HC Deb 10 July 1956 vol 556 cc341-60

(1) The promotion and conduct of small lotteries and small card and gaming parties within the meaning of subsection (1) of section one and of subsection (1) of section four of the Small Lotteries and Gaming Act, 1956, respectively shall not be deemed to be the carrying on of a trade of business for the purposes of income tax and profits tax.

(2) The proceeds of a small lottery within the meaning of subsection (1) and conducted in accordance with the provisions of paragraphs (a) to (m) of subsection (2) of section one of the said Act shall be exempted from income tax and profits tax if and insofar as it is shown to the satisfaction of the Commissioners of Inland Revenue that the said proceeds have been or are to be applied in accordance with the terms of paragraph (d) of subsection (2) of the said section one of the said Act.

(3) The proceeds of a small card and gaming party applied in pursuance of paragraph (c) of subsection (1) of section four of the said Act shall be exempted from income tax and profits tax if and insofar as it is shown to the satisfaction of the Commissioners of Inland Revenue that the said proceeds have been applied for purposes other than purposes of private gains.

(4) Any claim for exemption from income tax and profits tax under the preceding provisions of this section shall be made to the Commissioners of Inland Revenue in such form as they may prescribe and the said Commissioners shall, on proof of the facts to their satisfaction, allow the claim accordingly. Any person aggrieved by the decision of the said Commissioners may make an application as aforesaid and subsections (2) and (3) of section four hundred and fifty of the Income Tax Act, 1952, shall with any necessary modifications apply thereto.—[Mr. Ernest Davies.]

Brought up, and read the First time.

Mr. Ernest Davies (Enfield, East)

I beg to move, That the Clause be read a Second time.

I move this Clause as a sequel to the passing of the Small Lotteries and Gaming Act, which I introduced as a Private Member's Bill last November and which received the Royal Assent last Thursday. It has come to light that certain small lotteries are at present attracting the attention of the Inland Revenue and have been subjected to Income Tax. As the House will recall, the Small Lotteries and Gaming Act was designed to legalise those small lotteries which are run for charitable, sporting or other purposes provided that in no circumstances are they run for private gain.

The Measure received an unopposed Second Reading and Third Reading in this House and general support throughout the country. Having brought some order into the law on that matter, having succeeded in legalising those lotteries run for charity and other deserving purposes, having legalised small games such as whist drives, it is most unfortunate now to find that they may be subject to Income Tax.

Those small lotteries are run by a very large number of organisations throughout the country, even by some religious bodies, by hospitals, by schools, and by political parties as well. No money can be made out of them except for the purposes legalised under the Small Lotteries and Gaming Act. The money raised by those lotteries has to be distributed as to 50 per cent. less expenses to the organisations which are organising the lotteries. The expenses are limited to 10 per cent. With the high cost of printing today, and postage, nobody can possibly make very much money out of the organisation of those lotteries. If, after the 50 per cent. at the maximum has been distributed in prize money, and after the 10 per cent. reduction for expenses on the remaining 50 per cent., the amount of money left available for distribution to the clubs or organisations organising the lotteries is subject to Income Tax or Profits Tax, then the amount left for the organisation is reduced substantially.

It is not the intention of the Government, I am sure, that those organisations which are running those lotteries for deserving purposes should be subject to tax in this way. This new Clause makes it clear that any small lottery or game organised in accordance with the Act shall not be subject to Income Tax or Profits Tax provided, of course, that the purposes for which the money is raised are those which are defined in that Act—charitable purposes, the support of sport and athletics—not being for private gain or for any commercial undertaking.

In those circumstances, it seems reasonable that they should be exempt from all forms of taxation. I suggest to the Chancellor that there is no possibility of the Treasury losing any substantial amount if the Clause is accepted. At present, those organisations which are attracting the attention of the Inland Revenue are, for the most part, supporters' clubs, because it is claimed that they are not always run on a mutuality basis, that is, the members do not have a final say in the distribution of the moneys raised. They are run solely for the purpose of the organisation for which the supporters' club is founded and such supporters' clubs have been subject to tax.

Those which have succeeded in proving that they are run on a mutuality basis have not been subject to tax, but in a number of cases there was an attempt to tax. The total loss to the Treasury cannot be considerable, though if it persists in making these organisations subject to tax it may well bring in a certain amount of revenue.

It is rather unfortunate that, the House having made these lotteries legal and brought them within the law and thus brought the law into respect again and saved it from its former disrepute, the organisers of these lotteries should now find that the lotteries, being legal, are subject to tax whereas when they were illegal they were escaping it for the most part. I know that the Treasury has qualms about living on immoral earnings, but it seems unfortunate that in this case, having made the woman respectable, the Treasury is now taxing her because she is virtuous.

I hope that the Chancellor will be sympathetic to this proposal in view of the fact that he himself has now gone into the gambling business and is launching the Premium Bonds. He should be sympathetic to these small and limited lotteries. The amount of money involved is very little. The amount that can be raised by any of these societies is limited to £750 per lottery and they are confined to objects which the House has considered worthy.

I ask, therefore, for an assurance from the Government that either these organisations will not attract the attentions of the Inland Revenue in future, or that the new Clause will be accepted.

Mr. Mulley

I beg to second the Motion.

I do not think that it would be the desire of the House that I should detain it very long at this late hour, but I think that this is an important matter. Subject to what the Solicitor-General may tell us, I believe that the law is now substantially changed as a result of the Small Lotteries and Gaming Act, 1956, which was so successfully piloted through the House by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies).

Already, the Inland Revenue is apparently making demands for arrears of tax from the promoters of small lotteries which will now fall within the scope of the tax. I understand that the basis of the claim is that, although the lotteries were illegal by reason of the fact that tickets were sold beyond the limit of the Betting and Lotteries Act, 1934, it was held that the tickets were sold by non-members and, therefore, the lottery became a trading concern and subject to tax in that way. One of the main provisions of the 1956 Act is that now, for the first time, tickets can be sold to non-members of charitable or non-profit making organisations promoting a lottery.

10.30 p.m.

We are, therefore, very much concerned to have from the Solicitor-General either an assurance that this will not bring such lotteries within the general provision of the Income Tax law and make them liable for tax at the Standard Rate, or, alternatively that the hon. and learned Gentleman will accept this Clause, so that the matter may be beyond doubt.

Obviously, it was not the intention of the House when it unanimously passed the Small Lotteries and Gaming Bill, and agreed to the provision that 50 per cent. of the proceeds of such lotteries, after deducting the 10 per cent. allowed for expenses, should go to the charity concerned, that 29 per cent. only should go to the charity and 21 per cent. should go to the Chancellor of the Exchequer.

While the Bill was going through its various stages concern was expressed that by increasing the maximum amount allowed for expenses we were reducing the amount that would go to these worthy charitable organisations. The small increase from 5 per cent. to 10 per cent. in the permitted expense is nothing compared with the reduction in the sum going to charity as a result of tax being deducted at the standard rate.

In a sense it would mean providing revenue by the back door if, as a result of the operation of the tax collector, only 29 per cent. instead of the 50 per cent. provided for in the Bill, which had the support of all quarters both in this House and in another place, went to the charitable and other non-profit making organisations. I hope, therefore, that we shall have either an assurance from the Government on the lines I have suggested or an acceptance by them tonight of this Clause, so that we shall not be faced with the problem which some of us who are concerned with these lotteries fear that we might.

Mr. Simon Mahon (Bootle)

I have no wish, any more than have my hon. Friends, to detain the House at this hour of the night, but in the part of the country from which I come the Measure introduced by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) is of vital importance.

I think it will be generally agreed that though we are living in a Welfare State there will always be room for personal and private charity. My hon. Friend's small Bill has enabled the religious and charitable organisations to legalise what was a harmless form of lottery in connection with sporting and cultural pursuits. Such a form of lottery is no less deserving because of the way in which it is run, or because of the regularity of its collections. The purposes are still the same and are still very worthy.

I desire to bring to the notice of the House two anomalies which exist in Liverpool. Quite recently I had reason to go into a hospital run by a religious order which takes in patients from State-run hospitals. These patients are cared for by the nuns of this order. They are people who may be dying of cancer or tuberculosis—hopeless cases. The nuns receive 32s. 6d. a week for looking after them. Such treatment and nursing would not be possible but for the vocationalism and devotion of these excellent women.

My hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock) has given me some up-to-date figures. She is very knowledgable on this subject. In Broad Green Hospital the weekly maintenance figure is £13 18s. 2d. For the Park Hospital, which is run on similar lines for senile cases, the figure is £9 3s. Then there are the Newsham Hospital, £10 8s. 7d.; the Rathbone Hospital, £15 13s. 1d.; and the maternity hospital at Mill Road, £16 17s. 6d.

If a hospital of the sort that I have mentioned—say, St. Vincent's Hospital for the Dying, among many of these excellent institutions—wanted to preserve its private vocationalism and was assisted by a group of charitable people who desired to organise a charity on the lines of this particular form of lottery, there would be nothing wrong with the idea. They would be organising a charity to help such an excellent body.

I want the Chancellor to bear in mind that we are not dealing with a small number of people. I am a manager of all sorts of schools, including county schools, Church of England schools and Roman Catholic schools. I am a Roman Catholic myself, and I have taken a keen interest in voluntary education all my life. I am one of five brothers. I object to the fact that in this matter of education we, as Roman Catholics, are treated differently from everybody else. We were all in the Forces together. Never a ship went out of Liverpool without its Irish complement, or not fully manned. There was never a regiment that was not similarly fully manned. Yet when our people returned home after making our contribution to the war effort, we found that we had to pay twice for our schools.

I realise that there are some here who will not agree with me, but in substantiation of what I have said I would remind the House that there were 38 Roman Catholic V.C.s on parade before Her Majesty the other day. I suggest that we, as Catholics, are entitled to equal treatment with everybody else in the matter of education. I know of one young parish priest—and I do not expect everybody to agree with me, but it has to be said—who is now caring for thousands of people from the City of Liverpool but who has to pay £250,000 for schools, and the only way he can raise this money——

Mr. Deputy-Speaker (Sir Charles MacAndrew)

The hon. Gentleman is getting rather a long way from small lotteries and gaming.

Mr. Mahon

I am trying to keep in order, Mr. Deputy-Speaker.

I am sorry to have kept the House so long, but this sort of thing needs to be said because we are no longer dealing with minorities. Thirty-five per cent. of the children in Liverpool need to go to voluntary establishments, and this presents a great problem. I ask the Chancellor to give this proposed new Clause every possible consideration.

Mr. L. M. Lever (Manchester, Ardwick)

I want, in a few words, to appeal to the Chancellor of the Exchequer to have a heart. By the acceptance of this proposed new Clause, charitable causes affecting all denominations will be assisted. The Small Lotteries and Gaming Act received wholehearted support when it was before the House, because it was realised that it would assist good causes. I know that the Chancellor is conducting a credit squeeze at the moment, but there is no reason why he should squeeze voluntary effort. Ever since 1948 we have been told that what the State provides can only be of a limited character and that it must be supplemented by voluntary effort.

The Measure that was passed recently is designed to assist voluntary effort. Many schools of all denominations and many charitable causes will benefit as a result of the Act promoted by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies).

I hope that the Chancellor will consider that this is a matter which stands in a category entirely of its own. A charity is not a business. It is something specially recognised by law, and it is exempted in many respects from ordinary taxation. There is no reason why efforts designed to assist a good cause should give the Chancellor the benefit of the work of the organisation concerned.

If the Clause is not accepted it will mean that all the good of the Act which has recently been passed will be undone at one stroke by the Chancellor. I appeal to the right hon. Gentleman. If he accepts this proposal his decision will command the universal respect of every section of the community. It will make people feel that, although the Chancellor has had to embark on certain courses to obtain revenue, he is, at the same time, prepared to give consideration to the voluntary efforts of the people. I appeal to him most fervently and hope that he will accept the new Clause.

Mr. Denis Howell (Birmingham, All Saints)

I do not wish to detain the House for more than a minute—[HON. MEMBERS: "Hear, hear."] Such an incentive as that provided by hon. Members is likely to make me continue for much longer.

This is an extremely important issue in the social life of our various communities, and it is because of that that I wish to submit a short plea to the Chancellor. Those who have anything to do with sporting organisations know perfectly well that it is almost impossible to run a social or sporting club on a financially self-supporting basis.

Unfortunately, this is an age of canned entertainment and there was never a time when it was more important that social activities should be encouraged. People should be encouraged to support football and cricket clubs, and so on, none of which could continue without the help of small lotteries. Recently, in connection with Entertainments Duty on football, I have made a survey of many of the small clubs in the Midlands and I have not discovered one which is financially self-supporting. Not one could continue without the help provided by small lotteries. Although the hour is late, it is right that Parliament should be informed that football and cricket clubs provide the social centres in many small villages, and that we should consider how we can assist these organisations to continue. They cannot continue without the aid of small lotteries.

The same applies in the hospital service where, in spite of the great strides made in the National Health Service, those who serve on hospital management committees see every week the need for Leagues of Friends, the need for people outside the actual organisation of the Service, to contribute funds to give extra benefits to patients and staff. These activities are not possible without the small bands of people who get together to raise money through small lotteries and in other ways. In other words, these people can raise greater funds, as an organisation, than they can provide from their own resources.

I hope, therefore, that the Chancellor will be no less generous in his attitude to these well-worth-while charities than he has been in his attitude to Premium Bonds. It will be a sad day for the country if voluntary organisations like Leagues of Friends collapse. It will be a sad day for the country if football and cricket clubs and the like, which depend upon income gained from outside their own immediate circle, collapse. I hope that, in the light of the importance of matters which may be regarded by some hon. Members as relatively unimportant but which are important in the social life of the country, the Chancellor will show by his attitude to the Clause that he is prepared to encourage people in voluntary organisations in a no less generous manner than that with which he treats people who invest in Premium Bonds. Because I believe that our social life is important and is in danger, I hope that our plea to the Chancellor will not go unheeded.

10.45 p.m.

The Solicitor-General (Sir Harry Hylton-Foster)

We have here jovial jobs or sombre stints to discharge. I put this in the sombre stint class, because I acknowledge myself, as most other hon. Members do, a staunch supporter of the Act of the hon. Member for Enfield, East (Mr. Ernest Davies).

Why I have not at once to receive the proposition with acclamation does not depend upon the good things that are done with the money raised. If it did, my cause would be hopeless. However, I hope that the House will think for a moment of another aspect of the matter to which no one has referred, no doubt for very wise reasons. I do not for a moment challenge, for instance, the kind of account that the hon. Member for Bootle (Mr. Mahon) was giving of the very good services rendered in one form or another by charitable organisations which derive funds from such activities as are here contemplated. However, putting the matter bluntly, by his Clause the hon. Member is asking for a body which is not a charity a more sweeping exemption than, as a nation, we have ever granted to any charity. It is rather a tall order on the face of it.

Perhaps I might adopt a phrase of the hon. Member for Ardwick (Mr. L. M. Lever) and say that a charity is not a business. Our principle, so far as I know, has always been that, if a charity chooses to descend into the realm of business, then it ought to be dealt with on the basis that it is doing business. Otherwise, it is grossly unfair to other forms of taxpayers who do not have equivalent advantages. If it chooses to enter the field of trade, it would be very unfair to other taxpayers to leave them in a comparatively grossly disadvantageous position.

The bodies for which the hon. Member advances his Clause are, of course, not charities, but for the moment I am discussing the matter as if they were. We as a nation, under every kind of Government, have allowed a charity, if it chooses to enter the field of trade, to be exempt only subject to various strict limitations, which are known to hon. Members and which no one could suggest could apply to the kind of organisation that will run these small lotteries, and so we need not bother with them.

Because the general idea that one should exempt from taxation money which is on the way to such very good objects in the end is attractive, it was put up to the Royal Commission. It had suggested to it the idea that the special exemption granted to charities, under very strict limitations, should be extended to any organisation trading by the use of unpaid labour—the House will recall the passage—and the Royal Commission, having considered it as sympathetically as anybody would who is concerned with the good things which are done with the moneys, came to the conclusion—and my reference is to paragraph 613 of the final Report—that it did not think that it would be sound to extend the exemption in the way sought.

That was on the basis of charities, but of course the bodies with which the suggested new Clause deals would not be charities, nor does it necessarily follow that the moneys which they raised would go to charitable purposes. They might go to a wide range of purposes, non-commercial purposes, sport, culture, but not necessarily charitable.

I hope that with those few words, which I would not wish to extend at this hour, the House will agree that what is asked under the cloak of such an attractive destination is in fact a vast concession from the principle on which charities which have entered trade have always been taxed under our system and wholly inconsistent with previous concessions and something which a Royal Commission on careful consideration lately rejected.

I do not want in the least to pose as someone who can suggest any ideas to right hon. Gentlemen opposite, but I am bound to say that whereas it may be difficult to bring these lotteries within the principles of mutuality trading—I have no doubt that hon. Members would like to go outside the realm of mutuality and get some money from outside—it seems to me, speaking as an individual, not very difficult to devise an arrangement whereby all the money paid over to the charity can be totally exempt from charge in the hands of the charity.

I am not quite certain where my duty lies, but should an hon. Member or right hon. Member be sufficiently interested in what I am saying, I should like outside this place to give him a reference to a suitable case which I hope will help. That would not involve any departure from the underlying principle of that taxation and would involve an application of the general law to this particular case. I am afraid that on those grounds I feel it necessary to invite the House to say that it could not accept the new Clause.

Mr. H. Wilson

The case to which the Solicitor-General referred was no doubt the Arethusa Training Ship case which, if my memory serves—I have not looked at it for some time—is on page 397 of the Tax Cases volume. I must express a very keen sense of disappointment, shared by hon. Members in other parts of the House—if I may say so without disrespect to the Solicitor-General—that he should have been put up to reply. That is not a reflection on him. We have appreciative recollections of his interventions in Committee, and he always answers our arguments with good humour and courtesy.

However, this was not a legal but a political point of considerable importance. I want to make this very plain, and I hope that the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) will follow the argument as I proceed, although I want to be very brief. For some time the Board of Inland Revenue has been assessing for Income Tax—in some cases for six years back, at 9s. in the £ for the greater part of the period—a number of small charities run by charitable, religious and other bodies. I hope that we shall not waste too much time linking this debate with the Premium Bonds debate, I at any rate made it clear when we were discussing Premium Bonds that I saw all the difference in the world between small lotteries run by charitable, religious, political, sporting and other organisations and the intervention of the State, and certainly I do not want to go into the question of Premium Bonds. But for some time now, certainly for many months, there have been these assessments made.

I heard about the matter purely from a constituency aspect, because I represent an area just outside Liverpool where there are a considerable number of these lotteries run by people for religious purposes, or at any rate, for raising money for purposes of denominational schools. I mentioned the matter to the previous Chancellor of the Exchequer, who I think was as surprised as I was that the Board of Inland Revenue was acting in this way. I mentioned the matter to him some time before the Budget and said that I hoped he would consider it. I know that the matter has been inquired into by the Chancellor personally.

It is a fact that under the law as it stood before the very helpful Measure of my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) became law, it was possible, by various kinds of what might be called legitimate tax avoidance, to avoid paying Income Tax on the proceeds of these efforts chiefly by reference to the principle of what is usually called mutuality; the idea being that tickets were sold only to members of what might be called a community or family and they got the benefits from these efforts. Members of a parish clubbed together in one of these efforts to provide a school or hall or something of benefit to the parishioners. There was an element of mutuality. It was not trade but a family effort, if hon. Members would care to look at it in that way.

But after the passing of the Act of my hon. Friend, mutuality disappeared, as my hon. Friend made clear, because tickets could be sold to non-members. Therefore it is no longer possible to avoid the levying of Income Tax by recourse to the kind of procedure which I am sure the learned Solicitor-General has in mind. This is a very serious matter, and although the Solicitor-General naturally looks at this from a legal point of view, I hope that the Chancellor will examine it again and find some means of remedying the very difficult situation with which we are faced.

Whatever the lawyers may say, this is not primarily a legal question. It is nonsense to talk about these things being trade. It is a different thing from profit-making or trading organisations, and in practically all cases the profits are applied to religious, cultural or legitimate political purposes. We may have different ideas of what are legitimate political purposes but, as a House of Commons, let us be impartial about that.

I hope that the Chancellor will look at this again and realise that a considerable injustice is being done, and that by the mechanism of the tax law the purposes of my hon. Friend's Act are being frustrated. Until my hon. Friend's Bill became law, many of these lotteries were, or were deemed to be, illegal. But even so, they were being taxed, because the Board of Inland Revenue taxes a lot of things that are illegal. The Chancellor was shocked when I suggested that the Board taxes immoral earnings, but that has been admitted publicly and in the Press.

So long as they were illegal, the Board of Inland Revenue did not tax many of these small lotteries. But now that they are legal, I am afraid there is a danger that many of them will be destroyed by the activities of the tax collector. As was pointed out by my hon. Friend the Member for Bootle (Mr. Mahon) it is particularly serious that taxes are being levied for several years back and there are no funds to meet the tax collector's demands. In the case of the schools referred to by my hon. Friend the Member for Bootle, all the money raised has gone into bricks and mortar. It is quite impossible for them to raise the money to meet this retrospective tax demand.

11.0 p.m.

I wish to conclude with reference to a rather broader issue which must be in the minds of all hon. Members. I do so with a great sense of delicacy, because it is a matter of which I do not want to make very much. But a considerable number of small lotteries which are now legalised by my hon. Friend's Bill are for the purpose of raising funds for denominational schools.

Every hon. Member may have a different view about denominational schools, and that is not for us to argue, but in the 1944 Education Act a certain compromise was reached about denominational schools, certain estimates were then made of the amount of money likely to be involved. In fact, because of the inflation in building costs, those estimates have been to a considerable extent falsified. Again, purely as a matter of history, the money has been raised, albeit with great difficulty, through small lotteries, football pools and efforts of that kind.

If the Chancellor by this new drive of the Inland Revenue against the proceeds of these efforts is to rob these organisations of their revenue, I for one am extremely alarmed about what may be the consequences. I do not want to overstress that, and none of us would want this to become a party political issue. I would be the last to want that. Speaking as a Non-conformist in a constituency with one of the largest Roman Catholic votes in the country, I know only too well what can be made, and what was made in 1950, of the incursion of this matter into politics.

But I appeal to the Chancellor to consult the Lord Privy Seal about this and to realise what may be involved. Although I say this with a sense of responsibility, and in no party sense, I must warn him that if this particular source of revenue is to be cut off for these religious organisations, as a result of the activities of the Department of Inland Revenue, I am extremely alarmed about the possible consequences.

I hope, therefore, that the Chancellor will get up now and say he will look at this matter again. I know he can do nothing more about the Finance Bill, because it will go to another place, where amendment is not possible. But I hope he will undertake to look at it, and, if necessary, introduce a small amending Measure to put this matter right. It is a matter that transcends party, and although it may appear small, it is one of which the consequences are incalculable. I beseech him, and I ask the Lord Privy Seal not to let us have this matter dragged into politics again.

Mr. H. Macmillan

I think it would be discourteous of me not to make some reply to the statement which has been made by the right hon. Gentleman, the Member for Huyton (Mr. H. Wilson), which goes far beyond this particular Clause. I asked the Solicitor-General to reply to it because it raises very important legal points. But I should be the first to admit—and the right hon. Gentleman was good enough to write to me about this matter—that these are much broader problems that he has now brought in and which, he would agree, could not possibly be related to this Clause. This Clause goes far beyond the question he raised, both in correspondence with me and which he has raised again tonight, because it would include purposes such as were legalised in the Bill, and go far beyond the question of building denominational schools.

I accept fully the right hon. Gentleman's statement that he does not wish to bring any party question into this, though I am as much aware and as much interested. I have spent a good deal of activity in my life, both at home and in other parts, in trying to face the problems put upon us by the education settlement for the church schools, and I know quite well the struggles we have to keep our schools in the hands of our own Church. I realise those are very heavy burdens on us, and at my own home recently we raised great sums, through considerable efforts, to keep our church school, which we regard as of vital importance to the future of our children.

I admit that these methods, like fêtes, church bazaars, small lotteries, and so on, are used to try to bring us in money. Therefore, it was with a very friendly eye that I looked at this matter when the right hon. Gentleman wrote to me; but neither my advisers nor I have been able to find a method. This Clause would not do it because it would go far beyond the circumstances with which we are concerned.

Mr. L. M. Lever

Would the Chancellor be prepared to introduce an amendment to assist the denominational schools?

Mr. Macmillan

We have here an amendment; but what I am trying to explain is that, first, we have the new Act which is just beginning to work and, by so doing away with the mutuality principle, we have a new situation in relation to the small lotteries. No responsible Government, or Chancellor, or any Law Officer, could recommend the acceptance of this amendment to the law either in its present form or in a modified form. We must watch the operation of the new Act, and we will do our best to see that this is properly and reasonably worked. Beyond that, I cannot go at present. We will see what possible help can be given

in conforming with the views of Parliament when it passed that Act, but I cannot ask the House to accept a Clause which goes far beyond it.

I promise to give further study to this subject, and will see that nothing harsh, nor that any heavy burden, is brought about by sticking to the principles of the law. What I cannot do is to ask the House to go far beyond those principles which, I remind hon. Members, successive Governments have for so long followed in the assessment of Income Tax in efforts of this kind—all of which are clearly laid down on a determined basis. I cannot advise the House to vote for a Clause which it is not possible in its conscience to do.

Question put, That the Clause be read a Second time.

The House divided: Ayes, 146: Noes, 200.

Division No. 260.] AYES [11.8 p.m.
Albu, A. H. Fraser, Thomas (Hamilton) Oliver, G. H.
Allaun, Frank (Salford, E.) Gibson, C. W. Orbach, M.
Allen, Scholefield (Crewe) Gordon Walker. Rt. Hon. P. C. Oswald, T.
Awbery, S. S. Greenwood, Anthony Padley, W. E.
Bacon, Miss Alice Grenfell, Rt. Hon. D. R. Paget, R. T.
Baird, J. Griffiths, Rt. Hon. James (Llanelly) Paling, Rt. Hon. W. (Dearne Valley)
Balfour, A. Hannan, W. Palmer, A. M. F.
Bence, C. R. (Dunbartonshire, E.) Harrison, J, (Nottingham, N.) Pannell, Charles (Leeds, W.)
Benn, Hn. Wedgwood (Bristol, S. E.) Hayman, F. H. Pargiter, G. A.
Benson, G. Herbison, Miss M. Parker, J.
Beswick, F. Hewitson, Capt. M. Parkin, B. T.
Bevan, Rt. Hon. A. (Ebbw Vale) Hobson, C. R. Pearson, A.
Blackburn, F. Holman, P. Popplewell, E.
Blenkinsop, A. Holmes, Horace Price, J. T. (Westhoughton)
Boardman, H. Howell, Denis (All Saints) Price, Philips (Gloucestershire, W.)
Bottomley, Rt. Hon. A. G. Hoy, J. H. Probert, A. R.
Bowden, H. W. (Leicester, S. W.) Hubbard, T. F. Proctor, W. T.
Boyd, T. C. Hughes, Cledwyn (Anglesey) Randall, H. E.
Braddock, Mrs. Elizabeth Hughes, Emrys (S. Ayrshire) Redhead, E. C.
Brockway, A. F. Hunter, A. E. Robinson, Kenneth (St. Pancras, N.)
Broughton, Dr. A. D. D. Hynd, J. B. (Attercliffe) Silverman, Julius (Aston)
Burke, W. A. Irvine, A. J. (Edge Hill) Silverman, Sydney (Nelson)
Burton, Miss F. E. Irving, S. (Dartford) Sorensen, R. W.
Butler, Herbert (Hackney, C.) Janner, B. Soskice, Rt. Hon. Sir Frank
Callaghan, L. J. Jay, Rt. Hon. D. P. T. Sparks, J. A.
Castle, Mrs. B. A. Jeger, George (Goole) Steele, T.
Champion, A. J. Jones, Rt. Hon. A. Creech (Wakefield) Stewart, Michael (Fulham)
Chetwynd, G. R. Jones, David (The Hartlepools) Strachey, Rt. Hon. J.
Coldrick, W. King, Dr. H. M. Summerskill, Rt. Hon. E.
Collick, P. H. (Birkenhead) Lawson, G. M. Thomas, Iorwerth (Rhondda, W.)
Corbet, Mrs. Freda Lee, Frederick (Newton) Thornton, E.
Craddock, George (Bradford, S.) Lever, Leslie (Ardwick) Timmons, J.
Crossman, R. H. S. Logan, D. G. Usborne, H. C.
Cullen, Mrs. A. Mabon, Dr. J. Dickson Warbey, W. N.
Dalton, Rt. Hon. H. MacColl, J. E. Weitzman, D.
Davies, Ernest (Enfield, E.) McInnes, J. Wells, William (Walsall, N.)
Davies, Harold (Leek) McKay, John (Wallsend) West, D. G.
Deer, G. McLeavy, Frank Wheeldon, W. E.
de Freitas, Geoffrey Macpherson, Malcolm (Stirling) White, Mrs. Eirene (E. Flint)
Delargy, H. J. Mahon, Simon Willis, Eustace (Edinburgh, E.)
Dodds, N. N. Mallalieu, J. P. W. (Huddersfd, E.) Wilson, Rt. Hon. Harold (Huyton)
Dugdale, Rt. Hn. John (W. Brmwch) Mann, Mrs. Jean Winterbottom, Richard
Dye, S. Marquand, Rt. Hon. H. A. Woodburn, Rt. Hon. A.
Ede, Rt. Hon. J. C. Mellish, R. J. Yates, V. (Ladywood)
Edwards, W. J. (Stepney) Mikardo, Ian Younger, Rt. Hon. K.
Evans, Edward (Lowestoft) Mitchison, G. R. Zilliacus, K.
Evans, Stanley (Wednesbury) Moody, A. S.
Fernyhough, E. Moss, R. TELLERS FOR THE AYES:
Fletcher, Eric Mulley, F. W. Mr. Wilkins and Mr. Simmons.
Forman, J. C. Noel-Baker, Francis (Swindon)
NOES
Agnew, Cmdr. P. G. Grimston, Sir Robert (Westbury) Moore, Sir Thomas
Aitken, W. T. Hare, Rt. Hon. J. H. Nabarro, G. D. N.
Allan, R. A. (Paddington, S.) Harris, Frederic (Croydon, N. W.) Nairn, D. L. S.
Amery, Julian (Preston, N.) Harrison, Col. J. H. (Eye) Heave, Airey
Anstruther-Gray, Major Sir William Harvey, Ian (Harrow, E.) Nicholls, Harmer
Armstrong, C. W. Harvey, John (Walthamstow, E.) Nicolson, N. (B'n'm'th, E. & Chr'ch)
Ashton, H. Heath, Rt. Hon. E. R. G. Nield, Basil (Chester)
Atkins, H. E. Hill, Rt. Hon. Charles (Luton) Oakshott, H. D.
Baldock, Lt.-Cmdr. J. M. Hill, Mrs. E. (Wythenshawe) Ormsby-Gore, Hon. W. D.
Balniel, Lord Hill, John (S. Norfolk) Orr, Capt. L. P. S.
Barber, Anthony Hinchingbrooke, Viscount Orr-Ewing, Charles Ian (Hendon, N.)
Barlow, Sir John Hirst, Geoffrey Page, R. G.
Barter, John Holland-Martin, C. J. Peyton, J. W. W.
Bennett, F. M. (Torquay) Hornby, R. P. Pitman, I. J.
Bevins, J. R. (Toxteth) Hornsby-Smith, Miss M. P. Pitt, Miss E. M.
Biggs-Davison, J. A. Howard, Hon. Greville (St. Ives) Pott, H. P.
Birch, Rt. Hon. Nigel Hudson, Sir Austin (Lewisham, N.) Powell, J. Enoch
Bishop, F. P. Hughes Hallett, Vice-Admiral J. Prior-Palmer, Brig. O. L.
Body, R. F. Hughes-Young, M. H. C. Profumo, J. D.
Boothby, Sir Robert Hurd, A. R. Raikes, Sir Victor
Bossom, Sir Alfred Hyde, Montgomery Rawlinson, Peter
Boyd-Carpenter, Rt. Hon. J. A. Iremonger, T. L. Redmayne, M.
Boyle, Sir Edward Irvine, Bryant Goodman (Rye) Rees-Davies, W. R.
Braine, B. R. Jenkins, Robert (Dulwich) Remnant, Hon. P
Bromley-Davenport, Lt.-Col. W. H. Jennings, J. C. (Burton) Renton, D. L. M.
Brooke, Rt. Hon. Henry Johnson, Dr. Donald (Carlisle) Ridsdale, J. E.
Bryan, P. Johnson, Eric (Blackley) Rippon, A. G. F.
Bullus, Wing Commander E. E. Joseph, Sir Keith Rodgers, John (Sevenoaks)
Burden, F. F. A. Joynson-Hicks, Hon. Sir Lancelot Roper, Sir Harold
Butcher, Sir Herbert Kaberry, D. Ropner, Col. Sir Leonard
Channon, H. Keegan, D. Schofield, Lt.-Col. W.
Chichester-Clark, R. Kerr, H. W. Scott-Miller, Cmdr. R.
Clarke, Brig. Terence (Portsmth, W.) Kirk, P. M. Sharpies, R. C.
Cole, Norman Lagden, G. W. Shepherd, William
Cordeaux, Lt-Col. J. K. Lambert, Hon. G. Simon, J. E. S. (Middlesbrough, W.)
Corfield, Capt. F. V. Lancaster, Col. C. G. Spearman, Sir Alexander
Craddock, Beresford (Spelthorne) Langford-Holt, J. A. Stevens, Geoffrey
Crouch, R. F. Leather, E. H. C. Steward, Harold (Stockport, S.)
Cunningham, Knox Leavey, J. A. Steward, Sir William (Woolwich, W.)
Currie, G. B. H. Leburn, W. G. Stoddart-Scott, Col. M.
Dance, J. C. G. Legge-Bourke, Maj. E. A. H. Studholme, Sir Henry
Davidson, Viscountess Legh, Hon. Peter (Petersfield) Taylor, William (Bradford, N.)
D'Avigdor-Goldsmid, Sir Henry Lindsay, Hon. James (Devon, N.) Teeling, W.
Deedes, W. F. Lindsay, Martin (Solihull) Thomas, Leslie (Canterbury)
Donaldson, Cmdr. C. E. McA. Linstead, Sir H. N. Thomas, P. J. M. (Conway)
Doughty, C. J. A. Longden, Gilbert Thompson, Kenneth (Walton)
Drayson, G. B. Lucas, Sir Jocelyn (Portsmouth, S.) Thompson, Lt.-Cdr. R. (Croydon, S.)
du Cann, E. D. L. Lucas-Tooth, Sir Hugh Tiley, A. (Bradford, W.)
Duthie, W. S. Mackeson, Brig. Sir Harry Tilney, John (Wavertree)
Eden, J. B. (Bournemouth, West) Mackie, J. H. (Galloway) Turner, H. F. L.
Elliot, Rt. Hon. W, E. McLaughlin, Mrs. P. Turton, Rt. Hon. R. H.
Emmet, Hon. Mrs. Evelyn Maclay, Rt. Hon. John Vane, W. M. F.
Errington, Sir Eric McLean, Neil (Inverness) Vickers, Miss J. H.
Fell, A. MacLeod, John (Ross & Cromarty) Vosper, D. F.
Fisher, Nigel Macmillan, Rt. Hn. Harold (Bromley) Wakefield, Edward (Derbyshire, W.)
Fletcher-Cooke, C. Maddan, Martin Walker-Smith, D. C.
Foster, John Maitland, Cdr. J. F. W. (Horncastle) Wall, Major Patrick
Galbraith, Hon. T. G. D. Maitland, Hon. Patrick (Lanark) Ward, Hon. George (Worcester)
George, J. C. (Polish) Manningham-Buller, Rt. Hn. Sir R. Ward, Dame Irene (Tynemouth)
Gibson-Watt, D. Markham, Major Sir Frank Waterhouse, Capt. Rt. Hon. C.
Glover, D. Marlowe, A. A. H. Whitelaw, W. S. I. (Penrith & Border)
Gough, C. F. H. Mathew, R. Williams, Paul (Sunderland, S.)
Gower, H. R. Maude, Angus Williams, R. Dudley (Exeter)
Graham, Sir Fergus Mawby, R. L. Wilson, Geoffrey (Truro)
Grant, W. (Woodside) Maydon, Lt.-Comdr. S. L. C. Woollam, John Victor
Grant-Ferris, Wg Cdr. R. (Nantwich) Milligan, Rt. Hon. W. R.
Green, A. Molson, Rt. Hon. Hugh TELLERS FOR THE NOES:
Mr. Wills and Mr. Godber.

Question put and agreed to.

11.15 p.m.

Mr. H. Macmillan

I beg to move, That further consideration of the Bill, as amended, be adjourned.

We have made good progress today. There is every indication that we have got well ahead with the task we set ourselves. I would thank the House for the co-operation it has given. I think we can adjourn now and hope to finish our labours at a reasonable hour tomorrow.

Bill, as amended (in Committee and on re-committal), to be further considered Tomorrow.