argue that since any bicycle, so far as I know, is capable of having such an accessory engine attached to it, is, therefore, a vehicle designed to be mechanically propelled?
    I believe that the Parliamentary Secretary to the Ministry of Housing and Local Government normally comes to the House on a pedal cycle which one sees in New Palace Yard. Would it be possible for the Customs to try to impose a tax upon him on the grounds that his bicycle, though not mechanically propelled, was nevertheless designed to be so propelled? These are some of the questions that spring to one's mind from an examination of this subsection. No doubt we shall have a most ingenious explanation from the Solicitor-General, even though we may have a contrary one on the Report stage.
    The Solicitor-General: I feel that on this occasion, as indeed on most, my right hon. Friend the Financial Secretary and I speak with the same voice. I am not sure that I can say the same about the right hon. Member for Battersea, North (Mr. Jay). I cannot help feeling that when he spoke on the Finance Bill in 1950 he was probably called upon to make the speech which I am now going to make in answer to a speech made by my right hon. Friend the Financial Secretary, on which the right hon. Gentleman has modelled the speech which he has just made to the Committee.
    Section 18 (3) of the Finance Act, 1950, reads as follows:
    "For the purposes of the said enactments a chassis designed for a mechanically propelled vehicle shall be deemed to be mechanically propelled, whether or not complete with an engine and other parts and accessories required for the purpose, …"
    The Clause which we are now discussing applies to a motor vehicle the wording which was applied in 1950 to a chassis.
    Mr. M. Follick: This is much wider.
    The Solicitor-General: I quite agree that it is much wider. The actual words with which the right hon. Member for Battersea, North most justifiably made such play were taken from Section 18 (3) of the 1950 Act relating to chassis. Those words have been inserted in this year's Bill and applied to mechanically propelled vehicles for precisely the same reasons as they were then inserted in relation to chassis.
    As I am sure the right hon. Member will remember, the Purchase Tax liability was expressed to fall upon mechanically propelled vehicles, and the difficulty in 1950 was in cases where a chassis was sold and the engine was fitted afterwards. It was for the purpose of bringing that into the tax and not letting it pass the tax point that the amendment was made in 1950. It is for the same reason that we now find it necessary to make a similar amendment in relation to motor vehicles.
    There are signs of a possible development of the practice of selling motor vehicles without the parts which are necessary for their mechanical propulsion, and so avoiding or reducing the liability to tax. The right hon. Member for

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    Battersea, North made some play about mechanically propelled bicycles. I was interested that he should do so because there was a decision on the matter in the High Court. In 1952 it was held that a bicycle with motor attachments from which one or two essential parts, perhaps a sparking plug, had been removed was not a mechanically propelled vehicle for the purposes of compulsory third-party insurance.
    If that decision were extended or applied to this tax it might well be that one would have motor cars passing without paying full tax liability solely because of the omission to fit a petrol tank or sparking plugs or something of that sort before sale to the purchaser. I hope I have explained to the right hon. Member what this subsection is intended to deal with. I must admit that the words are at first sight curious, but I think they are adequate to achieve the purpose we desire and I commend them to the Committee.
    9.0 p.m.
    Mr. G. R. Mitchison: I do not think back benchers can let this pass on the conspiracy of nonsense between the two Front Benches. The only defence put up by the Government for this legislative absurdity is that the previous Government did it, too. In the interests of plain English I think we want a better defence than that. It appears that, in practice, one may sell a car to be made up by the purchaser and it is to protect that practice that this curious piece of legislation is intended.
    I agree that there are difficulties. This subsection may be to meet the case of the Ford car which, after having been driven 30 miles into the desert, then stopped and was found to have gone so far on its reputation alone. Any car which behaves in that way must be taxed somehow or other.
    The next point which bothers me is whether on this, as on the railway journey which one finds more difficult nowadays it can be asked, "Is it really necessary?" I should have thought the Commissioners were sufficiently protected and sufficiently powerful under subsection (2). There is a fruity bit here. The Commissioners can
    "determine for any goods of a prescribed class."
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    That is to say, for mechanically propelled vehicles,
    "what parts and accessories are for those purposes to be deemed to belong to such goods when complete and what type of any part or accessory deemed to belong to such goods when complete, goods lacking that part or accessory are to be treated for those purposes as having."
    If the sparking plug is left out would they require to have recourse to subsection (5)?
    Perhaps this subsection has been put in to replace obscurity by absurdity and to replace subsection (2) by subsection (5). Let me confess that subsection (5) is much the clearer as it is a more patent absurdity than the other subsection. It is a matter of choice which we prefer, but it seems unnecessary.
    I wish to put this philosophical difficulty because I feel that on Finance Bills the metaphysical elements in our taxation system and, indeed, in the Treasury, have full play. May I point out to the Government the very remarkable position? Apparently for the purposes of this subsection a mechanically propelled vehicle need not have an engine nor any other part nor accessory required for the purpose. Therefore, we could take four wheels and each of them may be deemed to be a complete motor car. It may well be that my right hon. Friend did something foolish and absurd in the past, but surely the practice should not be continued. Is it not possible to provide, in more simple English, the Commissioners with the powers which they require? The taxpayer, undoubtedly, will be quite unable to understand what this Clause is about, but no doubt the Commissioners will, and that is a bit one-sided. Could not we have it more simply and less absurdly, please?
    Mr. Albu: Sometime during the Committee stage of a Finance Bill an hon. Member such as myself has to get up to speak not on the legal position, but on such questions as whether the omission of a sparking plug from a motor car would make it cease to be a mechanically propelled vehicle. Without wishing to be insulting, I do not see why the Commissioners would be so foolish as to think that. What was said by my hon. and learned Friend the Member for Kettering (Mr. Mitchison) covers this point, in my opinion, whatever decision may have been made with regard to a motor car for

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    a completely different purpose. I do not know if a legal decision arrived at for one purpose may be interpreted by the Commissioners to cover a different purpose. I should not think that is the case. I cannot see why the Treasury should become worried about a legal decision which is concerned entirely with insurance.
    The point I wish to press was made by my right hon. Friend the Member for Battersea, North (Mr. Jay). I am not certain—and the Financial Secretary will no doubt correct me if I am wrong—but I think I am right in saying that the rate of Purchase Tax on a mechanically propelled bicycle is not the same as the rate on an ordinary bicycle.
    Mr. Boyd-Carpenter indicated assent.
    Mr. Albu: If that be the case I think that there is some validity in the point made by my right hon. Friend. If an hon. Member buys a bicycle, can it be interpreted to be an incompleted mechanically propelled vehicle because it is possible to buy an engine to add to it and make it into a mechanically propelled vehicle? Indeed, it is not quite so simple as that, because today bicycles of the type which are made to carry engines, which may be fitted to them later to make them into mechanically propelled vehicles, are made of a special strength. What happens if someone buys such a bicycle and fits the motor when he has time? What rate of Purchase Tax is to be charged on such a bicycle because it may well carry a motor? Is it to be counted as a mechanically propelled vehicle?
    As more mechanically propelled bicycles are used and sold it may become the practice of manufacturers to strengthen all bicycles so that they may carry motors, if it is so desired. Would they all then be liable to the higher rate of Purchase Tax? I am not certain of the rates, but I gather from the nod given by the Financial Secretary that there is a difference between the rate for a mechanically propelled bicycle and an ordinary bicycle, and if that is so my hon. Friend's point is valid. I think this may lead to considerable confusion because of the difficulty of distinguishing between a bicycle capable of being fitted with a motor and a bicycle which is propelled by human energy.
    Mr. Follick: What about a motor scooter?
    The Solicitor-General: I think that motor scooters will fall into their proper place in the reply which I am about to make.
    With regard to subsection (5), the hon. Members for Edmonton (Mr. Albu) and Loughborough (Mr. Follick) will notice that the definition applies to vehicles which are designed to be mechanically propelled. That is to say, the actual designing of the vehicle must involve mechanical propulsion. There may often be a fine division between a vehicle which is capable of having a mechanical unit attached to it and a vehicle which is designed for mechanical propulsion, and there may be some borderline cases. The ordinary bicycle is, clearly, not a vehicle which is designed in its manufacture for mechanical propulsion.
    Mr. Albu: More and more bicycles are being made in such a way that they can have a mechanical unit fitted to them afterwards. I should have thought that they would be of different construction and lighter if the manufacturer did not bear in mind the fact that they might later have motors fitted to them. I should have thought that that made a considerable difference.
    The Solicitor-General: I am not sure whether the hon. Member is right in assuming that bicycles of that sort are now being manufactured. The Clause deals with vehicles which are designed for mechanical propulsion. That is the test.
    The hon. and learned Member for Kettering (Mr. Mitchison) suggested that subsection (5) was unnecessary because of subsection (2). I hope that, on reflection, the hon. and learned Gentleman will agree that that is not so. Subsection (2) begins:
    "It shall be for the Commissioners to determine for any goods of a prescribed class …"
    Subsection (4) says:
    "In this section the expression 'prescribed class' means mechanically propelled vehicles and such other classes of goods …"
    Therefore, to bring goods within the terms of subsection (2) they must come into the "prescribed class," and mechanically propelled vehicles will fall into that "prescribed class."

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    That brings me back to what I was saying earlier when I dealt with the necessity for defining mechanically propelled vehicles as being vehicles designed to be mechanically propelled even though at the time the manufacturers omit the propulsive power or some other part or accessory required for the purpose of mechanical propulsion. I explained to the Committee the necessity for using that language, based on the 1950 Act in relation to chassis.
    When we have reached that stage and have got the goods in the "prescribed class," subsection (2) comes into play because it deals with the sale of such vehicles; that is, without what might be regarded as their normal equipment. Subsection (2) would, for instance, deal with the practice, if it arose, of selling motor cars unpainted or without the usual spare tyres. Such matters would come under subsection (2) and not subsection (5).
    The subsection will not be used to impede the introduction of new and simplified types of car which are genuinely designed for use without many of the fittings at present ordinarily provided, such as carpets, bumpers and separate headlamps. It will be used—I hope the Committee will agree that it should be used—for the purpose of preventing avoidance of a proper tax liability.
    Amendment negatived.
    9.15 p.m.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Sir Frank Soskice: I should like to ask one question on this Clause, the object of which has been clearly put before us by the Solicitor-General. I can follow the reasons which he has given for the various provisions of the Clause, but one, however, causes me some slight anxiety, because I am not quite sure how it will work, and I shall be obliged if the hon. and learned Gentleman will give me the benefit of his advice.
    I refer to subsection (3). I can understand perfectly well that the Commissioners, in determining what missing parts the articles are deemed to possess for the purpose of assessing the tax, should have
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    regard to the standard specification of that type of goods. I can well see the object of that, and it will be apparent to the Committee. What causes me some slight doubt is what is the precise object of the words that follow.
    Let us suppose that the Commissioners have before them the problem of deciding, with regard to some incomplete article, what it is to be deemed to possess for the purpose of deciding whether it is a taxable article or not. Having directed their minds to the standard specification of that article and any information which they may derive from that, what are they then to ask themselves with regard to
    "the common practice of users of such goods."
    After all, we are asking, in regard to an incomplete article what we are supposing it to possess for the purpose of deciding whether it is taxable or not.
    I do not understand the precise relevance of the words regarding the common practice of the users of such goods. I am sure that there is a perfectly good reason, and I am also sure that the draftsmen of this Clause had clearly in their minds something to which the Commissioners should direct their attention. I feel, however, that these words may give rise to some uncertainty in the application of the Clause, and I should be grateful if the learned Solicitor-General would indicate to the Committee what precisely the Government had in mind in inserting these words.
    The Solicitor-General: I did inquire some time ago as to the reason for the addition of these words. At the moment, I am not quite sure whether my recollection of the explanation I was then given is entirely reliable, and so I hope that I shall not be held to it too strongly.
    My recollection—and I hope I am right—is that the intention was to try to exclude what we may call optional articles which some particular users like to attach to particular types of cars. One would not only look at the standard specification of the type of goods, from the point of view of the manufacturer of that type of article, but one would look at the other side of it to see what is the common practice of the users of such goods. I am reminded now that the explanation which I have given is correct. It is intended for that reason.

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    It is common to have a spare wheel on a car, and to have a horn, which is required by law, but the specifications for particular types of motor cars may contain a lare number of gadgets and accessories which the normal car user would not require, and, indeed, would not demand. It is in order to have regard to both sides of the picture that these words are inserted.
    Sir F. Soskice: I am much obliged to the Solicitor-General for his explanation, which we will very carefully ponder between now and Report stage. Perhaps, as there seems to lurk in his mind some slight trace of uncertainty, he will give consideration to these words between now and the Report stage in order to determine whether they may not also be a ground for some uncertainty.
    Clause ordered to stand part of the Bill.

    Clause 12.—(VALUATION OF GOODS.)
    Mrs. Castle: I beg to move, in page 7, line 9, at the beginning, to insert:
    "that the retail selling price to the public of the goods comprised in the purchase is fixed by the manufacturers or wholesalers or is otherwise controlled by an agreement for price-maintenance and."
    This Amendment deals with the question of uplift, a problem which has been a preoccupation of mine for some years. I begin by congratulating the Government on facing up in this Clause at last to their obligation to take action on the Grant Report. The Committee will remember that two years ago some of us raised this question of uplift, and the unsatisfactory nature of the present situation.
    As the result of our debate, the Grant Committee was appointed, and many of us were disappointed last year that the Chancellor did not feel able to give us his policy on the Grant Committee's recommendations quite as quickly as he was prepared to act on the Hutton Report. At last, after great labour, the Government have produced their policy and it is reflected in Clause 12. It substantially coincides with the majority recommendations of the Grant Committee.
    To make my Amendment clear I will remind the Committee what uplift is about. Purchase Tax is levied on the
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    wholesale value of goods. There has been a valuation practice whereby, in the case of goods bought by retailers direct from manufacturers, Customs and Excise has required Purchase Tax to be levied not on the actual sale price to the retailer but on that price uplifted by an arbitrary percentage fixed by Customs and Excise, in order to reach its estimate of the wholesale price in an open market.
    The objections to this practice have been that in a large number of cases it has made Purchase Tax based on some purely hypothetical figure. That has meant uncertainty and an unsatisfactory relationship between traders of different kinds. The Clause has one merit, namely, that it bases Purchase Tax from now on, apart from the exemptions listed in the Clause, on the actual price charged to the retailer. This is in conformity with the recommendations of the majority of the Grant Committee, who discovered, as the result of their deliberations, how unsatisfactory the present position is and who laid it down that for the calculation of tax on retailers, purchases from manufacturers the actual price should not be unlifted by the interposition of an imaginary wholesale merchant but that it should, with certain exceptions, be based on the actual price charged.
    This Clause takes away a good deal of the arbitrariness of the present situation, whereby Customs and Excise can query the price on which Purchase Tax is levied in almost any transaction. We begin to know where we are and to get some firm basis for the calculation of the tax. The only quarrel I have with the Clause is with the exceptions which are proposed to the new basis of valuation and the new ruling. This Amendment deals with the exceptions in the Clause relating to the so-called "quantity advantage." That is to say, the exception lays down that any quantity advantage enjoyed by a retailer purchasing from a manufacturer shall be taken into account in calculating Purchase Tax—that a reduction in price which he has enjoyed through buying in quantity shall be uplifted so as to offset this advantage.
    The argument for uplifting the actual price in this case, as laid down in the Majority Report of the Grant Committee, is based on two grounds. The first is that if the retailer gets this special price as a

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    result of buying in quantity and is dealing in price-maintained goods where the manufacturer fixes the selling price to the public, if uplift is not operated then, as a result of its abolition, the retailer will get an advantage which he will not pass on to the consumer. It is, therefore, said that this makes it essential to operate uplift in these cases.
    The second reason for suggesting that uplift should be retained in cases where quantity advantage is enjoyed by the retailer is that it is unfair to the small trader to compel him to pay Purchase Tax on a higher price than the large retailer has to pay for similar goods.
    I will take the argument about price maintenance first, because there can be no disagreement among us that the main purpose of abolishing uplift in cases where a retailer gets a price advantage through buying in quantity direct from the manufacturer is that he passes on that advantage to the consumer. That is the argument of those who signed the Minority Report of the Grant Committee. They want this advantage passed on in full to the consumer. They say that the large retailer usually passes on this advantage, it being part of his trading technique to be as competitive as possible and to cut down his selling price as much as possible. Therefore, his advantage should be passed on completely without uplift interfering artificially to alter the price.
    Where, of course, the selling price of an article is laid down by the manufacturer, that advantage cannot be passed on, and both the Majority and the Minority Reports of the Grant Committee agreed that in the case of price-maintained goods it was clear that there was an undesirable situation if the advantage was not passed on. The Minority Report admitted that this problem existed, but said that it applied only to the minority of goods affected by uplift, and that we should not base our whole taxation law on these minority cases, because that would be making the tail wag the dog. They said that the advantage to the community of abolishing uplift where quantity advantage exists would far outweigh the disadvantage of retailers getting a certain windfall, as it were, in the case of price-maintained goods.
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    But, as I said, the Minority Report assumed that we could not separate price-maintained goods from the rest of goods affected by the quantity advantage. They said that even assuming that they still wanted in these cases to abolish uplift. We think that our Amendment provides a watertight formula for separating price-maintained goods and excepting them from the advantage of abolishing uplift. This being so, we are left merely with the second argument to meet.
    9.30 p.m.
    We are entitled now to ask the Government why they insist on applying uplift in the remaining cases where, as we know, the quantity advantage which a retailer enjoys is passed to the consumer. Judging by the arguments in the Grant Report the Chancellor or the Financial Secretary, when replying, will say that there must be uplift here as otherwise it is unfair to the small trader. The large retailer buys in quantity and gets a cut price, and would not only have that advantage over the small retailer but also that of the cut in Purchase Tax.
    This is the argument of the majority. I suggest that it is an argument whose validity is grossly exaggerated. It is wrong in principle. I do not think that the protection of the individual retailer should stand in the way of our passing to the consumer the benefits of fair competition. Apart from that point of principle there is the point of actual practice. If we go into this unemotionally we find that this argument about the small trader has been grossly exaggerated, and that the small trader has his own advantages which offset the advantage of size of the large retailer.
    The small trader's advantage is, of course, that of convenience. The man who will be affected by this is largely a man who is running "the shop round the corner," the man who is in the street or who is nearly on the doorstep of the purchaser who thereby save bus fares and other costs involved in going to the big stores. The consumer is thus prepared to pay an extra½d. on an article because of the saving of time and trouble and of costs in other directions.
    In attempting to correct this so-called injustice to the small trader—an injustice which has not been proved—the Clause is creating a whole series of new injustices.

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    There is, first, the injustice to the consumer, who pays a price artificially inflated by a higher rate of Purchase Tax than otherwise would be paid. The consumers are contributing a bit more to the Chancellor than, strictly, they would were we to stand by the principle that the basis of the valuation should be the actual price charged to a retailer without any of these arbitrary and notional variations.
    I frankly suggest to the Committee that in dealing with this question of uplift the Chancellor of the Exchequer has always had his revenue considerations in mind. He gets a little more tax than he otherwise would because the consumer "forks out" a little more than he otherwise should. That is a consideration which the Chancellor has had in mind in dealing with the problem.
    There is, secondly, the injustice to the trader, arising from the uncertainty of his present position as to tax liability. The Minority Report of the Grant Committee says that the trader has a right to know where he is. He has a right to know that if he pays a certain amount of money for certain articles he can calculate for himself what the tax will be before he places any orders.
    In the present situation, however, he cannot do that because Customs and Excise argue that somehow the price that he has to pay for the articles has been reduced below some mystical norm because they are bought in bulk. Customs and Excise can alter quite arbitrarily the calculation of what the price ought to be and, therefore, the amount of tax that he has to pay. The trader does not know where he is, because this is quite a notional figure. In many cases nobody can say outright, "If you had not ordered 1,000 of these articles, but only 100, the price would have been so much." It is anybody's guess what the price would be. This applies particularly where a manufacturer may be trying to launch a new type of article and is trying to entice a retailer to give him an order for a new line of goods which is not yet selling in a general way to retailers. In such cases the selling price to the retailer which Customs and Excise accept is again quite arbitrary. There is no real basis of comparison because this is a new line of goods, but Customs and Excise say, "We believe that if those goods had been sold on the open market the price would have
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    been so much, and you must pay tax on this basis."
    This creates an element of great uncertainty which holds up the development of business and gives considerable anxiety to traders. Therefore, a fundamental injustice arises out of the existing situation which this Clause seeks to perpetuate—the injustice of making unreal comparisons between articles which are not comparable.
    Subsection (2, a) states that uplift shall operate where
    "by reason of the quantity of the goods comprised in the purchase, the price payable there-under is lower than the price which would be paid by retail traders in general for goods of the like description."
    That opens the door to Customs and Excise to insist on comparing the non-comparable. For example, where a large retailer orders a line of goods which are, in fact, being made for that retailer only and not for the general market, it can say, "The price which You are paying has been reduced in comparison with the price that retailers would have been paying if there had been other retailers buying articles of the like description." We are in the realm of pure speculation. We are not in a real world at all; we are in a world in which Customs and Excise can create arbitrarily.
    A very strong point made by the Grant Committee is that it is highly desirable to have a firm basis of calculation for Purchase Tax and to take the hypothetical and arbitrary elements out of the situation as much as possible. I hope the Chancellor will accept this Amendment because it deals with the case of price-maintained goods, and he should exempt them from the application of uplift. We should not be hag-ridden by this idea that a large retailer buying in quantity is on a comparable basis with the small retailer and should have some arbitrary penalty imposed upon him.
    Most of the goods concerned under Clause 12 (2, a) and affected by this continuation of uplift are not goods which are sold equally to all retailers and are merely enjoying a straight quantity discount for a large resale. Most of the goods which are sold generally to large and small retailers alike—with the large retailer enjoying a clear-cut quantity discount—are price-maintained goods and, therefore, would be left out of this benefit

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    by our Amendment, but the goods which remain to be penalised by uplift if the Clause stands as at present are the goods which are made to special order by large retailers and, had they not been ordered by a large retailer, would probably not have been produced at all.
    We could argue that, out of justice to the small retailer, there is a case for uplifting an identical article which goes in bulk to a large retailer, but there can be no justification for uplifting an article which would not have gone to the small retailer in any case and does not come into the picture. This point is made very strongly by the Minority Report, which, I think, gets to the root of this problem more logically than does the Majority Report. The Minority Report points out that the quantity uplift in these cases is often purely notional. It must be completely unreal to say that there is a quantity element in the price paid by a large retailer where he is buying goods which are specially made for him and for nobody else.
    I should like to quote two sentences from the Report, because this is an involved matter and the Report puts it more clearly than I can. They read:
    "These difficulties"—
    that is, the difficulties of getting away from a notional standard—
    "are present in their most conspicuous form wherever the receipt of a large order by a manufacturer enables him to adopt more economical methods either of production or selling; it may even enable him to produce an altogether cheaper substitute. No quantity discount is ascertainable in these circumstances, for the simple reason that a smaller quantity would not have been produced at all."
    The price advantage which a large retailer is enjoying in these cases does not arise from the fact, primarily, that he is buying in bulk but arises from the fact that the manufacturer has been able to produce in bulk. The production costs have been reduced rather than the distribution costs. Are we to say that where the production cost of an article is lower in one case than in another, we should uplift in order that the Chancellor shall get his last mite out of the wretched consumer? Of course, I can see it from his point of view, but it is the Committee's duty to try to operate Purchase Tax fairly, and I suggest that as long as this
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    arbitrary uplift is operated in these cases the consumer is not being treated fairly.
    I want to give an illustration of how this might work. Take the case of a small exhibitor at a trade fair. He is displaying a new gadget. He has thought out a bright idea, let us say a new line in egg beaters. He exhibits it at a trade fair and his only hope of launching into production is to get some retailer to back him. He is not in a position to put his egg beater on the open market. He is not in a position to produce at all, unless he is reasonably certain of having an assured outlet for a reasonable quantity of his goods from some retailer.
    9.45 p.m.
    So he shows a prototype of his new egg beater, and hopes that a large retailer will say, "That is a jolly good idea. You can send me so many gross, but I can only sell it if your price is keen. It is only worth-while my buying this if the price is keen, and then I can give you a full order." Then the Customs and Excise may come along and say, "This is an egg beater and the wholesale price of egg beaters in the open market is so and so. Therefore, for the purpose of collecting Purchase Tax we are not going to take the price which you think the retailer will actually pay; we are going to uplift that price to a figure which represents the open market value." So, although it is a good egg beater, it may never be produced at all in that particular form. If that is going to be done that means that the retailer will hesitate, he will not give an order and a good egg beater may never get on the open market.
    I suggest that the present position of uplift is quite ridiculous. We are being asked, in this Clause, in order to protect—I think quite wrongfully—shall I say to protect the illusory interest of the small retailer here and there, to perpetuate this whole range of injustices—injustice to the consumer, injustice to the trader and injustice to the chap who has the bright idea and wants to launch it on the market.
    All these injustices are to be perpetuated because some people say, "If we allow the large retailer to get a quantity advantage without bringing him back to the level of the small retailer we shall be unfair to the small retailer." I think that is using a number of large injustices to cure a number of small injustices.

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    Speaking as a shopper and a housewife, the small retailer's attraction to me, and his guarantee of survival, lies in the fact that he is just round the corner and I do not have to take a bus to go to him. I think that as a consumer I am entitled to enjoy the convenience of the small man round the corner, or if I take a bus into the centre of the town, I have the right to get my goods as cheaply as possible with all the advantages that large-scale orders and large-scale retailing provides in the form of lower prices.
    I suggest to the Chancellor, who has talked a great deal about the virtue of competition and lectured us on it from time to time that to say, "We must use uplift to protect the small retailer from this unfair competition" is out of all proportion to what he will get. I suggest that the Amendment deals with the main difficulty of price-maintained goods, and I hope that the Chancellor will agree to accept it and give to consumers the benefit of fair competition.
    Mr. R. A. Butler: On a point of order. In view of the comprehensive speech of the hon. Lady the Member for Blackburn, East (Mrs. Castle), it would be useful if we had an indication of how we were to take the various Amendments. I have some little knowledge of the majority and minority Reports and of the Amendments, and it would appear that certain of the Amendments have already been mentioned in the hon. Lady's review.
    It might be convenient if we could take a small block, not all, of them together—I do not want to suggest anything unreasonable—and then, if necessary, have votes on them. We might, for example, be able to take all except the last two on page 2923 of the Order Paper in one block and then, if hon. Members want to put individual points, they would be able to do so. Mostly, the Amendments have been touched on in the hon. Lady's speech, and therefore my suggestion would not stop debate but would enable us to get a comprehensive review of the subject.
    Mr. Jay: I am afraid I cannot agree with the right hon. Gentleman. It seems to us from careful examination that quite different arguments are involved in each of the series of Amendments. I have no desire to prolong the debates, but if the
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    alternative is a series of short, clear debates or one long and confused debate, it seems to us better to keep the debates very clear.
    Mr. Butler: I have studied this subject and the Report of the Committee. While I am not such an expert as some other hon. Members, by closely watching the argument I noticed an allusion to the other Amendments. Therefore, I presumed that the case I was putting was already won by the concession which you had made, Wing Commander Hulbert, in allowing the hon. Lady to speak as widely as she did.
    The Temporary Chairman (Wing Commander Hulbert): It would appear that the Amendment moved by the hon. Lady strays on to the following Amendment, in page 7, line 9, to leave out paragraph (a). The hon. Lady was at one time referring to paragraph (a). It would appear that these two Amendments and the Amendment in the name of the right hon. Member for Huyton (Mr. H. Wilson), might be discussed together; they seem very closely allied. I am, however, entirely in the hands of the Committee.
    It might be convenient if I say at this stage that the Amendments in the names of the hon. Member for Langstone (Mr. Stevens), in page 7, line 10, at end insert "or higher." and of the hon. Member for Islington, East (Mr. E. Fletcher), in line 11, leave out "would be," and insert "is." have not been selected.
    Mr. E. Fletcher: Further to that point of order. May I point out that the first two Amendments are alternatives and that quite different arguments apply in support of the Amendment moved by my hon. Friend the Member for Blackburn, East (Mrs. Castle) than would have to be adduced, if that Amendment should fail or is not accepted, in support of the next Amendment. I should have thought that as my hon. Friend devoted the whole of her speech to her Amendment, it would be convenient if that Amendment were disposed of first.
    The Temporary Chairman: As the hon. Member points out, the first two Amendments appear to be alternatives. I should have thought it would have been of convenience to the Committee to discuss those two together.
    Mr. Jay: Further to the point of order. I am bound to say that I feel exactly the reverse applies. It is because the two Amendments are alternative ways of dealing with the problem that it is difficult to dicuss them together. Without desiring to lengthen the discussion, it seemed to us that the logical course was to take a decision on the first Amendment, and if the Committee did not accept it we could then discuss the second one.
    The Temporary Chairman: I am entirely in the hands of the Committee. But if we follow the right hon. Gentleman's suggestion, I must rule that the debate on the first Amendment must be within very narrow limits and cannot stray on to other points.
    Mr. Jay: Certainly.
    Mr. Butler: The trouble is that we have already strayed. The hon. Lady is an expert on this subject, and I waited over half an hour to hear what she had to say. I took notes on my knee, and it seemed that at times she was not only mentioning paragraph (a), but made an occasional reference to some of the other Amendments. That is why I imagined we were having a general debate.
    The hon. Lady also referred to the minority and majority Reports of the Committee. I thought it would be much better, in the interests of the Committee, to have a more general debate. Then, if hon. Members wish to divide the Committee, they will be in no way inhibited nor will the discussion be any the worse.
    Mr. Stevens: Further to that point of order, Wing Commander Hulbert. I was given to understand that although the Amendment in my name and that of my hon. Friends, in page 7, line 10, at the end to insert "or higher" had not been selected, it could be considered in conjunction with the one before it, in line 9, and the one after it, in line 11. Indeed, as I listened to the hon. Lady I wondered if the same rumour had reached her.
    The Temporary Chairman: The hon. Member can certainly discuss the substance of his Amendment provided that it is in order on the Amendment under discussion. If, however, the Committee is not in agreement with the suggestion made by the Chancellor of the Exchequer, perhaps we had better proceed
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    with the first Amendment, but in that case the debate will have to be strictly confined to it.
    Mr. Butler: May I then claim, Wing Commander Hulbert, that the debates on the other Amendments should be equally restricted? We have had a speech which has already ranged for over half an hour on this subject. We sat listening because it is a complicated subject, we know the merits of the majority and minority Reports, and I thought it would be clearer for hon. Members who have not studied them closely if the arguments were put in a general way. If not, we shall have a much more difficult debate, which must be kept entirely technical, otherwise it will not be in order.
    The Temporary Chairman: I agree with the right hon. Gentleman. If the Committee wants these Amendments to be discussed separately, the debate will have to relate to the Amendment under discussion.
    Mr. Butler: May I say, for the honour of the Government, that we cannot reply to many of the arguments of the hon. Lady in that case, and that we shall not do so.
    The Temporary Chairman: Of course, the Chancellor of the Exchequer will also have to keep his remarks within the confines of the Amendment under discussion. Mr. Eric Fletcher.
    Mr. E. Fletcher: I support the Amendment moved by my hon. Friend—[HON. MEMBERS: "Which one?"]—so ably and so persuasively. I intend to confine my remarks strictly to the arguments in support of her Amendment which I hope will commend itself to the Chancellor because, if it does, or if it is accepted by the Committee, it may be unnecessary for us to discuss some of the later Amendments.
    It would seem that the only possible answer to the logical case which my hon. Friend has made out in support of this Amendment is its cost. When the Chancellor dealt with these subjects on Second Reading he said, if I understood him correctly, that whereas the cost of implementing the majority Report of the Grant Committee would cost £5 million, to carry out the minority Report would cost £15 million. The Chancellor did not make

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    it quite clear whether he meant an additional £15 million or that the total cost of carrying out the majority and minority Reports would be £15 million.
    However that may be, may I point out to the right hon. Gentleman that the cost of carrying the proposal contained in this Amendment would be much less than it would cost to carry out the full recommendations of the minority Report of the Grant Committee. That is one reason why I hope the Amendment will commend itself to the Chancellor. I hope he will appreciate that its virtue is that it is confined to the free-price goods—I am sure I can have the attention of the Chancellor for a moment?
    Mr. R. A. Butler: I was trying to calculate the sum for which the hon. Gentleman was asking and I was telling the Financial Secretary.
    Mr. Fletcher: The last thing I want to do is to disturb that calculation. but I had imagined that both the Chancellor and his Financial Secretary would have had the figure at their fingertips, because either it is £10 million or £15 million.
    10.0 p.m.
    Another calculation which will interest the Committee no less will be to know what is the cost of implementing the Amendment. It must be very much less than the full cost of the Minority Report. I hope that the Chancellor will appreciate that the real attraction and merit of the Amendment is that it draws a distinction between uplift on price-maintained goods and uplift on free-price goods. It is most unfortunate that both the Minority and Majority Reports proceeded on the assumption that for the purposes of uplift no distinction could be drawn between price-maintained goods and free-price goods.
    It is implicit in the recommendations of the Majority Report that if the majority of the Grant Committee had felt that a distinction could be drawn between price-maintained goods and free-price goods they would have been in favour of removing uplift as regards quantity considerations for free-price goods. Unfortunately, they assumed that it was necessary either to retain uplift or remove uplift both for price-maintained goods and free-price goods. They came to the conclusion that it was no advantage to the consumer to remove uplift in this
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    respect as regards price-maintained goods and that for the purpose of equity the same must be applied to free-price goods.
    The Grant Committee do not say why it is impossible to draw a distinction. We concede that there are administrative difficulties in this matter, whatever decision is taken by the Committee, but I do not believe that it is impossible. No reason was given in evidence to the Grant Committee why it would be impossible to draw a dividing line and retain uplift for price-maintained goods, because in that category no benefit goes to the consumer, and remove it in the case of quantity considerations for free-price goods.
    In the Majority Report it was considered an instance of the tail wagging the dog and in the Minority Report of hard cases making bad law. The Amendment strikes a mean and provides maximum benefit to the consumer. It will involve much less cost to the Revenue than would the full implementation of the Minority Report and for those reasons I very much hope that the Chancellor will give sympathetic consideration to the Amendment.
    Mr. Stevens: On a point of order. May I have your guidance, Sir Charles. as to whether, in discussing the Amendment now before the Committee, we should be in order in discussing the subject matter of the words "or higher" mentioned in my Amendment in page 7, line 10.
    The Chairman: No. I gather that at the moment we are only discussing the first Amendment in page 7, line 9.
    Mr. Stevens: Do I understand that the second Amendment to line 9 to leave out paragraph (a) and my Amendment, and also that in the name of the hon. Member for Islington, East (Mr. E. Fletcher) to line 11 will be discussed together?
    The Chairman: Yes.
    Mr. Butler: That is a Ruling, Sir Charles, which adds novelty to the discussion. I had prepared a speech in reply to the hon. Lady, but, in view of the Ruling given by your predecessor in the Chair, I am unable to make it because we must now stick to detail. If we were to discuss the two Amendments together would we be confined to detail arising out of those Amendments?
    The Chairman: I think so, on paragraph (a). I am sorry that there has been confusion but, originally, the Amendments were grouped in a certain way and the leaders of the Opposition wanted them to be taken separately. Perhaps that was not indicated to the Treasury.
    Mr. Butler: It is very complicated and difficult to discuss the Report if we are to follow the arguments of the hon. Lady and I think that only detailed matters can be dealt with.
    The Chairman: I think that was to oblige the Opposition.
    Mr. Albu: In spite of what the Chancellor said I do not think the difference between the two Amendments is so small as it appears. The difficulty arises out of the complicated nature of the subsection which makes changes by a passage with two negatives in it. The effect of the Amendment moved by my hon. Friend the Member for Blackburn, East (Mrs. Castle) is to add another consideration to paragraph (a) of subsection (2) without which additional considerations in paragraph (a) uplift will not be charged.
    In doing so it provides what I think many of us feel is a better alternative to the second Amendment, which is designed to achieve a rather similar result. In discussing this Amendment one can discuss the fact that its intention is to remove uplift from goods which are purchased in quantity by a retailer if, in addition, those goods are not sold under price-maintained conditions.
    It is true that it might have been easier if we had discussed the second Amendment first, but that would be taking them out of the order in which they appear on the Order Paper. But there is no reason why we should not discuss the question now before the Committee. On the whole I prefer this Amendment to the second Amendment—because I think I speak for my hon. Friends—although we are desirous of giving the benefit of the concession of not charging uplift to retailers who purchase in large quantities, we do not wish to give that concession in cases where retailers, by agreement with manufacturers, sell goods under price maintenance arrangements.
    The first Amendment provides a way of obviating what might be considered
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    an objectionable feature of the second Amendment by which the only beneficiaries of the Amendment would be the retailers themselves and not the consumers. By accepting the first Amendment the Committee would do two things, and that is why my hon. Friend was in order in asking the question about uplift in the case of quantity sales. In fact, this Amendment provides that two conditions have to be fulfilled if the benefit is not received by the retailer, instead of only one condition as at present. This Amendment would be extremely satisfactory and it is very important that the Committee should understand this. I have no idea where hon. Members opposite stand on this question.
    Sir Harold Webbe: Nor have we.
    Mr. Albu: I do not think that the hon. Member would have understood if we were discussing the second Amendment. I doubt whether he really understands what it is about.
    What we are discussing is whether or not uplift shall be charged on quantity sales to retailers when there is a resale price maintenance. We on this side of the Committee are in favour of not charging uplift in the case of quantity sales to a retailer if there is no resale price maintenance and if the Committee agrees with the argument advanced by my hon. Friend that the way to achieve that is to accept this particular Amendment.
    I cannot see why the Chancellor should be in difficulty. It seems a reasonable Amendment and if the Chancellor accepts it we shall not have to discuss the second Amendment at all. I imagine that it is quite in order for the Financial Secretary to give reasons for accepting this Amendment on the ground that he does not wish to discriminate against those retailers who buy in bulk, but who at the same time, are not bound by any resale price maintenance arrangements. I hope that we shall hear from the Finance Secretary that the Chancellor is prepared to accept this Amendment. If not, we shall have to move the second Amendment which is not such a desirable one and which contains some features which will not be of such great benefit to the consumer.
    Mr. Coldrick: If I may intervene to extract this matter from the obscurity which seems to surround it, I would say that I support this Amendment for somewhat different reasons from those stated so persuasively by my hon. Friend the Member for Blackburn, East (Mrs. Castle) on behalf of the consumer.
    We are familiar with the case of the wholesaler who buys in bulk from the manufacturer and then sends goods to the retailer. I am concerned not about these large-scale purchases, but about the fact that there is a growing practice in this country for manufacturers to send their goods direct to the retailer and not to incur the expense of the wholesaler. In such cases the Treasury says that because the wholesale charge has not been incurred, they must have some notional artificial figure attached to the manufactured price upon which the tax may be levied.
    I think it grossly unfair that the consumer should be called upon to pay that tax upon notional uplift. As it seems to me it has reached ridiculous proportions because, unlike the case stated by my hon. Friend the Member for Blackburn, East, it does not affect merely the large-scale buyer. I can quote cases where relatively small manufacturers in this country are supplying goods directly to the retailer.
    10.15 p.m.
    The Chairman: Is the hon. Member speaking to paragraph (b)?
    Mr. Coldrick: I am giving the reason for removing the uplift. I take it that that is precisely the purpose of the Amendment.
    Hon. Members: No. Mrs.
    Mrs. Castle: Yes.
    Mr. Coldrick: If that is not its purpose, I do not think the Committee know what its purpose is. Anyhow, I wish to draw attention to the fact that the practice is developing of sending goods directly from the factory to the retailer. Small manufacturers are doing that in a larger number of cases now. The result is that the Commissioners are charging these small retailers a notional uplift figure which, in turn, is passed on to the consumer. It is for that reason that I support the Amendment.
    Mr. Boyd-Carpenter: As I understand it. under the Rulings which have been given, the Committee is confined on the discussion on this Amendment to the proposal that uplift should continue in respect of price-maintained goods but should not continue, as is proposed in the Clause, in cases where the large retailer has a buying advantage. Therefore, we are on a comparatively narrow point; we are able to discuss not the general merits or otherwise of uplift, but merely whether it should be applied to price-maintained goods but not applied in the case of large purchases.
    That proposal, contained as we now know in the Amendment moved by the hon. Lady the Member for Blackburn, East (Mrs. Castle), has the dubious advantage of having been recommended neither by the majority nor by the minority of the Grant Committee, whereas the Clause as it stands embodies broadly the recommendations of the majority of the Grant Committee, recommendations in which, so far as they went, the minority concurred, although the minority would have gone somewhat further. Therefore, we start on the basis that on this rather narrow point on this very difficult question the proposal which the hon. Lady commends to the Committee has not been recommended by either section of the Committee which most carefully investigated the matter.
    That does not conclude the matter. It may be that the hon. Lady is right and that every member of the Grant Committee was wrong. I should like, within the limitations, to examine her proposal on its merits. Under her proposal, uplift would continue solely in respect of price-maintained goods. One of the difficulties that would arise from that is that this would involve discrimination against price-maintained goods. It may be—the interventions which I heard from hon. Members opposite seemed to confirm the view—that that is really based on the dislike of hon. Members opposite of the system of price maintenance. I do not propose to get into an argument with them—it would not be in order so to do—on the general merits or demerits of a system of price maintenance, but I must say that a discriminatory Purchase Tax seems to be absolutely the wrong way to tackle the problem, whether one approves of price maintenance or not.

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    I think I elicited from the Opposition confirmation that at least one of the objects was to discriminate against price-maintained goods, and that seems to amount to one of the major objections to these proposals. We are trying, in a rather difficult sphere of Purchase Tax, to devise a system which will operate fairly. I do not think we are serving that end if we introduce the wholly extraneous element of trying to make the position of price-maintained goods more difficult by the use of taxation measures which have a totally different purpose.
    The hon. Member for Islington, East (Mr. E. Fletcher) commended this proposal to my right hon. Friend on the ground that it would be cheaper than the alternative, and he asked for the cost. The cost would be between £7 million and £8 million a year, which is a substantial figure, but I would not like to rest my argument solely or even mainly on the question of cost. Despite what the hon. Lady tried to suggest—that this system was operated by a ruthless Chancellor, concerned to wring the last penny from each and all—in point of fact, the Revenue point of view could equally be met by the adjustment of the rates of tax, which is probably the proper way to secure an adequate revenue. Therefore, though the cost element is very substantial, I would not commend it as being conclusive, because if my right hon. Friend or the Committee took the view that, in principle, this Amendment was justified, it might be necessary to recoup the Revenue in some other direction.
    I would address myself to the point that is made on this Amendment—in addition to the discrimination against price-maintained goods—of the effect of abolishing uplift with respect to purchases by a large store or some other retailers who, by reason of their size, have a purchasing advantage in that they can give a very big order, and thus obtain their goods at lower prices.
    If we abolish uplift, we add to the advantage which such a trader has already by reason of his ability to secure a smaller price, the further additional benefit of paying less Purchase Tax than will his competitor in respect of the same goods; that is to say, we add to the competitive advantage which he already has a further advantage deriving from a
    540
    differential rate of Purchase Tax. It is perfectly clear that that would work unfairly towards the smaller trader, and it would work very unfairly towards him since the tax system would then confer a competitive advantage upon a competitor.
    The hon. Lady sought to avoid that argument by saying that it was all in aid of the consumer. It is a matter of speculation, on which any of us can form a view, whether or not that advantage would necessarily in all—or in any—cases be passed on to the consumer at all. There is no guarantee contained in this Amendment that it would. All that would happen would be that that advantage under the tax system would go to the purchaser who, by reason of his size, is in a favourable position, and who would be able to retain a larger profit or to pass it on to the consumer as, from the business point of view, happened to suit him.
    Whatever else is uncertain, what is certain is that the small trader, as opposed to the large trader, would, from the competitive point of view, be hurt, and I should like to make clear that one of the major justifications for the system of uplift, which was worked in its full rigour by right hon. Gentlemen opposite and which is proposed in this Clause to be operated with somewhat less rigour by my right hon. Friend—and it is a justification which appeals to the present Government as indeed it did to its predecessor—is the fact that it operates to prevent the small trader suffering undue competition resulting, not from competitive efficiency, but from differential taxation.
    That is really the argument for it, and that is why, after careful thought on the findings of this very valuable Committee, my right hon. Friend came to this conclusion, which, while abolishing uplift in other directions, retains it both in respect of price-maintained goods and in respect of purchases made by the type of retailer who has a purchasing advantage by reason of his size.
    Mr. Roy Jenkins: The Financial Secretary implies that a large retailer may get an advantage, if the Amendment were accepted, entirely independent of any greater efficiency. Surely he will admit that the

    541
    advantage which could arise under the Amendment, even in a limited number of cases, could only do so if there was a prior advantage because of greater efficiency.
    Mr. Boyd-Carpenter: It can only arise if there is a prior advantage, but where I join issue with the hon. Gentleman is when he says, "accruing from greater efficiency." It must be his experience and that of many other Members of the Committee in respect of many classes of goods that if you are a big retailer and place a very large order you can, in many cases, get that order executed at a more favourable price than on a smaller number of articles; and that has nothing to do with efficiency. It may reflect efficiency or size. I hope that the hon. Gentleman is not confusing efficiency with size.
    Mr. Jenkins: It automatically makes the trader more efficient from the point of view of the consumer.
    Mr. Boyd-Carpenter: It makes him more efficient from the consumer's point of view if he passes the advantage on to the consumer, but as I have pointed out to the Committee, it does not follow from the Amendment, that the trader will. If he is given an advantage by reason of size, the advantage may accrue to his profits and not to the consumer at all. It is misleading to assume, with a naivete which I do not normally attribute to the hon. Member, that all such advantages will be automatically passed on to the consumer.
    On this narrow issue therefore, among other things because of its cost, because of its unfairness both with price-maintained goods and to the small retailer, and because this suggestion did not find favour with the impartial committee that reviewed the matter, I am afraid that, having considered the arguments which were put forward, my right hon. Friend finds himself quite unable to agree to the Amendment.
    Mr. Hale: All the Financial Secretary's arguments dealt with comparable articles, whereas my hon. Friend the Member for Blackburn, East (Mrs. Castle) raised matters of very great importance to the textile industry. There is a whole lot of woollen and cotton research going on dealing with bleaching, printing, new
    542
    designs and virtually new materials, which have to be considered in respect of the Purchase Tax treatment they are to receive. All these items are marketed on a large scale, and they are all vital to the success of the textile industry. Nevertheless, they have to carry extra tax.
    Mr. Boyd-Carpenter: The hon. Gentleman is suffering from the disadvantage from which we are all suffering at the moment, in having to discuss a very narrow point. If the hon. Gentleman's argument has any force, it is relevant to the whole general question of whether uplift is necessary. We are dealing with an Amendment which says that uplift shall continue in regard to price-maintained goods, but abolishes it in other respects. I disagree with him, but I cannot argue with him on this Amendment the principle of uplift. We are not discussing "uplift or no uplift" but the precise point where uplift shall apply and where it shall not apply.
    Mrs. Castle: The whole purpose of my Amendment is that uplift should be abolished in cases where quantity advantage arises, and that was the case to Which my hon. Friend the Member for Oldham, West (Mr. Hale) was referring.
    Mr. Boyd-Carpenter: If the hon. Lady takes the view that my compliance with the rules of order is dodging. I must leave it to her.
    10.30 p.m.
    Mr. Jay: The Financial Secretary quite rightly says that this Amendment seeks to abolish uplift in those cases where quantity rebates are in force but where resale price maintenance is not. He said, quite rightly, that that solution was not commended by either the majority of the minority Report of the Grant Committee. He did not, however, say that the main objection of the majority of the Committee to the solution of abolishing uplift in the case of quantity rebates was precisely because very often in such cases price maintenance was in force.
    Our reason for wishing to discuss this issue separately was that that was the main objection the majority had to the solution which the minority wished to adopt. I am sorry it sounds complicated, but there it is. In the opinion of many of us it would be right that where a lower price is paid the benefit should be passed to the consumer. Where, however, resale

    543
    price maintenance is in force—which is the issue here—the benefit would not be passed to the consumer.
    Therefore, as the Financial Secretary said, the whole of the benefit of tax reduction would go into profits. We did not wish that to happen, and followed the perfectly logical procedure of first putting down the Amendment in order to have that point decided. If the Financial Secretary had said that the Amendment was impractical or would not rule out the possibility of price maintenance he would have produced a real objection. Instead, he has left the impression that this is not an impractical solution.
    I would point out that it obtains the benefits which the minority Report sought to get, and at the same time meets the main difficulty put forward by the majority of the Committee. I therefore think that the Amendment has a good deal to commend it.
    Sir H. Williams: I have been critical of uplift ever since the introduction of Purchase Tax, but we are here really discussing price maintenance—or at least a large part of the present debate is concerned with price maintenance. I should like to know if buying the "Daily Herald" or the "Daily Worker" in the Co-op would be a breach of the price maintenance agreement with regard to those two eminent newspapers—
    Mr. Hale: Is there Purchase Tax on newspapers?
    Sir H. Williams: The debate has ranged on price maintenance. I did not draft the Amendment. This speaks of price maintenance.
    Mr. Hale: On a point of order. Should we be in order, Sir Charles, to cover the whole range of British commodities not affected by either Purchase Tax or uplift?
    The Chairman: No.
    Sir H. Williams: The hon. Members opposite are very cross because the Co-ops will not sell the "Daily Herald."
    Mr. Hale: On a point of order. It is within the recollection of the Committee that just five minutes ago the Financial Secretary insisted on the rules of order and insisted that he had obeyed them with
    544
    a technicality and care for which he demanded the praise of the Committee—which was readily accorded. I do not know if the hon. Member for Croydon, East (Sir H. Williams) is to be allowed to discuss the very fascinating question of whether the "Daily Worker" contains uplift.
    The Chairman: I hope we shall keep to the Amendment, which is quite narrow.
    Mr. Burden: It would seem that if this Amendment were carried it would completely deny the recommendations of the Grant Committee. That Committee had certain considerations and certain representations made to it, and I should like to quote two. It was the general view of the trade representatives, which was submitted by the Electric Light Fittings Association, that
    "It follows … that the retailer who purchases in large quantities most likely receives a higher rate of discount than the smaller retailer purchasing a given article by units; it would mean that if the purchase tax was not chargeable on an agreed notional value, the amount of tax per invoice would vary and always be more favourable to the large trade buyer; a system which would completely disturb the present trading structure of our industry."
    The second extract is from the evidence of the Independent Traders' Alliance of Great Britain:
    "We suggest that purchase tax should be levied on the price at which the wholesaler will sell to his smallest trade account and, where the sale is direct from the manufacturer to retailer, on the price at which a wholesaler dealing in those goods would sell them."
    The conclusions of the Grant Committee were:
    "Where a retailer pays a specially high price for goods because of the smallness of the quantity which he buys, or for some special reason, there are substantial grounds for the view that the actual price ought to be reduced in order to arrive at the value for tax purposes."
    For those reasons the Amendment should be withdrawn or resoundingly defeated.
    Mr. Albu: The hon. Gentleman was referring to electric bulbs, which are price maintained, and would be excluded by the Amendment.
    Mr. Burden: These conclusions were the general conclusions in regard to all merchandise. The Committee's view was that the same merchandise should pay

    545
    the same rate of tax irrespective whether it was bought from the smaller or, the larger retailer—in other words, equity on tax on the particular article.
    Question put, "That those words be there inserted."
    The Committee divided: Ayes, 171; Noes, 198.

    Division No. 120.]

    AYES

    [10.37 p.m.

    Acland, Sir Richard

    Hall, John T. (Gateshead, W.)

    Price, Philips (Gloucestershire, W.)

    Albu, A. H.

    Hamilton, W. W.

    Proctor, W. T.

    Allen, Arthur (Bosworth)

    Hannan, W.

    Pryde, D. J.

    Allen, Scholefield (Crewe)

    Hargreaves, A.

    Reid, Thomas (Swindon)

    Awbery, S. S.

    Hastings, S.

    Rhodes, H.

    Bacon, Miss Alice

    Hayman, F. H.

    Roberts, Albert (Normanton)

    Benson, G.

    Henderson, Rt. Hon. A. (Rowley Regis)

    Robinson, Kenneth (St. Pancras, N.)

    Beswick, F.

    Herbison, Miss M.

    Ross, William

    Bing, G. H. C.

    Hewitson, Capt. M.

    Royle, C.

    Blackburn, F.

    Holman, P.

    Shackleton, E. A. A.

    Blenkinsop, A.

    Holmes, Horace

    Shawcross, Rt. Hon. Sir Hartley

    Blyton, W. R.

    Houghton, Douglas

    Short, E. W.

    Boardman, H.

    Hoy, J. H.

    Shurmer, P. L. E.

    Braddock, Mrs. Elizabeth

    Hudson, James (Ealing, N.)

    Silverman, Julius (Erdington)

    Brockway, A. F.

    Hughes, Hector (Aberdeen, N.)

    Simmons, C. J. (Brierley Hill)

    Brook, Dryden (Halifax)

    Irvine, A. J. (Edge Hill)

    Skeffington, A. M.

    Broughton, Dr. A. D. D.

    Irving, W. J. (Wood Green)

    Slater, Mrs. H. (Stoke-on-Trent)

    Burke, W. A.

    Janner, B.

    Slater, J. (Durham, Sedgefield)

    Castle, Mrs. B. A.

    Jay, Rt. Hon. D. P. T.

    Smith, Ellis (Stoke, S.)

    Champion, A. J.

    Jenkins, R. H. (Stechford)

    Snow, J. W.

    Chapman, W. D.

    Johnson, James (Rugby)

    Sorensen, R. W.

    Clunie, J.

    Jones, David (Hartlepool)

    Soskice, Rt. Hon. Sir Frank

    Coldrick, W.

    Jones, Frederick Elwyn (West Ham, S.)

    Strauss, Rt. Hon. George (Vauxhall)

    Collick, P. H.

    Jones, Jack (Rotherham)

    Summerskill, Rt. Hon. E.

    Cove, W. G.

    Keenan, W.

    Sylvester, G. O.

    Craddock, George (Bradford, S.)

    Kenyon, C.

    Taylor, Bernard (Mansfield)

    Crosland, C. A. R.

    Lawson, G. M.

    Taylor, John (West Lothian)

    Crossman, R. H. S.

    Lee, Frederick (Newton)

    Taylor, Rt. Hon. Robert (Morpeth)

    Cullen, Mrs. A.

    Lewis, Arthur

    Thomas, Iorwerth (Rhondda, W.)

    Dalton, Rt. Hon. H.

    Logan, D. G.

    Thomas, Ivor Owen (Wrekin)

    Davies, Ernest (Enfield, E.)

    McColl, J. E.

    Timmons, J.

    Davies, Harold (Leek)

    McGhee, H. G.

    Tomney, F.

    Delargy, H. J.

    McInnes, J.

    Turner-Samuels, M.

    Dodds, N. N.

    MacMillan, M. K. (Western Isles)

    Ungoed-Thomas, Sir Lynn

    Ede, Rt. Hon. J. C.

    Mallalieu, J. P. W. (Huddersfield, E.)

    Usborne, H. C

    Edwards, Rt. Hon. John (Brighouse)

    Mann, Mrs. Jean

    Warbey, W N.

    Edwards, Rt. Hon. Ness (Caerphilly)

    Manuel, A. C.

    Watkins, T. E.

    Evans, Stanley (Wednesbury)

    Marquand, Rt. Hon. H. A.

    Wells, William (Walsall)

    Fernyhough, E.

    Mason, Roy

    West, D. G.

    Finch, H. J.

    Mikardo, Ian

    Wheeldon, W. E.

    Fletcher, Eric (Islington, E.)

    Mitchison, G. R.

    White, Mrs. Eirene (E. Flint)

    Foot, M. M.

    Moody, A. S.

    White, Henry (Derbyshire, N.E.)

    Forman, J. C.

    Mort, D. L.

    Whiteley, Rt. Hon. W.

    Fraser, Thomas (Hamilton)

    Moyle, A.

    Wigg, George

    Freeman, Peter (Newport)

    Mulley, F. W.

    Wilkins, W. A.

    Gaitskell, Rt. Hon. H. T. N.

    Nally, W.

    Willey, F. T.

    Gibson, C. W.

    Neal, Harold (Bolsover)

    Williams, David (Neath)

    Glanville, James

    Oliver, G. H.

    Williams, Rev. Llywelyn (Abertillery)

    Gooch, E. G.

    Orbach, M.

    Williams, Ronald (Wigan)

    Gordon-Walker, Rt. Hon. P. C.

    Oswald, T.

    Williams, W. R. (Droylsden)

    Greenwood, Anthony (Rossendale)

    Paget, R. T.

    Williams, W. T. (Hammersmith, S.)

    Grenfell, Rt. Hon. D. R.

    Paling, Rt. Hon. W. (Dearne Valley)

    Willis, E. G.

    Grey, C. F.

    Paling, Will T. (Dewsbury)

    Wilson, Rt. Hon. Harold (Huyton)

    Griffiths, David (Rother Valley)

    Palmer, A. M. F.

    Woodburn, Rt. Hon. A.

    Griffiths, Rt. Hon. James (Llanelly)

    Parker, J.

    Younger, Rt. Hon. K.

    Griffiths, William (Exchange)

    Pearson, A.

    Hale, Leslie

    Porter, G

    TELLERS FOR THE AYES:

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Price, J. T. (Westhoughton)

    Mr. Wallace and Mr. Rogers.

    NOES

    Aitken W. T.

    Bishop, F. P.

    Butler, Rt. Hon. R. A. (Saffron Walden)

    Alpert, C. J. M.

    Black, C. W.

    Carr, Robert

    Anstruther-Gray, Major W. J.

    Bowen, E. R.

    Channon, H.

    Arbuthnot, John

    Boyd-Carpenter, Rt. Hon. J. A.

    Clarke, Col. Ralph (East Grinstead)

    Baldock, Lt.-Cmdr. J. M.

    Boyle, Sir Edward

    Clarke, Brig. Terence (Portsmouth, W.)

    Baldwin, A. E.

    Braine, B. R.

    Clyde, Rt. Hon. J. L.

    Banks, Col. C.

    Braithwaite, Sir Gurney

    Cole, Norman

    Barlow, Sir John

    Brooman-White, R. C.

    Colegate, W. A.

    Baxter, A. B.

    Buchan-Hepburn, Rt. Hon. P. G. T.

    Conant, Maj. R. J. E.

    Beach, Maj. Hicks

    Bullard, D. G.

    Cooper-Key, E. M.

    Bell, Philip (Bolton, E.)

    Bullus, Wing Commander E. E.

    Craddock, Beresford (Spelthorne)

    Bennett, Dr. Reginald (Gosport)

    Burden, F. F. A.

    Crookshank, Capt. Rt. Hon. H. F. C.

    Birch, Nigel

    Butcher, Sir Herbert

    Crosthwaite-Eyre, Col. O. E.

    Crouch, R. F.

    Kaberry, D.

    Remnant, Hon. P

    Crowder, Sir John (Finchley)

    Kerby, Capt. H. B

    Ridsdale, J. E.

    Crowder, Petre (Ruislip—Northwood)

    Kerr, H. W.

    Roberts, Peter (Heeley)

    Darling, Sir William (Edinburgh, S.)

    Langford-Holt. J. A

    Roper, Sir Harold

    Davidson, Viscountess

    Leather, E. H. C.

    Ropner, Col. Sir Leonard

    Deedes, W. F.

    Legge-Bourke, Maj. E. A. H.

    Russell, R. S.

    Donaldson, Cmdr. C. E. McA

    Legh, Hon. Peter (Petersfield)

    Ryder, Capt. R. E. D.

    Doughty, C. J. A

    Lindsay, Martin

    Schofield, Lt.-Col. W

    Douglas-Hamilton, Lord Malcolm

    Linstead, Sir H. N

    Scott, R. Donald

    Drayson, G. B.

    Llewellyn, D. T.

    Scott-Miller, Cmdr. R.

    Duncan, Capt J. A L.

    Longden, Gilbert

    Shepherd, William

    Duthie, W. S.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Simon, J. E. S. (Middlesbrough, W)

    Erroll, F. J.

    Lucas, P. B. (Brentford)

    Snadden, W. McN.

    Fisher, Nigel

    Lucas-Tooth, Sir Hugh

    Soames, Capt. C.

    Fort, R.

    McCallum, Major C.

    Spearman, A. C. M.

    Foster, John

    Macdonald, Sir Peter

    Speir, R. M.

    Fraser, Hon. Hugh (Stone)

    McKibbin, A. J.

    Stanley, Capt. Hon. Richard

    Fyfe, Rt. Hon. Sir David Maxwell

    Mackie, J. H. (Galloway)

    Stevens, Geoffrey

    Galbraith, Rt. Hon. T. D. (Pollock)

    Maclean, Fitzroy

    Stewart, Henderson (Fife, E.)

    Gamer-Evans, E. H.

    Macleod, Rt. Hon. lain (Enfield, W.)

    Stoddart-Scott, Col. M.

    George, Rt. Hon. Maj. G. Lloyd

    MacLeod, John (Ross and Cromarty)

    Storey, S.

    Glover, D.

    Macpherson, Niall (Dumfries)

    Strauss, Henry (Norwich, S.)

    Godber, J. B.

    Maitland, Comdr. J. F. W. (Horncastle)

    Studholme, H. G.

    Gough, C. F. H.

    Maitland, Patrick (Lanark)

    Taylor, William (Bradford, N.)

    Gower, H. R.

    Manningham-Buller, Sir R. E

    Teeling, W.

    Graham, Sir Fergus

    Marshall, Douglas (Bodmin)

    Thomas, Rt. Han. J. P. L. (Hereford)

    Grimond, J.

    Maude, Angus

    Thomas, Leslie (Canterbury)

    Grimston, Hon. John (St. Albans)

    Maudling, R.

    Thomas, P. J. M. (Conway)

    Grimston, Sir Robert (Westbury)

    Medlicott, Brig. F.

    Thompson, Lt.-Cdr. R. (Croydon, W)

    Hall, John (Wycombe)

    Mellor, Sir John

    Thornton-Kemsley, Col. C. N

    Harden, J. R. E.

    Morrison, John (Salisbury)

    Tilney, John

    Hare, Hon. J. H.

    Nabarro, G. D. N.

    Touche, Sir Gordon

    Harris, Frederic (Croydon, N.)

    Neave, Airey

    Turner, H. F. L

    Harris, Reader (Heston)

    Nicholls, Harmar

    Turton, R. H.

    Harrison, Col. J. H. (Eye)

    Nield, Basil (Chester)

    Vaughan-Morgan, J. K

    Harvey, Air Cdre. A. V. (Macclesfield)

    Noble, Comdr. A. H. P

    Wakefield, Edward (Derbyshire, W.)

    Heald, Flt. Hon. Sir Lionel

    Odey, G. W.

    Wakefield, Sir Wavell (St. Marylebone)

    Heath, Edward

    O'Neill, Hon. Phelim (Co. Antrim, N.)

    Walker-Smith, D. C.

    Higgs, J. M. C.

    Ormsby-Gore, Hon. W. D.

    Wall, P. H. B.

    Hill, Dr. Charles (Luton)

    Orr, Capt. L. P. S.

    Ward, Hon. George (Worcester)

    Hirst, Geoffrey

    Orr-Ewing, Charles Ian (Hendon, N.)

    Ward, Miss I. (Tynemouth)

    Holland-Martin, C. J

    Osborne, C.

    Waterhouse, Capt. Rt. Hon. C

    Holt, A. F.

    Page, R. G.

    Watkinson, H. A.

    Hornsby-Smith, Miss M. P.

    Peto, Brig. C. H. M

    Webbe, Sir H. (London & Westminster)

    Horsbrugh, Rt. Hon. Florence

    Peyton, J. W. W.

    Wellwood, W.

    Howard, Gerald (Cambridgeshire)

    Pickthorn, K. W. M

    Williams, Gerald (Tonbridge)

    Hurd, A. R.

    Pilkington, Capt. R. A.

    Williams, Sir Herbert (Croydon, E.)

    Hutchison, Sir Ian Clark (E'b'rgh, W.)

    Pitt, Miss E. M.

    Williams, Paul (Sunderland, S.)

    Hylton-Foster, H. B. H.

    Prior-Palmer, Brig. O. L

    Williams, R. Dudley (Exeter)

    Iremonger, T. L.

    Profumo, J. D.

    Wills, G.

    Jennings, Sir Roland

    Raikes, Sir Victor

    Wood, Hon. R.

    Johnson, Eric (Blackley)

    Rayner, Brig. R.

    Jones, A. (Hall Green)

    Redmayne, M.

    TELLERS FOR THE NOES:

    Joynson-Hicks, Hon. L. W.

    Rees-Davies, W. R.

    Sir Cedric Drewe and Mr. Vosper.

    Mr. Jay: I beg to move, in page 7, line 9, to leave out paragraph (a).
    Had the Committee accepted the previous Amendment, it would not have been necessary to discuss this one. However, as the Committee has misguidedly rejected that Amendment, I think we have an obligation to turn our minds to this one. Though by the last decision of the Committee it is not intended to exclude cases of resale price maintenance from the field where it is proposed that uplift should be abolished, nevertheless, in our view, there is a strong case for removing uplift where a quantity rebate is given in the purchase by the retailer. That is what this Amendment proposes.
    We have to make up our minds whether, in spite of the argument advanced by the majority Report of the
    548
    Grant Committee about resale price maintenance, and even though we realise that resale price maintenance will continue in these cases, it is not desirable, on balance, that the advantage of a large order should be passed on to the consumer by means of a lower tax. There are two main advantages in removing uplift, so it seems to me, in the case of the large order at a lower price. I will rehearse them very briefly because they are the kernel of the case on this Amendment.
    In the first place, of course, the removal of uplift gets rid of an arbitrary and hypothetical element in Purchase Tax. Under the system of uplift, the Customs, instead of imposing tax on the basis of the actual price paid, imposes it on a hypothetical price imagined to be

    549
    paid in certain circumstances which do not in fact exist. I think we all recognise that normally that is not a very sound or desirable principle of taxation. It is far better to accept an actual price and to know where one is. That is the first clear advantage: the removal of that arbitrary and hypothetical element.
    Secondly—this is the most important argument of all—the effect of charging the tax on a price higher than the price which was actually paid by the retailer is inevitably to increase the price to the final consumer. Throughout the whole of this argument we have put the main emphasis on the need to increase efficiency in distribution and to bring down the price to the consumer wherever it can be done.
    It is true that resale price maintenance to some extent limits that possibility. Nevertheless, in our view, as we move into rather more competitive conditions and get further from the shortages of the war period, there ought surely to be an increasing measure of competition in the distributive trades, which will operate to bring down the price, at any rate in most cases where the tax has been reduced.
    The Financial Secretary himself said earlier that we were operating now in more competitive conditions. In the last Government, when we considered this, it always seemed to us that there was a very strong case for the removal of uplift. To some extent, in conditions of shortage and in wartime and post-war conditions, those advantages were rather academic but as we have got further away from those conditions and into a more competitive world, those advantages become less academic and much more real.
    The Financial Secretary said that the large order placed by the large retailer did not necessarily imply greater efficiency. But in so far as the lower price, as a result of competition, is passed on to the consumer, that is clearly greater efficiency from the consumer's point of view. We ought not to get into the position of arguing that though greater efficiency of production and mining and industrial processes generally is desirable, greater efficiency of distribution does not matter. Surely, most Members would agree that in the case of the larger distributive organisations there are elements of real efficiency of organisation which
    550
    contribute in a real sense to the benefit of the consumer.
    We were told by the Financial Secretary that it was quite unfair that when the large retailer already had the advantage of greater size and could place an order at a lower price, the Government should add a further advantage by imposing a lesser tax. But surely it can be argued with just as much force that where by greater efficiency the retailer has contrived to secure a lower price, it is undesirable from the public point of view that the Government should impose what is a higher percentage tax on precisely the same article.
    The effect of uplifting the tax in the case of the goods in quantity purchase is, in effect, to impose a higher percentage tax in the case of the goods bought in quantity than in the case of the same goods bought in smaller quantities. Therefore, that argument can be just as effectively used the other way. Uplift is, in fact, a discouragement, a disincentive to efficiency.
    The only other argument which is seriously brought against the case that the removal of uplift would benefit the consumer is that, as the Financial Secretary said, it might be unfair to the small shop, which cannot secure the benefits of large purchases. Where the benefits in the hands of the larger distributing organisation are due to efficiency, I do not think it is undesirable that taxation should take that into account.
    It does seem to us that the small shop has a great gain in its immediate convenience which outweighs the obvious advantages of large-scale organisation in the bigger retailing groups. The village shop round the corner which is able to serve one, and therefore removes the necessity to take a bus to the large chain store some distance away does, although the price may be very slightly higher than that in the big store, attract those who live near by—those who are attracted by the nearness of the shop and are not deterred by the slightly higher price. So, although the Committee has not accepted what we consider to be the ideal solution contained in the Amendment which has just been rejected, there are strong arguments for adopting the general terms of the minority Report for encouraging, and not for discouraging, greater efficiency in distribution.
    Mr. John Arbuthnot: I understand that it has been ruled that we should be in order in discussing the Amendment standing in the name of my hon. Friend the Member for Langstone (Mr. Stevens), other honourable Friends and myself, in page 7, line 10, at the end, to insert "or higher."
    It is to that Amendment that I address a few brief remarks. We wish to point out that as the Clause is drafted, it—quite rightly in our view—says that no attention should be paid to an invoice value as evidence of the Purchase Tax value, if the price paid by the retailer is lower by reason of a quantity purchase.
    As I say, we feel that is quite right, but we also feel that exactly the same argument applies the other way. The purchases of a retailer from a manufacturer may be in quantities smaller than the normal quantities sold, and there may be an additional element in the price to cover factors such as. for instance, breaking bulk.
    This recommendation is covered in the Grant Committee's Report. In paragraph 132 of that Report on Purchase Tax, it is said:
    "Where a retailer pays a specially high price for goods because of the smallness of the quantity which he buys, or for some special reason, there are substantial grounds for the view that the actual price ought to be reduced in order to arrive at the value for tax purposes."
    The Grant Committee recognised the difficulties, but went on to state:
    "… but the Department ought to consider whether there may not be cases in which such a price is in excess of the open market value and, therefore, ought to be reduced in arriving at the 'wholesale value'."
    We feel that it is logical that the higher price should also be taken into account as well as the lower and I therefore support the Amendment in the name of my hon. Friends.
    11.0 p.m.
    Mr. Albu: I do not intend to follow the hon. Member for Dover (Mr. Arbuthnot) in his argument because I am not sure what are the cases to which he was referring. It might well be that what he was asking the Commissioners to do was to subsidise or support inefficient retailers. However, that is not the Amendment which we are discussing.
    We have had a certain amount of frivolity about these two Amendments,
    552
    but we are discussing an extremely important point, one about which there was considerable controversy for a number of years, about which there has been an interesting but complicated Report, with an important minority Report. Last year we had a good debate on this matter, when we pressed the Chancellor to take some action. The right hon. Gentleman has taken some action, but the Clause does not seem to us to go far enough.
    Behind this Clause is that highly emotional concept the small businessman or the small shopkeeper, and Members of this House and Committee are generally almost incapable of facing these issues in any realistic way. I suppose there are hon. Members who consider that in some way or another their political future will be determined by whether or nor they appear to support the small shopkeeper as against the large one.
    At any rate the minority Report has made it fairly clear that the small shopkeeper will not be affected very much one way or the other by removing the uplift from sales made by retailers who are able to buy in large quantities. As my hon. Friend the Member for Blackburn, East (Mrs. Castle) and my right hon. Friend the Member for Battersea, North (Mr. Jay) have pointed out, the small shopkeeper has other advantages. On the other hand, anybody who has watched the trend of retail trade in recent years has seen the enormous growth in the sales of the Co-operative societies and of the chain stores, and that is not surprising to anybody who goes into any of their shops.
    I do not suppose that hon. Members opposite often do so, because they frequently display extraordinary ignorance about the ordinary affairs of business, whether manufacturing or retailing. Anybody who makes comparisons of, for instance, the prices of goods being sold in these multiple shops, knows that they are one of the most potent factors at the present time in bringing down the cost of living. The value that is given, the prices that are paid, the ease of the service—all are of enormous benefit to the community.
    It seems to us on this side of the Committee that the present system of charging uplift on the class of goods frequently sold by these retailers is to inhibit the

    553
    movement towards not only more efficient distribution but also more efficient manufacture; and so, in fact, to maintain one of the rigidities in the economic system which hon. Gentlemen opposite so frequently attack. This trend towards new methods of merchandise, new methods of buying, new methods of designing, new methods of purchasing, new methods of achieving quality and new methods of retailing, is not going to stop. Accordingly it seems to be a kind of Ludditism on the part of the Treasury to try to weight the balance against this trend by insisting on maintaining the uplift on goods which are sold in large quantities.
    The arguments have been well deployed already, but I make no excuse for continuing the argument because after the speech by my hon. Friend the Member for Blackburn, East we restricted ourselves narrowly on the last Amendment to the point concerned with goods which are free from resale price maintenance. But it is important that we thrash out the basic argument as to whether or not we shall subsidise the more inefficient manufacturer and seller of consumer goods.
    The Financial Secretary showed a complete ignorance of the basic reason why some manufacturers are able to supply goods in large quantities at lower prices. They do not do it for love, or merely because the quantities are large per sale. It is because of the large orders that they are able to rationalise their production and are frequently able to reduce their overheads per unit production, maintain regularity of employment and keep down production costs.
    On the retail side there are extraordinary advantages in the chain of distribution. Anyone who has examined the figures of large retailers knows the profit margins on which they are able to sell their goods are very much lower than those of other retailers. Is it really the object of this Committee, in present-day society, to assist by a taxation system the maintenance of old and obsolete methods either of manufacture or distribution of consumer goods?
    I suggest that hon. Members opposite know little about these things. Few of them are engaged in manufacture at all. Some may have become directors
    554
    of family concerns but few have engaged in the manufacture of consumer goods. With the exception of the hon. Member for Edinburgh, South (Sir W. Darling), I do not believe that they are engaged in large-scale retail distribution. Certainly the Financial Secretary showed a lamentable ignorance in replying to the previous Amendment.
    Our argument is of great substance. Whatever the Committee does this year will not settle the matter. There is no doubt that when the consumers understand the real effects of uplift—not only the increase in prices of goods sold in the shops, but the hampering effect on the extension of this type of trade—they will react very strongly against it. I hope the Financial Secretary will not give us the rather flippant sort of reply which he frequently gives on these occasions.
    As is usual when we are discussing extremely important trade matters, there is no representative of the Board of Trade present. This is not merely a question of taxation, because its effects will be felt from manufacture to distribution and are bound to affect the nature of our industry, the system of distribution and the cost of living. I hope therefore that we shall not have a speech from the Financial Secretary as though the matter was one which concerns only the Treasury.
    Mr. Burden: I find it difficult to follow the arguments of Members opposite because it appears that they are proposing that there should be an abolition of tax equity. I believe that to be an entirely wrong concept. Where taxation is imposed, whether on merchandise or individuals, it should be imposed in equity.
    Hon. Members opposite are proposing that the small retailer should be penalised and forced to pay more tax than the large purchasers. They are not only referring to the small retailer in the village shop—for whom they shed a few crocodile tears, commenting at the same time that customers would come to him rather than go to the large towns because it was more convenient—but the small retailer in the large town who is competing with those big order organisations which are lauded by hon. Members opposite and who, most of us would agree, are very enterprising.

    555
    It seems to me that the hon. Member for Edmonton (Mr. Albu) destroyed his own argument when he said that, because of their efficiency, they were able to reduce their margins of profit. If they want to reduce their margins of profit and so give better value, there is nothing whatever to stop them, but that is no argument for saying that, in addition to that, they should be placed in a privileged position regarding the levying of Purchase Tax. That is an extremely difficult argument to follow.
    The right hon. Member for Battersea, North (Mr. Jay) and the hon. Member for Edmonton implied, perhaps unwittingly, that the Grant Committee dealt only with price-maintained goods when it stated in its conclusions that there should be tax equity. I would refer to the right hon. Gentleman and the hon. Gentleman to page 26 of the Report, where it is stated:
    "Our conclusion is that quantity discounts or lower prices allowed on the grounds of quantity ought to be disregarded so far as price-maintained goods are concerned."
    That is where the right hon. Gentleman and the hon. Gentleman stopped. If they had read on they would have seen:
    "If there is to be one definition of 'wholesale value' for all goods (as in our opinion there ought to be). it would follow that quantity discounts and lower prices for large quantities should be disregarded in valuation of all goods, whether price-maintained or not."
    Mr. Albu: We are supporting the minority view.
    Mr. Burden: I am glad that that has now been made perfectly clear. It seemed to me that Members opposite were trying to ride off very lightly the fact that they were supporting the minority Report. It is just as well that the view of the majority should be made known perfectly clearly. I also hope that the many people who buy from the many small traders throughout the country will note that hon. Gentlemen opposite are in favour of increasing their cost of living. I sincerely hope that my right hon. Friend will resist the Amendment.
    Mr. Boyd-Carpenter: As has been indicated, the Amendment is really an alternative to the one which the Committee was discussing a little while ago. If I understood the hon. Lady the
    556
    Member for Blackburn, East (Mrs. Castle) correctly, it is her second choice only. To some extent it is perhaps inevitable that we should cover the same ground, although the Amendments are not the same and in some degree, indeed, where they overlap they are inconsistent. However, to some considerable extent, the same issues arise, and it may be necessary for me for a moment to weary the Committee with much the same arguments as before.
    There is the same question of cost involved—some millions of pounds—but this is not an Amendment which I would seek to deal with solely on the question of cost. It is well worth considering whether, if such sums of money were available, they could hest be remitted in this way as opposed to some alteration of the rates. That is a matter on which opinions may well differ, but, as I have said, although we cannot wholly ignore the question of cost, the real point at issue on this Amendment, as on its predecessor, is that to which my hon. Friend the Member for Gillingham (Mr. Burden) has just referred with considerable eloquence, the clash of interests between the big store and the small retailer.
    This has been a subject of controversy for many years. There is a very real difference of view and there is a clash of commercial and financial interest on the matter. It was largely in view of that that my right hon. Friend last year appointed the Grant Committee with a view to obtaining the impartial and able advice which he rightly felt that that Committee could give. The Clause embodies the view contained in the majority Report. The hon. Member for Edmonton (Mr. Albu) said, in an interjection in the speech of my hon. Friend the Member for Gillingham (Mr. Burden), that hon. Members opposite are, broadly speaking, in favour of the minority recommendations. We have to consider on this Amendment whether over a large part of the field uplift should be retained or abolished. The Committee will recall by way of background that the Clause provides for reductions in both the sphere and the amount of uplift, the Government having accepted the recommendation to that effect in the majority Report.

    557
    11.15 p.m.
    The difference between the two sides of the Committee is whether we can go the stage further which this Amendment suggests. We cannot do so, unless we are consciously and deliberately willing to put the small, as opposed to the large, retailers at a severe disadvantage, which would be accentuated by the fact that they would be paying different amounts of tax in respect of the same goods. I should find it difficult to justify that.
    The argument, as I understand it, from the benches opposite is that the retail price on which they would justify levying the lower amount of Purchase Tax is the reward for a system which benefits the Consumer. Against that is the point Which I put on the previous Amendment that there would only be a benefit to the consumer if, in point of fact, the retailer concerned passed on the benefit instead of using it to increase his profits.
    The Committee might like to reflect that the benefit to the consumer, in so far as it existed, would be shown only in the reduced amount of tax paid, and therefore, in the sacrifice of revenue which my right hon. Friend would have made. That benefit to the consumer would flow equally easily from any remission of tax, or reduction in the rates. When we are discussing this benefit to the consumer it is as well to clear our minds of the idea that it is produced by some manipulation, and without sacrifice of revenue. Once we contemplate loss of revenue we come back to the point whether that sacrifice can be contemplated without some countervailing increase of tax in some other direction.
    We ought not to entertain the naive idea that the consumer will benefit automatically from the acceptance of something in the nature of the minority Report. He will only so benefit if the revenue can be sacrificed without a countervailing increase of taxation. The Committee would do well to consider very seriously the recommendations made by the Grant Committee after very careful consideration and review of evidence. I should have thought there was some strong presumption in favour of accepting its views. and I am bound to say that nothing I have heard in the debate has shaken that view.
    The issue really comes to this. Are we prepared to go further than the
    558
    majority of the Grant Committee would go in reducing uplift and thereby quite consciously and deliberately—I think one must face this—inflict some considerable disadvantage and difficulty on the small retailer? It may amuse the Committee if I read two or three lines from a letter about the minority Report which I received from one organisation:
    "The almost loving regard for the small trader expressed by the two ladies signing the Minute of Dissent is so completely contradictory to their recommendation for abolition of uplift that we hope their plea may be rejected."
    I am bound to say that that has a lot of force.
    Mr. Roy Jenkins: Before the right hon. Gentleman sits down I wonder if he will tell us that, as he has based his objection on the ground that one must not discriminate in favour of the large against the small trader, he will withdraw Part IV of the Bill?
    Mr. Boyd-Carpenter: It seems to me that there is no inconsistency between the two, because in both cases if there be discrimination it is in favour of the small trader. Nor do I see any relevance in that interjection to this issue.
    Mr. Arbuthnot rose—
    Mr. Boyd-Carpenter: My hon. Friend the Member for Dover (Mr. Arbuthnot), by rising, reminds me that I had sat down prematurely. I had not dealt with his interesting point. I did not, of course. intend any discourtesy.
    Logically my hon. Friend's proposal has a great deal to be said for it. He would introduce, in contradistinction to uplift, what I think my right hon. Friend two years ago christened "downfall." which would apply in converse circumstances. Though logically there is much to be said for that, the practical administrative difficulties would be very great. On the figures which I have the actual variations in price would really be so small as to make it very doubtful whether it would be worth the trouble to arrange.
    There are already powers. I understand, to take account of an unduly high price. I suggest that the point is logical and unanswerable but it is, from the practical point of view, not likely to arise in sufficient degree or in a sufficient number of cases to justify special provisions. There are powers to deal with the extreme case.
    Mr. Percy Holman: May I ask the right hon. Gentleman if it is not a fact that, administratively the point raised by his hon. Friend is largely covered by the fact that in many trades Purchase Tax is normally levied on a quantity basis in excess of the quantities normally supplied to the small retailer? There is, therefore, an actual downfall for the small retail buyer.
    Mr. Boyd-Carpenter: I think that the hon. Gentleman is saying what I said. The extreme case can be taken care of, but generally speaking that case does not substantially arise.
    Question put, "That the words proposed to be left out stand part of the Clause."
    The Committee divided: Ayes, 175; Noes, 143.

    Division No. 121.]

    AYES

    [11.25 p.m.

    Aitken, W. T.

    Harris, Frederic (Croydon, N.)

    Page, R. G.

    Alpert, C. J. M.

    Harris, Reader (Heston)

    Pete, Brig. C. H. M.

    Anstruther-Gray, Major W. J

    Harrison, Col. J. H. (Eye)

    Payton, J. W. W.

    Arbuthnot, John

    Harvey, Air Cdre. A. V. (Macclesfield)

    Pilkington, Capt. R. A.

    Baldock, Ll.-Cmdr. J. M.

    Heald, Rt. Hon. Sir Lionel

    Prior-Palmer, Brig. O. L.

    Baldwin, A. E.

    Heath, Edward

    Profumo, J. D.

    Banks, Cal. C.

    Hill, Dr. Charles (Luton)

    Raikes, Sir Victor

    Barlow, Sir John

    Hirst, Geoffrey

    Rayner, Brig. R.

    Baxter, A. B.

    Holland-Martin, C. J.

    Redmayne, M.

    Beach, Major Hicks

    Holt, A. F.

    Rees-Davies, W. R.

    Bell, Philip (Bolton, E.)

    Hornsby-Smith, Miss M. P

    Remnant, Hon. P.

    Bennett, F. M. (Reading, N.)

    Horsbrugh, Rt. Hon. Florence

    Ridsdale, J. E.

    Bennett, Dr. Reginald (Gosport)

    Howard, Gerald (Cambridgeshire)

    Roberts, Peter (Heeley)

    Birch, Nigel

    Hurd, A. R.

    Roper, Sir Harold

    Bishop, F. P.

    Hutchison, Sir Ian Clark (Eb'rgh, W.)

    Ropner, Col. Sir Leonard

    Black, C. W.

    Hylton-Foster, H. B. H

    Russell, R. S.

    Bowen, E. R.

    Iremonger, T. L.

    Ryder, Capt. R. E. D.

    Boyd-Carpenter, Rt. Hon. J. A

    Johnson, Eric (Blackley)

    Schofield, Lt.-Col. W.

    Boyle, Sir Edward

    Joynson-Hicks, Hon. L. W

    Scott, R. Donald

    Braine B. R.

    Kaberry, D.

    Scott-Miller, Cmdr. R.

    Buchan-Hepburn, Rt. Hon. P. G. T

    Kerby, Capt H. B.

    Shepherd, William

    Bullard, D. G.

    Kerr, H. W.

    Simon, J. E. S. (Middlesbrough, W.)

    Burden, F. F. A.

    Langford-Holt, J. A.

    Soames, Capt. C.

    Butcher, Sir Herbert

    Leather, E. H. C.

    Spearman, A. C. M.

    Butler, Rt. Hon. R. A. (Saffron Walden)

    Legge-Bourke, Maj. E. A. H.

    Speir, R. M .

    Channon, H.

    Legh, Hon. Peter (Petersfield)

    Stevens, Geoffrey

    Clarke, Col. Ralph (East Grinstead)

    Lindsay, Martin

    Stoddart-Scott, Col. M.

    Clarke, Brig. Terence (Portsmouth, W.)

    Linstead, Sir H. N.

    Storey, S.

    Colegate, W. A.

    Llewellyn, D. T.

    Strauss, Henry (Norwich, S.)

    Cooper-Key, E. M.

    Longden, Gilbert

    Studholme, H. G.

    Craddock, Beresford (Spelthorne)

    Lucas, Sir Jocelyn (Portsmouth, S)

    Teeling, W.

    Crookshank, Capt. Rt. Hon. H. F. C.

    Lucas-Tooth, Sir Hugh

    Thomas, Leslie (Canterbury)

    Crosthwaite-Eyre, Col. O. E.

    Macdonald, Sir Peter

    Thomas, P. J. M. (Conway)

    Crouch, R. F.

    Mackeson, Brig. Sir Harry

    Thompson, Lt.-Cdr. R. (Croydon, W.)

    Crowder, Petre (Ruislip—Northwood)

    McKibbin, A. J.

    Tilney John

    Darling, Sir William (Edinburgh, S.)

    Mackie, J. H. (Galloway)

    Touche, Sir Gordon

    Davidson, Viscountess

    Maclean, Fitzroy

    Turner, H. F. L.

    Deedes, W. F.

    Macleod, Rt. Hon. lain (Enfield, W.)

    Turton, R. H.

    Donaldson, Cmdr. C. E. McA.

    MacLeod, John (Ross and Cromarty)

    Tweedsmuir, Lady

    Doughty, C. J. A.

    Macpherson, Niall (Dumfries)

    Vaughan-Morgan, J. K.

    Douglas-Hamilton, Lord Malcolm

    Maitland, Comdr. J. F. W. (Horncastle)

    Vosper, D. F.

    Duthie, W. S.

    Maitland, Patrick (Lanark)

    Wakefield, Edward (Derbyshire, W.)

    Erroll, F. J.

    Manningham-Buller, Sir R. E.

    Wakefield, Sir Wavell (St. Marylebone)

    Fort, R.

    Marples, A. E.

    Walker-Smith, D. C.

    Foster, John

    Marshall, Douglas (Bodmin)

    Wall, Major Patrick

    Fraser, Hon. Hugh (Stone)

    Maude, Angus

    Ward, Hon. George (Worcester)

    Fyfe, Rt. Hon. Sir David Maxwell

    Maudling, R.

    Ward, Miss I. (Tynemouth)

    Garner-Evans, E. H.

    Medlicott, Brig. F.

    Waterhouse, Capt. Rt. Hon. C.

    George Rt. Hon. Maj. G. Lloyd

    Mellor, Sir John

    Webbe, Sir H. (London & Westminster)

    Glover, D.

    Morrison, John (Salisbury)

    Millwood, W.

    Godber, J. B.

    Nabarro, G. D. N.

    Williams, Gerald (Tonbridge)

    Gough, C. F. H.

    Heave, Airey

    Williams, Sir Herbert (Croydon, E.)

    Gower, H. R.

    Nield, Basil (Chester)

    Williams, Paul (Sunderland, S.)

    Graham, Sir Fergus

    Noble, Comdr. A. H. P.

    Williams, R. Dudley (Exeter)

    Grimond, J.

    Odey, G. W.

    Wills, G.

    Grimston, Hon. John (St. Albans)

    O'Neill, Hon. Phelim (Co. Antrim, N.)

    Wood, Hon. R.

    Grimston, Sir Robert (Westbury)

    Ormsby-Gore, Hon. W. D.

    TELLERS FOR THE AYES:

    Hall, John (Wycombe)

    Orr-Ewing, Charles Ian (Hendon, N.)

    Sir Cedric Drewe and

    Hare, Hon. J. H.

    Osborne, C.

    Major Conant.

    NOES

    Acland, Sir Richard

    Hall, John T. (Gateshead, W.)

    Pryde, D. J.

    Albu, A. H.

    Hannan, W.

    Rhodes, H.

    Allen, Arthur (Bosworth)

    Hargreaves, A.

    Roberts, Albert (Normanton)

    Allen, Scholefield (Crewe)

    Hayman, F. H.

    Robinson, Kenneth (St. Pancras, N.)

    Awbery, S. S

    Henderson, Rt. Hon. A. (Rowley Regis)

    Ross, William

    Benson, G.

    Herbison, Miss M.

    Shackleton, E. A. A.

    Beswick, F.

    Hewitson, Capt. M.

    Shawcross, Rt. Hon. Sir Hartley

    Bing, G. H. C.

    Holman, P.

    Short, E. W.

    Blackburn, F.

    Houghton, Douglas

    Shurmer, P. L. E.

    Blenkinsop, A.

    Hudson, James (Ealing, N.)

    Silverman, Julius (Erdington)

    Blyton, W. R.

    Irvine, A. J. (Edge Hill)

    Simmons, C. J. (Brierley Hill)

    Boardman, H.

    Jay, Rt. Hon. D. P. T.

    Skeffington, A. M.

    Braddock, Mrs. Elizabeth

    Jenkins, R. H. (Stechford)

    Slater, Mrs. H. (Stoke-on-Trent)

    Brockway, A. F.

    Johnson, James (Rugby)

    Slater, J. (Durham, Sedgfield)

    Brook, Dryden (Halifax)

    Jones, David (Hartlepool)

    Smith, Ellis (Stoke, S.)

    Broughton, Dr. A. D. D.

    Jones, Frederick Elwyn (West Ham, S.)

    Snow, J. W.

    Castle, Mrs. B. A.

    Jones, Jack (Rotherham)

    Soskice, Rt. Hon, Sir Frank

    Champion, A. J.

    Keenan, W.

    Stokes, Rt. Hon. R. R.

    Coldrick, W.

    Kenyon, C.

    Strauss, Rt. Hon. George (Vauxhall)

    Collick, P. H.

    Lawson, G. M.

    Summerskill, Rt. Hon. E.

    Craddock, George (Bradford, S.)

    Lewis, Arthur

    Sylvester, G. O.

    Crosland, C. A. R.

    Logan, D. G.

    Taylor, Bernard (Mansfield)

    Grossman, R. H. S.

    McInnes, J.

    Taylor, Rt. Hon. Robert (Morpeth)

    Cullen, Mrs. A.

    Mallalieu, E. L. (Brigg)

    Thomas, Iorwerth (Rhondda, W.)

    Dalton, Rt. Hon. H.

    Mann, Mrs. Jean

    Timmons, J.

    Davies, Ernest (Enfield, E.)

    Manuel, A. C.

    Ungoed-Thomas, Sir Lynn

    Davies, Harold (Leek)

    Mason, Roy

    Usborne, H. C.

    Delargy, H. J.

    Mikardo, Ian

    Warbey, W. N.

    Dodds, N. N.

    Mitchison, G. R.

    Watkins, T. E.

    Ede, Rt. Hon. J. C.

    Moody, A. S.

    Wells, William (Walsall)

    Edwards, Rt. Hon. John (Brighouse)

    Mort, D. L.

    West. D. G.

    Edwards, Rt. Hon. Ness (Caerphilly)

    Moyle, A.

    Wheeldon, W. E.

    Evans, Stanley (Wednesbury)

    Mulley, F. W.

    White, Mrs. Eirene (E. Flint)

    Fernyhough, E.

    Nally, W.

    White, Henry (Derbyshire, N.E.)

    Finch, H. J.

    Neal, Harold (Bolsover)

    Whiteley, Rt. Hon. W.

    Fletcher, Eric (Islington, E.)

    Noel-Baker, Rt. Hon. P J

    Wigg, George

    Foot, M. M.

    Oliver, G. H

    Wilkins, W. A.

    Forman, J. C.

    Orbach, M.

    Willey, F. T.

    Fraser, Thomas (Hamilton)

    Oswald, T.

    Williams, Rev. Llywelyn (Abertillery)

    Freeman, Peter (Newport)

    Paget, R. T.

    Williams, Ronald (Wigan)

    Gaitskell, Rt. Hon. H. T. N.

    Paling, Rt. Hon. W. (Dearne Valley)

    Williams, W. R. (Droylsden)

    Gibson, C. W.

    Paling, Will T. (Dewsbury)

    Williams, W. T. (Hammersmith, S.)

    Gordon-Walker, Rt. Hon. P. C.

    Palmer, A. M. F.

    Willis, E. G.

    Greenwood, Anthony (Rossendale)

    Parker, J.

    Wilson, Rt. Hon. Harold (Huyton)

    Grey, C. F.

    Pearson, A.

    Younger, Rt. Hon. K.

    Griffiths, Rt. Hon. James (Llanelly)

    Porter, G.

    Griffiths, William (Exchange)

    Price, J. T. (Westhoughton)

    TELLERS FOR THE NOES:

    Hale, Leslie

    Price, Philips (Gloucestershire, W.)

    Mr. Wallace and

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Proctor, W. T.

    Mr. George Rogers.

    Question put, and agreed to.

    Mr. Jay: I beg to move, in page 7. line 15, to leave out from "merchants." to "or." in line 17.
    This Amendment—
    The Solicitor-General: On a point of order, Sir Rhys, are we dealing with the correct Amendment? I understood that we were taking this Amendment, and those to lines 17. 19. and 32 together.
    The Deputy-Chairman (Sir Rhys Hopkin Morris): I understand that this is being taken separately, and that the others are being taken together.
    Mr. R. A. Butler: On a point of order. I understood that these Amendments were being taken together. This is the second time that the Government has been in a muddle over this. I do not want to question your word, Sir Rhys, but it was understood that this matter was the other way round.
    The Deputy-Chairman: I understood that the original arrangement was that this Amendment should be discussed in group four, and that the next group begins with the proposed Amendment, in page 17, line 17. The Amendment with which we are dealing was originally to have been considered with the earlier Amendment, but now it is being called separately.
    Mr. Gaitskell: That was certainly my impression. I do not think we need take long over it, but it is a distinct Amendment, and we should like to discuss it.
    Mr. Jay: This is a limited Amendment, on which we seek information. We wish to ask the Government what is the meaning and the purpose of the words at the end of Subsection (2, b). The words read as follows:
    "… or otherwise enjoys any purchasing advantage over retail traders in general…"

    563
    The significance of those words is that if a trader
    "otherwise enjoys any purchasing advantage over retail traders in general,"
    then he is deprived of the advantage of the abolition of uplift.
    This is rather an obscure and oracular phrase, and what we want to know from the Government is what are those other purchasing advantages which a retail trader might enjoy which would deprive him of the burden of being "disuplifted," if for the sake of brevity I may use that word. [HON. MEMBERS: "Oh."] Very well, deprived of the benefit of uplift, if the Committee prefers the longer phrase.
    These advantages cannot in the first place, of course, be the advantages of a large quantity order. They have already been ruled out by Clause 12 (2, a). They are, secondly, not the advantage of performing wholesale functions, since that has already been covered by the first part of Clause 12 (2, b). Nor, finally, can they consist of any advantages due to the transaction between the retailer and the wholesaler not being an arm's length transaction, but being in some sense arranged so that the price is artificially depressed. For, as the Committee will remember, any circumstance of that kind is covered by the Eighth Schedule to the 1940 Finance Act which originally introduced Purchase Tax.
    If those other advantages which the Bill implies that the retail trader might enjoy are in none of these three classes, we shall be very anxious to know what they are. The only other form of advantage that I can think of is that the trader should show greater efficiency and ability, which enable him to do his business better and at a lower cost. We want to know from the Government whether the purpose of these words is to lay down that the benefits of greater ability and efficiency are not to be allowed to be reflected in the tax paid; and, if those are not the advantages which the Government have in mind, we shall be glad if they will tell us what they are.
    The Solicitor-General: These few words in this subsection which have led the right hon. Gentleman to use a word which I have never heard used before really have not the sinister significance
    564
    that he sought to attach to them. The phrase "any purchasing advantage" certainly does not connote or take into account greater ability or greater efficiency. The words are put in because, if they were not inserted in that subsection, it might be contended that the big retail shop was not within the ambit of paragraph (b), and the paragraph would then apply only to wholesale merchants.
    The right hon. Gentleman raised the point that so far as price is concerned the position of large retail traders was dealt with by paragraph (a). But in order to ensure equality of treatment between the various types of retailers it has been thought necessary to include these words so as to make sure that where a particular retail trader enjoys some purchasing advantage—which is a thing quite distinct from the efficiency or ability of the enterprise—over retail traders in general, then this provision should apply.
    Mr. Jay: Can the hon. and learned Gentleman give an indication of the purchasing advantage, other than that of placing a large order, which is covered specifically in paragraph (a)?
    The Solicitor-General: There might be some form of association—indefinite, it may be—between the retailer and the wholesaler which secured that even in respect of small orders, that particular retailer had an advantage over other retailers in general.
    Mr. Jay: Is the Solicitor-General not aware that any form of association between the purchaser and the seller is covered in the Eighth Schedule of the 1940 Act, which is still in force?
    The Solicitor-General: Even if that be so, I think it is desirable for the sake of clarity that this provision should be contained in the subsection.
    Mrs. Castle: The Solicitor-General has been very ingenious. I congratulate him on the way he is handling a subject which is obviously rather strange to him. The explanation is that this is another example of the Government simply blindly following the majority Report without having worked out whether the majority Report was always right in its recommendations.

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    The majority Report of the Grant Committee in its summary of recommendations, said that where
    "the actual price is reduced by reason of any buying advantage which such retailer enjoys …."
    other than those mentioned in the paragraphs dealing with quantity advantage—
    "such reduction should be disregarded."
    This is carrying uplift to mad and fantastic lengths, because in page 26 the majority Report itself, in discussing these various advantages which a large retailer has over a small retailer, refers to the main advantages: for example,
    "where a retailer buyer pay less for goods (whether by means of a quantity discount or by means of a lower price) …"
    The Report said that when that happens, the wholesale value should be uplifted to counteract that price advantage.
    The Committee went on to say:
    "We do not know of any other buying advantage which the large retailer enjoys, but if there be such in the case of any large retailer we think that its effect on the price which he pays ought also to be counteracted by 'uplift'."
    In other words, the Grant Committee wanted to make absolutely sure that the large retailer does not get a start in any direction or for any reason over the small retailer. And so we get this hotchpotch coverage. That, I suggest, is the real explanation, and not the one that the Solicitor-General has been asked to give us.
    Amendment negatived.
    Mr. Albu: I beg to move, in page 7, line 17, to leave out from "general," to the end of line 19.
    The Deputy-Chairman: It may be for the convenience of the Committee to discuss, at the same time, the two Amendments to line 18, the first to line 19 and the one to line 32.
    Mr. Albu: I do not intend to weary the Committee with a long argument, but two substantial matters arise. First, we should like a little more explanation from the Government as to why the seller who is not a person who mainly sells to retail traders is to be barred from the benefit conferred by subsection (2). I shall not quote my right hon. Friend's horrible words. It seems to us that these benefits should accrue to any seller who
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    sells and satisfies the other conditions. Perhaps the Solicitor-General will explain why the subsection is introduced. Further than that, it appears to me that the words "in general" may have a dangerous effect. Does this mean that a seller who mainly sells to a particular group of retail traders as, for example, a Co-operative society, is excluded from its effects because he is not selling to retail trades in general? If that be the case, then I think we shall have to press this Amendment. We thought the words meant retail traders of every type.
    11.45 p.m.
    Lieut.-Colonel Wentworth Schofield: While I do not like subsection (2 c) of the Clause, I must say that I think it is better that it be left in and not deleted from the Bill, as is suggested. My own criticism of paragraph (c) is that it is altogether too vague. It would have been much better if the intention behind it could have been expressed a little more precisely. On Second reading, the Financial Secretary, referring to Purchase Tax and uplift, said:
    "… after the Bill has become law there will necessarily be some discussions between the Customs and the trade associations concerned."—[OFFICIAL REPORT, 3rd May, 1954, c. 29.]
    Experience has taught me that in discussions of this character, difficulties often arise in connection with the interpretation of words. While those negotiating on behalf of the trade interests may interpret certain words to mean one thing, the Customs authorities may very well interpret them in a different way. Such a difference of view might well occur, in my view, over the interpretation of paragraph (c), which says that
    "the seller is not a person who mainly sells to retail traders in general."
    What interpretation is to be placed on the word "mainly"? Is it intended to mean more than half, or will the Customs authorities interpret it as meaning a much higher percentage?
    I understand that there is a working arrangement between the Customs authorities and trade organisations whereby manufacturers and converters who ordinarily sell to ordinary retailers are exempt from uplift if it is shown that their selling and distribution costs are one-seventh, or more, of their total sales

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    turnover; or where a firm can show 250 or more "live" accounts with ordinary retailers.
    These exemptions are not provided for in the Bill and I would have felt much happier if subsection (2, c) had been a little more explicit, and if it had stated that, in determining whether or not a person sells mainly to retail traders, the Commissioners may have regard to the number of his retail accounts or to his selling or distribution expenses. Had this been so, there would have been no doubt in the mind of anybody that reasonable treatment could be given to those firms with genuine organisations for selling to retailers, and, similarly, it would allow the Customs authorities to have regard to those types of firms in the exclusive end of the trade where the cost of handling small quantities of novelty types is so high in relation to the total turnover.
    Again, may I ask what is meant by the words "retail traders in general"? Would these retail traders include small makers-up and bespoke tailors who normally buy in retail quantities? This has always been an important point in the textile trade, and hitherto the Customs have always agreed to treat these small garment makers as retail accounts. There is also some disquiet in trading circles that subsection (2, c) in its present form would seem to exclude a firm whose business is mainly export, even if the bulk of its home trade is with retail trade. If this is so, it will be a serious deterrent to exporters and can place any firms which are trying to develop their export trade at a serious disadvantage.
    The contention of the trade is that where manufacturing firms have a genuine and substantial trade with a large number of retailers, backed by an adequate sales organisation and stocks. they should be in the same position as wholesalers as regards uplift, and should not be put at a disadvantageous position merely because they also happen to have a large export trade with export markets, or for that matter, with makers-up.
    I agree that most of the points which I have raised may be met in the discussions which are likely to be held between the Customs authorities and the trade organisations, but the success of
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    those will depend much upon the individual interpretations which are placed on paragraph (c). I hope, therefore, that the Financial Secretary will be able to give an assurance to the Committee on the points which I have made, and that to help in those discussions he might find it worth while to issue some form of directive to the Customs authorities of what this Clause really means.
    Mr. E. Fletcher: I have a great deal of sympathy with what the hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield) has said, and I hope that his observations will appeal to the Government. I support this series of Amendments, but it seems to me that if paragraph (c) is to stay in the Bill, we must have a clear explanation from the Government of what it means and why it is necessary.
    It must first be observed that this is extraneous to the recommendations of the Grant Committee. Hitherto, the Government have resisted Amendments that have been put forward on the ground that they were not recommended either by the majority or minority sections of the Grant Committee. This is something which finds no place anywhere in those recommendations. It is something they did not consider necessary. That being so, may we know why the Government think it necessary to retain uplift in view of the circumstances covered by paragraphs (a) and (b); also, as an additional alternative, in circumstances where the seller is not a person who mainly sells to retail traders in general?
    What kind of goods is it intended shall be covered by the sentence and what does it mean? Is it intended to cover the goods of a manufacturer who normally sells as a wholesaler, or a large consumer who occasionally supplies a few retailers with small quantities only? If so, I do not think it is particularly specific. It states that
    "… the seller is not a person who mainly sells to retail traders in general."
    That is a very vague phrase—"who mainly sells," not who merely sells. I could understand if it ended at "traders." One of our Amendments proposes to leave out the last two words, "in general."
    Presumably there is a distinction in the minds of the Government between a

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    seller who mainly sells to retail traders—which I can understand—and another person who mainly sells to retail traders in general; because that would exclude someone who mainly sold to a particular kind of retail trader. We are dealing here with a subject in which the number of permutations and combinations of circumstances are so great that it is essential that traders should know where they stand, and that there should be some coherent explanation from the Government as to which cases are covered and which are not.
    The Solicitor-General: It is true that this paragraph (c) is not one of the Grant Committee recommendations but it flows from those recommendations because it is primarily necessary to forestall tax avoidance. Surely the Committee will appreciate that without this provision manufacturers who specialise in supplying big stores, for example, might be tempted to make token or dummy sales to ordinary retailers at the same prices. If they did that without the provision of this paragraph they would be able to establish a case for exemption from uplift for their whole trade.
    As for the words, "traders in general" which troubled the hon. Member for Islington, East (Mr. E. Fletcher), unless the words "in general" are added "retail traders" might be confined to the big stores and shops. The words make it clear that ordinary retailers are included. This provision is also necessary as a matter of equity.
    My hon. and gallant Friend the Member for Rochdale (Lieut.-Colonel Schofield) wanted the subsection to go into greater detail. He feared that it might lead to difficulties in operation. He asked what would be the effect on existing practices. I can answer quite shortly his question about the small buyers in the tailoring trade. The practice would be unchanged.
    My hon. and gallant Friend mentioned the question of the export trade. It is customary for the two sides of a business to be kept distinct, namely, the business on the home market and the business on the export side, but there may be a few cases of interlocking, and it is, consequently, desirable that there should be a measure of flexibility here, and, as framed, the subsection provides that
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    flexibility, so that the unusual and difficult cases can be taken into account. I can give my hon. and gallant Friend an assurance that the general practice which has existed heretofore of ignoring export trade in Purchase Tax assessments will be continued unchanged under the provisions of the Bill.
    I hope that with those short remarks I have satisfied the hon. Member for Islington, East and my hon. and gallant Friend that the Amendment is necessary for the purpose of preventing tax avoidance.
    12 midnight.
    Mr. Gaitskell: We feel that the two paragraphs as drafted are too wide and the phraseology seems to us to rule out too many cases.
    After listening to the Solicitor-General, I still feel rather unhappy, particularly about paragraph (c). The hon. and learned Gentleman said that the purpose of introducing "in general" was that the paragraph might otherwise refer only to large retailers. Does that mean that a seller who is selling only to large retailers and does not happen to have any business with small ones is caught by paragraph (c)? If so, surely that would be quite unfair. If it does not mean that, what is the purpose of inserting "in general"?
    I feel very dissatisfied about it. It seems to me that the people who have drafted the Bill have drawn it so widely that many of the advantages which the Majority Report felt should follow—
    The Solicitor-General: On the point of interpretation, the seller who sells mainly to the big retail stores would not come within paragraph (c).
    Mr. E. Fletcher: Even if he also sells to an ordinary retailer? May we take the case of somebody who sells both to the stores and to some "retailers in general"? Then we have to draw a distinction between such a person and a person who sells mainly to the stores. What is most confusing about the Clause is that it has two vague, imprecise and indefinite terms "mainly" and "in general."
    I could understand the Clause if "in general" was omitted and if "mainly" was omitted, but to retain those two vague

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    terms in a single Clause will lead to confusion piled on confusion. We must have a much fuller explanation of what is intended.
    The Solicitor-General: I can only repeat that the words "retail traders in general" are meant to define—I think that they are apt for that purpose—ordinary retail traders, and, therefore, a person who sells mainly to the big stores would not come within paragraph (c).
    Mr. Gaitskell: That is surely quite a serious consideration. Here we are concerned with conditions in which the imposition of uplift is to continue. Three such conditions are laid down in subsection (2). We are concerned with the third of those conditions. The Solicitor-General told us that a person who happens not to sell to small retailers merely by virtue of the fact that his custom is with the large retailers will not get the benefit of the Clause, and is, in other words, to be compelled, whatever the circumstances, to continue to pay uplift. I find it difficult to believe that that is the intention of the Government.
    Why should this arbitrary line be drawn? What would be the position in the case of a supplier predominantly to a large number of retail stores which were under the same management, but not to the retail trade in general. The Government are supposed to believe in free enterprise, but I cannot think of anything that ties up wholesale and retail traders more than this Clause.
    I ask the Chancellor to have another look at these words. We have no desire to keep the Committee late, but we are very unhappy about what we have heard. If the right hon. Gentleman would undertake to look at the words of this little paragraph between now and the Report stage my Friends would be satisfied. It is well understood that he may be able to offer a better explanation, but in the light of what has been said we cannot leave the matter there.
    Mrs. Castle: It may be my fault, but it seems to me that the Solicitor-General is not talking sense. He has told us quite seriously that the manufacturer who sells only to the large retailers will not be covered by the paragraph. If so, what is the point of having the paragraph at all?
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    A few moments earlier he explained, a little uncertainly, that the paragraph was supposed to cover the case of a manufacturer selling to large retailers and also making dummy sales to small retailers so as to give the impression that the price at which they sold to the large retailers was that at which they sold to the small retailers. If that is the purpose of the paragraph, to stop a manufacturer covering up the fact that he largely sells to the large retailers, why not go on to say that the man who only does that will not be included? Cover-up and dummy sales then become unnecessary.
    This paragraph is one of the consequences of the Government's passionate and reckless pursuit of uplift, and is quite illogical. The Government are so obsessed with the idea that somebody may get away without paying a bit of uplift that they are prepared to cause injustice all round the place. There are manufacturers who sell direct to retailers but do not sell to retailers in general because they are not large enough men. They are not big manufacturers. They are rather small people. They do not sell to retailers in general, but supply a selected group of retailers. Yet, for purposes which are completely obscure to this Committee, the Government are to penalise them under this subsection. I suggest that the subsection should be taken back so that the wording may be re-examined and that the Government in their pursuit of uplift do not in this way persecute honest and legitimate traders.
    Mr. R. A. Butler: I think the Solicitor-General's explanation exactly met the position. Some of the anxiety of hon. Members opposite arises from the fact that this is not a recommendation of the Grant Committee Majority Report. Anxiety and suspicion therefore arise that the subsection has some ulterior motive or something sinister about it. The words "mainly" and "in general" have caused anxiety as to whether the English is correct and whether they really express what is meant. We should like to reexamine it, on the understanding that the Solicitor-General's explanation is not taken as incorrect and that I have an opportunity to look at the matter.
    Sir Hartley Shawcross: I rise on this point because, in a quite serious speech a week or two ago I drew

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    attention to the fact that our taxation legislation is really in a shameful condition, in which those who are affected by it—the ordinary taxpayers—are quite unable to understand what it means. We really should make a serious attempt to frame our legislation in such terms that it is reasonably comprehensible if not to the ordinary taxpayer at any rate to the ordinary lawyer. At present, the great mass of this legislation is quite incomprehensible to the taxpayer and quite in comprehensible to a great many lawyers.
    I am not concerned at all with the purpose of this Clause, though I welcome the undertaking of the right hon. Gentleman to take it back to consider its drafting. It seems to me that it is not only not English, but that its meaning is perfectly incomprehensible. Were I speaking in this Committee not as a Member but as a lawyer I should invite the right hon. Gentleman to retain the wording. It would certainly be very good for trade—but I suppose I must disregard my personal interest here. I urge the right hon. Gentleman to suggest to the draftsmen that paragraph (c) which says that
    "… the seller is not a person who mainly sells to retail traders in general,"
    is not only not English but is complete nonsense.
    Mr. E. Fletcher: I also welcome the assurance that the matter will be reconsidered. As my right hon. and learned Friend has said, I am quite sure that it is incomprehensible in its present form. In view of the right hon. Gentleman's assurance I am sure that my hon. Friend the Member for Edmonton (Mr. Albu) will wish to withdraw the Amendment.
    Mr. Albu: I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    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."
    I hope the Chancellor will agree that we should now adjourn.
    Mr. R. A. Butler: We have managed to finish Part II of the Bill, and I am quite ready to accept the Motion. In fact, it was about to be put from the
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    Government Front Bench. I hope we can make progress with Clause 13—to which my hon. Friends attach some importance—immediately we resume consideration of the Bill. I am obliged to the Committee for its assistance.
    Committee report Progress; to sit again this day.

  CONGREGATIONAL MINISTER, MYNYDD BACH
  Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Vosper.]
  12.16 a.m.
  Rev. Llywelyn Williams: At the outset, I should like to say that I speak with the permission of my hon. Friend the Member for Swansea, East (Mr. Mort) in whose constituency the Rev. Leonard Hugh resides. Dr. Hugh is the minister of the Mynydd Bach Congregational Church, near Swansea. In the academic world he holds a very distinguished position indeed, he is M.A., B.D. and Ph.D. His doctorate was awarded for a thesis submitted to London University.
  Dr. Hugh applied for a post as specialist instructor in religious knowledge in Gowerton Grammar School, and out of 15 applicants was appointed to that position. When he was interviewed by the governors, who were acting on behalf of the Glamorgan county authority, he was informed of course, that on being appointed to this post his name would be required to be removed from the list of regular ministers. The word "regular" is to be understood as meaning ministers in charge of a church. Dr. Hugh realised, of course, that this was quite a reasonable request, and indeed, that his name inevitably would be removed from the list of regular ministers the Congregational order.
  At a further interview with the clerk to the governors, Mr. T. Gwyn Jones, he was asked to supply the clerk with a certificate of relinquishment in order to comply with regulations under the Education Act, 1944. This certificate of relinquishment was immediately forthcoming from the secretary of the Monnybach Welsh Congregational Church with the

  575
  authority of the church meeting and the purport of the certificate was to signify as and from the date which Dr. Hugh would be commencing his duties as schoolmaster in the grammar school he would be no longer minister of that church. On 1st February Mr. Gwyn Jones wrote a letter to Dr. Hugh asking:
  "I shall be glad to know whether you have now obtained the necessary document to show that you are no longer an ordained minister of your denomination."
  On 8th February, Mr. Gwyn Jones wrote another letter to Dr. Hugh, saying:
  "I wish to inform you that the governors of this school at their meeting yesterday were informed that you had not replied to my letter of 1st February, in which you were asked whether you had now obtained the necessary documents to show that you are no longer an ordained minister. The governors decided to give you 14 days from today in which to reply to this letter and submit the document required, and if no reply is received at the end of this period the post will be declared vacant."
  I wish to inform the Parliamentary Secretary that such a document could not be supplied, because of the nature of the Congregational order. The Congregational order is such that the only recognised authority is the authority of the local church. There is no central authority. The local church supplied all that it could, in this case, namely, a certificate of relinquishment. It is impossible for any Congregational minister to supply a document such as that asked for by the clerk to the governors.
  I am bewildered by the fact that in a county such as Glamorgan, where, numerically, the Congregationalists are the strongest of all the Nonconformist denominations, there should be such surprising ignorance of the Congregationalist order as was revealed in this correspondence. Dr. Leonard Hugh replied to the letter of 1st February, and his letter crossed in the post a letter written on 8th February, which he received on 10th February.
  I think his reply to Mr. T. Gwyn Jones gives a clear resumé of his position. I quote from his letter:
  "During the interview I fully explained to you the Congregational principle involved in this matter. I also understand that the Rev. Curig Davies, secretary of the Welsh Congregational Union, clarified the position in a telephonic conversation a few days prior to our interview. When I was appointed by the governors, I agreed to relinquish charge of my
  576
  church and to have my name deleted from the list of regular ministers. Accordingly, I obtained a deed of relinquishment from my church in time for me to commence duties on the 4th January as requested by the governors. Your persistent demand, and I quote from your letter, 'for the necessary documents to show that I am no longer an ordained minister of your denomination' is both unprecedented and contrary to the meaning of the 1944 Education Act. Moreover, the Welsh Congregational Union has no authority to grant such documents."
  Dr. Leonard Hugh also wrote to the clerk to the governors on 22nd February. I quote from the letter:
  "With reference to my letter of 9th February, I must reassert that I have done everything within my power to comply with the conditions governing this appointment. The only authoritative and relevant deed within the framework of Congregational policy is the church deed of relinquishment. This was forwarded to you in time for me to commence duties on 4th January as the governors requested. As an inevitable result my name would be deleted from the list of regular ministers and I would, therefore, forfeit all the privileges appertaining to ministers in charge of churches.
  Your demand for a document to show that I am no longer an ordained minister contravenes the essential meaning of the Congregational faith. No Welsh Congregationalist could produce such a document. Nevertheless, I realise that I must submit to your ruling in this matter and I do so without further argument. I have, therefore, to inform you that I am no longer interested in the post of Scripture Specialist at Gowerton Boys' Grammar School. I shall now send a full statement of events leading up to this decision to the Minister of Education in London, for clarification."
  Dr. Hugh got into touch with me, and I wrote to the Director of Education for the Glamorgan County Council. In his first letter to me the director writes a paragraph which, in my view, is unsatisfactory:
  "The present difficulty appears to have arisen through the implementation of this regulation"—
  he quoted from one of the Ministry's regulations—
  "and possibly the arrangements of the Congregational ministry were insufficiently realised."
  I submit that that paragraph is so weak and so lacking in anything positive that it amounts in this case to a continuation of the injustice which I insist Dr. Leonard Hugh was receiving. Dr. Hugh was placed in a very invidious position. He resigned from his church, accepted this post in the grammar school, and then these so-called administrative difficulties arose. Finally, in a panic,

  577
  because he seemed to see all doors closed to him, Dr. Hugh was compelled by the exigencies of the circumstances to resign the post.
  Dr. Hugh was fortunate in that the church, in one sense, took pity on him and invited him to resume the ministry in the Mynydd Bach Church, but, psychologically, the relationship between the minister and the church can obviously never be quite the same.
  In all the correspondence which I have received, and which Dr. Hugh received, there has been no word of apology, and not a single expression of regret. I must confess to my surprise and bitter disappointment that this attitude has been adopted towards a person of the academic eminence of Dr. Leonard Hugh in the unfortunate circumstances in which he found himself.
  What I particularly want the Parliamentary Secretary and the Ministry to consider doing in this case is to give a real clarification of the position of Congregational ministers who seek appointments as Scripture teachers in grammar schools in the light of the 1944 Act. Obviously, this authority would suggest that Congregational ministers, unless they do the impossible—the thing which they just could not do—are not qualified to take up these posts.
  But that is not so in many other areas. Only a few weeks ago I was speaking to the director of education of a large city in England, and he was astonished to learn of this case. He told me that he had at least half a dozen Nonconformist ministers serving as teachers in schools in his area.
  This position must be clarified. Nothing, presumably, can be done for Dr. Leonard Hugh, but in his trial, and I would say personal embarrassment and humiliation in these circumstances, he will at least serve as a portent of what really needs to be done regarding the position of Congregational ministers.
  I am wondering whether a circular could be sent to local education authorities on this point, because, as I have said before, Congregationalists and Baptists recognise only one authority, and that authority is vested in the local church.
  The request of the clerk of the governors was an unreasonable one, and one with which no Congregational
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  minister could comply. In the setting of Glamorgan, it is a complete mystery to a person such as myself. One would be foolish to enter into the realm of discerning motives—that is purely speculative—and perhaps one should not attempt to enter into that strange and unknown world; but, obviously, there is something in this case which is far from satisfying to a person who has tried to assess it honestly and clearly. I hope that the Parliamentary Secretary will be able to shed some light on it and ensure that this type of injustice never occurs again.
  Mr. David Llewellyn: I intervene for a moment as the only Member present who represents a Glamorgan constituency. I congratulate the hon. Member for Abertillery (Rev. Ll. Williams) on having raised this matter. As the Parliamentary Secretary will know, the hon. Member is himself a great preacher. I reinforce what the hon. Member has said about the very strong feeling that exists, not only among Congregationalists in Glamorgan and in Wales, but also among all Nonconformist denominations. I should like to know what action my hon. Friend proposes to take to avoid a recurrence of this sort of thing in the future.
  12.32 a.m.
  The Parliamentary Secretary to the Ministry of Education (Mr. Kenneth Pickthorn): I must choose language very carefully in answering this debate. I quite understand the importance of it, and the hon. Member for Abertillery (Rev. Williams) will do me the justice of understanding the difficulty I am in. I must, therefore, use language with great care, but I hope I shall not give the impression, which would certainly be a false one, that if I am being very careful in my language it is because I want in any way to shuffle off the issue or to wrap it up. I quite understand the importance of the questions raised, and as far as my understanding of them goes, they have been raised with perfect fairness.
  In so far as there has been any injustice, or even appearance of injustice, and especially in so far as there has been what must in the nature of the case have been a very painful professional turning in Dr. Hugh's career—the turning, or the half-turning, out into something different from his own choice, and then what

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  must appear to be to some extent turning willy-nilly back again—I fully understand that to a sensitive man, quite apart from any material consequences that may follow from that, all that must have been painful; and I very much regret that it should have happened.
  I will not go at any length into the normal ways of making appointments. I had written out, to be sure I had got it right, the exact ways of appointing, the powers which are delegated, and so on, but I have only 13 minutes left to me and I would rather get on to the part which ought to be put on record. Neither will I read what, I am sure, the right hon. Member for South Shields (Mr. Ede) knows by heart—Regulation 19 of the Schools Grant Regulations, 1951, with its three subsections. I can omit reading it partly because of the right hon. Gentleman's presence.
  I will begin by putting into four-ale bar language what the words in the Regulation appear to me to mean, and I am sure the right hon. Gentleman will correct me if he thinks I am getting it wrong again; the interpretation which has generally been put upon Regulation 19, which is an exact repetition of an earlier Regulation of 1945, has been as follows: first, that in general
  "no clerk in Holy Orders or regular Minister of any religious denomination may be employed"
  as a regular teacher in a maintained school. That is subsection (1).
  But by virtue of subsection (2), if the school is a secondary grammar school or a school of various other kinds—but a secondary grammar school is what matters for the moment—the governors or authority appointing may, at their discretion, employ such a person.
  Moreover, by virtue of subsection (3), even in the case of other kinds of school—the kinds of school where, in principle, one may not employ such a person—the appointing authority—in this case the governors, with the powers delegated to them—may appoint the otherwise ineligible person upon getting permission from the Minister to do so.
  That is, as I understand it, what the Regulations mean, and I do not think that in the Ministry—the present Ministry, or that of my predecessor—has there at any time been any doubt that that
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  is the meaning. The history of the Regulation I have had written out at some length in order to be sure that I have it right; but again, I think that all hon. Members now present know that background pretty well, and that we can therefore leave most of it out. When the new classification of schools came about in 1945, those which had been under the Regulations for Secondary or Higher education became known as secondary grammar and technical schools respectively; for those schools there has never been any ineligibility in being a minister; they are covered by subsection (2), which merely continues previous practice.
  The Authority argues in its letter of 12th May—and this correspondence is not yet finished and, therefore, I must be most careful what I state—that an ordained minister continues to be a minister unless he somehow manages to get out of that state. I was then quoting their interpretation; they are not the words in the Regulations. There are difficult theological questions involved in understanding the Anglican, Roman Catholic, or Congregational practice, but I think that I understand sufficiently how a Congregationalist minister has to be defined. Quite plainly, what constitutes the minister's character, if one may put it in that way, is the fact that a particular congregation has called him to minister to it, and he is still the minister of that congregation.
  Mr. Ede: I think it would be fairer to say that in this denomination there is no power which can "unfrock"—to use the term we generally understand in connection with the Anglican and Roman Catholic communities—a man who has been ordained a minister. Having once been ordained, he remains so, and speaking as one brought up as a Congregationalist and as one who still believes in the ecclesiastical theories of Congregationalism, that is the position arising in this case.
  Mr. Pickthorn: That may be, but I do not think that it affects the argument. It is true that a clerk in holy orders, even if he has no benefice nor cure of souls, is mill a clerk in holy orders and is still bound by the Regulations until he relinquishes those orders. Orders can be relinquished; that has been done sufficiently for the purpose of the Regula-

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  tion; all that is necessary for our immediate argument is to be prepared to agree, for the sake of argument, that that is not an operation feasible within the Congregational arrangements.
  It is not for me to understand about these things, but I am prepared to admit that that may be so. There are differing practices in these matters between differing churches. I am not concerned to deny that there may be a Free Church minister in another denomination, with no regular duties in respect of a particular denomination, who may yet be regarded as a regular minister of his denomination.
  In the case of Dr. Hugh, however, this was not so, and the Chief Education Officer was told in a letter from the Ministry of 11th May that, in the view of the Minister, since he was no longer regularly officiating in charge of a congregation, he was not subject to Regulation 19 (1). That letter ought perhaps to have added—it may be argued that it would be rather harsh to use the word "ought"—but it certainly could have added another point.
  There are two views about such matters: when there are two reasons, either of them sufficient for a decision, it may be argued that it is better only to state one because, with a plurality of reasons, one may raise a doubt about their validity whereas, on another view, it is better to put in all the possible reasons. The letter might have put in another reason; that is to say, that since the school concerned here was a grammar school, therefore that bar did not arise here. It may be that it would have been better if the letter had said that too, though I do not think any blame is to be put on the drafting of the letter that it did not do so.
  Even if they were uncertain about the effect of subsection (2), and if they thought that Dr. Hugh was a minister within the terms of subsection (1), there is a third point. Even then they could, if they had wished, have appointed him as being academically highly qualified for the purpose—and for all I have to say, for the purpose he was possibly as highly qualified as he could have been—
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  by asking the permission of the Minister under subsection (3).
  Finally, I come to what can be done. I think that most of what can be done I hope may have been done by what have said this evening, and by the reporting of it. My right hon. Friend would think it her duty where, as appears to be the case here, there has been action based on misconception of a Regulation, to inform the authorities or governors concerned of the proper interpretation. She would expect the authority to review their practice and to pay proper attention to that information in the future. There has already been a letter written to the authority and there will be more. I do not think there is a serious danger that this case will be the thin end of a wedge which will spread to other parts of the country. In any event, this particular case is still not settled correspondence is still going on.
  I hope that what I have said has been plain, and I have no doubt that it will be so published that other governors and authorities will be aware of what I have said.
  12.44 a.m.
  Mr. Ede: In the minute that remains I should like to thank the Parliamentary Secretary for his statement which is very important, namely, that for the senior forms of secondary grammar schools there should be on the staff, since religious instruction is a compulsory subject, a person of sufficient standing in that subject to deal with the very awkward questions that can be put to ill-instructed teachers in this matter by the senior pupils, particularly of science forms.
  I rejoice that the hon. Gentleman has made quite clear that under Regulations 19 (2) and 19 (3) there is ample opportunity for local education authorities, if they desire to do so, to appoint fully qualified people, although they have been, or are, ministers of a particular denomination.
  Adjourned accordingly at a Quarter to One o'Clock a.m.