Commons Sitting of 11 July 1956

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  MILLPORT PIERS (AMENDMENT) ORDER CONFIRMATION BILL
  Considered; to be read the Third time Tomorrow.
ORAL ANSWERS TO QUESTIONS
  TELEPHONE SERVICE

    Kiosks, Manchester (Gorton)
    Mr. Zilliacusasked the Postmaster-General whether he is aware that there are only three telephone booths in the Abbey district of Gorton in Manchester, that one of these, being situated in Abbey Hey Lane Post Office, is not available after 6 p.m. or on Sundays or Wednesday afternoons, that this is a working class district with very few private telephones, and that the resulting inconvenience is considerable and widely felt; and whether he will take steps as a matter of urgency to have at least two more outside telephone booths installed in the district.
    The Postmaster-General (Dr. Charles Hill): I am arranging to replace the kiosk inside the Abbey Hey Post Office by one outside so as to give a 24-hour service, and also to provide a new kiosk. This will, I think, meet existing needs, but the position will be closely watched.
    Mr. Zilliacus: I thank the right hon. Gentleman for what he has done, but I hope he will think of putting an extra one in as well.

    Stoke-on-Trent
    Dr. Strossasked the Postmaster-General the number of subscribers to the telephone service in Stoke-on-Trent; how many share a line; and how many are on the list awaiting a new installation.
    Dr. Hill: The numbers are: 11,422, 2,426 and 769, respectively.
    Dr. Stross: Could the right hon. Gentleman tell me how these figures compare with, say, a year ago, and secondly, if many people have given up their telephones as a result of expecting to pay more for them in future?
    Dr. Hill: If the hon. Gentleman will put down those questions, I will get him the figures.

  POST OFFICE

    Factories
    Mr. Hobsonasked the Postmaster-General if he is satisfied that the Post Office factories are working to capacity; and if he will make a statement.
    Dr. Hill: The primary function of the Factories Department is the repair of telecommunications and other Post Office equipment, and the maximum use is being made of its resources for this purpose.
    Mr. Hobson: In view of the right hon. Gentleman's reply, can he state why it has been found necessary to dispense with £20,000 worth of plant?
    Dr. Hill: Because it is thought right, particularly in the light of the comments of the Select Committee in 1950, to return to the pre-war position in which Post Office factories devote their attention to repair and not to manufacture, apart, of course, from prototypes.
    Mr. Hobsonasked the Postmaster-General the number of men made redundant in the Post Office factories during the last 12 months, and why.
    Dr. Hill: Because of a decrease in toolsetting work, six dilutee toolsetters were declared redundant on that grade. There have been no discharges of staff, and the six men are now employed as telephone mechanics.
    Mr. Hobson: Does not the right hon. Gentleman think that there is certain work which these factories could do in order to retain the services of these people, particularly in view of the fact that there is very often a time-lag in the delivery of certain telecommunications parts from the manufacturers, in view of the demands of the export trade? Will he look at this matter again?
    Dr. Hill: I am certain that the policy is right, particularly as we are engaged on a three-year programme of telephone expansion. There have been no discharges, and none is contemplated.

    H.M. Telegraph Ships
    Mr. Hobsonasked the Postmaster-General the number and names of Her Majesty's telegraph ships at present in commission.
    Dr. Hill: Four. "Monarch", "Alert", and "Ariel" are in commission, and the fourth, "Iris", is at present refitting.
    Mr. Hobson: In view of the age of H.M.T.S. "Alert", and in view of the fact that she is a reparation vessel, does not the right hon. Gentleman think it is time to replace this vessel at the earliest opportunity?
    Dr. Hill: Yes, I agree with the hon. Gentleman. We have got to the stage of drawings and specifications, and it is hoped soon to begin the replacement.

    Advisory Committees
    Mr. J. Johnsonasked the Postmaster-General how many Post Office advisory committees exist in England and Wales, and which of these are in Warwickshire.
    Dr. Hill: Fifty-seven, of which two, those in Birmingham and Coventry, are in Warwickshire. Another is to be set up in Rugby.
    Mr. Johnson: Will the Minister admit that, even in good Departments like his, there can be misunderstanding, particularly where telephones are concerned? Hence, can I appeal to a good democrat and good publicist like the right hon. Gentleman to press on with these committees, particularly where some mysterious arbiter in a distant county town appears to be the sole arbiter as to who gets or does not get a telephone in the local borough?
    Dr. Hill: I did announce on 21st June that I was proposing to invite and to encourage the establishment of Post Office advisory committees throughout the country, and I am glad to say that Rugby is one of the first areas to act following that announcement.
    Mr. Ness Edwards: In constituting the new Post Office advisory committees—a step which is very much welcomed and approved on this side—would the right hon. Gentleman consider appointing people from the local authorities, who will be known to the people and who can disseminate the information throughout the local authority organisation?
    Dr. Hill: In the lettter on this subject which I have sent to head postmasters, I have deliberately and emphatically mentioned the desirability of seeking representation from local authorities as representing the general body of opinion in the area.

    Sub-Offices
    Mr. F. M. Bennettasked the Postmaster-General what agreements are in force between his Department and the Sub-Postmasters Federation regarding the maximum number of sub-post offices to be authorised in a locality.
    Dr. Hill: None, Sir.
    Mr. Bennett: Even if no formal agreements exist, can my right hon. Friend confirm that when he comes to a decision as to whether or not an additional local sub-post office is necessary, the only considerations that guide him are local consumer requirements? Or does he take into account restrictionist representations by neighbouring sub-post offices which do not want further competition?
    Dr. Hill: I have given the answer "None", and I mean it. My primary concern is with the public facilities and the public convenience in the area, and I want to affirm that this is the prime consideration which affects me.
    Mr. D. Jones: Is the right hon. Gentleman aware that his arbitrary decision to space sub-post offices—particularly in new housing areas—at not less than a mile apart is causing a good deal of anxiety and dissatisfaction in very many parts of the country, particularly in my own constituency, where about 400 or 500 old-age pensioners have to cross a very busy main road in order to get to the sub-office?
    Dr. Hill: I would assure the hon. Gentleman that there is no form of arbitrary rule for all areas relating to a distance of one mile. As many hon.

    375
    Members know, I receive, and sympathetically consider, proposals which mean distances between offices of less than a mile. I would say to him that I will consider sympathetically any set of circumstances that he brings to my notice. So far as a general rule is concerned, it has been the practice in the past to consider spacing at more frequent intervals than one mile apart to be impossible, but where there are aggregations of population or other special circumstances, no such rule applies and each case will be considered on its merits.

  WIRELESS AND TELEVISION

    Interference
    Mr. Leaveyasked the Postmaster-General what steps he will take to protect radio reception from interference caused by television reception.
    Dr. Hill: Where a T.V. set causes interference with sound receivers which are themselves in proper working order, the Post Office offers the owner of the T.V. set all possible advice to help him cure the trouble. The question of designing T.V. sets so as to avoid such interference is primarily a matter for the radio industry. They are alive to the problem and the Post Office is co-operating with them to the full.
    Mr. Leavey: While noting what my right hon. Friend has said, may I ask him whether he does not feel that something further could be done to bring home to the owners of television sets their specific obligations not to annoy their neighbours who have radio sets—obligations which they accept with their licences?
    Dr. Hill: My hon. Friend will appreciate that, under the Act of 1949, wireless apparatus is specifically excluded from my powers, but I assure him that we are receiving very real co-operation in this matter from the manufacturers and almost invariably from the owners of television sets.

    Ambulance Radio Services (Licence Fees)
    Mr. Haymanasked the Postmaster-General when he expects to reach a decision on the question of the licence fee for ambulance radio services.
    Dr. Hill: Licence fees for mobile radio services are based on the costs of Post Office administration. The fees are higher for ambulances than for police and fire radio services, as the costs of the latter are largely borne by the Home Office. I regret, therefore, that I cannot remove this apparent anomaly by reducing the licence fees for ambulances to the level of the other two services. I am writing to the hon. Member.
    Mr. Hayman: Will the right hon. Gentleman bear in mind that it seems very odd to the layman that the police and fire services, which protect property, can get a licence for £2 a vehicle, while the ambulance service, which exists to save life, has to pay a fee of £3?
    Dr. Hill: I am aware of the anomaly, and I agree with the hon. Member that it may well look odd. From the Post Office point of view, we should, I think, as a general principle relate the charges to the costs incurred by us, and the hon. Member will realise that the costs in respect of the latter group are very much more than in respect of the former group.
    Mr. Hobson: When the right hon. Gentleman is considering what fee shall be charged to these services, will he bear in mind that many of them have had to change their frequencies at their own expense as a result of the coming of I.T.A.?

    Advertisements (Cigarettes and Tobacco)
    Mr. Gordon Walkerasked the Postmaster-General, in view of the decision that there is an incontrovertible statistical association between cigarette smoking and the incidence of lung cancer, whether he will make regulations under Section 4 (4) of the Television Act, 1954, prescribing that there shall be no tobacco advertisements within a quarter of an hour before and after children's programmes.
    Dr. Hill: No, Sir.
    Mr. Gordon Walker: In view of what the Minister of Health has said about the connection between smoking and cancer, does not the right hon. Gentleman feel that it really is indefensible that there should be incitement to smoking in close conjunction with children's programmes?
    Dr. Hill: The programme companies have decided not to include advertisements for tobacco in these programmes. That seems to me to be reasonable. To go beyond that, bearing in mind the smoking advertisements in newspapers and on hoardings, would seem to me to be grandmotherly and petty.
    Mr. Ness Edwards: Would it not be a contribution to better public relations and to the rather improving standard of advertising practice on commercial television if the programme contractors undertook not to exhibit their advertisements for cigarettes and tobacco in association with the children's programmes? Would it not be a contribution to better public and political relations if they were to give such an undertaking?
    Dr. Hill: The programme companies have decided of their own free will not to include such advertisements in the programmes. What the right hon. Gentleman was suggesting to me was that I should bring an affirmative order before this House to modify the schedule to deal with this other quarter of an hour.
    Mr. Beresford Craddock: Has my right hon. Friend taken note of a discussion which took place yesterday at the British Medical Association and which seems to be a direct contradiction to the implications in this Question?
    Dr. Hill: It is not strictly my field, but let nothing I say appear to controvert the acknowledged statistical relationship between heavy cigarette smoking and cancer of the lung.

    Holme Moss Transmitter (Shared Facilities)
    Mr. G. Darlingasked the Postmaster-General what technical reasons prevented the Holme Moss transmitter from being used for both the British Broadcasting Corporation and Independent Television Authority television services.
    Dr. Hill: The B.B.C. mast at Holme Moss was not designed to carry the additional load of a separate I.T.A. aerial of the required size and its transmission link with apparatus at ground level. The B.B.C. offered to share their aerial with the I.T.A. but this would not have given the Authority the radiated power it required.
    Mr. Darling: While appreciating that there are technical difficulties, may I ask the right hon. Gentleman whether he has any persuasive or other powers to make sure that duplication of transmitters will not occur?
    Dr. Hill: As the hon. Gentleman points out, in this case, with the Holme Moss B.B.C. aerial already there, there are serious technical difficulties, but, on the general proposition, as I informed my hon. Friend the Member for Westmorland (Mr. Vane) a little time ago, I am doing my utmost to see that there are not two aerials where one will do.

    Reception, Sheffield
    Mr. G. Darlingasked the Postmaster-General whether he will examine the cost and all the technical considerations involved in erecting a transmitter in the City of Sheffield for local diffusion of all present and future television services operating in the Yorkshire area.
    Dr. Hill: No, Sir. The question of deciding the best means of overcoming reception difficulties at Sheffield, which the hon. Member no doubt has in mind, is a matter for the broadcasting authorities. At present, they are fully engaged on their main development programmes.
    Mr. Darling: Is the right hon. Gentleman aware that there are about 150,000 television licence-holders in this area and that many of them cannot get proper reception? The right hon. Gentleman is, therefore, taking licence money, so to speak, under false pretences. Can this matter be examined? The information would be useful not only to deal with this situation in Sheffield but also for television development on this local basis in other areas.
    Dr. Hill: I will convey what the hon. Gentleman says to the broadcasting authorities, but, as he knows better than most, in the Sheffield area to which he refers there are some hollows that make transmission exceedingly difficult. It is geography that has to be faced in this case.

    Cumberland
    Mr. Whitelawasked the Postmaster-General whether the technical arrangements connected with the installation of the new high frequency wireless and television station in Cumberland have

    379
    now been completed; when it is proposed to start work on it; and on what date it is hoped to commence transmission from this station.
    Dr. Hill: Preparatory work has already started on the new B.B.C. television station at Sandale, near Carlisle. The permanent transmitters will be ready for service towards the end of 1957, though the B.B.C. hopes to provide a temporary television service before the end of this year. I hope that a V.H.F. sound station at Carlisle will be included in the next stage of the V.H.F. sound programme, which I am now discussing with the B.B.C.
    Mr. Whitelaw: While appreciating the efforts that my right hon. Friend is making in this part of the world, may I ask if he would impart a real sense of urgency into all those members of his Department who are concerned in this work, in order that the long-suffering viewers and listeners in a very neglected area should be given the decent reception to which I know he believes they are really entitled?
    Dr. Hill: My hon. Friend will realise that this is primarily a matter for the B.B.C., and I would say to him that the answer I have given today shows a determined and relatively speedy effort to deal with this local problem.

    Independent Television Authority (Grant Application)
    Lieut.-Colonel Liptonasked the Postmaster-General what requests for financial aid he has received from the Independent Television Authority; and what action he is taking.
    Dr. Hill: I have received a request from the Authority for a grant under Section 11 of the Television Act. The request is being considered.
    Lieut.-Colonel Lipton: Was it not the idea of the Government and the will of Parliament that the I.T.A. should have up to £750,000 a year so as to be independent of commercial interests? Is he not aware that a refusal or unwillingness to give effect to this Section of the Act must be regarded, for the time being anyhow, as a breach of faith, and that it puts the I.T.A. in the hands of advertising interests?
    Dr. Hill: I am aware that Section 11 of the Act empowers me, with the agreement of the Treasury, to make a grant up to £750,000 a year. An application has been received and is now being considered.
    Mr. Ness Edwards: Could the right hon. Gentleman tell us for what purpose the grant has been sought, how much, and whether it is to be an annual grant or just one grant-in-aid?
    Dr. Hill: Section 11 relates to an annual grant, so that it may be taken that the application is in respect of a sum of money for the current year. The application was for the full sum of money for the current year. The application is in rather general terms, but the right hon. Gentleman can take it that behind it is a desire to affect the balance of the I.T.A. programmes—to improve, in the view of the I.T.A., the balance of such programmes.
    Mr. Ness Edwards: Does this reflect the opinion of the I.T.A. that the programme contractors are not providing balanced programmes and are, therefore, contradicting the terms of the Act?
    Dr. Hill: There is no question of a contradiction of the terms of the Act. The application has come from the Independent Television Authority, and the right hon. Gentleman can infer what he likes from that.
    Mr. H. Morrison: Can the right hon. Gentleman say whether this indicates that there is a deficit commercially on I.T.A working, and that that is the reason for the request for this money, or is it wanted merely for fun or for pocket money?
    Dr. Hill: The application which has been received in no way relates to or refers to the general financial position of the programme companies. The case is not put upon any such basis.

    Southampton (I.T.A. Programmes)
    Mr. J. Howardasked the Postmaster-General when he anticipates that the Southampton area will be able to receive the Independent Television Authority programme.
    Dr. Hill: The Independent Television Authority informs me that it is unlikely to be able to serve this area before 1958.

  ROYAL AIR FORCE

    N.A.A.F.I. Board (R.A.F. Member)
    Mr. H. Hyndasked the Secretary of State for Air what is the rank of the air member of the Board of Management of Navy, Army and Air Force Institutes; and how much time he spends on the business of that organisation.
    The Secretary of State for Air (Mr. Nigel Birch): A group captain is employed full time.
    Mr. Hynd: Is he employed for any length of time—that is to say, long enough for him to get acquainted with the work and to be really useful? Or is he just a group captain occupying the position for a short time in the middle of his other duties?
    Mr. Birch: The present incumbent, understand, has been in the post for about two years.

    Petrol Tankers (Cleaning)
    Mr. Ledgerasked the Secretary of State for Air whether he is satisfied that there is no negligence at the Horsham St. Faith Royal Air Force Station in the giving of instructions on safety precautions to be observed when carrying out the cleaning of petrol tankers; and whether he will make a statement in connection with the death of Junior Technician Lewis.
    Mr. Birch: I am satisfied that appropriate safety precautions are now in force. The court of inquiry held into Junior Technician Lewis' death established that Lewis and other airmen had been using canister type respirators when inspecting petrol tankers at this station, instead of the remote breathing apparatus prescribed by regulations. On the day of his death Lewis had been given instructions merely to remove the manhole covers, but he entered the tanker before it had been drained and vented, and without a "safety man" standing by with a life-line. In these circumstances, there would have been a serious risk even if he had been wearing a remote breathing apparatus.
    Mr. Ledger: I thank the Minister for that Answer, but is he aware that since 1953 a number of airmen have done a similar job unassisted? This appears to
    382
    have been a practice at this air station, and will he take steps now to see whether or not the N.C.O.s in charge during that period are carrying on their jobs with the same negligence as they showed then? I feel that only then will the parents of young men in the Air Force be assured that the right hon. Gentleman is taking all the precautions necessary
    Mr. Birch: Yes, certainly. Steps have been taken to tighten up the regulations everywhere.

    Senior Officers
    Mr. H. Hyndasked the Secretary of State for Air how many officers of the rank of air vice-marshal and upwards are now serving in the Royal Air Force; and by how many the number will be reduced as a consequence of economies in the Royal Air Force.
    Mr. Birch: Ninety-eight. I cannot yet say what the future establishment will be.
    Mr. Hynd: Is the right hon. Gentleman taking care to see that the Air Force is not top-heavy with these high ranks and that the numbers are in proportion to those of other ranks in the Air Force?
    Mr. Birch: Yes, certainly.
    Mr. de Freitas: Will the Minister insist that his senior officers in the Air Ministry make themselves responsible for cutting down their staffs and do not rely on bringing in the Director of Works Study, who appears to be inclined to act as a very expensive scapegoat for the senior officers not doing a job which should be theirs?
    Mr. Birch: I will bear the hon. Gentleman's point in mind.

    Leuchars Airfield (Use)
    Sir W. Anstruther-Grayasked the Secretary of State for Air how often Leuchars Aerodrome has been made available for civil aircraft during the last 12 months; and whether he will state the conditions under which civil aircraft are allowed to use this aerodrome.
    Mr. Birch: The airfield is normally available to civil aircraft in emergency for diversions. No such diversions have been required in the last twelve months, but two civil charter flights were specially authorised to use the airfield. It is now temporarily out of flying use.
    Sir W. Anstruther-Gray: Can I take it from that reply that my right hon. Friend is prepared to consider sympathetically any requests which he may receive either from B.E.A. or from civil companies?
    Mr. Birch: Yes, certainly. No firm request has, I understand, been made.

    Habbaniya (Married Quarters)
    Mr. W. R. Williamsasked the Secretary of State for Air how many married men of the Royal Air Force stationed at Habbaniya have still to be provided with married quarters.
    Mr. Birch: There are 63 officers and airmen on the waiting list at present.
    Mr. Williams: How long does the Minister think it will be before they are allocated married quarters? There is a good deal of dissatisfaction in the area. If we are to assist the Iraqi Government, we should impose upon them the obligation of looking after our married people in the same way as we try to look after them ourselves.
    Mr. Birch: As I pointed out to the hon. Gentleman, I think last week, the position is a good deal better since the agreement with Iraq, but there is a shortage of married quarters in all the stations in the Middle East.

    Air Trooping (York Aircraft)
    Mr. de Freitasasked the Secretary of State for Air what changes have been made in his arrangements for the air trooping of the families of Service men as a result of the findings of the inquiry into the crash of the Scottish Aviation's York aircraft in Malta last February.
    Mr. Birch: None, Sir.
    Mr. de Freitas: Does not the Minister intend to make permanent the temporary ban imposed on the use of these old York aircraft for air trooping? Did not this inquiry disclose that the aircraft was not only overloaded but, quite clearly—as many people had suspected for a long time—was incapable of performing effectively if one engine failed on take-off?
    Mr. Birch: I cannot agree with the hon. Gentleman's reading of the report. I think the report shows that the primary cause of the accident was a pilot error. As the hon. Gentleman knows, another
    384
    court of inquiry is considering another accident, and I will make my decision when I have the report of that court of inquiry.
    Mr. de Freitas: But, until then, does the temporary ban still continue?
    Mr. Birch: Yes, certainly.

  ROADS

    West Riding
    Mr. A. Robertsasked the Minister of Transport and Civil Aviation what steps he proposes to take to improve road communications for which he is responsible in the West Riding of Yorkshire.
    The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Hugh Molson): The reconstruction of Doncaster Mill Bridge has been authorised, and our more immediate plans for roads for which my right hon. Friend is the highway authority include the construction of by-passes at Wetherby, Allerton Station (Hopperton) and Doncaster, as well as a number of smaller schemes.
    Mr. Roberts: Is the Parliamentary Secretary aware that this is not the type of facilities that we would like in the West Riding? Is he further aware that the connection with the Great North Road is, indeed, a very bad one, and that the whole of the West Riding, with its prolific industrial area, has winding and twisting roads right up to the Great North Road? Is he prepared to give some consideration to bringing about some improvement in the industrial areas of the West Riding?
    Mr. Molson: I have already indicated a number of large schemes which we have in mind; we also have a number of smaller schemes. Really, that part of the country is getting a very fair proportion of the money that is available.
    Colonel Stoddart-Scott: Would my right hon. Friend push along with the east-west trunk road so that the industrial West Riding may have better access to the Great North Road?
    Mr. Molson: We are trying to take all these roads in the order best suited to facilitate the movement of traffic.
    Mr. T. Williams: Can the Minister give any idea how long it will be before these various bridges go up, because we want to prevent the diversion of heavy traffic as much as possible?
    Mr. Molson: As regards this particular bridge, we have received the tenders and they are under consideration at the present time.
    Mr. A. Robertsasked the Minister of Transport and Civil Aviation what consultation he has had with the West Riding County Council for the provision of a motor road to link the West Riding with the Great North Road at a convenient point.
    The Minister of Transport and Civil Aviation (Mr. Harold Watkinson): Some preliminary survey work has been done on the Sheffield—Leeds motorway and on the Lancashire—Yorkshire motorway. I have been in close touch with the county council throughout, and both roads are included in the county development plan.

    Doncaster By-pass
    Mr. T. Williamsasked the Minister of Transport and Civil Aviation what limitation there has been on the capital expenditure allowed for preliminary work on the proposed by-pass road at Doncaster; and to what extent this has delayed the start of the physical work.
    Mr. Watkinson: None, Sir.
    Mr. Williams: Will the right hon. Gentleman say why, if there has been no limitation in finance for the preliminary work, and it now being 18 months since his predecessor made a promise that this by-pass was a very necessary improvement, nothing has happened up to now?
    Mr. Watkinson: Perhaps the right hon. Gentleman will be kind enough to await the answer I am making later, when I will give a fuller statement on that topic.
    Mr. Wilfred Palingasked the Minister of Transport and Civil Aviation to give an assurance that it remains the policy of his Department to carry on the work on the Doncaster by-pass road in accordance with the undertaking given by his predecessor to a delegation from Yorkshire; and if the original time-table still holds good.
    Mr. Watkinson: Yes, Sir.
    Mr. G. Jegerasked the Minister of Transport and Civil Aviation the estimated expenditure for the year 1956–57 on the Doncaster by-bass road.
    Mr. A. Robertsasked the Minister of Transport and Civil Aviation what the preliminary expenses are on the Doncaster by-bass road to date; what contracts have been entered into for future work; and what is their value.
    Mr. Wilfred Palingasked the Minister of Transport and Civil Aviation how many persons are engaged on the work of the Doncaster by-bass road.
    Miss Baconasked the Minister of Transport and Civil Aviation what progress has been made with the preliminary stages of the proposed Doncaster by-bass road.
    Mr. Sylvesterasked the Minister of Transport and Civil Aviation if he is aware of the increasing congestion of road traffic through the county borough of Doncaster; and what steps are being taken to expedite the proposed by-bass road.
    Mr. Winterbottomasked the Minister of Transport and Civil Aviation when a start will be made on the physical work of the Doncaster by-bass road.
    Mr. Watkinson: I know the great urgency of this scheme. The preliminary survey is now done, and I am publishing tomorrow the draft scheme for fixing the line of the by-bass. I must then, as the Statute provides, allow some months for the lodging and consideration of objections. As soon as the line is fixed, the process of land acquisition can start, and at the same time the detailed engineering plans be worked out. The time taken to acquire the land depends largely on the number of objections.
    All this preparatory work on this major by-bass, with its 15 miles of dual carriageways costing some £5 million, is being pressed forward as fast as possible. No construction work can start until it is finished and the contracts let. The only expenditure in 1956–57 can therefore be on preparatory work. £4,000 has already been spent on this.
    Mr. Jeger: Will the Minister place a copy of the plans in the Library, so that

    387
    those of us from Yorkshire who are interested may see them, together with the schedule of the time-table, with the approximate cost of each stage of the work?
    Mr. Watkinson: I will certainly put any information I can in the Library showing what is being done on this most important work.
    Mr. T. Williams: Will the Minister say why it has taken so long to prepare the plans, when 18 months ago we were informed by the appropriate surveyor that all the preliminary work could be completed within 12 months?
    Mr. Watkinson: I think the local authorities and hon. and right hon. Members interested will remember that this Doncaster by-bass was included in the large number of schemes announced in the House by my predecessor. He told all concerned, I think, that it was hoped to authorise this scheme in the series of schemes for the period 1956–60. The scheme is not behind-hand. As I think the right hon. Gentleman knows, the by-bass has had to be completely re-drawn because all the pre-war plans have now been made abortive by building development. I do not think an excessive time has been taken in this re-drawing.
    Mr. Williams: Will the right hon. Gentleman say whether he is wholly convinced that the original time-table will be carried through?
    Mr. Watkinson: I have not said, anything to indicate that it will not be.
    Mr. Paling: Will the right hon. Gentleman press on with this scheme as fast as possible? Is he aware that the situation on the North Road, north of Doncaster, is rapidly becoming intolerable, and that there are queues every Saturday, that last Saturday in particular there was a queue nearly four miles long, and at Whitsuntide there was a queue nearly five miles long which lasted from lunchtime until early evening? Will the Minister bear in mind that this is becoming worse week by week, and will he attend to the matter as quickly as possible?
    Mr. Watkinson: That is exactly what I said in my Answer.

    Harley Street (Car Parking)
    Mr. E. Johnsonasked the Minister of Transport and Civil Aviation if he is aware that cars are being parked in a single line on one side of Harley Street, London, W.1, and in a double line on the other side; and if he will authorise the diagonal parking of cars on one side which would accommodate more cars and take up less of the roadway.
    Mr. Molson: I am aware of the excessive parking in Harley Street, but my hon. Friend's suggestion would not improve matters. I think it will be as well to await the outcome of the special survey of parking facilities in inner London, now in progress.
    Mr. Johnson: Is my hon. Friend aware that his view is not shared by the residents in that street, the view being that it would undoubtedly improve matters, and is he aware that there is very great delay because, whenever a car has to stop there, the whole of the street is blocked as a result?
    Mr. Molson: In considering parking questions such as this, there are three considerations which have to be taken into account: the number of cars which can be parked, the reduction of the width of the carriageway which is brought about by the parking, and the interference with traffic as cars park and move out. My hon. Friend's suggestion would result in a reduction from 10 to 8¾ in the number of cars which could be parked in 100 feet, it would take 19½ feet off the carriage way instead of 15 feet, and it would be more obstructive to passing traffic.
    Mr. Speaker: In other words, it is not a very good idea.

    Manchester—London Motorway
    Mr. E. Johnsonasked the Minister of Transport and Civil Aviation what are his proposals for the construction of a motorway between Manchester and London.
    Mr. Watkinson: The construction of the first section of the London—Yorkshire motorway, with a spur to Dunchurch, for Birmingham, will be followed at a later date by a further motorway between the north of Birmingham and the Preston by-bass, which will pass quite close to Manchester. In addition, A.45 between Dunchurch and Birmingham will be brought up to dual carriageway standard throughout.
    Mr. Johnson: Is my right hon. Friend aware that I heard a little of his answer? Is he further aware that, on average, it now takes at least one hour longer to drive from Manchester to London than before the war?
    Mr. J. Harrison: In dealing with this traffic from Manchester to London, would not the Minister agree that the provision of roads leading to the new bridge across the Trent at Nottingham would really give substantial help?
    Mr. Watkinson: I could build all sorts of roads everywhere, all of which would make a contribution to relieving traffic problems, but what I have to do is to get the right kind of priorities which will help the traffic most quickly and get it flowing faster than it is today.

    Improvement Schemes
    Mr. E. Johnsonasked the Minister of Transport and Civil Aviation what work will be carried out this year to widen and straighten roads A5 between Atherstone and Gailey, A51 between Lichfield and Stone, A34 between Stone and Manchester, A41 between Westonunder-Lizard and Whitchurch and A49 between Whitchurch and Tarporley, respectively.
    Mr. Watkinson: On these stretches of road, except A.49, some 22 schemes costing sonie £1,145,000 are in progress or are due to start this year. Two further schemes on A.34 costing £822,000 will probably he authorised this year, but are unlikely to start until next. I will circulate details in the OFFICIAL REPORT.
    Mr. Johnson: Is my right hon. Friend aware that, although his statement will be received with some satisfaction by users of those roads, they are still really nothing but winding country lanes and quite unfit for modern traffic conditions?
    Mr. Watkinson: I hope my hon. Friend did hear the answer to that Question. If it prompts him to read the list of schemes which I am circulating in the OFFICIAL REPORT, a very large number of schemes, costing in total, as I have said, something like £2 million, I think he will not be dissatisfied that we are making some progress.
    Following is the list of schemes in progress or expected to start in the financial year 1956–57:
    390

    (1) A.5 between Atherstone and Galley. Trunk Road

    £

    Improvement at Brown's shop, Wilnecote. (Est. Cost)

    820

    Bus draw-in at Ninefoot, Wilnecote. (Est. Cost)

    230

    Widening of Wilnecote Station Bridge. (Est. Cost)

    3,600

    Widening from Weeford Cross Roads (A.446) to A.38. (Est. Cost)

    119,635

    Improvement at Hannay Hay Cross Roads. (Est. Cost)

    9,355

    Roundabout at Muckley Corner (A.446). (Est. Cost)

    14,520

    Roundabout at junction of A.5 and A.452, Brownhills. (Est. Cost)

    3,566

    £151,726

    There are no major improvement schemes in progress on this length of road, but the above schemes are expected to be started this year.

    (2) A.34 between Stone and Talke. Trunk Road

    £

    Improvement north of Filleybrooks River Bridge. In progress. (Est. Cost)

    36,356

    Provision of dual carriageways Crown Inn, Aston to Filleybrooks River Bridge. Expected to start this year. (Est. Cost)

    295,000

    £331,356

    (3) A.41 between Weston-under-Lizard and Whitchurch. Trunk Road

    £

    Standford Bridge Diversion. In progress. (Est. Cost)

    39,546

    Widening north of Standford Bridge. Expected to start this year. (Est. Cost)

    16,000

    £55,546

    (4) A.49 between Whitchurch and Tarporley. Trunk Road

    No schemes in progress, and no schemes expected to start this year.

    (5) A.51 between Lichfield and Stone. Classified Road

    £

    Longdon by-bass. In progress. (Est. Cost)

    58,980

    Widening between Milestone "Lichfield 5" and north end of Longdon by-bass. In progress. (Est. Cost)

    38,834

    Rugeley by-bass. In progress. (Est. Cost)

    92,489

    Diversion at Carr House Railway Bridge. In progress. (Est. Cost)

    69,971

    Improvement at Little Stoke. In progress. (Est. Cost)

    2,239

    Stone by-bass. May be started this year. (Est. Cost)

    165,000

    £427,513

    (6) A.34 between Talke and Manchester. Classified Road

    £

    Congleton By-pass. In progress. (Est. Cost)

    77,000

    Widening at Wilmslow Road, Handforth In progress. (Est. Cost)

    74,323

    Improvement at junction of Padgbury Lane, Astbury Marsh. Authorised and expected to start this year. (Est. Cost)

    1,909

    Improvement at Congleton Road, Alderley Edge. Authorised and expected to start this year. (Est. Cost)

    19,576

    Improvement of London Road, Alderley Edge. Authorised and expected to start this year. (Est. Cost)

    5,500

    £178,308

    The Angel, Islington
    Mr. E. Fletcherasked the Minister of Transport and Civil Aviation whether he will now state his plans to improve the road junction at The Angel, Islington, and relieve the traffic congestion there.
    Mr. Molson: My right hon. Friend has been considering a scheme for an improved system of traffic signals here, and he expects to be able to make a grant towards the cost of this work very soon. The London County Council has provided for a roundabout here in the second period of their development plan.
    Mr. Fletcher: Would the Minister bear in mind that merely to improve the traffic signals will not solve the problem, and will he remember that it is a matter of the greatest concern, both to the inhabitants of Islington and to all who use this important artery, that something should be done to relieve the appalling traffic congestion which now exists?
    Mr. Molson: The new traffic lights will be of a very much improved kind. There will be a master controller controlling the flow of traffic from the three different roads. We believe that that will bring about an improvement. At the same time, we are in negotiation with the Finsbury and Islington Borough Councils about works upon the roads; there has been delay because of the need to consult the statutory undertakers, but we expect that that work will be undertaken shortly.

    Don Bridge, Doncaster
    Mr. William Palingasked the Minister of Transport and Civil Aviation the increased distance that heavy lorries must travel which have to leave the Great North Road north of Doncaster and finally return to the Great North Road south of Doncaster because of the weight limit allowed over the River Don bridge at Doncaster.
    Mr. Molson: The assessed weight limit for vehicles using the River Don Bridge at Doncaster is 30 tons. The recommended route for vehicles in excess of this limit, up to 80 tons weight, involves an additional distance of about 15 miles.
    Mr. Paling: Is the Minister aware of the serious dislocation which is caused to West Riding trade and commerce? Is he aware that these new routes, as has been said of another part of the country, are often down what can only be termed country lanes and that the position is becoming worse each week? Is the Minister satisfied that the new Doncaster by-pass will give the anticipated relief to trade and commerce of the West Riding?
    Mr. Molson: It was the two considerations first put forward by the hon. Member that induced my right hon. Friend to give the rebuilding of this bridge such priority that it has already been authorised. As regards the second part of his question, we are satisfied that the Doncaster by-pass, when completed, will be able to deal with the traffic problem there.

    Parking Meter Charges (Doctors)
    Dr. Strossasked the Minister of Transport and Civil Aviation whether, in framing his regulations regarding parking meters, he will arrange that medical practitioners in the course of their work will be exempted from charges if they park their cars in streets in which parking meters may be installed.
    Mr. Watkinson: No, Sir. A general exemption of this nature would be contrary to the principles underlying the proposals as to parking in the Road Traffic Bill.
    Dr. Stross: May I thank the Minister for the letter he sent me the other day on this matter and ask him whether it is proposed to retain this inflexible attitude

    393
    for ambulances and fire-fighting vehicles also? Will not the Minister please consider speaking to the British Medical Association about the whole of this matter?
    Mr. Watkinson: There is nothing inflexible about my attitude on this matter. The facts are that I have, as I think the hon. Member knows, the powers to make exemptions, so that I am adequately armed with them, but I prefer to wait until I have this detailed survey of the whole of London parking which is coming to me. I think that no one will gain more from that than the doctors if they can move about rather more freely.
    Mr. Ernest Davies: This is the second time the right hon. Gentleman has referred to the survey on parking. Can he indicate when the report is likely to be made? Will it be published and presented to the House?
    Mr. Watkinson: As to the first part of the question, I hope that enough of the survey—which I think the hon. Gentleman, with his expert knowledge, knows is a very complicated operation—will be done to judge its merits in some areas in the early autumn. As to how much longer the total investigation will take, I am not yet in a position to say because it is such a complex operation.

    Drill Corner, Romford
    Mr. Ledgerasked the Minister of Transport and Civil Aviation if he is aware that the major highway improvement scheme to Drill Corner, Romford, agreed between the local councils concerned, is awaiting approval; and if he will make a statement on the matter.
    Mr. Molson: In view of the competing claims of other schemes, I am afraid my right hon. Friend cannot accept this improvement for grant in the current financial year. The Essex County Council was informed of this decision on 15th June and was invited to consider a less expensive scheme involving a smaller roundabout.
    Mr. Ledger: Is the Minister not aware that the local councils, who are more directly involved, do not regard the modified scheme as serving the right purpose? Is he not aware that large vehicles going round this roundabout have to reverse to avoid going up on to the pave-
    394
    ment and that as long as it remains a temporary scheme, no offence is committed if a vehicle passes on the wrong side of the island? In view of these facts, will not the Minister consider the position again and see whether he can allow the new plan to be developed?
    Mr. Molson: My information does not entirely coincide with that which the hon. Member has now given, but in view of what he has said I will make a point of having further inquiries made.
    Mr. Lagden: Will my right hon. Friend accept from me that the information given by the hon. Member for Romford (Mr. Ledger) is perfectly correct and that the scheme for the smaller roundabout would not in any way cure the traffic congestion? This is a serious matter, which the hon. Member for Romford has in no way exaggerated.

    Accidents
    Mr. Remnantasked the Minister of Transport and Civil Aviation what percentage of accidents on the roads occur in towns and villages, main roads outside towns and secondary roads.
    Mr. Molson: Road accident figures do not draw the exact distinction made by my hon. Friend in his Question, but his two categories correspond fairly closely with roads subject to a speed limit and those not so subject.
    In 1955, 72 per cent. of the casualties in road accidents occurred on roads subject to a speed limit. The latest figures available giving more detail of the kind asked for relate to 1952, in which year also 72 per cent. of the casualties occurred on roads subject to a speed limit. The 28 per cent. on roads not subject to a speed limit were then made up of 2 per cent. on roads in the Metropolitan Police District; 20 per cent. on trunk, class I and class II roads outside that district; and 6 per cent. on other roads.
    Mr. Remnant: Can my right hon. Friend say whether that pattern is a continuing one since the war, or is it changing as the years go by?
    Mr. Molson: Broadly, it is a continuing pattern. If we take the figures for accidents as opposed to casualties in 1955, we find that 76 per cent. of all accidents involving personal injury occurred on

    395
    roads with speed limits, and that 24 per cent. occurred on roads without speed limits.
    Mr. J. T. Price: Will the right hon. Gentleman resist the temptation to draw false conclusions from these figures? Is he aware that the mere fact that 76 per cent. of accidents occurred on roads with speed limits does not suggest anything in the nature of removing the speed limit, but merely that the speed-limited roads are in centres of denser population where it is more likely that more people are resident?
    Mr. Molson: I think that is an entirely correct deduction to draw from the figures.

    Waiting Restrictions
    Mr. Remnantasked the Minister of Transport and Civil Aviation whether he will make regulations enabling the extension of no parking orders to main streets and main highways with only a short and stated time for delivery before 11 a.m.
    Mr. Molson: Outside the London Traffic Area, the initiative for making orders regulating the waiting of vehicles rests with the local authorities. Inside the London Traffic Area, where waiting restrictions are our responsibility, my right hon. Friend is considering making changes. He has already consulted the London and Home Counties Traffic Advisory Committee, who are awaiting the report due in September of the Survey of Parking Facilities of Inner London which is likely to contain recommendations about the hours at which restrictions in that area should begin.
    Mr. Remnant: Will my right hon. Friend give an undertaking that he will take a strong line to get rid of as much parking as possible, consistent with the setting down and picking up of passengers and/or goods? Is it not the case that parking is surely one of the major factors leading to congestion?
    Mr. Molson: It is because we recognise this to be the case that we have made provision for dealing with the matter in the Road Traffic Bill.

    A614 (Airmyn—Rawcliffe—Goole)
    Mr. G. Jegerasked the Minister of Transport and Civil Aviation whether he is aware of the dangerous nature of the
    396
    road A614 from Airmyn and Rawcliffe Station bridge for about half a mile towards Goole; and whether he will take action to improve it.
    Mr. Molson: We are aware of the need to improve this length of road, but I cannot at present say when it will be possible to authorise an improvement scheme. In the meantime, work has recently been completed to provide a better surface on this and an adjoining length.
    Mr. Jeger: Is he aware that, in putting down a better surface, he has obliterated the marks which had been placed there by the surveyor with the intention of improving the road instead of putting the new surface on top of the bad substructure? Is he also aware of the fact that the present condition of the road is very unsatisfactory, that it is narrow, that its surface is bad and dangerous, that there is a ditch alongside it, and that even the police in the neighbourhood are asking that something should be done about it?
    Mr. Molson: I am sorry if, after this improvement in the surface, in some respects the result has been unsatisfactory. I will certainly make inquiries into it, in the light of what the hon. Gentleman has said.
    Mr. H. Morrison: In view of the long string of complaints from Yorkshire, and, indeed, from other parts of the country, and the negative answers, on the whole, which have been given to these questions, would the Parliamentary Secretary or the Minister one of these days be good enough to inform the House—perhaps they can do it now—what is the total revenue from motor licences to the so-called Road Fund and how much of it is filched by the Treasury and thereby denied to the roads?
    Mr. Molson: That supplementary question does not arise out of this Question. In any case, the information is available in the papers which have been presented to the House. I have already given a list of major works which are to be undertaken in that part of Yorkshire. In addition, there are a number of others, such as the Finningley by-pass, the North Elmsall diversion, the Tudworth Hall diversion, and the improvement of the junction of A1 with A614. As I happen to have that information available, I thought the right hon. Gentleman might like to have it.
    Mr. T. Williams: Would not the right hon. Gentleman agree that the fact that there are so many schemes urgently necessary now indicates that there must have been much neglect in the past?
    Mr. Molson: It was only when this Government came into office that even a beginning was made.

    Common Arch Bridge, Chard Junction
    Mr. Peytonasked the Minister of Transport and Civil Aviation what progress has been made in the negotiations between his Department, the British Transport Commission, and the Somerset County Council, as highway authority, for taking over Common Arch Bridge, Chard Junction.
    Mr. Molson: Negotiations have been completed except for the terms of an indemnity clause and some details about land and culverts, on which the county council and the British Transport Commission have not yet reached agreement.
    Mr. Peyton: While thanking my right hon. Friend for that reply, not all of which I was able to hear, and while also thanking him warmly for the previous help which he has given on this subject, may I ask him if he will please ask the two bodies concerned, the Commission and the county council, to expedite this matter, which has been going on far too long, perhaps three or four years, and will my right hon. Friend please use his best endeavours to stimulate them into getting an agreement?
    Mr. Molson: I am much obliged to my hon. Friend for what he has said, and I will see what can be done in this direction.

    Cromwell Road Extension
    Mr. G. Wilsonasked the Minister of Transport and Civil Aviation what steps are now being taken to improve the Cromwell Road Extension Scheme so as to avoid bottlenecks at Talgarth Road and at Gunnersbury; and whether the flyover at Hammersmith will now be constructed.
    Mr. Watkinson: At Gunnersbury the new road will be carried over Wellesley Road and the Chiswick High Road by a
    398
    redesigned flyover, and the surface roundabout at the junction of the Great West Road and the Chiswick High Road will be enlarged to about two acres in extent to improve the flow of traffic. I am glad to say that the London County Council has now agreed to widen Talgarth Road, thus removing a major bottleneck in the existing scheme. I have recently discussed with the Council the inclusion of the Hammersmith flyover at this stage. As full provision has now been made for it at a later stage, and as its inclusion now would greatly delay the completion of the whole of the Hammersmith section of the new road, I am satisfied that it is right to press on with the construction of the new roundabout at Hammersmith, leaving the flyover for further examination.
    Mr. Wilson: While thanking my right hon. Friend for that reply, may I ask him whether his attention has been drawn to the Traffic Engineering Report on this scheme prepared by Mr. Andren and Mr. Seymer, indicating that a serious traffic bottleneck will be formed if the flyover at Hammersmith is not constructed? Has my right hon. Friend any comments to make on that?
    Mr. Watkinson: I have read the Report, which was kindly sent to me by the British Road Federation. I have had it examined by my experts. I still think that the decision which I have announced is the best one to get the maximum traffic flow at the earliest possible stage. This does not in any way prejudice the construction of a flyover, which, I think, in the end will undoubtedly be necessary, but it is not necessary to put it into the scheme at this stage.
    Lieut.-Colonel Lipton: Will the right hon. Gentleman give an assurance that, so far as he can contrive it, there will not be too long a delay between the first part of the scheme, which is, of course, necessary, and the flyover at Hammersmith, because Hammersmith will continue, if there is a wide gap between the two schemes, to be one of the worst bottlenecks in that part of the world?
    Mr. Watkinson: I propose to try to get the road from Cromwell Road to the Bath Road, to give access to London Airport, as fast as I can.

  TRANSPORT

    Road Haulage Assets (Disposal)
    Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation why he refused the request of the British Transport Commission to retain 200 service vans as C licence vehicles; and why 140 of these vehicles are to be sold as chattels under Section 6 (1) of Transport Act, 1953.
    Mr. Watkinson: The request was refused because the Commission wished to keep these vehicles in addition to the number the Transport (Disposal of Road Haulage Property) Bill permits it to keep. The 140 are being sold as chattels under Section 6 (1) because service vehicles have not generally been used to carry traffic and it would, therefore, be undesirable to grant special A licences to the purchasers of these vehicles.
    Mr. Davies: Is this not the craziest of all actions in conjunction with disposal? Does the Minister realise that these vehicles would not compete with commercial road hauliers—they would have C licences—and that his action means that the Commission, having to dispose of these vehicles, must now buy new vehicles to carry its own goods? What is the point of compelling the Commission to sell vehicles at a loss and to purchase new vehicles at a higher price in these days of capital restriction?
    Mr. Watkinson: The fact is, as the hon. Member quite definitely knows, that, taking the whole operation generally, the Commission has had a very fair and generous deal. [HON. MEMBERS: "Oh."]Oh, yes; it certainly has. There are bound to be these small anomalies before we can finally clear up the process of disposal, which I wish to do as quickly as possible for the sake of the Commission.
    Mr. Davies: How can the Minister say that the Commission has had a fair deal when he whittled down by 7½ per cent. the number of vehicles which the Commission was allowed to keep? When he is deliberately making the Commission dispose of vehicles, which it could use for its own use and which would not enter into competition, with the result that the Commission has to buy new vehicles, how can the right hon. Gentleman justify this crazy bit of business?
    Mr. Watkinson: The hon. Gentleman, I think, forgets the purpose of the Act, which concerned 7,500 lorries, which is a rather more important matter.

  CIVIL AVIATION

    B.O.A.C. (Aircraft)
    Mr. Hunterasked the Minister of Transport and Civil Aviation what recent requests he has received from the British Overseas Airways Corporation for sanction to purchase United States jet air liners.
    Mr. Watkinson: I have at present nothing to add to the reply I gave last week to the hon. Member for Govan (Mr. Rankin).
    Mr. Hunter: Is the Minister aware that reports have appeared in the Press that the Chairman of B.O.A.C. has applied for Government sanction to spend millions of pounds on eight American jet liners for use by B.O.A.C.? I assume from the Minister's reply that those reports are not correct.
    Mr. Watkinson: I am grateful to the hon. Member for raising this matter. It is particularly important that all who work on the airport should know the facts. Perhaps I might recapitulate them. A most careful and detailed technical examination is being undertaken, both of the American aircraft, which are Britain's competitors, and British jet and turboprop aircraft, with a view to meeting the requirements which the new Chairman of B.O.A.C. has now worked out as a result of the technical study which his experts have carried out. Until all these technical examinations are completed, no firm decisions can possibly be taken about the kind of aircraft that will be required.
    Mr. Strauss: While one appreciates that a decision of this kind cannot be taken in a hurry, surely it is a fact that under the former Chairman as well as the present Chairman of B.O.A.C. this matter has been considered for months and months, presumably with the Minister. When are we likely to receive a decision on this matter? If it has not been pursued for many months past, surely it ought to have been. If it has not been pursued, what is the reason?
    Mr. Watkinson: The right hon. Gentleman has asked me the reason, and I will tell him. First, in fairness to the past Chairman and management of B.O.A.C., it must be said that this air business has changed enormously in the past six months. The new big American jet aircraft have come forward and large numbers of orders have been placed. I believe that something like 200 aircraft have been ordered by foreign airlines which compete with B.O.A.C. The first task that I asked the new Chairman to perform was to examine the whole situation in the light of these new developments. That he has now done, and, as a result, we are carrying out this technical assessment of both the new American aircraft, which his competitors will soon be flying—within a measurable number of years—and what the British industry has to offer and what B.O.A.C. has on order. I do not think that any time has been wasted upon this study, on which depends the whole future of the Corporation.
    Mr. Rankin: The Minister referred to the technical examination now going on in regard to the Boeing 707. Is it the case that already a statement has been made by someone of authority connected with this investigation to the effect that this aircraft will sell readily in other countries as well as America? If that is true, is it a wise statement to make and in the interests of the development of British aviation?
    Mr. Watkinson: I do not know who made the statement. All I can say is that both British and American companies are trying to sell their aircraft, and no doubt both will be making wide statements as to their capabilities.

    Controlled Air Spaces (Regulations)
    Mr. Farey-Jonesasked the Minister of Transport and Civil Aviation whether, in view of the risk of collision which may arise between aircraft flying in controlled air spaces under visual flight rules, particularly under marginal conditions, he will now make it obligatory for all aircraft flying in controlled air spaces, under both instrument and visual flight rules, to do so under air traffic control clearances.
    Mr. Watkinson: I have nothing at present to add to the Answer I gave the
    402
    hon. Member for Uxbridge (Mr. Beswick) on 6th June, when I said that this whole question was being reviewed.
    Mr. Farey-Jones: Does not my right hon. Friend agree that the term "controlled air space" is a complete misnomer if aircraft can operate in that space, and is he not aware that there is an ever-present and growing anxiety among world airline operators, particularly at London Airport, while no action is taken on this matter?
    Mr. Watkinson: I quite agree, and we are taking urgent action on this matter. As I think my hon. Friend knows, it is a most technical and difficult matter, and I think we had better look at it carefully before we come to any conclusion.

    British European Airways (Aircraft)
    Mr. G. Jegerasked the Minister of Transport and Civil Aviation what recent applications have been made to him by British European Airways Corporation for approval for the purchase of medium-range aircraft.
    Mr. Watkinson: None, Sir.
    Mr. Jeger: Is the right hon. Gentleman aware that that is a very surprising reply, because the fact is that only one British aircraft today lands at the Berlin Airport at Tempelhof, whereas aircraft of other nations land there on several occasions during the day? Is he also aware that B.E.A. advise would-be passengers to book through charter companies? Does not this indicate that they are short of the necessary aircraft, and will he take the matter up with B.E.A. in order to maintain our prestige and our airline service to Berlin?
    Mr. Watkinson: Of course, I will look into it, but the answer to the Question on the Order Paper is still "None, Sir."

BUSINESS OF THE HOUSE
Proceedings on Government Business exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[Mr. Heath.]
ORDERS OF THE DAY
  FINANCE (No. 2) BILL
  As amended (in Committee and on recommittal), further considered.
  FINANCE (No. 2) BILL

    New Clause.—(SMALL MAINTENANCE PAYMENTS.)
    Section two hundred and five of the Income Tax Act, 1952 (which defines the expressions "small maintenance payments" and "small maintenance order"), shall be amended as follows:—

    (1) By inserting as a new subsection to replace the existing subsection (2), which is hereby repealed, the paragraph set out below, that is to say—

    "(2) The age referred to in paragraph (b) of subsection (1) of this section is twenty-one years of age".

    (2) By inserting as a new subsection (3) to replace the existing subsection (3), which is hereby repealed, the paragraph set out below, that is to say—

    "(3) The amount referred to in paragraph (i) of subsection (1) of this section is—

    (a) in the case of payments to or for the benefit of a woman for her maintenance, five pounds; and

    (b) in the case of payments to any person for the benefit of, or for the maintenance or education of, a person under the age specified in subsection (2) of this section, thirty shillings".—[Mr. Simon.]

    Brought up, and read the First time.
    3.32 p.m.
    Mr. J. E. S. Simon: I beg to move, That the Clause be read a Second time.
    This Clause seeks to remove an anomaly in the law whereby a wife who has suffered a matrimonial wrong at the hands of her husband is able to get one type of order in a court of summary jurisdiction, but, when she goes to the High Court, can only get what, from the point of view of tax, is a less favourable type of order.
    We are concerned here with a class of person with whom the House will have especial sympathy. These people are in all cases women of small means, because this type of order relates only to women of small means; in addition, they are women who have already suffered great hardship in their personal lives—whose lot, in any event, must be a bitter and a hard one.
    404
    It must be rare when this House not only can remedy an injustice to individuals but, at the same time, correct an anomaly in the law. When one adds to that that in this case we shall also be effecting an administrative saving, one can say that it must be a very rare event that such a concomitance of favourable circumstances is found before the House in considering a new Clause.
    The matter arises in this way. Before 1944, a wife who had had a matrimonial wrong committed against her by her husband could either go for a separation or maintenance order in a court of summary jurisdiction, or she could sue for divorce or separation in the High Court. In either case the court had jurisdiction to make a maintenance order in her favour.
    The way it operated for tax purposes was this. The husband, in all cases, whether the order was made in the High Court or in a court of summary jurisdiction, paid over the sum awarded in two parts. He paid over the tax on the, sum awarded by way of maintenance, and at the full rate—even though neither he nor his wife may have had sufficient income to attract tax at the full rate, he had, nevertheless, to pay the full standard rate of Income Tax—to the Inland Revenue; and he handed over only the balance to his wife. All she could do in order to get what the court thought was right for her was to get from her husband a certificate of deduction of Income Tax, present that to the Revenue authorities and claim a repayment of tax.
    Obviously, that had very grave disadvantages. In the first place, there was the overriding administrative disadvantage in that the Inland Revenue was acting as a clearinghouse for these tax rebates; because in very many cases the wife was not liable to pay any tax at all on her small order and, therefore, gained the full amount of the rebate. As a result, some quite unnecessary work was being done by the Inland Revenue authorities, who had, of course, to be satisfied that everything was in order.
    It also involved great personal hardships for wives in poor circumstances, because they were kept out of the money to which they were entitled, and these were all cases of women who had been abandoned in some way or another by their husbands. They were kept out of

    405
    their money, or a considerable part of it, when Income Tax at the full rate, amounting to nearly half of the amount was paid, until the matter was cleared with the Inland Revenue authorities. If the husband was recalcitrant, or ignorant, or feckless she could be kept out of her money a very long time, owing to his failure to render the proper certificate of deduction.
    It was for those reasons, I apprehend, that by Section 25 of the Finance Act, 1944, a new type of order could be made. If the sum ordered by way of maintenance was within the amount stipulated in that Section, what the husband did was to pay over the whole sum to the wife; and only if she was liable herself for tax would she be responsible to the Revenue authorities for paying tax on that sum.
    Of course, that meant that the evils which, I suggest, flowed from the previous system were ameliorated, both as to the administrative inconvenience and as to the wife suffering hardship. The amounts of the order that could be made under the Finance Act, 1944, were £2 in the case of an order in favour of the wife and £1 in favour of a child of the marriage. Those provisions applied to all courts, wherever the order was made, the High Court or the court of summary jurisdiction, or the county courts in the rare cases when they made such an order.
    The matter remained on that footing until 1949, when by the Married Women's (Maintenance) Act the jurisdiction of the courts of summary jurisdiction to award maintenance to a wife in respect of herself and her child was extended. It was raised in the case of a wife from £2 to £5 and in the case of a child from 10s. to 30s.
    The provisions of Section 25 of the Finance Act, 1944, to which I have referred, were made applicable to those increased amounts. In other words, the system which had been found satisfactory as far as the maintenance orders for the smaller amounts paid up to them had been concerned was made applicable to these larger sums. But that concession was limited to orders made under the 1949 Act. The High Court was still limited to its £2 in the case of a wife and its £1 in the case of a child. Even courts of summary jurisdiction had a different tax system for their orders,
    406
    according to whether they were made under the Married Women's code or under the Guardianship of Infants' code.
    The Guardianship and Maintenance of Infants Act, 1951, raised the jurisdiction in respect of orders made under the Guardianship of Infants Act—because, as hon. Members will appreciate, married women when seeking maintenance for a child often go under the one code as much as the other. Jurisdiction to make orders under the Guardianship of Infants Acts was increased to 30s. in respect of the child, and the 1944 provisions were made applicable to that type of payment. These provisions were consolidated in the Income Tax Act, 1952, which the new Clause seeks to amend.
    The purpose of the Clause is to correct the anomalies which are to be found in the present law, whereby there is a different tax code applicable to orders for the same amount according to the court in which they are made. I submit that such a differentiation has very little to recommend it. All the arguments which led to the reforms in 1949, and the extension of the concessions to sums of £5 for a wife and 30s. for a child, apply equally in the High Court as in a court of summary jurisdiction.
    There are a number of further arguments. Over 50 per cent. of divorce cases now are legally aided and, therefore, a great number of women who are in the circumstances envisaged by the reform that was found in the Finance Act, 1944, come to the High Court for relief. They can go before the very experienced registrars of the High Court to have their maintenance assessed. But at the moment the registrars have no powers to make the sort of order, as far as tax is concerned, that courts of summary jurisdiction have; and, therefore, if she wishes to have that sort of order, the wife is forced into a court of summary jurisdiction and she receives no legal aid. That is an unnecessary anomaly and a hard ship on a class of the community who already, by definition, will have suffered severely.
    I am told that if the new Clause is accepted the bulk of the orders will be in the region of £3 to £4 a week. The wife, if she goes to the High Court, has to wait for repayment of tax rebate, and if the husband is a doubtful payer he will not produce the certificate and she will be

    407
    without her money for at least a month, and it may well be longer. She is a class of woman who does not easily obtain credit.
    There are anomalies, also, in respect of the child. Not only have we now an anomaly as to the amount payable to the child, but also as to the age of the child; because in a court of summary jurisdiction this type of small maintenance order can be made in respect of a child up to the age of 21 for a larger amount, whereas in the High Court it can only be made up to the age of 16 in respect of a smaller amount. In these days, when we are doing our best to encourage parents to keep their children at school beyond the age of 16, such a differentiation cannot be justified.
    The extension of the jurisdiction to the High Court will result in a further saving in administrative costs to the Revenue, in that it will not have to carry out the monthly working of the rebate system. The cost of the concession, if anything, must be infinitesimal, because it can only relate to the balancing of the allowance as between husband and wife. In respect of the children it can be at most only £10 a year for each child. For all these reasons, I commend the Clause without hesitation to the House.
    Mr. Geoffrey Stevens: In view of the very clear and careful exposition of the new Clause by my hon. and learned Friend the Member for Middlesbrough, West (Mr. Simon) there is nothing more for me to do than formally to second the Motion and commend the Clause warmly to the House.
    3.45 p.m.
    Mr. G. R. Mitchison: The hon. and learned Member for Middlesbrough, West (Mr. Simon) has an excellent and purely professional acquaintance with all the workings of the divorce courts. He put this somewhat complicated question so clearly that there is no need whatever to repeat the arguments which he adduced. This appears to be an anomaly which, for the reasons he gave, bears hardly on just the wrong people. It is something the remedy of which appeals to my hon. and right hon. Friends and myself just as much as I hope and trust it will appeal to the
    408
    Government. If, as I feel sure, the Government intend to accept the Clause, I believe that they will do so with the support of the whole House.
    The Economic Secretary to the Treasury (Sir Edward Boyle): I should like to join in the tributes paid to my hon. and learned Friend the Member for Middlesbrough, West (Mr. Simon) for the extremely clear and lucid manner in which he expounded the Clause to the House and the fairness with which he put his case. I hope, therefore, that the House will not misunderstand me when I say that he has an intimate knowledge of divorce and maintenance, about which he sometimes speaks.
    The object of the Clause, as my hon. and learned Friend explained, is to increase the extent of the class of "small maintenance payments" as defined in Section 205 of the consolidating Income Tax Act, 1952 which, by virtue of Section 206, are payable without deduction of Income Tax and are assessable directly upon the recipients. Until 1944, periodical payments under court orders for the maintenance of women and children in divorce and separation cases were payable under deduction of tax in accordance with the normal Income Tax law, but Section 25 of the Finance Act, 1944, changed this law in relation to small maintenance payments by making them payable in full. The main purpose of the change was to relieve the difficulties which magistrates found when issuing warrants for payment of arrears.
    The intention of the Clause is to abolish the distinction which the present definition of "small maintenance payments" draws between those payments which are made under High Court orders and those which are made under magistrates' orders. I can see the force of the argument that the present distinction seems to be anomalous. It originates in the fact that when the maxima of the amounts which magistrates could award were raised in 1949, under the Married Women (Maintenance) Act, the limits for non-deduction of tax in magistrates' cases were raised to correspond, but no corresponding alteration was made in the limits for non-deduction of tax in High Court cases, which would have required separate legislation.
    I see that at first sight this seems to be an amomaly and I expected my hon.

    409
    and learned Friend to make the point that wives in whose favour small High Court orders had been made suffer inconvenience because of the need to claim and recover Income Tax which they are not strictly liable normally to bear. However, I think it might be a mistake for us to consider this matter absolutely on its own. We have no reason to think that the present state of the law is having any specially harsh effects. At the same time, however, my right hon. Friend is very ready for this matter to be fully considered along with the problem of the law of maintenance generally, and he will suggest that the Inland Revenue should discuss with the department of the Lord Chancellor and the Law Officers whether a change in the law may be desirable.
    There are some drafting objections to the new Clause as it appears on the Notice Paper. They are rather technical points with which I need not weary the House. I put it to my hon. and learned Friend that the most satisfactory solution would be if the Inland Revenue discussed this question with the Law Officers and with the department of the Lord Chancellor, and that if it is thought that a change in the law is desirable, we will see to it that the change is made as soon as a suitable opportunity for legislation presents itself. My right hon. Friend thinks that in view of those technical defects in the proposed Clause it would be better to postpone legislation on this subject until those discussions have taken place.
    With the asurance that we realise there is a point here which needs to be looked at carefully, I hope that my hon. and learned Friend may consider withdrawing his proposed Clause.
    Mr. Simon: We have learned in this House that the word "never" means "perhaps". I hope that in this case, therefore, "perhaps" will mean "yes". I do not know how long my hon. Friend proposes for these discussions. I accept from him readily that there are technical objections to the Clause as drafted, and if he envisages those discussions being over before next year's Finance Bill, I would ask leave to withdraw the Motion.
    Mr. Harold Wilson: Before the House considers whether the Motion and Clause should be withdrawn, I want
    410
    to put a point to the hon. Gentleman the Economic Secretary. On this side of the House we are impressed by the case made by the hon. and learned Gentleman the Member for Middlesbrough, West (Mr. Simon). To many of us it was a new point, but it was put so convincingly, and it was made so plain that hardship is caused, that we felt that if the Government did not accept the Clause there would be a strong case for dividing the House upon it.
    Now the Economic Secretary has produced reasons why there should not be a Division. The hon. Gentleman has suggested that the matter is to be considered rather more broadly than in the context of the proposed Clause, and has pointed out that there are some drafting weaknesses in it. That surprises me, since it has come from so great an authority on the subject as the hon. and learned Gentleman.
    We on this side of the Committee are in some difficulty in voting. We do not want to divide the House unnecessarily and we have a pledge from the Government that they will consider the matter, I am sure, sympathetically. I hope, however, that the Economic Secretary intends to treat this as a matter of some urgency, and will not just leave it to be looked at some time next year as in the case of many other things we heard about during earlier stages of the Bill. Can the hon. Gentleman say how quickly he thinks the examination can be carried out, and when he feels that it might be possible to produce the necessary legislation?
    Of course, there would be obvious difficulties about having this Finance Bill amended in another place. We do not know whether any further Measures will he brought forward by the Chancellor of the Exchequer in the course of the next year which would enable him to do what is asked. Does it really mean waiting for a whole year, with all the hardship referred to, or can the hon. Gentleman hold out any hope that we shall get some legislation in the not too distant future?
    For example, it occurs to me that when this matter has been looked at it could be the subject of a one-Clause Bill, which I can promise the Government we on this side of the House would give full co-operation in getting through quickly. Can we have some idea of the time-table which the Economic Secretary has in mind, and

    411
    the kind of legislative facilities he would propose for carrying into law the result of the examination?
    Sir E. Boyle: With the leave of the House, Sir, may I say that I cannot give any pledge this afternoon about a time-table. There are quite a number of candidates for tidying up this part of the law, and I do not think that a one-Clause Bill on this subject would be an advantage. What my right hon. Friend is keen on is that the Inland Revenue and the department of the Lord Chancellor and the Law Officers should look at all this part of the law and consider the various candidates before legislation is proposed.
    Mr. Wilson: By leave of the House, Sir, may I put this point to the hon. Gentleman? When he refers to this side of the law and the number of candidates, I am not clear whether he means the side of the law relating to maintenance and divorce——
    Sir E. Boyle: Yes.
    Mr. Wilson: And High Court orders.
    Sir E. Boyle: Maintenance and High Court orders.
    Mr. Wilson: Again, one does not know, from what the hon. Gentleman has said, how big a job that will be.
    At an earlier stage of the Bill my hon. Friend the Member for Sowerby (Mr. Houghton) put it to the Chancellor that there is the strongest case for legislation on the administration of taxes generally, in a non-revenue and non-taxing sense. For instance, there are the 15 or more recommendations of the Royal Commission. I take it that the hon. Gentleman is not referring to anything as broad as that. I hope that the Chancellor will consider the possibility of legislation in the near future to tidy up the administrative side of the tax system, of which this is one example.
    From what the hon. and learned Gentleman has said this seems rather more urgent than would justify it waiting to be considered as part of the general consideration of the administration of taxes. We are not too happy about the assurance which has been given, and if we do not divide the House I hope the Government will not take that as any
    412
    excuse for not proceeding quickly and reporting to the House at the earliest opportunity.
    Mr. Speaker: Does the hon. and learned Gentleman ask leave to withdraw the Motion?
    Mr. Simon: Yes, Sir. I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(VICTORIA CROSS.)
    Annuities and additional pensions paid to holders of the Victoria Cross by virtue of holding that award shall be disregarded for all the purposes of the Income Tax Acts.—[Lieut.-Colonel Lipton.]
    Brought up, and read the First time.
    Lieut.-Colonel Marcus Lipton: I beg to move, That the Clause be read a Second time.
    Mr. Hector Hughes: On a point of order, Sir. I was not aware that my hon. and gallant Friend was moving the Second Reading of a new Clause. I should like to draw your attention to the following proposed Clause standing on the Notice Paper in my name and in the name of my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton)—Reduction of duty on publicans' licences:
    As from the fifth day of April, nineteen hundred and fifty-six, a reduction of twenty-five per cent. of the amount which would have been payable apart from this section shall be made (either by repayment or by remission of duty) in the licence duty in respect of a publican's or beer house licence:
    Provided that this section shall not have effect in relation to a licence granted in respect of any such licensed hotel or restaurant premises as are mentioned in the Fourth Schedule to the Customs and Excise Act, 1952.
    While I would not dream of contesting your discretion with regard to selection, Sir, may I ask is my Clause not being selected?
    Mr. Speaker: No, the hon. and learned Member's Clause is not being selected.
    Lieut.-Colonel Lipton: The object of the Clause I have moved is to exempt from Income Tax the annuities and additional pensions paid to holders of the Victoria Cross. I am obliged to the 36 hon. Members in all parties in this House who added their names in support of the proposed Clause.

    413
    As I understand, the position is as follows. In all Services holders of the Victoria Cross below commissioned rank, or below warrant rank in the case of the Navy, receive an annuity of £10 per annum plus an additional 6d. a day by way of addition to any other Service pension to which they may be entitled. In the case of a person who wins a bar to the Victoria Cross—only one is living at the present time—he, if he is an other rank, receives an additional £5 a year.
    My next point is that the only persons holding the Victoria Cross who are entitled to this annuity of £10 a year are persons who won the award while they were serving in the ranks and not as officers. The number of people who are affected by this Clause is, therefore, extremely limited. It can apply only to other ranks who gained the Victoria Cross and who are now living in this country. So far as I have been able to ascertain, the number of persons affected cannot be more than about 100 all told. In those circumstances, the cost to the Exchequer cannot exceed about £300 or £400 a year.
    4.0 p.m.
    Only a short time ago we celebrated the centenary of the Victoria Cross. It was a shock for me to learn, in the course of those centenary celebrations, from the holders of the Victoria Cross that the £10 annuity is liable to tax. I hope that the Government will take advantage of the occasion to agree to make this concession. It must be quite the smallest monetary concession which the Treasury has been asked to make in the course of the long proceedings on this year's Finance Bill.
    I want to allay the anxieties of the right hon. Gentleman the Chancellor of the Exchequer to this extent, that if, unfortunately, he has to say "No" to this Clause, I do not propose to divide the House. I think that a concession of this kind should be made with grace and not as a result of a Division, a snap vote with Members tramping through the Lobbies and that sort of thing. I know that other financial rewards are paid to holders of other decorations in certain circumstances, but I believe that if the Chancellor makes this concession he will not be opening wide the flood gates to a large number of demands, because it will be agreed that the Victoria Cross can be easily distinguished and the distinction is
    414
    accepted by everybody. In those circumstances, I hope that the Chancellor will find it possible to accept the Clause which, as I have indicated, is supported by hon. Members in all parts of the House.
    Sir Frank Medlicott: I beg to second the Motion.
    I am glad that the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) has stressed the comparatively small cost which will be involved in this concession, but I should still have supported it even if a substantial amount of money were entailed. It is rather undignified that a great nation has to snatch at such small amounts of revenue from sources such as this. When one recollects the kind of imposition made in the past—Purchase Tax on hearing aids for the deaf and on sticks for the blind—one wonders what kind of people they are who think up this kind of taxation and what kind of people we in the House are to allow such taxes to be imposed.
    It might be said that it is difficult to know where to draw the line, but I suggest that part of our responsibility is to draw lines, and to draw them in the right places. It might also be said that a question of principle is involved and that all income must be taxed. However, if we are to deal with this matter on the basis of principles of taxation, I venture to quote from what is surely the fountain head, namely, what Adam Smith said in his "Wealth of Nations". He said that the first principle of taxation was that
    "The subjects of every State ought to contribute towards the support of the State as nearly as possible in proportion to their respective abilities."
    If it is a question of contributing towards the support of the State, how better can a man do that than by fighting for it to the last degree of heroism? What else can a man do to support the State?
    Adam Smith went on to say, on this question of principles, that subjects should also contribute
    "… in proportion to the revenue which they respectively enjoy under the protection of the State."
    Here it is not so much the State protecting the heroes; it is they who protect the State. There is not one of us who would be here if it were not for the heroism and sacrifice of countless men who fought in two wars and of whom the holders of the Victoria Cross are the

    415
    supreme and magnificent symbol. It is right—or, at least, it is necessary—that we should levy taxation upon the earnings of enterprise and business and on salaries, wages, profits and dividends, but surely, as a nation, we are not so poor in resources or in spirit that we have to place taxation upon heroism.
    The Chancellor of the Exchequer (Mr. Harold Macmillan): I am very grateful for the way in which this Clause has been moved and seconded. I very much appreciate what the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) said when he indicated that he did not regard this as a matter suitable for dividing the House. I think that he was right about that. Perhaps I might be allowed, for the record, to state the facts a little more completely.
    Holders of the Victoria Cross below commissioned rank are granted a State pension of £10 a year with an additional pension of £5 a year for each bar to the decoration as from the date of the act of bravery for which the decoration was gained. Those with a Service or disability pension may also receive an additional pension of 6d. a day over and above the £10. The pension may be increased to £75 per annum in the event of the pensioner being unable to earn a livelihood in consequence of age or infirmity.
    As regards commissioned ranks, an officer who has been awarded the Victoria Cross and who is unable from age or infirmity to earn a livelihood may be granted an annuity not exceeding £75. These pensions are liable to Income Tax under Schedule E as pensions payable by the Crown, or out of public revenue. Those are the facts. It is also true that grants may be awarded to holders of the Military Cross which, of course, is a very much more widely held decoration and to holders of the Distinguished Flying Cross and the Distinguished Conduct Medal.
    This is very much a matter in which the House must make a decision as the House of Commons. I would not attempt to guide it contrary to what I thought might be its general view. In logic, in law, and having regard to the possible claims that might be made in respect of other similar decorations, I think it would be my duty to advise the House to reject the Clause, but I am bound to say that I find it difficult to do so. If the House
    416
    should wish, as an act of all Members of all parties, to make this signal gesture in this great year in the history of the Victoria Cross, I could not advise the House to put logic or strict legality above sentiment.
    I would ask the House, however, to say, as it will affect all future Chancellors of the Exchequer, that if this decision is made today, our successors should enter into a self-denying ordinance and not quote this as an example for turning almost all pensions of the Crown, which are all earned by an act of good service and merit, into a reason why the law should be put into abeyance in other cases.
    What is the reason that we should do this—openly and knowingly do it, contrary to strict logic or legality? I think we might permit ourselves this act of sentiment in this year for this reason: it is not a bad thing, I think, that we should sometimes go outside the strict rules which we have to follow in so many cases, nor would it be a bad thing for the House at this moment to declare its sense of gratitude and honour to men who fight for their Queen and country and who make the kind of heroic acts which are signalised by this unique decoration which is known throughout the world as one without parallel.
    That is not to say—and perhaps this is the experience of many here—that we have not known men and comrades who might have been recommended for the Victoria Cross. It is not to deny that we have served alongside and seen acts which no one has ever reported and which were never brought to attention because of the fury of battle or the death of those who might have been the recorders.
    If I may add this in the spirit in which the hon. and gallant Member moved the new Clause, not as Chancellor of the Exchequer but as an old Member of the House who has taken part in war, I think it would be a noble thing that we should make this little act of tribute both to what this decoration means and to the spirit which lies behind many hundreds of thousands of men who feel honoured at having been comrades of holders of the Victoria Cross.
    Contrary, therefore, to what I ought to do, I should like us to pass this new

    417
    Clause in this hundredth year of the Victoria Cross, in memory of a great Queen and in honour of our present Queen.
    Mr. Hugh Dalton: I was very happy to hear the Chancellor's speech. I am sure that in all parts of the House, particularly among those who have memories of either of the two past wars, through which we came with shocking sacrifice of the flower of our manhood to a victorious end, hon. Members will be happy if all sections of the House agree to follow the line which the Chancellor has so eloquently indicated.
    The Chancellor has spoken with a fine choice of language and an appeal to emotions which we all share, and I do not wish to elaborate the theme further than to say that we on these benches welcome both what he said and how he said it and hope that there will be no opposition in any part of the House to the acceptance of the new Clause moved by my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton).
    Question put and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(REDUCTION OF DUTY ON PUBLIC SERVICE VEHICLES.)
    Section three of the Vehicles (Excise) Act, 1949, shall be amended by the insertion at the end of subsection (1) of the following words:—
    "Provided that in the case of a hackney carriage which is a public service vehicle the duty chargeable under this section shall not be more than twelve pounds ten shillings".—[Mr. Ernest Davies.]
    Brought up, and read the First time.
    4.15 p.m.
    Mr. Ernest Davies: I beg to move, That the Clause be read a Second time.
    The object of the new Clause is to reduce the annual Excise Duty paid on registrations by the larger of the public service vehicles. Under the Vehicles (Excise) Act, 1949, public service vehicles engaged in road passenger transport are taxed according to their seating capacity. Whereas up to a seating capacity of eight the duty is £12, when we get above that capacity the duty is more than that paid on an ordinary motor vehicle. In fact, it rises very steeply. For vehicles of from eight to 26-seat capacity, it is £12 plus £2 for every additional seat over eight.
    418
    Over a capacity of 26 it is £48 and over 32 it is £57 12s. This means that a 56-seater double-decker bus, which is the normal bus used in urban areas, bears an annual duty of £86 8s.
    The Clause is put forward with a view to trying to help in a very small degree the road passenger transport industry, which, as hon. Members are well aware from previous debates, is in a difficult position in that costs have risen substantially over recent years, fares have had to be increased until in many cases they have reached a point of diminishing returns and the industry is faced with the difficulty of either raising fares further and running the risk of traffic being diverted to other means or cutting down its services, reducing frequencies, or in other ways causing a deterioration of the public services.
    In Committee, I moved a new Clause, seconded by my hon. Friend the Member for Bradford, East (Mr. McLeavy), in which we proposed that there should be a discriminatory tax, favouring public service vehicles using diesel oil. This was rejected by the Financial Secretary on grounds which have been produced so frequently by the Treasury that they are becoming rather dog-eared. The main ground for rejection was that it would be a discrimination between different users of transport vehicles, that it would cost the Treasury too much—in that case £30 million—and that, in effect, it would not help rural transport very much because petrol vehicles were still used to a certain extent in rural areas and the concession would relate only to diesel oil.
    In framing this new Clause with a view to reducing the registration Excise duty, our objective has been to meet the objections which the Financial Secretary produced. In the first case, it would cost the Treasury far less to reduce the duty on public service vehicles to a flat rate of £12 10s.—that is, for those with a seating capacity of more than eight. The sum of £12 10s. is that paid on most motor cars today.
    It is difficult for me to estimate what the cost will be. No doubt the Economic Secretary will be able to give the House the figure. It would certainly not be more than £4 million to £5 million per annum; if we take a reasonable average of about £50 per annum for each of the 75,000 vehicles which are licensed, the

    419
    concession would come to about £5 million. The cost to the Treasury is, therefore, not exorbitant—a maximum of £5 million which, if it brought relief to the road passenger transport industry and prevented a further increase in fares or enabled existing services to be maintained, would be £5 million well spent.
    In the past, the Economic Secretary has used the argument of discrimination, but I believe that in this case we are discriminating against the public service vehicles. It seems to me quite unfair that a bus or a coach carrying from 26 to 56 passengers and occupying per passenger so much less road space than the private car, carrying a driver and possibly one, two or more passengers, should pay proportionately so much greater tax.
    It is the private motorist today who is in a favourable tax position. He is in a privileged position. It is the private motorist, particularly in the urban areas, who is contributing very largely to the congestion which confronts us and which creates such difficulties in maintaining the traffic flow. If the private motorist is moving along the road he is adding to the number of vehicles causing congestion. If his car is parked at the side of the road it stops a free flow of traffic by occupying road space.
    The big problem facing us today is that of finding parking space for the private motor car whereas, of course, the public service vehicle is provided with its own garage when not in operation. As I have stated, it carries many more passengers than the private motor car in relation to the amount of road space in which it operates. I suggest, therefore, that if there is any discrimination, it is against the road transport operator and in favour of the private motorist.
    The House has admitted that if we are to maintain our public road transport service something must be done. Unless relief in some form or another is given, there will be a reduction in the quality of the service and in its frequency, with the result that the public will not be served as well as it has been in the past.
    Of course, this is only a small suggestion and only a palliative. The longterm solution for this difficulty has, of course, been overthrown by the present Government. Had the Government pursued the road passenger transport policy
    420
    proposed by the Labour Government, and which was incorporated in previous legislation, the industry would not be faced with the difficulty which confronts it today.
    As it is, some 50 per cent. of the services operating in the rural areas today are running at a loss. They cannot go on operating at this loss which, in many cases, amounts to 1s. per car mile. Having rejected the previous suggestion made by this side of the House on the grounds that it was too costly, I ask the Economic Secretary to accept the suggestion contained in this Clause which would cost so much less.
    Mr. Frank McLeavy: I beg to second the Motion.
    First, I think that we ought to look at the history of this tax on passenger transport vehicles and of the relief from it given to other types of vehicles. I wish to emphasise the point made by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) that under the Vehicles (Excise) Act, 1949, and, indeed, under the Finance Act, 1952, weighty relief was conferred on the owners of certain types of vehicles. The passenger transport industry still has to pay a very high proportion of duty compared with private vehicles.
    My hon. Friend pointed out that under the 1945 and 1952 Acts, the tax on private motor cars was made at a flat rate of £12 10s. per annum as against £85 8s. per annum paid on a double-decker bus. When the Treasury decided to introduce the flat rate of tax for motor cars it was justified on the broad ground that the existing graduated tax was bedevilling the motor industry in relation to design. It is perfectly clear that in introducing the flat rate the Government were throwing overboard the whole question of a charge per passenger seat. That brought about the absurd position that though the seating capacity of private cars, from the Rolls-Royce downwards, varied very considerably indeed, the Government, nevertheless, thought it reasonable and in the interests of the motor car industry to apply the flat rate of tax.
    Nothing was done for the passenger transport industry. I do not think that anyone would deny that when such a radical change was made in the rate of taxation for motor cars it added force to the

    421
    argument that the passenger transport industry should receive similar treatment.
    My hon. Friend referred to the new Clause which we put down on an earlier stage of the Bill to provide exemption for the passenger transport industry from the fuel oil duty. At that time, the Economic Secretary made all kinds of excuses why the Treasury and the Chancellor of the Exchequer could not accept the Clause. I say very definitely to the Economic Secretary and to his right hon. Friend that the road transport industry is now in such a difficult financial position that, unless the Government do something to relieve it of some of the burden of taxation, fares will eventually have to go up again, with consequential effects upon the cost of living.
    I do not think that there is any other industry so taxed, in one way or another, as the road passenger transport industry. For the life of me, I cannot understand the mentality of the people who are advising the Chancellor in regard to this tax. They seem to assume that if a bus has a seating capacity for 50 or 54 persons it is actually carrying a full complement of passengers throughout the whole of its operating time which is, perhaps, from 5.30 in the morning to 12 o'clock at night. In reality, the position is quite different.
    Road passenger transport is in an entirely different position from that of any other section of the transport industry. It is in a different position from that of goods transport. Whereas goods transport carries a load from one point to another, passenger transport has to maintain a reasonable measure of service during both peak and off-peak periods. It has to provide—and the Traffic Commissioners are very keen on this—a reasonable amount of unremunerative services in the country areas and elsewhere, and it has to try to maintain a reasonable standard of fares.
    4.30 p.m.
    It is of vital importance that the Treasury should realise the difficult position of the passenger transport industry. If vehicles were carrying a full complement of passengers from the very commencement of their duty first thing in the morning until last thing at night there might be some justification for this iniquitous tax upon seating capacity, but the fact that in many cases buses run at a loss during off-peak periods, and that
    422
    transport undertakings are able more or less to balance their budgets only because of the traffic at peak periods, seems to me to merit fresh consideration of this matter.
    During our consideration of the Budget, in discussing the subject of fuel oil taxation I pointed out to the Financial Secretary that at the end of this financial year about 50 per cent. of the municipal transport undertakings would be in debt. I should like to ask one question of the Economic Secretary. If the same position prevailed in any other industry, would the Government be so complacent about it? If it were privately owned, would they be indifferent to the fact that this industry, which has made such a tremendous contribution to the transport of the people to and from the factories, workshops and dockyards, is having to raise its prices because of heavy taxation?
    Something must be done for passenger transport undertakings. It is no good the Economic Secretary giving us a stock reply; what we and the industry want to know is whether or not the Treasury will face its responsibilities in connection with the financial difficulties of the industry. During the war, when wage rates and conditions of employment in the transport industry were nothing like so good as those which obtained in munition factories and dockyards, I remember that we had the utmost difficulty in getting staff to man the buses necessary to keep the war machine going. We were not allowed to increase our fares in order to provide more attractive salaries and conditions of employment.
    Wage rates and conditions of employment in the industry today are still not as good as those prevailing in other industries. Many hon. Members will be aware that the industry is finding it difficult to man a sufficient number of buses in large cities and towns. The Transport Commission, or any corporation undertaking, in Bradford, Leeds, Sheffield, or elsewhere, will tell the same old story. They will say, "We cannot get the staff to man all the buses required to provide sufficient transport throughout the country." The reason for this is, very largely, that they are not in a financial position to pay rates of wages and provide conditions of employment such as would attract an increased intake of personnel.

    423
    We do not want to be fobbed off in this matter. We want a statement from the Treasury about its attitude to this very difficult problem. We have had plenty of sympathy in the past. Just before the last Election the Lord Privy Seal was full of sympathy and understanding for the difficulties facing the transport industry, but he did not do anything. I am asking the Treasury Bench not for a lot of sympathetic words or expressions of appreciation of the work which the industry is doing in the life of the community; what I want is a statement which will assure the industry that the Government will give it some financial help in order to enable it to meet its many difficulties.
    There is an overwhelming case for the acceptance of the Clause. It is unreasonable that the working man's Rolls-Royce should be taxed to the full while the real Rolls-Royces, used by the few privileged individuals who can afford to run them, bear a tax of only £12 10s. a year. The whole thing is outrageous. I hope that the Treasury will say that it will give financial assistance to the industry and will accept the Clause because it feels that the industry is entitled to some financial consideration.
    Mr. David Jones: I want to put forward one or two other reasons why the Economic Secretary should accept the Clause. I want, first, to take the position which exists in his native City of Birmingham. He knows he well as I do that every morning about 20 double-decker buses leave Birmingham for the outskirts, carrying workmen to various factories. He also knows that after making two journeys in the morning those vehicles go into the depot until they are required, in the evening, to run empty to the factories in order to make one or two trips back to the centre of the town carrying the workers from those factories, and that those vehicles are in use for about three hours a day only, for five days a week.
    That test can be applied to very many other towns. For many years I was the chairman of a transport authority in South Wales which had to turn out 17 double-decker buses every morning to convey workmen from various villages to the Treforest Trading Estate. They were not
    424
    required again until five o'clock in the evening, when they took those workmen back home. They were used only for 16 hours per five-day week. Yet before one of those vehicles could be put on the road it had to pay at least £86 8s. in taxation. In those circumstances there is no inducement to provide vehicles, and any municipality will, if it can, refuse to undertake these workmen's services.
    Furthermore, because of taxation being applied upon a basis of the seating capacity and not the size of the vehicle, there is an inducement to reduce the number of seats, with the result that at peak periods many passengers have to stand for whom seats would have been provided if this system of taxation had not been devised.
    There is not a Member of this House representing a rural area who has not, at some time or another, addressed communications to the Minister of Transport about this withdrawal of rural services. I had the privilege the other day of attending a conference at Newcastle, convened by the North Eastern Development Association and a Northumbrian rural council, which was seriously concerned about the lack of any facilities at all for bringing the people from the rural countryside into the towns.
    The reason given by both authorities, by the companies which the British Transport Commission control and by the privately owned companies, many of whom are under the control of the British Electric Traction Company, for the withdrawal of these services was that they were unremunerative and that no company, whether publicly or privately owned, could be expected to run a majority of its services which were unremunerative.
    There is a movement in the transport world to reintroduce the one-man bus because it is believed that by the removal of the conductor it will be possible to reduce costs, but even if a bus company put a 20-seaer bus on the road it would have to pay in taxation about £36 before it could be used. Because of the scarcity of traffic in the rural areas, a vehicle may be standing in a garage for long periods during the day. It may be used for service only in the morning, in the middle of the day and in the early evening. Before that vehicle can be put on the road at all £36 has to be paid. If a

    425
    vehicle with 26 seats is used, which is a popular type of vehicle for rural services, that figure is increased. I have calculated that it requires an operator of a 26-seater vehicle which is used for 313 days in the year to collect an average of 3s. per day in fares in order to pay the taxation alone.
    This is a matter which should be sympathetically examined by the Treasury. The Chancellor recently talked about the plateau of stability. Requests have been made and assented to that there should be no increase in prices during the next 12 months. Exhortations are being made to the trade unions not to make any demands for increases in wages. Here is a glorious opportunity for the Treasury to say that it will make this contribution so that some of the costs which fall upon transport operators may be eased.
    I understand from my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) that the cost to the Treasury of this concession would not be very high. At least, the Economic Secretary will not be able to tell us on this occasion that it is unfair to discriminate between heavy oil-consuming buses and petrol buses. Indeed, the right hon. Gentleman who is now the Minister of Pensions and National Insurance once argued against making any concession of tax on diesel oil on the ground that petrol vehicles were used in the rural services and heavy oil vehicles in the urban services.
    A simple inquiry from the Municipal Transport Association would have revealed to the right hon. Gentleman that that was pure nonsense. There is only a very small percentage of public service vehicles today which are not heavy oil-consuming vehicles. Therefore, he cannot get away with a statement that a discrimination can be made between the two forms of fuel.
    4.45 p.m.
    Unlike my hon. Friend the Member for Bradford, East (Mr. McLeavy), I do not think that if this concession were made it would make all the difference in the world to the bus operators, many of whom would still have extreme difficulty in operating their rural services.
    The Economic Secretary knows better than anyone else that a high degree of efficiency in the agricultural industry is largely dependent upon the good will of
    426
    the agricultural workers. What is he to say to the agricultural worker who leaves that industry to go to the nearest big town to live and work if all the services which are so necessary for a decent existence in the countryside are being withdrawn?
    Here is an opportunity for the Government to make a gesture which will not cost them very much. I can understand the Treasury refusing to make concessions of any kind which will mean a big loss to the revenue, but here is an opportunity for the Government to say to the bus operators that at least they are trying to help them to use the vehicles which they have to their maximum capacity, because they no longer propose to tax them on the basis of the number of seats provided.
    I hope that we shall hear from the Economic Secretary that he will make this little gesture, which will mean so much to the rural areas.
    Mr. Sidney Dye: I support the new Clause which has been so ably moved by my hon. Friend the Member for Enfield, East (Mr. Ernest Davies), because I represent a rural constituency in which, quite recently, a number of rural bus services ceased to operate because the operators found those services unremunerative. It is, of course, a hardship to the people in the small villages, who cannot afford to own their own motor cars, if there are no public services to enable them to go into the towns to do their shopping. This affects the older people in particular.
    I received a letter today from an old-age pensioner in my constituency who lives at South Ickenham. He complained that old-age pensioners now had to pay increased rates on their property because of the higher charges made by the rural district council and yet they were getting fewer services. One of the services which they were no longer getting was the bus service which ran along the rural road not far from their doors. In Norfolk many private operators who have operated bus services for many years, have, owing to the increasing cost of running them—not, I think, because of a decrease in the number of people using them—been compelled to withdraw the services. That comes after the Conservative Party has been in Government for about five years. It comes from a party

    427
    which has claimed in the past to look after the rural areas in particular.
    I was very interested in a debate in this House, about six weeks ago, on a Motion by the hon. Gentleman the Member for Westmorland (Mr. Vane), in which he drew attention to the need for assisting the rural transport services. That Motion was accepted by the House, but we do not want to pass Motions which are meaningless and which lead us nowhere. If the Government are sincere in their desire to assist rural transport, and road transport in particular, here is a way in which they can do it. They will be assisting not only the people who operate the transport and the passengers, but the local authorities.
    Norfolk pays more than £100,000 a year for the transport of school children by buses. If, therefore, some deduction were made on the licences for these vehicles it would mean a reduction in the charge for the school buses, and that would help the local rates. It would help the local rates by only 25 per cent. but would help the Exchequer by probably 75 per cent. It is clear that we should not be giving all this concession away. Some would come back in the form of reduced transport charges for all the children from the village schools to the grammar and secondary modern schools throughout the country.
    With that in mind, I hope that the Government spokesman will reply in favour of this proposal and will say that, representing the party which says that it looks after these rural areas, the Government recognise this as a means of giving that help. It might not be the best means but it is a means which is at our disposal at the moment, and such a concession would have an immediate effect in the rural areas. Although they all seem to be absent, there are many hon. Members of the party opposite who would welcome this. Why they are absent I really do not know. There is rather a poor showing by the back benchers of the Conservative Party, so many of whom represent, or misrepresent, or represent by absence, the rural districts of England.
    This is something which vitally affects the life of the rural communities. Our suggestion is a means by which we can stimulate new transport and keep existing transport on the roads. The life and
    428
    heart of a rural community is sustained by the people being able to get out of the villages and away from the farms into the towns for enjoyment, for the pleasure of shopping and for other purposes. Transport is essential to the rural community. I hope that the Government will look favourably upon this new Clause.
    Sir E. Boyle: The hon. Member for Norfolk, South-West (Mr. Dye) has just complained that there are not present on this side of the House more hon. Members representing the rural areas. I cannot resist pointing out that at any rate one rural Member, my hon. Friend the Member for Rye (Mr. Godman Irvine), who has the doubtful honour of representing myself, has been present throughout the debate.
    We have listened to some very interesting speeches on this new Clause, which was so ably moved by the hon. Member for Enfield, East (Mr. Ernest Davies). I will resist the temptation of engaging with him in a general debate on transport matters, partly because I do not think that you, Mr. Deputy-Speaker, would like that on this Clause, and partly because I must confess that transport is one subject on which I have never ventured to intervene in the House.
    As the hon. Member explained, the purpose of the new Clause is to reduce the rate of duty payable on public service vehicles so that it shall not exceed that payable on private cars, that is to say, £12 10s. a year. The first observation that I would make to the House is about the cost of accepting this proposal. The annual yield from hackney carriages seating more than eight persons is about £5½ million. This new Clause would reduce the yield to under £1 million, and I will simply say that in connection with a Budget in which my right hon. Friend has had to say "No" to many claimants, I am sure the House will realise that the proposal has to be scrutinised even more rigorously than usual. Certainly, to accept such a new Clause would go against the general principles of the Budget.
    I should not, however, like to rest my argument principally on those grounds, but would remind the House that the whole basis of the vehicle taxation system is that, in the main, vehicles operated for profit or for business purposes pay more

    429
    than private vehicles. In particular, the higher rates for the much heavier and larger public service and goods vehicles reflect, in part, their greater use of the roads and the greater wear they cause to the roads.
    I would, in particular, put this point to hon. Members opposite who have spoken. Any concession for public service vehicles would almost inevitably stimulate a campaign for a similar concession for goods vehicles. [HON. MEMBERS: "Oh."] I have no doubt about that, and I do not think that hon. Members opposite will dispute it. If one looks at the figures, in general the licence duties on goods vehicles are appreciably heavier than those on public service vehicles of equal weight.
    Mr. McLeavy: I think that the hon. Gentleman has made an important point which brings us back to the argument that I put forward, which was that the people who are advising the Treasury on this matter have not got the facts right. Goods vehicles cannot be compared with passenger vehicles. They carry a given load from one point to another. Passenger transport vehicles have to provide the service. They very often travel with less than half a load, sometimes a quarter of a load, but they have to maintain the service. They have an obligation to the community. There is really no comparison between the two, and I am really surprised that the Economic Secretary should try to get away with that "phoney" argument.
    Sir E. Boyle: I know the hon. Gentleman's great knowledge of, and sincerity in these matters, on which he often addresses the House, but I take absolutely full responsibility for the statement that I have just made.
    Certainly, if one looks at the figures it cannot be denied that, even agreeing with some part of the hon. Gentleman's point, under the present system they show a considerable differentiation against goods vehicles as compared with public service vehicles. One can hardly dispute that there is that differentiation, although I do not want to go into a mass of figures.
    The only other point is that relating to operating costs—which were referred to by more than one hon. Member. An analysis of the expenditure of operators of more than five buses or coaches, excluding the London Transport Executive,
    430
    shows that in 1954–55 the cost of licences of all kinds was 0·56d. per vehicle mile out of a total cost of 22·85d. per vehicle mile. I think that those figures show clearly that the reduction in duty proposed would not have any significant effect on the operating costs.
    Mr. D. Jones: That analysis is misleading. The hon. Gentleman takes the big cities, where there are dozens of vehicles operating continuously all day, and compares them with the rural and semi-rural areas, where the operators have to put numbers of vehicles on the road early in the morning and late at night and only have them on the road for about three hours a day. That clearly shows that to average it out in this way is simply nonsense.
    Sir E. Boyle: I have not, of course, got breakdown figures relating exclusively to the big cities, but there is that comparison between the 0·56d. and the 22·85d., and even if one excludes the big cities I do not think there is as much in the hon. Gentleman's point as he made out.
    It is, then, for those reasons that I must ask the House to resist the new Clause, and I can assure the House that my right hon. Friend has looked at it very carefully before coming to his conclusion.
    5.0 p.m.
    Mr. John Cronin: I listened to the Economic Secretary with some interest. He had one piece of praise for the proposed new Clause, which was that it went entirely against the principles of the Budget. That was praise, because the Budget is one of the most disappointing that we have had.
    I had some difficulty in following the arguments of the Economic Secretary. He said that public service vehicles had a large seating capacity and used the road more, and therefore caused greater wear. That was a valid point. The 50-seater bus does cause more wear to the road than a four-seater car. We ought, however, to consider the amount of wear of the road per passenger carried. That is the whole difference in the argument. Admittedly a public service vehicle causes more wear than a Rolls-Royce, but in one case 50 passengers are carried and in the other case one passenger, or perhaps one passenger and a chauffeur.

    431
    The hon. Gentleman said, on the difference in cost, that ·56d. per vehicle mile would be the saving against an operating cost of 22·85d. That is a saving of 2 per cent., a marginal saving, but all road transport works on a marginal basis in expanding its service and working out its profits and losses. If this concession were made it would represent a very big difference to rural areas, which suffer severely. It would also have a great psychological effect. I come from an area in which there are many farmers and coal miners, and where road transport is a very great problem. Our local industries are of the greatest importance. Farmers and coal miners are most deserving people, yet they often find themselves in the utmost difficulty about transport. Something should be done to assist them.
    The tax is retrogressive in every way. It is rather like the tax on windows of about 150 years ago, because it is a tax upon efficiency and amenity. My hon. Friend the Member for Enfield, East (Mr. Ernest Davies) pointed out that in the Second Schedule of the Vehicles (Excise) Act, 1949, there is a tax of £57 12s. on vehicles holding more than 32 persons. My hon. Friend did not mention it, but there is a tax on top of that of £1 4s. for every additional passenger carried. Apparently the more a vehicle takes people off the roads, reduces congestion and lessens the danger of casualties, the more severely it is taxed. That principle cannot be justified by any enlightened legislature.
    There is some purpose in a tax based upon commodities which are of doubtful social value. I would not argue much about the taxation of alcohol, which has deleterious effects, or a tax on tobacco, which is the basis of an innocuous but somewhat self-indulgent habit; but nobody travels on a public service vehicle from choice. It is in no sense a luxury or an indulgence. It is often a rather grim and grisly necessity which many hon. Members, particularly on this side of the House, face with apprehension and doubt.
    Mr. Cyril Bence: I am surprised that my hon. Friend the Member for Loughborough (Mr. Cronin) should say that. On two occasions since I have been a Member of
    432
    this House I have had the temerity to accept the offer of a lift from another hon. Member. I assure my hon. Friend that I was a bag of nerves at the end of the journey on both occasions. I have never had that experience in a public service vehicle.
    Mr. Dye: My hon. Friend will never get another lift.
    Mr. Cronin: I can sympathise with my hon. Friend.
    What I had in mind was not the nervous effect of travelling in a public vehicle, but costs. Even efficient services have high operating costs. If I were to take a public service vehicle from Ashby-de-la-Zouch to Loughborough, a distance of 12 miles, I should have to go by a circuitous route taking about two hours. Higher operating costs affect the charges made by public vehicles, in spite of the great attempts that are made to keep them reasonable.
    The tax will have a direct effect in our rural areas, and upon members of the community who are of very great value, such as coal miners and agricultural workers. If we agree to the proposed new Clause it will be an indication to the country that we are making some attempt to cope with inflation.
    Mr. A. G. Bottomley: I had occasion to say yesterday that the Economic Secretary is always polite and considerate, and I meant it. If I measure him by his usual standard, I must say that he has been inconsiderate today. He has not given a serious reply. He treated this new Clause far too lightly.
    He explained that the subject was new to him and that he had not spoken on it before. He also made mention of the fact that the hon. Member for Rye (Mr. Godman Irvine), his own Member of Parliament, was present. I would not be surprised if the hon. Member shares the view of the majority of the Members of the House in wishing that the Economic Secretary had not spoken at all.
    My hon. Friend the Member for Enfield, East (Mr. Ernest Davies) moved the proposed new Clause with great knowledge and skill. One of my hon. Friends drew an analogy between a public service vehicle, the Rolls-Royce of the worker, and the car in which the

    433
    businessman goes to business, he being a worker in a Rolls-Royce. My hon. Friend pointed out that the tax discriminated, because it was heavier on the public service vehicle than on the Rolls-Royce. My hon. Friend did not add that the worker does not get any tax relief on the public service vehicle whereas the user of the Rolls-Royce can put it down to his business account.
    Mr. Bence: Like the Daimler.
    Mr. Bottomley: I think we had better forget all about the Docker business. I have, anyhow. The less we have to say about him the better.
    One argument which the Economic Secretary used about cost was not too powerful. On this side of the House we have continually taken the view that the whole field of public transport is so important to our economy that we ought to take off whatever burden is imposed upon it, if it is possible to do so. I readily agree that, with the great amount of revenue that is received now from the taxation of transport generally, it would be difficult for any Chancellor to suggest that it should be done away with, but the very heavy tax justifies relief in one quarter or another. We tried, without success, on diesel oil. The proposed new Clause is another way, and we hoped that the Chancellor could meet our wishes.
    I will try to give one or two other arguments in addition to the powerful ones put forward by my hon. Friend the Member for Enfield, East. In view of modern transport needs, we should do everything possible to ensure that transport is not run at a loss and is able to keep on the roads to serve the community, not only so as to make a profit but possibly as a social service. It is important that transport should convey men and women to and from their work as speedily as can be. If we have a further distribution of industry, it will be necessary sometimes to have longer journeys, which can be done more expeditiously and efficiently if transport can be provided. We cannot expect that transport to be provided if losses are made such as we have heard about this afternoon. That is particularly the case in the rural areas.
    One of the reasons given by the Economic Secretary against reducing the excise tax in this case was that it would
    434
    not be fair. I do not know on what he bases that argument. As I understood it, it was that a public transport vehicle is heavy and is a greater liability because it causes more wear and tear on the roads than does a private vehicle. That is not a very convincing argument because, whereas on an average a car carries four passengers, a public service vehicle carries very many passengers. If we worked out the cost per head of those carried, we would find that the argument is not convincing and not one which should be put forward in order to defeat this Clause.
    I stress the need for a reduction in this tax in order to offset losses, especially in the rural services. The hon. Member for Gravesend (Mr. Kirk) has the honour to represent a constituency in the same part of Kent as my constituency. I think he will confirm that we get complaints from constituents and others of the need for bus services and public transport services in very important centres which are developing for industrial purposes. I am sure that view would be shared by hon. Members on both sides of the House. If we are to build up our industry it is necessary to provide cheap passenger transport.
    That is also necessary if we are to build up our export trade. The two are linked together. If we are to limit the output of passenger service vehicles, which are in demand all over the world, it will mean that to that extent we shall limit our opportunities of building up a great industry providing export potential and thereby helping the economy of the country.
    The Economic Secretary also said that this cannot be done now. I do not know when these things can be done. He said that if this were conceded there would be pressure for a similar concession for commercial vehicles and others. I ask him to consider how the Chancellor of the Exchequer pushed all that aside this afternoon when, quite rightly, he conceded the claims of holders of the Victoria Cross. Why cannot the Economic Secretary take the same view in this instance and say that this concession shall apply only to public service vehicles? if he would do that it would benefit the nation as a whole. The hon. Gentleman ought to look at this again and not to turn it down. I ask him to reconsider

    435
    the matter. If he will not I shall have no alternative but to ask my hon. Friends to divide the House.
    Question put, That the Clause be read a Second time:—
    The House divided: Ayes 196, Noes 245.

    Division No. 261.]

    AYES

    [5.14 p.m.

    Ainsley, J. W.

    Grimond, J.

    Paget, R. T.

    Albu, A. H.

    Hale, Leslie

    Paling, Will, T. (Dewsbury)

    Allaun, Frank (Salford, E.)

    Hall, Rt. Hn. Glenvil (Colns Valley)

    Pannell, Charles (Leeds, W.)

    Allen, Arthur (Bosworth)

    Hamilton, W. W.

    Parkin, B. T.

    Allen, Scholefield (Crewe)

    Harrison, J. (Nottingham, N.)

    Pearson, A.

    Anderson, Frank

    Hastings, S.

    Plummer, Sir Leslie

    Awbery, S. S.

    Hayman, F. H.

    Popplewell, E.

    Bacon, Miss Alice

    Healey, Denis

    Price, J. T. (Westhoughton)

    Balfour, A.

    Henderson, Rt. Hn. A. (Rwly Regis)

    Price, Philips (Gloucestershire, W.)

    Bence, C. R. (Dunbartonshire, E.)

    Herbison, Miss M.

    Probert, A. R.

    Benson, G.

    Hobson, C. R.

    Proctor, W. T.

    Beswick, F.

    Holman, P.

    Pryde, D. J.

    Blackburn, F.

    Holmes, Horace

    Randall, H. E.

    Blenkinsop, A.

    Holt, A. F.

    Rankin, John

    Boardman, H.

    Howell, Charles (Perry Barr)

    Redhead, E. C.

    Bottomley, Rt. Hon. A. G.

    Howell, Denis (All Saints)

    Reeves, J.

    Bowden, H. W. (Leicester, S. W.)

    Hoy, J. H.

    Reid, William

    Bowles, F. G.

    Hubbard, T. F.

    Roberts, Albert (Normanton)

    Boyd, T. C.

    Hughes, Cledwyn (Anglesey)

    Roberts, Goronwy (Caernarvon)

    Braddock, Mrs. Elizabeth

    Hughes, Emrys (S, Ayrshire)

    Robinson, Kenneth (St. Pancras, N.)

    Brockway, A. F.

    Hughes, Hector (Aberdeen, N.)

    Royle, C.

    Broughton, Dr. A. D. D.

    Hunter, A. E.

    Shinwell, Rt. Hon. E.

    Brown, Rt. Hon. George (Belper)

    Hynd, H. (Accrington)

    Short, E. W.

    Brown, Thomas (Ince)

    Hynd, J. B. (Attercliffe)

    Silverman, Julius (Aston)

    Burke, W. A.

    Irving, S. (Dartford)

    Silverman, Sydney (Nelson)

    Burton, Miss F. E.

    Janner, B.

    Skeffington, A. M.

    Butler, Mrs. Joyce (Wood Green)

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

    Slater, J. (Sedgefield)

    Castle, Mrs. B. A.

    Jeger, George (Goole)

    Smith, Ellis (Stoke, S.)

    Champion, A. J.

    Jeger, Mrs. Lena (Holbn & St. Pncs, S.)

    Snow, J. W.

    Clunie, J.

    Jenkins, Roy (Stechford)

    Soskice, Rt. Hon. Sir Frank

    Coldrick, W.

    Johnson, James (Rugby)

    Sparks, J. A.

    Collick, P. H. (Birkenhead)

    Jones, Rt. Hon. A. Creech (Wakefield)

    Steele, T.

    Collins, V. J. (Shoreditch & Finsbury)

    Jones, David (The Hartlepools)

    Stewart, Michael (Fulham)

    Cove, W. G.

    Jones, J. Idwal (Wrexham)

    Stokes, Rt. Hon. R. R. (Ipswich)

    Craddock, George (Bradford, S.)

    Jones, T. W. (Merioneth)

    Strauss, Rt. Hon. George (Vauxhall)

    Cronin, J. D.

    Key, Rt. Hon. C. W.

    Stross, Dr. Barnett (Stoke-on-Trent, C.)

    Crossman, R. H. S.

    King, Dr. H. M.

    Summerskill, Rt. Hon. E.

    Cullen, Mrs. A.

    Lawson, G. M.

    Swingler, S. T.

    Daines, P.

    Ledger, R. J.

    Thomas, George (Cardiff)

    Dalton, Rt. Hon. H.

    Lee, Frederick (Newton)

    Thomson, George (Dundee, E.)

    Darling, George (Hillsborough)

    Lee, Miss Jennie (Cannock)

    Thornton, E.

    Davies, Rt. Hon. Clement (Montgomery)

    Lipton, Lt.-Col. M.

    Timmons, J.

    Davies, Ernest (Enfield, E.)

    Logan, D. G.

    Tomney, F.

    Davies, Stephen (Merthyr)

    Mabon, Dr. J. Dickson

    Ungoed-Thomas, Sir Lynn

    Deer, G.

    MacColl, J. E.

    Usborne, H. C.

    de Freitas, Geoffrey

    McInnes, J.

    Weitzman, D.

    Delargy, H. J.

    McKay, John (Wallsend)

    Wells, Percy (Faversham)

    Dodds, N. N.

    McLeavy, Frank

    Wells, William (Walsall, N.)

    Dugdale, Rt. Hn. John (W. Brmwch)

    MacPherson, Malcolm (Stirling)

    West, D. G.

    Dye, S.

    Mahon, Simon

    Wheeldon, W. E.

    Edwards, Rt. Hon. John (Brighouse)

    Mann, Mrs. Jean

    White, Mrs. Eirene (E. Flint)

    Edwards, Rt. Hon. Ness (Caerphilly)

    Marquand, Rt. Hon. H. A.

    Wilkins, W. A.

    Edwards, W. J. (Stepney)

    Mayhew, C. P.

    Williams, David (Neath)

    Evans, Albert (Islington, S. W.)

    Messer, Sir F.

    Williams, Rev. Llywelyn (Ab'tillery)

    Evans, Edward (Lowestoft)

    Mitchison, G. R.

    Williams, Rt. Hon. T. (Don Valley)

    Evans, Stanley (Wednesbury)

    Moody, A. S.

    Williams, W. R. (Openshaw)

    Fernyhough, E.

    Morrison, Rt. Hn. Herbert (Lewis'm, S.)

    Williams, W. T. (Barons Court)

    Flenburgh, W.

    Mort, D. L.

    Willis, Eustace (Edinburgh, E.)

    Fraser, Thomas (Hamilton)

    Moss, R.

    Wilson, Rt. Hon. Harold (Huyton)

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

    Mulley, F. W.

    Winterbottom, Richard

    Gibson, C. W.

    Oliver, G. H.

    Woodburn, Rt. Hon. A.

    Gooch, E. G.

    Oram, A. E.

    Yates, V. (Ladywood)

    Gordon Walker, Rt. Hon. P. C.

    Orbach, M.

    Younger, Rt. Hon. K.

    Greenwood, Anthony

    Oswald, T.

    Zilliacus, K.

    Grenfell, Rt. Hon. D. R.

    Owen, W. J.

    Grey, C. F.

    Padley, W. E.

    TELLERS FOR THE AYES:

    Mr. Rogers and Mr. John Taylor

    NOES

    Agnew, Cmdr. P. G.

    Armstrong, C. W.

    Baldwin, A. E.

    Aitken, W. T.

    Ashton, H.

    Balniel, Lord

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

    Astor, Hon. J. J.

    Barter, John

    Alport, C. J. M.

    Atkins, H. E.

    Baxter, Sir Beverley

    Amory, Rt. Hn. Heathcoat (Tiverton)

    Baldock, Lt.-Cmdr. J. M.

    Beamish, Maj. Tufton

    437

    Bell, Philip (Bolton, E.)

    Head, Rt. Hon. A. H.

    Noble, Comdr. A. H. P.

    Bell, Ronald (Bucks, S.)

    Heath, Rt. Hon. E. R. G.

    Oakshott, H. D.

    Bennett, F. M. (Torquay)

    Henderson, John (Cathcart)

    Ormsby-Gore, Hon. W. D.

    Bevins, J. R. (Toxteth)

    Hill, Rt. Hon. Charles (Luton)

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

    Bidgood, J. C.

    Hill, Mrs. E. (Wythenshawe)

    Orr-Ewing, Sir Ian (Weston-S-Mare)

    Biggs-Davison, J. A.

    Hill, John (S. Norfolk)

    Osborne, C.

    Birch, Rt. Hon. Nigel

    Hirst, Geoffrey

    Page, R. G.

    Bishop, F. P.

    Holland-Martin, C. J.

    Partridge, E.

    Black, C. W.

    Hope, Lord John

    Peyton, J. W. W.

    Body, R. F.

    Hornby, R. P.

    Pilkington, Capt. R. A.

    Bossom, Sir Alfred

    Horobin, Sir Ian

    Pitman, I. J.

    Boyle, Sir Edward

    Horsbrugh, R. Hon. Dame Florence

    Pitt, Miss E. M.

    Brains, B. R.

    Howard, Hon. Greville (St. Ives)

    Pott, H. P.

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

    Howard, John (Test)

    Powell, J. Enoch

    Brooke, Rt. Hon. Henry

    Hudson, Sir Austin (Lewisham, N.)

    Price, Henry (Lewisham, W.)

    Brooman-White, R. C.

    Hughes Hallett, Vice-Admiral J.

    Prior-Palmer, Brig. O. L.

    Browne, J. Nixon (Craigton)

    Hughes-Young, M. H. C.

    Profumo, J. D.

    Bryan, P.

    Hurd, A. R.

    Raikes, Sir Victor

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

    Hutchison, Sir Ian Clark (E'b'gh, W,)

    Ramsden, J. E.

    Bullus, Wing Commander E. E.

    Hutchison, Sir James (Scotstoun)

    Rawlinson, Peter

    Burden, F. F. A.

    Hyde, Montgomery

    Redmayne, M.

    Channon, H.

    Iremonger, T. L.

    Rees-Davies, W. R.

    Chichester-Clark, R.

    Irving, Bryant Godman (Rye)

    Remnant, Hon. P.

    Clarke, Brig. Terence (Portsmth, W.)

    Jenkins, Robert (Dulwich)

    Ridsdale, J. E.

    Cole, Norman

    Jennings, J. C. (Burton)

    Rippon, A. G. F.

    Cooper, Sqn. Ldr. Albert

    Johnson, Dr. Donald (Carlisle)

    Robertson, Sir David

    Cooper-Key, E. M.

    Johnson, Eric (Blackley)

    Rodgers, John (Sevenoaks)

    Cordeaux, Lt.-Col. J. K.

    Joynson-Hicks, Hon. Sir Lancelot

    Roper, Sir Harold

    Corfield, Capt. F. V.

    Keegan, D.

    Ropner, Col. Sir Leonard

    Craddock, Beresford (Spelthorne)

    Kerby, Capt. H. B.

    Russell, R. S.

    Crowder, Sir John (Finchley)

    Kerr, H. W.

    Sandys, Rt. Hon. D.

    Cunningham, Knox

    Kershaw, J. A.

    Schofield, Lt.-Col. W.

    Currie, G. B. H.

    Kimball, M.

    Scott-Miller, Cmdr. R.

    Dance, J. C. G.

    Kirk, P. M.

    Sharples, R. C.

    Davidson, Viscountess

    Lagden, C. W.

    Shepherd, William

    D'Avigdor-Goldsmid, Sir Henry

    Lambert, Hon. G.

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

    Deedes, W. F.

    Leavey, J. A.

    Spearman, Sir Alexander

    Digby, Simon Wingfield

    Leburn, W. G.

    Speir, R. M.

    Donaldson, Cmdr. C. E. McA.

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

    Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)

    Doughty, C. J. A.

    Legh, Hon. Peter (Petersfield)

    Stevens, Geoffrey

    du Cann, E. D. L.

    Lindsay, Hon. James (Devon, N.)

    Steward, Harold (Stockport, S.)

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

    Linstead, Sir H. N.

    Steward, Sir William (Woolwich, W.)

    Duncan, Capt. J. A. L.

    Lloyd, Maj. Sir Guy (Renfrew, E.)

    Stoddart-Scott, Col, M.

    Duthie, W. S.

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Studholme, Sir Henry

    Eccles, Rt. Hon. Sir David

    Lloyd-George, Maj. Rt. Hon. G.

    Taylor, Sir Charles (Eastbourne)

    Eden, Rt. Hn. Sir A. (Warwick&L'm'tn)

    Longden, Gilbert

    Taylor, William (Bradford, N.)

    Eden, J. B. (Bournemouth, West)

    Lucas, P. B. (Brentford & Chiswick)

    Teeling, W.

    Errington, Sir Eric

    Lucas-Tooth, Sir Hugh

    Thomas, Leslie (Canterbury)

    Erroll, F. J.

    Mackeson, Brig. Sir Harry

    Thomas, P. J. M. (Conway)

    Farey-Jones, F. W.

    Mackie, J. H. (Galloway)

    Thompson, Kenneth (Walton)

    Fell, A.

    Maclay, Rt. Hon. John

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

    Finlay, Graeme

    McLean, Nell (Inverness)

    Thornton-Kemsley, C. N.

    Fisher, Nigel

    MacLeod, John (Ross & Cromarty)

    Tiley, A. (Bradford, W.)

    Fletcher-Cooke, C.

    Macmillan, Rt. Hn. Harold (Bromley)

    Tilney, John (Wavertree)

    Fort, R.

    Macpherson, Niall (Dumfries)

    Touche, Sir Gordon

    Freeth, D. K.

    Maddan, Martin

    Turner, H. F. L.

    Gammans, Sir David

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

    Tweedsmuir, Lady

    George, J. C. (Pollok)

    Maitland, Hon. Patrick (Lanark)

    Vane, W. M. F.

    Gibson-Watt, D.

    Markham, Major Sir Frank

    Vickers, Miss J. H.

    Glover, D.

    Marlowe, A. A. H.

    Vosper, D. F.

    Godber, J. B.

    Marshall, Douglas

    Wakefield, Edward (Derbyshire, W.)

    Gomma-Duncan, Col. Sir Alan

    Mathew, R.

    Wakefield, Sir Wavell (St. M'lebone)

    Gower, H. R.

    Maudling, Rt. Hon. R.

    Walker-Smith, D. C.

    Graham, Sir Fergus

    Mawby, R. L.

    Wall, Major Patrick

    Grant, W. (Woodside)

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

    Ward, Hon. George (Worcester)

    Grant-Ferris, Wg Cdr. R. (Nantwich)

    Medlicott, Sir Frank

    Ward, Dame Irene (Tynemouth)

    Green, A.

    Milligan, Rt. Hon. W. R.

    Waterhouse, Capt. Rt. Hon. C.

    Grimston, Hon. John (St. Albans)

    Molson, Rt. Hon. Hugh

    Watkinson, Rt. Hon. Harold

    Grimston, Sir Robert (Westbury)

    Monckton, Rt. Hon. Sir Walter

    Whitelaw, W.S.I. (Penrith & Border)

    Gurden, Harold

    Moore, Sir Thomas

    Williams, Paul (Sunderland, S.)

    Hall, John (Wycombe)

    Mott-Radclyffe, C. E.

    Williams, R. Dudley (Exeter)

    Harris, Frederic (Croydon, N. W.)

    Nabarro, G. D. N.

    Wilson, Geoffrey (Truro)

    Harris, Reader (Heston)

    Nairn, D. L. S.

    Woollam, John Victor

    Harrison, A. B. C. (Maldon)

    Neave, Airey

    Yates, William (The Wrekin)

    Harrison, Col. J. H. (Eye)

    Nicholls, Harman

    Harvey, John (Walthamstow, E.)

    Nicholson, Godfrey (Farnham)

    TELLERS FOR THE NOES:

    Harvie-Watt, Sir George

    Nicolson, N. (B'n'm'th, E. & Chr'ch)

    Mr. Wills and Mr. Barber.

    Hay, John

    Nield, Basil (Chester)

    Clause 2.—(EXCISE DUTY ON STRENGTHENED CIDER AND PERRY.)
    Mr. Bryant Godman Irvine: I beg to move, in page 2, line 27, to leave out from "April" to the end of line 33.
    The Chairman: It would also be convenient to discuss at the same time the following Amendment in the hon. Member's name: in line 43, at the end, to insert:
    (4) In so far as this section restricts the class of intoxicating liquor to which any retailer's on-licence or retailer's off-licence extends it shall not have effect before the first day of June, nineteen hundred and fifty-seven.
    Mr. Godman Irvine: The Committee will be happy to know that the purpose of the Amendment can be explained in a very few words. Clause 2 deals with Excise Duty on strengthened cider and perry. I was interested to note that the hon. Member for Loughborough (Mr. Cronin) said only a few moments ago that he thought nobody could object to a tax on alcohol. Anyone who heard the debate on this Clause in Committee could hardly have formed that view. The result of Clause 2 is that cider will be divided into two classes—cider below 15 degrees of proof and cider over 15 degrees of proof. Cider which is over 15 degrees of proof is by the Clause deemed to be sweets.
    Two things follow from that. One is that the cider drinkers will have the privilege of paying the Chancellor of the Exchequer for the benefit of drinking these beverages. The second is that they can be sold only in premises where there is an adequate licence. A large quantity of cider is sold in premises which hold a beer-on or a beer-off licence, and it follows that after 18th July those premises will not be able to provide their customers with the beverage which they like. The licensing point is dealt with in Clause 2 (2, b), where it is provided that a licence would not be required before 18th July. When I first read the Clause I was unable to follow why the date 18th July was mentioned. The Financial Secretary explained that it was thought right that people who had a stock of this cider should be allowed to dispose of it before the provisions came into force with full weight.
    What is not provided for is what is to happen between 18th July and the next brewster sessions. As the Committee
    440
    knows, the general annual licensing sessions take place only in the February of each year. Last February it would not be possible for anybody who wanted to sell cider to foresee that he would need a sweets licence between then and the next brewster sessions. The position therefore arises under the Clause that from July until next February he would not have a licence and would be unable to apply for a licence to sell this beverage until next February. The Amendment has been put down to deal with that.
    The result of it is that Clause 2 (2, b) would be deleted, and there would be a new subsection (4) to provide that a licence would not be needed in order to sell this class of liquor between now and the next time the general annual licensing session is held.
    The Financial Secretary said that he had had no representations about this matter from the trade. I have been able to represent the case of only one cider manufacturer—a man in my constituency; and I raised that matter on Second Reading. I am putting it only on that basis today, and I am not representing the trade. The Financial Secretary is probably right in what he says on that subject.
    I am told, however, that this licensing point might be quite a serious matter for this manufacturer—and there may be others. It will not have escaped your notice, Sir Charles, that the financial arrangements under the Clause are quite clear, and it may be a coincidence that the licensing part of the Clause is not quite so clear. I therefore put forward the Amendment, and I hope that the Financial Secretary will be able to give us some assistance on the point.
    Mr. William Teeling: I beg to second the Amendment.
    I must confess that until this Budget I knew very little about cider, but, as often happens when I want to discover the interests of the younger generation, I went to my young Conservatives. With them I made a tour and found out a little of the feeling in Sussex on this point. I discovered that there are two organisations—the Merridown Wine Company and Church Farm Ltd.—which supply this cider which is a little stronger than

    441
    others. The two gentlemen who started the Merridown cider business were prisoners-of-war in Germany where they obtained the recipe, or whatever we like to call it, for this apple production. They brought it back from Germany after the war. Since then they have made a tremendous success of the business and have found that the Americans in this country like their cider very much. The business has been going ahead for quite a time.
    I also found that in my constituency there is a gentleman who is concentrating more or less on selling this form of cider. Like my hon. Friend the Member for Rye (Mr. Godman Irvine), I think there are only one or two people who are dealing with it in their respective areas, but this man was making quite a lot of money out of it. His solicitor has corresponded with me and also with the Treasury, and, roughly speaking, this is what his solicitor has told me.
    About 60 per cent. of Mr. Traynor's sales are in vintage ciders produced and sold by the two companies which I have mentioned. Mr. Traynor has been selling these ciders for over three years and has built up the business based on their sales. Since his stocks of vintage cider were used up two months ago, he has steadily lost business, and goodwill is being lost by failure to supply these ciders to many persons requiring them. If the sale of these ciders continues to be impossible as a result of the Finance Bill, Mr. Traynor will be forced to close the business, because it is impossible to carry on "The Cider Bar" in Brighton on takings of 40 per cent. of the turnover prior to 5th April.
    He had a certain amount of stock left over at that date, but I am afraid that the Treasury were wrong in thinking that it would last until the middle of July. It was consumed in a fortnight after the actual date of the Budget, since when this poor man has been unable to do anything because he cannot get the required licence until the next brewster sessions which will be held next February or March.
    I am sure that it was not in the mind of the Chancellor to do what is a definite harm to this business. Therefore, I feel that it would be a generous gesture on the part of the Treasury to agree to this
    442
    Amendment and make it possible for this man to carry on at least until the date of the brewster sessions when the justices can decide whether or not he should have a licence.
    5.30 p.m.
    The Financial Secretary to the Treasury (Mr. Henry Brooke): The question here is whether we can avoid an injustice. My hon. Friend the Member for Rye (Mr. Godman Irvine) raised this matter at an earlier stage of our debates after the Budget announcement, and pointed out, quite rightly, that there seemed likely to be a gap between the date when the retailer exhausted his stock of cider or 18th July, three months after the Budget date, and the time of the next brewster sessions when the retailer can make application for the licence which will hence-forward be needed if he wishes to sell strengthened ciders.
    This was discussed again in Committee, and at that time I gave an undertaking that I would consult with my right hon. and gallant Friend the Home Secretary, because the licensing justices might have an interest in this, and one thing upon which we in this House are all agreed is that we should not wish to do anything which might prejudge their decision or render their work more difficult. There is no doubt that unless the Clause is amended, certain retailers and their customers will have a legitimate sense of injustice against Parliament, because, through the operation of the Finance Act, we shall have created this period during which no power is available whereby a man can regain his opportunity to sell this cider legally until he applies to the brewster sessions next spring.
    I have carried out my pledge, I have consulted my right hon. and gallant Friend and also my right hon. Friend the Secretary of State for Scotland. They do not feel that the House would be creating a difficulty regarding the work of the justices were it thought fit to make this change. I must emphasise this very strongly, because were the House to accept these Amendments, it must be perfectly clear that it is solely to avoid, as it were, a chance dislocation of trade by allowing the position to remain unchanged for the sale of strengthened cider until the necessary application for a licence could be made to the licensing justices

    443
    next year. It would not be intended, and must not be considered, as in any way an attempt to prejudge the consideration by the justices of such applications in the ordinary way. Indeed, if the Clause is thus amended, the justices will be completely free to reach their own decisions on the merits of the case in the future as they are in the case of other applications.
    Having said that, and subject to those safeguards, I recommend the House to accept the Amendments. Otherwise, I think that injustice would be caused to a small number of individuals, and that is something that no hon. Member would desire.
    Amendment agreed to.
    Further Amendment made: In page 2, line 43, at end insert:
    (4) in so far as this section restricts the class of intoxicating liquor to which any retailer's on-licence or retailer's off-licence extends it shall not have effect before the first day of June, nineteen hundred and fifty-seven.—[Mr. Godman Irvine.]

    Clause 6.—(EXEMPTION FROM CUSTOMS DUTIES OF FILMS PRODUCED BY THE UNITED NATIONS.)
    Mr. John Hay: I beg to move, in page 4, line 42, to leave out "or one of its" and insert:
    "the Council of Europe, Western European Union, the Brussels Treaty Organisation or the North Atlantic Treaty Organisation or any of their".
    I think that perhaps the following Amendment might be considered at the same time, as it is consequential, namely, in page 5, line 1, to leave out from the beginning to "agencies", and insert:
    "any of the said bodies or their specialised".
    The purpose of this Clause is to exempt from Customs Duty certain films of a non-commercial character produced by the United Nations or any of its Specialised Agencies. The reasons for its inclusion in the Finance Bill were shortly but succinctly given by my right hon. Friend the Financial Secretary during the Second Reading debate when he said that the Clause was necessary
    "to enable the United Kingdom to implement obligations under the U.N.E.S.C.O. Agreement, which was ratified in 1954, regarding import duty on films produced by the United Nations and its specialised agencies."—[OFFICIAL REPORT, 9th May, 1956; Vol. 552, c. 1233.]
    444
    We had a short debate on the Clause during the Committee stage, on the Question, "That the Clause stand part of the Bill".
    My right hon. Friend then explained that already the existing powers enable the entry free of Customs Duty of films produced for scientific or research purposes or for the advancement of learning or art. He added that free entry in this sense was not given if the film was to be used for a substantially commercial purpose. He went on to explain that duty has not been charged until now on this sort of film, but the thing has been done by means of one of those "extra-statutory concessions" which are all too rarely given by the Treasury.
    The ambit of the Clause is limited to the United Nations and its Specialised Agencies. The House will observe that the Amendments which we propose would extend its scope to certain other films produced by other international bodies, the Council of Europe, Western European Union, the Brussels Treaty Organisation and N.A.T.O. I should like to say a word about each of these bodies in connection with the production of films of this kind, because it is with films that we are mainly concerned, although the Clause specifically refers to what I think in the jargon is called "public information media", that is to say, film strips, micro-films or cine recordings.
    First, I wish to refer to the Council of Europe. I understand that until now the Council has not produced any film of this character. But the Committee on Cultural and Scientific Questions recently recommended to the Consultative Assembly of the Council that an expanded information programme should be carried out which would include the manufacture and distribution of this sort of film. It was, I think, largely due to the efforts of my hon. Friend the Member for Bournemouth, East and Christchurch (Mr. N. Nicolson), who produced an admirable report on the subject, that the Committee agreed and in April last the Consultative Assembly carried the recommendation unanimously.
    I do not know what has happened to that recommendation since. Having been unanimously adopted, I hope that it will be implemented. But there is a rumour going round that, as usual, Her Majesty's Government have imposed a veto, and

    445
    that this particular recommendation will fall by the wayside, as so many previous recommendations of the Consultative Assembly have done. I hope that that is not so. In the hope that perhaps it will not be so, and that the Council will be producing films of this kind, the Amendment is drawn to include films produced by that body. If it transpires that the Council can produce films, any concession which can be made in this Clause, as amended, would be useful.
    It is mainly in relation to the second and third of the bodies mentioned in the Amendment that the matter arises. Western European Union is the successor to the old Brussels Treaty Organisation, and the House will recollect the work done in founding Western European Union by my right hon. Friend the Prime Minister in 1954, the flight that he undertook to a number of the capitals of Europe, and his discussions with statesmen, concluding eventually with the Paris Agreements. Western European Union has been built up on the Brussels Treaty Organisation. One of its essential functions is the exploration of cultural and social matters as they affect the seven countries which are members, and the production of films forms a most important part of that work. So far, the Brussels Treaty Organisation and Western European Union have produced three different categories of non-commercial films, and I should like to say a word about each of them.
    First there are a number of joint productions by international teams. One particular example is a film called "The Open Window", a colour film on landscape painting, produced in 1953 by the Brussels Treaty Organisation—by five countries in collaboration. I have some figures relating to the distribution of that film inside Great Britain. Up to March this year, it has had 338 commercial bookings in ordinary cinemas, 191 non-commercial showings, mainly through the Central Office of Information—and it is estimated that some 7,000 people have seen those showings—and finally it has had a world-wide distribution through the British Council. Lord Beaverbrook, please note.
    This year Western European Union is producing a film in this category called "December—the Children's Month". It is about Christmas festivities in the seven
    446
    countries and it is a film for children. That is the sort of film that everybody likes to see, particularly at Christmas time.
    The second category relates to films in a series made by a number of the various member countries. In 1956 five countries got together to produce a series of educational films on geography, and in the coming year, 1957, the seven countries are getting together to produce a series of educational films on the history of science. These will be of great value.
    The final category consists of exchanges of films of a cultural, informative, documentary, educational or children's character. So far, I am told, the United Kingdom has had through Western European Union some 30 films from five countries. Many hon. Members may remember seeing about a year ago, or perhaps more recently, a film called "Men against the Sea", produced by the Netherlands Government, and telling the story of the tragic events which beset the Dutch when the North Sea floods took place some years ago, and of the work which has been done since to prevent a repetition of that incident. That is the sort of film that has been distributed widely in this country, mainly through the organisation of Western European Union.
    I think I have already said enough to show that in this field some very useful work is being done by at least one of these often much-derided international bodies. People often say that we are members of these bodies like W.E.U. and the Council of Europe, but nothing happens. Well, this is something that is being done, and I hope that this Amendment will help to improve the opportunities for that work to be carried out.
    The Amendment also deals with N.A.T.O. I have not a great deal of information about the production of films of this sort by N.A.T.O., but I am told that there have been quite a number, including a series of 14 films, each one of which has been produced by one of the N.A.T.O. countries under the general title of "The Atlantic Community". I think that is the sort of thing, very similar indeed to the United Nations series of films, with which the Clause already deals.
    It could well be that all these films about which I have been talking already

    447
    come under the Treasury's extra-statutory concession, but I think the House would agree that, all other things being equal, it would be better if the importation and freedom from Customs Duty of such films were dealt with by legislation, as is to be done in respect of U.N. films, rather than that the matter should be left to be dealt with by such a concession. I think that, if for no other reason, it would be an earnest of our intentions as a nation to co-operate with our friends abroad and to enable our people to know something more of the life of countries overseas than is shown in the sometimes rather highly coloured and distorted versions which the commercial cinemas put before us.
    I hope that my right hon. Friend will be able to say, if not that he can at once agree to the Amendment, that the matter will be given very careful consideration.
    5.45 p.m.
    Mr. Peter Kirk: I beg to second the Amendment.
    My hon. Friend the Member for Henley (Mr. Hay) has spoken so persuasively, that I do not think there is any need for me to say much in support. I should, however, like to refer to one matter in connection with my hon. Friend's last point. There is a suspicion—whether it is well founded or not is not for me to say, in view of my short experience in the Council of Europe—that the British Government are somewhat half-hearted about the support they give to these international bodies, that they are always turning everything down, and that whenever any suggestion is put forward the Foreign Office can be relied upon to veto it.
    That is the general attitude. It may or may not be true—it is not for me to judge—but if we were to make this concession, which is a small one, it would go quite a long way to kill that idea which is so prevalent in Europe at the moment. I believe that a real service could be done to our propaganda abroad, as well as to the good propaganda of other countries in this country, by making a concession of this kind. It would help the free exchange of ideas, which I am sure every hon. Member would wish to see between this country and other European countries. In those circumstances, it is with
    448
    great pleasure that I second the Amendment.
    Mrs. Eirene White: I am sure that we all have the greatest sympathy with the intentions behind the Amendment, and I am certain that we would all wish that the type of film which the hon. Member for Henley (Mr. Hay) has described should not in any way be impeded in coming into this country and should not be the subject of Customs Duty. But I am afraid that the method chosen seems to us on this side of the House to be ill-advised.
    If these films are worth bringing into the country, because they are children's films or educational films and so on, surely arrangements should be made to bring them in on their merits rather than according to the body which has produced them. There is something to be said for doing what we have already done, namely, for giving a blanket approval to the United Nations Organisation and its subsidiaries, but I am sure that the hon. Member will see that what he is trying to do leads along a path to which one can see no end.
    I have here a list of organisations. The Council of Europe would be unexceptionable, but there may be people who have views about the North Atlantic Treaty Organisation. Why should films sponsored by countries which happen to be in a defensive organisation of that sort have special concessions—and, if the North Atlantic Treaty Organisation, why not the South-East Asia Treaty Organisation? Why not the members of the Bagdad Pact?
    One could go on mentioning various international treaty organisations of which this country is or might in the future be a member, and if by any chance they added film making to their activities there would be no logical reason why they should not equally be included. One might then go on to say: "If we are to have this kind of organisation covered by legislation, why stop here? Why not the great international voluntary organisations? Why not the Girl Guides or the International Council of Women?"
    It is for that reason that my hon. Friends and I feel some hesitation about this proposal. We do not want to make too much fuss about it, but, in expressing our views, it is not from any lack of

    449
    sympathy with the intentions of the hon. Gentleman that we disagree with him; we really feel that this proposed method of dealing with this type of film is not satisfactory. We therefore suggest that the hon. Members who are interested, and the Government, might think again, and try to discover a more sensible way of allowing these films, which we all want to see in this country, to come in without the imposition of Customs Duty.
    Sir James Hutchison: I am disappointed that the hon. Lady the Member for Flint, East (Mrs. White) has taken the view she has. I had hoped that I should find a good deal of support among hon. Members opposite who have been to Strasbourg and other towns in which these meetings have been held. After all, the hon. Lady is really arguing that, because we suggest extending this privilege to four bodies mentioned in the Amendment, we must extend it further. But we are asking only for the extension of something which already exists in regard to the United Nations. Therefore, to be logical, the hon. Lady should try to scrub out and destroy the facilities accorded to the United Nations. I had hoped also that I should receive some support from my right hon. Friend the Chancellor, who has played so important a part on a number of occasions at Strasbourg, where he is held in great esteem.
    It is one of the problems of today for ordinary members of the electorate to know what all these bodies are whose initials appear here and there in the newspapers. If we are, in fact, to continue to support organisations such as the Council of Europe and Western European Union, it is highly desirable that the public should know what those bodies are trying to do. In our constituencies, we labour to explain these rather complicated organisations and their rather flexible functions and duties. Here is an opportunity for making such bodies as Western European Union known. Those who know anything about Western European Union already probably identify it almost entirely with matters of defence, whereas in fact it has under its umbrella of activity cultural, educational and social problems and responsibilities. It is only with that aspect that we are concerned in this Amendment.
    450
    I should be glad if my right hon. Friend would give us some sort of assurance with regard to the ingress of these films, whatever their merits may be. I am not at the moment really arguing the merits of the films; I think they are self-evident from the titles which my hon. Friend the Member for Henley (Mr. Hay) read out and from the titles which can be seen by those who are interested. I am arguing that it is for the benefit of the public that everyone should know that Western European Union and the Council of Europe are concerned in a sort of cultural and social drive among all the countries of Western Europe. That purpose, which I am sure 99 per cent. of the population would in fact support, is behind my hon. Friend's idea, in part at any rate, in asking that this Amendment be accepted by my right hon. Friend.
    Sir E. Boyle: We have heard a very agreeable and interesting speech from my hon. Friend the Member for Henley (Mr. Hay) who moved the Amendment, and we have had a speech from the hon. Lady the Member for Flint, East (Mrs. White) which, I must say, might almost be taken as a model speech from the Treasury Bench during a Finance Bill debate.
    I will say this to my hon. Friends. The purpose of the Clause, as the House knows, is to serve the very limited objective of enabling the United Kingdom to fulfil her agreements under Article I, Annex C, subsection (iv), of the U.N.E.S.C.O. Agreement of 20th November, 1950. That Agreement provides for the removal of import duties and other restrictions from a limited range of educational, scientific and cultural materials. The purpose of the Clause is the specific one of giving effect to that Agreement.
    If we find ourselves in the position of entering into a similar agreement with a similar kind of organisation, then it may well be that we shall want to introduce another Clause of this type; but I must say that I think there are real disadvantages in adding to this Clause a number of organisations of which the United Kingdom is simply a member, for the reason that the hon. Lady mentioned. It is very difficult to see quite where one could stop in doing that.

    451
    Therefore, I suggest to my hon. Friends that the Amendment which my hon. Friend the Member for Henley has moved does in a sense mistake the very strictly limited objective of the Clause. There is, of course, no doubt at all that the work of these organisations is of great value. I am myself an old alumnus of the Council of Europe, and I quite agree with all that my hon. Friends have said on that subject. But I hope they will agree to withdraw the Amendment, on the understanding that there is no dispute at all between us about the importance of these organisations or the cultural work they do, or about the value of these films; it is simply that we have quite deliberately limited the Clause to implement a specific Agreement.
    Mr. Hay: I have listened very carefully to what my hon. Friend has said. I must admit that I did not exactly expect him to come forward and welcome the Amendment with open arms, because I anticipated that he would take very much the same point as that taken by the hon. Lady the Member for Flint, East (Mrs. White) in her speech. But, with respect to my hon. Friend, I hope that this matter will not be completely lost sight of. It is all very well to say that the purpose behind the Amendment is a good one, that we do not want to stop this sort of film coming into the country, and we all believe in these international bodies. In my opinion, that is not good enough.
    Mr. Deputy-Speaker: The hon. Member is making a second speech, is he not?
    Mr. Hay: With respect, I thought I was entitled to reply. If not, I ask the leave of the House to speak a second time.
    I do not want to take up the time of the House, in view of what you have indicated to me, Sir Charles. My final word is that I hope this matter will not be overlooked. I hope it will be explored further between now and next year. It would be a pity if any impediment in the form of taxation were directed against this very desirable sort of film.
    The hon. Member for Flint, East said in Committee, dealing with this very Clause:
    452
    "We all wish that there should be no penal taxation upon the products of the United Nations or any of its Specialised Agencies."—[OFFICAL REPORT, 5th June, 1956; Vol. 553, c. 1008]
    We all say, "Hear, hear" to that; but I would add these other bodies which do equally important work and which I believe deserve the same sort of treatment.
    Having said that, I beg to ask leave to withdraw the Amendment.
    Mr. Gordon Walker: I am sorry that the Chancellor did not deal with this point, because this matter of European Union is one in which he is a specialist. He did not hesitate in earlier days, when he thought it might embarrass the then Government, to make all sorts of extraordinary speeches, and I think this idea is really more in line with what he then used to say. We should have preferred that, if this proposal is to be turned down in this way, it should be turned down by the right hon. Gentleman, who used to make so much propaganda on this sort of subject.
    I agree with my hon. Friend the Member for Flint, East (Mrs. White) that, in this form, the Amendment would not really be acceptable because it is limited; it really ought to go farther, or not start at all. I hope that it will not be difficult to draw up a proper schedule of organisations of one sort or another which should have the benefit of this proposal, no doubt including these. I hope it will be done in due course, and that then the Chancellor will be able to give us his present views on these matters.
    Amendment, by leave, withdrawn.

    Clause 7.—(CHARGE OF PURCHASE TAX ON CONVERSION OF GOODS VEHICLE TO PASSENGER VEHICLE OR THE LIKE.)
    Mr. H. Brooke: I beg to move, in page 5, line 13, after "vehicle", to insert:
    "to which this section does not apply into one'.
    Perhaps it would be for the convenience of the House if we were to consider, along with this Amendment, the next 11 Amendments on the Notice Paper to Clause 7.
    These 12 Amendments deal with a matter which was discussed in Committee rather late at night on the Question, "That the Clause stand part of the Bill." They are concerned with the liability to Purchase Tax of what are known as

    453
    "specials", cars made by amateur enthusiasts. When I was replying to that debate, I said that we would consider, between then and the Report stage, everything which had been said.
    I had at that time to express the view that it would be right to draw the tax line between, on the one hand, the car made out of an old car which had been bought by an amateur enthusiast and stripped down and rebuilt, which, as I said, if Purchase Tax had already been paid upon it, would not be the subject of any further Purchase Tax, and, on the other hand, the car which was not constructed out of an old car but assembled either out of a kit which had been bought or from a complete collection of parts made or picked up by the man who was doing the job, and, no doubt, greatly enjoying it.
    6.0 p.m.
    We have fulfilled our promise of giving further consideration to this matter and we have come to the conclusion that that is not the right place to draw the line. Nor, after further examination, do we believe that it would be workable, because in the last resort it might be quite impossible to determine whether, in the case of a particular car, it had originated in an old car, or the pieces of the old car might have disappeared in the process.
    There is one danger of which I must tell the House. If the proposal in these Amendments to exempt the "specials" from tax were to be exploited commercially, we would have to look at the position again. I am not suggesting that the kind of people engaged in these activities are the kind of people who would want to get an unfair tax advantage, but hon. Members know from their experience of the tax law that sometimes an exemption which has been granted in all good faith may be exploited by a different class of person. If the freedom which the Amendments will now leave to amateur engineers to make cars tax free were at any time to be exploited on a commercial scale, the Government of the day might well have to take steps to check such activities.
    Having said that, however, I offer this set of Amendments to the House for what they are worth, and I personally think that they are worth a good deal. They will entirely free from charge to Purchase Tax the amateur who builds a car by
    454
    assembling or completing the assembly of the parts, or who constructs or completes the construction of the body. It certainly was the sense of the Committee that hon. Members would be pleased if the Government could do this; and from the letters which I have subsequently received from hon. Members, on both sides, I have a sneaking feeling that for once the Financial Secretary may be popular in proposing these Amendments.
    Mr. Cyril Bence: While it is a great gratification to myself and to a young man who lives but two doors from me that these Amendments have been put down, there has been some agitation not far from me over the last three months. About three and a half years ago, this young man became an apprentice in Albion Motors. His father has an empty garage attached to his house and the young man started going around to scrap yards and picking up spare parts and bits of old iron. With advice here and there, he started to build a motor car and three months ago he finished it. It is not at all a bad job. Those who have indulged in the game of making amateur cars know that we call them jalopies.
    The position under the Clause originally was that this young man would have to go to the Inland Revenue to get the car taxed for the purposes of assessing Purchase Tax. Some of the parts he had bought. He spent £150 to £200 over the last three and a half years in buying odd things. He bought a Ford 10 engine for a few pounds and got it rebored and relined. Then he got some scrap metal and it was cut into the shape of wings, beaten out and planished. Then he did some welding and completed the wings. The wheels were picked up in scrap yards, but some of the parts were bought new, such as the distributor and carburettor, on which Purchase Tax was paid.
    The problem was, how was the vehicle to be assessed for tax? How could the Inland Revenue assess the Purchase Tax to be charged on it? We did our best to calculate it and we estimated that if the car was put on the road and the man applied for a log book, he would have to pay £150 to £180 Purchase Tax. The young man built the car over three and a half years by spending his pocket money each week. At this rate, he would need

    455
    to have saved his pocket money for another four years to pay the Purchase Tax before he could put it on the road. Then he would have been 25 years of age and thinking of getting married, and that would have been the end of the jalopy.
    Amateur work of this nature is not uncommon. Lads all over the country indulge in this sort of thing, just as we did after the First World War. I remember that many of my contemporaries were putting up wireless masts. We were told off by our parents because the dining room or drawing room was full of wires and bits of metal. We were making radio sets of all shapes and sizes, starting with the "cat's whisker" set and finishing with the seven-valve set. Frightful contraptions were to be seen in the kitchen or dining room. Young fellows will do this sort of thing.
    When the Bill was introduced, it struck me that the Clause was a shocking thing to impose on young engineers who indulge in this kind of thing at home. Although one may not regard these cars as commercial propositions, there is no better training to make a creative engineer than this indulgence in amateur engineering at home.
    The young fellow who is only 20 years of age, and who lives a couple of doors from my home, shows, in the building of his car, great creative capacity. Had the Purchase Tax remained on that kind of engineering product from the back yard of a young apprentice, it would have put a damper on thousands of young boys who are apprentices in engineering shops, who have the capacity, the energy and the creative imagination to evolve and develop engineering processes.
    I have been in the engineering industry since 1917. Many may not realise that some of our finest engineering techniques in the factories today have come not from the higher research establishments, but from the simple, natural intelligence of an apprentice in a factory, operating a machine, who has seen an easier way to operate it than the manufacturer thought when he designed it. This kind of work by engineers in their back yards and in their homes plays a great part in the evolution of manufacturing techniques and engineering design.
    456
    I express my gratitude for the Amendments as an engineer and as one who indulged in making things from the age of 16 until I was married. One's wife will not stand what one's mother has put up with, so I had to stop the work. We did all these engineering jobs at home, making bicycles and motor cycles. I made two of them and they went very well until I nearly broke my neck on one of them.
    When I first saw the Clause, and looked back to my youth and to my contemporaries among the apprentice engineers, I considered it one of the worst things that the Government had done to stifle the enterprise and ingenuity of our young generation of engineers. I am grateful that the Chancellor has seen fit to listen to the pleas which were made in Committee, and by correspondence, to abolish the Purchase Tax in this way and I thank him on behalf of my constituents.
    Sir Ian Clark Hutchison: When this matter was discussed in Committee on 5th June I was one of those on this side of the House who pointed out the unfortunate effects of the Clause. I agree very strongly with the hon. Member for Dunbartonshire, East (Mr. Bence) that it would have had the effect of prejudicing and discouraging young engineers and others who do very useful work in their spare time. I should like to thank the Financial Secretary and the Government for meeting us and for removing an obnoxious provision from the Finance Bill.
    Mr. Frederick Mulley: I have so often criticised the Financial Secretary that it is pleasant to be able for once to congratulate him on these sensible Amendments to this very dull Bill.
    I am sure that the House will appreciate that, had the Clause gone through in its original terms, it would not only have deprived an important section of our young engineers of some enjoyment and pleasure, but would also perhaps have retarded the development of design which, it is claimed, comes from people who have made cars themselves in this way. I believe that it would also have had serious consequences for the people who make small racing cars, and that it would have had a detrimental effect on the motor racing

    457
    sport, which, in turn, might have affected our export sales, because, oddly enough, I believe that it is our racing and sports car manufacturers who are still able to hold their own in the American market.
    I am sure that, by meeting the wishes of amateur enthusiasts and people who make cars from parts, the Government have done a very sensible thing. I am sure that the House will also agree with the warning that has been given. If this concession is abused in a commercial sense, and if people attempt to exploit the real purpose for which it is given, the warning has already been given, and I hope it will not be necessary for the Government to introduce further legislation on this point. I am sure that the Government have done a very sensible thing in proposing this series of Amendments, and I welcome them.
    Mr. Douglas Jay: I should like to thank and compliment the Financial Secretary to the Treasury for making this concession, for several reasons. First, because he seems to have adopted the suggestion made by myself during the Committee stage, though, I admit, rather on the spur of the moment; secondly, because this seems to be almost the only occasion on this Bill when the Government have felt able to accept a proposal which did not come from my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton). The third reason is that the Financial Secretary told us during the Committee stage that this was really quite an impossible thing to do. He said:
    "I must advise the Committee that my right hon. Friend does not see any way in which this Clause could be amended so as to meet the case of a man who builds a perfectly good car for himself out of bits he has picked up or a kit he has bought. As a House of Commons, we must seek to avoid giving to the Customs and Excise officials a task which cannot reasonably be performed."—[OFFICIAL REPORT, 5th June, 1956; Vol. 553, c. 1039.]
    With a little help and advice from all over the House, the Financial Secretary now finds himself able to do these things, and I think it is a tribute to the value of the work which we do, both as a Committee and as a House, and for all these reasons I wish to compliment the Financial Secretary.
    Amendment agreed to.
    Further Amendments made: In line 16, leave out "makes it" and insert "does so".
    In line 18, leave out subsection (2).
    In line 46, leave out "who makes" and insert:
    "making another vehicle into".
    In page 6, line 2, after "made", insert "another vehicle into".
    In line 9, after "makes", insert "another vehicle into".
    In line 11, leave out "makes it" and insert "does so".
    In line 18, after "of", insert "another vehicle into".
    In line 20, after "makes", insert "another vehicle into".
    In page 7, line 3, leave out from beginning to end of line 10.
    In line 37, after "making", insert "another vehicle into".
    In line 44, after second "of" insert "another vehicle into".—[Mr. H. Brooke.]

    Clause 10.—(OFFICES AND EMPLOYMENTS.)
    Mr. H. Brooke: I beg to move, in page 9, line 24, after "resident", to insert "or domiciled".
    This Amendment is consequential on an Amendment which we made on the Recommittal stage of the Bill yesterday.
    Amendment agreed to.

    Clause 14.—(SUSPENSION OF INVESTMENT ALLOWANCES (WITH CERTAIN EXCEPTIONS).)
    Sir E. Boyle: I beg to move, in page 13, line 25, after "descriptions", to insert:
    "and of other plant so included the use of which may or may not be related to fuel economy".
    This Amendment concerns a rather technical point about investment allowances. As subsection (4) is drafted, it enables the order prescribing plant to impose, in the case of ancillary plant, the conditions upon which the plant is to rank for the investment allowance. The reason for this provision was that certain of the ancillary items are not of their nature fuel saving, but they do contribute to fuel economy if they are fitted as a necessary part of the main fuel-saving installation. It was necessary to take power to provide that such ancillary items

    459
    of this kind could be prescribed subject to conditions, the conditions being that they are installed as a necessary part of one of the main fuel-saving devices.
    It now seems that there ought to be power to lay down conditions at any rate in regard to one of the main fuel-saving devices recommended for prescription. This item is feedwater treatment plant. It is essential to be able to impose in the case of this plant the condition that it must form part of a steam boiler installation, because the same kind of plant could be used, for example, for the treatment of cold water required for a manufacturing process, and if so used the plant would not contribute in any way to fuel economy. The same difficulty may arise with other items of plant, and, if so, they would have to be prescribed in later orders.
    I hope that, with that explanation, the House will accept the Amendment.
    Amendment agreed to.
    6.15 p.m.
    Sir E. Boyle: I beg to move, in page 13, line 36, at the end to insert:
    (6) Notwithstanding subsection (1) of this section, investment allowances shall also continue to be made by virtue of subsection (5) of section sixteen of the Finance Act, 1954 (which relates to expenditure incurred for the purposes of husbandry or forestry), in respect of expenditure incurred after the said seventeenth day of February in adding to any building or structure which is or has been already in use, and in which artificial heating is regularly used for the purposes of husbandry or forestry, any insulation against loss of heat.
    During the Committee stage of the Bill, hon. Members will remember that Amendments were moved by hon. Members opposite with the object of enabling the insulation of existing agricultural buildings to continue to qualify for the investment allowance. I gave the House an undertaking that I would look into this question. We understand that, although there is not a great deal of scope for saving fuel in significant quantities by the insulation of agricultural buildings, some savings can be and are being secured by the insulation of heated glasshouses, horticultural packing sheds and poultry houses. It is to give effect to that undertaking which I gave in Committee that I submit this Amendment.
    Amendment agreed to.

    Clause 15.—(CAPITAL ALLOWANCES FOR INDUSTRIAL BUILDINGS (EXPENDITURE ON CUTTING, TUNNELLING, ETC.).)
    Sir E. Boyle: I beg to move, in page 14, line 34, after "April", to insert "or to a later day".
    This Amendment is consequential on the Amendment which extends the mills and factories allowance for another three years.
    Amendment agreed to.
    Sir E. Boyle: I beg to move, in page 14, line 37, at the end to insert:
    (3) Where capital expenditure is or has been incurred on preparing, cutting, tunnelling or levelling land for the purposes of preparing the land as a site for the installation of machinery or plant, and apart from this sub-section no allowance could be made in respect of that expenditure under Chapter I or II of Part X of the Income Tax Act, 1952, then in relation to allowances and charges for the year 1956–57 and subsequent years of assessment, as regards that expenditure—

    (a) the machinery or plant shall be treated for the purposes of the said Chapter I as a building or structure (whether or not it would be so treated apart from this subsection); and

    (b) subsection (1) of section two hundred and seventy-six (which provides, among other things, that allowances shall not be made under the said Chapter I in respect of expenditure on a building or structure if allowances can be made under Chapter II in respect of the same or other expenditure on it) shall apply with the omission of the reference to Chapter II:

    Provided that as regards expenditure to which the said Chapter I is applied by this subsection, the appointed day, for the purposes of any reference thereto in the said Chapter I except in section two hundred and sixty-five (which relates to initial allowances), shall be the sixth day of April, nineteen hundred and fifty-six.
    This is a slightly more substantial point. The purpose of this Amendment is to deal with a type of case, not covered by Clause 15, in which my right hon. Friend thinks that capital allowances might none the less very reasonably be given. This is the case where expenditure is incurred in preparing the site for an industrial installation which might not be regarded as a building or structure within the meaning of Clause 15 (1). Examples are to be found in certain plant and machinery forming part of an oil refinery.
    The proposed Amendment provides that where capital expenditure is incurred on the preparation of a site for the installation of plant and machinery and the

    461
    expenditure would not otherwise rank for capital allowances, then, for the purpose of capital allowances for 1956–57 and future years, the plant or machinery is to be treated, as regards that expenditure, as a building or structure.
    Amendment agreed to.

    Clause 18.—(POWER TO OBTAIN INFORMATION AS TO FEES, COMMISSIONS, ETC.)
    Mr. H. Brooke: I beg to move, in page 19, line 27, at the end to insert:
    (3) A return required under either of the foregoing subsections shall, if the trade or business or other activity is carried on by an unincorporated body of persons, be made and delivered by the person who is or performs the duties of secretary of the body, and the notice shall be framed accordingly.
    This Amendment is designed to remedy a weakness in the Revenue's powers to obtain from unincorporated bodies of persons returns of payments made in respect of services rendered or in respect of copyright. The kinds of bodies most likely to be affected by the Amendment are musical societies, clubs, and the like. I am advised that in the case of such bodies it would not be sufficient to serve a notice requiring a return on the body as such, but a notice would have to be served on each of the members individually. In the same way, if the return were not rendered, it would not be possible to recover a penalty except by instituting proceedings against each of the members individually.
    That would be an impossible procedure, and the purpose of the Amendment accordingly is to provide that in the case of unincorporated bodies, the secretary or the person performing the duties of secretary, and not the body as such, shall be liable to make the return.
    Amendment agreed to.
    Mr. H. Brooke: I beg to move, in page 19, line 43, at the end to insert:
    "or

    (c) particulars of any payment made in a year of assessment ending more than three years before the service of the notice requiring him to make the return."

    This Amendment is to fulfil a pledge which was given in Committee in answer to an Amendment which was moved by my right hon. and learned Friend the Member for Kensington, South (Sir P. Spens). The purpose of the Amendment is to provide that the power to call for the returns of payments made shall not
    462
    extend to payments made in any Income Tax year ending more than three years before the service of the notice requiring the returns. When my right hon. and learned Friend moved the Amendment in Committee the Government accepted it in principle, but had to point out that it was not quite technically satisfactory because there was not the power to go back to the beginning of a suitable Income Tax year.
    We do not think that there will be any danger to the Revenue in this change. We have examined what was said about it. Certain criticisms were expressed in Committee. Nevertheless, we think that this is a wise and sensible course to take, and it will be in line with that which was laid down by Section 27 of the Finance Act, 1951.
    Amendment agreed to.

    Clause 20.—(RETIREMENT ANNUITIES (RELIEF FOR PREMIUMS, AND EARNED INCOME RELIEF.))
    Mr. H. Brooke: I beg to move, in page 24, line 13, at the end insert:
    (10) Nothing in sections four and six of the Policies of Assurance Act, 1867 (which put on assurance companies certain obligations in relation to notices of assignment of policies of life assurance), shall be taken to apply to any contract approved under this section.
    This Amendment is simply to keep the Statute Book clean. If it were not made there would be an inconsistency between this Finance Bill and the Policies of Assurance Act, 1867.
    Amendment agreed to.

    Clause 21.—(NATURE AND AMOUNT OF RELIEF FOR QUALIFYING PREMIUMS.)
    Mr. Gordon Walker: I beg to move, in page 24, line 21, at the end to insert:
    "five hundred pounds or, in the case of an individual who has attained the age of fifty before or during that year".
    I think that this Amendment could be considered with that which we propose in page 24, line 26.
    The two Amendments go with the Schedule we discussed yesterday, when we reserved our position in Committee about some Amendments. The Amendment is to deal with the question of late entrants into the Millard Tucker Clauses of the Bill, a matter which was raised, and very ably raised, by the right hon. and learned

    463
    Gentleman the Member for Kensington, South (Sir P. Spens). I hope that we may, perhaps, have his support for the Amendment because, on the whole, we think that this proposal deals better with the question of late entrants than the Government's proposals do, and in one respect is more generous, as I shall point out, than the Government's proposals. It is certainly more restrictive in one respect, but it is more generous in another.
    It is more restrictive because the effect of the Amendment would be to retain the £500 upper limit as the general limit. On that, as I have explained several times during our consideration of the Bill, we feel very strongly, and we continue to feel very strongly about it. It would also be more restrictive than the Government's proposals in that it would limit the rate of the higher benefits to those over the age of 50, whereas that would not apply under the Government's proposals.
    However, I would draw to the attention of the right hon. and learned Gentleman the Member for Kensington, South that this is in one respect more generous than the Government's proposals, because it would deal with all late entrants for ever. Anyone who reaches the age of 50 any time from now on, if our Amendment were accepted, could qualify for certain benefits because of his age; whereas the Government's proposals are for those only who are now of a certain age. The people who will benefit from the Chancellor's proposals will diminish until, finally, they disappear when the last of them dies.
    Under our proposals anybody who, for one reason or another, had not been able to come into the scheme before the age of 50 would at that age be able to do so if he chose, and we think that that is right. There will be people who, for quite proper reasons, cannot come into the scheme, cannot buy these annuities, until the age of 50, and who will thus certainly suffer very much if our Amendment is not accepted.
    We are in agreement with the main principle, and against this one question of the limit only, and we think that it would be better to let everybody come in, even if they came in over the age of 50. The effect of our Amendment would be to make a distinction hereafter between people under 50 and over 50. The benefit of the larger percentages of their incomes
    464
    that they can spend on buying annuities, which is provided for in the Schedule we passed yesterday, would, under our Amendment, be limited to people over 50, but they would go on getting it. A person who became 50 could get that benefit.
    It would not be a tapering benefit. It would be a permanent benefit. Some of those who entered the scheme would get a proportionately smaller benefit under our Amendment, two-thirds of the benefit the Chancellor is proposing in the Schedule to give to late entrants, but we think that our Amendment is just and right.
    I hope it will be supported on the other side of the House as well as on ours because it is a genuine attempt to meet fairly the problem of late entry, and, although it does make the general level £500, it would lift that level for late entrants. It would lift that level for any late entrant at any time in the future. It shows how eager we are to make the scheme fair and effective. Despite out great distaste for the raising of the limit in general, we see the case for the late entrant, and for providing for him for the future and not merely once for all, as the Chancellor has proposed.
    Sir Patrick Spens: I appreciate that this indicates a rather different attitude of mind from that which we saw on this subject earlier, but, of course, the Amendment does not cover the class I had in mind when I pressed the original Amendment, that is to say, the young professional men who were caught by the war. They are now between 35 and 45 and they are the people whom I personally, at any rate, and, I think, many of my hon. Friends, particularly want to help as late entrants. Therefore, though the Amendment does give certain advantages, I do not think that it satisfies the object which we have in mind.
    I still think that the upper limit of £750 was the all-important concession which we succeeded in getting out of my right hon. Friend, and for it we are most grateful. I am not going to repeat the speech I made last night on the subject, but I think the whole attitude of the Opposition towards this matter has been taken on the assumption that people earn either steady incomes or incomes which steadily increase, whereas the incomes of the professional people whom I have in mind go up and down in no

    465
    calculable fashion very often, and through no fault of the professional men themselves. From personal experience in the old days I know that that was so, and I am quite certain that those people experience the same thing now.
    For instance, because of the crisis of 1929 to 1931, professional men, men who were earning substantial incomes a year or two before, found themselves, to all intents and purposes, out of work. It is in those circumstances that I think the £750 limit is so useful at the end of a career. Therefore, although a bait has been dangled before us very cleverly by the Opposition, I hope that my right hon. Friend will not accept the Amendments
    6.30 p.m.
    Mr. H. Macmillan: I recognise very much the spirit in which the right hon. Member for Smethwick (Mr. Gordon Walker) has put the Amendments on the Notice Paper and the words he has used in moving the Amendment. I am sure that it will be of general benefit to us all, both now and in the future, if this new and comprehensive scheme carries with it the maximum possible sympathy from all sides of the House and from both parties. Though we have had discussions and debates on what precisely the limit should be, I hope that the mere fact that the House has now decided to make it rather higher than was first suggested by the Government will not in itself, as things settle down, be regarded as a serious breach of that spirit of co-operation which has marked discussions of this part of the Finance Bill.
    I recognise that the main purpose of the Amendment is to try to undo what the House has done in raising the £500 limit to £750 and yet deal with the problem of those who are over 50. It is quite true that this problem of the men over 50 was brought very much to our notice by a large number of hon. Members on both sides of the House and by outside organisations. I had that impression and I tried to meet it in the way in which we have met it, but this case of the man over 50 was not the only type of case that we decided to meet by increasing the limit.
    466
    My right hon. Friend the Financial Secretary specifically mentioned the man whose income fluctuated. That was another type of case with which we had to try to deal. There is no logical reason why a handicap suffered by men under 50 in respect of such fluctuation should be left and it should be removed from men who are over 50. There are those whose maximum earnings are achieved before 50 and then decline. There are professions—happily, politics is not one of them—in which men reach a very high earning point at an earlier age and then sometimes lose their earning power. That might be true sometimes of actors, even of musicians, and certainly of singers, and of other people. Therefore, these were the type of cases which we had in mind, which would not be covered if I accepted the Amendments.
    The right hon. Member for Smethwick said, very fairly, that his system would go on whereas our plans for late entrants are to deal with a specific problem, but I think that that is the way to deal with it. The reason why I think it right to deal with late entrants is that we are introducing a new scheme. Hon. Members know that when a pension scheme is introduced in a business there is the problem that the day it is introduced there are a tremendous number of people who cannot take advantage of it because they are too old. Therefore, arrangements have to be made to deal with them, but thereafter people are expected to go into the general plan.
    I do not believe that it is wrong, therefore, to make a special arrangement to deal with the older people when one starts a new idea and then to say that that arrangement must come to an end and as the plan becomes part of the working system people must take advantage of it in the ordinary way. I recognise the spirit in which the Amendments are put forward, but I hope that the House will feel that we ought to stick to the plan which has been decided upon and not introduce complications into it.
    Question put, That those words be there inserted in the Bill:—
    The House divided: Ayes 195, Noes 236.

    Division No. 262.]

    AYES

    [6.35 p.m.

    Ainsley, J. W.

    Greenwood, Anthony

    Paling, Will T. (Dewsbury)

    Albu, A. H.

    Grenfell, Rt. Hon. D. R.

    Pannell, Charles (Leeds, W.)

    Allaun, Frank (Salford, E.)

    Grey, C. F.

    Parker, J.

    Allen, Arthur (Bosworth)

    Hale, Leslie

    Parkin, B. T.

    Allen, Scholefield (Crewe)

    Hall, Rt. Hn. Glenvil (Colne Valley)

    Pearson, A.

    Anderson, Frank

    Hamilton, W. W.

    Plummer, Sir Leslie

    Awbery, S. S.

    Hannan, W.

    Popplewell, E.

    Bacon, Miss Alice

    Harrison, J. (Nottingham, N.)

    Price, J. T. (Westhoughton)

    Bellenger, Rt. Hon. F. J.

    Hastings, S.

    Price, Philips (Gloucestershire, W.)

    Bence, C. R. (Dunbartonshire, E.)

    Hayman, F. H.

    Probert, A. R.

    Benson, G.

    Healey, Denis

    Proctor, W. T.

    Beswick, F.

    Henderson, Rt. Hn. A. (Rwly Regis)

    Pryde, D. J.

    Blackburn, F.

    Herbison, Miss M.

    Randall, H. E.

    Blenkinsop, A.

    Hobson, C. R.

    Rankin, John

    Boardman, H.

    Holman, P.

    Redhead, E. C.

    Bottomley, Rt. Hon. A. G.

    Holmes, Horace

    Reeves, J.

    Bowden, H. W. (Leicester, S.W.)

    Howell, Charles (Perry Barr)

    Reid, William

    Bowles, F. G.

    Howell, Denis (All Saints)

    Roberts, Albert (Normanton)

    Boyd, T. C.

    Hoy, J. H.

    Roberts, Goronwy (Caernarvon)

    Braddock, Mrs. Elizabeth

    Hubbard, T. F.

    Robinson, Kenneth (St. Pancras, N.)

    Brockway, A. F.

    Hughes, Emrys (S. Ayrshire)

    Rogers, George (Kensington, N.)

    Broughton, Dr. A. D. D

    Hughes, Hector (Aberdeen, N.)

    Royle, C.

    Brown, Rt. Hon. George (Belper)

    Hunter, A. E.

    Shinwell, Rt. Hon. E.

    Brown, Thomas (Ince)

    Hynd, H. (Accrington)

    Silverman, Julius (Aston)

    Burke, W. A.

    Hynd, J. B. (Attercliffe)

    Silverman, Sydney (Nelson)

    Burton, Miss F. E.

    Irving, S. (Dartford)

    Simmons, C. J. (Brierley Hill)

    Butler, Mrs. Joyce (Wood Green)

    Janner, B.

    Skeffington, A. M.

    Callaghan, L. J.

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

    Slater, J. (Sedgefield)

    Castle, Mrs. B. A.

    Jeger, George (Goole)

    Smith, Ellis (Stoke, S.)

    Champion, A. J.

    Jeger, Mrs. Lena (Holbn & St. Pncs, S.)

    Snow, J. W.

    Chapman, W. D.

    Jenkins, Roy (Stechford)

    Sorensen, R. W.

    Chetwynd, G. R.

    Johnson, James (Rugby)

    Soskice, Rt. Hon. Sir Frank

    Clunie, J.

    Jones, David (The Hartlepools)

    Steele, T.

    Coldrick, W.

    Key, Rt. Hon. C. W.

    Stewart, Michael (Fulham)

    Collick, P. H. (Birkenhead)

    King, Dr. H. M.

    Stokes, Rt. Hon. R. R. (Ipswich)

    Collins, V. J. (Shoreditch & Finsbury)

    Lawson, G. M.

    Strauss, Rt. Hon. George (Vauxhall)

    Craddock, George (Bradford, S.)

    Ledger, R. J.

    Stross, Dr. Barnett (Stoke-on-Trent, C.)

    Crossman, R. H. S.

    Lee, Frederick (Newton)

    Summerskill, Rt. Hon. E.

    Cullen, Mrs. A.

    Lee, Miss Jennie (Cannock)

    Swingler, S. T.

    Daines, P.

    Lever, Leslie (Ardwick)

    Taylor, John (West Lothian)

    Dalton, Rt. Hon. H.

    Lindgren, G. S.

    Thomson, George (Dundee, E.)

    Darling, George (Hillsborough)

    Lipton, Lt.-Col. M.

    Timmons, J.

    Davies, Ernest (Enfield, E.)

    Logan, D. G.

    Tomney, F.

    Davies, Harold (Leek)

    Mabon, Dr. J. Dickson

    Ungoed-Thomas, Sir Lynn

    Davies, Stephen (Merthyr)

    MacColl, J. E.

    Usborne, H. C.

    de Freitas, Geoffrey

    McInnes, J.

    Wells, Percy (Faversham)

    Delargy, H. J.

    McKay, John (Wallsend)

    Wells, William (Walsall, N.)

    Dodds, N. N.

    McLeavy, Frank

    West, D. G.

    Dye, S.

    MacPherson, Malcolm (Stirling)

    Wheeldon, W. E.

    Ede, Rt. Hon. J. C.

    Mahon, Simon

    White, Mrs. Eirene (E. Flint)

    Edwards, Rt. Hon. John (Brighouse)

    Mann, Mrs. Jean

    White, Henry (Derbyshire, N.E.)

    Edwards, Rt. Hon. Ness (Caerphilly)

    Marquand, Rt. Hon. H. A.

    Wilkins, W. A.

    Edwards, W. J. (Stepney)

    Mayhew, C. P.

    Williams, David (Neath)

    Evans, Albert (Islington, S.W.)

    Messer, Sir F.

    Williams, Rev. Llywelyn (Ab'tillery)

    Evans, Edward (Lowestoft)

    Mitchison, G. R.

    Williams, Rt. Hon. T. (Don Valley)

    Evans, Stanley (Wednesbury)

    Moody, A. S.

    Williams, W. R. (Openshaw)

    Fernyhough, E.

    Morrison, Rt. Hn. Herbert (Lewis'm, S.)

    Williams, W. T. (Barons Court)

    Fienburgh, W.

    Mort, D. L.

    Willis, Eustace (Edinburgh, E.)

    Finch, H. J.

    Moss, R.

    Wilson, Rt. Hon. Harold (Huyton)

    Fletcher, Eric

    Mulley, F. W.

    Winterbottom, Richard

    Forman, J. C.

    Oliver, G. H.

    Woodburn, Rt. Hon. A.

    Fraser, Thomas (Hamilton)

    Oram, A. E.

    Yates, V. (Ladywood)

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

    Orbach, M.

    Zilliacus, K.

    Gibson, C. W.

    Oswald, T.

    Gooch, E. G.

    Owen, W. J.

    TELLERS FOR THE AYES:

    Gordon Walker, Rt. Hon. P. C.

    Padley, W. E.

    Mr. Deer and Mr. Short.

    468

    NOES

    Agnew, Cmdr. P. G.

    Barter, John

    Bossom, Sir Alfred

    Aitken, W. T.

    Baxter, Sir Beverley

    Boyle, Sir Edward

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

    Beamish, Maj. Tufton

    Braine, B. R.

    Alport, C. J. M.

    Bell, Philip (Bolton, E.)

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

    Amory, Rt. Hn. Heathcoat (Tiverton)

    Bell, Ronald (Bucks, S.)

    Brooke, Rt. Hon. Henry

    Armstrong, C. W.

    Bevins, J. R. (Toxteth)

    Brooman-White, R. C.

    Ashton, H.

    Bidgood, J. C.

    Browne, J. Nixon (Craigton)

    Astor, Hon. J. J.

    Biggs-Davison, J. A.

    Bryan, P.

    Atkins, H. E.

    Birch, Rt. Hon. Nigel

    Bullus, Wing Commander E. E.

    Baldock, Lt.-Cmdr. J.M.

    Bishop, F. P.

    Burden, F. F. A.

    Baldwin, A. E.

    Black, C. W.

    Channon, H.

    Balniel, Lord

    Body, R. F.

    Clarke, Brig. Terence (Portsmth, W.)

    469

    Cole, Norman

    Hudson, Sir Austin (Lewisham, N.)

    Partridge, E.

    Conant, Maj. Sir Roger

    Hughes Hallett, Vice-Admiral J.

    Pilkington, Capt. R. A.

    Cooper, A. E.

    Hughes-Young, M. H. C.

    Pitman, I. J.

    Cooper-Key, E. M.

    Hulbert, Sir Norman

    Pitt, Miss E. M.

    Cordeaux, Lt.-Col. J. K.

    Hurd, A. R.

    Pott, H. P.

    Corfield, Capt. F. V.

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

    Powell, J. Enoch

    Craddock, Beresford (Spelthorne)

    Hutchison, Sir James (Scotstoun)

    Price, Henry (Lewisham, W.)

    Crowder, Sir John (Finchley)

    Iremonger, T. L.

    Profumo, J. D.

    Dance, J. C. G.

    Irvine, Bryant Godman (Rye)

    Raikes, Sir Victor

    Davidson, Viscountess

    Jenkins, Robert (Dulwich)

    Ramsden, J. E.

    D'Avigdor-Goldsmid, Sir Henry

    Jennings, J. C. (Burton)

    Rawlinson, Peter

    Deedes, W. F.

    Johnson, Dr. Donald (Carlisle)

    Redmayne, M.

    Digby, Simon Wingfield

    Johnson, Eric (Blackley)

    Pees-Davies, W. R.

    Donaldson, Cmdr. C. E. McA.

    Joynson-Hicks, Hon. Sir Lancelot

    Remnant, Hon. P.

    du Cann, E. D. L.

    Keegan, D.

    Ridsdale, J. E.

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

    Kerby, Capt. H. B.

    Rippon, A. G. F.

    Duncan, Capt. J. A. L.

    Kerr, H. W.

    Robertson, Sir David

    Duthie, W. S.

    Kershaw, J. A.

    Roper, Sir Harold

    Eccles, Rt. Hon. Sir David

    Kimball, M.

    Ropner, Col. Sir Leonard

    Eden, Rt. Hn. Sir A. (Warwick & L'm'tn)

    Kirk, P. M.

    Russell, R. S.

    Eden, J. B. (Bournemouth, West)

    Lagden, G. W.

    Sandys, Rt. Hon. D.

    Errington, Sir Eric

    Lambert, Hon. G.

    Schofield, Lt.-Col, W.

    Erroll, F. J.

    Lancaster, Col. C. G.

    Scott-Miller, Cmdr. R.

    Farey-Jones, F. W.

    Leavey, J. A.

    Sharples, R. C.

    Finlay, Graeme

    Leburn, W. G.

    Shepherd, William

    Fisher, Nigel

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

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

    Fleetwood-Hesketh, R. F.

    Legh, Hon. Peter (Petersfield)

    Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)

    Fletcher-Cooke, C.

    Lindsay, Hon. James (Devon, N.)

    Stevens, Geoffrey

    Foster, John

    Lindsay, Martin (Solihull)

    Steward, Harold (Stockport, S.)

    Galbraith, Hon. T. G. D.

    Linstead, Sir H. N.

    Steward, Sir William (Woolwich, W.)

    Gammans, Sir David

    Lloyd, Maj. Sir Guy (Renfrew, E.)

    Stoddart-Scott, Col. M.

    George, J. C. (Pollok)

    Lloyd-George, Maj. Rt. Hon. G.

    Studholme, Sir Henry

    Gibson-Watt, D.

    Longden, Gilbert

    Summers, Sir Spencer

    Glover, D.

    Lucas, P. B. (Brantford & Chiswick)

    Taylor, Sir Charles (Eastbourne)

    Godber, J. B.

    Lucas-Tooth, Sir Hugh

    Taylor, William (Bradford, N.)

    Gomme-Duncan, Col. Sir Alan

    McAdden, S. J.

    Teeling, W.

    Gough, C. F. H.

    Mackie, J. H. (Galloway)

    Thomas, Leslie (Canterbury)

    Gower, H. R.

    Maclay, Rt. Hon. John

    Thomas, P. J. M. (Conway)

    Graham, Sir Fergus

    McLean, Neil (Inverness)

    Thompson, Kenneth (Walton)

    Grant, W. (Woodside)

    MacLeod, John (Ross & Cromarty)

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

    Grant-Ferris, Wg. Cdr. R. (Nantwich)

    Macmillan, Rt. Hn. Harold (Bromley)

    Thornton-Kemsley, C. N.

    Green, A.

    Macpherson, Niall (Dumfries)

    Tiley, A. (Bradford, W.)

    Grimond, J.

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

    Tilney, John (Wavertree)

    Grimston, Hon. John (St. Albans)

    Maitland, Hon. Patrick (Lanark)

    Touche, Sir Gordon

    Grimston, Sir Robert (Westbury)

    Markham, Major Sir Frank

    Turner, H. F. L.

    Gurden, Harold

    Marlowe, A. A. H.

    Turton, Rt. Hon. R. H.

    Hall, John (Wycombe)

    Marshall, Douglas

    Vickers, Miss J. H.

    Hare, Rt. Hon. J. H.

    Mathew, R.

    Vosper, D. F.

    Harris, Frederic (Croydon, N.W.)

    Mawby, R. L.

    Wade, D. W.

    Harris, Reader (Heston)

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

    Wakefield, Edward (Derbyshire, W.)

    Harrison, A. B. C. (Maldon)

    Medlicott, Sir Frank

    Wakefield, Sir Wavell (St. M'lebone)

    Harvey, Ian (Harrow, E.)

    Milligan, Rt. Hon. W. R.

    Walker-Smith, D. C.

    Harvey, John (Walthamstow, E.)

    Molson, Rt. Hon. Hugh

    Wall, Major Patrick

    Harvie-Watt, Sir George

    Moore, Sir Thomas

    Ward, Hon. George (Worcester)

    Hay, John

    Mott-Radclyffe, C. E.

    Ward, Dame Irene (Tynemouth)

    Head, Rt. Hon. A. H.

    Nabarro, G. D. N.

    Waterhouse, Capt. Rt. Hon. C.

    Heald, Rt. Hon. Sir Lionel

    Nairn, D. L. S.

    Watkinson, Rt. Hon. Harold

    Heath, Rt. Hon. E. R. G.

    Neave, Airey

    Whitelaw, W.S.I. (Penrith & Border)

    Hill, Rt. Hon. Charles (Luton)

    Nicholson, Godfrey (Farnham)

    Williams, Paul (Sunderland, S.)

    Hill, Mrs. E. (Wythenshawe)

    Nicolson, N. (B'n'm'th, E. & Chr'ch)

    Williams, R. Dudley (Exeter)

    Hill, John (S. Norfolk)

    Nield, Basil (Chester)

    Wills, G. (Bridgwater)

    Hirst, Geoffrey

    Noble, Comdr. A. H. P.

    Wilson, Geoffrey (Truro)

    Holland-Martin, C. J.

    Oakshott, H. D.

    Woollam, John Victor

    Holt, A. F.

    Ormsby-Gore, Hon. W. D.

    Yates, William (The Wrekin)

    Hope, Lord John

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

    Hornby, R. P.

    Orr-Ewing, Sir Ian (Weston-S-Mare)

    TELLERS FOR THE NOES:

    Horsbrugh, Rt. Hon. Dame Florence

    Osborne, C.

    Colonel J. H. Harrison and

    Howard, Hon. Greville (St. Ives)

    Page, R. G.

    Mr. Barber.

    6.45 p.m.
    Mr. Gordon Walker: I beg to move, in page 24, line 23, after "year" to insert:
    "nor more than the sum of five thousand pounds in any ten consecutive years".
    I regard this Amendment as of much greater importance than the one we have just dealt with, although I thought that that was important. This one ought to
    470
    appeal to the right hon. and learned Gentleman the Member for Kensington, South (Sir P. Spens) and maybe to the hon. Gentleman the Member for Cheadle (Mr. Shepherd), and even to the Chancellor. I say that because in the course of the previous debate the right hon. Gentleman pointed to the case of someone whose earnings might fluctuate, or might even reach their maximum before

    471
    the age of 50, and for such people this would be a benefit.
    This Amendment deals with the late earners, if I may so describe them, rather than the late entrants, and late earners will, presumably, be with us for ever. They are not a problem which arises only at the beginning of a scheme. Clearly, there is a case, which was made by the hon. Member for Cheadle among others, for the late earner, the man who reaches his highest earning capacity towards the end of his life but, because he was not earning much before, the one-tenth of his income he was able to put in did not add up to much. Even then he is still allowed only to pay up to £500 a year which, relative to someone who had been earning a higher average all through his working life, would make him less well off.
    This point was well put, we appreciated it ourselves from the beginning, and there is a case for it. However, I do not think that there is any case for the Chancellor's way of dealing with it. What the right hon. Gentleman has done is to raise the limit for everybody, including his own category of people who reach their maximum earning capacity before the age of 50, either at 40 or even 35. In the case of athletes it may be even earlier.
    The Chancellor has raised the limit for everybody regardless of whether they are late earners, early earners or steady earners, in order to benefit the one class of late earners. The burden of the representations made to him was that these people whose interests were represented were late earners. But the proposal of the right hon. Gentleman benefits all men, though, of course, only all rich men, earning over £5,000 a year net relevant earnings, regardless of the point at which they reach their full earnings.
    Our Amendment is designed, and, I think, succeeds in hitting just the class we are talking about, namely, those who reach a high earning capacity at a relatively late age. Our Amendment would enable such late earners to catch up with other people who had been earning a more even income through the whole or the greater part of their earning life, because it would enable such a late earner to go over the £500 a year limit, but only in so far that if that were
    472
    averaged over ten years it would still reach an annual average of £500.
    The late earner would not, therefore, get ahead of other people, but would be able to catch them up. After all, that is the intent and purpose behind all the suggestions that have been made on behalf of the late earner. It means that the late earner would be able to get an annual average spread over ten years of £500 a year, and this is exactly what he ought to get in justice, and it would avoid the raising of the limit for everybody—late, early, anybody—as long as they were rich enough to enjoy it.
    Under our Amendment, in a particular year a late earner could go even above the Chancellor's £750 as long as the annual average over ten years was only £500. In certain respects this might benefit a late earner even more than the Chancellor does, but it would not enable him in the end to get above the general level allowed to all other people.
    It seems to me that the cost would be considerably less than the cost of the Chancellor's proposal. I do not doubt that the right hon. Gentleman, in his usual courteous way, will give us the cost, but I imagine it would be less because the general raising of the limit would be avoided by this means and would be concentrated upon late earners.
    This is a compromise we could accept, and that is why we are putting it forward. I hope very much that the Chancellor will look at it in that way, because we have gone very far to try to get a reasonable compromise by which, as a result of giving way somewhat on points we are not really sure about, we can achieve a real unity of both sides of the House on this important matter.
    I must tell the Chancellor that we are still bitterly opposed to his remedy of raising the limit from £500 to £750. The Chancellor must not deduce from the tone in which we moved the previous Amendment, and from our desire to arrive at a compromise here, that we are in the slightest degree weakening in our complete objection to his remedy of raising the limit for everybody from £500 to £750. We are opposed to that whatever representations are made and by whomever they are made, and we shall continue to be opposed to it. If the Chancellor insists upon it, and the Amendment is rejected, the scheme will not be able to

    473
    be considered as one which, in this respect, is based on common agreement in the House. That applies to the rest of the scheme, but if the Chancellor does not accept the Amendment we shall retain strong and lasting objection to his raising of the limit.
    I hope that the right hon. Gentleman, for the sake of unity, for the reason which he gave on the last Amendment, that of the need to get maximum sympathy from both sides of the House for the launching of this kind of experiment, can come the halfway that is necessary to meet those on this side who have gone halfway to meet him. As I have often said to him, we would sooner not have a party issue on this point, but the Chancellor must not think that, because our words have been moderate, we have weakened in the slightest degree in our very strong, bitter and lasting opposition to the raising of the limit.
    We put forward our proposal as a compromise. There is more to be said on the merits, but none the less, it is a compromise which would enable us to proceed with sympathy on both sides of the House. If the Amendment is rejected, that chance will be destroyed, and we shall retain our feeling that this is wrong and our liberty to put it right when the chance comes to us to do so.
    Mr. H. Brooke: I am sure it is recognised that the right hon. Member for Smethwick (Mr. Gordon Walker) spoke with sincerity when he said that he was opposed to the £750 limit which has now been written into the Bill. However, I hope he will take the view, as we on the Government side of the House have done, that the whole Millard Tucker scheme is experimental and we must see how we get on. I trust that experience will show that his right hon. and learned Friend the Member for St. Helens (Sir H. Shawcross) was correct in the view that he expressed and that the other members of the Labour Party were wrong.
    The Amendment would—indeed, this is its intention—whittle down the value of the £750 limit which has now been inserted in the Bill. The right hon. Gentleman said the Amendment would help the late earners, but that is not so. If the Bill were amended in this way, it would restrict the late earners. It would have helped the late earners only if the
    474
    Bill had not previously been amended by substituting £750 for £500.
    I listened with care to the arguments on which the right hon. Gentleman based his case. I thought he was going to face me, on the Amendment, with a complete answer to something that I had said in Committee, because one of the reasons which I had given for accepting the Amendment to alter the limit from £500 to £750 was that that would help the man whose earnings fluctuated. I want to do the right hon. Gentleman full justice, and I must say that I thought the Amendment was a very clever form of words in reply to that part of the argument which I had adduced. I stress "that part", because other considerations were raised in Committee, and we must see how the Amendment would affect them also.
    Several hon. Members have referred at various times to the case of the professional man who has a considerable struggle in his early years and then reaches, for a short period in later life, a high rate of earnings. That is the type of man who can afford to save relatively little until he reaches middle life. At that point, he is faced with the necessity of making provision out of savings for his retirement at a time when each £100 that he can put aside by way of premium to acquire a pension policy for his retirement will have much less value in terms of the annuity that it will purchase than £100 paid, say, twenty years earlier.
    That type of man will be hit by the Amendment. The right hon. Gentleman said that the Amendment would succeed in hitting "just the class we are aiming at." I thought he meant hitting to their advantage, but "hit" is ambiguous, and I will show that the Amendment would hit them gravely to their disadvantage. The people who in their later life before retirement are able for a short time to enjoy substantial incomes would, if the Amendment were accepted, be restricted to tax relief on an average of £500 a year for the ten years of their highest earnings. The total relief that such a man would be able to get in the ten years would be only £5,000, which, of course, is just what it would have been for him if the limit had never been raised in Committee from £500 to £750.
    There is a further objection, and I think that hon. Members opposite,

    475
    although they are strongly prejudiced in favour of the Amendment, will recognise the force of what I am about to say. The proposed limit of £5,000 in any ten-year period would apply so as to cut down the additional tax relief to which the late entrants would otherwise be entitled. As the Bill stands, the maximum for those born in 1907 or earlier is £1,125. Indeed, if we had never accepted the Amendment to change the limit from £500 to £750, the tax relief under the comparable Amendment, to which I am sure the Committee would have agreed for the benefit of the late entrants, would have given the man who was born before 1907 the right to tax relief on £750 a year. Those people—my argument is equally applicable whether the limit is £500 or £750—would be harshly hit by the Amendment, because they would find that they had exhausted their tax relief before the end of the ten years.
    Indeed, with the Bill as it stands, the person who was born before 1907 and is fortunate enough to be earning £7,500 a year, would be able to get tax relief on £1,125 a year. In four years that would amount to £4,500, and then he would find, under the Amendment, that he was left with a further £500 only for the remaining six years of the ten-year period. Although the right hon. Gentleman believes that he and his hon. Friends have devised a skilful and unobjectionable way of meeting the difficulty that otherwise arises over fluctuating earnings, what has really happened is that he has moved an Amendment which would not help but harm both the late earners and the late entrants. For those reasons I could not possibly advise the House to accept the Amendment.
    7.0 p.m.
    Mr. Mitchison: My right hon. and learned Friend the Member for St. Helens (Sir H. Shawcross) was speaking, on the occasion to which the Financial Secretary took yet another opportunity to refer, as Chairman of the Bar Council. If he is the Chairman of the Bar Council, he has to represent the views of the Council and to represent them fairly and fully. It seems to me inviting very unfortunate consequences to the future of the House if observations and representations, which are made in that representative capacity, are confused with something
    476
    entirely different, the political and perhaps personal views—I do not know about that—of the right hon. and learned Member.
    If it is desired that right hon. and hon. Members shall occupy positions of that importance in their professions—as I hope they still may—then I suggest that it is up to all responsible Members, including for that purpose members of the Government, to make it particularly clear in what capacity that kind of statement is made. I regard it as unfortunate, to say the least of it, that that matter, which was clearly stated yesterday and cleared up in an exchange between the Chancellor of the Exchequer, who, originally, put the matter far more fairly than did the right hon. Gentleman, and my right hon. Friend the Member for Huyton (Mr. H. Wilson), should have further reference made to it which can only have the effect of obscuring what was said yesterday.
    Now I turn to the merits of the Amendment. We have always taken the view that £500 and not £750 was the right limit. That was the view of the Government. That was the figure which they put into the Bill. A great deal of the procedural difficulty in which we have been involved has been due to the fact that the Government, under pressure from their own supporters in the course of the Committee stage, at a very late hour of the night accepted an Amendment which it never occured to me they would accept.
    It did not occur to me because I certainly imagined that, when making up their minds on a matter of considerable importance, something which involved many millions of public money, the Government would at least have decided what limit they would have before coming to the House. It is with some impatience that I now hear the kind of comment which the right hon. Gentleman is now able to make, that the matter has not been sufficiently thought out by the Opposition. We have done a little better than he gives us credit for having done.
    Let us see what the effect of the Amendment will be. It is intended to meet a particular type of case, the type of person, usually a professional man, who makes high earnings in a short period, but who very often has to wait for a long time before he makes them.

    477
    It is only out of those earnings that he is able to save. The period over which he can make them varies in different professions. It is probably particularly short—although I speak without expert knowledge of these matters—in the case of a highly skilled surgeon. It may be a little longer in the case of a highly learned and expert lawyer. It may be a little more in the case of an actor, to take a rather different type of occupation.
    When we are considering a tax concession of this magnitude—and it is considerable—we feel that we ought not to use that particular case to justify a general increase which will be for the benefit only of people who make between £5,000 and £7,500 a year and who are to have a tax concession at a moment when the Chancellor is telling us that the country is in considerable financial difficulties. That is our broad line of approach.
    What we suggest is not a very complicated matter. It may be that we have gone too far, but I do not think that we have. Let us take the example of a person who, during a quite short period, makes phenomenally high earnings. During that short period he will get the benefit of the £750—or of the £7,500 to put it the other way. No doubt during the preparatory years, or in retirement, because his skill has lessened, he will not be in a position to save so much that he will reach even the £500 limit. Any hon. Member can work out for himself the various combinations of figures—a limit of £250 followed by a limit of £750 and numerous other combinations.
    However, the principle is perfectly clear and it is that if, contrary to our view, we are to have a high limit at all in the circumstances of the moment, then we should at least confine it to the type of case for which something plausible was said during our discussions in Committee. It is for that reason that we have a spread of this amount over a term of years.
    It is said that the Amendment will be hard on the late entrant. It is fair to point out that we have already tried to do something about the late entrant on our own lines and we are no longer discussing that. We have been turned down and that is that. I should like to point out that the late entrant and the high casual earner are not likely to be the same sort of person. We are here trying
    478
    to deal with the person who, at present, is not in a position to get much out of this concession, because he cannot save enough, but who, as time passes, will be able to get something out of it. It is quite possible to combine the two things, if that is what is really required, but at the moment we are left with the question of whether or not we ought to accept the Amendment as it stands.
    I say without hesitation that in the financial circumstances of the moment I prefer to have this broad limit of £5,000 over ten years, even though the late entrants will not get as much out of it as they will from the Chancellor's concession to them in the Schedule. The class of person with whom we are trying to deal seems to be a class which invites more attention and requires more to be done for it than the late entrants to whom reference was made. I do not regard the late entrants as so badly off, because if they are a separate class then they will get the benefit of the £750. As we already say that, in general, the £750 is too high, we cannot be expected to agree with any great satisfaction to yet further additions to that sum on behalf of this particular class.
    I repeat, finally, that there is only one real moral case for raising this limit. That is the case of the man who can make much, but only for a short time. When I listened yesterday to the right hon. and learned Member for Kensington, South (Sir P. Spens) pleading generally in support of the £750 limit, I thought it highly significant that the instance he took was just that of the man who earns a great deal for a short time and who has to wait long for it, or, to take the other end of the scale, has to retire early.
    It therefore seems to me that this Amendment raises a question of principle, a question of fairness, a question of the duty of the Government, in the financial circumstances of the time, towards people generally and of how far a Government, who have already refused concessions for tobacco and other similar concessions, which would have helped really poor people, are justified in making this general concession without limit and without provision for its not being abused in favour of the class of people who earn between £5,000 and £7,500 a year. I say that that is giving too much and that this Amendment would meet the one case of real—I will not say hardship because,

    479
    after all, we have got a little bit beyond hardship—unfairness that might have arisen and that it ought to be accepted.
    Question put, That those words be there inserted in the Bill:—
    The House divided: Ayes 185, Noes 224.

    Division No. 263.]

    AYES

    [7.12 p.m.

    Ainsley, J. W.

    Gordon Walker, Rt. Hon. P. C.

    Oswald, T.

    Allaun, Frank (Salford, E.)

    Greenwood, Anthony

    Owen, W. J.

    Allen, Arthur (Bosworth)

    Grenfell, Rt. Hon. D. R.

    Padley, W. E.

    Allen, Scholefield (Crewe)

    Grey, C. F.

    Paling, Will T. (Dewsbury)

    Anderson, Frank

    Griffiths, David (Rother Valley)

    Pannell, Charles (Leeds, W.)

    Awbery, S. S.

    Hale, Leslie

    Parker, J.

    Bacon, Miss Alice

    Hamilton, W. W.

    Parkin, B. T.

    Bellenger, Rt. Hon. F. J.

    Hannan, W.

    Pearson, A.

    Bence, C. R. (Dunbartonshire, E.)

    Harrison, J. (Nottingham, N.)

    Plummer, Sir Leslie

    Benson, G.

    Hastings, S.

    Popplewell, E.

    Beswick, F.

    Hayman, F. H.

    Price, J. T. (Westhoughton)

    Blackburn, F.

    Heeley, Denis

    Probert, A. R.

    Blenkinsop, A.

    Henderson, Rt. Hn. A. (Rwly Regis)

    Proctor, W. T.

    Boardman, H.

    Herbison, Miss M.

    Pryde, D. J.

    Bottomley, Rt. Hon. A. G.

    Hewitson, Capt. M.

    Randall, H. E.

    Bowden, H. W. (Leicester, S. W.)

    Hobson, C. R.

    Rankin, John

    Boyd, T. C.

    Holman, P.

    Redhead, E. C.

    Braddock, Mrs. Elizabeth

    Howell, Charles (Perry Barr)

    Reeves, J.

    Brockway, A. F.

    Howell, Denis (All Saints)

    Reid, William

    Broughton, Dr. A. D. D.

    Hoy. J. H.

    Roberts, Albert (Normanton)

    Brown, Rt. Hon. George (Belper)

    Hubbard, T. F.

    Roberts, Goronwy (Caernarvon)

    Brown, Thomas (Ince)

    Hughes, Emrys (S. Ayrshire)

    Rogers, George (Kensington, N.)

    Burke, W. A.

    Hughes, Hector (Aberdeen, N.)

    Royle, C.

    Burton, Miss F. E.

    Hunter, A. E.

    Short, E. W.

    Butler, Mrs. Joyce (Wood Green)

    Hynd, H. (Acorington)

    Silverman, Julius (Aston)

    Callaghan, L. J.

    Hynd, J. B. (Attercliffe)

    Silverman, Sydney (Nelson)

    Castle, Mrs. B. A.

    Irving, S. (Dartford)

    Skeffington, A. M.

    Champion, A. J.

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

    Slater, J. (Sedgefield)

    Chapman, W. D.

    Jeger, Mrs. Lena (Holbn & St. Pncs, S.)

    Smith, Ellis (Stoke, S.)

    Chetwynd, G. R.

    Jenkins, Roy (Stechford)

    Sorensen, R. W.

    Clunie, J.

    Johnson, James (Rugby)

    Steele, T.

    Coldrick, W.

    Jones, David (The Hartlepools)

    Stewart, Michael (Fulham)

    Collick, P. H. (Birkenhead)

    Key, Rt. Hon. C. W.

    Stokes, Rt. Hon. R. R. (Ipswich)

    Collins, V. J. (Shoreditch& Finsbury)

    King, Dr. H. M.

    Stross, Dr. Barnett (Stoke-on-Trent, C.)

    Craddock, George (Bradford, S.)

    Lawson, G. M.

    Summerskill, Rt. Hon. E.

    Crossman, R. H. S.

    Ledger, R. J.

    Swingler, S. T.

    Cullen, Mrs. A.

    Lee, Frederick (Newton)

    Taylor, John (West Lothian)

    Dalton, Rt. Hon. H.

    Lee, Miss Jennie (Cannock)

    Thomas, George (Cardiff)

    Darling, George (Hillsborough)

    Lever, Leslie (Ardwick)

    Thomson, George (Dundee, E.)

    Davies, Harold (Leek)

    Lindgren, G. S.

    Timmons, J.

    Davies, Stephen (Merthyr)

    Lipton, Lt.-Col. M.

    Tomney, F.

    Deer, G.

    Logan, D. G.

    Ungood-Thomas, Sir Lynn

    De Freitas, Geoffrey

    Mahon, Dr. J. Dickson

    Usborne, H. C.

    Delargy, H. J.

    MacColl, J. E.

    Wells, Percy (Faversham)

    Dodds, N. N.

    McInnes, J.

    Wells, William (Walsall, N.)

    Dye, S.

    McKay, John (Wallsend)

    Wheeldon, W. E.

    Ede, Rt. Hon. J. C.

    McLeavy, Frank

    White, Mrs. Eirene (E. Flint)

    Edwards, Rt. Hon. John (Brighouse)

    MacPherson, Malcolm (Stirling)

    White, Henry (Derbyshire, N. E.)

    Edwards, Rt. Hon. Ness (Caerphilly)

    Mahon, Simon

    Wilkins, W. A.

    Edwards, W. J. (Stepney)

    Mann, Mrs. Jean

    Williams, David (Heath)

    Evans, Albert (Islington, S. W.)

    Marquand, Rt. Hon. H. A.

    Williams, Rev. Llywelyn (Ab'tillery)

    Evans, Edward (Lowestoft)

    Mayhew, C. P.

    Williams, Rt. Hon. T. (Don Valley)

    Evans, Stanley (Wednesbury)

    Messer, Sir F.

    Williams, W. R. (Openshaw)

    Fernyhough, E.

    Mitchison, G. R.

    Williams, W. T. (Barons Court)

    Fienburgh, W.

    Moody, A. S.

    Willis, Eustace (Edinburgh, E.)

    Finch, H. J.

    Morrison, Rt. Hn. Herbert (Lewis'm, S.)

    Wilson, Rt. Hon. Harold (Huyton)

    Fletcher, Eric

    Mort, D. L.

    Winterbottom, Richard

    Forman, J. C.

    Moss, R.

    Woodburn, Rt. Hon. A.

    Fraser, Thomas (Hamilton)

    Mulley, F. W.

    Yates, V. (Ladywood)

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

    Neal, Harold (Bolsover)

    Zilliacus, K.

    Gibson, C. W.

    Oliver, G. H.

    Gooch, E. G.

    Oram, A. E.

    TELLERS FOR THE AYES:

    Orbach, M.

    Mr. Holmes and Mr. Simmons.

    NOES

    Agnew, Cmdr. P. G.

    Atkins, H. E.

    Bell, Ronald (Bucks, S.)

    Aitken, W. T.

    Baldock, Lt.-Cmdr. J. M.

    Bevins, J. R. (Toxteth)

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

    Baldwin, A. E.

    Bidgood, J. C.

    Alport, C. J. M.

    Balniel, Lord

    Biggs-Davison, J. A.

    Amory, Rt. Hn. Heathcoat (Tiverton)

    Barber, Anthony

    Birch, Rt. Hon. Nigel

    Anstruther-Gray, Major Sir William

    Barter, John

    Bishop, F. P.

    Armstrong, C. W.

    Baxter, Sir Beverley

    Black, C. W.

    Ashton, H.

    Beamish, Maj. Tufton

    Body, R. F.

    Astor, Hon. J. J.

    Bell, Philip (Bolton, E.)

    Bossom, Sir Alfred

    Boyle, Sir Edward

    Holt, A. F.

    Page, R. G.

    Braine, B. R.

    Hornby, R. P.

    Partridge, E.

    Brooke, Rt. Hon. Henry

    Horsbrugh, Rt. Hon. Dame Florence

    Pilkington, Capt. R. A.

    Brooman-White, R. C.

    Howard, Hon. Greville (St. Ives)

    Pitman, I. J.

    Browne, J. Nixon (Craigton)

    Hudson, Sir Austin (Lewisham, N.)

    Pitt, Miss E. M.

    Bullus, Wing Commander E. E.

    Hughes Hallett, Vice-Admiral J.

    Pott, H. P.

    Burden, F. F. A.

    Hughes-Young, M. H. C.

    Powell, J. Enoch

    Channon, H.

    Hulbert, Sir Norman

    Price, Henry (Lewisham, W.)

    Clarke, Brig. Terence (Portsmth, W.)

    Hurd, A. R.

    Profumo, J. D.

    Cole, Norman

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

    Raikes, Sir Victor

    Conant, Maj. Sir Roger

    Hutchison, Sir James (Scotstoun)

    Ramsden, J. E.

    Cooper, Sqn. Ldr. Albert

    Iremonger, T. L.

    Rawlinson, Peter

    Cooper-Key, E. M.

    Irvine, Bryant Godman (Rye)

    Redmayne, M.

    Cordeaux, Lt.-Col. J. K.

    Jenkins, Robert (Dulwich)

    Rees-Davies, W. R.

    Corfield, Capt. F. V.

    Jennings, J. C. (Burton)

    Remnant, Hon. P.

    Craddock, Beresford (Spelthorne)

    Johnson, Dr. Donald (Carlisle)

    Ridsdale, J. E.

    Crouch, R. F.

    Johnson, Eric (Blackley)

    Rippon, A. G. F.

    Crowder, Sir John (Finchley)

    Joynson-Hicks, Hon. Sir Lancelot

    Robertson, Sir David

    Dance, J. C. G.

    Keegan, D.

    Roper, Sir Harold

    D'Avigelor-Goldsmid, Sir Henry

    Kerby, Capt. H. B.

    Ropner, Col. Sir Leonard

    Deedes, W. F.

    Kerr, H. W.

    Russell, R. S.

    Digby, Simon Wingfield

    Kershaw, J. A.

    Schofield, Lt.-Col. W.

    Donaldson, Cmdr. C. E. McA.

    Kimball, M.

    Scott-Miller, Cmdr. R.

    Drayson, G. B.

    Kirk, P. M.

    Sharples, R. C.

    du Cann, E. D. L.

    Lagden, G. W.

    Shepherd, William

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

    Lambert, Hon. G.

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

    Duncan, Capt. J. A. L.

    Lancaster, Col. C. G.

    Spearman, Sir Alexander

    Eccles, Rt. Hon. Sir David

    Leavey, J. A.

    Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)

    Eden, J. B. (Bournemouth, West)

    Leburn, W. G.

    Stanley, Capt. Hon. Richard

    Errington, Sir Eric

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

    Steward, Harold (Stockport, S.)

    Finlay, Graeme

    Legh, Hon. Peter (Petersfield)

    Steward, Sir William (Woolwich, W.)

    Fisher, Nigel

    Lindsay, Hon. James (Devon, N.)

    Stoddart-Scott, Col. M.

    Fleetwood-Hesketh, R. F.

    Lindsay, Martin (Solihull)

    Studholme, Sir Henry

    Fletcher-Cooke, C,

    Linstead, Sir H. N.

    Summers, Sir Spencer.

    Foster, John

    Lloyd, Maj. Sir Guy (Renfrew, E.)

    Taylor, Sir Charles (Eastbourne)

    Galbraith, Hon. T. G. D.

    Longden, Gilbert

    Taylor, William (Bradford, N.)

    Gammans, Sir David

    Lucas, P. B. (Brantford & Chiswick)

    Teeling, W.

    George, J. C. (Pollok)

    Lucas-Tooth, Sir Hugh

    Thomas, Leslie (Canterbury)

    Gibson-Watt, D.

    Mackie, J. H. (Galloway)

    Thomas, P. J. (M. (Conway)

    Glover, D.

    Maclay, Rt. Hon. John

    Thompson, Kenneth (Walton)

    Gomme-Duncan, Col. Sir Alan

    McLean, Neil (Inverness)

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

    Gough, C. F. H.

    MacLeod, John (Ross & Cromarty)

    Thornton-Kemsley, C. N.

    Gower, H. R.

    Macmillan, Rt. Hn. Harold (Bromley)

    Tiley, A. (Bradford, W.)

    Graham, Sir Fergus

    Macpherson, Niall (Dumfries)

    Tilney, John (Wavertree)

    Grant, W. (Woodside)

    Maddan, Martin

    Touche, Sir Gordon

    Grant-Ferris, Wg. Cdr. R. (Nantwich)

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

    Turner, H. F. L.

    Green, A.

    Maitland, Hon. Patrick (Lanark)

    Turton, Rt. Hon. R. H.

    Grimond, J.

    Markham, Major Sir Frank

    Vickers, Miss J. H.

    Grimston, Hon. John (St. Albans)

    Marlowe, A. A. H.

    Vosper, D. F.

    Grimston, Sir Robert (Westbury)

    Marshall, Douglas

    Wakefield, Edward (Derbyshire, W.)

    Gurden, Harold

    Mathew, R.

    Wakefield, Sir Wavell (St. M'lebone)

    Hall, John (Wycombe)

    Mawby, R. L.

    Walker-Smith, D. C.

    Hare, Rt. Hon. J. H.

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

    Wall, Major Patrick

    Harris, Frederic (Croydon, N. W.)

    Medlicott, Sir Frank

    Ward, Hon. George (Worcester)

    Harrison, A. B. C. (Maldon)

    Milligan, Rt. Hon. W. R.

    Ward, Dame Irene (Tynemouth)

    Harrison, Col. J. H. (Eye)

    Molson, Rt. Hon. Hugh

    Waterhouse, Capt. Rt. Hon. C.

    Harvey, Ian (Harrow, E.)

    Moore, Sir Thomas

    Whitelaw, W. S. I. (Penrith & Border)

    Harvey, John (Walthamstow, E.)

    Mott-Radclyffe, C. E.

    Wiliams, Paul (Sunderland, S.)

    Harvie-Watt, Sir George

    Nabarro, G. D. N.

    Williams, R. Dudley (Exeter)

    Hay, John

    Neave, Airey

    Wills, G. (Bridgwater)

    Heald, Rt. Hon. Sir Lionel

    Nicholson, Godfrey (Farnham)

    Wilson, Geoffrey (Truro)

    Heath, Rt. Hon. E. R. G.

    Nicolson, N. (B'n'm'th, E. & Chr'ch)

    Woollam, John Victor

    Hill, Mrs. E. (Wythenshawe)

    Nield, Basil (Chester)

    Hill, John (S. Norfolk)

    Noble, Comdr. A. H. P.

    Yates, William (The Wrekin)

    Hirst, Geoffrey

    Oakshott, H. D.

    TELLERS FOR THE NOES:

    Holland-Martin, C. J.

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

    Mr. Godber and Mr. Bryan.

    Osborne, C.

    Mr. Geoffrey Hirst: I beg to move, in page 27, line 8, at the end to insert:
    (13) Without prejudice to subsection (3) of this section, a person who pays a qualifying premium in the year 1957–58 may elect that it or part of it shall be treated for the purposes of this and the last foregoing section as a qualifying premium paid in the year 1956–57, and shall be treated (subject to subsection (2) of this section) as not paid in the year 1957–58.
    These rather complicated words—necessary for drafting purposes—disguise
    482
    a very simple issue, and what I think the House would treat as a fair point. If I understand it correctly the Bill provides a time limit, as it must do, in which qualifying premiums for deferred annuities may rank for tax relief. This time limit, provided in an earlier part of the Clause, expires six months after the end of the year of assessment. I suggest that that is a quite understandable administrative convenience in respect of years other than the first year, but in first year, so

    483
    I am advised, it will be rather a handicap, as it will allow insufficient time for the establishment of trust funds. It takes some time to set up such funds, and they are desirable in the context of the Clause.
    The sole purpose of the Amendment is to extend to 5th April, 1958, the time limit for paying contributions to rank for tax relief in 1956–57. Since it is fully in the spirit of the Clause and the intentions of the Government—which I fully support—I trust that the Government will feel able to accept it.
    Mr. Edward du Cann: I beg to second the Amendment.
    As has been clearly demonstrated by my hon. Friend the Member for Shipley (Mr. Hirst), the Amendment is designed to improve the Clause, and I hope that my right hon. Friend will accept it.
    Mr. Mitchison: That seems reasonable.
    Mr. H. Brooke: In these happy circumstances, I should like to congratulate my hon. Friend the Member for Shipley (Mr. Hirst) upon having made a good point. I have great pleasure in advising the House to accept the Amendment.
    Amendment agreed to.

    Clause 27.—(GROUPS OF COMPANIES.)
    Sir E. Boyle: I beg to move, in page 35, line 24, to leave out from "it" to "nor" in line 25, and insert:
    "unless each of them is engaged in carrying on a trade or business, or each of them was so engaged at the beginning of the chargeable period specified in the notice as the first of the periods as respects which the notice is to have effect".
    This Amendment implements an undertaking which my hon. and learned Friend the Solicitor-General gave during the Committee stage. Subsection (1) provides that:
    "A grouping notice may not be given by a principal company as respects a subsidiary of it if either of them is not engaged in carrying on a trade or business …"
    In Committee, Amendments were moved by my hon. Friend the Member for Langstone (Mr. Stevens) designed to enable a grouping notice to be given in respect of a period when both companies were trading, although one had stopped doing so when the notice was given. My hon. and learned Friend said that my
    484
    hon. Friend's Amendments were clearly right in principle. He could not accept the wording, which was not quite right, but he said that he would arrange for a suitable Amendment to be tabled upon Report—and this is it.
    Mr. H. Wilson: After a prolonged study of the matter, we have come to the conclusion that this also seems reasonable.
    Mr. Stevens: All I wish to do is to congratulate my hon. Friend upon correcting my bad draftsmanship, and to thank him for accepting the principle of the Amendment.
    Amendment agreed to.

    Clause 28.—(EXTENT TO WHICH SUMS APPLIED IN REDUCING SHARE CAPITAL OR REPAYING LOANS ARE TO BE TREATED AS DISTRIBUTIONS.)
    Sir E. Boyle: I beg to move, in page 39, line 3, after "varied)", to insert:
    "conferred on the body corporate a right or".
    It might be for the convenience of the House if we considered, with this Amendment, the remaining Government Amendments in page 39, in lines 5, 10, 12, 17 and 19.
    This group of Amendments meets a point which my hon. and learned Friend the Solicitor-General undertook to consider in Committee, namely, whether the scope of the exemption granted by subsection (5) to premiums payable upon the redemption of redeemable preference shares issued before 16th April, 1947, should be extended so as to cover certain types of share which were not covered by the subsection as drafted. The Amendments extend the exemption in two ways. First, they modify subsection (5) so as to cover cases where pre-1947 terms of issue of redeemable preference shares of a company confer upon the company a right, but do not make it obligatory, to redeem the shares at a premium.
    Secondly, the new subsection (6) makes provision for similar treatment in cases where pre-1947 rights attached to issues of shares—other than redeemable preference shares—include a right of priority as respects capital for a sum in excess of the nominal amount of the shares. It is a technical point, but we have looked into it carefully.
    Mr. H. Wilson: These Amendments appear to be reasonable on the whole, in so far as we understand them, but I should like to ask the hon. Member if he will seek to secure the leave of the House to speak for a second time in relation to the last Amendment in the group. Is he absolutely satisfied that this does not widen too greatly the concession which he had in mind? If I remember rightly, the whole Clause stems from the case of the Universal Grinding Wheel Company, where the Board of Inland Revenue, as one gathers, was rather surprised by the decision of the court and has now, by means of the Clause, attempted to close the loophole.
    No Law Officers are present, but I am sure that their advice has been taken. Is the Chancellor quite sure that this concession would not allow either the Universal Grinding Wheel Company, in the case which was before the courts, or any other company in similar circumstances, to take advantage of the Clause, and thus defeat what the Government had in mind, namely the prevention of this rather minor form of legitimate tax avoidance?
    Sir E. Boyle: Perhaps I may reply, by leave of the House. I honestly do not think that that is so. I shall try to explain to the right hon. Gentleman the very narrow point which is covered by subsection (6). The provisions at the end of the first paragraph of the new subsection, regarding shares issued at a premium for cash, have been put in simply to ensure that in such cases the same amount is not deducted twice in computing distributions for Profits Tax purposes on a liquidation. I assure the right hon. Gentleman that the Amendment will do no more than that.
    Amendment agreed to.
    Further Amendments made: In page 39, line 5, after "that", insert "right or".
    In line 10, leave out "by that" and insert:
    "in pursuance of that right or".
    In line 12, after "said", insert "right or".
    In line 17, leave out "by the said" and insert:
    "in pursuance of the said right or".
    In line 19, at end insert:
    (6) Where immediately before the sixteenth day of April, nineteen hundred and forty-seven, the rights attached to any issued shares
    486
    of a body corporate included any right of priority as respects capital for a sum in excess of the nominal amount of the shares (not being, in the case of redeemable preference shares, a right only to a premium on redemption), and by virtue of that right a sum in excess of the said nominal amount is paid in respect of the shares, then for the purposes of subsection (1) of this section or of subsection (1) of section thirty-five of the Finance Act, 1947, those shares shall be taken as being of a nominal amount equal to the sum so paid but for the purposes of subsection (1) of the said section thirty-five the excess of that sum over the nominal amount of the shares shall, if those or any other shares were or are issued by the body corporate at a premium for cash, be deducted from the amounts of the premiums:
    Provided that, where the rights as respects capital attached to the shares are or have been varied on or after the said sixteenth day of April, this subsection shall not apply so as to treat them as being of a nominal amount greater than the least amount for which a right of priority shall have attached thereto on that day or at any time subsequently.—[Sir E. Boyle.]

    Clause 31.—(ACCEPTANCE OF WORKS OF ART IN SATISFACTION OF DEATH DUTIES, AND AMENDMENT AS TO EXEMPTION.)
    7.30 p.m.
    Mr. H. Brooke: I beg to move, in page 44, line 14, after "merit", to insert "or historical value".
    We now move rather swiftly from the Universal Grinding Wheel Company to works of art which the Inland Revenue may accept in satisfaction of Estate Duty. About 3 o'clock in the morning of 13th June, we were discussing Clause 31 and I promised to give careful and sympathetic consideration to the points raised in an Amendment moved by the hon. Member for Stechford (Mr. Roy Jenkins). As a result of that, I hope that the House will be happy to know that the Government are bringing forward an Amendment in almost the same words as his.
    In brief, the point is this. The Clause as drafted would cover only works of art of an aesthetic merit. It was pointed out that there might be important works of which it could hardly be truthfully said that they had an aesthetic merit, although they were of great historical interest. I am not sure whether someone mentioned the Bayeux tapestry. There is no question whatever about the historical value or interest of the Bayeux tapestry, but it might well be open to question whether it was a work of art of aesthetic merit.

    487
    No one is offering the Bayeux tapestry to the Inland Revene, but I thought that that was the most striking example I could quote, which would be known to everyone. The Government now propose to meet this and to provide that the test shall not only be one of aesthetic merit but, alternatively, of historic value. I hope that in that way we have shown our open-mindedness and acceded to what appeared, at 3 o'clock in the morning at any rate, to be the general wish of the Committee.
    Mr. Gordon Walker: I think that the right hon. Gentleman was putting his remarks on that occasion in the early morning in rather a favourable light. He produced one argument after another against our Amendment, but, none the less, we are very glad that, in the clear light of the afternoon, he has come to a different decision.
    We cannot allow this to pass without saying that this is the only contribution to the Bill, or, shall I say, "non-Brixton" contribution to the Bill that has come from this side of the House. I think that I am right in saying that all the others came from my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton), who has written two new Clauses into the Bill. If we were in the United States, it would be called the "Macmillan-Lipton Bill." This is a matter of some slight significance, and we have great pleasure in thanking the right hon. Gentleman and his right hon. Friend for this sensible concession which they have made.
    Amendment agreed to.

    Second Schedule.—(OFFICES AND EMPLOYMENTS (PROVISIONS APPLICABLE TO CASES I, II AND III OF SCHEDULE E).)
    Mr. H. Brooke: I beg to move, in page 54, line 22, at the end to insert:
    5. Where an office or employment is in substance one of which the duties fall in the year of assessment to be performed outside the United Kingdom, then for the purposes of Cases I and II (including the purposes of this Schedule so far as it relates to those Cases), there shall be treated as so performed any duties performed in the United Kingdom the performance of which is merely incidental to the performance of the other duties outside the United Kingdom.
    I need say very little about this Amendment, because it meets the point which was raised by my hon. Friend
    488
    the Member for Wimbledon (Mr. Black) in Committee.
    We inserted words similar to these in Clause 11 of the Bill yesterday. The effect of this Amendment, although we are actually amending the Schedule, is to provide similarly for Clause 10 of the Bill. It was originally on Clause 10 that my hon. Friend raised this point. It is a question of the interpretation of the word "wholly", if, in fact, there are some incidental duties that are performed in the United Kingdom. I think that the form of words which we have now found will satisfactorily meet that case.
    Amendment agreed to.
    Further Amendments made: In line 24, leave out "the last foregoing paragraph" and insert:
    "this Schedule so far as it relates to those Cases".
    In line 41, leave out from first "of" to "as" in line 42, and insert:
    "this Schedule so far as it relates to those Cases)".

    Third Schedule.—(PROFITS TAX (PROVISIONS CONSEQUENTIAL ON CHANGE OF RATE OF TAX OR OF RELIEF FOR NON-DISTRIBUTION.)
    Mr. H. Brooke: I beg to move in page 58, line 42, at the end to add:
    6.—

    (1) Where the dividends of a body corporate, unincorporated society or other body which are assignable to any accounting period beginning before the end of October, nineteen hundred and fifty-five, and were declared before the seventeenth day of April, nineteen hundred and fifty-six,—

    (a) exceed the governing total for that accounting period; and

    (b) include dividends declared after the twenty-fifth day of the said month of October, and paid after the beginning of the said month of April;

    then, notwithstanding anything in paragraph 4 of the Second Schedule to the Finance (No. 2) Act, 1955, the dividends so declared and paid (if the body or society so elects) shall to the extent of the excess—

    (i) in determining the gross relevant distributions to proprietors for the chargeable accounting period ending at the end of March, nineteen hundred and fifty-six, be included as a distribution for that chargeable accounting period; and

    (ii) in determining those for any other chargeable accounting period, be left out of account.

    (2) Sub-paragraphs (2) to (5) of the said paragraph 4 (which define "the governing total" and other expressions) shall apply for the purposes of this paragraph as they apply for the purposes of that.

    489
    This Amendment deals with a matter of almost inscrutable complexity, but I hope, in a very few words, to be able to make the point sufficiently clear to the House. It follows from the fact that the Profits Tax on distributed profits has twice been increased within a comparatively short time. In this Profits Tax legislation we have the concept of excess dividends, and if this Amendment were not made there would be an anomaly in that excess dividends declared before this year's Budget day for periods beginning before the end of October, 1955, would be treated differently according to whether they were paid before or after the beginning of April, 1956.
    If they happened to be paid before the beginning of April, the excess dividend would be taxable at 27½ per cent., and if they were paid after the end of March, the excess would be taxable at 30 per cent. When the dividend was declared it must have been before the Budget day and the company could have no knowledge of the likelihood of the Profits Tax being altered. It seems that this is a clear anomaly. Our attention was drawn to it by a Clause put down in Committee, but not selected, by my hon. Friend the Member for Langstone (Mr. Stevens). I would stress again that this only affects dividends declared before Budget day. There can he no loophole here at all, and I think that it is desirable, if I have made the position sufficiently clear—I do not know whether I have—that in the general interest that the anomaly should be removed.
    Mr. Mitchison: That seems both complicated and reasonable. I would merely add that I hope the right hon. Gentleman and his hon. Friends read the unselected Amendments of the Opposition with the same care as that which they have apparently directed to the unselected Amendments of their hon. Friends. They will learn much from the former class.
    Amendment agreed to.

    Fourth Schedule.—(REPEALS.)
    Mr. H. Brooke: I beg to move, in page 60, line 45, at the end, to insert:

    15 & 16 Geo. 6, and 1 Eliz. 2, c. 44.

    The Customs and Excise Act, 1952.

    In section one hundred and forty-nine, in subsection (6), paragraphs (c) and (d) and the proviso.

    490
    This Amendment is consequential on what I hope I may be permitted to describe as one of the "Lipton Amendments."
    Amendment agreed to.
    Bill to be read the Third time Tomorrow and to be printed. [Bill No. 163.]

    PUBLIC WORKS LOANS BILL
    Considered in Committee.
    [Sir RHYS HOPKIN MORRIS in the Chair]

    Clause 1.—(GRANTS FOR PUBLIC WORKS.)
    7.43 p.m.
    Mr. Emrys Hughes: I beg to move, in page 1, line 7, after "Commissioners", to insert:
    "at rates of interest not exceeding two and a half per cent.".
    This Amendment is in the names of myself, my hon. Friend the Member for Edinburgh, East (Mr. Willis) and my hon. Friend the Member for Fife, West (Mr. Hamilton). All three of us represent Scottish constituencies, but we believe this to be an Amendment which should receive the support of hon. Members representing constituencies in all parts of the country, including hon. Gentlemen opposite. I hope that before the debate ends we shall have a representative present from the Scottish Office, because this is a matter of grave concern to local authorities in Scotland. When the Bill was under consideration last Friday, there was considerable comment on the fact that although we have five Scottish Ministers, not one of them was present to explain the interests of Scotland.
    The rate of interest of the Public Works Loan Board is the subject of discussion at practically every meeting of every local authority in Scotland at present. During the last twelve months hon. Members on both sides of the Committee have received protests from county councils and town councils, and have been called upon to exert the utmost pressure on the Government to reduce the rates of interest of the Board. This is our opportunity. Every local authority in Ayrshire has passed resolutions calling on the Government to reduce the rates of interest. These rates, which affect housing, education, public health

    491
    and a variety of local government responsibilities, act as a sanction upon local government borrowing and expenditure.
    In this Clause the Government agree to the lending to local authorities of a sum of £300 million. There is no doubt that that will be wise expenditure, because it will have received the sanction of the Minister and the support of the Treasury. Since the previous Bill of this kind came before the House the rate of interest has gone up 1½ per cent., and last Friday we had the extraordinary spectacle of a Minister introducing this Bill without making the slightest reference to the rates of interest. It was not only a case of Hamlet without the Prince of Denmark, but of Hamlet without the five acts.
    Mr. Ede: Or the gravedigger.
    Mr. Hughes: Or the gravedigger.
    I suggest that the Committee would be doing a service to all these local authorities if this very reasonable Amendment were accepted, and the rates of interest reduced. I am prepared to be very reasonable with the Minister. If he would suggest 2½ per cent. or 3 per cent. or 2¾ per cent., hon. Members representing Scottish constituencies would be prepared to accept that as a sort of compromise. Here is an opportunity for the Minister to show that he is not enemy No. 1 of the local authorities.
    Mr. E. G. Willis: But he is.
    Mr. Hughes: In default of the other Ministers for Scotland, he is enemy No. 1.
    In the debate on Friday it was pointed out that the addition of per 1½ cent. on a £1,700 house worked out at a rent of 8s. 7d. per week; and during discussions in the Scottish Standing Committee this week it was agreed that if we were arguing on a figure of 10s. a week, that would be quite a reasonable calculation. So we suggest that if the Minister wishes to reduce rents, this is an opportunity for him to show his practical sympathy. On Friday the Minister argued that local authorities must be prepared to do their share in contributing to economy. But it is a false economy to lend to local authorities at prohibitive rates. If we increase
    492
    the rate of interest on housing and rents and rates, we make it impossible not only for local authorities to supply housing at reasonable rents, but indirectly——
    The Deputy-Chairman: Order. The hon. Member must remember that this is a machinery Bill. He cannot go into the reasons for reducing interest rates.
    Mr. Charles Pannell: On a point of order, Sir Rhys. I have taken an interest in this Bill over a number of years, and I wish to put this point to you. In previous years it has been allowed that the effect of the machinery on local government is a factor in these debates. I must draw your attention to this, because it so happens that this Bill was almost the first Measure to come forward after the change of Government in 1951, when interest rates were raised. I have made speeches on this matter almost every year, and I say with respect that the rules of order have never been so tightly drawn as you are now attempting to draw them.
    The Deputy-Chairman: I think that the hon. Gentleman is quite right about the debate in 1951, but I venture to say that the discussion on that occasion was out of order.
    Mr. Willis: This is an Amendment suggesting that money should be lent at a certain rate of interest. Surely, it is in order to give the reason why we suggest that this money should be lent at that rate of interest.
    The Deputy-Chairman: It might be touched upon, but hon. Members cannot discuss the reasons, because the Bill is purely a machinery Bill.
    Mr. G. R. Mitchison: Further to the point of order. The question of the rate of interest was extensively touched upon during the Second Reading. It was made clear at the time that this was a machinery Bill. I am looking through the HANSARD of 6th July, and I see repeated references to the rates of interest, but no rebuke from Mr. Speaker.
    The Deputy-Chairman: That was a Second Reading debate, as the hon. and learned Gentleman knows.
    Mr. Arthur Blenkinsop: Further to the point of order. I have with me reports of the debates on the previous Bill, when it was

    493
    in Committee, and it is clear that the widest scope was allowed. This was not in 1951, but last year. A reasonable latitude seemed to be allowed on that occasion, and, I venture to suggest, might be allowed now.
    The Deputy-Chairman: It is against the rules of order on a machinery Bill to go into the detailed reasons. That is clear.
    Mr. Hughes: I bow to your Ruling, Sir Rhys. Of course, this is a machinery Bill, and we are suggesting something to oil the machinery. The present cost of the oil makes a difference to the working of the machinery. The Amendment would lower the rates of interest, and the machinery would promptly begin to work more smoothly.
    I understand the position. I have made what I consider to be the main points in favour of the Amendment. The Minister who represents the Treasury is in a generous mood. He has done an extraordinary thing; he paid a tribute to my hon. and gallant Friend the Member for Brixton (Lieut-Colonel Lipton) such as my hon. and gallant Friend does not often receive. The right hon. Gentleman has gladdened the heart of my hon. and gallant Friend the Member for Brixton. By accepting the Amendment he could gladden the hearts of local authorities throughout the country. If he wants to figure as the hero of today's proceedings in the Committee of the House of Commons, and wants his photograph to be put up in every town hall in the country, including every municipal building in Scotland, all he has to do is to accept the Amendment.
    Mr. Willis: I support the Amendment. It is important that the Government should look very carefully at what is happening to the money loaned by the Public Works Loan Board.
    When the Minister introduced the Bill last Friday he told us that of the money loaned out of the authorisation of £500 million, namely, about £402 million, about £283 million had been spent on housing. If we are to take that as the general pattern of the spending of money borrowed by local authorities from the Board, most of the sum that we are now authorising will also be spent on housing. There can be no doubt that because of
    494
    the present interest rate the cost of housing has become so excessive that many local authorities cannot afford to have a housing programme. The Amendment would reduce the cost of housing.
    My hon. Friend the Member for Leith (Mr. Hoy) asked a Question some time ago and elicited the amazing fact that a local authority pays in interest more than twice the cost of the house it builds. Nobody can contemplate that fact without realising the fantastic situation at which we have arrived. A burden of debt is placed upon citizens for generations, for 60 years. We and our children might not see the end of it.
    Our Amendment is quite modest. All it asks is that the rate of interest on this money should be not more than 2½ per cent. Replying to the debate on Friday last, the right hon. Gentleman showed why he could not see his way clear to do anything about this matter. As I understand, the argument was that this concession would represent a concealed subsidy to local authorities. He did not say that the Government were opposed to a subsidy. He said of my hon. Friend the Member for Widnes (Mr. MacColl):
    "What he was, in fact, appealing for was a system of concealed subsidies to local authorities by enabling them to borrow at a rate of interest which was neither the market rate nor the Public Works Loan Board rate as now calculated, but Government credit itself. That is not our view of the way in which local authorities should be assisted by the central Government. We consider that such assistance should be done openly from Exchequer grants rather than by any concealed subsidies."—[OFFICAL REPORT, 6th July, 1956; Vol. 555, c. 1758]
    All right; is the right hon. Gentleman prepared to give local authorities grants to meet this cost?
    What is the purpose of the present high rate of interest? As I understand from Government spokesmen, from the Chancellor of the Exchequer downwards, it is that we must decrease capital expenditure. The Government have an immense machine to control the expenditure of local authorities without touching interest rates at all. A local authority cannot erect a small lavatory in a school playground, or put up a bus shelter, without going to the Government for permission. Over and over again local authorities have been frustrated because of that situation, often in respect of very trivial expenditure indeed.

    495
    If the Government have this vast machinery for curtailing and curbing extravagance by local authorities, and for compelling them to conform to Government policy, why should the local authorities have to pay the present exorbitant interest rates in addition? What really happens as a result of the policy, that we are seeking to alter by means of the Amendment, is that the Government are curtailing the expenditure and the use of materials by the local authorities by placing an intolerable burden upon the citizens for the future. That seems to be very wrong indeed.
    We suggest modestly that the rate of interest should not exceed 2½ per cent. If the Government are generous they can even lower that figure. The local authorities would be very pleased. Hon. Members have received many letters from constituents and from local authorities protesting against the interest rates. Many of the local authorities are good supporters of the Government.
    Mr. Cyril Bence: They used to be.
    Mr. Willis: Yes, but perhaps they are being weaned.
    Why should not the Government give this relief to local authorities? There would be an argument if the Government had only this weapon of controlling the expenditure of local authorities, but in view of the vast machinery to which I have referred there is certainly no case, and there will be an intolerable burden on local authorities. In the interests of good government, and of the citizens as a whole, I suggest that the right hon. Gentleman consider very seriously the very modest proposal that we are making.
    8.0 p.m.
    Mr. Bence: I am amazed when I hear some of the words used here in dealing with financial questions. Last Friday, I heard the right hon. Gentleman say that this was a grant to local authorities of a maximum of £400 million from Government credit. I presume that meant that out of the credit of the Government local authorities would be entitled, during the next year, to draw up to £400 million credit.
    The Government represent the State, so that is the credit of the State, yet in the
    496
    next breath the Government say that they have to borrow credit from someone else. In borrowing from some other institution they have to pay 4½ per cent. or 5 per cent. and, therefore, they charge the local authorities more for the credit of the State because they cannot use their own credit and have to go to someone else for it.
    We are faced with an astonishing situation. My hon. Friend the Member for Edinburgh, East (Mr. Willis) rightly said that we have a form of physical control. Because we do not use physical control we use the Bank Rate and financial sanctions to control credit. Here we have an instrument of physical control over the dispensation of credit.
    Mr. Willis: Fiscal control.
    Mr. Bence: This is machinery and, as an engineer, I say that it is physical control. We are not only using fiscal policy on an open market to put up intererest rates to avoid using physical control by Government, but are using both methods in the same instance. If we have a machinery Bill to see that local authorities do not get too much money the interest rates are put up to serve the same purpose. This seems to me to be stupid. It is like having a form of conscription to make a man do a job and, at the same time, rewarding him with the incentives we have under a voluntary system. This seems to me a complete contradiction.
    Another thing which astonishes me is that we have a banking system which, through a great institution, creates credit and lends it. I cannot understand why the Government do not create their own credit. The bank lends credit which goes into commercial enterprise which is not used philanthropically or for social purposes. Here we are using credit for essential social purposes. In using it for those social purposes, why should we be tied down to financial techniques or principles of interest and usury for commercial dealings? In running the Army, the Navy and the Air Force and supplying troops we do not use commercial principles——
    The Deputy-Chairman: The hon. Member for Edinburgh, East (Mr. Willis) succeeded in keeping in order in his

    497
    speech. I hope that the hon. Member for Dunbartonshire, East (Mr. Bence) will follow his example.
    Mr. Bence: I am sorry, Sir Rhys. I am always ready to recognise that I am not able to cultivate the ability of my hon. Friend the Member for Edinburgh, East (Mr. Willis) or my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) to keep in order so well. I do my best, but it seems that I never succeed.
    When local authorities build houses or do other social work they confine their activity purely to the social field, but the Government insist on them using the commercial technique of interest rates. When they appreciate that it is almost impossible for local authorities to work under those conditions they set up machinery of a fiscal character and arrange a subsidy. Why not start, by eliminating commercial practice? We could then avoid all the staff needed for working our subsidies. I am amazed that each year we have a Bill of this kind and leave the question open as to whatever will be the condition of the money market at that time.
    Time and again we have pleas from farmers who want to know what we are doing about the long-term programme for agriculture. What are we doing about the long-term programme for local authorities? What is the use of telling them that this is a machinery Bill, assuring them of £400 million credit? For the famous burgh of Kirkintilloch it is no use saying that it can borrow £400 million; the burgh wants to know how much that will cost. For years I have mentioned the Kirkintilloch sewerage scheme——
    The Deputy-Chairman: I hope that the hon. Member is not going to mention it again.
    Mr. Bence: It is no use local authorities undertaking schemes unless they know what the interest rates will be. If local authorities do not undertake those schemes next year we shall have £200 million or £300 million left over. Is that the Government's objective? [Laughter.] My hon. Friends seem to treat this matter facetiously, but it is a very serious matter. In the County of Dunbarton every year the rates have been going up——
    The Deputy-Chairman: So long as the hon. Member keeps to the Amendment that will be all right. He must take other
    498
    occasions for raising other important matters.
    Mr. Bence: This is very serious indeed, because every increase in the rates in Dunbartonshire is due to the progressive increases in interest rates which we have to pay for all the things we have to do. We are expected to do those things; the Scottish Office expects us to do them and the Government expect us to do them. That pushes the rates sky high. It is important when we have machinery Bills like this that there should be written into them every year exactly what the interest rates will be for the ensuing year. Then the local authorities would know and the poor ratepayers would know exactly what they had to pay.
    I make this plea, although I do not suppose that the Treasury will listen. I hope to see the day when local authorities may use credit created by the Government and not borrowed from private institutions lending credit which, in fact, is the credit of the whole nation and charging interest on that credit which they hand to the right hon. Gentleman to hand on to local authorities, who have to pay interest on the nation's credit.
    I hope that I have not gone too far out of order. I also hope that when the right hon. Gentleman prepares a Bill next year he will put into the machinery some of the oil about which my hon. Friend the Member for South Ayrshire spoke. As an engineer, I know that the finest machinery in the world will not work unless it is oiled properly. If it lacks oil it will seize up.
    Mr. A. Blenkinsop: The Government have on many occasions, in the House, declared that one of their main anxieties is to secure stable prices, and indeed, as we recognise in their negotiations with industry and in their discussions with the trade union movement, they have emphasised that they expect the trade union movement, for example, to restrain its members from making new wage demands, on the assumption that prices will, as far as possible, be held on the plateau which the Chancellor of the Exchequer has discussed on several occasions.
    It seems to me that this Amendment will help the Government and the Chancellor to achieve these very aims, and that is why I feel sure that the Financial

    499
    Secretary, when he replies, will express his sympathy with it. I hope that he will even be able to express more than his sympathy—the Government's welcome and support for the Amendment. In fact, what my hon. Friends have very rightly pointed out, not only today but on many previous occasions, is that the main villian in the piece, so far as rising prices and increased wage demands are concerned, is indeed this very matter of interest rates. Here, we have a proposal which seeks, very properly, to reduce interest rates to a moderate figure, which would have the immediate, or at least the very early effect of reducing costs in the country, on housing and health services, etc., in the expenditure incurred both by public authorities, statutory authorities and the State itself.
    I wish to give one example, because this matter of interest rates very seriously affects the whole of our economy and the whole of the social services which are an important part of it. We have rightly had stressed in this House the importance of making proper provision in the health field for those elderly persons who tend to have to be accommodated in hospital. My own local authority is about to seek permission to borrow sums of money for the purpose, amongst others, of constructing a new home for the elderly infirm at the request of the Government, and the problem of my own local authority, and of course of many others all over the country, in considering this matter—we have not yet got the loan sanction for the scheme—is that, when it receives it, this very much higher rate of interest than was current even a year ago, will have to be paid. If this Amendment were accepted, it would, in the instance which I have quoted, mean that the local authority would have to pay less in interest charges for this sum of money which it wants to raise.
    The sum of £60,000 is required as part of the general borrowing requirements of the local authority of which I am speaking, and it is clear that a very considerable difference would be made if the Amendment was accepted. It would be possible for my own local authority to borrow from the Public Works Loan Board at this more moderate and reasonable rate of 2½ per cent., instead of having to borrow at a rate of over 5 per cent. if it has to get the money by going either
    500
    into the open market or by borrowing through the Public Works Loan Board at the rates of interest that are current today.
    I suggest that here is a practical example of a local authority faced with these unnecessarily high interest rates, which inevitably it has to take into account in deciding whether to go forward with this vital scheme for the care of our old people in Newcastle. I suggest to the Government that here we have a case in which it might well be that because of the high interest rates, the local authority may feel itself unable to go forward with this particular scheme. If so, what will be the result? The result will not be to the satisfaction of hon. Gentlemen opposite, but will be seen in extra pressure on hospital accommodation and increased expenditure there.
    The Deputy-Chairman: The hon. Member has so far kept very well in order, but he is now reaching the limits.
    8.15 p.m.
    Mr. Blenkinsop: I shall make haste to come back fully within the rules of order in that case, but I was merely using that example as an illustration of the value of this Amendment to the Exchequer as well as to the local authority, because it will result in an economy for both, as well as for the country as a whole.
    It would mean that the State itself would not be required to make as large a contribution out of Exchequer funds which is inevitably involved when interest rates rise. We know, for example, that the Exchequer has inflicted upon itself some further hundreds of millions of pounds a year in extra expenditure on these high interest rates, which year by year have been increased. This Amendment would provide, in effect, for a reduction of these charges, and the effect of the acceptance of the Amendment would be that the Government would be obliged to reconsider their general Bank Rate provisions. That is beyond the scope of this Amendment, but there is no doubt that that would be the effect in practice of the acceptance of the Amendment. It would mean a very considerable saving to the local authorities and to the Exchequer itself.
    As my hon. Friends have so rightly pointed out, it is not as though the Government have no other means of defence against what they may feel to be the

    501
    excessive use of capital for investment expenditure. They have within their grasp, if they wish to use them—and it is obvious, for there has been plenty of evidence—physical means of restriction, and therefore there is no reason at all why the Financial Secretary should not welcome this Amendment with open arms. I do not know whether that would be the right term to use in regard to the right hon. Gentleman, who accepts his duties in a very stern and rigorous manner. Perhaps it would not be proper to suggest that he would welcome the Amendment with open arms.
    The right hon. Gentleman should, however, recognise the force in the argument which has been advanced. When the Chancellor of the Exchequer and other members of the Government are pressing for the restriction of expenditure and are calling upon local authorities to restrain their demands, and yet, at the same time, by their actions are forcing up the cost of the work which local authorities are obliged to undertake, and when in fact they are obliged to contribute more from their own funds to meet those high charges, it is a mad circle into which the local authorities are being forced.
    It seems to me that my hon. Friends who tabled this Amendment are suggesting to the Government a means by which they can bridge the difficulty, with benefit to the Government, to the country and to everyone. It would also give the working people in the country some earnest that the Government themselves really wish to see reductions in the cost of services that are vital to the community, instead of talking about it and yet taking the very action most likely to raise those costs and to precipitate natural and proper demands for wage increases.
    Mr. A. E. Cooper: This is really nonsense. For the last half hour we have been listening to the economics of Alice in Wonderland and watching hon. Gentlemen opposite performing the unique exercise of speaking with the tongue in both cheeks at once.
    Mr. John Rankin: Try it.
    Mr. Cooper: The hon. Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) really ought not to make the sort of speech he has made. He was at one time Parliamentary Secretary to the
    502
    Ministry of Housing and Local Government.
    Sir Frederick Messer: No.
    Mr. David Jones: Perhaps the hon. Member for Ilford, South (Mr. Cooper) was not here then?
    Mr. Cooper: He was the Parliamentary Secretary to the Ministry of Health, which was responsible for local government in those days, and it was his right hon. Friend the Member for Ebbw Vale (Mr. Bevan) who put up the interest rates—[HON. MEMBERS: "To what?"]—it does not matter—from 2½ per cent., which is the rate suggested by the Amendment. Yet the right hon. Gentleman put the rates up from that figure. Why was that figure of 2½ per cent. wrong at that time? It was wrong at that time because it was releasing far too many resources and bringing about inflation.
    Mr. Blenkinsop rose——
    The Deputy-Chairman: Order. This argument is beyond the scope of the Amendment. The hon. Member for Ilford, South (Mr. Cooper) is carrying it too far. It cannot be pursued any farther.
    Mr. Rankin: Surely, Sir Rhys, when a charge is made it ought either to be substantiated or withdrawn.
    The Deputy-Chairman: I cannot say, before I hear a charge, whether it is in order or not. I have to hear it first.
    Mr. Blenkinsop: As the hon. Member gave way to me for an intervention, may I ask, as this is strictly relevant to the Amendment, whether he is suggesting that it does not matter at all whether the interest rate be 3 per cent. or 5½ per cent.? I can assure him that the local authorities feel that it makes a good deal of difference.
    Mr. Cooper: I am not suggesting anything of the sort.
    This Amendment states that the rate of interest to be charged to local authorities should be 2½ per cent. I am suggesting—indeed, I am stating—that the hon. Member for Newcastle-upon-Tyne, East, when he was Parliamentary Secretary to the Ministry of Health in the Labour Government, put up the interest rates from the figure which is now suggested in the Opposition Amendment.
    The Deputy-Chairman: That is not in order on this Amendment.
    Mr. Blenkinsop: Do I understand the hon. Member to say that he would support the Amendment were the figure 3 per cent. rather than 2½ per cent.?
    Mr. Cooper: I am not suggesting anything of the sort. It is not for me to suggest anything of the sort. I am merely pointing out that hon. Gentlemen opposite are quite prepared to say one thing when they are in Opposition and to do something quite contrary when they are in office.
    The hon. Gentleman talked about the Government having in their hands powers like physical controls to settle all that the interest rates themselves do. Of course, that is true, but the point is that by the imposition of interest rates, at varying levels, the local authorities themselves know what their borrowing will cost, and they have control of the priorities for the work which they themselves seek to do.
    Mr. Willis: Surely, if the Amendment were carried the same position would prevail, and the local authorities would be in exactly the same position?
    Mr. Cooper: That, of course, would be the position, with this difference, that with 2½ per cent. no local authority would find it necessary to exercise any sort of control over its expenditure. That is precisely why, between 1945 and 1950, the Labour Government found it necessary to devalue the £. We believe that financial controls are essential. They constitute one reason for our certainty that we shall now defend the £.
    Mr. Tom Brown: It is rather remarkable that I should have the opportunity to follow the hon. Member for Ilford, South (Mr. Cooper), because I had something to say in criticism of his last speech in the House and I have even more criticism to make now. If what he has been pouring forth is his economics, I cannot understand them. If the hon. Member has had any experience of local government, whether at urban, rural or county level, I cannot understand how he could make such statements as he has made tonight.
    There is a straight question I want to put to the Government, and it is this. Is it their intention to help local authorities, or is it their intention to hinder the work
    504
    of the local authorities? If they intend to help the local authorities in the difficulties confronting them, they are bound to accept this Amendment. The Financial Secretary to the Treasury has had a great deal of experience on the London County Council. He knows full well that when the London County Council embarked upon a scheme of improvement or expansion it always desired to borrow money at the lowest possible interest rate. That was the policy it always followed.
    My hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) has said already that county councils and urban authorities throughout the country are all complaining about the difficulties in which they are finding themselves because of the high rate of interest they have to pay upon borrowed money. I suggest to the Financial Secretary that it would be as well if he examined the position in relation to the conditions of those local authorities, for be it remembered that the local authorities have been facing considerable difficulties during the last eleven years.
    They faced those difficulties with considerable courage. They have done a magnificent job because of the demands made upon them by the people, who had been too long satisfied with conditions as they were. The demand is going forth, quite rightly, for improved roadways and other amenities——
    8.30 p.m.
    The Deputy-Chairman: If the hon. Member will keep to the rate of interest he will be in order.
    Mr. Brown: I know that it has been indicated that we are skating on very thin ice, but those of us who have had experience in local administration feel very keenly about this. I hope that you will not rule me out of order, Sir Rhys, if I recall that last Wednesday a very gloomy and dark picture was painted in the House of the country from which you come, when we discussed Mid-Wales and Monmouthshire.
    I will not pursue that any further, however. I rose to call the attention of the Financial Secretary to the position of two local authorities in my constituency, Ashton-in-Makerfield and Ince-in-Makerfield, where we are now faced with the problem of land subsidence and having to construct a complete sewerage scheme, involving an expenditure of £200,000 to

    505
    £300,000. The difficulties will be intensified unless the right hon. Gentleman is prepared to give some consideration to the Amendment. I beg him to do so in order that these local authorities may not be hindered but helped by the Government to do work which is so essential for the citizens whom they govern.
    Mr. C. W. Gibson: I hope that the Government will seriously consider accepting the Amendment because, whilst this is a Bill to provide an extra £300 million in loans to local and other authorities for public work purposes, it is really absurd to tell the authorities that they can borrow more money whilst at the same time charging such high rates of interest that, to carry out any scheme at all, becomes utterly impossible.
    We are supported in this contention by such an august journal as the Financial Times, which said on 16th March:
    "The situation as far as mortgage loans are concerned is one of considerable difficulty. Money is far from plentiful and lenders are naturally seeking the highest possible rates for the longest possible periods. Rates of 5⅞ per cent. to 6 per cent. are being asked for the shorter period mortgages and 5⅜ per cent. to 5½ per cent. for terms up to 25 years."
    Anybody who has had anything at all to do with local government capital expenditure knows that today an interest rate of 5½ per cent. and more makes it completely impossible for local authorities to carry out their job effectively. The Amendment to fix a lower rate of interest would help the Government's overall policy of reducing capital expenditure.
    I can give one illustration from the constituency of my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton), where there is a large housing scheme. The tender cost was £2¾ million two years ago. The housing committee chairman reported that by the time the authority has paid the interest on capital borrowed from the Public Works Loan Board it will have paid £6¼ million. [HON. MEMBERS: "Shame."] Since then, the rate of interest has gone up by more than 1 per cent. so that the extra charge, either on the rents or the rates, will probably be many hundreds of thousands more for that one scheme alone. Therefore, when one considers all the housing schemes of large local authorities, such as Birmingham and Manchester, the interest charge at the present figure becomes a serious burden.
    506
    I should have thought that a Government anxious to encourage slum clearance would have been prepared to allow local authorities to borrow some of this £300 million at a rate of interest which would enable them not only to pull slum property down but afterwards to let houses at rents which the people could afford to pay. At the moment, that is not the case. Only last week three instances were reported in the newspapers of the serious effect of the present high rate of interest which is being charged to local authorities.
    In Lewisham, the council has decided not to go on with an eight-acre slum clearance scheme because it says that the present financial policy of the Government has made that impossible. The Deptford Borough Council announced in the Press last week that, owing to the difficulties caused by interest charges plus the virtual abolition of the subsidy, it would not be able to continue house building in its borough. That is in the middle of London, where there is a terrific housing shortage, and this council would do its utmost not to stop building; but, owing to the financial policy of the Government and especially because of the high rates of interest now being charged, it has had to make this decision.
    Mr. D. Jones: Will my hon. Friend explain whether it is necessary to get the sanction of the Ministry of Housing and Local Government before a local authority can borrow from the Public Works Loan Board? Would not that be a sufficient guarantee?
    Mr. Gibson: I do not know whether to deal with that would be in order—
    The Deputy-Chairman: In my opinion, no; it is very far out of order.
    Mr. Gibson: It is true that this is a machinery Bill, but the point that I am trying to make is that there is strong justification for this Amendment. In fact it will help the policy of the Government by reducing the overall expenditure, if that is what they want, though I do not think the Government are going the right way to produce the results which they want.
    What is more, a reduction of the present high rate of interest to 2½ per cent. would practically solve all the

    507
    present financial troubles of local government. It would enable local authorities to let their houses and flats at reasonable rents which tenants could afford to pay, as well as enabling the authorities to do many other things. For instance, I have been today to the opening of a new park in London. I was told by the chairman of the housing committee that as a result of the financial policy which it is now necessary to follow, nearly half of that authority's schemes for park improvements in the next year have been stopped. And yet a Minister who spent several years on the London County Council is criticising my colleagues and myself because we were not doing enough for the parks of London.
    The Deputy-Chairman: This is going beyond the Amendment.
    Mr. Mitchison: On a point of order, Sir Rhys. What we have to consider, in relation to the Amendment, is whether there ought to be a fixed rate of interest or a maximum rate of interest, and what it ought to be. On the latter point, at any rate, I submit that it is proper to consider the character of the loans which are to be made; that is to say, whether they are, as in fact the vast majority of them are, loans already approved by the Government, for which Governmental sanction has been given, and the type of expenditure to which the loans are directed. I submit, therefore, that within reason my hon. Friends are in order in saying that these loans are, in the vast majority of cases, as the right hon. Gentleman would at once admit, already sanctioned by the Government and, further, are loans directed to certain public objects of which my hon. Friends may give particulars, within reason, in their constituencies.
    The Deputy-Chairman: The hon. and learned Gentleman has stated the case fairly accurately. Of course the parts of the debate to which I have taken exception have gone well beyond that.
    Mr. Gibson: I apologise to you, Sir Rhys, for allowing myself, in my enthusiasm, to be carried into L.C.C. politics. I was trying to make the point that high rates of interest have a deleterous effect on the work of local authorities.
    This Bill, which provides for an additional £300 million of loans which local
    508
    authorities can call upon after they have fiddled around in the market, trying to get loans from private lenders, ought to be so framed that the interest rates charged by the Public Works Loan Board should not be penal. They should not be so heavy as to make it impossible effectively to carry out the housing schemes, the road improvements, the park improvements, etc., for which local authorities will borrow this money.
    A low rate of interest might have a tremendous influence on the cost of living. If it reduced rents, it would reduce one of the factors in the build-up of the cost-of-living figures. In that way, it would help the Government out of some of their difficulties. It would also set a standard of interest charges for housing societies and others who lend money for public purposes.
    I am particularly concerned because it seems that as a result of the policy of allowing interest rates to rise—there does not seem to be any chance that the rate will stop at 5½ per cent.—we are preventing the carrying out of projects which the Government say they want done. Slum clearance will stop. Building by housing authorities is stopping. A local authority in Kent which is controlled by a Conservative majority has decided that, owing to the high interest charges, it can no longer lend money for house purchase.
    Therefore, it seems to me that the Amendment is an extremely sensible one, because it will enable the Board to lend money—the Government have complete control over all these schemes, if they care to exercise it—for schemes which will effectively provide happiness and comfort for our people. If we are not here for that purpose, we are not here for anything.
    The Minister ought to give consideration to this matter. It was pointed out a few nights ago that because interest rates have risen five times during the past year the weekly rent of a £2,000 house in London has risen by more than 10s. Somebody has to meet that charge. It can take the form of an increase in the rent, a method which some councils adopt, or it can be put on the rates, and then one has an unholy row with the local ratepayers' association about it. Acceptance of the Amendment would relieve the Government of that trouble at least.

    509
    Acceptance of the Amendment would also encourage local authorities. I find it difficult to understand how raising interest rates to local authorities on loans for public works of all kinds can make any difference at all to our balance of trade difficulties or our gold and dollar reserves. All it does is to make things more difficult for the people who matter most, those whose labour produces the wealth which the country enjoys.
    Consequently, I support the Amendment with very great fervour, and I hope that the Government will accept it or at least look again at the Alice-in-Wonderland situation of interest rates.
    Mr. James H. Hoy: I support the Amendment. I have for a considerable time been putting Questions to the Secretary of State for Scotland about the effect of the high interest rates on Scottish housing.
    On 6th March I asked the Secretary of State what effect the continual rises in interest rates were having on Scottish local authorities. We were given an astonishing figure. In the case of a £1,500 house built under the Labour Government, the interest charges over a period of 60 years amounted to £1,743, but since the Tory Government came to power, in 1951, interest rates have risen to such an extent that a similar house today carries an interest charge burden of no less than £3,446. Those are the figures given by the Secretary of State for Scotland himself. The interest rate on every single house built at a cost of £1,500 has doubled since the Tory Government came to power.
    8.45 p.m.
    What is the use of the Financial Secretary talking about keeping the cost of living down, or the Chancellor appealing to workers in industry to restrict their demands, if the Government are being so free with the nation's money to the money-lenders? The consequence of that is that every council house tenant in Scotland has already had to pay increases in rent and will have to pay further increases unless something is done to off-set these continually rising charges. If we tackle the interest rate, this intolerable burden which the Government have foisted on local authorities, we shall be going in the right direction.
    510
    I have a strange ally in the claim for lower interest rates, because on 6th March my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes), to whom the Committee is indebted for putting down this Amendment, asked the Secretary of State a similar Question. In the concluding part of his reply, the Secretary of State said:
    "I hope that perhaps, with luck."—
    I agree that he thought that we required a little luck—
    "on the next occasion the interest rates may be reduced, and then the Questions by the hon. Member on the subject may also be reduced."
    When I asked the right hon. Gentleman about these increases he said:
    "As to the second part of the supplementary question, I can only express the hope that the next move in interest rates might perhaps be a downward one, in which case I might perhaps not get this sort of question."—[OFFICIAL REPORT, 6th March, 1956; Vol. 549, c. 1921–2.]
    Mr. Rankin: On a point of order. Is is not most unfortunate that when my hon. Friend the Member for Leith (Mr. Hoy) is dealing with matters of such moment, not a single representative of the Scottish Office is on the Front Bench opposite?
    The Deputy-Chairman: The hon. Member well knows that that is not a point of order.
    Mr. Hoy: What I was hoping to prove to the Committee, and I am certain I have proved to the Financial Secretary to the Treasury, is that the Secretary of State for Scotland has given his sympathetic support to this Amendment. I am a little surprised, now that my hon. Friend has given him this opportunity, that he is not here himself, and has not sent one of his many Under-Secretaries to support the Amendment.
    Mr. George Brown: The Scottish Office is the most overstaffed Department in the Government.
    Mr. Hoy: One can see at a glance what an appalling problem local authorities have. The Treasury has control, because local authorities can spend within this £300 million only if they get permission from the Treasury. The Treasury already exercises control and one would have thought that in the interests of good municipal government that would have been sufficient.

    511
    However, other authorities may make a claim. For instance, perhaps the Financial Secretary can tell us whether the Independent Television Authority can make a claim on this £300 million and, if so, what rate of interest it will be charged. Will it be the same as for local authority housing purposes? I suggest that the right hon. Gentleman will find that the I.T.A. pays a lower rate of interest.
    The Deputy-Chairman: The hon. Member is now going beyond the Amendment.
    Mr. Hoy: I do not want to get out of order. What I was seeking to do was to find out whether what I was saying about the £300 million was correct, and how the rate of interest which the Treasury charges local authorities for housing purposes compares with its interest rates to commercial television for its lines of business. I do not intend to go beyond that, but what I can claim is that what I have said proves up to the hilt that the intolerable burden which all housing authorities have to carry today is one which, since 1951, has been placed on their shoulders by the present Government. The figures which I have quoted tonight—not my figures, but the figures supplied by the Government themselves—condemn them out of their own months.
    When the Government talk about carrying out a scheme of slum clearance at this time, they know that they are talking, as was said by the hon. Member for Ilford, South (Mr. Cooper), who departed from this Chamber after his one-minute speech, with their tongues in their cheeks. The Financial Secretary, as a leading ex-member of the London County Council, knows what the burden of these interest rates is on local authorities, and, surely, in all decency, he is bound to agree with the case put forward from this side of the Committee tonight. I beg the right hon. Gentleman to give serious consideration to this problem, knowing that my hon. Friend the Member for South Ayrshire will not be too sticky about 2½ per cent. Indeed, he has told me that he is willing to go in the other direction. He says that as a start he will accept 3½ per cent. if the Treasury will announce it tonight. He is prepared to be generous in the matter.
    512
    It is no use the hon. Member for Wimbledon (Mr. Black), who is the chairman of a building society, saying that the interest rates charged by the Government and foisted on the local authorities have had no repercussions on the people whom he supplies with money with which to build houses. As a consequence, the interest rates are higher now than they were under the Labour Government. Therefore, the hon. Gentleman had better not give us any more of that type of nonsense.
    The Financial Secretary must face up to the high interest rate as it affects local authorities and housing and see that he brings about some reduction in the rate and makes it possible for local authorities to carry out the duties which the central Government places on their shoulders.
    Mr. Ede: This Bill will provide money to be loaned to people other than local authorities. In fact, in some cases, the money will be lent to people whom the right hon. Gentleman the Financial Secretary himself brought into the scheme of things. On 4th April 1944, speaking on the Education Bill of that year, the right hon. Gentleman said:
    "In connection with this Clause I feel rather like a duck that laid an egg and had it taken away from her to be hatched elsewhere, and later unexpectedly met her surprisingly grown-up offspring."—[OFFICIAL REPORT, 4th April, 1944; Vol. 398, c. 1954.]
    I have never thought that the right hon. Gentleman's claim to the invention of that form of loan was justified, but he wants to claim it for himself. Really he must be surprised at the grown-up offspring today because when those loans were inaugurated, to be advanced by the Public Works Loan Board, they were expected to provide interest and repayment of principal for 4½ per cent. Today, interest alone is at least 5½ per cent. The right hon. Gentleman, in those days, used to speak for the Archbishop of Canterbury. After Mr. Willink was brought into the Government the Archbishop of Canterbury selected the right hon. Gentleman as the new acolyte.
    A large sum of money has been borrowed by the Church of England and also by the Roman Catholic Church, and larger sums will have to be borrowed in the near future by the same bodies because of the decision of the Government—rightly, I think—to speed up what is

    513
    called rural reorganisation. Nothing is more appalling to the people who have to try to raise these sums of money and repay them than to be faced with these continual increases in interest rates. I am a Nonconformist but, together with the hon. Member for Wimbledon (Mr. Black), I am a governor of two Roman Catholic schools in his constituency—the Jesuit College and the Ursuline Convent. [Laughter.] It is not very amusing, especially when one has to meet the reverend mother prioress and she announces that upon the money she wants to borrow to carry on with the work of the school she has to find an additional 1 per cent.
    I mention this because we do not want anybody to think that this is merely a quarrel between the Government and local authorities. A great deal of useful work is done by harbour boards and similar bodies, who have to raise capital in this way and then pay the interest charged upon it. The effect of Government policy in this matter has been seriously to handicap all the people engaged in these beneficient public works. My hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) is to be congratulated for putting down the Amendment and so enabling us to have this discussion.
    I hope that the "duck"—I will not say the "duckie"—will tonight recognise the appalling size to which his offspring has grown; in fact, it must now be almost a swan, walking about on the earth. But a swan is graceful only when it is floating on the water. The right hon. Gentleman has made it quite impossible for his swan to float with any comfort to those who are now responsible for its sustenance.
    Mr. H. Brooke: This has indeed become a debate of varied imagery. One and a half hours ago, when the hon. Member for South Ayrshire (Mr. Emrys Hughes) initiated it, he drew what seemed to me to be a somewhat far-fetched comparison with Hamlet without the gravedigger. Had William Shakespeare been sitting beside me, as my right hon. Friend the Member for Stratford, I might have heard him whispering, "Alas, poor Emrys" because I am afraid that I am not going to accept the Amendment. The hon. Member presented me with a frightful dilemma. He said that I had to choose between becoming enemy No. 1 of the local authorities and qualifying to
    514
    have my photograph put up in every municipal building in Scotland. This is as bad a situation as that of the man who had to choose between the lady and the tiger. On balance, I have great regard for the amenities of Scotland.
    The debate has proceeded upon two fallacies, which have been shared by every speaker, apart from my hon. Friend the Member for Ilford, South (Mr. Cooper). The first fallacy is the supposition that local authorities borrow only from the Public Works Loan Board and that everything can, therefore, be controlled by Clause 1. The truth is that local authorities borrow on their own credit in the market. They have at all times wished for their freedom to do so; they now have their freedom, and since last October it has been Government policy to require all local authorities to seek loans in the open market before admitting them to the facilities of the Board.
    That will certainly remain Government policy, whether or not the Amendment is carried. Consequently, the effect of the Amendment would be to create a most surprising and unwelcome differentiation between the interest rates payable by different local authorities. It will indeed be, as the hon. Member for South Ayrshire said, a matter of very grave concern to local authorities not only in Scotland but elsewhere.
    9.0 p.m.
    A further point which has been taken by one or two hon. Members, but not openly realised by many, is that if the money is to be lent to the local authorities at 2½ per cent. that can only be achieved by a subsidy from the Exchequer, because it is impossible, in present circumstances, for the Exchequer to borrow this money in the open market at a 2½ per cent. rate.
    Mr. Blenkinsop: Would the right hon. Gentleman not agree that I made the suggestion that inevitably this must mean reconsideration of the Government's policy in regard to interest rates?
    Mr. Brooke: That is exactly what I thought was happening today. I thought that a skilful attempt was being made to hang on the peg of this Amendment a debate on the whole economic policy of the Government. I must confess that I was tempted to reply to many of these matters, but I intend, if I can, to keep

    515
    myself in order and address myself to the methods by which local authorities can borrow.
    I am entitled to say that if the Public Works Loan Board has to lend to local authorities at 2½ per cent. that must be with money from the Local Loans Fund, which itself is fed by the Exchequer, and the Exchequer must provide itself with the money, either by borrowing in the open market—which it cannot do at 2½ per cent.—or by the use of the printing press.
    I think that what would appeal to those hon. Members opposite who talk about the nation creating its own credit, and so forth, is that we should get rid of all the apparatus of the money market, and resort to the printing press and uncontrolled inflation. [HON. MEMBERS: "Nonsense."] Whatever the interpretation may be, the fact remains that loans to local authorities at 2½ per cent. today involve a subsidy from somewhere. It would, in fact, be a subsidy from the Exchequer, that is, the taxpayer, and as a local government man I have listened with interest and some sadness to hon. Members opposite following one another avidly in the pursuit of what I regard as an entirely false idea—that local government will flourish entirely at the expense of the taxpayer.
    On the contrary, I think that a proper balance has to be maintained between the interest of the ratepayer and the interest of the taxpayer, and where the taxpayer comes to the assistance of local government it should be done by an open subsidy, sanctioned by Act of Parliament, and not by the concealment which would be implicit in any method of this kind. There is, I know, a fundamental difference between the two sides of the Committee on this. Hon. Members opposite believe in the feather bedding of local government, as I said on Friday. [HON. MEMBERS: "No."] They have not the same desire that we have, that the local authorities—[Interruption.] I am still proud to be a member of a local authority——
    Mr. T. Brown: Not a feather-bedded one.
    Mr. Brooke: —and I believe in the freedom and responsibility of local authorities. I cannot believe that it is for the long-term good of local authorities
    516
    that they should be artificially insulated from the play of economic forces.
    When the hon. Member for Clapham (Mr. Gibson) says that under present conditions it is utterly impossible for local authorities to carry out any schemes at all, it is obvious that he was not present last Friday when we were discussing the Bill; and when the fact was established that since the new system was operated from October of last year local authorities have been borrowing from the Board at an average rate of £4 million a week. They have certainly been borrowing on a considerable scale from other sources as well.
    Local authorities would not be borrowing this money if they were not finding it possible to carry out schemes of local expenditure.
    Mr. Gibson: I gave three instances which have occurred during the past week of local authorities which have stopped building because they are in difficulties.
    Mr. Brooke: I noticed that the hon. Gentleman gave the case of the Borough of Lewisham which, he says, decided not to go on with slum clearance schemes. I was afraid that things like that would happen when, two months ago, the Borough of Lewisham switched over to Socialist control.
    There is a fundamental objection to this Amendment to which I have not yet referred, and which no hon. Member on either side of the Committee has perceived. This is the second fallacy which I said that I must mention. It is supposed by hon. Members who are supporting this Amendment that, by passing it, they would secure the issue of loans from the Public Works Loan Board to local authorities at rates of interest not exceeding 2½ per cent.—[HON. MEMBERS: "Hear, hear."] Hon. Gentleman say, "Hear, hear", but that is a policy which would not be provided by the Amendment, or by this Clause. It is, and will remain, whatever we do by this Clause, a statutory power of the Treasury to prescribe the rates at which the Public Works Loan Board lends. That is laid down in the Public Works Loans Act, 1897.
    If we adopt this Amendment, the Committee will be cutting off from the Public Works Loan Board the supply of money to lend; because the Board would not be

    517
    able to derive any money from the Local Loans Fund unless it undertook to lend money to local authorities at a rate not exceeding 2½ per cent. In present conditions it would be quite impossible for the Treasury to fix a rate of interest at 2½ per cent. for the Board to lend to local authorities.
    When the hon. Member for South Ayrshire said—as he did—that this was an issue of very grave concern to local authorities, when the hon. Member for Dunbartonshire, East (Mr. Bence) said that a machine could work for some time without adequate oil, but would eventually seize up, both hon. Members were speaking with complete truth. In fact, the hon. Member for Dunbartonshire, East would be cutting off the oil from the machine and the whole work of the Public Works Loan Board would seize up, were this Amendment passed.
    Now that we have had a very pleasant debate for a couple of hours, I should like hon. Members to give serious attention to the points which I have put before them.
    Mr. Mitchison: I was here on Friday. So was the Financial Secretary. What he has been talking about was in some respects discussed then. I shall not repeat what was said, or make a long speech in answer to him.
    Of all the insufficient and unsatisfactory replies, this is about the worst I have ever heard. The right hon. Gentleman went to the trouble of repeating that most unfortunate phrase "featherbedding local authorities". This follows shortly after our debate on the Finance Bill, when the right hon. Gentleman was making tax concessions to people earning between £5,000 and £7,500 a year. It is not a very remarkable idea to suggest for whom and upon what terms he ought to provide satisfactory beds.
    Let us look at the "fallacies". I will deal with the first problem. The right hon. Gentleman referred to uncontrolled inflation. He seems completely to have forgotten—no doubt the Treasury looks at these matters from a somewhat remote fastness—that the question about which we are talking today, the loans made by the Public Works Loan Board to local authorities, are in respect of matters for which in practically every case the authorities already have the sanction of the responsible Minister.
    518
    Therefore, if the inflation is uncontrolled, it is simply because in this as in other matters the Government have no policy. Otherwise those who have to sanction these loans can exercise control at that point. My hon. Friends were perfectly right in saying that the fiscal control being exercised at present by the very high rate of interest charged to local authorities is a wrong and poor substitute for proper control over their policy by the responsible Ministers—in England and Wales the Minister of Housing and Local Government and in Scotland the Secretary of State, who appears not to be in complete agreement with his right hon. Friend on some important financial questions.
    Let me deal very shortly with the second so-called "fallacy". It was rather unworthy of the right hon. Gentleman. He knows perfectly well what we have in mind, which is that there ought to be a maximum rate of interest for the loans made by the Public Works Loan Board, mainly to local authorities. It will follow from that that there will have to be a corresponding change in the rate of interest charged by the Treasury to the Public Works Loan Board. I did not suppose that the right hon. Gentleman would take refuge in that argument and say, "If Parliament carries the Amendment and decides that the right rate of interest is 2½ per cent., the Treasury will not provide any money at that figure". After all, Parliament looks after the money of the country. If the Amendment is carried, the right hon. Gentleman knows that the Government and the Treasury will have to think again. That is the plain and short answer to the second "fallacy".
    I put the matter to the right hon. Gentleman a little more seriously. We ought to be very grateful to my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) and to all my hon. Friends who have followed him. They have spoken in different styles and have made short and pointed speeches. The right hon. Gentleman, as a member of the Government, ought to recognise that this is not just a bit of Parliamentary fun. What he has heard today represents the feelings of local authorities over the country. Behind those local authorities is the feeling of the ratepayers and the rent payers, who are being made to pay

    519
    for the Government's fiscal policy. That is what the right hon. Gentleman has to meet and face up to.
    9.15 p.m.
    I am not going to pick and choose among so many excellent speeches. I thought that each of them showed clearly the reality of what was being put to the right hon. Gentleman. There are two questions involved. The first question is, ought there to be a maximum rate of interest chargeable to local authorities? The second question is, if there ought to be such a maximum, ought it to be 2½ per cent.? I say, as has already been said in this debate, that no one on this side of the Committee wants necessarily to insist on 2½ per cent. If the right hon. Gentleman is prepared to say, "If you will be good enough to withdraw this Amendment, I will, on Report, introduce a suitable Amendment with another maximum rate". I very much doubt whether we would have to trouble the Committee much longer with this matter. The really substantial point is, ought there to be a maximum rate of interest?
    I said to the right hon. Gentleman a few days ago, and say again now, that we are concerned here with vital services. Housing is one, health is one, education is another. If the right hon. Gentleman looks through the list, as I am sure he has done, to note the purposes for which the loans are used, he will see that many minor purposes are covered. All of them relate to things which have to be carried on. We are asking whether we are to expect the rate of interest to continue rising steadily, as it is rising under this Government, or are we to treat the present level as permanent?
    I would remind the right hon. Gentleman that under my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) the rate of interest was 2½ per cent. and it stayed there. Under the late Sir Stafford Cripps the rate of interest for this purpose was 3 per cent. and stayed there. The moment this Government came into office, the rate of interest began to rise. It has continued to rise ever since, and no one knows where it will stop. In those circumstances, we must either expect this state of affairs to be temporary—in which case acceptance
    520
    of the Amendment will do no great harm—or, if high rates of interest are to continue, this or some succeeding Government will have to consider whether they are prepared to make a subsidy—not a hidden subsidy, but a subsidy—to local authorities in the form of the rate of interest charged to them.
    This is no news to the right hon. Gentleman; it is exactly what I said to him on Friday, and I did not say it without deliberation. We on this side of the Committee are considering this question very seriously. We are convinced that we cannot hold up the health, the education, or the housing services of this country by charging local authorities such high rates of interest that they cannot do the work they are required to do, because the rates and ratepayers and the rent payers will not stand it. If local government in this country—and, of course, I include Scotland—is to function properly, the question of these rates of interest will have to be faced in a way which the right hon. Gentleman, by his frivolous answer tonight, discouraged me from thinking he was prepared to face. It just is not good enough. This matter has got to be dealt with more seriously than that.
    The right hon. Gentleman spoke of alternative sources. He knows perfectly well what has been happening. As a result of the policy of the Government, not merely in the last few months, not merely since the change-over to which he referred, the Public Works Loan Board has been failing, to an ever-increasing extent, to do this job and to meet the requirements of local authorities. If he gave it the sort of impetus and help which would be given by a fixed maximum rate of interest—for this purpose I am not tying mself to 2½ per cent.—he would allow it once more to do what it has been failing to do, to meet its public duty of lending money for public purposes to local authorities.
    Mr. William Hamilton: I want to supplement what was said by my hon. Friend the Member for Leith (Mr. Hoy) about the Secretary of State for Scotland. Although the Amendment is in the names of three Scottish Members, no Scottish Minister has condescended to attend any part of the debate. It is fortunate for the sake of our argument

    521
    that in the debate in the Scottish Standing Committee yesterday, the Secretary of State said:
    "At the end of May, 1956, 69 local authorities out of 230 in Scotland had no houses under construction."
    One local authority in three in Scotland has no houses under construction today.
    Mr. C. Pannell: The Financial Secretary to the Treasury made the point that that anti-social conduct could come only from councils with Labour majorities. Perhaps my hon. Friend will deal with the Conservative ones.
    Mr. Hamilton: The bulk of these are Conservative-controlled. The Secretary of State added:
    "This contraction was in the main in the county districts and small burghs."
    Any Scottish Member knows full well that these are, in the main, Tory authorities. The Secretary of State continued, in the same context:
    "For every 100 houses these authorities built in 1953, they now have under construction 76."—[OFFICIAL REPORT, Scottish Standing Committee, Tuesday, 10th July, 1956; c. 164.]
    That shows the effect of the Government's policy of high interest rates.
    In my own local authority, Fife County Council, we have a Labour majority of one, and that council has resolved, no matter how interest rates vary, that it will build houses. In my constituency there is a village which has houses probably worse than those anywhere else in Scotland. My local authority has said, "We intend to build 90 houses there despite the penal rate of interest". Then, although the local authority has taken a decision by a majority of 16—an all-party decision—the Scottish Office say, "If you intend to build despite the interest rates we will stop you in any case." We are not being allowed to build the houses. When the penal interest rates do not have any effect the Government step in and do the dirty work.
    Another point which has not been made so far is that one of the big problems which we face as a nation is the mobility of labour. Last week the Minister of Labour said that what we must do to increase the mobility of labour was to build more houses to let. Is that the policy of the Government? If it is, how are they encouraging local authorities to
    522
    do that? Are they doing it by high interest rates? They know that that is not so. High interest rates are having the effect, as the Secretary of State for Scotland has admitted, of stopping one in three of the local authorities in Scotland from building any houses at all.
    This is an intolerable position. The Government are stopping the building of houses and are, therefore, decreasing the mobility of labour. This is also having the effect of encouraging demands for increased wages. What is the use of the Government saying to the nationalised industries that they should stabilise their prices and then, having got an assurance, going to the T.U.C. and saying, "There, are not we good boys? Now you restrain your wage claims", and then, in the next breath, saying to the local authorities, "We are going to force you to put up rents, and when you have done that we will decontrol the privately owned houses and put up those rents as well"? There is no consistency in this. It is no contribution to the solution of our national problems. The right hon. Gentleman has made one of the most disgusting speeches that I have ever heard in the House of Commons.
    Mr. Rankin: I should like, briefly, to deal with two points which were made by the Financial Secretary. He seemed to be rather worried about where to get cheap money. He ridiculed the idea of the 2½ per cent. which is suggested in the Amendment. But my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) is not thirled to the 2½ per cent.
    Mr. Emrys Hughes: Tied.
    Mr. Rankin: I am sorry if I have used a word outwith the comprehension of the Minister; I do not want to take him out of his depth. I was saying that my hon. Friend is not tied to the 2½ per cent., and that, if the right hon. Gentleman is prepared to "talk turkey" in this matter, my hon. Friend is prepared to do a deal round about 3 or 3½ per cent. We shall be glad to hear what the right hon. Gentleman has to say on that point later.
    I now want to deal with the right hon. Gentleman's first point. He seemed to think it was difficult to get cheap money. The right hon. Gentleman knows where to get it cheap. He knows where 2½ per cent. is being paid just now. It is being paid to Post Office savers, and the money

    523
    is there. Millions of pounds of it are there, and that money can be had. That money goes to the Government, who, I assume, will pay the savings bank perhaps ¼ per cent. more for its work and charges in connection with the handling of that money.
    From the City of Glasgow come millions of pounds to the Government at a cheap interest rate, and then, in turn, the Government pay perhaps no more than 2¾ per cent. or 3 per cent. for that money. When Glasgow requires it to build houses, the Government charge at least 5¼ and perhaps 5½ per cent. for the money which they got from the city at almost half that price.
    It is quite clear that the local authorities can do a great deal to awaken the Government in this matter, and there is no reason why they should not go ahead with the formation of municipal banks in order that they themselves may provide the cheap money which the Treasury is finding it impossible to give them. It has been done before, and if the Treasury finds itself in that position, in which it is deprived of money which it presently uses and then lends back at double the price, because of the refusal to talk sensibly on this matter, it will have only itself to thank.
    I want now to refer to the second point which the right hon. Gentleman made. He said that he did not want to insulate the local authorities artificially from the rigours of the market. He did not want them to be feather-bedded. The right hon. Gentleman used another phrase; he called it artificially insulating them. I should like to see at what point this insulation takes place, and I want to quote an example from a housing scheme in the City of Glasgow—one of the great new housing schemes going up in my own city. At Castle Milk, in the City of Glasgow, the five-apartment house costs £2,258. The rent which the corporation finds it necessary to charge for that type of house is £40. If it had to charge the economic rent for those houses it would require to charge £136 19s. 10d.
    9.30 p.m.
    The Government, knowing that that is an impossible rent to charge, pursue the policy—I have to be careful I use the phrase aright—of "artificial insulation."
    524
    Yes, the policy which the right hon. Gentleman has just condemned. He is pursuing it because, recognising the impossibility of charging a rent of £136 19s. 10d. he gives £46 15s. as Government insulation to the corporation to prevent that rent from being charged. That is insulation, which he condemns, and which he could avoid by lowering the interest rate.
    Out of the economic rent of £136 19s. 10d., £110 goes to the money-lenders, and he is the money-lender, and we all condemn the money-lender. Of course, he acts ex officio. The amount he hands out is £46 15s. After taking in £110 he gives back £46 15s. That is what they call high finance. I am sorry that the high financier, the hon. Member for Ilford, South (Mr. Cooper) has gone. He said that we on this side of the Committee were in Wonderland. I wish he had heard later of the kind of Wonderland that his Government have blundered into.
    In addition to artificial insulation to the extent of £46 15s., the right hon. Gentleman goes on to inflate. For weeks we have heard his chief saying he is going to stop inflation. To get the rent down to £40 the local authority has to levy a statutory rate which brings in for each house £15 10s., and that is a form of inflation, but even that does not bring the housing authority's books into balance. To balance expenditure it has to levy an additional rate which brings in £34 14s. 10d. All that is inflation.
    The right hon. Gentleman sits there without a blush on his face, yet he and his chief are doing what they have been condemning for week after week. They are inflating. They are artificially insulating. We have heard the right hon. Gentleman condemn these things tonight, and we have heard the Chancellor of the Exchquer condemn them during the last few weeks. The result of it all is an even bigger inflation, because the total housing deficit which the Glasgow Corporation has to meet this year is £1,176,000, as a result of the policies carried out by this Government and because of the high interest rates charged. My hon. Friend the Member for South Ayrshire, in his wisdom, has come along and offered an escape. I hope that the Government will not be so stupid as to

    525
    ignore the lifeline that is being flung out to them tonight, because if they do not grasp it they will disappear without leaving a trace of where they have been.
    Question put, That those words be there insterted:—
    The Committee divided: Ayes 153. Noes 184

    Division No. 264.]

    AYES

    [9.35 p.m.

    Ainsley, J. W.

    Grenfell, Rt. Hon. D. R.

    Neal, Harold (Bolsover)

    Allaun, Frank (Salford, E.)

    Grey, C. F.

    Noel-Baker, Francis (Swindon)

    Allen, Arthur (Bosworth)

    Hale, Leslie

    Oram, A. E.

    Allen, Scholefield (Crewe)

    Hamilton, W. W

    Orbach, M.

    Awbery, S. S.

    Hannan, W.

    Oswald, T.

    Bacon, Miss Alice

    Harrison, J. (Nottingham, N.)

    Owen, W. J.

    Bence, C. R. (Dunbartonshire, E.)

    Hastings, S.

    Paling, Will T. (Dewsbury)

    Blackburn, F.

    Hayman, F. H.

    Pannell, Charles (Leeds, W.)

    Blenkinsop, A.

    Herbison, Miss M.

    Parker, J.

    Boardman, H.

    Hewitson, Capt. M.

    Parkin, B. T.

    Bottomley, Rt. Hon. A. G.

    Hobson, C. R.

    Plummer, Sir Leslie

    Bowden, H. W. (Leicester, S.W.)

    Holman, P.

    Popplewell, E.

    Boyd, T. C.

    Holmes, Horace

    Price, J. T. (Westhoughton)

    Braddock, Mrs. Elizabeth

    Howell, Charles (Perry Barr)

    Probert, A. R.

    Brockway, A. F.

    Howell, Denis (All Saints)

    Proctor, W. T.

    Broughton, Dr. A. D. D.

    Hoy, J. H.

    Pryde, D. J.

    Brown, Rt. Hon. George (Belper)

    Hubbard, T. F.

    Randall, H. E.

    Brown, Thomas (Ince)

    Hughes, Emrys (S. Ayrshire)

    Rankin, John

    Burke, W. A.

    Hughes, Hector (Aberdeen, N.)

    Redhead, E. C.

    Butler, Herbert (Hackney, C.)

    Hunter, A. E.

    Reeves, J.

    Butler, Mrs. Joyce (Wood Green)

    Hynd, H. (Accrington)

    Roberts, Albert (Normanton)

    Callaghan, L. J.

    Hynd, J. B. (Attercliffe)

    Roberts, Goronwy (Caernarvon)

    Champion, A. J.

    Irvine, A. J. (Edge Hill)

    Royle, C.

    Chapman, W. D.

    Irving, S. (Dartford)

    Silverman, Julius (Aston)

    Chetwynd, G. R.

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

    Skeffington, A. M.

    Clunie, J.

    Jeger, George (Goole)

    Slater, J. (Sedgefield)

    Coldrick, W.

    Jeger, Mrs. Lena (Holbn & St. Pncs, S.)

    Smith, Ellis (Stoke, S.)

    Collick, P. H. (Birkenhead)

    Johnson, James (Rugby)

    Snow, J. W.

    Collins, V. J. (Shoreditch & Finsbury)

    Jones, Rt. Hon. A. Creech (Wakefield)

    Sorensen, R. W.

    Craddock, George (Bradford, S.)

    Jones, David (The Hartlepools)

    Steele, T.

    Crossman, R. H. S.

    King, Dr. H. M.

    Stewart, Michael (Fulham)

    Dalton, Rt. Hon. H.

    Lawson, G. M.

    Swingler, S. T.

    Davies, Harold (Leek)

    Lee, Frederick (Newton)

    Taylor, John (West Lothian)

    Davies, Stephen (Merthyr)

    Lever, Leslie (Ardwick)

    Thomson, George (Dundee, E.)

    Deer, G.

    Lindgren, G. S.

    Timmons, J.

    Delargy, H. J.

    Lipton, Lt.-Col. M.

    Wells, Percy (Faversham)

    Dodds, N. N.

    Logan, D. G.

    Wheeldon, W. E.

    Dye, S.

    Mabon, Dr. J. Dickson

    Wilkins, W. A.

    Ede, Rt. Hon. J. C.

    MacColl, J. E.

    Williams, David (Heath)

    Edwards, Rt. Hon. John (Brighouse)

    McInnes, J.

    Williams, Rev. Llywelyn (Ab'tillery)

    Edwards, Rt. Hon. Ness (Caerphilly)

    McKay, John (Wallsend)

    Williams, Rt. Hon. T. (Don Valley)

    Evans, Albert (Islington, S.W.)

    McLeavy, Frank

    Williams, W. R. (Openshaw)

    Evans, Stanley (Wednesbury)

    MacPherson, Malcolm (Stirling)

    Williams, W. T. (Barons Court)

    Fernyhough, E.

    Mahon, Simon

    Willis, Eustace (Edinburgh, E.)

    Fienburgh, W.

    Mann, Mrs. Jean

    Wilson, Rt. Hon. Harold (Huyton)

    Finch, H. J.

    Marquand, Rt. Hon. H. A.

    Winterbottom, Richard

    Fletcher, Eric

    Mayhew, C. P.

    Woodburn, Rt. Hon. A.

    Forman, J. C.

    Mikardo, Ian

    Yates, V. (Ladywood)

    Fraser, Thomas (Hamilton)

    Mitchison, G. R.

    Zilliacus, K.

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

    Moody, A. S.

    Gibson, C. W.

    Mort, D. L.

    TELLERS FOR THE AYES:

    Gordon Walker, Rt. Hon. P. C.

    Moss, R.

    Mr. Pearson and Mr. Simmons.

    NOES

    Agnew, Cmdr. P. G.

    Boyle, Sir Edward

    Donaldson, Comdr. C. E. McA.

    Aitken, W. T.

    Brooke, Rt. Hon. Henry

    Drayson, G. B.

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

    Brooman-White, R. C.

    du Cann, E. D. L.

    Alport, C. J. M.

    Browne, J. Nixon (Craigton)

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

    Amory, Rt. Hn. Heathcoat(Tiverton)

    Bryan, P.

    Duncan, Capt. J. A. L.

    Armstrong, C. W.

    Bullus, Wing Commander E. E.

    Eccles, Rt. Hon. Sir David

    Ashton, H.

    Burden, F. F. A.

    Eden, J. B. (Bournemouth, West)

    Atkins, H. E.

    Channon, H.

    Errington, Sir Eric

    Baldwin, A. E.

    Clarke, Brig. Terence (Portsmth, W.)

    Finlay, Graeme

    Balniel, Lord

    Cole, Norman

    Fleetwood-Hesketh, R. F.

    Barter, John

    Conant, Maj. Sir Roger

    Fletcher-Cooke, C.

    Baxter, Sir Beverley

    Cooper-Key, E. M.

    Foster, John

    Beamish, Maj. Tufton

    Cordeaux, Lt.-Col. J. K.

    Galbraith, Hon. T. G. D

    Bennett, F. M. (Torquay)

    Corfield, Capt. F. V.

    George, J. C. (Pollok)

    Bennett, Dr. Reginald

    Craddock, Beresford (Spelthorne)

    Gibson-Watt, D.

    Biggs-Davison, J. A.

    Crouch, R. P.

    Glover, D.

    Bishop, F. P.

    Crowder, Sir John (Finchley)

    Godber, J. B.

    Black, C, W.

    Dance, J. C. G.

    Gomme-Duncan, Col. Sir Alan

    Bossom, Sir Alfred

    Deedes, W. F.

    Gough, C. F. H.

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

    Dodds-Parker, A. D.

    Gower, H. R

    Graham, Sir Fergus

    Lambert, Hon. G.

    Raikes, Sir Victor

    Grant, W. (Woodside)

    Lancaster, Col. C. G.

    Rawlinson, Peter

    Grant-Ferris, Wg Cdr. R. (Nantwich)

    Leavey, J. A.

    Redmayne, M.

    Green, A.

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

    Remnant, Hon. P.

    Grimond, J.

    Legh, Hon. Peter (Petersfield)

    Ridsdale, J. E.

    Grimston, Hon. John (St. Albans)

    Lindsay, Hon. James (Devon, N.)

    Rippon, A. G. F.

    Grimston, Sir Robert (Westbury)

    Linstead, Sir H. N.

    Robertson, Sir David

    Gurden, Harold

    Lloyd, Maj. Sir Guy (Renfrew, E.)

    Roper, Sir Harold

    Hare, Rt. Hon. J. H.

    Low, Rt. Hon. A. R. W.

    Ropner, Col. Sir Leonard

    Harris, Frederic (Croydon, N.W.)

    Lucas, P. B. (Brentford & Chiswick)

    Russell, R. S.

    Harrison, A. B. C. (Maldon)

    Lucas-Tooth, Sir Hugh

    Schofield, Lt.-Col. W.

    Harrison, Col. J. H. (Eye)

    Mackie, J. H. (Galloway)

    Scott-Miller, Cmdr. R.

    Harvey, Ian (Harrow, E.)

    Maclay, Rt. Hon. John

    Spearman, Sir Alexander

    Harvey, John (Walthamstow, E.)

    McLean, Neil (Inverness)

    Steward, Harold (Stockport, S.)

    Heald, Rt. Hon. Sir Lionel

    MacLeod, John (Ross & Cromarty)

    Steward, Sir William (Woolwich, W.)

    Heath, Rt. Hon. E. R. G.

    Maddan, Martin

    Stoddart-Scott, Col. M.

    Hill, Mrs. E. (Wythenshawe)

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

    Studholme, Sir Henry

    Hill, John (S. Norfolk)

    Maitland, Hon. Patrick (Lanark)

    Summers, Sir Spencer

    Hinchingbrooke, Viscount

    Markham, Major Sir Frank

    Taylor, William (Bradford, N.)

    Hirst, Geoffrey

    Marlowe, A. A. H.

    Thomas, P. J. M. (Conway)

    Holt, A. F.

    Mathew, R.

    Thompson, Kenneth (Walton)

    Hornby, R. P.

    Mawby, R. L.

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

    Horsbrugh, Rt. Hon. Dame Florence

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

    Thornton-Kemsley, C. N.

    Hudson, Sir Austin (Lewisham, N.)

    Milligan, Rt. Hon. W. R.

    Tiley, A. (Bradford, W.)

    Hughes Hallett, Vice-Admiral J.

    Molson, Rt. Hon. Hugh

    Tilney, John (Wavertree)

    Hughes-Young, M. H. C.

    Moore, Sir Thomas

    Touche, Sir Gordon

    Hulbert, Sir Norman

    Nabarro, G. D. N.

    Turton, Rt. Hon. R. H.

    Hurd, A. R.

    Heave, Airey

    Vickers, Miss J. H.

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

    Nicholson, Godfrey (Farnham)

    Vosper, D. F.

    Hutchison, Sir James (Scotstoun)

    Nicolson, N. (B'n'm'th, E. & Chr'ch)

    Wakefield, Sir Wavell (St. M'lebone)

    Irvine, Bryant Godman (Rye)

    Nield, Basil (Chester)

    Wall, Major Patrick

    Jenkins, Robert (Dulwich)

    Noble, Comdr. A. H. P.

    Ward, Hon. George (Worcester)

    Jennings, J. C. (Burton)

    Oakshott, H. D.

    Ward, Dame Irene (Tynemouth)

    Johnson, Dr. Donald (Carlisle)

    Osborne, C.

    Whitelaw, W. S. I. (Penrith & Border)

    Johnson, Eric (Blackley)

    Page, R. G.

    Williams, Paul (Sunderland, S.)

    Joynson-Hicks, Hon. Sir Lancelot

    Partridge, E.

    Williams, R. Dudley (Exeter)

    Keegan, D.

    Pilkington, Capt. R. A.

    Wills, G. (Bridgwater)

    Kerr, H. W.

    Pitt, Miss E. M.

    Wilson, Geoffrey (Truro)

    Kershaw, J. A.

    Pott, H. P.

    Woollam, John Victor

    Kimball, M.

    Powell, J. Enoch

    Yates, William (The Wrekin)

    Kirk, P. M.

    Price, Henry (Lewisham, W.)

    Lagden, G. W.

    Profumo, J. D.

    TELLERS FOR THE NOES:

    Mr. Wakefield and Mr. Barber.

    Question put and agreed to.

    Motion made, and Question proposed, That the Clause stand part of the Bill.
    9.45 p.m.
    Lieut.-Colonel Marcus Lipton: One or two remarks of a general nature made a little while ago by the Financial Secretary were of such an extraordinary nature that some further comment is required before we part with the Clause.
    I know that the Financial Secretary did not find it possible to accept the proposal made by my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes), but he based his rejection of any reduction in the present rate of interest on the argument that it was impossible for the Government to borrow at rates low enough to comply with the terms of the Amendment upon which we have just voted or to grant any concession whatever in respect of the current rates of interest charged by the Public Works Loan Board.
    The right hon. Gentleman sail that if the Government were to make any reduction in the present rates charged by the Board, it would mean either an open or
    528
    concealed subsidy on the part of the Government or resort to the printing press. I challenge that statement. Without granting a concealed subsidy and without resorting to the printing press, it is well within the Treasury's power to make a reduction in the rates to be charged upon the £300 million which the Clause seeks to authorise.
    It can be done by this means. The Government have possession, in the Post Office Savings Bank—or they had on 31st December, 1955; this is the latest figure that I have been able to obtain—of balances due to depositors amounting to about £1,700 million, which, on the basis of the current rate of £300 million a year, would be sufficient to cover the Board's requirements for the next five years. Those deposits represent real money, not artificially created money; they are the savings of ordinary people, and the Government pay 2½ per cent. interest on them. It should be possible for the Government, in various selected fields of expenditure or loan sanctions, such as local government, to use the £1,700 million by lending it to local authorities at a rate of interest higher than 2½ per cent., in order to cover

    529
    expenses, but certainly very much lower than the rates now charged by the Board.
    It is lamentable that the Financial Secretary should seek to mislead the Committee by pretending that there was no possibility of the Government granting local authorities loans at a lower rate of interest than at present applies. The hardships imposed upon local authorities have been mentioned, and I shall not dilate upon them. By using funds placed at the disposal of the Government by ordinary savers at a rate of interest not exceeding 2½ per cent., the Treasury could, if it wished—unfortunately, it does not so wish—very considerably lighten the burdens of local authorities, whose task has been made virtually impossible by the policy pursued by the present Administration.
    Mr. James McInnes: I want to deal with an aspect of the matter which the Financial Secretary has not mentioned. I refer to the Stamp Duty and fees which the Public Works Loan Board charges to local authorities seeing to borrow money from it. On page 13 of the Annual Report of the Board the Financial Secretary will observe that apart from Stamp Duty, of which the Board accumulates about £800,000 a year, the Board charges local authorities 4s. per £100 as a fee.
    In 1955–56 the Board received from local authorities no less than £732,000 in respect of fees at the rate of 4s. per £100. The fees, in the words of the Report, are paid to meet
    "… the cost to the Board (a) of examining applications for loans (including investigation of titles in respect of property loans), making advances and opening new accounts … and (b) of maintaining accounts over the periods of the loans, which vary from 4 to 80 years …"
    In other words, that means all the work which is undertaken by the staff employed by the Board. The cost of the staff is also set out on page 13 and is given as about £54,700. Other expenditure, rent, rates, furniture, superannuation and so on amount to about £27,500.
    That means that the Board receives from local authorities nearly £732,000 to meet an annual operating or administration cost of about £82,000 a year. I have calculated that during the past seven years the Board has received from local authorities fees of no less than £5,100,000 to meet operating costs of about £550,000,
    530
    a profit on that aspect of the transactions of at least £4½ million.
    During the last few years I have repeatedly directed the attention of the Financial Secretary to that aspect of the matter, and asked him whether it is not possible to reduce the fees from 4s. per £100 borrowed to 6d. per £100 borrowed. The cost to a city like Glasgow of borrowing money from the Board is about £70,000. If the duty were reduced to a rate of 6d. per £100 borrowed, Glasgow would pay only £8,000 to £9,000. That state of affairs applies to every local authority. Despite the fact that I have raised this issue year in and year out, I always get the same reply from the Financial Secretary—"We recognise what you say, we appreciate your point of view and we give you the assurance that it will be examined."
    However, it has never been examined. At least there has been no alteration in that rate during the past seven years. I hope that the Financial Secretary will recognise that while it would be a small concession, it would, nevertheless, be a very beneficial concession to local authorities which have to contend with such an enormous burden as a result of the Government's interest rate policy. Such a reduction would tend, if only in a very small degree, to reduce the costs. I trust that in these circumstances the right hon. Gentleman will not this evening fob me off with the hardy annual by saying, "We recognise your point and we appreciate what you say. The matter will be examined," because then I should have to repeat this speech again next year. I hope that the right hon. Gentleman will deal with the matter tonight.
    Mr. S. O. Davies: I had not intended to intervene in this debate, although I am naturally deeply interested, like most hon. Members on this side of the Committee, in the Amendment which was moved by my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes). My intervention has really been made inevitable by the shocking and offensive speech made by the Financial Secretary, in which he lectured the local authorities and showed such a pathetic solicitude for the money-lenders in the money markets of this country.
    I hope that the right hon. Gentleman will read his speech tomorrow. I speak with some humility and with some years of experience of a local authority which,

    531
    in common with other local authorities, was nearly blasted out of existence by Tory Governments in the inter-war years. I had hoped that because of the right hon. Gentleman's personal experience of local government he would exercise a little common sense and a sense of proportion.
    Some of us in this Committee are still very proud of our magnificent local government structure with which, we believe, there is nothing in the world to be compared. Having listened to the lecture delivered by the right hon. Gentleman tonight to local authorities in which he said that they should exercise some sense of freedom and responsibility in the teeth of the most penal legislation that has been passed at the expense of local authorities in the last 40 years, I must, as I have said, ask the Financial Secretary to read his speech tomorrow.
    Why this solicitude for the money-lenders? Why should the right hon. Gentleman urge local authorities to go to the money markets if they are not satisfied with the Public Works Loan Board? I speak as one whose constituency still has thousands of houses that are no better than slums. I and my constituents know what an appalling problem it is to try to rehouse people owing to the utterly unscrupulous and penal methods devised by the Government at the expense of the local authorities.
    The Financial Secretary owes an apology to the local authorities. Insults have been added to injuries, and he should have been the last man to do it. I rose merely to make that protest on behalf of local authorities.
    Clause ordered to stand part of the Bill.
    Clauses 2 and 3 ordered to stand part of the Bill.
    Bill reported, without Amendment: read the Third time and passed.

    BRITISH CARIBBEAN FEDERATION [MONEY]
    Resolution reported,
    That, for the purposes of any Act of the present Session to provide for the federation of certain West Indian colonies and for the transfer, to a court established for the purposes of the federation, of the jurisdiction of the Court of Appeal established by the West Indian Court of Appeal Act, 1919, and the
    532
    dissolution of that court; to provide for conferring on the first-mentioned court jurisdiction to hear and determine appeals from the courts of colonies which are not for the time being included in the federation and to repeal the British Honduras (Court of Appeal) Act, 1881; and for purposes connected with the matters aforesaid, it is expedient to authorise—

    (1) the payment out of moneys provided by Parliament—

    (a) of such sums, not exceeding in the aggregate one million pounds, as may be required by the Secretary of State for the purpose of making grants towards defraying the cost of establishing the seat of the Government of the federation established by virtue of the said Act; and

    (b) of such sums as may be required by him for the purpose of making, in respect of the period of ten years beginning with the first day of January next after the establishment of the said federation, grants to that Government for the purpose of enabling it to make grants to the governments of colonies for the time being included in the federation whose resources are, in its opinion, insufficient to enable them to defray their administrative expenses; and

    (2) the payment out of moneys provided by Parliament or out of the Consolidated Fund of any increase in sums payable thereout under any other enactment which is attributable to an Order in Council made under or by virtue of the said Act.

    BRITISH CARIBBEAN FEDERATION BILL
    Considered in Committee, and reported, without Amendment.
    10.3 p.m.
    The Minister of State for Colonial Affairs (Mr. John Hare): I beg to move, That the Bill be now read the Third time.
    I shall not detain the House for very long, because the very warm welcome which the Bill had during the Second Reading debate, and the rapid way in which the remaining stages have just been dealt with, show how unanimous hon. Members on both sides of the House are in this matter.
    I shall make no formal speech of commendation, but it should be made clear to the people of the West Indies that we in the United Kingdom wish Godspeed and a fair passage to the new British Caribbean Federation when it comes into being. I hope that in view of the Bill's warm and friendly reception the leaders and the peoples of the new Federation will feel assured that they will always have the continued friendship and help of hon. Members on both sides of the House.
    10.4 p.m.
    Mr. Arthur Creech Jones: In view of the importance of the Bill and the fact that it looks with great hope to the future I feel that we should wish the people of the Caribbean all good luck and success in the work of the new Federation before the Bill leaves the House. We realise that many problems remain to be solved, and that a great deal of work must be done before the Federation can come into operation. The considerable difficulties which will have to be faced were expressed during the Second Reading debate. A great deal of patience will be necessary in order to build up that corporate spirit upon which the success of the Federation depends, and to overcome the phyical difficulties of communication between respective territories.
    None the less, the Federation coming into being will, we hope, assume the status of a new Dominion inside the Commonwealth. We know that, with its financial limitations, it is not an easy thing to build up a new State inside the Commonwealth, but we hope that this nation will continue to show the utmost generosity in regard to the problems which have to be solved by this new Federation. Therefore, we hope that all will go well in the days immediately ahead, and, speaking for the Opposition and, I think, for all Members on both sides of the House, we wish the people of the Caribbean well in this great adventure on which they are about to start.
    Mr. R. W. Sorensen: As a back bencher, may I add my word, as I am sure other back benchers wish to do, to the good wishes extended to the emergence of this new Federation. In a sense, what we are doing today is only poetic justice and some kind of compensation for what we have done in the past. We must not forget the past; and that many of the people of these islands are the descendants of those who were taken away from their homeland years ago and dumped overseas as human merchandise. If we can do something to bring the people of those areas together for their social, economic and ethical good, that will, in some measure, counterbalance the evils of the past.
    It is true, as has been mentioned in another connection, that there are very great difficulties in the development of
    534
    this Federation, but nowadays these difficulties can be overcome through our knowledge of science. Nature has scattered and fragmented a number of these islands, and in former days it would have been most difficult to bring about any kind of homogeneity. Fortunately, by science, we can now leap over the waters and so help to bring together people who otherwise might have spent an indefinite time in segregation and isolation. Therefore, I hope that the bridge which modern science can offer will be helpful in the development of one more pattern within our amazing and inspiring Commonwealth of Nations.
    For this reason, I trust that these humble words will carry some little weight from those of us on the back benches, and will add to the more weighty utterances which have come from right hon. Members on the Front Benches in wishing Godspeed to the Bill. We hope that while these people will keep their identity in the several islands they will nevertheless develop into a nation which will comprehend and preserve those individual identities.
    That, I am sure, will add very materially to the well-being of the people of these islands. It will add to the possibility of their economic development, but, above all, I think that it is necessary that those who live in these islands should increasingly have a sense of belonging to the same community, with variety in it, but a community which can be proud of itself and proud of membership of the Commonwealth of Nations.
    Bill accordingly read the Third time and passed.

    GOVERNORS' PENSIONS [MONEY]
    Resolution reported,
    That, for the purposes of any Act of the present Session to amend the Pensions (Governors of Dominions, &c.) Acts, 1911 to 1947, it is expedient to authorise the payment out of moneys provided by Parliament of any increase attributable to the provisions of the said Act in the sums which under the Pensions (Governors of Dominions, &c.) Acts. 1911 to 1947, or under the Superannuation Acts, 1834 to 1950, are payable out of moneys so provided.

    GOVERNORS' PENSIONS BILL
    Considered in Committee.
    [Sir RHYS HOPKIN MORRIS in the Chair]

    Clause 1.—(PENSIONS TO CERTAIN GOVERNORS WITH LESS THAN THREE YEARS' SERVICE.)
    10.10 p.m.
    Mr. Emrys Hughes: I beg to move, in page 1, line 10, to leave out from "State" to "if" in line 12.
    Those of us who are trying to improve the Bill have no wish to inflict injustice upon colonial Governors. But, while we recognise that the colonial Governors have performed their duties and deserve pensions from the Government, we think that this is not an opportune moment to select them for special attention to use a term already used this evening, for "feather-bedding". The last persons who would desire to be "feather-bedded" are the colonial Governors, and we do not see any need to give the very generous concessions contained in this Bill, and especially in Clause 1.
    This is a time when everyone is seeking better pension conditions. I do not wish to elaborate upon the number of people who are doing that. I should not for a moment venture on such forbidden territory, but I do not think that a case has been made out for giving priority to colonial Governors such as is given in this Bill. By this Amendment we seek to delete the words:
    "… notwithstanding that he has not completed three years' service as a Governor (the period required by section one of the Pensions (Governors of Dominions, etc.) Act, 1936 …"
    We think it reasonable that some explanation should be given about why it is necessary to insert these special conditions for this privileged class of people.
    We do not think, for example, that it is necessary to have special pension terms to attract colonial Governors. There is no difficulty about attracting them, and the conditions, pay, general prestige and honour should be taken into consideration. We should like a further explanation of why such exceptionally generous treatment is meted out to a very small class of civil servants, especially when we read in the Clause
    536
    "… if the other conditions for the grant of such a pension are satisfied, and, in particular, the period of his service as a Governor and the period of his service in the permanent Civil Service of the State together amount to not less than ten years."
    I am in favour of the most generous and considerate terms for all kinds of civil servants, but I think that we should have a fuller explanation of why our commonsense, reasonable and moderate Amendment should not be accepted.
    The Minister of State for Colonial Affairs (Mr. John Hare): I accept that the hon. Member for South Ayrshire (Mr. Emrys Hughes) wishes to improve the Bill, and I am concerned that that object would be defeated were this Amendment accepted. It would defeat the whole purpose of the Bill, which is, by allowing the period of service of the Governor to be considered in conjunction with his normal service as a member of the Oversea Civil Service, to give him the same treatment as if he were serving in the Home or Oversea Civil Service.
    10.15 p.m.
    The effect of this Amendment would be to restore the rule that a Governor who immediately before his appointment was in the Home Civil Service must serve at least three years as a Governor to qualify for a Governor's pension. The Committee knows that the majority of Governors are appointed from the Home or Oversea Civil Service. It is definitely the view of the Government that it is reasonable to take account of their careers as a whole in determining their eligibility for pension. The Clause preserves the ten-year rule, which is applicable in the Home and Oversea Civil Service. I do not want in any way to offend the hon. Gentleman, but I can assure him that the Amendment would defeat the very purpose for which the Bill is designed.
    Lieut.-Colonel Marcus Lipton: I did my best to follow the Minister's explanation. I appreciate that it is desirable that pensions should be given for the whole period of service, but I find it difficult to understand that the Government contemplate appointing reputable and desirable people to the important post of Governor, knowing that the person is not likely to occupy that position for as long as three years. Because that person may have had eight years or nine years in the permanent Civil Service in another capacity he qualifies

    537
    for pension as ex-Governor even though he has occupied that position for only six months. It is not unreasonable to suggest that he should have served for some mimimum period as Governor before he retired.
    The effect of the Clause is that a man who has served in the Home Civil Service for nine years and ten months can be appointed as Governor for two months and then be entitled to pension. It is rather strange that no minimum period of any kind is contemplated.
    Mr. E. G. Willis: I agree with my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton) that the Clause seems to go rather far, particularly when we consider Clause 9. It would be out of order to refer to the Clause at any length, but it says
    "Section eight of the principal Act (which enables the Secretary of State to declare a person's claim to a pension under that Act forfeited for his failure to accept or perform the duties of a Governor) shall cease to have effect."
    So far as I can understand it, it means that if a man, after a period of a month, ceases to perform his duties as Governor, he can draw his pension. That seems to go a considerable distance, and I should have thought that it would be undesirable. Can we not have a better explanation?
    Amendment negatived.
    Miss Joan Vickers: I beg to move, in page 1, line 16, at the end, to insert:
    (2) A pension may, subject to the provisions of the principal Act, be granted under that Act to a person who has completed not less than three years' service as a Governor notwithstanding that before his appointment as a Governor he was not employed in service in the permanent Civil Service of the State.
    The Amendment covers the political Governors, Governors appointed for one or more particular jobs. Many of the people both in the home or overseas service may be desirable as Governors. Now that countries are becoming independent, most of the posts of a junior calibre and those up to that of Governor will be taken by the people of the territory but it may be found necessary for the newly independent countries to have an "outside" Governor. Particularly in countries where there are mixed races it may be desirable for a considerable period to have a Governor-General or Governor from this country, in the same
    538
    way as there have been Governors-General from this country in Australia and New Zealand. The right hon. Member for Wakefield (Mr. Creech Jones) may remember that during his term of office such appointments were made in Cyprus and Malta.
    "Political Governors" do extremely good service. After a busy and active life in this country they are called upon to take over difficult jobs, expensive jobs where there is a great deal of entertaining to be done, and they should get some form of pension should they need to retire after three years. I have stated the period as three years, but I should be willing to accept a longer period than that if my right hon. Friend considered it necessary. These Governors might serve in one territory for three years or more and then be transferred to another territory. We have a Governor in the Central African Federation in that position. As I understand the Clause, if such a Governor had not been a civil servant he would not be entitled to receive any type of pension for that service.
    If a man, or a woman—I hope that in the not too distant future we may have women Governors—has given excellent service to a territory I am sure we should like to reward such a person in some way. When a Governor retires it may be extremely difficult to find a job for him in this country, and he may have little or nothing to live on. As the Clause stands, only people with private means would be able to take a political appointment as a Governor. I think that such positions should be open to the persons best qualified to do the job. For that reason I ask my right hon. Friend to consider this Amendment.
    Mr. R. E. Winterbottom: I agree with most of the speech of the hon. Member for Devonport (Miss Vickers). Apart from the fact that she was talking about Governors overseas, every argument she has used might very well be used tomorrow in relation to Members of Parliament in the same way as she used those arguments tonight.
    Mr. Hare: I should like to congratulate my hon. Friend the Member for Devonport (Miss Vickers) on the very sympathetic way in which she put her case. I feel all the more sorry that I am not able to accept her very convincing and sincere suggestion. As she said, the pur-

    539
    pose of the Amendment is to provide pensions to Governors who have not been civil servants and who have served for not less than three years. I should make it clear that the requirement of ten years' qualifying service for a pension is universal in the public superannuation schemes of the United Kingdom and also of the overseas territories. It is difficult to think of any ground which would really justify a modification of that rule.
    Hon. Members will be aware that pensions are normally awarded in the public service to officials who have completed a period of service which usually, although not always, is their whole career. There are flexible arrangements for aggregating service under different official employers in order to give a fair pension on final retirement, but it would be a new departure to introduce an arrangement which would give a man a pension after such a short period as suggested in this Amendment. My hon. Friend pointed out that those who might benefit would possibly include politicians who would be sent to take up positions for a short period because of their peculiar qualifications.
    Mr. F. Blackburn: Peculiar?
    Mr. Hare: Hon. Members can attach whatever meaning they wish to that word. I do not think that the Government could really insist on a career pension for officials while permitting a politician to receive a pension after as brief a period as three years' service. That would be unreasonable.
    Miss Vickers: I did not speak of a politician; I spoke of political appointments. That is rather different.
    Mr. Hare: A political appointment might perhaps be the appointment of a politician. Other persons who might come within this category would not be in either the Home or the Oversea Civil Service. There are the obvious examples of distinguished ex-Service people who are appointed Governors. Most of them are already provided for under the pension codes of the Services in which they have spent most of their life. Most of them are drawing pensions in respect of that service.
    Mr. Emrys Hughes: Is it possible for anybody to draw two pensions as a result of this?
    Mr. Hare: No. It has been an invariable rule, both in the Home and in the Oversea Civil Service, that officers of the Armed Forces who come into employment under United Kingdom superannuation Acts, or under the pension laws of overseas territories, must, if they have drawn their Service pension, start afresh before they qualify for a Civil Service pension.
    Those are briefly the reasons why I am afraid that I cannot accept the Amendment. I can only hope that perhaps my hon. Friend will withdraw it.
    Miss Vickers: In view of what my hon. Friend has said, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdraw.
    Clause ordered to stand part of the Bill.
    Clause 2 ordered to stand part of the Bill.

    Clause 3.—(INCREASE OF MAXIMUM AMOUNT OF GOVERNOR'S PENSION.)
    Motion made, and Question proposed, That the Clause stand part of the Bill.
    Mr. Willis: This is the Clause which raises the pension from £2,300 to £3,000, or
    "… such other sum as the Treasury may by order specify; or
    two-thirds of the yearly amount of the highest salary …"
    This seems to me, as I said on Second Reading, to be a very substantial increase. Once again I ask whether, at this juncture, it is right to increase these pensions by such an amount. I understand that it would mean rather more than an increase from £2,300 to £3,000, because the concluding words of subsection (1, a)
    "… or such other sum as the Treasury may by order specifsy …"
    are included in order to enable the Treasury to increase the amount. The result might be not £3,000 but £4,000. That is really a very large increase in pension to grant to any person at present. If the increase is £1,700, that is almost doubling the pension.
    I appreciate the value of the work done and the importance of the position held. Under normal circumstances I might be in favour of this—I do not know—but at the present I certainly view the Clause with considerable misgiving. When right hon. and hon. Gentlemen opposite are appealing to the workers not to ask for

    541
    a shilling increase in their wages, to grant hundreds of pounds in extra pensions to people who are already enjoying what I should have thought was a very comfortable pension seems to be wrong. I cannot understand how the Government can do that and at the same time expect other pensioners to be satisfied with £2 a week.
    10.30 p.m.
    When I go to my constituency and old-age pensioners ask me why I voted for a Bill which increases the pension of a colonial Governor from £2,300 to £3,000 I do not know what the answer is. Other hon. Members may be able to answer the question, but I find it very difficult to give an answer, particularly in view of the present situation, when we are told that we must not do anything inflationary—I should have thought this proposal was inflationary, to say the least—and when we are asked personally to set an example to the rest of the country. Surely the Government should set an example in ways other than by introducing a Clause of this character.
    I agree that the number of people concerned is small. I agree, too, that the total sum involved might not be very large. That is not the point. It is a symbol of the outlook of the Government, that they are prepared to do this for one class of the community and deny it to other classes. It is a symbol that upsets me and makes it very difficult for me personally to accept the Clause.
    I hope that the Minister of State for Colonial Affairs will have some very good reasons why this step should be taken at the present time. I understand that one of the reasons is that it will bring these pensions into line with the Civil Service conditions and pensions. Surely there are other things which could be brought into line with Civil Service conditions and pensions.
    Mr. Frederic Harris: What is the hon. Member going to say tomorrow?
    Mr. Willis: It would be out of order to discuss tomorrow's debate.
    Why the exception in this case? Why the hurry? Why should this be done at the present time? Why could not it be left until next year? We ought to have some answer to these questions from the right hon. Gentleman.
    Mr. Emrys Hughes: The last thing I would dream of doing would be to refer to anything that is likely to happen tomorrow.
    Mr. Anthony Kershaw: The hon. Gentleman's thoughts wander in that direction.
    Mr. Hughes: Even my thoughts never go out of order when you are in the Chair, Sir Rhys. Even if I thought out of order, I am sure that your perception would enable you to stop me before the thought reached utterance.
    What are we asked to do? A pension of £60 a week is a lot, is it not? We do not even argue that this is too much. All that my hon. Friend the Member for Edinburgh, East (Mr. Willis) says is this: is this the right time? My hon. Friend reads the reports of the speeches of the Chancellor of the Exchequer. I do not. My hon. Friend reads the letters from the Prime Minister in which he says that this is the time to call a halt, the time for the sternest economy, the time when the Government should set an example of economy, prudence and restraint in Government matters. I do not read these letters.
    Mr. David Jones: How does my hon. Friend know what is in the Prime Minister's letters if he does not read them?
    Mr. Hughes: My hon. Friend the Member for Edinburgh, East tells me. My hon. Friend represents a Scottish constituency that is, naturally, alarmed at a pension of £60 a week. In normal conditions we would not grudge £60, but these are times of great financial stringency and economic crisis in which we will easily get on the slippery slope of inflation. The people who read these debates are not merely colonial Governors. The lower ranks of the Colonial Service will read these debates, and other ranks of the Civil Service will, too, and the danger is that, the Government having set such a magnificent example of payment of pensions of £60 a week, they will stir people to ask awkward questions, the answers to which it is difficult to find.
    My hon. Friend and I represent Scottish constituencies, where we take these questions of economy seriously. What answer are we to give to our constituents? The Government urge us not to spend

    543
    money, urge us to thrift, tell us that every item of national expenditure counts and must be scrutinised, and yet they are going to give an increase of £10 a week to people who already have £50 a week. It cannot be argued that there is hardship because these colonial governors can retire at 50.
    Notice taken that 40 Members were not present;
    House counted, and, 40 Members being present—
    Mr. Hughes: May I, on behalf of the colonial governors, thank the hon. Members who have come along to see that they get this increase?
    Mr. Hare: The hon. Member for Edinburgh, East (Mr. Willis) and the hon. Member for South Ayrshire (Mr. Emrys Hughes) have asked me for good reasons why this figure of £3,000 has been adopted. The answer is very simple. It has been adopted because it is the equivalent of the maximum pension which a Permanent Secretary in the Home Civil Service can receive for forty years' service. These governors are public servants, and I think it is doing only justice to them to bring them into line with senior civil servants in the Home Civil Service. This, therefore, is a question of doing justice, and not one of extravagance, which is what the two hon. Gentlemen have suggested the Government are committing.
    Mr. Willis: There is a difference between a man who does forty years' service and a man who does ten years' service. There is a big difference. The right hon. Gentleman has not told us why this is being done at the present, when, we are told, these things should not be done.
    Mr. Hare: The hon. Gentleman must not assume that a man who has done ten years' service would get £3,000. We are dealing with the maximum amount.
    I am not surprised the hon. Member for South Ayrshire did not move the Amendment which he had tabled, to omit the reference to £3,000, because were that Amendment to be made to the Clause the pension could be higher than £3,000; it could go as high as £4,500.
    Mr. Hughes: On a point of order. Is it in order to refer to an Amendment which has not been moved?
    The Deputy-Chairman: It is not in order.
    Mr. Hare: I thought, Sir Rhys, that you would forgive me for mentioning that interesting fact.
    This is a question of doing justice, which need not arouse the apprehension of the two hon. Gentlemen, and I hope that they will agree to what is proposed.
    Clause ordered to stand part of the Bill.
    Clause 4 ordered to stand part of the Bill.

    Clause 5.—(GRATUITY IN CASE OF DEATH WHILE SERVING AS GOVERNOR.)
    Motion made, and Question proposed, That the Clause stand part of the Bill.
    Mr. Willis: This Clause again raises the same point. We ought to have an explanation from the Minister of State of the meaning of subsection (3), which states that
    (3) The Treasury may by order direct that the last foregoing subsection shall have effect as if for the reference to four thousand five hundred pounds there were substituted a reference to such other sum as may be specified in the order.
    The Clause does not say so, but I take is that the purpose is to make it possible to increase the gratuity payable. We are bound to ask whether the gratuity should be increased at present. A sum of £4,500 is a very substantial amount of money to be received as a gratuity by a personal representative on the death of a Governor. There are a great many cases where people would like to receive one-tenth of that sum. The hon. Gentleman should tell us whether the purpose of the Clause is to increase the sum and, if so, why it is necessary to do so at present.
    Mr. Emrys Hughes: The Minister should give us more details before we sanction these very generous gratuities. Could he give a concrete example, without mentioning names, showing exactly how this works out? Is the gratuity of £4,000 or £5,000 given without any means test or inquiry? If there is an inquiry, what form does it take? What conditions are fulfilled before a gratuity is granted?
    Mr. Hare: The Clause empowers the Treasury to make a gratuity to the personal representatives of a Governor who dies in office, or immediately before

    545
    his appointment if he is serving in the Home or Overseas Civil Service. The sum of £4,500 is a maximum under the Bill. It is difficult to give a particular example, as the hon. Member for South Ayrshire (Mr. Emrys Hughes) requested, but I do not think that to provide £4,500 is extravagant in view of the services which these men give. I hope, therefore, that the Committee will accept the Clause.
    Mr. Willis: Subsection (3) authorises an increase on the £4,500. Surely the intention is to increase the sum, not to reduce it.
    Mr. Hare: It can be increased by Treasury order.
    Mr. Hughes: Is there any means test or inquiry?
    Mr. Hare: All the relevant circumstances of the Governor concerned are taken into consideration.
    Clause ordered to stand part of the Bill.
    Clauses 6 to 8 ordered to stand part of the Bill.

    Clause 9.—(ABOLITION OF DUTY TO BECOME OR REMAIN GOVERNOR.)
    Motion made, and Question proposed, That the Clause stand part of the Bill.
    Mr. Willis: We should like to have an explanation of the Clause. Up to now the Minister has not done very well. He has stuck very closely to his brief, for which I cannot blame him, since the Bill is otherwise difficult to justify. Clause 9 states that
    Section eight of the principal Act (which enables the Secretary of State to declare a person's claim to a pension under that Act forfeited for his failure to accept or perform the duties of a Governor) shall cease to have effect.
    I should have thought that if a person fails to accept or to perform the duties of a Governor, there is some justification for the Secretary of State's claiming that the person's pension shall be forfeited. What are the circumstances in which this might apply? Suppose a Governor failed to perform his duties and came under the eye of the Secretary of State on account of some undesirable practice. Would the Secretary of State have power to say that his pension was forfeit? What does it mean? Why is the Secretary of State's power being removed?
    10.45 p.m.
    Mr. Emrys Hughes: We ought to be given a fuller explanation of the provision. Has there been any example in history where a Governor has been—if I may be excused for using such an awful word—sacked? If a Governor has been sacked for some justifiable reason, why are we now taking steps to repeal what seems to be a very sensible precaution?
    Mr. Hare: I can assure both hon. Gentlemen that my right hon. Friend will retain all his powers over pensions despite the fact that the Clause repeals Section 8 of the Pensions (Governors of Dominions, &c.) Act, 1911. My right hon. Friend has power to refuse to grant a pension irrespective of Section 8, and, as far as I know, that Section has not been applied within living memory. That explains why the Clause is so framed.
    The actual granting of a pension under other Sections of the Pensions (Governors of Dominions, &c.) Acts is permissive, and my right hon. Friend has the right to decide whether or not a pension can be granted. This power applies in every case.
    Clause ordered to stand part of the Bill.
    Clauses 10 to 15 ordered to stand part of the Bill.

    New Clause.—(POWER TO GRANT PENSION TO GOVERNOR RETIRING UNDER FIFTY-FIVE.)
    The age at which a pension may be granted under the principal Act shall be fifty instead of fifty-five years, and accordingly the word "fifty" shall be substituted for the words "fifty-five" in paragraph (a) of subsection (1) of section one of that Act, in subsection (1) of section nine of that Act (in both places where those words occur) and in subsection (2) of section one of the Pensions (Governors of Dominions, &c.) Act, 1947.—[Mr. Hare.]
    Brought up, and read the First time.
    Mr. Hare: I beg to move, That the Clause be read a Second time.
    The object of this Clause is to reduce from 55 to 50 the age at which a pension may be granted to a Governor. I do not think that the Committee will be surprised when I say that this reduction is not a completely new proposal. There is, in fact, already provision in the Pensions (Governors of Dominions, &c.) Acts for granting a pension at an age earlier than 55.

    547
    Under Section 1 (1) of the 1911 Act, a pension may be granted to a Governor who has served the requisite number of years but has not reached the age of 55. It can be granted on two main grounds, if he has retired or been removed from his office because of its abolition, or if he has become, in the opinion of the Secretary of State, incapable of discharging the duties of his office by reason of some infirmity of mind or body.
    Moreover, Section 9 of the 1911 Act provides that, in a special case, a Governor who would be entitled to a pension if he had reached the age of 55 may be granted one under that age provided that it is impracticable to find him other appropriate employment in the public service and it is, at the same time, in the interests of the public service to grant him a pension.
    Cases have arisen where retirement at an age earlier than 55 was desirable but where it was not, in fact, appropriate to apply the provisions of the 1911 Act which I have just mentioned. In particular, the application of the provision in Section 9 of that Act could perhaps be regarded as a reflection on the person concerned, and such a reflection would not be appropriate in the cases for which the new Clause would provide. Therefore, Her Majesty's Government proposed that, in appropriate cases, provision should be made for granting a pension between the ages of 50 and 55. I can assure the Committee that these cases are likely to be very rare.
    My right hon. Friend does not intend to treat 50 as the normal age of retirement for governors. Indeed, in the great majority of cases, there is no reason why a Governor should not serve till the age of 55 or even beyond. With those reasons, I hope that the Committee will accept the Clause.
    Mr. Emrys Hughes: Will it be possible, under the terms of this new Clause, for a Governor to be retired at the age of 50 and then for him to come home and become a director of one or two quite prosperous companies?
    Mr. Hare: Or a Member of Parliament. Once a man ceases to be a Governor he becomes a free man, and, I suppose, can do what he likes.
    Mr. Arthur Creech Jones: May I ask whether the initiative to retire may be enjoyed, or is likely to be enjoyed, by the Governor concerned? In other words, if a Governor wishes to withdraw from the service, may he exercise the option of withdrawing or must the initiative to withdraw come from the Secretary of State himself?
    I think that there is some virtue in a Clause of this kind because, speaking from experience, there are Governors who tend to become tired in well-doing, whose faculties are not always quite as acute after the age of 50 as they were and where it would certainly be in the interest of the public service if they could be retired. I believe that there is sometimes great wisdom in a Secretary of State having the power to cut out what I call the "dead wood." If that flexibility is there, and if that discretion is vested in the Secretary of State, then I think that there is a very distinct gain to the public service. Moreover, it stimulates Governors not to grow weary and to keep up a high standard of action. It helps things along and keeps Governors on their toes if they know that this power can be exercised by the Secretary of State at an earlier age than 55. As I have said, I think that there would be some virtue in the adoption of this Clause.
    Mr. Emrys Hughes: Can the right hon. Gentleman assure the Committee that the dead wood will not be grafted on somewhere else?
    Mr. Hare: I hope it will not.
    In reply to the right hon. Member for Wakefield (Mr. Creech Jones), I would say that the initiative can come from either side. It can come at the suggestion of the Secretary of State or from the Governor concerned, but the actual permission rests with the Secretary of State. I think that that covers the right hon. Gentleman's inquiry and that this Clause commends itself to him.
    Clause read a Second time, and added to the Bill.

    New Clause.—(ALLOCATION OF PART OF GOVERNOR'S PENSION TO SPOUSE OR DEPENDANT.)
    (1) The Treasury may make rules for securing that, in such circumstances and subject to such conditions as to proof of good health and other matters as may be specified in the rules,—

    (a) a Governor shall be allowed to surrender, as from the date of his retirement, and

    (b) a retired Governor under the age of seventy who has married since his retirement shall be allowed to surrender, as from the date of his marriage,

    in return for the benefits of the rules, such part of any pension granted or to be granted to him under the principal Act as, subject to the next following subsection, may be specified in the rules, and for enabling the Treasury to grant either to his spouse, or (unless the surrender was made under paragraph (b) of this subsection) to a dependant, a pension of such value as, according to tables to be prepared from time to time by the Government Actuary, is actuarially equivalent, at the date as from which the said part is surrendered, to the value of that part.

    (2) The part of a pension surrendered under the foregoing subsection (whether by virtue of paragraph (a) or paragraph (b) or both) shall not exceed one-third or, where part of the pension is commuted under section four of this Act, one-third of the remainder.

    (3) Any pension under this section for the benefit of a dependant (not being the spouse) of a retired Governor shall be payable in respect of the period, if any, for which the dependant survives him, and any such pension for the benefit of the spouse shall, according as the Governor may, in conformity with the rules under this section elect, be payable either—

    (a) in respect of the period, if any, for which the spouse survives him, or

    (b) in respect both of the period of their joint lives (subsequent to the retirement or marriage), and of the period, if any, for which the spouse survives him,

    and the rules may provide that a pension payable thereunder in respect of the periods mentioned in paragraph (b) of this subsection shall be paid at one rate in respect of the first of those periods and at a higher rate in respect of the second.

    (4) For the purposes of paragraph (b) of subsection (2) of section four of the principal Act (which imposes a limit on the amount of a pension under that Act which a person in receipt of another Crown pension may receive) any part of a pension surrendered by a person in accordance with rules made under this section shall be treated as being received by him.

    (5) Rules under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.—[Mr. Hare.]

    Brought up, and read the First time.
    Mr. Hare: I beg to move, That the Clause be read a Second time.
    The Chairman: I think it would be for the convenience of the Committee if, together with this new Clause, we discussed the one in the name of the hon. Lady the Member for Devonport (Miss Vickers), entitled "Widows' pensions."
    Mr. Hare: This new Clause provides for the allocation of part of a governor's pension and has been put down in order to meet, as far as we can, the proposal contained in the proposed new Clause standing in the name of my hon. Friend the Member for Devonport (Miss Vickers), which we are also discussing. We have gone as far as we can, but to go as far as my hon. Friend's Clause suggests would, in the opinion of the Government, put us right out of line with existing pensions practice.
    In the Civil Service there is no such thing as a pension for dependants provided wholly at the cost of the State, except where an officer has been killed in the execution of his duty. Most Governors who previously served in the Home or Oversea Service will have had an opportunity to provide for their wives by means either of Part I of the Superannuation Act, 1949, or by contribution to the Colonial Widows' and Orphans' Pensions Schemes in respect of territories in which they served. Under Clause 4 of the Bill, a Governor may commute up to a quarter of his pension, and the lump sum so obtained would be available for him to make provision for his wife if he so wished.
    The new Clause which has been tabled by my right hon. Friend proposes that a Governor who is in receipt of a pension under the principal Act shall, if he wishes, allocate up to one-third of his pension to his wife or other dependants. In addition, it also provides that a retired Governor under the age of 70 may make an allocation from his pension if he is married after he retires. It is proposed that the rules to be made by the Treasury about the circumstances and conditions of the allocation shall be on the same lines as those made under Section (2) of the Superannuation Act, 1935, and Section (33) of the Superannuation Act, 1949, as regards allocation of pension by home Civil Servants.

    551
    If a Governor has taken his right of commuting part of his pension under Clause 4, and subsequently wishes to allocate from his pension, the amount he can allocate in that case is limited to a third of the remainder of his pension. I am sorry that I cannot accept what my hon. Friends suggested, but I hope they feel that in this Clause we have seen their point and gone as far as we can to accept it.
    Miss Vickers: I should like to thank my right hon. Friend for his explanation of this long new Clause and for accepting my object in tabling my new Clause. I understand that Governors are excluded from joining the Widows' and Orphans' Pensions Scheme in the Colonies in which they serve. But Governors can continue in a scheme if they joined before becoming Governors. Consequently, unless a Governor dies in harness, under the Bill his widow gets nothing whatever. That is my main reason in putting down my new Clause.
    I should like to suggest, in respect of paragraph 3 (a) of my right hon. Friend's new Clause, that if we are proposing to use the word "spouse" in respect of a widow, perhaps we might also add "survives him or her", to cover perhaps women Governors in future.
    Mr. Hare: I think I should make quite clear that although my hon. Friend is right in saying the Governor cannot contribute to a pension scheme in the territory in which he is serving as a Governor, he is allowed to continue contributing to a pension scheme in the territory in which he was previously serving. So he is covered. On the other suggestion, I will give that my consideration.
    Clause read a Second time, and added to the Bill.

    Schedule.—(ENACTMENTS REPEALED.)
    Mr. Hare: I beg to move, in page 7, line 19, column 3, to leave out from "one" to "(3)" in line 21 and to insert "subsections (1)".
    This Amendment is really consequential on the adoption of the new Clause to revise the retiring age of Governors.
    Amendment agreed to.
    Schedule, as amended, agreed to.
    Bill reported, with Amendments; as amended, considered; read the Third time and passed.

    STEEL SCRAP (PRICES)
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Oakshott.]
    11.0 p.m.
    Mr. R. E. Winterbottom: I am glad to see the Minister of State for the Board of Trade present. I had a note from the Ministry of Supply saying that this was now a matter for the Board of Trade. I am glad that the representative of the Board of Trade is the one who originally dealt with the problem of steel scrap prices when it was first raised.
    On 4th May this year steel scrap prices went up. I understand from a reply reported in HANSARD that the increase was 24 per cent. I also understand that the effect will be to increase the cost of manufacturing steel by 14s. per ton. I wrote to the Minister of Supply and received an answer from the Minister who, I presume, will reply that the increase from 4th May was by an average of £2 per ton.
    I want to raise two matters. The first is that the decision to raise steel scrap prices was taken, I understand, at Cabinet level. The intimation that prices would rise was given to the trade about a week before 4th May. That was a most injudicious thing to do. This trade is not without people who take advantage of the market. There are some who can only be described as "spivs."
    The result of this revelation to the associations dealing with scrap steel was that scrap steel was withheld from the furnaces, in the expectancy of the rise announced for 4th May. It has been calculated that through this leak—in a letter I have received from him the right hon. Gentleman agrees that there was a leak—about £100,000 extra profit went to the steel scrap merchants. Very few benefited in that respect. In the main, the people in the scrap steel trade of this country have a sense of responsibility towards the part they play in the nsational economy.

    553
    In spite of the fact that the Minister of State indicated in his letter to me on 14th May that the associations connected with the steel scrap industry had been consulted. I have in my possession now statements by responsible leaders of the National Federation of Scrap Iron, Steel and Metal Merchants which say that they were completely opposed to this increase. The only request they had made was for a matter of a few shillings a ton to meet rising transport charges. Instead, they were given this 24 per cent. increase, whatever its effect may be on the national economy.
    The letter from the Minister of State said:
    "A number of trade organisations were consulted in strict confidence. These included the British Iron and Steel Federation, the Joint Iron Council and the National Federation of Scrap Iron, Steel and Metal Merchants."
    I ask the Minister: does the word. "consulted" mean a declaration of an arbitrary decision by the Government to increase the price against the wishes of every responsible official in the organisations he mentioned? Every one of the scrap steel merchants who has a sense of responsibility in the Federation is most angry at the way in which the Government have increased these prices unnecessarily.
    I want to know why the increase was made. According to one reply by the Minister, the indication is that there is a black market in scrap steel, so he is going to raise the official price of scrap steel to the level of the black market price. By raising that price he has raised the price of scrap steel in the black market. What kind of a confession is that for a responsible Minister of the Government, who says, "We will countenance, encourage and abet those who are getting more than they should through the black market"?
    What about the cost of steel? If this country is to survive it can only be by keeping down its prices as much as possible, especially in the export trade. Everyone who reads the declarations of the Government in respect of the export trade will know that the Government are constantly urging that prices should be kept as low as possible. Is it not hypocritical for the Government arbitrarily, against the wishes of the associations concerned—which say that they can sell scrap
    554
    at the prices at which they were previously—to drive the prices up whilst declaring they should be kept as low as possible?
    Since this question arose I have been to many important scrap steel merchants and learned of their experience since the rise took place. I would agree with the Minister if he says that our prices are still the lowest in the world, but that is no reason why the Government should arbitrarily increase them. According to these merchants this increase has not resulted in one ounce more scrap steel being fed to the furnaces. They say that the probability is that it will not increase the supply. What is the effect of this price increase? At least 14s. a ton will go on the price of British manufactured steel. That, surely, will have effect on those steel manufacturers who are entering the export trade. The Government are pricing our exports out of the market. Responsible men in the industry, knowing the seriousness of our economic position, heartily condemn the Government for their arbitrary action.
    The Government have approached the Federation of British Industries and the trade unions, begging the former to use its influence to prevent wage increases, despite constantly rising prices; and asking the unions to restrain wage increase applications. They have also pressed upon the nationalised industries the need for stabilisation of prices. At the same time, in a matter vital to a raw material which affects almost every industry in the complicated British economy, the Government have voluntarily, gratuitously, and for no reason, given this increase in prices, which has been condemned by everyone in the trade, and particularly by the associations.
    I quote this from a responsible statement made by a leader of the Federation:
    "… a step which I feel is entirely contrary to the national interest and, quite apart from the anti-inflationary endeavours they are vitally concerned with, our general welfare, and it is here"
    that is, in the association,
    "that we should place on record that there was no desire on the part of the National Federation of Scrap Iron, Steel, and Metal Merchants for such an increase, and I am sure that such a step will be deplored by a vast majority of our members"

    555
    I could continue with quotations in the same strain from responsible officials of all the organisations concerned.
    I think I have made out a case which justifies my asking why this increase was given against the wishes of the trade. Is this another act which shows clearly that this Government are partisan in almost everything they do? They will refuse to give anything to the worst-off sections of the community, but to others give far too liberally. We have had an example in this Chamber tonight, namely, liberal giving to Governors of British Colonies, though there is withholding from old-age pensioners. They are giving to financiers, to brewers and to a whole list of others, but to those who are in need they give nothing. Therefore, because of this attitude, which has been described in this House tonight as appalling, I suggest that we are entitled to hear why the Government have taken this course.
    11.15 p.m.
    Mr. Cyril Bence: It has been said before, and my hon. Friend the Member for Brightside (Mr. R. E. Winterbottom) said it again this evening, that the object of increasing the price of scrap was to eliminate the black market. I do not know whether or not that is true, but I should be one of the first to admit that this has been a most difficult problem in the engineering industry for many years, even before the war. In a scarcity market it is difficult to get a flow of raw products to the different processes in the industry. There have been tendencies for raw materials to be hived off, with underhand means of payment.
    I want to know whether the motive behind the increase of 25 per cent. was to swallow the black market. I assure the right hon. Gentleman that such a method will never succeed on an increasing scarcity market. As a result of the expansion we have had since 1939, we have had a progressively rising demand for raw material for blast furnaces and a falling supply. The potential black market is always there, whatever the price.
    Another important point is that, with technological development in steel and engineering processes, everybody from the directorate down to the office boy, tries to claim an increased reward for raw
    556
    material, for labour and for services. When we improve the technological processes in the steel and engineering industry admittedly we create higher conversion values, but we must not assume that we can, therefore, afford to pay more for the raw material because many other people want more for the services they render. This is causing a drag within the industry. I hope that the Minister will consider what I have said.
    11.18 p.m.
    The Minister of State, Board of Trade (Mr. A. R. W. Low): I have no quarrel with the hon. Member for Brightside (Mr. R. E. Winterbottom) for raising this matter. He has been in correspondence with me about the increase in the average price of scrap which took place recently. The increase was one of £2, from the average price of £8 10s. to an average price of £10 10s. per ton. He was concerned with the leak, and with the subject of consultations which I will come to at the end of my reply.
    The hon. Member posed a number of questions, and I am sure that he is right to ask us how this increase in the price of scrap fits into what might be called the price stability campaign, and why, in fact, it was made. I will try, very shortly, to explain why we decided to make an increase in the price of scrap.
    The House will know that scrap and pig iron are substantially interchangeable as raw materials both for steel making and for foundry work. That is clearly set out in the Iron and Steel Board's Report, 1954, at paragraph 102. If the price of scrap is kept artificially too cheap, then steel furnaces and foundries prefer to use scrap rather than pig iron. That would reduce the demand for pig iron and thus discourage the expansion of blast furnaces, which is essential to the proper expansion of iron and steel production in Great Britain, which ought not to be based on imported scrap. I do not think that there will be any issue between us on that point.
    The steel industry has for seventeen years secured a balanced relationship between the effective price of pig iron and scrap by means of their scrap levy, but the foundry industry has no such scheme. The inevitable result of keeping scrap at too low a price would be to increase the demand for it from the founders and to

    557
    discourage the use of pig iron by founders. This would reduce the amount of scrap available to steel furnaces.
    In fact, in 1955 when pig iron prices increased and the scrap price did not, the foundries used more scrap than before. Moreover, though inside the steel industry the costs of using scrap and pig iron are equalised whatever the relationship of prices, it is true that, taking the industry as a whole, artificially too cheap scrap must encourage the use of scrap and discourage the use of pig iron. But we are short of scrap in the United Kingdom, and if we wish to use more scrap we have to import it, at a very considerable cost, at about £26 10s. per ton. The total bill last year for imported scrap was £22 million.
    Our balance of payments gains if, instead, we make more pig iron, which means higher imports of iron ore, and the import costs of iron ore is about £5 10s. per ton of steel produced. I think that the House will pay attention to those comparative figures.
    The House will also be glad to know that since pre-war pig iron production has grown from 6·8 million tons a year in 1938 to 9·7 million tons a year in 1951, and now to 13½ million tons a year, which is the annual rate at which pig iron production is running this year—a very sizeable and welcome increase. For that reason, it seemed to us right that we should maintain a proper relationship between the two prices.
    Whatever may be said about the effect upon the supplies of home scrap of increasing the price of scrap, no one will quarrel with me when I say that an increase in the price of scrap will not reduce the supplies of home scrap for the steel and foundry industries.
    What should be the price of scrap in order to get this balanced relationship? We could argue about that. It has been said that the economic price of scrap should be 85 per cent. of the price of pig iron. At today's pig iron price, £18, scrap should be about £15 15s. per ton, on that basis. But for some time now, since the beginning of the war, the Government have maintained control on the price of scrap, and the Iron and Steel Board advised in its 1954 Report that that should continue.
    558
    In settling the price at which it should be controlled recently we have had regard particularly in our latest increase to the relationship which the prices of scrap and pig iron have had during this period. In the middle of 1955 the difference between the two—the price of scrap and the price of pig iron—was £7 5s. a ton. The difference was then increased to £8 11s. a ton because the price of pig iron increased. This year that difference would have risen to £9 13s. a ton but for the increase in the price of scrap which we made. The difference is now £7 10s., and it really seemed to us wise to restore the earlier relationship in this way.
    Quite properly, the hon. Gentleman raised the question of what is the effect of this upon the price of steel, and he said, quite accurately, that the £2 per ton increase in the price of scrap has resulted in a 14s. per ton increase in the average price of steel. That is 14s. out of the increase in the average price of steel of about 5 per cent. in May. But that does not add the same amount to the costs of the steel user who gains from the increase in the price of scrap which he sells. In fact, some parts of the engineering industry may gain more by the increase in the price of scrap than they will lose by this 14s, element in the increase in the price of steel that they buy.
    No one, certainly not I, who has some responsibility for overseas trade, will quarrel with what the hon. Gentleman said about the importance of the cost of steel to exports. Of course they are important, and of course every element in our prices is important to our exports, particularly at this time, but we cannot overlook the importance of steel production in our home economy. The hon. Gentleman said, righty, that British steel is still cheaper than other steel in the world, and the more we can have of that cheaper steel the better for our exporting industries.
    I come to the question about consultation. Why, it may be asked, did we do this against the advice of the merchants and the steel industry? Let me make clear our position about consultation in this matter. Our statutory duty is to consult the Iron and Steel Board on the policy question whether there should be an increase or not. We did consult the Board. It is not, of course, the practice to disclose the advice which we receive.

    559
    We take responsibility for the decision. We carried out our obligation to consult.
    After settling the policy we consulted the merchants, the National Federation of Scrap Iron, Steel and Metal Merchants, which the hon. Member mentioned, the British Iron and Steel Federation and the Joint Iron Council on the detailed method of carrying out our policy decision. This is the normal practice which has been adopted consistently since the war.
    I regret very much that there is some evidence that the proposal to make an increase was known before the Order was made—known outside the actual individuals we consulted. It has not been found possible to trace the source of the leak. I strongly deprecate such breaches of confidence, and we have made it clear to all concerned that in future, where increases in the price of scrap are contemplated, we shall have to ensure that there is no leak, if need be by limiting consultation.
    I would make clear, too, in response to some doubts that have been expressed in the scrap trade, that we have no further increase in contemplation at present. I should also like to make clear, in response to something which the hon. Gentleman said, that despite this alleged leak of information, deliveries of scrap to steel works and foundries in April, which is the month with which we are concerned, the month before the Order was made, were at the average rate of 128,000 tons per week.
    Mr. R. E. Winterbottom: I took only the week before 4th May.
    Mr. Low: Let me give the figures to show what happened.
    The average rate was 128,000 tons per week, 8,000 tons above the rate in February and 6,000 tons below the rate in May.
    I know that the hon. Gentleman is particularly concerned about what happened in his constituency. I should like to say to him, if I may, and without appearing to be patronising, that I think it is right and proper that he should be concerned, and I congratulate him on having taken this matter so seriously, and I thank him for the way in which he has brought this to our notice. I hope very much that he and the House are now satisfied that it was right and proper for us to make the increase.
    I hope that they are satisfied, too, that we went through the proper consultation procedures. There are many details—if the hon. Gentleman will look at the Order he will see how detailed the matter is—and they can be properly settled only by consultation with people well versed in the trade. I trust that the hon. Gentleman will feel that I have expressed a proper reaction to the events as they took place.
    Adjourned accordingly at twenty-nine minutes past Eleven o'clock.