HC Deb 17 July 1957 vol 573 cc1157-200
Mr. Roy Jenkins (Birmingham, Stechford)

I beg to move, in page 15, line 11, after "Kingdom" to insert" and in the Commonwealth".

Mr. Speaker

It will be convenient if the House takes, at the same time, the immediately following Amendment, which has exactly the same purpose.

Mr. Jenkins

Yes, Mr. Speaker.

The Amendment is perhaps a slightly less technical one than those which have been moved by the Solicitor-General. It is designed to deal in a slightly different form with a point which we discussed to some extent in Committee. It will be within the recollection of the House that we moved a new Clause which would have been our substitute proposal for the exemption of overseas trade corporations, to extend the investment allowance to the Commonwealth, and the House will also recall that we put forward an Amendment to one of the Schedules which would have given specific preference to overseas trade corporations operating in the Commonwealth.

The Amendment is a slight variation of these proposals. In effect, taken with the Amendment immediately following it, it confines the operation of the con- cession to overseas trade corporations to those which operate within the Commonwealth. The main reason why we have put this forward is that, as the Economic Secretary and the Financial Secretary know, at any rate, as our discussions upon Part IV have gone forward hon. Members on this side of the House have become increasingly doubtful about the merits of these proposals. They seem to us to be extravagant and unjustified.

The proposal would limit the amount of the extravagance, and I should like to know from the Economic Secretary to what extent the loss of revenue involved in Part IV would be limited if this restricted Amendment were to be agreed to. Lt limits the concession in a way which also has a great deal to commend it, because it confines it to those companies operating within the Commonwealth and excludes those operating in other parts of the world.

We have to some extent discussed in Committee the principles underlying the Amendment, but I do not think that the arguments are still the same. The Economic Secretary would probably agree that there have been some changes in the situation since the Committee stage. There appears to have been a good deal of deterioration in our general economic position. This is certainly the view which the Chancellor of the Exchequer appears to have fostered in a number of carefully publicised speeches. Certainly, I would have thought that everything which he has said in the past week would have made the Government more anxious, perhaps, than they were a few weeks ago to consider whether an expensive concession such as is involved in Part IV of the Bill is really justified at the present time.

Secondly, we have the, position in which the Commonwealth Prime Ministers' Conference has met in London and has had, no doubt, fairly exhaustive discussions about economic matters as well as about other matters with which that conference is concerned. We have not had any very firm statement of their conclusions, but I think that there can be no doubt at all that one of the matters which they must have considered—certainly should have considered—with some concern, is that, judged by two very important tests, there has been a recent strong tendency for the Commonwealth and sterling area in particular to show signs of disintegration.

The first test is the tendency of outer sterling area countries to hold their reserves not centrally in London but in their own banking institutions at home, and the second is the gradually shrinking share of our total trade which Commonwealth trade is occupying.

Therefore, it seems particularly urgent that some measures should be taken, without in any way prejudicing one's attitude to the merits or demerits of the European Free Trade Area, to pull together these loosened economic links of the Commonwealth which have undoubtedly been becoming looser under this Government in recent years. There were, therefore, powerful arguments in Committee for some such limitation of the concession as we are, proposing in these two Amendments. Without question, those arguments have been reinforced, in the time which has gone by since the Committee stage, in the two ways which I have tried to outline.

Is the Economic Secretary really sure that in this month of July, which is a month in which traditionally Chancellors' rather complacent and optimistic Budget expectations begin to look a bit doubtful, on all the facts available to him and to the Chancellor, that we can afford this very large concession to O.T.C.s operating throughout the world, which the Treasury Bench has failed so signally to justify in the course of our debates? Is he not certain that it would he better at this stage to claw back some of these concessions, somewhat to fortify the Revenue and to fortify the balance of payments, in view of the doubtful outlook both on the grounds of the balance of payments and of inflation at home which now presents itself and will continue to do so in the next few months?

Does the right hon. Gentleman not think that if this were to be done it would be particularly desirable to do it by restricting the concessions to companies operating in the Commonwealth, by making a deliberate discrimination in this direction in order to draw Commonwealth economic links slightly tighter at a time when there is only too much indication that they are becoming disturbingly looser?

Mr. Eric Fletcher (Islington, East)

I beg to second the Amendment.

As my hon. Friend the Member for Stechford (Mr. Roy Jenkins) has said, this is a new point. It is not a point which was specifically raised, at any rate in this form, in Committee and I would urge the Economic Secretary to pay attention to the argument which my hon. Friend has adduced in support of the Amendment.

I agree with what my hon. Friend has said. I have always been very doubtful about the wisdom of these concessions which are made in Part IV of the Bill. I was prepared to look at them sympathetically. I listened to the arguments from the Treasury Bench. I appreciate the objective with which they are put forward, but I am bound to say that I have a great deal of apprehension about the way in which they will work out in practice. Anyhow, in Committee they were accepted. 4. 15 p.m.

As my hon. Friend has said, a good deal has happened since the Committee stage of the Bill. We have had two very disturbing speeches from the Chancellor of the Exchequer, but not disturbing enough. We have had the Prime Ministers' Conference, but we have not had a very satisfactory explanation of what was discussed at that Conference. I should like to ask the Economic Secretary whether this matter was discussed at the Prime Ministers' Conference. Did the Prime Ministers of the Commonwealth express any opinion about the merits of Part IV of this Bill with regard to overseas trade corporations?

I would have expected that the Prime Ministers of the Commonwealth, if they were in favour of this at all, would have been in favour of limiting this to the Commonwealth countries. The whole object of Part IV is to enable the companies in the United Kingdom to develop certain overseas markets. There is an obvious limit on the amount which the economy of this country can afford to be extended in developing overseas markets, and I would have thought that it would have been much better to have confined these concessions to Commonwealth countries rather than to have extended them to non-Commonwealth countries.

I should like the Government spokesman to tell us this. What is there left in the Commonwealth, in material terms, except the economic provisions which stem from Imperial Preference? Is there any good reason why these concessions should be extended beyond the Commonwealth? After all, what is our basic policy? In so far as we want to develop overseas trade and give greater opportunities and facilities for exploiting undeveloped parts of the world, is it our desire primarily to develop parts of the Commonwealth, or is it not?

I am a great believer in the Commonwealth. If these provisions in Part IV are applied indiscriminately both to non-Commonwealth countries and to Commonwealth countries, we shall be losing one of the few remaining opportunities that are open to us of asserting and affirming our belief in the future of the Commonwealth. I think it is high time that we had a clear pronouncement on this subject from the Government. We do not know what their policy is with regard to European markets and European free trade. We have had a most ambiguous statement from the Government on their policy in that respect. Are they for European free trade, or are they for he Commonwealth?

As far as I can follow Government pronouncements, they speak with one voice at the European sessions and with another voice at the Prime Ministers' Conference. It is high time we had a clear and definite statement of policy from the Government, particularly in a matter which touches the Commonwealth so directly as this matter does.

It would be out of order for me, in seconding this Amendment, to repeat all the arguments which have been addressed against the overseas trade corporations, but in so far as we are now embarking upon large new concessions of a nature which may well give rise to much evasion and some injustice, I hope that the Government will see the wisdom of limiting these concessions in a sphere which would give great advantage to the Treasury and would, at the same time, affirm our determination to preserve these links with the Commonwealth wherever possible.

The Economic Secretary to the Treasury (Mr. Nigel Birch)

As the hon. Member for Stechford (Mr. Roy Jenkins) pointed out, we have discussed this point in various forms before. This is a new Amendment which we may owe to the industry and ingenuity of the hon. And learned Member for Kettering (Mr. Mitchison).

The Amendment goes a good deal further than the last proposed new Clause we discussed, which only gave preferential rights to the Commonwealth but did not exclude foreign countries from the benefits of Part IV. The Amendment goes further by cutting out the foreign countries altogether.

The main reason against the Amendment is that it is contrary to the recommendations of the Royal Commission, whose idea was based on the conception of jurisdiction. It was to be up to the country of residence of the company to tax, and to the controlling country to levy the tax when the profits were distributed. The hon. Member for Stechford asked how much of this concession would be for the benefit of companies operating in the Commonwealth. It is not very easy to estimate, but the best general estimate I can give is that about three-quarters of the benefit of this part of the Bill will go to the Commonwealth.

The hon. Member for Islington, East (Mr. E. Fletcher) asked whether O.T.C.s were discussed at the Prime Ministers' Conference. It would be against precedent to disclose what went on at the Commonwealth Conference, but as most of this concession goes to Commonwealth countries we believe that it will be of great benefit to those countries.

On the economic arguments for exclusion, I would point out that there are minerals and other materials, not found in great quantities in the Commonwealth, which we much require. Oil is a very obvious example, and so are some metals. I cited borax last time as an example. It would be a pity if we set off taxation in such a way that we were prevented—

Mr. Harold Wilson (Huyton)

May I point out to the hon. Gentleman that there is oil in Canada? Does he not recall also that there was a lot of oil in Trinidad until 12 months ago?

Mr. Birch

The right hon. Gentleman refers to Canada, but there are restrictions on the amount of money we can put into Canada to develop the oil there. The main sources of our oil are not in Trinidad or in the Commonwealth.

Mr. Wilson

Not now.

Mr. Birch

No, and they never were. This Amendment would be economically damaging. The reason we have brought in these provisions about O.T.C.s is that we believe they would be, in the medium-turn run, of great benefit to our balance of payments. We remain clear that that will be the effect of them.

Both hon. Gentlemen who have spoken raised a number of wider economic issues, including that of the Free Trade Area. I should be out of order if I replied on that point because, as I understand, we are to have an economic debate at the instance of the Opposition, when, no doubt, all these subjects can be discussed at length. Perhaps I may sum up by saying that, basically for the same reasons that we gave before, we believe that the Amendment would be wrong and, therefore, we cannot accept it.

Mr. E. Fletcher

The right hon. Gentleman said there was a limit to the amount we could invest in Canada. What is the limit?

Mr. Birch

We are limited by our shortage of dollars.

Mr. H. Wilson

We are getting quite used to these perfunctory replies from the right hon. Gentleman. It is a commentary on the turn of events that Government supporters should treat an important debate on Commonwealth economics in the way they are treating it this afternoon.

All we get from the Government Front Bench is a very brief, offhand reply from the right hon. Gentleman, saying, "I have answered it all before, in Committee" This is a different Amendment. If it were not, it would not be in order. It raises a different point, and, in any case, both my hon. Friends have pointed out that there have been very serious developments in our internal position and in Commonwealth economic affairs since the Committee.

During the debate today there have been about five Government supporters on the benches opposite, and one of them is now asleep. [Laughter.] He is still asleep. We can certainly say on this side of the House that we have shown a desire to develop Commonwealth trade whereas the speech of the right hon. Gentleman shows the same disregard for the need to develop the Commonwealth as he and the Government have shown over the past six years.

I am prepared to concede right away that this Amendment is fundamental. If the right hon. Gentleman had described it as a "wrecking" Amendment I would have found it difficult to resist that description. It is wrecking in the sense that the Government's conception of O.T.C.s is very different from ours, and that if the Amendment were carried the whole of the Government's conception would disappear. The Government's idea is that any overseas trade corporation, wherever it may operate and whatever its business, other than shipping, banking, and so on, should benefit from the Clause. If there are to be tax concessions in this very critical year we would like to see them directed to the specific purpose of economic development which would be of direct benefit to the country.

I do not want to raise the whole wide issue of overseas trade corporations at this stage. Perhaps there will be an opportunity to say something about that on the Third Reading of the Bill later this week. All of us on this side of the House have felt very concerned not merely that the Government should propose this year a new form of taxation or a new venture in British taxation methods, but should also drive a coach and horses through the conception that all taxpayers are equal irrespective of where their money is earned. This is a point which my right hon. and hon. Friends made in quoting from the Board of Inland Revenue's memorandum which the Government withheld from the House for far too long. It will be recalled that the Board of Inland Revenue raised very strong objections during the period of the Royal Commission to any idea which would discriminate between one taxpayer and another according to where the income was earned.

The Government have done that. We have felt that it was up to the Government to make a very strong economic case for doing it, but they have not made that case. All we have had is very vague phrases like, "We want to encourage overseas trade," and when we asked what kind of overseas trade we have not had an answer from the right hon. Gentleman, as in the reply he gave to my hon. Friend the Member for Islington, East Mr. E. Fletcher), who asked about the limit on investment in Canada.

In earlier debates on overseas trade corporations, the point was raised by my hon. Friend the Member for Oldham. West (Mr. Hale) that the principal beneficiaries of this kind of legislation would be the property-dealing companies in South America. That will not help the economic position of this country in the slightest. In so far as it reduces the tax revenue of this country it will, in the present inflationary situation, do positive harm, and for no positive good at all.

If there is to be any special concession it should be given for Commonwealth development. I agree with the right hon. Gentleman that we have all made it very plain—my hon. Friend the Member for Stechford (Mr. Roy Jenkins) has made it plain on a number of occasions—that it is pointless and hypocritical to talk about Commonwealth development unless we are able to create the necessary surplus of real resources to make that development possible. The failure of the Government, as exemplified in their most recent demands about the economic situation, shows that the position is even worse than some hon. Members thought two or three months ago.

4.30 p.m.

Nevertheless, all of us feel that whatever can be made available in surpluses should be directly related to the economic benefit of this country and the Commonwealth. What gain is there to this country to be expanding the activities or to be making tax free the activities of property dealing companies in South America? We have not had an answer from the right hon. Gentleman on that at any stage. It is part of the philosophy of the Government that any company operating in the City of London is equally worth while. That is the whole basis of their failure to control inflation, because they will not distinguish between essential and unessential activities of companies in this country. If this is true of companies in this country, how much more true is it of companies overseas?

We have tabled this Amendment in an attempt to confine the benefit for overseas trade corporations to Commonwealth development. We had a brief debate about this in Committee, on a new Clause. We debated it for only a few minutes. To judge from HANSARD the debate started about nine minutes past 11 and finished 16 or 17 minutes past 11. That was a short time for the Committee to spend on this very important question of Commonwealth trade.

During that time the Commonwealth Prime Ministers' Conference was being held. We have not had a report to the House about that Conference. The official communiqué said nothing at all. It was just a bunch of platitudes. The Prime Minister went on the air with his great panache and flair for making something out of nothing, but anyone who saw his television performance, or heard the broadcast, could not believe that anything whatever came out of that Conference except that it was quite clear that Her Majesty's Ministers—I do not know whether the Economic Secretary was one—were trying to sell to the Prime Ministers the idea of the European Free Trade Area.

We have drawn this to the attention of the Government many times. They must realise that the sterling area, which is one of the main economic and material links of the Commonwealth, is changing in its nature very seriously and very rapidly indeed. The fact that not only a number of Commonwealth countries ran down sterling balances during the Suez crisis, but that now Ghana and, shortly, Malaya are to be independent and will have under their control the spending of their sterling balances, whether on sterling goods or dollar goods, means that a very serious strain is being put on the functioning of the sterling area.

This should have been an occasion for Her Majesty's Government to discuss with the Prime Ministers of other Commonwealth countries every possible means of encouraging development in the Commonwealth, but to judge from inspired reports or leakages from the Conference, all that happened was that the Chancellor of the Exchequer said that the economic position of the sterling area was "set fair", whatever that may mean. I suppose he thought that the economic position of this country was "set fair", until the Chancellor of the Duchy of Lancaster blew the story to the newspapers last week. Secondly, the right hon. Gentleman said that we had no surplus whatever for Commonwealth development.

Serious statements have been made by Commonwealth Ministers. The New Zealanders went away empty-handed. They came with proposals for increasing Commonwealth trade, but what happened? The Government said, "We are not prepared to interfere with laissez faire private buying and the free functioning of commodity markets" and the rest. The Australians were so infuriated about the refusal of the Government to do anything for Commonwealth trade that, last November, in effect they denounced the Ottawa Agreements and now, finding that the Government are prepared to do nothing to encourage Anglo-Australian trade, they have done this deal with Japan.

We cannot blame them for doing that. I do not know what representations Her Majesty's Government made to them about the Australia-Japan Agreement. Frankly, I do not think it lay in their mouths to say very much after their refusal to develop Commonwealth trade.

Here we have a situation in which, for example, the Finance Minister of Ghana —in his Budget speech, which I hope the Economic Secretary has studied, as it is very significant—said, "We shall have to spend more of our sterling balances on dollar goods." Why was that? It was because we are not doing enough to ensure Ghana's economic future, because the Government refuse to allow the Commonwealth Development Corporation to function in the new, independent countries, because, owing to their desire to allow private markets to function, they refused to do anything about stabilising cocoa prices, because they cannot control inflation in this country sufficiently to produce a surplus for aiding Commonwealth production and, owing to inflation, are becoming less and less competitive in tenders for the supply of capital for some of these areas.

All this adds up to a case for confining to Commonwealth activities what surplus we have for development. I would go further and say that so far as we can give a priority to Commonwealth activities, they should be worthwhile economic Commonwealth activities. We do not want this Amendment used for the purpose of making tax-free the activities of British brewery companies making outlets for their products in Australia, South Africa, or elsewhere. We should like to see it used to raise the living standards of people in Commonwealth countries and in developing the supplies of essential raw materials and foodstuffs to this country.

Of course, it is all in keeping with the economic philosophy of this Government to turn down this proposal. If we were to develop Commonwealth foodstuffs and raw materials, there would be no market for these things in this country because all the time the Government are sacrificing Commonwealth suppliers and Commonwealth trade in the interests of traders in other parts of the world. It was only a brief debate we had in Committee, but I ask leave once again to ram home these essential and important figures about Commonwealth trade, which were deployed on that occasion.

The Conservative Party fought the 1951 and 1955 Elections on an Empire policy. "Britain strong and free" we were told in 1951. They were going to develop Empire trade. We were never so flamboyant about these things in our time; we did it without so much talking about it. During our period of office from 1945 to 1951, we said we would increase Commonwealth trade, and we did so. We reduced our dependence on the dollar area by expanding our dependence on Commonwealth sources of supply. We restricted less essential dollar imports and expanded Commonwealth production. We were able to do that, partly by interfering with trade channels, but mainly by bulk buying and long-term contracts.

I have given the figures before. I commend them to Treasury Ministers; obviously, they have not realised their significance. Between 1948 and 1952, imports from the sterling area into this country rose by 25 per cent., while imports from the dollar area were cut by 6 per cent. Those were figures we could be proud about in a very difficult time when it was difficult to restore production in Commonwealth countries. In the very much easier circumstances of the last few years, from 1953 to 1956, under the Government of hon. Members opposite, imports from the sterling area have fallen by 2 per cent. and imports from the dollar area have risen by 30 per cent. That makes this country much more vulnerable to dollar crises and balance of payment crises, twelve years after the war.

Only a week or two ago the Government announced a further liberalisation of imports from the United States. They have crippled the policy of getting Commonwealth countries to sell goods to this country by winding up the bulk buying arrangements that we had. When we were in power we had the Raw Cotton Commission, for example, by which Commonwealth and Colonial countries felt confident in planning ahead and developing their production of raw cotton because they knew that there would he an assured market in this country.

But Her Majesty's present Government went in for the farce of reopening the Liverpool Cotton Market —an utter farce, as everyone now realises. It is barely functioning at all. The result of leaving the trade in raw cotton to the so-called free functioning and free market system has been to discourage imports from Commonwealth areas.

The President of the Board of Trade, last October, gave some very serious figures showing the declining percentage of raw cotton coming from the Commonwealth areas. We want 4o redress this. There is not very much hope of doing it while this Government are in power, because their heart is not in the job of Commonwealth development and because they will never, as the Trinidad oil lease showed last year, sacrifice their ideological views and the vested interests which they support to their so-called declared belief in Commonwealth trade. It is because of that that we have tabled this Amendment. We are very unhappy about the overseas trade corporations in any event, but if there must be overseas trade corporations let their activities be confined to the Commonwealth areas and, so far as possible, confined to essential investment and development in the Commonwealth.

I hope that the Economic Secretary, who made a very sketchy and perfunctory reply this afternoon, will not leave this debate where it now stands. I hope that he will say something a little more positive than he has so far said. I am sorry that the hon. Member for Southgate (Sir B. Baxter), who has just come in to the Chamber, was not here to listen to the debate, which has been very one-sided, about a subject which I know is very dear to his heart—the development of Commonwealth trade. If he had been here, he would have been shocked to hear the reply of the Economic Secretary.

Sir Beverley Baxter (Southgate)

May I say in excuse, that I was receiving some visitors from the Commonwealth, which interfered with my being here?

Mr. Wilson

I am quite sure that the hon. Member had very good reasons for not being here. I can only say that while he was receiving those visitors from the Commonwealth and telling them, as I am sure he would in all sincerity, how keen he was to strengthen the links with the Commonwealth, the Government he supports, and, for all I know, still supports, might have been able to say something worthy of him on this subject of the Commonwealth.

Mr. Donald Chapman (Birmingham, Northfield)

The Economic Secretary missed a wonderful opportunity today. We are coming towards the end of our debates on overseas trade corporations and he ought to have struck a note to the whole country about the things that it should do in the Commonwealth. The right hon. Gentleman's usual sort of dry-as-dust replies came over in the usual two-and-a-half or three minutes. Perhaps, at this stage, it is a little difficult for anyone to get any inspiration for these overseas trade corporations from anything which he has ever said, but here was an opportunity for him to say, "We are doing something in the Commonwealth. Her Majesty's Government have thought about this. Here are the great benefits we are offering overseas trade corporations and these are the sort of things that we want to put over."

4.45 p.m.

This could have been an opportunity for the right hon. Gentleman to make an appeal to investors to do their job in the Commonwealth. It is not often that I find that I have anything in common with the Daily Express, but one thing that one learns in this House is that truth is many-sided. While the present Government are in power there is more than a grain of truth in the Daily Express campaign that the Government has an anti-Commonwealth bias. It could have been no more exemplified than in the speech that we have heard today from the right hon. Gentleman.

I am surprised that there has not been any comment on the piece of news which is in this newspaper today, that Mr. Norman Manley is to try to raise £8 million in order to bring industry into Jamaica. That is a very praiseworthy objective. If the right hon. Gentleman could have done no more, he could have used the cue on that piece of news this morning to give encouragement to this kind of thing in the Commonwealth.

Mr. H. Wilson

It does not matter to him.

Mr. Chapman

I agree that these things perhaps do not matter to the right hon. Gentleman. I think that there was something extremely significant in what Mr. Manley said.

When he was being interviewed about this proposal to raise £8 million to bring industry to Jamaica, he was asked, "What about nationalisation? You have a Socialist Government out there. Are you not afraid that some of the industries that may be established may be nationalised?" He said, very bluntly and very simply, "You cannot nationalise nothing. We have nothing in Jamaica; so what is all the worry about?" That is very significant.

It is the sort of thing that the right hon. Gentleman ought to have been saying. He ought to have been saying, "That is a commentary on the way in which the Commonwealth has been let down in the last few years. That is the reason why Jamaicans are coming to England in extraordinary numbers. There is no industry over there to raise the standard of living. "The question which we pose bluntly from this side to the right hon. Gentleman is this: which comes first, the sort of property dealing which has been mentioned by the hon. Member for Oldham, West (Mr. Hale), or development in Jamaica. Is Mr. Norman

Manley to be left with the consolation that he must compete in the British market for funds for Jamaica against these other less worthwhile things in the hope that one or two will think that Commonwealth investment is better than quick profits in property in South America?

There is a question of priorities in all this. I think that we are entitled to a little more interest in the feelings of the Commonwealth than the right hon. Gentleman has given. My right hon. Friend mentioned the question of the sale of Trinidad oil. The type of question which bothers us on this side of the Committee is, how many more Trinidad Oils will be sold over the next two or three years. How many more will the Government sell? I met a man yesterday who told me that there is one bit of Trinidad which we managed to buy back from the Americans, when a quick deal was slipped through in the time of the Labour Government, in which the Trinidad Asphalt Company was bought back from the Americans after a great to-do and some obstruction. That is the sort of thing which we should be doing. We should be encouraging money to be sent to these areas to buy back some of the little America, some of the possessions which are being sold by the Government to the Americans in areas such as Trinidad.

I was very disappointed by the right hon. Gentleman's reply. I should have thought that today we could have had some encouragement for this kind of activity in the Commonwealth. I hope the right hon. Gentleman will make another reply and will tell us that the Commonwealth will be put first in all these projects which will result from this concession to overseas trade corporations. I hope he will tell us, as we are anxious to hear, that these projects will be in the Commonwealth and not any-old-where.

Question put, That these words be there inserted in the Bill:—

The House divided: Ayes 218, Noes 271.

Division No. 170.] AYES [4.49 p.m.
Ainsley, J. W. Allen, Scholefield (Crewe) Bellenger, Rt. Hon. F. J.
Albu, A. H. Awbery, S. S. Bence, C. R. (Dunbartonshire, E.)
Allaun, Frank (Salford, E.) Bacon, Miss Alice Benson, G.
Allen, Arthur (Bosworth) Balfour, A. Beswick, Frank
Bevan, Rt. Hon. A. (Ebbw Vale) Holmes, Horace Prentice, R. E.
Blackburn, F. Houghton, Douglas Price, J. T. (Westhoughton)
Blenkinsop, A. Howell, Charles (Perry Barr) Price, Philips (Gloucestershire, W.)
Blyton, W. R. Hoy, J. H. Probert, A. R.
Boardman, H. Hubbard, T. F. Randall, H. E.
Botlomley, Rt. Hon. A. G. Hughes, Cledwyn (Anglesey) Rankin, John
Bowden, H. W. (Leicester, S. W.) Hughes, Emrys (S. Ayrshire) Redhead, E. C.
Bowles, F. G. Hughes, Hector (Aberdeen, N.) Reeves, J.
Boyd, T. C. Hunter, A. E. Reid, William
Braddock, Mrs. Elizabeth Hynd, H. (Accrington) Rhodes, H.
Brockway, A. F. Hynd, J. B. (Attercliffe) Robens, Rt. Hon. A.
Broughton, Dr. A. D. D. Irving, Sydney (Dartford) Roberts, Albert (Normanton)
Brown, Rt. Hon. George (Belper) Isaacs, Rt. Hon. G. A. Roberts, Goronwy (Caernarvon)
Brown, Thomas (Ince) Jay, Rt. Hon. D. P. T. Robinson, Kenneth (St. Pancras, N.)
Burke, W. A. Jeger, George (Goole) Ross, William
Butler, Herbert (Hackney, C.) Jeger, Mrs. Lena (Holbn & St. Pncs, S.) Royle, C.
Butler, Mrs. Joyce (Wood Green) Jenkins, Roy (Stechford) Shinwell, Rt, Hon. E.
Carmichael, J. Johnson, James (Rugby) Short, E. W.
Castle, Mrs. B. A. Johnston, Douglas (Paisley) Silverman, Julius (Aston)
Champion, A. J. Jones, Rt. Hn. A. Creech (Wakefield) Silverman, Sydney (Nelson)
Chapman, W. D. Jones, David (The Hartlepools) Simmons, C. J. (Brierley Hill)
Chetwynd, C. R. Jones, Elwyn (W. Ham, S.) Skeffington, A. M.
Clunie, J. Jones, Jack (Rotherham) Slater, Mrs. H. (Stoke, N.)
Collick, P. H. (Birkenhead) Jones, J. Idwal (Wrexham) Slater, J. (Sedgefield)
Collins, V. J. (Shoreditch & Finsbury) Jones, T. W. (Merioneth) Smith, Ellis (Stoke, S.)
Cove, W. G. Kenyon, C. Snow, J. W.
Craddock, George (Bradford, S.) King, Dr. H. M. Soskice, Rt. Hon. Sir Frank
Cronin, J. D. Lawson, G. M. Sparks, J. A.
Cullen, Mrs. A. Ledger, R. J. Steele, T.
Dalton, Rt. Hon. H. Lee, Frederick (Newton) Stewart, Michael (Fulham)
Darling, George (Hillsborough) Lee, Miss Jennie (Cannock) Stokes, Rt. Hon. R. R. (Ipswich)
Davies, Ernest (Enfield, E.) Lewis, Arthur Stonehouse, John
Davies, Stephen (Merthyr) Lipton, Marcus Strachey, Rt. Hon. J.
Deer, G. Logan, D. G. Strauss, Rt. Hon. George (Vauxhall)
Delargy, H. J. Mabon, Dr. J. Dickson Summerskill, Rt. Hon. E.
Dodds, N. N. MacColl, J. E. Sylvester, G. O.
Dugdale, Rt. Hn. John (W. Brmwch) McInnes, J. Taylor, Bernard (Mansfield)
Edelman, M. McKay, John (Wallsend) Thomas, George (Cardiff)
Edwards, Rt. Hon. John (Brighouse) MacPherson, Malcolm (Stirling) Thomas, Iorwerth (Rhondda, W.)
Edwards, Rt. Hon. Ness (Caerphilly) Mahon, Simon Thomson, George (Dundee, E.)
Edwards, Robert (Bilston) Mallalieu, E. L. (Brigg) Thornton, E.
Edwards, W. J. (Stepney) Mallalieu, J. P. W. (Huddersfd, E.) Tomney, F.
Evans, Albert (Islington, S. W.) Mann, Mrs. Jean Ungoed-Thomas, Sir Lynn
Fernyhough, E. Marquand, Rt. Hon. H. A. Usborne, H. C.
Flenhurgh, W. Mason, Roy Viant, S. P.
Finch, H. J. Mayhew, C. P. Watkins, T. E.
Fletcher, Eric Mellish, R. J. Weitzman, D.
Forman, J. C. Messer, Sir F. Wells, Percy (Faversham)
Fraser, Thomas (Hamilton) Mikardo, fan Wells, William (Walsall, N.)
Gaitskell, Rt. Hon. H. T. N. Mitchison, G. R. Wheeldon, W. E.
George, Lady Megan Lloyd (Car'then) Monslow, W. White, Mrs. Eirene (E. Flint)
Gibson, C. W. Moody, A. S. White, Henry (Derbyshire, N. E.)
Cooch, E. G. Morrison, Rt. Hn. Herbert (Lewis'm, S.) Wilkins, W. A.
Gordon Walker, Rt. Hon. P. C. Moss, R. Willey, Frederick
Greenwood, Anthony Moyle, A. Williams, David (Neath)
Grenfell, Rt. Hon. D. R. Mulley, F. W. Williams, Rev. Llywelyn (Ab'tillery)
Grey, C. F. Noel-Baker, Rt. Hon. P. (Derby, S.) Williams, Ronald (Wigan)
Griffiths, David (Rother Valley) Oliver, G. H. Williams, Rt. Hon. T. (Don Valley)
Griffiths, Rt. Hon. James (Llanelly) Oram, A. E. Williams, W. R. (Openshaw)
Griffiths, William (Exchange) Orbach, M. Williams, W. T. (Barons Court)
Hale, Leslie Oswald, T. Willis, Eustace (Edinburgh, E.)
Hamilton, W. W. Owen, W. J. Wilson, Rt. Hon. Harold (Huyton)
Hannan, W. Padley, W. E. Woodburn, Rt. Hon. A.
Harrison, J. (Nottingham, N.) Paget, R. T. Woof, R. E.
Hastings, S. Pannell, Charles (Leeds, W.) Yates, V. (Ladywood)
Hayman, F. H. Parkin, B. T. Zilliacus, K.
Henderson, Rt. Hn. A. (Rwly Regis) Paton, John
Herbison, Miss M. Pearson, A. TELLERS FOR THE AYES:
Hobson, C. R. (Keighley) Peart, T. F. Mr. John Taylor and Mr. Rosen.
Holman, P. Pentland, N.
Agnew, Sir Peter Atkins, H. E. Biggs-Davison, J. A.
Aitken, W. T. Baldock, Lt.-Cmdr. J. M. Birch, Rt. Hon. Nigel
Allan, R. A. (Paddington, S.) Baldwin, A. E. Bishop, F. P.
Alport, C. J. M. Barlow, Sir John Body, R. F.
Amery, Julian (Preston, N.) Barter, John Boothby, Sir Robert
Amory, Rt. Hn. Heathcoat (Tiverton) Baxter, Sir Beverley Boyd-Carpenter, Rt. Hon. J. A.
Arbuthnot, John Beamish, Maj. Tufton Boyle, Sir Edward
Armstrong, C. W. Bell, Philip (Bolton, E.) Braine, B. R.
Ashton, H. Bennett, F. M. (Torquay) Braithwaite, Sir Albert (Harrow, W.)
Astor, Hon. J. J. Bidgood, J. C. Bromley-Davenport, Lt.-Col. W. H.
Brooman-White, R. C. Hill, John (S. Norfolk) Orr-Ewing, Charles Ian (Hendon, N.)
Browne, J. Nixon (Craigton) Hinchingbrooke, Viscount Orr-Ewing, Sir Ian (Weston-S-Mare)
Bullus, Wing Commander E. E. Holland-Martin, C. J. Osborne, C.
Burden, F. F. A. Holt, A. F. Page, R. G.
Butcher, Sir Herbert Hope, Lord John Pannell, N. A. (Kirkdale)
Butler, Rt. Hn. R. A. (Saffron Walden) Hornby, R. P. Partridge, E.
Campbell, Sir David Hornsby-Smith, Miss M. P. Pickthorn, K. W. M.
Carr, Robert Horobin, Sir Ian Pike, Miss Mervyn
Cary, Sir Robert Horsbrugh, Rt. Hon. Dame Florence Pilkington, Capt. R. A.
Channon, Sir Henry Howard, Hon. Greville (St. Ives) Pitman, I. J.
Chichester-Clark, R. Howard, John (Test) Pitt, Miss E. M.
Churchill, Rt. Hon. Sir Winston Hudson, W. R. A. (Hull, N.) Pott, H. P.
Cole, Norman Hughes Hallett, Vice-Admiral J. Powell, J. Enoch
Conant, Maj. Sir Roger Hughes-Young, M. H. C. Price, David (Eastleigh)
Cooper, A. E. Hulbert, Sir Norman Price, Henry (Lewisham, W.)
Cordeaux, Lt.-Col. J. K. Hurd, A. R. Prior-Palmer, Brig. O. L.
Corfield, Capt. F. V. Hutchison, Michael Clark (E'b'gh, S.) Raikes, Sir Victor
Craddock, Beresford (Spelthorne) Hutchison, Sir Ian Clark (E'b'gh, W.) Ramsden, J. E.
Crosthwaite-Eyre, Col. O. E. Hyde, Montgomery Rawlinson, Peter
Crowder, Sir John (Finchley) Hylton-Foster, Rt. Hon. Sir Harry Redmayne, M.
Currie, G. B. H. Irvine, Bryant Godman (Rye) Remnant, Hon. P.
Dance, J. C. G. Jenkins, Robert (Dulwich) Renton, D. L. M.
Davidson, Viscountess Jennings, J. C. (Burton) Ridsdale, J. E.
Davies. Rt. Hn. Clement (Montgomery) Johnson, Dr. Donald (Carlisle) Rippon, A. G. F.
Digby, Simon Wingfield Johnson, Eric (Blackley) Robertson, Sir David
Dodds-Parker, A. D. Jones, Rt. Hon. Aubrey (Hall Green) Robinson, Sir Roland (Blackpool, S.)
Donaldson, Cmdr. C. E. McA. Joseph, Sir Keith Rodgers, John (Sevenoaks)
Doughty, C. J. A. Joynson-Hicks, Hon. Sir Lancelot Roper, Sir Harold
Drayson, G. B. Kerby, Capt. H. B. Ropner, Col. Sir Leonard
du Cann, E. D. L. Kerr, Sir Hamilton Russell, R. S.
Dugdale, Rt. Hn. Sir T. (Richmond) Kershaw, J. A. Sandys, Rt. Hon. D.
Eden, J. B. (Bournemouth, West) Kirk, P. M. Schofield, Lt.-Col. W.
Elliot, Rt. Hon. W. E. (Kelvingrove) Lagden, G. W. Sharples, R. C.
Elliott, R. W. (N'castle upon Tyne, N.) Lambton, Viscount Shepherd, William
Emmet, Hon. Mrs. Evelyn Lancaster, Col. C. G. Smithers, Peter (Winchester)
Errington, Sir Eric Langford-Holt, J. A. Smyth, Brig. Sir John (Norwood)
Erroll, F. J. Leather, E. H. C. Speir, R. M.
Finlay, Graeme Leavey, J. A. Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Fisher, Nigel Leburn, W. G. Stanley, Capt. Hon. Richard
Fletcher-Cooke, C. Legge-Bourke, Maj. E. A. H, Stevens, Geoffrey
Fort, R. Legh, Hon. Peter (Petersfield) Steward, Harold (Stockport, S.)
Fraser, Hon. Hugh (Stone) Lindsay, Hon. James (Devon, N.) Steward, Sir William (Woolwich, W.)
Fraser, Sir Ian (M'ombe & Lonsdale) Linstead, Sir H. N. Storey, S.
Freeth, Denzil Lloyd, Maj. Sir Guy (Renfrew, E.) Stuart, Rt. Hon. James (Moray)
Galbraith, Hon. T. G. D. Longden, Gilbert Studholme, Sir Henry
Gammans, Lady Low, Rt. Hon. A. R. W. Summers, Sir Spencer
Garner-Evans, E. H. Lucas-Tooth, Sir Hugh Sumner, W. D. M. (Orpington)
George, J. C. (Pollok) McAdden, S. J. Taylor, Sir Charles (Eastbourne)
Gibson-Watt, D. Macdonald, Sir Peter Taylor, William (Bradford, N.)
Glover, D. Mackeson, Brig. Sir Harry Teeling, W.
Glyn, Col. R. Mackie, J. H. (Galloway) Temple, John M.
Godber, J. B. McLaughlin, Mrs. P. Thomas, P. J. M. (Conway)
Gomme-Duncan, Col. Sir Alan Maclay, Rt. Hon. John Thompson, Kenneth (Walton)
Goodhart, Philip Maclean, Sir Fitzroy (Lancaster) Thorneycroft, Rt. Hon. P.
Gower, H. R. McLean, Neil (Inverness) Thornton-Kemsley, C. N.
Graham, Sir Fergus Macleod, Rt. Hn. Iain (Enfield, W.) Tilney, John (Wavertree)
Grant, W. (Woodside) Macmillan, Rt. Hn. Harold (Bromley) Turner, H. F. L.
Grant-Ferris, Wg Cdr. R. (Nantwich) Macpherson, Niall (Dumfries) Turton, Rt. Hon. R. H.
Green, A. Maddan, Martin Tweedsmuir, Lady
Cresham Cooke, R. Maitland, Cdr. J. F. W. (Horncastle) Vane, W. M. F.
Grimond, J. Markham, Major Sir Frank Vaughan-Morgan, J. K.
Grimston, Hon. John (St. Albans) Marlowe, A. A. H. Vickers, Miss Joan
Grimston, Sir Robert (Westbury) Marples, Rt. Hon. A. E. Wade, D. W.
Grosvenor, Lt.-Col. R. G. Marshall, Douglas Wakefield, Edward (Derbyshire, W.)
Gurden, Harold Mathew, R. Wakefield, Sir Wavell (St. M'lebone)
Hall, John (Wycombe) Maude, Angus Walker-Smith, Rt. Hon. Derek
Hare, Rt. Hon. J. H. Maudlins, Rt. Hon. R. Wall, Major Patrick
Harris, Reader (Heston) Mawby, R. L. Ward, Rt. Hon. G. R. (Woncester)
Harrison, A. B. C. (Maldon) Maydon, Lt.-Comdr. S. L. C. Ward, Dame Irene (Tynemouth)
Harrison, Col. J. H. (Eye) Medlicott, Sir Frank Waterhouse, Capt. Rt. Hon. C.
Harvey, Sir Arthur Vere (Macclesfd) Moore, Sir Thomas Watkinson, Rt. Hon. Harold
Harvey, Ian (Harrow, E.) Mott-Radclyffe, Sir Charles Webbe, Sir H.
Harvey, John (Walthamstow, E.) Nabarro, G. D. N. Whitelaw, W. S. I.
Hay, John Nairn, D. L. S. Williams, Paul (Sunderland, S.)
Heald, Rt. Hon. Sir Lionel Neave, Airey Williams, R. Dudley (Exeter)
Heath, Rt. Hon. E. R. G. Nicholls, Harmar Wills, G. (Bridgwater)
Henderson, John (Cathcart) Nicholson, Godfrey (Farnham) Wood, Hon. R.
Henderson-Stewart, Sir James Nicolson, N. (B'n'm'th, E. & Chr'ch) Woollam, John Victor
Hicks-Beach, Maj. W. W. Oakshott, H. D. Yates, William (The Wrekin)
Hill, Rt. Hon. Charles (Luton) O'Neill, Hn. Phelim (Co. Antrim, N.)
Hill, Mrs. E. (Wythenshawe) Orr, Capt. L. P. S. TELLERS FOR THE NOES:
Mr. Barber and Mr. Bryan.
Mr. H. Wilson

On a point of order. I beg to ask leave to move, "That further consideration of the Bill be now adjourned."

The reason that I seek your leave to do so, Sir Gordon, is the scandalous way in which the House has been treated by the Government in this very important debate on the Commonwealth, which has just ended.

There are other Amendments on the Notice Paper relating to Commonwealth trade. In my relatively short period of twelve years in the House, I cannot remember a debate on so important a subject as Commonwealth trade and the whole of Commonwealth economics when we had only about a two-minute, perfunctory reply from the Minister; when the Secretary of State for the Colonies was neither here nor represented; when the Secretary of State for Commonwealth Relations was not represented; when the Prime Minister and the Chancellor of the Duchy of Lancaster, who bear a very heavy responsibility in respect of the declining position of the sterling area, were obviously within reach but not in the House; and when the whole debate was treated with contempt.

(3) A company which has never been an Overseas Trade Corporation may, by notice having effect as from the beginning of the first period in which it would otherwise qualify as an Overseas Trade Corporation, elect not to qualify as an Overseas Trade Corporation.
5 (4) A company which would, apart from this subsection, qualify as an Overseas Trade Corporation in the period of twelve months beginning with the sixth day of April in any year, and which has so qualified in some previous period, may by notice apply to the Commissioners of Inland Revenue for a direction that as from the sixth day of April in that year the company shall not qualify as an Overseas Trade Corporation and the Commissioners shall, within such period after the end of the said period of twelve months
10 as may be prescribed, give such a direction unless—
15 (a) relief would, on the footing that the company did not so qualify in the said period of twelve months, be allowable under the Income Tax Acts in respect of a loss sustained by the company in the said period of twelve months in carrying on a trade, or in respect of capital allowances falling to be made in charging the profits or gains of such a trade, for the year of assessment comprised in the said period of twelve months against income tax charged on income of the company which, if it qualified as an Overseas Trade Corporation, would be investment income, and
20 (b) it appears to the Commissioners that that relief, together with any corresponding reduction of the liability of the company to the profits tax, is the sole or main benefit which the company will derive from the direction so far as it relates to the said period of twelve months.
25 (5) A company which is aggrieved by the refusal of the Commissioners to give a direction under the last foregoing subsection may, by notice in writing given to the Commissioners within thirty days from the date on which notice of the refusal is given to the company, require their application under that subsection to be heard and determined by the Special Commissioners, and the Special Commissioners shall hear and determine the application in like manner as an appeal made to them against an assessment to income tax under Schedule D.
30 All the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.

We realise that the Government are aware that they can impose their will on this House by calling up hon. Members to vote on the question of overseas trade corporations, but in view of all the declared professions of the Conservative Party about the desire to increase Commonwealth trade we feel that the Government have treated the House with the very greatest contempt in their attitude to these very important Amendments. Therefore, Mr. Deputy-Speaker, I beg to move, "That further consideration of the Bill be now adjourned" until the Government can be properly represented and these subjects treated with the attention that they deserve.

Mr. Deputy-Speaker (Sir Gordon Touche)

I cannot accept that Motion.

Amendments made: In page 15, line 17, at beginning insert "Provided that."

In line 17, leave out "the foregoing" and insert "this".—[Mr. Powell.]

5.0 p.m.

The Financial Secretary to the Treasury (Mr. J. Enoch Powell)

I beg to move, in page 15, line 21, at the end to insert:

35 (6) An election made or direction given under the foregoing provisions of this section shall apply as respects all periods after the time as from which it has effect but the company may by notice having effect as from the sixth day of April in any year revoke the election or require the Commissioners to withdraw their direction; and any notice under the foregoing provisions of this section shall be given in the prescribed manner and within the prescribed time.

This is the Amendment dealing with options to enjoy or not to enjoy overseas trade corporation status which my right hon. Friend undertook to table at this stage of the Bill. The first subsection deals with the case of a company which has never been an overseas trade corporation, and gives it the option not to qualify for that status as long as it desires; but, under subsection (6) it can, at will, take on that status for the first time. That, I think, is the simpler of the two cases which are covered by the Amendment.

In subsection (4) we give to a company which has qualified as a corporation of this type but wishes to cease to be so qualified, the opportunity to do so. It cannot do that, however, except by virtue of a direction by the Commissioners of Inland Revenue, and the Commissioners cannot give that direction if they are satisfied that, as a result, the company would enjoy relief by being able to set off trading losses and capital allowances against income against which such allowances could not, if the company was an overseas trade corporation, be so set off, and are also satisfied that that benefit is the sole or main benefit which the company would derive from ceasing to qualify as an overseas trade corporation.

If, however, neither of those objections appears to exist, the Commissioners must give a direction, and, in that case the company can opt out of the status. It can then in the future—like a company which has never been an overseas trade corporation—exercise the right of election to come back into the status of an O.T.C. The Amendment, therefore, covers the two cases. It enables a company to defer entering into the status of an overseas trade corporation for the first time, and it also enables a company which is qualified, to cease to be treated as an overseas trade corporation where that is not done for the purpose of enjoying this particular kind of tax advantage. Then, in that case, at a future date, it will be open to that company to opt back into the status of an overseas trade corporation.

It will be seen that the bar upon opting out of overseas trade corporation status under this procedure is the same as that which the Committee yesterday inserted into the Clause whereby companies can disqualify themselves by an act of their own. In each case, the advantage cannot be reaped if that advantage consists of being able to obtain relief by setting off losses and capital allowances in a way which would not be possible if the company remained an overseas trade corporation.

Mr. Deputy-Speaker

I think that it would be for the convenience of the House if the Amendments in lines 18 and 19, and the first of those in line 21 were discussed together.

Mr. Douglas Houghton (Sowerby)

Yes, Mr. Deputy-Speaker. I beg to move, as an Amendment to the proposed Amendment, in line 18, to leave out "it appears to" and to substitute the company does not satisfy". We are grateful to the Financial Secretary for explaining this rather lengthy Amendment to Clause 22. It implements promises which were given during the Committee stage to deal with two weaknesses which had been revealed in the provisions of the Bill as drafted. One was the apparent inability of a company which had no desire to become an overseas trade corporation to avoid becoming one. The hon. Member for Essex, South-East (Mr. Braine) pointed out that it seemed wrong that a company which had no desire to be an O.T.C. should be compelled to become one.

The proposed subsection (3) submitted by the hon. Gentleman deals with that, and, as he pointed out a moment ago, subsection (6) allows a company which has elected to remain outside the scope of the overseas trade corporation provisions to elect to go into them at a later stage.

The Amendment that I have moved relates to the second of the matters which were referred to in the Committee stage discussions; in particular, by the Financial Secretary in column 300 of the OFFICIAL REPORT of 26th June. Those came to be known as the "hopping in and out temptations" which a company might have. A company at one stage might, if it was to its advantage, be an O.T.C., and then, for reasons referred to by the hon. Gentleman, it might wish to disqualify itself from that status in order to take advantage of the more favourable Income Tax treatments of trading losses and of capital allowances if it was not an overseas trade corporation.

Subsection (4) of the Amendment moved by the Financial Secretary gives powers to the Commissioners of Inland Revenue to give a direction to put a company, at its request, outside the status of an O.T.C., but before that direction is given the company must satisfy the Commissioners of two important matters. If a company desires to take advantage of the more favourable treatment of trading losses if it is not an overseas trade corporation, the Commissioners must be satisfied that that is not the sole, or the main purpose of the desire to contract out. It is a simple restraint upon contracting out if a company is doing it solely or mainly to get an Income Tax advantage.

That, I think, puts it in fairly simple terms, but the House will notice that in line 9 of the hon. Gentleman's Amendment it says that: '…the Commissioners shall …give such a direction unless … and the "unless" qualifications are dealt with in paragraphs (a) and (b) of subsection (4).

My Amendment, and the two associated with it, really relate to onus of proof. At the moment, subsection (4, b) leaves it with the Commissioners to decide in the light of the facts, without putting upon the applicant an onus of proof as strong as we would wish. Paragraph (b) provides that if it appears to the Commissioners that that relief"— that is, the reliefs mentioned in subsection (4, a)

: together with any corresponding reduction of the liability of the company to the profits tax, is the sole or main benefit which the company will derive from the direction so far as it relates to the said period of twelve months. the Commissioners need not issue the direction. They are empowered to refuse it. We wish to put the onus of proof more strongly on the applicant by saying that if the company fails to satisfy the Commissioners that it is not the sole or main benefit which the company would derive, then the Commissioners shall have power to refuse a direction.

This is, perhaps, playing with words, but words matter in provisions of this kind. The lawyers would probably say that the onus of proof is much more definitely placed upon the applicant if he is required to satisfy the Commissioners that he is not trying to do something than if the Commissioners have to be satisfied that this is the sole or main purpose of what he proposes to do. We think that it is desirable to place this responsibility more heavily upon the applicant than does the Government's Amendment and that is why we propose to substitute for the words "it appears to" the words the company does not satisfy and after the word "is" in line 19, the word "not" and why at the end of the paragraph in line 21 we move to insert: nor the substantial reason for the company's said application It is rubbing it in, as it were, that the company must satisfy the Commissioners that it is not up to something which is solely for its tax advantage.

We are in sympathy with the purpose of the Amendment moved by the Financial Secretary because, with him, we want to stop the hopping in and out, and the only question at issue between us is whether our form of words placing the onus of proof on the applicant strengthens the hands of the Commissioners and acts as a deterrent to applicants who might otherwise enter into the matter more lightheartedly and who might think that the task before them is less formidable than it would be under our Amendment.

Mr, Roy Jenkins

I beg to second the Amendment to the proposed Amendment.

Mr. Powell

I, too, sympathise with the object of the Amendment moved by the hon. Member for Sowerby (Mr. Houghton), but I do not think that, in fact, it will have any practical effect or will strengthen the force of the Clause. Under the procedure which subsection (4) lays down it is incumbent upon the company to make an application to the Commissioners. The company has to make the first move. Then the Commissioners have the duty, by law, of satisfying themselves and of deciding whether it appears to them that the relief set out in paragraph (b) is the sole or main benefit which the company will derive. That legal obligation upon the Commissioners to satisfy themselves of the facts of the case is identical with the wording in the Amendment which I moved and with the words which the hon. Member seeks to substitute.

Nevertheless, I would have had no objection to recommending the House to make the Amendment but for the fact that it would result in a rather curious expression, namely: shall give such a direction unless the company does not satisfy. "Unless not" is a very inelegant and, I think, unusual phrase, and since there is no gain in force at all and no practical effect from making the change, I would advise the House not to insist upon it.

5.15 p.m.

As regards the second pair of Amendments to which the hon. Member referred, there, again, the addition of the words nor the substantial reason for the company's said application"— that is, the addition of a subjective criterion to the objective criterion of the nature of the benefit—really adds nothing, because, if it appears to the Commissioners that the sole or main benefit in fact lies in this relief, then nothing is gained by their going on to consider the purpose of the company in making the application. There is really no further safeguard inherent in those words. It may be—

Mr. Mitchison


Mr. Powell

—and perhaps I am now going to meet the point of the hon. and learned Gentleman—that it was intended to be an alternative, that the conception was that, where this benefit was not the main benefit, the purpose could be taken into account. But, of course, that is not the effect of the Amendment.

Mr. Mitchison

May I ask the Financial Secretary to consider, not the second Amendment on page 2522, which is meant to go with the wording which he has rejected by way of an Amendment to lines 18 and 19, but the third Amendment on page 2523 which makes it perfectly clear, following in this instance the language of the Government's own Amendment, that this is suggested as a subjective alternative to the objective alternative which is the sole reason allowed by the Government.

I ask the hon. Gentleman to consider what harm can be done by adding a second subjective reason which is absolutely in line with his own use the other day of the word "deliberately" The hon. Gentleman will remember that I called attention to it in a rather similar connection. I suggest that if we accept his point that the first two Amendments would not really alter the substance of the matter, he might well accept our point that the fourth Amendment does add a further safeguard of a kind to which, if I understood his language aright, he would not object.

Mr. Powell

I am at one with the hon. and learned Gentleman in agreeing that the effect of the fourth Amendment is that it would bite only in a case where the relief mentioned is not the sole nor the main benefit, but is, in fact, a minor benefit. The question is whether, in circumstances where there is clearly a major benefit which is not tax avoidance in the terms in which we have been considering it, we should then ask the Commissioners of Inland Revenue to dive into the mind of a company and say whether, in spite of the facts that the relief mentioned was only a minor benefit and that the major benefit was something else and something laudable or harmless, nevertheless the company's secret motives were such that it wanted the objectionable relief much more than it wanted the major and unobjectionable benefit.

I think that is an extremely difficult and rather absurd task to place upon the Commissioners, and I suggest that the House ought to stand upon the factual test which, after all, can be objectively interpreted—where does the main advantage to the company lie in this change? If it lies in the relief set out in the Clause, then its application must be rejected.

Mr. Mitchison

I am much obliged to the hon. Gentleman, but it was because I anticipated that he might make this sort of point having, perhaps, a natural predilection for the objective, that I asked him in a rather similar connection on 27th June: Does that mean that what the Commissioners will have to consider is the question of the company's intentions in entering into contracts or making other arrangements which disqualify it for a period?"—[OFFICIAL REPORT, 27th June, 1957; Vol. 572, c. 469.] That was in connection with doing things that we are taking out of the qualifications, and the hon. Gentleman answered in the affirmative, if in that case the intention is to be regarded, surely it should be properly regarded in this one.

Mr. Powell

We are only at one stage removed, in that, when speaking during the Committee stage about what is here before us in the terms of the Amendment, we were seeking to prevent an avoidance intention. We are both at one about that. We want to prevent this thing from happening by way of avoidance. It was in that sense that I said that in deciding whether or not to allow opting out, the Commissioners would be having regard to the object of opting out; but when we are considering the machinery of the matter I suggest that it is better to give the Commissioners the objective test of whether there is avoidance or not, rather than to ask them to perform the very difficult operation of diving into the company's intention which would be required under the terms of the fourth Amendment.

Question, That "it appears to" stand part of the proposed Amendment, put and agreed to.

Mr. Mitchison

I beg to move, as an Amendment to the proposed Amendment, in line 21, at the end to insert: Provided that any such direction may be given unconditionally or on such conditions as seem appropriate to the Commissioners, including conditions that the company do pay by way of income tax or profits tax a sum not exceeding the amount of that relief or of that corresponding reduction of liability to the profits tax, as the case may be. Perhaps it would be convenient if I referred at the same time to the next Amendment, in line 23, after "subsection", to insert or by such conditions as aforesaid. and the Amendment in line 24, after refusal," to insert, "or of the conditions. This is quite a short and, in some ways, a minor point. The Commissioners have to consider whether the "sole or main benefit" got from a change of this sort is, to put it quite shortly, a tax benefit. It seems to us that there may be instances where the Commissioners either feel doubtful about the matter or arrive at a nice balancing of benefits and advantages and are in some doubt as to the right thing to do.

The words used are, …the sole or main benefit. Of course, the sole benefit is clear enough, but the question of the main benefit will sometimes be clear and sometimes be more doubtful. If they have to deal with a question of that sort, it is right that they should have power to deal with it conditionally, and the sort of condition that they may be empowered to impose is a condition of partial payment of the advantage to be gained that is to say, in effect to allow the change of status to come at a price. For that reason we put down the Amendment in line 21 which provides for conditions being allowed according to what seems appropriate to the Commissioners, including the payment by the company, as Income Tax or Profits Tax, of something which will in no event exceed the benefit they would get otherwise. It is quite a simple, and, I think, a short point.

Mr. E. Fletcher

I beg to second the Amendment to the proposed Amendment.

In a certain sense my hon. and learned Friend the Member for Kettering (Mr. Mitchison) is right when he says that this raises a minor point; but, on the other hand, it seems to me to raise a matter which may conceivably have considerable significance in the future, and therefore I believe it worthy of the attention of the House. The Financial Secretary has said that he prefers an objective test for liability to tax rather than a test which depends upon the Commissioners examining whether or not the intention of the company was to avoid tax, and I have a great deal of sympathy with that point of view.

I would put this argument to the Minister. It is undoubtedly true that in times past, and until comparatively recently, it was logical to say, "Let us have an Income Tax law phrased in such a way that the taxpayer either falls on one side of it or the other" We cannot get perfect justice in Income Tax provisions. There is a "watershed", and we find that taxpayers are either fortunate or unfortunate. We have an objective test, because it is not fair to impose upon the Commissioners the burden of looking at an intention to see whether some device is entered into for the purpose of avoiding tax or, as the Minister said, for some harmless motive.

That I can understand. But it is not the end of the question, because in recent years we have, in my opinion, departed from that ideal of objective purity and we have tended to enter a sphere in which our Income Tax legislation makes an attempt—I think it only a half-hearted and not very satisfactory attempt, but at any rate, it is an attempt—to achieve justice not entirely by laying down objective tests but by seeing what is the fair, reasonable and sensible thing to do in given circumstances.

That would be a perfectly proper method of applying Income Tax provisions. In fact, the more complicated, the more intricate, our Income Tax law becomes, the more there is to be said for the philosophical approach of trying to judge the case of a particular taxpayer or company on that basis and seeing in the circumstances of the case what is the right and equitable thing to do. I appreciate that that means giving the Commissioners a degree of latitude and a degree of discretion which would impose considerable burdens upon them, but I think we are approaching that position in our Income Tax law. and we may well have to come to it, if justice is to be done as between one taxpayer and another, particularly when one enters into the very abstruse field of overseas trading corporations.

The Amendment goes part of the way, but not the whole way, to meeting that difficulty, which is a very real difficulty not only in this part of the Income Tax code but in other parts as well. From what my hon. and learned Friend says, obviously there will be borderline cases where the Commissioners may have to weigh up the relative advantages either of giving a direction or not giving one. There will be the dilemma of whether a company is outside the scope of the provisions or inside. But there will also be circumstances in which it would be reasonable to say that the Commissioners should give a direction conditionally, provided that things are done and matters arranged and accounts adjusted in such a way that relief is given, provided that some tax is paid.

I do not think that unreasonable, and I ask the Minister, in the interests of sound administration, to tell us whether there is any practical as opposed to a mere theoretical objection to a provision of this kind. It is couched in terms which will give the Commissioners of Inland Revenue a power which they do not at present possess, and it will have application in this limited field. If it works well, it could be extended. Therefore, why should it not be tried as an experiment, to see how it works? In the interests of the Revenue and of the taxpayer, I hope that we shall have a sympathetic response from the Minister.

5.30 p.m.

Mr. Powell

I shall be forgiven if I do not enter into the philosophical speculations of the hon. Member for Islington, East (Mr. E. Fletcher) as to the manner in which our tax administration is developing; but I agree that, prima facie, the proviso contained in the Amendment moved by the hon. and learned Member for Kettering (Mr. Mitchison) is logical—that since, in many of these cases, part of the benefit may arise from the objectionable relief, as we have been calling it, and part of the benefit may arise from other causes, it should be sufficient for the Commissioners to be able to annul the objectionable benefit and leave the other intact. I accept the theoretical logic of that position, but there is this further consideration which I should put to the House.

Where we are dealing with a company which has enjoyed the very substantial advantages of overseas trade corporation status, it will be much simpler, and, I think, more satisfactory, if, should the objective test on which we are both agreed in wishing to put a very severe onus of proof, go against the company and should it appear that it is, in the main, getting this objectionable relief as a result of the change of status, it should be told to take the advantages it has got as an overseas trade corporation, and not, to use the phrase we have often used in these debates, seek to hop in and out. It is easier to adopt that rather blunt point of view since the Amendment which I moved does provide for an appeal; it will be possible for a company which believes that it has a substantial case, in reason, of a non-evasive character, for losing its O.T.C. status to go to an impartial body and be heard on the matter.

I suggest. therefore, that we should not finesse about this, but that a company should be content to enjoy overseas trade corporation status unless it can show that the main advantage lies in ceasing to enjoy that status for reasons which have nothing to do with tax avoidance.

Question, That those words be there inserted in the proposed Amendment. put and negatived.

Mr. Houghton

I beg to move, as an Amendment to the proposed Amendment, in line 34. to leave out from "may" to "to" in line 35 and to insert: request the Commissioners to grant permission for the revocation of the company's election or

Mr. Deputy-Speaker

I think that it would be convenient if the next Amendment, to insert a new subsection (7), were discussed at the same time.

Mr. Houghton

Yes, Mr. Deputy- Speaker.

The Amendment seeks to tighten up the provisions of subsection (6) of the Government Amendment. In the first place, a company which has elected not to be an overseas trade corporation can, under subsection (6) of the Government Amendment, revoke that election. There are no conditions whatever attached to that revocation. as far as I can see. Having elected in the first place, a company is quite free to revoke that election and go into the category of overseas trade corporation.

Our Amendment seeks to impose the condition that a company shall not be in a position to make a simple revocation of its election, but must seek the permission of the Commissioners of Inland Revenue to do so. In our view, that is desirable because, in certain circumstances, a company may elect not to become an overseas trade corporation solely for some tax advantage and then, when it has reaped that advantage, it may then elect to become an overseas trade corporation and reap a different kind of tax advantage. The Commissioners of Inland Revenue should be allowed to examine the purity of the motives of an applicant for revocation of its original election to remain outside the status of overseas trade corporation.

Similarly, in the case of companies which have asked for a direction from the Commissioners to exclude them from the status of overseas trade corporation, if they make application to return, they should be subject to a certain scrutiny. Subsection (6) of the Government Amendment allows such companies to require the Commissioners to withdraw their direction. Our Amendment would give a company the right to request the Commissioners to grant permission for re-entry into the status of overseas trade corporation, but we then impose a condition upon the exercise of that power by the Commissioners of Inland Revenue. We propose, by the Amendment associated with the one I am now moving, to insert a further subsection (7) which will provide that permission for the revocation of an election or withdrawal of a direction under the earlier provisions shall not be granted save after consultation with the Board of Trade and then only on account of a change of circumstances beyond the control of the company or for reasons of national interest. As regards the latter case, the right of a company to re-enter the status of overseas trade corporation after having once been in it and asked the Commissioners for a direction to get out, I would refer to an interjection by the Financial Secretary on 26th June. The right hon. and learned Member for Kensington, South (Sir P. Spens) had been speaking on the point earlier in the debate, and my hon. and learned Friend the Member for Kettering (Mr. Mitchison) said: I gather that the intention of the right hon. and learned Gentleman and his Friends, and the intention accepted by the Government in this matter, is that any company having once contracted out of its status of overseas trade corporation should remain out of that status. The Financial Secretary then interjected with the word "Normally", and we hang our string of Amendments on that word. My hon. and learned Friend, following that interjection, went on to say: The hon. Gentleman says "Normally" We shall have to see what the Treasury Clause means exactly."—[OFFICIAL REPORT, 26th June, 1957; Vol. 395, c. 302.] As far as we can see, the Government Amendment now before us means, as I said, first, that a company which initially elected to remain outside the status of overseas trade corporation can, by the simple act of revocation, go in; and we impose conditions upon the exercise of that right. Secondly, as regards the company which has once been in and has asked for a direction to go out, we think that there should be some condition imposed on the right of re-entry, if the word used by the Financial Secretary in the interjection I quoted has any real meaning.

Otherwise, it seems as if a company can not only elect to go in for the first time on a simple revocation of its initial election to stay out, but that a company, having asked for a direction to leave overseas trade corporation status, can require the Commissioners to allow it to go back. We cannot see what restraints are put upon that unless the conditions which we seek to impose are included. We shall be glad to hear from the Financial Secretary what the word "normally" meant if there are no restraints in the way of complete freedom of action. I trust that the hon. Gentleman will be able to satisfy us that companies will not be able to go in and out just to suit their own purposes.

We have already provided that companies shall not be allowed to get out of the overseas trade corporation status unless they satisfy the Commissioners of Inland Revenue that they are not doing it solely or mainly for tax advantage in circumstances mentioned in the Clause; but it does not seem to us that having once got that direction to go out, any restraint or restriction is put upon the right of companies to go back.

The Financial Secretary may reply that since companies are required to satisfy the Commissioners of Inland Revenue that they are not up to monkey tricks when they apply for a direction to go out, there is no reason to treat their desire for reentry any differently from a revocation from the initial election to stay out.

In the activities of these companies there are many mysteries and devices, many motives and many opportunities for arranging affairs to the tax advantage of those concerned. Since we on this side, and, I think, the House as a whole, have taken the view that the favourable advantages of overseas trade corporation status are costing the revenue a lot of money, the conditions of using them and enjoying their benefits must be strict to check tax avoidance devices and the manipulation of the provisions of the Bill solely for the benefit of profit and shareholders.

That is our desire. It is no more and no less than that. We hope that the Financial Secretary will see merit in our attempt to tighten up the conditions both of revocation of election to remain out and the conditions of requirement for the withdrawal of a direction in order that companies may re-enter overseas trade corporation status.

Mr. E. Fletcher

I beg to second the Amendment to the proposed Amendment.

On this occasion, the Financial Secretary cannot wriggle out of the matter, as he has done on the last two Amendments, by saying that he is not prepared to enter into any philosophical discussion as to his attitude. As my hon. Friend the Member for Sowerby (Mr. Houghton) made perfectly clear, the Amendment raises, in extreme form, the very question which I sought to put on the two previous Amendments. The point at issue does not concern me as much as the approach of the Financial Secretary. We are entitled to know the Government's attitude on this subject. It affects not only the point at issue, but the whole scope of our Income Tax law.

I can understand the Minister saying, as he has appeared to say on some occasions, that we must eliminate all discretion and that we must not give the Commissioners of Inland Revenue the right to look into motives and to ascertain intentions. The hon. Gentleman is entitled to say that we must have a rigid, definitive, objective law laid down in the Income Tax code and that if some unfortunate taxpayers are on one side or the other, that is just too bad, that is their misfortune, but we cannot start giving the Commissioners discretion to attach conditions to directions and secure a greater method of equity and justice.

5.45 p.m.

I am becoming more and more inclined to the view that the more abstruse these provisions of Income Tax law become, the more necessary it will be, to obtain justice between one taxpayer and another and, what is more important, to ensure that the objects of the Inland Revenue are satisfied, that a much wider discretion should be given to the Commissioners than the Minister is prepared to concede on some of our Amendments.

Hitherto, the Minister has adopted a rigid non possumus attitude. He should hardly do that, because, as my hon. Friend pointed out so clearly, we know what happened when the matter was considered in Committee. It is all on record in the OFFICIAL REPORT for 26th June. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) who on that occasion was putting some very pointed questions to the Minister, said: I gather that the intention of the right hon. and learned Gentleman and his Friends, and the intention accepted by the Government in this matter is that any company, having once contracted out of its status of overseas trading corporation, should remain out of that status. That was a perfectly simple question, but what did the Minister say? He said: Normally"—[OFFICIAL REPORT, 26th June, 1957; Vol. 572, c. 302.] That was not answering "Yes" or "No." "Normally" means, I understand, in most cases "yes" but in some cases "no" Therefore, we are entitled to ask, what are the cases in which the exception arises? What are the abnormal circumstances which prevent the answer being a categorical "Yes"?

The debate in Committee continued. My hon. and learned Friend pursued his argument. It was supported by one of the Minister's hon. Friends and then pursued again by my hon. Friend the Member for Loughborough (Mr. Cronin), who was followed by the hon. Member for Essex, South-East (Mr. Braine). As we found over and over again in our debates in Committee, however, there was no reply from the Government benches. The Minister sat silent. Our position, therefore, at this Report stage is that on this important matter we have had from the Government one word—"normally"and we do not know what it means. It is inconsistent with the doctrine which the Minister has tried to lay down, thoroughly unsuccessfully, on a whole series of previous Amendments.

It is not good enough to legislate in a complicated matter like this and to let taxpayers know that in some cases, having once contracted out of the status of an overseas trade corporation, they should remain out of that status and that in other cases they should be able to come in again. That is why my hon. Friend put down the Amendment.

We must now invite the Minister to abandon his very unsatisfactory sphinx-like attitude of silence which he maintains on ail difficult questions and his ambiguous monosyllabic answers to complicated questions. For goodness' sake, let us know where we stand. I hope that on this occasion we shall have a full, clear-cut and definite reply to this important question, which so far has been left by the Government in such a thoroughly unsatisfactory state.

Sir Ian Fraser (Morecambe and Lonsdale)

We have the most admirable and trustworthy Civil Service, but I do not think it is a good thing to put upon it these discretions. The law should be as simple, clear and direct as possible and it should not be complicated by Civil Service discretions.

Mr. Powell

I remember that the Royal Library of Naples used to be peculiar amongst the great libraries of Europe in that one could get in without a ticket, but there was a grenadier at the exit and one could not get out unless one had a pass signed by the Librarian. That is the arrangement which this Amendment provides for companies with the overseas trade corporation status. It is desired that companies which can qualify under the terms of Part IV shall enjoy, if it is to their advantage, the benefits of overseas trade corporation status, but it is also our determination to ensure that they shall not go in and out of that status for reasons of tax avoidance, as those are defined in the terms of the Amendment.

The hon. Member for Sowerby (Mr. Houghton), who moved the Amendment to the Amendment, said that we must test the purity of the motives of companies which, having elected not to be overseas trade corporations, or having been overseas trade corporations and ceased to be so by virtue of a direction of the Commissioners, want to become overseas trade corporations; but there is no question of motive in the whole matter of Part IV. We are placing this on the Statute Book with the idea that companies which can fulfil the qualifications shall get the benefit from being overseas trade corporations, and so it is surely right not to place a barrier to qualification, either for the first time, or when a company which has properly ceased to be an overseas trading corporation and is not one contemplates becoming an overseas trade corporation again.

Mr. Houghton

I was not seeking to test the purity of the motives of a single act, but the purity of the motives of one act followed by another; in the first place election to stay out, then application to come in; and in the second place, having gone out, on getting a direction to go out, then desiring to re-enter.

Mr. Powell

The material act is the getting out, because it is in the getting out that the tax avoidance arises. The tax advantage which arises in getting in is an advantage which we seek to confer and which we seek to deny to no company which can properly qualify for it. So it is at the point of exit that we want to station the grenadier.

It has been pointed out by both hon. Members, the hon. Member for Sowerby and the hon. Member for Islington, East (Mr. E. Fletcher), that I said that, normally, hopping in and out would not happen. I am quite sure that normally it will not happen. I am quite sure that it will be very difficult for a company to satisfy the Commissioners so as to get through the hoop of subsection (4) in the Amendment, and I am quite sure that if it does, that is to say that if circumstances have arisen which genuinely make it disadvantageous for it to continue to be an overseas trade corporation, it will be very abnormal for the company in a future

year to find advantage in regaining that status. It will be abnormal that such a thing will happen, and, of course, this guard upon the exit will make it abnormal, but we do not want, and it would be in conflict with the purposes of this Part of the Bill, to prevent a company which can benefit from the provisions of Part IV from doing so, whether it has elected not to do so for the first time, which will be the usual case, or whether —which will be the abnormal case—it has been once an overseas trade corporation and succeeded in satisfying the Commissioners that it might fairly cease to be one.

Mr. Roy Jenkins

The Financial Secretary has applied himself closely to this matter, as he always applies himself closely to any matter. We all followed his Neapolitan anecdote at the beginning of his speech, though I am not quite sure that I followed the connection of the anecdote, which he maintained throughout, with some of his refutations which he went on to make of the arguments of my hon. Friends, but I do not think he answered all the arguments which were put by either my hon. Friend the Member for Sowerby (Mr. Houghton) or my hon. Friend the Member for Islington, East (Mr. E. Fletcher). The hon. Gentleman applies himself, as I have noted before, rather more closely to the genuine difficulties of avoidance than do his colleagues on the Treasury Bench, but as the Government do not seem sufficiently adequately concerned with the dangers of avoidance and evasion I hope that my hon. Friends will vote for the Amendment to the Amendment as an expression of this view.

Question put, That the words proposed to be left out stand part of the proposed Amendment:—

The House divided: Ayes 273, Noes 221.

Division No. 171.] AYES [5.55 p.m.
Agnew, Sir Peter Baldwin, A. E. Biggs-Davison, J. A.
Aitken, W. T. Barber, Anthony Birch, Rt. Hon. Nigel
Allan, R. A. (Paddington, S.) Barlow, Sir John Bishop, F. P.
Alport, C. J. M. Barter, John Body, R. F.
Amery, Julian (Preston, N.) Baxter, Sir Beverley Boothby, Sir Robert
Amory, Rt. Hn. Heathcoat (Tiverton) Beamish, Maj. Tufton Boyd-Carpenter, Rt. Hon. J. A.
Arbuthnot, John Bell, Philip (Bolton, E.) Boyle, Sir Edward
Armstrong, C. W. Bell, Ronald (Bucks, S.) Braine, B. R.
Ashton, H. Bennett, F. M. (Torquay) Braithwalte, Sir Albert (Harrow, W.)
Astor, Hon. J. J. Bennett, Dr. Reginald Bromley-Davenport, Lt.-Col. W. H.
Atkins, H. E. Bevins, J. R. (Toxteth) Brooman-White, R. C.
Baldock, Lt.-Cmdr. J. M. Bidgood, J. C. Browne, J. Nixon (Craigton)
Bullus, Wing Commander, E. E. Hinchingbrooke, viscount Oakshott, H. D.
Burden, F. F. A. Holland-Martin, C. J. O'Neill, Hn. Phelim (Co. Antrim, N.)
Butler, Rt. Hn. R. A. (Saffron Walden) Holt, A. F. Orr, Capt. L. P. S.
Campbell, Sir David Hornby, R. P. Orr-Ewing, Sir Ian (Weston-S-Mare)
Carr, Robert Hornsby-Smith, Miss M. P. Osborne, C.
Cary, Sir Robert Horobin, Sir Ian Page, R. G.
Channon, Sir Henry Horsbrugh, Rt. Hon. Dame Florence Pannell, N. A. (Kirkdale)
Chichester-Clark, R. Howard, Hon. Greville (St. Ives) Partridge, E.
Clarke, Brig. Terence (Portsmth, W.) Howard, John (Test) Pickthorn, K. W. M.
Cole, Norman Hudson, W. R. A. (Hull, N.) Pike, Miss Mervyn
Conant, Maj. Sir Roger Hughes Hallett, Vice-Admiral J. Pitman, I. J.
Cooper, A. E. Hughes-Young, M. H. C. Pitt, Miss E. M.
Cordeaux, Lt.-Col. J. K. Hulbert, Sir Norman Pott, H. P.
Corfield, Capt. F. V. Hurd, A. R. Powell, J. Enoch
Craddock, Beresford (Spelthorne) Hutchison, Michael Clark (E'b'gh, S.) Price, David (Eastleigh)
Crosthwaite-Eyre, Col. O. E. Hutchison, Sir Ian Clark (E'h'gh, W.) Price, Henry (Lewisham, W.)
Crowder, Sir John (Finchley) Hyde, Montgomery Prior-Palmer, Brig. O. L.
Currie, G. B. H. Hylton-Foster, Rt. Hon. Sir Harry Profumo, J. D.
Davidson, Viscountess Iremonger, T. L. Raikes, Sir Victor
Davies, Rt. Hn. Clement (Montgomery) Irvine, Bryant Godman (Rye) Ramsden, J. E.
Deedes, W. F. Jenkins, Robert (Dulwich) Rawlinson, Peter
Digby, Simon Wingfield Jennings, J. C. (Burton) Redmayne, M.
Dodds-Parker, A. D. Johnson, Dr. Donald (Carlisle) Remnant, Hon. P.
Donaldson, Cmdr. C. E. McA. Johnson, Eric (Blackley) Renton, D. L. M.
Doughty, C. J. A. Jones, Rt. Hon. Aubrey(Hall Green) Ridsdale, J. E.
Drayson, G. B. Joseph, Sir Keith Rippon, A. C. F.
du Cann, E. D. L. Joynson-Hicks, Hon. Sir Lancelot Robinson, Sir Roland (Blackpool, S.)
Dugdale, Rt. Hn. Sir T. (Richmond) Kerby, Capt. H. B. Rodgers, John (Sevenoaks)
Duncan, Sir James Kerr, sir Hamilton Roper, Sir Harold
Eden, J. B. (Bournemouth, West) Kershaw, J. A. Ropner, Col. Sir Leonard
Elliot, Rt. Hon. W. E. (Kelvingrove) Kirk, P. M. Russell, R. S.
Elliott, R.W.(N'castle upon Tyne, N) Lagden, C. W. Sandys, Rt. Hon. D.
Emmet, Hon. Mrs. Evelyn Lambert, Hon. G. Schofiefd, Lt.-Col. W.
Errington, Sir Eric Lambton, Viscount Sharples, R. C.
Erroll, F. J. Lancaster, Col. C, G. Shepherd, William
Finlay, Graeme Langford-Holt, J. A. Smithers, Peter (Winchester)
Fisher, Nigel Leather, E. H. C. Smyth, Brig. Sir John (Norwood)
Fletoher-Cooke, C. Leavey, J. A. Speir, R. M.
Fort, R. Leburn, W. G. Spence, H. R. (Aberdeen, W.)
Foster, John Legge-Bourke, Maj. E. A. H. Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Fraser, Hon. Hugh (Stone) Legh, Hon. Peter (Petersfield) Stanley, Capt. Hon. Richard
Fraser, Sir Ian (M'ombe & Lonsdale) Lindsay, Hon. James (Devon, N.) Stevens, Geoffrey
Freeth, Denzil Linstead, Sir H. N. Steward, Harold (Stockport, S.)
Galbraith, Hon. T. G. D. Lloyd, Maj. Sir Guy (Renfrew, E.) Steward, Sir William (Woolwich, W.)
Gammans, Lady Longden, Gilbert Stoddart-Scott, Col. Sir Malcolm
Garner-Evans, E. H. Low, Rt. Hon. A. R. W. Storey, S.
George, J. C. (Pollok) Lucas, P. B. (Brentford & Chiswick) Studholme, Sir Henry
Gibson-Watt, D. Lucas-Tooth, Sir Hugh Summers, Sir Spencer
Glover, D. McAdden, S. J. Sumner, W. D. M. (Orpington)
Glyn, Col. R. Macdonald, Sir Peter Taylor, Sir Charles (Eastbourne)
Godber, J. B. Mackeson, Brig. Sir Harry Taylor, William (Bradford, N.)
Gomme-Duncan, Col. Sir Alan Mackie, J. H. (Galloway) Teeling, W.
Goodhart, Philip McLaughlin, Mrs. P. Temple, John M.
Gower, H. R. Maclay, Rt. Hon. John Thomas, P. J. M. (Conway)
Graham, Sir Fergus Maclean, Sir Fitzroy (Lancaster) Thompson, Kenneth (Walton)
Grant, W. (Woodside) McLean, Neil (Inverness) Thornton-Kemsley, C. N.
Grant-Ferris, Wg Cdr. R. (Nantwich) MacLeod, John (Ross & Cromarty) Tilney, John (Wavertree)
Green, A. Macmillan, Rt. Hn. Harold (Bromley) Turner, H. F. L.
Gresham Cooke, R. Macpherson, Niall (Dumfries) Turton, Rt. Hon. R. H.
Grimond, J. Maddan, Martin Tweedsmuir, Lady
Grimston, Hon. John (St. Albans) Maitland, Cdr. J. F. W. (Horncastle) Vane, W. M. F.
Grimston, Sir Robert (Westbury) Manningham-Buller, Rt. Hn. Sir R. Vaughan-Morgan, J. K.
Grosvenor, Lt.-Col. R. G. Markham, Major Sir Frank Wade, D. W.
Gurden, Harold Marlowe, A. A. H. Wakefield, Edward (Derbyshire, W.)
Hall, John (Wycombe) Marples, Rt. Hon. A. E. Wakefield, Sir Wavell (St. M'lebone)
Hare, Rt. Hon. J. H. Marshall, Douglas Walker-Smith, Rt. Hon. Derek
Harris, Reader (Heston) Mathew, R. Wall, Major Patrick
Harrison, A. B. C. (Maldon) Maude, Angus Ward, Dame Irene (Tynemouth)
Harrison, Col. J. H. (Eye) Maudling, Rt. Hon. R. Waterhouse, Capt. Rt. Hon. C.
Harvey, Sir Arthur (Macclesfd) Mawby, R. L. Watkinson, Rt. Hon. Harold
Harvey, Ian (Harrow, E.) Maydon, Lt.-Comdr. S. L. C. Webbe, Sir H.
Harvey, John (Walthamstow, E.) Moore, Sir Thomas Whitelaw, W. S. I.
Hay, John Mott-Radclyffe, Sir Charles Williams, Paul (Sunderland, S.)
Heald, Rt. Hon. Sir Lionel Nabarro, C. D. N. Wood, Hon. R.
Heath, Rt. Hon. E. R. G. Nairn, D. L. S. Woollam, John Victor
Henderson, John (Cathcart) Neave, Airey Yates, William (The Wrekin)
Henderson-Stewart, Sir James Nicholls, Harmar
Hicks-Beach, Maj. W. W. Nicholson, Godfrey (Farnham) TELLERS FOR THE AYES:
Hill, Rt. Hon. Charles (Luton) Nicolson, N. (B'n'm'th, E. & Chr'ch) Mr. Wills and Mr. Bryan.
Hill, Mrs. E. (Wythenshawe) Noble, Comdr. Rt. Hon. Allan
Hill, John (S. Norfolk)
Ainsley, J. W. Hastings, S. Parkin, B. T.
Albu, A. H. Hayman, F. H. Paton, John
Allaun, Frank (Salford, E.) Henderson, Rt. Hn. A. (Rwly Regis) Pearson, A.
Allen, Arthur (Bosworth)) Herbison, Miss M. Peart, T. F.
Allen, Scholefield (Crewe) Hobson, c. R. (Keighley) Pentland, N.
Awbery, S. S. Holman, P. Prentice, R. E.
Bacon, Miss Alice Holmes, Horace Price, J. T. (Westhoughton)
Balfour, A. Houghton, Douglas Price, Philips (Gloucestershire, W.)
Bellenger, Rt. Hon. F. J. Howell, Charles (Perry Barr) Probert, A. R.
Bence, C. R. (Dunbartonshire, E.) Hoy, J. H. Randall, H. E.
Benn, Hn. Wedgwood (Bristol, S. E.) Hubbard, T. F. Rankin, John
Benson, G. Hughes, Cledwyn (Anglesey) Redhead, E. C.
Beswick, Frank Hughes, Emrys (S. Ayrshire) Reeves, J.
Blackburn, F. Hughes, Hector (Aberdeen, N.) Reid, William
Blenkinsop, A. Hunter, A. E. Rhodes, H.
Blyton, W. R. Hynd, H. (Accrington) Robens, Rt. Hon. A.
Boardman, H. Hynd, J. B. (Attercliffe) Roberts, Albert (Normanton)
Bottomley, Rt. Hon. A. G. Irvine, A. J. (Edge Hill) Roberts, Goronwy (Caernarvon)
Bowden, H. W. (Leicester, S. W.) Irving, Sydney (Dartford) Robinson, Kenneth (St. Pancras, N.)
Bowles, F. G. Isaacs, Rt. Hon. G. A. Rogers, George (Kensington, N.)
Boyd, T. C. Jay, Rt. Hon. D. P. T. Ross, William
Braddock, Mrs. Elizabeth Jeger, George (Goole) Royle, C.
Brockway, A. F. Jeger, Mrs. Lena (Holbn & St. Pncs, S.) Shinwell, Rt. Hon. E.
Broughton, Dr. A. D. D. Jenkins, Roy (Stechford) Silverman, Julius (Aston)
Brown, Thomas (Ince) Johnson, James (Rugby) Silverman, Sydney (Nelson)
Burke, W. A. Johnston, Douglas (Paisley) Simmons, C. J. (Brierley Hill)
Butler, Herbert (Hackney, C.) Jones, Rt. Hon. A. Creech (Wakefield) Skeffington, A. M.
Butler, Mrs. Joyce (Wood Green) Jones, David (The Hartlepools) Slater, Mrs. H. (Stoke, N.)
Callaghan, L. J. Jones, Elwyn (W. Ham, S.) Slater, J. (Sedgefield)
Castle, Mrs. B. A. Jones, Jack (Rotherham) Smith, Ellis (Stoke, S.)
Champion, A. J. Jones, J. Idwal (Wrexham) Snow, J. W.
Chapman, W. D. Jones, T. W. (Merioneth) Sorensen, R. W.
Chetwynd, G. R. Kenyon, C. Soskice, Rt. Hon. Sir Frank
Clunie, J. Key, Rt. Hon. C. W. Sparks, J. A.
Collick, P. H. (Birkenhead) King, Dr. H. M. Steele, T.
Collins, V.J. (Shoreditch & Finsbury) Lawson, G. M. Stewart, Michael (Fulham)
Cove, W. G. Ledger, R. J. Strachey, Rt. Hon. J.
Craddock, George (Bradford, S.) Lee, Frederick (Newton) Strauss, Rt. Hon. George (Vauxhall)
Cronin, J, D. Lee, Miss Jennie (Cannock) Summerskill, Rt. Hon. E.
Cullen, Mrs. A. Lewis, Arthur Taylor, Bernard (Mansfield)
Dalton, Rt. Hon. H. Lipton, Marcus Taylor, John (West Lothian)
Darling, George (Hillsborough) Logan, D. G. Thomas, George (Cardiff)
Davies, Ernest (Enfield, E.) Mabon, Dr. J. Dickson Thomas, Iorwerth (Rhondda, W.)
Davies, Harold (Leek) MacColl, J. E. Thornton, E.
Davies, Stephen (Merthyr) McGovern, J. Timmons, J.
Delargy, H. J. McInnes, J. Tomney, F.
Dodds, N. N. McKay, John (Wallsend) Ungoed-Thomas, Sir Lynn
Dugdale, Rt. Hn. John (W. Brmwch) MacPherson, Malcolm (Stirling) Usborne, H. C.
Edelman, M. Mahon, Simon Viant, S. P.
Edwards, Rt. Hon. John (Brighouse) Mallalieu, E. L. (Brigg) Watkins, T. E.
Edwards, Rt. Hon. Ness (Caerphilly) Mallalieu, J. P. W. (Huddersfd, E.) Weitzman, D.
Edwards, Robert (Bilston) Mann, Mrs. Jean Wells, Percy (Faversham)
Edwards, W. J. (Stepney) Marquand, Rt. Hon. H. A. Wells, William (Walsall, N.)
Evans, Albert (Islington, S. W.) Mason, Roy West, D. G.
Fernyhough, E. Mayhew, C. P. Wheeldon, W. E.
Flenburgh, W. Mellish, R. J. White, Mrs. Eirene (E. Flint)
Finch, H. J. Messer, Sir F. White, Henry (Derbyshire, N. E.)
Fletcher, Eric Mikardo, Ian Wilkins, W. A.
Forman, J. C. Mitchlson, G. R. Wiley, Frederick
Fraser, Thomas (Hamilton) Monslow, W. Williams, David (Neath)
Gaitskell, Rt. Hon. H. T. N. Moody, A. S. Williams, Rev. Llywelyn (Ab'tillery)
George, Lady Megan Lloyd (Car'then) Morrison, Rt. Hn. Herbert (Lewis'm, S.) Williams, Ronald (Wigan)
Gibson, C. W. Moss, R. Williams, Rt. Hon. T. (Don Valley)
Gooch, E. G. Moyle, A. Williams, W. R. (Openshaw)
Gordon Walker, Rt. Hon. P. C. Mulley, F. W. Williams, W. T. (Barons Court)
Greenwood, Anthony Noel-Baker, Rt. Hon. P. (Derby, S.) Willis, Eustace (Edinburgh, E.)
Grenfell, Rt. Hon. D. R. Oliver, G. H. Wilson, Rt. Hon. Harold (Huyton)
Grey, C. F. Oram, A. E. Woodburn, Rt. Hon. A.
Griffiths, David (Rother Valley) Orbach, M. Woof, R. E.
Griffiths, Rt. Hon. James (Llanelly) Oswald, T. Yates, V. (Ladywood)
Griffiths, William (Exchange) Owen, W. J. Zilliacus, K.
Hale, Leslie Padley, W. E.
Hamilton, W. W. Pannell, Charles (Leeds, W.) TELLERS FOR THE NOES:
Hannan, W. Parglter, G. A. Mr. Short and Mr. Deer.
Harrison, J. (Nottingham, N.) Parker, J.

Proposed words there inserted in the Bill.