§ Mr. Kenneth Robinson (St. Pancras, North)
I beg to move, in page 2, line 40, after "effect" to insert:as regards any underwriter who establishes to the reasonable satisfaction of the surveyor of taxes that a substantial part of his business represents the insurance of risks outside the United Kingdom.
§ The Deputy-Chairman (Sir Rhys Hopkin Morris)
I think that it will be for the convenience of the Committee if, with this Amendment, we were to take that in page 3, line 10, at end, insert:Provided also that the said amendment shall not apply, unless the underwriter can show to the satisfaction of the surveyor of taxes that in the year preceding the year of assessment he has either received a premium income amounting to not less than the sum of one thousand dollars in the currency of the United States of America or paid losses amounting to not less than that sum in that currency.They both cover very much the same point.
§ Mr. Robinson
I find it rather strange that the concession embodied in this Clause has never been discussed in this Committee. I do not know the reason for that; it may be that it is an extremely complicated and involved matter. The fact is that it was first introduced in the 1949 Budget of Sir Stafford Cripps. Apart from a very brief reference in my own maiden speech in that Budget debate, I do not think that the matter was referred to at any stage of the Bill. The Clause embodying the concession was agreed to without Amendment or debate. Again, in 1952, there was no discussion, and the Clause was agreed to without Amendment and without debate. We on this side think that the time has now come when it should be looked at rather closely.
Two main reasons have been put forward in the very brief references by various Ministers for making this concession which is, in effect, a Surtax concession to underwriting members of Lloyd's. In his Budget speech of 1949, Sir Stafford Cripps said:I regard this as a necessary and desirable adjustment, so as to assure the stability of Lloyd's underwriting, and the foreign exchange income that we derive from it."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2090.]Very roughly, that is what has been said since.
2176 The first reason given for the concession is that it is to compensate Lloyd's underwriters for a special disability which they suffer by reason of being unable to trade as a company. I should be out of order if I pursued that any further at the moment, although it may be possible to say a few words about it in the debate on the Question, "That the Clause stand part of the Bill." The second reason given is that it is intended to preserve and increase the foreign exchange earnings which we derive from the insurance industry.
In the Second Reading debate, the Financial Secretary enlarged on those two reasons and we are grateful to him for the only attempt so far made—even sketchily—to explain this Surtax concession. On 8th November last, the Financial Secretary said:Clause 3 is important to our balance of payments. We need all the dollars we can earn by doing insurance business overseas. Our invisible exports can be of tremendous importance and value to us just now.A little later he went on to say:Because of its urgency for maintaining, and I hope expanding, dollar earnings, this Clause cannot wait until next year's Budget"—[OFFICIAL REPORT, 8th November, 1955; Vol. 545, c. 1667–8.]It may be desirable to encourage the underwriting of dollar insurance business in this country, because it is perfectly true, as the Financial Secretary said, that dollar insurance premiums obtained by our underwriters represent invisible exports. What is not so often stressed, of course, is that claims paid in dollars by our underwriters represent invisible imports. When deciding whether or not this is a justifiable concession, surely our only concern should be whether the net result of transactions, over a period, represents an invisible import or an invisible export. That is what we are never told.
I should like to know whether the Financial Secretary can tell us the overall results of dollar business—because most of his arguments are related to dollar insurance rather than to the more general question of overseas insurance—by Lloyd's underwriters, if possible, because this concession relates only to them. If he cannot tell us that, perhaps he can tell us the results for the insurance market generally. Whether there is a net profit or a net loss seems to me to be highly 2177 relevant to this discussion. One or two of his remarks on Second Reading suggested that the results have not been very good lately. He said that the catastrophic loss arising from hurricanes in the United States had necessitated the increase in this concession.
That is not surprising to me in view of the nature of most of the dollar business which is underwritten by the London insurance market. It is quite unreal to suggest that it is necessary to have special facilities in order that additional dollar insurance can be under-written in London. What happens is that, by and large, we get in London only the American insurance business which the American insurance market either cannot itself absorb or does not want, either at any price or at the rate of premium offered by London.
That certainly used to be the case when I worked at Lloyd's before the war, and I have no reason to suppose that it is any different today. One of the types of insurance which was very frequently placed in the London market was what was known as the excess loss insurance. I will not go into the technicalities; indeed, I might not be within the bounds of order if I did. Briefly, it is an insurance of a very large sum of money to be paid only in the event of a catastrophe, and because of that the insurance is at a very low rate of premium indeed. The strange thing is that catastrophes happen with monotonous regularity, but the London insurance market goes on writing these risks.
If some hon. Members think that the situation may have changed recently or since the war, and that America is now willing to allow large insurances to be placed in the London market which she would dearly like to underwrite in her own market, I simply suggest that they should ask themselves whether that is likely in view of the experience which we have had over certain matters such as the Chief Joseph Dam contract and various other large contracts where this country has put in lower tenders than any other but, in the end, has failed to get the contract. Is it likely that there has been this change, when we consider the additional import tax imposed on bicycles exported to the United States from Great Britain when the volume of business became what the United States considered to be dangerously large from their point 2178 of view? I suggest that these factors still operate as they operated when I knew a certain amount about dollar business with Lloyd's before the war.
I do not accept, and I do not think my hon. Friends accept, that a concession like this is necessary to enable Lloyd's underwriters to obtain such dollar business as the United States is likely to allow to be placed outside their own country. Nevertheless, if we accept for a moment the argument of the Financial Secretary and his predecessors, what concerns us is that no limitation of any kind is placed on the concession in order to limit it to those underwriters who carry out foreign and dollar insurance.
That brings me to the point of the Amendment which I moved and the other Amendment which, Sir Rhys, you said we could discuss at the same time. The purpose of these Amendments is to limit this very substantial concession to those underwriting members who can show that the business which they transact includes a substantial proportion of foreign business. The second Amendment deals specifically with dollar business.
I want to ask the Financial Secretary one or two questions, because on Second Reading he left many questions unanswered. He said, in effect, that this concession is a deferred payment of Surtax rather than a Surtax exemption in that the tax which is not paid now will come to the Exchequer in due course when the special reserve funds which are set up under the Clause are wound up on the retirement of the underwriting member concerned.
What happens when the underwriting member dies while still carrying on his business? Is it a fact that, at any rate originally, a loophole existed here? Could the right hon. Gentleman say whether it has now been closed and could he say that in all circumstances, on the death or retirement of an underwriter, the Surtax which he is permitted not to pay now will become payable?
I want to ask a question about the cost of this concession as a whole. The right hon. Gentleman very kindly told us on Second Reading that this expansion of the concession was estimated to cost £500,000 in a full year. I should like to know how much the total concession costs in a full year. If it is roughly pro rata, then from 2179 the figures given it seems to me that the total cost is £1 million to £2 million a year, which is a very substantial concession.
I think hon. Members should appreciate how this concession has grown since it was first introduced. When Sir Stafford Cripps introduced it, it was possible for underwriters to place into the Special reserve funds £1,500 a year or 25 per cent. of their under-writing profits, whichever was the smaller. Now, under the Chancellor's proposal this year, the figures will go up to £7,000 or 50 per cent. of the profits.
There is one further question to which I want the Financial Secretary to address his mind. Sir Stafford Cripps said, in a very brief reference to this matter, that although these profits would be exempt from Surtax, by reason of this concession, they would become liable to Profits Tax. I know that the basis of levying Profits Tax has changed since then, and I want to ask the right hon. Gentleman whether these sums are still liable to Profits Tax. If that is so, and, indeed, in any event, will he say whether the concession is so much more valuable in view of the reduction in tax on undistributed profits since 1949? If that is so, perhaps he could tell up how much more valuable it is to Lloyd's underwriters as a whole.
I think my right hon. and hon. Friends' attitude towards these Amendments will depend very largely upon the reply which the Financial Secretary gives, because we are not satisfied that the concession, as it is drawn at the moment, has been justified by anything which the Chancellor or the Financial Secretary has said hitherto.
§ Mr. Houghton
I congratulate my hon. Friend the Member for St. Pancras, North (Mr. K. Robinson) on his very lucid and clear explanation of a very difficult subject. I think the whole Committee must tread warily now, because we are about to enter the jungle. There are many things about taxation in this field which are not easily understood by the layman. Lloyd's underwriters have always had a great fascination for the British public. It is a romantic institution; it is the place where one can insure against any risk, we are told. One can insure against having twins and one can insure against a wet 2180 day for the flower show. One can insure against almost anything.
§ Mr. Houghton
I am dealing with the Amendment, Sir Rhys, because it is obvious that the important part of Lloyd's underwriting, with which we are now concerned, is the ability to insure against risks in the dollar market. These policies which have to do with catastrophies engaged my attention and I wondered whether the risk of having a Conservative Government was among them, although I admit, Sir Rhys, that that was nothing to do with dollar earnings.
When explaining this Clause in his Second Reading speech, the Financial Secretary said:Unfortunately, the United States has suffered tragically from hurricanes in the last year or two. These have thrown heavy liabilities on the London insurance market. My right hon. Friend became aware that Lloyd's underwriters were realising that they would be forced to restrict their commitments in America unless they could find some means of increasing their covering reserves.On hearing that speech I was moved to sympathy with the citizens of the United States and with Lloyd's underwriters on the tragic events which had befallen them. The right hon. Gentleman went on to say that something needed to be done. We can understand that when the right hon. Gentleman says that something needs to be done in this Bill it needs to be done as a matter of urgency. He then said:Its dollar-earning effect is well worth the temporary loss of revenue."—[OFFICIAL REPORT, 8th November, 1955; Vol. 545, c. 1667–8.]This Amendment is designed to focus attention on the dollar earning element in this concession.
It is a concession, whether it is a postponement of the payment of Surtax or however one looks at it. If it were not a concession no one would have asked for it and it would not have been necessary for the Chancellor to give it. I think we are entitled to ask who made the Financial Secretary's right hon. Friend aware of this matter. He said, "My right hon. Friend became aware." If he became aware someone must have told hint something. He would not have known it without being made aware. Who told him and what did they say? I believe that Lloyd's underwriters have some kind 2181 of governing body; I believe that it is called the Committee of Lloyd's Underwriters. Did that Committee make the Chancellor aware of it, and, if so, how did it satisfy him of the need to introduce this concession into an emergency Budget and this Finance Bill?
One would assume that the events of the past would already have had their effect on existing reserves. Unless similar tragic events were feared for the future, it is not very clear how the reserves for the future have to be increased to provide for risks the nature of which could not be known and the incidence of which could be still less known. In this Amendment we want to focus attention on the dollar-earning importance of this concession, so we reasonably say that this concession should be given to those underwriters for whom it is intended and not to the others. Those who are insuring people at home against having twins, against having babies with red hair, or against having a wet day for the flower show, should not come within this concession, because no hurricane has hit them.
Lloyd's underwriters would get the concession under this Amendment if they could establish to the reasonable satisfaction of the surveyor of taxes—who is mostly a reasonable man—that a substantial part of their business represented insurance risks outside the United Kingdom. That is not unreasonable because all Lloyd's underwirters—those operating at home and those operating abroad, those operating mostly at home and not much abroad, or mostly abroad and not much at home—all stand in the same relationship to this concession. I do not say that they all stand in the same need of reserves, but, after all, who is going to hesitate about reserves if it represents a concession on deferment of payment of Surtax?
Under the existing law, and even under the proposals of this Clause, there is a considerable concession in the event of the underwriter dying in harness. That is where the real concession comes. Although otherwise the underwriters would be brought back into paying Surtax, when an underwriter dies in harness up to now there has been no charge on his estate for Surtax on the reserve fund. Although a later subsection modifies that 2182 as regards the excess over the old limits, it is still important.
We want the right hon. Gentleman to satisfy us rather more than he did that the dollar-earning importance of this proposal justifies the concession. We hope that he will assist the Committee in directing this relief to the type of underwriting business for which it is intended.
§ The Financial Secretary to the Treasury (Mr. Henry Brooke)
This Clause concerns a subject of considerable complexity. If the hon. Member for St. Pancras, North (Mr. K. Robinson) dealt with it in his maiden speech, my opinion of him becomes higher than it was before. I am sure that we should spend a little time discussing this matter now. I was grateful to the hon. Member for his reference to my remarks on Second Reading, because I have been anxious throughout the debates that the Committee should have the broad picture of what is proposed to be done.
I start by answering one or two of the questions—some of which went beyond the narrow scope of the Amendment, but it is necessary to see this question in its setting. The original representations were made by Lloyd's to Sir Stafford Cripps in 1949. There have been subsequent communications and representations following them, but there has been no change in the procedure that was initiated when Sir Stafford Cripps decided to introduce the first of these concessions in that year.
The cost of what has been done—that is to say, the 1949 concessions as modified by the 1952 enlargement—is now running at about £1¼ million a year. As I think I said on Second Reading, if the Committee agrees to this Clause the additional cost flowing from this Clause will be about £½ million a year, but that, of course, will decrease as the Surtax becomes payable because, as I pointed out, it is a deferment of Surtax and not an exemption from Surtax. As regards the 1949 and 1952 concessions, there could be an actual exemption from Surtax if the underwriter were still in business when he died and the reserves were intact.
§ Mr. K. Robinson
Before the right hon. Gentleman leaves that point, would he say whether he considered amending the law so that a loop-hole might be closed in respect of earlier concessions?
§ Mr. Brooke
I must put it to the Committee that the whole purpose of the Clause is to improve our balance of payments and make it easier for Lloyd's underwriters to strengthen their reserves. It would have been rather anomalous if, in strengthening in one direction, we had weakened them in another by inserting a discouragement as well as an incentive to add to reserves.
§ Mr. Gaitskell
I wonder whether the right hon. Gentleman will make the position clear, because I do not exactly understand what the position is when an underwriter dies. As I understand, under some of these provisions there would be liability for payment of Surtax and in others there would not be liability. How is the calculation made?
§ Mr. Brooke
The position is that under the original concession introduced by Sir Stafford Cripps, and extended by my right hon. Friend the Chancellor, in 1952, supposing the underwriter went out of business during his lifetime, Surtax would then be payable on the release of his reserve fund. If, however, he died whilst he was still a Lloyd's underwriter, the reserve fund, on being released, would not be liable to Surtax. That was the principle adopted by Sir Stafford Cripps from the beginning. It is proposed to continue that as far as the existing limits are concerned; that is to say, the limits provided in the 1949 Act, as enlarged by the Act of 1952.
As to the excess which will be permitted under this Clause, if the reserves representing this excess are intact at the time when the underwriter dies, this excess will become liable to Surtax; that is, the amount that has been accumulated under the 1949 and 1952 Acts will still remain exempt from Surtax. The law will remain entirely unchanged in that should the underwriter go out of business during his lifetime, Surtax will be chargeable.
§ Mr. K. Robinson
This is a most incredibly complicated position. Surely it is the same special reserve fund in both cases. Out of this reserve fund amounts are being transferred from time to time, but not necessarily every year. Who can say whether the amounts transferred come out of the original concession or out of 2184 the new concession which we are discussing in this Finance Bill? It seems to me to be quite fantastic and impossible to implement.
§ Mr. Beresford Craddock (Spelthorne)
Before my right hon. Friend replies, may I put a question to him? This is a point which I was going to bring up in the discussion on the Question, "That the Clause stand part of the Bill," and it may be that it will save time if I put it now. At the moment, when the underwriter dies, the 35 per cent. goes into his estate and attracts Estate Duty, but the new concession of 15 per cent. will not do so in similar circumstances. It will be written back over a number of years. To take an example, let us suppose that the underwriter has been in business for forty years. The executors will have the task of going back over the whole of the forty years to try to calculate each year the amount of the Surtax. With great respect, I do not understand why the 35 per cent. and the new 15 per cent. concession should be treated differently.
§ Mr. Brooke
The point raised by my hon. Friend is, I think, covered by a later Amendment, which, I understand, is likely to be called. Perhaps I can reserve my remarks on it until then.
I grant that this matter is complex, but I think that from the terms of the Bill, if it becomes an Act, it will be perfectly clear to the accountants and others who have to operate the matter exactly how the different parts of this reserve fund should be treated; but I do not at all deny the complexity of it. My right hon. Friend would be acting more generously to underwriters, and indeed more simply, if he were to let the situation continue as regards exemption from Surtax for this excess as well as for the original concession, but in his view that would be going too far, and he thought that it might have been liable to legitimate criticism.
If I may come to the point of this Amendment, having dealt with some of the background, I would say that both these Amendments are designed to secure that the only people who shall derive advantage from the Clause are those who are doing substantial dollar business or overseas business. I understand that it is a fact that a substantial part of the business of all, or virtually all, Lloyd's 2185 syndicates already consists of the insurance of risks outside the United Kingdom. All Lloyd's underwriters, I am informed, do dollar business in the United States, and I would suggest to the Committee that it would be putting in rather a foolish test—I do not mean the word foolish in any derogatory sense, but in the sense that it would not be a very effective test—if anyone, before claiming the advantage of this Clause, had to show a 1,000 dollar premium income per annum.
It would be a very easy test to satisfy, and it might have the unfortunate effect of conveying a feeling that, in Parliament's view, it was good enough if that amount of dollar business was done, whereas, of course, both sides of the Committee desire Lloyd's underwriters to do the maximum amount of dollar business. Indeed, the whole purpose of this Clause is to enable them and to stimulate them to raise that business to the maximum amount which they think is justifiable.
There is a suggestion here that the test might also be concerned with the nature of their losses, but, equally, there is really no reason for giving more favourable treatment on account of losses in America than on account of losses elsewhere. The loss will run down the underwriters' reserves by the same amount of money wherever it occurs, and the purpose of the Clause is to enable the amount of the reserves to be strengthened. Moreover, I am bound to say that it is not only in the United States that we want to see British insurance earning foreign currency.
I grant that the immediate cause of the introduction of this Clause was the serious losses in America, which we all hope are transient, not just for the sake of British underwriters but for the sake of the American people. It was a difficult situation; certainly, it was having a discouraging effect on Lloyd's underwriters going out for overseas business. I hope that the Committee, looking at the rather narrow points raised by both these Amendments, will agree that it would be a mistake to put in some restrictive words of the kind suggested. I am not arguing about the main purpose of the Clause, because we may wish to debate that further.
Finally, I would say to accept the Amendment would be a departure from 2186 what I think is a universally accepted tax principle in this country, a principle which has been accepted in the past by both sides of the Committee and by all parties in the House—the principle that a man's tax liability depends upon the profits he makes and not upon the manner in which he makes them. One pays the same taxes wherever one conducts a business that is profitable. I hope that with this explanation, the Committee will look sympathetically towards the general purpose of the Clause, and will accept from me that it would be unduly and indeed unnecessarily restrictive to write into it the words suggested in these two Amendments.
§ Mr. Gaitskell
The Financial Secretary, I do not doubt, has done his best both to explain the purpose of this Clause and the reasons why he is unwilling to accept the Amendments, but, with the best will in the world, I must tell him that I do not find very much clearer the intentions of the Government in regard to the Clause itself, and certainly do not feel convinced by the arguments which he has put against our Amendments.
It is admitted that this concession is quite a substantial one. It involves a loss to the Revenue of £500,000 a year, and, I understand from the Financial Secretary, brings the total cost of the concessions as a whole to nearly £2 million. Frankly, for a small body of men—I do not think there is such a large number of underwriters at Lloyd's—that is a rather big sum, and while we all have great respect for the work done there and appreciate the high traditions of London insurance, it is our duty, as Members of this Committee, to scrutinise very carefully concessions of this kind, not least because they might very easily lead to demands from other quarters and special interests which it would be difficult to resist. Therefore, in the case of a Surtax concession of this kind costing £500,000 it is necessary to scrutinise the reasons very carefully.
The Financial Secretary has repeated the argument that the concession is necessary to encourage underwriters to go out and get more dollar business. The right hon. Gentleman has given us nothing more than a bare assertion that they already do a lot of dollar business. He has not indicated any particular reason why at this very moment a concession of this kind should be made. After all, this 2187 is an emergency Budget. There are a great many changes in our tax law which we would have been happy to suggest from this side of the Committee had we been permitted to do so. We are not allowed to do so because of the Ways and Means Resolution, which the Chancellor has defended on the grounds that this is not a normal Budget. It is difficult to understand why this change has been rushed through in this manner without any adequate explanation.
There are one or two points in the Financial Secretary's statement on which I should like to comment. He tried to explain the situation, as regards both the 1949 and 1952 Acts and under the Bill, when an underwriter dies. Here again, I am quite unconvinced by what the right hon. Gentleman said. He finally fell back on the rather unusual phrase, "The accountants will know."
That reminds me of a story of one of the right hon. Gentleman's predecessors, Mr. Stanley Baldwin, who, when Financial Secretary to the Treasury, was explaining a difficult Clause to the Committee. He got up to reply to the general debate on the Clause and said, "This is a very difficult Clause. I do not pretend to understand it myself, but the officials of the Inland Revenue are very clever people and I am sure we can leave it to them." I understand that he got away with it, but I am not sure that we ought to allow the Financial Secretary to get away with saying simply, "The accountants will know." He is not relying even on his own officials. We hope that when we come to the debate on the Question, "That the Clause stand part of the Bill," another attempt will be made to explain the situation, which some of us feel is extremely confused.
On our Amendments, the right hon. Gentleman's only objection was that perhaps they were not necessary. The first is a fairly general one and, I should have thought a very reasonable one. It follows directly on what the right hon. Gentleman himself has said and his only objection seems to be that all underwriters do a
§ substantial part of their business in foreign markets and, therefore, the Amendment is not necessary. That is not a good enough answer. Simply to have an assurance that they do a lot of foreign business misses the whole point. We want this concession to be limited to the purposes for which apparently the Government intend it. I cannot for a moment accept as an adequate answer the view that the underwriters are doing quite well and that we do not need to worry.
§ As to the second Amendment, the right hon. Gentleman objected to the fact that 1,000 dollars was not a large enough figure. My hon. Friends would be perfectly happy if the Government chose a higher figure. I admit that 1,000 dollars is low. We put it in the Amendment so as not to appear unreasonable, so that at least we would exclude from the benefits of the Clause those who did no dollar business at all. If the Government feel that the underwriters do a certain amount of dollar business, let them put in—I do not mind what sort of figure it is—perhaps 10,000 or 100,000 dollars, or whatever is the appropriate figure, but let us at least give some incentive to those who are in this dollar business, as, apparently, they all are, to do better than they have done before. In that way we should be justifying the important concession which the Government are making.
§ I suggest to my hon. Friend the Member for St. Pancras, North (Mr. K. Robinson) that in view of the obvious desire of other hon. Members to speak on rather wider aspects, it might be as well if we came to a decision on the Amendment now, leaving over further discussion for the debate on the Clause as a whole. I do not know what my hon. Friend has in mind, but as far as I am concerned I shall be very happy to support him if he chooses to divide the Committee on the first Amendment.
§ Question put, That those words be there inserted:—
§ The Committee divided: Ayes 197, Noes 246.2191
|Division No. 65.]||AYES||[6.45 p.m.|
|Ainsley, J. W.||Bacon, Miss Alice||Blackburn, F.|
|Albu, A. H.||Balfour, A.||Blenkinsop, A.|
|Allen, Scholefield (Crewe)||Bellenger, Rt. Hon. F. J.||Blyton, W. R.|
|Attlee, Rt. Hon. C. R.||Benson, G.||Boardman, H.|
|Awbery, S. S.||Bevan, Rt. Hon. A. (Ebbw vale)||Bowden, H. W. (Leicester, S.W.)|
|Boyd, T. C.||Howell, Charles (Perry Barr)||Popplewell E.|
|Braddock, Mrs. Elizabeth||Howell, Denis (All Saints)||Probert, A. R.|
|Brockway, A. F.||Hughes, Cledwyn (Anglesey)||Proctor, W. T.|
|Broughton, Dr. A. D. D.||Hughes, Emrys (S. Ayrshire)||Pryde, D. J.|
|Brown, Rt. Hon. George (Belper)||Hughes, Hector (Aberdeen, N.)||Pursey, Cmdr. H.|
|Brown, Thomas (Ince)||Hunter, A. E.||Reid, William|
|Burke, W. A.||Hynd, H. (Accrington)||Rhodes, H.|
|Burton, Miss F. E.||Hynd, J. B. (Attercliffe)||Roberts, Albert (Normanton)|
|Butler, Herbert (Hackney, C.)||Irving, S. (Dartford)||Roberts, Goronwy (Caernarvon)|
|Butler, Mrs. Joyce (Wood Green)||Isaacs, Rt. Hon. G. A.||Robinson, Kenneth (St. Pancras, N.)|
|Carmichael, J.||Janner, B.||Rogers, George (Kensington, N.)|
|Castle, Mrs. B. A.||Jay, Rt. Hon. D. P. T.||Ross, William|
|Champion, A. J.||Jeger, George (Goole)||Short, E. W.|
|Chapman, W. D.||Jenkins, Roy (Stechford)||Silverman, Julius (Aston)|
|Chetwynd, G. R.||Johnson, James (Rugby)||Silverman, Sydney (Nelson)|
|Clunie, J.||Jones, David (The Hartlepools)||Simmons, C. J. (Brierley Hill)|
|Coldrick, W.||Jones, Jack (Rotherham)||Skeffington, A. M.|
|Collick, P. H. (Birkenhead)||Jones, J. Idwal (Wrexham)||Slater, Mrs. H. (Stoke, N.)|
|Collins, V. J. (Shoreditch & Finsbury)||Jones, T, W. (Merioneth)||Slater, J. (Sedgefield)|
|Corbet, Mrs. Freda||Kenyon, C.||Smith, Ellis (Stoke, S.)|
|Cove, W. G.||Key, Rt. Hon. C. W.||Snow, J. W.|
|Craddock, George (Bradford, S.)||King, Dr. H. M.||Sorensen, R. W.|
|Cronin, J. D.||Lawson, G. M.||Sparks, J. A.|
|Crossman, R. H. S.||Ledger, R. J.||Steele, T.|
|Cullen, Mrs. A.||Lee, Frederick (Newton)||Stewart, Michael (Fulham)|
|Dalton, Rt. Hon. H.||Lee, Miss Jennie (Cannock)||Stones, W. (Consett)|
|Deer, G.||Lever, Leslie (Ardwick)||Strauss, Rt. Hon. George (Vauxhall)|
|Delargy, H. J.||Logan, D. G.||Stross, Dr. Barnett (Stoke-on-Trent, C.)|
|Dodds, N. N.||MacColl, J. E.||Summerskill, Rt. Hon. E.|
|Dugdale, Rt. Hn. John (W. Brmwch)||McGovern, J.||Swingler, S. T.|
|Dye, S.||McInnes, J.||Sylvester, G. O.|
|Edelman, M.||McKay, John (Wallsend)||Taylor, Bernard (Mansfield)|
|Edwards, Rt. Hon. John (Brighouse)||McLeavy, Frank||Taylor, John (West Lothian)|
|Edwards, Rt. Hon. Ness (Caerphilly)||MacMillan, M. K. (Western Isles)||Thomas, Iorwerth (Rhondda, W.)|
|Edwards, Robert (Bilston)||MacPherson, Malcolm (Stirling)||Thomson, George (Dundee, E.)|
|Edwards, W. J. (Stepney)||Mahon, S.||Thornton, E.|
|Evans, Albert (Islington, S.W.)||Mallalieu, E. L. (Brigg)||Timmons, J.|
|Fletcher, Eric||Mason, Roy||Tomney, F.|
|Forman, J. C.||Mayhew, C. P.|
|Fraser, Thomas (Hamilton)||Messer, Sir F.||Turner-Samuels, M.|
|Gaitskell, Rt. Hon. H, T. N.||Mitchison, G. R.||Ungoed-Thomas, Sir Lynn|
|Gibson, C. W.||Monslow, W.||Usborne, H. C.|
|Gooch, E. G.||Moody, A. S.||Viant, S. P.|
|Gordon Walker, Rt. Hon. P. C.||Morris, Percy (Swansea, W.)||Warbey, W. N.|
|Greenwood, Anthony||Mort, D. L.||Weitzman, D.|
|Grenfell, Rt. Hon. D. R.||Moss, R.||Wells, Percy (Faversham)|
|Grey, C. F.||Moyle, A.||West, D. G.|
|Griffiths, David (Rother Valley)||Mulley, F. W.||Wheeldon, W. E.|
|Griffiths, Rt. Hon. James (Llanelly)||Neal, Harold (Bolsover)||White, Henry (Derbyshire, N.E.)|
|Griffiths, William (Exchange)||Oram, A. E.||Wilkins, W. A.|
|Hale, Leslie||Orbach, M.||Willey, Frederick|
|Hall, Rt. Hn. Glenvil (Colne Valley)||Owen, W. J.||Williams, David (Neath)|
|Hamilton, W. W.||Padley, W. E.||Williams, Ronald (Wigan)|
|Hannan, W.||Paget, R. T.||Williams, Rt. Hon. T. (Don Valley)|
|Hastings, S.||Paling, Will T. (Dewsbury)||Willis, E. G. (Edinburgh, E.)|
|Hayman, F. H.||Pannell, Charles (Leeds, W.)||Wilson, Rt. Hon. Harold (Huyton)|
|Henderson, Rt. Hn. A. (Rwly Regis)||Pargiter, G. A.||Winterbottom, Richard|
|Herbison, Miss M.||Parker, J.||Woodburn, Rt. Hon. A.|
|Hobson, C. R.||Parkin, B. T.||Yates, V. (Ladywood)|
|Holman, P.||Pearson, A.|
|Holmes, Horace||Peart, T. F.||TELLERS FOR THE AYES:|
|Houghton, Douglas||Plummer, Sir Leslie||Mr. A. Allen and Mr. J. T. Price|
|Agnew, Cmdr. P. G.||Bishop, F. P.||Cole, Norman|
|Aitken, W. T.||Body, R. F.||Conant, Maj. Sir Roger|
|Alport, C. J. M.||Bossom, Sir A. C.||Cordeaux, Lt.-Col. J. K.|
|Amory, Rt. Hn. Heathcoat (Tiverton)||Boyle, Sir Edward||Corfield, Capt. F. V.|
|Arbuthnot, John||Braine, B. R.||Craddock, Beresford (Spelthorne)|
|Armstrong, C. W.||Bromley-Davenport, Lt.-Col. W. H.||Crookshank, Capt. Rt. Hn. H. F. C,|
|Ashton, H.||Brooke, Rt. Hon. Henry||Crosthwaite-Eyre, Col. O. E.|
|Atkins, H. E.||Brooman-White, R. C.||Crouch, R. F.|
|Baldock, Lt.-Cmdr. J. M.||Buchan-Hepburn, Rt. Hon. P. G. T.||Crowder, Sir John (Finchley)|
|Balniel, Lord||Burden, F. F. A.||Crowder, Petre (Ruislip—Northwood)|
|Barber, Anthony||Butcher, Sir Herbert||Cunningham, Knox|
|Barlow, Sir John||Butler, Rt. Hn. R. A. (Saffron Walden)||Dance, J. C. G.|
|Barter, John||Campbell, Sir David||Davidson, Viscountess|
|Baxter, Sir Beverley||Carr, Robert||Deedes, W. F.|
|Bevins, J. R. (Toxteth)||Cary, Sir Robert||Dodds-Parker, A. D.|
|Bidgood, J. C.||Channon, H.||Donaldson, Cmdr. C. E. McA.|
|Biggs-Davison, J. A.||Chichester-Clark, R.||Doughty, C. J. A.|
|Birch, Rt. Hon. Nigel||Clarke, Brig. Terence (Portsmth, W.)||Duncan, Capt. J. A. L.|
|Errington, Sir Eric||Keegan, D.||Prior-Palmer, Brig. O. L.|
|Erroll, F. J.||Kerr, H. W.||Profumo, J. D.|
|Farey-Jones, F. W.||Kirk, P. M.||Raikes, Sir Victor|
|Fell, A.||Lagden, C. W.||Ramsden, J. E.|
|Finlay, Graeme||Lambton, Viscount||Rawlinson, P. A. G.|
|Fisher, Nigel||Lancaster, Col. C. G.||Redmayne, M.|
|Fleetwood-Hesketh, R. F.||Leavey, J. A.||Rees-Davies, W. R.|
|Fletcher-Cooke, C.||Leburn, W. G.||Remnant, Hon. P.|
|Fraser, Sir Ian (M'cmbe & Lonsdale)||Legh, Hon. Peter (Petersfield)||Renton, D. L. M.|
|Freeth, D. K.||Lindsay, Hon. James (Devon, N.)||Ridsdale, J. E.|
|Galbraith, Hon. T, G. D.||Lindsay, Martin (Solihull)||Rippon, A. G. F.|
|Gamer-Evans, E, H.||Linstead, Sir H. N.||Robertson, Sir David|
|George, J. C. (Pollok)||Lloyd, Rt. Hon. Selwyn (Wirral)||Robson-Brown, W.|
|Glover, D.||Longden, Gilbert||Rodgers, John (Sevenoaks)|
|Godber, J. B.||Lucas, Sir Jocelyn (Portsmouth, S.)||Roper, Sir Harold|
|Gomme-Duncan, Col. A.||Lucas-Tooth, Sir Hugh||Ropner, Col. Sir Leonard|
|Gower, H. R.||Macdonald, Sir Peter||Russell, R. S.|
|Graham, Sir Fergus||Mackeson, Brig. Sir Harry||Schofield, Lt.-Col. W.|
|Grant, W. (Woodside)||McKibbin, A. J.||Scott-Miller, Cmdr. R.|
|Grant-Ferris, Wg Cdr. R. (Nantwich)||Mackie, J. H. (Galloway)||Sharples, Maj. R. C.|
|Green, A.||McLaughlin, Mrs. P.||Shepherd, William|
|Gresham Cooke, R.||Maclay, Rt. Hon. John||Smithers, Peter (Winchester)|
|Grimond, J.||McLean, Neil (Inverness)||Smyth, Brig. J. G. (Norwood)|
|Grimston, Hon. John (St. Albans)||Macleod, Rt. Hn. Iain (Enfield, W.)||Soames, Capt. C.|
|Grimston, Sir Robert (Westbury)||MacLeod, John (Ross & Cromarty)||Spearman, A. C. M.|
|Crosvenor, Lt.-Col. R. G.||Macmillan, Rt. Hn. Harold (Bromley)||Speir, R. M.|
|Gurden, Harold||Macmillan, Maurice (Halifax)||Spans, Rt. Hn. Sir P. (Kens'gt'n, S.)|
|Hall, John (Wycombe)||Macpherson, Niall (Dumfries)||Stanley, Capt. Hon. Richard|
|Hare, Hon. J. H.||Maddan, Martin||Stevens, Geoffrey|
|Harris, Frederic (Croydon, N.W.)||Maitland, Cdr. J. F. W. (Horncastle)||Stewart, Henderson (Fife, E.)|
|Harrison, A. B. C. (Maldon)||Manningham-Buller, Rt. Hn. Sir R.||Stoddart-Scott, Col. M.|
|Harrison, Col. J. H. (Eye)||Marlowe, A. A. H.||Storey, S.|
|Harvey, Air Cdre. A. V. (Macclesfd)||Marples, A. E.||Summers, G. S. (Aylesbury)|
|Harvey, Ian (Harrow, E.)||Mathew, R.||Sumner, W. D. M. (Orpington)|
|Hay, John||Maude, Angus||Taylor, William (Bradford, N.)|
|Head, Rt. Hon. A. H.||Maudling, Rt. Hon. R.||Thomas, Rt. Hn. J. P. L. (Hereford)|
|Heald, Rt. Hon. Sir Lionel||Maydon, Lt.-Comdr. S. L. C.||Thomas, Leslie (Canterbury)|
|Heath, Edward||Medlicott, Sir Frank||Thompson, Kenneth (Walton)|
|Henderson, John (Cathcart)||Milligan, Rt. Hon. W. R.||Thompson, Lt.-Cdr. R. (Croydon, S.)|
|Hicks-Beach, Maj. W. W.||Molson, A. H. E.||Thornton-Kemsley, C. N.|
|Hill, Rt. Hon. Charles (Luton)||Moore, Sir Thomas||Tiley, A. (Bradford, W.)|
|Hill, Mrs. E. (Wythenshawe)||Morrison, John (Salisbury)|
|Hill, John (S. Norfolk)||Nabarro, G. D. N.||Touche, Sir Gordon|
|Hirst, Geoffrey||Nairn, D. L. S.||Tweedsmuir, Lady|
|Holland-Martin, C. J.||Neave, Airey||Vaughan-Morgan, J. K.|
|Holt, A. F.||Nicholls, Harmar||Vickers, Miss J. H.|
|Hornsby-Smith, Miss M. P.||Nicholson, Godfrey (Farnham)||Vosper, D. F.|
|Horobin, Sir Ian||Nicolson, N. (B'n'm'th, E. & Chr'ch)||Wade, D. W.|
|Horsbrugh, Rt. Hon. Dame Florence||Nugent, G. R. H.||Wakefield, Edward (Derbyshire, W.)|
|Howard, John (Test)||Oakshott, H. D.||Walker-Smith, D. c.|
|Hudson. Sir Austin (Lewisham, N.)||O'Neill, Hn. Phelim (Co. Antrim, N.)||Wall, Major Patrick|
|Hudson, W. R. A. (Hull, N.)||Orr, Capt. L. P. S.||Ward, Hon. George (Worcester)|
|Hughes, Hallett, Vice-Admiral J.||Orr-Ewing, Charles Ian (Hendon, N.)||Ward, Dame Irene (Tynemouth)|
|Hughes-Young, M. H. C.||Page, R. G.||Waterhouse, Capt. Rt. Hon. C.|
|Hulbert, Sir Norman||Pannell, N. A. (Kirkdale)||Watkinson, H. A.|
|Hurd, A. R.||Partridge, E.||Whitelaw, W.S.I.(Penrith & Border)|
|Hutchison, Sir Ian Clark (E'b'gh, W.)||Peake, Rt. Hon. O.||Williams, Paul (Sunderland, S.)|
|Hutchison, James (Scotstoun)||Peyton, J. W. W.||Williams, R. Dudley (Exeter)|
|Hyde, Montgomery||Pickthorn, K. W. M.||Wills, C. (Bridgwater)|
|Hylton-Foster, Sir H. B. H.||Pilkington, Capt. R. A.||Wilson, Geoffrey (Truro)|
|Irvine, Bryant Godman (Rye)||Pitman, I. J.||Wood, Hon. R.|
|Jenkins, Robert (Dulwich)||Pitt, Miss E. M.||Woollam, John Victor|
|Jennings, J. C. (Burton)||Pott, H. P.||Yates, William (The Wrekin)|
|Johnson, Eric (Blackley)||Powell, J. Enoch|
|Jones, A. (Hall Green)||Price, Henry (Lewisham, W.)||TELLERS FOR THE NOES:|
|Mr. R. Allan and Mr. Studholme|
§ Motion made, and Question proposed, That the Clause stand part of the Bill.
§ Mr. K. Robinson
I think we ought to have a further look at the general principle of the Clause before we part with it. It may also be as well to have a look at what Lloyd's is. We know that Lloyd's is an unique institution, and we are all very proud of it, but I do not think that that fact alone is a necessary reason or even an argument why the 2192 underwriting members of Lloyd's should be uniquely treated for Income Tax and Surtax purposes.
There are one or two things about Lloyd's of which we should remind ourselves. Lloyd's have always been excellent advocates in their own cause. This is not the only occasion when they have obtained privileged treatment from the Government—and I do not mean only the present Government. They contrive to 2193 convey in very subtle ways that they are, if not quite a charitable organisation, at least a body which is established to render a service to our nation and to industry. They are, in fact, pursuing the motive of private profit with a single-mindedness which is remarkable even in the City of London; and they are, incidentally, performing a service to the capitalist system, but only incidentally.
Possibly some hon. Members, certainly on this side of the Committee, do not know exactly how Lloyd's is made up. Lloyd's is a collection of individuals; they are banded together in syndicates, each quite small, each with an underwriting agent who accepts insurance risks on behalf of what are called his underwriting names. The names for the most part play no part whatever in the working of Lloyd's. Like holders of ordinary shares in private industry they provide the risk capital, and, as in private industry, the rewards for providing the risk capital are out of all proportion to the risks involved.
Underwriting members, who include several hon. Members opposite but not, I think, many on this side of the Committee, become members of Lloyd's by depositing with the Corporation of Lloyd's a considerable sum in cash or in negotiable securities. In the pre-war days when I was at Lloyd's—not, I assure hon. Members, as an underwriting member—this was a sum measured in thousands of pounds. It is now, I understand, measured in tens of thousands of pounds. The member-elect, having provided this sum of money, having found sponsors, having furnished references, and having passed the scrutiny of the Committee of Lloyd's, then need do nothing more for the rest of his life but pay into his bank the annual or half-yearly cheque which represents his share of the underwriting profits of the syndicate—that is, of course, if he is lucky. Despite the recent rather serious case of fraud on the part of a Lloyd's underwriter, most underwriting members are lucky to a greater or a lesser degree.
The underwriting member, as the Financial Secretary pointed out during the Second Reading debate, is liable to the extent of the whole of his personal fortune. There is no limited liability, and, of course, that is the reason Lloyd's security is so good, and the reason 2194 the security is so good is that they get such dollar business as is available. I am totally unconvinced by the argument of the Financial Secretary that these special incentives are needed to induce Lloyd's underwriters to write dollar business. It is very seldom that, although the underwriting member is liable to the extent of his private fortune, he even has to draw on the amount he has deposited with the Corporation. So we see this concession against its true background.
It is a concession to a comparatively small number of individuals who are among the richest people in Great Britain. So far as the vast majority of them are concerned, it is a concession in respect of unearned income. Whatever the Commissioners of Inland Revenue may say, from the commonsense point of view this is unearned income, if ever there were such a thing. So we see that this is a concession which is wholly of a pattern with the Chancellor's financial and taxation policy. It is just one more example of giving to him that hath. In order to do that, it has clearly been necessary to take away from him that hath not, under Clause 1 of the Bill, which I should be out of order in discussing now. This very special tenderness has always been shown by the right hon. Gentleman to the better-off section of the community, and we cannot find many sections better off than this particular one.
In explaining the Government's motives in reply to the Amendment on which we have just voted, the Financial Secretary got into very deep water indeed, and I hope that in the interval which has passed since then he has gathered some more information which will allow him to extricate himself. I do not feel at all satisfied by the vague assurance that the accountants will know all about it in the end. I think that it is right that this Committee should know all about it; and should know exactly how this concession is to be operated.
I would point out one very important fact. The right hon. Gentleman says that everything is all right if the underwriting member retires. All these difficulties arise only when he dies in harness. But almost all underwriting members of Lloyd's die in harness. There is no incentive to induce any Lloyd's underwriter to retire. He need not do any work at all; he is 2195 getting a fat income on a deposit which was made years ago with the Corporation—so what inducement is there for him to retire? He gains very substantial benefit.
I hope that the Financial Secretary will tell us how the Commissioners of Inland Revenue are to distinguish those parts of the special reserve fund which come under the 1949 and 1952 concessions and those parts which, if this Clause is passed, will be the 1955 concession. I am extremely unhappy about the whole of this concession. I am not at all convinced that it is necessary or desirable. I am not at all sure that it will help our dollar earnings, and I am not convinced that, in the absence of any figures from the right hon. Gentleman, we ought to encourage Lloyd's insurance market to underwrite dollar business at all.
§ Mr. Beresford Craddock
I will keep the Committee for only a few minutes. I should like to return to the question which I put to my right hon. Friend in our previous discussion, and which has been raised 'again in the final sentence of the speech of the hon. Member for St. Pancras, North (Mr. K. Robinson). It seems to me, if my understanding of this Clause is correct, that we shall get into a most complicated situation in the future. I should like to suggest that in the interests of trying to simplify the methods of assessment for taxation purposes this point might be well looked at again.
As I understand, at present 35 per cent. of the profits go into a special reserve fund.
§ Mr. Beresford Craddock
I am assuming for the purpose of illustration that the 35 per cent. does go into the reserve fund. I am only dealing with the case where the underwriter dies. I should explain to the Committee that I have no interest direct or indirect, in Lloyd's at all, that I know very little about how it works, and I am raising this from the point of view of taxation only because I believe that we should try to simplify the methods of assessing a tax which this Clause seems to complicate.
Thirty-five per cent. of the profits, if an underwriter dies, goes into his estate and attracts Estate Duty in the normal way. When this Clause becomes law the 2196 amount that can be put into reserve is 50 per cent. When an underwriter dies the 35 per cent. goes into his estate and attracts duty in the ordinary way but the amount that represents the 15 per cent. has to be calculated back each year for the purpose of Surtax. Let us take the extreme case of an underwriter practising in his profession for 30 or 40 years. The task of his executors will be that they have to take the amount of the fund which represents the 15 per cent. contribution, and for each of those 40 years they have to arrive at what he would have paid by way of Surtax.
§ Mr. Robinson
Complicated as this is, I think that that would be true so long as this fund were merely a fund into which sums were put, but it becomes even more complicated when one realises that this is a fund out of which funds are paid year by year.
§ Mr. Beresford Craddock
That may well be. That illustrates the complexity of this Clause.
I have raised this matter because I feel strongly that all efforts should be made to simplify tax assessment rather than to complicate it, and this strikes me as a most astonishing complication. I cannot understand why the 15 per cent. could not have been treated in the same way as the 35 per cent. or at least the whole 50 per cent. treated in one way or in another, and I should be grateful to my right hon. Friend if he would clarify the situation.
§ Mr. Houghton
The way to simplify this matter, as the right hon. Gentleman pointed out, would have been to allow the new limits to enjoy exemption from Surtax on the death of the underwriter in harness as the existing limits are exempt from Surtax. That would have been the simple way, as the right hon. Gentleman said that it would have been—to make the new limits subject to exactly the same relief on the death of the underwriter as the present limits.
The right hon. Gentleman said that that might be going too far, and that as the limits rise it seemed unreasonable to allow the original exemption from Surtax on the estate of the deceased underwriter to continue with the rise in the new limits, bearing in mind that originally the limit was one-quarter of the profits or £1,500, whichever was the smaller, and 2197 then went up to 35 per cent. and £5,000 and is now to go up to 50 per cent. and £7,000.
I think that the Committee will probably agree with the right hon. Gentleman that, complicated as it has become, it is perhaps right that in lifting the limits still further there should be some qualification brought into the scheme now with regard to the continuing exemptions on the death of the underwriter. I want to be quite reasonable about this. I have nothing to do with Lloyd's. I have never been in the place, if there is such a place. I have never insured against twins or for any of the other risks which, I understand, it is possible to insure against.
I candidly think that it would be wrong for the Government now to worsen the conditions of the earlier reserve fund. To that extent I think that the Chancellor is right in saying that the new and restricted conditions on the death of the underwriter shall apply to the excess over the old limit and not to the whole of the reserve. I think that he is right. That money was put into reserve under then existing conditions, and I think that the normal principle which we follow here is that we do not retrospectively worsen conditions when money was deposited for a certain purpose under the conditions then prevailing. I think that he is right in confining this change to the excess. That is fair.
§ Mr. K. Robinson
Would such a proposal be substantially different from increasing the rate of Estate Duty?
§ Mr. Houghton
That is arguable. There is a difference between a reserve fund deliberately created under the prevailing conditions at the time and the accumulation of wealth which, so to speak, one cannot help. Death catches us out, and Estate Duty is payable on all we have got. We cannot say that our wealth was a deliberate act. It was incidental, accidental, and all the rest of it; but here was something done under conditions prevailing at that time. However, I agree that it is arguable, and I merely express the opinion that the right hon. Gentleman is being fair and right in restricting this to the excess over the existing limits.
The complicated way in which the calculations will be made on the death of the underwriter is dealt with in paragraphs (a), (b) and (c) of subsection (3). 2198 It is very aggravating to have to go back and calculate Surtax over past years, but the hon. Member for Spelthorne (Mr. Beresford Craddock) will realise that this is not very big money. The excess that the underwriter will leave over the old limits cannot be a large one. It is only a few thousand pounds, at the outside.
I am not at all sure whether it is reasonable to recalculate the thing over past years under this complicated formula. I admit that the simple way might be regarded as a little hard on the estate of the underwriter. Where an underwriter goes out of business and still survives, which my hon. Friend says is a rare occurrence, then the money brought back suffers Surtax at the rate in the year in which it is brought back and on the whole amount that is brought back. One might say that is hard. He might want it to be stepped back over the years of accumulation, but that is the way in which it has been done and it is certainly simple. It would have been simpler, and I do not think that it would have been terribly unfair, to have treated the return of the excess on death on the same footing, because the amount would not be large. We complicate the matter if we bring in the Estate Duty. All we are concerned with here is Surtax.
These moneys have been transferred to a reserve fund as if they had been taxed and as if Profits Tax had been paid on the amount, so that they attract neither Income Tax nor Profits Tax but only Surtax.
§ Mr. Beresford Craddock
I am most interested in this point. Is not it resolving itself into rather a gamble as to whether the Government would get more by way of Surtax or Estate Duty? It seems to me rather a gamble which will be the greater in the ultimate result.
§ Mr. Houghton
Yes. If there is any gamble in this, I am sure that the underwriters are prepared to take it, but I can see that there is a refinement there and that according to the amount of Surtax extracted so will the Estate Duty be less. I appreciate the point that, really and truly, there is probably not much in it and we might as well do it simply instead of having the complications set out in subsection (3).
2199 7.15 p.m.
I ask the Financial Secretary, once again, to tell us who asked for all this. He has not told us so far. He said that his right hon. Friend had been "made aware." So have I. I have been made aware that this provision has excited little interest and less enthusiasm among Lloyd's underwriters, and still less do they want it on the terms proposed in subsection (3) regarding the taxation of the excess over the old limits in the event of death. I understand that various people have made the right hon. Gentleman aware that there is simply nothing in this and that it is not worth going on with.
The Committee should be assured that this proposal is really desired; that the underwriters do want it. Surely we should not throw concessions at Lloyd's underwriters that they do not want. I never like to displease people, least of all Lloyd's underwriters. We want to keep on good terms with them, because in three or four years' time there are certain risks that we may want them to underwrite for us, on one side or the other. Let us come to terms with these people, but do they really want this provision on these terms? That seems to be the point and there seems to be strong doubt about it.
I do not think that in principle we can quarrel with the concession. It is too long-established. It was established in the period of the Labour Government, enlarged with, of course, the change in the Profits Tax arrangements at the end of 1951. It was enlarged in 1952, and there is a proposal to increase it still further. The principle is fairly well established, and I would not want to quarrel with it now. But since we are putting up the limit and introducing some new conditions which are a disadvantage to the Lloyd's underwriters, the Committee must be assured that this is necessary, that it is essential from the point of view of dollar earnings and that the Lloyd's underwriters want it and regard it as imperative.
Otherwise, it would be much better to withdraw the Clause, to cut it out of the Bill, so that the matter may be examined at leisure and consultations may be held between now and the next Finance Bill.
§ Mr. Geoffrey Stevens (Portsmouth, Langstone)
Unlike the hon. Member for St. Pancras, North (Mr. K. Robinson), I 2200 think that I am pretty clear about the reasons which led my right hon. Friend the Chancellor to include the Clause in the Bill. It cannot be forgotten that the success of Lloyd's underwriters, and indeed of every other form of British insurance undertaking, in the United States of America can be measured in broad terms by the knowledge of the insured in the United States of the resources behind the insurers who are writing the risks for them.
I should have thought that that was the obvious reason which led my right hon. Friend to introduce the Clause or to accept the principle of it, he being anxious to increase the concessions which Lloyd's underwriters already possess. However, with the hon. Member for Sowerby (Mr. Houghton) and my hon. Friend the Member for Spelthorne (Mr. Beresford Craddock), I confess that I am puzzled about the methods which my right hon. Friend has employed to give effect to his obviously good intentions.
It is obvious to anyone with the great knowledge of Income Tax possessed by the hon. Member for Sowerby that only a very wealthy member of Lloyd's could possibly afford to contemplate as large a sum as £7,000 a year, which is the amount provided in the Clause—50 per cent. of the profits or £7,000 a year—free of Income Tax and non-distributable Profits Tax as well. In those circumstances the estate of the underwriter will be subject, in due course, in respect of that slice of his income, to the higher rate of Income Tax; in other words, Surtax at the highest rate of 18s. 6d. in the £. The consequence is that there is little incentive to this wealthy underwriter to take advantage of these additional concessions, if concessions there be.
The hon. Gentleman the Member for St. Pancras, North talked about the possibility of an underwriter dying after he had retired.
§ Mr. K. Robinson indicated dissent.
§ Mr. Stevens
I cannot imagine any underwriter being in a position to be able to afford to retire, in any case until the provisions of the Millard Tucker No. 2 Report have been implemented—but that is out of order, I realise, Sir Charles.
1 wonder, as the hon. Member for Sowerby wondered, what would be the 2201 difference in cost if we left things as they stand, with the proviso that the aggregate of the reserve fund accumulated over the years is accounted for as part of the estate of the deceased. That estate will most probably pay a high rate of Estate Duty, possibly even 80 per cent. Can my right hon. Friend tell us what would be the difference in cost to the Inland Revenue? Why are we going to this extreme and complicated length to transfer possibly much the same sum of money from one pocket of the Inland Revenue to another pocket also of the Inland Revenue?
I am puzzled for another reason. Reference has been made to the fact that accountants will be called in to help. Here I must declare an interest. I am not an underwriter but I have clients who are underwriters. I look forward with interest and joy to the calculations over twenty or twenty-five years, and I shall not even have my clients with me to quibble about the bill, only their executors, so it will be easier to settle. Seriously, it will be extremely complicated in twenty-five years' time to reopen these assessments.
Another point which worries me concerns the rather sombre words in subsection (4):notwithstanding any time limit for the making of assessments.In a small but moderate experience of taxation affairs I do not know of another instance in which assessments have been normally reopened without time limit, which is usually six years, save in a case of fraud. It seems odd that my right hon. Friend, in endeavouring to assist underwriters, and through them to assist this country towards greater dollar earnings, should do it at the expense of putting underwriters into the dock with criminals. I would like to know the reasons for this marriage of incompatibles.
§ Mr. Eric Fletcher (Islington, East)
Like other hon. Members who have spoken, the more I look at this Clause the less I like it. It does not seem to meet the requirements of justice or to be administratively workable. Nor, as we now hear, does it seem to meet the wishes of those whom it is desired to help, namely, Lloyd's underwriters. I have no special prejudice either for or against Lloyd's underwriters. My only 2202 concern is to try to ensure that the Committee does not, without further examination, agree to a Clause in a Finance Bill which is so extraordinary or so complicated as this one. I should have hoped, in view of the discussion which has taken place this evening, that at the least we should have assurances that the Clause will be radically altered before a later stage.
I also want to ask the Financial Secretary a question on subsection (4). There was an Amendment on the Paper on which this point might have been raised. It seems to me monstrous, as a matter of administrative arrangement, to introduce into our Income Tax legislation a provision which enables the Revenue to reopen assessments notwithstanding any time limit. As one hon. Member said, an underwriter may be in practice for forty years. He may then die. If this Clause is passed, the Revenue would be entitled to make, and his executors would be under an obligation to submit to, a most complicated examination, perhaps contentious, of his Income Tax and Surtax liability going back for thirty or forty years.
That is something which no self-respecting legislature ought to legislate about, and I do not believe that it is necessary. Even if it were a simple matter, it would be indefensible, but think of the complications to which this provision may give rise. It is not as though in every case the sums put to reserve will remain and accumulate. Claims against the fund will be made. In some years there may be large claims, in others there may be no claims. Moreover, some claims will relate possibly to risks underwritten many years ago. Claims will not necessarily all relate to risks underwritten in the year when the claim arises.
The matter does not rest there. We have not yet had an explanation from the Financial Secretary as to how a claim against the fund is to be dealt with. Is it to come out of the first 35 per cent. which is treated under the 1949 and 1952 concessions or is it to come out of the concession under this Bill or is it to come out of both proportionately? I hope that the Financial Secretary will tell us, because there is nothing in the Clause, as I read it, which makes that plain. Suppose a claim arises in a future year as the result of a risk underwritten in an 2203 earlier year when this concession did not operate? How will that claim against the fund be dealt with?
These are only some of the complications which seem to me to arise on the question of principle as to whether it is better to deal with this fund by way of reduction through Estate Duty or Surtax reassessment. I have an open mind about that. It would be almost impossible to prophesy which would be of greater advantage to the Revenue or to the taxpayer, but it seems to me to be the plain duty of the Committee, if we decide to accept the principle of this Clause, to make it as sensible and as capable of easy administration as is possible within the limits laid down by the necessity to give special exemption and privilege or encouragement to Lloyd's underwriters.
I should have thought that to have had a system whereby this reserve fund is created and then, at the underwriter's death or retirement, part of it is brought into calculation for Estate Duty and a lesser part is treated as liable to Surtax reassessment, is probably to make the worst of both worlds.
I agree with my hon. Friend the Member for St. Pancras, North (Mr. K. Robinson); I should have thought that there could be no possible inducement in future—even if there has been in the past—to any underwriter ever to retire, because the provisions for tax liability seem to be so much more heavily weighted in favour of the Inland Revenue upon his voluntary retirement than they would be on his death. Whether this is just or desirable I do not know, but we must assume that, in future, no Lloyd's underwriter will retire. What effect that may have upon other potential Lloyd's underwriters who are waiting to step into the shoes of the existing ones, I do not know.
There are some other points which occur to me, but they are matters of so much detail compared with those which have been raised that I hope that the Financial Secretary will give some clear answers to those points before we proceed further.
§ 7.30 p.m.
§ Mr. Roy Jenkins
Not for the first time in our discussions on this Bill, the Committee finds itself in a position of extraordinary difficulty. Here we are dealing with a Finance Bill which, as the 2204 Chancellor told us only an hour or so ago, is essentially part of the emergency Budget—in respect of which he did not have time to consider the recommendations of the Royal Commission, but had to make snap decisions—and yet, in the middle of this emergency Finance Bill, he has apparently chosen to force £500,000 worth of concessions upon a group of reluctant Lloyd's underwriters. It would be very difficult for us to agree to proceed under these conditions and, in view of the other provisions of the Bill, to accept a Clause which gives away revenue to this extent, without any indication whether it is desirable or even whether it is desired by anybody.
To save the time of the Committee, I very much hope that the Financial Secretary will tell us that he will not proceed with the Clause. There cannot be any conceivable hurry about it. If there is a case for it, it can be worked out and deployed in next April's Budget. It is not an emergency problem; it is a long-term one. The Financial Secretary should now say that the Government will agree to look at the question again before next April. If he does so, there will be another £500,000 worth of concessions to be given away when we consider the question of Purchase Tax on the Report stage.
§ Mr. H. Brooke
If the Lloyd's underwriters are as reluctant to take advantage of the Clause as the hon. Member for Stechford (Mr. Roy Jenkins) suggests, there will not be £500,000 worth loss of revenue. That figure was calculated upon the assumption that the Clause will be used, and I think it will be.
I welcome the opportunity to enlarge upon the Clause because, as the Committee may have realised, I was somewhat restricted by the narrow limit of the previous Amendment and could not answer all the questions which were put to me. In particular, in connection with the phrase which I used, which was, I believe, "which the accountants will understand," I am sure that the right hon. Gentleman, who twitted me about it afterwards will appreciate that it would have been out of order to deal in detail with subsection (3) in the discussion of an Amendment to subsection (1). I shall be very glad to answer that point as fully as I can at the appropriate time.
The hon. Member for St. Pancras, North (Mr. K. Robinson) suggested that 2205 Lloyd's underwriters were being uniquely treated for tax purposes. I should have thought that up to now everybody, apart from the hon. Member, had accepted that this was a unique problem—a problem to which Sir Stafford Cripps addressed his mind and which the House sought to tackle six years ago. The problem arises from the fact that Lloyd's underwriters are individuals and are obliged to trade as individuals. Other insurance companies, as companies, are liable to Profits Tax and not to Surtax; Lloyd's underwriters are liable to Surtax, and yet they have a quite unique obligation to build up large reserve funds, because a man who is carrying on business on his own in the insurance world needs a reserve fund against contingent losses of an altogether different order of magnitude from that of the ordinary individual trader. That is the problem with which the 1949 and 1952 legislation sought to deal, and this proposal is a limited extension of that endeavour.
The hon. Member for St. Pancras, North spoke of the service which Lloyd's underwriters gave to themselves and to the capitalist system. Frankly, the only service with which I am concerned is that which Lloyd's underwriters and all those who are engaged in insurance give to our balance of payments. We should be in poor shape if our overseas earnings from insurance were to dwindle and disappear. I suggest that that is the question to which we must direct our attention. That is the reason which brings the Clause into being. It is true that this is an emergency Measure, and I certainly could not advise the Committee not to accept a Clause which, as I shall proceed to show, is of definite importance in strengthening our balance of payments, which is one of the subjects at issue in the Budget.
§ Mr. Roy Jenkins
The Financial Secretary has twice referred to the balance of payments position and has used the words, "We should be in poor shape if these overseas earnings were to disappear." It is clear that he has in mind some approximate figure, or he would not have used such language. We do not want to tie him down to an exact figure, but surely he can give the Committee a broad estimate, in arithmetical terms.
§ Mr. Brooke
The hon. Member well knows that our earnings from insurance 2206 fluctuate from year to year. He must also well know that this is a substantial item in our invisible exports, and that we have every incentive to seek to increase it rather than let it diminish.
§ Mr. Gaitskell
Cannot the Financial Secretary give us a single figure for our net invisible exports from insurance? I hope that we may be given some information upon this subject.
§ Mr. Brooke
The figure fluctuates from year to year, but it is a substantial amount.
I was asked how these representations came to be made.
§ Mr. K. Robinson
The Financial Secretary really must give us some information of the net effect of dollar business in this country over the last three years for which figures are available.
§ Mr. E. Fletcher
How does the right hon. Gentleman know that the figure fluctuates if he does not know what the respective figures are?
§ Mr. Brooke
I am sufficiently acquainted with our invisible exports position, and with the nature of insurance, to know that this figure necessarily fluctuates, and also that it is a substantial one in each year.
The hon. Member for St. Pancras, North asked how, when, and by whom these representations came to be made. I believe that the hon. Member for Sowerby (Mr. Houghton) raised the same point. Representations were made to the Chancellor on behalf of Lloyd's in the course of last winter, before the normal date of the April Budget. The Chancellor, naturally, considered what was said to him, but, owing to the special circumstances of the April Budget—which had to be confined to a very small number of Clauses owing to the imminence of the Dissolution—it was not possible to consider including any provision of this sort. This is the earliest opportunity for doing so.
The hon. Member suggests that this might well be left until next April, but if we did that we could not include the benefit in the current year, unless we 2207 acted retrospectively. The object of including it now is because it is believed by my right hon. Friend to be urgent; to have definite balance of payments importance; and to be necessary for inclusion in the Bill so that it can operate for the benefit of the Income Tax year 1955–56.
§ Mr. Houghton
Has the right hon. Gentleman any idea whether the representations were made before or after the hurricanes?
§ Mr. Brooke
The hurricanes took place in 1954. They were after that.
My hon. Friend the Member for Spelthorne (Mr. Beresford Craddock) asked why this provision needed to be so complicated. I apologise for what I said before, when I understood that another Amendment was to be called and thought I should have the opportunity to explain the matter then. My right hon. Friend reached the conclusion that it was essential to do something to increase these limits, but that he would not be justified in simply extending the limits without putting any restriction on the Surtax exemption. That is why he is proposing that we should legislate now to achieve the result that, while sums that have been put to reserve under the old limits will remain free of Surtax on the underwriter's death, the excess which can be put to reserve under the new limits will be liable to Surtax.
My hon. Friend reached that decision largely because he felt that if he put in no such restriction the facilities that would be granted to Lloyd's underwriters would seem to be out of scale with the retention of profits that is usually possible in businesses conducted through the medium of a company. The whole of the purpose is to keep Lloyd's underwriters in as equitable a tax position as is possible, bearing in mind that they are individuals and, therefore, liable to Surtax.
On the other hand, my right hon. Friend would not wish to go so far in his favourable treatment of them in that respect as to carry them beyond any advantage that could accrue if the tax was being applied to a company and not to an individual. That is how my right hon. Friend came to his conclusion that the Surtax exemption should not run for these additional amounts.
2208 7.45 p.m.
Then one has to address oneself to the question which the right hon. Member for Leeds, South (Mr. Gaitskell) very properly but slightly prematurely referred to. When the underwriter dies, how is one to calculate which part of his reserve fund will be liable to Surtax and which will not? This is all set out in subsection (3) and that is why I could not refer to it upon the Amendment to subsection (1). Rather than read out subsection (3), or even try to paraphrase it, I would like to give the Committee a simple example which may make the matter clear.
Suppose we take the letters A and B, and say that what the underwriter puts into reserve up to the 1952 limit is called A and what he puts in under the new limits is called B. We will say that in the first year he puts in A1/B1, in the second year A2/B2, and so on. Let us say that in the sixth year he suffers a loss. The whole of the A payments up to the sixth year—that is, A1, A2, A3. A4 and A5—will be taken first as being withdrawn to meet the loss, before any of the B payments is treated as withdrawn. When the whole of the A payments have been withdrawn, if a further withdrawal is required to meet Fe loss in the sixth year, then the B payments will be drawn upon, beginning with the latest in time and going backwards.
If hon. Members, bearing that explanation in mind, would read subsection (3), which expresses in legal language what I have been explaining, they will see that the matter is comparatively simple. I grant at once that some of these calculations will have to be made over a considerable number of years back. I think the hon. Member for Islington, East (Mr. E. Fletcher) had an Amendment on the Notice Paper which was concerned with that point. I grant that that will happen and that complicated calculations will have to be made, but all the facts will be on record. I am glad to see the hon. Member for Sowerby nodding. I do not think that it will be as difficult a calculation in practice as it sounds.
There is no simpler method by which we can settle this matter, if it is once granted that the exemption from Surtax on the excess above the 1952 limits should not continue. One must have some practical method of allocating the 2209 losses to the payments in the different years, and this is a simple and straightforward one.
I have sought to answer all the detailed questions that have been put to me about the working of the subsection. It is, in the view of my right hon. Friend, most important that we should extend these limits. He has authorised me to say that he will continue to watch the position as it has been watched since 1949 when a provision was put on the Statute Book, with very little Parliamentary discussion. It was amended in 1952 in the light of experience, and it is being amended now, I trust, in 1955, in the light of the new situation that has arisen, thanks to these heavy American losses and the risk that Lloyd's underwriters might be discouraged from underwriting the greatest possible amount of American business unless further action is taken.
There must be unity on both sides of the Committee that it is desirable that this business should be done because it is, over the long run, profitable to this country, and we cannot afford to miss any chance of exports, visible or invisible. That is why the subsection is in the Bill. It could not wait until next April, though that would have been a simpler course, because it would not have been possible then to make any of the benefit accrue in the tax year 1955–56.
§ Mr. Gaitskell
Most Members of the Committee agree that there is a case in principle for a special arrangement about persons like Lloyd's underwriters who are not limited companies and are liable to pay Surtax on profits in a way in which companies are not. I am sure, too, that all hon. Members agree that if a real case can be made out for a particular tax concession on the ground that it will substantially increase our dollar exports, visible or invisible, we should not be disposed to quarrel with it. But I do not feel that the connection between these two things has yet been established.
It is all very well to say that when Sir Stafford Cripps introduced the first concession of this kind, in 1949, it went through without any discussion. It did, but the amounts then involved were very different from those which we are now considering. I think that the limits then were £1,500, and 25 per cent. of the profits. Now they are £7,000—nearly five times as much on the one side and, 2210 say, twice as much on the other. What may be perfectly reasonable when the figure is small, as it was in 1949, may be far from reasonable when it becomes large.
It is for that reason that my hon. Friends, and hon. Gentlemen opposite, have been very critical of this Clause. It really is not good enough to say to the Committee, as did the Financial Secretary, that he knows the earnings are substantial and knows that they fluctuate, but cannot give us a single figure for any year as to what the earnings are. If he has no information about the figures, how does he know that they are substantial? It does not make sense.
We were always under the impression before the war that there were invisible exports from insurance. I must confess at once that on this side we certainly do not now know what the present dollar position is. My hon. Friend the Member for St. Pancras, North (Mr. K. Robinson) made a good point when he asked what the net gain was. We receive these premiums, but we also have to make substantial payments. We are told that the hurricanes have made a difference. 1; is extraordinary to argue that our tax laws should be permanently altered because of an event in one year—1954. Had we heard that there was a serious danger of default or something like that it would have been some sort of argument, but nothing has been put forward.
It is for those reasons that we have pressed the Financial Secretary to consider the Clause again and to see whether some or other of the Amendments, moved or not, could be considered before the Report stage. Apart from Amendments, we have asked whether he would consider what has been said by hon. Members on different sides. I see that the right hon. Gentleman the Chancellor of the Exchequer is here. I would ask him whether he is prepared to look at the Clause again, read what has been said in the debate and reconsider the Clause with a view to making changes on Report. If he is so prepared I should advise my hon. Friends to allow the Clause to go through, but if we receive an adamant refusal, as we have done up to now from the Government, to consider any changes at all then—although I must confess to the Committee that such was not our original intention—in the light of the 2211 treatment we have received, I would advise my hon. Friends to divide the Committee.
§ Question put:—
§ The Committee divided: Ayes 235, Noes, 179.2213
|Division No. 66.]||AYES||[7.52 p.m.|
|Agnew, Comdr. P. G.||Grimston, Hon. John (St. Albans)||Marlowe, A. A. H.|
|Aitken, W. T.||Grimston, Sir Robert (Westbury)||Marples, A. E.|
|Allan, R. A. (Paddington, S.)||Grosvenor, Lt.-Col. R. G.||Mathew, R.|
|Alport, C. J. M.||Curden, Harold||Maude, Angus|
|Amory, Rt. Hn. Heathooat (Tiverton)||Hall, John (Wycombe)||Maudling, Rt. Hon. R.|
|Arbuthnot, John||Hare, Hon. J. H.||Maydon, Lt.-Comdr. S. L. C.|
|Armstrong, C. W.||Harris, Frederic (Croydon, N.W.)||Milligan, Rt. Hon. w. R.|
|Ashton, H.||Harrison, A. B. C. (Maldon)||Moore, Sir Thomas|
|Atkins, H. E.||Harrison, Col. J. H. (Eye)||Morrison, John (Salisbury)|
|Baldock, Lt.-Cmdr. J. M.||Harvey, Air Cdre. A. V. (Macclesfd)||Nabarro, G. D. N.|
|Baldwin, A, E.||Hay, John||Nairn, D. L. S.|
|Balniel, Lord||Head, Rt. Hon. A. H.||Neave, Airey|
|Barber, Anthony||Heald, Rt. Hon. Sir Lionel||Nicholls, Harmar|
|Barlow, Sir John||Heath, Edward||Nicholson, Godfrey (Farnham)|
|Barter, John||Henderson, John (Cathcart)||Nicolson, N. (B'n'm'th, E. & Chr'ch)|
|Baxter, Sir Beverley||Hicks-Beach, Maj. W. W.||Nugent, G. R. H.|
|Bevins, J. R. (Toxteth)||Hill, Rt. Hon. Charles (Luton)||Oakshott, H. D.|
|Bidgood, J. C.||Hill, Mrs. E. (Wythenshawe)||O'Neill, Hn. Phelim (Co. Antrim, N.)|
|Birch, Rt. Hon. Nigel||Hill, John (S. Norfolk)||Orr, Capt. L. P. S.|
|Bishop, F. P.||Hinchingbrooke, Viscount||Orr-Ewing, Charles Ian (Hendon, N.)|
|Body, R. F.||Hirst, Geoffrey||Page, R. G.|
|Boyle, Sir Edward||Holland-Martin, C. J.||Pannell, N. A. (Kirkdale)|
|Braine, B. R.||Holt, A. F.||Partridge, E.|
|Bromley-Davenport, Lt.-Col. W. H.||Horobin, Sir Ian||Peyton, J. W. w.|
|Brooke, Rt. Hon. Henry||Horsbrugh, Rt. Hon. Dame Florence||Pickthorn, K. W. M.|
|Brooman-White, R. C.||Howard, John (Test)||Pilkington, Capt. R. A.|
|Buchan-Hepburn, Rt. Hon. P. G. T.||Hudson, Sir Austin (Lewisham, N.)||Pitman, I. J.|
|Burden, F. F. A.||Hudson, W. R. A. (Hull, N.)||Pitt, Miss E. M.|
|Butcher, Sir Herbert||Hughes Hallett, Vice-Admiral J.||Pott, H. P.|
|Butler, Rt. Hn. B. A.(Saffron Walden)||Hughes-Young, M. H. C.||Powell, J. Enoch|
|Campbell, Sir David||Hulbert, Sir Norman||Price, Henry (Lewisham, w.)|
|Carr, Robert||Hutchison, Sir Ian Clark (E'b'gh, W.)||Prior-Palmer, Brig. O. L.|
|Cary, Sir Robert||Hutchison, James (Scotstoun)||Profumo, J. D.|
|Channon, H.||Hyde, Montgomery||Raikes, Sir Victor|
|Chichester-Clark, R.||Hylton-Foster, Sir H. B. H.||Ramsden, J. E.|
|Clarke, Brig. Terence (Portsmth, W.)||Irvine, Bryant Godman (Rye)||Rawlinson, P. A. G.|
|Cole, Norman||Jenkins, Robert (Dulwich)||Redmayne, M.|
|Conant, Maj. Sir Roger||Jennings, J. C. (Burton)||Rees-Davies, W. R.|
|Cordeaux, Lt.-Col. J. K.||Johnson, Eric (Blackley)||Remnant, Hon. P.|
|Corfield, Capt. F. V.||Jones, A. (Hall Green)||Renton, D. L. M.|
|Craddook, Beresford (Spelthorne)||Kaberry, D.||Ridsdale, J. E.|
|Crookshank, Capt. Rt. Hn. H. F. C.||Keegan, D.||Rippon, A. G. F.|
|Crosthwaite-Eyre, Col. O. E.||Kerby, Capt. H. B.||Robertson, Sir David|
|Crouch, R. F.||Kerr, H. W.||Robson-Brown, W.|
|Crowder, Sir John (Finchley)||Kirk, P. M.||Rodgers, John (Sevenoaks)|
|Crowder, Petre (Ruislip—Northwood)||Lagden, G. W.||Roper, Sir Harold|
|Cunningham, Knox||Lambton, Viscount||Ropner, Col. Sir Leonard|
|Dance, J. C. G.||Lancaster, Col. C. G.||Schofield, Lt.-Col. W.|
|Davidson, Viscountess||Langford-Holt, J. A.||Scott-Miller, Cmdr. R.|
|Deedes, W. F.||Learner, E. H. C.||Sharples, Maj. R. C.|
|Dodds-Parker, A. D.||Leavey, J. A.||Shepherd, William|
|Donaldson, Cmdr. C. E. McA.||Leburn, W. G.||Smithers, Peter (Winchester)|
|Doughty, C. J. A.||Legh, Hon. Peter (Petersfield)||Smyth, Brig. J. G. (Norwood)|
|Duncan, Capt. J. A. L.||Lindsay, Hon. James (Devon, N.)||Soames, Capt. C.|
|Duthie, W. S.||Lindsay, Martin (Solihull)||Spearman, A. C. M.|
|Eden, Rt. Hn. Sir A. (Warwick & L'm'tn)||Speir, R. M.|
|Farey-Jones, F. W.||Linstead, Sir H. N.||Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)|
|Fell, A.||Lloyd, Rt. Hon. Selwyn (Wirral)||Stanley, Capt. Hon. Richard|
|Finlay, Graeme||Low, Rt. Hon. A. R. W.||Stevens, Geoffrey|
|Fisher, Nigel||Lucas, Sir Jocelyn (Portsmouth, S.)||Stewart, Henderson (Fife, E.)|
|Fleetwood-Hesketh, R. F.||Lucas-Tooth, Sir Hugh||Storey, S.|
|Fletcher-Cooke, C.||Macdonald, Sir Peter||Summers, G. S. (Aylesbury)|
|Freeth, D. K.||McKibbin, A. J.||Sumner, W. D. M. (Orpington)|
|Gamer-Evans, E. H.||Mackie, J. H. (Galloway)||Taylor, William (Bradford, N.)|
|George, J. C. (Pollok)||McLaughlin, Mrs. P.||Thomas, Rt. Hn. J. P. L. (Hereford)|
|Glover, D.||Maclay, Rt. Hon. John||Thomas, Leslie (Canterbury)|
|Godber, J. B.||McLean, Neil (Inverness)||Thompson, Kenneth (Walton)|
|Gomme-Duncan. Col. A||Macleod, Rt. Hn. Iain (Enfield, W.)||Tiley, A. (Bradford, W.)|
|Gower, H. R.||MacLeod, John (Ross & Cromarty)||Touche, Sir Gordon|
|Graham, Sir Fergus||Macmillan, Rt. Hn. Harold (Bromley)||Tweedsmuir, Lady|
|Grant, W. (Woodside)||Macmillan, Maurice (Halifax)||Vaughan-Morgan, J. K.|
|Grant-Ferris, Wg Cdr. R. (Nantwich)||Macpherson, Niall (Dumfries)||Vickers, Miss J. H.|
|Green, A.||Maddan, Martin||Vosper, D. F.|
|Gresham Cooke, R.||Maitland, Cdr. J. F. W. (Horncastle)||Wade, D. W.|
|Grimond, J.||Manningham-Buller, Rt. Hn. Sir R.||Wall, Major Patrick|
|Ward, Dame Irene (Tynemouth)||Williams, R. Dudley (Exeter)||Yates, William (The Wrekin)|
|Waterhouse, Capt. Rt. Hon. C.||Wills, G. (Bridgwater)|
|Watkinson, H. A.||Wilson, Geoffrey (Truro)||TELLERS FOR THE AYES:|
|Whitelaw, W.S.I.(Penrith & Border)||Wood, Hon. R.||Mr. Studholme and|
|Williams, Paul (Sunderland, S.)||Woollam, John Victor||Mr. E. Wakefield.|
|Ainsley, J. W.||Griffiths, David (Rother Valley)||Parker, J.|
|Albu, A. H.||Griffiths, Rt. Hon. James (Llanelly)||Parkin, B. T.|
|Allen, Arthur (Bosworth)||Hamilton, W. W.||Pearson, A.|
|Allen, Scholefield (Crewe)||Hannan, W,||Peart, T. F.|
|Attlee, Rt. Hon. C. R.||Hastings, S.||Popplewell, E.|
|Awbery, S. S.||Hayman, F. H.||Probert, A. R.|
|Bacon, Miss Alice||Harbison, Miss M.||Proctor, W. T.|
|Balfour, A.||Hobson, C. R.||Pryde, D. J.|
|Benson, G.||Holman, P.||Pursey, Cmdr. H.|
|Bevan, Rt. Hon. A. (Ebbw Vale)||Houghton, Douglas||Reid, William|
|Blackburn, F.||Howell, Charles (Perry Barr)||Rhodes, H.|
|Blenkinsop, A.||Howell, Denis (All Saints)||Roberts, Albert (Normanton)|
|Blyton, W. R.||Hughes, Cledwyn (Anglesey)||Roberts, Goronwy (Caernarvon)|
|Boardman, H.||Hughes, Emrys (S. Ayrshire)||Robinson, Kenneth (St. Pancras, N.)|
|Bottomley, Rt. Hon. A. G.||Hughes, Hector (Aberdeen, N.)||Rogers, George (Kensington, N.)|
|Bowden, H. W. (Leicester, S.W.)||Hunter, A. E.||Ross, William|
|Boyd, T. C.||Hynd, J. B. (Attercliffe)||Short, E. W.|
|Braddock, Mrs. Elizabeth||Irving, S. (Dartford)||Silverman, Julius (Aston)|
|Brookway, A. F.||Jay, Rt. Hon. D. P. T.||Simmons, C. J. (Brierley Hill)|
|Broughton, Dr. A. D. D.||Jeger, George (Goole)||Skeffington, A. M.|
|Brown, Rt. Hon. George (Belper)||Jenkins, Roy (Stechford)||Slater, Mrs. H. (Stoke, N.)|
|Brown, Thomas (Ince)||Johnson, James (Rugby)||Slater, J. (Sedgefield)|
|Burke, W. A.||Jones, David (The Hartlepools)||Smith, Ellis (Stoke, S.)|
|Burton, Miss F. E.||Jones, Jack (Rotherham)||Snow, J. W.|
|Butler, Herbert (Hackney, C.)||Jones, J. Idwal (Wrexham)||Sorensen, R. W.|
|Butler, Mrs. Joyce (Wood Green)||Jones, T. w. (Merioneth)||Sparks, J. A.|
|Carmichael, J.||Kenyon, C.||Steele, T.|
|Castle, Mrs. B. A.||Key, Rt. Hon. C. W.||Stones, W. (Consett)|
|Champion, A. J.||King, Dr. H. M.||Stross, Dr. Barnett (Stoke-on-Trent, C.)|
|Chapman, W. D.||Lawson, G. M.||Summerskill, Rt. Hon. E.|
|Chetwynd, G. R.||Ledger, R. J.||Swingler, S. T.|
|Clunie, J.||Lee, Frederick (Newton)||Sylvester, G. O.|
|Coldrick, W.||Lee, Miss Jennie (Cannock)||Taylor, Bernard (Mansfield)|
|Collick, P. H. (Birkenhead)||Taylor, John (West Lothian)|
|Collins, V. J. (Shoreditch & Finsbury)||Lever, Leslie (Ardwick)||Thomas, Iorwerth (Rhondda, W.)|
|Corbet, Mrs. Freda||Logan, D. G.||Thomson, George (Dundee, E.)|
|Cove, W. G.||MacColl, J. E.||Thornton, E.|
|Craddock, George (Bradford, S.)||McGovern, J.||Timmons, J.|
|Cronin, J. D.||McInnes, J.||Tomney, F.|
|Crossman, R. H. S.||McKay, John (Wallsend)||Turner-Samuels, M.|
|Cullen, Mrs. A.||McLeavy, Frank||Usborne, H. C.|
|Dalton, Rt. Hon. H.||MacMiltan, M. K. (Western Isles)||Viant, s. P.|
|Deer, G.||MacPherson, Malcolm (Stirling)||Warbey, W. N.|
|Delargy, H. J.||Mallalieu, E. L. (Brigg)||Weitzman, D.|
|Dodds, N. N.||Mann, Mrs. Jean||Wells, Percy (Faversham)|
|Dugdale, Rt. Hn. John (W. Brmwch)||Mason, Roy||West, D. G.|
|Dye, S.||Messer, Sir F.||Wheeldon, W. E.|
|Edelman, M.||Mitchison, G. R.||White, Henry (Derbyshire, N.E.)|
|Edwards, Rt. Hon. John (Brighouse)||Monslow, W.||Wilkins, W. A.|
|Edwards, Rt. Hon. Ness (Caerphilly)||Moody, A. S.||Willey, Frederick|
|Edwards, W. J. (Stepney)||Morris, Percy (Swansea, W.)||Williams, David (Neath)|
|Fletcher, Eric||Mort, D. L.||Williams, Ronald (Wigan)|
|Forman, J. C.||Moss, R.||Williams, Rt. Hon. T. (Don Valley)|
|Fraser, Thomas (Hamilton)||Moyle, A.||Willis, Eustace (Edinburgh, E.)|
|Gaitskell, Rt. Hon. H. T. N.||Mulley, F. W.||Wilson, Rt. Hon. Harold (Huyton)|
|Gibson, C. W.||Neal, Harold (Bolsover)||Winterbottom, Richard|
|Gooch, E. G.||Oram, A. E.||Woodburn, Rt. Hon. A.|
|Gordon Walker, Rt. Hon. P. C.||Owen, W. J.||Yates, V. (Ladywood)|
|Greenwood, Anthony||Padley, W. E.|
|Grenfell, Rt. Hon. D. R.||Paling, Will T. (Dewsbury)||TELLERS FOR THE NOES:|
|Grey, C. F.||Panned, Charles (Leeds, W.)||Mr. Holmes and Mr. J. T. Price.|